G.R. No. 172525 October 20, 2010
00
SHINRYO (PHILIPPINES) COMPANY, INC., Petitioner,
vs.
RRN INCORPORATED,* Respondent.
DECISION
PERALTA, J.:
This resolves the Petition for Review on Certiorari under Rule 45 of the Rules
of Court, praying that the Decision1of the Court of Appeals (CA) dated
February 22, 2006, affirming the Decision of the Construction Industry
Arbitration Commission (CIAC), and the CA Resolution2 dated April 26, 2006,
denying herein petitioner's motion for reconsideration, be reversed and set
aside.
The facts, as accurately narrated in the CA Decision, are as follows.
Petitioner Shinryo (Philippines) Company, Inc. (hereinafter petitioner) is a
domestic corporation organized under Philippine laws. Private respondent
RRN Incorporated (hereinafter respondent) is likewise a domestic
corporation organized under Philippine laws.
Respondent filed a claim for arbitration against petitioner before CIAC for
recovery of unpaid account which consists of unpaid portions of the sub-
contract, variations and unused materials in the total sum of P5,275,184.17
and legal interest in the amount of P442,014.73. Petitioner filed a
counterclaim for overpayment in the amount ofP2,512,997.96.
The parties admitted several facts before the CIAC. It was shown that
petitioner and respondent executed an Agreement and Conditions of Sub-
contract (hereafter Agreement signed on June 11, 1996 and June 14, 1996,
respectively. Respondent signified its willingness to accept and perform for
petitioner in any of its projects, a part or the whole of the works more
particularly described in Conditions of Sub-Contract and other Sub-contract
documents.
On June 11, 2002, the parties executed a "Supply of Manpower,
Tools/Equipment, Consumables for the Electrical Works-Power and
Equipment Supply, Bus Duct Installation" for the Phillip Morris Greenfield
Project (hereafter Project) covered by Purchase Order Nos. 4501200300-
000274 and 4501200300-000275 amounting toP15,724,000.
and P9,276,000.00 respectively, or a total amount of P25,000,000.00. The
parties also agreed that respondent will perform variation orders in the
Project. In connection with the Project, petitioner supplied manpower
chargeable against respondent.
Respondent was not able to finish the entire works with petitioner due to
financial difficulties. Petitioner paid respondent a total amount
of P26,547,624.76. On June 25, 2005 [should read 2003], respondent,
through its former counsel sent a letter to petitioner demanding for the
payment of its unpaid balance amounting toP5,275,184.17. Petitioner
claimed material back charges in the amount of P4,063,633.43. On
September 26, 2003, respondent only acknowledged P2,371,895.33 as
material back charges. Thereafter, on October 16, 2003, respondent sent
another letter to petitioner for them to meet and settle their dispute.
On January 8, 2004, respondent sent another letter to petitioner regarding
the cost of equipment rental and the use of scaffolding. Thereafter, on
August 12, 2004, petitioner sent a letter to respondent denying any unpaid
account and the failure in their negotiations for amicable settlement.
On September 3, 2004, respondent, through its new counsel, advised
petitioner of their intention to submit the matter to arbitration. Thereafter, their
dispute was submitted to arbitration. During the preliminary conference, the
parties agreed in their Terms of Reference to resolve eight issues, to wit:
1. What should be the basis in evaluating the variation cost?
1.1 How much is the variation cost?
2. Is the Respondent (petitioner in the instant case) justified in
charging claimant (herein respondent) the equipment rental fee and
for the use of the scaffoldings? If so, how much should be charged to
Claimant?
3. What should be the basis in evaluating the total cost of materials
supplied by Respondent to the Project which is chargeable to
Claimant?
3.1 How much is the total cost of materials supply
chargeable to Claimant?
ObliCon Page | 1
 4. How much is the value of the remaining works left undone by the
Claimant in the project?
5. Is the Claimant's claim for inventory of excess materials valid? If
so, how much is the value thereof?
6. Is the Respondent entitled to its claim for an overpayment in the
amount of P2,512,997.96?
7. Is Claimant entitled to its claim for interest? If so, how much?
8. Who between the parties shall bear the cost of Arbitration?
The CIAC rendered the assailed decision after the presentation of the
parties' evidence. [The dispositive portion of said decision reads as follows:
WHEREFORE, judgment is hereby rendered in favor of the claimant and
respondent is ordered to pay claimant its unpaid account in the sum
of P3,728,960.54 plus legal interest of 6% reckoned from June 25, 2003 up
to the filing of the case on October 11, 2004 and 12% of P3,728,960.54 from
the finality of the judgment until fully paid and arbitration cost of P104,333.82
representing claimant's share of the arbitration cost which respondent should
reimburse.
SO ORDERED.]
Petitioner accepts the ruling of the CIAC only in Issue No. 1 and Sub-Issue
No. 1.1 and in Issue No. 2 in so far as the amount of P440,000.00 awarded
as back charges for the use of scaffoldings. x x x3
On February 22, 2006, the CA promulgated the assailed Decision affirming
the decision of the CIAC. The CA upheld the CIAC ruling that petitioner failed
to adduce sufficient proof that the parties had an agreement regarding
charges for respondent's use of the manlift. As to the other charges for
materials, the CA held that the evidence on record amply supports the CIAC
findings. Petitioner moved for reconsideration of said ruling, but the same
was denied per Resolution dated April 26, 2006.
Hence, this petition where it is alleged that:
I. THE HONORABLE COURT OF APPEALS COMMITTED GRAVE
REVERSIBLE ERROR WHEN IT DENIED PETITIONER'S CLAIM FOR
MANLIFT EQUIPMENT RENTAL IN THE AMOUNT OFP511,000.00
DESPITE EVIDENCE ON RECORD THAT RESPONDENT RRN ACTUALLY
USED AND BENEFITED FROM THE MANLIFT EQUIPMENT.
II. IN RENDERING THE QUESTIONED DECISION AND QUESTIONED
RESOLUTION, THE HONORABLE COURT OF APPEALS HAS DECIDED A
QUESTION OF SUBSTANCE NOT IN ACCORD WITH LAW AND/OR WITH
THE APPLICABLE DECISIONS OF THE HONORABLE SUPREME COURT.
III. THE COURT OF APPEALS COMMITTED A GRAVE REVERSIBLE
ERROR IN AFFIRMING THE CIAC AWARD FOR THE VALUE OF
INVENTORIED MATERIALS CONSIDERING THAT:
A. RESPONDENT RRN ADMITTED THE VALIDITY OF THE
DEDUCTIONS ON ACCOUNT OF MATERIAL SUPPLY, WHICH
INCLUDED THE INVENTORIED MATERIALS.
B. RESPONDENT RRN HAS NO BASIS TO CLAIM BECAUSE
ENGR. BONIFACIO ADMITTED THAT RESPONDENT RRN
FAILED TO ESTABLISH WHETHER THE MATERIALS CAME
FROM RESPONDENT RRN OR FROM PETITIONER AND THAT IT
WAS PETITIONER THAT ACTUALLY INSTALLED THE SAID
MATERIALS AS PART OF REMAINING WORKS THAT
PETITIONER TOOK OVER FROM RESPONDENT RRN.
C. THE CLAIM FOR THE VALUE OF INVENTORIED MATERIALS
IS A DOUBLE CLAIM OR DOUBLE ENTRY BECAUSE IN THE
COMPUTATION OF THE FINAL ACCOUNT, RESPONDENT RRN
WAS CREDITED THE FULL CONTRACT PRICE AND THE COST
OF VARIATIONS, WHICH INCLUDED THE INVENTORIED
MATERIALS.
IV. IN RENDERING THE QUESTIONED DECISION AND QUESTIONED
RESOLUTION, THE COURT OF APPEALS COMMITTED A GRAVE
REVERSIBLE ERROR IN THAT IT COMPLETELY DISREGARDED THE
PROVISION OF THE SUBCONTRACT, WHICH ALLOWED PAYMENT OF
ACTUAL COST INCURRED BY PETITIONER IN COMPLETING THE
REMAINING WORKS THAT PRIVATE RESPONDENT ADMITTEDLY
FAILED TO COMPLETE.
V. THE COURT OF APPEALS COMMITTED A GRAVE REVERSIBLE
ERROR WHEN IT COMPLETELY DISREGARDED THE EVIDENCE ON
ObliCon Page | 2
ACTUAL COST INCURRED BY PETITIONER IN COMPLETING THE
REMAINING WORKS.
VI. THE COURT OF APPEALS COMMITTED GRAVE REVERSIBLE
ERROR WHEN IT AFFIRMED THE CIAC AWARD FOR INTERESTS AND
ARBITRATION COSTS IN FAVOR OF RESPONDENT RRN.4
The petition is bereft of merit.
Despite petitioner's attempts to make it appear that it is advancing questions
of law, it is quite clear that what petitioner seeks is for this Court to
recalibrate the evidence it has presented before the CIAC. It insists that its
evidence sufficiently proves that it is entitled to payment for respondent's use
of its manlift equipment, and even absent proof of the supposed agreement
on the charges petitioner may impose on respondent for the use of said
equipment, respondent should be made to pay based on the principle of
unjust enrichment. Petitioner also questions the amounts awarded by the
CIAC for inventoried materials, and costs incurred by petitioner for
completing the work left unfinished by respondent.
As reiterated by the Court in IBEX International, Inc. v. Government Service
Insurance System,5 to wit:
It is settled that findings of fact of quasi-judicial bodies, which have
acquired expertise because their jurisdiction is confined to specific
matters, are generally accorded not only respect, but also finality,
especially when affirmed by the Court of Appeals. In particular, factual
findings of construction arbitrators are final and conclusive and not
reviewable by this Court on appeal.
This rule, however, admits of certain exceptions. In Uniwide Sales Realty and
Resources Corporation v. Titan-Ikeda Construction and Development
Corporation, we said:
In David v. Construction Industry and Arbitration Commission, we ruled that,
as exceptions, factual findings of construction arbitrators may be reviewed by
this Court when the petitioner proves affirmatively that: (1) the award was
procured by corruption, fraud or other undue means; (2) there was evident
partiality or corruption of the arbitrators or any of them; (3) the arbitrators
were guilty of misconduct in refusing to hear evidence pertinent and material
to the controversy; (4) one or more of the arbitrators were disqualified to act
as such under Section nine of Republic Act No. 876 and willfully refrained
from disclosing such disqualifications or of any other misbehavior by which
the rights of any party have been materially prejudiced; or (5) the arbitrators
exceeded their powers, or so imperfectly executed them, that a mutual, final
and definite award upon the subject matter submitted to them was not
made.1avvp++i1
Other recognized exceptions are as follows: (1) when there is a very clear
showing of grave abuse of discretion resulting in lack or loss of jurisdiction as
when a party was deprived of a fair opportunity to present its position before
the Arbitral Tribunal or when an award is obtained through fraud or the
corruption of arbitrators, (2) when the findings of the Court of Appeals are
contrary to those of the CIAC, and (3) when a party is deprived of
administrative due process.6
A perusal of the records would reveal that none of the aforementioned
circumstances, which would justify exemption of this case from the general
rule, are present here. Such being the case, the Court, not being a trier of
facts, is not duty-bound to examine, appraise and analyze anew the evidence
presented before the arbitration body.7
Petitioner's reliance on the principle of unjust enrichment is likewise
misplaced. The ruling of the Court inUniversity of the Philippines v. Philab
Industries, Inc.8 is highly instructive, thus:
Unjust enrichment claims do not lie simply because one party benefits from
the efforts or obligations of others, but instead it must be shown that a party
was unjustly enriched in the sense that the term unjustly could mean illegally
or unlawfully.
Moreover, to substantiate a claim for unjust enrichment, the claimant must
unequivocally prove that another party knowingly received something of
value to which he was not entitled and that the state of affairs are such that it
would be unjust for the person to keep the benefit. Unjust enrichment is a
term used to depict result or effect of failure to make remuneration of or for
property or benefits received under circumstances that give rise to legal or
equitable obligation to account for them; to be entitled to remuneration, one
must confer benefit by mistake, fraud, coercion, or request. Unjust
enrichment is not itself a theory of reconvey. Rather, it is a prerequisite for
the enforcement of the doctrine of restitution.
Article 22 of the New Civil Code reads:
ObliCon Page | 3
Every person who, through an act of performance by another, or any other
means, acquires or comes into possession of something at the expense of
the latter without just or legal ground, shall return the same to him.
In order that accion in rem verso may prosper, the essential elements must
be present: (1) that the defendant has been enriched, (2) that the plaintiff has
suffered a loss, (3) that the enrichment of the defendant is without just or
legal ground, and (4) that the plaintiff has no other action based on contract,
quasi-contract, crime or quasi-delict.
An accion in rem verso is considered merely an auxiliary action, available
only when there is no other remedy on contract, quasi-contract, crime, and
quasi-delict. If there is an obtainable action under any other institution of
positive law, that action must be resorted to, and the principle of accion in
rem verso will not lie.9
As found by both the CIAC and affirmed by the CA, petitioner failed to prove
that respondent's free use of the manlift was without legal ground based on
the provisions of their contract. Thus, the third requisite, i.e., that the
enrichment of respondent is without just or legal ground, is missing. In
addition, petitioner's claim is based on contract, hence, the fourth requisite −
that the plaintiff has no other action based on contract, quasi-contract, crime
or quasi-delict − is also absent. Clearly, the principle of unjust enrichment is
not applicable in this case.
x x x The Court will not review the factual findings of an arbitral tribunal upon
the artful allegation that such body had "misapprehended facts" and will not
pass upon issues which are, at bottom, issues of fact, no matter how cleverly
disguised they might be as "legal questions." The parties here had recourse
to arbitration and chose the arbitrators themselves; they must have had
confidence in such arbitrators. The Court will not, therefore, permit the
parties to relitigate before it the issues of facts previously presented and
argued before the Arbitral Tribunal, save only where a clear showing is made
that, in reaching its factual conclusions, the Arbitral Tribunal committed an
error so egregious and hurtful to one party as to constitute a grave abuse of
discretion resulting in lack or loss of jurisdiction.12
As discussed above, there is nothing in the records that point to any grave
abuse of discretion committed by the CIAC.
The awards for interests and arbitration costs are, likewise, correct as they
are in keeping with prevailing jurisprudence.13
IN VIEW OF THE FOREGOING, the Petition is DENIED. The Decision of the
Court of Appeals dated February 22, 2006 and its Resolution dated April 26,
2006 are AFFIRMED.
SO ORDERED.

The other issues raised by petitioner all boil down to whether the CIAC or the
CA erred in rejecting its claims for costs of some materials.

Again, these issues are purely factual and cannot be properly addressed in
this petition for review on certiorari. InHanjin Heavy Industries and
Construction Co., Ltd. v. Dynamic Planners and Construction Corp.,10 it was
emphasized that mathematical computations, the propriety of arbitral awards,
claims for "other costs" and "abandonment" are factual questions. Since the
discussions of the CIAC and the CA in their respective Decisions show that
its factual findings are supported by substantial evidence, there is no reason
why this Court should not accord finality to said findings. Verily, to accede to
petitioner's request for a recalibration of its evidence, which had been
thoroughly studied by both the CIAC and the CA would result in negating the
objective of Executive Order No. 1008, which created an arbitration body to
ensure the prompt and efficient settlement of disputes in the construction
industry. Thus, the Court held in Uniwide Sales Realty and Resources
Corporation v. Titan-Ikeda Construction and Development
Corporation,11 that:

ObliCon Page | 4
G.R. No. 183984 April 13, 2011
ARTURO SARTE FLORES, Petitioner,
vs.
SPOUSES ENRICO L. LINDO, JR. and EDNA C. LINDO, Respondents.
DECISION
CARPIO, J.:
The Case
Before the Court is a petition for review1 assailing the 30 May 2008
Decision2 and the 4 August 2008 Resolution3of the Court of Appeals in CA-
G.R. SP No. 94003.
The Antecedent Facts
The facts, as gleaned from the Court of Appeals’ Decision, are as follows:
On 31 October 1995, Edna Lindo (Edna) obtained a loan from Arturo Flores
(petitioner) amounting to P400,000 payable on 1 December 1995 with 3%
compounded monthly interest and 3% surcharge in case of late payment. To
secure the loan, Edna executed a Deed of Real Estate Mortgage 4 (the Deed)
covering a property in the name of Edna and her husband Enrico (Enrico)
Lindo, Jr. (collectively, respondents). Edna also signed a Promissory
Note5 and the Deed for herself and for Enrico as his attorney-in-fact.
Edna issued three checks as partial payments for the loan. All checks were
dishonored for insufficiency of funds, prompting petitioner to file a Complaint
for Foreclosure of Mortgage with Damages against respondents. The case
was raffled to the Regional Trial Court of Manila, Branch 33 (RTC, Branch
33) and docketed as Civil Case No. 00-97942.
In its 30 September 2003 Decision,6 the RTC, Branch 33 ruled that petitioner
was not entitled to judicial foreclosure of the mortgage. The RTC, Branch 33
found that the Deed was executed by Edna without the consent and authority
of Enrico. The RTC, Branch 33 noted that the Deed was executed on 31
October 1995 while the Special Power of Attorney (SPA) executed by Enrico
was only dated 4 November 1995.
The RTC, Branch 33 further ruled that petitioner was not precluded from
recovering the loan from Edna as he could file a personal action against her.
However, the RTC, Branch 33 ruled that it had no jurisdiction over the
personal action which should be filed in the place where the plaintiff or the
defendant resides in accordance with Section 2, Rule 4 of the Revised Rules
on Civil Procedure.
Petitioner filed a motion for reconsideration. In its Order 7 dated 8 January
2004, the RTC, Branch 33 denied the motion for lack of merit.
On 8 September 2004, petitioner filed a Complaint for Sum of Money with
Damages against respondents. It was raffled to Branch 42 (RTC, Branch 42)
of the Regional Trial Court of Manila, and docketed as Civil Case No. 04-
110858.
Respondents filed their Answer with Affirmative Defenses and Counterclaims
where they admitted the loan but stated that it only amounted to P340,000.
Respondents further alleged that Enrico was not a party to the loan because
it was contracted by Edna without Enrico’s signature. Respondents prayed
for the dismissal of the case on the grounds of improper venue, res judicata
and forum-shopping, invoking the Decision of the RTC, Branch 33. On 7
March 2005, respondents also filed a Motion to Dismiss on the grounds of
res judicata and lack of cause of action.
The Decision of the Trial Court
On 22 July 2005, the RTC, Branch 42 issued an Order 8 denying the motion
to dismiss. The RTC, Branch 42 ruled that res judicata will not apply to rights,
claims or demands which, although growing out of the same subject matter,
constitute separate or distinct causes of action and were not put in issue in
the former action. Respondents filed a motion for reconsideration. In its
Order9 dated 8 February 2006, the RTC, Branch 42 denied respondents’
motion. The RTC, Branch 42 ruled that the RTC, Branch 33 expressly stated
that its decision did not mean that petitioner could no longer recover the loan
petitioner extended to Edna.
Respondents filed a Petition for Certiorari and Mandamus with Prayer for a
Writ of Preliminary Injunction and/or Temporary Restraining Order before the
Court of Appeals.
The Decision of the Court of Appeals
ObliCon Page | 5
In its 30 May 2008 Decision, the Court of Appeals set aside the 22 July 2005
and 8 February 2006 Orders of the RTC, Branch 42 for having been issued
with grave abuse of discretion.
The Court of Appeals ruled that while the general rule is that a motion to
dismiss is interlocutory and not appealable, the rule admits of exceptions.
The Court of Appeals ruled that the RTC, Branch 42 acted with grave abuse
of discretion in denying respondents’ motion to dismiss.
The Court of Appeals ruled that under Section 3, Rule 2 of the 1997 Rules of
Civil Procedure, a party may not institute more than one suit for a single
cause of action. If two or more suits are instituted on the basis of the same
cause of action, the filing of one on a judgment upon the merits in any one is
available ground for the dismissal of the others. The Court of Appeals ruled
that on a nonpayment of a note secured by a mortgage, the creditor has a
single cause of action against the debtor, that is recovery of the credit with
execution of the suit. Thus, the creditor may institute two alternative
remedies: either a personal action for the collection of debt or a real action to
foreclose the mortgage, but not both. The Court of Appeals ruled that
petitioner had only one cause of action against Edna for her failure to pay her
obligation and he could not split the single cause of action by filing separately
a foreclosure proceeding and a collection case. By filing a petition for
foreclosure of the real estate mortgage, the Court of Appeals held that
petitioner had already waived his personal action to recover the amount
covered by the promissory note.
Petitioner filed a motion for reconsideration. In its 4 August 2008 Resolution,
the Court of Appeals denied the motion.
Hence, the petition before this Court.
The Issue
The sole issue in this case is whether the Court of Appeals committed a
reversible error in dismissing the complaint for collection of sum of money on
the ground of multiplicity of suits.
The Ruling of this Court
The petition has merit.
The rule is that a mortgage-creditor has a single cause of action against a
mortgagor-debtor, that is, to recover the debt.10 The mortgage-creditor has
the option of either filing a personal action for collection of sum of money or
instituting a real action to foreclose on the mortgage security. 11 An election of
the first bars recourse to the second, otherwise there would be multiplicity of
suits in which the debtor would be tossed from one venue to another
depending on the location of the mortgaged properties and the residence of
the parties.12
The two remedies are alternative and each remedy is complete by itself. 13 If
the mortgagee opts to foreclose the real estate mortgage, he waives the
action for the collection of the debt, and vice versa.14 The Court explained:
x x x in the absence of express statutory provisions, a mortgage creditor may
institute against the mortgage debtor either a personal action for debt or a
real action to foreclose the mortgage. In other words, he may pursue either of
the two remedies, but not both. By such election, his cause of action can by
no means be impaired, for each of the two remedies is complete in itself.
Thus, an election to bring a personal action will leave open to him all the
properties of the debtor for attachment and execution, even including the
mortgaged property itself. And, if he waives such personal action and
pursues his remedy against the mortgaged property, an unsatisfied judgment
thereon would still give him the right to sue for deficiency judgment, in which
case, all the properties of the defendant, other than the mortgaged property,
are again open to him for the satisfaction of the deficiency. In either case, his
remedy is complete, his cause of action undiminished, and any advantages
attendant to the pursuit of one or the other remedy are purely accidental and
are all under his right of election. On the other hand, a rule that would
authorize the plaintiff to bring a personal action against the debtor and
simultaneously or successively another action against the mortgaged
property, would result not only in multiplicity of suits so offensive to justice
(Soriano v. Enriques, 24 Phil. 584) and obnoxious to law and equity (Osorio
v. San Agustin, 25 Phil. 404), but also in subjecting the defendant to the
vexation of being sued in the place of his residence or of the residence of the
plaintiff, and then again in the place where the property lies.15
The Court has ruled that if a creditor is allowed to file his separate complaints
simultaneously or successively, one to recover his credit and another to
foreclose his mortgage, he will, in effect, be authorized plural redress for a
single breach of contract at so much costs to the court and with so much
vexation and oppressiveness to the debtor.16
ObliCon Page | 6
In this case, however, there are circumstances that the Court takes into
consideration.
Petitioner filed an action for foreclosure of mortgage. The RTC, Branch 33
ruled that petitioner was not entitled to judicial foreclosure because the Deed
of Real Estate Mortgage was executed without Enrico’s consent. The RTC,
Branch 33 stated:
All these circumstances certainly conspired against the plaintiff who has the
burden of proving his cause of action. On the other hand, said circumstances
tend to support the claim of defendant Edna Lindo that her husband did not
consent to the mortgage of their conjugal property and that the loan
application was her personal decision.
Accordingly, since the Deed of Real Estate Mortgage was executed by
defendant Edna Lindo lacks the consent or authority of her husband Enrico
Lindo, the Deed of Real Estate Mortgage is void pursuant to Article 96 of the
Family Code.
This does not mean, however, that the plaintiff cannot recover the P400,000
loan plus interest which he extended to defendant Edna Lindo. He can
institute a personal action against the defendant for the amount due which
should be filed in the place where the plaintiff resides, or where the
defendant or any of the principal defendants resides at the election of the
plaintiff in accordance with Section 2, Rule 4 of the Revised Rules on Civil
Procedure. This Court has no jurisdiction to try such personal action. 17
Edna did not deny before the RTC, Branch 33 that she obtained the loan.
She claimed, however, that her husband did not give his consent and that he
was not aware of the transaction.18 Hence, the RTC, Branch 33 held that
petitioner could still recover the amount due from Edna through a personal
action over which it had no jurisdiction.
Edna also filed an action for declaratory relief before the RTC, Branch 93 of
San Pedro Laguna (RTC, Branch 93), which ruled:
At issue in this case is the validity of the promissory note and the Real Estate
Mortgage executed by Edna Lindo without the consent of her husband.
The real estate mortgage executed by petition Edna Lindo over their conjugal
property is undoubtedly an act of strict dominion and must be consented to
by her husband to be effective. In the instant case, the real estate mortgage,
absent the authority or consent of the husband, is necessarily void. Indeed,
the real estate mortgage is this case was executed on October 31, 1995 and
the subsequent special power of attorney dated November 4, 1995 cannot be
made to retroact to October 31, 1995 to validate the mortgage previously
made by petitioner.
The liability of Edna Lindo on the principal contract of the loan however
subsists notwithstanding the illegality of the mortgage. Indeed, where a
mortgage is not valid, the principal obligation which it guarantees is not
thereby rendered null and void. That obligation matures and becomes
demandable in accordance with the stipulation pertaining to it. Under the
foregoing circumstances, what is lost is merely the right to foreclose the
mortgage as a special remedy for satisfying or settling the indebtedness
which is the principal obligation. In case of nullity, the mortgage deed
remains as evidence or proof of a personal obligation of the debtor and the
amount due to the creditor may be enforced in an ordinary action.
In view of the foregoing, judgment is hereby rendered declaring the deed of
real estate mortgage as void in the absence of the authority or consent of
petitioner’s spouse therein. The liability of petitioner on the principal contract
of loan however subsists notwithstanding the illegality of the real estate
mortgage.19
The RTC, Branch 93 also ruled that Edna’s liability is not affected by the
illegality of the real estate mortgage.
Both the RTC, Branch 33 and the RTC, Branch 93 misapplied the rules.
Article 124 of the Family Code provides:
Art. 124. The administration and enjoyment of the conjugal partnership
property shall belong to both spouses jointly. In case of disagreement, the
husband’s decision shall prevail, subject to recourse to the court by the wife
for proper remedy, which must be availed of within five years from the date of
contract implementing such decision.
In the event that one spouse is incapacitated or otherwise unable to
participate in the administration of the conjugal properties, the other spouse
may assume sole powers of administration. These powers do not include
disposition or encumbrance without authority of the court or the written
consent of the other spouse. In the absence of such authority or consent the
disposition or encumbrance shall be void. However, the transaction shall
be construed as a continuing offer on the part of the consenting
spouse and the third person, and may be perfected as a binding
ObliCon Page | 7
contract upon the acceptance by the other spouse or authorization by
the court before the offer is withdrawn by either or both
offerors. (Emphasis supplied)
Article 124 of the Family Code of which applies to conjugal partnership
property, is a reproduction of Article 96 of the Family Code which applies to
community property.
Both Article 96 and Article 127 of the Family Code provide that the powers do
not include disposition or encumbrance without the written consent of the
other spouse. Any disposition or encumbrance without the written consent
shall be void. However, both provisions also state that "the transaction shall
be construed as a continuing offer on the part of the consenting spouse and
the third person, and may be perfected as a binding contract upon the
acceptance by the other spouse x x x before the offer is withdrawn by
either or both offerors."
In this case, the Promissory Note and the Deed of Real Estate Mortgage
were executed on 31 October 1995. The Special Power of Attorney was
executed on 4 November 1995. The execution of the SPA is the
acceptance by the other spouse that perfected the continuing offer as a
binding contract between the parties, making the Deed of Real Estate
Mortgage a valid contract.
However, as the Court of Appeals noted, petitioner allowed the decisions of
the RTC, Branch 33 and the RTC, Branch 93 to become final and executory
without asking the courts for an alternative relief. The Court of Appeals stated
that petitioner merely relied on the declarations of these courts that he could
file a separate personal action and thus failed to observe the rules and
settled jurisprudence on multiplicity of suits, closing petitioner’s avenue for
recovery of the loan.
Nevertheless, petitioner still has a remedy under the law.
In Chieng v. Santos,20 this Court ruled that a mortgage-creditor may institute
against the mortgage-debtor either a personal action for debt or a real action
to foreclose the mortgage. The Court ruled that the remedies are alternative
and not cumulative and held that the filing of a criminal action for violation
of Batas Pambansa Blg. 22 was in effect a collection suit or a suit for the
recovery of the mortgage-debt.21 In that case, however, this Courtpro hac
vice, ruled that respondents could still be held liable for the balance of the
loan, applying the principle that no person may unjustly enrich himself at the
expense of another.22
The principle of unjust enrichment is provided under Article 22 of the Civil
Code which provides:
Art. 22. Every person who through an act of performance by another, or any
other means, acquires or comes into possession of something at the
expense of the latter without just or legal ground, shall return the same to
him.
There is unjust enrichment "when a person unjustly retains a benefit to the
loss of another, or when a person retains money or property of another
against the fundamental principles of justice, equity and good
conscience."23 The principle of unjust enrichment requires two conditions: (1)
that a person is benefited without a valid basis or justification, and (2) that
such benefit is derived at the expense of another.241avvphi1
The main objective of the principle against unjust enrichment is to prevent
one from enriching himself at the expense of another without just cause or
consideration.25 The principle is applicable in this case considering that Edna
admitted obtaining a loan from petitioners, and the same has not been fully
paid without just cause. The Deed was declared void erroneously at the
instance of Edna, first when she raised it as a defense before the RTC,
Branch 33 and second, when she filed an action for declaratory relief before
the RTC, Branch 93. Petitioner could not be expected to ask the RTC,
Branch 33 for an alternative remedy, as what the Court of Appeals ruled that
he should have done, because the RTC, Branch 33 already stated that it had
no jurisdiction over any personal action that petitioner might have against
Edna.Considering the circumstances of this case, the principle against unjust
enrichment, being a substantive law, should prevail over the procedural rule
on multiplicity of suits. The Court of Appeals, in the assailed decision, found
that Edna admitted the loan, except that she claimed it only amounted
to P340,000. Edna should not be allowed to unjustly enrich herself because
of the erroneous decisions of the two trial courts when she questioned the
validity of the Deed. Moreover, Edna still has an opportunity to submit her
defenses before the RTC, Branch 42 on her claim as to the amount of her
indebtedness.
WHEREFORE, the 30 May 2008 Decision and the 4 August 2008 Resolution
of the Court of Appeals in CA-G.R. SP No. 94003 are SET ASIDE. The
Regional Trial Court of Manila, Branch 42 is directed to proceed with the trial
of Civil Case No. 04-110858.
SO ORDERED.
ObliCon Page | 8
G.R. No. 120138 September 5, 1997 In 1984, Judge Torres, in order to make substantial savings in taxes, adopted
an "estate planning" scheme under which he assigned to Tormil Realty &
MANUEL A. TORRES, JR., (Deceased), GRACIANO J. TOBIAS, RODOLFO Development Corporation (Tormil for brevity) various real properties he
L. JOCSON, JR., MELVIN S. JURISPRUDENCIA, AUGUSTUS CESAR owned and his shares of stock in other corporations in exchange for 225,972
AZURA and EDGARDO D. PABALAN, petitioners, Tormil Realty shares. Hence, on various dates in July and August of 1984,
vs. ten (10) deeds of assignment were executed by the late Judge Torres:
COURT OF APPEALS, SECURITIES AND EXCHANGE COMMISSION,
TORMIL REALTY & DEVELOPMENT CORPORATION, ANTONIO P. ASSIGNMENT DATE PROPERTY ASSIGNED LOCATION SHARES
TORRES, JR., MA. CRISTINA T. CARLOS, MA. LUISA T. MORALES and TO BE
DANTE D. MORALES, respondents. ISSUED

1. July 13, 1984 TCT 81834 Quezon City 13,252

TCT 144240 Quezon City
KAPUNAN, J.:
2. July 13, 1984 TCT 77008 Manila
In this petition for review on certiorari under Rule 45 of the Revised Rules of TCT 65689 Manila 78,493
Court, petitioners seek to annul the decision of the Court of Appeals in CA- TCT 109200 Manila
G.R. SP. No. 31748 dated 23 May 1994 and its subsequent resolution dated
10 May 1995 denying petitioners' motion for reconsideration. 3. July 13, 1984 TCT 374079 Makati 8,307

The present case involves two separate but interrelated conflicts. The facts 4. July 24, 1984 TCT 41527 Pasay
leading to the first controversy are as follows: TCT 41528 Pasay 9,855
TCT 41529 Pasay
The late Manuel A. Torres, Jr. (Judge Torres for brevity) was the majority
stockholder of Tormil Realty & Development Corporation while private 5. Aug. 06, 1984 El Hogar Filipino Stocks 2,000
respondents who are the children of Judge Torres' deceased brother Antonio
A. Torres, constituted the minority stockholders. In particular, their respective 6. Aug. 06, 1984 Manila Jockey Club Stocks 48,737
shareholdings and positions in the corporation were as follows:
7. Aug. 07, 1984 San Miguel Corp. Stocks 50,283
Name of Stockholder Number of Percentage Position(s)
Shares
8. Aug. 07, 1984 China banking Corp. Stocks 6,300

Manuel A. Torres, Jr. 100,120 57.21 Dir./Pres./Chair

9. Aug. 20, 1984 Ayala Corp. Stocks 7,468
Milagros P. Torres 33,430 19.10 Dir./Treasurer
Josefina P. Torres 8,290 4.73 Dir./Ass. Cor-Sec.
Ma. Cristina T. Carlos 8,290 4.73 Dir./Cor-Sec. 10. Aug. 29, 1984 Ayala Fund Stocks 1,322
Antonio P. Torres, Jr. 8,290 4.73 Director
Ma. Jacinta P. Torres 8,290 4.73 Director ———
Ma. Luisa T. Morales 7,790 4.45 Director 225,972 2
Dante D. Morales 500 .28 Director 1
Consequently, the aforelisted properties were duly recorded in the inventory
of assets of Tormil Realty and the revenues generated by the said properties

ObliCon Page | 9
were correspondingly entered in the corporation's books of account and
financial records.
Likewise, all the assigned parcels of land were duly registered with the
respective Register of Deeds in the name of Tormil Realty, except for the
ones located in Makati and Pasay City.
At the time of the assignments and exchange, however, only 225,000 Tormil
Realty shares remained unsubscribed, all of which were duly issued to and
received by Judge Torres (as evidenced by stock certificates Nos. 17, 18, 19,
20, 21, 22, 23, 24 & 25). 3
Due to the insufficient number of shares of stock issued to Judge Torres and
the alleged refusal of private respondents to approve the needed increase in
the corporation's authorized capital stock (to cover the shortage of 972
shares due to Judge Torres under the "estate planning" scheme), on 11
September 1986, Judge Torres revoked the two (2) deeds of assignment
covering the properties in Makati and Pasay City. 4
Noting the disappearance of the Makati and Pasay City properties from the
corporation's inventory of assets and financial records private respondents,
on 31 March 1987, were constrained to file a complaint with the Securities
and Exchange Commission (SEC) docketed as SEC Case No. 3153 to
compel Judge Torres to deliver to Tormil corporation the two (2) deeds of
assignment covering the aforementioned Makati and Pasay City properties
which he had unilaterally revoked and to cause the registration of the
corresponding titles in the name of Tormil. Private respondents alleged that
following the disappearance of the properties from the corporation's inventory
of assets, they found that on October 24, 1986, Judge Torres, together with
Edgardo Pabalan and Graciano Tobias, then General Manager and legal
counsel, respectively, of Tormil, formed and organized a corporation named
"Torres-Pabalan Realty and Development Corporation" and that as part of
Judge Torres' contribution to the new corporation, he executed in its favor a
Deed of Assignment conveying the same Makati and Pasay City properties
he had earlier transferred to Tormil.
The second controversy — involving the same parties — concerned the
election of the 1987 corporate board of directors.
The 1987 annual stockholders meeting and election of directors of Tormil
corporation was scheduled on 25 March 1987 in compliance with the
provisions of its by-laws.
Pursuant thereto, Judge Torres assigned from his own shares, one (l) share
each to petitioners Tobias, Jocson, Jurisprudencia, Azura and Pabalan.
These assigned shares were in the nature of "qualifying shares," for the sole
purpose of meeting the legal requirement to be able to elect them (Tobias
and company) to the Board of Directors as Torres' nominees.
The assigned shares were covered by corresponding Tormil Stock
Certificates Nos. 030, 029, 028, 027, 026 and at the back of each certificate
the following inscription is found:
The present certificate and/or the one share it represents,
conformably to the purpose and intention of the Deed of
Assignment dated March 6, 1987, is not held by me under
any claim of ownership and I acknowledge that I hold the
same merely as trustee of Judge Manuel A. Torres, Jr. and
for the sole purpose of qualifying me as Director;
(Signature of Assignee) 5
The reason behind the aforestated action was to remedy the "inequitable
lopsided set-up obtaining in the corporation, where, notwithstanding his
controlling interest in the corporation, the late Judge held only a single seat in
the nine-member Board of Directors and was, therefore, at the mercy of the
minority, a combination of any two (2) of whom would suffice to overrule the
majority stockholder in the Board's decision making functions." 6
On 25 March 1987, the annual stockholders meeting was held as scheduled.
What transpired therein was ably narrated by Attys. Benito Cataran and
Bayani De los Reyes, the official representatives dispatched by the SEC to
observe the proceedings (upon request of the late Judge Torres) in their
report dated 27 March 1987:
xxx xxx xxx
The undersigned arrived at 1:55 p.m. in the place of the
meeting, a residential bungalow in Urdaneta Village, Makati,
Metro Manila. Upon arrival, Josefina Torres introduced us to
the stockholders namely: Milagros Torres, Antonio Torres,
Jr., Ma. Luisa Morales, Ma. Cristina Carlos and Ma. Jacinta
Torres. Antonio Torres, Jr. questioned our authority and
personality to appear in the meeting claiming subject
corporation is a family and private firm. We explained that
our appearance there was merely in response to the request
ObliCon Page | 10
of Manuel Torres, Jr. and that SEC has jurisdiction over all
registered corporations. Manuel Torres, Jr.,
septuagenarian, argued that as holder of the major and
controlling shares, he approved of our attendance in the
meeting.
At about 2:30 p.m., a group composed of Edgardo Pabalan,
Atty. Graciano Tobias, Atty. Rodolfo Jocson, Jr., Atty. Melvin
Jurisprudencia, and Atty. Augustus Cesar Azura
arrived.Atty. Azura told the body that they came as counsels
of Manuel Torres, Jr. and as stockholders having assigned
qualifying shares by Manuel Torres, Jr.
The stockholders' meeting started at 2:45 p.m. with Mr.
Pabalan presiding after verbally authorized by Manuel
Torres, Jr., the President and Chairman of the Board. The
secretary when asked about the quorum, said that there was
more than a quorum. Mr. Pabalan distributed copies of the
president's report and the financial statements. Antonio
Torres, Jr.requested time to study the said reports and
brought out the question of auditing the finances of the
corporation which he claimed was approved previously by
the board. Heated arguments ensued which also touched on
family matters. Antonio Torres, Jr. moved for the suspension
of the meeting but Manuel Torres, Jr. voted for the
continuation of the proceedings.
Mr. Pabalan suggested that the opinion of the SEC
representatives be asked on the propriety of suspending the
meeting but Antonio Torres, Jr. objected reasoning out that
we were just observers.
When the Chairman called for the election of directors, the
Secretary refused to write down the names of nominees
prompting Atty. Azura to initiate the appointment of Atty.
Jocson, Jr. as Acting Secretary.
Antonio Torres, Jr. nominated the present members of the
Board. At this juncture, Milagros Torres cried out and told the
group of Manuel Torres, Jr. to leave the house.
Manuel Torres, Jr., together with his lawyers-stockholders
went to the residence of Ma. Jacinta Torres in San Miguel
Village, Makati, Metro Manila. The undersigned joined them
a since the group with Manuel Torres, Jr. the one who
requested for S.E.C. observers, represented the majority of
the outstanding capital stock and still constituted a quorum.
At the resumption of the meeting, the following were
nominated and elected as directors for the year 1987-1988:
1. Manuel Torres, Jr.
2. Ma. Jacinta Torres
3. Edgardo Pabalan
4. Graciano Tobias
5. Rodolfo Jocson, Jr.
6. Melvin Jurisprudencia
7. Augustus Cesar Azura
8. Josefina Torres
9. Dante Morales
After the election, it was resolved that after the meeting, the
new board of directors shall convene for the election of
officers.
xxx xxx xxx 7
Consequently, on 10 April 1987, private respondents instituted a complaint
with the SEC (SEC Case No. 3161) praying in the main, that the election of
petitioners to the Board of Directors be annulled.
Private respondents alleged that the petitioners-nominees were not
legitimate stockholders of Tormil because the assignment of shares to them
violated the minority stockholders' right of pre-emption as provided in the
corporation's articles and by-laws.
ObliCon Page | 11
Upon motion of petitioners, SEC Cases Nos. 3153 and 3161 were
consolidated for joint hearing and adjudication.
On 6 March 1991, the Panel of Hearing Officers of the SEC rendered a
decision in favor of private respondents. The dispositive portion thereof
states, thus:
WHEREFORE, premises considered, judgment is hereby
rendered as follows:
1. Ordering and directing the respondents, particularly
respondent Manuel A. Torres, Jr., to turn over and deliver to
TORMIL through its Corporate Secretary, Ma. Cristina T.
Carlos: (a) the originals of the Deeds of Assignment dated
July 13 and 24, 1984 together with the owner's duplicates of
Transfer Certificates of Title Nos. 374079 of the Registry of
Deeds for Makati, and 41527, 41528 and 41529 of the
Registry of Deeds for Pasay City and/or to cause the formal
registration and transfer of title in and over such real
properties in favor of TORMIL with the proper government
agency; (b) all corporate books of account, records and
papers as may be necessary for the conduct of a
comprehensive audit examination, and to allow the
examination and inspection of such accounting books,
papers and records by any or all of the corporate directors,
officers and stockholders and/or their duly authorized
representatives or auditors;
2. Declaring as permanent and final the writ of preliminary
injunction issued by the Hearing Panel on February 13,
1989;
3. Declaring as null and void the election and appointment of
respondents to the Board of Directors and executive
positions of TORMIL held on March 25, 1987, and all their
acts and resolutions made for and in behalf of TORMIL by
authority of and pursuant to such invalid appointment &
election held on March 25, 1987;
4. Ordering the respondents jointly and severally, to pay the
complainants the sum of ONE HUNDRED THOUSAND
PESOS (P100,000.00) as and by way of attorney's fees. 8
Petitioners promptly appealed to the SEC en banc (docketed as SEC-AC No.
339). Thereafter, on 3 April 1991, during the pendency of said appeal,
petitioner Manuel A. Torres, Jr. died. However, notice thereof was brought to
the attention of the SEC not by petitioners' counsel but by private
respondents in a Manifestation dated 24 April 1991. 9
On 8 June 1993, petitioners filed a Motion to Suspend Proceedings on
grounds that no administrator or legal representative of the late Judge
Torres' estate has yet been appointed by the Regional Trial Court of Makati
where Sp. Proc. No. M-1768 ("In Matter of the Issuance of the Last Will and
Testament of Manuel A Torres, Jr.") was pending. Two similar motions for
suspension were filed by petitioners on 28 June 1993 and 9 July 1993.
On 19 July 1993, the SEC en banc issued an Order denying petitioners'
aforecited motions on the following ground:
Before the filing of these motions, the Commission en
banc had already completed all proceedings and had
likewise ruled on the merits of the appealed cases. Viewed
in this light, we thus feel that there is nothing left to be done
except to deny these motions to suspend proceedings. 10
On the same date, the SEC en banc rendered a decision, the dispositive
portion of which reads, thus:
WHEREFORE, premises considered, the appealed decision
of the hearing panel is hereby affirmed and all motions
pending before us incident to this appealed case are
necessarily DISMISSED.
SO ORDERED. 11
Undaunted, on 10 August 1993, petitioners proceeded to plead its cause to
the Court of Appeals by way of a petition for review (docketed as CA-G.R.
SP No. 31748).
On 23 May 1994, the Court of Appeals rendered a decision, the dispositive
portion of which states:
WHEREFORE, the petition for review is DISMISSED and the
appealed decision is accordingly affirmed.
ObliCon Page | 12
 SO ORDERED. 12
From the said decision, petitioners filed a motion for reconsideration which
was denied in a resolution issued by the Court of Appeals dated 10 May
1995. 13
Insisting on their cause, petitioners filed the present petition for review
alleging that the Court of Appeals committed the following errors in its
decision:
(1)
WHEN IT RENDERED THE MAY 23, 1994 DECISION,
WHICH IS A FULL LENGTH DECISION, WITHOUT THE
EVIDENCE AND THE ORIGINAL RECORD OF S.E.C. —
AC NO. 339 BEING PROPERLY BROUGHT BEFORE IT
FOR REVIEW AND RE-EXAMINATION, AN OMISSION
RESULTING IN A CLEAR TRANSGRESSION OR
CURTAILMENT OF THE RIGHTS OF THE HEREIN
PETITIONERS TO PROCEDURAL DUE PROCESS;
(2)
WHEN IT SANCTIONED THE JULY 19, 1993 DECISION
OF THE RESPONDENT S.E.C., WHICH IS VOID FOR
HAVING BEEN RENDERED WITHOUT THE PROPER
SUBSTITUTION OF THE DECEASED PRINCIPAL PARTY-
RESPONDENT IN S.E.C.-AC NO. 339 AND
CONSEQUENTLY, FOR WANT OF JURISDICTION OVER
THE SAID DECEASED'S TESTATE ESTATE, AND
MOREOVER, WHEN IT SOUGHT TO JUSTIFY THE NON-
SUBSTITUTION BY ITS APPLICATION OF THE CIVIL LAW
CONCEPT OF NEGOTIORUM GESTIO;
(3)
WHEN IT FAILED TO SEE, AS A CONSEQUENCE OF THE
EVIDENCE AND THE ORIGINAL RECORD OF S.E.C. —
AC NO. 339 NOT HAVING ACTUALLY BEEN RE-
EXAMINED, THAT S.E.C. CASE NO. 3153 INVOLVED A
SITUATION WHERE PERFORMANCE WAS IMPOSSIBLE
(AS CONTEMPLATED UNDER ARTICLE 1191 OF THE
CIVIL CODE) AND WAS NOT A MERE CASE OF LESION
OR INADEQUACY OF CAUSE (UNDER ARTICLE 1355 OF
THE CIVIL CODE) AS SO ERRONEOUSLY
CHARACTERIZED BY THE RESPONDENT S.E.C.; and,
(4)
WHEN IT FAILED TO SEE, AS A CONSEQUENCE OF THE
EVIDENCE AND THE ORIGINAL RECORD OF S.E.C. —
AC NO. 339 NOT HAVING ACTUALLY BEEN EXAMINED,
THAT THE RECORDING BY THE LATE JUDGE MANUEL
A. TORRES, JR. OF THE QUESTIONED ASSIGNMENT OF
QUALIFYING SHARES TO HIS NOMINEES, WAS
AFFIRMED IN THE STOCK AND TRANSFER BOOK BY AN
ACTING CORPORATE SECRETARY AND MOREOVER,
THAT ACTUAL NOTICE OF SAID ASSIGNMENT WAS
TIMELY MADE TO THE OTHER STOCKHOLDERS. 14
We shall resolve the issues in seriatim.
I
Petitioners insist that the failure to transmit the original records to the Court
of Appeals deprived them of procedural due process. Without the evidence
and the original records of the proceedings before the SEC, the Court of
Appeals, petitioners adamantly state, could not have possibly made a proper
appreciation and correct determination of the issues, particularly the factual
issues, they had raised on appeal. Petitioners also assert that since the
Court of Appeals allegedly gave due course to their petition, the original
records should have been forwarded to said court.
Petitioners anchor their argument on Secs. 8 and 11 of SC Circular 1-91
(dated 27 February 1991) which provides that:
8. WHEN PETITION GIVEN DUE COURSE. — The Court of
Appeals shall give due course to the petition only when it
shows prima facie that the court, commission, board, office
or agency concerned has committed errors of fact or law that
would warrant reversal or modification of the order, ruling or
decision sought to be reviewed. The findings of fact of the
court commission, board, office or agency concerned when
supported by substantial evidence shall be final.
xxx xxx xxx
ObliCon Page | 13
 11. TRANSMITTAL OF RECORD. — Within fifteen (15) days
from notice that the petition has been given due course, the
court, commission, board, office or agency concerned shall
transmit to the Court of Appeals the original or a certified
copy of the entire record of the proceeding under review.
The record to be transmitted may be abridged by agreement
of all parties to the proceeding. The Court of Appeals may
require or permit subsequent correction or addition to the
record.
Petitioners contend that the Court of Appeals had given due course to their
petition as allegedly indicated by the following acts:
a) it granted the restraining order applied for
by the herein petitioners, and after hearing,
also the writ of preliminary injunction sought
by them; under the original SC Circular No.
1-91, a petition for review may be given due
course at the onset (paragraph 8) upon a
mere prima facie finding of errors of fact or
law having been committed, and such prima
facie finding is but consistent with the grant
of the extra-ordinary writ of preliminary
injunction;
b) it required the parties to submit
"simultaneous memoranda" in its resolution
dated October 15, 1993 (this is in addition to
the comment required to be filed by the
respondents) and furthermore declared in
the same resolution that the petition will be
decided "on the merits," instead of outrightly
dismissing the same;
c) it rendered a full length decision, wherein:
(aa) it expressly declared the respondent
S.E.C. as having erred in denying the
pertinent motions to suspend proceedings;
(bb) it declared the supposed error as
having become a non-issue when the
respondent C.A. "proceeded to hear (the)
appeal"; (cc) it formulated and applied its
own theory of negotiorum gestio in justifying
the non-substitution of the deceased
principal party in S.E.C. — AC No. 339 and
moreover, its theory of di minimis non curat
lex (this, without first determining the true
extent of and the correct legal
characterization of the so-called "shortage"
of Tormil shares;
and, (dd) it expressly affirmed the assailed
decision of respondent S.E.C. 15
Petitioners' contention is unmeritorious.
There is nothing on record to show that the Court of Appeals gave due
course to the petition. The fact alone that the Court of Appeals issued a
restraining order and a writ of preliminary injunction and required the parties
to submit their respective memoranda does not indicate that the petition was
given due course. The office of an injunction is merely to preserve the status
quo pending the disposition of the case. The court can require the
submission of memoranda in support of the respective claims and positions
of the parties without necessarily giving due course to the petition. The
matter of whether or not to give due course to a petition lies in the discretion
of the court.
It is worthy to mention that SC Circular No. 1-91 has been replaced by
Revised Administrative Circular No. 1-95 (which took effect on 1 June 1995)
wherein the procedure for appeals from quasi-judicial agencies to the Court
of Appeals was clarified thus:
10. Due course. — If upon the filing of the comment or such
other pleadings or documents as may be required or allowed
by the Court of Appeals or upon the expiration of the period
for the filing thereof, and on the bases of the petition or the
record the Court of Appeals findsprima facie that the court or
agency concerned has committed errors of fact or law that
would warrant reversal or modification of the award,
judgment, final order or resolution sought to be reviewed, it
may give due course to the petition; otherwise, it shall
dismiss the same. The findings of fact of the court or agency
concerned, when supported by substantial evidence, shall
be binding on the Court of Appeals.
11. Transmittal of record. — Within fifteen (15) days from
notice that the petition has been given due course, the Court
ObliCon Page | 14
 of Appeals may require the court or agency concerned to
transmit the original or a legible certified true copy of the
entire record of the proceeding under review. The record to
be transmitted may be abridged by agreement of all parties
to the proceeding. The Court of Appeals may require or
permit subsequent correction of or addition to the record.
(Emphasis ours.)
The aforecited circular now formalizes the correct practice and clearly states
that in resolving appeals from quasi judicial agencies, it is within the
discretion of the Court of Appeals to have the original records of the
proceedings under review be transmitted to it. In this connection petitioners'
claim that the Court of Appeals could not have decided the case on the
merits without the records being brought before it is patently lame.
Indubitably, the Court of Appeals decided the case on the basis of the
uncontroverted facts and admissions contained in the pleadings, that is, the
petition, comment, reply, rejoinder, memoranda, etc. filed by the parties.
II
Petitioners contend that the decisions of the SEC and the Court of Appeals
are null and void for being rendered without the necessary substitution of
parties (for the deceased petitioner Manuel A. Torres, Jr.) as mandated by
Sec. 17, Rule 3 of the Revised Rules of Court, which provides as follows:
Sec. 17. Death of party. — After a party dies and the claim is
not thereby extinguished, the court shall order, upon proper
notice, the legal representative of the deceased to appear
and to be substituted for the deceased, within a period of
thirty (30) days, or within such time as may be granted. If the
legal representative fails to appear within said time, the court
may order the opposing party to procure the appointment of
a legal representative of the deceased within a time to be
specified by the court, and the representative shall
immediately appear for and on behalf of the interest of the
deceased. The court charges involved in procuring such
appointment, if defrayed by the opposing party, may be
recovered as costs. The heirs of the deceased may be
allowed to be substituted for the deceased, without requiring
the appointment of an executor or administrator and the
court may appoint guardian ad litem for the minor heirs.
Petitioners insist that the SEC en banc should have granted the motions to
suspend they filed based as they were on the ground that the Regional Trial
Court of Makati, where the probate of the late Judge Torres' will was
pending, had yet to appoint an administrator or legal representative of his
estate.
We are not unaware of the principle underlying the aforequoted provision:
It has been held that when a party dies in an action that
survives, and no order is issued by the Court for the
appearance of the legal representative or of the heirs of the
deceased to be substituted for the deceased, and as a
matter of fact no such substitution has ever been effected,
the trial held by the court without such legal representative or
heirs, and the judgment rendered after such trial, are null
and void because the court acquired no jurisdiction over the
persons of the legal representative or of the heirs upon
whom the trial and the judgment are not binding. 16
As early as 8 April 1988, Judge Torres instituted Special Proceedings No. M-
1768 before the Regional Trial Court of Makati for the ante-mortem probate
of his holographic will which he had executed on 31 October 1986. Testifying
in the said proceedings, Judge Torres confirmed his appointment of
petitioner Edgardo D. Pabalan as the sole executor of his will and
administrator of his estate. The proceedings, however, were opposed by the
same parties, herein private respondents Antonio P. Torres, Jr., Ma. Luisa T.
Morales and Ma. Cristina T. Carlos, 17 who are nephew and nieces of Judge
Torres, being the children of his late brother Antonio A. Torres.
It can readily be observed therefore that the parties involved in the present
controversy are virtually the same parties fighting over the representation of
the late Judge Torres' estate. It should be recalled that the purpose behind
the rule on substitution of parties is the protection of the right of every party
to due process. It is to ensure that the deceased party would continue to be
properly represented in the suit through the duly appointed legal
representative of his estate. In the present case, this purpose has been
substantially fulfilled (despite the lack of formal substitution) in view of the
peculiar fact that both proceedings involve practically the same parties. Both
parties have been fiercely fighting in the probate proceedings of Judge
Torres' holographic will for appointment as legal representative of his estate.
Since both parties claim interests over the estate, the rights of the estate
were expected to be fully protected in the proceedings before the SEC en
banc and the Court of Appeals. In either case, whoever shall be appointed
ObliCon Page | 15
legal representative of Judge Torres' estate (petitioner Pabalan or private
respondents) would no longer be a stranger to the present case, the said
parties having voluntarily submitted to the jurisdiction of the SEC and the
Court of Appeals and having thoroughly participated in the proceedings.
The foregoing rationate finds support in the recent case of Vda. de Salazar
v. CA, 18 wherein the Court expounded thus:
The need for substitution of heirs is based on the right to due
process accruing to every party in any proceeding. The
rationale underlying this requirement in case a party dies
during the pendency of proceedings of a nature not
extinguished by such death, is that . . . the exercise of
judicial power to hear and determine a cause implicitly
presupposes in the trial court, amongst other essentials,
jurisdiction over the persons of the parties. That jurisdiction
was inevitably impaired upon the death of the protestee
pending the proceedings below such that unless and until a
legal representative is for him duly named and within the
jurisdiction of the trial court, no adjudication in the cause
could have been accorded any validity or binding effect upon
any party, in representation of the deceased, without
trenching upon the fundamental right to a day in court which
is the very essence of the constitutionally enshrined
guarantee of due process.
We are not unaware of several cases where we have ruled
that a party having died in an action that survives, the trial
held by the court without appearance of the deceased's legal
representative or substitution of heirs and the judgment
rendered after such trial, are null and void because the court
acquired no jurisdiction over the persons of the legal
representatives or of the heirs upon whom the trial and the
judgment would be binding. This general rule
notwithstanding, in denying petitioner's motion for
reconsideration, the Court of Appeals correctly ruled that
formal substitution of heirs is not necessary when the heirs
themselves voluntarily appeared, participated in the case
and presented evidence in defense of deceased defendant.
Attending the case at bench, after all, are these particular
circumstances which negate petitioner's belated and
seemingly ostensible claim of violation of her rights to due
process. We should not lose sight of the principle underlying
the general rule that formal substitution of heirs must be
effectuated for them to be bound by a subsequent judgment.
Such had been the general rule established not because the
rule on substitution of heirs and that on appointment of a
legal representative are jurisdictional requirements per se
but because non-compliance therewith results in the
undeniable violation of the right to due process of those who,
though not duly notified of the proceedings, are substantially
affected by the decision rendered therein . . . .
It is appropriate to mention here that when Judge Torres died on April 3,
1991, the SEC en banc had already fully heard the parties and what
remained was the evaluation of the evidence and rendition of the judgment.
Further, petitioners filed their motions to suspend proceedings only after
more than two (2) years from the death of Judge Torres. Petitioners' counsel
was even remiss in his duty under Sec. 16, Rule 3 of the Revised Rules of
Court. 19 Instead, it was private respondents who informed the SEC of Judge
Torres' death through a manifestation dated 24 April 1991.
For the SEC en banc to have suspended the proceedings to await the
appointment of the legal representative by the estate was impractical and
would have caused undue delay in the proceedings and a denial of justice.
There is no telling when the probate court will decide the issue, which may
still be appealed to the higher courts.
In any case, there has been no final disposition of the properties of the late
Judge Torres before the SEC. On the contrary, the decision of the SEC en
banc as affirmed by the Court of Appeals served to protect and preserve his
estate. Consequently, the rule that when a party dies, he should be
substituted by his legal representative to protect the interests of his estate in
observance of due process was not violated in this case in view of its
peculiar situation where the estate was fully protected by the presence of the
parties who claim interests therein either as directors, stockholders or heirs.
Finally, we agree with petitioners' contention that the principle of negotiorum
gestio 20 does not apply in the present case. Said principle explicitly covers
abandoned or neglected property or business.
III
Petitioners find legal basis for Judge Torres' act of revoking the assignment
of his properties in Makati and Pasay City to Tormil corporation by relying on
Art. 1191 of the Civil Code which provides that:
ObliCon Page | 16
 Art. 1191. The power to rescind obligations is implied in for the revocation of the deeds covering
reciprocal ones, in case one of the obligors should not Pasay and Quezon City properties.
comply with what is incumbent upon him.
In Universal Food Corp. vs. CA, the
The injured party may choose between the fulfillment and Supreme Court held:
the rescission of the obligation, with the payment of
damages in either case. He may also seek rescission, even The general rule is that
after he has chosen fulfillment, if the latter should become rescission of a contract will
impossible. not be permitted for a slight
or carnal breach, but only
The court shall decree the rescission claimed, unless there for such substantial and
be just cause authorizing the fixing of a period. fundamental breach as
would defeat the very object
This is understood to be without prejudice to the rights of of the parties in making the
third persons who have acquired the thing, in accordance agreement.
with articles 1385 and 1388 and the Mortgage Law.
The shortage of 972 shares definitely is not
Petitioners' contentions cannot be sustained. We see no justifiable reason to substantial and fundamental breach as
disturb the findings of SEC, as affirmed by the Court of Appeals: would defeat the very object of the parties in
entering into contract. Art. 1355 of the Civil
Code also provides: "Except in cases
We sustain the ruling of respondent SEC in the decision
appealed from (Rollo, pp. 45-46) that — specified by law, lesion or inadequacy of
cause shall not invalidate a contract, unless
there has been fraud, mistake or undue
. . . the shortage of 972 shares would not be influences." There being no fraud, mistake
valid ground for respondent Torres to or undue influence exerted on respondent
unilaterally revoke the deeds of assignment Torres by TORMIL and the latter having
he had executed on July 13, 1984 and July already issued to the former of its 225,000
24, 1984 wherein he voluntarily assigned to unissued shares, the most logical course of
TORMIL real properties covered by TCT No. action is to declare as null and void the deed
374079 (Makati) and TCT No. 41527, 41528 of revocation executed by respondent
and 41529 (Pasay) respectively. Torres. (Rollo, pp. 45-46.) 21

A comparison of the number of shares that The aforequoted Civil Code provision does not apply in this particular
respondent Torres received from TORMIL situation for the obvious reason that a specific number of shares of stock (as
by virtue of the "deeds of assignment" and evidenced by stock certificates) had already been issued to the late Judge
the stock certificates issued by the latter to Torres in exchange for his Makati and Pasay City properties. The records
the former readily shows that TORMIL had thus disclose:
substantially performed what was expected
of it. In fact, the first two issuances were in
DATE OF PROPERTY LOCATION NO. OF SHARES ORDER OF
satisfaction to the properties being revoked
ASSIGNMENT ASSIGNED TO BE ISSUED COMPLIANCE*
by respondent Torres. Hence, the shortage
of 972 shares would never be a valid ground

ObliCon Page | 17
 1. July 13, 1984 TCT 81834 Quezon City) 13,252 3rd Petitioners insist that the assignment of "qualifying shares" to the nominees
TCT 144240 Quezon City) of the late Judge Torres (herein petitioners) does not partake of the real
nature of a transfer or conveyance of shares of stock as would call for the
2. July 13, 1984 TCT 77008 Manila) "imposition of stringent requirements (with respect to the) recording of the
TCT 65689 Manila) 78,493 2nd transfer of said shares." Anyway, petitioners add, there was substantial
TCT 102200 Manila) compliance with the above-stated requirement since said assignments were
entered by the late Judge Torres himself in the corporation's stock and
3. July 13, 1984 TCT 374079 Makati 8,307 1st transfer book on 6 March 1987, prior to the 25 March 1987 annual
stockholders meeting and which entries were confirmed on 8 March 1987 by
petitioner Azura who was appointed Assistant Corporate Secretary by Judge
4. July 24, 1984 TCT 41527 Pasay Torres.
TCT 41528 Pasay) 9,855 4th
TCT 41529 Pasay)
Petitioners further argue that:
5. August 6, 1984 El Hogar Filipino Stocks 2,000 7th
10.10. Certainly, there is no legal or just basis for the
respondent S.E.C. to penalize the late Judge Torres by
6. August 6, 1984 Manila Jockey Club Stocks 48,737 5th invalidating the questioned entries in the stock and transfer
book, simply because he initially made those entries (they
7. August 7, 1984 San Miguel Corp. Stocks 50,238 8th were later affirmed by an acting corporate secretary) and
because the stock and transfer book was in his possession
8. August 7, 1984 China Banking Corp. Stocks 6,300 6th instead of the elected corporate secretary, if the background
facts herein-before narrated and the serious animosities that
9. August 20, 1984 Ayala Corp. Stocks 7,468.2) 9th then reigned between the deceased Judge and his relatives
are to be taken into account;
10. August 29, 1984 Ayala Fund Stocks 1,322.1)
xxx xxx xxx
—————
TOTAL 225,972.3 10.12. Indeed it was a practice in the corporate respondent,
a family corporation with only a measly number of
stockholders, for the late judge to have personal custody of
*Order of stock certificate issuances by TORMIL to
corporate records; as president, chairman and majority
respondent Torres relative to the Deeds of Assignment he
stockholder, he had the prerogative of designating an acting
executed sometime in July and August, 1984. 22 (Emphasis
corporate secretary or to himself make the needed entries, in
ours.)
instances where the regular secretary, who is a mere
subordinate, is unavailable or intentionally defaults, which
Moreover, we agree with the contention of the Solicitor General that the was the situation that obtained immediately prior to the 1987
shortage of shares should not have affected the assignment of the Makati annual stockholders meeting of Tormil, as the late Judge
and Pasay City properties which were executed in 13 and 24 July 1984 and Torres had so indicated in the stock and transfer book in the
the consideration for which have been duly paid or fulfilled but should have form of the entries now in question;
been applied logically to the last assignment of property — Judge Torres'
Ayala Fund shares — which was executed on 29 August 1984. 23
10.13. Surely, it would have been futile nay foolish for him to
have insisted under those circumstances, for the regular
IV secretary, who was then part of a group ranged against him,

ObliCon Page | 18
 to make the entries of the assignments in favor of his
nominees; 24
Petitioners' contentions lack merit.
It is precisely the brewing family discord between Judge Torres and private
respondents — his nephew and nieces that should have placed Judge
Torres on his guard. He should have been more careful in ensuring that his
actions (particularly the assignment of qualifying shares to his nominees)
comply with the requirements of the law. Petitioners cannot use the flimsy
excuse that it would have been a vain attempt to force the incumbent
corporate secretary to register the aforestated assignments in the stock and
transfer book because the latter belonged to the opposite faction. It is the
corporate secretary's duty and obligation to register valid transfers of stocks
and if said corporate officer refuses to comply, the transferor-stockholder
may rightfully bring suit to compel performance. 25 In other words, there are
remedies within the law that petitioners could have availed of, instead of
taking the law in their own hands, as the cliche goes.
Thus, we agree with the ruling of the SEC en banc as affirmed by the Court
of Appeals:
We likewise sustain respondent SEC when it ruled,
interpreting Section 74 of the Corporation Code, as follows
(Rollo, p. 45):
In the absence of (any) provision to the
contrary, the corporate secretary is the
custodian of corporate records. Corollarily,
he keeps the stock and transfer book and
makes proper and necessary entries therein.
Contrary to the generally accepted corporate
practice, the stock and transfer book of
TORMIL was not kept by Ms. Maria Cristina
T. Carlos, the corporate secretary but by
respondent Torres, the President and
Chairman of the Board of Directors of
TORMIL. In contravention to the above cited
provision, the stock and transfer book was
not kept at the principal office of the
corporation either but at the place of
respondent Torres.
These being the obtaining circumstances,
any entries made in the stock and transfer
book on March 8, 1987 by respondent
Torres of an alleged transfer of nominal
shares to Pabalan and Co. cannot therefore
be given any valid effect. Where the entries
made are not valid, Pabalan and Co. cannot
therefore be considered stockholders of
record of TORMIL. Because they are not
stockholders, they cannot therefore be
elected as directors of TORMIL. To rule
otherwise would not only encourage
violation of clear mandate of Sec. 74 of the
Corporation Code that stock and transfer
book shall be kept in the principal office of
the corporation but would likewise open the
flood gates of confusion in the corporation
as to who has the proper custody of the
stock and transfer book and who are the real
stockholders of records of a certain
corporation as any holder of the stock and
transfer book, though not the corporate
secretary, at pleasure would make entries
therein.
The fact that respondent Torres holds
81.28% of the outstanding capital stock of
TORMIL is of no moment and is not a
license for him to arrogate unto himself a
duty lodged to (sic) the corporate
secretary. 26
All corporations, big or small, must abide by the provisions of the Corporation
Code. Being a simple family corporation is not an exemption. Such
corporations cannot have rules and practices other than those established by
law.
WHEREFORE, premises considered, the petition for review on certiorari is
hereby DENIED.
SO ORDERED.
ObliCon Page | 19
G.R. No. 166869 February 16, 2010
PHILIPPINE HAWK CORPORATION, Petitioner,
vs.
VIVIAN TAN LEE, Respondent.
DECISION
PERALTA, J.:
This is a Petition for Review on Certiorari1 of the Decision of the Court of
Appeals in CA-G.R. CV No. 70860, promulgated on August 17, 2004,
affirming with modification the Decision of the Regional Trial Court (RTC) of
Quezon City, Branch 102, dated March 16, 2001, in Civil Case No. Q-91-
9191, ordering petitioner Philippine Hawk Corporation and Margarito Avila to
jointly and severally pay respondent Vivian Tan Lee damages as a result of a
vehicular accident.
The facts are as follows:
On March 15, 2005, respondent Vivian Tan Lee filed before the RTC of
Quezon City a Complaint2 against petitioner Philippine Hawk Corporation
and defendant Margarito Avila for damages based on quasi-delict, arising
from a vehicular accident that occurred on March 17, 1991 in Barangay
Buensoceso, Gumaca, Quezon. The accident resulted in the death of
respondent’s husband, Silvino Tan, and caused respondent physical injuries.
On June 18, 1992, respondent filed an Amended Complaint, 3 in her own
behalf and in behalf of her children, in the civil case for damages against
petitioner. Respondent sought the payment of indemnity for the death of
Silvino Tan, moral and exemplary damages, funeral and interment expenses,
medical and hospitalization expenses, the cost of the motorcycle’s repair,
attorney’s fees, and other just and equitable reliefs.
The accident involved a motorcycle, a passenger jeep, and a bus with Body
No. 119. The bus was owned by petitioner Philippine Hawk Corporation, and
was then being driven by Margarito Avila.
In its Answer,4 petitioner denied liability for the vehicular accident, alleging
that the immediate and proximate cause of the accident was the
recklessness or lack of caution of Silvino Tan. Petitioner asserted that it
exercised the diligence of a good father of the family in the selection and
supervision of its employees, including Margarito Avila.
On March 25, 1993, the trial court issued a Pre-trial Order5 stating that the
parties manifested that there was no possibility of amicable settlement
between them. However, they agreed to stipulate on the following facts:
1. On March 17, 1991, in Bgy. Buensoceso, Gumaca, Quezon,
plaintiff Vivian Lee Tan and her husband Silvino Tan, while on board
a motorcycle with [P]late No. DA-5480 driven by the latter, and a
Metro Bus with [P]late No. NXR-262 driven by Margarito Avila, were
involved in an accident;
2. As a result of the accident, Silvino Tan died on the spot while
plaintiff Vivian Lee Tan suffered physical injuries which necessitated
medical attention and hospitalization;
3. The deceased Silvino Tan is survived by his wife, plaintiff Vivian
Lee Tan and four children, three of whom are now residents of the
United States; and
4. Defendant Margarito Avila is an employee of defendant Philippine
Hawk.6
The parties also agreed on the following issues:
1. Whether or not the proximate cause of the accident causing
physical injuries upon the plaintiff Vivian Lee Tan and resulting in the
death of the latter’s husband was the recklessness and negligence of
Margarito Avila or the deceased Silvino Tan; and
2. Whether or not defendant Philippine Hawk Transport Corporation
exercised the diligence of a good father of the family in the selection
and supervision of its driver Margarito Avila.7
Respondent testified that on March 17, 1991, she was riding on their
motorcycle in tandem with her husband, who was on the wheel, at a place
after a Caltex gasoline station in Barangay Buensoceso, Gumaca, Quezon
on the way to Lopez, Quezon. They came from the Pasumbal Machine Shop,
where they inquired about the repair of their tanker. They were on a stop
position at the side of the highway; and when they were about to make a
turn, she saw a bus running at fast speed coming toward them, and then the
ObliCon Page | 20
bus hit a jeep parked on the roadside, and their motorcycle as well. She lost
consciousness and was brought to the hospital in Gumaca, Quezon, where
she was confined for a week. She was later transferred to St. Luke’s Hospital
in Quezon City, Manila. She suffered a fracture on her left chest, her left arm
became swollen, she felt pain in her bones, and had high blood pressure. 8
Respondent’s husband died due to the vehicular accident. The immediate
cause of his death was massive cerebral hemorrhage. 9
Respondent further testified that her husband was leasing 10 and operating a
Caltex gasoline station in Gumaca, Quezon that yielded one million pesos a
year in revenue. They also had a copra business, which gave them an
income of P3,000.00 a month or P36,000.00 a year.11
Ernest Ovial, the driver of the passenger jeep involved in the accident,
testified that in the afternoon of March 17, 1991, his jeep was parked on the
left side of the highway near the Pasumbal Machine Shop. He did not notice
the motorcycle before the accident. But he saw the bus dragging the
motorcycle along the highway, and then the bus bumped his jeep and sped
away.12
For the defense, Margarito Avila, the driver of petitioner’s bus, testified that
on March 17, 1999, at about 4:30 p.m., he was driving his bus at 60
kilometers per hour on the Maharlika Highway. When they were at Barangay
Buensoceso, Gumaca, Quezon, a motorcycle ran from his left side of the
highway, and as the bus came near, the motorcycle crossed the path of the
bus, and so he turned the bus to the right. He heard a loud banging sound.
From his side mirror, he saw that the motorcycle turned turtle ("bumaliktad").
He did not stop to help out of fear for his life, but drove on and surrendered to
the police. He denied that he bumped the motorcycle.13
Avila further testified that he had previously been involved in sideswiping
incidents, but he forgot how many times.14
Rodolfo Ilagan, the bus conductor, testified that the motorcycle bumped the
left side of the bus that was running at 40 kilometers per hour.15
Domingo S. Sisperes, operations officer of petitioner, testified that, like their
other drivers, Avila was subjected to and passed the following requirements:
(1) Submission of NBI clearance;
(2) Certification from his previous employer that he had no bad
record;
(3) Physical examination to determine his fitness to drive;
(4) Test of his driving ability, particularly his defensive skill; and
(5) Review of his driving skill every six months.16
Efren Delantar, a Barangay Kagawad in Buensoceso, Gumaca, Quezon,
testified that the bus was running on the highway on a straight path when a
motorcycle, with a woman behind its driver, suddenly emerged from the left
side of the road from a machine shop. The motorcycle crossed the highway
in a zigzag manner and bumped the side of the bus.17
In its Decision dated March 16, 2001, the trial court rendered judgment
against petitioner and defendant Margarito Avila, the dispositive portion of
which reads:
ACCORDINGLY, MARGARITO AVILA is adjudged guilty of simple
negligence, and judgment is hereby rendered in favor of the plaintiff Vivian
Lee Tan and h[er] husband’s heirs ordering the defendants Philippine Hawk
Corporation and Margarito Avila to pay them jointly and solidarily the sum
of P745,575.00 representing loss of earnings and actual damages
plus P50,000.00 as moral damages.18
The trial court found that before the collision, the motorcycle was on the left
side of the road, just as the passenger jeep was. Prior to the accident, the
motorcycle was in a running position moving toward the right side of the
highway. The trial court agreed with the bus driver that the motorcycle was
moving ahead of the bus from the left side of the road toward the right side of
the road, but disagreed that the motorcycle crossed the path of the bus while
the bus was running on the right side of the road.19
The trial court held that if the bus were on the right side of the highway, and
Margarito Avila turned his bus to the right in an attempt to avoid hitting the
motorcyle, then the bus would not have hit the passenger jeep, which was
then parked on the left side of the road. The fact that the bus also hit the
passenger jeep showed that the bus must have been running from the right
lane to the left lane of the highway, which caused the collision with the
motorcycle and the passenger jeep parked on the left side of the road. The
trial court stated that since Avila saw the motorcycle before the collision, he
should have stepped on the brakes and slowed down, but he just maintained
ObliCon Page | 21
his speed and veered to the left.20 The trial court found Margarito Avila guilty
of simple negligence.
The trial court held petitioner bus company liable for failing to exercise the
diligence of a good father of the family in the selection and supervision of
Avila, having failed to sufficiently inculcate in him discipline and correct
behavior on the road.21
On appeal, the Court of Appeals affirmed the decision of the trial court with
modification in the award of damages. The dispositive portion of the decision
reads:
WHEREFORE, foregoing premises considered, the appeal is DENIED. The
assailed decision dated March 16, 2001 is hereby AFFIRMED with
MODIFICATION. Appellants Philippine Hawk and Avila are hereby ordered to
pay jointly and severally appellee the following amount: (a) P168,019.55 as
actual damages; (b) P10,000.00 as temperate damages; (c) P100,000.00 as
moral damages; (d) P590,000.00 as unearned income; and (e)P50,000.00 as
civil indemnity.22
Petitioner filed this petition, raising the following issues:
1) The Court of Appeals committed grave abuse of discretion
amounting to lack of jurisdiction in passing upon an issue, which had
not been raised on appeal, and which had, therefore, attained
finality, in total disregard of the doctrine laid down by this Court in
Abubakar v. Abubakar, G.R. No. 134622, October 22, 1999.
2) The Court of Appeals committed reversible error in its finding that
the petitioner’s bus driver saw the motorcycle of private respondent
executing a U-turn on the highway "about fifteen (15) meters away"
and thereafter held that the Doctrine of Last Clear was applicable to
the instant case. This was a palpable error for the simple reason that
the aforesaid distance was the distance of the witness to the bus and
not the distance of the bus to the respondent’s motorcycle, as clearly
borne out by the records.
3) The Court of Appeals committed reversible error in awarding
damages in total disregard of the established doctrine laid down in
Danao v. Court of Appeals, 154 SCRA 447 and Viron Transportation
Co., Inc. v. Delos Santos, G.R. No. 138296, November 22, 2000.23
In short, the issues raised by petitioner are: (1) whether or not negligence
may be attributed to petitioner’s driver, and whether negligence on his part
was the proximate cause of the accident, resulting in the death of Silvino Tan
and causing physical injuries to respondent; (2) whether or not petitioner is
liable to respondent for damages; and (3) whether or not the damages
awarded by respondent Court of Appeals are proper.
Petitioner seeks a review of the factual findings of the trial court, which were
sustained by the Court of Appeals, that petitioner’s driver was negligent in
driving the bus, which caused physical injuries to respondent and the death
of respondent’s husband.
The rule is settled that the findings of the trial court, especially when affirmed
by the Court of Appeals, are conclusive on this Court when supported by the
evidence on record.24 The Court has carefully reviewed the records of this
case, and found no cogent reason to disturb the findings of the trial court,
thus:
The Court agree[s] with the bus driver Margarito that the motorcycle was
moving ahead of the bus towards the right side from the left side of the road,
but disagrees with him that it crossed the path of the bus while the bus was
running on the right side of the highway.
If the bus were on the right side of the highway and Margarito turned his bus
to the right in an attempt to avoid hitting it, then the bus would not have hit
the passenger jeep vehicle which was then parked on the left side of the
road. The fact that the bus hit the jeep too, shows that the bus must have
been running to the left lane of the highway from right to the left, that the
collision between it and the parked jeep and the moving rightways cycle
became inevitable. Besides, Margarito said he saw the motorcycle before the
collision ahead of the bus; that being so, an extra-cautious public utility driver
should have stepped on his brakes and slowed down. Here, the bus never
slowed down, it simply maintained its highway speed and veered to the left.
This is negligence indeed.25
Petitioner contends that the Court of Appeals was mistaken in stating that the
bus driver saw respondent’s motorcycle "about 15 meters away" before the
collision, because the said distance, as testified to by its witness Efren
Delantar Ong, was Ong’s distance from the bus, and not the distance of the
bus from the motorcycle. Petitioner asserts that this mistaken assumption of
the Court of Appeals made it conclude that the bus driver, Margarito Avila,
had the last clear chance to avoid the accident, which was the basis for the
conclusion that Avila was guilty of simple negligence.
ObliCon Page | 22
A review of the records showed that it was petitioner’s witness, Efren
Delantar Ong, who was about 15 meters away from the bus when he saw the
vehicular accident.26 Nevertheless, this fact does not affect the finding of the
trial court that petitioner’s bus driver, Margarito Avila, was guilty of simple
negligence as affirmed by the appellate court. Foreseeability is the
fundamental test of negligence.27 To be negligent, a defendant must have
acted or failed to act in such a way that an ordinary reasonable man would
have realized that certain interests of certain persons were unreasonably
subjected to a general but definite class of risks.28
In this case, the bus driver, who was driving on the right side of the road,
already saw the motorcycle on the left side of the road before the collision.
However, he did not take the necessary precaution to slow down, but drove
on and bumped the motorcycle, and also the passenger jeep parked on the
left side of the road, showing that the bus was negligent in veering to the left
lane, causing it to hit the motorcycle and the passenger jeep.
Whenever an employee’s negligence causes damage or injury to another,
there instantly arises a presumption that the employer failed to exercise the
due diligence of a good father of the family in the selection or supervision of
its employees.29 To avoid liability for a quasi-delict committed by his
employee, an employer must overcome the presumption by presenting
convincing proof that he exercised the care and diligence of a good father of
a family in the selection and supervision of his employee.30
The Court upholds the finding of the trial court and the Court of Appeals that
petitioner is liable to respondent, since it failed to exercise the diligence of a
good father of the family in the selection and supervision of its bus driver,
Margarito Avila, for having failed to sufficiently inculcate in him discipline and
correct behavior on the road. Indeed, petitioner’s tests were concentrated on
the ability to drive and physical fitness to do so. It also did not know that Avila
had been previously involved in sideswiping incidents.
As regards the issue on the damages awarded, petitioner contends that it
was the only one that appealed the decision of the trial court with respect to
the award of actual and moral damages; hence, the Court of Appeals erred in
awarding other kinds of damages in favor of respondent, who did not appeal
from the trial court’s decision.
Petitioner’s contention is unmeritorious.
Section 8, Rule 51 of the 1997 Rules of Civil Procedure provides:
SEC. 8. Questions that may be decided. -- No error which does not affect the
jurisdiction over the subject matter or the validity of the judgment appealed
from or the proceedings therein will be considered unless stated in the
assignment of errors, or closely related to or dependent on an assigned error
and properly argued in the brief, save as the court pass upon plain errors and
clerical errors.
Philippine National Bank v. Rabat31 cited the book32 of Justice Florenz D.
Regalado to explain the section above, thus:
In his book, Mr. Justice Florenz D. Regalado commented on this section,
thus:
1. Sec. 8, which is an amendment of the former Sec. 7 of this Rule,
now includes some substantial changes in the rules on assignment
of errors. The basic procedural rule is that only errors claimed and
assigned by a party will be considered by the court, except errors
affecting its jurisdiction over the subject matter. To this exception has
now been added errors affecting the validity of the judgment
appealed from or the proceedings therein.
Also, even if the error complained of by a party is not expressly
stated in his assignment of errors but the same is closely related to
or dependent on an assigned error and properly argued in his brief,
such error may now be considered by the court. These changes are
of jurisprudential origin.
2. The procedure in the Supreme Court being generally the same as
that in the Court of Appeals, unless otherwise indicated (see Secs. 2
and 4, Rule 56), it has been held that the latter is clothed with ample
authority to review matters, even if they are not assigned as errors
on appeal, if it finds that their consideration is necessary in arriving at
a just decision of the case. Also, an unassigned error closely related
to an error properly assigned (PCIB vs. CA, et al., L-34931, Mar. 18,
1988), or upon which the determination of the question raised by
error properly assigned is dependent, will be considered by the
appellate court notwithstanding the failure to assign it as error
(Ortigas, Jr. vs. Lufthansa German Airlines, L-28773, June 30, 1975;
Soco vs. Militante, et al., G.R. No. 58961, June 28, 1983).
It may also be observed that under Sec. 8 of this Rule, the appellate
court is authorized to consider a plain error, although it was not
specifically assigned by the appellant (Dilag vs. Heirs of
ObliCon Page | 23
 Resurreccion, 76 Phil. 649), otherwise it would be sacrificing In the computation of loss of earning capacity, only net earnings, not gross
substance for technicalities.33 earnings, are to be considered; that is, the total of the earnings less
expenses necessary for the creation of such earnings or income, less living
In this case for damages based on quasi-delict, the trial court awarded and other incidental expenses.39 In the absence of documentary evidence, it
respondent the sum of P745,575.00, representing loss of earning capacity is reasonable to peg necessary expenses for the lease and operation of the
(P590,000.00) and actual damages (P155,575.00 for funeral expenses), gasoline station at 80 percent of the gross income, and peg living expenses
plus P50,000.00 as moral damages. On appeal to the Court of Appeals, at 50 percent of the net income (gross income less necessary expenses).
petitioner assigned as error the award of damages by the trial court on the
ground that it was based merely on suppositions and surmises, not the In this case, the computation for loss of earning capacity is as follows:
admissions made by respondent during the trial.
Life
In its Decision, the Court of Appeals sustained the award by the trial court for Net Reasonable and
Expectancy Gross
loss of earning capacity of the deceased Silvino Tan, moral damages for his Earning Necessary
= [2/3 (80-age x Annual –
death, and actual damages, although the amount of the latter award was Capacit Expenses
at the time of Income (GAI)
modified. y (80% of GAI)
death)]

The indemnity for loss of earning capacity of the deceased is provided for by X = [2/3 (80-65)] x P1,000,000.0 - P800,000.00
Article 2206 of the Civil Code.34Compensation of this nature is awarded not 0
for loss of earnings, but for loss of capacity to earn money. 35
X = 2/3 (15) x P200,000.00 - P100,000.00(Livi
As a rule, documentary evidence should be presented to substantiate the ng Expenses)
claim for damages for loss of earning capacity. 36 By way of exception, X = 30/3 x P100,000.00
damages for loss of earning capacity may be awarded despite the absence
of documentary evidence when: (1) the deceased is self-employed and X = 10 x P100,000.00
earning less than the minimum wage under current labor laws, in which case,
judicial notice may be taken of the fact that in the deceased's line of work no X = P1,000,000.0
documentary evidence is available; or (2) the deceased is employed as a 0
daily wage worker earning less than the minimum wage under current labor
laws.37
The Court of Appeals also awarded actual damages for the expenses
incurred in connection with the death, wake, and interment of respondent’s
In this case, the records show that respondent’s husband was leasing and husband in the amount of P154,575.30, and the medical expenses of
operating a Caltex gasoline station in Gumaca, Quezon. Respondent testified respondent in the amount of P168,019.55.
that her husband earned an annual income of one million pesos. Respondent
presented in evidence a Certificate of Creditable Income Tax Withheld at
Source for the Year 1990,38 which showed that respondent’s husband earned Actual damages must be substantiated by documentary evidence, such as
a gross income of P950,988.43 in 1990. It is reasonable to use the Certificate receipts, in order to prove expenses incurred as a result of the death of the
and respondent’s testimony as bases for fixing the gross annual income of victim40 or the physical injuries sustained by the victim. A review of the valid
the deceased at one million pesos before respondent’s husband died on receipts submitted in evidence showed that the funeral and related expenses
March 17, 1999. However, no documentary evidence was presented amounted only toP114,948.60, while the medical expenses of respondent
regarding the income derived from their copra business; hence, the amounted only to P12,244.25, yielding a total ofP127,192.85 in actual
testimony of respondent as regards such income cannot be considered. damages.

ObliCon Page | 24
Moreover, the Court of Appeals correctly sustained the award of moral WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals
damages in the amount of P50,000.00 for the death of respondent’s dated August 17, 2004 in CA-G.R. CV No. 70860 is hereby AFFIRMED with
husband. Moral damages are not intended to enrich a plaintiff at the expense MODIFICATION. Petitioner Philippine Hawk Corporation and Margarito Avila
of the defendant.41 They are awarded to allow the plaintiff to obtain means, are hereby ordered to pay jointly and severally respondent Vivian Lee Tan:
diversions or amusements that will serve to alleviate the moral suffering (a) civil indemnity in the amount of Fifty Thousand Pesos (P50,000.00); (b)
he/she has undergone due to the defendant’s culpable action and must, actual damages in the amount of One Hundred Twenty-Seven Thousand
perforce, be proportional to the suffering inflicted.42 One Hundred Ninety-Two Pesos and Eighty-Five Centavos ( P127,192.85);
(c) moral damages in the amount of Eighty Thousand Pesos (P80,000.00);
In addition, the Court of Appeals correctly awarded temperate damages in (d) indemnity for loss of earning capacity in the amount of One Million Pesos
the amount of P10,000.00 for the damage caused on respondent’s (P1,000,000.00); and (e) temperate damages in the amount of Ten
motorcycle. Under Art. 2224 of the Civil Code, temperate damages "may be Thousand Pesos (P10,000.00).
recovered when the court finds that some pecuniary loss has been suffered
but its amount cannot, from the nature of the case, be proved with certainty." Costs against petitioner.
The cost of the repair of the motorcycle was prayed for by respondent in her
Complaint. However, the evidence presented was merely a job estimate 43 of SO ORDERED.
the cost of the motorcycle’s repair amounting to P17, 829.00. The Court of
Appeals aptly held that there was no doubt that the damage caused on the
motorcycle was due to the negligence of petitioner’s driver. In the absence of
competent proof of the actual damage caused on the motorcycle or the
actual cost of its repair, the award of temperate damages by the appellate
court in the amount of P10,000.00 was reasonable under the
circumstances.44

The Court of Appeals also correctly awarded respondent moral damages for
the physical injuries she sustained due to the vehicular accident. Under Art.
2219 of the Civil Code,45 moral damages may be recovered in quasi-delicts
causing physical injuries. However, the award of P50,000.00 should be
reduced to P30,000.00 in accordance with prevailing jurisprudence.46

Further, the Court of Appeals correctly awarded respondent civil indemnity

for the death of her husband, which has been fixed by current jurisprudence
at P50,000.00.47 The award is proper under Art. 2206 of the Civil Code.48

In fine, the Court of Appeals correctly awarded civil indemnity for the death of
respondent’s husband, temperate damages, and moral damages for the
physical injuries sustained by respondent in addition to the damages granted
by the trial court to respondent. The trial court overlooked awarding the
additional damages, which were prayed for by respondent in her Amended
Complaint. The appellate court is clothed with ample authority to review
matters, even if they are not assigned as errors in the appeal, if it finds that
their consideration is necessary in arriving at a just decision of the case. 49

ObliCon Page | 25
G. R. No. 166876 March 24, 2006
ARTEMIO INIEGO,1Petitioner,
vs.
The HONORABLE JUDGE GUILLERMO G. PURGANAN, in his official
capacity as Presiding Judge of the Regional Trial Court, Branch 42, City
of Manila, and FOKKER C. SANTOS, Respondents.
DECISION
CHICO-NAZARIO, J.:
For this Court to grant this petition for review on certiorari under Rule 45 of
the Rules of Court, petitioner has to persuade us on two engaging questions
of law. First, he has to convince us that actions for damages based on quasi-
delict are actions that are capable of pecuniary estimation, and therefore
would fall under the jurisdiction of the municipal courts if the claim does not
exceed the jurisdictional amount of P400,000.00 in Metro Manila. Second, he
has to convince us that the moral and exemplary damages claimed by the
private respondent should be excluded from the computation of the above-
mentioned jurisdictional amount because they arose from a cause of action
other than the negligent act of the defendant.
Petitioner urges us to reverse the 28 October 2004 Decision and 26 January
2005 Resolution of the Court of Appeals, Eighth Division, in CA-G.R. SP No.
76206 denying due course to the petition for certiorari filed by petitioner
under Rule 65, elevating the 21 October 2002 Omnibus Order and the 21
January 2003 Order of the Regional Trial Court (RTC), Branch 42, City of
Manila. The dispositive portion of the 28 October 2004 Decision of the Court
of Appeals reads:
WHEREFORE, the petition is DENIED DUE COURSE and DISMISSED for
lack of merit.2
The factual and procedural antecedents of this case are as follows:
On 1 March 2002, private respondent Fokker Santos filed a complaint for
quasi-delict and damages against Jimmy T. Pinion, the driver of a truck
involved in a traffic accident, and against petitioner Artemio Iniego, as owner
of the said truck and employer of Pinion. The complaint stemmed from a
vehicular accident that happened on 11 December 1999, when a freight truck
allegedly being driven by Pinion hit private respondent’s jitney which private
respondent was driving at the time of the accident.
On 24 August 2002, private respondent filed a Motion to Declare defendant
in Default allegedly for failure of the latter to file his answer within the final
extended period. On 28 August 2002, petitioner filed a Motion to Admit and a
Motion to Dismiss the complaint on the ground, among other things, that the
RTC has no jurisdiction over the cause of action of the case.
On 21 October 2002, public respondent Judge Guillermo G. Purganan,
acting as presiding judge of the RTC, Branch 42, Manila, issued the assailed
Omnibus Order denying the Motion to Dismiss of the petitioner and the
Motion to Declare Defendant in Default of the private respondent. Pertinent
portions of the Omnibus Order and the dispositive portion thereof read:
In his opposition to the motion to declare him in default and his Motion to
Admit defendant IÑEGO alleged that he never received the Order dated 12
August 2002. But believing in good faith, without being presumptuous, that
his 3rd Motion for additional Time to file or any appropriate [pleading] would
be granted, he filed the aforesaid Motion received by the Court on 23 August
2002.
The explanation of defendant IÑEGO has merit. The order dated 12 August
2002 was sent to a wrong address, thus defendant IÑEGO did not receive it.
Since it was not received, he was not aware that the court would grant no
further extension. The Motion to Admit Motion to Dismiss has to be granted
and the Motion to declare Defendant IÑEGO [in default] has to be DENIED.
xxxx
The plaintiff opines that this court has exclusive jurisdiction because the
cause of action is the claim for damages, which exceeds P400,000.00. The
complaint prays for actual damages in the amount of P40,000.00, moral
damages in the amount of P300,000.00, and exemplary damages in the
amount of P150,000.00. Excluding attorney’s fees in the amount
of P50,000.00, the total amount of damages being claimed is P490,000.00.
Proceeding on the assumption that the cause of action is the claim of (sic) for
damages in the total amount ofP490,000.00, this court has jurisdiction. But is
the main cause of action the claim for damages?
This court is of the view that the main cause of action is not the claim for
damages but quasi-delict. Damages are being claimed only as a result of the
alleged fault or negligence of both defendants under Article 2176 of the Civil
Code in the case of defendant Pinion and under Article 2180 also of the Civil
Code in the case of defendant Iniego. But since fault or negligence (quasi-
ObliCon Page | 26
delicts) could not be the subject of pecuniary estimation, this court has
exclusive jurisdiction.
xxxx
WHEREFORE, in view of all the foregoing, the motion to declare defendant
Iniego in default and the said defendant’s motion to dismiss are denied. 3
On 7 November 2002, petitioner filed a Motion for Reconsideration of the
Omnibus Order of 21 October 2002. On 21 January 2003, public respondent
issued an Order denying petitioner’s motion for reconsideration. Pertinent
portions of the 21 January 2003 Order are reproduced hereunder:
What this court referred to in its Order sought to be reconsidered as not
capable of pecuniary estimation is the CAUSE OF ACTION, which is quasi-
delict and NOT the amount of damage prayed for.
xxxx
WHEREFORE, in view of the foregoing, the motion for reconsideration is
DENIED.4
Petitioner elevated the 21 October 2002 and 21 January 2003 Orders of the
RTC to the Court of Appeals on petition for certiorari under Rule 65 of the
Rules of Court. On 28 October 2004, the Court of Appeals promulgated the
assailed Decision, the dispositive portion thereof reads:
WHEREFORE, the petition is DENIED DUE COURSE and dismissed for lack
of merit.5
On 22 November 2004, petitioner moved for reconsideration, which was
denied by the Court of Appeals on 26 January 2005. Hence, this present
petition.
Petitioner claims that actions for damages based on quasi-delict are actions
that are capable of pecuniary estimation; hence, the jurisdiction in such
cases falls upon either the municipal courts (the Municipal Trial Courts,
Metropolitan Trial Courts, Municipal Trial Courts In Cities, And Municipal
Circuit Trial Courts), or the Regional Trial Courts, depending on the value of
the damages claimed.
Petitioner argues further that should this Court find actions for damages
capable of pecuniary estimation, then the total amount of damages claimed
by the private respondent must exceed P400,000.00 in order that it may fall
under the jurisdiction of the RTC. Petitioner asserts, however, that the moral
and exemplary damages claimed by private respondent be excluded from the
computation of the total amount of damages for jurisdictional purposes
because the said moral and exemplary damages arose, not from the quasi-
delict, but from the petitioner’s refusal to pay the actual damages.
I
Actions for damages based on quasi-delicts are primarily and effectively
actions for the recovery of a sum of money for the damages suffered
because of the defendant’s alleged tortious acts, and are therefore capable
of pecuniary estimation.
In a recent case,6 we did affirm the jurisdiction of a Municipal Circuit Trial
Court in actions for damages based on quasi-delict, although the ground
used to challenge said jurisdiction was an alleged forum shopping, and not
the applicability of Section 19(1) of Batas Pambansa Blg. 129.
According to respondent Judge, what he referred to in his assailed Order as
not capable of pecuniary estimation is the cause of action, which is a quasi-
delict, and not the amount of damage prayed for.7 From this, respondent
Judge concluded that since fault or negligence in quasi-delicts cannot be the
subject of pecuniary estimation, the RTC has jurisdiction. The Court of
Appeals affirmed respondent Judge in this respect.8
Respondent Judge’s observation is erroneous. It is crystal clear from B.P.
Blg. 129, as amended by Republic Act No. 7691, that what must be
determined to be capable or incapable of pecuniary estimation is not the
cause of action, but the subject matter of the action.9 A cause of action is
"the delict or wrongful act or omission committed by the defendant in
violation of the primary rights of the plaintiff."10 On the other hand, the
"subject matter of the action" is "the physical facts, the thing real or personal,
the money, lands, chattels, and the like, in relation to which the suit is
prosecuted, and not the delict or wrong committed by the defendant."11
The case of Lapitan v. Scandia, Inc., et al., 12 has guided this Court time and
again in determining whether the subject matter of the action is capable of
pecuniary estimation. In Lapitan, the Court spoke through the eminent Mr.
Justice Jose B.L. Reyes:
ObliCon Page | 27
In determining whether an action is one the subject matter of which is not
capable of pecuniary estimation this Court has adopted the criterion of first
ascertaining the nature of the principal action or remedy sought. If it is
primarily for the recovery of a sum of money, the claim is considered capable
of pecuniary estimation, and whether jurisdiction is in the municipal courts or
in the courts of first instance [now Regional Trial Courts] would depend on
the amount of the claim. However, where the basic issue is something other
than the right to recover a sum of money, where the money claim is purely
incidental to, or a consequence of, the principal relief sought like suits to
have the defendant perform his part of the contract (specific performance)
and in actions for support, or for annulment of a judgment or to foreclose a
mortgage, this court has considered such actions as cases where the subject
of the litigation may not be estimated in terms of money, and are cognizable
exclusively by courts of first instance [now Regional Trial Courts]. x x
x.13 (Emphasis supplied.)
Actions for damages based on quasi-delicts are primarily and effectively
actions for the recovery of a sum of money for the damages suffered
because of the defendant’s alleged tortious acts. The damages claimed in
such actions represent the monetary equivalent of the injury caused to the
plaintiff by the defendant, which are thus sought to be recovered by the
plaintiff. This money claim is the principal relief sought, and is not merely
incidental thereto or a consequence thereof. It bears to point out that the
complaint filed by private respondent before the RTC actually bears the
caption "for DAMAGES."
Fault or negligence, which the Court of Appeals claims is not capable of
pecuniary estimation, is not actionable by itself. For such fault or negligence
to be actionable, there must be a resulting damage to a third person. The
relief available to the offended party in such cases is for the reparation,
restitution, or payment of such damage, without which any alleged offended
party has no cause of action or relief. The fault or negligence of the
defendant, therefore, is inextricably intertwined with the claim for damages,
and there can be no action based on quasi-delict without a claim for
damages.
We therefore rule that the subject matter of actions for damages based on
quasi-delict is capable of pecuniary estimation.
II
The amount of damages claimed is within the jurisdiction of the RTC, since it
is the claim for all kinds of damages that is the basis of determining the
jurisdiction of courts, whether the claims for damages arise from the same or
from different causes of action.
Despite our concurrence in petitioner’s claim that actions for damages based
on quasi-delict are actions that are capable of pecuniary estimation, we find
that the total amount of damages claimed by the private respondent
nevertheless still exceeds the jurisdictional limit of P400,000.00 and remains
under the jurisdiction of the RTC.
Petitioner argues that in actions for damages based on quasi-delict, claims
for damages arising from a different cause of action (i.e., other than the fault
or negligence of the defendant) should not be included in the computation of
the jurisdictional amount. According to petitioner, the moral and exemplary
damages claimed by the respondents in the case at bar are not direct and
proximate consequences of the alleged negligent act. Petitioner points out
that the complaint itself stated that such moral and exemplary damages
arose from the alleged refusal of defendants to honor the demand for
damages, and therefore there is no reasonable cause and effect between the
fault or negligence of the defendant and the claim for moral and exemplary
damages.14 If the claims for moral and exemplary damages are not included
in the computation for purposes of determining jurisdiction, only the claim for
actual damages in the amount of P40,000.00 will be considered, and the
MeTC will have jurisdiction.
We cannot give credence to petitioner’s arguments. The distinction he made
between damages arising directly from injuries in a quasi-delict and those
arising from a refusal to admit liability for a quasi-delict is more apparent than
real, as the damages sought by respondent originate from the same cause of
action: the quasi-delict. The fault or negligence of the employee and the juris
tantum presumption of negligence of his employer in his selection and
supervision are the seeds of the damages claimed, without distinction.
Even assuming, for the sake of argument, that the claims for moral and
exemplary damages arose from a cause of action other than the quasi-delict,
their inclusion in the computation of damages for jurisdictional purposes is
still proper. All claims for damages should be considered in determining the
jurisdiction of the court regardless of whether they arose from a single cause
of action or several causes of action. Rule 2, Section 5, of the Rules of Court
allows a party to assert as many causes of action as he may have against
the opposing party. Subsection (d) of said section provides that where the
claims in all such joined causes of action are principally for recovery of
money, the aggregate amount claimed shall be the test of jurisdiction.15
ObliCon Page | 28
Hence, whether or not the different claims for damages are based on a single
cause of action or different causes of action, it is the total amount thereof
which shall govern. Jurisdiction in the case at bar remains with the RTC,
considering that the total amount claimed, inclusive of the moral and
exemplary damages claimed, isP490,000.00.

In sum, actions for damages based on quasi-delicts are actions that are
capable of pecuniary estimation. As such, they fall within the jurisdiction of
either the RTC or the municipal courts, depending on the amount of
damages claimed. In this case, the amount of damages claimed is within the
jurisdiction of the RTC, since it is the claim for all kinds of damages that is
the basis of determining the jurisdiction of courts, whether the claims for
damages arise from the same or from different causes of action.

WHEREFORE, the petition for review on certiorari is hereby DENIED for lack
of merit. The Decision and Resolution of the Court of Appeals dated 28
October 2004 and 26 January 2005, respectively, are AFFIRMED insofar as
they held that the Regional Trial Court has jurisdiction. No costs.

SO ORDERED.

ObliCon Page | 29
G.R. No. 188715 April 6, 2011
Petitioner,
vs.
FEDERICO P. CARIN, Respondent.
DECISION
CARPIO MORALES, J.:
Assailed via this petition for review of petitioner Rodolfo N. Regala is the May
26, 2009 Decision1 of the Court of Appeals which affirmed with modification
the May 29, 2006 Decision2 of the Regional Trial Court (RTC) of Las Piñas
City, Br. 255 in Civil Case No. LP-99-0058, ordering petitioner to pay
respondent Federico P. Carin moral and exemplary damages and attorney’s
fees.
Petitioner and respondent are adjacent neighbors at Spirig Street, BF Resort
Village, Las Piñas City. When petitioner decided to renovate his one storey
residence by constructing a second floor, he under the guise of merely
building an extension to his residence, approached respondent sometime in
May 1998 for permission to bore a hole through a perimeter wall shared by
both their respective properties, to which respondent verbally consented on
condition that petitioner would clean the area affected by the work.
As earlier indicated, petitioner’s real intention was to build a second floor, in
fact with a terrace atop the dividing wall. In the course of the construction of
the second floor, respondent and his wife Marietta suffered from the dust and
dirt which fell on their property. As petitioner failed to address the problem to
respondent’s satisfaction, respondent filed a letter-complaint3 with the Office
of the City Engineer and Building Official of Las Piñas City on June 9, 1998.
In his letter-complaint, respondent related that, despite the lack of a building
permit for the construction of a second floor, petitioner had demolished the
dividing wall, failed to clean the debris falling therefrom, allowed his laborers
to come in and out of his (respondent’s) property without permission by
simply jumping over the wall, and trampled on his vegetable garden; and that
despite his protestations, petitioner persisted in proceeding with the
construction, he claiming to be the owner of the perimeter wall.
Several "sumbongs"4 (complaints) were soon lodged by respondent before
the Office of Barangay Talon Dos against petitioner for encroachment,
rampant invasion of privacy and damages arising from the construction, and
for illegal construction of scaffoldings inside his (respondent’s) property.
As no satisfactory agreement was reached at the last barangay conciliation
proceedings in December 1998, and petitioner having continued the
construction work despite issuance of several stop-work notices from the City
Engineer’s Office for lack of building permit, respondent filed on March 1999
a complaint5 for damages against petitioner before the RTC of Las Piñas
City.
In his complaint, respondent alleged in the main that, instead of boring just
one hole as agreed upon, petitioner demolished the whole length of the wall
from top to bottom into five parts for the purpose of constructing a second
floor with terrace; and that debris and dust piled up on respondent’s property
ruining his garden and forcing him to, among other things, shut some of the
windows of his house. Respondent thus prayed for the award of moral and
exemplary damages.
Petitioner, denying respondent’s allegations, claimed in his Answer 6 that he
was the sole and exclusive owner of the wall referred to as a perimeter wall,
the same having been built within the confines of his property and being part
and parcel of the house and lot package he purchased from the developer,
BF Homes, Inc., in 1981; that the issue of its ownership has never been
raised by respondent or his predecessor; and that securing the consent of
respondent and his neighbors was a mere formality in compliance with the
requirements of the Building Official to facilitate the issuance of a building
permit, hence, it should not be taken to mean that he (petitioner)
acknowledges respondent to be a co-owner of the wall. He added that he
eventually secured the requisite building permit7 in March 1999 and had duly
paid the administrative fine.8
Further, petitioner, denying that a demolition of the whole length of the wall
took place, claimed that he and his contractor’s laborers had been diligently
cleaning respondent’s area after every day’s work until respondent arrogantly
demanded the dismantling of the scaffoldings, and barred the workforce
from, and threatening to shoot anyone entering the premises; and that the
complaint was instituted by respondent as leverage to force him to withdraw
the criminal case for slander and light threats9 which he had earlier filed
against respondent for uttering threats and obscenities against him in
connection with the construction work.
ObliCon Page | 30
At the trial, after respondent and his wife confirmed the material allegations
of the complaint, petitioner took the witness stand and presented his
witnesses.
Architect Antonio Punzalan III10 testified that he installed GI sheets to prevent
debris from falling onto respondent’s property and had instructed his workers
to clean the affected area after every work day at 5:00 p.m., but they were
later barred by respondent from entering his property.
Engineer Crisostomo Chan11 from the Office of the Building Official of Las
Piñas City testified, among other things, on the circumstances surrounding
the complaint for illegal construction filed by respondent and that a building
permit was eventually issued to petitioner on March 15, 1999.
Engineer Sonia Haduca12 declared that upon a joint survey conducted on the
properties of both petitioner and respondent in December 1998 to determine
their exact boundaries, she found an encroachment by petitioner of six
centimeters at the lower portion of the existing wall negligible, since the Land
Survey Law permits an encroachment of up to ten centimeters.
By Decision of May 29, 2006, Branch 255 of the Las Piñas City RTC
rendered judgment in favor of respondent whom it awarded moral damages
in the sum of P100,000, exemplary damages of P100,000 and attorney’s
fees of P50,000 plus costs of suit.13
In finding for respondent, the trial court declared that, apart from the fact that
petitioner knowingly commenced the renovation of his house without the
requisite building permit from the City Engineer’s Office, he misrepresented
to respondent his true intent of introducing renovations. For, it found that
instead of just boring a hole in the perimeter wall as originally proposed,
petitioner divided the wall into several sections to serve as a foundation for
his firewall (which ended up higher than the perimeter wall) and the second
storey of his house.
The trial court further declared that respondent and his family had thus to
contend with the noise, dust and debris occasioned by the construction,
which petitioner and his work crew failed to address despite respondent’s
protestations, by refusing to clean the mess or install the necessary safety
devices.
Applying Article 2176 of the Civil Code on quasi-delicts, the trial court ruled
that petitioner was at fault and negligent for failing to undertake sufficient
safety measures to prevent inconvenience and damage to respondent to
thus entitle respondent to moral and exemplary damages.
On appeal by petitioner, the Court of Appeals affirmed the trial court’s
decision with modification by reducing the award of moral and exemplary
damages to P50,000 and P25,000, respectively. The appellate court
anchored its affirmance on Article 19 of the New Civil Code which directs
every person to, in the exercise of his rights and in the performance of his
duties, act with justice, and observe honesty and good faith.
By Resolution14 of July 10, 2009, the appellate court denied petitioner’s
motion for reconsideration as well as respondent’s prayer in his Comment
that the original awards made by the trial court be restored.
Hence, petitioner’s present petition faulting the appellate court in
Affirming with modification the decision of the trial court….considering
the absence of any competent proof to warrant the grant of moral and
exemplary damages as well as attorney’s fees.15 (underscoring supplied)
Petitioner maintains that since moral and exemplary damages are
compensatory in nature, being meant neither to punish nor enrich, the
claimant must establish that not only did he sustain injury but also that the
other party had acted in bad faith or was motivated by ill will. To petitioner,
respondents failed to discharge this burden. He adds that the trial court did
not delve into whether petitioner’s renovations were the primary cause of
respondent’s claimed injuries, viz violation of privacy, sleepless nights and
mental anguish, among other things, as it instead focused on the lack of a
building permit as basis for the awards.
Rebutting the testimony of respondent’s wife as to the alleged unauthorized
intrusion of petitioner’s workers into respondent’s property in order to erect
scaffoldings, petitioner points out that such an undertaking would take a
considerable length of time and could not have gone unnoticed had consent
not been given by respondent.
Moreover, petitioner posits, if consent had truly been withheld, there was
nothing to prevent respondent from dismantling or immediately removing the
offending structures – a course of action he did not even attempt.
In his Comment16 to the petition, respondent quotes heavily from the
appellate and trial court’s findings that fault and negligence attended
petitioner’s renovation, thus justifying the award of damages. He goes on to
ObliCon Page | 31
reiterate his plea that the awards given by the trial court in its decision of May
29, 2006 should be reinstated.
The petition is partly impressed with merit.
The trial court’s award of moral and exemplary damages, as affirmed by the
appellate court, was premised on the damage and suffering sustained by
respondent arising from quasi-delict under Article 217617 of the Civil Code.
Thus the trial court explained:
Indeed, there was fault or negligence on the part of the defendant when he
did not provide sufficient safety measures to prevent causing a lot of
inconvenience and disturbance to the plaintiff and his family. The evidence
presented by the plaintiff regarding the dirt or debris, as well as the absence
of devices or safety measures to prevent the same from falling inside
plaintiff’s property, were duly established. It did not help the cause of the
defendant that he made a lot of misrepresentations regarding the renovations
on his house and he did not initially have a building permit for the same. In
fact, it was only after the construction works were completed that the said
permit was issued and upon payment of an administrative fine by the
defendant.18
In prayers for moral damages, however, recovery is more an exception rather
than the rule. Moral damages are not meant to be punitive but are designed
to compensate and alleviate the physical suffering, mental anguish, fright,
serious anxiety, besmirched reputation, wounded feelings, moral shock,
social humiliation, and similar harm unjustly caused to a person. To be
entitled to such an award, the claimant must satisfactorily prove that he has
suffered damages and that the injury causing it has sprung from any of the
cases listed in Articles 221919 and 222020 of the Civil Code. Moreover, the
damages must be shown to be the proximate result of a wrongful act or
omission. The claimant must thus establish the factual basis of the damages
and its causal tie with the acts of the defendant.
In fine, an award of moral damages calls for the presentation of 1) evidence
of besmirched reputation or physical, mental or psychological suffering
sustained by the claimant; 2) a culpable act or omission factually established;
3) proof that the wrongful act or omission of the defendant is the proximate
cause of the damages sustained by the claimant; and 4) the proof that the
act is predicated on any of the instances expressed or envisioned by Article
2219 and Article 2220 of the Civil Code.21
In the present case, respondent failed to establish by clear and convincing
evidence that the injuries he sustained were the proximate effect of
petitioner’s act or omission. It thus becomes necessary to instead look into
the manner by which petitioner carried out his renovations to determine
whether this was directly responsible for any distress respondent may have
suffered since the law requires that a wrongful or illegal act or omission must
have preceded the damages sustained by the claimant.
It bears noting that petitioner was engaged in the lawful exercise of his
property rights to introduce renovations to his abode. While he initially did not
have a building permit and may have misrepresented his real intent when he
initially sought respondent’s consent, the lack of the permit was
inconsequential since it only rendered petitioner liable to administrative
sanctions or penalties.1avvphi1
The testimony of petitioner and his witnesses, specifically Architect
Punzalan, demonstrates that they had actually taken measures to prevent, or
at the very least, minimize the damage to respondent’s property occasioned
by the construction work. Architect Punzalan details how upon reaching an
agreement with petitioner for the construction of the second floor, he
(Punzalan) surveyed petitioner’s property based on the Transfer Certificate of
Title (TCT) and Tax Declarations22 and found that the perimeter wall was
within the confines of petitioner’s property; that he, together with petitioner,
secured the consent of the neighbors (including respondent) prior to the start
of the renovation as reflected in a Neighbor’s Consent 23 dated June 12,
1998; before the construction began, he undertook measures to prevent
debris from falling into respondent’s property such as the installation of GI
sheet strainers, the construction of scaffoldings 24 on respondent’s property,
the instructions to his workers to clean the area before leaving at 5:00
p.m;25 and that the workers conducted daily clean-up of respondent’s
property with his consent, until animosity developed between the parties.26
Malice or bad faith implies a conscious and intentional design to do a
wrongful act for a dishonest purpose or moral obliquity; it is different from the
negative idea of negligence in that malice or bad faith contemplates a state
of mind affirmatively operating with furtive design or ill will.27 While the Court
harbors no doubt that the incidents which gave rise to this dispute have
brought anxiety and anguish to respondent, it is unconvinced that the
damage inflicted upon respondent’s property was malicious or willful, an
element crucial to merit an award ofmoral damages under Article 2220 of the
Civil Code.
Necessarily, the Court is not inclined to award exemplary damages.28
ObliCon Page | 32
Petitioner, however, cannot steer clear from any liability whatsoever.
Respondent and his family’s rights to the peaceful enjoyment of their
property have, at the very least, been inconvenienced from the incident
borne of petitioner’s construction work. Any pecuniary loss or damage
suffered by respondent cannot be established as the records are bereft of
any factual evidence to establish the same. Nominal damages may thus be
adjudicated in order that a right of the plaintiff, respondent herein, which has
been violated or invaded by the defendant, petitioner herein, may be
vindicated or recognized, and not for the purpose of indemnifying the plaintiff
for any loss suffered by him.29

WHEREFORE, the petition is GRANTED. The May 26, 2009 Decision of the
Court of Appeals is VACATED. The Court orders petitioner to pay
respondent the sum of P25,000 as nominal damages.

No costs.

SO ORDERED.

ObliCon Page | 33
G.R. No. 162987 May 21, 2009 General Hospital. However, on 3 November 1994, Antero died due to the
injuries he sustained from the collision. The car was a total wreck while the
SOFIA M. GUILLANG, represented by SUSAN GUILLANG-CABATBAT, truck sustained minor damage.
REYNALDO, GERARDO, BIENVENIDO, DAWNA, and NELLIE, all
surnamed GUILLANG, GENARO GUILLANG, JOSE DIGNADICE, and On 24 April 1995, petitioners Genaro, Llanillo, Dignadice, and the heirs of
ALVIN LLANILLO, Petitioners, Antero5 instituted a complaint for damages based on quasi-delict against
vs. respondents Bedania and de Silva.
RODOLFO BEDANIA and RODOLFO DE SILVA, Respondents.
On 5 December 2000, the trial court rendered a decision in favor of
DECISION petitioners. The trial court found Bedania grossly negligent for recklessly
maneuvering the truck by making a sudden U-turn in the highway without
CARPIO, J.: due regard to traffic rules and the safety of other motorists. The trial court
also declared de Silva grossly negligent in the selection and supervision of
The Case his driver, Bedania. The dispositive portion of the decision provides:

WHEREFORE, judgment is hereby rendered ordering defendants Rodolfo A.

This is a petition for review1 of the 3 June 2003 Decision2 and the 23 March
2004 Resolution3 of the Court of Appeals in CA-G.R. CV No. 69289. The 3 Bedania and Rodolfo de Silva, jointly and severally, to pay plaintiffs, as
June 2003 Decision set aside the 5 December 2000 Decision 4 of the follows:
Regional Trial Court, Branch 30, Manila (trial court). The 23 March 2004
Resolution denied the motion for reconsideration. 1. The sum of P508,566.03 representing the damage/repair costs of
the Toyota to plaintiff Genaro M. Guillang.
The Facts
2. The sum of P50,000.00 for the death of Antero Guillang
plus P185,000.00 for his burial expenses, to the heirs of Antero
On 25 October 1994, at about 5:45 in the afternoon, petitioner Genaro M.
Guillang.
Guillang (Genaro) was driving his brand new Toyota Corolla GLI sedan with
conduction sticker no. 54-DFT (car) along Emilio Aguinaldo Highway
(highway) in Cavite. Genaro, Antero Guillang (Antero), Felipe Jurilla, Jose 3. For hospital and medical expenses as reflected in Exhibits E, E-1
Dignadice (Dignadice), and Alvin Llanillo (Llanillo) had all just left from to E-30 to plaintiffs Genaro M. Guillang, Jose Dignadice and Alvin
Golden City, Dasmariñas, Cavite, and were on their way to Manila. At the Llanillo.
other side of the highway, respondent Rodolfo A. Bedania (Bedania) was
driving a ten-wheeler Isuzu cargo truck with plate no. CAC-923 (truck) 4. The sum of P50,000.00 as moral damages for the heirs of the
towards Tagaytay City. The truck was owned by respondent Rodolfo de Silva deceased Antero Guillang.
(de Silva).
5. The sum of P50,000.00 as moral damages each to plaintiffs Jose
Along the highway and the road leading to the Orchard Golf Course, Bedania Dignadice, Alvin Llanillo and Genaro Guillang.
negotiated a U-turn. When the truck entered the opposite lane of the
highway, Genaro’s car hit the right portion of the truck. The truck dragged 6. The sum of P50,000.00 as exemplary damages.
Genaro’s car some five meters to the right of the road.
7. The sum of P100,000.00 as and for attorney’s fess.
As a consequence, all the passengers of the car were rushed to the De La
Salle University Medical Center in Dasmariñas, Cavite for treatment. 8. The costs of the suit.
Because of severe injuries, Antero was later transferred to the Philippine

ObliCon Page | 34
SO ORDERED.6
Respondents appealed to the Court of Appeals.
On 3 June 2003, the Court of Appeals rendered its decision in favor of
respondents. The dispositive portion of the decision provides:
IN VIEW OF ALL THE FOREGOING, the appealed decision
is REVERSED and SET ASIDE. The complaint of the herein appellees in
Civil Case No. 95-73666 is DISMISSED, for lack of merit. The appellants’
counterclaims in the instant case are likewise DISMISSED. No
pronouncement as to cost.
SO ORDERED.7
Petitioners filed a motion for reconsideration. On 23 March 2004, the Court of
Appeals denied the motion.
Hence, this petition.
The Ruling of the Regional Trial Court
According to the trial court, there is a presumption that a person driving a
motor vehicle has been negligent if at the time of the mishap, he was
violating any traffic regulation.8 In this case, the trial court found that the
Traffic Accident Investigation Report (report),9 corroborated by the
testimonies of the witnesses, showed that the truck committed a traffic
violation by executing a U-turn without signal lights. The trial court also
declared that Bedania violated Sections 45(b),10 48,11 and 5412 of Republic
Act No. 413613 when he executed the sudden U-turn. The trial court added
that Bedania violated another traffic rule when he abandoned the victims
after the collision.14The trial court concluded that Bedania was grossly
negligent in his driving and held him liable for damages.
Moreover, the trial court found that Bedania did not make the U-turn at an
intersection. According to the trial court, vehicles trying to maneuver to
change directions must seek an intersection where it is safer to maneuver
and not recklessly make a U-turn in a highway. The trial court said Bedania
should have observed extreme caution in making a U-turn because it was
unexpected that a long cargo truck would execute a U-turn along the
highway.
The trial court also said that Bedania’s gross negligence raised the legal
presumption that de Silva, as Bedania’s employer, was negligent in the
selection and supervision of his employees. The trial court said that, under
Articles 217615 and 218016 of the Civil Code, de Silva’s liability was based
on culpa aquiliana which holds the employer primarily liable for tortious acts
of his employees, subject to the defense that he exercised all the diligence of
a good father of a family in the selection and supervision of his employees.
The trial court ruled that de Silva failed to prove this defense and,
consequently, held him liable for damages.
The Ruling of the Court of Appeals
The Court of Appeals reversed the trial court’s decision and said that the trial
court overlooked substantial facts and circumstances which, if properly
considered, would justify a different conclusion and alter the results of the
case.
The Court of Appeals dismissed the testimonies of the witnesses and
declared that they were "contrary to human observation, knowledge and
experience." The Court of Appeals also said that the following were the
physical evidences in the case:
1. It was not yet dark when the incident transpired;
2. The four-lane highway the appellees were cruising on was wide,
straight, dry, relatively plain and with no obstructions to the driver’s
vision;
3. The point of impact of the collision is on the lane where the car
was cruising and the car hit the gas tank of the truck located at its
right middle portion, which indicates that the truck had already
properly positioned itself and had already executed the U-turn before
the impact occurred;
4. Genaro Guillang was not able to stop the car in time and the car’s
front portion was totally wrecked. This negates appellees’ contention
that they were traveling at a moderate speed; and
5. The sheer size of the truck makes it improbable for the said
vehicle to negotiate a U-turn at a sudden and fast speed – as
appellees vigorously suggest – without toppling over on its
side.17 (Citations omitted)
ObliCon Page | 35
The Court of Appeals concluded that the collision was caused by Genaro’s
negligence. The Court of Appeals declared that the truck arrived at the
intersection way ahead of the car and had already executed the U-turn when
the car, traveling at a fast speed, hit the truck’s side. The Court of Appeals
added that considering the time and the favorable visibility of the road and
the road conditions, Genaro, if he was alert, had ample time to react to the
changing conditions of the road. The Court of Appeals found no reason for
Genaro not to be prudent because he was approaching an intersection and
there was a great possibility that vehicles would be traversing the intersection
either going to or from Orchard Golf Course. The Court of Appeals said
Genaro should have slowed down upon reaching the intersection. The Court
of Appeals concluded that Genaro’s failure to observe the necessary
precautions was the proximate cause of Antero’s death and the injuries of the
petitioners.
The Court of Appeals also relied on the testimony of Police Traffic
Investigator Efren Videna (Videna) that the car was running at a fast speed
and overtook another vehicle just before the collision occurred. 18 The Court
of Appeals concluded that Genaro did not see the truck as the other vehicle
temporarily blocked his view of the intersection. The Court of Appeals also
gave weight to Videna’s testimony that it was normal for a ten-wheeler truck
to make a U-turn on that part of the highway because the entrance to
Orchard Golf Course was spacious.19
The Issues
Petitioners raise the following issues:
1. Did the Court of Appeals decide a question of substance in this
case in a way probably not in accord with law or with the applicable
decisions of the Honorable Supreme Court?
2. Did the Court of Appeals depart from the accepted and usual
course of judicial proceedings particularly when it revised, and recast
the findings of facts of the trial court pertaining to credibility of
witnesses of which the trial court was at the vantage point to
evaluate?
3. Did the Court of Appeals act with grave abuse of discretion
amounting to lack of jurisdiction when it rendered the palpably
questionable Court of Appeals’ Decision that tampered with the
findings of fact of the trial court for no justifiable reason?
4. Is the Court of Appeals’ judgment and resolution reversing the
decision of the trial court supported by the evidence and the law and
jurisprudence applicable?20
The issue in this case is who is liable for the damages suffered by
petitioners. The trial court held Bedania and de Silva, as Bedania’s employer,
liable because the proximate cause of the collision was the sudden U-turn
executed by Bedania without any signal lights. On the other hand, the Court
of Appeals reversed the trial court’s decision and held Genaro liable because
the proximate cause of the collision was Genaro’s failure to stop the car
despite seeing that Bedania was making a U-turn.
The Ruling of the Court
The principle is well-established that this Court is not a trier of facts.
Therefore, in an appeal by certiorari under Rule 45 of the Rules of Court,
only questions of law may be raised. The resolution of factual issues is the
function of the lower courts whose findings on these matters are received
with respect and are, as a rule, binding on this Court.21
However, this rule is subject to certain exceptions. One of these is when the
findings of the appellate court are contrary to those of the trial
court.22 Findings of fact of the trial court and the Court of Appeals may also
be set aside when such findings are not supported by the evidence or where
the lower courts’ conclusions are based on a misapprehension of
facts.23 Such is the situation in this case and we shall re-examine the facts
and evidence presented before the lower courts.
Article 2176 of the Civil Code provides that whoever by act or omission
causes damage to another, there being fault or negligence, is obliged to pay
for the damage done. Such fault or negligence, if there is no pre-existing
contractual relations between the parties, is called a quasi-delict. To sustain
a claim based on quasi-delict, the following requisites must concur: (a)
damage suffered by the plaintiff; (b) fault or negligence of defendant; and (c)
connection of cause and effect between the fault or negligence of defendant
and the damage incurred by the plaintiff.24
There is no dispute that petitioners suffered damages because of the
collision. However, the issues on negligence and proximate cause are
disputed.
On the Presumption of Negligence and Proximate Cause
ObliCon Page | 36
Negligence is defined as the failure to observe for the protection of the
interest of another person that degree of care, precaution, and vigilance
which the circumstances justly demand, whereby such other person suffers
injury. In Picart v. Smith,25 we held that the test of negligence is whether the
defendant in doing the alleged negligent act used that reasonable care and
caution which an ordinary person would have used in the same situation.
The conclusion of the Court of Appeals that Genaro was negligent is not
supported by the evidence on record. In ruling that Genaro was negligent,
the Court of Appeals gave weight and credence to Videna’s testimony.
However, we find that Videna’s testimony was inconsistent with the police
records and report that he made on the day of the collision. First, Videna
testified that the car was running fast and overtook another vehicle that
already gave way to the truck.26 But this was not indicated in either the report
or the police records. Moreover, if the car was speeding, there should have
been skid marks on the road when Genaro stepped on the brakes to avoid
the collision. But the sketch of the accident showed no skid marks made by
the car.27 Second, Videna testified that the petitioners came from a drinking
spree because he was able to smell liquor.28 But in the report,29 Videna
indicated that the condition of Genaro was "normal." Videna did not indicate
in the report that Genaro "had been drinking liquor" or that Genaro "was
obviously drunk." Third, Videna testified that when he arrived at the scene,
Bedania was inside his truck.30 This contradicts the police records where
Videna stated that after the collision Bedania escaped and abandoned the
victims.31 The police records also showed that Bedania was arrested by the
police at his barracks in Anabu, Imus, Cavite and was turned over to the
police only on 26 October 1994.32
Under Article 2185 of the Civil Code, unless there is proof to the contrary, a
person driving a vehicle is presumed negligent if at the time of the mishap,
he was violating any traffic regulation.
In this case, the report33 showed that the truck, while making the U-turn,
failed to signal, a violation of traffic rules. The police records also stated that,
after the collision, Bedania escaped and abandoned the petitioners and his
truck.34 This is another violation of a traffic regulation.35 Therefore, the
presumption arises that Bedania was negligent at the time of the mishap.
The evidence presented in this case also does not support the conclusion of
the Court of Appeals that the truck had already executed the U-turn before
the impact occurred. If the truck had fully made the U-turn, it should have
been hit on its rear.36 If the truck had already negotiated even half of the turn
and is almost on the other side of the highway, then the truck should have
been hit in the middle portion of the trailer or cargo compartment. But the
evidence clearly shows, and the Court of Appeals even declared, that the car
hit the truck’s gas tank, located at the truck’s right middle portion, which
disproves the conclusion of the Court of Appeals that the truck had already
executed the U-turn when it was hit by the car.
Moreover, the Court of Appeals said that the point of impact was on the lane
where the car was cruising. Therefore, the car had every right to be on that
road and the car had the right of way over the truck that was making a U-
turn. Clearly, the truck encroached upon the car’s lane when it suddenly
made the U-turn.
The Court of Appeals also concluded that Bedania made the U-turn at an
intersection. Again, this is not supported by the evidence on record. The
police sketch37 does not indicate an intersection and only shows that there
was a road leading to the Orchard Golf Course near the place of the collision.
Furthermore, U-turns are generally not advisable particularly on major
streets.38 Contrary to Videna’s testimony, it is not normal for a truck to make
a U-turn on a highway. We agree with the trial court that if Bedania wanted to
change direction, he should seek an intersection where it is safer to
maneuver the truck. Bedania should have also turned on his signal lights and
made sure that the highway was clear of vehicles from the opposite direction
before executing the U-turn.
The finding of the Court of Appeals that it was not yet dark when the collision
occurred is also not supported by the evidence on record. The report stated
that the daylight condition at the time of the collision was "darkness."39
Contrary to the conclusion of the Court of Appeals, the sheer size of the truck
does not make it improbable for the truck to execute a sudden U-turn. The
trial court’s decision did not state that the truck was traveling at a fast speed
when it made the U-turn. The trial court said the truck made a "sudden" U-
turn, meaning the U-turn was made unexpectedly and with no warning, as
shown by the fact that the truck’s signal lights were not turned on.
Clearly, Bedania’s negligence was the proximate cause of the collision which
claimed the life of Antero and injured the petitioners. Proximate cause is that
which, in the natural and continuous sequence, unbroken by any efficient,
intervening cause, produces the injury, and without which the result would
not have occurred.40 The cause of the collision is traceable to the negligent
act of Bedania for if the U-turn was executed with the proper precaution, the
mishap in all probability would not have happened. The sudden U-turn of the
truck without signal lights posed a serious risk to oncoming motorists.
ObliCon Page | 37
Bedania failed to prevent or minimize that risk. The truck’s sudden U-turn
triggered a series of events that led to the collision and, ultimately, to the
death of Antero and the injuries of petitioners.
We agree with the trial court that de Silva, as Bedania’s employer, is also
liable for the damages suffered by petitioners. De Silva failed to prove that he
exercised all the diligence of a good father of a family in the selection and
supervision of his employees.
On the Award of Damages and Attorney’s Fees
According to prevailing jurisprudence, civil indemnity for death caused by a
quasi-delict is pegged at P50,000.41Moral damages in the amount of P50,000
is also awarded to the heirs of the deceased taking into consideration the
pain and anguish they suffered.42 Bienvenido Guillang (Bienvenido), Antero’s
son, testified that Sofia, Antero’s wife and his mother, became depressed
after Antero’s death and that Sofia died a year after.43 Bienvenido also
testified on the pain and anguish their family suffered as a consequence of
their father’s death.44 We sustain the trial court’s award of P50,000 as
indemnity for death and P50,000 as moral damages to the heirs of Antero.
As to funeral and burial expenses, the court can only award such amount as
are supported by proper receipts.45In this case, petitioners proved funeral
and burial expenses of P55,000 as evidenced by Receipt No.
1082,46P65,000 as evidenced by Receipt No. 114647 and P15,000 as
evidenced by Receipt No. 1064,48 all issued by the Manila South Cemetery
Association, Inc., aggregating P135,000. We reduce the trial court’s award of
funeral and burial expenses from P185,000 to P135,000.
As to hospitalization expenses, only substantiated and proven expenses, or
those that appear to have been genuinely incurred in connection with the
hospitalization of the victims will be recognized in court. 49 In this case, the
trial court did not specify the amount of hospitalization expenses to be
awarded to the petitioners. Since petitioners presented receipts for
hospitalization expenses during the trial, we will determine the proper
amounts to be awarded to each of them. We award hospitalization expenses
of P27,000.98 to the heirs of Antero,50P10,881.60 to Llanillo,51 P5,436.77 to
Dignadice,52 and P300 to Genaro53 because these are the amounts duly
substantiated by receipts.
We affirm the trial court’s award of P508,566.03 for the repair of the car. The
Court notes that there is no dispute that Genaro was driving a brand new
Toyota Corolla GLI sedan and that, after the collision, the car was a total
wreck. In this case, the repair order presented by Genaro is sufficient proof of
the damages sustained by the car.541avvphi1.zw+
Moral damages may be recovered in quasi-delicts causing physical
injuries.55 However, in accordance with prevailing jurisprudence, we reduce
the award of moral damages from P50,000 to P30,000 each to Llanillo,
Dignadice, and Genaro since they only suffered physical injuries brought
about by the collision.56
In quasi-delicts, exemplary damages may be granted if the defendant acted
with gross negligence.57 While the amount of exemplary damages need not
be proved, the plaintiff must show that he is entitled to moral, temperate or
compensatory damages before the court may consider the question of
whether or not exemplary damages should be awarded. 58 In this case,
Bedania was grossly negligent in suddenly making a U-turn in the highway
without signal lights. To serve as an example for the public good, we affirm
the trial court’s award of exemplary damages in the amount of P50,000.
Finally, we affirm the trial court’s award of attorney’s fees in the amount
of P100,000. Under Article 2208 of the Civil Code, attorney’s fees may be
recovered when, as in this case, exemplary damages are awarded.
WHEREFORE, we REVERSE the 3 June 2003 Decision and 23 March 2004
Resolution of the Court of Appeals in CA-G.R. CV No. 69289.
We REINSTATE with MODIFICATIONS the 5 December 2000 Decision of
the Regional Trial Court, Branch 30, Manila. We ORDER Rodolfo Bedania
and Rodolfo de Silva, jointly and severally, to pay the following amounts:
1. Funeral and Burial Expenses of P135,000 to the heirs of Antero
Guillang;
2. Hospitalization Expenses of P27,000.98 to the heirs of Antero
Guillang, P10,881.60 to Alvin Llanillo,P5,436.77 to Jose Dignadice,
and P300 to Genaro Guillang; and
3. Moral damages of P30,000 each to Alvin Llanillo, Jose Dignadice,
and Genaro Guillang.
SO ORDERED.
ObliCon Page | 38