G.R. No.

108245 November 25, 1994

MANOLO P. SAMSON, petitioner,

vs.
COURT OF APPEALS, SANTOS & SONS, INC., and ANGEL SANTOS,
respondents.

Clara Dumandan-Singh for petitioner.

Paterno A. Catacutan for private respondents.

PUNO, J.:

Petitioner MANOLO P. SAMSON prays for the reversal of the Decision of the
Court of Appeals, dated November 27, 1992, 1 modifying the decision of the
Regional Trial Court of Pasig, Branch 157, dated November 29, 1990, and
absolving private respondent Angel Santos from liability for the damages
sustained by petitioner.

The antecedent facts, as borne by the records, are as follows:

The subject matter of this case is a commercial unit at the Madrigal Building,
located at Claro M. Recto Avenue, Sta. Cruz, Manila. The building is owned by
Susana Realty Corporation and the subject premises was leased to private
respondent Angel Santos. The lessee's haberdashery store, Santos & Sons, Inc.,
occupied the premises for almost twenty (20) years on a yearly basis. 2 Thus, the
lease contract in force between the parties in the year 1983 provided that the
term of the lease shall be one (1) year, starting on August 1, 1983 until July 31,
1984. 3

On June 28, 1984, the lessor Susana Realty Corporation, through its
representative Mr. Jes Gal R. Sarmiento, Jr., informed respondents that the lease
contract which was to expire on July 31, 1984 would not be renewed. 4

Nonetheless, private respondent's lease contract was extended until December

31, 1984. 5 Private respondent also continued to occupy the leased premises
beyond the extended term.

On February 5, 1985, private respondent received a letter 6 from the lessor,

through its Real Estate Accountant Jane F. Bartolome, informing him of the
increase in rentals, retroactive to January 1985, pending renewal of his contract
until the arrival of Ms. Ma. Rosa Madrigal (one of the owners of Susana Realty).
Four days later or on February 9, 1985, petitioner Manolo Samson saw private
respondent in the latter's house and offered to buy the store of Santos & Sons
and his right to lease the subject premises. 7 Petitioner was advised to return after
a week.

On February 15, 1985, petitioner returned to private respondent's house to

confirm his offer. On said occasion, private respondent presented petitioner with
a letter containing his counter proposal, thus:

MANOLO SAMSON
Marikina, Metro Manila

Sir:

In line with our negotiation to sell our rights in the Madrigal

building at Recto, Rizal Avenue, I propose the following:

1. The lease contract between Santos and Sons, Inc. and

Madrigal was impliedly renewed. It will be formally renewed this
monthly (sic) when Tanya Madrigal arrives.

2. To avoid breach of contract with Madrigal, I suggest that you

acquire all our shares in Santos and Sons, Inc.

3. I will answer and pay all obligations of Santos and Sons, Inc.
as of February 28, 1985.

Very truly yours,

Angel C. Santos

Petitioner affixed his signature on the letter-proposal signifying his acceptance. 8

They agreed that the consideration for the sale of the store and leasehold right of
Santos & Sons, Inc. shall be P300,000.00.

On February 20, 1985, petitioner paid P150,000.00 to private respondent

representing the value of existing improvements in the Santos & Sons store. The
parties agreed that the balance of P150,000.00 shall be paid upon the formal
renewal of the lease contract between private respondent and Susana Realty. It
was also a condition precedent to the transfer of the leasehold right of private
respondent to petitioner. 9

In March 1985, petitioner began to occupy the Santos & Sons store. He utilized
the store for the sale of his own goods. 10

All went well for a few months. In July 1985, however, petitioner received a notice
from Susana Realty, addressed to Santos & Sons, Inc., directing the latter to
vacate the leased premises on or before July 15, 1985. 11 Private respondent
failed to renew his lease over the premises and petitioner was forced to vacate
the same on July 16, 1985.

Petitioner then filed an action for damages against private respondent. He

imputed fraud and bad faith against private respondent when the latter stated in
his letter-proposal that his lease contract with Susana Realty has been impliedly
renewed. Petitioner claimed that this misrepresentation induced him to purchase
the store of Santos & Sons and the leasehold right of private respondent.

In defense, respondent alleged that their agreement was to the effect that the
consideration for the sale was P300,000.00, broken down as follows:
P150,000.00 shall be for the improvements in the store, and the balance of
P150,000.00 shall be for the sale of the leasehold right of Santos & Sons over
the subject premises. The balance shall be paid only after the formal renewal of
the lease contract and its actual transfer to petitioner.

Trial on the merits ensued. On November 29, 1990, the trial court rendered a
decision 12 in favor of petitioner. The dispositive portion reads:

WHEREFORE, AND IN VIEW OF ALL THE FOREGOING, judgment is hereby

rendered in favor of plaintiff Manolo P. Samson and against defendants Santos
and Sons, Inc., and Angel C. Santos, ordering the said defendants to pay jointly
and severally unto the plaintiff:

1. The sum of P150,000.00, representing the cash advance

payment for the store and the right to occupy its leased premises
subject matter of the sale involved, with interest thereon at the
legal rate from the filing of the complaint on November 5, 1985
until the same is fully paid;

2. The sum of P70,000.00 representing the cost of additional

improvements of the store sold, also with legal interest from
November 5, 1985 until the full payment thereof;

3. The sum of P150,000.00, representing the loss that the

plaintiff suffered from the sale at bargain prices of the goods
taken out of the store, with legal interest thereon from the (d)ate
of this decision until the same is fully paid;

4. The sum of P100,000.00 representing the profits which

plaintiff failed to realize from the sale of the goods referred to
above, with legal interest thereon from the date of the decision
until said amount is fully paid;

5. The amounts of P100,000.00 and P50,000.00 as moral and

exemplary damages, respectively, also with legal interest
thereon, from the date of this judgment until fully paid; and

6. The sum of P45,000.00 as and for attorney's fees and

expenses of litigation, in addition to judicial costs.
 On the defendants' counterclaim, the plaintiff is ordered to return to the
defendants the latter's steel filing cabinet, adding machine, typewriter and all its
unused sales invoices, receipts and blank checks, if the plaintiff still has any of
the said papers or documents.

SO ORDERED. 13

Private respondent appealed to the Court of Appeals. In a Decision dated

November 27, 1992, 14 the appellate court modified the decision of the trial court
after finding that private respondent did not exercise fraud or bad faith in its
dealings with petitioner. The dispositive portion of the impugned decision reads:

WHEREFORE, the appealed decision is hereby MODIFIED by reducing the

amounts the trial court awarded to appellee Manolo P. Samson in that appellants
Santos & Sons, Inc. and Angel C. Santos are ordered to pay appellee, by way of
reimbursement, the P150,000.00 which the latter gave appellants as advance
payment for their store and lease right with legal interest to be reckoned from the
promulgation date of this decision; and AFFIRMED with respect to the trial court's
judgment ordering appellee to return to appellants the latter's filing cabinet,
adding machine, typewriter, and all their unused sales invoices, receipts and
blank checks, if appellee still has any of these documents. No costs.

SO ORDERED. 15

Hence this petition for review with the following assigned errors:

WHETHER OR NOT THE COURT OF APPEALS ERRED IN DISREGARDING

THE FOLLOWING FACTUAL FINDINGS OF THE TRIAL COURT:

1. THAT RESPONDENTS DELIBERATELY AND

FRAUDULENTLY CONCEALED FROM THE PETITIONER THE
FACT THAT THE LEASE ON THE SUBJECT STORE
PREMISES HAD ALREADY EXPIRED AND WOULD NO
LONGER BE RENEWED BY THE LESSOR.

2. THAT SOLELY BY REASON OF RESPONDENTS'

FRAUDULENT CONDUCT AND BAD FAITH, PETITIONER
EXERCISING THE DILIGENCE REQUIRED UNDER THE
CIRCUMSTANCES, THE LATTER INCURRED DAMAGES AND
LOSSES.

II

WHETHER OR NOT THE COURT OF APPEALS ERRED IN HOLDING

RESPONDENTS FREE FROM LIABILITY TO PETITIONER FOR THE
DAMAGES THE LATTER HAD INCURRED ON ACCOUNT OF THE
RESPONDENTS' BAD FAITH.

The pivotal issue in the case at bench is whether or not private respondent Angel
Santos committed fraud or bad faith in representing to petitioner that his contract
of lease over the subject premises has been impliedly renewed by Susana
Realty. Undoubtedly, it was this representation which induced petitioner to enter
into the subject contract with private respondent.

We find the petition devoid of merit.

Bad faith is essentially a state of mind affirmatively operating with furtive design
or with some motive of ill-will. 16 It does not simply connote bad judgment or
negligence. It imports a dishonest purpose or some moral obliquity and
conscious doing of wrong. 17 Bad faith is thus synonymous with fraud and involves
a design to mislead or deceive another, not prompted by an honest mistake as to
one's rights or duties, but by some interested or sinister motive. 18

In contracts, the kind of fraud that will vitiate consent is one where, through
insidious words or machinations of one of the contracting parties, the other is
induced to enter into a contract which, without them, he would not have agreed
to. 19 This is known as dolo causante or causal fraud which is basically a
deception employed by one party prior to or simultaneous to the contract in order
to secure the consent of the other.

Petitioner claims that their agreement was that the amount of P300,000.00 is the
consideration for the transfer of private respondent's leasehold right to him and
he paid P150,000.00 as downpayment therefor. He insists that private
respondent acted in bad faith in assuring him that his lease contract with Susana
Realty has been impliedly renewed and would be formally renewed upon the
arrival of Tanya Madrigal (representative of Susana Realty). As evidence of
private respondent's bad faith, petitioner stresses that private respondent himself
admitted that prior to February 15, 1985, he was informed by his lawyer that he
could not yet sell his lease right to petitioner for his lease over the premises has
not been renewed by Susana Realty Corporation.

After carefully examining the records, we sustain the finding of public respondent
Court of Appeals that private respondent was neither guilty of fraud nor bad faith
in claiming that there was implied renewal of his contract of lease with Susana
Realty. The records will bear that the original contract of lease between the lessor
Susana Realty and the lessee private respondent was for a period of one year,
commencing on August 1, 1983 until July 31, 1984. Subsequently, however,
private respondent's lease was extended until December 31, 1984. At this point,
it was clear that the lessor had no intention to renew the lease contract of private
respondent for another year. However, on February 5, 1985, the lessor, thru its
Real Estate Accountant, sent petitioner a letter 20 of even date, worded as follows:

February 5, 1985

Mr. Angel Santos

1609-1613 C.M. Recto Avenue
Sta. Cruz, Manila
 Dear Mr. Santos:

This is to notify you that the rentals for the 1609-1613 C.M.
Recto Avenue, Sta. Cruz, Manila, which you are leasing with
(sic) us has been increased from P77.81 to P100.00 per square
meter retroactive January 1985 (as you have not vacated the
place) pending renewal of your contract until the arrival of Miss
Ma. Rosa A.S. Madrigal.

Thus, your new rate will be PESOS: FOURTEEN THOUSAND

TWO HUNDRED FIFTY ONLY (P14,250.00) since you are
occupying One Hundred Forty-Two and 50/100 square meters.

Please note that we are charging the same for everybody and
they all agreed to pay the new rate.

We do expect your full cooperation with regards (sic) to this

matter.

Very truly yours,

(Sgd.) JANE F. BARTOLOME

Accountant-Real Estate

Clearly, this letter led private respondent to believe and conclude that his lease
contract was impliedly renewed and that formal renewal thereof would be made
upon the arrival of Tanya Madrigal. This much was admitted by petitioner himself
when he testified during cross-examination that private respondent initially told
him of the fact that his lease contract with Susana Realty has already expired but
he was anticipating its formal renewal upon the arrival of Madrigal. 21 Thus, from
the start, it was known to both parties that, insofar as the agreement regarding
the transfer of private respondent's leasehold right to petitioner was concerned,
the object thereof relates to a future right. 22 It is a conditional contract recognized
in civil law, 23 the efficacy of which depends upon an expectancy — the formal
renewal of the lease contract between private respondent and Susana Realty.

The records would also reveal that private respondent's lawyer informed him that
he could sell the improvements within the store for he already owned them but
the sale of his leasehold right over the store could not as yet be made for his
lease contract had not been actually renewed by Susana Realty. Indeed, it was
precisely pursuant to this advice that private respondent and petitioner agreed
that the improvements in the store shall be sold to petitioner for P150,000.00 24
while the leasehold right shall be sold for the same amount of P150,000.00,
payable only upon the formal renewal of the lease contract and the actual
transfer of the leasehold right to petitioner. 25 The efficacy of the contract between
the parties was thus made dependent upon the happening of this suspensive
condition.
Moreover, public respondent Court of Appeals was correct when it faulted
petitioner for failing to exercise sufficient diligence in verifying first the status of
private respondent's lease. We thus quote with approval the decision of the Court
of Appeals when it ruled, thus:

When appellant Angel C. Santos said that the lease contract had expired but that
it was impliedly renewed, that representation should have put appellee on guard.
To protect his interest, appellee should have checked with the lessor whether that
was so, and this he failed to do; or he would have simply deferred his decision on
the proposed sale until Miss Madrigal's arrival, and this appellee also failed to do.
In short, as a buyer of the store and lease right in question — or as a buyer of
any object of commerce for that matter — appellee was charged with the
obligation of caution aptly expressed in the universal maxim caveat emptor. 26

Indeed, petitioner had every opportunity to verify the status of the lease contract
of private respondent with Susana Realty. As held by this Court in the case of
Caram, Jr. v. Laureta, 27 the rule caveat emptor requires the purchaser to be
aware of the supposed title of the vendor and he who buys without checking the
vendor's title takes all the risks and losses consequent to such failure. In the case
at bench, the means of verifying for himself the status of private respondent's
lease contract with Susana Realty was open to petitioner. Nonetheless, no effort
was exerted by petitioner to confirm the status of the subject lease right. 28 He
cannot now claim that he has been deceived.

In sum, we hold that under the facts proved, private respondent cannot be held
guilty of fraud or bad faith when he entered into the subject contract with
petitioner. Causal fraud or bad faith on the part of one of the contracting parties
which allegedly induced the other to enter into a contract must be proved by clear
and convincing evidence. This petitioner failed to do.

IN VIEW WHEREOF, the appealed decision is hereby AFFIRMED in toto. Costs

against petitioner.

SO ORDERED.

Narvasa, C.J., Regalado and Mendoza, JJ., concur.

# Footnotes

1 Penned by Associate Justice Jesus M. Elbinias and concurred in by Associate

Justices Nathanael P. De Pano, Jr. and Angelina S. Gutierrez.

2 TSN, November 21, 1988, pp. 4-5.

3 See lease contract, Exhibit "H", Original Records, p. 110.

4 Exhibit "J", Original Records, p. 112.

5 See letter of Ms. Ma. Rosa Madrigal, dated November 8, 1984, Exhibit "I",
Original Records, p. 111.

6 Exhibit "1", Original Records, p. 169.

7 TSN, November 21, 1988, pp. 14-15.

8 TSN, December 1, 1987, pp. 45-50.

9 Id., pp. 52-57.

10 TSN, November 21, 1988, pp. 31 & 36.

11 It appears that on July 2, 1985, the lessor Susana Realty Incorporation sold its
rights over the entire Madrigal Building to Eduardo Litonjua. The contract of sale
between the parties provided that the building should be cleared of all tenants
before delivery thereof to the new owners.

12 Penned by Judge Domingo R. Garcia, presiding judge, Regional Trial Court,

Pasig, Metro Manila, Branch 157; Original Records, pp. 184-198.

13 Id, at p. 198.

14 Rollo, pp. 37-43.

15 Id., at p. 42.

16 Air France v. Carrascoso, L-21438, September 28, 1966, 18 SCRA 166.

17 Board of Liquidators v. Kalaw, No. L-18805, August 14, 1967, 20 SCRA 1007.

18 Black's Law Dictionary, 4th edition, p. 176.

19 Article 1338, New Civil Code.

20 Exhibit "1", Original Records, p. 169.

21 TSN, December 1, 1987, pp. 35-41.

22 This agreement is sanctioned under Art. 1347 of the New Civil Code which, in
part, provides:

All things which are not outside the commerce of men, including future things,
may be the object of a contract. . . .

23 Art. 1461 of the New Civil Code provides:

Things having a potential existence may be the object of a contract of sale.

 The efficacy of a sale of a mere hope or expectancy is deemed subject to the
condition that the thing will come into existence.

24 See receipt issued by private respondent to petitioner, dated February 20,

1985 (Exh. "B-1", Rollo, p. 104), evidencing payment by the latter of P150,000,
representing the "cash advance for the improvement of Santos & Sons."

25 TSN, March 6, 1989, pp. 8-10.

26 Rollo, at p. 41.

27 No. L-28740, February 24, 1981, 103 SCRA 7.

28 In fact, it clearly appears from the record that there was collusion between
petitioner and private respondent for both were aware at the time they entered
into the contract that there was an existing stipulation in the original contract of
lease prohibiting private respondent lessee from sub-leasing the property. They
nevertheless entered into the contract and petitioner in fact occupied the store of
the lessee Santos & Sons from March to July 1985 and paid for the rentals
thereof without the knowledge and consent of the lessor-owner, Susana Realty;
see also TSN, November 21, 1988, pp. 36-39.

G.R. No. L-25906 May 28, 1970

PEDRO D. DIOQUINO, plaintiff-appellee,

vs.
FEDERICO LAUREANO, AIDA DE LAUREANO and JUANITO LAUREANO,
defendants-appellants.

Pedro D. Dioquino in his own behalf.

Arturo E. Valdomero, Jose L. Almario and Rolando S. Relova for defendants-

appellants.

FERNANDO, J.:

The present lawsuit had its origin in a relationship, if it could be called such, the
use of a car owned by plaintiff Pedro D. Dioquino by defendant Federico
Laureano, clearly of a character casual and temporary but unfortunately married
by an occurrence resulting in its windshield being damaged. A stone thrown by a
boy who, with his other companions, was thus engaged in what undoubtedly for
them must have been mistakenly thought to be a none too harmful prank did not
miss its mark. Plaintiff would hold defendant Federico Laureano accountable for
the loss thus sustained, including in the action filed the wife, Aida de Laureano,
and the father, Juanito Laureano. Plaintiff prevail in the lower court, the judgment
however going only against the principal defendant, his spouse and his father
being absolved of any responsibility. Nonetheless, all three of them appealed
directly to us, raising two questions of law, the first being the failure of the lower
court to dismiss such a suit as no liability could have been incurred as a result of
a fortuitous event and the other being its failure to award damages against
plaintiff for the unwarranted inclusion of the wife and the father in this litigation.
We agree that the lower court ought to have dismissed the suit, but it does not
follow that thereby damages for the inclusion of the above two other parties in the
complaint should have been awarded appellants.

The facts as found by the lower court follow: "Attorney Pedro Dioquino, a
practicing lawyer of Masbate, is the owner of a car. On March 31, 1964, he went
to the office of the MVO, Masbate, to register the same. He met the defendant
Federico Laureano, a patrol officer of said MVO office, who was waiting for a
jeepney to take him to the office of the Provincial Commander, PC, Masbate.
Attorney Dioquino requested the defendant Federico Laureano to introduce him
to one of the clerks in the MVO Office, who could facilitate the registration of his
car and the request was graciously attended to. Defendant Laureano rode on the
car of Atty. Dioquino on his way to the P.C. Barracks at Masbate. While about to
reach their destination, the car driven by plaintiff's driver and with defendant
Federico Laureano as the sole passenger was stoned by some 'mischievous
boys,' and its windshield was broken. Defendant Federico Laureano chased the
boys and he was able to catch one of them. The boy was taken to Atty. Dioquino
[and] admitted having thrown the stone that broke the car's windshield. The
plaintiff and the defendant Federico Laureano with the boy returned to the P.C.
barracks and the father of the boy was called, but no satisfactory arrangements
[were] made about the damage to the
windshield." 1

It was likewise noted in the decision now on appeal: "The defendant Federico
Laureano refused to file any charges against the boy and his parents because he
thought that the stone-throwing was merely accidental and that it was due to
force majeure. So he did not want to take any action and after delaying the
settlement, after perhaps consulting a lawyer, the defendant Federico Laureano
refused to pay the windshield himself and challenged that the case be brought to
court for judicial adjudication. There is no question that the plaintiff tried to
convince the defendant Federico Laureano just to pay the value of the windshield
and he even came to the extent of asking the wife to convince her husband to
settle the matter amicably but the defendant Federico Laureano refused to make
any settlement, clinging [to] the belief that he could not be held liable because a
minor child threw a stone accidentally on the windshield and therefore, the same
was due to force majeure." 2

1. The law being what it is, such a belief on the part of defendant Federico
Laureano was justified. The express language of Art. 1174 of the present Civil
Code which is a restatement of Art. 1105 of the Old Civil Code, except for the
addition of the nature of an obligation requiring the assumption of risk, compels
such a conclusion. It reads thus: "Except in cases expressly specified by the law,
or when it is otherwise declared by stipulation, or when the nature of the
obligation requires the assumption of risk, no person shall be responsible for
those events which could not be, foreseen, or which, though foreseen were
inevitable." Even under the old Civil Code then, as stressed by us in the first
decision dating back to 1908, in an opinion by Justice Mapa, the rule was well-
settled that in the absence of a legal provision or an express covenant, "no one
should be held to account for fortuitous cases." 3 Its basis, as Justice Moreland
stressed, is the Roman law principle major casus est, cui humana infirmitas
resistere non potest. 4 Authorities of repute are in agreement, more specifically
concerning an obligation arising from contract "that some extraordinary
circumstance independent of the will of the obligor, or of his employees, is an
essential element of a caso fortuito." 5 If it could be shown that such indeed was
the case, liability is ruled out. There is no requirement of "diligence beyond what
human care and foresight can provide." 6

The error committed by the lower court in holding defendant Federico Laureano
liable appears to be thus obvious. Its own findings of fact repel the motion that he
should be made to respond in damages to the plaintiff for the broken windshield.
What happened was clearly unforeseen. It was a fortuitous event resulting in a
loss which must be borne by the owner of the car. An element of reasonableness
in the law would be manifestly lacking if, on the circumstances as thus disclosed,
legal responsibility could be imputed to an individual in the situation of defendant
Laureano. Art. 1174 of the Civil Code guards against the possibility of its being
visited with such a reproach. Unfortunately, the lower court was of a different
mind and thus failed to heed its command.

It was misled, apparently, by the inclusion of the exemption from the operation of
such a provision of a party assuming the risk, considering the nature of the
obligation undertaken. A more careful analysis would have led the lower court to
a different and correct interpretation. The very wording of the law dispels any
doubt that what is therein contemplated is the resulting liability even if caused by
a fortuitous event where the party charged may be considered as having
assumed the risk incident in the nature of the obligation to be performed. It would
be an affront, not only to the logic but to the realities of the situation, if in the light
of what transpired, as found by the lower court, defendant Federico Laureano
could be held as bound to assume a risk of this nature. There was no such
obligation on his part.

Reference to the leading case of Republic v. Luzon Stevedoring Corp. 7 will

illustrate when the nature of the obligation is such that the risk could be
considered as having been assumed. As noted in the opinion of Justice J.B.L.
Reyes, speaking for the Court: "The appellant strongly stresses the precautions
taken by it on the day in question: that it assigned two of its most powerful
tugboats to tow down river its barge L-1892; that it assigned to the task the more
competent and experienced among its patrons, had the towlines, engines and
equipment double-checked and inspected; that it instructed its patrons to take
extra-precautions; and concludes that it had done all it was called to do, and that
the accident, therefore, should be held due to force majeure or fortuitous event."
Its next paragraph explained clearly why the defense of caso fortuito or force
majeure does not lie. Thus: "These very precautions, however, completely
destroy the appellant's defense. For caso fortuito or force majeure (which in law
are identical in so far as they exempt an obligor from liability) by definition, are
extraordinary events not foreseeable or avoidable, 'events that could not be
foreseen, or which, though foreseen, were inevitable' (Art. 1174, Civil Code of the
Philippines). It is, therefore, not enough that the event should not have been
foreseen or participated, as is commonly believed, but it must be one impossible
to foresee or to avoid. The mere difficulty to foresee the happening is not
impossibility to foresee the same: un hecho no constituye caso fortuito por la sola
circunstancia de que su existencia haga mas dificil o mas onerosa la accion
diligente del presente ofensor' (Peirano Facio, Responsibilidad Extra-contractual,
p. 465; Mazeaud, Traite de la Responsibilite Civile, Vol. 2, sec. 1569). The very
measures adopted by appellant prove that the possibility of danger was not only
foreseeable, but actually foreseen, and was not caso fortuito."

In that case then, the risk was quite evident and the nature of the obligation such
that a party could rightfully be deemed as having assumed it. It is not so in the
case before us. It is anything but that. If the lower court, therefore, were duly
mindful of what this particular legal provision contemplates, it could not have
reached the conclusion that defendant Federico Laureano could be held liable.
To repeat, that was clear error on its part.

2. Appellants do not stop there. It does not suffice for them that defendant
Federico Laureano would be freed from liability. They would go farther. They
would take plaintiff to task for his complaint having joined the wife, Aida de
Laureano, and the father, Juanita Laureano. They were far from satisfied with the
lower court's absolving these two from any financial responsibility. Appellants
would have plaintiff pay damages for their inclusion in this litigation. We are not
disposed to view the matter thus.

It is to be admitted, of course, that plaintiff, who is a member of the bar, ought to

have exercised greater care in selecting the parties against whom he would
proceed. It may be said that his view of the law that would consider defendant
Federico Laureano liable on the facts as thus disclosed, while erroneous, is not
bereft of plausibility. Even the lower court, mistakenly of course, entertained
similar view. For plaintiff, however, to have included the wife and the father would
seem to indicate that his understanding of the law is not all that it ought to have
been.

Plaintiff apparently was not entirely unaware that the inclusion in the suit filed by
him was characterized by unorthodoxy. He did attempt to lend some color of
justification by explicitly setting forth that the father was joined as party defendant
in the case as he was the administrator of the inheritance of an undivided
property to which defendant Federico Laureano could lay claim and that the wife
was likewise proceeded against because the conjugal partnership would be
made to respond for whatever liability would be adjudicated against the husband.

It cannot be said that such an attempt at justification is impressed with a high

persuasive quality. Far from it. Nonetheless, mistaken as plaintiff apparently was,
it cannot be concluded that he was prompted solely by the desire to inflict
needless and unjustified vexation on them. Considering the equities of the
situation, plaintiff having suffered a pecuniary loss which, while resulting from a
fortuitous event, perhaps would not have occurred at all had not defendant
Federico Laureano borrowed his car, we, feel that he is not to be penalized
further by his mistaken view of the law in including them in his complaint. Well-
worth paraphrasing is the thought expressed in a United States Supreme Court
decision as to the existence of an abiding and fundamental principle that the
expenses and annoyance of litigation form part of the social burden of living in a
society which seeks to attain social control through law. 8

WHEREFORE, the decision of the lower court of November 2, 1965 insofar as it

orders defendant Federico Laureano to pay plaintiff the amount of P30,000.00 as
damages plus the payment of costs, is hereby reversed. It is affirmed insofar as it
dismissed the case against the other two defendants, Juanita Laureano and Aida
de Laureano, and declared that no moral damages should be awarded the
parties. Without pronouncement as to costs.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Teehankee,

Barredo and Villamor, JJ., concur.

Castro. J., is on leave.

Footnotes
1 Decision, Record on Appeal, pp. 29-30.

2 Ibid, pp. 36-37.

3 Crame Sy Panco v. Gonzaga, 10 Phil. 646, 648. Cf. Chan Keep v. Chan Gioco, 14 Phil. 5 (1909) and Novo & Co. v.
Ainsworth, 26 Phil. 380 (1913).

4 Roman Catholic Bishop of Jaro v. De la Pena, 26 Phil. 144, 146 (1913).

5 Lasam v. Smith, 45 Phil. 657, 661-662 (1924). Cf. Yap Kim Chuan v. Tiaoqui, 31 Phil. 433 (1955); University of Santo
Tomas v. Descals, 38 Phil. 267 (1918); Lizares v. Hernaez, 40 Phil. 981 (1920); Garcia v. Escudero, 43 Phil. 437
(1922); Millan v. Rio y Olabarrieta, 45 Phil. 718 (1924); Obejera v. Iga Sy, 76 Phil. 580 (1946).

6 Gillaco v. Manila Railroad Co., 97 Phil. 884 (1955).

7 L-21749, Sept. 29, 1967, 21 SCRA 279.

 8 Cf. Petroleum Exploration v. Public Service Commission, 304 US 209 (1938).

JARCO MARKETING CORPORATION, LEONARDO KONG, JOSE TIOPE and

ELISA PANELO, petitioners, vs. HONORABLE COURT OF APPEALS, CONRADO C.
AGUILAR and CRISELDA R. AGUILAR, respondents.

DECISION

DAVIDE, JR., C.J.:

In this petition for review on certiorari under Rule 45 of the Rules of Court,
petitioners seek the reversal of the 17 June 1996 decisioni[1] of the Court of Appeals
in C.A. G.R. No. CV 37937 and the resolutionii[2]denying their motion for
reconsideration. The assailed decision set aside the 15 January 1992 judgment of the
Regional Trial Court (RTC), Makati City, Branch 60 in Civil Case No. 7119 and
ordered petitioners to pay damages and attorney’s fees to private respondents
Conrado and Criselda (CRISELDA) Aguilar.

Petitioner Jarco Marketing Corporation is the owner of Syvel’s Department Store,

Makati City. Petitioners Leonardo Kong, Jose Tiope and Elisa Panelo are the store’s
branch manager, operations manager, and supervisor, respectively. Private
respondents are spouses and the parents of Zhieneth Aguilar (ZHIENETH).

In the afternoon of 9 May 1983, CRISELDA and ZHIENETH were at the 2nd floor
of Syvel’s Department Store, Makati City. CRISELDA was signing her credit card
slip at the payment and verification counter when she felt a sudden gust of wind and
heard a loud thud. She looked behind her. She then beheld her daughter ZHIENETH
on the floor, her young body pinned by the bulk of the store’s gift-wrapping
counter/structure. ZHIENETH was crying and screaming for help. Although
shocked, CRISELDA was quick to ask the assistance of the people around in lifting
the counter and retrieving ZHIENETH from the floor.iii[3]

ZHIENETH was quickly rushed to the Makati Medical Center where she was
operated on. The next day ZHIENETH lost her speech and thereafter communicated
with CRISELDA by writing on a magic slate. The injuries she sustained took their
toil on her young body. She died fourteen (14) days after the accident or on 22 May
1983, on the hospital bed. She was six years old.iv[4]

The cause of her death was attributed to the injuries she sustained. The provisional
medical certificatev[5] issued by ZHIENETH’s attending doctor described the extent
of her injuries:

Diagnoses:

1. Shock, severe, sec. to intra-abdominal injuries due to blunt injury

2. Hemorrhage, massive, intraperitoneal sec. to laceration, (L) lobe liver

3. Rupture, stomach, anterior & posterior walls

4. Complete transection, 4th position, duodenum

5. Hematoma, extensive, retroperitoneal

6. Contusion, lungs, severe

CRITICAL

After the burial of their daughter, private respondents demanded upon petitioners the
reimbursement of the hospitalization, medical bills and wake and funeral
expensesvi[6] which they had incurred. Petitioners refused to pay. Consequently,
private respondents filed a complaint for damages, docketed as Civil Case No. 7119
wherein they sought the payment of P157,522.86 for actual damages, P300,000 for
moral damages, P20,000 for attorney’s fees and an unspecified amount for loss of
income and exemplary damages.

In their answer with counterclaim, petitioners denied any liability for the injuries and
consequent death of ZHIENETH. They claimed that CRISELDA was negligent in
exercising care and diligence over her daughter by allowing her to freely roam
around in a store filled with glassware and appliances. ZHIENETH too, was guilty
of contributory negligence since she climbed the counter, triggering its eventual
collapse on her. Petitioners also emphasized that the counter was made of sturdy
wood with a strong support; it never fell nor collapsed for the past fifteen years since
its construction.

Additionally, petitioner Jarco Marketing Corporation maintained that it observed the

diligence of a good father of a family in the selection, supervision and control of its
employees. The other petitioners likewise raised due care and diligence in the
performance of their duties and countered that the complaint was malicious for which
they suffered besmirched reputation and mental anguish. They sought the dismissal
of the complaint and an award of moral and exemplary damages and attorney’s fees
in their favor.

In its decisionvii[7] the trial court dismissed the complaint and counterclaim after
finding that the preponderance of the evidence favored petitioners. It ruled that the
proximate cause of the fall of the counter on ZHIENETH was her act of clinging to
it. It believed petitioners’ witnesses who testified that ZHIENETH clung to the
counter, afterwhich the structure and the girl fell with the structure falling on top of
her, pinning her stomach. In contrast, none of private respondents’ witnesses
testified on how the counter fell. The trial court also held that CRISELDA’s
negligence contributed to ZHIENETH’s accident.

In absolving petitioners from any liability, the trial court reasoned that the counter
was situated at the end or corner of the 2nd floor as a precautionary measure hence, it
could not be considered as an attractive nuisance.viii[8] The counter was higher than
ZHIENETH. It has been in existence for fifteen years. Its structure was safe and
well-balanced. ZHIENETH, therefore, had no business climbing on and clinging to
it.

Private respondents appealed the decision, attributing as errors of the trial court its
findings that: (1) the proximate cause of the fall of the counter was ZHIENETH’s
misbehavior; (2) CRISELDA was negligent in her care of ZHIENETH; (3)
petitioners were not negligent in the maintenance of the counter; and (4) petitioners
were not liable for the death of ZHIENETH.

Further, private respondents asserted that ZHIENETH should be entitled to the

conclusive presumption that a child below nine (9) years is incapable of contributory
negligence. And even if ZHIENETH, at six (6) years old, was already capable of
contributory negligence, still it was physically impossible for her to have propped
herself on the counter. She had a small frame (four feet high and seventy pounds)
and the counter was much higher and heavier than she was. Also, the testimony of
one of the store’s former employees, Gerardo Gonzales, who accompanied
ZHIENETH when she was brought to the emergency room of the Makati Medical
Center belied petitioners’ theory that ZHIENETH climbed the counter. Gonzales
claimed that when ZHIENETH was asked by the doctor what she did, ZHIENETH
replied, “[N]othing, I did not come near the counter and the counter just fell on
me.”ix[9] Accordingly, Gonzales’ testimony on ZHIENETH’s spontaneous declaration
should not only be considered as part of res gestae but also accorded credit.

Moreover, negligence could not be imputed to CRISELDA for it was reasonable for
her to have let go of ZHIENETH at the precise moment that she was signing the
credit card slip.

Finally, private respondents vigorously maintained that the proximate cause of

ZHIENETH’s death, was petitioners’ negligence in failing to institute measures to
have the counter permanently nailed.

On the other hand, petitioners argued that private respondents raised purely factual
issues which could no longer be disturbed. They explained that ZHIENETH’s death
while unfortunate and tragic, was an accident for which neither CRISELDA nor even
ZHIENETH could entirely be held faultless and blameless. Further, petitioners
adverted to the trial court’s rejection of Gonzales’ testimony as unworthy of
credence.

As to private respondent’s claim that the counter should have been nailed to the
ground, petitioners justified that it was not necessary. The counter had been in
existence for several years without any prior accident and was deliberately placed at
a corner to avoid such accidents. Truth to tell, they acted without fault or negligence
for they had exercised due diligence on the matter. In fact, the criminal casex[10] for
homicide through simple negligence filed by private respondents against the
individual petitioners was dismissed; a verdict of acquittal was rendered in their
favor.

The Court of Appeals, however, decided in favor of private respondents and reversed
the appealed judgment. It found that petitioners were negligent in maintaining a
structurally dangerous counter. The counter was shaped like an inverted “L”xi[11]
with a top wider than the base. It was top heavy and the weight of the upper portion
was neither evenly distributed nor supported by its narrow base. Thus, the counter
was defective, unstable and dangerous; a downward pressure on the overhanging
portion or a push from the front could cause the counter to fall. Two former
employees of petitioners had already previously brought to the attention of the
management the danger the counter could cause. But the latter ignored their concern.
The Court of Appeals faulted the petitioners for this omission, and concluded that the
incident that befell ZHIENETH could have been avoided had petitioners repaired the
defective counter. It was inconsequential that the counter had been in use for some
time without a prior incident.

The Court of Appeals declared that ZHIENETH, who was below seven (7) years old
at the time of the incident, was absolutely incapable of negligence or other tort. It
reasoned that since a child under nine (9) years could not be held liable even for an
intentional wrong, then the six-year old ZHIENETH could not be made to account
for a mere mischief or reckless act. It also absolved CRISELDA of any negligence,
finding nothing wrong or out of the ordinary in momentarily allowing ZHIENETH to
walk while she signed the document at the nearby counter.

The Court of Appeals also rejected the testimonies of the witnesses of petitioners. It
found them biased and prejudiced. It instead gave credit to the testimony of
disinterested witness Gonzales. The Court of Appeals then awarded P99,420.86 as
actual damages, the amount representing the hospitalization expenses incurred by
private respondents as evidenced by the hospital's statement of account.xii[12] It
denied an award for funeral expenses for lack of proof to substantiate the same.
Instead, a compensatory damage of P50,000 was awarded for the death of
ZHIENETH.

We quote the dispositive portion of the assailed decision,xiii[13] thus:

WHEREFORE, premises considered, the judgment of the lower court is SET ASIDE
and another one is entered against [petitioners], ordering them to pay jointly and
severally unto [private respondents] the following:

1. P50,000.00 by way of compensatory damages for the death of Zhieneth

Aguilar, with legal interest (6% p.a.) from 27 April 1984;
2. P99,420.86 as reimbursement for hospitalization expenses incurred; with
legal interest (6% p.a.) from 27 April 1984;
3. P100,000.00 as moral and exemplary damages;
 4. P20,000.00 in the concept of attorney’s fees; and
5. Costs.

Private respondents sought a reconsideration of the decision but the same was denied
in the Court of Appeals’ resolutionxiv[14] of 16 July 1997.

Petitioners now seek the reversal of the Court of Appeals’ decision and the
reinstatement of the judgment of the trial court. Petitioners primarily argue that the
Court of Appeals erred in disregarding the factual findings and conclusions of the
trial court. They stress that since the action was based on tort, any finding of
negligence on the part of the private respondents would necessarily negate their
claim for damages, where said negligence was the proximate cause of the injury
sustained. The injury in the instant case was the death of ZHIENETH. The
proximate cause was ZHIENETH’s act of clinging to the counter. This act in turn
caused the counter to fall on her. This and CRISELDA’s contributory negligence,
through her failure to provide the proper care and attention to her child while inside
the store, nullified private respondents’ claim for damages. It is also for these
reasons that parents are made accountable for the damage or injury inflicted on
others by their minor children. Under these circumstances, petitioners could not be
held responsible for the accident that befell ZHIENETH.

Petitioners also assail the credibility of Gonzales who was already separated from
Syvel’s at the time he testified; hence, his testimony might have been tarnished by ill-
feelings against them.

For their part, private respondents principally reiterated their arguments that neither
ZHIENETH nor CRISELDA was negligent at any time while inside the store; the
findings and conclusions of the Court of Appeals are substantiated by the evidence
on record; the testimony of Gonzales, who heard ZHIENETH comment on the
incident while she was in the hospital’s emergency room should receive credence;
and finally, ZHIENETH’s part of the res gestae declaration “that she did nothing to
cause the heavy structure to fall on her” should be considered as the correct version
of the gruesome events.

We deny the petition.

The two issues to be resolved are: (1) whether the death of ZHIENETH was
accidental or attributable to negligence; and (2) in case of a finding of negligence,
whether the same was attributable to private respondents for maintaining a defective
counter or to CRISELDA and ZHIENETH for failing to exercise due and reasonable
care while inside the store premises.

An accident pertains to an unforeseen event in which no fault or negligence attaches

to the defendant.xv[15] It is “a fortuitous circumstance, event or happening; an event
happening without any human agency, or if happening wholly or partly through
human agency, an event which under the circumstances is unusual or unexpected by
the person to whom it happens.”xvi[16]

On the other hand, negligence is the omission to do something which a reasonable

man, guided by those considerations which ordinarily regulate the conduct of human
affairs, would do, or the doing of something which a prudent and reasonable man
would not do.xvii[17] Negligence is “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.”xviii[18]

Accident and negligence are intrinsically contradictory; one cannot exist with the
other. Accident occurs when the person concerned is exercising ordinary care, which
is not caused by fault of any person and which could not have been prevented by any
means suggested by common prudence.xix[19]

The test in determining the existence of negligence is enunciated in the landmark

case of Picart v. Smith,xx[20] thus: Did the defendant in doing the alleged negligent
act use that reasonable care and caution which an ordinarily prudent person would
have used in the same situation? If not, then he is guilty of negligence.xxi[21]

We rule that the tragedy which befell ZHIENETH was no accident and that
ZHIENETH’s death could only be attributed to negligence.

We quote the testimony of Gerardo Gonzales who was at the scene of the incident
and accompanied CRISELDA and ZHIENETH to the hospital:

Q While at the Makati Medical Center, did you hear or notice anything while
the child was being treated?

A At the emergency room we were all surrounding the child. And when the
doctor asked the child “what did you do,” the child said “nothing, I did not come near
the counter and the counter just fell on me.”

Q (COURT TO ATTY. BELTRAN)

You want the words in Tagalog to be translated?

ATTY. BELTRAN

Yes, your Honor.

COURT

Granted. Intercalate “wala po, hindi po ako lumapit doon. Basta

bumagsak.”xxii[22]
This testimony of Gonzales pertaining to ZHIENETH’s statement formed (and
should be admitted as) part of the res gestae under Section 42, Rule 130 of the Rules
of Court, thus:

Part of res gestae. Statements made by a person while a startling occurrence is

taking place or immediately prior or subsequent thereto with respect to the
circumstances thereof, may be given in evidence as part of the res gestae. So, also,
statements accompanying an equivocal act material to the issue, and giving it a legal
significance, may be received as part of the res gestae.

It is axiomatic that matters relating to declarations of pain or suffering and statements

made to a physician are generally considered declarations and admissions.xxiii[23] All
that is required for their admissibility as part of the res gestae is that they be made or
uttered under the influence of a startling event before the declarant had the time to
think and concoct a falsehood as witnessed by the person who testified in court.
Under the circumstances thus described, it is unthinkable for ZHIENETH, a child of
such tender age and in extreme pain, to have lied to a doctor whom she trusted with
her life. We therefore accord credence to Gonzales’ testimony on the matter, i.e.,
ZHIENETH performed no act that facilitated her tragic death. Sadly, petitioners did,
through their negligence or omission to secure or make stable the counter’s base.

Gonzales’ earlier testimony on petitioners’ insistence to keep and maintain the

structurally unstable gift-wrapping counter proved their negligence, thus:

Q When you assumed the position as gift wrapper at the second floor, will you
please describe the gift wrapping counter, were you able to examine?

A Because every morning before I start working I used to clean that counter and
since it is not nailed and it was only standing on the floor, it was shaky.

xxx

Q Will you please describe the counter at 5:00 o’clock [sic] in the afternoon on
[sic] May 9 1983?

A At that hour on May 9, 1983, that counter was standing beside the verification
counter. And since the top of it was heavy and considering that it was not nailed, it
can collapse at anytime, since the top is heavy.

xxx

Q And what did you do?

A I informed Mr. Maat about that counter which is [sic] shaky and since Mr.
Maat is fond of putting display decorations on tables, he even told me that I would
put some decorations. But since I told him that it not [sic] nailed and it is shaky he
told me “better inform also the company about it.” And since the company did not
do anything about the counter, so I also did not do anything about the counter.xxiv[24]
[Emphasis supplied]

Ramon Guevarra, another former employee, corroborated the testimony of Gonzales,

thus:

Q Will you please described [sic] to the honorable Court the counter where you
were assigned in January 1983?

xxx

A That counter assigned to me was when my supervisor ordered me to carry

that counter to another place. I told him that the counter needs nailing and it has to
be nailed because it might cause injury or accident to another since it was shaky.

Q When that gift wrapping counter was transferred at the second floor on
February 12, 1983, will you please describe that to the honorable Court?

A I told her that the counter wrapper [sic] is really in good [sic] condition; it
was shaky. I told her that we had to nail it.

Q When you said she, to whom are you referring to [sic]?

A I am referring to Ms. Panelo, sir.

Q And what was the answer of Ms. Panelo when you told her that the counter
was shaky?

A She told me “Why do you have to teach me. You are only my subordinate
and you are to teach me?” And she even got angry at me when I told her that.

xxx

Q From February 12, 1983 up to May 9, 1983, what if any, did Ms. Panelo or
any employee of the management do to that (sic)

xxx

Witness:

None, sir. They never nailed the counter. They only nailed the counter after
the accident happened.xxv[25] [Emphasis supplied]

Without doubt, petitioner Panelo and another store supervisor were personally
informed of the danger posed by the unstable counter. Yet, neither initiated any
concrete action to remedy the situation nor ensure the safety of the store’s employees
and patrons as a reasonable and ordinary prudent man would have done. Thus, as
confronted by the situation petitioners miserably failed to discharge the due diligence
required of a good father of a family.

On the issue of the credibility of Gonzales and Guevarra, petitioners failed to

establish that the former’s testimonies were biased and tainted with partiality.
Therefore, the allegation that Gonzales and Guevarra’s testimonies were blemished
by “ill feelings” against petitioners – since they (Gonzales and Guevarra) were
already separated from the company at the time their testimonies were offered in
court – was but mere speculation and deserved scant consideration.

It is settled that when the issue concerns the credibility of witnesses, the appellate
courts will not as a general rule disturb the findings of the trial court, which is in a
better position to determine the same. The trial court has the distinct advantage of
actually hearing the testimony of and observing the deportment of the witnesses.xxvi
[26] However, the rule admits of exceptions such as when its evaluation was reached
arbitrarily or it overlooked or failed to appreciate some facts or circumstances of
weight and substance which could affect the result of the case.xxvii[27] In the instant
case, petitioners failed to bring their claim within the exception.

Anent the negligence imputed to ZHIENETH, we apply the conclusive presumption

that favors children below nine (9) years old in that they are incapable of
contributory negligence. In his book,xxviii[28] former Judge Cezar S. Sangco stated:

In our jurisdiction, a person under nine years of age is conclusively presumed to have
acted without discernment, and is, on that account, exempt from criminal liability.
The same presumption and a like exemption from criminal liability obtains in a case
of a person over nine and under fifteen years of age, unless it is shown that he has
acted with discernment. Since negligence may be a felony and a quasi-delict and
required discernment as a condition of liability, either criminal or civil, a child under
nine years of age is, by analogy, conclusively presumed to be incapable of
negligence; and that the presumption of lack of discernment or incapacity for
negligence in the case of a child over nine but under fifteen years of age is a
rebuttable one, under our law. The rule, therefore, is that a child under nine years of
age must be conclusively presumed incapable of contributory negligence as a matter
of law. [Emphasis supplied]

Even if we attribute contributory negligence to ZHIENETH and assume that she

climbed over the counter, no injury should have occurred if we accept petitioners’
theory that the counter was stable and sturdy. For if that was the truth, a frail six-
year old could not have caused the counter to collapse. The physical analysis of the
counter by both the trial court and Court of Appeals and a scrutiny of the
evidencexxix[29]on record reveal otherwise, i.e., it was not durable after all. Shaped
like an inverted “L,” the counter was heavy, huge, and its top laden with formica. It
protruded towards the customer waiting area and its base was not secured.xxx[30]
CRISELDA too, should be absolved from any contributory negligence. Initially,
ZHIENETH held on to CRISELDA’s waist, later to the latter’s hand.xxxi[31]
CRISELDA momentarily released the child’s hand from her clutch when she signed
her credit card slip. At this precise moment, it was reasonable and usual for
CRISELDA to let go of her child. Further, at the time ZHIENETH was pinned down
by the counter, she was just a foot away from her mother; and the gift-wrapping
counter was just four meters away from CRISELDA.xxxii[32] The time and distance
were both significant. ZHIENETH was near her mother and did not loiter as
petitioners would want to impress upon us. She even admitted to the doctor who
treated her at the hospital that she did not do anything; the counter just fell on her.

WHEREFORE, in view of all the foregoing, the instant petition is DENIED and the
challenged decision of the Court of Appeals of 17 June 1996 in C.A. G.R. No. CV
37937 is hereby AFFIRMED.

Costs against petitioners.

SO ORDERED.

Puno, Kapunan, Pardo, and Ynares-Santiago, JJ., concur.

i[1] Annex “A” of Petition; Rollo, 36-47. Per Justice Godardo A. Jacinto, with Justices Salome A.
Montoya and Maximiano C. Asuncion, concurring.

ii[2] Annex “B” of Petition; Rollo, 49.

iii[3] TSN, 13 February 1985, 5, 6, 7-8, 21-22, 31.

iv[4] Id., 32, 36, 42, 52.

v[5] Original Record (OR), 8.

vi[6] Exhibit “H.”

vii[7] OR, 603-612. Per Judge Pedro N. Lagui.

viii[8] One who maintains on his premises dangerous instrumentalities or appliances of a character
likely to attract children in play, and who fails to exercise ordinary care to prevent children from
playing therewith or resorting thereto, is liable to a child of tender years who is injured thereby, even if
the child is technically a tresspasser in the premises.

The principal reason for the doctrine is that the condition or appliance in question although its danger is
apparent to those of age, is so enticing or alluring to children of tender years as to induce them to
approach, get on or use it, and this attractiveness is an implied invitation to such children. (Hidalgo
Enterprises, Inc. v. Balandan, et al., 488, 490 [1952].

ix[9] TSN, 10 September 1987, 12.

x[10] Criminal Case No. 118986 filed with the Makati Metropolitan Trial Court, Branch 61.

xi[11] Exhibit “D.”

xii[12] Exhibit “F.”

xiii[13] Supra note 1.

xiv[14] Supra note 2.

xv[15] See Novo & Co. v. Ainsworth, 26 Phil. 380, 387 [1913].

xvi[16] Black’s Law Dictionary, 5th ed. 1979, 14.

xvii[17] McKee v. Intermediate Appellate Court, 211 SCRA 517, 539 [1992] citing Black’s Law
Dictionary, 5th ed., 1979, 930.

xviii[18] U.S. v. Barias, 23 Phil. 434, 437 [1912] citing Judge Cooley's work on Torts, 3rd ed., 1324.

xix[19] See Cavanaugh v. Jepson Iowa, 167 N.W.2d 616, 623 [1969]. See also Restatement, Second,
Torts §8.
xx[20] 37 Phil. 809 [1918].

xxi[21] Ibid, 813.

xxii[22] TSN, 10 September 1987, 12, 13.

xxiii[23] Ricardo J. Francisco, III Evidence, 1997, 591 citing Keefe v. State of Arizona, 60 Ariz. 293;
Stukas v. Warfield, Pratt, Howell Co., 175 N.W. 81, 85 [1919].

xxiv[24] TSN, 10 September 1987, 8, 9, 11.

xxv[25] TSN, 2 October 1987, 9, 11.

xxvi[26] See BPI Credit Corporation v. Court of Appeals, 204 SCRA 601, 608 [1991]; Geronimo v.
Court of Appeals, 224 SCRA 494, 498 [1993].

xxvii[27] Borillo v. Court of Appeals, 209 SCRA 130, 140-141 [1992]; McKee v. Intermediate
Appellate Court, supra note 16, 537; Salvador v. Court of Appeals, 243 SCRA 239, 253 [1995].

xxviii[28] I Philippine Law On Torts And Damages, 70-71 (1993).

xxix[29] Exhibit “D.”

xxx[30] Exhibits “K,” “M,” and “N.” The counter was made of heavy wood measuring about 4 to 5
meters in height; 1 meter in length; and 2½ to 3 meters in width; with four (4) square legs. Its top was
made of 5 ½ inch thick wood covered by formica about ¾ inch thick.

xxxi[31] TSN, 13 February 15, 20.

xxxii[32] Ibid., 11, 22.

People vs Fallouna
(Nitago, wala ko kakita)
G.R. No. 120262 July 17, 1997

PHILIPPINE AIRLINES, INC., petitioner,

vs.
COURT OF APPEALS and LEOVIGILDO A. PANTEJO, respondents.

REGALADO, J.:
In this appeal by certiorari, petitioner Philippine Airlines, Inc. (PAL) seeks to set aside the
decision of respondent Court of Appeals, 1 promulgated on December 29, 1994, which
affirmed the award for damages made by the trial court in favor of herein private respondent
Leovegildo A. Pantejo.

On October 23, 1988, private respondent Pantejo, then City Fiscal of Surigao City, boarded a
PAL plane in Manila and disembarked in Cebu City where he was supposed to take his
connecting flight to Surigao City However, due to typhoon Osang, the connecting flight to
Surigao City was cancelled.

To accommodate the needs of its stranded passengers, PAL initially gave out cash assistance
of P100.00 and, the next day, P200.00, for their expected stay of two days in Cebu.
Respondent Pantejo requested instead that he be billeted in a hotel at PAL's expense
because he did not have cash with him at that time, but PAL refused. Thus, respondent
Pantejo was forced to seek and accept the generosity of a co-passenger, an engineer named
Andoni Dumlao, and he shared a room with the latter at Sky View Hotel with the promise to
pay his share of the expenses upon reaching Surigao.

On October 25, 1988 when the flight for Surigao was resumed, respondent Pantejo came to
know that the hotel expenses of his co-passengers, one Superintendent Ernesto Gonzales
and a certain Mrs. Gloria Rocha, an auditor of the Philippine National Bank, were reimbursed
by PAL. At this point, respondent Pantejo informed Oscar Jereza, PAL's Manager for
Departure Services at Mactan Airport and who was in charge of cancelled flights, that he was
going to sue the airline for discriminating against him. It was only then that Jereza offered to
pay respondent Pantejo P300.00 which, due to the ordeal and anguish he had undergone, the
latter decline.

On March 18, 1991, the Regional Trial Court of Surigao City, Branch 30, rendered judgment in
the action for damages filed by respondent Pantejo against herein petitioner, Philippine
Airlines, Inc., ordering the latter to pay Pantejo P300.00 for actual damages, P150,000.00 as
moral damages, P100,000.00 as exemplary damages, P15,000.00 as attorney's fees, and 6%
interest from the time of the filing of the complaint until said amounts shall have been fully
paid, plus costs of suit. 2 On appeal, respondent court affirmed the decision of the court a quo,
but with the exclusion of the award of attorney's fees and litigation expenses.

The main issue posed for resolution is whether petitioner airlines acted in bad faith when it
failed and refused to provide hotel accommodations for respondent Pantejo or to reimburse
him for hotel expenses incurred by reason of the cancellation of its connecting flight to
Surigao City due to force majeure.

To begin with, it must be emphasized that a contract to transport passengers is quite different
in kind and degree from any other contractual relation, and this is because of the relation
which an air carrier sustain with the public. Its business is mainly with the travelling public. It
invites people to avail of the comforts and advantages it offers. The contract of air carriage,
therefore, generates a relation attended with a public duty. Neglect or malfeasance of the
carrier's employees naturally could give ground for an action for damages. 3
In ruling for respondent Pantejo, both the trial court and the Court of Appeals found that
herein petitioner acted in bad faith in refusing to provide hotel accommodations for
respondent Pantejo or to reimburse him for hotel expenses incurred despite and in contrast to
the fact that other passengers were so favored.

In declaring that bad faith existed, respondent court took into consideration the following
factual circumstances:

1. Contrary to petitioner's claim that cash assistance was given instead because of non-
availability of rooms in hotels where petitioner had existing tie-ups, the evidence shows that
Sky View Hotel, where respondent Pantejo was billeted, had plenty of rooms available.

2. It is not true that the P300.00 Paid to Ernesto Gonzales, a co-passenger of respondent,
was a refund for his plane ticket, the truth being that it was a reimbursement for hotel and
meal expenses.

3. It is likewise not denied that said Gonzales and herein respondent came to know about the
reimbursements only because another passenger, Mrs. Rocha, informed them that she was
able to obtain the refund for her own hotel expenses.

4. Petitioner offered to pay P300.00 to private respondent only after he had confronted the
airline's manager about the discrimination committed against him, which the latter realized
was an actionable wrong.

5. Service Voucher No. 199351, presented by petitioner to prove that it gave cash assistance
to its passengers, was based merely on the list of passengers already given cash assistance
and was purportedly prepared at around 10:00 A.M. of October 23, 1988. This was two hours
before respondent came to know of the cancellation of his flight to Surigao, hence private
respondent could not have possibly refused the same. 4

It must be stressed that these factual findings, which are supported by substantial evidence,
are binding, final and conclusive upon this Court absent any reason, and we find none, why
this settled evidential rule should not apply.

Petitioner theorizes that the hotel accommodations or cash assistance given in case a flight is
cancelled is in the nature of an amenity and is merely a privilege that may be extended at its
own discretion, but never a right that may be demanded by its passengers. Thus, when
respondent Pantejo was offered cash assistance and he refused it, petitioner cannot be held
liable for whatever befell respondent Pantejo on that fateful day, because it was merely
exercising its discretion when it opted to just give cash assistance to its passengers.

Assuming arguendo that the airline passengers have no vested right to these amenities in
case a flight is cancelled due to force majeure, what makes petitioner liable for damages in
this particular case and under the facts obtaining herein is its blatant refusal to accord the so-
called amenities equally to all its stranded passengers who were bound for Surigao City. No
compelling or justifying reason was advanced for such discriminatory and prejudicial conduct.
More importantly, it has been sufficiently established that it is petitioner's standard company
policy, whenever a flight has been cancelled, to extend to its hapless passengers cash
assistance or to provide them accommodations in hotels with which it has existing tie-ups. In
fact, petitioner's Mactan Airport Manager for departure services, Oscar Jereza, admitted that
PAL has an existing arrangement with hotels to accommodate stranded passengers, 5 and
that the hotel bills of Ernesto Gonzales were reimbursed 6 obviously pursuant to that policy.

Also, two witnesses presented by respondent, Teresita Azarcon and Nerie Bol, testified that
sometime in November, 1988, when their flight from Cebu to Surigao was cancelled, they
were billeted at Rajah Hotel for two nights and three days at the expense of PAL. 7 This was
never denied by PAL.

Further, Ernesto Gonzales, the aforementioned co-passenger of respondent on that fateful

flight, testified that based on his previous experience hotel accommodations were extended
by PAL to its stranded passengers either in Magellan or Rajah Hotels, or even in Cebu Plaza.
Thus, we view as impressed with dubiety PAL's present attempt to represent such emergency
assistance as being merely ex gratia and not ex debito.

While petitioner now insists that the passengers were duly informed that they would be
reimbursed for their hotel expenses, it miserably and significantly failed to explain why the
other passengers were given reimbursement while private respondent was not. Although
Gonzales was subsequently given a refund, this was only so because he came to know about
it by accident through Mrs. Rocha, as earlier explained.

Petitioner could only offer the strained and flimsy pretext that possibly the passengers were
not listening when the announcement was made. This is absurd because when respondent
Pantejo came to know that his flight had been cancelled, he immediately proceeded to
petitioner's office and requested for hotel accommodations. He was not only refused
accommodations, but he was not even informed that he may later on be reimbursed for his
hotel expenses. This explains why his co-passenger, Andoni Dumlao, offered to answer for
respondent's hotel bill and the latter promised to pay him when they arrive in Surigao. Had
both know that they would be reimbursed by the airline, such arrangement would not have
been necessary.

Respondent Court of Appeals thus correctly concluded that the refund of hotel expenses was
surreptitiously and discriminatorily made by herein petitioner since the same was not made
known to everyone, except through word of mouth to a handful of passengers. This is a sad
commentary on the quality of service and professionalism of an airline company, which is the
country's flag carrier at that.

On the bases of all the foregoing, the inescapable conclusion is that petitioner acted in bad
faith in disregarding its duties as a common carrier to its passengers and in discriminating
against herein respondent Pantejo. It was even oblivious to the fact that this respondent was
exposed to humiliation and embarrassment especially because of his government position
and social prominence, which altogether necessarily subjected him to ridicule, shame and
anguish. It remains uncontroverted that at the time of the incident, herein respondent was
then the City Prosecutor of Surigao City, and that he is a member of the Philippine Jaycee
Senate, past Lt. Governor of the Kiwanis Club of Surigao, a past Master of the Mount Diwata
Lodge of Free Masons of the Philippines, member of the Philippine National Red Cross,
Surigao Chapter,
and past Chairman of the Boy Scouts of the Philippines, Surigao del Norte Chapter. 8

It is likewise claimed that the moral and exemplary damages awarded to respondent Pantejo
are excessive and unwarranted on the ground that respondent is not totally blameless
because of his refusal to accept the P100.00 cash assistance which was inceptively offered to
him. It bears emphasis that respondent Pantejo had every right to make such refusal since it
evidently could not meet his needs and that was all that PAL claimed it could offer.

His refusal to accept the P300.00 proffered as an afterthought when he threatened suit was
justified by his resentment when he belatedly found out that his co-passengers were
reimbursed for hotel expenses and he was not. Worse, he would not even have known about
it were it not for a co-passenger who verbally told him that she was reimbursed by the airline
for hotel and meal expenses. It may even be said that the amounts, the time and the
circumstances under which those amounts were offered could not salve the moral wounds
inflicted by PAL on private respondent but even approximated insult added to injury.

The discriminatory act of petitioner against respondent ineludibly makes the former liable for
moral damages under Article 21 in relation to Article 2219 (10) of the Civil Code. 9 As held in
Alitalia Airways vs. CA, et al., 10 such inattention to and lack of care by petitioner airline for the
interest of its passengers who are entitled to its utmost consideration, particularly as to their
convenience, amount to bad faith which entitles the passenger to the award of moral
damages.

Moral damages are emphatically not intended to enrich a plaintiff at the expense of the
defendant. They are awarded only to allow the former to obtain means, diversion, or
amusements that will serve to alleviate the moral suffering he has undergone due to the
defendant's culpable action and must, perforce, be proportional to the suffering inflicted. 11
However, substantial damages do not translate into excessive damages. 12 Except for
attorney's fees and costs of suit, it will be noted that the Court of Appeals affirmed point by
point the factual findings of the lower court upon which the award of damages had been
based. 13 We, therefore, see no reason to modify the award of damages made by the trial
court.

Under the peculiar circumstances of this case, we are convinced that the awards for actual,
moral and exemplary damages granted in the judgment of respondent court, for the reasons
meticulously analyzed and thoroughly explained in its decision, are just and equitable. It is
high time that the travelling public is afforded protection and that the duties of common
carriers, long detailed in our previous laws and jurisprudence and thereafter collated and
specifically catalogued in our Civil Code in 1950, be enforced through appropriate sanctions.

We agree, however, with the contention that the interest of 6% imposed by respondent court
should be computed from the date of rendition of judgment and not from the filing of the
complaint. The rule has been laid down in Eastern Shipping Lines, Inc. vs. Court of Appeals,
et al. 14 that:
 When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the
amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum.
No interest, however, shall be adjudged on unliquidated claims or damages except when or until the
demand can be established with reasonable certainty. Accordingly, where the demand is established
with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or
extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so reasonably established at the
time the demand is made, the interest shall begin to run only from the date the judgment of the court is
made (at which time the quantification of damages may be deemed to have been reasonably
ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount
finally adjudged.

This is because at the time of the filing of the complaint, the amount of damages to which
plaintiff may be entitled remains unliquidated and not known, until it is definitely ascertained,
assessed and determined by the court, and only after the presentation of proof thereon. 15

WHEREFORE, the challenged judgment of respondent Court of Appeals is hereby

AFFIRMED, subject to the MODIFICATION regarding the computation of the 6% legal rate of
interest on the monetary awards granted therein to private respondent

SO ORDERED.

Romero and Puno, JJ., concur.

Mendoza, J., took no part.

Torres, Jr., J., is on leave.

Footnotes

1 CA-G.R CV 33842; Presiding Justice Nathaniel P. De Pano, Jr., ponente; Associate Justices
Artemon de Luna and Ramon U. Mabutas, Jr. concurring; Annex A, Petition; Rollo, 48.

2 Petition, 3; Rollo, 30.

3 Zulueta, et al. vs. Pan American World Airways, Inc., L-28589, February 29, 1972, 43 SCRA
397.

4 Rollo, 52-57.

5 Ibid., 54.

6 Ibid., 57.

7 Ibid., 52.

8 Ibid., 58.

9 Sibal vs. Notre Dame of Greater Manila, et al., G.R. No. 75093, February 23, 1990, 182 SCRA
538.

10 G.R. No. 77011, July 24, 1990, 187 SCRA 763.

 11 Philtranco Service Enterprises, Inc., et al. vs. CA, et al., G.R. No. 120553, June 17, 1997.

12 National Power Corporation, et al. vs. CA, et al., G.R. No. 113103, June 13, 1997.

13 Meneses, et al. vs. CA, et al., G.R. No 82220, July 14, 1995, 246 SCRA 162.

14 G.R. No. 97412, July 12, 1994, 234 SCRA 78.

15 Korean Airlines Co., Ltd. vs. Court of Appeals, et al., G.R. No. 114061, August 3, 1994, 234
SCRA 717.

La mallorca vs Ca 17 SCRA 739

(huhuhu wala jud ko kakita)