LEONEN DIGESTS

 

RUEL TUANO Y HERNANDEZ vs. PEOPLE OF THE PHILIPPINES

 

 

Facts: RTC convicted accused for violation of RA 9165 for having in his possession illegal drugs. On appeal, the CA affirmed the ruling of the RTC. Accused moved for reconsideration , but the Motion was denied by the CA. SC sustained the conviction of accused, thus affirming the ruling of the Court of Appeals. Accused moved for reconsideration, questioning this Court's unsigned Resolution and praying for his acquittal.

 

On June 27, 2016, this Court issued the Resolution 17 reconsidering its June 23, 2014 unsigned Resolution. This Court acquitted accused for failure of the prosecution to prove his guilt beyond reasonable doubt. On July 22, 2016, this Court received from the Director General of the Bureau of Corrections a letter 20 dated July 15, 2016 informing this Court that accused died on March 1, 2015, prior to the issuance of this Court's June 27, 2016 Resolution. A certified machine copy of accused's Death Certificate was attached to the letter.

 

Issue: W/N the criminal liability and the civil liability are totally extinguished upon the death of the accused.

 

Ruling: Yes. Death of the accused pending appeal of his conviction extinguishes his criminal liability as well as the civil liability ex delicto.

 

The death of accused extinguishes his criminal liability. Article 89, paragraph 1 of the Revised Penal Code provides:

Art. 89. How criminal liability is totally extinguished.

—  Criminal liability is totally extinguished:

1.  By the death of the convict, as to the personal penalties; and as to pecuniary penalties, liability therefore is extinguished only when the death of the offender occurs before final judgment[.]

 

Likewise, the civil liability of the accused arising from his criminal liability is extinguished upon his death. In People v. Bayotas:

 

1.   Death of the accused pending appeal of his conviction extinguishes his criminal liability as well as the civil liability based solely thereon. As opined by Justice Regalado, in this regard, "the death of the accused prior to final judgment terminates his criminal liability and only the civil liability directly arising from and based solely on the offense committed, i.e., civil liability ex delicto in senso strictiore."

2.    Corollarily, the claim for civil liability survives notwithstanding the death of accused, if the same may also be predicated on a source of obligation other than delict. Article 1157 of the Civil Code enumerates these other sources of obligation from which the civil liability may arise as a result of the same act or omission:

a)  Law

b)  Contracts

c)  Quasi-contracts

d) . . . .

e) Quasi-delicts

3.  Where the civil liability survives, as explained in Number 2 above, an action for recovery therefor may be pursued but only by way of filing a separate civil action and subject to Section 1, Rule 111 of the 1985 Rules on Criminal Procedure as amended. This separate civil action may be enforced either against the executor/administrator or the estate of the accused, depending on the source of obligation which the same is based as explained above. (Emphasis supplied, citations omitted)

 

In People v. Paras, this Court rendered judgment in a criminal case without being informed earlier that the accused had already passed away. Premised on the principle that the death of the accused extinguishes his criminal liability, the Court set aside its decision and dismissed the criminal case.

 

Considering accused's death pending appeal extinguishes his criminal liability and civil liability ex delicto, the criminal action must be dismissed since there is no longer a defendant to stand as the accused.

 

Therefore, when accused died on March 1, 2015 during the pendency of his appeal and prior to this Court's Resolution dated June 27, 2016, his criminal liability has already been extinguished. From that point on, the criminal action had no defendant upon which the action is based. This Court's June 27, 2016 Resolution had become ineffectual and must be set aside. Likewise, the criminal action must be dismissed.

 

 

 

CHIQUITA BRANDS vs. GEORGE E. OMELIO

 

Facts: On August 1993, thousands of banana plantation workers instituted a class suit in the US for damages against 11 foreign corporations, Chiquita Brands being one of them. The claimants claimed to have been exposed to dibromochloropropane (DBCP) while working in the plantation. As a result, these workers suffered serious and permanent injuries to their reproductive system.

 

However, the US courts dismissed the complaint based on forum non conveniens and directed the claimants to file actions in their respective home countries.

 

On May 1996, the claimants filed a complaint on the same 11 corporations in the RTC of Panabo City, Davao. Before the pre-trial, the petitioner and the claimants entered into a compromise agreement. The agreement provided, among others, that the settlement amount should be deposited in an escrow account, which should be administered by a mediator.

 

The RTC of Panabo approved the compromise agreement and dismissed the petition of the claimant.

 

After dismissal of the civil case, the claimants moved for the execution of the compromise agreement.

 

The petitioner opposed the execution on the ground of mootness; they argued that they had already complied with their obligation by depositing the settlement amount into an escrow account.

 

However, RTC of Panabo granted the motion for execution because there was no proof that the settlement amounts had been withdrawn and delivered to each individual claimant.

 

On May 2003, petitioner filed a motion to suspend the execution and be allowed to present evidence on their behalf.

 

During the hearing of the case, the claimants picketed outside the court room and accused the RTC judge of Panabo as a corrupt official who delayed the execution. Petitioner requested for change of venue and was granted.

 

The case was transferred and now under the jurisdiction of the RTC of Davao city.

 

On July 2009, the RTC of Davao city through Judge Omelio ordered the execution of the compromise agreement.

 

Aggrieved by the RTC’s decision, the petitioner filed for a petition for certiorari even without a prior appeal to the CA.

 

Petitioner allege that the respondent Judge committed grave abuse of discretion in issuing the writ of execution and ordering them to directly pay each of the claimant contrary to the compromise agreement between petitioner and claimant.

 

Issue: W/N the respondent Judge committed grave abuse of discretion in issuing the writ of execution and ordering them to directly pay each of the claimant.

 

Ruling: Yes.

 

In any case, a compromise validly entered into has the authority and effect of res judicata as between the parties. Moreover, a judicial compromise is regarded as a "determination of the controversy" between the parties and "has the force and effect of final judgment." In other words, it is both a contract and "a judgment on the merits." It may neither be disturbed nor set aside except in cases where there is forgery or when either of the parties' consent has been vitiated.

 

The doctrine on immutability of judgments applies to compromise agreements approved by the courts in the same manner that it applies to judgments that have been rendered on the basis of a full-blown trial.

In this case, the Writ of Execution ordering the collection of the settlement amount directly from petitioners and its co-defendants in the civil case is void.

 

Under the judicially approved Compromise Agreement, petitioners are obliged to deposit the settlement amount in escrow within 10 business days after they receive a signed Compromise Agreement from the counsel of the claimants.

 

There was nothing in the Compromise Agreement that required petitioners to ensure the distribution of the settlement amount to each claimant. Petitioners' obligation under the Compromise Agreement was limited to depositing the settlement amount in escrow. On the other hand, the actual distribution of the settlement amounts was delegated to the chosen mediator, Mr. Mills. To require proof that the settlement amounts have been withdrawn and delivered to each claimant would enlarge the obligation of petitioners under the Compromise Agreement.

 

 

 

 

TANKEH vs. DEVELOPMENT BANK OF THE PHILIPPINES

 

Facts:

Sometime in 1980, Alejandro was approached by his brother, Ruperto (president of SSL) informing him that the latter was operating a new shipping line business and offered him 1000 shares worth P1M to be a director of the business. Alejandro accepted the offer based on   the promised that he be part of the admin staff so that he can oversee the operation of the business plus his son, who is a practicing lawyer would be given a position in the company.

A loan was applied from DBP for financing of an ocean-going vessel with the conditions that the first mortgage is obtained over the vessel, the future earnings of the mortgage including proceeds should be assigned to DBP and DBP is assigned to no less than 67% of the voting shares of the company. Alejandro signed the Assignment of Shares of Stock with Voting Rights and the promissory note making him liable jointly and severally for the amount of the loan. After the vessel is acquired, a deed of assignment was executed in favor of DBP. On 1983, upon realizing that he was only being made a tool to realize the purposes of Ruperto, Alejandro officially informed the company by means of letter that he has severed his connection with the company and asking the board to pass a resolution to released him from his liabilities with DBP and notify the latter about this.

On 1986, the account of SSL in the DBP were transferred to Asset Privatization Trust by virtue of Presidential Proclamation No. 50. The asset including loan in favor of DBP were ordered to be transferred to the national government. Despite the assignment and cash equity contribution of SSL to cover part of the acquisition cost of the vessel and the like, the promissory note still

subsisted. Hence, Alejandro is still bound as a debtor because of the promissory note.

Alejandro’s contention: The promisorry note must be declared as null and void and he be absolved from any liability. Ruperto exercised deceit and fraud in causing him to bind himself jointly and severally to pay DBP the amount of the mortgage loan. All the  money  supposedly invested by him were put by Ruperto, hence he had never invested any money. He was invited to attend the board meeting only once and he was never compensated by SSL for being called director and stockholder. None of the promises of Ruperto was complied with.

 

 

Issue:

1.  WON the fraud perpetrated by Ruperto is serious enough to warrant annulment of the contract?

2.  WON Ruperto is liable for moral and exemplary damages

Ruling:

 

Issue 1:

No. Only incidental fraud exists in this case. Therefore it is not sufficient to warrant the annulment of the contracts petitioner entered into but respondent Ruperto is liable to pay him damages. The distinction between fraud as a ground for rendering a contract voidable or as basis for an award of damages is provided in Article 1344: In order that fraud may make a contract voidable, it should be serious and should not have been employed by both contracting parties. Incidental fraud only obliges the person employing it to pay damages.

Given the standing and stature of the petitioner, he was in a position to ascertain more information about the contract. The following facts show that petitioner was fully aware of the magnitude of his undertaking: First, petitioner was fully aware of the financial reverses that SSL had been undergoing, and he took great pains to release himself from the obligation. Second, his background as a doctor, as a bank organizer, and as a businessman with experience in the textile business and real estate should have apprised him of the irregularity in the contract that he would be undertaking. This meant that at the time petitioner gave his consent to become a part of the corporation, he had been fully aware of the circumstances and the risks of his participation. Intent is determined by the acts. Finally, the records showed that petitioner had been fully aware of the effect of his signing the promissory note. The bare assertion that he was not privy to the records cannot counteract the fact that petitioner himself had admitted that after he had severed ties with his brother, he had written a letter seeking to reach an amicable settlement with respondent Rupert. Petitioner’s actions defied his claim of a complete lack of awareness regarding the circumstances and the contract he had been entering.

The required standard of proof – clear and convincing evidence – was not met. There was no dolo causante or fraud used to obtain the petitioner’s consent to enter into the contract. Petitioner had the opportunity to become

aware of the facts that attended the signing of the promissory note. He even admitted that he has a lawyer-son who the petitioner had hoped would assist him in the administration of Sterling Shipping Lines, Inc. The totality of the facts on record belies petitioner’s claim that fraud was used to obtain his consent to the contract given his personal circumstances and the applicable law.

However, in refusing to allow petitioner to participate in the management of the business, respondent Ruperto Tankeh was liable for the commission of incidental fraud. In Geraldez, this Court defined incidental fraud as "those which are not serious in character and without which the other party would still have entered into the contract. Although there was no fraud that had been undertaken to obtain petitioner’s consent, there was fraud in the performance of the contract.

 

Issue 2: Yes.

The Obligation to Pay Damages (TORTS TOPIC)

As such, respondent Ruperto Tankeh is liable to his older brother, petitioner Alejandro, for damages. The liability of Ruperto is based on the law, under Article 1344, which provides that the commission of incidental fraud obliges the person employing it to pay damages.

In addition to this obligation, as the result of the contract between petitioner and respondents, there was also a patent abuse of right on the part of Ruperto Tankeh. This abuse of right is included in Articles 19 and 21 of the Civil Code which provide that:

Article 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.

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

Respondent Ruperto V. Tankeh abused his right to pursue undertakings in the interest of his business operations. This is because of his failure to at least act in good faith and be transparent with petitioner regarding Sterling Shipping Lines, Inc.'s daily operations.

First, petitioner was informed by Development Bank of the Philippines that it would still pursue his liability for the payment of the promissory note. This would not have happened if petitioner had allowed himself to be fully apprised of Sterling Shipping Lines, Inc.'s financial straits and if he felt that he could still participate in the company's operations. There is no evidence that respondent Ruperto V. Tankeh showed an earnest effort to at least allow the possibility of making petitioner part of the administration a reality. The respondent was the brother of the petitioner and was also the primary party that compelled petitioner Alejandro Tankeh to be solidarily bound to the promissory note. Ruperto V. Tankeh should have done his best to ensure that he had exerted the diligence to comply with the obligations attendant to the participation of petitioner.

Second, respondent Ruperto V. Tankeh's refusal to enter into an agreement or settlement with petitioner after the latter's discovery of the sale of the M/V Sterling Ace was an action that constituted bad faith. Due to Ruperto's refusal, his brother, petitioner Alejandro, became solidarily liable for an obligation that the latter could have avoided if he had been given an opportunity to participate in the operations of Sterling Shipping Lines, Inc. The simple sale of all of petitioner's shares would not have solved petitioner's problems, as it would not have negated his liability under the terms of the promissory note.

Finally, petitioner is still bound to the creditors of Sterling Shipping Lines, Inc., namely, public respondents Development Bank of the Philippines and Asset Privatization Trust. This is an additional financial burden for petitioner. Nothing in the records suggested the possibility that Development Bank of the Philippines or Asset Privatization Trust through the Privatization Management Office will not pursue or is precluded from pursuing its claim against the petitioner. Although petitioner Alejandro voluntarily signed the promissory note and became a stockholder and board member, respondent should have treated him with fairness, transparency, and consideration to minimize the risk of incurring grave financial reverses.

An award of moral damages would require certain conditions to be met, to wit: (1) first, there must be an injury, whether physical, mental or psychological, clearly sustained by the claimant; (2) second, there must be culpable act or omission factually established; (3) third, the wrongful act or omission of the defendant is the proximate cause of the injury sustained by the claimant; and (4) fourth, the award of damages is predicated on any of the cases stated in Article 2219 of the Civil Code.

In this case, the four elements cited in Francisco are present. First, petitioner suffered an injury due to the mental duress of being bound to such an onerous debt to Development Bank of the Philippines and Asset Privatization Trust. Second, the wrongful acts of undue exclusion done by respondent Ruperto V. Tankeh clearly fulfilled the same requirement. Third, the proximate cause of his injury was the failure of respondent Ruperto

V.  Tankeh to comply with his obligation to allow petitioner to either participate in the business or to fulfill his fiduciary responsibilities with candor and good faith. Finally, Article 2219 83 of the Civil Code provides that moral damages may be awarded in case of acts and actions referred to in Article 21, which, as stated, had been found to be attributed to respondent Ruperto V. Tankeh.

In addition to moral damages, this Court may also impose the payment of exemplary damages. Exemplary damages are further discussed in Articles 2233 and 2234, particularly regarding the prerequisites of ascertaining moral damages and the fact that it is discretionary upon this Court to award them or not:

ART. 2233. Exemplary damages cannot be recovered as a matter of right; the court will decide whether or not they should be adjudicated.

ART. 2234. While the amount of the exemplary damages need not be proven, 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.

To justify an award for exemplary damages, the wrongful act must be accompanied by bad faith, and an award of damages would be allowed only if the guilty party acted in a wanton, fraudulent, reckless or malevolent manner. In this case, this Court finds that respondent Ruperto V. Tankeh acted in a fraudulent manner through the finding of dolo incidente due to his failure to act in a manner consistent with propriety, good morals, and prudence.

 

 

 

ORION FREIGHT INTERNATIONAL V. KEIHIN EVERETT FORWARDING

 

Facts: Respondent Keihin entered into a Trucking Service Agreement Matsushita Corporation. On the same day, respondent sub-contracted petitioner for the latter to provide services for Matsushita’s trucking requirements. Subsequently, Matsushita contacted respondent Keihin about a news of an alleged stolen truck filled with video monitors and CCTV system owned by the former. When contacted about the news, petitioner merely informed by respondent that the same merely involved a breakdown and towing of a truck and that it was subsequently released and did not miss the intended time for the shipment.

 

Subsequently when the shipment arrived, it was however found that some items were missing. It was found out that the truck was subjected to pilferage. This prompted Matsushita to terminate its contract with respondent for non-disclosure of material facts amounting to fraud and uttered disregard to rule of law. Respondent on the other hand sent a demand letter to the petitioner for purposes of reimbursement for loss of income. Respondent subsequently filed a case against petitioner for non payment. Respondent prayed for compensation for lost of income with legal interest, exemplary damage, attorney’s fees, litigation expenses, and the costs of the suit.

 

Issue: WON petitioner is liable for damages for the loss of income of respondent?

 

 

Ruling: Yes. Articles 2200 and 2201 of  the Civil  Code provide for the liability for damages in contractual obligations:

Article 2200. Indemnification for damages shall comprehend not only the value of the loss suffered, but also that of the profits which the obligee failed to obtain.

Article 2201. In contracts and quasi-contracts, the damages for which the obligor who acted in good faith is liable shall be those that are the natural and probable consequences  of  the  breach  of  the  obligation,  and

which the parties have foreseen or could have reasonably foreseen at the time the obligation was constituted.

In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all damages which may be reasonably attributed to the non-performance of the obligation.

In Central Bank of the Philippines v. Court of Appeals, this Court explained the principles underlying Articles 2200 and 2201:

Construing these provisions, the following is what this Court held in Cerrano vs. Tan Chuco, 38 Phil. 392:". . . Article 1106 (now 2200) of the Civil Code establishes the rule that prospective profits may be recovered as damages, while article 1107 (now 2201) of the same Code provides that the damages recoverable for the breach of obligations not originating in fraud (dolo) are those which were or might have been foreseen at the time the contract was entered into. Applying these principles to the facts in this case, we think that it is unquestionable that defendant must be deemed to have foreseen at the time he made the contract that in the event of his failure to perform it, the plaintiff would be damaged by the loss of the profit he might reasonably have expected to derive from its use.

"When the existence of a loss is established, absolute certainty as to its amount is not required. The benefit to be derived from a contract which one of the parties has absolutely failed to perform is of necessity to some extent, a matter of speculation, but the injured party is not to be denied all remedy for that reason alone. He must produce the best evidence of which his case is susceptible and if that evidence warrants the inference that he has been damaged by the loss of profits which he might with reasonable certainty have anticipated but for the defendant's wrongful act, he is entitled to recover. As stated in Sedgwick on Damages (Ninth Ed., par. 177):

The general rule is, then, that a plaintiff may recover compensation for any gain which he can make it appear with reasonable certainty the defendant's wrongful act prevented him from acquiring, . . .' (See also Algarra vs. Sandejas, 27 Phil. Rep., 284, 289; Hicks vs. Manila

Hotel Co., 28 Phil. Rep., 325.)" (At pp. 398-399.)

The lower courts established that petitioner's negligence resulted in Matsushita's cancellation of its contract with respondent. The Regional Trial Court found:

In the letter dated June 6, 2002, Matsushita pre-terminated its In-House Brokerage Service Agreement with plaintiff Keihin for violation of the terms of said contract. Its President, KenGo Toda, stated that because of the incident that happened on April 17, 2002 involving properties which the plaintiff failed to inform them, Matsushita has lost confidence in plaintiff's capability to handle its brokerage and forwarding requirements. There was clearly a breach of trust as manifested by plaintiff's failure to disclose facts

was when it had the duty to reveal them and it constitutes fraud. Moreover, the negligence of plaintiff personnel cannot be tolerated as Matsushita is bound to protect the integrity of the company.

It could be reasonably foreseen that the failure to disclose the true facts of an incident, especially when it turned out that a crime might have been committed, would lead to a loss of trust and confidence in the party which was bound to disclose these facts. Petitioner caused the loss of trust and confidence when it misled respondent and Matsushita into believing that the incident had been irresponsibly reported and merely involved a stalled truck. Thus, petitioner is liable to respondent for the loss of profit sustained due to Matsushita's termination of the In-House Brokerage Service Agreement.

 

 

 

 

PEOPLE OF THE PHILIPPINES, vs. JULITO DIVINAGRACIA, SR

 

FACTS:

Divinagracia and CCC were husband and wife with seven (7) children. The family lived in a one (1)-room house at Jagobiao, Mandaue City near the boundary of Riverside, Consolacion.

Sometime in November 1996, Divinagracia and CCC quarrelled, prompting CCC to leave and spend the night at her sibling's house. Their daughters AAA (8 years old) and BBB (9 years old) were then left by themselves since their other siblings were either at their grandmother's house or with their friends.

Later that evening, while AAA and BBB were sleeping side by side inside their house, BBB suddenly woke up to her father's tight embrace from behind and felt him roughly running his hand over her leg and breasts. BBB then felt her father poking his hard penis against her buttocks. BBB begged her father to stop, saying that she still had to go to school the following day. Divinagracia moved away from BBB and went out of the house. A few minutes later, Divinagracia went back inside the house and lay down beside AAA, and proceeded to rape her.

When CCC arrived later that day, AAA told her that she was molested by Divinagracia. AAA did not say that she was raped because she was afraid that her parents would only quarrel again. However, CCC did not believe her daughter.

A little over two (2) years after the incident, Sister Mary Ann Abuna (Sister Mary Ann), CCC's sister and a nun, visited her family in Cebu.

That same day, AAA told Sister Mary Ann that she wanted to stop her schooling and begged to go with her back to Manila because she did not want

to see her father anymore, and confided that he even almost raped them.

Sister Mary Ann asked the sisters to leave Cebu and go back with her to Manila to prevent their father from further molesting them. She brought AAA, BBB, their other sister, and CCC back with her to Manila. While in Pampanga, AAA saw CCC crying because she wanted to go back to Cebu. AAA then went to Sister Mary Ann and declared that if CCC would return to Cebu, she would not go back with her. It was at this point that AAA opened up to Sister Mary Ann about the sexual abuse she suffered from her father.

Sister Mary Ann brought AAA to the Hospital Ning in Angeles City  to  be  examined  by  a  doctor. After examining AAA, Dr. Lauro C. Biag issued a medical certificate finding lacerations in the hymen of the victim indicative of rape. As a result, a complaint was filed for rape and acts of lasciviousness against their father, Divinagracia.

The trial court and the CA convicted their father. However, both decisions of the lower courts lack the award of civil indemnity and other damages. The Regional Trial Court, as affirmed by the Court of Appeals, held that since Divinagracia, as the father of AAA and BBB, stood to benefit from the monetary award, it would not be proper to award civil indemnity:

The Court shall not award civil indemnity to the private complainant. The accused as the father of the private complainants stands to benefit from the monetary award if adjudicated to his daughters since he is a compulsory heir. The concept of indemnification is not served if the very person made to pay for his crime shall benefit from it.

ISSUE: W/N an award for civil indemnity is proper in this case. –YES

RULING: Yes, the lower courts are mistaken.

Civil indemnity ex delicto, as a form of monetary restitution or compensation to the victim, attaches upon a finding of criminal liability because "[e]very person criminally liable for a felony is also civilly liable."'

On the other hand, moral damages are treated as "compensatory damages awarded for mental pain and suffering or mental anguish resulting from a wrong." The award of moral damages is meant to restore the status quo ante; thus, it must be commensurate to the suffering and anguish experienced by the victim.

Finally, exemplary or corrective damages are imposed as an example to the public, serving as a deterrent to the commission of similar acts. Exemplary damages are also awarded "as a part of the civil liability may be imposed when the crime was

committed    with     one     or     more     aggravating circumstances."

In view of the depravity of the acts committed by Divinagracia against his minor daughters, this Court imposes the following monetary awards, in accordance with jurisprudence:

For rape against AAA, Divinagracia is directed to pay AAA P100,000.00 as civil indemnity, P100,000.00 as moral damages, and P100,000.00 as exemplary damages.

For acts of lasciviousness against BBB, this Court adopts the ruling in People v. Santos and directs Divinagracia to pay BBB P20,000.00 as civil indemnity and P30,000.00 as moral damages. However, in light of the heinous nature of the crime committed, exemplary damages are increased from P2,000.00 to P20,000.00.

In addition, interest at the legal rate of six percent (6%) per annum shall be imposed on all damages awarded from the date of finality of this judgment until fully paid.

 

 

 

 

CARAVAN TRAVEL V ABEJAR, GR 170631, 10 FEBRUARY 2016

 

 

FACTS

Jesmariane R. Reyes (Reyes) was walking along the west-bound lane of Sampaguita  Street,  Parañaque City. A Mitsubishi L-300 van was travelling along the east-bound lane, opposite Reyes. To avoid an incoming vehicle, the van swerved to its left and hit Reyes. A witness to the accident went to her aid and loaded her in the back of the van and told the driver of the van, Jimmy Bautista (Bautista), to bring Reyes to the hospital. Instead, Bautista appeared to have left the van parked inside a nearby subdivision with Reyes still in the van. Fortunately, an unidentified civilian came to help and drove Reyes to the hospital. Upon investigation, it was found that the registered owner of the van was Caravan. Caravan shouldered the hospitalization expenses of Reyes. Despite medical attendance, Reyes died two (2) days after the accident.

 

Respondent Ermilinda R. Abejar (Abejar), Reyes' paternal aunt filed a Complaint for damages against Bautista and Caravan. In her Complaint, Abejar alleged that Bautista was an employee of Caravan and that Caravan is the registered owner of the van that hit Reyes. Abejar argues that since Caravan is the registered owner of the van, it is directly, primarily, and solidarily liable for the tortious acts of its driver.

 

Caravan argues that Abejar has no personality to bring this suit  because  she  is  not  a  real  party   in   interest. According to Caravan, only the victim herself or

her heirs can enforce an action based on culpa aquiliana such as Abejar's action for damages. Furthermore, Caravan argues that Abejar offered no documentary or testimonial evidence to prove that Bautista, the driver, acted "within the scope of his assigned tasks” when the accident occurred.

 

ISSUES

·         Whether respondent Ermilinda R. Abejar is a real party in interest who may bring an action for damages against petitioner Caravan Travel and Tours International, Inc. on account of Jesmariane R. Reyes' death; and

·         Whether petitioner should be held liable as an employer, pursuant to Article 2180 of the Civil Code.

 

RULING

Aunt is a real party in interest

Having exercised substitute parental authority, respondent suffered actual loss and is, thus, a real party in interest in this case. Respondent properly filed an action based on quasi-delict. The article does not limit or specify the active subjects, much less the relation that must exist between the victim of the culpa aquiliana and the person who may recover damages, thus warranting the inference that, in principle, anybody who suffers any damage from culpa aquiliana, whether a relative or not of the victim, may recover damages from the person responsible therefor.

 

Caravan Travel is liable as an employer

The plaintiff may first prove the employer's ownership of the vehicle involved in a mishap by presenting the vehicle's registration in evidence. Thereafter, a disputable presumption that the requirements for an employer's liability under Article 2180 of the Civil Code have been satisfied will arise. The burden of evidence then shifts to the defendant to show that no liability under Article 2180 has ensued.

 

The registered owner cannot use the defenses available under Article 2180 of the Civil Code — that the employee acts beyond the scope of his assigned task or that it exercised the due diligence of a good father of a family to prevent damage — because the motor vehicle registration law, to a certain extent, modified Article 2180 of the Civil Code by making these defenses unavailable to the registered owner of the motor vehicle. Thus, for as long as one is the registered owner of the car involved in the vehicular accident, it could not escape primary liability for the damages caused.

 

It is now up to petitioner to establish that it incurred no liability under Article 2180. This it can do by presenting proof of any of the following: first, that it had no employment relationship with Bautista; second, that Bautista acted outside the scope of his assigned tasks; or third, that it exercised the diligence of a good father of a family in the selection and supervision of Bautista. Evidently, petitioner did not only fail to exercise due diligence when it selected Bautista as service driver; it

also committed an actual violation of law. Employing a person holding a non-professional driver's license to operate another's motor vehicle violates Section 24 of the Land Transportation and Traffic Code. The mere formulation of various company policies on safety without showing that they were being complied with is not sufficient to exempt petitioner from liability arising from negligence of its employees.

 

The liability imposed on the registered owner is direct and primary. It does not depend on the inclusion of the negligent driver in the action. Petitioner's interest and liability is distinct from that of its driver. Regardless of petitioner's employer-employee relationship with Bautista, liability attaches to petitioner on account of its being the registered owner of a vehicle that figures in a mishap. Instead of insisting that Bautista — who was nothing more than a necessary party — should not have been dropped as a defendant, or that petitioner, along with Bautista, should have been dropped, petitioner could have opted to file a cross- claim against Bautista as its remedy.

 

Award of damages is correct Actual damages

The Court of Appeals committed no reversible error when it awarded actual damages to respondent. Respondent's claim for actual damages was based on the Certificate issued and signed by a certain Peñaloza showing that respondent paid Peñaloza P35,000.00 for funeral expenses. Respondent had personal knowledge of the facts sought to be proved by the Certificate, i.e., that she spent P35,000.00 for the funeral expenses of Reyes. Thus, the Certificate that she identified and testified to is not hearsay. It was not an error to admit this Certificate as evidence and basis for awarding P35,000.00 as actual damages to respondent

 

Civil indemnity and exemplary damages

The Court of Appeals likewise did not err in awarding civil indemnity and exemplary damages. Both the Court of Appeals and the Regional Trial Court found Bautista grossly negligent in driving the van and concluded that Bautista's gross negligence was the proximate cause of Reyes' death. The evidentiary bases for the award of civil indemnity and exemplary damages stand. As such, petitioner must pay the exemplary damages arising from the negligence of its driver. For the same reasons, the award of P50,000.00 by way of civil indemnity is justified.

 

Moral damages

The award of moral damages is likewise proper. For deaths caused by quasi-delict, the recovery of moral damages is limited to the spouse, legitimate and illegitimate descendants, and ascendants of the deceased. Persons exercising substitute parental authority are to be considered ascendants for the purpose of awarding moral damages. Persons exercising substitute parental authority are intended to stand in place of a child's parents.

Moral damages are awarded to compensate the claimant for his or her actual injury, and not to penalize the wrongdoer. Moral damages enable the injured party to alleviate the moral suffering resulting from the defendant's actions. It aims to restore — to the extent possible — "the spiritual status quo ante.” Hence, respondent is entitled to moral damages.

 

 

Attorney’s fees

As exemplary damages have been awarded and as respondent was compelled to litigate in order to protect her interests, she is rightly entitled to attorney's fees.

 

Interest

Interest of 6% per annum is awarded and is to be applied to

·         Actual damages from the time it was judicially or extrajudicially demanded from petitioner Caravan Travel and Tours International, Inc. until full satisfaction;

·         Moral damages, exemplary damages, and attorney's fees from the date of the Regional Trial Court Decision until full satisfaction; and

·         Civil indemnity from the date of the Court of Appeals Decision until full satisfaction.

 

 

 

RAUL S. IMPERIAL, Petitioner, v. HEIRS OF NEIL BAYABAN, AND MARY LOU BAYABAN, Respondents.

 

 

ONE-LINER: The burden of proving that a negligent act of an employee was performed within the scope of his or her assigned tasks rests with the plaintiff. When the plaintiff has discharged this burden, as in this case, the presumption that the employer was negligent arises, and the employer must put forward evidence showing that he or she had exercised the due diligence of a good father of a family in the selection and supervision of the employee. Failing to dispute this presumption renders the employer solidarily liable with the employee for the quasi-delict.

 

Facts:

 

Two (2) vehicles, a van and a tricycle, figured in an accident along Sumulong Highway, Antipolo City. The Mitsubishi L-300 van with plate number USX 931 was owned and registered under Imperial's name, and was driven by Laraga. The tricycle with plate number DU 8833 was driven by Gerardo Mercado (Mercado).

 

On board the tricycle were the Bayaban Spouses (Neil and Mary Lou), who sustained injuries. For the injuries they sustained, the Bayaban Spouses had to undergo therapy and post-medical treatment.

 

The Bayaban Spouses demanded compensation from Imperial, Laraga, and Mercado for the hospital bills and

loss of income that they sustained while undergoing therapy and post-medical treatment. They filed before the RTC a complaint for damages impleading Imperial, Laraga, and Mercado as defendants.Neil's unearned income as a second-mate seaman, P7,600.00 per month representing Mary Lou's unearned income as pharmacist, P200,000.00 as moral damages, and P20,000.00 as attorney's fees.

 

The Regional Trial Court ruled in favor of the Bayaban Spouses . It found Laraga negligent and the proximate cause of the accident, i.e., overtaking another vehicle and, in the process, colliding with the tricycle that carried the Bayaban Spouses on the other side of the road. As for Imperial, it ruled that he failed to prove that he had exercised due diligence in the selection and supervision of Laraga, his employee; thus, he was presumed negligent and was likewise held liable for damages to the Bayaban Spouses.

 

The Regional Trial Court held that the official receipts presented in evidence substantiated the Bayaban Spouses' claim for reimbursement of medical and hospital expenses. However, it found the certificates of employment inadequate to prove the amount of their unearned income. Nevertheless, Mary Lou, for her own behalf, and the Heirs of Neil Bayaban were awarded P100,000.00 as temperate damages. Moral damages and exemplary damages of P50,000.00 each and attorney's fees of P25,000.00 plus costs of suit were awarded to them as well.

 

The CA affirmed the decision of the RTC but deleted the award of temperate damages. CA ruled that temperate and actual damages were mutually exclusive and could not be awarded at the same time.

 

Imperial (Petitioner) filed a petition for certiorari before the SC.

 

Imperial’s Defenses:

-the van was under the custody of one Rosalia Pascua where he lent the van to her to fix some pipes in Imperial’s Greenhouse in Antipolo

-he exercised due diligence in the selection and supervision of Laraga (the driver); He even allegedly sponsored Laraga's formal driving lessons

-Laraga was allegedly acting outside the scope of his duties when the accident happened considering that it was a Sunday, his rest day

 

ISSUES:

1.     W/N Respondents proved that Laraga was acting within the scope of his assigned task? YES

2.     W/N original receipts of the medical and hospital bills presented by respondents Neil Bayaban and Mary Lou Bayaban are competent evidence of the actual damages that they have sustained considering that the receipts were not authenticated? YES

3.     W/N Respondents are entitled to temperate damages? YES

 

HELD:

1.     Articles 2176 and 2180 of the Civil Code were derived from Articles 1902 and 1903 of the Spanish Civil Code of 1889. Article 2176 defines "quasi-delict" as the fault or negligence that causes damage to another, there being no pre-existing contractual relations between the parties. On the other hand, Article 2180 enumerates persons who are vicariously liable for the fault or negligence of persons over whom they exercise control, whether absolute or limited.

 

Specifically for employers, they are deemed liable or morally responsible for the fault or negligence of their employees but only if the employees are acting within the scope of their assigned tasks. An act is deemed an assigned task if it is "done by an employee, in furtherance of the interests of the employer or for the account of the employer at the time of the infliction of the injury or damage.

 

The SC, in a case, said that the burden of proving the existence of an employer-employee relationship and that the employee was acting within the scope of his or her assigned tasks rests with the plaintiff under the Latin maxim "ei incumbit probatio qui dicit, non qui negat" or "he who asserts, not he who denies, must prove." Therefore, it is not incumbent on the employer to prove that the employee was not acting within the scope of his assigned tasks. Once the plaintiff establishes the requisite facts, the presumption that the employer was negligent in the selection and supervision of the employee arises, disputable with evidence that the employer has observed all the diligence of a good father of a family to prevent damage. Though vicarious, the liability of employers under Article 2180 is personal and direct.

 

Applying the foregoing, this Court finds that respondents have discharged the burden of proof necessary to hold Imperial vicariously liable under Article 2180 of the Civil Code.

 

There is no question here that Laraga was petitioner's driver, hence, his employee, as this fact was admitted by petitioner. This Court likewise finds that respondents have established that Laraga was acting within the scope of his assigned tasks at the time of the accident. It was 3:00 p.m. and Laraga was driving in Antipolo City, where, as alleged by petitioner, his greenhouse and garden were located. It is worth noting that according to petitioner, he loaned the van to one Pascua for the maintenance of his greenhouse and the repair of the water line pipes in his garden. The logical conclusion is that Laraga was driving the van in connection with the upkeep of petitioner's Antipolo greenhouse and garden. Laraga was driving the

van in furtherance of the interests of petitioner at the time of the accident.

 

The defense that Sunday was supposedly Laraga's day off fails to convince. There is no proof whatsoever of the truthfulness of this allegation, with Laraga not having appeared in court to testify on this matter.

 

With respondents having discharged their burden of proof, the disputable presumption that petitioner Imperial was negligent in the selection and supervision of Laraga arises.

 

Unfortunately for petitioner, he miserably failed to dispute the presumption of negligence in his selection and supervision of Laraga. As the Regional Trial Court and the Court of Appeals found, he only gave self-serving testimonies without the requisite documentary proof that he had enrolled Laraga in a formal driving school. At best, he only established that he had financed the fees needed for Laraga to obtain his driver's license, which is hardly the due diligence contemplated in Article 2180 of the Civil Code.

 

Considering that petitioner failed to dispute the presumption of negligence on his part, he was correctly deemed liable for the damages incurred by the Bayaban Spouses when the tricycle they were riding collided with the van driven by petitioner's employee, Laraga.

 

2.   Under the rules of evidence, documents are either public or private. Public documents are those exclusively enumerated in Rule 132, Section 19 of the Rules of Court. These include written official acts, or records of the official acts of the sovereign authority, official bodies and tribunals, and public officers, whether of the Philippines, or of a foreign country; documents acknowledged before a notary public except last wills and testaments; and public records, kept in the Philippines, of private documents required by law to be entered there. When public documents are presented in evidence, they are prima facie evidence of the facts stated there, and thus, need not be authenticated.

 

As for private documents, i.e., those not enumerated in Rule 132, Section 19, they must be authenticated, or their due execution and authenticity proven, per Rule 132, Section 20 of the Rules of Court.

 

Official receipts of hospital and medical expenses are not among those enumerated in Rule 132, Section 19. These official receipts, therefore, are private documents which may be authenticated either by presenting as witness anyone who saw the document executed or written, or by presenting an evidence of the genuineness of the signature or handwriting of the maker.

 

Respondent Mary Lou testified as to the circumstances of the accident and the expenses she and Neil had incurred as a result of it. The official receipts were issued to her and Neil upon payment of the expenses. Since the official receipts were issued to respondent Mary Lou, her

testimony, therefore, is a competent evidence of the execution of the official receipts.

 

With respondent Mary Lou testifying as to the execution and issuance of the official receipts, they were duly authenticated, contrary to petitioner's claim.

 

3.   Temperate or moderate damages, which are more than nominal but less than actual or compensatory damages, may be 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. Temperate damages must be reasonable under the circumstances.

 

While respondents failed to put forward definite proof of income lost during confinement and post-therapy, they still suffered pecuniary loss when they were incapacitated to work. Under the circumstances, the P100,000.00 awarded by the Regional Trial Court is reasonable to compensate them for the income that the Bayaban Spouses could have earned as a second-mate seaman and a pharmacist, respectively.

 

As opposed to the Court of Appeals' ruling, temperate damages may still be awarded to respondents despite previous award of actual damages because the damages cover distinct pecuniary losses. The temperate damages awarded cover the loss of earning capacity while the actual damages cover the medical and hospital expenses.

 

Petition DENIED.

 

 

 

VIVIAN B. TORREON and FELOMINA F. ABELLANA,

vs.

GENEROSO APARRA, JR., FELIX CABALLES, and CARMELO SIMOLDE

 

 

On November 1, 1989, Vivian's husband, Rodolfo Torreon (Rodolfo), and daughters, Monalisa Torreon (Monalisa) and Johanna Ava Torreon (Johanna), arrived with Felomina Abellana (Abellana) at the municipal wharf of Jetafe, Bohol. They came from Cebu City aboard M/B Island Traders, a motor boat owned and operated by Carmelo Simolde (Simolde).

 

After disembarking from the motor boat, they boarded a cargo truck to transport them from the wharf to the poblacion of Jetafe. Abellana was seated in front while Rodolfo and his daughters were at the back of the truck. There were no proper seats at the back and the 30 or more passengers were either standing or sitting on their bags. Caballes is the official truck driver and allowed Aparra, a chief diesel mechanic to drive the truck while he sat beside him. Aparra maneuvered to the right of the road hitting a parked bicycle. As he turned, Aparra had to swerve to the left to avoid hitting Subiano who was

standing on the side of the road. Because the road was only 4 meters and 24 inches wide, Aparra lost control of the truck and it fell off the ward. Rodolfo and Monalisa died while Johanna and Abellana were injured.

 

Vivian and Abellana filed a criminal complaint for Reckless Imprudence resulting to Double Homicide, Multiple Serious Physical Injuries and Damage to Property against Aparra and Caballes and a sepearate complaint for damages against Simolde, Caballes and Aparra.

 

Issue:

1.  W/n actual damages for loss of earning capacity should be awarded to petitioner Vivian

 

2.  W/n the value of the other awarded damages should be increased

 

Ruling:

 

Not related to damages

Abellana is barred from instituting this case as she did not reserve her right to institute a separate civil action, her cause of action for damages was deemed impliedly instituted with the criminal case.

 

Article 2176 of the Civil Code provides that those who commit acts consituting a quasi-delict are liable to pay damages. The elements to establish a quasi-delict case are:

a.  Damages to the plaintiff

b.  Negligence, by act or omission of the defendant

c.  Connection of the cause and effect between the negligence and the damages

 

Caballes was grossly negligent in allowing Aparra to drive the truck despite being an inexperienced driver. Such inexperience caused the accident that led to the deaths of Rodolfo and Monalisa. Their deaths caused damage to Vivian. The elemets are present.

 

Article 2180 of the Civil Code provides that an employer is vicariously liable with his employees for any damage caused while performing their duties. Simolde is solidarily liable with Caballes and Aparra for the payment of damages for failing to exercise diligence in the supervision of his employees.

 

DAMAGES

As to the loss of earning capacity of Rodolfo Applying Article 2206 in awarding lost earning capacity in addition to civil/death indemnity (50,000), the formula is Net Earning Capacity = 2/3 x (80 - age at time of death) x (gross annual income- reasonable and necessary living expenses)

 

To be awarded with the claim on loss of earning capacity, Vivian is only required to present preponderance of evidence and testimonial evidence is allowed to prove such loss in civil cases. Testimony of Abellana who is Rodolfo’s employer is sufficient.

 

Respondents are liable to compensate for the income the heirs would have received had he lived in the amount of 1,919,700.

 

Life expectancy= 2/3 x 80-48 LE= 21.33 years

 

Loss of Earning Capacity = 21.33 x 180000/2 LEC= 1,919,700

 

As to the funeral and burial expenses for daughter Monalisa

Vivan failed to produce any receipt or evidence to support this claim. Hence, she cannot be entitled to an award of actual damages for Monalisa’s loss

 

As to the award of moral damages

Although the CC grants compensation for mental anguish by the heirs of the loss of their loved on, this award is not meant to enrich the petitioner. The increase sought by Vivian cannot be granted. It shall remain as 50,000 to the heirs of Rodolfo and another 50,000 to the heirs Monalisa

 

As to the award of exemplary damages

It is imposed as a punishment for highly reprehensible conduct, meant to deter serious wrong doing.

In quasi- delicts, there must be gross  negligence  for this to be granted.

In the present case, each respondent clearly acted with gross negligence. Aparra drove without a license and jeopardized the life of the passengers. Caballes allowed Aparra to drive and also permitted passengers to board the truck despite knowing it is not designed to transport people. Simolde was also grossly negligent in tolerating his employees’ negligent behavior.

 

The exemplary damage of 10,000 is to be awarded to the heirs of Rodolfo and Monalisa.

 

As to the award of litigation expenses and atty fees Considering the protracted litigation of this dispute, an award of 100,000 as attys fees and 50,000 for litigation expenses be awarded to Vivian.

 

As to interest (also known as moratory damages)

In the absence of an exress stipulation as to rate of interest, the prevailing rate of interest is 6% per annum. In case of non-payment of judgment award, an interest at the legal rate of 6% shall be imposed on the total judgment award reckoned from the finality of judgment until full payment.

 

 

 

MERCURY DRUG VS HUANG

 

 

Tortious Act: Collision of a 16 wheeler truck and a Sedan causing paralysis to the driver.

See Art 2205.

 

 

Facts:

Petitioner Mercury Drug Corporation (Mercury Drug) is the registered owner of a six-wheeler truck with. It has in its employ petitioner Rolando J. del Rosario as driver.

Respondent spouses Richard and Carmen Huang are the parents of respondent Stephen Huang and owners of the red 1991 Toyota Corolla GLI Sedan.

These two vehicles figured in a road accident on December 20, 1996 at around 10:30 p.m. within the municipality of Taguig, Metro Manila. Both were traversing the C-5 Highway, north bound, coming from the general direction of Alabang going to Pasig City.

The car was on the left innermost lane while the truck was on the next lane to its right. When the truck suddenly swerved to its left and slammed into the front right side of the car. The collision hurled the car over the island where it hit a lamppost, spun around and landed on the opposite lane.

At the time of the accident, petitioner Del Rosario only had a Traffic Violation Receipt (TVR). His driver’s license had been confiscated because he had been previously apprehended for reckless driving.

The car, valued at P300,000.00, was a total wreck. Respondent Stephen Huang sustained massive injuries to his spinal cord, head, face, and lung. Despite a series of operations, respondent Stephen Huang is paralyzed for life from his chest down and requires continuous medical and rehabilitation treatment.

In contrast, petitioners allege that the immediate and proximate cause of the accident was respondent Stephen Huang’s recklessness. According to petitioner Del Rosario, he was driving on the left innermost lane when the car bumped the truck’s front right tire.

 

Issue: Whether or not the persumption of negligence was properly rebutted by Mercury Drug

 

Ruling: NO.

We now come to the liability of petitioner Mercury Drug as employer of Del Rosario. Articles 2176 and 2180 of the Civil Code provide:

Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter.

Art. 2180. The obligation imposed by article 2176 is demandable not only for one’s own acts or omissions, but also for those of persons for whom one is responsible.

x x x

The owners and managers of an establishment or enterprise are likewise responsible for damages caused by their employees in the service of the branches in

which the latter are employed or on the occasion of their functions.

x x x

The liability of the employer under Art. 2180 of the Civil Code is direct or immediate. It is not conditioned on a prior recourse against the negligent employee, or a prior showing of insolvency of such employee. It is also joint and solidary with the employee.

To be relieved of liability, petitioner Mercury Drug should show that it exercised the diligence of a good father of a family, both in the selection of the employee and in the supervision of the performance of his duties. Thus, in the selection of its prospective employees, the employer is required to examine them as to their qualifications, experience, and service records. With respect to the supervision of its employees, the employer should formulate standard operating procedures, monitor their implementation, and impose disciplinary measures for their breach. To establish compliance with these requirements, employers must submit concrete proof, including documentary evidence.

 

In the instant case, petitioner Mercury Drug presented testimonial evidence on its hiring procedure. According to Mrs. Merlie Caamic, the Recruitment and Training Manager of petitioner Mercury Drug, applicants are required to take theoretical and actual driving tests, and psychological examination. In the case of petitioner Del Rosario, however, Mrs. Caamic admitted that he took the driving tests and psychological examination when he applied for the position of Delivery Man, but not when he applied for the position of Truck Man. Mrs. Caamic also admitted that petitioner Del Rosario used a Galant which is a light vehicle, instead of a truck during the driving tests. Further, no tests were conducted on the motor skills development, perceptual speed, visual attention, depth visualization, eye and hand coordination and steadiness of petitioner Del Rosario. No NBI and police clearances were also presented. Lastly, petitioner Del Rosario attended only three driving seminars – on June 30, 2001, February 5, 2000 and July 7, 1984. In effect, the only seminar he attended before the accident which occurred in 1996 was held twelve years ago in 1984.

It also appears that petitioner Mercury Drug does not provide for a back-up driver for long trips. At the time of the accident, petitioner Del Rosario has been out on the road for more than thirteen hours, without any alternate. Mrs. Caamic testified that she does not know of any company policy requiring back-up drivers for long trips.

Petitioner Mercury Drug likewise failed to show that it exercised due diligence on the supervision and discipline over its employees. In fact, on the day of the accident, petitioner Del Rosario was driving without a license. He was holding a TVR for reckless driving. He testified that he reported the incident to his superior, but nothing was done about it. He was not suspended or reprimanded. No disciplinary action whatsoever was taken against

petitioner Del Rosario. We therefore affirm the finding that petitioner Mercury Drug has failed to discharge its burden of proving that it exercised due diligence in the selection and supervision of its employee, petitioner Del Rosario.

 

 

No discussion jud for damages by the SC but ila gi reiterate ang sa lower court:

Although Stephen survived the accident, the doctors are unanimous in saying that Stephen needs continuous rehabilitation for the rest of his life. Dr. Sibayan's prognosis with regard to Stephen's future recovery is nil, or zero. The best thing that can be done for Stephen is for the latter to maintain some kind of rehabilitation program with the aim of preventing complications, particularly bed sores, infection of the bladder, inability to move. There are no dedicated and speci5c centers in the Philippines with spinal cord injury rehabilitation program. Notwithstanding the presentation by plaintiffs of the rehabilitation programs which the plaintiff Stephen may avail of at Kessler Institute for Rehabilitation, New Jersey, USA, together with the estimated expenses which may be incurred by plaintiffs, (Exhibits Y, Z-3), this Court deems it proper not to include the said amount because as far as the records are concerned, the enrollment of Stephen thereat remained a plan. The plaintiffs Spouses Richard and Carmen Huang merely contemplated the sending of their son, Stephen to Kessler Institute.

 

Accordingly, the defendants must not only pay for the actual expenses incurred by plaintiffs for the hospitalization and medical treatment of Stephen, they must also pay plaintiffs for the natural and probable expenses which the plaintiffs will in the future likely incur as a result of the injuries he suffered. In 1997[,] Stephen[']s average monthly expense was P21,500.00 and for 1998 it was for P16,280.00 more or less, (TSN, p. 11, January 11, 1999). It is expected that he will continue to incur these expenses for the rest of his life. The chance of Stephen regaining his normal ability to walk and perform the most basic body movements is remote. Thus, he shall be dependent 5nancially and physically on the care, assistance, and support of his family throughout his life. Based on the actuarial computation of the remaining years that Stephen is expected to live, the life care cost will amount to P23,461,062.00 more or less. Plaintiffs must be compensated.

To determine how much to be awarded for decreased earning capacity, the health of the injured party, and his mental and physical ability to maintain himself before the injury as compared with his condition in this respect afterwards have to be considered. The rule necessarily permits an inquiry into the capacity of plaintiff prior to the injury, including his physical condition, and his ability to labor or follow his usual vocation, his age, his state of health, and his

probable life expectancy. The plaintiff's ability and disposition to labor or his business or professional habits may also be taken into consideration . . .

 

 

NOELL WHESSOE, INC. vs. INDEPENDENT TESTING CONSULTANTS, INC., PETROTECH SYSTEMS, INC., and LIQUIGAZ PHILIPPINES CORP.

 

 

Facts:

 

Petrotech, a subcontractor of Liquigaz, engaged the services of Independent Testing Consultants to conduct non-destructive testing on Liquigaz's piping systems and liquefied petroleum gas storage tanks located in Barangay Alas-Asin, Mariveles, Bataan.

 

Independent Testing Consultants conducted the agreed tests. It later billed Petrotech. However, despite demand, Petrotech refused to pay.

 

Independent Testing Consultants led a Complaint 8 for collection of sum of money with damages against Petrotech, Liquigaz, and Noell Whessoe. It joined Noell Whessoe as a defendant, alleging that it was Liquigaz's contractor that subcontracted Petrotech

 

Noell Whessoe denied that it was Liquigaz's contractor and that its basic role was merely to supervise the construction of its gas plants. It argued that any privity  of contract was only with Petrotech. Thus, it asserted that Petrotech alone should be liable to Independent Testing Consultants.

 

Petrotech alleged that upon Noell Whessoe's approval, Independent Testing Consultants was chosen to conduct the non-destructive testing on Liquigaz's liquefied petroleum gas storage. However, it averred that it later received a letter from Noell Whessoe withdrawing its approval for Independent Testing Consultants' continued services.

 

Regional Trial Court found Liquigaz, Noell Whessoe, and Petrotech solidarily liable to Independent Testing Consultants.

 

The Court of Appeals affirmed the RTC. Noell Whessoe could not disclaim knowledge that Petrotech engaged the services of Independent Testing Consultants, considering its admission that it later sent a letter to Petrotech withdrawing its approval of the engagement. The Court of Appeals, however, held that Noell Whessoe's liability did not preclude it from demanding reimbursement from Petrotech for any amount paid.

 

Noell Whessoe’s arguments

 

Petitioner asserts that it should not have been made solidarily liable to respondent Independent Testing Consultants since it had no privity of contract with the latter. It maintains that the Contract Agreement for the

Mariveles Terminal Expansion Project was between Liquigaz and Whessoe UK, an entity separate and distinct from petitioner.

 

Petitioner maintains that it cannot be bound by the contract between Whessoe UK and Petrotech simply because it sent a letter to Petrotech expressing dissatisfaction or disapproval of respondent Independent Testing Consultants' services. It likewise points out that even assuming that there was privity of contract, Whessoe UK had already paid in full its contractual obligations to Petrotech.

 

Thus, it asserts that it was entitled to moral damages of P1,000,000.00 since "the filing of this baseless and unfounded case . . . has tarnished its good business name and standing by giving the erroneous and false impression to the public that it is a company that reneges on its obligations."

 

ISSUES:

 

Whether or not petitioner Noell Whessoe, Inc. can be held solidarily liable with respondents Liquigaz Philippines Corporation and Petrotech Systems, Inc. for unpaid fees to respondent Independent Testing Consultants, Inc. NO.

 

Assuming that petitioner Noell Whessoe, Inc. was not liable, this Court is further asked to resolve the issue of whether or not it was entitled to moral damages. NO.

 

 

RULING:

 

 

To resolve the issue of whether petitioner is solidarily liable with Liquigaz and Petrotech, this Court must first pass upon petitioner's argument that it is a separate and distinct entity from Whessoe UK, the signatory of the contracts with them.

 

As of April 12, 1997, petitioner referred to itself as a "wholly owned subsidiary" of Whessoe UK. It alleged, however, that on June 5, 1997, it was registered with the Securities and Exchange Commission as a domestic corporation engaged in general construction and other allied businesses. Unfortunately, no evidence was presented to prove that it was incorporated as a separate corporation by June 5, 1997.

 

Petitioner argues that the execution of this contract did not make it the contractor for the Mariveles Terminal Expansion Project. It asserts that it was merely a subcontractor hired by Whessoe UK to oversee the management of the site and the other subcontractors' activities. Records, however, show that during the negotiations for the Pipework and Mechanical Equipment Installation Subcontract with Petrotech, Petrotech made no distinction between petitioner and Whessoe UK. This letter did not state that Whessoe UK, through petitioner, was withdrawing approval. It states that petitioner was

withdrawing approval.

 

Under Article 1729, respondent Independent Testing Consultants had a cause of action against Liquigaz and petitioner, even if its contract was only with Petrotech. The Regional Trial Court and the Court of Appeals, therefore, did not err in concluding that petitioner was solidarily liable with Liquigaz and Petrotech for unpaid fees to respondent Independent Testing Consultants.

 

Article 1729 creates a solidary liability between the owner, the contractor, and the subcontractor. A solidary obligation is "one in which each debtor is liable for the entire obligation, and each creditor is entitled to demand the whole obligation."

 

Respondent Independent Testing Consultants may demand payment for all of its unpaid fees from Liquigaz, petitioner, or Petrotech, even if its contract was only with the latter.

 

However, Article 1729, while serving as an exception to the general rule on the privity of contracts, likewise provides for an exception to this exception. The contractor is solidarily liable with the owner and subcontractor for any liabilities against a supplier despite the absence of contract between the contractor and the supplier, except when the subcontractor has already been fully paid for its services.

 

Since Whessoe UK and petitioner should be considered the same entity for the purposes of the Mariveles Terminal Expansion Project, Whessoe UK's full payment to Petrotech would serve as a valid defense against petitioner's solidary liability. Thus, petitioner still cannot be held solidarily liable with Liquigaz and Petrotech for any remaining receivables from respondent Independent Testing Consultants. Any remaining obligations to it should be solidarily borne by the owner, Liquigaz, and the subcontractor, Petrotech.

 

While petitioner is absolved from its solidary liability, it is not, however, entitled to any moral damages. Petitioner asserts that it was entitled to moral damages of P1,000,000.00 on the basis that respondent Independent Testing Consultants' collection suit has tarnished its good business name and standing.

 

Moral damages are awarded when the claimant suffers physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. These damages must be understood to be in the concept of grants, not punitive or corrective in nature, calculated to compensate the claimant for the injury suffered. Its award is "aimed at a restoration, within the limits possible, of the spiritual status quo ante; and therefore, it must be proportionate to the suffering inflicted.

 

A corporation is not a natural person. It is a creation of legal fiction and has no feelings, no emotions, no senses. A corporation is incapable of fright, anxiety,

shock, humiliation, and physical or mental suffering.

 

Mental suffering can be experienced only by one having a nervous system and it flows from real ills, sorrows, and griefs of life. A corporation, not having a nervous system or a human body, does not experience physical suffering, mental anguish, embarrassment, or wounded feelings. Thus, a corporation cannot be awarded moral damages.