Republic of the PhilippinesSUPREME COURTManilaEN BANC G.R. No. L-11624 January 21, 1918E. M. BACHRACH, plaintiff-appellee, vs."LA PROTECTORA", ET AL., defendants-appellants. Vicente Foz for appellants. A. J. Burke for appellee. STREET, J.:In the year 1913, the individuals named as defendants in this action formed a civil partnership, called "La Protectora," for the purpose of engaging in the business of transporting passengers and freight at Laoag, Ilocos Norte. In order to provide the enterprise with means of transportation, Marcelo Barba, acting as manager, came to Manila and upon June 23, 1913, negotiated the purchase of two automobile trucks from the plaintiff, E. M. Bachrach, for the agree price of P16,500. He paid the sum of 3,000 in cash, and for the balance executed promissory notes representing the deferred payments. These notes provided for the payment of interest from June 23, 1913, the date of the notes, at the rate of 10 per cent per annum. Provision was also made in the notes for the payment of 25 per cent of the amount due if it should be necessary to place the notes in the hands of an attorney for collection. Three of these notes, for the sum of P3,375 each, have been made the subject of the present action, and there are exhibited with the complaint in the cause. One was signed by Marcelo Barba in the following manner:P. P. La Protectora By Marcelo Barba Marcelo Barba.The other two notes are signed in the same way with the word "By" omitted before the name of Marcelo Barba in the second line of the signature. It is obvious that in thus signing the notes Marcelo Barba intended to bind both the partnership and himself. In the body of the note the word "I" (yo) instead of "we" (nosotros) is used before the words "promise to pay" (prometemos) used in the printed form. It is plain that the singular pronoun here has all the force of the plural. As preliminary to the purchase of these trucks, the defendants Nicolas Segundo, Antonio Adiarte, Ignacio Flores, and Modesto Serrano, upon June 12, 1913, executed in due form a document in which they declared that they were members of the firm "La Protectora" and that they had granted to its president full authority "in the name and representation of said partnership to contract for the purchase of two automobiles" (en nombre y representacion de la mencionada sociedad contratante la compra de dos automoviles). This document was apparently executed in obedience to the requirements of subsection 2 of article 1697 of the Civil Code, for the purpose of evidencing the authority of Marcelo Barba to bind the partnership by the purchase. The document in question was delivered by him to Bachrach at the time the automobiles were purchased. From time to time after this purchase was made, Marcelo Barba purchased of the plaintiff various automobile effects and accessories to be used in the business of "La Protectora." Upon May 21, 1914, the indebtedness resulting from these additional purchases amounted to the sum of P2,916.57 In May, 1914, the plaintiff foreclosed a chattel mortgage which he had retained on the trucks in order to secure the purchase price. The amount realized from this sale was P1,000. This was credited unpaid. To recover this balance, together with the sum due for additional purchases, the present action was instituted in the Court of First Instance of the city of Manila, upon May 29, 1914, against "La Protectora" and the five individuals Marcelo Barba, Nicolas Segundo, Antonio Adiarte, Ignacio Flores, and Modesto Serrano. No question has been made as to the propriety of impleading "La Protectora" as if it were a legal entity. At the hearing, judgment was rendered against all of the defendants. From this judgment no appeal was taken in behalf either of "La Protectora" or Marcelo Barba; and their liability is not here under consideration. The four individuals who signed the document to which reference has been made, authorizing Barba to purchase the two trucks have, however, appealed and assigned errors. The question here to be determined is whether or not these individuals are liable for the firm debts and if so to what extent. The amount of indebtedness owing to the plaintiff is not in dispute, as the principal of the debt is agreed to be P7,037. Of this amount it must now be assumed, in view of the finding of the trial court, from which no appeal has been taken by the plaintiff, that the unpaid balance of the notes amounts to P4,121, while the remainder (P2,916) represents the amount due for automobile supplies and accessories. The business conducted under the name of "La Protectora" was evidently that of a civil partnership; and the liability of the partners to this association must be determined under the provisions of the Civil Code. The authority of Marcelo Barba to bind the partnership, in the purchase of the trucks, is fully established by the document executed by the four appellants upon June 12, 1913. The transaction by which Barba secured these trucks was in conformity with the tenor of this document. The promissory notes constitute the obligation exclusively of "La Protectora" and of Marcelo Barba; and they do not in any sense constitute an obligation directly binding on the four appellants. Their liability is based on the fact that they are members of the civil partnership and as such are liable for its debts. It is true that article 1698 of the Civil Code declares that a member of a civil partnership is not liable in solidum (solidariamente) with his fellows for its entire indebtedness; but it results from this article, in connection with article 1137 of the Civil Code, that each is liable with the others (mancomunadamente) for his aliquot part of such indebtedness. And so it has been held by this court. (Co-Pitco vs. Yulo, 8 Phil. Rep., 544.) The Court of First Instance seems to have founded its judgment against the appellants in part upon the idea that the document executed by them constituted an authority for Marcelo Barba to bind them personally, as contemplated in the second clause of article 1698 of the Civil Code. That cause says that no member of the partnership can bind the others by a personal act if they have not given him authority to do so. We think that the document referred to was intended merely as an authority to enable Barba to bind the partnership and that the parties to that instrument did not intend thereby to confer upon Barba an authority to bind them personally. It is obvious that the contract which Barba in fact executed in pursuance of that authority did not by its terms profess to bind the appellants personally at all, but only the partnership and himself. It follows that the four appellants cannot be held to have been personally obligated by that instrument; but, as we have already seen, their liability rests upon the general principles underlying partnership liability. As to so much of the indebtedness as is based upon the claim for automobile supplies and accessories, it is obvious that the document of June 12, 1913, affords no authority for holding the appellants liable. Their liability upon this account is, however, no less obvious than upon the debt incurred by the purchase of the trucks; and such liability is derived from the fact that the debt was lawfully incurred in the prosecution of the partnership enterprise. There is no proof in the record showing what the agreement, if any, was made with regard to the form of management. Under these circumstances it is declared in article 1695 of the Civil Code that all the partners are considered agents of the partnership. Barba therefore must be held to have had authority to incur these expenses. But in addition to this he is shown to have been in fact the president or manager, and there can be no doubt that he had actual authority to incur this obligation. From what has been said it results that the appellants are severally liable for their respective shares of the entire indebtedness found to be due; and the Court of First Instance committed no error in giving judgment against them. The amount for which judgment should be entered is P7,037, to which shall be added (1) interest at 10 per cent per annum from June 23, 1913, to be calculated upon the sum of P4.121; (2) interest at 6 per cent per annum from July 21, 1915, to be calculated upon the sum of P2,961; (3) the further sum of P1,030.25, this being the amount stipulated to be paid by way of attorney's fees. However, it should be noted that any property pertaining to "La Protectora" should first be applied to this indebtedness pursuant to the judgment already entered in this case in the court below; and each of the four appellants shall be liable only for the one-fifth part of the remainder unpaid. Let judgment be entered accordingly, without any express finding of costs of this instance. So ordered. Arellano, C.J., Torres, Araullo, Malcolm, and Avancea, JJ., concur.

The Lawphil Project - Arellano Law Foundation

Republic of the PhilippinesSUPREME COURTManilaEN BANC G.R. No. 13228 September 13, 1918WILLIAM OLLENDORFF, plaintiff-appellee, vs.IRA ABRAHAMSON, defendant-appellant.Lawrence & Ross for appellant.Wolfson & Wolfson for appellee.FISHER, J.:This is an appeal by defendant from a judgment of the Court of First Instance of Manila by which he was enjoined for a term of five years, from September 10, 1915, from engaging in the Philippine Islands in any business similar to or competitive with that of plaintiff.The record discloses that plaintiff is and for a long time past has been engaged in the city of Manila and elsewhere in the Philippine Islands in the business of manufacturing ladies embroidered underwear for export. Plaintiff imports the material from which this underwear is made and adopts decorative designs which are embroidered upon it by Filipino needle workers from patterns selected and supplied by him. Most of the embroidery work is done in the homes of the workers. The embroidered material is then returned to plaintiff's factory in Manila where it is made into finished garments and prepared for export. The embroiderers employed by plaintiff are under contract to work for plaintiff exclusively. Some fifteen thousand home workers and eight hundred factory workers are engaged in this work for plaintiff, and some two and a half million pesos are invested in his business.On September 10, 1915, plaintiff and defendant entered into a contract in the following terms:Contract of agreement made and entered into this date by and between William Ollendorff, of Manila, Philippine Islands, party of the first part, and Ira Abrahamson, of Manila, Philippine Islands, party of the second part:The party of first part hereby agrees to employ the party of the second part, and the party of the second part hereby obligates and binds himself to work for the party of the first part for a term of two years from date commencing from the sixth of September, one thousand nine hundred and fifteen and ending on the fifth day of September, one thousand nine hundred seventeen, at a salary of fifty peso (50) per week payable at the end of each week.The party of the second part hereby obligates and binds himself to devote his entire time, attention, energies and industry to the promotion of the furtherance of the business and interest of the party of the first part and to perform during the term of this contract such duties as may be assigned to him by the party of the first part, and failure by the said party of the second part to comply with these conditions to the satisfaction of the party of the first shall entitle the party of the first part to discharge and dismiss the said party of the second part from the employ of the party of the first part.It is mutually understood and agreed by the parties hereto that this contract, upon its termination, may be extended for a like for a longer or a shorter period by the mutual consent of both contracting parties.The said party of the second part hereby further binds and obligates himself, his heirs, successors and assigns, that he will not enter into or engage himself directly or indirectly, nor permit any other person under his control to enter in or engage in a similar or competitive business to that of the said party of the first part anywhere within the Philippine Islands for a period of five years from this date.Under the terms of this agreement defendant entered the employ of plaintiff and worked for him until April, 1916, when defendant, on account of ill health, left plaintiff's employ and went to the United States. While in plaintiff's establishment, and had full opportunity to acquaint himself with plaintiff's business method and business connection. The duties performed by him were such as to make it necessary that he should have this knowledge of plaintiff's business. Defendant had a general knowledge of the Philippine embroidery business before his employment by plaintiff, having been engaged in similar work for several years.Some months after his departure for the United States, defendant returned to Manila as the manager of the Philippine Underwear Company, a corporation. This corporation does not maintain a factory in the Philippine Islands, but send material and embroidery designs from New York to its local representative here who employs Filipino needle workers to embroider the designs and make up the garments in their homes. The only difference between plaintiff's business and that of the firm by which the defendant is employed, is the method of doing the finishing work -- the manufacture of the embroidered material into finished garments. Defendant admits that both firms turn out the same class of goods and that they are exported to the same market. It also clearly appears from the evidence that defendant has employed to work his form some of the same workers employed by the plaintiff.Shortly after defendant's return to Manila and the commencement by him of the discharge of the duties of his position as local manager of the Philippine Embroidery Company, as local manager of the Philippine Embroidery Company, plaintiff commenced this action, the principal purpose of which is to prevent by injunction, any further breach of that part of defendant's contract of employment by plaintiff, by which he agreed that he would not "enter into or engage himself directly or indirectly . . . in a similar or competitive business to that of (plaintiff) anywhere within the Philippine Islands for a period of five years . . ." from the date of the agreement. The lower court granted a preliminary injunction, and upon trial the injunction was made perpetual.Defendant, as appellant, argues that plaintiff failed to substantiate the averments of his complaints to the effect that the business in which the defendant is employed is competitive with that of plaintiff. The court below found from the evidence that the business was "very similar." We have examined the evidence and rare of the opinion that the business in which defendant is engaged is not only very similar to that of plaintiff, but that it is conducted in open competition with that business within the meaning of the contract in question. Defendant himself expressly admitted, on cross-examination, that the firm by which he is now employed puts out the same class of foods as that which plaintiff is engaged in producing. When two concerns operate in the same field, produce the same class of goods and dispose them in the same market, their businesses are of necessity competitive. Defendant having engaged in the Philippine Islands in a business directly competitive with that of plaintiff, within five years from the date of his contract of employment by plaintiff, under the terms of which he expressly agreed that he would refrain form doing that very thing, his conduct constitutes a breach of that agreement.Defendant argues that even assuming that there has been a breach of the agreement, the judgment of the court below is nevertheless erroneous, contending that (1) the contract is void for lack of mutuality; (2) that the contract is void as constituting an unreasonable restraint of trade; (3) that plaintiff has failed to show that he has suffered any estimable pecuniary damage; and (4) that even assuming that such damage as to warrant the court in restraining by injunction its continuance.The contention that the contract is void for lack of mutuality is based upon that part of the agreement which authorizes plaintiff to discharge the defendant before the expiration of the stipulated term, should defendant fail to comply with its conditions to plaintiff's satisfaction. It is argued that by this contracts it was sought to impose upon defendant the absolute obligation of rendering service, while reserving to plaintiff the right to rescind it at will. We are of the opinion that this question is largely academic. It is admitted that defendant left plaintiff's employ at his own request before the expiration of the stipulated terms of the contract. Had plaintiff sought to discharge defendant without just cause, before the expiration of the term of the employment, it might have been a serious question whether he could lawfully do so, notwithstanding the terms in which the contract was drawn. (Civil Code, art. 1256.) But even assuming this particular clause of the contract to be invalid, this would not necessarily affect the rest of the agreement. The inclusion is an agreement of one or more pacts which are invalid does not of necessity invalidate the whole contract.We are of the opinion that the contract was not void as constituting an unreasonable restraint of trade. We have been cited to no statutory expression of the legislative will to which such an agreement is directly obnoxious. The rule in this jurisdiction is that the obligations created by contracts have the force of law between the contracting parties and must be enforce in accordance with their tenor. (Civil Code, art 1091.) The only limitation upon the freedom of contractual agreement is that the pacts established shall not be contrary to "law, morals or public order." (Civil Code, Art. 1255.) The industry of counsel has failed to discover any direct expression of the legislative will which prohibits such a contract as that before us. It certainly is not contrary to any recognized moral precept, and it therefore only remains to consider whether it is contrary to "public order." This term, as correctly stated by Manresa (Commentaries, vol. 8, p. 606) "does not mean, as here used, the actual keeping of the public peace, but signifies the public weal . . . that which is permanent, and essential in institutions . . . ." It is the equivalent, as here used and as defined by Manresa, of the term "public policy" as used in the law of the United States. Public policy has been defined as being that principle under which freedom of contract or private dealing is restricted for the freedom of contract or private dealing is restricted for the good of the community. (People's Bank vs. Dalton, 2 Okla., 476.) It is upon this theory that contracts between private individuals which result in an unreasonable restraint of trade have frequently being recognized by article 1255 of our Civil Code, the court of these Islands are vested with like authority.In the nature of things, it is impossible to frame a general rule by which to determine in advance the precise point at which the right of freedom of contract must yield to the superior interest of community in keeping trade and commerce free from unreasonable restrictions. Originally the English courts adopted the view that any agreement which imposed restrictions upon a man's right to exercise his trade or calling was void as against public policy. (Cyc. vol. 9, p. 525.) In the course of time this opinion was abandoned and the American and English courts adopted the doctrine that where the restraint was unlimited as to space but unlimited as to time were valid. In recent years there has been a tendency on the part of the courts of England and America to discard these fixed rules and to decide each case according to its peculiar circumstances, and make the validity of the restraint depend upon its reasonableness. If the restraint is no greater than is reasonably necessary for the protection of the party in whose favor it is imposed it is upheld, but if it goes beyond this is declared void. This is the principle followed in such cases by the Supreme Court of the United States. In the case of Gibbs vs. Consolidated Gas Co. of Baltimore (130 U.S., 396) the court said:The decision in Mitchel vs. Reynolds (1P. Wms. 181 [Smith's Leading Cases, Vol. 1, Pt. II, 508]), is the foundation of rule in relation to the invalidity of contracts in restraint of trade; but as it was made under a condition of things, and a state of society, different from those which now prevail, the rule laid down is not regarded as inflexible, and has been considerably modified. Public welfare is first considered, and if it be not involved, and the restraint upon one party is not greater than protection to the other party requires, the contract may be sustained. The question is, whether, under the particular circumstances of the case and the nature of the particular contract involved in it, the contract is, or is not, unreasonable. (Rousillon vs. Rousillon, L. R. 14 Ch. Div., 351; Leather Cloth Co. vs. Lorsont, L. R. 9 Eq., 345.)Following this opinion, we adopt the modern rule that the validity of restraints upon trade or employment is to be determined by the intrinsinc reasonableness of restriction in each case, rather than by any fixed rule, and that such restrictions may be upheld when not contrary to afford a fair and reasonable protection to the party in whose favor it is imposed.Examining the contract here in question from this stand point, it does not seem so with respect to an employee whose duties are such as of necessity to give him an insight into the general scope and details of his employers business. A business enterprise may and often does depend for its success upon the owner's relations with other dealers, his skill in establishing favorable connections, his methods of buying and selling -- a multitude of details, none vital if considered alone, but which in the aggregate constitute the sum total of the advantages which the result of the experience or individual aptitude and ability of the man or men by whom the business has been built up. Failure or success may depend upon the possession of these intangible but all important assets, and it is natural that their possessor should seek to keep them from falling into the hands of his competitors. It is with this object in view that such restrictions as that now under consideration are written into contracts of employment. Their purpose is the protection of the employer, and if they do not go beyond what is reasonably necessary to effectuate this purpose they should be upheld. We are of the opinion, and so hold, that in the light of the established facts the restraint imposed upon defendant by his contract is not unreasonable. As was well said in the case of Underwood vs. Barker (68 Law J. Ch., 201). "If there is one thing more than another which is essential to the trade and commerce of this country, it is the inviolability of contract deliberately entered into; and to allow a person of mature age, and not imposed upon, to enter into a contract, to obtain the benefit of it, and then to repudiate it and the obligation which he has undertaken, is prima facie, at all events, contrary to the interest of any and every country . . . . The public policy which allows a person to obtain employment on certain terms understood by and agreed to by him, and to repudiate his contract, conflicts with, and must, to avail the defendant, for some sufficient reason, prevail over, the manifest public policy, which, as a rule holds him to his bond . . . .Having held that the contract is valid, we pass to a consideration of defendant's objections to its enforcement by injunction.It is contended that plaintiff has not proved that he has suffered any estimable pecuniary damage by reason of defendant's breach of the contract, and that for that reason his action must fail. It is further contended that in no event is it proper to enforce such a contract as this by injunction, because it has not been alleged and proved that the continuance of the acts complained of will cause plaintiff "irreparable damage." These objections can conveniently be considered together.The obligation imposed upon defendant by the particular clause of his contract now under consideration is negative in character. Unless defendant voluntarily complies with his undertaking there is no way by which the contract can be enforced except by the injunctive power of judicial process. Such negative obligations have long been enforced by the courts in this manner. As stated by High in his well-known work on Injunctions (vol. 2, pp. 877-878):The remedy by injunction to prevent the violation of negative agreements, or contracts not to do a particular thing, is closely akin to the remedy by way of specific performance of agreements of an affirmative nature. In both cases the object sought is substantially one and the same, and by enjoining the violation of a negative agreement the court of equity in effect decrees its specific performance. (Lumley vs. Wagner, 1 DeGex, M. & G., 604.)Where by the terms of a contract imposing a positive obligation the obligor is entitled to a specific performance, it will not avail the defendant to show that plaintiff will suffer no pecuniary damage if the contract is not performed. Upon like reasons, when the undertaking is negative in character and defendant is violating the obligation imposed upon him the court may interfere without requiring proof of actual damage. (High on Injunctions, par. 1135, citing Dickenson vs. Grand Junction Canal Co., 15 Beav., 270.)The admitted fact that plaintiff has failed to establish proof of pecuniary damage by reason of the breach of the contract by defendant by the acts committed prior to the issuance of the preliminary injunction is, of course, a bar or nay money judgment for damages for the breach of the contract, but will not justify us in permitting defendant to continue to break his contract over plaintiff's objection. The injury is a continuous one. The fact that the court may not be able to give damages for that part of the breach of the contract which had already taken place when its aid was invoked is no reason why it should countenance a continuance of such disregard of plaintiff's rights.With respect to the contention that an injunction may only be granted to prevent irreparable injury, the answer is that any continuing breach of a valid negative covenant is irreparable by the ordinary process of courts of law. As stated by High, (vol. 2, p. 906) injunctive relief is granted in cases like this "upon the ground that the parties cannot be placed in statu quo, and that damages at law can afford no adequate compensation, the injury being a continuous one irreparable by the ordinary process of courts of law."In the case of Gilchrist vs. Cuddy (29 Phil. rep., 542), at page 552, this court said, citing with approval the case of Wahle vs. Reinbach (76 Ill., 322):By "irreparable injury" is not meant such injury as is beyond the possibility of repair, or beyond possible compensation in damages, nor necessarily great injury or great damage, but that species of injury, whether great or small, that ought not be submitted to on the one hand or inflicted on the other; and, because it is so large on the one hand, or so small on the other, is of such constant and frequent recurrence that no fair or reasonable redress can be had therefor in a court of law.This definition was quoted with approval by the Supreme Court of the United States in the case of Donovan vs. Pennsylvania Co., (199 U.S., 279), in which the injury complained of was continuous in its nature.It is true, as held in the case of Liongson vs. Martinez (36 Phil. Rep., 948) that "an injunction should never issue when an action for damages would adequately compensate the injuries caused" But it frequently happens that the acts of the defendant, while constituting a very substantial invasion of plaintiff's rights are of such a character that the damages which result therefrom "cannot be measured by any certain pecuniary standard." (Eau Claire Water Co. vs. City of Eau Claire, 127 Wis., 154.) The Civil Code (art. 1908) casts upon real estate owners liability in damages for the emission, upon their premises, of excessive smoke, which may be noxious to person or property. The injury caused by such a nuisance might bring about a depreciation in the value of adjoining properties, but there is no "certain pecuniary standard" by which such damages can be measured, and in that sense the threatened injury is "irreparable" and may appropriately be restrained by injunction.. . . If the nuisance is a continuing one, invading substantial rights of the complainant in such a manner that he would thereby lose such rights entirely but for the assistance of a court of equity he will entitled but for the assistance of a court of equity he will be entitled to an injunction upon a proper showing, notwithstanding the fact the he might recover some damages in an action at law. (Tise vs. Whitaker-Harvey Co., 144 N. C., 507.)The injury done the business of a merchant by illegal or unfair competition is exceedingly difficult to measure. A diminution of the volume of a business may be due to so many different causes that it is often impossible to demonstrate that it has in fact been caused by the illegal competition of the defendant. This is frequently the case in suit for the infringement of trademark rights, in which the courts may enjoin the continued use of the infringing mark, although unable to assess damages for the past injury.The judgment of the trial court is affirmed with costs. So ordered.Arellano, C.J., Torres, Johnson, Street and Avancea, JJ., concur.Malcolm, J., concurs in result.

The Lawphil Project - Arellano Law Foundation

Republic of the PhilippinesSUPREME COURTManilaEN BANCG.R. No. L-21676 February 28, 1969VICENTE ALDABA, ET AL., petitioners, vs.COURT OF APPEALS, CESAR ALDABA, ET AL., respondents.Rodas and Almeda for petitioners. Dakila F. Castro and Associates for respondents.ZALDIVAR, J.: This is a petition to review the decision of the Court of Appeals in case CA-G.R. No. 27561-R, entitled "Vicente Aldaba, et al., plaintiffs-appellants, versus Cesar Aldaba, et al., defendants-appellees", affirming the decision of the Court of First Instance of Manila in its Civil Case No. 41260. When Belen Aldaba, a rich woman of Malolos, Bulacan, died on February 25, 1955, she left as her presumptive heirs her surviving husband Estanislao Bautista, and her brother Cesar Aldaba. Belen Aldaba was childless. Among the properties that she left were the two lots involved in this case, situated at 427 Maganda Street, Santa Mesa, Manila. Petitioners Dr. Vicente Aldaba and Jane Aldaba, father and daughter, respectively, lived during the last war in their house in Malate, Manila. Belen Aldaba used to go to their house to seek the advice and medical assistance of Dr. Vicente Aldaba. When the latter's house was burned during the liberation of Manila in 1945, Belen Aldaba invited Dr. Aldaba and his daughter, who was then a student in medicine, to live in one of her two houses standing on the lots in question, and the Aldaba father and daughter accepted the offer of Belen and they actually lived in one of those two houses until sometime in 1957 when respondent Emmanuel Bautista filed an ejectment case against them in the city court of Manila. Dr. Vicente Aldaba continued to act as a sort of adviser of Belen and Jane, after becoming a qualified doctor of medicine, became the personal physician of Belen until the latter's death on February 25, 1955. On June 24, 1955, the presumptive heirs Estanislao Bautista and Cesar Aldaba, executed a deed of extrajudicial partition of the properties left by the deceased Belen Aldaba, by virtue of which deed the two lots in question were alloted to Cesar Aldaba. Subsequently, on August 26, 1957, herein respondents Cesar Aldaba and Emmanuel Bautista, the latter being a grandson of Estanislao Bautista by his first marriage, executed a deed whereby the two lots that were alloted to Cesar Aldaba were ceded to Emmanuel Bautista in exchange of the latter's lot situated at San Juan, Rizal. By virtue of the deed of extra-judicial partition and the deed of exchange, Transfer certificates of Title Nos. 1334 and 1335, respectively, covering lots Nos. 32 and 34 now in question both in the name of Belen Aldaba, were cancelled by the Register of Deeds of Manila, and Transfer Certificates of Title Nos. 49996 and 49997 in the name of Emmanuel Bautista were issued in lieu thereof. Emmanuel Bautista then required Dr. Vicente Aldaba to vacate the lots in question and, upon the latter's refusal, filed an ejectment case against him in the City Court of Manila. Without awaiting the final result of the ejectment case, herein petitioners filed, on August 22, 1959, a complaint in the Court of First Instance of Manila, docketed as Civil Case No. 41260, against herein respondents Cesar Aldaba and Emmanuel Bautista and the Register of Deeds of Manila, alleging that they had become the owners of the two lots in question, and praying that the deed of partition entered into by Estanislao Bautista and Cesar Aldaba be declared null and void with respect to Lot No. 32, covered by Transfer Certificate of Title No. 1334, and lot No. 34 covered by Transfer Certificate of Title No 1335; that said lots be declared the property of therein plaintiffs (herein petitioners); and that the Register of Deeds of Manila be ordered to cancel TCT Nos. 49996 and 49997 in the name of Emmanuel Bautista and in lieu thereof issue two new TCTs in the name of therein plaintiffs. After hearing, the court a quo rendered a decision dismissing the complaint, and declaring, among others, that if the deceased Belen Aldaba intended to convey the lots in question to Vicente Aldaba and Jane Aldaba, by way of donation, the conveyance should be considered a donation inter vivos, for the validity of which a public instrument was necessary pursuant to Article 749 of the Civil Code. The dispositive portion of the decision of the trial court reads as follows: IN VIEW WHEREOF both complaint and counterclaim dismissed; the Court holds Emmanuel Bautista to be the absolute owner of the property in question, land and improvement, but with the right of plaintiffs to stay until they should have been reimbursed of P5,000.00 but without any obligation, until such reimbursement, to pay any rental unto defendant Emmanuel Bautista. No pronouncement as to costs. From this decision, therein plaintiffs appealed to the Court of Appeals, and the latter court rendered a decision, on June 21, 1963, raising from P5,000 to P8,000 the amount to be reimbursed to plaintiffs-appellants, but affirming in all other respects the decision of the lower court. Herein petitioners' motion for reconsideration of the decision having been denied by the Court of Appeals, they forthwith filed the present petition in this Court. Before this Court, petitioners now contend that the Court of Appeals erred: (1) in affirming the decision of the Court of First Instance; (2) in holding that the donation, as found by the Court of First Instance of Manila, was a simple donation inter vivos and not a donation "con causa onerosa and so it was void for it did not follow the requirements of Article 749 of the Civil Code; (3) in not holding that the property in question had already been donated to herein petitioners in consideration of the latter's services; (4) in not declaring petitioners to be the absolute owners of the property in dispute; and (5) in considering testimonies which had been stricken out. The errors assigned by petitioners being interrelated, We are going to discuss them together. Petitioners contend that petitioners Dr. Vicente Aldaba and Jane Aldaba had rendered services to the deceased Belen Aldaba for more than ten years without receiving any compensation, and so in compensation for their services Belen Aldaba gave them the lots in dispute including the improvements thereon. It is the stand of petitioners that the property in question was conveyed to them by way of an onerous donation which is governed by Article 733, and not Article 749, of the Civil Code. Under Article 733 of the Civil Code an onerous donation does not have to be done by virtue of a public instrument. The petitioners point to the note, Exhibit 6, as indicating that a donation had been made, which note reads as follows:June 18, 1953 Jane, Huag kayong umalis diyan. Talagang iyan ay para sa inyo. Alam nila na iyan ay sa inyo.Belen A. Bautista. Petitioners maintain that the note, although it could not transmit title, showed, nevertheless, that a donation had already been made long before its writing, in consideration of the services rendered before the writing and to be rendered after its writing. And the donation being with an onerous cause, petitioners maintain that it was valid even if it was done orally. Petitioners further maintain that if Exhibit 6 labors under some ambiguity, this ambiguity is cured by Exhibit 7, which reads as follows:June 27, 1956 Dear Nana Tering, Narito po ang notice tungkol sa amillaramiento na pagbabayaran diyan sa lupa at bahay na kinatatayuan ninyo. Sa Malolos po ito tinanggap. Ang pagbabayaran po ng Inkong ay bayad na.Gumagalang, "Cely." The addressee, Tering, was the wife of Dr. Vicente Aldaba, and the sender, Cely was the wife of respondent Emmanuel Bautista. This note, petitioners argue, proves that respondents had recognized the ownership of the petitioners of the house and lot, for, otherwise, Cely should have sent the notice of real estate tax to respondent Cesar Aldaba, to whom was alloted the property in question by virtue of the extra-judicial partition. Respondents, Cesar Aldaba and Emmanuel Bautista, on the other hand, contend that the evidence of the plaintiff does not disclose clearly that a donation had been made. Respondents point out that the note, Exhibit 6, as worded, is vague, in that it could not be interpreted as referring to the lots in question, or that which was given therein was given for a valuable consideration. And finally, respondents contend that if the property had really been given to petitioners, why did they not take any step to transfer the property in their names? The Court of Appeals, in its decision, made the following findings and conclusions:(1) The note Exhibit 6 did not make any reference to the lots in question, nor to the services rendered, or to be rendered, in favor of Belen. The note was insufficient is a conveyance, and hence could not be considered as evidence of a donation with onerous cause. This note can be considered, at most, as indicative of the intention to donate.(2) There is no satisfactory explanation why from 1945 to 1955, no notarial document was executed by Belen in favor of petitioners who were educated persons. The reason given was "extremada delicadeza" which reason the Court of Appeals considered as unsatisfactory.(3) The evidence regarding the value of the services (P53,000.00) rendered by petitioners (father and daughter) to Belen does not improve the proof regarding the alleged donation. If petitioners believed that the gratuitous use of the property was not sufficient to compensate them for their services, they could have presented their claims in the intestate proceedings, which they themselves could have initiated, if none was instituted. The conclusion of the Court of Appeals, as well as that of the trial court, that there was no onerous donation made by Belen Aldaba to petitioners is based upon their appreciation of the evidence, and this Court will not disturb the factual findings of those courts.lawphi1.nt The question to be resolved in the instant case is: Was there a disposition of the property in question made by the deceased Belen Aldaba in favor of herein petitioners? The note, Exhibit 6, considered alone, was, as held by the Court of Appeals, confirming the opinion of the lower court, only an indication of the intention of Belen Aldaba to donate to the petitioners the property occupied by the latter. We agree with this conclusion of the trial court and the Court of Appeals. The note, in fact, expressed that the property was really intended for the petitioners, "talagang iyan ay para sa inyo." If the property was only intended for petitioners then, at the time of its writing, the property had not yet been disposed of in their favor. There is no evidence in the record that such intention was effectively carried out after the writing of the note. Inasmuch as the mere expression of an intention is not a promise, because a promise is an undertaking to carry the intention into effect, 1 We cannot, considering Exhibit 6 alone, conclude that the deceased promised, much less did convey, the property in question to the petitioners. That the note, Exhibit 6, was only an indication of an intention to give was also the interpretation given by petitioners themselves, when they said in their memorandum, dated February 2, 1960, in the lower court 2 thus: Legally speaking, there was a contractual relation created between Belen Aldaba and the plaintiff since 1945 whereby the former would give to the latter the two parcels of land, together with the house standing thereon, upon the rendition of said services. This fact can be gleaned from the note (Exh. "6", Plaintiffs) which in part says: TALAGANG IYAN AY PARA SAINYO We have said that Exhibit 6 expressed only the intention to donate. Let us suppose, for the sake of argument, that previous to the writing of the note there had already been a disposition of the property in favor of the petitioners. This disposition alone, would not make the donation a donation for a valuable consideration. We still have to ask: What was the consideration of such disposition? We do not find in the record that there had been an express agreement between petitioners and Belen Aldaba that the latter would pay for the services of the former. If there was no express agreement, could it not be at least implied? There could not be an implied contract for payment because We find in the record that Jane did not expect to be paid for her services. In the memorandum of counsel for the petitioners in the trial court We find this statement: For all she did to her aunt she expected not to be paid.3 When a person does not expect to be paid for his services, there cannot be a contract implied in fact to make compensation for said services. However, no contract implied in fact to make compensation for personal services performed for another arises unless the party furnishing the services then expected or had reason to expect the payment or compensation by the other party. To give rise to an implied contract to pay for services, they must have been rendered by one party in expectation that the other party would pay for them, and have been accepted by the other party with knowledge of that expectation. (58 Am. Jur. p. 512 and cases cited therein). In the same manner when the person rendering the services has renounced his fees, the services are not demandable obligations. 4 Even if it be assumed for the sake of argument that the services of petitioners constituted a demandable debt, We still have to ask whether in the instant case this was the consideration for which the deceased made the (alleged) disposition of the property to the petitioners. As we have adverted to, we have not come across in the record even a claim that there was an express agreement between petitioners and Belen Aldaba that the latter would give the property in question in consideration of the services of petitioners. All that petitioners could claim regarding this matter was that "it was impliedly understood" between them. 5 How said agreement was implied and from what facts it was implied, petitioners did not make clear. The question of whether or not what is relied upon as a consideration had been knowingly accepted by the parties as a consideration, is a question of fact, 6 and the Court of Appeals has not found in the instant case that the lots in question were given to petitioners in consideration of the services rendered by them to Belen Aldaba. We find, therefore, that the conditions to constitute a donation cum causa onerosa are not present in the instant case, and the claim of petitioners that the two lots in question were donated to them by Belen Aldaba cannot be sustained. WHEREFORE, the decision of the Court of Appeals is affirmed, with costs against the petitioners. It is so ordered.Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Castro, Fernando, Capistrano, Teehankee and Barredo, JJ., concur.Sanchez, J., took no part.Footnotes117 American Jurisprudence, 2d. p. 334.2Record on Appeal, pp. 87-88. Emphasis supplied.3Record on Appeal, p. 83.4Manresa, Commentaries al Codigo Civil Espaol, 5th ed. Vol. V, p. 73.5Brief for petitioners, p. 14.617 American Jurisprudence 2d. pp. 434-435.

The Lawphil Project - Arellano Law Foundation

Republic of the PhilippinesSUPREME COURTManilaEN BANCG.R. Nos. L-13012 and L-14786December 31, 1960THE CITY OF CEBU, petitioner, vs.JUDGE EDMUNDO S. PICCIO, of the Court of First Instance of Cebu, and ANACLETO CABALLERO, respondents.--------------------------------------THE CITY OF CEBU, plaintiff-appellant, vs.ANACLETO CABALLERO, defendant-appellee.Emilio A. Matheu for respondent and appellee A. Caballero.PAREDES, J.:On April 11, 1955, Anacleto Caballero filed with the CFI of Cebu (Civil Case No. R-3941), a petition for Mandamus against the City Mayor, the Municipal Board, the City, for reinstatement to his former position of Caretaker, Operation of Cemeteries, and for the payment of his back salaries from April 15, 1953. On August 6, 1955, the Hon. Edmundo Piccio, rendered the following judgement:IN VIEW THEREOF, this Court hereby decides that this petition is in order and consequently orders for the reinstatement of petitioner Caballero to his former position from which he has been separated without benefit of an investigation and determination of sufficient cause, and was thus contrary to the existing law and regulations, such reinstatement to be affected within 30 days from receipt of this order plus the payment of his back salaries from April 15, 1953.No appeal had been taken by the respondent therein and the above judgment became final. Upon motion of petitioner therein (Caballero), a writ of execution was issued. Pursuant to the writ, the municipal board of Cebu City passed a resolution, appropriating the amount of P3,224.00 for the payment of the back salaries of Caballero. Respondent City Mayor Jose V. Rodriguez approved the resolution and the amount was paid to Caballero.Caballero not having been reinstated, notwithstanding the abolition of his position, Judge Piccio issued an order dated August 27, 1958, directing the municipal board to recreate Caballero's position as Caretaker, with compensation of P4.00 per day. As the municipal board did not comply with order, on September 11, 1957, Caballero filed a motion, asking for an order to compel the members of the board to do so. The City Mayor, members of the board, the treasure and the Auditor, answering the motion for compliance, alleged that the City of Cebu, not having been made a party to the case (Mandamus), compulsion would be illegal and unwarranted under the facts obtaining.The lower court entered, on October 11, 1957, the following Order:IN VIEW THEREOF, the Court, amending its original order of reinstatement by excluding therefrom petitioner's right to reimbursement of his back salaries from June 30, 1955 to the date of his reinstatement, hereby directs that its order of August 28, 1957, directing respondent Municipal Board to recreate the petitioner's position as caretaker of the cemetery of Cebu, Cebu City, with compensation at the rate of P4.00 a day including Sundays and holidays be carried out within 5 days from receipt of this order, or the Court shall avail itself of its coercive powers to enforce said directive until it is obeyed.The City of Cebu exception from the above order and on October 18, 1957, filed a petition for Certiorari with this Court (G.R. No. L-13012), to restrain Caballero and judgment.Before the termination of the Mandamus proceedings, on October 2, 1957, the City of Cebu, claiming that the payment of the sum of P3,224.00 to Caballero was wrongful and illegal, since it was not a party to the case, instituted an action (Civil Case No. R-5243) against said Caballero, for the recovery of the same amount, plus P25,000.00 by way of compensatory, moral and exemplary damages. Instead of answering, Caballero on October 29, 1957, moved to dismiss the complaint for alleged failure to state a cause of action. To buttress his motion, Caballero cited a number of cases decided by this Court, ordering the payment of back salaries of employees illegally ousted, even though the municipality and/or city concerned was not impleaded.(Mission et al. vs. Del Rosario, et al., 94 Phil., 483; 50 Off., Gaz., No. 4,1571; Uy vs. Rodriguez, 95 Phil., 493; 50 Off. Gaz., No. 8, 3574; Rodriguez vs. Del Rosario et al., 93 Phil., 1070; 49 Off. Gaz., [12] 5427; Manuel vs. De la Fuente, 92 Phil., 302; 48 Off. Gaz., No. 11, 4829-32). An answer to the Motion to Dismiss was presented by the City of Cebu on October 30, 1957, invoking Section 5 of the Charter for the said City, exempting the City Government from any liability for damages or injuries to person or property arising from the failure of the Mayor, the Municipal Board, or any other city officer, to enforce the provisions of the Charter, or any other law or ordinance, or from negligence of the said officials and/or officers while enforcing or attempting to enforce the said provisions. Cited in support of this Answer were cases decided by this Court, dismissing them for failure to include the municipal corporations concerned (Cabanes, et al. vs. Rodriguez, et al., G.R. No. L-9799, May 31, 1957; Cabo Kho vs. Rodriguez, et al., G.R. No. L-9032, Sept. 28, 1957; City of Bacolod vs. Enriquez, et al., 101 Phil., 644; 55 Off. Gaz., [51] 10545; Angara vs. Gorospe, 101 Phil., 79; 53 Off. Gaz. [14] 4480).lawphil.netOn December 3, 1957, the CFI of Cebu, presided by Judge Rodriguez entered an order dismissing the complaint. The City of Cebu appealed the order directly to this Court, (now G.R. No. L-14876), claiming that the lower court erred;(1) in overlooking the fact that the City of Cebu was never made a party in the mandamus case (Civil No. R-3941), so that it could not be bound by the judgment therein entered; (2) in ignoring the provisions of section 5 of the Charter of the City of Cebu, as interpreted and applied in the case of Faunillan vs. Del Rosario, et al, 99 Phil., 758; Off. Gaz. [31] 5815; and(3) in dismissing the case.The issues involved in the petition for certiorari and the appeal are identical. Both cases pose the following questions: (1) Does the non-inclusion of the City of Cebu in the Mandamus case, make the payment of the back salaries of Caballero wrongful or illegal and not binding on said City; and (2) Is the dismissal of the recovery case, well taken?While the petition is designated as certiorari, there is, however, no allegation therein regarding the lack or excess of jurisdiction or grave abuse of discretion, committed by the respondent court which constitute precisely the basis of this kind of action. Furthermore, the appropriate remedy against the decision and/or orders complained of is appeal, if properly and timely, which petitioners herein did not interpose.It seems that the complaint to refund is predicated upon the following provisions of the Civil Code:Art. 2154. If something is received when there is no right to demand it, and it was unduly delivered through mistake, the obligation to return it arises.Considering that the indispensable requisites of this juridical relation, known as solutio indebiti, are (a) that he who paid was not under obligation to do so; and (b) that the payment was made by reason of an essential mistake of fact (Hoskyn vs. The Goodyear Tire, etc., CA, 40 Off. Gaz., Supp. 11, 245; Velez vs. Balzarza, 73 Phil., 630), we are of the belief that the complaint was correctly dismissed. It is fully established that Caballero had the perfect right to demand for the payment of his back salaries during his illegal dismissal, that the sum of P3,224.00 was paid to Caballero by virtue of a writ of execution lawfully issued; and that the payment was not made through mistake. On this score, alone, it would appear manifest that the complaint does not state a cause of action.The question of whether the City of Cebu was a party or not in the mandamus case becomes unimportant, as it is immaterial. It is true that in the mandamus case, only, the City Mayor, the Municipal Board, the City Treasurer, and the City Auditor, of Cebu City were included in the order of the execution of the judgment, but we have declared that a municipal corporation whether included or not in the complaint for the recovery of back salaries due to wrongful removal from office, is liable. In the case of Mangubat vs. Osmea, G.R. No. L-12837, April 30, 1959, a ruling was enunciated, thus:The necessity of making the City a respondent herein is based upon its right to defend itself, as demanded by the requirements of due process. However, these requirements have been substantially complied with in the case at bar. The parties herein have handled the case, and the same was heard and decided in the lower court, as if the City had been named respondent in the pleadings. The officer required by law "to cause to be defended all suits against the City", its Mayor (Sec. 8, Commonwealth Act No. 58), is respondent in his official capacity. The officer charged with the duty to represent the City "in all civil cases wherein the City . . . is a party" to wit, its city attorney (Sec. 17, Commonwealth Act No. 58) counsel for respondents herein. In addition thereto, the auditor, the treasurer, and even the municipal board of the City of Cebu, are parties respondents.There is no reason to believe that these officers and the City Mayor would have exerted greater effort, than those already displayed by them, in protecting the interests of the City of Cebu, where it formally a respondent therein. Indeed, it is only logical to expect that, having been individually named as respondents, said officers, must have taken as much concern if not more, in warding off petitioner's claim. Under the foregoing circumstances, we would be subordinating the substance to the form if the action for mandamus insofar as the claim for back salaries is concerned were, either dismissed, or remanded to the lower court, for the corresponding amendment of the pleading and a repetition of the proceedings held for the last five (5) years, in order to reach the same decision rendered by the lower court and the same conclusions set forth in this decision, as regards the substansive rights of the parties. It is our considered opinion, therefore, that the ends of justice and equity would be served best if the inclusion of the City of Cebu, as one of the respondents herein, were considered a mere formality and deemed effective, as if a formal amendment of the pleadings had been made. (Emphasis supplied)which was reiterated in the case of Discano, et al. vs. Gatmaitan, et al., 109 Phil., 918; 60 Off. Gaz., [42] 6786.We find no plausible reason for disregarding the above ruling on a procedural matter, knowing as we do, that after all, the obligation to pay the back salary of Caballero, cannot be eluded and the officer concerned in the City of Cebu will have to pay it anyhow, in his official capacity. When a judgment is rendered against an officer of a municipal corporation who sues or is sued in his official capacity, the judgment is binding upon the corporation, upon the other officers of the municipal corporation who represent the same interest and the effect of judgment against a municipal officer is not lost by a change in the occupant of the office. (38 Am. Jur. sec. 727, pp. 431-32). We are not unmindful of the pronouncement in the Faunillan case (supra) but the same is evidently predicated upon a different set of facts. Furthermore, it would seem that the City of Cebu in the case at bar, had already waived the rights and benefits afforded by section 5 of the Cebu City Charter, by and through the acts of its agents, the officers-respondents in the mandamus case, by appropriating funds and paying Caballero with them. The lawful act of these officers within the scope of their authority is deemed the act of the principal, the City of Cebu.In view hereof, the petition for certiorari is dismissed for lack of merits and the order of dismissal of the complaint, object of the appeal, is affirmed. Costs is taxed against the petitioners and the appellant City of Cebu, in both cases and in both instances. So ordered.Bengzon, Padilla, Bautista Angelo, Reyes, J. B. L., Barrera, and Gutierrez David, JJ., concur.

The Lawphil Project - Arellano Law Foundation

Republic of the PhilippinesSUPREME COURTManilaTHIRD DIVISIONG.R. No. 166869 February 16, 2010PHILIPPINE HAWK CORPORATION, Petitioner, vs.VIVIAN TAN LEE, Respondent.D E C I S I O NPERALTA, J.:This is a Petition for Review on Certiorari1 of the Decision of the Court of Appeals in CA-G.R. CV No. 70860, promulgated on August 17, 2004, affirming with modification the Decision of the Regional Trial Court (RTC) of Quezon City, Branch 102, dated March 16, 2001, in Civil Case No. Q-91-9191, ordering petitioner Philippine Hawk Corporation and Margarito Avila to jointly and severally pay respondent Vivian Tan Lee damages as a result of a vehicular accident.The facts are as follows:On March 15, 2005, respondent Vivian Tan Lee filed before the RTC of Quezon City a Complaint2 against petitioner Philippine Hawk Corporation and defendant Margarito Avila for damages based on quasi-delict, arising from a vehicular accident that occurred on March 17, 1991 in Barangay Buensoceso, Gumaca, Quezon. The accident resulted in the death of respondents husband, Silvino Tan, and caused respondent physical injuries. On June 18, 1992, respondent filed an Amended Complaint,3 in her own behalf and in behalf of her children, in the civil case for damages against petitioner. Respondent sought the payment of indemnity for the death of Silvino Tan, moral and exemplary damages, funeral and interment expenses, medical and hospitalization expenses, the cost of the motorcycles repair, attorneys fees, and other just and equitable reliefs.The accident involved a motorcycle, a passenger jeep, and a bus with Body No. 119. The bus was owned by petitioner Philippine Hawk Corporation, and was then being driven by Margarito Avila.In its Answer,4 petitioner denied liability for the vehicular accident, alleging that the immediate and proximate cause of the accident was the recklessness or lack of caution of Silvino Tan. Petitioner asserted that it exercised the diligence of a good father of the family in the selection and supervision of its employees, including Margarito Avila. On March 25, 1993, the trial court issued a Pre-trial Order5 stating that the parties manifested that there was no possibility of amicable settlement between them. However, they agreed to stipulate on the following facts:1. On March 17, 1991, in Bgy. Buensoceso, Gumaca, Quezon, plaintiff Vivian Lee Tan and her husband Silvino Tan, while on board a motorcycle with [P]late No. DA-5480 driven by the latter, and a Metro Bus with [P]late No. NXR-262 driven by Margarito Avila, were involved in an accident;2. As a result of the accident, Silvino Tan died on the spot while plaintiff Vivian Lee Tan suffered physical injuries which necessitated medical attention and hospitalization;3. The deceased Silvino Tan is survived by his wife, plaintiff Vivian Lee Tan and four children, three of whom are now residents of the United States; and4. Defendant Margarito Avila is an employee of defendant Philippine Hawk.6 The parties also agreed on the following issues:1. Whether or not the proximate cause of the accident causing physical injuries upon the plaintiff Vivian Lee Tan and resulting in the death of the latters husband was the recklessness and negligence of Margarito Avila or the deceased Silvino Tan; and2. Whether or not defendant Philippine Hawk Transport Corporation exercised the diligence of a good father of the family in the selection and supervision of its driver Margarito Avila.7 Respondent testified that on March 17, 1991, she was riding on their motorcycle in tandem with her husband, who was on the wheel, at a place after a Caltex gasoline station in Barangay Buensoceso, Gumaca, Quezon on the way to Lopez, Quezon. They came from the Pasumbal Machine Shop, where they inquired about the repair of their tanker. They were on a stop position at the side of the highway; and when they were about to make a turn, she saw a bus running at fast speed coming toward them, and then the bus hit a jeep parked on the roadside, and their motorcycle as well. She lost consciousness and was brought to the hospital in Gumaca, Quezon, where she was confined for a week. She was later transferred to St. Lukes Hospital in Quezon City, Manila. She suffered a fracture on her left chest, her left arm became swollen, she felt pain in her bones, and had high blood pressure.8Respondents husband died due to the vehicular accident. The immediate cause of his death was massive cerebral hemorrhage.9 Respondent further testified that her husband was leasing10 and operating a Caltex gasoline station in Gumaca, Quezon that yielded one million pesos a year in revenue. They also had a copra business, which gave them an income of P3,000.00 a month or P36,000.00 a year.11 Ernest Ovial, the driver of the passenger jeep involved in the accident, testified that in the afternoon of March 17, 1991, his jeep was parked on the left side of the highway near the Pasumbal Machine Shop. He did not notice the motorcycle before the accident. But he saw the bus dragging the motorcycle along the highway, and then the bus bumped his jeep and sped away.12 For the defense, Margarito Avila, the driver of petitioners bus, testified that on March 17, 1999, at about 4:30 p.m., he was driving his bus at 60 kilometers per hour on the Maharlika Highway. When they were at Barangay Buensoceso, Gumaca, Quezon, a motorcycle ran from his left side of the highway, and as the bus came near, the motorcycle crossed the path of the bus, and so he turned the bus to the right. He heard a loud banging sound. From his side mirror, he saw that the motorcycle turned turtle ("bumaliktad"). He did not stop to help out of fear for his life, but drove on and surrendered to the police. He denied that he bumped the motorcycle.13 Avila further testified that he had previously been involved in sideswiping incidents, but he forgot how many times.14Rodolfo Ilagan, the bus conductor, testified that the motorcycle bumped the left side of the bus that was running at 40 kilometers per hour.15 Domingo S. Sisperes, operations officer of petitioner, testified that, like their other drivers, Avila was subjected to and passed the following requirements:(1) Submission of NBI clearance;(2) Certification from his previous employer that he had no bad record;(3) Physical examination to determine his fitness to drive;(4) Test of his driving ability, particularly his defensive skill; and(5) Review of his driving skill every six months.16Efren Delantar, a Barangay Kagawad in Buensoceso, Gumaca, Quezon, testified that the bus was running on the highway on a straight path when a motorcycle, with a woman behind its driver, suddenly emerged from the left side of the road from a machine shop. The motorcycle crossed the highway in a zigzag manner and bumped the side of the bus.17In its Decision dated March 16, 2001, the trial court rendered judgment against petitioner and defendant Margarito Avila, the dispositive portion of which reads:ACCORDINGLY, MARGARITO AVILA is adjudged guilty of simple negligence, and judgment is hereby rendered in favor of the plaintiff Vivian Lee Tan and h[er] husbands heirs ordering the defendants Philippine Hawk Corporation and Margarito Avila to pay them jointly and solidarily the sum of P745,575.00 representing loss of earnings and actual damages plus P50,000.00 as moral damages.18The trial court found that before the collision, the motorcycle was on the left side of the road, just as the passenger jeep was. Prior to the accident, the motorcycle was in a running position moving toward the right side of the highway. The trial court agreed with the bus driver that the motorcycle was moving ahead of the bus from the left side of the road toward the right side of the road, but disagreed that the motorcycle crossed the path of the bus while the bus was running on the right side of the road.19 The trial court held that if the bus were on the right side of the highway, and Margarito Avila turned his bus to the right in an attempt to avoid hitting the motorcyle, then the bus would not have hit the passenger jeep, which was then parked on the left side of the road. The fact that the bus also hit the passenger jeep showed that the bus must have been running from the right lane to the left lane of the highway, which caused the collision with the motorcycle and the passenger jeep parked on the left side of the road. The trial court stated that since Avila saw the motorcycle before the collision, he should have stepped on the brakes and slowed down, but he just maintained his speed and veered to the left.20 The trial court found Margarito Avila guilty of simple negligence. The trial court held petitioner bus company liable for failing to exercise the diligence of a good father of the family in the selection and supervision of Avila, having failed to sufficiently inculcate in him discipline and correct behavior on the road.21 On appeal, the Court of Appeals affirmed the decision of the trial court with modification in the award of damages. The dispositive portion of the decision reads:WHEREFORE, foregoing premises considered, the appeal is DENIED. The assailed decision dated March 16, 2001 is hereby AFFIRMED with MODIFICATION. Appellants Philippine Hawk and Avila are hereby ordered to pay jointly and severally appellee the following amount: (a) P168,019.55 as actual damages; (b) P10,000.00 as temperate damages; (c) P100,000.00 as moral damages; (d) P590,000.00 as unearned income; and (e) P50,000.00 as civil indemnity.22 Petitioner filed this petition, raising the following issues:1) The Court of Appeals committed grave abuse of discretion amounting to lack of jurisdiction in passing upon an issue, which had not been raised on appeal, and which had, therefore, attained finality, in total disregard of the doctrine laid down by this Court in Abubakar v. Abubakar, G.R. No. 134622, October 22, 1999.2) The Court of Appeals committed reversible error in its finding that the petitioners bus driver saw the motorcycle of private respondent executing a U-turn on the highway "about fifteen (15) meters away" and thereafter held that the Doctrine of Last Clear was applicable to the instant case. This was a palpable error for the simple reason that the aforesaid distance was the distance of the witness to the bus and not the distance of the bus to the respondents motorcycle, as clearly borne out by the records.3) The Court of Appeals committed reversible error in awarding damages in total disregard of the established doctrine laid down in Danao v. Court of Appeals, 154 SCRA 447 and Viron Transportation Co., Inc. v. Delos Santos, G.R. No. 138296, November 22, 2000.23In short, the issues raised by petitioner are: (1) whether or not negligence may be attributed to petitioners driver, and whether negligence on his part was the proximate cause of the accident, resulting in the death of Silvino Tan and causing physical injuries to respondent; (2) whether or not petitioner is liable to respondent for damages; and (3) whether or not the damages awarded by respondent Court of Appeals are proper. Petitioner seeks a review of the factual findings of the trial court, which were sustained by the Court of Appeals, that petitioners driver was negligent in driving the bus, which caused physical injuries to respondent and the death of respondents husband.The rule is settled that the findings of the trial court, especially when affirmed by the Court of Appeals, are conclusive on this Court when supported by the evidence on record.24 The Court has carefully reviewed the records of this case, and found no cogent reason to disturb the findings of the trial court, thus:The Court agree[s] with the bus driver Margarito that the motorcycle was moving ahead of the bus towards the right side from the left side of the road, but disagrees with him that it crossed the path of the bus while the bus was running on the right side of the highway. If the bus were on the right side of the highway and Margarito turned his bus to the right in an attempt to avoid hitting it, then the bus would not have hit the passenger jeep vehicle which was then parked on the left side of the road. The fact that the bus hit the jeep too, shows that the bus must have been running to the left lane of the highway from right to the left, that the collision between it and the parked jeep and the moving rightways cycle became inevitable. Besides, Margarito said he saw the motorcycle before the collision ahead of the bus; that being so, an extra-cautious public utility driver should have stepped on his brakes and slowed down. Here, the bus never slowed down, it simply maintained its highway speed and veered to the left. This is negligence indeed.25 Petitioner contends that the Court of Appeals was mistaken in stating that the bus driver saw respondents motorcycle "about 15 meters away" before the collision, because the said distance, as testified to by its witness Efren Delantar Ong, was Ongs distance from the bus, and not the distance of the bus from the motorcycle. Petitioner asserts that this mistaken assumption of the Court of Appeals made it conclude that the bus driver, Margarito Avila, had the last clear chance to avoid the accident, which was the basis for the conclusion that Avila was guilty of simple negligence.A review of the records showed that it was petitioners witness, Efren Delantar Ong, who was about 15 meters away from the bus when he saw the vehicular accident.26 Nevertheless, this fact does not affect the finding of the trial court that petitioners bus driver, Margarito Avila, was guilty of simple negligence as affirmed by the appellate court. Foreseeability is the fundamental test of negligence.27 To be negligent, a defendant must have acted or failed to act in such a way that an ordinary reasonable man would have realized that certain interests of certain persons were unreasonably subjected to a general but definite class of risks.28 In this case, the bus driver, who was driving on the right side of the road, already saw the motorcycle on the left side of the road before the collision. However, he did not take the necessary precaution to slow down, but drove on and bumped the motorcycle, and also the passenger jeep parked on the left side of the road, showing that the bus was negligent in veering to the left lane, causing it to hit the motorcycle and the passenger jeep. Whenever an employees negligence causes damage or injury to another, there instantly arises a presumption that the employer failed to exercise the due diligence of a good father of the family in the selection or supervision of its employees.29 To avoid liability for a quasi-delict committed by his employee, an employer must overcome the presumption by presenting convincing proof that he exercised the care and diligence of a good father of a family in the selection and supervision of his employee.30 The Court upholds the finding of the trial court and the Court of Appeals that petitioner is liable to respondent, since it failed to exercise the diligence of a good father of the family in the selection and supervision of its bus driver, Margarito Avila, for having failed to sufficiently inculcate in him discipline and correct behavior on the road. Indeed, petitioners tests were concentrated on the ability to drive and physical fitness to do so. It also did not know that Avila had been previously involved in sideswiping incidents. As regards the issue on the damages awarded, petitioner contends that it was the only one that appealed the decision of the trial court with respect to the award of actual and moral damages; hence, the Court of Appeals erred in awarding other kinds of damages in favor of respondent, who did not appeal from the trial courts decision. Petitioners contention is unmeritorious.Section 8, Rule 51 of the 1997 Rules of Civil Procedure provides:SEC. 8. Questions that may be decided. -- No error which does not affect the jurisdiction over the subject matter or the validity of the judgment appealed from or the proceedings therein will be considered unless stated in the assignment of errors, or closely related to or dependent on an assigned error and properly argued in the brief, save as the court pass upon plain errors and clerical errors.Philippine National Bank v. Rabat31 cited the book32 of Justice Florenz D. Regalado to explain the section above, thus:In his book, Mr. Justice Florenz D. Regalado commented on this section, thus:1. Sec. 8, which is an amendment of the former Sec. 7 of this Rule, now includes some substantial changes in the rules on assignment of errors. The basic procedural rule is that only errors claimed and assigned by a party will be considered by the court, except errors affecting its jurisdiction over the subject matter. To this exception has now been added errors affecting the validity of the judgment appealed from or the proceedings therein.Also, even if the error complained of by a party is not expressly stated in his assignment of errors but the same is closely related to or dependent on an assigned error and properly argued in his brief, such error may now be considered by the court. These changes are of jurisprudential origin.2. The procedure in the Supreme Court being generally the same as that in the Court of Appeals, unless otherwise indicated (see Secs. 2 and 4, Rule 56), it has been held that the latter is clothed with ample authority to review matters, even if they are not assigned as errors on appeal, if it finds that their consideration is necessary in arriving at a just decision of the case. Also, an unassigned error closely related to an error properly assigned (PCIB vs. CA, et al., L-34931, Mar. 18, 1988), or upon which the determination of the question raised by error properly assigned is dependent, will be considered by the appellate court notwithstanding the failure to assign it as error (Ortigas, Jr. vs. Lufthansa German Airlines, L-28773, June 30, 1975; Soco vs. Militante, et al., G.R. No. 58961, June 28, 1983).It may also be observed that under Sec. 8 of this Rule, the appellate court is authorized to consider a plain error, although it was not specifically assigned by the appellant (Dilag vs. Heirs of Resurreccion, 76 Phil. 649), otherwise it would be sacrificing substance for technicalities.33In this case for damages based on quasi-delict, the trial court awarded respondent the sum of P745,575.00, representing loss of earning capacity (P590,000.00) and actual damages (P155,575.00 for funeral expenses), plus P50,000.00 as moral damages. On appeal to the Court of Appeals, petitioner assigned as error the award of damages by the trial court on the ground that it was based merely on suppositions and surmises, not the admissions made by respondent during the trial. In its Decision, the Court of Appeals sustained the award by the trial court for loss of earning capacity of the deceased Silvino Tan, moral damages for his death, and actual damages, although the amount of the latter award was modified.The indemnity for loss of earning capacity of the deceased is provided for by Article 2206 of the Civil Code.34 Compensation of this nature is awarded not for loss of earnings, but for loss of capacity to earn money.35As a rule, documentary evidence should be presented to substantiate the claim for damages for loss of earning capacity.36 By way of exception, damages for loss of earning capacity may be awarded despite the absence of documentary evidence when: (1) the deceased is self-employed and earning less than the minimum wage under current labor laws, in which case, judicial notice may be taken of the fact that in the deceased's line of work no documentary evidence is available; or (2) the deceased is employed as a daily wage worker earning less than the minimum wage under current labor laws.37In this case, the records show that respondents husband was leasing and operating a Caltex gasoline station in Gumaca, Quezon. Respondent testified that her husband earned an annual income of one million pesos. Respondent presented in evidence a Certificate of Creditable Income Tax Withheld at Source for the Year 1990,38 which showed that respondents husband earned a gross income of P950,988.43 in 1990. It is reasonable to use the Certificate and respondents testimony as bases for fixing the gross annual income of the deceased at one million pesos before respondents husband died on March 17, 1999. However, no documentary evidence was presented regarding the income derived from their copra business; hence, the testimony of respondent as regards such income cannot be considered. In the computation of loss of earning capacity, only net earnings, not gross earnings, are to be considered; that is, the total of the earnings less expenses necessary for the creation of such earnings or income, less living and other incidental expenses.39 In the absence of documentary evidence, it is reasonable to peg necessary expenses for the lease and operation of the gasoline station at 80 percent of the gross income, and peg living expenses at 50 percent of the net income (gross income less necessary expenses). In this case, the computation for loss of earning capacity is as follows:Net Earning Capacity=Life Expectancy [2/3 (80-age at the time of death)]xGross Annual Income (GAI)Reasonable and Necessary Expenses (80% of GAI)

X=[2/3 (80-65)]xP1,000,000.00-P800,000.00

X=2/3 (15)xP200,000.00-P100,000.00(Living Expenses)

X=30/3xP100,000.00

X=10xP100,000.00

X=P1,000,000.00

The Court of Appeals also awarded actual damages for the expenses incurred in connection with the death, wake, and interment of respondents husband in the amount of P154,575.30, and the medical expenses of respondent in the amount of P168,019.55. Actual damages must be substantiated by documentary evidence, such as receipts, in order to prove expenses incurred as a result of the death of the victim40 or the physical injuries sustained by the victim. A review of the valid receipts submitted in evidence showed that the funeral and related expenses amounted only to P114,948.60, while the medical expenses of respondent amounted only to P12,244.25, yielding a total of P127,192.85 in actual damages. Moreover, the Court of Appeals correctly sustained the award of moral damages in the amount of P50,000.00 for the death of respondents husband. Moral damages are not intended to enrich a plaintiff at the expense of the defendant.41 They are awarded to allow the plaintiff to obtain means, diversions or amusements that will serve to alleviate the moral suffering he/she has undergone due to the defendants culpable action and must, perforce, be proportional to the suffering inflicted.42In addition, the Court of Appeals correctly awarded temperate damages in the amount of P10,000.00 for the damage caused on respondents motorcycle. Under Art. 2224 of the Civil Code, temperate 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." The cost of the repair of the motorcycle was prayed for by respondent in her Complaint. However, the evidence presented was merely a job estimate43 of the cost of the motorcycles repair amounting to P17, 829.00. The Court of Appeals aptly held that there was no doubt that the damage caused on the motorcycle was due to the negligence of petitioners driver. In the absence of competent proof of the actual damage caused on the motorcycle or the actual cost of its repair, the award of temperate damages by the appellate court in the amount of P10,000.00 was reasonable under the circumstances.44 The Court of Appeals also correctly awarded respondent moral damages for the physical injuries she sustained due to the vehicular accident. Under Art. 2219 of the Civil Code,45 moral damages may be recovered in quasi-delicts causing physical injuries. However, the award of P50,000.00 should be reduced to P30,000.00 in accordance with prevailing jurisprudence.46 Further, the Court of Appeals correctly awarded respondent civil indemnity for the death of her husband, which has been fixed by current jurisprudence at P50,000.00.47 The award is proper under Art. 2206 of the Civil Code.48In fine, the Court of Appeals correctly awarded civil indemnity for the death of respondents husband, temperate damages, and moral damages for the physical injuries sustained by respondent in addition to the damages granted by the trial court to respondent. The trial court overlooked awarding the additional damages, which were prayed for by respondent in her Amended Complaint. The appellate court is clothed with ample authority to review matters, even if they are not assigned as errors in the appeal, if it finds that their consideration is necessary in arriving at a just decision of the case.49 WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated August 17, 2004 in CA-G.R. CV No. 70860 is hereby AFFIRMED with MODIFICATION. Petitioner Philippine Hawk Corporation and Margarito Avila are hereby ordered to pay jointly and severally respondent Vivian Lee Tan: (a) civil indemnity in the amount of Fifty Thousand Pesos (P50,000.00); (b) actual damages in the amount of One Hundred Twenty-Seven Thousand One Hundred Ninety-Two Pesos and Eighty-Five Centavos ( P127,192.85); (c) moral damages in the amount of Eighty Thousand Pesos (P80,000.00); (d) indemnity for loss of earning capacity in the amount of One Million Pesos (P1,000,000.00); and (e) temperate damages in the amount of Ten Thousand Pesos (P10,000.00).Costs against petitioner.SO ORDERED. DIOSDADO M. PERALTAAssociate JusticeWE CONCUR:RENATO C. CORONAAssociate JusticeChairpersonPRESBITERO J. VELASCO, JR.Associate JusticeANTONIO EDUARDO B. NACHURAAssociate Justice

JOSE CATRAL MENDOZAAssociate JusticeA T T E S T A T I O NI attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.RENATO C. CORONAAssociate JusticeThird Division, ChairpersonC E R T I F I C A T I O NPursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.REYNATO S. PUNOChief Justice

Footnotes1 Under Rule 45 of the Rules of Court.2 Records, p. 1.3 Id. at 38.4 Id. at 54.5 Id. at 80.6 Supra note 2, at 80.7 Id.8 TSN, April 26, 1994, pp. 6-7, 14 and 22; May 11, 1994, pp. 14-15.9 Death Certificate, Exhibit "B," folder of exhibits, p. 3.10 Annex "C," folder of exhibits, p.11. 11 TSN, April 26, 1994, pp. 12-13.12 TSN, March 16, 1995, pp. 4-6.13 TSN, February 13, 1996, pp. 5-11, 18-19 and 23; September 10, 1996, pp. 7, 10, 12 and 14.14 TSN, September 10, 1996, pp. 3-4.15 TSN, October 22, 1996, p. 5.16 TSN, January 14, 1997, pp. 5-18.17 TSN, July 8, 1997, p. 5.18 Record, p. 209.19 Supra note 18, at 208. 20 Id.21 Id.22 Rollo p. 32.23 Id. at 8-9.24 Viron Transportation Co., Inc. v. Delos Santos, G.R. No. 138296, November 22, 2000, 345 SCRA 509.25 Supra note 18, at 208.26 TSN, July 8, 1997, p. 27. 27 Achevara v. Ramos, G.R. No. 175172, September 29, 2009.28 Id.29 Macalinao v. Ong, G.R. No. 146635, December 14, 2005, 477 SCRA 740. 30 Id.31 G.R. No. 134406, November 15, 2000, 344 SCRA 706.32 Remedial Law Compendium, Vol. I, 582-583 (Sixth Revised Edition, 1997).33 Supra note 31, at 715.34 Civil Code, Art. 2206. xxxx(1) The defendant shall be liable for the loss of the earning capacity of the deceased, and the indemnity shall be paid to the heirs of the latter; such indemnity shall in every case be assessed and awarded by the court, unless the deceased on account of permanent physical disability not caused by the defendant, had no earning capacity at the time of his death;xxxx 35 Heirs of George Y. Poe v. Malayan Insurance Co., Inc., G.R. No. 156302, April 7, 2009, 584 SCRA 178. 36 People v. Garchitorena, G.R. No. 175605, August 28, 2009.37 Supra note 36.38 Exhibit "J," folder of exhibits, p. 20.39 Smith Bell Dodwell Shipping Agency Corporation v. Borja, G.R. No. 143008, June 10, 2002, 383 SCRA 341, 351.40 People v. Ibaez, G.R. Nos. 133923-24, July 30, 2003, 407 SCRA 406.41 Hernandez v. Dolor, G.R. No. 160286, July 30, 2004, 435 SCRA 668.42 Id.43 Exhibit "M," folder of exhibits, p. 47.44 See Viron Transportation Co., Inc. v. Delos Santos, supra note 24. 45 Art. 2219. Moral damages may be recovered in the following and analogous cases:xxxx(2) Quasi-delicts causing physical injuries; xxxx46 Guillang v. Bedania, G.R. No. 162987, May 21, 2009, 588 SCRA 73.47 Id.; Philtranco Service Enterprises v. Court of Appeals, G.R. No. 120553, June 17, 1997, 273 SCRA 562.48 Art. 2206. The amount of damages for death caused by a crime or quasi-delict shall be at least three thousand pesos, even though there may have been mitigating circumstances. xxxx49 Korean Airlines Co., Ltd. v. Court of Appeals, G.R. No. 114061, August 3, 1994, 234 SCRA 717.

The Lawphil Project - Arellano Law Foundation

Republic of the PhilippinesSUPREME COURTManilaEN BANCG.R. No. L-6913 November 21, 1913THE ROMAN CATHOLIC BISHOP OF JARO, plaintiff-appellee, vs.GREGORIO DE LA PEA, administrator of the estate of Father Agustin de la Pea, defendant-appellant. J. Lopez Vito, for appellant.Arroyo and Horrilleno, for appellee. MORELAND, J.: This is an appeal by the defendant from a judgment of the Court of First Instance of Iloilo, awarding to the plaintiff the sum of P6,641, with interest at the legal rate from the beginning of the action. It is established in this case that the plaintiff is the trustee of a charitable bequest made for the construction of a leper hospital and that father Agustin de la Pea was the duly authorized representative of the plaintiff to receive the legacy. The defendant is the administrator of the estate of Father De la Pea. In the year 1898 the books Father De la Pea, as trustee, showed that he had on hand as such trustee the sum of P6,641, collected by him for the charitable purposes aforesaid. In the same year he deposited in his personal account P19,000 in the Hongkong and Shanghai Bank at Iloilo. Shortly thereafter and during the war of the revolution, Father De la Pea was arrested by the military authorities as a political prisoner, and while thus detained made an order on said bank in favor of the United States Army officer under whose charge he then was for the sum thus deposited in said bank. The arrest of Father De la Pea and the confiscation of the funds in the bank were the result of the claim of the military authorities that he was an insurgent and that the funds thus deposited had been collected by him for revolutionary purposes. The money was taken from the bank by the military authorities by virtue of such order, was confiscated and turned over to the Government. While there is considerable dispute in the case over the question whether the P6,641 of trust funds was included in the P19,000 deposited as aforesaid, nevertheless, a careful examination of the case leads us to the conclusion that said trust funds were a part of the funds deposited and which were removed and confiscated by the military authorities of the United States. That branch of the law known in England and America as the law of trusts had no exact counterpart in the Roman law and has none under the Spanish law. In this jurisdiction, therefore, Father De la Pea's liability is determined by those portions of the Civil Code which relate to obligations. (Book 4, Title 1.) Although the Civil Code states that "a person obliged to give something is also bound to preserve it with the diligence pertaining to a good father of a family" (art. 1094), it also provides, following the principle of the Roman law, major casus est, cui humana infirmitas resistere non potest, that "no one shall be liable for events which could not be foreseen, or which havi