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Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. 109125 December 2, 1994

ANG YU ASUNCION, ARTHUR GO AND KEH TIONG, petitioners,vs.THE HON. COURT OF APPEALS and BUEN REALTY DEVELOPMENTCORPORATION, respondents.

Antonio M. Albano for petitioners.

Umali, Soriano & Associates for private respondent.

VITUG, J.:

Assailed, in this petition for review, is the decision of the Court of Appeals, dated 04 December1991, in CA-G.R. SP No. 26345 setting aside and declaring without force and effect the orders ofexecution of the trial court, dated 30 August 1991 and 27 September 1991, in Civil Case No. 87-41058.

The antecedents are recited in good detail by the appellate court thusly:

On July 29, 1987 a Second Amended Complaint for Specific Performance was filedby Ang Yu Asuncion and Keh Tiong, et al., against Bobby Cu Unjieng, Rose CuUnjieng and Jose Tan before the Regional Trial Court, Branch 31, Manila in CivilCase No. 87-41058, alleging, among others, that plaintiffs are tenants or lessees ofresidential and commercial spaces owned by defendants described as Nos. 630-638Ongpin Street, Binondo, Manila; that they have occupied said spaces since 1935 andhave been religiously paying the rental and complying with all the conditions of thelease contract; that on several occasions before October 9, 1986, defendantsinformed plaintiffs that they are offering to sell the premises and are giving thempriority to acquire the same; that during the negotiations, Bobby Cu Unjieng offered aprice of P6-million while plaintiffs made a counter offer of P5-million; that plaintiffsthereafter asked the defendants to put their offer in writing to which requestdefendants acceded; that in reply to defendant's letter, plaintiffs wrote them onOctober 24, 1986 asking that they specify the terms and conditions of the offer tosell; that when plaintiffs did not receive any reply, they sent another letter datedJanuary 28, 1987 with the same request; that since defendants failed to specify theterms and conditions of the offer to sell and because of information received thatdefendants were about to sell the property, plaintiffs were compelled to file thecomplaint to compel defendants to sell the property to them.


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Defendants filed their answer denying the material allegations of the complaint andinterposing a special defense of lack of cause of action.

After the issues were joined, defendants filed a motion for summary judgment whichwas granted by the lower court. The trial court found that defendants' offer to sell wasnever accepted by the plaintiffs for the reason that the parties did not agree upon the

terms and conditions of the proposed sale, hence, there was no contract of sale atall. Nonetheless, the lower court ruled that should the defendants subsequently offertheir property for sale at a price of P11-million or below, plaintiffs will have the right offirst refusal. Thus the dispositive portion of the decision states:

WHEREFORE, judgment is hereby rendered in favor of thedefendants and against the plaintiffs summarily dismissing thecomplaint subject to the aforementioned condition that if thedefendants subsequently decide to offer their property for sale for apurchase price of Eleven Million Pesos or lower, then the plaintiffshas the option to purchase the property or of first refusal, otherwise,defendants need not offer the property to the plaintiffs if the purchaseprice is higher than Eleven Million Pesos.

SO ORDERED.

Aggrieved by the decision, plaintiffs appealed to this Court inCA-G.R. CV No. 21123. In a decision promulgated on September 21, 1990 (pennedby Justice Segundino G. Chua and concurred in by Justices Vicente V. Mendoza andFernando A. Santiago), this Court affirmed with modification the lower court's

judgment, holding:

In resume, there was no meeting of the minds between the partiesconcerning the sale of the property. Absent such requirement, theclaim for specific performance will not lie. Appellants' demand foractual, moral and exemplary damages will likewise fail as there existsno justifiable ground for its award. Summary judgment for defendantswas properly granted. Courts may render summary judgment whenthere is no genuine issue as to any material fact and the moving partyis entitled to a judgment as a matter of law (Garcia vs. Court of

Appeals, 176 SCRA 815). All requisites obtaining, the decision of thecourt a quo is legally justifiable.

WHEREFORE, finding the appeal unmeritorious, the judgmentappealed from is hereby AFFIRMED, but subject to the followingmodification: The courta quoin the aforestated decision gave theplaintiffs-appellants the right of first refusal only if the property is sold

for a purchase price of Eleven Million pesos or lower; however,considering the mercurial and uncertain forces in our marketeconomy today. We find no reason not to grant the same right of firstrefusal to herein appellants in the event that the subject property issold for a price in excess of Eleven Million pesos. No pronouncementas to costs.

SO ORDERED.


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The decision of this Court was brought to the Supreme Court by petition for reviewon certiorari. The Supreme Court denied the appeal on May 6, 1991 "for insufficiencyin form and substances" (Annex H, Petition).

On November 15, 1990, while CA-G.R. CV No. 21123 was pending consideration bythis Court, the Cu Unjieng spouses executed a Deed of Sale (Annex D, Petition)

transferring the property in question to herein petitioner Buen Realty andDevelopment Corporation, subject to the following terms and conditions:

1. That for and in consideration of the sum of FIFTEEN MILLIONPESOS (P15,000,000.00), receipt of which in full is herebyacknowledged, the VENDORS hereby sells, transfers and conveysfor and in favor of the VENDEE, his heirs, executors, administratorsor assigns, the above-described property with all the improvementsfound therein including all the rights and interest in the said propertyfree from all liens and encumbrances of whatever nature, except thepending ejectment proceeding;

2. That the VENDEE shall pay the Documentary Stamp Tax,registration fees for the transfer of title in his favor and otherexpenses incidental to the sale of above-described property includingcapital gains tax and accrued real estate taxes.

As a consequence of the sale, TCT No. 105254/T-881 in the name of the Cu Unjiengspouses was cancelled and, in lieu thereof, TCT No. 195816 was issued in the nameof petitioner on December 3, 1990.

On July 1, 1991, petitioner as the new owner of the subject property wrote a letter tothe lessees demanding that the latter vacate the premises.

On July 16, 1991, the lessees wrote a reply to petitioner stating that petitionerbrought the property subject to the notice oflis pendensregarding Civil Case No. 87-41058 annotated on TCT No. 105254/T-881 in the name of the Cu Unjiengs.

The lessees filed a Motion for Execution dated August 27, 1991 of the Decision inCivil Case No. 87-41058 as modified by the Court of Appeals in CA-G.R. CV No.21123.

On August 30, 1991, respondent Judge issued an order (Annex A, Petition) quotedas follows:

Presented before the Court is a Motion for Execution filed by plaintiffrepresented by Atty. Antonio Albano. Both defendants Bobby Cu

Unjieng and Rose Cu Unjieng represented by Atty. Vicente Sison andAtty. Anacleto Magno respectively were duly notified in today'sconsideration of the motion as evidenced by the rubber stamp andsignatures upon the copy of the Motion for Execution.

The gist of the motion is that the Decision of the Court datedSeptember 21, 1990 as modified by the Court of Appeals in itsdecision in CA G.R. CV-21123, and elevated to the Supreme Courtupon the petition for review and that the same was denied by the


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On 04 December 1991, the appellate court, on appeal to it by private respondent, set aside anddeclared without force and effect the above questioned orders of the court a quo.

In this petition for review on certiorari, petitioners contend that Buen Realty can be held bound by thewrit of execution by virtue of the notice of lis pendens, carried over on TCT No. 195816 issued in thename of Buen Realty, at the time of the latter's purchase of the property on 15 November 1991 from

the Cu Unjiengs.

We affirm the decision of the appellate court.

A not too recent development in real estate transactions is the adoption of such arrangements as theright of first refusal, a purchase option and a contract to sell. For ready reference, we might point outsome fundamental precepts that may find some relevance to this discussion.

An obligation is a juridical necessity to give, to do or not to do (Art. 1156, Civil Code). The obligationis constituted upon the concurrence of the essential elements thereof, viz: (a) The vinculum

juris orjuridical tie which is the efficient cause established by the various sources of obligations (law,contracts, quasi-contracts, delicts and quasi-delicts); (b) the objectwhich is the prestation or conduct;

required to be observed (to give, to do or not to do); and (c) the subject-persons who, viewed fromthe demandability of the obligation, are the active (obligee) and the passive (obligor) subjects.

Among the sources of an obligation is a contract (Art. 1157, Civil Code), which is a meeting of mindsbetween two persons whereby one binds himself, with respect to the other, to give something or torender some service (Art. 1305, Civil Code). A contract undergoes various stages that include itsnegotiation or preparation, its perfection and, finally, its consummation. Negotiation covers theperiodfrom the time the prospective contracting parties indicate interest in the contract tothe timethe contract is concluded (perfected). Theperfection of the contract takes place upon theconcurrence of the essential elements thereof. A contract which is consensual as to perfection is soestablished upon a mere meeting of minds, i.e., the concurrence of offer and acceptance, on theobject and on the cause thereof. A contract which requires, in addition to the above, the delivery ofthe object of the agreement, as in a pledge or commodatum, is commonly referred to asa real contract. In a solemn contract, compliance with certain formalities prescribed by law, such asin a donation of real property, is essential in order to make the act valid, the prescribed form beingthereby an essential element thereof. The stage of consummation begins when the parties performtheir respective undertakings under the contract culminating in the extinguishment thereof.

Until the contract is perfected, it cannot, as an independent source of obligation, serve as a bindingjuridical relation. In sales, particularly, to which the topic for discussion about the case at benchbelongs, the contract is perfected when a person, called the seller, obligates himself, for a pricecertain, to deliver and to transfer ownership of a thing or right to another, called the buyer, overwhich the latter agrees. Article 1458 of the Civil Code provides:

Art. 1458. By the contract of sale one of the contracting parties obligates himself to

transfer the ownership of and to deliver a determinate thing, and the other to paytherefor a price certain in money or its equivalent.

A contract of sale may be absolute or conditional.

When the sale is not absolute but conditional, such as in a "Contract to Sell" where invariably theownership of the thing sold is retained until the fulfillment of a positive suspensive condition(normally, the full payment of the purchase price), the breach of the condition will prevent theobligation to convey title from acquiring an obligatory force. 2In Dignos vs. Court of Appeals (158


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SCRA 375), we have said that, although denominated a "Deed of Conditional Sale," a sale is still absolutewhere the contract is devoid of anyproviso that title is reserved or the right to unilaterally rescind isstipulated, e.g., until or unless the price is paid. Ownership will then be transferred to the buyer uponactual or constructive delivery (e.g., by the execution of a public document) of the property sold. Wherethe condition is imposed upon the perfection of the contract itself, the failure of the condition wouldprevent such perfection.3If the condition is imposed on the obligation of a party which is not fulfilled, theother party may either waive the condition or refuse to proceed with the sale (Art. 1545, Civil Code).4

An unconditional mutual promise to buy and sell, as long as the object is made determinate and theprice is fixed, can be obligatory on the parties, and compliance therewith may accordingly beexacted.5

An accepted unilateral promise which specifies the thing to be sold and the price to be paid, whencoupled with a valuable consideration distinctandseparate from the price, is what may properly betermed a perfected contract of option. This contract is legally binding, and in sales, it conforms withthe second paragraph of Article 1479 of the Civil Code, viz:

Art. 1479. . . .

An accepted unilateral promise to buy or to sell a determinate thing for a price certainis binding upon the promissor if the promise is supported by a consideration distinctfrom the price. (1451a)6

Observe, however, that the option is notthe contract of sale itself.7The optionee has the right, but notthe obligation, to buy. Once the option is exercised timely, i.e., the offer is accepted before a breach ofthe option, a bilateral promise to sell and to buy ensues and both parties are then reciprocally bound tocomply with their respective undertakings.8

Let us elucidate a little. A negotiation is formally initiated by an offer. An imperfectpromise (policitacion)is merely an offer. Public advertisements or solicitations and the like areordinarily construed as mere invitations to make offers or only as proposals. These relations, until a

contract is perfected, are not considered binding commitments. Thus, at any time prior to theperfection of the contract, either negotiating party may stop the negotiation. The offer, at this stage,may be withdrawn; the withdrawal is effective immediately after its manifestation, such as by itsmailing and not necessarily when the offeree learns of the withdrawal (Laudico vs. Arias, 43 Phil.270). Where a period is given to the offeree within which to accept the offer, the following rulesgenerally govern:

(1) If the period is not itself founded upon or supported by a consideration, the offeror is still free andhas the right to withdraw the offer before its acceptance, or, if an acceptance has been made, beforethe offeror's coming to know of such fact, by communicating that withdrawal to the offeree (seeArt.1324, Civil Code; see also Atkins, Kroll & Co. vs. Cua, 102 Phil. 948, holding that this rule isapplicable to a unilateral promise to sell under Art. 1479, modifying the previous decision in SouthWestern Sugar vs. Atlantic Gulf, 97 Phil. 249; see alsoArt. 1319, Civil Code; Rural Bank ofParaaque, Inc., vs. Remolado, 135 SCRA 409; Sanchez vs. Rigos, 45 SCRA 368). The right towithdraw, however, must not be exercised whimsically or arbitrarily; otherwise, it could give rise to adamage claim under Article 19 of the Civil Code which ordains that "every person must, in theexercise of his rights and in the performance of his duties, act with justice, give everyone his due,and observe honesty and good faith."

(2) If the period has a separate consideration, a contract of "option" is deemedperfected, and itwould be a breach of that contract to withdraw the offer during the agreed period. The option,


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however, is an independent contract by itself, and it is to be distinguished from the projected mainagreement (subject matter of the option) which is obviously yet to be concluded. If, in fact, theoptioner-offeror withdraws the offer before its acceptance (exercise of the option) by the optionee-offeree, the latter may not sue for specific performance on the proposed contract ("object" of theoption) since it has failed to reach its own stage of perfection. The optioner-offeror, however, rendershimself liable for damages for breach of the option. In these cases, care should be taken of the real

nature of the consideration given, for if, in fact, it has been intended to be part of the considerationfor the main contract with a right of withdrawal on the part of the optionee, the main contract couldbe deemed perfected; a similar instance would be an "earnest money" in a contract of sale that canevidence its perfection (Art. 1482, Civil Code).

In the law on sales, the so-called "right of first refusal" is an innovative juridical relation. Needless topoint out, it cannot be deemed a perfected contract of sale under Article 1458 of the Civil Code.Neither can the right of first refusal, understood in its normal concept, per se be brought within thepurview of an option under the second paragraph of Article 1479, aforequoted, or possibly of an offerunder Article 13199of the same Code. An option or an offer would require, among other things,10a clearcertainty on both the object and the cause or consideration of the envisioned contract. In a right of firstrefusal, while the object might be made determinate, the exercise of the right, however, would bedependent not only on the grantor's eventual intention to enter into a binding juridical relation with another

but also on terms, including the price, that obviously are yet to be later firmed up. Prior thereto, it can atbest be so described as merely belonging to a class of preparatory juridical relations governed not bycontracts (since the essential elements to establish the vinculum juris would still be indefinite andinconclusive) but by, among other laws of general application, the pertinent scattered provisions of theCivil Code on human conduct.

Even on the premise that such right of first refusal has been decreed under a final judgment, likehere, its breach cannot justify correspondingly an issuance of a writ of execution under a judgmentthat merely recognizes its existence, nor would it sanction an action for specific performance withoutthereby negating the indispensable element of consensuality in the perfection of contracts.11It is notto say, however, that the right of first refusal would be inconsequential for, such as already intimatedabove, an unjustified disregard thereof, given, for instance, the circumstances expressed in Article 19 12ofthe Civil Code, can warrant a recovery for damages.

The final judgment in Civil Case No. 87-41058, it must be stressed, has merely accorded a "right offirst refusal" in favor of petitioners. The consequence of such a declaration entails no more than whathas heretofore been said. In fine, if, as it is here so conveyed to us, petitioners are aggrieved by thefailure of private respondents to honor the right of first refusal, the remedy is not a writ of executionon the judgment, since there is none to execute, but an action for damages in a proper forum for thepurpose.

Furthermore, whether private respondent Buen Realty Development Corporation, the allegedpurchaser of the property, has acted in good faith or bad faith and whether or not it should, in anycase, be considered bound to respect the registration of the lis pendens in Civil Case No. 87-41058are matters that must be independently addressed in appropriate proceedings. Buen Realty, not

having been impleaded in Civil Case No. 87-41058, cannot be held subject to the writ of executionissued by respondent Judge, let alone ousted from the ownership and possession of the property,without first being duly afforded its day in court.

We are also unable to agree with petitioners that the Court of Appeals has erred in holding that thewrit of execution varies the terms of the judgment in Civil Case No. 87-41058, later affirmed in CA-G.R. CV-21123. The Court of Appeals, in this regard, has observed:


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Finally, the questioned writ of execution is in variance with the decision of the trialcourt as modified by this Court. As already stated, there was nothing in saiddecision 13that decreed the execution of a deed of sale between the Cu Unjiengs andrespondent lessees, or the fixing of the price of the sale, or the cancellation of title in thename of petitioner (Limpin vs. IAC, 147 SCRA 516; Pamantasan ng Lungsod ng Maynilavs. IAC, 143 SCRA 311; De Guzman vs. CA, 137 SCRA 730; Pastor vs. CA, 122 SCRA

885).

It is likewise quite obvious to us that the decision in Civil Case No. 87-41058 could not have decreedat the time the execution of any deed of sale between the Cu Unjiengs and petitioners.

WHEREFORE, we UPHOLD the Court of Appeals in ultimately setting aside the questioned Orders,dated 30 August 1991 and 27 September 1991, of the court a quo. Costs against petitioners.

SO ORDERED.


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EN BANC

[G.R. No. L-27454. April 30, 1970.]

ROSENDO O. CHAVES, Plaintiff-Appellant, v. FRUCTUOSO GONZALES, Defendant-Appellee.

Chaves, Elio, Chaves & Associates, for Plaintiff-Appellant.

Sulpicio E. Platon, for Defendant-Appellee.

SYLLABUS

1. CIVIL LAW; CONTRACTS; BREACH OF CONTRACT FOR NON-PERFORMANCE; FIXING OF PERIOD BEFOREFILING OF COMPLAINT FOR NON-PERFORMANCE, ACADEMIC.Where the time for compliance had expiredand there was breach of contract by non-performance, it was academic for the plaintiff to have firstpetitioned the court to fix a period for the performance of the contract before filing his complaint.

2. ID.; ID.; ID.; DEFENDANT CANNOT INVOKE ARTICLE 1197 OF THE CIVIL CODE OF THE PHILIPPINES.

Where the defendant virtually admitted non-performance of the contract by returning the typewriter that he

was obliged to repair in a non-working condition, with essential parts missing, Article 1197 of the Civil Codeof the Philippines cannot be invoked. The fixing of a period would thus be a mere formality and would serveno purpose than to delay.

3. ID.; ID.; ID.; DAMAGES RECOVERABLE; CASE AT BAR.Where the defendant-appellee contravened the

tenor of his obligation because he not only did not repair the typewriter but returned it "in shambles, he isliable for the cost of the labor or service expended in the repair of the typewriter, which is in the amount ofP58.75, because the obligation or contract was to repair it. In addition, he is likewise liable under Art. 1170of the Code, for the cost of the missing parts, in the amount of P31.10, for in his obligation to repair thetypewriter he was bound, but failed or neglected, to return it in the same condition it was when he receivedit.

4. ID.; ID.; ID.; CLAIMS FOR DAMAGES OR ATTORNEYS FEES NOT RECOVERABLE; NOT ALLEGED ORPROVED IN INSTANT CASE.Claims for damages and attorneys fees must be pleaded, and the existence ofthe actual basis thereof must be proved. As no findings of fact were made on the claims for damages and

attorneys fees, there is no factual basis upon which to make an award therefor.

5. REMEDIAL LAW; APPEALS; APPEAL FROM COURT OF FIRST INSTANCE TO SUPREME COURT; ONLYQUESTIONS OF LAW REVIEWABLE.Where the appellant directly appeals from the decision of the trialcourt to the Supreme Court on questions of law, he is bound by the judgment of the court a quo on itsfindings of fact.

D E C I S I O N

REYES, J.B.L., J.:

This is a direct appeal by the party who prevailed in a suit for breach of oral contract and recovery ofdamages but was unsatisfied with the decision rendered by the Court of First Instance of Manila, in its CivilCase No. 65138, because it awarded him only P31.10 out of his total claim of P690 00 for actual, temperateand moral damages and attorneys fees.

The appealed judgment, which is brief, is hereunder quoted in full: jgc:chanrobles.com.ph

"In the early part of July, 1963, the plaintiff delivered to the defendant, who is a typewriter repairer, a

portable typewriter for routine cleaning and servicing. The defendant was not able to finish the job aftersome time despite repeated reminders made by the plaintiff. The defendant merely gave assurances, butfailed to comply with the same. In October, 1963, the defendant asked from the plaintiff the sum of P6.00


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for the purchase of spare parts, which amount the plaintiff gave to the defendant. On October 26, 1963,after getting exasperated with the delay of the repair of the typewriter, the plaintiff went to the house of thedefendant and asked for the return of the typewriter. The defendant delivered the typewriter in a wrappedpackage. On reaching home, the plaintiff examined the typewriter returned to him by the defendant andfound out that the same was in shambles, with the interior cover and some parts and screws missing. OnOctober 29, 1963. the plaintiff sent a letter to the defendant formally demanding the return of the missing

parts, the interior cover and the sum of P6.00 (Exhibit D). The following day, the defendant returned to the

plaintiff some of the missing parts, the interior cover and the P6.00.

"On August 29, 1964, the plaintiff had his typewriter repaired by Freixas Business Machines, and the repairjob cost him a total of P89.85, including labor and materials (Exhibit C).

"On August 23, 1965, the plaintiff commenced this action before the City Court of Manila, demanding fromthe defendant the payment of P90.00 as actual and compensatory damages, P100.00 for temperatedamages, P500.00 for moral damages, and P500.00 as attorneys fees.

"In his answer as well as in his testimony given before this court, the defendant made no denials of the factsnarrated above, except the claim of the plaintiff that the typewriter was delivered to the defendant through

a certain Julio Bocalin, which the defendant denied allegedly because the typewriter was delivered to himpersonally by the plaintiff.

"The repair done on the typewriter by Freixas Business Machines with the total cost of P89.85 should not,

however, be fully chargeable against the defendant. The repair invoice, Exhibit C, shows that the missingparts had a total value of only P31.10.

"WHEREFORE, judgment is hereby rendered ordering the defendant to pay the plaintiff the sum of P31.10,and the costs of suit.

"SO ORDERED." cralaw virtua1aw library

The error of the court a quo, according to the plaintiff-appellant, Rosendo O. Chaves, is that it awarded onlythe value of the missing parts of the typewriter, instead of the whole cost of labor and materials that wentinto the repair of the machine, as provided for in Article 1167 of the Civil Code, reading as follows:jgc:chanrobles.com.ph

"ART. 1167. If a person obliged to do something fails to do it, the same shall be executed at his cost.

This same rule shall be observed if he does it in contravention of the tenor of the obligation. Furthermore it

may be decreed that what has been poorly done he undone." cralaw virtua1aw library

On the other hand, the position of the defendant-appellee, Fructuoso Gonzales, is that he is not liable at all,not even for the sum of P31.10, because his contract with plaintiff-appellant did not contain a period, so that

plaintiff-appellant should have first filed a petition for the court to fix the period, under Article 1197 of theCivil Code, within which the defendant appellee was to comply with the contract before said defendant-appellee could be held liable for breach of contract.

Because the plaintiff appealed directly to the Supreme Court and the appellee did not interpose any appeal,the facts, as found by the trial court, are now conclusive and non-reviewable. 1

The appealed judgment states that the "plaintiff delivered to the defendant . . . a portable typewriter forroutine cleaning and servicing" ; that the defendant was not able to finish the job after some time despite

repeated reminders made by the plaintiff" ; that the "defendant merely gave assurances, but failed tocomply with the same" ; and that "after getting exasperated with the delay of the repair of the typewriter",the plaintiff went to the house of the defendant and asked for its return, which was done. The inferences

derivable from these findings of fact are that the appellant and the appellee had a perfected contract forcleaning and servicing a typewriter; that they intended that the defendant was to finish it at some futuretime although such time was not specified; and that such time had passed without the work having beenaccomplished, far the defendant returned the typewriter cannibalized and unrepaired, which in itself is abreach of his obligation, without demanding that he should be given more time to finish the job, orcompensation for the work he had already done. The time for compliance having evidently expired, andthere being a breach of contract by non-performance, it was academic for the plaintiff to have firstpetitioned the court to fix a period for the performance of the contract before filing his complaint in thiscase. Defendant cannot invoke Article 1197 of the Civil Code for he virtually admitted non-performance by


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returning the typewriter that he was obliged to repair in a non-working condition, with essential partsmissing. The fixing of a period would thus be a mere formality and would serve no purpose than to delay (cf.Tiglao. Et. Al. V. Manila Railroad Co. 98 Phil. 18l).

It is clear that the defendant-appellee contravened the tenor of his obligation because he not only did notrepair the typewriter but returned it "in shambles", according to the appealed decision. For such

contravention, as appellant contends, he is liable under Article 1167 of the Civil Code. jam quot, for the cost

of executing the obligation in a proper manner. The cost of the execution of the obligation in this caseshould be the cost of the labor or service expended in the repair of the typewriter, which is in the amount ofP58.75. because the obligation or contract was to repair it.

In addition, the defendant-appellee is likewise liable, under Article 1170 of the Code, for the cost of themissing parts, in the amount of P31.10, for in his obligation to repair the typewriter he was bound, but failedor neglected, to return it in the same condition it was when he received it.

Appellants claims for moral and temperate damages and attorneys fees were, however, correctly rejectedby the trial court, for these were not alleged in his complaint (Record on Appeal, pages 1-5). Claims fordamages and attorneys fees must be pleaded, and the existence of the actual basis thereof must be proved.

2 The appealed judgment thus made no findings on these claims, nor on the fraud or malice charged to theappellee. As no findings of fact were made on the claims for damages and attorneys fees, there is no factualbasis upon which to make an award therefor. Appellant is bound by such judgment of the court, a quo, byreason of his having resorted directly to the Supreme Court on questions of law.

IN VIEW OF THE FOREGOING REASONS, the appealed judgment is hereby modified, by ordering thedefendant-appellee to pay, as he is hereby ordered to pay, the plaintiff-appellant the sum of P89.85, withinterest at the legal rate from the filing of the complaint. Costs in all instances against appellee FructuosoGonzales.


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Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

G.R. No. 115129 February 12, 1997

IGNACIO BARZAGA, petitioner,vs.COURT OF APPEALS and ANGELITO ALVIAR, respondents.

BELLOSILLO, J .:

The Fatesordained that Christmas 1990 be bleak for Ignacio Barzaga and his family. On thenineteenth of December Ignacio's wife succumbed to a debilitating ailment after prolonged pain andsuffering. Forewarned by her attending physicians of her impending death, she expressed her wishto be laid to rest before Christmas day to spare her family from keeping lonely vigil over her remainswhile the whole of Christendom celebrate the Nativity of their Redeemer.

Drained to the bone from the tragedy that befell his family yet preoccupied with overseeing the wakefor his departed wife, Ignacio Barzaga set out to arrange for her interment on the twenty-fourth ofDecember in obedience semper fidelisto her dying wish. But her final entreaty, unfortunately, couldnot be carried out. Dire events conspired to block his plans that forthwith gave him and his familytheir gloomiest Christmas ever.

This is Barzaga's story. On 21 December 1990, at about three o'clock in the afternoon, he went tothe hardware store of respondent Angelito Alviar to inquire about the availability of certain materialsto be used in the construction of a niche for his wife. He also asked if the materials could bedelivered at once. Marina Boncales, Alviar's storekeeper, replied that she had yet to verify if thestore had pending deliveries that afternoon because if there were then all subsequent purchaseswould have to be delivered the following day. With that reply petitioner left.

At seven o'clock the following morning, 22 December, Barzaga returned to Alviar's hardware store tofollow up his purchase of construction materials. He told the store employees that the materials hewas buying would have to be delivered at the Memorial Cemetery in Dasmarinas, Cavite, by eighto'clock that morning since his hired workers were already at the burial site and time was of theessence. Marina Boncales agreed to deliver the items at the designated time, date and place. Withthis assurance, Barzaga purchased the materials and paid in full the amount of P2,110.00.

Thereafter he joined his workers at the cemetery, which was only a kilometer away, to await thedelivery.

The construction materials did not arrive at eight o'clock as promised. At nine o'clock, the deliverywas still nowhere in sight. Barzaga returned to the hardware store to inquire about the delay.Boncales assured him that although the delivery truck was not yet around it had already left thegarage and that as soon as it arrived the materials would be brought over to the cemetery in no timeat all. That left petitioner no choice but to rejoin his workers at the memorial park and wait for thematerials.


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By ten o'clock, there was still no delivery. This prompted petitioner to return to the store to inquireabout the materials. But he received the same answer from respondent's employees who evencajoled him to go back to the burial place as they would just follow with his construction materials.

After hours of waiting which seemed interminable to him Barzaga became extremely upset. Hedecided to dismiss his laborers for the day. He proceeded to the police station, which was just

nearby, and lodged a complaint against Alviar. He had his complaint entered in the police blotter.When he returned again to the store he saw the delivery truck already there but the materials hepurchased were not yet ready for loading. Distressed that Alviar's employees were not the leastconcerned, despite his impassioned pleas, Barzaga decided to cancel his transaction with the storeand look for construction materials elsewhere.

In the afternoon of that day, petitioner was able to buy from another store. But since darkness wasalready setting in and his workers had left, he made up his mind to start his project the followingmorning, 23 December. But he knew that the niche would not be finish in time for the scheduledburial the following day. His laborers had to take a break on Christmas Day and they could onlyresume in the morning of the twenty-sixth. The niche was completed in the afternoon and Barzaga'swife was finally laid to rest. However, it was two-and-a-half (2-1/2) days behind schedule.

On 21 January 1991, tormented perhaps by his inability to fulfill his wife's dying wish, Barzaga wroteprivate respondent Alviar demanding recompense for the damage he suffered. Alviar did notrespond. Consequently, petitioner sued him before the Regional Trial Court. 1

Resisting petitioner's claim, private respondent contended that legal delay could not be validlyascribed to him because no specific time of delivery was agreed upon between them. He pointed outthat the invoices evidencing the sale did not contain any stipulation as to the exact time of deliveryand that assuming that the materials were not delivered within the period desired by petitioner, thedelivery truck suffered a flat tire on the way to the store to pick up the materials. Besides, his menwere ready to make the delivery by ten-thirty in the morning of 22 December but petitioner refused toaccept them. According to Alviar, it was this obstinate refusal of petitioner to accept delivery thatcaused the delay in the construction of the niche and the consequent failure of the family to inter

their loved one on the twenty-fourth of December, and that, if at all, it was petitioner and no otherwho brought about all his personal woes.

Upholding the proposition that respondent incurred in delay in the delivery of the constructionmaterials resulting in undue prejudice to petitioner, the trial court ordered respondent Alviar to paypetitioner (a) P2,110.00 as refund for the purchase price of the materials with interest per annumcomputed at the legal rate from the date of the filing of the complaint, (b) P5,000.00 as temperatedamages, (c) P20,000.00 as moral damages, (d) P5,000.00 as litigation expenses, and (e)P5,000.00 as attorney's fees.

On appeal, respondent Court of Appeals reversed the lower court and ruled that there was nocontractual commitment as to the exact time of delivery since this was not indicated in the invoice

receipts covering the sale.2

The arrangement to deliver the materials merely implied that delivery should be made within areasonable time but that the conclusion that since petitioner's workers were already at the graveyardthe delivery had to be made at that precise moment, is non-sequitur. The Court of Appeals also heldthat assuming that there was delay, petitioner still had sufficient time to construct the tomb and holdhis wife's burial as she wished.


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We sustain the trial court. An assiduous scrutiny of the record convinces us that respondent AngelitoAlviar was negligent and incurred in delay in the performance of his contractual obligation. Thissufficiently entitles petitioner Ignacio Barzaga to be indemnified for the damage he suffered as aconsequence of delay or a contractual breach. The law expressly provides that those who in theperformance of their obligation are guilty of fraud, negligence, or delay and those who in any mannercontravene the tenor thereof, are liable for damages. 3

Contrary to the appellate court's factual determination, there was a specific time agreed upon for thedelivery of the materials to the cemetery. Petitioner went to private respondent's store on 21December precisely to inquire if the materials he intended to purchase could be deliveredimmediately. But he was told by the storekeeper that if there were still deliveries to be made thatafternoon his order would be delivered the following day. With this in mind Barzaga decided to buythe construction materials the following morning after he was assured of immediate deliveryaccording to his time frame. The argument that the invoices never indicated a specific delivery timemust fall in the face of the positive verbal commitment of respondent's storekeeper. Consequently itwas no longer necessary to indicate in the invoices the exact time the purchased items were to bebrought to the cemetery. In fact, storekeeper Boncales admitted that it was her custom not toindicate the time of delivery whenever she prepared invoices.4

Private respondent invokes fortuitous event as his handy excuse for that "bit of delay" in the deliveryof petitioner's purchases. He maintains that Barzaga should have allowed his delivery men a littlemore time to bring the construction materials over to the cemetery since a few hours more would notreally matter and considering that his truck had a flat tire. Besides, according to him, Barzaga stillhad sufficient time to build the tomb for his wife.

This is a gratuitous assertion that borders on callousness. Private respondent had no right tomanipulate petitioner's timetable and substitute it with his own. Petitioner had a deadline to meet. Afew hours of delay was no piddling matter to him who in his bereavement had yet to attend to otherpressing family concerns. Despite this, respondent's employees still made light of his earnestimportunings for an immediate delivery. As petitioner bitterly declared in court " . . . they(respondent's employees) were making a fool out of me." 5

We also find unacceptable respondent's justification that his truck had a flat tire, for this event, ifindeed it happened, was forseeable according to the trial court, and as such should have beenreasonably guarded against. The nature of private respondent's business requires that he should beready at all times to meet contingencies of this kind. One piece of testimony by respondent's witnessMarina Boncales has caught our attention - that the delivery truck arrived a little late thanusual because it came from a delivery of materials in Langcaan, Dasmarinas, Cavite.6Significantly,this information was withheld by Boncales from petitioner when the latter was negotiating with her for thepurchase of construction materials. Consequently, it is not unreasonable to suppose that had she toldpetitioner of this fact and that the delivery of the materials would consequently be delayed, petitionerwould not have bought the materials from respondent's hardware store but elsewhere which could meethis time requirement. The deliberate suppression of this information by itself manifests a certain degree ofbad faith on the part of respondent's storekeeper.

The appellate court appears to have belittled petitioner's submission that under the prevailingcircumstances time was of the essence in the delivery of the materials to the grave site. However,we find petitioner's assertion to be anchored on solid ground. The niche had to be constructed at thevery least on the twenty-second of December considering that it would take about two (2) days tofinish the job if the interment was to take place on the twenty-fourth of the month. Respondent'sdelay in the delivery of the construction materials wasted so much time that construction of the tombcould start only on the twenty-third. It could not be ready for the scheduled burial of petitioner's wife.


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This undoubtedly prolonged the wake, in addition to the fact that work at the cemetery had to be putoff on Christmas day.

This case is clearly one of non-performance of a reciprocal obligation.7In their contract of purchaseand sale, petitioner had already complied fully with what was required of him as purchaser, i.e., thepayment of the purchase price of P2,110.00. It was incumbent upon respondent to immediately fulfill his

obligation to deliver the goods otherwise delay would attach.

We therefore sustain the award of moral damages. It cannot be denied that petitioner and his familysuffered wounded feelings, mental anguish and serious anxiety while keeping watch on Christmasday over the remains of their loved one who could not be laid to rest on the date she herself hadchosen. There is no gainsaying the inexpressible pain and sorrow Ignacio Barzaga and his familybore at that moment caused no less by the ineptitude, cavalier behavior and bad faith of respondentand his employees in the performance of an obligation voluntarily entered into.

We also affirm the grant of exemplary damages. The lackadaisical and feckless attitude of theemployees of respondent over which he exercised supervisory authority indicates gross negligencein the fulfillment of his business obligations. Respondent Alviar and his employees should haveexercised fairness and good judgment in dealing with petitioner who was then grieving over the lossof his wife. Instead of commiserating with him, respondent and his employees contributed topetitioner's anguish by causing him to bear the agony resulting from his inability to fulfill his wife'sdying wish.

We delete however the award of temperate damages. Under Art. 2224 of the Civil Code, temperatedamages are more than nominal but less than compensatory, and may be recovered when the courtfinds that some pecuniary loss has been suffered but the amount cannot, from the nature of thecase, be proved with certainty. In this case, the trial court found that plaintiff suffered damages in theform of wages for the hired workers for 22 December 1990 and expenses incurred during the extratwo (2) days of the wake. The record however does not show that petitioner presented proof of theactual amount of expenses he incurred which seems to be the reason the trial court awarded to himtemperate damages instead. This is an erroneous application of the concept of temperate damages.

While petitioner may have indeed suffered pecuniary losses, these by their very nature could beestablished with certainty by means of payment receipts. As such, the claim falls unequivocallywithin the realm of actual or compensatory damages. Petitioner's failure to prove actual expenditureconsequently conduces to a failure of his claim. For in determining actual damages, the court cannotrely on mere assertions, speculations, conjectures or guesswork but must depend on competentproof and on the best evidence obtainable regarding the actual amount of loss.8

We affirm the award of attorney's fees and litigation expenses. Award of damages, attorney's feesand litigation costs is left to the sound discretion of the court, and if such discretion be wellexercised, as in this case, it will not be disturbed on appeal.9

WHEREFORE, the decision of the Court of Appeals is REVERSED and SET ASIDE except insofar

as it GRANTED on a motion for reconsideration the refund by private respondent of the amount ofP2,110.00 paid by petitioner for the construction materials. Consequently, except for the award ofP5,000.00 as temperate damages which we delete, the decision of the Regional Trial Court grantingpetitioner (a) P2,110.00 as refund for the value of materials with interest computed at the legalrateper annumfrom the date of the filing of the case; (b) P20,000.00 as moral damages; (c)P10,000.00 as exemplary damages; (d) P5,000.00 as litigation expenses; and (4) P5,000.00 asattorney's fees, is AFFIRMED. No costs.

SO ORDERED.


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FIRST DIVISION

[G.R. No. 117190. January 2, 1997]

JACINTO TANGUILIG doing business under the name and style J.M.T.ENGINEERING AND GENERALMERCHANDISING, pet i t ioner, vs. COURT OF APPEALS andVICENTE HERCE JR., respondents.

D E C I S I O N

BELLOSILLO, J.:

This case involves the proper interpretation of the contract entered intobetween the parties.

Sometime in April 1987 petitioner Jacinto M. Tanguilig doing businessunder the name and style J. M. T. Engineering and GeneralMerchandisingproposed to respondent Vicente Herce Jr. to construct awindmill system for him. After some negotiations they agreed on theconstruction of the windmill for a consideration of P60,000.00 with a one-yearguaranty from the date of completion and acceptance by respondent HerceJr. of the project. Pursuant to the agreement respondent paid petitioner a

down payment of P30,000.00 and an installment payment of P15,000.00,leaving a balance of P15,000.00.

On 14 March 1988, due to the refusal and failure of respondent to pay thebalance, petitioner filed a complaint to collect the amount. InhisAnswer before the trial court respondent denied the claim saying that hehad already paid this amount to the San Pedro General Merchandising Inc.(SPGMI) which constructed the deep well to which the windmill system was tobe connected. According to respondent, since the deep well formed part ofthe system the payment he tendered to SPGMI should be credited to his

account by petitioner. Moreover, assuming that he owed petitioner a balanceof P15,000.00, this should be offset by the defects in the windmill systemwhich caused the structure to collapse after a strong wind hit their place.[1]

Petitioner denied that the construction of a deep well was included in theagreement to build the windmill system, for the contract price of P60,000.00was solely for the windmill assembly and its installation, exclusive of otherincidental materials needed for the project. He also disowned any obligation
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to repair or reconstruct the system and insisted that he delivered it in goodand working condition to respondent who accepted the same withoutprotest. Besides, its collapse was attributable to a typhoon,a forcemajeure,which relieved him of any liability.

In finding for plaintiff, the trial court held that the construction of thedeep well was not part of the windmill project as evidenced clearly bythe letter proposals submitted by petitioner to respondent.[2]It noted that "[i]fthe intention of the parties is to include the construction of the deep well in theproject, the same should be stated in the proposals. In the absence of suchan agreement, it could be safely concluded that the construction of the deepwell is not a part of the project undertaken by the plaintiff."[3]With respect tothe repair of the windmill, the trial court found that "there is no clear andconvincing proof that the windmill system fell down due to the defect of theconstruction."[4]

The Court of Appeals reversed the trial court. It ruled that the constructionof the deep well was included in the agreement of the parties because theterm "deep well" was mentioned in both proposals. It also gave credence tothe testimony of respondent's witness Guillermo Pili, the proprietor of SPGMIwhich installed the deep well, that petitioner Tanguilig told him that the cost ofconstructing the deep well would be deducted from the contract priceof P60,000.00. Upon these premises the appellate court concluded thatrespondent's payment of P15,000.00 to SPGMI should be applied to hisremaining balance with petitioner thus effectively extinguishing his contractual

obligation. However, it rejected petitioner's claim of force majeureandordered the latter to reconstruct the windmill in accordance with the stipulatedone-year guaranty.

His motion for reconsideration having been denied by the Court ofAppeals, petitioner now seeks relief from this Court. He raises twoissues: firstly, whether the agreement to construct the windmill systemincluded the installation of a deep well and, secondly,whether petitioner isunder obligation to reconstruct the windmill after it collapsed.

We reverse the appellate court on the first issue but sustain it on the

second.The preponderance of evidence supports the finding of the trial court that

the installation of a deep well was not included in the proposals of petitioner toconstruct a windmill system for respondent. There were in fact two (2)proposals: one dated 19 May 1987 which pegged the contract priceat P87,000.00 (Exh. "1"). This was rejected by respondent. The other wassubmitted three days later, i.e., on 22 May 1987 which contained more
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specifications but proposed a lower contract price of P60,000.00 (Exh."A"). The latter proposal was accepted by respondent and the constructionimmediately followed. The pertinent portions of the first letter-proposal (Exh."1") are reproduced hereunder -

In connection with your Windmill System and Installation, we would like to quote toyou as follows:

One (1) Set - Windmill suitable for 2 inches diameter deepwell, 2 HP, capacity, 14feet in diameter, with 20 pieces blade, Tower 40 feet high, including mechanismwhich is not advisable to operate during extra-intensity wind. Excluding cylinderpump.

UNIT CONTRACT PRICE P87,000.00

The second letter-proposal (Exh. "A") provides as follows:

In connection with your Windmill system Supply of Labor Materials and Installation,operated water pump, we would like to quote to you as follows -

One (1) set - Windmill assembly for 2 inches or 3 inches deep-well pump, 6 Stroke,14 feet diameter, 1-lot blade materials, 40 feet Tower complete with standardappurtenances up to Cylinder pump, shafting U.S. adjustable International Metal.

One (1) lot - Angle bar, G. I. pipe, Reducer Coupling, Elbow Gate valve, cross Tee

coupling.

One (1) lot - Float valve.

One (1) lot - Concreting materials foundation.

F. O. B. Laguna

Contract Price P60,000.00

Notably, nowhere in either proposal is the installation of a deep wellmentioned, even remotely. Neither is there an itemization or description of thematerials to be used in constructing the deep well. There is absolutely nomention in the two (2) documents that a deep well pump is a component ofthe proposed windmill system. The contract prices fixed in both proposalscover only the features specifically described therein and no other. While thewords "deep well" and "deep well pump" are mentioned in both, these do not


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indicate that a deep well is part of the windmill system. They merely describethe type of deep well pump for which the proposed windmill would besuitable. As correctly pointed out by petitioner, the words "deepwell" preceded by the prepositions "for"and "suitable for" were meant onlyto convey the idea that the proposed windmill would be appropriate for a deep

well pump with a diameter of 2 to 3 inches. For if the real intent of petitionerwas to include a deep well in the agreement to construct a windmill, he wouldhave used instead the conjunctions "and"or "with." Since the terms of theinstruments are clear and leave no doubt as to their meaning they should notbe disturbed.

Moreover, it is a cardinal rule in the interpretation of contractsthat the intention of the parties shall be accorded primordialconsideration[5]and, in case of doubt, their contemporaneous and subsequentacts shall be principally considered.[6]An examination of such

contemporaneous and subsequent acts of respondent as well as theattendant circumstances does not persuade us to uphold him.

Respondent insists that petitioner verbally agreed that the contract priceof P60,000.00 covered the installation of a deep well pump. He contends thatsince petitioner did not have the capacity to install the pump the latter agreedto have a third party do the work the cost of which was to be deducted fromthe contract price. To prove his point, he presented Guillermo Pili of SPGMIwho declared that petitioner Tanguilig approached him with a letter fromrespondent Herce Jr. asking him to build a deep well pump as "part of the

price/contract which Engineer (Herce) had with Mr. Tanguilig."

[7]

We are disinclined to accept the version of respondent. The claim of Pili

that Herce Jr. wrote him a letter is unsubstantiated. The alleged letter wasnever presented in court by private respondent for reasons known only tohim. But granting that this written communication existed, it could nothave simply contained a request for Pili to install a deep well; it would havealso mentioned the party who would pay for the undertaking. It strainscredulity that respondent would keep silent on this matter and leave it all topetitioner Tanguilig to verbally convey to Pili that the deep well was part ofthe windmill construction and that its payment would come from the contract

price of P60,000.00.

We find it also unusual that Pili would readily consent to build a deep wellthe payment for which would come supposedly from the windmill contractprice on the mere representation of petitioner, whom he had never met before,without a written commitment at least from the former. For if indeed the deepwell were part of the windmill project, the contract for its installation would
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have been strictly a matter between petitioner and Pili himself with the formerassuming the obligation to pay the price. That it was respondent Herce Jr.himself who paid for the deep well by handing over to Pili the amountof P15,000.00 clearly indicates that the contract for the deep well was not partof the windmill project but a separate agreement between respondent and

Pili. Besides, if the price of P60,000.00 included the deep well, the obligationof respondent was to pay the entire amount to petitioner without prejudice toany action that Guillermo Pili or SPGMI may take, if any, against thelatter. Significantly, when asked why he tendered payment directly to Pili andnot to petitioner, respondent explained, rather lamely, that he did it "becausehe has (sic) the money, so (he) just paid the money in his possession."[8]

Can respondent claim that Pili accepted his payment on behalf ofpetitioner? No. While the law is clear that "payment shall be made to theperson in whose favor the obligation has been constituted, or

hissuccessor in interest, or

any person

authorized

to

receive it,".[9]

It doesnot appear from the record that Pili and/or SPGMI was so authorized.

Respondent cannot claim the benefit of the law concerning "paymentsmade by a third person."[10]The Civil Code provisions do not apply in theinstant case because no creditor-debtor relationship between petitioner andGuillermo Pili and/or SPGMI has been established regarding the constructionof the deep well. Specifically, witness Pili did not testify that he entered into acontract with petitioner for the construction of respondent's deep well. IfSPGMI was really commissioned by petitioner to construct the deep well, an

agreement particularly to this effect should have been entered into.The contemporaneous and subsequent acts of the parties concerned

effectively belie respondent's assertions. These circumstances only show thatthe construction of the well by SPGMI was for the sole account of respondentand that petitioner merely supervised the installation of the well because thewindmill was to be connected to it. There is no legal nor factual basis bywhich this Court can impose upon petitioner an obligation he did not expresslyassume nor ratify.

The second issue is not a novel one. In a long line of cases[11]this Court

has consistently held that in order for a party to claim exemption from liabilityby reason of fortuitous event under Art. 1174 of the Civil Code the eventshould be the sole and proximate cause of the loss or destruction of theobject of the contract. In Nakpilvs. Court of Appeals,[12]four (4) requisitesmust concur: (a) the cause of the breach of the obligation must beindependent of the will of the debtor; (b) the event must be eitherunforeseeable or unavoidable; (c) the event must be such as to render it
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impossible for the debtor to fulfill his obligation in a normal manner; and, (d)the debtor must be free from any participation in or aggravation of the injury tothe creditor.

Petitioner failed to show that the collapse of the windmill was due solely to

a fortuitous event. Interestingly, the evidence does not disclose that therewas actually a typhoon on the day the windmill collapsed. Petitionermerely stated that there was a "strong wind." But a strong wind in this casecannot be fortuitous - unforeseeable nor unavoidable. On the contrary, astrong wind should be present in places where windmills are constructed,otherwise the windmills will not turn.

The appellate court correctly observed that "given the newly-constructedwindmill system, the same would not have collapsed had there been noinherent defect in it which could only be attributable to the appellee." [13]Itemphasized that respondent had in his favor the presumption that"things have happened according to the ordinary course of nature and theordinary habits of life."[14]This presumption has not been rebutted by petitioner.

Finally, petitioner's argument that private respondent was already indefault in the payment of his outstanding balance of P15,000.00 and henceshould bear his own loss, is untenable. In reciprocal obligations, neither partyincurs in delay if the other does not comply or is not ready to comply in aproper manner with what is incumbent upon him.[15]When the windmill failed tofunction properly it became incumbent upon petitioner to institute the properrepairs in accordance with the guaranty stated in the contract. Thus,

respondent cannot be said to have incurred in delay; instead, it is petitionerwho should bear the expenses for the reconstruction of the windmill. Article1167 of the Civil Code is explicit on this point that if a person obliged to dosomething fails to do it, the same shall be executed at his cost.

WHEREFORE, the appealed decision is MODIFIED. RespondentVICENTE HERCE JR. is directed to pay petitioner JACINTO M. TANGUILIGthe balance of P15,000.00 with interest at the legal rate from the date of thefiling of the complaint. In return, petitioner is ordered to "reconstruct subjectdefective windmill system, in accordance with the one-year guaranty"[16]and to

complete the same within three (3) months from the finality of this decision.SO ORDERED.
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SECOND DIVISION

[G.R. No. 130547. October 3, 2000]

LEAH ALESNA REYES, ROSE NAHDJA, JOHNNY, and minors LLOYDand KRISTINE, all surnamed REYES, represented by theirmother, LEAH ALESNA REYES,pet i t ioners, vs. SISTERS OFMERCY HOSPITAL, SISTER ROSE PALACIO, DR. MARVIEBLANES, and DR. MARLYN RICO, respondents.

D E C I S I O N

MENDOZA, J.:

This is a petition for review of the decision [1]of the Court of Appeals in CA-G.R. CV No. 36551 affirming the decision of the Regional Trial Court, BranchIX, Cebu City which dismissed a complaint for damages filed by petitionersagainst respondents.

The facts are as follows:

Petitioner Leah Alesna Reyes is the wife of the late Jorge Reyes. Theother petitioners, namely, Rose Nahdja, Johnny, Lloyd, and Kristine, allsurnamed Reyes, were their children. Five days before his death on January8, 1987, Jorge had been suffering from a recurring fever with chills. After hefailed to get relief from some home medication he was taking, which consistedof analgesic, antipyretic, and antibiotics, he decided to see the doctor.

On January 8, 1987, he was taken to the Mercy Community Clinic by hiswife. He was attended to by respondent Dr. Marlyn Rico, resident physicianand admitting physician on duty, who gave Jorge a physical examination andtook his medical history. She noted that at the time of his admission, Jorgewas conscious, ambulatory, oriented, coherent, and with respiratorydistress.[2]Typhoid fever was then prevalent in the locality, as the clinic had

been getting from 15 to 20 cases of typhoid per month.[3]Suspecting thatJorge could be suffering from this disease, Dr. Rico ordered a Widal Test, astandard test for typhoid fever, to be performed on Jorge. Blood count, routineurinalysis, stool examination, and malarial smear were also made.[4]Afterabout an hour, the medical technician submitted the results of the test fromwhich Dr. Rico concluded that Jorge was positive for typhoid fever. As her
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shift was only up to 5:00 p.m., Dr. Rico indorsed Jorge to respondent Dr.Marvie Blanes.

Dr. Marvie Blanes attended to Jorge at around six in the evening. She alsotook Jorges history and gave him a physical examination. Like Dr. Rico, her

impression was that Jorge had typhoid fever. Antibiotics being the acceptedtreatment for typhoid fever, she ordered that a compatibility test with theantibiotic chloromycetin be done on Jorge. Said test was administered bynurse Josephine Pagente who also gave the patient a dose of triglobe. As shedid not observe any adverse reaction by the patient to chloromycetin, Dr.Blanes ordered the first five hundred milligrams of said antibiotic to beadministered on Jorge at around 9:00 p.m. A second dose was administeredon Jorge about three hours later just before midnight.

At around 1:00 a.m. of January 9, 1987, Dr. Blanes was called as Jorgestemperature rose to 41C. The patient also experienced chills and exhibitedrespiratory distress, nausea, vomiting, and convulsions. Dr. Blanes put himunder oxygen, used a suction machine, and administered hydrocortisone,temporarily easing the patients convulsions.When he regainedconsciousness, the patient was asked by Dr. Blanes whether he had aprevious heart ailment or had suffered from chest pains in the past. Jorgereplied he did not.[5]After about 15 minutes, however, Jorge again started tovomit, showed restlessness, and his convulsions returned. Dr. Blanes re-applied the emergency measures taken before and, in addition, valium wasadministered. Jorge, however, did not respond to the treatment and slipped

into cyanosis, a bluish or purplish discoloration of the skin or mucousmembrane due to deficient oxygenation of the blood. At around 2:00 a.m.,Jorge died. He was forty years old. The cause of his death was Ventricular

Arrythemia Secondary to Hyperpyrexia and typhoid fever.

On June 3, 1987, petitioners filed before the Regional Trial Court of CebuCity a complaint[6]for damages against respondents Sisters of Mercy, SisterRose Palacio, Dr. Marvie Blanes, Dr. Marlyn Rico, and nurse JosephinePagente. On September 24, 1987, petitioners amended their complaint toimplead respondent Mercy Community Clinic as additional defendant and todrop the name of Josephine Pagente as defendant since she was no longer

connected with respondent hospital. Their principal contention was that Jorgedid not die of typhoid fever.[7]Instead, his death was due to the wrongfuladministration of chloromycetin. They contended that had respondent doctorsexercised due care and diligence, they would not have recommended andrushed the performance of the Widal Test, hastily concluded that Jorge wassuffering from typhoid fever, and administered chloromycetin without firstconducting sufficient tests on the patients compatibility with said drug.They
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charged respondent clinic and its directress, Sister Rose Palacio, withnegligence in failing to provide adequate facilities and in hiring negligentdoctors and nurses.[8]

Respondents denied the charges. During the pre-trial conference, the

parties agreed to limit the issues on the following: (1) whether the death ofJorge Reyes was due to or caused by the negligence, carelessness,imprudence, and lack of skill or foresight on the part of defendants; (2)whether respondent Mercy Community Clinic was negligent in the hiring of itsemployees; and (3) whether either party was entitled to damages. The casewas then heard by the trial court during which, in addition to the testimonies ofthe parties, the testimonies of doctors as expert witnesses were presented.

Petitioners offered the testimony of Dr. Apolinar Vacalares, ChiefPathologist at the Northern Mindanao Training Hospital, Cagayan de OroCity. On January 9, 1987, Dr. Vacalares performed an autopsy on JorgeReyes to determine the cause of his death. However, he did not open the skullto examine the brain. His findings[9]showed that the gastro-intestinal tract wasnormal and without any ulceration or enlargement of the nodules. Dr.Vacalares testified that Jorge did not die of typhoid fever. He also stated thathe had not seen a patient die of typhoid fever within five days from the onsetof the disease.

For their part, respondents offered the testimonies of Dr. Peter Gotiongand Dr. Ibarra Panopio. Dr. Gotiong is a diplomate in internal medicine whoseexpertise is microbiology and infectious diseases. He is also a consultant at

the Cebu City Medical Center and an associate professor of medicine at theSouth Western University College of Medicine in Cebu City. He had treatedover a thousand cases of typhoid patients. According to Dr. Gotiong, thepatients history and positive Widal Test results ratio of 1:320 would make himsuspect that the patient had typhoid fever.As to Dr. Vacalares observationregarding the absence of ulceration in Jorges gastro-intestinal tract, Dr.Gotiong said that such hyperplasia in the intestines of a typhoid victim may bemicroscopic. He noted that since the toxic effect of typhoid fever may lead tomeningitis, Dr. Vacalares autopsy should have included an examination of thebrain.[10]

The other doctor presented was Dr. Ibarra Panopio, a member of theAmerican Board of Pathology, examiner of the Philippine Board of Pathologyfrom 1978 to 1991, fellow of the Philippine Society of Pathologist, associateprofessor of the Cebu Institute of Medicine, and chief pathologist of the

Andres Soriano Jr. Memorial Hospital in Toledo City. Dr. Panopio stated thatalthough he was partial to the use of the culture test for its greater reliability in
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the diagnosis of typhoid fever, the Widal Test may also be used. Like Dr.Gotiong, he agreed that the 1:320 ratio in Jorges case was already themaximum by which a conclusion of typhoid fever may be made. No additionalinformation may be deduced from a higher dilution.[11]He said that Dr.Vacalares autopsy on Jorge was incomplete and thus inconclusive.

On September 12, 1991, the trial court rendered its decision absolvingrespondents from the charges of negligence and dismissing petitioners actionfor damages. The trial court likewise dismissed respondents counterclaim,holding that, in seeking damages from respondents, petitioners were impelledby the honest belief that Jorges death was due to the latters negligence.

Petitioners brought the matter to the Court of Appeals. On July 31, 1997,the Court of Appeals affirmed the decision of the trial court.

Hence this petition.

Petitioners raise the following assignment of errors:

I. THE HONORABLE COURT OF APPEALS COMMITTED A REVERSIBLE ERRORWHEN IT RULED THAT THE DOCTRINE OF RES IPSA LOQUITURIS NOT

APPLICABLE IN THE INSTANT CASE.

II. THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERRORWHEN IT MADE AN UNFOUNDED ASSUMPTION THAT THE LEVEL OFMEDICAL PRACTICE IS LOWER IN ILIGAN CITY.

III. THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT RULEDFOR A LESSER STANDARD OF CARE AND DEGREE OF DILIGENCE FORMEDICAL PRACTICE IN ILIGAN CITY WHEN IT APPRECIATE[D] NO DOCTORS

NEGLIGENCE IN THE TREATMENT OF JORGE REYES.

Petitioners action is for medical malpractice.This is a particular form ofnegligence which consists in the failure of a physician or surgeon to apply tohis practice of medicine that degree of care and skill which is ordinarilyemployed by the profession generally, under similar conditions, and in likesurrounding circumstances.[12]In order to successfully pursue such a claim, apatient must prove that the physician or surgeon either failed to do somethingwhich a reasonably prudent physician or surgeon would have done, or that heor she did something that a reasonably prudent physician or surgeon would

not have done, and that the failure or action caused injury to thepatient.[13]There are thus four elements involved in medical negligence cases,namely: duty, breach, injury, and proximate causation.

In the present case, there is no doubt that a physician-patient relationshipexisted between respondent doctors and Jorge Reyes. Respondents werethus duty-bound to use at least the same level of care that any reasonablycompetent doctor would use to treat a condition under the same


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circumstances. It is breach of this duty which constitutes actionablemalpractice.[14]As to this aspect of medical malpractice, the determination ofthe reasonable level of care and the breach thereof, expert testimony isessential. Inasmuch as the causes of the injuries involved in malpracticeactions are determinable only in the light of scientific knowledge, it has been

recognized that expert testimony is usually necessary to support theconclusion as to causation.[15]

Res Ipsa Loqu itur

There is a case when expert testimony may be dispensed with, and that isunder the doctrine of res ipsa loquitur. As held in Ramos v. Court of

Appeals:[16]

Although generally, expert medical testimony is relied upon in malpractice suits toprove that a physician has done a negligent act or that he has deviated from thestandard medical procedure, when the doctrine of res ipsa loquitoris availed by theplaintiff, the need for expert medical testimony is dispensed with because the injuryitself provides the proof of negligence. The reason is that the general rule on thenecessity of expert testimony applies only to such matters clearly within the domainof medical science, and not to matters that are within the common knowledge ofmankind which may be testified to by anyone familiar with the facts. Ordinarily, onlyphysicians and surgeons of skill and experience are competent to testify as to whether

a patient has been treated or operated upon with a reasonable degree of skill andcare. However, testimony as to the statements and acts of physicians and surgeons,external appearances, and manifest conditions which are observable by any one maybe given by non-expert witnesses. Hence, in cases where the res ipsa loquiturisapplicable, the court is permitted to find a physician negligent upon proper proof ofinjury to the patient, without the aid of expert testimony, where the court from its fundof common knowledge can determine the proper standard of care. Where commonknowledge and experience teach that a resulting injury would not have occurred to thepatient if due care had been exercised, an inference of negligence may be drawngiving rise to an application of the doctrine of res ipsa loquiturwithout medical

evidence, which is ordinarily required to show not only what occurred but how andwhy it occurred. When the doctrine is appropriate, all that the patient must do is provea nexus between the particular act or omission complained of and the injury sustainedwhile under the custody and management of the defendant without need to produceexpert medical testimony to establish the standard of care. Resort to res ipsaloquitoris allowed because there is no other way, under usual and ordinaryconditions, by which the patient can obtain redress for injury suffered by him.


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Thus, courts of other jurisdictions have applied the doctrine in the followingsituations: leaving of a foreign object in the body of the patient after an operation,injuries sustained on a healthy part of the body which was not under, or in the area, oftreatment, removal of the wrong part of the body when another part was intended,knocking out a tooth while a patients jaw was under anesthetic for the removal of his

tonsils, and loss of an eye while the patient was under the influence of anesthetic,during or following an operation for appendicitis, among others.[17]

Petitioners asserted in the Court of Appeals that the doctrine of res ipsaloquiturapplies to the present case because Jorge Reyes was merelyexperiencing fever and chills for five days and was fully conscious, coherent,and ambulant when he went to the hospital. Yet, he died after only ten hoursfrom the time of his admission.

This contention was rejected by the appellate court.

Petitioners now contend that all requisites for the application of res ipsaloquiturwere present, namely: (1) the accident was of a kind which does notordinarily occur unless someone is negligent; (2) the instrumentality or agencywhich caused the injury was under the exclusive control of the person incharge; and (3) the injury suffered must not have been due to any voluntaryaction or contribution of the person injured.[18]

The contention is without merit. We agree with the ruling of the Court ofAppeals. In the Ramoscase, the question was whether a surgeon, ananesthesiologist, and a hospital should be made liable for the comatose

condition of a patient scheduled for cholecystectomy.[19]

In that case, thepatient was given anesthesia prior to her operation. Noting that the patientwas neurologically sound at the time of her operation, the Court applied thedoctrine of res ipsa loquitur as mental brain damage does not normally occur in agallblader operation in the absence of negligence of theanesthesiologist. Taking judicial notice that anesthesia procedures hadbecome so common that even an ordinary person could tell if it wasadministered properly, we allowed the testimony of a witness who was not anexpert. In this case, while it is true that the patient died just a few hours afterprofessional medical assistance was rendered, there is really nothing unusual

or extraordinary about his death. Prior to his admission, the patient alreadyhad recurring fevers and chills for five days unrelieved by the analgesic,antipyretic, and antibiotics given him by his wife. This shows that he had beensuffering from a serious illness and professional medical help came too latefor him.


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Respondents alleged failure to observe due care was not immediatelyapparent to a layman so as to justify application of res ipsa loquitur. Thequestion required expert opinion on the alleged breach by respondents of thestandard of care required by the circumstances. Furthermore, on the issue ofthe correctness of her diagnosis, no presumption of negligence can be applied

to Dr. Marlyn Rico.As held in Ramos:

. . . .Res ipsa loquituris not a rigid or ordinary doctrine to be perfunctorily used but arule to be cautiously applied, depending upon the circumstances of each case. It isgenerally restricted to situations in malpractice cases where a layman is able to say, asa matter of common knowledge and observation, that the consequences ofprofessional care were not as such as would ordinarily have followed if due care hadbeen exercised. A distinction must be made between the failure to secure results, andthe occurrence of something more unusual and not ordinarily found if the service ortreatment rendered followed the usual procedure of those skilled in that particularpractice. It must be conceded that the doctrine of res ipsa loquitur can have noapplication in a suit against a physician or a surgeon which involves the merits of adiagnosis or of a scientific treatment. The physician or surgeon is not required at

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