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36. 37. 38. SECOND DIVISION G.R. No.

71159 November 15, 1989 CITY OF MANILA, and EVANGELINE SUVA, petitioners, vs. HON. INTERMEDIATE APPELLATE COURT, IRENE STO. DOMINGO and for and in behalf of her minor children, VIVENCIO, JR., IRIS, VERGEL and IMELDA, all surnamed STO. DOMINGO, respondents. PARAS, J.: This is a petition for review on certiorari seeking to reverse and set aside: (a) the Decision of the Intermediate Appellate Court now Court of Appeals 1 promulgated on May 31, 1984 in AC-G.R. CV No. 00613-R entitled Irene Sto. Domingo et al., v. City Court of Manila et al., modifying the decision of the then Court of First Instance of Manila, Branch VIII 2 in Civil Case No. 121921 ordering the defendants (herein petitioners,) to give plaintiffs (herein private respondents) the right to use a burial lot in the North Cemetery corresponding to the unexpired term of the fully paid lease sued upon, to search the remains of the late Vivencio Sto. Domingo, Sr. and to bury the same in a substitute lot to be chosen by the plaintiffs; and (b) the Resolution of the Court of Appeals dated May 28, 1985 denying petitioner's motion for reconsideration. As found by the Court of Appeals and the trial court, the undisputed facts of the case are as follows: Brought on February 22, 1979 by the widow and children of the late Vivencio Sto. Domingo, Sr. was this action for damages against the City of Manila; Evangeline Suva of the City Health Office; Sergio Mallari, officer-in-charge of the North Cemetery; and Joseph Helmuth, the latter's predecessor as officer-incharge of the said burial grounds owned and operated by the City Government of Manila. Vivencio Sto. Domingo, Sr. deceased husband of plaintiff Irene Sto. Domingo and father of the litigating minors, died on June 4,1971 and buried on June 6,1971 in Lot No. 159, Block No. 194 of the North Cemetery which lot was leased by the city to Irene Sto. Domingo for the period from June 6, 1971 to June 6, 2021 per Official Receipt No. 61307 dated June 6, 1971 (see Exh. A) with an expiry date of June 6, 2021 (see Exh. A-1). Full payment of the rental therefor of P50.00 is evidenced by the said receipt which appears to be regular on its face. Apart from the aforementioned receipt, no other document was executed to embody such lease over the burial lot in question. In fact, the burial record for Block No. 194 of Manila North Cemetery (see Exh. 2) in which subject Lot No. 159 is situated does

not reflect the term of duration of the lease thereover in favor of the Sto. Domingos. Believing in good faith that, in accordance with Administrative Order No. 5, Series of 1975, dated March 6, 1975, of the City Mayor of Manila (See Exh. 1) prescribing uniform procedure and guidelines in the processing of documents pertaining to and for the use and disposition of burial lots and plots within the North Cemetery, etc., subject Lot No. 159 of Block 194 in which the mortal remains of the late Vivencio Sto. Domingo were laid to rest, was leased to the bereaved family for five (5) years only, subject lot was certified on January 25, 1978 as ready for exhumation. On the basis of such certification, the authorities of the North Cemetery then headed by defendant Joseph Helmuth authorized the exhumation and removal from subject burial lot the remains of the late Vivencio Sto. Domingo, Sr., placed the bones and skull in a bag or sack and kept the same in the depository or bodega of the cemetery y Subsequently, the same lot in question was rented out to another lessee so that when the plaintiffs herein went to said lot on All Souls Day in their shock, consternation and dismay, that the resting place of their dear departed did not anymore bear the stone marker which they lovingly placed on the tomb. Indignant and disgusted over such a sorrowful finding, Irene Sto. Domingo lost no time in inquiring from the officer-in-charge of the North Cemetery, defendant Sergio Mallari, and was told that the remains of her late husband had been taken from the burial lot in question which was given to another lessee. Irene Sto. Domingo was also informed that she can look for the bones of her deceased husband in the warehouse of the cemetery where the exhumed remains from the different burial lots of the North Cemetery are being kept until they are retrieved by interested parties. But to the bereaved widow, what she was advised to do was simply unacceptable. According to her, it was just impossible to locate the remains of her late husband in a depository containing thousands upon thousands of sacks of human bones. She did not want to run the risk of claiming for the wrong set of bones. She was even offered another lot but was never appeased. She was too aggrieved that she came to court for relief even before she could formally present her claims and demands to the city government and to the other defendants named in the present complaint. (Decision, Court of Appeals, pp. 2-3; Rollo, pp. 34-55) The trial court, on August 4, 1981, rendered its Decision, the dispositive portion of which states: WHEREFORE, judgment is hereby rendered, ordering the defendants to give plaintiffs the right to make use of another single lot within the North Cemetery for a period of forty-three (43) years four (4) months and eleven (11) days, corresponding to the unexpired term of the fully paid lease sued upon; and to search without let up and with the use of all means humanly possible, for the

remains of the late Vivencio Sto. Domingo, Sr. and thereafter, to bury the same in the substitute lot to be chosen by the plaintiffs pursuant to this decision. For want of merit, defendant's counterclaim is DISMISSED. No pronouncement as to costs. SO ORDERED. (Rollo, p. 31) The decision was appealed to the Court of Appeals which on May 31, 1984 rendered a decision (Rollo, pp. 33-40) modifying the decision appealed from, the dispositive portion of which reads: WHEREFORE, PREMISES CONSIDERED, the decision appealed from is hereby REVERSED (is hereby modified) and another one is hereby entered: 1. Requiring in full force the defendants to look in earnest for the bones and skull of the late Vivencio Sto. Domingo, Sr., and to bury the same in the substitute lot adjudged in favor of plaintiffs hereunder; 2. Ordering defendants to pay plaintiffs-appellants jointly and severally P10,000.00 for breach of contract; 3. Ordering defendants to pay plaintiffs-appellants, jointly and severally, P20,000.00 for moral damages; 4. Ordering defendants to pay plaintiffs-appellants jointly and severally, P20,000.00 for exemplary damages; 5. Ordering defendants to pay plaintiffs-appellants, jointly and severally, P10,000.00 as and for attorney's fees; 6. Ordering defendants, to pay plaintiffs-appellants, jointly and severally, on the foregoing amounts legal rate of interest computed from filing hereof until fully paid; and 7. Ordering defendants, to pay plaintiffs-appellants, jointly and severally, the cost of suit. SO ORDERED. (Rollo, p. 40) The petitioners' motion for reconsideration was likewise denied. Hence, this instant petition (Rollo, pp. 7-27) filed on July 27, 1985. The grounds relied upon for this petition are as follows:

I THE HONORABLE INTERMEDIATE APPELLATE COURT ERRED IN AWARDING DAMAGES AGAINST THE PETITIONERS HEREIN, NOTWITHSTANDING THEIR GOOD FAITH AND THEIR LACK OF KNOWLEDGE OR CONSENT TO THE REMOVAL OF THE SKELETAL REMAINS OF THE LATE VIVENCIO STO. DOMINGO, SR. FROM THE SUBJECT BURIAL LOT. II THE HON. INTERMEDIATE APPELLATE COURT ERRED IN HOLDING PETITIONERS HEREIN RESPONSIBLE FOR THE ALLEGED TORTS OF THEIR SUBORDINATE OFFICIALS AND EMPLOYEES, INSPITE OF THE PROVISIONS OF SECTION 4 OF THE REPUBLIC ACT NO. 409 (REVISED CHARTER OF MANILA) AND OTHER APPLICABLE JURISPRUDENCE ON THE SUBJECT EXEMPTING THE PETITIONERS FROM DAMAGES FROM THE MALFEASANCE OR MISFEASANCE OF THEIR OFFICIALS AND EMPLOYEES, IF THERE BE ANY IN THIS CASE. (Brief for Petitioners, Rollo, pp. 93-94) In the resolution dated November 13, 1985 (,Rollo, p. 84), the petition was given due course. The pivotal issue of this case is whether or not the operations and functions of a public cemetery are a governmental, or a corporate or proprietary function of the City of Manila. The resolution of this issue is essential to the determination of the liability for damages of the petitioner city. Petitioners alleged in their petition that the North Cemetery is exclusively devoted for public use or purpose as stated in Sec. 316 of the Compilation of the Ordinances of the City of Manila. They conclude that since the City is a political subdivision in the performance of its governmental function, it is immune from tort liability which may be caused by its public officers and subordinate employees. Further Section 4, Article I of the Revised Charter of Manila exempts the city from liability for damages or injuries to persons or property arising from the failure of the Mayor, the Municipal Board, or any other city officer, to enforce the provision of its charter or any other laws, or ordinance, or from negligence of said Mayor, Municipal Board or any other officers while enforcing or attempting to enforce said provisions. They allege that the Revised Charter of Manila being a special law cannot be defeated by the Human Relations provisions of the Civil Code being a general law. Private respondents on the other hand maintain that the City of Manila entered into a contract of lease which involve the exercise of proprietary functions with private respondent Irene Sto. Domingo. The city and its officers therefore can be sued for any-violation of the contract of lease. Private respondents' contention is well-taken.

Under Philippine laws, the City of Manila is a political body corporate and as such endowed with the faculties of municipal corporations to be exercised by and through its city government in conformity with law, and in its proper corporate name. It may sue and be sued, and contract and be contracted with. Its powers are twofold in character-public, governmental or political on the one hand, and corporate, private and proprietary on the other. Governmental powers are those exercised in administering the powers of the state and promoting the public welfare and they include the legislative, judicial, public and political. Municipal powers on the one hand are exercised for the special benefit and advantage of the community and include those which are ministerial, private and corporate. In McQuillin on Municipal Corporation, the rule is stated thus: "A municipal corporation proper has ... a public character as regards the state at large insofar as it is its agent in government, and private (so called) insofar as it is to promote local necessities and conveniences for its own community (Torio v. Fontanilla, 85 SCRA 599 [1978]). In connection with the powers of a municipal corporation, it may acquire property in its public or governmental capacity, and private or proprietary capacity. The New Civil Code divides such properties into property for public use and patrimonial properties (Article 423), and further enumerates the properties for public use as provincial roads, city streets, municipal streets, the squares, fountains, public waters, promenades, and public works for public service paid for by said provisions, cities or municipalities, all other property is patrimonial without prejudice to the provisions of special laws (Article 424; Province of Zamboanga del Norte v. City of Zamboanga, et al., 22 SCRA 1334 [1968]). Thus in Torio v. Fontanilla, supra, the Court declared that with respect to proprietary functions the settled rule is that a municipal corporation can be held liable to third persons ex contractu (Municipality of Moncada v. Cajuigan, et al., 21 Phil. 184 (1912) or ex delicto (Mendoza v. de Leon, 33 Phil. 508 (1916). The Court further stressed: Municipal corporations are subject to be sued upon contracts and in tort.... xxx xxx xxx The rule of law is a general one, that the superior or employer must answer civilly for the negligence or want of skill of its agent or servant in the course or line of his employment, by which another who is free from contributory fault, is injured. Municipal corporations under the conditions herein stated, fall within tile operation of this rule of law, and are liable accordingly, to civil actions for damages when the requisite elements of liability co-exist. ... (Emphasis supplied) The Court added: ... while the following are corporate or proprietary in character, viz: municipal waterworks, slaughter houses, markets, stables, bathing establishments, wharves, ferries and fisheries. Maintenance of parks, golf courses, cemeteries and airports among others, are also recognized as municipal or city activities of a proprietary

character. (Dept. of Treasury v. City of Evansvulle, Sup. Ct. of Indiana, 60 N.E. 2nd 952, 954 cited in Torio v. Fontanilla, supra) (Emphasis supplied) Under the foregoing considerations and in the absence of a special law, the North Cemetery is a patrimonial property of the City of Manila which was created by resolution of the Municipal Board of August 27, 1903 and January 7, 1904 (Petition, Rollo pp. 20-21 Compilation of the Ordinances of the City of Manila). The administration and government of the cemetery are under the City Health Officer (Ibid., Sec. 3189), the order and police of the cemetery (Ibid., See. 319), the opening of graves, niches, or tombs, the exhuming of remains, and the purification of the same (Ibid., Sec. 327) are under the charge and responsibility of the superintendent of the cemetery. The City of Manila furthermore prescribes the procedure and guidelines for the use and dispositions of burial lots and plots within the North Cemetery through Administrative Order No. 5, s. 1975 (Rollo, p. 44). With the acts of dominion, there is, therefore no doubt that the North Cemetery is within the class of property which the City of Manila owns in its proprietary or private character. Furthermore, there is no dispute that the burial lot was leased in favor of the private respondents. Hence, obligations arising from contracts have the force of law between the contracting parties. Thus a lease contract executed by the lessor and lessee remains as the law between them. (Henson v. Intermediate Appellate Court, 148 SCRA 11 [1 987]). Therefore, a breach of contractual provision entitles the other party to damages even if no penalty for such breach is prescribed in the contract. (Boysaw v. Interphil Promotions, Inc., 148 SCRA 635 [1987]). Noteworthy are the findings of the Court of Appeals as to the harrowing experience of private respondents and their wounded feelings upon discovery that the remains of their loved one were exhumed without their knowledge and consent, as said Court declared: It has been fully established that the appellants, in spite or perhaps because, of their lowly station in life have found great consolation in their bereavement from the loss of their family head, by visiting his grave on special or even ordinary occasions, but particularly on All Saints Day, in keeping with the deep, beautiful and Catholic Filipino tradition of revering the memory of their dead. It would have been but fair and equitable that they were notified of the intention of the city government to transfer the skeletal remains of the late Vivencio Sto. Domingo to give them an opportunity to demand the faithful fulfillment of their contract, or at least to prepare and make provisions for said transfer in order that they would not lose track of the remains of their beloved dead, as what has actually happened on this case. We understand fully what the family of the deceased must have felt when on All Saints Day of 1978, they found a new marker on the grave they were to visit, only to be told to locate their beloved dead among thousands of skeletal remains which to them was desecration and an impossible task. Even the lower court recognized this when it stated in its decision thus: All things considered, even as the Court commiserates with plaintiffs for the unfortunate happening complained of and untimely desecration of the resting place and remains of their deceased dearly beloved, it finds the reliefs prayed for by them

lacking in legal and factual basis. Under the aforementioned facts and circumstances, the most that plaintiffs ran ask for is the replacement of subject lot with another lot of equal size and similar location in the North Cemetery which substitute lot plaintiffs can make use of without paying any rental to the city government for a period of forty-three (43) years, four (4) months and eleven (11) days corresponding to the unexpired portion of the term of the lease sued upon as of January 25, 1978 when the remains of the late Vivencio Sto. Domingo, Sr. were prematurely removed from the disputed lot; and to require the defendants to look in earnest for the bones and skull of the late Vivencio Sto. Domingo Sr. and to bury the same in the substitute lot adjudged in favor of plaintiffs hereunder. (Decision, Intermediate Appellate Court, p. 7, Rollo, p. 39) As regards the issue of the validity of the contract of lease of grave lot No. 159, Block No. 195 of the North Cemetery for 50 years beginning from June 6, 1971 to June 6, 2021 as clearly stated in the receipt duly signed by the deputy treasurer of the City of Manila and sealed by the city government, there is nothing in the record that justifies the reversal of the conclusion of both the trial court and the Intermediate Appellate Court to the effect that the receipt is in itself a contract of lease. (Decision, Intermediate Appellate Court, p. 3, Rollo, pp. 5-6). Under the doctrine of respondent superior, (Torio v. Fontanilla, supra), petitioner City of Manila is liable for the tortious act committed by its agents who failed to verify and check the duration of the contract of lease. The contention of the petitioner-city that the lease is covered by Administrative Order No. 5, series of 1975 dated March 6, 1975 of the City of Manila for five (5) years only beginning from June 6, 1971 is not meritorious for the said administrative order covers new leases. When subject lot was certified on January 25, 1978 as ready for exhumation, the lease contract for fifty (50) years was still in full force and effect. PREMISES CONSIDERED, the Decision of the Intermediate Appellate Court is hereby AFFIRMED. SO ORDERED.

39. FIRST DIVISION G.R. No. L-29993 October 23, 1978 LAUDENCIO TORIO, GUILLERMO EVANGELISTA, MANUEL DE GUZMAN, ALFONSO R. MAGSANOC, JESUS MACARANAS, MAXIMO MANANGAN, FIDEL MONTEMAYOR, MELCHOR VIRAY, RAMON TULAGAN, all Members of the Municipal Council of Malasiqui in 1959, Malasiqui, Pangasinan, petitioners, vs. ROSALINA, ANGELINA, LEONARDO, EDUARDO, ARTEMIO, ANGELITA, ANITA, ERNESTO, NORMA, VIRGINIA, REMEDIOS and ROBERTO, all surnamed FONTANILLA, and THE HONORABLE COURT OF APPEALS,respondents. G.R. No. L-30183 October 23, 1978 MUNICIPALITY OF MALASIQUI, petitioner, vs. ROSALINA, ANGELINA, LEONARDO, EDUARDO, ARTEMIO, ANGELITA, ANITA, ERNESTO, NORMA, VIRGINIA, REMEDIOS and ROBERTO, all surnamed FONTANILLA, and the Honorable COURT OF APPEALS,respondents. Julian M. Armas, Assistant Provincial Fiscal for petitioners. Isidro L. Padilla for respondents.

MUOZ PALMA, J.: These Petitions for review present the issue of whether or not the celebration of a town fiesta authorized by a municipal council under Sec. 2282 of the Municipal Law as embodied in the Revised Administrative Code is a governmental or a corporate or proprietary function of the municipality. A resolution of that issue will lead to another, viz the civil liability for damages of the Municipality of Malasiqui, and the members of the Municipal Council of Malasiqui, province of Pangasinan, for a death which occurred during the celebration of the town fiesta on January 22, 1959, and which was attributed to the negligence of the municipality and its council members. The following facts are not in dispute: On October 21, 1958, the Municipal Council of Malasiqui, Pangasinan, passed Resolution No. 159 whereby "it resolved to manage the 1959 Malasiqui town fiesta celebration on January 21, 22, and 23, 1959." Resolution No. 182 was also passed creating the "1959 Malasiqui 'Town Fiesta Executive Committee" which in turn organized a sub-committee on entertainment and stage, with Jose Macaraeg as Chairman. the council appropriated the amount of P100.00 for the

construction of 2 stages, one for the "zarzuela" and another for the cancionan Jose Macaraeg supervised the construction of the stage and as constructed the stage for the "zarzuela" was "5- meters by 8 meters in size, had a wooden floor high at the rear and was supported by 24 bamboo posts 4 in a row in front, 4 in the rear and 5 on each side with bamboo braces." 1 The "zarzuela" entitled "Midas Extravaganza" was donated by an association of Malasiqui employees of the Manila Railroad Company in Caloocan, Rizal. The troupe arrived in the evening of January 22 for the performance and one of the members of the group was Vicente Fontanilla. The program started at about 10:15 o'clock that evening with some speeches, and many persons went up the stage. The "zarzuela" then began but before the dramatic part of the play was reached, the stage collapsed and Vicente Fontanilla who was at the rear of the stage was pinned underneath. Fontanilia was taken to tile San Carlos General Hospital where he died in the afternoon of the following day. The heirs of Vicente Fontanilia filed a complaint with the Court of First Instance of Manila on September 11, 1959 to recover damages. Named party-defendants were the Municipality of Malasiqui, the Municipal Council of Malasiqui and all the individual members of the Municipal Council in 1959. Answering the complaint defendant municipality invoked inter alia the principal defense that as a legally and duly organized public corporation it performs sovereign functions and the holding of a town fiesta was an exercise of its governmental functions from which no liability can arise to answer for the negligence of any of its agents. The defendant councilors inturn maintained that they merely acted as agents of the municipality in carrying out the municipal ordinance providing for the management of the town fiesta celebration and as such they are likewise not liable for damages as the undertaking was not one for profit; furthermore, they had exercised due care and diligence in implementing the municipal ordinance. 2 After trial, the Presiding Judge, Hon. Gregorio T. Lantin narrowed the issue to whether or not the defendants exercised due diligence 'm the construction of the stage. From his findings he arrived at the conclusion that the Executive Committee appointed by the municipal council had exercised due diligence and care like a good father of the family in selecting a competent man to construct a stage strong enough for the occasion and that if it collapsed that was due to forces beyond the control of the committee on entertainment, consequently, the defendants were not liable for damages for the death of Vicente Fontanilla. The complaint was accordingly dismissed in a decision dated July 10, 1962. 3 The Fontanillas appealed to the Court of Appeals. In a decision Promulgated on October 31, 1968, the Court of Appeals through its Fourth Division composed at the time of Justices Salvador V. Esguerra, Nicasio A. Yatco and Eulogio S. Serrano reversed the trial court's decision and ordered all the defendants-appellees to pay jointly and severally the heirs of Vicente Fontanilla the sums of P12,000.00 by way of moral and actual damages: P1200.00 its attorney's fees; and the costs. 4

The case is now before Us on various assignments of errors all of which center on the proposition stated at the sentence of this Opinion and which We repeat: Is the celebration of a town fiesta an undertaking in the excercise of a municipality's governmental or public function or is it or a private or proprietary character? 1. Under Philippine laws municipalities are political bodies corporate and as such ag endowed with the faculties of municipal corporations to be exercised by and through their respective municipal governments in conformity with law, and in their proper corporate name, they may inter alia sue and be sued, and contract and be contracted with.5 The powers of a municipality are twofold in character public, governmental or political on the one hand, and corporate, private, or proprietary on the other. Governmental powers are those exercised by the corporation in administering the powers of the state and promoting the public welfare and they include the legislative, judicial public, and political Municipal powers on the other hand are exercised for the special benefit and advantage of the community and include those which are ministerial private and corporate. 6 As to when a certain activity is governmental and when proprietary or private, that is generally a difficult matter to determine. The evolution of the municipal law in American Jurisprudence, for instance, has shown that; none of the tests which have evolved and are stated in textbooks have set down a conclusive principle or rule, so that each case will have to be determined on the basis of attending circumstances. In McQuillin on Municipal Corporations, the rule is stated thus: "A municipal corporation proper has ... a public character as regards the state at large insofar as it is its agent in government, and private (so-called) insofar as it is to promote local necessities and conveniences for its own community. 7 Another statement of the test is given in City of Kokomo v. Loy, decided by the Supreme Court of Indiana in 1916, thus: Municipal corporations exist in a dual capacity, and their functions are two fold. In one they exercise the right springing from sovereignty, and while in the performance of the duties pertaining thereto, their acts are political and governmental Their officers and agents in such capacity, though elected or appointed by the are nevertheless public functionaries performing a public service, and as such they are officers, agents, and servants of the state. In the other capacity the municipalities exercise a private. proprietary or corporate right, arising from their existence as legal persons and not as public agencies. Their officers and agents in the performance of such functions act in behalf of the municipalities in their corporate or in. individual capacity, and not for the state or sovereign power. (112 N. E 994-995) In the early Philippine case of Mendoza v. de Leon 1916, the Supreme Court, through Justice Grant T. Trent, relying mainly on American Jurisprudence classified certain activities of the

municipality as governmental, e.g.: regulations against fire, disease, preservation of public peace, maintenance of municipal prisons, establishment of schools, post-offices, etc. while the following are corporate or proprietary in character, viz: municipal waterwork, slaughter houses, markets, stables, bathing establishments, wharves, ferries, and fisheries. 8 Maintenance of parks, golf courses, cemeteries and airports among others, are also recognized as municipal or city activities of a proprietary character. 9 2. This distinction of powers becomes important for purposes of determining the liability of the municipality for the acts of its agents which result in an injury to third persons. If the injury is caused in the course of the performance of a governmental function or duty no recovery, as a rule, can be. had from the municipality unless there is an existing statute on the matter, 10 nor from its officers, so long as they performed their duties honestly and in good faith or that they did not act wantonly and maliciously. 11 InPalafox, et al., v. Province of Ilocos Norte, et al., 1958, a truck driver employed by the provincial government of Ilocos Norte ran over Proceto Palafox in the course of his work at the construction of a road. The Supreme Court in affirming the trial court's dismissal of the complaint for damages held that the province could not be made liable because its employee was in the performance of a governmental function the construction and maintenance of roads and however tragic and deplorable it may be, the death of Palafox imposed on the province no duty to pay monetary consideration. 12 With respect to proprietary functions, the settled rule is that a municipal corporation can be held liable to third persons ex contract 13 or ex delicto. 14 Municipal corporations are subject to be sued upon contracts and in tort. ... xxx xxx xxx The rule of law is a general one, that the superior or employer must answer civilly for the negligence or want of skill of its agent or servant in the course or fine of his employment, by which another, who is free from contributory fault, is injured. Municipal corporations under the conditions herein stated, fall within the operation of this rule of law, and are liable, accordingly, to civil actions for damages when the requisite elements of liability co-exist. ... (Dillon on Municipal Corporations, 5th ed. Sec. 1610,1647, cited in Mendoza v. de Leon, supra. 514) 3. Coming to the cam before Us, and applying the general tests given above, We hold that the ho of the town fiesta in 1959 by the municipality of Malsiqui Pangasinan was an exercise of a private or proprietary function of the municipality. Section 2282 of the Chatter on Municipal Law of the Revised Administrative Code provides: Section 2282. Celebration of fiesta. fiesta may be held in each municipality not oftener than once a year upon a date fixed by the municipal council A fiesta s not be held upon any other date than that lawfully fixed therefor, except when, for weighty reasons, such as typhoons, foundations, earthquakes, epidemics, or other

public ties, the fiesta cannot be hold in the date fixed in which case it may be held at a later date in the same year, by resolution of the council. This provision simply gives authority to the municipality to accelebrate a yearly fiesta but it does not impose upon it a duty to observe one. Holding a fiesta even if the purpose is to commemorate a religious or historical event of the town is in essence an act for the special benefit of the community and not for the general welfare of the public performed in pursuance of a policy of the state. The mere fact that the celebration, as claimed was not to secure profit or gain but merely to provide entertainment to the town inhabitants is not a conclusive test. For instance, the maintenance of parks is not a source of income for the nonetheless it is private undertaking as distinguished from the maintenance of public schools, jails, and the like which are for public service. As stated earlier, there can be no hard and fast rule for purposes of determining the true nature of an undertaking or function of a municipality; the surrounding circumstances of a particular case are to be considered and will be decisive. The basic element, however beneficial to the public the undertaking may be, is that it is governmental in essence, otherwise. the function becomes private or proprietary in character. Easily, no overnmental or public policy of the state is involved in the celebration of a town fiesta. 15 4. It follows that under the doctrine of respondent superior, petitioner-municipality is to be held liable for damages for the death of Vicente Fontanilia if that was at- tributable to the negligence of the municipality's officers, employees, or agents. Art. 2176, Civil Code: Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. . . Art. 2180, Civil Code: The obligation imposed by article 2176 is demandable not only for one's own acts or omission, but also for those of persons for whom one is responsible. . . On this point, the Court of Appeals found and held that there was negligence. The trial court gave credence to the testimony of Angel Novado, a witness of the defendants (now petitioners), that a member of the "extravaganza troupe removed two principal braces located on the front portion of the stage and u them to hang the screen or "telon", and that when many people went up the stage the latter collapsed. This testimony was not believed however by respondent appellate court, and rightly so. According to said defendants, those two braces were "mother" or "principal" braces located semi-diagonally from the front ends of the stage to the front posts of the ticket booth located at the rear of the stage and were fastened with a bamboo twine. 16 That being the case, it becomes incredible that any person in his right mind would remove those principal braces and leave the front portion of the stage practically unsuported Moreover, if that did happen, there was indeed negligence as there was lack of suspension over the use of the stage to prevent such an occurrence.

At any rate, the guitarist who was pointed to by Novado as the person who removed the two bamboo braces denied having done go. The Court of Appeals said "Amor by himself alone could not have removed the two braces which must be about ten meters long and fastened them on top of the stags for the curtain. The stage was only five and a half meters wide. Surely, it, would be impractical and unwieldy to use a ten meter bamboo pole, much more two poles for the stage curtain. 17 The appellate court also found that the stage was not strong enough considering that only P100.00 was appropriate for the construction of two stages and while the floor of the "zarzuela" stage was of wooden planks, the Post and braces used were of bamboo material We likewise observe that although the stage was described by the Petitioners as being supported by "24" posts, nevertheless there were only 4 in front, 4 at the rear, and 5 on each side. Where were the rest? The Court of Appeals thus concluded The court a quo itself attributed the collapse of the stage to the great number of onlookers who mounted the stage. The municipality and/or its agents had the necessary means within its command to prevent such an occurrence. Having filed to take the necessary steps to maintain the safety of the stage for the use of the participants in the stage presentation prepared in connection with the celebration of the town fiesta, particularly, in preventing non participants or spectators from mounting and accumulating on the stage which was not constructed to meet the additional weight- the defendant-appellees were negligent and are liable for the death of Vicente Fontanilla . (pp. 30-31, rollo, L-29993) The findings of the respondent appellate court that the facts as presented to it establish negligence as a matter of law and that the Municipality failed to exercise the due diligence of a good father of the family, will not disturbed by Us in the absence of a clear showing of an abuse of discretion or a gross misapprehension of facts." 18 Liability rests on negligence which is "the want of such care as a person of ordinary prudence would exercise under the circumstances of the case." 19 Thus, private respondents argue that the "Midas Extravaganza" which was to be performed during the town fiesta was a "donation" offered by an association of Malasiqui employees of the Manila Railroad Co. in Caloocan, and that when the Municipality of Malasiqui accepted the donation of services and constructed precisely a "zarzuela stage" for the purpose, the participants in the stage show had the right to expect that the Municipality through its "Committee on entertainment and stage" would build or put up a stage or platform strong enough to sustain the weight or burden of the performance and take the necessary measures to insure the personal safety of the participants. 20 We agree. Quite relevant to that argument is the American case of Sanders v. City of Long Beach, 1942, which was an action against the city for injuries sustained from a fall when plaintiff was descending the steps of the city auditorium. The city was conducting a "Know your City Week"

and one of the features was the showing of a motion picture in the city auditorium to which the general public was invited and plaintiff Sanders was one of those who attended. In sustaining the award for Damages in favor of plaintiff, the District Court of Appeal, Second district, California, heldinter alia that the "Know your City Week" was a "proprietary activity" and not a "governmental one" of the city, that defendant owed to plaintiff, an invitee the duty of exercising ordinary care for her safety, and plaintiff was entitled to assume that she would not be exposed to a danger (which in this case consisted of lack of sufficient illumination of the premises) that would come to her through a violation of defendant duty. 21 We can say that the deceased Vicente Fontanilla was similarly situated as Sander The Municipality of Malasiqui resolved to celebrate the town fiesta in January of 1959; it created a committee in charge of the entertainment and stage; an association of Malasiqui residents responded to the call for the festivities and volunteered to present a stage show; Vicente Fontanilla was one of the participants who like Sanders had the right to expect that he would be exposed to danger on that occasion. Lastly, petitioner or appellant Municipality cannot evade ability and/or liability under the c that it was Jose Macaraeg who constructed the stage. The municipality acting through its municipal council appointed Macaraeg as chairman of the sub-committee on entertainment and in charge of the construction of the "zarzuela" stage. Macaraeg acted merely as an agent of the Municipality. Under the doctrine of respondent superior mentioned earlier, petitioner is responsible or liable for the negligence of its agent acting within his assigned tasks. 22 ... when it is sought to render a municipal corporation liable for the act of servants or agents, a cardinal inquiry is, whether they are the servants or agents of the corporation. If the corporation appoints or elects them, can control them in the discharge of their duties, can continue or remove the can hold them responsible for the manner in which they discharge their trust, and if those duties relate to the exercise of corporate powers, and are for the benefit of the corporation in its local or special interest, they may justly be regarded as its agents or servants, and the maxim of respondent superior applies." ... (Dillon on Municipal Corporations, 5th Ed., Vol IV, p. 2879) 5. The remaining question to be resolved centers on the liability of the municipal councilors who enacted the ordinance and created the fiesta committee. The Court of Appeals held the councilors jointly and solidarity liable with the municipality for damages under Article 27 of the Civil Code which provides that d any person suffering ing material or moral loss because a public servant or employee refuses or neglects, without just cause to perform his official duty may file an action for damages and other relief at the latter. 23 In their Petition for review the municipal councilors allege that the Court of Appeals erred in ruling that the holding of a town fiesta is not a governmental function and that there was negligence on their part for not maintaining and supervising the safe use of the stage, in applying Article 27 of the Civil Code against them and in not holding Jose Macaraeg liable for the collapse of the stage and the consequent death of Vicente Fontanilla. 24

We agree with petitioners that the Court of Appeals erred in applying Article 27 of the Civil Code against the for this particular article covers a case of nonfeasance or non-performance by a public officer of his official duty; it does not apply to a case of negligence or misfeasance in carrying out an official duty. If We are led to set aside the decision of the Court of Appeals insofar as these petitioners are concerned, it is because of a plain error committed by respondent court which however is not invoked in petitioners' brief. In Miguel v. The Court of appeal. et al., the Court, through Justice, now Chief Justice, Fred Ruiz Castro, held that the Supreme Court is vested with ample authority to review matters not assigned as errors in an appeal if it finds that their consideration and resolution are indispensable or necessary in arriving at a just decision in a given case, and that tills is author under Sec. 7, Rule 51 of the Rules of Court. 25 We believe that this pronouncement can well be applied in the instant case. The Court of Appeals in its decision now under review held that the celebration of a town fiesta by the Municipality of Malasiqui was not a governmental function. We upheld that ruling. The legal consequence thereof is that the Municipality stands on the same footing as an ordinary private corporation with the municipal council acting as its board of directors. It is an elementary principle that a corporation has a personality, separate and distinct from its officers, directors, or persons composing it 26 and the latter are not as a rule co-responsible in an action for damages for tort or negligence culpa aquilla committed by the corporation's employees or agents unless there is a showing of bad faith or gross or wanton negligence on their part. 27 xxx xxx xxx The ordinary doctrine is that a director, merely by reason of his office, is not personally Stable for the torts of his corporation; he Must be shown to have personally voted for or otherwise participated in them ... Fletcher Encyclopedia Corporations, Vol 3A Chapt 11, p. 207) Officers of a corporation 'are not held liable for the negligence of the corporation merely because of their official relation to it, but because of some wrongful or negligent act by such officer amounting to a breach of duty which resulted in an injury ... To make an officer of a corporation liable for the negligence of the corporation there must have been upon his part such a breach of duty as contributed to, or helped to bring about, the injury; that is to say, he must be a participant in the wrongful act. ... (pp. 207-208, Ibid.) xxx xxx xxx Directors who merely employ one to give a fireworks Ambition on the corporate are not personally liable for the negligent acts of the exhibitor. (p. 211, Ibid.)

On these people We absolve Use municipal councilors from any liability for the death of Vicente Fontanilla. The records do not show that said petitioners directly participated in the defective construction of the "zarzuela" stage or that they personally permitted spectators to go up the platform. 6. One last point We have to resolve is on the award of attorney's fees by respondent court. Petitioner-municipality assails the award. Under paragraph 11, Art. 2208 of the Civil Code attorney's fees and expenses of litigation may be granted when the court deems it just and equitable. In this case of Vicente Fontanilla, although respondent appellate court failed to state the grounds for awarding attorney's fees, the records show however that attempts were made by plaintiffs, now private respondents, to secure an extrajudicial compensation from the municipality: that the latter gave prorases and assurances of assistance but failed to comply; and it was only eight month after the incident that the bereaved family of Vicente Fontanilla was compelled to seek relief from the courts to ventilate what was believed to be a just cause. 28 We hold, therefore, that there is no error committed in the grant of attorney's fees which after all is a matter of judicial discretion. The amount of P1,200.00 is fair and reasonable. PREMISES CONSIDERED, We AFFIRM in toto the decision of the Court of Appeals insofar as the Municipality of Malasiqui is concerned (L-30183), and We absolve the municipal councilors from liability and SET ASIDE the judgment against them (L-9993). Without pronouncement as to costs. SO ORDERED,

40. EN BANC G.R. No. L-9356 February 18, 1915

C. S. GILCHRIST, plaintiff-appellee, vs. E. A. CUDDY, ET AL., defendants. JOSE FERNANDEZ ESPEJO and MARIANO ZALDARRIAGA, appellants. C. Lozano for appellants. Bruce, Lawrence, Ross and Block for appellee. TRENT, J.: An appeal by the defendants, Jose Fernandez Espejo and Mariano Zaldarriaga, from a judgment of the Court of First Instance of Iloilo, dismissing their cross-complaint upon the merits for damages against the plaintiff for the alleged wrongful issuance of a mandatory and a preliminary injunction. Upon the application of the appellee an ex parte mandatory injunction was issued on the 22d of May, 1913, directing the defendant, E. A. Cuddy, to send to the appellee a certain cinematograph film called "Zigomar" in compliance with an alleged contract which had been entered into between these two parties, and at the time an ex parte preliminary injunction was issued restraining the appellants from receiving and exhibiting in their theater the Zigomar until further orders of the court. On the 26th of that month the appellants appeared and moved the court to dissolve the preliminary injunction. When the case was called for trial on August 6, the appellee moved for the dismissal of the complaint "for the reason that there is no further necessity for the maintenance of the injunction." The motion was granted without objection as to Cuddy and denied as to the appellants in order to give them an opportunity to prove that the injunction were wrongfully issued and the amount of damages suffered by reason thereof. The pertinent part of the trial court's findings of fact in this case is as follows: It appears in this case that Cuddy was the owner of the film Zigomar and that on the 24th of April he rented it to C. S. Gilchrist for a week for P125, and it was to be delivered on the 26th of May, the week beginning that day. A few days prior to this Cuddy sent the money back to Gilchrist, which he had forwarded to him in Manila, saying that he had made other arrangements with his film. The other arrangements was the rental to these defendants Espejo and his partner for P350 for the week and the injunction was asked by Gilchrist against these parties from showing it for the week beginning the 26th of May. It appears from the testimony in this case, conclusively, that Cuddy willfully violated his contract, he being the owner of the picture, with Gilchrist because the defendants had offered him more for the same period. Mr. Espejo at the trial on the permanent injunction on the 26th of May admitted that he knew that Cuddy was the owner of the film. He was trying to get it through his agents Pathe Brothers in Manila. He is the agent of the same

concern in Iloilo. There is in evidence in this case on the trial today as well as on the 26th of May, letters showing that the Pathe Brothers in Manila advised this man on two different occasions not to contend for this film Zigomar because the rental price was prohibitive and assured him also that he could not get the film for about six weeks. The last of these letters was written on the 26th of April, which showed conclusively that he knew they had to get this film from Cuddy and from this letter that the agent in Manila could not get it, but he made Cuddy an offer himself and Cuddy accepted it because he was paying about three times as much as he had contracted with Gilchrist for. Therefore, in the opinion of this court, the defendants failed signally to show the injunction against the defendant was wrongfully procured. The appellants duly excepted to the order of the court denying their motion for new trial on the ground that the evidence was insufficient to justify the decision rendered. There is lacking from the record before us the deposition of the defendant Cuddy, which apparently throws light upon a contract entered into between him and the plaintiff Gilchrist. The contents of this deposition are discussed at length in the brief of the appellants and an endeavor is made to show that no such contract was entered into. The trial court, which had this deposition before it, found that there was a contract between Cuddy and Gilchrist. Not having the deposition in question before us, it is impossible to say how strongly it militates against this findings of fact. By a series of decisions we have construed section 143 and 497 (2) of the Code of Civil Procedure to require the production of all the evidence in this court. This is the duty of the appellant and, upon his failure to perform it, we decline to proceed with a review of the evidence. In such cases we rely entirely upon the pleadings and the findings of fact of the trial court and examine only such assigned errors as raise questions of law. (Ferrer vs. Neri Abejuela, 9 Phil. Rep., 324; Valle vs. Galera, 10 Phil. Rep., 619; Salvacion vs. Salvacion, 13 Phil. Rep., 366; Breta vs. Smith, Bell & Co., 15 Phil. Rep., 446; Arroyo vs. Yulo, 18 Phil. Rep., 236; Olsen & Co. vs. Matson, Lord & Belser Co., 19 Phil. Rep., 102; Blum vs.Barretto, 19 Phil. Rep., 161; Cuyugan vs. Aguas, 19 Phil. Rep., 379; Mapa vs. Chaves, 20 Phil. Rep., 147; Mansvs. Garry, 20 Phil. Rep., 134.) It is true that some of the more recent of these cases make exceptions to the general rule. Thus, in Olsen & Co. vs. Matson, Lord & Belser Co., (19 Phil. Rep., 102), that portion of the evidence before us tended to show that grave injustice might result from a strict reliance upon the findings of fact contained in the judgment appealed from. We, therefore, gave the appellant an opportunity to explain the omission. But we required that such explanation must show a satisfactory reason for the omission, and that the missing portion of the evidence must be submitted within sixty days or cause shown for failing to do so. The other cases making exceptions to the rule are based upon peculiar circumstances which will seldom arise in practice and need not here be set forth, for the reason that they are wholly inapplicable to the present case. The appellants would be entitled to indulgence only under the doctrine of the Olsen case. But from that portion of the record before us, we are not inclined to believe that the missing deposition would be sufficient to justify us in reversing the findings of fact of the trial court that the contract in question had been made. There is in the record not only the positive and detailed testimony of Gilchrist to this effect, but there is also a letter of apology from Cuddy to Gilchrist in which the former enters into a lengthy explanation of his reasons for leasing the film to another party. The latter could only have been called forth by a broken contract with Gilchrist to lease the film to him. We, therefore, fail to find any reason for overlooking the omission of the defendants to bring up the missing portion of

the evidence and, adhering to the general rule above referred to, proceed to examine the questions of law raised by the appellants. From the above-quoted findings of fact it is clear that Cuddy, a resident of Manila, was the owner of the "Zigomar;" that Gilchrist was the owner of a cinematograph theater in Iloilo; that in accordance with the terms of the contract entered into between Cuddy and Gilchrist the former leased to the latter the "Zigomar" for exhibition in his (Gilchrist's) theater for the week beginning May 26, 1913; and that Cuddy willfully violate his contract in order that he might accept the appellant's offer of P350 for the film for the same period. Did the appellants know that they were inducing Cuddy to violate his contract with a third party when they induced him to accept the P350? Espejo admitted that he knew that Cuddy was the owner of the film. He received a letter from his agents in Manila dated April 26, assuring him that he could not get the film for about six weeks. The arrangement between Cuddy and the appellants for the exhibition of the film by the latter on the 26th of May were perfected after April 26, so that the six weeks would include and extend beyond May 26. The appellants must necessarily have known at the time they made their offer to Cuddy that the latter had booked or contracted the film for six weeks from April 26. Therefore, the inevitable conclusion is that the appellants knowingly induced Cuddy to violate his contract with another person. But there is no specific finding that the appellants knew the identity of the other party. So we must assume that they did not know that Gilchrist was the person who had contracted for the film. The appellants take the position that if the preliminary injunction had not been issued against them they could have exhibited the film in their theater for a number of days beginning May 26, and could have also subleased it to other theater owners in the nearby towns and, by so doing, could have cleared, during the life of their contract with Cuddy, the amount claimed as damages. Taking this view of the case, it will be unnecessary for us to inquire whether the mandatory injunction against Cuddy was properly issued or not. No question is raised with reference to the issuance of that injunction. The right on the part of Gilchrist to enter into a contract with Cuddy for the lease of the film must be fully recognized and admitted by all. That Cuddy was liable in an action for damages for the breach of that contract, there can be no doubt. Were the appellants likewise liable for interfering with the contract between Gilchrist and Cuddy, they not knowing at the time the identity of one of the contracting parties? The appellants claim that they had a right to do what they did. The ground upon which the appellants base this contention is, that there was no valid and binding contract between Cuddy and Gilchrist and that, therefore, they had a right to compete with Gilchrist for the lease of the film, the right to compete being a justification for their acts. If there had been no contract between Cuddy and Gilchrist this defense would be tenable, but the mere right to compete could not justify the appellants in intentionally inducing Cuddy to take away the appellee's contractual rights. Chief Justice Wells in Walker vs. Cronin (107 Mass., 555), said: "Everyone has a right to enjoy the fruits and advantages of his own enterprise, industry, skill and credit. He has no right to be free from malicious and wanton interference, disturbance or annoyance. If disturbance or loss come as a result of competition, or the exercise of like rights by others, it is damnum absque injuria, unless some superior right by contract or otherwise is interfered with."

In Read vs. Friendly Society of Operative Stonemasons ([1902] 2 K. B., 88), Darling, J., said: "I think the plaintiff has a cause of action against the defendants, unless the court is satisfied that, when they interfered with the contractual rights of plaintiff, the defendants had a sufficient justification for their interference; . . . for it is not a justification that `they acted bona fide in the best interests of the society of masons,' i. e., in their own interests. Nor is it enough that `they were not actuated by improper motives.' I think their sufficient justification for interference with plaintiff's right must be an equal or superior right in themselves, and that no one can legally excuse himself to a man, of whose contract he has procured the breach, on the ground that he acted on a wrong understanding of his own rights, or without malice, or bona fide, or in the best interests of himself, or even that he acted as an altruist, seeking only good of another and careless of his own advantage." (Quoted with approval in Beekman vs. Marsters, 195 Mass., 205.) It is said that the ground on which the liability of a third party for interfering with a contract between others rests, is that the interference was malicious. The contrary view, however, is taken by the Supreme Court of the United States in the case of Angle vs. Railway Co. (151 U. S., 1). The only motive for interference by the third party in that case was the desire to make a profit to the injury of one of the parties of the contract. There was no malice in the case beyond the desire to make an unlawful gain to the detriment of one of the contracting parties. In the case at bar the only motive for the interference with the Gilchrist Cuddy contract on the part of the appellants was a desire to make a profit by exhibiting the film in their theater. There was no malice beyond this desire; but this fact does not relieve them of the legal liability for interfering with that contract and causing its breach. It is, therefore, clear, under the above authorities, that they were liable to Gilchrist for the damages caused by their acts, unless they are relieved from such liability by reason of the fact that they did not know at the time the identity of the original lessee (Gilchrist) of the film. The liability of the appellants arises from unlawful acts and not from contractual obligations, as they were under no such obligations to induce Cuddy to violate his contract with Gilchrist. So that if the action of Gilchrist had been one for damages, it would be governed by chapter 2, title 16, book 4 of the Civil Code. Article 1902 of that code provides that a person who, by act or omission, causes damages to another when there is fault or negligence, shall be obliged to repair the damage do done. There is nothing in this article which requires as a condition precedent to the liability of a tort-feasor that he must know the identity of a person to whom he causes damages. In fact, the chapter wherein this article is found clearly shows that no such knowledge is required in order that the injured party may recover for the damage suffered. But the fact that the appellants' interference with the Gilchrist contract was actionable did not of itself entitle Gilchrist to sue out an injunction against them. The allowance of this remedy must be justified under section 164 of the Code of Civil Procedure, which specifies the circumstance under which an injunction may issue. Upon the general doctrine of injunction we said in Devesa vs. Arbes (13 Phil. Rep., 273): An injunction is a "special remedy" adopted in that code (Act No. 190) from American practice, and originally borrowed from English legal procedure, which was there issued

by the authority and under the seal of a court of equity, and limited, as in order cases where equitable relief is sought, to cases where there is no "plain, adequate, and complete remedy at law," which "will not be granted while the rights between the parties are undetermined, except in extraordinary cases where material and irreparable injury will be done,"which cannot be compensated in damages, and where there will be no adequate remedy, and which will not, as a rule, be granted, to take property out of the possession of one party and put it into that of anotherwhose title has not been established by law. We subsequently affirmed the doctrine of the Devesa case in Palafox vs. Madamba (19 Phil., Rep., 444), and we take this occasion of again affirming it, believing, as we do, that the indiscriminate use of injunctions should be discouraged. Does the fact that the appellants did not know at the time the identity of the original lessee of the film militate against Gilchrist's right to a preliminary injunction, although the appellant's incurred civil liability for damages for such interference? In the examination of the adjudicated cases, where in injunctions have been issued to restrain wrongful interference with contracts by strangers to such contracts, we have been unable to find any case where this precise question was involved, as in all of those cases which we have examined, the identity of both of the contracting parties was known to the tort-feasors. We might say, however, that this fact does not seem to have a controlling feature in those cases. There is nothing in section 164 of the Code of Civil Procedure which indicates, even remotely, that before an injunction may issue restraining the wrongful interference with contrast by strangers, the strangers must know the identity of both parties. It would seem that this is not essential, as injunctions frequently issue against municipal corporations, public service corporations, public officers, and others to restrain the commission of acts which would tend to injuriously affect the rights of person whose identity the respondents could not possibly have known beforehand. This court has held that in a proper case injunction will issue at the instance of a private citizen to restrain ultra vires acts of public officials. (Severino vs. Governor-General, 16 Phil. Rep., 366.) So we proceed to the determination of the main question of whether or not the preliminary injunction ought to have been issued in this case. As a rule, injunctions are denied to those who have an adequate remedy at law. Where the choice is between the ordinary and the extraordinary processes of law, and the former are sufficient, the rule will not permit the use of the latter. (In re Debs, 158 U. S., 564.) If the injury is irreparable, the ordinary process is inadequate. In Wahle vs.Reinbach (76 Ill., 322), the supreme court of Illinois approved a definition of the term "irreparable injury" in the following language: "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 to 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." (Quoted with approval in Nashville R. R. Co. vs.McConnell, 82 Fed., 65.) The case at bar is somewhat novel, as the only contract which was broken was that between Cuddy and Gilchrist, and the profits of the appellee depended upon the patronage of the public, for which it is conceded the appellants were at liberty to complete by all fair does not deter the

application of remarked in the case of the "ticket scalpers" (82 Fed., 65), the novelty of the facts does not deter the application of equitable principles. This court takes judicial notice of the general character of a cinematograph or motion-picture theater. It is a quite modern form of the play house, wherein, by means of an apparatus known as a cinematograph or cinematograph, a series of views representing closely successive phases of a moving object, are exhibited in rapid sequence, giving a picture which, owing to the persistence of vision, appears to the observer to be in continuous motion. (The Encyclopedia Britanica, vol. 6, p. 374.) The subjects which have lent themselves to the art of the photographer in this manner have increased enormously in recent years, as well as have the places where such exhibition are given. The attendance, and, consequently, the receipts, at one of these cinematograph or motion-picture theaters depends in no small degree upon the excellence of the photographs, and it is quite common for the proprietor of the theater to secure an especially attractive exhibit as his "feature film" and advertise it as such in order to attract the public. This feature film is depended upon to secure a larger attendance that if its place on the program were filled by other films of mediocre quality. It is evident that the failure to exhibit the feature film will reduce the receipts of the theater. Hence, Gilchrist was facing the immediate prospect of diminished profits by reason of the fact that the appellants had induced Cuddy to rent to them the film Gilchrist had counted upon as his feature film. It is quite apparent that to estimate with any decree of accuracy the damages which Gilchrist would likely suffer from such an event would be quite difficult if not impossible. If he allowed the appellants to exhibit the film in Iloilo, it would be useless for him to exhibit it again, as the desire of the public to witness the production would have been already satisfied. In this extremity, the appellee applied for and was granted, as we have indicated, a mandatory injunction against Cuddy requiring him to deliver the Zigomar to Gilchrist, and a preliminary injunction against the appellants restraining them from exhibiting that film in their theater during the weeks he (Gilchrist) had a right to exhibit it. These injunction saved the plaintiff harmless from damages due to the unwarranted interference of the defendants, as well as the difficult task which would have been set for the court of estimating them in case the appellants had been allowed to carry out their illegal plans. As to whether or not the mandatory injunction should have been issued, we are not, as we have said, called upon to determine. So far as the preliminary injunction issued against the appellants is concerned, which prohibited them from exhibiting the Zigomar during the week which Gilchrist desired to exhibit it, we are of the opinion that the circumstances justified the issuance of that injunction in the discretion of the court. We are not lacking in authority to support our conclusion that the court was justified in issuing the preliminary injunction against the appellants. Upon the precise question as to whether injunction will issue to restrain wrongful interference with contracts by strangers to such contracts, it may be said that courts in the United States have usually granted such relief where the profits of the injured person are derived from his contractual relations with a large and indefinite number of individuals, thus reducing him to the necessity of proving in an action against the tort-feasor that the latter was responsible in each case for the broken contract, or else obliging him to institute individual suits against each contracting party and so exposing him to a multiplicity of suits. Sperry & Hutchinson Co. vs. Mechanics' Clothing Co. (128 Fed., 800); Sperry & Hutchinson Co. vs. Louis Weber & Co. (161 Fed., 219); Sperry & Hutchinson Co. vs. Pommer (199 Fed., 309); were all cases wherein the respondents were inducing retail

merchants to break their contracts with the company for the sale of the latters' trading stamps. Injunction issued in each case restraining the respondents from interfering with such contracts. In the case of the Nashville R. R. Co. vs. McConnell (82 Fed., 65), the court, among other things, said: "One who wrongfully interferes in a contract between others, and, for the purpose of gain to himself induces one of the parties to break it, is liable to the party injured thereby; and his continued interference may be ground for an injunction where the injuries resulting will be irreparable." In Hamby & Toomer vs. Georgia Iron & Coal Co. (127 Ga., 792), it appears that the respondents were interfering in a contract for prison labor, and the result would be, if they were successful, the shutting down of the petitioner's plant for an indefinite time. The court held that although there was no contention that the respondents were insolvent, the trial court did not abuse its discretion in granting a preliminary injunction against the respondents. In Beekman vs. Marsters (195 Mass., 205), the plaintiff had obtained from the Jamestown Hotel Corporation, conducting a hotel within the grounds of the Jamestown Exposition, a contract whereby he was made their exclusive agent for the New England States to solicit patronage for the hotel. The defendant induced the hotel corporation to break their contract with the plaintiff in order to allow him to act also as their agent in the New England States. The court held that an action for damages would not have afforded the plaintiff adequate relief, and that an injunction was proper compelling the defendant to desist from further interference with the plaintiff's exclusive contract with the hotel company. In Citizens' Light, Heat & Power Co. vs. Montgomery Light & Water Power Co. (171 Fed., 553), the court, while admitting that there are some authorities to the contrary, held that the current authority in the United States and England is that: The violation of a legal right committed knowingly is a cause of action, and that it is a violation of a legal right to interfere with contractual relations recognized by law, if there be no sufficient justification for the interference. (Quinn vs. Leatham, supra, 510; Angle vs. Chicago, etc., Ry. Co., 151 U. S., 1; 14 Sup. Ct., 240; 38 L. Ed., 55; Martens vs. Reilly, 109 Wis., 464, 84 N. W., 840; Rice vs. Manley, 66 N. Y., 82; 23 Am. Rep., 30; Bitterman vs. L. & N. R. R. Co., 207 U. S., 205; 28 Sup. Ct., 91; 52 L. Ed., 171; Beekman vs.Marsters, 195 Mass., 205; 80 N. E., 817; 11 L. R. A. [N. S.] 201; 122 Am. St. Rep., 232; South Wales Miners' Fed. vs. Glamorgan Coal Co., Appeal Cases, 1905, p. 239.) See also Nims on Unfair Business Competition, pp. 351- 371. In 3 Elliot on Contracts, section 2511, it is said: "Injunction is the proper remedy to prevent a wrongful interference with contract by strangers to such contracts where the legal remedy is insufficient and the resulting injury is irreparable. And where there is a malicious interference with lawful and valid contracts a permanent injunction will ordinarily issue without proof of express malice. So, an injunction may be issued where the complainant to break their contracts with him by agreeing to indemnify who breaks his contracts of employment may be adjoined

from including other employees to break their contracts and enter into new contracts with a new employer of the servant who first broke his contract. But the remedy by injunction cannot be used to restrain a legitimate competition, though such competition would involve the violation of a contract. Nor will equity ordinarily enjoin employees who have quit the service of their employer from attempting by proper argument to persuade others from taking their places so long as they do not resort to force or intimidations on obstruct the public thoroughfares." Beekman vs. Marster, supra, is practically on all fours with the case at bar in that there was only one contract in question and the profits of the injured person depended upon the patronage of the public. Hamby & Toomer vs.Georgia Iron & Coal Co., supra, is also similar to the case at bar in that there was only one contract, the interference of which was stopped by injunction. For the foregoing reasons the judgment is affirmed, with costs, against the appellants.

41. EN BANC G.R. No. L-13505 February 4, 1919

GEO. W. DAYWALT, plaintiff-appellant, vs. LA CORPORACION DE LOS PADRES AGUSTINOS RECOLETOS, ET AL., defendantsappellees. C. C. Cohn and Thos. D. Aitken for appellant. Crossfield & O'Brien for appellee. STREET, J.: In the year 1902, Teodorica Endencia, an unmarried woman, resident in the Province of Mindoro, executed a contract whereby she obligated herself to convey to Geo. W. Daywalt, a tract of land situated in the barrio of Mangarin, municipality of Bulalacao, now San Jose, in said province. It was agreed that a deed should be executed as soon as the title to the land should be perfected by proceedings in the Court of Land Registration and a Torrens certificate should be produced therefore in the name of Teodorica Endencia. A decree recognizing the right of Teodorica as owner was entered in said court in August 1906, but the Torrens certificate was not issued until later. The parties, however, met immediately upon the entering of this decree and made a new contract with a view to carrying their original agreement into effect. This new contract was executed in the form of a deed of conveyance and bears date of August 16, 1906. The stipulated price was fixed at P4,000, and the area of the land enclosed in the boundaries defined in the contract was stated to be 452 hectares and a fraction. The second contract was not immediately carried into effect for the reason that the Torrens certificate was not yet obtainable and in fact said certificate was not issued until the period of performance contemplated in the contract had expired. Accordingly, upon October 3, 1908, the parties entered into still another agreement, superseding the old, by which Teodorica Endencia agreed upon receiving the Torrens title to the land in question, to deliver the same to the Hongkong and Shanghai Bank in Manila, to be forwarded to the Crocker National Bank in San Francisco, where it was to be delivered to the plaintiff upon payment of a balance of P3,100. The Torrens certificate was in time issued to Teodorica Endencia, but in the course of the proceedings relative to the registration of the land, it was found by official survey that the area of the tract inclosed in the boundaries stated in the contract was about 1.248 hectares of 452 hectares as stated in the contract. In view of this development Teodorica Endencia became reluctant to transfer the whole tract to the purchaser, asserting that she never intended to sell so large an amount of land and that she had been misinformed as to its area. This attitude of hers led to litigation in which Daywalt finally succeeded, upon appeal to the Supreme Court, in obtaining a decree for specific performance; and Teodorica Endencia was ordered to convey the entire tract of land to Daywalt pursuant to the contract of October 3, 1908,

which contract was declared to be in full force and effect. This decree appears to have become finally effective in the early part of the year 1914.1 The defendant, La Corporacion de los Padres Recoletos, is a religious corporation, with its domicile in the city of Manila. Said corporation was formerly the owner of a large tract of land, known as the San Jose Estate, on the island of Mindoro, which was sold to the Government of the Philippine Islands in the year 1909. The same corporation was at this time also the owner of another estate on the same island immediately adjacent to the land which Teodorica Endencia had sold to Geo. W. Daywalt; and for many years the Recoletos Fathers had maintained large herds of cattle on the farms referred to. Their representative, charged with management of these farms, was father Isidoro Sanz, himself a members of the order. Father Sanz had long been well acquainted with Teodorica Endencia and exerted over her an influence and ascendency due to his religious character as well as to the personal friendship which existed between them. Teodorica appears to be a woman of little personal force, easily subject to influence, and upon all the important matters of business was accustomed to seek, and was given, the advice of father Sanz and other members of his order with whom she came in contact. Father Sanz was fully aware of the existence of the contract of 1902 by which Teodorica Endencia agreed to sell her land to the plaintiff as well as of the later important developments connected with the history of that contract and the contract substituted successively for it; and in particular Father Sanz, as well as other members of the defendant corporation, knew of the existence of the contract of October 3, 1908, which, as we have already seen finally fixed the rights of the parties to the property in question. When the Torrens certificate was finally issued in 1909 in favor of Teodorica Endencia, she delivered it for safekeeping to the defendant corporation, and it was then taken to Manila where it remained in the custody and under the control of P. Juan Labarga the procurador and chief official of the defendant corporation, until the deliver thereof to the plaintiff was made compulsory by reason of the decree of the Supreme Court in 1914. When the defendant corporation sold the San Jose Estate, it was necessary to bring the cattle off of that property; and, in the first half of 1909, some 2,368 head were removed to the estate of the corporation immediately adjacent to the property which the plaintiff had purchased from Teodorica Endencia. As Teodorica still retained possession of said property Father Sanz entered into an arrangement with her whereby large numbers of cattle belonging to the defendant corporation were pastured upon said land during a period extending from June 1, 1909, to May 1, 1914. Under the first cause stated in the complaint in the present action the plaintiff seeks to recover from the defendant corporation the sum of P24,000, as damages for the use and occupation of the land in question by reason of the pasturing of cattle thereon during the period stated. The trial court came to the conclusion that the defendant corporation was liable for damages by reason of the use and occupation of the premises in the manner stated; and fixed the amount to be recovered at P2,497. The plaintiff appealed and has assigned error to this part of the judgment of the court below, insisting that damages should have been awarded in a much larger sum and at least to the full extent of P24,000, the amount claimed in the complaint.

As the defendant did not appeal, the property of allowing damages for the use and occupation of the land to the extent o P2,497, the amount awarded, is not now in question an the only thing here to be considered, in connection with this branch of the case, is whether the damages allowed under this head should be increased. The trial court rightly ignored the fact that the defendant corporation had paid Teodorica Endencia of ruse and occupation of the same land during the period in question at the rate of P425 per annum, inasmuch as the final decree of this court in the action for specific performance is conclusive against her right, and as the defendant corporation had notice of the rights of the plaintiff under this contract of purchase, it can not be permitted that the corporation should escape liability in this action by proving payment of rent to a person other than the true owner. With reference to the rate of which compensation should be estimated the trial court came to the following conclusion: As to the rate of the compensation, the plaintiff contends that the defendant corporation maintained at leas one thousand head of cattle on the land and that the pasturage was of the value of forty centavos per head monthly, or P4,800 annually, for the whole tract. The court can not accept this view. It is rather improbable that 1,248 hectares of wild Mindoro land would furnish sufficient pasturage for one thousand head of cattle during the entire year, and, considering the locality, the rate of forty centavos per head monthly seems too high. The evidence shows that after having recovered possession of the land the plaintiff rented it to the defendant corporation for fifty centavos per hectares annually, the tenant to pay the taxes on the land, and this appears to be a reasonable rent. There is no reason to suppose that the land was worth more for grazing purposes during the period from 1909 to 1913, than it was at the later period. Upon this basis the plaintiff is entitled to damages in the sum of p2,497, and is under no obligation to reimburse the defendants for the land taxes paid by either of them during the period the land was occupied by the defendant corporation. It may be mentioned in this connection that the Lontok tract adjoining the land in question and containing over three thousand hectares appears to have been leased for only P1,000 a year, plus the taxes. From this it will be seen that the trial court estimated the rental value of the land for grazing purposes at 50 centavos per hectare per annum, and roughly adopted the period of four years as the time for which compensation at that rate should be made. As the court had already found that the defendant was liable for these damages from June, 1, 1909, to May 1, 1914, or a period of four years and eleven months, there seems some ground for the contention made in the appellant's first assignment of error that the court's computation was erroneous, even accepting the rule upon which the damages were assessed, as it is manifest that at the rate of 50 centavos per hectare per annum, the damages for four years and eleven months would be P3,090. Notwithstanding this circumstance, we are of the opinion that the damages assessed are sufficient to compensate the plaintiff for the use and occupation of the land during the whole time it was used. There is evidence in the record strongly tending to show that the wrongful use of the land by the defendant was not continuous throughout the year but was confined mostly to the reason when the forage obtainable on the land of the defendant corporation was not sufficient to maintain its cattle, for which reason it became necessary to allow them to go over to pasture on

the land in question; and it is not clear that the whole of the land was used for pasturage at any time. Considerations of this character probably led the trial court to adopt four years as roughly being the period during which compensation should be allowed. But whether this was advertently done or not, we see no sufficient reason, in the uncertainty of the record with reference to the number of the cattle grazed and the period when the land was used, for substituting our guess for the estimate made by the trial court. In the second cause of action stated in the complaint the plaintiff seeks to recover from the defendant corporation the sum of P500,000, as damages, on the ground that said corporation, for its own selfish purposes, unlawfully induced Teodorica Endencia to refrain from the performance of her contract for the sale of the land in question and to withhold delivery to the plaintiff of the Torrens title, and further, maliciously and without reasonable cause, maintained her in her defense to the action of specific performance which was finally decided in favor of the plaintiff in this court. The cause of action here stated is based on liability derived from the wrongful interference of the defendant in the performance of the contract between the plaintiff and Teodorica Endencia; and the large damages laid in the complaint were, according to the proof submitted by the plaintiff, incurred as a result of a combination of circumstances of the following nature: In 1911, it appears, the plaintiff, as the owner of the land which he had bought from Teodorica Endencia entered into a contract (Exhibit C) with S. B. Wakefield, of San Francisco, for the sale and disposal of said lands to a sugar growing and milling enterprise, the successful launching of which depended on the ability of Daywalt to get possession of the land and the Torrens certificate of title. In order to accomplish this end, the plaintiff returned to the Philippine Islands, communicated his arrangement to the defendant,, and made repeated efforts to secure the registered title for delivery in compliance with said agreement with Wakefield. Teodorica Endencia seems to have yielded her consent to the consummation of her contract, but the Torrens title was then in the possession of Padre Juan Labarga in Manila, who refused to deliver the document. Teodorica also was in the end contract with the plaintiff, with the result that the plaintiff was kept out of possession until the Wakefield project for the establishment of a large sugar growing and milling enterprise fell through. In the light of what has happened in recent years in the sugar industry, we feel justified in saying that the project above referred to, if carried into effect, must inevitably have proved a great success. The determination of the issue presented in this second cause of action requires a consideration of two points. The first is whether a person who is not a party to a contract for the sale of land makes himself liable for damages to the vendee, beyond the value of the use and occupation, by colluding with the vendor and maintaining him in the effort to resist an action for specific performance. The second is whether the damages which the plaintiff seeks to recover under this head are too remote and speculative to be the subject of recovery. As preliminary to a consideration of the first of these questions, we deem it well it dispose of the contention that the members of the defendants corporation, in advising and prompting Teodorica Endencia not to comply with the contract of sale, were actuated by improper and malicious motives. The trial court found that this contention was not sustained, observing that while it was true that the circumstances pointed to an entire sympathy on the part of the defendant corporation with the efforts of Teodorica Endencia to defeat the plaintiff's claim to the land, the fact that its officials may have advised her not to carry the contract into effect would not constitute

actionable interference with such contract. It may be added that when one considers the hardship that the ultimate performance of that contract entailed on the vendor, and the doubt in which the issue was involved to the extent that the decision of the Court of the First Instance was unfavorable to the plaintiff and the Supreme Court itself was divided the attitude of the defendant corporation, as exhibited in the conduct of its procurador, Juan Labarga, and other members of the order of the Recollect Fathers, is not difficult to understand. To our mind a fair conclusion on this feature of the case is that father Juan Labarga and his associates believed in good faith that the contract cold not be enforced and that Teodorica would be wronged if it should be carried into effect. Any advice or assistance which they may have given was, therefore, prompted by no mean or improper motive. It is not, in our opinion, to be denied that Teodorica would have surrendered the documents of title and given possession of the land but for the influence and promptings of members of the defendants corporation. But we do not credit the idea that they were in any degree influenced to the giving of such advice by the desire to secure to themselves the paltry privilege of grazing their cattle upon the land in question to the prejudice of the just rights of the plaintiff. The attorney for the plaintiff maintains that, by interfering in the performance of the contract in question and obstructing the plaintiff in his efforts to secure the certificate of tittle to the land, the defendant corporation made itself a co-participant with Teodorica Endencia in the breach of said contract; and inasmuch as father Juan Labarga, at the time of said unlawful intervention between the contracting parties, was fully aware of the existence of the contract (Exhibit C) which the plaintiff had made with S. B. Wakefield, of San Francisco, it is insisted that the defendant corporation is liable for the loss consequent upon the failure of the project outlined in said contract. In this connection reliance is placed by the plaintiff upon certain American and English decisions in which it is held that a person who is a stranger to contract may, by an unjustifiable interference in the performance thereof, render himself liable for the damages consequent upon non-performance. It is said that the doctrine of these cases was recognized by this court in Gilchrist vs. Cuddy (29 Phil. Rep., 542); and we have been earnestly pressed to extend the rule there enunciated to the situation here presente. Somewhat more than half a century ago the English Court of the Queen's Bench saw its way clear to permit an action for damages to be maintained against a stranger to a contract wrongfully interfering in its performance. The leading case on this subject is Lumley vs. Gye ([1853], 2 El. & Bl., 216). It there appeared that the plaintiff, as manager of a theatre, had entered into a contract with Miss Johanna Wagner, an opera singer,, whereby she bound herself for a period to sing in the plaintiff's theatre and nowhere else. The defendant, knowing of the existence of this contract, and, as the declaration alleged, "maliciously intending to injure the plaintiff," enticed and produced Miss Wagner to leave the plaintiff's employment. It was held that the plaintiff was entitled to recover damages. The right which was here recognized had its origin in a rule, long familiar to the courts of the common law, to the effect that any person who entices a servant from his employment is liable in damages to the master. The master's interest in the service rendered by his employee is here considered as a distinct subject of juridical right. It being thus accepted that it is a legal wrong to break up a relation of personal service, the question now arose whether it is illegal for one person to interfere with any contract relation subsisting between

others. Prior to the decision of Lumley vs. Gye [supra] it had been supposed that the liability here under consideration was limited to the cases of the enticement of menial servants, apprentices, and others to whom the English Statutes of Laborers were applicable. But in the case cited the majority of the judges concurred in the opinion that the principle extended to all cases of hiring. This doctrine was followed by the Court of Appeal in Bowen vs. Hall ([1881], 6 Q. B., Div., 333); and in Temperton vs. Russell ([1893], Q. B., 715), it was held that the right of action for maliciously procuring a breach of contract is not confined to contracts for personal services, but extends to contracts in general. In that case the contract which the defendant had procured to be breached was a contract for the supply of building material. Malice in some form is generally supposed to be an essential ingredient in cases of interference with contract relations. But upon the authorities it is enough if the wrong-doer, having knowledge of the existence of the contract relations, in bad faith sets about to break it up. Whether his motive is to benefit himself or gratify his spite by working mischief to the employer is immaterial. Malice in the sense of ill-will or spite is not essential. Upon the question as to what constitutes legal justification, a good illustration was put in the leading case. If a party enters into contract to go for another upon a journey to a remote and unhealthful climate, and a third person, with a bona fide purpose of benefiting the one who is under contract to go, dissuades him from the step, no action will lie. But if the advice is not disinterested and the persuasion is used for "the indirect purpose of benefiting the defendant at the expense of the plaintiff," the intermedler is liable if his advice is taken and the contract broken. The doctrine embodied in the cases just cited has sometimes been found useful, in the complicated relations of modern industry, as a means of restraining the activities of labor unions and industrial societies when improperly engaged in the promotion of strikes. An illustration of the application of the doctrine in question in a case of this kind is found in South Wales Miners Federation vs. Glamorgan Coal Co. ([1905]), A. C., 239). It there appeared that certain miners employed in the plaintiff's collieries, acting under the order of the executive council of the defendant federation, violated their contract with the plaintiff by abstaining from work on certain days. The federation and council acted without any actual malice or ill-will towards the plaintiff, and the only object of the order in question was that the price of coal might thereby be kept up, a factor which affected the miner's wage scale. It was held that no sufficient justification was shown and that the federation was liable. In the United States, the rule established in England by Lumley vs. Gye [supra] and subsequent cases is commonly accepted, though in a few of the States the broad idea that a stranger to a contract can be held liable upon its is rejected, and in these jurisdictions the doctrine, if accepted at all, is limited to the situation where the contract is strictly for personal service. (Boyson vs. Thorn, 98 Cal., 578; Chambers & Marshall vs. Baldwin 91 Ky., 121; Bourlier vs. Macauley, 91 Ky., 135; Glencoe Land & Gravel Co. vs. Hudson Bros. Com. Co., 138 Mo., 439.) It should be observed in this connection that, according to the English and American authorities, no question can be made as to the liability to one who interferes with a contract existing between

others by means which, under known legal cannons, can be denominated an unlawful means. Thus, if performance is prevented by force, intimidation, coercion, or threats, or by false or defamatory statements, or by nuisance or riot, the person using such unlawful means is, under all the authorities, liable for the damage which ensues. And in jurisdictions where the doctrine of Lumley vs. Gye [supra] is rejected, no liability can arise from a meddlesome and malicious interference with a contract relation unless some such unlawful means as those just indicated are used. (See cases last above cited.) This brings us to the decision made by this court in Gilchrist vs. Cuddy (29 Phil. Rep., 542). It there appeared that one Cuddy, the owner of a cinematographic film, let it under a rental contract to the plaintiff Gilchrist for a specified period of time. In violation of the terms of this agreement, Cuddy proceeded to turn over the film also under a rental contract, to the defendants Espejo and Zaldarriaga. Gilchrist thereupon restored to the Court of First Instance and produced an injunction restraining the defendants from exhibiting the film in question in their theater during the period specified in the contract of Cuddy with Gilchrist. Upon appeal to this court it was in effect held that the injunction was not improperly granted, although the defendants did not, at the time their contract was made, know the identity of the plaintiff as the person holding the prior contract but did know of the existence of a contract in favor of someone. It was also said arguendo, that the defendants would have been liable in damages under article 1902 of the Civil Code, if the action had been brought by the plaintiff to recover damages. The force of the opinion is, we think, somewhat weakened by the criticism contain in the concurring opinion, where it is said that the question of breach of contract by inducement was not really involved in the case. Taking the decision upon the point which was rally decided, it is authority for the proposition that one who buys something which he knows has been sold to some other person can be restrained from using that thing to the prejudice of the person having the prior and better right. Translated into terms applicable to the case at bar, the decision in Gilchrist vs. Cuddy (29 Phil. Rep., 542), indicates that the defendant corporation, having notice of the sale of the land in question to Daywalt, might have been enjoined by the latter from using the property for grazing its cattle thereon. That the defendant corporation is also liable in this action for the damage resulting to the plaintiff from the wrongful use and occupation of the property has also been already determined. But it will be observed that in order to sustain this liability it is not necessary to resort to any subtle exegesis relative to the liability of a stranger to a contract for unlawful interference in the performance thereof. It is enough that defendant use the property with notice that the plaintiff had a prior and better right. Article 1902 of the Civil Code declares that any person who by an act or omission, characterized by fault or negligence, causes damage to another shall be liable for the damage so done. Ignoring so much of this article as relates to liability for negligence, we take the rule to be that a person is liable for damage done to another by any culpable act; and by "culpable act" we mean any act which is blameworthy when judged by accepted legal standards. The idea thus expressed is undoubtedly broad enough to include any rational conception of liability for the tortious acts likely to be developed in any society. Thus considered, it cannot be said that the doctrine of Lumley vs. Gye [supra] and related cases is repugnant to the principles of the civil law.

Nevertheless, it must be admitted that the codes and jurisprudence of the civil law furnish a somewhat uncongenial field in which to propagate the idea that a stranger to a contract may sued for the breach thereof. Article 1257 of the Civil Code declares that contracts are binding only between the parties and their privies. In conformity with this it has been held that a stranger to a contract has no right of action for the nonfulfillment of the contract except in the case especially contemplated in the second paragraph of the same article. (Uy Tam and Uy Yet vs. Leonard, 30 Phil. Rep., 471.) As observed by this court in Manila Railroad Co. vs. Compaia Transatlantica, R. G. No. 11318 (38 Phil. Rep., 875), a contract, when effectually entered into between certain parties, determines not only the character and extent of the liability of the contracting parties but also the person or entity by whom the obligation is exigible. The same idea should apparently be applicable with respect to the person against whom the obligation of the contract may be enforced; for it is evident that there must be a certain mutuality in the obligation, and if the stranger to a contract is not permitted to sue to enforce it, he cannot consistently be held liable upon it. If the two antagonistic ideas which we have just brought into juxtaposition are capable of reconciliation, the process must be accomplished by distinguishing clearly between the right of action arising from the improper interference with the contract by a stranger thereto, considered as an independent act generate of civil liability, and the right of action ex contractu against a party to the contract resulting from the breach thereof. However, we do not propose here to pursue the matter further, inasmuch as, for reasons presently to be stated, we are of the opinion that neither the doctrine of Lumley vs. Gye [supra] nor the application made of it by this court in Gilchristvs. Cuddy (29 Phil. Rep., 542), affords any basis for the recovery of the damages which the plaintiff is supposed to have suffered by reason of his inability to comply with the terms of the Wakefield contract. Whatever may be the character of the liability which a stranger to a contract may incur by advising or assisting one of the parties to evade performance, there is one proposition upon which all must agree. This is, that the stranger cannot become more extensively liable in damages for the nonperformance of the contract than the party in whose behalf he intermeddles. To hold the stranger liable for damages in excess of those that could be recovered against the immediate party to the contract would lead to results at once grotesque and unjust. In the case at bar, as Teodorica Endencia was the party directly bound by the contract, it is obvious that the liability of the defendant corporation, even admitting that it has made itself coparticipant in the breach of the contract, can in no even exceed hers. This leads us to consider at this point the extent of the liability of Teodorica Endencia to the plaintiff by reason of her failure to surrender the certificate of title and to place the plaintiff in possession. It should in the first place be noted that the liability of Teodorica Endencia for damages resulting from the breach of her contract with Daywalt was a proper subject for adjudication in the action for specific performance which Daywalt instituted against her in 1909 and which was litigated by him to a successful conclusion in this court, but without obtaining any special adjudication with reference to damages. Indemnification for damages resulting from the breach of a contract is a right inseparably annexed to every action for the fulfillment of the obligation (art. 1124, Civil Code); and its is clear that if damages are not sought or recovered in the action to enforce performance they cannot be recovered in an independent action. As to Teodorica Endencia,

therefore, it should be considered that the right of action to recover damages for the breach of the contract in question was exhausted in the prior suit. However, her attorneys have not seen fit to interpose the defense of res judicata in her behalf; and as the defendant corporation was not a party to that action, and such defense could not in any event be of any avail to it, we proceed to consider the question of the liability of Teodorica Endencia for damages without refernce to this point. The most that can be said with refernce to the conduct of Teodorica Endencia is that she refused to carry out a contract for the sale of certain land and resisted to the last an action for specific performance in court. The result was that the plaintiff was prevented during a period of several years from exerting that control over the property which he was entitled to exert and was meanwhile unable to dispose of the property advantageously. Now, what is the measure of damages for the wrongful detention of real property by the vender after the time has come for him to place the purchaser in possession? The damages ordinarily and normally recoverable against a vendor for failure to deliver land which he has contracted to deliver is the value of the use and occupation of the land for the time during which it is wrongfully withheld. And of course where the purchaser has not paid the purchaser money, a deduction may be made in respect to the interest on the money which constitutes the purchase price. Substantially the same rule holds with respect to the liability of a landlord who fails to put his tenant in possession pursuant to contract of lease. The measure of damages is the value of the leasehold interest, or use and occupation, less the stipulated rent, where this has not been paid. The rule that the measure of damages for the wrongful detention of land is normally to be found in the value of use and occupation is, we believe, one of the things that may be considered certain in the law (39 cyc., 1630; 24 Cyc., 1052 Sedgewick on Damages, Ninth ed., sec. 185.) almost as wellsettled, indeed, as the rule that the measure of damages for the wrongful detention of money is to be found in the interest. We recognize the possibility that more extensive damages may be recovered where, at the time of the creation of the contractual obligation, the vendor, or lessor, is aware of the use to which the purchaser or lessee desires to put the property which is the subject of the contract, and the contract is made with the eyes of the vendor or lessor open to the possibility of the damage which may result to the other party from his own failure to give possession. The case before us is not this character, inasmuch as at the time when the rights of the parties under the contract were determined, nothing was known to any to them about the San Francisco capitalist who would be willing to back the project portrayed in Exhibit C. The extent of the liability for the breach of a contract must be determined in the light of the situation in existence at the time the contract is made; and the damages ordinarily recoverable are in all events limited to such as might be reasonable are in all events limited to such as might be reasonably foreseen in the light of the facts then known to the contracting parties. Where the purchaser desires to protect himself, in the contingency of the failure of the vendor promptly to give possession, from the possibility of incurring other damages than such as the incident to the normal value of the use and occupation, he should cause to be inserted in the contract a clause providing for stipulated amount to the paid upon failure of the vendor to give possession; and not case has been called to our attention where, in the absence of such a stipulation, damages have

been held to be recoverable by the purchaser in excess of the normal value of use and occupation. On the contrary, the most fundamental conceptions of the law relative to the assessment of damages are inconsistent with such idea. The principles governing this branch of the law were profoundly considered in the case Hadley vs. Baxendale (9 Exch., 341), decided in the English Court of Exchequer in 1854; and a few words relative to the principles governing will here be found instructive. The decision in that case is considered a leading authority in the jurisprudence of the common law. The plaintiffs in that case were proprietors of a mill in Gloucester, which was propelled by steam, and which was engaged in grinding and supplying meal and flour to customers. The shaft of the engine got broken, and it became necessarily that the broken shaft be sent to an engineer or foundry man at Greenwich, to serve as a model for casting or manufacturing another that would fit into the machinery. The broken shaft could be delivered at Greenwich on the second day after its receipts by the carrier it. It was delivered to the defendants, who were common carriers engaged in that business between these points, and who had told plaintiffs it would be delivered at Greenwich on the second day after its delivery to them, if delivered at a given hour. The carriers were informed that the mill was stopped, but were not informed of the special purpose for which the broken shaft was desired to forwarded, They were not told the mill would remain idle until the new shaft would be returned, or that the new shaft could not be manufactured at Greenwich until the broken one arrived to serve as a model. There was delay beyond the two days in delivering the broken shaft at Greenwich, and a corresponding delay in starting the mill. No explanation of the delay was offered by the carriers. The suit was brought to recover damages for the lost profits of the mill, cause by the delay in delivering the broken shaft. It was held that the plaintiff could not recover. The discussion contained in the opinion of the court in that case leads to the conclusion that the damages recoverable in case of the breach of a contract are two sorts, namely, (1) the ordinary, natural, and in a sense necessary damage; and (2) special damages. Ordinary damages is found in all breaches of contract where the are no special circumstances to distinguish the case specially from other contracts. The consideration paid for an unperformed promise is an instance of this sort of damage. In all such cases the damages recoverable are such as naturally and generally would result from such a breach, "according to the usual course of things." In case involving only ordinary damage no discussion is ever indulged as to whether that damage was contemplated or not. This is conclusively presumed from the immediateness and inevitableness of the damage, and the recovery of such damage follows as a necessary legal consequence of the breach. Ordinary damage is assumed as a matter of law to be within the contemplation of the parties. Special damage, on the other hand, is such as follows less directly from the breach than ordinary damage. It is only found in case where some external condition, apart from the actual terms to the contract exists or intervenes, as it were, to give a turn to affairs and to increase damage in a way that the promisor, without actual notice of that external condition, could not reasonably be expected to foresee. Concerning this sort of damage, Hadley vs.Baxendale (1854) [supra] lays down the definite and just rule that before such damage can be recovered the plaintiff must show

that the particular condition which made the damage a possible and likely consequence of the breach was known to the defendant at the time the contract was made. The statement that special damages may be recovered where the likelihood of such damages flowing from the breach of the contract is contemplated and foreseen by the parties needs to be supplemented by a proposition which, though not enunciated in Hadley vs. Baxendale, is yet clearly to be drawn from subsequent cases. This is that where the damage which a plaintiff seeks to recover as special damage is so far speculative as to be in contemplation of law remote, notification of the special conditions which make that damage possible cannot render the defendant liable therefor. To bring damages which would ordinarily be treated as remote within the category of recoverable special damages, it is necessary that the condition should be made the subject of contract in such sense as to become an express or implied term of the engagement. Horne vs. Midland R. Co. (L. R., 8 C. P., 131) is a case where the damage which was sought to be recovered as special damage was really remote, and some of the judges rightly places the disallowance of the damage on the ground that to make such damage recoverable, it must so far have been within the contemplation of the parties as to form at least an implied term of the contract. But others proceeded on the idea that the notice given to the defendant was not sufficiently full and definite. The result was the same in either view. The facts in that case were as follows: The plaintiffs, shoe manufacturers at K, were under contract to supply by a certain day shoes to a firm in London for the French government. They delivered the shoes to a carrier in sufficient time for the goods to reach London at the time stipulated in the contract and informed the railroad agent that the shoes would be thrown back upon their hands if they did not reach the destination in time. The defendants negligently failed to forward the good in due season. The sale was therefore lost, and the market having fallen, the plaintiffs had to sell at a loss. In the preceding discussion we have considered the plaintiff's right chiefly against Teodorica Endencia; and what has been said suffices in our opinion to demonstrate that the damages laid under the second cause of action in the complaint could not be recovered from her, first, because the damages laid under the second cause of action in the complaint could not be recovered from her, first, because the damages in question are special damages which were not within contemplation of the parties when the contract was made, and secondly, because said damages are too remote to be the subject of recovery. This conclusion is also necessarily fatal to the right of the plaintiff to recover such damages from the defendant corporation, for, as already suggested, by advising Teodorica not to perform the contract, said corporation could in no event render itself more extensively liable than the principle in the contract. Our conclusion is that the judgment of the trial court should be affirmed, and it is so ordered, with costs against the appellant.


43. EN BANC G.R. No. L-11014 January 21, 1958

VICTORIANA ESPIRITU, JORGE ROBLES, JOSEFINA DE VERA, FAUSTINO QINTIVES, LEONOR BRIONES, EVANGELINA PATACSIL, TEOFILO ANCHETA and BRIGIDA MANGONON, petitioners-appellants, vs. THE MUNICIPAL COUNCIL, MUNICIPAL MAYOR and THE CHIEF OF POLICE OF POZORRUBIO, PANGASINAN,respondents-appellees. MONTEMAYOR, J.: This is an appeal from the decision of the Court of First Instance of Pangasinan of April 28, 1956, dismissing the petition for prohibition filed by appellants, lifting the preliminary injunction against the appellees and ordering the removal of appellants' stalls from the public plaza of appellee municipality, within ten days from notice. Pending appeal, counsel for the appellees filed a Manifestation on September 16, 1957, copy of which was duly served on appellants, that several months after the oral argument held before this Tribunal on January 25, 1957, appellants had voluntarily vacated the public plaza of Pozorrubio by transferring and removing their buildings and therefrom to private lots fronting the plaza; and that the municipality had already begun the construction of concrete fences in the premises, formerly occupied by appellants, without any complaint whatsover from them or their counsel; and that consequently, the present case has become moot and academic, and asking that the present appeal be dismissed. By resolution of this Court of October 21, 1957, appellants were required to comment on thisManifestation and petition for dismissal, within ten days from notice. Despite notice of his resolution, appellants failed to file their required comment. For this reason, we could well summarily dismiss this appeal by resolution. However, for the satisfaction of the parties and for possible guidance of town officials and residents, we havre deemed it convenient and necessary to decide the case by formal decision. The facts are not disputed. In fact, no evidence was submitted at the hearing before the trial court, the parties having petitioned that the case be decided on the pleadings.

During the last world war, the market building of the town of Pozorrubio was destroyed, and after Liberation, the market vendors began constructing temporary and make-shifts stalls,, even small residences, on a portion of the town plaza. The Municipal Treasurer collected from these stall owners fees at the rate of P.25 per square meter a month. In time, the whole municipal market was rehabilitated, but the owners of the structures on the plaza failed and refused to transfer to said market place. The Municipal Council of Pozorrubio received petitions from civic organizations like the Women's Club and the Puericulture Center, for the removal of the market stalls on the plaza,

which were being used not only as stalls, but also for residence purposes, said organization desiring to convert said portion of the plaza into a children's park. The Provincial Board of Pangasinan had also presented to the Council the petition of another civic organization of Pozorrubio, asking for the removal of the stalls from the plaza, and the attention of the COuncil was also called to the latter-circular of the Secretary of the Interior about the existence of these stalls on the public plaza, said to be illegal. As a result, the Municipal Council of Pozorrubio No. 20, Series of 1951, stating that the public market had already been rehabilitated, and ordering the occupants and owners of the structures on the plaza to remove their buildings within sixty days from receipt of the resolution. In answer to this resolution, eight of the market stall building owners filed a petition for prohibition in the Cour of First Instance of Pangasinan against the Municipal Council, the Municipal Mayor, and the Chief of Police of Pozorrubio. Pending hearing, the trial court issued a writ of preliminary injunction. The trial court found that the fee of P.25 per square meter collected by the Municipal Tresurer, was not for the rent of the portion of the public plaza occupied by the market stalls, as claimed by appellants, but rather the market stall fees charges on all market vendors in a public market; and that there was absolutely no contract or agreement between the appellants on one side and the municipality on the other, about renting of the Plaza to the former. There is reason to believe that the occupation of the plaza and the construction of temporary buildings thereon by appellants mostly for market, even residence purposes, was merley tolerated by the municipality, because of the destruction of the public market during thewar, but the trouble is that appellants, even after the rehabilitationof the old market, refused to transfer to said market place, perhaps to save the trouble and expense of transferring their buildings, or possibly to continue enjoying the benefits from the strategic position of their stalls at the plaza. There is absolutelyno question that the town plaza cannot be used for the construction of market stalls, specially of residences, and that such structures constitute a nuisance subject to abatement according to law. Town Plazas are properties of public dominion, to be devoted to public use and to be made available to the public in general. They are outside the commerce of man and cannot be disposed of or even leased by the municipality to private parties.1While in case of war or during an emergency, town plazas may be occupied temporarily by private individuals, as was done and as was tolerated by the Municipality of Pozorrubio, when the emergency has ceased, said temporary occupation or use must also cease, and the town officials should see to it that the town plazas should ever be kept open to the public and free from encumbrances or illegal private constructions. Appellants must have realized the absolute lack of merit in their stand and the futility of their appeal because they voluntarily removed their buildings on the plaza. As a matter f fact, after the filing of the prohibition with the trial court, two out of the eight petitioners informed the trial court that they were included as petitioners without their consent, and so asked that they be excluded from the case. In view of the foregoing, the decision appealed from is hereby affirmed. With costs against appellants.chanroblesvirtualawli

44. EN BANC G.R. No. L-7012 March 26, 1913 THE ILOILO ICE AND COLD STORAGE COMPANY, Plaintiff-Appellee , vs. THE MUNICIPAL COUNCIL OF ILOILO, ET AL., Defendants-Appellants. TRENT, J. : According to the pleadings, the plaintiff, upon authority granted by the defendant, constructed an ice and cold storage plant in the city of Iloilo. Some time after the plant had been completed and was in operation, nearby residents made complaints to the defendant that the smoke from the plant was very injurious to their health and comfort. Thereupon the defendant appointed a committee to investigate and report upon the matters contained in said complaints. The committee reported that the complaints were well-founded. The defendant counsel then passed a resolution which reads in part as follows: That after the approval by the honorable provincial board of this resolution, a period of one month will be granted to the said entity. The Iloilo Ice and Cold Storage Company, in which to proceed with the elevation of said smokestacks, and if not done, the municipal president will execute the order requiring the closing or suspension of operations of said establishment. Upon receipt of this resolution and order, the plaintiff commenced this action in the Court of First Instance to enjoin the defendant from carrying into effect the said resolution. The fifth paragraph of the complaint is as follows: That the defendants intend and threaten to require compliance with said resolution administratively and without the intervention of the court, and by force to compel the closing and suspension of operations of the plaintiff's machinery and consequently of the entire plant, should the plaintiff not proceed with the elevation of the smokestacks to one hundred feet, which the plaintiff maintains it is not obliged to do and will not do. Upon notice and after hearing, a preliminary injunction was issued. Subsequently thereto the defendant answered, admitting paragraphs 1 and 4 and denying all the other allegations in the complaint, and as a special defense alleged: 1. xxx xxx xxx.

2. That the factory of the plaintiff company stands in a central and populated district of the municipality; 3. That the quantity of smoke discharged from the smokestacks of said factory is so great and so dense that it penetrates into the dwelling houses situated near it and causes great annoyance to the residents and prejudice to their health;

4. That the municipal board of health of the city has reported that the smoke discharged from the smokestacks of said factory is prejudicial and injurious to the public health; 5. That the plaintiff company has no right to maintain and operate machinery in its factory under the conditions which it is at present operating the same, without complying with the regulations which were imposed upon it when the license for its installation was granted, because it thereby violates the ordinances of the city now in force upon the matter. Wherefore, the defendant prays that it be absolved from the complaint and the plaintiff be declared to have no right to the remedy asked, and that the preliminary injunction issued in this case be set aside, with the costs against the plaintiff. The plaintiff demurred to this answer upon the following grounds: 1. That the facts alleged in the answer do not constitute a defense; and 2. That the answer is vague and ambiguous and contains arguments and conclusions of law instead of facts. This demurrer was sustained, the court saying: The defendant will amend his answer within five days or the injunction will be permanently granted as prayed for, with costs to the defendant. To this order the defendant excepted and, not desiring to amend its answer, appealed to this court. It is alleged in paragraph 1 that both the plaintiff and the defendants are corporations duly organized under the laws of the Philippine Islands; and paragraph 4 sets forth the resolution complained of, the dispositive part of which is inserted above. The allegations in paragraph 2, 3, 5, 6, 7, and 8, which are specifically denied in the answer, all (except the fifth) relate to the building of the plant under authority granted by the defendant, the cost of its construction, the legality of the resolution in question, the power of the defendant to pass such resolution, and the damages which will result if that resolution is carried into effect. As before stated, the allegations in paragraph 5 to the effect that the defendants intend and are threatening to close by force and without the intervention of the courts the plaintiff's plant is specifically denied. The issue in this case, according to the pleadings, relates to the power of the municipal council to declare the plant of the petitioner a nuisance as operated, and the method of abating it. The municipal council is, under section 39 (j) of the Municipal Code, specifically empowered "to declare and abate nuisances." A nuisance is, according to Blackstone, "Any thing that worketh hurt, inconvenience, or damages." (3 Black. Com., 216.) They arise from pursuing particular trades or industries in populous neighborhoods; from acts of public indecency, keeping disorderly houses, and houses of ill fame, gambling houses, etc. (2 Bouv., 248; Miller vs.Burch, 32 Tex., 208.) Nuisances have been divided into two classes: Nuisances per se, and nuisances per accidens. To the first belong those which are unquestionably and under all

circumstances nuisances, such as gambling houses, houses of ill fame, etc. The number of such nuisances is necessarily limited, and by far the greater number of nuisances are such because of particular facts and circumstances surrounding the otherwise harmless cause of the nuisance. For this reason, it will readily be seen that whether a particular thing is a nuisance is generally a question of fact, to be determined in the first instance before the term nuisance can be applied to it. This is certainly true of a legitimate calling, trade, or business such as an ice plant. Does the power delegated to a municipal council under section 39 (j) of the Municipal Code commit to the unrestrained will of that body the absolute power of declaring anything to be a nuisance? Is the decision of that body final despite the possibility that it may proceed from animosity or prejudice, from partisan zeal or enmity, from favoritism and other improper influences and motives, easy of concealment and difficult to be detected and exposed? Upon principle and authority, we think it does not. In Rutton vs. City of Camden, 39 N.J.L., 122, 129; 23 Am. Rep. 203, 209, the court said: The authority to decide when a nuisance exists in an authority to find facts, to estimate their force, and to apply rules of law to the case thus made. This is the judicial function, and it is a function applicable to a numerous class of important interests. The use of land and buildings, the enjoyment of water rights, the practice of many trades and occupations, and the business of manufacturing in particular localities, all fall on some occasions, in important respects, within its sphere. To say to a man that he shall not use his property as he pleases, under certain conditions, is to deprive him pro tanto of the enjoyment of such property. To find conclusively against him that a state of facts exists with respect to the use of his property, or the pursuit of his business, which subjects him to the condemnation of the law, is to affect his rights in a vital point. The next thing to depriving a man of his property is to circumscribe him in its use, and the right to use property is as much under the protection of the law as the property itself, in any other aspect, is, and the one interest can no more be taken out of the hands of the ordinary tribunal than the other can. If a man's property cannot be taken away from him except upon trial by jury, or by the exercise of the right of eminent domain upon compensation made, neither can be, in any other mode, be limited in the use of it. The right to abate public nuisances, whether we regard it as existing in the municipalities, or in the community, or in the land of the individual, is a common law right, and is derived, in every instance of its exercise, from the same source - that of necessity. It is akin to the right of destroying property for the public safety, in case of the prevalence of a devastating fire or other controlling exigency. But the necessity must be present to justify the exercise of the right, and whether present or not, must be submitted to a jury under the guidance of a court. The finding of a sanitary committee, or of a municipal council, or of any other body of a similar kind, can have no effect whatever for any purpose, upon the ultimate disposition of the matter of this kind. It cannot be used as evidence in any legal proceeding, for the end of establishing, finally, the fact of nuisance, and if can be made testimony for any purpose, it would seem that it can be such only to show that the persons acting in pursuance of it were devoid of that malicious spirit which sometimes aggravates a trespass and swells the damages. I repeat that the question of nuisance can conclusively be decided, for all legal uses, by the established courts of law or equity alone, and that the resolutions of officers, or of boards organized by force of municipal charters, cannot, to any degree, control such decision.

The leading case upon this point is Yates vs. Milwaukee, (10 Wall., 497; 19 L. ed., 984). The following quotation from this case has been cited or quoted with approval in a great number of cases. (See Notes to this case in 19 L. ed., Notes, page 356.) But the mere declaration by the city council of Milwaukee that a certain structure was an encroachment or obstruction did not make structure was an encroachment or obstruction did not make it so, nor could such declaration make it a nuisance unless it in fact had that character. It is a doctrine not to be tolerated in this country, that a municipal corporation, without any general laws either of the city or of the State, within which a given structure can be shown to be a nuisance, can, by its mere declaration that it is one, subject it to removal by any person supposed to be aggrieved, or even by the city itself. This would place every house, every business, and all the property of the city at the uncontrolled will of the temporary local authorities. Yet this seems to have been the view taken by counsel who defended this case in the circuit court; for that single ordinance of the city, declaring the wharf of Yates a nuisance, and ordering its abatement, is the only evidence in the record that it is a nuisance or an obstruction to navigation, or in any manner injurious to the public. In Cole vs. Kegler (64 la., 59, 61) the court said: We do not think the general assembly intended to confer on cities and towns the power of finally and conclusively determine, without notice or a hearing, and without the right of appeal, that any given thing constitutes a nuisance, unless, probably, in cases of great emergency, so strong as to justify extraordinary measures upon the ground of paramount necessity. The law does not contemplate such an exigency, and therefore does not provide for it. If it did, it would no longer be the undefined law of necessity. (Nelson, J., in The People vs. The Corporation of Albay, 11 Wend., 539.) Nuisance may be abated by an individual, but they must in fact exist, The determination of the individual that a nuisance exists does not make it so, and if he destroys property on the that it is a nuisance, he is responsible, unless it is established that the property destroyed constituted a nuisance. This precise power, and no more, is conferred by the statute on cities and towns. In Wood on Nuisances, section 740, it is said: "If the authorities of a city abate a nuisance under authority of an ordinance of the city, they are subject to the same perils and liabilities as an individual, if the thing in fact is not nuisance." In Grossman vs. City of Oakland (30 Ore., 478, 483) the court said: In our opinion this ordinance cannot be sustained as a legitimate exercise of municipal power. The character of the city confers upon it the power to prevent and restrain nuisances, and to "declare what shall constitute a nuisance;" but this does not authorize it to declare a particular use of property a nuisance, unless such use comes within the common law or statutory idea of a nuisance. (2 Wood on Nuisances (3d ed.), 977; Yates vs. Milwaukee, 77 U.S. (10 Wall.), 497; Village of Des Plaines vs. Poyer, 123 Ill., 348; 5 Am. St. Rep., 524; 14 N.E., 677; Quintini vs. City Board of Aldermen, 64 Miss., 483; 60 Am. Rep., 62; 1 So., 625; Chicago & Rock Islands R.R. Co. vs. City of Joliet, 79 Ill., 44; Hutton vs. City of Camden, 39 N.J. Law, 122; 23 Am. Rep., 203.) By this provision of the charter the city is clothed with authority to

declare by general ordinance under what circumstances and conditions certain specified acts or things injurious to the health or dangerous to the public are to constitute and be deemed nuisances, leaving the question of fact open for judicial determination as to whether the particular act or thing complained of comes within the prohibited class; but it cannot by ordinance arbitrarily declare any particular thing a nuisance which has not heretofore been so declared by law, or judicially determined to be such. (City of Dener vs. Mullen, 7 Colo., 345). In Western & Atlantic R. Co. vs. Atlanta (113 Ga., 537, 551), after an extensive review of the authorities, the court, per Lumpkin, J., said: It is our opinion that the provisions of our code require, when a municipal corporation is seeking to abate a nuisance such as it was alleged the floor of the union passenger station was in this case, that the parties interested be given reasonable notice of the time and place of hearing at which the fact whether the property complained of is or is not a nuisance shall be inquired into and determined; that, without such notice and a judgment on the facts by the body invested with power to abate the nuisance, it is unlawful to enter thereon and remove or destroy it as a nuisance. If the thing, as we said, is declared by law to be a nuisance, or if it is unquestionably a nuisance, such as a rabid dog, infected clothing, the carcass of a dead animal on a private lot, the presence of a smallpox patient on the street, it may be abated by the municipal authorities at once, by order, from the necessity of the case, and to meet an emergency which exists, to at once protect the health and lives of the people. In Everett vs. City of Council Bluffs (46 Ia., 66, 67), where the council passed an ordinance declaring trees on certain streets to be a nuisance and ordering the marshall to abate the same, the court held: The defendant is incorporated under a special charter, which provides that the city council has power "to declare what shall be a nuisance, and to prevent, remove, or abate the same." This general grant of power, however, will not authorize the council to declare anything a nuisance which is not such at common law, or has been declared such by statute. In Frostburg vs. Wineland (98 Md., 239, 243) the court said: The first question, then, in the case revolves itself to this, was the summary proceeding of the appellants in declaring the two trees in front of the appellee's property to be a nuisance and an obstruction to the paving and curbing of the street, and directing them to be removed and destroyed, so far final as not to be reviewable by the Courts? This question we think was in effect settled by this court in the recent cases of New Windsor vs.Stocksdale (95 Md., 215) and King vs. Hamil (97 Md., 103). In the latter case it is said that equity will not lend its aid to enforce by injunction the by-laws or ordinances of a municipal corporation, restraining an act, unless the act is shown to be a nuisance per se. . . . It is clear, we think, both upon reason and authority, that when a municipality undertakes to destroy private property which is not a nuisance per se, it then transcends its powers and its acts are reviewable by a court of equity.

In C.R.I. & P.R. Co. vs. City of Joilet (79 Ill., 25, 44) the court said: As to the ordinance of the common council of the city of Joilet, of September, 1872, declaring the railroad a nuisance, we regard that as without effect upon the case, although the charter of the city confers upon the common council the power to abate and remove nuisances, and to punish the authors thereof, and to define and declare what shall be deemed nuisances. We will, in this respect, but refer to the language of the Supreme Court of the United State in Yates vs. Milwaukee (10 Wall., 505). (Seesupra.) In the leading case of Denver vs. Mullen (7 Colo., 345, 353) where an extended review of the authorities is made, the court said: The basis of authority for the action of the city in the premises is made to rest upon certain provisions of the city charter, and certain ordinances, which are set out as exhibits in the testimony; and the following, among other of the enumerated powers conferred by the legislature upon the city, in said charter, is relied upon, viz: "To make regulations to secure the general health of the inhabitants, to declare what shall be a nuisance, and to prevent and remove the same." The proper construction of this language is that the city is clothed with authority to declare, by general ordinance, what shall constitute a nuisance. That is to say, the city may, by such ordinance, define, classify and enact what things or classes of things, and under what conditions and circumstances, such specified things are to constitute and be deemed nuisances. For instance, the city might, under such authority, declare by ordinance that slaughter-houses within the limits of the city, carcasses of dead animals left lying within the city, goods, boxes, and the like, piled up or remaining for certain length of time on the sidewalks, or other things injurious to health, or causing obstruction or danger to the public in the use of the streets and sidewalks, should be deemed nuisances; not that the city council may, by a mere resolution or motion, declare any particular thing a nuisance which has not theretofore been pronounced to be such by law, or so adjudged by judicial determination. (Everett vs. Council Bluffs, 40 Iowa, 66; Yates vs. Milwaukee, 10 Wall., 497.) No law or ordinance, under which the city council assumed to act in respect to this ditch, has been cited which defines nuisance, or within the meaning of which such ditch is comprehended. xxx xxx xxx

It is only certain kinds of nuisances that may be removed or abated summarily by the acts of individuals or by the public, such as those which affect the health, or interfere with the safety of property or person, or are tangible obstructions to streets and highways under circumstances presenting an emergency; such clear cases of nuisances per se, are well understood, and need not to be further noticed here to distinguish them from the case before us. If it were admitted that this ditch, by reason of its obstruction to the use of the public streets, at the time of the acts complained of, was a nuisance, it must also be admitted that it was not a nuisance per se. It was constructed for a necessary, useful and lawful purpose, was used for such purpose, and therefore in its nature was not a nuisance, as a matter of law. Nor as a matter of fact was it a nuisance while it was no hurt, detriment, or offense to the public, or to any private citizen. If, then, it has

become a nuisance, it is by reason of a change of circumstances brought about neither by the ditch itself, nor its use. Indeed, the sole matter complained of, to warrant its being regarded as a nuisance, is the absence of bridges at street crossings. The town has become populous; its growth has extended beyond the ditch and along its line for a great distance; streets laid out across its course have come to be traveled so much, that without bridges, the ditch, as appears by the testimony, has become inconvenient, detrimental, and an obstruction to the full, safe and lawful use of such streets as highways by the public. To this extent, and from these causes outside the ditch and its use per se, has the ditch come to be a public nuisance, if, as a matter of fact, it is such. But whether it is such or not is a fact which must first be ascertained by judicial determination before it can be lawfully abated, either by the public or by a private person. In Joyce vs. Woods (78 Ky., 386, 388) the court said: There was no judicial determination that there was a nuisance, and no opportunity offered the owner of the lot to contest that matter. Under the exercise of the police power, it may be conceded that municipalities can declare and abate nuisances in cases of necessity, without citation and without adjudication as to whether there is in fact a nuisance. But whenever the action of the municipality in declaring and abating a nuisance goes so far as to fix a burden upon the owner of the property, he is entitled to be heard upon the question as to the existence of the nuisance. This right to a hearing upon this question may come before or after the nuisance is abated, as circumstances may require, but there must be an opportunity offered him to be heard upon that matter before his property can be loaded with the cost of the removal of the nuisance. To the extent that property is thus burdened by the action of the city council, when there is no necessity to precipitate action without adjudication, the owner is deprived of his property, regardless of "the law of the land." The meaning of that provision of the constitution has generally been construed to be a law that hears before condemning, and arrives at a judgment for the divestiture of the rights of property through what is ordinarily understood to be judicial process - the general rules that govern society in reference, to the rights of property; and it is only in extreme cases, where the preservation and repose of society or the protection of the property rights of a large class of the community absolutely require a departure, that the courts recognize any exception. In this case there is no pretense of a necessity for precipitate action. There is no reason why appellant should not have been permitted to test the question as to the existence of the nuisance. In Everett vs. Marquette (53 Mich., 450, 451) the court, per Cooley, J., said: But it is not necessary in this case to determine whether the permission given by the village council was in due form for the purposes of a permanent appropriation, or even whether the council had the power to consent to such an appropriation. It is undoubted that the council had general control of the streets under the village charter; and it was a part of its duty to prevent the creation of any public nuisance within them. It is not to be assumed that consent would have been given to such a nuisance, and when, by formal resolution the council assumed to give permission to complainant to make the openings and build the stairways complained of, it must have been done in the belief that no public inconvenience would follow. If the permission was effectual for no other purpose, it at least rebutted any presumption which might otherwise have existed, that this partial appropriation of the street was per se a nuisance.

If the permission was a mere license, and the subsequent action of the city council is to be regarded as a revocation of the license, it does not follow that the plaintiff has by the revocation immediately been converted into a wrongdoer. The question will then be whether the act of the complainant in maintaining his structures constitutes a public nuisance; and while the city council is entitled, under its supervisory control of the public streets, to consider and pass upon that question for the purpose of deciding upon the institution of legal proceedings for abatement, it cannot make itself the judge. Maintaining a nuisance is a public offense; and the fact, as in other cases of alleged criminality, is to be tried on proper accusation and in the regular courts. The mere fact that the party makes use of some part of a public street for his private purposes does not make out the public offense. This was decided in People vs. Carpenter (1 Mich., 273), and has never been doubted in this State. The city in this case proceeding in an act of destruction on an assumption that the structures were already condemned as illegal. This was unwarranted, and it was quite right that the action should be restrained. The above authorities are collated in Judge Dillon's work on Municipal Corporations, fifth edition, section 684, with the following comment by the author: It is to secure and promote the public health, safety, and convenience that municipal corporations are so generally and so liberally endowed with power to prevent and abate nuisances. This authority and its summary exercise may be constitutionally conferred on the incorporated place, and it authorizes its council to act against that which comes within the legal notion of a nuisance; but such power, conferred in general terms, cannot be taken to authorize the extrajudicial condemnation and destruction of that as a nuisance which, in its nature, situation, or use, is not such. The questions discussed in this august array of authorities are exactly those of the present case, and the controlling principles and the reasoning upon which they are founded are so fully and lucidly set forth as to justify us in refraining from comment of our own. It is clear that municipal councils have, under the code, the power to declare and abate nuisances, but it is equally clear that they do not have the power to find as a fact that a particular thing is a nuisance when such thing is not a nuisance per se; nor can they authorize the extrajudicial condemnation and destruction of that as a nuisance which in its nature, situation, or use is not such. These things must be determined in the ordinary courts of law. In the present case it is certain that the ice factory of the plaintiff is not a nuisance per se. It is a legitimate industry, beneficial to the people, and conducive to their health and comfort. If it be in fact a nuisance due to the manner of its operation, that question cannot de determined by a mere resolution of the board. The petitioner is entitled to a fair and impartial hearing before a judicial tribunal. The respondent has, we think, joined issued by its answer denying that it was intending to proceed with the abatement of the alleged nuisance by arbitrary administrative proceedings. This is the issue of the present case, and upon its determination depends whether the injunction should be made permanent (but limited in its scope to prohibiting the closing of petitioner's factory by

administrative action), or whether the injunction should be dissolved, which will be done in case it be shown that the municipal officials intend to proceed with the abatement of the alleged nuisance in an orderly and legal manner. It is said that the plaintiff cannot be compelled to build its smokestack higher if said stack is in fact a nuisance, for the reason that the stack was built under authority granted by the defendant, and in accordance with the prescribed requirements. If the charter or license does not expressly subject the business or industry to the exercise of the police power by the State, it is conceded by the great preponderance of authority that such a reservation is implied to the extent that may be reasonably necessary for the public welfare. (Freud, Police Power, 361 et seq,and 513 et seq.) For the foregoing reasons, the order sustaining the plaintiff's demurrer to the defendant's answer is reversed. The record will be returned to the court whence it came with instructions to proceed with the trial of the cause in accordance with this opinion. No costs will be allowed in this instance. So ordered.chanroblesvirtualaw

45. EN BANC G.R. No. L-39810 August 31, 1934

BENITO TAN CHAT, ET AL., Plaintiff-Appellee, vs. THE MUNICIPALITY OF ILOILO, Defendant-Appellant. IMPERIAL, J.: On December 14, 1931, the municipal council of Iloilo, Province of Iloilo, passed the following ordinance: ORDINANCE NO. 10 - AMENDING ORDINANCE NO. 7, SERIES OF 1931 Be in acted by the Municipal Council of Iloilo, Province of Iloilo, by authority of Act 2711, known as the Revised Administrative Code: Ordinance No. 7, series of 1931, is hereby amended so that the same will read as follows: Section 1. The story and sale of lumber and the keeping of lumber stores are prohibited on the following streets: Jose Ma. Basa, Andres Bonifacio, Iznart, Ledesma (from Gay Square to Mabini Street), P. Arroyo, General Hughes, General Blanco, Rosario, Progreso, General Luna (from Iznart to Jalandoni), Aldeguer, Zamora, Delgado, Rizal (from Zamora to Iznart), Marina, Sto. Nio, Arsenal, Ortiz and Cotta Drive:Provided, That the lumber stores on said streets Jose Ma. Basa, Andres Bonifacio, Iznart, Ledesma (from Gay Square to Mabini Street), P. Arroyo, General Hughes, General Blanco, Rosario, Progreso, General Luna (from Iznart to Jalandoni), Aldeguer, Zamora, Delgado, Rizal (from Zamora to Iznart), Marina, Sto. Nio, Arsenal, Ortiz And Cotta Drive, which this municipal council considers as public nuisance, are given six (6) months to move, from the date this ordinance takes effect; Sec. 2. Violation of this ordinance shall be punished with a fine not to exceed two hundred pesos (P200), or imprisonment not to exceed six (6) months or both penalties in the direction of the court; Sec. 3. This ordinance shall take effect on January 1, 1932. Approved by the Municipal Council in its special session held on December 14, 1931. - Adopted unanimously. The plaintiffs, merchants residing in said city, instituted an action in the Court of First Instance of the province for the purpose of annulling said ordinance, alleging that the same is illegal and in violation of their rights. Upon a bond duly filed by them a writ of preliminary injunction was issued which continues in force up to this time.

In its answer the defendant interposed the following special defenses: 3. That the streets named in ordinance No. 10, series of 1931, referred to in the fourth paragraph of the complaint, constitute the most important commercial and residential zone and the most thickly populated section of the down town district of this municipality of Iloilo, capital of this Province of Iloilo; and particularly Iznart Street is of the greatest importance because of said street are located numerous and important commercial establishments and beautiful and costly commercial and residential buildings, besides being the principal thoroughfare used by the residents of the downtown district of Iloilo in going to various public offices, centers of learning and charitable institutions, and to many of the municipalities of this province and vice versa. 4. That in its ordinances No. 1, series of 1911; No. 14 (15), series of 1913; No. 9, series of 1914; No. 6, series of 1920, the defendant following a plan of expansion, urbanization, beautification and the public safety of its inhabitants, has declared the streets claimed the streets enumerated in ordinance No. 10, series of 1931, referred to in paragraph 4 of the complaint, as zones for strong material and fire-proof buildings. 5. That in violation of the ordinances mentioned in the preceding paragraph, the plaintiff residing on Iznart Street and other persons and entities residing on the other streets referred to in the ordinance mentioned in paragraph 4 of the complaint, have constructed ugly and unsightly buildings, without protection against fire and the spread thereof, wherein they have operated and are operating sawmills and have piled and are piling large quantities of lumber and sawdust, thus marring the beauty of said streets and creating a public nuisance and a source of fire which constantly threatens with destruction and loss of valuable business and individual properties, particularly, as far as this case is concerned, those properties mentioned in paragraph 3 of this answer. 6. That in accordance with the plan of urbanization and public safety mentioned in paragraph 4 of this answer, and in order to abate the public nuisance caused by the plaintiffs and others as described in the preceedings paragraph, and in pursuance of the powers conferred by sections 2238, 2242 (h), and 2243 (c), of the Administrative Code, Act 2711, this last section as amended by Act 3259, the municipal council of Iloilo has passed ordinance No. 10, series of 1931, referred to in paragraph 4 of the complaint and consequently said ordinance is legal and valid. 7. That the defendant has given the plaintiffs ample and reasonable time to enable them to remove and transfer their lumber stores and sawmills above mentioned, to some other place not prohibited by the ordinance, but they refused and still refuse to do so without legal excuse or justification. The defendant appealed from the judgment rendered holding null, illegal and unconstitutional said ordinance, and declaring final and perpetual the preliminary injunction theretofore issued, with costs. It appears from the evidence that the plaintiffs are lumber merchants with their place of business on Iznart Street, some of them having opened business previous to the year 1931, and constructed their buildings of strong material with galvanized iron roofing, some of them built on

their own land and others on leased land. Inside said buildings sawed lumber is stored and the premises blocks and big pieces of lumber are deposited, which are sawed by means of a small sawmill run by petroleum belonging to the plaintiff Benito Tan Chat. The loading of sawed lumber sold by these merchants is usually done within said buildings without anoyance to the neighbors nor to passers-by. The defendant alleges that the following errors were committed in the judgment: I. The lower court erred in holding that ordinance No. 10, series of 1931, of the municipality of Iloilo is null and void. II. The lower court committed error in holding that the defendant-appellant was not empowered to regulate and prohibit plaintiff-appellees' lumber business and yards, and by not declaring them as a nuisance within a certain area of the townsite of Iloilo. III. The lower court erred in denying defendant-appellant to establish the fact that on both sides of Iznart Street of the municipality of Iloilo there are costly and beautiful large buildings for commercial or store and residential purposes immediately adjoining the saw-mills, lumber business and yards belonging to plaintiff-appellees. In our opinion the question to be determined is whether or not the ordinance in question was enacted by the defendant in the exercise of the powers conferred upon it by the Legislature, in other words, in the exercise of its police power including the power to abate public nuisances and to divide its territory into commercial and residential zones. Such powers are enumerated in sections 2238, 2242, and 2243 of the Revised Administrative code. The provisions applicable to the instant case are as follows: Sec. 2238. General power of council t enact ordinances and make regulations.-The municipal council shall enact such ordinances and make such regulations, not repugnant to law, as may be necessary to carry in effect and discharge the powers and duties conferred upon it by law and such as shall seem necessary and proper to provide for the health and safety, promote the prosperity, improve the morals, peace, good order, comfort, and convinience of the municipality and the inhabitants thereof, and for the protection of property therein. Sec. 2242. Certain legislative powers of mandatory character.-It shall be the duty of the municipal council, comformably with law: xxx (h) To declare and abate nuisance. Sec. 2243. Certain legislative powers of discretionary character.-The municipality council shall have authority to exercise the following discretionary powers: xxx xxx xxx xxx xxx

(c) To establish fire limits in populous centers, prescribe the kinds of buildings that may be constructed or repaired within them, and issue permits for the erection or repair thereof, charging a fee which shall be determined by the municipal council and which shall not be less than two pesos for each building permit and one peso for each repair permit issued. The fees collected under the provisions of this subsection shall accrue to the municipal school fund. By virtue of the police power and express provisions of section 2242 (h) of the Revised Administrative Code, there is no question that the municipalities have power to enact ordinances for the purpose of abating public nuisances. (Switzer vs. Municipality of Cebu, 20 Phil., 111; Iloilo Ice & Cold Storage C. vs. Municipal Council of Iloilo, 24 Phil., 471.) The question which now arises in connection herewith is whether or not the sawmill and lumber stores of the plaintiffs constitute nuisance per se or per accidens. Bearing in mind the nature of such business and the indisputable fact that the conduct thereof necessarily disturbs and annoys passer-by and neighbors, we do not hesitate to declare that said business constitutes nuisance per accidens or per se. In the case of State vs. Rosenstein (181 N.W., 17), the Supreme Court of Minnesota said: It cannot seriously be doubted that the matter of the location, and to an extent the condition and care of lumber yards, where large quantities of lumber and building material are accumulated in piles and tiers of piles are matters proper for appropriate police regulation and control. The location of such yards may, even though properly cared for by the owner, become a fire menace and a source of danger to and destruction of surrounding property, a rendezvous for thieves and other violators of the law, and their location at least should be in control of the proper municipal authorities of every city and village having a population and build-up district sufficiently large to render them or their use a menace to public order and safety. The Legislature could itself by appropriate statutory provisions regulate the subject, and may deligate the authority to local municipalities. That the authority is fully vested in the city of Minneapolis by the quoted provisions of its charter is clear. It is there granted in clear terms and is in no way restricted by the proviso added thereto, as above quoted, except perhaps that regulations imposed by city ordinances existing at the time the present charter power was granted may not be changed. But whether the earlier regulations may be changed or modified is not here involved. The authority thus conferred upon the city is full and complete and sustains the ordinance in question. The ordinance clearly states that the sawmill and the sale of lumber by the plaintiff on Iznart Street constitute public nuisances; and although the question of fact herein involved may properly be reviewed by the courts, the evidence of record sufficiently justifies such conclusion. The power of the municipalities, in the exercise of their police power, to regulate and abate public nuisances is indisputable, when the measure taken that end is sound and reasonable, and redounds to the benefit of the locality. Such power has been expressly delegatedly by the Legislature according to the section above cited. One of the most usual powers enjoyed by municipal corporations is that of suppressing nuisances. The abatement of nuisances by municipal corporations is a governmental function. The legislature may, and often does, confer such power upon them. The power may arise by

express grant or by necessary implication. It usually is enjoyed as part of the police power, especially that part of the police power dealing with the protection of the health and of the inhabitants of the municipal corporation. And the exercise of the power is generally considered as a proper municipal function which is the duty of municipal corporations to exercise. The power to abate nuisances may extend to abate nuisances created by public utilities. Primarily it is within the power of the municipal authorities to determine and declare what shall constitute a nuisance. A large discretion rests with the municipal governing body in determining what constitutes nuisances. But the power must be exercised reasonably and not arbitrarily. The declaration by municipal authorities that a thing is a nuisance is not a final determination of the question; it is subject to review by the courts both as to its reasonableness and as to the thing inveighed against being in fact a nuisance. A municipal corporation cannot make a thing a nuisance by merely declaring it to be such. Even though the corporation is empowered to declare what shall constitute a nuisance, it cannot declare that to be a nuisance which is not so in fact; it cannot arbitrarily and without support reason or fact declare that which is harmless a nuisance. The power is limited to such things as the common law or statute declares to be nuisances. But the power may extend to those things which in their nature may be nuisances but as to which there may be honest differences of opinion in partial minds. Things which are not in their nature nuisances but which may become so by reason of their locality, surroundings, or the manner in which they may be conducted, managed, etc., may, and can only, be declared nuisances by municipal corporations when they are such in fact. The power does not extend to include the power to suppress acts merely vicious or immoral. But the power of the municipal corporation over nuisances may tend to authorize it to prevent a condition likely to become detrimental to the public health as much as it is to abate such conditions after the evil consequences appear. In so far as the legislature may declare nuisances, a municipal corporation may be empowered to declare by ordinance or by-law things or acts nuisances, although they may not be such in the absence of such ordinance or by-law. The power to regulate does not authorize entire prohibition." (43 C.J., pp. 401-404.) The next question relates to the establishment of industrial, commercial, and residential zones. This power of municipal corporations is recognized in almost all jurisdictions. It is derived from the police power itself and it is exercised for the protection and benefit of the residents of a locality. The power of municipal corporations to enact zoning regulations may be derived from constitutional or statutory provisions. Within its constitutional limitations the legislature may authorize such enactment. The power may also be derived directly from the constitution of the state; and state constitutional provisions conferring the power have been upheld as against the objection that they violated the federal constitution as a denial; of the equal protection of the law, or discrimination. Also, the statutes conferring the power have been upheld as against the objection that they were violative of the federal constitution. (43 C. J., pp. 333, 334.) It has been suggested that the police power residing in the state legislature is sufficient to authorize the enactment of zoning statutes, if done wisely; that zoning under the power of eminent domain is unwise; and that there is no necessity for constitutional amendment to provide for the zoning. (Ibid., p. 334.)

As a general rule, subject to the limitations to be noted hereinafter, municipal corporations may enjoy the right or power to enact reasonable zoning regulations. Regulations to that effect have been upheld as against the objection that they were unconstitutional, as denial of due process or equal protection of the law, and that they were discriminatory. The power is not an inherent one; it can be exercised only when it is expressly conferred on the municipal corporation or rises by necessary implication. While it has been held that the power to enact certain zoning regulations cannot be exercised as an incident of the municipal police power, the weight of authority is to the effect that reasonable zoning regulations may be proper exercise of the municipal police power. . . . (Ibid., pp. 334, 335.) In the case of People vs. Cruz (54 Phil., 24), this court said: It has been definitely settled both Philippine and American cases that in the exercise of their police power, municipal corporations may enact ordinances and regulations on zonification. (43 Copus Juris, 334.) Within the powers granted to municipal councils by section 2238 of the Revised Administrative Code, the municipal council of Cabanatuan was authorized to enact the zonification ordinance here in question. If the municipal council of Cabanatuan was authorized to establish said zone, it was likewise authorized to determine the kinds of machinery that might be installed therein. In prohibiting the installation within the zone of all kinds of machinery save those excepted in the ordinance, the municipal council has done no more than regulate their installation. In the case of Seng Kee & Co. vs. Earnshaw and Piatt (56 Phil., 204), in discussing the power of the City of Manila to enact ordinances establishing industrial and residential zones, this court said: There can no doubt that the City of Manila has the power to divide its territory into residential and industrial zones, and to prescribe that offensive and unwholesum trades and occupations are to be established exclusively in the latter zone. "The benefits to be derived by cities adopting such regulations (zoning) may be summarized as follows: They attract a desirable and assure a permanent citizenship; they foster pride in and attachment to the city; they promote happiness and contentment; they stabilize the use and value of property and promote the peace, tranquillity, and good order of the city. We do not hesitate to say that the attainment of these objects affords a legitimate field for exercise of the police power. He who owns property in such a district is not deprived of its use by such regulations. He may not use it to the desecration of the community constitutes no unreasonable or permanent hardship and results in no unjust burden." (State ex rel. Carter vs. Harper, 182 Wis., 148.) "It is a matter definitely settled by both Philippine and American cases, and the defendantappellant so admits, that municipal corporations may, in the exercise of their police power, enact ordinances or regulations on zonification (43 Corpus Juris, 334). Within the powers granted to municipal councils in section 2238 of the Revised Administrative Code, the municipal council of Cabanatuan was authorized to enact the zonification ordinance with which we are now concerned." (People vs. Cruz, 54 Phil., 24,27.)

Likewise, it cannot be denied that the City of Manila has the authority, derived from the police power, of forbidding the appellant to continue the manufacture of toyo in the zone were it is now situated, which has been declared residential, without providing for any compensation; these provisions of the Revised Ordinances do not in fact deprive Manila residents of their property without just compensation, or it deprives them neither the ownership nor of the possession thereof, but simply restricts them from the use of such property at certain places for the good of the majority of inhabitants. The 14th Amendment protects the citizen in his right to engage in any lawful business, but it does not prevent legislation intended to regulate useful occupations which, because of their nature or location, may prove injurious or offensive to the public. (Murphy vs. California, 225 U.S., 623.) Police regulations are not taken under the right of eminent domain or a deprivation of property without due process of law. Thus, a prohibition of the use of property, for purposes that are declared by valid legislation to be injurious to the health, morals, or safety of the community cannot, in any sense, be deemed a taking or an appropriation of property for the public benefit, as such legislation does not disturb the owner in the control or use of his property for lawful purposes, nor restrict his right to dispose of it. It is only a declaration by the state that its use by anyone for certain forbidden purposes is prejudicial to the public interests, the exercise of the police power by the destruction of the property, which is itself a public nuisance, or the prohibition of its use in a particular way, whereby its value becomes depreciated, is very different from taking property for public use, or from depriving a person of his property without due process of law. (Mugler vs. Kansas, 123 U.S., 623; 8 Sup. Ct., 273; 31 L. ed., 205.) In the case of Euclid vs. Ambler Realty Co., 71 Law. ed., 303,310 et seq., the Supreme Court of the United States said: Building zone laws are of modern origin. They began in this country about twenty-five years ago. Until recent years, urban life was comparatively simple; but with the great increase and concentration of population, problems have developed, and constantly are developing, which require, and will continue to require, additional restrictions in respect of the use and occupation of private lands in urban communities. Regulations, the wisdom, necessity and validity of which, as applied to existing conditions, are so apparent that they are now uniformly sustained, a century ago, or even half a century ago, probably would have been rejected as arbitrary and oppressive. Such regulations are sustained, under the complex conditions of our day, for reasons analogous to those who justify traffic regulations, which, before the advent of automobiles and rapid transit street railways, would have been condemned as fatally arbitrary and unreasonable. And in this there is no inconsistency, for while the meaning of constitutional guaranties never varies, the scope of their application must expand or contract to meet the new and different conditions which are constantly coming within the field of their operation. In a changing world, it is impossible that it should be otherwise. But although a degree of elasticity is thus imparted, not to the meaning, but to the applicationof constitutional principles, statutes, and ordinances, which after giving due weight to the new conditions, are found clearly not to conform to the Constitution, of course, must fall.

The ordinance now under review and all similar laws and regulations must find their justification in some aspect of the police power, asserted for the public welfare. The line in which in this field separates the legitimate from the illegitimate assumption of power is not capable of precise delimitation. It varies with the circumstances and conditions. A regulatory zoning ordinance, which would be clearly valid as applied to the great cities, might be clearly invalid as applied to rural communities. In solving doubts, the maxim "sic utere tuo ut alienum non lead as," which lies at the foundation of so much of the common law of nuisances, ordinarily will furnish a fairly clew. And the law of nuisances, likewise, may be consulted, not for the purpose of controlling, but for the greatful aid of its analogies in the process of ascertaining the scope of, the power. Thus the question whether the power exists to forbid the erection of a building of a particular kind or for a particular use, like the question whether a particular thing is a nuisance, is to be determined, not by an abstract consideration of the building or of the thing considered apart, but by considering it in connection with the circumstances and the locality. Sturges vs. Bridgman, L. R. 11 Ch. Div., 852, 865-C. A. nuisance may be merely a right thing in the wrong place, - like a pig in the parlor instead of the barn- yard. If the validity of the legislative classification for zoning purposes be fairly debatable, the legislative judgment must be allowed to control. (Radice vs. New York, 264 U. S., 292, 294; 68 L. ed., 690, 694; 44 Sup. Ct. Rep., 325.) There is no serious difference of opinion in respect of the validity of laws and regulations fixing the height of buildings within reasonable limits, the character of materials and methods of construction, and the joining area which must be left open, in order to minimize the danger of fire or collapse, the evils of overcrowding and the like, and excluding from residential sections offensive trades, industries and structures likely to create a niusances. (See Welch vs. Swasey, 214 U. S., 91; 53 L. ed., 923; 29 Sup. Ct. Rep., 567; Hadacheck vs. Sebastian, 239 U.S., 394; 60 L. ed., 348; 36 Sup. Ct. Rep., 143; Ann. Cas. 1917 B, 927; Reinman vs. Little Rock, 237 U.S., 171; 59 L. ed., 900; 35 Sup. Ct. Rep., 511; Thomas Cusak Co. vs. Chicago, 242 U.S., 526, 529, 530; 61 L. ed., 472, 475; L. R. A., 1918 A, 136; 37 Sup. Ct. Rep., 190; Ann. Cas. 1917 C, 594.) Here, however, the exclusion is in general terms of all industrial establishments, and it may thereby happen that not only offensive or dangerous industries will be excluded, but those which are neither offensive nor dangerous will share the same fate. But this is no more than happens in respect of many practice-forbidding laws which this court has upheld, although drawn in general terms so as to include individual cases that may turn out to be innocuous in themselves. (Hebe Co. vs. Shaw, 248 U.S., 297, 303; 63 L. ed., 255, 258; 39 Sup. Ct. Rep., 125; Pierce Oil Corp. vs. Hope, 248 U.S., 498, 500; 63 L. ed., 381, 39 Sup. Ct. Rep., 172.) The inclusion of a reasonable margin to insure effective enforcement will not put upon a law, otherwise valid the stamp of invalidity. Such laws may also find their jurisdiction in the fact that, in some fields, the bad fades into the good by such insensible degrees that the two are not capable of being readily distinguished and separated in terms of legislation. In the light of these considerations, we are not prepared to say that the end in view was not sufficient to justify the general rule of the ordinance, although some industries of an innocent character might fall within the prescribed class. It cannot be said that the ordinance in this respect "passes the bounds of reason and assumes the character of merely flat." (Putiry Extract & Tonic Co. vs. Lynch, 226 U.S., 192, 204; 57 L. ed., 184, 188; 33 Sup. Ct. Rep., 44.) Moreover, the restrictive provisions of the ordinance in this particular may be sustained upon the principles applicable to the broader exclusion from residential districts of all business and trade structures presently to be discussed.

In the case of In re Montgomery (163 Cal., 457), the Supreme Court of California said: An ordinance of the City of Los Angeles, dividing the territory included in the municipality into industrial and residential districts, and prohibiting the maintenance or conduct within the residential district of "any stone-crusher rolling-mill, machine-shop, planning-mill, carpetbeating establishment, hay-barn, woodyard, lumber-yard, public laundry pr wash-house," is a legitimate and constitutional exercise of the police power of the city. And in the case of State vs. McDonald (121 So. R., 613, 614), the Supreme Court of Louisiana said: Provision of zoning ordinance requiring that businesses in affected area must liquidate within the year and remove from area held not harsh, arbitrary or unreasonable. Discretion of municipal authorities in enacting zoning ordinances under Const. 1921, art. 14, sec. 29, and Act No. 27 of 1918, and Act No. 240 of 1926, to order removal of business establishment from residential districts, and to fix time limits, will not be interfered with by courts, unless its exercise is found to be manifestly and palpably hostile and unreasonable. The argument that the provisions of ordinance giving the plaintiffs a fixed a period to move their sawmill and lumber stores to some other adequate place is unconsitutional, on the ground that said measure is confiscatory and does not provide adequate compensation, is untenable, for the reason that in this case the city of Iloilo does not take over the ownership of said business within the limits established in the ordinance, and said prohibition is within the powers conferred upon the municipality. In enacting the ordinance in question the city of Iloilo has done nothing but to safeguard the health, safety, and welfare of its inhabitants, and it is perfectly fair that herein plaintiffs should abide by the provisions thereof which are in accordance with the old and wellknown maxim; salus populi suprema lex. In view of the foregoing, the above quoted ordinance is hereby declared valid and the judgment appealed from is reversed, with costs of both instances against the plaintiff-appellees. The preliminary injunction heretofore issued is set aside. So ordered.

46. EN BANC G.R. No. L-45519 April 26, 1939

RUFINA SALAO and LUCIO LUCAS, Plaintiffs-Appellants, vs. TEOFILO C. SANTOS, municipal president of Malabon, Rizal, and ELIGIO GOZON, intervenor, defendantsappellees. MORAN, J.: The present action was instituted by plaintiffs Rufina Salao and Lucio Lucas, now appellants, to restrain the defendant, Teofilo C. Santos, as municipal president of Malabon, Rizal, from enforcing compliance with his letter of October 22, 1935, wherein said plaintiffs were directed to observe he requirements of ordinance No. 23, series of 1929, of said municipality, on the matter of the operation of their smoked fish factory (umbuyan). The ordinance reads in part as follows: ARTICULO 1. Se prohibe terminantemente la fabricacion de toda materia, objeto de industria que requiere el uso de combustible en edificios que no sean de materiales fuertes con techo de hierro galvanizado o de teja. ART. 2. Todos los propietarios administradores, industriales o encargados de todo edificio, camarin o local destinado para la fabricacion de cualquier articulo de materia prima que requiere el uso de combustibles para su transformacion en materias alimenticias o de otra industria, proveeran el edificio, camarin o local destinado al efecto de una chimenea o tubo de escape que sera de metal o de hierro galvanizado o de carbon y tendra una altura adecuada, de modo que el humo, carbon o chispas que despiden no perjudique a los edificios contiguos, ni constituyen el mayor peligro de conflagracion. ART. 3. Para los efectos de esta ordenanza, toda fabricacion de ladrillos, alfareria o cal, trituracion, molienda o quema de piedras, huesos o conchas, la fabricacion de fosforos y otros negocios de caracter antihigienicos, nocivo, ofensivo o peligroso, guardaran una distancia de 40 metros de las casas o edificios contiguos; y la fabricacion de materias alimenticias asi como tambien la quema de los desperdicios de tabacos, guardaran una distancia de 20 metros de las casas o edificios a su alrededor. . . . The evidence discloses that for many years prior to the enactment of this ordinance, plaintiffs had already established a smoked fish factory in the barrio of Baritan, Malabon, Rizal, and had continually operated the same since then. On October 30, 1933, Lucio Lucas, one of the plaintiffs herein, was criminally prosecuted in the justice of the peace court of Malabon for noncompliance with the requirements of the ordinance aforementioned, but was acquitted to the charge. Thereafter, the intervenor herein, Eligio Gozon. whose house is situated near the smoked fish factory of the appellants, denounced said factory as a nuisance, by lodging a complaint in the central office of the Bureau of Health seeking relief against its continuance. An investigation was then conducted by the health authorities, and as a result thereof it was found that appellants' smoked fish factory was being operated not in accordance with the requirements of said

ordinance. Whereupon, the Bureau of Health and the district health office took steps to enforce the ordinance and to that effect the president of the sanitary division of the municipality addressed a letter to one of the plaintiffs, requesting compliance therewith. Compliance was refused on the ground that said plaintiff was not within the purview of the ordinance in accordance with the decision of the justice of the peace court above stated. The health authorities then addressed themselves to the municipal president who, for some reason or another, failed or omitted to act on the matter. Accordingly, the Department of the Interior, on the application of Eligio Gozon, intervened, and after several exchanges of correspondence with the provincial governor, the municipal president was required to enforce the order of the health authorities. Consequently, the municipal president addressed to one of the plaintiffs herein the letter of October 22, 1935, aforementioned., requiring the latter to comply with the ordinance of 1929 within 30 days on threat of having his license revoked. On October 10, 1935, however, the municipal council of Malabon had already enacted ordinance No. 10, series of 1935, amending ordinance No. 23 of 1929, the pertinent provisions of which follow: ARTICLE I. Ordinance No. 23, series of 1929, is hereby amended by adding a new article thereto which reads as follows: "Art. 3-(3). That this ordinance shall be effective only with regard to those that will be established after the approval hereof, and shall not be applicable to those already operating at the time of the approval of this ordinance." ARTICLE II. The effectivity of this ordinance shall retroact to the date of the approval of ordinance No. 23, series of 1929. Plaintiffs, in view of the president's order, instituted the present action for injunction to restrain him from enforcing his order. The trial court dismissed the action. Hence, this appeal. It is not disputed that appellants' smoked fish factory was established long before the enactment of the ordinance in question. Municipal ordinances, like all statutes, are to be construed as having only prospective operation unless the intention to give them retrospective effect is expressly declared or is necessarily implied from the language used. There is nothing in the ordinance showing the intention to give it a retrospective effect. On the contrary, it expressly refers to "fabrica o negocio que se ha de levantar" and not to factories already established. That such was the intention of the ordinance of 1929 is confirmed by ordinance No. 10 of 1935, which expressly provides that the amended ordinance "shall not be applicable to those already operating at the time of the approval" of the same. This amendatory ordinance is valid, despite the allegation to the effect that the municipal president intended its enactment for the protection of appellants and to frustrate the order of the health authorities. Whatever might have been the personal motives of the municipal president, no improper motive can be attributed to the municipal council in its enactment, and, therefore, the same stands as the expression of the true intention of the body. Besides, this amendatory ordinance was duly approved by the provincial board in its resolution No. 1874. Moreover, nuisances are of two kinds: nuisance per se and nuisance per accidens. The first is recognized as a nuisance under any and all circumstances, because it constitutes a direct menace

to public health or safety, and, for that reason, may be abated summarily under the undefined law of necessity. The second is that which depends upon certain conditions and circumstances, and its existence being a question of fact, it cannot be abated without due hearing thereon in a tribunal authorized to decide whether such a thing does in law constitute a nuisance. (Iloilo Ice and Cold Storage Co. vs. Municipal Council of Iloilo, 24 Phil., 471; Monteverde vs. Generoso, 52 Phil., 123, 127.) Appellants' smoked fish factory is not a nuisance per se. It is a legitimate industry. If it be, in fact, a nuisance due to the manner of its operation, then it would be merely a nuisance per accidens. (Iloilo Ice and Cold Storage Co.vs. Municipal Council of Iloilo, supra; Monteverde vs. Generoso, supra.) Consequently, the order of the municipal president and those of the health authorities issued with a view to the summary abatement of what they have concluded, by their own findings, as a nuisance, are null and void there having been no hearing in court to the effect. Judgment is reversed, with costs against appellees.

47. FIRST DIVISION [G.R. No. L-8191. February 27, 1956.] DIOSDADO A. SITCHON, ET AL., Petitioners-Appellants, vs. ALEJO AQUINO, in his capacity as City Engineer of the City of Manila, Respondent-Appellee. [G.R. No. L-8397. February 27, 1956] RICARDO DE LA CRUZ, ET AL., Petitioners-Appellants, vs. ALEJO AQUINO, in his capacity as City Engineer of the City of Manila, Respondent-Appellee. [G.R. No. L-8500. February 27, 1956] FELINO PEA, ET AL., Petitioners-Appellants, vs. ALEJO AQUINO, in his capacity as City Engineer of the City of Manila, Respondent-Appellee. [G.R. No. L-8513. February 27, 1956] SANTIAGO BROTAMONTE, ET AL., Petitioners-Appellants, vs. ALEJO AQUINO, in his capacity as City Engineer of the City of Manila, Respondent-Appellee. [G.R. No. L-8516. February 27, 1956] ERNESTO NAVARRO, ET AL., Petitioners-Appellants, vs. ALEJO AQUINO, in his capacity as the City Engineer of the City of Manila, Respondent-Appellee. [G.R. No. L-8620. February 27, 1956] AMADO SAYO, ET AL., Petitioners-Appellants, vs. ALEJO AQUINO, in his capacity as City Engineer of the City of Manila, Respondent-Appellee. DECISION CONCEPCION, J.: These are six (6) class suits against the City Engineer of Manila to enjoin him from carrying out his threat to demolish the houses of Petitioners herein, upon the ground that said houses constitute public nuisances. In due course, the Court of First Instance of Manila rendered separate, but substantially identical, decisions adverse to the Petitioners, who have appealed therefrom directly to this Court. Inasmuch as the fact are not disputed and the same issues have been raised in all these cases, which were jointly heard before this Court, we deem it fit to dispose of the appeals in one decision. 1. Case No. L-8191 (Case No. 21530 of the Court of First Instance of Manila) was instituted by Diosdado A. Sitchon, Luis Gavino and Ponciano Adoremos, in their own behalf and in representation of twenty-two (22) persons, named in an annex to the petition. In 1947 and 1948, said Petitioners occupied portions of the public street known as Calabash Road, City of Manila, and constructed houses thereon, without the consent of the authorities. Later on, some of them paid concession fees or damages, for the use of said portions of the street, to a collector of the city treasurer, who issued receipts with an annotation reading:chanroblesvirtuallawlibrary without prejudice to the order to vacate. On or about July 5, 1952, Respondent City Engineer advised and ordered them to vacate the place and remove their houses therefrom before August 5, 1952, with the warning that otherwise he would effect

the demolition of said houses at their expense. This notice having been unheeded, a demolition team of the office of the City Engineer informed the Petitioners in December, 1953, that their houses would be removed, whereupon the case was instituted for the purpose already stated. At the instance ofPetitioners herein, the lower court issued a writ of preliminary injunction. 2. Case No. L-8397 (Case No. 21755 of the Court of First Instance of Manila) was brought by Ricardo de la Cruz, Isidro Perez and Fernando Figuerroa, in their behalf and in representation of two hundred sixty-seven (267) persons, who, sometime after the liberation of Manila, occupied portions of Antipolo and Algeciras Streets, of said city, and constructed houses thereon, without any authority therefor. Several Petitioners later paid concession fees or damages to a collector of the city treasurer, and were given receipts with the annotation:chanroblesvirtuallawlibrarywithout prejudice to the order to vacate. The constructions were such that the roads and drainage on both sides thereof were obstructed. In some places, the ditches used for drainage purposes were completely obliterated. What is more, said ditches cannot be opened, repaired or placed in proper condition because of said houses. On or about May 15, 1952, Respondent City Engineer advised them to vacate the place and remove their houses within a stated period, with the warning already referred to. Hence, the institution of the case, upon the filing of which a writ of preliminary injunction was issued. 3. Felino Pea, Francisco Morales and Jose Villanueva filed case No. L-8500 (Case No. 21535 of the Court of First Instance of Manila), on their own behalf and in representation of about thirty (30) persons, who, without the aforementioned authority, occupied portions of the street area of R. Papa Extension, City of Manila, sometime after its liberation. As in the preceding cases, several Petitioners paid concession fees or damages to a collector of the city treasurer, without prejudice to the order to vacate, which was given on May 10, 1952, with the warning that should they fail to remove said houses, Respondent would do so, at their expense. Upon being advised, later on, of the intention of Respondents agents to carry out said threat, the corresponding petition was filed and a writ of preliminary injunction secured. 4. Santiago Brotamonte, Godofredo Blanquiso and Salvador Justiniano commenced case No. L8513 (Case No. 21531 of the Court of First Instance of Manila), on their behalf and in representation of forty-two (42) other persons, who, without any authority, occupied portions of the bed of a branch of the Estero de San Miguel, City of Manila, and constructed houses thereon, sometime in 1947 and 1948. As in the cases already mentioned, some of them paid concession fees or damages, without prejudice to the order to vacate, which was given, with the usual warning, in December, 1953. The institution of the case and a writ of preliminary injunction soon followed. 5. In case No. L-8516 (Case No. 21580 of the Court of First Instance of Manila), Ernesto Navarro, Pablo Salas and Herminigildo Digap are Petitioners, on their own behalf and in that of fifteen (15) persons, who, sometime after the liberation of Manila, occupied portions of the bed of the Pasig River, at about the end of Rio Vista Street, San Miguel, Manila, which are covered and uncovered by the tide, and erected houses there on without any authority therefor. Concession fees or damages were paid by some of them, without prejudice to the order to vacate. After giving, on or about June 20, 1952, the corresponding notice and warning, which were not heeded, Respondent threatened to demolish said houses atPetitioners expense, whereupon the case was instituted and a writ of preliminary injunction secured.

6. Case No. L-8620 (Case No. 22143 of the Court of First Instance of Manila) was filed by Amado Sayo, Marciano Lamco and Victor Bernardo, on their behalf and in that of twenty-two (22) other persons, who, in 1946 and 1947, occupied portions of Torres Bugallon, Cavite, Misericordia and Antipolo Streets, in the City of Manila, and constructed houses thereon, without any authority therefor. Some paid monthly rentals and/or damages, and/or concession fees from 1946 to 1951, without prejudice to the order to vacate, which was given on May 1, 1952, with the usual warning, followed, about two (2) years later, by a threat to demolish said houses. Hence, the case, upon the filing of which writ of preliminary injunction was issued. After appropriate proceedings, the Court of First Instance of Manila rendered separate decisions, the dispositive part of which, except in case No. L-8620, is of the following tenor:chanroblesvirtuallawlibrary Por tanto, el Juzgado sobresee esta causa por falta de meritos y ordena al ingeniero de la ciudad de Maniia que haga la demolicion o la remocion de las citadas casas, dentro de quince dias despues de haber avisado al efecto a los aqui recurrentes, y a costa de los mismos. In said case No. L-8620, follows:chanroblesvirtuallawlibrary the lower court rendered judgment as

In view of the foregoing considerations the Court hereby declares:chanroblesvirtuallawlibrary (a) that the houses of all Petitioners in this case erected on the land which forms part of Torres Bugallon, Cavite, Misericordia and Antipolo Streets constitute public nuisance as defined by section 1112 of Ordinance No. 1600 of the City of Manila and by Article 694 paragraphs 4 and 5 of the Civil Code and (b) that the City Engineer of the City of Manila is the official authorized by Article 1112 of Ordinance No. 1600 of the City of Manila and Article 699, paragraph 3 of the Civil Code to abate said public nuisance and charge the expenses thereof to Petitioners. Petitioners contend that said decisions should be reversed upon the ground that, in trying to demolish their respective houses without notice and hearing, the city engineer sought to deprive them of their property without due process of law, apart from the fact that, under Articles 701 and 702 of the new Civil Code, the power to remove public nuisances is vested in the district health officer, not in Respondent city engineer. It should be noted, however, that, before expressing his intent to demolish the houses in question, Respondent had advised and ordered the Petitioners to remove said houses, within the periods stated in the corresponding notices; chan roblesvirtualawlibrarythat Petitioners do not question, and have not questioned, the reasonableness or sufficiency of said periods; chan roblesvirtualawlibraryand that they have never asked Respondent herein to give them an opportunity to show that their houses do not constitute public nuisances. Besides, it is not disputed that said houses are standing on public streets, with the exception of the houses involved in cases Nos. 8513 and 8516, which are built on portions of river beds. It is clear, therefore, that said houses are public nuisances, pursuant to Articles 694 and 695 of the Civil Code of the Philippines, which is Republic Act No. 386, reading:chanroblesvirtuallawlibrary ART. 694. A nuisance is any act, omission, establishment, business, condition of property, or anything else which:chanroblesvirtuallawlibrary (1) Injures or endangers the health or safety of others; chan roblesvirtualawlibraryor

(2) Annoys or offends the senses; chan roblesvirtualawlibraryor (3) Shocks, defies or disregards decency or morality; chan roblesvirtualawlibraryor (4) Obstructs or interferes with the free passage of any public highway or street, or any body of water; chan roblesvirtualawlibraryor (5) Hinders or impairs the use of property. ART. 695. Nuisance is either public or private. A public nuisance affects a community or neighborhood or any considerable number of persons, although the extent of the annoyance, danger or damage upon individuals may be unequal. A private nuisance is one that is not included in the foregoing definition. (Italics supplied.) It is true that Articles 700 and 702 of the same Code provide:chanroblesvirtuallawlibrary ART. 700. The district health officer shall take care that one or all of the remedies against a public nuisance are availed of. ART. 702. The district health officer shall determine whether or not abatement, without judicial proceedings, is the best remedy against a public nuisance. However, section 31 of Republic Act No. 409, the Revised Charter of the City of Manila, specifically places upon the city engineer the duty, among others, to have charge of the cralawcare of cralaw streets, canals and esteros cralaw; chan roblesvirtualawlibraryto prevent the encroachment of private buildings cralawon the streets and public places cralaw; chan roblesvirtualawlibraryto have supervision cralaw of all private docks, wharves, piers cralaw and other property bordering on the harbor, rivers, esteros and waterways cralaw and cralaw issue permits for the construction, repair and removal of the same and enforce all ordinances relating to the same; chan roblesvirtualawlibraryto have the care and custody of all sources of water supply cralaw; chan roblesvirtualawlibraryto cause buildings dangerous to the public to be cralaw; chan roblesvirtualawlibrarytorn down; chan roblesvirtualawlibraryand to order the removal of buildings and structures erected in violation of the ordinances cralaw. Obviously, articles 700 and 702 of Republic Act No. 386, should yield to said section 31 of Republic Act No. 409, not only because the former preceded the latter, but, also, because said section 31 of Republic Act No. 409 is a special provision specifically designed for the City of Manila, whereas said Articles 700 and 702 of the Civil Code are general provisions applicable throughout the Philippines. Moreover, section 1122 of the Revised Ordinance of the City of Manila (No. 1600) explicitly authorizes the action sought to be taken by Respondent herein, by providing:chanroblesvirtuallawlibrary Whenever the owner or person responsible for any unauthorized obstruction shall, after official notice from the proper department, refuse or neglect to remove the same within a reasonable time, such obstruction shall be deemed a public nuisance, and the city engineer is authorized to remove the same at the owners expense. Again, houses constructed, without governmental authority, on public streets and waterways, obstruct at all times the free use by the public of said streets and waterways, and, accordingly, constitute nuisances per se, aside from public nuisances. As such, the summary removal thereof, without judicial process or proceedings may be authorized by the statute or municipal ordinance, despite the due process clause. (66 C.J.S. 733-734.)

The police power of the state justifies the abatement or destruction, by summary proceedings, of whatever may be regarded as a public nuisance; chan roblesvirtualawlibraryand the legislature may authorize the summary abatement of a nuisance without judicial process or proceeding. cralaw The remedy of summary abatement for violation of a municipal ordinance may be used against a public nuisance. (66 C.J.S. 855, 856.) When necessary to insure the public safety, the legislature may under its police power authorize municipal authorities summarily to destroy property without legal process or previous notice to the owner. cralaw It is not an objection to the validity of a police regulation that it does not provide for a hearing or for notice to the owner before his property is subjected to restraint or destruction. (12 Am. Jur. 356, 357.) In the exercise of the police power the state may authorize its officers summarily to abate public nuisances without resort to legal proceedings and without notice or a hearing. Municipal Corporations generally have power to cause the abatement of public nuisances summarily without resort to legal proceedings. (39 Am. Jur. 455, 456, 457.) Being in conformity with the facts and the law, the decisions appealed from are hereby affirmed in toto, and the writs of preliminary injunction issued by the lower court dissolved, with costs against Petitioners-Appellants. It is SO ORDERED.

48. EN BANC G.R. No. L-16815 July 24, 1961

ARSENIO L. CANLAS AND ADENA GONZALES-CANLAS Petitioners, vs. HON. BERNABE DE AQUINO, as Judge of the Court of First Instance of Tarlac and JAIME TAYAG, Respondents. CONCEPCION, J.: Original action for a writ of certiorari to annul an order of the Court of First Instance of Tarlac. On December 11, 1957, petitioners herein, Arsenio L. Canlas and Adena Gonzales-Canlas, who are husband and wife, as well as doctors of medicine by profession, were granted a permit for the construction of a house in the barrio of San Jose, municipality of Concepcion, province of Tarlac. Their purpose was to establish, operate and maintain in said house a private hospital with an accommodation of fifteen (15) beds, two (2) of which would be for charity cases. When half of the house was finished, in January 1958, petitioners opened therein a medical clinic of five (5) emergency beds, one of which was for charity. Subsequently, or on December 1, 1958, they applied from the Director of Hospitals for authority to operate and maintain the aforementioned hospital. Soon thereafter, or on January 14, 1959, the Provincial Board of Tarlac passed a resolution (No. 64) recommending approval of said application, which was approved on August 24, 1959. Meanwhile, or on October 30, 1958, respondent Jaime Tayag had obtained a permit to construct a ricemill in front of the Canlas Clinic, just across the street. It appears, however, that Chapter VII of Municipal Ordinance No. 44 of Concepcion, Tarlac, requires a sanitary permit issued by the local health officer, for operation of any establishment which may exhale foul odor or cause physical discomfort to such degree as to constitute a nuisance. Purporting to act pursuant to such ordinance, the municipal health officer of Concepcion revoked or cancelled the aforementioned permit issued to Tayag, who was advised of this action in a letter of said officer reading: A permit for a construction of a Rice Mill at Bo. San Jose Concepcion, Tarlac, has been granted to you on September 1959, on condition that Municipal Ordinances are strictly served. In view of the fact that we found out a Clinic of Dr. Arsenio Canlas has been established since January, 1958, and according to Sec. 111 Chapter VII Ordinance No. 44 Series of 1952, the operation of a Rice Mill in the above mentioned place is contrary to this Ordinance, thus repealing permit given to you on September 22, 1959. I hope you will not continue the construction of your Rice Mill in accordance with Municipal Ordinance, attached is a true copy of said Ordinance. Inasmuch as Tayag was about to proceed with the construction of his ricemill despite this communication, on or about October 19, 1959, petitioners herein filed, against him, a complaint, which was docketed as Civil Case No. 3512 of the Court of First Instance of Tarlac, setting forth therein the above facts and alleging that should the ricemill be eventually constructed, the

operation of the Canlas Clinic - "which has been in actual operation since January, 1959, rendering hospitalization, medical aid, cure and treatment, not only to the people of the municipality of Concepcion, but, also, to the people of the neighboring municipalities" - would have to be stopped altogether "because the smoke, vapor, palay husk dust and dirt and the constant noise generated from the operation of said ricemill would not be conducive to the quiet, cleanliness, tranquillity and fresh air and wholesome atmosphere needed and prescribed in the hospital area, its environs and surroundings for the health, comfort and well-being of its inmates and patients", and "that the Bureau of Hospitals has made it clear that if and should the said ricemill be eventually constructed and begin operation, the permit already issued for the said hospital . . .would be revoked and cancelled and the Canlas Clinic itself would be ordered closed", thereby working irreparable loss, damage and injury to petitioners herein, who had already spent not less than P40,000 for the construction of their aforementioned house and the equipment necessary for the operation of said hospital. On October 22, 1959, the Court of First Instance of Tarlac, then presided over by Hon. Zoilo Hilario, Judge, issued an order authorizing the issuance of a writ of preliminary injunction, enjoining respondent Tayag from constructing the aforementioned ricemill, upon the filing of a bond in the sum of P1,000.00. Soon later, or on November 4, 1959, respondent Tayag filed an unverified motion for the dissolution of said writ of preliminary injunction, alleging that the same "would work great damage to the defendant who has already spent a considerable sum of money", and that petitioners "can be fully compensated for any damages that they may suffer as respondent Tayag "is not only solvent but is willing to put up a bond in such amount as" the court may fix. Despite the opposition filed by petitioners herein, who contested the truth of these allegations of respondent Tayag, said court, then presided over by Hon. Bernabe de Aquino, Judge, one of the respondents herein, issued an order dated February 4, 1960, granting said motion and dissolving the aforementioned writ of preliminary injunction, upon the filing by Tayag of a bond in the sum P2,000, which was approved by the court on February 8, 1960. A reconsideration of this order having been denied by respondent Judge, petitioners herein instituted the present action to annul said order of February 4, 1960, upon the ground that in issuing the same the aforementioned respondent had acted without or in excess of his jurisdiction, as well as arbitrarily and with grave abuse of discretion, apart from prejudging said Civil Case No. 3512. In his answer to the petition herein, respondent Tayag maintained the legality of the order complained of. He, likewise, annexed to said pleading, as part thereof, his answer to the main action, in which he averred that the municipal health officer of Concepcion, Tarlac, had no authority to revoke the building permit issued to him (Tayag) by the municipal mayor on October 30, 1959; that on January 11, 1960, Chapter VII of Municipal Ordinance No. 14 was amended by Ordinance No. 7, which dispensed with the same permit formerly required, and gave the local health officer no more than the power to promulgate rules and regulations for the operation of the establishments referred to in said Chapter VII; and that to remove doubts, the requisite building permit was reissued to respondent Tayag on January 13, 1960. Petitioners herein are entitled to the writ prayed for. The motion of respondent Tayag for the dissolution of the writ of preliminary injunction issued on October 22, 1959, was unverified. Moreover, Rule 60, section 6, of the Rules of Court, provides:

The injunction may be refused, or, if granted ex parte, may be dissolved, upon the insufficiency of the complaint as shown by the complaint itself or upon affidavits on the part of the defendant, which may be opposed by the plaintiff also by affidavits. It may also be refused, or, if granted ex parte, may be dissolved, if it appears that the plaintiff is entitled to the injunction, but the issuance or continuance thereof, as the case may be, would cause great damage to the defendant, while the plaintiff can be fully compensated for such damages as he may suffer, and the defendant files a bond in an amount fixed by the judge conditioned that the defendant will pay all damages which the plaintiff may suffer by reason of the continuance during the action of the acts complained of. If it appears that he extent of the preliminary injunction granted is too great, it must be modified. On any of these grounds, the defendant may object to the injunction applied for, or may move that the same be dissolved or modified if already granted ex parte. Instead of alleging facts establishing the presence of the conditions prescribed in this section, respondent Tayag merely reproduced the language thereof, in his aforementioned motion, thus relying upon abstract conclusions, without any concrete or specific premise to bear out said conclusions. Again, although, in their opposition to said motion, petitioners impugned the accuracy of the conclusions therein alleged, respondent Judge accepted such conclusions on their face value, without any evidence, or, even affidavit in support thereof. Worst still, it is obvious that, the operation of a hospital is a matter that, not only concerns its owners or operators, but also, if not more particularly affects the health and welfare of the community, and that the damage sustained by the latter, in consequence, either of the obstruction to the proper operation of said hospital or of its closing, can not possibly compensated in full.. Then, too, it would appear that respondent Judge issued the order complained of on account of "very reliable in formation" he had received privately, to the effect that "these days a ricemill can be operated without causing any noise or emitting any smoke in such a way as (not) to be a nuisance to the neighborhood". In his order of March 10, 1960, refusing to reconsider the order of February 4, 1960, respondent stated, by way of justification for his reliance upon said "information", that, immediately after the construction of Tayag's ricemill, the Court intended to inspect the same "and see whether it really can be operated without noise or smoke" and that, if the ricemill is smoke while in was then found to "cause noise and emit smoke while in operation", the court would "immediately enjoin its operation". This process of reasoning entails such a serious error of judgment as to constitute a grave abuse of discretion amounting to excess of jurisdiction. Indeed, the main action was filed by petitioners herein for the purpose of joining and prohibiting Tayag from the constructing a ricemill, so that, upon the construction thereof, said action would become futile. Besides, the intention of respondent Judge to prohibit the continuance of the operation of said ricemill, should it later be found to be a nuisance, is not sufficient to offset the harm already done to the operation of the hospital, specially the injury suffered by the patients therein and the public in general, which are hardly susceptible of estimation or compensation. Needless to say, by permitting Tayag to construct his building, and purchase and install the machinery for the operation of the ricemill, respondent Judge exposed him to much greater damage than that which could possibly have resulted had the writ of preliminary injunction been maintained until the final disposition of the case.

WHEREFORE,, the aforementioned order of February 4, 1960 is hereby annulled, with costs against respondent Jaime Tayag. It is so ordered. chanroble


G.R. No. L-18390 December 20, 1971 PEDRO J. VELASCO, plaintiff-appellant, vs. MANILA ELECTRIC CO., ET AL., defendants-appellees. RESOLUTION

REYES, J.B.L., J.: Both appellant Velasco and appellee Manila Electric have filed their respective motions to reconsider the decision of this Court dated 6 August 1971. For the sake of clarity, the two motions will be here dealt with separately. A - APPELLANT'S MOTION FOR RECONSIDERATION The thrust of this motion is that the decision has incorrectly assessed appellant's damages and unreasonably reduced their amount. It is first argued that the decision erred in not taking into account, in computing appellant's loss of income, the appellant's undeclared income of P8,338.20, assessed by the Bureau of Internal Revenue for the year 1954, in addition to his declared income for that year (P10,975), it being argued that appellant never claim any other source of income besides his professional earnings. Several circumstances of record disprove this claim. (1) That the amount of P8,338.20 was kept apart from ordinary earnings of appellant for the year 1954 (P10,975), and not declared with it, is in itself circumstantial evidence that it was not of comparable character. (2) If it was part of his ordinary professional income, appellant was guilty of fraud in not declaring it and he should not be allowed to derive advantage from his own wrongdoing. (3) The decision pointed out that by including the undeclared amount in appellant's disclosed professional earning for 1954, to a grand total of P19,313.20, the income for said year becomes abnormally high (in fact, more that double), as compared to appellant's earnings for the preceding years, 1951-1953, that averaged not more that P7,000 per annum. Such abnormality justifies the Court's refusal to consider the undisclosed P8,338.20 as part of appellant's regular income for the purpose of computing the reduction in his earnings as a result of the complained acts of appellee. (4) Finally, the true source of the undeclared amount lay in appellant's own knowledge, but he chose not to disclose it; neither did he call upon the assessing revenue officer to reveal its character. Appellant Velasco urges that the damages awarded him are inadequate considering the present high cost of living, and calls attention to Article 1250 of the present Civil Code, and to the doctrines laid down in People vs. Pantoja G.R. No. L-18793, 11 October 1968, 25 SCRA 468. We do not deem the rules invoked to be applicable. Article 1250 of the Civil Code is to the effect that:

ART. 1250. In case an extraordinary inflation or deflation of the currency stipulated should supervene, the value of the currency at the time of the establishment of the obligation shall be the basis of payment, unless there is an agreement to the contrary. It can be seen from the employment of the words "extraordinary inflation or deflation of the currency stipulated" that the legal rule envisages contractual obligations where a specific currency is selected by the parties as the medium of payment; hence it is inapplicable to obligations arising from tort and not from contract, as in the case at bar, besides there being no showing that the factual assumption of the article has come into existence. As to the Pantoja ruling, the regard paid to the decreasing purchase of the peso was considered a factor in estimating the indemnity due for loss of life, which in itself is not susceptible of accurate estimation. It should not be forgotten that the damages awarded to herein appellant were by no means full compensatory damages, since the decision makes clear that appellant, by his failure to minimize his damages by means easily within his reach, was declared entitled only to a reduced award for the nuisance sued upon (Steel vs. Rail & River Coal Co., 43 Ohio App. 228,182 N.E. 552); and the amount granted him had already taken into account the changed economic circumstances. Nor is the fact that appellant lost a chance to sell his house for P95,000 to Jose Valencia constitute a ground for an award of damages in that amount. As remarked in the main decision, there is no adequate proof of loss, since there is no evidence of the depreciation in the market value of the house in question caused by the acts of defendant Meralco The house, after all, has remained with appellant and he admits in his motion for reconsideration (page 48) that properties have increased in value by 200% since then. For the foregoing reasons, the motion for reconsideration is denied. B - APPELLEE'S MOTION TO RECONSIDER Appellee Manila Electric Company argues that in case the noise emitted by its substation can not be brought down to the 50 decibel level imposed by our decision in chief, the remedy of the appellant would be to compel appellee Company to acquire and pay for the value of the house, under the so-called doctrine of "inverse condemnation and cites in support our doctrines in Bengzon vs. Province of Pangasinan, 62 Phil. 816, and Republic vs. Philippine Long Distance Telephone Co., L-18841, 27 January 1969, 26 SCRA 620-634. But as pointed out by appellant in his opposition, this issue was not raised, nor was the inverse condemnation doctrine invoked in the trial court, so that it would be improper to consider it on appeal, and worse still, on a motion for reconsideration of the decision on the merits. Furthermore, there is no showing that it is impossible to reduce the substation noise to the level decreed by this Court in the main decision. On the contrary, appellee's own evidence is that the noise can be reduced by erecting a wall barrier on the line separating the substation lot and the property of appellant. The version that appellee did not erect the wall because of the objections of appellant's wife was denied by her, and there is no preponderance of evidence in favor of appellee on this point. Moreover, since it was appellant Dr. Velasco who complained, his wife's objection would not suffice to constitute a waiver of his claim.

As to the petition to increase the sound level prescribed by his Court from 50 to 55 decibels on the ground that present "ambient sound already ranges from 44 to 55 decibels in the mornings", the same can not be granted. As shown by the evidence at the trial, the intensity of the noise emitted by appellee's transformers are most objectionable at night, when people are endeavoring to rest and sleep in compensation for the fatigue and tensions accumulated during daytime. WHEREFORE, appellee's motion to reconsider is likewise denied. chanrob

50. EN BANC G.R. No. L-3422 June 13, 1952

HIDALGO ENTERPRISES, INC., Petitioner, vs. GUILLERMO BALANDAN, ANSELMA ANILA and THE COURT OF APPEALS, Respondents. BENGZON, J.: This is an appeal by certiorari, from a decision of the Court of Appeals requiring Hidalgo Enterprises, Inc. to pay Guillermo Balandan and his wife, damages in the sum of P2,000 for the death of their son Mario. It appears that the petitioner Hidalgo Enterprises, Inc. "was the owner of an ice-plant factory in the City of San Pablo, Laguna, in whose premises were installed two tanks full of water, nine feet deep, for cooling purposes of its engine. While the factory compound was surrounded with fence, the tanks themselves were not provided with any kind of fence or top covers. The edges of the tanks were barely a foot high from the surface of the ground. Through the wide gate entrance, which is continually open, motor vehicles hauling ice and persons buying said commodity passed, and any one could easily enter the said factory, as he pleased. There was no guard assigned on the gate. At about noon of April 16, 1948, plaintiff's son, Mario Balandan, a boy barely 8 years old, while playing with and in company of other boys of his age entered the factory premises through the gate, to take a bath in one of said tanks; and while thus bathing, Mario sank to the bottom of the tank, only to be fished out later, already a cadaver, having been died of "asphyxia secondary to drowning." The Court of Appeals, and the Court of First Instance of Laguna, took the view that the petitioner maintained an attractive nuisance (the tanks), and neglected to adopt the necessary precautions to avoid accidents to persons entering its premises. It applied the doctrine of attractive nuisance, of American origin, recognized in this Jurisdiction in Taylor vs. Manila Electric 16 Phil., 8. The doctrine may be stated, in short, as follows: One who maintains on his premises dangerous instrumentalities or appliances of a character likely to attract children in play, and who fails to exercise ordinary care to prevent children from playing therewith or resorting thereto, is liable to a child of tender years who is injured thereby, even if the child is technically a trespasser in the premises. (See 65 C.J.S., p. 455.) The principle reason for the doctrine is that the condition or appliance in question although its danger is apparent to those of age, is so enticing or alluring to children of tender years as to induce them to approach, get on or use it, and this attractiveness is an implied invitation to such children (65 C.J.S., p. 458). Now, is a swimming pool or water tank an instrumentality or appliance likely to attract the little children in play? In other words is the body of water an attractive nuisance? The great majority of American decisions say no.

The attractive nuisance doctrine generally is not applicable to bodies of water, artificial as well as natural, in the absence of some unusual condition or artificial feature other than the mere water and its location. There are numerous cases in which the attractive nuisance doctrine has not been held not to be applicable to ponds or reservoirs, pools of water, streams, canals, dams, ditches, culverts, drains, cesspools or sewer pools, . . . (65 C.J.S., p. 476 et seg. citing decisions of California, Georgia, Idaho, Illinois, Kansas, Iowa, Louisiana, Miss., Missouri, Montana, Oklahoma, Pennsylvania, Tennessee, Texas, Nebraska, Wisconsin.) In fairness to the Court of Appeals it should be stated that the above volume of Corpus Juris Secundum was published in 1950, whereas its decision was promulgated on September 30, 1949. The reason why a swimming pool or pond or reservoir of water is not considered an attractive nuisance was lucidly explained by the Indiana Appellate Court as follows: Nature has created streams, lakes and pools which attract children. Lurking in their waters is always the danger of drowning. Against this danger children are early instructed so that they are sufficiently presumed to know the danger; and if the owner of private property creates an artificial pool on his own property, merely duplicating the work of nature without adding any new danger, . . . (he) is not liable because of having created an "attractive nuisance." Anderson vs. Reith-Riley Const. Co., N. E., 2nd, 184, 185; 112 Ind. App., 170. Therefore, as petitioner's tanks are not classified as attractive nuisance, the question whether the petitioner had taken reasonable precautions becomes immaterial. And the other issue submitted by petitioner - that the parents of the boy were guilty of contributory negligence precluding recovery, because they left for Manila on that unlucky day leaving their son under the care of no responsible individual - needs no further discussion. The appealed decision is reversed and the Hidalgo Enterprises, Inc. is absolved from liability. No costs. chanrobles


G.R. No. 85517 October 16, 1992 DOROTEO OCHEDA, Petitioner, vs. THE HONORABLE COURT OF APPEALS and THE HEIRS OF EDUARDO SANTOS, Respondents.

DAVIDE, JR., J.: The trial court's jurisdiction over an action for damages arising from a quasi-delict which resulted in the death of an employee while in the performance of his duty is challenged in this case. The late Eduardo Santos was, at the time of his death, employed as a painter by the petitioner who was a sub-contractor for the painting job on M.J. Building then being constructed along Salcedo Street, Makati, Metro Manila. The C.E. Construction Corporation, Inc. (CECCI) was the principal contractor thereof by virtue of a contract it entered into with M.J. Development Corporation, the owner of the building. Another corporation, Fujitec Philippines Industrial Company, Inc. (FUJITEC), was contracted by M.J. Development Corporation to install two (2) standard scenic elevator units in the building. When the painting job was almost complete, i.e., all that remained to be painted was the wall of the shaft for the second elevator, the petitioner trimmed his work forces to two (2) employees, Hernani Gozun and Eduardo Santos; these employees were tasked to finish the painting. On 5 February 1981, they started work on the inner wall of the elevator shaft; to paint the same, they had to stand on top of the elevator which was then on the second floor of the building. After they finished, they called on the boy operating the elevator to ask him to bring the same down to the first floor. Instead of lowering the elevator, however, the boy brought it up to the sixth floor. The sudden upward movement caused the elevator to jerk and the two (2) painters to lose their balance. Hernani was able to cling to the cable but Eduardo fell off the top, found himself pinned between the shaft and the elevator as the latter was moving upward and then fell to the ground when the elevator finally stopped on the sixth floor. Hernani rushed to Eduardo's aid upon hearing the latter's cry for help. The former lifted Eduardo in his arms and, with the help of another man, brought him to the Makati Medical Center where he later died. While the elevator boy was never identified, it is alleged that he worked for CECCI. On 11 September 1981, the spouses Catalino and Ester Santos, together with Wilma PalabasanSantos, parents and widow, respectively, of Eduardo, filed a Complaint 1 for damages against Doroteo Ocheda and CECCI before the then Court of First instance (now Regional Trial Court) of Pampanga. The case was docketed as Civil Case No. 6263 and was assigned to Branch 42 thereof. The complaint alleges the foregoing facts and, in addition, specifically states that while Eduardo was employed by the petitioner in 1979 and received a daily wage of P35.00, the

petitioner did not place him within "any SSS, Medicare and Workmen's Compensation coverage." It is further averred that the elevator boy was inexperienced for the work assigned to him. Then they asked for judgment ordering the defendants, jointly and severally, to pay P10,000.00 as burial expenses, P30,000.00 as moral damages, attorney's fees and compensatory damages as may be proved at the trial and costs. Petitioner filed an Answer with a Counterclaim against the plaintiff, and a Cross-Claim against CECCI. 2 He alleges therein that Eduardo was employed by him only a week before the accident and purely on a casual basis for the particular painting job. As affirmative defense, he avers that Eduardo's death was due to the negligence and carelessness of the elevator boy, an employee of CECCI. Thus, the latter is solely liable for the said death and no cause of action exists against him. Moreover, it is postulated that the trial court has no jurisdiction over the claims involving SSS, Medicare, Workmen's Compensation and insurance benefits. Such jurisdiction is vested in other administrative or quasi-judicial bodies; furthermore, he avers that the allegation concerning such claims (paragraph 8 of the complaint) is not essential to the plaintiffs' cause of action which is the negligent operation of the elevator. In this counterclaim, petitioner asks for an award of attorney's fees in the amount of P10,000.00, and the expenses of litigation. In due course, CECCI likewise filed its Answer with a Third-Party Complaint 3against FUJITEC which it alleged to be liable, being the employer of the elevator boy. FUJITEC filed its Answer to the said Third-Party Complaint 4 denying the allegations made therein and asserting that the operation of the elevator was turned over the building owner long before the fatal accident. Pre-trial was conducted on 23 September 1983. The pre-trial order issued by the trial court embodies the respective positions of the parties. As to herein petitioners, the Pre-trial order summarized his stand as follows: 2. Defendant Ocheda's Case: Defendant Doroteo Ocheda denies liability. He claims that the complaint states no cause of action against him; that the death of the deceased Eduardo Santos resulted from the operation of the elevator at the construction site; that he had nothing to do with the operation, or control, or management of the elevator in question, hence, the death of Eduardo Santos is not attributable to him; that his participation in the construction of the building was limited solely to painting specific portions thereof; that he filed a cross-claim against defendant C.E. Construction Corp. because the said corporation was the general contractor of the building, operator/maintainer of the elevator, and employer of the elevator boy. 5 During the trial of the case on the merits, petitioner presented two (2) witnesses - Josefino Rivera and himself. 6 On 24 February 1986, the trial court rendered its decision 7 finding both the petitioner and CECCI liable for the death of Eduardo. The dispositive portion of the decision reads as follows: WHEREFORE, in view of the foregoing considerations, judgment is hereby rendered as follows:

1. The defendant (sic) Doroteo Ocheda and C.E. Construction Corporation, Inc. are ordered to pay jointly and severally the plaintiffs the following amounts: a) Seven Thousand Three Hundred Fifty Pesos (P7,350.00) as burial expenses; b) Thirty Thousand Pesos (P30,000.00) as moral damages; c) Five Thousand pesos (P5,000.00) as attorney's fees; and d) Costs of suit. 2. The third-party complaint is hereby dismissed and the third-party plaintiff C.E. Construction Corporation, Inc. is ordered to pay the third-party defendant Fujitec the sum of Fifteen Thousand Pesos (P15,000.00) as attorney's fees plus the cost of suit; 3. The cross-claim and counterclaim of defendant Ocheda and the counterclaim of defendant C.E. Construction are hereby dismissed. SO ORDERED. 8 This determination of liability is based on the trial court's findings that: It has been sufficiently established that it was defendant Ocheda who caused the accident to happen. It was defendant Ocheda who ordered the late Eduardo Santos and Hernani Gozun to use the top of the elevator as stepping board while painting the wall of the elevator shaft. And defendant Ocheda failed to exercise the diligence of a good father of a family in the supervision of his employees. It has likewise been shown that C.E. Construction was, at the time of the incident in question, in full control of the building since the same was not yet accepted by the owner thereof. C.E. Construction was the general contractor of the building, hence it was in full management and control of the elevator because the same was already turned over to and accepted by the building owner from Fujitec. As such C.E. Construction should have guarded against the unauthorized use of the elevator by people working in the building. At the time of the incident, the late Eduardo Santos was an employee of defendant Ocheda, a sub-contractor of C.E. Construction. In view of all these, C.E. Construction is equally liable with defendant Ocheda pursuant to Article 2180, in conjunction with Article 2176 of the civil Code. The elevator which caused the injury and subsequent death of Eduardo Santos was under the management and control of C.E. Construction. Consequently, had C.E. Construction used proper care in the management and operation of the elevator, and had it exercised the diligence of a good father of a family in the supervision of its employees, then the fatal incident would not have happened. 9 Petitioner and CECCI appealed this adverse decision to the respondent Court of Appeals which docketed the case as C.A.-G.R. CV No. 09574. In the Brief he submitted, petitioner made the following assignment of errors:

I THE LOWER COURT ERRED IN HOLDING THAT THE REGIONAL TRIAL COURT HAD JURISDICTION OVER THE COMPLAINT; II THE LOWER COURT ERRED IN HOLDING THAT OCHEDA WAS GUILTY OF NEGLIGENCE FOR THE DEATH OF SANTOS; III THE LOWER COURT ERRED IN APPLYING ARTICLE 2180 OF THE NEW CIVIL CODE TO OCHEDA; IV THE LOWER COURT ERRED IN HOLDING OCHEDA JOINTLY AND SEVERALLY LIABLE WITH C.E. CONSTRUCTION CORP. TO THE PLAINTIFFS FOR DAMAGES. 10 On the other hand, CECCI, in its Brief, contended that the trial court gravely erred in finding it solidarily liable with the herein petitioner for the death of Eduardo, in awarding moral damages, in dismissing the third-party complaint and in not holding the plaintiffs therein liable for damages, attorney's fees and costs of the suit. 11 On 1 September 1988, the respondent Court promulgated its decision 12 upholding the findings of the trial court but reducing the amount of damages; it likewise eliminated the grant of attorney's fees in favor of FUJITEC. Thus: WHEREFORE, the decision appealed from is hereby AFFIRMED in all respects, except as modified herein by reducing the award for actual or compensatory damages to only P5,880.00; reducing the damage caused by death to only P24,000.00; and eliminating the award of P15,000.00 attorney's fees to third party defendant Fujitec. No costs. SO ORDERED. 13 The reduction in the award of damages was based on the respondent Court's finding of contributory negligence on the part of Eduardo Santos when he failed to heed the order to tie a rope around his waist while working. As to the issue of lack of jurisdiction on the part of the trial court, the respondent Court held: The case at bar is being prosecuted in behalf of a deceased, not dismissed, employee for damages arising from the death of the employee based on quasi-delict founded on an undoubted principle of justice recognized by all legislations that every injury, loss or damage which a person received in his right (sic), be it by act or by omission, creates a juridical relation from which is derived the

right which the aggrieved party has to be indemnified and the consequent obligation by the other party. In the present case of Floresca vs. Philex Mining Corporation, 136 SCRA 141, the Supreme Court ruled that recovery under the new Civil Code for damages arising from negligence is not barred by Article 173 of the New Labor Code. In this case, it was further held that an ordinary court has jurisdiction over complaints for damages filed by heirs of mining employees against the mining corporation for the death of the former allegedly caused by the negligence of their employer. 14 His motion to reconsider the decision having been denied in the resolution of the respondent Court dated 18 October 1988, 15 petitioner took this recourse under Rule 45 of the Rules of Court. He reiterates in the instant petition for review the assignment of errors submitted before the respondent Court. This Court grave due course to the petition and required the parties to submit their respective Memoranda 16 after the submission of the Comment to the petition by the private respondent, the Reply thereto by the petitioner and the Rejoinder to the latter by the private respondents. We find no merit in the petition. Regarding the issue of the factual findings upon which the second, third and fourth assigned errors are based. We find no cogent reason to disturb such findings of both the trial and respondent courts. Petitioner does not even attempt to show that this case falls under any of the accepted exceptions to the well-settled and oft-repeated rule that findings of facts of the Court of Appeals are biding upon this Court. 17 Anent the alleged lack of jurisdiction on the part of the trial court, petitioner admits that the private respondents cause of action, as expressed in the complaint, is based on a quasi-delict. The former submits, however, that since the monetary award is sought in connection with the employer-employee relationship which existed between him and the late Eduardo Santos, only Labor Arbiters, pursuant to Article 217 of the Labor Code of the Philippines as it was then worded, 18 have original and exclusive jurisdiction over them. Under the said provision, "all money claims of workers" and "all other claims arising from employer-employee relations" are exclusively cognizable by Labor Arbiters. We ruled in Getz Corp. vs. Court of Appeals 19 that pursuant to P.D. No. 1691, such claims include moral and exemplary damages. Petitioner further contends that Floresca vs. Philex Mining Corp., 20 which the respondent Court relied upon, is not applicable because the cause of action involved therein accrued on 28 June 1967, or before the enactment of the Labor Code and P.D. No. 1691; he asserts that the decision therein constituted "judicial legislation". Petitioner's unusual patience and tenacity on the first assigned error merits him no reward. In the first place, he did not raise in his answer that defense with respect to the claim for damages arising from a quasi-delict. His affirmative defense of lack of jurisdiction specifically refers to the allegation in paragraph 8 of the complaint concerning the SSS, Medicare, Workmen's Compensation and insurance benefits the award of which, according to him, falls within the

competence and jurisdiction of other administrative or quasi-judicial bodies. In fact, he even considers such allegation to be non-essential to the complaint's cause of action - the negligent operation of the elevator. This is how he worded that particular affirmative defense: SECOND AFFIRMATIVE DEFENSE 12. He need not deny nor (sic) admit the allegations in paragraph 8 regarding the alleged SSS, Medicare, Workmen's Compensation, and insurance coverage since this Honorable Court has no jurisdiction over disputes involving cases of these sorts, jurisdiction thereof being vested in other administrative or quasi-judicial bodies. Furthermore, the allegations in said paragraph 8 of the plaintiff's cause of action which is the negligent operation of the elevator resulting in the death of Eduardo (sic) Santos. 21 Obviously, he did not even have Labor Arbiters in mind for such cases. He knew, or at least ought to have known, that expressly excepted from the broad jurisdiction of labor Arbiters in Section 217 of the Labor Code are "claims for employees compensation, social security, medicate and maternity benefits." In the second place, during the pre-trial conference, petitioner failed to raise the issue of jurisdiction. He instead harped on the lack of a cause of action - his first affirmative defense which was based on the theory that the proximate cause of Eduardo's death was the negligence of the elevator boy who was an employee of CECCI; in fact, it was against the latter that he filed a cross-claim. In the third place, petitioner openly and unqualifiedly involved and submitted to the jurisdiction of the trial court by setting up a counterclaim, asking for relief in the concept of attorney's fees and expenses of litigation against the private respondents and filing a cross-claim against CECCI, whom he alleged to be the employer of the elevator boy. Finally, he presented evidence to prove that the proximate cause of the accident and resulting death of Eduardo was the negligence of the elevator boy. He concludes that as employer of the said boy, CECCI is solely liable to the private respondents for the damages claimed by the latter. Petitioner was, therefore, effectively estopped from raising the issue of jurisdiction with respect to the damages arising from a quasi-delict. While it is true that jurisdiction over the subject matter of a case may be raised at any stage of the proceedings as the same is conferred by law, 22 it is nevertheless settled that a party may be barred from arising it on the ground of estoppel. 23 The reason for this is that after voluntarily submitting a cause and encountering an adverse decision on the merits, it would be improper and too late, to say the least, for the lower to question the jurisdiction or power of the court. It is not correct for a party who has invoked the jurisdiction of a court in a particular matter to secure affirmative relief, to afterwards deny that very jurisdiction to escape penalty. And even granting, for the sake of argument, that the issue of jurisdiction can still be raised in connection with its specific reference to the damages arising out of a quasi-delict, petitioner's thesis would still fail. Such damages may not be awarded in accordance with Section 217 of the

Labor Code, as amended, for there is no reasonable causal connection with the employeremployee relationship. At the time the cause of action accrued, Article 217 of the Labor Code required that in order that the Labor Arbiter may adjudicate claims not included in the other paragraphs, the same must arise out of employer-employee relations. In San Miguel Corporation vs. National Labor Relations Commission, 24 this Court ruled, with respect to Article 217, as amended by B.P. Blg. 227: While paragraph 3 above refers to "all money claims of workers," it is not necessary to suppose that the entire universe of money claims that might be asserted by workers against their employers has been absorbed into the original and exclusive jurisdiction of Labor Arbiters. In the first place, paragraph 3 should be read not in isolation from but rather within the context formed by paragraph 1 (relating to unfair labor practices), paragraph 2 (relating to claims concerning terms and conditions of employment), paragraph 4 (claims relating to household services, a particular species of employer-employee relations), and paragraph 5 (relating to certain activities prohibited to employees or to employers). It is evident that there is a unifying element which runs through paragraphs 1 to 5 and that is, that they all refer to cases or disputes arising out of or in connection with an employer-employee relationship. This is, in other words, a situation where the rule ofnoscitur a sociis may be usefully invoked in clarifying the scope of paragraph 3, and any other paragraph of Article 217 of the Labor Code, as amended. We reach the above conclusion from an examination of the terms themselves of Article 217, as last amended by B.P. Blg. 227, and even though earlier versions of Article 217 of the Labor Code expressly brought within the jurisdiction of the Labor Arbiters and the NLRC "cases arising from employeremployee relations," which clause was not expressly carried over, in printer's ink, in Article 217 as it exists today. For it cannot be presumed that money claims of workers which do not arise out of or in connection with their employer-employee relationships, and which would therefore fall within the general jurisdiction of the courts of justice, were intended by the legislative authority to be taken away from the jurisdiction of the courts and lodged with Labor Arbiters on an exclusive basis. The Court, therefore, believes and so holds that the "money claims of workers" referred to in paragraph 3 of Article 217 embraces money claims which arise out of or in connection with the employer-employee relationship, or some aspect or incident of such relationship. Put a little differently, that money claims of workers which now fall within the original and exclusive jurisdiction of labor Arbiters are those money claims which have some reasonable causal connection with the employer-employee relationship. Said article presently reads as follows: 25 Art. 217. Jurisdiction of Labor Arbiters and the Commission. - (a) Except as otherwise provided under this Code, the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision without extension, even in the absence of stenographic notes, the following cases involving all workers, whether agricultural or non-agricultural: 1. Unfair labor practice cases; 2. Termination of disputes;

3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay, hours of work and other terms and conditions of employment; 4. Claims for actual, moral, exemplary and other forms of damages arising from the employeremployee relations; 5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strike and lockouts; and 6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims, arising from employer-employee relations, including those of persons in domestic or household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement. (b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters. (c) Cases involving from the interpretation or implementation of collective bargaining agreement and those arising from the interpretation or enforcement of company personnel policies shall be disposed of by the Labor Arbiter by referring the same to the grievance machinery and voluntary arbitration as may be provided in said agreements. In the instant case, the source of the obligation upon which the private respondents' cause of action is based is a quasi-delict or tort which has no reasonable connection with any of the claims provided for in the aforesaid Article 217 of the Labor Code. It would have been entirely different if the claim for damages arose out of, for instance, the illegal dismissal of Eduardo, in which case the Labor Arbiter would have exclusive jurisdiction thereon. 26 It would have also been different if the petitioner had grounded his claim of lack of jurisdiction on the basis of the Workmen's Compensation Law. Unfortunately, he adroitly avoided this issue from the very beginning not only because of his claim that the allegation on this matter is irrelevant to the private respondents' theory but, and more importantly, he did not, as revealed by the latter, register Eduardo with the Social Security System pursuant to the Amended Rules on Employees Compensation in relation to Chapter II, Title II, Book IV of the Labor Code of the Philippines (P.D. No. 442), as amended. To avoid possible liability thereunder, and more particularly the criminal and civil sanctions under Section 4, Rule II of said Rules which reads: Sec. 4. Penalty. - Any violation of this Rule shall be penalized as follows: (1) In case of failure or refusal to register employees, the employer or responsible official who committed the violation shall be punished with a fine of not less than P1,000 nor more than P10,000 and/or imprisonment for the duration of the violation or noncompliance or until such time that rectification of the violation has been made, at the discretion of the court. (2) In case a compensable contingency occurs after 30 days from employment and before the System receives any report for coverage about the employee or EC contribution on his behalf, his

employer shall be liable to the System for the lump sum equivalent to the benefits to which he or his dependents may be entitled. petitioner unabashedly asserted in his Answer that the late Eduardo Santos was his employee for barely a week and that he was hired on a casual basis only for the particular painting job on the M.J. Building. Having done so, he cannot now be heard to make a strained and tenuous analysis of Floresca vs. Philex mining Corporation. 27 WHEREFORE, for lack of merit, the instant petition is DENIED with costs against the petitioner. This decision is immediately executory. SO ORDERED.

52. EN BANC G.R. No. L-18056 January 30, 1965

ASSOCIATED REALTY DEVELOPMENT COMPANY, INC., Petitioner, vs. The COURT OF APPEALS, KEATER HUANG and TAN GIOK TIN, Respondents. PAREDES, J.: On May 7, 1946, the petitioner corporation bought from the China Banking Corporation a parcel of land containing an area of 4,562.79 square meters, located at the corner of Soler and Alvarado Streets, Manila. It was the desire of the petitioner to subdivide the property for purposes of resale, which was frustrated due to the difficulty of ejecting the tenants, all Chinese, and who had organized themselves into the Soler Tenant Association. Respondent spouses Keater Huang and Tan Giok Tin were also tenants of the property, and were at the time occupying a portion of the same. The projected ejectment of the tenants was brought to the attention of the Chinese Consul General in Manila. The intervention of the Consul General brought about the creation of a mediation committee, through whose efforts the matter was amicably settled, resulting into the tenants having been given the first option to acquire the lots occupied by them within a certain period of time and upon payment of the prices fixed in the agreement that will be made. The mediation committee was composed of respondent herein Keater Huang, tenant and member of the tenants organization; Y. C. Shueh, Vice-Consul of the Chinese Consulate; and Lim Sae Gim, another tenant. The property was subsequently subdivided into 43 lots of various areas and shapes which became later known as the Soler-Alvarado Subdivision. The subdivision and survey of the property, as per plan (Exh. K) prepared by surveyor Sixto Tenmatay, was undertaken from August 21 to 23, 1946. A second survey was made on December 10, 1946; a verification survey on June 23, 1947, by surveyor Jose N. Quedding; and third survey by another surveyor on July 31, 1947. After the first and second surveys, the Associated Realty, on April 22, 1947, wrote Tan Giok Tin (Mrs. Keater Huang), the following: This is to confirm in writing the subject of our conversation in connection with your desire to purchase a parcel of land situated at 271 Soler from the Associated Realty Development Co., Inc. The Company is willing to grant to you an additional parcel of land along the river bank which is adjacent to Lot No 24 of Plan Soler-Alvarado Subdivision, District of Binondo, Manila. This award is in consideration of the valuable services of your husband, Mr. Keater Huang, during the mediation between the Soler Tenant Association and this Company with the Chinese Consulate General. This grant is also given to you on these conditions: 1. That this parcel of land bordering or adjacent to the said Lot No. 24 (271 Soler) to the river bank - total area of which shall be surveyed and determined later - shall entirely form part and parcel of the said Lot No. 24 of the Soler-Alvarado Subdivision; 2. That this lot will also be included in the registration of the Torrens Title at the conclusion of contract of sales;

3. That there is no financial obligation on your part for its acquisition from the Company; xxx xxx xxx

On the same date also, the Associated Realty executed a document of sale captioned "RECEIPT OF FULL PAYMENT AND AGREEMENT TO CONVEY," whereby it transferred to Tan Giok Tin a parcel of land known as Lot No. 24 of plan Soler-Alvarado Subdivision with an area of FIFTY-TWO (52) sq. meters, more or less, situated at 271 Soler St., Binondo, Manila, and where it further agreed to have title thereto issued in the name of said Tan Giok Tin at the earliest practicable time, but not later than one year from the execution of the said document. The amount paid for the lot of 52 square meters was P6,760, at P130.00 per square meter. Upon the execution of the above document, Associated Realty delivered to the appellees herein possession of Lot No. 24, together with a copy of the survey plan, which indicated the exact shape, measurement and location thereof. Simultaneous to the delivery of Lot No. 24, Associated Realty also delivered possession to appellees herein the parcel of land situated alongside the Estero de Magdalena, subject matter of a letter earlier reproduced which, according to survey made, had an area of 79 square meters, after the plan indicating said parcel was approved by the Director of Lands. Upon the delivery of possession of the parcel along the estero, appellees herein constructed a cement fence along the estero, which cost them P3,400.00. The value of the property, at the time of the award was P130.00 per square meter or a total of P10,270.00. On March 31, 1948, Keater Huang presented with the Office of the Engineer, City of Manila, an application for the construction of a three (3) story Residential House of strong materials, which covered the whole area of Lot 24. The building plan was so prepared that it fitted the size and shape of the lot, as appearing in the subdivision plan, supplied by Associated Realty when it delivered possession thereof to appellees. The above application bore the consent of Associated Realty, same having been given by Ko Seng Liat, Vice-President of the Associated Realty. With the approval of the application for the construction of the building, the proposed residential house was built by appellees. After the completion of the construction, it turned out that Lot 24 contained only an area of 45 square meters or 7 square meters short of the area stated in the Receipt of Full Payment and Agreement to Convey; that the house constructed, which had a floor area of 52 square meters, occupied a portion of the estero lot, which the Associated Realty had given to plaintiffs, and which turned out to be owned by the government of which the Associated Realty had no authority to dispose, one way or the other. Demands for the release of the titles and conveyance in the names of the plaintiffs of the two parcels were made, but appellants failed and/or refused, due to the utter impossibility of doing so. A complaint for damages, containing four (4) causes of action, was filed on September 20, 1954, by appellees, with the CFI of Manila, praying: 1. Under the First Cause of Action: (a) Condemning the defendant to pay to the plaintiffs the sum of P23,700.00, which represents the present market value to the award containing seventy-nine (79) square meters at P300.00 per square meter, and with interest thereon at the legal rate from the filing of this complaint; and

(b) Ordering the defendant to pay to the plaintiffs the sum of P3,400.00, which represents the cost and repairs to the cement fence constructed by the plaintiffs along the Estero de Magdalena, with legal interest thereon from the filing of this complaint. (c) Ordering the defendant to pay to the plaintiffs the sum of P1,400.00 which represents the cost of the demolition, and removal of the old building on Lot No. 24, with legal interest thereon from the filing of this complaint. 3. Under the Third Cause of Action: (a) Condemning the defendant to pay to the plaintiffs a sum equivalent to ten (10%) per centum of the total amount that may be awarded by the Court in their favor to cover attorney's fees; (b) Condemning the defendant to pay to the plaintiffs the amount of not less than P50,000.00 as moral damages; (c) Condemning the defendant to pay to the plaintiffs the amount of not less than P10,000.00 as exemplary damages. 4. Under the Fourth Cause of Action: (a) Condemning the defendant to pay to the plaintiffs the sum of FIVE HUNDRED (P500.00) PESOS as additional attorney's fees; (b) Condemning the defendant to pay to the plaintiffs the sum of not less than P10,000.00 as additional moral damages; (c) Condemning the defendant to pay to the plaintiffs the sum of not less than P10,000.00 as additional exemplary damages; and (d) Ordering the defendant to pay the costs of this suit. The Associated Realty, answering the complaint, averred that it believed in good faith, but did not represent to plaintiffs, that it was the owner of the estero lot; that, if at all, the lot was being given as donation, which could not be valid as such because it was not executed in a public document and there was no valid acceptance thereof by the plaintiffs; that Keater Huang acted in bad faith in repairing and constructing the new fence along the estero lot, as he knew from the start that the same did not belong to the Associated Realty, but to the government; that if plaintiff Keater Huang is entitled to any compensation as mediator between the Associated Realty and the Soler-Alvarado Tenants Association a member, same would amount only to P2,000.000, which the corporation credited Lim Sae Gim, also a tenant and member of the committee. The corporation also claimed that plaintiffs had condoned the failure on its part to give the estero lot, when the parties (defendant and plaintiffs) exerted efforts to acquire the property from the government; that the deed of sale (Exh. G) merely stated that Lot No. 24 has an area of 52 square meters, more or less, without giving to the plaintiffs the survey plan indicating the shape, measurement and area of the said lot, because at the time the final survey was not yet completed;

that plaintiffs knew on or before March 31, 1948, that the estero lot did not belong to defendant corporation and that Lot 24, had an area of only 45.30 square meters; that after the above matters were brought out, the corporation, by way of compromise, offered to purchase the estero lot for P3,000.00, so that plaintiffs could make use thereof, but which was refused; that because of such refusal, and due to the impending winding up of the affairs of the corporation, regarding the Soler-Alvarado Subdivision, it transferred its rights over the estero lot, in favor of its Manager, Guillermo V. Madridejos. As a counterclaim, defendant corporation urged that plaintiffs be made liable to pay it P25,000.00 for maliciously prosecuting the case, in spite of lack of probable cause; P50,000.00 for the wrongful attachment of its properties, and P476.00 representing rentals it had paid the government for the use and occupation of the estero lot by plaintiffs. Plaintiffs generally and specifically denied the allegations in the counterclaim and prayed for additional damages of P25,000.00, for mental anguish, etc. The CFI of Manila, on December 29, 1956, rendered the following judgment: UPON THE FACTS ABOVE STATED, bearing in mind that the defendant has generously offered to the plaintiffs, in lieu of the estero land, the sum of P3,000.00, and in fairness and justice to all, the court believes that the plaintiffs are entitled to an indemnity in the sum of three thousand pesos (P3,000.00), plus P1,200.00 for the repairs of the stone fence in 1947, plus the sum of P871.00 representing the difference in the price of Lot No. 24 on the basis of the reduced area of 45.30 square meters. Accordingly, judgment is hereby rendered ordering the defendant to pay to the plaintiffs the sum of five thousand seventy-one pesos (P5,071.00). The fee for the revocable permit for the use of the estero land shall hereafter be paid by the plaintiffs. The defendant's counterclaim is dismissed. No pronouncement is made as to costs. Both parties appealed to this Court. In view, however, of the amendment of the Judiciary Act of 1948, by Rep. Act No. 2613, the case was referred to the Court of Appeals, it appearing that the amount in controversy is only P70,000.00, more or less. On November 9, 1960, the Court of Appeals rendered judgment, the pertinent portions of which are hereunder reproduced: ... It has noticed that the document of sale (Exhibit G) merely stated that lot 24 has an area of 52 square meters, more or less, and is situated at 271 Soler St., Binondo, Manila, without specifying the boundaries. It is also noted that the award of the estero lot does not state the area and boundaries. But it appears that the subdivision was surveyed immediately after its acquisition. The plan of the subdivision (Exhibit K), prepared by Sixto Tenmatay, as the surveyor hired by the defendant corporation, indicates that the first survey of the subdivision was undertaken from August 21 to 23, 1946, the second on December 10, 1946, and the third on July 31, 1947. Another verification survey was made by another surveyor, Jose N. Quedding, on June 23, 1947. According to Tito Dans, Manager of the defendant, the said subdivision plan (Exhibit K) was submitted to the corporation in December, 1946, and that he knew from said plan that Lot 24 was triangular in form. The plan (Exhibit K) shows two vital facts: (1) there is no strip of estero lot between Lot 24 and the river bank; and (2) Lot 24 has an area of 45.30 square meters and is triangular in shape.

The plaintiffs applied for the construction of their house on March 31, 1948. The application, building plan and location plan of the house, (Exhibits H, E, and K-1) show that the proposed building was in the shape of a capital letter "L" and spread over an area of 52 square meters, more or less. These papers were presented to Co Seng Liat and Tito Dans. At the time of the presentation of these papers to Co Seng Liat and Tito Dans, the subdivision was completely surveyed. Yet, Co Seng Liat and Tito Dans gave their conformity to the application and plan. It is true that on April 8, 1948 Co Seng Liat informed Keater Huang that the estero lot was government property, and the construction of the house of the plaintiffs started a week thereafter. But Co Seng Liat intimated to Keater Huang that part of the proposed building covered government property or that saidestero lot has an area of 79 square meters. Co Seng Liat's approval of the application and plan for the proposed building indicated at least that Lot 24 was in the shape of a capital letter "L" and has an area of 52 square meters. It is also true that Keater Huang knew of and consented to the application filed by Co Seng Liat for a lease over the estero lot from the government for the use and occupation of the plaintiffs, but, as aforesaid, Keater Huang was then still unaware of the fact that the estero lot claimed by the government has an area of 79 square meters or that a portion thereof is occupied by his house. Sometime in 1949, Keater Huang rejected the offer of defendant to buy the government lot for the use of plaintiffs for a sum of not less than P3,000.00. After Keater Huang had refused the offer, it appears that defendant never tried to return to the plaintiffs the corresponding purchase price of the difference in the area of Lot 24, taking into account that the total purchase price of P6,760.00 was based on the area of 52 square meters mentioned in the deed of sale. These circumstances belie defendant's pretense that plaintiffs have, either expressly or impliedly, excused said defendant from its failure to make good the award of the estero lot to the plaintiffs. Lastly, the corporation's assignment of its rights over the estero lot in favor of one of its employees, Guillermo Madridejos, without first notifying plaintiffs of such action, is highly questionable. Upon the foregoing, we are persuaded to believe and so hold that the defendant is guilty of fraud and bad faith in its dealings with plaintiffs. Accordingly, we cannot sustain defendant's appeal. ... ... Keater Huang must be reasonably compensated for his services as mediator in connection with the controversy between the corporation and the Soler Tenant Association. Defendant conceded that it was morally indebted to Keater Huang for his services in this regard, but asserts that at most Keater Huang was reasonably entitled to P2,000.00, the same amount which it had paid the other mediator Lim Sao Gim. In 1949, however, the corporation offered to buy the estero, property for not more than P3,000.00 on behalf of the plaintiffs. These circumstances are indicative of the truth of the testimony of Keater Huang that he had accepted the role of mediator upon the inducement of Go Puan Seng and Co Seng Liat who promised to pay him a reasonable amount for his services. ... . We are, therefore, constrained to order defendant to pay Keater Huang the sum of P5,000.00 as full and fair compensation for his services as mediator, in lieu of a return of the fair value of the estero lot which they have in the meantime used or occupied. With respect to Lot 24 and the residence of plaintiffs constructed thereon, plaintiffs choose to be paid for their actual values. The construction of the house was started in April, 1948 and completed in July, 1948. There is not an iota of positive evidence to show that, in the course of the construction, defendant or its officers and agents tried to advise plaintiffs to temporarily stop

construction on the ground that the building occupied more than the actual area of Lot 24, despite the fact that the final subdivision survey was finished as early as July, 1947. It is not farfetched to surmise, in this connection, that defendant might have deliberately concealed from plaintiffs the true area of Lot 24 in the hope that its application for a permit to occupy the estero lot would eventually ripen into a sales patent. For Lot 24 alone, its price per square meter in 1947 was P130.00 (Exhibit G). In 1954, when the complaint in this case was filed, the price certainly must have soared by reason of the development of the subdivision and the surroundings area. We may, therefore, set the price at P300.00 per square meter, as prayed for by plaintiffs, and, therefore, plaintiffs are entitled to the price of P15,600.00 for the investment of P6,760.00. ... . For the house, a three-story house worth P26,000 00 we must give allowances for depreciation and the beneficial use availed of it by plaintiffs since July, 1948. We may, therefore, set the price at P18,000.00, and grant to defendant the right to occupy, sell or demolish the building. For counsel fees, defendant is hereby condemned to pay 10% of the total amount due from it in favor of plaintiffs. No award of moral and exemplary damages. xxx xxx xxx

WHEREFORE, we hereby set aside the judgment of the lower court and render another condemning the defendant corporation to pay the plaintiff spouses in the total sum of P41,200.00, with legal interest thereon from September 20, 1954, until full payment, plus a sum equivalent to 10% of the above amount by way of counsel fees, without pronouncement as to cost. Plaintiffs (now respondents) moved for a reconsideration of the above decision, asking that instead of the amount of P5,000.00 awarded as compensation, the value of the estero lot, computed at P300.00 per square meter, for the 79 square meters, be adjudged. They anchored their claim on the fact that said estero lot was awarded to them in consideration of the valuable services of Keater Huang and which defendant corporation made a part and parcel of Lot 24. Upon the other hand, defendant (now petitioner) moved for the reconsideration and re-hearing, pointing out that the findings and conclusions in the decision have no basis, both in law and in fact. The Court of Appeals promulgated, on February 1, 1961, an "Amended Decision," which, in part, reads: We re-examined the voluminous record of this case, with the point discussed in the motions of the parties always in our mind. We reset the case for oral argumentation, and we listened intently to the able lawyers representing the parties. Anent the motion of the defendant corporation, we find no ground, factual or legal to justify a reversal of our judgment. All the arguments presented in the motion for reconsideration were thoroughly evaluated in our decision. The defendant's motion for reconsideration is hereby denied. With respect to the plaintiffs' motion for reconsideration, we are asked to eliminate the award of P5,000.00 representing Keater Huang's full and fair compensation for his services as mediator and, in lieu thereof, to order the defendant corporation to compensate the plaintiffs in the amount of P21,690.00, representing the fair value of the estero lot at the rate of P300.00 per square meter

based on its actual area of 72 square meters, because of the failure of the corporation to finalize the award of said estero lot to Keater Huang. We set aside the decision of the court a quo and rendered judgment in favor of the plaintiffs essentially upon our finding that the defendant is guilty of fraud or bad faith in its dealings with plaintiffs. We hesitated to grant compensation to the plaintiffs for the value of the esterolot because, among others, the area of said lot was not specified in the deed of award (Exhibit C). However, a review of the record would show that the Bureau of Lands approved the plan of the land, as surveyed for the defendant corporation, on April 26, 1948, showing that the estero lot has an area of 72 square meters (Exhibit D or 42). Quite significantly, it was the same month of April, 1948 that the plaintiff spouses started the construction of their new residence and the improvement of the esterolot. Upon the foregoing, we hereby grant the plaintiffs' motion for reconsideration, and hereby amend our decision of November 9, 1960 to conform to our views and conclusions above set forth and its dispositive portion shall therefore read as follows: WHEREFORE, we hereby set aside the judgment of the lower court and render another condemning the defendant corporation to pay the plaintiff spouses in the total sum of P57,890.00, with legal interest thereon from September 20, 1954, until full payment, plus a sum equivalent to 10% of the above amount by way of counsel fees, without pronouncement as to costs. The defendant corporation may take over Lot 24 and the house standing thereon upon full payment of the awards herein allowed the plaintiffs. The original decision and the amended one is now before this Court, on appeal, petitioner corporation assigning nine (9) errors supposedly committed by the Court of Appeals, to wit: (1) in awarding respondent spouses the market value of Lot 24 as damages consequent to the rescission of the sale of Lot 24, since an action of rescission on the ground of failure to deliver all that is comprised in the stated area of the land sold prescribes in six months from date of delivery. In this case, respondent spouses filed their original complaint only in 1954, or eight years after deliver of the land. (2) in awarding damages to the respondent spouses arising out of the alleged failure of the petitioner to deliver all that is comprised in the stated area of the land sold, since the sale was a sale of a definite parcel of land for a lump sum and not a sale of land for a price per square meter. (3) in awarding the respondent spouses P15,600.00, which was the market value of Lot 24 in 1954 when the complaint was filed, instead of the sum of P6,760.00, the purchase price paid by the respondent spouses for the lot in 1947, less the reasonable value of the use of the land by respondent spouses since December 1946. (4) in awarding respondent Keater Huang the "fair value of the estero lot," petitioner's promise to grant respondent the estero lot being void ab initio as the subject matter thereof was then undetermined and unsegregated and outside the commerce of men.

(5) in awarding the respondent spouses the sum of P21,690.00, representing the market value of theestero lot in 1954 when the complaint was filed, as compensation for respondent Huang's services as mediator. For xxx xxx xxx

(6) in allowing as "depreciation and the beneficial use availed of (the house built at an original cost of P26,000.00 in 1948) by plaintiffs since July, 1948," of only P8,000.00. (7) in failing to make findings of fact on the question of fraud or bad faith at the material and separate dates and stages covered by the transactions. (8) in finding petitioner guilty of fraud or bad faith in its dealings with respondent spouses, such finding being manifestly mistaken or impossible. In brief, it is without support substantial evidence. (9) in awarding the respondent spouses 10% of the amount due as attorney's fees. The first two (2) issues raised are irrelevant in the instant case. The case at bar was never intended to be one of rescission, nor was there also anything to indicate that a dispute existed as to whether or not the transaction was a sale of a definite parcel of land, for a lump sum. The lower court categorically stated that the suit was one to recover from the defendant corporation the sum of P23,700.00, in lieu of a piece of land allegedly given to them by the defendant, together with damages incurred by the plaintiffs in connection with a certain property bought by them from the defendant." It would be an idle gesture for Us, to discourse on said two alleged errors, because the matter which needs determination herein, is - whether or not respondents can recover the damages, actual or compensatory and otherwise, allegedly suffered by them and to what extent. Moreover, the provisions of law regarding rescission do not apply, because the parties are no longer in a position to restore the things they have received from each other, for the reasons set forth elsewhere in this opinion. The respondent Court of Appeals had expressed the belief and consequently held, that the petitioner-appellant was guilty of fraud and bad faith in its dealings with plaintiffs-appellees. As a general rule, We are bound by the findings and conclusions of fact made by the courts, whose decisions are appealed. In view, however, of the seriousness of the charge which may render the respondent officials of the petitioner-corporation subject to criminal responsibilities, and of the allegation that such findings and conclusions are not substantiated by the evidence of record, We went over the record of the case, with painstaking solicitude, in search of the truth, and We are of the opinion that the charge of fraud and bad faith in defendant-petitioner's business dealings with the respondent spouses in that case, has not been sufficiently shown. In justice to defendantpetitioner, therefore, the portion of the decision of the respondent Court on the matter is deleted, so as to conform with this ruling. This, however, will not exonerate the said petitioner from indemnifying the plaintiffs respondents, for reasons which follow. Alleged errors Nos. 4 & 5, refer to the estero lot. There seems to be no serious conflict that said lot was in payment of services rendered. Petitioner corporation, nevertheless, claims that in

making the award, it thought the estero lot formed part and parcel of the property it had bought; that even the respondent Court in its original decision, was of the opinion that the sum of P5,000.00 would be a full compensation for Keater Huang's services as a mediator, in lieu of a return of the lot's fair value; and that the other mediator was merely paid the sum of P2,000.00, for his services. It is a fact, however, that respondent Keater Huang's services were paid with the estero lot, not with cash; he accepted it; he was merely waiting for the title thereof, when it was discovered that said lot belonged to the government and had merely an area of 73 square meters. No one should belittle the justness of the proposition that if one cannot obtain the thing agreed upon, through no fault of his, but through the fault of the obligor, it stands to reason that he should be indemnified the reasonable value of the thing. If the petitioner corporation had chosen to award to Keater Huang a estero lot, instead of money, there must have been some good and useful reasons for doing so, which did not exist in the case of the other mediator. No one had ever compelled the petitioner-corporation to give the estero lot to Keater Huang. And it is indeed strange that the company is resorting to technicalities, on the formal requisites and validity of the alleged "donation," now that the courts are requiring it to pay its value. Aside from the fact that the transaction was not a "donation," in the strict sense of the word, the petitioner-corporation has already placed itself under the operation of the doctrine of estoppel. Next in discussion is the propriety of the award of P15,600.00, which constituted the market value of lot 24 in 1954 when the complaint was presented (Error No. 3). It will be noted that lot 24 was the subject of the contract of purchase and sale, wherein petitioner undertook to deliver to respondents said lot, with an area of 52 square meters, for P6,760.00, or at P130.00 per square meter. Full payment of the purchase price was made on April 22, 1947, the only act which remained to be done, was the delivery of the title. As of that date, therefore, respondents, in law, became the owners of the lot. The Court of Appeals found that, at the representation of the plaintiffs-respondents, the market value of the lots in that vicinity in 1954, was already P300.00 per square meter, a fact which was not disputed by petitioner at all. The difference in the price, partook of the nature of a lucro cesante, which, in this particular case, could have been realized by respondents. Indemnification for damages comprehends not only the value of the loss suffered, but also the profits which the obligee failed to obtain, had he sold it, at the time. Lucro cesante is usually the price which the thing could have commanded on the date that the obligation should have been fulfilled and was not (19 Scaevola, 558). Under the authority of article 220 NCC, and jurisprudence oil the matter therefore the petitioner is liable to respondents in the amounts specified by the respondent Court, which consisted of the price of the lot at the time complaint was presented (Borromeo v. Manila Electric Railroad, 44 Phil. 165; Algarra v. Sandejas, 27 Phil. 284). Anent the house the respondents had built on the lot (Error No. 6), We find no reason for altering the findings of the respondent Court, concerning the value of its depreciation. We find that the conclusion fixing the depreciation at P8,000.00 is reasonable, taking into account the fact that at the time the decision of the trial court was rendered (No. 6, 1960), the price of construction materials had already gone high. The respondent Court is correct when it disposed that "the defendant corporation may take over lot No. 24 and the house standing thereon, upon payment of the awards herein allowed the plaintiffs," because as things stand now, the plaintiff has no longer any beneficial use of the lot

(No. 24), its area having been reduced by 7 square meters and its form and shape being now triangular, and the house itself which occupies a surface area of 52 square meters cannot be made to fit a lesser area, without reducing it and destroying its form, since the estero lot is now assigned to or owned by Madridejos. Under such a situation, the value of the lot and the house should be paid to plaintiffs. The facts and circumstances obtaining in this particular case warrant the award of attorney's fees to the respondents-appellees (pars. 2 & 11, Art. 2208, NCC). We consider the amount fixed by the respondent Court, fair and reasonable. IN VIEW HEREOF, the decision appealed from is modified, in the manner heretofore indicated; and affirmed in all other respects, with costs, in both instances, against the petitioner-appellant Associated Realty Development Co., Inc.

53. FIRST DIVISION G.R. No. L-49496 May 31, 1979 MD TRANSIT, INC., Petitioner, vs. THE HONORABLE COURT OF APPEALS * and SERGIO MARIANO (for himself and in representation of his minors SERGIO, JR. and MICHAEL all surnamed MARIANO), Respondents.

TEEHANKEE, J.: The Court modifies the award to respondent of compensatory damages for lost earnings of his deceased wife Carmen G. Mariano (who was recklessly hit, while crossing the street on a pedestrian lane on Ayala Avenue in Makati, by petitioner's bus, thrown six meters away and instantly killed) from P309,920.00 to P200,000.00. The award is based on the two main factors of fife expectancy and lost net earning capacity of the deceased as set forth in the controlling case of Villa Rey Transit Inc. vs. Court of appeals. Respondent Court of Appeals, in its decision of August 31, 1978, affirmed in toto the judgment of December 15, 1976 of the Court of First Instance of Bataan in favor of respondent Sergio Mariano (for himself and in representation of two minor children) as plaintiffs-appellees against herein petitioner MD Transit, Inc. as defendant-appellant, as follows: WHEREFORE, PREMISES ABOVE CONSIDERED, finding the defendant MD Transit, Inc. civilly liable for having failed to exercise the diligence of a good father of a family in the supervision of its employee, Renato Dote who drove in a reckless manner defendant's MD Bus bumping and killing Carmen G. Mariano, the court hereby awards the following damages, to be paid by said defendant to herein plaintiffs, to wit: a) P50,000.00 as moral damages; b) P309,920.00 as compensatory damages for lost earnings; c) P20,160.00 as actual damages; d) P10,000.00 as attorney's fees; and e) Costs of suit. Petitioner filed on January 8, 1979 with this Court the present petition for review on certiorari of respondent appellate court's judgment. Upon receipt of respondents' comment as required in its Resolution of January 17, 1979, the Court in its March 5, 1979 Resolution resolved "to GIVE LIMITED DUE COURSE to the petition, only as to Item (b) of the judgment of the lower court as affirmed by the Court of Appeals, referring to the allegedly excessive compensatory damages

awarded in the amount of P309,920.00 ..., " and required the parties to submit their respective memoranda on this filed issue which were filed in due course. Respondent court found as 11 reasonable" the amount of P309,920.00 awarded as compensatory damages by the trial court, which had estimated the same in this wise: When the life of Carmen Mariano was untimely snapped she was only 39 years of age, in good health (Exhibit "E" - "E-2") and gainfully employed with the General Telephone Directory Co. receiving a monthly salary of P1,160.00 (Exhibit "F" Without taking into consideration anymore the regular annual increase of salary of the deceased (Exhibit "F-2"), had not her untimely death supervened, in her next 26 more years until her 65th year, she would have earned P309,920.00 deducting already some P2,000.00 as taxes (Exhibit 'K') and miscellaneous from her annual income of P13,920.00 126 years x P11,920.00 = [ P309,920.00]. 1 Respondent court had further rejected petitioner's objection to the Court's estimate of the deceased's life expectancy at 26 years more, affirming the trial court's findings on the basis of the evidence that the deceased was in good physical health, thus: As regards the compensatory damages awarded, while appellant does not dispute the findings of the court a quo that Carmen G. Mariano's earnings per month was P1,160.00 with the General Telephone Directory and she was only 39 years old when she met the untimely death, it however assails the ruling that the victim would still have for 26 years since her death on April 5, 1975, on the ground that while the victim was still living she did not deliver a baby normally but by Caesarian operation. A cursory reading of the Medical History and Physical Examination record (Exh. E, E-2) of the victim submitted by Mr. Mariano reveals that indeed the victim was in good physical health otherwise the phrase 'fit to continue present occupation could not have been placed in the 'remarks' portion of the record by the examining doctor. In the controlling case of Villa Rey Transit Inc. vs. Court of Appeals 2 (where P33,333.33 for loss of net earnings of P1,000.00 per year x 33-1/3 years of fife expectancy were awarded) as reaffirmed in Davila vs. Philippine Air Lines 3(where P195,000.00- damages were awarded based on net earnings of P7,200.00 per year x 25 years of life expectancy), the Court stressed two factors in the award of such compensatory damages, to wit, (1) "life expectancy is not only relevant but also an important element in fixing the amount recoverable" and (2) "earning capacity, as an element of damages to one's estate for his death by wrongful act is necessarily his net earning capacity or his capacity to acquire money, 'less the necessary expense for his own living.' Stated otherwise, the amount recoverable is not loss of the entire earning, but rather the loss of that portion of the earnings which the beneficiary would have received. In other words, only net earnings, not gross earning, are to be considered, that is, the total of the earnings less expenses necessary in the creation of such earnings or income and less living and other incidental expenses." Petitioner, citing the Villa Rey doctrine, contends in its petition that the maximum damages that should be awarded would amount to only P103,680.00 based on its contention that the victim's life expectancy should be 24 years (not 26 years) and net earnings only at P4,320.00 a year, thus:

The deceased Carmen G. Mariano, at the time of her death, was 39 years old. On the basis of the above formula (2/3 x 80-30) the deceased's normal life expectancy would be 24 years and not 27 years [sic]) at that age of 39 years old, ..., in the case at bar, the amount of at least P800.00 should be considered as reasonable monthly deduction from the income of the deceased or the sum of P9,600.00 a year. The deceased's yearly income was P13,920.00. s the above amount of P9,600.00, the deceased's net earning capacity would, therefore, be only P4,320.00 a year. Multiply this amount by 24 years (the deceased's normal life expectancy at age 39 years old, as above computed), the amount due private respondent, as compensatory damages, will then be P103,680.00 ... 4 In its memorandum, petitioner would further reduce the life expectancy of the deceased Carmen G. Mariano to 20 years instead of 24 years, arguing that "while it may be said that at the time of her death, Carmen G. Mariano was in relatively good health, yet undergoing a major surgery such as caesarian operation is a circumstance that would have affected her normal life expectancy and this fact should be considered as further allowance and hence, for purposes of this e her life expectancy may be reduced further to 20 years," and on this basis "(T)he deceased's yearly income was P13,920.00. Less the amount of P9,600.00, the deceased's net earning capacity would, therefore, be only P4,320.00 a year. Multiply this amount by 20 years (her normal life expectancy as herein before computed by us), the amount due private respondent, as compensatory damages, will then be only P86,400.00. 5 Respondents, on the other hand, contend that in the absence of a clear showing that the determination of the amount of compensatory damages based on life expectancy and the net earning capacity of the deceased is manifestly arbitrary or excessive, such award should be sustained. All factors considered, the Court believes that it is fair and reasonable to fix the deductible living and other expenses of the deceased at the sum of P4,800.00 a year or P400.00 a month (one half of the amount of P9,600.00 a year or P800.00 a month urged by petitioner), since the deceased's husband had also his own earnings and this sum would be her fair share of the family's expenses. Petitioner has expressly conceded the deceased's life expectancy to be at 20 to 24 years, supra. All in all, the Court believes that an award of P200,000.00 as compensatory damages by way of the deceased's lost earnings is completely justified, under the facts of the case at bar. Ts would be roughly based on an annual net earning of P9,120.00 [P13,920.00 gross earnings less P4,800.00 annual expenses] x 22 years of life expectancy P200,640.00). Such award of P200,000.00 for compensatory damages incidentally coincides with the exact amount prayed for as compensatory damages for loss of earning capacity in respondent's complaint. 6 This award of P200,000.00 as compensatory damages shall pertain in three equal one-third shares to respondent and the two minor children born of respondent's marriage with the deceased, namely Sergio Mariano, Jr. and Michael Mariano. ACCORDINGLY, judgment is hereby rendered reducing the lower court's award of compensatory damages, as affirmed by respondent court, to respondent and his two minor children, Sergio, Jr. and Michael, both surnamed Mariano to the sum of P200,000.00 in three

equal one-third shares among them. Since the other items of damages awarded to respondent (P50,000.00-moral damages, P20,160.00-actual damages, P10,000.00-attorney's fees and costs of suit) in the trial court's judgment as affirmed by respondent court have long become final and executory with the Court's denial of the petition to review these items per its Resolution of March 5, 1979, this judgment shall be immediately executory.

54. Villa Rey 55. EN BANC

G.R. No. L-28512 February 28, 1973 PEDRO R. DAVILA and PRECIOSA C. TIRO, plaintiffs-appellants, vs. PHILIPPINE AIR LINES, Defendant-Appellant. MAKALINTAL, J.: In Civil Case No. 5728 of the Court of First Instance of Iloilo (Pedro R. Davila and Preciosa C. Tirol, plaintiffs, vs. Philippine Air Lines, Inc., defendant) judgment was rendered ordering the defendant to pay the plaintiffs various sums of money, as follows: (1) For the death of Pedro T. Davila, Jr. the amount of P6,000.00; (2) For the loss of the earning capacity of the deceased at the rate of P12,000.00 per annum for five (5) years in the amount of Sixty Thousand Pesos. (P60,000.00); (3) For moral damages in favor of the plaintiffs Ten Thousand Pesos (P10,000.00); (4) For exemplary damages in the amount of Ten Thousand Pesos (P10,000.00); (5) For actual damages the amount of Five Thousand Pesos (P5,000.00) broken down to as follows: A rolex watch valued at P600.00; a pistol worth P300.00; burial expenses P600.00; for the lot and the mausoleum P3,500.00; (6) For Attorney's fees the amount of Ten Thousand Pesos (P10,000.00) or a total amount of One Hundred and One Thousand Pesos (P101,000.00) To pay the costs of this proceedings. Both parties appealed directly to this Court in view of the aggregate of the amounts awarded, the judgment having been rendered before the effectivity of Rep. Act No. 5440. In this appeal the plaintiffs seek an increase in said amounts, and the defendant, complete exoneration from, or at least mitigation of, liability. The case arose from the tragic crash of a passenger plane of the defendant which took the lives of all its crew and passengers. The plane, identified as PI-C133, was a DC-3 type of aircraft, manufactured in 1942 and acquired by the defendant in 1948. It had flown almost 18,000 hours at the time of its ill-fated flight. Despite its age, however, it had been certified as airworthy by the Civil Aeronautics Administration. On November 23, 1960, at 5:30 in the afternoon, it took off from the Manduriao Airport, Iloilo, on its way to Manila, with 33 people on board, including

the plane's complement. It did not reach its destination, but crashed at Mt. Baco, Mindoro, one hour and fifteen minutes after take-off. A massive search was undertaken by the defendant and by other parties as soon as it was realized that the plane's arrival in Manila was overdue. The plaintiffs, parents of Pedro T. Davila, Jr., who was one of the passengers, had no definite news of what had happened to their son, getting what information they could only from conflicting newspaper reports, until they received, on December 19, 1960, a letter of condolence from the defendant's president Andres Soriano, informing them that their son had died in the crash. And it was only on December 29 that his body was recovered an taken back to Iloilo. The issues before the trial court, and now before Us in this appeal, are whether or not the defendant is liable for violation of its contract of carriage and if so, for how much. The provisions of the Civil Code on this substantive question of liability are clear and explicit. Article 1733 binds common carriers, "from the nature of their business and by reasons of public policy, ... to observe extraordinary diligence in the vigilance ... for the safety of the passengers transported by them according to all the circumstances of each case." Article 1755 establishes the standard of care required of a common carrier, which is, "to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with due regard for all the circumstances." Article 1756 fixes the burden of proof by providing that "in case of death of or injuries to passengers, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as prescribed in Articles 1733 and 1755." Lastly, Article 1757 states that "the responsibility of a common carrier for the safety of passengers ... cannot be dispensed with or lessened by stipulation, by the posting of notices, by statements on tickets, or otherwise." The route prescribed by the Civil Aeronautics Administration for the flight of plane PI-C113 in the afternoon of November 23, 1960 was Iloilo-Romblon-Manila, the latter stage, denominated as airway "Amber I," being a straight lane from Romblon to Manila. The prescribed elevation of the flight was 6,000 ft. The plane reported its position after take-off and again when it was abeam the Roxas homer. However, it did not intercept airway "Amber I" over Romblon as it was supposed to do, and the pilot did not give his position then although Romblon was a compulsory checking point. The fact was that the plane had deviated from the prescribed route by 32 miles to the west when it crashed at Mt. Baco. The reading of the altimeter of the plane when its wreckage was found was 6,800 ft. There is a suggestion that in the course of the flight between Romblon and Mindoro the aircraft was drifted westward by the cross-winds then blowing in the region. The defendant, however, has not given a definite explanation as to why, if such was the case, the pilot failed to make the necessary correction in his flight to compensate for the drift. According to the defendant's witness, Maj. Mijares, Chief of the Aviation Safety Division of the Civil Aeronautics Administration and Chairman of the CAA Investigating Committee, there was a navigational error, to which several factors contributed: "the weather observation at that time from the Weather Bureau was not so good between Mt. Baco and Romblon and the wind aloft was quite strong, which would be also one of the causes for the drifting of the aircraft; and the other strong probability, I would say, would be the malfunction of the aircraft's navigational instrument." He further explained that "a cross-wind can drift the plane if the pilot will not make the necessary

correction, if his navigational instrument is malfunctioning and the visual reference outside the aircraft could not make the necessary corrections." There is nothing in the testimony of Maj. Mijares to show just how strong the cross-winds were in the region at the time, although in the investigation of the accident by the Senate Committee on transportation there was testimony that the cross-winds had a velocity of either 20 to 25 knots or 25 to 35 knots an hour. Considering the relatively short distance from Romblon to Mt. Baco and the brief span of time it would take to fly that distance, cross-winds with the velocity stated could not have possibly deviated the plane by as much as 32 miles. The defendant points out that the navigational instrument on board the plane consisted of two (2) sets of automatic direction finders (ADF) which, when found after the crash, showed a reading that the aircraft was heading north, which was the proper flight direction. This point, however, is of no vital significance in this case since it does not explain why the aircraft was 32 miles off its prescribed route in the first place. It is suggested that the pilot did not notice the drift of his plane because of poor visibility due to thick clouds, which prevented him from making the corresponding correction on the basis of visual references to the terrain outside. But according to Maj. Mijares himself the report from the Weather Bureau at the time showed that visibility was 15 miles between Romblon and Mt. Baco and that the clouds from 2,700 to 7,000 ft. elevation were "scattered." And the profile of the probable weather cross-section along airway "Amber I" during the flight (Exh. 33-A) shows that at 6,000 ft. the airlane was clear and free of clouds. The suggestion therefore that the pilot was practically flying blind and consequently failed to notice the drift of the aircraft is not justified by the evidence. Indeed even the investigating team of the defendant under the chairmanship of Capt. Jaime Manzano concluded in its report that "based on the limited evidences available, the board is of the opinion that the probable cause was the inability of the pilot to intersect airway "Amber I" over Romblon and to maintain track within its designated airway lane for reasons unknown." What is undisputed therefore is that the pilot did not follow the route prescribed for his flight, at least between Romblon and Manila. Since up to that point over Romblon, where he was supposed to intersect airway "Amber I" the weather was clear, the most reasonable conclusion is that his failure to do so was intentional, and that he probably wanted to fly on a straight line to Manila. It was a violation of air-craft traffic rules to which, under the circumstances, the accident may be directly attributable. In any case, absent a satisfactory explanation on the part of the defendant as to how and why the accident occurred, the presumption is that it was at fault, under Article 1756 of the Civil Code. The next question relates to the amount of damages that should be awarded to the plaintiffs, parents of the deceased. The trial court fixed the indemnity for his death in the amount of P6,000.00. Pursuant to current jurisprudence on the point it should be increased to P12,000.00. 1 The deceased was employed as manager of a radio station 2, from which he was earning P8,400.00 a year, consisting of a monthly salary of P600.00 and allowance of P100.00. As a lawyer and junior partner of his father in the law office, he had an annual income of P3,600.00.

From farming he was getting an average of P3,000.00. All in all therefore the deceased had gross earnings of P15,000.00 a year. According to Article 2206, paragraph (1), of the Civil Code, "the defendant shall be liable for the loss of the earning capacity of the deceased and indemnity shall be paid to the heirs of the latter." This Article, while referring to "damages for death caused by crime or quasi-delict," is expressly made applicable by Article 1764 "to the death of a passenger caused by the breach of contract by a common carrier." The deceased, Pedro Davila, Jr., was single and 30 years of age when he died. At that age one's normal life expectancy is 33-1/3 years, according to the formula (2/3 x [80-30]) adopted by this Court in the case of Villa Rey Transit, Inc. vs. Court of Appeals 3 on the basis of the American Expectancy Table of Mortality or the Actuarial of Combined Experience Table of Mortality. However, although the deceased was in relatively good health, his medical history shows that he had complained of and been treated for such ailments as backaches, chest pains and occasional feelings of tiredness. It is reasonable to make an allowance for these circumstances and consider, for purposes of this case, a reduction of his life expectancy to 25 years. In the same case of Villa Revenue Transit this Court stated: "... earning capacity, as an element of damages to one's estate for his death by wrongful act is necessarily his net earning capacity or his capacity to acquire money, less the necessary expense for his own living. Stated otherwise, the amount recoverable is not loss of the entire earnings, but rather the loss of that portion of the earnings which the beneficiary would have received. In other words, only net earnings, not gross earnings, are to be considered, that is, the total of the earnings less expenses necessary in the creation of such earnings or income and less living and other incidental expenses." Considering the fact that the deceased was getting his income from three (3) different sources, namely from managing a radio station, from law practice and from farming, the expenses incidental to the generation of such income were necessarily more than if he had only one source. Together with his living expenses, a deduction of P600.00 a month, or P7,200.00 a year, seems to Us reasonable, leaving a net yearly income of P7,800.00. This amount, multiplied by 25 years, or P195,000.00 is the amount which should be awarded to the plaintiffs in this particular respect. Actual losses sustained consist of the following, as found by the trial court: "Rolex Watch P600.00; pistol - P300.00; Burial Expenses - P600.00; and cost of cemetery lot and mausoleum P3,500.00." Under Article 2206, in relation to Article 1764, of the Civil Code, the parents of the deceased are entitled to moral damages for their mental anguish. The trial court awarded P10,000.00 in this concept, and We find no justification to change the award, considering the long period of uncertainty and suffering the plaintiffs underwent from November 23, when the plane crash occurred, to December 19, when they received a letter from the defendant's president confirming

the death of their son, and again to the following December 29, when his body was finally recovered and taken back to them. With respect to the award of P10,000.00 as exemplary damages, it is Our opinion that the same should be eliminated. According to Article 2232 of the Civil Code, in contracts and quasicontracts the court may award exemplary damages if the defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent manner. The failure of the defendant here to exercise extraordinary diligence, as required by law, does not amount to anyone of the circumstances contemplated in the said provision. The trial court has awarded attorney's fees of P10,000.00. We do not find this award groundless or the amount thereof unreasonable. The total of the different items above enumerated is P232,000.00. The judgment of the court a quo is therefore modified accordingly and the defendant is ordered to pay the said amount to the plaintiffs, with legal interest thereon from the finality of this judgment. With costs against the defendant.