Damages Custodio - Dbp Fulltxt

8/16/2019 Damages Custodio - Dbp Fulltxt

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SPOUSES CRISTINO and BRIGIDA CUSTODIO and SPOUSES LITOand MARIA CRISTINA SANTOS, petitioners, vs. COURT OFAPPEALS, HEIRS OF PACIFICO C. MABASA and REGIONALTRIAL COURT OF PASIG, METRO MANILA, BRANCH181, respondents.

D E C I S I O N

REGALADO, J.:

This petition for review on certiorari assails the decision of respondentCourt of Appeals in CA-G.R. CV No. 29115 pro!ul"ated on Nove!#er 1$199% which a&r!ed with !odi'cation the decision of the trial court aswell as its resolution dated (ul) * 199+ den)in" petitioner,s !otion forreconsideration. 1

/n Au"ust 20 19*2 Civil Case No. + +00 for the "rant of anease!ent of ri"ht of wa) was 'led #) aci'co 3a#asa a"ainst CristinoCustodio 4ri"ida R. Custodio Rosalina R. 3orato ito 6antos and 3ariaCristina C. 6antos #efore the Re"ional Trial Court of asi" and assi"ned to4ranch 22 thereof . 2

The "enerative facts of the case as s)nthesi7ed #) the trial court andadopted #) the Court of Appeals are as follows8

erusin" the record this Court 'nds that the ori"inal plainti aci'co3a#asa died durin" the pendenc) of this case and was su#stituted #)/felia 3a#asa his survivin" spouse and children .

The plainti owns a parcel of land with a two-door apart!ent erected

thereon situated at :nterior . 4ur"os 6t. alin"on Tipas Ta"ui" 3etro3anila. The plainti was a#le to ac;uire said propert) throu"h a contractof sale with spouses 3a!erto Ra)os and Teodora t? fro! 3a#asa,s residence to . 4ur"os 6treet. 6uch path is passin"in #etween the previousl) !entioned row of houses. The second

passa"ewa) is a#out % !eters in width and len"th fro! plainti 3a#asa,sresidence to . 4ur"os 6treetE it is a#out 20 !eters. :n passin" thru saidpassa"ewa) a less than a !eter wide path throu"h the septic tan= andwith 5-6 !eters in len"th has to #e traversed.

When said property was purchased by Mabasa, there were tenantsoccupying the premises and who were acknowledged by plaintif Mabasa

as tenants. However, sometime in ebruary, !"#$. one o% said tenantsvacated the apartment and when plaintif Mabasa went to see the

premises, he saw that there had been built an adobe %ence in the &rst passageway making it narrower in width . 6aid ado#e fence was 'rstconstructed #) defendants 6antoses alon" their propert) which is alsoalon" the 'rst passa"ewa). efendant 3orato constructed her ado#e fenceand even e tended said fence in such a wa) that the entire passa"ewa)was enclosed >@ hi#it B1-6antoses and Custodios D @ h. B D for plainti@ hs. B1-CD B1- D and B: -@D? And it was then that the re!ainin" tenants of said apart!ent vacated the area. efendant 3a. Cristina 6antos testi'edthat she constructed said fence #ecause there was an incident when herdau"hter was dra""ed #) a #ic)cle pedalled #) a son of one of the tenantsin said apart!ent alon" the 'rst passa"ewa). 6he also !entioned so!eother inconveniences of havin" >at? the front of her house a pathwa) suchas when so!e of the tenants were drun= and would #an" their doors andwindows. 6o!e of their footwear were even lost. % >:talics in ori"inalte tE corrections in parentheses supplied?

/n Fe#ruar) 2 199$ a decision was rendered #) the trial court withthis dispositive part8

Accordin"l) ud"!ent is here#) rendered as follows8

1? /rderin" defendants Custodios and 6antoses to "ive plainti per!anent

access - in"ress and e"ress to the pu#lic streetE

2? /rderin" the plainti to pa) defendants Custodios and 6antoses the su!of @i"ht Thousand esos > * $$$? as inde!nit) for the per!anent use ofthe passa"ewa).

The parties to shoulder their respective liti"ation e penses. +

Not satis'ed therewith therein plainti represented #) his heirsherein private respondents went to the Court of Appeals raisin" the soleissue of whether or not the lower court erred in not awardin" da!a"es intheir favor. /n Nove!#er 1$ 199% as earlier stated the Court of Appeals

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rendered its decision a&r!in" the ud"!ent of the trial court with!odi'cation the decretal portion of which disposes as follows8

HI@R@F/R@ the appealed decision of the lower court is here#) AFF:R3@H:TI 3/ :F:CAT:/N onl) insofar as the herein "rant of da!a"es toplainti s-appellants. The Court here#) orders defendants-appellees to pa)plainti s-appellants the su! of 6i t) Five Thousand '(65,)))* esos asActual a!a"es Thirt) Thousand > %$ $$$? esos as 3oral a!a"es and

Ten Thousand > 1$ $$$? esos as @ e!plar) a!a"es. The rest of theappealed decision is a&r!ed to all respects . 5

/n (ul) * 199+ the Court of Appeals denied petitioner,s !otion forreconsideration. 0 etitioners then too= the present recourse to us raisin"two issues na!el) whether or not the "rant of ri"ht of wa) to hereinprivate respondents is proper and whether or not the award of da!a"es isin order.

Hith respect to the 'rst issue herein petitioners are alread) #arredfro! raisin" the sa!e. etitioners did not appeal fro! the decision of thecourt a +uo "rantin" private respondents the ri"ht of wa) hence the) are

presu!ed to #e satis'ed with the ad udication therein. Hith the 'nalit) of the ud"!ent of the trial court as to petitioners the issue of propriet) of the "rant of ri"ht of wa) has alread) #een laid to rest.

For failure to appeal the decision of the trial court to the Court of Appeals petitioners cannot o#tain an) a&r!ative relief other than those"ranted in the decision of the trial court. That decision of the court #elowhas #eco!e 'nal as a"ainst the! and can no lon"er #e reviewed !uchless reversed #) this Court. The rule in this urisdiction is that wheneveran appeal is ta=en in a civil case an appellee who has not hi!self appealed !a) not o#tain fro! the appellate court an) a&r!ative relief other than what was "ranted in the decision of the lower court. The

appellee can onl) advance an) ar"u!ent that he !a) dee! necessar) todefeat the appellant,s clai! or to uphold the decision that is #ein"disputed and he can assi"n errors in his #rief if such is re;uired tostren"then the views e pressed #) the court a +uo. These assi"ned errorsin turn !a) #e considered #) the appellate court solel) to !aintain theappealed decision on other "rounds #ut not for the purpose of reversin" or!odif)in" the ud"!ent in the appellee,s favor and "ivin" hi! othera&r!ative reliefs.

Iowever with respect to the second issue we a"ree with petitionersthat the Court of Appeals erred in awardin" da!a"es in favor of privaterespondents. The award of da!a"es has no su#stantial le"al #asis. A

readin" of the decision of the Court of Appeals will show that the award of da!a"es was #ased solel) on the fact that the ori"inal plainti aci'co

3a#asa incurred losses in the for! of unreali7ed rentals when the tenantsvacated the leased pre!ises #) reason of the closure of the passa"ewa).

Iowever the !ere fact that the plainti su ered losses does not "iverise to a ri"ht to recover da!a"es. To warrant the recover) of da!a"esthere !ust #e #oth a ri"ht of action for a le"al wron" inJicted #) thedefendant and da!a"e resultin" to the plainti therefro!. Hron" withoutda!a"e or da!a"e without wron" does not constitute a cause of action

since da!a"es are !erel) part of the re!ed) allowed for the in ur) caused#) a #reach or wron". *

There is a !aterial distinction #etween da!a"es and in ur). :n ur) i sthe ille"al invasion of a le"al ri"htE da!a"e is the loss hurt or har! whichresults fro! the in ur)E and da!a"es are the reco!pense or co!pensationawarded for the da!a"e su ered. Thus there can #e da!a"e withoutin ur) in those instances in which the loss or har! was not the result of aviolation of a le"al dut). These situations are often called damnum abs+uein uria. 9 in order that a plainti !a) !aintain an action for the in uries of which he co!plains he !ust esta#lish that such in uries resulted fro! a#reach of dut) which the defendant owed to the plainti - a concurrence of in ur) to the plainti and le"al responsi#ilit) #) the person causin" it.

1$ The underl)in" #asis for the award of tort da!a"es is the pre!ise thatan individual was in ured in conte!plation of law. Thus there !ust 'rst #ethe #reach of so!e dut) and the i!position of lia#ilit) for that #reach#efore da!a"es !a) #e awardedE it is not su&cient to state that thereshould #e tort lia#ilit) !erel) #ecause the plainti su ered so!e pain andsu erin"? 11

3an) accidents occur and !an) in uries are inJicted #) acts oro!issions which cause da!a"e or loss to another #ut which violate nole"al dut) to such other person and conse;uentl) create no cause of action in his favor. :n such cases the conse;uences !ust #e #orne #) thein ured person alone. The law a ords no re!ed) for da!a"es resultin"fro! an act which does not a!ount to a le"al in ur) or wron". 12

:n other words in order that the law will "ive redress for an actcausin" da!a"e that act !ust #e not onl) hurtful #ut wron"ful. There!ust #e damnum et in uria. 1% :f as !a) happen in !an) cases a personsustains actual da!a"e that is har! or loss to his person or propert)without sustainin" an) le"al in ur) that is an act or o!ission which thelaw does not dee! an in ur) the da!a"e is re"arded as damnum abs+uein uria. 1+

:n the case at #ar althou"h there was da!a"e there was no le"al

in ur). Contrar) to the clai! of private respondents petitioners could not#e said to have violated the principle of a#use of ri"ht. :n order that the

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principle of a#use of ri"ht provided in Article 21 of the Civil Code can #eapplied it is essential that the followin" re;uisites concur8 >1? Thedefendant should have acted in a !anner that is contrar) to !orals "oodcusto!s or pu#lic polic)E >2? The acts should #e willfulE and >%? There wasda!a"e or in ur) to the plainti . 15

The act of petitioners in constructin" a fence within their lot is a valide ercise of their ri"ht as owners hence not contrar) to !orals "ood

custo!s or pu#lic polic). The law reco"ni7es in the owner the ri"ht toen o) and dispose of a thin" without other li!itations than thoseesta#lished #) law . 10 :t is within the ri"ht of petitioners as owners toenclose and fence their propert). Article +%$ of the Civil Code provides thatB>e?ver) owner !a) enclose or fence his land or tene!ents #) !eans of walls ditches live or dead hed"es or #) an) other !eans withoutdetri!ent to servitudes constituted thereon.D

At the ti!e of the construction of the fence the lot was not su# ect toan) servitudes. There was no ease!ent of wa) e istin" in favor of privaterespondents either #) law or #) contract. The fact that privaterespondents had no e istin" ri"ht over the said passa"ewa) is con'r!ed#) the ver) decision of the trial court "rantin" a co!pulsor) ri"ht of wa) intheir favor after pa)!ent of ust co!pensation. :t was onl) that decisionwhich "ave private respondents the ri"ht to use the said passa"ewa) afterpa)!ent of the co!pensation and i!posed a correspondin" dut) onpetitioners not to interfere in the e ercise of said ri"ht.

Ience prior to said decision petitioners had an a#solute ri"ht overtheir propert) and their act of fencin" and enclosin" the sa!e was an actwhich the) !a) lawfull) perfor! in the e!plo)!ent and e ercise of saidri"ht. To repeat whatever in ur) or da!a"e !a) have #een sustained #)private respondents #) reason of the ri"htful use of the said land #)petitioners is damnum abs+ue in uria. 1

A person has a ri"ht to the natural use and en o)!ent of his ownpropert) accordin" to his pleasure for all the purposes to which suchpropert) is usuall) applied. As a "eneral rule therefore there is no causeof action for acts done #) one person upon his own propert) in a lawful andproper !anner althou"h such acts incidentall) cause da!a"e or anunavoida#le loss to another as such da!a"e or loss is damnum abs+uein uria. 1* Hhen the owner of propert) !a=es use thereof in the "eneraland ordinar) !anner in which the propert) is used such as fencin" orenclosin" the sa!e as in this case no#od) can co!plain of havin" #eenin ured #ecause the inconvenience arisin" fro! said use can #econsidered as a !ere conse;uence of co!!unit) life. 19

The proper e ercise of a lawful ri"ht cannot constitute a le"al wron"for which an action will lie 2$ althou"h the act !a) result in da!a"e toanother for no le"al ri"ht has #een invaded 21 /ne !a) use an) lawful!eans to acco!plish a lawful purpose and thou"h the !eans adopted !a)cause da!a"e to another no cause of action arises in the latter,sfavor. An) in ur) or da!a"e occasioned there#) is damnum abs+uein uria. The courts can "ive no redress for hardship to an individualresultin" fro! action reasona#l) calculated to achieve a lawful end #)lawful !eans. 22

WHEREFORE under the co!pulsion of the fore"oin" pre!ises theappealed decision of respondent Court of Appeals is here#) R@V@R6@ and6@T A6: @ and the ud"!ent of the trial court is correspondin"l)R@:N6TAT@ .

SO ORDERED.

omero and (uno, ., concu r.

Mendo/a, ., too= no part .

HEIRS OF SIMEON BORLADO, namely, ADELAIDA BORLADO, LORETOBORLADO, RE NALDO BORLADO, RICARDO BORLADO,FRANCISCO BORLADO and ALADINO DORADO, petitioners,vs . COURT OF APPEALS, and SAL!ACION !DA. DE BULAN,BIEN!ENIDO BULAN, "R., NORMA B. CLARITO and THEPRO!INCIAL SHERIFF OF CAPI#, respondents .

D E C I S I O N

PARDO, J .$

The case is an appeal via certiorari fro! a decision 1 of the Court of Appeals a&r!in" the decision of the trial court the dispositive portion of which reads8

BWHEREFORE, ud"!ent is rendered dis!issin" plainti s, co!plaint forlac= of cause of action and orderin" as vacated the restrainin" order andwrit of preli!inar) in unction issued in this caseE and

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B1. lainti s to #e ointl) and solidaril) lia#le to defendants the ;uantit) ofone hundred >1$$? cavans of pala) ever) )ear fro! 19 2 until plainti svacate the pre!ises of the land in ;uestionE

B2. eclarin" defendants as owner of the land and entitled to possessionE

B%. /rderin" plainti s to pa) defendants the su! of 5 $$$.$$ asattorne),s fees and the su! of 5 $$$.$$ as liti"ation e pensesE and

B+. To pa) the costs of the suit.

B6/ /R @R@ .

BRo as Cit) hilippines 3arch 1* 19**.

B>6"d.? (/NA6 A. A4@ AR

B( u d " eD2

T%e Fa&'(

The facts as found #) the Court of Appeals are as follows8

BThe records show that plainti s-appellants % >petitioners? are the heirs of6i!eon 4orlado whose parents were 6erapio 4orlado and 4al#ina4ulan. The ori"inal owner of the lot in ;uestion ot No. 2$9 of the

ontevedra Cadastre 3aa)on Capi7 was 6erapio 4orlado "randfather ofpetitioners.

B/n 15 April 19+2 6erapio sold the lot to Francisco 4acero >@ h. BCD p.2+ 3TC Record? for Three Iundred esos > %$$.$$?. After the death ofFrancsico on 20 Fe#ruar) 19+* his widow A!paro ionisio Vda. de 4aceroin her capacit) as le"al "uardian of her !inor children na!el)8 NicolasValentin and u7vi!inda all surna!ed 4acero and forced heirs of Francisco4acero sold it >the lot? to the 6pouses 4ienvenido 4ulan and 6alvacion4or#on throu"h a eed of A#solute 6ale dated 2 Au"ust 195+ >@ h. 05pp. 2+%-2+5 id.?.

BKpon the e ecution of the eed of 6ale and even prior thereto actualpossession of ot No. 2$5 was with the vendees-spouses 4ulans in view of a loan o#tained #) Francisco 4acero fro! the! in ece!#er 19+ >@ h.B05D supra?. @ ercisin" their ri"ht of ownership under the eed of 6ale

6alvacion 4or#on Vda. de 4ulan declared the lot in her na!e in 19$$ forta ation purposes under Ta eclaration No. 22%2 >@ h. BFD p. 25+ Record

3TC ?. 6he paid the correspondin" ta es as evidenced #) the TaReceipts !ar=ed as @ hi#its BLD B(D B:D BGD BFD and BID >pp. 2+*-25%Record id.?. 6alvacion and her co-defendants-appellees, + possession ofthe lot was continuous peaceful uninterrupted adverse and e clusiveuntil Nove!#er + 19 2 when petitioners forci#l) entered and wrestedph)sical possession thereof fro! the!.

B/n 2% Nove!#er 19 2 respondents 'led with the 3unicipal Court of3aa)on Capi7 a co!plaint for e ect!ent doc=eted as Civil Case No. A-1a"ainst petitioners >p. 1 id.?. The e ect!ent case was decided in favor ofthe respondents where#) the petitioners their a"ents tenants privies and!e!#ers of their fa!ilies were ordered to vacate ot No. 2$ 9 and deliverpossession to the respondents to"ether with all i!prove!ents andstandin" cropsE to pa) said respondents /ne Iundred >1$$? cavans ofpala) annuall) fro! 19 2 to the present or in the total a!ount of /ne

Thousand /ne Iundred >1 1$$? cavans of pala)E and to pa) the su! of Five Thousand > 5 $$$.$$? esos as rei!#urse!ent for the a!ountrespondents had paid their law)er to protect their ri"htsE and the costs ofsuit >@ h. B5 D pp. 250-201 id.?. :nstead of appealin" the adverse decisionto the Court of First :nstance >now RTC? on * Nove!#er 19*% petitioners'led the present case with the Re"ional Trial Court 4ranch 1* Ro as Cit)doc=eted as Civil Case No. V-+** . This case was dis!issed for lac= ofcause of action in a decision the decretal portion of which was ;uotedearlier.D 5

/n 2+ Nove!#er 199% the Court of Appeals pro!ul"ated itsdecision a&r!in" in toto the appealed decision. 0

Ience this appeal .

T%e I(()e

The issue raised is whether the Court of Appeals erred in rulin" thatrespondents were the owners of the lot in ;uestion.

T%e C*)+' ( R)l-n

He den) the petition. The issue is factual. :n an appeal via certiorariwe !a) not review the 'ndin"s of fact of the Court of Appeals. * Hhensupported #) su#stantial evidence the 'ndin"s of fact of the Court of Appeals are conclusive and #indin" on the parties and are not reviewa#le#) this Court 9 unless the case falls under an) of the e ceptions to therule. 1$

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etitioner failed to prove that the case falls within the e ceptions.11 The 6upre!e Court is not a trier of facts. 12 :t is not our function to

review e a!ine and evaluate or wei"h the pro#ative value of the evidencepresented. 1% A ;uestion of fact would arise in such event. 1+


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;uotation that the court would have #een disposed to consider favora#l)the plainti Os clai! for in ur) to her #usiness had the evidence presentedit.

No evidence was then o ered #) the plainti to show that this sli"htla!eness in an) wa) interfered with the conduct of her #usiness or thatshe could !a=e an) less a!ount therein than she could !a=e if she did not

su er fro! this direct. The court therefore did not err in allowin" her nofurther da!a"es on this account #ecause there was no evidence that shehad su ered an).

The alle"ed da!a"es which the court refused to entertain in that case andunder the discussion of which appears the a#ove ;uotation fro! Viadawere for pain and su erin" the plainti !a) have e perienced. The courtsaid8 PFor the pro'ts which the plainti failed to o#tain spo=en of in thelatter part of this article the plainti was allowed to recover and the;uestion is whether the value of the loss which she su ered can #ee tended to pain which she e perienced #) reason of the accident.P

Actions for da!a"es such as the case at #ar are #ased upon article 19$2 of the Civil Code which reads as follows8 PA person who #) act or o!issioncauses da!a"e to another where there is fault or ne"li"ence shall #eo#li"ed to repair the da!a"e so done.P

/f this article the supre!e court of 6pain in its decision of Fe#ruar) 19$$ in considerin" the inde!nit) i!posed #) it said8 P:t is undisputedthat said reparation to #e e&cacious and su#stantial !ust rationall)include the "eneric idea of co!plete inde!nit) such as is de'ned ande plained in article 11$0 of the said >Civil? Code.P

Articles 11$0 and 11$ of the Civil Code read as follows8

11$0. :nde!nit) for losses and da!a"es includes not onl) the a!ount ofthe loss which !a) have #een su ered #ut also that of the pro't whichthe creditor !a) have failed to reali7e reservin" the provisions containedin the followin" articles.

11$ . The losses and da!a"es for which a de#tor in "ood faith is lia#leare those foreseen or which !a) have #een foreseen at the ti!e ofconstitutin" the o#li"ation and which !a) #e a necessar) conse;uence ofits nonful'll!ent.

:n case of fraud the de#tor shall #e lia#le for all those which clearl) !a)ori"inate fro! the nonful'll!ent of the o#li"ation.

Fraud is not an ele!ent of the present case and we are not thereforeconcerned with it. The lia#ilit) of the present defendant includes onl) thoseda!a"es which were Pforeseen or !a) have #een foreseenP at the ti!e ofthe accident and which are the necessar) and i!!ediate conse;uences of his fault. :n discussin" the ;uestion of da!a"es under the civil lawGutierre7 >vol. + pp. 0+ 05? sa)s8

:n the i!possi#ilit) of la)in" down a surer rule the Code understands=nown da!a"es to #e those which in the prudent discern!ent of the ud"e!erit such a ;uali'cation althou"h their conse;uences !a) not #e directi!!ediate inevita#le.

:f it is a ;uestion of losses occasioned throu"h other causes e cept fraudand the contractin" parties have not covenanted an) inde!nit) for thecase of nonful'll!ent then the reparation of the losses or da!a"es shallonl) co!prise those that fault. This rule !a) not #e ver) clear #ut is theonl) one possi#le in a !atter !ore of the do!ain of prudence than of law.

:n its decision of April 1* 19$1 the supre!e court of 6pain said8 PNeitherwere the errors incurred that are !entioned in the third assi"n!ent sincethe inde!nit) for da!a"es is understood to appl) to those caused theco!plainant directl) and not to those which indirectl) and throu"h !oreor less lo"ical deductions !a) a ect the interests of the A)unta!iento deViana as occurs in the present case where the increase of wealth concernsnot onl) the A)unta!iento #ut also the provide and the state )et not onthis account does an) action lie in their #ehalf as derived fro! thecontracts with Krioste.P

This doctrine is also a&r!ed in the !ore recent decision of 3arch 1*

19$9 in the followin" words8 PFor the calculation of the da!a"es clai!edit is necessar) pursuant to the provisions of article 92+ of the aw of Civil


7/43

rocedure to "ive due re"ard to the nature of the o#li"ation that wasunful'lled and to the reasona#le conse;uences of its nonful'll!ent#ecause the conviction sou"ht can #e i!posed onl) when there e ists anatural and true relation #etween such nonful'll!ent and da!a"eswhatever reason there !a) #e to de!and the! on another account.P

:n the case of Garcia Ga!o vs. Co!pania 3adrilena de Alu!#rado etc.

>1$1 (uris p. 002? it appeared that an e!plo)ee of the defendantco!pan) whose dut) it was to clean and li"ht the street la!ps left asstepladder leanin" a"ainst a tree which stood in a pu#lic pro!enade. Theseven-)ear old son of the plainti cli!#ed the tree #) !eans of the ladderand while endeavorin" to cut so!e #ranches fell to the "round sustainin"severe in uries which eventuall) caused his death. The plainti lost in thelower courts and on appeal to the supre!e court the decision of thoselower courts was a&r!ed with the followin" state!entE

That in this sense Q aside fro! the 'tness of the ud"!ent appealed fro!inas!uch as the ac;uittal of the defendant part) resolves all the issues

ar"ued at the trial if no counterclai! was !ade Q the assi"n!ents oferror in the appeal cannot #e sustained #ecause while the act of placin"the stepladder a"ainst the tree in the !anner and for the purposesaforestated was not per!issi#le it was re"ularl) allowed #) the localauthorities and that fact did not precisel) deter!ine the in ur) which wasdue 'rst to the a#andon!ent of the child #) his parents and secondl) tohis own i!prudence accordin" to the 'ndin"s of the trial court not le"all)o# ected to in the appealE so it is #e)ond peradventure that thecircu!stances necessar) for i!posin" the o#li"ations arisin" fro! "uilt orne"li"ence do not concur in the present case.

The court here si!pl) held that the in ur) to the child could not #econsidered as the pro#a#le conse;uence of an in ur) which could have#een foreseen fro! the act of the co!pan)Os e!plo)ee in leavin" theladder leanin" a"ainst the tree.

:n e Al#a vs. 6ociedad Anoni!a de Tranvias >1$2 (uris p. 92*? apassen"er was standin" on the platfor! of a street car while it was in!otion when on roundin" a curve the plainti f ell o and under the carthere#) sustainin" severe in uries which too= several !onths to heal. Iewas not allowed to recover in the lower courts and on appeal the supre!ecourt sustained the inferior tri#unals sa)in"8

Hhereas considerin" the circu!stances of the accident that happened to. Antonio 3orales de Al#a such as the) were held #) the trail court to

have #een proved the evidence does not disclose that an) lia#ilit)whatever in the said accident for acts or o!issions !a) #e char"eda"ainst the e!plo)ees of the street car as #ein" "uilt) throu"h fault orne"li"ence since it was shown that the car was not travelin" at an)unusual speed nor was this increased on roundin" the curve #ut that theaccident was solel) due to the fact that the car in turnin" !ade a!ove!ent which caused the plainti to lose his #alanceE and whereas noact whatever has #een proved of an) violation of the re"ulations nor can it#e re;uired of street-car e!plo)ees who have to attend to their respectiveduties that the) should foresee and #e on the alert to notif) the possi#ilit)of dan"er when not "reater than that which is !ore or less inherent to this!ode of travelE therefore the appeal can not #e upheld and with all the!ore reason since the passen"er who ta=es the ris= of travellin" on theplatfor! especiall) when there is an unoccupied seat in the car should #eon his "uard a"ainst a contin"enc) so natural as that of losin" his #alanceto a "reater or less e tent when the car rounds a curve.

:n Crespo vs. Garcia >112 (urisp. 90? the plainti a servant wo!an 2)ears old was in ured in the perfor!ance of her duties #) the sudden andune pected failure of the upper Joor of a house in which she was wor=in".

The owner and the architect of the #uildin" were !ade defendants andafter due trial it was held that no responsi#ilit) attached to the! for thefailure of the Joor conse;uentl) the plainti was not allowed to recover./n her appeal to the supre!e court that tri#unal said8

Hhereas the trial court held in view of all the evidence adduced includin"the e pert and other testi!on) that the act which occasioned the in ur)su ered #) o a 3aria Alonso Crespo was accidental without fault ofan)#od) and conse;uentl) fortuitous and that in so considerin" it toa#solve the defendants he did not incur the second error assi"ned on theappeal #ecause without overloo=in" the i!port and le"al value of thea&davit adduced at the trial he held that the defendants in their conductwere not lia#le for an) o!ission that !i "ht constitute such fault orne"li"ence as would o#li"e the! to inde!nif) the plainti E and to supportthe error assi"ned no le"al provision whatever was cited such as wouldre;uire a di erent 'ndin" nor was an) other authentic docu!ent producedthan the aforesaid a&davit which contained an account of the ocularinspection and the e pertOs report which as well as the testi!on) of thewitnesses the trial court was a#le to pass upon in accordance with itse clusive power-all points of proof which do not reveal an) !ista=e on thepart of the ud"e whose opinion the appellant would su#stitute with hisown #) a di erent interpretation.


8/43

These authorities are su&cient to show that lia#ilit) for acts e delictounder the Civil Code is precisel) that e!#raced within the Ppro i!atecauseP of the An"lo-6a on law of torts.

The "eneral rule as fre;uentl) stated is that in order that an act o!ission!a) #e the pro i!ate cause of an in ur) the in ur) !ust #e the naturaland pro#a#le conse;uence of the act or o!ission and such as !i"ht have#een foreseen #) an ordinaril) responsi#le and prudent !an in the li"ht of the attendant circu!stances as li=el) to result therefro! . . .

Accordin" to the latter authorities foreseea#leness as an ele!ent ofpro i!ate cause does not depend upon whether an ordinaril) reasona#leand prudent !an would or ou"ht in advance to have anticipated the resultwhich happened #ut whether if such result and the chain of eventsconnectin" it with the act co!plained of had occurred to his !ind thesa!e would have see!ed natural and pro#a#le and accordin" to theordinar) course of nature. Thus as said in one case PA person "uilt) ofne"li"ence or an unlawful act should #e held responsi#le for all theconse;uences which a prudent and e perienced !an full) ac;uainted withall the circu!stances which in fact e isted would at the ti!e of thene"li"ent or unlawful act have thou"ht reasona#le to follow if the) hadoccurred to his !ind.P >Ha#ash R. etc. Co. vs. Co=er *1 :ll. App. 00$ 00+ECoole) on Torts sec. 15.?

The view which : shall endeavor to ustif) is that for the purpose of civillia#ilit) those conse;uences and those onl) are dee!ed Pi!!ediate PPpro i!ate P or to anticipate a little Pnatural and pro#a#le P which a

person of avera"e co!petence and =nowled"e #ein" in the li=e case withthe person whose conduct is co!plained of and havin" the li=eopportunities of o#servation !i"ht #e e pected to foresees as li=el) tofollow upon such conduct. This is onl) where the particular conse;uence isnot =nown to have #een intended or foreseen #) the actor. :f proof of that#e forthco!in" whether the conse;uence was Pi!!ediateP or not doesnot !atter. That which a !an actuall) foresees is to hi! at all eventsnatural and pro#a#le. >He##Os olloc= on Torts p. %2.?

There is another line of de'nitions which have for their #asis Pthe naturaland pro#a#le conse;uencesP or Pthe direct and i!!ediate conse;uencesP

of the defendantOs act. >(o)ce on a!a"es sec. *2.?

:t will #e o#served that the supre!e court of 6pain in the a#ove decisionshas rather inclined to this line of de'nitions of what results a defendant islia#le for as a conse;uence of his wron"ful acts while the Civil Code usesthe phraseolo") Pthose foreseen or which !a) have #een foreseen.P Fro!either viewpoint the !ethod of arrivin" at the lia#ilit) of the wron"doerunder the Civil Code and under the An"lo 6a on law is the sa!e. 6uch wasthe holdin" of this court in Ta)lor vs. 3. @. R. and . Co. >10 hil. Rep. *

15?8

He a"ree with counsel for appellant that under the Civil Code as under the"enerall) accepted doctrine in the Knited 6tates the plainti in an actionsuch as that under consideration in order to esta#lish his ri"ht to arecover) !ust esta#lish #) co!petent evidence8

>1? a!a"es to the plaint i .

>2? Ne"li"ence #) act or o!ission of which defendant personall) orso!e person for whose acts it !ust respond was "uilt).

>%? The connection of cause and e ect #etween the ne"li"ence andthe da!a"es.

These propositions are of course ele!entar) and do not ad!it ofdiscussion the real di&cult) arisin" in the application of these principles tothe particular facts developed in the case under consideration.

arentheticall) it !a) #e said that we are not now dealin" with thedoctrine of co!parative >contri#utor)? ne"li"ence which was esta#lished#) Ra=es vs. A. G. and . Co. > hil. Rep. %59? and @ades vs. A. G. and .Co. >19 hil. Rep. 501.?

The rules for the !easure of da!a"es once that lia#ilit) is deter!inedare however so!ewhat di erent. The Civil Code re;uires that thedefendant repair the da!a"e caused #) his fault or ne"li"ence. No

distinction is !ade therein #etween da!a"e caused !aliciousl) andintentionall) and da!a"es caused throu"h !ere ne"li"ence in so far as the


9/43

civil lia#ilit) of the wron"doer in concerned. Nor is the defendant re;uiredto do !ore than repair the da!a"e done or in other words to put theplainti in the sa!e position so far as pecuniar) co!pensation can do sothat he would have #een in had the da!a"e not #een inJicted. :n thisrespect there is a nota#le di erence #etween the two s)ste!s. Knder theAn"lo-6A on law when !alicious or willful intention to cause the da!a"eis an ele!ent of the defendantOs act it is ;uite "enerall) re"arded as ana""ravatin" circu!stance for which the plainti is entitled to !ore than!ere co!pensation for the in ur) inJicted. These are called e e!plar) orpunitive da!a"es and no provision is !ade for the! in article 19$2 of theCivil Code.

A"ain it is ;uite co!!on under the @n"lish s)ste! to award what is calledno!inal da!a"es where there is onl) a technical violation of the plainti Osri"hts resultin" in no su#stantial in ur) to hi!. This #ranch of da!a"es isalso un=nown under the Civil Code. :f no da!a"es have actuall) occurredthere can #e none to repair and the doctrine of no!inal da!a"es is notapplica#le. Thus it has #een often held #) the supre!e court of 6pain thata !ere nonco!pliance with the o#li"ations of a contract is not su&cient tosustain a ud"!ent for da!a"es. :t !ust #e shown that da!a"es actuall)e isted. > ecision of Fe#ruar) 1$ 19$+.? A"ain in its decision of (anuar) 91*9 that hi"h tri#unal said that as a lo"ical conse;uence of there;uire!ents of articles 11$1 1 1* and 19$2 that he who causesda!a"es !ust repair the! their e istence !ust #e proved.

:n at least one case decided #) this court we held in e ect that no!inalda!a"es could not #e allowed. >3ercado vs. A#an"an 1$ hil. Rep. 0 0.?

The purpose of the law in awardin" actual da!a"es is to repair the wron"

that has #een done to co!pensate for the in ur) inJicted and not toi!pose a penalt). Actual da!a"es are not dependent on nor "raded #) theintent with which the wron"ful act is done.P >Field vs. 3unster 11 Te . Civ.Appl. %+1 %2 6. H. +1 .? PThe words Pactual da!a"esP shall #e construedto include all da!a"es that the plainti !a) he has su ered in respect tohis propert) #usiness trade profession or occupation and no otherda!a"es whatever.P >Gen 6tat. 3inn. 1*9+ sec. 5+1*.? PActual da!a"esare co!pensator) onl).P > ord /wen and Co. vs. Hood 12$ :owa %$% 9+N. H. *+2.? P SCo!pensator) da!a"esO as indicated #) the word e!plo)edto characteri7e the! si!pl) !a=e "ood or replace the loss caused #) thewron". The) proceed fro! a sense of natural ustice and are desi"ned torepair that of which one has #een deprived #) the wron" of another.P >Reid

vs. Terwill i"er 110 N. . 5%$E 22 N. @. 1$91.? PCo!pensator) da!a"esOare such as awarded to co!pensate the in ured part) for caused #) the

wron" and !ust #e onl) such as !a=e ust and fair co!pensation and aredue when the wron" is esta#lished whether it was co!!itted !aliciousl)Q that is with evil intention Q or not. >Hi!er vs. All#au"h * :owa 9E +2N. H. 5* E 10 A!. 6t. Rep. +22.?

Finall) this court has itself held that actual da!a"es are the e tent of therecover) allowed to the plainti . :n 3ar=er vs. Garcia >5 hil. Rep. 55 ?

which was an action for da!a"es for #reach of contract this court said8P@ cept in those cases where the law authori7es the i!position of punitiveor e e!plar) da!a"es the part) clai!in" da!a"es !ust esta#lish #)co!petent evidence the a!ount of such da!a"es and courts can not "ive

ud"!ent for a "reater a!ount than those actuall) proven.P

He are of the opinion that the re;uire!ents of article 19$2 that thedefendant repair the da!a"e done can onl) !ean what is set forth in thea#ove de'nitions An)thin" short of that would not repair the da!a"es andan)thin" #e)ond that would #e e cessive. Actual co!pensator) da!a"esare those allowed for tortious wron"s under the Civil CodeE nothin" !ore

nothin" less.

Accordin" to the te t of article 11$0 of the Civil Code which accordin" tothe decision of Fe#ruar) 199$ >referred to a#ove? is the "enericconception of what article 19$2 e!#races actual da!a"es include notonl) loss alread) su ered #ut loss of pro'ts which !a) not have #eenreali7ed. The allowance of loss of prospective pro'ts could hardl) #e !oree plicitl) provided for. 4ut it !a) not #e a!iss to refer to the decisions ofthe supre!e court of 6pain for its interpretation of this article. Thedecisions are nu!erous upon this point. The decisions are as epito!i7ed#) 6anche7 Ro!an >vol. 1 $. 2*1? interprets article 11$0 as follows8

ursuant to articles 11$0 and 11$ of the sa!e Code which "overn in"eneral the !atter of inde!nit) due for the nonful'll!ent of o#li"ationsthe inde!nit) co!prises not onl) the value of loss su ered #ut also thatof the prospective pro't that was not reali7ed and the o#li"ation of thede#tor in "ood faith is l i!ited to such losses and da!a"es as wereforeseen or !i"ht have #een foreseen at the ti!e the o#li"ation wasincurred and which are a necessar) conse;uence of his failure offul'll!ent. osses and da!a"es under such li!itations and frustratedpro'ts !ust therefore #e proved directl) #) !eans of the evidence thelaw authori7es.


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The decisions of (anuar) * 19$0 >pu#lished in 1+ (urisp. del Codi"o Civil510? had to do with the followin" case8 The plainti a painter #)occupation was en"a"ed to paint the poles fro! which were suspendedthe trolle) wires of a traction co!pan). Hhile at wor= on Fe#ruar) * 19$1the electric current was ne"li"entl) turned on #) the co!pan) where#)plainti received a severe shoc= causin" hi! to fall to the "round. laintisustained in uries which too= several !onths to heal and his ri"ht ar! wasper!anentl) disa#led #) the accident. The a"e of the plainti is not stated.Iis dail) wa"e was four pesetas. Ie was awarded 25 $$$ pesetas #) thetrial court and this ud"!ent was a&r!ed on appeal to the supre!e court.

This was e;uivalent to appro i!atel) twent) )earOs salar).

:n its decision of (anuar) 15 19$2 >pu#lished in 1$ (urisp. del Codi"o Civil.20$? the supre!e court had the followin" case under consideration8

lainti Os son was a travellin" sales!an +* )ears of a"e who received anannual salar) of 2 5$$ pesetas and e penses. Hhile travellin" ondefendantOs train an accident occurred which caused his death. Theaccident was held to #e due to the failure of the defendant co!pan) to=eep its trac= and road#ed in "ood repair. lainti was allowed %5 $$$pesetas for the death of her son. this would #e e;uivalent to a#outfourteen )earsO salar).

in the case dated /cto#er 19 19$9 >pu#lished in 110 (urisp. del Codi"oCivil 12$? plainti as suin" for the death of his son caused fro! in uriesinJicted #) the defendantOs #ull while plainti and his son were travellin"alon" a pu#lic road. The a"e of the son is not "iven. lainti was awarded% $$$ pesetas da!a"es.

:n each of the a#ove-!entioned cases the supre!e court refused to pass

on the a!ount of da!a"es which had #een awarded. :t appears to #e theunvar)in" rule of the supre!e court of 6pain to accept the a!ount ofda!a"es awarded #) trial courts its onl) in;uir) #ein" as to whetherda!a"es have actuall) occurred as the result of the defendantOs fault orne"li"ence. > ecision of (ul) 5 19$9.? The reason wh) the supre!e courtof 6pain refuses to consider the a!ount of da!a"es awarded is to #efound in the "reat i!portance attached #) it to the provision of the e) de@n uicia!iento Civil articles 059 and 1092 No. . :n its auto of 3arch 1019$$ >pu#lished in * (urisp. del Codi"o Civil 5$%? the followin" co!!ent is!ade on these articles8

As this supre!e court has repeatedl) held the wei"ht "iven #) the trial ud"e to the testi!on) with "ood discern!ent or otherwise can not #e a

!atter for reversal not even with the support of No. of article 1092 ofthe e) de @n uicia!iento Civil as it is e clusivel) su#!itted to hi!pursuant to the provisions of article 059 of the said law and article 12+* ofthe Code.

The practice of this court under our Code of Civil rocedure does notper!it of our "oin" to such len"ths in sustainin" the 'ndin"s of fact in trial

courts. He have repeatedl) held that due wei"ht will #e "iven in this courtto the 'ndin"s of fact #) trial courts #) reason of their opportunities to seeand hear the witnesses testif) note their de!eanor and #earin" upon thestand etc. #ut when the decision of the trial court after per!ittin" dueallowance for its superior advanta"es in wei"hin" the evidence of the caseappears to us to #e a"ainst the fair preponderance of that evidence it isour dut) to reverse or set aside the 'ndin"s of fact !ade #) the trial courtand render such ud"!ent as the facts of the sa!e dee! to us to warrant.>Code of Civ. roc. sec. +90.? He need "o to no other #ranch of law thanthat of da!a"es to support this state!ent. :n the followin" case theda!a"es awarded #) the lower court were reduced after a consideration of the evidenceE 6parrevohn vs. Fisher >2 hil. Rep. 0 0?E Ca!p#ell and Go-

Tauco vs. 4ehn 3e)er and Co. >% hil. Rep. 59$?E Causin vs. (a=osale! 95hil. Rep. 155?E 3ar=er vs. Garcia >5 hil. Rep. 55 ?E K) iaoco vs.

/s!e a >9 hil. Rep. 299?E 3acleod vs. hil. u#. Co. >12 hil. Rep. +2 ?E/rense vs. (aucian >1* hil. Rep. 55%?. :n Rodri"ue7 vs. Findla) and Co. >1+

hil. Rep. 29+?E and Cordo#a ) Conde vs. Castle 4ros. >1* hil. Rep. %1 ?the da!a"es awarded #) the lower court were increased on appeal after aconsideration of the evidence. :n 4rode= vs. arson >1* hil. Rep. +25? itwas held that the da!a"es awarded #) the lower court were #ase on toouncertain evidence and the case was re!anded for a new trial as to thea!ount of da!a"es sustained. Also in 6aldivar vs. 3unicipalit) of Talisa)>1* hil. Rep. %02? where the lower court e onerated the defendant fro!lia#ilit) this court after a consideration of the evidence held that thedefendant was lia#le and re!anded the case for the purpose of a new trial

in order to ascertain the a!ount of da!a"es sustained.

:n this respect the law of da!a"es under article 19$2 as laid down #) thedecisions of the supre!e court of 6pain has #een indirectl) !odi'ed #)the present Code of Civil rocedure so that the 'ndin" of the lower court asto the a!ount of da!a"es is not conclusive on appeal.

Actual da!a"es under the A!erican s)ste! include pecuniar)reco!pense for pain and su erin" in ured feelin"s and the li=e. Article19$2 as interpreted #) this court in 3arcelo vs. Velasco >11 hil. Rep.2* ? does not e tend to such incidents. Aside fro! this e ception actual


11/43

da!a"es in this urisdiction in the sense that the) !ean ustco!pensation for the loss su ered are practicall) s)non)!ous with actualda!a"es under the A!erican s)ste!.

This court has alread) "one so!e distance in incorporatin" into our urisprudence those principles of the A!erican law of actual da!a"eswhich are of a "eneral and a#stract nature. :n 4aer 6enior and Co.Os

6uccessors vs. Co!pa ia 3ariti!a >0 hil. Rep. 215? the A!ericanprinciple of ad!iralt) law that the lia#ilit) of the ship for a tow is not so"reat as that for her car"o was applied in deter!inin" the responsi#ilit) ofa ship under the Code of Co!!erce for her tow. :n Rodri"ue7 vs. Findla)and Co. >1+ hil. Rep. 29+? which was an action for #reach of contract ofwarrant) the followin" principle supported entirel) #) A!erican authorit)was used in co!putin" the a!ount of da!a"es due the plainti 8

The da!a"es recovera#le of a !anufacturer or dealer for the #reach ofwarrant) of !achiner) which he contracts to furnish or place in operationfor a =nown purpose are not con'ned to the di erence in value of the

!achiner) as warranted and as it proves to #e #ut includes suchconse;uential da!a"es as are the direct i!!ediate and pro#a#le resultof the #reach.

:n Alda7 vs. Ga) > hil. Rep. 20*? it was held that the earnin"s orpossi#le earnin"s of a wor=!an wron"full) dischar"ed should #econsidered in !iti"ation of his da!a"es for the #reach of contract #) hise!plo)er with the re!ar= that nothin" had #een #rou"ht to our attentionto the contrar) under 6panish urisprudence.

:n Fernande7 vs. 3. @. R. and . Co. >1+ hil. Rep. 2 +? a release orco!pro!ise for personal in ur) sustained #) ne"li"ence attri#uted to thedefendant co!pan) was held a #ar to an action for the recover) of furtherda!a"es on the stren"th of A!erican precedents.

:n Ta)lor vs. 3. @. R. and . Co. supra in the course of an e tendedreference to A!erican case law the doctrine of the so-called PTurnta#lePand PTorpedoP cases was adopted #) this court as a factor in deter!inin"the ;uestion of lia#ilit) for da!a"es in such cases as the one the court thethen had under consideration.

:n 3artine7 vs. Van 4us=ir= >1* hil. 9? this court after re!ar=in" thatthe rules under the 6panish law #) which the fact of ne"li"ence isdeter!ined are "enerall) spea=in" the sa!e as the) are in An"lo-6a oncountries approved the followin" well-=nown rule of the An"lo-6a on lawof ne"li"ence rel)in" e clusivel) upon A!erican authorities8 P. . . acts theperfor!ance of which has not proven destructive or in urious and whichhave #een "enerall) ac;uiesced in #) societ) for so lon" a ti!e as to haveripened into a custo! cannot #e held to #e unreasona#le or i!prudentand that under the circu!stances the driver was not "uilt) of ne"li"encein so leavin" his tea! while assistin" in unloadin" his wa"on.

This court does not as a rule content itself in the deter!ination of cases#rou"ht #efore it with a !ere reference to or ;uotation of the articles ofthe codes or laws applica#le to the ;uestions involved for the reason thatit is co!!itted to the practice of citin" precedents for its rulin"s whereverpractica#le. >6ee /ca!po vs. Ca#an"is 15 hil Rep. 020.? No #ettere a!ple of the necessit) of a!plif)in" the treat!ent of a su# ect "iven inthe code is a orded than article 19$2 of the Civil Code. That articlere;uires that the defendant repair the da!a"e done. There is however aworld of di&cult) in carr)in" out the le"islative will in this particular. The!easure of da!a"es is an ulti!ate fact to #e deter!ined fro! theevidence su#!itted to the court. The ;uestion is so!eti!es a nice one todeter!ine whether the o ered evidence in such as sou"ht to #econsidered #) the court in ' in" the ;uantu! of da!a"esE and while theco!ple it) of hu!an a airs is such that two cases are seldo! e actl)ali=e a thorou"h discussion of each case !a) per!it of their !ore or lessde'nite classi'cation and develop leadin" principles which will #e of "reatassistance to a court in deter!inin" the ;uestion not onl) of da!a"es #utof the prior one of ne"li"ence. He are of the opinion that as the Code is soinde'nite >even thou"h fro! necessit)? on the su# ect of da!a"es arisin"fro! fault or ne"li"ence the #ench and #ar should have access to andavail the!selves of those "reat underl)in" principles which have #een

"raduall) and conservativel) developed and thorou"hl) tested in An"lo-6a on courts. A careful and intelli"ent application of these principlesshould have a tendenc) to prevent !ista=es in the rulin"s of the court onthe evidence o ered and should assist in deter!inin" da!a"es "enerall)with so!e de"ree of unifor!it).

The law of da!a"es has not for so!e reason proved as favorite a the!ewith the civil-law writers as with those of the co!!on-law school. Thedecisions of the supre!e court of 6pain thou"h nu!erous on da!a"esarisin" fro! contractual o#li"ations are e ceedin"l) few upon da!a"es forpersonal in uries arisin" e delicto. The reasons for this are not i!portantto the present discussion. :t is su&cient to sa) that the law of da!a"es hasnot received the ela#orate treat!ent that it has at the hands of the An"lo-


12/43

6a on urists. :f we in this urisdiction desire to #ase our conclusions inda!a"e cases upon controllin" principles we !a) develop those principlesand incorporate the! into our urisprudence #) that di&cult and tediousprocess which constitutes the centuries-old histor) of An"lo-6a on

urisprudenceE or we !a) avail ourselves of these principles in theirpresent state of develop!ent without further e ort than it costs to refer tothe wor=s and writin"s of !an) e!inent te t-writers and urists. He shallnot atte!pt to sa) that all these principles will #e applica#le in this

urisdiction. :t !ust #e constantl) #orne in !ind that the law of da!a"es inthis urisdiction was conceived in the wo!# of the civil law and under anentirel) di erent for! of "overn!ent. These inJuences have had theire ect upon the custo!s and institutions of the countr). Nor are theindustrial and social conditions the sa!e. An Act which !i"ht constitutene"li"ence or da!a"e here and vice versa. As stated in 6tor) on4ail!ents section 12 P:t will thence follow that in di erent ti!es and indi erent countries the standard >of dili"ence? is necessar) varia#le withrespect to the facts althou"h it !a) #e unifor! with respect to theprinciple. 6o that it !a) happen that the sa!e acts which in one countr) orin one a"e !a) #e dee!ed ne"li"ent acts !a) at another ti!e or inanother countr) #e ustl) dee!ed an e ercise of ordinar) dili"ence.P

The a#stract rules for deter!inin" ne"li"ence and the !easure ofda!a"es are however rules of natural ustice rather than !an-!ade lawand are applica#le under an) enli"htened s)ste! of urisprudence. There isall the !ore reason for our adoptin" the a#stract principles of the An"lo-6a on law of da!a"es when we consider that there are at least twoi!portant laws o n our statute #oo=s of A!erican ori"in in the applicationof which we !ust necessaril) #e "uided #) A!erican authorities8 the) arethe i#el aw >which #) the wa) allows da!a"es for in ured feelin"s andreputation as well as punitive da!a"es in a proper case? and the@!plo)erOs ia#ilit) Act.

The case at #ar involves actual incapacit) of the plainti for two !onthsand loss of the "reater portion of his #usiness. As to the da!a"es resultin"fro! the actual incapacit) of the plainti to attend to his #usiness there isno ;uestion. The) are of course to #e allowed on the #asis of his earnin"capacit) which in this case is 5$ per !onth. the di&cult ;uestion in thepresent case is to deter!ine the da!a"e which has results to his #usinessthrou"h his enforced a#sence. :n 6an7 vs. avin 4ros. >0 hil. Rep. 299?this court citin" nu!erous decisions of the supre!e court of 6pain heldthat evidence of da!a"es P!ust rest upon satisfactor) proof of thee istence in realit) of the da!a"es alle"ed to have #een su ered.P 4utwhile certaint) is an essential ele!ent of an award of da!a"es it need not#e a !athe!atical certaint). That this is true is adduced not onl) fro! thepersonal in ur) cases fro! the supre!e court of 6pain which we have

discussed a#ove #ut #) !an) cases decided #) this court reference towhich has alread) #een !ade. As stated in (o)ce on a!a"es section 5P4ut to den) the in ured part) the ri"ht to recover an) actual da!a"es incases f torts #ecause the) are of such a nature a cannot #e thus certainl)!easured would #e to ena#le parties to pro't #) and speculate upon theirown wron"sE such is not the l aw.P

As to the ele!ents to #e considered in esti!atin" the da!a"e done toplainti Os #usiness #) reason of his accident this sa!e author citin"nu!erous authorities has the followin" to sa)8 :t is proper to consider the#usiness the plainti is en"a"ed in the nature and e tent of such#usiness the i!portance of his personal oversi"ht and superintendence inconductin" it and the conse;uent loss arisin" fro! his ina#ilit) toprosecure it.

The #usiness of the present plainti re;uired his i!!ediate supervision. Allthe pro'ts derived therefro! were wholl) due to his own e ertions. Nor arehis da!a"es con'ned to the actual ti!e durin" which he was ph)sicall)

incapacitated for wor= as is the case of a person wor=in" for a stipulateddail) or !onthl) or )earl) salar). As to persons whose la#or is thusco!pensated and who co!pletel) recover fro! their in uries the rule !a)#e said to #e that their da!a"es are con'ned to the duration of theirenforced a#sence fro! their occupation. 4ut the present plainti could notresu!e his wor= at the sa!e pro't he was !a=in" when the accidentoccurred. Ie had #uilt up an esta#lishin" #usiness which included so!etwent) re"ular custo!ers. These custo!ers represented to hi! a re"ularinco!e. :n addition to this he !ade sales to other people who were not sore"ular in their purchases. 4ut he could '"ure on !a=in" at least so!esales each !onth to others #esides his re"ular custo!ers. Ta=en as awhole his avera"e !onthl) inco!e fro! his #usiness was a#out 5$. As aresult of the accident he lost all #ut four of his re"ular custo!ers and hisreceipts dwindled down to practicall) nothin". /ther a"ents had invadedhis territor) and upon #eco!in" ph)sicall) a#le to attend to his #usinesshe found that would #e necessar) to start with practicall) no re"ular tradeand either win #ac= his old custo!ers fro! his co!petitors or else secureothers. urin" this process of reesta#lishin" his patrona"e his inco!ewould necessaril) #e less than he was !a=in" at the ti!e of the accidentand would continue to #e so for so!e ti!e. /f course if it could #e!athe!aticall) deter!ined how !uch less he will earn durin" thisre#uildin" process than he would have earned if the accident had notoccurred that would #e the a!ount he would #e entitled to in this action.4ut !anifestl) this ideal co!pensation cannot #e ascertained. The;uestion therefore resolves itself into whether this da!a"e to his #usinesscan #e so nearl) ascertained as to ustif) a court in awardin" an) a!ountwhatever.


13/43

Hhen it is shown that a plainti Os #usiness is a "oin" concern with a fairl)stead) avera"e pro't on the invest!ent it !a) #e assu!ed that had theinterruption to the #usiness throu"h defendantOs wron"ful act not occurredit would have continued producin" this avera"e inco!e Pso lon" as is usualwith thin"s of that nature.P Hhen in addition to the previous avera"einco!e of the #usiness it is further shown what the reduced receipts of the#usiness are i!!ediatel) after the cause of the interruption has #een

re!oved there can #e no !anner of dou#t that a loss of pro'ts hasresulted fro! the wron"ful act of the defendant. :n the present case wenot onl) have the value of plainti Os #usiness to hi! ust prior to theaccident #ut we also have its value to hi! after the accident. At the trialhe testi'ed that his wife had earned a#out 'fteen pesos durin" the two!onths that he was disa#led. That this al!ost total destruction of his#usiness was directl) char"ea#le to defendantOs wron"ful act there can #eno !anner of dou#tE and the !ere fact that the loss can not #e ascertainedwith a#solute accurac) is no reason for den)in" plainti Os clai! alto"ether.As stated in one case it would #e a reproach to the law if he could notrecover da!a"es at all. >4aldwin vs. 3ar;ue7 91 Ga. +$+?

ro'ts are not e cluded fro! recover) #ecause the) are pro'tsE #ut whene cluded it is on the "round that there are no criteria #) which to esti!atethe a!ount with the certaint) on which the ad udications of courts and the'ndin"s of uries should #e #ased. >4ri"ha! vs. Carlisle >Ala.? 50 A!.Rep. 2* as ;uoted in Hilson vs. Hernwa" 21 a. *2.?

The leadin" @n"lish case on the su# ect is hillips vs. ondon and6outhwestern R). Co. >5 5% 3ich. %22? the court said8PThe plainti in !a=in" proof of his da!a"es o ered testi!on) to thee ect that he was an attorne) at l aw of a#ilit) and in "ood standin" andthe e tent and value of his practice and that in su#stance the in ur) had

rendered hi! incapa#le of pursuin" his profession. This was o# ected to asirrelevant i!!aterial and inco!petent. He thin= this was co!petent. :twas within the declaration that his standin" in his profession was such asto co!!and respect and was proper to #e shown and his a#ilit) to earnand the e tent of his practice were a portion of the loss he had sustained#) the in ur) co!plained of. There was no error in per!ittin" this proofand we further thin= it was co!petent upon the ;uestion of da!a"esunder the evidence in this case for the plainti to show #) (ud"e Io)t aswas done that an interruption in his le"al #usiness and practice for ei"ht!onths was a da!a"e to hi!. :t see!s to have #een a part of thele"iti!ate conse;uences of the plainti Os in ur).P

:n uc= vs. Cit) of Ripon >52 His. 190? plainti was allowed to preventthat she was a !idwife and show the e tent of her earnin"s prior to theaccident in order to esta#lish the da!a"e done to her #usiness.

The pioneer case of Go#el vs. Iou"h >20 3inn. 252? contains perhaps oneof the clearest state!ents of the rule and is "enerall) considered as one of the leadin" cases on this su# ect. :n that case the court said8

Hhen a re"ular and esta#lished #usiness the value of which !a) #eascertained has #een wron"full) interrupted the true "eneral rule for


14/43

co!pensatin" the part) in ured is to ascertain how !uch less valua#le the#usiness was #) reason of the interruption and allow that as da!a"es.

This "ives hi! onl) what the wron"ful act deprived hi! of. The value ofsuch a #usiness depends !ainl) on the ordinar) pro'ts derived fro! it.6uch value cannot #e ascertained without showin" what the usual pro'tsareE nor are the ordinar) pro'ts incident to such a #usiness contin"ent orspeculative in the sense that e cludes pro'ts fro! consideration as anele!ent of da!a"es. Hhat the) would have #een in the ordinar) course of the #usiness for a period durin" which it was interrupted !a) #e shownwith reasona#le certaint). Hhat e ect e traordinar) circu!stances wouldhave had upon the #usiness !i"ht #e contin"ent and con ectural and an)pro'ts anticipated fro! such cause would #e o#no ious to the o# ectionthat the) are !erel) speculativeE #ut a histor) of the #usiness for areasona#le ti!e prior to a period of interruption would ena#le the ur) todeter!ine how !uch would #e done under ordinar) circu!stances and inthe usual course durin" the "iven periodE and the usual rate of pro't #ein"shown of course the a""re"ate #eco!es onl) a !atter of calculation.

:n the ver) recent case of Hellin"ton vs. 6pencer >/=la. 1%2 6. H. 0 5?plainti had rented a #uildin" fro! the defendant and used it as a hotel.

efendant sued out a wron"ful writ of attach!ent upon the e;uip!ent ofthe plainti which caused hi! to a#andon his hotel #usiness. Afterre!ar=in" that the earlier cases held that no recover) could #e had forprospective pro'ts #ut that the later authorities have held that suchda!a"es !a) #e allowed when the a!ount is capa#le of proof the courthad the followin" to sa)8

Hhere the plainti has ust !ade his arran"e!ents to #e"in #usiness andhe is prevented fro! #e"innin" either #) tort or a #reach of contract orwhere the in ur) is to a particular su# ect !atter pro'ts of which areuncertain evidence as to e pected pro'ts !ust #e e cluded fro! the ur)#ecause of the uncertaint). There is as !uch reason to #elieve that therewill #e no pro'ts as to #elieve that there will #e no pro'ts #ut no suchar"u!ent can #e !ade a"ainst provin" a usual pro't of an esta#lished#usiness. :n this case the plainti accordin" to his testi!on) had anesta#lished #usiness and was earnin" a pro't in the #usiness and had#een doin" that for a su&cient len"th of ti!e that evidence as toprospective pro'ts was not entirel) speculative. 3en who have #eenen"a"ed in #usiness calculate with a reasona#le certaint) the inco!e fro!their #usiness !a=e their plans to live accordin"l) and the value of such#usiness is not a !atter of speculation as to e clude evidence fro! the

ur).

A "ood e a!ple of a #usiness not esta#lished for which loss of pro'ts will#e allowed !a) #e found in the 6tates vs. ur=in >05 Lan. 1$1?. lainti sfor!ed a partnership and entered the plu!#in" #usiness in the cit) of

Tope=a in April. :n (ul) of the sa!e )ear the) #rou"ht an action a"ainst aplu!#ersO association on the "round that the latter had for!ed an unlawfulco!#ination in restraint of trade and prevented the! fro! securin"supplies for their #usiness within a reasona#le ti!e. The court said8

:n the present case the plainti s had onl) #een in #usiness a short ti!e Qnot so lon" that it can #e said that the) had an esta#lished #usiness. the)had contracted three o#s of plu!#in" had 'nished two and lost !one)on #othE not however #ecause of an) !isconduct or wron"ful acts on thepart of the defendants or either of the!. The) carried no stoc= in tradeand their !anner of doin" #usiness was to secure a contract and thenpurchase the !aterial necessar) for its co!pletion. :t i s not shown thatthe) had an) !eans or capital invested in the #usiness other than theirtools. Neither of the! had prior thereto !ana"ed or carried on a si!ilar#usiness. Nor was it shown that the) were capa#le of so !ana"in" this#usiness as to !a=e it earn a pro't. There was little of that class of#usiness #ein" done at the ti!e and little if an) pro't derived therefro!.

The plainti sO #usiness lac=ed duration per!anenc) and reco"nition. :twas an adventure as distin"uished fro! an esta#lished #usiness. :tspro'ts were speculative and re!ote e istin" onl) in anticipation. The lawwith all its vi"or and ener") in its e ort to ri"ht or wron"s and da!a"es forin uries sustained !a) not enter into a do!ain of speculation orcon ecture. :n view of the character and condition of the plainti sO#usiness the ur) had not su&cient evidence fro! which to ascertainpro'ts.

/ther cases which hold that the pro'ts of an esta#lished #usiness !a) #econsidered in calculatin" the !easure of da!a"es for an interruption of itare8 Hil=inson vs. un#ar >1+9 N. C. 2$?E Linne) vs. Croc=er >1* His. *$?E6achra vs. 3anila >12$ la. 502?E Lra!er vs. Cit) of os An"eles >1+ Cal.00*?E 3u""e vs. @r=!an >101 :ll. App. 1*$?E Fredonia Gas Co. vs. 4aile)9 Lan. 290?E 3orrow vs. 3o. ac. R. Co. >1+$ 3o. App. 2$$?E Cit) of:ndianapolis vs. Gaston >5* :nd. 2+?E National Fi#re 4oard vs. Au#urn@lectric i"ht Co. >95 3e. %1*?E 6utherland on a!a"es sec. $.

He have now outlined the principles which should "overn the !easure ofda!a"es in this case. He are of the opinion that the lower court had #eforeit su&cient evidence of the da!a"e to plainti Os #usiness in the wa) ofprospective loss of pro'ts to ustif) it in calculatin" his da!a"es as to hisite!. That evidence has #een properl) elevated to this court of review.


15/43

Knder section +90 of the Code of Civil rocedure we are authori7ed toenter 'nal ud"!ent or direct a new trial as !a) #est su#serve the ends of

ustice. He are of the opinion that the evidence presented as to theda!a"e done to plainti Os #usiness is credi#le and that it is su&cient andclear enou"h upon which to #ase a ud"!ent for da!a"es. lainti havin"had four )earsO e perience in sellin" "oods on co!!ission it !ust #epresu!ed that he will #e a#le to re#uild his #usiness to its for!erproportionsE so that at so!e ti!e in the future his co!!issions will e;ualthose he was receivin" when the accident occurred. Aided #) hise perience he should #e a#le to re#uild this #usiness to its for!erproportions in !uch less ti!e than it too= to esta#lish it as it stood ustprior to the accident. /ne )ear should #e su&cient ti!e in which to do this.

The pro'ts which plainti will receive fro! the #usiness in the course of itsreconstruction will "raduall) increase. The in ur) to plainti Os #usiness#e"ins where these pro'ts leave o and as a corollar) there is wheredefendantOs lia#ilit) #e"ins. Kpon this #asis we ' the da!a"es toplainti Os #usiness at 25$.

The ud"!ent of the lower court is set aside and the plainti is awardedthe followin" da!a"esE ten pesos for !edical e pensesE one hundredpesos for the two !onths of his enforced a#sence fro! his #usinessE andtwo hundred and 'ft) pesos for the da!a"e done to his #usiness in thewa) of loss of pro'ts or a total of three hundred and si t) pesos. No costswill #e allowed in this instance.

Arellano C.(. and Araullo (. concur.

Carson (. concurs in the result.

Repu#lic of the hilippines

6K R@3@ C/KRT

3anila

@N 4ANC

G.R. No. 1$99 0 April 20 2$$5

I: : :N@ NAT:/NA /: C/3 AN etitioner

vs.

TI@ I/N. C/KRT /F A @A 6 TI@ C/33:66:/N@R /F :NT@RNA R@V@NK@and T:R6/ 6AV@ AN/ Respondents.

--------------------

G.R. No. 112*$$ April 20 2$$5

I: : :N@ NAT:/NA 4ANL etitioner

vs.

TI@ I/N. C/KRT /F A @A 6 C/KRT /F TAM A @A 6 T:R6/ 4.6AV@ AN/ and C/33:66:/N@R /F :NT@RNA R@V@NK@ Respondents.

@ C : 6 : / N

CI:C/-NAUAR:/ (.8

This is a consolidation of two etitions for Review on Certiorari 'led #) thehilippine National /il Co!pan) > N/C?1 and the hilippine National 4an=

> N4? 2 assailin" the decisions of the Court of Appeals in CA-G.R. 6 No.295*%% and CA-G.R. 6 No. 29520 + respectivel) which #oth a&r!ed thedecision of the Court of Ta Appeals >CTA? in CTA Case No. +2+9.5

The etitions #efore this Court ori"inated fro! a sworn state!entsu#!itted #) private respondent Tirso 4. 6avellano >6avellano? to the4ureau of :nternal Revenue >4:R? on 2+ (une 19*0. Throu"h his swornstate!ent private respondent 6avellano infor!ed the 4:R that N4 hadfailed to withhold the 15W 'nal ta on interest earnin"s andXor )ields fro!the !one) place!ents of N/C with the said #an= in violation of

residential ecree > . .? No. 19%1. . . No. 19%1 which too= e ect on 11 (une 19*+ withdrew all ta e e!ptions of "overn!ent-owned andcontrolled corporations.

:n a letter dated $* Au"ust 19*0 the 4:R re;uested N/C to settle its

lia#ilit) for ta es on the interests earned #) its !one) place!ents withN4 and which N4 did not withhold.0 N/C wrote the 4:R on 25


16/43

6epte!#er 19*0 and !ade an o er to co!pro!ise its ta lia#ilit) which itesti!ated to #e in the su! of %$+ +19 %90.*% e cludin" interest andsurchar"es as of %1 (ul) 19*0. N/C proposed to set-o its ta lia#ilit)a"ainst a clai! for ta refundXcredit of the National ower Corporation>NA /C/R? then pendin" with the 4:R in the a!ount of %%5 259 +5$.21.

The a!ount of the clai! for ta refundXcredit was supposedl) a receiva#leaccount of N/C fro! NA /C/R.

/n $* /cto#er 19*0 the 4:R sent a de!and letter to N4 as withholdin"a"ent for the pa)!ent of the 'nal ta on the interest earnin"s andXor)ields fro! N/COs !one) place!ents with the #an= fro! 15 /cto#er19*+ to 15 /cto#er 19*0 in the total a!ount of % 0 %$1 1%%.%%.* /nthe sa!e date the 4:R also !ailed a letter to N/C infor!in" it of thede!and letter sent to N4.9

N/C in another letter dated 1+ /cto#er 19*0 reiterated its proposal tosettle its ta lia#ilit) throu"h the set-o of the said ta l ia#ilit) a"ainstNA /C/RO6 pendin" clai! for ta refundXcredit.1$ The 4:R replied on 11

Nove!#er 19*0 that the proposal for set-o was pre!ature sinceNA /C/ROs clai! was still under process. /nce !ore 4:R re;uested N/Cto settle its ta lia#ilit) in the total a!ount of %*5 901 5*$.*2 consistin"of %$% %+% 05.%2 'nal ta plus *2 01 *15.5$ interest co!puted until15 Nove!#er 19*0.11

/n $9 (une 19* N/C !ade another o er to the 4:R to settle its talia#ilit). This ti!e however N/C proposed a co!pro!ise #) pa)in"

91 $$% 129.*9 representin" %$W of the %$% %+% 00.29 #asic ta inaccordance with the provisions of @ ecutive /rder >@./.? No. ++.12

Then 4:R Co!!issioner 4ienvenido A. Tan in a letter dated 22 (une 19*accepted the co!pro!ise. The 4:R received a total ta pa)!ent on theinterest earnin"s andXor )ields fro! N/COs !one) place!ents with N4 inthe a!ount of 9% 955 + 9.12 #ro=en down as follows8

revious pa)!ent !ade #) N4

2 952 %+9.2%

Add8 a)!ent !ade #) N/C pursuant to the co!pro!ise a"ree!ent of (une 22 19*

91 $$% 129.*9

Total ta pa)!ent

9% 955 + 9.121%

rivate respondent 6avellano throu"h four install!ents was paid theinfor!erOs reward in the total a!ount of 1+ $9% %21.*9 representin" 15Wof the 9% 955 + 9.12 ta collected #) the 4:R fro! N/C and N4. Iereceived the last install!ent on $1 ece!#er 19* .1+

/n $ (anuar) 19** private respondent 6avellano throu"h his le"alcounsel wrote the 4:R to de!and pa)!ent of the #alance of his infor!erOsreward co!puted as follows8

4:R ta assess!ent

%*5 901 5*$.*2

Final ta rate

$.15

:nfor!erOs reward due >4:R de'cienc) ta assess!ent Final ta rate?

5 *9+ 2% .12


17/43

ess8 a)!ent received #) private respondent 6avellano

1+ $9% %21.*9

/utstandin" #alance

+% *$$ 915.2515

4:R Co!!issioner Tan replied throu"h a letter dated $* 3arch 19** thatprivate respondent 6avellano was alread) full) paid the infor!erOs rewarde;uivalent to 15W of the a!ount of ta actuall) collected #) the 4:Rpursuant to its co!pro!ise a"ree!ent with N/C. 4:R Co!!issioner Tanfurther e plained that the co!pro!ise was in accordance with theprovisions of @./. No. ++ Revenue 3e!orandu! /rder >R3/? No. %9-*0and R3/ No. +-* .10

rivate respondent 6avellano su#!itted another letter dated 2+ 3arch19** to 4:R Co!!issioner Tan see=in" reconsideration of his decision toco!pro!ise the ta lia#ilit) of N/C. :n the sa!e letter privaterespondent 6avellano ;uestioned the le"alit) of the co!pro!isea"ree!ent entered into #) the 4:R and N/C and clai!ed that the talia#ilit) should have #een collected in full.1

/n $* April 19** while the aforesaid 3otion for Reconsideration was stillpendin" with the 4:R private respondent 6avellano 'led a etition for

Review ad cautela! with the CTA doc=eted as CTA Case No. +2+9. Ieclai!ed therein that 4:R Co!!issioner Tan acted Pwith "rave a#use ofdiscretion andXor whi!sical e ercise of urisdictionP in enterin" into aco!pro!ise a"ree!ent that resulted in Pa "ross and unconsciona#ledi!inutionP of his reward. rivate respondent 6avellano pra)ed for theenforce!ent and collection of the total ta assess!ent a"ainst ta pa)er

N/C andXor withholdin" a"ent N4E and the pa)!ent to hi! #) the 4:RCo!!issioner of the 15W infor!erOs reward on the total ta collected.1*Ie would later a!end his etition to i!plead N/C and N4 as necessar)and indispensa#le parties since the) were parties to the co!pro!isea"ree!ent.19

:n his Answer 'led with the CTA 4:R Co!!issioner Tan asserted that theetition stated no cause of action a"ainst hi! and that private respondent

6avellano was alread) paid the infor!erOs reward due hi!. Alle"in" thatthe etition was #aseless and !alicious 4:R Co!!issioner Tan 'led acounterclai! for e e!plar) da!a"es a"ainst private respondent6avellano.2$

N/C and N4 'led separate 3otions to is!iss #oth ar"uin" that the CTAlac=ed urisdiction to decide the case.21 :n its Resolution dated 2*Nove!#er 19** the CTA denied the 3otions to is!iss since the ;uestionof lac= of urisdiction andXor cause of action do not appear to #eindu#ita#le.22

After their 3otions to is!iss were denied #) the CTA N/C and N4 'ledtheir respective Answers to the a!ended etition. N/C averred a!on"other thin"s that >1? it had no privit) with private respondent 6avellanoE>2? the 4:R Co!!issionerOs discretionar) act in enterin" into theco!pro!ise a"ree!ent had le"al #asis under @./. No. ++ and R3/ No. %9-

*0 and R3/ No. +-* E and >%? the CTA had no urisdiction to resolve thecase a"ainst it.2% /n the other hand N4 asserted that >1? the CTA lac=ed urisdiction over the caseE and >2? the 4:R Co!!issionerOs decision toaccept the co!pro!ise was discretionar) on his part and thereforecannot #e reviewed or interfered with #) the courts.2+ N/C and N4 later'led their a!ended Answer invo=in" an opinion of the Co!!ission onAudit >C/A? disallowin" the pa)!ent #) the 4:R of infor!erOs reward toprivate respondent 6avellano.25

The CTA thereafter ordered the parties to su#!it their evidence 20 to #efollowed #) their respective 3e!oranda.2

/n 2% Nove!#er 199$ private respondent 6avellano 'led a 3anifestationwith 3otion for 6uspension of roceedin"s clai!in" that his pendin"3otion for Reconsideration with the 4:R Co!!issioner !a) soon #eresolved.2* 4oth N/C and N4 opposed the said 3otion.29

6u#se;uentl) the new 4:R Co!!issioner (ose K. /n" in a letter to N4dated 10 (anuar) 1991 de!anded that N4 pa) de'cienc) withholdin" taon the interest earnin"s andXor )ields fro! N/COs !one) place!ents inthe a!ount of 29+ 95* +5$. % co!puted as follows8


18/43

Hithholdin" ta plus interest under the letter of de!and dated Nove!#er11 19*0

%*5 901 5*$.*2

ess8 A!ount paid under @./. No. ++

91 $$% 129.*9

A!ount still due and collecti#le

29+ 95* +5$. %%$

This 4:R letter was received #) N4 on $0 Fe#ruar) 1991 %1 and wasprotested #) it throu"h a letter dated 11 April 1991.%2 The 4:R denied

N4Os protest on the "round that it was 'led out of ti!e and thus theassess!ent had alread) #eco!e 'nal.%%

rivate respondent 6avellano on 22 Fe#ruar) 1991 'led an /!ni#us3otion !ovin" to withdraw his previous 3otion for 6uspension of

roceedin" since 4:R Co!!issioner /n" had 'nall) resolved his 3otion forReconsideration and su#!ittin" #) wa) of supple!ental o er of evidence>1? the letter of 4:R Co!!issioner /n" dated 1% Fe#ruar) 1991 infor!in"private respondent 6avellano of the action on his 3otion forReconsiderationE and >2? the de!and-letter of 4:R Co!!issioner /n" to

N4 dated 10 (anuar) 1991.%+

espite the oppositions of N/C and N4 the CTA in a Resolution dated$2 3a) 1991 resolved to allow private respondent 6avellano to withdrawhis previous 3otion for 6uspension of roceedin" and to ad!it thesupple!entar) evidence #ein" o ered #) the sa!e part).%5

:n its /rder dated $% (une 1991 the CTA considered the case su#!itted

for decision as of the followin" da) $+ (une 1991.%0

/n 11 (une 1991 N4 appealed to the epart!ent of (ustice > /(? the 4 :Rassess!ent dated 10 (anuar) 1991 for de'cienc) withholdin" ta in thesu! of 29+ 95* +5$. %. N4 alle"ed that its appeal to the /( wassanctioned under . . No. 2+2 which provided for the ad!inistrativesettle!ent of disputes #etween "overn!ent o&ces a"encies andinstru!entalities includin" "overn!ent-owned and controlledcorporations.%

Three da)s later on 1+ (une 1991 N4 'led a 3otion to 6uspendroceedin"s #efore the CTA since it had a pendin" appeal #efore the/(.%* /n $+ (ul) 1991 N4 'led with the CTA a 3otion for

Reconsideration of its /rder dated $% (une 1991 su#!ittin" the case fordecision as of $+ (une 1991 and pra)ed that the CTA hold its resolution ofthe case in view of N4Os appeal pendin" #efore the /(.%9

/n 1 (ul) 1991 N4 'led a 3otion to 6uspend the Collection of Ta #) the4:R. :t alle"ed that despite its re;uest for reconsideration of the de'cienc)withholdin" ta assess!ent dated 10 (anuar) 1991 4:R Co!!issioner/n" sent another letter dated 2% April 1991 de!andin" pa)!ent of the

29+ 95* +5$. % de'cienc) withholdin" ta on the interest earnin"s andXor)ields fro! N/COs !one) place!ents. The sa!e letter infor!ed N4 thatthis was the 4:R Co!!issionerOs 'nal decision on the !atter and that the4:R Co!!issioner was set to issue a warrant of distraint andXor lev)a"ainst N4Os deposits with the Central 4an= of the hilippines. N4further alle"ed that the lev) and distraint of N4Os deposits unlessrestrained #) the CTA would cause "reat and irrepara#le pre udice not onl)to N4 a "overn!ent-owned and controlled corporation #ut also to theGovern!ent itself.+$

ursuant to the /rder of the CTA durin" the hearin" on 19 (ul) 1991 +1 theparties su#!itted their respective 3e!oranda on N4Os 3otion to 6uspend

roceedin"s.+2

/n 2$ 6epte!#er 1991 private respondent 6avellano 'led another/!ni#us 3otion callin" the attention of the CTA to the fact that the 4:Ralread) issued on 12 Au"ust 1991 a warrant of "arnish!ent addressed tothe Central 4an= Governor and a"ainst N4. :n co!pliance with the saidwarrant the Central 4an= issued on 2% Au"ust 1991 a de#it advicea"ainst the de!and deposit account of N4 with the Central 4an= for thea!ount of 29+ 95* +5$. % with a correspondin" transfer of the sa!e


19/43

a!ount to the de!and deposit-in-trust of 4:R with the Central 4an=. 6incethe assess!ent had alread) #een enforced N4Os 3otion to 6uspend

roceedin"s #eca!e !oot and acade!ic. rivate respondent 6avellanothus !oved for the denial of N4Os 3otion to 6uspend roceedin"s and foran order re;uirin" 4:R to deposit with the CTA the a!ount of

++ 2+% 0 .$$ as his infor!erOs reward representin" 15W of thede'cienc) withholdin" ta collected.+%

4oth N/C and N4 opposed private respondent 6avellanoOs /!ni#us3otion dated 2$ 6epte!#er 1991 ar"uin" that the /( alread) orderedthe suspension of the collection of the ta de'cienc). There was thereforeno #asis for private respondent 6avellanoOs 3otion as the sa!e waspre!ised on the erroneous assu!ption that the ta de'cienc) had #eencollected. Hhen the /( denied the 4:R Co!!issionerOs 3otion to is!issand re;uired hi! to 'le his answer the /( assu!ed urisdiction over

N4Os appeal and the CTA should 'rst suspend its proceedin"s to "ive the/( the opportunit) to decide the validit) and propriet) of the ta

assess!ent a"ainst N4.++

The CTA on 2* 3a) 1992 rendered its decision wherein it upheld its urisdiction and disposed of the case as follows8

HI@R@F/R@ ud"!ent is rendered declarin" the C/3 R/3:6@AGR@@3@NT #etween the 4ureau of :nternal Revenue on the one handand the hilippine National /il Co!pan) and hilippine National 4an= onthe other as H:TI/KT F/RC@ AN @FF@CTE

The Co!!issioner of :nternal Revenue is here#) ordered to @NF/RC@ theA66@663@NT of (anuar) 10 1991 a"ainst hilippine National 4an= whichhas #eco!e 'nal and unappeala#le #) collectin" fro! hilippine National4an= the de'cienc) withholdin" ta plus interest totallin" >sic?

29+ 95* +5$. %E

etitioner !a) #e paid upon collection of the de'cienc) withholdin" tathe #alance of his entitle!ent to infor!erOs reward #ased on 'fteenpercent >15W? of the de'cienc) withholdin" total ta collected in this caseor ++ 2+%. 0 .$$ su# ect to e istin" rules and re"ulations "overnin"pa)!ent of reward to infor!ers.+5

:n a Resolution dated 10 Nove!#er 1992 the CTA denied the 3otions forReconsideration 'led #) N/C and N4 since the) su#stantiall) raised thesa!e issues in their previous pleadin"s and which had alread) #eenpassed upon and resolved adversel) a"ainst the!.+0

N/C and N4 'led separate appeals with the Court of Appeals see=in"the reversal of the CTA decision in CTA Case No. +2+9 dated 2* 3a) 1992and the CTA Resolution in the sa!e case dated 10 Nove!#er 1992.

N/COs appeal was doc=eted as CA-G.R. 6 No. 295*% while N4Os appealwas CA-G.R. 6 No. 29520. :n #oth cases the Court of Appeals a&r!edthe decision of the CTA.

:n the !eanti!e the Central 4an= a"ain issued on $2 6epte!#er 1992 ade#it advice a"ainst the de!and deposit account of N4 with the Central4an= for the a!ount of 29+ 95* +5$. % + and on 15 6epte!#er 1992credited the sa!e a!ount to the de!and deposit account of the Treasurerof the Repu#lic of the hilippines.+* /n $+ Nove!#er 1992 the Treasurerof the Repu#lic issued a ournal voucher transferrin" 29+ 95* +5$. % to

the account of the 4:R.+9 N4 in turn de#ited 29+ 95* +5$. % fro! thedeposit account of N/C with N4.5$

N/C and N4 then 'led separate etitions for Review on Certiorari withthis Court pra)in" that the decisions of the Court of Appeals in CA-G.R. 6No. 295*% and CA-G.R. 6 No. 29520 respectivel) #oth a&r!in" thedecision of the CTA in CTA Case No. +2+9 #e reversed and set aside.

These two etitions were consolidated since the) involved identical partiesand factual #ac="round and the resolution of related if not e actl) thesa!e issues.

:n its etition for Review N/C alle"ed the followin" errors co!!itted #)the Court of Appeals in CA-G.R. 6 No. 295*%8

1. The Court of Appeals erred in holdin" that the de'cienc) ta es of N/Ccould not #e the su# ect of a co!pro!ise under @ ecutive /rder No. ++Eand

2. The Court of Appeals erred in holdin" that 6avellano is entitled to

additional infor!erOs reward.51


20/43

N4 in its own etition for Review assailed the decision of the Court ofAppeals in CA-G.R. 6 No. 29520 assi"nin" the followin" errors8

1. Respondent Court erred in not 'ndin" that the Court of Ta Appealslac=s urisdiction on the controvers) involvin" 4:R and N4 >#oth"overn!ent instru!entalities? re"ardin" the new assess!ent of 4:Ra"ainst N4E

2. The respondent Court erred in not 'ndin" that the Court of Ta Appealshas no urisdiction to ;uestion the co!pro!ise a"ree!ent entered into #)the Co!!issioner of :nternal RevenueE and

%. The respondent Court erred in not rulin" that the Co!!issioner of:nternal Revenue cannot unilaterall) annul ta co!pro!ises validl)entered into #) his predecessor.52

The decisions of the Court of Appeals in CA-GR 6 No. 295*% and CA-G.R.6 No. 29520 a&r!ed the decision of the CTA in CTA Case No. +2+9. Theresolution therefore of the assi"ned errors in the Court of AppealsOdecisions essentiall) re;uires a review of the CTA decision itself.

:n consolidatin" the present etitions this Court 'nds that N/C and N4are #asicall) ;uestionin" the >1? (urisdiction of the CTA in CTA Case No.+2+9E >2? eclaration #) the CTA that the co!pro!ise a"ree!ent waswithout force and e ectE >%? Findin" of the CTA that the de'cienc)withholdin" ta assess!ent a"ainst N4 had alread) #eco!e 'nal andunappeala#le and thus enforcea

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