Petron Corp. v. Sps. Jovero, et al. G.R. No. 151038, January 18, 2012; Yes.
Yes. With regard to the delivery of the petroleum, Villaruz was acting as the agent
Facts:
On 25 April 1984, Rubin Uy entered into a Contract of Lease with Cesar J. Jovero
over a property located at E. Reyes Ave., Estancia, Iloilo for the purpose of
operating a gasoline station for a period of five (5) years. On 30 April 1984,
petitioner, a domestic corporation engaged in the importation and distribution of
gasoline and other petroleum products, entered into a Retail Dealer Contract with
Rubin Uy for the period 1 May 1984 to 30 April 1989. Under the dealership contract,
petitioner sold its products in quantities as ordered by the dealer. In order to
comply with its obligation to deliver the petroleum products to the dealer,
petitioner contracted the hauling services of Jose Villaruz, who did business under
the name Gale Freight Services.
Meanwhile, on 27 October 1988, Rubin Uy executed a Special Power of Attorney
(SPA) in favor of Chiong Uy authorizing the latter to manage and administer the
gasoline station. Chiong Uy and his wife, Dortina M. Uy, operated the gasoline
station as agents of Rubin Uy. However, on 27 November 1990, Chiong Uy left for
Hong Kong, leaving Dortina Uy to manage the gasoline station.
On 3 January 1991, around ten o’clock in the morning, Ronnie Allanaraiz, an
employee of the gasoline station, ordered from petitioner various petroleum
products. Petitioner then requested the services of Villaruz for the delivery of the
products to the gasoline station in Estancia, Iloilo. He, however, used a tank truck
different from the trucks specifically enumerated in the hauling contract executed
with petitioner. Petitioner nevertheless allowed the transport and delivery of its
products to Estancia in the tank truck driven by Pepito Igdanis.
During the unloading of the petroleum from the tank truck into the fill pipe that led
to the gasoline station’s underground tank, for reasons unknown, a fire started in
the fill pipe and spread to the rubber hose connected to the tank truck. During this
time, driver Pepito Igdanis was nowhere to be found. Bystanders then tried to put
out the flames. It was then that Igdanis returned to the gasoline station with a bag
of dried fish in hand. Seeing the fire, he got into the truck without detaching the
rubber hose from the fill pipe and drove in reverse, dragging the burning fuel hose
along the way. As a result, a conflagration started and consumed the nearby
properties of herein defendants, spouses Cesar J. Jovero and Erma Cudilla-Jovero,
amounting to P1,500,000; of spouses Leonito Tan and Luzvilla Samson, amounting
to P800,000; and of spouses Rogelio Limpoco and Lucia Josue Limpoco, amounting
to P4,112,000.
Issue:
Whether or not petitioner is solidarily liable with the dealer, Robin Uy?
Held:
of petitioner Petron. Therefore, as far as the dealer was concerned with regard to
the terms of the dealership contract, acts of Villaruz and his employees are also acts
of petitioner. Villaruz failed to rebut the presumption that the employer was
negligent in the supervision of an employee who caused damages to another; and,
thus, petitioner should likewise be held accountable for the negligence of Villaruz
and Igdanis.
To reiterate, petitioner, the dealer Rubin Uy – acting through his agent, Dortina Uy
– shared the responsibility for the maintenance of the equipment used in the
gasoline station and for making sure that the unloading and the storage of highly
flammable products were without incident. As both were equally negligent in those
aspects, petitioner cannot pursue a claim against the dealer for the incident.
Therefore, both are solidarily liable to respondents for damages caused by the fire.
Villaruz is also liable to petitioner based on the hauling contract. As the employer of
Igdanis, Villaruz was impleaded by herein respondents in the lower court and was
found to be solidarily liable with his other co-defendants.
To put it simply, based on the ruling of the lower courts, there are four (4) persons
who are liable to pay damages to respondents. The latter may proceed against any
one of the solidary debtors or some or all of them simultaneously, pursuant to
Article 1216 of the Civil Code. These solidary debtors are petitioner Petron, the
hauler Villaruz, the operator Dortina Uy and the dealer Rubin Uy. To determine the
liability of each defendant to one another, the amount of damages shall be divided
by four, representing the share of each defendant. Supposedly, under the hauling
contract, petitioner may require Villaruz to indemnify it for its share. However,
because it was not able to maintain the cross-claim filed against him, it shall be
liable for its own share under Article 1208 and can no longer seek indemnification
or subrogation from him under its dismissed cross-claim. Petitioner may not pursue
its cross-claim against Rubin Uy and Dortina Uy, because the cross-claims against
them were also dismissed; moreover, they were all equally liable for the
conflagration as discussed herein.
Pepsi-Cola Products Phils. v. Pagdanganan, G. R. No. 167866, October 12, 2006
Facts:
The respondents filed a complained against petitioners (Pepsi-Cola for brevity) for
sum of money and damages.
The issue stemmed from the fact that Pepsi-Cola launched a DTI-approved and
supervised under-the-crown promotional campaign entitled “Number Fever” in
1992. They undertook to give away cash prizes to holders of specially marked
crowns and resealable caps of Pepsi-Cola soft drink products. Specially marked
crowns and resealable caps were said to contain a) a three-digit number, b) a
seven-digit alpha-numeric security code, and c) the amount of the cash prize. In
doing so, they engaged in the services of a consultancy firm with experience in
handling similar promotion, to randomly pre-select 60 winning three-digit numbers
with their matching security codes out of 1000 three-digit numbers seeded in the
market, as well as the corresponding artworks appearing on a winning crown
and/or resealable cap.
On May 1992, Pepsi-Cola announced the notorious three-digit combination “349”
as the winning number. On the same night, they learned of reports that numerous
people were trying to redeem “349” crowns/caps with incorrect security codes “L-
2560-FQ” and “L-3560-FQ.” Upon verification from the list of the 25 pre-selected
winning three-digit numbers, Pepsi-Cola and DTI learned that the three-digit
combination “349” was indeed the winning combination but the security codes “L-
2560-FQ” and “L-3560-FQ” do not correspond to that assigned to the winning
number “349”. As “goodwill” however, Pepsi-Cola offered to give the respondents a
small sum of money.
Respondents demanded the payment of the corresponding cash prizes, but Pepsi-
Cola refused to take heed. This prompted the respondents to file a collective
complaint for sum of money and damages before the RTC.
RTC dismissed the same for lack of action, holding that the three-digit number must
tally with the corresponding security code, and that it was made clear in the
advertisements and posters put up by Pepsi-Cola that the defendants must acquire
both.
After the motion for reconsideration was denied by the same tribunal, they
elevated the case to Court of Appeals, which reversed the RTC’s order. Hence, the
appeal under Rule 45 of the Rules of Court.
Arguments:
Pepsi-Cola: In the previous Pepsi/”349″ cases, i.e., Mendoza, Rodrigo, Patan, and De
Mesa, SC held that both the three-digit number and the security code must be
acquired in order for the person to be entitled to such cash prize. Pepsi-Cola raised
this, alleging that the principle of stare decisis should have been determinative of
the outcome of the case at bar.
Respondents: They justified the non-application of stare decises by stating that it is
required that the legal rights and relations of the parties, and the facts, and the
applicable laws, the issue, and evidence are exactly the same. They contended that
they are not similar nor identical with the previous cases, and that their basis of
their action is Breach of Contract whereas the Mendoza case involved complains for
Specific Performance.
Issue:
Whether or not Pepsi-Cola is estopped from raising stare decisis as a defense.
Held:
SC held that the cases of Mendoza (and the other previous Pepsi/”349″ cases),
including the case at bar, arose from the same set of facts concerning the “Number
Fever” promo debacle of Pepsi-Cola. Like the respondents, Mendoza (and the other
previous Pepsi/”349″ cases) were also the holders of supposedly-winning crowns,
but were not honored for failing to contain the correct security code assigned to
such winning combination. In those old cases, SC held that the announced
mechanics clearly indicated the need for the authenticated security number in
order to prevent tampering or faking crowns; that in those cases, the legal rights
and relations of the parties, the facts, the applicable laws, the causes of action, the
issues, and the evidence are exactly the same as those preceding cases.
The principle of stare decisis et non quieta movere (to adhere to precedents and
not to unsettle things which are established) is well entrenched in Article 8 of the
Civil Code, to wit: ART. 8. Judicial decisions applying or interpreting the laws or the
Constitution shall form a part of the legal system of the Philippines. When a court
has laid down a principle of law as applicable to a certain state of facts, it will
adhere to that principle and apply it to all future cases where the facts are
substantially the same. In the case at bar, therefore, SC had no alternative but to
uphold the ruling that the correct security code is an essential, nay, critical,
requirement in order to become entitled to the amount printed on a “349” bearing
crown and/or resealable cap.
The same judicial principle should also prevent respondents from receiving the
money as goodwill compensation, as the respondents rejected the same and that
Pepsi-Cola’s offer of small money had long expired.
The doctrine of stare decisis embodies the legal maxim that a principle or rule of
law which has been established by the decision of a court of controlling jurisdiction
will be followed in other cases involving a similar situation. It is founded on the
necessity for securing certainty and stability in the law and does not require identity
of or privity of parties.28 This is unmistakable from the wordings of Article 8 of the
Civil Code. It is even said that such decisions “assume the same authority as the
statute itself and, until authoritatively abandoned, necessarily become, to the
extent that they are applicable, the criteria which must control the actuations not
only of those called upon to decide thereby but also of those in duty bound to
enforce obedience thereto.” Abandonment thereof must be based only on strong
and compelling reasons, otherwise, the becoming virtue of predictability which is
expected from this Court would be immeasurably affected and the public’s
confidence in the stability of the solemn pronouncements diminished.

Department of Health v. Philip Morris Philippines Manufacturing, Inc., G.R. No.
202943, March 25, 2015
The Facts:
Philip Morris Philippines Manufacturing Inc., thru its advertising agency, filed an
application for sales promotion under Article 166 of Republic Act 7394 before the
BFAD, now FAD for its Gear Up promo. Fifteen days having lapsed without any
action taken on its application, the company inquired about its status but was
verbally informed of a Memorandum issued by the DOH prohibiting the tobacco
companies from conducting any tobacco promotional activities in the country. The
company’s advertising arm thus requested that any formal action thereof be made
in writing. Subsequently, the company thru another advertising agency applied for
sales promotion permit for its Golden Stick promo. The BFAD refused outright its
application pursuant to a directive of the BFAD Director that all permit applications
for promotional activities of tobacco companies will no longer be accepted. On
January 15, 2009, the BFAD through Director Barbara Guttierez informed PMPI that
its application for Gear Up promo was denied upon instruction of DOH
Undersecretary for Standards and Regulations that all promotions, advertisements
and/or sponsorships of tobacco products are already prohibited under Republic Act
9211, as of July 1, 2008. Thus, PMPI filed an administrative appeal before the DOH
Secretary, arguing that under RA 9211, promotion is not prohibited but merely
restricted; while there are specific provisions banning advertisements and
sponsorships, none could be found banning promotion. Since the BFAD had been
granting such applications prior to January 5, 2009, it had acquired a vested right to
the granting of such sales promotional permit.
The DOH Secretary thru a Consolidated Decision denied the appeal. Ruling that the
issuance of permits was never a ministerial duty of the BFAD, it was discretionary
on the part of the BFAD to grant or deny any application for the permit, hence PMPI
could not have acquired a vested right to the grant of the promotional permit.
Since the intent of RA 9211 was to completely ban advertisements promotions and
sponsorships, promotion being an inherent part of both advertising and
sponsorships should be included in the prohibition. RA 9211 should not be
interpreted in such a way that it will be rendered meaningless and ridiculous.
Further, the country is obligated to observe the provisions of the Framework
Convention on Tobacco Control (FCTC), an international treaty to which it is a party.
On appeal to the CA, however, the latter set aside the DOH Consolidated Decision.
While advertising and sponsorships were completely banned by RA 9211, the same
does not hold true for promotion. Further the DOH is without authority to enforce
the provisions of RA 9211, since it is the Inter-Agency Committee–Tobacco (IAC-
Tobacco) created under Section 29 of the law which “has the exclusive power and
function to administer and implement the provisions of [RA 9211] x x x.” Section
166 of RA 7394 under which authority the PMPI sought sales promotional permit
was already repealed by Section 39 of RA 9211.
The DOH elevated the case to the Supreme Court to assail the CA ruling.
The Issue:
(a) whether or not the CA erred in finding that the authority of the DOH, through
the BFAD, to regulate tobacco sales promotions under Article 116 in relation to
Article 109 of RA 7394 had already been impliedly repealed by RA 9211, which
created the IAC-Tobacco and granted upon it the exclusive authority to administer
and implement the provisions thereof; and
(b) whether or not the CA erred in ascribing grave abuse of discretion upon the DOH
when the latter held that RA 9211 has also completely prohibited tobacco
promotions as of July 1, 2008.
The Ruling:
The petition is bereft of merit.
At the core of the present controversy are the pertinent provisions of RA 7394, i.e.,
Article 116 in relation to Article 109, to wit:
Article 116. Permit to Conduct Promotion. – No person shall conduct any sales
campaigns, including beauty contest, national in character, sponsored and
promoted by manufacturing enterprises without first securing a permit from the
concerned department at least thirty (30) calendar days prior to the
commencement thereof. Unless an objection or denial is received within fifteen
(15) days from filing of the application, the same shall be deemed approved and the
promotion campaign or activity may be conducted: Provided, That any sales
promotion campaign using medical prescriptions or any part thereof or attachment
thereto for raffles or a promise of reward shall not be allowed, nor a permit be
issued therefor. (Emphasis supplied)
Article 109. Implementing Agency. – The Department of Trade and Industry shall
enforce the provisions of this Chapter and its implementing rules and regulations:
Provided, That with respect to food, drugs, cosmetics, devices, and hazardous
substances, it shall be enforced by the Department of Health. (Emphasis and
underscoring supplied)
The DOH derives its authority to rule upon applications for sales promotion permits
from the above-cited provisions. On the other hand, Section 29 of RA 9211 creating
the IAC-Tobacco provides:
Section 29. Implementing Agency. – An Inter-Agency Committee-Tobacco (IAC-
Tobacco), which shall have the exclusive power and function to administer and
implement the provisions of this Act, is hereby created. The IAC-Tobacco shall be
chaired by the Secretary of the Department of Trade and Industry (DTI) with the
Secretary of the Department of Health (DOH) as Vice Chairperson. The IAC-Tobacco
shall have the following as members:
1. Secretary of the Department of Agriculture (DA);
2. Secretary of the Department of Justice (DOJ);
3. Secretary of the Department of Finance (DOF);
4. Secretary of the Department of Environment and Natural Resources
(DENR);
5. Secretary of the Department of Science and Technology (DOST);
6. Secretary of the Department of Education (DepEd);
7. Administrator of the National Tobacco Administration (NTA);
8. A representative from the Tobacco Industry to be nominated by the
legitimate and recognized associations of the industry; and
9. A representative from a nongovernment organization (NGO) involved in
public health promotion nominated by DOH in consultation with the concerned
NGOs[.]
The Department Secretaries may designate their Undersecretaries as their
authorized representative to the IAC. (Emphasis and underscoring supplied)
It is the CA’s pronouncement that the creation of the IAC-Tobacco effectively and
impliedly repealed1 the above-quoted provisions of RA 7394, thereby removing the
authority of the DOH to rule upon applications for sales promotional permits filed
by tobacco companies such as those filed by PMPMI subject of this case.
On the other hand, while the DOH and the BFAD concede that the creation of the
IAC-Tobacco expressly grants upon the IAC-Tobacco the exclusive power and
function to administer and implement its provisions, they nevertheless maintain
that RA 9211 did not remove their authority under RA 7394 to regulate tobacco
sales promotions.2 They point out that this much can be deduced from the lack of
provisions in RA 9211 and its implementing rules laying down the procedure for the
processing of applications for tobacco sales promotions permit.3 As such, the DOH,
through the BFAD, retains the authority to rule on PMPMI’s promotional permit
applications.
The Court agrees with the CA.
After a meticulous examination of the above-quoted pertinent provisions of RA
7394 and RA 9211, the Court finds that the latter law impliedly repealed the
relevant provisions of the former with respect to the authority of the DOH to
regulate tobacco sales promotions.
At this point, the Court notes that both laws separately treat “promotion” as one of
the activities related to tobacco: RA 7394 defines “sales promotion” under Article 4
(bm), while RA 9211 speaks of “promotion” or “tobacco promotion” under Section 4
(l).
“Sales promotion” is defined in Article 4 (bm) of RA 7394, to wit:
Article 4. Definition of Terms. – For purposes of this Act, the term:
xxxx
bm) “Sales Promotion” means techniques intended for broad consumer
participation which contain promises of gain such as prizes, in cash or in kind, as
reward for the purchase of a product, security, service or winning in contest, game,
tournament and other similar competitions which involve determination of
winner/s and which utilize mass media or other widespread media of information. It
also means techniques purely intended to increase the sales, patronage and/or
goodwill of a product.(Emphases and underscoring supplied)
Identifying its Gear Up Promo and Golden Stick Promo to be activities that fall under
sales promotion as contemplated in the said provision, PMPMI filed its permit
applications under Article 116 of RA 7394 before the BFAD.
Meanwhile, Section 4 (l) of RA 9211 defines “promotion” as follows:
Section 4. Definition of Terms. – As used in this Act:
xxxx
l. “Promotion” – refers to an event or activity organized by or on behalf of a tobacco
manufacturer, distributor or retailer with the aim of promoting a brand of tobacco
product, which event or activity would not occur but for the support given to it by
or on behalf of the tobacco manufacturer, distributor or retailer. It may also refer to
the display of a tobacco product or manufacturer’s name, trademark, logo, etc. on
non-tobacco products. This includes the paid use of tobacco products bearing the
brand names, trademarks, logos, etc. in movies, television and other forms of
entertainment. For the purpose of this Act, promotion shall be understood as
tobacco promotion[.] (Emphases and underscoring supplied)
As adverted to elsewhere, the IAC-Tobacco shall have the exclusive power and
function to administer and implement the provisions of RA 9211, which includes the
conduct of regulating promotion.
The Court has judiciously scrutinized the above definitions and finds that there is no
substantial difference between the activities that would fall under the purview of
“sales promotion” in RA 7394, as well as those under “promotion” in RA 9211, as
would warrant a delineation in the authority to regulate its conduct. In fact, the
techniques, activities, and methods mentioned in the definition of “sales
promotion” can be subsumed under the more comprehensive and broad scope of
“promotion.”
In order to fully understand the depth and scope of these marketing activities, the
Court finds it necessary to go beyond the ambit of the definitions provided in our
laws.
Outside RA 7394, “sales promotion” refers to activities which make use of “media
and non-media marketing communication for a pre-determined, limited time to
increase consumer demand, stimulate market demand or improve product
availability,”4 “to provide added value or incentives to consumers, wholesalers,
retailers, or other organizational customers to stimulate immediate sales” and
“product interest, trial, or purchase.” 5 Examples of devices used in “sales
promotion” are contests, coupons, freebies, point-of-purchase displays, premiums,
raffle prizes, product samples, sweepstakes, and rebates.6
On the other hand, “promotion” is a term frequently used in marketing which
pertains to “raising customer awareness of a product or brand, generating sales,
and creating brand loyalty”7 which utilize the following subcategories: personal
selling, advertising, sales promotion, direct marketing, and publicity.8 The three
basic objectives of promotion are: (1) to present information to consumers as well
as others; (2) to increase demand; and (3) to differentiate a product.9 “Promotion”
can be done through various methods, e.g., internet advertisements, special events,
endorsements, incentives in the purchase of a product like discounts (i.e., coupons),
free items, or contests.10
Consequently, if “sales promotion” is considered as one of the subcategories of
“promotion,” it is clear, therefore, that “promotion” necessarily incorporates the
activities that fall under “sales promotion.” Considering that the common and
fundamental purpose of these marketing strategies is to raise customer awareness
in order to increase consumer demand or sales, drawing a demarcation line
between “promotion” and “sales promotion” as two distinct and separate activities
would be unnecessarily stretching their meanings and, accordingly, sow more
confusion. Moreover, the techniques, methods, and devices through which “sales
promotion” are usually accomplished can likewise be considered as activities
relating to “promotion,” like raffle contests, which necessarily require prizes and
drawing of winners, discounts, and freebies.
Concomitantly, while the Court acknowledges the attempt of the Department of
Justice (DOJ), through its DOJ Opinion No. 29, series of 2004,11 (DOJ Opinion) to
reconcile and harmonize the apparently conflicting provisions of RA 7394 and RA
9211 in this respect, to the Court’s mind, it is more logical to conclude that “sales
promotion” and “promotion” are actually one and the same. The DOJ, in fact,
referred12 to “product promotion” in RA 9211 as “promotion per se” which,
therefore, can be taken to mean an all-encompassing activity or marketing strategy
which may reasonably and logically include “sales promotion.” Besides, the DOJ
Opinion is merely persuasive and not necessarily controlling.
Furthermore, the declared policy of RA 9211 where “promotion” is defined includes
the institution of “a balanced policy whereby the use, sale and advertisements of
tobacco products shall be regulated in order to promote a healthful environment
and protect the citizens from the hazards of tobacco smoke x x x.” Hence, if the
IAC-Tobacco was created and expressly given the exclusive authority to implement
the provisions of RA 9211 in accordance with the foregoing State policy, it signifies
that it shall also take charge of the regulation of the use, sale, distribution, and
advertisements of tobacco products, as well as all forms of “promotion” which
essentially includes “sales promotion.” Therefore, with this regulatory power
conferred upon the IAC-Tobacco by RA 9211, the DOH and the BFAD have been
effectively and impliedly divested of any authority to act upon applications for
tobacco sales promotional permit, including PMPMI’s.
Finally, it must be stressed that RA 9211 is a special legislation which exclusively
deals with the subject of tobacco products and related activities. On the other hand,
RA 7394 is broader and more general in scope, and treats of the general welfare
and interests of consumers vis-à-vis proper conduct for business and industry. As
such, lex specialis derogat generali. General legislation must give way to special
legislation on the same subject, and generally is so interpreted as to embrace only
cases in which the special provisions are not applicable. In other words, where two
statutes are of equal theoretical application to a particular case, the one specially
designed therefore should prevail.13
In fine, the Court agrees with the CA that it is the IAC-Tobacco and not the DOH
which has the primary jurisdiction to regulate sales promotion activities as
explained in the foregoing discussion. As such, the DOH’s ruling, including its
construction of RA 9211 (i.e., that it completelybanned tobacco advertisements,
promotions, and sponsorships, as promotion is inherent in both advertising and
sponsorship), are declared null and void, which, as a necessary consequence,
precludes the Court from further delving on the same. As it stands, the present
applications filed by PMPMI are thus remanded to the IAC-Tobacco for its
appropriate action. Notably, in the proper exercise of its rule-making authority,
nothing precludes the IAC-Tobacco from designating any of its pilot agencies
(which, for instance, may even be the DOH14 to perform its multifarious functions
under RA 9211.
WHEREFORE, the petition is DENIED. The Decision dated August 26, 2011 and the
Resolution dated August 3, 2012 of the Court of Appeals in CA-G.R. SP No. 109493
are hereby AFFIRMED with the MODIFICATION in that the present permit
applications filed by respondent Philip Morris Philippines Manufacturing, Inc. for its
tobacco sales promotions are hereby REMANDED to the Inter-Agency Committee-
Tobacco for appropriate action. SO ORDERED.
Aowa Electronic Philippines, Inc. v. DTI,G.R. No. 189655, April 2011
FACTS:
The DTI-NCR records show at least 273 administrative complaints against Aowa
Electronics Philippines, Inc. from the year 2001 to 2007. The facts narrated in the
consumer complaints consistently contain a common thread that a target costumer
is approached by Aowa’s representative usually in the mall and inform the former
that he/she has won a gift or a “give-away.” Aowa’s representatives then verbally
reveal that the said gift can only be claimed upon purchase of additional products.
An initial gift is also offered to target customer and upon acceptance, the customer
is invited to Aowa’s store or outlet. It is that point that the customer is informed
that he/she is qualified for a raffle draw or contest entitling him to additional gift. In
the same manner, the additional gift can be received only upon purchase of
additional products. In the course of enticing the target customer to purchase
additional products, they are physically surrounded (a.k.a ganging up) by Aowa’s
representatives. The purchase of additional products is not disclosed during the
initial stage of the sales pitch. The revelation is done only when the customer is
already being surrounded by Aowa’s representatives.
As a result, DTI-NCR filed a Formal Charge against Aowa before the DTI-NCR
Adjudication Officer for violation Articles 50 and 52 of the Consumer Act of the
Philippines praying that a cease and desist order be issued and administrative fines
be imposed.
The Adjudication Officer held that DTI-NCR had sufficiently established prima facie
evidence against Aowa for violation of the Consumer Act and its Implementing
Rules and Regulations. Furthermore, the Adjudication Officer highlighted that Aowa
failed to secure any Sales Promotion Permit. Thus, a Decision was made declaring
Aowa liable for Deceptive, Unfair and Unconscionable Sales act or Practices.
Aowa appealed the Adjudication Officer’s Decision before the Appeals Committee
(OLA). On August 26, 2008, the Appeals Committee sustained the Decision and held
that the schemes and techniques employed by Aowa were fraudulent.
Feeling aggrieved, Aowa elevated the Decision of the Appeals Committee to the
Court of Appeals (CA) under Rule 65 of the Rules of Civil Procedure. However, on
June 23, 2009, the CA affirmed the findings of the Appeals Committee.
Still unsatisfied, Aowa finally elevated the case before the Supreme Court by filing a
Petition for Review on Certiorari under Rule 45 of the Rules of Civil Procedure
seeking the reversal of the CA Decision. Briefly stated, Aowa raised among others
the following errors before the high tribunal:
1. There is no sufficient basis in the Formal Charge against Aowa since the charge is
merely based on consumer complaints which have all been amicably settled.
2. The CA erred when it affirmed the harsh and excessive Decision of DTI
notwithstanding the fact that the Formal Charge is not supported by any concrete,
sufficient and convincing evidence.
3. The complaints against Aowa pertain to cases in the NCR, hence, there was no
basis for DTI to presume that the allege offenses are likewise practice in other
places in the country.
4. Aowa also argued that like other companies, sales personnel employed
enthusiasm and overzealousness in sales talk to convince potential customers which
cannot and should not be considered as deceit.
ISSUE:
Whether or not the CA committed any reversible error in affirming the findings and
ruling of the Adjudication Officer and the DTI Appeals Committee.
HELD:
In sustaining the CA Decision, the Supreme Court held that “it is indubitable that the
DTI is tasked to protect the consumers against deceptive, unfair and
unconscionable sales, acts or practices as defined in Article 50 and 52 of the
Consumer Act.” It cannot be gainsaid that the DTI acted on the basis of about 273
consumer complaints against Aowa, averring a common and viral scheme in
carrying out its business to the prejudice of comsumers. Complaints- filed by
consumers not only within NCR but also in the provinces- continued to be filed even
after the formal charge and the issuance of PMO.
In giving due respect to factual findings of DTI, the Supreme Court held: “By reason
of the special knowledge and expertise of DTI over matters falling under its
jurisdiction, it is in better position to pass judgment on the issues, and its findings of
fact in that regard, especially when confirmed by the CA, are generally accorded
with respect, if not finality, by this Court. Furthermore, Aowa failed to refute DTI’s
finding that it did not secure any permit for its alleged promotional sale.”
“In these trying times when fly-by-night establishments and syndicates proliferate
all over the country, lurking and waiting to prey on innocent consumers , and
ganging up on them like a pack of wolves with their sugar-coated sales talk false
fellester.blogspot.com representations disguised as “overzealous marketing
strategies,” it is the mandated duty of the government, through its various agencies
like the DTI, to be wary and ready to protect each and every consumer. To allow or
to even tolerate the marketing schemes such as these, under the pretext of
promotional sales in contravention of the law and its existing rules and regulations,
would result in consumers being robbed in broad daylight of their hard-earned
money. This Court shall not countenance theses pernicious acts at the expense of
the consumers”.
Ang v. Court of Appeals, G.R. No. 177874, September 29, 2008
Petitioner: Jaime D. Ang
Respondent: Court of Appeals and Bruno Soledad
FACTS: Under a “car-swapping” scheme, respondent Soledad sold his Mitsubishi
GSR sedan 1982 model to petitioner Ang by Deed of Absolute Sale dated July 28,
1992. Ang later offered the Mitsubishi GSR for sale through Far Eastern Motors, a
second-hand auto display center. The vehicle was eventually sold to a certain Paul
Bugash. Before the deed could be registered in Bugash’s name, however, the
vehicle was seized by virtue of a writ of replevin on account of the alleged failure of
Ronaldo Panes, the owner of the vehicle prior to Soledad, to pay the mortgage debt
constituted thereon.
To secure the release of the vehicle, Ang paid BA Finance the amount of
P62,038.47. Soledad refused to reimburse the said amount, despite repeated
demands, drawing Ang to charge him for Estafa with abuse of confidence. It was
dismissed later for insufficiency of evidence. Ang filed the first complaint for
damages against Soledad. It was dismissed for failure to submit the controversy to
barangay conciliation. Ang thereafter secured a certification to file action and again
filed a complaint for damages which was dismissed on the ground that the amount
involved is not within its jurisdiction.
Ang thereupon filed with the Municipal Trial Court in Cities (MTCC) a complaint the
subject of the instant petition. After trial, the MTCC dismissed the complaint on the
ground of prescription pursuant to Article 1571.
Ang appealed to the RTC which affirmed the dismissal of the complaint, albeit it
rendered judgment in favor of Ang “for the sake of justice and equity, and in
consonance with the salutary principle of non-enrichment at another’s expense.”
Soledad’s Motion for Reconsideration was denied. He elevated the case to the
Court of Appeals. The appellate court accordingly reversed the RTC decision and
denied Ang’s motion for reconsideration.
ISSUE: Whether Ang’s cause of action has prescribed
RULING: The resolution of the sole issue of whether the complaint had prescribed
hinges on a determination of what kind of warranty is provided in the Deed of
Absolute Sale subject of the present case. Art. 1546 of the Civil Code defines
express warranty. Among the implied warranty provisions of the Civil Code are: as
to the seller’s title (Art. 1548), against hidden defects and encumbrances (Art.
1561), as to fitness or merchantability (Art. 1562), and against eviction (Art. 1548).
The earlier cited ruling in Engineering & Machinery Corp. states that “the
prescriptive period for instituting actions based on a breach of express warranty is
that specified in the contract, and in the absence of such period, the general rule on
rescission of contract, which is four years (Article 1389, Civil Code).” For actions
based on breach of implied warranty, the prescriptive period is, under Art. 1571
(warranty against hidden defects of or encumbrances upon the thing sold) and Art.
1548 (warranty against eviction), six months from the date of delivery of the thing
sold.
In declaring that he owned and had clean title to the vehicle at the time the Deed of
Absolute Sale was forged, Soledad gave an implied warranty of title. In pledging
that he “will defend the same from all claims or any claim whatsoever [and] will
save the vendee from any suit by the government of the Republic of the
Philippines,” Soledad gave a warranty against eviction. Given Ang’s business of
buying and selling used vehicles, he could not have merely relied on Soledad’s
affirmation that the car was free from liens and encumbrances. He was expected
to have thoroughly verified the car’s registration and related documents.
Since what Soledad, as seller, gave was an implied warranty, the prescriptive period
to file a breach thereof is six months after the delivery of the vehicle, following Art.
1571. But even if the date of filing of the action is reckoned from the date
petitioner instituted his first complaint for damages on November 9, 1993, and not
on July 15, 1996 when he filed the complaint subject of the present petition, the
action just the same had prescribed, it having been filed 16 months after July 28,
1992, the date of delivery of the vehicle.
De Guzman v. Toyota Cubao, Inc.,G.R. No. 141480, November 29, 2006
FACTS:
On November 27, 1997, BUYER purchased from SELLER a brand new vehicle. The
vehicle was delivered to BUYER two days later. On October 18, 1998, BUYER
demanded the replacement of the engine of the vehicle because it developed a
crack after traversing Marcos Highway during a heavy rain. As BUYER knows no
reason why the vehicle's engine would crack just like that, the same could only be
due to the fact that said engine and/or the vehicle itself was defective even from
the time it was bought. BUYER asserted that respondent should replace the engine
with a new one based on an implied warranty. SELLER refused to answer for this
defect saying it is not covered by the vehicle's warranty. It refused to replace the
vehicle as BUYER demanded (or at least its engine, or even repair the damage). He
further alleged that the BUYER's cause of action had prescribed as the case was
filed more than six months from the date the vehicle was sold and/or delivered.
ISSUES:
1) Whether the SELLER is liable for the redhibitory defects of the vehicle.
2) Whether the BUYER's cause of action had prescribed.
RULING:
The pertinent provisions of the Code set forth the available remedies of a buyer
against the seller on the basis of a warranty against hidden defects:
Art. 1561. The vendor shall be responsible for warranty against the hidden defects
which the thing sold may have, should they render it unfit for the use for which it is
intended, or should they diminish its fitness for such use to such an extent that, had
the vendee been aware thereof, he would not have acquired it or would have given
a lower price for it; but said vendor shall not be answerable for patent defects or
those which may be visible, or for those which are not visible if the vendee is an
expert who, by reason of this trade or profession, should have known them.
(Emphasis supplied)
Art. 1566. The vendor is responsible to the vendee for any hidden faults or defects
in the thing sold, even though he was not aware thereof.
This provision shall not apply if the contrary has been stipulated and the vendor was
not aware of the hidden faults or defects in the thing sold.
Art. 1571. Actions arising from the provisions of the preceding ten articles shall be
barred after six months from the delivery of the thing sold.
Wherefore, the SELLER is not liable for the defects and a redhibitory action for
violation of an implied warranty against hidden defects has been time-barred.
Isidro v. Nissan Motor Phils.,G.R. No. 136500, December 3, 1999
Facts:
On December 21, 1995, petitioner bought from respondent a brand-new Nissan
Sentra with an express manufacturer's warranty against hidden defects for a period
of 24 months or 50,000 kilometers, whichever comes first.
On August 31, 1998, or two years and nine months after delivery of the car,
petitioner filed with the Regional Trial Court, Quezon City, assigned to Branch 81, a
complaint against respondent for breach of warranty.
The trial court dismissed the case on the ground that the plaintiff’s cause of action
has prescribed.
Issue:
Whether or not petitioner's action for enforcement of the manufacturer's express
warranty covering the subject motor vehicle has prescribed.
Ruling:
The manufacturer's warranty covering the subject motor vehicle was for defective
parts over a period of twenty-four (24) months or fifty thousand (50,000)
kilometers, whichever comes first. Where there is an express warranty in the
contract, as in the case at bar, the prescriptive period is the one specified in the
express warranty, if any.
The action to enforce the warranty was filed two and a half years from the date of
the purchase or delivery of the vehicle subject of the warranty.
Clearly, the action has prescribed. The period of the guarantee under the express
warranty has expired.
G.A. Machineries, Inc. v. Yaptinchay, G.R. No. L-30965, November 29, 1983
Petitioner G. A. Machineries, Inc. (hereinafter referred to as GAMI) seeks the
reversal of the decision of the Court of First Instance of Rizal, affirmed by the Court
of Appeals in the original case entitled HoracioYaptinchay, doing business under the
name and style "Hi-way Express", v. G. A. Machineries Inc. for recovery of damages.
The antecedent facts of the case are not seriously disputed and are summarized by
the Court of Appeals as follows:
"Sometime early in January, 1962 appellant GAMI, thru a duly authorized agent,
offered to sell a brand-new Fordson Diesel Engine to appellee Horacio Yaptinchay,
owner of the freight hauling business styled 'Hi-Way Express'. Relying on the
representations of appellant's representative that the engine offered for sale was
brand-new, appellee agreed to purchase the same at the price of P7,590.00.
Pursuant to the contract of sale thus entered into, appellant delivered to appellee,
on January 27, 1962, one (1) Fordson Diesel Engine assembly, Model 6-D, with
Engine Serial No. A-212193, at 1500 RPM, with fly wheel, fly wheel housing, fuel
injection assembly, exhauster, fuel filter, oil filter, fuel lift pump, plus conversion kit
for F-500, subject to the standard warranties, particularly the representation, relied
upon by appellee, that the same was brand-new. Said engine was installed by
appellant in Unit No. 6 of the Hi-Way Express.
"Within the week after its delivery, however, the engine in question started to have
a series of malfunctions which necessitated successive trips to appellant's repair
shop. Thus, it first sprang an oil leak such that, on February 6, 1962, it was brought
in to '1. Adjust idling of engine and tappete clearance; 2. Inspect and remedy oil
leaks of engine; 3. Replace clutch disc and pressure plate w/original; and 4.
Replace release bearing hub trunion bolt' (Exhibit C). Thereafter, the
malfunctioning persisted and, on inspection, appellee's mechanic noticed a worn
out screw which made appellee suspicious about the age of the engine. This
prompted appellee, thru his lawyer, to write appellant a letter, dated February 10,
1962, protesting that the engine was not brand-new as represented (Exhibit E).
Because of the recurring defects, the engine was again submitted to appellant's
shop to '1. Inspect engine oil leaks on cylinder head; 2. Check up propeller shaft
(vibrating at high speed); and 3. Tighten bolts of pump.' (Exhibit F). All these
notwithstanding, the engine could still not be returned into operation because it
continued not to function well. In fact, it was sent back to appellant's shop on the
same day it was delivered after the last repair work done on it. Another check up
was thereafter required to be made on March 5, 1962 (Exhibit G). Then, again, on
March 10, 1962, the engine was back at the repair shop to '1. Inspect leaks on No. 1
& 5 high pressure pipe; and 2. Change engine oil with flushing & oil element'
(Exhibit H). Still, the oil leaks remained unchecked and, on July 2, 1962, one last
effort to '1. Remedy engine oil leaks' (Exhibit 1) was made, but all to no avail
because, instead of improving, the engine's condition became worse as it
developed engine knock and appellee had to stop its operation altogether due to its
unserviceability.
"These repeatedly recurring defects and continued failure of appellant to put the
engine in good operating condition only served to firm up in appellee's mind the
suspicion that the engine sold to him was not brand-new as represented. He then
sought the assistance of the PC Criminal Investigation Service to check on the
authenticity of the serial number of the engine, with due notice to appellant.
Scientific examination and verification tests revealed that the original motor
number of the engine aforesaid was tampered. Further inquiries by appellee from
the Manila Trading Company, which also handles the importation and distribution
of similar engines, also disclosed that, unlike the engine delivered to appellee
whose engine body and injection pump were painted with two different colors,
brand-new engines are painted with only one color all over.
"Thus convinced that a fraudulent misrepresentation as to the character of the
engine had been perpetrated upon him, appellee made demands from appellant for
indemnification for damages and eventually instituted the present suit.
"In its defense, appellant interposed prescription of the action, denied the
imputation of misrepresentation, and disputed the propriety and amount of
damages claimed." x x x
After trial on the merits, the trial court ruled in favor of plaintiff Yaptinchay as
follows:
"FOR ALL THE FOREGOING CONSIDERATIONS, the Court hereby renders judgment
ordering the defendant, G.A. Machineries Inc., to pay the plaintiff, Horacio
Yaptinchay, actual damages sustained in the sum of P54,000.48; to reimburse the
purchase price of the Fordson diesel engine in the amount of P7,590.00; and to pay
attorney's fees to plaintiff's counsel on the sum of P2,000.00 and costs.
"Plaintiff is, likewise, ordered to return the Fordson diesel engine with serial
number A-21219 to the defendant."
Defendant GAMI appealed the decision to the Court of Appeals. As stated earlier,
the decision was affirmed by the Appellate Court. A motion for reconsideration was
denied. Hence, the instant petition.
Petitioner GAMI raises the following alleged errors of judgment of the respondent
court:
I delivered by the petitioner to the respondent was not brand-new contrary to the
THE COURT OF APPEALS ERRED IN NOT APPLYING THE PRESCRIPTIVE PERIOD OF
ARTICLE 1571 OF THE CIVIL CODE TO THE CASE AT BAR.
II
THE COURT OF APPEALS ERRED IN APPLYING THE DOCTRINE IN THE CASE OF
ASOCIACION ZANJERA CASILIAN vs. CRUZ, 46 O.G. 4813, 4820 REGARDING ADMIS-
SION BY FAILURE TO REBUT, TO THE ISSUE OF ACTUAL DAMAGES, WHICH MUST BE
PROVED BY THE BEST AND COMPETENT EVIDENCE.
III
THE COURT OF APPEALS ERRED IN AWARDING ACTUAL DAMAGES IN THE FORM OF
UNREALIZED PROFITS (LUCRUM CESSANTE) WHEN THE ISSUE RAISED BY THE
PLEADINGS REFERS ONLY TO ALLEGED ACTUAL DAMAGES IN THE FORM OF
DAMNUM EMERGENTE.
IV
THE COURT OF APPEALS ERRED IN FINDING THAT THE FORDSON DIESEL ENGINE
DELIVERED BY PETITIONER TO RESPONDENT HORACIO YAPTINCHAY WAS NOT
BRAND NEW, REACHING SUCH FINDING BY WAY OF A MANIFESTLY MISTAKEN
INFERENCE AND ON THE BASIS OF A MISAPPREHENSION OF FACTS AND SOLELY ON
THE GROUND OF SPECULATION, SURMISES AND CONJECTURES.
The assignments of errors raise the following issues: 1) whether or not the
respondent's cause of action against the petitioner had already prescribed at the
time the complaint was filed in the trial court; 2) whether or not the factual findings
of both the trial and appellate courts as regards the subject Fordson diesel engine
are supported by evidence and 3) whether or not the award of damages was
justified considering evidence on record.
The first issue is premised on the petitioner's proposition that the respondent's
cause of action was for breach of warranty against hidden defects as provided
under Articles 1561 and 1566 of the Civil Code. Article 1571 of the Civil Code
provides for a six-month prescriptive period from the delivery of the thing sold for
the filing of an action for breach of warranty against hidden defects. According to
petitioner GAMI when respondent Yaptinchay filed the case with the trial court,
more than six months had already lapsed from the time the alleged defective
engine was delivered and, therefore, the action had prescribed.
The petitioner contends that Yaptinchay's asserted cause of action was premised
and anchored on the delivery by the defendant of a DEFECTIVE ENGINE and that the
allegations in the complaint that the engine was not brand new are clearly mere
specifications of the precise nature of the hidden defects.
A cursory reading of the complaint shows that the petitioner's arguments are not
well-taken.
The main thrust of the complaint is the contention that the Fordson diesel engine
representations of the former and the expectations of the latter. The complaint
was couched in a manner which shows that instead of the brand-new Fordson
diesel engine which was bought by the respondent from the petitioner, another
engine which was not brand new was delivered resulting in the damages sought to
be recovered. It is evident therefore, that the complaint was for a breach of a
contract of sale rather than a breach of warranty against hidden defects. This is so
because an action for breach of warranty against hidden defects presupposes that
the thing sold is the same thing delivered but with hidden defects. Consequently,
the six-month prescriptive period under Article 1571 of the Civil Code is not
applicable.
The petitioner takes exception to the factual findings of the appellate court and
argues: 1) the fact that the Fordson diesel engine developed oil leaks does not
necessarily imply that the said engine was not brand new and 2) the testimony of
laboratory technician Captain Garcia of the Philippine Constabulary to the effect
that the motor or serial number of the engine was tampered does not deserve
credence.
The first argument is premised on the proposition that even brand-new engines in
many cases develop oil leaks. To support this proposition the petitioner presented
documentary evidence (Exhibits "5", "7", "8", "9", "10", "11", "12", "13", "14", "15",
"16", and "17") consisting of job orders for allegedly brand new engines which
developed oil leaks.
An examination of the documentary evidence shows that the job orders were for
twelve (12) different engines. Moreover, the petitioner's witness who testified on
the said job orders admitted that some engines were repaired only after a few
months. On the other hand, the subject Fordson diesel engine was repaired on the
complaint not only of oil leaks but also replacement of clutch disc and pressure
plate, replacement of release bearing hub trunion belt, and other defects within a
week after it was delivered to the respondents or on February 6, 1962 (Exhibit "C").
Thereafter it was returned for more repairs on February 28, 1962 (Exhibit "F"), on
March 10, 1962 (Exhibit "H") and on July 2, 1962 (Exhibit "I"). The documentary
evidence of the petitioner consisting of the job orders of the supposed brand-new
engines which also developed oil leaks is no reason to doubt the trial court's and
appellate court's factual findings. In fact, the documentary evidence and the
admissions of the petitioner's witness enhance the respondent's allegation that the
Fordson diesel engine sold to him was not brand-new.
The second argument questions Captain Garcia's findings that the original motor
number of the engine was tampered as shown by the presence of fragmentary
numbers which appeared in the engine when he conducted a macro-etching test
thereon by applying acid on the surface of said engine. The petitioner emphasizes
Captain Garcia's alleged testimony that "x x x what he calls fragmentary numeral" is
not definitely a numeral or a fragment of a numeral and states that the same could
have been caused by any molecular pressure applied to the area of the metal where
it appeared. In effect, the petitioner insists that the supposed fragmentary
numerals could have been merely scratches or indentations near the serial number
of the motor which might have been caused by sparks from the welding process.
The arguments are not well-taken. First, the statements attributed to Captain
Garcia are not accurate. An examination of the record shows that Captain Garcia
positively stated the fragmentary numeral to be a numeral or a number but in the
absence of key portions he could not positively identify the exact number or
numeral. He discounted the possibility that such fragmentary numerals could be
mere scratches. Second, the witness did not categorically state that any molecular
pressure could have caused the fragmentary numeral. Hence, Captain Garcia under
cross-examination stated:
"Q. This fragmentary numeral could be caused deliberately by tampering with the
engine number or by other factor such as scratches or burning by other foreign
element, is that right?
"A No, sir, they can be caused by scraping but not by scratching, because by
scraping there is molecular disturbance of metal.
"Q When you say molecular disturbance does it mean you first apply in the area,
or would it disturb the molecule in or around that area?
"A Once you stamped the number, you impressed it and there is molecular
disturbance in the structure of the metal.
"Q If the metal is burned, there is also molecular disturbance in the metal, is that
correct?
"A The metal will only expand.
"Q There is no spark of the machine could not cause the molecular disturbance in
the steam, is that right?
"A It cannot"
(T.S.N., Iluminado C. Palisoc, February 5, 1965, pp. 99-100)
The petitioner's argument that the Court of Appeals findings are based on
manifestly mistaken inferences, misapprehension of facts, and purely on
speculation, surmises, and conjectures is without merit.
The Fordson diesel engine delivered to the respondent was not brand-new.
We agree with the Court of Appeals that:
"Indeed, it would be too much to say that the successive malfunctions of the
engine, the defects and other discrepancies therein that cropped up so soon after
its delivery, the numerous trips it had to appellant's repair shop the demonstrable
tampering with its serial number, and its ultimate breakdown despite appellant's
attempts to put it into good working order could be attributed to mere coincidence.
If all these mean anything at all, it can only be that the engine aforesaid was not
really brand new.
The petitioner committed a breach of contract against the respondent. The
misrepresentation of the quality of the subject Fordson diesel engine is tantamount
to fraud or bad faith. The return of the P7,590.00 purchase price with legal interest
from the date of purchase and computed pursuant to our ruling in Viloria v. Court
of Appeals (G.R. No. 63398, June 29, 1983) is justified. The next question refers to
the award of actual damages in the amount of P54,000.48. This amount covers the
probable income which the respondent failed to realize because of the breach of
contract. Is the award of damages in the form of lucro cessante justified?
The law on the matter is spelled out in Raagas v. Traya (22 SCRA 839), where we
stated:
"x x x In Abubakar Tan v. Tian Ho, L-18820, December 29, 1962 and Lim Giok v.
Bataan Cigar and Cigarette Factory, L-15861, April 16, 1960, we held that even if the
allegations regarding the amount of damages in the complaint are not specifically
denied in the answer, such damages are not deemed admitted. In Tomassiv. Villa-
Abrille, L-7047, August 21, 1958, Suntay Tanjangco v. Jovellanos, et al., L-12332,
June 30,1960, and Delfin v. Court of Agrarian Relations, et al., L-23348, March 14,
1967, 1967 A PHILD 453, we declared in no uncertain terms that actual damages
must be proved, and that a court cannot rely on 'speculation, conjecture or
guesswork' as to the fact and amount of damages, but must depend on actual proof
that damages had been suffered and on evidence of the actual amount.x x x"
The fact that the defendant does not dispute the amount of this kind of damages
does not necessarily imply that the other party outright is entitled to the award of
damages.
Article 2200 of the Civil Code entitles the respondent to recover as compensatory
damages not only the value of the loss suffered but also prospective profits while
Article 2201 entitles the respondent to recover all damages which may be
attributed to the non-performance of the obligation. However, in order to recover
this kind of damages, the plaintiff must prove his case -
" 'When the existence of a loss is established, absolute certainty as to its amount is
not required. The benefit to be derived from a contract whichone of the parties has
absolutely failed to perform is of necessity to some extent, a matter of speculation,
but the injured party is not to be denied all remedy for that reason alone. He must
produce the best evidence of which his case is susceptible and if that evidence
warrants the inference that he has been damaged by the loss of profits which he
might with reasonable certainty have anticipated but for the defendant's wrongful
act, he is entitled to recover." (Cerreno v. Tan Chuco, 28 Phil. 312 quoted in Central
Bank of the Philippines v. Court of Appeals, 63 SCRA 431, 457).
Applying the foregoing test to the instant case, we find the evidence of the
respondent insufficient to be considered within the purview of "best evidence".
The bare assertion of the respondent that he lost about P54,000.00 and the
accompanying documentary evidence presented to prove the amount lost are
inadequate if not speculative. The document itself merely shows that everytime a
truck travels, Mr. Yaptinchay earns P369.88. This amount is then multiplied by the
number of trips which the truck was allegedly unable to make. The estimates were
prepared by a certain Dionisio M. Macasieb whose identity was not even revealed
by the respondent. Mr. Yaptinchay was in the freight truck business. He had
several freight trucks among them the truck with the subject Fordson diesel engine,
covering the route from Manila to Baguio. To prove actual damages, it would have
been easy to present the average actual profits realized by the other freight trucks
plying the Manila-Baguio route. With the presentation of such actual income the
court could have arrived with reasonable certainty at the amount of actual damages
suffered by the respondent. We rule that the award of actual damages in the
amount of P54,000.08 is not warranted by the evidence on record.
WHEREFORE, the decision appealed from is hereby modified. The award of actual
damages in the amount of P54,000.48 is deleted. The petitioner shall also pay six
(6%) percent interest per annum on the P7,590.00 purchase price from January 27,
1962 to July 29, 1974 and twelve (12%) percent interest per annum from July 30,
1974 until the purchase price is reimbursed. In all other respects, the appealed
decision is affirmed. SO ORDERED.
Radio Communications of the Phils., Inc. v. Verchez, G.R. No. 164349, January 31,
2006
Those who in the performance of their obligations are guilty of fraud, negligence, or
delay, and those who in any manner contravene the tenor thereof, are liable for
damages.
Facts:
Respondent Grace Verchez-Infante (Grace) hired the services of Radio
Communications of the Philippines, Inc. (RCPI) to send a telegram to her sister
respondent Zenaida Verchez-Catibog (Zenaida), asking her to send money for their
mother Editha Verchez (Editha) who at that time was confined in a hospital in
Sorsogon. But it took 25 days before such message was conveyed to Zenaida.
When Editha died, her husband, respondent Alfonso Verchez (Alfonso), along with
his daughters Grace and Zenaida and their respective spouses, filed an action for
damages against RCPI before the Regional Trial Court (RTC) of Sorsogon. They
alleged that the delay in the delivery of the message contributed to the early death
of Editha. RCPI argues that there is no privity of contract between other
respondents except with Grace, also the delay in the delivery is caused by force
majeure, maintaining further that they exercised due diligence in choosing their
employees; hence they must be released from any liability. The RTC rendered
judgement against RCPI. RCPI appealed to the Court of Appeals (CA). The CA
affirmed the decision of the RTC.
ISSUE:
Whether or not the award of moral damages is proper despite the fact that there
was no direct connection between the injury and the alleged negligent acts
HELD:
RCPI‘s stand fails. It bears noting that its liability is anchored on culpa contractual or
breach of contract with regard to Grace, and on tort with regard to her co-plaintiffs-
herein-co-respondents. Article 1170 of the Civil Code provides that those who in the
performance of their obligations are guilty of fraud, negligence, or delay, and those
who in any manner contravene the tenor thereof, are liable for damages.
In the case at bar, RCPI bound itself to deliver the telegram within the shortest
possible time. It took 25 days, however, for RCPI to deliver it. RCPI invokes force
majeure, specifically, the alleged radio noise and interferences which adversely
affected the transmission and/or reception of the telegraphic message.
Additionally, its messenger claimed he could not locate the address of Zenaida and
it was only on the third attempt that he was able to deliver the telegram.
For the defense of force majeure to prosper, it is necessary that one has committed
no negligence or misconduct that may have occasioned the loss. An act of God
cannot be invoked to protect a person who has failed to take steps to forestall the
possible adverse consequences of such a loss. One‘s negligence may have
concurred with an act of God in producing damage and injury to another;
nonetheless, showing that the immediate or proximate cause of the damage or
injury was a fortuitous event would not exempt one from liability. When the effect
is found to be partly the result of a person‘s participation – whether by active
intervention, neglect or failure to act – the whole occurrence is humanized and
removed from the rules applicable to acts of God.
Assuming arguendo that fortuitous circumstances prevented RCPI from delivering
the telegram at the soonest possible time, it should have at least informed Grace of
the non-transmission and the non-delivery s that she could have taken steps to
remedy the situation. But it did not. There lies the fault or negligence.
And for quasi-delict, RCPI is liable to Grace‘s co-respondents following Article 2176
of the Civil Code which provides that whoever by act or omission causes damage to
another, there being fault or negligence, is obliged to pay for the damage done.
Such fault or negligence, if there is no pre-existing contractual relation between the
parties, is called a quasi-delict and is governed by the provisions of this Chapter.
RCPI‘s liability as an employer could of course be avoided if it could prove that it
observed the diligence of a good father of a family to prevent damage provided in
Article 2180 of the Civil Code. RCPI failed, however, to prove that it observed all the
diligence of a good father of a family to prevent damage.
Coca-Cola Bottlers Philippines, Inc. v. Court of Appeals, G.R. No. 110295, October
18, 1993
FACTS: Private respondent was the proprietress of Kindergarten Wonderland
Canteen in Dagupan City. In August 1989, some parents of the students complained
to her that the Coke and Sprite soft drinks sold by her contained fiber-like matter
and other foreign substances. She brought the said bottles for examination to DOH
and it was found out that the soft drinks “are adulterated.” As a result, her per day
sales of soft drinks severely plummeted that she had to close her shop on 12
December 1989 for losses. She demanded damages from petitioner before the RTC
which dismissed the same on motion by petitioner based on the ground of
Prescription. On appeal, the CA annulled the orders of the RTC.
ISSUE: WON the action for damages by the proprietress against the soft drinks’
manufacturer should be treated as one for breach of implied warranty under article
1561 of the CC which prescribes after six months from delivery of the thing sold.
RULING: Petition Denied.
The SC agrees with the CA’s conclusion that the cause of action in the case at bar is
found on quasi-delict under Article 1146 of the CC which prescribes in four years
and not on breach of warranty under article 1562 of the same code. This is
supported by the allegations in the complaint which makes reference to the
reckless and negligent manufacture of "adulterated food items intended to be sold
for public consumption."
Navida, et al. v. Hon. Teodoro Dizon, Jr., G.R. No. 125078, May 30, 2011
Facts:
Beginning 1993, a number of personal injury suits were filed in different Texas state
courts by citizens of twelve foreign countries, including the Philippines. The
thousands of plaintiffs sought damages for injuries they allegedly sustained from
their exposure to dibromochloropropane (DBCP), a chemical used to kill nematodes
(worms), while working on farms in 23 foreign countries. The cases were eventually
transferred to, and consolidated in, the Federal District Court for the Southern
District of Texas, Houston Division. The defendants in the consolidated cases prayed
for the dismissal of all the actions under the doctrine of forum non conveniens.
In a Memorandum Order, the Federal District Court conditionally granted the
defendants’ motion to dismiss provided the defendants:
(1) participated in expedited discovery in the United States
(2) either waived or accepted service of process and waived any other jurisdictional
defense in any action commenced by a plaintiff in these actions in his home country
or the country in which his injury occurred.
(3) waived any limitations-based defense that has matured since the
commencement of these actions in the courts of Texas;
(4) stipulated that any discovery conducted during the pendency of these actions
may be used in any foreign proceeding to the same extent as if it had been
conducted in proceedings initiated there; and

(5) submitted an agreement binding them to satisfy any final judgment rendered in
favor of plaintiffs by a foreign court.
In the event that the highest court of any foreign country finally affirms the
dismissal for lack of jurisdiction of an action commenced by a plaintiff in these
actions in his home country or the country in which he was injured, that plaintiff
may return to this court and, upon proper motion, the court will resume jurisdiction
over the action as if the case had never been dismissed for.
Case 1 (125078) and 2 (125598):
336 plaintiffs from General Santos City filed a Joint Complaint in the RTC of General
Santos City. Named as defendants therein were: Shell Oil Co. (SHELL); Dow Chemical
Co. (DOW); Occidental Chemical Corp. (OCCIDENTAL); Dole Food Co., Inc., Dole
Fresh Fruit Co., Standard Fruit Co., Standard Fruit and Steamship Co. (hereinafter
collectively referred to as DOLE); Chiquita Brands, Inc. and Chiquita Brands
International, Inc. (CHIQUITA); Del Monte Fresh Produce N.A. and Del Monte
Tropical Fruit Co. (hereinafter collectively referred to as DEL MONTE); Dead Sea
Bromine Co., Ltd.; Ameribrom, Inc.; Bromine Compounds, Ltd.; and Amvac Chemical
Corp. (The aforementioned defendants are hereinafter collectively referred to as
defendant companies.)
NAVIDA, et al., prayed for the payment of damages in view of the illnesses and
injuries to the reproductive systems which they allegedly suffered because of their
exposure to DBCP. They claimed, among others, that they were exposed to this
chemical during the early 1970’s up to the early 1980’s when they used the same in
the banana plantations where they worked at; and/or when they resided within the
agricultural area where such chemical was used. NAVIDA, et al., claimed that their
illnesses and injuries were due to the fault or negligence of each of the defendant
companies in that they produced, sold and/or otherwise put into the stream of
commerce DBCP-containing products. According to NAVIDA, et al., they were
allowed to be exposed to the said products, which the defendant companies knew,
or ought to have known, were highly injurious to the former’s health and well-
being.
Without resolving the motions filed by the parties, the RTC of General Santos City
issued an Order dismissing the complaint. First, the trial court determined that it did
not have jurisdiction to hear the case because the substance of the cause of action
as stated in the complaint against the defendant foreign companies cites activity on
their part which took place abroad and had occurred outside and beyond the
territorial domain of the Philippines. These acts of defendants cited in the
complaint included the manufacture of pesticides, their packaging in containers,
their distribution through sale or other disposition, resulting in their becoming part
of the stream of commerce. The subject matter stated in the complaint and which is
uniquely particular to the present case, consisted of activity or course of conduct
engaged in by foreign defendants outside Philippine territory, hence, outside and
beyond the jurisdiction of Philippine Courts, including the present Regional Trial
Court.
Second, the RTC of General Santos City adjudged that NAVIDA, et al., were coerced
into submitting their case to the Philippine courts, merely to comply with the U.S.
District Court’s Order and in order to keep open to the plaintiffs the opportunity to
return to the U.S. District Court.
Third, the trial court ascribed little significance to the voluntary appearance of the
defendant companies. Defendants have appointed their agents authorized to
accept service of summons/processes in the Philippines pursuant to the agreement
in the U.S. court that defendants will voluntarily submit to the jurisdiction of this
court. While it is true that this court acquires jurisdiction over persons of the
defendants through their voluntary appearance, it appears that such voluntary
appearance of the defendants in this case is conditional. Thus in the “Defendants’
Amended Agreement Regarding Conditions of Dismissal for Forum Non
Conveniens” filed with the U.S. District Court, defendants declared that “(t)he
authority of each designated representative to accept service of process will
become effective upon final dismissal of these actions by the Court”. The decision of
the U.S. District Court dismissing the case is not yet final and executory since both
the plaintiffs and defendants appealed therefrom. Consequently, since the
authority of the agent of the defendants in the Philippines is conditioned on the
final adjudication of the case pending with the U.S. courts, the acquisition of
jurisdiction by this court over the persons of the defendants is also conditional.
Fourth, the RTC of General Santos City ruled that the act of NAVIDA, et al., of filing
the case in the Philippine courts violated the rules on forum shopping and litis
pendencia. This court frowns upon the fact that the parties herein are both
vigorously pursuing their appeal of the decision of the U.S. District court dismissing
the case filed thereat. To allow the parties to litigate in this court when they are
actively pursuing the same cases in another forum, violates the rule on ‘forum
shopping’ so abhorred in this jurisdiction. Moreover, the filing of the case in the U.S.
courts divested this court of its own jurisdiction. This court takes note that the U.S.
District Court did not decline jurisdiction over the cause of action. The case was
dismissed on the ground of forum non conveniens, which is really a matter of
venue. By taking cognizance of the case, the U.S. District Court has, in essence,
concurrent jurisdiction with this court over the subject matter of this case. It is
settled that initial acquisition of jurisdiction divests another of its own jurisdiction.
Case 3 (126654), 4 (127856), 5(128398)
Another joint complaint for damages against SHELL, DOW, OCCIDENTAL, DOLE, DEL
MONTE, and CHIQUITA was filed before Branch 16 of the RTC of Davao City by 155
plaintiffs from Davao City. They alleged that as workers in the banana plantation
and/or as residents near the said plantation, they were made to use and/or were
exposed to nematocides, which contained the chemical DBCP. According to ABELLA,
et al., such exposure resulted in “serious and permanent injuries to their health,
including, but not limited to, sterility and severe injuries to their reproductive
capacities.”
The RTC of Davao City, however, junked Civil Cases. The Court however is
constrained to dismiss the case at bar not solely on the basis of the above but
because it shares the opinion of legal experts given in the interview made by the
Inquirer in its Special report “Pesticide Cause Mass Sterility,” Former Justice
Secretary Demetrio Demetria in a May 1995 opinion said: The Philippines should be
an inconvenient forum to file this kind of damage suit against foreign companies
since the causes of action alleged in the petition do not exist under Philippine laws.
There has been no decided case in Philippine Jurisprudence awarding to those
adversely affected by DBCP. This means there is no available evidence which will
prove and disprove the relation between sterility and DBCP.
Eventually, the cases reached the SC!
Present case:
The main contention of the petitioners states that the allegedly tortious acts and/or
omissions of defendant companies occurred within Philippine territory. Said fact
allegedly constitutes reasonable basis for our courts to assume jurisdiction over the
case.
DOLE similarly maintains that the acts attributed to defendant companies constitute
a quasi-delict, which falls under Article 2176 of the Civil Code. DOLE also argues that
if indeed there is no positive law defining the alleged acts of defendant companies
as actionable wrong, Article 9 of the Civil Code dictates that a judge may not refuse
to render a decision on the ground of insufficiency of the law. The court may still
resolve the case, applying the customs of the place and, in the absence thereof, the
general principles of law.
CHIQUITA (another petitioner) argues that the courts a quo had jurisdiction over
the subject matter of the cases filed before them. CHIQUITA avers that the
pertinent matter is the place of the alleged exposure to DBCP, not the place of
manufacture, packaging, distribution, sale, etc., of the said chemical. This is in
consonance with the lex loci delicti commisi theory in determining the situs of a
tort, which states that the law of the place where the alleged wrong was committed
will govern the action. CHIQUITA and the other defendant companies also
submitted themselves to the jurisdiction of the RTC by making voluntary
appearances and seeking for affirmative reliefs during the course of the
proceedings.
Issue:
Whether or not the RTCs have jurisdiction over the subject matter in these cases.
Held: Yes.
1. The rule is settled that jurisdiction over the subject matter of a case is conferred
by law and is determined by the allegations in the complaint and the character of
the relief sought, irrespective of whether the plaintiffs are entitled to all or some of
the claims asserted therein. Once vested by law, on a particular court or body, the
jurisdiction over the subject matter or nature of the action cannot be dislodged by
anybody other than by the legislature through the enactment of a law.
At the time of the filing of the complaints, the jurisdiction of the RTC in civil cases
under Batas Pambansa Blg. 129, as amended by Republic Act No. 7691, was:
In all other cases in which the demand, exclusive of interest, damages of whatever
kind, attorney’s fees, litigation expenses, and costs or the value of the property in
controversy exceeds One hundred thousand pesos (P100,000.00) or, in such other
cases in Metro Manila, where the demand, exclusive of the abovementioned items
exceeds Two hundred thousand pesos (P200,000.00).
Supreme Court Administrative Circular No. 09-94, states:
The exclusion of the term “damages of whatever kind” in determining the
jurisdictional amount under Section 19 (8) and Section 33 (1) of B.P. Blg. 129, as
amended by R.A. No. 7691, applies to cases where the damages are merely
incidental to or a consequence of the main cause of action. However, in cases
where the claim for damages is the main cause of action, or one of the causes of
action, the amount of such claim shall be considered in determining the jurisdiction
of the court.
It is clear that the claim for damages is the main cause of action and that the total
amount sought in the complaints is approximately P2.7 million for each of the
plaintiff claimants. The RTCs unmistakably have jurisdiction over the cases filed in
General Santos City and Davao City.
2. The jurisdiction of the court cannot be made to depend upon the defenses set up
in the answer or upon the motion to dismiss, for otherwise, the question of
jurisdiction would almost entirely depend upon the defendants. What determines
the jurisdiction of the court is the nature of the action pleaded as appearing from
the allegations in the complaint. The averments therein and the character of the
relief sought are the ones to be consulted.
Clearly then, the acts and/or omissions attributed to the defendant companies
constitute a quasi-delict which is the basis for the claim for damages filed by
NAVIDA, et al., and ABELLA, et al., with individual claims of approximately P2.7
million for each plaintiff claimant, which obviously falls within the purview of the
civil action jurisdiction of the RTCs.
3. It is, therefore, error on the part of the courts a quo when they dismissed the
cases on the ground of lack of jurisdiction on the mistaken assumption that the
cause of action narrated by NAVIDA, et al., and ABELLA, et al., took place abroad
and had occurred outside and beyond the territorial boundaries of the Philippines,
i.e., “the manufacture of the pesticides, their packaging in containers, their
distribution through sale or other disposition, resulting in their becoming part of the
stream of commerce,” and, hence, outside the jurisdiction of the RTCs.
Certainly, the cases below are not criminal cases where territoriality, or the situs of
the act complained of, would be determinative of jurisdiction and venue for trial of
cases. In personal civil actions, such as claims for payment of damages, the Rules of
Court allow the action to be commenced and tried in the appropriate court, where
any of the plaintiffs or defendants resides, or in the case of a non-resident
defendant, where he may be found, at the election of the plaintiff.
In a very real sense, most of the evidence required to prove the claims of NAVIDA,
et al., and ABELLA, et al., are available only in the Philippines. First, plaintiff
claimants are all residents of the Philippines, either in General Santos City or in
Davao City. Second, the specific areas where they were allegedly exposed to the
chemical DBCP are within the territorial jurisdiction of the courts a quo wherein
NAVIDA, et al., and ABELLA, et al., initially filed their claims for damages. Third, the
testimonial and documentary evidence from important witnesses, such as doctors,
co-workers, family members and other members of the community, would be
easier to gather in the Philippines.
----
Re: Jurisdiction over the person
The RTC of General Santos City and the RTC of Davao City validly acquired
jurisdiction over the persons of all the defendant companies. All parties voluntarily,
unconditionally and knowingly appeared and submitted themselves to the
jurisdiction of the courts a quo. All the defendant companies submitted themselves
to the jurisdiction of the courts a quo by making several voluntary appearances, by
praying for various affirmative reliefs, and by actively participating during the
course of the proceedings below.
In line herewith, this Court, in Meat Packing Corporation of the Philippines v.
Sandiganbayan, held that jurisdiction over the person of the defendant in civil cases
is acquired either by his voluntary appearance in court and his submission to its
authority or by service of summons. Furthermore, the active participation of a party
in the proceedings is tantamount to an invocation of the court’s jurisdiction and a
willingness to abide by the resolution of the case, and will bar said party from later
on impugning the court or body’s jurisdiction.
---
Jurisdiction v Exercise of Jurisdiction
It may also be pertinently stressed that “jurisdiction” is different from the “exercise
of jurisdiction.” Jurisdiction refers to the authority to decide a case, not the orders
or the decision rendered therein. Accordingly, where a court has jurisdiction over
the persons of the defendants and the subject matter, as in the case of the courts a
quo, the decision on all questions arising therefrom is but an exercise of such
jurisdiction. Any error that the court may commit in the exercise of its jurisdiction is
merely an error of judgment, which does not affect its authority to decide the case,
much less divest the court of the jurisdiction over the case.
----
Re: Bad faith in filing cases to procure a dismissal and to allow petitioners to return
to the forum of their choice.
This Court finds such argument much too speculative to deserve any merit.
It must be remembered that this Court does not rule on allegations that are
unsupported by evidence on record. This Court does not rule on allegations which
are manifestly conjectural, as these may not exist at all. This Court deals with facts,
not fancies; on realities, not appearances.
* We REMAND the records of this case to the respective Regional Trial Courts of
origin for further and appropriate proceedings in line with the ruling herein that
said courts have jurisdiction over the subject matter of the amended complaints.
Moran, Jr. v. Office of the President, G.R. No. 192957, September 29, 2014
FACTS:
On February 2, 2004, the late Emmanuel B. Moran, Jr. filed with the Consumer
Arbitration Office (CAO) a verified complaint against private respondent PGA Cars,
Inc. pursuant to the relevant provisions of Republic Act No. 7394 (RA 7394),
otherwise known as the Consumer Act of the Philippines. The complaint alleged
that the private respondent should be held liable for the product imperfections of a
BMW car which it sold to complainant.

On September 23, 2005, the CAO rendered a Decision in favor of complainant and
ordered the private respondent to refund the purchase price of the BMW car in
addition to the payment of costs of litigation and administrative fines.
On October 19, 2005, the private respondent sought reconsideration of the
Decision but the CAO denied the motion in an Order dated January 19, 2006. Thus,
the private respondent appealed to the Secretary of the Department of Trade and
Industry (DTI), the quasi-judicial agency designated by Article 165[8] of RA 7394 to
entertain appeals from the adverse decisions and orders of the CAO. However, in a
Resolution dated April 28, 2006, the DTI Secretary dismissed the appeal of the
private respondent who then filed an appeal with the herein public respondent OP.
On April 3, 2007, the OP granted the appeal, reversed the DTI Secretary's
Resolution, and dismissed the complaint. Complainant filed a motion for
reconsideration with the OP, but the OP denied said motion in an Order dated
October 22, 2008.
On January 23, 2009, complainant filed a petition for certiorari with the CA and
alleged lack of jurisdiction on the part of the OP for ruling on cases involving a
violation of RA 7394. On March 13, 2009, the CA dismissed the petition for
certiorari on the ground that it was a wrong mode of appeal and for the failure of
the petitioner to state material dates. On June 25, 2010, the CA denied the motion
for reconsideration.
Since, Emmanuel B. Moran, Jr. passed away on May 17, 2010, his widow, Concordia
V. Moran filed the present petition for review on certiorari on August 9, 2010.
Petitioner argues that the CA erred in denying the petition for certiorari which
alleged error of jurisdiction on the part of the OP. She contends that in cases
alleging error of jurisdiction on the part of the OP, the proper remedy is to file a
petition for certiorari with the CA because appeal is not available to correct lack of
jurisdiction. Moreover, even though appeal is available, it is not considered as the
plain, speedy, and adequate legal remedy.
Respondent argues that the CA was correct in denying the petition for certiorari
since this was an improper remedy in view of the availability of an appeal from the
OP. Furthermore, the private respondent confirms the appellate jurisdiction of the
OP over the DTI based on the constitutional power of control of the OP over
Executive Departments and the well-entrenched doctrine of exhaustion of
administrative remedies.
ISSUE:
Whether or not the CA is correct in dismissing the petition for certiorari on the
ground that petitioner resorted to a wrong mode of appeal.
HELD:
We rule in the negative. Under the Consumer Act (RA 7394), the DTI has the
authority and the mandate to act upon complaints filed by consumers pursuant to
the State policy of protecting the consumer against deceptive, unfair and
unconscionable sales, acts or practices.[12] Said law provided for an arbitration
procedure whereby consumer complaints are heard and investigated by consumer
arbitration officers whose decisions are appealable to the DTI Secretary. Article 166
thereof provides:
ART. 166. Decision on Appeal. The Secretary shall decide the appeal within thirty
(30) days from receipt thereof. The decision becomes final after fifteen (15) days
from receipt thereof unless a petition for certiorari is filed with the proper court.
The procedure for appeals to the OP is governed by Administrative Order No. 18,
Series of 1987. Section 1 thereof provides:
SECTION 1. Unless otherwise governed by special laws, an appeal to the Office of
the President shall be taken within thirty (30) days from receipt by the aggrieved
party of the decision/resolution/order complained of or appealed from…
In Phillips Seafood (Philippines) Corporation v. The Board of Investments,[15] we
interpreted the above provision and declared that "a decision or order issued by a
department or agency need not be appealed to the Office of the President when
there is a special law that provides for a different mode of appeal."
The executive power of control over the acts of department secretaries is laid down
in Section 17, Article VII of the 1987 Constitution. The power of control has been
defined as the "power of an officer to alter or modify or nullify or set aside what a
subordinate officer had done in the performance of his duties and to substitute the
judgment of the former for that of the latter."
Such "executive control" is not absolute. The definition of the structure of the
executive branch of government, and the corresponding degrees of administrative
control and supervision is not the exclusive preserve of the executive. It may be
effectively limited by the Constitution, by law, or by judicial decisions. All the more
in the matter of appellate procedure as in the instant case. Appeals are remedial in
nature; hence, constitutionally subject to this Court's rule-making power. The Rules
of Procedure was issued by the Court pursuant to Section 5, Article VIII of the
Constitution, which expressly empowers the Supreme Court to promulgate rules
concerning the procedure in all courts.
Parenthetically, Administrative Order (A.O.) No. 18 expressly recognizes an
exception to the remedy of appeal to the Office of the President from the decisions
of executive departments and agencies. Under Section 1 thereof, a decision or
order issued by a department or agency need not be appealed to the Office of the
President when there is a special law that provides for a different mode of appeal.
In the instant case, the enabling law of respondent BOI, E.O. No. 226, explicitly
allows for immediate judicial relief from the decision of respondent BOI involving
petitioner's application for an ITH. E.O. No. 226 is a law of special nature and should
prevail over A.O. No. 18.
In this case, a special law, RA 7394, likewise expressly provided for immediate
judicial relief from decisions of the DTI Secretary by filing a petition for certiorari
with the "proper court." Hence, private respondent should have elevated the case
directly to the CA through a petition for certiorari.
In filing a petition for certiorari before the CA raising the issue of the OP's lack of
jurisdiction, complainant Moran, Jr. thus availed of the proper remedy. The CA thus
erred in dismissing the petition for certiorari on the ground of being an improper
remedy.
Further, we hold that the Resolution dated April 28, 2006 of the DTI Secretary had
become FINAL and EXECUTORY with private respondent's failure to appeal the
same within the 15-day reglementary period.
Cabanting vs. BPI
Family Savings Bank, G.R. No. 201927 Feb 27, 2016
Nature and Effects of Obligation: Delay
Facts: Petitioners brought a vehicle from Diamond Motors a motor vehicle secured
by a Promissory Note with Chattel Mortgage, wherein they jointly and severally
obligated themselves to pay Diamond Motors the sum of 1, 836,032.00, payable in
monthly installments in accordance with the schedule of payment indicated
therein. Diamond Motors thereafter executed a Deed of Assignment, thereby
assigning to BPI Family all its rights to the said Promissory Note. Come October 16,
2003, however, a Complaint was filed by BPI Family against petitioners for replevin
and damages, praying that petitioners be ordered to pay the unpaid portion of the
vehicle's purchase price plus interest, alleging that petitioners failed to pay three (3)
consecutive installments despite written demand to pay or to surrender possession
of the vehicle to BPI Family.
Petitioners, however, alleged that they sold the subject vehicle to one Victor S.
Abalos, with the agreement that the latter shall assume the obligation to pay the
remaining monthly installments. It was Abalos who made payments to BPI Family
through post-dated checks, and such was accepted by BPI Family. Thus, they
maintain that BPI Family should have sued Abalos instead of them. However,
despite numerous opportunities given to petitioners to present evidence, they were
not able to adduce the same. BPI Family then moved for the petitioners' right to
present evidence be deemed as waived. Such was granted by the RTC. The RTC
eventually ruled in favor of the plaintiff BPI Family, which was affirmed by the CA,
holding that a preponderance of evidence was in favor of respondent, considering
that since petitioners were deemed to have waived their right to present evidence,
there is nothing on record to prove their claim that there was a valid assumption of
obligation by one Victor S. Abalos.
Issue: Whether or not respondent bank may be held entitled to the possession of
the subject motor vehicle or the payment of its value and damages, without proof
of prior demand;
Held: Yes. No prior demand was necessary to make petitioners' obligation due and
payable as it was clearly stipulated in the executed Promissory Note that in case of
petitioners' failure to pay when due and payable, shall render the obligation as
immediately due and payable without the necessity of notice or demand which they
hereby waive.
While the petitioners argue that such stipulation should be deemed invalid as the
document they executed was a contract of adhesion, the court ruled that a contract
of adhesion is not necessarily invalid. The validity or enforceability of such have to
be determined by the peculiar circumstances obtained in each case. Here, there is
no proof that petitioners were disadvantaged, uneducated or utterly inexperienced
in dealing with financial institutions; thus, there is no reason for the court to step in
and protect the interest of the supposed weaker party. Verily, petitioners are bound
by the stipulations in the Promissory Note with Chattel Mortgage which waived the
necessity of notice and demand to make the obligation due and payable.
Moreover, Article 1169 (1) of the Civil Code allows a party to waive the need for
notice and demand; hence, petitioners' argument that their liability cannot be
deemed due and payable for lack of proof of demand must be struck down.
As for the interest rates, the Court further held that where the demand is
established with reasonable certainty, the interest shall begin to run from the time
the claim is made judicially or extrajudicially (Art. 1169, Civil Code), but when such
certainty cannot be so reasonably established at the time the demand is made, the
interest shall begin to run only from the date the judgment of the court is made (at
which time the quantification of damages may be deemed to have been reasonably
ascertained). The actual base for the computation of legal interest shall, in any case,
be on the amount finally adjudged.
Autozentrum Alabang vs. Spouses Bernardo, G.R. No. 214122, June 8, 2016
G.R. No. 214122, June 08, 2016
CARPIO, ACTING C.J.:
Petitioner: Autozentrum Alabang, Inc
Respondents: SPS. Miamar Bernardo and Genao Bernardo, DTI, Asian Carmakers
Corporation, Bayerishe Motoren
Citation: GR No. 214122
Date of Promulgation: June 08, 2016
Ponente:
FACTS:
• SPS. Bernardo: on November 12, 2008, bought a 2008 BMW 320i sports car
in the amount of P2, 990, 000 from Autozentrum
- Autozentrum:
o Authorized dealer of BMW
o Authorized to deliver the brand new car to SPS. Bernardo
• October 12, 2009: SPS. Bernardo brought the car to BMW Authohaus
service of Asian Carmakers because its ABS Brake systeme and steering column
malfunctioned
• October 26, 2009: 6 days after the car’s release, SPS. Bernardo returned
the car to BMW Autohaus due to malfunctioning of the electric warning system and
door lock system.
• March 2010: the car was brought again to BMW Autohaus because its
airconditioning unit bogged down
- BMW Autohaus: repaired the car under us warranty
• September 2010: SPS. Bernardo brought the car to BMW Autohaus, under
an insurance claim, for the replacement of its two front wheels due to the damage
of its wishbone component.
- BMW Autohaus performed the repairs and discovered that one of the rear
tires did not have Running Flat Technology (RFT), when all of its tires should have
RFT. Upon being informed, Autozentrum replaced the ordinary tire with an RFT tire.
• January 13, 2011: pouses Bernardo brought the car to ACC because the
car's fuel tank was leaking. ACC replaced the fuel tank without cost to the Spouses
Bernardo. On 17 January and 26 January 2011, Spouses Bernardo sent letters to
Autozentrum, demanding for the replacement of the car or the refund of their
payment.
• In his letter dated 29 January 2011: Autozentrum's Aftersales Manager
Ron T. Campilan (Campilan) replied that the car purchased by Spouses Bernardo
was certified pre-owned or used, and that Autozentrum's legal department was still
examining their demand.
• February 24, 2011: Spouses Bernardo filed a complaint for refund or
replacement of the car and damages with the DTI against respondents
Autozentrum, ACC, and Bayerishe Motoren Werke (BMW) A.G. for violation of
Article 50(b) and (c), in relation to Article 97, of the Consumer Act of the Philippines
or Republic Act No. (RA) 7394.
• DTI RULING: DTI Hearing Officer Maria Fatima B. Pacampara (Hearing
Officer) ruled that:
1. Autozentrum violated the Consumer Act of the Philippines particularly the
provisions on defective products and deceptive sales. In concluding that the car was
defective, the Hearing Officer considered that the major malfunctions in the car do
not usually happen in such a short period of usage, and Autozentrum did not
present proof that the malfunctions were caused by ordinary wear and tear.
2. The Hearing Officer further held Autozentrum liable for deceptive sales
because the car was not brand new at the time of sale, contrary to what
Autozentrum represented to Spouses Bernardo.
3. However, the Hearing Officer exculpated ACC and BMW, since there was
no proof that the defects were due to design and manufacturing, and they were not
privy to the sale of the car.
• DTI APPEALS: affirmed
• CA: in favor SPS. Bernardo; car was defective and not brand new
ISSUES:
1. W/N the car sold was defective and not brand new?
2. W/N Autozentrum shall be held liable under Article 97 of RA 7394?
HELD:
1. YES
Article 97. Liability for the Defective Products. - Any Filipino or foreign
manufacturer, producer, and any importer, shall be liable for redress,
independently of fault, for damages caused to consumers by defects resulting from
design, manufacture, construction, assembly and erection, formulas and handling
and making up, presentation or packing of their products, as well as for the
insufficient or inadequate information on the use and hazards thereof.
A product is defective when it does not offer the safety rightfully expected of it,
taking relevant circumstances into consideration, including but not limited to:
a) presentation of product;
b) use and hazards reasonably expected of it;
c) the time it was put into circulation.
A product is not considered defective because another better quality product has
been placed in the market.
The manufacturer, builder, producer or importer shall not be held liable when it
evidences:
a) that it did not place the product on the market;
b) that although it did place the product on the market such product has no defect;
c) that the consumer or a third party is solely at fault.11 (Emphasis supplied)crala
RA 7394 specifically provides that an act of a seller is deceptive when it represents
to a consumer that a product is new, original or unused, when in fact, it is
deteriorated, altered, reconditioned, reclaimed or second-hand. A representation is
not confined to words or positive assertions; it may consist as well of deeds, acts or
artifacts of a nature calculated to mislead another and thus allow the fraud-feasor
to obtain an undue advantage.12 Failure to reveal a fact which the seller is, in good
faith, bound to disclose may generally be classified as a deceptive act due to its
inherent capacity to deceive.13Suppression of a material fact which a party is
bound in good faith to disclose is equivalent to a false
representation.14ChanRoblesVirtualawlibrary
A case where the defendant repainted an automobile, worked it over to resemble a
new one and represented that the automobile being sold was new, was found to be
"a false representation of an existing fact; and, if it was material and induced the
plaintiff to accept something entirely different from that which he had contracted
for, it clearly was a fraud which, upon its discovery and a tender of the property
back to the seller, entitled the plaintiff to rescind the trade and recover the
purchase money."15ChanRoblesVirtualawlibrary
In the present case, both the DTI and the CA found that Autozentrum sold a
defective car and represented a second-hand car as brand new to Spouses
Bernardo. In finding that the evidence weighs heavily in favor of Spouses Bernardo,
the DTI and the CA gave considerable weight to the following facts: (1) the
condition of the car in just 11 months from the date of purchase; (2) Autozentrum's
Aftersales Manager Campilan's letter declaring that the vehicle was certified pre-
owned or used; (3) one of the tires was not RFT; and (4) the Land Transportation
Office (LTO) registration papers stating that Autozentrum was the previous owner
of the car. As public documents, the LTO registration papers are prima facie
evidence of the facts stated therein.16ChanRoblesVirtualawlibrary
By reason of the special knowledge and expertise of the DTI over matters falling
under its jurisdiction, it is in a better position to pass judgment on the issues; and its
findings of fact in that regard, especially when affirmed by the CA, are generally
accorded respect, if not finality, by this Court.17ChanRoblesVirtualawlibrary
Moreover, by claiming that its initial intention was for the car to be used by one of
its executive officers, Autozentrum effectively admitted ownership of the car prior
to its purchase by Spouses Bernardo. Autozentrum failed to present evidence that
its intention did not occur. On the other hand, Autozentrum's registration of the car
under its name and Campilan's letter bolster the fact that the car was pre-owned
and used by Autozentrum. For failure to reveal its prior registration of the car in its
name, and for representing an altered and second-hand car as brand new to
Spouses Bernardo, Autozentrum committed a deceptive sales act, in violation of
Section 50 of RA 7394
2. NO
However, Autozentrum cannot be liable under Article 97 of RA 7394 because
Spouses Bernardo failed to present evidence that Autozentrum is the manufacturer,
producer, or importer of the car and that damages were caused to them due to
defects in design, manufacture, construction, assembly and erection, formulas and
handling and making up, presentation or packing of products, as well as for the
insufficient or inadequate information on the use and hazards thereof.
RA 7394 provides the penalties for deceptive, unfair, and unconscionable sales acts
or practices, as follows:chanRoblesvirtualLawlibrary
Article 60. Penalties. - a) Any person who shall violate the provisions of Title III,
Chapter I, shall upon conviction, be subject to a fine of not less than Five Hundred
Pesos (P500.00) but not more than Ten Thousand Pesos (P10,000.00) or
imprisonment of not less than five (5) months but not more than one (1) year or
both, upon the discretion of the court.
b) In addition to the penalty provided for in paragraph (1), the court may grant an
injunction restraining the conduct constituting the contravention of the provisions
of Articles 50 and 51 and/or actual damages and such other orders as it thinks fit to
redress injury to the person caused by such conduct.
xxxx
Article 164. Sanctions. - After investigation, any of the following administrative
penalties may be imposed even if not prayed for in the complaint:
a) the issuance of a cease and desist order, Provided, however, That such order
shall specify the acts that respondent shall cease and desist from and shall require
him to submit a report of compliance therewith within a reasonable time;
b) the acceptance of a voluntary assurance of compliance or discontinuance from
the respondent which may include any or all of the following terms and conditions:
1) an assurance to comply with the provisions of this Act and its implementing rules
and regulations;
2) an assurance to refrain from engaging in unlawful acts and practices or unfair or
unethical trade practices subject of the formal investigation;
3) an assurance to comply with the terms and conditions specified in the consumer
transaction subject of the complaint;
4) an assurance to recall, replace, repair, or refund the money value of defective
products distributed in commerce;
5) an assurance to reimburse the [complainant] out of any money or property in
connection with the complaint, including expenses in making or pursuing the
complaint, if any, and to file a bond to guarantee compliance therewith.
c) restitution or rescission of the contract without damages;
d) condemnation and seizure of the consumer product found to be hazardous to
health and safety unless the respondent files a bond to answer for any damage or
injury that may arise from the continued use of the product;
e) the imposition of administrative fines in such amount as deemed reasonable by
the Secretary, which shall in no case be less than Five Hundred Pesos (P500.00) nor
more than Three Hundred Thousand Pesos (P300,000.00) depending on the gravity
of the offense, and an additional fine of not more than One Thousand Pesos
(P1,000.00) for each day of continuing violation.18(Emphasis supplied)cralawred
DTI Department Administrative Order No. 007-0619 reiterates the power of the DTI
Adjudication Officer to impose the following penalties upon the respondent, if
warranted, and even if these have not been prayed for by the complainant: "(3) The
restitution or rescission of the contract without damages; x x x (5) The imposition of
an administrative fine in such amount as deemed reasonable by the Adjudication
Officer, which shall in no case be less than Five Hundred Pesos (P500.00) nor more
than Three Hundred Thousand Pesos (P300,000.00) depending on the gravity of the
offense, and [an] additional administrative fine of not more than One Thousand
Pesos (P1,000.00) for each day of continuing violation x x x."
The DTI is tasked with protecting the consumer against deceptive, unfair, and
unconscionable sales acts or practices.20Thus, the DTI can impose restitution or
rescission of the contract without damages and payment of administrative fine
ranging from P500 to P300,000, plus P1,000 for each day of continuing violation.
Rescission creates the obligation to return the things which were the object of the
contract, together with their fruits, and the price with its interest; consequently, it
can be carried out only when he who demands rescission can return whatever he
may be obliged to restore.21 Rescission abrogates the contract from its inception
and requires a mutual restitution of the benefits
received.22ChanRoblesVirtualawlibrary
Records show that Autozentrum already possessed the car since 8 August 2011.
Thus, the DTI Hearing Officer and the CA correctly applied RA 7394 and DTI
Department Administrative Order No. 007-06 when they ordered Autozentrum to
return to Spouses Bernardo the value of the car amounting to P2,990,000 and to
pay an administrative fine of P160,000 and an additional administrative fine of not
more than P1,000 for each day of continuing violation.
Section 1 of Resolution No. 796 of the Monetary Board of the Bangko Sentral ng
Pilipinas dated 16 May 2013 provides: "The rate of interest for the loan or
forbearance of any money, goods or credits and the rate allowed in judgments, in
the absence of an express contract as to such rate of interest, shall be six percent
(6%) per annum." Thus, Autozentrum is ordered to pay the value of the car
amounting to P2,990,000, with a legal interest rate of 6% per annum from the
finality of this Decision until the amount is fully paid.
WHEREFORE, we DENY the petition and AFFIRM with MODIFICATION the Decision
dated 30 June 2014 and Resolution dated 4 September 2014 of the Court of Appeals
in CA-G.R. SP No. 127748. We ORDER petitioner Autozentrum Alabang, Inc. to
RETURN to respondents Spouses Miamar A. Bernardo and Genaro F. Bernardo, Jr.
the value of the car amounting to P2,990,000, with 6% interest per annum from the
finality of this Decision until the amount is fully paid.
Pharmaceutical and Healthcare Association of the Phil. Vs. Duque III, G.R. No.
173034, October 9, 2007
Facts:
Petition for certiorari seeking to nullify the Revised Implementing Rules and
Regulations (RIRR) of E.O. 51 (Milk Code). Petitioner claims that the RIRR is not valid
as it contains provisions that are not constitutional and go beyond what it is
supposed to implement. Milk Code was issued by President Cory Aquino under the
Freedom Constitution on Oct.1986. One of the preambular clauses of the Milk
Code states that the law seeks to give effect to Art 11 of the Int’l Code of Marketing
and Breastmilk Substitutes(ICBMS), a code adopted by the World Health
Assembly(WHA). From 1982-2006, The WHA also adopted severe resolutions to the
effect that breastfeeding should be supported, hence, it should be ensured that
nutrition and health claims are not permitted for breastmilk substitutes. In 2006,
the DOH issued the assailed RIRR.
Issue:
Sub-Issue: W/N the pertinent int’l agreements entered into by the Phil are part of
the law of the land and may be implemented by DOH through the RIRR. If yes, W/N
the RIRR is in accord with int’l agreements
MAIN: W/N the DOH acted w/o or in excess of their jurisdiction, or with grave abuse
of discretion amounting to lack of excess of jurisdiction and in violation of the
Constitution by promulgating the RIRR.

Held:
Sub-issue:
Yes for ICBMS. Under 1987 Consti, int’l law can become domestic law by
transformation (thru constitutional mechanism such as local legislation) or
incorporation (mere constitutional declaration i.e treaties) The ICBMS and WHA
resolutions were not treaties as they have not been concurred by 2/3 of all
members of the Senate as required under Sec, 21, Art 8. However, the ICBMS had
been transformed into domestic law through a local legislation such as the Milk
Code. The Milk Code is almost a verbatim reproduction of ICBMS.

No for WHA Resolutions. The Court ruled that DOH failed to establish that the
provisions pertinent WHA resolutions are customary int’l law that may be deemed
part of the law of the land. For an int’l rule to be considered as customary law, it
must be established that such rule is being followed by states because they
consider it as obligatory to comply with such rules (opinion juris). The WHO
resolutions, although signed by most of the member states, were enforced or
practiced by at least a majority of member states. Unlike the ICBMS whereby
legislature enacted most of the provisions into the law via the Milk Code, the WHA
Resolutions (specifically providing for exclusive breastfeeding from 0-6 months,
breastfeeding up to 24 Months and absolutely prohibiting ads for breastmilk
substitutes) have not been adopted as domestic law nor are they followed in our
country as well. The Filipinos have the option of how to take care of their babies as
they see fit. WHA Resolutions may be classified as SOFT LAW – non-binding norms,
principles and practices that influence state behavior. Soft law is not part of int’l
law.

Main issue:
Yes. Some parts of the RIRR were not in consonance with the Milk Code such as Sec.
4(f) ->advertising, promotions of formula are prohibited,
Sec 11 -> prohibitions for advertising breastmilk substitutes intended for infants and
young children uo to 24 months
And Sec 46 -> sanctions for advertising .
These provisions are declared null and void. The DOH and respondents are
prohibited from implementing said provisions.