Credits Transactions Cases (2/2)

8/17/2019 Credits Transactions Cases (2/2)

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SERFINO VS. FAR EASTBefore the Court is a petition for review on certiorari, led under Rule 45 of theRules of Court, assailing the decision dated February 23, 2! of the Regional "rial Court #R"C$ of Bacolod City, Branch 4%, inCivil Case &o' (5)(344'F*C"+* *&"-C-.-&"/ "he present case traces its roots to the co0pro0ise 1udg0ent dated ctober24, %((53 of the R"C of Bacolod City, Branch 4, in Civil Case &o' (5)(' CivilCase &o' (5)( was an action for collection of su0 of 0oney instituted by thepetitioner spouses odfrey and erardina /erno against the spouses .o0ingo

and 6agdalena Corte7 #collectively, spouses Corte7$' By way of settle0ent, thespouses/erno and the spouses Corte7 e8ecuted a co0pro0ise agree0ent on ctober2, %((5, in which the spouses Corte7 ac9nowledged their indebtedness to thespouses /erno in the a0ount of :%,245'%' "o satisfy the debt, 6agdalenabound herself ;to pay in full the 1udg0ent debt out of her retire0ent benetss na0e was owned by the spouses/erno by virtue of an assign0ent 0ade in their favor by the spouses Corte7' "he letter re?uested F-B"C to prevent the delivery of the deposit to eitherrace or the spouses Corte7 until its actual ownership has been resolved incourt'n *pril 25, %((!, the spouses /erno instituted Civil Case &o' (5)(344 againstthe spouses Corte7, race and her husband, .ante Corte7, and F-B"C for therecovery of 0oney on deposit and the pay0ent of da0ages, with a prayer for

preli0inary attach0ent'n *pril 2!, %((!, race withdrew :%5,' fro0 her savings account withF-B"C' n the sa0e day, the spouses /erno sent another letter to F-B"Cinfor0ing it of the pending action@ attached to the letter was a copy of theco0plaint led as Civil Case &o' (5)(344'.uring the pendency of Civil Case &o' (5)(344, the spouses Corte7 0anifestedthat they were turning over the balance of the deposit in F-B"C #a0ounting to:54,534'$ to the spouses /erno as partial pay0ent of their obligation underthe co0pro0ise 1udg0ent' "he R"C issued an order dated Auly 3, %((,authori7ing F-B"C to turn over the balance of the deposit to the spouses/erno' "wo deposits were 0ade in race>s savings account a chec9 deposit in thea0ount of :55,3'3 was 0ade on *pril %2, %((!, the chec9 was issued to6agdalena and indorsed by her in favor of race@ and a cash deposit of:%(,' was 0ade on *pril %(, %((! #id' at 45$' .ecision 'R' &o' %%45'n February 23, 2!, the R"C issued the assailed decision #a$ nding thespouses Corte7, race and .ante liable for fraudulently diverting the a0ount

due the spouses /erno, but #b$ absolving F-B"C fro0 any liability for allowingrace to withdraw the deposit' "he R"C declared that F-B"C was not a party tothe co0pro0ise 1udg0ent@ F-B"C was thus not chargeable with notice of theparties> agree0ent, as there was no valid court order or processes re?uiring itto withhold pay0ent of the deposit' iven the nature of ban9 deposits, F-B"Cwas pri0arily bound by its contract of loan with race' "here was, therefore, nolegal 1ustication for the ban9 to refuse pay0ent of the account,notwithstanding the clai0 of the spouses /erno as stated in their three letters' "- :*R"=-/> *R+6-&"/ "he spouses /erno appealed the R"C>s ruling absolving F-B"C fro0 liability forallowing the withdrawal of the deposit' "hey allege that the R"C cited no legalbasis for declaring that only a court order or process can 1ustify the withholdingof the deposit in race>s na0e' /ince F-B"C was infor0ed of their adverseclai0 after they sent three letters, they clai0 that DuEpon receipt of a notice ofadverse clai0 in proper for0, it beco0es the duty of the ban9 to %' ithholdpay0ent of the deposit until there is a reasonable opportunity to institute legalproceedings to contest ownership@ and 2$ give pro0pt notice of the adverseclai0 to the depositor' "he ban9 0ay be held liable to the adverse clai0ant if itdisregards the notice of adverse clai0 and pays the depositor' hen the ban9has reasonable notice of a bona de clai0 that 0oney deposited with it is theproperty of another than the depositor, it should withhold pay0ent until there isreasonable opportunity to institute legal .ecision 'R' &o' %%45 proceedingsto contest the ownership'*side fro0 the three letters, F-B"C should be dee0ed bound by theco0pro0ise 1udg0ent, since *rticle %!25 of the Civil Code states that an

assign0ent of credit binds third persons if it appears in a public instru0ent' "hey conclude that F-B"C, having been notied of their adverse clai0, shouldnot have allowed race to withdraw the deposit' hile they ac9nowledged thatban9 deposits are governed by theCivil Code provisions on loan, the spouses /erno allege that the provisions onvoluntary deposits should apply by analogy in this case, particularly *rticle%( of the Civil Code, which states *rticle %(' "he thing deposited 0ust bereturned to the depositor upon de0and, even though a specied period or ti0efor such return 0ay have been 8ed' "his provision shall not apply when the thing is 1udicially attached while in thedepositary>s possession, or should he have been notied of the opposition of athird person to the return or the re0oval of the thing deposited' =n these cases,the depositary 0ust i00ediately infor0 the depositor of the attach0ent oropposition'Based on *rticle %( of the Civil Code, the depository is not obliged to return

the thing to the depositor if notied of a third party>s adverse clai0' By allowingrace to withdraw the deposit that is due the0 under the co0pro0ise 1udg0ent, the spouses /erno clai0 that F-B"C co00itted an actionable wrongthat entitles the0 to the pay0ent of actual and0oral da0ages'F-B"C, on the other hand, insists on the correctness of the R"C ruling' =t clai0sthat it is not bound by the co0pro0ise 1udg0ent, but only by its contract ofloan with its depositor' *s a loan, the ban9 deposit is owned by the ban9@ hence,the spouses /erno>s clai0 of ownership over it is erroneous' Based on theseargu0ents, the case essentially involves a deter0ination of the obligation ofban9s to a third party who clai0s rights over a ban9 deposit standing in thena0e of another' "- C+R">/ R+=&e nd the petition un0eritorious and see no reason to reverse the R"C>sruling'

Clai0 for actual da0ages not 0eritorious because there could be no pecuniaryloss that should be co0pensated if there was no assign0ent of credit


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"he spouses /erno>s clai0 for da0ages against F-B"C is pre0ised on theirclai0 of ownership of the deposit with F-B"C' "he deposit consists of6agdalena>s retire0ent benets, which the spouses /erno clai0 to have beenassigned to the0 under the co0pro0ise 1udg0ent' "hat the retire0ent benetswere deposited in race>s savings account with F-B"C supposedly did notdivest the0 of ownership of the a0ount, as ;the 0oney already belongs to theDspouses /ernoE having been absolutely an assign0ent of credit, right oraction shall produce no eGect as against third persons, unless it appears in apublic instru0ent, or the instru0ent is recorded in the Registry of :roperty incase the assign0ent involves real property' .ecision 'R' &o' %%45 assignedto the0 and constructively delivered by virtue of the public instru0ent' Byvirtue of the assign0ent of credit, the spouses /erno clai0 ownership of thedeposit, and they posit that F-B"C was duty bound to protect their right bypreventing the withdrawal of the deposit since the ban9 had been notied of theassign0ent and of their clai0'e nd no basis to support the spouses /erno>s clai0 of ownership of thedeposit' ;*n assign0ent of credit is an agree0ent by virtue of which the ownerof a credit, 9nown as the assignor, by a legal cause, such as sale, dation inpay0ent, e8change or donation, and without the consent of the debtor,transfers his credit and accessory rights to another, 9nown as the assignee, whoac?uires the power to enforce it to the sa0e e8tent as the assignor couldenforce it against the debtor' =t 0ay be in the for0 of sale, but at ti0es it 0ayconstitute a dation in pay0ent, such as when a debtor, in order to obtain arelease fro0 his debt, assigns to his creditor a credit he has against a thirdperson's obligation to pay the balance of her accountswith the petitioner was e8tinguished, pro tanto, by the deeds of assign0ent ofcredit e8ecuted by the respondent in favor of the petitioner'=n the present case, the 1udg0ent debt was not e8tinguished by the 0ere

designation in the co0pro0ise 1udg0ent of 6agdalena>s retire0ent benets asthe fund fro0 which pay0ent shall be sourced' "hat the co0pro0ise agree0ent

authori7es recourse in case of default on other e8ecutable properties of thespouses Corte7, to satisfy the 1udg0ent debt, further supports our conclusionthat there was no assign0ent of 6agdalena>s credit with the /=/ that wouldhave e8tinguished the obligation' "he co0pro0ise 1udg0ent in this case also did not give the supposedassignees, the spouses /erno, the power to enforce 6agdalena>s credit againstthe /=/' =n fact, the spouses /erno are prohibited fro0 enforcing their clai0until after the lapse of one #%$ wee9 fro0 6agdalena>s receipt of her retire0entbenets #d$ "hat the plaintiGs shall refrain fro0 having the 1udg0ent basedupon this Co0pro0ise *gree0ent e8ecuted until after one #%$ wee9 fro0receipt by the defendant, 6agdalena Corte7 of her retire0ent benets fro0 theD/=/E but fails to pay within the said period the defendants> 1udg0ent debt inthis case, in which case DthisE Co0pro0ise *gree0ent D0ay beE e8ecuted uponany property of the defendants that are sub1ect to e8ecution upon 0otion bythe plaintiGs' *n assign0ent of credit not only entitles the assignee to the credititself, but also gives hi0 the power to enforce it as against the debtor of theassignor'/ince no valid assign0ent of credit too9 place, the spouses /erno cannotvalidly clai0 ownership of the retire0ent benets that were deposited withF-B"C' ithout ownership rights over the a0ount, they suGered no pecuniaryloss that has to be co0pensated by actual da0ages' "he grant of actualda0ages presupposes that the clai0ant suGered a duly proven pecuniaryCivil Code, *rticle 2%((' -8cept as provided by law or by stipulation, one isentitled to an ade?uate co0pensation only for such pecuniary loss suGered byhi0 as he has duly proven' /uch co0pensation is referred to as actual or

co0pensatory da0ages' .ecision Clai0 for 0oral da0ages not 0eritoriousbecause no duty e8ists on the part of the ban9 to protect interest of third personclai0ing deposit in the na0e of another' +nder *rticle 22%( of the Civil Code,0oral da0ages are recoverable for acts referred to in *rticle 2% of the CivilCode' *rticle 2% of the Civil Code, in con1unction with *rticle %( of the CivilCode, is part of the cause of action 9nown in this 1urisdiction as ;abuse ofrights'< "he ele0ents of abuse of rights are #a$ there is a legal right or duty@ #b$e8ercised in bad faith@ and #c$ for the sole intent of pre1udicing or in1uringanother' "he spouses /erno invo9e *0erican co00on law that i0poses a duty upon aban9 receiving a notice of adverse clai0 to the fund in a depositor>s account tofree7e the account for a reasonable length of ti0e, suHcient to allow theadverse clai0ant to institute legal proceedings to enforce his right to the fund'=n other words, the ban9 has a duty not to release the deposits unreasonablyearly after a third party 0a9es 9nown his adverse clai0 to the ban9 deposit'

*c9nowledging that no such duty is i0posed by law in this 1urisdiction, thespouses /erno as9 theCourt to adopt this foreign rule'23 "o adopt the foreign rule, however, goes beyond the power of this Court topro0ulgate rules governing pleading, practice and procedure in all courts' "herule reIects a 0atter of policy that is better addressed by the other branches of govern0ent, particularly, the Bang9o /entral ng :ilipinas, which is the agencythat supervises the operations and activities of *rticle 2%' *ny person whowillfully causes loss or in1ury to another in a 0anner that is contrary to 0orals,good custo0s, or public policy shall co0pensate the latter for the da0age'22 /ee A' *da0 /holar, Ban9 .eposits "he &eed for an *dverse Clai0 /tatute in&orth Carolina, ban9s, and which has the power to issue ;rules of conduct or theestablish0ent of standards of operation for unifor0 application to all institutionsor functions coveredD'E


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adverse to the ban9 and its functions, and opens it to liability to both thedepositor and the adverse clai0ant,2! 0any *0erican states have sinceadopted adverse clai0 statutes that shifted or, at least, e?uali7ed the burden'-ssentially, these statutes do not i0pose a duty on ban9s to free7e the depositupon a 0ere notice of adverse clai0@ they rst re?uire either a court order or aninde0nity bond'=n the absence of a law or a rule binding on the Court, it has no option but touphold the e8isting policy that recogni7es the duciary nature of ban9ing' =tli9ewise re1ects the adoption of a 1udicially)i0posed rule giving third parties withunveried clai0s against the deposit of another a better right over the deposit'*s current laws provide, the ban9>s contractual relations are with its depositor,not with the third party@ ;a ban9 is under obligation to treat the accounts of itsdepositors with 0eticulous care and always to have in 0ind the duciary natureof its relationship with the0'<=n the absence of any positive duty of the ban9 to an adverse clai0ant, therecould be no breach that entitles the latter to 0oral da0ages'

DURBAN APARTMENTS VS. PIONEERINSURANCEFor review is the .ecision D%E of the Court of *ppeals #C*$ in C*)'R' CJ &o'!!(, which aHr0ed the decisionD2E of the Regional "rial Court #R"C$, Branch!!, 6a9ati City, in Civil Case &o' 3)5, holding petitioner .urban *part0entsCorporation solely liable to respondent :ioneer =nsurance and /uretyCorporation for the loss of AeGrey /ees #/ees$ vehicle'

"he facts, as found by the C*, are si0ple'n Auly 22, 23, DrespondentE :ioneer =nsurance and /urety Corporation 8 8 8,by right of subrogation, led Dwith the R"C of 6a9ati CityE a Co0plaint forRecovery of .a0ages against DpetitionerE .urban *part0ents Corporation,doing business under the na0e and style of City ardenotel, and Ddefendantbefore the R"CE Jicente Austi0baste 8 8 8' DRespondent averredE that it is theinsurer for loss and da0age of AeGrey /' /ees Dthe insuredsE 2% /u7u9i randJitara 8 8 8 with :late &o' KB)5% under :olicy &o' 6C)CJ))%)34!)). in the a0ount of:%,%5,'@ on *pril 3, 22, /ee arrived and chec9ed inat the City arden otel in 6a9ati corner Lalayaan *venues, 6a9ati City before0idnight, and its par9ing attendant, defendant 8 8 8 Austi0baste got the 9ey tosaid Jitara fro0 /ee to par9 itD' En 6ay %, 22, at about % ocloc9 in the0orning, /ee was awa9ened in his roo0 by DaE telephone call fro0 the otelChief /ecurity Hcer who infor0ed hi0 that his Jitara was carnapped while itwas par9ed unattended at the par9ing area of -?uitable :C= Ban9 along 6a9ati

*venue between the hours of %2 Da'0'E and % Da'0'E@ /ee went to see theotel Chief /ecurity Hcer, thereafter reported the incident to the perations.ivision of the 6a9ati City :olice *nti)Carnapping +nit, and a Iash alar0 wasissued@ the 6a9ati City :olice *nti)Carnapping +nit investigated otel /ecurityHcer, -rnesto "' orlador, Ar' 8 8 8 and defendant 8 8 8 Austi0baste@ /ee gavehis /inu0paang /alaysay to the police investigator, and led a Co0plaint /heetwith the :&: "raHc 6anage0ent roup in Ca0p Cra0e, Mue7on City@ the Jitarahas not yet been recovered since Auly 23, 22 as evidenced by a Certicationof &on) Recovery issued by the :&: "6@ it paid the :%,%!3,25' 0oneyclai0 of /ee and 0ortgagee *B& *6R /avings Ban9, =nc' as inde0nity for theloss of the Jitara@ the Jitara was lost due to the negligence of DpetitionerE.urban *part0ents and DdefendantE Austi0baste because it was discoveredduring the investigation that this was the second ti0e that a si0ilar incident of carnapping happened in the valet par9ing service of DpetitionerE .urban*part0ents and no necessary precautions were ta9en to prevent its repetition@

DpetitionerE .urban *part0ents was wanting in due diligence in the selectionand supervision of its e0ployees particularly defendant 8 8 8 Austi0baste@ and

defendant Austi0baste and DpetitionerE .urban *part0ents failed and refused topay its valid, 1ust, and lawful clai0 despite written de0ands'

+pon service of /u00ons, DpetitionerE .urban *part0ents and DdefendantE Austi0baste led their *nswer with Co0pulsory Counterclai0 alleging that /eedid not chec9 in at its hotel, on the contrary, he was a guest of a certain Ching6ontero defendant Austi0baste did not get the ignition 9ey of /ees Jitara, onthe contrary, it was /ee who re?uested a par9ing attendant to par9 the Jitara atany available par9ing space, and it was par9ed at the -?uitable Ban9 par9ingarea, which was within /ees view, while he and 6ontero were waiting in front of the hotel@ they 0ade a written denial of the de0and of DrespondentE :ioneer=nsurance for want of legal basis@ valet par9ing services are provided by thehotel for the convenience of its custo0ers loo9ing for a par9ing space near thehotel pre0ises@ it is a special privilege that it gave to 6ontero and /ee@ it doesnot include responsibility for any losses or da0ages to 0otor vehicles and itsaccessories in the par9ing area@ and the sa0e holds true even if it was /eehi0self who par9ed his Jitara within the pre0ises of the hotel as evidenced bythe valet par9ing custo0ers clai0 stub issued to hi0@ the carnapper was able toopen the Jitara without using the 9ey given earlier to the par9ing attendant andsubse?uently turned over to /ee after the Jitara was stolen@ defendant 8 8 8 Austi0baste saw the Jitara speeding away fro0 the place where it was par9ed@he tried to run after it, and bloc9ed its possible path but to no avail@ and /eewas duly and i00ediately infor0ed of the carnapping of his Jitara@ the 0atterwas reported to the nearest police precinct@ and defendant 8 8 8 Austi0baste,and orlador sub0itted the0selves to police investigation'

.uring the pre)trial conference on &ove0ber 2, 23, counsel for DrespondentE:ioneer =nsurance was present' *tty' 6onina ee counsel of record of DpetitionerE.urban *part0ents and Austi0baste was absent, instead, a certain *tty' &estor6e1ia appeared for DpetitionerE .urban *part0ents and Austi0baste, but did notle their pre)trial brief'n &ove0ber 5, 24, the lower court granted the 0otion of DrespondentE:ioneer =nsurance, despite the opposition of DpetitionerE .urban *part0ents and Austi0baste, and allowed DrespondentE :ioneer =nsurance to present itsevidence ex parte before the Branch Cler9 of Court'/ee testied that on *pril 3, 22, at about %%3 in the evening, he drove hisJitara and stopped in front of City arden otel in 6a9ati *venue, 6a9ati City@ apar9ing attendant, who0 he had later 9nown to be defendant 8 8 8 Austi0baste,approached and as9ed for his ignition 9ey, told hi0 that the latter would par9the Jitara for hi0 in front of the hotel, and issued hi0 a valet par9ing custo0ers

clai0 stub@ he and 6ontero, thereafter, chec9ed in at the said hotel@ on 6ay %,22, at around % in the 0orning, the otel /ecurity Hcer who0 he later9new to be orlador called his attention to the fact that his Jitara wascarnapped while it was par9ed at the par9ing lot of -?uitable :C= Ban9 which isin front of the hotel@ his Jitara was insured with DrespondentE :ioneer =nsurance@he together with orlador and defendant 8 8 8 Austi0baste went to :recinct %(of the 6a9ati City :olice to report the carnapping incident, and a police oHcerca0e acco0panied the0 to the *nti)Carnapping +nit of the said station forinvestigation, ta9ing of their sworn state0ents, and Iashing of a voice alar0@ heli9ewise reported the said incident in :&: "6 in Ca0p Cra0e where anotheralar0 was issued@ he led his clai0 with DrespondentE :ioneer =nsurance, and arepresentative of the latter, who is also an ad1uster of Jesper =nsurance*d1usters)*ppraisers DJesperE, investigated the incident@ and DrespondentE:ioneer =nsurance re?uired hi0 to sign a Release of Clai0 and /ubrogationReceipt, and nally paid hi0 the su0 of :%,%!3,25' for his clai0'

Ricardo F' Red testied that he is a clai0s evaluator of DpetitionerE :ioneer=nsurance tas9ed, a0ong others, with the receipt of clai0s and docu0ents fro0

http://sc.judiciary.gov.ph/jurisprudence/2011/january2011/179419.htm#_ftn1http://sc.judiciary.gov.ph/jurisprudence/2011/january2011/179419.htm#_ftn2http://sc.judiciary.gov.ph/jurisprudence/2011/january2011/179419.htm#_ftn2http://sc.judiciary.gov.ph/jurisprudence/2011/january2011/179419.htm#_ftn1


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the insured, investigation of the said clai0, inspection of da0ages, ta9ing of pictures of insured unit, and 0onitoring of the processing of the clai0 until itspay0ent@ he 0onitored the processing of /ees clai0 when the latter reportedthe incident to DrespondentE :ioneer =nsurance@ DrespondentE :ioneer =nsuranceassigned the case to Jesper who veried /ees report, conducted aninvestigation, obtained the necessary docu0ents for the processing of theclai0, and tendered a settle0ent chec9 to /ee@ they evaluated the case uponreceipt of the subrogation docu0ents and the ad1usters report, and eventuallyreco00ended for its settle0ent for the su0 of :%,%!3,25' which wasaccepted by /ee@ the 0atter was referred and forwarded to their counsel, R'B'/ara1an N *ssociates, who prepared and sent de0and letters to DpetitionerE.urban *part0ents and DdefendantE Austi0baste, who did not pay DrespondentE:ioneer =nsurance notwithstanding their receipt of the de0and letters@ and theservices of R'B' /ara1an N *ssociates were engaged, for :%,' asattorneys fees plus :3,' per court appearance, to prosecute the clai0s of DrespondentE :ioneer =nsurance against DpetitionerE .urban *part0ents and Austi0baste before the lower court'Ferdinand Cacnio testied that he is an ad1uster of Jesper@ DrespondentE:ioneer =nsurance assigned to Jesper the investigation of /ees case, and he wasthe one actually assigned to investigate it@ he conducted his investigation of the0atter by interviewing /ee, going to the City arden otel, re?uiredsubrogation docu0ents fro0 /ee, and veried the authenticity of the sa0e@ helearned that it is the standard procedure of the said hotel as regards its valetpar9ing service to assist their guests as soon as they get to the lobby entrance,par9 the cars for their guests, and place the ignition 9eys in their safety 9ey

bo8@ considering that the hotel has only twelve #%2$ available par9ing slots, ithas an agree0ent with -?uitable :C= Ban9 per0itting the hotel to use thepar9ing space of the ban9 at night@ he also learned that a yundai /tare8 vanwas carnapped at the said place barely a 0onth before the occurrence of thisincident because iberty =nsurance assigned the said incident to Jespers, andorlador and defendant 8 8 8 Austi0baste ad0itted the occurrence of the sa0ein their sworn state0ents before the *nti)Carnapping +nit of the 6a9ati City:olice@ upon verication with the :&: "6 D+nitE in Ca0p Cra0e, he learnedthat /ees Jitara has not yet been recovered@ upon evaluation, Jesperreco00ended to DrespondentE :ioneer =nsurance to settle /ees clai0for :%,45,5'@ /ee contested the reco00endation of Jesper by reasoningout that the %O depreciation should not be applied in this case considering thefact that the Jitara was used for barely eight #$ 0onths prior to its loss@ andDrespondentE :ioneer =nsurance acceded to /ees contention, tendered the su0of :%,%!3,25' as settle0ent, the for0er accepted it, and signed a release of

clai0 and subrogation receipt' "he lower court denied the 6otion to *d0it :re)"rial Brief and 6otion forReconsideration eld by DpetitionerE .urban *part0ents and Austi0baste in itsrders dated 6ay 4, 25 and ctober 2, 25, respectively, for being devoidof 0erit'D3E

"hereafter, on Aanuary 2, 2!, the R"C rendered a decision, disposing, asfollows -R-FR-, 1udg0ent is hereby rendered ordering Dpetitioner .urban*part0ents CorporationE to pay Drespondent :ioneer =nsurance and /uretyCorporationE the su0 of :%,%!3,25' with legal interest thereon fro0 Auly 22,23 until the obligation is fully paid and attorneys fees and litigation e8pensesa0ounting to :%2,''

n appeal, the appellate court aHr0ed the decision of the trial court, viz '-R-FR-, pre0ises considered, the .ecision dated Aanuary 2, 2! of theR"C, Branch !!, 6a9ati City in Civil Case &o' 3)5 is hereby *FF=R6-. insofar

as it holds DpetitionerE .urban *part0ents Corporation solely liable to

DrespondentE :ioneer =nsurance and /urety Corporation for the loss of AeGrey/ees /u7u9i rand Jitara'ence, this recourse by petitioner' "he issues for our resolution are

%' hether the lower courts erred in declaringpetitioner as in default for failure to appear at thepre)trial conference and to le a pre)trial brief

2' Corollary thereto, whether the trial court correctlyallowed respondent to present evidence ex-parte@

3' hether petitioner is liable to respondent forattorneys fees in the a0ount of :%2,'@and+lti0ately, whether petitioner is liable torespondent for the loss of /ees vehicle'

"he petition 0ust fail' e are in co0plete accord with the co00onruling of the lower courts that petitioner was in default for failure to appear atthe pre)trial conference and to le a pre)trial brief, and thus, correctly allowedrespondent to present evidence ex-parte' i9ewise, the lower courts did not errin holding petitioner liable for the loss of /ees vehicle' ell)entrenched in 1urisprudence is the rule that factual ndings of the trial

court, especially when aHr0ed by the appellate court, are accorded the highestdegree of respect and are considered conclusive between the parties' D!E * reviewof such ndings by this Court is not warranted e8cept upon a showing of highly0eritorious circu0stances, such as #%$ when the ndings of a trial court aregrounded entirely on speculation, sur0ises, or con1ectures@ #2$ when a lowercourts inference fro0 its factual ndings is 0anifestly 0ista9en, absurd, ori0possible@ #3$ when there is grave abuse of discretion in the appreciation of facts@ #4$ when the ndings of the appellate court go beyond the issues of thecase, or fail to notice certain relevant facts which, if properly considered, will 1ustify a diGerent conclusion@ #5$ when there is a 0isappreciation of facts@ #!$when the ndings of fact are conclusions without 0ention of the specicevidence on which they are based, are pre0ised on the absence of evidence, orare contradicted by evidence on record'DE&one of the foregoing e8ceptionsper0itting a reversal of the assailed decision e8ists in this instance':etitioner urges us, however, that strong DandE co0pelling reasonDsE such as the

prevention of 0iscarriage of 1ustice warrant a suspension of the rules ande8cuse its and its counsels non)appearance during the pre)trial conference andtheir failure to le a pre)trial brief'e are not persuaded' Rule % of the Rules of Court leaves no roo0 fore?uivocation@ appearance of parties and their counsel at the pre)trialconference, along with the ling of a corresponding pre)trial brief, is 0andatory,nay, their duty' "hus, /ection 4 and /ection ! thereof provide /-C'4' Appearance of parties'=t shall be the duty of the parties and their counsel toappear at the pre)trial' "he non)appearance of a party 0ay be e8cused only if avalid cause is shown therefor or if a representative shall appear in his behalf fully authori7ed in writing to enter into an a0icable settle0ent, to sub0it toalternative 0odes of dispute resolution, and to enter into stipulations orad0issions of facts and docu0ents' /-C' !' Pre-trial brief '"he parties shall lewith the court and serve on the adverse party, in such 0anner as shall ensuretheir receipt thereof at least three #3$ days before the date of the pre)trial, their

respective pre)trial briefs which shall contain, a0ong others Failure to le thepre)trial brief shall have the sa0e eGect as failure to appear at the pre)trial'

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Contrary to the foregoing rules, petitioner and its counsel of record were notpresent at the scheduled pre)trial conference' orse, they did not le a pre)trialbrief' "heir non)appearance cannot be e8cused as /ection 4, in relation to/ection !, allows only two e8ceptions #%$ a valid e8cuse@ and #2$ appearance of a representative on behalf of a party who is fully authori7ed in writing to enterinto an a0icable settle0ent, to sub0it to alternative 0odes of disputeresolution, and to enter into stipulations or ad0issions of facts and docu0ents':etitioner is ada0ant and harps on the fact that &ove0ber 2, 23 was 0erelythe rst scheduled date for the pre)trial conference, and a certain *tty' 6e1iaappeared on its behalf' owever, its assertion is belied by its own ad0issionthat, on said date, this *tty' 6e1ia did not have in his possession the /pecial:ower of *ttorney issued by petitioners Board of .irectors'*s pointed out by the C*, petitioner, through *tty' ee, received the notice of pre)trial on ctober 2, 23, thirty)two #32$ days prior to the scheduledconference' =n that span of ti0e, *tty' ee, who was charged with the duty of notifying petitioner of the scheduled pre)trial conference, DE petitioner, and *tty'6e1ia should have discussed which lawyer would appear at the pre)trialconference with petitioner, ar0ed with the appropriate authority therefor' /adly,petitioner failed to co0ply with not 1ust one rule@ it also did not proGer a reasonwhy it li9ewise failed to le a pre)trial brief' =n all, petitioner has not shown anypersuasive reason why it should be e8e0pt fro0 abiding by the rules' "he appearance of *tty' 6e1ia at the pre)trial conference, without a pre)trialbrief and with only his bare allegation that he is counsel for petitioner, wascorrectly re1ected by the trial court' *ccordingly, the trial court, as aHr0ed by

the appellate court, did not err in allowing respondent to present evidence ex- parte' For0er Chief Austice *ndres R' &arvasas words continue to resonate, thus-veryone 9nows that a pre)trial in civil actions is 0andatory, and has been sosince Aanuary %, %(!4' Pet to this day its place in the sche0e of things is notfully appreciated, and it receives but perfunctory treat0ent in 0any courts'/o0e courts consider it a 0ere technicality, serving no useful purpose saveperhaps, occasionally to furnish ground for non)suiting the plaintiG, or declaringa defendant in default, or, wistfully, to bring about a co0pro0ise' "he pre)trialdevice is not thus put to full use' ence, it has failed in the 0ain to acco0plishthe chief ob1ective for it the si0plication, abbreviation and e8pedition of thetrial, if not indeed its dispensation' "his is a great pity, because the ob1ective isattainable, and with not 0uch diHculty, if the device were 0ore intelligentlyand e8tensively handled' Consistently with the 0andatory character of the pre)trial, the Rules oblige not only the lawyers but the parties as well to appear for

this purpose before the Court, and when a party fails to appear at a pre)trialconference #he$ 0ay be non)suited or considered as in default' "he obligation toappear denotes not si0ply the personal appearance, or the 0ere physicalpresentation by a party of ones self, but connotes as i0portantly, preparednessto go into the diGerent sub1ect assigned by law to a pre)trial' *nd in thoseinstances where a party 0ay not hi0self be present at the pre)trial, and anotherperson substitutes for hi0, or his lawyer underta9es to appear not only as anattorney but in substitution of the clients person, it is i0perative for thatrepresentative of the lawyer to have special authority to 0a9e such substantiveagree0ents as only the client otherwise has capacity to 0a9e' "hat specialauthority should ordinarily be in writing or at the very least be duly establishedby evidence other than the self)serving assertion of counsel #or the proclai0edrepresentative$ hi0self' ithout that special authority, the lawyer orrepresentative cannot be dee0ed capacitated to appear in place of the party@hence, it will be considered that the latter has failed to put in an appearance at

all, and he D0ustE therefore be non)suited or considered as in default,notwithstanding his lawyers or delegates presence'D(E

e are not un0indful that defendants #petitioners$ preclusion fro0 presentingevidence during trial does not auto0atically result in a 1udg0ent in favor of plaintiG #respondent$' "he plaintiG 0ust still substantiate the allegations in itsco0plaint'D%E therwise, it would be inutile to continue with the plaintiGspresentation of evidence each ti0e the defendant is declared in default'=n this case, respondent substantiated the allegations in its co0plaint, i.e., acontract of necessary deposit e8isted between the insured /ee and petitioner'n this score, we nd no error in the following dis?uisition of the appellatecourt D"heE records also reveal that upon arrival at the City arden otel, /eegave notice to the door0an and par9ing attendant of the said hotel, 8 8 8 Austi0baste, about his Jitara when he entrusted its ignition 9ey to the latter' 8 88 Austi0baste issued a valet par9ing custo0er clai0 stub to /ee, par9ed theJitara at the -?uitable :C= Ban9 par9ing area, and placed the ignition 9ey insidea safety 9ey bo8 while /ee proceeded to the hotel lobby to chec9 in' "he-?uitable :C= Ban9 par9ing area beca0e an anne8 of City arden otel whenthe 0anage0ent of the said ban9 allowed the par9ing of the vehicles of hotelguests thereat in the evening after ban9ing hours' D

*rticle %(!2, in relation to *rticle %((, of the Civil Code denes a contract of deposit and a necessary deposit 0ade by persons in hotels or inns *rt' %(!2' *deposit is constituted fro0 the 0o0ent a person receives a thing belonging toanother, with the obligation of safely 9eeping it and returning the sa0e' =f thesafe9eeping of the thing delivered is not the principal purpose of the contract,there is no deposit but so0e other contract' *rt' %((' "he deposit of eGects0ade by travelers in hotels or inns shall also be regarded as necessary' "he

9eepers of hotels or inns shall be responsible for the0 as depositaries, providedthat notice was given to the0, or to their e0ployees, of the eGects brought bythe guests and that, on the part of the latter, they ta9e the precautions whichsaid hotel)9eepers or their substitutes advised relative to the care and vigilanceof their eGects'

:lainly, fro0 the facts found by the lower courts, the insured /ee deposited hisvehicle for safe9eeping with petitioner, through the latters e0ployee, Austi0baste' =n turn, Austi0baste issued a clai0 stub to /ee' "hus, the contractof deposit was perfected fro0 /ees delivery, when he handed over to Austi0baste the 9eys to his vehicle, which Austi0baste received with theobligation of safely 9eeping and returning it' +lti0ately, petitioner is liable forthe loss of /ees vehicle' astly, petitioner assails the lower courts award of attorneys fees to respondent in the a0ount of :%2,'' :etitioner clai0sthat the award is not substantiated by the evidence on record' e disagree'

hile it is a sound policy not to set a pre0iu0 on the right to litigate,D%2E

we ndthat respondent is entitled to reasonable attorneys fees' *ttorneys fees 0ay beawarded when a party is co0pelled to litigate or incur e8penses to protect itsinterest,D%3E or when the court dee0s it 1ust and e?uitable'D%4E =n this case,petitioner refused to answer for the loss of /ees vehicle, which was depositedwith it for safe9eeping' "his refusal constrained respondent, the insurer of /ee,and subrogated to the latters right, to litigate and incur e8penses' owever, wereduce the award of :%2,' to :!,' in view of the si0plicity of theissues involved in this case' WHEREFORE, the petition is DENIED' "he .ecisionof the Court of *ppeals in C*)'R' CJ &o' !!( is AFFIRMED withthe MODIFICATION that the award of attorneys fees is reduced to :!,''Costs against petitioner'

MAKATI SHABGRI LA VS. HARPER

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.C"R=&- &egligence Q *rticle 2%! f the &ew Civil Code provides ;hoeverby act or o0ission causes da0age to another, there being fault or negligence, isobliged to pay for the da0age done' /uch fault or negligence, if there is no pre)e8isting contractual relation between the parties, is called a ?uasi)delict and isgoverned by the provisions of this Chapter'< "he hotel business is i0bued with public interest' otel9eepers are bound toprovide not only lodging for their guests but also security to their persons andbelongings to their guest' "he twin duty constitutes the essence of the business#*rts 2)2% &ew Civil Code$'otel owner is liable for civil da0ages to surviving heirs of hotel guest who0strangers 0urder inside his hotel roo0'F*C"/ Christian arper was a &orwegian who ca0e to 6anila on a businesstrip' e stayed at 6a9ati /hangri)la otel, but he was 0urdered in his hotelroo0 D/pecically Roo0 %42' is ghost can be found thereE' =t was found thatthe 0urderer, a caucasian 0ale, was able to trespass into the hotel roo0 of thevicti0 and was then able to 0urder and rob the victi0' "he heirs of the victi0bla0e the hotels gross negligence in providing the 0ost basic security syste0of its guests' "he R"C held in favor of the heirs and ordered /hangri)la to pay da0ages' C*aHr0ed'=//+- & /hangri)la otel is liable for da0ages'-. Pes' /hangri)la is liable due to its own negligence' "he testi0onyrevealed that the 0anage0ent practice of the hotel prior to the death of thevicti0 was to deploy only one security or roving guard for every three or fourIoors of the hotel, which is inade?uate because the hotel is )shaped that

rendered hallways not visible end to end' "hat there was a reco00endation toincrease security to one guard per Ioor but this was not followed' "his o0issionis critical' "he hotel business is i0bued with public interest' otel9eepers arebound to provide not only lodging for their guests but also security to theirpersons and belongings to their guest' "he twin duty constitutes the essence ofthe business' "herefore, the hotel has a greater degree of care andresponsibility for its guests, otherwise the hotel9eepers would 1ust stand idly bywhile strangers have unrestricted access to all hotel roo0s on the pretense ofbeing visitors of the guests which is absurd'&ote "he decision of the C* was reproduced in the decision to which the /Cconcurred' "he C* discussed the test of negligence as ;"he test of negligenceis ob1ective' - 0easure the act or o0ission of the tortfeasor with aperspective as that of an ordinary reasonable person who is si0ilarly situated' "he test, as applied to the e8tant case, is whether or not D/hangri)la otelE,under the attendant circu0stances, used that reasonable care and caution

which an ordinary person would have used in the sa0e situation'<

YHT REALTY VS. COURT OF APPEALS

"he pri0ary ?uestion of interest before this Court is the only legal issue in thecase =t is whether a hotel 0ay evade liability for the loss of ite0s left with it forsafe9eeping by its guests, by having these guests e8ecute written waiversholding the establish0ent or its e0ployees free fro0 bla0e for such loss in lightof *rticle 23 of the Civil Code which voids such waivers'

Before this Court is a Rule 45 petition for review of the .ecision dated %(ctober %((5 of the Court of *ppeals which aHr0ed the .ecision dated %!.ece0ber %((% of the Regional "rial Court #R"C$, Branch %3, of 6anila, nding

P" Realty Corporation, Brunhilda 6ata)"an #"an$, -rlinda aine7 #aine7$ and*nicia :aya0 #:aya0$ 1ointly and solidarily liable for da0ages in an action led

by 6aurice 6coughlin #6coughlin$ for the loss of his *0erican and *ustraliandollars deposited in the safety deposit bo8 of "ropicana Copacabana *part0entotel, owned and operated by P" Realty Corporation' "he factual bac9drop ofthe case follows :rivate respondent 6coughlin, an *ustralian business0an)philanthropist, used to stay at /heraton otel during his trips to the :hilippinesprior to %(4 when he 0et "an' "an befriended 6coughlin by showing hi0around, introducing hi0 to i0portant people, acco0panying hi0 in visitingi0poverished street children and assisting hi0 in buying gifts for the childrenand in distributing the sa0e to charitable institutions for poor children' "anconvinced 6coughlin to transfer fro0 /heraton otel to "ropicana whereaine7, :aya0 and .anilo ope7 were e0ployed' ope7 served as 0anager ofthe hotel while aine7 and :aya0 had custody of the 9eys for the safety depositbo8es of "ropicana' "an too9 care of 6coughlins boo9ing at the "ropicana wherehe started staying during his trips to the :hilippines fro0 .ece0ber %(4 to/epte0ber %(' n 3 ctober %(, 6coughlin arrived fro0 *ustralia andregistered with "ropicana' e rented a safety deposit bo8 as it was his practiceto rent a safety deposit bo8 every ti0e he registered at "ropicana in previoustrips' *s a tourist, 6coughlin was aware of the procedure observed by "ropicana relative to its safety deposit bo8es' "he safety deposit bo8 could onlybe opened through the use of two 9eys, one of which is given to the registeredguest, and the other re0aining in the possession of the 0anage0ent of thehotel' hen a registered guest wished to open his safety deposit bo8, he alonecould personally re?uest the 0anage0ent who then would assign one of itse0ployees to acco0pany the guest and assist hi0 in opening the safety depositbo8 with the two 9eys' 6coughlin allegedly placed the following in his safety

deposit bo8 Fifteen "housand +/ .ollars #+/S%5,'$ which he placed intwo envelopes, one envelope containing "en "housand +/ .ollars#+/S%,'$ and the other envelope Five "housand +/ .ollars#+/S5,'$@ "en "housand *ustralian .ollars #*+/S%,'$ which he alsoplaced in another envelope@ two #2$ other envelopes containing letters andcredit cards@ two #2$ ban9boo9s@ and a chec9boo9, arranged side by side insidethe safety deposit bo8'

n %2 .ece0ber %(, before leaving for a brief trip to ong9ong, 6coughlinopened his safety deposit bo8 with his 9ey and with the 9ey of the 0anage0entand too9 there fro0 the envelope containing Five "housand +/ .ollars#+/S5,'$, the envelope containing "en "housand *ustralian .ollars#*+/S%,'$, his passports and his credit cards'D!E 6coughlin left theother ite0s in the bo8 as he did not chec9 out of his roo0 at the "ropicanaduring his short visit to ong9ong' hen he arrived in ong9ong, he opened the

envelope which contained Five "housand +/ .ollars #+/S5,'$ anddiscovered upon counting that only "hree "housand +/ .ollars #+/S3,'$were enclosed therein' /ince he had no idea whether so0ebody else hadta0pered with his safety deposit bo8, he thought that it was 1ust a result of badaccounting since he did not spend anything fro0 that envelope' *fter returningto 6anila, he chec9ed out of "ropicana on % .ece0ber %( and left for*ustralia' hen he arrived in *ustralia, he discovered that the envelope with "en "housand +/ .ollars #+/S%,'$ was short of Five "housand +/ .ollars#+/S5,$' e also noticed that the 1ewelry which he bought in ong9ong andstored in the safety deposit bo8 upon his return to "ropicana was li9ewise0issing, e8cept for a dia0ond bracelet' hen 6coughlin ca0e bac9 to the:hilippines on 4 *pril %(, he as9ed aine7 if so0e 0oney andTor 1ewelry whichhe had lost were found and returned to her or to the 0anage0ent' owever,aine7 told hi0 that no one in the hotel found such things and none were turnedover to the 0anage0ent' e again registered at "ropicana and rented a safety

deposit bo8' e placed therein one #%$ envelope containing Fifteen "housand +/.ollars #+/S%5,'$, another envelope containing "en "housand *ustralian

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.ollars #*+/S%,'$ and other envelopes containing his travelingpapersTdocu0ents' n %! *pril %(, 6coughlin re?uested aine7 and :aya0to open his safety deposit bo8' e noticed that in the envelope containingFifteen "housand +/ .ollars #+/S%5,'$, "wo "housand +/ .ollars#+/S2,'$ were 0issing and in the envelope previously containing "en "housand *ustralian .ollars #*+/S%,'$, Four "housand Five undred*ustralian .ollars #*+/S4,5'$ were 0issing' hen 6coughlin discoveredthe loss, he i00ediately confronted aine7 and :aya0 who ad0itted that "anopened the safety deposit bo8 with the 9ey assigned to hi0'D%%E 6coughlinwent up to his roo0 where "an was staying and confronted her' "an ad0ittedthat she had stolen 6coughlins 9ey and was able to open the safety depositbo8 with the assistance of ope7, :aya0 and aine7' ope7 also told 6coughlinthat "an stole the 9ey assigned to 6coughlin while the latter was asleep'6coughlin re?uested the 0anage0ent for an investigation of the incident'ope7 got in touch with "an and arranged for a 0eeting with the police and6coughlin' hen the police did not arrive, ope7 and "an went to the roo0 of6coughlin at "ropicana and thereat, ope7 wrote on a piece of paper apro0issory note dated 2% *pril %(' "he pro0issory note reads as follows =pro0ise to pay 6r' 6aurice 6coughlin the a0ount of *+/S4,' and+/S2,' or its e?uivalent in :hilippine currency on or before 6ay 5, %('

ope7 re?uested "an to sign the pro0issory note which the latter did and ope7also signed as a witness' .espite the e8ecution of pro0issory note by "an,6coughlin insisted that it 0ust be the hotel who 0ust assu0e responsibility forthe loss he suGered' owever, ope7 refused to accept the responsibility relying

on the conditions for renting the safety deposit bo8 entitled +nderta9ing For the+se f /afety .eposit Bo8,D%5E specically paragraphs #2$ and #4$ thereof, towit 2' "o release and hold free and bla0eless "R:=C*&* *:*R"6-&" "-fro0 any liability arising fro0 any loss in the contents andTor use of the saiddeposit bo8 for any cause whatsoever, including but not li0ited to thepresentation or use thereof by any other person should the 9ey be lost@ 4' "oreturn the 9ey and e8ecute the R--*/- in favor of "R:=C*&* *:*R"6-&""- upon giving up the use of the bo8' n % 6ay %(, 6coughlin wentbac9 to *ustralia and he consulted his lawyers as to the validity of theabove0entioned stipulations' "hey opined that the stipulations are void forbeing violative of universal hotel practices and custo0s' is lawyers prepared aletter dated 3 6ay %( which was signed by 6coughlin and sent to :residentCora7on *?uino'D%E "he Hce of the :resident referred the letter to the.epart0ent of Austice #.A$ which forwarded the sa0e to the estern :olice.istrict #:.$' *fter receiving a copy of the indorse0ent in *ustralia,

6coughlin ca0e to the :hilippines and registered again as a hotel guest of "ropicana' 6coughlin went to 6alacaUang to follow up on his letter but he wasinstructed to go to the .A' "he .A directed hi0 to proceed to the :. fordocu0entation' But 6coughlin went bac9 to *ustralia as he had an urgentbusiness 0atter to attend to' For several ti0es, 6coughlin left for *ustralia toattend to his business and ca0e bac9 to the :hilippines to follow up on his letterto the :resident but he failed to obtain any concrete assistance' 6coughlin leftagain for *ustralia and upon his return to the :hilippines on 25 *ugust %(( topursue his clai0s against petitioners, the :. conducted an investigationwhich resulted in the preparation of an aHdavit which was forwarded to the6anila City Fiscals Hce' /aid aHdavit beca0e the basis of preli0inaryinvestigation' owever, 6coughlin left again for *ustralia without receiving thenotice of the hearing on 24 &ove0ber %((' "hus, the case at the Fiscals Hcewas dis0issed for failure to prosecute' 6cloughlin re?uested the reinstate0entof the cri0inal charge for theft' =n the 0eanti0e, 6coughlin and his lawyers

wrote letters of de0and to those having responsibility to pay the da0age' "henhe left again for *ustralia' +pon his return on 22 ctober %((, he registered at

the -chelon "owers at 6alate, 6anila' 6eetings were held between 6coughlinand his lawyer which resulted to the ling of a co0plaint for da0ages on 3.ece0ber %(( against P" Realty Corporation, ope7, aine7, :aya0 and "an#defendants$ for the loss of 6coughlins 0oney which was discovered on %!*pril %(' *fter ling the co0plaint, 6coughlin left again for *ustralia toattend to an urgent business 0atter' "an and ope7, however, were not servedwith su00ons, and trial proceeded with only aine7, :aya0 and P" RealtyCorporation as defendants' *fter defendants had led their :re)"rial Briefad0itting that they had previously allowed and assisted "an to open the safetydeposit bo8, 6coughlin led an *0endedT/upple0ental Co0plaintD2E dated% Aune %((% which included another incident of loss of 0oney and 1ewelry inthe safety deposit bo8 rented by 6coughlin in the sa0e hotel which too9 placeprior to %! *pril %('D2%E "he trial court ad0itted the *0endedT/upple0entalCo0plaint' .uring the trial of the case, 6coughlin had been in and out of thecountry to attend to urgent business in *ustralia, and while staying in the:hilippines to attend the hearing, he incurred e8penses for hotel bills, airfareand other transportation e8penses, long distance calls to *ustralia, 6eralcopower e8penses, and e8penses for food and 0aintenance, a0ong others' *ftertrial, the R"C of 6anila rendered 1udg0ent in favor of 6coughlin, thedispositive portion of which reads -R-FR-, above pre0ises considered, 1udg0ent is hereby rendered by this Court in favor of plaintiG and against thedefendants, to wit %' rdering defendants, 1ointly and severally, to pay plaintiGthe su0 of +/S%%,4' or its e?uivalent in :hilippine Currencyof :342,', 0ore or less, and the su0 of *+/S4,5' or its e?uivalent in:hilippine Currency of :((,', or a total of :44%,', 0ore or less, with%2O interest fro0 *pril %! %( until said a0ount has been paid to plaintiG#=te0 %, -8hibit CC$@ 2' rdering defendants, 1ointly and severally to pay plaintiG the su0 of :3,!4,23' as actual and conse?uential da0ages arising fro0the loss of his *ustralian and *0erican dollars and 1ewelries co0plained againstand in prosecuting his clai0 and rights ad0inistratively and 1udicially@ 3'rdering defendants, 1ointly and severally, to pay plaintiG the su0of :5,' as 0oral da0ages #=te0 K, -8h' CC$@ 4' rdering defendants, 1ointly and severally, to pay plaintiG the su0 of :35,' as e8e0plaryda0ages #=te0 K=, -8h' CC$@ 5' *nd ordering defendants, 1ointly and severally,to pay litigation e8penses in the su0 of :2,' #=te0 K==, -8h' CC$@ !'rdering defendants, 1ointly and severally, to pay plaintiG the su0of :2,' as attorneys fees, and a fee of :3,' for every appearance@and ' :lus costs of suit' / R.-R-.'

"he trial court found that 6coughlins allegations as to the fact of loss and as to

the a0ount of 0oney he lost were suHciently shown by his direct andstraightforward 0anner of testifying in court and found hi0 to be credible andworthy of belief as it was established that 6coughlins 0oney, 9ept in "ropicanas safety deposit bo8, was ta9en by "an without 6coughlins consent' "he ta9ing was eGected through the use of the 0aster 9ey which was in thepossession of the 0anage0ent' :aya0 and aine7 allowed "an to use the0aster 9ey without authority fro0 6coughlin' "he trial court added that if6coughlin had not lost his dollars, he would not have gone through the troubleand personal inconvenience of see9ing aid and assistance fro0 the Hce of the:resident, .A, police authorities and the City Fiscals Hce in his desire torecover his losses fro0 the hotel 0anage0ent and "an'

*s regards the loss of /even "housand +/ .ollars #+/S,'$ and 1ewelryworth appro8i0ately ne "housand "wo undred +/ .ollars #+/S%,2'$which allegedly occurred during his stay at "ropicana previous to 4 *pril %(,

no clai0 was 0ade by 6coughlin for such losses in his co0plaint dated 2%&ove0ber %(( because he was not sure how they were lost and who the

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responsible persons were' But considering the ad0ission of the defendants intheir pre)trial brief that on three previous occasions they allowed "an to openthe bo8, the trial court opined that it was logical and reasonable to presu0ethat his personal assets consisting of /even "housand +/ .ollars #+/S,'$and 1ewelry were ta9en by "an fro0 the safety deposit bo8 without 6coughlinsconsent through the cooperation of :aya0 and aine7' "he trial court also foundthat defendants acted with gross negligence in the perfor0ance and e8ercise of their duties and obligations as inn9eepers and were therefore liable to answerfor the losses incurred by 6coughlin' 6oreover, the trial court ruled thatparagraphs #2$ and #4$ of the +nderta9ing For "he +se f /afety .epositBo8 are not valid for being contrary to the e8press 0andate of *rticle 23 ofthe &ew Civil Code and against public policy'D2E "hus, there being fraud orwanton conduct on the part of defendants, they should be responsible for allda0ages which 0ay be attributed to the non)perfor0ance of their contractualobligations'D2E "he Court of *ppeals aHr0ed the dis?uisitions 0ade by thelower court e8cept as to the a0ount of da0ages awarded' "he decretal te8t ofthe appellate courts decision reads "- FR-=& C&/=.-R-., theappealed .ecision is hereby *FF=R6-. but 0odied as follows "he appellantsare directed 1ointly and severally to pay the plaintiGTappellee the followinga0ounts

%$ :%53,2' representing the peso e?uivalent of +/S2,' and*+/S4,5'@ 2$ :3,', representing the peso value for the air faresfro0 /idney DsicE to 6anila and bac9 for a total of eleven #%%$ trips@ 3$ ne)halfof :33!,2'5 or :%!,%3'52 representing pay0ent to "ropicana *part0ent

otel@ 4$ ne)half of :%52,!3'5 or :!,34%'5 representing pay0ent to-chelon "ower@ 5$ ne)half of :%(,!3'2 or :(,(3%'! for the ta8itransportation fro0 the residence to /idney *irport and fro0 6=* to the hotelhere in 6anila, for the eleven #%%$ trips@ !$ ne)half of :,%'(4 or :3,('(representing 6eralco power e8penses@ $ ne)half of :35!,4'or :%,' representing e8penses for food and 0aintenance@ $ :5,'for 0oral da0ages@ ($ :%,' as e8e0plary da0ages@ and %$ :2,representing attorneys fees' ith costs' / R.-R-.' +nperturbed, P" RealtyCorporation, aine7 and :aya0 went to this Court in this appeal by certiorari':etitioners sub0it for resolution by this Court the following issues #a$ whetherthe appellate courts conclusion on the alleged prior e8istence and subse?uentloss of the sub1ect 0oney and 1ewelry is supported by the evidence on record@#b$ whether the nding of gross negligence on the part of petitioners in theperfor0ance of their duties as inn9eepers is supported by the evidence onrecord@ #c$ whether the +nderta9ing For "he +se of /afety .eposit Bo8

ad0ittedly e8ecuted by private respondent is null and void@ and #d$ whether theda0ages awarded to private respondent, as well as the a0ounts thereof, areproper under the circu0stances' "he petition is devoid of 0erit' =t is worthy ofnote that the thrust of Rule 45 is the resolution only of ?uestions of law and anyperipheral factual ?uestion addressed to this Court is beyond the bounds of this0ode of review' :etitioners point out that the evidence on record is insuHcientto prove the fact of prior e8istence of the dollars and the 1ewelry which hadbeen lost while deposited in the safety deposit bo8es of "ropicana, the basis ofthe trial court and the appellate court being the sole testi0ony of 6coughlin asto the contents thereof' i9ewise, petitioners dispute the nding of grossnegligence on their part as not supported by the evidence on record' e are notpersuaded' e adhere to the ndings of the trial court as aHr0ed by theappellate court that the fact of loss was established by the credible testi0ony inopen court by 6coughlin' /uch ndings are factual and therefore beyond thea0bit of the present petition' "he trial court had the occasion to observe the

de0eanor of 6coughlin while testifying which reIected the veracity of thefacts testied to by hi0' n this score, we give full credence to the appreciation

of testi0onial evidence by the trial court especially if what is at issue is thecredibility of the witness' "he oft)repeated principle is that where the credibilityof a witness is an issue, the established rule is that great respect is accorded tothe evaluation of the credibility of witnesses by the trial court'D3%E "he trialcourt is in the best position to assess the credibility of witnesses and theirtesti0onies because of its uni?ue opportunity to observe the witnessesrsthand and note their de0eanor, conduct and attitude under grillinge8a0ination' e are also not i0pressed by petitioners argu0ent that thending of gross negligence by the lower court as aHr0ed by the appellate courtis not supported by evidence' "he evidence reveals that two 9eys are re?uiredto open the safety deposit bo8es of "ropicana' ne 9ey is assigned to the guestwhile the other re0ains in the possession of the 0anage0ent' =f the guestdesires to open his safety deposit bo8, he 0ust re?uest the 0anage0ent for theother 9ey to open the sa0e' =n other words, the guest alone cannot open thesafety deposit bo8 without the assistance of the 0anage0ent or its e0ployees'ith 0ore reason that access to the safety deposit bo8 should be denied if theone re?uesting for the opening of the safety deposit bo8 is a stranger' "hus, incase of loss of any ite0 deposited in the safety deposit bo8, it is inevitable toconclude that the 0anage0ent had at least a hand in the consu00ation of theta9ing, unless the reason for the loss is force 0a1eure'

&oteworthy is the fact that :aya0 and aine7, who were e0ployees of "ropicana, had custody of the 0aster 9ey of the 0anage0ent when the losstoo9 place' =n fact, they even ad0itted that they assisted "an on three separateoccasions in opening 6coughlins safety deposit bo8' "his only proves that

"ropicana had prior 9nowledge that a person aside fro0 the registered guesthad access to the safety deposit bo8' Pet the 0anage0ent failed to notify6coughlin of the incident and waited for hi0 to discover the ta9ing before itdisclosed the 0atter to hi0' "herefore, "ropicana should be held responsible forthe da0age suGered by 6coughlin by reason of the negligence of itse0ployees'

"he 0anage0ent should have guarded against the occurrence of this incidentconsidering that :aya0 ad0itted in open court that she assisted "an threeti0es in opening the safety deposit bo8 of 6coughlin at around !3 *'6' to3 *'6' while the latter was still asleep'D34E =n light of the circu0stancessurrounding this case, it is undeniable that without the ac?uiescence of thee0ployees of "ropicana to the opening of the safety deposit bo8, the loss of6coughlins 0oney could and should have been avoided'

"he 0anage0ent contends, however, that 6coughlin, by his act, 0ade itse0ployees believe that "an was his spouse for she was always with hi0 0ost ofthe ti0e' "he evidence on record, however, is bereft of any showing that6coughlin introduced "an to the 0anage0ent as his wife' /uch an inferencefro0 the act of 6coughlin will not e8culpate the petitioners fro0 liability in theabsence of any showing that he 0ade the 0anage0ent believe that "an was hiswife or was duly authori7ed to have access to the safety deposit bo8' 6ere closeco0panionship and inti0acy are not enough to warrant such conclusionconsidering that what is involved in the instant case is the very safety of6coughlins deposit' =f only petitioners e8ercised due diligence in ta9ing care of6coughlins safety deposit bo8, they should have confronted hi0 as to hisrelationship with "an considering that the latter had been observed opening6coughlins safety deposit bo8 a nu0ber of ti0es at the early hours of the0orning' "ans acts should have pro0pted the 0anage0ent to investigate herrelationship with 6coughlin' "hen, petitioners would have e8ercised due

diligence re?uired of the0' Failure to do so warrants the conclusion that the

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0anage0ent had been re0iss in co0plying with the obligations i0posed uponhotel)9eepers under the law'

+nder *rticle %% of the &ew Civil Code, those who, in the perfor0ance of theirobligations, are guilty of negligence, are liable for da0ages' *s to who shallbear the burden of paying da0ages, *rticle 2%, paragraph #4$ of the sa0eCode provides that the owners and 0anagers of an establish0ent or enterpriseare li9ewise responsible for da0ages caused by their e0ployees in the serviceof the branches in which the latter are e0ployed or on the occasion of theirfunctions' *lso, this Court has ruled that if an e0ployee is found negligent, it ispresu0ed that the e0ployer was negligent in selecting andTor supervising hi0for it is hard for the victi0 to prove the negligence of such e0ployer'D35E "hus,given the fact that the loss of 6coughlins 0oney was consu00ated throughthe negligence of "ropicanas e0ployees in allowing "an to open the safetydeposit bo8 without the guests consent, both the assisting e0ployees and P"Realty Corporation itself, as owner and operator of "ropicana, should be heldsolidarily liable pursuant to *rticle 2%(3'D3!E "he issue of whetherthe +nderta9ing For "he +se of /afety .eposit Bo8 e8ecuted by 6coughlin istainted with nullity presents a legal ?uestion appropriate for resolution in thispetition' &otably, both the trial court and the appellate court found the sa0e tobe null and void' e nd no reason to reverse their co00on conclusion' *rticle23 is controlling, thus *rt' 23' "he hotel)9eeper cannot free hi0self fro0responsibility by posting notices to the eGect that he is not liable for the articlesbrought by the guest' *ny stipulation between the hotel)9eeper and the guestwhereby the responsibility of the for0er as set forth in *rticles %(( to

2%D3E is suppressed or di0inished shall be void' *rticle 23 wasincorporated in the &ew Civil Code as an e8pression of public policy precisely toapply to situations such as that presented in this case' "he hotel business li9ethe co00on carriers business is i0bued with public interest' Catering to thepublic, hotel9eepers are bound to provide not only lodging for hotel guests andsecurity to their persons and belongings' "he twin duty constitutes the essenceof the business' "he law in turn does not allow such duty to the public to benegated or diluted by any contrary stipulation in so)called underta9ings thatordinarily appear in prepared for0s i0posed by hotel 9eepers on guests fortheir signature' =n an early case, the Court of *ppeals through its then :residing Austice #later *ssociate Austice of the Court$ Aose :' Beng7on, ruled that to holdhotel9eepers or inn9eeper liable for the eGects of their guests, it is notnecessary that they be actually delivered to the inn9eepers or their e0ployees'=t is enough that such eGects are within the hotel or inn' ith greater reasonshould the liability of the hotel9eeper be enforced when the 0issing ite0s are

ta9en without the guests 9nowledge and consent fro0 a safety deposit bo8provided by the hotel itself, as in this case' :aragraphs #2$ and #4$ of theunderta9ing 0anifestly contravene *rticle 23 of the &ew Civil Code for theyallow "ropicana to be released fro0 liability arising fro0 any loss in the contentsandTor use of the safety deposit bo8 for any cause whatsoever' -vidently, theunderta9ing was intended to bar any clai0 against "ropicana for any loss of thecontents of the safety deposit bo8 whether or not negligence was incurred by "ropicana or its e0ployees' "he &ew Civil Code is e8plicit that the responsibilityof the hotel)9eeper shall e8tend to loss of, or in1ury to, the personal property ofthe guests even if caused by servants or e0ployees of the 9eepers of hotels orinns as well as by strangers, e8cept as it 0ay proceed fro0 any force 0a1eure'=t is the loss through force 0a1eure that 0ay spare the hotel)9eeper fro0liability' =n the case at bar, there is no showing that the act of the thief or robberwas done with the use of ar0s or through an irresistible force to ?ualify thesa0e as force 0a1eure'

:etitioners li9ewise anchor their defense on *rticle 22 which e8e0pts thehotel)9eeper fro0 liability if the loss is due to the acts of his guest, his fa0ily, orvisitors' -ven a cursory reading of the provision would lead us to re1ectpetitioners contention' "he 1ustication they raise would render nugatory thepublic interest sought to be protected by the provision' hat if the negligenceof the e0ployer or its e0ployees facilitated the consu00ation of a cri0eco00itted by the registered guests relatives or visitorV /hould the lawe8culpate the hotel fro0 liability since the loss was due to the act of the visitorof the registered guest of the hotelV ence, this provision presupposes that thehotel)9eeper is not guilty of concurrent negligence or has not contributed in anydegree to the occurrence of the loss' * depositary is not responsible for the lossof goods by theft, unless his actionable negligence contributes to the loss' =nthe case at bar, the responsibility of securing the safety deposit bo8 was sharednot only by the guest hi0self but also by the 0anage0ent since two 9eys arenecessary to open the safety deposit bo8' ithout the assistance of hotele0ployees, the loss would not have occurred' "hus, "ropicana was guilty ofconcurrent negligence in allowing "an, who was not the registered guest, toopen the safety deposit bo8 of 6coughlin, even assu0ing that the latter wasalso guilty of negligence in allowing another person to use his 9ey' "o ruleotherwise would result in under0ining the safety of the safety deposit bo8es inhotels for the 0anage0ent will be given i0pri0atur to allow any person, underthe pretense of being a fa0ily 0e0ber or a visitor of the guest, to have accessto the safety deposit bo8 without fear of any liability that will attach thereafterin case such person turns out to be a co0plete stranger' "his will allow the hotelto evade responsibility for any liability incurred by its e0ployees in conspiracywith the guests relatives and visitors' :etitioners contend that 6coughlins casewas 0ounted on the theory of contract, but the trial court and the appellatecourt upheld the grant of the clai0s of the latter on the basis of tort' "here isnothing ano0alous in how the lower courts decided the controversy for thisCourt has pronounced a 1urisprudential rule that tort liability can e8ist even ifthere are already contractual relations' "he act that brea9s the contract 0ayalso be tort' *s to da0ages awarded to 6coughlin, we see no reason to0odify the a0ounts awarded by the appellate court for the sa0e were based onfacts and law' =t is within the province of lower courts to settle factual issuessuch as the proper a0ount of da0ages awarded and such nding is bindingupon this Court especially if suHciently proven by evidence and notunconscionable or e8cessive' "hus, the appellate court correctly awarded6coughlin "wo "housand +/ .ollars #+/S2,'$ and Four "housand Fiveundred *ustralian dollars #*+/S4,5'$ or their peso e?uivalent at the ti0eof pay0ent,D4E being the a0ounts duly proven by evidence'D4E "he alleged

loss that too9 place prior to %! *pril %( was not considered since the a0ountsalleged to have been ta9en were not suHciently established by evidence' "heappellate court also correctly awarded the su0 of :3,', representingthe peso value for the air fares fro0 /ydney to 6anila and bac9 for a total ofeleven #%%$ trips@D4(E one)half of :33!,2'5 or :%!,%3'52 representingpay0ent to "ropicana@D5E one)half of :%52,!3'5 or :!,34%'5 representingpay0ent to -chelon "ower@D5%E one)half of :%(,!3'2 or :(,(3%'! for theta8i or transportation e8penses fro0 6coughlins residence to /ydney *irportand fro0 6=* to the hotel here in 6anila, for the eleven #%%$ trips@D52E one)halfof :,%'(4 or :3,('( representing 6eralco power e8penses@D53E one)halfof :35!,4' or :%,' representing e8penses for food and0aintenance'D54E "he a0ount of :5,' for 0oral da0ages is reasonable'*lthough trial courts are given discretion to deter0ine the a0ount of 0oralda0ages, the appellate court 0ay 0odify or change the a0ount awarded whenit is palpably and scandalously e8cessive' 6oral da0ages are not intended to

enrich a co0plainant at the e8pense of a defendant' "hey are awarded only toenable the in1ured party to obtain 0eans, diversion or a0use0ents that will

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serve to alleviate the 0oral suGering he has undergone, by reason ofdefendants culpable action' "he awards of :%,' as e8e0plary da0agesand :2,' representing attorneys fees are li9ewise sustained'-R-FR-, foregoing pre0ises considered, the .ecision of the Court of*ppeals dated %( ctober %((5 is hereby *FF=R6-.' :etitioners are directed, 1ointly and severally, to pay private respondent the following a0ounts #%$+/S2,' and *+/S4,5' or their peso e?uivalent at the ti0e ofpay0ent@ #2$ :3,', representing the peso value for the air fares fro0/ydney to 6anila and bac9 for a total of eleven #%%$ trips@ #3$ ne)halfof :33!,2'5 or :%!,%3'52 representing pay0ent to "ropicana Copacabana*part0ent otel@ #4$ ne)half of :%52,!3'5 or :!,34%'5 representingpay0ent to -chelon "ower@ #5$ ne)half of :%(,!3'2 or :(,(3%'! for theta8i or transportation e8pense fro0 6coughlins residence to /ydney *irportand fro0 6=* to the hotel here in 6anila, for the eleven #%%$ trips@ #!$ ne)halfof :,%'(4 or :3,('( representing 6eralco power e8penses@ #$ ne)halfof :35!,4' or :%,2' representing e8penses for food and0aintenance@ #$ :5,' for 0oral da0ages@ #($ :%,' as e8e0plaryda0ages@ and #%$ :2, representing attorneys fees' ith costs' /R.-R-.'

PCIC VS. PETROLEUM DISTRIBUTORS

Before the Court is a petition for review under Rule 45 of the Rules of Court

see9ing the reversal of the Auly 3%, 2 .ecisionD%E and the .ece0ber 2, 2ResolutionD2E of the Court of *ppeals (CA) in C*)'R' CJ &o' 24%, whichaHr0ed with 0odication the Aanuary %2, 24 .ecision of the Regional "rialCourt, Branch %%%, :asay City (RTC).

The Facts: n Aanuary 2, %(((, respondent :etroleu0 .istributors and/ervices Corporation (PDSC), through its president, Conrado :' i0caco, enteredinto a building contractD3E with &'C' Francia Construction Corporation (FCC),represented by its president and chief e8ecutive oHcer, -00anuel "' Francia,for the construction of a four)story co00ercial and par9ing co0ple8 located at6=* Road corner .o0estic Road, :asay City, 9nown as :ar9 & Fly Building (Park Fl! $' +nder the contract, FCC agreed to underta9e the construction of :ar9 &Fly for the price of W45,522,%('2' "he parties agreed that the construction wor9 would begin on February %, %((('+nder the :ro1ect -valuation and Review "echni?ue Critical :ath 6ethod (P"RT-

CP#), the pro1ect was divided into two stages :hase % D4E of the constructionwor9 would be nished on 6ay %, %((( and :hase 2 D5E would begin on 6ay %,%((( and nish on ctober 2, %(((' "he pro1ect should be turned overby ctober 2%, %((('D!E =t was further stipulated that in the event FCC failed tonish the pro1ect within the period specied, li?uidated da0ages e?uivalent to%T% of %O of the contract price for every day of delay shall accrue in favor of :./C'DE

"o ensure co0pliance with its obligation, FCCs individual oHcers, na0ely,&atividad Francia, -00anuel C' Francia, Ar', *nna /heila C' Francia, /an .iegoFelipe ' Ber0ude7, -00anuel "' Francia, Charle0agne C' Francia, and Ruben' Caperia, signed the +nderta9ing of /urety DE holding the0selves personallyliable for the accountabilities of FCC'*lso, FCC procured :erfor0ance Bond &o' 3%(%5 a0ounting to W!,2,32('fro0 petitioner :hilippine Charter =nsurance Corporation (PC$C) to secure fulland faithful perfor0ance of its obligation under the Building Contract' D(E

"he construction of the :ar9 & Fly started on February %, %((('

:ursuant to the Building Contract, :./C sourced out construction 0aterials andsubcontracted various phases of the wor9 to help obtain the lowest cost of theconstruction and speed up the wor9 of the pro1ect' "hese resulted in thereduction of the contract price'D%E.uring the :hase % of the pro1ect, :./Cnoticed that FCC was si8teen #%!$ days behind schedule' =n aetterD%%E dated 6arch 25, %(((, it re0inded FCC to catch up with the scheduleof the pro1ected wor9 path, or it would i0pose the penalty of %T% of the %O of the contract price' "he proble0, however, was not addressed, as the delayincreased to 3 daysD%2E and ballooned to ! days'D%3E

Conse?uently, on /epte0ber %, %(((, FCC e8ecuted a deed of assign0ent,D%4E assigning a portion of its receivables fro0 Calte8 :hilippines,=nc' (Caltex), and a chattel 0ortgage,D%5E conveying so0e of its constructione?uip0ent to :./C as additional security for the faithful co0pliance with itsobligation' n even date, :./C and FCC li9ewise e8ecuted a 0e0orandu0 of agree0ent (#%A),D%!E wherein the parties agreed to revise the wor9 schedule of the pro1ect' *s a conse?uence, :erfor0ance Bond &o' 3%(%5 was e8tended upto 6arch 2, 2'D%E For failure of FCC to acco0plish the pro1ect within theagreed co0pletion period, :./C, in a letterD%E dated .ece0ber 3, %(((,infor0ed FCC that it was ter0inating their contract based on *rticle %2,:aragraph %2'% of the Building Contract' /ubse?uently, :./C sent de0andlettersD%(E to FCC and its oHcers for the pay0ent of li?uidated da0agesa0ounting to W(,%4(,(!2'2 for the delay' =n the sa0e 0anner, :./C wrote:C=C as9ing for re0uneration pursuant to :erfor0ance Bond &o' 3%(%5'D2E

.espite notice, :./C did not receive any reply fro0 either FCC or :C=C,constraining it to le a co0plaintD2%E for da0ages, recovery of possession of personal property andTor foreclosure of 0ortgage with prayer for the issuance of a writ of replevin and writ of attach0ent, against FCC and its oHcers before theR"C' :./C later led a supple0ental co0plaintD22E i0pleading :C=C, clai0ingcoverage under :erfor0ance Bond &o' 3%(%5 in the a0ount of W!,2,32('!!'=n its *0ended *nswer with aHr0ative defense and counterclai0,D23E FCCad0itted that it entered into a contract with :./C for the construction of the:ar9 & Fly building' =t, however, asserted that due to outsourcing of diGerent0aterials and subcontracting of various phases of wor9s 0ade by :./C, thecontract price was invariably reduced to W%(,(,22'%2'

FCC denied any liability to :./C clai0ing that any such clai0 by the latter hadbeen waived, abandoned or otherwise e8tinguished by the e8ecution of the /epte0ber %, %((( 6*' FCC clai0ed that in the said 6*, :./C assu0edall the obligations originally reposed upon it' FCC further e8plained that the:-R")C:6 agreed upon by the parties covering the rst phase of the wor9

pro1ect was severely aGected when :./C deleted several scopes of wor9 andundertoo9 to perfor0 the sa0e' =n fact, the :-R")C:6 was evaluated and it wasconcluded that the delay was attributable to both of the0' FCC added that after:hase = of the pro1ect, it sent a progress billing in the a0ount of W(3(,%!5'but :./C approved the a0ount of W!3(,%!5' only after deducting the cost of the attributable delay with the agree0ent that fro0 then on, :./C shouldshoulder all e8penses in the construction of the building until co0pletion@ thatFCC would provide the wor9ers on the condition that they would be paid by:./C@ and that it would allow :./C free use of the construction e?uip0entsthat were in the pro1ect site' For its part, :C=C averred that as a surety, it wasnot liable as a principal obligor@ that its liability under the bond was conditionaland subsidiary and that it could be 0ade liable only upon FCCs default of itsobligation in the Building Contract up to the e8tent of the ter0s and conditionsof the bond' :C=C also alleged that its obligation under the perfor0ance bondwas ter0inated when it e8pired on ctober %5, %((( and the e8tension of the

perfor0ance bond until 6arch 2, 2 was not binding as it was 0ade withoutits 9nowledge and consent'

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:C=C added that :./Cs clai0 against it had been waived, abandoned ore8tinguished by the /epte0ber %, %((( 6*' =t also argued that its obligationwas indeed e8tinguished when :./C ter0inated the contract on .ece0ber 3,%((( and too9 over the construction and it failed to le its clai0 within ten #%$days fro0 the e8piry date or fro0 the alleged default of FCC' D24E&onetheless, inthe event that :C=C would be 0ade liable, its liability should be in proportion tothe liabilities of the other sureties'n Aanuary %2, 24, the R"C rendered its .ecision D25E in favor of :./C' "he R"Cfound FCC guilty of delay when it failed to nish and turn over the pro1ecton ctober %5, %(((' =t pronounced FCC and :C=C 1ointly and severally liableand ordered the0 to pay :./C the a0ount of W(,,' as da0ages andW5,' as attorneys fees plus interest'FCC and :C=C led their respective notice of appealD2!E with the R"C' n February%2, 24, the R"C issued its rder D2Egiving due course to the notice of appeal'n Auly 3%, 2, the C* 0odied the R"Cs decision' D2E "he C* agreed that FCCincurred delay in the construction of the pro1ect' =t, however, found that theco0putation of the li?uidated da0ages should be based on the reducedcontract price of W%(,(,22'%2' "he dispositive portion reads -R-FR-,the .ecision dated %2 Aanuary 24 of the Regional "rial Court of :asay City,Branch %%% is *FF=R6-. with 6.=F=C*"=& in that appellants &'C' FranciaConstruction Corporation, &atividad Francia, -00anuel Francia, Ar', *nna /heilaFrancia /an .iego, Felipe Ber0ude7, -00anuel Francia, Charle0agne Francia,Ruben Caperia, and :hilippine Charter =nsurance Corporation are hereby heldsolidarily liable to pay appellee :etroleu0 .istributors N /ervices Corporation#%$ li?uidated da0ages in the su0 of W3,2,25'%3, which shall earn legalinterest at the rate of !O per annu0 fro0 % Aanuary 2 until nality of this 1udg0ent@ #2$ attorneys fees a0ounting to W5,'@ and #3$ cost of suit':ursuant to :erfor0ance Bond &o' 3%(%5, the liability of appellant :hilippineCharter =nsurance Corporation should not e8ceedW!,2,32('!!'*ppellants &'C Francia Construction Corporation, -00anuel Francia and&atividad Francia are ad1udged liable to pay appellant :hilippine Charter=nsurance Corporation for the a0ount the latter 0ay have paid under:erfor0ance Bond &o' 3%(%5' / R.-R-.'D2(E

FCC and :C=C led their separate 0otion

Credits Transactions Cases (2/2)

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