DELSAN TRANSPORT LINES, INC., vs.

C & A Construction
G.R. No. 156034. October 1, 2003

Facts:

C&A Construction (C & A for brevity) was engaged by the National Housing Authority (NHA) to construct
a deflector wall at the Vitas Reclamation Area in Vitas, Tondo Manila.

M/V Delsan Express, a ship owned and operated by petitioner Delsan Transport Lines, Inc., (Delsan)
anchored at the Navotas Fish Port for the purpose of installing a cargo pump and clearing the cargo oil
tank. At around 12:00 midnight of October 20, 1994, Captain Demetrio T. Jusep of M/V Delsan Express
received a report from his radio head operator in Japan that a typhoon was going to hit Manila in about
eight (8) hours.

At approximately 8:35 in the morning of the next day, Captain Jusep tried to seek shelter at the North
Harbor but could not enter the area because it was already congested. At 10:00 am., Captain Jusep
decided to drop anchor at the vicinity of Vitas mouth which is 4 miles away from a Napocor power barge.
At that time, the waves were already reaching 8 to 10 feet high. Captain Jusep ordered his crew to go
full ahead to counter the wind which was dragging the ship towards the Napocor power barge.

To avoid collision, Captain Jusep ordered a full stop of the vessel. He succeeded in avoiding the power
barge, but when the engine was re-started and the ship was maneuvered full astern, it hit the deflector
wall constructed by (C & A). C&A demanded payment of the damage from Delsan but the latter refused
to pay. Hence, the complaint for damages with the RTC.

Regional Trial Court ruled against C&A and in favor of Delsan stating absence of negligence. The Court
of Appeals reversed the decision.

Issues:

1. Wether or not Captain Jusep was negligent.

2. Wether or not Delsan is solidary liable under Article 2180 of the NCC.

Ruling:

1. Yes. Captain Jusep was negligent in deciding to transfer the vessel only at 8:35 in the morning of the
next day when as early as 12:00 in the midnight beforehand, he received a report from his radio head
operator in Japan that a typhoon was going to hit Manila after 8 hours. This, notwithstanding, he did
nothing, until 8:35 of the next day.

The finding of negligence cannot be rebutted upon proof that the ship could not have sought refuge at
the North Harbor even if the transfer was done earlier. It is not the speculative success or failure of a
decision that determines the existence of negligence in the present case, but the failure to take immediate
and appropriate action under the circumstances.

When he ignored the weather report notwithstanding reasonable foresight of harm, Captain Jusep
showed an inexcusable lack of care and caution which an ordinary prudent person would have observed
in the same situation.
Furthermore, the “emergency rule” is not applicable in this case because the danger where Captain Jusep
found himself was caused by his own negligence.

2. Yes. Delsan is vicariously liable for the negligent act of Captain Jusep. Under Article 2180, an employer
may be held solidarily liable for the negligent act of his employee.

Whenever an employee’s negligence causes damage or injury to another, there instantly arises a
presumption juris tantum that the employer failed to exercise diligence in the selection or supervision of
its employees. The proper defense for the employer to raise so that he may escape liability is to prove
that he exercised the diligence of the good father of the family to prevent damage not only in the selection
of his employees but also in adequately supervising them over their work.

Delsan cannot claim that it exercised due diligence in the selection and supervision of its employees. In
this case, Delsan presented no evidence that it formulated rules/guidelines for the proper performance
of functions of its employees and that it strictly implemented and monitored compliance therewith. Failing
to discharge the burden, Delsan should therefore be held liable for the negligent act of Captain Jusep.

WHEREFORE, petition DENIED.

17
BOARD OF LIQUIDATORS V KALAW G.R. No. L-18805 August 14, 1967 THE BOARD OF
LIQUIDATORS representing THE GOVERNMENT OF THE REPUBLIC OF THE
PHILIPPINES, plaintiff-appellant, vs. HEIRS OF MAXIMO M. KALAW, JUAN BOCAR, ESTATE OF
THE DECEASED CASIMIRO GARCIA, and LEONOR MOLL, defendants-appellees.

FACTS:

The National Coconut Corporation (NACOCO, for short) was chartered as a non-profit governmental
organization on avowedly for the protection, preservation and development of the coconut industry in
the Philippines. On August 1, 1946, NACOCO's charter was amended [Republic Act 5] to grant that
corporation the express power to buy and sell copra. The charter amendment was enacted to stabilize
copra prices, to serve coconut producers by securing advantageous prices for them, to cut down to a
minimum, if not altogether eliminate, the margin of middlemen, mostly aliens. General manager and
board chairman was Maximo M. Kalaw; defendants Juan Bocar and Casimiro Garcia were members of
the Board; defendant Leonor Moll became director only on December 22, 1947. NACOCO, after the
passage of Republic Act 5, embarked on copra trading activities.

An unhappy chain of events conspired to deter NACOCO from fulfilling the contracts it entered into.
Nature supervened. Four devastating typhoons visited the Philippines in 1947. When it became clear that
the contracts would be unprofitable, Kalaw submitted them to the board for approval. It was not until
December 22, 1947 when the membership was completed. Defendant Moll took her oath on that date.
A meeting was then held. Kalaw made a full disclosure of the situation, apprised the board of the
impending heavy losses. No action was first taken on the contracts but not long thereafter, that is, on
January 30, 1948, the board met again with Kalaw, Bocar, Garcia and Moll in attendance. They
unanimously approved the contracts hereinbefore enumerated.

As was to be expected, NACOCO but partially performed the contracts. The buyers threatened damage
suits, some of which were settled. But one buyer, Louis Dreyfus & Go. (Overseas) Ltd., did in fact sue
before the Court of First Instance of Manila. The cases culminated in an out-of- court amicable settlement
when the Kalaw management was already out. With particular reference to the Dreyfus claims, NACOCO
put up the defenses that:

(1) the contracts were void because Louis Dreyfus & Co. (Overseas) Ltd. did not have license to do
business here; and

(2) failure to deliver was due to force majeure, the typhoons. All the settlements sum up to
P1,343,274.52.

In this suit started in February, 1949, NACOCO seeks to recover the above sum of P1,343,274.52 from
general manager and board chairman Maximo M. Kalaw, and directors Juan Bocar, Casimiro Garcia and
Leonor Moll. It charges Kalaw with negligence under Article 1902 of the old Civil Code (now Article 2176,
new Civil Code); and defendant board members, including Kalaw, with bad faith and/or breach of trust
for having approved the contracts. By Executive Order 372, dated November 24, 1950, NACOCO, together
with other government-owned corporations, was abolished, and the Board of Liquidators was entrusted
with the function of settling and closing its affairs.
ISSUE:

Whether or not damages should be awarded.

RULING:

No. This is a case of damnum absque injuria. Conjunction of damage and wrong is here absent. There
cannot be an actionable wrong if either one or the other is wanting. Of course, Kalaw could not have
been an insurer of profits. He could not be expected to predict the coming of unpredictable typhoons.
And even as typhoons supervened Kalaw was not remissed in his duty. He exerted efforts to stave off
losses. That Kalaw cannot be tagged with crassa negligentia or as much as simple negligence, would
seem to be supported by the fact that even as the contracts were being questioned in Congress and in
the NACOCO board itself, President Roxas defended the actuations of Kalaw.
It is a well-known rule of law that questions of policy of management are left solely to the honest decision
of officers and directors of a corporation, and the court is without authority to substitute its judgment for
the judgment of the board of directors; the board is the business manager of the corporation, and so
long as it acts in good faith its orders are not reviewable by the courts."

SERGIO AMONOY, petitioner, v. SPOUSES JOSE GUTIERREZ AND ANGELA

FORNILDA, respondents.
G.R. No. 140420. February 15, 2001

Facts:

Amonoy was the counsel of the successors of the deceased Julio Cantolos for the settlement of
the latter’s estate. On January 1965, the lots were adjudicated to Asuncion Pasamba and Alfonso
Formilda. On January 20, 1965, Pasamba and Formilda executed a deed of real estate mortgage
on the said two lots adjudicated to them, in favor of Amonoy to secure the payment of his
attorney’s fees. But on August 6, 1969, after the taxes had been paid, the claims settled and the
properties adjudicated, the estate was declared closed and terminated. When Pasamba and
Formilda passed away, Formilda was succeeded by the spouses Gutierrez. On January 21, 1970,
Amonoy filed for the closure of the two lots alleging the non-payment of attorney’s fees. The
herein respondents denied the allegation, but judgment was rendered in favor of Amonoy.

Still for failure to pay attorney’s fees, the lots were foreclosed. Amonoy was able to buy the lots
by auction where the house of the spouses Gutierrez was situated. On Amonoy’s motion of April
24, 1986, orders were implemented for the demolition of structures in the said lot, including
herein respondents’ house. On September 27, 1985, David Formilda petitioned to the Supreme
Court for a TRO for the suspension of the demolition, which was granted, but the houses have
already been demolished. A complaint for damages was filed by respondents, which was denied
by RTC but granted by CA, thus this case.

Issue:

Whether or not the Court of Appeals erred in ruling that Amonoy was liable for damages to
respondents.
Ruling:

Petitioner invokes that it is well-settled that the maxim of damage resulting from the
legitimate exercise of a person’s rights is a loss without injury — damnum absque injuria — for
which the law gives no remedy, saying he is not liable for damages. The precept of Damnum
Absque Injuria has no application is this case. Petitioner did not heed the TRO suspending the
demolition of structures. Although the acts of petitioner may have been legally justified at the
outset, their continuation after the issuance of the TRO amounted to an insidious abuse of his
right. Indubitably, his actions were tainted with bad faith.

Article 19, known to contain what is commonly referred to as the principle of abuse of rights, sets
certain standards which may be observed not only in the exercise of one’s rights but also in the
performance of one’s duties. These standards are the following: to act with justice;
to give everyone his due; and to observe honesty and good faith. This must be observed. Clearly
then, the demolition of respondents’ house by petitioner, despite his receipt of the TRO, was not
only an abuse but also an unlawful exercise of such right. The petition is denied. The decision of
CA is affirmed.