G.R. No. L-55300 March 15, 1990FRANKLIN G. GACAL and CORAZON M. GACAL, the latter assisted by her husband, FRANKLIN G. GACAL,petitioners,vs.PHILIPPINE AIR LINES, INC., and THE HONORABLE PEDRO SAMSON C. ANIMAS, in his capacity as PRESIDING JUDGE of the COURT OF FIRST INSTANCE OF SOUTH COTABATO, BRANCH I,respondents.Vicente A. Mirabueno for petitioners.Siguion Reyna, Montecillo & Ongsiako for private respondent.PARAS,J.:This is a, petition for review oncertiorariof the decision of the Court of First Instance of South Cotabato, Branch 1,*promulgated on August 26, 1980 dismissing three (3) consolidated cases for damages: Civil Case No. 1701, Civil Case No. 1773 and Civil Case No. 1797 (Rollo, p. 35).The facts, as found by respondent court, are as follows:Plaintiffs Franklin G. Gacal and his wife, Corazon M. Gacal, Bonifacio S. Anislag and his wife, Mansueta L. Anislag, and the late Elma de Guzman, were then passengers boarding defendant's BAC 1-11 at Davao Airport for a flight to Manila, not knowing that on the same flight, Macalinog, Taurac Pendatum known as Commander Zapata, Nasser Omar, Liling Pusuan Radia, Dimantong Dimarosing and Mike Randa, all of Marawi City and members of the Moro National Liberation Front (MNLF), were their co-passengers, three (3) armed with grenades, two (2) with .45 caliber pistols, and one with a .22 caliber pistol. Ten (10) minutes after take off at about 2:30 in the afternoon, the hijackers brandishing their respective firearms announced the hijacking of the aircraft and directed its pilot to fly to Libya. With the pilot explaining to them especially to its leader, Commander Zapata, of the inherent fuel limitations of the plane and that they are not rated for international flights, the hijackers directed the pilot to fly to Sabah. With the same explanation, they relented and directed the aircraft to land at Zamboanga Airport, Zamboanga City for refueling. The aircraft landed at 3:00 o'clock in the afternoon of May 21, 1976 at Zamboanga Airport. When the plane began to taxi at the runway, it was met by two armored cars of the military with machine guns pointed at the plane, and it stopped there. The rebels thru its commander demanded that a DC-aircraft take them to Libya with the President of the defendant company as hostage and that they be given $375,000 and six (6) armalites, otherwise they will blow up the plane if their demands will not be met by the government and Philippine Air Lines. Meanwhile, the passengers were not served any food nor water and it was only on May 23, a Sunday, at about 1:00 o'clock in the afternoon that they were served 1/4 slice of a sandwich and 1/10 cup of PAL water. After that, relatives of the hijackers were allowed to board the plane but immediately after they alighted therefrom, an armored car bumped the stairs. That commenced the battle between the military and the hijackers which led ultimately to the liberation of the surviving crew and the passengers, with the final score of ten (10) passengers and three (3) hijackers dead on the spot and three (3) hijackers captured.City Fiscal Franklin G. Gacal was unhurt. Mrs. Corazon M. Gacal suffered injuries in the course of her jumping out of the plane when it was peppered with bullets by the army and after two (2) hand grenades exploded inside the plane. She was hospitalized at General Santos Doctors Hospital, General Santos City, for two (2) days, spending P245.60 for hospital and medical expenses, Assistant City Fiscal Bonifacio S. Anislag also escaped unhurt but Mrs. Anislag suffered a fracture at the radial bone of her left elbow for which she was hospitalized and operated on at the San Pedro Hospital, Davao City, and therefore, at Davao Regional Hospital, Davao City, spending P4,500.00. Elma de Guzman died because of that battle. Hence, the action of damages instituted by the plaintiffs demanding the following damages, to wit:Civil Case No. 1701 City Fiscal Franklin G. Gacal and Mrs. Corazon M. Gacal actual damages: P245.60 for hospital and medical expenses of Mrs Gacal; P8,995.00 for their personal belongings which were lost and not recovered; P50,000.00 each for moral damages; and P5,000.00 for attorney's fees, apart from the prayer for an award of exemplary damages (Record, pp. 4-6, Civil Case No. 1701).Civil Case No. 1773 xxx xxx xxxCivil Case No. 1797 xxx xxx xxxThe trial court, on August 26, 1980, dismissed the complaints finding that all the damages sustained in the premises were attributed toforce majeure.On September 12, 1980 the spouses Franklin G. Gacal and Corazon M. Gacal, plaintiffs in Civil Case No. 1701, filed a notice of appeal with the lower court on pure questions of law (Rollo, p. 55) and the petition for review oncertiorariwas filed with this Court on October 20, 1980 (Rollo, p. 30).The Court gave due course to the petition (Rollo, p. 147) and both parties filed their respective briefs but petitioner failed to file reply brief which was noted by the Court in the resolution dated May 3, 1982 (Rollo, p. 183).Petitioners alleged that the main cause of the unfortunate incident is the gross, wanton and inexcusable negligence of respondent Airline personnel in their failure to frisk the passengers adequately in order to discover hidden weapons in the bodies of the six (6) hijackers. They claimed that despite the prevalence of skyjacking, PAL did not use a metal detector which is the most effective means of discovering potential skyjackers among the passengers (Rollo, pp. 6-7).Respondent Airline averred that in the performance of its obligation to safely transport passengers as far as human care and foresight can provide, it has exercised the utmost diligence of a very cautious person with due regard to all circumstances, but the security checks and measures and surveillance precautions in all flights, including the inspection of baggages and cargo and frisking of passengers at the Davao Airport were performed and rendered solely by military personnel who under appropriate authority had assumed exclusive jurisdiction over the same in all airports in the Philippines.Similarly, the negotiations with the hijackers were a purely government matter and a military operation, handled by and subject to the absolute and exclusive jurisdiction of the military authorities. Hence, it concluded that the accident that befell RP-C1161 was caused by fortuitous event,force majeureand other causes beyond the control of the respondent Airline.The determinative issue in this case is whether or not hijacking or air piracy during martial law and under the circumstances obtaining herein, is acasofortuitoorforcemajeurewhich would exempt an aircraft from payment of damages to its passengers whose lives were put in jeopardy and whose personal belongings were lost during the incident.Under the Civil Code, common carriers are required to exercise extraordinary diligence in their vigilance over the goods and for the safety of passengers transported by them, according to all the circumstances of each case (Article 1733). They are presumed at fault or to have acted negligently whenever a passenger dies or is injured (Philippine Airlines, Inc. v. National Labor Relations Commission, 124 SCRA 583 [1983]) or for the loss, destruction or deterioration of goods in cases other than those enumerated in Article 1734 of the Civil Code (Eastern Shipping Lines, Inc. v. Intermediate Appellate Court, 150 SCRA 463 [1987]).The source of a common carrier's legal liability is the contract of carriage, and by entering into said contract, it binds itself to carry the passengers safely as far as human care and foresight can provide. There is breach of this obligation if it fails to exert extraordinary diligence according to all the circumstances of the case in exercise of the utmost diligence of a very cautious person (Isaac v. Ammen Transportation Co., 101 Phil. 1046 [1957]; Juntilla v. Fontanar, 136 SCRA 624 [1985]).It is the duty of a common carrier to overcome the presumption of negligence (Philippine National Railways v. Court of Appeals, 139 SCRA 87 [1985]) and it must be shown that the carrier had observed the required extraordinary diligence of a very cautious person as far as human care and foresight can provide or that the accident was caused by a fortuitous event (Estrada v. Consolacion, 71 SCRA 523 [1976]). Thus, as ruled by this Court, no person shall be responsible for those "events which could not be foreseen or which though foreseen were inevitable. (Article 1174, Civil Code). The term is synonymous withcaso fortuito(Lasam v. Smith, 45 Phil. 657 [1924]) which is of the same sense as "force majeure" (Words and Phrases Permanent Edition, Vol. 17, p. 362).In order to constitute acaso fortuitoorforce majeurethat would exempt a person from liability under Article 1174 of the Civil Code, it is necessary that the following elements must concur: (a) the cause of the breach of the obligation must be independent of the human will (the will of the debtor or the obligor); (b) the event must be either unforeseeable or unavoidable; (c) the event must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner; and (d) the debtor must be free from any participation in, or aggravation of the injury to the creditor (Lasam v. Smith, 45 Phil. 657 [1924]; Austria v. Court of Appeals, 39 SCRA 527 [1971]; Estrada v. Consolacion,supra; Vasquez v. Court of Appeals, 138 SCRA 553 [1985]; Juan F. Nakpil & Sons v. Court of Appeals, 144 SCRA 596 [1986]).Caso fortuitoorforce majeure, by definition, are extraordinary events not foreseeable or avoidable, events that could not be foreseen, or which, though foreseen, are inevitable. It is, therefore, not enough that the event should not have been foreseen or anticipated, as is commonly believed, but it must be one impossible to foresee or to avoid. The mere difficulty to foresee the happening is not impossibility to foresee the same (Republic v. Luzon Stevedoring Corporation, 21 SCRA 279 [1967]).Applying the above guidelines to the case at bar, the failure to transport petitioners safely from Davao to Manila was due to the skyjacking incident staged by six (6) passengers of the same plane, all members of the Moro National Liberation Front (MNLF), without any connection with private respondent, hence, independent of the will of either the PAL or of its passengers.Under normal circumstances, PAL might have foreseen the skyjacking incident which could have been avoided had there been a more thorough frisking of passengers and inspection of baggages as authorized by R.A. No. 6235. But the incident in question occurred during Martial Law where there was a military take-over of airport security including the frisking of passengers and the inspection of their luggage preparatory to boarding domestic and international flights. In fact military take-over was specifically announced on October 20, 1973 by General Jose L. Rancudo, Commanding General of the Philippine Air Force in a letter to Brig. Gen. Jesus Singson, then Director of the Civil Aeronautics Administration (Rollo, pp. 71-72) later confirmed shortly before the hijacking incident of May 21, 1976 by Letter of Instruction No. 399 issued on April 28, 1976 (Rollo, p. 72).Otherwise stated, these events rendered it impossible for PAL to perform its obligations in a nominal manner and obviously it cannot be faulted with negligence in the performance of duty taken over by the Armed Forces of the Philippines to the exclusion of the former.Finally, there is no dispute that the fourth element has also been satisfied. Consequently the existence offorce majeurehas been established exempting respondent PAL from the payment of damages to its passengers who suffered death or injuries in their persons and for loss of their baggages.PREMISES CONSIDERED, the petition is hereby DISMISSED for lack of merit and the decision of the Court of First Instance of South Cotabato, Branch I is hereby AFFIRMED.SO ORDERED.

G.R. No. L-82619 September 15, 1993PHILIPPINE AIRLINES, INC.,petitioner,vs.COURT OF APPEALS and PEDRO ZAPATOS,respondents.Leighton R. Liazon for petitioner.Balmes L. Ocampo for private respondent.BELLOSILLO,J.:This petition for review incertiorariseeks to annul and set aside the decision of the then Intermediate Appellant Court,1now Court of Appeals, dated 28 February 1985, in AC-G.R. CV No. 69327 ("Pedro Zapatos v. Philippine Airlines, Inc.") affirming the decision of the then Court of first Instance, now Regional Trial Court, declaring Philippine Airlines, Inc., liable in damages for breach of contract.On 25 November 1976, private respondent filed a complaint for damages for breach of contract of carriage2against Philippine Airlines, Inc. (PAL), before the then Court of First Instance, now Regional Trial Court, of Misamis Occidental, at Ozamiz City. According to him, on 2 August 1976, he was among the twenty-one (21) passengers of PAL Flight 477 that took off from Cebu bound for Ozamiz City. The routing of this flight was Cebu-Ozamiz-Cotabato. While on flight and just about fifteen (15) minutes before landing at Ozamiz City, the pilot received a radio message that the airport was closed due to heavy rains and inclement weather and that he should proceed to Cotabato City instead.Upon arrival at Cotabato City, the PAL Station Agent informed the passengers of their options to return to Cebu on flight 560 of the same day and thence to Ozamiz City on 4 August 1975, or take the next flight to Cebu the following day, or remain at Cotabato and take the next available flight to Ozamiz City on 5 August 1975.3The Station Agent likewise informed them that Flight 560 bound for Manila would make a stop-over at Cebu to bring some of the diverted passengers; that there were only six (6) seats available as there were already confirmed passengers for Manila; and, that the basis for priority would be the check-in sequence at Cebu.Private respondent chose to return to Cebu but was not accommodated because he checked-in as passenger No. 9 on Flight 477. He insisted on being given priority over the confirmed passengers in the accommodation, but the Station Agent refused private respondent's demand explaining that the latter's predicament was not due to PAL's own doing but to be aforce majeure.4Private respondent tried to stop the departure of Flight 560 as his personal belongings, including a package containing a camera which a certain Miwa from Japan asked him to deliver to Mrs. Fe Obid of Gingoog City, were still on board. His plea fell on deaf ears. PAL then issued to private respondent a free ticket to Iligan city, which the latter received under protest.5Private respondent was left at the airport and could not even hitch a ride in the Ford Fiera loaded with PAL personnel.6PAL neither provided private respondent with transportation from the airport to the city proper nor food and accommodation for his stay in Cotabato City.The following day, private respondent purchased a PAL ticket to Iligan City. He informed PAL personnel that he would not use the free ticket because he was filing a case against PAL.7In Iligan City, private respondent hired a car from the airport to Kolambugan, Lanao del Norte, reaching Ozamiz City by crossing the bay in a launch.8His personal effects including the camera, which were valued at P2,000.00 were no longer recovered.On 13 January 1977, PAL filed its answer denying that it unjustifiably refused to accommodate private respondent.9It alleged that there was simply no more seat for private respondent on Flight 560 since there were only six (6) seats available and the priority of accommodation on Flight 560 was based on the check-in sequence in Cebu; that the first six (6) priority passengers on Flight 477 chose to take Flight 560; that its Station Agent explained in a courteous and polite manner to all passengers the reason for PAL's inability to transport all of them back to Cebu; that the stranded passengers agreed to avail of the options and had their respective tickets exchanged for their onward trips; that it wasonly the private respondent who insisted on being given priority in the accommodation; that pieces of checked-in baggage and had carried items of the Ozamiz City passengers were removed from the aircraft; that the reason for their pilot's inability to land at Ozamis City airport was because the runway was wet due to rains thus posing a threat to the safety of both passengers and aircraft; and, that such reason offorce majeurewas a valid justification for the pilot to bypass Ozamiz City and proceed directly to Cotabato City.On 4 June 1981, the trial court rendered its decision10the dispositive portion of which states:WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendant Philippine AirLines, Inc. ordering the latter to pay:(1) As actual damages, the sum of Two Hundred Pesos (P200.00) representing plaintiff's expenses for transportation, food and accommodation during his stranded stay at Cotabato City; the sum of Forty-Eight Pesos (P48.00) representing his flight fare from Cotabato City to Iligan city; the sum of Five Hundred Pesos (P500.00) representing plaintiff's transportation expenses from Iligan City to Ozamiz City; and the sum of Five Thousand Pesos (P5,000.00) as loss of business opportunities during his stranded stay in Cotabato City;(2) As moral damages, the sum of Fifty Thousand Pesos (P50,000.00) for plaintiff's hurt feelings, serious anxiety, mental anguish and unkind and discourteous treatment perpetrated by defendant's employees during his stay as stranded passenger in Cotabato City;(3) As exemplary damages, the sum of Ten Thousand Pesos (P10,000.00) to set a precedent to the defendant airline that it shall provide means to give comfort and convenience to stranded passengers;(4) The sum of Three Thousand Pesos (P3,000.00) as attorney's fees;(5) To pay the costs of this suit.PAL appealed to the Court of Appeals which on 28 February 1985, finding no reversible error, affirmed the judgment of the courta quo.11PAL then sought recourse to this Court by way of a petition for review oncertiorari12upon the following issues: (1) Can the Court of Appeals render a decision finding petitioner (then defendant-appellant in the court below) negligent and, consequently, liable for damages on a question of substance which was neither raised on a question nor proved at the trial? (2) Can the Court of Appeals award actual and moral damages contrary to the evidence and established jurisprudence?13An assiduous examination of the records yields no valid reason for reversal of the judgment on appeal; only a modification of its disposition.In its petition, PAL vigorously maintains that private respondent's principal cause of action was its alleged denial of private respondent's demand for priority over the confirmed passengers on Flight 560. Likewise, PAL points out that the complaint did not impute to PAL neglect in failing to attend to the needs of the diverted passengers; and, that the question of negligence was not and never put in issue by the pleadings or proved at the trial.Contrary to the above arguments, private respondent's amended complaint touched on PAL's indifference and inattention to his predicament. The pertinent portion of the amended complaint14reads:10. That by virtue of the refusal of the defendant through its agent in Cotabato to accommodate (sic) and allow the plaintiff to take and board the plane back to Cebu, and by accomodating (sic)and allowing passengers from Cotabato for Cebu in his stead and place, thus forcing the plaintiff against his will, to be left and stranded in Cotabato, exposed to the peril and danger of muslim rebels plundering at the time, the plaintiff, as a consequence, (have) suffered mental anguish, mental torture, social humiliation, bismirched reputation and wounded feeling, all amounting to a conservative amount of thirty thousand (P30,000.00) Pesos.To substantiate this aspect of apathy, private respondent testified15A I did not even notice that I was I think the last passenger or the last person out of the PAL employees and army personnel that were left there. I did not notice that when I was already outside of the building after our conversation.Q What did you do next?A I banished (sic) because it seems that there was a war not far from the airport. The sound of guns and the soldiers were plenty.Q After that what did you do?A I tried to look for a transportation that could bring me down to the City of Cotabato.Q Were you able to go there?A I was at about 7:00 o'clock in the evening more or less and it was a private jeep that I boarded. I was even questioned why I and who am (sic) I then. Then I explained my side that I am (sic) stranded passenger. Then they brought me downtown at Cotabato.Q During your conversation with the Manager were you not offered any vehicle or transportation to Cotabato airport downtown?A In fact I told him (Manager) now I am by-passed passenger here which is not my destination what can you offer me. Then they answered, "it is not my fault. Let us forget that."Q In other words when the Manager told you that offer was there a vehicle ready?A Not yet. Not long after that the Ford Fiera loaded with PAL personnel was passing by going to the City of Cotabato and I stopped it to take me a ride because there was no more available transportation but I was not accommodated.Significantly, PAL did not seem to mind the introduction of evidence which focused on its alleged negligence in caring for its stranded passengers. Well-settled is the rule in evidence that the protest or objection against the admission of evidence should be presented at the time the evidence is offered, and that the proper time to make protest or objection to the admissibility of evidence is when the question is presented to the witness or at the time the answer thereto is given.16There being no objection, such evidence becomes property of the case and all the parties are amenable to any favorable or unfavorable effects resulting from the evidence.17PAL instead attempted to rebut the aforequoted testimony. In the process, it failed to substantiate its counter allegation for want of concrete proof18Atty. Rubin O. Rivera PAL's counsel:Q You said PAL refused to help you when you were in Cotabato, is that right?Private respondent:A Yes.Q Did you ask them to help you regarding any offer of transportation or of any other matter asked of them?A Yes, he (PAL PERSONNEL) said what is? It is not our fault.Q Are you not aware that one fellow passenger even claimed that he was given Hotel accommodation because they have no money?xxx xxx xxxA No, sir, that was never offered to me. I said, I tried to stop them but they were already riding that PAL pick-up jeep, and I was not accommodated.Having joined in the issue over the alleged lack of care it exhibited towards its passengers, PAL cannot now turn around and feign surprise at the outcome of the case. When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings.19With regard to the award of damages affirmed by the appellate court, PAL argues that the same is unfounded. It asserts that it should not be charged with the task of looking after the passengers' comfort and convenience because the diversion of the flight was due to a fortuitous event, and that if made liable, an added burden is given to PAL which is over and beyond its duties under the contract of carriage. It submits that grantingarguendothat negligence exists, PAL cannot be liable in damages in the absence of fraud or bad faith; that private respondent failed to apprise PAL of the nature of his trip and possible business losses; and, that private respondent himself is to be blamed for unreasonably refusing to use the free ticket which PAL issued.The contract of air carriage is a peculiar one. Being imbued with public interest, the law requires common carriers to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with due regard for all the circumstances.20InAir France v.Carrascoso,21we held that A contract to transport passengers is quite different in kind and degree from any other contractual relation. And this, because of the relation which an air carrier sustains with the public. Its business is mainly with the travelling public.It invites people to avail of the comforts and advantages it offers. The contract of air carriage, therefore, generates a relation attended with a public duty . . . . ( emphasis supplied).The position taken by PAL in this case clearly illustrates its failure to grasp the exacting standard required by law. Undisputably, PAL's diversion of its flight due to inclement weather was a fortuitous event. Nonetheless, such occurrence did not terminate PAL's contract with its passengers. Being in the business of air carriage and the sole one to operate in the country, PAL is deemed equipped to deal with situations as in the case at bar. What we said in one case once again must be stressed,i.e., the relation of carrier and passenger continues until the latter has been landed at the port of destination and has left the carrier's premises.22Hence, PAL necessarily would still have to exercise extraordinary diligence in safeguarding the comfort, convenience and safety of its stranded passengers until they have reached their final destination. On this score, PAL grossly failed considering the then ongoing battle between government forces and Muslim rebels in Cotabato City and the fact that the private respondent was a stranger to the place. As the appellate court correctly ruled While the failure of plaintiff in the first instance to reach his destination at Ozamis City in accordance with the contract of carriage was due to the closure of the airport on account of rain and inclement weather which was radioed to defendant 15 minutes before landing, it has not been disputed by defendant airline that Ozamis City has no all-weather airport and has to cancel its flight to Ozamis City or by-pass it in the event of inclement weather. Knowing this fact, it becomes the duty of defendant to provide all means of comfort and convenience to its passengers when they would have to be left in a strange place in case of such by-passing. The steps taken by defendant airline company towards this end has not been put in evidence, especially for those 7 others who were not accommodated in the return trip to Cebu, only 6 of the 21 having been so accommodated. It appears that plaintiff had to leave on the next flight 2 days later. If the cause of non-fulfillment of the contract is due to a fortuitous event, it has to be the sole and only cause (Art. 1755 CC., Art. 1733 C.C.) Since part of the failure to comply with the obligation of common carrier to deliver its passengers safely to their destination lay in the defendant's failure to provide comfort and convenience to its stranded passengers using extra-ordinary diligence, the cause of non-fulfillment is not solely and exclusively due to fortuitous event, but due to something which defendant airline could have prevented, defendant becomes liable to plaintiff.23While we find PAL remiss in its duty of extending utmost care to private respondent while being stranded in Cotabato City, there is no sufficient basis to conclude that PAL failed to inform him about his non-accommodation on Flight 560, or that it was inattentive to his queries relative thereto.On 3 August 1975, the Station Agent reported to his Branch Manager in Cotabato City that 3. Of the fifteen stranded passengers two pax elected to take F478 on August 05, three pax opted to take F442 August 03. The remaining ten (10) including subject requested that they be instead accommodated (sic) on F446 CBO-IGN the following day where they intended to take the surface transportation to OZC. Mr. Pedro Zapatos had by then been very vocal and boiceterous (sic) at the counter and we tactfully managed to steer him inside the Station Agent's office. Mr. Pedro Zapatos then adamantly insisted that all the diverted passengers should have been given priority over the originating passengers of F560 whether confirmed or otherwise. We explained our policies and after awhile he seemed pacified and thereafter took his ticket (in-lieued (sic) to CBO-IGN, COCON basis), at the counter in the presence of five other passengers who were waiting for their tickets too. The rest of the diverted pax had left earlier after being assured their tickets will be ready the following day.24Aforesaid Report being an entry in the course of business isprima facieevidence of the facts therein stated. Private respondent, apart from his testimony, did not offer any controverting evidence. If indeed PAL omitted to give information about the options available to its diverted passengers, it would have been deluged with complaints. But, only private respondent complained Atty. Rivera (for PAL)Q I understand from you Mr. Zapatos that at the time you were waiting at Cotabato Airport for the decision of PAL, you were not informed of the decision until after the airplane left is that correct?A Yes.COURT:Q What do you mean by "yes"? You meant you were not informed?A Yes, I was not informed of their decision, that they will only accommodate few passengers.Q Aside from you there were many other stranded passengers?A I believed, yes.Q And you want us to believe that PAL did not explain (to) any of these passengers about the decision regarding those who will board the aircraft back to Cebu?A No, Sir.Q Despite these facts Mr. Zapatos did any of the other passengers complained (sic) regarding that incident?xxx xxx xxxA There were plenty of argument and I was one of those talking about my case.Q Did you hear anybody complained (sic) that he has not been informed of the decision before the plane left for Cebu?A No.25Admittedly, private respondent's insistence on being given priority in accommodation was unreasonable considering the fortuitous event and that there was a sequence to be observed in the booking,i.e., in the order the passengers checked-in at their port of origin. His intransigence in fact was the main cause for his having to stay at the airport longer than was necessary.Atty. Rivera:Q And, you were saying that despite the fact that according to your testimony there were at least 16 passengers who were stranded there in Cotabato airport according to your testimony, and later you said that there were no other people left there at that time, is that correct?A Yes, I did not see anyone there around. I think I was the only civilian who was left there.Q Why is it that it took you long time to leave that place?A Because I was arguing with the PAL personnel.26Anent the plaint that PAL employees were disrespectful and inattentive toward private respondent, the records are bereft of evidence to support the same. Thus, the ruling of respondent Court of Appeals in this regard is without basis.27On the contrary, private respondent was attended to not only by the personnel of PAL but also by its Manager."28In the light of these findings, we find the award of moral damages of Fifty Thousand Pesos (P50,000.00) unreasonably excessive; hence, we reduce the same to Ten Thousand Pesos (P10,000.00). Conformably herewith, the award of exemplary damages is also reduced to five Thousand Pesos (5,000.00). Moral damages are not intended to enrich the private respondent. They are awarded only to enable the injured party to obtain means, diversion or amusements that will serve to alleviate the moral suffering he has undergone by reason of the defendant's culpable action.29With regard to the award of actual damages in the amount of P5,000.00 representing private respondent's alleged business losses occasioned by his stay at Cotabato City, we find the same unwarranted. Private respondent's testimony that he had a scheduled business "transaction of shark liver oil supposedly to have been consummated on August 3, 1975 in the morning" and that "since (private respondent) was out for nearly two weeks I missed to buy about 10 barrels of shark liver oil,"30are purely speculative. Actual or compensatory damages cannot be presumed but must be duly proved with reasonable degree of certainty. A court cannot rely on speculation, conjecture or guesswork as to the fact and amount of damages, but must depend upon competent proof that they have suffered and on evidence of the actual amount thereof.31WHEREFORE the decision appealed from is AFFIRMED with modification however that the award of moral damages of Fifty Thousand Pesos (P50,000.00) is reduced to Ten Thousand Pesos (P10,000.00) while the exemplary damages of Ten Thousand Pesos (P10,000.00) is also reduced to Five Thousand Pesos (P5,000.00). The award of actual damages in the amount Five Thousand Pesos (P5,000.00) representing business losses occasioned by private respondent's being stranded in Cotabato City is deleted.SO ORDERED.

[G.R. No. 126389.July 10, 1998]SOUTHEASTERN COLLEGE, INC.,petitioner, vs.COURT OF APPEALS, JUANITA DE JESUS VDA. DE DIMAANO, EMERITA DIMAANO, REMEDIOS DIMAANO, CONSOLACION DIMAANO and MILAGROS DIMAANO,respondents.D E C I S I O NPURISIMA,J.:Petition for review under Rule 45 of the Rules of Court seeking to set aside the Decision[1]promulgated on July 31, 1996, and Resolution[2]dated September 12, 1996 of the Court of Appeals[3]in CA-G.R. No. 41422, entitled Juanita de Jesus vda. de Dimaano, et al.vs. Southeastern College, Inc., which reduced the moral damages awarded below fromP1,000,000.00 toP200,000.00.[4]The Resolution under attack denied petitioners motion for reconsideration.Private respondents are owners of a house at 326 College Road, Pasay City, while petitioner owns a four-storey school building along the same College Road.On October 11, 1989, at about 6:30 in the morning, a powerful typhoon Salinghit Metro Manila.Buffeted byvery strong winds, the roof of petitioners building was partly ripped off and blown away, landing on and destroying portions of the roofing of private respondents house.After the typhoon had passed, an ocular inspection of the destroyed buildings was conducted by a team of engineers headed by the city building official, Engr. Jesus L. Reyna.Pertinent aspects of the latters Report[5]dated October 18, 1989 stated, as follows:5.One of the factors that may have led to this calamitous event is the formation of the buildings in the area and the general direction of the wind.Situated in the peripheral lot is an almost U-shaped formation of 4-storey building. Thus, with the strong winds having a westerly direction, the general formation of the buildings becomes a big funnel-like structure, the one situated along College Road, receiving the heaviest impact of the strong winds. Hence, there are portions of the roofing, those located on both ends of the building, which remained intact after the storm.6.Another factor and perhaps the most likely reason for the dislodging of the roofings structural trusses is the improper anchorage of the said trusses to the roof beams. The 1/2 diameter steel bars embedded on the concrete roof beams which serve as truss anchorage are not bolted nor nailed to the trusses.Still, there are other steel bars which were not even bent to the trusses, thus, those trusses are not anchored at all to the roofbeams.It then recommended that to avoid any further loss and damage to lives, limbs and property of persons living in the vicinity, the fourth floor of subject school building be declared as astructural hazard.In their Complaint[6]before the Regional Trial Court of Pasay City, Branch 117, for damages based onculpa aquiliana,private respondents alleged that the damage to their house rendered the same uninhabitable, forcing them to stay temporarily in others houses.And so they sought to recover from petitionerP117,116.00, as actual damages,P1,000,000.00, as moral damages,P300,000.00, as exemplary damages andP100,000.00, for and as attorneys fees; plus costs.In its Answer, petitioner averred that subject school building had withstood several devastating typhoons and other calamities in the past, without its roofing or any portion thereof giving way; that it has not been remiss in its responsibility to see to it that said school building, which houses school children, faculty members, and employees, is in tip-top condition; and furthermore, typhoon Salingwas an act of God and therefore beyond human control such that petitioner cannot be answerable for the damages wrought thereby, absent any negligence on its part.The trial court, giving credence to the ocular inspection report to the effect that subject school building had a defective roofing structure, found that, while typhoon Saling was accompanied by strong winds, the damage to private respondents house could have been avoided if the construction of the roof of [petitioners] building was not faulty. The dispositive portion of the lower courts decision[7]reads thus:WHEREFORE, in view of the foregoing, the Court renders judgment (sic) in favor of the plaintiff (sic) and against the defendants, (sic) ordering the latter to pay jointly and severally the former as follows:a)P117,116.00, as actual damages, plus litigation expenses;b)P1,000,000.00 as moral damages;c)P100,000.00 as attorneys fees;d)Costs of the instant suit.The claim for exemplary damages is denied for the reason that the defendants (sic) did not act in a wanton fraudulent, reckless, oppressive or malevolent manner.In its appeal to the Court of Appeals, petitioner assigned as errors,[8]that:ITHE TRIAL COURT ERRED IN HOLDING THAT TYPHOON SALING, AS AN ACT OF GOD, IS NOT THE SOLE AND ABSOLUTE REASON FOR THE RIPPING-OFF OF THE SMALL PORTION OF THE ROOF OF SOUTHEASTERNS FOUR (4) STOREY SCHOOL BUILDING.IITHE TRIAL COURT ERRED IN HOLDING THAT THE CONSTRUCTION OF THE ROOF OF DEFENDANTS SCHOOL BUILDING WAS FAULTY NOTWITHSTANDING THE ADMISSION THAT THERE WERE TYPHOONS BEFORE BUT NOT AS GRAVE AS TYPHOON SALING WHICH IS THE DIRECT AND PROXIMATE CAUSE OF THE INCIDENT.IIITHE TRIAL COURT ERRED IN AWARDING ACTUAL AND MORAL DAMAGES AS WELL AS ATTORNEYS FEES AND LITIGATION EXPENSES AND COSTS OF SUIT TO DIMAANOS WHEN THEY HAVE NOT INCURRED ACTUAL DAMAGES AT ALL AS DIMAANOS HAVE ALREADY SOLD THEIR PROPERTY, AN INTERVENING EVENT THAT RENDERS THIS CASE MOOT AND ACADEMIC.IVTHE TRIAL COURT ERRED IN ORDERING THE ISSUANCE OF THE WRIT OF EXECUTION INSPITE OF THE PERFECTION OF SOUTHEASTERNS APPEAL WHEN THERE IS NO COMPELLING REASON FOR THE ISSUANCE THERETO.As mentioned earlier, respondent Court of Appeals affirmed with modification the trial courts disposition by reducing the award of moral damages fromP1,000,000.00 toP200,000.00.Hence, petitioners resort to this Court, raising for resolution the issues of:1.Whether or not the award of actual damage[sic]to respondent Dimaanos on the basis of speculation or conjecture, without proof or receipts of actual damage,[sic]legally feasible or justified.2.Whether or not the award of moral damages to respondent Dimaanos, without the latter having suffered, actual damage has legal basis.3.Whether or not respondent Dimaanos who are no longer the owner of the property, subject matter of the case, during its pendency, has the right to pursue their complaint against petitioner when the case was already rendered moot and academic by the sale of the property to third party.4.Whether or not the award of attorneys fees when the case was already moot and academic[sic]legally justified.5.Whether or not petitioner is liable for damage caused to others by typhoon Saling being an act of God.6.Whether or not the issuance of a writ of execution pending appeal, ex-parte or without hearing, has support in law.The pivot of inquiry here, determinative of the other issues, is whether the damage on the roof of the building of private respondents resulting from the impact of the falling portions of the school buildings roof ripped off by the strong winds of typhoon Saling, was, within legal contemplation, due to fortuitous event?If so, petitioner cannot be held liable for the damages suffered by the private respondents. This conclusion finds support in Article 1174 of the CivilCode, whichprovides:Art 1174.Except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation requires the assumption of risk, no person shall be responsible for those events which could not be foreseen, or which, though foreseen, were inevitable.The antecedent of fortuitous event orcaso fortuitois found in thePartidaswhich defines it as an event which takes place by accident and could not have been foreseen.[9]Escriche elaborates it as an unexpected event or act of God which could neither be foreseen nor resisted.[10]Civilist Arturo M. Tolentino adds that [f]ortuitous events may be produced by two general causes: (1)by nature, such as earthquakes, storms, floods, epidemics, fires, etc. and(2)by the act of man, such as an armed invasion, attack by bandits, governmental prohibitions, robbery, etc.[11]In order that a fortuitous event may exempt a person from liability, it is necessary that he be free from any previous negligence or misconduct by reason of which the loss may have been occasioned.[12]An act of God cannot be invoked for the protection of a person who has been guilty of gross negligence in not trying to forestall its possible adverse consequences.When a persons negligence concurs with an act of God in producing damage or injury to another, such person is not exempt from liability by showing that the immediate or proximate causeof the damage or injury was a fortuitous event.When the effect is found to be partly the result of the participation of man whether it be from active intervention, or neglect, or failure to act the whole occurrence is hereby humanized, and removed from the rules applicable to acts of God.[13]In the case under consideration, the lower court accorded full credence to the finding of the investigating team that subject school buildings roofing had no sufficient anchorage to hold it in position especially when battered by strong winds.Based on such finding, the trial court imputed negligence to petitioner and adjudged it liable for damages to private respondents.After a thorough study and evaluation of the evidence on record, this Court believes otherwise, notwithstanding the general rule that factual findings by the trial court, especially when affirmed by the appellate court, are binding and conclusive upon this Court.[14]After a careful scrutiny of the records and the pleadings submitted by the parties, we find exception to this rule and hold that the lower courts misappreciated the evidence proffered.There is no question that a typhoon or storm is a fortuitous event, a natural occurrence which may be foreseen but is unavoidable despite any amount of foresight, diligence or care.[15]In order to be exempt from liability arising from any adverse consequence engendered thereby, there should have been no human participation amounting to a negligent act.[16]In other words, the person seeking exoneration from liability must not be guilty of negligence.Negligence, as commonly understood, is conduct which naturally or reasonably creates undue risk or harm to others.It may be the failure to observe that degree of care, precaution, and vigilance which the circumstances justly demand,[17]or the omission to do something which a prudent and reasonable man, guided by considerations which ordinarily regulate the conduct of human affairs, would do.[18]From these premises, we proceed to determine whether petitioner was negligent, such that if it were not, the damage caused to private respondents house could have been avoided?At the outset, it bears emphasizing that a person claiming damages for the negligence of another has the burden of proving the existence of fault or negligence causative of his injury or loss.The facts constitutive of negligence must be affirmatively established bycompetent evidence,[19]not merely by presumptions and conclusions without basis in fact.Private respondents, in establishing the culpability of petitioner, merely relied on the aforementioned report submitted by a team which made an ocularinspection of petitioners school building after the typhoon.As the term imparts, an ocular inspection is one by means of actual sight or viewing.[20]What is visual to the eye though, is not always reflective of the real cause behind.For instance, one who hears a gunshot and then sees a wounded person, cannot always definitely conclude that a third person shot the victim.It could have been self-inflicted or caused accidentally by a stray bullet.The relationship of cause and effect must be clearly shown.In the present case, other than the said ocular inspection, no investigation was conducted to determine the real cause of the partial unroofing of petitioners school building.Private respondents did noteven show that the plans, specifications and design of said school building were deficient and defective.Neither did they prove any substantial deviation from the approved plans and specifications.Nordid they conclusively establish that the construction of such building was basically flawed.[21]On the other hand, petitioner elicited from one of the witnesses of private respondents, city building official Jesus Reyna, that the original plans and design of petitioners school building were approved prior to its construction.Engr. Reyna admitted that it was a legal requirement before the construction of any building to obtain a permit from the city building official (city engineer, prior to the passage of the Building Act of 1977).In like manner, after construction of the building, a certification must be secured from the same official attesting to the readiness for occupancy of the edifice.Having obtained both building permit and certificate of occupancy, these are, at the very least,prima facieevidence of the regular and proper construction of subject school building.[22]Furthermore, when part of its roof needed repairs of the damage inflicted by typhoon Saling,the same city official gave the go-signal for such repairs without any deviation from the original design and subsequently, authorized the use of the entire fourth floor of the same building.These only prove that subject building suffers from no structural defect, contrary to the report that its U-shaped form was structurally defective.Having given his unqualifiedimprimatur, the city building official is presumed to have properly performed his duties[23]in connection therewith.In addition, petitioner presented its vice president for finance and administration who testified that an annual maintenance inspection and repair of subject school building were regularly undertaken.Petitioner was even willing to present its maintenance supervisor to attest to the extent of such regular inspection but private respondents agreed to dispense with his testimony and simply stipulated that it would be corroborative of the vice presidents narration.Moreover, the city building official, who has been in the city government service since 1974, admitted in open court that no complaint regarding any defect on the same structure has ever been lodged before his office prior to the institution of the case at bench.It is a matter of judicial notice that typhoons are common occurrences in this country.If subject school buildings roofing was not firmly anchored to its trusses, obviously, it could not have withstood long years and several typhoons even stronger than Saling.In light of the foregoing, we find no clear and convincing evidence to sustain the judgment of the appellate court.We thus hold that petitioner has not been shown negligent or at fault regarding the construction and maintenance of its school building in question and that typhoon Salingwas the proximate cause of the damage suffered by private respondents house.With this disposition on the pivotal issue, private respondents claim for actual and moral damages as well as attorneys fees must fail.[24]Petitioner cannot be made to answer for a purely fortuitous event.[25]More so because no bad faith or willful act to cause damage was alleged and proven to warrant moral damages.Private respondents failed to adduce adequate and competent proof of the pecuniary loss they actually incurred.[26]It is not enough that the damage be capable of proof but must be actually proved with a reasonable degree of certainty, pointing out specific facts that afford a basis for measuring whatever compensatory damages are borne.[27]Private respondents merely submitted an estimated amount needed for the repair of the roof of their subject building.What is more, whether the necessary repairs were caused ONLY by petitioners alleged negligence in the maintenance of its school building, or included the ordinary wear and tear of the house itself, is an essential question that remains indeterminable.The Court deems unnecessary to resolve the other issues posedby petitioner.As regards the sixth issue, however, the writ of execution issued on April 1, 1993 by the trial court is hereby nullified and set aside.Private respondents are ordered to reimburse any amount or return to petitioner any property which they may have received by virtue of the enforcement of said writ.WHEREFORE, the petition is GRANTED and the challenged Decision is REVERSED.The complaint of private respondents in Civil Case No. 7314 before the trial courta quois ordered DISMISSED and the writ of execution issued on April 1, 1993 in said case is SET ASIDE.Accordingly, private respondents are ORDERED to return to petitioner any amount or property received by them by virtue of said writ.Costs against the private respondents.SO ORDERED.

G.R. No. 147324 May 25, 2004PHILIPPINE COMMUNICATIONS SATELLITE CORPORATION,petitioner,vs.GLOBE TELECOM, INC. (formerly Globe Mckay Cable and Radio Corporation),respondents.x-----------------------------xGLOBE TELECOM, INC.,petitioner,vs.PHILIPPINE COMMUNICATION SATELLITE CORPORATION,respondent.D E C I S I O NTINGA,J.:Before the Court are twoPetitions for Reviewassailing theDecisionof the Court of Appeals, dated 27 February 2001, in CA-G.R. CV No. 63619.1The facts of the case are undisputed.For several years prior to 1991, Globe Mckay Cable and Radio Corporation, now Globe Telecom, Inc. (Globe), had been engaged in the coordination of the provision of various communication facilities for the military bases of the United States of America (US) in Clark Air Base, Angeles, Pampanga and Subic Naval Base in Cubi Point, Zambales. The said communication facilities were installed and configured for the exclusive use of the US Defense Communications Agency (USDCA), and for security reasons, were operated only by its personnel or those of American companies contracted by it to operate said facilities. The USDCA contracted with said American companies, and the latter, in turn, contracted with Globe for the use of the communication facilities. Globe, on the other hand, contracted with local service providers such as the Philippine Communications Satellite Corporation (Philcomsat) for the provision of the communication facilities.On 07 May 1991, Philcomsat and Globe entered into an Agreement whereby Philcomsat obligated itself to establish, operate and provide an IBS Standard B earth station (earth station) within Cubi Point for the exclusive use of the USDCA.2The term of the contract was for 60 months, or five (5) years.3In turn, Globe promised to pay Philcomsat monthly rentals for each leased circuit involved.4At the time of the execution of the Agreement, both parties knew that the Military Bases Agreement between the Republic of the Philippines and the US (RP-US Military Bases Agreement), which was the basis for the occupancy of the Clark Air Base and Subic Naval Base in Cubi Point, was to expire in 1991. Under Section 25, Article XVIII of the 1987 Constitution, foreign military bases, troops or facilities, which include those located at the US Naval Facility in Cubi Point, shall not be allowed in the Philippines unless a new treaty is duly concurred in by the Senate and ratified by a majority of the votes cast by the people in a national referendum when the Congress so requires, and such new treaty is recognized as such by the US Government.Subsequently, Philcomsat installed and established the earth station at Cubi Point and the USDCA made use of the same.On 16 September 1991, the Senate passed and adopted Senate Resolution No. 141, expressing its decision not to concur in the ratification of the Treaty of Friendship, Cooperation and Security and its Supplementary Agreements that was supposed to extend the term of the use by the US of Subic Naval Base, among others.5The last two paragraphs of the Resolution state:FINDING that the Treaty constitutes a defective framework for the continuing relationship between the two countries in the spirit of friendship, cooperation and sovereign equality: Now, therefore, be it Resolved by the Senate, as it is hereby resolved, To express its decision not to concur in the ratification of the Treaty of Friendship, Cooperation and Security and its Supplementary Agreements, at the same time reaffirming its desire to continue friendly relations with the government and people of the United States of America.6On 31 December 1991, the Philippine Government sent aNote Verbaleto the US Government through the US Embassy, notifying it of the Philippines termination of the RP-US Military Bases Agreement. TheNote Verbalestated that since the RP-US Military Bases Agreement, as amended, shall terminate on 31 December 1992, the withdrawal of all US military forces from Subic Naval Base should be completed by said date.In a letter dated 06 August 1992, Globe notified Philcomsat of its intention to discontinue the use of the earth station effective 08 November 1992 in view of the withdrawal of US military personnel from Subic Naval Base after the termination of the RP-US Military Bases Agreement. Globe invoked as basis for the letter of termination Section 8 (Default) of the Agreement, which provides:Neither party shall be held liable or deemed to be in default for any failure to perform its obligation under this Agreement if such failure results directly or indirectly from force majeure or fortuitous event. Either party is thus precluded from performing its obligation until such force majeure or fortuitous event shall terminate. For the purpose of this paragraph, force majeure shall mean circumstances beyond the control of the party involved including, but not limited to, any law, order, regulation, direction or request of the Government of the Philippines, strikes or other labor difficulties, insurrection riots, national emergencies, war, acts of public enemies, fire, floods, typhoons or other catastrophies or acts of God.Philcomsat sent a reply letter dated 10 August 1992 to Globe, stating that "we expect [Globe] to know its commitment to pay the stipulated rentals for the remaining terms of the Agreement even after [Globe] shall have discontinue[d] the use of the earth station after November 08, 1992."7Philcomsat referred to Section 7 of the Agreement, stating as follows:7. DISCONTINUANCE OF SERVICEShould [Globe] decide to discontinue with the use of the earth station after it has been put into operation, a written notice shall be served to PHILCOMSAT at least sixty (60) days prior to the expected date of termination. Notwithstanding the non-use of the earth station, [Globe] shall continue to pay PHILCOMSAT for the rental of the actual number of T1 circuits in use, but in no case shall be less than the first two (2) T1 circuits, for the remaining life of the agreement. However, should PHILCOMSAT make use or sell the earth station subject to this agreement, the obligation of [Globe] to pay the rental for the remaining life of the agreement shall be at such monthly rate as may be agreed upon by the parties.8After the US military forces left Subic Naval Base, Philcomsat sent Globe a letter dated 24 November 1993 demanding payment of its outstanding obligations under the Agreement amounting to US$4,910,136.00 plus interest and attorneys fees. However, Globe refused to heed Philcomsats demand.On 27 January 1995, Philcomsat filed with the Regional Trial Court of Makati aComplaintagainst Globe, praying that the latter be ordered to pay liquidated damages under the Agreement, with legal interest, exemplary damages, attorneys fees and costs of suit. The case was raffled to Branch 59 of said court.Globe filed anAnswerto theComplaint,insisting that it was constrained to end the Agreement due to the termination of the RP-US Military Bases Agreement and the non-ratification by the Senate of the Treaty of Friendship and Cooperation, which events constitutedforce majeureunder the Agreement. Globe explained that the occurrence of said events exempted it from paying rentals for the remaining period of the Agreement.On 05 January 1999, the trial court rendered itsDecision,the dispositive portion of which reads:WHEREFORE, premises considered, judgment is hereby rendered as follows:1. Ordering the defendant to pay the plaintiff the amount of Ninety Two Thousand Two Hundred Thirty Eight US Dollars (US$92,238.00) or its equivalent in Philippine Currency (computed at the exchange rate prevailing at the time of compliance or payment) representing rentals for the month of December 1992 with interest thereon at the legal rate of twelve percent (12%) per annum starting December 1992 until the amount is fully paid;2. Ordering the defendant to pay the plaintiff the amount of Three Hundred Thousand (P300,000.00) Pesos as and for attorneys fees;3. Ordering the DISMISSAL of defendants counterclaim for lack of merit; and4. With costs against the defendant.SO ORDERED.9Both parties appealed the trial courtsDecisionto the Court of Appeals.Philcomsat claimed that the trial court erred in ruling that: (1) the non-ratification by the Senate of the Treaty of Friendship, Cooperation and Security and its Supplementary Agreements constitutesforce majeurewhich exempts Globe from complying with its obligations under the Agreement; (2) Globe is not liable to pay the rentals for the remainder of the term of the Agreement; and (3) Globe is not liable to Philcomsat for exemplary damages.Globe, on the other hand, contended that the RTC erred in holding it liable for payment of rent of the earth station for December 1992 and of attorneys fees. It explained that it terminated Philcomsats services on 08 November 1992; hence, it had no reason to pay for rentals beyond that date.On 27 February 2001, the Court of Appeals promulgated itsDecisiondismissing Philcomsats appeal for lack of merit and affirming the trial courts finding that certain events constitutingforce majeureunder Section 8 the Agreement occurred and justified the non-payment by Globe of rentals for the remainder of the term of the Agreement.The appellate court ruled that the non-ratification by the Senate of the Treaty of Friendship, Cooperation and Security, and its Supplementary Agreements, and the termination by the Philippine Government of the RP-US Military Bases Agreement effective 31 December 1991 as stated in the Philippine GovernmentsNote Verbaleto the US Government, are acts, directions, or requests of the Government of the Philippines which constituteforce majeure. In addition, there were circumstances beyond the control of the parties, such as the issuance of a formal order by Cdr. Walter Corliss of the US Navy, the issuance of the letter notification from ATT and the complete withdrawal of all US military forces and personnel from Cubi Point, which prevented further use of the earth station under the Agreement.However, the Court of Appeals ruled that although Globe sought to terminate Philcomsats services by 08 November 1992, it is still liable to pay rentals for the December 1992, amounting to US$92,238.00 plus interest, considering that the US military forces and personnel completely withdrew from Cubi Point only on 31 December 1992.10Both parties filed their respectivePetitions for Reviewassailing theDecisionof the Court of Appeals.InG.R. No. 147324,11petitioner Philcomsat raises the following assignments of error:A. THE HONORABLE COURT OF APPEALS ERRED IN ADOPTING A DEFINITION OFFORCE MAJEUREDIFFERENT FROM WHAT ITS LEGAL DEFINITION FOUND IN ARTICLE 1174 OF THE CIVIL CODE, PROVIDES, SO AS TO EXEMPT GLOBE TELECOM FROM COMPLYING WITH ITS OBLIGATIONS UNDER THE SUBJECT AGREEMENT.B. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT GLOBE TELECOM IS NOT LIABLE TO PHILCOMSAT FOR RENTALS FOR THE REMAINING TERM OF THE AGREEMENT, DESPITE THE CLEAR TENOR OF SECTION 7 OF THE AGREEMENT.C. THE HONORABLE OCURT OF APPEALS ERRED IN DELETING THE TRIAL COURTS AWARD OF ATTORNEYS FEES IN FAVOR OF PHILCOMSAT.D. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT GLOBE TELECOM IS NOT LIABLE TO PHILCOMSAT FOR EXEMPLARY DAMAGES.12Philcomsat argues that the termination of the RP-US Military Bases Agreement cannot be considered a fortuitous event because the happening thereof was foreseeable. Although the Agreement was freely entered into by both parties, Section 8 should be deemed ineffective because it is contrary to Article 1174 of the Civil Code. Philcomsat posits the view that the validity of the parties definition offorce majeurein Section 8 of the Agreement as "circumstances beyond the control of the party involved including, but not limited to, any law, order, regulation, direction or request of the Government of the Philippines, strikes or other labor difficulties, insurrection riots, national emergencies, war, acts of public enemies, fire, floods, typhoons or other catastrophies or acts of God," should be deemed subject to Article 1174 which defines fortuitous events as events which could not be foreseen, or which, though foreseen, were inevitable.13Philcomsat further claims that the Court of Appeals erred in holding that Globe is not liable to pay for the rental of the earth station for the entire term of the Agreement because it runs counter to what was plainly stipulated by the parties in Section 7 thereof. Moreover, said ruling is inconsistent with the appellate courts pronouncement that Globe is liable to pay rentals for December 1992 even though it terminated Philcomsats services effective 08 November 1992, because the US military and personnel completely withdrew from Cubi Point only in December 1992. Philcomsat points out that it was Globe which proposed the five-year term of the Agreement, and that the other provisions of the Agreement, such as Section 4.114thereof, evince the intent of Globe to be bound to pay rentals for the entire five-year term.15Philcomsat also maintains that contrary to the appellate courts findings, it is entitled to attorneys fees and exemplary damages.16In itsCommentto PhilcomsatsPetition,Globe asserts that Section 8 of the Agreement is not contrary to Article 1174 of the Civil Code because said provision does not prohibit parties to a contract from providing for other instances when they would be exempt from fulfilling their contractual obligations. Globe also claims that the termination of the RP-US Military Bases Agreement constitutesforce majeureand exempts it from complying with its obligations under the Agreement.17On the issue of the propriety of awarding attorneys fees and exemplary damages to Philcomsat, Globe maintains that Philcomsat is not entitled thereto because in refusing to pay rentals for the remainder of the term of the Agreement, Globe only acted in accordance with its rights.18InG.R. No. 147334,19Globe, the petitioner therein, contends that the Court of Appeals erred in finding it liable for the amount of US$92,238.00, representing rentals for December 1992, since Philcomsats services were actually terminated on 08 November 1992.20In itsComment, Philcomsat claims that Globes petition should be dismissed as it raises a factual issue which is not cognizable by the Court in a petition for review oncertiorari.21On 15 August 2001, the Court issued aResolutiongiving due course to PhilcomsatsPetitioninG.R. No.147324and required the parties to submit their respective memoranda.22Similarly, on 20 August 2001, the Court issued aResolutiongiving due course to thePetitionfiled by Globe inG.R. No. 147334and required both parties to submit their memoranda.23Philcomsat and Globe thereafter filed their respectiveConsolidated Memorandain the two cases,reiterating their arguments in their respective petitions.The Court is tasked to resolve the following issues: (1) whether the termination of the RP-US Military Bases Agreement, the non-ratification of the Treaty of Friendship, Cooperation and Security, and the consequent withdrawal of US military forces and personnel from Cubi Point constituteforce majeurewhich would exempt Globe from complying with its obligation to pay rentals under its Agreement with Philcomsat; (2) whether Globe is liable to pay rentals under the Agreement for the month of December 1992; and (3) whether Philcomsat is entitled to attorneys fees and exemplary damages.No reversible error was committed by the Court of Appeals in issuing the assailedDecision;hence the petitions are denied.There is no merit is Philcomsats argument that Section 8 of the Agreement cannot be given effect because the enumeration of events constitutingforce majeuretherein unduly expands the concept of a fortuitous event under Article 1174 of the Civil Code and is therefore invalid.In support of its position, Philcomsat contends that under Article 1174 of the Civil Code, an event must be unforeseen in order to exempt a party to a contract from complying with its obligations therein. It insists that since the expiration of the RP-US Military Bases Agreement, the non-ratification of the Treaty of Friendship, Cooperation and Security and the withdrawal of US military forces and personnel from Cubi Point were not unforeseeable, but were possibilities known to it and Globe at the time they entered into the Agreement, such events cannot exempt Globe from performing its obligation of paying rentals for the entire five-year term thereof.However, Article 1174, which exempts an obligor from liability on account of fortuitous events orforce majeure, refers not only to events that are unforeseeable,but also to those which are foreseeable, but inevitable:Art. 1174. Except in cases specified by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation requires the assumption of risk, no person shall be responsible for those events which, could not be foreseen, or which, though foreseen were inevitable.A fortuitous event under Article 1174 may either be an "act of God," or natural occurrences such as floods or typhoons,24or an "act of man," such as riots, strikes or wars.25Philcomsat and Globe agreed in Section 8 of the Agreement that the following events shall be deemed events constitutingforce majeure:1. Any law, order, regulation, direction or request of the Philippine Government;2. Strikes or other labor difficulties;3. Insurrection;4. Riots;5. National emergencies;6. War;7. Acts of public enemies;8. Fire, floods, typhoons or other catastrophies or acts of God;9. Other circumstances beyond the control of the parties.Clearly, the foregoing are either unforeseeable, or foreseeable but beyond the control of the parties. There is nothing in the enumeration that runs contrary to, or expands, the concept of a fortuitous event under Article 1174.Furthermore, under Article 130626of the Civil Code, parties to a contract may establish such stipulations, clauses, terms and conditions as they may deem fit, as long as the same do not run counter to the law, morals, good customs, public order or public policy.27Article 1159 of the Civil Code also provides that "[o]bligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith."28Courts cannot stipulate for the parties nor amend their agreement where the same does not contravene law, morals, good customs, public order or public policy, for to do so would be to alter the real intent of the parties, and would run contrary to the function of the courts to give force and effect thereto.29Not being contrary to law, morals, good customs, public order, or public policy, Section 8 of the Agreement which Philcomsat and Globe freely agreed upon has the force of law between them.30In order that Globe may be exempt from non-compliance with its obligation to pay rentals under Section 8, the concurrence of the following elements must be established: (1) the event must be independent of the human will; (2) the occurrence must render it impossible for the debtor to fulfill the obligation in a normal manner; and (3) the obligor must be free of participation in, or aggravation of, the injury to the creditor.31The Court agrees with the Court of Appeals and the trial court that the abovementioned requisites are present in the instant case. Philcomsat and Globe had no control over the non-renewal of the term of the RP-US Military Bases Agreement when the same expired in 1991, because the prerogative to ratify the treaty extending the life thereof belonged to the Senate. Neither did the parties have control over the subsequent withdrawal of the US military forces and personnel from Cubi Point in December 1992:Obviously the non-ratification by the Senate of the RP-US Military Bases Agreement (and its Supplemental Agreements) under its Resolution No. 141. (Exhibit "2") on September 16, 1991 is beyond the control of the parties. This resolution was followed by the sending on December 31, 1991 o[f] a"Note Verbale"(Exhibit "3") by the Philippine Government to the US Government notifying the latter of the formers termination of the RP-US Military Bases Agreement (as amended) on 31 December 1992 and that accordingly, the withdrawal of all U.S. military forces from Subic Naval Base should be completed by said date. Subsequently, defendant [Globe] received a formal order from Cdr. Walter F. Corliss II Commander USN dated July 31, 1992 and a notification from ATT dated July 29, 1992 to terminate the provision of T1s services (via an IBS Standard B Earth Station) effective November 08, 1992. Plaintiff [Philcomsat] was furnished with copies of the said order and letter by the defendant on August 06, 1992.Resolution No. 141 of the Philippine Senate and the Note Verbale of the Philippine Government to the US Government are acts, direction or request of the Government of the Philippines and circumstances beyond the control of the defendant. The formal order from Cdr. Walter Corliss of the USN, the letter notification from ATT and the complete withdrawal of all the military forces and personnel from Cubi Point in the year-end 1992 are also acts and circumstances beyond the control of the defendant.Considering the foregoing, the Court finds and so holds that the afore-narrated circumstances constitute "force majeure or fortuitous event(s) as defined under paragraph 8 of the Agreement.From the foregoing, the Court finds that the defendant is exempted from paying the rentals for the facility for the remaining term of the contract.As a consequence of the termination of the RP-US Military Bases Agreement (as amended) the continued stay of all US Military forces and personnel from Subic Naval Base would no longer be allowed, hence, plaintiff would no longer be in any position to render the service it was obligated under the Agreement. To put it blantly (sic), since the US military forces and personnel left or withdrew from Cubi Point in the year end December 1992, there was no longer any necessity for the plaintiff to continue maintaining the IBS facility.32(Emphasis in the original.)The aforementioned events made impossible the continuation of the Agreement until the end of its five-year term without fault on the part of either party. The Court of Appeals was thus correct in ruling that the happening of such fortuitous events rendered Globe exempt from payment of rentals for the remainder of the term of the Agreement.Moreover, it would be unjust to require Globe to continue paying rentals even though Philcomsat cannot be compelled to perform its corresponding obligation under the Agreement. As noted by the appellate court:We also point out the sheer inequity of PHILCOMSATs position. PHILCOMSAT would like to charge GLOBE rentals for the balance of the lease term without there being any corresponding telecommunications service subject of the lease. It will be grossly unfair and iniquitous to hold GLOBE liable for lease charges for a service that was not and could not have been rendered due to an act of the government which was clearly beyond GLOBEs control. The binding effect of a contract on both parties is based on the principle that the obligations arising from contracts have the force of law between the contracting parties, and there must be mutuality between them based essentially on their equality under which it is repugnant to have one party bound by the contract while leaving the other party free therefrom (Allied Banking Corporation v. Court of Appeals, 284 SCRA 357).33With respect to the issue of whether Globe is liable for payment of rentals for the month of December 1992, the Court likewise affirms the appellate courts ruling that Globe should pay the same.Although Globe alleged that it terminated the Agreement with Philcomsat effective 08 November 1992 pursuant to the formal order issued by Cdr. Corliss of the US Navy, the date when they actually ceased using the earth station subject of the Agreement was not established during the trial.34However, the trial court found that the US military forces and personnel completely withdrew from Cubi Point only on 31 December 1992.35Thus, until that date, the USDCA had control over the earth station and had the option of using the same. Furthermore, Philcomsat could not have removed or rendered ineffective said communication facility until after 31 December 1992 because Cubi Point was accessible only to US naval personnel up to that time. Hence, the Court of Appeals did not err when it affirmed the trial courts ruling that Globe is liable for payment of rentals until December 1992.Neither did the appellate court commit any error in holding that Philcomsat is not entitled to attorneys fees and exemplary damages.The award of attorneys fees is the exception rather than the rule, and must be supported by factual, legal and equitable justifications.36In previously decided cases, the Court awarded attorneys fees where a party acted in gross and evident bad faith in refusing to satisfy the other partys claims and compelled the former to litigate to protect his rights;37when the action filed is clearly unfounded,38or where moral or exemplary damages are awarded.39However, in cases where both parties have legitimate claims against each other and no party actually prevailed, such as in the present case where the claims of both parties were sustained in part, an award of attorneys fees would not be warranted.40Exemplary damages may be awarded in cases involving contracts or quasi-contracts, if the erring party acted in a wanton, fraudulent, reckless, oppressive or malevolent manner.41In the present case, it was not shown that Globe acted wantonly or oppressively in not heeding Philcomsats demands for payment of rentals. It was established during the trial of the case before the trial court that Globe had valid grounds for refusing to comply with its contractual obligations after 1992.WHEREFORE, thePetitionsare DENIED for lack of merit. The assailedDecisionof the Court of Appeals in CA-G.R. CV No. 63619 is AFFIRMED.SO ORDERED.

G.R. No. 147839 June 8, 2006GAISANO CAGAYAN, INC.Petitioner,vs.INSURANCE COMPANY OF NORTH AMERICA,Respondent.D E C I S I O NAUSTRIA-MARTINEZ,J.:Before the Court is a petition for review on certiorari of the Decision1dated October 11, 2000 of the Court of Appeals (CA) in CA-G.R. CV No. 61848 which set aside the Decision dated August 31, 1998 of the Regional Trial Court, Branch 138, Makati (RTC) in Civil Case No. 92-322 and upheld the causes of action for damages of Insurance Company of North America (respondent) against Gaisano Cagayan, Inc. (petitioner); and the CA Resolution dated April 11, 2001 which denied petitioner's motion for reconsideration.The factual background of the case is as follows:Intercapitol Marketing Corporation (IMC) is the maker of Wrangler Blue Jeans. Levi Strauss (Phils.) Inc. (LSPI) is the local distributor of products bearing trademarks owned by Levi Strauss & Co.. IMC and LSPI separately obtained from respondent fire insurance policies with book debt endorsements. The insurance policies provide for coverage on "book debts in connection with ready-made clothing materials which have been sold or delivered to various customers and dealers of the Insured anywhere in the Philippines."2The policies defined book debts as the "unpaid account still appearing in the Book of Account of the Insured 45 days after the time of the loss covered under this Policy."3The policies also provide for the following conditions:1. Warranted that the Company shall not be liable for any unpaid account in respect of the merchandise sold and delivered by the Insured which are outstanding at the date of loss for a period in excess of six (6) months from the date of the covering invoice or actual delivery of the merchandise whichever shall first occur.2. Warranted that the Insured shall submit to the Company within twelve (12) days after the close of every calendar month all amount shown in their books of accounts as unpaid and thus become receivable item from their customers and dealers. x x x4x x x xPetitioner is a customer and dealer of the products of IMC and LSPI. On February 25, 1991, the Gaisano Superstore Complex in Cagayan de Oro City, owned by petitioner, was consumed by fire. Included in the items lost or destroyed in the fire were stocks of ready-made clothing materials sold and delivered by IMC and LSPI.On February 4, 1992, respondent filed a complaint for damages against petitioner. It alleges that IMC and LSPI filed with respondent their claims under their respective fire insurance policies with book debt endorsements; that as of February 25, 1991, the unpaid accounts of petitioner on the sale and delivery of ready-made clothing materials with IMC wasP2,119,205.00 while with LSPI it wasP535,613.00; that respondent paid the claims of IMC and LSPI and, by virtue thereof, respondent was subrogated to their rights against petitioner; that respondent made several demands for payment upon petitioner but these went unheeded.5In its Answer with Counter Claim dated July 4, 1995, petitioner contends that it could not be held liable because the property covered by the insurance policies were destroyed due to fortuities event or force majeure; that respondent's right of subrogation has no basis inasmuch as there was no breach of contract committed by it since the loss was due to fire which it could not prevent or foresee; that IMC and LSPI never communicated to it that they insured their properties; that it never consented to paying the claim of the insured.6At the pre-trial conference the parties failed to arrive at an amicable settlement.7Thus, trial on the merits ensued.On August 31, 1998, the RTC rendered its decision dismissing respondent's complaint.8It held that the fire was purely accidental; that the cause of the fire was not attributable to the negligence of the petitioner; that it has not been established that petitioner is the debtor of IMC and LSPI; that since the sales invoices state that "it is further agreed that merely for purpose of securing the payment of purchase price, the above-described merchandise remains the property of the vendor until the purchase price is fully paid", IMC and LSPI retained ownership of the delivered goods and must bear the loss.Dissatisfied, petitioner appealed to the CA.9On October 11, 2000, the CA rendered its decision setting aside the decision of the RTC. The dispositive portion of the decision reads:WHEREFORE, in view of the foregoing, the appealed decision is REVERSED and SET ASIDE and a new one is entered ordering defendant-appellee Gaisano Cagayan, Inc. to pay:1. the amount ofP2,119,205.60 representing the amount paid by the plaintiff-appellant to the insured Inter Capitol Marketing Corporation, plus legal interest from the time of demand until fully paid;2. the amount ofP535,613.00 representing the amount paid by the plaintiff-appellant to the insured Levi Strauss Phil., Inc., plus legal interest from the time of demand until fully paid.With costs against the defendant-appellee.SO ORDERED.10The CA held that the sales invoices are proofs of sale, being detailed statements of the nature, quantity and cost of the thing sold; that loss of the goods in the fire must be borne by petitioner since theprovisocontained in the sales invoices is an exception under Article 1504 (1) of the Civil Code, to the general rule that if the thing is lost by a fortuitous event, the risk is borne by the owner of the thing at the time the loss under the principle of res perit domino; that petitioner's obligation to IMC and LSPI is not the delivery of the lost goods but the payment of its unpaid account and as such the obligation to pay is not extinguished, even if the fire is considered a fortuitous event; that by subrogation, the insurer has the right to go against petitioner; that, being a fire insurance with book debt endorsements, what was insured was the vendor's interest as a creditor.11Petitioner filed a motion for reconsideration12but it was denied by the CA in its Resolution dated April 11, 2001.13Hence, the present petition for review on certiorari anchored on the following Assignment of Errors:THE COURT OF APPEALS ERRED IN HOLDING THAT THE INSURANCE IN THE INSTANT CASE WAS ONE OVER CREDIT.THE COURT OF APPEALS ERRED IN HOLDING THAT ALL RISK OVER THE SUBJECT GOODS IN THE INSTANT CASE HAD TRANSFERRED TO PETITIONER UPON DELIVERY THEREOF.THE COURT OF APPEALS ERRED IN HOLDING THAT THERE WAS AUTOMATIC SUBROGATION UNDER ART. 2207 OF THE CIVIL CODE IN FAVOR OF RESPONDENT.14Anent the first error, petitioner contends that the insurance in the present case cannot be deemed to be over credit since an insurance "on credit" belies not only the nature of fire insurance but the express terms of the policies; that it was not credit that was insured since respondent paid on the occasion of the loss of the insured goods to fire and not because of the non-payment by petitioner of any obligation; that, even if the insurance is deemed as one over credit, there was no loss as the accounts were not yet due since no prior demands were made by IMC and LSPI against petitioner for payment of the debt and such demands came from respondent only after it had already paid IMC and LSPI under the fire insurance policies.15As to the second error, petitioner avers that despite delivery of the goods, petitioner-buyer IMC and LSPI assumed the risk of loss when they secured fire insurance policies over the goods.Concerning the third ground, petitioner submits that there is no subrogation in favor of respondent as no valid insurance could be maintained thereon by IMC and LSPI since all risk had transferred to petitioner upon delivery of the goods; that petitioner was not privy to the insurance contract or the payment between respondent and its insured nor was its consent or approval ever secured; that this lack of privity forecloses any real interest on the part of respondent in the obligation to pay, limiting its interest to keeping the insured goods safe from fire.For its part, respondent counters that while ownership over the ready- made clothing materials was transferred upon delivery to petitioner, IMC and LSPI have insurable interest over said goods as creditors who stand to suffer direct pecuniary loss from its destruction by fire; that petitioner is liable for loss of the ready-made clothing materials since it failed to overcome the presumption of liability under Article 126516of the Civil Code; that the fire was caused through petitioner's negligence in failing to provide stringent measures of caution, care and maintenance on its property because electric wires do not usually short circuit unless there are defects in their installation or when there is lack of proper maintenance and supervision of the property; that petitioner is guilty of gross and evident bad faith in refusing to pay respondent's valid claim and should be liable to respondent for contracted lawyer's fees, litigation expenses and cost of suit.17As a general rule, in petitions for review, the jurisdiction of this Court in cases brought before it from the CA is limited to reviewing questions of law which involves no examination of the probative value of the evidence presented by the litigants or any of them.18The Supreme Court is not a trier of facts; it is not its function to analyze or weigh evidence all over again.19Accordingly, findings of fact of the appellate court are generally conclusive on the Supreme Court.20Nevertheless, jurisprudence has recognized several exceptions in which factual issues may be resolved by this Court, such as: (1) when the findings are grounded entirely on speculation, surmises or conjectures; (2) when the inference made is manifestly mistaken, absurd or impossible; (3) when there is grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the findings of facts are conflicting; (6) when in making its findings the CA went beyond the issues of the case, or its findings are contrary to the admissions of both the appellant and the appellee; (7) when the findings are contrary to the trial court; (8) when the findings are conclusions without citation of specific evidence on which they are based; (9) when the facts set forth in the petition as well as in the petitioner's main and reply briefs are not disputed by the respondent; (10) when the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on record; and (11) when the CA manifestly overlooked certain relevant facts not disputed by the parties, which, if properly considered, would justify a different conclusion.21Exceptions (4), (5), (7), and (11) apply to the present petition.At issue is the proper interpretation of the questioned insurance policy. Petitioner claims that the CA erred in construing a fire insurance policy on book debts as one covering the unpaid accounts of IMC and LSPI since such insurance applies to loss of the ready-made clothing materials sold and delivered to petitioner.The Court disagrees with petitioner's stand.It is well-settled that when the words of a contract are plain and readily understood, there is no room for construction.22In this case, the questioned insurance policies provide coverage for "book debts in connection with ready-made clothing materials which have been sold or delivered to various customers and dealers of the Insured anywhere in the Philippines."23; and defined book debts as the "unpaid account still appearing in the Book of Account of the Insured 45 days after the time of the loss covered under this Policy."24Nowhere is it provided in the questioned insurance policies that the subject of the insurance is the goods sold and delivered to the customers and dealers of the insured.Indeed, when the terms of the agreement are clear and explicit that they do not justify an attempt to read into it any alleged intention of the parties, the terms are to be understood literally just as they appear on the face of the contract.25Thus, what were insured against were the accounts of IMC and LSPI with petitioner which remained unpaid 45 days after the loss through fire, and not the loss or destruction of the goods delivered.Petitioner argues that IMC bears the risk of loss because it expressly reserved ownership of the goods by stipulating in the sales invoices that "[i]t is further agreed that merely for purpose of securing the payment of the purchase price the above described merchandise remains the property of the vendor until the purchase price thereof is fully paid."26The Court is not persuaded.The present case clearly falls under paragraph (1), Article 1504 of the Civil Code:ART. 1504. Unless otherwise agreed, the goods remain at the seller's risk until the ownership therein is transferred to the buyer, but when the ownership therein is transferred to the buyer the goods are at the buyer's risk whether actual delivery has been made or not,except that:(1) Where delivery of the goods has been made to the buyer or to a bailee for the buyer, in pursuance of the contract and the ownership in the goods has been retained by the seller merely to secure performance by the buyer of his obligations under the contract, the goods are at the buyer's risk from the time of such delivery; (Emphasis supplied)x x x xThus, when the seller retains ownership only to insure that the buyer will pay its debt, the risk of loss is borne by the buyer.27Accordingly, petitioner bears the risk of loss of the goods delivered.IMC and LSPI did not lose complete interest over the goods. They have an insurable interest until full payment of the value of the delivered goods. Unlike the civil law concept of res perit domino, where ownership is the basis fo