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VOL. 164, AUGUST 29, 1988 731 F.F. Cruz and Co., Inc. vs.

Court of Appeals
F.F. Cruz and Co., Inc. vs. Court of Appeals found thereon. It must also be noted that negligence or
No. L-52732. August 29, 1988. *
want of care on the part of petitioner or its employees was not
F.F. CRUZ and CO., INC., petitioner, vs. THE COURT merely presumed. The Court of Appeals found that petitioner
OF APPEALS, GREGORIO MABLE as substituted by failed to construct a firewall between its shop and the
his wife LUZ ALMONTE MABLE and children residence of private respondents as required by a city
DOMING, LEONIDAS, LIGAYA, ELENA, GREGORIO, ordinance; that the fire could have been caused by a heated
JR., SALOME, ANTONIO, and BERNARDO all motor or a lit cigarette; that gasoline and alcohol were used
surnamed MABLE, respondents. and stored in the shop; and that workers sometimes smoked
Civil Law; Damages; Negligence; Concept of the common inside the shop [CA Decision, p. 5; Rollo, p. 33.]
law doctrine of res ipsa loquitur.—The doctrine of res ipsa Same; Same; Same; Same; Even without applying the
loquitur,whose application to the instant case petitioner doctrine of res ipsa loquitur, petitioner’s failure to construct a
objects to, may be stated as follows: Where the thing which firewall between its shop and the residence of private
caused the injury complained of is shown to be under the respondents, in accordance with city ordinances, supports a
management of the defendant or his servants and the accident findings of negligence.—Even without applying the doctrine
is such as in the ordinary course of things does not happen if of res ipsa loquitur,petitioner’s failure to construct a firewall in
those who have its management or control use proper care, it accordance with city ordinances would suffice to Support a
affords reasonable evidence, in the absence of explanation by finding of negligence.
the defendant, that the accident arose from want of care. Same; Same; Same; Same; Same; Failure to comply with an
[Africa v. Caltex (Phil.), Inc., G.R. No. L-12986, March 31, ordinance providing for safety regulations is an act of
1966, 16 SCRA 448.] negligence.—In the instant case, with more reason should
Same; Same; Same; Doctrine of res ipsa loquitur, applicable petitioner be found guilty of negligence since it had failed to
in the case considering the presence of combustible materials in construct a firewall between its property and private
the furniture shop, and the failure of petitioner to build a respondents’ residence which sufficiently complies with the
firewall.—The facts of the case likewise call for the application pertinent city ordinances. The failure to comply with an
of the doctrine, considering that in the normal course of ordinance providing for safety regulations had been ruled by
operations of a furniture manufacturing shop, combustible the Court as an act of negligence [Teague v. Fernandez, G.R.
material such as wood chips, sawdust, paint, varnish and fuel No. L-29745, June 4, 1973, 51 SCRA 181.] The Court of
and lubricants for machinery may be Appeals, therefore, had more than adequate basis to find
_______________ petitioner liable for the loss sustained by private respondents.
* THIRD DIVISION. Same; Same; Same; Finding of fact by the Court of Appeals
732 as to the amount of the loss sustained by the respondents
732 SUPREME COURT REPORTS ANNOTATED
should not be disturbed.—Since the amount of the loss for the damage caused to their house and its contents has not
sustained by private respondents constitutes a finding of fact, escaped the attention of the Court. Hence, the Court holds that
such finding by the Court of Appeals should not be disturbed in accordance with Article 2207 of the Civil Code the amount of
by this Court [M.D. Transit & Taxi Co., Inc. v. Court of P35,000.00 should be deducted from the amount awarded as
Appeals, G.R. No. L-23882, February 17, 1968, 22 SCRA 559], damages. x x x The law is clear and needs no interpretation.
more so when there is no showing of arbitrariness. Having been indemnified by their insurer, private respondents
Same; Same; Same; Same; Finding of fact by the Court of are only entitled to recover the deficiency from petitioner.
Appeals as to the amount of loss by private respondents and Same; Same; Same; Subrogation; Right of insurer to be
damages, not arbitrary nor excessive; Appreciation in value of subrogated to the rights of the insured and to seek
real estate and diminution of the real value of the peso, reimbursement from the third party for the amount it paid to
considered.—In the instant case, both the CFI and the Court of the insured, is recognized; Real party in interest as to the
Appeals were in agreement as to the value of private indemnity received by the insured is the insurer.—On the other
respondents’ furniture and fixtures and personal effects lost in hand, the insurer, if it is so minded, may seek reimbursement
the fire (i.e. P50,000.00). With regard to the house, the of the amount it indemnified private respondents from
733 petitioner. This is the essence of its right to be subrogated to
VOL. 164, AUGUST 29, 1988 733 the rights of the insured, as expressly provided in Article 2207.
F.F. Cruz and Co., Inc. vs. Court of Appeals
Upon payment of the loss incurred by the insured, the insurer
Court of Appeals reduced the award to P70,000.00 from
is entitled to be subrogated pro tanto to any right of action
P80,000.00. Such cannot be categorized as arbitrary
which the insured may have against the third person whose
considering that the evidence shows that the house was built
negligence or wrongful act caused the loss LFireman’s Fund
in 1951 for P40,000.00 and, according to private respondents,
Insurance Co. v. Jamila & Co., Inc., G.R. No. L-27427, April 7,
its reconstruction would cost P246,000.00. Considering the
1976, 70 SCRA 323.] Under Article 2207, the real party in
appreciation in value of real estate and the diminution of the
interest with regard to the indemnity received by the insured
real value of the peso, the valuation of the house at P70,000.00
is the insurer [Phil. Air Lines, Inc. v. Heald Lumber Co., 101
at the time it was razed cannot be said to be excessive.
Phil. 1031, (1957).] Whether or not the insurer should exercise
Same; Same; Same; Insurance; Having been indemnified by
the rights of the insured to which it had been subrogated lies
their insurer for the damage caused to their house and its
solely within the former’s sound discretion. Since the insurer is
contents, private respondents are only entitled to recover the
not a party to the case, its identity is not of record and no claim
deficiency from the petitioner.—While this Court finds that
is made on its behalf, the private respondent’s insurer has to
petitioner is liable for damages to private respondents as found
claim his right to reimbursement of the P35,000.00 paid to the
by the Court of Appeals, the fact that private respondents have
insured.
been indemnified by their insurer in the amount of P35,000.00
734
734 SUPREME COURT REPORTS ANNOTATED On January 23, 1975, private respondents filed an
F.F. Cruz and Co., Inc. vs. Court of Appeals
action for damages against petitioner, praying for a
PETITION to review the decision of the Court of
judgment in their favor awarding P150,000.00 as actual
Appeals.
damages, P50,000.00 as moral damages, P25,000.00 as
The facts are stated in the opinion of the court.
exemplary damages, P20,000.00 as attorney’s fees and
Luis S. Topacio for petitioner.
costs. The Court of First Instance held for private
Mauricio M. Monta for respondents.
respondents:
CORTÉS, J.:
WHEREFORE, the Court hereby renders judgment, in favor of
This petition to review the decision of the Court of
plaintiffs, and against the defendant:
Appeals puts in issue the application of the common law
1. 1.Ordering the defendant to pay to the plaintiffs the
doctrine ofres ipsa loquitur.
amount of P80,000.00 for damages suffered by said
The essential facts of the case are not disputed.
plaintiffs for the loss of their house, with interest of 6%
The furniture manufacturing shop of petitioner in
from the date of the filing of the Complaint on January
Caloocan City was situated adjacent to the residence of
23, 1975, until fully paid;
private respondents. Sometime in August 1971, private
735
respondent Gregorio Mable first approached Eric Cruz, VOL. 164, AUGUST 29, 1988 735
petitioner’s plant manager, to request that a firewall be F.F. Cruz and Co., Inc. vs. Court of Appeals
constructed between the shop and private respondents’ 1. 2.Ordering the defendant to pay to the plaintiffs the sum
residence. The request was repeated several times but of P50,000.00 for the loss of plaintiffs’ furnitures,
they fell on deaf ears. In the early morning of September religious images, silverwares, chinawares, jewelries,
6, 1974, fire broke out in petitioner’s shop. Petitioner’s books, kitchen utensils, clothing and other valuables,
employees, who slept in the shop premises, tried to put with interest of 6% from date of the filing of the
out the fire, but their efforts proved futile. The fire Complaint on January 23, 1975, until fully paid;
spread to private respondents’ house. Both the shop and 2. 3.Ordering the defendant to pay to the plaintiffs the sum
the house were razed to the ground. The cause of the of P5,000.00 as moral damages, P2,000.00 as exemplary
conflagration was never discovered. The National damages, and P5,000.00 as and by way of attorney’s fees;
Bureau of Investigation found specimens from the 3. 4.With costs against the defendant;
burned structures negative for the presence of 4. 5.Counterclaim is ordered dismissed, for lack of merit.
inflammable substances. [CA Decision, pp. 1-2; Rollo, pp. 29-30.]
Subsequently, private respondents collected On appeal, the Court of Appeals, in a decision
P35,000.00 on the insurance on their house and the promulgated on November 19, 1979, affirmed the
contents thereof.
decision of the trial court but reduced the award of being merely consequential. In view thereof, the errors
damages: assigned by petitioner shall be discussed in the reverse
WHEREFORE, the decision declaring the defendants liable is order.
affirmed. The damages to be awarded to plaintiff should be 1. 1.The doctrine of res ipsa loquitur, whose
reduced to P70,000.00 for the house and P50,000.00 for the application to the instant case petitioner objects to,
furniture and other fixtures with legal interest from the date of may be stated as follows:
the filing of the complaint until full payment thereof. [CA Where the thing which caused the injury complained of is
Decision, p. 7; Rollo, p. 35.] shown to be under the management of the defendant or his
A motion for reconsideration was filed on December 3, servants and the accident is such as in the ordinary course of
1979 but was denied in a resolution dated February 18, things does not happen if those who have its management or
1980. Hence, petitioner filed the instant petition for control use proper care, it affords reasonable evidence, in the
review on February 22, 1980. absence of explanation by the defendant, that the accident
After the comment and reply were filed, the Court arose from want of care. [Africa v. Caltex (Phil.), Inc., G.R. No.
resolved to deny the petition for lack of merit on June 11, L-12986, March 31, 1966,16 SCRA 448.]
1980. However, petitioner filed a motion for Thus, in Africa, supra, where fire broke out in a Caltex
reconsideration, which was granted, and the petition was service station while gasoline from a tank truck was
given due course on September 12, 1980. After the being unloaded into an underground storage tank
parties filed their memoranda, the case was submitted through a hose and the fire spread to and burned
for decision on January 21, 1981. neighboring houses, this Court, applying the doctrine
Petitioner contends that the Court of Appeals erred: of res ipsa loquitur, adjudged Caltex liable for the loss.
1. 1.In not deducting the sum of P35,000.00, which The facts of the case likewise call for the application of
private respondents recovered on the insurance on the doctrine, considering that in the normal course of
their house, from the award of damages. operations of a furniture manufacturing shop,
2. 2.In awarding excessive and/or unproved damages. combustible material such as wood chips, sawdust, paint,
3. 3.In applying the doctrine of res ipsa loquitur to the varnish and fuel and lubricants for machinery may be
facts of the instant case. found thereon.
The pivotal issue in this case is the applicability of the It must also be noted that negligence or want of care
common law doctrine of res ipsa loquitur, the issue of on the part of petitioner or its employees was not merely
damages presumed. The Court of Appeals found that petitioner
736 failed to construct a firewall between its shop and the
736 SUPREME COURT REPORTS ANNOTATED residence of private respondents as required by a city
F.F. Cruz and Co., Inc. vs. Court of Appeals
ordinance; that the fire could have been caused by a
heated motor or a lit cigarette; that gasoline and alcohol The Court of Appeals, therefore, had more than
were used and stored in the shop; and that workers adequate basis to find petitioner liable for the loss
sometimes smoked inside the shop [CA Decision, p. 5; sustained by private respondents.
Rollo, p. 33.] 1. 2.Since the amount of the loss sustained by private
Even without applying the doctrine of res ipsa respondents constitutes a finding of fact, such
loquitur,petitioner’s failure to construct a firewall in finding by the Court of Appeals should not be
accordance with city ordinances would suffice to support disturbed by this Court [M.D. Transit & Taxi Co.,
a finding of negligence. Inc. v. Court of Appeals, G.R. No. L-23882,
Even then the fire possibly would not have spread to the February 17, 1968, 22 SCRA 559], more so when
neighboring houses were it not for another negligent omission there is no showing of arbitrariness.
on the part of defendants, namely, their failure to provide a In the instant case, both the CFI and the Court of
concrete wall high enough to prevent the flames from leaping Appeals were in agreement as to the value of private
over it. As it was the respondents’ furniture and fixtures and personal effects
737 lost in the fire (i.e. P50,000.00). With regard to the
VOL. 164, AUGUST 29, 1988 737 house, the Court of Appeals reduced the award to
F.F. Cruz and Co., Inc. vs. Court of Appeals
P70,000.00 from P80,000.00. Such cannot be categorized
concrete wall was only 2-1/2 meters high, and beyond that
as arbitrary considering that the evidence shows that the
height it consisted merely of galvanized iron sheets, which
house was built in 1951 for P40,000.00 and, according to
would predictably crumble and melt when subjected to intense
private respondents, its reconstruction would cost
heat.Defendant’s negligence, therefore, was not only with
P246,000.00. Considering the appreciation in value of
respect to the cause of the fire but also with respect to the spread
real estate and the diminution of the real value of the
thereof to the neighboring houses. [Africa v. Caltex (Phil.),
peso, the valuation of the house at P70,000.00 at the
Inc., supra; Italics supplied.]
time it was razed cannot be said to be excessive.
In the instant case, with more reason should petitioner
1. 3.While this Court finds that petitioner is liable for
be found guilty of negligence since it had failed to
damages to private respondents as found by the
construct a firewall between its property and private
Court of Appeals, the fact that private respondents
respondents’ residence which sufficiently complies with
have been indemnified by their insurer in the
the pertinent city ordinances. The failure to comply with
amount of P35,000.00 for the damage caused to
an ordinance providing for safety regulations had been
their house and its contents has not escaped the
ruled by the Court as an act of negligence [Teague v.
738
Fernandez, G.R. No. L-29745, June 4, 1973, 51 SCRA 738 SUPREME COURT REPORTS ANNOTATED
181.] F.F. Cruz and Co., Inc. vs. Court of Appeals
1. attention of the Court. Hence, the Court holds that Phil. 1031, (1957).] Whether or not the insurer should
in accordance with Article 2207 of the Civil Code exercise the rights of the insured to which it had been
the amount of P35,000.00 should be deducted from subrogated lies solely within the former’s sound
the amount awarded as damages. Said article discretion. Since the insurer is not a party to the case, its
provides: identity is not of record and no claim is made on its
Art. 2207. If the plaintiff’s property has been insured, and he behalf, the private respondent’s insurer has to claim his
has received indemnity from the insurance company for the right to reimbursement of the P35,000.00 paid to the
injury or loss arising out of the wrong or breach of contract insured.
complained of, the insurance company is subrogated to the WHEREFORE, in view of the foregoing, the decision of
rights of the insured against the wrongdoer or the person who the Court of Appeals is hereby AFFIRMED with the
violated the contract. If the amount paid by the insurance following modifications as to the damages awarded for
company does not fully cover the injury or loss, the aggrieved the loss of private respondents’ house, considering their
party shall be entitled to recover the deficiency from the person receipt of P35,000.00 from their insurer: (1) the damages
causing the loss or injury. (Italics supplied.] awarded for the loss of the
The law is clear and needs no interpretation. Having 739
been indemnified by their insurer, private respondents VOL. 164, AUGUST 29, 1988 739
Jacinto vs. Intermediate Appellate Court
are only entitled to recover the deficiency from
house is reduced to P35,000.00; and (2) the right of the
petitioner.
insurer to subrogation and thus seek reimbursement
On the other hand, the insurer, if it is so minded, may
from petitioner for the P35,000.00 it had paid private
seek reimbursement of the amount it indemnified
respondents is recognized.
private respondents from petitioner. This is the essence
SO ORDERED.
of its right to be subrogated to the rights of the insured,
Fernan (C.J.), Gutierrez, Jr., Feliciano and Bidin,
as expressly provided in Article 2207. Upon payment of
JJ., concur.
the loss incurred by the insured, the insurer is entitled to
Decision affirmed with modifications.
be subrogated pro tanto to any right of action which the
Note.—Factual conclusion of the appellate court is
insured may have against the third person whose
binding and conclusive in the Supreme Court. Only legal
negligence or wrongful act caused the loss [Fireman’s
question may be raised in the Supreme Court. (Hidalgo
Fund Insurance Co. v. Jamila & Co., Inc., G.R. No. L-
vs. Court of Appeals, 130 SCRA 652.)
27427, April 7, 1976, 70 SCRA 323.]
——o0o——
Under Article 2207, the real party in interest with
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regard to the indemnity received by the insured is the !
insurer [Phil. Air Lines, Inc. v. Heald Lumber Co., 101