THE SPOUSES BERNABE AFRICA AND SOLEDAD C. AFRICA, AND THE HEIRS OF DOMINGA ONG, PETITIONERS AND APPELLANTS, VS. CALTEX (PHIL.) INC., MATEO BOQUIREN AND THE COURT OF APPEALS, RES…

This case is before us on a petition for review of the decision of
the Court of Appeals, which affirmed that of the Court of First
Instance of Manila dismissing petitioners’ second amended complaint
against respondents.

The action is for damages under Articles 1902 and 1903 of the old
Civil Code. It appears that in the afternoon of March 18, 1948 a fire
broke out at the Caltex service station at the corner of Antipolo
street and Rizal Avenue, Manila. It started while gasoline was being
hosed from a tank truck into the underground storage, right at the
opening of the receiving tank where the nozzle of the hose was
inserted. The fire spread to and burned several neighboring houses,
including the personal properties and effects inside them. Their
owners, among them petitioners here, sued respondents Caltex (Phil.),
Inc. and Mateo Boquiren, the first as alleged owner of the station and
the second as its agent in charge of operation. Negligence on the part
of both of them was attributed as the cause of the fire.

The trial court and the Court of Appeals found that petitioners
failed to prove negligence and that respondents had exercised due care
in the premises and with respect to the supervision of their employees.

The first question before Us refers to the admissibility of certain
reports on the fire prepared by the Manila Police and Fire Departments
and by a certain Captain Tinio of the Armed Forces of the Philippines.
Portions of the first two reports are as follows:

1. Police Department report: 
   

   “Investigation disclosed that at about 4: 00 P. M. March 18, 1948, while
   Leandro Flores was transfering gasoline from a tank truck, plate No.
   T-5292 into the underground tank of the Caltex Gasoline Station located
   at the corner of Rizal Avenue and Antipolo Street, this City, an
   unknown Filipino lighted a cigarette and threw the burning match stick
   near the main valve of the said underground tank. Due to the gasoline
   fumes, fire suddenly blazed. Quick action of Leandro Flores in pulling
   off the gasoline hose connecting the truck with the underground tank
   prevented a terrific explosion. However, the flames scattered due to
   the hose from which the gasoline was spouting. It burned the truck and
   the following accessories and residences.”

2. The Fire Department report:
   

   “In
   connection with their allegation that the premises was (sic) subleased
   for the installation of a coca-cola and cigarette stand, the
   complainants furnished this Office a copy of a photograph taken during
   the fire and which is submitted herewith. It appears in this picture
   that there are in the premises a coca-cola cooler and a rack which
   according to information gathered in the neighborhood contained
   cigarettes and matches, installed between the gasoline pumps and the
   underground tanks. ”

The report of Captain Tinio reproduced information given by a
certain Benito Morales regarding the history of the gasoline station
and what the chief of the fire department had told him on the same
subject.

The foregoing reports were ruled out as “double hearsay” by the
Court of Appeals and hence inadmissible. This ruling is now assigned as
error. It is contended: first, that said reports were admitted by the
trial court without objection on the part of respondents; secondly,
that with respect to the police report (Exhibit V-Africa) which appears
signed by a Detective Zapanta allegedly “for Salvador Capacillo, ” the
latter was presented as witness but respondents waived their right to
cross-examine him although they had the opportunity to do so; and
thirdly, that in any event the said reports are admissible as an
exception to the hearsay rule under section 35 of Rule 123, now Rule
130.

The first contention is not borne out by the record. The transcript
of the hearing of September 17, 1953 (pp. 167-170) shows that the
reports in question, when offered as evidence, were objected to by
counsel for each of respondents on the ground that they were hearsay
and that they were “irrelevant, immaterial and impertinent. ” Indeed,
in the court’s resolution only Exhibits J, K, K-5 and X-6 were admitted
without objection; the admission of the others, including the disputed
ones, carried no such explanation.

On the second point, although Detective Capacillo did take the
witness stand, he was not examined and he did not testify as to the
facts mentioned in his alleged report (signed by Detective Zapanta. )
All he said was that he was one of those who investigated “the location
of the fire and, if possible, gather witnesses as to the occurrence, ”
and that he brought the report with him. There was nothing, therefore,
on which he need be cross-examined; and the contents of the report, as
to which he did not testify, did not thereby become competent evidence.
And even if he had testified, his testimony would still have been
objectionable as far as information gathered by him from third persons
was concerned.

Petitioners maintain, however, that the reports in themselves, that
is, without further testimonial evidence on their contents, fall within
the scope of section 35, Rule 123, which provides that “entries in
official records made in the performance of his duty by a public
officer of the Philippines, or by a person in the performance of a duty
specially enjoined by law, are prima facie evidence of the facts
therein stated. ”

There are three requisites for admissibility under the rule just
mentioned: (a) that the entry was made by a public officer, or by
another person specially enjoined by law to do so; (b) that it was made
by the public officer in the performance of his duties, or by such
other person in the performance of a duty specially enjoined by law;
and (c) that the public officer or other person had sufficient
knowledge of the facts by him stated, which must have been acquired by
him personally or through official information. (Moran, Comments on the
Rules of Court, Vol. 3 (1957) p. 398.

Of the three requisites just stated, only the last need be
considered here. Obviously the material facts recited in the reports as
to the cause and circumstances of the fire were not within the personal
knowledge of the officers who conducted the investigation. Was
knowledge of such facts, however, acquired by them through official
information? As to some facts the sources thereof are not even
identified. Others are attributed to Leopoldo Medina, referred to as an
employee at the gas station where the fire occurred; to Leandro Flores,
driver of the tank truck from which gasoline was being transferred at
the time to the underground tank of the station; and to respondent
Mateo Baquiren, who could not, according to Exhibit V-Africa, give any
reason as to the origin of the fire. To qualify their statements as
“official information” acquired by the officers who prepared the
reports, the persons who made the statements not only must have
personal knowledge of the facts stated but must have the duty to give
such statements for record.^[1]

The reports in question do not constitute an exception to the
hearsay rule: the facts stated therein were not acquired by the
reporting officers through official information, not having been given
by the informants pursuant to any duty to do so.

The next question is whether or not, without proof as to the cause
and origin of the fire, the doctrine of res ipsa loquitur should apply
so as to presume negligence on the part of appellees. Both the trial
court and the appellate court refused to apply the doctrine in the
instant case on the grounds that “as to(its) applicability … in the
Philippines, there seems to be nothing definite, ” and that while the
rules do not prohibit its adoption in appropriate cases, “in the case
at bar, however, we find no practical use for such doctrine. ” The
question deserves more than such summary dismissal. The doctrine has
actually been applied in this jurisdiction, in the case of Espiritu vs.
Philippine Power and Development Co. ( C. A. G. R. No. L-3240-R,
September 20, 1949), wherein the decision of the Court of Appeals was
penned by Mr. Justice J. B. L. Reyes now a member of the Supreme Court.

The facts of that case are stated in the decision as follows:

“In the afternoon of May 5, 1946, while the
plaintiff-appellee and other companions were loading grass between the
municipalities of Bay and Calauan, in the province of Laguna, with
clear weather and without any wind blowing, an electric transmission
wire, installed and maintained by the defendant Philippine Power and
Development Co., Inc. alongside the road, suddenly parted, and one of
the broken ends hit the head of the plaintiff as he was about to board
the truck. As a result, plaintiff received the full shock of 4, 400
volts carried by the wire and was knocked unconscious to the ground.
The electric charge coursed through his body and caused extensive and
serious multiple burns from skull to legs, leaving the bone exposed in
some parts and causing intense pain and wounds that were not completely
healed when the case was tried on June 18, 1947, over one year after
the mishap. “

The defendant therein disclaimed liability
on the ground that the plaintiff had failed to show any specific act of
negligence, but the appellate court overruled the defense under the
doctrine of res ipsa loquitur. The court said:

“The first point is directed against the
sufficiency of plaintiff’s evidence to place appellant on its defense.
While it is the rule, as contended by the appellant, that in case of
noncontractual negligence, or culpa aquiliana, the burden of proof is
on the plaintiff to establish that the proximate cause of his injury
was the negligence of the defendant, it is also a recognized principle
that ‘Where the thing which caused injury, without fault of the injured
person, is under the exclusive control of the defendant and the injury
is such as in the ordinary course of things does not occur if he having
such control use proper care, it affords reasonable evidence, in the
absence of the explanation, that the injury arose from defendant’s want
of care.”

“And the burden of evidence is shifted to him to
establish that he has observed due care and diligence. (San Juan Light
& Transit Co. vs. Requena, 224 U. S. 89, 56 L. ed. 680). This rule
is known by the name of res ipsa loquitur (the transaction speaks for
itself), and is peculiarly applicable to the case at bar, where it is
unquestioned that the plaintiff had every right to be on the highway,
and the electric wire was under the sole control of defendant company.
In the ordinary course of events, electric wires do not part suddenly
in fair weather and injure people, unless they are subjected to unusual
strain and stress or there are defects in their installation,
maintenance and supervision; just as barrels do not ordinarily roll out
of the warehouse windows to injure passersby, unless some one was
negligent. (Byrne vs. Boadle, 2 H & Co. 722; 159 Eng. Reprint 299,
the leading case that established that rule). Consequently, in the
absence of contributory negligence (which is admittedly not present),
the fact that the wire snapped suffices to raise a reasonable
presumption of negligence in its installation, care and maintenance.
Thereafter, as observed by Chief Baron Pollock, if there are any facts
inconsistent with negligence, it is for the defendant to prove.”

It is true of course that decisions of the Court of Appeals do not
lay down doctrines binding on the Supreme Court, but we do not consider
this a reason for not applying the particular doctrine of res ipsa
loquitur in the case at bar. Gasoline is a highly combustible material,
in the storage and sale of which extreme care must be taken. On the
other hand, fire is not considered a fortuitous event, as it arises
almost invariably from some act of man. A case strikingly similar to
the one before Us is Jones vs. Shell Petroleum Corporation, et al., 171
So. 447:

“Arthur O. Jones is the owner of a building in the city of
Hammon which in the year 1934 was leased to the Shell Petroleum
Corporation for a gasoline filling station. On October 8, 1934, during
the term of the lease, while gasoline was being transferred from the
tank wagon, also operated by the Shell Petroleum Corporation, to the
underground tank of the station, a fire started with resulting damages
to the building owned by Jones. Alleging that the damages to his
building amounted to $516.95, Jones sued the Shell Petroleum
Corporation for the recovery of that amount. The judge of the district
court, after hearing the testimony, concluded that plaintiff was
entitled to a recovery and rendered judgment in his favor for $427.82.
The Court of Appeals for the First Circuit reversed this judgment, on
the ground the testimony failed to show with reasonable certainty any
negligence on the part of the Shall Petroleum Corporation or any of its
agents or employees. Plaintiff applied to this Court for a Writ of
Review which was granted, and the case is now before us for decision. ”

In resolving the issue of negligence, the Supreme Court of Louisiana held:

“Plaintiff’s petition contains two distinct charges
of negligence – one relating to the cause of the fire and the other
relating to the spreading of the gasoline about the filling station.

Other than an expert to assess the damages caused
plaintiff’s building by the fire, no witnesses were placed on the stand
by the defendant.

Taking up plaintiff’s charge of negligence relating to the cause
of the fire, we find it established by the record that the filling
station and the tank truck were under the control of the defendant and
operated by its agents or employees. We further find from the
uncontradicted testimony of plaintiff’s witnesses that fire started in
the underground tank attached to the filling station while it was being
filled from the tank truck and while both the tank and the truck were
in charge of and being operated by the agents or employees of the
defendant, extended to the hose and tank truck, and was communicated
from the burning hose, tank truck, and escaping gasoline to the
building owned by the plaintiff.

Predicated on these circumstances and the further circumstance of
defendant’s failure to explain the cause of the fire or to show its
lack of knowledge of the cause, plaintiff has evoked the doctrine of
res ipsa loquitur. There are many cases in which the doctrine may be
successfully invoked and this, we think, is one of them.

Where the thing which caused the injury complained of is shown to be
under the management of defendant or his servants and the accident is
such as in the ordinary course of things does not happen if those who
have its management or control use proper care, it affords reasonable
evidence, in absence of explanation by defendant, that the accident
arose from want of care, 45 C. J. 768, p. 1193.

This statement of the rule of res ipsa loquitur has been widely
approved and adopted by the courts of last resort. Some of the cases in
this jurisdiction in which the doctrine has been applied are the
following, viz.: Maus vs. Broderick, 51 La. Ann. 1153, 25 So. 977;
Hebert vs. Lake Charles Ice etc., Co., 111 La. 522, 35 So. 731, 64 L. R.
A. 101, 100 Am. St. Rep. 505; Willis vs. Vicksburg, etc., R. Co., 115
La. 53, 38 So. 892; Bentz vs. Page, 115 La. 560, 39 So. 599.”

The principle enunciated in the aforequoted case applies
with equal force here. The gasoline station, with all its appliances,
equipment and employees, was under the control of appellees. A fire
occurred therein and spread to and burned the neighboring houses. The
persons who knew or could have known how the fire started were
appellees and their employees, but they gave no explanation thereof
whatsoever. It is a fair and reasonable inference that the incident
happened because of want of care.

In the report submitted by Captain Leoncio Mariano of the Manila Police Department (Exh. X-1 Africa) the following appears:

“Investigation of the basic complaint disclosed that the
Caltex Gasoline Station complained of occupies a lot approximately 10 m
x 10 m at the southwest corner of Rizal Avenue and Antipolo. The
location is within a very busy business district near the Obrero
Market, a railroad crossing and very thickly populated neighborhood
where a great number of people mill around throughout the day until
late at night. These circumstances put the gasoline station in a
situation primarily prejudicial to its operation because the passersby,
those waiting for buses or transportation, those waiting to cross the
streets and others loafing around have to occupy not only the sidewalks
but also portion of the gasoline station itself. Whatever be the
activities of these people smoking or lighting a cigarette cannot be
excluded and this constitute a secondary hazard to its operation which
in turn endangers the entire neighborhood to conflagration.

Furthermore, aside from precautions already taken by its operator
the concrete walls south and west adjoining the neighborhood are only 2
1/2 meters high at most and cannot avoid the flames from leaping over
it in case of fire.

Records show that there have been two cases of fire which caused not
only material damages but desperation and also panic in the
neighborhood.

Although the soft drinks stand had been eliminated, this gasoline
service station is also used by its operator as a garage and repair
shop for his fleet of taxicabs numbering ten or more, adding another
risk to the possible outbreak of fire at this already small but crowded
gasoline station.”

The foregoing report, having been submitted by a police
officer in the performance of his duties on the basis of his own
personal observation of the facts reported, may properly be considered
as an exception to the hearsay rule. Those facts, descriptive of the
location and objective circumstances surrounding the operation of the
gasoline station in question, strengthen the presumption of negligence
under the doctrine of res ipsa loquitur, since on their face they
called for more stringent measures of caution than those which would
satisfy the standard of due diligence under ordinary circumstances.
There is no more eloquent demonstration of this than the statement of
Leandro Flores before the police investigator. Flores was the driver of
the gasoline tank wagon who, alone and without assistance, was
transferring the contents thereof into the underground storage when the
fire broke out. He said: “Before loading the underground tank there
were no people, but while the loading was going on, there were people
who went to drink coca-cola (at the coca-cola stand) which is about a
meter from the hole leading to the underground tank. ” He added that
when the tank was almost filled he went to the tank truck to close the
valve, and while he had his back turned to the “manhole” he heard
someone shout “fire.”

Even then the fire possibly would not have spread to the
neighboring houses were it not for another negligent omission on the
part of defendants, namely, their failure to provide a concrete wall
high enough to prevent the flames from leaping over it. As it was the
concrete wall was only 2 1/2 meters high, and beyond that height it
consisted merely of galvanized iron sheets, which would predictably
crumple and melt when subjected to intense heat. Defendants’
negligence, therefore, was not only with respect to the cause of the
fire but also with respect to the spread thereof to the neighboring
houses.

There is an admission on the part of Boquiren in his amended answer
to the second amended complaint that “the fire was caused through the
acts of a stranger who, without authority, or permission of answering
defendant, passed through the gasoline station and negligently threw a
lighted match in the premises. ” No evidence on this point was adduced,
but assuming the allegation to be true—certainly any unfavorable
inference from the admission may be taken against Boquiren—it does not
extenuate his negligence. A decision of the Supreme Court of Texas,
upon facts analogous to those of the present case, states the rule
which we find acceptable here: “It is the rule that those who
distribute a dangerous article or agent owe a degree of protection to
the public proportionate to and commensurate with a danger involved . .
we think it is the generally accepted rule as applied to torts that ‘if
the effects of the actor’s negligent conduct actively and continuously
operate to bring about harm to another, the fact that the active and
substantially simultaneous operation of the effects of a third person’s
innocent, tortious or criminal act is also a substantial factor in
bringing about the harm, does not protect the actor from liability. ‘
Restatement of the Law of Torts, vol. 2, p. 1184, #439. Stated in
another way, ‘The intervention of an unforeseen and unexpected cause,
is not sufficient to relieve a wrongdoer from consequences of
negligence, if such negligence directly and proximately cooperates with
the independent cause in the resulting injury. ” (MacAfee et al. vs.
Travers Gas Corp., et al., 153 S. W. 2nd 442).

The next issue is whether Caltex should be held liable for the
damages caused to appellants. This issue depends on whether Boquiren
was an independent contractor, as held by the Court of Appeals, or an
agent of Caltex. This question, in the light of the facts not
controverted, is one of law and hence may be passed upon by this Court.
These facts are: (1) Boquiren made an admission that he was an agent of
Caltex; (2) at the time of the fire Caltex owned the gasoline station
and all the equipment therein; (3) Caltex exercised control over
Boquiren in the management of the station; (4) the delivery truck used
in delivering gasoline to the station had the name CALTEX painted on
it; and (5) the license to store gasoline at the station was in the
name of Caltex, which paid the license fees. (Exhibit T-Africa; Exhibit
U-Africa; Exhibit X-5 Africa; Exhibit X-6 Africa; Exhibit Y-Africa).

In Boquiren’s amended answer to the second amended complaint, he
denied that he directed one of his drivers to remove gasoline from the
truck into the tank and alleged that the “alleged driver, if one there
was, was not in his employ, the driver being an employee of the Caltex
(Phil. ) Inc. and/or the owners of the gasoline station. ” It is true
that Boquiren later on amended his answer, and that among the changes
was one to the effect that he was not acting as agent of Caltex. But
then again, in his motion to dismiss appellants’ second amended
complaint the ground alleged was that it stated no cause of action
since under the allegations thereof he was merely acting as agent of
Caltex, such that he could not have incurred personal liability. A
motion to dismiss on this ground is deemed to be an admission of the
facts alleged in the complaint.

Caltex admits that it owned the gasoline station as well as the
equipment therein, but claims that the business conducted at the
service station in question was owned and operated by Boquiren. But
Caltex did not present any contract with Boquiren that would reveal the
nature of their relationship at the time of the fire. There must have
been one in existence at that time. Instead, what was presented was a
license agreement manifestly tailored for purposes of this case, since
it was entered into shortly before the expiration of the one-year
period it was intended to operate. This so-called license agreement
(Exhibit 5-Caltex) was executed on November 29, 1948, but made
effective as of January 1, 1948 so as to cover the date of the fire,
namely, March 18, 1948. This retroactivity provision is quite
significant, and gives rise to the conclusion that it was designed
precisely to free Caltex from any responsibility with respect to the
fire, as shown by the clause that Caltex “shall not be liable for any
injury to person or property while in the property herein licensed, it
being understood and agreed that LICENSEE (Boquiren) is not an
employee, representative or agent of LICENSOR (Caltex). ”

But even if the license agreement were to govern, Boquiren can
hardly be considered an independent contractor. Under that agreement
Boquiren would pay Caltex the purely nominal sum of P1.00 for the use
of the premises and all the equipment therein. He could sell only
Caltex products. Maintenance of the station and its equipment was
subject to the approval, in other words control, of Caltex. Boquiren
could not assign or transfer his rights as licensee without the consent
of Caltex. The license agreement was supposed to be from January 1,
1948 to December 31, 1948, and thereafter until terminated by Caltex
upon two days prior written notice. Caltex could at any time cancel and
terminate the agreement in case Boquiren ceased to sell Caltex
products, or did not conduct the business with due diligence, in the
judgment of Caltex. Termination of the contract was therefore a right
granted only to Caltex but not to Boquiren. These provisions of the
contract show the extent of the control of Caltex over Boquiren. The
control was such that the latter was virtually an employee of the
former.

“Taking into consideration the fact that the
operator owed his position to the company and the latter could remove
him or terminate his services at will; that the service station
belonged to the company and bore its tradename and the operator sold
only the products of the company; that the equipment used by the
operator belonged to the company and were just loaned to the operator
and the company took charge of their repair and maintenance; that an
employee of the company supervised the operator and conducted periodic
inspection of the company’s gasoline and service station; that the
price of the products sold by the operator was fixed by the company and
not by the operator; and that the receipts signed by the operator
indicated that he was a mere agent, the finding of the Court of Appeals
that the operator was an agent of the company and not an independent
contractor should not be disturbed.

To determine the nature of a contract courts
do not have or are not bound to rely upon the name or title given it by
the contracting parties, should there be a controversy as to what they
really had intended to enter into, but the way the contracting parties
do or perform their respective obligations stipulated or agreed upon
may be shown and inquired into, and should such performance conflict
with the name or title given the contract by the parties, the former
must prevail over the latter. ” Shell Company of the Philippines, Ltd.
v. Firemens’ Insurance Company of Newark New Jersey, et al., 100 Phil.
757.

“The written contract was apparently drawn for the
purpose of creating the apparent relationship of employer and
independent contractor, and of avoiding liability for the negligence of
the employees about the station; but the company was not satisfied to
allow such relationship to exist. The evidence shows that it
immediately assumed control, and proceeded to direct the method by
which the work contracted for should be performed. By reserving the
right to terminate the contract at will, it retained the means of
compelling submission to its orders. Having elected to assume control
and to direct the means and methods by which the work has to be
performed, it must be held liable for the negligence of those
performing service under its direction. We think the evidence was
sufficient to sustain the verdict of the jury. ” Gulf Refining Company
v. Rogers 57 S. W. 2d 183.”

Caltex further argues that the gasoline stored in the
station belonged to Boquiren. But no cash invoices were presented to
show that Boquiren had bought said gasoline from Caltex. Neither was
there a sales contract to prove the same.

As found by the trial court the Africas sustained a loss of
P9,005.80, after deducting the amount of P2,000.00 collected by them on
the insurance of the house. The deduction is now challenged as
erroneous on the ground that Article 2207 of the new Civil Code, which
provides for the subrogation of the insurer to the rights of the
insured, was not yet in effect when the loss took place. However,
regardless of the silence of the law on this point at that time, the
amount that should be recovered must be measured by the damages
actually suffered, otherwise the principle prohibiting unjust
enrichment would be violated. With respect to the claim of the heirs of
Ong, P7,500.00 was adjudged by the lower court on the basis of the
assessed value of the property destroyed namely, P1,500.00,
disregarding the testimony of one of the Ong children that said
property was worth P4,000.00. We agree that the court erred, since it
is of common knowledge that the assessment for taxation purposes is not
an accurate gauge of fair market value, and in this case should not
prevail over positive evidence of such value. The heirs of Ong are
therefore entitled to P10,000.00.

Wherefore, the decision appealed from is reversed and
respondents-appellees are held liable solidarily to appellants, and
ordered to pay them the aforesaid sums of P9, 005.80 and P10,000.00,
respectively, with interest from the filing of the complaint, and costs.

Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera, Regala, Bengzon, J.P., and Zaldivar, JJ., concur.

^[1] Thus, for
instance, the record of a justice of the peace of marriage certificates
transmitted to him by the corresponding priest is admissible. The
justice of the peace has no personal knowledge of the marriage, but it
was reported to him by a priest whose duty it was, under the law, to
make the report for record purposes. Similarly, the tax records of a
provincial assessor are admissible even if the assessments were made by
subordinates. So also are entries of marriages made by a municipal
treasurer in his official record, because he acquires knowledge thereof
by virtue of a statutory duty on the part of those authorized to
solemnize marriages to send a copy of each marriage contract solemnized
by them to the local civil registrar. (See Moran, Comments on the Rules
of Court, Vol. 3 (1957) pp. 389-395.)