G.R. No.

L-52732 August 29, 1988 silverwares, chinawares, jewelries, books,

kitchen utensils, clothing and other
valuables, with interest of 6% from date of
F.F. CRUZ and CO., INC., petitioner,
the filing of the Complaint on January 23,
vs.
1975, until fully paid;
THE COURT OF APPEALS, GREGORIO MABLE as
substituted by his wife LUZ ALMONTE MABLE and children
DOMING, LEONIDAS, LIGAYA, ELENA, GREGORIO, JR., 3. Ordering the defendant to pay to the
SALOME, ANTONIO, and BERNARDO all surnamed plaintiffs the sum of P5,000.00 as moral
MABLE, respondents. damages, P2,000.00 as exemplary damages,
and P5,000.00 as and by way of attorney's
fees;
Luis S. Topacio for petitioner.

4. With costs against the defendant;

Mauricio M. Monta for respondents.

5. Counterclaim is ordered dismissed, for

lack of merit. [CA Decision, pp. 1-2; Rollo,
pp. 29-30.]
CORTES, J.:
On appeal, the Court of Appeals, in a decision promulgated on
This petition to review the decision of the Court of Appeals puts in November 19, 1979, affirmed the decision of the trial court but
issue the application of the common law doctrine of res ipsa reduced the award of damages:
loquitur.
WHEREFORE, the decision declaring the
The essential facts of the case are not disputed. defendants liable is affirmed. The damages
to be awarded to plaintiff should be reduced
to P70,000.00 for the house and P50,000.00
The furniture manufacturing shop of petitioner in Caloocan City for the furniture and other fixtures with legal
was situated adjacent to the residence of private respondents. interest from the date of the filing of the
Sometime in August 1971, private respondent Gregorio Mable first complaint until full payment thereof. [CA
approached Eric Cruz, petitioner's plant manager, to request that a Decision, p. 7; Rollo, p. 35.]
firewall be constructed between the shop and private respondents'
residence. The request was repeated several times but they fell on
deaf ears. In the early morning of September 6, 1974, fire broke A motion for reconsideration was filed on December 3, 1979 but
out in petitioner's shop. Petitioner's employees, who slept in the was denied in a resolution dated February 18, 1980. Hence,
shop premises, tried to put out the fire, but their efforts proved petitioner filed the instant petition for review on February 22,
futile. The fire spread to private respondents' house. Both the shop 1980. After the comment and reply were filed, the Court resolved
and the house were razed to the ground. The cause of the to deny the petition for lack of merit on June 11, 1980.
conflagration was never discovered. The National Bureau of
Investigation found specimens from the burned structures negative
However, petitioner filed a motion for reconsideration, which was
for the presence of inflammable substances.
granted, and the petition was given due course on September 12,
1980. After the parties filed their memoranda, the case was
Subsequently, private respondents collected P35,000.00 on the submitted for decision on January 21, 1981.
insurance on their house and the contents thereof.
Petitioner contends that the Court of Appeals erred:
On January 23, 1975, private respondents filed an action for
damages against petitioner, praying for a judgment in their favor
1. In not deducting the sum of P35,000.00, which private
awarding P150,000.00 as actual damages, P50,000.00 as moral
respondents recovered on the insurance on their house, from the
damages, P25,000.00 as exemplary damages, P20,000.00 as
award of damages.
attorney's fees and costs. The Court of First Instance held for
private respondents:
2. In awarding excessive and/or unproved damages.
WHEREFORE, the Court hereby renders
judgment, in favor of plaintiffs, and against 3. In applying the doctrine of res ipsa loquitur to the facts of the
the defendant: instant case.

1. Ordering the defendant to pay to the The pivotal issue in this case is the applicability of the common
plaintiffs the amount of P80,000.00 for law doctrine of res ipsa loquitur, the issue of damages being
damages suffered by said plaintiffs for the merely consequential. In view thereof, the errors assigned by
loss of their house, with interest of 6% from petitioner shall be discussed in the reverse order.
the date of the filing of the Complaint on
January 23, 1975, until fully paid;
1. The doctrine of res ipsa loquitur, whose application to the
instant case petitioner objects to, may be stated as follows:
2. Ordering the defendant to pay to the
plaintiffs the sum of P50,000.00 for the loss
Where the thing which caused the injury
of plaintiffs' furnitures, religious images,
complained of is shown to be under the
 management of the defendant or his servants should not be disturbed by this Court [M.D. Transit & Taxi Co.,
and the accident is such as in the ordinary Inc. v. Court of Appeals, G.R. No. L-23882, February 17, 1968, 22
course of things does not happen if those SCRA 559], more so when there is no showing of arbitrariness.
who have its management or control use
proper care, it affords reasonable evidence,
In the instant case, both the CFI and the Court of Appeals were in
in the absence of explanation by the
agreement as to the value of private respondents' furniture and
defendant, that the accident arose from want
fixtures and personal effects lost in the fire (i.e. P50,000.00). With
of care. [Africa v. Caltex (Phil.), Inc., G.R.
regard to the house, the Court of Appeals reduced the award to
No. L-12986, March 31, 1966, 16 SCRA
P70,000.00 from P80,000.00. Such cannot be categorized as
448.]
arbitrary considering that the evidence shows that the house was
built in 1951 for P40,000.00 and, according to private respondents,
Thus, in Africa, supra, where fire broke out in a Caltex service its reconstruction would cost P246,000.00. Considering the
station while gasoline from a tank truck was being unloaded into appreciation in value of real estate and the diminution of the real
an underground storage tank through a hose and the fire spread to value of the peso, the valuation of the house at P70,000.00 at the
and burned neighboring houses, this Court, applying the doctrine time it was razed cannot be said to be excessive.
of res ipsa loquitur, adjudged Caltex liable for the loss.
3. While this Court finds that petitioner is liable for damages to
The facts of the case likewise call for the application of the private respondents as found by the Court of Appeals, the fact that Fct
doctrine, considering that in the normal course of operations of a private respondents have been indemnified by their insurer in the
furniture manufacturing shop, combustible material such as wood amount of P35,000.00 for the damage caused to their house and its
chips, sawdust, paint, varnish and fuel and lubricants for contents has not escaped the attention of the Court.
machinery may be found thereon.
Hence, the Court holds that in accordance with Article 2207 of the
It must also be noted that negligence or want of care on the part of Civil Code the amount of P35,000.00 should be deducted from the
petitioner or its employees was not merely presumed. The Court of amount awarded as damages. Said article provides:
Appeals found that petitioner failed to construct a firewall between
Fct its shop and the residence of private respondents as required by a
Art. 2207. If the plaintiffs property has been
city ordinance; that the fire could have been caused by a heated
insured, and he has received indemnity from
motor or a lit cigarette; that gasoline and alcohol were used and
the insurance company for the injury or loss
stored in the shop; and that workers sometimes smoked inside the
arising out of the wrong or breach of
shop [CA Decision, p. 5; Rollo, p. 33.]
contract complained of, the insurance
company is subrogated to the rights of the
Even without applying the doctrine of res ipsa loquitur, petitioner's insured against the wrongdoer or the person
failure to construct a firewall in accordance with city ordinances who violated the contract. If the amount
would suffice to support a finding of negligence. paid by the insurance company does not
fully cover the injury or loss, the aggrieved
party shall be entitled to recover the
Even then the fire possibly would not have
deficiency from the person causing the loss
spread to the neighboring houses were it not
or injury. (Emphasis supplied.]
for another negligent omission on the part of
defendants, namely, their failure to provide a
concrete wall high enough to prevent the The law is clear and needs no interpretation. Having been
flames from leaping over it. As it was the indemnified by their insurer, private respondents are only entitled
concrete wall was only 2-1/2 meters high, to recover the deficiency from petitioner.
and beyond that height it consisted merely
of galvanized iron sheets, which would
On the other hand, the insurer, if it is so minded, may seek
predictably crumble and melt when
reimbursement of the amount it indemnified private respondents
subjected to intense heat. Defendant's
from petitioner. This is the essence of its right to be subrogated to
negligence, therefore, was not only with
the rights of the insured, as expressly provided in Article 2207.
respect to the cause of the fire but also with
Upon payment of the loss incurred by the insured, the insurer is
respect to the spread thereof to the
entitled to be subrogated pro tanto to any right of action which the
neighboring houses. [Africa v. Caltex
insured may have against the third person whose negligence or
(Phil.), Inc., supra; Emphasis supplied.]
wrongful act caused the loss [Fireman's Fund Insurance Co. v.
Jamila & Co., Inc., G.R. No. L-27427, April 7, 1976, 70 SCRA
In the instant case, with more reason should petitioner be found 323.]
guilty of negligence since it had failed to construct a firewall
between its property and private respondents' residence which
Under Article 2207, the real party in interest with regard to the
sufficiently complies with the pertinent city ordinances. The failure
indemnity received by the insured is the insurer [Phil. Air Lines,
to comply with an ordinance providing for safety regulations had
Inc. v. Heald Lumber Co., 101 Phil. 1031, (1957).] Whether or not
been ruled by the Court as an act of negligence [Teague v.
the insurer should exercise the rights of the insured to which it had
Fernandez, G.R. No. L-29745, June 4, 1973, 51 SCRA 181.]
been subrogated lies solely within the former's sound discretion.
Since the insurer is not a party to the case, its identity is not of
The Court of Appeals, therefore, had more than adequate basis to record and no claim is made on its behalf, the private respondent's
find petitioner liable for the loss sustained by private respondents. insurer has to claim his right to reimbursement of the P35,000.00
paid to the insured.
2. Since the amount of the loss sustained by private respondents
constitutes a finding of fact, such finding by the Court of Appeals
WHEREFORE, in view of the foregoing, the decision of the Court
of Appeals is hereby AFFIRMED with the following modifications
as to the damages awarded for the loss of private respondents'
house, considering their receipt of P35,000.00 from their insurer:
(1) the damages awarded for the loss of the house is reduced to
P35,000.00; and (2) the right of the insurer to subrogation and thus
seek reimbursement from petitioner for the P35,000.00 it had paid
private respondents is recognized.

SO ORDERED.