Case Summary (G.R. No. 138123)
Factual Background
In February 1991, Morillo verbally leased his truck to Mindex for mining support. Mindex paid rentals until April 10, 1991. On April 11, the truck suffered mechanical failure and was left unattended in a remote area. Two weeks later it was found completely burned, save for a partially intact engine. Morillo offered to sell the truck at cost (₱275,000) and waive rental claims (₱76,800+) if Mindex paid in four installments. Mindex refused purchase, counter-offered to pay ₱76,000 in rental and to repair and return the truck in good condition. Morillo accepted only the rental amount; negotiations over purchase stalled. In August 1991, Morillo retrieved the burned truck and spent ₱132,750 on repair elsewhere.
Ruling of the Regional Trial Court
The RTC held Mindex liable for the truck’s loss and ordered:
- ₱76,000 as balance of unpaid rentals, with 12% interest from June 22, 1994 until payment;
- ₱132,750 for repair costs, with 12% interest until payment;
- ₱20,000 as attorney’s fees.
Ruling of the Court of Appeals
The CA affirmed Mindex’s negligence in leaving the truck unrepaired and unguarded, modified interest to:
- 6% per annum on both amounts from June 22, 1994 to finality;
- 12% per annum thereafter until payment.
The CA maintained the attorney’s fees award.
Issues Presented
- Did the CA err in finding Mindex negligent rather than excused by a fortuitous event?
- Did the CA err in upholding liability for unpaid rentals and repair costs?
- Did the CA err in affirming attorney’s fees?
Applicable Law
- 1987 Philippine Constitution (post-1990 decision)
- Civil Code of the Philippines:
• Article 1174 (fortuitous event)
• Article 1665 (duty to return leased property)
• Article 1667 (lessee’s liability for loss)
• Article 2208 (award of attorney’s fees)
Supreme Court’s Findings: Negligence and Fortuitous Event
Under Article 1667, a lessee must prove loss without fault. Although a fortuitous event requires absence of negligence, Mindex failed to guard or tow the broken truck for two weeks in a sparsely populated area. Witness testimony confirmed no nighttime security. Contributory negligence “humanized” the loss, removing it from an act-of-God defense. The Court found no error in the lower courts’ factual conclusions.
Supreme Court’s Findings on Unpaid Rentals and Repair Costs
Mindex produced no proof of payment for the ₱76,000 rental balance. Morillo’s April 15 letter waiving rentals was conditional on purchase, never effectuated. Mindex’s own correspondence acknowledged liability to pay rents and to restore the vehicle under Articles 1665 and 1667. Repair costs of ₱132,750 were duly supported by rece
...continue readingCase Syllabus (G.R. No. 138123)
Case Citation and Procedural Posture
- Supreme Court of the Philippines, Third Division
- G.R. No. 138123, decided March 12, 2002
- Reporter citation: 428 Phil. 934
- Petition for Review under Rule 45 of the Rules of Court
- Petitioners: Mindex Resources Development Corporation (MINDEX)
- Respondent: Ephraim Morillo
Factual Background
- In February 1991, Morillo verbally leased his 6 × 6 ten-wheeler cargo truck to MINDEX at ₱300 per hour (minimum eight hours daily, or ₱2,400 per day).
- MINDEX paid rentals through April 10, 1991.
- On April 11, 1991, while parked unattended in Sitio Aras due to mechanical trouble, the truck was burned by unidentified persons; only the engine remained partially intact.
- Morillo offered to sell the burned truck to MINDEX for ₱275,000 and waived the ₱76,800 rental claim as a “friendly gesture,” proposing four installment payments.
- MINDEX counter-offered to pay only ₱76,000 in rentals, to repair and overhaul the truck at its expense, and to return it in good running condition.
- Morillo accepted the ₱76,000 rental payment offer but insisted on payment of the ₱275,000 valuation balance in installments.
- Parties remained intransigent; in August 1991 Morillo retrieved the truck from MINDEX’s repair shop and spent ₱132,750 for its repair elsewhere.
Trial Court Ruling
- The Regional Trial Court held MINDEX liable for the destruction of the leased truck, awarding Morillo:
- ₱76,000 as unpaid rentals, with 12% interest from June 22, 1994 until full payment
- ₱132,750 as repair and overhaul costs, with 12% interest until full payment
- ₱20,000 as attorney’s fees
Court of Appeals Ruling
- CA affirmed MINDEX’s negligence for leaving the disabled truck unattended in a sparsely populated area and thus liable for its loss.
- CA sustained t