Nakpil and Sons vs. Court of Appeals

Factual Background

The Philippine Bar Association (PBA) constructed an office building on its 840-square-meter lot at the corner of Aduana and Arzobispo Streets, Intramuros, Manila. The building was designed by Juan F. Nakpil & Sons and constructed on an "administration" basis by United Construction Co., Inc. on the suggestion of its president, Juan J. Carlos. The building was completed in June, 1966. On August 2, 1968, an unusually strong earthquake caused major damage: several front columns buckled and the structure tilted forward, prompting tenants to vacate. United Construction Co., Inc. performed temporary shoring at a cost of P13,661.28. Subsequent earthquakes in April, 1970 caused further damage and the building was ultimately demolished.

Procedural History in the Trial Court

On November 29, 1968 the PBA sued United Construction Co., Inc. and Juan J. Carlos for damages arising from the partial collapse. Defendants filed third-party complaints against Juan F. Nakpil & Sons and Juan F. Nakpil, and the PBA’s president Roman Ozaeta was impleaded as a third-party defendant. By stipulation of March 3, 1969 the parties agreed that, should the trial show that the contractors were not liable but the plans or the architects were, judgment could be rendered against the Nakpils as if they had been formally made defendants. The trial court referred technical issues to Commissioner Andres O. Hizon, and tried the nontechnical issues itself. The Commissioner was charged to determine causation, apportion contribution of factors, and the cost or feasibility of repair. The trial court, agreeing generally with the Commissioner’s report, rendered judgment on September 21, 1971 ordering United Construction Co., Inc. and the third-party defendants, except Roman Ozaeta, to pay the PBA P989,335.68 with legal interest from November 29, 1968, dismissed claims against Juan J. Carlos, dismissed the third-party complaint, and dismissed counterclaims.

Referral to Commissioner and Technical Findings

The Commissioner conducted a detailed technical inquiry and on September 25, 1970 reported that the August 2, 1968 earthquake was the direct cause of the damage but that the collapse was also substantially attributable to defects in the plans and specifications prepared by the Nakpils, deviations from those plans by the contractor, poor workmanship, and failures of supervision by architects, contractor, and owner. The Commissioner catalogued specific design and construction shortcomings: deficiencies in detailing against torsion, overloaded ground floor columns, inadequate placement and splicing of reinforcement, omitted or improperly spaced spirals and ties in columns, cavities and honeycombing in concrete, contraband construction joints, and eccentric reinforcement assemblies. The Commissioner found that these defects diminished ductility and earthquake-resistance and that the construction defects aggravated the weaknesses in the design.

Trial Court’s Application of the Commissioner’s Report

The trial court adopted the Commissioner's conclusions except insofar as it held that the owner must exercise full-time supervision of construction, which the court found had no contractual or legal basis. The trial court found that the building was not initially a total loss and awarded the PBA P900,000 as the cost of repair together with other incidental relief noted in its decision and order.

Court of Appeals’ Review and Modification

On appeal the Court of Appeals affirmed the trial court’s factual findings that defects in design and deviations in construction contributed to the building’s failure and rejected the defendants’ contention that the earthquake was an excusing act of God. The Court of Appeals modified the trial court judgment by awarding an additional P200,000 in favor of the PBA to cover damage resulting from a subsequent earthquake of April 7, 1970, and ordered that the award be paid jointly and severally by the defendant and third-party defendants, except Roman Ozaeta; in other respects the trial court’s judgment stood affirmed with costs assigned as stated in the appellate disposition.

Issues Presented on Certiorari

The petitions to this Court raised, inter alia, whether the August 2, 1968 earthquake constituted a fortuitous event that excused liability of architect and contractor; whether the findings that defects in plans and departures in construction were proven should be disturbed; whether the additional award of P200,000 was proper; whether United Construction Co., Inc. was entitled to reimbursement for shoring expenses of P13,661.28; whether the Nakpils could properly be held jointly and solidarily liable with the contractor; and whether the measure of damages should be the total value of the building as claimed by the PBA.

Standards on Act of God and Concurrent Negligence

The Court set forth the governing principles: Art. 1723, New Civil Code imposes architect and contractor liability where a building collapses within fifteen years due to defects in plans or defects in construction, and Art. 1174, New Civil Code articulates the general rule on fortuitous events. To invoke the act-of-God exemption under Art. 1174, four requisites must concur: the cause must be independent of the debtor's will; the event must be unforeseeable or unavoidable; the event must render performance impossible in a normal manner; and the debtor must be free from any participation in or aggravation of the injury. The Court reiterated the well-established proposition that where negligence concurs with a fortuitous event in producing loss, the negligent party cannot escape liability.

Application of Law to the Record: Liability Established

Applying the standards, the Court observed that both the trial court and the Court of Appeals had found, on ample evidence and on the uncontradicted Commissioner's technical report, that the Nakpils’ designs contained deficiencies and that the contractor committed substantial deviations and poor workmanship. The Court affirmed that these defects and deviations were proximate causes that rendered the PBA building unable to withstand the earthquake forces and therefore precluded an act-of-God exculpation. The Court emphasized that many other structures in the same area withstood the same earthquake, and that the record supported a conclusion that human negligence, not a purely natural phenomenon, accounted for the collapse.

Assessment of Damages

The Court recounted the trial court’s award based on the Commissioner’s estimate that repair to tenantable condition would cost P900,000 and that unrealized rentals were allowed for a limited period. The Court of Appeals’ addition of P200,000 for subsequent earthquake damage was noted. The PBA sought a larger measure, namely P1,830,000 representing the building’s total value, and also urged continuing recovery of unrealized rentals until satisfaction of judgment. The defendants contested the additional award and the imposition of solidary liability. The Court accepted the finding that the building was initially repairable but that later tremors occasioned further loss; it concluded that liability attached to the Nakpils and to the contractor for the resulting damage.

Allocation of Fault and Solidary Liability

The Court accepted