G.R. No. 161083 - People vs. Gabo

Case Summary (G.R. No. 161083)

Key Dates and Contractual Background

Contract executed by ECI as successful bidder with National Waterworks and Sewerage Authority (NAWASA) on August 4, 1964, to construct the 2nd Ipo-Bicti Tunnel and appurtenant works, with an 800-calendar-day completion period measured from notice to proceed.
By September 1967, ECI had completed the tunnel excavation phase; some outworks at the Bicti site remained under construction.
Typhoon “Welming” struck the area on November 4, 1967, producing heavy rains and a rapid rise in the Angat reservoir.

Factual Sequence Leading to the Dispute

During the typhoon the reservoir level rose at an observed rate of approximately 60 centimeters per hour and reached a danger height; NPC opened the Angat Dam spillway gates to prevent overflow.
ECI’s stockpiles, camp facilities, equipment, materials, and certain structures at the Ipo site were washed away, lost, or destroyed following the release of an extraordinary volume of water from the spillway.
ECI submitted itemized proofs of damages and supporting vouchers; NPC did not present documentary evidence to rebut those specific items.

Procedural Posture and Relief Sought

Trial court awarded damages to ECI. On appeal, the Court of Appeals (CA) affirmed liability of NPC but reduced certain damage items (notably consequential damages and attorney’s fees) and eliminated exemplary damages.
Both parties filed petitions to the Supreme Court: NPC contested liability (arguing force majeure), and ECI contested the CA’s reductions/elimination of certain damages and fees.

Legal Issue(s) Presented

Primary legal issue: Whether the losses to ECI were attributable to force majeure (exonerating NPC) or to NPC’s negligent operation of the spillway gates (making NPC liable).
Secondary issues: Whether the awards for actual/compensatory damages, consequential damages (including alleged crane rental and lost bonus), exemplary damages, and counsel fees were properly computed and supported.

Court of Appeals and Trial Court Findings on Negligence

Both trial court and CA found preponderant evidence that NPC opened the spillway gates in a negligent manner — specifically, that the gates were opened only when the typhoon was at its height even though NPC had prior notice of the typhoon and could have opened the gates earlier and more gradually.
The CA concluded NPC’s method of opening the gates (late and not in a regulated manner) caused an extraordinary discharge that struck ECI’s installations with exceptional force.

Supreme Court’s Treatment of Force Majeure versus Contributory Human Agency

The Supreme Court applied settled law that an act of God (force majeure) exonerates only where the event is exclusively caused by natural forces and no human negligence contributes to the loss. If human negligence concurs with an act of God in producing the damage, the human actor remains liable.
Citing prior jurisprudence (including Nakpil), the Court held that because NPC’s operational choices (delayed and abrupt opening of spillway gates) contributed to the loss, the event was “humanized” and could not be treated as pure force majeure; NPC therefore remained liable.

Standard of Review and Evidentiary Weight

The Court reaffirmed that factual findings of the Court of Appeals are generally final and will not be disturbed unless clearly unfounded. A finding supported by substantial evidence — defined as relevant evidence a reasonable mind might accept as adequate to support the conclusion — will be respected.
Given the CA and trial court findings on negligence were supported by the record (including the chronology of events and knowledge of the impending typhoon), the Supreme Court declined to overturn the liability determination.

Compensatory Damages: Award and Basis

The CA’s award of actual or compensatory damages in the amount of P675,785.31 (itemized into camp facilities, equipment/parts/plant, materials, and permanent structures/accessories) was found to be supported by documentary vouchers submitted by ECI and untraversed by NPC.
The Supreme Court affirmed the compensatory damages award, finding no error in the CA’s acceptance of the evidentiary proofs.

Consequential Damages: Reduction and Rationale

The trial court had awarded P333,200.00 as consequential damages, which included alleged long-term crane rental expenses (P213,200.00) and an alleged unrealized one-month bonus from NAWASA (P120,000.00).
The CA reduced consequential damages substantially after examining the record: it identified a sales contract showing ECI ordered a new crawler-type crane shortly after the flood (purchase price ~P106,336.75 with delivery within 60 days), and evidence that the damaged crane had been repaired at a cost of P77,000.00 and was reactivated. The CA concluded ECI would not have rationally rented a replacement crane for the entire year at P4,000.00 per day given the sale of a new crane and the repair of the old one; consequently the CA limited consequential crane-related damages to the reasonable rental cost for only one month — computed in the record as P19,200.00.
The Supreme Court sustained the CA’s reasoning and affirmed the substantial reduction of consequential damages (the Supreme Court text records the reduced consequential damages at approximately P19,000.00), reasoning that to award the larger amount would produce unjust enrichment where the record supported acquisition/repair of equipment and a short actual work stoppage.
The Supreme Court likewise rejected the P120,000.00 “bonus” award: the damage occurred long after the contract’s completion period (the incident happened w

Case Syllabus (G.R. No. 161083)

Procedural Posture

Consolidated petitions before the Supreme Court: G.R. No. L-47379 (National Power Corporation, NPC, petitioner) and G.R. No. L-47481 (Engineering Construction, Inc., ECI, petitioner).
Both petitions challenge the decision of the Court of Appeals which held NPC liable for damages to ECI and which reduced certain damage awards made by the trial court.
NPC questions the Court of Appeals' holding of liability for damages.
ECI questions the reduction by the Court of Appeals of consequential damages and attorney’s fees and the elimination of exemplary damages.
The Supreme Court’s disposition: both petitions dismissed for lack of merit; the decision appealed from (Court of Appeals) affirmed.

Facts

On August 4, 1964, Engineering Construction, Inc. (ECI) as successful bidder executed a contract with the National Waterworks and Sewerage Authority (NAWASA) to construct the 2nd Ipo-Bicti Tunnel, Intake and Outlet Structures, and Appurtenant Features at Norzagaray, Bulacan, to be completed within 800 calendar days from notice to proceed (Exh. A).
The project had two major phases: (1) tunnel work—7 kilometers passing through the mountain from Ipo River (near Angat Dam) to Bicti; (2) outworks at both ends of the tunnel.
By September 1967 ECI had completed the tunnel excavation (first phase); some outworks at the Bicti site remained under construction. Equipment no longer needed at Bicti was transferred to the Ipo site.
On November 4, 1967, Typhoon “Welming” hit Central Luzon, passing through the Angat Hydro-electric Project and Dam at Ipo. Strong winds and heavy rains fell intermittently.
During the storm the reservoir water at Angat Dam rose at the rate of sixty (60) centimeters per hour, reaching the danger height of 212 meters above sea level.
To prevent overflow the defendant corporation (NPC) caused the opening of the spillway gates.

Trial and Court of Appeals Findings of Fact

The trial court found, and the Court of Appeals sustained, that the spillway gates were opened in a negligent manner.
Due to the manner of opening, an extraordinarily large volume of water rushed out and struck ECI’s installations and construction works at the Ipo site with terrific impact.
As a result, ECI’s stockpile of materials and supplies, camp facilities, and permanent structures and accessories were washed away, lost or destroyed.
The Court of Appeals found NPC had notice of the coming typhoon four days earlier and that the spillway gates could and should have been opened gradually and earlier (action could have been taken as early as November 3, 1967).
Opening the gates only when the typhoon was at its height, and in a rush to prevent overflow, was negligent conduct by NPC.

Issues Presented

Whether the destruction and loss of ECI’s equipment and facilities were due to force majeure (act of God) shielding NPC from liability.
Whether the award of compensatory (actual) damages by the trial court was proper and supported by evidence.
Whether the award of consequential damages (P333,200.00 by trial court) was justified and whether the Court of Appeals erred in reducing them.
Whether exemplary damages were properly awarded or should be eliminated.
Whether the trial court’s award of attorney’s fees (P50,000.00) should be reduced.

Holding

The Supreme Court affirmed the Court of Appeals: NPC is liable for damages; both petitions dismissed for lack of merit.
The Court of Appeals’ reduction of consequential damages and attorney’s fees and elimination of exemplary damages were affirmed by the Supreme Court.

Reasoning — Negligence vs. Force Majeure

The Supreme Court agreed with the Court of Appeals’ factual finding that NPC acted negligently in opening the spillway gates only at the height of the typhoon despite knowing of the storm days earlier.
Although the typhoon constituted an act of God or force majeure, NPC could not escape liability because its negligence was a proximate cause of the loss and damage.
The Court quoted and applied the doctrine stated in Juan F. Nakpil & Sons v. Court of Appeals: when a fortuitous event concurs with fraud, negligence, delay or other misconduct, the obligor cannot escape liability; the act of God doctrine applies only when the event is exclusively due to nature and human agency is excluded.
The concurrence of human intervention or neglect "humanizes" the event and removes it from the rules applicable to acts of God.
Questions of negligence are questions of fact properly within the fact-finding province of the Court of Appeals and are not to be disturbed unless clearly unfounded.
The Court endorsed the standard for appellate findings of fact: they are generally final and conclusive where supported by substantial evidence; substantial evidence is "such relevant evidence as a reasonable mind might accep