SECOND DIVISION

[G.R. No. 116100. February 9, 1996.]

SPOUSES CRISTINO and BRIGIDA CUSTODIO and SPOUSES
LITO and MARIA CRISTINA SANTOS, petitioners, vs. COURT OF
APPEALS, HEIRS OF PACIFICO C. MABASA and REGIONAL
TRIAL COURT OF PASIG, METRO MANILA, BRANCH 181,
respondents.
Maria T . M. Leviste for petitioners.
Roberto B. Arca for private respondents.
SYLLABUS
1. REMEDIAL LAW; ACTIONS; APPEALS; PARTY WHO DID NOT APPEAL
FROM THE DECISION OF THE COURT A QUO GRANTING PRIVATE
RESPONDENT THE RIGHT OF WAY, BARRED FROM RAISING THE SAME.
With respect to the first issue, herein petitioners are already barred from raising the same.
Petitioners did not appeal from the decision of the court a quo granting private
respondents the right of way, hence they are presumed to be satisfied with the
adjudication therein. With the finality of the judgment of the trial court as to petitioners,
the issue of propriety of the grant of right of way has already been laid to rest. For failure
to appeal the decision of the trial court to the Court of Appeals, petitioners cannot obtain
any affirmative relief other than those granted in the decision of the trial court. That
decision of the court below has become final as against them and can no longer be
reviewed, much less reversed, by this Court. The rule in this jurisdiction is that whenever
an appeal is taken in a civil case, an appellee who has not himself appealed may not
obtain from the appellate court any affirmative relief other than what was granted in the
decision of the lower court. The appellee can only advance an argument that he may
deem necessary to defeat the appellant's claim or to uphold the decision that is being
disputed, and he can assign errors in his brief if such is required to strengthen the views
expressed by the court a quo. These assigned errors, in turn, may be considered by the
appellate court solely to maintain the appealed decision on other grounds, but not for the
purpose of reversing or modifying the judgment in the appellee's favor and giving him
other affirmative reliefs.

2. CIVIL LAW DAMAGES; RECOVERY OF DAMAGES; REQUISITES. The mere

fact that the plaintiff suffered losses does not give rise to a right to recover damages. To
warrant the recovery of damages, there must be both a right of action for a legal wrong
inflicted by the defendant, and damage resulting to the plaintiff therefrom. Wrong
without damage, or damage without wrong, does not constitute a cause of action, since
damages are merely part of the remedy allowed for the injury caused by a breach or
wrong. In order that a plaintiff may maintain an action for the injuries of which he
complains, he must establish that such injuries resulted from a breach of duty which the
defendant owed to the plaintiff a concurrence of injury to the plaintiff and legal
responsibility by the person causing it. The underlying basis for the award of tort
damages is the premise that an individual was injured in contemplation of law. Thus,
there must first be the breach of some duty and the imposition of liability for that breach
before damages may be awarded, it is not sufficient to state that there should be tort
liability merely because the plaintiff suffered some pain and suffering. In other words, in
order that the law will give redress for an act causing damage, that act must be not only
hurtful, but wrongful. There must be damnum et injuria. If, as may happen in many cases,
a person sustains actual damage, that is, harm or loss to his person or property, without
sustaining any legal injury, that is, an act or omission which the law does not deem an
injury, the damage is regarded as damnum absque injuria.
3. ID.; ID.; DAMAGES DISTINGUISHED FROM INJURY. There is a material
distinction between damages and injury. Injury is the illegal invasion of a legal right;
damage is the loss, hurt, or harm which results from the injury; and damages are the
recompense or compensation awarded for the damage suffered. Thus, there can be
damage without injury in those instances in which the loss or harm was not the result of a
violation of a legal duty. These situations are often called damnum absque injuria.
4. ID.; ID.; DAMAGE OR LOSS WHICH VIOLATE NO LEGAL DUTY TO OTHER
PERSON, BORNE BY THE INJURED PERSON. Many accidents occur and many
injuries are inflicted by acts or omissions which cause damage or loss to another but
which violate no legal duty to such other person, and consequently create no cause of
action in his favor. In such cases, the consequences must be borne by the injured person
alone. The law affords no remedy for damages resulting from an act which does not
amount to a legal injury or wrong.
cdll

5. ID.; PRINCIPLE OF ABUSE OF RIGHTS; REQUISITES. Contrary to the claim of

private respondents, petitioners could not be said to have violated the principle of abuse
of right. In order that the principle of abuse of right provided in Article 21 of the Civil
Code can be applied, it is essential that the following requisites concur: (1) The defendant
should have acted in a manner that is contrary to morals, good customs or public policy,
(2) The acts should be willful; and (3) There was damage or injury to the plaintiff.
6. ID.; ID.; RIGHT NOT VIOLATED WHERE OWNERS ENCLOSE AND FENCE
THEIR PROPERTY. The act of petitioners in constructing a fence within their lot is a

valid exercise of their right as owners, hence not contrary to morals, good customs or
public policy. The law recognizes in the owner the right to enjoy and dispose of a thing,
without other limitations than those established by law. It is within the right of
petitioners, as owners, to enclose and fence their property. Article 430 of the Civil Code
provides that "(e)very owner may enclose or fence his land or tenements by means of
walls, ditches, live or dead hedges, or by any other means without detriment to servitudes
constituted thereon."
cdll

7. REMEDIAL LAW; ACTIONS; NO CAUSE OF ACTION FOR LAWFUL ACTS

DONE BY PERSON ON HIS PROPERTY. At the time of the construction of the
fence, the lot was not subject to any servitudes. It was only that decision which gave
private respondents the right to use the said passageway after payment of the
compensation and imposed a corresponding duty on petitioners not to interfere in the
exercise of said right. Hence, prior to said decision, petitioners had an absolute right over
their property and their act of fencing and enclosing the same was an act which they may
lawfully perform in the employment and exercise of said right. To repeat, whatever injury
or damage may have been sustained by private respondents by reason of the rightful use
of the said land by petitioners is damnum absque injuria. A person has a right to the
natural use and enjoyment of his own property, according to his pleasure, for all the
purposes to which such property is usually applied. As a general rule, therefore, there is
no cause of action for acts done by one person upon his own property in a lawful and
proper manner, although such acts incidentally cause damage or an unavoidable loss to
another, as such damage or loss is damnum absque injuria. When the owner of property
makes use thereof in the general and ordinary manner in which the property is used, such
as fencing or enclosing the same as in this case, nobody can complain of having been
injured, because the inconvenience arising from said use can be considered as a mere
consequence of community life. The proper exercise of a lawful right cannot constitute a
legal wrong for which an action will lie, although the act may result in damage to
another, for no legal right has been invaded. One may use any lawful means to
accomplish a lawful purpose and though the means adopted may cause damage to
another, no cause of action arises in the latter's favor. Any injury or damage occasioned
thereby is damnum absque injuria. The courts can give no redress for hardship to an
individual resulting from action reasonably calculated to achieve a lawful end by lawful
means.

DECISION

REGALADO, J :
p

This petition for review on certiorari assails the decision of respondent Court
of Appeals in CA-G.R. CV No. 29115, promulgated on November 10, 1993, which
affirmed with modification the decision of the trial court, as well as its resolution
dated July 8, 1994 denying petitioner's motion for reconsideration. 1
On August 26, 1982, Civil Case No. 47466 for the grant of an easement of
right of way was filed by Pacifico Mabasa against Cristino Custodio, Brigida R.
Custodio, Rosalina R. Morato, Lito Santos and Maria Cristina C. Santos before the
Regional Trial Court of Pasig and assigned to Branch 22 thereof. 2
The generative facts of the case, as synthesized by the trial court and adopted by the
Court of Appeals, are as follows:
Perusing the record, this Court finds that the original plaintiff Pacifico Mabasa
died during the pendency of this case and was substituted by Ofelia Mabasa, his
surviving spouse [and children].
The plaintiff owns a parcel of land with a two-door apartment erected thereon
situated at Interior P. Burgos St., Palingon, Tipas, Tagig, Metro Manila. The
plaintiff was able to acquire said property through a contract of sale with
spouses Mamerto Rayos and Teodora Quintero as vendors last September 1981.
Said property may be described to be surrounded by other immovables
pertaining to defendants herein. Taking P. Burgos Street as the point of
reference, on the left side, going to plaintiff's property, the row of houses will be
as follows: That of defendants Cristino and Brigida Custodio, then that of Lito
and Maria Cristina Santos and then that of Ofelia Mabasa. On the right side (is)
that of defendant Rosalina Morato and then a Septic Tank (Exhibit "D"). As an
access to P. Burgos Street from plaintiff's property, there are two possible
passageways. The first passageway is approximately one meter wide and is
about 20 meters distan(t) from Mabasa's residence to P. Burgos Street. Such
path is passing in between the previously mentioned row of houses. The second
passageway is about 3 meters in width and length from plaintiff Mabasa's
residence to P. Burgos Street; it is about 26 meters. In passing thru said
passageway, a less than a meter wide path through the septic tank and with 5-6
meters in length has to be traversed.

When said property was purchased by Mabasa, there were tenants occupying
the premises and who were acknowledged by plaintiff Mabasa as tenants.
However, sometime in February, 1982, one of said tenants vacated the
apartment and when plaintiff Mabasa went to see the premises, he saw that
there had been built an adobe fence in the first passageway making it narrower
in width. Said adobe fence was first constructed by defendants Santoses along
their property which is also along the first passageway. Defendant Morato
constructed her adobe fence and even extended said fence in such a way that the
entire passageway was enclosed (Exhibit "I-Santoses and Custodios, Exh. "D"

for plaintiff, Exhs. "1-C", "1-D" and "1-E") And it was then that the remaining
tenants of said apartment vacated the area. Defendant Ma. Cristina Santos
testified that she constructed said fence because there was an incident when her
daughter was dragged by a bicycle pedalled by a son of one of the tenants in
said apartment along the first passageway. She also mentioned some other
inconveniences of having (at) the front of her house a pathway such as when
some of the tenants were drunk and would bang their doors and windows. Some
of their footwear were even lost. . . . 3 (Italics in original text; corrections in
parentheses supplied)

On February 27, 1990, a decision was rendered by the trial court, with this dispositive
part:
Accordingly, judgment is hereby rendered as follows:
1) Ordering defendants Custodios and Santoses to give plaintiff permanent
access ingress and egress, to the public street;
2) Ordering the plaintiff to pay defendants Custodios and Santoses the sum of
Eight Thousand Pesos (P8,000) as indemnity for the permanent use of the
passageway.
The parties to shoulder their respective litigation expenses. 4

Not satisfied therewith, therein plaintiff represented by his heirs, herein private
respondents, went to the Court of Appeals raising the sole issue of whether or not the
lower court erred in not awarding damages in their favor. On November 10, 1993, as
earlier stated, the Court of Appeals rendered its decision affirming the judgment of the
trial court with modification, the decretal portion of which disposes as follows:
WHEREFORE, the appealed decision of the lower court is hereby
AFFIRMED WITH MODIFICATION only insofar as the herein grant of
damages to plaintiffs-appellants. The Court hereby orders defendants-appellees
to pay plaintiffs-appellants the sum of Sixty Five Thousand (P65,000) Pesos as
Actual Damages, Thirty Thousand (P30,000) Pesos as Moral Damages, and
Ten Thousand (P10,000) Pesos as Exemplary Damages. The rest of the
appealed decision is affirmed to all respects. 5

On July 8, 1994, the Court of Appeals denied petitioner's motion for reconsideration. 6
Petitioners then took the present recourse to us, raising two issues, namely, whether or
not the grant of right of way to herein private respondents is proper, and whether or not
the award of damages is in order.
prLL

With respect to the first issue, herein petitioners are already barred from raising the same.
Petitioners did not appeal from the decision of the court a quo granting private
respondents the right of way, hence they are presumed to be satisfied with the

adjudication therein. With the finality of the judgment of the trial court as to petitioners,
the issue of propriety of the grant of right of way has already been laid to rest.
For failure to appeal the decision of the trial court to the Court of Appeals, petitioners
cannot obtain any affirmative relief other than those granted in the decision of the trial
court. That decision of the court below has become final as against them and can no
longer be reviewed, much less reversed, by this Court. The rule in this jurisdiction is that
whenever an appeal is taken in a civil case, an appellee who has not himself appealed
may not obtain from the appellate court any affirmative relief other than what was
granted in the decision of the lower court. The appellee can only advance any argument
that he may deem necessary to defeat the appellant's claim or to uphold the decision that
is being disputed, and he can assign errors in his brief if such is required to strengthen the
views expressed by the court a quo. These assigned errors, in turn, may be considered by
the appellate court solely to maintain the appealed decision on other grounds, but not for
the purpose of reversing or modifying the judgment in the appellee's favor and giving
him other affirmative reliefs.7
However, with respect to the second issue, we agree with petitioners that the Court of
Appeals erred in awarding damages in favor of private respondents. The award of
damages has no substantial legal basis. A reading of the decision of the Court of Appeals
will show that the award of damages was based solely on the fact that the original
plaintiff, Pacifico Mabasa, incurred losses in the form of unrealized rentals when the
tenants vacated the leased premises by reason of the closure of the passageway.
However, the mere fact that the plaintiff suffered losses does not give rise to a right to
recover damages. To warrant the recovery of damages, there must be both a right of
action for a legal wrong inflicted by the defendant, and damage resulting to the plaintiff
therefrom. Wrong without damage, or damage without wrong, does not constitute a cause
of action, since damages are merely part of the remedy allowed for the injury caused by a
breach or wrong. 8
There is a material distinction between damages and injury. Injury is the illegal invasion
of a legal right; damage is the loss, hurt, or harm which results from the injury, and
damages are the recompense or compensation awarded for the damage suffered. Thus,
there can be damage without injury in those instances in which the loss or harm was not
the result of a violation of a legal duty. These situations are often called damnum absque
injuria. 9
In order that a plaintiff may maintain an action for the injuries of which he complains, he
must establish that such injuries resulted from a breach of duty which the defendant owed
to the plaintiff a concurrence of injury to the plaintiff and legal responsibility by the
person causing it. 10 The underlying basis for the award of tort damages is the premise
that an individual was injured in contemplation of law. Thus, there must first be the
breach of some duty and the imposition of liability for that breach before damages may

be awarded; it is not sufficient to state that there should be tort liability merely because
the plaintiff suffered some pain and suffering. 11
Many accidents occur and many injuries are inflicted by acts or omissions which cause
damage or loss to another but which violate no legal duty to such other person, and
consequently create no cause of action in his favor. In such cases, the consequences must
be borne by the injured person alone. The law affords no remedy for damages resulting
from an act which does not amount to a legal injury or wrong. 12
In other words, in order that the law will give redress for an act causing damage, that act
must be not only hurtful, but wrongful. There must be damnum et injuria. 13 If, as may
happen in many cases, a person sustains actual damage, that is, harm or loss to his person
or property, without sustaining any legal injury, that is, an act or omission which the law
does not deem an injury, the damage is regarded as damnum absque injuria. 14
In the case at bar, although there was damage, there was no legal injury. Contrary to the
claim of private respondents, petitioners could not be said to have violated the principle
of abuse of right. In order that the principle of abuse of right provided in Article 21 of the
Civil Code can be applied, it is essential that the following requisites concur: (1) The
defendant should have acted in a manner that is contrary to morals, good customs or
public policy; (2) The acts should be willful; and (3) There was damage or injury to the
plaintiff. 15
The act of petitioners in constructing a fence within their lot is a valid exercise of their
right as owners, hence not contrary to morals, good customs or public policy. The law
recognizes in the owner the right to enjoy and dispose of a thing, without other
limitations than those established by law. 16 It is within the right of petitioners, as
owners, to enclose and fence their property. Article 430 of the Civil Code provides that
"(e)very owner may enclose or fence his land or tenements by means of walls, ditches,
live or dead hedges, or by any other means without detriment to servitudes constituted
thereon."
At the time of the construction of the fence, the lot was not subject to any servitudes.
There was no easement of way existing in favor of private respondents, either by law or
by contract. The fact that private respondents had no existing right over the said
passageway is confirmed by the very decision of the trial court granting a compulsory
right of way in their favor after payment of just compensation. It was only that decision
which gave private respondents the right to use the said passageway after payment of the
compensation and imposed a corresponding duty on petitioners not to interfere in the
exercise of said right.
LLcd

Hence, prior to said decision, petitioners had an absolute right over their property and
their act of fencing and enclosing the same was an act which they may lawfully perform
in the employment and exercise of said right. To repeat, whatever injury or damage may

have been sustained by private respondents by reason of the rightful use of the said land
by petitioners is damnum absque injuria. 17
A person has a right to the natural use and enjoyment of his own property, according to
his pleasure, for all the purposes to which such property is usually applied. As a general
rule, therefore, there is no cause of action for acts done by one person upon his own
property in a lawful and proper manner, although such acts incidentally cause damage or
an unavoidable loss to another, as such damage or loss is damnum absque injuria. 18
When the owner of property makes use thereof in the general and ordinary manner in
which the property is used, such as fencing or enclosing the same as in this case, nobody
can complain of having been injured, because the inconvenience arising from said use
can be considered as a mere consequence of community life. 19

The proper exercise of a lawful right cannot constitute a legal wrong for which an action
will lie, 20 although the act may result in damage to another, for no legal right has been
invaded. 21 One may use any lawful means to accomplish a lawful purpose and though
the means adopted may cause damage to another, no cause of action arises in the latter's
favor. Any injury or damage occasioned thereby is damnum absque injuria. The courts
can give no redress for hardship to an individual resulting from action reasonably
calculated to achieve a lawful end by lawful means. 22
WHEREFORE, under the compulsion of the foregoing premises, the appealed decision of
respondent Court of Appeals is hereby REVERSED and SET ASIDE and the judgment
of the trial court is correspondingly REINSTATED.
SO ORDERED.
Romero andPuno, JJ., concur.
Mendoza, J., took no part.
(Spouses Custodio v. Court of Appeals, G.R. No. 116100, [February 9, 1996], 323 PHIL
575-589)
|||

EN BANC
[G.R. No. 12191. October 14, 1918.]
JOSE CANGCO, plaintiff-appellant, vs. MANILA RAILROAD CO.,
defendant-appellee.
Ramon Sotelo, for appellant.
Kincaid & Hartigan, for appellee.
SYLLABUS
1. MASTER AND SERVANT; CONTRACT; NEGLIGENCE. Failure to
perform a contract cannot be excused upon the ground that the breach was due to the
negligence of a servant of the obligor, and that the latter exercised due diligence in the
selection and control of the servant.
2. CONTRACTS; NEGLIGENCE:; CULPA AQUILIANA; CULPA
CONTRACTUAL. The distinction between negligence as the source of an
obligation (culpa aquiliana) and negligence in the performance of a contract (culpa
contractual ) pointed out.
3. CARRIERS; PASSENGERS; NEGLIGENCE; ALIGHTING FROM
MOVING TRAIN. It is not negligence per se for a traveler to alight from a slowly
moving train.

DECISION

FISHER, J :
p

At the time of the occurrence which gave rise to this litigation the plaintiff,
Jose Cangco, was in the employment of the Manila Railroad Company in the capacity
of clerk, with a monthly wage of P25. He lived in the pueblo of San Mateo, in the
province of Rizal, which is located upon the line of the defendant railroad company;
and in coming daily by train to the company's office in the city of Manila where he

worked, he used a pass, supplied by the company, which entitled him to ride upon the
company's trains free of charge. Upon the occasion in question, January 20, 1915, the
plaintiff was returning home by rail from his daily labors; and as the train drew up to
the station in San Mateo the plaintiff arose from his seat in the second class-car where
he was riding and, making his exit through the door, took his position upon the steps
of the coach, seizing the upright guardrail with his right hand for support.
On the side of the train where passengers alight at the San Mateo station there
is a cement platform which begins to rise with a moderate gradient some distance
away from the company's office and extends along in front of said office for a
distance sufficient to cover the length of several coaches. As the train slowed down
another passenger, named Emilio Zuniga, also an employee of the railroad company,
got off the same car, alighting safely at the point where the platform begins to rise
from the level of the ground. When the train had proceeded a little farther the plaintiff
Jose Cangco stepped off also, but one or both of his feet came in contact with a sack
of watermelons with the result that his feet slipped from under him and he fell
violently on the platform. His body at once rolled from the platform and was drawn
under the moving car, where his right arm was badly crushed and lacerated. It appears
that after the plaintiff alighted from the train the car moved forward possibly six
meters before it came to a full stop.
The accident occurred between 7 and 8 o'clock on a dark night, and as the
railroad station was lighted dimly by a single light located some distance away,
objects on the platform where the accident occurred were difficult to discern,
especially to a person emerging from a lighted car.
The explanation of the presence of a sack of melons on the platform where the
plaintiff alighted is found in the fact that it was the customary season for harvesting
these melons and a large lot had been brought to the station for shipment to the
market. They were contained in numerous tow sacks which had been piled on the
platform in a row one upon another. The testimony shows that this row of sacks was
so placed that there was a space of only about two feet between the sacks of melons
and the edge of the platform; and it is clear that the fall of the plaintiff was due to the
fact that his foot alighted upon one of these melons at the moment he stepped upon
the platform. His statement that he failed to see these objects in the darkness is readily
to be credited.
The plaintiff was drawn from under the car in an unconscious condition, and it
appeared that the injuries which he had received were very serious. He was therefore
brought at once to a certain hospital in the city of Manila where an examination was
made and his arm was amputated. The result of this operation was unsatisfactory, and
the plaintiff was then carried to another hospital where a second operation was
performed and the member was again amputated higher up near the shoulder. It
appears in evidence that the plaintiff expended the sum of P790.25 in the form of

medical and surgical fees and for other expenses in connection with the process of his
curation.
Upon August 31, 1915, he instituted this proceeding in the Court of First
Instance of the city of Manila to recover damages of the defendant company, founding
his action upon the negligence of the servants and employees of the defendant in
placing the sacks of melons upon the platform and in leaving them so placed as to be
a menace to the security of passenger alighting from the company's trains. At the
hearing in the Court of First Instance, his Honor, the trial judge, found the facts
substantially as above stated, and drew therefrom his conclusion to the effect that,
although negligence was attributable to the defendant by reason of the fact that the
sacks of melons were so placed as to obstruct passengers passing to and from the cars,
nevertheless, the plaintiff himself had failed to use due caution in alighting from the
coach and was therefore precluded from recovering. Judgment was accordingly
entered in favor of the defendant company, and the plaintiff appealed.
It can not be doubted that the employees of the railroad company were guilty
of negligence in piling these sacks on the platform in the manner above stated; that
their presence caused the plaintiff to fall as he alighted from the train; and that they
therefore constituted an effective legal cause of the injuries sustained by the plaintiff.
It necessarily follow s that the defendant company is liable for the damage thereby
occasioned unless recovery is barred by the plaintiff's own contributory negligence. In
resolving this problem it is necessary that each of these conceptions of liability, towit, the primary responsibility of the defendant company and the contributory
negligence of the plaintiff should be separately examined.
It is important to note that the foundation of the legal liability of the defendant
is the contract of carriage, and that the obligation to respond for the damage which
plaintiff has suffered arises, if at all, from the breach of that contract by reason of the
failure of defendant to exercise due care in its performance. That is to say, its liability
is direct and immediate, differing essentially, in the legal viewpoint from that
presumptive responsibility for the negligence of its servants, imposed by article 1903
of the Civil Code, which can be rebutted by proof of the exercise of due care in their
selection and supervision. Article 1903 of the Civil Code is not applicable to
obligations arising ex contractu, but only to extra-contractual obligations or to use
the technical form of expression, that article relates only to culpa aquiliana and not to
culpa contractual.
Manresa (vol. 8, p. 67) in his commentaries upon articles 1103 and 1104 of the
Civil Code, clearly points out this distinction, which was also recognized by this
Court in its decision in the case of Rakes vs. Atlantic, Gulf and Pacific Cc. (7 Phil.
Rep., 359). In commenting upon article 1093 (vol. 8, p. 30) Manresa clearly points out
the difference between "culpa, substantive and independent, which of itself
constitutes the source of an obligation between persons not formerly connected by any

legal tie" and culpa considered as an "accident in the performance of an obligation

already existing . . .."
In the Rakes case (supra) the decision of this court was made to rest squarely
upon the proposition that article 1903 of the Civil Code is not applicable to acts of
negligence which constitute the breach of a contract.
Upon this point the Court said:
"The acts to which these articles [1902 and 1903 of the Civil Code] are
applicable are understood to be those not growing out of pre-existing duties of
the parties to one another But where relations already formed give rise to duties,
whether springing from contract or quasi-contract, then breaches of those duties
are subject to articles 1101, 1103 and 1104 of the same code." (Rakes vs.
Atlantic, Gulf and Pacific Co., 7 Phil. Rep., 359 at p. 365.)

This distinction is of the utmost importance. The liability, which, under the
Spanish law, is, in certain cases imposed upon employers with respect to damages
occasioned by the negligence of their employees to persons to whom they are not
bound by contract, is not based, as in the English Common Law, upon the principle of
respondent superior if it were, the master would be liable in every case and
unconditionally but upon the principle announced in article 1902 of the Civil Code,
which imposes upon all persons who by their fault or negligence, do injury to another,
the obligation of making good the damage caused. One who places a powerful
automobile in the hands of a servant whom he knows to be ignorant of the method of
managing such a vehicle, is himself guilty of an act of negligence which makes him
liable for all the consequences of his imprudence. The obligation to make good the
damage arises at the very instant that the unskillful servant, while acting within the
scope of his employment, causes the injury. The liability of the master is personal and
direct. But, if the master has not been guilty of any negligence whatever in the
selection and direction of the servant, he is not liable for the acts of the latter, whether
done within the scope of his employment or not, if the damage done by the servant
does not amount to a breach of the contract between the master and the person
injured.
It is not accurate to say that proof of diligence and care in the selection and
control of the servant relieves the master from liability for the latter's acts on the
contrary, that proof shows that the responsibility has never existed. As Manresa says
(vol. 8, p. 68) the liability arising from extra-contractual culpa is always based upon a
voluntary act or omission which, without willful intent, but by mere negligence or
inattention, has caused damage to another. A master who exercises all possible care in
the selection of his servant, taking into consideration the qualifications they should
possess for the discharge of the duties which it is his purpose to confide to them, and
directs them with equal diligence, thereby performs his duty to third persons to whom
he is bound by no contractual ties, and he incurs no liability whatever if, by reason of

the negligence of his servants, even within the scope of their employment, such third
persons suffer damage. True it is that under article 1903 of the Civil Code the law
creates a presumption that he has been negligent in the selection or direction of his
servant, but the presumption is rebuttable and yields to proof of due care and
diligence in this respect.

The supreme court of Porto Rico, in interpreting identical provisions, as found

in the Porto Rican Civil Code, has held that these articles are applicable to cases of
extra-contractual culpa exclusively. (Carmona vs. Cuesta, 20 Porto Rico Reports,
215.)
This distinction was again made patent by this Court in its decision in the case
of Bahia vs. Litonjua and Leynes, (30 Phil. Rep., 624), which was an action brought
upon the theory of the extra-contractual liability of the defendant to respond for the
damage caused by the carelessness of his employee while acting within the scope of
his employment The Court, after citing the last paragraph of article 1903 of the Civil
Code, said:
"From this article two things are apparent: (1) That when an injury is
caused by the negligence of a servant or employee there instantly arises a
presumption of law that there was negligence on the part of the master or
employer either in the selection of the servant or employee, or in supervision
over him after the selection, or both; and (2) that presumption is juris tantum
and not juris et de jure, and consequently, may be rebutted. It follows
necessarily that if the employer shows to the satisfaction of the court that in
selection and supervision he has exercised the care and diligence of a good
father of a family, the presumption is overcome and he is relieved from liability.
"This theory bases the responsibility of the master ultimately on his own
negligence and not on that of his servant. This is the notable peculiarity of the
Spanish law of negligence. It is, of course, in striking contrast to the American
doctrine that, in relations with strangers, the negligence of the servant is
conclusively the negligence of the master."

The opinion there expressed by this Court, to the effect that in case of extracontractual culpa based upon negligence, it is necessary that there shall have been
some fault attributable to the defendant personally, and that the last paragraph of
article 1903 merely establishes a rebuttable presumption, is in complete accord with
the authoritative opinion of Manresa, who says (vol. 12, p. 611) that the liability
created by article 1903 is imposed by reason of the breach of the duties inherent in the
special relations of authority or superiority existing between the person called upon to
repair the damage and the one who, by his act or omission, was the cause of it.

On the other hand, the liability of masters and employers for the negligent acts
or omissions of their servants or agents, when such acts or omissions cause damages
which amount to the breach of a contract, is not based upon a mere presumption of the
master's negligence in their selection or control, and proof of exercise of the utmost
diligence and care in this regard does not relieve the master of his liability for the
breach of his contract.
Every legal obligation must of necessity be extra-contractual or contractual.
Extra-contractual obligation has its source in the breach or omission of those mutual
duties which civilized society imposes upon its members, or which arise from these
relations, other than contractual, of certain members of society to others, generally
embraced in the concept of status. The legal rights of each member of society
constitute the measure of the corresponding legal duties, mainly negative in character,
which the existence of those rights imposes upon all other members of society. The
breach of these general duties whether due to willful intent or to mere inattention, if
productive of injury, gives rise to an obligation to indemnify the injured party. The
fundamental distinction between obligations of this character and those which arise
from contract, rests upon the fact that in cases of non-contractual obligation it is the
wrongful or negligent act or omission itself which creates the vinculum juris, whereas
in contractual relations the vinculum exists independently of the breach of the
voluntary duty assumed by the parties when entering into the contractual relation.
With respect to extra-contractual obligation arising from negligence, whether
of act or omission, it is competent for the legislature to elect and our Legislature
has so elected to limit such liability to cases in which the person upon whom such
an obligation is imposed is morally culpable or, on the contrary, for reasons of public
policy, to extend that liability, without regard to the lack of moral culpability, so as to
include responsibility for the negligence of those persons whose acts or omissions are
imputable, by a legal fiction, to others who are in a position to exercise an absolute or
limited control over them. The legislature which adopted our Civil Code has elected
to limit extra contractual liability with certain well-defined exceptions to cases
in which moral culpability can be directly imputed to the persons to be charged. This
moral responsibility may consist in having failed to exercise due care in one's own
acts, or in having failed to exercise due care in the selection and control of one's
agents or servants, or in the control of persons who, by reason of their status, occupy a
position of dependency with respect to the person made liable for their conduct.
The position of a natural or juridical person who has undertaken by contract to
render service to another, is wholly different from that to which article 1903 relates.
When the source of the obligation upon which plaintiff's cause of action depends is a
negligent act or omission, the burden of proof rests upon plaintiff to prove the
negligence if he does not his action fails. But when the facts averred show a
contractual undertaking by defendant for the benefit of plaintiff, and it is alleged that
plaintiff has failed or refused to perform the contract, it is not necessary for plaintiff to

specify in his pleadings whether the breach of the contract is due to willful fault or to
negligence on the part of the defendant, or of his servants or agents. Proof of the
contract and of its nonperformance is sufficient prima facie to warrant a recovery.
"As a general rule . . . it is logical that in case of extra-contractual culpa,
a suing creditor should assume the burden of proof of its existence, as the only
fact upon which his action is based; while on the contrary, in a case of
negligence which presupposes the existence of a contractual obligation, if the
creditor shows that it exists and that it has been broken, it is not necessary for
him to prove the negligence." (Manresa, vol. 8, p. 71 [1907 ed., p. 76].)

As it is not necessary for the plaintiff in an action for the breach of a contract
to show that the breach was due to the negligent conduct of defendant or of his
servants, even though such be in fact the actual cause of the breach, it is obvious that
proof on the part of defendant that the negligence or omission of his servants or
agents caused the breach of the contract would not constitute a defense to the action.
If the negligence of servants or agents could be invoked as a means of discharging the
liability arising from contract, the anomalous result would be that persons acting
through the medium of agents or servants in the performance of their contracts, would
be in a better position than those acting in person. If one delivers a valuable watch to a
watchmaker who contracts to repair it, and the bailee, by a personal negligent act
causes its destruction, he is unquestionably liable. Would it be logical to free him
from his liability for the breach of his contract, which involves the duty to exercise
due care in the preservation of the watch, if he shows that it was his servant whose
negligence caused the injury? If such a theory could be accepted, juridical persons
would enjoy practically complete immunity from damages arising from the breach of
their contracts if caused by negligent acts of omission or commission on the part of
their servants, as such juridical persons can of necessity only act through agents or
servants, and it would no doubt be true in most instances that reasonable care had
been taken in the selection and direction of such servants. If one delivers securities to
a banking corporation as collateral, and they are lost by reason of the negligence of
some clerk employed by the bank, would it be just and reasonable to permit the bank
to relieve itself of liability for the breach of its contract to return the collateral upon
the payment of the debt by proving that due care had been exercised in the selection
and direction of the clerk?
This distinction between culpa aquiliana, as the source of an obligation, and
culpa contractual as a mere incident to the performance of a contract has frequently
been recognized by the supreme court of Spain. (Sentencias of June 27, 1894;
November 20, 1896; and December 13 1896.) In the decision of November 20, 1896,
it appeared that plaintiff s action arose ex contractu, but that defendant sought to avail
himself of the provisions of article 1902 of the Civil Code as a defense. The Spanish
Supreme Court rejected defendant's contention, saying:

"These are not cases of injury caused, without any pre-existing

obligation, by fault or negligence, such as those to which article 1902 of the
Civil Code relates, but of damages caused by the defendant's failure to carry out
the undertakings imposed by the contracts . . .."

A brief review of the earlier decision of this court involving the liability of
employers for damage done by the negligent acts of their servants will show that in no
case has the court ever decided that the negligence of the defendant's servants [has]
been held to constitute a defense to an action for damages for breach of contract.
In the case of Johnson vs. David (5 Phil. Rep., 663), the court held that the
owner of a carriage was not liable for the damages caused by the negligence of his
driver. In that case the court commented on the fact that no evidence had been
adduced in the trial court that the defendant had been negligent in the employment of
the driver, or that he had any knowledge of his lack of skill or carefulness.

In the case of Baer Senior & Co.'s Successors vs. Compaia Maritima (6 Phil.
Rep., 215), the plaintiff sued the defendant for damages caused by the loss of a barge
belonging to plaintiff which was allowed to get adrift by the negligence of defendant's
servants in the course of the performance of a contract of towage. The court held,
citing Manresa (vol. 8, pp. 29, 69) that if the "obligation of the defendant grew out of
a contract made between it and the plaintiff . . . we do not think that the provisions of
articles 1902 and 1903 are applicable to the case."
In the case of Chapman vs. Underwood (27 Phil. Rep., 374), plaintiff sued the
defendant to recover damages for personal injuries caused by the negligence of
defendant's chauffeur while driving defendant's automobile in which defendant was
riding at the time. The court found that the damages were caused by the negligence of
the driver of the automobile, but held that the master was not liable, although he was
present at the time, saying:
" . . . unless the negligent acts of the driver are continued for such a
length of time as to give the owner a reasonable opportunity to observe them
and to direct the driver to desist therefrom. . . . The act complained of must be
continued in the presence of the owner for such a length of time that the owner
by his acquiescence, makes the driver's acts his own."

In the case of Yamada vs. Manila Railroad Co. and Rachrach Garage &
Taxicab Co. (33 Phil. Rep., 8), it is true that the court rested its conclusion as to the
liability of the defendant upon article 1903, although the facts disclosed that the injury
complained of by plaintiff constituted a breach of the duty to him arising out of the
contract of transportation. The express ground of the decision in this case was that
article 1903, in dealing with the liability of a master for the negligent acts of his
servants "makes the distinction between private individuals and public enterprise;"

that as to the latter the law creates a rebuttable presumption of negligence in the
selection or direction of the servants; and that in the particular case the presumption of
negligence had not been overcome.
It is evident, therefore, that in its decision in the Yamada case, the court treated
plaintiff's action as though founded in tort rather than as based upon the breach of the
contract of carriage, and an examination of the pleadings and of the briefs shows that
the questions of law were in fact discussed upon this theory. Viewed from the
standpoint of the defendant the practical result must have been the same in any event.
The proof disclosed beyond doubt that the defendant's servant was grossly negligent
and that his negligence was the proximate cause of plaintiff's injury. It also
affirmatively appeared that defendant had been guilty of negligence in its failure to
exercise proper discretion in the direction of the servant. Defendant was therefore,
liable for the injury suffered by plaintiff, whether the breach of the duty were to be
regarded as constituting culpa aquilina or culpa contractual. As Manresa points out
(vol. 8, pp. 29 and 69) whether negligence occurs as an incident in the course of the
performance of a contractual undertaking or is itself the source of an extra-contractual
obligation, its essential characteristics are identical. There is always an act or
omission productive of damage due to carelessness or inattention on the part of the
defendant. Consequently, when the court holds that a defendant is liable in damages
for having failed to exercise due care, either directly, or in failing to exercise proper
care in the selection and direction of his servants, the practical result is identical in
either ease. Therefore, it follows that it is not to be inferred, because the court held in
the Yamada ease that the defendant was liable for the damages negligently caused by
its servant to a person to whom it was bound by contract, and made reference to the
fact that the defendant was negligent in the selection and control of its servants, that in
such a case the court would have held that it would have been a good defense to the
action, if presented squarely upon the theory of the breach of the contract, for
defendant to have proved that it did in fact exercise care in the selection and control of
the servant.
The true explanation of such cases is to be found by directing the attention to
the relative spheres of contractual and extra-contractual obligations. The field of noncontractual obligation is much more broader than that of contractual obligation,
comprising, as it does, the whole extent of juridical human relations. These two fields,
figuratively speaking, concentric; that is to say, the mere fact that a person is bound to
another by contract does not relieve him from extra-contractual liability to such
person. When such a contractual relation exists the obligor may break the contract
under such conditions that the same act which constitutes a breach of the contract
would have constituted the source of an extra-contractual obligation had no contract
existed between the parties.
The contract of defendant to transport plaintiff carried with it, by implication,
the duty to carry him in safety and to provide safe means of entering and leaving its

trains (Civil Code, article 1258). That duty, being contractual, was direct and
immediate, and its non-performance could not be excused by proof that the fault was
morally imputable to defendant's servants.
The railroad company's defense involves the assumption that even granting that
the negligent conduct of its servants in placing an obstruction upon the platform was a
breach of its contractual obligation to maintain safe means of approaching and leaving
its trains, the direct and proximate cause of the injury suffered by plaintiff was his
own contributory negligence in failing to wait until the train had come to a complete
stop before alighting. Under the doctrine of comparative negligence announced in the
Rakes case (supra), if the accident was caused by plaintiff's own negligence, no
liability is imposed upon defendant, whereas if the accident was caused by defendant's
negligence and plaintiff's negligence merely contributed to his injury, the damages
should be apportioned. It is, therefore, important to ascertain if defendant was in fact
guilty of negligence.
It may be admitted that had plaintiff waited until the train had come to a full
stop before alighting, the particular injury suffered by him could not have occurred.
Defendant contends, and cites many authorities in support of the contention, that it is
negligence per se for a passenger to alight from a moving train. We are not disposed
to subscribe to this doctrine n its absolute form. We are of the opinion that this
proposition is too broadly stated and is at variance with the experience of every-day
life. In this particular instance, tat the train was barely moving when plaintiff alighted
is shown conclusively by the fact that it came to stop within six meters from the place
where he stepped from it. Thousands of persons alight from trains under these
conditions every day of the year, and sustain no injury where the company has kept its
platform free from dangerous obstructions. There is no reason to believe that plaintiff
would have suffered any injury whatever in alighting as he did had it not been for
defendant's negligent failure to perform its duty to provide a safe alighting place.
We are of the opinion that the correct doctrine relating to this subject is that
expressed in Thompson's work on Negligence (vol. 3, sec. 3010) as follows:
"The test by which to determine whether the passenger has been guilty
of negligence in attempting to alight from a moving railway train, is that of
ordinary or reasonable care. It is to be considered whether an ordinarily prudent
person, of the age, sex and condition of the passenger, would have acted as the
passenger acted under the circumstances disclosed by the evidence. This care
has been defined to be, not the care which may or should be used by the prudent
man generally, but the care which a man of ordinary prudence would use under
similar circumstances, to avoid injury." (Thompson, Commentaries on
Negligence, vol. 3, sec. 3010.)

Or, if we prefer to adopt the mode of exposition used by this court in Picart vs.
Snith (37 Phil. Rep., 809), we may say that the test is this; Was there anything in the

circumstances surrounding the plaintiff at the time he alighted from the train which
would have admonished a person of average prudence that to get off the train under
the conditions then existing was dangerous ? If so, the plaintiff should have desisted
from alighting; and his failure so to desist was contributory negligence.
As the case now before us presents itself, the only fact from which a
conclusion can be drawn to the effect that the plaintiff was guilty of contributory
negligence is that he stepped off the car without being able to discern clearly the
condition of the platform and while the train was yet slowly moving. In considering
the situation thus presented, it should not be overlooked that the plaintiff was, as we
find, ignorant of the fact that the obstruction which was caused by the sacks of melons
piled on the platform existed; and as the defendant was bound by reason of its duty as
a public carrier to afford to its passengers facilities for safe egress from its trains, the
plaintiff had a right to assume, in the absence of some circumstance to warn him to
the contrary, that the platform was clear. The place, as we have already stated, was
dark, or dimly lighted, and this also is proof of a failure upon the part of the defendant
in the performance of a duty owing by it to the plaintiff; for if it were by any
possibility conceded that it had a right to pile these sacks in the path of alighting
passengers, the placing of them in that position gave rise to the duty to light the
premises adequately so that their presence would be revealed.

As pertinent to the question of contributory negligence on the part of the

plaintiff in this case the following circumstances are to be noted: The company's
platform was constructed upon a level higher than that of the roadbed and the
surrounding ground. The distance from the steps of the car to the spot where the
alighting passenger would place his feet on the platform was thus reduced, thereby
decreasing the risk incident to stepping off. The nature of the platform, constructed as
it was of cement material, also assured to the passenger a stable and even surface on
which to alight. Furthermore, the plaintiff was possessed of the vigor and agility of
young manhood, and it was by no means so risky for him to get off while the train
was yet moving as the same act would have been in an aged or feeble person. In
determining the question of contributory negligence in performing such act that is
to say, whether the passenger acted prudently or recklessly the age, sex, and
physical condition of the passenger are circumstances necessarily affecting the safety
of the passenger, and should be considered. Women, it has been observed, as a
general rule, are less capable than men of alighting with safety under such conditions,
as the nature of their wearing apparel obstructs the free movement of the limbs.
Again, it may be noted that the place was perfectly familiar to the plaintiff, as it was
his daily custom to get on and off the train at this station. There could, therefore, be
no uncertainty in his mind with regard either to the length of the step which he was
required to take or the character of the platform where he was alighting. Our
conclusion is that the conduct of the plaintiff in undertaking to alight while the train

was yet slightly under way was not characterized by imprudence and that therefore he
was not guilty of contributory negligence.
The evidence shows that the plaintiff, at the time of the accident, was earning
P25 a month as a copyist clerk, and that the injuries he has suffered have permanently
disabled him from continuing that employment. Defendant has not shown that any
other gainful occupation is open to plaintiff. His expectancy of life, according to the
standard mortality tables, is approximately thirty-three years. We are of the opinion
that a fair compensation for the damage suffered by him for his permanent disability
is the sum of P2,500, and that he is also entitled to recover of defendant the additional
sum of P790.25 for medical attention, hospital services, and other incidental
expenditures connected with the treatment of his injuries.
The decision of the lower court is reversed, and judgment is hereby rendered
plaintiff for the sum of P3,290.25, and for the costs of both instances. So ordered.
Arellano, C.J., Torres, Street and Avancea, JJ., concur.

Separate Opinions
(Cangco v. Manila Railroad Co., G.R. No. 12191, [October 14, 1918], 38 PHIL 768785)
|||

SECOND DIVISION
[G.R. No. 84698. February 4, 1992.]
PHILIPPINE SCHOOL OF BUSINESS ADMINISTRATION, JUAN
D. LIM, BENJAMIN P. PAULINO, ANTONIO M. MAGTALAS,
COL. PEDRO SACRO, AND LT. M. SORIANO, petitioners, vs.
COURT OF APPEALS, HON. REGINA ORDOEZ-BENITEZ, in
her capacity as Presiding Judge of Branch 47, Regional Trial Court,
Manila, SEGUNDA R. BAUTISTA, and ARSENIA D. BAUTISTA,
respondents.
Balgos and Perez for petitioners.
Collantes, Ramirez & Associates for private respondents.
SYLLABUS
1. CIVIL LAW; QUASI-DELICTS; DOCTRINE OF IN LOCO PARENTIS. Article
2180, in conjunction with Article 2176 of the Civil Code, establishes the rule in in loco
parentis. This Court discussed this doctrine in the afore-cited cases of Exconde, (101
Phil. 843) Mendoza, (101 Phil. 414), Palisoc (G.R. No. L-29025, 4 October, 1971, 41
SCRA 548) and, more recently, in Amadora vs. Court of Appeals, (G.R. No. L-47745, 15
April 1988, 160 SCRA 315). In all such cases, it had been stressed that the law (Article
2180) plainly provides that the damage should have been caused or inflicted by pupils or
students of the educational institution sought to be held liable for the acts of its pupils or
students while in its custody.
2. ID.; OBLIGATIONS AND CONTRACTS; CONTRACTS RESULTING IN
BILATERAL OBLIGATIONS ESTABLISHED WHEN ACADEMIC INSTITUTION
ACCEPTS STUDENTS FOR ENROLLMENT. When an academic institution accepts
students for enrollment, there is established a contract between them, resulting in
bilateral obligations which both parties are bound to comply with. For its part, the school
undertakes to provide the student with an education that would presumably suffice to
equip him with the necessary tools and skills to pursue higher education or a profession.
On the other hand, the student covenants to abide by the school's academic requirements
and observe its rules and regulations. Institutions of learning must also meet the implicit
or "built-in" obligation of providing their students with an atmosphere that promotes or
assists in attaining its primary undertaking of imparting knowledge. Certainly, no student

can absorb the intricacies of physics or higher mathematics or explore the realm of the
arts and other sciences when bullets are flying or grenades exploding in the air or where
there looms around the school premises a constant threat to life and limb. Necessarily, the
school must ensure that adequate steps are taken to maintain peace and order within the
campus premises and to prevent the breakdown thereof.
3. ID.; QUASI-DELICTS; OBLIGATIONS ARISING FROM QUASI-DELICTS OR
TORTS ARISE ONLY BETWEEN PARTIES NOT BOUND BY CONTRACT.
Because the circumstances of the present case evince a contractual relation between the
PSBA and Carlitos Bautista, the rules on quasi-delict do not really govern. A perusal of
Article 2176 shows that obligations arising from quasi-delicts or tort, also known as
extra-contractual obligations, arise only between parties not otherwise bound by contract,
whether express or implied.
4. ID.; ID.; VIEW THAT LIABILITY FROM TORT MAY EXIST EVEN IF THERE IS
A CONTRACT. In Air France vs. Carroscoso (124 Phil. 722), the private respondent
was awarded damages for his unwarranted expulsion from a first-class seat aboard the
petitioner airline. It is noted, however, that the Court referred to the petitioner-airline's
liability as one arising from tort, not one arising from a contract of carriage. In effect, Air
France is authority for the view that liability from tort may exist even if there is a
contract, for the act that breaks the contract may be also a tort. (Austro-America S.S. Co.
vs. Thomas, 248 Fed. 231).
5. ID.; ID.; AN ACT WHICH BREACHES A CONTRACT IN BAD FAITH AND IN
VIOLATION OF ART. 21 CONSTITUTES QUASI-DELICT. Air France penalized
the racist policy of the airline which emboldened the petitioner's employee to forcibly
oust the private respondent to cater to the comfort of a white man who allegedly "had a
better right to the seat." In Austro-American, supra, the public embarrassment caused to
the passenger was the justification for the Circuit Court of Appeals, (Second Circuit), to
award damages to the latter. From the foregoing, it can be concluded that should the act
which breaches a contract be done in bad faith and be violative of Article 21, then there is
a cause to view the act as constituting a quasi-delict.
6. ID.; ID.; CONTRACTUAL RELATION, A CONDITION SINE QUA NON TO
SCHOOL'S LIABILITY. A contractual relation is a condition sine qua non to the
school's liability. The negligence of the school cannot exist independently on the
contract, unless the negligence occurs under the circumstances set out in Article 21 of the
Civil Code.
7. ID.; ID.; ID.; SCHOOL MAY STILL AVOID LIABILITY BY PROVING THAT
THE BREACH OF CONTRACTUAL OBLIGATION TO STUDENTS WAS NOT DUE
TO ITS NEGLIGENCE. Conceptually a school, like a common carrier, cannot be an
insurer of its students against all risks. It would not be equitable to expect of schools to
anticipate all types of violent trespass upon their premises, for notwithstanding the
security measures installed, the same may still fail against an individual or group

determined to carry out a nefarious deed inside school premises and environs. Should this
be the case, the school may still avoid liability by proving that the breach of its
contractual obligation to the students was not due to its negligence.
8. ID.; ID.; NEGLIGENCE; DEFINED. Negligence is statutorily defined to be the
omission of that degree of diligence which is required by the nature of the obligation and
corresponding to the circumstances of persons, time and place.

DECISION

PADILLA, J :
p

A stabbing incident on 30 August 1985 which caused the death of Carlitos Bautista while
on the second-floor premises of the Philippine School of Business Administration
(PSBA) prompted the parents of the deceased to file suit in the Regional Trial Court of
Manila (Branch 47) presided over by Judge (now Court of Appeals justice) Regina
Ordoez-Benitez, for damages against the said PSBA and its corporate officers. At the
time of his death, Carlitos was enrolled in the third year commerce course at the PSBA. It
was established that his assailants were not members of the schools academic community
but were elements from outside the school.
Specifically, the suit impleaded the PSBA and the following school authorities: Juan D.
Lim (President), Benjamin P. Paulino (Vice-President), Antonio M. Magtalas
(Treasurer/Cashier), Col. Pedro Sacro (Chief of Security) and a Lt. M. Soriano (Assistant
Chief of Security). Substantially, the plaintiffs (now private respondents) sought to
adjudge them liable for the victim's untimely demise due to their alleged negligence,
recklessness and lack of security precautions, means and methods before, during and after
the attack on the victim. During the proceedings a quo, Lt. M. Soriano terminated his
relationship with the other petitioners by resigning from his position in the school.
Defendants a quo (now petitioners) sought to have the suit dismissed, alleging that since
they are presumably sued under Article 2180 of the Civil Code, the complaint states no
cause of action against them, as jurisprudence on the subject is to the effect that academic
institutions, such as the PSBA, are beyond the ambit of the rule in the afore-stated article.
The respondent trial court, however, overruled petitioners' contention and thru an order
dated 8 December 1987, denied their motion to dismiss. A subsequent motion for
reconsideration was similarly dealt with by an order dated 25 January 1988. Petitioners
then assailed the trial court's dispositions before the respondent appellate court which, in
a decision * promulgated on 10 June 1988, affirmed the trial court's orders. On 22 August

1988, the respondent appellate court resolved to deny the petitioners' motion for
reconsideration. Hence, this petition.
At the outset, it is to be observed that the respondent appellate court primarily anchored
its decision on the law of quasi-delicts, as enunciated in Articles 2176 and 2180 of the
Civil Code. 1 Pertinent portions of the appellate court's now assailed ruling state:
"Article 2180 (formerly Article 1903) of the Civil Code is an adoptation from
the old Spanish Civil Code. The comments of Manresa and learned authorities
on its meaning should give way to present day changes. The law is not fixed and
flexible (sic); it must be dynamic. In fact, the greatest value and significance of
law as a rule of conduct in (sic) its flexibility to adopt to changing social
conditions and its capacity to meet the new challenges of progress.
Construed in the light of modern day educational systems, Article 2180 cannot
be construed in its narrow concept as held in the old case of Exconde vs.
Capuno 2 and Mercado vs. Court of Appeals 3 ; hence, the ruling in the Palisoc
4 case that it should apply to all kinds of educational institutions, academic or
vocational.
At any rate, the law holds the teachers and heads of the school staff liable unless
they relieve themselves of such liability pursuant to the last paragraph of Article
2180 by 'proving that they observed all the diligence to prevent damage.' This
can only be done at a trial on the merits of the case." 5

While we agree with the respondent appellate court that the motion to dismiss the
complaint was correctly denied and the complaint should be tried on the merits, we do
not however agree with the premises of the appellate court's ruling.
Article 2180, in conjunction with Article 2176 of the Civil Code, establishes the rule of in
loco parentis. This Court discussed this doctrine in the afore-cited cases of Exconde,
Mendoza, Palisoc and, more recently, in Amadora vs. Court of Appeals. 6 In all such
cases, it had been stressed that the law (Article 2180) plainly provides that the damage
should have been caused or inflicted by pupils or students of the educational institution
sought to be held liable for the acts of its pupils or students while in its custody.
However, this material situation does not exist in the present case for, as earlier indicated,
the assailants of Carlitos were not students of the PSBA, for whose acts the school could
be made liable.

However, does the appellate court's failure to consider such material facts mean the
exculpation of the petitioners from liability? It does not necessarily follow.
When an academic institution accepts students for enrollment, there is established a
contract between them, resulting in bilateral obligations which both parties are bound to
comply with. 7 For its part, the school undertakes to provide the student with an

education that would presumably suffice to equip him with the necessary tools and skills
to pursue higher education or a profession. On the other hand, the student covenants to
abide by the school's academic requirements and observe its rules and regulations.
Institutions of learning must also meet the implicit or "built-in" obligation of providing
their students with an atmosphere that promotes or assists in attaining its primary
undertaking of imparting knowledge. Certainly, no student can absorb the intricacies of
physics or higher mathematics or explore the realm of the arts and other sciences when
bullets are flying or grenades exploding in the air or where there looms around the school
premises a constant threat to life and limb. Necessarily, the school must ensure that
adequate steps are taken to maintain peace and order within the campus premises and to
prevent the breakdown thereof.
Because the circumstances of the present case evince a contractual relation between the
PSBA and Carlitos Bautista, the rules on quasi-delict do not really govern. 8 A perusal of
Article 2176 shows that obligations arising from quasi-delicts or tort, also known as
extra-contractual obligations, arise only between parties not otherwise bound by contract,
whether express or implied. However, this impression has not prevented this Court from
determining the existence of a tort even when there obtains a contract. In Air France vs.
Carroscoso (124 Phil. 722), the private respondent was awarded damages for his
unwarranted expulsion from a first-class seat aboard the petitioner airline. It is noted,
however, that the Court referred to the petitioner-airline's liability as one arising from
tort, not one arising from a contract of carriage. In effect, Air France is authority for the
view that liability from tort may exist even if there is a contract, for the act that breaks the
contract may be also a tort. (Austro-America S.S. Co. vs. Thomas, 248 Fed. 231).
This view was not all that revolutionary, for even as early as 1918, this Court was already
of a similar mind. In Cangco vs. Manila Railroad (38 Phil. 780), Mr. Justice Fisher
elucidated thus:
"The field of non-contractual obligation is much more broader than that of
contractual obligation, comprising, as it does, the whole extent of juridical
human relations. These two fields, figuratively speaking, concentric; that is to
say, the mere fact that a person is bound to another by contract does not relieve
him from extra-contractual liability to such person. When such a contractual
relation exists the obligor may break the contract under such conditions that the
same act which constitutes a breach of the contract would have constituted the
source of an extra-contractual obligation had no contract existed between the
parties."

Immediately what comes to mind is the chapter of the Civil Code on Human Relations,
particularly Article 21, which provides:
"Any person who wilfully causes loss or injury to another in a manner that is
contrary to morals, good customs or public policy shall compensate the latter
for the damage." (emphasis supplied)

Air France penalized the racist policy of the airline which emboldened the petitioner's
employee to forcibly oust the private respondent to cater to the comfort of a white man
who allegedly "had a better right to the seat." In Austro-American, supra, the public
embarrassment caused to the passenger was the justification for the Circuit Court of
Appeals, (Second Circuit), to award damages to the latter. From the foregoing, it can be
concluded that should the act which breaches a contract be done in bad faith and be
violative of Article 21, then there is a cause to view the act as constituting a quasi-delict.
In the circumstances obtaining in the case at bar, however, there is, as yet, no finding that
the contract between the school and Bautista had been breached thru the former's
negligence in providing proper security measures. This would be for the trial court to
determine. And, even if there be a finding of negligence, the same could give rise
generally to a breach of contractual obligation only. Using the test of Cangco, supra, the
negligence of the school would not be relevant absent a contract. In fact, that negligence
becomes material only because of the contractual relation between PSBA and Bautista. In
other words, a contractual relation is a condition sine qua non to the school's liability.
The negligence of the school cannot exist independently on the contract, unless the
negligence occurs under the circumstances set out in Article 21 of the Civil Code.
This Court is not unmindful of the attendant difficulties posed by the obligation of
schools, above-mentioned, for conceptually a school, like a common carrier, cannot be an
insurer of its students against all risks. This is specially true in the populous student
communities of the so-called "university belt" in Manila where there have been reported
several incidents ranging from gang wars to other forms of hooliganism. It would not be
equitable to expect of schools to anticipate all types of violent trespass upon their
premises, for notwithstanding the security measures installed, the same may still fail
against an individual or group determined to carry out a nefarious deed inside school
premises and environs. Should this be the case, the school may still avoid liability by
proving that the breach of its contractual obligation to the students was not due to its
negligence, here statutorily defined to be the omission of that degree of diligence which
is required by the nature of the obligation and corresponding to the circumstances of
persons, time and place. 9
As the proceedings a quo have yet to commence on the substance of the private
respondents' complaint, the record is bereft of all the material facts. Obviously, at this
stage, only the trial court can make such a determination from the evidence still to unfold.
WHEREFORE, the foregoing premises considered, the petition is DENIED. The Court of
origin (RTC, Manila, Br. 47) is hereby ordered to continue proceedings consistent with
this ruling of the Court. Costs against the petitioners.
SO ORDERED.
Melencio-Herrera, Paras, Regalado and Nocon, JJ., concur.

(Philippine School of Business Administration v. Court of Appeals, G.R. No. 84698,

[February 4, 1992])
|||

THIRD DIVISION
[G.R. No. 112576. October 26, 1994.]
METROPOLITAN BANK AND TRUST COMPANY, petitioner, vs.
THE HON. COURT OF APPEALS, RURAL BANK OF PADRE
GARCIA, INC. and ISABEL R. KATIGBAK, respondents.

DECISION

ROMERO, J :
p

This petition for certiorari seeks to annul the decision of respondent Court
of Appeals dated October 29, 1992 in CA GR CV No. 26571 affirming the
decision of the Regional Trial Court of Lipa, Batangas Branch XIII for
damages, and the Resolution dated November 11, 1993 denying petitioner's
motion for reconsideration of the aforesaid decision.
The case emanated from a dispute between the Rural Bank of Padre
Garcia, Inc. (RBPG) and Metropolitan Bank and Trust Company (MBTC)
relative to a credit memorandum dated April 5, 1982 from the Central Bank in
the amount of P304,000.00 in favor of RBPG.
The records show that Isabel Katigbak is the president and director of
RBPG, owning 65% of the shares thereof. Metropolitan Bank and Trust
Company (MBTC) is the rural bank's depository bank, where Katigbak
maintains current accounts with MBTC's main office in Makati as well as its
Lipa City branch.
cdrep

On April 6, 1982, MBTC received from the Central Bank a credit memo
dated April 5, 1982 that its demand deposit account was credited with
P304,000.00 for the account of RBPG, representing loans granted by the Central
Bank to RBPG. On the basis of said credit memo, Isabel Katigbak issued several
checks against its account with MBTC in the total amount of P300,000.00, two
(2) of which (Metrobank Check Nos. 0069 and 0070) were payable to Dr. Felipe
C. Roque and Mrs. Eliza Roque for P25,000.00 each. Said checks issued to Dr.
and Mrs. Roque were deposited by the Roques with the Philippine Banking

Corporation, Novaliches Branch in Quezon City. When these checks were

forwarded to MBTC on April 12, 1982 for payment (six (6) days from receipt of
the Credit Memo), the checks were returned by MBTC with the annotations
"DAIF TNC" (Drawn Against Insufficient Funds Try Next Clearing) so
they were redeposited on April 14, 1982. These were however again dishonored
and returned unpaid for the following reasons: "DAIF TNC NO ADVICE
FROM CB."
After the second dishonor of the two (2) checks, Dr. Felipe Roque, a
member of the Board of Directors of Philippine Banking Corporation, allegedly
went to the Office of Antonio katigbak, an officer of RBPG, chiding him for the
bouncing checks. In order to appease the doctor, RBPG paid Dr. Roque
P50,000.00 in cash to replace the aforesaid checks.
On April 13, 1982, Isabel Katigbak who was in Hongkong on a businessvacation trip together with her sons Alfredo and Antonio, both of whom were
also officers of RBPG, received overseas phone calls from Mrs. Maris KatigbakSan Juan at her residence in San Lorenzo Village, Makati, informing Isabel
Katigbak that a certain Mr. Rizal Dungo, Assistant Cashier of MBTC insisted on
talking to her (Mrs. San Juan), berating her about the checks which bounced,
saying "Nag-issue kayo ng tseke, wala namang pondo," even if it was explained
to Mr. Dungo that Mrs. San Juan was not in any way connected with RBPG.
Mrs. Katigbak testified that she informed Mrs. San Juan to request
defendant MBTC to check and verify the records regarding the aforementioned
Central Bank credit memo for P304,000.00 in favor of RBPG as she was certain
that the checks were sufficiently covered by the CB credit memo as early as
April 6, 1994, but the following day, Mrs. San Juan received another insulting
call from Mr. Dungo ("Bakit kayo nag-issue ng tseke na wala namang pondo,
Three Hundred Thousand na.") 1 When Mrs. San Juan explained to him the need
to verify the records regarding the Central Bank memo, he merely brushed it
aside, telling her sarcastically that he was very sure that no such credit memo
existed. Mrs. San Juan was constrained to place another long distance call to
Mrs. Katigbak in Hongkong that evening. Tense and angered, the Katigbaks had
to cut short their Hongkong stay with their respective families and flew back to
Manila, catching the first available flight on April 15, 1982.
Immediately upon arrival, Mrs. Katigbak called up MBTC, through a Mr.
Cochico, for a re-examination of the records of MBTC regarding the Central
Bank credit memo dated April 5, 1982 for P304,000.00. Mr. Dungo, to whom
Cochico handed over the phone, allegedly arrogantly said: "Bakit kayo
magagalit, wala naman kayong pondo?" These remarks allegedly so shocked
Mrs. Katigbak that her blood pressure rose to a dangerous level and she had to
undergo medical treatment at the Makati Medical Center for two (2) days.

Metrobank not only dishonored the checks issued by RBPG, the latter
was issued four (4) debit memos representing service and penalty charges for the
returned checks.
RBPG and Isabel Katigbak filed Civil Case No. V-329 in the RTC of
Lipa, Batangas Branch XIII against the Metropolitan Bank and Trust
Company for damages on April 26, 1983.
The ultimate facts as alleged by the defendant MBTC in its answer are as
follows: that on April 6, 1982, its messenger, Elizer Gonzales, received from the
Central Bank several credit advices on rural bank accounts, which included that
of plaintiff RBPG in the amount of P304,000.00; that due to the inadvertence of
said messenger, the credit advice issued in favor of plaintiff RBPG was not
delivered to the department in charge of processing the same; consequently,
when MBTC received from the clearing department the checks in question, the
stated balance in RBPG's account was only P5,498.58 which excluded the
unprocessed credit advice of P304,000.00 resulting in the dishonor of the
aforementioned checks; that as regards the P304,000.00 which was a rediscounting loan from the Central Bank, the same was credited only on April 15,
1982 after the Central Bank finally confirmed that a credit advice was indeed
issued in favor of RBPG; that after the confirmation, MBTC credited the amount
of the credit advice to plaintiff RBPG's account and thru its officers, allegedly
conveyed personally on two occasions its apologies to plaintiffs to show that the
bank and its officers acted with no deliberate intent on their part to cause injury
or damage to plaintiffs, explaining the circumstances that gave rise to the
bouncing checks situation. Metrobank's negligence arising from their
messenger's misrouting of the credit advice resulting in the return of the checks
in question, despite daily reporting of credit memos and a corresponding daily
radio message confirmation, (as shown by Exhibit "I," the Investigation Report
of the bank's Mr. Valentino Elevado) and Mr. Dungo's improper handling of
clients led to the messenger's dismissal from service and Mr. Dungo's transfer
from Metro Manila to Mindoro.
The threshold issue was whether or not, under the facts and circumstances
of the case, plaintiff may be allowed to recover actual, moral and exemplary
damages, including attorney's fees, litigation expenses and the costs of the suit.
On August 25, 1989, the RTC of Lipa City rendered a decision 2 in favor of
plaintiffs and against the defendant MBTC, ordering the latter to:
1. pay plaintiff Isabel Katigbak P50,000.00 as temperate damages;
2. pay P500,000.00 as moral damages, considering that RBPG's credit standing
and business reputation were damaged by the wrongful acts of defendant's
employees, coupled with the rude treatment received by Isabel Katigbak at the
hands of Mr. Dungo, all of which impelled her to seek medical treatment;

3. pay P100,000.00 as attorney's fees and litigation expenses; and

4. pay the costs of suit.
The lower court did not award actual damages in the amount of
P50,000.00 representing the amount of the two (2) checks payable to Dr. Felipe
C. Roque and Mrs. Elisa Roque for P25,000.00 each, as it found no showing that
Mr. Antonio Katigbak who allegedly paid the amount was actually reimbursed
by plaintiff RBPG. Moreover, the court held that no actual damages could have
been suffered by plaintiff RBPG because on April 15, 1982, the Central Bank
credit advice in the amount of P304,000 which included the two (2) checks
issued to the Roque spouses in the sum of P50,000.00 were already credited to
the account of RBPG and the service, as well as penalty charges, were all
reversed.
MBTC appealed from the decision to the Court of Appeals in CA GR
CV No. 26571, alleging that the trial court erred in awarding temperate and
moral damages, as well as attorney's fees, plus costs and expenses of litigation
without factual or legal basis therefor.
On October 29, 1992, the Court of Appeals rendered a decision 3
affirming that of the trial court, except for the deletion of the award of temperate
damages, the reduction of moral damages from P500,000.00 to P50,000.00 in
favor of RBPG and P100,000.00 for Isabel Katigbak and P50,000.00, as
attorney's fees. Plaintiffs-appellees filed a motion for reconsideration of the
decision, questioning the deletion of the award of temperate damages and the
reduction of the award of moral damages and attorney's fees. The motion was
denied.
MBTC filed this petition, presenting the following issues for resolution:
1. whether or not private respondents RBPG and Isabel Rodriguez are legally
entitled to moral damages and attorney's fees, and.
2. assuming that they are so entitled, whether or not the amounts awarded are
excessive and unconscionable.
prcd

The petition is devoid of merit.

The case at bench was instituted to seek damages caused by the dishonor
through negligence of respondent bank's checks which were actually sufficiently
funded, and the insults from petitioner bank's officer directed against private
respondent Isabel R. Katigbak. The presence of malice and the evidence of
besmirched reputation or loss of credit and business standing, as well as a
reappraisal of its probative value, involves factual matters which, having been
already thoroughly discussed and analyzed in the courts below, are no longer

reviewable here. While this rule admits of exceptions, this case does not fall
under any of these.

There is no merit in petitioner's argument that it should not be considered

negligent, much less be held liable for damages on account of the inadvertence
of its bank employee as Article 1173 of the Civil Code only requires it to
exercise the diligence of a good pater familias.
As borne out by the records, the dishonoring of the respondent's checks
committed through negligence by the petitioner bank on April 6, 1982 was
rectified only on April 15, 1992 or nine (9) days after receipt of the credit memo.
Clearly, petitioner bank was remiss in its duty and obligation to treat private
respondents' account with the highest degree of care, considering the fiduciary
nature of their relationship. The bank is under obligation to treat the accounts of
its depositors with meticulous care, whether such account consists only of a few
hundred pesos or of millions. It must bear the blame for failing to discover the
mistake of its employee despite the established procedure requiring bank papers
to pass through bank personnel whose duty it is to check and countercheck them
for possible errors. 4 Responsibility arising from negligence in the performance
of every kind of obligation is demandable. 5 While the bank's negligence may
not have been attended with malice and bad faith, nevertheless, it caused serious
anxiety, embarrassment and humiliation to private respondents for which they
are entitled to recover reasonable moral damages. 6
As the records bear out, insult was added to injury by petitioner bank's
issuance of debit memoranda representing service and penalty charges for the
returned checks, not to mention the insulting remarks from its Assistant Cashier.
In the case of Leopoldo Araneta v. Bank of America, 7 we held that:
"The financial credit of a businessman is a prized and valuable
asset, it being a significant part of the foundation of his business. Any
adverse reflection thereon constitutes some financial loss to him. As stated
in the case of Atlanta National Bank vs. Davis, 96 Ga 334, 23 SE 190,
citing 2 Morse Banks, Sec. 458, 'it can hardly be possible that a customer's
check can be wrongfully refused payment without some impeachment of
his credit, which must in fact be an actual injury, though he cannot, from
the nature of the case, furnish independent, distinct proof thereof'."

It was established that when Mrs. Katigbak learned that her checks were
not being honored and Mr. Dungo repeatedly made the insulting phone calls, her
wounded feelings and the mental anguish suffered by her caused her blood
pressure to rise beyond normal limits, necessitating medical attendance for two
(2) days at a hospital.

The damage to private respondents' reputation and social standing entitles

them to moral damages. Moral damages include physical suffering, mental
anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral
shock, social humiliation and similar injury. 8 Temperate or moderate damages
which are more than nominal but less than compensatory damages, may be
recovered when the court finds that some pecuniary loss has been suffered but
its amount cannot, from the nature of the case, be proved with certainty. 9
Temperate damages may be allowed in cases where from the nature of the case,
definite proof of pecuniary loss cannot be adduced, although the court is
convinced that there has been such loss. The appellate court, however, justified
its deletion when MBTC reasoned out that the amount of P50,000.00 is not part
of the relief prayed for in the complaint, aside from the fact that the amount
allegedly suffered by Mrs. Katigbak is susceptible of proof. 10
Moral and temperate damages which are not susceptible of pecuniary
estimation are not awarded to penalize the petitioner but to compensate the
respondents for injuries suffered as a result of the former's fault and negligence,
taking into account the latter's credit and social standing in the banking
community, particularly since this is the very first time such humiliation has
befallen private respondents. The amount of such losses need not be established
with exactitude, precisely due to their nature. 11
The carelessness of petitioner bank, aggravated by the lack of promptness
in repairing the error and the arrogant attitude of the bank officer handling the
matter, justifies the grant of moral damages, which are clearly not excessive and
unconscionable.
prLL

Moreover, considering the nature and extent of the services rendered by

private respondent's counsel, both in the trial and appellate courts, the Court
deems it just and equitable that attorney's fees in the amount of P50,000.00 be
awarded.
WHEREFORE, the decision of respondent Court of Appeals is
AFFIRMED in all respects.
SO ORDERED.
Bidin, Melo and Vitug, JJ., concur.
Feliciano, J., is on Leave.
(Metropolitan Bank and Trust Co. v. Court of Appeals, G.R. No. 112576, [October 26,
1994])
|||

EN BANC
[G.R. No. L-10126. October 22, 1957.]
SALUD VILLANUEVA VDA. DE BATACLAN and the minors
NORMA, LUZVIMINDA, ELENITA, OSCAR and ALFREDO
BATACLAN, represented by their Natural guardian, SALUD
VILLANUEVA VDA. DE BATACLAN, plaintiffs-appellants, vs.
MARIANO MEDINA, defendant-appellant.
Lope E. Adriano, Emmanuel Andamo and Jose R. Francisco for plaintiffsappellants.
Fortunato Jose for defendant-appellant.
SYLLABUS
1. DAMAGES; CARRIER'S LIABILITY; WORDS AND PHRASES;
PROXIMATE CAUSE DEFINED. "The proximate legal cause is that the acting
first and producing the injury, either immediately or by setting other events in
motion., all constituting a natural and continuous chain of events, each having a close
causal connection with its immediate predecessor, the final event in the chain
immediately affecting the injury as a natural and probable result of the cause which
first acted, under such circumstances that the person responsible for the first event
should, as ordinarily prudent and intelligent person, have reasonable ground to expect
at the moment of his act or default that an injury to some person might be probably
result therefrom."
2. ID.; ID.; OVERTURNING OF BUS; PROXIMATE CAUSE OF DEATH.
When a vehicle turned not only on its side but completely on its back, the leaking
of the gasoline from the tank was not unnatural or unexpected; that the coming of the
men with the lighted torch was in response to the call for help, made not only by the
passengers, but most probably by the driver and the conductor themselves, and that
because it was very dark (about 2:30 in the morning), the rescuers had to carry a light
with them; and coming as they did from a rural area where the lanterns and flashlights
were not available, they had to use a torch the most handy and available; and what
was more natural, that said rescuers should innocently approached the overtuned
vehicle to extend the aid and effect the rescue requested from them. Held: That the

proximate cause of the death of B was overturning of the vehicle thru the negligence
of defendant and his agent.
3. ID.; ID.; CARRIER'S NEGLIGENCE; BURNING OF THE BUS. The
burning of the bus wherein some of the passengers were trapped can also be attributed
to the negligence of the carrier, through the driver and conductor who were on the
road walking back and forth. They should and must have known that in the position in
which the overtuned bus was, gasoline could and must have leaked from the gasoline
tank and soaked the area in and around the bus, this aside from the fact that gasoline
when spilled, especially over a large area, can be smelt and detected even from a
distance, Held: That the failure of the driver and the conductor to have cautioned or
taken steps to warn the rescuers not to bring the lighted torch too near the bus,
constitute negligence on the part of the agents of the carrier under the provisions of
the Civil Code, particularly, Article 1733, 1759 and 1763 thereof.

DECISION

MONTEMAYOR, J :
p

Shortly after midnight, on September 13, 1952, bus No. 30 of the Medina
Transportation, operated by its owner, defendant Mariano Medina, under a certificate
of public convenience, left the town of Amadeo, Cavite, on its way to Pasay City,
driven by its regular chauffeur, Conrado Saylon. There were about eighteen
passengers, including the driver and conductor. Among the passengers were Juan
Bataclan, seated beside and to the right of the driver, Felipe Lara, seated to the right
of Bataclan, another passenger apparently from the Visayan Islands whom the
witnesses just called Visaya, apparently not knowing his name, seated on the left side
of the driver, and a woman named Natalia Villanueva, seated just behind the four last
mentioned. At about 2 :00 o'clock that same morning, while the bus was running
within the jurisdiction of Imus, Cavite, one of the front tires burst and the vehicle
began to zig-zag until it fell into a canal or ditch on the right side of the road and
turned turtle. Some of the passengers managed to leave the bus the best way they
could, others had to be helped or pulled out, while the three passengers seated beside
the driver, named Bataclan, Lara and the Visayan and the woman behind them named
Natalia Villanueva, could not get out of the overturned bus. Some of the passengers,
after they had clambered up to the road, heard groans and moans from inside the bus,
particularly, shouts for help from Bataclan and Lara, who said that they could not get
out of the bus. There, is nothing in the evidence to show whether or not the passengers
already free from the wreck, including the driver and the conductor, made any attempt
to pull out or extricate and rescue the four passengers trapped inside the vehicle, but

calls or shouts for help were made to the houses in the neighborhood. After half an
hour, came about ten men, one of them carrying a lighted torch made of bamboo with
a wick on one end, evidently fueled with petroleum. These men presumably
approached the overturned bus, and almost immediately, a fierce fire started, burning
and all but consuming the bus, including the four passengers trapped inside it. It
would appear that as the bus overturned, gasoline began to leak and escape from the
gasoline tank on the side of the chassis, spreading over and permeating the body of
the bus and the ground under and around it, and that the lighted torch brought by one
of the men who answered the call for help set it on fire.
That same day, the charred bodies of the four doomed passengers inside the
bus were removed and duly identified, specially that of Juan Bataclan. By reason of
his death, his widow, Salud Villanueva, in her name and in behalf of her five minor
children, brought the present suit to recover from Mariano Medina compensatory,
moral, and exemplary damages and attorney's fees in the total amount of P87,150.
After trial, the Court of First Instance of Cavite awarded P1,000 to the plaintiffs, plus
P600 as attorney's fee, plus P100, the value of the merchandise being carried by
Bataclan to Pasay City for sale and which was lost in the fire. The plaintiffs and the
defendants appealed the decision to the Court of Appeals, but the latter court endorsed
the appeal to us because of the value involved in the claim in the complaint.
Our New Civil Code amply provides for the responsibility of a common carrier
to its passengers and their goods. For purposes of reference, we are reproducing the
pertinent codal provisions:
"ART. 1733. Common carriers, from the nature of their business and for
reasons of public policy, are bound to observe extraordinary diligence in the
vigilance over the goods and for the safety of the passengers transported by
them, according to all the circumstances of each case.
Such extraordinary diligence in the vigilance over the goods is further
expressed in articles 1734, 1735, and 1745, Nos. 5, 6, and 7 while the
extraordinary diligence for the safety of the passengers is further set forth in
articles 1755 and 1756."
"ART. 1755. A common carrier is bound to carry the passengers safely
as far as human care and foresight can provide, using the utmost diligence of
very cautious persons, with a due regard for all the circumstances."
"ART. 1756. In case of death of or injuries to passengers, common
carriers are presumed to have been at fault or to have acted negligently, unless
they prove that they observed extraordinary diligence as prescribed in articles
1733 and 1755."
"ART. 1759. Common carriers are liable for the death of or injuries to
passengers through the negligence or wilful acts of the former's employees,

although such employees may have acted beyond the scope of their authority or
in violation of the orders of the common carriers.
This liability of the common carriers does not cease upon proof that they
exercised all the diligence of a good father of a family in the selection and
supervision of their employees."
"ART. 1763. A common carrier is responsible for injuries suffered by a
passenger on account of the wilful acts or negligence of other passengers or of
strangers, if the common carrier's employees through the exercise of the
diligence of a good father of a family could have prevented or stopped the act or
omission."

We agree with the trial court that the case involves a breach of contract of
transportation for hire, the Medina Transportation having undertaken to carry
Bataclan safely to his destination, Pasay City. We also agree with the trial court that
there was negligence on the part of the defendant, through his agent, the driver
Saylon. There is evidence to show that at the time of the blow out, the bus was
speeding, as testified to by one of the passengers, and as shown by the fact that
according to the testimony of the witnesses, including that of the defense, from the
point where one of the front tires burst up to the canal where the bus overturned after
zig-zagging, there was a distance of about 150 meters. The chauffeur, after the blowout, must have applied the brakes in order to stop the bus, but because of the velocity
at which the bus must have been running, its momentum carried it over a distance of
150 meters before it fell into the canal and turned turtle.
There is no question that under the circumstances, the defendant carrier is
liable. The only question is to what degree. The trial court was of the opinion that the
proximate cause of the death of Bataclan was not the overturning of the bus, but
rather, the fire that burned the bus, including himself and his co-passengers who were
unable to leave it; that at the time the fire started, Bataclan, though he must have
suffered physical injuries, perhaps serious, was still alive, and so damages were
awarded, not for his death, but for the physical injuries suffered by him. We disagree.
A satisfactory definition of proximate cause is found in Volume 38, pages 695-696 of
American Jurisprudence, cited by plaintiffs-appellants in their brief. It is as follows:

". . . 'that cause, which, in natural and continuous sequence, unbroken by

any efficient intervening cause, produces the injury, and without which the
result would not have occurred.' And more comprehensively, 'the proximate
legal cause is that acting first and producing the injury, either immediately or by
setting other events in motion, all constituting a natural and continuous chain of
events, each having a close causal connection with its immediate predecessor,
the final event in the chain immediately effecting the injury as a natural and
probable result of the cause which first acted, under such circumstances that the

person responsible for the first event should, as an ordinarily prudent and
intelligent person, have reasonable ground to expect at the moment of his act or
default that an injury to some person might probably result therefrom."

It may be that ordinarily, when a passenger bus overturns, and pins down a passenger,
merely causing him physical injuries, if through some event, unexpected and
extraordinary, the overturned bus is set on fire, say, by lightning, or if some
highwaymen after looting the vehicle sets it on fire, and the passenger is burned to
death, one might still contend that the proximate cause of his death was the fire and
not the overturning of the vehicle. But in the present case and under the circumstances
obtaining in the same, we do not hesitate to hold that the proximate cause of the death
of Bataclan was the overturning of the bus, this for the reason that when the vehicle
turned not only on its side but completely on its back, the leaking of the gasoline from
the tank was not unnatural or unexpected; that the coming of the men with a lighted
torch was in response to the call for help, made not only by the passengers, but most
probably, by the driver and the conductor themselves, and that because it was very
dark (about 2:30 in the morning), the rescuers had to carry a light with them; and
coming as they did from a rural area where lanterns and flashlights were not available,
they had to use a torch, the most handy and available; and what was more natural than
that said rescuers should innocently approach the overturned vehicle to extend the aid
and effect the rescue requested from them. In other words, the coming of the men
with the torch was to be expected and was a natural sequence of the overturning of the
bus, the trapping of some of its passengers and the call for outside help. What is more,
the burning of the bus can also in part be attributed to the negligence of the carrier,
through its driver and its conductor. According to the witnesses, the driver and the
conductor were on the road walking back and forth. They, or at least, the driver
should and must have known that in the position in which the overturned bus was,
gasoline could and must have leaked from the gasoline tank and soaked the area in
and around the bus, this aside from the fact that gasoline when spilled, specially over
a large area, can be smelt and detected even from a distance, and yet neither the driver
nor the conductor would appear to have cautioned or taken steps to warn the rescuers
not to bring the lighted torch too near the bus. Said negligence on the part of the
agents of the carrier come under the codal provisions above- reproduced, particularly,
Articles 1733, 1759 and 1763.
As regards the damages to which plaintiffs are entitled, considering the earning
capacity of the deceased, as well as the other elements entering into a damage award,
we are satisfied that the amount of SIX THOUSAND (P6,000) PESOS would
constitute satisfactory compensation, this to include compensatory, moral, and other
damages. We also believe that plaintiffs are entitled to attorney's fees, and assessing
the legal services rendered by plaintiffs' attorneys not only in the trial court, but also
in the course of the appeal, and not losing sight of the able briefs prepared by them,
the attorney's fees may well be fixed at EIGHT HUNDRED (P800) PESOS. The

award made by the trial court of ONE HUNDRED (P100) PESOS for the loss of the
merchandise carried by the deceased in the bus, is adequate and will not be disturbed.
There is one phase of this case which disturbs if it does not shock us.
According to the evidence, one of the passengers who, because of the injuries suffered
by her, was hospitalized, and while in the hospital, she was visited by the defendant
Mariano Medina, and in the course of his visit, she overheard him speaking to one of
his bus inspectors, telling said inspector to have the tires of the bus changed
immediately because they were already old, and that as a matter of fact, he had been
telling the driver to change the said tires, but that the driver did not follow his
instructions. If this be true, it goes to prove that the driver had not been diligent and
had not taken the necessary precautions to insure the safety of his passengers. Had he
changed the tires, specially those in front, with new ones, as he had been instructed to
do, probably, despite his speeding, as we have already stated, the blow out would not
have occurred. All in all, there is reason to believe that the driver operated and drove
his vehicle negligently, resulting in the death of four of his passengers, physical
injuries to others, and the complete loss and destruction of their goods, and yet the
criminal case against him, on motion of the fiscal and with his consent, was
provisionally dismissed, because according to the fiscal, the witnesses on whose
testimony he was banking to support the complaint, either failed to appear or were
reluctant to testify. But the record of the case before us shows that several witnesses,
passengers in that bus, willingly and unhesitatingly testified in court to the effect that
the said driver was negligent. In the public interest, the prosecution of said erring
driver should be pursued, this, not only as a matter of justice, but for the promotion of
the safety of passengers on public utility buses. Let a copy of this decision be
furnished the Department of Justice and the Provincial Fiscal of Cavite.
In view of the foregoing, with the modification that the damages awarded by
the trial court are increased from ONE THOUSAND (P1,000) PESOS to SIX
THOUSAND (P6,000) PESOS, and from SIX HUNDRED PESOS TO EIGHT
HUNDRED (P800) PESOS, for the death of Bataclan and for attorney's fees,
respectively, the decision appealed from is hereby affirmed, with costs.
Paras, C. J., Bengzon, Padilla, Reyes, A., Bautista Angelo, Labrador,
Concepcion., Reyes, J. B. L., Endencia and Felix, JJ., concur.

(Vda. De Bataclan v. Medina, G.R. No. L-10126, [October 22, 1957], 102 PHIL 181189)
|||

THIRD DIVISION
[G.R. No. L-44264. September 19, 1988.]
HEDY GAN y YU, petitioner, vs. THE HONORABLE COURT OF
APPEALS and the PEOPLE OF THE PHILIPPINES, respondents.
Pacis, Baluyot, Reyes & De Leon for petitioner.
The Solicitor General for respondents.
SYLLABUS
1.CRIMINAL LAW; HOMICIDE THRU SIMPLE IMPRUDENCE; NEGLIGENCE;
TEST TO DETERMINE CULPABILITY. The test for determining whether or not a
person is negligent in doing an act whereby injury or damage results to the person or
property of another is this: Would a prudent man in the position of the person to whom
negligence is attributed foresee harm to the person injured as a reasonable consequence
of the course about to be pursued? If so, the law imposes the duty on the doer to take
precaution against its mischievous results and the failure to do so constitutes negligence.
2.ID.; ID.; ID.; EMERGENCY RULE. A corollary rule is what is known in the law as
the emergency rule. "Under that rule, one who suddenly finds himself in a place of
danger, and is required to act without time to consider the best means that may be
adopted to avoid the impending danger, is not guilty of negligence, if he fails to adopt
what subsequently and upon reflection may appear to have been a better method, unless
the emergency in which he finds himself is brought about by his own negligence."
3.REMEDIAL LAW; EVIDENCE; ACCUSED STATEMENT PRESENTED BY
PROSECUTION DEEMED ADMITTED BY IT. The prosecution having presented
this exhibit as its own evidence, we cannot but deem its veracity to have been admitted
by it.
4.CRIMINAL LAW; HOMICIDE THRU SIMPLE IMPRUDENCE; NEGLIGENCE; A
DRIVER WHO SUDDENLY HAD TO EXERCISE HER BEST JUDGMENT TO
AVOID DANGER IS NOT NEGLIGENT. Under the circumstances narrated by
petitioner, we find that the appellate court is asking too much from a mere mortal like the
petitioner who in the blink of an eye had to exercise her best judgment to extricate herself
from a difficult and dangerous situation caused by the driver of the overtaking vehicle.

Petitioner certainly could not be expected to act with all the coolness of a person under
normal conditions." The danger confronting petitioner was real and imminent,
threatening her very existence. She had no opportunity for rational thinking but only
enough time to heed the very powerful instinct of self-preservation. Also, the respondent
court itself pronounced that the petitioner was driving her car within the legal limits. We
therefore rule that the "emergency rule" enunciated above applies with full force to the
case at bar and consequently absolve petitioner from any criminal negligence in
connection with the incident under consideration.
5.CRIMINAL LAW; CIVIL LIABILITY; RELEASE BY HEIRS OF CLAIM IS
WAIVER OF AWARD OF DAMAGES. We further set aside the award of damages
to the heirs of the victim, who by executing a release of the claim due them, had
effectively and clearly waived their right thereto. Petitioner is no longer liable for the
P12,000.00 civil indemnity awarded by the appellate court to the heirs of the victim.

DECISION

FERNAN C.J. :
p

Petitioner Hedy Gan was convicted of the crime of Homicide thru Reckless Imprudence
in Criminal Case No. 10201 of the then Court of First Instance of Manila, Branch XXII,
presided by Judge Federico C. Alikpala. She was sentenced to an indeterminate penalty
of four (4) months and one (1) day of arresto mayor as minimum and two (2) years, four
(4) months and one (1) day of prision correccional as maximum and was made to
indemnify the heirs of the victim the sum of P12,000.00 without any subsidiary
imprisonment in case of insolvency and to pay the costs. On appeal, the trial court's
decision was modified and petitioner was convicted only of Homicide thru Simple
Imprudence. Still unsatisfied with the decision of the Court of Appeals, 1 petitioner has
come to this Court for a complete reversal of the judgment below.
The facts of the case as found by the appellate court are as follows:
"In the morning of July 4, 1972 at about 8:00 o'clock, the accused Hedy Gan
was driving a Toyota car along North Bay Boulevard, Tondo, Manila. While in
front of house no. 694 of North Bay Boulevard, there were two vehicles, a truck
and a jeepney parked on one side of the road, one following the other about two
to three meters from each other. As the car driven by the accused approached
the place where the two vehicles were parked, there was a vehicle coming from
the opposite direction, followed by another which tried to overtake and bypass
the one in front of it and thereby encroached the lane of the car driven by the
accused. To avoid a head-on collision with the oncoming vehicle, the defendant
swerved to the right and as a consequence, the front bumper of the Toyota

Crown Sedan hit an old man who was about to cross the boulevard from south
to north, pinning him against the rear of the parked jeepney. The force of the
impact caused the parked jeepney to move forward hitting the rear of the parked
truck ahead of it. The pedestrian was injured, the Toyota Sedan was damaged on
its front, the jeep suffered damages on its rear and front parts, and the truck
sustained scratches at the wooden portion of its rear. The body of the old man
who was later identified as Isidoro Casino was immediately brought to the Jose
Reyes Memorial Hospital but was (pronounced) dead on arrival." 2

An information for Homicide thru Reckless Imprudence was filed against petitioner in
view of the above incident. She entered a plea of not guilty upon arraignment and the
case was set for trial.
Meanwhile, petitioner sought and was granted a re-investigation by the City Fiscal, as a
result of which the trial fiscal moved for the dismissal of the case against petitioner
during the resumption of hearing on September 7, 1972. The grounds cited therefor were
lack of interest on the part of the complaining witness to prosecute the case as evidenced
by an affidavit of desistance submitted to the trial court and lack of eyewitness to sustain
the charge.
The motion to dismiss filed by the fiscal was never resolved. The Court instead ordered
the prosecution to present its evidence. After the prosecution rested its case, the petitioner
filed a motion to dismiss the case on the ground of insufficiency of evidence.
On December 22, 1972, the trial court rendered judgment finding petitioner guilty beyond
reasonable doubt of the offense charged.
Petitioner appealed to the Court of Appeals in CA-G.R. No. 14472-CR. On May 3, 1976,
the Court of Appeals rendered a decision, the dispositive portion of which reads as
follows:
"Wherefore, as modified, the accused Hedy Gan is guilty beyond reasonable
doubt of the crime of homicide thru simple imprudence and, pursuant to
paragraph 2, Article 365 of the Revised Penal Code she is hereby sentenced to
the indeterminate penalty of three (3) months and eleven (11 ) days of arresto
mayor and to indemnify the heirs of Isidoro Casino in the sum of Twelve
Thousand Pesos (P12,000.00) without, however, any subsidiary imprisonment
in case of insolvency, and to pay the costs." 3

Petitioner now appeals to this Court on the following assignments of errors:

I
The Court of Appeals erred in holding that when the petitioner saw a car
travelling directly towards her, she should have stepped on the brakes
immediately or in swerving her vehicle to the right should have also stepped on
the brakes or lessened her speed, to avoid the death of a pedestrian.

II
The Court of Appeals erred in convicting the petitioner of the crime of
Homicide thru Simple Imprudence.
III
The Court of Appeals erred in adjudging the petitioner liable to indemnify the
deceased in the sum of P12,000.00. 4

We reverse.
The test for determining whether or not a person is negligent in doing an act whereby
injury or damage results to the person or property of another is this: Would a prudent man
in the position of the person to whom negligence is attributed foresee harm to the person
injured as a reasonable consequence of the course about to be pursued? If so, the law
imposes the duty on the doer to take precaution against its mischievous results and the
failure to do so constitutes negligence. 5
A corollary rule is what is known in the law as the emergency rule. "Under that rule, one
who suddenly finds himself in a place of danger, and is required to act without time to
consider the best means that may be adopted to avoid the impending danger, is not guilty
of negligence, if he fails to adopt what subsequently and upon reflection may appear to
have been a better method, unless the emergency in which he finds himself is brought
about by his own negligence." 6
Applying the above test to the case at bar, we find the petitioner not guilty of the crime of
Simple Imprudence resulting in Homicide.
The appellate court in finding the petitioner guilty said:
"The accused should have stepped on the brakes when she saw the car going in
the opposite direction followed by another which overtook the first by passing
towards its left. She should not only have swerved the car she was driving to the
right but should have also tried to stop or lessen her speed so that she would not
bump into the pedestrian who was crossing at the time but also the jeepney
which was then parked along the street." 7

The course of action suggested by the appellate court would seem reasonable were it not
for the fact that such suggestion did not take into account the amount of time afforded
petitioner to react to the situation she was in. For it is undeniable that the suggested
course of action presupposes sufficient time for appellant to analyze the situation
confronting her and to ponder on which of the different courses of action would result in
the least possible harm to herself and to others.
Due to the lack of eyewitnesses, no evidence was presented by the prosecution with
respect to the relative distances of petitioner to the parked jeepney and the oncoming

overtaking vehicle that would tend to prove that petitioner did have sufficient time to
reflect on the consequences of her instant decision to swerve her car to the right without
stepping on her brakes. In fact, the evidence presented by the prosecution on this point is
the petitioner's statement to the police 8 stating:

"Ang masasabi ko lang ho umiwas ho ako sa isang sasakyan na biglang

nagovertake sa sasakyan na aking kasalubong kung kaya ay aking kinabig sa
kanan ang aking kotse subalit siya naman biglang pagtawid ng tao o victim at
hindi ko na ho naiiwasan at ako ay wala ng magawa. Iyan ho ang buong
pangyayari nang nasabing aksidente." 9 (emphasis supplied)

The prosecution having presented this exhibit as its own evidence, we cannot but deem
its veracity to have been admitted by it. Thus, under the circumstances narrated by
petitioner, we find that the appellate court is asking too much from a mere mortal like the
petitioner who in the blink of an eye had to exercise her best judgment to extricate herself
from a difficult and dangerous situation caused by the driver of the overtaking vehicle.
Petitioner certainly could not be expected to act with all the coolness of a person under
normal conditions." 10 The danger confronting petitioner was real and imminent,
threatening her very existence. She had no opportunity for rational thinking but only
enough time to heed the very powerful instinct of self-preservation.
Also, the respondent court itself pronounced that the petitioner was driving her car within
the legal limits. We therefore rule that the "emergency rule" enunciated above applies
with full force to the case at bar and consequently absolve petitioner from any criminal
negligence in connection with the incident under consideration.
We further set aside the award of damages to the heirs of the victim, who by executing a
release of the claim due them, had effectively and clearly waived their right thereto.
WHEREFORE, judgment is hereby rendered acquitting petitioner HEDY GAN y YU of
the crime of Homicide thru Simple Imprudence. She is no longer liable for the
P12,000.00 civil indemnity awarded by the appellate court to the heirs of the victim.
SO ORDERED.
Feliciano, Bidin and Cortes, JJ., concur.
Gutierrez, Jr., J., is on leave.
|||

(Gan y Yu v. Court of Appeals, G.R. No. L-44264, [September 19, 1988])

THIRD DIVISION
[G.R. No. 119850. June 20, 1996.]
MANDARIN VILLA, INC., petitioner, vs. COURT OF APPEALS,
and CLODUALDO DE JESUS, respondents.

SYLLABUS
CIVIL LAW; CONTRACTS; STIPULATION POUR AUTRUI; PRIVATE
RESPONDENT MAY DEMAND ITS FULFILLMENT PROVIDED HE
COMMUNICATED HIS ACCEPTANCE TO THE PETITIONER BEFORE ITS
REVOCATION. While private respondent may not be a party to the said agreement,
the above-quoted stipulation conferred a favor upon the private respondent, a holder of
credit card validly issued by BANKARD. This stipulation is a stipulation pour autrui and
under Article 1311 of the Civil Code private respondent may demand its fulfillment
provided he communicated his acceptance to the petitioner before its revocation. In this
case, private respondent's offer to pay by means of his BANKARD credit card constitutes
not only an acceptance of the said stipulation but also an explicit communication of his
acceptance to the obligor.

RESOLUTION

FRANCISCO, J :
p

With ample evidentiary support are the following antecedent facts:

In the evening of October 19, 1989, private respondent, Clodualdo de Jesus, a
practicing lawyer and businessman, hosted a dinner for his friends at the petitioner's
restaurant, the Mandarin Villa Seafoods Village, Greenhills, Mandaluyong City. After
dinner the waiter handed to him the bill in the amount of P2,658.50. Private
respondent offered to pay the bill through his credit card issued by Philippine
Commercial Credit Card Inc. (BANKARD). This card was accepted by the waiter
who immediately proceeded to the restaurant's cashier for card verification. Ten
minutes later, however, the waiter returned and audibly informed private respondent

that his credit card had expired. 1 Private respondent remonstrated that said credit
card had yet to expire on September 1990, as embossed on its face. 2 The waiter was
unmoved, thus, private respondent and two of his guests approached the restaurant's
cashier who again passed the credit card over the verification computer. The same
information was produced, i.e., CARD EXPIRED. Private respondent and his guests
returned to their table and at this juncture, Professor Lirag, another guest, uttered the
following remarks: "Clody [referring to Clodualdo de Jesus], may problema ba?
Baka kailangang maghugas na kami ng pinggan?" 3 Thereupon, private respondent
left the restaurant and got his BPI Express Credit Card from his car and offered it to
pay their bill. This was accepted and honored by the cashier after verification. 4
Petitioner and his companions left afterwards.
The incident triggered the filing of a suit for damages by private respondent.
Following a full-dress trial, judgment was rendered directing the petitioner and
BANKARD to pay jointly and severally the private respondent: (a) moral damages in
the amount of P250,000.00; (b) exemplary damages in the amount of P100,000.00;
and (c) attorney's fees and litigation expenses in the amount of P50,000.00.
Both the petitioner and BANKARD appealed to the respondent Court of
Appeals which rendered a decision, thus:
"WHEREFORE, the decision appealed from is hereby MODIFIED by:
1. Finding appellant MANDARIN solely responsible for damages in
favor of appellee;
2 Absolving appellant BANKARD of any responsibility for damages;
3. Reducing moral damages awarded to appellee to TWENTY FIVE
THOUSAND and 00/100 (P25,000.00) PESOS;
4. Reducing exemplary damages awarded to appellee to TEN
THOUSAND and 00/100 (P10,000.00) PESOS;
5. Reversing and setting aside the award of P50,000.00 for attorney's
fees as well as interest awarded; and
6. AFFIRMING the dismissal of all counterclaims and cross-claims.
Costs against appellant Mandarin.
SO ORDERED." 5

Mandarin Villa, thus, interposed this present petition, faulting the respondent
court with six (6) assigned errors which may be reduced to the following issues, to
wit: (1) whether or not petitioner is bound to accept payment by means of credit card;
(2) whether or not petitioner is negligent under the circumstances obtaining in this

case; and (3) if negligent, whether or not such negligence is the proximate cause of
the private respondent's damage.
Petitioner contends that it cannot be faulted for its cashier's refusal to accept
private respondent's BANKARD credit card, the same not being a legal tender. It
argues that private respondent's offer to pay by means of credit card partook of the
nature of a proposal to novate an existing obligation for which petitioner, as creditor,
must first give its consent otherwise there will be no binding contract between them.
Petitioner cannot seek refuge behind this averment.
We note that Mandarin Villa Seafood Village is affiliated with BANKARD. In
fact, an "Agreement" 6 entered into by petitioner and BANKARD dated June 23,
1989, provides inter alia:
"The MERCHANT shall honor validly issued PCCCI credit cards presented by
their corresponding holders in the purchase of goods and/or services supplied by
it provided that the card expiration date has not elapsed and the card number
does not appear on the latest cancellation bulletin of lost, suspended and
canceled PCCCI credit cards and, no signs of tampering, alterations or
irregularities appear on the face of the credit card." 7

While private respondent may not be a party to the said agreement, the above-quoted
stipulation conferred a favor upon the private respondent, a holder of credit card validly
issued by BANKARD. This stipulation is a stipulation pour autrui and under Article
1311 of the Civil Code private respondent may demand its fulfillment provided he
communicated his acceptance to the petitioner before its revocation. 8 In this case,
private respondent's offer to pay by means of his BANKARD credit card constitutes not
only an acceptance of the said stipulation but also an explicit communication of his
acceptance to the obligor.
In addition, the record shows that petitioner posted a logo inside Mandarin
Villa Seafood Village stating that "Bankard is accepted here." 9 This representation is
conclusive upon the petitioner which it cannot deny or disprove as against the private
respondent, the party relying thereon. Petitioner, therefore, cannot disclaim its
obligation to accept private respondent's BANKARD credit card without violating the
equitable principle of estoppel. 10
Anent the second issue, petitioner insists that it is not negligent. In support
thereof, petitioner cites its good faith in checking, not just once but twice, the validity
of the aforementioned credit card prior to its dishonor. It argues that since the
verification machine flashed an information that the credit card has expired, petitioner
could not be expected to honor the same much less be adjudged negligent for
dishonoring it. Further, petitioner asseverates that it only followed the guidelines and
instructions issued by BANKARD in dishonoring the aforementioned credit card. The
argument is untenable.

The test for determining the existence of negligence in a particular case may be
stated as follows: Did the defendant in doing the alleged negligent act use the
reasonable care and caution which an ordinary prudent person would have used in the
same situation? If not, then he is guilty of negligence. 11 The Point of Sale (POS)
Guidelines which outlined the steps that petitioner must follow under the
circumstances provides:
"xxx xxx xxx
"CARD EXPIRED
a. Check expiry date on card.
b. If unexpired, refer to CB.
b.1. If valid, honor up to maximum of SPL only.
b.2. If in CB as Lost, do procedures 2a to 2e.,
b.3. If in CB as Suspended/Cancelled, do not honor card.
c. If expired, do not honor card." 12

A cursory reading of said rule reveals that whenever the words CARD
EXPIRED flashes on the screen of the verification machine, petitioner should check
the credit card's expiry date embossed on the card itself. If unexpired, petitioner
should honor the card provided it is not invalid, cancelled or otherwise suspended.
But if expired, petitioner should not honor the card. In this case, private respondent's
BANKARD credit card has an embossed expiry date of September 1990. 13 Clearly,
it has not yet expired on October 19, 1989, when the same was wrongfully dishonored
by the petitioner. Hence, petitioner did not use the reasonable care and caution which
an ordinary prudent person would have used in the same situation and as such
petitioner is guilty of negligence. In this connection, we quote with approval the
following observations of the respondent Court.
"Mandarin argues that based on the POS Guidelines (supra), it has three
options in case the verification machine flashes 'CARD EXPIRED.' It chose to
exercise option (c) by not honoring appellee's credit card. However, appellant
apparently intentionally glossed over option '(a) Check expiry date on card" (id.)
which would have shown without any shadow of doubt that the expiry date
embossed on the BANKARD was 'SEP 90'. (Exhibit "D".) A cursory look at the
appellee's BANKARD would also reveal that appellee had been as of that date a
cardholder since 1982, a fact which would have entitled the customer the
courtesy of better treatment." 14

Petitioner, however, argues that private respondent's own negligence in not

bringing with him sufficient cash was the proximate cause of his damage. It likewise
sought exculpation by contending that the remark of Professor Lirag 15 is a

supervening event and at the same time the proximate cause of private respondent's
injury.
We find this contention also devoid of merit. While it is true that private
respondent did not have sufficient cash on hand when he hosted a dinner at
petitioner's restaurant, this fact alone does not constitute negligence on his part.
Neither can it be claimed that the same was the proximate cause of private
respondent's damage. We take judicial notice 16 of the current practice among major
establishments, petitioner included, to accept payment by means of credit cards in lieu
of cash. Thus, petitioner accepted private respondent's BPI Express Credit Card after
verifying its validity, 17 a fact which all the more refutes petitioner's imputation of
negligence on the private respondent.

Neither can we conclude that the remark of Professor Lirag was a supervening
event and the proximate cause of private respondent's injury. The humiliation and
embarrassment of the private respondent was brought about not by such a remark of
Professor Lirag but by the fact of dishonor by the petitioner of private respondent's
valid BANKARD credit card. If at all, the remark of Professor Lirag served only to
aggravate the embarrassment then felt by private respondent, albeit silently within
himself.
WHEREFORE, the instant petition is hereby DISMISSED.
SO ORDERED.
Davide, Jr., Melo and Panganiban, JJ ., concur.
Narvasa, C. J., took no part.
(Mandarin Villa, Inc. v. Court of Appeals, G.R. No. 119850 (Resolution), [June 20,
1996], 327 PHIL 328-334)
|||

SECOND DIVISION
[G.R. No. 77679. September 30, 1987.]
VICENTE VERGARA, petitioner, vs. THE COURT OF APPEALS
and AMADEO AZARCON, respondents.

RESOLUTION

PADILLA, J :
p

An action for damages based on quasi-delict (Art. 2176 of the Civil Code) was filed by
private respondent against petitioner. The action arose from a vehicular accident that
occurred on 5 August 1979 in Gapan, Nueva Ecija, when Martin Belmonte, while driving
a cargo truck belonging to petitioner, rammed "head-on" the store-residence of the private
respondent, causing damages thereto which were inventoried and assessed at P53,024.22.
In his answer to the complaint, the petitioner alleged principally: "that his driver Martin
Belmonte operated said cargo truck in a very diligent (and) careful manner; that the
steering wheel refused to respond to his effort and as a result of a blown-out tire and
despite application of his brakes, the said cargo truck hit the store-residence of plaintiff
(private respondent) and that the said accident was an act of God for which he cannot be
held liable." 1
Petitioner also filed a third party complaint against Travellers Insurance and Surety
Corporation, alleging that said cargo truck involved in the vehicular accident, belonging
to the petitioner, was insured by the third party defendant insurance company. Petitioner
asked that the latter be ordered to pay him whatever amount he may be ordered by the
court to pay to the private respondent.
LLphil

The trial court rendered judgment in favor of private respondent. Upon appeal to the
Court of Appeals, the latter court affirmed in toto the decision of the trial court, which
ordered petitioner to pay, jointly and severally with Travellers Insurance and Surety
Corporation, to the private, respondent the following: (a) P53,024.22 as actual damages;
(b) P10,000.00 as moral damages; (c) P10,000.00 as exemplary damages; and (d) the sum
of P5,000.00 for attorney's fees and the costs. On the third party complaint, the insurance
company was sentenced to pay to the petitioner the following: (a) P50,000.00 for third

party liability under its comprehensive accident insurance policy; and (b) P3,000.00 for
and as attorney's fees.
prLL

Hence, this petition for review on certiorari.

Petitioner's contention that the respondent court erred in finding him guilty of fault or
negligence is not tenable. It was established by competent evidence that the requisites of
a quasi-delict are present in the case at bar. These requisites are: (1) damages to the
plaintiff; (2) negligence, by act or omission, of which defendant, or some person for
whose-acts he must respond, was guilty; and (3) the connection of cause and effect
between such negligence and the damages.
LibLex

It is undisputed that private respondent suffered damages as a result of an act or omission

of petitioner. The issue of whether or not this act or omission can be considered as a
"negligent" act or omission was passed upon by the trial court. The findings of said court,
affirmed by the respondent court, which we are not prepared to now disturb, show that
the fact of occurrence of the "vehicular accident" was sufficiently established by the
policy report and the testimony of Patrolman Masiclat. And the fact of negligence may be
deduced from the surrounding circumstances thereof. According to the police report, "the
cargo truck was travelling on the right side of the road going to Manila and then it
crossed to the center line and went to the left side of the highway; it then bumped a
tricycle; and then another bicycle; and then said cargo truck rammed the storewarehouse
of the plaintiff." 2
According to the driver of the cargo truck, he applied the brakes but the latter did not
work due to mechanical defect. Contrary to the claim of the petitioner, a mishap caused
by defective brakes cannot be considered as fortuitous in character. Certainly, the defects
were curable and the accident preventable.
Furthermore, the petitioner failed to adduce any evidence to overcome the disputable
presumption of negligence on his part in the selection and supervision of his driver.
Based on the foregoing finding by the respondent Court that there was negligence on the
part of the petitioner, the petitioner's contention that the respondent court erred in
awarding private respondent actual, moral and exemplary damages as well as attorney's
fees and costs, is untenable.
ACCORDINGLY, the petition is DENIED.
(Vergara v. Court of Appeals, G.R. No. 77679 (Resolution), [September 30, 1987], 238
PHIL 565-569)
|||

EN BANC
[G.R. No. L-12219. March 15, 1918.]
AMADO PICART, plaintiff-appellant, vs. FRANK SMITH, jr.,
defendant-appellee.
Alejo Mabanag for appellant.
G. E. Campbell for appellee.
SYLLABUS
1. NEGLIGENCE; CRITERION FOR DETERMINING EXISTENCE OF
NEGLIGENCE. The test for determining whether a person is negligent in doing an
act whereby injury or damage results to the person or property of another is this:
Would a prudent man, in the position of the person to whom negligence is attributed,
foresee harm to the person injured as a reasonable consequence of the course about to
be pursued. If so, the law imposes a duty on the actor to refrain from that course or to
take precaution against its mischievous results, and the failure to do so constitutes
negligence. Reasonable foresight of harm, followed by the ignoring of the admonition
born of this prevision, is the constitutive fact in negligence.
2. ID.; CONTRIBUTORY NEGLIGENCE; SUCCESSIVE NEGLIGENT
ACTS. Where both parties are guilty of negligence, but the negligent act of one
succeeds that of the other by an appreciable interval of time, the one who has the last
reasonable opportunity to avoid the impending harm and fails to do so is chargeable
with the consequences, without reference to the prior negligence of the other party.
3. ID.; ID.; CASE AT BAR. The plaintiff was riding a pony on a bridge.
Seeing an automobile ahead he improperly pulled his horse over to the railing on the
right. The driver of the automobile, however, guided his car toward the plaintiff
without diminution of speed until he was only a few feet away. He then turned to the
right but passed so closely to the horse that the latter being frightened, jumped around
and was killed by the passing car. Held: That although the plaintiff was guilty of
negligence in being on the wrong side of the bridge, the defendant was nevertheless
civilly liable for the legal damages resulting from the collision, as he had a fair
opportunity to avoid the accident after he realized the situation created by the

negligence of the plaintiff and failed to avail himself of that opportunity; while the
plaintiff could by no means then place himself in a position of greater safety.

DECISION

STREET, J :
p

In this action the plaintiff, Amado Picart, seeks to recover of the defendant,
Frank Smith, jr., the sum of P31,100, as damages alleged to have been caused by an
automobile driven by the defendant. From a judgment of the Court of First Instance of
the Province of La Union absolving the defendant from liability the plaintiff has
appealed.
The occurrence which gave rise to the institution of this action took place on
December 12, 1912, on the Carlatan Bridge, at San Fernando, La Union. It appears
that upon the occasion in question the plaintiff was riding on his pony over said
bridge. Before he had gotten half way across, the defendant approached from the
opposite direction in an automobile, going at the rate of about ten or twelve miles per
hour. As the defendant neared the bridge he saw a horseman on it and blew his horn to
give warning of his approach. He continued his course and after he had taken the
bridge he gave two more successive blasts, as it appeared to him that the man on
horseback before him was not observing the rule of the road.
The plaintiff, it appears, saw the automobile coming and heard the warning
signals. However, being perturbed by the novelty of the apparition or the rapidity of
the approach, he pulled the pony closely up against the railing on the right side of the
bridge instead of going to the left. He says that the reason he did this was that he
thought he did not have sufficient time to get over to the other side. The bridge is
shown to have a length of about 75 meters and a width of 4.08 meters. As the
automobile approached, the defendant guided it toward his left, that being the proper
side of the road for the machine. In so doing the defendant assumed that the horseman
would move to the other side. The pony had not as yet exhibited fright, and the rider
had made no sign for the automobile to stop. Seeing that the pony was apparently
quiet, the defendant, instead of veering to the right while yet some distance away or
slowing down, continued to approach directly toward the horse without diminution of
speed. When he had gotten quite near, there being then no possibility of the horse
getting across to the other side, the defendant quickly turned his car sufficiently to the
right to escape hitting the horse alongside of the railing where it was then standing;
but in so doing the automobile passed in such close proximity to the animal that it
became frightened and turned its body across the bridge with its head toward the

railing. In so doing, it was struck on the hock of the left hind leg by the flange of the
car and the limb was broken. The horse fell and its rider was thrown off with some
violence. From the evidence adduced in the case we believe that when the accident
occurred the free space where the pony stood between the automobile and the railing
of the bridge was probably less than one and one half meters. As a result of its injuries
the horse died. The plaintiff received contusions which caused temporary
unconsciousness and required medical attention for several days.
The question presented for decision is whether or not the defendant in
maneuvering his car in the manner above described was guilty of negligence such as
gives rise to a civil obligation to repair the damage done; and we are of the opinion
that he is so liable. As the defendant started across the bridge, he had the right to
assume that the horse and rider would pass over to the proper side; but as he moved
toward the center of the bridge it was demonstrated to his eyes that this would not be
done; and he must in a moment have perceived that it was too late for the horse to
cross with safety in front of the moving vehicle. In the nature of things this change of
situation occurred while the automobile was yet some distance away; and from this
moment it was not longer within the power of the plaintiff to escape being run down
by going to a place of greater safety. The control of the situation had then passed
entirely to the defendant; and it was his duty either to bring his car to an immediate
stop or, seeing that there were no other persons on the bridge, to take the other side
and pass sufficiently far away from the horse to avoid the danger of collision. Instead
of doing this, the defendant ran straight on until he was almost upon the horse. He
was, we think, deceived into doing this by the fact that the horse had not yet exhibited
fright. But in view of the known nature of horses, there was an appreciable risk that, if
the animal in question was unacquainted with automobiles, he might get excited and
jump under the conditions which here confronted him. When the defendant exposed
the horse and rider to this danger he was, in our opinion, negligent in the eye of the
law.
The test by which to determine the existence of negligence in a particular case
may be stated as follows: Did the defendant in doing the alleged negligent act use that
reasonable care and caution which an ordinarily prudent person would have used in
the same situation? If not, then he is guilty of negligence. The law here in effect
adopts the standard supposed to be supplied by the imaginary conduct of the discreet
paterfamilias of the Roman law. The existence of negligence in a given case is not
determined by reference to the personal judgment of the actor in the situation before
him. The law considers what would be reckless, blameworthy, or negligent in the man
of ordinary intelligence and prudence and determines liability by that.
The question as to what would constitute the conduct of a prudent man in a
given situation must of course be always determined in the light of human experience
and in view of the facts involved in the particular case. Abstract speculation cannot
here be of much value but his much can be profitably said: Reasonable men govern

their conduct by the circumstances which are before them or known to them. They are
not, and are not supposed to be, omniscient of the future. Hence they can be expected
to take care only when there is something before them to suggest or warn of danger.
Could a prudent man, in the case under consideration, foresee harm as a result of the
course actually pursued? If so, it was the duty of the actor to take precautions to guard
against that harm. Reasonable foresight of harm, followed by the ignoring of the
suggestion born of this prevision, is always necessary before negligence can be held
to exist. Stated in these terms, the proper criterion for determining the existence of
negligence in a given case is this: Conduct is said to be negligent when a prudent man
in the position of the tortfeasor would have foreseen that an effect harmful to another
was sufficiently probable to warrant his foregoing the conduct or guarding against its
consequences.
Applying this test to the conduct of the defendant in the present case we think
that negligence is clearly established. A prudent man, placed in the position of the
defendant, would, in our opinion, have recognized that the course which he was
pursuing was fraught with risk, and would therefore have foreseen harm to the horse
and rider as a reasonable consequence of that course. Under these circumstances the
law imposed on the defendant the duty to guard against the threatened harm.
It goes without saying that the plaintiff himself was not free from fault, for he
was guilty of antecedent negligence in planting himself on the wrong side of the road.
But as we have already stated, the defendant was also negligent; and in such case the
problem always is to discover which agent is immediately and directly responsible. It
will be noted that the negligent acts of the two parties were not contemporaneous,
since the negligence of the defendant succeeded the negligence of the plaintiff by an
appreciable interval. Under these circumstances the law is that the person who has the
last fair chance to avoid the impending harm and fails to do so is chargeable with the
consequences, without reference to the prior negligence of the other party.

The decision in the case of Rakes vs. Atlantic, Gulf and Pacific Co.(7 Phil.
Rep., 359) should perhaps be mentioned in this connection. This Court there held that
while contributory negligence on the part of the person injured did not constitute a bar
to recover, it could be received in evidence to reduce the damages which would
otherwise have been assessed wholly against the other party. The defendant company
had there employed the plaintiff, a laborer, to assist in transporting iron rails from a
barge in Manila harbor to the company's yards located not far away. The rails were
conveyed upon cars which were hauled along a narrow track. At a certain spot near
the water's edge the track gave way by reason of the combined effect of the weight of
the car and the insecurity of the road bed. The car was in consequence upset; the rails
slid off; and the plaintiff's leg was caught and broken. It appeared in evidence that the
accident was due to the effects of a typhoon which had dislodged one of the supports

of the track. The court found that the defendant company was negligent in having
failed to repair the bed of the track and also that the plaintiff was, at the moment of
the accident, guilty of contributory negligence in walking at the side of the car instead
of being in front or behind. It was held that while the defendant was liable to the
plaintiff by reason of its negligence in having failed to keep the track in proper repair,
nevertheless the amount of the damages should be reduced on account of the
contributory negligence of the plaintiff. As will be seen the defendant's negligence in
that case consisted in an omission only. The liability of the company arose from its
responsibility for the dangerous condition of its track. In a case like the one now
before us, where the defendant was actually present and operating the automobile
which caused the damage, we do not feel constrained to attempt to weigh the
negligence of the respective parties in order to apportion the damage according to the
degree of their relative fault. It is enough to say that the negligence of the defendant
was in this case the immediate and determining cause of the accident and that the
antecedent negligence of the plaintiff was a more remote factor in the case.
A point of minor importance in the case is indicated in the special defense
pleaded in the defendant's answer, to the effect that the subject matter of the action
had been previously adjudicated in the court of a justice of the peace. In this
connection it appears that soon after the accident in question occurred, the plaintiff
caused criminal proceedings to be instituted before a justice of the peace charging the
defendant with the infliction of serious injuries (lesiones graves). At the preliminary
investigation the defendant was discharged by the magistrate and the proceedings
were dismissed. Conceding that the acquittal of the defendant at a trial upon the
merits in a criminal prosecution for the offense mentioned would be res adjudicata
upon the question of his civil liability arising from negligence a point upon which
it is unnecessary to express an opinion the action of the justice of the peace in
dismissing the criminal proceeding upon the preliminary hearing can have no such
effect. (See U.S. vs. Banzuela and Banzuela, 31 Phil. Rep., 564.)
From what has been said it results that the judgment of the lower court must be
reversed, and judgment is here rendered that the plaintiff recover of the defendant the
sum of two hundred pesos (P200), with costs of both instances. The sum here awarded
is estimated to include the value of the horse, medical expenses of the plaintiff, the
loss or damage occasioned to articles of his apparel, and lawful interest on the whole
to the date of this recovery. The other damages claimed by the plaintiff are remote or
otherwise of such characters as not to be recoverable. So ordered.
Arellano, C.J., Torres, Carson, Araullo, Avancea, and Fisher, JJ., concur.
Johnson, J., reserves his vote.
|||

(Picart v. Smith, Jr., G.R. No. L-12219, [March 15, 1918], 37 PHIL 809-816)

FIRST DIVISION
[G.R. No. 70493. May 18, 1989.]
GLAN PEOPLE'S LUMBER AND HARDWARE, GEORGE LIM,
FABIO S. AGAD, FELIX LIM and PAUL ZACARIAS y INFANTE,
petitioners, vs. INTERMEDIATE APPELLATE COURT, CECILIA
ALFEREZ VDA. DE CALIBO, Minors ROYCE STEPHEN, JOYCE
JOAN, JANISE MARIE, JACQUELINE BRIGITTE, JOCELINE
CORAZON, JULIET GERALDINE, JENNIFER JILL, all surnamed
CALIBO, represented by their mother, CECILIA A. VDA. DE
CALIBO, respondents.
Rufino Mayor and Isidro M. Ampig for petitioners.
Manuel L. Hontanosas for private respondents.
SYLLABUS
1. TORTS AND DAMAGES; DOCTRINE OF LAST CLEAR CHANCE. The law is
that the person who has the last fair chance to avoid the impending harm and fails to do
so is chargeable with the consequences.
2. ID.; ID.; FAILURE TO OBSERVE THE DOCTRINE. Considering that both
drivers had a full view of each other's vehicle from a distance of one hundred fifty
meters, with both vehicles traveling at a speed of approximately thirty kilometers per
hour and that the truck had been brought to a stop while the jeep was still thirty meters
away, it is logical to conclude that the driver of the jeep had the last clear chance to avoid
the accident by stopping in his turn or swerving the jeep away from the truck.
3. CIVIL PROCEDURE; AUTHORITY OF THE SUPREME COURT TO REVIEW
FINDINGS OF THE APPELLATE COURT DIRECTLY IN CONFLICT WITH THOSE
OF THE TRIAL COURT. The Supreme Court may review the findings of facts of the
Court of Appeals if they are in conflict with those of the trial court.

DECISION

NARVASA, J :
p

There is a two-fold message in this judgment that bears stating at the outset. The first, an
obvious one, is that it is the objective facts established by proofs presented in a
controversy that determine the verdict, not the plight of the persons involved, no matter
how deserving of sympathy and commiseration because, for example, an accident of
which they are the innocent victims has brought them to reduced circumstances or
otherwise tragically altered their lives. The second is that the doctrine laid done many,
many years ago in Picart vs. Smith, 1 continues to be good law to this day.
The facts giving rise to the controversy at bar are tersely and quite accurately recounted
by the Trial Court as follows: 2
"Engineer Orlando T. Calibo, Agripino Roranes, and Maximo Patos were on the
jeep owned by the Bacnotan Consolidated Industries, Inc., with Calibo at the
wheel, as it approached from the South Lizada Bridge going towards the
direction of Davao City at about 1:45 in the afternoon of July 4, 1979. At about
that time, the cargo truck, loaded with cement bags, GI sheets, plywood, driven
by defendant Paul Zacarias y Infante, coming from the opposite direction of
Davao City and bound for Glan, South Cotabato, had just crossed said bridge.
At about 59 yards after crossing the bridge, the cargo truck and the jeep collided
as a consequence of which Engineer Calibo died while Roranes and Patos
sustained physical injuries. Zacarias was unhurt. As a result of the impact, the
left side of the truck was slightly damaged while the left side of the jeep,
including its fender and hood, was extensively damaged. After the impact, the
jeep fell and rested on its right side on the asphalted road a few meters to the
rear of the truck, while the truck stopped on its wheels on the road.
On November 27, 1979, the instant case for damages was filed by the surviving
spouse and children of the late Engineer Calibo who are residents of Tagbilaran
City against the driver and owners of the cargo truck.
For failure to file its answer to the third party complaint, third party defendant,
which insured the cargo truck involved, was declared in default."

The case filed by the heirs of Engineer Calibo his widow and minor children,
private respondents herein was docketed as Civil Case No. 3283 of the Court of
First Instance of Bohol. 3 Named defendants in the complaint were "Felix S. Agad,
George Lim and Felix Lim . . . (who) appear to be the co-owners of the Glan People's
Lumber and Hardware . . . (and) Paul Zacarias y Infante." 4 The defendants' answer
however alleged that the lumber and hardware business was exclusively owned by
George Y. Lim, this being evidenced by the Certificate of Registration issued by the
Bureau of Domestic Trade; Fabio S. Agad was not a co-owner thereof but "merely
employed by . . . George Y. Lim as bookkeeper"; and Felix Lim had no connection
whatever with said business, "he being a child only eight (8) years of age." 5

"After (trial, and) a careful evaluation of the evidence, both testimonial and
documentary," the Court reached the conclusion "that the plaintiffs failed to establish by
preponderance of evidence the negligence, and thus the liability, of the defendants."
Accordingly, the Court dismissed the complaint (and defendants' counterclaim) "for
insufficiency of evidence." Likewise dismissed was third-party complaint presented by
the defendants against the insurer of the truck. The circumstances leading to the Court's
conclusion just mentioned, are detailed in the Court's decision, as follows:
1. Moments before its collision with the truck being operated by Zacarias, the jeep of the
deceased Calibo was "zigzagging." 6
2. Unlike Zacarias who readily submitted himself to investigation by the police, Calibo's
companions, Roranes (an accountant), and Patos, who suffered injuries on account of the
collision, refused to be so investigated or give statements to the police officers. This, plus
Roranes' waiver of the right to institute criminal proceedings against Zacarias, and the
fact that indeed no criminal case was ever instituted in Court against Zacarias, were
"telling indications that they did not attribute the happening to defendant Zacarias'
negligence or fault." 7
3. Roranes' testimony, given in plaintiffs' behalf, was "not as clear and detailed as that of .
. . Zacarias," and was "uncertain and even contradicted by the physical facts and the
police investigators Dimaano and Esparcia." 8
4. That there were skid marks left by the truck's tires at the scene, and none by the jeep,
demonstrates that the driver of the truck had applied the brakes and the jeep's driver had
not; and that the jeep had on impact fallen on its right side is indication that it was
running at high speed. Under the circumstances, according to the Court, given "the
curvature of the road and the descending grade of the jeep's lane, it was negligence on the
part of the driver of the jeep, Engr. Calibo, for not reducing his speed upon sight of the
truck and failing to apply the brakes as he got within collision range with the truck."
5. Even if it be considered that there was some antecedent negligence on the part of
Zacarias shortly before the collision, in that he had caused his truck to run some 25
centimeters to the left of the center of the road, Engr. Calibo had the last clear chance of
avoiding the accident because he still had ample room in his own lane to steer clear of the
truck, or he could simply have braked to a full stop.
The Court of Appeals saw things differently. It rendered judgment 9 on the plaintiffs'
appeal, 10 reversing the decision of the Trial Court. It found Zacarias to be negligent on
the basis of the following circumstances, to wit:
1) "the truck driven by defendant Zacarias occupied the lane of the jeep when
the collision occurred," and although Zacarias saw the jeep from a distance of
about 150 meters, he "did not drive his truck back to his lane in order to avoid
collision with the oncoming jeep . . . ;" 11 what is worse, "the truck driver

suddenly applied his brakes even as he knew that he was still within the lane of
the jeep;" 12 had both vehicles stayed in their respective lanes, the collision
would never have occurred, they would have passed "alongside each other
safely;" 13
2) Zacarias had no license at the time; what he handed to Pfc. Esparcia, on the
latter's demand, was the "driver's license of his co-driver Leonardo Baricuatro;"

14
3) the waiver of the right to file criminal charges against Zacarias should not be
taken against "plaintiffs" Roranes and Patos who had the right, under the law, to
opt merely to bring a civil suit. 15

The Appellate Court opined that Zacarias' negligence "gave rise to the presumption of
negligence on the part of his employer, and their liability is both primary and solidary." It
therefore ordered "the defendants jointly and solidarily to indemnify the plaintiffs the
following amounts:
(1) P30,000.00 for the death of Orlando Calibo;
(2) P378,000.00 for the loss of earning capacity of the deceased
(3) P15,000.00 for attorney's fees;
(4) Cost of suit." 16

The defendants George Lim, Felix Lim, Fabio S. Agad and Paul Zacarias have appealed
to this Court on certiorari and pray for a reversal of the judgment of the Intermediate
Appellate Court which, it is claimed, ignored or ran counter to the established facts. A
review of the record confirms the merit of this assertion and persuades this Court that
said judgment indeed disregarded facts clearly and undisputably demonstrated by the
proofs. The appealed judgment, consequently, will have to be reversed.
The finding that "the truck driven by defendant Paul Zacarias occupied the lane of the
jeep when the collision occurred" is a loose one, based on nothing more than the showing
that at the time of the accident, the truck driven by Zacarias had edged over the painted
center line of the road into the opposite lane by a width of twenty-five (25) centimeters. It
ignores the fact that by the uncontradicted evidence, the actual center line of the road was
not that indicated by the painted stripe but, according to measurements made and testified
by Patrolman Juanito Dimaano, one of the two officers who investigated the accident,
correctly lay thirty-six (36) centimeters farther to the left of the truck's side of said stripe.
LibLex

The unimpugned testimony of Patrolman Dimaano, a witness for the private respondents,
is to the effect that the jeep's lane was three (3) meters and seventy-five (75) centimeters
wide, and that of the truck three (3) meters and three (3) centimeters, measured from the
center stripe to the corresponding side lines or outer edges of the road. 17 The total width

of the road being, therefore, six (6) meters and seventy-eight (78) centimeters, the true
center line equidistant from both side lines would divide the road into two lanes each
three (meters) and thirty-nine (39) centimeters wide. Thus, although it was not disputed
that the truck overrode the painted stripe by twenty-five (25) centimeters, it was still at
least eleven (11) centimeters away from its side of the true center line of the road and
well inside its own lane when the accident occurred. By this same reckoning, since it was
unquestionably the jeep that rammed into the stopped truck, it may also be deduced that it
(the jeep) was at the time travelling beyond its own lane and intruding into the lane of the
truck by at least the same 11-centimeter width of space.
Not only was the truck's lane, measured from the incorrectly located center stripe
uncomfortably narrow, given that vehicle's width of two (2) meters and forty-six (46)
centimeters; the adjacent road shoulder was also virtually impassable, being about three
(3) inches lower than the paved surface of the road and "soft" not firm enough to offer
traction for safe passage besides which, it sloped gradually down to a three foot-deep
ravine with a river below. 18 The truck's lane as erroneously demarcated by the center
stripe gave said vehicle barely half a meter of clearance from the edge of the road and the
dangerous shoulder and little room for maneuver, in case this was made necessary by
traffic contingencies or road conditions, if it always kept to said lane. It being also shown
that the accident happened at or near the point of the truck's approach to a curve, 19 which
called for extra precautions against driving too near the shoulder, it could hardly be
accounted negligent on the part of its driver to intrude temporarily, and by only as small
as a twenty-five centimeter-wide space (less than ten inches), into the opposite lane in
order to insure his vehicle's safety. This, even supposing that said maneuver was in fact
an intrusion into the opposite lane, which was not the case at all as just pointed out.
Nor was the Appellate Court correct in finding that Paulino Zacarias had acted
negligently in applying his brakes instead of getting back inside his lane upon espying the
approaching jeep. Being well within his own lane, as has already been explained, he had
no duty to swerve out of the jeep's way as said Court would have had him do. And even
supposing that he was in fact partly inside the opposite lane, coming to a full stop with
the jeep still thirty (30) meters away cannot be considered an unsafe or imprudent action,
there also being uncontradicted evidence that the jeep was "zigzagging" 20 and hence no
way of telling in which direction it would go as it approached the truck.
Also clearly erroneous is the finding of the Intermediate Appellate Court that Zacarias
had no driver's license at the time. The traffic accident report attests to the proven fact
that Zacarias voluntarily surrendered to the investigating officers his driver's license,
valid for 1979, that had been renewed just the day before the accident, on July 3, 1979.
21 The Court was apparently misled by the circumstance that when said driver was first
asked to show his license by the investigators at the scene of the collision, he had first
inadvertently produced the license of a fellow driver, Leonardo Baricuatro, who had left
said license in Davao City and had asked Zacarias to bring it back to him in Glan,
Cotabato. 22

The evidence not only acquits Zacarias of any negligence in the matter; there are also
quite a few significant indicators that it was rather Engineer Calibo's negligence that was
the proximate cause of the accident. Zacarias had told Patrolman Dimaano at the scene of
the collision and later confirmed in his written statement at the police headquarters 23
that the jeep had been "zigzagging," which is to say that it was travelling or being driven
erratically at the time. The other investigator, Patrolman Jose Esparcia, also testified that
eyewitnesses to the accident had remarked on the jeep's "zigzagging." 24 There is
moreover more than a suggestion that Calibo had been drinking shortly before the
accident. The decision of the Trial Court adverts to further testimony of Esparcia to the
effect that three of Calibo's companions at the beach party he was driving home from
when the collision occurred, who, having left ahead of him went to the scene when they
heard about the accident, had said that there had been a drinking spree at the party and,
referring to Calibo, had remarked: "Sabi na huag nang mag drive . . . pumipilit," (loosely
translated, "He was advised not to drive, but he insisted.")
It was Calibo whose driver's license could not be found on his person at the scene of the
accident, and was reported by his companions in the jeep as having been lost with his
wallet at said scene, according to the traffic accident report, Exhibit "J". Said license
unexplainedly found its way into the record some two years later.
Cdpr

Reference has already been made to the finding of the Trial Court that while Zacarias
readily submitted to interrogation and gave a detailed statement to the police investigators
immediately after the accident, Calibo's two companions in the jeep and supposed
eyewitnesses, Agripino Roranes and Maximo Patos, refused to give any statements.
Furthermore, Roranes who, together with Patos, had sustained injuries as a result of the
collision, waived his right to file a criminal case against Zacarias. 25
Even, however, ignoring these telltale indicia of negligence on the part of Calibo, and
assuming some antecedent negligence on the part of Zacarias in failing to keep within his
designated lane, incorrectly demarcated as it was, the physical facts, either expressly
found by the Intermediate Appellate Court or which may be deemed conceded for lack of
any dispute, would still absolve the latter of any actionable responsibility for the accident
under the rule of the last clear chance.
Both drivers, as the Appellate Court found, had a full view of each other's vehicle from a
distance of one hundred fifty meters. Both vehicles were travelling at a speed of
approximately thirty kilometers per hour. 26 The private respondents have admitted that
the truck was already at a full stop when the jeep plowed into it. And they have not seen
fit to deny or impugn petitioners' imputation that they also admitted the truck had been
brought to a stop while the jeep was still thirty meters away. 27 From these facts the
logical conclusion emerges that the driver of the jeep had what judicial doctrine has
appropriately called the last clear chance to avoid the accident, while still at that distance
of thirty meters from the truck, by stopping in his turn or swerving his jeep away from the
truck, either of which he had sufficient time to do while running at a speed of only thirty

kilometers per hour. In those circumstances, his duty was to seize that opportunity of
avoidance, not merely rely on a supposed right to expect, as the Appellate Court would
have it, the truck to swerve and leave him a clear path.
The doctrine of the last clear chance provides as valid and complete a defense to accident
liability today as it did when invoked and applied in the 1918 case of Picart vs. Smith,
supra, which involved a similar state of facts. Of those facts, which should be familiar to
every student of law, it is only necessary to recall the summary made in the syllabus of
this Court's decision that:
llcd

"(t)he plaintiff was riding a pony on a bridge. Seeing an automobile ahead he

improperly pulled his horse over to the railing on the right. The driver of the
automobile, however guided his car toward the plaintiff without diminution of
speed until he was only few feet away. He then turned to the right but passed so
closely to the horse that the latter being frightened, jumped around and was
killed by the passing car. . . . ."

Plaintiff Picart was thrown off his horse and suffered contusions which required
several days of medical attention. He sued the defendant Smith for the value of his
animal, medical expenses and damage to his apparel and obtained judgment from this
Court which, while finding that there was negligence on the part of both parties, held
that of the defendant was the immediate and determining cause of the accident and
that of the plaintiff ". . . the more remote factor in the case":
"It goes without saying that the plaintiff himself was not free from fault, for he
was guilty of antecedent negligence in planting himself on the wrong side of the
road. But as we have already stated, the defendant was also negligent; and in
such case the problem always is to discover which agent is immediately and
directly responsible. It will be noted that the negligent acts of the two parties
were not contemporaneous, since the negligence of the defendant succeeded the
negligence of the plaintiff by an appreciable interval. Under these circumstances
the law is that the person who has the last fair chance to avoid the impending
harm and fails to do so is chargeable with the consequences, without reference
to the prior negligence of the other party."

Since said ruling clearly applies to exonerate petitioner Zacarias and his employer (and
co-petitioner) George Lim, an inquiry into whether or not the evidence support the latter's
additional defense of due diligence in the selection and supervision of said driver is no
longer necessary and will not be undertaken. The fact is that there is such evidence in the
record which has not been controverted.

It must be pointed out, however, that the Intermediate Appellate Court also seriously
erred in holding the petitioners Pablo S. Agad and Felix Lim solidarily liable for the
damages awarded in its appealed decision, as alleged owners, with petitioner George

Lim, of Glan People's Lumber and Hardware, employer of petitioner Zacarias. This
manifestly disregarded, not only the certificate of registration issued by the Bureau of
Domestic Trade identifying Glan People's Lumber and Hardware as a business name
registered by George Lim, 28 but also unimpugned allegations into the petitioners'
answer to the complaint that Pablo S. Agad was only an employee of George Lim and
that Felix Lim, then a child of only eight (8) years, was in no way connected with the
business.
LLpr

In conclusion, it must also be stated that there is no doubt of this Court's power to review
the assailed decision of the Intermediate Appellate Court under the authority of
precedents recognizing exceptions to the familiar rule binding it to observe and respect
the latter's findings of fact. Many of those exceptions may be cited to support the review
here undertaken, but only the most obvious that said findings directly conflict with
those of the Trial Court will suffice. 29 In the opinion of this Court and after a careful
review of the record, the evidence singularly fails to support the findings of the
Intermediate Appellate Court which, for all that appears, seem to have been prompted
rather by sympathy for the heirs of the deceased Engineer Calibo than by an objective
appraisal of the proofs and a correct application of the law to the established facts.
Compassion for the plight of those whom an accident has robbed of the love and support
of a husband and father is an entirely natural and understandable sentiment. It should not,
however, be allowed to stand in the way of, much less to influence, a just verdict in a suit
at law.
WHEREFORE, the appealed judgment of the Intermediate Appellate Court is hereby
REVERSED, and the complaint against herein petitioners in Civil Case No. 3283 of the
Court of First Instance of Bohol, Branch IV, is DISMISSED. No pronouncement as to
costs.
SO ORDERED.
Cruz, Gancayco, Grio-Aquino and Medialdea, JJ., concur.
(Glan People's Lumber and Hardware v. Intermediate Appellate Court, G.R. No. 70493,
[May 18, 1989], 255 PHIL 447-459)
|||

THIRD DIVISION
[G.R. No. 68102. July 16, 1992.]
GEORGE MCKEE and ARACELI KOH MCKEE, petitioners, vs.
INTERMEDIATE APPELLATE COURT, JAIME TAYAG and
ROSALINDA MANALO, respondents.
[G.R. No. 68103. July 16, 1992.]
CARMEN DAYRIT KOH, LETICIA KOH, JULIETA KOH
TUQUERO, ARACELI KOH MCKEE, ANTONIO KOH and
ELIZABETH KOH TURLA, petitioners, vs. INTERMEDIATE
APPELLATE COURT, JAIME TAYAG and ROSALINDA
MANALO, respondents.

SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; CONSOLIDATION OF ACTIONS;
OBJECTIVES. Section 1, Rule 31 of the Rules of Court, which seeks to avoid a
multiplicity of suits, guard against oppression and abuse, prevent delays, clear congested
dockets to simplify the work of the trial court, or in short, attain justice with the least
expense to the parties litigants, would have easily sustained a consolidation, thereby
preventing the unseeming, if not ludicrous, spectacle of two (2) judges appreciating,
according to their respective orientation, perception and perhaps even prejudice, the same
facts differently, and thereafter rendering conflicting decisions.
2. ID.; CRIMINAL PROCEDURE; PROSECUTION OF CIVIL ACTION;
CONSOLIDATION OF INDEPENDENT CIVIL ACTION WITH CRIMINAL
ACTION; REQUISITE. In the recent case of Cojuangco vs. Court of Appeals, this
Court held that the present provisions of Rule 111 of the Revised Rules of Court allow a
consolidation of an independent civil action for the recovery of civil liability authorized
under Articles 32, 33, 34 or 2176 of the Civil Code with the criminal action subject,
however, to the condition that no final judgment has been rendered in that criminal case.
3. ID.; ID.; APPEALS; SUPREME COURT NOT A TRIER OF FACTS; ONLY
QUESTIONS OF LAW MAY BE RAISED IN APPEAL BY CERTIORARI UNDER

RULE 45; FACTUAL FINDINGS OF LOWER COURTS GENERALLY BINDING ON

SUPREME COURT; EXCEPTIONS; CASE AT BAR. The principle is wellestablished that this Court is not a trier of facts. Therefore, in an appeal by certiorari
under Rule 45 of the Revised Rules of Court, only questions of law may be raised. The
resolution of factual issues is the function of the lower courts whose findings on these
matters are received with respect and are, as a rule, binding on this Court. The foregoing
rule, however, is not without exceptions. Findings of facts of the trial courts and the
Court of Appeals may be set aside when such findings are not supported by the evidence
or when the trial court failed to consider the material facts which would have led to a
conclusion different from what was stated in its judgment. The same is true where the
appellate court's conclusions are grounded entirely on conjectures, speculations and
surmises or where the conclusions of the lower courts are based on a misapprehension of
facts. It is at once obvious to this Court that the instant case qualifies as one of the
aforementioned exceptions as the findings and conclusions of the trial court and the
respondent Court in its challenged resolution are not supported by the evidence, are based
on a misapprehension of facts and the inferences made therefrom are manifestly
mistaken. The respondent Court's decision of 29 November 1983 makes the correct
findings of fact.
4. ID.; EVIDENCE; PRESUMPTION THAT OFFICIAL DUTY HAD BEEN
REGULARLY PERFORMED; CASE AT BAR. We cannot give credence to private
respondents' claim that there was an error in the translation by the investigating officer of
the truck driver's response in Pampango as to whether the speed cited was in kilometers
per hour or miles per hour. The law presumes that official duty has been regularly
performed; unless there is proof to the contrary, this presumption holds. In the instant
case, private respondents' claim is based on mere conjecture.
5. CIVIL
LAW;
QUASI-DELICTS;
INDEPENDENT
CIVIL
ACTIONS;
RESPONSIBILITY FOR FAULT OR NEGLIGENCE IN QUASI-DELICT SEPARATE
AND DISTINCT FROM CIVIL LIABILITY ARISING FROM NEGLIGENCE UNDER
THE PENAL CODE; ACQUITTAL OR CONVICTION IN CRIMINAL ACTION
ENTIRELY IRRELEVANT TO INDEPENDENT CIVIL ACTION; CASE AT BAR.
As We held in Dionisio vs. Alvendia, the responsibility arising from fault or negligence in
a quasi-delict is entirely separate and distinct from the civil liability arising from
negligence under the Penal Code. And, as more concretely stated in the concurring
opinion of Justice J.B.L. Reyes, "in the case of independent civil actions under the new
Civil Code, the result of the criminal case, whether acquittal or conviction, would be
entirely irrelevant to the civil action." In Salta vs. De Veyra and PNB vs. Purisima, this
Court stated: ". . . It seems perfectly reasonable to conclude that the civil actions
mentioned in Article 33, permitted in the same manner to be filed separately from the
criminal case, may proceed similarly regardless of the result of the criminal case. Indeed,
when the law has allowed a civil case related to a criminal case, to be filed separately and
to proceed independently even during the pendency of the latter case, the intention is
patent to make the court's disposition of the criminal case of no effect whatsoever on the

separate civil case. This must be so because the offenses specified in Article 33 are of
such a nature, unlike other offenses not mentioned, that they may be made the subject of
a separate civil action because of the distinct separability of their respective juridical
cause or basis of action . . . ." What remains to be the most important consideration as to
why the decision in the criminal case should not be considered in this appeal is the fact
that private respondents were not parties therein. It would have been entirely different if
the petitioners' cause of action was for damages arising from a delict, in which case
private respondents' liability could only be subsidiary pursuant to Article 103 of the
Revised Penal Code. In the absence of any collusion, the judgment of conviction in the
criminal case against Galang would have been conclusive in the civil cases for the
subsidiary liability of the private respondents.
6. ID.; ID.; LIABILITY OF EMPLOYERS FOR ACTS OR OMISSIONS OF
EMPLOYEES; BASIS; DEFENSE AVAILABLE TO EMPLOYER. As employers of
the truck driver, the private respondents are, under Article 2180 of the Civil Code,
directly and primarily liable for the resulting damages. The presumption that they are
negligent flows from the negligence of their employee. That presumption, however, is
only juris tantum, not juris et de jure. Their only possible defense is that they exercised
all the diligence of a good father of a family to prevent the damage. Article 2180 reads as
follows: "The obligation imposed by Article 2176 is demandable not only for one's own
acts or omissions, but also for those of persons for whom one is responsible. . . .
Employers shall be liable for the damages caused by their employees and household
helpers acting within the scope of their assigned tasks, even though the former are not
engaged in any business or industry. . . . The responsibility treated of in this article shall
cease when the persons herein mentioned prove that they observed all the diligence of a
good father of a family to prevent damage." The diligence of a good father referred to
means the diligence in the selection and supervision of employees. The answers of the
private respondents in Civil Cases Nos. 4477 and 4478 did not interpose this defense.
Neither did they attempt to prove it.
7. ID.; ID.; INDEMNITY FOR DEATH. In the light of recent decisions of this Court,
the indemnity for death must, however, be increased from P12,000.00 to P50,000.00.
8. ID.; ID.; NEGLIGENCE; DEFINED; TEST BY WHICH EXISTENCE OF
NEGLIGENCE DETERMINED. Negligence was defined and described by this Court
in Layugan vs. Intermediate Appellate Court, thus: ". . . Negligence is the omission to do
something which a reasonable man, guided by those considerations which ordinarily
regulate the conduct of human affairs, would do, or the doing of something which a
prudent and reasonable man would not do (Black's Law Dictionary, Fifth Edition, 930),
or as Judge Cooley defines it, '(T)he failure to observe for the protection of the interests
of another person, that degree of care, precaution, and vigilance which the circumstances
justly demand, whereby such other person suffers injury.' (Cooley on Torts, Fourth
Edition, vol. 3, 265) In Picart vs. Smith (37 Phil. 809, 813), decided more than seventy
years ago but still a sound rule, (W)e held: The test by which to determine the existence

of negligence in a particular case may be stated as follows: Did the defendant in doing the
alleged negligent act use that (reasonable care and caution which an ordinarily prudent
person would have used in the same situation?) If not, then he is guilty of negligence.
The law here in effect adopts the standard supposed to be supplied by the imaginary
conduct of the discreet paterfamilias of the Roman Law. . . ." In Corliss vs. Manila
Railroad Company, We held: ". . . 'Negligence is want of the care required by the
circumstances. It is a relative or comparative, not an absolute, term and its application
depends upon the situation of the parties and the degree of care and vigilance which the
circumstances reasonably require. Where the danger is great, a high degree of care is
necessary, and the failure to observe it is a want of ordinary care under the circumstances.
(citing Ahern v. Oregon Telephone Co., 35 Pac. 549 (1894).'"
9. ID.; ID.; ID.; EMERGENCY RULE; EXPLAINED; CASE AT BAR. On the basis
of the foregoing definition, the test of negligence and the facts obtaining in this case, it is
manifest that no negligence could be imputed to Jose Koh. Any reasonable and ordinary
prudent man would have tried to avoid running over the two boys by swerving the car
away from where they were even if this would mean entering the opposite lane. Avoiding
such immediate peril would be the natural course to take particularly where the vehicle in
the opposite lane would be several meters away and could very well slow down, move to
the side of the road and give way to the oncoming car. Moreover, under what is known as
the emergency rule, "one who suddenly finds himself in a place of danger, and is required
to act without time to consider the best means that may be adopted to avoid the
impending danger, is not guilty of negligence, if he fails to adopt what subsequently and
upon reflection may appear to have been a better method, unless the emergency in which
he finds himself is brought about by his own negligence. Considering the sudden
intrusion of the two (2) boys into the lane of the car, We find that Jose Koh adopted the
best means possible in the given situation to avoid hitting them. Applying the above test,
therefore, it is clear that he was not guilty of negligence.

10. ID.; ID.; ID.; PROXIMATE CAUSE; DEFINED; CASE AT BAR. Proximate
cause has been defined as: ". . . 'that cause, which, in natural and continuous sequence,
unbroken by any efficient intervening cause, produces the injury, and without which the
result would not have occurred.' And more comprehensively, the proximate legal cause is
that acting first and producing the injury, either immediately or by setting other events in
motion, all constituting a natural and continuous chain of events, each having a close
causal connection with its immediate predecessor, the final event in the chain
immediately effecting the injury as a natural and probable result of the cause which first
acted, under such circumstances that the person responsible for the first event should, as
an ordinary prudent and intelligent person, have reasonable ground to expect at the
moment of his act or default that an injury to some person might probably result
therefrom." Applying the above definition, although it may be said that the act of Jose
Koh, if at all negligent, was the initial act in the chain of events, it cannot be said that the

same caused the eventual injuries and deaths because of the occurrence of a sufficient
intervening event, the negligent act of the truck driver, which was the actual cause of the
tragedy. The entry of the car into the lane of the truck would not have resulted in the
collision had the latter heeded the emergency signals given by the former to slow down
and give the car an opportunity to go back into its proper lane. Instead of slowing down
and swerving to the far right of the road, which was the proper precautionary measure
under the given circumstances, the truck driver continued at full speed towards the car.
The truck driver's negligence becomes more apparent in view of the fact that the road is
7.50 meters wide while the car measures 1.598 meters and the truck, 2.286 meters, in
width. This would mean that both car and truck could pass side by side with a clearance
of 3.661 meters to spare. Furthermore, the bridge has a level sidewalk which could have
partially accommodated the truck. Any reasonable man finding himself in the given
situation would have tried to avoid the car instead of meeting it head-on.
11. ID.; ID.; ID.; PRESUMPTION THAT DRIVER OF MOTOR VEHICLE
NEGLIGENT; CASE AT BAR. The truck driver's negligence is apparent in the
records. He himself said that his truck was running at 30 miles (48 kilometers) per hour
along the bridge while the maximum speed allowed by law on a bridge is only 30
kilometers per hour. Under Article 2185 of the Civil Code, a person driving a vehicle is
presumed negligent if at the time of the mishap, he was violating any traffic regulation.
12. ID.; ID.; ID.; DOCTRINE OF LAST CLEAR CHANCE; EXPLAINED. Last
clear chance is a doctrine in the law of torts which states that the contributory negligence
of the party injured will not defeat the claim for damages if it is shown that the defendant
might, by the exercise of reasonable care and prudence, have avoided the consequences
of the negligence of the injured party. In such cases, the person who had the last clear
chance to avoid the mishap is considered in law solely responsible for the consequences
thereof. In Bustamante vs. Court of Appeals, We held: "The respondent court adopted the
doctrine of 'last clear chance.' The doctrine, stated broadly, is that the negligence of the
plaintiff does not preclude a recovery for the negligence of the defendant where it appears
that the defendant, by exercising reasonable care and prudence, might have avoided
injurious consequences to the plaintiff notwithstanding the plaintiff's negligence. In other
words, the doctrine of last clear chance means that even though a person's own acts may
have placed him in a position of peril, and an injury results, the injured person is entitled
to recovery (sic). As the doctrine is usually stated, a person who has the last clear chance
or opportunity of avoiding an accident, notwithstanding the negligent acts of his
opponent or that of a third person imputed to the opponent is considered in law solely
responsible for the consequences of the accident. (Sangco, Torts and Damages, 4th Ed.,
1986, p. 165). The practical import of the doctrine is that a negligent defendant is held
liable to a negligent plaintiff, or even to a plaintiff who has been grossly negligent in
placing himself in peril, if he, aware of the plaintiff's peril, or according to some
authorities, should have been aware of it in the reasonable exercise of due care, had in
fact an opportunity later than that of the plaintiff to avoid an accident (57 Am. Jur., 2d,
pp. 798-799)." In Pantranco North Express, Inc. vs. Baesa, We ruled: "The doctrine of

last clear chance was defined by this Court in the case of Ong v. Metropolitan Water
District, 104 Phil. 397 (1958), in this wise: The doctrine of the last clear chance simply,
means that the negligence of a claimant does not preclude a recovery for the negligence
of defendant where it appears that the latter, by exercising reasonable care and prudence,
might have avoided injurious consequences to claimant notwithstanding his negligence.
The doctrine applies only in a situation where the plaintiff was guilty of prior or
antecedent negligence but the defendant, who had the last fair chance to avoid the
impending harm and failed to do so, is made liable for all the consequences of the
accident notwithstanding the prior negligence of the plaintiff [Picart v. Smith, 37 Phil.
809 {1918}; Glan People's Lumber and Hardware, et al. v. Intermediate Appellate Court,
Cecilia Alferez Vda. de Calibo, et al., G.R. No. 70493, May 18, 1989]. The subsequent
negligence of the defendant in failing to exercise ordinary care to avoid injury to plaintiff
becomes the immediate or proximate cause of the accident which intervenes between the
accident and the more remote negligence of the plaintiff, thus making the defendant liable
to the plaintiff [Picart v. Smith, supra]. Generally, the last clear chance doctrine is
invoked for the purpose of making a defendant liable to a plaintiff who was guilty of
prior or antecedent negligence, although it may also be raised as a defense to defeat claim
(sic) for damages."

DECISION

DAVIDE, JR., J :
p

Petitioners urge this Court to review and reverse the Resolution of the Court of Appeals
in C.A.-G.R. CV Nos. 69040-41, promulgated on 3 April 1984, which set aside its
previous Decision dated 29 November 1983 reversing the Decision of the trial court
which dismissed petitioners' complaints in Civil Case No. 4477 and Civil Case No. 4478
of the then Court of First Instance (now Regional Trial Court) of Pampanga entitled
"Carmen Dayrit Koh, Leticia Koh, Julieta Koh Tuquero, Araceli Koh McKee and
Elizabeth Koh Turla vs. Jaime Tayag and Rosalinda Manalo", and "George McKee and
Araceli Koh McKee vs. Jaime Tayag and Rosalinda Manalo", respectively, and granted
the private respondents' counterclaim for moral damages, attorney's fees and litigation
expenses.
The said civil cases for damages based on quasi-delict were filed as a result of a vehicular
accident which led to the deaths of Jose Koh, Kim Koh McKee and Loida Bondoc and
caused physical injuries to George Koh McKee, Christopher Koh McKee and petitioner
Araceli Koh McKee.

Petitioners in G.R. No. 68102, parents of the minors George Koh McKee, Christopher
Koh McKee and the deceased Kim Koh McKee, were the plaintiffs in Civil Case No.
4478, while petitioner Carmen Dayrit Koh and her co-petitioners in G.R. No. 68103, who
are the wife and children, respectively, of the late Jose Koh, were the plaintiffs in Civil
Case No. 4477. Upon the other hand, private respondents are the owners of the cargo
truck which figured in the mishap; a certain Ruben Galang was the driver of the truck at
the time of the accident.
LLpr

The antecedent facts are not disputed.

Between nine and ten o'clock in the morning of 8 January 1977, in Pulong Pulo Bridge
along Mac Arthur Highway, between Angeles City and San Fernando, Pampanga, a headon-collision took place between an International cargo truck, Loadstar, with Plate No.
RF912-T Philippines `76 owned by private respondents, and driven by Ruben Galang,
and a Ford Escort car bearing Plate No. S2-850 Pampanga '76 driven by Jose Koh. The
collision resulted in the deaths of Jose Koh, Kim Koh McKee and Loida Bondoc, and
physical injuries to George Koh McKee, Christopher Koh McKee and Araceli Koh
McKee, all passengers of the Ford Escort.
Jose Koh was the father of petitioner Araceli Koh McKee, the mother of minors George,
Christopher and Kim Koh McKee. Loida Bondoc, on the other hand, was the baby sitter
of one and a half year old Kim. At the time of the collision, Kim was seated on the lap of
Loida Bondoc who was at the front passenger's seat of the car while Araceli and her two
(2) sons were seated at the car's back seat.
Immediately before the collision, the cargo truck, which was loaded with two hundred
(200) cavans of rice weighing about 10,000 kilos, was traveling southward from Angeles
City to San Fernando Pampanga, and was bound for Manila. The Ford Escort, on the
other hand, was on its way to Angeles City from San Fernando. When the northbound car
was about ten (10) meters away from the southern approach of the bridge, two (2) boys
suddenly darted from the right side of the road and into the lane of the car. The boys were
moving back and forth, unsure of whether to cross all the way to the other side or turn
back. Jose Koh blew the horn of the car, swerved to the left and entered the lane of the
truck; he then switched on the headlights of the car, applied the brakes and thereafter
attempted to return to his lane. Before he could do so, his car collided with the truck. The
collision occurred in the lane of the truck, which was the opposite lane, on the said
bridge.
The incident was immediately reported to the police station in Angeles City;
consequently, a team of police officers was forthwith dispatched to conduct an on the
spot investigation. In the sketch 1 prepared by the investigating officers, the bridge is
described to be sixty (60) "footsteps" long and fourteen (14) "footsteps" wide seven
(7) "footsteps" from the center line to the inner edge of the side walk on both sides. 2
Pulong Pulo Bridge, which spans a dry brook, is made of concrete with soft shoulders
and concrete railings on both sides about three (3) feet high.

The sketch of the investigating officer discloses that the right rear portion of the cargo
truck was two (2) "footsteps" from the edge of the right sidewalk, while its left front
portion was touching the center line of the bridge, with the smashed front side of the car
resting on its front bumper. The truck was about sixteen (16) "footsteps" away from the
northern end of the bridge while the car was about thirty-six (36) "footsteps" from the
opposite end. Skid marks produced by the right front tire of the truck measured nine (9)
"footsteps", while skid marks produced by the left front tire measured five (5)
"footsteps". The two (2) rear tires of the truck, however, produced no skid marks.
llcd

In his statement to the investigating police officers immediately after the accident,
Galang admitted that he was traveling at thirty (30) miles (48 kilometers) per hour.
As a consequence of the collision, two (2) cases, Civil Case No. 4477 and No. 4478, were
filed on 31 January 1977 before the then Court of First Instance of Pampanga and were
raffled to Branch III and Branch V of the said court, respectively. In the first, herein
petitioners in G.R. No. 68103 prayed for the award of P12,000.00 as indemnity for the
death of Jose Koh, P150,000.00 as moral damages, P60,000.00 as exemplary damages,
P10,000.00 for litigation expenses, P6,000.00 for burial expenses, P3,650.00 for the
burial lot and P9,500.00 for the tomb, plus attorney's fees. 3 In the second case,
petitioners in G.R. No. 68102 prayed for the following: (a) in connection with the death
of Kim McKee, the sum of P12,000.00 as death benefit, P3,150.00 for funeral services,
P3,650.00 for the cemetery lot, P3,000.00 for the tomb, P50,000.00 as moral damages,
P10,000.00 as exemplary damages and P2,000.00 as miscellaneous damages, (b) in the
case of Araceli Koh McKee, in connection with the serious physical injuries suffered, the
sum of P100,000.00 as moral damages, P20,000.00 as exemplary damages, P12,000.00
for loss of earnings, P5,000.00 for the hospitalization expenses up to the date of the filing
of the complaint; and (c) with respect to George McKee, Jr., in connection with the
serious physical injuries suffered, the sum of P50,000.00 as moral damages, P20,000.00
as exemplary damages and the following medical expenses: P3,400 payable to the
Medical Center, P3,500.00 payable to the St. Francis Medical Center, P5,175.00 payable
to the Clark Air Base hospital, and miscellaneous expenses amounting to P5,000.00.
They also sought an award of attorney's fees amounting to 25% of the total award plus
traveling and hotel expenses, with costs. 4
On 1 March 1977, an Information charging Ruben Galang with the crime of "Reckless
Imprudence Resulting to (sic) Multiple Homicide and Physical Injuries and Damage to
Property" was filed with the trial court. It was docketed as Criminal Case No. 3751 and
was raffled to Branch V of the court, the same Branch where Civil Case No. 4478 was
assigned. 5
In their Answer with Counterclaim in Civil Case No. 4477, private respondents asserted
that it was the Ford Escort car which "invaded and bumped (sic) the lane of the truck
driven by Ruben Galang" and, as counterclaim, prayed for the award of P15,000.00 as

attorney's fees, P20,000.00 as actual and liquidated damages, P100,000.00 as moral

damages and P30,000.00 as business losses. 6 In Civil Case No. 4478, private
respondents first filed a motion to dismiss on grounds of pendency of another action
(Civil Case No. 4477) and failure to implead an indispensable party, Ruben Galang, the
truck driver; they also filed a motion to consolidate the case with Civil Case No. 4477
pending before Branch III of the same court, which was opposed by the plaintiffs. 7 Both
motions were denied by Branch V, then presided over by Judge Ignacio Capulong.
Thereupon, private respondents filed their Answer with Counterclaim 8 wherein they
alleged that Jose Koh was the person "at fault having approached the lane of the truck
driven by Ruben Galang, . . . which was on the right lane going towards Manila and at a
moderate speed observing all traffic rules and regulations applicable under the
circumstances then prevailing;" in their counterclaim, they prayed for an award of
damages as may be determined by the court after due hearing, and the sums of
P10,000.00 as attorney's fees and P5,000.00 as expenses of litigation.
cdll

Petitioners filed their Answers to the Counterclaims in both cases.

To expedite the proceedings, the plaintiffs in Civil Case No. 4478 filed on 27 March
1978 a motion to adopt the testimonies of witnesses taken during the hearing of Criminal
Case No. 3751, which private respondents opposed and which the court denied. 9
Petitioners subsequently moved to reconsider the order denying the motion for
consolidation, 10 which Judge Capulong granted in the Order of 5 September 1978; he
then directed that Civil Case No. 4478 be consolidated with Civil Case No. 4477 in
Branch III of the court then presided over by Judge Mario Castaeda, Jr.
Left then with Branch V of the trial court was Criminal Case No. 3751.
In the civil cases, the plaintiffs presented as witnesses Araceli Koh McKee, Fernando
Nuag, Col. Robert Fitzgerald, Primitivo Parel, Eugenio Tanhueco, Carmen Koh and
Antonio Koh, 11 and offered several documentary exhibits. Upon the other hand, private
respondents presented as witnesses Ruben Galang, Zenaida Soliman, Jaime Tayag and
Roman Dayrit. 12
In the criminal case, the prosecution presented as witnesses Mrs. Araceli McKee, Salud
Samia, Pfc. Fernando Nuag, Dr. Ramon Panlilio, Dr. Robert Fitzgerald, Dr. Roberto
Yuson, Dr. Hector Ulanday, Pfc. Benigno de Leon, Marina Bolos, Primitivo Parel,
Rogelio Pineda, Benito Caraan and Eugenio Tanhueco, and offered several documentary
exhibits. 13 Upon the other hand, the defense presented the accused Ruben Galang,
Luciano Punzalan, Zenaida Soliman and Roman Dayrit, and offered documentary
exhibits. 14
On 1 October 1980, Judge Capulong rendered a decision against the accused Ruben
Galang in the aforesaid criminal case. The dispositive portion of the decision reads as
follows:

"WHEREFORE, in view of the foregoing, judgment is hereby rendered finding

the accused Ruben Galang guilty beyond reasonable doubt of the crime charged
in the information and after applying the provisions of Article 365 of the
Revised Penal Code and indeterminate sentence law, this Court, imposes upon
said accused Ruben Galang the penalty of six (6) months of arresto mayor as
minimum to two (2) years, four (4) months and one (1) day of prision
correccional as maximum; the accused is further sentenced to pay and
indemnify the heirs of Loida Bondoc the amount of P12,000.00 as indemnity for
her death, to reimburse the heirs of Loida Bondoc the amount of P2,000.00
representing the funeral expenses; to pay the heirs of Loida Bondoc the amount
of P20,000.00 representing her loss of income; to indemnify and pay the heirs of
the deceased Jose Koh the value of the car in the amount of P53,910.95, and to
pay the costs." 15

The aforecited decision was promulgated only on 17 November 1980; on the same
day, counsel for petitioners filed with Branch III of the court where the two (2)
civil cases were pending a manifestation to that effect and attached thereto a copy
of the decision. 16
Upon the other hand, Judge Mario Castaeda, Jr. dismissed the two (2) civil cases on 12
November 1980 and awarded the private respondents moral damages, exemplary
damages and attorney's fees. 17 The dispositive portion of the said decision reads as
follows:
"WHEREFORE, finding the preponderance of evidence to be in favor of the
defendants and against the plaintiffs, these cases are hereby ordered
DISMISSED with costs against the plaintiffs. The defendants had proven their
counter-claim, thru evidences (sic) presented and unrebutted. Hence, they are
hereby awarded moral and exemplary damages in the amount of P100,000.00
plus attorney's fee of P15,000.00 and litigation expenses for (sic) P2,000.00.
The actual damages claimed for (sic) by the defendants is (sic) hereby dismissed
for lack of proof to that effect (sic)." 18

A copy of the decision was sent by registered mail to the petitioners on 28 November
1980 and was received on 2 December 1980. 19
Accused Ruben Galang appealed the judgment of conviction to the Court of Appeals. The
appeal was docketed as C.A.-G.R. Blg. 24764-CR and was assigned to the court's Third
Division. Plaintiffs in Civil Cases Nos. 4477 and 4478 likewise separately appealed the
12 November 1980 decision to the appellate court. The appeals were docketed as C.A.G.R. No. 69041-R and C.A.-G.R. No. 69040-R, respectively, and were assigned to the
Fourth Civil Cases Division.
On 4 October 1982, the respondent Court promulgated its decision 20 in C.A.-G.R. Blg.
24764-CR affirming the conviction of Galang. 21 The dispositive portion of the decision
reads:

"DAHIL DITO, ang hatol na paksa ng naritong paghahabol ay Aming

pinagtitibay sa kanyang kabuuan. Ang naghahabol pa rin ang pinagbabayad ng
gugol ng paghahabol."
cdphil

A motion for reconsideration of the decision was denied by the respondent Court in its
Kapasiyahan promulgated on 25 November 1982. 22 A petition for its review 23 was
filed with this Court; said petition was subsequently denied. A motion for its
reconsideration was denied with finality in the Resolution of 20 April 1983. 24
On 29 November 1983, respondent Court, by then known as the Intermediate Appellate
Court, promulgated its consolidated decision in A.C.-G.R. CV Nos. 69040 and 69041, 25
the dispositive portion of which reads:
"WHEREFORE, the decision appealed from is hereby reversed and set aside
and another one is rendered, ordering defendants-appellees to pay plaintiffsappellants as follows:

For the death of Jose Koh:

P50,000.00 as moral damages
P12,000.00 as death indemnity
P16,000.00 for the lot and tomb (Exhs. U and U-1)
P4,000.00 expenses for holding a wake (p. 9, tsn April 19, 1979)
P950.00 for the casket (Exh. M)
P375.00 for the vault services (Exhs. V and V-1)
For the death of Kim Koh McKee:
P50,000.00 as moral damages
P12,000.00 as death indemnity
P1,000.00 for the purchase of the burial lot ( Exh. M)
P950.00 for funeral services (Exh. M-1)
P375.00 for vault services (Exhs. V and V-1)
For the physical injuries suffered by George Koh McKee:
P25,000.00 as moral damages
P672.00 for Clark Field Hospital (Exh. E)

P4,384.00 paid to Angeles Medical Clinic (Exhs. D, D-1 and D2)

P1,555.00 paid to St. Francis Medical Center (Exhs. B and B-1)
For the physical injuries suffered by Araceli Koh McKee:
P25,000.00 as moral damages
P1,055.00 paid to St. Francis Medical Center (Exhs. G and G-1)
P75.00 paid to St. Francis Medical Center (Exhs G-2 and G-3)
P428.00 to Carmelite General Hospital (Exh. F)
P114.20 to Muoz Clinic (Exh. MM)
For the physical injuries suffered by Christopher Koh McKee:
P10,000.00 as moral damages
P1,231.10 to St. Francis Medical Center (Exhs. L and L-1)
P321.95 to F.C.E.A. Hospital (Exhs. G and D-1)
In addition, We award P10.000.00 as counsel (sic) fees in Civil Case No. 4477
and another P10,000.00 as counsel (sic) fees in Civil Case No. 4478.
No pronouncement as to costs.
SO ORDERED." 26

The decision is anchored principally on the respondent Court's findings that it was Ruben
Galang's inattentiveness or reckless imprudence which caused the accident. The appellate
court further said that the law presumes negligence on the part of the defendants (private
respondents), as employers of Galang, in the selection and supervision of the latter; it was
further asserted that these defendants did not allege in their Answers the defense of
having exercised the diligence of a good father of a family in selecting and supervising
the said employee. 27 This conclusion of reckless imprudence is based on the following
findings of fact:
"In the face of these diametrically opposed judicial positions, the determinative
issue in this appeal is posited in the fourth assigned error as follows:
'IV
THE TRIAL COURT ERRED WHEN IT HELD THE (sic) DRIVER OF THE
TRUCK STOPPED HIS TRUCK BLEW HIS HORN SWITCHED ON HIS
HEADLIGHTS AND COULD NOT SWERVE TO THE RIGHT.'

Supportive of plaintiffs' version, principal witness Araceli Koh McKee testified

thus:
'Q What happened after that, as you approached the bridge?
A When we were approaching the bridge, two (2) boys tried to cross the right
lane on the right side of the highway going to San Fernando. My father,
who is (sic) the driver of the car tried to avoid the two (2) boys who
were crossing, he blew his horn and swerved to the left to avoid hitting
the two (2) boys. We noticed the truck, he switched on the headlights to
warn the truck driver, to slow down to give us the right of way to come
back to our right lane.
Q Did the truck slow down?

Cdpr

A No, sir, it did not, just (sic) continued on its way.

Q What happened after that?
A After avoiding the two (2) boys, the car tried to go back to the right lane since
the truck is (sic) coming, my father stepped on the brakes and all what
(sic) I heard is the sound of impact (sic), sir.' (tsn, pp. 5-6, July 22,
1977); or (Exhibit 'O' in these Civil Cases).
xxx xxx xxx
Q Mrs. how did you know that the truck driven by the herein accused, Ruben
Galang did not reduce its speed before the actual impact of collision
(sic) as you narrated in this Exhibit '1', how did you know (sic)?
A It just kept on coming, sir. If only he reduced his speed, we could have got
(sic) back to our right lane on side (sic) of the highway, sir.' (tsn. pp. 3334, July 22, 1977) or (Exhibit `O' in these Civil Cases)' (pp. 30-31,
Appellants' Brief).
Plaintiffs' version was successfully corroborated to Our satisfaction by the
following facts and circumstances:
1. An impartial eye-witness to the mishap, Eugenio Tanhueco, declared that the
truck stopped only when it had already collided with the car:
xxx xxx xxx
Tanhueco repeated the same testimony during the hearing in the
criminal case:
xxx xxx xxx
Tanhueco could (sic) not be tagged as an accommodation witness
because he was one of the first to arrive at the scene of the accident. As a
matter of fact, he brought one of the injured passengers to the hospital.

We are not prepared to accord faith and credit to defendants'

witnesses, Zenaida Soliman, a passenger of the truck, and Roman
Dayrit, who supposedly lived across the street.
Regarding Soliman, experience has shown that in the ordinary
course of events people usually take the side of the person with whom
they are associated at the time of the accident, because, as a general rule,
they do not wish to be identified with the person who was at fault. Thus
an imaginary bond is unconsciously created among the several persons
within the same group (People vs. Vivencio, CA-G.R. No. 00310-CR,
Jan. 31, 1962).
With respect to Dayrit, We can not help suspecting (sic) that he
is an accommodation witness. He did not go to the succor of the injured
persons. He said he wanted to call the police authorities about the
mishap, but his phone had no dial tone. Be this (sic) as it may, the trial
court in the criminal case acted correctly in refusing to believe Dayrit.
2. Exhibit 2, the statement of Galang, does not include the claim
that Galang stopped his truck at a safe distance from the car, according
to plaintiffs (p. 25, Appellants' Brief). This contention of appellants was
completely passed sub-silencio or was not refuted by appellees in their
brief. Exhibit 2 is one of the exhibits not included in the record.
According to the Table of Contents submitted by the court below, said
Exhibit 2 was not submitted by defendants-appellees. In this light, it is
not far-fetched to surmise that Galang's claim that he stopped was an
eleventh-hour desperate attempt to exculpate himself from imprisonment
and damages.
3. Galang divulged that he stopped after seeing the car about 10
meters away:
ATTY. SOTTO:
Q Do I understand from your testimony that inspite of the fact that you admitted
that the road is straight and you may be able to (sic) see 500-1000
meters away from you any vehicle, you first saw that car only about ten
(10) meters away from you for the first time?
xxx xxx xxx
A I noticed it, sir, that it was about ten (10) meters away.
ATTY. SOTTO:
Q So, for clarification, you clarify and state under your oath that you have (sic)
not noticed it before that ten (10) meters? (Tsn. 3 to 5, Sept. 18, 1979).'
(p. 16, Appellants' Brief)'

Galang's testimony substantiate (sic) Tanhueco's statement that

Galang stopped only because of the impact. At ten (10) meters away,
with the truck running at 30 miles per hour, as revealed in Galang's
affidavit (Exh. 2; p. 25, Appellants' Brief), it is well-nigh impossible to
avoid a collision on a bridge.
5. Galang's truck stopped because of the collision, and not
because he waited for Jose Koh to return to his proper lane. The police
investigator, Pfc. Fernando L. Nunag, stated that he found skid marks
under the truck but there were not (sic) skid marks behind the truck (pp.
19-20, t.s.n., Nov. 3, 1978). The presence of skid marks show (sic) that
the truck was speeding. Since the skid marks were found under the truck
and none were found at the rear of the truck, the reasonable conclusion
is that the skid marks under the truck were caused by the truck's front
wheels when the trucks (sic) suddenly stopped seconds before the
mishap in an endeavor to avoid the same. But, as aforesaid, Galang saw
the car at barely 10 meters away, a very short distance to avoid a
collision, and in his futile endeavor to avoid the collision he abruptly
stepped on his brakes but the smashup happened just the same.
For the inattentiveness or reckless imprudence of Galang, the law presumes
negligence on the part of the defendants in the selection of their driver or in the
supervision over him. Appellees did not allege such defense of having exercised
the duties of a good father of a family in the selection and supervision of their
employees in their answers. They did not even adduce evidence that they did in
fact have methods of selection and programs of supervision. The inattentiveness
or negligence of Galang was the proximate cause of the mishap. If Galang's
attention was on the highway, he would have sighted the car earlier or at a very
safe distance than (sic) 10 meters. He proceeded to cross the bridge, and tried to
stop when a collision was already inevitable, because at the time that he entered
the bridge his attention was not riveted to the road in front of him.
LibLex

On the question of damages, the claims of appellants were amply proven, but
the items must be reduced." 28

A motion for reconsideration alleging improper appreciation of the facts was

subsequently filed by private respondents on the basis of which the respondent Court, in
its Resolution of 3 April 1984, 29 reconsidered and set aside its 29 November 1983
decision and affirmed in toto the trial court's judgment of 12 November 1980. A motion
to reconsider this Resolution was denied by the respondent Court on 4 July 1984. 30
Hence, this petition.
Petitioners allege that respondent Court:
"I

. . . COMMITTED A VERY SERIOUS AND GRAVE ERROR WHEN IT

TOTALLY REVERSED ITS DECISION BY MERELY BASING IT FROM
(sic) A MERE `PRESUMPTION,' TOTALLY DISREGARDING THE
PRIVATE
RESPONDENTS'
DRIVER'S
ADMISSIONS
AND
CONFESSIONS, WHO EXCLUSIVELY COMMITTED THE PROXIMATE
CAUSE OF THE ACCIDENT (sic), FURTHER, IT ALSO DISREGARDED
THE EVIDENCE ADDUCED AND FOUND IN THE RECORDS;
THEREFORE, RESPONDENT COURT'S RESOLUTIONS (ANNEXES A and
B, PETITION) ARE CLEARLY ERRONEOUS, PURELY BASED ON
SPECULATIONS, CONJECTURES AND WITHOUT SURE FOUNDATION
IN THE EVIDENCE.

II
. . . GRAVELY ABUSED ITS DISCRETION AND ERRED WHEN IN
EFFECT IT DISREGARDED A DOCTRINE LAID DOWN BY THIS
HONORABLE COURT BY STATING AMONG OTHERS, `IT CANNOT
CATEGORICALLY ADOPT THE FINDINGS OF GUILT IN THE
CRIMINAL CASE WHERE THE DRIVER OF THE TRUCK INVOLVED IN
THE ACCIDENT WAS INDICTED.'
III
. . . PATENTLY COMMITTED GRAVE ABUSE OF DISCRETION AND
MADE A MISLEADING PRONOUNCEMENT, WHEN IT HELD: `IT IS
THUS
INCUMBENT
UPON
THE
PLAINTIFFS-APPELLANTS
(APPELLEES WRONGLY MENTIONED IN THE RESOLUTION) TO
PROVE THEIR ALLEGATIONS THAT THE PROXIMATE CAUSE OF THE
ACCIDENT WAS THE NEGLIGENCE OF PRIVATE RESPONDENTS'
DRIVER..'
IV
. . . COMMITTED ANOTHER GRIEVIOUS (sic) ERROR, COMMITTED
GRAVE ABUSE OF DISCRETION AND CITED ANOTHER CASE WHICH
IS CLEARLY INAPPLICABLE TO THESE CASES.
V
. . . COMMITTED A PATENT ERROR AND GRAVELY ABUSED ITS
DISCRETION IN ADOPTING THE FINDINGS OF THE TRIAL COURT
WHICH ARE CLEARLY ERRONEOUS AND CONTRARY TO THE
EVIDENCE FOUND IN THE RECORDS, SPECIALLY THEY (sic) ARE
CONTRARY TO THE ADMITTED FACTS AND JUDICIAL ADMISSIONS
MADE BY THE PRIVATE RESPONDENTS' DRIVER.
VI

. . . EXCEEDED ITS JURISDICTION, COMMITTED GRAVE ABUSE OF

DISCRETION AND GRAVELY ERRED WHEN IT AWARDED DAMAGES
TO THE PRIVATE RESPONDENTS WHEN SAID AWARD IS NOT
SUPPORTED BY EVIDENCE, IN THE RECORDS, AND SAID AWARD IS
NOT ALLOWED BY LAW AND THE CONSISTENT DECISIONS OF THIS
HONORABLE COURT.
VII
. . . EXCEEDED ITS JURISDICTION, COMMITTED GRAVE ABUSE OF
DISCRETION AND GRAVELY ERRED WHEN IT ERRONEOUSLY SET
ASIDE ITS DECISION AWARDING DAMAGES TO PETITIONERS
WHICH IS CLEARLY IN ACCORDANCE WITH THE EVIDENCE, THE
LAW AND JURISPRUDENCE RELATIVE TO THE AWARD OF
DAMAGES." 31

In the Resolution of 12 September 1984, we required private respondents to Comment on

the petition. 32 After the said Comment 33 was filed, petitioners submitted a Reply 34
thereto; this Court then gave due course to the instant petitions and required petitioners to
file their Brief, 35 which they accordingly complied with.
There is merit in the petition. Before We take on the main task of dissecting the
arguments and counter-arguments, some observations on the procedural vicissitudes of
these cases are in order.
Civil Cases Nos. 4477 and 4478, which were for the recovery of civil liability arising
from a quasi-delict under Article 2176 in relation to Article 2180 of the Civil Code, were
filed ahead of Criminal Case No. 3751. Civil Case No. 4478 was eventually consolidated
with Civil Case No. 4477 for joint trial in Branch III of the trial court. The records do not
indicate any attempt on the part of the parties, and it may therefore be reasonably
concluded that none was made, to consolidate Criminal Case No. 3751 with the civil
cases, or vice-versa. The parties may have then believed, and understandably so, since by
then no specific provision of law or ruling of this Court expressly allowed such a
consolidation, that an independent civil action, authorized under Article 33 in relation to
Article 2177 of the Civil Code, such as the civil cases in this case, cannot be consolidated
with the criminal case. Indeed, such consolidation could have been farthest from their
minds as Article 33 itself expressly provides that the "civil action shall proceed
independently of the criminal prosecution, and shall require only a preponderance of
evidence." Be that as it may, there was then no legal impediment against such
consolidation. Section 1, Rule 31 of the Rules of Court, which seeks to avoid a
multiplicity of suits, guard against oppression and abuse, prevent delays, clear congested
dockets to simplify the work of the trial court, or in short, attain justice with the least
expense to the parties litigants, 36 would have easily sustained a consolidation, thereby
preventing the unseeming, if not ludicrous, spectacle of two (2) judges appreciating,
according to their respective orientation, perception and perhaps even prejudice, the same

facts differently, and thereafter rendering conflicting decisions. Such was what happened
in this case. It should not, hopefully, happen anymore. In the recent case of Cojuangco vs.
Court of Appeals, 37 this Court held that the present provisions of Rule 111 of the
Revised Rules of Court allow a consolidation of an independent civil action for the
recovery of civil liability authorized under Articles 32, 33, 34 or 2176 of the Civil Code
with the criminal action subject, however, to the condition that no final judgment has
been rendered in that criminal case.
Cdpr

Let it be stressed, however, that the judgment in Criminal Case No. 3751 finding Galang
guilty of reckless imprudence, although already final by virtue of the denial by no less
than this Court of his last attempt to set aside the respondent Court's affirmance of the
verdict of conviction, has no relevance or importance to this case.
As We held in Dionisio vs. Alvendia, 38 the responsibility arising from fault or
negligence in a quasi-delict is entirely separate and distinct from the civil liability arising
from negligence under the Penal Code. And, as more concretely stated in the concurring
opinion of Justice J.B.L. Reyes, "in the case of independent civil actions under the new
Civil Code, the result of the criminal case, whether acquittal or conviction, would be
entirely irrelevant to the civil action." 39 In Salta vs. De Veyra and PNB vs. Purisima, 40
this Court stated:
". . . It seems perfectly reasonable to conclude that the civil actions mentioned
in Article 33, permitted in the same manner to be filed separately from the
criminal case, may proceed similarly regardless of the result of the criminal
case.
Indeed, when the law has allowed a civil case related to a criminal case, to be
filed separately and to proceed independently even during the pendency of the
latter case, the intention is patent to make the court's disposition of the criminal
case of no effect whatsoever on the separate civil case. This must be so because
the offenses specified in Article 33 are of such a nature, unlike other offenses
not mentioned, that they may be made the subject of a separate civil action
because of the distinct separability of their respective juridical cause or basis of
action . . . ."

What remains to be the most important consideration as to why the decision in the
criminal case should not be considered in this appeal is the fact that private
respondents were not parties therein. It would have been entirely different if the
petitioners' cause of action was for damages arising from a delict, in which case
private respondents' liability could only be subsidiary pursuant to Article 103 of the
Revised Penal Code. In the absence of any collusion, the judgment of conviction in
the criminal case against Galang would have been conclusive in the civil cases for the
subsidiary liability of the private respondents. 41
And now to the merits of the petition.

It is readily apparent from the pleadings that the principal issue raised in this petition is
whether or not respondent Court's findings in its challenged resolution are supported by
evidence or are based on mere speculations, conjectures and presumptions. The principle
is well-established that this Court is not a trier of facts. Therefore, in an appeal by
certiorari under Rule 45 of the Revised Rules of Court, only questions of law may be
raised. The resolution of factual issues is the function of the lower courts whose findings
on these matters are received with respect and are, as a rule, binding on this Court. 42
The foregoing rule, however, is not without exceptions. Findings of facts of the trial
courts and the Court of Appeals may be set aside when such findings are not supported
by the evidence or when the trial court failed to consider the material facts which would
have led to a conclusion different from what was stated in its judgment. 43 The same is
true where the appellate court's conclusions are grounded entirely on conjectures,
speculations and surmises 44 or where the conclusions of the lower courts are based on a
misapprehension of facts. 45
It is at once obvious to this Court that the instant case qualifies as one of the
aforementioned exceptions as the findings and conclusions of the trial court and the
respondent Court in its challenged resolution are not supported by the evidence, are based
on a misapprehension of facts and the inferences made therefrom are manifestly
mistaken. The respondent Court's decision of 29 November 1983 makes the correct
findings of fact.
In the assailed resolution, the respondent Court held that the fact that the car improperly
invaded the lane of the truck and that the collision occurred in said lane gave rise to the
presumption that the driver of the car, Jose Koh, was negligent. On the basis of this
presumed negligence, the appellate court immediately concluded that it was Jose Koh's
negligence that was the immediate and proximate cause of the collision. This is an
unwarranted deduction as the evidence for the petitioners convincingly shows that the car
swerved into the truck's lane because as it approached the southern end of the bridge, two
(2) boys darted across the road from the right sidewalk into the lane of the car. As
testified to by petitioner Araceli Koh McKee:
"Q What happened after that, as you approached the bridge?
A When we were approaching the bridge, two (2) boys tried to cross the right
lane on the right side of the highway going to San Fernando. My father,
who is (sic) the driver of the car tried to avoid the two (2) boys who
were crossing, he blew his horn and swerved to the left to avoid hitting
the two (2) boys. We noticed the truck, he switched on the headlights to
warn the truck driver, to slow down to give us the right of way to come
back to our right lane.
Q Did the truck slow down?
A No, sir, it did not, just (sic) continued on its way.

Q What happened after that?

A After avoiding the two (2) boys, the car tried to go back to the right lane since
the truck is (sic) coming, my father stepped on the brakes and all what
(sic) I heard is the sound of impact (sic), sir." 46

Her credibility and testimony remained intact even during cross examination. Jose
Koh's entry into the lane of the truck was necessary in order to avoid what was, in his
mind at that time, a greater peril death or injury to the two (2) boys. Such act can
hardly be classified as negligent.
Negligence was defined and described by this Court in Layugan vs. Intermediate
Appellate Court, 47 thus:
". . . Negligence is the omission to do something which a reasonable man,
guided by those considerations which ordinarily regulate the conduct of human
affairs, would do, or the doing of something which a prudent and reasonable
man would not do (Black's Law Dictionary, Fifth Edition, 930), or as Judge
Cooley defines it, '(T)he failure to observe for the protection of the interests of
another person, that degree of care, precaution, and vigilance which the
circumstances justly demand, whereby such other person suffers injury.'
(Cooley on Torts, Fourth Edition, vol. 3, 265).
In Picart vs. Smith (87 Phil 809, 813), decided more than seventy years ago but
still a sound rule, (W)e held:
LLphil

The test by which to determine the existence of negligence in a particular case

may be stated as follows: Did the defendant in doing the alleged negligent act
use that (reasonable care and caution which an ordinarily prudent person
would have used in the same situation?) If not, then he is guilty of negligence.
The law here in effect adopts the standard supposed to be supplied by the
imaginary conduct of the discreet paterfamilias of the Roman law. . . ."

In Corliss vs. Manila Railroad Company, 48 We held:

". . . 'Negligence is want of the care required by the circumstances. It is a
relative or comparative, not an absolute, term and its application depends upon
the situation of the parties and the degree of care and vigilance which the
circumstances reasonably require. Where the danger is great, a high degree of
care is necessary, and the failure to observe it is a want of ordinary care under
the circumstances. (citing Ahern v. Oregon Telephone Co., 35 Pac. 549
(1894)'."

On the basis of the foregoing definition, the test of negligence and the facts obtaining in
this case, it is manifest that no negligence could be imputed to Jose Koh. Any reasonable
and ordinary prudent man would have tried to avoid running over the two boys by

swerving the car away from where they were even if this would mean entering the
opposite lane. Avoiding such immediate peril would be the natural course to take
particularly where the vehicle in the opposite lane would be several meters away and
could very well slow down, move to the side of the road and give way to the oncoming
car. Moreover, under what is known as the emergency rule, "one who suddenly finds
himself in a place of danger, and is required to act without time to consider the best
means that may be adopted to avoid the impending danger, is not guilty of negligence, if
he fails to adopt what subsequently and upon reflection may appear to have been a better
method, unless the emergency in which he finds himself is brought about by his own
negligence." 49
Considering the sudden intrusion of the two (2) boys into the lane of the car, We find that
Jose Koh adopted the best means possible in the given situation to avoid hitting them.
Applying the above test, therefore, it is clear that he was not guilty of negligence.
In any case, assuming, arguendo that Jose Koh is negligent, it cannot be said that his
negligence was the proximate cause of the collision. Proximate cause has been defined
as:
". . . 'that cause, which, in natural and continuous sequence, unbroken by any
efficient intervening cause, produces the injury, and without which the result
would not have occurred.' And more comprehensively, the proximate legal
cause is that acting first and producing the injury, either immediately or by
setting other events in motion, all constituting a natural and continuous chain of
events, each having a close causal connection with its immediate predecessor,
the final event in the chain immediately effecting the injury as a natural and
probable result of the cause which first acted, under such circumstances that the
person responsible for the first event should, as an ordinary prudent and
intelligent person, have reasonable ground to expect at the moment of his act or
default that an injury to some person might probably result therefrom." 50

Applying the above definition, although it may be said that the act of Jose Koh, if at all
negligent, was the initial act in the chain of events, it cannot be said that the same caused
the eventual injuries and deaths because of the occurrence of a sufficient intervening
event, the negligent act of the truck driver, which was the actual cause of the tragedy. The
entry of the car into the lane of the truck would not have resulted in the collision had the
latter heeded the emergency signals given by the former to slow down and give the car an
opportunity to go back into its proper lane. Instead of slowing down and swerving to the
far right of the road, which was the proper precautionary measure under the given
circumstances, the truck driver continued at full speed towards the car. The truck driver's
negligence becomes more apparent in view of the fact that the road is 7.50 meters wide
while the car measures 1.598 meters and the truck, 2.286 meters, in width. This would
mean that both car and truck could pass side by side with a clearance of 3.661 meters to
spare. 51 Furthermore, the bridge has a level sidewalk which could have partially

accommodated the truck. Any reasonable man finding himself in the given situation
would have tried to avoid the car instead of meeting it head-on.
The truck driver's negligence is apparent in the records. He himself said that his truck
was running at 30 miles (48 kilometers) per hour along the bridge while the maximum
speed allowed by law on a bridge 52 is only 30 kilometers per hour. Under Article 2185
of the Civil Code, a person driving a vehicle is presumed negligent if at the time of the
mishap, he was violating any traffic regulation. We cannot give credence to private
respondents' claim that there was an error in the translation by the investigating officer of
the truck driver's response in Pampango as to whether the speed cited was in kilometers
per hour or miles per hour. The law presumes that official duty has been regularly
performed; 53 unless there is proof to the contrary, this presumption holds. In the instant
case, private respondents' claim is based on mere conjecture.
The truck driver's negligence was likewise duly established through the earlier quoted
testimony of petitioner Araceli Koh McKee which was duly corroborated by the
testimony of Eugenio Tanhueco, an impartial eyewitness to the mishap.
Araceli Koh McKee testified further, thus:

prLL

xxx xxx xxx

"Q Mrs. how did you know that the truck driven by the herein accused, Ruben
Galang did not reduce its speed before the actual impact of collision as
you narrated in this Exhibit '1', how did you know?
A It just kept on coming, sir. If only he reduced his speed, we could have got
(sic) back to our right lane on side (sic) of the highway, sir.' (tsn, pp. 3334, July 22, 1977) or (Exhibit `O' in these Civil Cases) (pp. 30-31,
Appellants' Brief)" 54

while Eugenio Tanhueco testified thus:

"Q When you saw the truck, how was it moving?
A It was moving 50 to 60 kilometers per hour, sir.
Q Immediately after you saw this truck, do you know what happened?
A I saw the truck and a car collided (sic), sir, and I went to the place to help the
victims.' (tsn. 28, April 19, 1979)
xxx xxx xxx
Q From the time you saw the truck to the time of the impact, will you tell us if
the said truck ever stopped?

A I saw it stopped (sic) when it has (sic) already collided with the car and it
was already motionless.' (tsn. 31, April 19, 1979; Underlining supplied).
(p. 27, Appellants' Brief)." 55

Clearly, therefore, it was the truck driver's subsequent negligence in failing to take the
proper measures and degree of care necessary to avoid the collision which was the
proximate cause of the resulting accident.
Even if Jose Koh was indeed negligent, the doctrine of last clear chance finds application
here. Last clear chance is a doctrine in the law of torts which states that the contributory
negligence of the party injured will not defeat the claim for damages if it is shown that
the defendant might, by the exercise of reasonable care and prudence, have avoided the
consequences of the negligence of the injured party. In such cases, the person who had
the last clear chance to avoid the mishap is considered in law solely responsible for the
consequences thereof. 56
In Bustamante vs. Court of Appeals, 57 We held:
"The respondent court adopted the doctrine of `last clear chance.' The doctrine,
stated broadly, is that the negligence of the plaintiff does not preclude a
recovery for the negligence of the defendant where it appears that the defendant,
by exercising reasonable care and prudence, might have avoided injurious
consequences to the plaintiff notwithstanding the plaintiff's negligence. In other
words, the doctrine of last clear chance means that even though a person's own
acts may have placed him in a position of peril, and an injury results, the injured
person is entitled to recovery (sic). As the doctrine is usually stated, a person
who has the last clear chance or opportunity of avoiding an accident,
notwithstanding the negligent acts of his opponent or that of a third person
imputed to the opponent is considered in law solely responsible for the
consequences of the accident. (Sangco, Torts and Damages, 4th Ed., 1986, p.
165).

The practical import of the doctrine is that a negligent defendant is held liable to
a negligent plaintiff, or even to a plaintiff who has been grossly negligent in
placing himself in peril, if he, aware of the plaintiff's peril, or according to some
authorities, should have been aware of it in the reasonable exercise of due care,
had in fact an opportunity later than that of the plaintiff to avoid an accident (57
Am. Jur., 2d, pp. 798-799)."

In Pantranco North Express, Inc., vs. Baesa, 58 We ruled:

"The doctrine of last clear chance was defined by this Court in the case of Ong
v. Metropolitan Water District, 104 Phil. 397 (1958), in this wise:
The doctrine of the last clear chance simply, means that the
negligence of a claimant does not preclude a recovery for the negligence

of defendant where it appears that the latter, by exercising reasonable

care and prudence, might have avoided injurious consequences to
claimant notwithstanding his negligence.
The doctrine applies only in a situation where the plaintiff was guilty of prior or
antecedent negligence but the defendant, who had the last fair chance to avoid
the impending harm and failed to do so, is made liable for all the consequences
of the accident notwithstanding the prior negligence of the plaintiff [Picart v.
Smith, 37 Phil. 809 (1918); Glan People's Lumber and Hardware, et al. v.
Intermediate Appellate Court, Cecilia Alferez Vda. de Calibo, et al., G.R. No.
70493, May 18, 1989]. The subsequent negligence of the defendant in failing to
exercise ordinary care to avoid injury to plaintiff becomes the immediate or
proximate cause of the accident which intervenes between the accident and the
more remote negligence of the plaintiff, thus making the defendant liable to the
plaintiff [Picart v. Smith, supra].
Cdpr

Generally, the last clear chance doctrine is invoked for the purpose of making a
defendant liable to a plaintiff who was guilty of prior or antecedent negligence,
although it may also be raised as a defense to defeat claim (sic) for damages."

Applying the foregoing doctrine, it is not difficult to rule, as We now rule, that it was the
truck driver's negligence in failing to exert ordinary care to avoid the collision which was,
in law, the proximate cause of the collision. As employers of the truck driver, the private
respondents are, under Article 2180 of the Civil Code, directly and primarily liable for
the resulting damages. The presumption that they are negligent flows from the negligence
of their employee. That presumption, however, is only juris tantum, not juris et de jure.
59 Their only possible defense is that they exercised all the diligence of a good father of a
family to prevent the damage. Article 2180 reads as follows:
"The obligation imposed by Article 2176 is demandable not only for one's own
acts or omissions, but also for those of persons for whom one is responsible.
xxx xxx xxx
Employers shall be liable for the damages caused by their employees and
household helpers acting within the scope of their assigned tasks, even though
the former are not engaged in any business or industry.
xxx xxx xxx
The responsibility treated of in this article shall cease when the persons herein
mentioned prove that they observed all the diligence of a good father of a family
to prevent damage."

The diligence of a good father referred to means the diligence in the selection and
supervision of employees. 60 The answers of the private respondents in Civil Cases Nos.
4477 and 4478 did not interpose this defense. Neither did they attempt to prove it.

The respondent Court was then correct in its Decision of 29 November 1983 in reversing
the decision of the trial court which dismissed Civil Cases Nos. 4477 and 4478. Its
assailed Resolution of 3 April 1984 finds no sufficient legal and factual moorings.
In the light of recent decisions of this Court, 61 the indemnity for death must, however,
be increased from P12,000.00 to P50,000.00.
WHEREFORE, the instant petition is GRANTED. The assailed Resolution of the
respondent Court of 3 April 1984 is SET ASIDE while its Decision of 29 November
1983 in C.A.-G.R. CV Nos. 69040-41 is REINSTATED, subject to the modification that
the indemnity for death is increased from P12,000.00 to P50,000.00 each for the death of
Jose Koh and Kim Koh McKee.
Costs against private respondents.
SO ORDERED.
Gutierrez, Jr., Feliciano and Romero, JJ ., concur.
Bidin, J.,took no part.
|||

(Mckee v. Intermediate Appellate Court, G.R. No. 68102, 68103, [July 16, 1992])

FIRST DIVISION
[G.R. No. 97626. March 14, 1997.]
PHILIPPINE BANK OF COMMERCE, now absorbed by
PHILIPPINE
COMMERCIAL
INTERNATIONAL
BANK,
ROGELIO LACSON, DIGNA DE LEON, MARIA ANGELITA
PASCUAL, et al., petitioners, vs. THE COURT OF APPEALS,
ROMMEL'S MARKETING CORP., represented by ROMEO LIPANA,
its President & General Manager, respondents.
Carpio Villaraza & Cruz for petitioners.
Roberto C . Bermejo for private respondents.
SYLLABUS
1. CIVIL LAW; ELEMENTS OF QUASI-DELICT. There are three elements of a
quasi-delict: (a) damages suffered by the plaintiff; (b) fault or negligence of the
defendant, or some other person for whose acts he must respond; and (c) the connection
of cause and effect between the fault or negligence of the defendant and the damages
incurred by the plaintiff.
2. ID,; ID.; NEGLIGENCE; DEFINED AND CONSTRUED. Negligence is the
omission to do something which a reasonable man, guided by those considerations which
ordinarily regulate the conduct of human affairs, would do, or the doing of something
which a prudent and reasonable man would do. The seventy-eight (78)-year-old, yet still
relevant, case of Picart v. Smith, 37 Phil. 809 [1918], provides the test by which to
determine the existence of negligence in a particular case which may be stated as follows:
Did the defendant in doing the alleged negligent act use that reasonable care and caution
which an ordinarily prudent person would have used in the same situation? If not, then he
is guilty of negligence. The law here in effect adopts the standard supposed to be supplied
by the imaginary conduct of the discreet paterfamilias of the Roman law. The existence
of negligence in a given case is not determined by reference to the personal judgment of
the actor in the situation before him. The law considers what would be reckless,
blameworthy, or negligent in the man of ordinary intelligence and prudence and
determines liability by that.

3. ID.; ID.; ID.; WHEN PRESENT; CASE AT BAR. The fact that the duplicate slip
was not compulsorily required by the bank in accepting deposits should not relieve the
petitioner bank of responsibility. The odd circumstance alone that such duplicate copy
lacked one vital information that of the name of the account holder should have
already put Ms. Mabayad on guard. Rather than readily validating the incomplete
duplicate copy, she should have proceeded more cautiously by being more probing as to
the true reason why the name of the account holder in the duplicate slip was left blank
while that in the original was filled up. She should not have been so naive in accepting
hook, line and sinker the too shallow excuse of Ms. Irene Yabut to the effect that since
the duplicate copy was only for her personal record, she would simply fill up the blank
space later on. A "reasonable man of ordinary prudence" would not have given credence
to such explanation and would have insisted that the space left blank be filled up as a
condition for validation. It was this negligence of Ms. Azucena Mabayad, coupled by the
negligence of the petitioner bank in the selection and supervision of its bank teller, which
was the proximate cause of the loss suffered by the private respondent, and not the latter's
act of entrusting cash to a dishonest employee, as insisted by the petitioners.
4. ID.; DAMAGES; PROXIMATE CAUSE; DEFINED; CASE AT BAR. Proximate
cause is determined on the facts of each case upon mixed considerations of logic,
common sense, policy and precedent. Vda. de Bataclan v. Medina, 102 Phil. 181, 186
[1957], reiterated in the case of Bank of the Phil. Islands v. Court of Appeals, 216 SCRA
51, 75 [1992], defines proximate cause as "that cause, which, in natural and continuous
sequence, unbroken by any efficient intervening cause, produces the injury, and without
which the result would not have occurred. . . . " In this case, absent the act of Ms.
Mabayad in negligently validating the incomplete duplicate copy of the deposit slip, Ms.
Irene Yabut would not have the facility with which to perpetrate her fraudulent scheme
with impunity.
5. ID.; ID.; ID.; DOCTRINE OF "LAST CLEAR CHANCE"; CONSTRUED. Under
the doctrine of "last clear chance" (also referred to, at times as "supervening negligence"
or as "discovered peril"), petitioner bank was indeed the culpable party. This doctrine, in
essence, states that where both parties are negligent, but the negligent act of one is
appreciably later in time than that of the other, or when it is impossible to determine
whose fault or negligence should be attributed to the incident, the one who had the last
clear opportunity to avoid the impending harm and failed to do so is chargeable with the
consequences thereof. Stated differently, the rule would also mean that an antecedent
negligence of a person does not preclude the recovery of damages for the supervening
negligence of, or bar a defense against liability sought by another, if the latter, who had
the last fair chance, could have avoided the impending harm by the exercise of due
diligence.
6. ID.; ID.; MORE THAN THAT OF A GOOD FATHER OF A FAMILY; DEGREE OF
DILIGENCE REQUIRED FROM A BANK. In the case of banks, the degree of
diligence required is more than that of a good father of a family. Considering the

fiduciary nature of their relationship with their depositors, banks are duty bound to treat
the accounts of their clients with the highest degree of care. As elucidated in Simex
International (Manila), Inc. v. Court of Appeals, 183 SCRA 360, 367 [1990], in every
case, the depositor expects the bank to treat his account with the utmost fidelity, whether
such account consists only of a few hundred pesos or of millions. The bank must record
every single transaction accurately, down to the last centavo, and as promptly as
possible. This has to be done if the account is to reflect at any given time the amount of
money the depositor can dispose as he sees fit, confident that the bank will deliver it as
and to whomever he directs. A blunder on the part of the bank, such as the failure to duly
credit him his deposits as soon as they are made, can cause the depositor not a little
embarrassment if not financial loss and perhaps even civil and criminal litigation.
7. ID.; ID.; AWARD THEREOF; WHEN MITIGATED BY CONTRIBUTORY
NEGLIGENCE; CASE AT BAR. The damage would definitely not have ballooned to
such an amount if only RMC, particularly Romeo Lipana, had exercised even a little
vigilance in their financial affairs. This omission by RMC amounts to contributory
negligence which shall mitigate the damages that may be awarded to the private
respondent under Article 2179 of the New Civil Code, to wit: ". . . When the plaintiff's
own negligence was the immediate and proximate cause of his injury, he cannot recover
damages. But if his negligence was only contributory, the immediate and proximate cause
of the injury being the defendant's lack of due care, the plaintiff may recover damages,
but the courts shall mitigate the damages to be awarded." In view of this, we believe that
the demands of substantial justice are satisfied by allocating the damage on a 60-40 ratio.
Thus, 40% of the damage awarded by the respondent appellate court, except the award of
P25,000.00 attorney's fees, shall be borne by private respondent RMC; only the balance
of 60% needs to be paid by the petitioners. The award of attorney's fees shall be borne
exclusively by the petitioners.
PADILLA, J., dissenting:
1. CIVIL LAW; DAMAGES; DOCTRINE OF "LAST CLEAR CHANCE";
CONSTRUED. Coming to the doctrine of "last clear chance" it is Justice Padilla's
considered view that the doctrine assumes that the negligence of the defendant was
subsequent to the negligence of the plaintiff and the same must be the proximate cause of
the injury. In short, there must be a last and a clear chance, not a last possible chance, to
avoid the accident or injury. It must have been a chance as would have enabled a
reasonably prudent man in like position to have acted effectively to avoid the injury and
the resulting damage to himself.
2. ID.; ID.; ID.; APPLICABLE WHEN THE PRIVATE RESPONDENT FAILED TO
EXAMINE ITS MONTHLY BANK STATEMENT. In the case at bar, the bank was
not remiss in its duty of sending monthly bank statements to private respondent RMC so
that any error or discrepancy in the entries therein could be brought to the bank's attention
at the earliest opportunity. Private respondent failed to examine these bank statements not

because it was prevented by some cause in not doing so, but because it was purposely
negligent as it admitted that it does not normally check bank statements given by banks.
It was private respondent who had the last and clear chance to prevent any further
misappropriation by Yabut had it only reviewed the status of its current accounts on the
bank statement sent to it monthly or regularly. Since a sizable amount of cash was
entrusted to Yabut, private respondent should, at least, have taken care of its concerns, as
what the law presumes. Its negligence, therefore, is not contributory but the immediate
and proximate cause of its injury.

DECISION

HERMOSISIMA, JR., J :
p

Challenged in this petition for review is the Decision dated February 28, 1991 1 rendered
by public respondent Court of Appeals which affirmed the Decision dated November 15,
1985 of the Regional Trial Court, National Capital Judicial Region, Branch CLX (160),
Pasig City, in Civil Case No. 27288 entitled Rommel's Marketing Corporation, etc. v.
Philippine Bank of Commerce, now absorbed by Philippine Commercial and Industrial
Bank.
The case stemmed from a complaint filed by the private respondent Rommel's Marketing
Corporation (RMC for brevity), represented by its President and General Manager
Romeo Lipana, to recover from the former Philippine Bank of Commerce (PBC for
brevity), now absorbed by the Philippine Commercial International Bank, the sum of
P304,979.74 representing various deposits it had made in its current account with said
bank but which were not credited to its account, and were instead deposited to the
account of one Bienvenido Cotas, allegedly due to the gross and inexcusable negligence
of the petitioner bank.

RMC maintained two (2) separate current accounts, Current Account Nos. 53-01980-3
and 53-01748-7, with the Pasig Branch of PBC in connection with its business of selling
appliances.
In the ordinary and usual course of banking operations, current account deposits are
accepted by the bank on the basis of deposit slips prepared and signed by the depositor,
or the latter's agent or representative, who indicates therein the current account number to
which the deposit is to be credited, the name of the depositor or current account holder,
the date of the deposit, and the amount of the deposit either in cash or checks. The
deposit slip has an upper portion or stub, which is detached and given to the depositor or

his agent; the lower portion is retained by the bank. In some instances, however, the
deposit slips are prepared in duplicate by the depositor. The original of the deposit slip is
retained by the bank, while the, duplicate copy is returned or given to the depositor.
From May 5, 1975 to July 16, 1976, petitioner Romeo Lipana claims to have entrusted
RMC funds in the form of cash totalling P304,979.74 to his secretary, Irene Yabut, for
the purpose of depositing said funds in the current accounts of RMC with PBC. It turned
out, however, that these deposits, on all occasions, were not credited to RMC's account
but were instead deposited to Account No. 53-01734-7 of Yabut's husband, Bienvenido
Cotas who likewise maintains an account with the same bank. During this period,
petitioner bank had, however, been regularly furnishing private respondent with monthly
statements showing its current accounts balances. Unfortunately, it had never been the
practice of Romeo Lipana to check these monthly statements of account reposing
complete trust and confidence on petitioner bank.
Irene Yabut's modus operandi is far from complicated. She would accomplish two (2)
copies of the deposit slip, an original and a duplicate. The original showed the name of
her husband as depositor and his current account number. On the duplicate copy was
written the account number of her husband but the name of the account holder was left
blank. PBC's teller, Azucena Mabayad, would, however, validate and stamp both the
original and the duplicate of these deposit slips retaining only the original copy despite
the lack of information on the duplicate slip. The second copy was kept by Irene Yabut
allegedly for record purposes. After validation, Yabut would then fill up the name of
RMC in the space left blank in the duplicate copy and change the account number written
thereon, which is that of her husband's, and make it appear to be RMC's account number,
i.e., C.A. No. 53-01980-3. With the daily remittance records also prepared by Ms. Yabut
and submitted to private respondent RMC together with the validated duplicate slips with
the latter's name and account number, she made her company believe that all the while
the amounts she deposited were being credited to its account when, in truth and in fact,
they were being deposited by her and credited by the petitioner bank in the account of
Cotas. This went on in a span of more than one (1) year without private respondent's
knowledge.
Upon discovery of the loss of its funds, RMC demanded from petitioner bank the return
of its money, but as its demand went unheeded, it filed a collection suit before the
Regional Trial Court of Pasig, Branch 160. The trial court found petitioner bank
negligent and ruled as follows:
"WHEREFORE, judgment is hereby rendered sentencing defendant Philippine
Bank of Commerce, now absorbed by defendant Philippine Commercial &
Industrial Bank, and defendant Azucena Mabayad to pay the plaintiff, jointly
and severally, and without prejudice to any criminal action which may be
instituted if found warranted:

1. The sum of P304,979.72, representing plaintiff's lost deposit, plus interest

thereon at the legal rate from the filing of the complaint;
2. A sum equivalent to 14% thereof, as exemplary damages;
3. A sum equivalent to 25% of the total amount due, as and for attorney's fees;
and
4. Costs.
Defendants' counterclaim is hereby dismissed for lack of merit." 2

On appeal, the appellate court affirmed the foregoing decision with modifications, viz:
"WHEREFORE, the decision appealed from herein is MODIFIED in the sense
that the awards of exemplary damages and attorney's fees specified therein are
eliminated and instead, appellants are ordered to pay plaintiff, in addition to the
principal sum of P304,979.74 representing plaintiff's lost deposit plus legal
interest thereon from the filing of the complaint, P25,000.00 attorney's fees and
costs in the lower court as well as in this Court." 3

Hence, this petition anchored on the following grounds:

1) The proximate cause of the loss is the negligence of respondent Rommel
Marketing Corporation and Romeo Lipana in entrusting cash to a
dishonest employee.
2) The failure of respondent Rommel Marketing Corporation to cross-check the
bank's statements of account with its own records during the entire
period of more than one (1) year is the proximate cause of the
commission of subsequent frauds and misappropriation committed by
Ms. Irene Yabut.
3) The duplicate copies of the deposit slips presented by respondent Rommel
Marketing Corporation are falsified and are not proof that the amounts
appearing thereon were deposited to respondent Rommel Marketing
Corporation's account with the bank.
4) The duplicate copies of the deposit slips were used by Ms. Irene Yabut to
cover up her fraudulent acts against respondent Rommel Marketing
Corporation, and not as records of deposits she made with the bank. 4

The petition has no merit.

Simply put, the main issue posited before us is: What is the proximate cause of the loss,
to the tune of P304,979.74, suffered by the private respondent RMC petitioner bank's
negligence or that of private respondent's?
Petitioners submit that the proximate cause of the loss is the negligence of respondent
RMC and Romeo Lipana in entrusting cash to a dishonest employee in the person of Ms.

Irene Yabut. 5 According to them, it was impossible for the bank to know that the money
deposited by Ms. Irene Yabut belong to RMC; neither was the bank forewarned by RMC
that Yabut will be depositing cash to its account. Thus, it was impossible for the bank to
know the fraudulent design of Yabut considering that her husband, Bienvenido Cotas,
also maintained an account with the bank For the bank to inquire into the ownership of
the cash deposited by Ms. Irene Yabut would be irregular. Otherwise stated, it was
RMC's negligence in entrusting cash to a dishonest employee which provided Ms. Irene
Yabut the opportunity to defraud RMC. 6
Private respondent, on the other hand, maintains that the proximate cause of the loss was
the negligent act of the bank, thru its teller Ms. Azucena Mabayad, in validating the
deposit slips, both original and duplicate, presented by Ms. Yabut to Ms. Mabayad,
notwithstanding the fact that one of the deposit slips was not completely accomplished.
We sustain the private respondent.
Our law on quasi-delicts states:
"Art. 2176. Whoever by act or omission causes damage to another, there being
fault or negligence, is obliged to pay for the damage done. Such fault or
negligence if there is no pre-existing contractual relation between the parties, is
called a quasi-delict and is governed by the provisions of this Chapter."

There are three elements of a quasi-delict: (a) damages suffered by the plaintiff; (b) fault
or negligence of the defendant, or some other person for whose acts he must respond; and
(c) the connection of cause and effect between the fault or negligence of the defendant
and the damages incurred by the plaintiff. 7
In the case at bench, there is no dispute as to the damage suffered by the private
respondent (plaintiff in the trial court) RMC in the amount of P304,979.74. It is in
ascribing fault or negligence which caused the damage where the parties point to each
other as the culprit.
Negligence is the omission to do something which a reasonable man, guided by those
considerations which ordinarily regulate the conduct of human affairs, would do, or the
doing of something which a prudent and reasonable man would do. The seventy-eight
(78)-year-old, yet still relevant, case of Picart v. Smith, 8 provides the test by which to
determine the existence of negligence in a particular case which may be stated as follows:
Did the defendant in doing the alleged negligent act use that reasonable care and caution
which an ordinarily prudent person would have used in the same situation? If not, then he
is guilty of negligence. The law here in effect adopts the standard supposed to be supplied
by the imaginary conduct of the discreet paterfamilias of the Roman law. The existence
of negligence in a given case is not determined by reference to the personal judgment of
the actor in the situation before him. The law considers what would be reckless,

blameworthy, or negligent in the man of ordinary intelligence and prudence and

determines liability by that.
Applying the above test, it appears that the bank's teller, Ms. Azucena Mabayad, was
negligent in validating, officially stamping and signing all the deposit slips prepared and
presented by Ms. Yabut, despite the glaring fact that the duplicate copy was not
completely accomplished contrary to the self-imposed procedure of the bank with respect
to the proper validation of deposit slips, original or duplicate, as testified to by Ms.
Mabayad herself, thus:
"Q: Now, as teller of PCIB, Pasig Branch, will you please tell us Mrs. Mabayad
your important duties and functions?
A: I accept current and savings deposits from depositors and encashments.
Q: Now in the handling of current account deposits of bank clients, could you
tell us the procedure you follow?
A: The client or depositor or the authorized representative prepares a deposit
slip by filling up the deposit slip with the name, the account number, the
date, the cash breakdown, if it is deposited for cash, and the check
number, the amount and then he signs the deposit slip.

Q: Now, how many deposit slips do you normally require in accomplishing

current account deposit, Mrs. Mabayad?
A: The bank requires only one copy of the deposit although some of our clients
prepare the deposit slip in duplicate.
Q: Now in accomplishing current account deposits from your clients, what do
you issue to the depositor to evidence the deposit made?
A: We issue or we give to the clients the depositor's stub as a receipt of the
deposit.
Q: And who prepares the deposit slip?
A: The depositor or the authorized representative sir.
Q: Where does the depositor's stub comes (sic) from Mrs. Mabayad, is it with
the deposit slip?
A: The depositor's stub is connected with the deposit slip or the bank's copy. In
a deposit slip, the upper portion is the depositor's stub and the lower
portion is the bank's copy, and you can detach the bank's copy from the
depositor's stub by tearing it sir.

Q: Now what do you do upon presentment of the deposit slip by the depositor or
the depositor's authorized representative?
A: We see to it that the deposit slip 9 is properly accomplished and then we
count the money and then we tally it with the deposit slip sir.
Q: Now is the depositor's stub which you issued to your clients validated?
A: Yes, sir. " 10 [Emphasis ours.]

Clearly, Ms. Mabayad failed to observe this very important procedure. The fact that the
duplicate slip was not compulsorily required by the bank in accepting deposits should not
relieve the petitioner bank of responsibility. The odd circumstance alone that such
duplicate copy lacked one vital information that of the name of the account holder
should have already put Ms. Mabayad on guard. Rather than readily validating the
incomplete duplicate copy, she should have proceeded more cautiously by being more
probing as to the true reason why the name of the account holder in the duplicate slip was
left blank while that in the original was filled up. She should not have been so naive in
accepting hook, line and sinker the too shallow excuse of Ms. Irene Yabut to the effect
that since the duplicate copy was only for her personal record, she would simply fill up
the blank space later on. 11 A "reasonable man of ordinary prudence" 12 would not have
given credence to such explanation and would have insisted that the space left blank be
filled up as a condition for validation. Unfortunately, this was not how bank teller
Mabayad proceeded thus resulting in huge losses to the private respondent.
Negligence here lies not only on the part of Ms. Mabayad but also on the part of the bank
itself in its lackadaisical selection and supervision of Ms. Mabayad. This was exemplified
in the testimony of Mr. Romeo Bonifacio, then Manager of the Pasig Branch of the
petitioner bank and now its Vice-President, to the effect that, while he ordered the
investigation of the incident, he never came to know that blank deposit slips were
validated in total disregard of the bank's validation procedures, viz:
"Q: Did he ever tell you that one of your cashiers affixed the stamp mark of the
bank on the deposit slips and they validated the same with the machine,
the fact that those deposit slips were unfilled up, is there any report
similar to that?
A: No, it was not the cashier but the teller.
Q: The teller validated the blank deposit slip?
A: No it was not reported.
Q: You did not know that any one in the bank tellers or cashiers validated the
blank deposit slip?
A: I am not aware of that.

Q: It is only now that you are aware of that?

A: Yes, sir." 13

Prescinding from the above, public respondent Court of Appeals aptly observed:
"xxx xxx xxx
It was in fact only when he testified in this case in February, 1983, or after the
lapse of more than seven (7) years counted from the period when the funds in
question were deposited in plaintiffs accounts (May, 1975 to July, 1976) that
bank manager Bonifacio admittedly became aware of the practice of his teller
Mabayad of validating blank deposit slips. Undoubtedly, this is gross, wanton,
and inexcusable negligence in the appellant bank's supervision of its
employees." 14

It was this negligence of Ms. Azucena Mabayad, coupled by the negligence of the
petitioner bank in the selection and supervision of its bank teller, which was the
proximate cause of the loss suffered by the private respondent, and not the latter's act of
entrusting cash to a dishonest employee, as insisted by the petitioners.
Proximate cause is determined on the facts of each case upon mixed considerations of
logic, common sense, policy and precedent. 15 Vda. de Bataclan v. Medina, 16 reiterated
in the case of Bank of the Phil. Islands v. Court of Appeals, 17 defines proximate cause as
"that cause, which, in natural and continuous sequence, unbroken by any efficient
intervening cause, produces the injury, and without which the result would not have
occurred. . . ." In this case, absent the act of Ms. Mabayad in negligently validating the
incomplete duplicate copy of the deposit slip, Ms. Irene Yabut would not have the facility
with which to perpetrate her fraudulent scheme with impunity. Apropos, once again, is
the pronouncement made by the respondent appellate court, to wit:
". . . Even if Yabut had the fraudulent intention to misappropriate the funds
entrusted to her by plaintiff, she would not have been able to deposit those funds
in her husband's current account, and then make plaintiff believe that it was in
the latter's accounts wherein she had deposited them, had it not been for bank
teller Mabayad's aforesaid gross and reckless negligence. The latter's negligence
was thus the proximate, immediate and efficient cause that brought about the
loss claimed by plaintiff in this case, and the failure of plaintiff to discover the
same soon enough by failing to scrutinize the monthly statements of account
being sent to it by appellant bank could not have prevented the fraud and
misappropriation which Irene Yabut had already completed when she deposited
plaintiff's money to the account of her husband instead of to the latter's.
accounts." 18

Furthermore, under the doctrine of "last clear chance" (also referred to, at times as
"supervening negligence" or as "discovered peril"), petitioner bank was indeed the
culpable party. This doctrine, in essence, states that where both parties are negligent, but

the negligent act of one is appreciably later in time than that of the other, or when it is
impossible to determine whose fault or negligence should be attributed to the incident,
the one who had the last clear opportunity to avoid the impending harm and failed to do
so is chargeable with the consequences thereof. 19 Stated differently, the rule would also
mean that an antecedent negligence of a person does not preclude the recovery of
damages for the supervening negligence of, or bar a defense against liability sought by
another, if the latter, who had the last fair chance, could have avoided the impending
harm by the exercise of due diligence. 20 Here, assuming that private respondent RMC
was negligent in entrusting cash to a dishonest employee, thus providing the latter with
the opportunity to defraud the company, as advanced by the petitioner, yet it cannot be
denied that the petitioner bank, thru its teller, had the last clear opportunity to avert the
injury incurred by its client, simply by faithfully observing their self-imposed validation
procedure.
At this juncture, it is worth to discuss the degree of diligence ought to be exercised by
banks in dealing with their clients.
The New Civil Code provides:
"ART. 1173. The fault or negligence of the obligor consists in the omission of
that diligence which is required by the nature of the obligation and corresponds
with the circumstances of the persons, of the time and of the place. When
negligence shows bad faith, the provisions of articles 1171 and 2201, paragraph
2, shall apply.
If the law or contract does not state the diligence which is to be observed in the
performance, that which is expected of a good father of a family shall be
required. (1104a)"

In the case of banks, however, the degree of diligence required is more than that of a
good father of a family. Considering the fiduciary nature of their relationship with their
depositors, banks are duty bound to treat the accounts of their clients with the highest
degree of care. 21
As elucidated in Simex International (Manila), Inc. v. Court of Appeals, 22 in every case,
the depositor expects the bank to treat his account with the utmost fidelity, whether such
account consists only of a few hundred pesos or of millions. The bank must record every
single transaction accurately, down to the last centavo, and as promptly as possible. This
has to be done if the account is to reflect at any given time the amount of money the
depositor can dispose as he sees fit, confident that the bank will deliver it as and to
whomever he directs. A blunder on the part of the bank, such as the failure to duly credit
him his deposits as soon as they are made, can cause the depositor not a little
embarrassment if not financial loss and perhaps even civil and criminal litigation.
The point is that as a business affected with public interest and because of the nature of
its functions, the bank is under obligation to treat the accounts of its depositors with

meticulous care, always having in mind the fiduciary nature of their relationship. In the
case before us, it is apparent that the petitioner bank was remiss in that duty and violated
that relationship.
LexLib

Petitioners nevertheless aver that the failure of respondent RMC to cross-check the bank's
statements of account with its own records during the entire period of more than one (1)
year is the proximate cause of the commission of subsequent frauds and misappropriation
committed by Ms. Irene Yabut.
We do not agree.

While it is true that had private respondent checked the monthly statements of account
sent by the petitioner bank to RMC, the latter would have discovered the loss early on,
such cannot be used by the petitioners to escape liability. This omission on the part of the
private respondent does not change the fact that were it not for the wanton and reckless
negligence of the petitioners' employee in validating the incomplete duplicate deposit
slips presented by Ms. Irene Yabut, the loss would not have occurred. Considering,
however, that the fraud was committed in a span of more than one (1) year covering
various deposits, common human experience dictates that the same would not have been
possible without any form of collusion between Ms. Yabut and bank teller Mabayad. Ms.
Mabayad was negligent in the performance of her duties as bank teller nonetheless. Thus,
the petitioners are entitled to claim reimbursement from her for whatever they shall be
ordered to pay in this case.
The foregoing notwithstanding, it cannot be denied that, indeed, private respondent was
likewise negligent in not checking its monthly statements of account. Had it done so, the
company would have been alerted to the series of frauds being committed against RMC
by its secretary. The damage would definitely not have ballooned to such an amount if
only RMC, particularly Romeo Lipana, had exercised even a little vigilance in their
financial affairs. This omission by RMC amounts to contributory negligence which shall
mitigate the damages that may be awarded to the private respondent 23 under Article
2179 of the New Civil Code, to wit:
". . . When the plaintiff's own negligence was the immediate and proximate
cause of his injury, he cannot recover damages. But if his negligence was only
contributory, the immediate and proximate cause of the injury being the
defendant's lack of due care, the plaintiff may recover damages, but the courts
shall mitigate the damages to be awarded."

In view of this, we believe that the demands of substantial justice are satisfied by
allocating the damage on a 60-40 ratio. Thus, 40% of the damage awarded by the
respondent appellate court, except the award of P25,000.00 attorney's fees, shall be borne
by private respondent RMC; only the balance of 60% needs to be paid by the petitioners.
The award of attorney's fees shall be borne exclusively by the petitioners.

WHEREFORE, the decision of the respondent Court of Appeals is modified by reducing

the amount of actual damages private respondent is entitled to by 40%. Petitioners may
recover from Ms. Azucena Mabayad the amount they would pay the private respondent.
Private respondent shall have recourse against Ms. Irene Yabut. In all other respects, the
appellate court's decision is AFFIRMED.
Proportionate costs.
SO ORDERED.
Bellosillo, Vitug and Kapunan, JJ., concur.

Separate Opinions
PADILLA, J ., dissenting:
I regret that I cannot join the majority in ruling that the proximate cause of the damage
suffered by Rommel's Marketing Corporation (RMC) is mainly "the wanton and reckless
negligence of the petitioner's employee in validating the incomplete duplicate deposit
slips presented by Ms. Irene Yabut" (Decision, p. 15). Moreover, I find it difficult to
agree with the ruling that "petitioners are entitled to claim reimbursement from her (the
bank teller) for whatever they shall be ordered to pay in this case."
It seems that an innocent bank teller is being unduly burdened with what should fall on
Ms. Irene Yabut, RMC's own employee, who should have been charged with estafa or
estafa through falsification of private document. Interestingly, the records are silent on
whether RMC had ever filed any criminal case against Ms. Irene Yabut, aside from the
fact that she does not appear to have been impleaded even as a party defendant in any
civil case for damages. Why is RMC insulating Ms. Irene Yabut from liability when in
fact she orchestrated the entire fraud on RMC, her employer?
To set the record straight, it is not completely accurate to state that from 5 May 1975 to
16 July 1976, Miss Irene Yabut had transacted with PCIB (then PBC) through only one
teller in the person of Azucena Mabayad. In fact, when RMC filed a complaint for estafa
before the Office of the Provincial Fiscal of Rizal, it indicted all the tellers of PCIB in the
branch who were accused of conspiracy to defraud RMC of its current account deposits.
(See Annex B, Rollo, p. 22 and 47).
Even private respondent RMC, in its Comment, maintains that "when the petitioner's
tellers" allowed Irene Yabut to carry out her modus operandi undetected over a period of
one year, "their negligence cannot but be gross. (Rollo, p. 55; see also Rollo, pp. 58 to
59). This rules out the possibility that there may have been some form of collusion

between Yabut and bank teller Mabayad. Mabayad was just unfortunate that private
respondent's documentary evidence showed that she was the attending teller in the bulk
of Yabut's transactions with the bank.
aisadc

Going back to Yabut's modus operandi, it is not disputed that each time Yabut would
transact business with PBC's tellers, she would accomplish two (2) copies of the current
account deposit slip. PBC's deposit slip, as issued in 1975, had two parts. The upper part
was called the depositor's stub and the lower part was called the bank copy. Both parts
were detachable from each other. The deposit slip was prepared and signed by the
depositor or his representative, who indicated therein the current account number to
which the deposit was to be credited, the name of the depositor or current account holder,
the date of the deposit, and the amount of the deposit either in cash or in checks. (Rollo,
p. 137)
Since Yabut deposited money in cash, the usual bank procedure then was for the teller to
count whether the cash deposit tallied with the amount written down by the depositor in
the deposit slip. If it did, then the teller proceeded to verify whether the current account
number matched with the current account name as written in the deposit slip.
In the earlier days before the age of full computerization, a bank normally maintained a
ledger which served as a repository of accounts to which debits and credits resulting from
transactions with the bank were posted from books of original entry. Thus, it was only
after the transaction was posted in the ledger that the teller proceeded to machine validate
the deposit slip and then affix his signature or initial to serve as proof of the completed
transaction.
It should be noted that the teller validated the depositor's stub in the upper portion and the
bank copy on the lower portion on both the original and duplicate copies of the deposit
slips presented by Yabut. The teller, however, detached the validated depositor's stub on
the original deposit slip and allowed Yabut to retain the whole validated duplicate deposit
slip that bore the same account number as the original deposit slip, but with the account
name purposely left blank by Yabut, on the assumption that it would serve no other
purpose but for a personal record to complement the original validated depositor's stub.
Thus, when Yabut wrote the name of RMC on the blank account name on the validated
duplicate copy of the deposit slip, tampered with its account number, and superimposed
RMC's account number, said act only served to cover-up the loss already caused by her to
RMC, or after the deposit slip was validated by the teller in favor of Yabut's husband.
Stated otherwise, when there is a clear evidence of tampering with any of the material
entries in a deposit slip, the genuineness and due execution of the document become an
issue in resolving whether or not the transaction had been fair and regular and whether
the ordinary course of business had been followed by the bank.
It is logical, therefore, to conclude that the legal or proximate cause of RMC's loss was
when Yabut, its employee, deposited the money of RMC in her husband's name and

account number instead of that of RMC, the rightful owner of such deposited funds.
Precisely, it was the criminal act of Yabut that directly caused damage to RMC, her
employer, not the validation of the deposit slip by the teller as the deposit slip was made
out by Yabut in her husband s name and to his account.
Even if the bank teller had required Yabut to completely fill up the duplicate deposit slip,
the original deposit slip would nonetheless still be validated under the account of Yabut's
husband. In fine, the damage had already been done to RMC when Yabut deposited its
funds in the name and account number of her husband with petitioner bank. It is then
entirely left to speculation what Yabut would have done afterwards like tampering
both the account number and the account name on the stub of the original deposit slip and
on the duplicate copy in order to cover up her crime.
Under the circumstances in this case, there was no way for PBC's bank tellers to
reasonably foresee that Yabut might or would use the duplicate deposit slip to cover up
her crime. In the first place, the bank tellers were absolutely unaware that a crime had
already been consummated by Yabut when her transaction by her sole doing was posted
in the ledger and validated by the teller in favor of her husband's account even if the
funds deposited belonged to RMC.
The teller(s) in this case were not in any way proven to be parties to the crime either as
accessories or accomplices. Nor could it be said that the act of posting and validation was
in itself a negligent act because the teller(s) simply had no choice but to accept and
validate the deposit as written in the original deposit slip under the account number and
name of Yabut's husband. Hence, the act of validating the duplicate copy was not the
proximate cause of RMC's injury but merely a remote cause which an independent cause
or agency merely took advantage of to accomplish something which was not the probable
or natural effect thereof. That explains why Yabut still had to tamper with the account
number of the duplicate deposit slip after filling in the name of RMC in the blank space.

Coming now to the doctrine of "last clear chance," it is my considered view that the
doctrine assumes that the negligence of the defendant was subsequent to the negligence
of the plaintiff and the same must be the proximate cause of the injury. In short, there
must be a last and a clear chance, not a last possible chance, to avoid the accident or
injury. It must have been a chance as would have enabled a reasonably prudent man in
like position to have acted effectively to avoid the injury and the resulting damage to
himself.
In the case at bar, the bank was not remiss in its duty of sending monthly bank statements
to private respondent RMC so that any error or discrepancy in the entries therein could be
brought to the bank's attention at the earliest opportunity. Private respondent failed to
examine these bank statements not because it was prevented by some cause in not doing

so, but because it was purposely negligent as it admitted that it does not normally check
bank statements given by banks.
It was private respondent who had the last and clear chance to prevent any further
misappropriation by Yabut had it only reviewed the status of its current accounts on the
bank statements sent to it monthly or regularly. Since a sizable amount of cash was
entrusted to Yabut, private respondent should, at least, have taken ordinary care of its
concerns, as what the law presumes. Its negligence, therefore, is not contributory but the
immediate and proximate cause of its injury.
I vote to grant the petition.
(Philippine Bank of Commerce v. Court of Appeals, G.R. No. 97626, [March 14, 1997],
336 PHIL 667-687)
|||

FIRST DIVISION
[G.R. No. 19495. February 2, 1924.]
HONRION LASAM ET AL., plaintiffs-appellants, vs. FRANK
SMITH, jr., defendant-appellant.
Palma & Leuterion for plaintiffs-appellant.
Mariano Alisngco for defendant-appellant.
SYLLABUS
1. DAMAGES; CONTRACT OF CARRIAGE OF PASSENGERS; BREACH
OF CONTRACT. Defendant, the owner of a public garage, under took to convey
the plaintiffs by automobile from San Fernando, La union, to Currimao, Ilocos Norte.
While on the way to result of which the plaintiffs were injured. Held: That the action
for damages articles 1101-1107 of the Civil Code, and not article 1903, were
applicable.
2. ID.; ID.; FORTUITOUS EVENT. The expression "events which cannot
be foreseen and which having been foreseen, are inevitable" is synonymous with the
term "fortuitous event" of which some extraordinary circumstance independent of the
will of the obligor, or of his employees, is one of the essential elements.
3. ID.; ID.; CARRIER OF PASSENGERS NOT AN INSURER AGAINST
ALL RISKS. Neither under American nor Spanish law is a carrier of passengers an
absolute insurer against the risks of travel from which the passenger may protect
himself by exercising due care and diligence.
4. DAMAGES; CONTRACT, NEGLIGENCE IN FULFILLMENT . In
determining the extent of the liability for losses or damages resulting the courts have a
discretionary power to moderate the liability according to the circumstance (Civil
Code article 1103; De Guia vs. Manila Electric Railroad & Light Co., 40 Phil., 766.)

DECISION

OSTRAND, J :
p

The plaintiffs are husband and wife and this action is brought to recover
damages in the sum of P20,000 for physical injuries sustained by them in an
automobile accident. The trial court rendered a judgment in their favor for the sum of
P1,254.10, with legal interest from the date of the judgment. Both the plaintiffs and
the defendant appeal, the former maintaining that the damages awarded are
insufficient while the latter denies all liability for any damages whatever.
It appears from the evidence that on February 27, 1918, the defendant was of
San Fernando, La Union, and engaged in the business of carrying passengers for hire
from one point to another in the Province of La Union and the surrounding provinces.
On the date mentioned, he undertook to convey plaintiff from San Fernando to
Currimao, Ilocos Norte, in a Ford automobile. On leaving San Fernando, the
automobile was operated by a licensed chauffeur, but after having reached the town of
San Juan, the chauffeur allowed his assistant, Remigio Bueno, to drive the car. Bueno
held to driver's license, but had some experience in driving, and with the exception of
some slight engine trouble while passing through the town of Luna, the car functioned
well until after the crossing of the Abra River in Tagudin, when, according to the
testimony of witnesses for the plaintiffs, defects developed in the steering gear so as
to make accurate steering impossible, and after zigzagging for a distance of about half
a kilometer, the car left the road and went down a steep embankment.
The defendant, in his testimony, maintains that there was no defect in the
steering gear, neither before nor after the accident, and expresses the opinion that the
swaying or zigzagging of the car must have been due to its having been driven at an
excessive rate of speed. This may possibly be true, but it is, from our point of view,
immaterial whether the accident was caused by negligence on the part of the
defendant's employees, or whether it was due to the same in either event.
In going over the bank of the road, the automobile was overturned and the
plaintiffs pinned down under it. Mr. Lasam escaped with a few contusions and a
"dislocated" rib, but his wife, Joaquina Sanchez, received serious injuries, among
which was a compound fracture of one of the bones in her left wrist. She also appears
to have suffered a nervous breakdown from which she had not fully recovered at the
time of the trial.
The complaint in the case was filed about a year and a half after the occurrence
above related. It alleges, among other things, that the accident was due to defects in
the automobile as well as to the incompetence and negligence of the chauffeur, and
the case appears to have been tried largely upon the theory that it sounds in tort and
that the liability of the defendant is governed by article 1903 of the Civil Code. The
trial court held, however, that the cause of action rests on the defendant's breach of the
contract of carriage and that, consequently, articles 1101-1107 of the Civil Code, and

not article 1903, are applicable. The court further found that the breach of the contract
was not due to fortuitous events and that, therefore, the defendant was liable in
damages.
In our opinion, the conclusions of the court below are entirely correct. That
upon the facts stated the defendant's liability, if any, is contractual, is well settled by
previous decisions of the court, beginning with the case of Rakes vs. Atlantic, Gulf &
Pacific Co. (7 Phil., 359), and the distinction between extra-contractual liability and
contractual liability has been so ably and exhaustively discussed in various other
cases, that nothing further need here be said upon that subject. (See Cangco vs.
Manila Railroad Co. 38 Phil., 768; Manila Railroad Co. Compania Trasatlantica and
Atlantic, Gulf & Pacific Co., 38 Phil., 875; De Guia vs. Manila Electric Railroad &
Light source of the defendant's legal liability is the contract of carriage; the by
entering into that contract he bound himself to carry the plaintiffs safely and securely
to their destination; and that having failed to do so he is liable in damages unless he
shows that the failure to fulfill his obligation was due to causes mentioned in article
1105 of the Civil Code, which reads as follows:
"No one shall be liable for events which could not be foreseen or which,
even if foreseen, were inevitable, with the exception of the cases in which the
law expressly provides otherwise and those in which the obligation itself
imposes such liability."

This brings us to the principal question in the case: What is meant by "events
which cannot be foreseen and which having been foreseen, are inevitable?" The
Spanish authorities regard the language employed as an effort to define the term caso
fortuito and hold that the two expressions are synonymous. (Manresa, Comentarios al
Co Civil Espaol, vol. 8, pp. 88 et seq.; Scaevola, Codigo Civil, vol. 19, pp. 526 et
seq.)
The antecedent to article 1105 is found in Law 11, Title 33, Partida 7, which
defines caso fortuito as "ocasion que acaese por aventura deque non se puede ante
ver. E son estos, derrivamientos de casas e fuego que se enciende so ora, e
quebrantamiento de navio, fuerca de ladrones. . . . ( An event that takes place by
accident and could not have been foreseen, Examples of this are destruction of
houses, unexpected fire, shipwreck, violence of robbers. . . .)"
Escriche defines caso fortuito as "an unexpected event such as floods, torrents,
shipwrecks, conflagrations, lightning, compulsion, insurrections, destruction of
buildings by unforeseen accidents and other occurrences of a similar nature."
In discussing and analyzing the term caso fortuito the Enciclopedia Juridica
Espaola says: " In a legal sense and, consequently, also in relation to contracts, a
caso fortuito presents the following essential characteristics: (1) The cause of the
unforeseen and unexpected occurrence, or of the failure of the debtor to comply with

his obligation, must be independent of the human will. (2) It must be impossible to
foresee the event which constitutes the caso fortuito, or if it can be foreseen, it must
be impossible to avoid. (3) The occurrence must be such as to render it impossible for
the debtor to fulfill his obligation in a normal manner. And (4) the obligor (debtor)
must be free from any participation in the aggravation of the injury resulting to the
creditor." (5 Enciclopedia Juridica Espaola, 309.)
As will be seen, these authorities agree that some extraordinary circumstance
independent of the will of the obligor, or of his employees, is an essential element of a
caso fortuito. Turning to the present case, it is at once apparent that this elements is
lacking. It is not suggested that the accident in question was due to an act of God or to
adverse road conditions which could not have been foreseen. As far as the record
shows, the accident was caused either by defects in the automobile or else through the
negligence of its driver. That is not a caso fortuito.
We agree with counsel that neither under the American nor Spanish law is a
carrier of passengers an absolute insurer against the risks of travel from which the
passenger may protect himself by exercising ordinary care and diligence. The case of
Alba vs. Sociedad Anonima de Tranvias, Jurisprudencia Civil, vol. 102, p. 928, cited
by the defendant in support of his contentions, affords a good illustration of the
application of this principle. In that case Alba, a passenger on a street car, was
standing on the platform of the car while it was in motion. The car rounded a curve
causing Alba to lose his balance and fall off the platform, sustaining sever injuries. In
an action brought by him to recover damages, the supreme court of Spain held that
inasmuch as the car at the time of the accident was travelling at a moderate rate of
speed and there was no infraction of the regulations, and the plaintiff was exposed to
no greater danger than that inherent in that particular mode of travel, the plaintiff
could not recover, especially so since he should have been on his guard against a
contingency as natural as that of losing his balance to a greater or less extent when
the car rounded the curve.
But such is not the present case; here the passengers had no means of avoiding
the danger or escaping the injury.
The plaintiffs maintain that the evidence clearly establishes that they are
entitled to damages in the sum of P7,832.80 instead of P1,254.10 as found by the trial
court, and their assignments of error relate to this point only.

There can be no doubt that the expenses incurred by the plaintiffs as a result of
the accident greatly exceeded the amount of the damages awarded. But bearing in
mind that in determining the extent of the liability for losses or damages resulting
from negligence in the fulfillment of a contractual obligation, the courts have " a
discretionary power to moderate the liability according to the circumstances" (De

Guia vs. Manila Electric Railroad & light Co., 40 Phil., 706 Phil; art. 1103, Civil
Code), we do not think that the evidence is such as to justify us in interfering with the
discretion of the court below in this respect. As pointed out by that court in its wellreasoned and well considered decision, by far the greater part of the damages claimed
by the plaintiffs resulted from the fracture of a bone in the left wrist of Joaquina
Sanchez and from her objections to having a decaying splinter of the bone refusal to
submit to such an operation, a series of infections ensued and which required constant
and expensive medical treatment for several years. We agree with the these expenses.
For the reasons stated, the judgment appealed from is affirmed, without costs
in this instance. So ordered.
Araullo, C. J., Street, Malcolm, Johns, and Romualdez, JJ., concur.

|||

(Lasam v. Smith, Jr., G.R. No. 19495, [February 2, 1924], 45 PHIL 657-663)

EN BANC
[G.R. No. L-12986. March 31, 1966.]
THE SPOUSES BERNABE AFRICA and SOLEDAD C. AFRICA
and the HEIRS OF DOMINGA ONG, petitioners-appellants, vs.
CALTEX (PHIL.) INC., MATEO BOQUIREN and THE COURT
OF APPEALS, respondents-appellees.
Ross, Selph, Carrascoso & Janda for the respondents.
Bernabe Africa, etc. for the petitioners.
SYLLABUS
1. EVIDENCE; ENTRIES IN OFFICIAL RECORDS; REQUISITES FOR
ADMISSIBILITY. There are three requisites for admissibility of evidence under Sec.
35, Rule 123, Rules of Court: (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, p. 393).
2. ID.; HEARSAY RULE; REPORTS NOT CONSIDERED EXCEPTION TO
HEARSAY RULE. 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.
3. ID.; ID.; REPORT SUBMITTED BY A POLICE OFFICER IN THE
PERFORMANCE OF HIS DUTIES. The report 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.
4. ID.; PRESUMPTION OF NEGLIGENCE UNDER THE DOCTRINE OF Res Ipsa
Loquitur. Where the thing which caused the injury complained of is shown to be under
the management 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.)
5. ID.; ID.; APPLICATION OF PRINCIPLE TO THE CASE AT BAR. 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.
6. TORTS; INTERVENTION OF UNFORESEEN AND UNEXPECTED CAUSE.
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.)
7. DAMAGES; LIABILITY OF OWNER OF GASOLINE STATION; CASE AT BAR.
A fire broke out at the Caltex service station. It is started while gasoline was being
hosed from a tank into the underground storage. The fire spread to and burned several
neighboring houses owned by appellants. Issue: Whether Caltex should be held liable for
the damages caused to appellants. Held: The question depends on whether the operator of
the gasoline station was an independent contractor or an agent of Caltex. Under the
license agreement the operator would pay Caltex the purely nominal sum of P1.00 for the
use of the premises and all equipment therein. The operator could sell only Caltex
products. Maintenance of the station and its equipment was subject to the approval, in
other words control, of Caltex. The operator could not assign or transfer his rights as
license without the consent of Caltex. Termination of the contract was a right granted
only to Caltex but not to the operator. These provisions of the contract show that the
operator was virtually an employee of Caltex, not an independent contractor. Hence,
Caltex should be liable for damages caused to appellants.

DECISION

MAKALINTAL, J :
p

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 transferring gasoline from a tank truck, plate No. T-5292 into
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 of 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 crossexamined; 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. 383.)

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 Boquiren, 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-324O-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 those 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. 68 ). 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. 22; 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 the
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 high]y 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 Shell 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 asses 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 defendants
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; Bents, 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. The 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. Traver's 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 YAfrica).

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. vs. Firemen's
Insurance Company of Newark, New Jersey, 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 vs. 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.
Dizon, J., took no part.
(Spouses Africa v. Caltex (Phil.), Inc., G.R. No. L-12986, [March 31, 1966], 123 PHIL
272-288)
|||

THIRD DIVISION
[G.R. No. 52732. August 29, 1988.]
F.F. CRUZ and CO., INC., petitioner, vs. THE COURT OF
APPEALS, GREGORIO MABLE as substituted by his wife LUZ
ALMONTE MABLE and children DOMING, LEONIDAS,
LIGAYA, ELENA, GREGORIO, JR., SALOME, ANTONIO, and
BERNARDO all surnamed MABLE, respondents.
Luis S. Topacio for petitioner.
Mauricio M. Monta for respondents.
SYLLABUS
1.CIVIL LAW; DAMAGES; DOCTRINE OF RES IPSA LOQUITOR, APPLIED;
NEGLIGENCE NOT PRESUMED. The facts of the case call for the application of
the doctrine, considering that in the normal course of operations of a furniture
manufacturing shop, combustible material such as wood chips, sawdust, paint, varnish
and fuel and lubricants for machinery may be found thereon. It must also be noted that
negligence or want of care on the part of petitioner or its employees was not merely
presumed. Even without applying the doctrine of res ipsa loquitur, petitioner's failure to
construct a firewall in accordance with city ordinances would suffice to support a finding
of negligence.
2.REMEDIAL LAW; EVIDENCE; FACTUAL FINDINGS OF THE COURT OF
APPEALS GENERALLY NOT DISTURBED. Since the amount of the loss sustained
by private respondents constitutes a finding of fact, such finding by the Court of Appeals
should not be disturbed by this Court more so when there is no showing of arbitrariness.
3.CIVIL LAW; DAMAGES; DEFICIENCY BETWEEN AMOUNT INDEMNIFIED BY
INSURER AND THE AMOUNT OF LOSS SUSTAINED MAY BE RECOVERED
FROM PERSON CAUSING THE LOSS. Private respondents have been indemnified
by their insurer in the amount of P35,000.00 for the damage caused to their house and its
contents. Hence, the Court holds that in accordance with Article 2207 of the Civil Code
the amount of P35,000.00 should be deducted from the amount awarded as damages.
Having been indemnified by their insurer, private respondents are only entitled to recover
the deficiency from petitioner.

4.ID.; SUBROGATION; INSURER ENTITLED THERETO UNDER ART. 2207.

The insurer, if it is so minded, may seek reimbursement of the amount it indemnified
private respondents from petitioner. This is the essence of its right to be subrogated to the
rights of the insured, as expressly provided in Article 2207. Upon payment of the loss
incurred by the insured, the insurer is entitled to be subrogated pro tanto to any right of
action which the insured may have against the third person whose negligence or wrongful
act caused the loss [Fireman's Fund Insurance Co. v. Jamila & Co., Inc., G.R. No. L27427, April 7, 1976, 70 SCRA 323.]
5.ID.; ID.; EXERCISE OF RIGHT, DISCRETIONARY; INSURER, REAL PARTY IN
INTEREST WITH REGARD TO INDEMNITY AWARDED TO THE INSURED.
Under Article 2207, the real party in interest with regard to the indemnity received by the
insured is the insurer [Phil. Air Lines, Inc. v. Heald Lumber Co., 101 Phil. 1031, (1957).]
Whether or not the insurer should exercise the rights of the insured to which it had 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 record and no claim is made on its behalf, the private
respondent's insurer has to claim his right to reimbursement of the P35,000.00 paid to the
insured.

DECISION

CORTES, J :
p

This petition to review the decision of the Court of Appeals puts in issue the application
of the common law doctrine of res ipsa loquitur.
prcd

The essential facts of the case are not disputed.

The furniture manufacturing shop of petitioner in Caloocan City was situated adjacent to
the residence of private respondents. Sometime in August 1971, private respondent
Gregorio Mable first approached Eric Cruz, petitioner's plant manager, to request that a
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 out in petitioner's shop. Petitioner's employees, who slept in the shop
premises, tried to put out the fire, but their efforts proved futile. The fire spread to private
respondents' house. Both the shop and the house were razed to the ground. The cause of
the conflagration was never discovered. The National Bureau of Investigation found
specimens from the burned structures negative for the presence of inflammable
substances.

Subsequently, private respondents collected P35,000.00 on the insurance on their house

and the contents thereof.
On January 23, 1975, private respondents filed an action for damages against petitioner,
praying for a judgment in their favor awarding P150,000.00 as actual damages,
P50,000.00 as moral damages, P25,000.00 as exemplary damages, P20,000.00 as
attorney's fees and costs. The Court of First Instance held for private respondents:
WHEREFORE, the Court hereby renders judgment, in favor of plaintiffs, and
against the defendant:
1.Ordering the defendant to pay to the plaintiffs the amount of P80,000.00 for
damages suffered by said plaintiffs for the loss of their house, with interest of
6% from the date of the filing of the Complaint on January 23, 1975, until fully
paid;
2.Ordering the defendant to pay to the plaintiffs the sum of P50,000.00 for the
loss of plaintiffs' furnitures, religious images, silverwares, chinawares,
jewelries, books, kitchen utensils, clothing and other valuables, with interest of
6% from date of the filing of the Complaint on January 23, 1975, until fully
paid;
3.Ordering the defendant to pay to the plaintiffs the sum of P5,000.00 as moral
damages, P2,000.00 as exemplary damages, and P5,000.00 as and by way of
attorney's fees;
4.With costs against the defendant;
5.Counterclaim is ordered dismissed, for lack of merit. [CA Decision, pp. 1-2;
Rollo, pp. 29-30.]

On appeal, the Court of Appeals, in a decision promulgated on November 19, 1979,

affirmed the decision of the trial court but reduced the award of damages:
WHEREFORE, the decision declaring the 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 for the furniture and other fixtures with legal interest
from the date of the filing of the complaint until full payment thereof [CA
Decision, p. 7; Rollo, p. 35.]

A motion for reconsideration was filed on December 3, 1979 but was denied in a
resolution dated February 18, 1980. Hence, petitioner filed the instant petition for review
on February 22, 1980.
After the comment and reply were filed, the Court resolved to deny the petition for lack
of merit on June 11, 1980. However, petitioner filed a motion for reconsideration, which
was granted, and the petition was given due course on September 12, 1980. After the
parties filed their memoranda, the case was submitted for decision on January 21, 1981.

Petitioner contends that the Court of Appeals erred:

1.In not deducting the sum of P35,000.00, which private respondents recovered on the
insurance on their house, from the award of damages.
2.In awarding excessive and/or unproved damages.
3.In applying the doctrine of res ipsa loquitur to the facts of the instant case.
The pivotal issue in this case is the applicability of the common law doctrine of res ipsa
loquitur, the issue of damages being merely consequential. In view thereof, the errors
assigned by petitioner shall be discussed in the reverse order.
prcd

1.The doctrine of res ipsa loquitur, whose application to the instant case petitioner
objects to, may be stated as follows:
Where the thing which caused the injury complained of is shown to be under the
management of the 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 the absence of
explanation by the defendant, that the accident arose from want of care. [Africa
v. Caltex (Phil.), Inc., G.R. No. L-12986, March 31, 1966, 16 SCRA 448.]

Thus, in Africa, supra, where fire broke out in a Caltex service station while gasoline
from a tank truck was being unloaded into an underground storage tank through a hose
and the fire spread to and burned neighboring houses, this Court, applying the doctrine of
res ipsa loquitur, adjudged Caltex liable for the loss.
The facts of the case likewise call for the application of the doctrine, considering that in
the normal course of operations of a furniture manufacturing shop, combustible material
such as wood chips, sawdust, paint, varnish and fuel and lubricants for machinery may be
found thereon.
It must also be noted that negligence or want of care on the part of petitioner or its
employees was not merely presumed. The Court of Appeals found that petitioner failed to
construct a firewall between its shop and the residence of private respondents as required
by a city ordinance; that the fire could have been caused by a heated motor or a lit
cigarette; that gasoline and alcohol were used and stored in the shop; and that workers
sometimes smoked inside the shop [CA Decision, p. 5; Rollo, p. 33.]
Even without applying the doctrine of res ipsa loquitur, petitioner's failure to construct a
firewall in accordance with city ordinances would suffice to support a finding of
negligence.
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 crumble and melt when subjected to intense heat. Defendant's
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. [Africa Y. Caltex
(Phil.) Inc., supra; Emphasis supplied.]

In the instant case, with more reason should petitioner be found guilty of negligence since
it had failed to construct a firewall between its property and private respondents'
residence which sufficiently complies with the pertinent city ordinances. The failure to
comply with an ordinance providing for safety regulations had been ruled by the Court as
an act of negligence [Teague v. Fernandez, G.R. No. L-29745, June 4, 1973, 51 SCRA
181.]

The Court of Appeals, therefore, had more than adequate basis to find petitioner liable for
the loss sustained by private respondents.
cdll

2.Since the amount of the loss sustained by private respondents constitutes a finding of
fact, such finding by the Court of Appeals should not be disturbed by this Court [M.D.
Transit & Taxi Co., Inc. v. Court of Appeals, G.R. No. L-23882, February 17, 1968, 22
SCRA 559], more so when there is no showing of arbitrariness.
In the instant case, both the CFI and the Court of Appeals, were in agreement as to the
value of private respondents' furniture and fixtures and personal effects lost in the fire
(i.e. P50,000.00). With regard to the house, the Court of Appeals reduced the award to
P70,000.00 from P80,000.00. Such cannot be categorized as arbitrary considering that the
evidence shows that the house was built in 1951 for P40,000.00 and, according to private
respondents, its reconstruction would cost P246,000.00. Considering the appreciation in
value of real estate and the diminution of the real value of the peso, the valuation of the
house at P70,000.00 at time it was razed cannot be said to be excessive.
3.While this Court finds that petitioner is liable for damages to private respondents as
found by the Court of Appeals, the fact that private respondents have been indemnified
by their insurer in the amount of P35,000.00 for the damage caused to their house and its
contents has not escaped the attention of the Court. Hence, the Court holds that in
accordance with Article 2207 of the Civil Code the amount of P35,000.00 should be
deducted from the amount awarded as damages. Said article provides:
Art. 2207.If the plaintiff's property has been insured, and he has received
indemnity from the insurance company for the injury or loss arising out of the
wrong or breach of contract complained of, the insurance company is
subrogated to the rights of the insured against the wrongdoer or the person who
violated the contract. If the amount paid by the insurance company does not

fully cover the injury or loss, the aggrieved party shall be entitled to recover the
deficiency from the person causing the loss or injury. (Emphasis supplied.)

The law is clear and needs no interpretation. Having been indemnified by their insurer,
private respondents are only entitled to recover the deficiency from petitioner.
LLphil

On the other hand, the insurer, if it is so minded, may seek reimbursement of the amount
it indemnified private respondents from petitioner. This is the essence of its right to be
subrogated to the rights of the insured, as expressly provided in Article 2207. Upon
payment of the loss incurred by the insured, the insurer is entitled to be subrogated pro
tanto to any right of action which the insured may have against the third person whose
negligence or wrongful act caused the loss [Fireman's Fund Insurance Co. v. Jamila &
Co., Inc., G.R. No. L-27427, April 7, 1976, 70 SCRA 323.]
Under Article 2207, the real party in interest with regard to the indemnity received by the
insured is the insurer [Phil. Air Lines, Inc. v. Heald Lumber Co., 101 Phil. 1031, (1957).]
Whether or not the insurer should exercise the rights of the insured to which it had 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 record and no claim is made on its behalf, the private
respondent's insurer has to claim his right to reimbursement of the P35,000.00 paid to the
insured.
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.

prLL

Fernan, C.J., Gutierrez, Jr., Feliciano and Bidin, JJ., concur.

|||

(F.F. Cruz v. Court of Appeals, G.R. No. 52732, [August 29, 1988])

THIRD DIVISION
[G.R. No. 118231. July 5, 1996.]
DR. VICTORIA L. BATIQUIN and ALLAN BATIQUIN, petitioners,
vs. COURT OF APPEALS, SPOUSES QUEDO D. ACOGIDO and
FLOTILDE G. VILLEGAS, respondents.
Paras & Associates for petitioners.
Frederick E. Bustamante for private respondents.
SYLLABUS
1. REMEDIAL LAW; SPECIAL CIVIL ACTIONS; AS A GENERAL RULE, ONLY
QUESTIONS OF LAW MAY BE RAISED IN A PETITION FOR REVIEW ON
CERTIORARI; EXCEPTIONS. While the rule is that only questions of law may be
raised in a petition for review on certiorari, there are exceptions, among which are when
the factual findings of the trial court and the appellate court conflict, when the appealed
decision is clearly contradicted by the evidence on record, or when the appellate court
misapprehended the facts.
2. ID.; EVIDENCE; CREDIBILITY OF WITNESSES; EVEN WHEN A WITNESS IS
FOUND TO HAVE DELIBERATELY FALSIFIED IN SOME MATERIAL
PARTICULARS, IT IS NOT REQUIRED THAT THE WHOLE OF HIS
UNCORROBORATED TESTIMONY BE REJECTED, BUT SUCH PORTIONS
THEREOF DEEMED WORTHY OF BELIEF BE CREDITED. The phrase relied
upon by the trial court does not negate the fact that Dr. Kho saw a piece of rubber in
private respondent Villegas' abdomen, and that she sent it to a laboratory and then to
Cebu City for examination by a pathologist. Not even the Pathologist's Report, although
devoid of any mention of a piece of rubber, could alter what Dr. Kho saw. Furthermore,
Dr. Kho's knowledge of the piece of rubber could not be based on other than first hand
knowledge for, as she asserted before the trial court. The petitioners emphasize that the
private respondents never reconciled Dr. Kho's testimony with Dr. Batiquin's claim on
the witness stand that when Dr. Batiquin confronted Dr. Kho about the foreign body, the
latter said that there was a piece of rubber but that she threw it away. Although hearsay,
Dr. Batiquin's claim was not objected to, and hence, the same is admissible but it carries
no probative value. Nevertheless, assuming otherwise, Dr. Batiquin's statement cannot
belie the fact that Dr. Kho found a piece of rubber near private respondent Villegas's

uterus. And even if we were to doubt Dr. Kho as to what she did to the piece of rubber,
i.e., whether she threw it away or sent it to Cebu City, we are not justified in distrusting
her as to her recovery of a piece of rubber from private respondent Villegas' abdomen. On
this score, it is perfectly reasonable to believe the testimony of a witness with respect to
some facts and disbelieve his testimony with respect to other facts. And it has been aptly
said that even when a witness is found to have deliberately falsified in some material
particulars, it is not required that the whole of his uncorroborated testimony be rejected,
but such portions thereof deemed worthy of belief may be credited.
3. ID.; ID.; ID.; POSITIVE TESTIMONY IS STRONGER THAN NEGATIVE
TESTIMONY. It is here worth nothing that the trial court paid heed to the following
portions of Dr. Batiquin's testimony: that no rubber drain was used in the operation, and
that there was neither any tear on Dr. Batiquin's gloves after the operation nor blood
smears on her hands upon removing her gloves. Moreover, the trial court pointed out that
the absence of a rubber drain was corroborated by Dr. Doris Sy, Dr. Batiquin's assistant
during the operation on private respondent Villegas. But the trial court failed to recognize
that the assertions of Drs. Batiquin and Sy were denials or negative testimonies. Wellsettled is the rule that positive testimony is stronger than negative testimony. Of course,
as the petitioners advocate, such positive testimony must come from a credible source,
which leads us to the second assigned error. While the petitioners claim that
contradictions and falsities punctured Dr. Kho's testimony, a reading of the said
testimony reveals no such infirmity and establishes Dr. Kho as a credible witness. Dr.
Kho was frank throughout her turn on the witness stand. Furthermore, no motive to state
any untruth was ever imputed against Dr. Kho, leaving her trustworthiness unimpaired.
The trial court's following declaration shows that while it was critical of the lack of care
with which Dr. Kho handled the piece of rubber, it was not prepared to doubt Dr. Kho's
credibility, thus only supporting out appraisal of Dr. Kho's trustworthiness. Considering
that we have assessed Dr. Kho to be a credible witness, her positive testimony [that a
piece of rubber was indeed found in private respondent Villegas' abdomen] prevails over
the negative testimony in favor of the petitioners.
4. ID.; ID.; ID.; DOCTRINE OF RES IPSA LOQUITUR; APPLICABLE IN CASE AT
BAR. In the instant case, all the requisites for recourse to the doctrine of res ipsa
loquitur are present. First, the entire proceedings of the cesarean section were under the
exclusive control of Dr. Batiquin. In this light, the private respondents were bereft of
direct evidence as to the actual culprit or the exact cause of the foreign object finding its
way into private respondent Villegas's body, which, needless to say, does not occur
unless through the intervention of negligence. Second, since aside from the cesarean
section, private respondent Villegas underwent no other operation which could have
caused the offending piece of rubber to appear in her uterus, it stands to reason that such
could only have been a by-product of the cesarean section performed by Dr. Batiquin.
The petitioners, in this regard, failed to overcome the presumption of negligence arising
from resort to the doctrine of res ipsa loquitur. Dr. Batiquin is therefore liable for

negligently leaving behind a piece of rubber in private respondent Villegas' abdomen and
for all the adverse effects thereof.

DECISION

DAVIDE, JR., J :
p

Throughout history, patients have consigned their fates and lives to the skill of their
doctors. For a breach of this trust, men have been quick to demand retribution. Some
4,000 years ago, the Code of Hammurabi 1 then already provided: "If a physician make a
deep incision upon a man with his bronze lancet and cause the man's death, or operate on
the eye socket of a man with his bronze lancet and destroy the man's eyes, they shall cut
off his hand." 2 Subsequently, Hippocrates 3 wrote what was to become part of the
healer's oath: "I will follow that method of treatment which according to my ability and
judgment, I consider for the benefit of my patents, and abstain from whatever is
deleterious and mischievous . . . While I continue to keep this oath unviolated may it be
granted me to enjoy life and practice the art, respected by all men at all times but should I
trespass and violate this oath, may the reverse be my lot." At present, the primary
objective of the medical profession is the preservation of life and maintenance of the
health of the people. 4
Needless to say then, when a physician strays from his sacred duty and endangers instead
the life of his patient, he must be made to answer therefor. Although society today cannot
and will not tolerate the punishment meted out by the ancients, neither will it and this
Court, as this case would show, let the act go uncondemned.
The petitioners appeal from the decision 5 of the Court of Appeals of 11 May 1994 in
CA-G.R. CV No. 30851, which reversed the decision 6 of 21 December 1990 of Branch
30 of the Regional Trial Court (RTC) of Negros Oriental in Civil Case No. 9492.
The facts, as found by the trial court, are as follows:
Dr. Batiquin was a Resident Physician at the Negros Oriental Provincial
Hospital, Dumaguete City from January 9, 1978 to September 1989. Between
1987 and September, 1989 she was also the Actg. Head of the Department of
Obstetrics and Gynecology at the said Hospital.
Mrs. Villegas is a married woman who submitted to Dr. Batiquin for prenatal
care as the latter's private patient sometime before September 21, 1988.
In the morning of September 21, 1988 Dr. Batiquin with the assistance of Dr.
Doris Teresita Sy who was also a Resident Physician at the same Hospital, C.I.

and O.R. Nurse Arlene Diones and some student nurses performed a simple
cesarean section on Mrs. Villegas at the Negros Oriental Provincial Hospital
and after 45 minutes Mrs. Villegas delivered her first Child, Rachel Acogido, at
about 11:45 that morning. Thereafter, Plaintiff remained confined at the
Hospital until September 27, 1988 during which period of confinement she was
regularly visited by Dr. Batiquin. On September 28, 1988 Mrs. Villegas checked
out of the Hospital . . . and on the same day she paid Dr. Batiquin, thru the
latter's secretary, the amount of P1,500.00 as "professional fee" . . .
Soon after leaving the Hospital Mrs. Villegas began to suffer abdominal pains
and complained of being feverish. She also gradually lost her appetite, so she
consulted Dr. Batiquin at the latter's polyclinic who prescribed for her certain
medicines . . . which she had been taking up to December, 1988.
In the meantime, Mrs. Villegas was given a Medical Certificate by Dr. Batiquin
on October 31, 1988 . . . certifying to her physical fitness to return to her work
on November 7, 1988. So on the second week of November, 1988 Mrs. Villegas
returned to her work at the Rural Bank of Ayungon, Negros Oriental.
The abdominal pains and fever kept on recurring and bothered Mrs. Villegas no
end and despite the medications administered by Dr. Batiquin. When the pains
become unbearable and she was rapidly losing weight she consulted Dr. Ma.
Salud Kho at the Holy Child's Hospital in Dumaguete City on January 20, 1989.
The evidence of Plaintiffs show that when Dr. Ma. Salud Kho examined Mrs.
Villegas at the Holy Child's Hospital on January 20, 1989 she found Mrs.
Villegas to be feverish, pale and was breathing fast. Upon examination she felt
an abdominal mass one finger below the umbilicus which she suspected to be
either a tumor of the uterus or an ovarian cyst, either of which could be
cancerous. She had an x-ray taken of Mrs. Villegas ' chest, abdomen and
kidney. She also took blood tests of Plaintiff. A blood count showed that Mrs.
Villegas had [an] infection inside her abdominal cavity. The results of all those
examinations impelled Dr. Kho to suggest that Mrs. Villegas submit to another
surgery to which the latter agreed.

When Dr. Kho opened the abdomen of Mrs. Villegas she found whitish-yellow
discharge inside, an ovarian cyst on each of the left and right ovaries which
gave out pus, dirt and pus behind the uterus, and a piece of rubber materials on
the right side of the uterus embedded on [sic] the ovarian cyst. 2 inches by 3/4
inch in size. This piece of rubber material which Dr. Kho described as a
"foreign body" looked like a piece of a "rubber glove" . . . and which is [sic]
also "rubber-drain like . . . It could have been a torn section of a surgeon's
gloves or could have come from other sources. And this foreign body was the
cause of the infection of the ovaries and consequently of all the discomfort
suffered by Mrs. Villegas after her delivery on September 21, 1988. 7

The piece of rubber allegedly found near private respondent Flotilde Villegas's uterus
was not presented in court, and although Dr. Ma. Salud Kho testified that she sent it to a
pathologist in Cebu City for examination, 8 it was not mentioned in the pathologist's
Surgical Pathology Report. 9
Aside from Dr. Kho's testimony, the evidence which mentioned the piece of rubber are a
Medical Certificate, 10 a Progress Record, 11 an Anesthesia Record, 12 a Nurse's
Record, 13 and a Physician's Discharge Summary. 14 The trial court, however, regarded
these documentary evidence as mere hearsay, "there being no showing that the person or
persons who prepared them are deceased or unable to testify on the facts therein stated . .
. Except for the Medical Certificate (Exhibit "F"), all the above documents were allegedly
prepared by persons other than Dr. Kho, and she merely affixed her signature on some of
them to express her agreement thereto . . . " 15 The trial court also refused to give weight
to Dr. Kho's testimony regarding the subject piece of rubber as Dr. Kho "may not have
had first-hand knowledge" thereof, 16 as could be gleaned from her statement, thus:
A . . . I have heard somebody that [sic] say [sic] there is [sic] a foreign body that
goes with the tissues but unluckily I don't know where the rubber was.

17
The trial court deemed vital Dr. Victoria Batiquin's testimony that when she confronted
Dr. Kho regarding the piece of rubber, "Dr. Kho answered that there was rubber indeed
but that she threw it away. " 18 This statement, the trial court noted, was never denied nor
disputed by Dr. Kho, leading it to conclude:
There are now two different versions on the whereabouts of that offending
"rubber" (1) that it was sent to the Pathologist in Cebu as testified to in Court
by Dr. Kho and (2) that Dr. Kho threw it away as told by her to Defendant. The
failure of the Plaintiffs to reconcile these two different versions serve only to
weaken their claim against Defendant Batiquin. 19

All told, the trial court held in favor of the petitioners herein.
The Court of Appeals reviewed the entirety of Dr. Kho's testimony and, even without
admitting the private respondents' documentary evidence, deemed Dr. Kho's positive
testimony to definitely establish that a piece of rubber was found near private respondent
Villegas's uterus. Thus, the Court of Appeals reversed the decision of the trial court,
holding:
4. The fault or negligence of appellee Dr. Batiquin is established by
preponderance of evidence. The trial court itself had narrated what happened to
appellant Flotilde after the caesarean operation made by appellee doctor . . .
After the second operation, appellant Flotilde became well and healthy.
Appellant Flotilde's troubles were caused by the infection due to the "rubber"
that was left inside her abdomen. Both appellants testified that after the
operation made by appellee doctor, they did not go to any other doctor until they

finally decided to see another doctor in January, 1989 when she was not getting
any better under the care of appellee Dr. Batiquin . . . Appellee Dr. Batiquin
admitted on the witness stand that she alone decided when to close the operating
area; that she examined the portion she operated on before closing the same . . .
Had she exercised due diligence, appellee Dr. Batiquin would have found the
rubber and removed it before closing the operating area. 20

The appellate court then ruled:

Appellants' evidence show[s] that they paid a total of P17,000.00 [deposit of
P7,100.00 (Exh. G-1-A) plus hospital and medical expenses together with
doctor's fees in the total amount P9,900.00 (Exhs. G and G-2)] for the second
operation that saved her life.
For the miseries appellants endured for more than three (3) months, due to the
negligence of appellee Dr. Batiquin, they are entitled to moral damages in the
amount of P100,000.00; exemplary damages in the amount of P20,000.00 and
attorney's fees in the amount of P25,000.00.
The fact that appellant Flotilde can no longer bear children because her uterus
and ovaries were removed by Dr. Kho is not taken into consideration as it is not
shown that the removal of said organs were the direct result of the rubber left by
appellee Dr. Batiquin near the uterus. What is established is that the rubber left
by appellee cause infection, placed the life of appellant Flotilde in jeopardy and
caused appellants fear, worry and anxiety . . .
WHEREFORE, the appealed judgment, dismissing the complaint for damages is
REVERSED and SET ASIDE. Another judgment is hereby entered ordering
defendants-appellees to pay plaintiffs-appellants the amount of P17,000.00 as
and for actual damages; P100,000.00 as and for moral damages; P20,000.00 as
and for exemplary damages; and P25,000.00 as and for attorney's fees plus the
cost of litigation.
SO ORDERED. 21

From the above judgment, the petitioners appealed to this Court claiming that the
appellate court; (1) committed grave abuse of discretion by resorting to findings of fact
not supported by the evidence on record, and (2) exceeded its discretion, amounting to
lack or excess of jurisdiction, when it gave credence to testimonies punctured with
contradictions and falsities.
The private respondents commented that the petition raised only questions of fact, which
were not proper for review by this Court.
While the rule is that only questions of law may be raised in a petition for review on
certiorari, there are exceptions, among which are when the factual findings of the trial
court and the appellate court conflict, when the appealed decision is clearly contradicted
by the evidence on record, or when the appellate court misapprehended the facts. 22

After deciphering the cryptic petition, we find that the focal point of the instant appeal is
the appreciation of Dr. Kho's testimony. The petitioner contend that the Court of Appeals
misappreciated the following portion of Dr. Kho's testimony:
Q What is the purpose of the examination?
A Just in case, I was just thinking at the back of my mind, just in case this
would turn out to be a medico-legal case, I have heard somebody that
[sic] says [sic] there is [sic] a foreign body that goes with the tissues but
unluckily I don't know where the rubber was. It was not in the Lab, it
was not in Cebu. 23 (emphasis supplied)

The petitioners prefer the trial court's interpretation of the above testimony, i.e., that Dr.
Kho's knowledge of the piece of rubber was based on hearsay. The Court of Appeals, on
the other hand, concluded that the underscored phrase was taken out of context by the
trial court. According to the Court of Appeals, the trial court should have likewise
considered the other portions of Dr. Kho's testimony, especially the following:
Q So you did actually conduct the operation on her?
A Yes, I did.
Q And what was the result?
A Opening up her abdomen, there was whitish-yellow discharge inside the
abdomen, there was an ovarian cyst on the left and side and there was
also an ovarian cyst on the right which, on opening up or freeing it up
from the uterus, turned out to be pus. Both ovaries turned out . . . to have
pus. And the, cleaning up the uterus, at the back of the uterus it was very
dirty, it was full of pus. And there was a [piece of] rubber we found a
[piece of] rubber on the right side. 24

We agree with the Court of Appeals. The phrase relied upon by the trial court does not
negate the fact that Dr. Kho saw a piece of rubber in private respondent Villegas's
abdomen, and that she sent it to a laboratory and then to Cebu City for examination by a
pathologist. 25 Not even the Pathologist's Report, although devoid of any mention of a
piece of rubber, could alter what Dr. Kho saw. Furthermore, Dr. Kho's knowledge of the
piece of rubber could not be based on other than first hand knowledge for, as she asserted
before the trial court:
Q But you are sure you have seen [the piece of rubber]?
A Oh yes. I was not the only one who saw it. 26

The petitioners emphasize that the private respondents never reconciled Dr. Kho's
testimony with Dr. Batiquin's claim on the witness stand that when Dr. Batiquin
confronted Dr. Kho about the foreign body, the latter said that there was a piece of rubber
but that she threw it away. Although hearsay, Dr. Batiquin's claim was not objected to,

and hence, the same is admissible 27 but it carries no probative value. 28 Nevertheless,
assuming otherwise, Dr. Batiquin's statement cannot belie the fact that Dr. Kho found a
piece of rubber near private respondent Villegas uterus. And even if we were to doubt Dr.
Kho as to what she did to the piece of rubber, i.e., whether she threw it away or sent it to
Cebu City, we are not justified in distrusting her as to her recovery of a piece of rubber
from private respondent Villegas's abdomen. On this score, it is perfectly reasonable to
believe the testimony of a witness with respect to some facts and disbelieve his testimony
with respect to other facts. And it has been aptly said that even when a witness it found to
have deliberately falsified in some material particulars, it is not required that the whole of
his uncorroborated testimony be rejected, but such portions thereof deemed worthy of
belief may be credited. 29

It is here worth nothing that the trial court paid heed to the following portions of Dr.
Batiquin's testimony: that no rubber drain was used in the operation, 30 and that there
was neither any tear on Dr. Batiquin's gloves after the operation nor blood smears on her
hands upon removing her gloves. 31 Moreover, the trial court pointed out that the
absence of a rubber drain was corroborated by Dr. Doris Sy, Dr. Batiquin's assistant
during the operation on private respondent Villegas. 32 But the trial court failed to
recognize that the assertions of Drs. Batiquin and Sy were denials or negative
testimonies. Well-settled is the rule that positive testimony is stronger than negative
testimony. 33 Of course, as the petitioners advocate, such positive testimony must come
from a credible source, which leads us to the second assigned error.
While the petitioners claim that contradictions and falsities punctured Dr. Kho's
testimony, a reading of the said testimony reveals no such infirmity and establishes Dr.
Kho as a credible witness. Dr. Kho was frank throughout her turn on the witness stand.
Furthermore, no motive to state any untruth was ever imputed against Dr. Kho, leaving
her trustworthiness unimpaired. 34 The trial court's following declaration shows that
while it was critical of the lack of care with which Dr. Kho handled the piece of rubber, it
was not prepared to doubt Dr. Kho's credibility, thus only supporting out appraisal of Dr.
Kho's trustworthiness:
This is not to say that she was less than honest when she testified about her
findings, but it can also be said that she did not take the most appropriate
precaution to preserve that "piece of rubber" as an eloquent evidence of what
she would reveal should there be a "legal problem" which she claim[s] to have
anticipated. 35

Considering that we have assessed Dr. Kho to be a credible witness, her positive
testimony [that a piece of rubber was indeed found in private respondent Villegas's
abdomen] prevails over the negative testimony in favor of the petitioners.

As such, the rule of res ipsa loquitur comes to fore. This Court has had occasion to delve
into the nature and operation of this doctrine:
This doctrine [res ipsa loquitur] is stated thus: "Where the thing which causes injury is
shown to be under the management of the defendant, and the accident is such as in the
ordinary course of things does not happen if those who have the management use proper
care, it affords reasonable evidence, in the absence of an explanation by the defendant,
that the accident arose from want of care." Or as Black's Law Dictionary puts it:
Res ipsa loquitur. The thing speaks for itself. Rebuttable presumption or
inference that defendant was negligent, which arises upon proof that [the]
instrumentality causing injury was in defendant's exclusive control, and that the
accident was one which ordinary does not happen in absence of negligence. Res
ipsa loquitur is [a] rule of evidence whereby negligence of [the] alleged
wrongdoer may be inferred from [the] mere fact that [the] accident happened
provided [the] character of [the] accident and circumstances attending it lead
reasonably to belief that in [the] absence of negligence it would not have
occurred and that thing which caused injury is shown to have been under [the]
management and control of [the] alleged wrongdoer . . . Under [this] doctrine . .
. the happening of an injury permits an inference of negligence where the
plaintiff produces substantial evidence that [the] injury was caused by an agency
or instrumentality under [the] exclusive control and management of defendant,
and that the occurrence [sic] was such that in the ordinary course of things
would not happen if reasonable care had been used.
xxx xxx xxx
The doctrine of [r]es ipsa loquitur as a rule of evidence is peculiar to the law of
negligence which recognizes that prima facie negligence may be established
without direct proof and furnishes a substitute for specific proof of negligence.
The doctrine is not a rule of substantive law, but merely a mode of proof or a
mere procedural convenience. The rule, when applicable to the facts and
circumstances of a particular case, is not intended to and does not dispense with
the requirement of proof of culpable negligence on the party charged. It merely
determines and regulates what shall the prima facie evidence thereof and
facilitates the burden of plaintiff of proving a breach of the duty of due care.
The doctrine can be invoked when and only when, under the circumstances
involved direct evidence is absent and not readily available. 36

In the instant case, all the requisites for recourse to the doctrine are present. First, the
entire proceedings of the caesarean section were under the exclusive control of Dr.
Batiquin. In this light, the private respondents were bereft of direct evidence as to the
actual culprit or the exact cause of the foreign object finding its way into private
respondent Villegas's body, which, needless to say, does not occur unless through the
intervention of negligence. Second, since aside from the caesarean section, private
respondent Villegas underwent no other operation which could have caused the offending
piece of rubber to appear in her uterus, it stands to reason that such could only have been

a by-product of the cesarean section performed by Dr. Batiquin. The petitioners, in this
regard, failed to overcome the presumption of negligence arising from resort to the
doctrine of res ipsa loquitur. Dr. Batiquin is therefore liable for negligently leaving
behind a piece of rubber in private respondent Villegas's abdomen and for all the adverse
effects thereof.
As a final word, this Court reiterates its recognition of the vital role the medical
profession plays in the lives of the people, 37 and State's compelling interest to enact
measures to protect the public from " the potentially deadly effects of incompetence and
ignorance in those who would undertake to treat our bodies and minds for disease or
trauma." 38 Indeed, a physician is bound to serve the interest of his patients "with the
greatest of solicitude, giving them always his best talent and skill. " 39 Through her
tortious conduct, the petitioner endangered the life of Flotilde Villegas, in violation of her
profession's rigid ethical code and in contravention of the legal standards set forth for
professionals, in the general, 40 and members of the medical profession, 41 in particular.
WHEREFORE, the challenged decision of 11 May 1994 of the Court of Appeals in CAG.R. CV No. 30851 is hereby AFFIRMED in toto.
Costs against the petitioners.
SO ORDERED.
Narvasa, C . J ., Melo, Francisco and Panganiban, JJ ., concur.
|||

(Batiquin v. Court of Appeals, G.R. No. 118231, [July 5, 1996], 327 PHIL 965-981)

SECOND DIVISION
[G.R. No. 165339. August 23, 2010.]
EQUITABLE PCI BANK, petitioner, vs. ARCELITO B. TAN,
respondent.

DECISION

PERALTA, J :
p

Before this Court is a petition for review on certiorari under Rule 45 of the Rules of
Court seeking to set aside the Decision 1 and the Resolution 2 of the Court of Appeals
(CA) in CA-G.R. CV No. 41928.
The antecedents are as follows:
Respondent Arcelito B. Tan maintained a current and savings account with Philippine
Commercial International Bank (PCIB), now petitioner Equitable PCI Bank. 3 On May
13, 1992, respondent issued PCIB Check No. 275100 postdated May 30, 1992 4 in the
amount of P34,588.72 in favor of Sulpicio Lines, Inc. As of May 14, 1992, respondent's
balance with petitioner was P35,147.59. On May 14, 1992, Sulpicio Lines, Inc. deposited
the aforesaid check to its account with Solid Bank, Carbon Branch, Cebu City. After
clearing, the amount of the check was immediately debited by petitioner from
respondent's account thereby leaving him with a balance of only P558.87.
Meanwhile, respondent issued three checks from May 9 to May 16, 1992, specifically,
PCIB Check No. 275080 dated May 9, 1992, payable to Agusan del Sur Electric
Cooperative, Inc. (ASELCO) for the amount of P6,427.68; PCIB Check No. 275097
dated May 10, 1992 payable to Agusan del Norte Electric Cooperative, Inc., (ANECO)
for the amount of P6,472.01; and PCIB Check No. 314104 dated May 16, 1992 payable
in cash for the amount of P10,000.00. When presented for payment, PCIB Check Nos.
275080, 275097 and 314014 were dishonored for being drawn against insufficient funds.
As a result of the dishonor of Check Nos. 275080 and 275097 which were payable to
ASELCO and ANECO, respectively, the electric power supply for the two mini-sawmills
owned and operated by respondent, located in Talacogon, Agusan del Sur; and in Golden

Ribbon, Butuan City, was cut off on June 1, 1992 and May 28, 1992, respectively, and it
was restored only on July 20 and August 24, 1992, respectively.
ACSaHc

Due to the foregoing, respondent filed with the Regional Trial Court (RTC) of Cebu City
a complaint against petitioner, praying for payment of losses consisting of unrealized
income in the amount of P1,864,500.00. He also prayed for payment of moral damages,
exemplary damages, attorney's fees and litigation expenses.
Respondent claimed that Check No. 275100 was a postdated check in payment of Bills of
Lading Nos. 15, 16 and 17, and that his account with petitioner would have had sufficient
funds to cover payment of the three other checks were it not for the negligence of
petitioner in immediately debiting from his account Check No. 275100, in the amount of
P34,588.72, even as the said check was postdated to May 30, 1992. As a consequence of
petitioner's error, which brought about the dishonor of the two checks paid to ASELCO
and ANECO, the electric supply to his two mini-sawmills was cut off, the business
operations thereof were stopped, and purchase orders were not duly served causing
tremendous losses to him.
In its defense, petitioner denied that the questioned check was postdated May 30, 1992
and claimed that it was a current check dated May 3, 1992. It alleged further that the
disconnection of the electric supply to respondent's sawmills was not due to the dishonor
of the checks, but for other reasons not attributable to the bank.
After trial, the RTC, in its Decision 5 dated June 21, 1993, ruled in favor of petitioner and
dismissed the complaint.
Aggrieved by the Decision, respondent filed a Notice of Appeal. 6 In its Decision dated
May 31, 2004, the Court of Appeals reversed the decision of the trial court and directed
petitioner to pay respondent the sum of P1,864,500.00 as actual damages, P50,000.00 by
way of moral damages, P50,000.00 as exemplary damages and attorney's fees in the
amount of P30,000.00. Petitioner filed a motion for reconsideration, which the CA denied
in a Resolution dated August 24, 2004.
Hence, the instant petition assigning the following errors:
I
THE FOURTH DIVISION OF THE COURT OF APPEALS DEFIED OFFICE
ORDER NO. 82-04-CG BY HOLDING ON TO THIS CASE AND DECIDING
IT INSTEAD OF UNLOADING IT AND HAVING IT RE-RAFFLED
AMONG THE DIVISIONS IN CEBU CITY.
II
THE COURT OF APPEALS ERRED IN REVERSING THE FINDING OF
THE REGIONAL TRIAL COURT THAT CHECK NO. 275100 WAS DATED
MAY 3, 1992.

III
THE COURT OF APPEALS ERRED IN NOT HOLDING THAT
RESPONDENT'S WAY OF WRITING THE DATE ON CHECK NO. 275100
WAS THE PROXIMATE CAUSE OF THE DISHONOR OF HIS THREE
OTHER CHECKS.
THIAaD

IV
THE COURT OF APPEALS ERRED IN AWARDING ACTUAL DAMAGES,
MORAL DAMAGES, EXEMPLARY DAMAGES AND ATTORNEY'S FEES.

Anent the first issue, petitioner submits that the CA defied Office Order No. 82-04-CG
dated April 5, 2004 issued by then CA Presiding Justice Cancio C. Garcia when it failed
to unload CA-G.R. CV No. 41928 so that it may be re-raffled among the Divisions in
Cebu City.
Office Order No. 82-04-CG 7 provides:
xxx xxx xxx
In view of the reorganization of the different Divisions due to the appointment
of eighteen (18) new Justices to the additional divisions in the cities of Cebu
and Cagayan de Oro, the raffle of civil, criminal and special cases submitted for
decision and falling within the jurisdiction of the additional divisions shall
commence on April 6, 2004.
The raffle of newly-filed cases and those for completion likewise falling within
the jurisdiction of the additional divisions, shall start on April 12, 2004.
xxx xxx xxx

Petitioner alleged that since the aforementioned Office Order directed the raffle of civil,
criminal and special cases submitted for decision and falling within the jurisdiction of the
additional divisions on April 6, 2004, CA-G.R. CV No. 41928 should have been
unloaded by the CA's Fourth Division and re-raffled to the CA's Division in Cebu City
instead of deciding the case on May 31, 2004.
Respondent argued that the CA's Fourth Division correctly acted in taking cognizance of
the case. The CA defended its jurisdiction by ruling that cases already submitted for
decision as of the effectivity of Republic Act (R.A.) 8246 8 on February 1, 1997 were no
longer included for re-raffle to the newly-created Visayas and Mindanao Divisions of the
CA, conformable to Section 5 of the said statute.
Petitioner's argument is misplaced. Under Section 3 of R.A. 8246, it is provided that:
Section 3.Section 10 of Batas Pambansa Blg. 129, as amended, is hereby further
amended to read as follows:

Sec. 10.Place of Holding Sessions. The Court of Appeals shall have its
permanent stations as follows: The first seventeen (17) divisions shall be
stationed in the City of Manila for cases coming from the First to the Fifth
Judicial Regions; the Eighteenth, Nineteenth, and Twentieth Divisions shall be
in Cebu City for cases coming from the Sixth, Seventh and Eighth Judicial
Regions; the Twenty-first, Twenty-second and Twenty-third Divisions shall be
in Cagayan de Oro City for cases coming from the Ninth, Tenth, Eleventh, and
Twelfth Judicial Regions. Whenever demanded by public interest, or whenever
justified by an increase in case load, the Supreme Court, upon its own initiative
or upon recommendation of the Presiding Justice of the Court of Appeals, may
authorize any division of the Court to hold sessions periodically, or for such
periods and at such places as the Supreme Court may determine, for the purpose
of hearing and deciding cases. Trials or hearings in the Court of Appeals must
be continuous and must be completed within three (3) months unless extended
by the Chief Justice of the Supreme Court.
SATDEI

Further, Section 5 of the same Act provides:

Upon the effectivity of this Act, all pending cases, except those which have
been submitted for resolution, shall be referred to the proper division of the
Court of Appeals. 9

Although CA-G.R. CV No. 41928 originated from Cebu City and is thus referable to the
CA's Divisions in Cebu City, the said case was already submitted for decision as of July
25, 1994. 10 Hence, CA-G.R. CV No. 41928, which was already submitted for decision
as of the effectivity of R.A. 8246, i.e., February 1, 1997, can no longer be referred to the
CA's Division in Cebu City. Thus, the CA's Former Fourth Division correctly ruled that
CA-G.R. CV No. 41928 pending in its division was not among those cases that had to be
re-raffled to the newly-created CA Divisions in the Visayas Region.
Further, administrative issuances must not override, supplant or modify the law, but must
remain consistent with the law they intend to carry out. 11 Thus, Office Order No. 82-04CG cannot defeat the provisions of R.A. 8246.
As to the second issue, petitioner maintains that the CA erred in reversing the finding of
the RTC that Check No. 275100 was dated May 3, 1992. Petitioner argued that in
arriving at the conclusion that Check No. 275100 was postdated May 30, 1992, the CA
just made a visual examination of the check, unlike the RTC which verified the truth of
respondent's testimony relative to the issuance of Check No. 275100. Respondent argued
that the check was carefully examined by the CA which correctly found that Check No.
275100 was postdated to May 30, 1992 and not May 3, 1992.
The principle is well established that this Court is not a trier of facts. Therefore, in an
appeal by certiorari under Rule 45 of the Rules of Court, only questions of law may be
raised. The resolution of factual issues is the function of the lower courts whose findings
on these matters are received with respect and are, as a rule, binding on this Court.

However, this rule is subject to certain exceptions. One of these is when the findings of
the appellate court are contrary to those of the trial court. 12 Due to the divergence of the
findings of the CA and the RTC, We shall re-examine the facts and evidence presented
before the lower courts.
The RTC ruled that:
xxx xxx xxx
The issue to be resolved in this case is whether or not the date of PCIB Check
No. 275100 is May 3, 1992 as contended by the defendant, or May 30, 1992 as
claimed by the plaintiff. The date of the check is written as follows 5/3/0/92.
From the manner by which the date of the check is written, the Court cannot
really make a pronouncement as to whether the true date of the check is May 3
or May 30, 1992, without inquiring into the background facts leading to the
issuance of said check.
According to the plaintiff, the check was issued to Sulpicio Lines in payment of
bill of lading nos. 15, 16 and 17. An examination of bill of lading no. 15,
however, shows that the same was issued, not in favor of plaintiff but in favor of
Coca Cola Bottlers Philippines, Inc. Bill of Lading No. 16 is issued in favor of
Suson Lumber and not to plaintiff. Likewise, Bill of Lading No. 17 shows that it
was issued to Jazz Cola and not to plaintiff. Furthermore, the receipt for the
payment of the freight for the shipments reflected in these three bills of lading
shows that the freight was paid by Coca Cola Bottlers Philippines, Inc. and not
by plaintiff.
EACIcH

Moreover, the said receipt shows that it was paid in cash and not by check.
From the foregoing, the evidence on record does not support the claim of the
plaintiff that Check No. 275100 was issued in payment of bills of lading nos.
15, 16 and 17.
Hence, the conclusion of the Court is that the date of the check was May 3,
1992 and not May 30, 1992. 13
xxx xxx xxx

In fine, the RTC concluded that the check was dated May 3, 1992 and not May 30, 1992,
because the same check was not issued to pay for Bills of Lading Nos. 15, 16 and 17, as
respondent claims. The trial court's conclusion is preposterous and illogical. The purpose
for the issuance of the check has no logical connection with the date of the check.
Besides, the trial court need not look into the purpose for which the check was issued. A
reading of Check No. 275100 14 would readily show that it was dated May 30, 1992. As
correctly observed by the CA:
On the first issue, we agree with appellant that appellee Bank apparently erred
in misappreciating the date of Check No. 275100. We have carefully examined
the check in question (Exh. DDDD) and we are convinced that it was indeed

postdated to May 30, 1992 and not May 3, 1992 as urged by appellee. The date
written on the check clearly appears as "5/30/1992" (Exh. DDDD-4). The first
bar (/) which separates the numbers "5" and "30" and the second bar (/) which
further separates the number "30" from the year 1992 appear to have been done
in heavy, well-defined and bold strokes, clearly indicating the date of the check
as "5/30/1992" which obviously means May 30, 1992. On the other hand, the
alleged bar (/) which appellee points out as allegedly separating the numbers "3"
and "0," thereby leading it to read the date as May 3, 1992, is not actually a bar
or a slant but appears to be more of an unintentional marking or line done with a
very light stroke. The presence of the figure "0" after the number "3" is quite
significant. In fact, a close examination thereof would unerringly show that the
said number zero or "0" is connected to the preceding number "3." In other
words, the drawer of the check wrote the figures "30" in one continuous stroke,
thereby contradicting appellee's theory that the number "3" is separated from the
figure "0" by a bar. Besides, appellee's theory that the date of the check is May
3, 1992 is clearly untenable considering the presence of the figure "0" after "3"
and another bar before the year 1992. And if we were to accept appellee's theory
that what we find to be an unintentional mark or line between the figures "3"
and "0" is a bar separating the two numbers, the date of the check would then
appear as "5/3/0/1992", which is simply absurd. Hence, we cannot go along
with appellee's theory which will lead us to an absurd result. It is therefore our
conclusion that the check was postdated to May 30, 1992 and appellee Bank or
its personnel erred in debiting the amount of the check from appellant's account
even before the check's due date. Undoubtedly, had not appellee bank
prematurely debited the amount of the check from appellant's account before its
due date, the two other checks (Exhs. LLLL and GGGG) successively dated
May 9, 1992 and May 16, 1992 which were paid by appellant to ASELCO and
ANECO, respectively, would not have been dishonored and the said payees
would not have disconnected their supply of electric power to appellant's
sawmills, and the latter would not have suffered losses.

The law imposes on banks high standards in view of the fiduciary nature of banking.
Section 2 of R.A. 8791 15 decrees:
Declaration of Policy. The State recognizes the vital role of banks in
providing an environment conducive to the sustained development of the
national economy and the fiduciary nature of banking that requires high
standards of integrity and performance. In furtherance thereof, the State shall
promote and maintain a stable and efficient banking and financial system that is
globally competitive, dynamic and responsive to the demands of a developing
economy.

Although R.A. 8791 took effect only in the year 2000, the Court had already imposed on
banks the same high standard of diligence required under R.A. 8791 at the time of the
untimely debiting of respondent's account by petitioner in May 1992. In Simex
International (Manila), Inc. v. Court of Appeals, 16 which was decided in 1990, the
Court held that as a business affected with public interest and because of the nature of its

functions, the bank is under obligation to treat the accounts of its depositors with
meticulous care, always having in mind the fiduciary nature of their relationship.
The diligence required of banks, therefore, is more than that of a good father of a family.
17 In every case, the depositor expects the bank to treat his account with the utmost
fidelity, whether such account consists only of a few hundred pesos or of millions. The
bank must record every single transaction accurately, down to the last centavo, and as
promptly as possible. This has to be done if the account is to reflect at any given time the
amount of money the depositor can dispose of as he sees fit, confident that the bank will
deliver it as and to whomever he directs. 18 From the foregoing, it is clear that petitioner
bank did not exercise the degree of diligence that it ought to have exercised in dealing
with its client.
TSacID

With respect to the third issue, petitioner submits that respondent's way of writing the
date on Check No. 275100 was the proximate cause of the dishonor of his three other
checks. Contrary to petitioner's view, the Court finds that its negligence is the proximate
cause of respondent's loss.
Proximate cause is that cause which, in a natural and continuous sequence, unbroken by
any efficient intervening cause, produces the injury, and without which the result would
not have occurred. 19 The proximate cause of the loss is not respondent's manner of
writing the date of the check, as it was very clear that he intended Check No. 275100 to
be dated May 30, 1992 and not May 3, 1992. The proximate cause is petitioner's own
negligence in debiting the account of the respondent prior to the date as appearing in the
check, which resulted in the subsequent dishonor of several checks issued by the
respondent and the disconnection by ASELCO and ANECO of his electric supply.
The bank on which the check is drawn, known as the drawee bank, is under strict liability
to pay to the order of the payee in accordance with the drawer's instructions as reflected
on the face and by the terms of the check. 20 Thus, payment made before the date
specified by the drawer is clearly against the drawee bank's duty to its client.
In its memorandum 21 filed before the RTC, petitioner submits that respondent caused
confusion on the true date of the check by writing the date of the check as 5/3/0/92. If,
indeed, petitioner was confused on whether the check was dated May 3 or May 30
because of the "/" which allegedly separated the number "3" from the "0," petitioner
should have required respondent drawer to countersign the said "/" in order to ascertain
the true intent of the drawer before honoring the check. As a matter of practice, bank
tellers would not receive nor honor such checks which they believe to be unclear, without
the counter-signature of its drawer. Petitioner should have exercised the highest degree of
diligence required of it by ascertaining from the respondent the accuracy of the entries
therein, in order to settle the confusion, instead of proceeding to honor and receive the
check.

Further, petitioner's branch manager, Pedro D. Tradio, in a letter 22 addressed to

ANECO, explained the circumstances surrounding the dishonor of PCIB Check No.
275097. Thus:
June 11, 1992
ANECO
Agusan del Norte
Gentlemen:
This refer (sic) to PCIB Check No. 275097 dated May 16, 1992 in the amount
of P6,472.01 payable to your goodselves issued by Mr. Arcelito B. Tan
(MANWOOD Industries) which was returned by PCIB Mandaue Branch for
insufficiency of funds.
Please be advised that the return of the aforesaid check was a result of an earlier
negotiation to PCIB-Mandaue Branch through a deposit made on May 14, 1992
with SOLIDBANK Carbon Branch, or through Central Bank clearing via
Philippine Clearing House Corporation facilities, of a postdated check which
ironically and without bad faith passed undetected through several eyes from the
payee of the check down to the depository bank and finally the drawee bank
(PCIB) the aforesaid Check No. 275097 issued to you would have been honored
because it would have been sufficiently funded at the time it was negotiated. It
should be emphasized, however, that Mr. Arcelito B. Tan was in no way
responsible for the dishonor of said PCIB Check No. 275097.
ATCEIc

We hope that the foregoing will sufficiently explain the circumstances of the
dishonor of PCIB Check No. 275097 and would clear the name and credit of
Mr. Arcelito Tan from any misimpressions which may have resulted from the
dishonor of said check.
Thank you.
xxx xxx xxx

Although petitioner failed to specify in the letter the other details of this "postdated
check," which passed undetected from the eyes of the payee down to the petitioner
drawee bank, the Court finds that petitioner was evidently referring to no other than
Check No. 275100 which was deposited to Solidbank, and was postdated May 30, 1992.
As correctly found by the CA:
In the aforequoted letter of its Manager, appellee Bank expressly acknowledged
that Check No. 275097 (Exh. GGGG) which appellant paid to ANECO "was
sufficiently funded at the time it was negotiated," but it was dishonored as a
"result of an earlier negotiation to PCIB-Mandaue Branch through a deposit
made on May 14, 1992 with SOLIDBANK . . . of a postdated check which . . .
passed undetected." He further admitted that "Mr. Arcelito B. Tan was in no
way responsible for the dishonor of said PCIB Check No. 275097." Needless to

state, since appellee's Manager has cleared appellant of any fault in the dishonor
of the ANECO check, it [necessarily] follows that responsibility therefor or
fault for the dishonor of the check should fall on appellee bank. Appellee's
attempt to extricate itself from its inadvertence must therefore fail in the face of
its Manager's explicit acknowledgment of responsibility for the inadvertent
dishonor of the ANECO check. 23

Evidently, the bank's negligence was the result of lack of due care required of its
managers and employees in handling the accounts of its clients. Petitioner was negligent
in the selection and supervision of its employees. In Citibank, N.A. v. Cabamongan, 24
the Court ruled:
. . . Banks handle daily transactions involving millions of pesos. By the very
nature of their works the degree of responsibility, care and trustworthiness
expected of their employees and officials is far greater than those of ordinary
clerks and employees. Banks are expected to exercise the highest degree of
diligence in the selection and supervision of their employees.

We now resolve the question on the award of actual, moral and exemplary damages, as
well as attorney's fees by the CA to the respondent.
The CA based the award of actual damages in the amount of P1,864,500.00 on the
purchase orders 25 submitted by respondent. The CA ruled that:
. . . In the case at bar, appellant [respondent herein] presented adequate evidence
to prove losses consisting of unrealized income that he sustained as a result of
the appellee Bank's gross negligence. Appellant identified certain Purchase
Orders from various customers which were not met by reason of the disruption
of the operation of his sawmills when ANECO and ASELCO disconnected their
supply of electricity thereto. . . .
CIAHaT

Actual or compensatory damages are those awarded in order to compensate a party for an
injury or loss he suffered. They arise out of a sense of natural justice and are aimed at
repairing the wrong done. Except as provided by law or by stipulation, a party is entitled
to an adequate compensation only for such pecuniary loss as he has duly proven. 26 To
recover actual damages, not only must the amount of loss be capable of proof; it must
also be actually proven with a reasonable degree of certainty, premised upon competent
proof or the best evidence obtainable. 27
Respondent's claim for damages was based on purchase orders from various customers
which were allegedly not met due to the disruption of the operation of his sawmills.
However, aside from the purchase orders and his testimony, respondent failed to present
competent proof on the specific amount of actual damages he suffered during the entire
period his power was cut off. No other evidence was provided by respondent to show that
the foregoing purchase orders were not met or were canceled by his various customers.

The Court cannot simply rely on speculation, conjecture or guesswork in determining the
amount of damages. 28
Moreover, an examination of the purchase orders and job orders reveal that the orders
were due for delivery prior to the period when the power supply of respondent's two
sawmills was cut off on June 1, 1992 to July 20, 1992 and May 28, 1992 to August 24,
1992, respectively. Purchase Order No. 9906 29 delivery date is May 4, 1992; Purchase
Order No. 9269 30 delivery date is March 19, 1992; Purchase Order No. 147796 31 is
due for delivery on January 31, 1992; Purchase Order No. 76000 32 delivery date is
February and March 1992; and Job Order No. 1824, 33 dated March 18, 1992, has a 15
days duration of work. Clearly, the disconnection of his electricity during the period May
28, 1992 to August 24, 1992 could not possibly affect his sawmill operations and prior
orders therefrom.
Given the dearth of respondent's evidence on the matter, the Court resolves to delete the
award of actual damages rendered by the CA in favor of respondent for his unrealized
income.
Nonetheless, in the absence of competent proof on the actual damages suffered,
respondent is entitled to temperate damages. Under Article 2224 of the Civil Code of the
Philippines, temperate or moderate damages, which are more than nominal but less than
compensatory damages, may be recovered when the court finds that some pecuniary loss
has been suffered but its amount cannot, from the nature of the case, be proved with
certainty. 34 The allowance of temperate damages when actual damages were not
adequately proven is ultimately a rule drawn from equity, the principle affording relief to
those definitely injured who are unable to prove how definite the injury. 35
It is apparent that respondent suffered pecuniary loss. The negligence of petitioner
triggered the disconnection of his electrical supply, which temporarily halted his business
operations and the consequent loss of business opportunity. However, due to the
insufficiency of evidence before Us, We cannot place its amount with certainty. Article
2216 36 of the Civil Code instructs that assessment of damages is left to the discretion of
the court according to the circumstances of each case. Under the circumstances, the sum
of P50,000.00 as temperate damages is reasonable.
Anent the award of moral damages, it is settled that moral damages are meant to
compensate the claimant for any physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation and
similar injuries unjustly caused. 37 In Philippine National Bank v. Court of Appeals, 38
the Court held that a bank is under obligation to treat the accounts of its depositors with
meticulous care whether such account consists only of a few hundred pesos or of millions
of pesos. Responsibility arising from negligence in the performance of every kind of
obligation is demandable. While petitioner's negligence in that case may not have been
attended with malice and bad faith, the banks' negligence caused respondent to suffer

mental anguish, serious anxiety, embarrassment and humiliation. In said case, We ruled
that respondent therein was entitled to recover reasonable moral damages.
CAaSED

In this case, the unexpected cutting off of respondent's electricity, which resulted in the
stoppage of his business operations, had caused him to suffer humiliation, mental anguish
and serious anxiety. The award of P50,000.00 is reasonable, considering the reputation
and social standing of respondent. As found by the CA, as an accredited supplier,
respondent had been reposed with a certain degree of trust by various reputable and wellestablished corporations.
On the award of exemplary damages, Article 2229 of the Civil Code states:
Art. 2229.Exemplary or corrective damages are imposed, by way of example or
correction for the public good, in addition to the moral, temperate, liquidated or
compensatory damages.

The law allows the grant of exemplary damages to set an example for the public good.
The banking system has become an indispensable institution in the modern world and
plays a vital role in the economic life of every civilized society. Whether as mere passive
entities for the safekeeping and saving of money or as active instruments of business and
commerce, banks have attained an ubiquitous presence among the people, who have
come to regard them with respect and even gratitude and most of all, confidence. For this
reason, banks should guard against injury attributable to negligence or bad faith on its
part. Without a doubt, it has been repeatedly emphasized that since the banking business
is impressed with public interest, of paramount importance thereto is the trust and
confidence of the public in general. Consequently, the highest degree of diligence is
expected, and high standards of integrity and performance are even required of it. 39
Petitioner, having failed in this respect, the award of exemplary damages in the amount of
P50,000.00 is in order.
As to the award of attorney's fees, Article 2208 40 of the Civil Code provides, among
others, that attorney's fees may be recovered when exemplary damages are awarded or
when the defendant's act or omission has compelled the plaintiff to litigate with third
persons or to incur expenses to protect his interest. 41 Respondent has been forced to
undergo unnecessary trouble and expense to protect his interest. The Court affirms the
appellate court's award of attorney's fees in the amount of P30,000.00.
WHEREFORE, the petition is PARTIALLY GRANTED. The Decision and
Resolution of the Court of Appeals in CA-G.R. CV No. 41928, dated May 31, 2004 and
August 24, 2004, respectively, are AFFIRMED with the following
MODIFICATIONS:
1.The award of One Million Eight Hundred Sixty-Four Thousand and Five Hundred
Pesos (P1,864,500.00) as actual damages, in favor of respondent Arcelito B. Tan, is
DELETED; and

2.Petitioner Equitable PCI Bank is instead directed to pay respondent the amount of Fifty
Thousand Pesos (P50,000.00) as temperate damages.
SO ORDERED.
Carpio, Nachura, Abad and Mendoza, JJ., concur.
|||

(Equitable PCI Bank v. Tan, G.R. No. 165339, [August 23, 2010])

FIRST DIVISION
[G.R. No. 170865. April 25, 2012.]
PHILIPPINE NATIONAL BANK, petitioner, vs. SPOUSES CHEAH
CHEE CHONG and OFELIA CAMACHO CHEAH, respondents.
[G.R. No. 170892. April 25, 2012.]
SPOUSES CHEAH CHEE CHONG and OFELIA CAMACHO
CHEAH, petitioners, vs. PHILIPPINE NATIONAL BANK,
respondent.

DECISION

DEL CASTILLO, J :
p

Law favoreth diligence, and therefore, hateth folly and negligence.

Wingate's Maxim.
In doing a friend a favor to help the latter's friend collect the proceeds of a foreign check,
a woman deposited the check in her and her husband's dollar account. The local bank
accepted the check for collection and immediately credited the proceeds thereof to said
spouses' account even before the lapse of the clearing period. And just when the money
had been withdrawn and distributed among different beneficiaries, it was discovered that
all along, to the horror of the woman whose intention to accommodate a friend's friend
backfired, she and her bank had dealt with a rubber check.
These consolidated 1 Petitions for Review on Certiorari filed by the Philippine National
Bank (PNB) 2 and by the spouses Cheah Chee Chong and Ofelia Camacho Cheah
(spouses Cheah) 3 both assail the August 22, 2005 Decision 4 and December 21, 2005
Resolution 5 of the Court of Appeals (CA) in CA-G.R. CV No. 63948 which declared
both parties equally negligent and, hence, should equally suffer the resulting loss. For its
part, PNB questions why it was declared blameworthy together with its depositors,

spouses Cheah, for the amount wrongfully paid the latter, while the spouses Cheah lead
that they be declared entirely faultless.
Factual Antecedents
On November 4, 1992, Ofelia Cheah (Ofelia) and her friend Adelina Guarin (Adelina)
were having a conversation in the latter's office when Adelina's friend, Filipina Tuazon
(Filipina), approached her to ask if she could have Filipina's check cleared and encashed
for a service fee of 2.5%. The check is Bank of America Check No. 190 6 under the
account of Alejandria Pineda and Eduardo Rosales and drawn by Atty. Eduardo Rosales
against Bank of America Alhambra Branch in California, USA, with a face amount of
$300,000.00, payable to cash. Because Adelina does not have a dollar account in which
to deposit the check, she asked Ofelia if she could accommodate Filipina's request since
she has a joint dollar savings account with her Malaysian husband Cheah Chee Chong
(Chee Chong) under Account No. 265-705612-2 with PNB Buendia Branch.
Ofelia agreed.
That same day, Ofelia and Adelina went to PNB Buendia Branch. They met with Perfecto
Mendiola of the Loans Department who referred them to PNB Division Chief Alberto
Garin (Garin). Garin discussed with them the process of clearing the subject check and
they were told that it normally takes 15 days. 7 Assured that the deposit and subsequent
clearance of the check is a normal transaction, Ofelia deposited Filipina's check. PNB
then sent it for clearing through its correspondent bank, Philadelphia National Bank. Five
days later, PNB received a credit advice 8 from Philadelphia National Bank that the
proceeds of the subject check had been temporarily credited to PNB's account as of
November 6, 1992. On November 16, 1992, Garin called up Ofelia to inform her that the
check had already been cleared. 9 The following day, PNB Buendia Branch, after
deducting the bank charges, credited $299,248.37 to the account of the spouses Cheah. 10
Acting on Adelina's instruction to withdraw the credited amount, Ofelia that day
personally withdrew $180,000.00. 11 Adelina was able to withdraw the remaining amount
the next day after having been authorized by Ofelia. 12 Filipina received all the proceeds.
IcSADC

In the meantime, the Cable Division of PNB Head Office in Escolta, Manila received on
November 16, 1992 a SWIFT 13 message from Philadelphia National Bank dated
November 13, 1992 with Transaction Reference Number (TRN) 46506218, informing
PNB of the return of the subject check for insufficient funds. 14 However, the PNB Head
Office could not ascertain to which branch/office it should forward the same for proper
action. Eventually, PNB Head Office sent Philadelphia National Bank a SWIFT message
informing the latter that SWIFT message with TRN 46506218 has been relayed to PNB's
various divisions/departments but was returned to PNB Head Office as it seemed
misrouted. PNB Head Office thus requested for Philadelphia National Bank's advice on
said SWIFT message's proper disposition. 15 After a few days, PNB Head Office
ascertained that the SWIFT message was intended for PNB Buendia Branch.

PNB Buendia Branch learned about the bounced check when it received on November
20, 1992 a debit advice, 16 followed by a letter 17 on November 24, 1992, from
Philadelphia National Bank to which the November 13, 1992 SWIFT message was
attached. Informed about the bounced check and upon demand by PNB Buendia Branch
to return the money withdrawn, Ofelia immediately contacted Filipina to get the money
back. But the latter told her that all the money had already been given to several people
who asked for the check's encashment. In their effort to recover the money, spouses
Cheah then sought the help of the National Bureau of Investigation. Said agency's AntiFraud and Action Division was later able to apprehend some of the beneficiaries of the
proceeds of the check and recover from them $20,000.00. Criminal charges were then
filed against these suspect beneficiaries. 18
Meanwhile, the spouses Cheah have been constantly meeting with the bank officials to
discuss matters regarding the incident and the recovery of the value of the check while
the cases against the alleged perpetrators remain pending. Chee Chong in the end signed
a PNB drafted 19 letter 20 which states that the spouses Cheah are offering their
condominium units as collaterals for the amount withdrawn. Under this setup, the amount
withdrawn would be treated as a loan account with deferred interest while the spouses try
to recover the money from those who defrauded them. Apparently, Chee Chong signed
the letter after the Vice President and Manager of PNB Buendia Branch, Erwin Asperilla
(Asperilla), asked the spouses Cheah to help him and the other bank officers as they were
in danger of losing their jobs because of the incident. Asperilla likewise assured the
spouses Cheah that the letter was a mere formality and that the mortgage will be
disregarded once PNB receives its claim for indemnity from Philadelphia National Bank.
Although some of the officers of PNB were amenable to the proposal, 21 the same did not
materialize. Subsequently, PNB sent a demand letter to spouses Cheah for the return of
the amount of the check, 22 froze their peso and dollar deposits in the amounts of
P275,166.80 and $893.46, 23 and filed a complaint 24 against them for Sum of Money with
Branch 50 of the Regional Trial Court (RTC) of Manila, docketed as Civil Case No. 9471022. In said complaint, PNB demanded payment of around P8,202,220.44, plus
interests 25 and attorney's fees, from the spouses Cheah.
As their main defense, the spouses Cheah claimed that the proximate cause of PNB's
injury was its own negligence of paying a US dollar denominated check without waiting
for the 15-day clearing period, in violation of its bank practice as mandated by its own
bank circular, i.e., PNB General Circular No. 52-101/88. 26 Because of this, spouses
Cheah averred that PNB is barred from claiming what it had lost. They further averred
that it is unjust for them to pay back the amount disbursed as they never really benefited
therefrom. As counterclaim, they prayed for the return of their frozen deposits, the
recoupment of P400,000.00 representing the amount they had so far spent in recovering
the value of the check, and payment of moral and exemplary damages, as well as
attorney's fees.
DTIcSH

Ruling of the Regional Trial Court

The RTC ruled in PNB's favor. The dispositive portion of its Decision 27 dated May 20,
1999 reads:
WHEREFORE, premises considered, judgment is hereby rendered in favor of
the plaintiff Philippine National Bank [and] against defendants Mr. Cheah Chee
Chong and Ms. Ofelia Camacho Cheah, ordering the latter to pay jointly and
severally the herein plaintiffs' bank the amount:
1.of US$298,950.25 or its peso equivalent based on Central Bank Exchange
Rate prevailing at the time the proceeds of the BA Check No. 190 were
withdrawn or the prevailing Central Bank Rate at the time the amount is to be
reimbursed by the defendants to plaintiff or whatever is lower. This is without
prejudice however, to the rights of the defendants (accommodating parties) to
go against the group of Adelina Guarin, Atty. Eduardo Rosales, Filipina
Tuazon, etc., (Beneficiaries-accommodated parties) who are privy to the
defendants.
No pronouncement as to costs.
No other award of damages for non[e] has been proven.
SO ORDERED. 28

The RTC held that spouses Cheah were guilty of contributory negligence. Because Ofelia
trusted a friend's friend whom she did not know and considering the amount of the check
made payable to cash, the RTC opined that Ofelia showed lack of vigilance in her
dealings. She should have exercised due care by investigating the negotiability of the
check and the identity of the drawer. While the court found that the proximate cause of
the wrongful payment of the check was PNB's negligence in not observing the 15-day
guarantee period rule, it ruled that spouses Cheah still cannot escape liability to reimburse
PNB the value of the check as an accommodation party pursuant to Section 29 of the
Negotiable Instruments Law. 29 It likewise applied the principle of solutio indebiti under
the Civil Code. With regard to the award of other forms of damages, the RTC held that
each party must suffer the consequences of their own acts and thus left both parties as
they are.
Unwilling to accept the judgment, the spouses Cheah appealed to the CA.
Ruling of the Court of Appeals
While the CA recognized the spouses Cheah as victims of a scam who nevertheless have
to suffer the consequences of Ofelia's lack of care and prudence in immediately trusting a
stranger, the appellate court did not hold PNB scot-free. It ruled in its August 22, 2005
Decision, 30 viz.:

As both parties were equally negligent, it is but right and just that both parties
should equally suffer and shoulder the loss. The scam would not have been
possible without the negligence of both parties. As earlier stated, the complaint
of PNB cannot be dismissed because the Cheah spouses were negligent and Ms.
Cheah took an active part in the deposit of the check and the withdrawal of the
subject amounts. On the other hand, the Cheah spouses cannot entirely bear the
loss because PNB allowed her to withdraw without waiting for the clearance of
the check. The remedy of the parties is to go after those who perpetrated, and
benefited from, the scam.
WHEREFORE, the May 20, 1999 Decision of the Regional Trial Court, Branch
5, Manila, in Civil Case No. 94-71022, is hereby REVERSED and SET ASIDE
and another one entered DECLARING both parties equally negligent and
should suffer and shoulder the loss.
Accordingly, PNB is hereby ordered to credit to the peso and dollar accounts of
the Cheah spouses the amount due to them.
SO ORDERED. 31

CAaEDH

In so ruling, the CA ratiocinated that PNB Buendia Branch's non-receipt of the SWIFT
message from Philadelphia National Bank within the 15-day clearing period is not an
acceptable excuse. Applying the last clear chance doctrine, the CA held that PNB had the
last clear opportunity to avoid the impending loss of the money and yet, it glaringly
exhibited its negligence in allowing the withdrawal of funds without exhausting the 15day clearing period which has always been a standard banking practice as testified to by
PNB's own officers, and as provided in its own General Circular No. 52/101/88. To the
CA, PNB cannot claim from spouses Cheah even if the latter are accommodation parties
under the law as the bank's own negligence is the proximate cause of the damage it
sustained. Nevertheless, it also found Ofelia guilty of contributory negligence. Thus, both
parties should be made equally responsible for the resulting loss.
Both parties filed their respective Motions for Reconsideration 32 but same were denied in
a Resolution 33 dated December 21, 2005.
Hence, these Petitions for Review on Certiorari.
Our Ruling
The petitions for review lack merit. Hence, we affirm the ruling of the CA.
PNB's act of releasing the proceeds of
the check prior to the lapse of the 15-day
clearing period was the proximate cause
of the loss.

"Proximate cause is 'that cause, which, in natural and continuous sequence, unbroken by
any efficient intervening cause, produces the injury and without which the result would
not have occurred.' . . . To determine the proximate cause of a controversy, the question
that needs to be asked is: If the event did not happen, would the injury have resulted? If
the answer is no, then the event is the proximate cause." 34
DTAHEC

Here, while PNB highlights Ofelia's fault in accommodating a stranger's check and
depositing it to the bank, it remains mum in its release of the proceeds thereof without
exhausting the 15-day clearing period, an act which contravened established banking
rules and practice.
It is worthy of notice that the 15-day clearing period alluded to is construed as 15 banking
days. As declared by Josephine Estella, the Administrative Service Officer who was the
bank's Remittance Examiner, what was unusual in the processing of the check was that
the "lapse of 15 banking days was not observed." 35 Even PNB's agreement with
Philadelphia National Bank 36 regarding the rules on the collection of the proceeds of US
dollar checks refers to "business/banking days." Ofelia deposited the subject check on
November 4, 1992. Hence, the 15th banking day from the date of said deposit should fall
on November 25, 1992. However, what happened was that PNB Buendia Branch, upon
calling up Ofelia that the check had been cleared, allowed the proceeds thereof to be
withdrawn on November 17 and 18, 1992, a week before the lapse of the standard 15-day
clearing period.
This Court already held that the payment of the amounts of checks without previously
clearing them with the drawee bank especially so where the drawee bank is a foreign
bank and the amounts involved were large is contrary to normal or ordinary banking
practice. 37 Also, in Associated Bank v. Tan, 38 wherein the bank allowed the withdrawal
of the value of a check prior to its clearing, we said that "[b]efore the check shall have
been cleared for deposit, the collecting bank can only 'assume' at its own risk . . . that the
check would be cleared and paid out." The delay in the receipt by PNB Buendia Branch
of the November 13, 1992 SWIFT message notifying it of the dishonor of the subject
check is of no moment, because had PNB Buendia Branch waited for the expiration of
the clearing period and had never released during that time the proceeds of the check, it
would have already been duly notified of its dishonor. Clearly, PNB's disregard of its
preventive and protective measure against the possibility of being victimized by bad
checks had brought upon itself the injury of losing a significant amount of money.
It bears stressing that "the diligence required of banks is more than that of a Roman paler
familias or a good father of a family. The highest degree of diligence is expected." 39
PNB miserably failed to do its duty of exercising extraordinary diligence and reasonable
business prudence. The disregard of its own banking policy amounts to gross negligence,
which the law defines as "negligence characterized by the want of even slight care, acting
or omitting to act in a situation where there is duty to act, not inadvertently but wilfully
and intentionally with a conscious indifference to consequences in so far as other persons

may be affected." 40 With regard to collection or encashment of checks, suffice it to say

that the law imposes on the collecting bank the duty to scrutinize diligently the checks
deposited with it for the purpose of determining their genuineness and regularity. "The
collecting bank, being primarily engaged in banking, holds itself out to the public as the
expert on this field, and the law thus holds it to a high standard of conduct." 41 A bank is
expected to be an expert in banking procedures and it has the necessary means to
ascertain whether a check, local or foreign, is sufficiently funded.
Incidentally, PNB obliges the spouses Cheah to return the withdrawn money under the
principle of solutio indebiti, which is laid down in Article 2154 of the Civil Code: 42
Art. 2154.If something is received when there is no right to demand it, and it
was unduly delivered through mistake, the obligation to return it arises.

"[T]he indispensable requisites of the juridical relation known as solutio indebiti, are, (a)
that he who paid was not under obligation to do so; and (b) that the payment was made by
reason of an essential mistake of fact. 43
In the case at bench, PNB cannot recover the proceeds of the check under the principle it
invokes. In the first place, the gross negligence of PNB, as earlier discussed, can never be
equated with a mere mistake of fact, which must be something excusable and which
requires the exercise of prudence. No recovery is due if the mistake done is one of gross
negligence.
DICcTa

The spouses Cheah are guilty of

contributory negligence and are bound
to share the loss with the bank
"Contributory negligence is conduct on the part of the injured party, contributing as a
legal cause to the harm he has suffered, which falls below the standard to which he is
required to conform for his own protection." 44
The CA found Ofelia's credulousness blameworthy. We agree. Indeed, Ofelia failed to
observe caution in giving her full trust in accommodating a complete stranger and this led
her and her husband to be swindled. Considering that Filipina was not personally known
to her and the amount of the foreign check to be encashed was $300,000.00, a higher
degree of care is expected of Ofelia which she, however, failed to exercise under the
circumstances. Another circumstance which should have goaded Ofelia to be more
circumspect in her dealings was when a bank officer called her up to inform that the Bank
of America check has already been cleared way earlier than the 15-day clearing period.
The fact that the check was cleared after only eight banking days from the time it was
deposited or contrary to what Garin told her that clearing takes 15 days should have
already put Ofelia on guard. She should have first verified the regularity of such hasty
clearance considering that if something goes wrong with the transaction, it is she and her
husband who would be put at risk and not the accommodated party. However, Ofelia

chose to ignore the same and instead actively participated in immediately withdrawing
the proceeds of the check. Thus, we are one with the CA in ruling that Ofelia's prior
consultation with PNB officers is not enough to totally absolve her of any liability. In the
first place, she should have shunned any participation in that palpably shady transaction.
In any case, the complaint against the spouses Cheah could not be dismissed. As PNB's
client, Ofelia was the one who dealt with PNB and negotiated the check such that its
value was credited in her and her husband's account. Being the ones in privity with PNB,
the spouses Cheah are therefore the persons who should return to PNB the money
released to them.
All told, the Court concurs with the findings of the CA that PNB and the spouses Cheah
are equally negligent and should therefore equally suffer the loss. The two must both bear
the consequences of their mistakes.
WHEREFORE, premises considered, the Petitions for Review on Certiorari in G.R. No.
170865 and in G.R. No. 170892 are both DENIED. The assailed August 22, 2005
Decision and December 21, 2005 Resolution of the Court of Appeals in CA-G.R. CV No.
63948 are hereby AFFIRMED in toto.
SO ORDERED.
Corona, C.J., Leonardo-de Castro, Bersamin and Villarama, Jr., JJ., concur.

(Philippine National Bank v. Spouses Cheah, G.R. No. 170865, 170892, [April 25,
2012])
|||

EN BANC
[G.R. No. L-21486. May 14, 1966.]
LA MALLORCA and PAMPANGA BUS COMPANY, petitioners, vs.
VALENTIN DE JESUS, MANOLO TOLENTINO and COURT OF
APPEALS, respondents.
Manuel O. Chan for petitioners.
Sixto T. Antonio for respondents.
SYLLABUS
1. DAMAGES, ACCIDENT CAUSED BY MECHANICAL DEFECT; LIABILITY OF
OWNER OF VEHICLE. Where the cause of the blowout which caused the accident
was known in that the inner tube of the left front tire was pressed between the inner circle
of the left wheel and the rim which had slipped out of the wheel, a mechanical defect of
the conveyance or a fault in equipment which was easily discoverable if the bus had been
subjected to a more thorough or rigid check-up before it took to the road, the owner of the
vehicle is liable accident.
2. MORAL DAMAGES; COMMON CARRIER; BREACH OF CONTRACT. In this
jurisdiction moral damages are recoverable by reason of the death of a passenger caused
by the breach of contract of a common carrier, as provided in Article 1764, in relation to
Article 2206, of the Civil Code.

DECISION

MAKALINTAL, J :
p

La Mallorca and Pampanga Bus Company, Inc., commonly known as La MallorcaPambusco, filed this appeal by certiorari from the decision of the Court of Appeals which
affirmed that rendered by the Court of First Instance of Bulacan in its civil case No. 2100,
entitled Valentin de Jesus and Manolo Tolentino vs. La Mallorca Pambusco." The court a

quo sentenced the defendant now petitioner, "to pay to plaintiffs the amount of P2,132.50
for actual damages; P14,400.00 as compensatory damages; P10,000.00 to each plaintiff
by way of moral damages; and P3,000.00 as counsel fees."
Two errors are attributed to the appellate Court: (1) "in sustaining the decision (of the
court a quo) holding that the petitioners were liable for the accident which was caused by
a blow-out of one of the tires of the bus and in not considering the same as," and (2) in
holding petitioners liable for moral damages.
The suit arose by reason of the death of Lolita de Jesus, 20-year old daughter of Valentin
de Jesus and wife of Manolo Tolentino, in a head-on collision between petitioner's bus,
on which she was a passenger, and a freight truck travelling in the opposite direction, in a
barrio in Marilao, Bulacan, in the morning of October 8, 1959. The immediate cause of
the collision was the fact that the driver of the bus lost control of the wheel when its left
front tire suddenly exploded.
Petitioner maintains that a tire blowout is a fortuitous event and gives rise to no liability
for negligence, citing the rulings of the Court of Appeals in Rodriguez vs. Red Line
Transportation Co., CA-G.R. No. 8136; December 29, 1954, and vs. Palapad, CA-G.R.
No. 18480, June 27, 1953. These rulings, however, not only are not binding on this Court
but were based on considerations quite different from those that obtain in the case at bar.
The appellate Court there made no findings of any specific acts of negligence on the part
of the defendants and confined itself to the question of whether or not a tire blowout, by
itself alone and without a showing as to the causative factors, would generate liability. In
the present case, the cause of the blowout was known. The inner tube of the left front tire,
according to petitioner's own evidence and as found by the Court of Appeals, "was
pressed between the inner circle of the left wheel and the rim which had slipped out of
the wheel." This was, said Court correctly held, a mechanical direct of the conveyance or
a fault in its equipment which was easily discoverable if the bus had been subjected to a
more thorough or rigid check-up before it took to the road that morning.
Then again both trial court and the Court of Appeals found as a fact that the bus was
running quite fast immediately before the accident. Considering that the tire which
exploded was not new petitioner describes it as "hindi masyadong kalbo," or not so
very worn out the plea of caso fortuito cannot be entertained.
The second issue raised by petitioner is already a settled one. In this jurisdiction moral
damages are recoverable by reason of the death of a passenger cause by the breach of
contract of a common carrier, as provided in Article 1764, in relation to Article 2206, of
the Civil Code. These articles have been applied by this Court in a number of cases,
among them Necessito, etc. vs. Paras, et al., 104 Phil. 75; Mercado vs. Lira, 113 Phil.
112; Villa-Rey Transit vs. Bello, 117 Phil. 745.
Wherefore, the judgment appealed from is affirmed, with costs against petitioner.

Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera, Dizon, Regala,
Bengzon, J.P., Zaldivar and Sanchez, JJ., concur.
(La Mallorca and Pampanga Bus Co. v. De Jesus, G.R. No. L-21486, [May 14, 1966],
123 PHIL 875-878)
|||

EN BANC
[G.R. No. L-10605. June 30, 1958.]
PRECILLANO
NECESITO,
ETC.,
plaintiff-appellant,
NATIVIDAD PARAS, ET AL., defendants-appellees.

vs.

[G.R. No. L-10606. June 30, 1958.]

GERMAN NECESITO, ET AL., plaintiffs-appellants, vs. NATIVIDAD
PARAS, ET AL., defendants-appellees.
Tomas Besa and Federico Agrava for appellants.
Jose W. Diokno for appellees.
SYLLABUS
1.CARRIERS; LIABILITY FOR DAMAGES CAUSED BY MECHANICAL
DEFECTS. While the carrier is not an insurer of the safety of the passengers, it
should nevertheless be held to answer for the laws its equipment if such flaws were at
all discoverable. In this connection, the manufacturer of the defective appliance is
considered in law the agent of the carrier, and the good repute of the manufacturer
will not relieve the carrier from liability. The rationale of the carrier's liability is the
fact that the passenger has no privity with the manufacturer of the defective
equipment; hence, he has no remedy against him, while the carrier usually has.
2.DAMAGES; MORAL DAMAGES FOR BREACH OF CONTRACT,
WHEN RECOVERABLE. Under Article 2220 of the new Civil Code, in case to
suits for breach of contract, moral damages are recoverable only where the defendant
acted fraudulently or in bad faith, and there is none in the case at bar. (But see
Resolution on the Motion to Reconsider.)
3.CARRIERS; MECHANICAL DEFECTS. A carrier is liable to its
passengers for damages caused by mechanical defects of the conveyance.
4.ID.; ID.; WHERE INJURY IS PATENT, INDEMNITY CANNOT BE
DENIED. Where the injury is patent and not denied, the court is empowered to
calculate moderate damages, although there is no definite proof of the pecuniary loss
suffered by the injured party.

5.ID.; ID.; RIGHT OF HEIRS OF DECEASED PASSENGER TO RECOVER

MORAL DAMAGES. In case of accident due to a carrier's negligence, the heirs of
a deceased passenger may recover moral damages, even though a passenger who is
injured, but manages to survive, is not entitled to them. This special rule (Arts. 1264
and 2206, No. 3) in case of death controls the general rule of Article 2220.
6.ATTORNEY'S FEES; LITIGANT CANNOT BE DEPRIVED OF FEE IF
HE IS ENTITLED TO RECOVERY. A litigant who improvidently stipulates
higher counsel fees than those to which he is entitled, does not for that reason earn the
right to a larger indemnity; but, by parity of reasoning, he should not be deprived of
counsel fees if by law he is entitled to recover them.

DECISION

REYES, J.B.L., J :
p

These cases involve actions ex contractu against the owners and operators of
the common carrier known as Philippine Rabbit Bus Lines, filed by one passenger,
and the heirs of another, who were injured as a result of the fall into a river of the
vehicle in which they were riding.
In the morning of January 28, 1954, Severina Garces and her one- year old son,
Precillano Necesito, carrying vegetables, boarded passenger auto truck or bus No. 199
of the Philippine Rabbit Bus Lines at Agno, Pangasinan. The passenger truck, driven
by Francisco Bandonell, then proceeded on its regular run from Agno to Manila. After
passing Mangatarem, Pangasinan, truck No. 199 entered a wooden bridge, but the
front wheels swerved to the right; the driver lost control, and after wrecking the
bridge's wooden rails, the truck fell on its right side into a creek where water was
breast deep. The mother, Severina Garces, was drowned; the son, Precillano Necesito,
was injured, suffering abrasions and fracture of the left femur. He was brought to the
Provincial Hospital at Dagupan, where the fracture was set but with fragments one
centimeter out of line. The money, wrist watch and cargo of vegetables were lost.
Two actions for damages and attorney's fees totalling over P85,000 having
been filed in the Court of First Instance of Tarlac (Cases Nos. 908 and 909) against
the carrier, the latter pleaded that the accident was due to "engine or mechanical
trouble" independent or beyond the control of the defendants or of the driver
Bandonell.
After joint trial, the Court of First Instance found that the bus was proceeding
slowly due to the bad condition of the road; that the accident was caused by the

fracture of the right steering knuckle, which was defective in that its center or core
was not compact but "bubbled and cellulous", a condition that could not be known or
ascertained by the carrier despite the fact that regular thirty-day inspections were
made of the steering knuckle, since the steel exterior was smooth and shiny to the
depth of 3/16 of an inch all around; that the knuckles are designed and manufactured
for heavy duty and may last up to ten years; that the knuckle of bus No. 199 that
broke on January 28, 1954, was last inspected on January 5, 1954, and was due to be
inspected again on February 5th. Hence, the trial court, holding that the accident was
exclusively due to fortuitous event, dismissed both actions. Plaintiffs appealed
directly to this Court in view of the amount in controversy.
We are inclined to agree with the trial court that it is not likely that bus No. 199
of the Philippine Rabbit Lines was driven over the deeply rutted road leading to the
bridge at a speed of 50 miles per hour, as testified for the plaintiffs. Such conduct on
the part of the driver would have provoked instant and vehement protest on the part of
the passengers because of the attendant discomfort, and there is no trace of any such
complaint in the records. We are thus forced to assume that the proximate cause of the
accident was the reduced strength of the steering knuckle of the vehicle caused by
defects in casting it. While appellants hint that the broken knuckle exhibited in court
was not the real fitting attached to the truck at the time of the accident, the records
show that they registered no objection on that ground at the trial below.
The issue is thus reduced to the question whether or not the carrier is liable for
the manufacturing defect of the steering knuckle, and whether the evidence discloses
that in regard thereto the carrier exercised the diligence required by law (Art. 1755,
new Civil Code).
"ART. 1755.A common carrier is bound to carry the passengers safely
as far as human care and foresight can provide, using the utmost diligence of
very cautious persons, with a due regard for all the circumstances."

It is clear that the carrier is not an insurer of the passengers' safety. His liability
rests upon negligence, his failure to exercise the "utmost" degree of diligence that the
law requires, and by Art. 1756, in case of a passenger's death or injury the carrier
bears the burden of satisfying the court that he has duly discharged the duty of
prudence required. In the American law, where the carrier is held to the same degree
of diligence as under the new Civil Code, the rule on the liability of carriers for
defects of equipment is thus expressed: "The preponderance of authority is in favor of
the doctrine that a passenger is entitled to recover damages from a carrier for an injury
resulting from a defect in an appliance purchased from a manufacturer, whenever it
appears that the defect would have been discovered by the carrier if it had exercised
the degree of care which under the circumstances was incumbent upon it, with regard
to inspection and application of the necessary tests. For the purposes of this doctrine,
the manufacturer is considered as being in law the agent or servant of the carrier, as

far as regards the work of constructing the appliance. According to this theory, the
good repute of the manufacturer will not relieve the carrier from liability" (10 Am.
Jur. 205, s, 1324; see a]so Pennsylvania R. Co. vs. Roy, 102 U. S. 451; 20 L. Ed. 141;
Southern R. Co. vs. Hussey, 74 ALR 1172; 42 Fed. 2d 70; and Ed Note, 29 ALR 788;
Ann Cas. 1916E 929).
The rationale of the carrier's liability is the fact that the passenger has neither
choice nor control over the carrier in the selection and use of the equipment and
appliances in use by the carrier. Having, no privity whatever with the manufacturer or
vendor of the defective equipment, the passenger has no remedy against him, while
the carrier usually has. It is but logical, therefore, that the carrier, while not an insurer
of the safety of his passengers, should nevertheless be held to answer for the flaws of
his equipment if such flaws were at all discoverable. Thus Hannen, J., in Francis vs.
Cockrell, LR 5 Q. P. 184, said:
"In the ordinary course of things, the passenger does not know whether the
carrier has himself manufactured the means of carriage, or contracted with
someone else for its manufacture. If the carrier has contracted with someone
else the passenger does not usually know who that person is, and in no case has
he any share in the selection. The liability of the manufacturer must depend on
the terms of the contract between him and the carrier, of which the passenger
has no knowledge, and over which he can have no control, while the carrier can
introduce what stipulations and take what securities he may think proper. For
injury resulting to the carrier himself by the manufacturer's want of care, the
carrier has a remedy against the manufacturer; but the passenger has no remedy
against the manufacturer for damage arising from a mere breach of contract
with the carrier . . . Unless, therefore, the presumed intention of the parties be
that the passenger should, in the event of his being injured by the breach of the
manufacturer's contract, of which he has no knowledge, be without remedy, the
only way in which effect can be given to a different intention is by supposing
that the carrier is to be responsible to the passenger, and to look for his
indemnity to the person whom he selected and whose breach of contract has
caused the mischief." (29 ALR 789)

And in the leading case of Morgan vs. Chesapeake & O. R. Co. 15 LRA (NS)
790, 16 Ann. Cas. 608, the Court, in holding the carrier responsible for damages
caused by the fracture of a car axle, due to a "sand hole" in the course of moulding the
axle, made the following observations.

"The carrier, in consideration of certain well-known and highly valuable

rights granted to it by the public, undertakes certain duties toward the public,
among them being to provide itself with suitable and safe cars and vehicles in
which to carry the traveling public. There is no such duty on the manufacturer
of the cars. There is no reciprocal legal relation between him and the public in

this respect. When the carrier elects to have another build its cars, it ought not to
be absolved by that fact from its duty to the public to furnish safe care. The
carrier cannot lessen its responsibility by shifting its undertaking to another's
shoulders. Its duty to furnish safe care is side by side with its duty to furnish
safe track, and to operate them in a safe manner. None of its duties in these
respects can be sublet so as to relieve it from the full measure primarily exacted
of it by law. The carrier selecta the manufacturer of its cars, if it does not itself
construct them, precisely as it does those who grade its road, and lay its tracks,
and operate its trains. That it does not exercise control over the former is
because it elects to place that matter in the hands of the manufacturer, instead of
retaining the supervising control itself. The manufacturer should be deemed the
agent of the carrier as respects its duty to select the material out of which its
cars and locomotive are built, as well as in inspecting each step of their
construction. If there be tests known to the crafts of ear builders, or iron
moulders, by which such defects might be discovered before the part was
incorporated into the car, then the failure of the manufacturer to make the test
will be deemed a failure by the carrier to make it. This is not a vicarious
responsibility. It extends, as the necessity of this business demands, the rule of
respondent superior to a situation which falls clearly within its scope and spirit.
Where an injury is inflicted upon a passenger by the breaking or wrecking of a
part of the train on which he is riding, it is presumably the result of negligence
at some point by the carrier. As stated by Judge Story, in Story on Bailments,
sec. 601a: 'When the injury or damage happens to the passenger by the breaking
down or overturning of the coach, or by any other accident occurring on the
ground, the presumption prima facie is that it occurred by the negligence of the
coachmen, and onus probandi is on the proprietors of the coach to establish that
there has been no negligence whatever, and that the damage or injury has been
occasioned by inevitable casualty, or by some cause which human care and
foresight could not prevent; for the law will, in tenderness to human life and
limb, hold the proprietors liable for the slightest negligence, and will compel
them to repel by satisfactory proofs every imputation thereof.' When the
passenger has proved his injury as the result of a breakage in the car or the
wrecking of the train on which he was being carried, whether the defect was in
the particular car in which he was riding or not, the burden is then cast upon the
carrier to show that it was due to a cause or causes which the exercise of the
utmost human skill and foresight could not prevent. And the carrier in this
connection must show, if the accident was due to a latent defect in the material
or construction of the car, that not only could it not have discovered the defect
by the exercise of such care, but that the builders could not by the exercise of
the same care have discovered the defect or foreseen the result. This rule applies
the same whether the defective car belonged to the carrier or not."

In the case now before us, the record is to the effect that the only test applied to
the steering knuckle in question was a purely visual inspection every thirty days, to
see if any cracks developed. It nowhere appears that either the manufacturer or the
carrier at any time tested the steering knuckle to ascertain whether its strength was up

to standard, or that it had no hidden flaws that would impair that strength. And yet the
carrier must have been aware of the critical importance of the knuckle's resistance;
that its failure or breakage would result in loss of balance and steering control of the
bus, with disastrous effects upon the passengers. No argument is required to establish
that a visual inspection could not directly determine whether the resistance of this
critically important part was not impaired. Nor has it been shown that the weakening
of the knuckle was impossible to detect by any known test; on the contrary, there is
testimony that it could be detected. We are satisfied that the periodical visual
inspection of the steering knuckle as practiced by the carrier's agents did not measure
up to the required legal standard of "utmost diligence of very cautious persons" "as
far as human care and foresight can provide", and therefore that the knuckle's failure
can not be considered a fortuitous event that exempts the carrier from responsibility
(Lasam vs. Smith, 45 Phil, 607; Son vs. Cebu Autobus Co., 94 Phil., 892.
It may be impracticable, as appellee argues, to require of carriers to test the
strength of each and every part of its vehicles before each trip; but we are of the
opinion that a due regard for the carrier's obligations toward the traveling public
demands adequate periodical tests to determine the condition and strength of those
vehicle portions the failure of which may endanger the safety of the passengers.
As to the damages suffered by the plaintiffs, we agree with appellee that no
allowance may be made for moral damages, since under Article 2220 of the new Civil
Code, in case of suits for breach of contract, moral damages are recoverable only
where the defendant acted fraudulently or in bad faith, and there is none in the case
before us. As to exemp]ary damages, the carrier has not acted in a "wanton,
fraudulent, reckless, oppressive or malevolent manner" to warrant their award. Hence,
we believe that for the minor Precillano Necesito (G. R No. L-10605), an indemnity
of P5,000 would be adequate for the abrasions and fracture of the femur, including
medical and hospitalization expenses, there being no evidence that there would be any
permanent impairment of his faculties or bodily functions, beyond the lack of
anatomical symmetry. As for the death of Severina Garces (G. R. No. L-10606) who
was 33 years old, with seven minor children when she died, her heirs are obviously
entitled to indemnity not only for the incidental loses of property (cash, wrist watch
and merchandise) worth P394 that she carried at the time of the accident and for the
burial expenses of P490, but also for the loss of her earnings (shown to average P120
a month) and for the deprivation of her protection, guidance and company. In our
judgment, an award of P15,000 would be adequate (cf Alcantara vs. Surro, 49 Off.
Gaz. 2769; 93 Phil., 472).
The low income of the plaintiffs-appellants makes an award for attorney's fees
just and equitable (Civil Code, Art. 2208, par. 11). Considering that the two cases
filed were tried jointly, a fee of P3,500 would be reasonable.

In view of the foregoing, the decision appealed from is reversed, and the
defendants-appellees are sentenced to indemnify the plaintiffs-appellants in the
following amounts: P5,000 to Precillano Necesito, and P15,000 to the heirs of the
deceased Severina Garces, plus P3,500 by way of attorney's fees and litigation
expenses. Costs against defendants-appellees. So ordered.
Paras, C.J., Bengzon, Reyes, A., Bautista Angelo, Concepcion and Endencia,
JJ., concur.
Felix, J., concurs in the result.
RESOLUTION
September 11, 1958
REYES, J.B.L., J.:
Defendants-appellees have submitted a motion asking this Court to reconsider
its decision of June 30, 1958, and that the same be modified with respect to (1) its
holding the carrier liable for the breakage of the steering knuckle that caused the
autobus No. 199 to overturn, whereby the passengers riding in it were injured; (2) the
damages awarded, that appellees argue to be excessive; and (3) the award of attorneys'
fees.
(1)The rule prevailing in this jurisdiction as established in previous decisions
of this Court, cited in our main opinion, is that a carrier is liable to its passengers for
damages caused by mechanical defects of the conveyance. As early as 1924, in Lasam
vs. Smith, 45 Phil. 659 this Court ruled:
"As far as the record shows, the accident was caused either by defects in the
automobile or else through the negligence of its driver. That is not caso
fortuito."

And in Son vs. Cebu Autobus Company, 94 Phil., 892, this Court held a
common carrier liable in damages to a passenger for injuries caused by an accident
due to the breakage of a faulty drag-link spring.
It can be seen that while the courts of the United States are at variance on the
question of a carrier's liability for latent mechanical defects, the rule in this
jurisdiction has been consistent in holding the carrier responsible. This Court has
quoted from American and English decisions, not because it felt bound to follow the
same, but merely in approval of the rationale of the rule as expressed therein, since
the previous Philippine cases did not enlarge on the ideas underlying the doctrine
established thereby.

The new evidence sought to be introduced do not warrant the grant of a new
trial, since the proposed proof was available when the original trial was held. Said
evidence is not newly discovered.
(2)With regard to the indemnity awarded to the child Precilliano Necesito, the
injuries suffered by him are incapable of accurate pecuniary estimation, particularly
because the full effect of the injury is not ascertainable immediately. This uncertainty,
however, does not preclude the right to an indemnity, since the injury is patent and
not denied (Civil Code, Art. 2224). The reasons behind this award are expounded by
the Code Commission in its report:
"There are cases where from the nature of the case, definite proof of
pecuniary loss cannot be offered, although the court is convinced that there has
been such loss. For instance, injury to one's commercial credit or to the
goodwill of a business firm is often hard to show with certainty in terms of
money. Should damages be denied for that reason? The judge should be
empowered to calculate moderate damages in such cases, rather than that the
plaintiff should suffer, without redress, from the defendant's wrongful act."
(Report of the Code Commission, p. 75)

In awarding to the heirs of the deceased Severina Garces an indemnity for the
loss of her "guidance, protection and company," although it is but moral damage, the
Court took into account that the case of a passenger who dies in the course of an
accident, due to the carrier's negligence constitutes an exception to the general rule.
While, as pointed out in the main decision, under Article 2220 of the new Civil Code
there can be no recovery of moral damages for a breach of contract in the absence of
fraud malice) or bad faith, the case of a violation of the contract of carriage leading to
a passenger's death escapes this general rule, in view of Article 1764 in connection
with Article 2206, No. 3 of the new Civil Code.
"ART. 1764.Damages in cases comprised in this Section shall be
awarded in accordance with Title XVIII of this Book, concerning Damages.
Article 2206 shall also apply to the death of a passenger caused by the breach of
contract by a common carrier."
"ART. 2206.. . .
(3)The spouse, legitimate and illegitimate descendants and ascendants of
the deceased may demand moral damages for mental anguish by reason of the
death of the deceased."

Being a special rule limited to cases of fatal injuries, these articles prevail over
the general rule of Art. 2220. Special provisions control general ones (Lichauco & Co.
vs. Apstol, 44 Phil. 138; Sancio vs. Lizarraga, 55 Phil. 601).

It thus appears that under the new Civil Code, in case of accident due to a
carrier's negligence, the heirs of a deceased passenger may recover moral damages,
even though a passenger who is injured, but manages to survive, is not entitled to
them. There is, therefore, no conflict between our main decision in the instant case
and that of Cachero vs. Manila Yellow Taxi Cab Co., 101 Phil., 523, where the
passenger suffered injuries, but did not lose his life.
(3)In the Cachero case this Court disallowed attorneys' fees to the injured
plaintiff because the litigation arose out of his exaggerated and unreasonable demands
for an indemnity that was out of proportion with the compensatory damages to which
he was solely entitled. Put in the present case, plaintiffs' original claims can not be
deemed a priori wholly unreasonable, since they had a right to indemnity for moral
damages besides compensatory ones, and moral damages are not determined by set
and invariable bounds.
Neither does the fact that the contract between the passengers and their counsel
was on a contingent basis affect the former's right to counsel fees. As pointed out for
appellants, the Court's award is an indemnity to the party and not to counsel. A
litigant who improvidently stipulates higher counsel fees than those to which he is
lawfully entitled, does not for that reason earn the right to a larger indemnity; but, by
parity of reasoning, he should not be deprived of counsel fees if by law he is entitled
to recover them.
We find no reason to alter the main decision heretofore rendered. Ultimately,
the position taken by this Court is that a common carrier's contract is not to be
regarded as a game of chance wherein the passenger stakes his limb and life against
the carrier's property and profits.
Wherefore, the motion for reconsideration is hereby denied. So ordered.
Paras, C.J., Bengzon, Padilla, Montemayor, Reyes, A., Bautista Angelo,
Concepcion, Endencia and Felix, JJ., concur.
|||

(Necesito v. Paras, G.R. No. L-10605, L-10606, [June 30, 1958])

EN BANC
[G.R. No. L-21438. September 28, 1966.]
AIR FRANCE, petitioner, vs. RAFAEL CARRASCOSO and THE
HONORABLE COURT OF APPEALS, respondents.
Lichauco, Picazo & Agcaoili for petitioner.
Bengzon, Villegas & Zarraga for respondent R. Carrascoso.
SYLLABUS
1. JUDGMENT; FINDINGS OF FACT; REQUIREMENT OF LAW. Courts of
justice are not burdened with the obligation to specify in the sentence every bit and piece
of evidence presented by the parties upon the issues raised. The law solely insists that a
decision state the "essential ultimate facts" upon which the court's conclusion is drawn.
2. ID.; ID.; ID.; APPEAL AND ERROR; FAILURE TO MAKE FINDINGS ON
EVIDENCE AND CONTENTIONS OF ONE PARTY, EFFECT OF; DECISION NOT
TO BE CLOGGED WITH DETAILS. The mere failure to make specific findings of
fact on the evidence presented for the defense or to specify in the decision the contentions
of the appellant and the reasons for refusing to believe them is not sufficient to hold the
same contrary to the requirement of the law and the Constitution. There is no law that so
requires. A decision is not to be clogged with details such that prolixity, if not confusion,
may result.
3. ID.; ID.; ID.; FINDINGS OF FACT BY COURTS DEFINED. Findings of fact may
be defined as the written statement of the ultimate facts as found by the court and
essential to support the decision and judgment rendered thereon; they consist of the
court's "conclusions with respect to the determinative facts on issue."
4. ID.; ID.; ID.; QUESTION OF LAW EXPLAINED. A question of law is "one
which does not call for an examination of the probative value of the evidence presented
by the parties."
5. PLEADING AND PRACTICE; APPEAL; WHAT MAY BE RAISED ON APPEAL
FROM COURT OF APPEALS. It is not appropriately the business of the Supreme
Court to alter the facts or to review the questions of fact because, by statute, only

questions of law may be raised in an appeal by certiorari from a judgment of the Court of
Appeals, which judgment is conclusive as to the facts.
6. ID.; ID.; EFFECT OF AFFIRMANCE BY COURT OF APPEALS OF TRIAL
COURT'S DECISION. When the Court of Appeals affirms a judgment of the trial
court, and the findings of fact of said appellate court are not in any way at war with those
of the trial court, nor is said affirmance upon a ground or grounds different from those
which were made the basis of the trial court's conclusions, such judgment of affirmance is
(1) a determination by the Court of Appeals that the proceeding in the lower court was
free from prejudicial error; (7) that all questions raised by the assignments of error and all
questions that might have been so raised have been finally adjudicated as free from all
error.
7. ID.; COMPLAINT; SPECIFIC MENTION OF THE TERM "BAD FAITH" IN THE
COMPLAINT NOT REQUIRED. Although there is no specific mention of the term
bad faith in the complaint, the inference of bad faith may be drawn from the facts and
circumstances set forth therein. 8. EVIDENCE; FINDING OF COURT OF APPEALS
THAT RESPONDENT WAS ENTITLED TO A FIRST CLASS SEAT. The Court of
Appeals properly found that a first class-ticket holder is entitled to first class seat, given
the fact that seat availability in specific flights is therein confirmed; otherwise, an air
passenger will be placed in the hollow of the hands of an airline, because it will always
be easy for an airline to strike out the very stipulations in the ticket and say that there was
verbal agreement to the contrary. If only to achieve stability in the relations between
passenger and air carrier, adherence to the ticket so issued is desirable.
9. ID.; LACK OF SPECIFIC AVERMENT OF BAD FAITH CURED BY NOTICE TO
DEFENDANT OF WHAT PLAINTIFF INTENDS TO PROVE AND BY EVIDENCE
PRESENTED WITHOUT OBJECTION; AMENDMENT OF COMPLAINT TO
CONFORM TO EVIDENCE UNNECESSARY. If there was lack of specific
averment of bad faith in the complaint, such deficiency was cured by notice, right at the
start of the trial, by plaintiff's counsel to defendant as to what plaintiff intended to prove:
while in the plane in Bangkok, plaintiff was ousted by defendant's manager who gave his
seat to a white man; and by evidence of bad faith in the fulfillment of the contract
presented without objection on the part of the defendant. An amendment of the complaint
to conform to the evidence is not even required.
10. ID.; ADMISSIBILITY OF TESTIMONY ON AN ENTRY IN A NOTEBOOK;
TESTIMONY NOT COVERED BY BEST EVIDENCE RULE. The testimony of a
witness that the purser made an entry in his notebook reading "First Class passenger was
forced to go to the tourist class against his will and that the captain refused to intervene,"
is competent and admissible because the subject of the inquiry is not the entry but the
ouster incident. It does not come within the prescription of the best evidence rule.
11. CONTRACT OF CARRIAGE; QUASI-DELICT; LIABILITY OF COMMON
CARRIERS; CASE AT BAR. Neglect or malfeasance of the carrier's employees could

give ground for an action for damages. Damages here are proper because the stress of
respondent's action is placed upon his wrongful expulsion, which is a violation of a
public duty by petitioner-aircarrier a case of quasi-delict.
12. ID.; ID.; ID.; AWARD OF MORAL DAMAGES FOR BREACH OF CONTRACT.
Award of moral damages is proper, despite petitioner's argument that respondent's
action is planted upon breach of contract, where the stress of the action is put on
wrongful expulsion, the contract having been averred only to establish the relation
between the parties.
13. ID.; ID.; ID.; EMPLOYER IS RESPONSIBLE FOR TORTIOUS ACTS OF HIS
EMPLOYEE; CASE AT BAR. The responsibility of an employer for the tortious act
of his employees is well settled in law. (Art. 2130, Civil Code). Petitioner-aircarrier must
answer for the willful, malevolent act of its manager.
14. ID.; ID.; ID.; LIABILITY FOR EXEMPLARY DAMAGES; POWER OF COURTS
TO GRANT; CASE AT BAR. The Civil Code gives the court ample power to grant
exemplary damages, the only condition being that defendant should have "acted in a
wanton, fraudulent, reckless, oppressive, or malevolent manner." As the manner of
ejectment of plaintiff from his first class seat fits into this legal precept, exemplary
damages are well awarded, in addition to moral damages.
15. ID.; ID.; LIABILITY FOR ATTORNEY'S FEES; COURT DISCRETION WELL
EXERCISED SHOULD NOT BE DISTURBED. The grant of exemplary damages
justifies a similar judgment for attorney's fees. The court below felt that it is but just and
equitable that attorney's fees be given and the Supreme Court does not intend to break
faith with the tradition that discretion well-exercised as it is here should not be
disturbed.
16. ID.; RIGHTS OF PASSENGERS. Passengers do not contract merely for
transportation. They have a right to be treated by the carrier's employees with kindness,
respect, courtesy and due consideration. They are entitled to be protected against personal
misconduct, injurious language, indignities and abuses from such employees. So, any
rude or discourteous conduct on the part of employees towards a passenger gives the
latter an action for damages against the carrier. (4 R. C. L-1174-1175).
17. ID.; BREACH OF CONTRACT MAY BE A TORT. Although the relation of
passenger and carrier is contractual both in origin and nature, nevertheless, the act that
breaks the contract may also be a tort.
18. WORDS AND PHRASES; BAD FAITH DEFINED. "Bad faith", as understood in
law, contemplates a state of mind affirmatively operating with furtive design or with
some motive of self-interest or ill will or for ulterior purpose

DECISION

SANCHEZ, J :
p

The Court of First Instance of Manila 1 sentenced petitioner to pay respondent Rafael
Carrascoso P25,000.00 by way of moral damages; P10,000.00 as exemplary damages;
P393.20 representing the difference in fare between first class and tourist class for the
portion of the trip Bangkok-Rome, these various amounts with interest at the legal rate,
from the date of the filing of the complaint until paid; plus P3,000.00 for attorneys' fees;
and the costs of suit.
On appeal, 2 the Court of Appeals slightly reduced the amount of refund on Carrascoso's
plane ticket from P393.20 to P383.10, and voted to affirm the appealed decision "in all
other respects", with costs against petitioner.
The case is now before us for review on certiorari.
The facts declared by the Court of Appeals as "fully supported by the evidence of
record", are:
"Plaintiff, a civil engineer, was a member of a group of 48 Filipino pilgrims that
left Manila for Lourdes on March 30, 1958.
On March 28, 1958, the defendant, Air France, through its authorized agent,
Philippine Air Lines, Inc., issued to plaintiff a 'first class' round trip airplane
ticket from Manila to Rome. From Manila to Bangkok, plaintiff traveled in 'first
class', but at Bangkok, the Manager of the defendant airline forced plaintiff to
vacate the 'first class' seat that he was occupying because, in the words of the
witness Ernesto G. Cuento, there was a 'white man', who, the Manager alleged,
had a 'better right to the seat. When asked to vacate his 'first class' seat, the
plaintiff, as was to be expected, refused, and told defendant's Manager that his
seat would be taken over his dead body; a commotion ensued, and, according to
said Ernesto G. Cuento, many of the Filipino passengers got nervous in the
tourist class; when they found out that Mr. Carrascoso was having a hot
discussion with the white man [manager], they came all across to Mr.
Carrascoso and pacified Mr. Carrascoso to give his seat to the 'white man'
(Transcript, p. 12, Hearing of May 26, 1959); and plaintiff reluctantly gave his
'first class' seat in the plane." 3

1. The thrust of the relief petitioner now seeks is that we review "all the findings" 4 of
respondent Court of Appeals. Petitioner charges that respondent court failed to make
complete findings of fact on all the issues properly laid before it. We are asked to
consider facts favorable to petitioner, and then, to overturn the appellate court's decision.

Coming into focus is the constitutional mandate that "No decision shall be rendered by
any court of record without expressing therein clearly and distinctly the facts and the law
on which it is based". 5 This is echoed in the statutory demand that a judgment
determining the merits of the case shall state "clearly and distinctly the facts and the law
on which it is based", 6 and that "Every decision of the Court of Appeals shall contain
complete findings of fact on all issues properly raised before it." 7
A decision with absolutely nothing to support it is a nullity. It is open to direct attack. 8
The law, however, solely insists that a decision state the "essential ultimate facts" upon
which the court's conclusion is drawn. 9 A court of justice is not hidebound to write in its
decision every bit and piece of evidence 10 presented by one party and the other upon the
issues raised. Neither is it to be burdened with the obligation "to specify in the sentence
the facts" which a party "considered as proved". 11 This is but a part of the mental
process from which the Court draws the essential ultimate facts. A decision is not to be so
clogged with details such that prolixity, if not confusion, may result. So long as the
decision of the Court of Appeals contains the necessary facts to warrant its conclusions, it
is no error for said court to withhold therefrom "any specific finding of facts with respect
to the evidence for the defense". Because, as this Court well observed, "There is no law
that so requires". 12 Indeed, "the mere failure to specify (in the decision) the contentions
of the appellant and the reasons for refusing to believe them is not sufficient to hold the
same contrary to the requirements of the provisions of law and the Constitution". It is in
this setting that in Manigque, it was held that the mere fact that the findings "were based
entirely on the evidence for the prosecution without taking into consideration or even
mentioning the appellant's side in the controversy as shown by his own testimony",
would not vitiate the judgment. 13 If the court did not recite in the decision the testimony
of each witness for, or each item of evidence presented by, the defeated party, it does not
mean that the court has overlooked such testimony or such item of evidence. 14 At any
rate, the legal presumptions are that official duty has been regularly performed, and that
all the matters within an issue in a case were laid before the court and passed upon by it.
15

Findings of fact, which the Court of Appeals is required to make, may be defined as "the
written statement of the ultimate facts as found by the court . . . and essential to support
the decision and judgment rendered thereon". 16 They consist of the court's "conclusions
with respect to the determinative facts in issue" 17 A question of law, upon the other hand,
has been declared as "one which does not call for an examination of the probative value
of the evidence presented by the parties." 18
2. By statute, "only questions of law may be raised" in an appeal by certiorari from a
judgment of the Court of Appeals 19 That judgment is conclusive as to the facts. It is not
appropriately the business of this Court to alter the facts or to review the questions of
fact. 20
With these guideposts, we now face the problem of whether the findings of fact of the
Court of Appeals support its judgment.

3. Was Carrascoso entitled to the first class seat he claims?

It is conceded in all quarters that on March 28, 1958 he paid to and received from
petitioner a first class ticket. But petitioner asserts that said ticket did not represent the
true and complete intent and agreement of the parties; that said respondent knew that he
did not have confirmed reservations for first class on any specific flight, although he had
tourist class protection; that, accordingly, the issuance of a first class ticket was no
guarantee that he would have a first class ride, but that such would depend upon the
availability of first class seats.
These are matters which petitioner has thoroughly presented and discussed in its brief
before the Court of Appeals under its third assignment of error, which reads: "The trial
court erred in finding that plaintiff had confirmed reservations for, and a right to, first
class seats on the 'definite' segments of his journey, particularly that from Saigon to
Beirut." 21
And, the Court of Appeals disposed of this contention thus:
"Defendant seems to capitalize on the argument that the issuance of a first-class
ticket was no guarantee that the passenger to whom the same had been issued,
would be accommodated in the first-class compartment, for as in the case of
plaintiff he had yet to make arrangements upon arrival at every station for the
necessary first class reservation. We are not impressed by such a reasoning. We
cannot understand how a reputable firm like defendant airplane company could
have the indiscretion to give out ticket it never meant to honor at all. It received
the corresponding amount in payment of first-class tickets end yet it allowed the
passenger to be at the mercy of its employees. It is more in keeping with the
ordinary course of business that the company should know whether or not the
tickets it issues are to be honored or not." 22

Not that the Court of Appeals is alone. The trial court similarly disposed of petitioner's
contention, thus:
"On the fact that plaintiff paid for, and was issued a 'First class ticket, there can
be no question. Apart from his testimony, see plaintiffs Exhibits 'A', 'A-1' 'B',
'B-1', 'B-2', 'C' and 'C-1', and defendant's own witness, Rafael Altonaga,
confirmed plaintiff's testimony and testified as follows:
Q. In these tickets there are marks 'O.K.' From what you know,
what does this O.K. mean?
A. That the space is confirmed.
Q. Confirmed for first class?
A. Yes, 'first class'. (Transcript, p. 169)
xxx xxx xxx

"Defendant tried to prove by the testimony of its witnesses Luis Zaldariaga and
Rafael Altonaga that although plaintiff paid for, and was issued a 'first class'
airplane ticket, the ticket was subject to confirmation in Hongkong. The court
cannot give credit to the testimony of said witnesses. Oral evidence cannot
prevail over written evidence, and plaintiff's Exhibits 'A', 'A1', 'B', 'B-1', 'C' and
'C- 1' belie the testimony of said witnesses, and clearly show that the plaintiff
was issued, and paid for, a first class ticket without any reservation whatever.
Furthermore, as hereinabove shown, defendant's own witness Rafael Altonaga
testified that the reservation for a 'first class' accommodation for the plaintiff
was confirmed. The court cannot believe that after such confirmation ,defendant
had a verbal understanding with plaintiff that the 'first class' ticket issued to him
by defendant would be subject to confirmation in Hongkong." 23

We have heretofore adverted to the fact that except for a slight difference of a few pesos
in the amount refunded on Carrascoso's ticket, the decision of the Court of First Instance
was affirmed by the Court of Appeals in all other respects. We hold the view that such a
judgment of affirmance has merged the judgment of the lower court. 24 Implicit in that
affirmance is a determination by the Court of Appeals that the proceeding in the Court of
First Instance was free from prejudicial error and that 'all questions raised by the
assignments of error and all questions that might have been so raised are to be regarded
as finally adjudicated against the appellant". So also, the judgment affirmed "must be
regarded as free from all error" 25 We reached this policy construction because nothing in
the decision of the Court of Appeals on this point would suggest that its findings of fact
are in any way at war with those of the trial court. Nor was said affirmance by the Court
of Appeals upon a ground or grounds different from those which were made the basis of
the conclusions of the trial court. 26
If, as petitioner underscores, a first-class-ticket holder is not entitled to a first class seat,
notwithstanding the fact that seat availability in specific flights is therein confirmed, then
an air passenger is placed in the hollow of the hands of an airline. What security then can
a passenger have? It will always be an easy matter for an airline aided by its employees,
to strike out the very stipulations in the ticket, and say that there was a verbal agreement
to the contrary. What if the passenger had a schedule to fulfill? We have long learned
that, as a rule, a written document speaks a uniform language; that spoken word could be
notoriously unreliable. If only to achieve stability in the relations between passenger and
air carrier, adherence to the ticket so issued is desirable. Such is the case here. The lower
courts refused to believe the oral evidence intended to defeat the covenants in the ticket.
The foregoing are the considerations which point to the conclusion that there are facts
upon which the Court of Appeals predicated the finding that respondent Carrascoso had a
first class ticket and was entitled to a first class seat at Bangkok, which is a stopover in
the Saigon to Beirut leg of the flight, 27 We perceive no "welter of distortions by the
Court of Appeals of petitioner's statement of its position", as charged by petitioner. 28 Nor
do we subscribe to petitioners accusation that respondent Carrascoso "surreptitiously took

a first class seat to provoke an issue". 29 And this because, as petitioner states, Carrascoso
went to see the Manager at his office in Bangkok "to confirm my seat and because from
Saigon I was told again to see the Manager. 30 Why, then, was he allowed to take a first
class seat in the plane at Bangkok, if he had no seat? Or, if another had a better right to
the seat?
4. Petitioner assails respondent court's award of moral damages. Petitioner's trenchant
claim is that Carrascoso's action is planted upon breach of contract; that to authorize an
award for moral damages there must be an averment of fraud or bad faith; 31 and that the
decision of the Court of Appeals fails to make a finding of bad faith. The pivotal
allegations in the complaint bearing on this issue are:
"3. That . . . plaintiff entered into a contract of air carriage with the Philippine
Air Lines for a valuable consideration, the latter acting as general agents for and
in behalf of the defendant, under which aid contract, plaintiff was entitled to, as
defendant agreed to furnish plaintiff, First Class passage on defendant's plane
during the entire duration of plaintiff's tour of Europe with Hongkong as starting
point up to and until plaintiff's return trip to Manila, . . .
4. That during the first two legs of the trip from Hongkong to Saigon and from
Saigon to Bangkok, defendant furnished to the plaintiff First Class
accommodation but only after protestations, arguments and/or insistence were
made by the plaintiff with defendant's employees.
5. That finally, defendant failed to provide First Class passage, but instead
furnished plaintiff only Tourist Class accommodations from Bangkok to
Teheran and/or Casablanca, . . . the plaintiff has been compelled by defendant's
employees to leave the First Class accommodation berths at Bangkok after he
was already seated.
6. That consequently, the plaintiff, desiring no repetition of the inconvenience
and embarrassments brought by defendant's breach of contract was forced to
take a Pan American World Airways plane on his return trip from Madrid to
Manila. 32
xxx xxx xxx
2. That likewise, as a result of defendant's failure to furnish First Class
accommodations aforesaid, plaintiff suffered inconveniences, embarrassments,
and humiliations, thereby causing plaintiff mental anguish, serious anxiety,
wounded feelings, social humiliation, and the like injury, resulting in moral
damages in the amount of P30,000.00." 33
xxx xxx xxx

The foregoing, in our opinion, substantially aver: First, That there was a contract to
furnish plaintiff a first class passage covering, amongst others, the Bangkok-Teheran leg;
Second, That said contract was breached when petitioner failed to furnish first class

transportation at Bangkok; and Third, That there was bad faith when petitioner's
employee compelled Carrascoso to leave his first class accommodation berth "after he
was already seated" and to take a seat in the tourist class, by reason of which he suffered
inconvenience, embarrassments and humiliations, thereby causing him mental anguish,
serious anxiety, wounded feelings and social humiliation, resulting in moral damages. It
is true that there is no specific mention of the term bad faith in the complaint. But, the
inference of bad faith is there; it may be drawn from the facts and circumstances set forth
therein. 34 The contract was averred to establish the relation between the parties. But the
stress of the action is put on wrongful expulsion.
Quite apart from the foregoing is that (a) right at the start of the trial, respondent's
counsel placed petitioner on guard on what Carrascoso intended to prove: That while
sitting in the plane in Bangkok, Carrascoso was ousted by petitioner's manager who gave
his seat to a white man; 35 and (b) evidence of bad faith in the fulfillment of the contract
was presented without objection on the part of the petitioner. It is, therefore, unnecessary
to inquire as to whether or not there is sufficient averment in the complaint to justify an
award for moral damages. Deficiency in the complaint, if any, was cured by the evidence.
An amendment thereof to conform to the evidence is not even required. 36 On the
question of bad faith, the Court of Appeals declared:
"That the plaintiff was forced out of his seat in the first class compartment of
the plane belonging to the defendant Air France while at Bangkok, and was
transferred to the tourist class not only without his consent but against his will,
has been sufficiently established by plaintiff in his testimony before the court,
corroborated by the corresponding entry made by the purser of the plane in his
notebook which notation reads as follows:
'First-class passenger was forced to go to the tourist class
against his will and that the captain refused to intervene',
and by the testimony of an eye-witness Ernesto G. Cuento, who was a copassenger. The captain of the plane who was asked by the manager of
defendant company at Bangkok to intervene even refused to do so. It is
noteworthy that no one on behalf of defendant ever contradicted or denied
this evidence for the plaintiff. It could have been easy for defendant to
present its manager at Bangkok to testify at the trial of the case, or yet to
secure his deposition; but defendant did neither. 37

The Court of Appeals further stated

"Neither is there evidence as to whether or ,not a prior reservation was made by
the white man. Hence, if the employees of the defendant at Bangkok sold a firstclass ticket to him when all the seats had already been taken, surely the plaintiff
should not have been picked out as the one to suffer the consequences and to be
subjected to the humiliation and indignity of being ejected from his seat in the
presence of others. Instead of explaining to the white man the improvidence
committed by defendant's employees, the manager adopted the more drastic step

of ousting the plaintiff who was then safely ensconced in his rightful seat. We
are strengthened in our belief that this probably was what happened there, by
the testimony of defendant's witness Rafael Altonaga who, when asked to
explain the meaning of the letters 'O.K., appearing on the tickets of plaintiff,
said that 'the space is confirmed' for first class. Likewise, Zenaida Faustino,
another witness for defendant, who was the chief of the Reservation Office of
defendant, testified as follows:
'Q. How does the person in the ticket-issuing office know what
reservation the passenger has arranged with you?
A. They call us up by phone and ask for the confirmation.' (t.s.n.,
p. 247, June 19, 1959)

In this connection, we quote with approval what the trial Judge has said on this point:
'Why did the, using the words of witness Ernesto G. Cuento, 'white man' have a
'better right' to the seat occupied by Mr. Carrascoso? The record is silent. The
defendant airline did not prove 'any better', nay, any right on the part of the
'white man' to the 'First class' seat that the plaintiff was occupying and for which
he paid and was issued a corresponding 'first class' ticket.
'If there was a justified reason for the action of the defendant's Manager in
Bangkok, the defendant could have easily proven it by having taken the
testimony of the said Manager by deposition, but defendant did not do so; the
presumption is that evidence willfully suppressed would be adverse if produced
[Sec. 69, par. (e) Rules of Court]; and, under the circumstances, the Court is
constrained to find, as it does find, that the Manager of the defendant airline in
Bangkok not merely asked but threatened the plaintiff to throw him out of the
plane if he did not give up his 'first class' seat because the said Manager wanted
to accommodate using the words of the witness Ernesto G. Cuento, the 'white
man'." 38

It is really correct to say that the Court of Appeals in the quoted portion first transcribed
did not use the term "bad faith". But can it be doubted that the recital of facts therein
points to bad faith? The manager not only prevented Carrascoso from enjoying his right
to a first class seat; worse, he imposed his arbitrary will; he forcibly ejected him from his
seat, made him suffer the humiliation of having to go to the tourist class compartment
just to give way to another passenger whose right thereto has not been established.
Certainly, this is bad faith. Unless, of course, bad faith has assumed a meaning different
from what is understood in law. For, "bad faith" contemplates a "state of mind
affirmatively operating with furtive design or with some motive of self-interest or ill will
or for ulterior purposes." 39
And if the foregoing were not yet sufficient, there is the express finding of bad faith in
the judgment of the Court of First Instance, thus:

"The evidence shows that defendant violated its contract of transportation with
plaintiff in bad faith, with the aggravating circumstances that defendant's
Manager in Bangkok went to the extent of threatening the plaintiff in the
presence of many passengers to have him thrown out of the airplane to give the
'first class' seat that he was occupying to, again using the words of witness
Ernesto G. Cuento, a 'white man' whom he (defendant's Manager) wished to
accommodate, and the defendant has not proven that this 'white man' had any
'better right' to occupy the 'first class' seat that the plaintiff was occupying, duly
paid for, and for which the corresponding 'first class' ticket was issued by the
defendant to him." 40

5. The responsibility of an employer for the tortuous act of its employees-need not be
essayed. It is well settled in law. 41 For the willful malevolent act of petitioner's manager,
petitioner's his employer, must answer. Article 21 of the Civil Code says:
"Art. 21. Any person who willfully causes loss or injury to another in a manner
that is contrary to morals, good customs or public policy shall compensate the
latter for the damage."

In parallel circumstances, we applied the foregoing legal precept; and, we held that upon
the provisions of Article 2219 (10), Civil Code, moral damages are recoverable. 42
6. A contract to transport passengers is quite different in kind and degree from any other
contractual relation. 43 And this, because of the relation which an air-carrier sustains with
the public. Its business is mainly with the travelling public. It invites people to avail of
the comforts and advantages it offers. The contract of air carriage, therefore, generates a
relation attended with a public duty. Neglect or malfeasance of the carrier's employees,
naturally, could give ground for an action for damages.
Passengers do not contract merely for transportation. They have a light to be treated by
the carrier's employees with kindness, respect, courtesy and due consideration. They are
entitled to be protected against personal misconduct, injurious language, indignities and
abuses from such employees. So it is, that any rude or discourteous conduct on the part of
employees towards a passenger gives the latter an action for damages against the carrier.
44

Thus, "Where a steamship company 45 had accepted a passenger's check, it was a breach
of contract and a tort, giving a right of action for its agent in the presence of third persons
to falsely notify her that the check was worthless and demand payment under threat of
ejection, though the language used was not insulting and she was not ejected. 46 And this,
because, altho the relation of passenger and carrier is "contractual both in origin and
nature" nevertheless "the act that breaks the contract may be also a tort". 47 And in
another case, "Where a passenger on a railroad train, when the conductor came to collect
his fare, tendered him the cash fare to a point where the train was scheduled not to stop,
and told him that as soon as the train reached such point he would pay the cash fare from
that point to destination, there was nothing in the conduct of the passenger which justified

the conductor in using insulting language to him, as by calling him a lunatic," 48 and the
Supreme Court of South Carolina there held the carrier liable for the mental suffering of
said passenger.
Petitioner's contract with Carrascoso is one attended with public duty. The stress of
Carrascoso's action as we have said, is placed upon his wrongful expulsion. This is a
violation of public duty by the petitioner-air carrier a case of quasi-delict. Damages
are proper.
7. Petitioner draws our attention to respondent Carrascoso's testimony, thus
"Q. You mentioned about an attendant. Who is that attendant and
purser?
A. When we left already that was already in the trip I could
not help it. So one of the flight attendants approached me
and requested from me my ticket and I said, What for? and
she said, 'We will note that you were transferred to the
tourist class'. I said, 'Nothing of that kind. That is
tantamount to accepting my transfer.' And I also said, You
are not going to note anything there because I am
protesting to this transfer.
Q. Was she able to note it?
A. No, because I did not give my ticket.
Q. About that purser?
A. Well, the seats there are so close that you feel uncomfortable
and you don't have enough leg room, I stood up and I went
to the pantry that was next to me and the purser was there.
He told me, 'I have recorded the incident in my notebook.'
He read it and translated it to me because it was
recorded in French 'First class passenger was forced to
go to the tourist class against his will, and that the captain
refused to intervene.'
MR. VALTE
I move to strike out the last part of the testimony of the witness
because the best evidence would be the notes. Your Honor.
COURT
I will allow that as part of his testimony." 49

Petitioner charges that the finding of the Court of Appeals that the purser made an entry
in his notebooks reading "First class passenger was forced to go to the tourist class

against his will, and that the captain refused to intervene" is predicated upon evidence
[Carrascoso's testimony above] which is incompetent. We do not think so. The subject of
inquiry is not the entry, but the ouster incident. Testimony of the entry does not come
within the proscription of the best evidence rule. Such testimony is admissible. 49
Besides, from a reading of the transcript just quoted, when the dialogue happened, the
impact of the startling occurrence was still fresh and continued to be felt. The excitement
had not as yet died down. Statements then, in this environment, are admissible as part of
the res gestae. 50 For, they grow "out of the nervous excitement and mental and physical
condition of the declarant". 51 The utterance of the purser regarding his entry in the
notebook was spontaneous, and related to the circumstances of the ouster incident. Its
trustworthiness has been guaranteed. 52 It thus escapes the operation of the hearsay rule. It
forms part of the res gestae.
At all events, the entry was made outside the Philippines. And, by an employee of
petitioner. It would have been an easy matter for petitioner to have contradicted
Carrascoso's testimony. If it were really true that no such entry was made, the deposition
of the purser could have cleared up the matter.
We, therefore, hold that the transcribed testimony of Carrascoso is admissible in
evidence.
8. Exemplary damages are well awarded. The Civil Code gives the Court ample power to
grant exemplary damages in contracts and quasi-contracts. The only condition is that
defendant should have "acted in a wanton, fraudulent, reckless, oppressive, or malevolent
manner". 53 The manner of ejectment of respondent Carrascoso from his first class seat
fits into this legal precept. And this, in addition to moral damages. 54
9. The right to attorneys' fees is fully established. The grant of exemplary damages
justifies a similar judgment for attorneys' fees. The least that can be said is that the courts
below felt that it is but just and equitable that attorneys' fees be given. 55 We do not
intend to break faith with the tradition that discretion well exercised as it was here
should not be disturbed.
10. Questioned as excessive are the amounts decreed by both the trial court and the Court
of Appeals, thus: P25,000.00 as moral damages; P10,000.00, by way of exemplary
damages, and P3,000.00 as attorney's fees. The task of fixing these amounts is primarily
with the trial-court. 56 The Court of Appeals did not interfere with the same. The dictates
of good sense suggest that we give our imprimatur thereto. Because, the facts and
circumstances point to the reasonableness thereof. 57
On balance, we say that the judgment of the Court of Appeals does not suffer from
reversible error. We accordingly vote to affirm the same. Costs against petitioner. So
ordered.

Concepcion, C.J., Reyes J.B.L., Barrera, Dizon, Regala, Makalintal, Zaldivar and
Castro, JJ., concur.
Bengzon, J.P., J., did not take part.
(Air France v. Carrascoso, G.R. No. L-21438, [September 28, 1966], 124 PHIL 722742)
|||

THIRD DIVISION
[G.R. No. 199886. December 3, 2014.]
CAGAYAN II ELECTRIC COOPERATIVE, INC., represented by
its General Manager and Chief Executive Officer, GABRIEL A.
TORDESILLAS, petitioner, vs. ALLAN RAPANAN and MARY
GINE TANGONAN, respondents.

DECISION

VILLARAMA, JR., J :
p

This is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil
Procedure, as amended, assailing the December 8, 2011 Decision 1 of the Court of
Appeals (CA) in C.A. G.R. CV No. 77659. The appellate court granted the appeal of
respondents Allan Rapanan and Mary Gine Tangonan and held petitioner Cagayan II
Electric Cooperative, Inc. liable for quasi-delict resulting in the death of Camilo
Tangonan and physical injuries of Rapanan, and ordering it to pay respondents damages
and attorney's fees.
The antecedents of the case follow:
On October 31, 1998, around 9:00 p.m., a motorcycle with three passengers figured in a
mishap along the National Highway of Maddalero, Buguey, Cagayan. It was driven by its
owner Camilo Tangonan who died from the accident, while his companions respondent
Rapanan and one Erwin Coloma suffered injuries.
IcHSCT

On March 29, 2000, Rapanan and Camilo's common law wife, respondent Mary Gine
Tangonan, filed before the Regional Trial Court (RTC) of Aparri, Cagayan a complaint 2
for damages against petitioner. They alleged that while the victims were traversing the
national highway, they were struck and electrocuted by a live tension wire from one of
the electric posts owned by petitioner. They contended that the mishap was due to
petitioner's negligence when it failed to fix and change said live tension wire despite
being immediately informed by residents in the area that it might pose an immediate
danger to persons, animals and vehicles passing along the national highway.

Mary Gine prayed that she be awarded P50,000 civil indemnity, P25,000 burial expenses,
P1,584,000 indemnity for loss of earning capacity and P100,000 moral and exemplary
damages. Rapanan, on the other hand, prayed for P10,000 for his medical treatment and
P50,000 moral and exemplary damages. Both Mary Gine and Rapanan prayed for 30% of
the total award representing attorney's fees.
In its Answer, 3 petitioner alleged that the typhoons that struck its areas of responsibility
caused some of its electric poles to fall and high tension wires to snap or cut-off which
caused brownouts in said areas. It claimed that they cannot be faulted for negligence if
there were electric wires dangling along the national road since they were caused by
typhoons which are fortuitous events. It also alleged that it was able to clear the said
areas of fallen electric poles and dangling or hanging high tension wires immediately
after the typhoons, to secure the safety of persons and vehicles traveling in said areas. It
likewise contended that the proximate cause of the mishap was the victims' negligence
and imprudence in operating and driving the motorcycle they were riding on.
During the trial, respondents testified and also presented Dr. Triffany C. Hasim as
witness.
Mary Gine testified 4 that she is not married to Camilo but they are living together and
that they have one child. She also testified that she spent P20,776 for the funeral expenses
of Camilo. She herself prepared an itemized list and computation of said expenses. She
also claimed that Camilo worked as a jeepney driver earning P150 per day and that as a
result of Camilo's death, she suffered sleepless nights and lost weight.
Rapanan testified 5 that he, Camilo and one Erwin Coloma were riding a motorcycle
along the National Highway of Maddalero, Buguey, Cagayan on October 31, 1998,
around 9:00 in the evening. He claimed that they saw a wire dangling from an electric
post and because of a strong wind that blew, they got wound by said dangling wire. He
suffered physical injuries and electric burns and was hospitalized for seven days. He
claimed to have spent around P10,000 for his medicines, and also complained of
sleepless nights because of the mishap.
CEaDAc

Dr. Triffany C. Hasim, the physician who attended to the victims when they were rushed
to the Alfonso Ponce Enrile Memorial District Hospital, also testified 6 for the
respondents. According to Dr. Hasim, the abrasions of Rapanan were caused by pressure
when the body was hit by a hard object or by friction but she is uncertain as to whether a
live electric wire could have caused them. She further said that she did not find any
electrical burns on Rapanan. As with Camilo, she found abrasions and hematoma on his
body and that the cause of death was due to "cardio respiratory arrest secondary to
strangulation." She also opined that the strangulation could have been caused by an
electric wire entangled around Camilo's neck.
Petitioner, for its part, presented four witnesses among whom were SPO2 Pedro Tactac,
Tranquilino Rasos and Rodolfo Adviento.

SPO2 Tactac, who investigated the incident, testified 7 that there was a skid mark on the
cemented portion of the road caused by the motorycle's foot rest which was about 30
meters long. According to him, it appears that the motorcycle was overspeeding because
of said skid mark.
Rasos and Adviento, employees of petitioner, both testified 8 that as a result of the
onslaught of typhoons Iliang and Loleng in Buguey and Sta. Ana, Cagayan, the power
lines were cut off because the electric wires snapped and the electric poles were
destroyed. After the said typhoons, petitioner's employees inspected the affected areas.
The dangling wires were then removed from the electric poles and were placed at the foot
of the poles which were located four to five meters from the road.
On December 9, 2002, the RTC rendered a decision 9 in favor of petitioner and dismissed
the complaint for damages of respondents. It held that the proximate cause of the incident
is the negligence and imprudence of Camilo in driving the motorcycle. It further held that
respondent Mary Gine has no legal personality to institute the action since such right is
only given to the legal heir of the deceased. Mary Gine is not a legal heir of Camilo since
she is only his common law wife.
On appeal, the CA reversed the RTC and held petitioner liable for quasi-delict. The fallo
reads:
WHEREFORE, premises considered, the present appeal is GRANTED. The
assailed decision dated December 9, 2002 of the Regional Trial Court of
Appari, Cagayan, Branch 10 in Civil Case No. 10-305 is hereby REVERSED
and SET ASIDE and a NEW ONE ENTERED holding the defendant-appellee
CAGEL[C]O II liable for quasi-delict which resulted in the death of Camilo
Tangonan and the physical injuries of Allan Rapanan, and ordering the payment
of 50% of the following damages, except the attorney's fees which should be
borne by the defendant-appellant:
To the plaintiff-appellant Allan Rapanan:
1. temperate damages in the amount of P10,000.00; and
2. moral damages in the amount of P50,000.00;
To the legal heirs of the deceased Camilo Tangonan:
1. indemnity for death in the amount of P50,000.00;
2. indemnity for loss of earning capacity in the amount of
P1,062,000.00;
3. temperate damages in the amount of P20,000.00; and
[4.] moral damages in the amount of P50,000.00.

To both the plaintiff-appellant Allan Rapanan and the legal heirs of the
deceased Camilo Tangonan:
1. exemplary damages in the amount [of] P50,000.00; and
2. attorney's fees amounting to 20% of the total amount
adjudged.
SO ORDERED. 10

In ruling against petitioner, the CA found that despite the different versions of how the
incident occurred, one fact was consistent the protruding or dangling CAGELCO wire
to which the victims were strangled or trapped. It likewise ruled that the police blotter
and medical certificates together with the testimony of one of the passengers of the
motorcycle, respondent Rapanan, was able to establish the truth of the allegations of
respondents all of which were not controverted by petitioner. The appellate court held
that clearly, the cause of the mishap which claimed the life of Camilo and injured
Rapanan was the dangling wire which struck them. Without the dangling wire which
struck the victims, the CA held that they would not have fallen down and sustained
injuries. The CA found that if petitioner had not been negligent in maintaining its
facilities, and making sure that every facility needing repairs had been repaired, the
mishap could have been prevented.
The appellate court nevertheless ruled that the victims were partly responsible for the
injuries they sustained. At the time of the mishap, they were over-speeding and were not
wearing protective helmets. Moreover, the single motorcycle being driven carried three
persons. While said circumstances were not the proximate cause of Camilo's death and
Rapanan's injuries, they contributed to the occurrence of the unfortunate event.
Hence this petition raising the following arguments for this Court's consideration:
1. THE CONCLUSION OF THE COURT OF APPEALS THAT PETITIONER
WAS NEGLIGENT IN THE MAINTENANCE OF ITS POWER
LINES IS MANIFESTLY ABSURD AND PREMISED ON A
SERIOUS MISAPPREHENSION OF FACTS.
cIACaT

2. THE COURT OF APPEALS DISREGARDED THE EVIDENCE ON

RECORD AND COMMITTED SERIOUS MISAPPREHENSION OF
FACTS AND GRAVE ABUSE OF DISCRETION WHEN IT
CONCLUDED THAT THE CAUSE OF THE MISHAP WAS A
DANGLING ELECTRIC WIRE THAT STRUCK AND WOUND
UPON THE VICTIMS.
3. THE COURT OF APPEALS SERIOUSLY ERRED AND COMMITTED
GRAVE ABUSE OF DISCRETION IN AWARDING DAMAGES TO
THE HEIRS OF CAMILO TANGONAN NOTWITHSTANDING THE

FACT THAT THEY WERE NEVER IMPLEADED AS PARTIES TO

THE ACTION.
4. ASSUMING, FOR ARGUMENT'S SAKE, THAT THE PETITIONER CAN
BE HELD LIABLE FOR THE MISHAP, DAMAGES AND
ATTORNEY'S FEES COULD NOT BE AWARDED TO THE HEIRS
OF CAMILO TANGONAN; AND THE AWARD OF MORAL,
TEMPERATE AND EXEMPLARY DAMAGES, AS WELL AS
ATTORNEY'S FEES, TO ALLAN RAPANAN IS WITHOUT BASIS.
11

Thus, there are two main issues that need to be resolved by this Court: (1) Was
petitioner's negligence in maintenance of its facilities the proximate cause of the death of
Camilo and the injuries of Rapanan? and (2) In the event that petitioner's negligence is
found to be the proximate cause of the accident, should damages be awarded in favor of
Camilo's heirs even if they were not impleaded?
Petitioner contends that it cannot be accused of negligence as its crew cleared the roads
of fallen electric poles and snapped wires to ensure the safety of motorists and
pedestrians. They rolled the snapped wires and placed them behind nearby electric poles
away from the roads as temporary remedy considering that the snapped wires could not
be collected all at once. It cites the report of SPO2 Pedro Tactac and testimony of
Tranquilino Rasos stating that the electric wire was placed at the shoulder of the road.
The photograph of the wire also shows that it was placed among banana plants which
petitioner submits to be a clear indication that it was safely tucked away from the road.
Petitioner contends that the trial court correctly observed that Camilo drove the
motorcycle at a high speed causing it to careen to the shoulder of the road where the
electric wire was and had Camilo driven the motorcycle at an average speed, that would
not have happened. Thus, petitioner submits, as found by the trial court, the proximate
cause of the mishap was due to recklessness and imprudence of Camilo and not of
petitioner.
Respondents, for their part, insist that the appellate court erred in ruling that it was
petitioner's negligence that caused the mishap resulting to the death of Camilo and
injuries of Rapanan. They argued that had petitioner properly maintained its facilities by
making sure that every facility needing restoration is repaired, the mishap could have
been prevented.
The petition is meritorious.
Negligence is defined as the failure to observe for the protection of the interest of another
person that degree of care, precaution, and vigilance which the circumstances justly
demand, whereby such other person suffers injury. 12 Article 2176 of the Civil Code
provides that "[w]hoever by act or omission causes damage to another, there being fault
or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is
no pre-existing contractual relation between the parties, is a quasi-delict." Under this

provision, the elements necessary to establish a quasi-delict case are: (1) damages to the
plaintiff; (2) negligence, by act or omission, of the defendant or by some person for
whose acts the defendant must respond, was guilty; and (3) the connection of cause and
effect between such negligence and the damages. 13
TEAcCD

The presence of the first element is undisputed because the unfortunate incident brought
about the death of Camilo and physical injuries to Rapanan. This Court, however, finds
that the second and third elements are lacking thus precluding the award of damages in
favor of respondents.
Adviento, petitioner's employee testified that their electric poles along the highways,
including the one where the mishap took place, were erected about four to five meters
from the shoulder of the road. Another employee of petitioner, Rasos, testified that after
the typhoons hit Cagayan, he together with his co-employees, after checking the damage
to the electric lines, rolled the fallen electric wires and placed them at the foot of the
electric poles so as to prevent mishaps to pedestrians and vehicles passing by. Their
testimonies were corroborated by what was recorded in the Police Blotter of the Buguey
Police Station, Buguey, Cagayan after SPO2 Tactac investigated on the incident. The
pertinent excerpt from the blotter is quoted verbatim:
xxx xxx xxx
TEAM LED BY SPO2 PEDRO R TACTAC JUMPED OFF AND
PROCEEDED TO BRGY MADDALERO, BUGUEY, CAGAYAN TO
CONDUCT INVEST AT THE SAID VEHICULAR ACCIDENT AT THE
SAME PLACE AND RET STN WITH THE REPT THAT ON OR ABOUT
8:45 PM 31 OCTOBER 98 ONE MOTORCYCLE SUZUKI X4 WITH
TEMPORARY PLATE NUMBER 14592 DRIVEN BY ONE CAMILO
TANGONAN y ROSETE 21 years old, MARRIED, DRIVER AND A
RESIDENT OF BRGY MASI, STA TERESITA, CAGAYAN (DEAD ON THE
SPOT) AND TWO COMPANIONS EDWIN COLOMA y MABANAG, 23
YEARS OLD, MARRIED, DRIVER AND A RESIDENT OF MASI AND
ALLAN RAFANAN y GUILLERMO, 19 YEARS OLD, SINGLE,
CONDUCTOR AND A RESIDENT OF BRGY BUYUN STA TERESITA
CAGAYAN WAS ACCIDENTALLY TRAPPED BY A PROTRUDING
CAGELCO WIRE AT THE SHOULDER OF THE ROAD WHILE THEY
WERE BOUND TO STA TERESITA FROM APARRI THIS PROVINCE
DUE TO THE OVER SPEED OF MOTOR VEHICLE THE WIRE
STRANGLED THE NECK OF THE VICTIMS WHICH CAUSED THE
INSTANTANEOUS DEATH OF THE DRIVER, CAMILO TANGONAN
AND ABRASIONS ON DIFFERENT PARTS OF THE BODY OF THE TWO
OTHER VICTIMS THE SAID TWO OTHER VICTIMS WERE BROUGHT
TO ALFONSO ENRILE HOSPITAL, GONZAGA, CAGAYAN FOR
MEDICAL TREATMENT. 14 (Emphasis and underscoring supplied)

Thus, there is no negligence on the part of petitioner that was allegedly the proximate
cause of Camilo's death and Rapanan's injuries. From the testimonies of petitioner's
employees and the excerpt from the police blotter, this Court can reasonably conclude
that, at the time of that fatal mishap, said wires were quietly sitting on the shoulder of the
road, far enough from the concrete portion so as not to pose any threat to passing motor
vehicles and even pedestrians. Hence, if the victims of the mishap were strangled by said
wires, it can only mean that either the motorcycle careened towards the shoulder or even
more likely, since the police found the motorcycle not on the shoulder but still on the
road, that the three passengers were thrown off from the motorcycle to the shoulder of the
road and caught up with the wires. As to how that happened cannot be blamed on
petitioner but should be attributed to Camilo's over speeding as concluded by the police
after it investigated the mishap. SPO2 Tactac, in his testimony, explained how they made
such conclusion:
ATTY. TUMARU:
Q: . . . My question is, you said that the motor vehicle was overspeeding, when
you went to the place, what made you conclude that the motor vehicle
where the three rode which caused the death of Camilo Tangonan, was
overspeeding? Please explain that before this court[.]
ATTY. RAPANAN:
Incompetent, you honor.
COURT:
Answer.
A: I stated in the police blotter over speeding when we went to investigate. We
reflected in the report/police blotter that there was over speeding
because of the skid mark that lasted up to 30 meters from the start to the
place where the motorcycle fell, sir.
Q: In this skid mark that you have seen, at the point of the start of the skid mark
to the place where you found the motor vehicle, where was the motor
vehicle that time?
A: It was at the road, sir.
Q: What road?
A: At the edge of the cemented pavement, sir.
Q: Where was the victim found?
ATTY. RAPANAN:
Immaterial, your honor.

COURT:
Sustained.
ATTY. TUMARU:
Q: And did you try to investigate what was the cause [of death] of the victim?
ATTY. RAPANAN:
Incompetent, your honor.
ATTY. TUMARU:
Q: Per your investigation, did you find out the cause of death of the victim and
the others (sic)?
A: There was abrasion at the neck of the victim, sir.
COURT:
Q: Who among the victims?
A: The driver Camilo Tangonan, sir.
Q: What about the two others?
A: When we arrived at the scene, the two companions of the victim were
brought to the Gonzaga Alfonso Ponce Enrile hospital by the PNP of
Sta. Teresita police station, sir.
xxx xxx xxx
ATTY. RAPANAN:
Q: Do you know that a motorcycle is provided with the speedometer?
A: Yes, sir.
Q: When you arrived at the scene, you no longer bother yourself to see the
speedometer of the motorcycle, is that correct?
ATTY. TUMARU:
Incompetent, your honor.
COURT:
Answer.
A: I did not bother to see the speedometer, sir.

Q: You only conclude in saying that the driver of the motorcycle was running
his motorcycle in a very speed[y] manner because of the skid mark
measuring 30 meters, you did not include that in your report?
ATTY. TUMARU:
The document is the best evidence, your honor.
ATTY. RAPANAN:
This is a new matter, your honor.
COURT:
Answer.
A: We saw the skid mark so we concluded that there was an over speeding due
to the skid mark, sir.
Q: Do you know that a skid on the surface of a cemented road shows that
something happened to the motorcycle o[r] its [d]river?
ATTY. TUMARU:
That calls for an opinion, your honor.
COURT:
Answer.
A: There was an accident, sir.
Q: Do you know that when a vehicle even if running with slow speed if a driver
suddenly applied a break, there was always a skid mark on the road?
A: It is the footrest of the motorcycle that caused the skid mark, sir.
COURT:
Q: Which is which now, you found a skid mark of the tire and footrest or only
the skid mark of the footrest?
A: The footrest, sir.
Q: How do you know that the skid mark was caused by the footrest?
A: Because the skid mark was caused by the footrest because the place where
the motorcycle fell (sic), the footrest was still pointing [to] the skid mark
[on] the cemented road, sir. 15

The foregoing shows that the motorcycle was probably running too fast that it lost control
and started tilting and sliding eventually which made its foot rest cause the skid mark on

the road. Therefore, the mishap already occurred even while they were on the road and
away from petitioner's electric wires and was not caused by the latter as alleged by
respondents. It just so happened that after the motorcycle tilted and slid, the passengers
were thrown off to the shoulder where the electric wires were. This Court hence agrees
with the trial court that the proximate cause of the mishap was the negligence of Camilo.
Had Camilo driven the motorcycle at an average speed, the three passengers would not
have been thrown off from the vehicle towards the shoulder and eventually strangulated
by the electric wires sitting thereon. Moreover, it was also negligent of Camilo to have
allowed two persons to ride with him and for Rapanan to ride with them when the
maximum number of passengers of a motorcycle is two including the driver. This most
likely even aggravated the situation because the motorcycle was overloaded which made
it harder to drive and control. When the plaintiff's own negligence was the immediate and
proximate cause of his injury, he cannot recover damages. 16
CAaEDH

As to the second issue, assuming arguendo that petitioner was indeed negligent, the
appellate court erred in awarding damages in favor of Camilo's legal heirs since they
were not impleaded in the case. It should be noted that it was Mary Gine, the common
law wife of Camilo, who is the complainant in the case. As a mere common law wife of
Camilo, she is not considered a legal heir of the latter, and hence, has no legal personality
to institute the action for damages due to Camilo's death.
WHEREFORE, the petition is hereby GRANTED. The December 8, 2011 Decision of
the Court of Appeals in C.A. G.R. CV No. 77659 is hereby REVERSED and SET
ASIDE. The December 9, 2002 Decision of the Regional Trial Court of Aparri, Cagayan,
Branch 10 in Civil Case No. 10-305 dismissing the complaint for damages of respondents
Allan Rapanan and Mary Gine Tangonan is REINSTATED.
No pronouncement as to costs.
SO ORDERED.
Velasco, Jr., Peralta, Mendoza * and Reyes, JJ., concur.
(Cagayan II Electric Cooperative, Inc. v. Rapanan, G.R. No. 199886, [December 3,
2014])
|||

THIRD DIVISION
[G.R. No. 174161. February 18, 2015.]
R TRANSPORT CORPORATION, petitioner, vs. LUISITO G. YU,
respondent.

DECISION

PERALTA, J :
p

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of
Court seeking to reverse and set aside the Decision 1 and Resolution, 2 dated September
9, 2005 and August 8, 2006, respectively, of the Court of Appeals (CA) in CA-G.R. CV
No. 84175.
The antecedent facts are as follows:
At around 8:45 in the morning of December 12, 1993, Loreta J. Yu, after having alighted
from a passenger bus in front of Robinson's Galleria along the north-bound lane of
Epifanio de los Santos Avenue (EDSA), was hit and run over by a bus driven by Antonio
P. Gimena, who was then employed by petitioner R Transport Corporation. Loreta was
immediately rushed to Medical City Hospital where she was pronounced dead on arrival.
3

On February 3, 1994, the husband of the deceased, respondent Luisito G. Yu, filed a
Complaint for damages before the Regional Trial Court (RTC) of Makati City against
petitioner R Transport, Antonio Gimena, and Metro Manila Transport Corporation
(MMTC) for the death of his wife. MMTC denied its liability reasoning that it is merely
the registered owner of the bus involved in the incident, the actual owner, being petitioner
R Transport. 4 It explained that under the Bus Installment Purchase Program of the
government, MMTC merely purchased the subject bus, among several others, for resale
to petitioner R Transport, which will in turn operate the same within Metro Manila. Since
it was not actually operating the bus which killed respondent's wife, nor was it the
employer of the driver thereof, MMTC alleged that the complaint against it should be
dismissed. 5 For its part, petitioner R Transport alleged that respondent had no cause of
action against it for it had exercised due diligence in the selection and supervision of its

employees and drivers and that its buses are in good condition. Meanwhile, the driver
Antonio Gimena was declared in default for his failure to file an answer to the complaint.
DcAaSI

After trial on the merits, wherein the parties presented their respective witnesses and
documentary evidence, the trial court rendered judgment in favor of respondent Yu ruling
that petitioner R Transport failed to prove that it exercised the diligence required of a
good father of a family in the selection and supervision of its driver, who, by its
negligence, ran over the deceased resulting in her death. It also held that MMTC should
be held solidarily liable with petitioner R Transport because it would unduly prejudice a
third person who is a victim of a tort to look beyond the certificate of registration and
prove who the actual owner is in order to enforce a right of action. Thus, the trial court
ordered the payment of damages in its Decision 6 dated June 3, 2004, the dispositive
portion of which reads:
WHEREFORE, foregoing premises considered, judgment is hereby rendered
ordering defendants Rizal Transport and Metro Manila Transport Corporation to
be primarily and solidarily liable and defendant Antonio Parraba Gimena
subsidiarily liable to plaintiff Luisito Yu as follows:
1. Actual damages in the amount of Php78,357.00 subject to interest at
the legal rate from the filing of the complaint until fully paid;
2. Loss of income in the amount of Php500,000.00;
3. Moral damages in the amount of P150,000.00;
4. Exemplary damages in the amount of P20,000.00;
5. Attorney's fees in the amount of P10,000.00; and
6. Costs of suit. 7

On September 9, 2005, the CA affirmed the Decision of the RTC with modification that
defendant Antonio Gimena is made solidarily liable for the damages caused to
respondent. According to the appellate court, considering that the negligence of Antonio
Gimena was sufficiently proven by the records of the case, and that no evidence of
whatever nature was presented by petitioner to support its defense of due diligence in the
selection and supervision of its employees, petitioner, as the employer of Gimena, may be
held liable for the damage caused. The CA noted that the fact that petitioner is not the
registered owner of the bus which caused the death of the victim does not exculpate it
from liability. 8 Thereafter, petitioner's Motion for Reconsideration was further denied by
the CA in its Resolution 9 dated August 8, 2006.
Hence, the present petition.
Petitioner essentially invokes the following ground to support its petition:

I.
THE COURT OF APPEALS ERRED IN AFFIRMING THE RULING OF
THE REGIONAL TRIAL COURT FINDING PETITIONER LIABLE FOR
THE DAMAGES CAUSED BY THE NEGLIGENCE OF ITS EMPLOYEE,
WHICH WAS NOT SUPPORTED BY THE EVIDENCE ON RECORD.

Petitioner insists that the CA and the RTC were incorrect in ruling that its driver was
negligent for aside from the mere speculations and uncorroborated testimonies of the
police officers on duty at the time of the accident, no other evidence had been adduced to
prove that its driver was driving in a reckless and imprudent manner. It asserts that
contrary to the findings of the courts below, the bus from which the victim alighted is
actually the proximate cause of the victim's death for having unloaded its passengers on
the lane where the subject bus was traversing. Moreover, petitioner reiterates its argument
that since it is not the registered owner of the bus which bumped the victim, it cannot be
held liable for the damage caused by the same.
SAcaDE

We disagree.
Time and again, it has been ruled that whether a person is negligent or not is a question of
fact which this Court cannot pass upon in a petition for review on certiorari, as its
jurisdiction is limited to reviewing errors of law. 10 This Court is not bound to weigh all
over again the evidence adduced by the parties, particularly where the findings of both
the trial and the appellate courts on the matter of petitioners' negligence coincide. As a
general rule, therefore, the resolution of factual issues is a function of the trial court,
whose findings on these matters are binding on this Court, more so where these have
been affirmed by the Court of Appeals, 11 save for the following exceptional and
meritorious circumstances: (1) when the factual findings of the appellate court and the
trial court are contradictory; (2) when the findings of the trial court are grounded entirely
on speculation, surmises or conjectures; (3) when the lower court's inference from its
factual findings is manifestly mistaken, absurd or impossible; (4) when there is grave
abuse of discretion in the appreciation of facts; (5) when the findings of the appellate
court go beyond the issues of the case, or fail to notice certain relevant facts which, if
properly considered, will justify a different conclusion; (6) when there is a
misappreciation of facts; (7) when the findings of fact are themselves conflicting; and (8)
when the findings of fact are conclusions without mention of the specific evidence on
which they are based, are premised on the absence of evidence, or are contradicted by
evidence on record. 12
After a review of the records of the case, we find no cogent reason to reverse the rulings
of the courts below for none of the aforementioned exceptions are present herein. Both
the trial and appellate courts found driver Gimena negligent in hitting and running over
the victim and ruled that his negligence was the proximate cause of her death. Negligence
has been defined as "the failure to observe for the protection of the interests of another
person that degree of care, precaution, and vigilance which the circumstances justly

demand, whereby such other person suffers injury." 13 Verily, foreseeability is the
fundamental test of negligence. 14 It is the omission to do something which a reasonable
man, guided by those considerations which ordinarily regulate the conduct of human
affairs, would do, or the doing of something which a prudent and reasonable man would
not do. 15
In this case, the records show that driver Gimena was clearly running at a reckless speed.
As testified by the police officer on duty at the time of the incident 16 and indicated in
the Autopsy Report, 17 not only were the deceased's clothes ripped off from her body, her
brain even spewed out from her skull and spilled over the road. Indeed, this Court is not
prepared to believe petitioner's contention that its bus was travelling at a "normal speed"
in preparation for a full stop in view of the fatal injuries sustained by the deceased.
Moreover, the location wherein the deceased was hit and run over further indicates
Gimena's negligence. As borne by the records, the bus driven by Gimena bumped the
deceased in a loading and unloading area of a commercial center. The fact that he was
approaching such a busy part of EDSA should have already cautioned the driver of the
bus. In fact, upon seeing that a bus has stopped beside his lane should have signalled him
to step on his brakes to slow down for the possibility that said bus was unloading its
passengers in the area. Unfortunately, he did not take the necessary precaution and
instead, drove on and bumped the deceased despite being aware that he was traversing a
commercial center where pedestrians were crossing the street. Ultimately, Gimena should
have observed due diligence of a reasonably prudent man by slackening his speed and
proceeding cautiously while passing the area.
Under Article 2180 18 of the New Civil Code, employers are liable for the damages
caused by their employees acting within the scope of their assigned tasks. Once
negligence on the part of the employee is established, a presumption instantly arises that
the employer was remiss in the selection and/or supervision of the negligent employee.
To avoid liability for the quasi-delict committed by its employee, it is incumbent upon
the employer to rebut this presumption by presenting adequate and convincing proof that
it exercised the care and diligence of a good father of a family in the selection and
supervision of its employees. 19
TaSEHC

Unfortunately, however, the records of this case are bereft of any proof showing the
exercise by petitioner of the required diligence. As aptly observed by the CA, no
evidence of whatever nature was ever presented depicting petitioner's due diligence in the
selection and supervision of its driver, Gimena, despite several opportunities to do so. In
fact, in its petition, apart from denying the negligence of its employee and imputing the
same to the bus from which the victim alighted, petitioner merely reiterates its argument
that since it is not the registered owner of the bus which bumped the victim, it cannot be
held liable for the damage caused by the same. Nowhere was it even remotely alleged
that petitioner had exercised the required diligence in the selection and supervision of its
employee. Because of this failure, petitioner cannot now avoid liability for the quasidelict committed by its negligent employee.

At this point, it must be noted that petitioner, in its relentless attempt to evade liability,
cites our rulings in Vargas v. Langcay 20 and Tamayo v. Aquino 21 insisting that it
should not be held solidarily liable with MMTC for it is not the registered owner of the
bus which killed the deceased. However, this Court, in Jereos v. Court of Appeals, et al.,
22 rejected such contention in the following wise:
Finally, the petitioner, citing the case of Vargas vs. Langcay, contends that
it is the registered owner of the vehicle, rather than the actual owner, who
must be jointly and severally liable with the driver of the passenger vehicle
for damages incurred by third persons as a consequence of injuries or
death sustained in the operation of said vehicle.
The contention is devoid of merit. While the Court therein ruled that the
registered owner or operator of a passenger vehicle is jointly and severally
liable with the driver of the said vehicle for damages incurred by
passengers or third persons as a consequence of injuries or death sustained
in the operation of the said vehicle, the Court did so to correct the
erroneous findings of the Court of Appeals that the liability of the
registered owner or operator of a passenger vehicle is merely subsidiary, as
contemplated in Art. 103 of the Revised Penal Code. In no case did the
Court exempt the actual owner of the passenger vehicle from liability. On
the contrary, it adhered to the rule followed in the cases of Erezo vs. Jepte,
Tamayo vs. Aquino, and De Peralta vs. Mangusang, among others, that the
registered owner or operator has the right to be indemnified by the real or actual
owner of the amount that he may be required to pay as damage for the injury
caused.
The right to be indemnified being recognized, recovery by the registered owner
or operator may be made in any form-either by a cross-claim, third-party
complaint, or an independent action. The result is the same. 23

Moreover, while We held in Tamayo that the responsibility of the registered owner and
actual operator of a truck which caused the death of its passenger is not solidary, We
noted therein that the same is due to the fact that the action instituted was one for breach
of contract, to wit:
The decision of the Court of Appeals is also attacked insofar as it holds that
inasmuch as the third-party defendant had used the truck on a route not covered
by the registered owner's franchise, both the registered owner and the actual
owner and operator should be considered as joint tortfeasors and should be
made liable in accordance with Article 2194 of the Civil Code. This Article is as
follows:
TcDAHS

Art. 2194. The responsibility of two or more persons who are liable for a
quasi-delict is solidary.
But the action instituted in the case at bar is one for breach of contract, for
failure of the defendant to carry safely the deceased for her destination.

The liability for which he is made responsible, i.e., for the death of the
passenger, may not be considered as arising from a quasi-delict. As the
registered owner Tamayo and his transferee Rayos may not be held guilty
of tort or a quasi-delict; their responsibility is not solidary as held by the
Court of Appeals.
The question that poses, therefore, is how should the holder of the certificate of
public convenience, Tamayo, participate with his transferee, operator Rayos, in
the damages recoverable by the heirs of the deceased passenger, if their liability
is not that of Joint tortfeasors in accordance with Article 2194 of the Civil Code.
The following considerations must be borne in mind in determining this
question. As Tamayo is the registered owner of the truck, his responsibility to
the public or to any passenger riding in the vehicle or truck must be direct, for
the reasons given in our decision in the case of Erezo vs. Jepte, supra, as quoted
above. But as the transferee, who operated the vehicle when the passenger died,
is the one directly responsible for the accident and death he should in turn be
made responsible to the registered owner for what the latter may have been
adjudged to pay. In operating the truck without transfer thereof having been
approved by the Public Service Commission, the transferee acted merely as
agent of the registered owner and should be responsible to him (the registered
owner), for any damages that he may cause the latter by his negligence. 24

However, it must be noted that the case at hand does not involve a breach of contract of
carnage, as in Tamayo, but a tort or quasi-delict under Article 2176, 25 in relation to
Article 2180 26 of the New Civil Code. As such, the liability for which petitioner is being
made responsible actually arises not from a pre-existing contractual relation between
petitioner and the deceased, but from a damage caused by the negligence of its employee.
Petitioner cannot, therefore, rely on our ruling in Tamayo and escape its solidary liability
for the liability of the employer for the negligent conduct of its subordinate is direct and
primary, subject only to the defense of due diligence in the selection and supervision of
the employee. 27
Indeed, this Court has consistently been of the view that it is for the better protection of
the public for both the owner of record and the actual operator to be adjudged jointly and
severally liable with the driver. 28 As aptly stated by the appellate court, "the principle of
holding the registered owner liable for damages notwithstanding that ownership of the
offending vehicle has already been transferred to another is designed to protect the public
and not as a shield on the part of unscrupulous transferees of the vehicle to take refuge in,
inorder to free itself from liability arising from its own negligent act." 29
Hence, considering that the negligence of driver Gimena was sufficiently proven by the
records of the case, and that no evidence of whatever nature was presented by petitioner
to support its defense of due diligence in the selection and supervision of its employees,
petitioner, as the employer of Gimena, may be held liable for damages arising from the
death of respondent Yu's wife.

WHEREFORE, premises considered, the instant petition is DENIED. The Decision and
Resolution, dated September 9, 2005 and August 8, 2006, respectively, of the Court of
Appeals in CA-G.R. CV No. 84175 are hereby AFFIRMED.
SO ORDERED.
|||

SDIaCT

(R Transport Corp. v. Yu, G.R. No. 174161, [February 18, 2015])