Republic of the Philippines

SUPREME COURT
Manila
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.

HERMOSISIMA, JR., J.:

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. 5301980-3 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. 5301734-7 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 plaintiffs 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 crosscheck 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 plaintiff's 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 thelast 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.
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.

THIRD DIVISION
[G.R. Nos. 79050-51. November 14, 1989.]
PANTRANCO NORTH EXPRESS, INC., Petitioner, v. MARICAR BASCOS
BAESA, thru her personal guardian FRANCISCA O. BASCOS, FE O. ICO, in
her behalf and in behalf of her minor children, namely ERWIN, OLIVE,
EDMUNDO and SHARON ICO, Respondents.
Efren N. Ambrosio & Associates for petitioner PNEI.
Emiliano S. Micu for Respondents.
SYLLABUS
1. CIVIL LAW; DAMAGES; LAST CLEAR CHANCE DOCTRINE; WHEN APPLICABLE.
The doctrine of last clear chance applies only in a situation where the defendant,
having the last fair chance to avoid the impending harm and failed to do so,
becomes liable for all the consequences of the accident notwithstanding the prior
negligence of the plaintiff.
2. ID.; ID.; ID.; CONDITION TO MAKE DOCTRINE APPLICABLE. In order that the
doctrine of last clear chance may be applied, it must be shown that the person
who allegedly had the last opportunity to avert the accident was aware of the
existence of the peril or with exercise of due care should have been aware of it.
3. ID.; ID.; ID.; NOT APPLICABLE TO PERSON ACTING INSTANTANEOUSLY OR BY
AVAILABLE MEANS. This doctrine of last chance has no application to a case
where a person is to act instantaneously, and if the injury cannot be avoided by
using all means available after the peril is or should have been discovered.
4. ID.; ID.; PROVISION OF R.A. NO. 4136 RE VEHICLE ENTERING A THROUGH
HIGHWAY OR A STOP INTERSECTION. Section 43 (c), Article III, Chapter IV of
Republic Act No. 1436 cannot apply to case a bar where at the time of the
accident, the jeepney had already crossed the intersection.
5. ID.; ID.; NEGLIGENCE; BURDEN OF PROOF LIES ON THE EMPLOYER. A finding
of negligence on the part of the driver establishes a presumption that the

employer has been negligent and the latter has the burden of proof that it has
exercised due negligence not only in the selection of its employees but also in
adequately supervising their work.
6. ID.; ID.; FAILURE TO PRESENT EVIDENCE TO SUPPORT CLAIM FOR DAMAGES.
Plaintiffs failure to present documentary evidence to support their claim for
damages for loss of earning capacity of the deceased victim does not bar
recovery of the damages, if such loss may be based sufficiently on their
testimonies.
7. ID.; ID.; INDEMNITY FIXED AT P30,000. The indemnity for the death of a
person was fixed by this Court at (P30,000.00).
DECISION
CORTES, J.
In this Petition, Pantranco North Express Inc. (PANTRANCO), asks the Court to
review the decision of the Court of Appeals in CA-G.R. No. 05494-95 which
affirmed the decisions of the Court of First Instance of Rosales, Pangasinan in Civil
Case No. 561-R and Civil Case No. 589-R wherein PANTRANCO was ordered to pay
damages and attorneys fees to herein private respondents.chanrobles virtual
lawlibrary
The pertinent fact are as follows:chanrob1es virtual 1aw library
At about 7:00 oclock in the morning of June 12, 1981, the spouses Ceasar and
Marilyn Baesa and their children Harold Jim, Marcelino and Maricar, together with
spouses David Ico and Fe O. Ico with their son Erwin Ico and seven other persons,
were aboard a passenger jeepney on their way to a picnic at Malalam River,
Ilagan, Isabela, to celebrate the fifth wedding anniversary of Ceasar and Marilyn
Baesa.
The group, numbering fifteen (15) persons, rode in the passenger jeepney driven
by David Ico, who was also the registered owner thereof. From Ilagan, Isabela,
they proceeded to Barrio Capayacan to deliver some viands to one Mrs. Bascos
and thenceforth to San Felipe, taking the highway going to Malalam River. Upon
reaching the highway, the jeepney turned right and proceeded to Malalam River
at a speed of about 20 kph. While they were proceeding towards Malalam River, a
speeding PANTRANCO bus from Aparri, on its regular route to Manila, encroached
on the jeepneys lane while negotiating a curve, and collided with it.
As a result of the accident David Ico, spouses Ceasar Baesa and Marilyn Baesa
and their children, Harold Jim and Marcelino Baesa, died while the rest of the
passengers suffered injuries. The jeepney was extensively damaged. After the

accident the driver of the PANTRANCO Bus, Ambrosio Ramirez, boarded a car and
proceeded to Santiago, Isabela. From that time on up to the present, Ramirez has
never been seen and has apparently remained in hiding.
All the victims and/or their surviving heirs except herein private respondents
settled the case amicably under the "No Fault" insurance coverage of
PANTRANCO.
Maricar Baesa through her guardian Francisca O. Bascos and Fe O. Ico for herself
and for her minor children, filed separate actions for damages arising from quasidelict against PANTRANCO, respectively docketed as Civil Case No. 561-R and
589-R of the Court of First Instance of Pangasinan.
In its answer, PANTRANCO, aside from pointing to the late David Icos alleged
negligence as the proximate cause of the accident, invoked the defense of due
diligence in the selection and supervision of its driver, Ambrosio
Ramirez.chanroblesvirtualawlibrary
On July 3, 1984, the CFI of Pangasinan rendered a decision against PANTRANCO
awarding the total amount of Two Million Three Hundred Four Thousand Six
Hundred Forty-Seven (P2,304,647.00) as damages, plus 10% thereof as attorneys
fees and costs to Maricar Baesa in Civil Case No. 561-R, and the total amount of
Six Hundred Fifty Two Thousand Six Hundred Seventy-Two Pesos (P652,672.00) as
damages, plus 10% thereof as attorneys fees and costs to Fe Ico and her children
in Civil Case No. 589-R. On appeal, the cases were consolidated and the Court of
Appeals modified the decision of the trial court by ordering PANTRANCO to pay the
total amount of One Million One Hundred Eighty-Nine Thousand Nine Hundred
Twenty Seven Pesos (P1,189,927.00) as damages, plus Twenty Thousand Pesos
(P20,000.00) as attorneys fees to Maricar Baesa, and the total amount of Three
Hundred Forty-Four Thousand Pesos (P344,000.00) plus Ten Thousand Pesos
(P10,000.00) as attorneys fees to Fe Ico and her children, and to pay the costs in
both cases. The dispositive portion of the assailed decision reads as
follows:chanrob1es virtual 1aw library
WHEREFORE, the decision appealed from is hereby modified by ordering the
defendant PANTRANCO North Express, Inc. to pay:chanrob1es virtual 1aw library
I. The plaintiff in Civil Case No. 561-R, Maricar Bascos Baesa, the following
damages:chanrob1es virtual 1aw library
A) As compensatory damages for the death of Ceasar Baesa P30,000.00;
B) As compensatory damages for the death of Marilyn Baesa P30,000.00;
C) As compensatory damages for the death of Harold Jim Baesa and Marcelino
Baesa P30,000.00;

D) For the loss of earnings of Ceasar Baesa P630,000.00;

E) For the loss of earnings of Marilyn Bascos Baesa P375,000.00;
F) For the burial expenses of the deceased Ceasar and Marilyn Baesa
P41,200.00;
G) For hospitalization expenses of Maricar Baesa P3,727.00;
H) As moral damages P50,000.00;
I) As attorneys fees P20,000.00;
II. The plaintiffs in Civil Case No. 589-R, the following damages:chanrob1es virtual
1aw library
A) As compensatory damages for the death of David Ico P30,000.00;
B) For loss of earning capacity of David Ico P252,000.00;
C) As moral damages for the death of David Ico and the injury of Fe Ico
P30,000.00
D) As payment for the jeepney P20,000.00;
E) For the hospitalization of Fe Ico P12,000.000;
F) And for attorneys fees P10,000.00;
and to pay the costs in both cases.
The amount of P25,000 paid to Maricar Bascos Baesa, plaintiff in Civil Case No.
561-R, and the medical expenses in the sum of P3,273.55, should be deducted
from the award in her favor.chanrobles virtual lawlibrary
All the foregoing amounts herein awarded except the costs shall earn interest at
the legal rate from date of this decision until fully paid. [CA Decision, pp. 14-15;
Rollo, pp. 57-58.]
PANTRANCO filed a motion for reconsideration of the Court of Appeals decision,
but on June 26, 1987, it denied the same for lack of merit. PANTRANCO then filed
the instant petition for review.
I
Petitioner faults the Court of Appeals for not applying the doctrine of the "last

clear chance" against the jeepney driver. Petitioner claims that under the
circumstances of the case, it was the driver of the passenger jeepney who had the
last clear chance to avoid the collision and was therefore negligent in failing to
utilize with reasonable care and competence his then existing opportunity to
avoid the harm.
The doctrine of the last clear chance was defined by this Court in the case of Ong
v. Metropolitan Water District, 104 Phil. 397 (1958), in this wise:chanrob1es virtual
1aw library
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 Peoples 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 for
damages.chanrobles lawlibrary : rednad
To avoid liability for the negligence of its driver, petitioner claims that the original
negligence of its driver was not the proximate cause of the accident and that the
sole proximate cause was the supervening negligence of the jeepney driver David
Ico in failing to avoid the accident. It is petitioners position that even assuming
arguendo, that the bus encroached into the lane of the jeepney, the driver of the
latter could have swerved the jeepney towards the spacious dirt shoulder on his
right without danger to himself or his passengers.
The above contention of petitioner is manifestly devoid of merit.
Contrary to the petitioners contention, the doctrine of "last clear chance" finds no
application in this case. For the doctrine to be applicable, it is necessary to show
that the person who allegedly had the last opportunity to avert the accident was
aware of the existence of the peril or should, with exercise of due care, have been
aware of it. One cannot be expected to avoid an accident or injury if he does not

know or could not have known the existence of the peril. In this case, there is
nothing to show that the jeepney driver David Ico knew of the impending danger.
When he saw at a distance that the approaching bus was encroaching on his lane,
he did not immediately swerve the jeepney to the dirt shoulder on his right since
he must have assumed that the bus driver will return the bus to its own lane upon
seeing the jeepney approaching from the opposite direction. As held by this Court
in the case of Vda. De Bonifacio v. BLTB, G.R. No. L-26810, August 31, 1970, 34
SCRA 618, a motorist who is properly proceeding on his own side of the highway is
generally entitled to assume that an approaching vehicle coming towards him on
the wrong side, will return to his proper lane of traffic. There was nothing to
indicate to David Ico that the bus could not return to its own lane or was
prevented from returning to the proper lane by anything beyond the control of its
driver. Leo Marantan, an alternate driver of the Pantranco bus who was seated
beside the driver Ramirez at the time of the accident, testified that Ramirez had
no choice but to swerve the steering wheel to the left and encroach on the
jeepneys lane because there was a steep precipice on the right [CA Decision, p.
2; Rollo, p. 45]. However, this is belied by the evidence on record which clearly
shows that there was enough space to swerve the bus back to its own lane
without any danger [CA Decision, p. 7; Rollo, p. 50].
Moreover, both the trial court and the Court of Appeals found that at the time of
the accident the Pantranco bus was speeding towards Manila [CA Decision, p. 2;
Rollo, p. 45]. By the time David Ico must have realized that the bus was not
returning to its own lane, it was already too late to swerve the jeepney to his right
to prevent an accident. The speed at which the approaching bus was running
prevented David Ico from swerving the jeepney to the right shoulder of the road in
time to avoid the collision. Thus, even assuming that the jeepney driver perceived
the danger a few seconds before the actual collision, he had no opportunity to
avoid it. This Court has held that the last clear chance doctrine "can never apply
where the party charged is required to act instantaneously, and if the injury
cannot be avoided by the application of all means at hand after the peril is or
should have been discovered" [Ong v. Metropolitan Water District,
supra].chanrobles.com : virtual law library
Petitioner likewise insists that David Ico was negligent in failing to observe Section
43 (c), Article III Chapter IV of Republic Act No. 4136 * which provides that the
driver of a vehicle entering a through highway or a stop intersection shall yield
the right of way to all vehicles approaching in either direction on such through
highway.
Petitioners misplaced reliance on the aforesaid law is readily apparent in this
case. The cited law itself provides that it applies only to vehicles entering a
through highway or a stop intersection. At the time of the accident, the jeepney
had already crossed the intersection and was on its way to Malalam River.
Petitioner itself cited Fe Icos testimony that the accident occurred after the
jeepney had travelled a distance of about two (2) meters from the point of
intersection [Petition p. 10; Rollo, p. 27]. In fact, even the witness for the

petitioner, Leo Marantan, testified that both vehicles were coming from opposite
directions [CA Decision, p. 7; Rollo, p. 50], clearly indicating that the jeepney had
already crossed the intersection.
Considering the foregoing, the Court finds that the negligence of petitioners
driver in encroaching into the lane of the incoming jeepney and in failing to return
the bus to its own lane immediately upon seeing the jeepney coming from the
opposite direction was the sole and proximate cause of the accident without
which the collision would not have occurred. There was no supervening or
intervening negligence on the part of the jeepney driver which would have made
the prior negligence of petitioners driver a mere remote cause of the accident.
II
On the issue of its liability as an employer, petitioner claims that it had observed
the diligence of a good father of a family to prevent damage, conformably to the
last paragraph of Article 2180 of the Civil Code. Petitioner adduced evidence to
show that in hiring its drivers, the latter are required to have professional drivers
license and police clearance. The drivers must also pass written examinations,
interviews and practical driving tests, and are required to undergo a six-month
training period. Rodrigo San Pedro, petitioners Training Coordinator, testified on
petitioners policy of conducting regular and continuing training programs and
safety seminars for its drivers, conductors, inspectors and supervisors at a
frequency rate of at least two (2) seminars a month.
On this point, the Court quotes with approval the following findings of the trial
court which was adopted by the Court of Appeals in its challenged
decision:chanrob1es virtual 1aw library
When an injury is caused by the negligence of an employee, there instantly arises
a presumption that the employer has been negligent either in the selection of his
employees or in the supervision over their acts. Although this presumption is only
a disputable presumption which could be overcome by proof of diligence of a good
father of a family, this Court believes that the evidence submitted by the
defendant to show that it exercised the diligence of a good father of a family in
the case of Ramirez, as a company driver is far from sufficient. No support
evidence has been adduced. The professional drivers license of Ramirez has not
been produced. There is no proof that he is between 25 to 38 years old. There is
also no proof as to his educational attainment, his age, his weight and the fact
that he is married or not. Neither are the result of the written test, psychological
and physical test, among other tests, have been submitted in evidence [sic]. His
NBI or police clearances and clearances from previous employment were not
marked in evidence. No evidence was presented that Ramirez actually and really
attended the seminars. Vital evidence should have been the certificate of
attendance or certificate of participation or evidence of such participation like a
logbook signed by the trainees when they attended the seminars. If such records

are not available, the testimony of the classmates that Ramirez was their
classmate in said seminar (should have been presented) [CA Decision, pp. 8-9;
Rollo, pp. 51-52].chanrobles law library
Petitioner contends that the fact that Ambrosio Ramirez was employed and
remained as its driver only means that he underwent the same rigid selection
process and was subjected to the same strict supervision imposed by petitioner
on all applicants and employees. It is argued by the petitioner that unless proven
otherwise, it is presumed that petitioner observed its usual recruitment procedure
and company polices on safety and efficiency [Petition, p. 20; Rollo, p. 37].
The Court finds the above contention unmeritorious.
The finding of negligence on the part of its driver Ambrosio Ramirez gave rise to
the presumption of negligence on the part of petitioner and the burden of proving
that it exercised due diligence not only in the selection of its employees but also
in adequately supervising their work rests with the petitioner [Lilius v. Manila
Railroad Company, 59 Phil. 758 (1934); Umali v. Bacani, G.R. No. L-40570, June
30, 1976, 69 SCRA 623]. Contrary to petitioners claim, there is no presumption
that the usual recruitment procedures and safety standards were observed. The
mere issuance of rules and regulations and the formulation of various company
policies on safety, without showing that they are being complied with, are not
sufficient to exempt petitioner from liability arising from the negligence of its
employee. It is incumbent upon petitioner to show that in recruiting and
employing the erring driver, the recruitment procedures and company policies on
efficiency and safety were followed. Petitioner failed to do this. Hence, the Court
finds no cogent reason to disturb the finding of both the trial court and the Court
of Appeals that the evidence presented by the petitioner, which consists mainly of
the uncorroborated testimony of its Training Coordinator, is insufficient to
overcome the presumption of negligence against petitioner.cralawnad
III
On the question of damages, petitioner claims that the Court of Appeals erred in
fixing the damages for the loss of earning capacity of the deceased victims.
Petitioner assails respondent courts findings because no documentary evidence
in support thereof, such as income tax returns, pay-rolls, pay slips or invoices
obtained in the usual course of business, were presented [Petition, p. 22; Rollo, p.
39]. Petitioner argues that the "bare and self-serving testimonies of the wife of the
deceased David Ico and the mother of the deceased Marilyn Baesa . . . have no
probative value to sustain in law the Court of Appeals conclusion on the
respective earnings of the deceased victims." [Petition, pp. 21-22; Rollo, pp. 3839.] It is petitioners contention that the evidence presented by the private
respondent does not meet the requirements of clear and satisfactory evidence to
prove actual and compensatory damages.

The Court finds that the Court of Appeals committed no reversible error in fixing
the amount of damages for the loss of earning capacity of the deceased victims.
While it is true that private respondents should have presented documentary
evidence to support their claim for damages for loss of earning capacity of the
deceased victims, the absence thereof does not necessarily bar the recovery of
the damages in question. The testimony of Fe Ico and Francisca Bascos as to the
earning capacity of David Ico, and the spouses Baesa, respectively, are sufficient
to establish a basis from which the court can make a fair and reasonable estimate
of the damages for the loss of earning capacity of the three deceased victims.
Moreover, in fixing the damages for loss of earning capacity of a deceased victim,
the court can consider the nature of his occupation, his educational attainment
and the state of his health at the time of death.
In the instant case, David Ico was thirty eight (38) years old at the time of his
death in 1981 and was driving his own passenger jeepney. The spouses Ceasar
and Marilyn Baesa were both thirty (30) years old at the time of their death.
Ceasar Baesa was a commerce degree holder and the proprietor of the Cauayan
Press, printer of the Cauayan Valley Newspaper and the Valley Times at Cauayan,
Isabela. Marilyn Baesa graduated as a nurse in 1976 and at the time of her death,
was the company nurse, personnel manager, treasurer and cashier of the Ilagan
Press at Ilagan, Isabela. Respondent court duly considered these factors, together
with the uncontradicted testimonies of Fe Ico and Francisca Bascos, in fixing the
amount of damages for the loss of earning capacity of David Ico and the spouses
Baesa.chanrobles.com:cralaw:red
However, it should be pointed out that the Court of Appeals committed error in
fixing the compensatory damages for the death of Harold Jim Baesa and Marcelino
Baesa. Respondent court awarded to plaintiff (private respondent) Maricar Baesa
Thirty Thousand Pesos (P30,000.00) as "compensatory damages for the death of
Harold Jim Baesa and Marcelino Baesa." [CA Decision, p. 14; Rollo, 57]. In other
words, the Court of Appeals awarded only Fifteen Thousand Pesos (P15,000.00) as
indemnity for the death of Harold Jim Baesa and another Fifteen Thousand Pesos
(P15,000.00) for the death of Marcelino Baesa. This is clearly erroneous. In the
case of People v. de la Fuente, G.R. Nos. 63251-52, December 29, 1983, 126 SCRA
518, the indemnity for the death of a person was fixed by this Court at Thirty
Thousand Pesos (P30,000.00). Plaintiff Maricar Baesa should therefore be awarded
Sixty Thousand Pesos (P60,000.00) as indemnity for the death of her brothers,
Harold Jim Baesa and Marcelino Baesa or Thirty Thousand Pesos (P30,000.00) for
the death of each brother.
The other items of damages awarded by respondent court which were not
challenged by the petitioner are hereby affirmed.
WHEREFORE, premises considered, the petition is DENIED, and the decision of
respondent Court of Appeals is hereby AFFIRMED with the modification that the
amount of compensatory damages for the death of Harold Jim Baesa and
Marcelino Baesa are increased to Thirty Thousand Pesos (P30,000.00)

each.chanrobles law library

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
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 and Janda for the respondents.
Bernabe Africa, etc. for the petitioners.
MAKALINTAL., J.:
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. T5292 into the 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 off 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 accessorias 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 crossexamine 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 cross-examined; 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. 398).
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 were 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 he 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. (CAG.R. No. 3240-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 principal
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 he 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. v. Requena,
244, U.S. 89, 56 L. ed. 680.) 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 v. Boadle, 2 H & Co. 722; 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 its 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 highly 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.1wph1.t
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 assess 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
defendant's 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 v.
Broderick, 51 La. Ann. 1153, 25 So. 977; Hebert v. Lake Charles Ice, etc., Co.,
111 La. 522, 35 So. 731, 64 L.R.A. 101, 100 Am. St. Rep. 505; Willis v.
Vicksburg, etc., R. Co., 115 La. 63, 38 So. 892; Bents v. 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
t
until
gasoline
tever be theWactjvities of these peopleor 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. These
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 intention 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 Corporation, 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 state; (4) the delivery truck used in delivering gasoline to the
station had the name of 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 TAfrica; Exhibit U-Africa; Exhibit X-5 Africa; Exhibit X-6 Africa; Exhibit Y-Africa).
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
thereby 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. Firemens' 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 v. 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 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 sum 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., Zaldivar and Sanchez, JJ., concur.
Dizon, J., took no part.

THIRD DIVISION
[G.R. No. 132607. May 5, 1999]
CEBU SHIPYARD AND ENGINEERING WORKS, INC., petitioner, vs. WILLIAM
LINES, INC. and PRUDENTIAL GUARANTEE and ASSURANCE
COMPANY, INC., respondents.
DECISION
SYNOPSIS
Private respondent William Lines, Inc. was the owner of M/V Manila City, a
luxury passenger-cargo vessel, which caught fire and sank while undergoing drydocking and repairs within the premises of petitioner Cebu Shipyard and
Engineering Works, Inc. (CSEW) on February 16, 1991. The subject vessel was
insured with private respondent Prudential Guarantee and Assurance Company,
Inc. for P45 million. William Lines, Inc. sued CSEW for damages and impleaded
Prudential as co-plaintiff, after the latter had paid William Lines, Inc. the value of
the hull and machinery insurance on the M/V Manila City. As a result of such
payment Prudential was subrogated to the claim of P45 million, representing the
value of the said insurance it paid. The trial court rendered a decision against

CSEW. Petitioner appealed to the Court of Appeals which affirmed the decision of
the trial court. Petitioner filed a motion for reconsideration, but was denied by the
appellate court. Hence, the present petition. Petitioner faulted the Court of
Appeals for adjudging it negligent and liable for damages to the respondents,
William Lines, Inc. and Prudential for the loss of the vessel. Petitioner maintained
that it did not have exclusive control of the vessel and the trial court and the
Court of Appeals erred in applying the doctrine of res ipsa loquitur.
The Supreme Court upheld the trial court and the Court of Appeals in their
findings that the vessel caught fire and sank by reason of the negligence of the
workers of CSEW and in applying the doctrine of res ipsa loquitur. The Court ruled
that all the conditions warranting the application of the doctrine of res ipsa
loquitur were present, namely: (1) the accident was of a kind which does not
ordinarily occur unless someone is negligent; and (2) that the instrumentality or
agency which caused the injury was under the exclusive control of the person
charged with negligence. The trial court found direct evidence to prove that the
workers of CSEW were remiss in their duty of exercising due diligence in the care
of subject vessel. Said direct evidence substantiated the conclusion that CSEW
was really negligent even without applying the doctrine of res ipsa loquitur. The
Court discerned no basis for disturbing the finding of the trial court and the Court
of Appeals firmly anchored on enough evidence.
SYLLABUS
1. CIVIL LAW; TORTS; DOCTRINE OF RES IPSA LOQUITOR; APPLICABLE IN
CASE AT BAR. The finding by the trial court and the Court of Appeals that M/V
Manila City caught fire and sank by reason of the negligence of the workers of
CSEW, when the said vessel was under the exclusive custody and control of
CSEW is accordingly upheld. Under the circumstances of the case, the
doctrine of res ipsa loquitur applies. For the doctrine of res ipsa loquitur to
apply to a given situation, the following conditions must concur: (1) the
accident was of a kind which does not ordinarily occur unless someone is
negligent; and (2) that the instrumentality or agency which caused the injury
was under the exclusive control of the person charged with negligence. The
facts and evidence on record reveal the concurrence of said conditions in the
case under scrutiny. First, the fire that occurred and consumed M/V Manila City
would not have happened in the ordinary course of things if reasonable care
and diligence had been exercised. In other words, some negligence must have
occurred. Second, the agency charged with negligence, as found by the trial
court and the Court of Appeals and as shown by the records, is the herein
petitioner, Cebu Shipyard and Engineering Works, Inc., which had control over
subject vessel when it was docked for annual repairs. So also, as found by the

regional trial court, other responsible causes, including the conduct of the
plaintiff, and third persons, are sufficiently eliminated by the evidence.
2. COMMERCIAL LAW; INSURANCE; MARINE INSURANCE; THE INTENTION
OF THE PARTIES TO MAKE EACH OTHER A CO-ASSURED UNDER AN
INSURANCE POLICY IS TO BE GLEANED PRINCIPALLY FROM THE
INSURANCE CONTRACT OR POLICY ITSELF AND NOT FROM ANY OTHER
CONTRACT OR AGREEMENT BECAUSE THE INSURANCE POLICY ITSELF
DENOMINATES
THE
ASSURED
AND
BENEFICIARIES
OF
THE
INSURANCE. Clause 20 of the Work Order in question is clear in the sense
that it requires William Lines to maintain insurance on the vessel during the
period of dry-docking or repair. Concededly, such a stipulation works to the
benefit of CSEW as the shiprepairer. However, the fact that CSEW benefits
from the said stipulation does not automatically make it as a co-assured of
William Lines. The intention of the parties to make each other a co-assured
under an insurance policy is to be gleaned principally from the insurance
contract or policy itself and not from any other contract or agreement because
the insurance policy denominates the assured and the beneficiaries of the
insurance. The hull and machinery insurance procured by William Lines, Inc.
from Prudential named only William Lines, Inc. as the assured. There was no
manifestation of any intention of William Lines, Inc. to constitute CSEW as a
co-assured under subject policy. It is axiomatic that when the terms of a
contract are clear its stipulations control. Thus, when the insurance policy
involved named only William Lines, Inc. as the assured thereunder, the claim
of CSEW that it is a co-assured is unfounded.
3. CIVIL LAW; CONTRACTS; IN DETERMINING WHETHER A PROVISION IN A
CONTRACT
IS
ONE
OF
ADHESION,
THE
FACTS
AND
CIRCUMSTANCES VIS-A-VIS THE NATURE OF THE PROVISION SOUGHT
TO BE ENFORCED SHOULD BE CONSIDERED, BEARING IN MIND THE
PRINCIPLES OF EQUITY AND FAIR PLAY. Although in this jurisdiction,
contracts of adhesion have been consistently upheld as valid per se; as
binding as an ordinary contract, the Court recognizes instances when reliance
on such contracts cannot be favored especially where the facts and
circumstances warrant that subject stipulations be disregarded. Thus, in ruling
on the validity and applicability of the stipulation limiting the liability of CSEW
for negligence to One Million (P1,000,000.00) Pesos only, the facts and
circumstances vis-a-vis the nature of the provision sought to be enforced
should be considered, bearing in mind the principles of equity and fair play. It
is worthy to note that M/V Manila City was insured with Prudential for Forty
Five Million (P45,000,000.00) Pesos. To determine the validity and

sustainability of the claim of William Lines, Inc., for a total loss, Prudential
conducted its own inquiry. Upon thorough investigation by its hull surveyor,
M/V Manila City was found to be beyond economical salvage and repair. The
evaluation of the average adjuster also reported a constructive total loss. The
said claim of William Lines, Inc., was then found to be valid and compensable
such that Prudential paid the latter the total value of its insurance claim.
Furthermore, it was ascertained that the replacement cost of the vessel (the
price of a vessel similar to M/V Manila City), amounts to Fifty Five Million (P5
5,000,000.00) Pesos. Considering the aforestated circumstances, let alone the
fact that negligence on the part of petitioner has been sufficiently proven, it
would indeed be unfair and inequitable to limit the liability of petitioner to One
Million Pesos only. As aptly held by the trial court, it is rather unconscionable if
not overstrained. To allow CSEW to limit its liability to One Million Pesos
notwithstanding the fact that the total loss suffered by the assured and paid
for by Prudential amounted to Forty Five Million (P45,000,000.00) Pesos would
sanction the exercise of a degree of diligence short of what is ordinarily
required because, then, it would not be difficult for petitioner to escape liability
by the simple expedient of paying an amount very much lower than the actual
damage or loss suffered by William Lines, Inc.
4. REMEDIAL LAW; EVIDENCE; ADMISSIBILITY; OPINION OF EXPERT
WITNESS; COURTS ARE NOT BOUND BY THE TESTIMONIES OF EXPERT
WITNESSES; RECEPTION THEREOF IS WITHIN THE DISCRETION OF THE
COURT. Neither is there tenability in the contention of petitioner that the Court
of Appeals erroneously ruled on the inadmissibility of the expert testimonies it
(petitioner) introduced on the probable cause and origin of the fire. Petitioner
maintains that the Court of Appeals erred in disregarding the testimonies of
the fire experts, Messrs. David Grey and Gregory Michael Southeard, who
testified on the probable origin of the fire in M/V Manila City. Petitioner avers
that since the said fire experts were one in their opinion that the fire did not
originate in the area of Tank Top No. 12 where the JNB workers were doing
hotworks but on the crew accommodation cabins on the portside No. 2 deck,
the trial court and the Court of Appeals should have given weight to such
finding based on the testimonies of fire experts; petitioner argues. But courts
are not bound by the testimonies of expert witnesses. Although they may
have probative value, reception in evidence of expert testimonies is within the
discretion of the court. Section 49, Rule 130 of the Revised Rules of Court,
provides: SEC. 49. Opinion of expert witness. The opinion of a witness on a
matter requiring special knowledge, skill, experience or training which he is
shown to possess, may be received in evidence. The word may signifies that
the use of opinion of an expert witness as evidence is a prerogative of the

courts. It is never mandatory for judges to give substantial weight to expert

testimonies. If from the facts and evidence on record, a conclusion is readily
ascertainable, there is no need for the judge to resort to expert opinion
evidence. In the case under consideration, the testimonies of the fire experts
were not the only available evidence on the probable cause and origin of the
fire. There were witnesses who were actually on board the vessel when the
fire occurred. Between the testimonies of the fire experts who merely based
their findings and opinions on interviews and the testimonies of those present
during the fire, the latter are of more probative value. Verily, the trial court
and the Court of Appeals did not err in giving more weight to said testimonies.

PURISIMA, J.:
At bar is a Petition for Review on Certiorari under Rule 45 of the Revised Rules
of Court seeking a reversal of the decision of the Court of Appeals [1] which
affirmed the decision of the trial court of origin finding the petitioner herein, Cebu
Shipyard and Engineering Works, Inc. (CSEW) negligent and liable for damages to
the private respondent, William Lines, Inc., and to the insurer, Prudential
Guarantee Assurance Company, Inc.
The antecedent facts that matter are as follows:
Cebu Shipyard and Engineering Works, Inc. (CSEW) is a domestic corporation
engaged in the business of dry-docking and repairing of marine vessels while the
private respondent, Prudential Guarantee and Assurance, Inc. (Prudential), also a
domestic corporation is in the non-life insurance business.
William Lines, Inc. (plaintiff below) is in the shipping business. It was the owner
of M/V Manila City, a luxury passenger-cargo vessel, which caught fire and sank on
February 16, 1991. At the time of the unfortunate occurrence sued upon, subject
vessel was insured with Prudential for P45,000,000.00 pesos for hull and
machinery. The Hull Policy included an Additional Perils (INCHMAREE)
Clause covering loss of or damage to the vessel through the negligence of, among
others, ship repairmen. The Policy provided as follows:
Subject to the conditions of this Policy, this insurance also covers loss of or
damage to Vessel directly caused by the following:
xxx

Negligence of Charterers and/or Repairers, provided such Charterers and/or

Repairers are not an Assured hereunder.
xxx
provided such loss or damage has not resulted from want of due diligence by the
Assured, the Owners or Managers of the Vessel, of any of them. Masters, Officers,
Crew or Pilots are not to be considered Owners within the meaning of this Clause
should they hold shares in the Vessel.[2]
Petitioner CSEW was also insured by Prudential for third party liability under a
Shiprepairers Legal Liability Insurance Policy. The policy was for P10 million only,
under the limited liability clause, to wit:
7. Limit of Liability
The limit of liability under this insurance, in respect of any one accident or series
of accidents, arising out of one occurrence, shall be [P10 million], including
liability for costs and expense which are either:
(a) incurred with the written consent of the underwriters hereon; or
(b) awarded against the Assured.[3]
On February 5, 1991, William Lines, Inc. brought its vessel, M/V Manila City, to
the Cebu Shipyard in Lapulapu City for annual dry-docking and repair.
On February 6, 1991, an arrival conference was held between representatives
of William Lines, Inc. and CSEW to discuss the work to be undertaken on the M/V
Manila City.
The contracts, denominated as Work Orders, were signed thereafter, with the
following stipulations:
10. The Contractor shall replace at its own work and at its own cost any work or
material which can be shown to be defective and which is communicated in
writing within one (1) month of redelivery of the vessel or if the vessel was not in
the Contractors Possession, the withdrawal of the Contractors workmen, or at its
option to pay a sum equal to the cost of such replacement at its own works. These
conditions shall apply to any such replacements.
11. Save as provided in Clause 10, the Contractor shall not be under any liability
to the Customer either in contract or for delict or quasi-delict or otherwise except

for negligence and such liability shall itself be subject to the following overriding
limitations and exceptions, namely:
(a) The total liability of the Contractor to the Customer (over and above the
liability to replace under Clause 10) or of any sub-contractor shall be limited in
respect of any defect or event (and a series of accidents arising out of the same
defect or event shall constitute one defect or event) to the sum of Pesos
Philippine Currency One Million only.
(b) In no circumstance whatsoever shall the liability of the Contractor or any SubContractor include any sum in respect of loss of profit or loss of use of the vessel
or damages consequential on such loss of use.
xxx
20. The insurance on the vessel should be maintained by the customer and/or
owner of the vessel during the period the contract is in effect. [4]
While the M/V Manila City was undergoing dry-docking and repairs within the
premises of CSEW, the master, officers and crew of M/V Manila City stayed in the
vessel, using their cabins as living quarters. Other employees hired by William
Lines to do repairs and maintenance work on the vessel were also present during
the dry-docking.
On February 16, 1991, after subject vessel was transferred to the docking
quay, it caught fire and sank, resulting to its eventual total loss.
On February 21, 1991, William Lines, Inc. filed a complaint for damages
against CSEW, alleging that the fire which broke out in M/V Manila City was
caused by CSEWs negligence and lack of care.
On July 15, 1991 was filed an Amended Complaint impleading Prudential as coplaintiff, after the latter had paid William Lines, Inc. the value of the hull and
machinery insurance on the M/V Manila City. As a result of such payment
Prudential was subrogated to the claim of P45 million, representing the value of
the said insurance it paid.
On June 10, 1994, the trial court a quo came out with a judgment against
CSEW, disposing as follows:
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against
the defendant, ordering the latter:

1. To pay unto plaintiff Prudential Guarantee and Assurance, Inc., the subrogee,
the amount of Forty-five Million (P45 million) Pesos, with interest at the legal rate
until full payment is made;
2. To pay unto plaintiff, William Lines, Inc., the amount of Fifty-six Million Seven
Hundred Fifteen Thousand (P56,715,000.00) Pesos representing loss of income of
M/V MANILA CITY, with interest at the legal rate until full payment is made;
3. To pay unto plaintiff, William Lines, Inc. the amount of Eleven Million (P11
million) as payment, in addition to what it received from the insurance company
to fully cover the injury or loss, in order to replace the M/V MANILA CITY, with
interest at the legal rate until full payment is made;
4. To pay unto plaintiff, William Lines, Inc. the sum of Nine Hundred Twenty-Seven
Thousand Thirty-nine (P927,039.00) Pesos for the loss of fuel and lub (sic) oil on
board the vessel when she was completely gutted by fire at defendant, Cebu
Shipyards quay, with interest at the legal rate until full payment is made;
5. To pay unto plaintiff, William Lines, Inc. the sum of Three Million Fifty-four
Thousand Six Hundred Seventy-seven Pesos and Ninety-five centavos
(P3,054,677.95) as payment for the spare parts and materials used in the M/V
MANILA CITY during dry-docking with interest at the legal rate until full payment is
made;
6. To pay unto plaintiff William Lines, Inc. the sum of Five Hundred Thousand
(P500,000.00) Pesos in moral damages;
7. To pay unto plaintiff, William Lines, Inc. the amount of Ten Million
(P10,000,000.00) Pesos in attorneys fees; and to pay the costs of this suit.
CSEW (defendant below) appealed the aforesaid decision to the Court of
Appeals. During the pendency of the appeal, CSEW and William Lines presented a
Joint Motion for Partial Dismissal with prejudice, on the basis of the amicable
settlement inked between Cebu Shipyard and William Lines only.
On July 31, 1996, the Court of Appeals ordered the partial dismissal of the case
insofar as CSEW and William Lines were concerned.
On September 3, 1997, the Court of Appeals affirmed the appealed decision of
the trial court, ruling thus:
WHEREFORE, the judgment of the lower court ordering the defendant, Cebu
Shipyard and Engineering Works, Inc. to pay the plaintiff Prudential Guarantee and

Assurance, Inc., the subrogee, the sum of P45 Million, with interest at the legal
rate until full payment is made, as contained in the decision of Civil Case No. CEB9935 is hereby AFFIRMED.
With the denial of its motion for reconsideration by the Court of Appeals
Resolution dated February 13, 1998, CSEW found its way to this court via the
present petition, contending that:
I. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN HOLDING THAT
CSEW HAD MANAGEMENT AND SUPERVISORY CONTROL OF THE M/V MANILA CITY
AT THE TIME THE FIRE BROKE OUT.
II. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN APPLYING THE
DOCTRINE OF RES IPSA LOQUITUR AGAINST CSEW.
III. THE COURT OF APPEALS RULING HOLDING CSEW NEGLIGENT AND THEREBY
LIABLE FOR THE LOSS OF THE M/V MANILA CITY IS BASED ON FINDINGS OF FACT
NOT SUPPORTED BY EVIDENCE.
IV. THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN RULING CSEWS
EXPERT EVIDENCE AS INADMISSIBLE OR OF NO PROBATIVE VALUE.
V. THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN RULING THAT
PRUDENTIAL HAS THE RIGHT OF SUBROGATION AGAINST ITS OWN INSURED.
VI. ASSUMING ARGUENDO THAT PRUDENTIAL HAS THE RIGHT OF SUBROGATION
AND THAT CSEW WAS NEGLIGENT IN THE PERFORMANCE OF ITS OBLIGATIONS
UNDER THESHIPREPAIR CONTRACTS, THE COURT OF APPEALS COMMITTED A
REVERSIBLE ERROR IN HOLDING THAT THE CONTRACTUAL PROVISIONS LIMITING
CSEWS LIABILITY FOR NEGLIGENCE TO A MAXIMUM OF P1 MILLION IS NOT VALID,
CONTRARY TO THE APPLICABLE RULINGS OF THIS HONORABLE COURT.
Petitioners version of the events that led to the fire runs as follows:
On February 13, 1991, the CSEW completed the drydocking of M/V Manila City at
its grave dock. It was then transferred to the docking quay of CSEW where the
remaining repair to be done was the replating of the top of Water Ballast Tank No.
12 (Tank Top No. 12) which was subcontracted by CSEW to JNB General
Services. Tank Top No. 12 was at the rear section of the vessel, on level with the
flooring of the crew cabins located on the vessels second deck.
At around seven o clock in the morning of February 16, 1991, the JNB workers
trimmed and cleaned the tank top framing which involved minor hotworks

(welding/cutting works). The said work was completed at about 10:00 a. m. The
JNB workers then proceeded to rig the steel plates, after which they had their
lunch break. The rigging was resumed at 1:00 p.m.
While in the process of rigging the second steel plate, the JNB workers noticed
smoke coming from the passageway along the crew cabins. When one of the
workers, Mr. Casas, proceeded to the passageway to ascertain the origin of the
smoke, he noticed that smoke was gathering on the ceiling of the passageway but
did not see any fire as the crew cabins on either side of the passageway were
locked. He immediately sought out the proprietor of JNB, Mr. Buenavista, and the
Safety Officer of CSEW, Mr. Aves, who sounded the fire alarm. CSEWs fire brigade
immediately responded as well as the other fire fighting units in Metro Cebu.
However, there were no WLI representative, officer or crew to guide the firemen
inside the vessel.
Despite the combined efforts of the firemen of the Lapulapu City Fire Department,
Mandaue Fire Department, Cordova Fire Department, Emergency Rescue Unit
Foundation, and fire brigade of CSEW, the fire was not controlled until 2:00 a.m. of
the following day, February 17, 1991.
On the early morning of February 17, 1991, gusty winds rekindled the flames on
the vessel and fire again broke out. Then the huge amounts of water pumped into
the vessel, coupled with the strong current, caused the vessel to tilt until it
capsized and sank
When M/V Manila City capsized, steel and angle bars were noticed to have been
newly welded along the port side of the hull of the vessel, at the level of the crew
cabins. William Lines did not previously apply for a permit to do hotworks on the
said portion of the ship as it should have done pursuant to its work order with
CSEW.[5]
Respondent Prudential, on the other hand, theorized that the fire broke out in
the following manner :
At around eleven o clock in the morning of February 16, 1991, the Chief Mate of
M/V Manila City was inspecting the various works being done by CSEW on the
vessel, when he saw that some workers of CSEW were cropping out steel plates
on Tank Top No. 12 using acetylene, oxygen and welding torch. He also observed
that the rubber insulation wire coming out of the air-conditioning unit was already
burning, prompting him to scold the workers.

At 2:45 in the afternoon of the same day, witnesses saw smoke coming from Tank
No. 12. The vessels reeferman reported such occurence to the Chief Mate who
immediately assembled the crew members to put out the fire. When it was too hot
for them to stay on board and seeing that the fire cannot be controlled, the
vessels crew were forced to withdraw from CSEWs docking quay.
In the morning of February 17, 1991, M/V Manila City sank. As the vessel was
insured with Prudential Guarantee, William Lines filed a claim for constructive
total loss, and after a thorough investigation of the surrounding circumstances of
the tragedy, Prudential Guarantee found the said insurance claim to be
meritorious and issued a check in favor of William Lines in the amount of P45
million pesos representing the total value of M/V Manila Citys hull and machinery
insurance.[6]
The petition is unmeritorious.
Petitioner CSEW faults the Court of Appeals for adjudging it negligent and
liable for damages to the respondents, William Lines, Inc., and Prudential for the
loss of M/V Manila City. It is petitioners submission that the finding of negligence
by the Court of Appeals is not supported by the evidence on record, and contrary
to what the Court of Appeals found, petitioner did not have management and
control over M/V Manila City. Although it was brought to the premises of CSEW for
annual repair, William Lines, Inc. retained control over the vessel as the ship
captain remained in command and the ships crew were still present. While it
imposed certain rules and regulations on William Lines, it was in the exercise of
due diligence and not an indication of CSEWs exclusive control over subject
vessel. Thus, CSEW maintains that it did not have exclusive control over the M/V
Manila City and the trial court and the Court of Appeals erred in applying the
doctrine of res ipsa loquitur.
Time and again, this Court had occasion to reiterate the well-established rule
that factual findings by the Court of Appeals are conclusive on the parties and are
not reviewable by this Court. They are entitled to great weight and respect, even
finality, especially when, as in this case, the Court of Appeals affirmed the factual
findings arrived at by the trial court. [7] When supported by sufficient evidence,
findings of fact by the Court of Appeals affirming those of the trial court, are not to
be disturbed on appeal. The rationale behind this doctrine is that review of the
findings of fact of the Court of Appeals is not a function that the Supreme
Court normally undertakes.[8]
Here, the Court of Appeals and the Cebu Regional Trial Court of origin are
agreed that the fire which caused the total loss of subject M/V Manila City was due

to the negligence of the employees and workers of CSEW. Both courts found that
the M/V Manila City was under the custody and control of petitioner CSEW, when
the ill-fated vessel caught fire. The decisions of both the lower court and the Court
of Appeals set forth clearly the evidence sustaining their finding of actionable
negligence on the part of CSEW. This factual finding is accorded great weight and
is conclusive on the parties. The court discerns no basis for disturbing such finding
firmly anchored on enough evidence. As held in the case of Roblett Industrial
Construction Corporation vs. Court of Appeals, in the absence of any showing that
the trial court failed to appreciate facts and circumstances of weight and
substance that would have altered its conclusion, no compelling reason exists for
the Court to impinge upon matters more appropriately within its province. [9]
Furthermore, in petitions for review on certiorari, only questions of law may be
put into issue. Questions of fact cannot be entertained. The finding of negligence
by the Court of Appeals is a question which this Court cannot look into as it would
entail going into factual matters on which the finding of negligence was based.
Such an approach cannot be allowed by this Court in the absence of clear showing
that the case falls under any of the exceptions[10] to the well-established principle.
The finding by the trial court and the Court of Appeals that M/V Manila City
caught fire and sank by reason of the negligence of the workers of CSEW, when
the said vessel was under the exclusive custody and control of CSEW is
accordingly upheld. Under the circumstances of the case, the doctrine of res ipsa
loquitur applies. For the doctrine of res ipsa loquitur to apply to a given situation,
the following conditions must concur: (1) the accident was of a kind which does
not ordinarily occur unless someone is negligent; and (2) that the instrumentality
or agency which caused the injury was under the exclusive control of the person
charged with negligence.
The facts and evidence on record reveal the concurrence of said conditions in
the case under scrutiny. First, the fire that occurred and consumed M/V Manila City
would not have happened in the ordinary course of things if reasonable care and
diligence had been exercised. In other words, some negligence must have
occurred. Second, the agency charged with negligence, as found by the trial court
and the Court of Appeals and as shown by the records, is the herein petitioner,
Cebu Shipyard and Engineering Works, Inc., which had control over subject vessel
when it was docked for annual repairs. So also, as found by the regional trial
court, other responsible causes, including the conduct of the plaintiff, and third
persons, are sufficiently eliminated by the evidence.[11]
What is more, in the present case the trial court found direct evidence to prove
that the workers and/or employees of CSEW were remiss in their duty of

exercising due diligence in the care of subject vessel. The direct evidence
substantiates the conclusion that CSEW was really negligent. Thus, even without
applying the doctrine of res ipsa loquitur, in light of the direct evidence on record,
the ineluctable conclusion is that the petitioner, Cebu Shipyard and Engineering
Works, Inc., was negligent and consequently liable for damages to the
respondent, William Lines, Inc.
Neither is there tenability in the contention of petitioner that the Court of
Appeals erroneously ruled on the inadmissibility of the expert testimonies it
(petitioner) introduced on the probable cause and origin of the fire. Petitioner
maintains that the Court of Appeals erred in disregarding the testimonies of the
fire experts, Messrs. David Grey and Gregory Michael Southeard, who testified on
the probable origin of the fire in M/V Manila City. Petitioner avers that since the
said fire experts were one in their opinion that the fire did not originate in the area
of Tank Top No. 12 where the JNB workers were doing hotworks but on the crew
accommodation cabins on the portside No. 2 deck, the trial court and the Court of
Appeals should have given weight to such finding based on the testimonies of fire
experts; petitioner argues.
But courts are not bound by the testimonies of expert witnesses. Although
they may have probative value, reception in evidence of expert testimonies is
within the discretion of the court. Section 49, Rule 130 of the Revised Rules of
Court, provides:
SEC. 49. Opinion of expert witness. - The opinion of a witness on a matter
requiring special knowledge, skill, experience or training which he is shown to
possess, may be received in evidence.
The word may signifies that the use of opinion of an expert witness as evidence
is a prerogative of the courts. It is never mandatory for judges to give substantial
weight to expert testimonies. If from the facts and evidence on record, a
conclusion is readily ascertainable, there is no need for the judge to resort to
expert opinion evidence. In the case under consideration, the testimonies of the
fire experts were not the only available evidence on the probable cause and origin
of the fire. There were witnesses who were actually on board the vessel when the
fire occurred. Between the testimonies of the fire experts who merely based their
findings and opinions on interviews and the testimonies of those present during
the fire, the latter are of more probative value. Verily, the trial court and the Court
of Appeals did not err in giving more weight to said testimonies.
On the issue of subrogation, petitioner contends that Prudential is not entitled
to be subrogated to the rights of William Lines, Inc., theorizing that (1) the fire

which gutted M/V Manila City was an excluded risk and (2) it is a co-assured under
the Marine Hull Insurance Policy.
It is petitioners submission that the loss of M/V Manila City or damage thereto
is expressly excluded from the coverage of the insurance because the same
resulted from want of due diligence by the Assured, Owners or Managers which is
not included in the risks insured against. Again, this theory of petitioner is bereft
of any factual or legal basis. It proceeds from a wrong premise that the fire which
gutted subject vessel was caused by the negligence of the employees of William
Lines, Inc. To repeat, the issue of who between the parties was negligent has
already been resolved against Cebu Shipyard and Engineering Works, Inc. Upon
proof of payment by Prudential to William Lines, Inc., the former was subrogated
to the right of the latter to indemnification from CSEW. As aptly ruled by the Court
of Appeals, the law on the matter is succinct and clear, to wit:
Art. 2207. If the plaintiffs 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 shall be
subrogated to the rights of the insured against the wrongdoer or the person who
has 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.[12]
Thus, when Prudential, after due verification of the merit and validity of the
insurance claim of William Lines, Inc., paid the latter the total amount covered by
its insurance policy, it was subrogated to the right of the latter to recover the
insured loss from the liable party, CSEW.
Petitioner theorizes further that there can be no right of subrogation as it is
deemed a co-assured under the subject insurance policy. To buttress its stance
that it is a co-assured, petitioner placed reliance on Clause 20 of of the Work
Order which states:
20. The insurance on the vessel should be maintained by the customer and/or
owner of the vessel during the period the contract is in effect. [13]
According to petitioner, under the aforecited clause, William Lines, Inc., agreed to
assume the risk of loss of the vessel while under drydock or repair and to such
extent, it is benefited and effectively constituted as a co-assured under the policy.
This theory of petitioner is devoid of sustainable merit. Clause 20 of the Work
Order in question is clear in the sense that it requires William Lines to maintain

insurance on the vessel during the period of dry-docking or repair. Concededly,

such a stipulation works to the benefit of CSEW as the shiprepairer. However, the
fact that CSEW benefits from the said stipulation does not automatically make it
as a co-assured of William Lines. The intention of the parties to make each other a
co-assured under an insurance policy is to be gleaned principally from the
insurance contract or policy itself and not from any other contract or agreement
because the insurance policy denominates the assured and the beneficiaries of
the insurance. The hull and machinery insurance procured by William Lines, Inc.
from Prudential named only William Lines, Inc. as the assured. There was no
manifestation of any intention of William Lines, Inc. to constitute CSEW as a coassured under subject policy. It is axiomatic that when the terms of a contract are
clear its stipulations control.[14] Thus, when the insurance policy involved named
only William Lines, Inc. as the assured thereunder, the claim of CSEW that it is a
co-assured is unfounded.
Then too, in the Additional Perils Clause of the same Marine Insurance Policy, it
is provided that:
Subject to the conditions of this Policy, this insurance also covers loss of or
damage to vessel directly caused by the following:
xxx
Negligence of Charterers and/or Repairers, provided such Charterers and/or
Repairers are not an Assured hereunder.[15] (emphasis supplied)
As correctly pointed out by respondent Prudential, if CSEW were deemed a coassured under the policy, it would nullify any claim of William Lines, Inc. from
Prudential for any loss or damage caused by the negligence of CSEW. Certainly,
no shipowner would agree to make a shiprepairer a co-assured under such
insurance policy; otherwise, any claim for loss or damage under the policy would
be invalidated. Such result could not have been intended by William Lines, Inc.
Finally, CSEW argues that even assuming that it was negligent and therefore
liable to William Lines, Inc., by stipulation in the Contract or Work Order its liability
is limited to One Million (P1,000,000.00) Pesos only, and Prudential a mere
subrogee of William Lines, Inc., should only be entitled to collect the sum
stipulated in the said contract.
Although in this jurisdiction, contracts of adhesion have been consistently
upheld as valid per se; as binding as an ordinary contract, the Court recognizes
instances when reliance on such contracts cannot be favored especially where the

facts and circumstances warrant that subject stipulations be disregarded. [16] Thus,
in ruling on the validity and applicability of the stipulation limiting the liability
of CSEW for negligence to One Million (P1,000,000.00) Pesos only, the facts and
circumstances vis-a-vis the nature of the provision sought to be enforced should
be considered, bearing in mind the principles of equity and fair play.
It is worthy to note that M/V Manila City was insured with Prudential for Forty
Five Million (P45,000,000.00) Pesos. To determine the validity and sustainability of
the claim of William Lines, Inc., for a total loss, Prudential conducted its own
inquiry. Upon thorough investigation by its hull surveyor, M/V Manila City was
found to be beyond economical salvage and repair. [17] The evaluation of the
average adjuster also reported a constructive total loss. [18] The said claim of
William Lines, Inc., was then found to be valid and compensable such that
Prudential paid the latter the total value of its insurance claim. Furthermore, it
was ascertained that the replacement cost of the vessel (the price of a vessel
similar to M/V Manila City), amounts to Fifty-five Million (P55,000,000.00) Pesos. [19]
Considering the aforestated circumstances, let alone the fact that negligence
on the part of petitioner has been sufficiently proven, it would indeed be unfair
and inequitable to limit the liability of petitioner to One Million Pesos only. As aptly
held by the trial court, it is rather unconscionable if not overstrained. To allow
CSEW to limit its liability to One Million Pesos notwithstanding the fact that the
total loss suffered by the assured and paid for by Prudential amounted to Forty
Five Million (P45,000,000.00) Pesos would sanction the exercise of a degree of
diligence short of what is ordinarily required because, then, it would not be
difficult for petitioner to escape liability by the simple expedient of paying an
amount very much lower than the actual damage or loss suffered by William
Lines, Inc.
WHEREFORE, for want of merit, the petition is hereby DENIED and the
decision, dated September 3, 1997, and Resolution, dated February 13, 1998, of
the Court of Appeals AFFIRMED. No pronouncement as to costs.
SO ORDERED.
Romero (Chairman), Vitug, Panganiban, and Gonzaga-Reyes, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-44748 August 29, 1986
RADIO COMMUNICATIONS OF THE PHILS., INC. (RCPI). petitioner,
vs.
COURT OF APPEALS and LORETO DIONELA, respondents.
O. Pythogoras Oliver for respondents.

PARAS, J.:
Before Us, is a Petition for Review by certiorari of the decision of the Court of
Appeals, modifying the decision of the trial court in a civil case for recovery of
damages against petitioner corporation by reducing the award to private
respondent Loreto Dionela of moral damages from P40,000 to Pl5,000, and
attorney's fees from P3,000 to P2,000.
The basis of the complaint against the defendant corporation is a telegram sent
through its Manila Office to the offended party, Loreto Dionela, reading as follows:
176 AS JR 1215PM 9 PAID MANDALUYONG JUL 22-66 LORETO DIONELA
CABANGAN LEGASPI CITY
WIRE ARRIVAL OF CHECK FER
LORETO DIONELA-CABANGAN-WIRE ARRIVAL OF CHECK-PER
115 PM
SA IYO WALANG PAKINABANG DUMATING KA DIYAN-WALA-KANG
PADALA DITO KAHIT BULBUL MO
(p. 19, Annex "A")

Plaintiff-respondent Loreto Dionela alleges that the defamatory words on the

telegram sent to him not only wounded his feelings but also caused him undue
embarrassment and affected adversely his business as well because other people
have come to know of said defamatory words. Defendant corporation as a
defense, alleges that the additional words in Tagalog was a private joke between
the sending and receiving operators and that they were not addressed to or
intended for plaintiff and therefore did not form part of the telegram and that the
Tagalog words are not defamatory. The telegram sent through its facilities was
received in its station at Legaspi City. Nobody other than the operator manned the
teletype machine which automatically receives telegrams being transmitted. The
said telegram was detached from the machine and placed inside a sealed
envelope and delivered to plaintiff, obviously as is. The additional words in
Tagalog were never noticed and were included in the telegram when delivered.
The trial court in finding for the plaintiff ruled as follows:
There is no question that the additional words in Tagalog are libelous.
They clearly impute a vice or defect of the plaintiff. Whether or not
they were intended for the plaintiff, the effect on the plaintiff is the
same. Any person reading the additional words in Tagalog will naturally
think that they refer to the addressee, the plaintiff. There is no
indication from the face of the telegram that the additional words in
Tagalog were sent as a private joke between the operators of the
defendant.
The defendant is sued directly not as an employer. The business of the
defendant is to transmit telegrams. It will open the door to frauds and
allow the defendant to act with impunity if it can escape liability by the
simple expedient of showing that its employees acted beyond the
scope of their assigned tasks.
The liability of the defendant is predicated not only on Article 33 of the
Civil Code of the Philippines but on the following articles of said Code:
ART. 19.- Every person must, in the exercise of his rights and in the
performance of his duties, act with justice, give everyone his due, and
observe honesty and good faith.
ART. 20.-Every person who, contrary to law, wilfully or negligently
causes damage to another, shall indemnify the latter for the same.

There is sufficient publication of the libelous Tagalog words. The office

file of the defendant containing copies of telegrams received are open
and held together only by a metal fastener. Moreover, they are open to
view and inspection by third parties.
It follows that the plaintiff is entitled to damages and attorney's fees.
The plaintiff is a businessman. The libelous Tagalog words must have
affected his business and social standing in the community. The Court
fixes the amount of P40,000.00 as the reasonable amount of moral
damages and the amount of P3,000.00 as attorney's fee which the
defendant should pay the plaintiff. (pp. 15-16, Record on Appeal)
The respondent appellate court in its assailed decision confirming the aforegoing
findings of the lower court stated:
The proximate cause, therefore, resulting in injury to appellee, was the
failure of the appellant to take the necessary or precautionary steps to
avoid the occurrence of the humiliating incident now complained of.
The company had not imposed any safeguard against such
eventualities and this void in its operating procedure does not speak
well of its concern for their clientele's interests. Negligence here is very
patent. This negligence is imputable to appellant and not to its
employees.
The claim that there was no publication of the libelous words in Tagalog
is also without merit. The fact that a carbon copy of the telegram was
filed among other telegrams and left to hang for the public to see,
open for inspection by a third party is sufficient publication. It would
have been otherwise perhaps had the telegram been placed and kept
in a secured place where no one may have had a chance to read it
without appellee's permission.
The additional Tagalog words at the bottom of the telegram are, as
correctly found by the lower court, libelous per se, and from which
malice may be presumed in the absence of any showing of good
intention and justifiable motive on the part of the appellant. The law
implies damages in this instance (Quemel vs. Court of Appeals, L22794, January 16, 1968; 22 SCRA 44). The award of P40,000.00 as
moral damages is hereby reduced to P15,000.00 and for attorney's
fees the amount of P2,000.00 is awarded. (pp. 22-23, record)

After a motion for reconsideration was denied by the appellate court, petitioner
came to Us with the following:
ASSIGNMENT OF ERRORS
I
The Honorable Court of Appeals erred in holding that Petitioneremployer should answer directly and primarily for the civil liability
arising from the criminal act of its employee.
II
The Honorable Court of Appeals erred in holding that there was
sufficient publication of the alleged libelous telegram in question, as
contemplated by law on libel.
III
The Honorable Court of Appeals erred in holding that the liability of
petitioner-company-employer is predicated on Articles 19 and 20 of the
Civil Code, Articles on Human Relations.
IV
The Honorable Court of Appeals erred in awarding Atty's. fees. (p. 4,
Record)
Petitioner's contentions do not merit our consideration. The action for damages
was filed in the lower court directly against respondent corporation not as an
employer subsidiarily liable under the provisions of Article 1161 of the New Civil
Code in relation to Art. 103 of the Revised Penal Code. The cause of action of the
private respondent is based on Arts. 19 and 20 of the New Civil Code (supra). As
well as on respondent's breach of contract thru the negligence of its own
employees. 1
Petitioner is a domestic corporation engaged in the business of receiving and
transmitting messages. Everytime a person transmits a message through the
facilities of the petitioner, a contract is entered into. Upon receipt of the rate or
fee fixed, the petitioner undertakes to transmit the message accurately. There is
no question that in the case at bar, libelous matters were included in the message
transmitted, without the consent or knowledge of the sender. There is a clear case
of breach of contract by the petitioner in adding extraneous and libelous matters

in the message sent to the private respondent. As a corporation, the petitioner

can act only through its employees. Hence the acts of its employees in receiving
and transmitting messages are the acts of the petitioner. To hold that the
petitioner is not liable directly for the acts of its employees in the pursuit of
petitioner's business is to deprive the general public availing of the services of the
petitioner of an effective and adequate remedy. In most cases, negligence must
be proved in order that plaintiff may recover. However, since negligence may be
hard to substantiate in some cases, we may apply the doctrine of RES IPSA
LOQUITUR (the thing speaks for itself), by considering the presence of facts or
circumstances surrounding the injury.
WHEREFORE, premises considered, the judgment of the appellate court is hereby
AFFIRMED.
SO ORDERED.
Feria (Chairman), Fernan, Alampay, and Gutierrez, Jr., JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC
G.R. No. L-21749

September 29, 1967

REPUBLIC OF THE PHILIPPINES, plaintiff-appellee,

vs.
LUZON STEVEDORING CORPORATION, defendant-appellant.
Office of the Solicitor General for plaintiff-appellee.
H. San Luis and L.V. Simbulan for defendant-appellant.

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

The present case comes by direct appeal from a decision of the Court of First
Instance of Manila (Case No. 44572) adjudging the defendant-appellant, Luzon
Stevedoring Corporation, liable in damages to the plaintiff-appellee Republic of
the Philippines.
In the early afternoon of August 17, 1960, barge L-1892, owned by the Luzon
Stevedoring Corporation was being towed down the Pasig river by tugboats
"Bangus" and "Barbero"1 also belonging to the same corporation, when the barge
rammed against one of the wooden piles of the Nagtahan bailey bridge, smashing
the posts and causing the bridge to list. The river, at the time, was swollen and
the current swift, on account of the heavy downpour of Manila and the
surrounding provinces on August 15 and 16, 1960.
Sued by the Republic of the Philippines for actual and consequential damage
caused by its employees, amounting to P200,000 (Civil Case No. 44562, CFI of
Manila), defendant Luzon Stevedoring Corporation disclaimed liability therefor, on
the grounds that it had exercised due diligence in the selection and supervision of
its employees; that the damages to the bridge were caused by force majeure; that
plaintiff has no capacity to sue; and that the Nagtahan bailey bridge is an
obstruction to navigation.
After due trial, the court rendered judgment on June 11, 1963, holding the
defendant liable for the damage caused by its employees and ordering it to pay to
plaintiff the actual cost of the repair of the Nagtahan bailey bridge which
amounted to P192,561.72, with legal interest thereon from the date of the filing of
the complaint.

Defendant appealed directly to this Court assigning the following errors allegedly
committed by the court a quo, to wit:
I The lower court erred in not holding that the herein defendant-appellant
had exercised the diligence required of it in the selection and supervision of
its personnel to prevent damage or injury to others.1awphl.nt
II The lower court erred in not holding that the ramming of the Nagtahan
bailey bridge by barge L-1892 was caused by force majeure.
III The lower court erred in not holding that the Nagtahan bailey bridge is
an obstruction, if not a menace, to navigation in the Pasig river.
IV The lower court erred in not blaming the damage sustained by the
Nagtahan bailey bridge to the improper placement of the dolphins.
V The lower court erred in granting plaintiff's motion to adduce further
evidence in chief after it has rested its case.
VI The lower court erred in finding the plaintiff entitled to the amount of
P192,561.72 for damages which is clearly exorbitant and without any factual
basis.
However, it must be recalled that the established rule in this jurisdiction is that
when a party appeals directly to the Supreme Court, and submits his case there
for decision, he is deemed to have waived the right to dispute any finding of fact
made by the trial Court. The only questions that may be raised are those of law
(Savellano vs. Diaz, L-17441, July 31, 1963; Aballe vs. Santiago, L-16307, April 30,
1963; G.S.I.S. vs. Cloribel, L-22236, June 22, 1965). A converso, a party who
resorts to the Court of Appeals, and submits his case for decision there, is barred
from contending later that his claim was beyond the jurisdiction of the aforesaid
Court. The reason is that a contrary rule would encourage the undesirable
practice of appellants' submitting their cases for decision to either court in
expectation of favorable judgment, but with intent of attacking its jurisdiction
should the decision be unfavorable (Tyson Tan, et al. vs. Filipinas Compaia de
Seguros) et al., L-10096, Res. on Motion to Reconsider, March 23, 1966).
Consequently, we are limited in this appeal to the issues of law raised in the
appellant's brief.
Taking the aforesaid rules into account, it can be seen that the only reviewable
issues in this appeal are reduced to two:

1) Whether or not the collision of appellant's barge with the supports or piers
of the Nagtahan bridge was in law caused by fortuitous event or force
majeure, and
2) Whether or not it was error for the Court to have permitted the plaintiffappellee to introduce additional evidence of damages after said party had
rested its case.
As to the first question, considering that the Nagtahan bridge was an immovable
and stationary object and uncontrovertedly provided with adequate openings for
the passage of water craft, including barges like of appellant's, it is undeniable
that the unusual event that the barge, exclusively controlled by appellant,
rammed the bridge supports raises a presumption of negligence on the part of
appellant or its employees manning the barge or the tugs that towed it. For in the
ordinary course of events, such a thing does not happen if proper care is used. In
Anglo American Jurisprudence, the inference arises by what is known as the "res
ipsa loquitur" rule (Scott vs. London Docks Co., 2 H & C 596; San Juan Light &
Transit Co. vs. Requena, 224 U.S. 89, 56 L. Ed., 680; Whitwell vs. Wolf, 127 Minn.
529, 149 N.W. 299; Bryne vs. Great Atlantic & Pacific Tea Co., 269 Mass. 130; 168
N.E. 540; Gribsby vs. Smith, 146 S.W. 2d 719).
The appellant strongly stresses the precautions taken by it on the day in question:
that it assigned two of its most powerful tugboats to tow down river its barge L1892; that it assigned to the task the more competent and experienced among
its patrons, had the towlines, engines and equipment double-checked and
inspected; that it instructed its patrons to take extra precautions; and concludes
that it had done all it was called to do, and that the accident, therefore, should be
held due to force majeure or fortuitous event.
These very precautions, however, completely destroy the appellant's defense.
For caso fortuito or force majeure(which in law are identical in so far as they
exempt an obligor from liability)2 by definition, are extraordinary events not
foreseeable or avoidable, "events that could not be foreseen, or which, though
foreseen, were inevitable" (Art. 1174, Civ. Code of the Philippines). It is, therefore,
not enough that the event should not have been foreseen or anticipated, as is
commonly believed, but it must be one impossible to foresee or to avoid. The
mere difficulty to foresee the happening is not impossibility to foresee the same:
"un hecho no constituye caso fortuito por la sola circunstancia de que su
existencia haga mas dificil o mas onerosa la accion diligente del presento ofensor"
(Peirano Facio, Responsibilidad Extra-contractual, p. 465; Mazeaud Trait de la
Responsibilite Civil, Vol. 2, sec. 1569). The very measures adopted by appellant

prove that the possibility of danger was not only foreseeable, but actually
foreseen, and was not caso fortuito.
Otherwise stated, the appellant, Luzon Stevedoring Corporation, knowing and
appreciating the perils posed by the swollen stream and its swift current,
voluntarily entered into a situation involving obvious danger; it therefore assured
the risk, and can not shed responsibility merely because the precautions it
adopted turned out to be insufficient. Hence, the lower Court committed no error
in holding it negligent in not suspending operations and in holding it liable for the
damages caused.
It avails the appellant naught to argue that the dolphins, like the bridge, were
improperly located. Even if true, these circumstances would merely emphasize
the need of even higher degree of care on appellant's part in the situation
involved in the present case. The appellant, whose barges and tugs travel up and
down the river everyday, could not safely ignore the danger posed by these
allegedly improper constructions that had been erected, and in place, for years.
On the second point: appellant charges the lower court with having abused its
discretion in the admission of plaintiff's additional evidence after the latter had
rested its case. There is an insinuation that the delay was deliberate to enable the
manipulation of evidence to prejudice defendant-appellant.
We find no merit in the contention. Whether or not further evidence will be
allowed after a party offering the evidence has rested his case, lies within the
sound discretion of the trial Judge, and this discretion will not be reviewed except
in clear case of abuse.3
In the present case, no abuse of that discretion is shown. What was allowed to be
introduced, after plaintiff had rested its evidence in chief, were vouchers and
papers to support an item of P1,558.00 allegedly spent for the reinforcement of
the panel of the bailey bridge, and which item already appeared in Exhibit GG.
Appellant, in fact, has no reason to charge the trial court of being unfair, because
it was also able to secure, upon written motion, a similar order dated November
24, 1962, allowing reception of additional evidence for the said defendantappellant.4
WHEREFORE, finding no error in the decision of the lower Court appealed from,
the same is hereby affirmed. Costs against the defendant-appellant.

Concepcion, C.J., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles and

Fernando, JJ., concur.
Bengzon, J.P. J., on leave, took no part.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC

G.R. No. L-25906 May 28, 1970

PEDRO D. DIOQUINO, plaintiff-appellee,

vs.
FEDERICO LAUREANO, AIDA DE LAUREANO and JUANITO
LAUREANO, defendants-appellants.
Pedro D. Dioquino in his own behalf.
Arturo E. Valdomero, Jose L. Almario and Rolando S. Relova for defendantsappellants.

FERNANDO, J.:
The present lawsuit had its origin in a relationship, if it could be called such, the
use of a car owned by plaintiff Pedro D. Dioquino by defendant Federico Laureano,
clearly of a character casual and temporary but unfortunately married by an
occurrence resulting in its windshield being damaged. A stone thrown by a boy
who, with his other companions, was thus engaged in what undoubtedly for them
must have been mistakenly thought to be a none too harmful prank did not miss
its mark. Plaintiff would hold defendant Federico Laureano accountable for the
loss thus sustained, including in the action filed the wife, Aida de Laureano, and
the father, Juanito Laureano. Plaintiff prevail in the lower court, the judgment
however going only against the principal defendant, his spouse and his father
being absolved of any responsibility. Nonetheless, all three of them appealed
directly to us, raising two questions of law, the first being the failure of the lower
court to dismiss such a suit as no liability could have been incurred as a result of a
fortuitous event and the other being its failure to award damages against plaintiff
for the unwarranted inclusion of the wife and the father in this litigation. We agree
that the lower court ought to have dismissed the suit, but it does not follow that
thereby damages for the inclusion of the above two other parties in the complaint
should have been awarded appellants.
The facts as found by the lower court follow: "Attorney Pedro Dioquino, a
practicing lawyer of Masbate, is the owner of a car. On March 31, 1964, he went to
the office of the MVO, Masbate, to register the same. He met the defendant
Federico Laureano, a patrol officer of said MVO office, who was waiting for a
jeepney to take him to the office of the Provincial Commander, PC, Masbate.
Attorney Dioquino requested the defendant Federico Laureano to introduce him to
one of the clerks in the MVO Office, who could facilitate the registration of his car
and the request was graciously attended to. Defendant Laureano rode on the car
of Atty. Dioquino on his way to the P.C. Barracks at Masbate. While about to reach

their destination, the car driven by plaintiff's driver and with defendant Federico
Laureano as the sole passenger was stoned by some 'mischievous boys,' and its
windshield was broken. Defendant Federico Laureano chased the boys and he was
able to catch one of them. The boy was taken to Atty. Dioquino [and] admitted
having thrown the stone that broke the car's windshield. The plaintiff and the
defendant Federico Laureano with the boy returned to the P.C. barracks and the
father of the boy was called, but no satisfactory arrangements [were] made about
the damage to the
windshield." 1
It was likewise noted in the decision now on appeal: "The defendant Federico
Laureano refused to file any charges against the boy and his parents because he
thought that the stone-throwing was merely accidental and that it was due
to force majeure. So he did not want to take any action and after delaying the
settlement, after perhaps consulting a lawyer, the defendant Federico Laureano
refused to pay the windshield himself and challenged that the case be brought to
court for judicial adjudication. There is no question that the plaintiff tried to
convince the defendant Federico Laureano just to pay the value of the windshield
and he even came to the extent of asking the wife to convince her husband to
settle the matter amicably but the defendant Federico Laureano refused to make
any settlement, clinging [to] the belief that he could not be held liable because a
minor child threw a stone accidentally on the windshield and therefore, the same
was due to force majeure." 2
1. The law being what it is, such a belief on the part of defendant Federico
Laureano was justified. The express language of Art. 1174 of the present Civil
Code which is a restatement of Art. 1105 of the Old Civil Code, except for the
addition of the nature of an obligation requiring the assumption of risk, compels
such a conclusion. It reads thus: "Except in cases expressly specified by the law,
or when it is otherwise declared by stipulation, or when the nature of the
obligation requires the assumption of risk, no person shall be responsible for those
events which could not be, foreseen, or which, though foreseen were inevitable."
Even under the old Civil Code then, as stressed by us in the first decision dating
back to 1908, in an opinion by Justice Mapa, the rule was well-settled that in the
absence of a legal provision or an express covenant, "no one should be held to
account for fortuitous cases." 3 Its basis, as Justice Moreland stressed, is the
Roman law principle major casus est, cui humana infirmitas resistere non
potest. 4 Authorities of repute are in agreement, more specifically concerning an
obligation arising from contract "that some extraordinary circumstance
independent of the will of the obligor, or of his employees, is an essential element
of a caso fortuito." 5 If it could be shown that such indeed was the case, liability is

ruled out. There is no requirement of "diligence beyond what human care and
foresight can provide." 6
The error committed by the lower court in holding defendant Federico Laureano
liable appears to be thus obvious. Its own findings of fact repel the motion that he
should be made to respond in damages to the plaintiff for the broken windshield.
What happened was clearly unforeseen. It was a fortuitous event resulting in a
loss which must be borne by the owner of the car. An element of reasonableness
in the law would be manifestly lacking if, on the circumstances as thus disclosed,
legal responsibility could be imputed to an individual in the situation of defendant
Laureano. Art. 1174 of the Civil Code guards against the possibility of its being
visited with such a reproach. Unfortunately, the lower court was of a different
mind and thus failed to heed its command.
It was misled, apparently, by the inclusion of the exemption from the operation of
such a provision of a party assuming the risk, considering the nature of the
obligation undertaken. A more careful analysis would have led the lower court to a
different and correct interpretation. The very wording of the law dispels any doubt
that what is therein contemplated is the resulting liability even if caused by a
fortuitous event where the party charged may be considered as having assumed
the risk incident in the nature of the obligation to be performed. It would be an
affront, not only to the logic but to the realities of the situation, if in the light of
what transpired, as found by the lower court, defendant Federico Laureano could
be held as bound to assume a risk of this nature. There was no such obligation on
his part.
Reference to the leading case of Republic v. Luzon Stevedoring Corp. 7 will
illustrate when the nature of the obligation is such that the risk could be
considered as having been assumed. As noted in the opinion of Justice J.B.L.
Reyes, speaking for the Court: "The appellant strongly stresses the precautions
taken by it on the day in question: that it assigned two of its most powerful
tugboats to tow down river its barge L-1892; that it assigned to the task the more
competent and experienced among its patrons, had the towlines, engines and
equipment double-checked and inspected; that it instructed its patrons to take
extra-precautions; and concludes that it had done all it was called to do, and that
the accident, therefore, should be held due to force majeure or fortuitous event."
Its next paragraph explained clearly why the defense of caso fortuito or force
majeure does not lie. Thus: "These very precautions, however, completely destroy
the appellant's defense. For caso fortuito or force majeure (which in law are
identical in so far as they exempt an obligor from liability) by definition, are
extraordinary events not foreseeable or avoidable, 'events that could not be
foreseen, or which, though foreseen, were inevitable' (Art. 1174, Civil Code of the

Philippines). It is, therefore, not enough that the event should not have been
foreseen or participated, as is commonly believed, but it must be one impossible
to foresee or to avoid. The mere difficulty to foresee the happening is not
impossibility to foresee the same: un hecho no constituye caso fortuito por la sola
circunstancia de que su existencia haga mas dificil o mas onerosa la accion
diligente del presente ofensor' (Peirano Facio, Responsibilidad Extracontractual, p. 465; Mazeaud, Traite de la Responsibilite Civile, Vol. 2, sec. 1569).
The very measures adopted by appellant prove that the possibility of danger was
not only foreseeable, but actually foreseen, and was not caso fortuito."
In that case then, the risk was quite evident and the nature of the obligation such
that a party could rightfully be deemed as having assumed it. It is not so in the
case before us. It is anything but that. If the lower court, therefore, were duly
mindful of what this particular legal provision contemplates, it could not have
reached the conclusion that defendant Federico Laureano could be held liable. To
repeat, that was clear error on its part.
2. Appellants do not stop there. It does not suffice for them that defendant
Federico Laureano would be freed from liability. They would go farther. They would
take plaintiff to task for his complaint having joined the wife, Aida de Laureano,
and the father, Juanita Laureano. They were far from satisfied with the lower
court's absolving these two from any financial responsibility. Appellants would
have plaintiff pay damages for their inclusion in this litigation. We are not
disposed to view the matter thus.
It is to be admitted, of course, that plaintiff, who is a member of the bar, ought to
have exercised greater care in selecting the parties against whom he would
proceed. It may be said that his view of the law that would consider defendant
Federico Laureano liable on the facts as thus disclosed, while erroneous, is not
bereft of plausibility. Even the lower court, mistakenly of course, entertained
similar view. For plaintiff, however, to have included the wife and the father would
seem to indicate that his understanding of the law is not all that it ought to have
been.
Plaintiff apparently was not entirely unaware that the inclusion in the suit filed by
him was characterized by unorthodoxy. He did attempt to lend some color of
justification by explicitly setting forth that the father was joined as party
defendant in the case as he was the administrator of the inheritance of an
undivided property to which defendant Federico Laureano could lay claim and that
the wife was likewise proceeded against because the conjugal partnership would
be made to respond for whatever liability would be adjudicated against the
husband.

It cannot be said that such an attempt at justification is impressed with a high

persuasive quality. Far from it. Nonetheless, mistaken as plaintiff apparently was,
it cannot be concluded that he was prompted solely by the desire to inflict
needless and unjustified vexation on them. Considering the equities of the
situation, plaintiff having suffered a pecuniary loss which, while resulting from a
fortuitous event, perhaps would not have occurred at all had not defendant
Federico Laureano borrowed his car, we, feel that he is not to be penalized further
by his mistaken view of the law in including them in his complaint. Well-worth
paraphrasing is the thought expressed in a United States Supreme Court decision
as to the existence of an abiding and fundamental principle that the expenses and
annoyance of litigation form part of the social burden of living in a society which
seeks to attain social control through law. 8
WHEREFORE, the decision of the lower court of November 2, 1965 insofar as it
orders defendant Federico Laureano to pay plaintiff the amount of P30,000.00 as
damages plus the payment of costs, is hereby reversed. It is affirmed insofar as it
dismissed the case against the other two defendants, Juanita Laureano and Aida
de Laureano, and declared that no moral damages should be awarded the parties.
Without pronouncement as to costs.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Teehankee, Barredo
and Villamor, JJ., concur.
Castro. J., is on leave.