LAMBERT S. RAMOS, G.R. No.

184905
Petitioner,
- versus - Chico-Nazario,

C.O.L. REALTY CORPORATION,

Respondent. Promulgated:

August 28, 2009

x ---------------------------------------------------------------------------------------- x

DECISION

YNARES-SANTIAGO, J.:

The issue for resolution is whether petitioner can be held solidarily liable with his driver, Rodel Ilustrisimo,
to pay respondent C.O.L. Realty the amount of P51,994.80 as actual damages suffered in a vehicular collision.

The facts, as found by the appellate court, are as follows:

On or about 10:40 oclock in the morning of 8 March 2004, along Katipunan (Avenue),
corner Rajah Matanda (Street), Quezon City, a vehicular accident took place between a Toyota
Altis Sedan bearing Plate Number XDN 210, owned by petitioner C.O.L. Realty Corporation, and
driven by Aquilino Larin (Aquilino), and a Ford Expedition, owned by x x x Lambert Ramos (Ramos)
and driven by Rodel Ilustrisimo (Rodel), with Plate Number LSR 917. A passenger of the sedan, one
Estela Maliwat (Estela) sustained injuries. She was immediately rushed to the hospital for
treatment.

(C.O.L. Realty) averred that its driver, Aquilino, was slowly driving the Toyota Altis car at
a speed of five to ten kilometers per hour along Rajah Matanda Street and has just crossed the
center lane of Katipunan Avenue when (Ramos) Ford Espedition violently rammed against the cars
right rear door and fender. With the force of the impact, the sedan turned 180 degrees towards
the direction where it came from.

Upon investigation, the Office of the City Prosecutor of Quezon City found probable cause
to indict Rodel, the driver of the Ford Expedition, for Reckless Imprudence Resulting in Damage to
Property. In the meantime, petitioner demanded from respondent reimbursement for the
expenses incurred in the repair of its car and the hospitalization of Estela in the aggregate amount
of P103,989.60. The demand fell on deaf ears prompting (C.O.L. Realty) to file a Complaint for
Damages based on quasi-delict before the Metropolitan Trial Court of Metro Manila
(MeTC), Quezon City, docketed as Civil Case No. 33277, and subsequently raffled to Branch 42.

As could well be expected, (Ramos) denied liability for damages insisting that it was the
negligence of Aquilino, (C.O.L. Realtys) driver, which was the proximate cause of the accident.
(Ramos) maintained that the sedan car crossed Katipunan Avenue from Rajah Matanda
Street despite the concrete barriers placed thereon prohibiting vehicles to pass through the
intersection.
 (Ramos) further claimed that he was not in the vehicle when the mishap occurred. He
asserted that he exercised the diligence of a good father of a family in the selection and supervision
of his driver, Rodel.

Weighing the respective evidence of the parties, the MeTC rendered the Decision dated
1 March 2006 exculpating (Ramos) from liability, thus:

WHEREFORE, the instant case is DISMISSED for lack of merit. The

Counterclaims of the defendant are likewise DISMISSED for lack of sufficient
factual and legal basis.

SO ORDERED.

The aforesaid judgment did not sit well with (C.O.L. Realty) so that he (sic) appealed the
same before the RTC of Quezon City, raffled to Branch 215, which rendered the assailed Decision
dated 5 September 2006, affirming the MeTCs Decision. (C.O.L. Realtys) Motion for
Reconsideration met the same fate as it was denied by the RTC in its Order dated 5 June 2007. [1]

C.O.L. Realty appealed to the Court of Appeals which affirmed the view that Aquilino was negligent in
crossing Katipunan Avenue from Rajah Matanda Street since, as per Certification of the Metropolitan Manila
Development Authority (MMDA) dated November 30, 2004, such act is specifically prohibited. Thus:

This is to certify that as per records found and available in this office the crossing of
vehicles at Katipunan Avenue from Rajah Matanda Street to Blue Ridge Subdivision, Quezon
City has (sic) not allowed since January 2004 up to the present in view of the ongoing road
construction at the area.[2] (Emphasis supplied)

Barricades were precisely placed along the intersection of Katipunan Avenue and Rajah Matanda Street in
order to prevent motorists from crossing Katipunan Avenue.Nonetheless, Aquilino crossed Katipunan
Avenue through certain portions of the barricade which were broken, thus violating the MMDA rule.[3]

However, the Court of Appeals likewise noted that at the time of the collision, Ramos vehicle was moving
at high speed in a busy area that was then the subject of an ongoing construction (the Katipunan Avenue-Boni
Serrano Avenue underpass), then smashed into the rear door and fender of the passengers side of Aquilinos car,
sending it spinning in a 180-degree turn.[4] It therefore found the driver Rodel guilty of contributory negligence for
driving the Ford Expedition at high speed along a busy intersection.

Thus, on May 28, 2008, the appellate court rendered the assailed Decision, [5] the dispositive portion of
which reads, as follows:

WHEREFORE, the Decision dated 5 September 2006 of the Regional Trial Court of Quezon
City, Branch 215 is hereby MODIFIED in that respondent Lambert Ramos is held solidarily liable
with Rodel Ilustrisimo to pay petitioner C.O.L. Realty Corporation the amount of P51,994.80 as
actual damages. Petitioner C.O.L. Realty Corporations claim for exemplary damages, attorneys fees
and cost of suit are DISMISSED for lack of merit.

SO ORDERED.

Petitioner filed a Motion for Reconsideration but it was denied. Hence, the instant petition, which raises
the following sole issue:
 THE COURT OF APPEALS DECISION IS CONTRARY TO LAW AND JURISPRUDENCE, AND THE
EVIDENCE TO SUPPORT AND JUSTIFY THE SAME IS INSUFFICIENT.

We resolve to GRANT the petition.

There is no doubt in the appellate courts mind that Aquilinos violation of the MMDA prohibition against
crossing Katipunan Avenue from Rajah Matanda Street was theproximate cause of the accident. Respondent does
not dispute this; in its Comment to the instant petition, it even conceded that petitioner was guilty of mere
contributory negligence.[6]

Thus, the Court of Appeals acknowledged that:

The Certification dated 30 November 2004 of the Metropolitan Manila Development

Authority (MMDA) evidently disproved (C.O.L. Realtys) barefaced assertion that its driver,
Aquilino, was not to be blamed for the accident

TO WHOM IT MAY CONCERN:

This is to certify that as per records found and available in this office the
crossing of vehicles at Katipunan Avenue from Rajah Matanda Street to Blue
Ridge Subdivision,Quezon City has (sic) not allowed since January 2004 up to the
present in view of the ongoing road construction at the area.

This certification is issued upon request of the interested parties for

whatever legal purpose it may serve.

(C.O.L. Realty) admitted that there were barricades along the intersection of Katipunan
Avenue and Rajah Matanda Street. The barricades were placed thereon to caution drivers not to
pass through the intersecting roads. This prohibition stands even if, as (C.O.L. Realty) claimed, the
barriers were broken at that point creating a small gap through which any vehicle could pass. What
is clear to Us is that Aquilino recklessly ignored these barricades and drove through it. Without
doubt, his negligence is established by the fact that he violated a traffic regulation. This finds
support in Article 2185 of the Civil Code

Unless there is proof to the contrary, it is presumed that a person

driving a motor vehicle has been negligent if at the time of the mishap, he was
violating any traffic regulation.

Accordingly, there ought to be no question on (C.O.L. Realtys) negligence which resulted

in the vehicular mishap.[7]

However, it also declared Ramos liable vicariously for Rodels contributory negligence in driving the Ford
Expedition at high speed along a busy intersection. On this score, the appellate court made the following
pronouncement:

As a professional driver, Rodel should have known that driving his vehicle at a high speed
in a major thoroughfare which was then subject of an on-going construction was a perilous act. He
had no regard to (sic) the safety of other vehicles on the road. Because of the impact of the
collision, (Aquilinos) sedan made a 180-degree turn as (Ramos) Ford Expedition careened and
smashed into its rear door and fender. We cannot exculpate Rodel from liability.

Having thus settled the contributory negligence of Rodel, this created a presumption of
negligence on the part of his employer, (Ramos). For the employer to avoid the solidary liability
 for a tort committed by his employee, an employer must rebut the presumption by presenting
adequate and convincing proof that in the selection and supervision of his employee, he or she
exercises the care and diligence of a good father of a family. Employers must submit concrete
proof, including documentary evidence, that they complied with everything that was incumbent
on them.

(Ramos) feebly attempts to escape vicarious liability by averring that Rodel was highly
recommended when he applied for the position of family driver by the Social Service Committee
of his parish. A certain Ramon Gomez, a member of the churchs livelihood program, testified that
a background investigation would have to be made before an applicant is recommended to the
parishioners for employment. (Ramos) supposedly tested Rodels driving skills before accepting
him for the job. Rodel has been his driver since 2001, and except for the mishap in 2004, he has
not been involved in any road accident.

Regrettably, (Ramos) evidence which consisted mainly of testimonial evidence remained

unsubstantiated and are thus, barren of significant weight. There is nothing on the records which
would support (Ramos) bare allegation of Rodels 10-year unblemished driving record. He failed to
present convincing proof that he went to the extent of verifying Rodels qualifications, safety
record, and driving history.

So too, (Ramos) did not bother to refute (C.O.L. Realtys) stance that his driver was texting
with his cellphone while running at a high speed and that the latter did not slow down albeit he
knew that Katipunan Avenue was then undergoing repairs and that the road was barricaded with
barriers. The presumption juris tantum that there was negligence in the selection of driver remains
unrebutted. As the employer of Rodel, (Ramos) is solidarily liable for the quasi-delict committed
by the former.

Certainly, in the selection of prospective employees, employers are required to examine

them as to their qualifications, experience and service records. In the supervision of employees,
the employer must formulate standard operating procedures, monitor their implementation and
impose disciplinary measures for the breach thereof. These, (Ramos) failed to do. [8]

Petitioner disagrees, arguing that since Aquilinos willful disregard of the MMDA prohibition was the sole
proximate cause of the accident, then respondent alone should suffer the consequences of the accident and the
damages it incurred. He argues:

20. It becomes apparent therefore that the only time a plaintiff, the respondent herein,
can recover damages is if its negligence was only contributory, and such contributory negligence
was the proximate cause of the accident. It has been clearly established in this case, however, that
respondents negligence was not merely contributory, but the sole proximate cause of the
accident.

xxxx

22. As culled from the foregoing, respondent was the sole proximate cause of the
accident. Respondents vehicle should not have been in that position since crossing the said
intersection was prohibited. Were it not for the obvious negligence of respondents driver in
crossing the intersection that was prohibited, the accident would not have happened. The crossing
of respondents vehicle in a prohibited intersection unquestionably produced the injury, and
without which the accident would not have occurred. On the other hand, petitioners driver had
the right to be where he was at the time of the mishap. As correctly concluded by the RTC, the
petitioners driver could not be expected to slacken his speed while travelling along said
intersection since nobody, in his right mind, would do the same. Assuming, however, that
 petitioners driver was indeed guilty of any contributory negligence, such was not the proximate
cause of the accident considering that again, if respondents driver did not cross the prohibited
intersection, no accident would have happened. No imputation of any lack of care on Ilustrisimos
could thus be concluded. It is obvious then that petitioners driver was not guilty of any negligence
that would make petitioner vicariously liable for damages.

23. As the sole proximate cause of the accident was respondents own driver, respondent
cannot claim damages from petitioner.[9]

On the other hand, respondent in its Comment merely reiterated the appellate courts findings and
pronouncements, conceding that petitioner is guilty of mere contributory negligence, and insisted on his vicarious
liability as Rodels employer under Article 2184 of the Civil Code.

Articles 2179 and 2185 of the Civil Code on quasi-delicts apply in this case, viz:

Article 2179. When the plaintiffs 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 defendants lack of due care, the plaintiff
may recover damages, but the courts shall mitigate the damages to be awarded.

Article 2185. Unless there is proof to the contrary, it is presumed that a person driving a
motor vehicle has been negligent if at the time of the mishap, he was violating any traffic
regulation.

If the master is injured by the negligence of a third person and by the concurring contributory negligence
of his own servant or agent, the latters negligence is imputed to his superior and will defeat the superiors action
against the third person, assuming of course that the contributory negligence was the proximate cause of the
injury of which complaint is made.[10]

Applying the foregoing principles of law to the instant case, Aquilinos act of crossing Katipunan Avenue via
Rajah Matanda constitutes negligence because it was prohibited by law. Moreover, it was the proximate cause of
the accident, and thus precludes any recovery for any damages suffered by respondent from the accident.

Proximate cause is defined as that cause, which, in natural and continuous sequence, unbroken by any
efficient intervening cause, produces the injury, and without which the result would not have occurred. And more
comprehensively, the proximate legal cause is that acting first and producing the injury, either immediately or by
setting other events in motion, all constituting a natural and continuous chain of events, each having a close causal
connection with its immediate predecessor, the final event in the chain immediately effecting the injury as a natural
and probable result of the cause which first acted, under such circumstances that the person responsible for the first
event should, as an ordinary prudent and intelligent person, have reasonable ground to expect at the moment of his
act or default that an injury to some person might probably result therefrom.[11]

If Aquilino heeded the MMDA prohibition against crossing Katipunan Avenue from Rajah Matanda, the
accident would not have happened. This specific untoward event is exactly what the MMDA prohibition was
intended for. Thus, a prudent and intelligent person who resides within the vicinity where the accident occurred,
Aquilino had reasonable ground to expect that the accident would be a natural and probable result if he crossed
Katipunan Avenue since such crossing is considered dangerous on account of the busy nature of the thoroughfare
and the ongoing construction of the Katipunan-Boni Avenue underpass. It was manifest error for the Court of
Appeals to have overlooked the principle embodied in Article 2179 of the Civil Code, that when the plaintiffs own
negligence was the immediate and proximate cause of his injury, he cannot recover damages.
 Hence, we find it unnecessary to delve into the issue of Rodels contributory negligence, since it cannot
overcome or defeat Aquilinos recklessness which is the immediate and proximate cause of the accident. Rodels
contributory negligence has relevance only in the event that Ramos seeks to recover from respondent whatever
damages or injuries he may have suffered as a result; it will have the effect of mitigating the award of damages in
his favor. In other words, an assertion of contributory negligence in this case would benefit only the petitioner; it
could not eliminate respondents liability for Aquilinos negligence which is the proximate result of the accident.

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals dated May 28, 2008 in CA-G.R.
SP No. 99614 and its Resolution of October 13, 2008 are hereby REVERSED and SET ASIDE. The Decision of the
Regional Trial Court of Quezon City, Branch 215 dated September 5, 2006 dismissing for lack of merit respondents
complaint for damages is hereby REINSTATED.

SO ORDERED.

SECOND DIVISION
[G.R. No. 107968. October 30, 1996]
ELIAS S. CIPRIANO and/or E.S. CIPRIANO ENTERPRISES, petitioner, vs. THE COURT OF APPEALS and MACLIN
ELECTRONICS, INC., respondents.
DECISION
MENDOZA, J.:
This is a petition for review of the decision[1] of the Court of Appeals in CA-G.R. CV No. 36045 which affirmed in
toto the decision of Branch 58[2] of the Quezon City Regional Trial Court, ordering the petitioner to pay P252,155.00
to private respondent for the loss of the latters vehicle while undergoing rustproofing and P10,000.00 in attorneys
fees.
The facts of the case are as follows:
Petitioner Elias S. Cipriano is the owner of E.S. Cipriano Enterprises, which is engaged in the rustproofing of
vehicles, under the style Motobilkote. On April 30, 1991, private respondent Maclin Electronics, Inc., through an
employee, brought a 1990 model Kia Pride Peoples car to petitioners shop for rustproofing. The car had been
purchased the year before from the Integrated Auto Sales, Inc. for P252,155.00.
The vehicle was received in the shop under Job Order No. 123581,[3] which showed the date it was received for
rustproofing as well its condition at the time. Neither the time of acceptance nor the hour of release, however, was
specified. According to the petitioner, the car was brought to his shop at 10 oclock in the morning of April 30,
1991 and was ready for release later that afternoon, as it took only six hours to complete the process of rustproofing.
In the afternoon of May 1, 1991, fire broke out at the Lambat restaurant, which petitioner also owned,
adjoining his Mobilkote rustproofing shop. The fire destroyed both the shop and the restaurant, including private
respondents Kia Pride. The car had been kept inside the building, allegedly to protect it from theft. Petitioner claimed
that despite efforts to save the vehicle, there was simply not enough time to get it out of the building, unlike three
other cars which had been saved because they were parked near the entrance of the garage. [4]
On May 8 1991, private respondent sent a letter to petitioner, demanding reimbursement for the value of the
Kia Pride. In reply, petitioner denied liability on the ground that the fire was a fortuitous event. This prompted
private respondent to bring this suit for the value of its vehicle and for damages against petitioner. Private
respondent alleged that its vehicle was lost due to the negligence and imprudence of the petitioner, citing petitioners
failure to register his business with the Department of Trade and Industry under P.D. No. 1572 and to insure it as
required in the rules implementing the Decree.[5]
In his Answer, petitioner invoked Art. 1174 of the Civil Code and denied liability for the loss which he alleged
was due to a fortuitous event. He later testified that he employed an electrician who regularly inspected the lighting
in his restaurant and rustproofing shop. In addition, he claimed he had installed fire-fighting devices and that the
fire was an accident entirely independent of his will and devoid of any negligence on his part. He further averred
that private respondents car was ready for release as early as afternoon of April 30, 1991, and that it was private
respondents delay in claiming it that was the cause of the loss.
Petitioner explained that rustproofing involved spraying asphalt-like materials underneath motor vehicle so
that rust will not corrode its body and that the materials and chemicals used for this purpose are not
inflammable. Therefore, he could not be made to assume the risk of loss due to fire. He also claimed that he was not
required to register his business with the Department of Trade and Industry, because he was not covered by P.D.
No. 1572.
On the other hand, private respondent argued that petitioner was liable for the loss of the car even if it was
caused by a fortuitous event. It contended that the nature of petitioners business required him to assume the risk
because under P.D. No. 1572, petitioner was required to insure his property as well as those of his customers.
The trial court sustained the private respondents contention that the failure of defendant to comply with P.D.
No. 1572 is in effect a manifest act of negligence which renders defendant [petitioner herein] liable for the loss of
the car even if the same was caused by fire,[6] even as it ruled that the business of rustproffing is definitely covered
by P.D. No. 1572. Since petitioner did not register his business and insure it, he must bear the cost of loss of his
customers. As already noted, the court ordered petitioner to pay private respondent P252,155.00 with interest at
6% per annum from the filing of the case and attorneys fees in the amount of P10,000.00.
On appeal, the decision was affirmed. The Court of Appeals ruled that the provisions of the Civil Code relied
upon by the petitioner are not applicable to this case, and that the law applicable to the case is P.D. No. 1572, the
purpose of which is to protect customers who entrust their properties to service and repair enterprises. The Court
of Appeals held that by virtue of the provisions of P.D. No. 1572 and its implementing rules and regulations which
require fire insurance coverage prior to accreditation, owners of service and repair enterprises assume the risk of
loss of their customers property. The appellate court stated:
Defendant-appellant was operating the business of rustproofing of cars and other motor vehicles
illegally at the time of the fire in question; i.e., without the necessary accreditation and license from
the Department of Trade and Industry, and it is for this reason that it did not carry at least a fire
insurance coverage to protect the vehicles entrusted to it by its customers. Therefore, it must bear the
consequences of such illegal operation, including the risk of losses or injuries to the vehicles of its
customers brought by unforeseen or fortuitous events like the fire that gutted its shop and completely
burned appellees car while said vehicle was in its possession.[7]
The Court of Appeals also affirmed the award of attorneys fees, ruling that although the lower court did not
expressly and specifically state the reason for the award, the basis therefor could be inferred from the finding that
petitioner unjustly refused to pay private respondents valid and demandable claim. Said the appellate court:
Such wanton, reckless, and illegal operation of appellants business resulted in appellees lack of
protection from the fire that gutted appellants shop and which completely burned its car while in
appellants possession for rustproofing. Yet appellant adamantly and stubbornly refused to pay
appellee the value of its lost car. It was, therefore, correctly ordered by the court a quo to pay
appellee reasonable attorneys fees as it had unjustly and unreasonably refused to satisfy the latters
plainly valid, just, and demandable claim, compelling said appellee to file this action to protect its
interest (Art. 2208, pars. (2) and (5), New Civil Code).[8]
Hence, this appeal. Petitioner contends that the fire which destroyed private respondents car was a fortuitous
event for which he cannot be held responsible. In support of his argument, he cites the following provisions of the
Civil Code:
ART. 1174. 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.
ART. 1262. An obligation which consists in the delivery of a determinate thing shall be extinguished if it should be
lost or destroyed without the fault of the debtor, and before he has incurred in delay.
When by law or stipulation, the obligor is liable even for fortuitous events, the loss of the thing does not extinguish
the obligation, and he shall be responsible for damages. The same rule applies when the nature of the obligation
requires the assumption of risk.
The contention is without merit. The issue in this case is whether petitioner was required to insure his business
and the vehicles received by him in the course of his business and, if so, whether his failure to do so constituted
negligence, rendering him liable for loss due to the risk required to be insured against. We hold that both questions
must be answered in the affirmative.
We have already held that violation of a statutory duty is negligence per se. In F.F. Cruz and Co., Inc. v. Court of
Appeals,[9] we held the owner of a furniture shop liable for the destruction of the plaintiffs house in a fire which
started in his establishment in view of his failure to comply with an ordinance which required the construction of a
firewall. In Teague v. Fernandez,[10] we stated that where the very injury which was intended to be prevented by the
ordinance has happened, non-compliance with the ordinance was not only an act negligence, but also the proximate
cause of the death.
Indeed, the existence of a contract between petitioner and private respondent does not bar a finding of
negligence under the principles of quasi-delict, as we recently held in Fabre v. Court of Appeals.[11] Petitioner's
negligence is the source of his obligation. He is not being held liable for breach of his contractual obligation due to
negligence but for his negligence in not complying with a duty imposed on him by law. It is therefore immaterial that
the loss occasioned to private respondent was due to a fortuitous event, since it was petitioners negligence in not
insuring against the risk which was the proximate cause of the loss.
Thus, P.D. No. 1572, 1 requires service and repair enterprises for motor vehicles, like that of petitioners to
register with the Department of Trade and Industry. As condition for such registration or accreditation, Ministry
Order No. 32 requires covered enterprises to secure insurance coverage. Rule III of this Order provides in pertinent
parts:[12]
1- REQUIREMENTS FOR ACCREDITATION
1) Enterprises applying for original accreditation shall submit the following:
1.1. List of machineries/equipment/tools in useful condition;
1.2. List of certified engineers/accredited technicians mechanics with their personal data;
1.3. Copy of Insurance Policy of the shop covering the property entrusted by its customer for repair,
service or maintenance together with a copy of the official receipt covering the full payment of
premium;
1.4. Copy of Bond referred to under Section 7, Rule III of this Rules and Regulations;
1.5. Written service warranty in the form prescribed by the Bureau;
1.6. Certificate issued by the Securities and Exchange Commission and Articles of Incorporation or
Partnership in case of corporation or partnership;
1.7. Such other additional documents which the Director may require from time to time.
8 - INSURANCE POLICY
The insurance policy for the following risks like theft, pilferage, fire, flood and loss should cover exclusively the
machines, motor vehicles, heavy equipment, engines, electronics, electrical, airconditioners, refrigerators, office
machines and data processing equipment, medical and dental equipment, other consumer mechanical and
industrial equipment stored for repair and/or service in the premises of the applicant.
There is thus a statutory duty imposed on petitioner and it is for his failure to comply with this duty that he was
guilty of negligence rendering him liable for damages to private respondent. While the fire in this case may be
considered a fortuitous event,[13] this circumstance cannot exempt petitioner from liability for loss.
We think, however, that the Court of Appeals erred in sustaining the award of attorneys fees by the lower
court. It is now settled that the reasons or grounds for an award of attorneys fees must be set forth in the decision
of the court.[14] They cannot be left to inference as the appellate court held in this case. The reason for this is that it
is not sound policy to penalize the right to litigate. An award of attorneys fees, being an exception to this policy and
limited to the grounds enumerated in the law,[15] must be fully justified in the decision. It can not simply be inserted
as an item of recoverable damages in the judgment of the court. Since in this case there is no justification for the
award of attorneys fees in the decision of the trial court, it was error for the Court of Appeals to sustain such award.
WHEREFORE, the decision, dated November 18, 1992, of the Court of Appeals is AFFIRMED, with the
modification that the award of attorneys fees is DELETED.
SO ORDERED.
Regalado (Chairman), Romero, Puno, and Torres, Jr., JJ., concur.
 PHILIPPINE NATIONAL BANK, G.R. No. 170865

VERSUS

SPOUSES CHEAH CHEE CHONG

and OFELIA CAMACHO CHEAH,
Respondents.
x--------------------------------x

SPOUSES CHEAH CHEE CHONG G.R. No. 170892

and OFELIA CAMACHO CHEAH,
Petitioners, Present:

CORONA, C.J., Chairperson,

LEONARDO-DE CASTRO,
- versus - BERSAMIN,
DEL CASTILLO, and
VILLARAMA, JR., JJ.

PHILIPPINE NATIONAL BANK, Promulgated:

Respondent. April 25, 2012
x-------------------------------------------------------------------x

DECISION

DEL CASTILLO, J.:

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

In doing a friend a favor to help the latters friend collect the proceeds of a foreign check, a woman deposited the check
in her and her husbands dollar account. The local bank accepted the check for collection and immediately credited the proceeds
thereof to said spouses account even before the lapse of the clearing period. And just when the money had been withdrawn and
distributed among different beneficiaries, it was discovered that all along, to the horror of the woman whose intention to
accommodate a friends friend backfired, she and her
bank had dealt with a rubber check.

These consolidated[1] Petitions for Review on Certiorari filed by the Philippine National Bank (PNB)[2] and by the spouses
Cheah Chee Chong and Ofelia Camacho Cheah (spouses Cheah)[3] both assail the August 22, 2005 Decision[4] and December 21,
2005 Resolution[5]of the Court of Appeals (CA) in CA-G.R. CV No. 63948 which declared both parties equally negligent and, hence,
should equally suffer the resulting loss. For its part, PNB questions why it was declared blameworthy together with its depositors,
spouses Cheah, for the amount wrongfully paid the latter, while the spouses Cheah plead that they be declared entirely faultless.

Factual Antecedents
 On November 4, 1992, Ofelia Cheah (Ofelia) and her friend Adelina Guarin (Adelina) were having a conversation in the
latters office when Adelinas friend, Filipina Tuazon (Filipina), approached her to ask if she could have Filipinas check cleared and
encashed for a service fee of 2.5%. The check is Bank of America Check No. 190[6] under the account of Alejandria Pineda and
Eduardo Rosales and drawn by Atty. Eduardo Rosales against Bank of America Alhambra Branch in California, USA, with a face
amount of $300,000.00, payable to cash. Because Adelina does not have a dollar account in which to deposit the check, she
asked Ofelia if she could accommodate Filipinas request since she has a joint dollar savings account with her Malaysian husband
Cheah Chee Chong (Chee Chong) under Account No. 265-705612-2 with PNB Buendia Branch.
Ofelia agreed.

That same day, Ofelia and Adelina went to PNB Buendia Branch. They met with Perfecto Mendiola of the Loans
Department who referred them to PNB Division Chief Alberto Garin (Garin). Garin discussed with them the process of clearing
the subject check and they were told that it normally takes 15 days.[7] Assured that the deposit and subsequent clearance of the
check is a normal transaction, Ofelia deposited Filipinas check. PNB then sent it for clearing through its correspondent bank,
Philadelphia National Bank. Five days later, PNB received a credit advice[8] from Philadelphia National Bank that the proceeds of
the subject check had been temporarily credited to PNBs account as of November 6, 1992. On November 16, 1992, Garin called
up Ofelia to inform her that the check had already been cleared.[9] The following day, PNB Buendia Branch, after deducting the
bank charges, credited $299,248.37 to the account of the spouses Cheah.[10] Acting on Adelinas instruction to withdraw the
credited amount, Ofelia that day personally withdrew $180,000.00.[11] Adelina was able to withdraw the remaining amount the
next day after having been authorized by Ofelia.[12] Filipina received all the proceeds.

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

PNB Buendia Branch learned about the bounced check when it received on November 20, 1992 a debit
advice,[16] followed by a letter[17] on November 24, 1992, from Philadelphia National Bank to which the November 13, 1992 SWIFT
message was attached. Informed about the bounced check and upon demand by PNB Buendia Branch to return the money
withdrawn, Ofelia immediately contacted Filipina to get the money back. But the latter told her that all the money had already
been given to several people who asked for the checks encashment. In their effort to recover the money, spouses Cheah then
sought the help of the National Bureau of Investigation. Said agencys Anti-Fraud and Action Division was later able to apprehend
some of the beneficiaries of the proceeds of the check and recover from them $20,000.00. Criminal charges were then filed
against these suspect beneficiaries.[18]

Meanwhile, the spouses Cheah have been constantly meeting with the bank officials to discuss matters regarding the
incident and the recovery of the value of the check while the cases against the alleged perpetrators remain pending. Chee Chong
in the end signed a PNB drafted[19] letter[20] which states that the spouses Cheah are offering their condominium units as
collaterals for the amount withdrawn. Under this setup, the amount withdrawn would be treated as a loan account with deferred
interest while the spouses try to recover the money from those who defrauded them. Apparently, Chee Chong signed the letter
after the Vice President and Manager of PNB Buendia Branch, Erwin Asperilla (Asperilla), asked the spouses Cheah to help him
and the other bank officers as they were in danger of losing their jobs because of the incident. Asperilla likewise assured the
spouses Cheah that the letter was a mere formality and that the mortgage will be disregarded once PNB receives its claim for
indemnity from Philadelphia National Bank.

Although some of the officers of PNB were amenable to the proposal,[21] the same did not materialize. Subsequently,
PNB sent a demand letter to spouses Cheah for the return of the amount of the check,[22] froze their peso and dollar deposits in
the amounts of P275,166.80 and $893.46,[23] and filed a complaint[24] against them for Sum of Money with Branch 50 of the
Regional Trial Court (RTC) of Manila, docketed as Civil Case No. 94-71022. In said complaint, PNB demanded payment of
around P8,202,220.44, plus interests[25] and attorneys fees, from the spouses Cheah.
 As their main defense, the spouses Cheah claimed that the proximate cause of PNBs injury was its own negligence of
paying a US dollar denominated check
without waiting for the 15-day clearing period, in violation of its bank practice as mandated by its own bank circular, i.e., PNB
General Circular No. 52-101/88.[26] Because of this, spouses Cheah averred that PNB is barred from claiming what it had lost. They
further averred that it is unjust for them to pay back the amount disbursed as they never really benefited therefrom. As
counterclaim, they prayed for the return of their frozen deposits, the recoupment of P400,000.00 representing the amount they
had so far spent in recovering the value of the check, and payment of moral and exemplary damages, as well as attorneys fees.

Ruling of the Regional Trial Court

The RTC ruled in PNBs favor. The dispositive portion of its Decision[27] dated May 20, 1999 reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff Philippine National
Bank [and] against defendants Mr. Cheah Chee Chong and Ms. Ofelia Camacho Cheah, ordering the latter to
pay jointly and severally the herein plaintiffs bank the amount:

1. of US$298,950.25 or its peso equivalent based on Central Bank Exchange Rate prevailing
at the time the proceeds of the BA Check No. 190 were withdrawn or the prevailing Central Bank Rate at the
time the amount is to be reimbursed by the defendants to plaintiff or whatever is lower. This is without
prejudice however, to the rights of the defendants (accommodating parties) to go against the group of
Adelina Guarin, Atty. Eduardo Rosales, Filipina Tuazon, etc., (Beneficiaries- accommodated parties) who are
privy to the defendants.

No pronouncement as to costs.

No other award of damages for non[e] has been proven.

SO ORDERED.[28]

The RTC held that spouses Cheah were guilty of contributory negligence.
Because Ofelia trusted a friends friend whom she did not know and considering the amount of the check made payable to cash,
the RTC opined that Ofelia showed lack of vigilance in her dealings. She should have exercised due care by investigating the
negotiability of the check and the identity of the drawer. While the court found that the proximate cause of the wrongful
payment of the check was PNBs negligence in not observing the 15-day guarantee period rule, it ruled that spouses Cheah still
cannot escape liability to reimburse PNB the value of the check as an accommodation party pursuant to Section 29 of the
Negotiable Instruments Law.[29] It likewise applied the principle of solutio indebiti under the Civil Code. With regard to the award
of other forms of damages, the RTC held that each party must suffer the consequences of their own acts and thus left both parties
as they are.

Unwilling to accept the judgment, the spouses Cheah appealed to the CA.

Ruling of the Court of Appeals

While the CA recognized the spouses Cheah as victims of a scam who nevertheless have to suffer the consequences of
Ofelias lack of care and prudence in immediately trusting a stranger, the appellate court did not hold PNB scot-free. It ruled in
its August 22, 2005 Decision,[30] viz:

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

Accordingly, PNB is hereby ordered to credit to the peso and dollar accounts of the Cheah spouses the
amount due to them.

SO ORDERED.[31]

In so ruling, the CA ratiocinated that PNB Buendia Branchs non-receipt of the SWIFT message from Philadelphia National Bank
within the 15-day clearing period is not an acceptable excuse.Applying the last clear chance doctrine, the CA held that PNB had
the last clear opportunity to avoid the impending loss of the money and yet, it glaringly exhibited its negligence in allowing the
withdrawal of funds without exhausting the 15-day clearing period which has always been a standard banking practice as testified
to by PNBs own officers, and as provided in its own General Circular No. 52/101/88. To the CA, PNB cannot claim from spouses
Cheah even if the latter are accommodation parties under the law as the banks own negligence is the proximate cause of the
damage it sustained. Nevertheless, it also found Ofelia guilty of contributory negligence. Thus, both parties should be made
equally responsible for the resulting loss.

Both parties filed their respective Motions for Reconsideration[32] but same were denied in a Resolution[33] dated
December 21, 2005.

Hence, these Petitions for Review on Certiorari.

Our Ruling

The petitions for review lack merit. Hence, we affirm the ruling of the CA.
PNBs act of releasing the proceeds of the check prior to the lapse of
the 15-day clearing period was the proximate cause of the loss.

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

Here, while PNB highlights Ofelias fault in accommodating a strangers check and depositing it to the bank, it remains
mum in its release of the proceeds thereof without exhausting the 15-day clearing period, an act which contravened established
banking rules and practice.

It is worthy of notice that the 15-day clearing period alluded to is construed as 15 banking days. As declared by
Josephine Estella, the Administrative Service Officer who was the banks Remittance Examiner, what was unusual in the
processing of the check was that the lapse of 15 banking days was not observed.[35] Even PNBs agreement with Philadelphia
National Bank[36] regarding the rules on the collection of the proceeds of US dollar checks refers to business/ banking days. Ofelia
deposited the subject check on November 4, 1992. Hence, the 15thbanking day from the date of said deposit should fall
on November 25, 1992. However, what happened was that PNB Buendia Branch, upon calling up Ofelia that the check had been
cleared, allowed the proceeds thereof to be withdrawn on November 17 and 18, 1992, a week before the lapse of the standard
15-day clearing period.
 This Court already held that the payment of the amounts of checks without previously clearing them with the drawee
bank especially so where the drawee bank is a foreign bank and the amounts involved were large is contrary to normal or
ordinary banking practice.[37] Also, in Associated Bank v. Tan,[38] wherein the bank allowed the withdrawal of the value of a check
prior to its clearing, we said that [b]efore the check shall have been cleared for deposit, the collecting bank can only assume at
its own risk x x x that the check would be cleared and paid out. The delay in the receipt by PNB Buendia Branch of the November
13, 1992 SWIFT message notifying it of the dishonor of the subject check is of no moment, because had PNB Buendia Branch
waited for the expiration of the clearing period and had never released during that time the proceeds of the check, it would have
already been duly notified of its dishonor. Clearly, PNBs disregard of its preventive and protective measure against the possibility
of being victimized by bad checks had brought upon itself the injury of losing a significant amount of money.

It bears stressing that the diligence required of banks is more than that of a Roman pater familias or a good father of a
family. The highest degree of diligence is expected.[39] PNB miserably failed to do its duty of exercising extraordinary diligence and
reasonable business prudence. The disregard of its own banking policy amounts to gross negligence, which the law defines as
negligence characterized by the want of even slight care, acting or omitting to act in a situation where there is duty to act, not
inadvertently but wilfully and intentionally with a conscious indifference to consequences in so far as other persons may be
affected.[40] With regard to collection or encashment of checks, suffice it to say that the law imposes on the collecting bank the
duty to scrutinize diligently the checks deposited with it for the purpose of determining their genuineness and regularity. The
collecting bank, being primarily engaged in banking, holds itself out to the public as the expert on this field, and the law thus holds
it to a high standard of conduct.[41] A bank is expected to be an expert in banking procedures and it has the necessary means to
ascertain whether a check, local or foreign, is sufficiently funded.

Incidentally, PNB obliges the spouses Cheah to return the withdrawn money under the principle of solutio indebiti, which is laid
down in Article 2154 of the Civil Code:[42]

Art. 2154. If something is received when there is no right to demand it, and it was unduly delivered
through mistake, the obligation to return it arises.

[T]he indispensable requisites of the juridical relation known as solutio indebiti, are, (a) that he who paid was not under
obligation to do so; and (b) that the payment was made by reason of an essential mistake of fact.[43]

In the case at bench, PNB cannot recover the proceeds of the check under the principle it invokes. In the first place, the
gross negligence of PNB, as earlier discussed, can never be equated with a mere mistake of fact, which must be something
excusable and which requires the exercise of prudence. No recovery is due if the mistake done is one of gross negligence.

The spouses Cheah are guilty of contributory negligence and are

bound to share the loss with the bank

Contributory negligence is conduct on the part of the injured party,

contributing as a legal cause to the harm he has suffered, which falls below the standard to which he is required to conform for
his own protection.[44]

The CA found Ofelias credulousness blameworthy. We agree. Indeed, Ofelia failed to observe caution in giving her full
trust in accommodating a complete stranger and this led her and her husband to be swindled. Considering that Filipina was not
personally known to her and the amount of the foreign check to be encashed was $300,000.00, a higher degree of care is
expected of Ofelia which she, however, failed to exercise under the circumstances. Another circumstance which should have
goaded Ofelia to be more circumspect in her dealings was when a bank officer called her up to inform that the Bank of America
check has already been cleared way earlier than the 15-day clearing period. The fact that the check was cleared after only eight
banking days from the time it was deposited or contrary to what Garin told her that clearing takes 15 days should have already
put Ofelia on guard. She should have first verified the regularity of such hasty clearance considering that if something goes wrong
with the transaction, it is she and her husband who would be put at risk and not the accommodated party. However, Ofelia chose
to ignore the same and instead actively participated in immediately withdrawing the proceeds of the check. Thus, we are one
with the CA in ruling that Ofelias prior consultation with PNB officers is not enough to totally absolve her of any liability. In the
first place, she should have shunned any participation in that palpably shady transaction.

In any case, the complaint against the spouses Cheah could not be dismissed. As PNBs client, Ofelia was the one who
dealt with PNB and negotiated the check such that its value was credited in her and her husbands account. Being the ones in
privity with PNB, the spouses Cheah are therefore the persons who should return to PNB the money released to them.

All told, the Court concurs with the findings of the CA that PNB and the spouses Cheah are equally negligent and should
therefore equally suffer the loss. The two must both bear the consequences of their mistakes.

WHEREFORE, premises considered, the Petitions for Review on Certiorari in G.R. No. 170865 and in G.R. No. 170892
are both DENIED. The assailed August 22, 2005 Decision and December 21, 2005 Resolution of the Court of Appeals in CA-G.R.
CV No. 63948 are hereby AFFIRMED in toto.

SO ORDERED.

CASE DIGEST
Ramos vs. COL Realty Corporation; Proximate Cause
G.R. No. 184905 August 28, 2009

Facts:
Petitioner Ramos is the employer of Rodel Ilustrisimo. While Rodel was driving the Ford
Expedition of petitioner an accident ensued, wherein it bumped with a Corrolla Altis driven by
Aquilino Larin and owned by Respondent COL Realty. Due to the impact of the vehicular mishap, the
passenger of the sedan was injured.

A case was filed against Ramos making him solidarily liable with his driver. Ramos in his
opposition argued that he cannot be held solidarily liable since it is Aquilnio's negligence that is the
proximate cause of the accident. He further argued that when the accident happened, Aquilino
violated an MMDA order, i.e. prohibiting the crossing is the place where the accident happened.
Issue:
Whether or not Ramos may be held liable since the proximate cause of the accident is his
employee's negligence.

Ruling:
No. There is no doubt that Aquilinos violation of the MMDA prohibition against crossing
Katipunan Avenue from Rajah Matanda Street was the proximate causeof the accident.

Proximate cause is defined as that cause, which, in natural and continuous sequence, unbroken
by any efficient intervening cause, produces the injury, and without which the result would not have
occurred. And more comprehensively, the proximate legal cause is that acting first and producing
the injury, either immediately or by setting other events in motion, all constituting a natural and
continuous chain of events, each having a close causal connection with its immediate predecessor,
the final event in the chain immediately effecting the injury as a natural and probable result of the
cause which first acted, under such circumstances that the person responsible for the first event
should, as an ordinary prudent and intelligent person, have reasonable ground to expect at the
moment of his act or default that an injury to some person might probably result therefrom.

If Aquilino heeded the MMDA prohibition against crossing Katipunan Avenue from Rajah Matanda,
the accident would not have happened. This specific untoward event is exactly what the MMDA
prohibition was intended for. Thus, a prudent and intelligent person who resides within the vicinity
where the accident occurred, Aquilino had reasonable ground to expect that the accident would be a
natural and probable result if he crossed Katipunan Avenue since such crossing is considered
dangerous on account of the busy nature of the thoroughfare and the ongoing construction of the
Katipunan-Boni Avenue underpass. It was manifest error for the Court of Appeals to have
overlooked the principle embodied in Article 2179 of the Civil Code, that when the plaintiffs own
negligence was the immediate and proximate cause of his injury, he cannot recover damages.

As to the alleged Rodel's contributory negligence- the court finds it unnecessary to delve
into it, since it cannot overcome or defeat Aquilinos recklessness which is the immediate and
proximate cause of the accident. Rodels contributory negligence has relevance only in the event
that Ramos seeks to recover from respondent whatever damages or injuries he may have suffered
as a result; it will have the effect of mitigating the award of damages in his favor.

[G.R. No. 107968. October 30, 1996]

ELIAS S. CIPRIANO and/or E.S. CIPRIANO ENTERPRISES, petitioner, vs. THE COURT OF APPEALS and MACLIN
ELECTRONICS, INC.,respondents.
MENDOZA, J.:
FACTS:
E.S. Cipriano Enterprises, owned by petitioner Cipriano, is engaged in the rustproofing of vehicles, under the style
Motobilkote. On April 30, 1991, private respondent Maclin Electronics, Inc., through an employee, brought a 1990
model Kia Pride Peoples car to petitioners shop for rustproofing. The job order showed the date it was received
for rustproofing as well its condition at the time. Neither the time of acceptance nor the hour of release, however,
was specified. According to the petitioner, the car was brought to his shop at 10 oclock in the morning of April 30,
1991 and was ready for release later that afternoon, as it took only six hours to complete the process of
rustproofing In the afternoon of May 1, 1991, fire broke out at the Lambat restaurant, which petitioner also
owned, adjoining his Mobilkote rustproofing shop. The fire destroyed both the shop and the restaurant, including
private respondents car.
On May 8 1991, MACLIN sent a letter to petitioner, demanding reimbursement for the value of the Kia Pride. In
reply, petitioner denied liability on the ground that the fire was a fortuitous event (Art. 1174 and 1262, NCC),
prompting private respondent to bring this suit for the value of its vehicle and for damages. Private respondent
argued that petitioner was liable for the loss of the car even if it was caused by a fortuitous event. It contended
that the nature of petitioners business required him to assume the risk because under P.D. No. 1572, petitioner
was required to insure his property as well as those of his customers.
RTC ruled in favor of MACLIN stating that the failure of defendant to comply with P.D. No. 1572 is in effect a
manifest act of negligence which renders defendant [petitioner herein] liable for the loss of the car even if the
same was caused by fire, and that rustproffing is definitely covered by P.D. No. 1572. Since petitioner did not
register his business and insure it, he must bear the cost of loss of his customers. CA affirmed the RTCs decision.
ISSUE: Whether petitioners failure to abide by PD 1572 constitutes negligence
HELD:
We have already held that violation of a statutory duty is negligence per se. We stated that where the very injury
which was intended to be prevented by the ordinance has happened, non-compliance with the ordinance was not
only an act negligence but also the proximate cause.
Indeed, the existence of a contract between petitioner and private respondent does not bar a finding of negligence
under the principles of quasi-delict. Petitioners negligence is the source of his obligation. He is not being held
liable for breach of his contractual obligation due to negligence but for his negligence in not complying with a duty
imposed on him by law. It is therefore immaterial that the loss occasioned to private respondent was due to a
fortuitous event, since it was petitioners negligence in not insuring against the risk which was the proximate cause
of the loss.
There is thus a statutory duty imposed on petitioner and it is for his failure to comply with this duty that he was
guilty of negligence rendering him liable for damages to private respondent. While the fire in this case may be
considered a fortuitous event,this circumstance cannot exempt petitioner from liability for loss.