PEDRO T.

LAYUGAN, petitioner,
vs.
INTERMEDIATE APPELLATE COURT, GODOFREDO ISIDRO, and TRAVELLERS MULTI-
INDEMNITY CORPORATION, respondents.

The findings of fact by the trial court which were adopted by the appellate court are as follows: 5
xxx xxx xxx
Pedro T. Layugan filed an action for damages against Godofredo Isidro, alleging that on May 15,
1979 while at Baretbet, Bagabag, Nueva Vizcaya, the Plaintiff and a companion were repairing
the tire of their cargo truck with Plate No. SU-730 which was parked along the right side of the
National Highway; that defendant's truck bearing Plate No. PW-583, driven recklessly by Daniel
Serrano bumped the plaintiff, that as a result, plaintiff was injured and hospitalized at Dr.
Paulino J. Garcia Research and Medical Center and the Our Lady of Lourdes Hospital; that he
spent TEN THOUSAND PESOS (Pl0,000.00) and will incur more expenses as he recuperates
from said injuries; that because of said injuries he would be deprived of a lifetime income in the
sum of SEVENTY THOUSAND PESOS (P70,000.00); and that he agreed to pay his lawyer the
sum of TEN THOUSAND PESOS (Pl0,000.00).
As prayed for by the plaintiffs counsel, the Court declared the defendant in default on October
12, 1979, and plaintiff's evidence was received ex-parte on January 11, 1978 and February 19,
1980. The decision on behalf of the plaintiff was set aside to give a chance to the defendant to
file his answer and later on, a third-party complaint.
Defendant admitted his ownership of the vehicle involved in the accident driven by Daniel
Serrano. Defendant countered that the plaintiff was merely a bystander, not a truck helper being
a brother-in-law law of the driver of said truck; that the truck allegedly being repaired was
parked, occupying almost half of the right lane towards Solano, Nueva Vizcaya, right after the
curve; that the proximate cause of the incident was the failure of the driver of the parked truck in
installing the early warning device, hence the driver of the parked car should be liable for
damages sustained by the truck of the herein defendant in the amount of more than P20,000.00;
that plaintiff being a mere bystander and hitchhiker must suffer all the damages he incurred. By
way of counterclaim defendant alleged that due to plaintiffs baseless complaint he was
constrained to engage the services of counsel for P5,000.00 and P200.00 per court appearance;
that he suffered sleepless nights, humiliation, wounded feelings which may be estimated at
P30.000.00.
On May 29, 1981, a third-party complaint was filed by the defendant against his insurer, the
Travellers Multi Indemnity Corporation; that the third-party plaintiff, without admitting his
liability to the plaintiff, claimed that the third-party defendant is liable to the former for
contribution, indemnity and subrogation by virtue of their contract under Insurance Policy No.
11723 which covers the insurer's liability for damages arising from death, bodily injuries and
damage to property.
Third-party defendant answered that, even assuming that the subject matter of the complaint is
covered by a valid and existing insurance policy, its liability shall in no case exceed the limit
defined under the terms and conditions stated therein; that the complaint is premature as no
claim has been submitted to the third party defendant as prescribed under the Insurance Code;
that the accident in question was approximately caused by the carelessness and gross negligence
of the plaintiff-, that by reason of the third-party complaint, third-party defendant was
constrained to engage the services of counsel for a fee of P3,000.00.
Pedro Layugan declared that he is a married man with one (1) child. He was employed as
security guard in Mandaluyong, Metro Manila, with a salary of SIX HUNDRED PESOS
(600.00) a month. When he is off-duty, he worked as a truck helper and while working as such,
he sustained injuries as a result of the bumping of the cargo truck they were repairing at
Baretbet, Bagabag, Nueva Vizcaya by the driver of the defendant. He used to earn TWO
HUNDRED PESOS (P200.00) to THREE HUNDRED PESOS (P300.00) monthly, at the rate of
ONE HUNDRED PESOS (Pl00.00) per trip. Due to said injuries, his left leg was amputated so
he had to use crutches to walk. Prior to the incident, he supported his family sufficiently, but
after getting injured, his family is now being supported by his parents and brother.
GODOFREDO ISIDRO, defendant/third-party plaintiff, testified that his truck involved in this
vehicular accident is insured with the Travellers Multi Indemnity Corporation covering own
damage and third-party liability, under vehicle policy No. 11723 (Exh. "1") dated May 30, 1978;
that after he filed the insurance claim the insurance company paid him the sum of P18,000.00 for
the damages sustained by this truck but not the third party liability.
 DANIEL SERRANO, defendant driver, declared that he gave a statement before the municipal
police of Bagabag, Nueva Vizcaya on May 16, 1979; that he knew the responsibilities of a
driver; that before leaving, he checked the truck. The truck owner used to instruct him to be
careful in driving. He bumped the truck being repaired by Pedro Layugan, plaintiff, while the
same was at a stop position. From the evidence presented, it has been established clearly that the
injuries sustained by the plaintiff was caused by defendant's driver, Daniel Serrano. The police
report confirmed the allegation of the plaintiff and admitted by Daniel Serrano on cross-
examination. The collision dislodged the jack from the parked truck and pinned the plaintiff to
the ground. As a result thereof, plaintiff sustained injuries on his left forearm and left foot. The
left leg of the plaintiff from below the knee was later on amputated (Exh. "C") when gangrene
had set in, thereby rendering him incapacitated for work depriving him of his income. (pp. 118 to
120, Record on Appeal.)
xxx xxx xxx
Upon such findings, amply supported by the evidence on record, the trial court rendered its decision, the
dispositive part of which reads as follows: 6
WHEREFORE, premises considered, the defendant is hereby ordered:
a) To pay the plaintiff SEVENTY THOUSAND (P70,000.00) PESOS actual and compensatory
damages;
b) TWO THOUSAND (P2,000.00) PESOS for attorney's fees;
c) FIVE THOUSAND (P5,000.00) PESOS for moral damages; and
d) To pay the costs of this suit. On the third-party complaint, the third-party defendant is ordered
to indemnify the defendant/third party plaintiff-.
a) The sum of FIFTY THOUSAND (P50,000.00) PESOS for actual and compensatory damages;
and
b) The costs of this suit.
The Intermediate Appellate Court as earlier stated reversed the decision of the trial court and dismissed the
complaint, the third-party complaint, and the counter- claims of both appellants. 7
Hence, this petition.
The petitioner alleges the following errors. 8
1. WHETHER UPON THE GIVEN FACTS, THE INTERMEDIATE APPELLATE COURT
ACTED CORRECTLY IN REVERSING AND SETTING ASIDE AND DISMISSING THE
PLAINTIFF-APPELLEE'S COMPLAINT.
2. WHETHER THE INTERMEDIATE APPELLATE COURT ACTED CORRECTLY IN
APPLYING THE DOCTRINE OF "RES IPSA LOQUITUR" WITH PROPER JURIS-
PRUDENTIAL (sic) BASIS.
The crux of the controversy lies in the correctness or error of the decision of the respondent court finding the
petitioner negligent under the doctrine of RES IPSA loquitur (The thing speaks for itself).<äre||anº•1àw>
Corollary thereto, is the question as to who is negligent, if the doctrine is inapplicable.
The respondent corporation stresses that the issues raised in the petition being factual, the same is not reviewable
by this Court in a petition for review by certiorari. 9
Indeed, it is an elementary rule in the review of decisions of the Court of Appeals that its findings of fact are
entitled to great respect and will not ordinarily be disturbed by this Court. 10 For if we have to review every
question of fact elevated to us, we would hardly have any more time left for the weightier issues compelling and
deserving our preferential attention.11 Be that as it may, this rule is not inflexible. Surely there are established
exceptions 12 —when the Court should review and rectify the findings of fact of the lower court, such as:
1) when the conclusion is a finding grounded entirely on speculation, surmise, or conjecture; 2) the inference
made is manifestly mistaken; 3) there is grave abuse of discretion; 4) the judgment is based on misapprehension
of facts; 5) the Court of Appeals went beyond the issues of the case if the findings are contrary to the admission
of both the appellant and the appellee; 6) the findings of the Court of Appeals are contrary to those of the trial
court; 7) the said findings of fact are conclusions without citation of specific evidence on which they are based;
8) the facts set forth in the petition as well as in the petitioner's main and reply briefs are not disputed by the
respondents; and 9) when the findings of fact of the Court of Appeals are premised on the absence of evidence
and are contradicted on record.
Exceptions 1, 2, 4, 6, 7, and 9 obtain in the instant case to warrant a deviation from the general rule.
From its finding that the parked truck was loaded with ten (10) big round logs 13 the Court of Appeals inferred
that because of its weight the truck could not have been driven to the shoulder of the road and concluded that the
same was parked on a portion of the road 14 at the time of the accident. Consequently, the respondent court
inferred that the mishap was due to the negligence of the driver of the parked truck. 15 The inference or
conclusion is manifestly erroneous. In a large measure, it is grounded on speculation, surmise, or conjecture.
How the respondent court could have reversed the finding of the trial court that a warning device was installed
16 escapes us because it is evident from the record that really such a device, in the form of a lighted kerosene
lamp, was installed by the driver of the parked truck three to four meters from the rear of his parked truck. 17 We
see this negative finding of the respondent appellate court as a misreading of the facts and the evidence on record
and directly contravening the positive finding of the trial court that an early warning device was in proper place
when the accident happened and that the driver of the private respondent was the one negligent. On the other
hand, the respondent court, in refusing to give its "imprimatur to the trial court's finding and conclusion that
Daniel Serrano (private respondent Isidro's driver) was negligent in driving the truck that bumped the parked
truck", did not cite specific evidence to support its conclusion. In cavalier fashion, it simply and nebulously
adverted to unspecified "scanty evidence on record." 18
On the technical aspect of the case, the respondent corporation would want us to dismiss this petition on the
ground that it was filed out of time. It must be noted that there was a motion for extension, 19 albeit filed
erroneously with the respondent court, dated March 19, 1986, requesting for 30 days from March 20, 1986, to
file the necessary petition or pleading before the Supreme Court". Also, on April 1, 1986, an appearance of a new
lawyer for the petitioner before the Supreme Court" with motion 20 was filed, again erroneously, with the Court
of Appeals, requesting for 20 days extension "to file the Petition for Review on Certiorari." Likewise a similar
motion 21 was filed with this Court also on April 1, 1986. On the other hand, the instant petition for review was
filed on April 17, 1986 22 but it was only after three months, on August 1, 1986, in its comment 23 that the
respondent corporation raised the issue of tardiness. The respondent corporation should not have waited in
ambush before the comment was required and before due course was given. In any event, to exact its "a pound of
flesh", so to speak, at this very late stage, would cause a grave miscarriage of justice. Parenthetically, it must be
noted that private respondent Isidro did not raise this issue of late filing.
We now come to the merits of this petition.
The question before us is who was negligent? Negligence is the omission to do something which a reasonable
man, guided by those considerations which ordinarily regulate the conduct of human affairs, would do, or the
doing of something which a prudent and reasonable man would not do 24 or as Judge Cooley defines it, "(T)he
failure to observe for the protection of the interests of another person, that degree of care, precaution, and
vigilance which the circumstances justly demand, whereby such other person suffers injury. 25
In Picart vs. Smith, 26 decided more than seventy years ago but still a sound rule, we held:
The test by which to determine the existence of negligence in a particular case may be stated as follows: Did the
defendant in doing the alleged negligent act use that reasonable care and caution which an ordinarily prudent
person would have used in the same situation? If not, then he is guilty of negligence. The law here in effect
adopts the standard supposed to be supplied by the imaginary conduct of the discreet paterfamilias of the Roman
law. 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.
Respondent Isidro posits that any immobile object along the highway, like a parked truck, poses serious danger
to a moving vehicle which has the right to be on the highway. He argues that since the parked cargo truck in this
case was a threat to life and limb and property, it was incumbent upon the driver as well as the petitioner, who
claims to be a helper of the truck driver, to exercise extreme care so that the motorist negotiating the road would
be properly forewarned of the peril of a parked vehicle. Isidro submits that the burden of proving that care and
diligence were observed is shifted to the petitioner, for, as previously claimed, his (Isidro's) Isuzu truck had a
right to be on the road, while the immobile cargo truck had no business, so to speak, to be there. Likewise, Isidro
proffers that the petitioner must show to the satisfaction of a reasonable mind that the driver and he (petitioner)
himself, provided an early warning device, like that required by law, or, by some other adequate means that
would properly forewarn vehicles of the impending danger that the parked vehicle posed considering the time,
place, and other peculiar circumstances of the occasion. Absent such proof of care, as in the case at bar, Isidro
concludes, would, under the doctrine of RES IPSA loquitur, evoke the presumption of negligence on the part of
the driver of the parked cargo truck as well as his helper, the petitioner herein, who was fixing the flat tire of the
said truck. 27
Respondent Isidro's contention is untenable.
The evidence on record discloses that three or four meters from the rear of the parked truck, a lighted kerosene
lamp was placed.28 Moreover, there is the admission of respondent Isidro's driver, Daniel Serrano, to Wit: 29
 Question No. 8 (by Patrolman Josefino Velasco)—Will you narrate to me in brief how the
accident happens (sic) if you can still remember?
Answer: (by Daniel Serrano)
That on or about 10:40 p.m., 15 May 1979 while driving Isuzu truck at Baretbet,
Bagabag, Nueva Vizcaya and at KM 285, I met another vehicle who (sic) did not
dim his (sic) lights which cause (sic) me to be blinded with intense glare of the
light that's why I did not notice a parked truck who (sic) was repairing a front
flat tire. When I was a few meters away, I saw the truck which was loaded with
round logs. I step (sic) on my foot brakes but it did not function with my many
attempts. I have (sic) found out later that the fluid pipe on the rear right was cut
that's why the breaks did not function. (Emphasis supplied).
Whether the cargo truck was parked along the road or on half the shoulder of the right side of the road would be
of no moment taking into account the warning device consisting of the lighted kerosene lamp placed three or
four meters from the back of the truck. 30 But despite this warning which we rule as sufficient, the Isuzu truck
driven by Daniel Serrano, an employee of the private respondent, still bumped the rear of the parked cargo truck.
As a direct consequence of such accident the petitioner sustained injuries on his left forearm and left foot. His
left leg was later amputated from below the knee when gangrene had set in. 31
It is clear from the foregoing disquisition that the absence or want of care of Daniel Serrano has been established
by clear and convincing evidence. It follows that in stamping its imprimatur upon the invocation by respondent
Isidro of the doctrine of RES IPSA loquitur to escape liability for the negligence of his employee, the
respondent court committed reversible error.
The respondent court ruled: 32
xxx xxx xxx
In addition to this, we agree with the following arguments of appellant Godofredo Isidro which
would show that the accident was caused due to the negligence of the driver of the cargo truck:
xxx xxx xxx
... In the case at bar the burden of proving that care and diligence was (sic)
observed is shifted evidently to the plaintiff, for, as adverted to, the motorists
have the right to be on the road, while the immobile truck has no business, so to
speak, to be there. It is thus for the plaintiff to show to the satisfaction of a
reasonable mind that the driver and he himself did employ early warning device
such as that required by law or by some other adequate means or device that
would properly forewarn vehicles of the impending danger that the parked
vehicle posed considering the time, place and other peculiar circumstances of
the occasion. Absent such proof of care, as in the case at bar, will evoke the
presumption of negligence under the doctrine of RES IPSA loquitur, on the part
of the driver of the parked cargo truck as well as plaintiff who was fixing the flat
tire of said truck. (pp. 14-17, Appellant's Brief). (Emphasis supplied).
At this juncture, it may be enlightening and helpful in the proper resolution of the issue of negligence to examine
the doctrine of RES IPSA loquitur.
This doctrine is stated thus: "Where the thing which causes injury is shown to be under the management of the
defendant, and the accident is such as in the ordinary course of things does not happen if those who have the
management use proper care, it affords reasonable evidence, in the absence of an explanation by the defendant,
that the accident arose from want of care. 33 Or as Black's Law Dictionary 34 puts it:
RES IPSA loquitur. The thing speaks for itself Rebuttable presumption or inference that
defendant was negligent, which arises upon proof that instrumentality causing injury was in
defendant's exclusive control, and that the accident was one which ordinarily does not happen in
absence of negligence. RES IPSA loquitur is rule of evidence whereby negligence of alleged
wrongdoer may be inferred from mere fact that accident happened provided character of
accident and circumstances attending it lead reasonably to belief that in absence of negligence it
would not have occurred and that thing which caused injury is shown to have been under
management and control of alleged wrongdoer. Hillen v. Hooker Const. Co., Tex. Civ. App., 484
S.W. 2d 133, 155. Under doctrine of "RES IPSA loquitur" the happening of an injury permits an
inference of negligence where plaintiff produces substantial evidence that injury was caused by
an agency or instrumentality under exclusive control and management of defendant, and that the
occurrence was such that in the ordinary course of things would not happen if reasonable care
had been used.
In this jurisdiction we have applied this doctrine in quite a number of cases, notably in Africa et al. vs. Caltex,
Inc., et al., 35 and the latest is in the case of F.F. Cruz and Co., Inc. vs. CA.36
The doctrine of RES IPSA loquitur as a rule of evidence is peculiar to the law of negligence which recognizes
that prima facie negligence may be established without direct proof and furnishes a substitute for specific proof
of negligence. 37 The doctrine is not a rule of substantive law 38 but merely a mode of proof or a mere
procedural convenience. 39 The rule, when applicable to the facts and circumstances of a particular case, is not
intended to and does not dispense with the requirement of proof of culpable negligence on the part of the party
charged. 40 It merely determines and regulates what shall be prima facie evidence thereof and facilitates the
burden of plaintiff of proving a breach of the duty of due care. 41 The doctrine can be invoked when and only
when, under the circumstances involved, direct evidence is absent and not readily available. 42 Hence, it has
generally been held that the presumption of inference arising from the doctrine cannot be availed of, or is
overcome, where plaintiff has knowledge and testifies or presents evidence as to the specific act of negligence
which is the cause of the injury complained of or where there is direct evidence as to the precise cause of the
accident and all the facts and circumstances attendant on the occurrence clearly appear. 43 Finally, once the
actual cause of injury is established beyond controversy, whether by the plaintiff or by the defendant, no
presumptions will be involved and the doctrine becomes inapplicable when the circumstances have been so
completely eludicated that no inference of defendant's liability can reasonably be made, whatever the source of
the evidence, 44 as in this case.
The private respondent is sued under Art. 2176 in relation to Art. 2180, paragraph 5, of the Civil Code. In the
latter, when an injury is caused by the negligence of a servant or employee there instantly arises a presumption
of law that there was negligence on the part of the master or employer either in the selection of the servant or
employee, or in supervision over him after selection, or both. Such presumption is juris tantum and not juris et
de jure and consequently, may be rebutted. If follows necessarily that if the employer shows to the satisfaction of
the court that in the selection and in the supervision he has exercised the care and diligence of a good father of a
family, the presumption is overcome and he is relieved from liability. 45 In disclaiming liability for the incident,
the private respondent stresses that the negligence of his employee has already been adequately overcome by his
driver's statement that he knew his responsibilities as a driver and that the truck owner used to instruct him to be
careful in driving. 46
We do not agree with the private respondent in his submission. In the first place, it is clear that the driver did not
know his responsibilities because he apparently did not check his vehicle before he took it on the road. If he did
he could have discovered earlier that the brake fluid pipe on the right was cut, and could have repaired it and
thus the accident could have been avoided. Moveover, to our mind, the fact that the private respondent used to
intruct his driver to be careful in his driving, that the driver was licensed, and the fact that he had no record of
any accident, as found by the respondent court, are not sufficient to destroy the finding of negligence of the
Regional Trial Court given the facts established at the trial 47 The private respondent or his mechanic, who must
be competent, should have conducted a thorough inspection of his vehicle before allowing his driver to drive it.
In the light of the circumstances obtaining in the case, we hold that Isidro failed to prove that the diligence of a
good father of a family in the supervision of his employees which would exculpate him from solidary liability
with his driver to the petitioner. But even if we concede that the diligence of a good father of a family was
observed by Isidro in the supervision of his driver, there is not an iota of evidence on record of the observance by
Isidro of the same quantum of diligence in the supervision of his mechanic, if any, who would be directly in
charge in maintaining the road worthiness of his (Isidro's) truck. But that is not all. There is paucity of proof that
Isidro exercised the diligence of a good father of a family in the selection of his driver, Daniel Serrano, as well as
in the selection of his mechanic, if any, in order to insure the safe operation of his truck and thus prevent damage
to others. Accordingly, the responsibility of Isidro as employer treated in Article 2180, paragraph 5, of the Civil
Code has not ceased.
WHEREFORE, the petition is hereby GRANTED. The Decision of the respondent court as well as its Resolution
denying the petitioner's motion for reconsideration are hereby SET ASIDE and the decision of the trial court,
dated January 20, 1983, is hereby REINSTATED in toto. With costs against the private respondents.
SO ORDERED.
M. CONSUNJI, INC., petitioner,
vs.
COURT OF APPEALS and MARIA J. JUEGO

Around 1:30PM of November 2, 1990, Jose Juergo, a construction worker of D.M. Consunji Inc. fell 14 floors
from the Renaissance Tower, Pasig City. He was immediately rushed to Rizal Medical Center in Pasig City. The
attending physician, Dr. Errol de Yzo, pronounce Jose dead on arrival (DOA) at around 2:15PM.

Jose Juergo, together with Jessie Jaluag and Delso Destajo, performing their work as carpenter at the elevator
core of the 14th floor of Tower D, Renaissance Tower Building were on board a platform. Jose was crushed to
death when the platform fell due to removal or looseness of the pin, which was merely inserted to the connecting
points of the chain block and platform but without a safety lock. Luckily, Jessie and Delso jumped out of safety.

PO3 Rogelio Villanueva of the Eastern Police District investigated the tragedy and filed report dated Nov. 25,
1990. Maria Juergo, Jose’s widow filed a complaint on May 9, 1991 for damages in the RTC and was rendered a
favorable decision to receive support from DM Consunji amounting to P644,000.

DM Consunji seeks reversal of the CA decision.

ISSUE: Whether Maria Juergo can still claim damages with D.M. Consunji apart from the death benefits she
claimed in the State Insurance Fund.

HELD:

The respondent is not precluded from recovering damages under the civil code. Maria Juergo was unaware of
petitioner’s negligence when she filed her claim for death benefits from the State Insurance Fund. She filed the
civil complaint for damages after she received a copy of the police investigation report and the Prosecutor’s
Memorandum dismissing the criminal complaint against petitioner’s personnel.

Supreme Court remanded to the RTC of Pasig City to determine whether the award decreed in its decision is
more than that of the Employees Compensation Commission (ECC). Should the award decreed by the trial
court be greater than that awarded by the ECC, payments already made to private respondent pursuant to the
Labor Code shall be deducted therefrom.

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. T-5292 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 cross-examine him although they had the opportunity to do so; and thirdly, that
in any event the said reports are admissible as an exception to the hearsay rule under section 35 of Rule 123,
now Rule 130.
The first contention is not borne out by the record. The transcript of the hearing of September 17, 1953 (pp. 167-
170) shows that the reports in question, when offered as evidence, were objected to by counsel for each of
respondents on the ground that they were hearsay and that they were "irrelevant, immaterial and impertinent."
Indeed, in the court's resolution only Exhibits J, K, K-5 and X-6 were admitted without objection; the admission
of the others, including the disputed ones, carried no such explanation.
On the second point, although Detective Capacillo did take the witness stand, he was not examined and he did
not testify as to the facts mentioned in his alleged report (signed by Detective Zapanta). All he said was that he
was one of those who investigated "the location of the fire and, if possible, gather witnesses as to the occurrence,
and that he brought the report with him. There was nothing, therefore, on which he need be 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. (CA-G.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.1äwphï1.ñët
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 T-Africa; 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.
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.1awphîl.nèt
 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 Compañia 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 plaintiff-appellee 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 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.
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
defendant-appellant.4
WHEREFORE, finding no error in the decision of the lower Court appealed from, the same is hereby affirmed.
Costs against the defendant-appellant.

DR. VICTORIA L. BATIQUIN and ALLAN BATIQUIN, petitioners,

vs.
COURT OF APPEALS, SPOUSES QUEDO D. ACOGIDO and FLOTILDE G. VILLEGAS,
respondents.

DAVIDE, JR., J.:p

Throughout history, patients have consigned their fates and lives to the skill of their doctors. For a
breach of this trust, men have been quick to demand retribution. Some 4,000 years ago, the Code of
Hammurabi1 then already provided: "If a physician make a deep incision upon a man with his
bronze lancet and cause the man's death, or operate on the eye socket of a man with his bronze
lancet and destroy the man's eyes, they shall cut off his hand." 2 Subsequently, Hippocrates3 wrote
what was to become part of the healer's oath: "I will follow that method of treatment which
according to my ability and judgment, I consider for the benefit of my patients, and abstain from
whatever is deleterious and mischievous. . . . While I continue to keep this oath unviolated may it
be granted me to enjoy life and practice the art, respected by all men at all times but should I
trespass and violate this oath, may the reverse be my lot." At present, the primary objective of the
medical profession if the preservation of life and maintenance of the health of the people. 4

Needless to say then, when a physician strays from his sacred duty and endangers instead the life of
his patient, he must be made to answer therefor. Although society today cannot and will not tolerate
the punishment meted out by the ancients, neither will it and this Court, as this case would show,
let the act go uncondemned.

The petitioners appeal from the decision 5 of the Court of Appeals of 11 May 1994 in CA-G.R. CV
No. 30851, which reversed the decision 6 of 21 December 1990 of Branch 30 of the Regional Trial
Court (RTC) of Negros Oriental in Civil Case No. 9492.

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

Dr. Batiquin was a Resident Physician at the Negros Oriental Provincial Hospital,
Dumaguete City from January 9, 1978 to September 1989. Between 1987 and
September, 1989 she was also the Actg. Head of the Department of Obstetrics and
Gynecology at the said Hospital.

Mrs. Villegas is a married woman who submitted to Dr. Batiquin for prenatal care
as the latter's private patient sometime before September 21, 1988.

In the morning of September 21, 1988 Dr. Batiquin, with the assistance of Dr.
Doris Teresita Sy who was also a Resident Physician at the same Hospital, C.I. and
O.R. Nurse Arlene Diones and some student nurses performed a simple caesarean
 section on Mrs. Villegas at the Negros Oriental Provincial Hospital and after 45
minutes Mrs. Villegas delivered her first child, Rachel Acogido, at about 11:45 that
morning. Thereafter, Plaintiff remained confined at the Hospital until September
27, 1988 during which period of confinement she was regularly visited by Dr.
Batiquin. On September 28, 1988 Mrs. Villegas checked out of the Hospital. . . and
on that same day she paid Dr. Batiquin, thru the latter's secretary, the amount of
P1,500.00 as "professional fee". . . .

Soon after leaving the Hospital Mrs. Villegas began to suffer abdominal pains and
complained of being feverish. She also gradually lost her appetite, so she consulted
Dr. Batiquin at the latter's polyclinic who prescribed for her certain medicines. . .
which she had been taking up to December, 1988.

In the meantime, Mrs. Villegas was given a Medical Certificate by Dr. Batiquin on
October 31, 1988. . . certifying to her physical fitness to return to her work on
November 7, 1988. So, on the second week of November, 1988 Mrs. Villegas
returned to her work at the Rural Bank of Ayungon, Negros Oriental.

The abdominal pains and fever kept on recurring and bothered Mrs. Villegas no
end despite the medications administered by Dr. Batiquin. When the pains became
unbearable and she was rapidly losing weight she consulted Dr. Ma. Salud Kho at
the Holy Child's Hospital in Dumaguete City on January 20, 1989.

The evidence of Plaintiffs show that when Dr. Ma. Salud Kho examined Mrs.
Villegas at the Holy Child's Hospital on January 20, 1989 she found Mrs. Villegas
to be feverish, pale and was breathing fast. Upon examination she felt an
abdominal mass one finger below the umbilicus which she suspected to be either a
tumor of the uterus or an ovarian cyst, either of which could be cancerous. She had
an x-ray taken of Mrs. Villegas' chest, abdomen and kidney. She also took blood
tests of Plaintiff. A blood count showed that Mrs. Villegas had [an] infection inside
her abdominal cavity. The results of all those examinations impelled Dr. Kho to
suggest that Mrs. Villegas submit to another surgery to which the latter agreed.

When Dr. Kho opened the abdomen of Mrs. Villegas she found whitish-yellow
discharge inside, an ovarian cyst on each of the left and right ovaries which gave
out pus, dirt and pus behind the uterus, and a piece of rubber material on the right
side of the uterus embedded on [sic] the ovarian cyst, 2 inches by 3/4 inch in size.
This piece of rubber material which Dr. Kho described as a "foreign body" looked
like a piece of a "rubber glove". . . and which is [sic] also "rubber-drain like". . . . It
could have been a torn section of a surgeon's gloves or could have come from other
sources. And this foreign body was the cause of the infection of the ovaries and
consequently of all the discomfort suffered by Mrs. Villegas after her delivery on
September 21, 1988.7

The piece of rubber allegedly found near private respondent Flotilde Villegas's uterus was not
presented in court, and although Dr. Ma. Salud Kho Testified that she sent it to a pathologist in
Cebu City for examination,8 it was not mentioned in the pathologist's Surgical Pathology Report. 9

Aside from Dr. Kho's testimony, the evidence which mentioned the piece of rubber are a Medical
Certificate,10 a Progress Record,11 an Anesthesia Record,12 a Nurse's Record,13 and a
Physician's Discharge Summary.14 The trial court, however, regarded these documentary evidence
as mere hearsay, "there being no showing that the person or persons who prepared them are
deceased or unable to testify on the facts therein stated. . . . Except for the Medical Certificate
(Exhibit "F"), all the above documents were allegedly prepared by persons other than Dr. Kho, and
she merely affixed her signature on some of them to express her agreement thereto. . . ." 15 The
trial court also refused to give weight to Dr. Kho's testimony regarding the subject piece of rubber
as Dr. Kho "may not have had first-hand knowledge" thereof, 16 as could be gleaned from her
statement, thus:

A . . . I have heard somebody that [sic] says [sic] there is [sic] a

foreign body that goes with the tissues but unluckily I don't know
where the rubber was. 17
The trial court deemed vital Dr. Victoria Batiquin's testimony that when she confronted Dr. Kho
regarding the piece of rubber, "Dr. Kho answered that there was rubber indeed but that she threw it
away."18 This statement, the trial court noted, was never denied nor disputed by Dr. Kho, leading it
to conclude:

There are now two different versions on the whereabouts of that offending "rubber"
— (1) that it was sent to the Pathologist in Cebu as testified to in Court by Dr. Kho
and (2) that Dr. Kho threw it away as told by her to Defendant. The failure of the
Plaintiffs to reconcile these two different versions serve only to weaken their claim
against Defendant Batiquin.19

All told, the trial court held in favor of the petitioners herein.

The Court of Appeals reviewed the entirety of Dr. Kho's testimony and, even without admitting the
private respondents' documentary evidence, deemed Dr. Kho's positive testimony to definitely
establish that a piece of rubber was found near private respondent Villegas's uterus. Thus, the Court
of Appeals reversed the decision of the trial court, holding:

4. The fault or negligence of appellee Dr. Batiquin is established by preponderance

of evidence. The trial court itself had narrated what happened to appellant Flotilde
after the caesarean operation made by appellee doctor. . . . After the second
operation, appellant Flotilde became well and healthy. Appellant Flotilde's troubles
were caused by the infection due to the "rubber" that was left inside her abdomen.
Both appellant; testified that after the operation made by appellee doctor, they did
not go to any other doctor until they finally decided to see another doctor in
January, 1989 when she was not getting any better under the care of appellee Dr.
Batiquin. . . . Appellee Dr. Batiquin admitted on the witness stand that she alone
decided when to close the operating area; that she examined the portion she
operated on before closing the same. . . Had she exercised due diligence, appellee
Dr. Batiquin would have found the rubber and removed it before closing the
operating area.20

The appellate court then ruled:

Appellants' evidence show[s] that they paid a total of P17,000.00 [deposit of

P7,100.00 (Exh. G-1-A) plus hospital and medical expenses together with doctor's
fees in the total amount P9,900.00 (Exhs. G and G-2)] for the second operation that
saved her life.

For the miseries appellants endured for more than three (3) months, due to the
negligence of appellee Dr. Batiquin they are entitled to moral damages in the
amount of P100,000.00; exemplary damages in the amount of P20,000.00 and
attorney's fees in the amount of P25,000.00.

The fact that appellant Flotilde can no longer bear children because her uterus and
ovaries were removed by Dr. Kho is not taken into consideration as it is not shown
that the removal of said organs were the direct result of the rubber left by appellee
Dr. Batiquin near the uterus. What is established is that the rubber left by appellee
caused infection, placed the life of appellant Flotilde in jeopardy and caused
appellant fear, worry and anxiety. . . .

WHEREFORE, the appealed judgment, dismissing the complaint for damages is

REVERSED and SET ASIDE. Another judgment is hereby entered ordering
defendants-appellees to pay plaintiffs-appellants the amounts of P17,000.00 as and
for actual damages; P100,000.00 as and for moral damages; P20,000.00 as and for
exemplary damages; and P25,000.00 as and for attorney's fees plus the costs of
litigation.

SO ORDERED.21

From the above judgment, the petitioners appealed to this Court claiming that the appellate court:
(1) committed grave abuse of discretion by resorting to findings of fact not supported by the
evidence on record, and (2) exceeded its discretion, amounting to lack or excess of jurisdiction,
when it gave credence to testimonies punctured with contradictions and falsities.

The private respondents commented that the petition raised only questions of fact, which were not
proper for review by this Court.

While the rule is that only questions of law may be raised in a petition for review on certiorari,
there are exceptions, among which are when the factual findings of the trial court and the appellate
court conflict, when the appealed decision is clearly contradicted by the evidence on record, or
when the appellate court misapprehended the facts. 22

After deciphering the cryptic petition, we find that the focal point of the instant appeal is the
appreciation of Dr. Kho's testimony. The petitioners contend that the Court of Appeals
misappreciated the following portion of Dr. Kho's testimony:

Q What is the purpose of the examination?

A Just in case, I was just thinking at the back of my mind, just in

case this would turn out to be a medico-legal case, I have heard
somebody that [sic] says [sic] there is [sic] a foreign body that
goes with the tissues but unluckily I don't know where the rubber
was. It was not in the Lab, it was not in Cebu. 23 (emphasis
supplied)

The petitioners prefer the trial court's interpretation of the above testimony, i.e., that Dr.
Kho's knowledge of the piece of rubber was based on hearsay. The Court of Appeals, on
the other hand, concluded that the underscored phrase was taken out of context by the trial
court. According to the Court of Appeals, the trial court should have likewise considered
the other portions of Dr. Kho's testimony, especially the following:

Q So you did actually conduct the operation on her?

A Yes, I did.

Q And what was the result?

A Opening up her abdomen, there was whitish-yellow discharge

inside the abdomen, there was an ovarian cyst on the left and side
and there was also an ovarian cyst on the right which, on opening
up or freeing it up from the uterus, turned out to be pus. Both
ovaries turned out. . . to have pus. And then, cleaning up the uterus,
at the back of the uterus it was very dirty, it was full of pus. And
there was a [piece of] rubber, we found a [piece of] rubber on the
right
side. 24

We agree with the Court of Appeals. The phrase relied upon by the trial court does not negate the
fact that Dr. Kho saw a piece of rubber in private respondent Villegas's abdomen, and that she sent
it to a laboratory and then to Cebu City for examination by a pathologist. 25 Not even the
Pathologist's Report, although devoid of any mention of a piece of rubber, could alter what Dr. Kho
saw. Furthermore, Dr. Kho's knowledge of the piece of rubber could not be based on other than
first-hand knowledge for, as she asserted before the trial court:

Q But you are sure you have seen [the piece of rubber]?

A Oh yes. I was not the only one who saw it. 26

The petitioners emphasize that the private respondents never reconciled Dr. Kho's testimony with
Dr. Batiquin's claim on the witness stand that when Dr. Batiquin confronted Dr. Kho about the
foreign body, the latter said that there was a piece of rubber but that she threw it away. Although
hearsay, Dr. Batiquin's claim was not objected to, and hence, the same is admissible 27 but it carries
no probative value.28 Nevertheless, assuming otherwise, Dr. Batiquin's statement cannot belie the
fact that Dr. Kho found a piece of rubber near private respondent Villegas's uterus. And even if we
were to doubt Dr. Kho as to what she did to the piece of rubber, i.e., whether she threw it away or
sent it to Cebu City, we are not justified in distrusting her as to her recovery of a piece of rubber
from private respondent Villegas's abdomen. On this score, it is perfectly reasonable to believe the
testimony of a witness with respect to some facts and disbelieve his testimony with respect to other
facts. And it has been aptly said that even when a witness is found to have deliberately falsified in
some material particulars, it is not required that the whole of his uncorroborated testimony be
rejected, but such portions thereof deemed worthy of belief may be credited. 29

It is here worth noting that the trial court paid heed to the following portions of Dr. Batiquin's
testimony: that no rubber drain was used in the operation, 30 and that there was neither any tear on
Dr. Batiquin's gloves after the operation nor blood smears on her hands upon removing her
gloves.31 Moreover, the trial court pointed out that the absence of a rubber drain was corroborated
by Dr. Doris Sy, Dr. Batiquin's assistant during the operation on private respondent Villegas. 32 But
the trial court failed to recognize that the assertions of Drs. Batiquin and Sy were denials or
negative testimonies. Well-settled is the rule that positive testimony is stronger than negative
testimony.33 Of course, as the petitioners advocate, such positive testimony must come from a
credible source, which leads us to the second assigned error.

While the petitioners claim that contradictions and falsities punctured Dr. Kho's testimony, a
regarding of the said testimony reveals no such infirmity and establishes Dr. Kho as a credible
witness. Dr. Kho was frank throughout her turn on the witness stand. Furthermore, no motive to
state any untruth was ever imputed against Dr. Kho, leaving her trustworthiness unimpaired. 34 The
trial court's following declaration shows that while it was critical of the lack of care with which Dr.
Kho handled the piece of rubber, it was not prepared to doubt Dr. Kho's credibility, thus only
supporting our appraisal of Dr. Kho's trustworthiness:

This is not to say that she was less than honest when she testified about her
findings, but it can also be said that she did not take the most appropriate
precaution to preserve that "piece of rubber" as an eloquent evidence of what she
would reveal should there be a "legal problem" which she claim[s] to have
anticipated.35

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

As such, the rule of RES IPSA loquitur comes to fore. This Court has had occasion to delve into
the nature and operation of this doctrine:

This doctrine [RES IPSA loquitur] is stated thus: "Where the thing which causes
injury is shown to be under the management of the defendant, and the accident is
such as in the ordinary course of things does not happen in those who have the
management use proper care, it affords reasonable evidence, in the absence of an
explanation by the defendant, that the accident arose from want of care." Or as
Black's Law Dictionary puts it:

RES IPSA loquitur. The thing speaks for itself. Rebuctable

presumption or inference that defendant was negligent, which
arises upon proof that [the] instrumentality causing injury was in
defendant's exclusive control, and that the accident was one which
ordinary does not happen in absence of negligence. RES IPSA
loquitur is [a] rule of evidence whereby negligence of [the] alleged
wrongdoer may be inferred from [the] mere fact that [the] accident
happened provided [the] character of [the] accident and
circumstances attending it lead reasonably to belief that in [the]
absence of negligence it would not have occurred and that thing
which caused injury is shown to have been under [the]
management and control of [the] alleged wrongdoer. . . . Under
[this] doctrine
. . . the happening of an injury permits an inference of negligence
where plaintiff produces substantial evidence that [the] injury was
caused by an agency or instrumentality under [the] exclusive
control and management of defendant, and that the occurrence [sic]
was such that in the ordinary course of things would not happen if
 reasonable care had been used.

xxx xxx xxx

The doctrine of [r]es ipsa loquitur as a rule of evidence is peculiar

to the law of negligence which recognizes that prima facie
negligence may be established without direct proof and furnishes a
substitute for specific proof of negligence. The doctrine is not a
rule of substantive law, but merely a mode of proof or a mere
procedural convenience. The rule, when applicable to the facts and
circumstances of a particular case, is not intended to and does not
dispense with the requirement of proof of culpable negligence on
the party charged. It merely determines and regulates what shall be
prima facie evidence thereof and facilitates the burden of plaintiff
of proving a breach of the duty of due care. The doctrine can be
invoked when and only when, under the circumstances involved,
direct evidence is absent and not readily available. 36

In the instant case, all the requisites for recourse to the doctrine are present. First, the entire
proceedings of the caesarean section were under the exclusive control of Dr. Batiquin. In this light,
the private respondents were bereft of direct evidence as to the actual culprit or the exact cause of
the foreign object finding its way into private respondent Villegas's body, which, needless to say,
does not occur unless through the intersection of negligence. Second, since aside from the
caesarean section, private respondent Villegas underwent no other operation which could have
caused the offending piece of rubber to appear in her uterus, it stands to reason that such could only
have been a by-product of the caesarean section performed by Dr. Batiquin. The petitioners, in this
regard, failed to overcome the presumption of negligence arising from resort to the doctrine of
RES IPSA loquitur. Dr. Batiquin is therefore liable for negligently leaving behind a piece of rubber
in private respondent Villegas's abdomen and for all the adverse effects thereof.

As a final word, this Court reiterates its recognition of the vital role the medical profession plays in
the lives of the people,3 7 and the State's compelling interest to enact measures to protect the
public from "the potentially deadly effects of incompetence and ignorance in those who would
undertake to treat our bodies and minds for disease or trauma." 38 Indeed, a physician is bound to
serve the interest of his patients "with the greatest of solicitude, giving them always his best talent
and skill."39 Through her tortious conduct, the petitioner endangered the life of Flotilde Villegas,
in violation of her profession's rigid ethical code and in contravention of the legal standards set
forth for professionals, in general,40 and members of the medical profession,41 in particular.

WHEREFORE, the challenged decision of 11 May 1994 of the Court of Appeals in CA-G.R. CV
No. 30851 is hereby AFFIRMED in toto.

FGU INSURANCE CORPORATION, petitioner,

vs.
G.P. SARMIENTO TRUCKING CORPORATION and LAMBERT M. EROLES, respondents.
VITUG, J.:
G.P. Sarmiento Trucking Corporation (GPS) undertook to deliver on 18 June 1994 thirty (30) units of Condura
S.D. white refrigerators aboard one of its Isuzu truck, driven by Lambert Eroles, from the plant site of
Concepcion Industries, Inc., along South Superhighway in Alabang, Metro Manila, to the Central Luzon
Appliances in Dagupan City. While the truck was traversing the north diversion road along McArthur highway
in Barangay Anupol, Bamban, Tarlac, it collided with an unidentified truck, causing it to fall into a deep canal,
resulting in damage to the cargoes.
FGU Insurance Corporation (FGU), an insurer of the shipment, paid to Concepcion Industries, Inc., the value of
the covered cargoes in the sum of P204,450.00. FGU, in turn, being the subrogee of the rights and interests of
Concepcion Industries, Inc., sought reimbursement of the amount it had paid to the latter from GPS. Since the
trucking company failed to heed the claim, FGU filed a complaint for damages and breach of contract of carriage
against GPS and its driver Lambert Eroles with the Regional Trial Court, Branch 66, of Makati City. In its
answer, respondents asserted that GPS was the exclusive hauler only of Concepcion Industries, Inc., since 1988,
and it was not so engaged in business as a common carrier. Respondents further claimed that the cause of
damage was purely accidental.1âwphi1.nêt
The issues having thus been joined, FGU presented its evidence, establishing the extent of damage to the cargoes
and the amount it had paid to the assured. GPS, instead of submitting its evidence, filed with leave of court a
motion to dismiss the complaint by way of demurrer to evidence on the ground that petitioner had failed to prove
that it was a common carrier.
The trial court, in its order of 30 April 1996,1 granted the motion to dismiss, explaining thusly:
"Under Section 1 of Rule 131 of the Rules of Court, it is provided that ‘Each party must prove his own
affirmative allegation, xxx.’
"In the instant case, plaintiff did not present any single evidence that would prove that defendant is a
common carrier.
"x x x xxx xxx
"Accordingly, the application of the law on common carriers is not warranted and the presumption of
fault or negligence on the part of a common carrier in case of loss, damage or deterioration of goods
during transport under 1735 of the Civil Code is not availing.
"Thus, the laws governing the contract between the owner of the cargo to whom the plaintiff was
subrogated and the owner of the vehicle which transports the cargo are the laws on obligation and
contract of the Civil Code as well as the law on quasi delicts.
"Under the law on obligation and contract, negligence or fault is not presumed. The law on quasi delict
provides for some presumption of negligence but only upon the attendance of some circumstances. Thus,
Article 2185 provides:
‘Art. 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.’
"Evidence for the plaintiff shows no proof that defendant was violating any traffic regulation. Hence, the
presumption of negligence is not obtaining.
"Considering that plaintiff failed to adduce evidence that defendant is a common carrier and defendant’s
driver was the one negligent, defendant cannot be made liable for the damages of the subject cargoes."2
The subsequent motion for reconsideration having been denied,3 plaintiff interposed an appeal to the Court of
Appeals, contending that the trial court had erred (a) in holding that the appellee corporation was not a common
carrier defined under the law and existing jurisprudence; and (b) in dismissing the complaint on a demurrer to
evidence.
The Court of Appeals rejected the appeal of petitioner and ruled in favor of GPS. The appellate court, in its
decision of 10 June 1999,4 discoursed, among other things, that -
"x x x in order for the presumption of negligence provided for under the law governing common carrier
(Article 1735, Civil Code) to arise, the appellant must first prove that the appellee is a common carrier.
Should the appellant fail to prove that the appellee is a common carrier, the presumption would not arise;
consequently, the appellant would have to prove that the carrier was negligent.
"x x x xxx xxx
"Because it is the appellant who insists that the appellees can still be considered as a common carrier,
despite its `limited clientele,’ (assuming it was really a common carrier), it follows that it (appellant) has
the burden of proving the same. It (plaintiff-appellant) `must establish his case by a preponderance of
evidence, which means that the evidence as a whole adduced by one side is superior to that of the other.’
(Summa Insurance Corporation vs. Court of Appeals, 243 SCRA 175). This, unfortunately, the appellant
failed to do -- hence, the dismissal of the plaintiff’s complaint by the trial court is justified.
"x x x xxx xxx
"Based on the foregoing disquisitions and considering the circumstances that the appellee trucking
corporation has been `its exclusive contractor, hauler since 1970, defendant has no choice but to comply
with the directive of its principal,’ the inevitable conclusion is that the appellee is a private carrier.
"x x x xxx xxx
"x x x the lower court correctly ruled that 'the application of the law on common carriers is not warranted
and the presumption of fault or negligence on the part of a common carrier in case of loss, damage or
deterioration of good[s] during transport under [article] 1735 of the Civil Code is not availing.' x x x.
"Finally, We advert to the long established rule that conclusions and findings of fact of a trial court are
entitled to great weight on appeal and should not be disturbed unless for strong and valid reasons."5
Petitioner's motion for reconsideration was likewise denied;6 hence, the instant petition,7 raising the following
issues:
 I
WHETHER RESPONDENT GPS MAY BE CONSIDERED AS A COMMON CARRIER AS DEFINED
UNDER THE LAW AND EXISTING JURISPRUDENCE.
II
WHETHER RESPONDENT GPS, EITHER AS A COMMON CARRIER OR A PRIVATE CARRIER,
MAY BE PRESUMED TO HAVE BEEN NEGLIGENT WHEN THE GOODS IT UNDERTOOK TO
TRANSPORT SAFELY WERE SUBSEQUENTLY DAMAGED WHILE IN ITS PROTECTIVE
CUSTODY AND POSSESSION.
III
WHETHER THE DOCTRINE OF RES IPSA LOQUITUR IS APPLICABLE IN THE INSTANT CASE.
On the first issue, the Court finds the conclusion of the trial court and the Court of Appeals to be amply justified.
GPS, being an exclusive contractor and hauler of Concepcion Industries, Inc., rendering or offering its services
to no other individual or entity, cannot be considered a common carrier. Common carriers are persons,
corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or
both, by land, water, or air, for hire or compensation, offering their services to the public,8 whether to the public
in general or to a limited clientele in particular, but never on an exclusive basis.9 The true test of a common
carrier is the carriage of passengers or goods, providing space for those who opt to avail themselves of its
transportation service for a fee.10 Given accepted standards, GPS scarcely falls within the term "common
carrier."
The above conclusion nothwithstanding, GPS cannot escape from liability.
In culpa contractual, upon which the action of petitioner rests as being the subrogee of Concepcion Industries,
Inc., the mere proof of the existence of the contract and the failure of its compliance justify, prima facie, a
corresponding right of relief.11 The law, recognizing the obligatory force of contracts,12 will not permit a party
to be set free from liability for any kind of misperformance of the contractual undertaking or a contravention of
the tenor thereof.13 A breach upon the contract confers upon the injured party a valid cause for recovering that
which may have been lost or suffered. The remedy serves to preserve the interests of the promisee that may
include his "expectation interest," which is his interest in having the benefit of his bargain by being put in as
good a position as he would have been in had the contract been performed, or his "reliance interest," which is his
interest in being reimbursed for loss caused by reliance on the contract by being put in as good a position as he
would have been in had the contract not been made; or his "restitution interest," which is his interest in having
restored to him any benefit that he has conferred on the other party.14 Indeed, agreements can accomplish little,
either for their makers or for society, unless they are made the basis for action.15 The effect of every infraction is
to create a new duty, that is, to make recompense to the one who has been injured by the failure of another to
observe his contractual obligation16 unless he can show extenuating circumstances, like proof of his exercise of
due diligence (normally that of the diligence of a good father of a family or, exceptionally by stipulation or by
law such as in the case of common carriers, that of extraordinary diligence) or of the attendance of fortuitous
event, to excuse him from his ensuing liability.
Respondent trucking corporation recognizes the existence of a contract of carriage between it and petitioner’s
assured, and admits that the cargoes it has assumed to deliver have been lost or damaged while in its custody. In
such a situation, a default on, or failure of compliance with, the obligation – in this case, the delivery of the
goods in its custody to the place of destination - gives rise to a presumption of lack of care and corresponding
liability on the part of the contractual obligor the burden being on him to establish otherwise. GPS has failed to
do so.
Respondent driver, on the other hand, without concrete proof of his negligence or fault, may not himself be
ordered to pay petitioner. The driver, not being a party to the contract of carriage between petitioner’s principal
and defendant, may not be held liable under the agreement. A contract can only bind the parties who have
entered into it or their successors who have assumed their personality or their juridical position.17 Consonantly
with the axiom res inter alios acta aliis neque nocet prodest, such contract can neither favor nor prejudice a third
person. Petitioner’s civil action against the driver can only be based on culpa aquiliana, which, unlike culpa
contractual, would require the claimant for damages to prove negligence or fault on the part of the defendant.18
A word in passing. RES IPSA loquitur, a doctrine being invoked by petitioner, holds a defendant liable where
the thing which caused the injury complained of is shown to be under the latter’s management and the accident
is such that, in the ordinary course of things, cannot be expected to happen if those who have its management or
control use proper care. It affords reasonable evidence, in the absence of explanation by the defendant, that the
accident arose from want of care.19 It is not a rule of substantive law and, as such, it does not create an
independent ground of liability. Instead, it is regarded as a mode of proof, or a mere procedural convenience
since it furnishes a substitute for, and relieves the plaintiff of, the burden of producing specific proof of
negligence. The maxim simply places on the defendant the burden of going forward with the proof.20 Resort to
the doctrine, however, may be allowed only when (a) the event is of a kind which does not ordinarily occur in
the absence of negligence; (b) other responsible causes, including the conduct of the plaintiff and third persons,
are sufficiently eliminated by the evidence; and (c) the indicated negligence is within the scope of the
defendant's duty to the plaintiff.21 Thus, it is not applicable when an unexplained accident may be attributable to
one of several causes, for some of which the defendant could not be responsible.22
RES IPSA loquitur generally finds relevance whether or not a contractual relationship exists between the
plaintiff and the defendant, for the inference of negligence arises from the circumstances and nature of the
occurrence and not from the nature of the relation of the parties.23 Nevertheless, the requirement that
responsible causes other than those due to defendant’s conduct must first be eliminated, for the doctrine to apply,
should be understood as being confined only to cases of pure (non-contractual) tort since obviously the
presumption of negligence in culpa contractual, as previously so pointed out, immediately attaches by a failure
of the covenant or its tenor. In the case of the truck driver, whose liability in a civil action is predicated on culpa
acquiliana, while he admittedly can be said to have been in control and management of the vehicle which
figured in the accident, it is not equally shown, however, that the accident could have been exclusively due to his
negligence, a matter that can allow, forthwith, RES IPSA loquitur to work against him.
If a demurrer to evidence is granted but on appeal the order of dismissal is reversed, the movant shall be deemed
to have waived the right to present evidence.24 Thus, respondent corporation may no longer offer proof to
establish that it has exercised due care in transporting the cargoes of the assured so as to still warrant a remand of
the case to the trial court.1âwphi1.nêt
WHEREFORE, the order, dated 30 April 1996, of the Regional Trial Court, Branch 66, of Makati City, and the
decision, dated 10 June 1999, of the Court of Appeals, are AFFIRMED only insofar as respondent Lambert M.
Eroles is concerned, but said assailed order of the trial court and decision of the appellate court are REVERSED
as regards G.P. Sarmiento Trucking Corporation which, instead, is hereby ordered to pay FGU Insurance
Corporation the value of the damaged and lost cargoes in the amount of P204,450.00. No costs.
DEAN C. WORCESTER, plaintiff-appellee,
vs.
MARTIN OCAMPO, TEODORO M. KALAW, LOPE K. SANTOS, FIDEL A. REYES, FAUSTINO
AGUILAR, ET AL., defendants-appellants.
Felipe Agoncillo for appellants.
W. A. Kincaid and Thos. L. Hartigan for appellee.
JOHNSON, J.:
On the 23rd day of January, 1909, the plaintiff commenced an action against the defendants in the Court of
First Instance of the city of Manila, for the purpose of recovering damages resulting from an alleged
libelous publication. The complaint was in the following language:
COMPLAINT.
I.
That the plaintiff as well as the defendants are residents of the city of Manila, Philippine Islands.
II.
That for a long time before the 30th of October, 1908, the defendants, Martin Ocampo, Teodoro M.
Kalaw, Lope K. Santos, Fidel A. Reyes, Faustino Aguilar, Leoncio G. Liquete , Manuel Palma,
Arcadio Arellano, Angel Jose, Galo Lichauco, Felipe Barretto, and Gregorio M. Cansipit, were the
owners, directors, writers (redactores), editors (editores) and administrators of a certain daily
newspaper known as "El Renacimiento" and "Muling Pagsilang," which newspaper during all the
time mentioned in this complaint was published and circulated daily in the Spanish and Tagalog
languages in the city of Manila, having a large circulation throughout the Philippine Islands.
III.
That for a long time the defendants have been maliciously persecuting and attacking the plaintiff in
said newspaper, until at last on the 30th of October, 1908, with the malicious intention of injuring the
plaintiff, who on said date was, and still is a member of the Civil Commission of the Philippines and
Secretary of the Interior in the Government of the Philippines, they attacked the honesty and reviled
the fame of the plaintiff, not only as a private person but also as an official of the Government of the
Philippine Islands, and with the object of exposing him to the odium, contempt, and ridicule of the
public, printed, wrote (redactaron), and published in said newspaper in its ordinary number of the
30th of October, 1908, a malicious defamation and false libel which was injurious ( injurioso) to the
plaintiff, said libel reading as follows:
IV.
That the plaintiff was, on the date of said publication, and still is, well known to the officials of the
Government of the Philippine Islands, and to the inhabitants of the Philippine Islands, and to public
in general, personally as well as a member of the Civil Commission of the Philippines and as
Secretary of the Interior, and the defamation and libel, and the words, terms and language used in
said defamation and libel were employed by the said defendants with the intention of indicating the
said plaintiff, and that should be understood, as in effect they were understood, by the public
officials of the Government and the inhabitants of the Philippine Islands in general, as referring to
the plaintiff, by reason of the publicly known fact that said plaintiff in compliance with his duties in
his position as such member of the Civil Commission of the Philippines and as such Secretary of
the Interior of the Philippine Islands, ascended on a previous occasion the mountains of the
Province of Benguet to study the native tribe known as Igorot, residing in said region; by reason of
the publicly known fact that in the said mountains of Benguet there exist large deposits of gold, and
for the reason that, as member of the Civil Commission of the Philippines, which is the legislative
body of the Philippine Islands, the plaintiff takes part in the enactment and repealing of laws in said
Islands; by reason furthermore of the fact, publicly known, that the plaintiff, as such Secretary of the
Interior of the Philippine Islands, has had under his direction and control the enforcement of the
laws of the Philippine Islands and the ordinances of the city of Manila relating to the slaughtering of
cattle; by reason furthermore of the fact, publicly known that said plaintiff, as such Secretary of the
Interior of the Philippine Islands, had under his direction and control the Bureau of Science of the
Government of the Philippine Islands, and he is generally known as a man devoted to the study of
science; by reason furthermore of the publicly known fact that the said plaintiff, as such Secretary of
the Interior of the Philippine Islands, at a previous time, caused the importation into the Philippine
Islands of fish eggs for the purpose of supplying the mountain streams of the Philippine Islands with
fish-hatcheries; by reason furthermore of the publicly known fact that said plaintiff, as such
Secretary of the Interior of the Philippine Islands, has journeyed to and explored the Islands of
Mindoro, Mindanao, and other regions of the Philippine Archipelago; by reason furthermore of the
publicly known fact that said plaintiff, as such Secretary of the Interior of the Philippine Islands, at
one time investigated and prepared a report for the Civil Commission of the Philippines in regard to
a certain proposition for the purchase of a parcel of land for the city of Manila; by reason
furthermore of the publicly known fact that said plaintiff, as member of said Civil Commission of the
Philippines together with the other members of said legislative body, once opened negotiations with
a certain firm engaged in the hotel business in regard to the location of a prospective hotel on one
of the filled-in lands of the city of Manila.
That said defendants charged said plaintiff with the prostitution of his office as member of the Civil
Commission of the Philippines and as Secretary of the Interior of said Islands, for personal ends;
with wasting public funds for the purpose of promoting his personal welfare; with the violation of the
laws of the Philippine Islands and the ordinances of the city of Manila; with taking part in illegal
combinations for the purpose of robbing the people; with the object of gain for himself and for
others; and lastly with being "a bird of prey;" and that said defamation should be understood, as in
effect it was understood, by the public officials of the Government and the people of the Philippine
Islands in general, as charging the said plaintiff with the conduct, actions and things above
specified; all of which allegations relating to the character and conduct of the said plaintiff, as above
stated, were and are false and without any foundation whatsoever.
That said defamation and libel were published by the defendants under a heading in large and
showy type, and every effort made by said defendants to see that said defamation and libel should
attract the attention of the public and be read by all the subscribers to said newspaper and the
readers of the same.
V.
Besides assailing the integrity and reviling the reputation of the plaintiff, said defendants, in
publishing the said libel, did so with the malicious intention of inciting the Filipino people to believe
that the plaintiff was a vile despot and a corrupt person, unworthy of the position which he held, and
for this reason to oppose his administration of the office in his charge as Secretary of the Interior,
and in this way they endeavored to create enormous difficulties for him in the performance of his
official duties, and to make him so unpopular that he would have to resign his office as member of
the Civil Commission of the Philippines and Secretary of the Interior.
In fact said defendants, by means of said libel and other false statements in said mentioned
newspaper, have been deliberately trying to destroy the confidence of the public in the plaintiff and
to incite the people to place obstacles in his way in the performance of his official duties, in
consequence of which the plaintiff has met with a great many difficulties which have increased to a
great extent his labors as a public official in every one of the Departments.
VI.
And for all these reasons the plaintiff alleges: That he has been damaged and is entitled to an
indemnity for the additional work to which he has been put, by the said defendants, in the
compliance of his duties, both in the past and the future, as well as for the injuries to his reputation
and feelings, in the sum of fifty thousand pesos (P50,000) Philippine currency, and besides this said
amount he is entitled to collect from the defendants the additional sum of fifty thousand pesos
(P50,000) Philippine currency, in the way of punitive damages, as a warning to the defendants.
While we believe that the lower court committed no error in refusing to admit the sentence acquitting Lope
K. Santos in the criminal case, we are of the opinion, after a careful examination of the record brought to
this court, that it is insufficient to show that Lope K. Santos was responsible, in any way, for the publication
of the alleged libel, and without discussing the question whether or not the so-called Tagalog edition of "El
Renacimiento" and "El Renacimiento" constituted one and the same newspaper, we find that the evidence
is insufficient to show that Lope K. Santos is responsible in damages, in any way, for the publication of the
said alleged libel.
The appellants discussed the eight and ninth assignments of error together, and claim that the lower court
committed an error in rendering a judgment jointly and severally against the defendants and in allowing an
execution against the individual property of said owners, and cite provisions of the Civil and Commercial
Codes in support of their contention. The difficulty in the contention of the appellants is that they fail to
recognize that the basis of the present action is a tort. They fail to recognize the universal doctrine that
each joint tort feasor is not only individually liable for the tort in which he participates, but is also jointly
liable with his tort feasors. The defendants might have been sued separately for the commission of the tort.
They might have been sued jointly and severally, as they were. (Nicoll vs. Glennie, 1 M. & S. (English
Common Law Reports), 558.) If several persons jointly commit a tort, the plaintiff or person injured, has his
election to sue all or some of the parties jointly, or one of them separately, because the tort is in its nature a
separate act of each individual. (1 Chiddey, Common Law Pleadings, 86.) It is not necessary that the
cooperation should be a direct, corporeal act, for, to give an example, in a case of assault and battery
committed by various persons, under the common law all are principals. So also is the person who
counsels, aids or assists in any way he commission of a wrong. Under the common law, he who aided or
assisted or counseled, in any way, the commission of a crime, was as much a principal as he who inflicted
or committed the actual tort. (Page vs. Freeman, 19 Mo., 421.)
It may be stated as a general rule, that the joint tort feasors are all the persons who command, instigate,
promote, encourage, advise, countenance, cooperate in, aid or abet the commission of a tort, or who
approve of it after it is done, if done for their benefit. They are each liable as principals, to the same extent
and in the same manner as if they had performed the wrongful act themselves. (Cooley on Torts, 133; Moir
vs. Hopkins, 16 Ill., 313 (63 Am. Dec., 312 and note); Berry vs. Fletch, 1st Dill., 67; Smithwick vs. Ward, 7
Jones L. 64; Smith vs. Felt, 50 Barb. (N. Y.), 612; Shepard vs. McQuilkin, 2 W. Va., 90; Lewis vs. Johns, 34
Cal., 269.)
Joint tort feasors are jointly and severally liable for the tort which they commit. The person injured may sue
all of them, or any number less than all. Each is liable for the whole damage caused by all, and all together
are jointly liable for the whole damage. It is no defense for one sued alone, that the others who participated
in the wrongful act are not joined with him as defendants; nor is it any excuse for him that his participation
in the tort was insignificant as compared with that of the others. (Forebrother vs. Ansley, 1 Campbell
(English Reports), 343; Pitcher vs. Bailey, 8 East, 171; Booth vs. Hodgson, 6 Term Reports, 405; Vose vs.
Grant, 15 Mass., 505; Acheson vs. Miller, 18 Ohio, 1; Wallace vs. Miller, 15 La. Ann., 449; Murphy vs.
Wilson, 44 Mo., 313; Bishop vs. Ealey, 9 Johnson (N. Y.), 294.)
Joint tort feasors are not liable pro rata. The damages can not be apportioned among them, except among
themselves. They can no insist upon an apportionment, for the purpose of each paying an aliquot part.
They are jointly and severally liable for the full amount. (Pardrige vs. Brady, 7 Ill. App., 639; Carney vs.
Read, 11 Ind., 417; Lee vs. Black, 27 Ark., 337; Bevins vs. McElroy, 52 Am. Dec., 258.)
A payment in full of the damage done, by one of the joint tort feasors, of course satisfies any claim which
might exist against the others. There can be but one satisfaction. The release of one of the joint tort feasors
by agreement, generally operates to discharge all. (Wright vs. Lathrop, 2 Ohio, 33; Livingston vs. Bishop, 1
Johnson (N.Y.), 290; Brown vs. Marsh, 7 Vt., 327; Ayer vs. Ashmead, 31 Conn., 447; Eastman vs. Grant, 34
Vt., 387; Turner vs. Hitchcock, 20 Iowa, 310; Ellis vs. Esson, 50 Wis., 149.)
Of course the courts during the trial may find that some of the alleged joint tort feasors are liable and that
others are not liable. The courts may release some for lack of evidence while condemning others of the
alleged tort feasors. And this is true even though they are charged jointly and severally. (Lansing vs.
Montgomery, 2 Johnson (N. Y.), 382; Drake vs. Barrymore, 14 Johnson, 166; Owens vs. Derby, 3 Ill., 126.)
This same principle is recognized by Act 277 of the Philippine Commission. Section 6 provides that:
Every author, editor or proprietor . . . is chargeable with the publication of any words in any part . . .
or number of each newspaper, as fully as if he were the author of the same.
In our opinion the lower court committed no error in rendering a joint and several judgment against the
defendants and allowing an execution against their individual property. The provisions of the Civil and
Commercial Codes cited by the defendants and appellants have no application whatever to the question
presented in the present case.
The tenth assignment of error above noted relates solely to the amount of damages suffered on account of
wounded feelings, mental suffering and injury to the good name and reputation of Mr. Worcester, by reason
of the alleged libelous publication. The lower court found that the damages thus suffered by Mr. Worcester
amounted to P35,000. This assignment of error presents a most difficult question. The amount of damages
resulting from a libelous publication to a man's good name and reputation is difficult of ascertainment. It is
nor difficult to realize that the damage thus done is great and almost immeasurable. The specific amount
the damages to be awarded must depend upon the facts in each case and the sound discretion of the
court. No fixed or precise rules can be laid down governing the amount of damages in cases of libel. It is
difficult to include all of the facts and conditions which enter into the measure of such damages. A man's
good name and reputation are worth more to him than all the wealth which he can accumulate during a
lifetime of industrious labor. To have them destroyed may be eminently of more damage to him personally
than the destruction of his physical wealth. The loss is immeasurable. No amount of money can
compensate him for his loss. Notwithstanding the great loss which he, from his standpoint, sustains, the
courts must have some tangible basis upon which to estimate such damages.
In discussing the elements of damages in a case of libel, the Honorable James C. Jenkins, who tried the
present case in the court below, correctly said that, "The enjoyment of a private reputation is as much a
constitutional right as the possession of life, liberty or property. It is one of those rights necessary to human
society, that underlie the whole scheme of human civilization. The respect and esteem of his fellows are
among the highest rewards of a wellspent life vouchsafed to man in this existence. The hope of it is the
inspiration of youth and its possession is a solace in later years. A man of affairs, a business man, who has
been seen known by his fellowmen in the active pursuits of life for many years, and who has developed a
great character and an unblemished reputation, has secured a possession more useful and more valuable
than lands or houses or silver or gold. The law recognizes the value of such a reputation and constantly
strives to give redress for its injury. It imposes upon him who attacks it by slanderous words or libelous
publications, the liability to make full compensation for the damage to the reputation, for the shame,
obloquy and for the injury to the feelings of its owner, which are caused by the publication of the slander or
libel. The law goes further. If the words are spoken or the publication is made with the intent to injure the
victim or with criminal indifference to civil obligation, it imposes such damages as the jury, in view of all the
circumstances of the particular case, adjudge that the wrongdoer ought to pay as an example to the public
and to deter others from doing likewise, and for punishment for the infliction of the injury."
As was said above, the damages suffered by Mr. Worcester to his good name and reputation are most
difficult of ascertainment. The attorney for the appellants, in his brief, lends the court but little assistance in
reaching a conclusion upon this question. The appellants leaves the whole question to the discretion of the
court, without any argument whatever.
After a careful examination, we are of the opinion that part of the judgment of the lower court relating to the
damages suffered by the Honorable Dean C. Worcester, should be modified, and that a judgment should
be rendered in favor of Mr. Dean C. Worcester and against the defendants, jointly and severally, for the
sum of P15,000, with interest at 6 per cent from the 23d of January, 1909.
With reference to the eleventh assignment of error above noted, to wit: That the court erred in imposing
punitive damages upon the defendants, we are of the opinion, after a careful examination of the evidence,
and in view of all of the facts and circumstances and the malice connected with the publication of said
editorial and the subsequent publications with relation to said editorial, that the lower court, by virtue of the
provisions of Act No. 277 of the Philippine Commission, was justified in imposing punitive damages upon
the defendants.
Section 11 of Act No. 277 allows the court, in an action for libel, to render a judgment for punitive damages,
in an amount which the court may think will be a just punishment to the libeler and an example to others.
Exemplary damages in civil actions for libel may always be recovered if the defendant or defendants are
actuated by malice. In the present case there was not the slightest effort on the part of the defendants to
show the existence of probable cause or foundation whatever for the facts contained in said editorial.
Malice, hatred, and ill will against the plaintiff are seen throughout the record. The said editorial not only
attempted to paint the plaintiff as a villain, but upon every occasion, the defendants resorted to ridicule of
the severest kind.
Here again we find difficulty in arriving at a conclusion relating to the damages which should be imposed
upon the defendants for the purpose of punishment. Upon this question the courts must be governed in
each case by the evidence, the circumstances and their sound discretion. Taking into consideration the fact
that some of the defendants have been prosecuted criminally and have been sentenced, and considering
that fact as a part of the punitive damages, we have arrived at the conclusion that the judgment of the lower
court should be modified, and that a judgment should be rendered against the defendants, jointly and
severally, and in favor of the plaintiff, the Honorable Dean C. Worcester, in the sum of P10,000, as punitive
damages, with interest at 6 per cent from the 23d day of January, 1909.
Therefore, after a full consideration of all the facts contained in the record and the errors assigned by the
appellants in this court, we are of the opinion that the judgment of the lower court should be modified and
that a judgment should be rendered in favor of Dean C. Worcester and against the defendants Martin
Ocampo, Teodoro M. Kalaw, Manuel Palma, Arcadio Arellano, Angel Jose, Galo Lichauco, Felipe Barretto,
and Gregorio M. Cansipit, jointly and severally, for the sum of P25,000 with interest at 6 per cent from the
23d of January, 1909, with costs, and that a judgment should be entered absolving Lope K. Santos from
any liability under said complaint. So ordered.
LOADMASTERS CUSTOMS SERVICES, INC., Petitioner,
vs.
GLODEL BROKERAGE CORPORATION and R&B INSURANCE CORPORATION,

THE FACTS:
On August 28, 2001, R&B Insurance issued Marine Policy No. MN-00105/2001 in favor of Columbia to
insure the shipment of 132 bundles of electric copper cathodes against All Risks. On August 28, 2001, the
cargoes were shipped on board the vessel "Richard Rey" from Isabela, Leyte, to Pier 10, North Harbor,
Manila. They arrived on the same date.
Columbia engaged the services of Glodel for the release and withdrawal of the cargoes from the pier and
the subsequent delivery to its warehouses/plants. Glodel, in turn, engaged the services of Loadmasters for
the use of its delivery trucks to transport the cargoes to Columbia’s warehouses/plants in Bulacan and
Valenzuela City.
The goods were loaded on board twelve (12) trucks owned by Loadmasters, driven by its employed drivers
and accompanied by its employed truck helpers. Six (6) truckloads of copper cathodes were to be delivered
to Balagtas, Bulacan, while the other six (6) truckloads were destined for Lawang Bato, Valenzuela City.
The cargoes in six truckloads for Lawang Bato were duly delivered in Columbia’s warehouses there. Of the
six (6) trucks en route to Balagtas, Bulacan, however, only five (5) reached the destination. One (1) truck,
loaded with 11 bundles or 232 pieces of copper cathodes, failed to deliver its cargo.
Later on, the said truck, an Isuzu with Plate No. NSD-117, was recovered but without the copper cathodes.
Because of this incident, Columbia filed with R&B Insurance a claim for insurance indemnity in the amount
of ₱1,903,335.39. After the requisite investigation and adjustment, R&B Insurance paid Columbia the
amount of ₱1,896,789.62 as insurance indemnity.
R&B Insurance, thereafter, filed a complaint for damages against both Loadmasters and Glodel before the
Regional Trial Court, Branch 14, Manila (RTC), docketed as Civil Case No. 02-103040. It sought
reimbursement of the amount it had paid to Columbia for the loss of the subject cargo. It claimed that it had
been subrogated "to the right of the consignee to recover from the party/parties who may be held legally
liable for the loss."2
On November 19, 2003, the RTC rendered a decision 3 holding Glodel liable for damages for the loss of the
subject cargo and dismissing Loadmasters’ counterclaim for damages and attorney’s fees against R&B
Insurance. The dispositive portion of the decision reads:
WHEREFORE, all premises considered, the plaintiff having established by preponderance of evidence its
claims against defendant Glodel Brokerage Corporation, judgment is hereby rendered ordering the latter:
1. To pay plaintiff R&B Insurance Corporation the sum of ₱1,896,789.62 as actual and
compensatory damages, with interest from the date of complaint until fully paid;
2. To pay plaintiff R&B Insurance Corporation the amount equivalent to 10% of the principal amount
recovered as and for attorney’s fees plus ₱1,500.00 per appearance in Court;
3. To pay plaintiff R&B Insurance Corporation the sum of ₱22,427.18 as litigation expenses.
WHEREAS, the defendant Loadmasters Customs Services, Inc.’s counterclaim for damages and attorney’s
fees against plaintiff are hereby dismissed.
With costs against defendant Glodel Brokerage Corporation.
SO ORDERED.4
Both R&B Insurance and Glodel appealed the RTC decision to the CA.
On August 24, 2007, the CA rendered the assailed decision which reads in part:
Considering that appellee is an agent of appellant Glodel, whatever liability the latter owes to appellant
R&B Insurance Corporation as insurance indemnity must likewise be the amount it shall be paid by
appellee Loadmasters.
WHEREFORE, the foregoing considered, the appeal is PARTLY GRANTED in that the appellee
Loadmasters is likewise held liable to appellant Glodel in the amount of ₱1,896,789.62 representing the
insurance indemnity appellant Glodel has been held liable to appellant R&B Insurance Corporation.
Appellant Glodel’s appeal to absolve it from any liability is herein DISMISSED.
SO ORDERED.5
Hence, Loadmasters filed the present petition for review on certiorari before this Court presenting the
following
 ISSUES
1. Can Petitioner Loadmasters be held liable to Respondent Glodel in spite of the fact that
the latter respondent Glodel did not file a cross-claim against it (Loadmasters)?
2. Under the set of facts established and undisputed in the case, can petitioner Loadmasters
be legally considered as an Agent of respondent Glodel?6
To totally exculpate itself from responsibility for the lost goods, Loadmasters argues that it cannot be
considered an agent of Glodel because it never represented the latter in its dealings with the consignee. At
any rate, it further contends that Glodel has no recourse against it for its (Glodel’s) failure to file a cross-
claim pursuant to Section 2, Rule 9 of the 1997 Rules of Civil Procedure.
Glodel, in its Comment,7 counters that Loadmasters is liable to it under its cross-claim because the latter
was grossly negligent in the transportation of the subject cargo. With respect to Loadmasters’ claim that it
is already estopped from filing a cross-claim, Glodel insists that it can still do so even for the first time on
appeal because there is no rule that provides otherwise. Finally, Glodel argues that its relationship with
Loadmasters is that of Charter wherein the transporter (Loadmasters) is only hired for the specific job of
delivering the merchandise. Thus, the diligence required in this case is merely ordinary diligence or that of
a good father of the family, not the extraordinary diligence required of common carriers.
R&B Insurance, for its part, claims that Glodel is deemed to have interposed a cross-claim against
Loadmasters because it was not prevented from presenting evidence to prove its position even without
amending its Answer. As to the relationship between Loadmasters and Glodel, it contends that a contract of
agency existed between the two corporations.8
Subrogation is the substitution of one person in the place of another with reference to a lawful claim or
right, so that he who is substituted succeeds to the rights of the other in relation to a debt or claim,
including its remedies or securities.9 Doubtless, R&B Insurance is subrogated to the rights of the insured to
the extent of the amount it paid the consignee under the marine insurance, as provided under Article 2207
of the Civil Code, which reads:
ART. 2207. If the plaintiff’s property has been insured, and he has received indemnity from the insurance
company for the injury or loss arising out of the wrong or breach of contract complained of, the insurance
company shall be subrogated to the rights of the insured against the wrong-doer 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.
As subrogee of the rights and interest of the consignee, R&B Insurance has the right to seek
reimbursement from either Loadmasters or Glodel or both for breach of contract and/or tort.
The issue now is who, between Glodel and Loadmasters, is liable to pay R&B Insurance for the amount of
the indemnity it paid Columbia.
At the outset, it is well to resolve the issue of whether Loadmasters and Glodel are common carriers to
determine their liability for the loss of the subject cargo. Under Article 1732 of the Civil Code, common
carriers are persons, corporations, firms, or associations engaged in the business of carrying or
transporting passenger or goods, or both by land, water or air for compensation, offering their services to
the public.
Based on the aforecited definition, Loadmasters is a common carrier because it is engaged in the business
of transporting goods by land, through its trucking service. It is a common carrier as distinguished from a
private carrier wherein the carriage is generally undertaken by special agreement and it does not hold itself
out to carry goods for the general public.10 The distinction is significant in the sense that "the rights and
obligations of the parties to a contract of private carriage are governed principally by their stipulations, not
by the law on common carriers."11
In the present case, there is no indication that the undertaking in the contract between Loadmasters and
Glodel was private in character. There is no showing that Loadmasters solely and exclusively rendered
services to Glodel.
In fact, Loadmasters admitted that it is a common carrier.12
In the same vein, Glodel is also considered a common carrier within the context of Article 1732. In its
Memorandum,13 it states that it "is a corporation duly organized and existing under the laws of the Republic
of the Philippines and is engaged in the business of customs brokering." It cannot be considered otherwise
because as held by this Court in Schmitz Transport & Brokerage Corporation v. Transport Venture, Inc., 14 a
customs broker is also regarded as a common carrier, the transportation of goods being an integral part of
its business.
Loadmasters and Glodel, being both common carriers, are mandated from the nature of their business and
for reasons of public policy, to observe the extraordinary diligence in the vigilance over the goods
transported by them according to all the circumstances of such case, as required by Article 1733 of the Civil
Code. When the Court speaks of extraordinary diligence, it is that extreme measure of care and caution
which persons of unusual prudence and circumspection observe for securing and preserving their own
property or rights.15 This exacting standard imposed on common carriers in a contract of carriage of goods
is intended to tilt the scales in favor of the shipper who is at the mercy of the common carrier once the
goods have been lodged for shipment. 16 Thus, in case of loss of the goods, the common carrier is
presumed to have been at fault or to have acted negligently. 17 This presumption of fault or negligence,
however, may be rebutted by proof that the common carrier has observed extraordinary diligence over the
goods.
With respect to the time frame of this extraordinary responsibility, the Civil Code provides that the exercise
of extraordinary diligence lasts from the time the goods are unconditionally placed in the possession of, and
received by, the carrier for transportation until the same are delivered, actually or constructively, by the
carrier to the consignee, or to the person who has a right to receive them. 18
Premises considered, the Court is of the view that both Loadmasters and Glodel are jointly and severally
liable to R & B Insurance for the loss of the subject cargo. Under Article 2194 of the New Civil Code, "the
responsibility of two or more persons who are liable for a quasi-delict is solidary."
Loadmasters’ claim that it was never privy to the contract entered into by Glodel with the consignee
Columbia or R&B Insurance as subrogee, is not a valid defense. It may not have a direct contractual
relation with Columbia, but it is liable for tort under the provisions of Article 2176 of the Civil Code on quasi-
delicts which expressly provide:
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.
Pertinent is the ruling enunciated in the case of Mindanao Terminal and Brokerage Service, Inc. v. Phoenix
Assurance Company of New York,/McGee & Co., Inc. 19 where this Court held that a tort may arise despite
the absence of a contractual relationship, to wit:
We agree with the Court of Appeals that the complaint filed by Phoenix and McGee against Mindanao
Terminal, from which the present case has arisen, states a cause of action. The present action is based on
quasi-delict, arising from the negligent and careless loading and stowing of the cargoes belonging to Del
Monte Produce. Even assuming that both Phoenix and McGee have only been subrogated in the rights of
Del Monte Produce, who is not a party to the contract of service between Mindanao Terminal and Del
Monte, still the insurance carriers may have a cause of action in light of the Court’s consistent ruling that
the act that breaks the contract may be also a tort. In fine, a liability for tort may arise even under a
contract, where tort is that which breaches the contract. In the present case, Phoenix and McGee are not
suing for damages for injuries arising from the breach of the contract of service but from the
alleged negligent manner by which Mindanao Terminal handled the cargoes belonging to Del Monte
Produce. Despite the absence of contractual relationship between Del Monte Produce and Mindanao
Terminal, the allegation of negligence on the part of the defendant should be sufficient to establish a cause
of action arising from quasi-delict. [Emphases supplied]
In connection therewith, Article 2180 provides:
ART. 2180. The obligation imposed by Article 2176 is demandable not only for one’s own acts or omissions,
but also for those of persons for whom one is responsible.
xxxx
Employers shall be liable for the damages caused by their employees and household helpers acting within
the scope of their assigned tasks, even though the former are not engaged in any business or industry.
It is not disputed that the subject cargo was lost while in the custody of Loadmasters whose employees
(truck driver and helper) were instrumental in the hijacking or robbery of the shipment. As employer,
Loadmasters should be made answerable for the damages caused by its employees who acted within the
scope of their assigned task of delivering the goods safely to the warehouse.
Whenever an employee’s negligence causes damage or injury to another, there instantly arises a
presumption juris tantum that the employer failed to exercise diligentissimi patris families in the selection
(culpa in eligiendo) or supervision (culpa in vigilando) of its employees. 20 To avoid liability for a quasi-delict
committed by its employee, an employer must overcome the presumption by presenting convincing proof
that he exercised the care and diligence of a good father of a family in the selection and supervision of his
employee.21 In this regard, Loadmasters failed.
Glodel is also liable because of its failure to exercise extraordinary diligence. It failed to ensure that
Loadmasters would fully comply with the undertaking to safely transport the subject cargo to the designated
destination. It should have been more prudent in entrusting the goods to Loadmasters by taking
precautionary measures, such as providing escorts to accompany the trucks in delivering the cargoes.
Glodel should, therefore, be held liable with Loadmasters. Its defense of force majeure is unavailing.
At this juncture, the Court clarifies that there exists no principal-agent relationship between Glodel and
Loadmasters, as erroneously found by the CA. Article 1868 of the Civil Code provides: "By the contract of
agency a person binds himself to render some service or to do something in representation or on behalf of
another, with the consent or authority of the latter." The elements of a contract of agency are: (1) consent,
express or implied, of the parties to establish the relationship; (2) the object is the execution of a juridical
act in relation to a third person; (3) the agent acts as a representative and not for himself; (4) the agent acts
within the scope of his authority.22
Accordingly, there can be no contract of agency between the parties. Loadmasters never represented
Glodel. Neither was it ever authorized to make such representation. It is a settled rule that the basis for
agency is representation, that is, the agent acts for and on behalf of the principal on matters within the
scope of his authority and said acts have the same legal effect as if they were personally executed by the
principal. On the part of the principal, there must be an actual intention to appoint or an intention naturally
inferable from his words or actions, while on the part of the agent, there must be an intention to accept the
appointment and act on it.23 Such mutual intent is not obtaining in this case.
What then is the extent of the respective liabilities of Loadmasters and Glodel? Each wrongdoer is liable for
the total damage suffered by R&B Insurance. Where there are several causes for the resulting damages, a
party is not relieved from liability, even partially. It is sufficient that the negligence of a party is an efficient
cause without which the damage would not have resulted. It is no defense to one of the concurrent
tortfeasors that the damage would not have resulted from his negligence alone, without the negligence or
wrongful acts of the other concurrent tortfeasor. As stated in the case of Far Eastern Shipping v. Court of
Appeals,24
X x x. Where several causes producing an injury are concurrent and each is an efficient cause without
which the injury would not have happened, the injury may be attributed to all or any of the causes and
recovery may be had against any or all of the responsible persons although under the circumstances of the
case, it may appear that one of them was more culpable, and that the duty owed by them to the injured
person was not the same. No actor's negligence ceases to be a proximate cause merely because it does
not exceed the negligence of other actors. Each wrongdoer is responsible for the entire result and is liable
as though his acts were the sole cause of the injury.
There is no contribution between joint tortfeasors whose liability is solidary since both of them are liable for
the total damage. Where the concurrent or successive negligent acts or omissions of two or more persons,
although acting independently, are in combination the direct and proximate cause of a single injury to a
third person, it is impossible to determine in what proportion each contributed to the injury and either of
them is responsible for the whole injury. Where their concurring negligence resulted in injury or damage
to a third party, they become joint tortfeasors and are solidarily liable for the resulting damage under Article
2194 of the Civil Code. [Emphasis supplied]
The Court now resolves the issue of whether Glodel can collect from Loadmasters, it having failed to file a
cross-claim against the latter.1avvphi1

Undoubtedly, Glodel has a definite cause of action against Loadmasters for breach of contract of service as
the latter is primarily liable for the loss of the subject cargo. In this case, however, it cannot succeed in
seeking judicial sanction against Loadmasters because the records disclose that it did not properly
interpose a cross-claim against the latter. Glodel did not even pray that Loadmasters be liable for any and
all claims that it may be adjudged liable in favor of R&B Insurance. Under the Rules, a compulsory
counterclaim, or a cross-claim, not set up shall be barred.25 Thus, a cross-claim cannot be set up for the
first time on appeal.
For the consequence, Glodel has no one to blame but itself. The Court cannot come to its aid on equitable
grounds. "Equity, which has been aptly described as ‘a justice outside legality,’ is applied only in the
absence of, and never against, statutory law or judicial rules of procedure." 26 The Court cannot be a lawyer
and take the cudgels for a party who has been at fault or negligent.
WHEREFORE, the petition is PARTIALLY GRANTED. The August 24, 2007 Decision of the Court of
Appeals is MODIFIED to read as follows:
WHEREFORE, judgment is rendered declaring petitioner Loadmasters Customs Services, Inc. and
respondent Glodel Brokerage Corporation jointly and severally liable to respondent R&B Insurance
Corporation for the insurance indemnity it paid to consignee Columbia Wire & Cable Corporation and
ordering both parties to pay, jointly and severally, R&B Insurance Corporation a] the amount of
₱1,896,789.62 representing the insurance indemnity; b] the amount equivalent to ten (10%) percent thereof
for attorney’s fees; and c] the amount of ₱22,427.18 for litigation expenses.
JOHN KAM BIAK Y. CHAN, JR., Petitioner,
vs.
Iglesia Ni Cristo, Inc., Respondent.

The antecedents of the instant case are quite simple.

The Aringay Shell Gasoline Station is owned by the petitioner. It is located in Sta. Rita East, Aringay, La
Union, and bounded on the south by a chapel of the respondent.
The gasoline station supposedly needed additional sewerage and septic tanks for its washrooms. In view of
this, the services of Dioscoro "Ely" Yoro (Yoro), a retired general of the Armed Forces of the Philippines,
was procured by petitioner, as the former was allegedly a construction contractor in the locality.
Petitioner and Yoro executed a Memorandum of Agreement 3 (MOA) on 28 February 1995 which is
reproduced hereunder:
MEMORANDUM OF AGREEMENT
KNOW ALL MEN BY THESE PRESENTS:
This MEMORANDUM OF AGREEMENT, executed this 28th day of February, 1995, by and between:
JOHN Y. CHAN, of legal age, single, and a resident of Aringay, La Union, now and hereinafter called the
FIRST PARTY;
GEN. ELY E. YORO, Jr., of legal age, married, and a resident of Damortis, Sto. Tomas, La Union,
hereinafter referred to as the SECOND PARTY:
WITNESSETH that:
WHEREAS, the FIRST PARTY is the owner of a parcel of land located at Sta. Rita, Aringay, La Union.
WHEREAS, the FIRST PARTY, desires to dig a septic tank for its perusal in the property bordering Iglesia
ni Cristo.
WHEREAS, the SECOND PARTY is willing to contract the intended digging of septic tank for the first party.
WHEREAS, the FIRST PARTY and SECOND PARTY has (sic) agreed verbally as to the compensation of
the said digging of septic tank.
WHEREFORE, for and in consideration of the terms and covenants hereinbelow set forth, the FIRST
PARTY hereby AGREES and ALLOWS the SECOND PARTY to undertake the digging of the parcel of land
for the exclusive purpose of having a septic tank.
TERMS AND COVENANTS
1. The SECOND PARTY shall contract the said digging;
2. The FIRST PARTY shall have complete control over the number of personnel who will be entering the
property for said contract;
3. The digging shall be allowed for a period of three (3) weeks only, commencing on March 28, 1995,
unless extended by agreement of the parties;
4. Any damage within or outside the property of the FIRST PARTY incurred during the digging shall be
borne by the SECOND PARTY;
5. In the event that valuable objects are found on the property, the same shall be divided among the parties
as follows:
FIRST PARTY - 60%
SECOND PARTY - 40%
6. In the event that valuable objects are found outside the property line during the said digging, the same
shall be divided among the parties as follows:
FIRST PARTY - 35%
SECOND PARTY - 65%
7. In case government or military interference or outside intervention is imminent, the FIRST PARTY hereby
reserves the option to stop the digging at any stage thereof.
IN WITNESS WHEREOF, We have hereunto set our hands on the day and year first above-written at
Aringay, La Union.4
Diggings thereafter commenced. After some time, petitioner was informed by the members of the
respondent that the digging traversed and penetrated a portion of the land belonging to the latter. The
foundation of the chapel was affected as a tunnel was dug directly under it to the damage and prejudice of
the respondent.
On 18 April 1995, a Complaint5 against petitioner and a certain Teofilo Oller, petitioner’s engineer, was filed
by the respondent before the RTC, La Union, Branch 31, docketed therein as Civil Case No. A-1646.
Petitioner and Oller filed an Answer with Third-Party Complaint6 impleading Yoro as third-party defendant.
Yoro filed an Answer to the Third-Party Complaint7 dated 13 July 1995. An Amended and Supplemental
Complaint8 dated 30 August 1995 was later filed by the respondent already naming Yoro as a party-
defendant, to which the petitioner and Oller filed an Answer. 9 Yoro filed his own Answer.10
After four years of hearing the case, the trial court promulgated its Decision 11 holding that the diggings
were not intended for the construction of sewerage and septic tanks but were made to construct tunnels to
find hidden treasure.12 The trial court adjudged the petitioner and Yoro solidarily liable to the respondent on
a 35%-65% basis (the petitioner liable for the 35%), and absolving Oller from any liability, viz:
WHEREFORE, this Court renders judgment in favor of plaintiff IGLESIA NI CRISTO and against
defendants JOHN KAMBIAK CHAN and DIOSCORO "ELY" YORO, JR. who are respectively solidarily
liable to PLAINTIFF on a 35%-65% basis, with JOHN CHAN taking the 35% tab, Ordering the two (2)
aforesaid DEFENDANTS to pay PLAINTIFF the following amounts:
1. SIX HUNDRED THIRTY-THREE THOUSAND FIVE HUNDRED NINETY-FIVE PESOS AND FIFTY
CENTAVOS (P633,595.50); representing ACTUAL DAMAGES;
2. FIVE HUNDRED THOUSAND PESOS (P500,000.00) representing MORAL DAMAGES;
3. TEN MILLION PESOS (P10,000,000.00) as EXEMPLARY DAMAGES;
4. FIFTY THOUSAND PESOS (P50,000.00) as plaintiff’s attorney’s fees; and
5. TWENTY THOUSAND PESOS (P20,000.00) as litigation expenses.
Defendant TEOFILO OLLER is absolved of any civil liability.
Any counterclaim filed against PLAINTIFF IGLESIA NI CRISTO is dismissed.13
Petitioner filed a Notice of Appeal14 dated 18 August 1999. Yoro filed his own Notice of Appeal 15 dated 20
August 1999.
In a Resolution16 dated 19 November 1999, the trial court disallowed Yoro’s appeal for failure to pay the
appellate court docket and other lawful fees within the reglementary period for taking an appeal. 17 In view
of Yoro’s failure to appropriately file an appeal, an order was issued for the issuance of a Writ of Execution
as against him only, the dispositive portion of which reads:
WHEREFORE, premises considered, this Court GRANTS the motion of plaintiff Iglesia ni Cristo for the
issuance of a Writ of Execution as against Dioscoro "Ely" Yoro, Jr. only. 18
The petitioner’s appeal to the Court of Appeals, on the other hand, was given due course. 19 On 25
September 2003, the Court of Appeals rendered its Decision denying the appeal. It affirmed the trial court
but with modifications. The decretal portion of the decision states:
WHEREFORE, the appeal is hereby DENIED. The assailed decision in Civil Case No. A-1646 is hereby
AFFIRMED with MODIFICATIONS as follows:
(a) The award of moral damages in the amount of ₱500,000.00 is hereby deleted.
(b) The award of exemplary damages is hereby reduced to ₱50,000.00.
(c) The award of attorney’s fees and litigation expenses is hereby reduced to ₱30,000.00. 20
Undeterred, petitioner instituted the instant case before this Court. On 15 December 2004, the instant
petition was given due course.21
ASSIGNMENT OF ERRORS
Petitioner assigns as errors the following:
I
THE COURT OF APPEALS ERRED IN AFFIRMING THE DECISION OF THE REGIONAL TRIAL COURT
(BRANCH 31, AGOO, LA UNION) PARTICULARLY IN SAYING THAT THE BASIS OF THE SOLIDARY
OBLIGATION OF PETITIONER AND YORO VIS-À-VIS PLAINTIFF IS BASED NOT ON THE MOA BUT ON
TORT
II
THE COURT OF APPEALS ERRED IN NOT GIVING EFFECT TO THE MOA WHICH SHOULD
EXONERATE THE PETITIONER FROM ALL LIABILITIES TO THE PRIVATE RESPONDENT
III
THE COURT OF APPEALS ERRED IN NOT APPRECIATING THE THIRD-PARTY COMPLAINT AS
CROSS-CLAIM OF THE PETITIONER AGAINST YORO.22
ISSUE
Drawn from the above assignment of errors, the solitary issue that needs to be resolved is:
WHETHER OR NOT THE MEMORANDUM OF AGREEMENT ENTERED INTO BY THE PETITIONER
AND YORO HAS THE EFFECT OF MAKING THE LATTER SOLELY RESPONSIBLE FOR DAMAGES TO
THE RESPONDENT.
THE RULINGS OF THE COURT
Petitioner avers that no liability should attach to him by laying the blame solely on Yoro. He argues that the
MOA executed between him and Yoro is the law between them and must be given weight by the courts.
Since nothing in the MOA goes against the law, morals, good customs and public policy, it must govern to
absolve him from any liability.23 Petitioner relies heavily in Paragraph 4 of the MOA, which is again
reproduced hereunder:
4. Any damage within or outside the property of the FIRST PARTY incurred during the digging shall be
borne by the SECOND PARTY.
In answer to this, the respondent asserts that the MOA should not absolve petitioner from any liability. This
written contract, according to the respondent, clearly shows that the intention of the parties therein was to
search for hidden treasure. The alleged digging for a septic tank was just a cover-up of their real
intention.24 The aim of the petitioner and Yoro to intrude and surreptitiously hunt for hidden treasure in the
respondent’s premises should make both parties liable.25
At this juncture, it is vital to underscore the findings of the trial court and the Court of Appeals as to what
was the real intention of the petitioner and Yoro in undertaking the excavations. The findings of the trial
court and the Court of Appeals on this point are in complete unison. Petitioner and Yoro were in quest for
hidden treasure26 and, undoubtedly, they were partners in this endeavor.
The Court of Appeals, in its Decision, held in part:
The basis of their solidarity is not the Memorandum of Agreement but the fact that they have become joint
tortfeasors. There is solidary liability only when the obligation expressly so states, or when the law or the
nature of the obligation requires solidarity.27
We find no compelling reason to disturb this particular conclusion reached by the Court of Appeals. The
issue, therefore, must be ruled in the negative.
Article 2176 of the New Civil Code provides:
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.
Based on this provision of law, the requisites of quasi-delict are the following:
(a) there must be an act or omission;
(b) such act or omission causes damage to another;
(c) such act or commission is caused by fault or negligence; and
(d) there is no pre-existing contractual relation between the parties.
All the requisites are attendant in the instant case. The tortious act was the excavation which caused
damage to the respondent because it was done surreptitiously within its premises and it may have affected
the foundation of the chapel. The excavation on respondent’s premises was caused by fault. Finally, there
was no pre-existing contractual relation between the petitioner and Yoro on the one hand, and the
respondent on the other.
For the damage caused to respondent, petitioner and Yoro are jointly liable as they are joint tortfeasors.
Verily, the responsibility of two or more persons who are liable for a quasi-delict is solidary. 28
The heavy reliance of petitioner in paragraph 4 of the MOA cited earlier cannot steer him clear of any
liability.
As a general rule, joint tortfeasors are all the persons who command, instigate, promote, encourage,
advise, countenance, cooperate in, aid or abet the commission of a tort, or who approve of it after it is
done, if done for their benefit.29
Indubitably, petitioner and Yoro cooperated in committing the tort. They even had provisions in their MOA
as to how they would divide the treasure if any is found within or outside petitioner’s property line. Thus, the
MOA, instead of exculpating petitioner from liability, is the very noose that insures that he be so declared as
liable.
Besides, petitioner cannot claim that he did not know that the excavation traversed the respondent’s
property. In fact, he had two (2) of his employees actually observe the diggings, his security guard and his
engineer Teofilo Oller.30
Coming now to the matter on damages, the respondent questions the drastic reduction of the exemplary
damages awarded to it. It may be recalled that the trial court awarded exemplary damages in the amount of
₱10,000,000.00 but same was reduced by the Court of Appeals to ₱50,000.00.
Exemplary or corrective damages are imposed by way of example or correction for the public good. 31 In
quasi-delicts, exemplary damages may be granted if the defendant acted with gross negligence. 32 By
gross negligence is meant such entire want of care as to raise a presumption that the person in fault is
conscious of the probable consequences of carelessness, and is indifferent, or worse, to the danger of
injury to person or property of others.33
Surreptitiously digging under the respondent’s chapel which may weaken the foundation thereof, thereby
endangering the lives and limbs of the people in worship, unquestionably amounts to gross negligence. Not
to mention the damage that may be caused to the structure itself. The respondent may indeed be awarded
exemplary damages.
For such tortious act done with gross negligence, the Court feels that the amount awarded by the Court of
Appeals is inadequate. The exemplary damages must correspondingly be increased to ₱100,000.00.
The modification made by this Court to the judgment of the Court of Appeals must operate as against Yoro,
for as fittingly held by the court a quo:
While it is settled that a party who did not appeal from the decision cannot seek any relief other than what
is provided in the judgment appealed from, nevertheless, when the rights and liability of the defendants are
so interwoven and dependent as to be inseparable, in which case, the modification of the appealed
judgment in favor of appellant operates as a modification to Gen. Yoro who did not appeal. In this case, the
liabilities of Gen. Yoro and appellant being solidary, the above exception applies. 34
WHEREFORE, the Decision of the Court of Appeals dated 25 September 2003 is AFFIRMED with
MODIFICATION as to the award of exemplary damages, which is hereby increased to ₱100,000.00. Costs
against petitioner.
SO ORDERED.

BERNABE L. NAVIDA, JOSE P. ABANGAN

vs.
HON. TEODORO A. DIZON

Proceedings before the Texas Courts

Beginning 1993, a number of personal injury suits were filed in different Texas state courts by citizens of
twelve foreign countries, including the Philippines. The thousands of plaintiffs sought damages for injuries
they allegedly sustained from their exposure to dibromochloropropane (DBCP), a chemical used to kill
nematodes (worms), while working on farms in 23 foreign countries. The cases were eventually transferred
to, and consolidated in, the Federal District Court for the Southern District of Texas, Houston Division. The
cases therein that involved plaintiffs from the Philippines were "Jorge Colindres Carcamo, et al. v. Shell Oil
Co., et al.," which was docketed as Civil Action No. H-94-1359, and "Juan Ramon Valdez, et al. v. Shell Oil
Co., et al.," which was docketed as Civil Action No. H-95-1356. The defendants in the consolidated cases
prayed for the dismissal of all the actions under the doctrine of forum non conveniens.
In a Memorandum and Order dated July 11, 1995, the Federal District Court conditionally granted the
defendants’ motion to dismiss. Pertinently, the court ordered that:
Delgado, Jorge Carcamo, Valdez and Isae Carcamo will be dismissed 90 days after the entry of this
Memorandum and Order provided that defendants and third- and fourth-party defendants have:
(1) participated in expedited discovery in the United States xxx;
(2) either waived or accepted service of process and waived any other jurisdictional defense within
40 days after the entry of this Memorandum and Order in any action commenced by a plaintiff in
these actions in his home country or the country in which his injury occurred. Any plaintiff desiring to
bring such an action will do so within 30 days after the entry of this Memorandum and Order;
(3) waived within 40 days after the entry of this Memorandum and Order any limitations-based
defense that has matured since the commencement of these actions in the courts of Texas;
(4) stipulated within 40 days after the entry of this Memorandum and Order that any discovery
conducted during the pendency of these actions may be used in any foreign proceeding to the
same extent as if it had been conducted in proceedings initiated there; and
(5) submitted within 40 days after the entry of this Memorandum and Order an agreement binding
them to satisfy any final judgment rendered in favor of plaintiffs by a foreign court.
xxxx
Notwithstanding the dismissals that may result from this Memorandum and Order, in the event that the
highest court of any foreign country finally affirms the dismissal for lack of jurisdiction of an action
commenced by a plaintiff in these actions in his home country or the country in which he was injured, that
plaintiff may return to this court and, upon proper motion, the court will resume jurisdiction over the action
as if the case had never been dismissed for [forum non conveniens].13
Civil Case No. 5617 before the RTC of General Santos City and G.R. Nos. 125078 and 125598
In accordance with the above Memorandum and Order, a total of 336 plaintiffs from General Santos City
(the petitioners in G.R. No. 125078, hereinafter referred to as NAVIDA, et al.) filed a Joint Complaint 14 in
the RTC of General Santos City on August 10, 1995. The case was docketed as Civil Case No. 5617.
Named as defendants therein were: Shell Oil Co. (SHELL); Dow Chemical Co. (DOW); Occidental
Chemical Corp. (OCCIDENTAL); Dole Food Co., Inc., Dole Fresh Fruit Co., Standard Fruit Co., Standard
Fruit and Steamship Co. (hereinafter collectively referred to as DOLE); Chiquita Brands, Inc. and Chiquita
Brands International, Inc. (CHIQUITA); Del Monte Fresh Produce N.A. and Del Monte Tropical Fruit Co.
(hereinafter collectively referred to as DEL MONTE); Dead Sea Bromine Co., Ltd.; Ameribrom, Inc.;
Bromine Compounds, Ltd.; and Amvac Chemical Corp. (The aforementioned defendants are hereinafter
collectively referred to as defendant companies.)
Navida, et al., prayed for the payment of damages in view of the illnesses and injuries to the reproductive
systems which they allegedly suffered because of their exposure to DBCP. They claimed, among others,
that they were exposed to this chemical during the early 1970’s up to the early 1980’s when they used the
same in the banana plantations where they worked at; and/or when they resided within the agricultural area
where such chemical was used. Navida, et al., claimed that their illnesses and injuries were due to the fault
or negligence of each of the defendant companies in that they produced, sold and/or otherwise put into the
stream of commerce DBCP-containing products. According to NAVIDA, et al., they were allowed to be
exposed to the said products, which the defendant companies knew, or ought to have known, were highly
injurious to the former’s health and well-being.
Instead of answering the complaint, most of the defendant companies respectively filed their Motions for
Bill of Particulars.15 During the pendency of the motions, on March 13, 1996, NAVIDA, et al., filed an
Amended Joint Complaint,16 excluding Dead Sea Bromine Co., Ltd., Ameribrom, Inc., Bromine
Compounds, Ltd. and Amvac Chemical Corp. as party defendants.
Again, the remaining defendant companies filed their various Motions for Bill of Particulars. 17 On May 15,
1996, DOW filed an Answer with Counterclaim.18
On May 20, 1996, without resolving the motions filed by the parties, the RTC of General Santos City issued
an Order dismissing the complaint. First, the trial court determined that it did not have jurisdiction to hear
the case, to wit:
THE COMPLAINT FOR DAMAGES FILED WITH THE REGIONAL TRIAL COURT SHOULD BE
DISMISSED FOR LACK OF JURISDICTION
xxxx
The substance of the cause of action as stated in the complaint against the defendant foreign companies
cites activity on their part which took place abroad and had occurred outside and beyond the territorial
domain of the Philippines. These acts of defendants cited in the complaint included the manufacture of
pesticides, their packaging in containers, their distribution through sale or other disposition, resulting in their
becoming part of the stream of commerce.
Accordingly, the subject matter stated in the complaint and which is uniquely particular to the present case,
consisted of activity or course of conduct engaged in by foreign defendants outside Philippine territory,
hence, outside and beyond the jurisdiction of Philippine Courts, including the present Regional Trial
Court.19
Second, the RTC of General Santos City declared that the tort alleged by Navida, et al., in their complaint
is a tort category that is not recognized in Philippine laws. Said the trial court:
THE TORT ASSERTED IN THE PRESENT COMPLAINT AGAINST DEFENDANT FOREIGN COMPANIES
IS NOT WITHIN THE SUBJECT MATTER JURISDICTION OF THE REGIONAL TRIAL COURT, BECAUSE
IT IS NOT A TORT CATEGORY WITHIN THE PURVIEW OF THE PHILIPPINE LAW
The specific tort asserted against defendant foreign companies in the present complaint is product liability
tort. When the averments in the present complaint are examined in terms of the particular categories of tort
recognized in the Philippine Civil Code, it becomes stark clear that such averments describe and identify
the category of specific tort known as product liability tort. This is necessarily so, because it is the product
manufactured by defendant foreign companies, which is asserted to be the proximate cause of the
damages sustained by the plaintiff workers, and the liability of the defendant foreign companies, is
premised on being the manufacturer of the pesticides.
It is clear, therefore, that the Regional Trial Court has jurisdiction over the present case, if and only if the
Civil Code of the Philippines, or a suppletory special law prescribes a product liability tort, inclusive of and
comprehending the specific tort described in the complaint of the plaintiff workers. 20
Third, the RTC of General Santos City adjudged that Navida, et al., were coerced into submitting their case
to the Philippine courts, viz:
FILING OF CASES IN THE PHILIPPINES - COERCED AND ANOMALOUS
The Court views that the plaintiffs did not freely choose to file the instant action, but rather were coerced to
do so, merely to comply with the U.S. District Court’s Order dated July 11, 1995, and in order to keep open
to the plaintiffs the opportunity to return to the U.S. District Court.21
Fourth, the trial court ascribed little significance to the voluntary appearance of the defendant companies
therein, thus:
THE DEFENDANTS’ SUBMISSION TO JURISDICTION IS CONDITIONAL AS IT IS ILLUSORY
Defendants have appointed their agents authorized to accept service of summons/processes in the
Philippines pursuant to the agreement in the U.S. court that defendants will voluntarily submit to the
jurisdiction of this court. While it is true that this court acquires jurisdiction over persons of the defendants
through their voluntary appearance, it appears that such voluntary appearance of the defendants in this
case is conditional. Thus in the "Defendants’ Amended Agreement Regarding Conditions of Dismissal for
Forum Non Conveniens" (Annex to the Complaint) filed with the U.S. District Court, defendants declared
that "(t)he authority of each designated representative to accept service of process will become effective
upon final dismissal of these actions by the Court". The decision of the U.S. District Court dismissing the
case is not yet final and executory since both the plaintiffs and defendants appealed therefrom (par. 3(h),
3(i), Amended Complaint). Consequently, since the authority of the agent of the defendants in the
Philippines is conditioned on the final adjudication of the case pending with the U.S. courts, the acquisition
of jurisdiction by this court over the persons of the defendants is also conditional. x x x.
The appointment of agents by the defendants, being subject to a suspensive condition, thus produces no
legal effect and is ineffective at the moment.22
Fifth, the RTC of General Santos City ruled that the act of NAVIDA, et al., of filing the case in the Philippine
courts violated the rules on forum shopping and litis pendencia. The trial court expounded:
THE JURISDICTION FROWNS UPON AND PROHIBITS FORUM SHOPPING
This court frowns upon the fact that the parties herein are both vigorously pursuing their appeal of the
decision of the U.S. District court dismissing the case filed thereat. To allow the parties to litigate in this
court when they are actively pursuing the same cases in another forum, violates the rule on ‘forum
shopping’ so abhorred in this jurisdiction. x x x.
xxxx
THE FILING OF THE CASE IN U.S. DIVESTED THIS COURT OF ITS OWN JURISDICTION
Moreover, the filing of the case in the U.S. courts divested this court of its own jurisdiction. This court takes
note that the U.S. District Court did not decline jurisdiction over the cause of action. The case was
dismissed on the ground of forum non conveniens, which is really a matter of venue. By taking cognizance
of the case, the U.S. District Court has, in essence, concurrent jurisdiction with this court over the subject
matter of this case. It is settled that initial acquisition of jurisdiction divests another of its own jurisdiction. x
x x.
xxxx
THIS CASE IS BARRED BY THE RULE OF "LITIS PENDENCIA"
Furthermore, the case filed in the U.S. court involves the same parties, same rights and interests, as in this
case. There exists litis pendencia since there are two cases involving the same parties and interests. The
court would like to emphasize that in accordance with the rule on litis pendencia x x x; the subsequent case
must be dismissed. Applying the foregoing [precept] to the case-at-bar, this court concludes that since the
case between the parties in the U.S. is still pending, then this case is barred by the rule on "litis
pendencia."23
Plaintiffs’ purported bad faith in filing the subject civil cases in Philippine courts
Anent the insinuation by DOLE that the plaintiff claimants filed their cases in bad faith merely to procure a
dismissal of the same and to allow them to return to the forum of their choice, this Court finds such
argument much too speculative to deserve any merit.
It must be remembered that this Court does not rule on allegations that are unsupported by evidence on
record. This Court does not rule on allegations which are manifestly conjectural, as these may not exist at
all. This Court deals with facts, not fancies; on realities, not appearances. When this Court acts on
appearances instead of realities, justice and law will be short-lived. 71 This is especially true with respect to
allegations of bad faith, in line with the basic rule that good faith is always presumed and bad faith must be
proved.72
In sum, considering the fact that the RTC of General Santos City and the RTC of Davao City have
jurisdiction over the subject matter of the amended complaints filed by NAVIDA, et al., and ABELLA, et al.,
and that the courts a quo have also acquired jurisdiction over the persons of all the defendant companies, it
therefore, behooves this Court to order the remand of Civil Case Nos. 5617 and 24,251-96 to the RTC of
General Santos City and the RTC of Davao City, respectively.
The Court notes that the Consolidated Motions (to Drop Party-Respondents) that was filed by
NAVIDA, et al., and ABELLA, et al., only pertained to DOW, OCCIDENTAL and SHELL in view of the
latter companies’ alleged compromise agreements with the plaintiff claimants. However, in
subsequent developments, DEL MONTE and CHIQUITA supposedly reached their own amicable
settlements with the plaintiff claimants, but DEL MONTE qualified that it entered into a settlement
agreement with only four of the plaintiff claimants in Civil Case No. 5617. These four plaintiff
claimants were allegedly the only ones who were asserting claims against DEL MONTE. However,
the said allegation of DEL MONTE was simply stipulated in their Compromise Settlement,
Indemnity, and Hold Harmless Agreement and its truth could not be verified with certainty based on
the records elevated to this Court. Significantly, the 336 plaintiff claimants in Civil Case No. 5617
jointly filed a complaint without individually specifying their claims against DEL MONTE or any of
the other defendant companies. Furthermore, not one plaintiff claimant filed a motion for the
removal of either DEL MONTE or CHIQUITA as defendants in Civil Case Nos. 5617 and 24,251-96.
There is, thus, a primary need to establish who the specific parties to the alleged compromise agreements
are, as well as their corresponding rights and obligations therein. For this purpose, the courts a quo may
require the presentation of additional evidence from the parties. Thereafter, on the basis of the records of
the cases at bar and the additional evidence submitted by the parties, if any, the trial courts can then
determine who among the defendants may be dropped from the said cases.
It is true that, under Article 2194 of the Civil Code, the responsibility of two or more persons who are liable
for the same quasi-delict is solidary. A solidary obligation is one in which each of the debtors is liable for the
entire obligation, and each of the creditors is entitled to demand the satisfaction of the whole obligation
from any or all of the debtors.81
In solidary obligations, the paying debtor’s right of reimbursement is provided for under Article 1217 of the
Civil Code, to wit:
Art. 1217. Payment made by one of the solidary debtors extinguishes the obligation. If two or more solidary
debtors offer to pay, the creditor may choose which offer to accept.
He who made the payment may claim from his co-debtors only the share which corresponds to each, with
the interest for the payment already made. If the payment is made before the debt is due, no interest for the
intervening period may be demanded.
When one of the solidary debtors cannot, because of his insolvency, reimburse his share to the debtor
paying the obligation, such share shall be borne by all his co-debtors, in proportion to the debt of each. 1avvphil

The above right of reimbursement of a paying debtor, and the corresponding liability of the co-debtors to
reimburse, will only arise, however, if a solidary debtor who is made to answer for an obligation actually
delivers payment to the creditor. As succinctly held in Lapanday Agricultural Development Corporation v.
Court of Appeals,82 "[p]ayment, which means not only the delivery of money but also the performance, in
any other manner, of the obligation, is the operative fact which will entitle either of the solidary debtors to
seek reimbursement for the share which corresponds to each of the [other] debtors." 83
In the cases at bar, there is no right of reimbursement to speak of as yet. A trial on the merits must
necessarily be conducted first in order to establish whether or not defendant companies are liable for the
claims for damages filed by the plaintiff claimants, which would necessarily give rise to an obligation to pay
on the part of the defendants.
At the point in time where the proceedings below were prematurely halted, no cross-claims have been
interposed by any defendant against another defendant. If and when such a cross-claim is made by a non-
settling defendant against a settling defendant, it is within the discretion of the trial court to determine the
propriety of allowing such a cross-claim and if the settling defendant must remain a party to the case purely
in relation to the cross claim.
In Armed Forces of the Philippines Mutual Benefit Association, Inc. v. Court of Appeals, 84 the Court had the
occasion to state that "where there are, along with the parties to the compromise, other persons involved in
the litigation who have not taken part in concluding the compromise agreement but are adversely affected
or feel prejudiced thereby, should not be precluded from invoking in the same proceedings an adequate
relief therefor."85
Relevantly, in Philippine International Surety Co., Inc. v. Gonzales, 86 the Court upheld the ruling of the trial
court that, in a joint and solidary obligation, the paying debtor may file a third-party complaint and/or a
cross-claim to enforce his right to seek contribution from his co-debtors.
Hence, the right of the remaining defendant(s) to seek reimbursement in the above situation, if proper, is
not affected by the compromise agreements allegedly entered into by NAVIDA, et al., and ABELLA, et al.,
with some of the defendant companies.
WHEREFORE, the Court hereby GRANTS the petitions for review on certiorari in G.R. Nos. 125078,
126654, and 128398. We REVERSE and SET ASIDE the Order dated May 20, 1996 of the Regional Trial
Court of General Santos City, Branch 37, in Civil Case No. 5617, and the Order dated October 1, 1996 of
the Regional Trial Court of Davao City, Branch 16, and its subsequent Order dated December 16, 1996
denying reconsideration in Civil Case No. 24,251-96, and REMAND the records of this case to the
respective Regional Trial Courts of origin for further and appropriate proceedings in line with the ruling
herein that said courts have jurisdiction over the subject matter of the amended complaints in Civil Case
Nos. 5617 and 24,251-96.
The Court likewise GRANTS the motion filed by Del Monte to withdraw its petition in G.R. No. 127856. In
view of the previous grant of the motion to withdraw the petition in G.R. No. 125598, both G.R. Nos.
127856 and 125598 are considered CLOSED AND TERMINATED.
ALLIED BANKING CORPORATION, Petitioner,
vs.
LIM SIO WAN, METROPOLITAN BANK AND TRUST CO., and PRODUCERS BANK,

The facts as found by the RTC and affirmed by the CA are as follows:
On November 14, 1983, respondent Lim Sio Wan deposited with petitioner Allied Banking Corporation
(Allied) at its Quintin Paredes Branch in Manila a money market placement of PhP 1,152,597.35 for a term
of 31 days to mature on December 15, 1983, 3 as evidenced by Provisional Receipt No. 1356 dated
November 14, 1983.4
On December 5, 1983, a person claiming to be Lim Sio Wan called up Cristina So, an officer of Allied, and
instructed the latter to pre-terminate Lim Sio Wan’s money market placement, to issue a manager’s check
representing the proceeds of the placement, and to give the check to one Deborah Dee Santos who would
pick up the check.5 Lim Sio Wan described the appearance of Santos so that So could easily identify her. 6
Later, Santos arrived at the bank and signed the application form for a manager’s check to be issued. 7 The
bank issued Manager’s Check No. 035669 for PhP 1,158,648.49, representing the proceeds of Lim Sio
Wan’s money market placement in the name of Lim Sio Wan, as payee. 8 The check was cross-checked
"For Payee’s Account Only" and given to Santos.9
Thereafter, the manager’s check was deposited in the account of Filipinas Cement Corporation (FCC) at
respondent Metropolitan Bank and Trust Co. (Metrobank), 10 with the forged signature of Lim Sio Wan as
indorser.11
Earlier, on September 21, 1983, FCC had deposited a money market placement for PhP 2 million with
respondent Producers Bank. Santos was the money market trader assigned to handle FCC’s account. 12
Such deposit is evidenced by Official Receipt No. 317568 13 and a Letter dated September 21, 1983 of
Santos addressed to Angie Lazo of FCC, acknowledging receipt of the placement. 14 The placement
matured on October 25, 1983 and was rolled-over until December 5, 1983 as evidenced by a Letter dated
October 25, 1983.15 When the placement matured, FCC demanded the payment of the proceeds of the
placement.16 On December 5, 1983, the same date that So received the phone call instructing her to pre-
terminate Lim Sio Wan’s placement, the manager’s check in the name of Lim Sio Wan was deposited in the
account of FCC, purportedly representing the proceeds of FCC’s money market placement with Producers
Bank.17 In other words, the Allied check was deposited with Metrobank in the account of FCC as Producers
Bank’s payment of its obligation to FCC.
To clear the check and in compliance with the requirements of the Philippine Clearing House Corporation
(PCHC) Rules and Regulations, Metrobank stamped a guaranty on the check, which reads: "All prior
endorsements and/or lack of endorsement guaranteed." 18
The check was sent to Allied through the PCHC. Upon the presentment of the check, Allied funded the
check even without checking the authenticity of Lim Sio Wan’s purported indorsement. Thus, the amount
on the face of the check was credited to the account of FCC.19
On December 9, 1983, Lim Sio Wan deposited with Allied a second money market placement to mature on
January 9, 1984.20
On December 14, 1983, upon the maturity date of the first money market placement, Lim Sio Wan went to
Allied to withdraw it.21 She was then informed that the placement had been pre-terminated upon her
instructions. She denied giving any instructions and receiving the proceeds thereof. She desisted from
further complaints when she was assured by the bank’s manager that her money would be recovered. 22
When Lim Sio Wan’s second placement matured on January 9, 1984, So called Lim Sio Wan to ask for the
latter’s instructions on the second placement. Lim Sio Wan instructed So to roll-over the placement for
another 30 days.23 On January 24, 1984, Lim Sio Wan, realizing that the promise that her money would be
recovered would not materialize, sent a demand letter to Allied asking for the payment of the first
placement.24 Allied refused to pay Lim Sio Wan, claiming that the latter had authorized the pre-termination
of the placement and its subsequent release to Santos.25
Consequently, Lim Sio Wan filed with the RTC a Complaint dated February 13, 1984 26 docketed as Civil
Case No. 6757 against Allied to recover the proceeds of her first money market placement. Sometime in
February 1984, she withdrew her second placement from Allied.
Allied filed a third party complaint 27 against Metrobank and Santos. In turn, Metrobank filed a fourth party
complaint28 against FCC. FCC for its part filed a fifth party complaint 29 against Producers Bank.
Summonses were duly served upon all the parties except for Santos, who was no longer connected with
Producers Bank.30
On May 15, 1984, or more than six (6) months after funding the check, Allied informed Metrobank that the
signature on the check was forged.31 Thus, Metrobank withheld the amount represented by the check from
FCC. Later on, Metrobank agreed to release the amount to FCC after the latter executed an Undertaking,
promising to indemnify Metrobank in case it was made to reimburse the amount. 32
Lim Sio Wan thereafter filed an amended complaint to include Metrobank as a party-defendant, along with
Allied.33 The RTC admitted the amended complaint despite the opposition of Metrobank. 34 Consequently,
Allied’s third party complaint against Metrobank was converted into a cross-claim and the latter’s fourth
party complaint against FCC was converted into a third party complaint. 35
After trial, the RTC issued its Decision, holding as follows:
WHEREFORE, judgment is hereby rendered as follows:
1. Ordering defendant Allied Banking Corporation to pay plaintiff the amount of P1,158,648.49 plus
12% interest per annum from March 16, 1984 until fully paid;
2. Ordering defendant Allied Bank to pay plaintiff the amount of P100,000.00 by way of moral
damages;
3. Ordering defendant Allied Bank to pay plaintiff the amount of P173,792.20 by way of attorney’s
fees; and,
4. Ordering defendant Allied Bank to pay the costs of suit.
Defendant Allied Bank’s cross-claim against defendant Metrobank is DISMISSED.
Likewise defendant Metrobank’s third-party complaint as against Filipinas Cement Corporation is
DISMISSED.
Filipinas Cement Corporation’s fourth-party complaint against Producer’s Bank is also DISMISSED.
Allied raises the following issues for our consideration:
The Honorable Court of Appeals erred in holding that Lim Sio Wan did not authorize [Allied] to pre-
terminate the initial placement and to deliver the check to Deborah Santos.
The Honorable Court of Appeals erred in absolving Producers Bank of any liability for the reimbursement of
amount adjudged demandable.
The Honorable Court of Appeals erred in holding [Allied] liable to the extent of 60% of amount adjudged
demandable in clear disregard to the ultimate liability of Metrobank as guarantor of all endorsement on the
check, it being the collecting bank.38
The petition is partly meritorious.
However, in Bank of the Philippine Islands v. Court of Appeals, we said that the drawee bank is
liable for 60% of the amount on the face of the negotiable instrument and the collecting bank is
liable for 40%. We also noted the relative negligence exhibited by two banks, to wit:
Both banks were negligent in the selection and supervision of their employees resulting in the encashment
of the forged checks by an impostor. Both banks were not able to overcome the presumption of negligence
in the selection and supervision of their employees. It was the gross negligence of the employees of both
banks which resulted in the fraud and the subsequent loss. While it is true that petitioner BPI’s negligence
may have been the proximate cause of the loss, respondent CBC’s negligence contributed equally to the
success of the impostor in encashing the proceeds of the forged checks. Under these circumstances, we
apply Article 2179 of the Civil Code to the effect that while respondent CBC may recover its losses, such
losses are subject to mitigation by the courts. (See Phoenix Construction Inc. v. Intermediate Appellate
Courts, 148 SCRA 353 [1987]).
Considering the comparative negligence of the two (2) banks, we rule that the demands of substantial
justice are satisfied by allocating the loss of P2,413,215.16 and the costs of the arbitration proceeding in
the amount of P7,250.00 and the cost of litigation on a 60-40 ratio.52
Similarly, we ruled in Associated Bank v. Court of Appeals that the issuing institution and the collecting bank
should equally share the liability for the loss of amount represented by the checks concerned due to the
negligence of both parties:
The Court finds as reasonable, the proportionate sharing of fifty percent-fifty percent (50%-50%). Due to
the negligence of the Province of Tarlac in releasing the checks to an unauthorized person (Fausto
Pangilinan), in allowing the retired hospital cashier to receive the checks for the payee hospital for a period
close to three years and in not properly ascertaining why the retired hospital cashier was collecting checks
for the payee hospital in addition to the hospital’s real cashier, respondent Province contributed to the loss
amounting to P203,300.00 and shall be liable to the PNB for fifty (50%) percent thereof. In effect, the
Province of Tarlac can only recover fifty percent (50%) of P203,300.00 from PNB.
The collecting bank, Associated Bank, shall be liable to PNB for fifty (50%) percent of P203,300.00. It is
liable on its warranties as indorser of the checks which were deposited by Fausto Pangilinan, having
guaranteed the genuineness of all prior indorsements, including that of the chief of the payee hospital, Dr.
Adena Canlas. Associated Bank was also remiss in its duty to ascertain the genuineness of the payee’s
indorsement.53
A reading of the facts of the two immediately preceding cases would reveal that the reason why the bank or
institution which issued the check was held partially liable for the amount of the check was because of the
negligence of these parties which resulted in the issuance of the checks.
In the instant case, the trial court correctly found Allied negligent in issuing the manager’s check and in
transmitting it to Santos without even a written authorization. 54 In fact, Allied did not even ask for the
certificate evidencing the money market placement or call up Lim Sio Wan at her residence or office to
confirm her instructions. Both actions could have prevented the whole fraudulent transaction from
unfolding. Allied’s negligence must be considered as the proximate cause of the resulting loss.
To reiterate, had Allied exercised the diligence due from a financial institution, the check would not have
been issued and no loss of funds would have resulted. In fact, there would have been no issuance of
indorsement had there been no check in the first place.
The liability of Allied, however, is concurrent with that of Metrobank as the last indorser of the check. When
Metrobank indorsed the check in compliance with the PCHC Rules and Regulations 55 without verifying the
authenticity of Lim Sio Wan’s indorsement and when it accepted the check despite the fact that it was
cross-checked payable to payee’s account only,56 its negligent and cavalier indorsement contributed to the
easier release of Lim Sio Wan’s money and perpetuation of the fraud. Given the relative participation of
Allied and Metrobank to the instant case, both banks cannot be adjudged as equally liable. Hence, the
60:40 ratio of the liabilities of Allied and Metrobank, as ruled by the CA, must be upheld.
FCC, having no participation in the negotiation of the check and in the forgery of Lim Sio Wan’s
indorsement, can raise the real defense of forgery as against both banks. 57
As to Producers Bank, Allied Bank’s argument that Producers Bank must be held liable as employer of
Santos under Art. 2180 of the Civil Code is erroneous. Art. 2180 pertains to the vicarious liability of an
employer for quasi-delicts that an employee has committed. Such provision of law does not apply to civil
liability arising from delict.
One also cannot apply the principle of subsidiary liability in Art. 103 of the Revised Penal Code in the
instant case. Such liability on the part of the employer for the civil aspect of the criminal act of the employee
is based on the conviction of the employee for a crime. Here, there has been no conviction for any crime.
As to the claim that there was unjust enrichment on the part of Producers Bank, the same is correct. Allied
correctly claims in its petition that Producers Bank should reimburse Allied for whatever judgment that may
be rendered against it pursuant to Art. 22 of the Civil Code, which provides: "Every person who through an
act of performance by another, or any other means, acquires or comes into possession of something at the
expense of the latter without just cause or legal ground, shall return the same to him." 1avvphi1

The above provision of law was clarified in Reyes v. Lim, where we ruled that "[t]here is unjust enrichment
when a person unjustly retains a benefit to the loss of another, or when a person retains money or property
of another against the fundamental principles of justice, equity and good conscience." 58
In Tamio v. Ticson, we further clarified the principle of unjust enrichment, thus: "Under Article 22 of the Civil
Code, there is unjust enrichment when (1) a person is unjustly benefited, and (2) such benefit is derived at
the expense of or with damages to another."59
In the instant case, Lim Sio Wan’s money market placement in Allied Bank was pre-terminated and
withdrawn without her consent. Moreover, the proceeds of the placement were deposited in Producers
Bank’s account in Metrobank without any justification. In other words, there is no reason that the proceeds
of Lim Sio Wans’ placement should be deposited in FCC’s account purportedly as payment for FCC’s
money market placement and interest in Producers Bank. With such payment, Producers Bank’s
lavvphil

indebtedness to FCC was extinguished, thereby benefitting the former. Clearly, Producers Bank was
unjustly enriched at the expense of Lim Sio Wan. Based on the facts and circumstances of the case,
Producers Bank should reimburse Allied and Metrobank for the amounts the two latter banks are ordered to
pay Lim Sio Wan.
It cannot be validly claimed that FCC, and not Producers Bank, should be considered as having been
unjustly enriched. It must be remembered that FCC’s money market placement with Producers Bank was
already due and demandable; thus, Producers Bank’s payment thereof was justified. FCC was entitled to
such payment. As earlier stated, the fact that the indorsement on the check was forged cannot be raised
against FCC which was not a part in any stage of the negotiation of the check. FCC was not unjustly
enriched.
From the facts of the instant case, we see that Santos could be the architect of the entire controversy.
Unfortunately, since summons had not been served on Santos, the courts have not acquired jurisdiction
over her.60 We, therefore, cannot ascribe to her liability in the instant case.
Clearly, Producers Bank must be held liable to Allied and Metrobank for the amount of the check plus 12%
interest per annum, moral damages, attorney’s fees, and costs of suit which Allied and Metrobank are
adjudged to pay Lim Sio Wan based on a proportion of 60:40.
WHEREFORE, the petition is PARTLY GRANTED. The March 18, 1998 CA Decision in CA-G.R. CV No.
46290 and the November 15, 1993 RTC Decision in Civil Case No. 6757 are AFFIRMED with
MODIFICATION.
Thus, the CA Decision is AFFIRMED, the fallo of which is reproduced, as follows:
WHEREFORE, premises considered, the decision appealed from is MODIFIED. Judgment is rendered
ordering and sentencing defendant-appellant Allied Banking Corporation to pay sixty (60%) percent and
defendant-appellee Metropolitan Bank and Trust Company forty (40%) of the amount of P1,158,648.49 plus
12% interest per annum from March 16, 1984 until fully paid. The moral damages, attorney’s fees and
costs of suit adjudged shall likewise be paid by defendant-appellant Allied Banking Corporation and
defendant-appellee Metropolitan Bank and Trust Company in the same proportion of 60-40. Except as thus
modified, the decision appealed from is AFFIRMED.
SO ORDERED.
Additionally and by way of MODIFICATION, Producers Bank is hereby ordered to pay Allied and Metrobank
the aforementioned amounts. The liabilities of the parties are concurrent and independent of each other.