TORTS AND DAMAGES that taken on the second is not.
Not all the evidence taken on
I. Article 2176 (Elements, Coverage, Tests, Defenses)
1) E. M. WRIGHT vs. MANILA ELECTRIC R.R. & LIGHT
CO., G.R. No. L-7760, October 1, 1914
This is an action brought to recover damages for injuries
sustained in an accident which occurred in Caloocan on the
night of August 8, 1909. The defendant is a corporation
engaged in operating an electric street railway in the city of
Manila and its suburbs, including the municipality of
Caloocan. The plaintiff's residence in Caloocan fronts on the
street along which defendant's tracks run, so that to enter his
premises from the street plaintiff is obliged to cross
defendant's tracks. On the night mentioned plaintiff drove
home in a calesa and in crossing the tracks to enter his
premises the horse stumbled, leaped forward, and fell,
causing the vehicle with the rails, resulting in a sudden stop,
threw plaintiff from the vehicle and caused the injuries
complained of. It is undisputed that at the point where
plaintiff crossed the tracks on the night in question not only
the rails were above-ground, but that the ties upon which the
rails rested projected from one-third to one-half of their
depth out of the ground, thus making the tops of the rails
some 5 or 6 inches or more above the level of the street. It is
admitted that the defendant was negligent in maintaining its
tracks as described, but it is contended that the plaintiff was
also negligent in that he was intoxicated to such an extent at
the time of the accident that he was unable to take care of
himself properly and that such intoxication was the primary
cause of the accident. The trial court held that both parties
were negligent, but that the plaintiff's negligence was not as
great as defendant's and under the authority of the case of
Rakes vs. A. G. & P. Co. (7 Phil. Rep., 359) apportioned the
damages and awarded plaintiff a judgment of P1,000. The
question before us is stated by the defendant thus:
"Accepting the findings of the trial court that both plaintiff
and defendant were guilty of negligence, the only question to
be considered is whether the negligence of plaintiff
contributed t the 'principal occurrence' or 'only to his own
injury.' If the former, he cannot recover; if the latter, the trial
court was correct in apportioning the damages." The
questioned as stated by plaintiff is as follows: "The main
question at issue is whether or not the plaintiff was negligent,
and, if so, to what extent. If the negligence of the plaintiff
was the primary cause of the accident then, of course, he
cannot recover; if his negligence had nothing to do with the
accident but contributed to his injury, then the court was
right in apportioning the damages, but if there was no
negligence on the part of the plaintiff, then he should be
awarded damages adequates to the injury sustained."
In support of the defendant's contention counsel says:
"Defendant's negligence was its failure properly to maintain
the track; plaintiff's negligence was his intoxication; the
'principal occurrence' was plaintiff's fall from his calesa. It
seems clear that plaintiff's intoxication contributed to the fall;
if he had been sober, it can hardly be doubted that he would
have crossed the track safely, as he had done a hundred
times before." While both parties appealed from the
decision, the defendant on the ground that it was not liable
and the plaintiff on the ground that the damages were
insufficient according to the evidence, and while the plaintiff
made a motion for a new trial upon the statutory grounds
and took proper exception to the denial thereof, thus
conferring upon this court jurisdiction to determine the
question of fact, nevertheless, not all of the testimony taken
on the trial, so far as can be gathered from the record, has
been brought to this court. There seems to have been two
hearings, one on the 31st of August and the other on the 28th
of September. The evidence taken on the first hearing is here;
the hearings being before the court, we must refuse, under
our rules, to consider even that evidence which is here; and,
in the decision of this case, we are, therefore, relegated to
the facts stated in the opinion of the court and the pleadings
filed. A careful reading of the decision of the trial court leads
us to the conclusion that there is nothing in the opinion
which sustains the conclusion of the court that the plaintiff
was negligent with reference to the accident which is the
basis of this action. Mere intoxication establishes a want of
ordinary care. It is but a circumstance to be considered with
the other evidence tending to prove negligence. It is the
general rule that it is immaterial whether a man is drunk or
sober if no want of ordinary care or prudence can be imputed
to him, and no greater degree of care is required than by a
sober one. If one's conduct is characterized by a proper
degree of care and prudence, it is immaterial whether he is
drunk or sober. If intoxication is not in itself negligence, what
are the facts found by the trial court and stated in its opinion
upon which may be predicated the finding that the plaintiff
did not use ordinary care and prudence and that the
intoxication contributed to the injury complained of? After
showing clearly and forcibly the negligence of the defendant
in leaving its tracks in the condition in which they were on the
night of the injury, the court has the following to say, and it is
all that can be found in its opinion, with reference to the
negligence of the plaintiff: "With respect to the condition in
which Mr. Wright was on returning to his house on the night
in question, the testimony of Doctor Kneedler, who was the
physician who attended him an hour after the accident,
demonstrates that he was intoxicated. If the defendant or its
employees were negligent by reason of having left the rails
and a part of the ties uncovered in a street where there is a
large amount of travel, the plaintiff was no less negligent, he
not having abstained from his custom of taking more wine
than he could carry without disturbing his judgment and his
self-control, he knowing that he had to drive a horse and
wagon and to cross railroad tracks which were to a certain
extent dangerous by reason of the rails being elevated above
the level of the street. If the plaintiff had been prudent on the
night in question and had not attempted to drive his
conveyance while in a drunken condition, he would certainly
have avoided the damages which he received, although the
company, on its part, was negligent in maintaining its tracks
in a bad condition for travel. Both parties, therefore, were
negligent and both contributed to the damages resulting to
the plaintiff, although the plaintiff, in the judgment of the
court, contributed in greater proportion to the damages that
did the defendant. As is clear from reading the opinion, no
facts are stated therein which warrant the conclusion that the
plaintiff was negligent. The conclusion that if he had been
sober he would not have been injured is not warranted by the
facts as found. It is impossible to say that a sober man would
not have fallen from the vehicle under the conditions
described. A horse crossing the railroad tracks with not only
the rails but a portion of the ties themselves aboveground,
stumbling by reason of the unsure footing and falling, the
vehicle crashing against the rails with such force as to break a
wheel, this might be sufficient to throw a person from the
vehicle no matter what his condition; and to conclude that,
under such circumstances, a sober man would not have fallen
while a drunken man did, is to draw a conclusion which
enters the realm of speculation and guesswork. It having
been found that the plaintiff was not negligent, it is
unnecessary to discuss the question presented by the
appellant company with reference to the applicability of the
case of Rakes vs. A. G. & P. Co., above; and we do not find
facts in the opinion of the court below which justify a larger
verdict than the one found.

2) TOMAS BERNAL and FORTUNATA ENVERSO, vs. J. V.
HOUSE and TACLOBAN ELECTRIC and ICE PLANT, LTD., G.R.
No. L-30741, January 30, 1930
The parents of the five-year old child, Purificacion Bernal,
appeal from a judgment of the Court of First Instance of
Leyte, which denied them P15,000 damages from J.V. House
and the Tacloban Electric & Ice Plant, Ltd., for the death of
the child as a consequence of burns alleged to have been
caused by the fault and negligence of the defendants.
The salient facts as found by the trial judge are the following:
On the evening of April 10, 1925, the procession of Holy
Friday was held in Tacloban, Leyte. Fortunata Enverso with
her daughter Purificacion Bernal came from another
municipality to attend the religious celebration. After the
procession was over, the woman and her daughter,
accompanied by two other persons by the names of Fausto
and Elias, passed along a public street named Gran Capitan.
The little girl was allowed to get a short distance in advance
of her mother and her friends. When in front of the offices of
the Tacloban Electric & Ice Plant, Ltd., and automobile
appeared from the opposite direction which so frightened the
child that she turned to run, with the result that she fell into
the street gutter. At that time there was hot water in this
gutter or ditch coming from the Electric Ice Plant of J.V.
House. When the mother and her companions reached the
child, they found her face downward in the hot water. Her
clothes were immediately removed and, then covered with a
garment, the girl was taken to the provincial hospital. There
she was attended by the resident physician, Dr. Victoriano A.
Benitez. Despite his efforts, the child died that same night at
11:40 o'clock. Dr. Benitez, who, of course, was in a better
position than any one to know the cause of the death, and
who had no reason to depart from the true facts, certified
that the cause of death was "Burns, 3rd Degree, whole Body",
and that the contributory causes were "Congestion of the
Brain and visceras of the chest & abdomen". The same
physician in his general record in the Leyte Hospital for this
patient, under diagnosis in full, stated: "Burned 3rd Degree,
whole body". The treatment record of the attending nurse
was much to the same effect. The defense was that the hot
water was permitted to flow down the side of the street Gran
Captain with the knowledge and consent of the authorities;
that the cause of death was other than the hot water; and
that in the death the plaintiffs contributed by their own fault
and negligence. The trial judge, however, after examination
of the evidence presented by the defendants, failed to
sustain their theory of the case, except as to the last
mentioned special defense. We are shown no good reason
for the departing from the conclusion of the trial judge to the
effect that the sudden death of the child Purification Bernal
was due principally to the nervous shock and organic
calefaction produced by the extensive burns from the hot
water. "The danger from burns is proportional rather to the
extent of surface involved than to the depth of the burn".
(Wharton & Stille's Medical Jurisprudence, vol. 3, p. 263). The
same authority continues. "Burns of the first degree, covering
two-thirds of the body surface, are rarely recovered from. . . .
Children seem especially susceptible to the effect of burns."
(Pp. 263, 264).
Although the trial judge made the findings of fact
hereinbefore outlined, he nevertheless was led to order the
dismissal of the action because of the contributory negligence
of the plaintiffs. It is from this point that a majority of the
court depart from the stand taken by the trial judge. The
mother and her child had a perfect right to be on the
principal street of Tacloban, Leyte, on the evening when the
religious procession was held. There was nothing abnormal in
allowing the child to run along a few paces in advance of the
mother. No one could foresee the coincidence of an
automobile appearing and of a frightened child running and
falling into a ditch filled with hot water. The doctrines
announced in the much debated case of Rakes vs. Atlantic,
Gulf and Pacific Co. ([1907], 7 Phil., 359), still rule. Article
1902 of the Civil Code must again be enforced. The
contributory negligence of the child and her mother, if any,
does not operate as a bar to recovery, but in its strictest
sense could only result in reduction of the damages.
Having reached the conclusion that liability exists, we next
turn to discover who can recover damages for the obligation,
and against whom the action will lie. The plaintiffs are Tomas
Bernal and Fortunata Enverso. The latter was the mother of
Purificacion Bernal and the former was the natural father,
who had never legally recognized his child. The daughter lived
with the mother, and presumably was supported by her.
Under these facts, recovery should be permitted the mother
but not the father. As to the defendants, they are J.V. House
and the Tacloban Electric & Ice Plant, Ltd., J.V. House was
granted a franchise by Act No. 2700 of the Philippine
Legislature approved on March 9, 1917. He only transferred
this franchise formally to the Tacloban Electric & Ice Plant,
Ltd. on March 30, 1926, that is, nearly a year after the death
of the child Purificacion Bernal. Under these facts, J.V. House
is solely responsible. Counsel for appellees point out that
there is no satisfactory proof to establish the pecuniary loss.
That is true. But in cases of this character the law presumes a
loss because of the impossibility of exact computation. There
is not enough money in the entire world to compensate a
mother for the death of her child. In criminal cases, the rule
has been to allow as a matter of course P1,000 as indemnity
to the heirs of the deceased. In the case of Manzanares vs.
Moreta ([1918], 38 Phil., 821), which in many respects is on
all fours with the case at bar, the same amount of P1,000 was
allowed the mother of the dead boy eight or nine years of
age. The same criterion will have to be followed in this
instance.
The result will, therefore, be to accept the findings of fact
made by the trial judge; to set aside the legal deductions
flowing from those facts; to hold that the death of the child
Purificacion Bernal was the result of fault and negligence in
permitting hot water to flow through the public streets, there
to endanger the lives of passers-by who were unfortunately
enough to fall into it; to rule that the proper plaintiff is the
mother Fortunata Enverso and not the natural father Tomas
Bernal; to likewise rule that the person responsible to the
plaintiff is J.V. House and not the entity the Tacloban Electric
& Ice Plant, Ltd.; and finally to adjudge that the amount of
recovery, without the tendering of special proof, should be
fixed, as in other cases, at P1,000.
Concordant with the pronouncements just made, the
judgment appealed from shall in part be reversed and in the
court of origin another judgment shall issue in favor of
Fortunata Enverso and against J.V. House for the amount of
P1,000, and for the costs of both instances.
3) AMADO PICART vs. FRANK SMITH, JR., G.R. No. L-
12219, March 15, 1918
In this action the plaintiff, Amado Picart, seeks to recover of
the defendant, Frank Smith, jr., the sum of P31,000, as
damages alleged to have been caused by an automobile
driven by the defendant. From a judgment of the Court of
First Instance of the Province of La Union absolving the
defendant from liability the plaintiff has appealed. The
occurrence which gave rise to the institution of this action
took place on December 12, 1912, on the Carlatan Bridge, at
San Fernando, La Union. It appears that upon the occasion in
question the plaintiff was riding on his pony over said bridge.
Before he had gotten half way across, the defendant
approached from the opposite direction in an automobile,
going at the rate of about ten or twelve miles per hour. As
the defendant neared the bridge he saw a horseman on it
and blew his horn to give warning of his approach. He
continued his course and after he had taken the bridge he
gave two more successive blasts, as it appeared to him that
the man on horseback before him was not observing the rule
of the road.
The plaintiff, it appears, saw the automobile coming and
heard the warning signals. However, being perturbed by the
novelty of the apparition or the rapidity of the approach, he
pulled the pony closely up against the railing on the right side
of the bridge instead of going to the left. He says that the
reason he did this was that he thought he did not have
sufficient time to get over to the other side. The bridge is
shown to have a length of about 75 meters and a width of
4.80 meters. As the automobile approached, the defendant
guided it toward his left, that being the proper side of the
road for the machine. In so doing the defendant assumed
that the horseman would move to the other side. The pony
had not as yet exhibited fright, and the rider had made no
sign for the automobile to stop. Seeing that the pony was
apparently quiet, the defendant, instead of veering to the
right while yet some distance away or slowing down,
continued to approach directly toward the horse without
diminution of speed. When he had gotten quite near, there
being then no possibility of the horse getting across to the
other side, the defendant quickly turned his car sufficiently to
the right to escape hitting the horse alongside of the railing
where it as then standing; but in so doing the automobile
passed in such close proximity to the animal that it became
frightened and turned its body across the bridge with its head
toward the railing. In so doing, it as struck on the hock of the
left hind leg by the flange of the car and the limb was broken.
The horse fell and its rider was thrown off with some
violence. From the evidence adduced in the case we believe
that when the accident occurred the free space where the
pony stood between the automobile and the railing of the
bridge was probably less than one and one half meters. As a
result of its injuries the horse died. The plaintiff received
contusions which caused temporary unconsciousness and
required medical attention for several days.
The question presented for decision is whether or not the
defendant in maneuvering his car in the manner above
described was guilty of negligence such as gives rise to a civil
obligation to repair the damage done; and we are of the
opinion that he is so liable. As the defendant started across
the bridge, he had the right to assume that the horse and the
rider would pass over to the proper side; but as he moved
toward the center of the bridge it was demonstrated to his
eyes that this would not be done; and he must in a moment
have perceived that it was too late for the horse to cross with
safety in front of the moving vehicle. In the nature of things
this change of situation occurred while the automobile was
yet some distance away; and from this moment it was not
longer within the power of the plaintiff to escape being run
down by going to a place of greater safety. The control of the
situation had then passed entirely to the defendant; and it
was his duty either to bring his car to an immediate stop or,
seeing that there were no other persons on the bridge, to
take the other side and pass sufficiently far away from the
horse to avoid the danger of collision. Instead of doing this,
the defendant ran straight on until he was almost upon the
horse. He was, we think, deceived into doing this by the fact
that the horse had not yet exhibited fright. But in view of the
known nature of horses, there was an appreciable risk that, if
the animal in question was unacquainted with automobiles,
he might get exited and jump under the conditions which
here confronted him. When the defendant exposed the horse
and rider to this danger he was, in our opinion, negligent in
the eye of the law.
The test by which to determine the existence of negligence in
a particular case may be stated as follows: Did the defendant
in doing the alleged negligent act use that person would have
used in the same situation? If not, then he is guilty of
negligence. The law here in effect adopts the standard
supposed to be supplied by the imaginary conduct of the
discreet paterfamilias of the Roman law. The existence of
negligence in a given case is not determined by reference to
the personal judgment of the actor in the situation before
him. The law considers what would be reckless, blameworthy,
or negligent in the man of ordinary intelligence and prudence
and determines liability by that.
The question as to what would constitute the conduct of a
prudent man in a given situation must of course be always
determined in the light of human experience and in view of
the facts involved in the particular case. Abstract speculations
cannot here be of much value but this much can be profitably
said: Reasonable men govern their conduct by the
circumstances which are before them or known to them.
They are not, and are not supposed to be, omniscient of the
future. Hence they can be expected to take care only when
there is something before them to suggest or warn of danger.
Could a prudent man, in the case under consideration,
foresee harm as a result of the course actually pursued? If so,
it was the duty of the actor to take precautions to guard
against that harm. Reasonable foresight of harm, followed by
ignoring of the suggestion born of this prevision, is always
necessary before negligence can be held to exist. Stated in
these terms, the proper criterion for determining the
existence of negligence in a given case is this: Conduct is said
to be negligent when a prudent man in the position of the
tortfeasor would have foreseen that an effect harmful to
another was sufficiently probable to warrant his foregoing
conduct or guarding against its consequences.
Applying this test to the conduct of the defendant in the
present case we think that negligence is clearly established. A
prudent man, placed in the position of the defendant, would
in our opinion, have recognized that the course which he was
pursuing was fraught with risk, and would therefore have
foreseen harm to the horse and the rider as reasonable
consequence of that course. Under these circumstances the
law imposed on the defendant the duty to guard against the
threatened harm.
It goes without saying that the plaintiff himself was not free
from fault, for he was guilty of antecedent negligence in
planting himself on the wrong side of the road. But as we
have already stated, the defendant was also negligent; and in
such case the problem always is to discover which agent is
immediately and directly responsible. It will be noted that the
negligent acts of the two parties were not contemporaneous,
since the negligence of the defendant succeeded the
negligence of the plaintiff by an appreciable interval. Under
these circumstances the law is that the person who has the
last fair chance to avoid the impending harm and fails to do
so is chargeable with the consequences, without reference to
the prior negligence of the other party.
that the plaintiff recover of the defendant the sum of two
hundred pesos (P200), with costs of other instances. The sum
here awarded is estimated to include the value of the horse,
medical expenses of the plaintiff, the loss or damage
occasioned to articles of his apparel, and lawful interest on
the whole to the date of this recovery. The other damages
claimed by the plaintiff are remote or otherwise of such
character as not to be recoverable. So ordered.

The decision in the case of Rkes vs. Atlantic, Gulf and Pacific
Co. (7 Phil. Rep., 359) should perhaps be mentioned in this
connection. This Court there held that while contributory
negligence on the part of the person injured did not
constitute a bar to recovery, it could be received in evidence
to reduce the damages which would otherwise have been
assessed wholly against the other party. The defendant
company had there employed the plaintiff, as a laborer, to
assist in transporting iron rails from a barge in Manila harbor
to the company's yards located not far away. The rails were
conveyed upon cars which were hauled along a narrow track.
At certain spot near the water's edge the track gave way by
reason of the combined effect of the weight of the car and
the insecurity of the road bed. The car was in consequence
upset; the rails slid off; and the plaintiff's leg was caught and
broken. It appeared in evidence that the accident was due to
the effects of the typhoon which had dislodged one of the
supports of the track. The court found that the defendant
company was negligent in having failed to repair the bed of
the track and also that the plaintiff was, at the moment of the
accident, guilty of contributory negligence in walking at the
side of the car instead of being in front or behind. It was held
that while the defendant was liable to the plaintiff by reason
of its negligence in having failed to keep the track in proper
repair nevertheless the amount of the damages should be
reduced on account of the contributory negligence in the
plaintiff. As will be seen the defendant's negligence in that
case consisted in an omission only. The liability of the
company arose from its responsibility for the dangerous
condition of its track. In a case like the one now before us,
where the defendant was actually present and operating the
automobile which caused the damage, we do not feel
constrained to attempt to weigh the negligence of the
respective parties in order to apportion the damage
according to the degree of their relative fault. It is enough to
say that the negligence of the defendant was in this case the
immediate and determining cause of the accident and that
the antecedent negligence of the plaintiff was a more remote
factor in the case.

A point of minor importance in the case is indicated in the

special defense pleaded in the defendant's answer, to the
effect that the subject matter of the action had been
previously adjudicated in the court of a justice of the peace.
In this connection it appears that soon after the accident in
question occurred, the plaintiff caused criminal proceedings
to be instituted before a justice of the peace charging the
defendant with the infliction of serious injuries (lesiones
graves). At the preliminary investigation the defendant was
discharged by the magistrate and the proceedings were
dismissed. Conceding that the acquittal of the defendant at
the trial upon the merits in a criminal prosecution for the
offense mentioned would be res adjudicata upon the
question of his civil liability arising from negligence -- a point
upon which it is unnecessary to express an opinion -- the
action of the justice of the peace in dismissing the criminal
proceeding upon the preliminary hearing can have no effect.
(See U. S. vs. Banzuela and Banzuela, 31 Phil. Rep., 564.)

From what has been said it results that the judgment of the
lower court must be reversed, and judgment is her rendered
4) FAR EAST BANK AND TRUST COMPANY vs. CA, ET.
AL., G.R. No. 108164, February 23, 1995
Sometime in October 1986, private respondent Luis A. Luna
applied for, and was accorded, a FAREASTCARD issued by
petitioner Far East Bank and Trust Company ("FEBTC") at its
Pasig Branch. Upon his request, the bank also issued a
supplemental card to private respondent Clarita S. Luna. In
August 1988, Clarita lost her credit card. FEBTC was forthwith
informed. In order to replace the lost card, Clarita submitted
an affidavit of loss. In cases of this nature, the bank's internal
security procedures and policy would appear to be to
meanwhile so record the lost card, along with the principal
card, as a "Hot Card" or "Cancelled Card" in its master file. On
06 October 1988, Luis tendered a despedida lunch for a close
friend, a Filipino-American, and another guest at the Bahia
Rooftop Restaurant of the Hotel Intercontinental Manila. To
pay for the lunch, Luis presented his FAREASTCARD to the
attending waiter who promptly had it verified through a
telephone call to the bank's Credit Card Department. Since
the card was not honored, Luis was forced to pay in cash the
bill amounting to P588.13. Naturally, Luis felt embarrassed by
this incident. In a letter, dated 11 October 1988, private
respondent Luis Luna, through counsel, demanded from
FEBTC the payment of damages. Adrian V. Festejo, a vice-
president of the bank, expressed the bank's apologies to Luis.
In his letter, dated 03 November 1988, Festejo, in part, said:
In cases when a card is reported to our office as lost,
FAREASTCARD undertakes the necessary action to avert its
unauthorized use (such as tagging the card as hotlisted), as it
is always our intention to protect our cardholders. An
investigation of your case however, revealed that
FAREASTCARD failed to inform you about its security policy.
Furthermore, an overzealous employee of the Bank's Credit
Card Department did not consider the possibility that it may
have been you who was presenting the card at that time (for
which reason, the unfortunate incident occurred). Festejo
also sent a letter to the Manager of the Bahia Rooftop
Restaurant to assure the latter that private respondents were
"very valued clients" of FEBTC. William Anthony King, Food
and Beverage Manager of the Intercontinental Hotel, wrote
back to say that the credibility of private respondent had
never been "in question." A copy of this reply was sent to Luis
by Festejo. Still evidently feeling aggrieved, private
respondents, on 05 December 1988, filed a complaint for
damages with the Regional Trial Court ("RTC") of Pasig against
FEBTC. On 30 March 1990, the RTC of Pasig, given the
foregoing factual settings, rendered a decision ordering
FEBTC to pay private respondents (a) P300,000.00 moral
damages; (b) P50,000.00 exemplary damages; and (c)
P20,000.00 attorney's fees. On appeal to the Court of
Appeals, the appellate court affirmed the decision of the trial
court. Its motion for reconsideration having been denied by
the appellate court, FEBTC has come to this Court with this
petition for review. There is merit in this appeal.
In culpa contractual, moral damages may be recovered where
the defendant is shown to have acted in bad faith or with
malice in the breach of the contract. 2 The Civil Code
provides:
Art. 2220. Willful injury to property may be a legal
ground for awarding moral damages if the court should find
that, under the circumstances, such damages are justly due.
The same rule applies to breaches of contract where the
defendant acted fraudulently or in bad faith. (Emphasis
supplied)
Bad faith, in this context, includes gross, but not simple,
negligence.3 Exceptionally, in a contract of carriage, moral
damages are also allowed in case of death of a passenger
attributable to the fault (which is presumed4 ) of the
common carrier. Concededly, the bank was remiss in indeed
neglecting to personally inform Luis of his own card's
cancellation. Nothing in the findings of the trial court and the
appellate court, however, can sufficiently indicate any
deliberate intent on the part of FEBTC to cause harm to
private respondents. Neither could FEBTC's negligence in
failing to give personal notice to Luis be considered so gross
as to amount to malice or bad faith. Malice or bad faith
implies a conscious and intentional design to do a wrongful
act for a dishonest purpose or moral obliquity; it is different
from the negative idea of negligence in that malice or bad
faith contemplates a state of mind affirmatively operating
with furtive design or ill will. We are not unaware of the
previous rulings of this Court, such as in American Express
International, Inc., vs. Intermediate Appellate Court (167
SCRA 209) and Bank of Philippine Islands vs. Intermediate
Appellate Court (206 SCRA 408), sanctioning the application
of Article 21, in relation to Article 2217 and Article 22197 of
the Civil Code to a contractual breach similar to the case at
bench. Article 21 states: Art. 21. Any person who wilfully
causes loss or injury to another in a manner that is contrary
to morals, good customs or public policy shall compensate
the latter for the damage. Article 21 of the Code, it should be
observed, contemplates a conscious act to cause harm. Thus,
even if we are to assume that the provision could properly
relate to a breach of contract, its application can be
warranted only when the defendant's disregard of his
contractual obligation is so deliberate as to approximate a
degree of misconduct certainly no less worse than fraud or
bad faith. Most importantly, Article 21 is a mere declaration
of a general principle in human relations that clearly must, in
any case, give way to the specific provision of Article 2220 of
the Civil Code authorizing the grant of moral damages in
culpa contractual solely when the breach is due to fraud or
bad faith. Mr. Justice Jose B.L. Reyes, in his ponencia in Fores
vs. Miranda8 explained with great clarity the predominance
that we should give to Article 2220 in contractual relations;
we quote: Anent the moral damages ordered to be paid to
the respondent, the same must be discarded. We have
repeatedly ruled, that moral damages are not recoverable in
damage actions predicated on a breach of the contract of
transportation, in view of Articles 2219 and 2220 of the new
Civil Code, which provide as follows: Art. 2219. Moral
damages may be recovered in the following and analogous
cases: (1) A criminal offense resulting in physical
injuries; (2) Quasi-delicts causing physical injuries;
Art. 2220 Wilful injury to property may be a legal ground for
awarding moral damages if the court should find that, under
the circumstances, such damages are justly due. The same
rule applies to breaches of contract where the defendant
acted fraudulently or in bad faith.
By contrasting the provisions of these two articles it
immediately becomes apparent that:
(a) In case of breach of contract (including one of
transportation) proof of bad faith or fraud (dolus), i.e.,
wanton or deliberately injurious conduct, is essential to
justify an award of moral damages; and (b) That a breach of
contract can not be considered included in the descriptive
term "analogous cases" used in Art. 2219; not only because
Art. 2220 specifically provides for the damages that are
caused contractual breach, but because the definition of
quasi-delict in Art. 2176 of the Code expressly excludes the
cases where there is a "preexisitng contractual relations
between the parties." 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.
The exception to the basic rule of damages now under
consideration is a mishap resulting in the death of a
passenger, in which case Article 1764 makes the common
carrier expressly subject to the rule of Art. 2206, that entitles
the spouse, descendants and ascendants of the deceased
passenger to "demand moral damages for mental anguish by
reason of the death of the deceased" (Necesito vs. Paras, 104
Phil. 84, Resolution on motion to reconsider, September 11,
1958). But the exceptional rule of Art. 1764 makes it all the
more evident that where the injured passenger does not die,
moral damages are not recoverable unless it is proved that
the carrier was guilty of malice or bad faith. We think it is
clear that the mere carelessness of the carrier's driver does
not per se constitute or justify an inference of malice or bad
faith on the part of the carrier; and in the case at bar there is
no other evidence of such malice to support the award of
moral damages by the Court of Appeals. To award moral
damages for breach of contract, therefore, without proof of
bad faith or malice on the part of the defendant, as required
by Art. 2220, would be to violate the clear provisions of the
law, and constitute unwarranted judicial legislation. The
distinction between fraud, bad faith or malice in the sense of
deliberate or wanton wrong doing and negligence (as mere
carelessness) is too fundamental in our law to be ignored
(Arts. 1170-1172); their consequences being clearly
differentiated by the Code. Art. 2201. In contracts and quasi-
contracts, the damages for which the obligor who acted in
good faith is liable shall be those that are the natural and
probable consequences of the breach of the obligation, and
which the parties have foreseen or could have reasonably
foreseen at the time the obligation was constituted.
In case of fraud, bad faith, malice or wanton attitude, the
obligor shall be responsible for all damages which may be
reasonably attributed to the non-performance of the
obligation. It is to be presumed, in the absence of statutory
provision to the contrary, that this difference was in the mind
of the lawmakers when in Art. 2220 they limited recovery of
moral damages to breaches of contract in bad faith. It is true
that negligence may be occasionally so gross as to amount to
malice; but the fact must be shown in evidence, and a
carrier's bad faith is not to be lightly inferred from a mere
finding that the contract was breached through negligence of
the carrier's employees. The Court has not in the process
overlooked another rule that a quasi-delict can be the cause
for breaching a contract that might thereby permit the
application of applicable principles on tort9 even where there
is a pre-existing contract between the plaintiff and the
defendant (Phil. Airlines vs. Court of Appeals, 106 SCRA 143;
Singson vs. Bank of Phil. Islands, 23 SCRA 1117; and Air France
vs. Carrascoso, 18 SCRA 155). This doctrine, unfortunately,
cannot improve private respondents' case for it can aptly
govern only where the act or omission complained of would
constitute an actionable tort independently of the contract.
The test (whether a quasi-delict can be deemed to underlie
the breach of a contract) can be stated thusly: Where,
without a pre-existing contract between two parties, an act
or omission can nonetheless amount to an actionable tort by
itself, the fact that the parties are contractually bound is no
bar to the application of quasi-delict provisions to the case.
Here, private respondents' damage claim is predicated solely
on their contractual relationship; without such agreement,
the act or omission complained of cannot by itself be held to
stand as a separate cause of action or as an independent
actionable tort.
The Court finds, therefore, the award of moral damages
made by the court a quo, affirmed by the appellate court, to
be inordinate and substantially devoid of legal basis.
Exemplary or corrective damages, in turn, are intended to
serve as an example or as correction for the public good in
addition to moral, temperate, liquidated or compensatory
damages (Art. 2229, Civil Code; see Prudenciado vs. Alliance
Transport System, 148 SCRA 440; Lopez vs. Pan American
World Airways, 16 SCRA 431). In criminal offenses, exemplary
damages are imposed when the crime is committed with one
or more aggravating circumstances (Art. 2230, Civil Code). In
quasi-delicts, such damages are granted if the defendant is
shown to have been so guilty of gross negligence as to
approximate malice (See Art. 2231, Civil Code; CLLC E.G.
Gochangco Workers Union vs. NLRC, 161 SCRA 655; Globe
Mackay Cable and Radio Corp. vs. CA, 176 SCRA 778). In
contracts and quasi-contracts, the court may award
exemplary damages if the defendant is found to have acted in
a wanton, fraudulent, reckless, oppressive, or malevolent
manner (Art. 2232, Civil Code; PNB vs. Gen. Acceptance and
Finance Corp., 161 SCRA 449).
Given the above premises and the factual circumstances here
obtaining, it would also be just as arduous to sustain the
exemplary damages granted by the courts below (see De
Leon vs. Court of Appeals, 165 SCRA 166).
Nevertheless, the bank's failure, even perhaps inadvertent, to
honor its credit card issued to private respondent Luis should
entitle him to recover a measure of damages sanctioned
under Article 2221 of the Civil Code providing thusly:
Art. 2221. Nominal damages are adjudicated in order
that a right of the plaintiff, which has been violated or
invaded by the defendant, may be vindicated or recognized,
and not for the purpose of indemnifying the plaintiff for any
loss suffered by him.
Reasonable attorney's fees may be recovered where the
court deems such recovery to be just and equitable (Art.
2208, Civil Code). We see no issue of sound discretion on the
part of the appellate court in allowing the award thereof by
the trial court.
WHEREFORE, the petition for review is given due course. The
appealed decision is MODIFIED by deleting the award of
moral and exemplary damages to private respondents; in its
stead, petitioner is ordered to pay private respondent Luis A.
Luna an amount of P5,000.00 by way of nominal damages. In
all other respects, the appealed decision is AFFIRMED. No
costs.
SO ORDERED.
5) KHRISTINE REGINO vs. PANGASINAN COLLEGES OF
SCIENCE AND TECHNOLOGY, et al. G.R. No. 156109,
November 18, 2004
Upon enrolment, students and their school enter upon a
reciprocal contract. The students agree to abide by the standards
of academic performance and codes of conduct, issued usually in
the form of manuals that are distributed to the enrollees at the
start of the school term. Further, the school informs them of the
itemized fees they are expected to pay. Consequently, it cannot,
after the enrolment of a student, vary the terms of the contract.
It cannot require fees other than those it specified upon
enrolment.
The Case
Before the Court is a Petition for Review under Rule 45,[1]
seeking to nullify the July 12, 2002[2] and the November 22,
2002[3] Orders of the Regional Trial Court (RTC) of Urdaneta
City, Pangasinan (Branch 48) in Civil Case No. U-7541. The
decretal portion of the first assailed Order reads:
WHEREFORE, the Court GRANTS the instant motion to dismiss
for lack of cause of action.[4]
The second challenged Order denied petitioners Motion for
Reconsideration.
The Facts
Petitioner Khristine Rea M. Regino was a first year computer
science student at Respondent Pangasinan Colleges of Science
and Technology (PCST). Reared in a poor family, Regino went to
college mainly through the financial support of her relatives.
During the second semester of school year 2001-2002, she
enrolled in logic and statistics subjects under Respondents
Rachelle A. Gamurot and Elissa Baladad, respectively, as
teachers. In February 2002, PCST held a fund raising campaign
dubbed the Rave Party and Dance Revolution, the proceeds of
which were to go to the construction of the schools tennis and
volleyball courts. Each student was required to pay for two
tickets at the price of P100 each. The project was allegedly
implemented by recompensing students who purchased tickets
with additional points in their test scores; those who refused to
pay were denied the opportunity to take the final examinations.
Financially strapped and prohibited by her religion from
attending dance parties and celebrations, Regino refused to pay
for the tickets. On March 14 and March 15, 2002, the scheduled
dates of the final examinations in logic and statistics, her
teachers -- Respondents Rachelle A. Gamurot and Elissa Baladad
-- allegedly disallowed her from taking the tests. According to
petitioner, Gamurot made her sit out her logic class while her
classmates were taking their examinations. The next day,
Baladad, after announcing to the entire class that she was not
permitting petitioner and another student to take their statistics
examinations for failing to pay for their tickets, allegedly ejected
them from the classroom. Petitioners pleas ostensibly went
unheeded by Gamurot and Baladad, who unrelentingly defended
their positions as compliance with PCSTs policy. On April 25,
2002, petitioner filed, as a pauper litigant, a Complaint[5] for
damages against PCST, Gamurot and Baladad. In her Complaint,
she prayed for P500,000 as nominal damages; P500,000 as moral
damages; at least P1,000,000 as exemplary damages; P250,000
as actual damages; plus the costs of litigation and attorneys fees.
On May 30, 2002, respondents filed a Motion to Dismiss[6] on
the ground of petitioners failure to exhaust administrative
remedies. According to respondents, the question raised
involved the determination of the wisdom of an administrative
policy of the PCST; hence, the case should have been initiated
before the proper administrative body, the Commission of
Higher Education (CHED). In her Comment to respondents
Motion, petitioner argued that prior exhaustion of
administrative remedies was unnecessary, because her action
was not administrative in nature, but one purely for damages
arising from respondents breach of the laws on human relations.
As such, jurisdiction lay with the courts. On July 12, 2002, the
RTC dismissed the Complaint for lack of cause of action.
Ruling of the Regional Trial Court
In granting respondents Motion to Dismiss, the trial court noted
that the instant controversy involved a higher institution of
learning, two of its faculty members and one of its students. It
added that Section 54 of the Education Act of 1982 vested in the
Commission on Higher Education (CHED) the supervision and
regulation of tertiary schools. Thus, it ruled that the CHED, not
the courts, had jurisdiction over the controversy.[7] In its
dispositive portion, the assailed Order dismissed the Complaint
for lack of cause of action without, however, explaining this
ground. Aggrieved, petitioner filed the present Petition on pure
questions of law.[8]
Issues
In her Memorandum, petitioner raises the following issues for
our consideration:
-Whether or not the principle of exhaustion of administrative
remedies applies in a civil action exclusively for damages based
on violation of the human relation provisions of the Civil Code,
filed by a student against her former school.
-Whether or not there is a need for prior declaration of invalidity
of a certain school administrative policy by the Commission on
Higher Education (CHED) before a former student can
successfully maintain an action exclusively for damages in
regular courts.
-Whether or not the Commission on Higher Education (CHED)
has exclusive original jurisdiction over actions for damages based
upon violation of the Civil Code provisions on human relations
filed by a student against the school.[9]
All of the foregoing point to one issue -- whether the doctrine of
exhaustion of administrative remedies is applicable. The Court,
however, sees a second issue which, though not expressly raised
by petitioner, was impliedly contained in her Petition: whether
the Complaint stated sufficient cause(s) of action.
The Courts Ruling: The Petition is meritorious.
First Issue:
Exhaustion of Administrative Remedies
Respondents anchored their Motion to Dismiss on petitioners
alleged failure to exhaust administrative remedies before
resorting to the RTC. According to them, the determination of
the controversy hinge on the validity, the wisdom and the
propriety of PCSTs academic policy. Thus, the Complaint should
have been lodged in the CHED, the administrative body tasked
under Republic Act No. 7722 to implement the state policy to
protect, foster and promote the right of all citizens to affordable
quality education at all levels and to take appropriate steps to
ensure that education is accessible to all.[10] Petitioner counters
that the doctrine finds no relevance to the present case since she
is praying for damages, a remedy beyond the domain of the
CHED and well within the jurisdiction of the courts.[11]
Petitioner is correct. First, the doctrine of exhaustion of
administrative remedies has no bearing on the present case. In
Factoran Jr. v. CA,[12] the Court had occasion to elucidate on the
rationale behind this doctrine: The doctrine of exhaustion of
administrative remedies is basic. Courts, for reasons of law,
comity, and convenience, should not entertain suits unless the
available administrative remedies have first been resorted to and
the proper authorities have been given the appropriate
opportunity to act and correct their alleged errors, if any,
committed in the administrative forum. x x x.[13] Petitioner is
not asking for the reversal of the policies of PCST. Neither is she
demanding it to allow her to take her final examinations; she
was already enrolled in another educational institution. A
reversal of the acts complained of would not adequately redress
her grievances; under the circumstances, the consequences of
respondents acts could no longer be undone or rectified. Second,
exhaustion of administrative remedies is applicable when there
is competence on the part of the administrative body to act
upon the matter complained of.[14] Administrative agencies are
not courts; they are neither part of the judicial system, nor are
they deemed judicial tribunals.[15] Specifically, the CHED does
not have the power to award damages.[16] Hence, petitioner
could not have commenced her case before the Commission.
Third, the exhaustion doctrine admits of exceptions, one of
which arises when the issue is purely legal and well within the
jurisdiction of the trial court.[17] Petitioners action for damages
inevitably calls for the application and the interpretation of the
Civil Code, a function that falls within the jurisdiction of the
courts.[18]
Second Issue:
Cause of Action Sufficient Causes of Action Stated in the
Allegations in the Complaint
As a rule, every complaint must sufficiently allege a cause of
action; failure to do so warrants its dismissal.[19] A complaint is
said to assert a sufficient cause of action if, admitting what
appears solely on its face to be correct, the plaintiff would be
entitled to the relief prayed for. Assuming the facts that are
alleged to be true, the court should be able to render a valid
judgment in accordance with the prayer in the complaint.[20] A
motion to dismiss based on lack of cause of action hypothetically
admits the truth of the alleged facts. In their Motion to Dismiss,
respondents did not dispute any of petitioners allegations, and
they admitted that x x x the crux of plaintiffs cause of action is
the determination of whether or not the assessment of P100 per
ticket is excessive or oppressive.[21] They thereby premised
their prayer for dismissal on the Complaints alleged failure to
state a cause of action. Thus, a reexamination of the Complaint is
in order.
The Complaint contains the following factual allegations:
10. In the second week of February 2002, defendant Rachelle A. Gamurot, in
connivance with PCST, forced plaintiff and her classmates to buy or take two
tickets each, x x x;
11. Plaintiff and many of her classmates objected to the forced distribution
and selling of tickets to them but the said defendant warned them that if
they refused [to] take or pay the price of the two tickets they would not be
allowed at all to take the final examinations;
12. As if to add insult to injury, defendant Rachelle A. Gamurot bribed
students with additional fifty points or so in their test score in her subject
just to unjustly influence and compel them into taking the tickets;
13. Despite the students refusal, they were forced to take the tickets because
[of] defendant Rachelle A. Gamurots coercion and act of intimidation, but
still many of them including the plaintiff did not attend the dance party
imposed upon them by defendants PCST and Rachelle A. Gamurot;
14. Plaintiff was not able to pay the price of her own two tickets because
aside form the fact that she could not afford to pay them it is also against her
religious practice as a member of a certain religious congregation to be
attending dance parties and celebrations;
15. On March 14, 2002, before defendant Rachelle A. Gamurot gave her class
its final examination in the subject Logic she warned that students who had
not paid the tickets would not be allowed to participate in the examination,
for which threat and intimidation many students were eventually forced to
make payments:
16. Because plaintiff could not afford to pay, defendant Rachelle A. Gamurot
inhumanly made plaintiff sit out the class but the defendant did not allow her
to take her final examination in Logic;
17. On March 15, 2002 just before the giving of the final examination in the
subject Statistics, defendant Elissa Baladad, in connivance with defendants
Rachelle A. Gamurot and PCST, announced in the classroom that she was not
allowing plaintiff and another student to take the examination for their
failure and refusal to pay the price of the tickets, and thenceforth she ejected
plaintiff and the other student from the classroom;
18. Plaintiff pleaded for a chance to take the examination but all defendants
could say was that the prohibition to give the examinations to non-paying
students was an administrative decision;
19. Plaintiff has already paid her tuition fees and other obligations in the
school;
20. That the above-cited incident was not a first since PCST also did another
forced distribution of tickets to its students in the first semester of school
year 2001-2002; x x x [22]
The foregoing allegations show two causes of action; first, breach of
contract; and second, liability for tort.
Reciprocity of the School-Student Contract
In Alcuaz v. PSBA,[23] the Court characterized the relationship
between the school and the student as a contract, in which a
student, once admitted by the school is considered enrolled for
one semester.[24] Two years later, in Non v. Dames II,[25] the
Court modified the termination of contract theory in Alcuaz by
holding that the contractual relationship between the school and
the student is not only semestral in duration, but for the entire
period the latter are expected to complete it.[26] Except for the
variance in the period during which the contractual relationship
is considered to subsist, both Alcuaz and Non were unanimous in
characterizing the school-student relationship as contractual in
nature. The school-student relationship is also reciprocal. Thus, it
has consequences appurtenant to and inherent in all contracts of
such kind -- it gives rise to bilateral or reciprocal rights and
obligations. The school undertakes to provide students with
education sufficient to enable them to pursue higher education
or a profession. On the other hand, the students agree to abide
by the academic requirements of the school and to observe its
rules and regulations.[27] The terms of the school-student
contract are defined at the moment of its inception -- upon
enrolment of the student. Standards of academic performance
and the code of behavior and discipline are usually set forth in
manuals distributed to new students at the start of every school
year. Further, schools inform prospective enrollees the amount
of fees and the terms of payment. In practice, students are
normally required to make a down payment upon enrollment,
with the balance to be paid before every preliminary, midterm
and final examination. Their failure to pay their financial
obligation is regarded as a valid ground for the school to deny
them the opportunity to take these examinations.
The foregoing practice does not merely ensure compliance with
financial obligations; it also underlines the importance of major
examinations. Failure to take a major examination is usually fatal
to the students promotion to the next grade or to graduation.
Examination results form a significant basis for their final grades.
These tests are usually a primary and an indispensable requisite
to their elevation to the next educational level and, ultimately,
to their completion of a course. Education is not a measurable
commodity. It is not possible to determine who is better
educated than another. Nevertheless, a students grades are an
accepted approximation of what would otherwise be an
intangible product of countless hours of study. The importance
of grades cannot be discounted in a setting where education is
generally the gate pass to employment opportunities and better
life; such grades are often the means by which a prospective
employer measures whether a job applicant has acquired the
necessary tools or skills for a particular profession or trade. Thus,
students expect that upon their payment of tuition fees,
satisfaction of the set academic standards, completion of
academic requirements and observance of school rules and
regulations, the school would reward them by recognizing their
completion of the course enrolled in. The obligation on the part
of the school has been established in Magtibay v. Garcia,[28]
Licup v. University of San Carlos[29] and Ateneo de Manila
University v. Garcia,[30] in which the Court held that, barring any
violation of the rules on the part of the students, an institution of
higher learning has a contractual obligation to afford its students
a fair opportunity to complete the course they seek to pursue.
We recognize the need of a school to fund its facilities and to
meet astronomical operating costs; this is a reality in running it.
Crystal v. Cebu International School[31] upheld the imposition by
respondent school of a land purchase deposit in the amount of
P50,000 per student to be used for the purchase of a piece of
land and for the construction of new buildings and other
facilities x x x which the school would transfer [to] and occupy
after the expiration of its lease contract over its present site. The
amount was refundable after the student graduated or left the
school. After noting that the imposition of the fee was made only
after prior consultation and approval by the parents of the
students, the Court held that the school committed no
actionable wrong in refusing to admit the children of the
petitioners therein for their failure to pay the land purchase
deposit and the 2.5 percent monthly surcharge thereon. In the
present case, PCST imposed the assailed revenue-raising
measure belatedly, in the middle of the semester. It exacted the
dance party fee as a condition for the students taking the final
examinations, and ultimately for its recognition of their ability to
finish a course. The fee, however, was not part of the school-
student contract entered into at the start of the school year.
Hence, it could not be unilaterally imposed to the prejudice of
the enrollees. Such contract is by no means an ordinary one. In
Non, we stressed that the school-student contract is imbued
with public interest, considering the high priority given by the
Constitution to education and the grant to the State of
supervisory and regulatory powers over all educational
institutions.[32] Sections 5 (1) and (3) of Article XIV of the 1987
Constitution provide: The State shall protect and promote the
right of all citizens to quality education at all levels and shall take
appropriate steps to make such declaration accessible to all.
Every student has a right to select a profession or course of
study, subject to fair, reasonable and equitable admission and
academic requirements.
The same state policy resonates in Section 9(2) of BP 232,
otherwise known as the Education Act of 1982: Section 9. Rights
of Students in School. In addition to other rights, and subject to
the limitations prescribed by law and regulations, students and
pupils in all schools shall enjoy the following rights:
(2) The right to freely choose their field of study subject to
existing curricula and to continue their course therein up to
graduation, except in cases of academic deficiency, or violation
of disciplinary regulations.
Liability for Tort
In her Complaint, petitioner also charged that private
respondents inhumanly punish students x x x by reason only of
their poverty, religious practice or lowly station in life, which
inculcated upon [petitioner] the feelings of guilt, disgrace and
unworthiness;[33] as a result of such punishment, she was
allegedly unable to finish any of her subjects for the second
semester of that school year and had to lag behind in her studies
by a full year. The acts of respondents supposedly caused her
extreme humiliation, mental agony and demoralization of
unimaginable proportions in violation of Articles 19, 21 and 26 of
the Civil Code. These provisions of the law state thus: Article 19.
Every person must, in the exercise of his rights and in the
performance of his duties, act with justice, give everyone his
due, and observe honesty and good faith; Article 21. Any person
who wilfully causes loss or injury to another in a manner that is
contrary to morals, good customs or public policy shall
compensate the latter for the damage; Article 26. Every person
shall respect the dignity, personality, privacy and peace of mind
of his neighbors and other persons. The following and similar
acts, though they may not constitute a criminal offense, shall
produce a cause of action for damages, prevention and other
relief: (1) Prying into the privacy of anothers residence; (2)
Meddling with or disturbing the private life or family relations of
another; (3) Intriguing to cause another to be alienated from his
friends; (4) Vexing or humiliating another on account of his
beliefs, lowly station in life, place of birth, physical defect, or
other personal condition.
under such conditions that the same act which constitutes a
breach of the contract would have constituted the source of an
extra-contractual obligation had no contract existed between
the parties. Immediately what comes to mind is the chapter of
the Civil Code on Human Relations, particularly Article 21 x x
x.[35]
Academic Freedom
In their Memorandum, respondents harp on their right to
academic freedom. We are not impressed. According to present
jurisprudence, academic freedom encompasses the
independence of an academic institution to determine for itself
(1) who may teach, (2) what may be taught, (3) how it shall
teach, and (4) who may be admitted to study.[36] In Garcia v. the
Faculty Admission Committee, Loyola School of Theology,[37]
the Court upheld the respondent therein when it denied a
female students admission to theological studies in a seminary
for prospective priests. The Court defined the freedom of an
academic institution thus: to decide for itself aims and objectives
and how best to attain them x x x free from outside coercion or
interference save possibly when overriding public welfare calls
for some restraint.[38] In Tangonan v. Pao,[39] the Court upheld,
in the name of academic freedom, the right of the school to
refuse readmission of a nursing student who had been enrolled
on probation, and who had failed her nursing subjects. These
instances notwithstanding, the Court has emphasized that once
a school has, in the name of academic freedom, set its standards,
these should be meticulously observed and should not be used
to discriminate against certain students.[40] After accepting
them upon enrollment, the school cannot renege on its
contractual obligation on grounds other than those made known
to, and accepted by, students at the start of the school year. In
sum, the Court holds that the Complaint alleges sufficient causes
of action against respondents, and that it should not have been
summarily dismissed. Needless to say, the Court is not holding
respondents liable for the acts complained of. That will have to
be ruled upon in due course by the court a quo. WHEREFORE,
the Petition is hereby GRANTED, and the assailed Orders
REVERSED. The trial court is DIRECTED to reinstate the Complaint
and, with all deliberate speed, to continue the proceedings in
Civil Case No. U-7541. No costs. SO ORDERED.

Generally, liability for tort arises only between parties not

otherwise bound by a contract. An academic institution,
however, may be held liable for tort even if it has an existing
contract with its students, since the act that violated the
contract may also be a tort. We ruled thus in PSBA vs. CA,[34]
from which we quote: A perusal of Article 2176 [of the Civil
Code] shows that obligations arising from quasi-delicts or tort,
also known as extra-contractual obligations, arise only between
parties not otherwise bound by contract, whether express or
implied. However, this impression has not prevented this Court
from determining the existence of a tort even when there
obtains a contract. In Air France v. Carrascoso (124 Phil. 722), the
private respondent was awarded damages for his unwarranted
expulsion from a first-class seat aboard the petitioner airline. It is
noted, however, that the Court referred to the petitioner-airlines
liability as one arising from tort, not one arising form a contract
of carriage. In effect, Air France is authority for the view that
liability from tort may exist even if there is a contract, for the act
that breaks the contract may be also a tort. x x x This view was
not all that revolutionary, for even as early as 1918, this Court
was already of a similar mind. In Cangco v. Manila Railroad (38
Phil. 780), Mr. Justice Fisher elucidated thus: x x x. When such a
contractual relation exists the obligor may break the contract
II. Article 2178
1) LEANDRO CARILLO, vs. PEOPLE OF THE PHILIPPINES,
G.R. No. 86890, January 21, 1994
Petitioner Dr. Leandro Carillo, an anesthetist, seeks review of
the Decision of the Court of Appeals dated 28 November
1988, which affirmed his conviction by the Regional Trial
Court of the crime of simple negligence resulting in homicide,
for the death of his thirteen (13) year old patient
Catherine Acosta. The trial court had sentenced him to suffer
the penalty of arresto mayor in its medium period (four [4]
months' imprisonment), as well as to pay the heirs of his
patient an indemnity of P30,000.00 for her death, P10,000.00
as reimbursement for actual expenses incurred, P50,000.00
as moral damages and to pay the costs of the suit.1
The information filed against petitioner and his co-accused,
the surgeon Dr. Emilio Madrid, alleged the following:
That on or about the 31st of May 1981, in the municipality of
Parañaque, Metro Manila, Philippines and within the
jurisdiction of this Honorable Court, the above-named
accused, conspiring and confederating together and mutually
helping and aiding with one another, without taking the
necessary care and precaution to avoid injury to person, did
then and there willfully, unlawfully and feloniously operate,
in a reckless, careless and imprudent manner and neglected
to exercise their respective medical knowhow and tasks
and/or departed from the recognized standard in their
treatment, diagnosis of the condition, and operation of the
patient, one Catherine Acosta, 13 years old, which negligence
caused the death of the said Catherine Acosta. Petitioner and
Dr. Emilio Madrid entered pleas of not guilty at arraignment
and the case proceeded to trail with Judge Job B. Madayag
presiding.3 The prosecution presented as its principal
evidence the testimony of four (4) witnesses, namely: 1)
Yolanda Acosta, Catherine's mother, who was able to observe
the conduct of the accused outside the operating theater
before, during and after the appendectomy procedure carried
out on her daughter;4 2) Domingo Acosta, Catherine's father,
who corroborated some parts of his wife's
testimony;5 3) Dr. Horacio Buendia, an expert witness who
described before the trial court the relationship between a
surgeon and an anesthetist in the course of a surgical
operation, as well as define the likelihood of cardiac arrest as
a post operative complication;6 and 4) Dr. Nieto Salvador, an
expert witness who analyzed and explained the significance
of the results of the pathological study and autopsy
conducted on Catherine's body by one Dr. Alberto Reyes.7
After the prosecution had rested its case, the defense was
granted leave to file a demurrer to the evidence.8 After
failing to file the demurrer within the reglementary period,
Judge Manuel Yuzon, who had in the meantime taken over as
presiding judge of the sala where this case was pending,
denied the defense motion for extension of time to file
demurrer and declared the case submitted for decision.9 On
19 September 1985, the trial court promulgated its decision
convicting both the accused of the crime charged. On appeal,
the Court of Appeals affirmed the judgment of conviction,
and specified that the civil liability of the two (2) accused was
solidary in nature. Petitioner Dr. Carillo alone filed the
present Petition for Review with the Court, seeking reversal
of his conviction, or in the alternative, the grant of a new
trial. Dr. Madrid did not try to appeal further the Court of
Appeals Decision. Accordingly, the judgment of conviction
became final insofar as the accused surgeon Dr. Madrid is
concerned.
The facts of the case as established by the Court of Appeals
are as follows:
The deceased, Catherine Acosta, a 13 year old girl, daughter
of spouses Domingo and Yolanda Acosta, complained to her
father at about 10:30 o'clock in the morning of May 31, 1981
of pains in the lower part of her abdomen. Catherine was
then brought to Dr. Elva Peña. Dra. Peña called for Dr. Emilio
Madrid and the latter examined Catherine Acosta. According
to Dr. Madrid, his findings might be appendicitis. Then Dr.
Peña told Catherine's parents to bring the child to the
hospital in Baclaran so that the child will be observed. At the
Baclaran General Hospital, a nurse took blood sample form
the child. The findings became known at around 3:00 o'clock
in the afternoon and the child was scheduled for operation at
5:00 o'clock in the afternoon. The operation took place at
5:45 p.m. because Dr. Madrid arrived only at that time. When
brought inside the operating room, the child was feeling very
well and they did not subject the child to ECG
(electrocardiogram) and
X-ray. The appellant Dr. Emilio Madrid, a surgeon, operated
on Catherine. He was assisted by appellant, Dr. Leandro
Carillo, an anesthesiologists. During the operation, while
Yolanda Acosta, Catherine's mother, was staying outside the
operating room, she "noticed something very unfamiliar."
The three nurses who assisted in the operation were going in
and out of the operating room, they were not carrying
anything, but in going out of the operating room, they were
already holding something. Yolanda asked one of the nurses if
she could enter the operating room but she was refused. At
around 6:30 p.m., Dr. Emilio Madrid went outside the
operating room and Yolanda Acosta was allowed to enter the
first door. The appendicitis (sic) was shown to them by Dr.
Madrid, because, according to Dr. Madrid, they might be
wondering because he was going to install drainage near the
operating (sic) portion of the child. When asked, the doctor
told them the child was already out of danger but the
operation was not yet finished. It has also been established
that the deceased was not weighed before the administration
of anesthesia on her. The operation was finished at 7:00
o'clock in the evening and when the child was brought out
from the operating room, she was observed to be shivering
(nanginginig); her heart beat was not normal; she was asleep
and did not wake up; she was pale; and as if she had difficulty
in breathing and Dr. Emilio Madrid suggested that she placed
under oxygen tank; that oxygen was administered to the child
when she was already in the room. Witness Yolanda Acosta
further testified that shortly before the child was transferred
from the operating room to her room, she (witness) was
requested by the anesthesiologist to go home and get a
blanket. A portion of Yolanda Acosta's testimony on what
happened when she returned to the hospital are reproduced
hereunder as follows:
Q What happened afterward?
A When I arrived in the hospital, my child was being
transferred to her bed.
Q What else happened?
Q I noticed that the heartbeat of my daughter was not
normal. And I noticed that her hospital gown is rising up and down.
Q What transpired after that?
A I asked Dr. Madrid why it was like that, that the heartbeat
of my daughter is not normal.
Q And did the doctor make any reply?
A The doctor said because of the lesion of the child.
Q What else happened?
A After they have revived the heartbeat of the child, Dr.
Carillo and Dr. Madrid left.
Q Now do you remember what time was it when Dr. Carillo
stepped out?
A Only a minute after they have transferred the child to the
bed.
Q What happened later on after Dr. Carillo and Dr. Madrid
stepped out of the hospital?
A After 15 or 30 minutes has lapsed at about 7:15 or 7:30,
the child had developed convulsion and stiffening of the body.
Q When you observed convulsion and stiffening of the body,
did you do anything?
A We requested the nurse who was attending to her to call
for a doctor.
Q And the nurse who was attending to the patient called for
a doctor?
A They called for Dra. Peña, their family physician.
Q What transpired afterwards?
A What Dra. Peña did was call for Dr. Madrid and the
cardiologist.
Q Did this doctor arrived?
A Yes.
Q What transpired after the doctor arrived?
A They examined the child.
Q After they examined the child, did they inform you of the
result of the examination?
A The cardiologist was the one whom informed us after he
stepped out of the room when we followed him. The doctor told us
that she suffered severe infection which went up to her head.
Q After you were informed of the result of his examination,
what transpired next?
A According to them, they will do their best for the child and
that they will call for Dr. Carillo.
Q Did Dr. Carillo arrived?
A At around 10:30 in the evening.
Q Did Dr. Carillo do anything when he arrived on 31 May
1981?
A When he arrived, he noticed that there were two small
bottles and big bottles of dextrose which were hanging above the
bed of the child. Then he said, "What is this? Christmas tree or
what?" He told us that one bottle of dextrose be removed. And the
big one will remain.
Q What happened after that?
A After that we talked to Dr. Carillo and asked him how did
this happen to the child.
Q What did Dr. Carillo reply (sic) to you?
A He answered "that is nothing, the child will regain
consciousness and if the child will not regain consciousness, I will
resign (sic) as a doctor."12
When Catherine remained unconscious until noontime the
next day, a neurologist examined her and she was diagnosed
as comatose. 13 Three (3) days later, Catherine died without
regaining consciousness.14 The Court of Appeals held that
Catherine had suffered from an overdose of, or an adverse
reaction to, anesthesia, particularly the arbitrary
administration of Nubain, a pain killer, without benefit of
prior weighing of the patient's body mass, which weight
determines the dosage of Nubain which can safely be given to
a patient. 15 The Court of Appeals held that this condition
triggered off a heart attack as a post-operative complication,
depriving Catherine's brain of oxygen, leading to the brain's
hemorrhage. 16 The Court of Appeals identified such cardiac
arrest as the immediate cause of Catherine's death. 17The
Court of Appeals found criminal negligence on the part of
petitioner Dr. Carillo and his co-accused Dr. Madrid, holding
that both had failed to observe the required standard of
diligence in the examination of Catherine prior to the actual
administration of anesthesia; 18 that it was "a bit rash" on
the part of the accused Dr. Carillo "to have administered
Nubain without first weighing Catherine"; 19 and that it was
an act of negligence on the part of both doctors when, (a)
they failed to monitor Catherine's heartbeat after the
operation and
(b) they left the hospital immediately after reviving
Catherine's heartbeat, depriving the latter of immediate and
expert medical assistance when she suffered a heart attack
approximately fifteen (15) to thirty (30) minutes later. 20
Since neither petitioner nor his co-accused presented
evidence in their own behalf, the present Petition seeks to
question the soundness of the factual conclusions drawn by
the Court of Appeals, upon which the affirmance of
petitioner's conviction was based. Close examination of the
instant Petition for Review shows that petitioner's main
arguments are two-fold: (1) the Court of Appeals "completely
brushed aside" and "misapprehended" Catherine's death
certificate and biopsy report which allegedly showed that the
cause of death was a ruptured appendix, which led to blood
poisoning, 21 rather than faulty anesthetic treatment;
and (2) there was no direct evidence of record showing that
Nubain was administered to Catherine either during the
appendectomy procedure or after such operation. 22
Two (2) related issues are thus posed for the Court's
consideration. The first is whether the Court of Appeals so
drastically "misapprehended" the relevant, operative facts in
this case as to compel this Court to examine and resolve
question(s) of fact which would have a decisive significance
for the disposition of the case. The rule is too firmly settled to
require much documentation that only questions of law may
be raised before this Court in a petition for review on
certiorari, subject to certain well-known exceptions. 23 After
careful scrutiny of petitioner's contentions before us and the
record of this case, we do not believe that petitioner has
shown "misapprehension of facts" on the part of the Court of
Appeals which would require this Court to overturn the
judgment reached by the former. The second issue is whether
or not the findings of fact of the Court of Appeals adequately
support the conclusion that petitioner Dr. Carillo was, along
with Dr. Madrid, guilty of simple negligence which resulted in
homicide. Our review of the record leads us to an affirmative
answer.
Petitioner contends that the Court of Appeals seriously erred
in finding that an overdose of, or an allergic reaction to, the
anesthetic drug Nubain had led to the death of Catherine
Acosta and that the true cause of Catherine's death was that
set out in the death certificate of Catherine: "Septicemia (or
blood poisoning) due to perforated appendix with
peritonitis." 24 The concept of causation in general, and the
cause of death in human beings in particular, are complex
and difficult notions. What is fairly clear is that death,
understood as a physical condition involving cessation of vital
signs in the brain and heart, is preceded by a series of
physiological events, any one of which events can, with equal
cogency, be described as a "cause of death". The Court of
Appeals found that an overdose of, or an adverse reaction to,
Nubain, an anesthetic or pain-killing drug the appropriate
dose of which depends on the body weight or mass of the
patient, had generated or triggered off cardiac arrest, which
in turn led to lack of oxygen in Catherine's brain, which then
brought about hemorrhaging in the brain. Vital activity in the
brain thereupon ceased. The medical evidence presented at
the trial was quite consistent with the findings of the Court of
Appeals which concluded that cardiac arrest was the cause of
Catherine's death. 25 For his part, petitioner insists that
cardiac arrest is not the only cause of oxygen-starvation of
the brain, that septicemia with peritonitis or severe infection
which had "gone up to the head" of Catherine was an equally
efficient cause of deprivation of the brain of oxygen and
hence of brain hemorrhage. The medical testimony of the
expert witnesses for the prosecution on which petitioner
relies is also consistent with petitioner's theory that
septicemia with peritonitis was, or at least could have been,
the cause of Catherine's death. 26 Indeed, it appears to the
Court that there was no medical proof submitted to the trial
court to show that one or the other "cause" was necessarily
an exclusive cause of death in the case of Catherine Acosta;
that an overdose or allergic reaction to Nubain could not
have combined with septicemia and peritonitis in bringing
about Catherine's death. What is of critical importance for
present purposes is not so much the identification of the
"true cause" or "real cause" of Catherine's death but rather
the set of circumstances which both the trial court and the
Court of Appeals found constituted simple (as distinguished
from reckless) negligence on the part of the two accused Dr.
Madrid and Dr. Carillo leading to the death of Catherine.
When the patient was wheeled out of the operating room
after completion of surgery, she manifested signs of medical
instability (i.e., shivering, paleness, irregular breathing and
weak heart beat). 27 She was not brought to a properly
equipped recovery room, or intensive care until which the
hospital lacked. 28 Such facilities and their professional staffs,
of which an anesthetist is commonly a part, are essential for
providing close observation and patient care while a post-
surgery patient is recovering from the effects of anesthesia
and while the normal protective mechanisms are still dull or
obtunded. 29 Instead, the patient was merely brought to her
assigned hospital bed and was provided oxygen on the
instructions of Dr. Madrid then "revived" her heartbeat. 30
Both doctors then left their patient and the hospital;
approximately fifteen minutes later, she suffered convulsions
and cardiac arrest. 31 The conduct of Dr. Madrid and of the
petitioner constituted inadequate care of their patient in
view of her vulnerable condition. Both doctors failed to
appreciate the serious condition of their patient whose
adverse physical signs were quite manifest right after surgery.
And after reviving her heartbeat, both doctors failed to
monitor their patient closely or extend further medical care
to her; such conduct was especially necessary in view of the
inadequate, post-operative facilities of the hospital. We do
not, of course, seek to hold petitioner responsible for the
inadequate facilities of the Baclaran General Hospital. We
consider, however, that the inadequate nature of those
facilities did impose a somewhat higher standard of
professional diligence upon the accused surgeon and
anesthetist personally than would have been called for in a
modern fully-equipped hospital. While Dr. Madrid and a
cardiologist were containing the patient's convulsions, and
after the latter had diagnosed that infection had reached the
patient's head, these two (2) apparently after consultation,
decided to call-in the petitioner. 32 There is here a strong
implication that the patient's post-operative condition must
have been considered by the two (2) doctors as in some way
related to the anesthetic treatment she had received from
the petitioner either during or after the surgical procedure.
Once summoned, petitioner anesthesiologist could not be
readily found. When he finally appeared at 10:30 in the
evening, he was evidently in a bad temper, commenting
critically on the dextrose bottles before ordering their
removal. 33 This circumstance indicated he was not disposed
to attend to this unexpected call, in violation of the canons of
his profession that as a physician, he should serve the interest
of his patient "with the greatest of solicitude, giving them
always his best talent and skill." 34 Indeed, when petitioner
finally saw his patient, he offered the unprofessional bluster
to the parents of Catherine that he would resign if the patient
will not regain consciousness. 35 The canons of medical
ethics require a physician to "attend to his patients faithfully
and conscientiously." He should secure for them all possible
benefits that may depend upon his professional skill and care.
As the sole tribunal to adjudge the physician's failure to fulfill
his obligation to his patient is, in most cases, his own
conscience, violation of this rule on his part is "discreditable
and inexcusable". 36 Nubain was an experimental drug for
anesthesia and post-operative pain and the medical literature
required that a patient be weighed first before it is
administered and warned that there was no (or inadequate)
experience relating to the administration thereof to a patient
less that eighteen (18) ears of age. 37 Yet, the doctor's order
sheet (Exhibit "C") did not contain this precaution but instead
directed a reader to apply the drug only when warranted by
the circumstances. 38 During the offer of Exhibit "C" by the
prosecution, Dr. Madrid admitted that this prescription,
which was unsigned, was made in his own handwriting. 39 It
must be observed that the instruction was open-ended in
that some other individual still had to determine if
circumstances existed warranting administration of the drug
to the patient. The document thus indicated the abdication of
medical responsibility on an extremely critical matter. Since
petitioner anesthesiologist entered subsequent prescriptions
or orders in the same order sheet, which were signed by him,
at 7:15 p.m. on the same evening of 31 May 1981, he was in a
position to appreciate the dangers inherent in the prior
prescription, which was within his (petitioner's) area of
specialization, and to order measures to correct this anomaly
and protect his patient's well-being. So far as the condition of
the evidence shows, he failed to do so. In sum, only a low
level of diligence was exhibited by petitioner and Dr. Madrid
in the prescription of medication for their patient. As noted
earlier, petitioner relied heavily in this proceeding on the
testimony on cross-examination of the expert witnesses for
the prosecution to show that blood poisoning resulting from
a ruptured appendix could also be responsible for the
patient's death. No suggestion has been made that the
rupture of the patient's occurred prior to surgery. After her
blood sample was examined, the patient was merely
diagnosed as a case of appendicitis, without further
elaboration. 40 No intensive preoperative preparations, like
the immediate administration of antibiotics, was thereafter
undertaken on the patient. This is a standard procedure for
patients who are, after being diagnosed, suspected of
suffering from a perforated appendix and consequent
peritonitis. 41 The mother also testified that petitioner
anesthesiologist merely injected a drug, "pre-anesthesia"
intended to put the patient to sleep, into the container of
fluids being administered to her daughter intravenously at
her room, prior to surgery. 42 We note further that the
surgeon Dr. Madrid was forty-five minutes late in arriving at
the operating theater. 43 Considering that delay in treatment
of appendicitis increases the morbidity of the patient, 44 Dr.
Madrid's conduct can only be explained by a pre-operative
diagnosis on his part that the condition of appendicitis was
not yet attended by complications (i.e., a ruptured appendix
and peritonitis). The above circumstances do strongly
indicate that the rupture of the patient's appendix occurred
during the appendectomy procedure, that is, at a time and
place — the operating room — where the two (2) accused
were in full control of the situation and could determine
decisively what needed to be done in respect of the patient.
45 This circumstance must be considered in conjunction with
other related circumstances which the prosecution had
proven: that the patient was ambulatory when brought to the
operating room; 46 that she left the operating room two (2)
hours later in obviously serious condition; and that an
appendectomy accompanied or followed by sustained
antibiotic treatment is a fairly common and generally
accepted medical procedure for dealing with ruptured
appendix and peritonitis, 47 a fact of which judicial note may
be taken. As early as in People v. Vistan, 48 the Court defined
simple negligence, penalized under what is now Article 365 of
the Revised Penal Code, as "a mere lack of prevision in a
situation where either the threatened harm is not immediate
or the danger not openly visible." Put in a slightly different
way, the gravamen of the offense of simple negligence is the
failure to exercise the diligence necessitated or called for the
situation which was not immediately
life-destructive but which culminated, in the present case, in
the death of a human being three (3) days later. Such failure
to exercise the necessary degree of care and diligence is a
negative ingredient of the offense charged. The rule in such
cases is that while the prosecution must prove the negative
ingredient of the offense, it needs only to present the best
evidence procurable under the circumstances, in order to
shift the burden of disproving or countering the proof of the
negative ingredient to the accused, provided that such initial
evidence establishes at least on a prima facie basis the guilt
of the accused. 49 This rule is particularly applicable where
the negative ingredient of the offense is of such a nature or
character as, under the circumstances, to be specially within
the knowledge or control of the accused. 50 In the instant
case, the Court is bound to observe that the events which
occurred during the surgical procedure (including whether or
not Nubain had in fact been administered as an anesthesia
immediately before or during the surgery) were peculiarly
within the knowledge and control of Dr. Carillo and Dr.
Madrid. It was, therefore, incumbent upon the two (2)
accused to overturn the prima facie case which the
prosecution had established, by reciting the measures which
they had actually taken to prevent or to counter the
obviously serious condition of Catherine Acosta which was
evident right after surgery. This they failed or refused to do
so.
Still another circumstance of which account must be taken is
that both petitioner and Dr. Madrid failed to inform the
parents of their minor patient of the nature of her illness, or
to explain to them either during the surgery
(if feasible) or at any time after the surgery, the events which
comprised the dramatic deterioration of her condition
immediately after surgery as compared with her pre-surgery
condition. To give a truthful explanation to the parents was a
duty imposed upon them by the canons of their profession.
51 Petitioner should have explained to Catherine's parents
the actual circumstances surrounding Catherine's death, how,
in other words, a simple appendectomy procedure upon an
ambulatory patient could have led to such fatal
consequences.
By way of resume, in the case at bar, we consider that the
chain of circumstances above noted, namely: (1) the failure of
petitioner and Dr. Madrid to appreciate the serious post-
surgery condition of their patient and to monitor her
condition and provide close patient care to her; (2) the
summons of petitioner by Dr. Madrid and the cardiologist
after the patient's heart attack on the very evening that the
surgery was completed; (3) the low level of care and diligence
exhibited by petitioner in failing to correct Dr. Madrid's
prescription of Nubain for post-operative pain; (4) the
extraordinary failure or refusal of petitioner and Dr. Madrid
to inform the parents of Catherine Acosta of her true
condition after surgery, in disregard of the requirements of
the Code of Medical Ethics; and (5) the failure of petitioner
and Dr. Madrid to prove that they had in fact exercised the
necessary and appropriate degree of care and diligence to
prevent the sudden decline in the condition of Catherine
Acosta and her death three (3) days later, leads the Court to
the conclusion, with moral certainty, that petitioner and Dr.
Madrid were guilty of simple negligence resulting in
homicide.
In addition to the main arguments raised by petitioner earlier,
he also raised an ancillary, constitutional claim of denial of
due process. He contends that he was deprived of his right to
have competent representation at trial, and to have his cause
adequately heard, because his counsel of record, Atty. Jose B.
Puerto, was "incompetent" and exhibited "gross negligence"
by manifesting an intent to file a demurrer to the evidence, in
failing to present evidence in his behalf and in omitting to file
a defense memorandum for the benefit of
Judge Yuzon, after the latter took over the case at the end of
trial and before the Judge rendered his decision. 52 Petitioner
submits he is entitled to a new trial. 53
These contentions do not persuade. An examination of the
record indicates that Atty. Puerto represented petitioner
during trial with reasonable competence. Except for the two
hearing sessions when witnesses Domingo Acosta was cross-
examined and recross-examined by Atty. Puerto, petitioner
was present during all the sessions when the other
prosecution witnesses were presented and during which Atty.
Puerto extensively cross-examined them in behalf of
petitioner and Dr. Madrid. This counsel elicited from the two
(2) expert witnesses for the prosecution testimony favorable
to petitioner and which was relied upon by the latter in this
proceeding. 54 The record further indicates that if petitioner
indeed entertained substantial doubts about the capability of
Atty. Puerto, he could have easily terminated the services of
that counsel and retained a new one, or sought from the trial
court the appointment of counsel de oficio, during the ample
opportunity given from the time Atty. Puerto manifested his
intent to file a demurrer on 16 October 1985, to the
submission of the case for decision on 25 June 1986 and
before the promulgation of judgment on 19 September 1986.
55 During all this time, petitioner could have obtained leave
of court to present evidence in his behalf in lieu of a
demurrer, or to submit a memorandum for the defense. After
promulgation of the judgment of conviction, petitioner did
not seek a new trial, but permitted Atty. Puerto to obtain
leave from the trial court to continue on bail during the
pendency of the proceedings before the Court of Appeals. 56
Indeed, petitioner replaced
Atty. Puerto as counsel only upon institution of the present
petition. 57
Petitioner's constitutional objection is plainly an
afterthought.
WHEREFORE, the Decision of the Court of Appeals dated 28
November 1988 is hereby AFFIRMED, subject only to the
modification that the indemnity for the death of Catherine
Acosta is hereby increased to P50,000.00, in line with current
jurisprudence. 58
SO ORDERED.
3) EDGAR O. PEREA, complainant, vs. ATTY. RUBEN
ALMADRO, A.C. No. 5246, March 20, 2003
Before the Court is a complaint for disbarment filed by Edgar
O. Perea against Atty. Ruben Almadro for gross neglect of his
duties as lawyer of herein complainant. Complainant
narrates: Respondent was his counsel before the Regional
Trial Court of Quezon City (Branch 99) where he (complainant
Perea) is being charged with the crime of Frustrated
Homicide. On February 26, 1996, the said RTC issued an order
granting Atty. Almadros motion for leave to file demurrer to
evidence within ten (10) days from said date. All the while,
complainant thought that respondent filed said demurrer and
the case against him dismissed. It was only sometime in 1999
that complainant learned that Atty. Almadro failed to file any
demurrer. The trial court ordered the herein complainant to
present evidence in his defense. Later, a warrant was issued
for his arrest prompting him to surrender to the court and
post bail. Complainant suffered financially and emotionally
due to respondents neglect of his duties. Respondent has not
attended any of his hearings which led complainant to plead
with respondent to withdraw formally as his counsel so he
could hire another lawyer. Because of Atty. Almadros neglect,
complainant is now facing the loss of his freedom and
livelihood.[1] Respondent filed three motions for extension of
time to file comment.[2] On November 13, 2000, the Court
resolved to grant the said motions with a warning that no
further extensions shall be granted.[3] On November 17,
2000, respondent, through the law firm Sua and Alambra,
filed a Manifestation and Motion that respondent has not yet
received a copy of the complaint hence it asked the Court to
order the complainant to furnish them a copy.[4] On
December 20, 2000, respondent through said law firm
submitted an Answer[5] to the complaint, contending that:
two days after the RTC granted the manifestation of defense
to file motion for leave to file demurrer to evidence, he had
finished the draft of the motion and the accompanying
pleading which he stored in a magnetic computer diskette
intended for editing prior to its submission in court; a few
days before the deadline, herein respondent tried to retrieve
the draft from the diskette but said drafts were nowhere to
be found despite efforts to retrieve them; this led him to
believe that the drafts must have been finalized and the
edited versions accordingly filed since it is his practice to
expunge from the diskette drafts that were already finalized
and acted upon; meanwhile, the presiding judge of the RTC
retired, as a consequence, actions on pending cases were
held in abeyance; moreover, communications with the herein
complainant had become rarer; thereafter, towards the end
of 1997 up to the next five months of 1998, respondent was
preoccupied with the congressional elections in Biliran where
he ran and subsequently lost; then he was offered a position
at the Philippine Stock Exchange as head of the Compliance
and Surveillance Division which he accepted; his time and
attention was spent in the performance of his demanding job
at the PSE as well as in the preparation of his testimony
before the Senate Blue Ribbon Committee in connection with
the BW scam; anent the case of herein complainant, he
offered on several occasions to withdraw as one of the
defense counsel of the complainant even to the extent of
offering to return his acceptance fee which the latter
however refused;[6] it is not true that complainant pleaded
with respondent to withdraw as his counsel, the truth being
that it was complainant who refused to let go of respondent
as his counsel; also, while he is a counsel of complainant in
the criminal case before the RTC, he was merely a
collaborating counsel, the lead counsel being Atty. Solomon
Villanueva;[7] finally, he was actually mulling over the
possible procedural steps to take with regard to complainants
case when he received instead, a copy of the present
complaint.[8] On February 28, 2001, the Court issued a
Resolution[9] referring the case to the Integrated Bar of the
Philippines for investigation, report and recommendation. On
June 13, 2001, the IBP through Commissioner Renato G.
Cunanan submitted its report, pertinent portions of which are
quoted verbatim: We are not convinced about the truth of
respondents affirmative allegations. It is clear that he as well
as his counsels are lying. First off, the manifestation with
motion filed by respondents counsels, Sua and Alambra is
incredibly unbelievable. In fact, to be blunt about it,
respondents counsels were clearly lying when they
manifested that the respondent has yet to receive a copy of
the complaint... This is an outrageous lie. The respondents
three (3) motions never once mentioned that he had not
received copy of the complaint. In fact, in his second motion
for further extension of time to file comment, Atty. Almadro
CLEARLY stated in the second paragraph thereof that: He is in
the process of reviewing an initial draft of said comment and
will need said period of ten (10) days to complete and finalize
the draft.
From the afore-quoted portion of Mr. Almadros
manifestation and motion, it is obvious he already had a copy
of the complaint. The manifestation and motion filed on his
behalf by Attys. Sua and Alambra with the Honorable
Supreme Court is a brazen and deliberate misrepresentation
which deserves an uncompromising and vigorous
condemnation. The respondent claims he is in solo practice.
How then can he honestly claim that when he could not find
the draft of his demurrer in the magnetic computer diskette
where he allegedly stored it, he was led to believe that the
drafts must have been finalized and the edited versions
thereof accordingly filed. This allegation is pure
unadulterated garbage. All Mr. Almadro had to do was check
his case folder to see if a demurrer had indeed been filed. As
a solo practitioner like this representation, we can only
surmise that logically, nothing happens or goes down in Mr.
Almadros office without his knowledge and indispensable
participation. If so, how could he have been led to believe
anything? To be sure, he would have read and signed the
demurrer before it was accordingly filed. Being a solo
practitioner no one else could have signed that demurrer.
And does Mr. Almadro expect anyone to believe that after
finishing the draft (in his computer) he would not even bother
to print a hard copy for him to read, edit and correct without
having to do so from his computer monitor?
Incidentally, this representation verified the records of the
complainants criminal case before RTC-Branch 99, Quezon
City. We came upon an Order of the incumbent presiding
judge declaring the respondent herein in contempt of court
for repeatedly failing to submit an explanation as ordered by
the court. The undersigned is convinced that Atty. Ruben L.
Almadros actuations reveal not only serious neglect or
indifference to his duties as a lawyer but more gravely his
open disrespect for the court and the authority it represents.
We wish to put on record our extreme DISPLEASURE at the
behavior of respondent Atty. Ruben L. Almadro. We strongly
recommend that respondent be suspended from the practice
of law for two (2) years and that he be fined Ten Thousand
(PhP10,000.00) Pesos. We likewise recommend strongly that
Attys. Sua and Alambra be ordered to explain why they
should not be held in contempt for deliberately foisting a
deliberate falsehood and misrepresentation on the
Honorable Supreme Court by declaring that their client had
not received a copy of the complaint when such was not true.
By their misrepresentation the afore-named counsels have
exhibited contemptible disrespect not only for the Court but
also the authority it represents.[10]
The report was adopted and approved by the Board of
Governors of the IBP Commission on Bar Discipline with some
modifications thus:
RESOLVED to ADOPT and APPROVE, as it is hereby ADOPTED
and APPROVED, the Report and Recommendation of the
Investigating Commissioner of the above-entitled case, herein
made part of this Resolution/Decision as Annex A; and,
finding the recommendation fully supported by the evidence
on record and the applicable laws and rules, with
modification, and considering that Atty. Ruben L. Almadros
actuations reveal not only serious neglect or indifference to
his duties as a lawyer but more gravely his open disrespect
for the court and the authority it represent. Respondent is
hereby SUSPENDED from the practice of law for one (1) year
and FINED for Ten Thousand (P 10,000.00) Pesos. Likewise,
Atty. Sua and Atty. Alambra are ordered to explain why they
should not be held in contempt for deliberately foisting a
deliberate falsehood and misrepresentation.[11] Respondent
filed a motion for reconsideration on September 11, 2002,
this time in his own behalf, of the above quoted IBP Board
Resolution.[12] This was denied on October 19, 2002.[13] We
are in full accord with the findings and recommendation of
the IBP.
As clearly stated in the Code of Professional Responsibility -
CANON 18 --- A lawyer shall serve his client with competence and
diligence.
Rule 18.03 --- A lawyer shall not neglect a legal matter entrusted to
him and his negligence in connection therewith shall render him
liable.
Rule 18.04 --- A lawyer shall keep the client informed of the status of
his case and shall respond within a reasonable time to the clients
request for information.
It is plain from the records that respondent lawyer failed to
submit a demurrer to evidence for which he had earlier asked
permission from the trial court and which his client, herein
complainant was relying on. More than that, he failed to
contact his client and to apprise the latter about the
developments of the case leaving complainant completely
surprised and without any protection when years later, he
received summons from the trial court asking him to present
evidence in his defense and, not long after, the trial court
issued a warrant for his arrest. In the recent case of Sps.
Galen et al. vs. Atty. Paguirigan[14] the Court is explicit in its
pronouncement that:
An attorney is bound to protect his clients interest to the best
of his ability and with utmost diligence. A failure to file brief
for his client certainly constitutes inexcusable negligence on
his part. The respondent has indeed committed a serious
lapse in the duty owed by him to his client as well as to the
Court not to delay litigation and to aid in the speedy
administration of justice. A lawyer is expected to be familiar
with these rudiments of law and procedure and anyone who
acquires his service is entitled to not just competent service
but also whole-hearted devotion to his clients cause. It is the
duty of a lawyer to serve his client with competence and
diligence and he should exert his best efforts to protect
within the bounds of law the interest of his client. A lawyer
should never neglect a legal matter entrusted to him,
otherwise his negligence in fulfilling his duty will render him
liable for disciplinary action.[15] In other cases, the Court also
held that while a lawyer may decline a person to become his
client for valid reasons, once he agrees to take up the cause
of a client, he begins to owe fidelity to such cause and must
always be mindful of the trust and confidence reposed in him.
As a lawyer, he must serve the client with competence and
diligence, and champion the latters cause with wholehearted
fidelity, care and devotion. Indeed, he owes entire devotion
to the interest of his client, warm zeal in the maintenance
and defense of his clients rights, and the exertion of his
utmost learning and ability to the end that nothing be taken
or withheld from his client, save by the rules of law legally
applied.[16] His client is entitled to the benefit of any and
every remedy and defense that is authorized by the law of
the land and he may expect his lawyer to assert every such
remedy or defense.[17] Respondents negligence is
compounded by his attempt to have this tribunal believe the
story of how his draft, stored in a magnetic diskette,
mysteriously disappeared and how the absence of such file in
his diskette led him to believe that the same was already filed
in court. In his Answer, he even tried to depict himself as a
conscientious lawyer by stating that he was actually mulling
on the procedural steps he would undertake regarding
complainants case when instead he received a copy of this
complaint for disbarment. Such story, as observed by the IBP,
is not only outrageous but is contemptuous as it makes a
mockery of the Court. Again, the Code of Professional
Responsibility is explicit on this matter:
CANON 10--- A lawyer owes candor, fairness and good faith to the
court.
Rule 10.01 ---A lawyer shall not do any falsehood, nor consent to the
doing of any in court; nor shall he mislead or allow the court to be
misled by any artifice.
In Benguet Electric Cooperative, Inc. vs Atty. Flores,[18] the
Court, aside from citing Canon 10 above stated that a lawyer
must be a disciple of truth. Indeed, it cannot be stressed
enough how important it is for a lawyer as an officer of the
court to observe honesty at all times, especially before the
courts.
Respondent would have this Court believe a very
preposterous story of how his draft disappeared, all the time
avoiding the simple fact that he failed to submit the
necessary pleading before the trial court. Such behavior
cannot be countenanced and deserves stern penalty therefor.
The act of the IBP in requiring Atty. Kenton Sua and Atty. Alan
Alambra to show cause why they should not be held in
contempt of court for deliberate falsehood and
misrepresentation in the preparation of the Answer for
herein respondent is appropriate. Records reveal that both
Attys. Sua and Alambra have filed their joint Explanation.[19]
WHEREFORE, finding respondent Atty. Ruben Almadro guilty
of serious neglect of his duties as a lawyer and of open
disrespect for the court and the authority it represents, as
embodied in Canon 18, Rules 18.03 and 18.04 and Canon 10,
Rule 10.01 of the Code of Professional Responsibility, he is
SUSPENDED from the practice of law for one (1) year and
FINED in the amount of Ten Thousand (P10,000.00) Pesos,
with a WARNING that any or similar acts of dishonesty would
be dealt with more severely.
Let a copy of the Resolution be attached to the personal
records of Atty. Alambra in the Office of the Bar Confidant
and copies be furnished the Integrated Bar of the Philippines
(IBP) and all the courts in the country for their information
and guidance.
Let the records of herein case be remanded to the Office of
the Integrated Bar of the Philippines for further action on the
contempt proceedings against Atty. Kenton Sua and Atty.
Alan Alambra.
SO ORDERED.
4) EQUITABLE BANKING CORP v. SPECIAL STEEL
PRODUCTS, INC G.R. No. 175350, June 13, 2012
A crossed check with the notation account payee only can
only be deposited in the named payees account. It is gross
negligence for a bank to ignore this rule solely on the basis of
a third partys oral representations of having a good title
thereto. Before the Court is a Petition for Review on
Certiorari of the October 13, 2006 Decision of the Court of
Appeals (CA) in CA-G.R. CV No. 62425. The dispositive portion
of the assailed Decision reads: WHEREFORE, premises
considered, the May 4, 1998 Decision of the Regional Trial
Court of Pasig City, Branch 168, in Civil Case No. 63561, is
hereby AFFIRMED. SO ORDERED.[1]
Factual Antecedents
Respondent Special Steel Products, Inc. (SSPI) is a private
domestic corporation selling steel products. Its co-respondent
Augusto L. Pardo (Pardo) is SSPIs President and majority
stockholder.[2] International Copra Export Corporation
(Interco) is its regular customer.[3] Jose Isidoro[4] Uy, alias
Jolly Uy (Uy), is an Interco employee, in charge of the
purchasing department, and the son-in-law of its majority
stockholder.[5] Petitioner Equitable Banking Corporation
(Equitable or bank) is a private domestic corporation engaged
in banking[6] and is the depository bank of Interco and of Uy.
In 1991, SSPI sold welding electrodes to Interco, as evidenced
by the following sales invoices:
The due dates for these invoices were March 16, 1991 (for
the first sales invoice) and May 11, 1991 (for the others). The
invoices provided that Interco would pay interest at the rate
of 36% per annum in case of delay. In payment for the above
welding electrodes, Interco issued three checks payable to
the order of SSPI on July 10, 1991,[10] July 16, 1991,[11] and
July 29, 1991.[12] Each check was crossed with the notation
account payee only and was drawn against Equitable. The
records do not identify the signatory for these three checks,
or explain how Uy, Intercos purchasing officer, came into
possession of these checks. The records only disclose that Uy
presented each crossed check to Equitable on the day of its
issuance and claimed that he had good title thereto.[13] He
demanded the deposit of the checks in his personal accounts
in Equitable, Account No. 18841-2 and Account No. 03474-
0.[14] Equitable acceded to Uys demands on the assumption
that Uy, as the son-in-law of Intercos majority
stockholder,[15] was acting pursuant to Intercos orders. The
bank also relied on Uys status as a valued client.[16] Thus,
Equitable accepted the checks for deposit in Uys personal
accounts[17] and stamped ALL PRIOR ENDORSEMENT
AND/OR LACK OF ENDORSEMENT GUARANTEED on their
dorsal portion.[18] Uy promptly withdrew the proceeds of
the checks. In October 1991, SSPI reminded Interco of the
unpaid welding electrodes, amounting to P985,234.98.[19] It
reiterated its demand on January 14, 1992.[20] SSPI explained
its immediate need for payment as it was experiencing some
financial crisis of its own. Interco replied that it had already
issued three checks payable to SSPI and drawn against
Equitable. SSPI denied receipt of these checks.
On August 6, 1992, SSPI requested information from
Equitable regarding the three checks. The bank refused to
give any information invoking the confidentiality of
deposits.[21] The records do not disclose the circumstances
surrounding Intercos and SSPIs eventual discovery of Uys
scheme. Nevertheless, it was determined that Uy, not SSPI,
received the proceeds of the three checks that were payable
to SSPI. Thus, on June 30, 1993 (twenty-three months after
the issuance of the three checks), Interco finally paid the
value of the three checks to SSPI, plus a portion of the
accrued interests. Interco refused to pay the entire accrued
interest of P767,345.64 on the ground that it was not
responsible for the delay. Thus, SSPI was unable to collect
P437,040.35 (at the contracted rate of 36% per annum) in
interest income.[22] SSPI and its president, Pardo, filed a
complaint for damages with application for a writ of
preliminary attachment against Uy and Equitable Bank. The
complaint alleged that the three crossed checks, all payable
to the order of SSPI and with the notation account payee
only, could be deposited and encashed by SSPI only.
However, due to Uys fraudulent representations, and
Equitables indispensable connivance or gross negligence, the
restrictive nature of the checks was ignored and the checks
were deposited in Uys account. Had the defendants not
diverted the three checks in July 1991, the plaintiffs could
have used them in their business and earned money from
them. Thus, the plaintiffs prayed for an award of actual
damages consisting of the unrealized interest income from
the proceeds of the checks for the two-year period that the
defendants withheld the proceeds from them (from July 1991
up to June 1993).[23] In his personal capacity, Pardo claimed
an award of P3 million as moral damages from the
defendants. He allegedly suffered hypertension, anxiety, and
sleepless nights for fear that the government would charge
him for tax evasion or money laundering. He maintained that
defendants actions amounted to money laundering and that
it unfairly implicated his company in the scheme. As for his
fear of tax evasion, Pardo explained that the Bureau of
Internal Revenue might notice a discrepancy between the
financial reports of Interco (which might have reported the
checks as SSPIs income in 1991) and those of SSPI (which
reported the income only in 1993). Since Uy and Equitable
were responsible for Pardos worries, they should compensate
him jointly and severally therefor.[24] SSPI and Pardo also
prayed for exemplary damages and attorneys fees.[25] In
support of their application for preliminary attachment, the
plaintiffs alleged that the defendants are guilty of fraud in
incurring the obligation upon which the action was brought
and that there is no sufficient security for the claim sought to
be enforced in this action.[26] The trial court granted
plaintiffs application.[27] It issued the writ of preliminary
attachment on September 20, 1993,[28] upon the filing of
plaintiffs bond for P500,000.00. The sheriff served and
implemented the writ against the personal properties of both
defendants.[29] Upon Equitables motion and filing of a
counter-bond, however, the trial court eventually discharged
the attachment[30] against it.[31] Equitable then argued for
the dismissal of the complaint for lack of cause of action. It
maintained that interest income is due only when it is
expressly stipulated in writing. Since Equitable and SSPI did
not enter into any contract, Equitable is not liable for
damages, in the form of unobtained interest income, to
SSPI.[32] Moreover, SSPIs acceptance of Intercos payment on
the sales invoices is a waiver or extinction of SSPIs cause of
action based on the three checks.[33] Equitable further
argued that it is not liable to SSPI because it accepted the
three crossed checks in good faith.[34] Equitable averred
that, due to Uys close relations with the drawer of the checks,
the bank had basis to assume that the drawer authorized Uy
to countermand the original order stated in the check (that it
can only be deposited in the named payees account). Since
only Uy is responsible for the fraudulent conversion of the
checks, he should reimburse Equitable for any amounts that
it may be made liable to plaintiffs.[35] The bank counter-
claimed that SSPI is liable to it in damages for the wrongful
and malicious attachment of Equitables personal properties.
The bank maintained that SSPI knew that the allegation of
fraud against the bank is a falsehood. Further, the bank is
financially capable to meet the plaintiffs claim should the
latter receive a favorable judgment. SSPI was aware that the
preliminary attachment against the bank was unnecessary,
and intended only to humiliate or destroy the banks
reputation.[36] Meanwhile, Uy answered that the checks
were negotiated to him; that he is a holder for value of the
checks and that he has a good title thereto.[37] He did not,
however, explain how he obtained the checks, from whom he
obtained his title, and the value for which he received them.
During trial, Uy did not present any evidence but adopted
Equitables evidence as his own.
Ruling of the Regional Trial Court [38]
The RTC clarified that SSPIs cause of action against Uy and
Equitable is for quasi-delict. SSPI is not seeking to enforce
payment on the undelivered checks from the defendants, but
to recover the damage that it sustained from the wrongful
non-delivery of the checks.[39] The crossed checks belonged
solely to the payee named therein, SSPI. Since SSPI did not
authorize anyone to receive payment in its behalf, Uy clearly
had no title to the checks and Equitable had no right to
accept the said checks from Uy. Equitable was negligent in
permitting Uy to deposit the checks in his account without
verifying Uys right to endorse the crossed checks. The court
reiterated that banks have the duty to scrutinize the checks
deposited with it, for a determination of their genuineness
and regularity. The law holds banks to a high standard
because banks hold themselves out to the public as experts in
the field. Thus, the trial court found Equitables explanation
regarding Uys close relations with the drawer
unacceptable.[40] Uys conversion of the checks and
Equitables negligence make them liable to compensate SSPI
for the actual damage it sustained. This damage consists of
the income that SSPI failed to realize during the delay.[41]
The trial court then equated this unrealized income with the
interest income that SSPI failed to collect from Interco. Thus,
it ordered Uy and Equitable to pay, jointly and severally, the
amount of P437,040.35 to SSPI as actual damages.[42]
It also ordered the defendants to pay exemplary damages of
P500,000.00, attorneys fees amounting to P200,000.00, as
well as costs of suit.[43] The trial court likewise found merit in
Pardos claim for moral damages. It found that Pardo suffered
anxiety, sleepless nights, and hypertension in fear that he
would face criminal prosecution. The trial court awarded
Pardo the amount of P3 million in moral damages.[44]
The dispositive portion of the trial courts Decision reads:
WHEREFORE, judgment is hereby rendered in favor of
plaintiffs Special Steel Products, Inc., and Augusto L. Pardo
and against defendants Equitable Banking Corporation [and]
Jose Isidoro Uy, alias Jolly Uy, ordering defendants to jointly
and severally pay plaintiffs the following: Defendant EBCs
counterclaim is hereby DISMISSED for lack of factual and legal
basis.
Likewise, the crossclaim filed by defendant EBC against
defendant Jose Isidoro Uy and the crossclaim filed by
defendant Jose Isidoro Uy against defendant EBC are hereby
DISMISSED for lack of factual and legal basis. The trial court
denied Equitables motion for reconsideration in its Order
dated November 19, 1998.[46] Only Equitable appealed to
the CA,[47] reiterating its defenses below.
Appealed Ruling of the Court of Appeals[48]
The appellate court found no merit in Equitables appeal. It
affirmed the trial courts ruling that SSPI had a cause of action
for quasi-delict against Equitable.[49] The CA noted that the
three checks presented by Uy to Equitable were crossed
checks, and strictly made payable to SSPI only. This means
that the checks could only be deposited in the account of the
named payee.[50] Thus, the CA found that Equitable had the
responsibility of ensuring that the crossed checks are
deposited in SSPIs account only. Equitable violated this duty
when it allowed the deposit of the crossed checks in Uys
account.[51] The CA found factual and legal basis to affirm
the trial courts award of moral damages in favor of Pardo.[52]
It likewise affirmed the award of exemplary damages and
attorneys fees in favor of SSPI.[53]
Issues
1. Whether SSPI has a cause of action against Equitable for
quasi-delict;
2. Whether SSPI can recover, as actual damages, the
stipulated 36% per annum interest from Equitable;
3. Whether speculative fears and imagined scenarios, which
cause sleepless nights, may be the basis for the award of
moral damages; and
4. Whether the attachment of Equitables personal properties
was wrongful.
Our Ruling
SSPIs cause of action
This case involves a complaint for damages based on quasi-
delict. SSPI asserts that it did not receive prompt payment
from Interco in July 1991 because of Uys wilful and illegal
conversion of the checks payable to SSPI, and of Equitables
gross negligence, which facilitated Uys actions. The combined
actions of the defendants deprived SSPI of interest income on
the said moneys from July 1991 until June 1993. Thus, SSPI
claims damages in the form of interest income for the said
period from the parties who wilfully or negligently withheld
its money from it. Equitable argues that SSPI cannot assert a
right against the bank based on the undelivered checks.[54] It
cites provisions from the Negotiable Instruments Law and the
case of Development Bank of Rizal v. Sima Wei[55] to argue
that a payee, who did not receive the check, cannot require
the drawee bank to pay it the sum stated on the checks.
Equitables argument is misplaced and beside the point. SSPIs
cause of action is not based on the three checks. SSPI does
not ask Equitable or Uy to deliver to it the proceeds of the
checks as the rightful payee. SSPI does not assert a right
based on the undelivered checks or for breach of contract.
Instead, it asserts a cause of action based on quasi-delict. A
quasi-delict is an act or omission, there being fault or
negligence, which causes damage to another. Quasi-delicts
exist even without a contractual relation between the parties.
The courts below correctly ruled that SSPI has a cause of
action for quasi-delict against Equitable. The checks that
Interco issued in favor of SSPI were all crossed, made payable
to SSPIs order, and contained the notation account payee
only. This creates a reasonable expectation that the payee
alone would receive the proceeds of the checks and that
diversion of the checks would be averted. This expectation
arises from the accepted banking practice that crossed checks
are intended for deposit in the named payees account only
and no other.[56] At the very least, the nature of crossed
checks should place a bank on notice that it should exercise
more caution or expend more than a cursory inquiry, to
ascertain whether the payee on the check has authorized the
holder to deposit the same in a different account. It is well to
remember that [t]he banking system has become an
indispensable institution in the modern world and plays a
vital role in the economic life of every civilized society.
Whether as mere passive entities for the safe-keeping and
saving of money or as active instruments of business and
commerce, banks have attained an [sic] ubiquitous presence
among the people, who have come to regard them with
respect and even gratitude and, above all, trust and
confidence. In this connection, it is important that banks
should guard against injury attributable to negligence or bad
faith on its part. As repeatedly emphasized, since the banking
business is impressed with public interest, the trust and
confidence of the public in it is of paramount importance.
Consequently, the highest degree of diligence is expected,
and high standards of integrity and performance are required
of it.[57] Equitable did not observe the required degree of
diligence expected of a banking institution under the existing
factual circumstances. The fact that a person, other than the
named payee of the crossed check, was presenting it for
deposit should have put the bank on guard. It should have
verified if the payee (SSPI) authorized the holder (Uy) to
present the same in its behalf, or indorsed it to him.
Considering however, that the named payee does not have
an account with Equitable (hence, the latter has no specimen
signature of SSPI by which to judge the genuineness of its
indorsement to Uy), the bank knowingly assumed the risk of
relying solely on Uys word that he had a good title to the
three checks. Such misplaced reliance on empty words is
tantamount to gross negligence, which is the absence of or
failure to exercise even slight care or diligence, or the entire
absence of care, evincing a thoughtless disregard of
consequences without exerting any effort to avoid them.[58]
Equitable contends that its knowledge that Uy is the son-in-
law of the majority stockholder of the drawer, Interco, made
it safe to assume that the drawer authorized Uy to
countermand the order appearing on the check. In other
words, Equitable theorizes that Interco reconsidered its
original order and decided to give the proceeds of the checks
to Uy.[59] That the bank arrived at this conclusion without
anything on the face of the checks to support it is
demonstrative of its lack of caution. It is troubling that
Equitable proceeded with the transaction based only on its
knowledge that Uy had close relations with Interco. The bank
did not even make inquiries with the drawer, Interco (whom
the bank considered a valued client), to verify Uys
representation. The banking system is placed in peril when
bankers act out of blind faith and empty promises, without
requiring proof of the assertions and without making the
appropriate inquiries. Had it only exercised due diligence,
Equitable could have saved both Interco and the named
payee, SSPI, from the trouble that the banks mislaid trust
wrought for them. Equitables pretension that there is nothing
under the circumstances that rendered Uys title to the checks
questionable is outrageous. These are crossed checks, whose
manner of discharge, in banking practice, is restrictive and
specific. Uys name does not appear anywhere on the crossed
checks. Equitable, not knowing the named payee on the
check, had no way of verifying for itself the alleged
genuineness of the indorsement to Uy. The checks bear
nothing on their face that supports the belief that the drawer
gave the checks to Uy. Uys relationship to Intercos majority
stockholder will not justify disregarding what is clearly
ordered on the checks.
Actual damages
For its role in the conversion of the checks, which deprived
SSPI of the use thereof, Equitable is solidarily liable with Uy to
compensate SSPI for the damages it suffered. Among the
compensable damages are actual damages, which encompass
the value of the loss sustained by the plaintiff, and the profits
that the plaintiff failed to obtain.[60] Interest payments,
which SSPI claims, fall under the second category of actual
damages. SSPI computed its claim for interest payments
based on the interest rate stipulated in its contract with
Interco. It explained that the stipulated interest rate is the
actual interest income it had failed to obtain from Interco due
to the defendants tortious conduct.
The Court finds the application of the stipulated interest rate
erroneous. SSPI did not recover interest payments at the
stipulated rate from Interco because it agreed that the delay
was not Intercos fault, but that of the defendants. If that is
the case, then Interco is not in delay (at least not after
issuance of the checks) and the stipulated interest payments
in their contract did not become operational. If Interco is not
liable to pay for the 36% per annum interest rate, then SSPI
did not lose that income. SSPI cannot lose something that it
was not entitled to in the first place. Thus, SSPIs claim that it
was entitled to interest income at the rate stipulated in its
contract with Interco, as a measure of its actual damage, is
fallacious. More importantly, the provisions of a contract
generally take effect only among the parties, their assigns and
heirs.[61] SSPI cannot invoke the contractual stipulation on
interest payments against Equitable because it is neither a
party to the contract, nor an assignee or an heir to the
contracting parties. Nevertheless, it is clear that defendants
actions deprived SSPI of the present use of its money for a
period of two years. SSPI is therefore entitled to obtain from
the tortfeasors the profits that it failed to obtain from July
1991 to June 1993. SSPI should recover interest at the legal
rate of 6% per annum,[62] this being an award for damages
based on quasi-delict and not for a loan or forbearance of
money.
Moral damages
Both the trial and appellate courts awarded Pardo P3 million
in moral damages. Pardo claimed that he was frightened,
anguished, and seriously anxious that the government would
prosecute him for money laundering and tax evasion because
of defendants actions.[63] In other words, he was worried
about the repercussions that defendants actions would have
on him. Equitable argues that Pardos fears are all imagined
and should not be compensated. The bank points out that
none of Pardos fears panned out.[64]Moral damages are
recoverable only when they are the proximate result of the
defendants wrongful act or omission.[65] Both the trial and
appellate courts found that Pardo indeed suffered as a result
of the diversion of the three checks. It does not matter that
the things he was worried and anxious about did not
eventually materialize. It is rare for a person, who is beset
with mounting problems, to sift through his emotions and
distinguish which fears or anxieties he should or should not
bother with. So long as the injured partys moral sufferings are
the result of the defendants actions, he may recover moral
damages. The Court, however, finds the award of P3 million
excessive. Moral damages are given not to punish the
defendant but only to give the plaintiff the means to assuage
his sufferings with diversions and recreation.[66] We find that
the award of P50,000.00[67] as moral damages is reasonable
under the circumstances.
Equitable to recover amounts from Uy
Equitable then insists on the allowance of their cross-claim
against Uy. The bank argues that it was Uy who was enriched
by the entire scheme and should reimburse Equitable for
whatever amounts the Court might order it to pay in
damages to SSPI.[68] Equitable is correct. 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.[69] In the instant case, the fraudulent scheme
concocted by Uy allowed him to improperly receive the
proceeds of the three crossed checks and enjoy the profits
from these proceeds during the entire time that it was
withheld from SSPI. Equitable, through its gross negligence
and mislaid trust on Uy, became an unwitting instrument in
Uys scheme. Equitables fault renders it solidarily liable with
Uy, insofar as respondents are concerned. Nevertheless, as
between Equitable and Uy, Equitable should be allowed to
recover from Uy whatever amounts Equitable may be made
to pay under the judgment. It is clear that Equitable did not
profit in Uys scheme. Disallowing Equitables cross-claim
against Uy is tantamount to allowing Uy to unjustly enrich
himself at the expense of Equitable. For this reason, the Court
allows Equitables cross-claim against Uy.
Preliminary attachment
Equitable next assails as error the trial courts dismissal of its
counter-claim for wrongful preliminary attachment. It
maintains that, contrary to SSPIs allegation in its application
for the writ, there is no showing whatsoever that Equitable
was guilty of fraud in allowing Uy to deposit the checks. Thus,
the trial court should not have issued the writ of preliminary
attachment in favor of SSPI. The wrongful attachment
compelled Equitable to incur expenses for a counter-bond,
amounting to P30,204.26, and caused it to sustain damage,
amounting to P5 million, to its goodwill and business
credit.[70] SSPI submitted the following affidavit in support of
its application for a writ of preliminary attachment:
I, Augusto L. Pardo, of legal age, under oath hereby depose and
declare:
1. I am one of the plaintiffs in the above-entitled case; the other
plaintiff is our family corporation, Special Steel Products, Inc., of
which I am the president and majority stockholder; I caused the
preparation of the foregoing Complaint, the allegations of which I
have read, and which I hereby affirm to be true and correct out of
my own personal knowledge;
2. The corporation and I have a sufficient cause of action against
defendants Isidoro Uy alias Jolly Uy and Equitable Banking
Corporation, who are guilty of fraud in incurring the obligation upon
which this action is brought, as particularly alleged in the Complaint,
which allegations I hereby adopt and reproduce herein;
3. There is no sufficient security for our claim in this action and that
the amount due us is as much as the sum for which the order is
granted above all legal counterclaims;
4. We are ready and able to put up a bond executed to the
defendants in an amount to be fixed by the Court[,] conditioned on
the payment of all costs[,] which may be adjudged to defendants[,]
and all damages[,] which they may sustain by reason of the
attachment of the court, should [the court] finally adjudge that we
are not entitled thereto.[71]
The complaint (to which the supporting affidavit refers) cites
the following factual circumstances to justify SSPIs
application: 6. x x x Yet, notwithstanding the fact that SPECIAL
STEEL did not open an account with EQUITABLE BANK as
already alleged, thru its connivance with defendant UY in his
fraudulent scheme to defraud SPECIAL STEEL, or at least thru
its gross negligence EQUITABLE BANK consented to or
allowed the opening of Account No. 18841-2 at its head office
and Account No. 03474-0 at its Ermita Branch in the name of
SPECIAL STEEL without the latters knowledge, let alone
authority or consent, but obviously on the bases of spurious
or falsified documents submitted by UY or under his
authority, which documents EQUITABLE BANK did not bother
to verify or check their authenticity with SPECIAL STEEL.[72]
9. On August 6, 1992, plaintiffs, thru counsel, wrote
EQUITABLE BANK about the fraudulent transactions involving
the aforesaid checks, which could not have been perpetrated
without its indispensable participation and cooperation, or
gross negligence, and therein solicited its cooperation in
securing information as to the anomalous and irregular
opening of the false accounts maintained in SPECIAL STEELs
name, but EQUITABLE BANK malevolently shirking from its
responsibility to prevent the further perpetration of fraud,
conveniently, albeit unjustifiably, invoked the confidentiality
of the deposits and refused to give any information, and
accordingly denied SPECIAL STEELs valid request, thereby
knowingly shielding the identity of the ma[le]factors involved
[in] the unlawful and fraudulent transactions.[73]
The above affidavit and the allegations of the complaint are
bereft of specific and definite allegations of fraud against
Equitable that would justify the attachment of its properties.
In fact, SSPI admits its uncertainty whether Equitables
participation in the transactions involved fraud or was a
result of its negligence. Despite such uncertainty with respect
to Equitables participation, SSPI applied for and obtained a
preliminary attachment of Equitables properties on the
ground of fraud. We believe that such preliminary
attachment was wrongful. [A] writ of preliminary attachment
is too harsh a provisional remedy to be issued based on mere
abstractions of fraud. Rather, the rules require that for the
writ to issue, there must be a recitation of clear and concrete
factual circumstances manifesting that the debtor practiced
fraud upon the creditor at the time of the execution of their
agreement in that said debtor had a preconceived plan or
intention not to pay the creditor.[74] No proof was adduced
tending to show that Equitable had a preconceived plan not
to pay SSPI or had knowingly participated in Uys scheme. That
the plaintiffs eventually obtained a judgment in their favor
does not detract from the wrongfulness of the preliminary
attachment. While the evidence warrants [a] judgment in
favor of [the] applicant, the proofs may nevertheless also
establish that said applicants proffered ground for
attachment was inexistent or specious, and hence, the writ
should not have issued at all x x x.[75] For such wrongful
preliminary attachment, plaintiffs may be held liable for
damages. However, Equitable is entitled only to such
damages as its evidence would allow,[76] for the
wrongfulness of an attachment does not automatically
warrant the award of damages. The debtor still has the
burden of proving the nature and extent of the injury that it
suffered by reason of the wrongful attachment.[77] The Court
has gone over the records and found that Equitable has duly
proved its claim for, and is entitled to recover, actual
damages. In order to lift the wrongful attachment of
Equitables properties, the bank was compelled to pay the
total amount of P30,204.26 in premiums for a counter-
bond.[78] However, Equitable failed to prove that it sustained
damage to its goodwill and business credit in consequence of
the alleged wrongful attachment. There was no proof of
Equitables contention that respondents actions caused it
public embarrassment and a bank run.
WHEREFORE, premises considered, the Petition is PARTIALLY
GRANTED. The assailed October 13, 2006 Decision of the
Court of Appeals in CA-G.R. CV No. 62425 is MODIFIED by: 1.
REDUCING the award of actual damages to respondents to
the rate of 6% per annum of the value of the three checks
from July 1991 to June 1993 or a period of twenty-three
months; 2. REDUCING the award of moral damages in favor
of Augusto L. Pardo from P3,000,000.00 to P 50,000.00; and
3. REVERSING the dismissal of Equitable Banking Corporations
cross-claim against Jose Isidoro Uy, alias Jolly Uy. Jolly Uy is
hereby ORDERED to REIMBURSE Equitable Banking
Corporation the amounts that the latter will pay to
respondents. Additionally, the Court hereby REVERSES the
dismissal of Equitable Banking Corporations counterclaim for
damages against Special Steel Products, Inc. This Court
ORDERS Special Steel Products, Inc. to PAY Equitable Banking
Corporation actual damages in the total amount of
P30,204.36, for the wrongful preliminary attachment of its
properties.
The rest of the assailed Decision is AFFIRMED.
SO ORDERED.
5) PHILIPPINE NATIONAL BANK, vs. F.F. CRUZ AND CO.,
INC., G.R. No. 173259, July 25, 2011
As between a bank and its depositor, where the banks
negligence is the proximate cause of the loss and the
depositor is guilty of contributory negligence, the greater
proportion of the loss shall be borne by the bank. This
Petition for Review on Certiorari seeks to reverse and set
aside the Court of Appeals January 31, 2006 Decision[1] in
CA-G.R. CV No. 81349, which modified the January 30, 2004
Decision[2] of the Regional Trial Court of Manila City, Branch
46 in Civil Case No. 97-84010, and the June 26, 2006
Resolution[3] denying petitioners motion for reconsideration.
Factual Antecedents
The antecedents are aptly summarized by the appellate
court:
In its complaint, it is alleged that [respondent F.F. Cruz & Co.,
Inc.] (hereinafter FFCCI) opened savings/current or so-called
combo account No. 0219-830-146 and dollar savings account
No. 0219-0502-458-6 with [petitioner Philippine National
Bank] (hereinafter PNB) at its Timog Avenue Branch. Its
President Felipe Cruz (or Felipe) and Secretary-Treasurer
Angelita A. Cruz (or Angelita) were the named signatories for
the said accounts. The said signatories on separate but coeval
dates left for and returned from the Unites States of America,
Felipe on March 18, 1995 until June 10, 1995 while Angelita
followed him on March 29, 1995 and returned ahead on May
9, 1995. While they were thus out of the country, applications
for cashiers and managers [checks] bearing Felipes
[signature] were presented to and both approved by the PNB.
The first was on March 27, 1995 for P9,950,000.00 payable to
a certain Gene B. Sangalang and the other one was on April
24, 1995 for P3,260,500.31 payable to one Paul Bautista. The
amounts of these checks were then debited by the PNB
against the combo account of [FFCCI]. When Angelita
returned to the country, she had occasion to examine the
PNB statements of account of [FFCCI] for the months of
February to August 1995 and she noticed the deductions of
P9,950,000.00 and P3,260,500.31. Claiming that these were
unauthorized and fraudulently made, [FFCCI] requested PNB
to credit back and restore to its account the value of the
checks. PNB refused, and thus constrained [FFCCI] filed the
instant suit for damages against the PNB and its own
accountant Aurea Caparas (or Caparas). In its traverse, PNB
averred lack of cause of action. It alleged that it exercised due
diligence in handling the account of [FFCCI]. The applications
for managers check have passed through the standard bank
procedures and it was only after finding no infirmity that
these were given due course. In fact, it was no less than
Caparas, the accountant of [FFCCI], who confirmed the
regularity of the transaction. The delay of [FFCCI] in picking
up and going over the bank statements was the proximate
cause of its self-proclaimed injury. Had [FFCCI] been
conscientious in this regard, the alleged chicanery would have
been detected early on and Caparas effectively prevented
from absconding with its millions. It prayed for the dismissal
of the complaint.[4]
Regional Trial Courts Ruling
The trial court ruled that F.F. Cruz and Company, Inc. ( FFCCI)
was guilty of negligence in clothing Aurea Caparas (Caparas)
with authority to make decisions on and dispositions of its
account which paved the way for the fraudulent transactions
perpetrated by Caparas; that, in practice, FFCCI waived the
two-signature requirement in transactions involving the
subject combo account so much so that Philippine National
Bank (PNB) could not be faulted for honoring the applications
for managers check even if only the signature of Felipe Cruz
appeared thereon; and that FFCCI was negligent in not
immediately informing PNB of the fraud. On the other hand,
the trial court found that PNB was, likewise, negligent in not
calling or personally verifying from the authorized signatories
the legitimacy of the subject withdrawals considering that
they were in huge amounts. For this reason, PNB had the last
clear chance to prevent the unauthorized debits from FFCCIs
combo account. Thus, PNB should bear the whole loss
WHEREFORE, judgment is hereby rendered ordering
defendant [PNB] to pay plaintiff [FFCCI] P13,210,500.31
representing the amounts debited against plaintiffs account,
with interest at the legal rate computed from the filing of the
complaint plus costs of suit.
Court of Appeals Ruling
On January 31, 2006, the CA rendered the assailed Decision
affirming with modification the Decision of the trial court, viz:
WHEREFORE, the appealed Decision is AFFIRMED with the
MODIFICATION that [PNB] shall pay [FFCCI] only 60% of the
actual damages awarded by the trial court while the
remaining 40% shall be borne by [FFCCI].
The appellate court ruled that PNB was negligent in not
properly verifying the genuineness of the signatures
appearing on the two applications for managers check as
evidenced by the lack of the signature of the bank verifier
thereon. Had this procedure been followed, the forgery
would have been detected. Nonetheless, the appellate court
found FFCCI guilty of contributory negligence because it
clothed its accountant/bookkeeper Caparas with apparent
authority to transact business with PNB. In addition, FFCCI
failed to timely examine its monthly statement of account
and report the discrepancy to PNB within a reasonable period
of time to prevent or recover the loss. FFCCIs contributory
negligence, thus, mitigated the banks liability. Pursuant to the
rulings in Philippine Bank of Commerce v. Court of Appeals[7]
and The Consolidated Bank & Trust Corporation v. Court of
Appeals,[8] the appellate court allocated the damages on a
60-40 ratio with the bigger share to be borne by PNB. From
this decision, both FFCCI and PNB sought review before this
Court. On August 17, 2006, FFCCI filed its petition for review
on certiorari which was docketed as G.R. No. 173278.[9] On
March 7, 2007, the Court issued a Resolution[10] denying said
petition. On June 13, 2007, the Court issued another
Resolution[11] denying FFCCIs motion for reconsideration. In
denying the aforesaid petition, the Court ruled that FFCCI
essentially raises questions of fact which are, as a rule, not
reviewable under a Rule 45 petition; that FFCCI failed to show
that its case fell within the established exceptions to this rule;
and that FFCCI was guilty of contributory negligence. Thus,
the appellate court correctly mitigated PNBs liability. On July
13, 2006, PNB filed its petition for review on certiorari which
is the subject matter of this case.
Issue
Whether the Court of Appeals seriously erred when it found
PNB guilty of negligence.[12]
Our Ruling
We affirm the ruling of the CA. PNB is guilty of negligence.
Preliminarily, in G.R. No. 173278, we resolved with
finality[13] that FFCCI is guilty of contributory negligence,
thus, making it partly liable for the loss (i.e., as to 40%
thereof) arising from the unauthorized withdrawal of
P13,210,500.31 from its combo account. The case before us
is, thus, limited to PNBs alleged negligence in the subject
transactions which the appellate court found to be the
proximate cause of the loss, thus, making it liable for the
greater part of the loss (i.e., as to 60% thereof) pursuant to
our rulings in Philippine Bank of Commerce v. Court of
Appeals[14] and The Consolidated Bank & Trust Corporation
v. Court of Appeals.[15] PNB contends that it was not
negligent in verifying the genuineness of the signatures
appearing on the subject applications for managers check. It
claims that it followed the standard operating procedure in
the verification process and that four bank officers examined
the signatures and found the same to be similar with those
found in the signature cards of FFCCIs authorized signatories
on file with the bank. PNB raises factual issues which are
generally not proper for review under a Rule 45 petition.
While there are exceptions to this rule, we find none
applicable to the present case. As correctly found by the
appellate court, PNB failed to make the proper verification
because the applications for the managers check do not bear
the signature of the bank verifier. PNB concedes the
absence[16] of the subject signature but argues that the
same was the result of inadvertence. It posits that the
testimonies of Geronimo Gallego (Gallego), then the branch
manager of PNB Timog Branch, and Stella San Diego (San
Diego), then branch cashier, suffice to establish that the
signature verification process was duly followed.
cause of the loss and the depositor is guilty of contributory
negligence, we allocated the damages between the bank and
the depositor on a 60-40 ratio. We apply the same ruling in
this case considering that, as shown above, PNBs negligence
is the proximate cause of the loss while the issue as to FFCCIs
contributory negligence has been settled with finality in G.R.
No. 173278. Thus, the appellate court properly adjudged PNB
to bear the greater part of the loss consistent with these
rulings.
WHEREFORE, the petition is DENIED. The January 31, 2006
Decision and June 26, 2006 Resolution of the Court of
Appeals in CA-G.R. CV No. 81349 are AFFIRMED.
Costs against petitioner.
SO ORDERED.

We are not persuaded.

First, oral testimony is not as reliable as documentary

evidence.[17] Second, PNBs own witness, San Diego, testified
that in the verification process, the principal duty to
determine the genuineness of the signature devolved upon
the account analyst.[18] However, PNB did not present the
account analyst to explain his or her failure to sign the box for
signature and balance verification of the subject applications
for managers check, thus, casting doubt as to whether he or
she did indeed verify the signatures thereon. Third, we
cannot fault the appellate court for not giving weight to the
testimonies of Gallego and San Diego considering that the
latter are naturally interested in exculpating themselves from
any liability arising from the failure to detect the forgeries in
the subject transactions. Fourth, Gallego admitted that PNBs
employees received training on detecting forgeries from the
National Bureau of Investigation.[19] However, Emmanuel
Guzman, then NBI senior document examiner, testified, as an
expert witness, that the forged signatures in the subject
applications for managers check contained noticeable and
significant differences from the genuine signatures of FFCCIs
authorized signatories and that the forgeries should have
been detected or observed by a trained signature verifier of
any bank.[20]

Given the foregoing, we find no reversible error in the

findings of the appellate court that PNB was negligent in the
handling of FFCCIs combo account, specifically, with respect
to PNBs failure to detect the forgeries in the subject
applications for managers check which could have prevented
the loss. As we have often ruled, the banking business is
impressed with public trust.[21] A higher degree of diligence
is imposed on banks relative to the handling of their affairs
than that of an ordinary business enterprise.[22] Thus, the
degree of responsibility, care and trustworthiness expected
of their officials and employees is far greater than those of
ordinary officers and employees in other enterprises.[23] In
the case at bar, PNB failed to meet the high standard of
diligence required by the circumstances to prevent the fraud.
In Philippine Bank of Commerce v. Court of Appeals[24] and
The Consolidated Bank & Trust Corporation v. Court of
Appeals,[25] where the banks negligence is the proximate
II. Article 2179
1) LA MALLORCA vs. VALENTIN DE JESUS, G.R. No. L-
21486, May 14, 1966
La Mallorca and Pampanga Bus Company, Inc., commonly
known as La Mallorca-Pambusco, filed this appeal by
certiorari from the decision of the Court of Appeals which
affirmed that rendered by the Court of First Instance of
Bulacan in its civil case No. 2100, entitled "Valentin de Jesus
and Manolo Tolentino vs. La Mallorca-Pambusco." The court
a quo sentenced the defendant, now petitioner, "to pay to
plaintiffs the amount of P2,132.50 for actual damages;
P14,400.00 as compensatory damages; P10,000.00 to each
plaintiff by way of moral damages; and P3,000.00 as counsel
fees."
Two errors are attributed to the appellate Court: (1) "in
sustaining the decision (of the court a quo) holding that the
petitioners were liable for the accident which was caused by
a blow-out of one of the tires of the bus and in not
considering the same as caso fortuito," and (2) in holding
petitioners liable for moral damages.
The suit arose by reason of the death of Lolita de Jesus, 20-
year old daughter of Valentin de Jesus and wife of Manolo
Tolentino, in a head-on collision between petitioner's bus, on
which she was a passenger, and a freight truck traveling in
the opposite direction, in a barrio in Marilao Bulacan, in the
morning of October 8, 1959. The immediate cause of the
collision was the fact that the driver of the bus lost control of
the wheel when its left front tire suddenly exploded.
Petitioner maintains that a tire blow-out is a fortuitous event
and gives rise to no liability for negligence, citing the rulings
of the Court of Appeals in Rodriguez vs. Red Line
Transportation Co., CA-G.R. No. 8136, December 29, 1954,
and People vs. Palapad, CA-G.R. No. 18480, June 27, 1958.
These rulings, however, not only are not not binding on this
Court but were based on considerations quite different from
those that obtain in the at bar. The appellate Court there
made no findings of any specified acts of negligence on the
part of the defendants and confined itself to the question of
whether or not a tire blow-out, by itself alone and without a
showing as to the causative factors, would generate liability.
In the present case, the cause of the blow-out was known.
The inner tube of the left front tire, according to petitioner's
own evidence and as found by the Court of Appeals "was
pressed between the inner circle of the left wheel and the rim
which had slipped out of the wheel." This was, said Court
correctly held, a mechanical defect of the conveyance or a
fault in its equipment which was easily discoverable if the bus
had been subjected to a more thorough, or rigid check-up
before it took to the road that morning.
Then again both the trial court and the Court of Appeals
found as a fact that the bus was running quite fast
immediately before the accident. Considering that the tire
which exploded was not new — petitioner describes it as
"hindi masyadong kalbo," or not so very worn out — the plea
of caso fortuito cannot be entertained.1äwphï1.ñët
The second issue raised by petitioner is already a settled one.
In this jurisdiction moral damages are recoverable by reason
of the death of a passenger caused by the breach of contract
of a common carrier, as provided in Article 1764, in relation
to Article 2206, of the Civil Code. These articles have been
applied by this Court in a number of cases, among them
Necesito, etc. vs. Paras, et al., L-10605-06, June 30, 1958;
Mercado vs. Lira, L-13328-29, Sept. 29, 1961; Villa-Rey Transit
vs. Bello, L-18957, April 23, 1963.
Wherefore, the judgment appealed from is affirmed, with
costs against petitioners.
2) MERCURY DRUG CORPORATION v. SEBASTIAN M.
BAKING, G.R. No. 156037, 25 May 2007
For our resolution is the instant Petition for Review on
Certiorari1 assailing the Decision2 dated May 30, 2002 and
Resolution dated November 5, 2002 of the Court of Appeals
in CA-G.R. CV No. 57435, entitled "Sebastian M. Baking,
plaintiff-appellee, versus Mercury Drug Co. Inc., defendant-
appellant."
The facts are:
On November 25, 1993, Sebastian M. Baking, respondent,
went to the clinic of Dr. Cesar Sy for a medical check-up. On
the following day, after undergoing an ECG, blood, and
hematology examinations and urinalysis, Dr. Sy found that
respondent’s blood sugar and triglyceride were above normal
levels. Dr. Sy then gave respondent two medical prescriptions
– Diamicron for his blood sugar and Benalize tablets for his
triglyceride. Respondent then proceeded to petitioner
Mercury Drug Corporation (Alabang Branch) to buy the
prescribed medicines. However, the saleslady misread the
prescription for Diamicron as a prescription for Dormicum.
Thus, what was sold to respondent was Dormicum, a potent
sleeping tablet. Unaware that what was given to him was the
wrong medicine, respondent took one pill of Dormicum on
three consecutive days –November 6, 1993 at 9:00 p.m.,
November 7 at 6:00 a.m., and November 8 at 7:30 a.m. On
November 8 or on the third day he took the medicine,
respondent figured in a vehicular accident. The car he was
driving collided with the car of one Josie Peralta. Respondent
fell asleep while driving. He could not remember anything
about the collision nor felt its impact. Suspecting that the
tablet he took may have a bearing on his physical and mental
state at the time of the collision, respondent returned to Dr.
Sy’s clinic. Upon being shown the medicine, Dr. Sy was
shocked to find that what was sold to respondent was
Dormicum, instead of the prescribed Diamicron. Thus, on
April 14, 1994, respondent filed with the Regional Trial Court
(RTC), Branch 80 of Quezon City a complaint for damages
against petitioner, docketed as Civil Case No. Q-94-20193.
After hearing, the trial court rendered its Decision dated
March 18, 1997 in favor of respondent, thus: WHEREFORE,
premises considered, by preponderance of evidence, the
Court hereby renders judgment in favor of the plaintiff and
against the defendant ordering the latter to pay mitigated
damages as follows: 1. ₱250,000.00 as moral damages; 2.
₱20,000.00 as attorney’s fees and litigation expenses; 3. plus
½% of the cost of the suit. SO ORDERED.
On appeal, the Court of Appeals, in its Decision, affirmed in
toto the RTC judgment. Petitioner filed a motion for
reconsideration but it was denied in a Resolution dated
November 5, 2002. Hence, this petition. Petitioner contends
that the Decision of the Court of Appeals is not in accord with
law or prevailing jurisprudence. Respondent, on the other
hand, maintains that the petition lacks merit and, therefore,
should be denied.
The issues for our resolution are:
1. Whether petitioner was negligent, and if so, whether such
negligence was the proximate cause of respondent’s
accident; and
2. Whether the award of moral damages, attorney’s fees,
litigation expenses, and cost of the suit is justified.
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.
To sustain a claim based on the above provision, the
following requisites must concur: (a) damage suffered by the
plaintiff; (b) fault or negligence of the defendant; and, (c)
connection of cause and effect between the fault or
negligence of the defendant and the damage incurred by the
plaintiff.3
There is no dispute that respondent suffered damages. It is
generally recognized that the drugstore business is imbued
with public interest. The health and safety of the people will
be put into jeopardy if drugstore employees will not exercise
the highest degree of care and diligence in selling medicines.
Inasmuch as the matter of negligence is a question of fact, we
defer to the findings of the trial court affirmed by the Court
of Appeals. Obviously, petitioner’s employee was grossly
negligent in selling to respondent Dormicum, instead of the
prescribed Diamicron. Considering that a fatal mistake could
be a matter of life and death for a buying patient, the said
employee should have been very cautious in dispensing
medicines. She should have verified whether the medicine
she gave respondent was indeed the one prescribed by his
physician. The care required must be commensurate with the
danger involved, and the skill employed must correspond
with the superior knowledge of the business which the law
demands. Petitioner contends that the proximate cause of
the accident was respondent’s negligence in driving his car.
We disagree.
Proximate cause is defined as any cause that produces injury
in a natural and continuous sequence, unbroken by any
efficient intervening cause, such that the result would not
have occurred otherwise. Proximate cause is determined
from the facts of each case, upon a combined consideration
of logic, common sense, policy, and precedent.5
Here, the vehicular accident could not have occurred had
petitioner’s employee been careful in reading Dr. Sy’s
prescription. Without the potent effects of Dormicum, a
sleeping tablet, it was unlikely that respondent would fall
asleep while driving his car, resulting in a collision.
Complementing Article 2176 is Article 2180 of the same Code
which states:
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.
The owners and managers of an establishment or enterprise
are likewise responsible for damages caused by their
employees in the service of the branches in which the latter
are employed or on the occasion of their functions.
Employers shall be liable for the damages caused by their
employees and household helpers acting within the scope of
their assigned tasks, even though the former are not engaged
in any business or industry. The responsibility treated of in
this article shall cease when the persons herein mentioned
prove that they observed the diligence of a good father of a
family to prevent damage. It is thus clear that the employer
of a negligent employee is liable for the damages caused by
the latter. When an injury is caused by the negligence of an
employee, there instantly arises a presumption of the law
that there has been negligence on the part of the employer,
either in the selection of his employee or in the supervision
over him, after such selection. The presumption, however,
may be rebutted by a clear showing on the part of the
employer that he has exercised the care and diligence of a
good father of a family in the selection and supervision of his
employee.6 Here, petitioner's failure to prove that it
exercised the due diligence of a good father of a family in the
selection and supervision of its employee will make it
solidarily liable for damages caused by the latter.
As regards the award of moral damages, we hold the same to
be in order. Moral damages may be awarded whenever the
defendant’s wrongful act or omission is the proximate cause
of the plaintiff’s physical suffering, mental anguish, fright,
serious anxiety, besmirched reputation, wounded feelings,
moral shock, social humiliation, and similar injury in the cases
specified or analogous to those provided in Article 2219 of
the Civil Code.7
Respondent has adequately established the factual basis for
the award of moral damages when he testified that he
suffered mental anguish and anxiety as a result of the
accident caused by the negligence of petitioner’s employee.
There is no hard-and-fast rule in determining what would be
a fair and reasonable amount of moral damages, since each
case must be governed by its own peculiar facts. However, it
must be commensurate to the loss or injury suffered.8 Taking
into consideration the attending circumstances here, we are
convinced that the amount awarded by the trial court is
exorbitant. Thus, we reduce the amount of moral damages
from ₱250,000.00 to ₱50,000.00 only.
In addition, we also deem it necessary to award exemplary
damages. Article 2229 allows the grant of exemplary damages
by way of example or correction for the public good. As
mentioned earlier, the drugstore business is affected with
public interest. Petitioner should have exerted utmost
diligence in the selection and supervision of its employees.
On the part of the employee concerned, she should have
been extremely cautious in dispensing pharmaceutical
products. Due to the sensitive nature of its business,
petitioner must at all times maintain a high level of
meticulousness. Therefore, an award of exemplary damages
in the amount of ₱25,000.00 is in order.1awphi1.nét
On the matter of attorney’s fees and expenses of litigation, it
is settled that the reasons or grounds for the award thereof
must be set forth in the decision of the court.9 Since the trial
court’s decision did not give the basis of the award, the same
must be deleted. In Vibram Manufacturing Corporation v.
Manila Electric Company,10 we held: Likewise, the award for
attorney’s fees and litigation expenses should be deleted.
Well-enshrined is that "an award for attorney’s fees must be
stated in the text of the court’s decision and not in the
dispositive portion only" (Consolidated Bank and Trust
Corporation (Solidbank) v. Court of Appeals, 246 SCRA 193
[1995] and Keng Hua Paper Products, Inc. v. Court of Appeals,
286 SCRA 257 [1998]). This is also true with the litigation
expenses where the body of the decision discussed nothing
for its basis.
WHEREFORE, we DENY the petition. The challenged Decision
and Resolution of the Court of Appeals in CA-G.R. CV No.
57435 are AFFIRMED with modification in the sense that (a)
the award of moral damages to respondent is reduced from
₱250,000.00 to ₱50,000.00; (b) petitioner is likewise ordered
to pay said respondent exemplary damages in the amount of
₱25,000.00; and (c) the award of attorney’s fees and litigation
expenses is deleted. Costs against petitioner. SO ORDERED.
3) SALUD VILLANUEVA VDA. DE BATACLAN and the
minors NORMA LUZVIMINDA, ELENITA, OSCAR and ALFREDO
BATACLAN, represented by their Natural guardian, SALUD
VILLANUEVA VDA. DE BATACLAN vs. MARIANO MEDINA, G.R.
No. L-10126, October 22, 1957
Shortly after midnight, on September 13, 1952 bus no. 30 of
the Medina Transportation, operated by its owner defendant
Mariano Medina under a certificate of public convenience,
left the town of Amadeo, Cavite, on its way to Pasay City,
driven by its regular chauffeur, Conrado Saylon. There were
about eighteen passengers, including the driver and
conductor. Among the passengers were Juan Bataclan, seated
beside and to the right of the driver, Felipe Lara, sated to the
right of Bataclan, another passenger apparently from the
Visayan Islands whom the witnesses just called Visaya,
apparently not knowing his name, seated in the left side of
the driver, and a woman named Natalia Villanueva, seated
just behind the four last mentioned. At about 2:00 o'clock
that same morning, while the bus was running within the
jurisdiction of Imus, Cavite, one of the front tires burst and
the vehicle began to zig-zag until it fell into a canal or ditch on
the right side of the road and turned turtle. Some of the
passengers managed to leave the bus the best way they
could, others had to be helped or pulled out, while the three
passengers seated beside the driver, named Bataclan, Lara
and the Visayan and the woman behind them named Natalia
Villanueva, could not get out of the overturned bus. Some of
the passengers, after they had clambered up to the road,
heard groans and moans from inside the bus, particularly,
shouts for help from Bataclan and Lara, who said they could
not get out of the bus. There is nothing in the evidence to
show whether or not the passengers already free from the
wreck, including the driver and the conductor, made any
attempt to pull out or extricate and rescue the four
passengers trapped inside the vehicle, but calls or shouts for
help were made to the houses in the neighborhood. After
half an hour, came about ten men, one of them carrying a
lighted torch made of bamboo with a wick on one end,
evidently fueled with petroleum. These men presumably
approach the overturned bus, and almost immediately, a
fierce fire started, burning and all but consuming the bus,
including the four passengers trapped inside it. It would
appear that as the bus overturned, gasoline began to leak and
escape from the gasoline tank on the side of the chassis,
spreading over and permeating the body of the bus and the
ground under and around it, and that the lighted torch
brought by one of the men who answered the call for help set
it on fire.chanroblesvirtualawlibrary chanrobles virtual law
library
That same day, the charred bodies of the four deemed
passengers inside the bus were removed and duly identified
that of Juan Bataclan. By reason of his death, his widow,
Salud Villanueva, in her name and in behalf of her five minor
children, brought the present suit to recover from Mariano
Medina compensatory, moral, and exemplary damages and
attorney's fees in the total amount of P87,150. After trial, the
Court of First Instance of Cavite awarded P1,000 to the
plaintiffs plus P600 as attorney's fee, plus P100, the value of
the merchandise being carried by Bataclan to Pasay City for
sale and which was lost in the fire. The plaintiffs and the
defendants appealed the decision to the Court of Appeals,
but the latter endorsed the appeal to us because of the value
involved in the claim in the
complaint.chanroblesvirtualawlibrary chanrobles virtual law
library
Our new Civil Code amply provides for the responsibility of
common carrier to its passengers and their goods. For
purposes of reference, we are reproducing the pertinent
codal provisions:
ART. 1733. Common carriers, from the nature of their
business and for reasons of public policy, are bound to
observe extraordinary diligence in the vigilance over the
goods and for the safety of the passengers transported by
them, according to all the circumstances of each
case.chanroblesvirtualawlibrary chanrobles virtual law library
Such extraordinary diligence in the vigilance over the goods is
further expressed in articles 1734, 1735, and 1745, Nos. 5, 6,
and 7, while the extra ordinary diligence for the safety of the
passengers is further set forth in articles 1755 and
1756.chanroblesvirtualawlibrary chanrobles virtual law library
ART. 1755. A common carrier is bound to carry the
passengers safely as far as human care and foresight can
provide, using the utmost diligence of very cautious persons,
with a due regard for all the
circumstances.chanroblesvirtualawlibrary chanrobles virtual
law library
ART. 1756. In case of death of or injuries to passengers,
common carriers are presumed to have been at fault or to
have acted negligently, unless they prove that they observed
extraordinary diligence as prescribed in articles 1733 and
1755chanrobles virtual law library
ART. 1759. Common carriers are liable for the death of or
injuries to passengers through the negligence or willful acts of
the former's employees, although such employees may have
acted beyond the scope of their authority or in violation of
the order of the common carriers.chanroblesvirtualawlibrary
chanrobles virtual law library
This liability of the common carriers does not cease upon
proof that they exercised all the diligence of a good father of
a family in the selection and supervision of their
employees.chanroblesvirtualawlibrary chanrobles virtual law
library
ART. 1763. A common carrier responsible for injuries suffered
by a passenger on account of the willful acts or negligence of
other passengers or of strangers, if the common carrier's
employees through the exercise of the diligence of a good
father of a family could have prevented or stopped the act or
omission.
We agree with the trial court that the case involves a breach
of contract of transportation for hire, the Medina
Transportation having undertaken to carry Bataclan safely to
his destination, Pasay City. We also agree with the trial court
that there was negligence on the part of the defendant,
through his agent, the driver Saylon. There is evidence to
show that at the time of the blow out, the bus was speeding,
as testified to by one of the passengers, and as shown by the
fact that according to the testimony of the witnesses,
including that of the defense, from the point where one of
the front tires burst up to the canal where the bus overturned
after zig-zaging, there was a distance of about 150 meters.
The chauffeur, after the blow-out, must have applied the
brakes in order to stop the bus, but because of the velocity at
which the bus must have been running, its momentum
carried it over a distance of 150 meters before it fell into the
canal and turned turtle.chanroblesvirtualawlibrary
chanrobles virtual law library
There is no question that under the circumstances, the
defendant carrier is liable. The only question is to what
degree. The trial court was of the opinion that the proximate
cause of the death of Bataclan was not the overturning of the
bus, but rather, the fire that burned the bus, including himself
and his co-passengers who were unable to leave it; that at
the time the fire started, Bataclan, though he must have
suffered physical injuries, perhaps serious, was still alive, and
so damages were awarded, not for his death, but for the
physical injuries suffered by him. We disagree. A satisfactory
definition of proximate cause is found in Volume 38, pages
695-696 of American jurisprudence, cited by plaintiffs-
appellants in their brief. It is as follows:
. . . 'that cause, which, in natural and continuous sequence,
unbroken by any efficient intervening cause, produces the
injury, and without which the result would not have
occurred.' And more comprehensively, 'the proximate legal
cause is that acting first and producing the injury, either
immediately or by setting other events in motion, all
constituting a natural and continuous chain of events, each
having a close causal connection with its immediate
predecessor, the final event in the chain immediately
effecting the injury as a natural and probable result of the
cause which first acted, under such circumstances that the
person responsible for the first event should, as an ordinary
prudent and intelligent person, have reasonable ground to
expect at the moment of his act or default that an injury to
some person might probably result therefrom.
It may be that ordinarily, when a passenger bus overturns,
and pins down a passenger, merely causing him physical
injuries, if through some event, unexpected and
extraordinary, the overturned bus is set on fire, say, by
lightning, or if some highwaymen after looting the vehicle
sets it on fire, and the passenger is burned to death, one
might still contend that the proximate cause of his death was
the fire and not the overturning of the vehicle. But in the
present case under the circumstances obtaining in the same,
we do not hesitate to hold that the proximate cause was the
overturning of the bus, this for the reason that when the
vehicle turned not only on its side but completely on its back,
the leaking of the gasoline from the tank was not unnatural
or unexpected; that the coming of the men with a lighted
torch was in response to the call for help, made not only by
the passengers, but most probably, by the driver and the
conductor themselves, and that because it was dark (about
2:30 in the morning), the rescuers had to carry a light with
them, and coming as they did from a rural area where
lanterns and flashlights were not available; and what was
more natural than that said rescuers should innocently
approach the vehicle to extend the aid and effect the rescue
requested from them. In other words, the coming of the men
with a torch was to be expected and was a natural sequence
of the overturning of the bus, the trapping of some of its
passengers and the call for outside help. What is more, the
burning of the bus can also in part be attributed to the
negligence of the carrier, through is driver and its conductor.
According to the witness, the driver and the conductor were
on the road walking back and forth. They, or at least, the
driver should and must have known that in the position in
which the overturned bus was, gasoline could and must have
leaked from the gasoline tank and soaked the area in and
around the bus, this aside from the fact that gasoline when
spilled, specially over a large area, can be smelt and directed
even from a distance, and yet neither the driver nor the
conductor would appear to have cautioned or taken steps to
warn the rescuers not to bring the lighted torch too near the
bus. Said negligence on the part of the agents of the carrier
come under the codal provisions above-reproduced,
particularly, Articles 1733, 1759 and
1763.chanroblesvirtualawlibrary chanrobles virtual law library
As regard the damages to which plaintiffs are entitled,
considering the earning capacity of the deceased, as well as
the other elements entering into a damage award, we are
satisfied that the amount of SIX THOUSAND (P6,000) PESOS
would constitute satisfactory compensation, this to include
compensatory, moral, and other damages. We also believe
that plaintiffs are entitled to attorney's fees, and assessing
the legal services rendered by plaintiffs' attorneys not only in
the trial court, but also in the course of the appeal, and not
losing sight of the able briefs prepared by them, the
attorney's fees may well be fixed at EIGHT HUNDRED (P800)
PESOS for the loss of merchandise carried by the deceased in
the bus, is adequate and will not be disturbed.
There is one phase of this case which disturbs if it does not
shock us. According to the evidence, one of the passengers
who, because of the injuries suffered by her, was
hospitalized, and while in the hospital, she was visited by the
defendant Mariano Medina, and in the course of his visit, she
overheard him speaking to one of his bus inspectors, telling
said inspector to have the tires of the bus changed
immediately because they were already old, and that as a
matter of fact, he had been telling the driver to change the
said tires, but that the driver did not follow his instructions. If
this be true, it goes to prove that the driver had not been
diligent and had not taken the necessary precautions to
insure the safety of his passengers. Had he changed the tires,
specially those in front, with new ones, as he had been
instructed to do, probably, despite his speeding, as we have
already stated, the blow out would not have occurred. All in
all, there is reason to believe that the driver operated and
drove his vehicle negligently, resulting in the death of four of
his passengers, physical injuries to others, and the complete
loss and destruction of their goods, and yet the criminal case
against him, on motion of the fiscal and with his consent, was
provisionally dismissed, because according to the fiscal, the
witnesses on whose testimony he was banking to support the
complaint, either failed or appear or were reluctant to testify.
But the record of the case before us shows the several
witnesses, passengers, in that bus, willingly and
unhesitatingly testified in court to the effect of the said driver
was negligent. In the public interest the prosecution of said
erring driver should be pursued, this, not only as a matter of
justice, but for the promotion of the safety of passengers on
public utility buses. Let a copy of this decision be furnished
the Department of Justice and the Provincial Fiscal of Cavite.
In view of the foregoing, with the modification that the
damages awarded by the trial court are increased from ONE
THOUSAND (P1,000) PESOS TO SIX THOUSAND (P6,000)
PESOS, and from SIX HUNDRED PESOS TO EIGHT HUNDRED
(P800) PESOS, for the death of Bataclan and for the attorney's
fees, respectively, the decision appealed is from hereby
affirmed, with costs.
4) PROSPERO SABIDO and ASER LAGUNDA vs. CARLOS
CUSTODIO, BELEN MAKABUHAY CUSTODIO and THE
HONORABLE COURT OF APPEALS, G.R. No. L-21512, August
31, 1966
Prospero Sabido and Aser Lagunda seek the review by
certiorari of a decision of the Court of Appeals, affirming that
of the Court of First Instance of Laguna, sentencing the
Laguna-Tayabas Bus Co., Nicasio Mudales, and herein
petitioners, Prospero Sabido and Aser Lagunda, to jointly and
severally indemnify Belen Makabuhay Custodio and her son,
Agripino Custodio, Jr., in the sum of P6,000 and to pay the
costs of the suit. The facts are set forth in the decision of the
Court of Appeals from which we quote: "Upon a careful study
and judicious examining of the evidence on record, we are
inclined to concur in the findings made by the trial court.
Here is how the Court a quo analyzed the facts of this case:
'In Barrio Halang, Municipality of Lumban, Province of
Laguna, two trucks, one driven by Nicasio Mudales and
belonging to Laguna Tayabas Bus Company, and the other
driven by Aser Lagunda and owned by Prospero Sabido, going
in opposite directions met each other in a road curve.
Agripino Custodio, a passenger of LTB bus, who was hanging
on the left side as truck was full of passengers was
sideswiped by the truck driven by Aser Lagunda. As a result,
Agripino Custodio was injured and died (Exhibit A). 'It appears
clear from the evidence that Agripino Custodio was hanging
on the left side of the LTB Bus. Otherwise, were he sitting
inside the truck, he could not have been struck by the six by
six truck driven by Aser Lagunda. This fact alone, of allowing
Agripino Custodio to hang on the side of the truck, makes the
defendant Laguna Tayabas Bus Company liable for damages.
For certainly its employees, who are the driver and conductor
were negligent. They should not have allowed Agripino
Custodio to ride their truck in that manner. 'To avoid any
liability, Aser Lagunda and Prospero Sabido throw all the
blame on Nicasio Mudales. From the testimony, however, of
Belen Makabuhay, Agripino Custodio's widow, we can deduce
that Aser Lagunda was equally negligent as Nicasio Mudales.
Belen testified that the 6 x 6 truck was running fast when it
met the LTB Bus. And Aser Lagunda had time and opportunity
to avoid the mishap if he had been sufficiently careful and
cautious because the two trucks never collided with each
other. By simply swerving to the right side of the road, the 6 x
6 truck could have avoided hitting Agripino Custodio. It is
incredible that the LTB was running on the middle of the road
when passing a curve. He knows it is dangerous to do so. We
are rather of the belief that both trucks did not keep close to
the right side of the road so they sideswiped each other and
thus Agripino Custodio was injured and died. In other words,
both drivers must have driven their trucks not in the proper
line and are, therefore, both reckless and negligent'.
"We might state by way of additional observations that the
sideswiping of the deceased and his two fellow passengers
took place on broad daylight at about 9:30 in the morning of
June 9, 1955 when the LTB bus with full load of passengers
was negotiating a sharp curve of a bumpy and sliding
downward a slope, whereas the six by six truck was climbing
up with no cargoes or passengers on board but for three
helpers, owner Sabido and driver Lagunda (tsn. 308-309,
Mendoza). Under the above-stated condition, there exists
strong persuasion to accept what Belen Makabuhay and Sofia
Mesina, LTB passengers, had testified to the effect that the 6
x 6 cargo truck was running at a fast rate of speed (tsn. 15,
74, 175 Mendoza). From the lips of no less than driver
Lagunda himself come the testimonial admission that the
presence of three hanging passengers located at the left side
of the bus was noted when his vehicle was still at a distance
of 5 or 7 meters from the bus, and yet despite the existence
of a shallow canal on the right side of the road which he could
pass over with ease, Lagunda did not care to exercise
prudence to avert the accident simply because to use his own
language the canal 'is not a passage of trucks.'" Based upon
these facts, the Court of First Instance of Laguna and the
Court of Appeals concluded that the Laguna-Tayabas Bus Co. -
hereinafter referred to as the carrier - and its driver Nicasio
Mudales (none of whom has appealed), had violated the
contract of carriage with Agripino Custodio, whereas
petitioners Sabido and Lagunda were guilty of a quasi delict,
by reason of which all of them were held solidarily liable in
the manner above indicated. Petitioners now maintain: (1)
that the death of Agripino Custodio was due exclusively to
the negligence of the carrier and its driver; (2) that
petitioners were not guilty of negligence in connection with
the matter under consideration; (3) that petitioners cannot
be held solidarily liable with the carrier and its driver; and (4)
that the complaint against petitioners herein should be
dismissed. With respect to the first two (2) points, which are
interrelated, it is urged that the carrier and its driver were
clearly guilty of negligence for having allowed Agripino
Custodio to ride on the running board of the bus, in violation
of Section 42 of Act No. 3992, and that this negligence was
the proximate cause of Agripino's death. It should be noted,
however, that the lower court had, likewise, found the
petitioners guilty of contributory negligence, which was as
much a proximate cause of the accident as the carrier's
negligence, for petitioners' truck was running at a
considerable speed, despite the fact that it was negotiating a
sharp curve, and, instead of being close to its right side of the
road, said truck was driven on its middle portion and so near
the passenger bus coming from the opposite direction as to
sideswipe a passenger riding on its running board. The views
of the Court of Appeals on the speed of the truck and its
location at the time of the accident are in the nature of
findings of fact, which we cannot disturb in a petition for
review by certiorari, such as the one at bar. At any rate, the
correctness of said findings is borne out by the very
testimony of petitioner Lagunda to the effect that he saw the
passengers riding on the running board of the bus while the
same was still five (5) or seven (7) meters away from the
truck driven by him. Indeed, the distance between the two (2)
vehicles was such that he could have avoided sideswiping
said passengers if his truck were not running at a great speed.
Although the negligence of the carrier and its driver is
independent, in its execution, of the negligence of the truck
driver and its owner, both acts of negligence are the
proximate cause of the death of Agripino Custodio. In fact,
the negligence of the first two (2) would not have produced
this result without the negligence of petitioners' herein. What
is more, petitioners' negligence was the last, in point of time,
for Custodio was on the running board of the carrier's bus
sometime before petitioners' truck came from the opposite
direction, so that, in this sense, petitioners' truck had the last
clear chance. Petitioners contend that they should not be
held solidarily liable with the carrier and its driver, because
the latter's liability arises from a breach of contract, whereas
that of the former springs from a quasi-delict. The rule is,
however, that "According to the great weight of authority,
where the concurrent or successive negligent acts or
omission of two or more persons, although acting
independently of each other, are, in combination, the direct
and proximate cause of a single injury to a third person, and it
is impossible to determine in what proportion each
contributed to the injury, either is responsible for the whole
injury, even tho his act alone might not have caused the
entire injury, or the same damage might have resulted from
the acts of the other tort-feasor x x x." (38 Am. Jur. 946, 947.)
WHEREFORE, the decision appealed from is hereby affirmed,
with costs against the petitioners herein. IT IS SO ORDERED.

5) MANILA ELECTRIC COMPANY vs. SOTERO
REMOQUILLO G.R. No. L-8328, May 18, 1956
On August 22, 1950, Efren Magno went to the 3-story house
of Antonio Peñaloza, his stepbrother, located on Rodriguez
Lanuza Street, Manila, to repair a “media agua” said to be in a
leaking condition. The “media agua” was just below the
window of the third story. Standing on said “media agua”,
Magno received from his son thru that window a 3’ X 6’
galvanized iron sheet to cover the leaking portion, turned
around and in doing so the lower end of the iron sheet came
into contact with the electric wire of the Manila Electric
Company (later referred to as the Company) strung parallel to
the edge of the “media agua” and 2 1/2 feet from it, causing
his death by electrocution. His widow and children fled suit to
recover damages from the company. After hearing, the trial
court rendered judgment in their favor — P10,000 as compensatory
damages; P784 as actual damages; P2,000 as moral and exemplary damages;
and P3,000 as attorney’s fees, with costs. On appeal to the Court of Appeals,
the latter affirmed the judgment with slight modification by reducing the
attorney’s fees from P3,000 to P1,000 with costs. The electric company
has appealed said decision to us. The findings of fact made by
the Court of Appeals which are conclusive are stated in the
following portions of its decision which we reproduce below:
“The electric wire in question was an exposed, uninsulated
primary wire stretched between poles on the street and
carrying a charge of 3,600 volts. It was installed there some
two years before Peñaloza’s house was constructed. The
record shows that during the construction of said house a
similar incident took place, although fortunate]y with much
less tragic consequences. A piece of wood which a carpenter
was holding happened to come in contact with the same
wire, producing some sparks. The owner of the house
forthwith complained to Defendant about the danger which
the wire presented, and as a result Defendant moved one
end of the wire farther from the house by means of a brace,
but left the other end where it was. “At any rate, as revealed
by the ocular inspection of the premises ordered by the trial
court, the distance from the electric wire to the edge of the
‘media agua’ on which the deceased was making repairs was
only 30 inches or 2 1/2 feet. Regulations of the City of Manila
required that ‘all wires be kept three feet from the building.’
Appellant contends that in applying said regulations to the
case at bar the reckoning should not be from the edge of the
‘media agua’ but from the side of the house and that, thus
measured, the distance was almost 7 feet, or more then the
minimum prescribed. This contention is manifestly
groundless, for not only is a ‘media agua’ an integral part of
the building to which it is attached but to exclude it in
measuring the distance would defeat the purpose of the
regulation. Appellant points out, nevertheless, that even
assuming that the distance, within the meaning of the city
regulations, should be measured from the edge of the ‘media
agua’, the fact that in the case of the house involved herein
such distance was actually less than 3 feet was due to the
fault of the owner of said house, because the city authorities
gave him a permit to construct a ‘media agua’ only one meter
or 39 1/2 inches wide, but instead he built one having a width
of 65 3/4 inches, 17 3/8 inches more than the width
permitted by the authorities, thereby reducing the distance
to the electric wire to less than the prescribed minimum of 3
feet. “It is a fact that the owner of the house exceeded the
limit fixed in the permit given to him by the city authorities
for the construction of the ‘media agua’, and that if he had
not done so Appellants wire would have been 11 3/8 (inches)
more than the required distance of three feet from the edge
of the ‘media agua’. It is also a fact, however, that after the
‘media agua’ was constructed the owner was given a final
permit of occupancy of the house.“ The wire was an exposed,
high tension wire carrying a load of 3,600 volts. There was,
according to Appellant, no insulation that could have
rendered it safe, first, because there is no insulation material
in commercial use for such kind of wire; and secondly,
because the only insulation material that may be effective is
still in the experimental stage of development and, anyway,
its costs would be prohibitive… ” The theory followed by the
appellate court in finding for the Plaintiff is that although the
owner of the house in constructing the “media agua” in
question exceeded the limits fixed in the permit, still, after
making that “media agua”, its construction though illegal, was
finally approved because he was given a final permit to
occupy the house; it was the company that was at fault and
was guilty of negligence because although the electric wire in
question had been installed long before the construction of
the house and in accordance with the ordinance fixing a
minimum of 3 feet, mere compliance with the regulations
does not satisfy the requirement of due diligence nor avoid
the need for adopting such other precautionary measures as
may be warranted; that negligence cannot be determined by
a simple matter of inches; that all that the city did was to
prescribe certain minimum conditions and that just because
the ordinance required that primary electric wires should be
not less than 3 feet from any house, the obligation of due
diligence is not fulfilled by placing such wires at a distance of
3 feet and one inch, regardless of other factors. The appellate
court, however, refrained from stating or suggesting what
other precautionary measures could and should have been
adopted. After a careful study and discussion of the case and
the circumstances surrounding the same, we are inclined to
agree to the contention of Petitioner Company that the death
of Magno was primarily caused by his own negligence and in
some measure by the too close proximity of the “media agua”
or rather its edge to the electric wire of the company by
reason of the violation of the original permit given by the city
and the subsequent approval of said illegal construction of
the “media agua”. We fail to see how the Company could be
held guilty of negligence or as lacking in due diligence.
Although the city ordinance called for a distance of 3 feet of
its wires from any building, there was actually a distance of 7
feet and 2 3/4 inches of the wires from the side of the house
of Peñaloza. Even considering said regulation distance of 3
feet as referring not to the side of a building, but to any
projecting part thereof, such as a “media agua”, had the
house owner followed the terms of the permit given him by
the city for the construction of his “media agua”, namely, one
meter or 39 3/8 inches wide, the distance from the wires to
the edge of said “media agua” would have been 3 feet and 11
3/8 inches. In fixing said one meter width for the “media
agua” the city authorities must have wanted to preserve the
distance of at least 3 feet between the wires and any portion
of a building. Unfortunately, however, the house owner
disregarding the permit, exceeded the one meter fixed by the
same by 17 3/8 inches and leaving only a distance of 2 1/2
feet between the “Media agua” as illegally constructed and
the electric wires. And added to this violation of the permit
by the house owner, was its approval by the city through its
agent, possibly an inspector. Surely we cannot lay these
serious violations of a city ordinance and permit at the door
of the Company, guiltless of breach of any ordinance or
regulation. The Company cannot be expected to be always on
the lookout for any illegal construction which reduces the
distance between its wires and said construction, and after
finding that said distance of 3 feet had been reduced, to
change the stringing or installation of its wires so as to
preserve said distance. It would be much easier for the City,
or rather it is its duty, to be ever on the alert and to see to it
that its ordinances are strictly followed by house owners and
to condemn or disapprove all illegal constructions. Of course,
in the present case, the violation of the permit for the
construction of the “media agua” was not the direct cause of
the accident. It merely contributed to it. Had said “media
agua” been only one meter wide as allowed by the permit,
Magno standing on it, would instinctively have stayed closer
to or hugged the side of the house in order to keep a safe
margin between the edge of the “media agua” and the
yawning 2-story distance or height from the ground, and
possibly if not probably avoided the fatal contact between
the lower end of the iron sheet and the wires. We realize that
the presence of the wires in question quite close to the house
or its “media agua” was always a source of danger
considering their high voltage and uninsulated as they were,
but the claim of the company and the reasons given by it for
not insulating said wires were unrefuted as we gather from
the findings of the Court of Appeals, and so we have to
accept them as satisfactory. Consequently, we may not hold
said company as guilty of negligence or wanting in due
diligence in failing to insulate said wires. As to their proximity
to the house it is to be supposed that distance of 3 feet was
considered sufficiently safe by the technical men of the city
such as its electrician or engineer. Of course, a greater
distance of say 6 feet or 12 feet would have increased the
margin of safety but other factors had to be considered such
as that the wires could not be strung or the posts supporting
them could not be located too far toward the middle of the
street. Thus, the real cause of the accident or death was the
reckless or negligent act of Magno himself. When he was
called by his stepbrother to repair the “media agua” just
below the third story window, it is to be presumed that due
to his age and experience he was qualified to do so. Perhaps
he was a tinsmith or carpenter and had training and
experience for the job. So, he could not have been entirely a
stranger to electric wires and the danger lurking in them. But
unfortunately, in the instant care, his training and experience
failed him, and forgetting where he was standing, holding the
6-feet iron sheet with both hands and at arms length,
evidently without looking, and throwing all prudence and
discretion to the winds, he turned around swinging his arms
with the motion of his body, thereby causing his own
electrocution. In support of its theory and holding that
Defendant-Appellant was liable for damages the Court of
Appeals cites the case of Astudillo vs. Manila Electric Co., 55
Phil., 427. We do not think the case is exactly applicable.
There, the premises involved was that elevated portion or top
of the walls of Intramuros, Manila, just above the Sta. Lucia
Gate. In the words of the Court, it was “a public place where
persons come to stroll, to rest and to enjoy themselves”. The
electric company was clearly negligent in placing its wires so
near the place that without much difficulty or exertion, a
person by stretching his hand out could touch them. A boy
named Astudillo, placing one foot on a projection, reached
out and actually grasped the electric wire and was
electrocuted. The person electrocuted in said case was a boy
who was in no position to realize the danger. In the present
case, however, the wires were well high over the street
where there was no possible danger to pedestrians. The only
possible danger was to persons standing on the “media
agua”, but a “media agua” can hardly be considered a public
place where persons usually gather. Moreover, a person
standing on the “media agua” could not have reached the
wires with his hands alone. It was necessary as was done by
Magno to hold something long enough to reach the wire.
Furthermore, Magno was not a boy or a person immature but
the father of a family, supposedly a tinsmith trained and
experienced in the repair of galvanized iron roofs and “media
agua”. Moreover, in that very case of Astudillo vs. Manila
Electric Co., supra, the court said that although it is a well-
established rule that the liability of electric companies for
damages or personal injuries is governed by the rules of
negligence, nevertheless such companies are not insurers of
the safety of the public. But even assuming for a moment
that under the facts of the present case the Defendant
electric company could be considered negligent in installing
its electric wires so close to the house and “media agua” in
question, and in failing to properly insulate those wires
(although according to the unrefuted claim of said company it
was impossible to make the insulation of that kind of wire),
nevertheless to hold the Defendant liable in damages for the
death of Magno, such supposed negligence of the company
must have been the proximate and principal cause of the
accident, because if the act of Magno in turning around and
swinging the galvanized iron sheet with his hands was the
proximate and principal cause of the electrocution, then his
heirs may not recover. Such was the holding of this Court in
the case of Taylor vs. Manila Electric Railroad and Light
Company, 16 Phil., 8. In that case, the electric company was
found negligent in leaving scattered on its premises
fulminating caps which Taylor, a 15- year old boy found and
carried home. In the course of experimenting with said
fulminating caps, he opened one of them, held it out with his
hands while another boy applied a lighted match to it,
causing it to explode and injure one of his eyes eventually
causing blindness in said eye. Said this Tribunal in denying
recovery for the injury:“ so that while it may be true that
these injuries would not have been incurred but for the
negligent act of the Defendant in leaving the caps exposed on
its premises, nevertheless Plaintiff’s own act was the
proximate and principal cause of the accident which inflicted
the injury.” To us it is clear that the principal and proximate
cause of the electrocution was not the electric wire, evidently
a remote cause, but rather the reckless and negligent act of
Magno in turning around and swinging the galvanized iron
sheet without taking any precaution, such as looking back
toward the street and at the wire to avoid its contacting said
iron sheet, considering the latter’s length of 6 feet. For a
better understanding of the rule on remote and proximate
cause with respect to injuries, we find the following citation
helpful: “A prior and remote cause cannot be made the basis
of an action if such remote cause did nothing more than
furnish the condition or give rise to the occasion by which the
injury was made possible, if there intervened between such
prior or remote cause and the injury a distinct, successive,
unrelated, and efficient cause of the injury, even though such
injury would not have happened but for such condition or
occasion. If no danger existed in the condition except because
of the independent cause, such condition was not the
proximate cause. And if an independent negligent act or
defective condition sets into operation the circumstances
which result in injury because of the prior defective
condition, such subsequent act or condition is the proximate
cause.” We realize that the stringing of wires of such high
voltage (3,600 volts), uninsulated and so close to houses is a
constant source of danger, even death, especially to persons
who having occasion to be near said wires, do not adopt the
necessary precautions. But may be, the City of Manila
authorities and the electric company could get together and
devise means of minimizing this danger to the public. Just as
the establishment of pedestrian lanes in city thoroughfares
may greatly minimize danger to pedestrians because drivers
of motor vehicles may expect danger and slow down or even
stop and take other necessary precaution upon approaching
said lanes, so, a similar way may possibly be found. Since
these high voltage wires cannot be properly insulated and at
reasonable cost, they might perhaps be strung only up to the
outskirts of the city where there are few houses and few
pedestrians and there step-down to a voltage where the
wires carrying the same to the city could be properly
insulated for the better protection of the public. In view of all
the foregoing, the appealed decision of the Court of Appeals
is hereby reversed and the complaint filed against the
Company is hereby dismissed. No costs.

6) MERCEDES M. TEAGUE vs. ELENA FERNANDEZ, et al.,
G.R. No. L-29745, June 4, 1973
The Realistic Institute, admittedly owned and operated by
defendant-appellee Mercedes M. Teague was a vocational
school for hair and beauty culture situated on the second
floor of the Gil-Armi Building, a two-storey, semi-concrete
edifice (Exhs. "C", "C-1" to "C-5" and "4") located at the
corner of Quezon Boulevard and Soler Street, Quiapo, Manila.
The said second floor was unpartitioned, had a total area of
about 400 square meters, and although it had only one
stairway, of about 1.50 meters in width, it had eight windows,
each of which was provided with two fire-escape ladders
(Exh. "4"), and the presence of each of said fire-exits was
indicated on the wall (Exh. "5"). At about four o'clock in the
afternoon of October 24, 1955, a fire broke out in a store for
surplus materials located about ten meters away from the
institute. Soler Street lay between that store and the
institute. Upon seeing the fire, some of the students in the
Realistic Institute shouted 'Fire! Fire!' and thereafter, a panic
ensued. Four instructresses and six assistant instructress of
the Institute were present and they, together with the
registrar, tried to calm down the students, who numbered
about 180 at the time, telling them not to be afraid because
the Gil-Armi Building would not get burned as it is made of
concrete, and that the fire was anyway, across the street.
They told the students not to rush out but just to go down
the stairway two by two, or to use the fire-escapes. Mrs.
Justitia Prieto, one of the instructresses, took to the
microphone so as to convey to the students the above
admonitions more effectively, and she even slapped three
students in order to quiet them down. Miss Frino Meliton,
the registrar, whose desk was near the stairway, stood up
and tried with outstretched arms to stop the students from
rushing and pushing their way to the stairs. The panic,
however, could not be subdued and the students, with the
exception of the few who made use of fire-escapes kept on
rushing and pushing their way through the stairs, thereby
causing stampede therein. Indeed, no part of the Gil-Armi
Building caught fire. But, after the panic was over, four
students, including Lourdes Fernandez, a sister of plaintiffs-
appellants, were found dead and several others injured on
account of the stampede. The injuries sustained by Lourdes
Fernandez consisted of lacerations in both eyes and on the
upper lip, contused abrasions in different parts of the body,
internal hemorrhage and fractures in the second and third
right ribs. The cause of death, according to the autopsy
report, was "Shock due to traumatic fractures of the ribs with
perinephric hematoma and lacerations of the conjunctiva of
both eyes." The deceased's five brothers and sisters filed an
action for damages against Mercedes M. Teague as owner
and operator of Realistic Institute. The Court of First Instance
of Manila found for the defendant and dismissed the case.
The plaintiffs thereupon appealed to the Court of Appeals,
which by a divided vote of 3 to 2 (a special division of five
members having been constituted) rendered a judgment of
reversal and sentenced the defendant to pay damages to the
plaintiffs in the sum of P11,000.00, plus interest at the legal
rate from the date the complaint was filed. The case came up
to this Court on a petition for review filed by the defendant
below. The decision of the appellate court declared that the
defendant, hereinafter to be referred to as the petitioner,
was negligent and that such negligence was the proximate
cause of the death of Lourdes Fernandez. This finding of
negligence is based primarily on the fact that the provision of
Section 491 Of the Revised Ordinances of the City of Manila
had not been complied with in connection with the
construction and use of the Gil-Armi building where the
petitioner's vocational school was housed. This provision
reads as follows: Sec. 491. Firepro of partitions, exits and
stairways. — ... All buildings and separate sections of
buildings or buildings otherwise known as accessorias having
less than three stories, having one or more persons domiciled
therein either temporarily or permanently, and all public or
quasi-public buildings having less than three stories, such as
hospitals, sanitarium, schools, reformatories, places of
human detention, assembly halls, clubs, restaurants or
panciterias, and the like, shall be provided with at least two
unobstructed stairways of not less than one meter and
twenty centimeters in width and an inclination of not less
than forty degrees from the perpendicular, in case of large
buildings more than two stairways shall likewise be provided
when required by the chief of the fire department, said
stairways shall be placed as far apart as possible.
The alleged violation of the ordinance above-quoted
consisted in the fact that the second storey of the Gil-Armi
building had only one stairway, 1.5 meters wide, instead of
two of at least 1.2 meters each, although at the time of the
fire the owner of the building had a second stairway under
construction. In ruling that such non-compliance with the City
Ordinances was an act of negligence and that such negligence
was the proximate cause of the death of Lourdes Fernandez,
reliance is based on a number of authorities in the American
jurisdiction, thus: The mere fact of violation of a statute is not
sufficient basis for an inference that such violation was the
proximate cause of the injury complained. However, if the
very injury has happened which was intended to be
prevented by the statute, it has been held that violation of
the statute will be deemed to be proximate cause of the
injury. (65 C.J.S. 1156). The generally accepted view is that
violation of a statutory duty constitutes negligence,
negligence as a matter or law, or, according to the decisions
on the question, negligence per se for the reason that non-
observance of what the legislature has prescribed as a
suitable precaution is failure to observe that care which an
ordinarily prudent man would observe, and, when the state
regards certain acts as so liable to injure others as to justify
their absolute prohibition, doing the forbidden act is a breach
of duty with respect to those who may be injured thereby; or,
as it has been otherwise expressed, when the standard of
care is fixed by law, failure to conform to such standard is
negligence, negligence per se or negligence in and of itself, in
the absence of a legal excuse. According to this view it is
immaterial, where a statute has been violated, whether the
act or omission constituting such violation would have been
regarded as negligence in the absence of any statute on the
subject or whether there was, as a matter of fact, any reason
to anticipate that injury would result from such violation. But
the existence of an ordinance changes the situation. If a
driver causes an accident by exceeding the speed limit, for
example, do not inquire whether his prohibited conduct was
unreasonably dangerous. It is enough that it was prohibited.
Violation of an ordinance intended to promote safety is
negligence. If by creating the hazard which the ordinance was
intended to avoid it brings about the harm which the
ordinance was intended to prevent, it is a legal cause of the
harm. This comes only to saying that in such circumstances
the law has no reason to ignore the causal relation which
obviously exists in fact. The law has excellent reason to
recognize it, since it is the very relation which the makers of
the ordinance anticipated. This court has applied these
principles to speed limits and other regulations of the manner
of driving. However, the fact that other happenings causing
or contributing toward an injury intervened between the
violation of a statute or ordinance and the injury does not
necessarily make the result so remote that no action can be
maintained. The test is to be found not in the number of
intervening events or agents, but in their character and in the
natural and probable connection between the wrong done
and the injurious consequence. The general principle is that
the violation of a statute or ordinance is not rendered remote
as the cause of an injury by the intervention of another
agency if the occurrence of the accident, in the manner in
which it happened, was the very thing which the statute or
ordinance was intended to Prevent. (38 Am Jur 841).
The petitioner has raised a number of issues. The first is that
Section 491 of the Revised Ordinances of the City of Manila
refers to public buildings and hence did not apply to the Gil-
Armi building which was of private ownership. It will be noted
from the text of the ordinance, however, that it is not
ownership which determines the character of buildings
subject to its requirements, but rather the use or the purpose
for which a particular building is utilized. Thus the same may
be privately owned, but if it is devoted to any one of the
purposes mentioned in the ordinance — for instance as a
school, which the Realistic Institute precisely was — then the
building is within the coverage of the ordinance. Indeed the
requirement that such a building should have two (2)
separate stairways instead of only one (1) has no relevance or
reasonable relation to the fact of ownership, but does have
such relation to the use or purpose for which the building is
devoted.
It is next contended that the obligation to comply with the
ordinance devolved upon the owners of the building and
therefore it is they and not the petitioner herein, who is a
mere lessee, who should be liable for the violation. The
contention ignores the fact that it was the use of the building
for school purposes which brought the same within the
coverage of the ordinance; and it was the petitioner and not
the owners who was responsible for such use.
The next issue, indeed the basic one, raised by the petitioner
is whether or not the failure to comply with the requirement
of the ordinance was the proximate cause of the death of
Lourdes Fernandez. The case of Villanueva Vda. de Bataclan,
et al. vs. Medina, G. R. No. L-10126, October 22, 1957, is cited
in support of the contention that such failure was not the
proximate cause. It is there stated by this Court:
The proximate legal cause is that acting first and producing
the injury, either immediately or by settling other events in
motion, all constituting a natural and continuous chain of
events, each having a close causal connection with its
immediate predecessor, the final event in the chain
immediately affecting the injury as a natural and probable
result of the cause which first acted, under such
circumstances that the person responsible for the first event
should, as an ordinarily prudent and intelligent person, have
reasonable ground to expect at the moment of his act or
default that an injury to some person might probably result
therefrom.
Having in view the decision just quoted, the petitioner relates
the chain of events that resulted in the death of Lourdes
Fernandez as follows: (1) violation of ordinance; (2) fire at a
neighboring place; (3) shouts of "Fire!, Fire!"; (4) panic in the
Institute; (5) stampede; and (6) injuries and death.
As thus projected the violation of the ordinance, it is argued,
was only a remote cause, if at all, and cannot be the basis of
liability since there intervened a number of independent
causes which produced the injury complained of. A statement
of the doctrine relied upon is found in Manila Electric Co. vs.
Remoquillo, L-8328, May 18, 1956, wherein this Court, citing
Corpus Juris said:
A prior and remote cause cannot be made the basis of an
action if such remote cause did nothing more than furnish the
condition or give rise to the occasion by which the injury was
made possible, if there intervened between such prior or
remote cause and the injury a distinct, successive unrelated,
and efficient cause of the injury, even though such injury
would not have happened but for such condition or occasion.
If no danger existed in the condition except because of the
independent cause, such condition was not the proximate
cause. And if an independent negligent act or defective
condition sets into operation the circumstances which result
in injury because of the prior defective condition, such
subsequent act or condition is the proximate cause. (45 C.J. p.
931.)
According to the petitioner "the events of fire, panic and
stampede were independent causes with no causal
connection at all with the violation of the ordinance." The
weakness in the argument springs from a faulty juxtaposition
of the events which formed a chain and resulted in the injury.
It is true that the petitioner's non-compliance with the
ordinance in question was ahead of and prior to the other
events in point of time, in the sense that it was coetaneous
with its occupancy of the building. But the violation was a
continuing one, since the ordinance was a measure of safety
designed to prevent a specific situation which would pose a
danger to the occupants of the building. That situation was
undue overcrowding in case it should become necessary to
evacuate the building, which, it could be reasonably foreseen,
was bound to happen under emergency conditions if there
was only one stairway available. It is true that in this
particular case there would have been no overcrowding in
the single stairway if there had not been a fire in the
neighborhood which caused the students to panic and rush
headlong for the stairs in order to go down. But it was
precisely such contingencies or event that the authors of the
ordinance had in mind, for under normal conditions one
stairway would be adequate for the occupants of the
building. Thus, as stated in 38 American Jurisprudence, page
841: "The general principle is that the violation of a statute or
ordinance is not rendered remote as the cause of an injury by
the intervention of another agency if the occurrence of the
accident, in the manner in which it happened, was the very
thing which the statute or ordinance was intended to
prevent." To consider the violation of the ordinance as the
proximate cause of the injury does not portray the situation
in its true perspective; it would be more accurate to say that
the overcrowding at the stairway was the proximate cause
and that it was precisely what the ordinance intended to
prevent by requiring that there be two stairways instead of
only one. Under the doctrine of the cases cited by the
respondents, the principle of proximate cause applies to such
violation.
A procedural point mentioned by the petitioner is that the
complaint did not specifically allege that the ordinance in
question had been violated. The violation, however, as an act
of negligence which gave rise to liability, was sufficiently
comprehended within paragraph 7 of the complaint, which
reads: .
Par. 7. That the death of Lourdes Fernandez was due to the
gross negligence of the defendant who failed to exercise due
care and diligence for the safety of its students in not
providing the building with adequate fire exits and in not
practicing fire drill exercises to avoid the stampede, aside
from the fact that the defendant did not have a permit to use
the building as a school-house.
The decision appealed from is affirmed, with costs.
7) ILUSORIO, vs. C A and THE MANILA BANKING CORP.,
G.R. No. 139130, November 27, 2002
This petition for review seeks to reverse the decision[1]
promulgated on January 28, 1999 by the Court of Appeals in CA-
G.R. CV No. 47942, affirming the decision of the then Court of
First Instance of Rizal, Branch XV (now the Regional Trial Court of
Makati, Branch 138) dismissing Civil Case No. 43907, for
damages.
The facts as summarized by the Court of Appeals are as follows:
Petitioner is a prominent businessman who, at the time material
to this case, was the Managing Director of Multinational
Investment Bancorporation and the Chairman and/or President
of several other corporations. He was a depositor in good
standing of respondent bank, the Manila Banking Corporation,
under current Checking Account No. 06-09037-0. As he was then
running about 20 corporations, and was going out of the country
a number of times, petitioner entrusted to his secretary,
Katherine[2] E. Eugenio, his credit cards and his checkbook with
blank checks. It was also Eugenio who verified and reconciled the
statements of said checking account.[3] Between the dates
September 5, 1980 and January 23, 1981, Eugenio was able to
encash and deposit to her personal account about seventeen
(17) checks drawn against the account of the petitioner at the
respondent bank, with an aggregate amount of P119,634.34.
Petitioner did not bother to check his statement of account until
a business partner apprised him that he saw Eugenio use his
credit cards. Petitioner fired Eugenio immediately, and instituted
a criminal action against her for estafa thru falsification before
the Office of the Provincial Fiscal of Rizal. Private respondent,
through an affidavit executed by its employee, Mr. Dante Razon,
also lodged a complaint for estafa thru falsification of
commercial documents against Eugenio on the basis of
petitioners statement that his signatures in the checks were
forged.[4] Mr. Razons affidavit states: That I have examined and
scrutinized the following checks in accordance with prescribed
verification procedures with utmost care and diligence by
comparing the signatures affixed thereat against the specimen
signatures of Mr. Ramon K. Ilusorio which we have on file at our
said office on such dates, That the aforementioned checks were
among those issued by Manilabank in favor of its client MR.
RAMON K. ILUSORIO, That the same were personally encashed
by KATHERINE E. ESTEBAN, an executive secretary of MR.
RAMON K. ILUSORIO in said Investment Corporation; That I have
met and known her as KATHERINE E. ESTEBAN the attending
verifier when she personally encashed the above-mentioned
checks at our said office; That MR. RAMON K. ILUSORIO
executed an affidavit expressly disowning his signature
appearing on the checks further alleged to have not authorized
the issuance and encashment of the same.[5] Petitioner then
requested the respondent bank to credit back and restore to its
account the value of the checks which were wrongfully encashed
but respondent bank refused. Hence, petitioner filed the instant
case.[6] At the trial, petitioner testified on his own behalf,
attesting to the truth of the circumstances as narrated above,
and how he discovered the alleged forgeries. Several employees
of Manila Bank were also called to the witness stand as hostile
witnesses. They testified that it is the banks standard operating
procedure that whenever a check is presented for encashment
or clearing, the signature on the check is first verified against the
specimen signature cards on file with the bank. Manila Bank also
sought the expertise of the National Bureau of Investigation
(NBI) in determining the genuineness of the signatures appearing
on the checks. However, in a letter dated March 25, 1987, the
NBI informed the trial court that they could not conduct the
desired examination for the reason that the standard specimens
submitted were not sufficient for purposes of rendering a
definitive opinion. The NBI then suggested that petitioner be
asked to submit seven (7) or more additional standard signatures
executed before or about, and immediately after the dates of
the questioned checks. Petitioner, however, failed to comply
with this request. After evaluating the evidence on both sides,
the court a quo rendered judgment on May 12, 1994 with the
following dispositive portion: WHEREFORE, finding no sufficient
basis for plaintiff's cause herein against defendant bank, in the
light of the foregoing considerations and established facts, this
case would have to be, as it is hereby DISMISSED. Defendants
counterclaim is likewise DISMISSED for lack of sufficient basis. SO
ORDERED.[7]
Aggrieved, petitioner elevated the case to the Court of Appeals
by way of a petition for review but without success. The
appellate court held that petitioners own negligence was the
proximate cause of his loss. The appellate court disposed as
follows: WHEREFORE, the judgment appealed from is AFFIRMED.
Costs against the appellant. SO ORDERED.[8]
Before us, petitioner ascribes the following errors to the Court of
Appeals:
A. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE
RESPONDENT BANK IS ESTOPPED FROM RAISING THE DEFENSE
THAT THERE WAS NO FORGERY OF THE SIGNATURES OF THE
PETITIONER IN THE CHECK BECAUSE THE RESPONDENT FILED A
CRIMINAL COMPLAINT FOR ESTAFA THRU FALSIFICATION OF
COMMERCIAL DOCUMENTS AGAINST KATHERINE EUGENIO
USING THE AFFIDAVIT OF PETITIONER STATING THAT HIS
SIGNATURES WERE FORGED AS PART OF THE AFFIDAVIT-
COMPLAINT.[9]
B. THE COURT OF APPEALS ERRED IN NOT APPLYING SEC. 23,
NEGOTIABLE INSTRUMENTS LAW.[10]
C. THE COURT OF APPEALS ERRED IN NOT HOLDING THE BURDEN
OF PROOF IS WITH THE RESPONDENT BANK TO PROVE THE DUE
DILIGENCE TO PREVENT DAMAGE, TO THE PETITIONER, AND
THAT IT WAS NOT NEGLIGENT IN THE SELECTION AND
SUPERVISION OF ITS EMPLOYEES.[11]
D. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT
RESPONDENT BANK SHOULD BEAR THE LOSS, AND SHOULD BE
MADE TO PAY PETITIONER, WITH RECOURSE AGAINST
KATHERINE EUGENIO ESTEBAN.[12]
Essentially the issues in this case are: (1) whether or not
petitioner has a cause of action against private respondent; and
(2) whether or not private respondent, in filing an estafa case
against petitioners secretary, is barred from raising the defense
that the fact of forgery was not established.
Petitioner contends that Manila Bank is liable for damages for its
negligence in failing to detect the discrepant checks. He adds
that as a general rule a bank which has obtained possession of a
check upon an unauthorized or forged endorsement of the
payees signature and which collects the amount of the check
from the drawee is liable for the proceeds thereof to the payee.
Petitioner invokes the doctrine of estoppel, saying that having
itself instituted a forgery case against Eugenio, Manila Bank is
now estopped from asserting that the fact of forgery was never
proven. For its part, Manila Bank contends that respondent
appellate court did not depart from the accepted and usual
course of judicial proceedings, hence there is no reason for the
reversal of its ruling. Manila Bank additionally points out that
Section 23[13] of the Negotiable Instruments Law is inapplicable,
considering that the fact of forgery was never proven. Lastly, the
bank negates petitioners claim of estoppel.[14]
On the first issue, we find that petitioner has no cause of action
against Manila Bank. To be entitled to damages, petitioner has
the burden of proving negligence on the part of the bank for
failure to detect the discrepancy in the signatures on the checks.
It is incumbent upon petitioner to establish the fact of forgery,
i.e., by submitting his specimen signatures and comparing them
with those on the questioned checks. Curiously though,
petitioner failed to submit additional specimen signatures as
requested by the National Bureau of Investigation from which to
draw a conclusive finding regarding forgery. The Court of
Appeals found that petitioner, by his own inaction, was
precluded from setting up forgery. Said the appellate court: We
cannot fault the court a quo for such declaration, considering
that the plaintiffs evidence on the alleged forgery is not
convincing enough. The burden to prove forgery was upon the
plaintiff, which burden he failed to discharge. Aside from his own
testimony, the appellant presented no other evidence to prove
the fact of forgery. He did not even submit his own specimen
signatures, taken on or about the date of the questioned checks,
for examination and comparison with those of the subject
checks. On the other hand, the appellee presented specimen
signature cards of the appellant, taken at various years, namely,
in 1976, 1979 and 1981 (Exhibits 1, 2, 3 and 7), showing
variances in the appellants unquestioned signatures. The
evidence further shows that the appellee, as soon as it was
informed by the appellant about his questioned signatures,
sought to borrow the questioned checks from the appellant for
purposes of analysis and examination (Exhibit 9), but the same
was denied by the appellant. It was also the former which sought
the assistance of the NBI for an expert analysis of the signatures
on the questioned checks, but the same was unsuccessful for
lack of sufficient specimen signatures.[15] Moreover, petitioners
contention that Manila Bank was remiss in the exercise of its
duty as drawee lacks factual basis. Consistently, the CA and the
RTC found that Manila Bank employees exercised due diligence
in cashing the checks. The banks employees in the present case
did not have a hint as to Eugenios modus operandi because she
was a regular customer of the bank, having been designated by
petitioner himself to transact in his behalf. According to the
appellate court, the employees of the bank exercised due
diligence in the performance of their duties. Thus, it found that:
The evidence on both sides indicates that TMBCs employees
exercised due diligence before encashing the checks. Its verifiers
first verified the drawers signatures thereon as against his
specimen signature cards, and when in doubt, the verifier went
further, such as by referring to a more experienced verifier for
further verification. In some instances the verifier made a
confirmation by calling the depositor by phone. It is only after
taking such precautionary measures that the subject checks
were given to the teller for payment. Of course it is possible that
the verifiers of TMBC might have made a mistake in failing to
detect any forgery -- if indeed there was. However, a mistake is
not equivalent to negligence if they were honest mistakes. In the
instant case, we believe and so hold that if there were mistakes,
the same were not deliberate, since the bank took all the
precautions.[16] As borne by the records, it was petitioner, not
the bank, 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 do.[17] In the present case, it appears
that petitioner accorded his secretary unusual degree of trust
and unrestricted access to his credit cards, passbooks, check
books, bank statements, including custody and possession of
cancelled checks and reconciliation of accounts. Court of Appeals
on this matter: Moreover, the appellant had introduced his
secretary to the bank for purposes of reconciliation of his
account, through a letter dated July 14, 1980 (Exhibit 8). Thus,
the said secretary became a familiar figure in the bank. What is
worse, whenever the bank verifiers call the office of the
appellant, it is the same secretary who answers and confirms the
checks. The trouble is, the appellant had put so much trust and
confidence in the said secretary, by entrusting not only his credit
cards with her but also his checkbook with blank checks. He also
entrusted to her the verification and reconciliation of his
account. Further adding to his injury was the fact that while the
bank was sending him the monthly Statements of Accounts, he
was not personally checking the same. His testimony did not
indicate that he was out of the country during the period
covered by the checks. Thus, he had all the opportunities to
verify his account as well as the cancelled checks issued
thereunder -- month after month. But he did not, until his
partner asked him whether he had entrusted his credit card to
his secretary because the said partner had seen her use the
same. It was only then that he was minded to verify the records
of his account. [18] The abovecited findings are binding upon the
reviewing court. We stress the rule that the factual findings of a
trial court, especially when affirmed by the appellate court, are
binding upon us[19] and entitled to utmost respect[20] and even
finality. We find no palpable error that would warrant a reversal
of the appellate courts assessment of facts anchored upon the
evidence on record. Petitioners failure to examine his bank
statements appears as the proximate cause of his own damage.
Proximate cause is that cause, which, in natural and continuous
sequence, unbroken by any efficient intervening cause, produces
the injury, and without which the result would not have
occurred.[21] In the instant case, the bank was not shown to be
remiss in its duty of sending monthly bank statements to
petitioner so that any error or discrepancy in the entries therein
could be brought to the banks attention at the earliest
opportunity. But, petitioner failed to examine these bank
statements not because he was prevented by some cause in not
doing so, but because he did not pay sufficient attention to the
matter. Had he done so, he could have been alerted to any
anomaly committed against him. In other words, petitioner had
sufficient opportunity to prevent or detect any misappropriation
by his secretary had he only reviewed the status of his accounts
based on the bank statements sent to him regularly. In view of
Article 2179 of the New Civil Code,[22] when the plaintiffs own
negligence was the immediate and proximate cause of his injury,
no recovery could be had for damages. Petitioner further
contends that under Section 23 of the Negotiable Instruments
Law a forged check is inoperative, and that Manila Bank had no
authority to pay the forged checks. True, it is a rule that when a
signature is forged or made without the authority of the person
whose signature it purports to be, the check is wholly
inoperative. No right to retain the instrument, or to give a
discharge therefor, or to enforce payment thereof against any
party, can be acquired through or under such signature.
However, the rule does provide for an exception, namely: unless
the party against whom it is sought to enforce such right is
precluded from setting up the forgery or want of authority. In
the instant case, it is the exception that applies. In our view,
petitioner is precluded from setting up the forgery, assuming
there is forgery, due to his own negligence in entrusting to his
secretary his credit cards and checkbook including the
verification of his statements of account. Petitioners reliance on
Associated Bank vs. Court of Appeals[23] and Philippine Bank of
Commerce vs. CA[24] to buttress his contention that respondent
Manila Bank as the collecting or last endorser generally suffers
the loss because it has the duty to ascertain the genuineness of
all prior endorsements is misplaced. In the cited cases, the fact
of forgery was not in issue. In the present case, the fact of
forgery was not established with certainty. In those cited cases,
the collecting banks were held to be negligent for failing to
observe precautionary measures to detect the forgery. In the
case before us, both courts below uniformly found that Manila
Banks personnel diligently performed their duties, having
compared the signature in the checks from the specimen
signatures on record and satisfied themselves that it was
petitioners.
On the second issue, the fact that Manila Bank had filed a case
for estafa against Eugenio would not estop it from asserting the
fact that forgery has not been clearly established. Petitioner
cannot hold private respondent in estoppel for the latter is not
the actual party to the criminal action. In a criminal action, the
State is the plaintiff, for the commission of a felony is an offense
against the State.[25] Thus, under Section 2, Rule 110 of the
Rules of Court the complaint or information filed in court is
required to be brought in the name of the People of the
Philippines. [26] Further, as petitioner himself stated in his
petition, respondent bank filed the estafa case against Eugenio
on the basis of petitioners own affidavit,[27] but without
admitting that he had any personal knowledge of the alleged
forgery. It is, therefore, easy to understand that the filing of the
estafa case by respondent bank was a last ditch effort to salvage
its ties with the petitioner as a valuable client, by bolstering the
estafa case which he filed against his secretary. All told, we find
no reversible error that can be ascribed to the Court of Appeals.
WHEREFORE, the instant petition is DENIED for lack of merit. The
assailed decision of the Court of Appeals dated January 28, 1999
in CA-G.R. CV No. 47942, is AFFIRMED. Costs against petitioner.
SO ORDERED.