Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-12219 March 15, 1918

AMADO PICART, plaintiff-appellant,

vs.
FRANK SMITH, JR., defendant-appellee.

Alejo Mabanag for appellant.

G. E. Campbell for appellee.

STREET, J.:

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

1
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

2
course. Under these circumstances the law imposed on the defendant the duty to guard against
the threatened harm.

It goes without saying that the plaintiff himself was not free from fault, for he was guilty of
antecedent negligence in planting himself on the wrong side of the road. But as we have already
stated, the defendant was also negligent; and in such case the problem always is to discover
which agent is immediately and directly responsible. It will be noted that the negligent acts of the
two parties were not contemporaneous, since the negligence of the defendant succeeded the
negligence of the plaintiff by an appreciable interval. Under these circumstances the law is that
the person who has the last fair chance to avoid the impending harm and fails to do so is
chargeable with the consequences, without reference to the prior negligence of the other party.

The decision in the case of 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.)

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From what has been said it results that the judgment of the lower court must be reversed, and
judgment is her rendered 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.

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 97626 March 14, 1997

PHILIPPINE BANK OF COMMERCE, now absorbed by PHILIPPINE COMMERCIAL

INTERNATIONAL BANK, ROGELIO LACSON, DIGNA DE LEON, MARIA ANGELITA
PASCUAL, et al., petitioners,
vs.
THE COURT OF APPEALS, ROMMEL'S MARKETING CORP., represented by ROMEO
LIPANA, its President & General Manager, respondents.

HERMOSISIMA, JR., J.:

Challenged in this petition for review is the Decision dated February 28, 19911 rendered by
public respondent Court of Appeals which affirmed the Decision dated November 15, 1985 of
the Regional Trial Court, National Capital Judicial Region, Branch CLX (160), Pasig City, in Civil
Case No. 27288 entitled "Rommel's Marketing Corporation, etc. v. Philippine Bank of
Commerce, now absorbed by Philippine Commercial and Industrial Bank."

The case stemmed from a complaint filed by the private respondent Rommel's Marketing
Corporation (RMC for brevity), represented by its President and General Manager Romeo
Lipana, to recover from the former Philippine Bank of Commerce (PBC for brevity), now
absorbed by the Philippine Commercial International Bank, the sum of P304,979.74
representing various deposits it had made in its current account with said bank but which were
not credited to its account, and were instead deposited to the account of one Bienvenido Cotas,
allegedly due to the gross and inexcusable negligence of the petitioner bank.

RMC maintained two (2) separate current accounts, Current Account Nos. 53-01980-3 and 53-
01748-7, with the Pasig Branch of PBC in connection with its business of selling appliances.

In the ordinary and usual course of banking operations, current account deposits are accepted
by the bank on the basis of deposit slips prepared and signed by the depositor, or the latter's
agent or representative, who indicates therein the current account number to which the deposit
is to be credited, the name of the depositor or current account holder, the date of the deposit,

4
and the amount of the deposit either in cash or checks. The deposit slip has an upper portion or
stub, which is detached and given to the depositor or his agent; the lower portion is retained by
the bank. In some instances, however, the deposit slips are prepared in duplicate by the
depositor. The original of the deposit slip is retained by the bank, while the duplicate copy is
returned or given to the depositor.

From May 5, 1975 to July 16, 1976, petitioner Romeo Lipana claims to have entrusted RMC
funds in the form of cash totalling P304,979.74 to his secretary, Irene Yabut, for the purpose of
depositing said funds in the current accounts of RMC with PBC. It turned out, however, that
these deposits, on all occasions, were not credited to RMC's account but were instead
deposited to Account No. 53-01734-7 of Yabut's husband, Bienvenido Cotas who likewise
maintains an account with the same bank. During this period, petitioner bank had, however,
been regularly furnishing private respondent with monthly statements showing its current
accounts balances. Unfortunately, it had never been the practice of Romeo Lipana to check
these monthly statements of account reposing complete trust and confidence on petitioner bank.

Irene Yabut's modus operandi is far from complicated. She would accomplish two (2) copies of
the deposit slip, an original and a duplicate. The original showed the name of her husband as
depositor and his current account number. On the duplicate copy was written the account
number of her husband but the name of the account holder was left blank. PBC's teller,
Azucena Mabayad, would, however, validate and stamp both the original and the duplicate of
these deposit slips retaining only the original copy despite the lack of information on the
duplicate slip. The second copy was kept by Irene Yabut allegedly for record purposes. After
validation, Yabut would then fill up the name of RMC in the space left blank in the duplicate
copy and change the account number written thereon, which is that of her husband's, and make
it appear to be RMC's account number, i.e., C.A. No. 53-01980-3. With the daily remittance
records also prepared by Ms. Yabut and submitted to private respondent RMC together with the
validated duplicate slips with the latter's name and account number, she made her company
believe that all the while the amounts she deposited were being credited to its account when, in
truth and in fact, they were being deposited by her and credited by the petitioner bank in the
account of Cotas. This went on in a span of more than one (1) year without private respondent's
knowledge.

Upon discovery of the loss of its funds, RMC demanded from petitioner bank the return of its
money, but as its demand went unheeded, it filed a collection suit before the Regional Trial
Court of Pasig, Branch 160. The trial court found petitioner bank negligent and ruled as follows:

WHEREFORE, judgment is hereby rendered sentencing defendant Philippine

Bank of Commerce, now absorbed by defendant Philippine Commercial &
Industrial Bank, and defendant Azucena Mabayad to pay the plaintiff, jointly and
severally, and without prejudice to any criminal action which may be instituted if
found warranted:

1. The sum of P304,979.72, representing plaintiffs lost deposit, plus interest

thereon at the legal rate from the filing of the complaint;

2. A sum equivalent to 14% thereof, as exemplary damages;

3. A sum equivalent to 25% of the total amount due, as and for attorney's fees;
and

5
 4. Costs.

Defendants' counterclaim is hereby dismissed for lack of merit.2

On appeal, the appellate court affirmed the foregoing decision with modifications, viz:

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

Hence, this petition anchored on the following grounds:

1) The proximate cause of the loss is the negligence of respondent Rommel

Marketing Corporation and Romeo Lipana in entrusting cash to a dishonest
employee.

2) The failure of respondent Rommel Marketing Corporation to cross-check the

bank's statements of account with its own records during the entire period of
more than one (1) year is the proximate cause of the commission of subsequent
frauds and misappropriation committed by Ms. Irene Yabut.

3) The duplicate copies of the deposit slips presented by respondent Rommel

Marketing Corporation are falsified and are not proof that the amounts appearing
thereon were deposited to respondent Rommel Marketing Corporation's account
with the bank,

4) The duplicate copies of the deposit slips were used by Ms. Irene Yabut to
cover up her fraudulent acts against respondent Rommel Marketing Corporation,
and not as records of deposits she made with the bank.4

The petition has no merit.

Simply put, the main issue posited before us is: What is the proximate cause of the loss, to the
tune of P304,979.74, suffered by the private respondent RMC — petitioner bank's negligence or
that of private respondent's?

Petitioners submit that the proximate cause of the loss is the negligence of respondent RMC
and Romeo Lipana in entrusting cash to a dishonest employee in the person of Ms. Irene
Yabut.5 According to them, it was impossible for the bank to know that the money deposited by
Ms. Irene Yabut belong to RMC; neither was the bank forewarned by RMC that Yabut will be
depositing cash to its account. Thus, it was impossible for the bank to know the fraudulent
design of Yabut considering that her husband, Bienvenido Cotas, also maintained an account
with the bank. For the bank to inquire into the ownership of the cash deposited by Ms. Irene
Yabut would be irregular. Otherwise stated, it was RMC's negligence in entrusting cash to a
dishonest employee which provided Ms. Irene Yabut the opportunity to defraud RMC.6

6
Private respondent, on the other hand, maintains that the proximate cause of the loss was the
negligent act of the bank, thru its teller Ms. Azucena Mabayad, in validating the deposit slips,
both original and duplicate, presented by Ms. Yabut to Ms. Mabayad, notwithstanding the fact
that one of the deposit slips was not completely accomplished.

We sustain the private respondent.

Our law on quasi-delicts states:

Art. 2176. Whoever by act or omission causes damage to another, there being
fault or negligence, is obliged to pay for the damage done. Such fault or
negligence, if there is no pre-existing contractual relation between the parties, is
called a quasi-delict and is governed by the provisions of this Chapter.

There are three elements of a quasi-delict: (a) damages suffered by the plaintiff; (b) fault or
negligence of the defendant, or some other person for whose acts he must respond; and (c) the
connection of cause and effect between the fault or negligence of the defendant and the
damages incurred by the plaintiff.7

In the case at bench, there is no dispute as to the damage suffered by the private respondent
(plaintiff in the trial court) RMC in the amount of P304,979.74. It is in ascribing fault or
negligence which caused the damage where the parties point to each other as the culprit.

Negligence is the omission to do something which a reasonable man, guided by those

considerations which ordinarily regulate the conduct of human affairs, would do, or the doing of
something which a prudent and reasonable man would do. The seventy-eight (78)-year-old, yet
still relevant, case of Picart v. Smith,8 provides the test by which to determine the existence of
negligence in a particular case which may be stated as follows: Did the defendant in doing the
alleged negligent act use that reasonable care and caution which an ordinarily prudent person
would have used in the same situation? If not, then he is guilty of negligence. The law here in
effect adopts the standard supposed to be supplied by the imaginary conduct of the
discreet paterfamilias of the Roman law. The existence of negligence in a given case is not
determined by reference to the personal judgment of the actor in the situation before him. The
law considers what would be reckless, blameworthy, or negligent in the man of ordinary
intelligence and prudence and determines liability by that.

Applying the above test, it appears that the bank's teller, Ms. Azucena Mabayad, was negligent
in validating, officially stamping and signing all the deposit slips prepared and presented by Ms.
Yabut, despite the glaring fact that the duplicate copy was not completely accomplished
contrary to the self-imposed procedure of the bank with respect to the proper validation of
deposit slips, original or duplicate, as testified to by Ms. Mabayad herself, thus:

Q: Now, as teller of PCIB, Pasig Branch, will you please tell us

Mrs. Mabayad your important duties and functions?

A: I accept current and savings deposits from depositors and

encashments.

Q: Now in the handling of current account deposits of bank clients,

could you tell us the procedure you follow?

7
 A: The client or depositor or the authorized representative
prepares a deposit slip by filling up the deposit slip with the name,
the account number, the date, the cash breakdown, if it is
deposited for cash, and the check number, the amount and then
he signs the deposit slip.

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

accomplishing current account deposit, Mrs. Mabayad?

A: The bank requires only one copy of the deposit although some
of our clients prepare the deposit slip in duplicate.

Q: Now in accomplishing current account deposits from your

clients, what do you issue to the depositor to evidence the deposit
made?

A: We issue or we give to the clients the depositor's stub as a

receipt of the deposit.

Q: And who prepares the deposit slip?

A: The depositor or the authorized representative sir?

Q: Where does the depositor's stub comes (sic) from Mrs.

Mabayad, is it with the deposit slip?

A: The depositor's stub is connected with the deposit slip or the

bank's copy. In a deposit slip, the upper portion is the depositor's
stub and the lower portion is the bank's copy, and you can detach
the bank's copy from the depositor's stub by tearing it sir.

Q: Now what do you do upon presentment of the deposit slip by

the depositor or the depositor's authorized representative?

A: We see to it that the deposit slip9 is properly accomplished and

then we count the money and then we tally it with the deposit slip
sir.

Q: Now is the depositor's stub which you issued to your clients

validated?

A: Yes, sir. 10 [Emphasis ours]

Clearly, Ms. Mabayad failed to observe this very important procedure. The fact that the
duplicate slip was not compulsorily required by the bank in accepting deposits should not
relieve the petitioner bank of responsibility. The odd circumstance alone that such
duplicate copy lacked one vital information — that of the name of the account holder —
should have already put Ms. Mabayad on guard. Rather than readily validating the
incomplete duplicate copy, she should have proceeded more cautiously by being more

8
 probing as to the true reason why the name of the account holder in the duplicate slip
was left blank while that in the original was filled up. She should not have been so naive
in accepting hook, line and sinker the too shallow excuse of Ms. Irene Yabut to the effect
that since the duplicate copy was only for her personal record, she would simply fill up
the blank space later on. 11 A "reasonable man of ordinary prudence" 12 would not have
given credence to such explanation and would have insisted that the space left blank be
filled up as a condition for validation. Unfortunately, this was not how bank teller
Mabayad proceeded thus resulting in huge losses to the private respondent.

Negligence here lies not only on the part of Ms. Mabayad but also on the part of the bank itself
in its lackadaisical selection and supervision of Ms. Mabayad. This was exemplified in the
testimony of Mr. Romeo Bonifacio, then Manager of the Pasig Branch of the petitioner bank and
now its Vice-President, to the effect that, while he ordered the investigation of the incident, he
never came to know that blank deposit slips were validated in total disregard of the bank's
validation procedures, viz:

Q: Did he ever tell you that one of your cashiers affixed the stamp
mark of the bank on the deposit slips and they validated the same
with the machine, the fact that those deposit slips were unfilled up,
is there any report similar to that?

A: No, it was not the cashier but the teller.

Q: The teller validated the blank deposit slip?

A: No it was not reported.

Q: You did not know that any one in the bank tellers or cashiers
validated the blank deposit slip?

A: I am not aware of that.

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

A: Yes, sir. 13

Prescinding from the above, public respondent Court of Appeals aptly observed:

xxx xxx xxx

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

9
It was this negligence of Ms. Azucena Mabayad, coupled by the negligence of the petitioner
bank in the selection and supervision of its bank teller, which was the proximate cause of the
loss suffered by the private respondent, and not the latter's act of entrusting cash to a dishonest
employee, as insisted by the petitioners.

Proximate cause is determined on the facts of each case upon mixed considerations of logic,
common sense, policy and precedent. 15 Vda. de Bataclan v. Medina, 16 reiterated in the case
of Bank of the Phil. Islands v. Court of Appeals, 17 defines proximate cause as "that cause,
which, in natural and continuous sequence, unbroken by any efficient intervening cause,
produces the injury, and without which the result would not have occurred. . . ." In this case,
absent the act of Ms. Mabayad in negligently validating the incomplete duplicate copy of the
deposit slip, Ms. Irene Yabut would not have the facility with which to perpetrate her fraudulent
scheme with impunity. Apropos, once again, is the pronouncement made by the respondent
appellate court, to wit:

. . . . Even if Yabut had the fraudulent intention to misappropriate the funds

entrusted to her by plaintiff, she would not have been able to deposit those funds
in her husband's current account, and then make plaintiff believe that it was in
the latter's accounts wherein she had deposited them, had it not been for bank
teller Mabayad's aforesaid gross and reckless negligence. The latter's negligence
was thus the proximate, immediate and efficient cause that brought about the
loss claimed by plaintiff in this case, and the failure of plaintiff to discover the
same soon enough by failing to scrutinize the monthly statements of account
being sent to it by appellant bank could not have prevented the fraud and
misappropriation which Irene Yabut had already completed when she deposited
plaintiff's money to the account of her husband instead of to the latter's
accounts. 18

Furthermore, under the doctrine of "last clear chance" (also referred to, at times as "supervening
negligence" or as "discovered peril"), petitioner bank was indeed the culpable party. This
doctrine, in essence, states that where both parties are negligent, but the negligent act of one is
appreciably later in time than that of the other, or when it is impossible to determine whose fault
or negligence should be attributed to the incident, the one who had the last clear opportunity to
avoid the impending harm and failed to do so is chargeable with the consequences
thereof. 19Stated differently, the rule would also mean that an antecedent negligence of a person
does not preclude the recovery of damages for the supervening negligence of, or bar a defense
against liability sought by another, if the latter, who had the last fair chance, could have avoided
the impending harm by the exercise of due diligence. 20Here, assuming that private respondent
RMC was negligent in entrusting cash to a dishonest employee, thus providing the latter with
the opportunity to defraud the company, as advanced by the petitioner, yet it cannot be denied
that the petitioner bank, thru its teller, had the last clear opportunity to avert the injury incurred
by its client, simply by faithfully observing their self-imposed validation procedure.

At this juncture, it is worth to discuss the degree of diligence ought to be exercised by banks in
dealing with their clients.

The New Civil Code provides:

Art. 1173. The fault or negligence of the obligor consists in the omission of that
diligence which is required by the nature of the obligation and corresponds with

10
 the circumstances of the persons, of the time and of the place. When negligence
shows bad faith, the provisions of articles 1171 and 2201, paragraph 2, shall
apply.

If the law or contract does not state the diligence which is to be observed in the
performance, that which is expected of a good father of a family shall be
required. (1104a)

In the case of banks, however, the degree of diligence required is more than that of a good
father of a family. Considering the fiduciary nature of their relationship with their depositors,
banks are duty bound to treat the accounts of their clients with the highest degree of care. 21

As elucidated in Simex International (Manila), Inc. v. Court of Appeals, 22 in every case, the
depositor expects the bank to treat his account with the utmost fidelity, whether such account
consists only of a few hundred pesos or of millions. The bank must record every single
transaction accurately, down to the last centavo, and as promptly as possible. This has to be
done if the account is to reflect at any given time the amount of money the depositor can
dispose as he sees fit, confident that the bank will deliver it as and to whomever he directs. A
blunder on the part of the bank, such as the failure to duly credit him his deposits as soon as
they are made, can cause the depositor not a little embarrassment if not financial loss and
perhaps even civil and criminal litigation.

The point is that as a business affected with public interest and because of the nature of its
functions, the bank is under obligation to treat the accounts of its depositors with meticulous
care, always having in mind the fiduciary nature of their relationship. In the case before us, it is
apparent that the petitioner bank was remiss in that duty and violated that relationship.

Petitioners nevertheless aver that the failure of respondent RMC to cross-check the bank's
statements of account with its own records during the entire period of more than one (1) year is
the proximate cause of the commission of subsequent frauds and misappropriation committed
by Ms. Irene Yabut.

We do not agree.

While it is true that had private respondent checked the monthly statements of account sent by
the petitioner bank to RMC, the latter would have discovered the loss early on, such cannot be
used by the petitioners to escape liability. This omission on the part of the private respondent
does not change the fact that were it not for the wanton and reckless negligence of the
petitioners' employee in validating the incomplete duplicate deposit slips presented by Ms. Irene
Yabut, the loss would not have occurred. Considering, however, that the fraud was committed in
a span of more than one (1) year covering various deposits, common human experience
dictates that the same would not have been possible without any form of collusion between Ms.
Yabut and bank teller Mabayad. Ms. Mabayad was negligent in the performance of her duties as
bank teller nonetheless. Thus, the petitioners are entitled to claim reimbursement from her for
whatever they shall be ordered to pay in this case.

The foregoing notwithstanding, it cannot be denied that, indeed, private respondent was
likewise negligent in not checking its monthly statements of account. Had it done so, the
company would have been alerted to the series of frauds being committed against RMC by its
secretary. The damage would definitely not have ballooned to such an amount if only RMC,

11
particularly Romeo Lipana, had exercised even a little vigilance in their financial affairs. This
omission by RMC amounts to contributory negligence which shall mitigate the damages that
may be awarded to the private respondent 23 under Article 2179 of the New Civil Code, to wit:

. . . When the plaintiff's own negligence was the immediate and proximate cause
of his injury, he cannot recover damages. But if his negligence was only
contributory, the immediate and proximate cause of the injury being the
defendant's lack of due care, the plaintiff may recover damages, but the courts
shall mitigate the damages to be awarded.

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

WHEREFORE, the decision of the respondent Court of Appeals is modified by reducing the
amount of actual damages private respondent is entitled to by 40%. Petitioners may recover
from Ms. Azucena Mabayad the amount they would pay the private respondent. Private
respondent shall have recourse against Ms. Irene Yabut. In all other respects, the appellate
court's decision is AFFIRMED.

Proportionate costs.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-7664 August 29, 1958

MR. AND MRS. AMADOR C. ONG, plaintiffs-appellants,

vs.
METROPOLITAN WATER DISTRICT, defendant-appellee.

Tomas Tria Tirona for appellants.

Government Corporate Counsel Ambrosio Padilla and Juan C. Jimenez for appellee.

BAUTISTA ANGELO, J.:

Plaintiffs spouses seek to recover from defendant, a government-owned corporation, the sum of
P50,000 as damages, P5,000 as funeral expenses, and P11,000 as attorneys' fees, for the
death of their son Dominador Ong in one of the swimming pools operated by defendant.

Defendant admits the fact that plaintiffs' son was drowned in one of its swimming pools but
avers that his death was caused by his own negligence or by unavoidable accident. Defendant

12
also avers that it had exercised due diligence in the selection of, and supervision over, its
employees and that it had observed the diligence required by law under the circumstances.

After trial, the lower court found that the action of plaintiffs is untenable and dismissed the
complaint without pronouncement as to costs. Plaintiffs took the case on appeal directly to this
Court because the amount involved exceeds the sum of P50,000.

Defendant owns and operates three recreational swimming pools at its Balara filters, Diliman,
Quezon City, to which people are invited and for which a nominal fee of P0.50 for adults and
P0.20 for children is charged. The main pool it between two small pools of oval shape known as
the "Wading pool" and the "Beginners Pool." There are diving boards in the big pools and the
depths of the water at different parts are indicated by appropriate marks on the wall. The care
and supervision of the pools and the users thereof is entrusted to a recreational section
composed of Simeon Chongco as chief, Armando Rule, a male nurse, and six lifeguards who
had taken the life-saving course given by the Philippine Red Cross at the YMCA in Manila. For
the safety of its patrons, defendant has provided the pools with a ring buoy, toy roof, towing line,
saving kit and a resuscitator. There is also a sanitary inspector who is in charge of a clinic
established for the benefit of the patrons. Defendant has also on display in a conspicuous place
certain rules and regulations governing the use of the pools, one of which prohibits the
swimming in the pool alone or without any attendant. Although defendant does not maintain a
full-time physician in the swimming pool compound, it has however a nurse and a sanitary
inspector ready to administer injections or operate the oxygen resuscitator if the need should
arise.

In the afternoon of July 5, 1952, at about 1:00 o'clock, Dominador Ong, a 14-year old high
school student and boy scout, and his brothers Ruben and Eusebio, went to defendant's
swimming pools. This was not the first time that the three brothers had gone to said natatorium
for they had already been there four or five times before. They arrived at the natatorium at about
1:45 p.m. After paying the requisite admission fee, they immediately went to one of the small
pools where the water was shallow. At about 4:35 p.m., Dominador Ong told his brothers that he
was going to the locker room in an adjoining building to drink a bottle of coke. Upon hearing this,
Ruben and Eusebio went to the bigger pool leaving Dominador in the small pool and so they did
not see the latter when he left the pool to get a bottle of coke. In that afternoon, there were two
lifeguards on duty in the pool compound, namely, Manuel Abaño and Mario Villanueva. The tour
of duty of Abaño was from 8:00 to 12:00 in the morning and from 2:00 to 6:00 in the afternoon,
and of Villanueva from 7:30 to 11:30 a.m. and from 12:30 to 4:30 p.m. Between 4:00 to 5:00 that
afternoon, there were about twenty bathers inside the pool area and Manuel Abaño was going
around the pools to observe the bathers in compliance with the instructions of his chief.

Between 4:40 to 4:45 p.m., some boys who were in the pool area informed a bather by the
name of Andres Hagad, Jr., that somebody was swimming under water for quite a long time.
Another boy informed lifeguard Manuel Abaño of the same happening and Abaño immediately
jumped into the big swimming pool and retrieved the apparently lifeless body of Dominador Ong
from the bottom. The body was placed at the edge of the pool and Abaño immediately applied
manual artificial respiration. Soon after, male nurse Armando Rule came to render assistance,
followed by sanitary inspector Iluminado Vicente who, after being called by phone from the clinic
by one of the security guards, boarded a jeep carrying with him the resuscitator and a medicine
kit, and upon arriving he injected the boy with camphorated oil. After the injection, Vicente left
on a jeep in order to fetch Dr. Ayuyao from the University of the Philippines. Meanwhile, Abaño
continued the artificial manual respiration, and when this failed to revive him, they applied the

13
resuscitator until the two oxygen tanks were exhausted. Not long thereafter, Dr. Ayuyao arrived
with another resuscitator, but the same became of no use because he found the boy already
dead. The doctor ordered that the body be taken to the clinic.

In the evening of the same day, July 5, 1952, the incident was investigated by the Police
Department of Quezon City and in the investigation boys Ruben Ong and Andres Hagad, Jr.
gave written statements. On the following day, July 6, 1952, an autopsy was performed by Dr.
Enrique V. de los Santos, Chief, Medico Legal Division, National Bureau of Investigation, who
found in the body of the deceased the following: an abrasion on the right elbow lateral aspect;
contusion on the right forehead; hematoma on the scalp, frontal region, right side; a congestion
in the brain with petechial subcortical hemorrhage, frontal lobe; cyanosis on the face and on the
nails; the lung was soggy with fine froth in the bronchioles; dark fluid blood in the heart;
congestion in the visceral organs, and brownish fluid in the stomach. The death was due to
asphyxia by submersion in water.

The issue posed in this appeal is whether the death of minor Dominador Ong can be attributed
to the negligence of defendant and/or its employees so as to entitle plaintiffs to recover
damages.

The present action is governed by Article 2176 in relation to Article 2080 of the new Civil Code.
The first article provides that "whoever by act or omission causes damage to another, there
being fault or negligence, is obliged to pay for the damages done." Such fault or negligence is
called quasi-delict. Under the second article, this obligation is demandable not only for one's
own acts or omissions but also for those of persons for whom one is responsible. In addition, we
may quote the following authorities cited in the decision of the trial court:

"The rule is well settled that the owners of resorts to which people generally are
expressly or by implication invited are legally bound to exercise ordinary care and
prudence in the management and maintenance of such resorts, to the end of making
them reasonably safe for visitors" (Larkin vs. Saltair Beach Co., 30 Utah 86, 83 Pac.
686).

"Although the proprietor of a natatorium is liable for injuries to a patron, resulting from
lack of ordinary care in providing for his safety, without the fault of the patron, he is not,
however, in any sense deemed to be the insurer of the safety of patrons. And the death
of a patron within his premises does not cast upon him the burden of excusing himself
from any presumption of negligence" (Bertalot vs. Kinnare. 72 Ill. App. 52, 22 A. L. R.
635; Flora vs. Bimini Water Co., 161 Cal. 495, 119 Pac. 661). Thus in Bertalot vs.
Kinnare, supra, it was held that there could be no recovery for the death by drowning of
a fifteen-year boy in defendant's natatorium, where it appeared merely that he was lastly
seen alive in water at the shallow end of the pool, and some ten or fifteen minutes later
was discovered unconscious, and perhaps lifeless, at the bottom of the pool, all efforts to
resuscitate him being without avail.

Since the present action is one for damages founded on culpable negligence, the principle to be
observed is that the person claiming damages has the burden of proving that the damage is
caused by the fault or negligence of the person from whom the damage is claimed, or of one of
his employees (Walter A. Smith & Co. vs. Cadwallader Gibson Lumber Co., 55 Phil., 517). The
question then that arises is: Have appellants established by sufficient evidence the existence of

14
fault or negligence on the part of appellee so as to render it liable for damages for the death of
Dominador Ong?

There is no question that appellants had striven to prove that appellee failed to take the
necessary precaution to protect the lives of its patrons by not placing at the swimming pools
efficient and competent employees who may render help at a moment's notice, and they
ascribed such negligence to appellee because the lifeguard it had on the occasion minor Ong
was drowning was not available or was attending to something else with the result that his help
came late. Thus, appellants tried to prove through the testimony of Andres Hagad, Jr. and
Ruben Ong that when Eusebio Ong and Hagad, Jr. detected that there was a drowning person
in the bottom of the big swimming pool and shouted to the lifeguard for help, lifeguard Manuel
Abaño did not immediately respond to the alarm and it was only upon the third call that he threw
away the magazine he was reading and allowed three or four minutes to elapse before
retrieving the body from the water. This negligence of Abaño, they contend, is attributable to
appellee.

But the claim of these two witnesses not only was vehemently denied by lifeguard Abaño, but is
belied by the written statements given by them in the investigation conducted by the Police
Department of Quezon City approximately three hours after the happening of the accident.
Thus, these two boys admitted in the investigation that they narrated in their statements
everything they knew of the accident, but, as found by the trial, nowhere in said statements do
they state that the lifeguard was chatting with the security guard at the gate of the swimming
pool or was reading a comic magazine when the alarm was given for which reason he failed to
immediately respond to the alarm. On the contrary, what Ruben Ong particularly emphasized
therein was that after the lifeguard heard the shouts for help, the latter immediately dived into
the pool to retrieve the person under water who turned out to be his brother. For this reason, the
trial court made this conclusion: "The testimony of Ruben Ong and Andres Hagad, Jr. as to the
alleged failure of the lifeguard Abaño to immediately respond to their call may therefore be
disregarded because they are belied by their written statements. (Emphasis supplied.)

On the other hand, there is sufficient evidence to show that appellee has taken all necessary
precautions to avoid danger to the lives of its patrons or prevent accident which may cause their
death. Thus, it has been shown that the swimming pools of appellee are provided with a ring
buoy, toy roof, towing line, oxygen resuscitator and a first aid medicine kit. The bottom of the
pools is painted with black colors so as to insure clear visibility. There is on display in a
conspicuous place within the area certain rules and regulations governing the use of the pools.
Appellee employs six lifeguards who are all trained as they had taken a course for that purpose
and were issued certificates of proficiency. These lifeguards work on schedule prepared by their
chief and arranged in such a way as to have two guards at a time on duty to look after the safety
of the bathers. There is a male nurse and a sanitary inspector with a clinic provided with oxygen
resuscitator. And there are security guards who are available always in case of emergency.

The record also shows that when the body of minor Ong was retrieved from the bottom of the
pool, the employees of appellee did everything possible to bring him back to life. Thus, after he
was placed at the edge of the pool, lifeguard Abaño immediately gave him manual artificial
respiration. Soon thereafter, nurse Armando Rule arrived, followed by sanitary inspector
Iluminado Vicente who brought with him an oxygen resuscitator. When they found that the pulse
of the boy was abnormal, the inspector immediately injected him with camphorated oil. When
the manual artificial respiration proved ineffective they applied the oxygen resuscitator until its
contents were exhausted. And while all these efforts were being made, they sent for Dr. Ayuyao

15
from the University of the Philippines who however came late because upon examining the body
he found him to be already dead. All of the foregoing shows that appellee has done what is
humanly possible under the circumstances to restore life to minor Ong and for that reason it is
unfair to hold it liable for his death.

Sensing that their former theory as regards the liability of appellee may not be of much help,
appellants now switch to the theory that even if it be assumed that the deceased is partly to be
blamed for the unfortunate incident, still appellee may be held liable under the doctrine of "last
clear chance" for the reason that, having the last opportunity to save the victim, it failed to do so.

We do not see how this doctrine may apply considering that the record does not show how
minor Ong came into the big swimming pool. The only thing the record discloses is that minor
Ong informed his elder brothers that he was going to the locker room to drink a bottle of coke
but that from that time on nobody knew what happened to him until his lifeless body was
retrieved. The doctrine of last clear chance simply means that the negligence of a claimant does
not preclude a recovery for the negligence of defendant where it appears that the latter, by
exercising reasonable care and prudence, might have avoided injurious consequences to
claimant notwithstanding his negligence. Or, "As the doctrine usually is stated, a person who
has the last clear chance or opportunity of avoiding an accident, notwithstanding the negligent
acts of his opponent or the negligence of a third person which is imputed to his opponent, is
considered in law solely responsible for the consequences of the accident." (38 Am. Jur. pp.
900-902)

It goes without saying that the plaintiff himself was not free from fault, for he was guilty of
antecedent negligence in planting himself in 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 a person who has the last clear 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. (Picart vs. Smith, 37 Phil., 809)

Since it is not known how minor Ong came into the big swimming pool and it being apparent
that he went there without any companion in violation of one of the regulations of appellee as
regards the use of the pools, and it appearing that lifeguard Aba_¤_o responded to the call for
help as soon as his attention was called to it and immediately after retrieving the body all efforts
at the disposal of appellee had been put into play in order to bring him back to life, it is clear that
there is no room for the application of the doctrine now invoked by appellants to impute liability
to appellee..

The last clear chance doctrine can never apply where the party charged is required to
act instantaneously, and if the injury cannot be avoided by the application of all means at
hand after the peril is or should have been discovered; at least in cases in which any
previous negligence of the party charged cannot be said to have contributed to the
injury. O'Mally vs. Eagan, 77 ALR 582, 43 Wyo. 233, 350, 2, P2d 1063. (A.L.R. Digest,
Vol. 8, pp. 955-956)

Before closing, we wish to quote the following observation of the trial court, which we find
supported by the evidence: "There is (also) a strong suggestion coming from the expert

16
evidence presented by both parties that Dominador Ong might have dived where the water was
only 5.5 feet deep, and in so doing he might have hit or bumped his forehead against the bottom
of the pool, as a consequence of which he was stunned, and which to his drowning. As a boy
scout he must have received instructions in swimming. He knew, or have known that it was
dangerous for him to dive in that part of the pool."

Wherefore, the decision appealed from being in accordance with law and the evidence, we
hereby affirm the same, without pronouncement as to costs.

[G.R. Nos. 79050-51. November 14, 1989.]

PANTRANCO NORTH EXPRESS, INC., Petitioner, v. MARICAR BASCOS BAESA, thru her
personal guardian FRANCISCA O. BASCOS, FE O. ICO, in her behalf and in behalf of her
minor children, namely ERWIN, OLIVE, EDMUNDO and SHARON ICO, Respondents.

Efren N. Ambrosio & Associates for petitioner PNEI.

Emiliano S. Micu for Respondents.

SYLLABUS

1. CIVIL LAW; DAMAGES; LAST CLEAR CHANCE DOCTRINE; WHEN APPLICABLE. — The
doctrine of last clear chance applies only in a situation where the defendant, having the last fair
chance to avoid the impending harm and failed to do so, becomes liable for all the
consequences of the accident notwithstanding the prior negligence of the plaintiff.

2. ID.; ID.; ID.; CONDITION TO MAKE DOCTRINE APPLICABLE. — In order that the doctrine
of last clear chance may be applied, it must be shown that the person who allegedly had the last
opportunity to avert the accident was aware of the existence of the peril or with exercise of due
care should have been aware of it.

3. ID.; ID.; ID.; NOT APPLICABLE TO PERSON ACTING INSTANTANEOUSLY OR BY

AVAILABLE MEANS. — This doctrine of last chance has no application to a case where a
person is to act instantaneously, and if the injury cannot be avoided by using all means
available after the peril is or should have been discovered.

4. ID.; ID.; PROVISION OF R.A. NO. 4136 RE VEHICLE ENTERING A THROUGH HIGHWAY
OR A STOP INTERSECTION. — Section 43 (c), Article III, Chapter IV of Republic Act No. 1436
cannot apply to case a bar where at the time of the accident, the jeepney had already crossed
the intersection.

5. ID.; ID.; NEGLIGENCE; BURDEN OF PROOF LIES ON THE EMPLOYER. — A finding of

negligence on the part of the driver establishes a presumption that the employer has been
negligent and the latter has the burden of proof that it has exercised due negligence not only in
the selection of its employees but also in adequately supervising their work.

6. ID.; ID.; FAILURE TO PRESENT EVIDENCE TO SUPPORT CLAIM FOR DAMAGES. —

Plaintiff’s failure to present documentary evidence to support their claim for damages for loss of

17
earning capacity of the deceased victim does not bar recovery of the damages, if such loss may
be based sufficiently on their testimonies.

7. ID.; ID.; INDEMNITY FIXED AT P30,000. — The indemnity for the death of a person was
fixed by this Court at (P30,000.00).

DECISION

CORTES, J.:

In this Petition, Pantranco North Express Inc. (PANTRANCO), asks the Court to review the
decision of the Court of Appeals in CA-G.R. No. 05494-95 which affirmed the decisions of the
Court of First Instance of Rosales, Pangasinan in Civil Case No. 561-R and Civil Case No. 589-
R wherein PANTRANCO was ordered to pay damages and attorney’s fees to herein private
respondents.chanrobles virtual lawlibrary

The pertinent fact are as follows:chanrob1es virtual 1aw library

At about 7:00 o’clock in the morning of June 12, 1981, the spouses Ceasar and Marilyn Baesa
and their children Harold Jim, Marcelino and Maricar, together with spouses David Ico and Fe
O. Ico with their son Erwin Ico and seven other persons, were aboard a passenger jeepney on
their way to a picnic at Malalam River, Ilagan, Isabela, to celebrate the fifth wedding anniversary
of Ceasar and Marilyn Baesa.

The group, numbering fifteen (15) persons, rode in the passenger jeepney driven by David Ico,
who was also the registered owner thereof. From Ilagan, Isabela, they proceeded to Barrio
Capayacan to deliver some viands to one Mrs. Bascos and thenceforth to San Felipe, taking the
highway going to Malalam River. Upon reaching the highway, the jeepney turned right and
proceeded to Malalam River at a speed of about 20 kph. While they were proceeding towards
Malalam River, a speeding PANTRANCO bus from Aparri, on its regular route to Manila,
encroached on the jeepney’s lane while negotiating a curve, and collided with it.

As a result of the accident David Ico, spouses Ceasar Baesa and Marilyn Baesa and their
children, Harold Jim and Marcelino Baesa, died while the rest of the passengers suffered
injuries. The jeepney was extensively damaged. After the accident the driver of the
PANTRANCO Bus, Ambrosio Ramirez, boarded a car and proceeded to Santiago, Isabela.
From that time on up to the present, Ramirez has never been seen and has apparently
remained in hiding.

All the victims and/or their surviving heirs except herein private respondents settled the case
amicably under the "No Fault" insurance coverage of PANTRANCO.

Maricar Baesa through her guardian Francisca O. Bascos and Fe O. Ico for herself and for her
minor children, filed separate actions for damages arising from quasi-delict against
PANTRANCO, respectively docketed as Civil Case No. 561-R and 589-R of the Court of First
Instance of Pangasinan.

In its answer, PANTRANCO, aside from pointing to the late David Ico’s alleged negligence as

18
the proximate cause of the accident, invoked the defense of due diligence in the selection and
supervision of its driver, Ambrosio Ramirez.chanroblesvirtualawlibrary

On July 3, 1984, the CFI of Pangasinan rendered a decision against PANTRANCO awarding
the total amount of Two Million Three Hundred Four Thousand Six Hundred Forty-Seven
(P2,304,647.00) as damages, plus 10% thereof as attorney’s fees and costs to Maricar Baesa in
Civil Case No. 561-R, and the total amount of Six Hundred Fifty Two Thousand Six Hundred
Seventy-Two Pesos (P652,672.00) as damages, plus 10% thereof as attorney’s fees and costs
to Fe Ico and her children in Civil Case No. 589-R. On appeal, the cases were consolidated and
the Court of Appeals modified the decision of the trial court by ordering PANTRANCO to pay the
total amount of One Million One Hundred Eighty-Nine Thousand Nine Hundred Twenty Seven
Pesos (P1,189,927.00) as damages, plus Twenty Thousand Pesos (P20,000.00) as attorney’s
fees to Maricar Baesa, and the total amount of Three Hundred Forty-Four Thousand Pesos
(P344,000.00) plus Ten Thousand Pesos (P10,000.00) as attorney’s fees to Fe Ico and her
children, and to pay the costs in both cases. The dispositive portion of the assailed decision
reads as follows:chanrob1es virtual 1aw library

WHEREFORE, the decision appealed from is hereby modified by ordering the defendant
PANTRANCO North Express, Inc. to pay:chanrob1es virtual 1aw library

I. The plaintiff in Civil Case No. 561-R, Maricar Bascos Baesa, the following
damages:chanrob1es virtual 1aw library

A) As compensatory damages for the death of Ceasar Baesa — P30,000.00;

B) As compensatory damages for the death of Marilyn Baesa — P30,000.00;

C) As compensatory damages for the death of Harold Jim Baesa and Marcelino Baesa —
P30,000.00;

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

E) For the loss of earnings of Marilyn Bascos Baesa — P375,000.00;

F) For the burial expenses of the deceased Ceasar and Marilyn Baesa — P41,200.00;

G) For hospitalization expenses of Maricar Baesa — P3,727.00;

H) As moral damages — P50,000.00;

I) As attorney’s fees — P20,000.00;

II. The plaintiffs in Civil Case No. 589-R, the following damages:chanrob1es virtual 1aw library

A) As compensatory damages for the death of David Ico — P30,000.00;

B) For loss of earning capacity of David Ico — P252,000.00;

C) As moral damages for the death of David Ico and the injury of Fe Ico — P30,000.00

D) As payment for the jeepney — P20,000.00;

19
E) For the hospitalization of Fe Ico — P12,000.000;

F) And for attorney’s fees — P10,000.00;

and to pay the costs in both cases.

The amount of P25,000 paid to Maricar Bascos Baesa, plaintiff in Civil Case No. 561-R, and the
medical expenses in the sum of P3,273.55, should be deducted from the award in her
favor.chanrobles virtual lawlibrary

All the foregoing amounts herein awarded except the costs shall earn interest at the legal rate
from date of this decision until fully paid. [CA Decision, pp. 14-15; Rollo, pp. 57-58.]

PANTRANCO filed a motion for reconsideration of the Court of Appeal’s decision, but on June
26, 1987, it denied the same for lack of merit. PANTRANCO then filed the instant petition for
review.

Petitioner faults the Court of Appeals for not applying the doctrine of the "last clear chance"
against the jeepney driver. Petitioner claims that under the circumstances of the case, it was the
driver of the passenger jeepney who had the last clear chance to avoid the collision and was
therefore negligent in failing to utilize with reasonable care and competence his then existing
opportunity to avoid the harm.

The doctrine of the last clear chance was defined by this Court in the case of Ong v.
Metropolitan Water District, 104 Phil. 397 (1958), in this wise:chanrob1es virtual 1aw library

The doctrine of the last clear chance simply, means that the negligence of a claimant does not
preclude a recovery for the negligence of defendant where it appears that the latter, by
exercising reasonable care and prudence, might have avoided injurious consequences to
claimant notwithstanding his negligence.

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

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

To avoid liability for the negligence of its driver, petitioner claims that the original negligence of
its driver was not the proximate cause of the accident and that the sole proximate cause was

20
the supervening negligence of the jeepney driver David Ico in failing to avoid the accident. It is
petitioner’s position that even assuming arguendo, that the bus encroached into the lane of the
jeepney, the driver of the latter could have swerved the jeepney towards the spacious dirt
shoulder on his right without danger to himself or his passengers.

The above contention of petitioner is manifestly devoid of merit.

Contrary to the petitioner’s contention, the doctrine of "last clear chance" finds no application in
this case. For the doctrine to be applicable, it is necessary to show that the person who
allegedly had the last opportunity to avert the accident was aware of the existence of the peril or
should, with exercise of due care, have been aware of it. One cannot be expected to avoid an
accident or injury if he does not know or could not have known the existence of the peril. In this
case, there is nothing to show that the jeepney driver David Ico knew of the impending danger.
When he saw at a distance that the approaching bus was encroaching on his lane, he did not
immediately swerve the jeepney to the dirt shoulder on his right since he must have assumed
that the bus driver will return the bus to its own lane upon seeing the jeepney approaching from
the opposite direction. As held by this Court in the case of Vda. De Bonifacio v. BLTB, G.R. No.
L-26810, August 31, 1970, 34 SCRA 618, a motorist who is properly proceeding on his own side
of the highway is generally entitled to assume that an approaching vehicle coming towards him
on the wrong side, will return to his proper lane of traffic. There was nothing to indicate to David
Ico that the bus could not return to its own lane or was prevented from returning to the proper
lane by anything beyond the control of its driver. Leo Marantan, an alternate driver of the
Pantranco bus who was seated beside the driver Ramirez at the time of the accident, testified
that Ramirez had no choice but to swerve the steering wheel to the left and encroach on the
jeepney’s lane because there was a steep precipice on the right [CA Decision, p. 2; Rollo, p.
45]. However, this is belied by the evidence on record which clearly shows that there was
enough space to swerve the bus back to its own lane without any danger [CA Decision, p. 7;
Rollo, p. 50].

Moreover, both the trial court and the Court of Appeals found that at the time of the accident the
Pantranco bus was speeding towards Manila [CA Decision, p. 2; Rollo, p. 45]. By the time David
Ico must have realized that the bus was not returning to its own lane, it was already too late to
swerve the jeepney to his right to prevent an accident. The speed at which the approaching bus
was running prevented David Ico from swerving the jeepney to the right shoulder of the road in
time to avoid the collision. Thus, even assuming that the jeepney driver perceived the danger a
few seconds before the actual collision, he had no opportunity to avoid it. This Court has held
that the last clear chance doctrine "can never apply where the party charged is required to act
instantaneously, and if the injury cannot be avoided by the application of all means at hand after
the peril is or should have been discovered" [Ong v. Metropolitan Water District,
supra].chanrobles.com : virtual law library

Petitioner likewise insists that David Ico was negligent in failing to observe Section 43 (c), Article
III Chapter IV of Republic Act No. 4136 * which provides that the driver of a vehicle entering a
through highway or a stop intersection shall yield the right of way to all vehicles approaching in
either direction on such through highway.

Petitioner’s misplaced reliance on the aforesaid law is readily apparent in this case. The cited
law itself provides that it applies only to vehicles entering a through highway or a stop
intersection. At the time of the accident, the jeepney had already crossed the intersection and
was on its way to Malalam River. Petitioner itself cited Fe Ico’s testimony that the accident
occurred after the jeepney had travelled a distance of about two (2) meters from the point of

21
intersection [Petition p. 10; Rollo, p. 27]. In fact, even the witness for the petitioner, Leo
Marantan, testified that both vehicles were coming from opposite directions [CA Decision, p. 7;
Rollo, p. 50], clearly indicating that the jeepney had already crossed the intersection.

Considering the foregoing, the Court finds that the negligence of petitioner’s driver in
encroaching into the lane of the incoming jeepney and in failing to return the bus to its own lane
immediately upon seeing the jeepney coming from the opposite direction was the sole and
proximate cause of the accident without which the collision would not have occurred. There was
no supervening or intervening negligence on the part of the jeepney driver which would have
made the prior negligence of petitioner’s driver a mere remote cause of the accident.

II

On the issue of its liability as an employer, petitioner claims that it had observed the diligence of
a good father of a family to prevent damage, conformably to the last paragraph of Article 2180
of the Civil Code. Petitioner adduced evidence to show that in hiring its drivers, the latter are
required to have professional driver’s license and police clearance. The drivers must also pass
written examinations, interviews and practical driving tests, and are required to undergo a six-
month training period. Rodrigo San Pedro, petitioner’s Training Coordinator, testified on
petitioner’s policy of conducting regular and continuing training programs and safety seminars
for its drivers, conductors, inspectors and supervisors at a frequency rate of at least two (2)
seminars a month.

On this point, the Court quotes with approval the following findings of the trial court which was
adopted by the Court of Appeals in its challenged decision:chanrob1es virtual 1aw library

When an injury is caused by the negligence of an employee, there instantly arises a

presumption that the employer has been negligent either in the selection of his employees or in
the supervision over their acts. Although this presumption is only a disputable presumption
which could be overcome by proof of diligence of a good father of a family, this Court believes
that the evidence submitted by the defendant to show that it exercised the diligence of a good
father of a family in the case of Ramirez, as a company driver is far from sufficient. No support
evidence has been adduced. The professional driver’s license of Ramirez has not been
produced. There is no proof that he is between 25 to 38 years old. There is also no proof as to
his educational attainment, his age, his weight and the fact that he is married or not. Neither are
the result of the written test, psychological and physical test, among other tests, have been
submitted in evidence [sic]. His NBI or police clearances and clearances from previous
employment were not marked in evidence. No evidence was presented that Ramirez actually
and really attended the seminars. Vital evidence should have been the certificate of attendance
or certificate of participation or evidence of such participation like a logbook signed by the
trainees when they attended the seminars. If such records are not available, the testimony of
the classmates that Ramirez was their classmate in said seminar (should have been presented)
[CA Decision, pp. 8-9; Rollo, pp. 51-52].chanrobles law library

Petitioner contends that the fact that Ambrosio Ramirez was employed and remained as its
driver only means that he underwent the same rigid selection process and was subjected to the
same strict supervision imposed by petitioner on all applicants and employees. It is argued by
the petitioner that unless proven otherwise, it is presumed that petitioner observed its usual
recruitment procedure and company polices on safety and efficiency [Petition, p. 20; Rollo, p.
37].

22
The Court finds the above contention unmeritorious.

The finding of negligence on the part of its driver Ambrosio Ramirez gave rise to the
presumption of negligence on the part of petitioner and the burden of proving that it exercised
due diligence not only in the selection of its employees but also in adequately supervising their
work rests with the petitioner [Lilius v. Manila Railroad Company, 59 Phil. 758 (1934); Umali v.
Bacani, G.R. No. L-40570, June 30, 1976, 69 SCRA 623]. Contrary to petitioner’s claim, there is
no presumption that the usual recruitment procedures and safety standards were observed. The
mere issuance of rules and regulations and the formulation of various company policies on
safety, without showing that they are being complied with, are not sufficient to exempt petitioner
from liability arising from the negligence of its employee. It is incumbent upon petitioner to show
that in recruiting and employing the erring driver, the recruitment procedures and company
policies on efficiency and safety were followed. Petitioner failed to do this. Hence, the Court
finds no cogent reason to disturb the finding of both the trial court and the Court of Appeals that
the evidence presented by the petitioner, which consists mainly of the uncorroborated testimony
of its Training Coordinator, is insufficient to overcome the presumption of negligence against
petitioner.cralawnad

III

On the question of damages, petitioner claims that the Court of Appeals erred in fixing the
damages for the loss of earning capacity of the deceased victims. Petitioner assails respondent
court’s findings because no documentary evidence in support thereof, such as income tax
returns, pay-rolls, pay slips or invoices obtained in the usual course of business, were presented
[Petition, p. 22; Rollo, p. 39]. Petitioner argues that the "bare and self-serving testimonies of the
wife of the deceased David Ico and the mother of the deceased Marilyn Baesa . . . have no
probative value to sustain in law the Court of Appeals’ conclusion on the respective earnings of
the deceased victims." [Petition, pp. 21-22; Rollo, pp. 38-39.] It is petitioner’s contention that the
evidence presented by the private respondent does not meet the requirements of clear and
satisfactory evidence to prove actual and compensatory damages.

The Court finds that the Court of Appeals committed no reversible error in fixing the amount of
damages for the loss of earning capacity of the deceased victims. While it is true that private
respondents should have presented documentary evidence to support their claim for damages
for loss of earning capacity of the deceased victims, the absence thereof does not necessarily
bar the recovery of the damages in question. The testimony of Fe Ico and Francisca Bascos as
to the earning capacity of David Ico, and the spouses Baesa, respectively, are sufficient to
establish a basis from which the court can make a fair and reasonable estimate of the damages
for the loss of earning capacity of the three deceased victims. Moreover, in fixing the damages
for loss of earning capacity of a deceased victim, the court can consider the nature of his
occupation, his educational attainment and the state of his health at the time of death.

In the instant case, David Ico was thirty eight (38) years old at the time of his death in 1981 and
was driving his own passenger jeepney. The spouses Ceasar and Marilyn Baesa were both
thirty (30) years old at the time of their death. Ceasar Baesa was a commerce degree holder
and the proprietor of the Cauayan Press, printer of the Cauayan Valley Newspaper and the
Valley Times at Cauayan, Isabela. Marilyn Baesa graduated as a nurse in 1976 and at the time
of her death, was the company nurse, personnel manager, treasurer and cashier of the Ilagan
Press at Ilagan, Isabela. Respondent court duly considered these factors, together with the

23
uncontradicted testimonies of Fe Ico and Francisca Bascos, in fixing the amount of damages for
the loss of earning capacity of David Ico and the spouses Baesa.chanrobles.com:cralaw:red

However, it should be pointed out that the Court of Appeals committed error in fixing the
compensatory damages for the death of Harold Jim Baesa and Marcelino Baesa. Respondent
court awarded to plaintiff (private respondent) Maricar Baesa Thirty Thousand Pesos
(P30,000.00) as "compensatory damages for the death of Harold Jim Baesa and Marcelino
Baesa." [CA Decision, p. 14; Rollo, 57]. In other words, the Court of Appeals awarded only
Fifteen Thousand Pesos (P15,000.00) as indemnity for the death of Harold Jim Baesa and
another Fifteen Thousand Pesos (P15,000.00) for the death of Marcelino Baesa. This is clearly
erroneous. In the case of People v. de la Fuente, G.R. Nos. 63251-52, December 29, 1983, 126
SCRA 518, the indemnity for the death of a person was fixed by this Court at Thirty Thousand
Pesos (P30,000.00). Plaintiff Maricar Baesa should therefore be awarded Sixty Thousand
Pesos (P60,000.00) as indemnity for the death of her brothers, Harold Jim Baesa and Marcelino
Baesa or Thirty Thousand Pesos (P30,000.00) for the death of each brother.

The other items of damages awarded by respondent court which were not challenged by the
petitioner are hereby affirmed.

WHEREFORE, premises considered, the petition is DENIED, and the decision of respondent
Court of Appeals is hereby AFFIRMED with the modification that the amount of compensatory
damages for the death of Harold Jim Baesa and Marcelino Baesa are increased to Thirty
Thousand Pesos (P30,000.00) each.chanrobles law library

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 188363 February 27, 2013

ALLIED BANKING CORPORATION, Petitioner,

vs.
BANK OF THE PHILIPPINE ISLANDS, Respondents.

DECISION

VILLARAMA, JR., J.:

A collecting bank is guilty of contributory negligence when it accepted for deposit a post-dated
check notwithstanding that said check had been cleared by the drawee bank which failed to
return the check within the 24-hour reglementary period.

Petitioner Allied Banking Corporation appeals the Decision1 dated March 19, 2009 of the Court
of Appeals (CA) in CA-G.R. SP No. 97604 which set aside the Decision2 dated December 13,
2005 of the Regional Trial Court (RTC) of Makati City, Branch 57 in Civil Case No. 05-418.

24
The factual antecedents:

On October 10, 2002, a check in the amount of ₱1,000,000.00 payable to "Mateo Mgt. Group
International" (MMGI) was presented for deposit and accepted at petitioner's Kawit Branch. The
check, post-dated "Oct. 9, 2003", was drawn against the account of Marciano Silva, Jr. (Silva)
with respondent Bank of the Philippine Islands (BPI) Bel-Air Branch. Upon receipt, petitioner
sent the check for clearing to respondent through the Philippine Clearing House Corporation
(PCHC).3

The check was cleared by respondent and petitioner credited the account of MMGI with
₱1,000,000.00. On October 22, 2002, MMGI’s account was closed and all the funds therein
were withdrawn. A month later, Silva discovered the debit of ₱1,000,000.00 from his account. In
response to Silva’s complaint, respondent credited his account with the aforesaid sum.4

On March 21, 2003, respondent returned a photocopy of the check to petitioner for the reason:
"Postdated." Petitioner, however, refused to accept and sent back to respondent a photocopy of
the check. Thereafter, the check, or more accurately, the Charge Slip, was tossed several times
from petitioner to respondent, and back to petitioner, until on May 6, 2003, respondent
requested the PCHC to take custody of the check. Acting on the request, PCHC directed the
respondent to deliver the original check and informed it of PCHC’s authority under Clearing
House Operating Memo (CHOM) No. 279 dated 06 September 1996 to split 50/50 the amount
of the check subject of a "Ping-Pong" controversy which shall be implemented thru the issuance
of Debit Adjustment Tickets against the outward demands of the banks involved. PCHC likewise
encouraged respondent to submit the controversy for resolution thru the PCHC Arbitration
Mechanism.5

However, it was petitioner who filed a complaint6 before the Arbitration Committee, asserting
that respondent should solely bear the entire face value of the check due to its negligence in
failing to return the check to petitioner within the 24-hour reglementary period as provided in
Section 20.17 of the Clearing House Rules and Regulations8(CHRR) 2000. Petitioner prayed
that respondent be ordered to reimburse the sum of ₱500,000.00 with 12% interest per annum,
and to pay attorney’s fees and other arbitration expenses.

In its Answer with Counterclaims,9 respondent charged petitioner with gross negligence for
accepting the post-dated check in the first place. It contended that petitioner’s admitted
negligence was the sole and proximate cause of the loss.

On December 8, 2004, the Arbitration Committee rendered its Decision10 in favor of petitioner
and against the respondent. First, it ruled that the situation of the parties does not involve a
"Ping-Pong" controversy since the subject check was neither returned within the reglementary
time or through the PCHC return window, nor coursed through the clearing facilities of the
PCHC.

As to respondent’s direct presentation of a photocopy of the subject check, it was declared to be

without legal basis because Section 21.111 of the CHRR 2000 does not apply to post-dated
checks. The Arbitration Committee further noted that respondent not only failed to return the
check within the 24-hour reglementary period, it also failed to institute any formal complaint
within the contemplation of Section 20.312 and it appears that respondent was already contented
with the 50-50 split initially implemented by the PCHC. Finding both parties negligent in the

25
performance of their duties, the Committee applied the doctrine of "Last Clear Chance" and
ruled that the loss should be shouldered by respondent alone, thus:

WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiff Allied

Banking Corporation and against defendant Bank of the Philippine Islands, ordering the latter to
pay the former the following:

(a) The sum of ₱500,000.00, plus interest thereon at the rate of 12% per annum counted
from the date of filing of the complaint;

(b) Attorney’s fees in the amount of ₱25,000.00;

(c) The sum of ₱2,090.00 as and by way of reimbursement of filing fees, plus the cost of
suit.

SO ORDERED.13

Respondent filed a motion for reconsideration14 but it was denied by the PCHC Board of
Directors under Board Resolution No. 10-200515 dated April 22, 2005. The Board pointed out
that what actually transpired was a "ping-pong" "not of a check but of a Charge Slip (CS)
enclosed in a carrier envelope that went back and forth through the clearing system in apparent
reaction by [petitioner] to the wrongful return via the PCHC clearing system." Respondent’s
conduct was held as a "gross and unmistakably deliberate violation" of Section 20.2,16 in
relation to Section 20.1(e) of the CHRR 2000.17

On May 13, 2005, respondent filed a petition for review18 in the RTC claiming that PCHC erred
in constricting the return of a post-dated check to Section 20.1, overlooking the fact that Section
20.3 is also applicable which provision necessarily contemplates defects that are referred to in
Section 20.1 as both sections are subsumed under the general provision (Section 20) on the
return of regular items. Respondent also argued that assuming it to be liable, the PCHC erred in
holding it solely responsible and should bear entirely the consequent loss considering that while
respondent may have the "last" opportunity in proximity, it was petitioner which had the longest,
fairest and clearest chance to discover the mistake and avoid the happening of the loss. Lastly,
respondent assailed the award of attorney’s fees, arguing that PCHC’s perception of "malice"
against it and misuse of the clearing machinery is clearly baseless and unfounded.

In its Decision dated December 13, 2005, the RTC affirmed with modification the Arbitration
Committee’s decision by deleting the award of attorney’s fees. The RTC found no merit in
respondent’s stance that through inadvertence it failed to discover that the check was post-
dated and that confirmation within 24 hours is often "elusive if not outright impossible" because
a drawee bank receives hundreds if not thousands of checks in an ordinary clearing day. Thus:

Petitioner admitted par. 4 in its Answer with Counterclaim and in its Memorandum, further
adding that upon receipt of the subject check "through inadvertence", it did not notice that the
check was postdated, hence, petitioner did not return the same to respondent."

These contradict petitioner’s belated contention that it discovered the defect only after the lapse
of the reglementary period. What the evidence on record discloses is that petitioner received the
check on October 10, 2002, that it was promptly sent for clearing, that through inadvertence, it

26
did not notice that the check was postdated. Petitioner did not even state when it discovered the
defect in the subject check.

Likewise, petitioner’s contention that its discovery of the defect was a non-issue in view of the
admissions made in its Answer is unavailing. The Court has noted the fact that the PCHC
Arbitration Committee conducted a clarificatory hearing during which petitioner admitted that its
standard operating procedure as regards confirmation of checks was not followed. No less than
petitioner’s witness admitted that BPI tried to call up the drawer of the check, as their procedure
dictates when it comes to checks in large amounts. However, having initially failed to contact the
drawer, no follow up calls were made nor other actions taken. Despite these, petitioner cleared
the check. Having admitted making said calls, it is simply impossible for petitioner to
have missed the fact that the check was postdated.19 (Emphasis supplied)

With the denial of its motion for partial reconsideration, respondent elevated the case to the CA
by filing a petition for review under Rule 42 of the 1997 Rules of Civil Procedure, as amended.

By Decision dated March 19, 2009, the CA set aside the RTC judgment and ruled for a 60-40
sharing of the loss as it found petitioner guilty of contributory negligence in accepting what is
clearly a post-dated check. The CA found that petitioner’s failure to notice the irregularity on the
face of the check was a breach of its duty to the public and a telling sign of its lack of due
diligence in handling checks coursed through it. While the CA conceded that the drawee bank
has a bigger responsibility in the clearing of checks, it declared that the presenting bank cannot
take lightly its obligation to make sure that only valid checks are introduced into the clearing
system. According to the CA, considerations of public policy and substantial justice will be
served by allocating the damage on a 60-40 ratio, as it thus decreed:

WHEREFORE, the decision of the Regional Trial Court of Makati City (Branch 57) dated
December 13, 2005 is ANNULLED and SET ASIDE and judgment is rendered ordering
petitioner to pay respondent Allied Banking Corporation the sum of ₱100,000.00 plus interest
thereon at the rate of 6% from July 10, 2003, which shall become 12% per annum from finality
hereof, until fully paid, aside from costs.

SO ORDERED.20

Its motion for reconsideration having been denied by the CA, petitioner is now before the Court
seeking a partial reversal of the CA’s decision and affirmance of the December 13, 2005
Decision of the RTC.

Essentially, the two issues for resolution are: (1) whether the doctrine of last clear chance
applies in this case; and (2) whether the 60-40 apportionment of loss ordered by the CA was
justified.

As well established by the records, both petitioner and respondent were admittedly negligent in
the encashment of a check post-dated one year from its presentment.

Petitioner argues that the CA should have sustained PCHC’s finding that despite the antecedent
negligence of petitioner in accepting the postdated check for deposit, respondent, by exercising
reasonable care and prudence, might have avoided injurious consequences had it not
negligently cleared the check in question. It pointed out that in applying the doctrine of last clear
chance, the PCHC cited the case of Philippine Bank of Commerce v. Court of Appeals21 which

27
ruled that assuming the bank’s depositor, private respondent, was negligent in entrusting cash
to a dishonest employee, thus providing the latter with the opportunity to defraud the company,
it cannot be denied that petitioner bank had the last clear opportunity to avert the injury incurred
by its client, simply by faithfully observing their self-imposed validation procedure.

Petitioner underscores respondent’s failure to observe clearing house rules and its own
standard operating procedure which, the PCHC said constitute further negligence so much so
that respondent should be solely liable for the loss. Specifically, respondent failed to return the
subject check within the 24-hour reglementary period under Section 20.1 and to institute any
formal complaint within the contemplation of Section 20.3 of the CHRR 2000. The PCHC
likewise faulted respondent for not making follow-up calls or taking any other action after it
initially attempted, without success, to contact by telephone the drawer of the check, and
clearing the check despite such lack of confirmation from its depositor in violation of its own
standard procedure for checks involving large amounts.

The doctrine of last clear chance, stated broadly, is that the negligence of the plaintiff does not
preclude a recovery for the negligence of the defendant where it appears that the defendant, by
exercising reasonable care and prudence, might have avoided injurious consequences to the
plaintiff notwithstanding the plaintiff’s negligence.22The doctrine necessarily assumes
negligence on the part of the defendant and contributory negligence on the part of the plaintiff,
and does not apply except upon that assumption.23 Stated differently, the antecedent
negligence of the plaintiff does not preclude him from recovering damages caused by the
supervening negligence of the defendant, who had the last fair chance to prevent the impending
harm by the exercise of due diligence.24Moreover, in situations where the doctrine has been
applied, it was defendant’s failure to exercise such ordinary care, having the last clear chance to
avoid loss or injury, which was the proximate cause of the occurrence of such loss or injury.25

In this case, the evidence clearly shows that the proximate cause of the unwarranted
encashment of the subject check was the negligence of respondent who cleared a post-dated
check sent to it thru the PCHC clearing facility without observing its own verification procedure.
As correctly found by the PCHC and upheld by the RTC, if only respondent exercised ordinary
care in the clearing process, it could have easily noticed the glaring defect upon seeing the date
written on the face of the check "Oct. 9, 2003". Respondent could have then promptly returned
the check and with the check thus dishonored, petitioner would have not credited the amount
thereof to the payee’s account. Thus, notwithstanding the antecedent negligence of the
petitioner in accepting the post-dated check for deposit, it can seek reimbursement from
respondent the amount credited to the payee’s account covering the check.

What petitioner omitted to mention is that in the cited case of Philippine Bank of Commerce v.
Court of Appeals,26while the Court found petitioner bank as the culpable party under the
doctrine of last clear chance since it had, thru its teller, the last opportunity to avert the injury
incurred by its client simply by faithfully observing its own validation procedure, it nevertheless
ruled that the plaintiff depositor (private respondent) must share in the loss on account of
its contributory negligence. Thus:

The foregoing notwithstanding, it cannot be denied that, indeed, private respondent was
likewise negligent in not checking its monthly statements of account. Had it done so, the
company would have been alerted to the series of frauds being committed against RMC by its
secretary. The damage would definitely not have ballooned to such an amount if only RMC,
particularly Romeo Lipana, had exercised even a little vigilance in their financial affairs. This

28
omission by RMC amounts to contributory negligence which shall mitigate the damages
that may be awarded to the private respondent under Article 2179 of the New Civil
Code, to wit:

"x x x. When the plaintiff’s own negligence was the immediate and proximate cause of his injury,
he cannot recover damages. But if his negligence was only contributory, the immediate and
proximate cause of the injury being the defendant's lack of due care, the plaintiff may recover
damages, but the courts shall mitigate the damages to be awarded."

In view of this, we believe that the demands of substantial justice are satisfied by allocating the
damage on a 60-40 ratio. Thus, 40% of the damage awarded by the respondent appellate
court, except the award of ₱25,000.00 attorney’s fees, shall be borne by private respondent
RMC; only the balance of 60% needs to be paid by the petitioners. The award of attorney’s fees
shall be borne exclusively by the petitioners.27 (Italics in the original; emphasis supplied)

In another earlier case,28 the Court refused to hold petitioner bank solely liable for the loss
notwithstanding the finding that the proximate cause of the loss was due to its negligence. Since
the employees of private respondent bank were likewise found negligent, its claim for damages
is subject to mitigation by the courts. Thus:

Both banks were negligent in the selection and supervision of their employees resulting in the
encashment of the forged checks by an impostor. Both banks were not able to overcome the
presumption of negligence in the selection and supervision of their employees. It was the gross
negligence of the employees of both banks which resulted in the fraud and the subsequent
loss. While it is true that petitioner BPI’s negligence may have been the proximate cause
of the loss, respondent CBC’s negligence contributed equally to the success of the
impostor in encashing the proceeds of the forged checks. Under these circumstances, we
apply Article 2179 of the Civil Code to the effect that while respondent CBC may recover its
losses, such losses are subject to mitigation by the courts. x x x

Considering the comparative negligence of the two (2) banks, we rule that the demands of
substantial justice are satisfied by allocating the loss of ₱2,413,215.16 and the costs of the
arbitration proceedings in the amount of ₱7,250.00 and the costs of litigation on a 60-40 ratio.
Conformably with this ruling, no interests and attorney’s fees can be awarded to either of the
parties.29 (Emphasis supplied)

Apportionment of damages between parties who are both negligent was followed in subsequent
cases involving banking transactions notwithstanding the court’s finding that one of them had
the last clear opportunity to avoid the occurrence of the loss.

In Bank of America NT & SA v. Philippine Racing Club,30 the Court ruled:

In the case at bar, petitioner cannot evade responsibility for the loss by attributing negligence on
the part of respondent because, even if we concur that the latter was indeed negligent in pre-
signing blank checks, the former had the last clear chance to avoid the loss. To reiterate,
petitioner’s own operations manager admitted that they could have called up the client for
verification or confirmation before honoring the dubious checks. Verily, petitioner had the final
opportunity to avert the injury that befell the respondent. x x x Petitioner’s negligence has been
undoubtedly established and, thus, pursuant to Art. 1170 of the NCC, it must suffer the
consequence of said negligence.

29
In the interest of fairness, however, we believe it is proper to consider respondent’s own
negligence to mitigate petitioner’s liability.1âwphi1 Article 2179 of the Civil Code
provides:

xxxx

Explaining this provision in Lambert v. Heirs of Ray Castillon, the Court held:

"The underlying precept on contributory negligence is that a plaintiff who is partly responsible for
his own injury should not be entitled to recover damages in full but must bear the consequences
of his own negligence. The defendant must thus be held liable only for the damages actually
caused by his negligence. xxx xxx xxx"

xxxx

Following established jurisprudential precedents, we believe the allocation of sixty percent

(60%) of the actual damages involved in this case (represented by the amount of the checks
with legal interest) to petitioner is proper under the premises. Respondent should, in light of
its contributory negligence, bear forty percent (40%) of its own loss.31 (Emphasis supplied)

In Philippine National Bank v. F.F. Cruz and Co., Inc.,32 the Court made a similar disposition,
thus:

Given the foregoing, we find no reversible error in the findings of the appellate court that PNB
was negligent in the handling of FFCCI’s combo account, specifically, with respect to PNB’s
failure to detect the forgeries in the subject applications for manager’s check which could have
prevented the loss. x x x 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 and The Consolidated Bank & Trust Corporation v. Court of Appeals, where the bank’s
negligence is the proximate 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, PNB’s negligence is the
proximate cause of the loss while the issue as to FFCCI’s 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.33

"Contributory negligence is conduct on the part of the injured party, contributing as a legal
cause to the harm he has suffered, which falls below the standard to which he is required to
conform for his own protection."34 Admittedly, petitioner’s acceptance of the subject check for
deposit despite the one year postdate written on its face was a clear violation of established
banking regulations and practices. In such instances, payment should be refused by the drawee
bank and returned through the PCHC within the 24-hour reglementary period. As aptly observed
by the CA, petitioner’s failure to comply with this basic policy regarding post-dated checks was
"a telling sign of its lack of due diligence in handling checks coursed through it."35

It bears stressing that "the diligence required of banks is more than that of a
Roman paterfamilias or a good father of a family. The highest degree of diligence is
expected,"36 considering the nature of the banking business that is imbued with public interest.
While it is true that respondent's liability for its negligent clearing of the check is greater,
petitioner cannot take lightly its own violation of the long-standing rule against encashment of

30
post-dated checks and the injurious consequences of allowing such checks into the clearing
system.

Petitioner repeatedly harps on respondent's transgression of clearing house rules when the
latter resorted to direct presentment way beyond the reglementary period but glosses over its
own negligent act that clearly fell short of the conduct expected of it as a collecting bank.
Petitioner must bear the consequences of its omission to exercise extraordinary diligence in
scrutinizing checks presented by its depositors.

Assessing the facts and in the light of the cited precedents, the Court thus finds no error
committed by the CA in allocating the resulting loss from the wrongful encashment of the
subject check on a 60-40 ratio.

WHEREFORE, the petition for review on certiorari is DENIED. The Decision dated March 19,
2009 of the Court of Appeals in CA-G.R. SP No. 97604 is hereby AFFIRMED.

No pronouncement as to costs.

SO ORDERED.

[G.R. No. 140698. June 20, 2003]

ROGELIO ENGADA, petitioner, vs. HON. COURT OF APPEALS, Former Fourteenth

Division, Manila, and PEOPLE OF THE PHILIPPINES, respondents.

DECISION
QUISUMBING, J.:

This petition for review seeks the reversal of the decision[1] dated May 31, 1999 of the Court
of Appeals in CA-G.R. CR No. 18358, which affirmed with modification the judgment[2] dated
August 25, 1994, of the Regional Trial Court of Iloilo City, Branch 29, in Criminal Case No.
36223. The RTC found petitioner guilty beyond reasonable doubt of simple imprudence resulting
in physical injuries and damage to property, and sentenced him to (a) suffer imprisonment for one
month and one day of arresto mayor, (b) pay private complainant, Mrs. Sheila Seyan, the amount
of fifty one thousand pesos (P51,000) for the total destruction of the Toyota Tamaraw jeepney,
and one hundred ten thousand pesos (P110,000) for her hospital and medical expenses, and (c)
pay the costs of suit. The CA increased the prison term imposed on petitioner to four months
of arresto mayor.
The facts culled from the records are as follows:
On November 29, 1989, at about 1:30 in the afternoon, Edwin Iran was driving a blue Toyota
Tamaraw jeepney bound for Iloilo City. On board was Sheila Seyan, the registered owner of the
Tamaraw. While traversing the road along Barangay Acquit, Barotac Nuevo, the Tamaraw
passengers allegedly saw from the opposite direction a speeding Isuzu pick-up, driven by
petitioner Rogelio Engada. The pick-up had just negotiated a hilly gradient on the highway. When
it was just a few meters away from the Tamaraw, the Isuzu pick-ups right signal light flashed, at

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the same time, it swerved to its left, encroaching upon the lane of the Tamaraw and headed
towards a head-on collision course with it. Seyan shouted at Iran to avoid the pick-up. Iran
swerved to his left but the pick-up also swerved to its right. Thus, the pick-up collided with the
Tamaraw, hitting the latter at its right front passenger side. The impact caused the head and
chassis of the Tamaraw to separate from its body. Seyan was thrown out of the Tamaraw and
landed on a ricefield. The pick-up stopped diagonally astride the center of the road.
Seyan and Iran were brought to Barotac Nuevo Medicare Hospital.[3] Seyan was profusely
bleeding from her nose and was in a state of shock with her eyes closed. In the afternoon of the
same day, November 29, 1989, she was transferred to St. Pauls Hospital in Iloilo City where she
was confined. Her medical certificate revealed that she suffered a fracture on the right femur,
lacerated wound on the right foot, multiple contusions, abrasions, blunt abdominal injury, and
lacerations of the upper-lower pole of the right kidney.[4] She was discharged from the hospital
only on January 15, 1990.
Seyan incurred P130,000 in medical expenses. The Toyota Tamaraw jeepney ended up in
the junk heap. Its total loss was computed at P80,000.
A criminal complaint for damage to property through reckless imprudence with serious
physical injuries was filed with the Municipal Trial Court of Barotac Nuevo against petitioner
Rogelio Engada and Edwin Iran.[5] Probable cause was found against petitioner, while the
complaint against Iran was dismissed.[6]
Consequently, an Information was filed against petitioner charging him with serious physical
injuries and damage to property through reckless imprudence, thus:

That on or about November 29, 1989, in the Municipality of Barotac Nuevo, Province of Iloilo,
Philippines, and within the jurisdiction of this Honorable Court, the above-named accused
Rogelio Engada driving an Isuzu Pick-up with Plate No. SAR 117 owned by the Land Bank of
the Philippines, did then and there wilfully, unlawfully and with reckless imprudence drive said
pick-up in a careless, reckless and imprudent manner with disregard of traffic laws and
regulations, and as a result of such negligent and reckless driving the Isuzu Pick-up driven by
the accused bumped a Toyota Tamaraw jeep with Plate No. FBF 601 owned by Joelito and
Sheila Seyan and driven by Edwin Iran thereby causing damage to the Toyota Tamaraw in the
amount of P80,000.00 and serious physical injuries to Mrs. Sheila Seyan who was riding said
vehicle, the injuries barring complications will heal in more than 30 days.

CONTRARY TO LAW.[7]

After trial, the court rendered on August 25, 1994 a decision, disposing as follows:

WHEREFORE, the Court, finding the accused guilty beyond reasonable doubt of Simple
Imprudence resulting [in] physical injuries and damage to property defined and penalized in
Article 263, paragraph 4 and in relation with Article 365, paragraph 2 of the Revised Penal
Code, hereby sentences the accused Rogelio Engada to suffer imprisonment of ONE (1)
MONTH and ONE (1) DAY of arresto mayor.

Accused is further ordered to pay complainant Mrs. Sheila Seyan the amount of P51,000.00 for
the total destruction of the Toyota Tamaraw Jeepney and P110,000.00 for indemnification of
hospital and medical expenses, and to pay the cost of the suit.

SO ORDERED.[8]

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 Petitioner appealed to the Court of Appeals. On May 31, 1999, the CA dismissed the appeal
and affirmed with modification the trial courts decision, thus:

WHEREFORE, the instant appeal is hereby DISMISSED. Accordingly, the appealed decision is
hereby AFFIRMED with modification as to the penalty imposed upon the accused who is hereby
sentenced to suffer imprisonment of FOUR (4) MONTHS of arresto mayor.

SO ORDERED.[9]

Petitioner filed a motion for reconsideration, but it was denied. Hence, the instant petition,
wherein petitioner raises the issue of:

WHETHER OR NOT THE FINDINGS OF RESPONDENT COURT OF APPEALS ARE

SUPPORTED BY THE EVIDENCE OR BASED ON A MISAPPREHENSION OF FACTS
RESULTING IN A MANIFESTLY MISTAKEN INFERENCE SPECIFICALLY ON WHAT WAS
THE PROXIMATE CAUSE OF THE ACCIDENT AND WHOSE ACT WAS IT.[10]

Petitioner claims innocence and seeks acquittal. He contends that in this case we should
relax the rule that only legal questions can be raised in a petition for review under Rule 45 of the
Rules of Court. According to him, the Court of Appeals misapprehended the facts, and erred in
its conclusion as to the proximate cause of the collision. He insists that the Court of Appeals erred
when it found him negligent for occupying the lane of the Tamaraw jeepney, and then failing to
return to his original lane at the safest and earliest opportunity.
Petitioner further contends that the CA failed to consider that he already relayed his intention
to go back to his lane by flashing the pick-ups right signal light. He submits that at that moment
Iran, the driver of the Tamaraw, had no more reason to swerve to his left. Had Iran not swerved
to the left, according to petitioner, the collision would have been avoided. It was Iran who was
clearly negligent, says petitioner. Citing our ruling in McKee v. Intermediate Appellate
Court,[11] petitioner avers that although his act of occupying the Tamaraws lane was the initial act
in the chain of events, Irans swerving to the left after petitioner flashed his right turn signal,
constituted a sufficient intervening event, which proximately caused the eventual injuries and
damages to private complainant.
Petitioner also claims that the Court of Appeals erred when it found that the pick-up
approached the Tamaraw at a fast speed. He maintains that this was not borne by the evidence
on record.
The Office of the Solicitor General, as counsel for the state, counters that the Court of Appeals
did not err in convicting the accused, now petitioner herein. Petitioners negligence was the
proximate cause of the accident, according to the OSG, for the following reasons: First, petitioner
for no justifiable reason occupied the opposite lane. Second, while on the wrong lane, petitioner
was driving the Isuzu pick-up fast, and he returned to his own lane only at the last minute. This
left Iran, the driver of the Tamaraw, with no opportunity to reflect on the safest way to avoid the
accident. Irans swerving to the left was his reaction to petitioners wrongful act, which appropriately
calls for the application of the emergency rule. The rationale of this rule is that a person who is
confronted with a sudden emergency might have no time for thought, and he must make a prompt
decision based largely upon impulse or instinct. Thus, he cannot be held to the same standard of
conduct as one who had an opportunity to reflect, even though it later appears that he made the
wrong decision. Clearly, under the emergency rule petitioner cannot shift the blame to Iran,
concludes the OSG.

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 As to petitioners claim that there was no evidence showing that the pick-up was running very
fast, the OSG avers that this is rebutted by the testimony of Seyan and Iran who both testified
that petitioner drove the pick-up at a fast speed when it encroached on their lane immediately
before the collision.
Did the Court of Appeals err in finding that the action of petitioner, Rogelio Engada, was the
proximate cause of the collision? This is the crux of the present petition.
In our view, petitioners attempt to pin the blame on Edwin Iran, the driver of the Tamaraw, for
the vehicular collision is unfounded. Iran swerved to the left only to avoid petitioners pick-up,
which was already on a head to head position going against Irans Tamaraw jeepney immediately
before the vehicles collided. This fact has been established by the evidence on record. No
convincing proof was adduced by petitioner that the driver of the Tamaraw, Iran, could have
avoided a head-on collision.
We note that petitioner admitted his Isuzu pick-up intruded into the lane of the Tamaraw
jeepney. Prosecution witness Nelson Alobin, one of those who went to the scene of the incident
immediately, testified that when he arrived at the place where the collision took place, he saw the
pick-up positioned diagonally at the center of the road.[12] Its head was towards the direction of
Barotac Nuevo and the rear tires were just a few inches beyond the center of the lane.[13] Moving
backwards facing Barotac Nuevo, at two arms length away from the pick-up, Alobin also saw a
tire mark, 12 inches long and located at the left side of the center line going to the right side. [14]
The above circumstance corroborates the testimony of both Seyan and Iran that, immediately
before the collision, the pick-up was not on its proper lane but on the other lane (the left lane
rather than the right) directly on collision course with the Tamaraw jeepney. The tire mark reveals
the short distance between the two vehicles when the Isuzu pick-up attempted to return to its
proper lane.
It is a settled rule that a driver abandoning his proper lane for the purpose of overtaking
another vehicle in an ordinary situation has the duty to see to it that the road is clear and he should
not proceed if he cannot do so in safety.[15] This rule is consistent with Section 41, paragraph (a)
of R.A. 4136 as amended, otherwise known as The Land Transportation and Traffic Code, which
provides:

Sec. 41. Restrictions on overtaking and passing. (a) The driver of a vehicle shall not drive to the
left side of the center line of a highway in overtaking or passing another vehicle proceeding in
the same direction, unless such left side is clearly visible and is free of oncoming traffic for a
sufficient distance ahead to permit such overtaking or passing to be made in safety.

In the present case, there was only a distance of 30 meters from the Tamaraw jeepney when
the Isuzu pick-up abandoned its lane and swerved to the left of the center line. [16] In addition,
petitioner was running at a fast clip while traversing this lane. This was testified to by Seyan and
Iran, unrebutted by petitioner. The resulting damage to the Tamaraw jeepney, at the point where
the head and chassis were separated from the body, bolsters this conclusion that petitioner was
speeding. In our view, petitioner was negligent in several ways, and his negligence was the
proximate cause of the collision. In abandoning his lane, he did not see to it first that the opposite
lane was free of oncoming traffic and was available for a safe passage. Further, after seeing the
Tamaraw jeepney ahead, petitioner did not slow down, contrary to the rule set in Batangas
Laguna Tayabas Bus Co. v. IAC,[17] thus:

34
[O]r if, after attempting to pass, the driver of the overtaking vehicle finds that he cannot make
the passage in safety, the latter must slacken his speed so as to avoid the danger of a collision,
even bringing his car to a stop if necessary.

For failing to observe the duty of diligence and care imposed on drivers of vehicles
abandoning their lane, petitioner must be held liable.
Iran could not be faulted when in his attempt to avoid the pick-up, he swerved to his left.
Petitioners acts had put Iran in an emergency situation which forced him to act quickly. An
individual who suddenly finds himself in a situation of danger and is required to act without much
time to consider the best means that may be adopted to avoid the impending danger, is not guilty
of negligence if he fails to undertake what subsequently and upon reflection may appear to be a
better solution, unless the emergency was brought by his own negligence.[18]
Petitioner tries to extricate himself from liability by invoking the doctrine of last clear
chance. He avers that between him and Iran, the latter had the last clear chance to avoid the
collision, hence Iran must be held liable.
The doctrine of last clear chance states that a person who has the last clear chance or
opportunity of avoiding an accident, notwithstanding the negligent acts of his opponent, is
considered in law solely responsible for the consequences of the accident.[19] But as already
stated on this point, no convincing evidence was adduced by petitioner to support his invocation
of the abovecited doctrine. Instead, what has been shown is the presence of an emergency and
the proper application of the emergency rule. Petitioners act of swerving to the Tamaraws lane at
a distance of 30 meters from it and driving the Isuzu pick-up at a fast speed as it approached the
Tamaraw, denied Iran time and opportunity to ponder the situation at all. There was no clear
chance to speak of. Accordingly, the Court of Appeals did not err in holding petitioner responsible
for the vehicular collision and the resulting damages, including the injuries suffered by Mrs. Sheila
Seyan and the total loss of the Tamaraw jeepney. It also did not err in imposing on petitioner the
sentence of four (4) months of arresto mayor.[20]
WHEREFORE, the instant petition is DENIED for lack of merit. The assailed decision of the
Court of Appeals in CA-G.R. CR No. 18358 is AFFIRMED. Costs against petitioner.
SO ORDERED.

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