EN BANC [G.R. No. 108164. February 23, 1995.] FAR EAST BANK AND TRUST COMPANY, petitioner, vs.

THE HONORABLE COURT OF APPEALS, LUIS A. LUNA and CLARITA S. LUNA, respondents. SYLLABUS 1. CIVIL LAW; DAMAGES; MORAL DAMAGES; WHEN MAY BE RECOVERED IN CASE OF CULPA CONTRACTUAL; RULE; CASE AT BAR. In culpa contractual, moral damages may be recovered where the defendant is shown to have acted in bad faith or with malice in the breach of the contract. Bad faith, in this context, includes gross, but not simple, negligence. Exceptionally, in contract of carriage, moral damages are also allowed in case of death of a passenger attributable to the fault (which is presumed) of the common carrier. Concededly, the bank was remiss in indeed neglecting to personally inform Luis of his own card's cancellation. Nothing in the findings of the trial court and the appellate court, however, can sufficiently indicate any deliberate intent on the part of FEBTC to cause harm to private respondents. Neither could FEBTC's negligence in failing to give personal notice to Luis be considered so gross as to amount to malice or bad faith. Malice or bad faith implies a conscious and intentional design to do a wrongful act for a dishonest purpose or moral

obliquity; it is different from the negative idea of negligence in that malice or bad faith contemplates a state of mind affirmatively operating with furtive design or ill-will. Article 21 of the Code, it should be observed, contemplates a conscious act to cause harm. Thus, even if we are to assume that the provision could properly relate to a breach of contract, its application can be warranted only when the defendant's disregard of his contractual obligation is so deliberate as to approximate a degree of misconduct certainly no less worse than fraud or bad faith. Most importantly, Article 21 is a mere declaration of a general principle in human relations that clearly must, in any case, give way to the specific provision of Article 2220 of the Civil Code authorizing the grant of moral damages in culpa contractual solely when the breach is due to fraud or bad faith. 2. ID.; ID.; ID.; ID.; ID.; APPLICATION OF THE PROVISION ON QUASI-DELICT. The Court has not in the process overlooked another rule that a quasi-delict can be the cause for breaching a contract that might thereby permit the application of applicable principles on tort even where there is a pre-existing contract between the plaintiff and the defendant (Phil. Airlines vs. Court of Appeals, 106 SCRA 143; Singson vs. Bank of the Phil. Islands, 23 SCRA 1117; and Air France vs. Carrascoso, 18 SCRA 155). This doctrine, unfortunately, cannot improve private respondents' case for it can aptly govern only where the act or omission complained of would constitute an actionable tort independently of the contract. The test (whether a quasidelict can be deemed to underlie the breach of a contract) can be stated thusly: Where, without a pre-existing contract between two parties, an act or omission can nonetheless

amount to an actionable tort by itself, the fact that the parties are contractually bound is no bar to the application of quasidelict provisions to the case. Here, private respondents' damage claim is predicated solely on their contractual relationship; without such agreement, the act or omission complained of cannot by itself be held to stand as a separate cause of action or as an independent actionable tort. 3. ID.; ID.; EXEMPLARY OR CORRECTIVE DAMAGES; WHEN AVAILABLE. Exemplary or corrective damages, in turn, are intended to serve as an example or as correction for the public good in addition to moral, temperate, liquidated or compensatory damages (Art. 2229, Civil Code; see Prudenciado vs. Alliance Transport System, 148 SCRA 440; Lopez vs. Pan American World Airways, 16 SCRA 431). In criminal offenses, exemplary damages are imposed when the crime is committed with one or more aggravating circumstances (Art. 2230, Civil Code). In quasidelicts, such damages are granted if the defendant is shown to have been so guilty of gross negligence as to approximate malice (See Art. 2231, Civil Code; CLLC E.G. Gochangco Workers Union vs. NLRC, 161 SCRA 655; Globe Mackay Cable and Radio Corp. vs. CA, 176 SCRA 778. In contracts and quasi-contracts, the court may award exemplary damages if the defendant is found to have acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner (Art. 2232, Civil Code; PNB vs. Gen. Acceptance and Finance Corp., 161 SCRA 449). 4. ID.; ID.; NOMINAL DAMAGES; WHEN AVAILABLE; APPLICATION IN CASE AT BAR. The bank's failure, even perhaps inadvertent, to honor its credit card issued to private respondent Luis should entitle him to recover a

measure of damages sanctioned under Article 2221 of the Civil Code providing thusly: "Art. 2221. Nominal damages are adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him."

DECISION

VITUG, J p: Some time in October 1986, private respondent Luis A. Luna applied for, and was accorded, a FAREASTCARD issued by petitioner Far East Bank and Trust Company ("FEBTC") at its Pasig Branch. Upon his request, the bank also issued a supplemental card to private respondent Clarita S. Luna. In August 1988, Clarita lost her credit card. FEBTC was forthwith informed. In order to replace the lost card, Clarita submitted an affidavit of loss. In cases of this nature, the banks internal security procedures and policy would appear to be to meanwhile so record the lost card, along with the principal card, as a "Hot Card" or "Cancelled Card" in its master file. On 06 October 1988, Luis tendered a despedida lunch for a close friend, a Filipino-American, and another guest at the Bahia Rooftop Restaurant of the Hotel Intercontinental Manila. To pay for the lunch, Luis presented his FAREASTCARD to the attending waiter who promptly had it verified through a telephone call to the bank's Credit Card Department. Since the card was

not honored, Luis was forced to pay in cash the bill amounting to P588.13. Naturally, Luis felt embarrassed by this incident. In a letter, dated 11 October 1988, private respondent Luis Luna, through counsel, demanded from FEBTC the payment of damages. Adrian V. Festejo, a vice-president of the bank, expressed the bank's apologies to Luis. In his letter, dated 03 November 1988, Festejo, in part, said: "In cases when a card is reported to our office as lost, FAREASTCARD undertakes the necessary action to avert its unauthorized use (such as tagging the card as hotlisted), as it is always our intention to protect our cardholders. "An investigation of your case however, revealed that FAREASTCARD failed to inform you about its security policy. Furthermore, an overzealous employee of the Bank's Credit Card Department did not consider the possibility that it may have been you who was presenting the card at that time (for which reason, the unfortunate incident occurred)." 1 Festejo also sent a letter to the Manager of the Bahia Rooftop Restaurant to assure the latter that private respondents were "very valued clients" of FEBTC. William Anthony King, Food and Beverage Manager of the Intercontinental Hotel, wrote back to say that the credibility of private respondent had never been "in

question." A copy of this reply was sent to Luis by Festejo. Still evidently feeling aggrieved, private respondents, on 05 December 1988, filed a complaint for damages with the Regional Trial Court ("RTC") of Pasig against FEBTC. On 30 March 1990, the RTC of Pasig, given the foregoing factual settings, rendered a decision ordering FEBTC to pay private respondents (a) P300,000.00 moral damages; (b) P50,000.00 exemplary damages; and (c) P20,000.00 attorney's fees. On appeal to the Court of Appeals, the appellate court affirmed the decision of the trial court. Its motion for reconsideration having been denied by the appellate court, FEBTC has come to this Court with this petition for review. There is merit in this appeal. In culpa contractual, moral damages may be recovered where the defendant is shown to have acted in bad faith or with malice in the breach of the contract. 2 The Civil Code provides: "Art. 2220. Willful injury to property may be a legal ground for awarding moral damages if the court should find that, under the circumstances, such damages are justly due. The same rule applies to breaches of contract where the defendant acted fraudulently or in bad faith." (Emphasis supplied)cdasia

Bad faith, in this context, includes gross, but not simple, negligence. 3 Exceptionally, in a contract of carriage, moral damages are also allowed in case of death of a passenger attributable to the fault (which is presumed 4 ) of the common carrier. 5 Concededly, the bank was remiss in indeed neglecting to personally inform Luis of his own cards cancellation. Nothing in the findings of the trial court and the appellate court, however, can sufficiently indicate any deliberate intent on the part of FEBTC to cause harm to private respondents. Neither could FEBTC's negligence in failing to give personal notice to Luis be considered so gross as to amount to malice or bad faith. llcd Malice or bad faith implies a conscious and intentional design to do a wrongful act for a dishonest purpose or moral obliquity; it is different from the negative idea of negligence in that malice or bad faith contemplates a state of mind affirmatively operating with furtive design or ill will. 6 We are not unaware of the previous rulings of this Court, such as in American Express International, Inc. vs. Intermediate Appellate Court (167 SCRA 209) and Bank of Philippine Islands vs. Intermediate Appellate Court (206 SCRA 408), sanctioning the application of Article 21, in relation to Article 2217 and Article 2219 7 of the Civil Code to a contractual breach similar to the case at bench. Article 21 states:

policy shall compensate the latter for the damage." Article 21 of the Code, it should be observed, contemplates a conscious act to cause harm. Thus, even if we are to assume that the provision could properly relate to a breach of contract, its application can be warranted only when the defendant's disregard of his contractual obligation is so deliberate as to approximate a degree of misconduct certainly no less worse than fraud or bad faith. Most importantly, Article 21 is a mere declaration of a general principle in human relations that clearly must, in any case, give way to the specific provision of Article 2220 of the Civil Code authorizing the grant of moral damages in culpa contractual solely when the breach is due to fraud or bad faith. Mr. Justice Jose B.L. Reyes, in his ponencia in Fores vs. Miranda 8 explained with great clarity the predominance that we should give to Article 2220 in contractual relations; we quote: "Anent the moral damages ordered to be paid to the respondent, the same must be discarded. We have repeatedly ruled (Cachero vs. Manila Yellow Taxicab Co. Inc., 101 Phil. 523; 54 Off. Gaz., [26], 6599; Necesito, et al. vs. Paras, 104 Phil., 75; 56 Off. Gaz., [23] 4023, that moral damages are not recoverable in damage actions predicated on a breach of the contract of transportation, in view of Articles 2219 and 2220 of the new Civil Code, which provide as follows:cdasia

"Art. 21. Any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or public

"'ART. 2219. Moral damages may be recovered in the following and analogous cases: '(1) A criminal offense resulting in physical injuries; '(2) Quasi-delicts causing physical injuries; xxx xxx xxx 'ART. 2220. Willful injury to property may be a legal ground for awarding moral damages if the court should find that, under the circumstances, such damages are justly due. The same rule applies to breaches of contract where the defendant acted fraudulently or in bad faith.' "By contrasting the provisions of these two articles it immediately becomes apparent that: "(a) In case of breach of contract (including one of transportation) proof of bad faith or fraud (dolus), i.e., wanton or deliberately injurious conduct, is essential to justify an award of moral damages; and

"(b) That a breach of contract can not be considered included in the descriptive term 'analogous cases' used in Art. 2219; not only because Art. 2220 specifically provides for the damages that are caused contractual breach, but because the definition of quasidelict in Art. 2176 of the Code expressly excludes the cases where there is a 'pre-exisiting contractual relations between the parties.' LexLib "'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 quasidelict and is governed by the provisions of this Chapter.' "The exception to the basic rule of damages now under consideration is a mishap resulting in the death of a passenger, in which case Article 1764 makes the common carrier expressly subject to the rule of Art. 2206, that entitles the spouse, descendants and ascendants of the deceased passenger to 'demand moral damages for mental anguish by reason of the death of the deceased'

(Necesito vs. Paras, 104 Phil. 84, Resolution on Motion to Reconsider, September 11, 1958). But the exceptional rule of Art. 1764 makes it all the more evident that where the injured passenger does not die, moral damages are not recoverable unless it is proved that the carrier was guilty of malice or bad faith. We think it is clear that the mere carelessness of the carrier's driver does not per se constitute or justify an inference of malice or bad faith on the part of the carrier; and in the case at bar there is no other evidence of such malice to support the award of moral damages by the Court of Appeals. To award moral damages for breach of contract, therefore, without proof of bad faith or malice on the part of the defendant, as required by Art. 2220, would be to violate the clear provisions of the law, and constitute unwarranted judicial legislation. "xxx xxx xxx. "The distinction between fraud, bad faith or malice in the sense of deliberate or wanton wrong doing and negligence (as mere carelessness) is too fundamental in our law to be ignored (Arts. 1170-1172); their consequences being clearly differentiated by the Code. cdasia "'ART. 2201. In contracts and quasicontracts, the damages for which the

obligor who acted in good faith is liable shall be those that are the natural and probable consequences of the breach of the obligation, and which the parties have foreseen or could have reasonably foreseen at the time the obligation was constituted. 'In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all damages which may be reasonably attributed to the nonperformance of the obligation." "It is to be presumed, in the absence of statutory provision to the contrary, that this difference was in the mind of the lawmakers when in Art. 2220 they limited recovery of moral damages to breaches of contract in bad faith. It is true that negligence may be occasionally so gross as to amount to malice; but the fact must be shown in evidence, and a carrier's bad faith is not to be lightly inferred from a mere finding that the contract was breached through negligence of the carriers employees." LLphil The Court has not in the process overlooked another rule that a quasi-delict can be the cause for breaching a contract that might thereby permit the application of applicable principles on tort 9 even where there is a pre-existing contract between the plaintiff and the defendant (Phil. Airlines vs. Court of Appeals, 106

SCRA 143; Singson vs. Bank of Phil. Islands, 23 SCRA 1117; and Air France vs. Carrascoso, 18 SCRA 155). This doctrine, unfortunately, cannot improve private respondents' case for it can aptly govern only where the act or omission complained of would constitute an actionable tort independently of the contract. The test (whether a quasi-delict can be deemed to underlie the breach of a contract) can be stated thusly: Where, without a pre-existing contract between two parties, an act or omission can nonetheless amount to an actionable tort by itself, the fact that the parties are contractually bound is no bar to the application of quasi-delict provisions to the case. Here, private respondents' damage claim is predicated solely on their contractual relationship; without such agreement, the act or omission complained of cannot by itself be held to stand as a separate cause of action or as an independent actionable tort. cdll The Court finds, therefore, the award of moral damages made by the court a quo, affirmed by the appellate court, to be inordinate and substantially devoid of legal basis. Exemplary or corrective damages, in turn, are intended to serve as an example or as correction for the public good in addition to moral, temperate, liquidated or compensatory damages (Art. 2229, Civil Code; see Prudenciado vs. Alliance Transport System, 148 SCRA 440; Lopez vs. Pan American World Airways, 16 SCRA 431). In criminal offenses, exemplary damages are imposed when the crime is committed with one or more aggravating circumstances (Art. 2230, Civil Code). In quasi-delicts, such damages are granted if the defendant is shown to have been so guilty of gross negligence as to

approximate malice (See Art. 2231, Civil Code; CLLC E.G. Gochangco Workers Union vs. NLRC, 161 SCRA 655; Globe Mackay Cable and Radio Corp. vs. CA, 176 SCRA 778. In contracts and quasi-contracts, the court may award exemplary damages if the defendant is found to have acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner (Art. 2232, Civil Code; PNB vs. Gen. Acceptance and Finance Corp. , 161 SCRA 449).cdasia Given the above premises and the factual circumstances here obtaining, it would also be just as arduous to sustain the exemplary damages granted by the courts below (see De Leon vs. Court of Appeals, 165 SCRA 166). Nevertheless, the bank's failure, even perhaps inadvertent, to honor its credit card issued to private respondent Luis should entitle him to recover a measure of damages sanctioned under Article 2221 of the Civil Code providing thusly: "Art. 2221. Nominal damages are adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him." llcd Reasonable attorney's fees may be recovered where the court deems such recovery to be just and equitable (Art. 2208, Civil Code). We see no misuse of sound discretion on the part of the appellate court in allowing the award thereof by the trial court.

WHEREFORE, the petition for review is given due course. The appealed decision is MODIFIED by deleting the award of moral and exemplary damages to private respondents; in its stead, petitioner is ordered to pay private respondent Luis A. Luna an amount of P5,000.00 by way of nominal damages. In all other respects, the appealed decision is AFFIRMED. No costs. SO ORDERED. Narvasa, C.J ., Feliciano, Padilla, Bidin, Regalado, Davide, Jr ., Romero, Bellosillo, Melo, Quiason, Puno, Kapunan, Mendoza and Francisco, JJ., concur. Footnotes 1. Rollo, p. 52. 2. Necesito vs. Paras, 104 Phil. 75; Panay Electric Co. vs. CA, 119 SCRA 456; Sweet Lines, Inc. vs. CA, 121 SCRA 769; Rex Taxicab Co., Inc. vs. Bautista, 109 Phil. 712. 3. Philippine Airlines vs. Court of Appeals, 106 SCRA 143. 4. Art. 1756, Civil Code. 5. Art. 1764. Damages in cases comprised in this Section shall be awarded in accordance with the Title XVIII of this Book, concerning Damages. Article 2206 shall also apply to the death of a passenger caused by the breach of contract by a common carrier.

6. See Luzon Brokerage, Co., Inc. vs. Maritime Building, Co., Inc., 43 SCRA 93; also Black's Law Dictionary. 7. Art. 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of pecuniary computation, moral damages may be recovered if they are the proximate result of the defendant's wrongful act for omission. Art. 2219. Moral damages may be recovered in the following and analogous cases: (1) A criminal offense resulting in physical injuries; (2) Quasi-delicts causing physical injuries; (3) Seduction, abduction, rape, or other lascivious acts; (4) Adultery or concubinage; (5) Illegal or arbitrary detention or arrest; (6) Illegal search; (7) Libel, slander or any other form of defamation; (8) Malicious prosecution; (9) Acts mentioned in article 309; (10) Acts and actions referred to in articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.

The parents of the female seduced, abducted, raped, or abused, referred to in No. 3 of this article, may also recover moral damages. The spouse, descendants, ascendants, and brother and sisters may bring action mentioned in No. 9 of this article, in the order named. 8. 105 Phil. 266, 273-276. 9. In culpa aquiliana, moral damages may be recovered when the act or omission complained of causes physical injuries or where the defendant is guilty of intentional tort (Article 2219 [2][10], Civil Code).

EN BANC [G.R. No. L-21438. September 28, 1966.] AIR FRANCE, petitioner, vs. RAFAEL CARRASCOSO and THE HONORABLE COURT OF APPEALS, respondents. Lichauco, Picazo & Agcaoili for petitioner. Bengzon, Villegas & Zarraga for respondent R. Carrascoso. SYLLABUS 1. JUDGMENT; FINDINGS OF FACT; REQUIREMENT OF LAW. Courts of justice are not burdened with the obligation to specify in the sentence every bit and piece of evidence presented by the parties upon the issues raised. The law solely insists that a decision state the "essential ultimate facts" upon which the court's conclusion is drawn. 2. ID.; ID.; ID.; APPEAL AND ERROR; FAILURE TO MAKE FINDINGS ON EVIDENCE AND CONTENTIONS OF ONE PARTY, EFFECT OF; DECISION NOT TO BE CLOGGED WITH DETAILS. The mere failure to make specific findings of fact on the evidence presented for the defense or to specify in the decision the contentions of the appellant and the reasons for refusing to believe them is not sufficient to hold the same contrary to the requirement of the law and the Constitution. There is no law that so requires. A decision is not to be

clogged with details such that prolixity, if not confusion, may result. 3. ID.; ID.; ID.; FINDINGS OF FACT BY COURTS DEFINED. Findings of fact may be defined as the written statement of the ultimate facts as found by the court and essential to support the decision and judgment rendered thereon; they consist of the court's "conclusions with respect to the determinative facts on issue." 4. ID.; ID.; ID.; QUESTION OF LAW EXPLAINED. A question of law is "one which does not call for an examination of the probative value of the evidence presented by the parties." 5. PLEADING AND PRACTICE; APPEAL; WHAT MAY BE RAISED ON APPEAL FROM COURT OF APPEALS. It is not appropriately the business of the Supreme Court to alter the facts or to review the questions of fact because, by statute, only questions of law may be raised in an appeal by certiorari from a judgment of the Court of Appeals, which judgment is conclusive as to the facts. 6. ID.; ID.; EFFECT OF AFFIRMANCE BY COURT OF APPEALS OF TRIAL COURT'S DECISION. When the Court of Appeals affirms a judgment of the trial court, and the findings of fact of said appellate court are not in any way at war with those of the trial court, nor is said affirmance upon a ground or grounds different from those which were made the basis of the trial court's conclusions, such judgment of affirmance is (1) a determination by the Court of Appeals that the proceeding in the lower court was free from prejudicial error; (7) that all questions raised by the

assignments of error and all questions that might have been so raised have been finally adjudicated as free from all error. 7. ID.; COMPLAINT; SPECIFIC MENTION OF THE TERM "BAD FAITH" IN THE COMPLAINT NOT REQUIRED. Although there is no specific mention of the term bad faith in the complaint, the inference of bad faith may be drawn from the facts and circumstances set forth therein. 8. EVIDENCE; FINDING OF COURT OF APPEALS THAT RESPONDENT WAS ENTITLED TO A FIRST CLASS SEAT. The Court of Appeals properly found that a first class-ticket holder is entitled to first class seat, given the fact that seat availability in specific flights is therein confirmed; otherwise, an air passenger will be placed in the hollow of the hands of an airline, because it will always be easy for an airline to strike out the very stipulations in the ticket and say that there was verbal agreement to the contrary. If only to achieve stability in the relations between passenger and air carrier, adherence to the ticket so issued is desirable. 9. ID.; LACK OF SPECIFIC AVERMENT OF BAD FAITH CURED BY NOTICE TO DEFENDANT OF WHAT PLAINTIFF INTENDS TO PROVE AND BY EVIDENCE PRESENTED WITHOUT OBJECTION; AMENDMENT OF COMPLAINT TO CONFORM TO EVIDENCE UNNECESSARY. If there was lack of specific averment of bad faith in the complaint, such deficiency was cured by notice, right at the start of the trial, by plaintiff's counsel to defendant as to what plaintiff intended to prove: while in the plane in Bangkok, plaintiff was ousted by defendant's manager who gave his seat to a white man; and by evidence of bad faith in the fulfillment of

the contract presented without objection on the part of the defendant. An amendment of the complaint to conform to the evidence is not even required. 10. ID.; ADMISSIBILITY OF TESTIMONY ON AN ENTRY IN A NOTEBOOK; TESTIMONY NOT COVERED BY BEST EVIDENCE RULE. The testimony of a witness that the purser made an entry in his notebook reading "First Class passenger was forced to go to the tourist class against his will and that the captain refused to intervene," is competent and admissible because the subject of the inquiry is not the entry but the ouster incident. It does not come within the prescription of the best evidence rule. 11. CONTRACT OF CARRIAGE; QUASI-DELICT; LIABILITY OF COMMON CARRIERS; CASE AT BAR. Neglect or malfeasance of the carrier's employees could give ground for an action for damages. Damages here are proper because the stress of respondent's action is placed upon his wrongful expulsion, which is a violation of a public duty by petitioner- aircarrier a case of quasi-delict. 12. ID.; ID.; ID.; AWARD OF MORAL DAMAGES FOR BREACH OF CONTRACT. Award of moral damages is proper, despite petitioner's argument that respondent's action is planted upon breach of contract, where the stress of the action is put on wrongful expulsion, the contract having been averred only to establish the relation between the parties. 13. ID.; ID.; ID.; EMPLOYER IS RESPONSIBLE FOR TORTIOUS ACTS OF HIS EMPLOYEE; CASE AT BAR. The responsibility of an employer for the tortious act of

his employees is well settled in law. (Art. 2130, Civil Code). Petitioner-aircarrier must answer for the willful, malevolent act of its manager. 14. ID.; ID.; ID.; LIABILITY FOR EXEMPLARY DAMAGES; POWER OF COURTS TO GRANT; CASE AT BAR. The Civil Code gives the court ample power to grant exemplary damages, the only condition being that defendant should have "acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner." As the manner of ejectment of plaintiff from his first class seat fits into this legal precept, exemplary damages are well awarded, in addition to moral damages. 15. ID.; ID.; LIABILITY FOR ATTORNEY'S FEES; COURT DISCRETION WELL EXERCISED SHOULD NOT BE DISTURBED. The grant of exemplary damages justifies a similar judgment for attorney's fees. The court below felt that it is but just and equitable that attorney's fees be given and the Supreme Court does not intend to break faith with the tradition that discretion well-exercised as it is here should not be disturbed. 16. ID.; RIGHTS OF PASSENGERS. Passengers do not contract merely for transportation. They have a right to be treated by the carrier's employees with kindness, respect, courtesy and due consideration. They are entitled to be protected against personal misconduct, injurious language, indignities and abuses from such employees. So, any rude or discourteous conduct on the part of employees towards a passenger gives the latter an action for damages against the carrier. (4 R. C. L-1174-1175).

17. ID.; BREACH OF CONTRACT MAY BE A TORT. Although the relation of passenger and carrier is contractual both in origin and nature, nevertheless, the act that breaks the contract may also be a tort. 18. WORDS AND PHRASES; BAD FAITH DEFINED. "Bad faith", as understood in law, contemplates a state of mind affirmatively operating with furtive design or with some motive of self-interest or ill will or for ulterior purpose

DECISION

SANCHEZ, J p: The Court of First Instance of Manila 1 sentenced petitioner to pay respondent Rafael Carrascoso P25,000.00 by way of moral damages; P10,000.00 as exemplary damages; P393.20 representing the difference in fare between first class and tourist class for the portion of the trip Bangkok-Rome, these various amounts with interest at the legal rate, from the date of the filing of the complaint until paid; plus P3,000.00 for attorneys' fees; and the costs of suit. On appeal, 2 the Court of Appeals slightly reduced the amount of refund on Carrascoso's plane ticket from P393.20 to P383.10, and voted to affirm the appealed decision "in all other respects", with costs against petitioner. The case is now before us for review on certiorari. The facts declared by the Court of Appeals as "fully supported by the evidence of record", are:

"Plaintiff, a civil engineer, was a member of a group of 48 Filipino pilgrims that left Manila for Lourdes on March 30, 1958. On March 28, 1958, the defendant, Air France, through its authorized agent, Philippine Air Lines, Inc., issued to plaintiff a 'first class' round trip airplane ticket from Manila to Rome. From Manila to Bangkok, plaintiff traveled in 'first class', but at Bangkok, the Manager of the defendant airline forced plaintiff to vacate the 'first class' seat that he was occupying because, in the words of the witness Ernesto G. Cuento, there was a 'white man', who, the Manager alleged, had a 'better right to the seat. When asked to vacate his 'first class' seat, the plaintiff, as was to be expected, refused, and told defendant's Manager that his seat would be taken over his dead body; a commotion ensued, and, according to said Ernesto G. Cuento, many of the Filipino passengers got nervous in the tourist class; when they found out that Mr. Carrascoso was having a hot discussion with the white man [manager], they came all across to Mr. Carrascoso and pacified Mr. Carrascoso to give his seat to the 'white man' (Transcript, p. 12, Hearing of May 26, 1959); and plaintiff reluctantly gave his 'first class' seat in the plane." 3 1. The thrust of the relief petitioner now seeks is that we review "all the findings" 4 of respondent Court of Appeals.

Petitioner charges that respondent court failed to make complete findings of fact on all the issues properly laid before it. We are asked to consider facts favorable to petitioner, and then, to overturn the appellate court's decision.

Coming into focus is the constitutional mandate that "No decision shall be rendered by any court of record without expressing therein clearly and distinctly the facts and the law on which it is based". 5 This is echoed in the statutory demand that a judgment determining the merits of the case shall state "clearly and distinctly the facts and the law on which it is based", 6 and that "Every decision of the Court of Appeals shall contain complete findings of fact on all issues properly raised before it." 7 A decision with absolutely nothing to support it is a nullity. It is open to direct attack. 8 The law, however, solely insists that a decision state the "essential ultimate facts" upon which the court's conclusion is drawn. 9 A court of justice is not hidebound to write in its decision every bit and piece of evidence 10 presented by one party and the other upon the issues raised. Neither is it to be burdened with the obligation "to specify in the sentence the facts" which a party "considered as proved". 11 This is but a part of the mental process from which the Court draws the essential ultimate facts. A decision is not to be so clogged with details such that prolixity, if not confusion, may result. So long as the decision of the Court of Appeals contains the necessary facts to warrant its conclusions, it is no error for said court to withhold therefrom "any specific finding of facts with

respect to the evidence for the defense". Because, as this Court well observed, "There is no law that so requires". 12 Indeed, "the mere failure to specify (in the decision) the contentions of the appellant and the reasons for refusing to believe them is not sufficient to hold the same contrary to the requirements of the provisions of law and the Constitution". It is in this setting that in Manigque, it was held that the mere fact that the findings "were based entirely on the evidence for the prosecution without taking into consideration or even mentioning the appellant's side in the controversy as shown by his own testimony", would not vitiate the judgment. 13 If the court did not recite in the decision the testimony of each witness for, or each item of evidence presented by, the defeated party, it does not mean that the court has overlooked such testimony or such item of evidence. 14 At any rate, the legal presumptions are that official duty has been regularly performed, and that all the matters within an issue in a case were laid before the court and passed upon by it. 15 Findings of fact, which the Court of Appeals is required to make, may be defined as "the written statement of the ultimate facts as found by the court . . . and essential to support the decision and judgment rendered thereon". 16 They consist of the court's "conclusions with respect to the determinative facts in issue" 17 A question of law, upon the other hand, has been declared as "one which does not call for an examination of the probative value of the evidence presented by the parties." 18 2. By statute, "only questions of law may be raised" in an appeal by certiorari from a judgment of the Court of Appeals 19 That judgment is conclusive as to the facts. It is not

appropriately the business of this Court to alter the facts or to review the questions of fact. 20 With these guideposts, we now face the problem of whether the findings of fact of the Court of Appeals support its judgment. 3. Was Carrascoso entitled to the first class seat he claims? It is conceded in all quarters that on March 28, 1958 he paid to and received from petitioner a first class ticket. But petitioner asserts that said ticket did not represent the true and complete intent and agreement of the parties; that said respondent knew that he did not have confirmed reservations for first class on any specific flight, although he had tourist class protection; that, accordingly, the issuance of a first class ticket was no guarantee that he would have a first class ride, but that such would depend upon the availability of first class seats. These are matters which petitioner has thoroughly presented and discussed in its brief before the Court of Appeals under its third assignment of error, which reads: "The trial court erred in finding that plaintiff had confirmed reservations for, and a right to, first class seats on the 'definite' segments of his journey, particularly that from Saigon to Beirut." 21 And, the Court of Appeals disposed of this contention thus: "Defendant seems to capitalize on the argument that the issuance of a first-class ticket was no guarantee that the passenger to whom the same had been issued, would be accommodated in the first-class compartment,

for as in the case of plaintiff he had yet to make arrangements upon arrival at every station for the necessary first class reservation. We are not impressed by such a reasoning. We cannot understand how a reputable firm like defendant airplane company could have the indiscretion to give out ticket it never meant to honor at all. It received the corresponding amount in payment of first-class tickets end yet it allowed the passenger to be at the mercy of its employees. It is more in keeping with the ordinary course of business that the company should know whether or not the tickets it issues are to be honored or not." 22 Not that the Court of Appeals is alone. The trial court similarly disposed of petitioner's contention, thus: "On the fact that plaintiff paid for, and was issued a 'First class ticket, there can be no question. Apart from his testimony, see plaintiffs Exhibits 'A', 'A-1' 'B', 'B-1', 'B-2', 'C' and 'C-1', and defendant's own witness, Rafael Altonaga, confirmed plaintiff's testimony and testified as follows: Q. In these tickets there are marks 'O.K.' From what you know, what does this O.K. mean? A. That the space is confirmed. Q. Confirmed for first class?

A. Yes, 'first class'. (Transcript, p. 169) xxx xxx xxx "Defendant tried to prove by the testimony of its witnesses Luis Zaldariaga and Rafael Altonaga that although plaintiff paid for, and was issued a 'first class' airplane ticket, the ticket was subject to confirmation in Hongkong. The court cannot give credit to the testimony of said witnesses. Oral evidence cannot prevail over written evidence, and plaintiff's Exhibits 'A', 'A1', 'B', 'B-1', 'C' and 'C- 1' belie the testimony of said witnesses, and clearly show that the plaintiff was issued, and paid for, a first class ticket without any reservation whatever. Furthermore, as hereinabove shown, defendant's own witness Rafael Altonaga testified that the reservation for a 'first class' accommodation for the plaintiff was confirmed. The court cannot believe that after such confirmation ,defendant had a verbal understanding with plaintiff that the 'first class' ticket issued to him by defendant would be subject to confirmation in Hongkong." 23 We have heretofore adverted to the fact that except for a slight difference of a few pesos in the amount refunded on Carrascoso's ticket, the decision of the Court of First Instance was affirmed by the Court of Appeals in all other respects. We hold the view that such a judgment of

affirmance has merged the judgment of the lower court. 24 Implicit in that affirmance is a determination by the Court of Appeals that the proceeding in the Court of First Instance was free from prejudicial error and that 'all questions raised by the assignments of error and all questions that might have been so raised are to be regarded as finally adjudicated against the appellant". So also, the judgment affirmed "must be regarded as free from all error" 25 We reached this policy construction because nothing in the decision of the Court of Appeals on this point would suggest that its findings of fact are in any way at war with those of the trial court. Nor was said affirmance by the Court of Appeals upon a ground or grounds different from those which were made the basis of the conclusions of the trial court. 26 If, as petitioner underscores, a first-class-ticket holder is not entitled to a first class seat, notwithstanding the fact that seat availability in specific flights is therein confirmed, then an air passenger is placed in the hollow of the hands of an airline. What security then can a passenger have? It will always be an easy matter for an airline aided by its employees, to strike out the very stipulations in the ticket, and say that there was a verbal agreement to the contrary. What if the passenger had a schedule to fulfill? We have long learned that, as a rule, a written document speaks a uniform language; that spoken word could be notoriously unreliable. If only to achieve stability in the relations between passenger and air carrier, adherence to the ticket so issued is desirable. Such is the case here. The lower courts refused to believe the oral evidence intended to defeat the covenants in the ticket.

The foregoing are the considerations which point to the conclusion that there are facts upon which the Court of Appeals predicated the finding that respondent Carrascoso had a first class ticket and was entitled to a first class seat at Bangkok, which is a stopover in the Saigon to Beirut leg of the flight, 27 We perceive no "welter of distortions by the Court of Appeals of petitioner's statement of its position", as charged by petitioner. 28 Nor do we subscribe to petitioners accusation that respondent Carrascoso "surreptitiously took a first class seat to provoke an issue". 29 And this because, as petitioner states, Carrascoso went to see the Manager at his office in Bangkok "to confirm my seat and because from Saigon I was told again to see the Manager. 30 Why, then, was he allowed to take a first class seat in the plane at Bangkok, if he had no seat? Or, if another had a better right to the seat? 4. Petitioner assails respondent court's award of moral damages. Petitioner's trenchant claim is that Carrascoso's action is planted upon breach of contract; that to authorize an award for moral damages there must be an averment of fraud or bad faith; 31 and that the decision of the Court of Appeals fails to make a finding of bad faith. The pivotal allegations in the complaint bearing on this issue are:

"3. That . . . plaintiff entered into a contract of air carriage with the Philippine Air Lines for a valuable consideration, the latter acting as general agents for and in behalf of the defendant, under which aid contract, plaintiff was entitled to, as defendant agreed to furnish

plaintiff, First Class passage on defendant's plane during the entire duration of plaintiff's tour of Europe with Hongkong as starting point up to and until plaintiff's return trip to Manila, . . . 4. That during the first two legs of the trip from Hongkong to Saigon and from Saigon to Bangkok, defendant furnished to the plaintiff First Class accommodation but only after protestations, arguments and/or insistence were made by the plaintiff with defendant's employees. 5. That finally, defendant failed to provide First Class passage, but instead furnished plaintiff only Tourist Class accommodations from Bangkok to Teheran and/or Casablanca, . . . the plaintiff has been compelled by defendant's employees to leave the First Class accommodation berths at Bangkok after he was already seated. 6. That consequently, the plaintiff, desiring no repetition of the inconvenience and embarrassments brought by defendant's breach of contract was forced to take a Pan American World Airways plane on his return trip from Madrid to Manila. 32 xxx xxx xxx 2. That likewise, as a result of defendant's failure to furnish First Class accommodations

aforesaid, plaintiff suffered inconveniences, embarrassments, and humiliations, thereby causing plaintiff mental anguish, serious anxiety, wounded feelings, social humiliation, and the like injury, resulting in moral damages in the amount of P30,000.00." 33 xxx xxx xxx The foregoing, in our opinion, substantially aver: First, That there was a contract to furnish plaintiff a first class passage covering, amongst others, the Bangkok-Teheran leg; Second, That said contract was breached when petitioner failed to furnish first class transportation at Bangkok; and Third, That there was bad faith when petitioner's employee compelled Carrascoso to leave his first class accommodation berth "after he was already seated" and to take a seat in the tourist class, by reason of which he suffered inconvenience, embarrassments and humiliations, thereby causing him mental anguish, serious anxiety, wounded feelings and social humiliation, resulting in moral damages. It is true that there is no specific mention of the term bad faith in the complaint. But, the inference of bad faith is there; it may be drawn from the facts and circumstances set forth therein. 34 The contract was averred to establish the relation between the parties. But the stress of the action is put on wrongful expulsion. Quite apart from the foregoing is that (a) right at the start of the trial, respondent's counsel placed petitioner on guard on what Carrascoso intended to prove: That while sitting in the plane in Bangkok, Carrascoso was ousted by petitioner's manager who gave his seat to a white man; 35 and (b)

evidence of bad faith in the fulfillment of the contract was presented without objection on the part of the petitioner. It is, therefore, unnecessary to inquire as to whether or not there is sufficient averment in the complaint to justify an award for moral damages. Deficiency in the complaint, if any, was cured by the evidence. An amendment thereof to conform to the evidence is not even required. 36 On the question of bad faith, the Court of Appeals declared: "That the plaintiff was forced out of his seat in the first class compartment of the plane belonging to the defendant Air France while at Bangkok, and was transferred to the tourist class not only without his consent but against his will, has been sufficiently established by plaintiff in his testimony before the court, corroborated by the corresponding entry made by the purser of the plane in his notebook which notation reads as follows: 'First-class passenger was forced to go to the tourist class against his will and that the captain refused to intervene', and by the testimony of an eye-witness Ernesto G. Cuento, who was a copassenger. The captain of the plane who was asked by the manager of defendant company at Bangkok to intervene even refused to do so. It is noteworthy that no one on behalf of defendant ever contradicted or denied this evidence for the plaintiff. It could have been easy for

defendant to present its manager at Bangkok to testify at the trial of the case, or yet to secure his deposition; but defendant did neither. 37 The Court of Appeals further stated "Neither is there evidence as to whether or ,not a prior reservation was made by the white man. Hence, if the employees of the defendant at Bangkok sold a first-class ticket to him when all the seats had already been taken, surely the plaintiff should not have been picked out as the one to suffer the consequences and to be subjected to the humiliation and indignity of being ejected from his seat in the presence of others. Instead of explaining to the white man the improvidence committed by defendant's employees, the manager adopted the more drastic step of ousting the plaintiff who was then safely ensconced in his rightful seat. We are strengthened in our belief that this probably was what happened there, by the testimony of defendant's witness Rafael Altonaga who, when asked to explain the meaning of the letters 'O.K., appearing on the tickets of plaintiff, said that 'the space is confirmed' for first class. Likewise, Zenaida Faustino, another witness for defendant, who was the chief of the Reservation Office of defendant, testified as follows:

'Q. How does the person in the ticket-issuing office know what reservation the passenger has arranged with you? A. They call us up by phone and ask for the confirmation.' (t.s.n., p. 247, June 19, 1959) In this connection, we quote with approval what the trial Judge has said on this point: 'Why did the, using the words of witness Ernesto G. Cuento, 'white man' have a 'better right' to the seat occupied by Mr. Carrascoso? The record is silent. The defendant airline did not prove 'any better', nay, any right on the part of the 'white man' to the 'First class' seat that the plaintiff was occupying and for which he paid and was issued a corresponding 'first class' ticket. 'If there was a justified reason for the action of the defendant's Manager in Bangkok, the defendant could have easily proven it by having taken the testimony of the said Manager by deposition, but defendant did not do so; the presumption is that evidence willfully suppressed would be adverse if produced [Sec. 69, par. (e) Rules of Court]; and, under the circumstances, the Court is constrained to find, as it does find, that the

Manager of the defendant airline in Bangkok not merely asked but threatened the plaintiff to throw him out of the plane if he did not give up his 'first class' seat because the said Manager wanted to accommodate using the words of the witness Ernesto G. Cuento, the 'white man'." 38 It is really correct to say that the Court of Appeals in the quoted portion first transcribed did not use the term "bad faith". But can it be doubted that the recital of facts therein points to bad faith? The manager not only prevented Carrascoso from enjoying his right to a first class seat; worse, he imposed his arbitrary will; he forcibly ejected him from his seat, made him suffer the humiliation of having to go to the tourist class compartment just to give way to another passenger whose right thereto has not been established. Certainly, this is bad faith. Unless, of course, bad faith has assumed a meaning different from what is understood in law. For, "bad faith" contemplates a "state of mind affirmatively operating with furtive design or with some motive of self-interest or ill will or for ulterior purposes." 39 And if the foregoing were not yet sufficient, there is the express finding of bad faith in the judgment of the Court of First Instance, thus: "The evidence shows that defendant violated its contract of transportation with plaintiff in bad faith, with the aggravating circumstances that defendant's Manager in Bangkok went to the extent of threatening the plaintiff in the

presence of many passengers to have him thrown out of the airplane to give the 'first class' seat that he was occupying to, again using the words of witness Ernesto G. Cuento, a 'white man' whom he (defendant's Manager) wished to accommodate, and the defendant has not proven that this 'white man' had any 'better right' to occupy the 'first class' seat that the plaintiff was occupying, duly paid for, and for which the corresponding 'first class' ticket was issued by the defendant to him." 40 5. The responsibility of an employer for the tortuous act of its employees-need not be essayed. It is well settled in law. 41 For the willful malevolent act of petitioner's manager, petitioner's his employer, must answer. Article 21 of the Civil Code says: "Art. 21. Any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage." In parallel circumstances, we applied the foregoing legal precept; and, we held that upon the provisions of Article 2219 (10), Civil Code, moral damages are recoverable. 42 6. A contract to transport passengers is quite different in kind and degree from any other contractual relation. 43 And this, because of the relation which an air-carrier sustains with the public. Its business is mainly with the travelling public. It invites people to avail of the comforts and advantages it offers. The contract of air carriage, therefore,

generates a relation attended with a public duty. Neglect or malfeasance of the carrier's employees, naturally, could give ground for an action for damages. Passengers do not contract merely for transportation. They have a light to be treated by the carrier's employees with kindness, respect, courtesy and due consideration. They are entitled to be protected against personal misconduct, injurious language, indignities and abuses from such employees. So it is, that any rude or discourteous conduct on the part of employees towards a passenger gives the latter an action for damages against the carrier. 44

Thus, "Where a steamship company 45 had accepted a passenger's check, it was a breach of contract and a tort, giving a right of action for its agent in the presence of third persons to falsely notify her that the check was worthless and demand payment under threat of ejection, though the language used was not insulting and she was not ejected. 46 And this, because, altho the relation of passenger and carrier is "contractual both in origin and nature" nevertheless "the act that breaks the contract may be also a tort". 47 And in another case, "Where a passenger on a railroad train, when the conductor came to collect his fare, tendered him the cash fare to a point where the train was scheduled not to stop, and told him that as soon as the train reached such point he would pay the cash fare from that point to destination, there was nothing in the conduct of the passenger which justified the conductor in using insulting language to him, as by calling him a lunatic," 48 and the Supreme Court of South

Carolina there held the carrier liable for the mental suffering of said passenger. Petitioner's contract with Carrascoso is one attended with public duty. The stress of Carrascoso's action as we have said, is placed upon his wrongful expulsion. This is a violation of public duty by the petitioner-air carrier a case of quasi-delict. Damages are proper. 7. Petitioner draws our attention to respondent Carrascoso's testimony, thus "Q. You mentioned about an attendant. Who is that attendant and purser? A. When we left already that was already in the trip I could not help it. So one of the flight attendants approached me and requested from me my ticket and I said, What for? and she said, 'We will note that you were transferred to the tourist class'. I said, 'Nothing of that kind. That is tantamount to accepting my transfer.' And I also said, You are not going to note anything there because I am protesting to this transfer.

Q. Was she able to note it? A. No, because I did not give my ticket. Q. About that purser? A. Well, the seats there are so close that you feel uncomfortable and you don't have enough leg room, I stood up and I went to the pantry that was next to me and the purser was there. He told me, 'I have recorded the incident in my notebook.' He read it and translated it to me because it was recorded in French 'First class passenger was forced to go to the tourist class against his will, and that the captain refused to intervene.' MR. VALTE I move to strike out the last part of the testimony of the witness because the best evidence would be the notes. Your Honor. COURT

I will allow that as part of his testimony." 49 Petitioner charges that the finding of the Court of Appeals that the purser made an entry in his notebooks reading "First class passenger was forced to go to the tourist class against his will, and that the captain refused to intervene" is predicated upon evidence [Carrascoso's testimony above] which is incompetent. We do not think so. The subject of inquiry is not the entry, but the ouster incident. Testimony of the entry does not come within the proscription of the best evidence rule. Such testimony is admissible. 49 Besides, from a reading of the transcript just quoted, when the dialogue happened, the impact of the startling occurrence was still fresh and continued to be felt. The excitement had not as yet died down. Statements then, in this environment, are admissible as part of the res gestae. 50 For, they grow "out of the nervous excitement and mental and physical condition of the declarant". 51 The utterance of the purser regarding his entry in the notebook was spontaneous, and related to the circumstances of the ouster incident. Its trustworthiness has been guaranteed. 52 It thus escapes the operation of the hearsay rule. It forms part of the res gestae. At all events, the entry was made outside the Philippines. And, by an employee of petitioner. It would have been an easy matter for petitioner to have contradicted Carrascoso's testimony. If it were really true that no such entry was made, the deposition of the purser could have cleared up the matter. We, therefore, hold that the transcribed testimony of Carrascoso is admissible in evidence.

8. Exemplary damages are well awarded. The Civil Code gives the Court ample power to grant exemplary damages in contracts and quasi-contracts. The only condition is that defendant should have "acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner". 53 The manner of ejectment of respondent Carrascoso from his first class seat fits into this legal precept. And this, in addition to moral damages. 54 9. The right to attorneys' fees is fully established. The grant of exemplary damages justifies a similar judgment for attorneys' fees. The least that can be said is that the courts below felt that it is but just and equitable that attorneys' fees be given. 55 We do not intend to break faith with the tradition that discretion well exercised as it was here should not be disturbed. 10. Questioned as excessive are the amounts decreed by both the trial court and the Court of Appeals, thus: P25,000.00 as moral damages; P10,000.00, by way of exemplary damages, and P3,000.00 as attorney's fees. The task of fixing these amounts is primarily with the trial-court. 56 The Court of Appeals did not interfere with the same. The dictates of good sense suggest that we give our imprimatur thereto. Because, the facts and circumstances point to the reasonableness thereof. 57 On balance, we say that the judgment of the Court of Appeals does not suffer from reversible error. We accordingly vote to affirm the same. Costs against petitioner. So ordered. Concepcion, C.J., Reyes J.B.L., Barrera, Dizon, Regala, Makalintal, Zaldivar and Castro, JJ., concur.

Bengzon, J.P., J., did not take part. Footnotes 1. Civil Case No. 38810, Rafael Carrascoso, plaintiff, vs. Air France, defendant," R.A., pp. 79-80. 2. C.A. - G.R. No. 26522-R, Rafael Carrascoso, plaintiffappellee, vs. Air France, defendant-appellant". 3. Appendix A, petitioner's brief, pp. 146-147. See also R.A., pp. 66-67. 4. Petitioner's brief, p. 142. 5. Section 12, Article VIII, Constitution. 6. Section 1, Rule 36, Rules of Court. See also Section 2, Rule 120, in reference to judgments in criminal cases. 7. Sec. 4, Rule 51; Sec. 33(2), Judiciary Act of 1948, as amended. 8. Edwards vs. McCoy, 22 Phil., 598, 601; Yangco vs. Court of First Instance of Manila, et al., 29 Phil., 183, 191. 9. Braga vs. Millora 3 Phil., 458, 465. 10. Id. 11. Aringo vs. Arena, 14 Phil., 263, 266, italics supplied. 12. Reyes vs. People, 71 Phil., 598, 600.

13. People vs. Manigque, 35 Off. Gaz., No. 94, pp. 1682, 1683 citing Section 133 of the Code of Civil Procedure and Section 12, Art. VIII, Constitution, supra. 14. Badger, et al., vs. Beyd, 65 S.W. (2d), pp. 601, 610. 15. Section 5, (m) and (o), Rule 131, Rules of Court. * Editor's Note: Should read may be. 16. In re Good's Estate, 266 P. (2d), pp. 719, 729. 17. Badger, et al., vs. Boyd, supra. 18. Goduco vs. Court of Appeals, et al., L-17647, February 28, 1964. 19. Section 2, Rule 45, Rules of Court, formerly Section 2, Rule 46 of the Rules of Court. 20. Medel, et al., vs. Calasanz, et al., L-14835, August 31, 1960; Astraquillo, et al., vs. Javier, et al., L-20034, January 30, 1965. 21. Petitioner's brief in the Court of Appeals, pp. 82-98. 22. Decision of the Court of Appeals, Appendix A, petitioner's brief, pp. 148-149. 23. R. A., pp. 67, 73. 24. 5 B. C. J. S., p. 295; 3 Am. Jur. p. 678. 25. 3 Am. Jur., pp. 677-678.

26. See Garcia Valdez vs. Soteraa Tuason, 40 Phil., 943, 951. 27. Carrascoso's ticket, according to petitioner (brief, pp. 7-8), shows: Segment or leg Carrier Flight No. Date of Departure

34. Copeland vs. Cunehoo, et al., 138 S.E., 267, 270. See also 25 C.J.S., pp. 758-759; 15 Am. Jur., pp. 766767. 35. Statement of Attorney Villegas for respondent Carrascoso in open court. Respondent's brief. p. 33. 36. Section 5, Rule 10, Rules of Court, in part reads:

1. Manila to Hongkong PAL 300A March 30 2. Hongkong to Saigon VN (Air Vietnam) 693 March 31 3. Saigon to Beirut AF (Air France) 245 March 31 28. Petitioner's brief, p. 50; see also id., pp. 37 and 46. 29. Id., p. 103. 30. Ibid., p. 102. 31. Article 2220, Civil Code reads: "Willful injury to property may be a legal ground for awarding moral damages if the court should find that, under the circumstances, such damages are justly due. The same rule applies to breaches of contract where the defendant acted fraudulently or in bad faith." 32. R. A., p. 2-4; Italics supplied. 33. R. A. p. 5; second cause of action. "SEC. 5. Amendment to conform to or authorize presentation of evidence. When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects, as if they had been raised in the pleadings. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at any time, even after judgment; but failure so to amend does not affect the result of the trial of these issues . . .; Co Tiamco vs. Diaz, etc., et al., 75 Phil., 672, 679; J. M. Tuason & Co., Inc., etc., vs. Bolaos, 95 Phil., 106, 110. 37. Decision, Court of Appeals, Appendix A of petitioner's brief, pp. 147-148. 38. Decision of the Court of Appeals, Appendix A petitioner's brief pp. 147-151. 39. Words & Phrases, Perm. Ed., Vol. 5, p. 13, citing Warfield Natural Gas Co., vs. Allen, 59 S.W. (2d.) 534, 538. 40. R.A., p. 74; emphasis supplied.

41. Article 2180, Civil Code. 42. Philippine Refining Co. vs. Garcia, et al., L-21871 and L- 21962, September 27, 1966. 43. See Section 4, Chapter 3, Title VIII. Civil Code. 44. 4 R.C.L., pp. 1174-1175. 45. An air carrier is common carrier; and air transportation is similar or analogous to land and water transportation, Mendoza vs. Philippine Air Lines, Inc., 90 Phil., 836, 841-842.

53. Article 2232, Civil Code. 54. Article 2229, Civil Code. 55. Article 2208, (1) and (11), Civil Code. 56. Coleongco vs. Claparols, L-18616, March 31, 1964; Corpus vs. Cuaderno, et al., L-23721, March 31, 1965. 57. Cf. Yutuk vs. Manila Electric company, L-13016, May 31, 1961; Lopez et al., vs. Pan American World Airways, L-22415, March 30, 1966.

46. Austro-American S.S. Co. vs. Thomas, 248 F.231. 47. Id., p. 233. 48. Lipman vs. Atlantic Coast Line R. Co., 93 S.E., 714, 716. 49. Petitioner's brief, pp. 104-105. 49a V. Moran, Comments on Rules of Court, 1963 ed., p. 76. 50. Section 36. Rule 130, Rules of Court. 51. IV Martin, Rules of Court in the Philippines, 1966 ed., p. 324. 52. Ibid.

SECOND DIVISION [G.R. No. 84698. February 4, 1992.] PHILIPPINE SCHOOL OF BUSINESS ADMINISTRATION, JUAN D. LIM, BENJAMIN P. PAULINO, ANTONIO M. MAGTALAS, COL. PEDRO SACRO, AND LT. M. SORIANO, petitioners, vs. COURT OF APPEALS, HON. REGINA ORDOEZ-BENITEZ, in her capacity as Presiding Judge of Branch 47, Regional Trial Court, Manila, SEGUNDA R. BAUTISTA, and ARSENIA D. BAUTISTA, respondents. Balgos and Perez for petitioners. Collantes, Ramirez & Associates for private respondents. SYLLABUS 1. CIVIL LAW; QUASI-DELICTS; DOCTRINE OF IN LOCO PARENTIS. Article 2180, in conjunction with Article 2176 of the Civil Code, establishes the rule in in loco parentis. This Court discussed this doctrine in the aforecited cases of Exconde, (101 Phil. 843) Mendoza, (101 Phil. 414), Palisoc (G.R. No. L-29025, 4 October, 1971, 41 SCRA 548) and, more recently, in Amadora vs. Court of Appeals, (G.R. No. L-47745, 15 April 1988, 160 SCRA 315). In all such cases, it had been stressed that the law (Article 2180) plainly provides that the damage should have been caused or

inflicted by pupils or students of the educational institution sought to be held liable for the acts of its pupils or students while in its custody. 2. ID.; OBLIGATIONS AND CONTRACTS; CONTRACTS RESULTING IN BILATERAL OBLIGATIONS ESTABLISHED WHEN ACADEMIC INSTITUTION ACCEPTS STUDENTS FOR ENROLLMENT. When an academic institution accepts students for enrollment, there is established a contract between them, resulting in bilateral obligations which both parties are bound to comply with. For its part, the school undertakes to provide the student with an education that would presumably suffice to equip him with the necessary tools and skills to pursue higher education or a profession. On the other hand, the student covenants to abide by the school's academic requirements and observe its rules and regulations. Institutions of learning must also meet the implicit or "built-in" obligation of providing their students with an atmosphere that promotes or assists in attaining its primary undertaking of imparting knowledge. Certainly, no student can absorb the intricacies of physics or higher mathematics or explore the realm of the arts and other sciences when bullets are flying or grenades exploding in the air or where there looms around the school premises a constant threat to life and limb. Necessarily, the school must ensure that adequate steps are taken to maintain peace and order within the campus premises and to prevent the breakdown thereof. 3. ID.; QUASI-DELICTS; OBLIGATIONS ARISING FROM QUASI-DELICTS OR TORTS ARISE ONLY BETWEEN PARTIES NOT BOUND BY CONTRACT.

Because the circumstances of the present case evince a contractual relation between the PSBA and Carlitos Bautista, the rules on quasi-delict do not really govern. A perusal of Article 2176 shows that obligations arising from quasi-delicts or tort, also known as extra-contractual obligations, arise only between parties not otherwise bound by contract, whether express or implied. 4. ID.; ID.; VIEW THAT LIABILITY FROM TORT MAY EXIST EVEN IF THERE IS A CONTRACT. In Air France vs. Carroscoso (124 Phil. 722), the private respondent was awarded damages for his unwarranted expulsion from a first-class seat aboard the petitioner airline. It is noted, however, that the Court referred to the petitionerairline's liability as one arising from tort, not one arising from a contract of carriage. In effect, Air France is authority for the view that liability from tort may exist even if there is a contract, for the act that breaks the contract may be also a tort. (Austro-America S.S. Co. vs. Thomas, 248 Fed. 231). 5. ID.; ID.; AN ACT WHICH BREACHES A CONTRACT IN BAD FAITH AND IN VIOLATION OF ART. 21 CONSTITUTES QUASI-DELICT. Air France penalized the racist policy of the airline which emboldened the petitioner's employee to forcibly oust the private respondent to cater to the comfort of a white man who allegedly "had a better right to the seat." In Austro-American, supra, the public embarrassment caused to the passenger was the justification for the Circuit Court of Appeals, (Second Circuit), to award damages to the latter. From the foregoing, it can be concluded that should the act which breaches a contract be done in bad faith and be violative of Article 21,

then there is a cause to view the act as constituting a quasidelict. 6. ID.; ID.; CONTRACTUAL RELATION, A CONDITION SINE QUA NON TO SCHOOL'S LIABILITY. A contractual relation is a condition sine qua non to the school's liability. The negligence of the school cannot exist independently on the contract, unless the negligence occurs under the circumstances set out in Article 21 of the Civil Code. 7. ID.; ID.; ID.; SCHOOL MAY STILL AVOID LIABILITY BY PROVING THAT THE BREACH OF CONTRACTUAL OBLIGATION TO STUDENTS WAS NOT DUE TO ITS NEGLIGENCE. Conceptually a school, like a common carrier, cannot be an insurer of its students against all risks. It would not be equitable to expect of schools to anticipate all types of violent trespass upon their premises, for notwithstanding the security measures installed, the same may still fail against an individual or group determined to carry out a nefarious deed inside school premises and environs. Should this be the case, the school may still avoid liability by proving that the breach of its contractual obligation to the students was not due to its negligence. 8. ID.; ID.; NEGLIGENCE; DEFINED. Negligence is statutorily defined to be the omission of that degree of diligence which is required by the nature of the obligation and corresponding to the circumstances of persons, time and place.

DECISION

PADILLA, J p: A stabbing incident on 30 August 1985 which caused the death of Carlitos Bautista while on the second-floor premises of the Philippine School of Business Administration (PSBA) prompted the parents of the deceased to file suit in the Regional Trial Court of Manila (Branch 47) presided over by Judge (now Court of Appeals justice) Regina Ordoez-Benitez, for damages against the said PSBA and its corporate officers. At the time of his death, Carlitos was enrolled in the third year commerce course at the PSBA. It was established that his assailants were not members of the schools academic community but were elements from outside the school. Specifically, the suit impleaded the PSBA and the following school authorities: Juan D. Lim (President), Benjamin P. Paulino (Vice-President), Antonio M. Magtalas (Treasurer/Cashier), Col. Pedro Sacro (Chief of Security) and a Lt. M. Soriano (Assistant Chief of Security). Substantially, the plaintiffs (now private respondents) sought to adjudge them liable for the victim's untimely demise due to their alleged negligence, recklessness and lack of security precautions, means and methods before, during and after the attack on the victim. During the proceedings a quo, Lt. M. Soriano terminated his relationship with the other petitioners by resigning from his position in the school. Defendants a quo (now petitioners) sought to have the suit dismissed, alleging that since they are presumably sued

under Article 2180 of the Civil Code, the complaint states no cause of action against them, as jurisprudence on the subject is to the effect that academic institutions, such as the PSBA, are beyond the ambit of the rule in the afore-stated article. The respondent trial court, however, overruled petitioners' contention and thru an order dated 8 December 1987, denied their motion to dismiss. A subsequent motion for reconsideration was similarly dealt with by an order dated 25 January 1988. Petitioners then assailed the trial court's dispositions before the respondent appellate court which, in a decision * promulgated on 10 June 1988, affirmed the trial court's orders. On 22 August 1988, the respondent appellate court resolved to deny the petitioners' motion for reconsideration. Hence, this petition. At the outset, it is to be observed that the respondent appellate court primarily anchored its decision on the law of quasi-delicts, as enunciated in Articles 2176 and 2180 of the Civil Code. 1 Pertinent portions of the appellate court's now assailed ruling state: "Article 2180 (formerly Article 1903) of the Civil Code is an adoptation from the old Spanish Civil Code. The comments of Manresa and learned authorities on its meaning should give way to present day changes. The law is not fixed and flexible (sic); it must be dynamic. In fact, the greatest value and significance of law as a rule of conduct in (sic) its flexibility to adopt to changing social conditions and its capacity to meet the new challenges of progress.

Construed in the light of modern day educational systems, Article 2180 cannot be construed in its narrow concept as held in the old case of Exconde vs. Capuno 2 and Mercado vs. Court of Appeals 3 ; hence, the ruling in the Palisoc 4 case that it should apply to all kinds of educational institutions, academic or vocational. At any rate, the law holds the teachers and heads of the school staff liable unless they relieve themselves of such liability pursuant to the last paragraph of Article 2180 by 'proving that they observed all the diligence to prevent damage.' This can only be done at a trial on the merits of the case." 5 While we agree with the respondent appellate court that the motion to dismiss the complaint was correctly denied and the complaint should be tried on the merits, we do not however agree with the premises of the appellate court's ruling. Article 2180, in conjunction with Article 2176 of the Civil Code, establishes the rule of in loco parentis. This Court discussed this doctrine in the afore-cited cases of Exconde, Mendoza, Palisoc and, more recently, in Amadora vs. Court of Appeals. 6 In all such cases, it had been stressed that the law (Article 2180) plainly provides that the damage should have been caused or inflicted by pupils or students of the educational institution sought to be held liable for the acts of its pupils or students while in its custody. However, this material situation does not exist in the present case for, as

earlier indicated, the assailants of Carlitos were not students of the PSBA, for whose acts the school could be made liable.

However, does the appellate court's failure to consider such material facts mean the exculpation of the petitioners from liability? It does not necessarily follow. When an academic institution accepts students for enrollment, there is established a contract between them, resulting in bilateral obligations which both parties are bound to comply with. 7 For its part, the school undertakes to provide the student with an education that would presumably suffice to equip him with the necessary tools and skills to pursue higher education or a profession. On the other hand, the student covenants to abide by the school's academic requirements and observe its rules and regulations. Institutions of learning must also meet the implicit or "builtin" obligation of providing their students with an atmosphere that promotes or assists in attaining its primary undertaking of imparting knowledge. Certainly, no student can absorb the intricacies of physics or higher mathematics or explore the realm of the arts and other sciences when bullets are flying or grenades exploding in the air or where there looms around the school premises a constant threat to life and limb. Necessarily, the school must ensure that adequate steps are taken to maintain peace and order within the campus premises and to prevent the breakdown thereof. Because the circumstances of the present case evince a contractual relation between the PSBA and Carlitos Bautista, the rules on quasi-delict do not really govern. 8 A

perusal of Article 2176 shows that obligations arising from quasi-delicts or tort, also known as extra-contractual obligations, arise only between parties not otherwise bound by contract, whether express or implied. However, this impression has not prevented this Court from determining the existence of a tort even when there obtains a contract. In Air France vs. Carroscoso (124 Phil. 722), the private respondent was awarded damages for his unwarranted expulsion from a first-class seat aboard the petitioner airline. It is noted, however, that the Court referred to the petitionerairline's liability as one arising from tort, not one arising from a contract of carriage. In effect, Air France is authority for the view that liability from tort may exist even if there is a contract, for the act that breaks the contract may be also a tort. (Austro-America S.S. Co. vs. Thomas, 248 Fed. 231). This view was not all that revolutionary, for even as early as 1918, this Court was already of a similar mind. In Cangco vs. Manila Railroad (38 Phil. 780), Mr. Justice Fisher elucidated thus: "The field of non-contractual obligation is much more broader than that of contractual obligation, comprising, as it does, the whole extent of juridical human relations. These two fields, figuratively speaking, concentric; that is to say, the mere fact that a person is bound to another by contract does not relieve him from extra-contractual liability to such person. When such a contractual relation exists the obligor may break the contract under such conditions that the same act which constitutes a breach of the contract would have

constituted the source of an extra-contractual obligation had no contract existed between the parties." Immediately what comes to mind is the chapter of the Civil Code on Human Relations, particularly Article 21, which provides: "Any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage." (emphasis supplied) Air France penalized the racist policy of the airline which emboldened the petitioner's employee to forcibly oust the private respondent to cater to the comfort of a white man who allegedly "had a better right to the seat." In AustroAmerican, supra, the public embarrassment caused to the passenger was the justification for the Circuit Court of Appeals, (Second Circuit), to award damages to the latter. From the foregoing, it can be concluded that should the act which breaches a contract be done in bad faith and be violative of Article 21, then there is a cause to view the act as constituting a quasi-delict. In the circumstances obtaining in the case at bar, however, there is, as yet, no finding that the contract between the school and Bautista had been breached thru the former's negligence in providing proper security measures. This would be for the trial court to determine. And, even if there be a finding of negligence, the same could give rise generally to a breach of contractual obligation only. Using the test of Cangco, supra, the negligence of the school

would not be relevant absent a contract. In fact, that negligence becomes material only because of the contractual relation between PSBA and Bautista. In other words, a contractual relation is a condition sine qua non to the school's liability. The negligence of the school cannot exist independently on the contract, unless the negligence occurs under the circumstances set out in Article 21 of the Civil Code. This Court is not unmindful of the attendant difficulties posed by the obligation of schools, above-mentioned, for conceptually a school, like a common carrier, cannot be an insurer of its students against all risks. This is specially true in the populous student communities of the so-called "university belt" in Manila where there have been reported several incidents ranging from gang wars to other forms of hooliganism. It would not be equitable to expect of schools to anticipate all types of violent trespass upon their premises, for notwithstanding the security measures installed, the same may still fail against an individual or group determined to carry out a nefarious deed inside school premises and environs. Should this be the case, the school may still avoid liability by proving that the breach of its contractual obligation to the students was not due to its negligence, here statutorily defined to be the omission of that degree of diligence which is required by the nature of the obligation and corresponding to the circumstances of persons, time and place. 9 As the proceedings a quo have yet to commence on the substance of the private respondents' complaint, the record is bereft of all the material facts. Obviously, at this stage, only

the trial court can make such a determination from the evidence still to unfold. WHEREFORE, the foregoing premises considered, the petition is DENIED. The Court of origin (RTC, Manila, Br. 47) is hereby ordered to continue proceedings consistent with this ruling of the Court. Costs against the petitioners. SO ORDERED. Melencio-Herrera, Paras, Regalado and Nocon, JJ., concur. Footnotes * Penned by Justice Jose C. Campos, Jr. and concurred in by Justices Ricardo J. Francisco and Alfredo L. Benipayo. 1. Article 2176 provides: "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." Article 2180 provides: "The obligation imposed by article 2176 is demandable not only for one's own acts or omissions, but also for those of persons for whom one is responsible.

xxx xxx xxx "Lastly, teachers or heads of establishments of arts and trades shall be liable for damages caused by their pupils and students or apprentices, so long as they remain in their custody. "The responsibility treated of in this article shall cease when the persons herein mentioned prove that they observed all the diligence of a good father of a family to prevent damage." 2. 101 Phil. 843. 3. 108 Phil. 414. 4. G.R. No. L-29025, 4 October 1971, 41 SCRA 548. 5. Rollo, p. 75. 6. G.R. No. L-47745, 15 April 1988, 160 SCRA 315. 7. In Non vs. Dames II , G.R. No. 89317, 20 May 1990, 185 SCRA 535, it was held that the contract between school and student is one "imbued with public interest" but a contract nonetheless. 8. Article 2176, Civil Code is re-quoted for stress: "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." (emphasis supplied). 9. Article 1173, Civil Code provides: "The fault or negligence of the obligor consists in the omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the persons, of the time and of the place. When negligence shows bad faith, the provisions of articles 1171 and 2201, paragraph 2, shall apply."

SECOND DIVISION [G.R. No. 98695. January 27, 1993.] JUAN J. SYQUIA, CORAZON C. SYQUIA, CARLOTA C. SYQUIA, CARLOS C. SYQUIA and ANTHONY C. SYQUIA, petitioners, vs. THE HONORABLE COURT OF APPEALS, and THE MANILA MEMORIAL PARK CEMETERY, INC., respondents. Pacis & Reyes Law Offices for petitioners. Augusto S. San Pedro & Ari-Ben C. Sebastian for private respondents. SYLLABUS 1. CIVIL LAW; QUASI-DELICT; A PRE-EXISTING CONTRACTUAL RELATION BETWEEN THE PARTIES DOES NOT PRECLUDE THE EXISTENCE OF A CULPA AQUILIANA. Although a pre-existing contractual relation between the parties does not preclude the existence of a culpa aquiliana, We find no reason to disregard the respondent's Court finding that there was no negligence. In this case, it has been established that the Syquias and the Manila Memorial Park Cemetery, Inc., entered into a contract entitled "Deed of Sale and Certificate of Perpetual Care" on August 27, 1969. That agreement governed the relations of the parties and defined their respective rights and obligations. Hence, had there been actual negligence on

the part of the Manila Memorial Park Cemetery, Inc., it would be held liable not for a quasi-delict or culpa aquiliana, but for culpa contractual as provided by Article 1170 of the Civil Code, to wit: "Those who in the performance of their obligations are guilty of fraud, negligence, or delay, and those who in any manner contravene the tenor thereof, are liable for damages." 2. INTERPRETATION OF CONTRACT THE WORD "SEALED" CANNOT BE EQUATED WITH "WATERPROOF"; LITERAL MEANING OF THE STIPULATION SHALL CONTROL WHEN THE TERMS OF THE CONTRACT ARE CLEAR. Petitioners claim that the vault provided by private respondent was not sealed, that is, not waterproof. Consequently, water seeped through the cement enclosure and damaged everything inside it. We do not agree. There was no stipulation in the Deed of Sale and Certificate of Perpetual Care and in the Rules and Regulations of the Manila Memorial Park Cemetery, Inc. that the vault would be waterproof. On the other hand, the word "seal" is defined as ". . . any of various closures or fastenings . . . that cannot be opened without rupture and that serve as a check against tampering or unauthorized opening." The meaning that has been given by private respondent to the word conforms with the cited dictionary definition. Moreover, it is also quite clear that "sealed" cannot be equated with "waterproof". Well settled is the rule that when the terms of the contract are clear and leave no doubt as to the intention of the contracting parties, then the literal meaning of the stipulation shall control. 3. THE CIRCUMSTANCES SURROUNDING THE BORING OF THE HOLE ON THE VAULT NEGATE

THE ALLEGATION OF NEGLIGENCE ON THE PART OF PRIVATE RESPONDENT; HENCE NO REASON TO AWARD DAMAGES TO PETITIONERS. can private respondent be liable for culpa aquiliana for boring the hole on the vault? It cannot be denied that the hole made possible the entry of more water and soil than was natural had there been no hole. The law defines negligence as the "omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the persons, of the time and of the place." In the absence of stipulation or legal provision providing the contrary, the diligence to be observed in the performance of the obligation is that which is expected of a good father of a family. The circumstances surrounding the commission of the assailed act boring of the hole negate the allegation of negligence. Private respondent has exercised the diligence of a good father of a family in preventing the accumulation of water inside the vault which would have resulted in the caving in of earth around the grave filling the same with earth. Thus, finding no evidence of negligence on the part of private respondent, We find no reason to award damages in favor of petitioners.

complaint 1 in the then Court of First Instance against herein private respondent, Manila Memorial Park Cemetery, Inc. for recovery of damages arising from breach of contract and/or quasi-delict. The trial court dismissed the complaint. prLL The antecedent facts, as gathered by the respondent Court, are as follows: "On March 5, 1979, Juan, Corazon, Carlota and Anthony all surnamed Syquia, plaintiffsappellants herein, filed a complaint for damages against defendant-appellee, Manila Memorial Park Cemetery, Inc. The complaint alleged among others, that pursuant to a Deed of Sale (Contract No. 6885) dated August 27, 1969 and Interment Order No. 7106 dated July 21, 1978 executed between plaintiff-appellant Juan J. Syquia and defendant-appellee, the former, father of deceased Vicente Juan J. Syquia authorized and instructed defendant-appellee to inter the remains of deceased in the Manila Memorial Park Cemetery in the morning of July 25, 1978 conformably and in accordance with defendant-appellant's (sic) interment procedures; that on September 4, 1978, preparatory to transferring the said remains to a newly purchased family plot also at the Manila Memorial Park Cemetery, the concrete vault encasing the coffin of the deceased was removed from its niche underground with the

DECISION

CAMPOS, JR., J p: Herein petitioners, Juan J. Syquia and Corazon C. Syquia, Carlota C. Syquia, Carlos C. Syquia, and Anthony Syquia, were the parents and siblings, respectively, of the deceased Vicente Juan Syquia. On March 5, 1979, they filed a

assistance of certain employees of defendantappellant (sic); that as the concrete vault was being raised 'to the surface, plaintiffsappellants discovered that the concrete vault had a hole approximately three (3) inches in diameter near the bottom of one of the walls closing out the width of the vault on one end and that for a certain length of time (one hour, more or less), water drained out of the hole; that because of the aforesaid discovery, plaintiffs-appellants became agitated and upset with concern that the water which had collected inside the vault might have risen as it in fact did rise, to the level of the coffin and flooded the same as well as the remains of the deceased with ill effects thereto; that pursuant to an authority granted by the Municipal Court of Paraaque, Metro Manila on September 14, 1978, plaintiffs-appellants with the assistance of licensed morticians and certain personnel of defendant-appellant (sic) caused the opening of the concrete vault on September 15, 1978: that upon opening the vault, the following became apparent to the plaintiffs-appellants: (a) the interior walls of the concrete vault showed evidence of total flooding; (b) the coffin was entirely damaged by water, filth and silt causing the wooden parts to warp and separate and to crack the viewing glass panel located directly above the head and torso of the deceased; (6) the entire lining of the coffin, the clothing of the deceased, and the exposed parts of the

deceased's remains were damaged and soiled by the action of the water and silt and were also coated with filth. Due to the alleged unlawful and malicious breach by the defendant-appellee of its obligation to deliver a defect-free concrete vault designed to protect the remains of the deceased and the coffin against the elements which resulted in the desecration of deceased's grave and in the alternative, because of defendant-appellee's gross negligence conformably to Article 2176 of the New Civil Code in failing to seal the concrete vault, the complaint prayed that judgment be rendered ordering defendant-appellee to pay plaintiffs-appellants P30,000.00 for actual damages, P500,000.00 for moral damages, exemplary damages in the amount determined by the court, 20% of defendant-appellee's total liability as attorney's fees, and expenses of litigation and costs of suit." 2 In dismissing the complaint, the trial court held that the contract between the parties did not guarantee that the cement vault would be waterproof; that there could be no quasi-delict because the defendant was not guilty of any fault or negligence, and because there was a pre-existing contractual relation between the Syquias and defendant Manila Memorial Park Cemetery, Inc. The trial court also noted that the father himself, Juan Syquia, chose the gravesite despite knowing that said area had to be constantly sprinkled with water to keep the grass green and that water

would eventually seep through the vault. The trial court also accepted the explanation given by defendant for boring a hole at the bottom side of the vault: "The hole had to be bored through the concrete vault because if it has no hole the vault will (sic) float and the grave would be filled with water and the digging would caved (sic) in the earth, the earth would caved (sic) in the (sic) fill up the grave." 3 From this judgment, the Syquias appealed. They alleged that the trial court erred in holding that the contract allowed the flooding of the vault; that there was no desecration; that the boring of the hole was justifiable; and in not awarding damages. The Court of Appeals in the Decision 4 dated December 7, 1990 however, affirmed the judgment of dismissal. Petitioner's motion for reconsideration was denied in a Resolution dated April 25, 1991. 5 Unsatisfied with the respondent Court's decision, the Syquias filed the instant petition. They allege herein that the Court of Appeals committed the following errors when it: 1. held that the contract and the Rules and Regulations of private respondent allowed the flooding of the vault and the entrance thereto of filth and silt; 2. held that the act of boring a hole was justifiable and corollarily, when it held that no act of desecration was committed; 3. overlooked and refused to consider relevant, undisputed facts, such as those

which have been stipulated upon by the parties, testified to by private respondent's witnesses, and admitted in the answer, which could have justified a different conclusion;

4. held that there was no tort because of a preexisting contract and the absence of fault/negligence; and 5. did not award the P25,000.00 actual damages which was agreed upon by the parties, moral and exemplary damages, and attorney's fees. At the bottom of the entire proceedings is the act of boring a hole by private respondent on the vault of the deceased kin of the bereaved petitioners. The latter allege that such act was either a breach of private respondent's contractual obligation to provide a sealed vault, or, in the alternative, a negligent act which constituted a quasi-delict. Nonetheless, petitioners claim that whatever kind of negligence private respondent has committed, the latter is liable for desecrating the grave of petitioners' dead. In the instant case, We are called upon to determine whether the Manila Memorial Park Cemetery, Inc. breached its contract with petitioners; or, alternatively, whether private respondent was guilty of a tort. We understand the feelings of petitioners and empathize with them. Unfortunately, however, We are more inclined to answer the foregoing questions in the negative. There is not

enough ground, both in fact and in law, to justify a reversal of the decision of the respondent Court and to uphold the pleas of the petitioners. LLpr With respect to herein petitioners' averment that private respondent has committed culpa aquiliana, the Court of Appeals found no negligent act on the part of private respondent to justify an award of damages against it. Although a pre-existing contractual relation between the parties does not preclude the existence of a culpa aquiliana, We find no reason to disregard the respondent's Court finding that there was no negligence. "ARTICLE 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 . . ." (Emphasis Ours). In this case, it has been established that the Syquias and the Manila Memorial Park Cemetery, Inc., entered into a contract entitled "Deed of Sale and Certificate of Perpetual Care" 6 on August 27, 1969. That agreement governed the relations of the parties and defined their respective rights and obligations. Hence, had there been actual negligence on the part of the Manila Memorial Park Cemetery, Inc., it would be held liable not for a quasi-delict or culpa aquiliana, but for culpa contractual as provided by Article 1170 of the Civil Code, to wit: "Those who in the performance of their obligations are guilty of fraud, negligence, or

delay, and those who in any manner contravene the tenor thereof, are liable for damages." The Manila Memorial Park Cemetery, Inc. bound itself to provide the concrete box to be used in the interment. Rule 17 of the Rules and Regulations of private respondent provides that: "Rule 17. Every earth interment shall be made enclosed in a concrete box, or in an outer wall of stone, brick or concrete, the actual installment of which shall be made by the employees of the Association." 7 Pursuant to this above-mentioned Rule, a concrete vault was provided on July 27, 1978, the day before the interment, and was, on the same day, installed by private respondent's employees in the grave which was dug earlier. After the burial, the vault was covered by a cement lid. Petitioners however claim that private respondent breached its contract with them as the latter held out in the brochure it distributed that the ". . . lot may hold single or double internment (sic) underground in sealed concrete vault." 8 Petitioners claim that the vault provided by private respondent was not sealed, that is, not waterproof. Consequently, water seeped through the cement enclosure and damaged everything inside it. prcd We do not agree. There was no stipulation in the Deed of Sale and Certificate of Perpetual Care and in the Rules and Regulations of the Manila Memorial Park Cemetery, Inc. that the vault would be waterproof. Private respondent's

witness, Mr. Dexter Heuschkel, explained that the term "sealed" meant "closed " 9 On the other hand, the word "seal" is defined as ". . . any of various closures or fastenings . . . that cannot be opened without rupture and that serve as a check against tampering or unauthorized opening." 10 The meaning that has been given by private respondent to the word conforms with the cited dictionary definition. Moreover, it is also quite clear that "sealed" cannot be equated with "waterproof". Well settled is the rule that when the terms of the contract are clear and leave no doubt as to the intention of the contracting parties, then the literal meaning of the stipulation shall control. 11 Contracts should be interpreted according to their literal meaning and should not be interpreted beyond their obvious intendment. 12 As ruled by the respondent Court: "When plaintiff-appellant Juan J. Syquia affixed his signature to the Deed of Sale (Exhibit "A") and the attached Rules and Regulations (Exhibit "1"), it can be assumed that he has accepted defendant-appellee's undertaking to merely provide a concrete vault. He can not now claim that said concrete vault must in addition, also be waterproofed (sic). It is basic that the parties are bound by the terms of their contract, which is the law between them (Rizal Commercial Banking Corporation vs. Court of Appeals, et al. 178 SCRA 739). Where there is nothing in the contract which is contrary to law, morals, good customs, public order, or public policy, the validity of the contract must be sustained (Phil. American Insurance Co. vs. Judge

Pineda 175 SCRA 416). Consonant with this ruling, a contracting party cannot incur a liability more than what is expressly specified in his undertaking. It cannot be extended by implication, beyond the terms of the contract (Rizal Commercial Banking Corporation vs. Court of Appeals, supra). And as a rule of evidence, where the terms of an agreement are reduced to writing, the document itself, being constituted by the parties as the expositor of their intentions, is the only instrument of evidence in respect of that agreement which the law will recognize, so long as its (sic) exists for the purpose of evidence (Starkie. Ev., pp. 648, 655, Kasheenath vs. Chundy, 5 W.R. 68 cited in Francisco, Revised Rules of Court in the Phil. p. 153, 1973 Ed.). And if the terms of the contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulations shall control (Santos vs. CA, et al., G.R. No. 83664, Nov. 13, 1989; Prudential Bank & Trust Co. vs. Community Builders Co., Inc., 165 SCRA 285; Balatero vs. IAC, 154 SCRA 530)." 13 We hold, therefore, that private respondent did not breach the tenor of its obligation to the Syquias. While this may be so, can private respondent be liable for culpa aquiliana for boring the hole on the vault? It cannot be denied that the hole made possible the entry of more water and soil than was natural had there been no hole. Cdpr

The law defines negligence as the "omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the persons, of the time and of the place." 14 In the absence of stipulation or legal provision providing the contrary, the diligence to be observed in the performance of the obligation is that which is expected of a good father of a family. The circumstances surrounding the commission of the assailed act - boring of the hole negate the allegation of negligence. The reason for the act was explained by Henry Flores, Interment Foreman, who said that: "Q It has been established in this particular case that a certain Vicente Juan Syquia was interred on July 25, 1978 at the Paraaque Cemetery of the Manila Memorial Park Cemetery, Inc., will you please tell the Hon. Court what or whether you have participation in connection with said internment (sic)? A A day before Juan (sic) Syquia was buried our personnel dug a grave. After digging the next morning a vault was taken and placed in the grave and when the vault was placed on the grave a hole was placed on the vault so that water could come into the vault because it was raining heavily then because the vault has no hole the vault will float and the grave would be filled with water and the digging would caved (sic)

in and the earth, the earth would (sic) caved in and fill up the grave." 15 (Emphasis ours) Except for the foreman's opinion that the concrete vault may float should there be a heavy rainfall, from the abovementioned explanation, private respondent has exercised the diligence of a good father of a family in preventing the accumulation of water inside the vault which would have resulted in the caving in of earth around the grave filling the same with earth. Thus, finding no evidence of negligence on the part of private respondent, We find no reason to award damages in favor of petitioners. In the light of the foregoing facts, and construed in the language of the applicable laws and jurisprudence, We are constrained to AFFIRM in toto the decision of the respondent Court of Appeals dated December 7, 1990. No costs. SO ORDERED. Narvasa, C .J ., Feliciano, Regalado and Nocon, JJ ., concur. Footnotes 1. Civil Case No. Q-27112, "Juan J. Syquia, et al. vs. Manila Memorial Park Cemetery, Inc." 2. Rollo, pp. 59-60.

3. Ibid., p. 65. 4. Penned by Associate Justice Arturo B. Buena, concurred in by Associate Justices Minerva P. Gonzaga-Reyes and Jainal D. Rasul. 5. Rollo, p. 87-A. 6. Exhibit "D"; Records, p. 10. 7. Annex A of Answer; Records, p. 31. 8. Petition, p. 5; Rollo, p. 13. 9. TSN, November 4, 1981, p. 7. 10. Webster's Third International Dictionary 2046 (1970). 11. Mercantile Insurance Co., Inc. vs. Felipe Ysmael, Jr. and Co., Inc., 169 SCRA 66 (1989); Papa vs. Alonzo, 198 SCRA 564 (1991); Alim vs. CA, 200 SCRA 450 (1991); Republic vs. Sandiganbayan, 203 SCRA 310 (1991). 2012 CD Technologies Asia, Inc. Click here for our Disclaimer and Copyright Notice

12. Mercantile Insurance Co., Inc. vs. Felipe Ysmael, Jr. and Co., Inc. 169 SCRA 66 (1989). 13. Rollo, pp. 64-65. 14. CIVIL CODE, Article 1173. 15. TSN, June 28, 1982, p. 2.

SECOND DIVISION [G.R. No. 122039. May 31, 2000.] VICENTE CALALAS, petitioner, vs. COURT OF APPEALS, ELIZA JUJEURCHE SUNGA and FRANCISCO SALVA, respondents. Leo B. Diocos for petitioner. Enrique S. Empleo for E.J. Sunga. Eduardo T. Sedillo for F. Salva. SYNOPSIS Sunga filed a complaint for damages against Calalas, alleging violation of the contract of carriage by the former in failing to exercise the diligence required of him as a common carrier. Calalas, on the other hand, filed a thirdparty complaint against Francisco Salva, the owner of the Isuzu truck that bumped their passenger jeepney. The lower court rendered judgment against Salva as third-party defendant and absolved Calalas of liability, holding that it was the driver of the Isuzu truck who was responsible for the accident. It took cognizance of another case (Civil Case No. 3490), filed by Calalas against Salva and Verena for quasidelict, in which Branch 37 of the same court held Salva and his driver Verena jointly liable to Calalas for the damage to his jeepney. On appeal, the Court of Appeals reversed the ruling of the lower court on the ground that Sunga's cause of

action was based on a contract of carriage, not quasi-delict, and that the common carrier failed to exercise the diligence required under the Civil Code. The appellate court dismissed the third-party complaint against Salva and adjudged Calalas liable for damages to Sunga. Hence, this petition. It is immaterial that the proximate cause of the collision between the jeepney and the truck was the negligence of the truck driver. The doctrine of proximate cause is applicable only in actions for quasi-delict, not in actions involving breach of contract. In the case at bar, upon the happening of the accident, the presumption of negligence at once arose, and it became the duty of petitioner to prove that he had observed extraordinary diligence in the care of his passengers. The fact that Sunga was seated in an "extension seat" placed her in a peril greater than that to which the other passengers were exposed. Therefore, not only was petitioner unable to overcome the presumption of negligence imposed on him for the injury sustained by Sunga, but also, the evidence showed he was actually negligent in transporting passengers. The decision of the Court of Appeals was, affirmed, with the modification that the award of moral damages was deleted. SYLLABUS 1. CIVIL LAW; TORTS AND DAMAGES; QUASIDELICT AND BREACH OF CONTRACT; DISTINGUISHED; CASE AT BAR. The issue in Civil Case No. 3490 was whether Salva and his driver Verena were liable for quasi-delict for the damage caused to petitioner's jeepney. On the other hand, the issue in this case is whether petitioner is liable on his contract of carriage. The

first, quasi-delict, also known as culpa aquiliana or culpa extra contractual, has as its source the negligence of the tortfeasor. The second, breach of contract or culpa contractual, is premised upon the negligence in the performance of a contractual obligation. Consequently, in quasi-delict, the negligence or fault should be clearly established because it is the basis of the action, whereas in breach of contract, the action can be prosecuted merely by proving the existence of the contract and the fact that the obligor, in this case the common carrier, failed to transport his passenger safely to his destination. In case of death or injuries to passengers, Art. 1756 of the Civil Code provides that common carriers are presumed to have been at fault or to have acted negligently unless they prove that they observed extraordinary diligence as defined in Arts. 1733 and 1755 of the Code. This provision necessarily shifts to the common carrier the burden of proof. 2. ID.; ID.; ID.; DOCTRINE OF PROXIMATE CAUSE; NOT APPLICABLE IN ACTIONS INVOLVING BREACH OF CONTRACT; RATIONALE. The doctrine of proximate cause is applicable only in actions for quasidelict, not in actions involving breach of contract. The doctrine is a device for imputing liability to a person where there is no relation between him and another party. In such a case, the obligation is created by law itself. But, where there is a pre-existing contractual relation between the parties, it is the parties themselves who create the obligation, and the function of the law is merely to regulate the relation thus created. Insofar as contracts of carriage are concerned, some aspects regulated by the Civil Code are those respecting the diligence required of common carriers with regard to the

safety of passengers as well as the presumption of negligence in cases of death or injury to passengers. 3. ID.; ID.; ID.; CASO FORTUITO; DEFINED; REQUIREMENTS THEREOF. A caso fortuito is an event which could not be foreseen, or which, though foreseen, was inevitable. This requires that the following requirements be present: (a) the cause of the breach is independent of the debtor's will; (b) the event is unforeseeable or unavoidable; (c) the event is such as to render it impossible for the debtor to fulfill his obligation in a normal manner, and (d) the debtor did not take part in causing the injury to the creditor. Petitioner should have foreseen the danger of parking his jeepney with its body protruding two meters into the highway. 4. ID.; DAMAGES; MORAL DAMAGES; WHEN IT MAY BE RECOVERED. As a general rule, moral damages are not recoverable in actions for damages predicated on a breach of contract for it is not one of the items enumerated under Art. 2219 of the Civil Code. As an exception, such damages are recoverable: (1) in cases in which the mishap results in the death of a passenger, as provided in Art. 1764, in relation to Art. 2206 (3) of the Civil Code; and (2) in the cases in which the carrier is guilty of fraud or bad faith, as provided in Art. 2220. SCDaET

DECISION

MENDOZA, J p:

This is a petition for review on certiorari of the decision 1 of the Court of Appeals, dated March 31, 1991, reversing the contrary decision of the Regional Trial Court, Branch 36, Dumaguete City, and awarding damages instead to private respondent Eliza Jujeurche Sunga as plaintiff in an action for breach of contract of carriage. prLL The facts, as found by the Court of Appeals, are as follows: At 10 o'clock in the morning of August 23, 1989, private respondent Eliza Jujeurche G. Sunga, then a college freshman majoring in Physical Education at the Siliman University, took a passenger jeepney owned and operated by petitioner Vicente Calalas. As the jeepney was filled to capacity of about 24 passengers, Sunga was given by the conductor an "extension seat," a wooden stool at the back of the door at the rear end of the vehicle. On the way to Poblacion Sibulan, Negros Occidental, the jeepney stopped to let a passenger off. As she was seated at the rear of the vehicle, Sunga gave way to the outgoing passenger. Just as she was doing so, an Isuzu truck driven by Iglecerio Verena and owned by Francisco Salva bumped the left rear portion of the jeepney. As a result, Sunga was injured. She sustained a fracture of the "distal third of the left tibia-fibula with severe necrosis of the underlying skin." Closed reduction of the fracture, long leg circular casting, and case wedging were done under sedation. Her confinement in the hospital lasted from August 23 to September 7, 1989. Her attending physician, Dr. Danilo V. Oligario, an orthopedic surgeon, certified she would remain on a cast for a period of three months and would have to ambulate in crutches during said period. dctai

On October 9, 1989, Sunga filed a complaint for damages against Calalas, alleging violation of the contract of carriage by the former in failing to exercise the diligence required of him as a common carrier. Calalas, on the other hand, filed a third-party complaint against Francisco Salva, the owner of the Isuzu truck. The lower court rendered judgment, against Salva as thirdparty defendant and absolved Calalas of liability, holding that it was the driver of the Isuzu truck who was responsible for the accident. It took cognizance of another case (Civil Case No. 3490), filed by Calalas against Salva and Verena, for quasi-delict, in which Branch 37 of the same court held Salva and his driver Verena jointly liable to Calalas for the damage to his jeepney. On appeal to the Court of Appeals, the ruling of the lower court was reversed on the ground that Sunga's cause of action was based on a contract of carriage, not quasi-delict, and that the common carrier failed to exercise the diligence required under the Civil Code. The appellate court dismissed the third-party complaint against Salva and adjudged Calalas liable for damages to Sunga. The dispositive portion of its decision reads: WHEREFORE, the decision appealed from is hereby REVERSED and SET ASIDE, and another one is entered ordering defendantappellee Vicente Calalas to pay plaintiffappellant: (1) P50,000.00 as actual and compensatory damages;

(2) P50,000.00 as moral damages; (3) P10,000.00 as attorney's fees; and (4) P1,000.00 as expenses of litigation; and (5) to pay the costs. SO ORDERED. Hence, this petition. Petitioner contends that the ruling in Civil Case No. 3490 that the negligence of Verena was the proximate cause of the accident negates his liability and that to rule otherwise would be to make the common carrier an insurer of the safety of its passengers. He contends that the bumping of the jeepney by the truck owned by Salva was a caso fortuito. Petitioner further assails the award of moral damages to Sunga on the ground that it is not supported by evidence. prLL The petition has no merit. The argument that Sunga is bound by the ruling in Civil Case No. 3490 finding the driver and the owner of the truck liable for quasi-delict ignores the fact that she was never a party to that case and, therefore, the principle of res judicata does not apply. Nor are the issues in Civil Case No. 3490 and in the present case the same. The issue in Civil Case No. 3490 was whether Salva and his driver Verena were liable for quasidelict for the damage caused to petitioner's jeepney. On the other hand, the issue in this case is whether petitioner is liable on his contract of carriage. The first, quasi-delict, also

known as culpa aquiliana or culpa extra contractual, has as its source the negligence of the tortfeasor. The second, breach of contract or culpa contractual, is premised upon the negligence in the performance of a contractual obligation.

Consequently, in quasi-delict, the negligence or fault should be clearly established because it is the basis of the action, whereas in breach of contract, the action can be prosecuted merely by proving the existence of the contract and the fact that the obligor, in this case the common carrier, failed to transport his passenger safely to his destination. 2 In case of death or injuries to passengers, Art. 1756 of the Civil Code provides that common carriers are presumed to have been at fault or to have acted negligently unless they prove that they observed extraordinary diligence as defined in Arts. 1733 and 1755 of the Code. This provision necessarily shifts to the common carrier the burden of proof. There is, thus, no basis for the contention that the ruling in Civil Case No. 3490, finding Salva and his driver Verena liable for the damage to petitioner's jeepney, should be binding on Sunga. It is immaterial that the proximate cause of the collision between the jeepney and the truck was the negligence of the truck driver. The doctrine of proximate cause is applicable only in actions for quasi-delict, not in actions involving breach of contract. The doctrine is a device for imputing liability to a person where there is no relation between him and another party. In such a case, the obligation is created by law itself. But, where there is a preexisting contractual relation between the parties, it is the

parties themselves who create the obligation, and the function of the law is merely to regulate the relation thus created. Insofar as contracts of carriage are concerned, some aspects regulated by the Civil Code are those respecting the diligence required of common carriers with regard to the safety of passengers as well as the presumption of negligence in cases of death or injury to passengers. It provides: llcd ARTICLE 1733. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances of each case. Such extraordinary diligence in the vigilance over the goods is further expressed in Articles 1734, 1735, and 1746, Nos. 5, 6, and 7, while the extraordinary diligence for the safety of the passengers is further set forth in Articles 1755 and 1756. LLjur ARTICLE 1755. A common carrier is bound to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with due regard for all the circumstances. ARTICLE 1756. In case of death of or injuries to passengers, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they

observed extraordinary diligence as prescribed by Articles 1733 and 1755. In the case at bar, upon the happening of the accident, the presumption of negligence at once arose, and it became the duty of petitioner to prove that he had to observe extraordinary diligence in the care of his passengers. Now, did the driver of jeepney carry Sunga "safely as far as human care and foresight could provide, using the utmost diligence of very cautious persons, with due regard for all the circumstances" as required by Art. 1755? We do not think so. Several factors militate against petitioner's contention. First, as found by the Court of Appeals, the jeepney was not properly parked, its rear portion being exposed about two meters from the broad shoulders of the highway, and facing the middle of the highway in a diagonal angle. This is a violation of the R.A. No. 4136, as amended, or the Land Transportation and Traffic Code, which provides: SECTION 54. Obstruction of Traffic. No person shall drive his motor vehicle in such a manner as to obstruct or impede the passage of any vehicle, nor, while discharging or taking on passengers or loading or unloading freight, obstruct the free passage of other vehicles on the highway. LLpr Second, it is undisputed that petitioner's driver took in more passengers than the allowed seating capacity of the jeepney, a violation of 32(a) of the same law. It provides:

Exceeding registered capacity. No person operating any motor vehicle shall allow more passengers or more freight or cargo in his vehicle than its registered capacity. The fact that Sunga was seated in an "extension seat" placed her in a peril greater than that to which the other passengers were exposed. Therefore, not only was petitioner unable to overcome the presumption of negligence imposed on him for the injury sustained by Sunga, but also, the evidence shows he was actually negligent in transporting passengers. We find it hard to give serious thought to petitioner's contention that Sunga's taking an "extension seat" amounted to an implied assumption of risk. It is akin to arguing that the injuries to the many victims of the tragedies in our seas should not be compensated merely because those passengers assumed a greater risk of drowning by boarding an overloaded ferry. This is also true of petitioner's contention that the jeepney being bumped while it was improperly parked constitutes caso fortuito. A caso fortuito is an event which could not be foreseen, or which, though foreseen, was inevitable. 3 This requires that the following requirements be present: (a) the cause of the breach is independent of the debtor's will; (b) the event is unforeseeable or unavoidable; (c) the event is such as to render it impossible for the debtor to fulfill his obligation in a normal manner, and (d) the debtor did not take part in causing the injury to the creditor. 4 Petitioner should have foreseen the danger of parking his jeepney with its body protruding two meters into the highway. dctai

Finally, petitioner challenges the award of moral damages alleging that it is excessive and without basis in law. We find this contention well taken. In awarding moral damages, the Court of Appeals stated: Plaintiff-appellant at the time of the accident was a first-year college student in that school year 1989-1990 at the Siliman University, majoring in Physical Education. Because of the injury, she was not able to enroll in the second semester of that school year. She testified that she had no more intention of continuing with her schooling, because she could not walk and decided not to pursue her degree, major in Physical Education "because of my leg which has a defect already." Plaintiff-appellant likewise testified that even while she was under confinement, she cried in pain because of her injured left foot. As a result of her injury, the Orthopedic Surgeon also certified that she has "residual bowing of the fracture side." She likewise decided not to further pursue Physical Education as her major subject, because "my left leg . . . has a defect already." LLphil Those are her physical pains and moral sufferings, the inevitable bedfellows of the injuries that she suffered. Under Article 2219 of the Civil Code, she is entitled to recover moral damages in the sum of P50,000.00, which is fair, just and reasonable.

As a general rule, moral damages are not recoverable in actions for damages predicated on a breach of contract for it is not one of the items enumerated under Art. 2219 of the Civil Code. 5 As an exception, such damages are recoverable: (1) in cases in which the mishap results in the death of a passenger, as provided in Art. 1764, in relation to Art. 2206(3) of the Civil Code; and (2) in the cases in which the carrier is guilty of fraud or bad faith, as provided in Art. 2220. 6 In this case, there is no legal basis for awarding moral damages since there was no factual finding by the appellate court that petitioner acted in bad faith in the performance of the contract of carriage. Sunga's contention that petitioner's admission in open court that the driver of the jeepney failed to assist her in going to a nearby hospital cannot be construed as an admission of bad faith. The fact that it was the driver of the Isuzu truck who took her to the hospital does not imply that petitioner was utterly indifferent to the plight of his injured passenger. If at all, it is merely implied recognition by Verena that he was the one at fault for the accident. LLpr WHEREFORE, the decision of the Court of Appeals, dated March 31, 1995, and its resolution, dated September 11, 1995, are AFFIRMED, with the MODIFICATION that the award of moral damages is DELETED. SO ORDERED. Bellosillo and Buena, JJ., concur. Quisumbing and De Leon, Jr., JJ., are on leave.

Footnotes 1. Per Justice Artemon D. Luna and concurred in by Justices Hector L. Hofilena and B.A. Adefuin-dela Cruz. 2. See B. BALDERRAMA, THE PHILIPPINE LAW ON TORTS AND DAMAGES 20 (1953). 3. CIVIL CODE, ART. 1174. 4. Juan F. Nakpil & Sons v. Court of Appeals, 144 SCRA 596 (1986); Vasquez v. Court of Appeals, 138 SCRA 553 (1985); Republic v. Luzon Stevedoring Corp., 128 Phil. 313 (1967). 5. Fores v. Miranda, 105 Phil. 267 (1959); Mercado v. Lira, 3 SCRA 124 (1961). 6. Philippine Rabbit Bus Lines, Inc. v. Esguerra, 117 SCRA 741 (1982); Sabena Belgian World Airlines v. Court of Appeals, 171 SCRA 620 (1989); China Airlines Ltd. v. Intermediate Appellate Court, 169 SCRA 226 (1989). AMADO PICART vs. FRANK SMITH

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. SYLLABUS 1. NEGLIGENCE; CRITERION FOR DETERMINING EXISTENCE OF NEGLIGENCE. The test for determining whether a person is negligent in doing an act whereby injury or damage results to the person or property of another is this: Would a prudent man, in the position of the person to whom negligence is attributed, foresee harm to the person injured as a reasonable consequence of the course about to be pursued. If so, the law imposes a duty on the actor to refrain from that course or to take precaution against its mischievous results, and the failure to do so constitutes negligence. Reasonable foresight of harm, followed by the ignoring of the admonition born of this prevision, is the constitutive fact in negligence. 2. ID.; CONTRIBUTORY NEGLIGENCE; SUCCESSIVE NEGLIGENT ACTS. Where both parties are guilty of negligence, but the negligent act of one succeeds that of the other by an appreciable interval of time, the one who has the last reasonable opportunity

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. 3. ID.; ID.; CASE AT BAR. The plaintiff was riding a pony on a bridge. Seeing an automobile ahead he improperly pulled his horse over to the railing on the right. The driver of the automobile, however, guided his car toward the plaintiff without diminution of speed until he was only a few feet away. He then turned to the right but passed so closely to the horse that the latter being frightened, jumped around and was killed by the passing car. Held: That although the plaintiff was guilty of negligence in being on the wrong side of the bridge, the defendant was nevertheless civilly liable for the legal damages resulting from the collision, as he had a fair opportunity to avoid the accident after he realized the situation created by the negligence of the plaintiff and failed to avail himself of that opportunity; while the plaintiff could by no means then place himself in a position of greater safety.

DECISION

STREET, J p: In this action the plaintiff, Amado Picart, seeks to recover of the defendant, Frank Smith, jr., the sum of P31,100, 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 4.08 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 was 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 was struck on the hock of the left hind leg by the flange of the car and the limb was broken. The horse fell and its rider was thrown off with some violence. From the evidence adduced in the case we believe that when the accident occurred the free space where the pony stood between the automobile and the railing of the bridge was probably less than one and one half meters. As a result of its injuries the horse died. The plaintiff received contusions which caused temporary unconsciousness and required medical attention for several days. The question presented for decision is whether or not the defendant in maneuvering his car in the manner above described was guilty of negligence such as gives rise to a civil obligation to repair the damage done; and we are of the opinion that he is so liable. As the defendant started across the bridge, he had the right to assume that the horse and 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 excited 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 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.

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 speculation cannot here be of much value but his 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 the 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 the 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 rider as a reasonable consequence of that course. Under

these circumstances the law imposed on the defendant the duty to guard against the threatened harm. It goes without saying that the plaintiff himself was not free from fault, for he was guilty of antecedent negligence in planting himself on the wrong side of the road. But as we have already stated, the defendant was also negligent; and in such case the problem always is to discover which agent is immediately and directly responsible. It will be noted that the negligent acts of the two parties were not contemporaneous, since the negligence of the defendant succeeded the negligence of the plaintiff by an appreciable interval. Under these circumstances the law is that the person who has the last fair chance to avoid the impending harm and fails to do so is chargeable with the consequences, without reference to the prior negligence of the other party. The decision in the case of Rakes 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 recover, 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, 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 a 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 a 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 of 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 a 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 such effect. (See U.S. vs. Banzuela and Banzuela, 31 Phil. Rep., 564.) From what has been said it results that the judgment of the lower court must be reversed, and judgment is here rendered that the plaintiff recover of the defendant the sum of two hundred pesos (P200), with costs of both 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 characters as not to be recoverable. So ordered. Arellano, C.J., Torres, Carson, Araullo, Avancea, and Fisher, JJ., concur. Johnson, J., reserves his vote. Separate Opinions MALCOLM, J., concurring:

After mature deliberation, I have finally decided to concur with the judgment in this case. I do so because of my understanding of the "last clear chance" rule of the law of negligence as particularly applied to automobile accidents. This rule cannot be invoked where the negligence of the plaintiff is concurrent with that of the defendant. Again, if a traveller when he reaches the point of collision is in a situation to extricate himself and avoid injury, his negligence at that point will prevent a recovery. But Justice Street finds as a fact that the negligent act of the defendant succeeded that of the plaintiff by an appreciable interval of time, and that at that moment the plaintiff had no opportunity to avoid the accident. consequently, the "last clear chance" rule is applicable. In other words, when a traveller has reached a point where he cannot extricate himself and vigilance on his part will not avert the injury, his negligence in reaching that position becomes the condition and not the proximate cause of the injury and will not preclude a recovery. (Note especially Aiken vs. Metcalf [1917], 102 Atl., 330.)

FIRST DIVISION [G.R. No. 129792. December 21, 1999.] JARCO MARKETING CORPORATION, LEONARDO KONG, JOSE TIOPE and ELISA PANELO, petitioners, vs. HONORABLE COURT OF APPEALS, CONRADO C. AGUILAR and CRISELDA R. AGUILAR, respondents. Estrella & Virtudazo Law Firm for petitioners. Florante A. Bautista for private respondents. SYNOPSIS Petitioner Jarco Marketing Corporation is the owner of Syvel's Department Store, Makati City (Syvel's), while the private respondents are spouses and the parents of Zhieneth Aguilar. While Criselda and her child Zhieneth were at the 2nd floor of Syvel's, a terrible accident happened, which caused the life of the six-year old Zhieneth. She was pinned by the bulk of the store's gift-wrapping counter structure which collapsed. Fourteen days later, Zhieneth died at the hospital, which was attributed to the injuries she sustained. Private respondents filed a complaint for damages wherein they sought the payment of P157,522.86 for actual damages, P300,000.00 for moral damages, P20,000.00 for attorney's fees and an unspecified amount for loss income and exemplary damages. Petitioners, however, denied any liability for the injuries and consequent death of Zhieneth.

They sought the dismissal of the complaint and an award of moral and exemplary damages and attorney's fees in their favor. The trial court dismissed the complaint, finding that the preponderance of the evidence favored petitioners. The Court of Appeals decided in favor of private respondents and reversed the appealed judgment. It found that petitioners were negligent in maintaining a structurally dangerous counter. It also declared Zhieneth, who was below seven at the time, was absolutely incapable of negligence or other tort. The appellate court then awarded private respondents P99,420.86 as actual damages, representing hospitalization expenses. It denied the award for funeral expenses for lack of proof. Instead, compensatory damages were awarded for the death of Zhieneth. Petitioners sought the reversal of the Court of Appeals' decision and the reinstatement of the judgment of the trial court. EHTSCD The Supreme Court ruled that the tragedy which befell Zhieneth was no accident and her death could only be attributed to negligence. The physical analysis of the counter by both the trial court and the Court of Appeals and a scrutiny of the evidence on record revealed that it was not durable. Criselda should be absolved from any contributory negligence. The petition was denied and the decision of the Court of Appeals was affirmed. SYLLABUS 1. CIVIL LAW; DAMAGES. ACCIDENT AND NEGLIGENCE; DISTINGUISHED. An accident pertains to an unforeseen event in which no fault or negligence attaches to the defendant. It is "a fortuitous circumstance, event or happening; an event happening

without any human agency, or if happening wholly or partly through human agency, an event which under the circumstances is unusual or unexpected by the person to whom it happens." On the other hand, negligence is the omission to do something which a reasonable man, guided by those considerations which ordinarily regulate the conduct of human affairs, would do, or the doing of something which a prudent and reasonable man would not do. Negligence is "the failure to observe, for the protection of the interest of another person, that degree of care, precaution and vigilance which the circumstances justly demand, whereby such other person suffers injury." 2. ID.; ID.; ID.; TEST TO DETERMINE NEGLIGENCE. The test in determining the existence of negligence is enunciated in the landmark case of Picart v. Smith, (37 Phil. 809 [1918]) thus: 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. 3. REMEDIAL LAW; EVIDENCE; TESTIMONY; EXCEPTION TO HEARSAY RULE; PART OF RES GESTAE, DEFINED. The testimony of witness Gonzales pertaining to ZHIENETH's statement formed (and should be admitted as) part of the res gestae under Section 42, Rule 130 of the Rules of Court, thus: Part of res gestae. Statements made by a person while a startling occurrence is taking place or immediately prior or subsequent thereto with respect to the circumstances thereof, may be given in evidence as part of the res gestae. So, also, statements accompanying an equivocal act material to the issue, and giving it a legal significance, may be received as part of the

res gestae. It is axiomatic that matters relating to declarations of pain or suffering and statements made to a physician are generally considered declarations and admissions. 4. ID.; ID.; ID.; ID.; REQUIREMENTS FOR ADMISSIBILITY; PRESENT IN CASE AT BAR. All that is required for their admissibility as part of the res gestae is that they be made or uttered under the influence of a startling event before the declarant had the time to think and concoct a falsehood as witnessed by the person who testified in court. Under the circumstances, it is unthinkable for ZHIENETH, a child of such tender age and in extreme pain, to have lied to a doctor whom she trusted with her life. We accord credence to Gonzales' testimony on the matter, i.e., ZHIENETH performed no act that facilitated her tragic death. 5. ID.; ID.; ID.; CREDIBILITY OF WITNESSES; FINDINGS OF THE TRIAL COURT GENERALLY NOT DISTURBED ON APPEAL; EXCEPTIONS; NOT PRESENT IN CASE AT BAR. It is settled that when the issue concerns the credibility of witnesses, the appellate courts will not as a general rule disturb the findings of the trial court, which is in a better position to determine the same. The trial court has the distinct advantage of actually hearing the testimony of and observing the deportment of the witnesses. However, the rule admits of exceptions such as when its evaluation was reached arbitrarily or it overlooked or failed to appreciate some facts or circumstances of weight and substance which could affect the result of the case. In the instant case, petitioners failed to bring their claim within the exception.

6. ID.; ID.; PRESUMPTION; CHILDREN BELOW NINE YEARS OLD, CONCLUSIVELY PRESUMED TO BE INCAPABLE OF CONTRIBUTORY NEGLIGENCE; CASE AT BAR. Anent the negligence imputed to ZHIENETH, we apply the conclusive presumption that favors children below nine (9) years old incapable of contributory negligence. In his book, (I Philippine Law on Torts and Damages, 70-71 [1993]), former Judge Cezar S. Sangco stated: In our jurisdiction, a person under nine years of age is conclusively presumed to have acted without discernment, and is, on that account, exempt from criminal liability. The same presumption and a like exemption from criminal liability obtains in a case of a person over nine and under fifteen years of age, unless it is shown that he has acted with discernment. Since negligence may be a felony and a quasi-delict and required discernment as a condition of liability, either criminal or civil, a child under nine years of age is, by analogy, conclusively presumed to be incapable of negligence; and that the presumption of lack of discernment or incapacity for negligence in the case of a child over nine but under fifteen years of age is a rebuttable one, under our law. The rule, therefore, is that a child under nine years of age must be conclusively presumed incapable of contributory negligence as a matter of law. SDIACc

1996 decision 1 of the Court of Appeals in C.A. G.R. No. CV 37937 and the resolution 2 denying their motion for reconsideration. The assailed decision set aside the 15 January 1992 judgment of the Regional Trial Court (RTC), Makati City, Branch 60 in Civil Case No. 7119 and ordered petitioners to pay damages and attorney's fees to private respondents Conrado and Criselda (CRISELDA) Aguilar. cdasia Petitioner Jarco Marketing Corporation is the owner of Syvel's Department Store, Makati City. Petitioners Leonardo Kong, Jose Tiope and Elisa Panelo are the store's branch manager, operations manager, and supervisor, respectively. Private respondents are spouses and the parents of Zhieneth Aguilar (ZHIENETH). In the afternoon of 9 May 1983, CRISELDA and ZHIENETH were at the 2nd floor of Syvel's Department Store, Makati City. CRISELDA was signing her credit card slip at the payment and verification counter when she felt a sudden gust of wind and heard a loud thud. She looked behind her. She then beheld her daughter ZHIENETH on the floor, her young body pinned by the bulk of the store's giftwrapping counter/structure. ZHIENETH was crying and screaming for help. Although shocked, CRISELDA was quick to ask the assistance of the people around in lifting the counter and retrieving ZHIENETH from the floor. 3 ZHIENETH was quickly rushed to the Makati Medical Center where she was operated on. The next day ZHIENETH lost her speech and thereafter communicated with CRISELDA by writing on a magic slate. The injuries she sustained took their toil on her young body. She died

DECISION

DAVIDE, JR., C.J p: In this petition for review on certiorari under Rule 45 of the Rules of Court, petitioners seek the reversal of the 17 June

fourteen (14) days after the accident or on 22 May 1983, on the hospital bed. She was six years old. 4 The cause of her death was attributed to the injuries she sustained. The provisional medical certificate 5 issued by ZHIENETH's attending doctor described the extent of her injuries: Diagnoses: 1. Shock, severe, sec. to intra-abdominal injuries due to blunt injury 2. Hemorrhage, massive, intraperitoneal sec. to laceration, (L) lobe liver 3. Rupture, stomach, anterior & posterior walls 4. Complete transection, 4th position, duodenum 5. Hematoma, extensive, retroperitoneal 6. Contusion, lungs, severe CRITICAL After the burial of their daughter, private respondents demanded upon petitioners the reimbursement of the hospitalization, medical bills and wake and funeral expenses 6 which they had incurred. Petitioners refused to pay. Consequently, private respondents filed a complaint for damages, docketed as Civil Case No. 7119 wherein they

sought the payment of P157,522.86 for actual damages, P300,000 for moral damages, P20,000 for attorney's fees and an unspecified amount for loss of income and exemplary damages.

In their answer with counterclaim, petitioners denied any liability for the injuries and consequent death of ZHIENETH. They claimed that CRISELDA was negligent in exercising care and diligence over her daughter by allowing her to freely roam around in a store filled with glassware and appliances. ZHIENETH too, was guilty of contributory negligence since she climbed the counter, triggering its eventual collapse on her. Petitioners also emphasized that the counter was made of sturdy wood with a strong support; it never fell nor collapsed for the past fifteen years since its construction. Additionally, petitioner Jarco Marketing Corporation maintained that it observed the diligence of a good father of a family in the selection, supervision and control of its employees. The other petitioners likewise raised due care and diligence in the performance of their duties and countered that the complaint was malicious for which they suffered besmirched reputation and mental anguish. They sought the dismissal of the complaint and an award of moral and exemplary damages and attorney's fees in their favor. Cdpr In its decision 7 the trial court dismissed the complaint and counterclaim after finding that the preponderance of the evidence favored petitioners. It ruled that the proximate cause of the fall of the counter on ZHIENETH was her act

of clinging to it. It believed petitioners' witnesses who testified that ZHIENETH clung to the counter, afterwhich the structure and the girl fell with the structure falling on top of her, pinning her stomach. In contrast, none of private respondents' witnesses testified on how the counter fell. The trial court also held that CRISELDA's negligence contributed to ZHIENETH's accident. In absolving petitioners from any liability, the trial court reasoned that the counter was situated at the end or corner of the 2nd floor as a precautionary measure hence, it could not be considered as an attractive nuisance. 8 The counter was higher than ZHIENETH. It has been in existence for fifteen years. Its structure was safe and well-balanced. ZHIENETH, therefore, had no business climbing on and clinging to it. Private respondents appealed the decision, attributing as errors of the trial court its findings that: (1) the proximate cause of the fall of the counter was ZHIENETH's misbehavior; (2) CRISELDA was negligent in her care of ZHIENETH; (3) petitioners were not negligent in the maintenance of the counter; and (4) petitioners were not liable for the death of ZHIENETH. Further, private respondents asserted that ZHIENETH should be entitled to the conclusive presumption that a child below nine (9) years is incapable of contributory negligence. And even if ZHIENETH, at six (6) years old, was already capable of contributory negligence, still it was physically impossible for her to have propped herself on the counter. She had a small frame (four feet high and seventy pounds) and the counter was much higher and heavier than she was. Also, the testimony of one of the store's former employees,

Gerardo Gonzales, who accompanied ZHIENETH when she was brought to the emergency room of the Makati Medical Center belied petitioners' theory that ZHIENETH climbed the counter. Gonzales claimed that when ZHIENETH was asked by the doctor what she did, ZHIENETH replied, "[N]othing, I did not come near the counter and the counter just fell on me." 9 Accordingly, Gonzales' testimony on ZHIENETH's spontaneous declaration should not only be considered as part of res gestae but also accorded credit. Moreover, negligence could not be imputed to CRISELDA for it was reasonable for her to have let go of ZHIENETH at the precise moment that she was signing the credit card slip. Finally, private respondents vigorously maintained that the proximate cause of ZHIENETH's death, was petitioners' negligence in failing to institute measures to have the counter permanently nailed. On the other hand, petitioners argued that private respondents raised purely factual issues which could no longer be disturbed. They explained that ZHIENETH's death while unfortunate and tragic, was an accident for which neither CRISELDA nor even ZHIENETH could entirely be held faultless and blameless. Further, petitioners adverted to the trial court's rejection of Gonzales' testimony as unworthy of credence. As to private respondent's claim that the counter should have been nailed to the ground, petitioners justified that it was not necessary. The counter had been in existence for several years without any prior accident and was deliberately placed at a corner to avoid such accidents. Truth to tell, they acted without fault or negligence for they had exercised due

diligence on the matter. In fact, the criminal case 10 for homicide through simple negligence filed by private respondents against the individual petitioners was dismissed; a verdict of acquittal was rendered in their favor. The Court of Appeals, however, decided in favor of private respondents and reversed the appealed judgment. It found that petitioners were negligent in maintaining a structurally dangerous counter. The counter was shaped like an inverted "L" 11 with a top wider than the base. It was top heavy and the weight of the upper portion was neither evenly distributed nor supported by its narrow base. Thus, the counter was defective, unstable and dangerous; a downward pressure on the overhanging portion or a push from the front could cause the counter to fall. Two former employees of petitioners had already previously brought to the attention of the management the danger the counter could cause. But the latter ignored their concern. The Court of Appeals faulted the petitioners for this omission, and concluded that the incident that befell ZHIENETH could have been avoided had petitioners repaired the defective counter. It was inconsequential that the counter had been in use for some time without a prior incident. The Court of Appeals declared that ZHIENETH, who was below seven (7) years old at the time of the incident, was absolutely incapable of negligence or other tort. It reasoned that since a child under nine (9) years could not be held liable even for an intentional wrong, then the six-year old ZHIENETH could not be made to account for a mere mischief or reckless act. It also absolved CRISELDA of any negligence, finding nothing wrong or out of the ordinary in

momentarily allowing ZHIENETH to walk while she signed the document at the nearby counter. LLjur The Court of Appeals also rejected the testimonies of the witnesses of petitioners. It found them biased and prejudiced. It instead gave credit to the testimony of disinterested witness Gonzales. The Court of Appeals then awarded P99,420.86 as actual damages, the amount representing the hospitalization expenses incurred by private respondents as evidenced by the hospital's statement of account. 12 It denied an award for funeral expenses for lack of proof to substantiate the same. Instead, a compensatory damage of P50,000 was awarded for the death of ZHIENETH. We quote the dispositive portion of the assailed decision, 13 thus: WHEREFORE, premises considered, the judgment of the lower court is SET ASIDE and another one is entered against [petitioners], ordering them to pay jointly and severally unto [private respondents] the following: 1. P50,000.00 by way of compensatory damages for the death of Zhieneth Aguilar, with legal interest (6% p.a.) from 27 April 1984; 2. P99,420.86 as reimbursement for hospitalization expenses incurred; with legal interest (6% p.a.) from 27 April 1984;

3. P100,000.00 as moral and exemplary damages; 4. P20,000.00 in the concept of attorney's fees; and 5. Costs. Private respondents sought a reconsideration of the decision but the same was denied in the Court of Appeals' resolution 14 of 16 July 1997. Petitioners now seek the reversal of the Court of Appeals' decision and the reinstatement of the judgment of the trial court. Petitioners primarily argue that the Court of Appeals erred in disregarding the factual findings and conclusions of the trial court. They stress that since the action was based on tort, any finding of negligence on the part of the private respondents would necessarily negate their claim for damages, where said negligence was the proximate cause of the injury sustained. The injury in the instant case was the death of ZHIENETH. The proximate cause was ZHIENETH's act of clinging to the counter. This act in turn caused the counter to fall on her. This and CRISELDA's contributory negligence, through her failure to provide the proper care and attention to her child while inside the store, nullified private respondents' claim for damages. It is also for these reasons that parents are made accountable for the damage or injury inflicted on others by their minor children. Under these circumstances, petitioners could not be held responsible for the accident that befell ZHIENETH. Petitioners also assail the credibility of Gonzales who was already separated from Syvel's at the time he testified;

hence, his testimony might have been tarnished by illfeelings against them. For their part, private respondents principally reiterated their arguments that neither ZHIENETH nor CRISELDA was negligent at any time while inside the store; the findings and conclusions of the Court of Appeals are substantiated by the evidence on record; the testimony of Gonzales, who heard ZHIENETH comment on the incident while she was in the hospital's emergency room should receive credence; and finally, ZHIENETH's part of the res gestae declaration "that she did nothing to cause the heavy structure to fall on her" should be considered as the correct version of the gruesome events. We deny the petition. The two issues to be resolved are: (1) whether the death of ZHIENETH was accidental or attributable to negligence; and (2) in case of a finding of negligence, whether the same was attributable to private respondents for maintaining a defective counter or to CRISELDA and ZHIENETH for failing to exercise due and reasonable care while inside the store premises.

An accident pertains to an unforeseen event in which no fault or negligence attaches to the defendant. 15 It is "a fortuitous circumstance, event or happening; an event happening without any human agency, or if happening wholly or partly through human agency, an event which under the circumstances is unusual or unexpected by the person to whom it happens." 16

On the other hand, negligence is the omission to do something which a reasonable man, guided by those considerations which ordinarily regulate the conduct of human affairs, would do, or the doing of something which a prudent and reasonable man would not do. 17 Negligence is "the failure to observe, for the protection of the interest of another person, that degree of care, precaution and vigilance which the circumstances justly demand, whereby such other person suffers injury." 18 Accident and negligence are intrinsically contradictory; one cannot exist with the other. Accident occurs when the person concerned is exercising ordinary care, which is not caused by fault of any person and which could not have been prevented by any means suggested by common prudence. 19 The test in determining the existence of negligence is enunciated in the landmark case of Picart v. Smith, 20 thus: 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. 21 We rule that the tragedy which befell ZHIENETH was no accident and that ZHIENETH's death could only be attributable to negligence. LLjur We quote the testimony of Gerardo Gonzales who was at the scene of the incident and accompanied CRISELDA and ZHIENETH to the hospital: Q While at the Makati Medical Center, did you hear or notice anything while the child was being treated?

A At the emergency room we were all surrounding the child. And when the doctor asked the child "what did you do," the child said "nothing, I did not come near the counter and the counter just fell on me." Q (COURT TO ATTY. BELTRAN) You want the words in Tagalog to be translated? ATTY. BELTRAN Yes, your Honor. COURT Granted. Intercalate "wala po, hindi po ako lumapit doon. Basta bumagsak." 22 This testimony of Gonzales pertaining to ZHIENETH's statement formed (and should be admitted as) part of the res gestae under Section 42, Rule 130 of the Rules of Court, thus: Part of res gestae. Statements made by a person while a startling occurrence is taking place or immediately prior or subsequent thereto with respect to the circumstances thereof, may be given in evidence as part of the res gestae. So, also, statements accompanying an equivocal act material to the

issue, and giving it a legal significance, may be received as part of the res gestae. It is axiomatic that matters relating to declarations of pain or suffering and statements made to a physician are generally considered declarations and admissions. 23 All that is required for their admissibility as part of the res gestae is that they be made or uttered under the influence of a startling event before the declarant had the time to think and concoct a falsehood as witnessed by the person who testified in court. Under the circumstances thus described, it is unthinkable for ZHIENETH, a child of such tender age and in extreme pain, to have lied to a doctor whom she trusted with her life. We therefore accord credence to Gonzales' testimony on the matter, i.e., ZHIENETH performed no act that facilitated her tragic death. Sadly, petitioners did, through their negligence or omission to secure or make stable the counter's base. Gonzales' earlier testimony on petitioners' insistence to keep and maintain the structurally unstable gift-wrapping counter proved their negligence, thus: Q When you assumed the position as gift wrapper at the second floor, will you please describe the gift wrapping counter, were you able to examine? A Because every morning before I start working I used to clean that counter and since it is not nailed and it was only standing on the floor, it was shaky. xxx xxx xxx

Q Will you please describe the counter at 5:00 o'clock [sic] in the afternoon on [sic] May 9, 1983? A At that hour on May 9, 1983, that counter was standing beside the verification counter. And since the top of it was heavy and considering that it was not nailed, it can collapsed at anytime, since the top is heavy. xxx xxx xxx Q And what did you do? A I informed Mr. Maat about that counter which is [sic] shaky and since Mr. Maat is fond of putting display decorations on tables, he even told me that I would put some decorations. But since I told him that it not [sic] nailed and it is shaky he told me "better inform also the company about it." And since the company did not do anything about the counter, so I also did not do anything about the counter. 24 [Emphasis supplied] Ramon Guevarra, another former employee, corroborated the testimony of Gonzales, thus: Q Will you please described [sic] to the Honorable Court the counter where you were assigned in January 1983?

xxx xxx xxx A That counter assigned to me was when my supervisor ordered me to carry that counter to another place. I told him that the counter needs nailing and it has to be nailed because it might cause injury or accident to another since it was shaky. LibLex Q When that gift wrapping counter was transferred at the second floor on February 12, 1983, will you please describe that to the honorable Court? A I told her that the counter wrapper [sic] is really in good [sic] condition; it was shaky. I told her that we had to nail it. Q When you said she, to whom are you referring to [sic]? A I am referring to Ms. Panelo, sir. Q And what was the answer of Ms. Panelo when you told her that the counter was shaky? A She told me "Why do you have to teach me. You are only my subordinate and you are to teach me? And she even got angry at me when I told her that. xxx xxx xxx

Q From February 12, 1983 up to May 9, 1983, what if any, did Ms. Panelo or any employee of the management do to that [sic] xxx xxx xxx Witness: None, sir. They never nailed the counter. They only nailed the counter after the accident happened. 25 [Emphasis supplied] Without doubt, petitioner Panelo and another store supervisor were personally informed of the danger posed by the unstable counter. Yet, neither initiated any concrete action to remedy the situation nor ensure the safety of the store's employees and patrons as a reasonable and ordinary prudent man would have done. Thus, as confronted by the situation petitioners miserably failed to discharge the due diligence required of a good father of a family. On the issue of the credibility of Gonzales and Guevarra, petitioners failed to establish that the former's testimonies were biased and tainted with partiality. Therefore, the allegation that Gonzales and Guevarra's testimonies were blemished by "ill feelings" against petitioners since they (Gonzales and Guevarra) were already separated from the Company at the time their testimonies were offered in court was but mere speculation and deserved scant consideration.

It is settled that when the issue concerns the credibility of witnesses, the appellate courts will not as a general rule disturb the findings of the trial court, which is in a better position to determine the same. The trial court has the distinct advantage of actually hearing the testimony of and observing the deportment of the witnesses. 26 However, the rule admits of exceptions such as when its evaluation was reached arbitrarily or it overlooked or failed to appreciate some facts or circumstances of weight and substance which could affect the result of the case. 27 In the instant case, petitioners failed to bring their claim within the exception. Anent the negligence ZHIENETH, we apply the conclusive presumption that favors children below nine (9) years old in that they are incapable of contributory negligence. In his book, 28 former Judge Cezar S. Sangco stated: In our jurisdiction, a person under nine years of age is conclusively presumed to have acted without discernment, and is, on that account, exempt from criminal liability. The same presumption and a like exemption from criminal liability obtains in a case of a person over nine and under fifteen years of age, unless it is shown that he has acted with discernment. Since negligence may be a felony and a quasi-delict and required discernment as a condition of liability, either criminal or civil, a child under nine years of age is, by analogy, conclusively presumed to be incapable of negligence; and that the presumption of lack of discernment or incapacity for negligence in the case of a child

over nine but under fifteen years of age is a rebuttable one, under our law. The rule, therefore, is that a child under nine years of age must be conclusively presumed incapable of contributory negligence as a matter of law. [Emphasis supplied] Even if we attribute contributory negligence to ZHIENETH and assume that she climbed over the counter, no injury should have occurred if we accept petitioners' theory that the counter was stable and sturdy. For if that was the truth, a frail six-year old could not have caused the counter to collapse. The physical analysis of the counter by both the trial court and Court of Appeals and a scrutiny of the evidence 29 on record reveal otherwise, i.e., it was not durable after all. Shaped like an inverted "L," the counter was heavy, huge, and its top laden with formica. It protruded towards the customer waiting area and its base was not secured. 30 CRISELDA too, should be absolved from any contributory negligence. Initially, ZHIENETH held on to CRISELDA's waist, later to the latter's hand. 31 CRISELDA momentarily released the child's hand from her clutch when she signed her credit card slip. At this precise moment, it was reasonable and usual for CRISELDA to let go of her child. Further, at the time ZHIENETH was pinned down by the counter, she was just a foot away from her mother; and the gift-wrapping counter was just four meters away from CRISELDA. 32 The time and distance were both significant. ZHIENETH was near her mother and did not loiter as petitioners would want to impress upon us. She even

admitted to the doctor who treated her at the hospital that she did not do anything; the counter just fell on her.

WHEREFORE, in view of all the foregoing, the instant petition is DENIED and the challenged decision of the Court of Appeals of 17 June 1996 in C.A. G.R. No. CV 37937 is hereby AFFIRMED. Costs against petitioners. SO ORDERED. LibLex Puno, Kapunan, Pardo and Ynares-Santiago, JJ., concur. Footnotes 1. Annex "A" of Petition; Rollo, 36-47. Per Justice Godardo A. Jacinto, with Justices Salome A. Montoya and Maximiano C. Asuncion, concurring. 2. Annex "B" of Petition; Rollo, 49. 3. TSN, 13 February 1985, 5, 6, 7-8, 21-22, 31. 4. Id., 32, 36, 42, 52. 5. Original Record (OR), 8. 6. Exhibit "H." 7 OR, 603-612, Per Judge Pedro N. Lagui.

8. One who maintains on his premises dangerous instrumentalities or appliances of a character likely to attract children in play, and who fails to exercise ordinary care to prevent children from playing therewith or resorting thereto, is liable to a child of tender years who is injured thereby, even if the child is technically a trespasser in the premises. The principal reason for the doctrine is that the condition or appliance in question although its danger is apparent to those of age, is so enticing or alluring to children of tender years as to induce them to approach, get on or use it, and this attractiveness is an implied invitation to such children. (Hidalgo Enterprises, Inc. v. Balandan, et al., 488, 490 [1952]). 9. TSN, 10 September 1987, 12. 10. Criminal Case No. 118986 filed with the Makati Metropolitan Trial Court, Branch 61. 11. Exhibit "D." 12. Exhibit "F." 13. Supra note 1. 14. Supra note 2. 15. See Novo & Co. v. Ainsworth, 26 Phil. 380, 387 [1913]. 16. BLACK'S LAW DICTIONARY, 5th ed. 1979, 14.

17. McKee v. Intermediate Appellate Court, 211 SCRA 517, 539 [1992] citing Black's Law Dictionary, 5th ed., 1979, 930. 18. U.S. v. Barias, 23 Phil. 434, 437 [1912] citing Judge Cooley's work on Torts, 3rd ed., 1324. 19. See Cavanaugh v. Jepson Iowa, 167 N.W. 2d 616, 623 [1969]. See also Restatement, Second, Torts 8. 20. 37 Phil. 809 [1918]. 21. Ibid., 813. 22. TSN, 10 September 1987, 12, 13. 23. RICARDO J. FRANCISCO, III EVIDENCE, 1997, 591 citing Keefe v. State of Arizona, 60 Ariz. 293; Stukas v. Warfield, Pratt, Howell Co., 175 N.W. 81, 85 [1919]. 24. TSN, 10 September 1987, 8, 9, 11. 25. TSN, 2 October 1987, 9, 11. 26. See BPI Credit Corporation v. Court of Appeals, 204 SCRA 601, 608 [1991]; Geronimo v. Court of Appeals, 224 SCRA 494, 498 [1993]. 27. Borillo v. Court of Appeals, 209 SCRA 130, 140-141 [1992]; McKee v. Intermediate Appellate Court, supra note 16, 537; Salvador v. Court of Appeals, 243 SCRA 239, 253 [1995].

28. 1 PHILIPPINE LAW ON TORTS AND DAMAGES, 70-71 (1993). 29. Exhibit "D." 30. Exhibits "K," "M," and "N." The counter was made of heavy wood measuring about 4 to 5 meters in height; 1 meter in length; and 2 1/2 to 3 meters in width; with four (4) square legs. Its top was made of 5 1/2 inch thick wood covered by formica about 3/4 inch thick. 31. TSN, 13 February 15, 20. 32. Ibid., 11, 22.

FIRST DIVISION [G.R. No. 4977. March 22, 1910.] DAVID TAYLOR, plaintiff-appellee, vs. THE MANILA ELECTRIC RAILROAD AND LIGHT COMPANY, defendantappellant. W.H. Lawrence, for appellant. W.L. Wright, for appellee. SYLLABUS 1. LIABILITY FOR DAMAGES; CONTRIBUTORY NEGLIGENCE. When the immediate cause of an accident resulting in an injury is the plaintiff's own act, which contributed to the principal occurrence as one of its determining factors, he can not recover damages for the injury.

The defendant is a foreign corporation engaged in the operation of a street railway and an electric light system in the city of Manila. Its power plant is situated at the eastern end of a small island in the Pasig River within the city of Manila, known as the Isla del Provisor. The power plant may be reached by boat or by crossing a footbridge, impassable for vehicles, at the westerly end of the island. The plaintiff, David Taylor, was at the same time when he received the injuries complained of, 15 years of age, the son of a mechanical engineer, more mature than the average boy of his age, and having considerable aptitude and training in mechanics. On the 30th of September, 1905, plaintiff, with a boy named Manuel Claparols, about 12 years of age, crossed the footbridge of the Isla del Provisor, for the purpose of visiting one Murphy, an employee of the defendant, who had promised to make them a cylinder for a miniature engine. Finding on inquiry that Mr. Murphy was not in his quarters, the boys, impelled apparently by youthful curiosity and perhaps by the unusual interest which both seem to have taken in machinery, spent some time in wandering about the company's premises. The visit made on a Sunday afternoon, and it does not appear that they saw or spoke to anyone after leaving the power house where they had asked for Mr. Murphy. After watching the operation of the traveling crane used in handling the defendant's coal, they walked across the open space in the neighborhood of the place where the company dumped the cinders and ashes from its furnaces. Here they found some twenty or thirty brass

DECISION

CARSON, J p: An action to recover damages for the loss of an eye and other injuries, instituted by David Taylor, a minor, by his father, his nearest relative.

fulminating caps scattered on the ground. These caps are approximately of the size and appearance of small pistol cartridges and each has attached to it two long thin wires by means of which it may be discharged by the use of electricity. They are intended for use in the explosion of blasting charges of dynamite, and have in themselves considerable explosive power. After some discussion as to the ownership of caps, and their right to take them, the boys picked up all they could find, hung them of a stick, of which each took one end, and carried them home. After crossing the footbridge, they met a little girl named Jessie Adrian, less than 9 years old, and all three went to the home of the boy Manuel. The boys then made a series of experiments with the caps. They thrust the ends of the wires into an electric light socket and obtained no result. They next tried to break the cap with a stone and failed. Manuel looked for a hammer, but could not find one. They then opened one of the caps with a knife, and finding that it was filled with a yellowish substance they got matches, and David held the cap while Manuel applied a lighted match to the contents. An explosion followed, causing more or less serious injuries to all three. Jessie, who, when the boys proposed purring a match to the contents of the cap, became frightened and started to run away, received a slight cut in the neck. Manuel had his hand burned and wounded, and David was struck in the face by several particles of the metal capsule, one of which injured his right eye to such an extent as to necessitate its removal by the surgeons who were called in to care for his wounds. The evidence does not definitely and conclusively disclose how the caps came to be on the defendant's premises, not how long they had been there when the

boys found them. It appeared, however, that some months before the accident, during the construction of the defendant's plant, detonating caps of the same kind as those found by the boys were used in sinking a well at the power plant near the place where the caps were found; and it also appears that at or about the time when these caps were found, similar caps were in use in the construction of an extension of defendant's street car line to Fort William McKinley. The caps when found appeared to the boys who picked them up to have been lying there for a considerable time, and from the place where they were found would seem to have been discarded as defective or worthless and fir only to be thrown upon the rubbish heap. No measures seem to have been adapted by the defendant company to prohibit or prevent visitors from entering and walking about its premises unattended, when they felt disposed as to do. As admitted in defendant counsel's brief, "it is undoubtedly true that children in their play sometimes crossed the footbridge to the island;" and, we may add, roamed about at will on the unenclosed premises of the defendant, in the neighborhood of the place where the caps were found. There is no evidence that any effort ever was made to forbid these children from visiting the defendant company's premises, although it must be assumed that the company or its employees were aware of the fact that they not infrequently did so. Two years before the accident, plaintiff spent four months at sea, as a cabin boy on one of the interisland transports. later he took upon work in his father's office learning mechanical drawing and mechanical

engineering. About a month after his accident he obtained employment as a mechanical draftsman and continued in the employment for six months at a salary of P2.50 a day; and it appears that he was a boy of more than average intelligence, taller and more mature both mentally and physically than most boys of fifteen. The facts set our in the foregoing statement are to our mind fully and conclusively established by the evidence of record, and are substantially admitted by counsel. The only questions of fact which are seriously disputed are plaintiff's allegations that the caps which were found by plaintiff on defendant company's premises were the property of the defendant, or that they had come from its possession and control, and that the company or some of its employees left them exposed on its premises at the point where they were found. The evidence in support of these allegations is meager, and the defendant company, apparently relying on the rule of law which places the burden of proof of such allegations upon the plaintiff, offered no evidence in rebuttal, and insists that plaintiff failed in his proof. We think, however, the plaintiff's evidence is sufficient to sustain a findings in accord with his allegations in this regard. It was proven that caps, similar to those found by the plaintiff, were used, more or less extensively, on the McKinley extension of the defendant company's track; that some of these caps were used in blasting a well on the company's premises a few months before the accident; that not far from the place where the caps were found the company has a storehouse for the materials, supplies, and so forth, used by it in its operations as a

street railway and a a purveyor of electric light; and that the place, in the neighborhood of which the caps were found, was being used by the company as a short of dumping ground for ashes and cinders. Fulminating caps or detonators for the discharge by electricity of blasting charges by dynamite are not articles in common use by the average citizen, and under all the circumstances, and in the absence of all evidence to the contrary, we thing that the discovery of twenty or thirty of these caps at the place where they were found by the plaintiff on defendant's premises fairly justifies the inference that the defendant company was either the owner of the caps in question or had these caps under its possession and control. We think also that the evidence tends to disclose that these caps or detonators were willfully and knowingly thrown by the company or its employees at the spot where they were found, with the expectations that they would be buried out of sight by the ashes which it was engaged in dumping in that neighborhood, they being old and perhaps defective; and, however this may be, we are satisfied that the evidence is sufficient to sustained a finding that the company or some of employees either willfully or through an oversight left them exposed at a point on its premises which the general public including children at play, were not prohibited from visiting, and over which the company knew or ought to have known that young boys were likely to roam abound in pastime or in play. Counsel for appellant endeavors to weaken or destroy the probative value of the facts on which these conclusions are based by intimating or rather assuming that the blasting worked on the company's well and on its McKinley extension was done by contractors. It was

conclusively proven, however, that while the workman employed in blasting the well was regularly employed by J.G. White & Co., a firm of contractors, he did the work on the well directly and immediately under the supervision and control of one of defendant company's foremen, and there is no proof whatever in the record that the blasting on the McKinley extension was done by independent contractors. Only one witness testified upon this point, and while he stated that he understood that a part of this work was done by contract, he could not say so of his own knowledge, and knew nothing of the terms and conditions of the alleged contract, or of the relations of the alleged contractor to the defendant company. The fact having been proven that detonating caps were more or less extensively employed on work done by the defendant company's directions and on its behalf, we think that the company should have introduced the necessary evidence to support its contention if it wished to avoid the not unreasonable inference that it was the owner of the material used in these operations and that it was responsible for tortious of negligent acts of the agents employed therein, on the ground that this work had been intrusted to independent contractors as to whose acts the maxim respondent superior should not be applied. If the company did not in fact own or make use of caps such as those found on its premises, as intimated by counsel, it was a very simple matter for it to prove that fact, and in the absence of such proof we think that the other evidence in the record sufficiently establishes the contrary, and justifies the court in drawing the reasonable inference that the caps found on its premises were its property, and were left where they were found by the company or some of its employees.

Plaintiff appears to have rested his case, as did the trial judge his decision in plaintiff's favor, upon the provisions of article 1089 of the Civil Code read together with articles 1902, 1903, and 1908 of that Code. "ART. 1089. Obligations are created by law, by contracts, by quasicontracts, and by illicit acts and omissions or by those in which any kind of fault or negligence occurs." "ART. 1902. Any person who by an act or omission causes damage to another when there is fault or negligence shall be obliged to repair the damage so done. "ART. 1903. The obligation imposed by the preceding article is demandable, not only for personal acts and omission, but also for those of the persons for whom they should be responsible. "The father, and on his death or incapacity the mother, is liable for the damages caused by the minors who alive with them. xxx xxx xxx "Owners or directors of an establishment or enterprises are equally liable for the damages caused by their employees in the service of the branches in which the latter may be employed or on account of their duties. xxx xxx xxx

"The liability referred to in this article shall cease when the persons mentioned therein prove that they employed all the diligence of a good father of a family to avoid the damage." "ART. 1908. The owners shall be also be liable for the damages caused "1. By the explosion of machines which may not have been cared for with due diligence, and for kindling of explosive substance which may not have been placed in a safe and proper place." Counsel for defendant and appellant rests his appeal strictly upon his contention that the facts proven at the trial do not establish the liability of the defendant company under the provisions of these articles, and since we agree with this view of the case, it is not necessary for us to consider the various questions as to the form and the right of action (analogous to those raised in the case of Rakes vs. Atlantic, Gulf & Pacific Co., 7 Phil. Rep., 359), which would perhaps, be involved in a decision affirming the judgment of the court below. We agree with counsel for appellant that under the Civil Code, as under the generally accepted doctrine in the United States, the plaintiff in an action such as that under consideration, in order to establish his right to a recovery, must establish by competent evidence: (1) Damages to the plaintiff. (2) Negligence by act or omission of which defendant personally, or some person for whose acts it must respond, was guilty.

(3) The connection of cause and effect between the negligence and the damage. The propositions are, or course, elementary, and do not admit of discussion, the real difficulty arising in the application of these principles to the particular facts developed in the case under consideration. It is clear that the accident could not have happened had not the fulminating caps been left exposed at the point where they were found, or if their owner had exercised due care in keeping them in a appropriate place; but it is equally clear that plaintiff would not have been injured had he not, for his own pleasure and convenience, entered upon defendant's premised, and strolled around thereon without the express permission of the defendant, and had he not picked up and carried away the property of the defendant which he found on its premises, and had he not thereafter deliberately cut open one of the caps and applied a match to its contents. But counsel for plaintiff contends that because of plaintiff's youth and inexperience, his entry upon defendant company's premises, and the intervention of his action between the negligent act of defendant in leaving the caps exposed on its premises and the accident which resulted in his injury should not be held to have contributed in any wise accident, which should be deemed to be the direct result of defendant's negligence in leaving the caps exposed at the pace where they were found by the plaintiff, and this latter the proximate cause of the accident which occasioned the injuries sustained by him. In support of his contention, counsel for plaintiff relied on the doctrine laid down in many of the courts of

last result in the United States in the cases known as the "Torpedo" and "Turntable" cases, and the cases based thereon. In the typical cases, the question involved has been whether a railroad company is liable for an injury received by an infant of tender years, who from mere idle curiosity, or for purposes of amusement, enters upon the railroad company's premises, at a place where the railroad company's premises, at a place where the railroad company knew, or had a good reason to suppose, children who would likely to come, and there found explosive signal torpedoes left exposed by the railroad company's employees, one of which when carried away by the visitor, exploded and injured him; or where such infant found upon the premises a dangerous machine, such as a turntable left in such condition as to make it probable that children in playing with it would be exposed to accident or injury therefrom and where the infant did in fact suffer injury in playing with such machine. In these, and in a great variety of similar cases, the great weight of authority holds the owner of the premises liable. As laid down in Railroad Co. vs. Stout ( 17 Wall. (84 U.S.), 657), (wherein the principal question was whether a railroad company was liable for an injury received by an infant while upon its premises, from idle curiosity, or for purposed of amusement, if such injury was, under the circumstances, attributable to the negligence of the company), the principles on which these cases turn are that "while railroad company is not bound to the same degree of care in regard to mere

strangers who are unlawfully upon its premises that it owes to passengers conveyed by it, it is not exempt from responsibility to such strangers for injuries arising from its negligence or from its tortious acts;" and that "the conduct of an infant of tender years is not to be judged by the same rule which governs that of an adult. While it is the general rule in regard to an adult that to entitle him to recover damages for an injury resulting from the fault or negligence of another he must himself have been free from fault, such is not the rule in regard to an infant of tender years. The care and caution required of a child is according to his maturity and capacity only, and this is to be determined in such case by the circumstances of the case." The doctrine of the case of Railroad Company vs. Stout was vigorously controverted and sharply criticized in severally state courts, and the supreme court of Michigan in the case of Ryan vs. Towar (128 Mich., 463) formally repudiated and disapproved the doctrine of the Turntable cased, especially that laid down in Railroad Company vs. Stout, in a very able decision wherein it held, in the language of the syllabus: (1) That the owner of land is not liable to trespassers thereon for injuries sustained by them, not due to his wanton or willful acts; (2) that no exception to this rule exists in favor of children who are injured by dangerous machinery naturally calculated to attract them to the premises; (3) that an invitation of license to cross the premises of another can not be predicated on the mere fact that no steps have been taken to interfere with such practice; (4) that there is no difference between children and adults of an invitation or a license to enter upon another's premises.

Similar criticisms of the opinion in the case of Railroad Company vs. Stout were indulged in by the courts in Connecticut and Massachusetts. (Nolan vs. Railroad Co., 53 Conn., 461; 154 Mass., 349). And the doctrine has been questioned in Wisconsin, Pennsylvania, New Hampshire, and perhaps in other States. On the other hand, many if not most of the courts of last resort in the United States, citing and approving the doctrine laid down in England in the leading case of Lynch vs. Nurding (1 Q.B., 29, 35, 36), lay down the rule in these cases in accord with that announced in Railroad Company vs. Stout (supra), and the Supreme Court of the United States, in a unanimous opinion delivered by Justice Harlan in the case of Union Pacific Railway Co. vs. McDonald (152 U.S, 262) on the 5th of March, 1894, reexamined and reconsidered the doctrine laid down in Railroad Co. vs. Stout, and after an exhaustive and critical analysis and review of may of the adjudged cases, both English and America, formally declared that it adhered "to the principles announced in the case of Railroad Co. vs. Stout." In the case of Union Pacific Railway Co. vs. McDonald (supra) the facts were as follows: The plaintiff, a boy 12 years of age, our of curiosity and for his own pleasure, entered upon and visited the defendant's premises, without defendant's express permission or invitation, and, while there, was by an accident injured by failing into a burning slack pile of whose existence he had knowledge, but which had been left by defendant on its premises without any fence around it or anything to give warning of its dangerous

condition, although defendant knew or had reason to believe that it was in a place where it would attract the interest or curiosity of passers-by. On these facts the court held that the plaintiff could not be regarded as a mere trespasser, for whose safety and protection while on the premises in question, against the unseen danger referred to, the defendant was under no obligation to make provision. We quote at length from the discussion by the court of the application of the principles involved to the facts in that case, because what is said there is strikingly applicable in the case at bar, and would seem to dispose of defendant's contention that, the plaintiff in this case being a trespasser, the defendant's company owed him no duty, and in no case could be held liable for injuries which would not have resulted but for the entry of plaintiff on defendant's premises. "We adhere to the principle announced in Railroad Co., vs. Stout (supra). Applied to the case now before us, they require us to hold that the defendant was guilty of negligence in leaving unguarded the slack pile, made by it in the vicinity of its depot building. It could have forbidden all the persons from coming to its coal mine for purposes merely of curiosity and pleasure. But it did not do so. On the contrary, it permitted all, without regard to age, to visit its mine, and witness its operation. It knew that the usual approach to the mine was by a narrow path skirting its slack pit, close to its depot building, at which

the people of the village, old and young, would often assemble. It knew that children were in the habit of frequenting that locality and playing around the shaft house in the immediate vicinity of the slack pit. The slightest regard for the safety of these children would have suggested that they were in danger from being so near a pit, beneath the surface of which was concealed (except when snow, wind, or rain prevailed) a mass of burning coals into which a child might accidentally fall and be burned to death. Under all the circumstances, the railroad company ought not to be heard to say that the plaintiff, a mere lad, moved by curiosity to see the mine, in the vicinity of the slack pit, was a trespasser, to whom it owed no duty, or for whose protection it was under no obligation to make provisions. "In Townsend vs. Wathen (9 East., 277, 281) it was held that if a man place dangerous traps, baited with flesh, in his own ground, so near to a highway, or to the premises of another, that dogs passing along the highway, or kept in his neighbors premises, would probably be attracted by their instinct into the traps, and in consequence of such act his neighbor's dog be so attracted and thereby injured, an action on the case would lie. 'What difference,' said Lord Ellenborough, C.J., 'is there a reason between drawing the animal into the trap by means of his instinct which he can not resist, and putting him there by

manual force?' What difference, in reason we may observe in this case, is there between an express license to the children of this village to visit the defendant's coal mine, in the vicinity of its slack pile, and an implied license, resulting from the habit of the defendant to permit them, without objection or warning, to do so at will, for purposes of curiosity or pleasure? Referring to the case of Townsend vs. Wathen, Judge Thompson, in his work on the Law of negligence, volume 1, page 305, note, well ways: "It would be a barbarous rule of law that would make the owner of land liable for setting a trap thereon, baited with stinking meat, so that his neighbor's dog attracted by his natural instincts, might run into it and be killed, and which would exempt him from liability for the consequences of leaving exposed and unguarded on his land a dangerous machine, so that his neighbor's child attracted to it and tempted to intermeddle with it by instincts equally strong, might thereby be killed of maimed for life." Chief Justice Cooley, voicing the opinion of the supreme court of Michigan, in the case of Powers vs. Marlow (53 Mich., 507), said that (p. 515): "Children, wherever they go, must be expected to act upon childlike instincts and impulses; and others who are chargeable with a duty of care and caution toward them must calculate upon this, and take precautions

accordingly. If they leave exposed to the observation of children anything which would be tempting to them, and which they in their immature judgment might naturally suppose they were at liberty to handle or play with, they should expect that liberty to be taken." And the same eminent jurist in his treaties on torts, alluding to the doctrines of implied invitations to visit the premises of another, says: "In the case of young children, and other persons not fully sui juris, an implied license might sometimes arise when it would not on behalf of others. Thus leaving a tempting thing for children to play with exposed, where they would be likely to gather for that purpose, may be equivalent to an invitation to them to make use of it; and, perhaps if one were to throw away upon his premises, near the common way, things tempting to children, the same implication should arise." (Chap. 10, p. 303.) The reasoning which led the Supreme Court of the United States to its conclusions in the cases of Railroad Co., vs. Stout (supra) and Union Pacific Railroad Co. vs. McDonald (supra) is not less cogent and convincing in this jurisdiction than in that than in that wherein those cases originated. Children here are actuated by similar childish instincts and impulses. Drawn by curiosity and impelled by the restless spirit of youth, boys here as well as there will usually be found wherever the public permitted to congregate. The movement of machinery, and indeed anything which arouses the attention of the

young and inquiring mind, will draw them to the neighborhood as inevitably as does the magnet draw the iron which comes within the range of its magnetic influence. The owners of premises, therefore, whereon things attractive to children are exposed, or upon which the public are expressively or impliedly permitted to enter to or upon which the owner knows or ought to know children are likely to roam about for pastime and in play, "must calculate upon this, and take precautions accordingly." In such cases the owner of the premises can not be heard to say that because the child has entered upon his premises without his express permission he is a trespasser to whom the owner owes no duty or obligation whatever. The owner's failure to take reasonable precautions to prevent the child form entering premises at a place where he knows or ought to know that children are accustomed to roam about or to which their childish instincts and impulses are likely to attract them is at least equivalent to an implied license to enter, and where the child does not enter under such conditions the owner's failure to make reasonable precaution to guard the child against the injury from unknown or unseen dangers, placed upon such premises by the owner, is clearly a breach of duty, a negligent omission, for which he may and should be held responsible, if the child is actually injured, without other fault on its part than that it had entered on the premises of a stranger without his express invitation or permission. To hold otherwise would be expose to all the children in the community to unknown perils and unnecessary danger at the whim of the owners or occupants of land upon which they might naturally and reasonably be expected to enter.

This conclusion is founded on reason, justice, and necessary, and neither the contention that a man has a right to do what he will with his own property of that children should be kept under the care of the parents or guardian, so as to prevent their entering on the premises of others is of sufficient weight to put it in doubt. In this jurisdiction as well as in the United States all private property is acquired and held under the tacit condition that it shall not be so used as to injure the equal rights of others or greatly impair the public rights and interests of the community (see U.S. vs. Toribio, 1 No. 5060, decided January 26, 1910), and except as to infants of very tender years it would be absurd and unreasonable in community organized as is that in which we live to hold that parents or guardians are guilty of negligence or imprudence in every case wherein they permit growing boys and girls to leave the parental roof unattended, even if in the event of accident to the child the negligence of the parents could in any event be imputed to the child so as to deprive it of a right to recover in such cases a point which we neither discuss not decide. But while we hold that the entry of the plaintiff upon defendant's property without defendant's express invitation or permission would not have relieved defendant from responsibility for injuries incurred there by the plaintiff, without other fault on his part, if such injury were attributable to the negligence of the defendant, we are of opinion that under all the circumstances of this case the negligence of the defendant in leaving the caps exposed on its premises was not the proximate cause of the injury received by the plaintiff, which therefore was not, properly speaking, "attributable to the negligence of the defendant," and, on

the other hand, we are satisfied that plaintiff's action in cutting open the detonating cap and putting a match to its contents was the proximate cause of the explosion and of the resultant injuries inflicted upon the plaintiff, and that the defendant, therefore, is not civilly responsible for the injuries thus incurred. Plaintiff contends, upon the authority of the Turntable and Torpedo cases, that because of plaintiff's youth the intervention of his action between the negligent act of the defendant leaving the caps exposed on its premises and the explosion which resulted in his injury should not be held to have contributed in any wise to the accident; and it is because we can not agree with this proposition, although we accept the doctrine on the Turntable and Torpedo cases, that we have thought of proper to discuss and to consider that doctrine at length in this decision. As was said in case of Railroad Co. vs. Stout (supra), "While it is the general rule in regard to an adult that entitle him to recover damages for an injury resulting from the fault or negligence of another he must himself have been free from fault, such is not the rule in regard to an infant of tender years. The care and caution required of a child is according to his maturity and capacity only, and this is to be determined in each case by the circumstance of the case." As we think we have shown, under the reasoning on which rests the doctrine of the Turntable and Torpedo cases, no fault which would relieve defendant of responsibility for injuries resulting from negligence can be attributed to the plaintiff, a wellgrown boy of 15 years of age, because of his entry upon defendant's uninclosed premises without express permission or invitation; but it is a wholly different question whether such a youth can be said to have been

free from fault when he willfully and deliberately cut upon the detonating cap, and placed a match to the contents, knowing, as he undoubtedly did, that his action would result in an explosion. On this point, which must be determined by "the particular circumstances of this case," the doctrine laid down in the Turntable and Torpedo cases lends us no direct aid, although it is worthy of observation that in all of the "Torpedo" and analogous cases to which our attention has been directed, the record discloses that the plaintiffs, is whose favor judgments have been affirmed, were of such tender years that they were held not to have the capacity to understand the nature or character of the explosive instruments which fell into their hands. In the case at bar, plaintiff at the time of the accident was wellgrown youth of 15, more mature both mentally and physically than the average boy of his age; he had been to sea as a cabin boy; was able to earn P2.50 a day as a mechanical draftsman thirty days after the injury was incurred; and the record discloses throughout that he was exceptionally well qualified to take care. The evidence of record leaves no room for doubt that, despite his denials on the witness stands, he well knew the explosive character of the cap with which he was amusing himself. The series of experiments made by him in his attempt to produce an explosion, as described by the little girl who was present, admit of no other explanation. His attempt to discharge the cap by the use of electricity, followed by his efforts to explode it with a stone or a hammer, and the final success of his endeavors brought about by the applications of a match to the

contents of the cap, show clearly that he knew what he was about. Nor can there be any reasonable doubt that he had reason to anticipate that the explosion might be dangerous, in view of the fact that the little girl, 9 years of age, who was with him at the time when he put the match to the contents of the cap, became frightened and ran away. True, he may not have known and probably did not know the precise nature of the explosion which might be expected from the ignition of the contents of the cap, and of course he did not anticipate the resultant injuries which he incurred; but he well knew that a more or less dangerous explosion might be expected from his act, and yet he willfully, recklessly, and knowingly produced the explosion. It would be going far to say that "according to his maturity and capacity" he exercised such "care and caution" as might reasonably be required of him, or that the defendant or anyone else should be held civilly responsible for injuries incurred by him under such circumstances. The law fixed no arbitrary age at which a minor can be said to have the necessary capacity to understand and appreciate the nature and consequences of his own acts, so as to make it negligence on his part to fail to exercise with due care an precaution in the commission of such acts; and indeed it would be impracticable and perhaps impossible so to do, for in the very nature of things the question of negligence necessarily depends on the ability of the minor to understand the character of his own acts and their consequences; and the age at which a minor can be said to have such ability will necessarily vary in accordance with the varying nature of the infinite

variety of acts which may be done by him. But some idea of the presumed capacity of infants under the laws in force in these Islands may be gathered from an examination of the varying ages fixed by our laws at which minors are conclusively presumed to be capable to exercising certain rights and incurring certain responsibilities, through it can not be said that these provisions of law are of much practical assistance in cases such as that at bar, except so far as they illustrate the rule that the capacity of a minor to become responsible for his own acts varies with the varying circumstances of each case. Under the provisions of the Penal code a minor over fifteen years of age is presumed to be capable of committing a crime and is to be held criminally responsible therefore, although the fact that he is less than eighteen years of age will be taken into consideration as an extenuating circumstance (Penal code, arts, 8 and 9). At 10 years of age a child may, under certain circumstances, choose which parent it prefers to live with (Code of Civil Procedure, sec. 771). At 14 it may petition for the appointment of a guardian (Id., sec. 551), and may consent or refuse to be adopted (Id., sec. 765). And males of 14 and females of 12 are capable of contracting of legal marriage (Civil Code, art. 83; G.O., No., 68, sec. 1). We are satisfied that the plaintiff in this case had sufficient capacity and understanding to be sensible to the danger to which he exposed himself when he put the match to the contents of the cap; that he was sui juris in the sense that his age and his experience qualified him to understand and appreciate the necessity for the exercise of that degree of caution which would have avoided the injury which resulted from his own deliberate act; and

that the injury incurred by him must be held to have been the direct and immediate result of his own willful and reckless act, so that while it may be true that these injuries would not have been incurred but for the negligent act of the defendant in leaving the caps exposed on its premises, nevertheless plaintiff's own act was the proximate and principal cause of the accident which inflicted the injury. The rule of the Roman law was: Quod quis ex culpa sua damnum sentit, non intelligitur damnum sentire. (Digest, book 50, tit. 17, rule 203.) The partidas contain the following provisions: "The just thing is that a man should suffer the damage which comes to him through his own fault, and that he can not demand reparation therefore from another." (Law 25, tit. 5 Partida 3.) "And they even said that when a man received an injury through his own negligence he should blame himself for it." (Rule 22, tit. 34 Partida 7.) "According to ancient sages, when a man received an injury through his own acts the grievance should be against himself and not against another." (Law 2, tit. 7 Partida 2.) And while there does not appear to be anything in the Civil Code which expressly lays down the law touching contributory negligence in this jurisdiction, nevertheless, the interpretation placed upon its provisions by the supreme court of Spain, and by this court in the case of Rakes vs. Atlantic Gulf and Pacific Co., (7 Phil.

Rep., 359), clearly deny to the plaintiff in the case at bar the right to recover damages from the defendant, in whole or in part, for the injuries sustained by him. The judgment of the supreme court of Spain of the 7th of March, 1902 (93 Jurispredencia Civil, 391), is directly in point. In that case the court said: "According to the doctrine expressed in article 1902 of the Civil Code, fault or negligence is a source of obligation when between such negligence and the injury there exists, the relation of cause and effect: but if the injury produced should not be the result of acts or omissions of a third party, the latter has no obligation to repair the same, although such acts or omissions were imprudent or unlawful, and much less when it is shown that the immediate cause of the injury was the negligence of the injured party himself." The same court, in its decision of June 12, 1900, said that "the existence of the alleged fault or negligence is not sufficient without proof that it, and no other cause, gave rise to the damage." See also judgment of October 21, 1903. To similar effect Scaevola, the learned Spanish writer, writing under that title in his Jurisprudencia del Codigo Civil (1902 Anuario, p. 455), commenting on the decision of March 7, 1902, says that "in accordance with the doctrine expressed by article 1902 of the Civil Code, fault or negligence gives rise to an obligation when between it and the damage there exists the relation of cause and effect' but if the damage caused does not arise

from acts or omissions of a third person, there is no obligation to make good upon the latter, even though such acts or omissions be imprudent or illegal, and much less so when it is shown that the immediate cause of the damage has been the recklessness the injured party himself." And again "In accordance with the fundamental principle of proof, that the burden thereof is upon the plaintiff, it is apparent that it is the duty of him who shall claim damages to establish their existence. The decisions of April 9, 1896, and March 18, July 6, and September 27, 1898, have especially supported the principle, the first setting forth in detail the necessary points of the proof, which are two: An act or omission on the part of the person who is to be charged with the liability, and the production of the damage by said act or omission. "This includes, by inference, the establishment of a relation of cause or effect between the act or the omission and the damage; the latter must be direct result of one of the first two. As the decision of March 22, 1881, said, it is necessary that damages result immediately and directly from an act performed culpably and wrongfully' 'necessarily presupposing a legal ground for imputability.'" (Decision of October 29, 1877.)

"Negligence is not presumed, but be proven by him who alleges it." (Scaevola, Jurisprudencia del Codigo Civil, vol. 6, pp. 551, 552.) (Cf. decisions of supreme court of Spain of June 12, 1900. and June 23, 1900.) Finally, we think the doctrine is in this jurisdiction applicable to the case at bar was definitely settled in this court in the maturely considered case of Rakes vs. Atlantic, Gulf and Pacific Co. (supra), wherein we held that while "There are many cases (personal injury cases) in the supreme court of Spain in which the defendant was exonerated." on the ground that "the negligence of the plaintiff was immediate cause of the casualty" (decisions of the 15th of January, the 19th of February, and the 7th of March, 1902, stated in Alcubilla's Index of that year); none of the cases decided by the supreme court of Spain "define the effect to be given the negligence of a plaintiff which contributed to his injury as one of its causes, though not the principal one, and we left to seek the theory of the civil law in the law in the practice of another countries;" and in such cases we declared the law in this jurisdiction to require the application of 'the principle of proportional damages," but expressly and definitely denied the right of recovery when the acts of the injured party were the immediate causes of the accident. The doctrine as laid down in that case as follows: "Difficulty seems to be apprehended in deciding which acts of the injured party shall

be considered immediate causes of the accident. The test is simple. Distinction must be made between the accident and the injury, between the event itself, without which there could have been no accident, and those acts of the victim not entering into it, independence of it, but contributing to his own proper hurt. For instance, the cause of the accident under review was the displacement of the crosspiece or the failure to replace it. This produced the event giving occasion for damages that is, sinking of the track and the sliding of the iron rails. To this event, the act of the plaintiff in walking by the side of the car did not contribute, although it was an element of the damage which came to himself. Had the crosspiece been out of place wholly or partly through this act or omission of duty, that would have been one of the determining causes of the event or accident, for which he would have been responsible. Where he contributes to the principal occurrence, as one of its determining factors, he can not recover. Where, in conjunction with the occurrence, he contributes only to his own injury, he may recover the amount that the defendant responsible for the event should pay for such injury, less a sum deemed a suitable equivalent for his own imprudence." We think it is quite clear that under the doctrine thus stated, the immediate cause of the explosion , the accident which resulted in plaintiff's injury, was his own act of putting a match to the contents of the cap, and that

having "contributed to the principal occurrence, as one of its determining factors, he can not recover." We have not deemed it necessary to examine the effect of plaintiff's action in picking up upon defendant's premises the detonating caps, the property of the defendant, and carrying them sway to the home of his friend, as interrupting the relation of cause and effect between the negligent act or omission of the defendant in leaving the caps exposed on its premises and the injuries inflicted upon the plaintiff by the explosion of one of these caps. Under the doctrine of the Torpedo cases, such action on the part of an infant of very tender years would have no effect in relieving defendant of responsibility, but whether in view of the well known facts admitted in defendant's brief that "boys are snappers-up of unconsidered trifles," a youth of the age and maturity of plaintiff should be deemed without fault in picking up the caps in question under all the circumstances of this case, we neither discuss not decide. Twenty days after the date of this decision let judgment be entered reversing the judgment of the court below, without costs to either party in this instance, and ten days thereafter let the record be returned to the court wherein it originated, where judgment will be entered in favor of the defendant for the costs in first instance and the complaint dismissed without day. So ordered. Arellano, C.J., Torres and Moreland, JJ., concur. Johnson, J., concurs in the result. Footnotes 1. 15 Phil. Rep., 85. EN BANC [G.R. No. 35283. November 5, 1932.] JULIAN DEL ROSARIO, plaintiffappellant, vs. MANILA ELECTRIC COMPANY, defendant-appellee. Vicente Sotto for appellant. Ross, Lawrence & Selph and Antonio T. Carrascoso, jr. for appellee. SYLLABUS 1. NEGLIGENCE; UNEXPLAINED BREAK IN ELECTRIC WIRE; RESPONSIBILITY OF LIGHTING COMPANY FOR DEATH OR CHILD. Shortly after 2 o'clock in the afternoon trouble developed in an overhead wire conducting electricity for lighting purposes in the City of Manila. The wire soon parted and one of the charged ends fell to the ground in shrubbery close to the way. The lighting company received a telephonic report of this incident at 2.25 p.m., and promised to send an inspector. At 4 p.m. the neighboring school turned out and as the children went home one of the boys, of the age of 9 years, touched the wire with his hand and received a shock which resulted in death. Held, that the lighting company was responsible for the death. The delay in leaving this danger unguarded so long after

information of the trouble was received constituted negligence on its part. 2. ID.; APPARENT CONTRIBUTORY NEGLIGENCE OF CHILD. The circumstance that the boy who was killed touched the wire after one of his companions has warned him not to do so, did not relieve the company of responsibility, owing to his immature years and the natural curiosity of a child to do something out of the ordinary.

DECISION

STREET, J p: This action was instituted by Julian del Rosario for the purpose of recovering damages from the Manila Electric Company for the death of his son, Alberto del Rosario, resulting from a shock from a wire used by the defendant for the transmission of electricity. The accident occurred on Dimas-Alang Street, in the municipality of Caloocan, Province of Rizal. Damages are claimed in the complaint in the amount of P30,000. Upon hearing the cause the trial court absolved the defendant, and the plaintiff appealed. Shortly after 2 o'clock on the afternoon of August 4, 1930, trouble developed in a wire used by the defendant on Dimas-Alang Street for the purpose of conducting electricity used in lighting the City of Manila and its suburbs. Jose Noguera, who had charge of a tienda nearby, first noticed that the wire was burning and

its connections smoking. In a short while the wire parted and one of the ends of the wire fell to the ground among some shrubbery close to the way. As soon as Noguera took cognizance of the trouble, he stepped into a garage which was located nearby and asked Jose Soco, the timekeeper, to telephone the Malabon station of the Manila Electric Company that an electrical wire was burning at that place. Soco transmitted the message at 2.25 p.m. and received answer from the station to the effect that they would send an inspector. From the testimony of the two witnesses mentioned we are justified in the conclusion that information to the effect that the electric wire at the point mentioned had developed trouble was received by the company's servant at the time stated. At the time that message was sent the wire had not yet parted, but from the testimony of Demetrio Bingao, one of the witnesses for the defense, it is clear that the end of the wire was on the ground shortly after 3 p.m. At 4 p.m. the neighborhood school was dismissed and the children went home. Among these was Alberto del Rosario, of the age of 9 years, who was a few paces ahead of two other boys, all members of the second grade in the public school. These other two boys were Jose Salvador, of the age of 8, and Saturnino Endrina, of the age of 10. As the three neared the place where the wire was down, Saturnino made a motion as if to touch it. His companion, Jose Salvador, happened to be the son of an electrician and his father had cautioned him never to touch a broken electrical wire, as it might have a current. Jose therefore stopped Saturnino, telling him that the wire might be charged. Saturnino yielded to this admonition and desisted from his design, but Alberto del

Rosario, who was somewhat ahead, said, I have for some time been in the habit of touching wires ("Yo desde hace tiempo cojo alambres"). Jose Salvador rejoined that he should not touch wires as they carry a current, but Alberto, no doubt feeling that he was challenged in the matter, put out his index finger and touch the wire. He immediately fell face downwards, exclaiming "Ay! madre". The end of the wire remained in contact with his body which fell near the post. A crowd soon collected, and some one cut the wire and disengaged the body. Upon being taken to St. Luke's Hospital the child was pronounced dead. The wire was an ordinary number 6 triple weather proof wire, such as is commonly used by the defendant company for the purpose of conducting electricity for lighting. The wire was cased in the usual covering, but this had been burned off for some distance from the point where the wire parted. The engineer of the company says that it was customary for the company to make a special inspection of these wires at least once in six months, and that all of the company's inspectors were required in their daily rounds to keep a lookout for trouble of this kind. There is nothing in the record indicating any particular cause for the parting of the wire. We are of the opinion that the presumption of negligence on the part of the company from the breakage of this wire has not been overcome, and the defendant is in our opinion responsible for the accident. Furthermore, when notice was received at the Malabon station at 2.25 p.m., somebody should have been dispatched to the scene of the trouble at once, or other measures taken to guard the point of danger; but more than an hour and a half

passed before anyone representing the company appeared on the scene, and in the meantime this child had been claimed as a victim. It is doubtful whether contributory negligence can properly be imputed to the deceased, owing to his immature years and the natural curiosity which a child would feel to do something out of the ordinary, and the mere fact that the deceased ignored the caution of a companion of the age of 8 years does not, in our opinion, alter the case. But even supposing that contributory negligence could in some measure be properly imputed to the deceased, a proposition upon which the members of the court do not all agree, yet such negligence would not be wholly fatal to the right of action in this case, not having been the determining cause of the accident. (Rakes vs. Atlantic, Gulf and Pacific Co., 7 Phil., 359.) With respect to the amount of damages recoverable the majority of the members of this court are the opinion that the plaintiff is entitled to recover P250 for expenses incurred in connection with the death and burial of the boy. For the rest, in accordance with the precedents cited in Astudillo vs. Manila Electric Company (55 Phil., 427), the majority of the court are of the opinion that the plaintiff should recover the sum of P1,000 as general damages for loss of service. The judgment appealed from is therefore reversed and the plaintiff will recover of the defendant the sum of P1,250, with costs of both instances. So ordered. Avancea, C.J., Malcolm, Ostrand, Villa-Real, Vickers, Imperial and Butte, JJ., concur.

Separate Opinions ABAD SANTOS, J., concurring in part and dissenting in part: I concur in so far as the defendant company is held liable for the death of the plaintiff's son, but I dissent in so far as the decision allows the plaintiff to recover of the defendant the sum of P1,250 only. It is well settled in this jurisdiction that an action will lie to recover damages for death caused by wrongful act. (Manzanares vs. Moreta, 38 Phil., 821.) The question, however, arises as to the amount of damages recoverable in this case. In criminal cases, this court has adopted the rule of allowing, as a matter of course, the sum of P1,000 as indemnity to the heirs of the deceased. Following that rule, the court has allowed the plaintiff in this case to recover the sum of P1,000 as general damages for loss of service. Whatever may be the reasons for the rule followed in criminal cases, I am of the opinion that those reasons do not obtain in fixing the amount of the damages recoverable in the present case. The indemnity allowed in a criminal case is merely incidental to the main object sought, which is the punishment of the guilty party. In a civil action, the principal object is the recovery of damages for wrongful death; and where, as in this case, the defendant is a corporation, not subject to criminal prosecution for the act complained of, the question assumes a vastly different aspect. Both in reason and in justice, there should be a distinction between the civil liability of an ordinary person who, by wrongful act, has caused the death of another, and the civil liability of a corporation, organized

primarily for profit, which has caused the death of a person by failure to exercise due care in the prosecution of its business. The liability of such a corporation for damages must be regarded as a part of the risks which it assumes when it undertakes to promote its own business; and just as it is entitled to earn adequate profits from its business, so it should be made adequately to compensate those who have suffered damage by its negligence. Considering the circumstances of this case, I am of the opinion that the plaintiff should recover the sum of P2,250 as damages.

FIRST DIVISION [G.R. No. L-33722. July 29, 1988.] FEDERICO YLARDE and ADELAIDA DORONIO, petitioners, vs. EDGARDO AQUINO, MAURO SORIANO and COURT OF APPEALS, respondents. Buenaventura C. Evangelista for petitioners. Modesto V. Cabanela for respondent Edgardo Aquino. Manuel P. Pastor for respondent Mauro Soriano. SYLLABUS 1. CIVIL LAW; QUASI-DELICT; ART. 2180, CIVIL CODE; ONLY TEACHERS OF ACADEMIC SCHOOLS SHOULD BE ANSWERABLE FOR TORTS COMMITTED BY THEIR STUDENTS; RULING IN AMADORA VS. COURT OF APPEALS APPLIED IN THE CASE AT BAR. As regards the principal, We hold that he cannot be made responsible for the death of the child Ylarde, he being the head of an academic school and not a school of arts and trades. This is in line with Our ruling in Amadora vs. Court of Appeals, wherein this Court thoroughly discussed the doctrine that under Article 2180 of the Civil Code, it is only the teacher and not the head of an academic school who should be answerable for torts committed by their students. This Court went on to say that in a school of arts and trades, it is only the head of the

school who can be held liable. Hence, applying the said doctrine to this case, We rule that private respondent Soriano, as principal, cannot be held liable for the reason that the school he heads is an academic school and not a school of arts and trades. Besides, as clearly admitted by private respondent Aquino, private respondent Soriano did not give any instruction regarding the digging. From the foregoing, it can be easily seen that private respondent Aquino can be held liable under Article 2180 of the Civil Code as the teacher-in-charge of the children for being negligent in his supervision over them and his failure to take the necessary precautions to prevent any injury on their persons. 2. ID.; ID.; ART. 2176, CIVIL CODE; THE ACTS AND OMISSIONS OF RESPONDENT AMOUNTED TO FAULT AND GROSS NEGLIGENCE WHICH HAVE DIRECT CAUSAL RELATION TO THE DEATH OF THE VICTIM. However, as earlier pointed out, petitioners base the alleged liability of private respondent Aquino on Article 2176 which is separate and distinct from that provided for in Article 2180. With this in mind, the question We need to answer is this: Were there acts and omissions on the part of private respondent Aquino amounting to fault or negligence which have direct causal relation to the death of his pupil Ylarde? Our answer is in the affirmative. He is liable for damages. From a review of the record of this case, it is very clear that private respondent Aquino acted with fault and gross negligence when he: (1) failed to avail himself of services of adult manual laborers and instead utilized his pupils aged ten to eleven to make an excavation near the one-ton concrete stone which he knew to be a very hazardous task; (2) required the children to remain inside the

pit even after they had finished digging, knowing that the huge block was lying nearby and could be easily pushed or kicked aside by any pupil who by chance may go to the perilous area; (3) ordered them to level the soil around the excavation when it was so apparent that the huge stone was at the brink of falling; (4) went to a place where he would not be able to check on the children's safety; and (5) left the children close to the excavation, an obviously attractive nuisance. 3. ID.; ID.; ID.; ID.; CASE AT BAR. The negligent act of private respondent Aquino in leaving his pupils in such a dangerous site has a direct causal connection to the death of the child Ylarde. Left by themselves, it was but natural for the children to play around. Tired from the strenuous digging, they just had to amuse themselves with whatever they found. Driven by their playful and adventurous instincts and not knowing the risk they were facing, three of them jumped into the hole while the other one jumped on the stone. Since the stone was so heavy and the soil was loose from the digging, it was also a natural consequence that the stone would fall into the hole beside it, causing injury on the unfortunate child caught by its heavy weight. Everything that occurred was the natural and probable effect of the negligent acts of private respondent Aquino. Needless to say, the child Ylarde would not have died were it not for the unsafe situation created by private respondent Aquino which exposed the lives of all the pupils concerned to real danger. 4. ID.; ID.; ID.; DEGREE OF CARE REQUIRED OF MINOR CHILDREN; CASE AT BAR. In ruling that the child Ylarde was imprudent, it is evident that the lower court did not consider his age and maturity. This should not be the

case. The degree of care required to be exercised must vary with the capacity of the person endangered to care for himself. A minor should not be held to the same degree of care as an adult, but his conduct should be judged according to the average conduct of persons of his age and experience. The standard of conduct to which a child must conform for his own protection is that degree of care ordinarily exercised by children of the same age, capacity, discretion, knowledge and experience under the same or similar circumstances. Bearing this in mind, We cannot charge the child Ylarde with reckless imprudence. 5. ID.; ID.; ID.; DILIGENCE OF A VERY CAUTIOUS PERSON AS A DEFENSE TO ART. 2176, CIVIL CODE; ABSENT IN THE CASE AT BAR. The contention that private respondent Aquino exercised the utmost diligence of a very cautious person is certainly without cogent basis. A reasonably prudent person would have foreseen that bringing children to an excavation site, and more so, leaving them there all by themselves, may result in an accident. An ordinarily careful human being would not assume that a simple warning "not to touch the stone" is sufficient to cast away all the serious danger that a huge concrete block adjacent to an excavation would present to the children. Moreover, a teacher who stands in loco parentis to his pupils would have made sure that the children are protected from all harm in his company. 6. ID.; ID.; ID.; PAYMENT FOR DAMAGES ORDERED BY THE COURT. We close by categorically stating that a truly careful and cautious person would have acted in all contrast to the way private respondent Aquino did. Were it not for his gross negligence, the unfortunate incident would

not have occurred and the child Ylarde would probably be alive today, a grown-man of thirty-five. Due to his failure to take the necessary precautions to avoid the hazard, Ylarde's parents suffered great anguish all these years. In view of the foregoing, the petition is hereby granted and the questioned judgment of the respondent court is reversed and set aside and another judgment is hereby rendered ordering private respondent Edgardo Aquino to pay petitioners the following: (1) Indemnity for the death of Child Ylarde P30,000.00; (2) Exemplary damages 10,000.00; (3) Moral damages 20,000.00.

were serious hazards to the schoolchildren, another teacher by the name of Sergio Banez stated burying them one by one as early as 1962. In fact, he was able to bury ten of these blocks all by himself. Deciding to help his colleague, private respondent Edgardo Aquino gathered eighteen of his male pupils, aged ten to eleven, after class dismissal on October 7, 1963. Being their teacher-in-charge, he ordered them to dig beside a one-ton concrete block in order to make a hole wherein the stone can be buried. The work was left unfinished. The following day, also after classes, private respondent Aquino called four of the original eighteen pupils to continue the digging. These four pupils Reynaldo Alonso, Francisco Alcantara, Ismael Abaga and Novelito Ylarde, dug until the excavation was one meter and forty centimeters deep. At this point, private respondent Aquino alone continued digging while the pupils remained inside the pit throwing out the loose soil that was brought about by the digging. When the depth was right enough to accommodate the concrete block, private respondent Aquino and his four pupils got out of the hole. Then, said private respondent left the children to level the loose soil around the open hole while he went to see Banez who was about thirty meters away. Private respondent wanted to borrow from Banez the key to the school workroom where he could get some rope. Before leaving, private respondent Aquino allegedly told the children "not to touch the stone." A few minutes after private respondent Aquino left, three of the four kids, Alonso, Alcantara and Ylarde, playfully jumped into the pit. Then, without any warning at all, the

DECISION

GANCAYCO, J p: In this petition for review on certiorari seeking the reversal of the decision of the Court of Appeals in CA-G.R. No. 36390-R entitled "Federico Ylarde, et al. vs. Edgardo Aquino, et al.," a case which originated from the Court of First Instance of Pangasinan, We are again called upon to determine the responsibility of the principals and teachers towards their students or pupils. In 1963, private respondent Mariano Soriano was the principal of the Gabaldon Primary School, a public educational institution located in Tayug, Pangasinan. Private respondent Edgardo Aquino was a teacher therein. At that time, the school was littered with several concrete blocks which were remnants of the old school shop that was destroyed in World War II. Realizing that the huge stones

remaining Abaga jumped on top of the concrete block causing it to slide down towards the opening. Alonso and Alcantara were able to scramble out of the excavation on time but unfortunately for Ylarde, the concrete block caught him before he could get out, pinning him to the wall in a standing position. As a result thereof, Ylarde sustained the following injuries: "1. Contusion with hematoma, left inguinal region and suprapublic region. 2. Contusion with occhymosis, entire acrotal region. prLL 3. Lacerated wound, left lateral aspect of penile skin with phimosis. 4. Abrasion, gluteal region, bilateral.

2. Prognosis very poor. (Sgd.) MELQUIADES A. BRAVO Physician on Duty." 1 Three days later, Novelito Ylarde died. Ylarde's parents, petitioners in this case, filed a suit for damages against both private respondents Aquino and Soriano. The lower court dismissed the complaint on the following grounds: (1) that the digging done by the pupils is in line with their course called Work Education; (2) that Aquino exercised the utmost diligence of a very cautious person; and (3) that the demise of Ylarde was due to his own reckless imprudence. 2 On appeal, the Court of Appeals affirmed the Decision of the lower court. Petitioners base their action against private respondent Aquino on Article 2176 of the Civil Code for his alleged negligence that caused their son's death while the complaint against respondent Soriano as the head of school is founded on Article 2180 of the same Code. Article 2176 of the Civil Code provides: "Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter."

5. Intraperitoneal and extrapertitoneal extravasation of blood and urine about 2 liters. 6. Fracture, simple, symphesis pubis. 7. Ruptured (macerated) urinary bladder with body of bladder almost entirely separated from its neck. REMARKS: 1. Above were incurred by crushing injury.

On the other hand, the applicable provision of Article 2180 states: "Art. 2180. . . . xxx xxx xxx "Lastly, teachers or heads of establishments of arts and trades shall be liable for damages caused by their pupils and students or apprentices, so long as they remain in their custody." 3 The issue to be resolved is whether or not under the cited provisions, both private respondents can be held liable for damages. llcd As regards the principal, We hold that he cannot be made responsible for the death of the child Ylarde, he being the head of an academic school and not a school of arts and trades. This is in line with Our ruling in Amadora vs. Court of Appeals, 4 wherein this Court thoroughly discussed the doctrine that under Article 2180 of the Civil Code, it is only the teacher and not the head of an academic school who should be answerable for torts committed by their students. This Court went on to say that in a school of arts and trades, it is only the head of the school who can be held liable. In the same case, We explained: "After an exhaustive examination of the problem, the Court has come to the conclusion that the provision in question should apply to all schools, academic as well as non-academic. Where the school is

academic rather than technical or vocational in nature, responsibility for the tort committed by the student will attach to the teacher in charge of such student, following the first part of the provision. This is the general rule. In the case of establishments of arts and trades, it is the head thereof, and only he, who shall be held liable as an exception to the general rule. In other words, teachers in general shall be liable for the acts of their students except where the school is technical in nature, in which case it is the head thereof who shall be answerable. Following the canon of reddendo singula sinquilis, 'teachers' should apply to the words 'pupils and students' and 'heads of establishments of arts and trades' to the word 'apprentices.'" Hence, applying the said doctrine to this case, We rule that private respondent Soriano, as principal, cannot be held liable for the reason that the school he heads is an academic school and not a school of arts and trades. Besides, as clearly admitted by private respondent Aquino, private respondent Soriano did not give any instruction regarding the digging. From the foregoing, it can be easily seen that private respondent Aquino can be held liable under Article 2180 of the Civil Code as the teacher-in-charge of the children for being negligent in his supervision over them and his failure to take the necessary precautions to prevent any injury on their persons. However, as earlier pointed out, petitioners base the alleged liability of private respondent Aquino on

Article 2176 which is separate and distinct from that provided for in Article 2180. With this in mind, the question We need to answer is this: Were there acts and omissions on the part of private respondent Aquino amounting to fault or negligence which have direct causal relation to the death of his pupil Ylarde? Our answer is in the affirmative. He is liable for damages. From a review of the record of this case, it is very clear that private respondent Aquino acted with fault and gross negligence when he: (1) failed to avail himself of services of adult manual laborers and instead utilized his pupils aged ten to eleven to make an excavation near the one-ton concrete stone which he knew to be a very hazardous task; (2) required the children to remain inside the pit even after they had finished digging, knowing that the huge block was lying nearby and could be easily pushed or kicked aside by any pupil who by chance may go to the perilous area; (3) ordered them to level the soil around the excavation when it was so apparent that the huge stone was at the brink of falling; (4) went to a place where he would not be able to check on the children's safety; and (5) left the children close to the excavation, an obviously attractive nuisance. The negligent act of private respondent Aquino in leaving his pupils in such a dangerous site has a direct causal connection to the death of the child Ylarde. Left by themselves, it was but natural for the children to play around. Tired from the strenuous digging, they just had to amuse themselves with whatever they found. Driven by their playful and adventurous instincts and not knowing the risk they were facing, three of them jumped into the hole while

the other one jumped on the stone. Since the stone was so heavy and the soil was loose from the digging, it was also a natural consequence that the stone would fall into the hole beside it, causing injury on the unfortunate child caught by its heavy weight. Everything that occurred was the natural and probable effect of the negligent acts of private respondent Aquino. Needless to say, the child Ylarde would not have died were it not for the unsafe situation created by private respondent Aquino which exposed the lives of all the pupils concerned to real danger. LexLib We cannot agree with the finding of the lower court that the injuries which resulted in the death of the child Ylarde were caused by his own reckless imprudence. It should be remembered that he was only ten years old at the time of the incident. As such, he is expected to be playful and daring. His actuations were natural to a boy his age. Going back to the facts, it was not only him but the three of them who jumped into the hole while the remaining boy jumped on the block. From this, it is clear that he only did what any other ten-year old child would do in the same situation. In ruling that the child Ylarde was imprudent, it is evident that the lower court did not consider his age and maturity. This should not be the case. The degree of care required to be exercised must vary with the capacity of the person endangered to care for himself. A minor should not be held to the same degree of care as an adult, but his conduct should be judged according to the average conduct of persons of his age and experience. 5 The standard of conduct to which a child must conform for his own protection is that degree of care ordinarily exercised by children of the same age, capacity, discretion, knowledge and experience under

the same or similar circumstances. 6 Bearing this in mind, We cannot charge the child Ylarde with reckless imprudence. The court is not persuaded that the digging done by the pupils can pass as part of their Work Education. A single glance at the picture showing the excavation and the huge concrete block 7 would reveal a dangerous site requiring the attendance of strong, mature laborers and not ten-year old grade-four pupils. We cannot comprehend why the lower court saw it otherwise when private respondent Aquino himself admitted that there were no instructions from the principal requiring what the pupils were told to do. Nor was there any showing that it was included in the lesson plan for their Work Education. Even the Court of Appeals made mention of the fact that respondent Aquino decided all by himself to help his co-teacher Banez bury the concrete remnants of the old school shop. 8 Furthermore, the excavation should not be placed in the category of school gardening, planting trees, and the like as these undertakings do not expose the children to any risk that could result in death or physical injuries. The contention that private respondent Aquino exercised the utmost diligence of a very cautious person is certainly without cogent basis. A reasonably prudent person would have foreseen that bringing children to an excavation site, and more so, leaving them there all by themselves, may result in an accident. An ordinarily careful human being would not assume that a simple warning "not to touch the stone" is sufficient to cast away all the serious danger that a huge concrete block adjacent to an excavation would present to the children. Moreover, a teacher who stands in loco

parentis to his pupils would have made sure that the children are protected from all harm in his company. We close by categorically stating that a truly careful and cautious person would have acted in all contrast to the way private respondent Aquino did. Were it not for his gross negligence, the unfortunate incident would not have occurred and the child Ylarde would probably be alive today, a grown-man of thirty-five. Due to his failure to take the necessary precautions to avoid the hazard, Ylarde's parents suffered great anguish all these years.

WHEREFORE, in view of the foregoing, the petition is hereby GRANTED and the questioned judgment of the respondent court is REVERSED and SET ASIDE and another judgment is hereby rendered ordering private respondent Edgardo Aquino to pay petitioners the following: (1) Indemnity for the death of Child Ylarde P30,000.00 (2) Exemplary damages 10,000.00 (3) Moral damages 20,000.00 SO ORDERED. Narvasa, Cruz, Grio-Aquino and Medialdea, JJ., concur. Footnotes 1. Pages 2-3, Rollo.

2. Decision of the Court of First Instance of Pangasinan, page 22, Original Record. 3. Article 2180 of the Civil Code. 4. G.R. No. L-47745, April 15, 1988. 5. Sangco, Philippine Law on Torts and Damages, 1978 ed., p. 62. 6. Ibid, p. 123. 7. Exh. "B," Original Exhibit. 8. Decision of the Court of Appeals; page 33, Rollo. CULION ICE vs. PHIL. MOTORS CORPORATION

FIRST DIVISION [G.R. No. 32611. November 3, 1930.] CULION ICE, FISH & ELECTRIC CO., INC., plaintiff-appellee, vs. PHILIPPINE MOTORS CORPORATION, defendantappellant. Gibbs & McDonough for appellant. Benj. S. Ohnick for appellee. SYLLABUS 1. NEGLIGENCE; SKILL REQUIRED OF PERSON WHO UNDERTAKES PARTICULAR WORK. A person who holds himself out as being competent to do work requiring special skill is guilty of negligence if he fails to exhibit the care a prudent person would exhibit who is reasonably well skilled in the particular work undertaken. 2. ID.; ID.; CASE AT BAR. The manager of the defendant corporation, which was engaged chiefly in selling and repairing of automobiles, but which had authority under its charter, to deal in all sorts of machinery engines, and motors, and their equipment, undertook to change the gasoline engine on plaintiff's boat, with a view to enabling it to use a fuel of lower grade. After a new carburetor had been introduced and a new fuel tank installed, the boat was taken out for a trial, in the course of which a back fire took place in the

cylinder of the engine, and flames were communicated, through the carburetor, to the outside, with the result that the boat was destroyed. Held, upon the facts stated in the opinion, that the loss of the boat was attributable to the negligence or lack of skill on the part of the manager of the defendant corporation.

DECISION

STREET, J p: This action was instituted in the Court of First Instance of Manila by Culion Ice, Fish & Electric Co., Inc., for the purpose of recovering from the Philippine Motors Corporation the sum of P11,350, with interest and costs. Upon hearing the cause the trial court gave judgment in favor of the plaintiff to recover of the defendant the sum of P9,850, with interest at 6 per centum per annum from March 24, 1927, the date of the filing of the complaint, until satisfaction of the judgment, with costs. From this judgment the defendant appealed. The plaintiff and defendant are domestic corporations; and at the time of the incident with which we are here concerned; H.D. Cranston was the representative of the plaintiff in the City of Manila. At the same time the plaintiff was the registered owner of the motor schooner Gwendoline, which was used in the fishing trade in the Philippine Islands. In January, 1925, Cranston decided, if practicable, to have the engine on Gwendoline changed from a gasoline consumer to a crude oil burner, expecting thereby to effect economy in

the cost of running the boat. He therefore made known his desire to McLeod & Co., a firm dealing in tractors, and was told by McKellar, of said company, that he might make inquiries of the Philippine Motors Corporation, which had its office on Ongpin Street, in the City of Manila. Cranston accordingly repaired to the office of the Philippine Motors Corporation and had a conference with C.E. Quest, its manager, who agreed to do the job, with the understanding that payment should be made upon completion of the work. The Philippine Motors Corporation was at this time engaged in business as an automobile agency, but, under its charter, it had authority to deal in all sorts of machinery engines and motors, as well as to build, operate, buy and sell the same and the equipment thereof. Quest, as general manager, had full charge of the corporation in all its branches. As a result of the aforesaid interview, Quest, in company with Cranston, visited the Gwendoline while it lay at anchor in the Pasig river, and the work of effecting the change in the engine was begun and conducted under the supervision of Quest, chiefly by a mechanic whom Quest took with him to the boat. In this work Quest had the assistance of the members of the crew of the Gwendoline, who had been directed by Cranston to place themselves under Quest's directions. Upon preliminary inspection of the engine, Quest came to the conclusion that the principal thing necessary to accomplish the end in view was to install a new carburetor, and a Zenith carburetor was chosen as the one most adapted to the purpose. After this appliance had been installed, the engine was tried with gasoline as a

fuel , supplied from the tank already in use. The result of this experiment was satisfactory. The next problem was to introduce into the carburetor the baser fuel, consisting of a low grade of oil mixed with distillate. For this purpose a temporary tank to contain the mixture was placed on deck above and at a short distance from the compartment covering the engine. This tank was connected with the carburetor by a piece of tubing, which was apparently not well fitted at the point where it was connected with the tank. Owing to this fact the fuel mixture leaked from the tank and dripped down into the engine compartment. The new fuel line and that already in use between the gasoline tank and the carburetor were so fixed that it was possible to change from the gasoline fuel to the mixed fuel. The purpose of this arrangement was to enable the operator to start the engine on gasoline and then, after the engine had been operating for a few moments, to switch to the new fuel supply. In the course of the preliminary work upon the carburetor and its connections, it was observed that the carburetor was flooding, and that the gasoline, or other fuel, was trickling freely from the lower part of the carburetor to the floor. This fact was called to Quest's attention, but he appeared to think lightly of the matter and said that, when the engine had gotten to running well, the flooding would disappear. After preliminary experiments and adjustments had been made, the boat was taken out into the bay for a trial run at about 5 p.m., or a little later, on the evening of January 30, 1925. The first part of the course was covered without any untoward development, other than the fact that the engine stopped a few times, owing no

doubt to the use of an improper mixture of fuel. In the course of the trial Quest remained outside of the engine compartment and occupied himself with making experiments in the matter of mixing the crude oil with distillate, with a view of ascertaining what proportion of the two elements would give best results in the engine. As the boat was coming in from this run, at about 7:30 p.m., and when passing near Cavite, the engine stopped, and connection again had to be made with the gasoline line to get a new start. After this had been done the mechanic, or engineer, switched to the tube connecting with the new mixture. A moment later a back fire occurred in the cylinder chamber. This caused a flame to shoot back into the carburetor, and instantly the carburetor and adjacent parts were covered with a mass of flames, which the members of the crew were unable to subdue. They were therefore compelled, as the fire spread, to take to a boat, and their escape was safely effected, but the Gwendoline was reduced to a mere hulk. The salvage from the wreck, when sold, brought only the sum of P150. The value of the boat, before the accident occurred, as the court found, was P10,000.00. A study of the testimony leads us to the conclusion that the loss of this boat was chargeable to the negligence and lack of skill of Quest. The temporary tank in which the mixture was prepared was apparently at too great an elevation from the carburetor, with the result that when the fuel line opened, the hydrostatic pressure in the carburetor was greater that the delicate parts of the carburetor could sustain. This was no doubt the cause of the flooding of the carburetor; and the result was that, when the back fire occurred, the external parts of the

carburetor, already saturated with gasoline, burst into flames, whence the fire was quickly communicated to the highly inflammable material near-by. Ordinarily a back fire from an engine would not be followed by any disaster, but in this case the leak along the pipe line and the flooding of the carburetor had created a dangerous situation, which a prudent mechanic, versed in repairs of this nature, would have taken precautions to avoid. The back fire may have been due either to the fact that the spark was too advanced or the fuel improperly mixed. In this connection it must be remembered that when a person holds himself out as being competent to do things requiring professional skill, he will be held liable for negligence if he fails to exhibit the care and skill of one ordinarily skilled in the particular work which he attempts to do. The proof shows that Quest had had ample experience in fixing the engines of automobiles and tractors, but it does not appear that he was experienced in the doing of similar work on boats. For this reason, possibly, the dripping of the mixture from the tank on deck and the flooding of the carburetor did not convey to his mind an adequate impression of the danger of fire. But a person skilled in that particular sort of work would, we think, have been sufficiently warned from those circumstances to cause him to take greater and adequate precautions against the danger. In other words Quest did not use the skill that would have been exhibited by one ordinarily expert in repairing gasoline engines on boats. There was here, in our opinion, on the part of Quest, a blameworthy antecedent inadvertence to possible harm, and this constitutes negligence. The burning of the Gwendoline may be said to have resulted from accident, but this accident was in no sense an

unavoidable accident. It would not have occurred but for Quest's carelessness or lack of skill. The test of liability is not whether the jury was accidental in a sense, but whether Quest was free from blame. We therefore see no escape from the conclusion that this accident is chargeable to lack of skill or negligence in effecting the changes which Quest undertook to accomplish; and even supposing that our theory as to the exact manner in which the accident occurred might appear to be in some respects incorrect, yet the origin of the fire is not so inscrutable as to enable us to say that it was casus fortuitus. The trial judge seems to have proceeded on the idea that, inasmuch as Quest had control of the Gwendoline during the experimental run, the defendant corporation was in the position of a bailee and that, as a consequence the burden of proof was on the defendant to exculpate itself from responsibility by proving that the accident was not due to the fault of Quest. We are unable to accede to this point of view. Certainly, Quest was not in charge of the navigation of the boat on this trial run. His employment contemplated the installation of new parts in the engine only, and it seems rather strained to hold that the defendant corporation had thereby become bailee of its owner's yard, or a mechanic who repairs a coach without taking it to his shop, are not bailees, and their rights and liabilities are determined by the general rules of law, under their contract. The true bailee acquires possession and what is usually spoken of as special property in the chatted bailed. As a consequence of such possession and special property, the bailee is given a lien

for his compensation. These ideas seem to be incompatible with the situation now under consideration. But though defendant cannot be held liable on the supposition that the burden of proof has not been sustained by it in disproving the negligence of its manager, we are nevertheless of the opinion that the proof shows by a clear preponderance that the accident to the Gwendoline and the damages resulting therefrom are chargeable to the negligence or lack of skill of Quest. This action was instituted about two years after the accident in question had occurred, and after Quest had ceased to be the manager of the defendant corporation and had gone back to the United States. Upon these facts, the defendant bases the contention that the action should be considered stale. It is sufficient reply to say that the action was brought within the period limited by the statute of limitations and the situation is not one where the defense of laches can be properly invoked. It results that the judgment appealed from, awarding damages to the plaintiff in the amount of P9,850, with interest, must be affirmed; and it is so ordered, with costs against the appellant. Avancea, C. J., Malcolm, Villamor, Ostrand, Romualdez and Villareal, JJ., concur. 2012 CD Technologies Asia, Inc. Click here for our Disclaimer and Copyright Notice

FIRST DIVISION [G.R. No. L-12858. January 22, 1918.] THE UNITED STATES, plaintiff and appellee, vs. SANTIAGO PINEDA, defendant-appellant. Francisco & Lualhati for appellant. Acting Attorney-General Paredes for appellee. SYLLABUS 1. EVINDENCE; "RES INTER ALIOS ACTA." As general rule, the evidence of other offenses committed by a defendant is inadmissible. As one exception, however, it is permissible to ascertain defendant's knowledge and intent and to fix his negligence. If the defendant has on more than one occasion performed similar acts, accident in good faith is possibly excluded, negligence is intensified, and fraudulent intent may even be established. There is no better evidence of negligence than the frequency of accidents. 2. ID; DISCRETION OF TRIAL JUDGE. On the trial of a criminal case where the question relates to the tendency of certain testimony to throw light upon a particular fact, or to explain the conduct of a particular person, there is a certain discretion on the part of the trial judge which a court of error will not interfere with, unless it manifestly appear that the testimony has no

legitimate bearing upon the question at issue, and is calculated to prejudice the accused. (Moore vs. U.S. [1893], 150 U.S., 57.) 3. ID; CIRCUMSTANTIAL EVIDENCE. Whenever the necessity arises for a resort to circumstantial evidence, either from the nature of the inquiry or the failure of direct proof, objections to the testimony on the ground of irrelevancy are not favored. (Moore vs. U. S. [1893], 150 U.S 57.) 4. ID; MOTIVE. Evidence is admissible in a criminal action which tends to show motive, although it tends to prove the commission of another offense by the defendant. (Moore vs. U.S. [1893], 150 U.S. , 57.) 5. ID; ID. A druggist filled a prescription calling for protassium chlorate with barium chlorate, a poison, causing the death of two horses. After analyzing the packages, two chemists went to the drug store of the defendant and bought potassium chlorate, which when analyzed was found to be barium chlorate. Held: That the testimony of the chemist was admissible in order to demonstrate defendant's motive and negligence. 6. DRUGGISTS; RESPONSIBILITY. The profession of pharmacy is one demanding care and skill. The responsibility of the druggist to use care can be qualified as the highest degree of care known to practical men. The skill required of the druggist can be qualified as high or ample. In order words, the care required must be commensurate with the danger involved, and the skill employed must correspond with the superior knowledge of the business which the law demands.

7. ID; ID The rule of caveat emptor cannot be applied to the purchase and sale of drugs. An imperative duty is on the druggist to take precautions to prevent death or serious injury to any one who relies on his absolute honesty and peculiar learning. The nature of drugs is such that examination will not avail the purchaser anything, Consequently, it must be that the druggist warrant that he will deliver the drug called for. 8. ID; ID. In civil cases, the druggist is made liable for any injury approximately resulting from his negligence. "Pharmacists or apothecaries who compound or sell medicines, if they carelessly label a poison as a harmless medicine, and send it so labeled into the market are liable to all persons, who, without fault on their part, are injured by using it as such medicine, in consequence of the false label; the rule being that the liability in such a case arises, not out of any contract or direct privity between the wrongdoer and the person injured, but out of the duty which the law imposes on him to avoid acts in their nature dangerous to the lives of others." (Nat. Savings Bank vs. Ward [1879], 100 U.S. 195, following Thomas vs. Winchester [1852], 2 Seld. [N.Y.], 397.) 9. PHARMACY LAW; "FRAUDULENT" CONSTRUED. The Pharmacy Law makes it unlawful for any person to sell any drug under any "fraudulent name." The word "fraudulent" is not here used in all of its strictness. Rather considering the responsibility for the equality of drug which the law imposes on druggists and the position of the word "fraudulent" in juxtaposition to "name" what is made unlawful is the giving of a false name to the drug asked for.

10. PENALTY. The Law penalizes any druggist who shall sell one drug for another whether it be through negligence or mistake. 11. ID.; ID. A druggist in filling a prescription calling for potassium chlorate gave instead to the customer barium chlorate, a poison, and placed this poison in a package of the prescription to two of his sick horses with the result that they died shortly afterwards. Held: That the druggist is guilty of a violation of the Pharmacy Law.

DECISION

MALCOLM, J p: This appeal requires a construction and an application, for the first time, of the penal provisions of the Pharmacy Law. Santiago Pineda, the defendant, is a registered pharmacist of long standing and the owner of a drug store located at Nos. 442, 444, Calle Santo Cristo, city of Manila. One Feliciano Santos, having some sick horses, presented a copy of a prescription obtained from Dr. Richardson, and which on other occasions Santos had given to his horses with good results, at Pineda's drug store for filling. The prescription read "clorato de potasa 120 gramos en seis papelitos de 20 gramos, para caballo." Under the supervision of Pineda, the prescription was prepared and returned to Santos in the form of six papers marked, "Botica Pineda Clorato potasa 120.00 seis papeles para caballo Sto.

Cristo 442, 444, Binondo, Manila." Santos, under the belief that he had purchased the potasium chlorate which he had asked for, put two of his sick packages in water and gave the doses to two of his sick horses. Another package was mixed with water for another horse, but was not used. The two horses, to which had been given the preparation, died shortly afterwards. Santos, thereupon, took the three remaining packages to the Bureau of Science for examination. Drs. Pea and Darjuan, of the Bureau of Science, on analysis found that the packages contained to potassium chlorate but barium chlorate. At the instance of Santos, the two chemists also went to the drug store of the defendant and bought potassium chlorate, which when analyzed was found to be barium chlorate. (Barium chlorate, it should be noted, is a poison; potassium chlorate is not.) Dr. Buencamino, a veterinarian, performed an autopsy on the horse, and found that death was the result of poisoning. Four assignments of error are made. The first is that the lower court in admitting the testimony of the chemist Pea and Darjuan as to their purchase of potassium chlorate at the drug store of the accused, which substance proved on analysis to be barium chlorate. What appellant is here relying on is the maxim res inter alois acta. As a general rule, the evidence of other offenses committed by a defendant is inadmissible. But appellant has confused this maxim and this rule with certain exceptions thereto. The effort is not to convict the accused of a second offense. Nor is there an attempt to draw the mind away from the point at issue and thus to prejudice defendant's case. The purpose is to ascertain defendant's knowledge and intent, and to fix his negligence is intensified, and fraudulent intent may even

be evidence of negligence than the frequency of accidents. (See 10 R. C. L. pp. 938 940.) The United States Supreme Court has held that: "On the trial of a criminal case where the question relates to the tendency of certain testimony to throw light upon a particular fact, or to explain the conduct of a particular person, there is a certain discretion on the part of the trial judge which a court of errors will not interfere with, unless it manifestly appear that the testimony has no legitimate bearing upon the question at issue, and is calculated to prejudice the accused. "Whenever the necessity arises for a resort to circumstancial evidence, either from the nature of the inquiry or the failure of direct proof, objections to the testimony on the ground of irrelevancy are not favored. "Evidence is admissible in a criminal action which tends to show motive, although it tends to prove the commission of another offense by the defendant."(Moore vs. U.S. [1893], 150 U.S., 57.) The second assignment of error is that the lower court erred in finding that the substance sold by the accused to Feliciano Santos on the 22d of June, 1916, was barium chlorate and not potassium chlorate. The proof demonstrates the contrary. The third and fourth assignments of error are that the lower court erred in finding that the accused has been proved quality beyond a reasonable doubt of an

infraction of Act No. 597, section 17, as amended. The third assignment contains the points we should consider, including, we may remark, a somewhat difficult question concerning which the briefs have given little assistance. The Pharmacy Law was first enacted as Act No. 597, was later amended by Act Nos. 1921, 2236, and 2382, and is now found as Chapter 30 of the Administrative examiners, and the examination and registration of pharmacists, and finally contains sundry provisions relative to the practice of pharmacy. High qualifications for applicants for the pharmaceutical examination are established. The program of subjects for the examination in wide. Responsibility for the quality of drugs is fixed by section 17 of the Pharmacy Law, as amended (now Administrative Code [1917], section 751), in the following term: "Every pharmacist shall be responsible for the quality of all drugs, chemicals, medicines, and poisons he may sell or keep for sale; and it shall be unlawful for any person whomsoever to manufacture, prepare, sell, or administer any prescription, drug, chemical, medicine, or poison under any fraudulent name, direction, or pretense, or to adulterate any drug, chemical, or poison so used, sold , or offered for sale. Any drug, chemical, medicine, or poison shall be held to be adultered or deteriorated within the meaning of this section if it differs from the standard of quality or purity given in the United States Pharmacopoeia."

The same action of the Pharmacy Law also contains the following penal provision: "Any person violating the provisions of this Act shall, upon conviction, be punished by a fine not more than five hundred dollars." The Administrative Code, section 2676, changes the penalty somewhat by providing that: "Any person engaging in the practice of pharmacy in the Philippine Islands contrary to any provision of the Pharmacy Law or violating any provisions of said law for which no specific penalty is provided shall, for each offense, be punished by a fine not to exceed two hundred pesos, or by imprisonment for not more than ninety days, or both, in the direction of the court." These are the provisions of law, pursuant to which prosecution has been initiated and which it is now incumbent upon us to construe. Turning to the law, certain points therein as bearing on our present facts must be admitted. Thus, defendant is a pharmacist. As a pharmacist, he is made responsible for the quality of all drugs and poisons which he sells. And finally it is provided that it shall be unlawful for him to sell any drug or poison under any "fraudulent name." It is the one word "fraudulent" which has given the court trouble. What did the Legislature intend to convey by this restrictive adjective? Were we to adhere to the technical definition of fraud, which appellant vigorously insists upon, it would be difficult, if not impossible, to convict any druggist of a violation of the law. The prosecution would have to prove to a reasonable degree of certainly that the druggist

made a material representation; that it was false; that when he made it he knew that it was false of made it recklessly without any knowledge of its truth and as a positive assertion; that he made it with the intention that it should be acted upon by the purchaser; that the purchaser acted in reliance upon it, and that the purchaser thereby suffered injury. Such a construction with a literal following of well-known principles on the subject of fraud would strip the law of at least much of its force. It would leave the innocent purchaser of drugs, who must blindly trust in the good faith and vigilance of the pharmacist, at the mercy of any unscrupulous vendor. We should not, therefore, without good reason so devitalize the law. The profession of pharmacy, it has been said again and again, is one demanding care and skill. The responsibility of the druggist to use care has been variously qualified as "ordinary care," "care of a specially high degree," "the highest degree of care known to practical men." Even under the first conservative expression, "ordinary care" with reference to the business of a druggist, the Supreme Court of Connecticut has said must be held to signify "the highest practicable degree of prudence, thoughtfulness, and vigilance, and the most exact and reliable safeguards consistent with the reasonable conduct of the business, in order that human life may not constantly be exposed to the danger flowing from the substitution of deadly poisons for harmless medicine." (Tombari vs. Connor [1912], 85 Conn., 235. See also Willson vs. Atkins [1907] 81 N. E., 600.) The "skill " required of a druggist is denominated as "high" or "ample." (Peter vs. Jackson [1902], 50 W. Va., 644; 57 L. R.A., 428.) In order words, the care required must be

commensurate with the danger involved, and the skill employed must correspond with the superior knowledge of the business which the law demands. Under one conception, and it should not be forgotten that the cases we consider are civil in nature, the question of negligence or ignorance is irrelevant. The druggist is responsible as an absolute guarantor of what he sells. In a decision which stands alone, the Supreme Court of Kentucky said: "As applicable to the owners of drug stores, or persons engaged in vending drugs and medicines by retail, the legal maxim should be reversed. Instead of caveat emptor, it should be caveat venditor. That is to say, let him be certain that he does not sell to a purchaser or send to a patient one drug for another, as arsenic for calomel, cartharides for or mixed with snakeroot and Peruvian bark, or even on innocent drug, calculated to produce a certain effect, in place of another sent for and designed to produce a different effect. If he does these things, he cannot escape civil responsibility, upon the alleged pretexts that it was an accidental or an innocent mistake; that he had been very careful and particular, and had used extraordinary care and diligence in preparing or compounding the medicines as required, etc. Such excuses will not avail him."(Fleet vs Hollenkemp [1852], 56 Am. Dec., 563.) Under the other conception, in which proof of negligence is considered as material, where a customer

calls upon a druggist for a harmless remedy, delivery of a poisonous drug by mistake by the druggist is prima facie negligence, placing the burden on him to show that the mistake was under the circumstances consistent with the exercise of due care. (See Knoefel vs. Atkins, supra.) The druggist cannot, for example in filling a prescription calling for potassium chlorate give instead to the customer barium chlorate, a poison, place this poison in a package labeled "potassium chlorate" , and expect to escape responsibility on a plea of mistake. His mistake, under the most favorable aspect for himself, was negligence. So in a case where a druggist filled an order for calomel tablets with morphine and placed the morphine in a box labeled calomel, it was said: "It is not suggested, nor can we apprehend that it is in any wise probable, that the act of furnishing the wrong drug in this case was willful. If it was furnished by the clerk, it was undoubtedly a mistake and unintentional. However, it was a mistake of the gravest kind, and of the most disastrous effect. We cannot say that one holding himself out as competent to handle such drugs, and who does so, having rightful access to them, and relied upon by those dealing with him to exercise that high degree of caution and care called for by the peculiarly dangerous nature of this business, can be heard to say that his mistakes by which he furnishes a customer the most deadly of drugs for those comparatively harmless is not, in and of itself, gross negligence, and that of an

aggravated form." (Smith's Admix. vs. Middelton [1902], 56 L. R., 484.) The rule of caveat emptor cannot apply to the purchase and sale of drugs. The vendor and the vendee do not stand at arms length as in ordinary transactions. An imperative duty is on the druggist to take precautions to prevent death or serious injury to anyone who relies on his absolute honesty and peculiar learning. The nature of drugs is such that examination would not avail the purchaser anything. It would be idle mockery for the customer to make an examination of a compound of which he can know nothing. Consequently, it must be that the druggist warrants that he will deliver the drug called for. In civil cases, the druggist is made liable for any injury approximately resulting from his negligence. If B negligently sells poison under the guise of a beneficial drug to A, he is liable for the injury done to A. In a case, which has repeatedly been followed by the United States Supreme Court, it was said, "Pharmacists or apothecaries who compound or sell medicines, if they carelessly label a poison as a harmless medicine, and send it so labeled into the market, are liable to all persons who, without fault on their part, are injured by using it as such medicine, in consequence of the false label; the rule being that the liability in such a case arises not out of any contract or direct privity between the wrong-doer and the person injured, but out of the duty which the law imposes on him to avoid acts in their nature dangerous to the lives of others." (Nat. Savings Bank vs. Ward [1879], 100 U.S., 195, following Thomas vs. Winchester [1852], 2 Seld. [N.Y.] 397.) In reality, for the druggist, mistake is

negligence and care is no defense. Throughout the criminal law, run the same rigorous rules. For, example, apothecaries or apothecary clerks, who are quality of negligence in the sale of medicine when death ensues in consequence, have been held guilty of manslaughter. (See Tessymond's Case {1828}, 1 Lewin, C. C., 169.) Bearing these general principles in mind, and remembering particularly the care and skill which are expected of druggists, that in some jurisdictions they are liable even for their mistake and in others have the burden placed upon them to establish that they were not negligent, it cannot be that the Philippine Legislature intended to use the word "fraudulent" in all its strictness. A plea of accident and mistake cannot excuse for they cannot take place unless there be wanton and criminal carelessness and neglect. How the misfortune occurs in unimportant, if under all the circumstances the fact of occurrence is attributable to the druggist as a legal fault. Rather considering the responsibility for the quality of drugs which the law imposes on druggist and the position of the made unlawful is the giving of a false name to the drug asked for. This view is borne out by the Spanish translation, which we are permitted to consult to explain the English text. In the Spanish "supuesto" is used, and this word is certainly not synonymous with "fraudulent." The usual badges of fraud, falsity, deception, and injury must be present but not scienter. In view of the tremendous and imminent danger to the public from the careless sale of poisons and medicines, we do not deem it too rigid a rule to hold that the law penalizes any druggist who shall sell one drug for another whether it be through negligence or mistake.

The judgment of the lower court, sentencing the defendant to pay a fine of P100, with subsidiary imprisonment in case of insolvency, and to pay the costs, is affirmed with the costs of this instance against the appellant, without prejudice to any civil action which may be instituted. So ordered. Arellano, C.J., Torres, Johnson, Carson, Araullo, and Street, JJ.., concur.

THIRD DIVISION [G.R. No. 102383. November 26, 1992.] BANK OF THE PHILIPPINE ISLANDS, petitioner, vs. THE HON. COURT OF APPEALS (SEVENTH JUDICIAL), HON. JUDGE REGIONAL TRIAL COURT OF MAKATI, BRANCH 59, CHINA BANKING CORP., and PHILIPPINE CLEARING HOUSE CORPORATION, respondents. Padilla Law Office for petitioner. William R. Veto for Phil. Clearing House Corp. Cruz, Durian, Agabin, Atienza, Alday and Tuason for China Banking Corp. SYLLABUS 1. COMMERCIAL LAW; NEGOTIABLE INSTRUMENTS; CHECKS; EFFECT OF REPRESENTING OR COLLECTING BANK'S GUARANTEE OF "ALL PRIOR ENDORSEMENTS AND/OR LACK OF ENDORSEMENTS"; EFFECT OF FORGED ENDORSEMENTS OF PAYEES. We agreed with the following disquisition of the Regional Trial Court, to wit: "Anent petitioner's liability on said instruments, this court is in full accord with the ruling of the PCHC Board of Directors that: In presenting the checks for clearing and/for

payment, the defendant made an express guarantee on the validity of 'all prior endorsements.' Thus, stamped at the back of the checks are the defendant's clear warranty: ALL PRIOR ENDORSEMENTS AND/OR LACK OF ENDORSEMENTS GUARANTEED. Without such warranty, plaintiff would not have paid on the checks. No amount of legal jargon can reverse the clear meaning of defendant's warranty. As the warranty has proven to be false and inaccurate, the defendant is liable for any damage arising out of the falsity of its representation. The principle of estoppel, effectively prevents the defendant from denying liability for any damage sustained by the plaintiff which, relying upon an action or declaration of the defendant, paid on the checks. The same principle of estoppel effectively prevents the defendant from denying the existence of the checks (pp. 10-11, Decision, pp. 43-44, Rollo)" (at pp 194195) We also ruled: "Apropos the matter of forgery in endorsements, this Court has presently succinctly emphasized that the collecting bank or last endorser generally suffers the loss because it has the duty to ascertain the genuineness of all prior endorsements considering that the act of presenting the check for payment to the drawee is an assertion that the party making the presentment has done its duty to ascertain the genuineness of the endorsements. This is laid down in the case of PNB v. National City Bank (63 Phil. 1711) In another case, this court held that if the drawee-bank discovers that the signature of the payee was forged after it has paid the amount of the check to the holder thereof, it can recover the amount paid from the collecting bank. . . . The point that comes uppermost is whether the drawee bank wa negligent in failing to discover the alteration or the forgery. . . . The court reproduces with approval the following disquisition of the PCHC in its

decision. 'III. Having Violated Its Warranty On Validity Of All Endorsements, Collective Bank Cannot Deny Liability To Those Who Relied On Its Warranty. . . . 'The damage that will result if judgment is not rendered for the plaintiff is irreparable. The collecting bank has privity with the depositor who is the principal culprit in this case. The defendant knows the depositor; her address and her history. Depositor is defendant's client. It has taken a risk on its depositor when it allowed her to collect on the crossedchecks. 'Having accepted the crossed checks from persons other than the payees, the defendant is guilty of negligence; the risk of wrongful payment has to be assumed by the defendant." As can be gleaned from the decision, one of the main considerations in affirming the PCHC's decision was the finding that as between the drawee bank (Equitable Bank) and the representing or collecting bank (Banco de Oro) the latter was negligent and thus responsible for undue payment. 2. ID.; ID.; FORGERY; GENERAL RULE; FORGED SIGNATURE WHOLLY INOPERATIVE AND PAYMENT MADE THROUGH OR UNDER SUCH SIGNATURE INEFFECTUAL AND DOES NOT DISCHARGE INSTRUMENT; EXCEPTION; NEGLIGENCE OF PARTY INVOKING FORGERY A RECOGNIZED EXCEPTION TO GENERAL RULE. Section 23 of the Negotiable Instruments Law states: "When a signature is forged or made without the authority of the person whose signature it purports to be, it is wholly inoperative and no right to retain the instrument, or to give discharge therefore, or to enforce payment thereof, against any party thereto, can be acquired through or under such forged signature, unless the party against whom it is sought

to enforce such right is precluded from setting up the forgery or want of authority." There are two (2) parts of the provision. The first part states the general rule while the second part states the exception to the general rule. The general rule is to the effect that a forged signature is "wholly inoperative", and payment made "through or under such signature" is ineffectual or does not discharge the instrument. The exception to this rule is when the party relying on the forgery is "precluded from setting up the forgery or want of authority." In this jurisdiction we recognize negligence of the party invoking forgery as an exception to the general rule. (See Banco de Oro Savings and Mortgage Bank v. Equitable Banking Corporation supra; Philippine National Bank v. Quimpo, 158 SCRA 582 [1988]; Philippine National Bank v. Court of Appeals, 25 SCRA 693 [1968]; Republic v. Equitable Banking Corporation, 10 SCRA 8 [1964]; National Bank v. National City Bank of New York, 63 Phil. 711 [1936]; San Carlos Milling Co. v. Bank of P.I., 59 Phil. 59 [1933]). In these cases we determined the rights and liabilities of the parties under a forged endorsement by looking at the legal effects of the relative negligence of the parties thereto. In the present petition the payee's names in the two (2) subject checks were forged. Following the general rule, the checks are "wholly inoperative" and of no effect. However, the underlying circumstances of the case show that the general rule on forgery is not applicable. The issue as to who between the parties should bear the loss in the payment of the forged checks necessitates the determination of the rights and liabilities of the parties involved in the controversy in relation to the forged checks. The records show that petitioner BPI as drawee bank and respondent CBC as

representing or collecting bank were both negligent resulting in the encashment of the forged checks. 3. ID.; ID.; ID.; ID.; ID.; ID.; IN CASE AT BAR, DEMANDS OF SUBSTANTIAL JUSTICE SATISFIED BY ALLOCATING AMOUNT OF LOSS BASED ON COMPARATIVE NEGLIGENCE OF BOTH BANKS. Banks handle daily transactions involving millions of pesos. By the very nature of their work the degree of responsibility, care and trustworthiness expected of their employees and officials is far greater than those of ordinary clerks and employees. For obvious reasons, the banks are expected to exercise the highest degree of diligence in the selection and supervision of their employees. In the present case, there is no question that the banks were negligent in the selection and supervision of their employees. The Arbitration Committee, the PCHC Board of Directors and the lower courts, however disagree in the evaluation of the degree of negligence of the banks. While the Arbitration Committee declared the negligence of respondent CBC graver, the PCHC Board of Directors and the lower courts declared that petitioner BPI's negligence was graver. To the extent that the degree of negligence is equated to the proximate cause of the loss, we rule that the issue as to whose negligence is graver is relevant. No matter how many justifications both banks present to avoid responsibility, they cannot erase the fact that they were both guilty in not exercising extraordinary diligence in the selection and supervision of their employees. . . . Both banks were negligent in the selection and supervision of their employees resulting in the encashment of the forged checks by an impostor. Both banks were not able to overcome, the presumption of negligence in the selection and supervision of their employees. It was the

gross negligence of the employees of both banks which resulted in the fraud and the subsequent loss. While it is true that petitioner BPI's negligence may have been the proximate cause of the loss, respondent CBC's negligence contributed equally to the success of the impostor in encashing the proceeds of the forged checks. Under these circumstances, we apply Article 2179 of the Civil Code to the effect that while respondent CBC may recover its losses, such losses are subject to mitigation by the courts (See Phoenix Construction, Inc. v. Intermediate Appellate Court, 148 SCRA 353 [1987]). Considering the comparative negligence of the two (2) banks, we rule that the demands of substantial justice are satisfied by allocating the loss of P2,413,215.16 and the costs of the arbitration proceedings in the amount of P7,250.00 and the costs of litigation on a 6040 ratio. Conformably with this ruling, no interests and attorney's fees can be awarded to either of the parties. 4. CIVIL LAW; QUASI-DELICTS; DOCTRINE OF LAST CLEAR CHANCE; DISCUSSED; CASE AT BAR. We ruled: "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 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 no

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 to 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 excited 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 eyes 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 reasonable care and caution which an ordinarily prudent person would have used in the same situation? If not, then he is guilty of negligence. . . . 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." Applying these principles, petitioner BPI's reliance on the doctrine of last clear chance to clear it from liability is not well-taken. CBC had no prior notice of the fraud perpetrated by BPI's employees on the pretermination of Eligia G. Fernando's money market placement. Moreover, Fernando is not a depositor of CBC. Hence, a comparison of the signature of Eligia G. Fernando with that of the impostor Eligia G. Fernando, which respondent CBC did, could not have resulted in the discovery of the fraud. Hence, unlike in the Picart case wherein the defendant, had he used reasonable care and caution, would have recognized the risk he was taking and would have foreseen harm to the horse and the plaintiff but did not, respondent CBC had no way to discover the fraud at all. In fact the records fail to show that respondent CBC had knowledge, actual or implied, of the fraud perpetrated by the impostor and the employees of BPI.

5. ID.; ID.; PROXIMATE CAUSE; DEFINED; DISCUSSED; CASE AT BAR. In the case of Vda. de Bataclan, et al. v. Medina (102 Phil. 181 [1957]), we had occasion to discuss the doctrine of proximate cause. There is no question that under the circumstances, the defendant carrier is liable. The only question is to what degree. The trial court was of the opinion that the proximate cause of the death of Bataclan was not the overturning of the bus, but rather the fire that burned the bus, including himself and his co-passengers who were unable to leave it; that at the time the fire started, Bataclan, though he must have suffered physical injuries, perhaps serious, was still alive and so damages were awarded, not for his death, but for the

physical injuries suffered by him. We disagree. A satisfactory definition of proximate cause is found in Volume 38, pages 695-696 of American Jurisprudence, cited by plaintiffs-appellants in their brief. It is as follows: '. . . that cause, which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces the injury, and without which the result would not have occurred. And more comprehensively, 'the proximate legal cause is that acting first and producing the injury, either immediately or by setting other events in motion, all constituting a natural and continuous chain of events, each having a close causal connection with its immediate predecessor, the final event in the chain immediately effecting the injury as natural and probable result of the cause which first acted, under such circumstances that the person responsible for the first event should, as an ordinarily prudent and intelligent person, have reasonable ground to expect at the moment of his act or default that an injury to some person might probably result therefrom.' It may be that ordinarily, when a passenger bus overturns, and pins down a passenger, merely causing him physical injuries, if through some event, unexpected and extraordinary, the overturned bus is set on fire, say, by lightning, or if some highwaymen after looting the vehicle sets it on fire, and the passenger is burned to death, one might still contend that the proximate cause of his death was the fire and not the overturning of the vehicle. But in the present case and under the circumstances obtaining in the same, we do not hesitate to hold that the proximate cause of the death of Bataclan was the overturning of the bus, this for the reason that when the vehicle turned not only on its side but completely on its back, the leaking of the gasoline from the tank was not unnatural or unexpected; that the coming of the men with a

lighted torch was in response to the call for help, made not only by the passengers, but most probably, by the driver and the conductor themselves, and that because it was very dark (about 2:30 in the morning), the rescuers had to carry a light with them; and coming as they did from a rural area where lanterns and flashlights were not available, they had to use a torch, the most handy and available; and what was more natural than that said rescuers should innocently approach the overturned vehicle to extend the aid and effect the rescue requested from them. In other words, the coming of the men with the torch was to be expected and was natural sequence of the overturning of the bus, the trapping of some of its passengers bus, the trapping of some of its passengers and the call for outside help." Again, applying the doctrine of proximate cause, petitioner BPI's contention that CBC alone should bear the loss must fail. The gap of one (1) day between the issuance and delivery of the checks bearing the impostor's name as payee and the impostor's negotiating the said forged checks by opening an account and depositing the same with respondent CBC is not controlling. It is not unnatural or unexpected that after taking the risk of impersonating Eligia G. Fernando with the connivance of BPI's employees, the impostor would complete her deception by encashing the forged checks. There is, therefore, greater reason to rule that the proximate cause of the payment of the forged checks by an impostor was due to the negligence of petitioner BPI. 6. ADMINISTRATIVE LAW; ADMINISTRATIVE RULES AND REGULATIONS; MUST CONFORM TO AND NOT GO BEYOND TERMS AND PROVISIONS OF BASIC LAW; CASE AT BAR. petitioner BPI's theory that the present clearing guarantee requirement imposed on

the representing or collecting bank under the PCHC rules and regulations is independent of the Negotiable Instruments Law is not in order. Another reason why the petitioner's theory is uncalled for is the fact that the Negotiable Instruments Law (Act No. 2031) applies to negotiable instruments as defined under section one thereof. Undeniably, the present case involves checks as defined by and under the coverage of the Negotiable Instruments Law. To affirm the theory of the petitioner would, therefore, violate the rule that rules and regulations implementing the law should conform to the law, otherwise the rules and regulations are null and void. Thus, we held in Shell Philippines, Inc. v. Central Bank of the Philippines (162 SCRA 628 [1988]): ". . . while it is true that under the same law the Central Bank was given the authority to promulgate rules and regulations to implement the statutory provision in question, we reiterate the principle that this authority is limited only to carrying into effect what the law being implemented provides. "In People v. Maceren (79 SCRA 450, 458 and 460), this Court ruled that: Administrative regulations adopted under legislative authority by a particular department must be in harmony with the provisions of the law, and should be for the sole purpose of carrying into effect its general provisions. By such regulations, of course, the law itself cannot be extended. (U.S. v. Tupasi Molina, supra). An administrative agency cannot amend an act of Congress (Santos v. Estenzo, 109 Phil. 419, 422; Teoxon v. Members of the Board of Administrators, L-25619, June 30, 1970, 33 SCRA 585; Manuel v. General Auditing Office, L-28952, December 29, 1971, 42 SCRA 660; Deluao v. Casteel, L-21906, August 29, 1969, 29 SCRA 350). The rule-making power must be confined to details for regulating the mode or proceeding to

carry into effect the law as it has been enacted. The power cannot be extended to amending or expanding the statutory requirements or to embrace matters not covered by the statute. Rules that subvert the statute cannot be sanctioned. (University of Santo Tomas v. Board of Tax Appeals, 93 Phil. 376, 382, citing 12 C.J. 845-46. As to invalid regulations, see Collector of Internal Revenue v. Villaflor, 69 Phil. 319; Wise & Co v. Meer, 78 Phil. 655, 676, Del Mar v. Phil. Veterans Administration, L-27299, June 27, 1973, 51 SCRA 340, 349). . . . ". . . The rule or regulation should be within the scope of the statutory authority granted by the legislature to the administrative agency (Davis, Administrative Law, p. 194, 197, cited in Victorias Milling Co., Inc. v. Social Security Commission, 114 Phil. 555, 558). In case of discrepancy between the basic law and a rule or regulation issued to implement said law the basic law prevails because said rule or regulation cannot go beyond the terms and provisions of the basic law (People v. Lim, 108 Phil. 1091)." (at pp. 633-634).

DECISION

GUTIERREZ, JR., J p: The present petition asks us to set aside the decision and resolution of the Court of Appeals in CA-G.R. SP No. 24306 which affirmed the earlier decision of the Regional Trial Court of Makati, Branch 59 in Civil Case No. 14911 entitled Bank of the Philippine Islands v. China Banking Corporation and the Philippine Clearing House Corporation, the dispositive portion of which reads:

"WHEREFORE, premises considered, judgment is hereby rendered dismissing petitioner-appellant's (BPI's) appeal and affirming the appealed order of August 26, 1986 (Annex B of BPI's Petition) with modification as follows: 1. Ordering the petitioner-appellant (BPI) to pay respondent-appellee (CBC): (a) the amount of One Million Two Hundred Six Thousand, Six Hundred Seven Pesos and Fifty Eight Centavos (P1,206,607.58) with interest at the legal rate of twelve percent (12%) per annum starting August 26, 1986, the date when the order of the PCHC Board of Directors was issued until the full amount is finally paid; and (b) the amount of P150,000.00 representing attorney's fees; 2. BPI shall also bear 75% or P5,437.50 and CBC, 25% or P1,812.50 of the cost of the arbitration proceedings amounting to P7,250.00; 3. The ownership of respondent-appellee (CBC) of the other sum of One Million Two Hundred Six Thousand Six Hundred Seven Pesos and Fifty Eight Centavos (P1,206,607.58) previously credited to its clearing account on August 12, 1983 per

PCHC Stockholders' Resolution No. 6083 dated April 6, 1983, is hereby confirmed. 4. The PCHC is hereby directed to immediately debit the clearing account of BPI the sum of One Million Two Hundred Six Thousand Six Hundred Seven Pesos and Fifty Eight Centavos (P1,206,607.58) together with its interest as decreed in paragraph 1(a) herein above stated and credit the same to the clearing account of CBC; 5. The PCHC's counterclaim and crossclaim are dismissed for lack of merit; and 6. With costs against the petitioner-appellant." (Rollo, pp. 161-162) The controversy in this case arose from the following facts as found by the Arbitration Committee of respondent Philippine Clearing House Corporation in Arbicom Case No. 83-029 entitled Bank of the Philippine Islands v. China Banking Corporation: "The story underlying this case began in the afternoon of October 9, 1981 with a phone call to BPI's Money Market Department by a woman who identified herself as Eligia G. Fernando who had a money market placement as evidenced by a promissory note with a maturity date of November 11, 1981 and a maturity value of P2,462,243.19. The caller wanted to preterminate the placement, but Reginaldo Eustaquio, Dealer Trainee in BPI's

Money Market Department, who received the call and who happened to be alone in the trading room at the time, told her 'trading time' was over for the day, which was a Friday, and suggested that she call again the following week. The promissory note that the caller wanted to preterminate was a roll-over of an earlier 50-day money market placement that had matured on September 24, 1981.

originally handled Fernando's account, nor anybody else at BPI, bothered to call up Fernando at her Philamlife office to verify the request for pretermination. Informed that the placement would yield less than the maturity value because of its pretermination, the caller insisted on the pretermination just the same and asked that two checks be issued for the proceeds, one for P1,800,000.00 and the second for the balance, and that the checks be delivered to her office at Philamlife. Eustaquio, thus, proceeded to prepare the 'purchase order slip' for the requested pretermination as required by office procedure, and from his desk, the papers, following the processing route, passed through the position analyst, securities clerk, verifier clerk and documentation clerk, before the two cashier's checks, nos. 021759 and 021760 for P1,800,000.00 and P613,215.16, respectively, both payable to Eligia G. Fernando, covering the preterminated placement, were prepared. The two cashier's checks, together with the papers consisting of the purchase order slip indicating that the money market placement was to be preterminated and the promissory note (no. 35623) to be preterminated, were sent to Gerlanda E. de Castro and Celestino Sampiton, Jr., Manager and Administrative

Later that afternoon, Eustaquio conveyed the request for pretermination to the officer who before had handled Eligia G. Fernando's account, Penelope Bulan, but Eustaquio was left to attend to the pretermination process. The next Monday, October 12, 1981, in the morning, the caller of the previous Friday followed up with Eustaquio, merely by phone again, on the pretermination of the placement. Although not familiar with the voice of the real Eligia G. Fernando, Eustaquio 'made certain' that the caller was the real Eligia G. Fernando by 'verifying' that the details the caller gave about the placement tallied with the details in 'the ledger/folder' of the account. Eustaquio knew the real Eligia G. Fernando to be the Treasurer of Philippine American Life Insurance Company (Philamlife) since he was handling Philamlife's corporate money market account But neither Eustaquio nor Bulan who

Assistant, respectively, in BPI's Treasury Operations Department, both authorized signatories for BPI, who signed the two checks that very morning. Having been signed, the checks now went to the dispatcher for delivery. Later in the same morning, however, the same caller changed the delivery instructions; instead of the checks being delivered to her office at Philamlife, she would herself pick up the checks or send her niece, Rosemarie Fernando, to pick them up. Eustaquio then told her that if it were her niece who was going to get the checks, her niece would have to bring a written authorization from her to pick up the checks. This telephone conversation ended with the caller's statement that 'definitely' it would be her niece, Rosemarie Fernando, who would pick up the checks. Thus, Eustaquio had to hurriedly go to the dispatcher, Bernardo Laderas, to tell him of the new delivery instructions for the checks; in fact, he changed the delivery instruction on the purchase order slip, writing thereon 'Rosemarie Fernando release only with authority to pick up.' It was, in fact, Rosemarie Fernando who got the two checks from the dispatcher, as shown by the delivery receipt. Actually, as it turned out, the same impersonated both Eligia G. Fernando and Rosemarie Fernando. Although

the checks represented the termination proceeds of Eligia G. Fernando's placement, not just a roll-over of the placement, the dispatcher failed to get or to require the surrender of the promissory note evidencing the placement. There is also no showing that Eligia G. Fernando's purported signature on the letter requesting the pretermination and the letter authorizing Rosemarie Fernando to pick up the two checks, both of which letters were presumably handed to the dispatcher by Rosemarie Fernando, was compared or verified with Eligia G. Fernando's signature in BPI's file. Such purported nature has been established to be forged although it has a 'close similarity' to the real signature of Eligia G. Fernando (TSN of January 15, 1985, pp. 24 and 26). The story's scene now shifted when, in the afternoon of October 13, 1981, a woman who represented herself to be Eligia G. Fernando applied at CBC's Head Office for the opening of a current account. She was accompanied and introduced to Emily Sylianco Cuaso, Cash Supervisor, by Antonio Concepcion whom Cuaso knew to have opened, earlier that year, an account upon the instruction of Valentin Co, a lonestanding 'valued client' of CBC. What Cuaso indicated in the application form, however, was that the new client was introduced by

Valentin Co. and with her initials on the form signifying her approval, she referred the application to the New Accounts Section for processing. As finally processed, the application form shows the signature of 'Eligia G. Fernando', 'her' date of birth, sex, civil status, nationality, occupation ('business woman'), tax account number, and initial deposit of P10,000.00. The final approval of the new current account to indicated on the application form by the initials of Regina G. Dy, Cashier, who did not interview the new client but affixed her initials on the application form after reviewing it. The new current account was given the number: 263103. The following day, October 14, 1981, the woman holding herself out as Eligia G. Fernando deposited the two checks in controversy with Current Account No. 126310-3. Her endorsement on the two checks was found to conform with the depositor's specimen signature. CBC's guaranty of prior endorsements and/or lack of endorsement was then stamped on the two checks, which CBC forthwith sent to clearing and which BPI cleared on the same day. Two days after, withdrawals began on Current Account No. 26310-3: On October 16, 1981, by means of Check No. 240005 dated the same day for P1,000,000.00, payable to 'cash',

which the woman holding herself out as Eligia G. Fernando encashed over the counter, and Check No. 240003 dated October 15, 1981 for P48,500.00, payable to 'cash' which was received through clearing from PNB Pasay Branch; on October 19, 1981, by means of Check No. 240006 dated the same day for P1,000,000.00, payable to 'cash,' which the woman identifying herself as Eligia G. Fernando encashed over the counter; on October 22, 1981, by means of Check No. 240007 dated the same day for P370,000.00, payable to 'cash' which the woman herself also encashed over the counter; and on November 4, 1981, by means of Check No. 240001 dated November 3, 1981 for P4,100.00, payable to 'cash,' which was received through clearing from Far East Bank. All these withdrawals were allowed on the basis of the verification of the drawer's signature with the specimen signature on file and the sufficiency of the funds in the account. However, the balance shown in the computerized teller terminal when a withdrawal is serviced at the counter, unlike the ledger or usual statement prepared at month-end, does not show the account's historical data such as the account's opening date, the amounts and dates of deposits and withdrawals. The last withdrawal on November 4, 1981 left Current Account No. 26310-3 with a balance of only P571.61.

The day of reckoning came on November 11, 1981, the maturity date of Eligia G. Fernando's money market placement with BPI, when the real Eligia G. Fernando went to BPI for the roll-over of her placement. She disclaimed having preterminated her placement on October 12, 1981. She executed an affidavit stating that while she was the payee of the two checks in controversy, she never received nor endorsed them and that her purported signature on the back of the checks was not hers but forged. With her surrender of the original of the promissory note (no. 35623 with maturity value of P2,462,243.19) evidencing the placement which matured that day, BPI issued her a new promissory note (no. 40314 with maturity date of December 23, 1981 and maturity value of P2,500,266.77) to evidence a roll-over of the placement. On November 12, 1981, supported by Eligia G. Fernando's affidavit, BPI returned the two checks in controversy to CBC for the reason 'Payee's endorsement forged'. A ping-pong started when CBC, in turn, returned the checks for reason 'Beyond Clearing Time', and the stoppage of this ping-pong, as we mentioned at the outset, prompted the filing of this case. Investigation of the fraud by the Presidential Security Command led to the filing of

criminal actions for 'Estafa Thru Falsification of Commercial Documents' against four employees of BPI, namely Quirino Victorio, Virgilio Gayon, Bernardo Laderas and Jorge Atayan, and the woman who impersonated Eligia G. Fernando, Susan Lopez San Juan. Victorio and Gayon were both bookkeepers in BPI's Money Market Operations Department, Laderas was a dispatcher in the same department. . . ." (Rollo, pp. 74-79). The Arbitration Committee ruled in favor of petitioner BPI. The dispositive portion of the decision reads: cdll "WHEREFORE, we adjudged in favor of the Bank of the Philippine Islands and hereby order China Banking Corporation to pay with former the amount of P1,206,607.58 with interest thereon at 12% per annum from August 12, 1983, or the date when PCHC, pursuant to its procedure for compulsory arbitration of the ping-pong checks under Stockholders' Resolution No. 6-83 was implemented, up to the date of actual payment. Costs of suit in the total amount of P7,250.00 are to be assessed the litigant banks in the following proportion: a) Plaintiff BPI 25% P1,812.50 b) Defendant China 75% P5,437.50

Total Assessment P7,250.00 conformably with PCHC Resolution Nos. 4683 dated October 25, 1983 and 4-85 dated February 25, 1985. The PCHC is hereby directed to effect the corresponding entries to the litigant banks' clearing accounts in accordance with the foregoing decision " (Rollo, pp. 97-98).

P1,206,607.58 and credit the same to that of CBC. The cost of Arbitration proceedings are to be debited from the accounts of the parties in the proportion above stated." (Rollo, pp. 112-113) BPI then filed a petition for review of the abovestated order with the Regional Trial Court of Makati. The trial court dismissed the petition but modified the order as can be gleaned from the dispositive portion of its decision quoted earlier. Not satisfied with the trial court's decision petitioner BPI filed with us a petition for review on certiorari under Rule 45 of the Rules of Court. The case was docketed as G.R. No. 96376. However, in a Resolution dated February 6, 1991, we referred the case to the Court of Appeals for proper determination and disposition. The appellate court affirmed the trial court's decision. Hence, this petition. In a resolution dated May 20, 1992 we gave due course to the petition. Petitioner BPI now asseverates: I THE DECISION AND RESOLUTION OF THE RESPONDENT COURT LEAVES THE UNDESIRABLE RESULT OF RENDERING NUGATORY THE VERY PURPOSE FOR THE UNIFORM BANKING PRACTICE OF

However, upon motion for reconsideration filed by respondent CBC, the Board of Directors of the PCHC reversed the Arbitration Committee's decision in its Order, the dispositive portion of which reads: "WHEREFORE, the Board hereby reconsiders the Decision of the Arbitration Committee dated March 24, 1986 in Arbicom Case No. 183-029 and in lieu thereof, one is rendered modifying the decision so that the Complaint of BPI is dismissed, and on the Counterclaim of CBC, BPI is sentenced to pay CBC the sum of P1,206,607.58. In view of the facts, no interest nor attorney's fees are awarded BPI shall also bear 75% or P5,437.50 and CBC, 25% or P1,812.50 of the cost of the Arbitration proceedings amounting to P7,250.00. The PCHC is hereby directed to debit the clearing account of the BPI the sum of

REQUIRING THE CLEARING GUARANTEE OF COLLECTING BANKS. II CONTRARY TO THE RULING OF THE RESPONDENT COURT, THE PROXIMATE CAUSE FOR THE LOSS OF THE PROCEEDS OF THE TWO CHECKS IN QUESTION WAS THE NEGLIGENCE OF THE EMPLOYEES OF CBC AND NOT BPI; CONSEQUENTLY, EVEN UNDER SECTION 23 OF THE NEGOTIABLE INSTRUMENTS LAW, BPI WAS NOT PRECLUDED FROM RAISING THE DEFENSE OF FORGERY. III THE RESPONDENT COURT COMMITTED REVERSIBLE ERROR IN FAILING TO APPRECIATE THE FACT THAT CBC HAD THE "LAST CLEAR CHANCE" OF AVOIDING THE LOSS OCCASIONED BY THE FRAUDULENT ACTS INVOLVED IN THE INSTANT CASE " (Rollo, p. 24) LLphil The main issues raised in the assignment of errors are: When a bank (in this case CBC) presents checks for clearing and payment, what is the extent of the bank's warranty of the validity of all prior endorsements stamped at the back of the checks? In the event that the payee's signature is forged, may the drawer/drawee bank (in this case BPI) claim reimbursement from the collecting bank [CBC]) which

earlier paid the proceeds of the checks after the same checks were cleared by petitioner BPI through the PCHC? Anent the first issue, petitioner BPI contends that respondent CBC's clear warranty that "all prior endorsements and/or lack of endorsements guaranteed" stamped at the back of the checks was an unrestrictive clearing guaranty that all prior endorsements in the checks are genuine. Under this premise petitioner BPI asserts that the presenting or collecting bank, respondent CBC, had an unquestioned liability when it turned out that the payee's signature on the checks were forged. With these circumstances, petitioner BPI maintains that considerations of relative negligence becomes totally irrelevant. In sum, petitioner BPI theorizes that the Negotiable Instruments Law, specifically Section 23 thereof is not applicable in the light of the absolute liability of the representing or collecting bank as regards forged endorsements in consonance with the clearing guarantee requirement imposed upon the presenting or collecting banks "as it is worded today." Petitioner BPI first returned to CBC the two (2) checks on the ground that "Payee's endorsement (was) forged" an November 12, 1981. At that time the clearing regulation then in force under PCHC's Clearing House Rules and Regulations as revised on September 19, 1980 provides: "Items which have been the subject of material alteration or items bearing a forged endorsement when such endorsement is necessary for negotiation shall be returned within twenty four (24) hours after discovery

of the alteration or the forgery, but in no event beyond the period prescribed by law for the filing of a legal action by the returning bank/branch institution or entity against the bank/branch, institution or entity sending the same." (Section 23) In the case of Banco de Oro Savings and Mortgage Bank v. Equitable Banking Corporation (157 SCRA 188 [1988] the clearing regulation (this is the present clearing regulation) at the time the parties' dispute occurred was as follows: "SECTION 21. . . . . Items which have been the subject of material alteration or items bearing forged endorsement when such endorsement is necessary for negotiation shall be returned by direct presentation or demand to the Presenting Bank and not through the regular clearing house facilities within the period prescribed by law for the filing of a legal action by the returning bank/branch, institution or entity sending the same." It is to be noted that the above-cited clearing regulations are substantially the same in that it allows a return of a check "bearing forged endorsement when such endorsement is necessary for negotiation" even beyond the next regular clearing although not beyond the prescriptive period "for the filing of a legal action by the returning bank." Bearing in mind this similarity in the clearing regulation in force at the time the forged checks in the present case and

the Banco de Oro case were dishonored and returned to the presenting or collecting banks, we can be guided by the principles enunciated in the Banco de Oro case on the relevance of negligence of the drawee vis-a-vis the forged checks. The facts in the Banco de Oro case are as follows: Sometime in March, April, May and August 1983 Equitable Banking Corporation through its Visa Card Department drew six (6) crossed Manager's check with the total amount of Forty Five Thousand Nine Hundred and Eighty Two Pesos and Twenty Three Centavos (P45,982.23) and payable to certain member establishments of Visa Card. Later, the checks were deposited with Banco de Oro to the credit of its depositor, a certain Aida Trencio. Following normal procedures, and after stamping at the back of the checks the endorsements: "All prior and/or lack of endorsements guaranteed" Banco de Oro sent the checks for clearing through the PCHC. Accordingly, Equitable Banking Corporation paid the checks; its clearing amount was debited for the value of the checks and Banco de Oro's clearing account was credited for the same amount. When Equitable Banking Corporation discovered that the endorsements at the back of the checks and purporting to be that of the payees were forged it presented the checks directly to Banco de Oro for reimbursement Banco de Oro refused to reimburse Equitable Banking Corporation for the value of the checks. Equitable Banking Corporation then filed a complaint with the Arbitration Committee of the PCHC. The Arbiter, Atty. Ceasar Querubin, ruled in favor of Equitable Banking Corporation. The Board of Directors of the PCHC affirmed the Arbiter's decision. A petition for review of the decision filed by Banco de Oro with the Regional Trial Court of

Quezon City was dismissed. The decision of the PCHC was affirmed in toto. One of the main issues threshed out in this case centered on the effect of Banco de Oro's (representing or collecting bank) guarantee of "all prior endorsements and/or lack of endorsements" at the back of the checks. A corollary issue was the effect of the forged endorsements of the payees which were later discovered by the Equitable Banking Corporation (drawee bank) resulting in the latter's claim for reimbursement of the value of checks after it paid the proceeds of the checks. LLjur We agreed with the following disquisition of the Regional Trial Court, to wit: "Anent petitioner's liability on said instruments, this court is in full accord with the ruling of the PCHC Board of Directors that: In presenting the checks for clearing and/for payment, the defendant made an express guarantee on the validity of 'all prior endorsements.' Thus, stamped at the back of the checks are the defendant's clear warranty: ALL PRIOR ENDORSEMENTS AND/OR LACK OF ENDORSEMENTS GUARANTEED. Without such warranty, plaintiff would not have paid on the checks. No amount of legal jargon can reverse the clear meaning of defendant's warranty. As the warranty has proven to be false and

inaccurate, the defendant is liable for any damage arising out of the falsity of its representation. The principle of estoppel, effectively prevents the defendant from denying liability for any damage sustained by the plaintiff which, relying upon an action or declaration of the defendant, paid on the checks. The same principle of estoppel effectively prevents the defendant from denying the existence of the checks (pp. 10-11, Decision, pp. 43-44, Rollo)" (at pp 194-195) We also ruled: "Apropos the matter of forgery in endorsements, this Court has presently succinctly emphasized that the collecting bank or last endorser generally suffers the loss because it has the duty to ascertain the genuineness of all prior endorsements considering that the act of presenting the check for payment to the drawee is an assertion that the party making the presentment has done its duty to ascertain the genuineness of the endorsements. This is laid down in the case of PNB v. National City Bank (63 Phil. 1711) In another case, this court held that if the drawee-bank discovers that the signature of the payee was forged after it has paid the amount of the check to the

holder thereof, it can recover the amount paid from the collecting bank.

when it allowed her to collect on the crossedchecks. 'Having accepted the crossed checks from persons other than the payees, the defendant is guilty of negligence; the risk of wrongful payment has to be assumed by the defendant."(Emphasis supplied, at pp. 198202). As can be gleaned from the decision, one of the main considerations in affirming the PCHC's decision was the finding that as between the drawee bank (Equitable Bank) and the representing or collecting bank (Banco de Oro) the latter was negligent and thus responsible for undue payment. Parenthetically, petitioner BPI's theory that the present clearing guarantee requirement imposed on the representing or collecting bank under the PCHC rules and regulations is independent of the Negotiable Instruments Law is not in order. Another reason why the petitioner's theory is uncalled for is the fact that the Negotiable Instruments Law (Act No. 2031) applies to negotiable instruments as defined under section one thereof. Undeniably, the present case involves checks as defined by and under the coverage of the Negotiable Instruments Law. To affirm the theory of the petitioner would, therefore, violate the rule that rules and regulations implementing the law should conform to the law, otherwise the rules and regulations are null and void. Thus, we held in Shell Philippines, Inc. v. Central Bank of the Philippines (162 SCRA 628 [1988]):

xxx xxx xxx The point that comes uppermost is whether the drawee bank wa negligent in failing to discover the alteration or the forgery. (Emphasis supplied) xxx xxx xxx The court reproduces with approval the following disquisition of the PCHC in its decision. xxx xxx xxx 'III. Having Violated Its Warranty On Validity Of All Endorsements, Collective Bank Cannot Deny Liability To Those Who Relied On Its Warranty. xxx xxx xxx 'The damage that will result if judgment is not rendered for the plaintiff is irreparable. The collecting bank has privity with the depositor who is the principal culprit in this case. The defendant knows the depositor; her address and her history. Depositor is defendant's client. It has taken a risk on its depositor

". . . while it is true that under the same law the Central Bank was given the authority to promulgate rules and regulations to implement the statutory provision in question, we reiterate the principle that this authority is limited only to carrying into effect what the law being implemented provides. "In People v. Maceren (79 SCRA 450, 458 and 460), this Court ruled that: Administrative regulations adopted under legislative authority by a particular department must be in harmony with the provisions of the law, and should be for the sole purpose of carrying into effect its general provisions. By such regulations, of course, the law itself cannot be extended. (U.S. v. Tupasi Molina, supra). An administrative agency cannot amend an act of Congress (Santos v. Estenzo, 109 Phil. 419, 422; Teoxon v. Members of the Board of Administrators, L25619, June 30, 1970, 33 SCRA 585; Manuel v. General Auditing Office, L-28952, December 29, 1971, 42 SCRA 660; Deluao v. Casteel, L-21906, August 29, 1969, 29 SCRA 350). The rule-making power must be confined to details for regulating the mode or proceeding to carry into effect the law as it has been enacted. The power cannot be extended to amending or expanding the statutory

requirements or to embrace matters not covered by the statute. Rules that subvert the statute cannot be sanctioned. (University of Santo Tomas v. Board of Tax Appeals, 93 Phil. 376, 382, citing 12 C.J. 845-46. As to invalid regulations, see Collector of Internal Revenue v. Villaflor, 69 Phil. 319; Wise & Co v. Meer, 78 Phil. 655, 676, Del Mar v. Phil. Veterans Administration, L-27299, June 27, 1973, 51 SCRA 340, 349). xxx xxx xxx ". . . The rule or regulation should be within the scope of the statutory authority granted by the legislature to the administrative agency (Davis, Administrative Law, p. 194, 197, cited in Victorias Milling Co., Inc. v. Social Security Commission, 114 Phil. 555, 558). In case of discrepancy between the basic law and a rule or regulation issued to implement said law the basic law prevails because said rule or regulation cannot go beyond the terms and provisions of the basic law (People v. Lim, 108 Phil. 1091)." (at pp. 633-634). Section 23 of the Negotiable Instruments Law states: "When a signature is forged or made without the authority of the person whose signature it purports to be, it is wholly inoperative and no right to retain the instrument, or to give discharge therefore, or to enforce payment

thereof, against any party thereto, can be acquired through or under such forged signature, unless the party against whom it is sought to enforce such right is precluded from setting up the forgery or want of authority." There are two (2) parts of the provision. The first part states the general rule while the second part states the exception to the general rule. The general rule is to the effect that a forged signature is "wholly inoperative", and payment made "through or under such signature" is ineffectual or does not discharge the instrument. The exception to this rule is when the party relying on the forgery is "precluded from setting up the forgery or want of authority." In this jurisdiction we recognize negligence of the party invoking forgery as an exception to the general rule. (See Banco de Oro Savings and Mortgage Bank v. Equitable Banking Corporation supra; Philippine National Bank v. Quimpo, 158 SCRA 582 [1988]; Philippine National Bank v. Court of Appeals, 25 SCRA 693 [1968]; Republic v. Equitable Banking Corporation, 10 SCRA 8 [1964]; National Bank v. National City Bank of New York, 63 Phil. 711 [1936]; San Carlos Milling Co. v. Bank of P.I., 59 Phil. 59 [1933]). In these cases we determined the rights and liabilities of the parties under a forged endorsement by looking at the legal effects of the relative negligence of the parties thereto. In the present petition the payee's names in the two (2) subject checks were forged. Following the general rule, the checks are "wholly inoperative" and of no effect. However, the underlying circumstances of the case show that the general rule on forgery is not applicable. The issue as to who between the parties should bear the loss in the payment of

the forged checks necessitates the determination of the rights and liabilities of the parties involved in the controversy in relation to the forged checks. The records show that petitioner BPI as drawee bank and respondent CBC as representing or collecting bank were both negligent resulting in the encashment of the forged checks. The Arbitration Committee in its decision analyzed the negligence of the employees of petitioner BPI involved in the processing of the pre-termination of Eligia G. Fernando's money market placement and in the issuance and delivery of the subject checks in this wise: "a) The impostor could have been readily unmasked by a mere telephone call, which nobody in BPI bothered to make to Eligia G. Fernando, a vice-president of Philamlife (Annex C, p. 13). b) It is rather curious, too, that the officer who used to handle Eligia G. Fernando's account did not do anything about the account's pretermination (Ibid, p. 13). c) Again no verification appears to have been made by (sic) Eligia G. Fernando's purported signature on the letter requesting the pretermination and the letter authorizing her niece to pick-up the checks, yet, her signature was in BPI's file (Ibid , p. 13).

d) Another step that could have foiled the fraud, but which BPI neglected to take, was requiring before the two checks in controversy were delivered, the surrender of the promissory note evidencing the money market placement that was supposedly preterminated." (Rollo, p. 13) The Arbitration Committee, however, belittled petitioner BPI's negligence compared to that of respondent CBC which it declared as graver and the proximate cause of the loss of the subject checks to the impostor who impersonated Eligia G. Fernando. Petitioner BPI now insists on the adoption of the Arbitration Committee's evaluation of the negligence of both parties, to wit: "a) But what about the lapses of BPI's employees who processed the pretermination of Eligia G. Fernando's placement and issued the checks? We do not think it was a serious lapse not to confirm the telephone request for pretermination purportedly made by Eligia G. Fernando, considering that it is common knowledge that business in the money market is done mostly by telephone. Then, too, the initial request of the caller was for the two checks representing the pretermination proceeds to be delivered to 'her' office, meaning Eligia G. Fernando's office at Philamlife, this clever ruse must have put off guard the employee preparing the 'purchase order slip', enough at least for him to do away

with having to call Eligia G. Fernando at her office (Annex C at p. 17) b) We also do not think it unusual that Penelope Bulan, who used to handle Eligia G. Fernando's account, should do nothing about the request for pretermination and leave it to Eustaquio to process the pretermination In a bank the size of BPI, it would be quite normal for an officer to take over from another the handling of an account. (Ibid, p. 17) c) The failure to verify or compare Eligia G. Fernando's purported signature on the letter requesting the pretermination and the letter authorizing the pick-up of the checks in controversy with her signature in BPI's file showed lack of care and prudence required by the circumstances, although it is doubtful that such comparison would have disclosed the deception considering the 'close similarity' between her purported signature and her signature in BPI's file. (Ibid., p. 17)

d) A significant lapse was, however, committed when the two checks in controversy were delivered without requiring the surrender of the promissory note evidencing the placement that was supposedly preterminated. Although, as we already said, it is hard to determine whether the failure to require the surrender of the promissory note

was a deliberate act of Laderas, the dispatcher, or simply because the 'purchase order slip' note, (sic) the fact remains that such failure contributed to the consummation of the fraud. (Ibid., pp. 17-18) The Arbitration Committee Decision's conclusion was expressed thus 'Except for Laderas, not one of the BPI personnel tasked with the pretermination of Eligia G. Fernando's placement and the issuance of the pretermination checks colluded in the fraud, although there may have been lapses of negligence on their part which we shall discuss later. The secreting out of BPI of Fernando's specimen signature, which, as admitted by the impostor herself (Exhibit E-2; page 5), helped her in forging Fernando's signature was no doubt, an 'inside job' but done by any of the four employees colluding in the fraud, not by the personnel directly charged with the custody of Fernando's records.' (Annex C, p. 15) With respect to the negligence of the CBC employees in the payment of the two (2) BPI cashier's checks involved in this case, the Arbitration Committee's Decision made incontrovertible findings undisputed in the

statement of facts found in the Court of Appeals' decision of 8 August 1991, the Regional Trial Court decision of 28 November 1990 and the PCHC Board of Directors' Order of 26 August 1986 (Annexes A, E, D, respectively). These findings point to negligence of the CBC employees which led to: (a) the opening of the impostor's current account in the name of Eligia G. Fernando; (b) the deposit to said account of the two (2) checks in controversy and (c) the withdrawal of their proceeds from said account. The Arbitration Committee found that 1. Since the impostor presented only her tax account number as a means of identification, we feel that Emily Sylianco Cuaso, Cash Supervisor, approved the opening of her current account in the name of Eligia G. Fernando on the strength of the introduction of Antonio Concepcion who had himself opened an account earlier that year. That Mrs. Cuaso was not comfortable with the introduction of Antonio Concepcion who had himself opened an account earlier that year. That Mrs. Cuaso was not comfortable with the introduction of the new depositor by Concepcion is betrayed by the fact that she made it appear in the application form that the

new depositor was introduced by Valentin Co a long-standing valued client of CBC, who had introduced Concepcion when he opened his account. We find this misrepresentation significant because when she reviewed the application from she assumed that the new client was introduced by Valentin Co as indicated in the application form (tsn of March 19, 1985, page 13). Thus we find that the impostor was able to open with CBC's current account in the name of Eligia G. Fernando due to the negligence, if not misrepresentation, of its Cash Supervisor, (Annex C, p. 18). 2. Even with negligence attending the impostor's opening of a current account, her encashment of the two checks in controversy could still have been prevented if only the care and diligence demanded by the circumstances were exercised. On October 14, 1981, just a day after she opened her account, the impostor deposited the two checks which had an aggregate value of P2,413,215.16, which was grossly disproportionate to her initial deposit of P10,000. The very date of both checks, October 12, 1981, should have tipped off the real purpose of the opening of the account on

October 13, 1981. But what surely can be characterized only as abandonment of caution was allowing the withdrawal of the checks' proceeds which started on October 16, 1981 only two days after the two checks were deposited; by October 22, 1981, the account had been emptied of the checks' proceeds. (Annex C, p. 19). 3. We can not accept CBC's contention that 'big withdrawals' are 'usual business' with it. Huge withdrawals might be a matter of course with an established account but not for a newly opened account, especially since the supposed check proceeds being withdrawn were grossly disproportionate to the initial cash deposit.' (Annex C, p. 19) As intimated earlier, the foregoing findings of fact were not materially disputed either by the respondent PCHC Board of Directors or by the respondent courts (compare statement of facts of respondent court as reproduced in pp. 9-11 of this petition). Having seen the negligence of the employees of both Banks, the relevant question is: which negligence was graver. The Arbitration Committee's Decision found and concluded thus

'Since there were lapses by both BPI and CBC, the question is: whose negligence was the graver and which was the proximate cause of the loss? Even viewing BPI's lapses in the worst light, it can be said that while its negligence may have introduced the two checks in controversy into the commercial stream, CBC's lack of care in approving the opening with it of the impostor's current account, and its allowing the withdrawals of the checks' proceeds, the aggregate value of which was grossly disproportionate to the initial cash deposit, so soon after such checks were deposited, caused the 'payment' of the checks. Being closest to the event of loss, therefore, CBC's negligence must be held to be the proximate cause of the loss.'" (Annex C, pp. 19-20) (Rollo, pp. 38-41) While it is true that the PCHC Board of Directors, and the lower courts did not dispute the findings of facts of the Arbitration Committee, the PCHC Board of Directors evaluated the negligence of the parties, to wit: "The Board finds the ruling that the negligence of the employees of CBC is graver than that of the BPI not warranted by the facts because:

1. The acts and omissions of which BPI employees are guilty are not only negligent but criminal as found by the decision. 2. The act of BPI's dealer-trainee Eustaquio of disclosing information about the money market placement of its client over the telephone is a violation, if not of Republic Act 1405. of Sec. 87 (a) of the General Banking Act which penalizes any officer employee or agent of any banking institution who discloses to any unauthorized person any information relative to the funds or properties in the custody of the bank belonging to private individual, corporations. or any other entity; and the bland excuse given by the decision that 'business in the money market is done mostly by the telephone' cannot be accepted nor tolerated for it is an elementary rule of law that no custom or usage of business can override what a law specifically provides. (Ang Tek Lian v. CA, 87 Phil. 383). 3. The failure of BPI employees to verify or compare Eligia G. Fernando's purported signature on the letter requesting for pretermination and the letter authorizing the pick-up of the checks in controversy with the signatures on file is not even justified but admitted in the decision as showing lack of care and prudence required by the circumstances. The conjectural excuse made in the decision that 'it is doubtful that such

comparison would have disclosed the deception' does not give an excuse for the omission by BPI employees of the act of verifying the signature,a duty which is the basic requirement of all acts in the bank. From the very first time an employee enters the services of a bank up to the time he becomes the highest officer thereof, the cautionary rule is drilled on him to always be sure that when he acts on the basis of any signature presented before him, the signature is to be verified as genuine and that if the bank acts on the basis of a forgery of such signature, the bank will be held liable. There can be no excuse therefore for such an omission on the part of BPI employees. 4. The decision admits that: 'A significant lapse was, however, committed when the two checks in controversy were delivered without requiring the surrender of the promissory note evidencing the placement that was supposedly preterminated.' This omission of the BPI to require the surrender of the promissory notes evidencing the placement is justified by the decision by saying that Sec 74 of the Negotiable Instruments Law is not violated by this omission of the BPI employees because said

provision is intended for the benefit of the person paying (in this case the BPI) so that since the omission to surrender having been waived by BPI, so the non-surrender does not invalidate the payment. The fallacy of this argument is that the issue in this case is: whether or not such non-surrender is a necessary ingredient in the cause of the success of the fraud and not whether or not the payment was valid. This excuse may perhaps be acceptable if the omission did not cause damage to any other person. In this case, however, it did cause tremendous damage. Moreover, this statement obviously overlooks the provision in Art 1240 of the Civil Code requiring the payor (which in this case is the BPI) to be sure he pays to the right person and as Art 1242 states, he can claim good faith in paying to the right person only if he pays to the person in possession of the credit (which in this case is the promissory note evidencing the money market placement). Clearly therefore, the excuse given in the decision for the non-surrender of this promissory note evidencing the money market placement cannot be accepted. xxx xxx xxx "The decision, however, discusses in detail the negligent acts of the CBC in its lapses or certain requirements in the opening of the account and in allowing withdrawals against

the deposited checks soon after the deposit thereof. As stated by the decision however, in computerized banks the history of the account is not shown in the computer terminal whenever a withdrawal is made.

The Board therefore believes that these withdrawals, without any further showing that the CBC employees 'had actual knowledge of the infirmity or defect, or knowledge of such facts' (Sec. 56, Negotiable Instruments Law) that their action in accepting their checks for deposit and allowing the withdrawals against the same 'amounted to bad faith' cannot be considered as basis for holding CBC liable." (Rollo, pp. 107-111) Banks handle daily transactions involving millions of pesos. By the very nature of their work the degree of responsibility, care and trustworthiness expected of their employees and officials is far greater than those of ordinary clerks and employees. For obvious reasons, the banks are expected to exercise the highest degree of diligence in the selection and supervision of their employees. In the present case, there is no question that the banks were negligent in the selection and supervision of their employees. The Arbitration Committee, the PCHC Board of Directors and the lower courts, however disagree in the evaluation of the degree of negligence of the banks. While the Arbitration Committee declared the negligence of

respondent CBC graver, the PCHC Board of Directors and the lower courts declared that petitioner BPI's negligence was graver. To the extent that the degree of negligence is equated to the proximate cause of the loss, we rule that the issue as to whose negligence is graver is relevant. No matter how many justifications both banks present to avoid responsibility, they cannot erase the fact that they were both guilty in not exercising extraordinary diligence in the selection and supervision of their employees. The next issue hinges on whose negligence was the proximate cause of the payment of the forged checks by an impostor. Petitioner BPI accuses the Court of Appeals of inconsistency when it affirmed the PCHC's Board of Directors' Order but in the same breath declared that the negligent acts of the CBC employees occurred immediately before the actual loss. In this regard petitioner BPI insists that the doctrine of last clear chance enunciated in the case of Picart v. Smith (37 Phil. 809 [1918]) should have been applied considering the circumstances of the case. In the Picart case, Amado Picart was then riding on his pony over the Carlatan Bridge at San Fernando, La Union when Frank Smith approached from the opposite direction in a car. As Smith neared the bridge he saw Picart and blew his horn to give warning of his approach. When he was already on the bridge Picart gave two more successive blasts as it appeared to him that Picart was not observing the rule of the road Picart saw the car coming and heard the warning signals. An accident then ensued resulting in the death of the horse and physical injuries suffered by Picart which caused

him temporary unconsciousness and required medical attention for several days. Thereafter, Picart sued Smith for damages. We ruled: "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 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 no 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 to 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 excited 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 eyes 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 reasonable care and caution which an ordinarily prudent person would have used in the same situation? If not, then he is guilty of negligence. xxx xxx xxx 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." Applying these principles, petitioner BPI's reliance on the doctrine of last clear chance to clear it from liability is not well-taken. CBC had no prior notice of the fraud perpetrated by BPI's employees on the pretermination of Eligia G. Fernando's money market placement. Moreover, Fernando is not a depositor of CBC. Hence, a comparison of the signature of Eligia G. Fernando with that of the impostor Eligia G. Fernando, which respondent CBC did, could not have resulted in the discovery of the fraud. Hence, unlike in the Picart case wherein the defendant, had he used reasonable care and caution, would have recognized the risk he was taking and would have foreseen harm to the horse and the plaintiff but did not, respondent CBC had no way to discover the fraud at all. In fact the records fail to show that respondent CBC had knowledge, actual or implied, of the fraud perpetrated by the impostor and the employees of BPI. However, petitioner BPI insists that even if the doctrine of proximate cause is applied, still, respondent CBC should be held responsible for the payment to the impostor of the two (2) checks. It argues that the acts and omissions of respondent CBC are the cause "that set into motion the actual and continuous sequence of events that produced the injury and without which the result would not have

occurred." On the other hand, it asserts that its acts and omissions did not end in a loss. Petitioner BPI anchors its argument on its stance that there was "a gap, a hiatus, an interval between the issuance and delivery of said checks by petitioner BPI to the impostor and their actual payment of CBC to the impostor. Petitioner BPI points out that the gap of one (1) day that elapsed from its issuance and delivery of the checks to the impostor is material on the issue of proximate cause. At this stage, according to petitioner BPI, there was yet no loss and the impostor could have decided to desist from completing the same plan and could have held to the checks without negotiating them. We are not persuaded. In the case of Vda. de Bataclan, et al. v. Medina (102 Phil. 181 [1957]), we had occasion to discuss the doctrine of proximate cause. Briefly, the facts of this case are as follows: At about 2:00 o'clock in the morning of September 13, 1952 a bus carrying about eighteen (18) passengers on its way to Amadeo, Cavite figured in an accident. While the bus was running, one of the front tires burst and the bus began to zigzag until it fell into a canal on the right side of the road and turned turtle. Some passengers managed to get out from the overturned bus except for four (4) passengers, among them, Bataclan. The passengers who got out heard shouts for help from Bataclan and another passenger Lara who said they could not get out from the bus. After half an hour, about ten men came, one of them carrying a lighted torch made of bamboo with a wick on one end fueled with petroleum. These men approached the overturned bus, and

almost immediately, a fierce fire started burning and all but consuming the bus including the four (4) passengers trapped inside. It turned out that as the bus overturned, gasoline began to leak and escape from the gasoline tank on the side of the chassis spreading over and permeating the body of the bus and the ground under and around it. The lighted torch brought by one of the men who answered the call for help set it on fire. On the same day, the charred bodies of the trapped passengers were removed and identified. By reason of his death, Juan Bataclan's wife and her children filed a suit for damages against Maximo Medina, the operator and owner of the bus in the then Court of First Instance of Cavite. The trial court ruled in favor of the defendant. However, we reversed and set aside the trial court's decision and said: "There is no question that under the circumstances, the defendant carrier is liable. The only question is to what degree. The trial court was of the opinion that the proximate cause of the death of Bataclan was not the overturning of the bus, but rather the fire that burned the bus, including himself and his copassengers who were unable to leave it; that at the time the fire started, Bataclan, though he must have suffered physical injuries, perhaps serious, was still alive and so damages were awarded, not for his death, but for the physical injuries suffered by him. We disagree. A satisfactory definition of proximate cause is found in Volume 38, pages 695-696 of American Jurisprudence, cited by

plaintiffs-appellants in their brief. It is as follows:

'. . . that cause, which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces the injury, and without which the result would not have occurred. And more comprehensively, 'the proximate legal cause is that acting first and producing the injury, either immediately or by setting other events in motion, all constituting a natural and continuous chain of events, each having a close causal connection with its immediate predecessor, the final event in the chain immediately effecting the injury as natural and probable result of the cause which first acted, under such circumstances that the person responsible for the first event should, as an ordinarily prudent and intelligent person, have reasonable ground to expect at the moment of his act or default that an injury to some person might probably result therefrom.' It may be that ordinarily, when a passenger bus overturns, and pins down a passenger, merely causing him physical injuries, if through some event, unexpected and

extraordinary, the overturned bus is set on fire, say, by lightning, or if some highwaymen after looting the vehicle sets it on fire, and the passenger is burned to death, one might still contend that the proximate cause of his death was the fire and not the overturning of the vehicle. But in the present case and under the circumstances obtaining in the same, we do not hesitate to hold that the proximate cause of the death of Bataclan was the overturning of the bus, this for the reason that when the vehicle turned not only on its side but completely on its back, the leaking of the gasoline from the tank was not unnatural or unexpected; that the coming of the men with a lighted torch was in response to the call for help, made not only by the passengers, but most probably, by the driver and the conductor themselves, and that because it was very dark (about 2:30 in the morning), the rescuers had to carry a light with them; and coming as they did from a rural area where lanterns and flashlights were not available, they had to use a torch, the most handy and available; and what was more natural than that said rescuers should innocently approach the overturned vehicle to extend the aid and effect the rescue requested from them. In other words, the coming of the men with the torch was to be expected and was natural sequence of the overturning of the bus, the trapping of some of its passengers bus, the trapping of

some of its passengers and the call for outside help." (Emphasis supplied, at pp. 185-187) Again, applying the doctrine of proximate cause, petitioner BPI's contention that CBC alone should bear the loss must fail. The gap of one (1) day between the issuance and delivery of the checks bearing the impostor's name as payee and the impostor's negotiating the said forged checks by opening an account and depositing the same with respondent CBC is not controlling. It is not unnatural or unexpected that after taking the risk of impersonating Eligia G. Fernando with the connivance of BPI's employees, the impostor would complete her deception by encashing the forged checks. There is, therefore, greater reason to rule that the proximate cause of the payment of the forged checks by an impostor was due to the negligence of petitioner BPI. This finding, notwithstanding, we are not inclined to rule that petitioner BPI must solely bear the loss of P2,413,215.16, the total amount of the two (2) forged checks. Due care on the part of CBC could have prevented any loss. The Court cannot ignore the fact that the CBC employees closed their eyes to the suspicious circumstances of huge over-the-counter withdrawals made immediately after the account was opened. The opening of the account itself was accompanied by inexplicable acts clearly showing negligence. And while we do not apply the last clear chance doctrine as controlling in this case, still the CBC employees had ample opportunity to avoid the harm which befell both CBC and BPI. They let the opportunity slip by when the ordinary prudence expected of bank employees would have sufficed to seize it.

Both banks were negligent in the selection and supervision of their employees resulting in the encashment of the forged checks by an impostor. Both banks were not able to overcome, the presumption of negligence in the selection and supervision of their employees. It was the gross negligence of the employees of both banks which resulted in the fraud and the subsequent loss. While it is true that petitioner BPI's negligence may have been the proximate cause of the loss, respondent CBC's negligence contributed equally to the success of the impostor in encashing the proceeds of the forged checks. Under these circumstances, we apply Article 2179 of the Civil Code to the effect that while respondent CBC may recover its losses, such losses are subject to mitigation by the courts (See Phoenix Construction, Inc. v. Intermediate Appellate Court, 148 SCRA 353 [1987]). Considering the comparative negligence of the two (2) banks, we rule that the demands of substantial justice are satisfied by allocating the loss of P2,413,215.16 and the costs of the arbitration proceedings in the amount of P7,250.00 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. WHEREFORE, the questioned DECISION and RESOLUTION of the Court of Appeals are MODIFIED as outlined above. Petitioner Bank of the Philippine Islands shall be responsible for sixty percent (60%) while respondent China Banking Corporation shall share forty percent (40%) of the loss of TWO MILLION FOUR HUNDRED THIRTEEN THOUSAND, TWO HUNDRED FIFTEEN PESOS and SIXTEEN CENTAVOS

(P2,413,215.16) and the arbitration costs of SEVEN THOUSAND, TWO HUNDRED FIFTY PESOS (P7,250.00). The Philippine Clearing House Corporation is hereby directed to effect the corresponding entries to the banks' clearing accounts in accordance with this decision. Costs in the same proportion against the Bank of the Philippine Islands and the China Banking Corporation. SO ORDERED. Bidin, Davide, Jr., Romero and Melo, JJ ., concur.