ENTRIES IN THE COURSE OF BUSINESS

1. EMMANUEL B. AZNAR vs. CITIBANK, N.A., (Philippines) (2007)

Before this Court is a Petition for Review assailing the Decision 1 of the Court of Appeals (CA) in CA-G.R. CV No. 62554
dated January 30, 2004 which set aside the November 25, 1998 Order of the Regional Trial Court (RTC) Branch 10, Cebu
City and reinstated the Decision of RTC Branch 20 of Cebu City dated May 29, 1998 in Civil Case No. CEB-16474; and
the CA Resolution dated May 26, 2004 denying petitioners motion for reconsideration.
The facts are as follows:
Emmanuel B. Aznar (Aznar), a known businessman 2 in Cebu, is a holder of a Preferred Master Credit Card (Mastercard)
bearing number 5423-3920-0786-7012 issued by Citibank with a credit limit of P150,000.00. As he and his wife, Zoraida,
planned to take their two grandchildren, Melissa and Richard Beane, on an Asian tour, Aznar made a total advance deposit
of P485,000.00 with Citibank with the intention of increasing his credit limit toP635,000.00.3
With the use of his Mastercard, Aznar purchased plane tickets to Kuala Lumpur for his group worth P237,000.00. On July
17, 1994, Aznar, his wife and grandchildren left Cebu for the said destination. 4
Aznar claims that when he presented his Mastercard in some establishments in Malaysia, Singapore and Indonesia, the
same was not honored.5 And when he tried to use the same in Ingtan Tour and Travel Agency (Ingtan Agency) in
Indonesia to purchase plane tickets to Bali, it was again dishonored for the reason that his card was blacklisted by
Citibank. Such dishonor forced him to buy the tickets in cash. 6 He further claims that his humiliation caused by the denial
of his card was aggravated when Ingtan Agency spoke of swindlers trying to use blacklisted cards. 7 Aznar and his group
returned to the Philippines on August 10, 1994.8
On August 26, 1994, Aznar filed a complaint for damages against Citibank, docketed as Civil Case No. CEB-16474 and
raffled to RTC Branch 20, Cebu City, claiming that Citibank fraudulently or with gross negligence blacklisted his
Mastercard which forced him, his wife and grandchildren to abort important tour destinations and prevented them from
buying certain items in their tour.9 He further claimed that he suffered mental anguish, serious anxiety, wounded feelings,
besmirched reputation and social humiliation due to the wrongful blacklisting of his card. 10 To prove that Citibank
blacklisted his Mastercard, Aznar presented a computer print-out, denominated as ON-LINE AUTHORIZATIONS
FOREIGN ACCOUNT ACTIVITY REPORT, issued to him by Ingtan Agency (Exh. "G") with the signature of one
Victrina Elnado Nubi (Nubi)11 which shows that his card in question was "DECL OVERLIMIT" or declared over the
limit.12
Citibank denied the allegation that it blacklisted Aznars card. It also contended that under the terms and conditions
governing the issuance and use of its credit cards, Citibank is exempt from any liability for the dishonor of its cards by
any merchant affiliate, and that its liability for any action or incident which may be brought against it in relation to the
issuance and use of its credit cards is limited to P1,000.00 or the actual damage proven whichever is lesser.13
To prove that they did not blacklist Aznars card, Citibanks Credit Card Department Head, Dennis Flores, presented
Warning Cancellation Bulletins which contained the list of its canceled cards covering the period of Aznars trip. 14
On May 29, 1998, RTC Branch 20, Cebu City, through Judge Ferdinand J. Marcos, rendered its decision dismissing
Aznars complaint for lack of merit.15 The trial court held that as between the computer print-out 16presented by Aznar and
the Warning Cancellation Bulletins17 presented by Citibank, the latter had more weight as their due execution and
authenticity were duly established by Citibank.18 The trial court also held that even if it was shown that Aznars credit card
was dishonored by a merchant establishment, Citibank was not shown to have acted with malice or bad faith when the
same was dishonored.19
Aznar filed a motion for reconsideration with motion to re-raffle the case saying that Judge Marcos could not be impartial
as he himself is a holder of a Citibank credit card. 20 The case was re-raffled21 and on November 25, 1998, the RTC, this
time through Judge Jesus S. De la Pea of Branch 10 of Cebu City, issued an Order granting Aznars motion for
reconsideration, as follows:

WHEREFORE, the Motion for Reconsideration is hereby GRANTED. The DECISION dated May 29, 1998 is hereby
reconsidered, and consequently, the defendant is hereby condemned liable to pay the following sums of money:
a) P10,000,000.00 as moral damages;
b) P5,000,000.00 as exemplary damages;
c) P1,000,000.00 as attorneys fees; and
d) P200,000.00 as litigation expenses.22
Judge De la Pea ruled that: it is improbable that a man of Aznars stature would fabricate Exh. "G" or the computer printout which shows that Aznars Mastercard was dishonored for the reason that it was declared over the limit; Exh. "G" was
printed out by Nubi in the ordinary or regular course of business in the modern credit card industry and Nubi was not able
to testify as she was in a foreign country and cannot be reached by subpoena; taking judicial notice of the practice of
automated teller machines (ATMs) and credit card facilities which readily print out bank account status, Exh. "G" can be
received as prima facie evidence of the dishonor of Aznars Mastercard; no rebutting evidence was presented by Citibank
to prove that Aznars Mastercard was not dishonored, as all it proved was that said credit card was not included in the
blacklisted cards; when Citibank accepted the additional deposit of P485,000.00 from Aznar, there was an implied
novation and Citibank was obligated to increase Aznars credit limit and ensure that Aznar will not encounter any
embarrassing situation with the use of his Mastercard; Citibanks failure to comply with its obligation constitutes gross
negligence as it caused Aznar inconvenience, mental anguish and social humiliation; the fine prints in the flyer of the
credit card limiting the liability of the bank to P1,000.00 or the actual damage proven, whichever is lower, is a contract of
adhesion which must be interpreted against Citibank. 23
Citibank filed an appeal with the CA and its counsel filed an administrative case against Judge De la Pea for grave
misconduct, gross ignorance of the law and incompetence, claiming among others that said judge rendered his decision
without having read the transcripts. The administrative case was held in abeyance pending the outcome of the appeal filed
by Citibank with the CA.24lawphi1.net
On January 30, 2004, the CA rendered its Decision granting Citibanks appeal thus:
WHEREFORE, the instant appeal is GRANTED. The assailed order of the Regional Trial Court, 7th Judicial Region,
Branch 10, Cebu City, in Civil Case No. CEB-16474, is hereby SET ASIDE and the decision, dated 29 May 1998 of the
Regional Trial Court, 7th Judicial Region, Branch 20, Cebu City in this case is REINSTATED.
SO ORDERED.25
The CA ruled that: Aznar had no personal knowledge of the blacklisting of his card and only presumed the same when it
was dishonored in certain establishments; such dishonor is not sufficient to prove that his card was blacklisted by
Citibank; Exh. "G" is an electronic document which must be authenticated pursuant to Section 2, Rule 5 of the Rules on
Electronic Evidence26 or under Section 20 of Rule 132 of the Rules of Court27 by anyone who saw the document executed
or written; Aznar, however, failed to prove the authenticity of Exh. "G", thus it must be excluded; the unrefuted testimony
of Aznar that his credit card was dishonored by Ingtan Agency and certain establishments abroad is not sufficient to justify
the award of damages in his favor, absent any showing that Citibank had anything to do with the said dishonor; Citibank
had no absolute control over the actions of its merchant affiliates, thus it should not be held liable for the dishonor of
Aznars credit card by said establishments. 28
Aznar filed a motion for reconsideration which the CA dismissed in its Resolution dated May 26, 2004. 29
Parenthetically, the administrative case against Judge De la Pea was activated and on April 29, 2005, the Courts Third
Division30 found respondent judge guilty of knowingly rendering an unjust judgment and ordered his suspension for six
months. The Court held that Judge De la Pea erred in basing his Order on a manifestation submitted by Aznar to support
his Motion for Reconsideration, when no copy of such manifestation was served on the adverse party and it was filed
beyond office hours. The Court also noted that Judge De la Pea made an egregiously large award of damages in favor of
Aznar which opened himself to suspicion.31

Aznar now comes before this Court on a petition for review alleging that: the CA erroneously made its own factual
finding that his Mastercard was not blacklisted when the matter of blacklisting was already a non-issue in the November
25, 1998 Order of the RTC; the RTC found that Aznars Mastercard was dishonored for the reason that it was declared
over the credit limit; this factual finding is supported by Exh. "G" and by his (Aznars) testimony; the issue of dishonor on
the ground of DECL OVERLIMIT, although not alleged in the complaint, was tried with the implied consent of the
parties and should be treated as if raised in the pleadings pursuant to Section 5, Rule 10 of the Rules of Civil
Procedure;32 Exh. "G" cannot be excluded as it qualifies as an electronic evidence following the Rules on Electronic
Evidence which provides that print-outs are also originals for purposes of the Best Evidence Rule; Exh. "G" has remained
complete and unaltered, apart from the signature of Nubi, thus the same is reliable for the purpose for which it was
generated; the RTC judge correctly credited the testimony of Aznar on the issuance of the computer print-out as Aznar
saw that it was signed by Nubi; said testimony constitutes the "other evidence showing the integrity and reliability of the
print-out to the satisfaction of the judge" which is required under the Rules on Electronic Evidence; the trial court was
also correct in finding that Citibank was grossly negligent in failing to credit the additional deposit and make the
necessary entries in its systems to prevent Aznar from encountering any embarrassing situation with the use of his
Mastercard.33
Citibank, in its Comment, contends that: Aznar never had personal knowledge that his credit card was blacklisted as he
only presumed such fact; the issue of dishonor on the ground that the card was declared over the limit was also never tried
with the implied consent of both parties; Aznars self-serving testimony is not sufficient to prove the integrity and
reliability of Exh. "G"; Aznar did not declare that it was Nubi who printed the document and that said document was
printed in his presence as he merely said that the print-out was provided him; there is also no annotation on Exh. "G" to
establish that it was Nubi who printed the same; assuming further that Exh. "G" is admissible and Aznars credit card was
dishonored, Citibank still cannot be held liable for damages as it only shows that Aznars credit card was dishonored for
having been declared over the limit; Aznars cause of action against Citibank hinged on the alleged blacklisting of his card
which purportedly caused its dishonor; dishonor alone, however, is not sufficient to award Aznar damages as he must
prove that the dishonor was caused by a grossly negligent act of Citibank; the award of damages in favor of Aznar was
based on Article 117034 of the Civil Code, i.e., there was fraud, negligence or delay in the performance of its obligation;
there was no proof, however that Citibank committed fraud or delay or that it contravened its obligations towards Aznar;
the terms and conditions of the credit card cannot be considered as a contract of adhesion since Aznar was entirely free to
reject the card if he did not want the conditions stipulated therein; a person whose stature is such that he is expected to be
more prudent with respect to his transactions cannot later on be heard to complain for being ignorant or having been
forced into merely consenting to the contract.35
In his Reply, Aznar contended that to a layman, the term "blacklisting" is synonymous with the words "hot list" or
"declared overlimit"; and whether his card was blacklisted or declared over the limit, the same was dishonored due to the
fault or gross negligence of Citibank.36
Aznar also filed a Memorandum raising as issues the following:
I. Whether or not the augmentation deposit in the amount of P485,000.00 of the Petitioner constitutes relative
extinctive novation;
II. Whether or not the purchases made by Petitioner were beyond his credit limit;
III. Whether or not the issues of dishonor by reason of overlimit was tried with the consent of the parties;
IV. Whether or not the "On Line Authorization Report" is an electronic document."
V. Whether or not the "On Line Authorization Report" constitutes electronic evidence;
VI. Whether or not the agreement between the parties is a contract of adhesion;
VII. Whether or not the Respondent is negligent in not crediting the deposits of the Respondent. 37
Aznar further averred in his Memorandum that Citibank assured him that with the use of his Mastercard, he would never
be turned down by any merchant store, and that under Section 43, Rule 130 of the Rules of Court, Exh. "G" is admissible
in evidence.38
Citibank also filed a Memorandum reiterating its earlier arguments. 39
Stripped to its essentials, the only question that needs to be answered is: whether Aznar has established his claim against
Citibank.

The answer is no.

It is basic that in civil cases, the burden of proof rests on the plaintiff to establish his case based on a preponderance of
evidence. The party that alleges a fact also has the burden of proving it. 40
In the complaint Aznar filed before the RTC, he claimed that Citibank blacklisted his Mastercard which caused its
dishonor in several establishments in Malaysia, Singapore, and Indonesia, particularly in Ingtan Agency in Indonesia
where he was humiliated when its staff insinuated that he could be a swindler trying to use a blacklisted card.
As correctly found by the RTC in its May 29, 1998 Decision, Aznar failed to prove with a preponderance of evidence that
Citibank blacklisted his Mastercard or placed the same on the "hot list." 41
Aznar in his testimony admitted that he had no personal knowledge that his Mastercard was blacklisted by Citibank and
only presumed such fact from the dishonor of his card.
Q Now, paragraph 12 also states and I quote: "its entry in the "hot" list was confirmed to be authentic".
Now, who confirmed that the blacklisting of your Preferred Citibank Mastercard was authentic?
A. Okey. When I presented this Mastercard, my card rather, at the Merchants store, I do not know, they called up
somebody for verification then later they told me that "your card is being denied". So, I am not in a position to answer
that. I do not know whom they called up; where they verified. So, when it is denied thats presumed to be blacklisted.
Q. So the word that was used was denied?
A. Denied.
Q. And after you were told that your card was denied you presumed that it was blacklisted?
A. Definitely.
Q. So your statement that your card was allegedly blacklisted is only your presumption drawn from the fact, from
your allegations, that it was denied at the merchandise store?
A. Yes, sir.42 (Emphasis supplied)
The dishonor of Aznars Mastercard is not sufficient to support a conclusion that said credit card was blacklisted by
Citibank, especially in view of Aznars own admission that in other merchant establishments in Kuala Lumpur and
Singapore, his Mastercard was accepted and honored. 43
Aznar puts much weight on the ON-LINE AUTHORIZATION FOREIGN ACCOUNT ACTIVITY REPORT, a computer
print-out handed to Aznar by Ingtan Agency, marked as Exh. "G", to prove that his Mastercard was dishonored for being
blacklisted. On said print-out appears the words "DECL OVERLIMIT" opposite Account No. 5423-3920-0786-7012.
As correctly pointed out by the RTC and the CA, however, such exhibit cannot be considered admissible as its
authenticity and due execution were not sufficiently established by petitioner.
The prevailing rule at the time of the promulgation of the RTC Decision is Section 20 of Rule 132 of the Rules of Court. It
provides that whenever any private document offered as authentic is received in evidence, its due execution and
authenticity must be proved either by (a) anyone who saw the document executed or written; or (b) by evidence of the
genuineness of the signature or handwriting of the maker.
Aznar, who testified on the authenticity of Exh. "G," did not actually see the document executed or written, neither was he
able to provide evidence on the genuineness of the signature or handwriting of Nubi, who handed to him said computer
print-out. Indeed, all he was able to allege in his testimony are the following:
Q I show to you a Computer Print Out captioned as On Line Authorization Activity Report where it is shown that the
Preferred Master Card Number 5423392007867012 was denied as per notation on the margin of this Computer Print Out,
is this the document evidencing the dishonor of your Preferred Master Card?

xxxx
A Yes sir, after that Ingtan incident, I went straight to the Service Agency there and on the left hand side you will be able
to see the name of the person in-charged [sic] there certifying that really my card is being blacklisted and there is the
signature there of the agency.
ATTY. NAVARRO:
The witness, your honor, is pointing to the signature over the handwritten name of Victrina Elnado Nubi which I pray,
your honor, that the Computer Print Out be marked as our Exhibit "G" and the remarks at the left hand bottom portion of
Victorina Elnado Nubi with her signature thereon be encircled and be marked as our Exhibit "G-1".
xxxx
Q Mr. Aznar, where did you secure this Computer Print Out marked as Exhibit "G"?
A This is provided by that Agency, your honor. They were the ones who provided me with this. So what the lady
did, she gave me the Statement and I requested her to sign to show proof that my Preferred Master Card has been
rejected.44 (Emphasis supplied).
Even if examined under the Rules on Electronic Evidence, which took effect on August 1, 2001, and which is being
invoked by Aznar in this case, the authentication of Exh. "G" would still be found wanting.
Pertinent sections of Rule 5 read:
Section 1. Burden of proving authenticity. The person seeking to introduce an electronic document in any legal
proceeding has the burden of proving its authenticity in the manner provided in this Rule.
Section 2. Manner of authentication. Before any private electronic document offered as authentic is received in
evidence, its authenticity must be proved by any of the following means:
(a) by evidence that it had been digitally signed by the person purported to have signed the same;
(b) by evidence that other appropriate security procedures or devices as may be authorized by the Supreme Court
or by law for authentication of electronic documents were applied to the document; or
(c) by other evidence showing its integrity and reliability to the satisfaction of the judge.
Aznar claims that his testimony complies with par. (c), i.e., it constitutes the "other evidence showing integrity and
reliability of Exh. "G" to the satisfaction of the judge." The Court is not convinced. Aznars testimony that the person
from Ingtan Agency merely handed him the computer print-out and that he thereafter asked said person to sign the same
cannot be considered as sufficient to show said print-outs integrity and reliability. As correctly pointed out by Judge
Marcos in his May 29, 1998 Decision, Exh. "G" does not show on its face that it was issued by Ingtan Agency as Aznar
merely mentioned in passing how he was able to secure the print-out from the agency; Aznar also failed to show the
specific business address of the source of the computer print-out because while the name of Ingtan Agency was mentioned
by Aznar, its business address was not reflected in the print-out. 45
Indeed, Aznar failed to demonstrate how the information reflected on the print-out was generated and how the said
information could be relied upon as true. In fact, Aznar to repeat, testified as follows:
ATTY. NERI
Q Now, paragraph 12 also states and I quote: "its entry in the "hot" list was confirmed to be authentic"
Now, who confirmed that the blacklisting of your Preferred Citibank Mastercard was authentic?

A Okey. When I presented this Mastercard, my card rather, at the Merchants store, I do not know, they called up
somebody for verification then later they told me that "your card is being denied". So, I am not in a position to answer
that. I do not know whom they called up; where they verified. So, when it is denied thats presumed to be
blacklisted.46 (Emphasis supplied)
Aznar next invokes Section 43 of Rule 130 of the Rules of Court, which pertains to entries in the course of business, to
support Exh. "G". Said provision reads:
Sec. 43. Entries in the course of business. Entries made at, or near the time of the transactions to which they refer, by a
person deceased or unable to testify, who was in a position to know the facts therein stated, may be received as prima
facie evidence, if such person made the entries in his professional capacity or in the performance of duty and in the
ordinary or regular course of business or duty.
Under this rule, however, the following conditions are required:
1. the person who made the entry must be dead, or unable to testify;
2. the entries were made at or near the time of the transactions to which they refer;
3. the entrant was in a position to know the facts stated in the entries;
4. the entries were made in his professional capacity or in the performance of a duty, whether legal, contractual,
moral or religious; and
5. the entries were made in the ordinary or regular course of business or duty. 47
As correctly pointed out by the RTC in its May 29, 1998 Decision, there appears on the computer print-out the name of a
certain "Victrina Elnado Nubi" and a signature purportedly belonging to her, and at the left dorsal side were handwritten
the words "Sorry for the delay since the records had to be retrieved. Regards. Darryl Mario." It is not clear therefore if it
was Nubi who encoded the information stated in the print-out and was the one who printed the same. The handwritten
annotation signed by a certain Darryl Mario even suggests that it was Mario who printed the same and only handed the
print-out to Nubi. The identity of the entrant, required by the provision above mentioned, was therefore not established.
Neither did petitioner establish in what professional capacity did Mario or Nubi make the entries, or whether the entries
were made in the performance of their duty in the ordinary or regular course of business or duty.
And even if Exh. "G" is admitted as evidence, it only shows that the use of the credit card of petitioner was denied
because it was already over the limit. There is no allegation in the Complaint or evidence to show that there was gross
negligence on the part of Citibank in declaring that the credit card has been used over the limit.
The Court is also perplexed that stated on Exh. "G" is the amount of "6,289,195.10" opposite petitioner's account number,
which data, petitioner did not clarify.48 As plaintiff in this case, it was incumbent on him to prove that he did not actually
incur the said amount which is above his credit limit. As it is, the Court cannot see how Exh. "G" could help petitioner's
claim for damages.
The claim of petitioner that Citibank blacklisted his card through fraud or gross negligence is likewise effectively negated
by the evidence of Citibank which was correctly upheld by the RTC and the CA, to wit:
xxx Mr. Dennis Flores, the Head of the Credit Card Department of defendant Bank, presented documents known as
Warning Cancellation Bulletin for July 10, 17, 24, and 31, 1994 (Exhibits 3, 3-1 to 3-38, 4, 4-1 to 4-38 5, 5-1
to 5-39 and 6, 6-1 to 6-39), for August 7, 1994 (Exhibit[s] 7, 7-1 to 7-37), for August 8, 1994 (Exhibit[s] 8,
8-1 to 8-20) which show that plaintiffs Citibank preferred mastercard was not placed in a hot list or was not
blacklisted.
The Warning Cancellation Bulletins (WCB) (Exhibits 3, 4, 5, 6, 7, 8 and their submarkings) which covered the
period of four (4) days in July 1994 (from July 10, 17, 24 and 31, 1994), and two (2) days in August 1994, (August 7 and
8, 1994), when plaintiff traveled in the aforementioned Asian countries showed that said Citibank preferred mastercard
had never been placed in a hot list or the same was blacklisted, let alone the fact that all the credit cards which had been
cancelled by the defendant bank were all contained, reported and listed in said Warning Cancellation Bulletin which were
issued and released on a regular basis.

These three hundred (300) Warning Cancellation Bulletins pieces of documentary proofs, all in all, adduced by defendant
pointed to the fact that said plaintiffs credit car (sic) was not among those found in said bulletins as having been
cancelled for the period for which the said bulletins had been issued.
Between said computer print out (Exhibit G) and the Warning Cancellation Bulletins (Exhibits 3 to 8 and their
submarkings) the latter documents adduced by defendant are entitled to greater weight than that said computer print out
presented by plaintiff that bears on the issue of whether the plaintiffs preferred master card was actually placed in the hot
list or blacklisted for the following reasons:
The first reason is that the due execution and authentication of these Warning Cancellation Bulletins (or WCB) have been
duly established and identified by defendants own witness, Dennis Flores, one of the banks officers, who is the head of
its credit card department, and, therefore, competent to testify on the said bulletins as having been issued by the defendant
bank showing that plaintiffs preferred master credit card was never blacklisted or placed in the Banks hot list. But on
the other hand, plaintiffs computer print out (Exhibit G) was never authenticated or its due execution had never been
duly established. Thus, between a set of duly authenticated commercial documents, the Warning Cancellation Bulletins
(Exhibits 3 to 8 and their submarkings), presented by defendants (sic) and an unauthenticated private document,
plaintiffs computer print out (Exhibit G), the former deserves greater evidentiary weight supporting the findings of this
Court that plaintiffs preferred master card (Exhibit 1) had never been blacklisted at all or placed in a so-called hot list
by defendant.49
Petitioner next argues that with the additional deposit he made in his account which was accepted by Citibank, there was
an implied novation and Citibank was under the obligation to increase his credit limit and make the necessary entries in its
computerized systems in order that petitioner may not encounter any embarrassing situation with the use of his credit card.
Again, the Court finds that petitioner's argument on this point has no leg to stand on.
Citibank never denied that it received petitioners additional deposit. 50 It even claimed that petitioner was able to purchase
plane tickets from Cebu to Kuala Lumpur in the amount of P237,170.00, which amount was beyond hisP150,000.00 limit,
because it was able to credit petitioners additional deposit to his account. Flores of Citibank testified:
COURT:
Q When was this ticket purchased, after the account was augmented
or before?
A After the account was augmented, Your Honor, because there is no way we can approve a P250,000.00 purchase with a
P150,000.00 credit limit.51
xxx
ATTY. NERI:
For the record, your honor, the deposit of P450,000.00 was made as per exhibit of the plaintiff on June 28. The
purchase of the tickets amount to P237,000.00 was approved and debited on the account of Mr. Aznar on July 20,
your honor. The deposit was made about a month before the purchase of the tickets as per documentary exhibits,
your honor.
COURT:
So, Atty. Navarro, what do you say to that explanation?
ATTY. NAVARRO [counsel of petitioner]:
That is correct, your honor, that is borne out by the records, your honor. (Emphasis supplied)

COURT: (to witness)

Q So, I think Atty. Navarro is only after whether a credit line could be extended?
A Yes, your honor.
Q Even if there is no augmenting?
A No, sir, it is not possible. So, the only way the P237,000.00 transaction could be approved was by way of advance
payment which actually happened in this case because there is no way that the P237,000.00 can be approved with
the P150,000.00 credit limit.52 (Emphasis supplied)
The allegations of blacklisting not having been proved, is Citibank liable for damages for the dishonor of Aznars
Mastercard?
Again, the answer is no.
Citibank, in its attempt to evade liability, invokes paragraphs 7 and 15 of the terms and conditions governing the issuance
of its Mastercard which read:
7. MERCHANT AFFILIATES. [Citibank is] not responsible if the Card is not honored by any merchant affiliate for any
reason. Furthermore, [the cardholder] will not hold [Citibank] responsible for any defective product or service purchased
through the Card.
xxxx
15. LIMITATION OF LIABILITY. In any action arising from this agreement or any incident thereto which [the
cardholder] or any other party may file against [Citibank], [Citibanks] liability shall not exceed One Thousand Pesos
[P1,000.00] or the actual damages proven, whichever is lesser.53
On this point, the Court agrees with Aznar that the terms and conditions of Citibanks Mastercard constitute a contract of
adhesion. It is settled that contracts between cardholders and the credit card companies are contracts of adhesion, socalled, because their terms are prepared by only one party while the other merely affixes his signature signifying his
adhesion thereto.54
In this case, paragraph 7 of the terms and conditions states that "[Citibank is] not responsible if the Card is not honored by
any merchant affiliate for any reason x x x". While it is true that Citibank may have no control of all the actions of its
merchant affiliates, and should not be held liable therefor, it is incorrect, however, to give it blanket freedom from liability
if its card is dishonored by any merchant affiliate for any reason. Such phrase renders the statement vague and as the said
terms and conditions constitute a contract of adhesion, any ambiguity in its provisions must be construed against the party
who prepared the contract,55 in this case Citibank.
Citibank also invokes paragraph 15 of its terms and conditions which limits its liability to P1,000.00 or the actual damage
proven, whichever is lesser.
Again, such stipulation cannot be considered as valid for being unconscionable as it precludes payment of a larger amount
even though damage may be clearly proven. This Court is not precluded from ruling out blind adherence to the terms of a
contract if the attendant facts and circumstances show that they should be ignored for being obviously too one-sided. 56
The invalidity of the terms and conditions being invoked by Citibank, notwithstanding, the Court still cannot award
damages in favor of petitioner.
It is settled that in order that a plaintiff may maintain an action for the injuries of which he complains, he must establish
that such injuries resulted from a breach of duty which the defendant owed to the plaintiff a concurrence of injury to the
plaintiff and legal responsibility by the person causing it. The underlying basis for the award of tort damages is the

premise that an individual was injured in contemplation of law; thus there must first be a breach before damages may be
awarded and the breach of such duty should be the proximate cause of the injury. 57
It is not enough that one merely suffered sleepless nights, mental anguish or serious anxiety as a result of the actuations of
the other party. It is also required that a culpable act or omission was factually established, that proof that the wrongful act
or omission of the defendant is shown as the proximate cause of the damage sustained by the claimant and that the case is
predicated on any of the instances expressed or envisioned by Arts. 2219 58 and 222059 of the Civil Code.60
In culpa contractual or breach of contract, moral damages are recoverable only if the defendant has acted fraudulently or
in bad faith, or is found guilty of gross negligence amounting to bad faith, or in wanton disregard of his contractual
obligations. The breach must be wanton, reckless, malicious or in bad faith, oppressive or abusive. 61
While the Court commiserates with Aznar for whatever undue embarrassment he suffered when his credit card was
dishonored by Ingtan Agency, especially when the agencys personnel insinuated that he could be a swindler trying to use
blacklisted cards, the Court cannot grant his present petition as he failed to show by preponderance of evidence that
Citibank breached any obligation that would make it answerable for said suffering.
As the Court pronounced in BPI Express Card Corporation v. Court of Appeals,62
We do not dispute the findings of the lower court that private respondent suffered damages as a result of the cancellation
of his credit card. However, there is a material distinction between damages and injury. Injury is the illegal invasion of a
legal right; damage is the loss, hurt, or harm which results from the injury; and damages are the recompense or
compensation awarded for the damage suffered. Thus, there can be damage without injury to those instances in which the
loss or harm was not the result of a violation of a legal duty. In such cases, the consequences must be borne by the injured
person alone, the law affords no remedy for damages resulting from an act which does not amount to a legal injury or
wrong. These situations are often called damnum absque injuria.63
WHEREFORE, the petition is denied for lack of merit.
2. NESTLE PHILIPPINES, INC. vs. FY SONS, INCORPORATED (2006)
This is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the decision 1 of the Court of
Appeals (CA) in CA-G.R. CV No. 57299 dated January 11, 2001 which in turn affirmed with modification the decision of
Branch 57 of the Regional Trial Court (RTC) of Makati City in Civil Case No. 90-3169, 2 as well as the CAs
resolution3 dated November 14, 2001 which denied petitioners motion for reconsideration.
The antecedent facts follow.
Petitioner is a corporation engaged in the manufacture and distribution of all Nestle products nationwide. Respondent, on
the other hand, is a corporation engaged in trading, marketing, selling and distributing food items to restaurants and food
service outlets. On December 23, 1998, petitioner and respondent entered into a distributorship agreement (agreement)
whereby petitioner would supply its products for respondent to distribute to its food service outlets. A deed of assignment
was also executed by respondent in favor of petitioner on December 13, 1988, assigning the time deposit of a certain
Calixto Laureano in the amount of P500,000 to secure respondents credit purchases from petitioner. A special power of
attorney was likewise executed by Laureano authorizing the respondent to use the time deposit as collateral.
The areas covered by the agreement were Baguio, Dagupan, Angeles, Bulacan, Pampanga, Urdaneta, La Union, Tarlac
and Olongapo. At the end of 1989, the agreement expired and the parties executed a renewal agreement on January 22,
1990. A supplemental agreement was executed on June 27, 1990, to take effect on July 1, 1990.
On July 2, 1990, petitioner fined respondent P20,000 for allegedly selling 50 cases of Krem-Top liquid coffee creamer to
Lu Hing Market, a retail outlet in Tarlac. This was purportedly proscribed by the agreement. Respondent paid the fine. In
September 1990, Krem-Top liquid coffee creamer was sold to Augustus Bakery and Grocery, an act again allegedly in
violation of the agreement. Petitioner imposed a P40,000 fine which respondent refused to pay.

On October 19, 1990, respondent, through counsel, wrote petitioner to complain about the latters breaches of their
agreement and the various acts of bad faith committed by petitioner against respondent. Respondent demanded the
payment of damages. In turn, on November 5, 1990, petitioner sent respondent a demand letter and notice of termination,
alleging that the latter had outstanding accounts of P995,319.81. When the alleged accounts were not settled, petitioner
applied the P500,000 time deposit as partial payment.
Respondent filed a complaint for damages against petitioner, alleging bad faith. 4 According to respondent:
[petitioner] made representations and promises of rendering support, including marketing support, assignment of
representatives by way of assistance in its development efforts, and assurances of income in a marketing area not
previously developed. Thus, [respondent] was lured into executing a distributorship agreement with the [petitioner].
[Respondent] thereby invested huge sums of money, time and efforts to abide by such distributorship agreement, and to
develop market areas for [petitioners] products. Thereafter, the [petitioner] breached the distributorship agreement by
committing various acts of bad faith such as: failing to provide promotional support; deliberately failing to promptly
supply the [respondent] with the stocks for its orders; intentionally diminishing the [respondents] sales by supporting a
non-distributor; and concocting falsified charges to cause the termination of the distributorship agreement without just
cause. By such termination, [petitioner] would be able to obtain the market gains made by [respondent] at the latters own
efforts and expenses. When [respondent] complained to [petitioner] about the latters acts of bad faith, the latter
terminated the agreement on the allegation that [respondent] did not pay its accounts. [Petitioner] also seized
[respondents] time deposit collateral without basis; penalized [respondent] with monetary penalty for the concocted
charge; and unilaterally suspended the supply of stocks to [respondent]. 5
Respondent sought actual damages of P1,000,000, moral damages of P200,000, exemplary damages ofP100,000,
attorneys fees of P100,000, plus the return of the P500,000 time deposit and costs of suit. In its answer, petitioner
interposed a counterclaim for P495,319.81 representing the balance of respondents overdue accounts, with interest of 2%
per month from the date of default until fully paid, moral damages of P100,000, exemplary damages of P200,000,
attorneys fees of P120,000 and costs of suit.
In a decision dated November 10, 1997, the Makati City RTC ruled in favor of the respondent:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and against the defendant
ordering the defendant to pay plaintiff the following:
1. The amount of P1,000,000.00 as actual damages sustained by the plaintiff by reason of the unwarranted and
illegal acts of the defendant in terminating the distributorship agreement;
2. The amount of P100,000.00 as exemplary damages;
3. The amount of P100,000.00 as attorneys fees;
The plaintiff however, is hereby ordered to pay the defendant the amount of P53,214,26 (sic) which amount has been
established as the amount the defendant is entitled from the plaintiff.
Three-fourths costs against the defendant.
.
SO ORDERED.6
Petitioner appealed the decision to the CA. On January 11, 2001, the CA rendered a decision affirming the RTCs decision
with modification:
WHEREFORE, the judgment appealed from is AFFIRMED with the following MODIFICATIONS: (1) the actual
damages is INCREASED from P1,000,000.00 to P1,500,000.00;7 and (2) the amount of P53,214.26 payable by the
appellee to the appellant is DELETED.

SO ORDERED.8
Both the CA and the RTC found, among others, that petitioner indeed failed to provide support to respondent, its
distributor; that petitioner unjustifiably refused to deliver stocks to respondent; that the imposition of the P20,000 fine was
void for having no basis; that petitioner failed to prove respondents alleged outstanding obligation; that petitioner
terminated the agreement without sufficient basis in law or equity and in bad faith; and that petitioner should be held
liable for damages.
Hence this petition raising the following grounds:
(1)
THE [CA] COMMITTED A GRAVE ERROR IN LAW WHEN IT RULED THAT: "THE RATIOCINATIONS OF THE
APPELLANT AS TO THE APPELLEES ALLEGED VIOLATION OF THE CONTRACT ARE THUS WEAK AND
UNCONVINCING" AND "THE APPELLEES ALLEGED NON-PAYMENT AND OUTSTANDING BALANCE
OF P995,319.81 WAS NOT SUFFICIENTLY PROVEN" DESPITE THE FACT THAT FLORENTINO YUE, JR., THE
MANAGER OF THE RESPONDENT ADMITTED IN OPEN COURT IN ANSWER TO THE QUESTION OF THEN
PRESIDING JUDGE PHINNY C. ARAQUIL THAT THE DISTRIBUTORSHIP AGREEMENT WAS TERMINATED
BY YOUR PETITIONER BECAUSE OF THE UNPAID BALANCE OF THE RESPONDENT OF
AROUND P900,000.00.
(2)
THE [CA] COMMITTED A GRAVE ERROR IN LAW IN DISREGARDING THE TESTIMONY OF THE WITNESS
FOR THE PETITIONER, CRISTINA RAYOS WHO PREPARED THE STATEMENT OF ACCOUNT (EXHIBIT 11)
ON THE GROUNDS THAT SHE WAS NOT INVOLVED IN THE DELIVERY AS SHE WAS ONLY IN CHARGE OF
THE RECORDS AND DOCUMENTS OF ALL ACCOUNTS RECEIVABLES AS PART OF HER DUTIES AS CREDIT
AND COLLECTION MANAGER CONSIDERING THAT THE EVIDENCE PRESENTED WAS AN EXCEPTION TO
THE HEARSAY RULE UNDER SECTION 45 (SIC), RULE 130, OF THE REVISED RULES ON EVIDENCE.
(3)
THE [CA] COMMITTED A GRAVE ERROR IN LAW IN AWARDING TO THE RESPONDENT ACTUAL DAMAGES
IN THE AMOUNT OF P1,000,000.00 AND ORDERING THE REFUND OF THE AMOUNT OFP500,000.00
REPRESENTING THE TIME DEPOSIT OF THE RESPONDENT WHICH WAS ASSIGNED AS SECURITY FOR THE
RESPONDENTS CREDIT LINE BECAUSE THE PETITIONER HAD THE RIGHT TO TERMINATE THE
DISTRIBUTORSHIP AGREEMENT UNDER ART. 1191 OF THE CIVIL CODE AND PARAGRAPHS 5 AND 22 OF
THE DISTRIBUTORSHIP AGREEMENT BECAUSE OF THE FAILURE OF THE RESPONDENT TO SETTLE ITS
ACCOUNT IN THE AMOUNT OF P995,319.81 AND THAT THE EVIDENCE SUBMITTED BY THE RESPONDENT
ON THE ALLEGED ACTUAL DAMAGES IT SUSTAINED AS A RESULT OF THE TERMINATION OF THE
DISTRIBUTORSHIP AGREEMENT (EXHIBIT 5) AND COMPANION EXHIBITS WERE MERELY SPECULATIVE
AND DID NOT HAVE PROBATIVE VALUE.
(4)
THE [CA] COMMITTED A GRAVE ERROR IN LAW FOR NOT AWARDING TO THE PETITIONER ITS
COUNTERCLAIM.9
On the first issue, petitioner asserts that respondents witness, Florentino Yue, Jr., a director and officer of respondent
corporation, admitted in open court that the respondent had an unpaid obligation to petitioner in the amount of
"around P900,000."10
Respondent counters that this statement was merely in answer to the question of the presiding judge on what ground
petitioner supposedly terminated the agreement. The witness was not being asked, nor was he addressing, the truth of such

ground. In fact, this witness later testified that "(petitioner) wrote us back saying that they (had) terminated my contract
and that I owe(d) them something like P900,000."11
Petitioners argument is palpably without merit and deserves scant consideration. It quoted Mr. Yues statement in
isolation from the rest of his testimony and took it out of context. Obviously, Yues statement cannot be considered a
judicial admission that respondent had an unpaid obligation of P900,000 and that the agreement had been terminated for
this reason.
On the second issue, petitioner argues that the CA should not have disregarded the testimony of petitioners witness,
Cristina Rayos, who prepared the statement of account on the basis of the invoices and delivery orders corresponding to
the alleged overdue accounts of respondent.12 The CA ruled that petitioner was not able to prove that respondent indeed
had unpaid accounts, saying, among others, that the testimony of Rayos constituted incompetent evidence:
xxx the appellees alleged non-payment and outstanding balance of P995,319.81 was not sufficiently proven.
xxx xxx xxx
Anyway, the appellants Statement of Account showing such alleged unpaid balance is undated, and it does not show
receipt thereof by the appellee, and when, if such indeed was received. Moreover, there are no supporting documents to
sustain such unpaid accounts. The witness for the appellant who prepared the Statement, Cristina Rayos, in fact admitted
that the Invoices corresponding to the alleged overdue accounts are not signed. Her explanation was that there were DOs
or Delivery Orders covering the transactions. However, she did not identify the signatures appearing on the Delivery
Orders marked as Exhibits "13-A", "14-A", "15-A" and "16-A" as the persons who received the goods for the appellant. In
any case, she could not have identified the same, for she was not involved in the delivery, as she is only in charge of the
records and documents on all accounts receivables as part of her duties as Credit and Collection Manager. 13
Petitioner contends that the testimony of Rayos was an exception to the hearsay rule under Section 43, Rule 130 of the
Rules of Court:14
Entries in the course of business. Entries made at, or near the time of the transactions to which they refer, by a person
deceased, or unable to testify, who was in a position to know the facts therein stated, may be received asprima
facie evidence, if such person made the entries in his professional capacity or in the performance of duty and in the
ordinary or regular course of business or duty.1avvphil.net
Petitioners contention has no merit.
The provision does not apply to this case because it does not involve entries made in the course of business. Rayos
testified on a statement of account she prepared on the basis of invoices and delivery orders which she, however, knew
nothing about. She had no personal knowledge of the facts on which the accounts were based since, admittedly, she was
not involved in the delivery of goods and was merely in charge of the records and documents of all accounts receivable as
part of her duties as credit and collection manager.15 She thus knew nothing of the truth or falsity of the facts stated in the
invoices and delivery orders, i.e., whether such deliveries were in fact made in the amounts and on the dates stated, or
whether they were actually received by respondent. She was not even the credit and collection manager during the period
the agreement was in effect.16 This can only mean that she merely obtained these documents from another without any
personal knowledge of their contents.
The foregoing shows that Rayos was incompetent to testify on whether or not the invoices and delivery orders turned over
to her correctly reflected the details of the deliveries made. Thus, the CA correctly disregarded her testimony.
Furthermore, the invoices and delivery orders presented by petitioner were self-serving. Having generated these
documents, petitioner could have easily fabricated them. Petitioners failure to present any competent witness to identify
the signatures and other information in those invoices and delivery orders cast doubt on their veracity.
Petitioner next argues that respondent did not deny during the trial that it received the goods covered by the invoices and
was therefore deemed to have admitted the same. 17 This argument cannot be taken seriously. From the very beginning,

respondents position was that petitioner concocted falsified charges of non-payment to justify the termination of their
agreement.18 In no way could respondent be deemed to have admitted those deliveries.
On the third issue, petitioner questions the award of actual damages in the amount of P1,000,000 and the refund of
the P500,000 time deposit, contending that it validly terminated the agreement because of respondents failure to pay its
overdue accounts.
As discussed above, the CA declared that petitioner was not able to prove that respondent had unpaid accounts, thus
debunking the claim of a valid termination. The CA also held petitioner guilty of various acts which violated the
provisions of the agreement.19 Consequently, for petitioners breach of the agreement, the CA awarded actual damages to
respondent in the amount of P1,000,000. Petitioner, other than claiming that it validly terminated the agreement, did not
challenge the findings of the CA that it committed various violations of the agreement. Hence, there was legal basis for
the grant of actual damages.
Petitioner asserts that the documentary evidence presented by respondent to prove actual damages in the amount
of P4,246,015.60 should not have been considered because respondents complaint only prayed for an award
of P1,000,000. It further contends that the court acquires jurisdiction over the claim only upon payment of the prescribed
docket fee.20
Indeed, a court acquires jurisdiction over the claim of damages upon payment of the correct docket fees. 21 In this case, it is
not disputed that respondent paid docket fees based on the amounts prayed for in its complaint. Respondent adduced
evidence to prove its losses. It was proper for the CA and the RTC to consider this evidence and award the sum
of P1,000,000. Had the courts below awarded a sum more than P1,000,000, which was the amount prayed for, an
additional filing fee would have been assessed and imposed as a lien on the judgment. 22However, the courts limited their
award to the amount prayed for.
Both the RTC and CA found that respondent had satisfactorily proven the factual bases for the damages adjudged against
the petitioner. This is a factual matter binding and conclusive upon this Court. 23 It is well-settled that
. . . findings of fact of the trial court, when affirmed by the Court of Appeals, are binding upon the Supreme Court. This
rule may be disregarded only when the findings of fact of the Court of Appeals are contrary to the findings and
conclusions of the trial court, or are not supported by the evidence on record. But there is no ground to apply this
exception to the instant case. This Court will not assess all over again the evidence adduced by the parties particularly
where as in this case the findings of both the trial court and the Court of Appeals completely coincide. 24
Likewise, the determination of the amount of damages commensurate with the factual findings upon which it is based is
primarily the task of the trial court.25 Considering that the amount adjudged is not excessive, we affirm its correctness.
Moreover, given that petitioner was not able to prove that respondent had unpaid accounts in the amount ofP995,319.81,
the seizure of the P500,000 time deposit was improper. As a result, the refund of this amount with interest is also called
for.
Finally, petitioners counterclaims are necessarily without merit. It failed to prove the alleged outstanding accounts of
respondent. Accordingly, it is not entitled to the supposed unpaid balance of P495,319.81 with interest.
Petitioner, being at fault and in bad faith, and there being no proof that respondent was guilty of any wrongdoing, cannot
claim moral and exemplary damages and attorneys fees from respondent.
In fine, we find no error in the assailed decision and resolution of the CA. We therefore affirm them.
WHEREFORE, the petition is hereby DENIED for lack of merit. The decision of the Court of Appeals dated January 11,
2001 and resolution dated November 14, 2001 in CA-G.R. CV No. 57299 are hereby AFFIRMED.
3. G.R. No. 150464

June 27, 2006

SECURITY BANK AND TRUST COMPANY, Petitioner,

vs.
ERIC GAN, Respondent.
DECISION
CORONA, J.:
This petition for review on certiorari1 seeks the reversal of the decision2 of the Court of Appeals (CA) dated October 18,
2001 in CA-G.R. CV No. 45701, the dispositive portion of which read:
WHEREFORE, finding no reversible error therefrom, the Decision now on appeal is hereby AFFIRMED in toto.
SO ORDERED.3
The factual antecedents follow.
Petitioner Security Bank and Trust Company is a banking institution duly organized and existing under the laws of the
Philippines. In 1981, respondent Eric Gan opened a current account with petitioner at its Soler Branch in Santa Cruz,
Manila. Petitioner alleged that it had an agreement with respondent wherein the latter would deposit an initial amount in
his current account and he could draw checks on said account provided there were sufficient funds to cover them.
Furthermore, under a special arrangement with petitioners branch manager then, Mr. Qui, 4respondent was allowed to
transfer funds from his account to another persons account also within the same branch. 5 Respondent availed of such
arrangement several times by depositing checks in his account and even before they cleared, he withdrew the proceeds
thereof and transferred them to the other account. These transactions were covered by what were known as "debit memos"
since respondent had no sufficient funds to cover the amounts he transferred. 6
Later on, respondent purportedly incurred an overdraft or negative balance in his account. As of December 14, 1982, the
overdraft balance came up to P153,757.78. According to petitioner, respondent refused to heed petitioners repeated
demands for payment. For the period December 14, 1982 to September 15, 1990, the total obligation of respondent
reached P297,060.01, inclusive of interest.7
Thus, in 1991, petitioner filed a complaint for sum of money against respondent to recover the P297,060.01 with 12%
interest per annum from September 16, 1990 until fully paid, attorneys fees, litigation expenses and costs of suit. The
case was docketed as Civil Case No. 91-55605 with the Regional Trial Court of Manila, Branch 13. 8
Respondent denied liability to petitioner for the said amount. He contended that the alleged overdraft resulted from
transactions done without his knowledge and consent.
In a decision dated March 31, 1993, the trial court dismissed the complaint. It held that petitioner was not able to prove
that respondent owed it the amount claimed considering that the ledger cards it presented were merely hearsay evidence.
On petitioners appeal, the CA affirmed the trial courts decision.
Hence, this petition anchored on the following grounds:
I. The honorable Court of Appeals erred in not ruling that petitioner has sufficiently proved its cause of action
against respondent; and that the ledger cards and the testimony of Mr. Patricio Mercado constituted the best
evidence of the transactions made by the respondent relative to his account.
II. The honorable Court of Appeals erred in not applying the principle of estoppel against respondent who has
benefited from the special arrangement accorded to him by petitioner which resulted in an overdraft / negative
balance.
III. The honorable Court of Appeals erred in affirming the decision of the trial court. 9

We deny the petition for lack of merit.

It is well established that under Rule 45 of the Rules of Court, only questions of law, not of fact, may be raised before the
Supreme Court. It must be stressed that this Court is not a trier of facts and it is not its function to re-examine and weigh
anew the respective evidence of the parties. Factual findings of the trial court, especially those affirmed by the CA, are
conclusive on this Court when supported by the evidence on record. 10
Here, both the trial court and the CA found that petitioner failed to substantiate its claim that respondent knowingly
incurred an overdraft against his account. We see no reason to disturb this finding.
To prove its claim, petitioner presented Patricio Mercado who was the bookkeeper who handled the account of respondent
and recorded his transactions in a ledger. Based on this ledger, respondent allegedly had a negative balance
of P153,757.78. This resulted from transfers of funds from respondents current account to another persons account.
These transfers were made under the authority of Qui. 11 Respondent categorically denied that he ever authorized these
"funds transfers."12
The entries in the ledger, as testified to by Mercado, were not competent evidence to prove that respondent consented to
the transfers of funds. These entries merely showed that the transfers were indeed made and that Qui approved them.
Petitioners claim that respondent availed of a special arrangement to transfer funds from his account to another persons
account was a bare allegation that was never substantiated. Admittedly, Mercado had no personal knowledge of this
arrangement.13 In fact, when asked about the details of the alleged consent given by respondent to the transfers, he stated
that he could not remember because respondent talked to Qui and not to him. 14 Petitioner could have presented Qui whom
they alleged allowed the special arrangement with respondent. But it did not.
Neither can we accept petitioners argument that the entries made by Mercado in the ledger were competent evidence to
prove how and when the negative balance was incurred. Petitioner invokes Section 43 of Rule 130:
Entries in the course of business. Entries made at, or near the time of the transactions to which they refer, by a person
deceased, or unable to testify, who was in a position to know the facts therein stated, may be received asprima
facie evidence, if such person made the entries in his professional capacity or in the performance of duty and in the
ordinary or regular course of business or duty.
Under this exception to the hearsay rule, the admission in evidence of entries in corporate books required the satisfaction
of the following conditions:
1. the person who made the entry must be dead, or unable to testify;
2. the entries were made at or near the time of the transactions to which they refer;
3. the entrant was in a position to know the facts stated in the entries;
4. the entries were made in his professional capacity or in the performance of a duty, whether legal, contractual,
moral or religious; and
5. the entries were made in the ordinary or regular course of business or duty. 15
The ledger entries did not meet the first and third requisites.
Mercado, petitioners bookkeeper who prepared the entries, was presented to testify on the transactions pertaining to the
account of respondent. It was in the course of his testimony that the ledger entries were presented. There was, therefore,
neither justification nor necessity for the presentation of the entries as the person who made them was available to testify
in court.16

Moreover, Mercado had no personal knowledge of the facts constituting the entries, particularly those entries which
resulted in the negative balance. He had no knowledge of the truth or falsity of these entries. We agree entirely with the
following discussion of the trial court which was affirmed by the CA:
The plaintiff submits that the ledger cards constituted the best evidence of the transactions made by the defendant with the
bank relative to his account, pursuant to Section 43 of Rule 130 of the Revised Rules on Evidence. There is no question
that the entries in the ledgers were made by one whose duty it was to record transactions in the ordinary or regular course
of the business. But for the entries to be prima facie evidence of the facts recorded, the Rule interpose[s] a very important
condition, one which we think is truly indispensable to the probative worth of the entries as an exception to the hearsay
rule, and that is that the entrant must be "in a position to know the facts therein stated." Undeniably, Mr. Mercado was in a
position to know the facts of the check deposits and withdrawals. But the transfers of funds through the debit memos in
question?
Let us be clear, at the outset, what the transactions covered by the debit memos are. They are, at bottom, credit
accommodations said to have been granted by the banks branch manager Mr. [Q]ui to the defendant, and they are,
therefore loans, to prove which competent testimonial or documentary evidence must be presented. In the fac[e] of the
denial by the defendant of the existence of any such agreement, and the absence of any document reflecting it, the
testimony of a party to the transaction, i.e., Mr. [Q]ui, or of any witness to the same, would be necessary. The plaintiff
failed to explain why it did not or could not present any party or witness to the transactions, but even if it had a reason
why it could not, it is clear that the existence of the agreements cannot be established through the testimony of Mr.
Mercado, for he was [not in] a position to [know] those facts. As a subordinate, he could not have done more than record
what was reported to him by his superior the branch manager, and unless he was allowed to be privy to the latters
dealings with the defendant, the information that he received and entered in the ledgers was incapable of being confirmed
by him.
There is good reason why evidence of this nature is incorrigibly hearsay. Entries in business records which spring from
the duty of other employees to communicate facts occurring in the ordinary course of business are prima facie admissible,
the duty to communicate being itself a badge of trustworthiness of the entries, but not when they purport to record what
were independent agreements arrived at by some bank officials and a client. In this case, the entries become mere casual
or voluntary reports of the official concerned. To permit the ledgers, prepared by the bank at its own instance, to substitute
the contract as proof of the agreements with third parties, is to set a dangerous precedent. Business entries are allowed as
an exception to the hearsay rule only under certain conditions specified in Section 43, which must be scrupulously
observed to prevent them from being used as a source of undue advantage for the party preparing them. 17 (citations
omitted)
Thus, petitioner did not prove that respondent had incurred a negative balance in his account. Consequently, there was
nothing to show that respondent was indebted to it in the amount claimed.lavvphil.net
Petitioners next argument is that respondent was estopped from denying the claim of petitioner since he benefited from
the special arrangement accorded to him resulting in the negative balance. This must likewise fail. The so-called special
arrangement was never established. In addition, there was no evidence that respondent benefited from it. As held by the
CA:
The trial court satisfactorily explained the reason for not applying the principle of estoppel against defendant-appellee. As
held by the trial court:
"There is no scope here for the application of estoppel against the defendant-appellee, since it was not established that he
had ever received copies of the ledgers, and therefore given the opportunity to review the correctness of the entries. As we
see it, the case of the [plaintiff suffers from its failure to document its] transactions with its clients, and it is hardly right to
close our eyes to that infirmity at the expense of the defendant-appellee."
The temporary overdraft allegedly accorded by plaintiff-appellant to defendant-appellee has not benefited the defendantappellee in any manner. The 3 debit memos amounting to P150,000.00 appearing on defendant-appellees ledger consisted
of fund transfers from and not to defendant-appellees account. The transfers resulted [in] the benefit of other accounts,
not that of defendant-appellee.18

In view of the foregoing, the CA did not err in affirming the decision of the trial court.
WHEREFORE, the petition is hereby DENIED. The assailed decision of the Court of Appeals dated October 18, 2001 in
CA-G.R. CV No. 45701 is AFFIRMED in toto.
Costs against petitioner.
SO ORDERED.

OFFICIAL RECORDS
1. G.R. No. L-48727 September 30, 1982
PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
JOSEPH LEONES y DUCUSIN alias JESSIE, defendant-appellant.

GUERRERO, J.:
This is an appeal from the decision of the Court of First Instance of La Union, Branch I, convicting the accusedappellant, Joseph Leones y Ducusin, of the crime of rape charged in the following information, to wit:
The undersigned offended party after having been duly sworn to an oath in accordance with law
hereby accuses JOSEPH LEONES y DUCUSIN alias Jessie of the crime of RAPE, committed as
follows:
That on or about the 22nd day of April, 1973, in the Municipality of San Fernando, Province of La
Union, Philippines, and within the jurisdiction of this Honorable Court, said accused Joseph Leones
y Ducusin alias Jessie, by means of violence and use of force compelled the offended party to
swallow tablets and consequently thereafter while she fell into semi-consciousness the said accused
wilfully, unlawfully and feloniously have carnal knowledge of the complainant Irene Dulay against
her will in the house of the accused.
CONTRARY TO LAW, with the aggravating circumstance of abuse of confidence.
San Fernando, La Union, May 8,1973.
(SGD.) IRENE DULAY Offended Party
WITH MY CONFORMITY:
(SGD.) GAUDENCIO DULAY
(Father of the Offended Party)
and sentencing him to suffer the penalty of reclusion perpetua and to pay the cost.
The facts are narrated in the People's brief as follows:

Complainant Irene Dulay was a salesgirl employed in the store of Mr. & Mrs. Pepito Leones at San
Fernando, La Union where she resided.
On April 22, 1973, the complainant who had headache stayed in her room. Earlier that day, the
members of the Leones family, including the accused-appellant Joseph Leones and his sister
Elizabeth, had gone to nearby beach resort for a picnic.
At about past noon the appellant and Elizabeth returned to their house. While there, the appellant
and Elizabeth entered the room where complainant was lying down and forced her to take three
tablets dissolved in a spoon which according to them were aspirin. The complainant refused to take
the tablets but was forced to do so when the appellant held her mouth while his sister pushed the
medicine. Then the appellant and Elizabeth left the room and after a while the complainant felt
dizzy.
Later, the appellant returned to the complainant's room and took of her panty. Then the appellant
went on top of her. The complainant tried to push him but as she was weak and dizzy, the appellant
succeeded in abusing her (pp. 2-8,15-16, tsn, June 27, 1975).
At about 4:30 P.M. of the same date, Natividad Leones, the stepmother of the appellant, found the
complainant unconscious near her room without any panty on. She was then taken to the La Union
Provincial Hospital by the driver of the Leones family (pp. 3-5, tsn, June 10, 1976).
When admitted to the hospital at about 6:00 P.M. of the same date (April 22, 1973), the
complainant was semiconscious, incoherent and hysterical. She refused to talk and to be examined
by the doctors. She was irritated when approached by a male figure (Exhibit "B", Records, pp. 280281). The complainant was first attended to by Dr. Antonino Estioco who found out that she had
vaginal bleeding (Exhibit "2", Records, p. 786). The complainant was then referred to Dr. Fe Cayao
who was informed by Dr. Estioco that she might have been a victim of rape (p. 28, tsn, May 15,
1974). In the presence of the complainant's father, Dr. Cayao examined her on April 26, 1973 after
which she issued a medical certificate with the following findings:
1. Presence of erythema of the vestibular portion of external genitalia;
2. Healing lacerations of the hymen at 2 o'clock and 10 o'clock;
3. Easily admit one finger with pain;
4. Unclotted blood at the vaginal cavity;
5. Smear exam for sperm cell-negative;
6. D'plococci-negative
7. Florence test-reagent not available.
(Exhibit "A", Records, p. 3).
Because of the lack of facilities in the hospital, Dr. Cayao was not able to make any examination to
determine whether drug was given to the complainant. (pp. 23- 24, tsn, May 15, 1974. 1
The accused-appellant denied the charge imputed to him, claiming that at the time of the alleged rape between 2:00
o'clock and 3:00 o'clock p.m. on April 22, 1973, he was at the beach resort with the other members of the family,
namely his sister Elizabeth, his stepmother Natividad Leones, his younger brothers and sisters named Marivic,
Theresa, Carol, Pinky and Bongbong together with other companions, for a picnic and had lunch thereat,
swimming and picture-taking.

As indicated earlier, the trial court, holding that "viewed from all legal aspects of this case, in the light of the
recorded evidence, ... is fully convinced that the crime of rape charged in the criminal complaint was committed by
the accused. The evidence presented by the prosecution is not only clear and convincing but has established the
guilt of the accused beyond reasonable doubt."
From this sentence, the accused appeals to Us, strongly submitting that the trial court erred in finding him guilty of
the crime charged since the evidence presented against him did not prove his guilt beyond reasonable doubt.
At the outset, We note a number of significant facts from the recorded evidence of the prosecution which materially
and substantially debunks and derails the theory of the Government and correspondingly impresses considerable
merit to the defense.
1. The clinical case record of Irene Dulay's admission and confinement at the Provincial Hospital of La Union,
marked Exhibit "2", contain entries which totally and completely belle the claim of the complainant that she was
raped by the accused in the afternoon of April 22, 1973. The same is reproduced hereunder:
LA UNION PROVINCIAL HOSPITAL
San Fernando, La Union
CLINICAL CASE RECORD
Fiscal
Yr.:
1973

Physician
:

Physician
:

Adm.
No.:
275

Admitted
by:

File
No.
or
Rec.
No.

Approved
by:

Dept.

Dr.
Estioco

Ped.:

City
Free:

Surg.:

Transient
free:

Obs.:
Classif.

Govt.
free;

Med.:

Prvt.
free:

EENT:

Hosp.
pay:

C.U.

Off.
Hosp.
pay:

Dental:

Off.
Prvt.
pay:

Name of Patient: Irene Dulay

Maiden name: ____________________
Residence: San Fernando, La Union
In case of accident or death notify Natividad Leones, (employer)
Charge Hosp. Acct. to: _______________________________________
Age: 16 yrs. Single: Married; Widowed: Nationality Fil.
Admitted: 6:00 P.M. 4-22-1973 Assgd PR: I Bed by Dr. Estioco
Transf: P.M.____19____ to Dept: PR Ward #: ______ Bed # ______
Complaints: Vaginal bleeding
Diagnosis in full:
Healing lacerated wide at 2 o'clock and 10 o'clock hymen.
Resul
ts:

Rec.:

Dispositi
on:,

Disch
:

Imprv:

Disd:

Unimpr
ov:

Abco
nd:

3:
45
P.
M
.

Died:

Trans
f
Hosp.

512
73

Operation: _____________________________________
Anesthesia: _____________________________________
History written by: APPROVED:
(SGD.) ESTIOCO (unintelligible)
(Resident Physician) Dept. Head
The entry written in the above clinical record when Irene Dulay was admitted under the item "Complaints" reads:
Vaginal Bleeding, and below this entry appears the Diagnosis-Healing lacerated wide at 2 o'clock and 10 o'clock
hymen. Assuming that the victim was raped between 2 and 3 o'clock p.m., April 22, 1973 (the same day she was
admitted in the hospital), then the lacerations of the hymen at 2 o'clock and 10 o'clock would not have been
described and indicated to be Healing in the clinical case record. It would be described as "laceration fresh" or by
similar words like "bloody or new lacerations." There is no instant formula, technique or process known to

medical science or by human experience to hasten the healing of a lacerated hymen within three (3) hours or so
after defloration.
Citing from the book, Legal Medicine by Pedro P. Solis, M.D., Ll B Medico Legal Officer, National Bureau of
Investigation, Department (now Ministry) of Justice, We have the following comment on:
Healing time of laceration of the hymen:
Superficial laceration of the hymen may heal in two or three days.
More extensive tear may require longer time, usually seven to ten days.
Complicated types and those with intervening infection may cause delay in the healing depending upon the extent
of the involvement of the surrounding tissue and the degree of infection. Complicated laceration may even require
surgical intervention." (p. 302, Emphasis supplied.)
Since there was found laceration, wide, at 2 o'clock and 10 o'clock of the hymen which was then already healing on
April 22, 1973, it follows reasonably that the defloration occurred several days before, which may have happened
when Irene Dulay took a week-long vacation to her hometown in Pugo, La Union (tsn, p. 10, June 27, 1975) and
there is evidence that she had a suitor named Ferdinand Sarmiento who is from nearby Agoo, La Union. And when
she returned to the house of her employer in San Fernando, La Union, she had already chest and stomach pains
and a headache.
The written entries in the clinical case record, Exh. "2", showing the date of her admission in the hospital on April
22, 1973, her complaint of vaginal bleeding and the diagnosis of "Healing lacerated wide at 2 o'clock and 10 o'clock
hymen" are prima facie evidence of the facts therein stated, the said entries having been made in official records by
a public officer of the Philippines in the performance of his duty especially enjoined by law, which is that of a
physician in a government hospital. (Rule 130, See. 38, Rules of Court). In the case at bar, Dr. Antonino Estioco was
the admitting physician but unfortunately, he was not presented as a witness for the government.
In connection with Exhibit "2", there is one piece of damaging evidence which not only derogates the theory of the
prosecution but also cannot be explained by the government, and that is the frank testimony of Dr. Fe Cayao
herself, thus:
Q The question is: did you not discover through reading the clinical history of the
patient that the woman was not complaining of alleged rape?
A It was not indicated here that she was complaining of an alleged rape.
Q There was not a single word in the clinical record of the victim that she was the
victim of an alleged rape, is that correct?
A Yes. (tsn, pp. 27-28, May 15,1974)
2. From the same clinical case record, Exhibit "2", it appears clearly that the alleged victim, Irene Dulay, was
having her menstrual period when she was supposedly raped for the Complaint indicated that she had vaginal
bleeding. She herself admitted in her testimony that on April 22, 1973, she was having her menstruation. (tsn, p. 9,
June 27, 1975).
It is quite abnormal and unnatural, almost unheard of in human experience and behavior that a man would have
sexual intercourse with a woman then having her menstrual period, as was the admitted condition of the
complainant when she was allegedly abused by the accused. And because of this universal abhorrence, taboo and
distaste to have sexual contact with a menstruating female and this is so however passionate and lustful the man
way be unless he is depraved or demented. We cannot believe that the accused-appellant, a young fourth year

college student of civil engineering studying in Baguio City, would break or violate such a taboo by drugging the
complainant girl with the help of her sister and afterwards have sex relations with her in her menstrual condition.
3. When the complainant was investigated by the police, she declared in her affidavit, Exhibit "5", the following
answers to these questions:
5. Q Why are you in this office?
A I came here with the purpose of giving my voluntary statement in connection
with the incident that happened to me in the house of my employer and I want to file
a formal complaint against the persons who offended me, sir.
6. Q Who are those persons who offended you, if you know?
A They are Joseph alias Jessie and Elizabeth both surnamed Leones, the son and
daughter of Mr. Pepito Leones, my employer.
7. Q When did that incident happened?
A At about between the hours of 2:00 & 3:00 in the afternoon of April 22, 1973,
sir.
8. Q What did these Joseph and Elizabeth do against you?
A Because I was suffering headache at that time because it was the first day of
my menstrual period, they were inviting me to go with them to Wallace and I told
them that I have a headache then later they forced me to take in aspirin tablets,
three (3) tablets then after a few seconds, I begun to feel dizzy and halfconscious.
9. Q Do you know if what you have forcely taken and given by the two, Joseph
and Elizabeth were really aspirin tablets?
A I do not know, but they were white in color similar to aspirin tablets but after I
have taken them I felt dizzy then unconscious.
10. Q In what manner did Joseph Leones and Elizabeth Leones force you to take
in the tablets?
A At about that time and date I mentioned above, I was then lying on my bed in
my room at their residence, then Jessie and Elizabeth came in. Joseph alias Jessie
took hold of my throat with one hand and pressed it hard that I was almost choked
up, his other hand held my both cheeks his thumb and forefinger pressed hard to
forcely. open my mouth while Elizabeth held a spoon containing the three (3) tablets
then I was told by them to swallow the pills. I could not resist so I swallowed the
pills then later I felt dizzy as if the world was turning around.
Thus, it would appear from the above recorded evidence that the accused Joseph Leones and his sister Elizabeth,
helped and conspired with each other in the commission of the crime of rape against the offended party, an
assumption that is hardly believable for it would lead to the absurb conclusions that Elizabeth was a principal by
cooperation and that both Joseph and Elizabeth had planned the rape for they conveniently provided themselves
beforehand with the necessary drug.
It further appears in the record that the Philippine Constabulary in La Union did not believe the existence of rape
when Felicidad Boado reported the incident (tsn, p. 25, June 18, 1974), which disbelief may reasonably be

attributed to the unnatural and unusual version of the complainant that another of her own sex had conspired and
confabulated in the commission of the alleged defilement.
4. The complainant, Irene Dulay, had declared in her affidavit, Exhibit " 5 ", in answer to question No. 9 that after
she had taken the tablets that were white in color similar to aspirin tablets, she felt dizzy, then unconscious. In her
testimony at the trial, however, she testified that after she had taken the tablets, she felt dizzy and felt the removal
of her panty and that when he went on top of her, he inserted his private parts into her private parts (tsn, pp. 6-7,
June 27, 1975), but on cross-exmination, she said that she became unconscious when Joseph Leones was already on
top of her (tsn, p. 22, June 27, 1975). If she became unconscious when Leones was on top of her and yet she felt
pain when he placed his private parts into hers, then this is incredible for how could she have known what was
done to her and how she felt when she was already unconscious as admitted by her.
5. The record is replete with testimonies of the very witnesses of the prosecution itself revealing the irrational, if not
immoral behavior and conduct of the complainant which cuts deep into the morality, character and credibility of
the complaining witness. To cite a few of her immoral acts, when the police came to visit her, Irene Dulay took hold
of the penis, of the policeman (Testimony of Felicidad Boado, tsn, p. 20, June 18, 1974). Whenever she sees a man,
she goes after him and takes hold of his hand and places it in her private part (Testimony of Leonida Dulay, p. 5,
tsn, Sept. 20, 1974). Sometimes she is seated, sometimes she is standing and there are moments that she goes
around and whenever she sees a man, she calls for him and says "darling Jessie" (Cross-examination of Leonida
Dulay, tsn, p. 14, Sept. 20, 1974). She even said "have sexual intercourse with me," making particular mention of
the person who wanted to do that to her as Joseph Leones (Cross-examination of Leonida Dulay, tsn, pp. 27-28,
Sept. 20, 1974). There are times when she gets a pillow and imitates the sexual act (tsn, p. 29, Sept. 20, 1974). There
are moments when she takes hold of a pillow, embraces it, and makes movements imitating the sexual act (tsn,
Testimony of Leonida Dulay, p. 5, Sept. 20, 1974).
6. The circumstances of persons, time and place attendant in the commission of the crime do not build up the case
for the People. On the contrary, We find facts and circumstances which contradict and contravene the theory of the
prosecution, rendering it highly improbable and questionable. Thus, the room of the complainant where the alleged
rape was committed was at the ground floor of the house where her employer lives with his family and maintains a
canteen at the premises, the room being very near the washing place and had a door with only wooden jalousies.
There were several persons present in the house at the time of the alleged rape and they were Evelyn Estigoy, the
secretary of Natividad Leones, the cook Inocencia Gangad and her daughter, Mantes. With the presence of these
persons at the premises and the complainant's room was not secluded nor completely closed, the opportunity to
commit the rape is hardly present. More than that the alleged time being between 2:00 o'clock and 3:00 o'clock in
the afternoon and with the supposed attendance of the perpetrator's elder sister, Elizabeth the element of secrecy
had been totally ignored or disregarded which is quite unbelievable and incredible in such a crime as rape.
Indeed, rape is a most detestable crime. It should be severely and impartially punished. But a rape charge is easy to
make, hard to prove and harder to defend by the party accused, though innocent. Experience has shown that
unfounded charges of rape have frequently been preferred by women actuated of rape have frequently been
preferred by women actuated by some sinister, ulterior or undisclosed motive. Convictions for such crime should
not be sustained without clear and convincing proof of guilt. On more than one occasion, it has been pointed out
that in crimes against chastity, the testimony of the injured woman should not be received with precipitate
credulity. When the conviction depends on any vital point upon her uncorroborated testimony, it should not be
accepted unless her sincerity and candor are free from suspicion. A little insight into human nature is of utmost
value in judging matters of this kind. (Cornelio Flores, 26 Phil. 262, 268; Ignacio Landicho, 8 ACR 580; Rafael
Lacson, CA 53 O.G. 1823; Francisco Salvador, CA 52 O.G. 7290; Lago, CA 45 O.G. 1356; Barbo, 56 SCRA 459;
Bay, 27 Phil. 495; Pantaleon Ramos, 35 Phil. 671; Brocal, CA 36 O.G. 857; Topacio, CA 36 O.G. 1358; Fernando
Fausto, 51 Phil. 852; cited in Aquino, The Revised Penal Code, 1977 Ed., Vol. III, pp. 1679-1680).
After carefully analyzing and weighing the evidence presented by the prosecution in the light of the legal principles
above outlined and now well-established in Our jurisprudence and guided by a little insight into human nature, We
are persuaded and convinced that the guilt of the accused has not been proven beyond reasonable doubt. That
moral certainty or degree of proof which produces conviction in an unprejudiced mind (Rule 133, Section 2, Rules
of Court) has not been established by the prosecution. The constitutional mandate that the accused is presumed
innocent must prevail and, therefore, the accused-appellant, Joseph Leones, is entitled to an acquittal.

WHEREFORE, IN VIEW OF ALL THE FOREGOING, the judgment of conviction is hereby REVERSED and the
accused Joseph Leones y Ducusin is ACQUITTED of the crime charged.
Costs de oficio.
SO ORDERED.
2. G.R. No. 107735

February 1, 1996

PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs.
RICARDO SAN GABRIEL Y ORTIZ, defendant-appellant.
DECISION
BELLOSILLO, J.:
RICARDO O. SAN GABRIEL was charged with murder in an Information alleging that on 26 November 1989, armed
with a bladed weapon, in conspiracy with "Ramon Doe," with treachery, evident premeditation and intent to kill, he
assaulted and stabbed to death Jaime A. Tonog.1
The trial court convicted the accused as charged and sentenced him "to life imprisonment and to pay the heirs of Jaime
Tonog the sum of P30,000, plus costs."2
The accused is now before us on appeal.
The evidence shows that at around seven o'clock in the evening of 26 November 1989, within the vicinity of Pier 14 at
North Harbor along Marcos Road, Manila, a fistfight ensued between Jaime Tonog on one hand and the accused Ricardo
San Gabriel together with "Ramon Doe" on the other. The fight was eventually broken up when onlookers pacified the
protagonists. Ricardo and Ramon then hastened towards Marcos Road but in no time were back with bladed weapons.
They approached Tonog surreptitiously, surrounded him and simultaneously stabbed him in the stomach and at the back,
after which the assailants ran towards the highway leaving Tonog behind on the ground. He was then brought to Mary
Johnston Hospital where he was pronounced dead on arrival.
Dr. Marcial G. Cenido, Medico-Legal Officer of the Western Police District, autopsied the cadaver of the victim and
reported that it sustained two (2) penetrating stab wounds each caused by a single-bladed instrument. He opined that both
wounds were fatal.3
The accused has a different version. He testified that he saw Tonog drunk; Tonog even attempted to box him but he
parried his blow; Tonog continued walking but when he chanced upon Ramon he suddenly and without provocation boxed
and kicked Ramon; Ramon fought back but was subdued by his bigger assailant so the former ran towards the highway;
when Tonog met a certain "Mando" he boxed the latter who however fought back despite his (accused) warning not to; at
this moment he saw Ramon return with a bolo on hand; he warned Ramon not to fight but his advice went unheeded;
instead, with bolo on hand Ramon struck Tonog on the belly; when "Mando" saw what happened he ("Mando") pulled out
his knife and also stabbed Tonog at the back; Ramon and "Mando" then fled towards the highway.
The accused further claimed that he even stayed with the victim and called out the latter's companions to bring him to the
hospital; that prosecution witness Brenda Gonzales only arrived at the crime scene after Tonog was already taken to the
hospital; that Brenda even inquired from him what happened and then prodded him to testify; that his refusal coupled with
the fact that he owed Gonzales some money earned him the ire of the latter and that was why he was charged for the death
of Tonog.
Accused-appellant claims in this appeal that the trial court erred: (a) in giving credence to the testimonies of prosecution
witnesses Brenda Gonzales and Pio Ochobillo, and for discrediting his; (b) in finding that the killing was attended with
evident premeditation; (c) in ruling that he committed treachery and, (d) in convicting him of murder. 4

We sustain the conviction of the accused for murder. It is settled that findings of fact of the trial court are accorded
greatest respect by the appellate court absent any abuse of discretion, 5 and none is perceivable in the case at bench; hence
we affirm the factual findings of the trial court.
The accused contends that the testimonies of the prosecution witnesses are incredible and conflicting. We however find
otherwise. Gonzales and Ochobillo, as observed by the trial court, testified in a direct and candid manner. No evil motive
is attributed to them as to testify falsely against the accused. That Gonzales harbored a grudge against the accused because
he owed her some money, and even enticed her customers into patronizing another carinderia, can hardly be believed. We
are not convinced that Brenda Gonzales would testify against accused-appellant for a crime so grave simply because he
owed her a measly sum of P300.00. That he enticed the customers of Gonzales into patronizing another carinderia is
belied by the fact that on the night of the incident he was, as he claimed, eating at the carinderia of Gonzales. If there be
any testimony that should be considered incredible and illogical it must be that of the accused. His assertion that "Mando"
stabbed the victim should not receive any evidentiary value when weighed against the positive assertion of the prosecution
witnesses that the accused was the assailant of Jaime Tonog.
Quite interestingly, the accused did not offer any information regarding the person and circumstances of "Mando." Up to
this date "Mando" remains a myth. Not a single witness was presented by the defense to prove who "Mando" was, nor
even a hint of his personal circumstances. During the entire proceedings in the court below "Mando" was never mentioned
by the prosecution witnesses. Nobody ever implicated him except the accused. In fact, there should have been no
difficulty procuring witnesses to testify on the part of the accused as the incident was viewed openly by a multitude of
bystanders. His failure to present any witness pointing to "Mando" as the perpetrator of the crime convinces us that
"Mando" in fact existed only as a figment of the mind.
The accused also asserts that Gonzales arrived at the crime scene only after the victim was brought to the hospital and that
she even inquired from him about what happened.
Again we are not persuaded. The statement contradicts the earlier version of the accused that Gonzales was prejudiced
against him as he owed her some money. For, granting that Gonzales had a grudge against him it was not likely that she
would inquire from him about the incident as there were other persons then present who could shed light on the startling
occurrence.
Equally dubious is the avowal of the accused that Gonzales arrived at the crime scene only after the victim was rushed to
the hospital considering that the incident took place just in front of her store. Besides, this claim was easily demolished by
Gonzales' detailed account of the fight.
The fact that the witnesses did not immediately report the incident to the police does not necessarily discredit them. After
all, reports were made albeit by different persons. The accused banks on the apparent inconsistency as to why Gonzales
failed to give immediately her account of the killing to the authorities. But the discrepancy is so minor that it cannot
undermine her credibility nor detract from the truth that she personally witnessed the incident and positively identified the
accused.
The accused leans heavily on the Advance Information Sheet6 prepared by Pat. Steve Casimiro which did not mention him
at all and named only "Ramon Doe" as the principal suspect. Unfortunately this cannot defeat the positive and candid
testimonies of the prosecution witnesses. Entries in official records, as in the case of a police blotter, are only prima
facie evidence of the facts therein stated. They are not conclusive. The entry in the police blotter is not necessarily entitled
to full credit for it could be incomplete and inaccurate, sometimes from either partial suggestions or for want of
suggestions or inquiries, without the aid of which the witness may be unable to recall the connected collateral
circumstances necessary for the correction of the first suggestion of his memory and for his accurate recollection of all
that pertain to the subject. It is understandable that the testimony during the trial would be more lengthy and detailed than
the matters stated in the police blotter7 Significantly, the Advance Information Sheet was never formally offered by the
defense during the proceedings in the court below. Hence any reliance by the accused on the document must fail since the
court cannot consider any evidence which has not been formally offered. 8
Parenthetically, the Advance Information Sheet was prepared by the police officer only after interviewing Camba, an
alleged eyewitness. The accused then could have compelled the attendance of Camba as a witness. The failure to exert the
slightest effort to present Camba on the part of the accused should militate against his cause.

Entries in official records made in the performance of his duty by a public officer or by a person in the performance of a
duty specially enjoined by law are prima facie evidence of the facts therein stated. 9 But to be admissible in evidence three
(3) requisites must concur: (a) The entry was made by a police officer or by another person specially enjoined by law to
do so; (b) It was made by the public officer in the performance of his duties or by such other person in the performance of
a duty specially enjoined by law; and, (c) The public officer or other person had sufficient knowledge of the facts by him
stated, which must have been acquired by him personally or through official information. 10
The Advance Information Sheet does not constitute an exception to the hearsay rule, hence, inadmissible. The public
officer who prepared the document had no sufficient and personal knowledge of the stabbing incident. Any information
possessed by him was acquired from Camba which therefore could not be categorized as official information because in
order to be classified as such the persons who made the statements not only must have personal knowledge of the facts
stated but must have the duty to give such statements for the record. 11 In the case of Camba, he was not legally so obliged
to give such statements.
The accused enumerates discrepancies in the testimonies of the prosecution witnesses. Thus, according to him, it was
testified that the victim was stabbed by the accused at the back but failed to point out its precise location. The stabbing
admittedly occurred at around seven o'clock in the evening but the Advance Information Sheet reported "6:30 p.m." One
witness testified that the fistfight was only between the victim and "Ramon Doe," while another reported that it involved
the victim, "Ramon Doe" and the accused. Further, it was not accurately determined whether Ramon and the accused
returned to the scene of the crime within five (5) minutes or after the lapse thereof.
As previously stated, the discrepancies do not militate against the fact firmly established by the prosecution that Tonog
was stabbed at the back by the accused and by "Ramon Doe" in the abdomen. Any discordance noted is so minor and
insignificant that no further consideration is essential. The most honest witnesses make mistakes sometimes, but such
innocent lapses do not necessarily impair their credibility. The testimony of a witness must be considered and calibrated in
its entirety and not by truncated portions thereof or isolated passages therein. 12
The presence of the accused in the vicinity even after the commission of the crime does not in any way extricate him from
his dilemma. Certainly, it is no proof of his innocence.
The court a quo properly considered the aggravating circumstance of treachery in convicting the accused of murder.
Treachery is present when the offender commits any of the crimes against person, employing means, methods or forms in
the execution thereof which tend directly and specially to insure its execution, without risk to himself arising from the
defense which the offended party might make. 13 Alevosia or treachery presumes an attack that is deliberate and
unexpected. There is no treachery when the victim is placed on guard, as when a heated argument preceded the attack,
especially when the victim was standing face to face with his assailants, and the initial assault could not have been
foreseen. 14
It is true that in the case at bench the attack was preceded by a fistfight. It was however established that they were already
pacified by onlookers when the accused and Ramon returned. Lulled into complacency the victim simply stayed where he
was before the fistfight when after a brief moment the accused together with Ramon returned with bladed weapons. Both
approached the victim and circled him surreptitiously. The attack was sudden and simultaneous that the victim was never
given a chance to defend himself. As we have held in People v. Balisteros,15 where a victim was totally unprepared for the
unexpected attack from behind and had no weapon to resist it, the stabbing could not but be considered as treacherous.
The evidence proved that the victim was caught unaware by the sudden assault. No weapon was found, nor even intimated
to be, in his possession.
Conversely the court a quo should have disregarded evident premeditation. Evident premeditation requires a showing that
the execution of the criminal act was preceded by cool thought and reflection upon the resolution to carry out the criminal
intent during a space of time sufficient to arrive at a calm judgment. 16 Evidence for the prosecution showed that after the
fight was broken up the accused and "Ramon Doe" proceeded towards the highway. They returned only after a lapse of
approximately five (5) minutes. From the foregoing we cannot conclude that the accused had sufficient time within which
to meditate on the consequences of his acts. Meditation necessitates that it be evident and proven. Be that as it may,
treachery as a qualifying circumstance having attended the killing, the conviction of the accused for murder still holds.

WHEREFORE, the decision of the court a quo in Crim. Case No. 90-81744 dated 25 July 1991 convicting accusedappellant RICARDO SAN GABRIEL Y ORTIZ of murder is AFFIRMED. The penalty of life imprisonment however is
MODIFIED to reclusion perpetua, 17 while the award of P30,000.00 as indemnity is INCREASED to P50,000.00
conformably with existing jurisprudence. Costs against accused-appellant.
SO ORDERED.
3. G.R. No. 108433 October 15, 1996
WALLEM MARITIME SERVICES, INC. and WALLEM SHIPMANAGEMENT LTD., petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and JOSELITO V. MACATUNO, respondents.

ROMERO, J.:p
This petition for certiorari seeks to annul and set aside the Resolution 1 of the National Labor Relations
Commission (NLRC) affirming the Decision 2 of the Philippine Overseas Employment Administration (POEA)
which disposed of POEA Case No.(M) 89-09-865 as follows:
WHEREFORE, in view of the foregoing, respondents Wallem Maritime Services, Inc. and Wallem
Shipmanagement Ltd. are hereby ordered jointly and severally, to pay complainant the following in
Philippine currency at the prevailing rate of exchange at the time of payment:
a) THREE HUNDRED THREE US DOLLARS
(US$303.00) representing salary for the month of June 1989;
b) THREE THOUSAND FIFTY FOUR US DOLLARS
(US$3,054.00) representing salaries for the unexpired portion of the
contract (July-December 1989); and
c) ONE HUNDRED SIX & 50/100 US DOLLARS
(US$106.50) or five percent (5%) of the total award as and by way of
attorney's fees.
The claim against Prudential Guarantee and Assurance Inc. is dismissed for lack of merit.
SO ORDERED.
Private respondent Joselito V. Macatuno was hired by Wallem Shipmanagement Limited thru its local manning
agent, Wallem Maritime Services, Inc., as an able-bodied seaman on board the M/T Fortuna, a vessel of Liberian
registry. Pursuant to the contract of employment, private respondent was employed for ten (10) months covering
the period February 26, 1989 until December 26, 1989 with a monthly salary of two hundred seventy-six US
dollars (US $276); hourly overtime rate of one dollar and seventy-two cents (US $1.72), and a monthly tanker
allowance of one hundred twenty-seven dollars and sixty cents (US $127.60), with six (6) days leave with pay for
each month.
On June 24, 1989, while the vessel was berthed at the port of Kawasaki, Japan, an altercation took place between
private respondent and fellow Filipino crew member, Julius E. Gurimbao, on the one hand, and a cadet/apprentice
officer of the same nationality as the captain of the vessel on the other hand. The master entered the incident in the
tanker's logbook.

As a consequence, private respondent and Gurimbao were repatriated to the Philippines where they lost no time in
lodging separate complaints for illegal dismissal with the POEA. 3 According to the affidavit private respondent
executed before a POEA administering officer, the following facts led to the filing of the complaint.
At about 5:50 a.m. of June 24, 1989, private respondent was on duty along with Gurimbao, checking the manifold
of the vessel and looking for oil leakages, when a cadet/apprentice who was of the same nationality as the vessel's
captain (Singh), approached them. He ordered Gurimbao to use a shovel in draining the water which, mixed with
oil and dirt, had accumulated at the rear portion of the upper deck of the vessel.
Gurimbao explained to the cadet/apprentice that throwing dirty and oily water overboard was prohibited by the
laws of Japan; in fact, port authorities were roaming and checking the sanitary conditions of the port. The
cadet/apprentice got mad and, shouting, ordered Gurimbao to get a hose and siphon off the water. To avoid
trouble, Gurimbao used a shovel in throwing the dirty water into the sea.
Having finished his job, Gurimbao complained to private respondent about the "improper and unauthorized act"
of the cadet/apprentice. The two then went to the cadet/apprentice who was idly standing in a corner. They
reminded him that as a mere apprentice and not an officer of the vessel, he had no right whatsoever to order
around any member of the crew. However, the cadet/apprentice reacted violently shouting invectives and
gesturing "as if challenging" the two to a fight. To prevent him from "intimidating" them, private respondent
pushed twice the cadet/apprentice's chest while Gurimbao "mildly hit" his arm. Frantic and shouting, the
cadet/apprentice ran to the captain "who happened to witness the incident" from the cabin's window.
The captain summoned private respondent and Gurimbao. With their bosun (head of the deck crew), they went to
the captain's cabin. The captain told them to pack up their things as their services were being terminated. They
would disembark at the next port, the Port of Ube, from where they would be flown home to the Philippines, the
repatriation expenses to be shouldered by them. The two attempted to explain their side of the incident but the
captain ignored them and firmly told them to go home.
Before disembarking, they were entrusted by the bosun with a letter of their fellow crew members, addressed to
Capt. Dio, attesting to their innocence. At the Port of Ube, an agent of the company handed them their plane
tickets and accompanied them the following day to the Fukoka Airport where they boarded a Cathay Pacific
airplane bound for Manila.
A few days after their arrival in Manila or on July 1, 1989, the two gave the letter to Capt. Dio and conferred
with him and Mr. James Nichols. The latter told private respondent that they could not secure a reimbursement of
their repatriation expenses nor could they get their salaries for the month of June. Private respondent, in a letter
addressed to Capt. Dio, asked for a reconsideration of their dismissal but the latter did not respond. Frustrated,
private respondent sought the assistance of a lawyer who wrote Wallem a demand letter dated August 28, 1989 but
the same was ignored. 4
Petitioners, defending their position, alleged that the incident was not the first infraction committed by the two. As
shown by the logbook, on June 19, 1989, while the vessel was docked in Batangas, they left it during working
hours without asking permission. For this offense, they were given a warning. On June 27, 1989 (sic), while the
vessel was anchored at the Port of Kawasaki, Japan, they assaulted the officer on watch for the day, Mr. V.S.
Sason. The three were "mustered" and it was found that Sason "was attacked with a spanner without provacition
(sic)." The two were "severely warned that they will be dealt according to the rules and regulation of their contact
of employment (sic)." When the vessel was about to sail that day, the two went ashore inspite of the warning
given them. They were arrested by Japanese authorities but the vessel's departure was delayed for five (5) hours.
The agency in Manila was informed that their wages should be settled "after deducting recoveries" or fines and air
fare. Their dismissal from the service was also recommended. 5
In his aforementioned decision of September 14, 1990 finding private respondent's dismissal to be illegal, POEA
Deputy Administrator Manuel G. Imson held:

We find complainant's dismissal to be without just and valid cause. We cannot give much weight and
credence to the "certified true copy of the official logbook" (Annex "1", answer) because the alleged
entries therein were only handpicked and copied from the official logbook of the vessel M/V "Fortuna".
There is no way of verifying the truth of these entries and whether they actually appear in the log entries
for the specific dates mentioned. The pages in the official logbook where these entries appear should have
been the ones reproduced to give the same a taint of credence. Moreover, no documentary evidence was
submitted to support the alleged official logbook, like the Master's report and the police report or any
report by the Japanese authorities by reason of their arrest. Finally, the copy of the alleged official
logbook was not properly authenticated. The authentication is necessary specially so since this document
is the only piece of evidence submitted by respondents.
Granting that the entries in the logbook are true, a perusal thereof will readily show that complainant was
not afforded due process. The warnings allegedly given to complainant were not submitted in evidence.
Likewise, no investigation report was presented to prove that complainant was given the opportunity to
air his side of the incident.
It is also noteworthy to mention that complainant was able to describe with particularity the
circumstances which led to his misunderstanding with the cadet/apprentice and which we believe is not
sufficient to warrant his dismissal. 6
As stated above, the NLRC affirmed the decision of the POEA, adopting as its own the latter's findings and
conclusions. Hence, the instant petition contending that both the POEA and the NLRC gravely abused their
discretion in finding that private respondent was illegally terminated from his employment.
As with G.R. No. 107865, where herein petitioners likewise questioned the NLRC decision affirming that of
POEA Case No. (M) 88-11-1078 finding the dismissal from employment of Gurimbao to be illegal, 7 the Court
sees no merit in the instant petition.
An employer may dismiss or lay off an employee only for the just and authorized causes enumerated in Articles
282 and 283 of the Labor Code. However, this basic and normal prerogative of an employer is subject to
regulation by the State in the exercise of its paramount police power inasmuch as the preservation of lives of
citizens, as well as their means of livelihood, is a basic duty of the State more vital than the preservation of
corporate profits. 8 One' s employment, profession, trade or calling is a property right within the protection of the
constitutional guaranty of due process of law. 9
We agree with petitioners that the ship captain's logbook is a vital evidence as Article 612 of the Code of
Commerce requires him to keep a record of the decisions he had adopted as the vessel's head. Thus, inHaverton
Shipping Ltd. v. NLRC, 10 the Court held that a copy of an official entry in the logbook is legally binding and
serves as an exception to the hearsay rule.
However, the Haverton Shipping ruling does not find unqualified application in the case at bar. In said case, an
investigation of the incident which led to the seaman's dismissal was conducted before he was
dismissed.11 Consequently, the facts appearing in the logbook were supported by the facts gathered at the
investigation. In this case, because no investigation was conducted by the ship captain before repatriating private
respondent, the contents of the logbook have to be duly identified and authenticated lest an injustice result from a
blind adoption of such contents which merely serve as prima facie evidence of the incident in question. 12
Moreover, what was presented in the Haverton Shipping case was a copy of the official entry from the logbook
itself. In this case, petitioners did not submit as evidence to the POEA the logbook itself, or even authenticated
copies of pertinent pages thereof, which could have been easily xeroxed or photocopied considering the present
technology on reproduction of
documents. 13 What was offered in evidence was merely a typewritten collation of excerpts from what could be the
logbook 14 because by their format, they could have been lifted from other records kept in the vessel in accordance
with Article 612 of the Code of Commerce. 15

Furthermore, the alleged entry in the "logbook" states, as regards the June 27, 1989 (sic) incident, as follows:
KAWASAKI KAWASAKI This is to place on record
27.6.89 that at the time, date and
place mentioned Mr. J. V.
MACATUNO (Sr No. 147) and
Mr. J.E. GURIMBAO (Sr No.
156) attacked and assaulted
apprentice officer Mr V.S.
SASON while on duty. All three
were mustered and it was found
that Mr. SASON was attacked
with a spanner without
provacition (sic). Both the
seaman (sic) have been severely
warned that they will be dealt
according to the rules and
regulation of their contact of
employment. 16
Under the Table of Offenses and Corresponding Administrative Penalties appended to the contract of employment
entered into by petitioners and private respondent, the offense described by the logbook entry may well fall under
insubordination and may constitute assaulting a superior officer "with the use of deadly weapon" punishable with
dismissal 17 if the victim is indeed a "superior officer." However, an "apprentice officer" cannot be considered a
"superior officer." An apprentice is a person bound in the form of law to a master, to learn from him his art, trade,
or business, and to serve him during the time of his apprenticeship. 18 In other words, Mr. V. S. Sason was merely
a learner or a trainee and not a regular officer on board M/T Fortuna.
In this regard, it should be clarified that this Court does not tolerate nor sanction assault in any form. Physical
violence against anyone at any time and any place is reprehensible. However, in cases such as this, where a
person's livelihood is at stake, strict interpretation of the contract of employment in favor of the worker must be
observed to affirm the constitutional provision on protection to labor.
Moreover, the aforequoted entry in the logbook is so sketchy that, unsupported by other evidence, it leaves so
many questions unanswered. Although private respondent candidly admitted in his affidavit having hit Sason on
the chest twice, he did not admit using a spanner. The conflicting versions of the incident rendered it impossible to
determine whether it was private respondent or Gurimbao who wielded said tool. In the absence of a more
detailed narration in the logbook entry of the circumstances surrounding the alleged assault, the same cannot
constitute a valid justification to terminate private respondent's employment. 19
H ence, as the typewritten excerpts from the "logbook" were the only pieces of evidence presented by petitioners
to support the dismissal of private respondent, have no probative value at all, petitioners' cause must fail. Their
failure to discharge the onus probandi properly may have no other result than a finding that the dismissal of
private respondent is unjustified. 20
Petitioners' failure to substantiate the grounds for a valid dismissal was aggravated by the manner by which the
employment of private respondent was terminated. It must be borne in mind that the right of an employer to
dismiss an employee is to be distinguished from and should not be confused with the manner in which such right
is exercised. Dismissal from employment must not be effected abusively and oppressively as it affects one's
person and property. Thus, Batas Pambansa Blg. 130, amending paragraph (b) of Article 278 of the Labor Code,
imposed as a condition sine qua non that any termination of employment under the grounds provided in Article
283 must be done only after notice and formal investigation have been accorded the supposed errant
worker. 21
That the workers involved in the incident were "mustered" or convened thereafter by the captain is
inconsequential. It is insufficient compliance with the law which requires, as a vital component of due process,

observance of the twin requirements of notice and hearing before dismissing an employee. As regards the notice
requirement, the Court has stated:
On the issue of due process . . . , the law requires the employer to furnish the worker whose employment
is sought to be terminated a written notice containing a statement of the cause or causes for termination
and shall afford him ample opportunity to be heard and to defend himself with the assistance of a
representative. Specifically, the employer must furnish the worker with two (2) written notices before
termination of employment can be legally effected: (a) notice which apprises the employee of the
particular acts or omissions for which his dismissal is sought; and (b) the subsequent notice which
informs the employee of the employer's decision to dismiss him. (Emphasis supplied.) 22
Neither is the ship captain's having witnessed the altercation an excuse for dispensing with the notice and hearing
requirements. Serving notice to private respondent under the circumstances cannot be regarded as an "absurdity
and superfluity." 23
ON ALL THE FOREGOING CONSIDERATIONS, the petition at bar is DISMISSED and the Resolution of
respondent National Labor Relations Commission is hereby AFFIRMED in toto.
SO ORDERED.
PRIOR TESTIMONY
2. G.R. No. 150157

January 25, 2007

MAURICIO MANLICLIC and PHILIPPINE RABBIT BUS LINES, INC., Petitioners,

vs.
MODESTO CALAUNAN, Respondent.
DECISION
CHICO-NAZARIO, J.:
Assailed before Us is the decision1 of the Court of Appeals in CA-G.R. CV No. 55909 which affirmed in toto the
decision2 of the Regional Trial Court (RTC) of Dagupan City, Branch 42, in Civil Case No. D-10086, finding petitioners
Mauricio Manliclic and Philippine Rabbit Bus Lines, Inc. (PRBLI) solidarily liable to pay damages and attorneys fees to
respondent Modesto Calaunan.
The factual antecedents are as follows:
The vehicles involved in this case are: (1) Philippine Rabbit Bus No. 353 with plate number CVD-478, owned by
petitioner PRBLI and driven by petitioner Mauricio Manliclic; and (2) owner-type jeep with plate number PER-290,
owned by respondent Modesto Calaunan and driven by Marcelo Mendoza.
At around 6:00 to 7:00 oclock in the morning of 12 July 1988, respondent Calaunan, together with Marcelo Mendoza,
was on his way to Manila from Pangasinan on board his owner-type jeep. The Philippine Rabbit Bus was likewise bound
for Manila from Concepcion, Tarlac. At approximately Kilometer 40 of the North Luzon Expressway in Barangay
Lalangan, Plaridel, Bulacan, the two vehicles collided. The front right side of the Philippine Rabbit Bus hit the rear left
side of the jeep causing the latter to move to the shoulder on the right and then fall on a ditch with water resulting to
further extensive damage. The bus veered to the left and stopped 7 to 8 meters from point of collision.
Respondent suffered minor injuries while his driver was unhurt. He was first brought for treatment to the Manila Central
University Hospital in Kalookan City by Oscar Buan, the conductor of the Philippine Rabbit Bus, and was later
transferred to the Veterans Memorial Medical Center.

By reason of such collision, a criminal case was filed before the RTC of Malolos, Bulacan, charging petitioner Manliclic
with Reckless Imprudence Resulting in Damage to Property with Physical Injuries, docketed as Crim. Case No. 684-M89. Subsequently on 2 December 1991, respondent filed a complaint for damages against petitioners Manliclic and PRBLI
before the RTC of Dagupan City, docketed as Civil Case No. D-10086. The criminal case was tried ahead of the civil case.
Among those who testified in the criminal case were respondent Calaunan, Marcelo Mendoza and Fernando Ramos.
In the civil case (now before this Court), the parties admitted the following:
1. The parties agreed on the capacity of the parties to sue and be sued as well as the venue and the identities of the
vehicles involved;
2. The identity of the drivers and the fact that they are duly licensed;
3. The date and place of the vehicular collision;
4. The extent of the injuries suffered by plaintiff Modesto Calaunan and the existence of the medical certificate;
5. That both vehicles were going towards the south; the private jeep being ahead of the bus;
6. That the weather was fair and the road was well paved and straight, although there was a ditch on the right side
where the jeep fell into.3
When the civil case was heard, counsel for respondent prayed that the transcripts of stenographic notes (TSNs) 4of the
testimonies of respondent Calaunan, Marcelo Mendoza and Fernando Ramos in the criminal case be received in evidence
in the civil case in as much as these witnesses are not available to testify in the civil case.
Francisco Tuliao testified that his brother-in-law, respondent Calaunan, left for abroad sometime in November, 1989 and
has not returned since then. Rogelio Ramos took the stand and said that his brother, Fernando Ramos, left for Amman,
Jordan, to work. Rosalia Mendoza testified that her husband, Marcelo Mendoza, left their residence to look for a job. She
narrated that she thought her husband went to his hometown in Panique, Tarlac, when he did not return after one month.
She went to her husbands hometown to look for him but she was informed that he did not go there.1awphil.net
The trial court subpoenaed the Clerk of Court of Branch 8, RTC, Malolos, Bulacan, the court where Criminal Case No.
684-M-89 was tried, to bring the TSNs of the testimonies of respondent Calaunan, 5 Marcelo Mendoza6 and Fernando
Ramos7 in said case, together with other documentary evidence marked therein. Instead of the Branch Clerk of Court, it
was Enrique Santos Guevara, Court Interpreter, who appeared before the court and identified the TSNs of the three aforenamed witnesses and other pertinent documents he had brought. 8 Counsel for respondent wanted to mark other TSNs and
documents from the said criminal case to be adopted in the instant case, but since the same were not brought to the trial
court, counsel for petitioners compromised that said TSNs and documents could be offered by counsel for respondent as
rebuttal evidence.
For the defendants, petitioner Manliclic and bus conductor Oscar Buan testified. The TSN 9 of the testimony of Donato
Ganiban, investigator of the PRBLI, in Criminal Case No. 684-M-89 was marked and allowed to be adopted in the civil
case on the ground that he was already dead.
Respondent further marked, among other documents, as rebuttal evidence, the TSNs 10 of the testimonies of Donato
Ganiban, Oscar Buan and petitioner Manliclic in Criminal Case No. 684-M-89.
The disagreement arises from the question: Who is to be held liable for the collision?
Respondent insists it was petitioner Manliclic who should be liable while the latter is resolute in saying it was the former
who caused the smash up.
The versions of the parties are summarized by the trial court as follows:

The parties differed only on the manner the collision between the two (2) vehicles took place. According to the plaintiff
and his driver, the jeep was cruising at the speed of 60 to 70 kilometers per hour on the slow lane of the expressway when
the Philippine Rabbit Bus overtook the jeep and in the process of overtaking the jeep, the Philippine Rabbit Bus hit the
rear of the jeep on the left side. At the time the Philippine Rabbit Bus hit the jeep, it was about to overtake the jeep. In
other words, the Philippine Rabbit Bus was still at the back of the jeep when the jeep was hit. Fernando Ramos
corroborated the testimony of the plaintiff and Marcelo Mendoza. He said that he was on another jeep following the
Philippine Rabbit Bus and the jeep of plaintiff when the incident took place. He said, the jeep of the plaintiff overtook
them and the said jeep of the plaintiff was followed by the Philippine Rabbit Bus which was running very fast. The bus
also overtook the jeep in which he was riding. After that, he heard a loud sound. He saw the jeep of the plaintiff swerved
to the right on a grassy portion of the road. The Philippine Rabbit Bus stopped and they overtook the Philippine Rabbit
Bus so that it could not moved (sic), meaning they stopped in front of the Philippine Rabbit Bus. He testified that the jeep
of plaintiff swerved to the right because it was bumped by the Philippine Rabbit bus from behind.
Both Mauricio Manliclic and his driver, Oscar Buan admitted that the Philippine Rabbit Bus bumped the jeep in question.
However, they explained that when the Philippine Rabbit bus was about to go to the left lane to overtake the jeep, the
latter jeep swerved to the left because it was to overtake another jeep in front of it. Such was their testimony before the
RTC in Malolos in the criminal case and before this Court in the instant case. [Thus, which of the two versions of the
manner how the collision took place was correct, would be determinative of who between the two drivers was negligent in
the operation of their respective vehicles.] 11
Petitioner PRBLI maintained that it observed and exercised the diligence of a good father of a family in the selection and
supervision of its employee, specifically petitioner Manliclic.
On 22 July 1996, the trial court rendered its decision in favor of respondent Calaunan and against petitioners Manliclic
and PRBLI. The dispositive portion of its decision reads:
WHEREFORE, judgment is rendered in favor of the plaintiff and against the defendants ordering the said defendants to
pay plaintiff jointly and solidarily the amount of P40,838.00 as actual damages for the towing as well as the repair and the
materials used for the repair of the jeep in question; P100,000.00 as moral damages and another P100,000.00 as
exemplary damages and P15,000.00 as attorneys fees, including appearance fees of the lawyer. In addition, the
defendants are also to pay costs.12
Petitioners appealed the decision via Notice of Appeal to the Court of Appeals. 13
In a decision dated 28 September 2001, the Court of Appeals, finding no reversible error in the decision of the trial court,
affirmed it in all respects.14
Petitioners are now before us by way of petition for review assailing the decision of the Court of Appeals. They assign as
errors the following:
I
THE COURT OF APPEALS ERRED ON A QUESTION OF LAW IN AFFIRMING THE TRIAL COURTS
QUESTIONABLE ADMISSION IN EVIDENCE OF THE TSNs AND OTHER DOCUMENTS PRESENTED IN THE
CRIMINAL CASE.
II
THE COURT OF APPEALS ERRED ON A QUESTION OF LAW IN AFFIRMING THE TRIAL COURTS RELIANCE
ON THE VERSION OF THE RESPONDENT ON HOW THE ACCIDENT SUPPOSEDLY OCCURRED.
III

THE COURT OF APPEALS ERRED ON A QUESTION OF LAW IN AFFIRMING THE TRIAL COURTS UNFAIR
DISREGARD OF HEREIN PETITIONER PRBLs DEFENSE OF EXERCISE OF DUE DILIGENCE IN THE
SELECTION AND SUPERVISION OF ITS EMPLOYEES.
IV
THE COURT OF APPEALS ERRED ON A QUESTION OF LAW IN AFFIRMING THE TRIAL COURTS
QUESTIONABLE AWARD OF DAMAGES AND ATTORNEYS FEE.
With the passing away of respondent Calaunan during the pendency of this appeal with this Court, we granted the Motion
for the Substitution of Respondent filed by his wife, Mrs. Precila Zarate Vda. De Calaunan, and children, Virgilio
Calaunan, Carmelita Honeycomb, Evelyn Calaunan, Marko Calaunan and Liwayway Calaunan. 15
In their Reply to respondents Comment, petitioners informed this Court of a Decision 16 of the Court of Appeals acquitting
petitioner Manliclic of the charge17 of Reckless Imprudence Resulting in Damage to Property with Physical Injuries
attaching thereto a photocopy thereof.
On the first assigned error, petitioners argue that the TSNs containing the testimonies of respondent Calaunan, 18Marcelo
Mendoza19 and Fernando Ramos20 should not be admitted in evidence for failure of respondent to comply with the
requisites of Section 47, Rule 130 of the Rules of Court.
For Section 47, Rule 13021 to apply, the following requisites must be satisfied: (a) the witness is dead or unable to testify;
(b) his testimony or deposition was given in a former case or proceeding, judicial or administrative, between the same
parties or those representing the same interests; (c) the former case involved the same subject as that in the present case,
although on different causes of action; (d) the issue testified to by the witness in the former trial is the same issue involved
in the present case; and (e) the adverse party had an opportunity to cross-examine the witness in the former case. 22
Admittedly, respondent failed to show the concurrence of all the requisites set forth by the Rules for a testimony given in
a former case or proceeding to be admissible as an exception to the hearsay rule. Petitioner PRBLI, not being a party in
Criminal Case No. 684-M-89, had no opportunity to cross-examine the three witnesses in said case. The criminal case was
filed exclusively against petitioner Manliclic, petitioner PRBLIs employee. The cases dealing with the subsidiary liability
of employers uniformly declare that, strictly speaking, they are not parties to the criminal cases instituted against their
employees.23
Notwithstanding the fact that petitioner PRBLI was not a party in said criminal case, the testimonies of the three witnesses
are still admissible on the ground that petitioner PRBLI failed to object on their admissibility.
It is elementary that an objection shall be made at the time when an alleged inadmissible document is offered in evidence;
otherwise, the objection shall be treated as waived, since the right to object is merely a privilege which the party may
waive. Thus, a failure to except to the evidence because it does not conform to the statute is a waiver of the provisions of
the law. Even assuming ex gratia argumenti that these documents are inadmissible for being hearsay, but on account of
failure to object thereto, the same may be admitted and considered as sufficient to prove the facts therein
asserted.24 Hearsay evidence alone may be insufficient to establish a fact in a suit but, when no objection is made thereto,
it is, like any other evidence, to be considered and given the importance it deserves. 25
In the case at bar, petitioner PRBLI did not object to the TSNs containing the testimonies of respondent Calaunan,
Marcelo Mendoza and Fernando Ramos in the criminal case when the same were offered in evidence in the trial court. In
fact, the TSNs of the testimonies of Calaunan and Mendoza were admitted by both petitioners. 26Moreover, petitioner
PRBLI even offered in evidence the TSN containing the testimony of Donato Ganiban in the criminal case. If petitioner
PRBLI argues that the TSNs of the testimonies of plaintiffs witnesses in the criminal case should not be admitted in the
instant case, why then did it offer the TSN of the testimony of Ganiban which was given in the criminal case? It appears
that petitioner PRBLI wants to have its cake and eat it too. It cannot argue that the TSNs of the testimonies of the
witnesses of the adverse party in the criminal case should not be admitted and at the same time insist that the TSN of the
testimony of the witness for the accused be admitted in its favor. To disallow admission in evidence of the TSNs of the

testimonies of Calaunan, Marcelo Mendoza and Fernando Ramos in the criminal case and to admit the TSN of the
testimony of Ganiban would be unfair.
We do not subscribe to petitioner PRBLIs argument that it will be denied due process when the TSNs of the testimonies
of Calaunan, Marcelo Mendoza and Fernando Ramos in the criminal case are to be admitted in the civil case. It is too late
for petitioner PRBLI to raise denial of due process in relation to Section 47, Rule 130 of the Rules of Court, as a ground
for objecting to the admissibility of the TSNs. For failure to object at the proper time, it waived its right to object that the
TSNs did not comply with Section 47.
In Mangio v. Court of Appeals,27 this Court, through Associate Justice Reynato S. Puno,28 admitted in evidence a TSN of
the testimony of a witness in another case despite therein petitioners assertion that he would be denied due process. In
admitting the TSN, the Court ruled that the raising of denial of due process in relation to Section 47, Rule 130 of the Rules
of Court, as a ground for objecting to the admissibility of the TSN was belatedly done. In so doing, therein petitioner
waived his right to object based on said ground.
Petitioners contend that the documents in the criminal case should not have been admitted in the instant civil case because
Section 47 of Rule 130 refers only to "testimony or deposition." We find such contention to be untenable. Though said
section speaks only of testimony and deposition, it does not mean that documents from a former case or proceeding
cannot be admitted. Said documents can be admitted they being part of the testimonies of witnesses that have been
admitted. Accordingly, they shall be given the same weight as that to which the testimony may be entitled. 29
On the second assigned error, petitioners contend that the version of petitioner Manliclic as to how the accident occurred
is more credible than respondents version. They anchor their contention on the fact that petitioner Manliclic was acquitted
by the Court of Appeals of the charge of Reckless Imprudence Resulting in Damage to Property with Physical Injuries.
To be resolved by the Court is the effect of petitioner Manliclics acquittal in the civil case.
From the complaint, it can be gathered that the civil case for damages was one arising from, or based on, quasidelict.30 Petitioner Manliclic was sued for his negligence or reckless imprudence in causing the collision, while petitioner
PRBLI was sued for its failure to exercise the diligence of a good father in the selection and supervision of its employees,
particularly petitioner Manliclic. The allegations read:
"4. That sometime on July 12, 1988 at around 6:20 A.M. plaintiff was on board the above-described motor vehicle
travelling at a moderate speed along the North Luzon Expressway heading South towards Manila together with
MARCELO MENDOZA, who was then driving the same;
"5. That approximately at kilometer 40 of the North Luzon Express Way, the above-described motor vehicle was
suddenly bumped from behind by a Philippine Rabbit Bus with Body No. 353 and with plate No. CVD 478 then
being driven by one Mauricio Manliclic of San Jose, Concepcion, Tarlac, who was then travelling recklessly at a
very fast speed and had apparently lost control of his vehicle;
"6. That as a result of the impact of the collision the above-described motor vehicle was forced off the North
Luzon Express Way towards the rightside where it fell on its drivers side on a ditch, and that as a consequence,
the above-described motor vehicle which maybe valued at EIGHTY THOUSAND PESOS (P80,000) was
rendered a total wreck as shown by pictures to be presented during the pre-trial and trial of this case;
"7. That also as a result of said incident, plaintiff sustained bodily injuries which compounded plaintiffs frail
physical condition and required his hospitalization from July 12, 1988 up to and until July 22, 1988, copy of the
medical certificate is hereto attached as Annex "A" and made an integral part hereof;
"8. That the vehicular collision resulting in the total wreckage of the above-described motor vehicle as well as
bodily (sic) sustained by plaintiff, was solely due to the reckless imprudence of the defendant driver Mauricio
Manliclic who drove his Philippine Rabbit Bus No. 353 at a fast speed without due regard or observance of
existing traffic rules and regulations;

"9. That defendant Philippine Rabbit Bus Line Corporation failed to exercise the diligence of a good father of
(sic) family in the selection and supervision of its drivers; x x x" 31
Can Manliclic still be held liable for the collision and be found negligent notwithstanding the declaration of the Court of
Appeals that there was an absence of negligence on his part?
In exonerating petitioner Manliclic in the criminal case, the Court of Appeals said:
To the following findings of the court a quo, to wit: that accused-appellant was negligent "when the bus he was driving
bumped the jeep from behind"; that "the proximate cause of the accident was his having driven the bus at a great speed
while closely following the jeep"; x x x
We do not agree.
The swerving of Calaunans jeep when it tried to overtake the vehicle in front of it was beyond the control of accusedappellant.
xxxx
Absent evidence of negligence, therefore, accused-appellant cannot be held liable for Reckless Imprudence Resulting in
Damage to Property with Physical Injuries as defined in Article 365 of the Revised Penal Code. 32
From the foregoing declaration of the Court of Appeals, it appears that petitioner Manliclic was acquitted not on
reasonable doubt, but on the ground that he is not the author of the act complained of which is based on Section 2(b) of
Rule 111 of the Rules of Criminal Procedure which reads:
(b) Extinction of the penal action does not carry with it extinction of the civil, unless the extinction proceeds from a
declaration in a final judgment that the fact from which the civil might arise did not exist.
In spite of said ruling, petitioner Manliclic can still be held liable for the mishap. The afore-quoted section applies only to
a civil action arising from crime or ex delicto and not to a civil action arising from quasi-delict or culpa aquiliana. The
extinction of civil liability referred to in Par. (e) of Section 3, Rule 111 [now Section 2 (b) of Rule 111], refers exclusively
to civil liability founded on Article 100 of the Revised Penal Code, whereas the civil liability for the same act considered
as a quasi-delict only and not as a crime is not extinguished even by a declaration in the criminal case that the criminal act
charged has not happened or has not been committed by the accused. 33
A quasi-delict or culpa aquiliana is a separate legal institution under the Civil Code with a substantivity all its own, and
individuality that is entirely apart and independent from a delict or crime a distinction exists between the civil liability
arising from a crime and the responsibility for quasi-delicts or culpa extra-contractual. The same negligence causing
damages may produce civil liability arising from a crime under the Penal Code, or create an action for quasi-delicts or
culpa extra-contractual under the Civil Code.34 It is now settled that acquittal of the accused, even if based on a finding
that he is not guilty, does not carry with it the extinction of the civil liability based on quasi delict. 35
In other words, if an accused is acquitted based on reasonable doubt on his guilt, his civil liability arising from the crime
may be proved by preponderance of evidence only. However, if an accused is acquitted on the basis that he was not the
author of the act or omission complained of (or that there is declaration in a final judgment that the fact from which the
civil might arise did not exist), said acquittal closes the door to civil liability based on the crime or ex delicto. In this
second instance, there being no crime or delict to speak of, civil liability based thereon or ex delicto is not possible. In this
case, a civil action, if any, may be instituted on grounds other than the delict complained of.
As regards civil liability arising from quasi-delict or culpa aquiliana, same will not be extinguished by an acquittal,
whether it be on ground of reasonable doubt or that accused was not the author of the act or omission complained of (or
that there is declaration in a final judgment that the fact from which the civil liability might arise did not exist). The
responsibility arising from fault or negligence in a quasi-delict is entirely separate and distinct from the civil liability

arising from negligence under the Penal Code.36 An acquittal or conviction in the criminal case is entirely irrelevant in the
civil case37 based on quasi-delict or culpa aquiliana.
Petitioners ask us to give credence to their version of how the collision occurred and to disregard that of respondents.
Petitioners insist that while the PRBLI bus was in the process of overtaking respondents jeep, the latter, without warning,
suddenly swerved to the left (fast) lane in order to overtake another jeep ahead of it, thus causing the collision.
As a general rule, questions of fact may not be raised in a petition for review. The factual findings of the trial court,
especially when affirmed by the appellate court, are binding and conclusive on the Supreme Court. 38 Not being a trier of
facts, this Court will not allow a review thereof unless:
(1) the conclusion is a finding grounded entirely on speculation, surmise and conjecture; (2) the inference made is
manifestly mistaken; (3) there is grave abuse of discretion; (4) the judgment is based on a misapprehension of facts; (5)
the findings of fact are conflicting; (6) the Court of Appeals went beyond the issues of the case and its findings are
contrary to the admissions of both appellant and appellees; (7) the findings of fact of the Court of Appeals are contrary to
those of the trial court; (8) said findings of fact are conclusions without citation of specific evidence on which they are
based; (9) the facts set forth in the petition as well as in the petitioner's main and reply briefs are not disputed by the
respondents; and (10) the findings of fact of the Court of Appeals are premised on the supposed absence of evidence and
contradicted by the evidence on record.39
After going over the evidence on record, we do not find any of the exceptions that would warrant our departure from the
general rule. We fully agree in the finding of the trial court, as affirmed by the Court of Appeals, that it was petitioner
Manliclic who was negligent in driving the PRBLI bus which was the cause of the collision. In giving credence to the
version of the respondent, the trial court has this say:
x x x Thus, which of the two versions of the manner how the collision took place was correct, would be determinative of
who between the two drivers was negligent in the operation of their respective vehicle.
In this regard, it should be noted that in the statement of Mauricio Manliclic (Exh. 15) given to the Philippine Rabbit
Investigator CV Cabading no mention was made by him about the fact that the driver of the jeep was overtaking another
jeep when the collision took place. The allegation that another jeep was being overtaken by the jeep of Calaunan was
testified to by him only in Crim. Case No. 684-M-89 before the Regional Trial Court in Malolos, Bulacan and before this
Court. Evidently, it was a product of an afterthought on the part of Mauricio Manliclic so that he could explain why he
should not be held responsible for the incident. His attempt to veer away from the truth was also apparent when it would
be considered that in his statement given to the Philippine Rabbit Investigator CV Cabading (Exh. 15), he alleged that the
Philippine Rabbit Bus bumped the jeep of Calaunan while the Philippine Rabbit Bus was behind the said jeep. In his
testimony before the Regional Trial Court in Malolos, Bulacan as well as in this Court, he alleged that the Philippine
Rabbit Bus was already on the left side of the jeep when the collision took place. For this inconsistency between his
statement and testimony, his explanation regarding the manner of how the collision between the jeep and the bus took
place should be taken with caution. It might be true that in the statement of Oscar Buan given to the Philippine Rabbit
Investigator CV Cabading, it was mentioned by the former that the jeep of plaintiff was in the act of overtaking another
jeep when the collision between the latter jeep and the Philippine Rabbit Bus took place. But the fact, however, that his
statement was given on July 15, 1988, one day after Mauricio Manliclic gave his statement should not escape attention.
The one-day difference between the giving of the two statements would be significant enough to entertain the possibility
of Oscar Buan having received legal advise before giving his statement. Apart from that, as between his statement and the
statement of Manliclic himself, the statement of the latter should prevail. Besides, in his Affidavit of March 10, 1989,
(Exh. 14), the unreliability of the statement of Oscar Buan (Exh. 13) given to CV Cabading rear its "ugly head" when he
did not mention in said affidavit that the jeep of Calaunan was trying to overtake another jeep when the collision between
the jeep in question and the Philippine Rabbit bus took place.
xxxx
If one would believe the testimony of the defendant, Mauricio Manliclic, and his conductor, Oscar Buan, that the
Philippine Rabbit Bus was already somewhat parallel to the jeep when the collision took place, the point of collision on
the jeep should have been somewhat on the left side thereof rather than on its rear. Furthermore, the jeep should have

fallen on the road itself rather than having been forced off the road. Useless, likewise to emphasize that the Philippine
Rabbit was running very fast as testified to by Ramos which was not controverted by the defendants. 40
Having ruled that it was petitioner Manliclics negligence that caused the smash up, there arises the juris tantum
presumption that the employer is negligent, rebuttable only by proof of observance of the diligence of a good father of a
family.41 Under Article 218042 of the New Civil Code, when an injury is caused by the negligence of the employee, there
instantly arises a presumption of law that there was negligence on the part of the master or employer either in the selection
of the servant or employee, or in supervision over him after selection or both. The liability of the employer under Article
2180 is direct and immediate; it is not conditioned upon prior recourse against the negligent employee and a prior showing
of the insolvency of such employee. Therefore, it is incumbent upon the private respondents to prove that they exercised
the diligence of a good father of a family in the selection and supervision of their employee. 43
In the case at bar, petitioner PRBLI maintains that it had shown that it exercised the required diligence in the selection and
supervision of its employees, particularly petitioner Manliclic. In the matter of selection, it showed the screening process
that petitioner Manliclic underwent before he became a regular driver. As to the exercise of due diligence in the
supervision of its employees, it argues that presence of ready investigators (Ganiban and Cabading) is sufficient proof that
it exercised the required due diligence in the supervision of its employees.
In the selection of prospective employees, employers are required to examine them as to their qualifications, experience
and service records. In the supervision of employees, the employer must formulate standard operating procedures, monitor
their implementation and impose disciplinary measures for the breach thereof. To fend off vicarious liability, employers
must submit concrete proof, including documentary evidence, that they complied with everything that was incumbent on
them.44
In Metro Manila Transit Corporation v. Court of Appeals, 45 it was explained that:
Due diligence in the supervision of employees on the other hand, includes the formulation of suitable rules and regulations
for the guidance of employees and the issuance of proper instructions intended for the protection of the public and persons
with whom the employer has relations through his or its employees and the imposition of necessary disciplinary measures
upon employees in case of breach or as may be warranted to ensure the performance of acts indispensable to the business
of and beneficial to their employer. To this, we add that actual implementation and monitoring of consistent compliance
with said rules should be the constant concern of the employer, acting through dependable supervisors who should
regularly report on their supervisory functions.
In order that the defense of due diligence in the selection and supervision of employees may be deemed sufficient and
plausible, it is not enough to emptily invoke the existence of said company guidelines and policies on hiring and
supervision. As the negligence of the employee gives rise to the presumption of negligence on the part of the employer,
the latter has the burden of proving that it has been diligent not only in the selection of employees but also in the actual
supervision of their work. The mere allegation of the existence of hiring procedures and supervisory policies, without
anything more, is decidedly not sufficient to overcome such presumption.
We emphatically reiterate our holding, as a warning to all employers, that "the formulation of various company policies on
safety without showing that they were being complied with is not sufficient to exempt petitioner from liability arising
from negligence of its employees. It is incumbent upon petitioner to show that in recruiting and employing the erring
driver the recruitment procedures and company policies on efficiency and safety were followed." x x x.
The trial court found that petitioner PRBLI exercised the diligence of a good father of a family in the selection but not in
the supervision of its employees. It expounded as follows:
From the evidence of the defendants, it seems that the Philippine Rabbit Bus Lines has a very good procedure of
recruiting its driver as well as in the maintenance of its vehicles. There is no evidence though that it is as good in the
supervision of its personnel. There has been no iota of evidence introduced by it that there are rules promulgated by the
bus company regarding the safe operation of its vehicle and in the way its driver should manage and operate the vehicles
assigned to them. There is no showing that somebody in the bus company has been employed to oversee how its driver
should behave while operating their vehicles without courting incidents similar to the herein case. In regard to

supervision, it is not difficult to observe that the Philippine Rabbit Bus Lines, Inc. has been negligent as an employer and
it should be made responsible for the acts of its employees, particularly the driver involved in this case.
We agree. The presence of ready investigators after the occurrence of the accident is not enough to exempt petitioner
PRBLI from liability arising from the negligence of petitioner Manliclic. Same does not comply with the guidelines set
forth in the cases above-mentioned. The presence of the investigators after the accident is not enough supervision. Regular
supervision of employees, that is, prior to any accident, should have been shown and established. This, petitioner failed to
do. The lack of supervision can further be seen by the fact that there is only one set of manual containing the rules and
regulations for all the drivers of PRBLI. 46 How then can all the drivers of petitioner PRBLI know and be continually
informed of the rules and regulations when only one manual is being lent to all the drivers?
For failure to adduce proof that it exercised the diligence of a good father of a family in the selection and supervision of
its employees, petitioner PRBLI is held solidarily responsible for the damages caused by petitioner Manliclics
negligence.
We now go to the award of damages. The trial court correctly awarded the amount of P40,838.00 as actual damages
representing the amount paid by respondent for the towing and repair of his jeep. 47 As regards the awards for moral and
exemplary damages, same, under the circumstances, must be modified. The P100,000.00 awarded by the trial court as
moral damages must be reduced to P50,000.00.48 Exemplary damages are imposed by way of example or correction for
the public good.49 The amount awarded by the trial court must, likewise, be lowered to P50,000.00.50 The award
of P15,000.00 for attorneys fees and expenses of litigation is in order and authorized by law.51
WHEREFORE, premises considered, the instant petition for review is DENIED. The decision of the Court of Appeals in
CA-G.R. CV No. 55909 is AFFIRMED with the MODIFICATION that (1) the award of moral damages shall be reduced
to P50,000.00; and (2) the award of exemplary damages shall be lowered to P50,000.00. Costs against petitioners.
SO ORDERED.