EN BANC

[G.R. No. 48006. July 8, 1942.]

FAUSTO BARREDO, petitioner, vs. SEVERINO GARCIA and TIMOTEA ALMARIO, respondents.
Celedonio P. Gloria and Antonio Barredo for petitioner.
Jose G. Advincula for respondents.
SYLLABUS
1.
DAMAGES; QUASI-DELICT OR "CULPA AQUILIANA"; PRIMARY AND DIRECT RESPONSIBILITY OF
EMPLOYERS UNDER ARTICLES 1902-1910 OF THE CIVIL CODE. A head-on collision between a taxi and
a carretela resulted in the death of a 16-year-old boy, one of the passengers of the carretela. A criminal
action was filed against the taxi driver and he was convicted and sentenced accordingly. The court in the
criminal case granted the petition that the right to bring a separate civil action be reserved. Thereafter
the parents of the deceased brought suit for damages against the proprietor of the taxi, the employer of
the taxi driver, under article 1903 of the Civil Code. Defendant contended that his liability was governed
by the Revised Penal Code, according to which his responsibility was only secondary, but no civil action
had been brought against the taxi driver. Held: That this separate civil action lies, the employer being
primarily and directly responsible in damages under articles 1902 and 1903 of the Civil Code.
2.
ID.; ID.; ID. 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. Upon this principle, and on the wording and spirit of article 1903 of the Civil Code, the
primary and direct responsibility of employers may be safely anchored.
3.
ID.; ID.; ID. The individuality of cuasi-delito or culpa extra- contractual looms clear and
unmistakable. This legal institution is of ancient lineage, one of its early ancestors being the Lex Aquilia
in the Roman Law. In fact, in Spanish legal terminology, this responsibility is often referred to as culpa
aquiliana. The Partidas also contributed to the genealogy of the present fault or negligence under the
Civil Code: for instance, Law 6, Title 15, of Partida 7, says: "Tenudo es de fazer emienda, porque, como
quier que el non fizo a sabiendas el dao al otro, pero acaescio por su culpa."
4.
ID.; ID.; ID. The distinctive nature of cuasi-delitos survives in the Civil Code. According to
article 1089, one of the five sources of obligations is this legal institution of cuasi-delito or culpa extracontractual: "los actos . . . en que intervenga cualquier genero de culpa o negligencia." Then article 1093
provides that this kind of obligation shall be governed by Chapter II of Title XVI of Book IV, meaning
articles 1902-1910. This portion of the Civil Code is exclusively devoted to the legal institution of culpa
aquiliana.
5.
ID.; ID.; ID.; DISTINCTION BETWEEN CRIMES UNDER THE PENAL CODE AND THE "CULPA
AQUILIANA" OR "CUASI-DELITO" UNDER THE CIVIL CODE. A distinction exists between the civil liability
arising from a crime and the responsibility for cuasi-delitos or culpa extra-contractual. The same

negligent act causing damages may produce civil liability arising from a crime under article 100 of the
Revised Penal Code, or create an action for cuasi-delito or culpa extra-contractual under articles 19021910 of the Civil Code. Plaintiffs were free to choose which remedy to enforce. Some of the differences
between crimes under the Penal Code and the culpa aquiliana or cuasi-delito under the Civil Code are
enumerated in the decision.
6.
ID.; ID.; ID.; OPINIONS OF JURISTS. The decision sets out extracts from opinions of jurists on
the separate existence of cuasi- delicts and the employer's primary and direct liability under article 1903
of the Civil Code.
7.
ID.; ID.; ID.; SENTENCES OF THE SUPREME TRIBUNAL OF SPAIN. The decision cites sentences
of the Supreme Tribunal of Spain upholding the principles above set forth: that a cuasi-delict or culpa
extra- contractual is a separate and distinct legal institution, independent from the civil responsibility
arising from criminal liability, and that an employer is, under article 1903 of the Civil Code, primarily and
directly responsible for the negligent acts of his employee.
8.
ID.; ID.; ID.; DECISIONS OF THIS COURT. Decisions of this Court are also cited holding that, in
this jurisdiction, the separate individuality of a cuasi-delito or culpa aquiliana under the Civil Code has
been fully and clearly recognized, even with regard to a negligent act for which the wrongdoer could
have been prosecuted and convicted in a criminal case and for which, after such a conviction, he could
have been sued for his civil liability arising from his crime.
9.
ID.; ID.; ID.; FOUNDATIONS OF DOCTRINES ABOVE SET FORTH; LITERAL MEANING OF THE LAW.
The Revised Penal Code punishes not only reckless but also simple negligence; if it should be held that
articles 1902-1910, Civil Code, apply only to negligence not punishable by law, culpa aquiliana would
have very little application in actual life. The literal meaning of the law will not be used to smother a
principle of such ancient origin and such full-grown development as culpa aquiliana.
10.
ID.; ID.; ID.; ID.; DEGREE OF PROOF. There are numerous cases of criminal negligence which
can not be shown beyond reasonable doubt, but can be proved by a preponderance of evidence. In such
cases, defendant can and should be made responsible in a civil action under articles 1902 to 1910, Civil
Code. Ubi jus ibi remedium.
11.
ID.; ID.; ID.; ID.; EXPEDITIOUS REMEDY. The primary and direct responsibility of employer
under article 1903, Civil Code, is more likely to facilitate remedy for civil wrongs. Such primary and direct
responsibility of employers is calculated to protect society.
12.
ID.; ID.; ID.; ID.; PRACTICE OF RELYING SOLELY ON CIVIL RESPONSIBILITY FOR A CRIME. The
harm done by such practice is pointed out, and the principle of responsibility for fault or negligence
under articles 1902 et seq., of the Civil Code is restored to its full vigor.
DECISION
BOCOBO, J p:

This case comes up from the Court of Appeals which held the petitioner herein, Fausto Barredo, liable in
damages for the death of Faustino Garcia caused by the negligence of Pedro Fontanilla, a taxi driver
employed by said Fausto Barredo.
At about half past one in the morning of May 3, 1936, on the road between Malabon and Navotas,
Province of Rizal, there was a head-on collision between a taxi of the Malate Taxicab driven by Pedro
Fontanilla and a carretela guided by Pedro Dimapilis. The carretela was overturned, and one of its
passengers, 16-year-old boy Faustino Garcia, suffered injuries from which he died two days later. A
criminal action was filed against Fontanilla in the Court of First Instance of Rizal, and he was convicted
and sentenced to an indeterminate sentence of one year and one day to two years of prision
correccional. The court in the criminal case granted the petition that the right to bring a separate civil
action be reserved. The Court of Appeals affirmed the sentence of the lower court in the criminal case.
Severino Garcia and Timotea Almario, parents of the deceased, on March 7, 1939, brought an action in
the Court of First Instance of Manila against Fausto Barredo as the sole proprietor of the Malate Taxicab
and employer of Pedro Fontanilla. On July 8, 1939, the Court of First Instance of Manila awarded
damages in favor of the plaintiffs for P2,000 plus legal interest from the date of the complaint. This
decision was modified by the Court of Appeals by reducing the damages to P1,000 with legal interest
from the time the action was instituted. It is undisputed that Fontanilla's negligence was the cause of
the mishap, as he was driving on the wrong side of the road, and at high speed. As to Barredo's
responsibility, the Court of Appeals found:
". . . It is admitted that defendant is Fontanilla's employer. There is no proof that he exercised the
diligence of a good father of a family to prevent the damage. (See p. 22, appellant's brief.) In fact it is
shown he was careless in employing Fontanilla who had been caught several times for violation of the
Automobile Law and speeding (Exhibit A) violations which appeared in the records of the Bureau of
Public Works available to the public and to himself. Therefore, he must indemnify plaintiffs under the
provisions of article 1903 of the Civil Code."
The main theory of the defense is that the liability of Fausto Barredo is governed by the Revised Penal
Code; hence, his liability is only subsidiary, and as there has been no civil action against Pedro Fontanilla,
the person criminally liable, Barredo cannot be held responsible in this case. The petitioner's brief states
on page 10:
". . . The Court of Appeals holds that the petitioner is being sued for his failure to exercise all the
diligence of a good father of a family in the selection and supervision of Pedro Fontanilla to prevent
damages suffered by the respondents. In other words, the Court of Appeals insists on applying in this
case article 1903 of the Civil Code. Article 1903 of the Civil Code is found in Chapter II, Title 16, Book IV
of the Civil Code. This fact makes said article inapplicable to a civil liability arising from a crime as in the
case at bar simply because Chapter II of Title 16 of Book IV of the Civil Code, in the precise words of
article 1903 of the Civil Code itself, is applicable only to "those (obligations) arising from wrongful or
negligent acts or omissions not punishable by law.'"
The gist of the decision of the Court of Appeals is expressed thus:

". . . We cannot agree to the defendant's contention. The liability sought to be imposed upon him in this
action is not a civil obligation arising from a felony or a misdemeanor (the crime of Pedro Fontanilla), but
an obligation imposed in article 1903 of the Civil Code by reason of his negligence in the selection or
supervision of his servant or employee."
The pivotal question in this case is whether the plaintiffs may bring this separate civil action against
Fausto Barredo, thus making him primarily and directly responsible under article 1903 of the Civil Code
as an employer of Pedro Fontanilla. The defendant maintains that Fontanilla's negligence being
punishable by the Penal Code, his (defendant's) liability as an employer is only subsidiary, according to
said Penal Code, but Fontanilla has not been sued in a civil action and his property has not been
exhausted. To decide the main issue, we must cut through the tangle that has, in the minds of many,
confused and jumbled together delitos and cuasi delitos, or crimes under the Penal Code and fault or
negligence under articles 1902-1910 of the Civil Code. This should be done, because justice may be lost
in a labyrinth, unless principles and remedies are distinctly envisaged. Fortunately, we are aided in our
inquiry by the luminous presentation of this perplexing subject by renown jurists and we are likewise
guided by the decisions of this Court in previous cases as well as by the solemn clarity of the
considerations in several sentences of the Supreme Tribunal of Spain.
Authorities support the proposition that 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. Upon this principle, and on the wording and spirit of article 1903 of
the Civil Code, the primary and direct responsibility of employers may be safely anchored.
The pertinent provisions of the Civil Code and Revised Penal Code are as follows:
CIVIL CODE
"ART. 1089.
Obligations arise from law, from contracts and quasi- contracts, and from acts and
omissions which are unlawful or in which any kind of fault or negligence intervenes."
xxx

xxx

xxx

"ART. 1092.
Civil obligations arising from felonies or misdemeanors shall be governed by the
provisions of the Penal Code.
"ART. 1093.
Those which are derived from acts or omissions in which fault or negligence, not
punishable by law, intervenes shall be subject to the provisions of Chapter II, Title XVI of this book."
xxx

xxx

xxx

"ART. 1902.
Any person who by an act or omission causes damage to another by his fault or
negligence shall be liable for the damage so done.
"ART. 1903.
The obligation imposed by the next preceding article is enforcible, not only for personal
acts and omissions, but also for those of persons for whom another is responsible.

"The father, and, in case of his death or incapacity, the mother, are liable for any damages caused by the
minor children who live with them.
"Guardians are liable for damages done by minors or incapacitated persons subject to their authority
and living with them.
"Owners or directors of an establishment or business are equally liable for any damages caused by their
employees while engaged in the branch of the service in which employed, or on occasion of the
performance of their duties.
"The State is subject to the same liability when it acts through a special agent, but not if the damage
shall have been caused by the official upon whom properly devolved the duty of doing the act
performed, in which case the provisions of the next preceding article shall be applicable.
"Finally, teachers or directors of arts and trades are liable for any damages caused by their pupils or
apprentices while they are under their custody.
"The liability imposed by this article shall cease in case the persons mentioned therein prove that they
exercised all the diligence of a good father of a family to prevent the damage.".
"Art. 1904.Any person who pays for damage caused by his employees may recover from the latter what
he may have paid.".
REVISED PENAL CODE
"Art. 100.
Civil liability of a person guilty of felony. Every person criminally liable for a felony is
also civilly liable.
"Art. 101.
Rules regarding civil liability in certain cases. The exemption from criminal liability
established in subdivisions 1, 2, 3, 5, and 6 of article 12 and in subdivision 4 of article 11 of this Code
does not include exemption from civil liability, which shall be enforced subject to the following rules:
"First. In cases of subdivisions 1, 2 and 3 of article 12 the civil liability for acts committed by any imbecile
or insane person, and by a person under nine years of age, or by one over nine but under fifteen years
of age, who has acted without discernment, shall devolve upon those having such person under their
legal authority or control, unless it appears that there was no fault or negligence on their part.
"Should there be no person having such insane, imbecile or minor under his authority, legal
guardianship, or control, or if such person be insolvent, said insane, imbecile, or minor shall respond
with their own property, excepting property exempt from execution, in accordance with the civil law.
"Second. In cases falling within subdivision 4 of article 11, the persons for whose benefit the harm has
been prevented shall be civilly liable in proportion to the benefit which they may have received.
"The courts shall determine, in their sound discretion, the proportionate amount for which each one
shall be liable.

"When the respective shares can not be equitably determined, even approximately, or when the liability
also attaches to the Government, or to the majority of the inhabitants of the town, and, in all events,
whenever the damage has been caused with the consent of the authorities or their agents,
indemnification shall be made in the manner prescribed by special laws or regulations.
"Third. In cases falling within subdivisions 5 and 6 of article 12, the persons using violence or causing the
fear shall be primarily liable and secondarily, or, if there be no such persons, those doing the act shall be
liable, saving always to the latter that part of their property exempt from execution.
"ART. 102.
Subsidiary civil liability of innkeepers, tavern keepers and proprietors of establishment.
In default of persons criminally liable, innkeepers, tavern keepers, and any other persons or
corporations shall be civilly liable for crimes committed in their establishments, in all cases where a
violation of municipal ordinances or some general or special police regulation shall have been
committed by them or their employees.
"Innkeepers are also subsidiarily liable for the restitution of goods taken by robbery or theft within their
houses from guests lodging therein, or for the payment of the value thereof, provided that such guests
shall have notified in advance the innkeeper himself, or the person representing him, of the deposit of
such goods within the inn; and shall furthermore have followed the directions which such innkeeper or
his representative may have given them with respect to the care of and vigilance over such goods. No
liability shall attach in case of robbery with violence against or intimidation of persons unless committed
by the innkeeper's employees.
"ART. 103.
Subsidiary civil liability of other persons. The subsidiary liability established in the
next preceding article shall also apply to employers, teachers, persons, and corporations engaged in any
kind of industry for felonies committed by their servants, pupils, workmen, apprentices, or employees in
the discharge of their duties."
xxx

xxx

xxx

"ART. 365.
Imprudence and negligence. Any person who, by reckless imprudence, shall commit
any act which, had it been intentional, would constitute a grave felony, shall suffer the penalty of
arresto mayor in its maximum period to prision correccional in its minimum period; if it would have
constituted a less grave felony, the penalty of arresto mayor in its minimum and medium periods shall
be imposed.
"Any person who, by simple imprudence or negligence, shall commit an act which would otherwise
constitute a grave felony, shall suffer the penalty of arresto mayor in its medium and maximum periods;
if it would have constituted a less serious felony, the penalty of arresto mayor in its minimum period
shall be imposed."
It will thus be seen that while the terms of article 1902 of the Civil Code seem to be broad enough to
cover the driver's negligence in the instant case, nevertheless article 1093 limits cuasi-delitos to acts or
omissions "not punishable by law." But inasmuch as article 365 of the Revised Penal Code punishes not

only reckless but even simple imprudence or negligence, the fault or negligence under article 1902 of
the Civil Code has apparently been crowded out. It is this overlapping that makes the "confusion worse
confounded." However, a closer study shows that such a concurrence of scope in regard to negligent
acts does not destroy the distinction between the civil liability arising from a crime and the responsibility
for cuasi- delitos or culpa extra-contractual. The same negligent act causing damages may produce civil
liability arising from a crime under article 100 of the Revised Penal Code, or create an action for cuasidelito or culpa extra-contractual under articles 1902-1910 of the Civil Code.
The individuality of cuasi-delito or culpa extra-contractual looms clear and unmistakable. This legal
institution is of ancient lineage, one of its early ancestors being the Lex Aquilia in the Roman Law. In
fact, in Spanish legal terminology, this responsibility is often referred to as culpa aquiliana. The Partidas
also contributed to the genealogy of the present fault or negligence under the Civil Code, for instance,
Law 6, Title 15, of Partida 7, says: "Tenudo es de fazer emienda, porque, como quier que el non fizo a
sabiendas el dao al otro, pero acaescio por su culpa."
The distinctive nature of cuasi-delitos survives in the Civil Code. According to article 1089, one of the five
sources of obligations is this legal institution of cuasi-delito or culpa extra- contractual: "los actos . . . en
que intervenga cualquier genero de culpa o negligencia." Then article 1093 provides that this kind of
obligation shall be governed by Chapter II of Title XVI of Book IV, meaning articles 1902-1910. This
portion of the Civil Code is exclusively devoted to the legal institution of culpa aquiliana.
Some of the differences between crimes under the Penal Code and the culpa aquiliana or cuasi-delito
under the Civil Code are:.
1.

That crimes affect the public interest, while cuasi-delitos are only of private concern.

2.
That, consequently, the Penal Code punishes or corrects the criminal act, while the Civil Code,
by means of indemnification, merely repairs the damage.
3.
That delicts are not as broad as quasi-delicts, because the former are punished only if there is a
penal law clearly covering them, while the latter, cuasi-delitos, include all acts in which "any kind of fault
or negligence intervenes." However, it should be noted that not all violations of the penal law produce
civil responsibility, such as begging in contravention of ordinances, violation of the game laws, infraction
of the rules of traffic when nobody is hurt. (See Colin and Capitant, "Curso Elemental de Derecho Civil,"
Vol. 3, p. 728.).
Let us now ascertain what some jurists say on the separate existence of quasi-delicts and the employer's
primary and direct liability under article 1903 of the Civil Code.
Dorado Montero in his essay on "Responsabilidad" in the "Enciclopedia Juridica Espaola" (Vol. XXVII, p.
414) says:
"El concepto juridico de la responsabilidad civil abarca diversos aspectos y comprende a diferentes
personas. Asi, existe una responsabilidad civil propiamente dicha, que en ningun caso lleva aparejada

responsabilidad criminal alguna, y otra que es consecuencia indeclinable de la penal que nace de todo
delito o falta."
"The juridical concept of civil responsibility has various aspects and comprises different persons. Thus,
there is a civil responsibility, properly speaking, which in no case carries with it any criminal
responsibility, and another which is a necessary consequence of the penal liability as a result of every
felony or misdemeanor."
Maura, an outstanding authority, was consulted on the following case: There had been a collision
between two trains belonging respectively to the Ferrocarril Cantabrico and the Ferrocarril del Norte. An
employee of the latter had been prosecuted in a criminal case, in which the company had been made a
party as subsidiarily responsible in civil damages. The employee had been acquitted in the criminal case,
and the employer, the Ferrocarril del Norte, had also been exonerated. The question asked was whether
the Ferrocarril Cantabrico could still bring a civil action for damages against the Ferrocarril del Norte.
Maura's opinion was in the affirmative, stating in part (Maura, Dictamenes, Vol. 6, pp. 511-513):
"Quedando las cosas asi, a proposito de la realidad pura y neta de los hechos, todavia menos parece
sostenible que exista cosa juzgada acerca de la obligacion civil de indemnizar los quebrantos y
menoscabos inferidos por el choque de los trenes. El titulo en que se funda la accion para demandar el
resarcimiento, no puede confundirse con las responsabilidades civiles nacidas de delito, siquiera exista
en este, sea el cual sea, una culpa rodeada de notas agravatorias que motivan sanciones penales, mas o
menos severas. La lesion causada por delito o falta en los derechos civiles, requiere restituciones,
reparaciones o indemnizaciones, que cual la pena misma ataen al orden publico; por tal motivo vienen
encomendadas, de ordinario, al Ministerio Fiscal; y claro es que si por esta via se enmiendan los
quebrantos y menoscabos, el agraviado excusa procurar el ya conseguido desagravio; pero esta eventual
coincidencia de los efectos, no borra la diversidad originaria de las acciones civiles para pedir
indemnizacion.
"Estas, para el caso actual (prescindiendo de culpas contractuales, que no vendrian a cuento y que
tienen otro regimen), dimanan, segun el articulo 1902 del Codigo Civil, de toda accion u omision,
causante de daos o perjuicios, en que intervenga culpa o negligencia. Es trivial que acciones
semejantes son ejercitadas ante los Tribunales de lo civil cotidianamente, sin que la Justicia punitiva
tenga que mezclarse en los asuntos. Los articulos 18 al 21 y 121 al 128 del Codigo Penal, atentos al
espiritu y a los fines sociales y politicos del mismo, desenvuelven y ordenan la materia de
responsabilidades civiles nacidas de delito, en terminos separados del regimen por ley comun de la
culpa que se denomina aquiliana, por alusion a precedentes legislativos del Corpus Juris. Seria
intempestivo un paralelo entre aquellas ordenaciones, y la de la obligacion de indemnizar a titulo de
culpa civil; pero viene al caso y es necesaria una de las diferenciaciones que en el tal paralelo se
notarian.
"Los articulos 20 y 21 del Codigo Penal, despues de distribuir a su modo las responsabilidades civiles,
entre los que sean por diversos conceptos culpables del delito o falta, las hacen extensivas a las
empresas y los establecimientos al servicio de los cuales estan los delincuentes; pero con caracter

subsidiario, o sea, segun el texto literal, en defecto de los que sean responsables criminalmente. No
coincide en ello el Codigo Civil, cuyo articulo 1903, dice; La obligacion que impone el articulo anterior es
exigible, no solo por los actos y omisiones propios, sino por los de aquellas personas de quienes se debe
responder; personas en la enumeracion de las cuales figuran los dependientes y empleados de los
establecimientos o empresas, sea por actos del servicio, sea con ocasion de sus funciones. Por esto
acontece, y se observa en la jurisprudencia, que las empresas, despues de intervenir en las causas
criminales con el caracter subsidiario de su responsabilidad civil por razon del delito, son demandadas y
condenadas directa y aisladamente, cuando se trata de la obligacion, ante los tribunales civiles.
"Siendo como se ve, diverso el titulo de esta obligacion, y formando verdadero postulado de nuestro
regimen judicial la separacion entre justicia punitiva y tribunales de lo civil, de suerte que tienen unos y
otros normas de fondo en distintos cuerpos legales, y diferentes modos de proceder, habiendose por
aadidura, abstenido de asistir al juicio criminal la Compaia del Ferrocarril Cantabrico, que se reservo
ejercitar sus acciones, parece innegable que la de indemnizacion por los daos y perjuicios que le irrogo
el choque, no estuvo sub judice ante el Tribunal del Jurado, ni fue sentenciada, sino que permanecio
intacta, al pronunciarse el fallo de 21 de marzo. Aun cuando el veredicto no hubiese sido de
inculpabilidad, mostrose mas arriba, que tal accion quedaba legitimamente reservada para despues del
proceso; pero al declararse que no existio delito, ni responsabilidad dimanada de delito, materia unica
sobre que tenian jurisdiccion aquellos juzgadores, se redobla el motivo para la obligacion civil ex lege, y
se patentiza mas y mas que la accion para pedir su cumplimiento permanece incolume, extraa a la cosa
juzgada."
"As things are, apropos of the reality pure and simple of the facts, it seems less tenable that there
should be res judicata with regard to the civil obligation for damages on account of the losses caused by
the collision of the trains. The title upon which the action for reparation is based cannot be confused
with the civil responsibilities born of a crime, because there exists in the latter, whatever each nature, a
culpa surrounded with aggravating aspects which give rise to penal measures that are more or less
severe. The injury caused by a felony or misdemeanor upon civil rights requires restitutions, reparations,
or indemnifications which, like the penalty itself, affect public order; for this reason, they are ordinarily
entrusted to the office of the prosecuting attorney; and it is clear that if by this means the losses and
damages are repaired, the injured party no longer desires to seek another relief; but this coincidence of
effects does not eliminate the peculiar nature of civil actions to ask for indemnity.
"Such civil actions in the present case (without referring to contractual faults which are not pertinent
and belong to another scope) are derived, according to article 1902 of the Civil Code, from every act or
omission causing losses and damages in which culpa or negligence intervenes. It is unimportant that
such actions are every day filed before the civil courts without the criminal courts interfering therewith.
Articles 18 to 21 and 121 to 128 of the Penal Code, bearing in mind the spirit and the social and political
purposes of that Code, develop and regulate the matter of civil responsibilities arising from a crime,
separately from the regime under common law, of culpa which is known as aquiliana, in accordance
with legislative precedent of the Corpus Juris. It would be unwarranted to make a detailed comparison
between the former provisions and that regarding the obligation to indemnify on account of civil culpa;
but it is pertinent and necessary to point out to one of such differences.

"Articles 20 and 21 of the Penal Code, after distributing in their own way the civil responsibilities among
those who, for different reasons, are guilty of felony or misdemeanor, make such civil responsibilities
applicable to enterprises and establishments for which the guilty parties render service, but with
subsidiary character, that is to say, according to the wording of the Penal Code, in default of those who
are criminally responsible. In this regard, the Civil Code does not coincide because article 1903 says: 'The
obligation imposed by the next preceding article is demandable, not only for personal acts and
omissions, but also for those of persons for whom another is responsible.' Among the persons
enumerated are the subordinates and employees of establishments or enterprises, either for acts during
their service or on the occasion of their functions. It is for this reason that it happens, and it is so
observed in judicial decisions, that the companies or enterprises, after taking part in the criminal cases
because of their subsidiary civil responsibility by reason of the crime, are sued and sentenced directly
and separately with regard to the obligation, before the civil courts.
"Seeing that the title of this obligation is different, and the separation between punitive justice and the
civil courts being a true postulate of our judicial system, so that they have different fundamental norms
in different codes, as well as different modes of procedure, and inasmuch as the Compaia del
Ferrocarril Cantabrico has abstained from taking part in the criminal case and has reserved the right to
exercise its actions, it seems undeniable that the action for indemnification for the loses and damages
caused to it by the collision was not sub judice before the Tribunal del Jurado, nor was it the subject of a
sentence, but it remained intact when the decision of March 21 was rendered. Even if the verdict had
not been that of acquittal, it has already been shown that such action had been legitimately reserved till
after the criminal prosecution; but because of the declaration of the non-existence of the felony and the
non- existence of the responsibility arising from the crime, which was the sole subject matter upon
which the Tribunal del Jurado had jurisdiction, there is greater reason for the civil obligation ex lege, and
it becomes clearer that the action for its enforcement remain intact and is not res judicata."
Laurent, a jurist who has written a monumental work on the French Civil Code, on which the Spanish
Civil Code is largely based and whose provisions on cuasi-delito or culpa extra-contractual are similar to
those of the Spanish Civil Code, says, referring to article 1384 of the French Civil Code which
corresponds to article 1903, Spanish Civil Code:
"The action can be brought directly against the person responsible (for another), without including the
author of the act. The action against the principal is accessory in the sense that it implies the existence
of a prejudicial act committed by the employee, but it is not subsidiary in the sense that it can not be
instituted till after the judgment against the author of the act or at least, that it is subsidiary to the
principal action; the action for responsibility (of the employer) is in itself a principal action." (Laurent,
Principles of French Civil Law, Spanish translation, Vol. 20, pp. 734-735.)
Amandi, in his "Cuestionario del Codigo Civil Reformado" (Vol. 4, pp. 429, 430), declares that the
responsibility of the employer is principal and not subsidiary. He writes:
"Cuestion 1. La responsabilidad declarada en el articulo 1903 por las acciones u omisiones de aquellas
personas por las que se debe responder, es subsidiaria? es principal? Para contestar a esta pregunta es

necesario saber, en primer lugar, en que se funda el precepto legal. Es que realmente se impone una
responsabilidad por una falta ajena? Asi parece a primera vista; pero semejante afirmacion seria
contraria a la justicia y a la maxima universal, segun la que las faltas son personales, y cada uno
responde de aquellas que le son imputables. La responsabilidad de que tratamos se impone con ocasion
de un delito o culpa, pero no por causa de ellos, sino por causa del cuasi delito, esto es, de la
imprudencia o de la negligencia del padre, del tutor, del dueo o director del establecimiento, del
maestro, etc. Cuando cualquiera de las personas que enumera el articulo citado (menores de edad,
incapacitados, dependientes, aprendices) causan un dao, la ley presume que el padre, el tutor, el
maestro, etc., han cometido una falta de negligencia para prevenir o evitar el dao. Esta falta es la que
la ley castiga. No hay, pues, responsabilidad por un hecho ajeno, sino en la apariencia; en realidad la
responsabilidad se exige por un hecho propio. La idea de que esa responsabilidad sea subsidiaria es, por
lo tanto, completamente inadmisible."
"Question No. 1. Is the responsibility declared in article 1903 for the acts or omissions of those persons
for whom one is responsible, subsidiary or principal? In order to answer this question it is necessary to
know, in the first place, on what the legal provision is based. Is it true that there is a responsibility for
the fault of another person? It seems so at first sight; but such assertion would be contrary to justice
and to the universal maxim that all faults are personal, and that everyone is liable for those faults that
can be imputed to him. The responsibility in question is imposed on the occasion of a crime or fault, but
not because of the same, but because of the cuasi-delito, that is to say, the imprudence or negligence of
the father, guardian, proprietor or manager of the establishment, of the teacher, etc. Whenever anyone
of the persons enumerated in the article referred to (minors, incapacitated persons, employees,
apprentices) causes any damage, the law presumes that the father, guardian, teacher, etc. have
committed an act of negligence in not preventing or avoiding the damage. It is this fault that is
condemned by the law. It is, therefore, only apparent that there is a responsibility for the act of another;
in reality the responsibility exacted is for one's own act. The idea that such responsibility is subsidiary is,
therefore, completely inadmissible."
Oyuelos, in his "Digesto: Principios, Doctrina y Jurisprudencia, Referentes al Codigo Civil Espaol," says in
Vol. VII, p. 743:
"Es decir, no se responde de hechos ajenos, porque se responde solo de su propia culpa, doctrina del
articulo 1902; mas por excepcion, se responde de la ajena respecto de aquellas personas con las que
media algun nexo o vinculo, que motiva o razona la responsabilidad. Esta responsabilidad, es directa o
es subsidiaria? En el orden penal, el Codigo de esta clase distingue entre menores e incapacitados y los
demas, declarando directa la primera (articulo 19) y subsidiaria la segunda (articulos 20 y 21); pero en el
orden civil, en el caso del articulo 1903, ha de entenderse directa, por el tenor del articulo que impone
la responsabilidad precisamente por los actos de aquellas personas de quienes se deba responder.'"
"That is to say, one is not responsible for the acts of others, because one is liable only for his own faults,
this being the doctrine of article 1902; but, by exception, one is liable for the acts of those persons with
whom there is a bond or tie which gives rise to the responsibility. Is this responsibility direct or
subsidiary? In the order of the penal law, the Penal Code distinguishes between minors and

incapacitated persons on the one hand, and other persons on the other, declaring that the responsibility
for the former is direct (article 19), and for the latter, subsidiary (articles 20 and 21); but in the scheme
of the civil law, in the case of article 1903, the responsibility should be understood as direct, according
to the tenor of that article, for precisely it imposes responsibility 'for the acts of those persons for whom
one should be responsible."
Coming now to the sentences of the Supreme Tribunal of Spain, that court has upheld the principles
above set forth: that a quasi- delict or culpa extra-contractual is a separate and distinct legal institution,
independent from the civil responsibility arising from criminal liability, and that an employer is, under
article 1903 of the Civil Code, primarily and directly responsible for the negligent acts of his employee.
One of the most important of those Spanish decisions is that of October 21, 1910. In that case, Ramon
Lafuente died as the result of having been run over by a street car owned by the "Compaia Electrica
Madrilea de Traccion." The conductor was prosecuted in a criminal case but he was acquitted.
Thereupon, the widow filed a civil action against the street car company, praying for damages in the
amount of 15,000 pesetas. The lower court awarded damages; so the company appealed to the
Supreme Tribunal, alleging violation of articles 1902 and 1903 of the Civil Code because by final
judgment the non-existence of fault or negligence had been declared. The Supreme Court of Spain
dismissed the appeal, saying:.
"Considerando que el primer motivo del recurso se funda en el equivocado supuesto de que el Tribunal
a quo, al condenar a la Compaia Electrica Madrilea al pago del dao causado con la muerte de Ramon
Lafuente Izquierdo, desconoce el valor y efectos juridicos de la sentencia absolutoria dictada en la causa
criminal que se siguio por el mismo hecho, cuando es lo cierto que de este han conocido las dos
jurisdicciones bajo diferentes aspectos, y como la de lo criminal declaro dentro de los limites de su
competencia que el hecho de que se trata no era constitutivo de delito por no haber mediado descuido
o negligencia graves, lo que no excluye, siendo este el unico fundamento del fallo absolutorio, el
concurso de la culpa o negligencia no calificadas, fuente de obligaciones civiles segun el articulo 1902
del Codigo Civil, y que alcanzan, segun el 1903, entre otras personas, a los Directores de
establecimientos o empresas por los daos causados por sus dependientes en determinadas
condiciones, es manifiesto que la de lo civil, al conocer del mismo hecho bajo este ultimo aspecto y al
condenar a la Compaia recurrente a la indemnizacion del dao causado por uno de sus empleados,
lejos de infringir los mencionados textos, en relacion con el articulo 116 de la Ley de Enjuiciamiento
Criminal, se ha atenido estrictamente a ellos, sin invadir atribuciones ajenas a su jurisdiccion propia, ni
contrariar en lo mas minimo el fallo recaido en la causa."
"Considering that the first ground of the appeal is based on the mistaken supposition that the trial court,
in sentencing the Compaia Madrilea to the payment of the damage caused by the death of Ramon
Lafuente Izquierdo, disregards the value and juridical effects of the sentence of acquittal rendered in the
criminal case instituted on account of the same act, when it is a fact that the two jurisdictions had taken
cognizance of the same act in its different aspects, and as the criminal jurisdiction declared within the
limits of its authority that the act in question did not constitute a felony because there was no grave
carelessness or negligence, and this being the only basis of acquittal, it does not exclude the co-

existence of fault or negligence which is not qualified, and is a source of civil obligations according to
article 1902 of the Civil Code, affecting, in accordance with article 1903, among other persons, the
managers of establishments or enterprises by reason of the damages caused by employees under
certain conditions, it is manifest that the civil jurisdiction in taking cognizance of the same act in this
latter aspect and in ordering the company, appellant herein, to pay an indemnity for the damage caused
by one of its employees, far from violating said legal provisions, in relation with article 116 of the Law of
Criminal Procedure, strictly followed the same, without invading attributes which are beyond its own
jurisdiction, and without in any way contradicting the decision in that cause." (Italics supplied.).
It will be noted, as to the case just cited:
First. That the conductor was not sued in a civil case, either separately or with the street car company.
This is precisely what happens in the present case: the driver, Fontanilla, has not been sued in a civil
action, either alone or with his employer.
Second. That the conductor had been acquitted of grave criminal negligence, but the Supreme Tribunal
of Spain said that this did not exclude the co-existence of fault or negligence, which is not qualified, on
the part of the conductor, under article 1902 of the Civil Code. In the present case, the taxi driver was
found guilty of criminal negligence, so that if he had even sued for his civil responsibility arising from the
crime, he would have been held primarily liable for civil damages, and Barredo would have been held
subsidiarily liable for the same. But the plaintiffs are directly suing Barredo, on his primary responsibility
because of his own presumed negligence which he did not overcome under article 1903. Thus,
there were two liabilities of Barredo: first, the subsidiary one because of the civil liability of the taxi
driver arising from the latter's criminal negligence; and, second, Barredo's primary liability as an
employer under article 1903. The plaintiffs were free to choose which course to take, and they preferred
the second remedy. In so doing, they were acting within their rights. It might be observed in passing,
that the plaintiffs chose the more expeditious and effective method of relief, because Fontanilla was
either in prison, or had just been released, and besides, he was probably without property which might
be seized in enforcing any judgment against him for damages.
Third. That inasmuch as in the above sentence of October 21, 1910, the employer was held liable civilly,
notwithstanding the acquittal of the employee (the conductor) in a previous criminal case, with greater
reason should Barredo, the employer in the case at bar, be held liable for damages in a civil suit filed
against him because his taxi driver had been convicted. The degree of negligence of the conductor in the
Spanish case cited was less than that of the taxi driver, Fontanilla, because the former was acquitted in
the previous criminal case while the latter was found guilty of criminal negligence and was sentenced to
an indeterminate sentence of one year and one day to two years of prision correccional.
(See also Sentence of February 19, 1902, which is similar to the one above quoted.).
In the Sentence of the Supreme Court of Spain, dated February 14, 1919, an action was brought against
a railroad company for damages because the station agent, employed by the company, had unjustly and
fraudulently, refused to deliver certain articles consigned to the plaintiff. The Supreme Court of Spain
held that this action was properly under article 1902 of the Civil Code, the court saying:

"Considerando que la sentencia discutida reconoce, en virtud de los hechos que consigna con relacion a
las pruebas del pleito: 1., que las expediciones facturadas por la compaia ferroviaria a la consignacion
del actor de las vasijas vacias que en su demanda relacionan tenian como fin el que este las devolviera a
sus remitentes con vinos y alcoholes; 2., que llegadas a su destino tales mercancias no se quisieron
entregar a dicho consignatario por el jefe de la estacion sin motivo justificado y con intencion dolosa, y
3., que la falta de entrega de estas expediciones al tiempo de reclamarlas el demandante le originaron
daos y perjuicios en cantidad de bastante importancia como expendedor al por mayor que era de vinos
y alcoholes por las ganancias que dejo de obtener al verse privado de servir los pedidos que se le habian
hecho por los remitentes en los envases:
"Considerando que sobre esta base hay necesidad de estimar los cuatro motivos que integran este
recurso, porque la demanda inicial del pleito a que se contrae no contiene accion que nazca del
incumplimiento del contrato de transporte, toda vez que no se funda en el retraso de la llegada de las
mercancias ni de ningun otro vinculo contractual entre las partes contendientes, careciendo, por tanto,
de aplicacion el articulo 371 del Codigo de Comercio, en que principalmente descansa el fallo recurrido,
sino que se limita a pedir la reparacion de los daos y perjuicios producidos en el patrimonio del actor
por la injustificada y dolosa negativa del porteador a la entrega de las mercancias a su nombre
consignadas, segun lo reconoce la sentencia, y cuya responsabilidad esta claramente sancionada en el
articulo 1902 del Codigo Civil, que obliga por el siguiente a la Compaia demandada como ligada con el
causante de aquellos por relaciones de caracter economico y de jerarquia administrativa."
"Considering that the sentence in question recognizes, in virtue of the facts which it declares, in relation
to the evidence in the case: (1) that the invoice issued by the railroad company in favor of the plaintiff
contemplated that the empty receptacles referred to in the complaint should be returned to the
consignors with wines and liquors; (2) that when the said merchandise reached their destination, their
delivery to the consignee was refused by the station agent without justification and with fraudulent
intent, and (3) that the lack of delivery of these goods when they were demanded by the plaintiff caused
him losses and damages of considerable importance, as he was a wholesale vendor of wines and liquors
and he failed to realize the profits when he was unable to fill the orders sent to him by the consignors of
the receptacles:
"Considering that upon this basis there is need of upholding the four assignments of error, as the
original complaint did not contain any cause of action arising from non-fulfilment of a contract of
transportation, because the action was not based on the delay of the goods nor on any contractual
relation between the parties litigant and, therefore, article 371 of the Code of Commerce, on which the
decision appealed from is based, is not applicable; but it limits itself to asking for reparation for losses
and damages produced on the patrimony of the plaintiff on account of the unjustified and fraudulent
refusal of the carrier to deliver the goods consigned to the plaintiff as stated by the sentence, and the
carrier's responsibility is clearly laid down in article 1902 of the Civil Code which binds, in virtue of the
next article, the defendant company, because the latter is connected with the person who caused the
damage by relations of economic character and by administrative hierarchy." (Emphasis supplied.)

The above case is pertinent because it shows that the same act may come under both the Penal Code
and the Civil Code. In that case, the action of the agent was unjustified and fraudulent and therefore
could have been the subject of a criminal action. And yet, it was held to be also a proper subject of a civil
action under article 1902 of the Civil Code. It is also to be noted that it was the employer and not the
employee who was being sued.
Let us now examine the cases previously decided by this Court.
In the leading case of Rakes vs. Atlantic Gulf and Pacific Co. (7 Phil., 359, 362-365 [year 1907]), the trial
court awarded damages to the plaintiff, a laborer of the defendant, because the latter had negligently
failed to repair a tramway, in consequence of which the rails slid off while iron was being transported,
and caught the plaintiff whose leg was broken. This Court held:.
"It is contended by the defendant, as its first defense to the action that the necessary conclusion from
these collated laws is that the remedy for injuries through negligence lies only in a criminal action in
which the official criminally responsible must be made primarily liable and his employer held only
subsidiarily to him. According to this theory the plaintiff should have procured the arrest of the
representative of the company accountable for not repairing the track, and on his prosecution a suitable
fine should have been imposed, payable primarily by him and secondarily by his employer.
"This reasoning misconceived the plan of the Spanish codes upon this subject. Article 1093 of the Civil
Code makes obligations arising from faults or negligence not punished by the law, subject to the
provisions of Chapter II of Title XVI. Section 1902 of that chapter reads:
" 'A person who by an act or omission causes damage to another when there is fault or negligence shall
be obliged to repair the damage so done.
" 'SEC. 1903. The obligation imposed by the preceding article is demandable, not only for personal
acts and omissions, but also for those of the persons for whom they should be responsible.
" 'The father, and on his death or incapacity, the mother, is liable for the damages caused by the minors
who live with them.
xxx

xxx

xxx

" 'Owners or directors of an establishment or enterprise are equally liable for the damages caused by
their employees in the service of the branches in which the latter may be employed or in the
performance of their duties.
xxx

xxx

xxx

" 'The liability referred to in this article shall cease when the persons mentioned therein prove that they
employed all the diligence of a good father of a family to avoid the damage.'"
"As an answer to the argument urged in this particular action it may be sufficient to point out that
nowhere in our general statutes is the employer penalized for failure to provide or maintain safe

appliances for his workmen. His obligation therefore is one 'not punished by the laws' and falls under
civil rather than criminal jurisprudence. But the answer may be a broader one. We should be reluctant,
under any conditions, to adopt a forced construction of these scientific codes, such as is proposed by the
defendant, that would rob some of these articles of effect, would shut out litigants against their will
from the civil courts, would make the assertion of their rights dependent upon the selection for
prosecution of the proper criminal offender, and render recovery doubtful by reason of the strict rules
of proof prevailing in criminal actions. Even if these articles had always stood alone, such a construction
would be unnecessary, but clear light is thrown upon their meaning by the provisions of the Law of
Criminal Procedure of Spain (Ley de Enjuiciamiento Criminal), which, though never in actual force in
these Islands, was formerly given a suppletory or explanatory effect. Under article 111 of this law, both
classes of action, civil and criminal, might be prosecuted jointly or separately, but while the penal action
was pending the civil was suspended. According to article 112, the penal action once started, the civil
remedy should be sought therewith, unless it had been waived by the party injured or been expressly
reserved by him for civil proceedings for the future. If the civil action alone was prosecuted, arising out
of a crime that could be enforced only on private complaint, the penal action thereunder should be
extinguished. These provisions are in harmony with those of articles 23 and 133 of our Penal Code on
the same subject.
"An examination of this topic might be carried much further, but the citation of these articles suffices to
show that the civil liability was not intended to be merged in the criminal nor even to be suspended
thereby, except as expressly provided in the law. Where an individual is civilly liable for a negligent act
or omission, it is not required that the injured party should seek out a third person criminally liable
whose prosecution must be a condition precedent to the enforcement of the civil right.
"Under article 20 of the Penal Code the responsibility of an employer may be regarded as subsidiary in
respect of criminal actions against his employees only while they are in process of prosecution, or in so
far as they determine the existence of the criminal act from which liability arises, and his obligation
under the civil law and its enforcement in the civil courts is not barred thereby unless by the election of
the injured person. Inasmuch as no criminal proceeding had been instituted, growing out of the accident
in question, the provisions of the Penal Code can not affect this action. This construction renders it
unnecessary to finally determine here whether this subsidiary civil liability in penal actions has survived
the laws that fully regulated it or has been abrogated by the American civil and criminal procedure now
in force in the Philippines.
"The difficulty in construing the articles of the code above cited in this case appears from the briefs
before us to have arisen from the interpretation of the words of article 1093, 'fault or negligence not
punished by law,' as applied to the comprehensive definition of offenses in articles 568 and 590 of the
Penal Code. It has been shown that the liability of an employer arising out of his relation to his employee
who is the offender is not to be regarded as derived from negligence punished by the law, within the
meaning of articles 1902 and 1093. More than this, however, it cannot be said to fall within the class of
acts unpunished by the law, the consequences of which are regulated by articles 1902 and 1903 of the
Civil Code. The acts to which these articles are applicable are understood to be those not growing out of
pre-existing duties of the parties to one another. But where relations already formed give rise to duties,

whether springing from contract or quasi contract, then breaches of those duties are subject to articles
1101, 1103, and 1104 of the same code. A typical application of this distinction may be found in the
consequences of a railway accident due to defective machinery supplied by the employer. His liability to
his employee would arise out of the contract of employment, that to the passengers out of the contract
for passage, while that to the injured bystander would originate in the negligent act itself."
In Manzanares vs. Moreta, 38 Phil., 821 (year 1918), the mother of the 8 or 9-year-old child Salvador
Bona brought a civil action against Moreta to recover damages resulting from the death of the child,
who had been run over by an automobile driven and managed by the defendant. The trial court
rendered judgment requiring the defendant to pay the plaintiff the sum of P1,000 as indemnity: This
Court in affirming the judgment, said in part:
"If it were true that the defendant, in coming from the southern part of Solana Street, had to stop his
auto before crossing Real Street, because he had met vehicles which were going along the latter street
or were coming from the opposite direction along Solana Street, it is to be believed that, when he again
started to run his auto across said Real Street and to continue its way along Solana Street northward, he
should have adjusted the speed of the auto which he was operating until he had fully crossed Real
Street and had completely reached a clear way on Solana Street. But, as the child was run over by the
auto precisely at the entrance of Solana Street, this accident could not have occurred if the auto had
been running at a slow speed, aside from the fact that the defendant, at the moment of crossing Real
Street and entering Solana Street, in a northward direction, could have seen the child in the act of
crossing the latter street from the sidewalk on the right to that on the left, and if the accident had
occurred in such a way that after the automobile had run over the body of the child, and the child's body
had already been stretched out on the ground, the automobile still moved along a distance of about 2
meters, this circumstance shows the fact that the automobile entered Solana Street from Real Street, at
a high speed without the defendant having blown the horn. If these precautions had been taken by the
defendant, the deplorable accident which caused the death of the child would not have occurred."
It will be noticed that the defendant in the above case could have been prosecuted in a criminal case
because his negligence causing the death of the child was punishable by the Penal Code. Here is
therefore a clear instance of the same act of negligence being a proper subject-matter either of a
criminal action with its consequent civil liability arising from a crime or of an entirely separate and
independent civil action for fault or negligence under article 1902 of the Civil Code. Thus, in this
jurisdiction, the separate individuality of a cuasi-delito or culpa aquiliana under the Civil Code has been
fully and clearly recognized, even with regard to a negligent act for which the wrongdoer could have
been prosecuted and convicted in a criminal case and for which, after such a conviction, he could have
been sued for this civil liability arising from his crime.
Years later (in 1930) this Court had another occasion to apply the same doctrine. In Bernal and Enverso
vs. House and Tacloban Electric & Ice Plant, Ltd., 54 Phil., 327, the parents of the five- year-old child,
Purificacion Bernal, brought a civil action to recover damages for the child's death as a result of burns
caused by the fault and negligence of the defendants. On the evening of April 10, 1925, the Good Friday
procession was held in Tacloban, Leyte. Fortunata Enverso with her daughter Purificacion Bernal had

come from another municipality to attend the same. After the procession the mother and the daughter
with two others were passing along Gran Capitan Street in front of the offices of the Tacloban Electric &
Ice Plant, Ltd., owned by defendant J. V. House, when an automobile appeared from the opposite
direction. The little girl, who was slightly ahead of the rest, was so frightened by the automobile that she
turned to run, but unfortunately she fell into the street gutter where hot water from the electric plant
was flowing. The child died that same night from the burns. The trial court dismissed the action because
of the contributory negligence of the plaintiffs. But this Court held, on appeal, that there was no
contributory negligence, and allowed the parents P1,000 in damages from J. V. House who at the time of
the tragic occurrence was the holder of the franchise for the electric plant. This Court said in part:
"Although the trial judge made the findings of fact hereinbefore outlined, he nevertheless was led to
order the dismissal of the action because of the contributory negligence of the plaintiffs. It is from this
point that a majority of the court depart from the stand taken by the trial judge. The mother and her
child had a perfect right to be on the principal street of Tacloban, Leyte, on the evening when the
religious procession was held. There was nothing abnormal in allowing the child to run along a few paces
in advance of the mother. No one could foresee the coincidence of an automobile appearing and of a
frightened child running and falling into a ditch filled with hot water. The doctrine announced in the
much debated case of Rakes vs. Atlantic Gulf and Pacific Co. ([1907], 7 Phil., 359), still rule. Article 1902
of the Civil Code must again be enforced. The contributory negligence of the child and her mother, if
any, does not operate as a bar to recovery, but in its strictest sense could only result in reduction of the
damages."
It is most significant that in the case just cited, this Court specifically applied article 1902 of the Civil
Code. It is thus that although J. V. House could have been criminally prosecuted for reckless or simple
negligence and not only punished but also made civilly liable because of his criminal negligence,
nevertheless this Court awarded damages in an independent civil action for fault or negligence under
article 1902 of the Civil Code.
In Bahia vs. Litonjua and Leynes (30 Phil., 624 [year 1915]), the action was for damages for the death of
the plaintiff's daughter alleged to have been caused by the negligence of the servant in driving an
automobile over the child. It appeared that the cause of the mishap was a defect in the steering gear.
The defendant Leynes had rented the automobile from the International Garage of Manila, to be used
by him in carrying passengers during the fiesta of Tuy, Batangas. Leynes was ordered by the lower court
to pay P1,000 as damages to the plaintiff. On appeal this Court reversed the judgment as to Leynes on
the ground that he had shown that he exercised the care of a good father of a family, thus overcoming
the presumption of negligence under article 1903. This Court said:
"As to selection, the defendant has clearly shown that he exercised the care and diligence of a good
father of a family. He obtained the machine from a reputable garage and it was, so far as appeared, in
good condition. The workmen were likewise selected from a standard garage, were duly licensed by the
Government in their particular calling, and apparently thoroughly competent. The machine had been
used but a few hours when the accident occurred and it is clear from the evidence that the defendant
had no notice, either actual or constructive, of the defective condition of the steering gear."

The legal aspect of the case was discussed by this Court thus:.
"Article 1903 of the Civil Code not only establishes liability in cases of negligence, but also provides
when the liability shall cease. It says:
" 'The liability referred to in this article shall cease when the persons mentioned therein prove that they
employed all the diligence of a good father of a family to avoid the damage.'"
"From this article two things are apparent: (1) That when an injury is caused by the negligence of a
servant or employee there instantly arises a presumption of law that there was negligence on the part of
the master or employer either in the selection of the servant or employee, or in supervision over him
after the selection, or both; and (2) that that presumption is juris tantum and not juris et de jure, and
consequently, may be rebutted. It follows necessarily that if the employer shows to the satisfaction of
the court that in selection and supervision he has exercised the care and diligence of a good father of a
family, the presumption is overcome and he is relieved from liability.
"This theory bases the responsibility of the master ultimately on his own negligence and not on that of
his servant."
The doctrine of the case just cited was followed by this Court in Cerf vs. Medel (33 Phil., 37 [year 1915]).
In the latter case, the complaint alleged that the defendant's servant had so negligently driven an
automobile, which was operated by defendant as a public vehicle, that said automobile struck and
damaged the plaintiff's motorcycle. This Court, applying article 1903 and following the rule in Bahia vs.
Litonjua and Leynes, said in part (p. 41) that:
"The master is liable for the negligent acts of his servant where he is the owner or director of a business
or enterprise and the negligent acts are committed while the servant is engaged in his master's
employment as such owner"
Another case which followed the decision in Bahia vs. Litonjua and Leynes was Cuison vs. Norton &
Harrison Co., 55 Phil., 18 (year 1930). The latter case was an action for damages brought by Cuison for
the death of his seven-year-old son Moises. The little boy was on his way to school with his sister
Marciana. Some large pieces of lumber fell from a truck and pinned the boy underneath, instantly killing
him. Two youths, Telesforo Binoya and Francisco Bautista, who were working for Ora, an employee of
defendant Norton & Harrison Co., pleaded guilty to the crime of homicide through reckless negligence
and were sentenced accordingly. This Court, applying articles 1902 and 1903, held:
"The basis of civil law liability is not respondeat superior but the relationship of pater familias. This
theory bases the liability of the master ultimately on his own negligence and not on that of his servant."
(Bahia vs. Litonjua and Leynes [1915], 30 Phil., 624; Cangco vs. Manila Railroad Co. [1918], 38 Phil., 768.)
In Walter A. Smith & Co. vs. Cadwallader Gibson Lumber Co., 55 Phil., 517 (year 1930) the plaintiff
brought an action for damages for the demolition of its wharf, which had been struck by the steamer
Helen C belonging to the defendant. This Court held (p. 526):

"The evidence shows that Captain Lasa at the time the plaintiff's wharf collapsed was a duly licensed
captain, authorized to navigate and direct a vessel of any tonnage, and that the appellee contracted his
services because of his reputation as a captain, according to F. C. Cadwallader. This being so, we are of
the opinion that the presumption of liability against the defendant has been overcome by the exercise
of the care and diligence of a good father of a family in selecting Captain Lasa, in accordance with the
doctrines laid down by this court in the cases cited above, and the defendant is therefore absolved from
all liability."
It is, therefore, seen that the defendant's theory about his secondary liability is negatived by the six
cases above set forth. He is, on the authority of these cases, primarily and directly responsible in
damages under article 1903, in relation to article 1902, of the Civil Code.
Let us now take up the Philippine decisions relied upon by the defendant. We study first, City of Manila
vs. Manila Electric Co., 52 Phil., 586 (year 1928). A collision between a truck of the City of Manila and a
street car of the Manila Electric Co. took place on June 8, 1925. The truck was damaged in the amount of
P1,788.27. Sixto Eustaquio, the motorman, was prosecuted for the crime of damage to property and
slight injuries through reckless imprudence. He was found guilty and sentenced to pay a fine of P900, to
indemnify the City of Manila for P1,788.27, with subsidiary imprisonment in case of insolvency. Unable
to collect the indemnity from Eustaquio, the City of Manila filed an action against the Manila Electric
Company to obtain payment, claiming that the defendant was subsidiarily liable. The main defense was
that the defendant had exercised the diligence of a good father of a family to prevent the damage. The
lower court rendered judgment in favor of the plaintiff. This Court held, in part, that this case was
governed by the Penal Code, saying:
"With this preliminary point out of the way, there is no escaping the conclusion that the provisions of
the Penal Code govern. The Penal Code in easily understandable language authorizes the determination
of subsidiary liability. The Civil Code negatives its application by providing that civil obligations arising
from crimes or misdemeanors shall be governed by the provisions of the Penal Code. The conviction of
the motorman was a misdemeanor falling under article 604 of the Penal Code. The act of the motorman
was not a wrongful or negligent act or omission not punishable by law. Accordingly, the civil obligation
connected up with the Penal Code and not with article 1903 of the Civil Code. In other words, the Penal
Code affirms its jurisdiction while the Civil Code negatives its jurisdiction. This is a case of criminal
negligence out of which civil liability arises and not a case of civil negligence."
xxx

xxx

xxx

"Our deduction, therefore, is that the case relates to the Penal Code and not to the Civil Code. Indeed,
as pointed out by the trial judge, any different ruling would permit the master to escape scot- free by
simply alleging and proving that the master had exercised all diligence in the selection and training of its
servants to prevent the damage. That would be a good defense to a strictly civil action, but might or
might not be to a civil action either as a part of or predicated on conviction for a crime or misdemeanor.
(By way of parenthesis, it may be said further that the statements here made are offered to meet the

argument advanced during our deliberations to the effect that article 1902 of the Civil Code should be
disregarded and codal articles 1093 and 1903 applied.)"
It is not clear how the above case could support the defendant's proposition, because the Court of
Appeals based its decision in the present case on the defendant's primary responsibility under article
1903 of the Civil Code and not on his subsidiary liability arising from Fontanilla's criminal negligence. In
other words, the case of City of Manila vs. Manila Electric Co., supra, is predicated on an entirely
different theory, which is the subsidiary liability of an employer arising from a criminal act of his
employee, whereas the foundation of the decision of the Court of Appeals in the present case is the
employer's primary liability under article 1903 of the Civil Code. We have already seen that this is a
proper and independent remedy.
Arambulo vs. Manila Electric Co. (55 Phil., 75), is another case invoked by the defendant. A motorman in
the employ of the Manila Electric Company had been convicted of homicide by simple negligence and
sentenced, among other things, to pay the heirs of the deceased the sum of P1,000. An action was then
brought to enforce the subsidiary liability of the defendant as employer under the Penal Code. The
defendant attempted to show that it had exercised the diligence of a good father of a family in selecting
the motorman, and therefore claimed exemption from civil liability. But this Court held:
"In view of the foregoing considerations, we are of opinion and so hold, (1) that the exemption from civil
liability established in article 1903 of the Civil Code for all who have acted with the diligence of a good
father of a family, is not applicable to the subsidiary civil liability provided in article 20 of the Penal
Code."
The above case is also extraneous to the theory of the defendant in the instant case, because the action
there had for its purpose the enforcement of the defendant's subsidiary liability under the Penal Code,
while in the case at bar, the plaintiff's cause of action is based on the defendant's primary and direct
responsibility under article 1903 of the Civil Code. In fact, the above case destroys the defendant's
contention because that decision illustrates the principle that the employer's primary responsibility
under article 1903 of the Civil Code is different in character from his subsidiary liability under the Penal
Code.
In trying to apply the two cases just referred to, counsel for the defendant has failed to recognize the
distinction between civil liability arising from a crime, which is governed by the Penal Code, and the
responsibility for cuasi-delito or culpa aquiliana under the Civil Code, and has likewise failed to give due
importance to the latter type of civil action.
The defendant-petitioner also cites Francisco vs. Onrubia (46 Phil., 327). That case need not be set forth.
Suffice it to say that the question involved was also civil liability arising from a crime. Hence, it is as
inapplicable as the two cases above discussed.
The foregoing authorities clearly demonstrate the separate individuality of cuasi-delitos or culpa
aquiliana under the Civil Code. Specifically they show that there is a distinction between civil liability
arising from criminal negligence (governed by the Penal Code) and responsibility for fault or negligence

under articles 1902 to 1910 of the Civil Code, and that the same negligent act may produce either a civil
liability arising from a crime under the Penal Code, or a separate responsibility for fault or negligence
under articles 1902 to 1910 of the Civil Code. Still more concretely, the authorities above cited render it
inescapable to conclude that the employer in this case the defendant-petitioner is primarily and
directly liable under article 1903 of the Civil Code.
The legal provisions, authors, and cases already invoked should ordinarily be sufficient to dispose of this
case. But inasmuch as we are announcing doctrines that have been little understood in the past, it might
not be inappropriate to indicate their foundations.
Firstly, the Revised Penal Code in article 365 punishes not only reckless but also simple negligence. If we
were to hold that articles 1902 to 1910 of the Civil Code refer only to fault or negligence not punished by
law, according to the literal import of article 1093 of the Civil Code, the legal institution of culpa
aquiliana would have very little scope and application in actual life. Death or injury to persons and
damage to property through any degree of negligence even the slightest would have to be
indemnified only through the principle of civil liability arising from a crime. In such a state of affairs,
what sphere would remain for cuasi-delito or culpa aquiliana? We are loath to impute to the lawmaker
any intention to bring about a situation so absurd and anomalous. Nor are we, in the interpretation of
the laws, disposed to uphold the letter that killeth rather than the spirit that giveth life. We will not use
the literal meaning of the law to smother and render almost lifeless a principle of such ancient origin
and such full-grown development as culpa aquiliana or cuasi-delito, which is conserved and made
enduring in articles 1902 to 1910 of the Spanish Civil Code.
Secondly, to find the accused guilty in a criminal case, proof of guilt beyond reasonable doubt is
required, while in a civil case, preponderance of evidence is sufficient to make the defendant pay in
damages. There are numerous cases of criminal negligence which can not be shown beyond reasonable
doubt, but can be proved by a preponderance of evidence. In such cases, the defendant can and should
be made responsible in a civil action under articles 1902 to 1910 of the Civil Code. Otherwise, there
would be many instances of unvindicated civil wrongs. Ubi jus ibi remedium.
Thirdly, to hold that there is only one way to make defendant's liability effective, and that is, to sue the
driver and exhaust his (the latter's) property first, would be tantamount to compelling the plaintiff to
follow a devious and cumbersome method of obtaining relief. True, there is such a remedy under our
laws, but there is also a more expeditious way, which is based on the primary and direct responsibility of
the defendant under article 1903 of the Civil Code. Our view of the law is more likely to facilitate remedy
for civil wrongs, because the procedure indicated by the defendant is wasteful and productive of delay,
it being a matter of common knowledge that professional drivers of taxis and similar public conveyances
usually do not have sufficient means with which to pay damages. Why then, should the plaintiff be
required in all cases to go through this roundabout, unnecessary, and probably useless procedure? In
construing the laws, courts have endeavored to shorten and facilitate the pathways of right and justice.
At this juncture, it should be said that the primary and direct responsibility of employers and their
presumed negligence are principles calculated to protect society. Workmen and employees should be

carefully chosen and supervised in order to avoid injury to the public. It is the masters or employers who
principally reap the profits resulting from the services of these servants and employees. It is but right
that they should guarantee the latter's careful conduct for the personnel and patrimonial safety of
others. As Theilhard has said, "they should reproach themselves, at least, some for their weakness,
others for their poor selection and all for their negligence." And according to Manresa, "It is much more
equitable and just that such responsibility should fall upon the principal or director who could have
chosen a careful and prudent employee, and not upon the injured person who could not exercise such
selection and who used such employee because of his confidence in the principal or director." (Vol. 12,
p. 622, 2nd Ed.) Many jurists also base this primary responsibility of the employer on the principle of
representation of the principal by the agent. Thus, Oyuelos says in the work already cited (Vol. 7, p. 747)
that before third persons the employer and employee "vienen a ser como una sola personalidad, por
refundicion de la del dependiente en la de quien le emplea y utiliza." ("become as one personality by the
merging of the person of the employee in that of him who employs and utilizes him.") All these
observations acquire a peculiar force and significance when it comes to motor accidents, and there is
need of stressing and accentuating the responsibility of owners of motor vehicles.
Fourthly, because of the broad sweep of the provisions of both the Penal Code and the Civil Code on this
subject, which has given rise to the overlapping or concurrence of spheres already discussed, and for
lack of understanding of the character and efficacy of the action for culpa aquiliana, there has grown up
a common practice to seek damages only by virtue of the civil responsibility arising from a crime,
forgetting that there is another remedy, which is by invoking articles 1902-1910 of the Civil Code.
Although this habitual method is allowed by our laws, it has nevertheless rendered practically useless
and nugatory the more expeditious and effective remedy based on culpa aquiliana or culpa extracontractual. In the present case, we are asked to help perpetuate this usual course. But we believe it is
high time we pointed out to the harm done by such practice and to restore the principle of responsibility
for fault or negligence under articles 1902 et seq. of the Civil Code to its full rigor. It is high time we
caused the stream of quasi-delict or culpa aquiliana to flow on its own natural channel, so that its waters
may no longer be diverted into that of a crime under the Penal Code. This will, it is believed, make for
the better safeguarding of private rights because it re- establishes an ancient and additional remedy,
and for the further reason that an independent civil action, not depending on the issues, limitations and
results of a criminal prosecution, and entirely directed by the party wronged or his counsel, is more
likely to secure adequate and efficacious redress.
In view of the foregoing, the judgment of the Court of Appeals should be and is hereby affirmed, with
costs against the defendant- petitioner.
Yulo, C.J., Moran, Ozaeta and Paras, JJ., concur.

FIRST DIVISION
[G.R. No. L-32599. June 29, 1979.]
EDGARDO E. MENDOZA, petitioner, vs. HON. ABUNDIO Z. ARRIETA, Presiding Judge of Branch VIII, Court
of First Instance of Manila, FELINO TIMBOL, and RODOLFO SALAZAR, respondents.
David G. Nitafan for petitioner.
Arsenio R. Reyes for respondent Timbol.
Armando M. Pulgado for respondent Salazar.
DECISION
MELENCIO-HERRERA, J p:
Petitioner, Edgardo Mendoza, seeks a review on Certiorari of the Orders of respondent Judge in Civil
Case No. 80803 dismissing his Complaint for Damages based on quasi-delict against respondents Felino
Timbol and Rodolfo Salazar.
The facts which spawned the present controversy may be summarized as follows:
On October 22, 1969, at about 4:00 o'clock in the afternoon, a three-way vehicular accident occurred
along Mac-Arthur Highway, Marilao, Bulacan, involving a Mercedes Benz owned and driven by
petitioner; a private jeep owned and driven by respondent Rodolfo Salazar; and a gravel and sand truck
owned by respondent Felipino Timbol and driven by Freddie Montoya. As a consequence of said mishap,
two separate Informations for Reckless Imprudence Causing Damage to Property were filed against
Rodolfo Salazar and Freddie Montoya with the Court of First Instance of Bulacan. The case against truckdriver Montoya, docketed as Criminal Case No. SM-227, was for causing damage to the jeep owned by
Salazar, in the amount of P1,604.00, by hitting it at the right rear portion thereby causing said jeep to hit
and bump an oncoming car, which happened to be petitioner's Mercedes Benz. The case against jeepowner-driver Salazar, docketed as Criminal Case No. SM-228, was for causing damage to the Mercedes
Benz of petitioner in the amount of P8,890.00.
At the joint trial of the above cases, petitioner testified that jeep-owner-driver Salazar overtook the
truck driven by Montoya, swerved to the left going towards the poblacion of Marilao, and hit his car
which was bound for Manila. Petitioner further testified that before the impact, Salazar had jumped
from the jeep and that he was not aware that Salazar's jeep was bumped from behind by the truck
driven by Montoya. Petitioner's version of the accident was adopted by truck-driver Montoya. Jeepowner-driver Salazar, on the other hand, tried to show that, after overtaking the truck driven by
Montoya, he flashed a signal indicating his intention to turn left towards the poblacion of Marilao but
was stopped at the intersection by a policeman who was directing traffic; that while he was at a stop
position, his jeep was bumped at the rear by the truck driven by Montoya causing him to be thrown out

of the jeep, which then swerved to the left and hit petitioner's car, which was coming from the opposite
direction.
On July 31, 1970, the Court of First Instance of Bulacan, Branch V, Sta. Maria, rendered judgment,
stating in its decretal portion:
"IN VIEW OF THE FOREGOING, this Court finds the accused Freddie Montoya GUILTY beyond reasonable
doubt of the crime of damage to property thru reckless imprudence in Crim. Case No. SM-227, and
hereby sentences him to pay a fine of P972.50 and to indemnify Rodolfo Salazar in the same amount of
P972.50 as actual damages, with subsidiary imprisonment in case of insolvency, both as to fine and
indemnity, with costs.
"Accused Rodolfo Salazar is hereby ACQUITTED from the offense charged in Crim. Case No. SM-228, with
costs de oficio, and his bond is ordered cancelled.
"SO ORDERED." 1
Thus, the trial Court absolved jeep-owner-driver Salazar of any liability, civil and criminal, in view of its
findings that the collision between Salazar's jeep and petitioner's car was the result of the former having
been bumped from behind by the truck driven by Montoya. Neither was petitioner awarded damages as
he was not a complainant against truck-driver Montoya but only against jeep-owner-driver Salazar.
On August 22, 1970, or after the termination of the criminal cases, petitioner filed Civil Case No. 80803
with the Court of First Instance of Manila against respondents jeep-owner-driver Salazar and Felino
Timbol, the latter being the owner of the gravel and sand truck driven by Montoya, for indemnification
for the damages sustained by his car as a result of the collision involving their vehicles. Jeep-ownerdriver Salazar and truck-owner Timbol were joined as defendants, either in the alternative or in solidum,
allegedly for the reason that petitioner was uncertain as to whether he was entitled to relief against
both on only one of them.
On September 9, 1970, truck-owner Timbol filed a Motion to Dismiss Civil Case No. 80803 on the
grounds that the Complaint is barred by a prior judgment in the criminal cases and that it fails to state a
cause of action. An Opposition thereto was filed by petitioner.
In an Order dated September 12, 1970, respondent Judge dismissed the Complaint against truck-owner
Timbol for reasons stated in the afore-mentioned Motion to Dismiss. On September 30, 1970, petitioner
sought before this Court the review of that dismissal, to which petition we gave due course.
On January 30, 1971, upon motion of jeep-owner-driver Salazar, respondent Judge also dismissed the
case as against the former. Respondent Judge reasoned out that "while it is true that an independent
civil action for liability under Article 2177 of the Civil Code could be prosecuted independently of the
criminal action for the offense from which it arose, the New Rules of Court, which took effect on January
1, 1964, requires an express reservation of the civil action to be made in the criminal action; otherwise,
the same would be barred pursuant to Section 2, Rule 111 . . ." 2 Petitioner's Motion for

Reconsideration thereof was denied in the order dated February 23, 1971, with respondent Judge
suggesting that the issue be raised to a higher Court "for a more decisive interpretation of the rule." 3
On March 25, 1971, petitioner then filed a Supplemental Petition before us, also to review the last two
mentioned Orders, to which we required jeep-owner-driver Salazar to file an Answer.
The Complaint against truck-owner Timbol
We shall first discuss the validity of the Order, dated September 12, 1970, dismissing petitioner's
Complaint against truck-owner Timbol.
In dismissing the Complaint against the truck-owner, respondent Judge sustained Timbol's allegations
that the civil suit is barred by the prior joint judgment in Criminal Cases Nos. SM-227 and SM-228,
wherein no reservation to file a separate civil case was made by petitioner and where the latter actively
participated in the trial and tried to prove damages against jeep-driver Salazar only; and that the
Complaint does not state a cause of action against truck-owner Timbol inasmuch as petitioner
prosecuted jeep-owner-driver Salazar as the one solely responsible for the damage suffered by his car.
Well-settled is the rule that for a prior judgment to constitute a bar to a subsequent case, the following
requisites must concur: (1) it must be a final judgment; (2) it must have been rendered by a Court having
jurisdiction over the subject matter and over the parties; (3) it must be a judgment on the merit; and (4)
there must be, between the first and second actions, identity of parties, identity of subject matter and
identity of cause of action.
It is conceded that the first three requisites of res judicata are present. However, we agree with
petitioner that there is no identity of cause of action between Criminal Case No. SM-227 and Civil Case
No. 80803. Obvious is the fact that in said criminal case truck-driver Montoya was not prosecuted for
damage to petitioner's car but for damage to the jeep. Neither was truck-owner Timbol a party in said
case. In fact as the trial Court had put it "the owner of the Mercedes Benz cannot recover any damages
from the accused Freddie Montoya, he (Mendoza) being a complainant only against Rodolfo Salazar in
Criminal Case No. SM-228." 4 And more importantly, in the criminal cases, the cause of action was the
enforcement of the civil liability arising from criminal negligence under Article 100 of the Revised Penal
Code, whereas Civil Case No. 80803 is based on quasi-delict under Article 2180, in relation to Article
2176 of the Civil Code. As held in Barredo vs. Garcia, et al.: 5
"The foregoing authorities clearly demonstrate the separate individuality of cuasi-delitos or culpa
aquiliana under the Civil Code. Specifically they show that there is a distinction between civil liability
arising from criminal negligence (governed by the Penal Code) and responsibility for fault or negligence
under articles 1902 to 1910 of the Civil Code, and that the same negligent act may produce either a civil
liability arising from a crime under the Penal Code, or a separate responsibility for fault or negligence
under articles 1902 to 1910 of the Civil Code. Still more concretely, the authorities above cited render it
inescapable to conclude that the employer in this case the defendant petitioner is primarily and directly
liable under article 1903 of the Civil Code."

That petitioner's cause of action against Timbol in the civil case is based on quasi-delict is evident from
the recitals in the complaint, to wit: that while petitioner was driving his car along MacArthur Highway
at Marilao, Bulacan, a jeep owned and driven by Salazar suddenly swerved to his (petitioner's) lane and
collided with his car; That the sudden swerving of Salazar's jeep was caused either by the negligence and
lack of skill of Freddie Montoya, Timbol's employee, who was then driving a gravel and sand truck in the
same direction as Salazar's jeep; and that as a consequence of the collision, petitioner's car suffered
extensive damage amounting to P12,248.20 and that he likewise incurred actual and moral damages,
litigation expenses and attorney's fees. Clearly, therefore, the two factors that a cause of action must
consist of, namely: (1) plaintiff's primary right, i.e., that he is the owner of a Mercedes Benz, and (2)
defendant's delict or wrongful act or omission which violated plaintiff's primary right, i.e., the negligence
or lack of skill either of jeep-owner Salazar or of Timbol's employee, Montoya, in driving the truck,
causing Salazar's jeep to swerve and collide with petitioner's car, were alleged in the Complaint. 6
Consequently, petitioner's cause of action being based on quasi-delict, respondent Judge committed
reversible error when he dismissed the civil suit against the truck-owner, as said case may proceed
independently of the criminal proceedings and regardless of the result of the latter.
"Art. 31.
When the civil action is based on an obligation not arising from the act or omission
complained of as a felony, such civil action may proceed independently of the criminal proceedings and
regardless of the result of the latter."
But it is truck-owner Timbol's submission (as well as that of jeep-owner-driver Salazar) that petitioner's
failure to make a reservation in the criminal action of his right to file an independent civil action bars the
institution of such separate civil action, invoking section 2, Rule 111, Rules of Court, which says:
"Section 2. Independent civil action. In the cases provided for in Articles 31, 32, 33, 34 and 2177 of
the Civil Code of the Philippines, an independent civil action entirely separate and distinct from the
criminal action, may be brought by the injured party during the pendency of the criminal case, provided
the right is reserved as required in the preceding section. Such civil action shall proceed independently
of the criminal prosecution, and shall require only a preponderance of evidence."
Interpreting the above provision, this Court, in Garcia vs. Florido, 7 said:
"As we have stated at the outset, the same negligent act causing damages may produce a civil liability
arising from crime or create an action for quasi-delict or culpa extra-contractual. The former is a
violation of the criminal law, while the latter is a distinct and independent negligence, having always had
its own foundation and individuality. Some legal writers are of the view that in accordance with Article
31, the civil action based upon quasi-delict may proceed independently of the criminal proceeding for
criminal negligence and regardless of the result of the latter. Hence, 'the proviso in Section 2 of Rule 111
with reference to . . . Articles 32, 33 and 34 of the Civil Code is contrary to the letter and spirit of the said
articles, for these articles were drafted . . . and are intended to constitute as exceptions to the general
rule stated in what is now Section 1 of Rule 111. The proviso, which is procedural, may also be regarded
as an unauthorized amendment of substantive law, Articles 32, 33 and 34 of the Civil Code, which do not
provide for the reservation required in the proviso.' . . ."

In his concurring opinion in the above case, Mr. Justice Antonio Barredo further observed that inasmuch
as Articles 2176 and 2177 of the Civil Code create a civil liability distinct and different from the civil
action arising from the offense of negligence under the Revised Penal Code, no reservation, therefore,
need be made in the criminal case; that Section 2 of Rule 111 is inoperative, "it being substantive in
character and is not within the power of the Supreme Court to promulgate; and even if it were not
substantive but adjective, it cannot stand because of its inconsistency with Article 2177, an enactment
of the legislature superseding the Rules of 1940."
We declare, therefore, that in so far as truck-owner Timbol is concerned, Civil Case No. 80803 is not
barred by the fact that petitioner failed to reserve, in the criminal action, his right to file an independent
civil action based on quasi-delict.

The suit against jeep-owner-driver Salazar

The case as against jeep-owner-driver Salazar, who was acquitted in Criminal Case No. SM-228, presents
a different picture altogether.
At the outset it should be clarified that inasmuch as civil liability coexists with criminal responsibility in
negligence cases, the offended party has the option between an action for enforcement of civil liability
based on culpa criminal under Article 100 of the Revised Penal Code, and an action for recovery of
damages based on culpa aquiliana under Article 2177 of the Civil Code. The action for enforcement of
civil liability based on culpa criminal under section 1 of Rule 111 of the Rules of Court is deemed
simultaneously instituted with the criminal action, unless expressly waived or reserved for separate
application by the offended party. 8
The circumstances attendant to the criminal case yields the conclusion that petitioner had opted to base
his cause of action against jeep-owner-driver Salazar on culpa criminal and not on culpa aquiliana, as
evidenced by his active participation and intervention in the prosecution of the criminal suit against said
Salazar. The latter's civil liability continued to be involved in the criminal action until its termination.
Such being the case, there was no need for petitioner to have reserved his right to file a separate civil
action as his action for civil liability was deemed impliedly instituted in Criminal Case No. SM-228.
Neither would an independent civil action be. Noteworthy is the basis of the acquittal of jeep-ownerdriver Salazar in the criminal case, expounded by the trial Court in this wise:
"In view of what has been proven and established during the trial, accused Freddie Montoya would be
held liable for having bumped and hit the rear portion of the jeep driven by the accused Rodolfo Salazar.
"Considering that the collision between the jeep driven by Rodolfo Salazar and the car owned and driven
by Edgardo Mendoza was the result of the hitting on the rear of the jeep by the truck driven by Freddie
Montoya, this Court believes that accused Rodolfo Salazar cannot be held liable for the damages
sustained by Edgardo Mendoza's car." 9

Crystal clear is the trial Court's pronouncement that under the facts of the case, jeep-owner driver
Salazar cannot be held liable for the damages sustained by petitioner's car. In other words, "the fact
from which the civil might arise did not exist." Accordingly, inasmuch as petitioner's cause of action as
against jeep-owner-driver Salazar is ex-delictu, founded on Article 100 of the Revised Penal Code, the
civil action must be held to have been extinguished in consonance with Section 3(c), Rule 111 of the
Rules of Court 10 which provides:
"Sec. 3. Other civil actions arising from offenses. In all cases not included in the preceding section the
following rules shall be observed:
xxx

xxx

xxx

(c)
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. . . ."
And even if petitioner's cause of action as against jeep-owner-driver Salazar were not ex-delictu, the end
result would be the same, it being clear from the judgment in the criminal case that Salazar's acquittal
was not based upon reasonable doubt, consequently, a civil action for damages can no longer be
instituted. This is explicitly provided for in Article 29 of the Civil Code quoted hereunder:
"Art. 29.
When the accused in a criminal prosecution is acquitted on the ground that his guilt has
not been proved beyond reasonable doubt, a civil action for damages for the same act or omission may
be instituted. Such action requires only a preponderance of evidence. . . .
"If in a criminal case the judgment of acquittal is based upon reasonable doubt, the court shall so
declare. In the absence of any declaration to that effect, it may be inferred from the text of the decision
whether or not the acquittal is due to that ground."
In so far as the suit against jeep-owner-driver Salazar is concerned, therefore, we sustain respondent
Judge's Order dated January 30, 1971 dismissing the complaint, albeit on different grounds.
WHEREFORE, 1) the Order dated September 12, 1970 dismissing Civil Case No. 80803 against private
respondent Felino Timbol is set aside, and respondent Judge, or his successor, hereby ordered to
proceed with the hearing on the merits; 2) but the Orders dated January 30, 1971 and February 23, 1971
dismissing the Complaint in Civil Case No. 80803 against respondent Rodolfo Salazar are hereby upheld.
No costs.
SO ORDERED.
Teehankee (Chairman), Makasiar, Fernandez, Guerrero and De Castro, JJ., concur.
Footnotes
1.

p. 26, Rollo.

2.

pp. 147-149, ibid.

3.

pp. 138-139, ibid.

4.

Decision, p. 26, ibid.

5.

73 Phil. 607, 620 (1942).

6.

Racoma vs. Fortich, 39 SCRA 521 (1971).

7.

52 SCRA 420 (1973).

8.

Padua vs. Robles, 66 SCRA 485 (1975).

9.

pp. 25-26, Rollo.

10.

Elcano Hill, 77 SCRA 98 (1977).

SECOND DIVISION
[G.R. No. 84698. February 4, 1992.]
PHILIPPINE SCHOOL OF BUSINESS ADMINISTRATION, JUAN D. LIM, BENJAMIN P. PAULINO, ANTONIO M.
MAGTALAS, COL. PEDRO SACRO, AND LT. M. SORIANO, petitioners, vs. COURT OF APPEALS, HON.
REGINA ORDOEZ-BENITEZ, in her capacity as Presiding Judge of Branch 47, Regional Trial Court, Manila,
SEGUNDA R. BAUTISTA, and ARSENIA D. BAUTISTA, respondents.
Balgos and Perez for petitioners.
Collantes, Ramirez & Associates for private respondents.
SYLLABUS
1.
CIVIL LAW; QUASI-DELICTS; DOCTRINE OF IN LOCO PARENTIS. Article 2180, in conjunction
with Article 2176 of the Civil Code, establishes the rule in in loco parentis. This Court discussed this
doctrine in the afore-cited cases of Exconde, (101 Phil. 843) Mendoza, (101 Phil. 414), Palisoc (G.R. No.
L-29025, 4 October, 1971, 41 SCRA 548) and, more recently, in Amadora vs. Court of Appeals, (G.R. No.
L-47745, 15 April 1988, 160 SCRA 315). In all such cases, it had been stressed that the law (Article 2180)
plainly provides that the damage should have been caused or inflicted by pupils or students of the
educational institution sought to be held liable for the acts of its pupils or students while in its custody.
2.
ID.; OBLIGATIONS AND CONTRACTS; CONTRACTS RESULTING IN BILATERAL OBLIGATIONS
ESTABLISHED WHEN ACADEMIC INSTITUTION ACCEPTS STUDENTS FOR ENROLLMENT. When an
academic institution accepts students for enrollment, there is established a contract between them,
resulting in bilateral obligations which both parties are bound to comply with. For its part, the school
undertakes to provide the student with an education that would presumably suffice to equip him with
the necessary tools and skills to pursue higher education or a profession. On the other hand, the student
covenants to abide by the school's academic requirements and observe its rules and regulations.
Institutions of learning must also meet the implicit or "built-in" obligation of providing their students
with an atmosphere that promotes or assists in attaining its primary undertaking of imparting
knowledge. Certainly, no student can absorb the intricacies of physics or higher mathematics or explore
the realm of the arts and other sciences when bullets are flying or grenades exploding in the air or
where there looms around the school premises a constant threat to life and limb. Necessarily, the school
must ensure that adequate steps are taken to maintain peace and order within the campus premises
and to prevent the breakdown thereof.
3.
ID.; QUASI-DELICTS; OBLIGATIONS ARISING FROM QUASI-DELICTS OR TORTS ARISE ONLY
BETWEEN PARTIES NOT BOUND BY CONTRACT. Because the circumstances of the present case evince
a contractual relation between the PSBA and Carlitos Bautista, the rules on quasi-delict do not really
govern. A perusal of Article 2176 shows that obligations arising from quasi-delicts or tort, also known as
extra-contractual obligations, arise only between parties not otherwise bound by contract, whether
express or implied.

4.
ID.; ID.; VIEW THAT LIABILITY FROM TORT MAY EXIST EVEN IF THERE IS A CONTRACT. In Air
France vs. Carroscoso (124 Phil. 722), the private respondent was awarded damages for his unwarranted
expulsion from a first-class seat aboard the petitioner airline. It is noted, however, that the Court
referred to the petitioner-airline's liability as one arising from tort, not one arising from a contract of
carriage. In effect, Air France is authority for the view that liability from tort may exist even if there is a
contract, for the act that breaks the contract may be also a tort. (Austro-America S.S. Co. vs. Thomas,
248 Fed. 231).
5.
ID.; ID.; AN ACT WHICH BREACHES A CONTRACT IN BAD FAITH AND IN VIOLATION OF ART. 21
CONSTITUTES QUASI-DELICT. Air France penalized the racist policy of the airline which emboldened
the petitioner's employee to forcibly oust the private respondent to cater to the comfort of a white man
who allegedly "had a better right to the seat." In Austro-American, supra, the public embarrassment
caused to the passenger was the justification for the Circuit Court of Appeals, (Second Circuit), to award
damages to the latter. From the foregoing, it can be concluded that should the act which breaches a
contract be done in bad faith and be violative of Article 21, then there is a cause to view the act as
constituting a quasi-delict.
6.
ID.; ID.; CONTRACTUAL RELATION, A CONDITION SINE QUA NON TO SCHOOL'S LIABILITY. A
contractual relation is a condition sine qua non to the school's liability. The negligence of the school
cannot exist independently on the contract, unless the negligence occurs under the circumstances set
out in Article 21 of the Civil Code.
7.
ID.; ID.; ID.; SCHOOL MAY STILL AVOID LIABILITY BY PROVING THAT THE BREACH OF
CONTRACTUAL OBLIGATION TO STUDENTS WAS NOT DUE TO ITS NEGLIGENCE. Conceptually a school,
like a common carrier, cannot be an insurer of its students against all risks. It would not be equitable to
expect of schools to anticipate all types of violent trespass upon their premises, for notwithstanding the
security measures installed, the same may still fail against an individual or group determined to carry
out a nefarious deed inside school premises and environs. Should this be the case, the school may still
avoid liability by proving that the breach of its contractual obligation to the students was not due to its
negligence.
8.
ID.; ID.; NEGLIGENCE; DEFINED. Negligence is statutorily defined to be the omission of that
degree of diligence which is required by the nature of the obligation and corresponding to the
circumstances of persons, time and place.
DECISION
PADILLA, J p:
A stabbing incident on 30 August 1985 which caused the death of Carlitos Bautista while on the secondfloor premises of the Philippine School of Business Administration (PSBA) prompted the parents of the
deceased to file suit in the Regional Trial Court of Manila (Branch 47) presided over by Judge (now Court
of Appeals justice) Regina Ordoez-Benitez, for damages against the said PSBA and its corporate
officers. At the time of his death, Carlitos was enrolled in the third year commerce course at the PSBA. It

was established that his assailants were not members of the schools academic community but were
elements from outside the school.
Specifically, the suit impleaded the PSBA and the following school authorities: Juan D. Lim (President),
Benjamin P. Paulino (Vice-President), Antonio M. Magtalas (Treasurer/Cashier), Col. Pedro Sacro (Chief
of Security) and a Lt. M. Soriano (Assistant Chief of Security). Substantially, the plaintiffs (now private
respondents) sought to adjudge them liable for the victim's untimely demise due to their alleged
negligence, recklessness and lack of security precautions, means and methods before, during and after
the attack on the victim. During the proceedings a quo, Lt. M. Soriano terminated his relationship with
the other petitioners by resigning from his position in the school.
Defendants a quo (now petitioners) sought to have the suit dismissed, alleging that since they are
presumably sued under Article 2180 of the Civil Code, the complaint states no cause of action against
them, as jurisprudence on the subject is to the effect that academic institutions, such as the PSBA, are
beyond the ambit of the rule in the afore-stated article.
The respondent trial court, however, overruled petitioners' contention and thru an order dated 8
December 1987, denied their motion to dismiss. A subsequent motion for reconsideration was similarly
dealt with by an order dated 25 January 1988. Petitioners then assailed the trial court's dispositions
before the respondent appellate court which, in a decision * promulgated on 10 June 1988, affirmed the
trial court's orders. On 22 August 1988, the respondent appellate court resolved to deny the petitioners'
motion for reconsideration. Hence, this petition.
At the outset, it is to be observed that the respondent appellate court primarily anchored its decision on
the law of quasi-delicts, as enunciated in Articles 2176 and 2180 of the Civil Code. 1 Pertinent portions
of the appellate court's now assailed ruling state:
"Article 2180 (formerly Article 1903) of the Civil Code is an adoptation from the old Spanish Civil Code.
The comments of Manresa and learned authorities on its meaning should give way to present day
changes. The law is not fixed and flexible (sic); it must be dynamic. In fact, the greatest value and
significance of law as a rule of conduct in (sic) its flexibility to adopt to changing social conditions and its
capacity to meet the new challenges of progress.
Construed in the light of modern day educational systems, Article 2180 cannot be construed in its
narrow concept as held in the old case of Exconde vs. Capuno 2 and Mercado vs. Court of Appeals 3;
hence, the ruling in the Palisoc 4 case that it should apply to all kinds of educational institutions,
academic or vocational.
At any rate, the law holds the teachers and heads of the school staff liable unless they relieve
themselves of such liability pursuant to the last paragraph of Article 2180 by 'proving that they observed
all the diligence to prevent damage.' This can only be done at a trial on the merits of the case."5

While we agree with the respondent appellate court that the motion to dismiss the complaint was
correctly denied and the complaint should be tried on the merits, we do not however agree with the
premises of the appellate court's ruling.
Article 2180, in conjunction with Article 2176 of the Civil Code, establishes the rule of in loco parentis.
This Court discussed this doctrine in the afore-cited cases of Exconde, Mendoza, Palisoc and, more
recently, in Amadora vs. Court of Appeals. 6 In all such cases, it had been stressed that the law (Article
2180) plainly provides that the damage should have been caused or inflicted by pupils or students of the
educational institution sought to be held liable for the acts of its pupils or students while in its custody.
However, this material situation does not exist in the present case for, as earlier indicated, the assailants
of Carlitos were not students of the PSBA, for whose acts the school could be made liable.
However, does the appellate court's failure to consider such material facts mean the exculpation of the
petitioners from liability? It does not necessarily follow.
When an academic institution accepts students for enrollment, there is established a contract between
them, resulting in bilateral obligations which both parties are bound to comply with. 7 For its part, the
school undertakes to provide the student with an education that would presumably suffice to equip him
with the necessary tools and skills to pursue higher education or a profession. On the other hand, the
student covenants to abide by the school's academic requirements and observe its rules and
regulations.
Institutions of learning must also meet the implicit or "built-in" obligation of providing their students
with an atmosphere that promotes or assists in attaining its primary undertaking of imparting
knowledge. Certainly, no student can absorb the intricacies of physics or higher mathematics or explore
the realm of the arts and other sciences when bullets are flying or grenades exploding in the air or
where there looms around the school premises a constant threat to life and limb. Necessarily, the school
must ensure that adequate steps are taken to maintain peace and order within the campus premises
and to prevent the breakdown thereof.
Because the circumstances of the present case evince a contractual relation between the PSBA and
Carlitos Bautista, the rules on quasi-delict do not really govern. 8 A perusal of Article 2176 shows that
obligations arising from quasi-delicts or tort, also known as extra-contractual obligations, arise only
between parties not otherwise bound by contract, whether express or implied. However, this
impression has not prevented this Court from determining the existence of a tort even when there
obtains a contract. In Air France vs. Carroscoso (124 Phil. 722), the private respondent was awarded
damages for his unwarranted expulsion from a first-class seat aboard the petitioner airline. It is noted,
however, that the Court referred to the petitioner-airline's liability as one arising from tort, not one
arising from a contract of carriage. In effect, Air France is authority for the view that liability from tort
may exist even if there is a contract, for the act that breaks the contract may be also a tort. (AustroAmerica S.S. Co. vs. Thomas, 248 Fed. 231).
This view was not all that revolutionary, for even as early as 1918, this Court was already of a similar
mind. In Cangco vs. Manila Railroad (38 Phil. 780), Mr. Justice Fisher elucidated thus:

"The field of non-contractual obligation is much more broader than that of contractual obligation,
comprising, as it does, the whole extent of juridical human relations. These two fields, figuratively
speaking, concentric; that is to say, the mere fact that a person is bound to another by contract does not
relieve him from extra-contractual liability to such person. When such a contractual relation exists the
obligor may break the contract under such conditions that the same act which constitutes a breach of
the contract would have constituted the source of an extra-contractual obligation had no contract
existed between the parties."
Immediately what comes to mind is the chapter of the Civil Code on Human Relations, particularly
Article 21, which provides:
"Any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good
customs or public policy shall compensate the latter for the damage." (emphasis supplied)
Air France penalized the racist policy of the airline which emboldened the petitioner's employee to
forcibly oust the private respondent to cater to the comfort of a white man who allegedly "had a better
right to the seat." In Austro-American, supra, the public embarrassment caused to the passenger was
the justification for the Circuit Court of Appeals, (Second Circuit), to award damages to the latter. From
the foregoing, it can be concluded that should the act which breaches a contract be done in bad faith
and be violative of Article 21, then there is a cause to view the act as constituting a quasi-delict.
In the circumstances obtaining in the case at bar, however, there is, as yet, no finding that the contract
between the school and Bautista had been breached thru the former's negligence in providing proper
security measures. This would be for the trial court to determine. And, even if there be a finding of
negligence, the same could give rise generally to a breach of contractual obligation only. Using the test
of Cangco, supra, the negligence of the school would not be relevant absent a contract. In fact, that
negligence becomes material only because of the contractual relation between PSBA and Bautista. In
other words, a contractual relation is a condition sine qua non to the school's liability. The negligence of
the school cannot exist independently on the contract, unless the negligence occurs under the
circumstances set out in Article 21 of the Civil Code.
This Court is not unmindful of the attendant difficulties posed by the obligation of schools, abovementioned, for conceptually a school, like a common carrier, cannot be an insurer of its students against
all risks. This is specially true in the populous student communities of the so-called "university belt" in
Manila where there have been reported several incidents ranging from gang wars to other forms of
hooliganism. It would not be equitable to expect of schools to anticipate all types of violent trespass
upon their premises, for notwithstanding the security measures installed, the same may still fail against
an individual or group determined to carry out a nefarious deed inside school premises and environs.
Should this be the case, the school may still avoid liability by proving that the breach of its contractual
obligation to the students was not due to its negligence, here statutorily defined to be the omission of
that degree of diligence which is required by the nature of the obligation and corresponding to the
circumstances of persons, time and place. 9

As the proceedings a quo have yet to commence on the substance of the private respondents'
complaint, the record is bereft of all the material facts. Obviously, at this stage, only the trial court can
make such a determination from the evidence still to unfold.
WHEREFORE, the foregoing premises considered, the petition is DENIED. The Court of origin (RTC,
Manila, Br. 47) is hereby ordered to continue proceedings consistent with this ruling of the Court. Costs
against the petitioners.
SO ORDERED.
Melencio-Herrera, Paras, Regalado and Nocon, JJ., concur.
Footnotes
*
Penned by Justice Jose C. Campos, Jr. and concurred in by Justices Ricardo J. Francisco and
Alfredo L. Benipayo.
1.

Article 2176 provides:

"Whoever by act or omission causes damage to another, there being fault or negligence, is
obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual
relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter."
Article 2180 provides:
"The obligation imposed by article 2176 is demandable not only for one's own acts or omissions,
but also for those of persons for whom one is responsible.
xxx

xxx

xxx

"Lastly, teachers or heads of establishments of arts and trades shall be liable for damages
caused by their pupils and students or apprentices, so long as they remain in their custody.
"The responsibility treated of in this article shall cease when the persons herein mentioned
prove that they observed all the diligence of a good father of a family to prevent damage."
2.

101 Phil. 843.

3.

108 Phil. 414.

4.

G.R. No. L-29025, 4 October 1971, 41 SCRA 548.

5.

Rollo, p. 75.

6.

G.R. No. L-47745, 15 April 1988, 160 SCRA 315.

7.
In Non vs. Dames II , G.R. No. 89317, 20 May 1990, 185 SCRA 535, it was held that the contract
between school and student is one "imbued with public interest" but a contract nonetheless.

8.

Article 2176, Civil Code is re-quoted for stress:

"Whoever by act or omission causes damage to another, there being fault or negligence, is
obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual
relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter."
(emphasis supplied).
9.

Article 1173, Civil Code provides:

"The fault or negligence of the obligor consists in the omission of that diligence which is
required by the nature of the obligation and corresponds with the circumstances of the persons, of the
time and of the place. When negligence shows bad faith, the provisions of articles 1171 and 2201,
paragraph 2, shall apply."

EN BANC
[G.R. No. L-47745. April 15, 1988.]
JOSE S. AMADORA, LORETA A. AMADORA, JOSE A. AMADORA JR., NORMA A. YLAYA, PANTALEON A.
AMADORA, JOSE A. AMADORA III, LUCY A. AMADORA, ROSALINDA A. AMADORA, PERFECTO A.
AMADORA, SERREC A. AMADORA, VICENTE A. AMADORA and MARIA TISCALINA A. AMADORA,
petitioners, vs. HONORABLE COURT OF APPEALS, COLEGIO DE SAN JOSE-RECOLETOS, VICTOR LLUCH,
SERGIO P. DAMASO, JR., CELESTINO DICON, ANIANO, ABELLANA, PABLITO DAFFON, thru his parents and
natural guardians, MR. and MRS. NICANOR GUMBAN, and ROLANDO VALENCIA, thru his guardian, ATTY.
FRANCISCO ALONSO, respondents.
Jose S. Amadora & Associates for petitioners.
Padilla Law Office for respondents.
SYLLABUS
1.
CIVIL LAW; OBLIGATIONS AND CONTRACTS; QUASI-DELICT; LIABILITY OF TEACHERS AND HEADS
OF ESTABLISHMENTS; APPLIES TO ALL SCHOOLS, WHETHER ACADEMIC OR NOT; RATIONALE. The
provision in Article 2180 of the Civil Code should apply to all schools, academic as well as non-academic.
Where the school is academic rather than technical or vocational in nature, responsibility for the tort
committed by the student will attach to the teacher in charge of such student, following the first part of
the provision. This is the general rule. In other words, teachers in general shall be liable for the acts of
their students except where the school is technical in nature, in which case it is the head thereof who
shall be answerable. There is really no substantial distinction between the academic and the nonacademic schools insofar as torts committed by their students are concerned. The same vigilance is
expected from the teacher over the students under his control and supervision, whatever the nature of
the school where he is teaching.
2.
STATUTORY CONSTRUCTION AND INTERPRETATION; REDDENDO SINGULA SINGULIS; APPLIED IN
ARTICLE 2180 OF THE CIVIL CODE. Article 2180 of the Civil Code provides: "Lastly, teachers or heads
of establishments of arts and trades shall be liable for damages caused by their pupils and students or
apprentices so long as they remain in their custody." Following the canon of reddendo singula singulis,
"teachers should apply to the words "pupils and student's and "heads of establishments of arts and
trades" to the word "apprentices."
3.
CIVIL LAW; OBLIGATIONS AND CONTRACTS; QUASI-DELICT; LIABILITY OF TEACHERS AND HEADS
OF ESTABLISHMENTS CO-EXTENSIVE WITH THE PERIOD THE STUDENT IS IN SCHOOL PREMISES IN
PURSUANCE OF LEGITIMATE OBJECTIVE. The student is in the custody of the school authorities as
long as he is under the control and influence of the school and within its premises, whether the
semester has not yet begun or has already ended. As long as it can be shown that the student is in the
school premises in pursuance of a legitimate student objective, in the exercise of a legitimate student

right, and even in the enjoyment of a legitimate student right, and even in the enjoyment of a legitimate
student privilege, the responsibility of the school authorities over the student continues.
4.
ID.; ID.; ID.; ID.; TEACHER-IN-CHARGE, DEFINED. The teacher-in-charge is the one designated
by the dean, principal, or other administrative superior to exercise supervision over the pupils in the
specific classes or sections to which they are assigned.
5.
ID.; ID.; ID.; ID.; LIABILITY FALLS DIRECTLY ON THE TEACHER OR HEAD OF SCHOOL. It should
be noted that the liability imposed by this article is supposed to fall directly on the teacher or the head
of the school of arts and trades and not on the school itself.
6.
ID.; ID.; ID.; ID.; RESPONDEAT SUPERIOR, BASIS OF LIABILITY OF SCHOOL FOR NEGLIGENCE OF
TEACHERS AND HEADS. If at all, the school, whatever its nature, may be held to answer for the acts
of its teachers or even of the head thereof under the general principle of respondeat superior, but then
it may exculpate itself from liability by proof that it had exercised the diligence of a bonus paterfamilias.
7.
ID.; ID.; ID.; ID.; DILIGENCE OF A GOOD FATHER OF A FAMILY, PROPER DEFENSE. Such defense
of bonus pater familias is also available to the teacher or the head of the school of arts and trades
directly held to answer for the tort committed by the student. As long as the defendant can show that
he had taken the necessary precautions to prevent the injury complained of, he can exonerate himself
from the liability imposed by Article 2180.
8.
ID.; ID.; ID.; ID.; LIABILITY ATTACHES REGARDLESS OF AGE OF STUDENT. It should be observed
that the teacher will be held liable not only when he is acting in loco parentis for the law does not
require that the offending student be of minority age. Unlike the parent, who will be liable only if his
child is still a minor, the teacher is held answerable by the law for the act of the student under him
regardless of the student's age.
MELENCIO-HERRERA, J., concurring and dissenting:
1.
CIVIL LAW; OBLIGATIONS AND CONTRACTS; QUASI-DELICT; LIABILITY OF TEACHERS AND HEADS
OF ESTABLISHMENTS; TERM NOT LIMITED TO TEACHER-IN-CHARGE; EMBRACES ONE THAT STANDS IN
LOCO PARENTIS. I concur, except with respect to the restricted meaning given the term "teacher" in
Article 2180 of the Civil Code as "teacher-in-charge." This would limit liability to occasions where there
are classes under the immediate charge of a teacher, which does not seem to be the intendment of the
law. The philosophy of the law is that whoever stands in loco parentis will have the same duties and
obligations as parents whenever in such a standing. Those persons are mandatorily held liable for the
tortious acts of pupils and students so long as the latter remain in their custody, meaning their
protective and supervisory custody.
2.
ID.; ID.; ID.; ID.; RATIONALE OF LIABILITY. "The protective custody of the school heads and
teachers is mandatorily substituted for that of the parents, and hence, it becomes their obligation as
well as that of the school itself to provide proper supervision of the students' activities during the whole
time that they are at attendance in the school, including recess time, as well as to take the necessary

precautions to protect the students in their custody from dangers and hazards that would reasonably be
anticipated, including injuries that some students themselves may inflict wilfully or through negligence
on their fellow students. (Palisoc vs, Brillantes, 41 SCRA 548)
3.
ID.; ID.; ID.; ID.; DEFENSE AGAINST LIABILITY. As provided for in the same Article 2180, the
responsibility treated of shall cease when the persons mentioned prove that they observed all the
diligence of a good father of a family to prevent damage.
4.
ID.; ID.; ID.; ID.; LIABILITY OF SCHOOLS, EXPLAINED; DEFENSE AVAILABLE. And while a school
is, admittedly, not directly liable since Article 2180 speaks only of teachers and schools heads, yet, by
virtue of the same provision, the school, as their employer, may be held liable for the failure of its
teachers or school heads to perform their mandatory legal duties as substitute parents (Sangco,
Philippine Law on Torts & Damages, 1978 ed., p. 201). Again, the school may exculpate itself from
liability by proving that it had exercised the diligence of a good father of the family.
DECISION
CRUZ, J p:
Like any prospective graduate, Alfredo Amadora was looking forward to the commencement exercises
where he would ascend the stage and in the presence of his relatives and friends receive his high school
diploma. These ceremonies were scheduled on April 16, 1972. As it turned out, though, fate would
intervene and deny him that awaited experience. On April 13, 1972, while they were in the auditorium
of their school, the Colegio de San Jose-Recoletes, a classmate, Pablito Daffon, fired a gun that mortally
hit Alfredo, ending all his expectations and his life as well. The victim was only seventeen years old. 1
Daffon was convicted of homicide thru reckless imprudence. 2 Additionally, the herein petitioners, as
the victim's parents, filed a civil action for damages under Article 2180 of the Civil Code against the
Colegio de San Jose-Recoletos, its rector, the high school principal, the dean of boys, and the physics
teacher, together with Daffon and two other students, through their respective parents. The complaint
against the students was later dropped. After trial, the Court of First Instance of Cebu held the
remaining defendants liable to the plaintiffs in the sum of P294,984.00, representing death
compensation, loss of earning capacity, costs of litigation, funeral expenses, moral damages, exemplary
damages, and attorney's fees. 3 On appeal to the respondent court, however, the decision was reversed
and all the defendants were completely absolved. 4
In its decision, which is now the subject of this petition for certiorari under Rule 45 of the Rules of Court,
the respondent court found that Article 2180 was not applicable as the Colegio de San Jose-Recoletos
was not a school of arts and trades but an academic institution of learning. It also held that the students
were not in the custody of the school at the time of the incident as the semester had already ended,
that there was no clear identification of the fatal gun, and that in any event the defendants had
exercised the necessary diligence in preventing the injury. 5

The basic undisputed facts are that Alfredo Amadora went to the San Jose-Recoletos on April 13, 1972,
and while in its auditorium was shot to death by Pablito Daffon, a classmate. On the implications and
consequences of these facts, the parties sharply disagree.
The petitioners contend that their son was in the school to finish his physics experiment as a
prerequisite to his graduation; hence, he was then under the custody of the private respondents. The
private respondents submit that Alfredo Amadora had gone to the school only for the purpose of
submitting his physics report and that he was no longer in their custody because the semester had
already ended.
There is also the question of the identity of the gun used which the petitioners consider important
because of an earlier incident which they claim underscores the negligence of the school and at least
one of the private respondents. It is not denied by the respondents that on April 7, 1972, Sergio
Damaso, Jr., the dean of boys, confiscated from Jose Gumban an unlicensed pistol but later returned it
to him without making a report to the principal or taking any further action. 6 As Gumban was one of
the companions of Daffon when the latter fired the gun that killed Alfredo, the petitioners contend that
this was the same pistol that had been confiscated from Gumban and that their son would not have
been killed if it had not been returned by Damaso. The respondents say, however, that there is no proof
that the gun was the same firearm that killed Alfredo.
Resolution of all these disagreements will depend on the interpretation of Article 2180 which, as it
happens, is invoked by both parties in support of their conflicting positions. The pertinent part of this
article reads as follows:
"Lastly, teachers or heads of establishments of arts and trades shall be liable for damages caused by
their pupils and students or apprentices so long as they remain in their custody."
Three cases have so far been decided by the Court in connection with the above-quoted provision, to
wit: Exconde v. Capuno, 7 Mercado v. Court of Appeals, 8 and Palisoc v. Brillantes. 9 These will be
briefly reviewed in this opinion for a better resolution of the case at bar.
In the Exconde Case, Dante Capuno, a student of the Balintawak Elementary School and a Boy Scout,
attended a Rizal Day parade on instructions of the city school supervisor. After the parade, the boy
boarded a jeep, took over its wheel and drove it so recklessly that it turned turtle, resulting in the death
of two of its passengers. Dante was found guilty of double homicide with reckless imprudence. In the
separate civil action filed against them, his father was held solidarily liable with him in damages under
Article 1903 (now Article 2180) of the Civil Code for the tort committed by the 15-year old boy.
This decision, which was penned by Justice Bautista Angelo on June 29, 1957, exculpated the school in
an obiter dictum (as it was not a party to the case) on the ground that it was not a school of arts and
trades. Justice J.B.L. Reyes, with whom Justices Sabino Padilla and Alex Reyes concurred, dissented,
arguing that it was the school authorities who should be held liable. Liability under this role, he said, was
imposed on (1) teachers in general; and (2) heads of schools of arts and trades in particular. The
modifying clause "of establishments of arts and trades" should apply only to "heads" and not "teachers."

Exconde was reiterated in the Mercado Case, and with an elaboration. A student cut a classmate with a
razor blade during recess time at the Lourdes Catholic School in Quezon City, and the parents of the
victim sued the culprit's parents for damages. Through Justice Labrador, the Court declared in another
obiter (as the school itself had also not been sued) that the school was not liable because it was not an
establishment of arts and trades. Moreover, the custody requirement had not been proved as this
"contemplates a situation where the student lives and boards with the teacher, such that the control,
direction and influences on the pupil supersede those of the parents." Justice J.B.L. Reyes did not take
part but the other members of the court concurred in this decision promulgated on May 30, 1960.
In Palisoc vs. Brillantes, decided on October 4, 1971, a 16-year old student was killed by a classmate with
fist blows in the laboratory of the Manila Technical Institute. Although the wrongdoer who was
already of age was not boarding in the school, the head thereof and the teacher in charge were held
solidarily liable with him. The Court declared through Justice Teehankee:
"The phrase used in the cited article 'so long as (the students) remain in their custody' means the
protective and supervisory custody that the school and its heads and teachers exercise over the pupils
and students for as long as they are at attendance in the school, including recess time. There is nothing
in the law that requires that for such liability to attach, the pupil or student who commits the tortious
act must live and board in the school, as erroneously held by the lower court, and the dicta in Mercado
(as well as in Exconde) on which it relied, must now be deemed to have been set aside by the present
decision."
This decision was concurred in by five other members, 10 including Justice J.B.L. Reyes, who stressed,
in answer to the dissenting opinion, that even students already of age were covered by the provision
since they were equally in the custody of the school and subject to its discipline. Dissenting with three
others, 11 Justice Makalintal was for retaining the custody interpretation in Mercado and submitted
that the rule should apply only to torts committed by students not yet of age as the school would be
acting only in loco parentis.
In a footnote, Justice Teehankee said he agreed with Justice Reyes' dissent in the Exconde Case but
added that "since the school involved at bar is a non-academic school, the question as to the
applicability of the cited codal provision to academic institutions will have to await another case wherein
it may properly be raised."
This is the case.
Unlike in Exconde and Mercado, the Colegio de San Jose-Recoletos has been directly impleaded and is
sought to be held liable under Article 2180; and unlike in Palisoc, it is not a school of arts and trades but
an academic institution of learning. The parties herein have also directly raised the question of whether
or not Article 2180 covers even establishments which are technically not schools of arts and trades, and,
if so, when the offending student is supposed to be "in its custody."
After an exhaustive examination of the problem, the Court has come to the conclusion that the
provision in question should apply to all schools, academic as well as non-academic. Where the school is

academic rather than technical or vocational in nature, responsibility for the tort committed by the
student will attach to the teacher in charge of such student, following the first part of the provision. This
is the general rule. In the case of establishments of arts and trades, it is the head thereof, and only he,
who shall be held liable as an exception to the general rule. In other words, teachers in general shall be
liable for the acts of their students except where the school is technical in nature, in which case it is the
head thereof who shall be answerable. Following the canon of reddendo singula singulis, "teachers"
should apply to the words "pupils and students" and "heads of establishments of arts and trades" to the
word "apprentices."
The Court thus conforms to the dissenting opinion expressed by Justice J.B.L. Reyes in Exconde where he
said in part:
"I can see no sound reason for limiting Art. 1903 of the Old Civil Code to teachers of arts and trades and
not to academic ones. What substantial difference is there between them insofar as concerns the
proper supervision and vigilance over their pupils? It cannot be seriously contended that an academic
teacher is exempt from the duty of watching that his pupils do not commit a tort to the detriment of
third persons, so long as they are in a position to exercise authority and supervision over the pupil. In my
opinion, in the phrase 'teachers or heads of establishments of arts and trades' used in Art. 1903 of the
old Civil Code, the words 'arts and trades' does not qualify 'teachers' but only 'heads of establishments.'
The phrase is only an updated version of the equivalent terms `preceptores y artesanos' used in the
Italian and French Civil Codes.
"If, as conceded by all commentators, the basis of the presumption of negligence of Art. 1903 in some
culpa in vigilando that the parents, teachers, etc. are supposed to have incurred in the exercise of their
authority, it would seem clear that where the parent places the child under the effective authority of the
teacher, the latter, and not the parent, should be the one answerable for the torts committed while
under his custody, for the very reason that the parent is not supposed to interfere with the discipline of
the school nor with the authority and supervision of the teacher while the child is under instruction. And
if there is no authority, there can be no responsibility.'
There is really no substantial distinction between the academic and the non-academic schools insofar as
torts committed by their students are concerned. The same vigilance is expected from the teacher over
the students under his control and supervision, whatever the nature of the school where he is teaching.
The suggestion in the Exconde and Mercado Cases is that the provision would make the teacher or even
the head of the school of arts and trades liable for an injury caused by any student in its custody but if
that same tort were committed in an academic school, no liability would attach to the teacher or the
school head. All other circumstances being the same, the teacher or the head of the academic school
would be absolved whereas the teacher and the head of the non-academic school would be held liable,
and simply because the latter is a school of arts and trades.
The Court cannot see why different degrees of vigilance should be exercised by the school authorities on
the basis only of the nature of their respective schools. There does not seem to be any plausible reason
for relaxing that vigilance simply because the school is academic in nature and for increasing such

vigilance where the school is non-academic. Notably, the injury subject of liability is caused by the
student and not by the school itself nor is it a result of the operations of the school or its equipment.
The injury contemplated may be caused by any student regardless of the school where he is registered.
The teacher certainly should not be able to excuse himself by simply showing that he is teaching in an
academic school where, on the other hand, the head would be held liable if the school were nonacademic.
These questions, though, may be asked: If the teacher of the academic school is to be held answerable
for the torts committed by his students, why is it the head of the school only who is held liable where
the injury is caused in a school of arts and trades? And in the case of the academic or non-technical
school, why not apply the rule also to the head thereof instead of imposing the liability only on the
teacher?
The reason for the disparity can be traced to the fact that historically the head of the school of arts and
trades exercised a closer tutelage over his pupils than the head of the academic school. The old schools
of arts and trades were engaged in the training of artisans apprenticed to their master who personally
and directly instructed them on the technique and secrets of their craft. The head of the school of arts
and trades was such a master and so was personally involved in the task of teaching his students, who
usually even boarded with him and so came under his constant control, supervision and influence. By
contrast, the head of the academic school was not as involved with his students and exercised only
administrative duties over the teachers who were the persons directly dealing with the students. The
head of the academic school had then (as now) only a vicarious relationship with the students.
Consequently, while he could not be directly faulted for the acts of the students, the head of the school
of arts and trades, because of his closer ties with them, could be so blamed.
It is conceded that the distinction no longer obtains at present in view of the expansion of the schools of
arts and trades, the consequent increase in their enrollment, and the corresponding diminution of the
direct and personal contact of their heads with the students. Article 2180, however, remains unchanged.
In its present state, the provision must be interpreted by the Court according to its clear and original
mandate until the legislature, taking into account the changes in the situation subject to be regulated,
sees fit to enact the necessary amendment.
The other matter to be resolved is the duration of the responsibility of the teacher or the head of the
school of arts and trades over the students. Is such responsibility co-extensive with the period when the
student is actually undergoing studies during the school term, as contended by the respondents and
impliedly admitted by the petitioners themselves?
From a reading of the provision under examination, it is clear that while the custody requirement, to
repeat Palisoc v. Brillantes, does not mean that the student must be boarding with the school
authorities, it does signify that the student should be within the control and under the influence of the
school authorities at the time of the occurrence of the injury. This does not necessarily mean that such,
custody be co-terminous with the semester, beginning with the start of classes and ending upon the
close thereof, and excluding the time before or after such period, such as the period of registration, and

in the case of graduating students, the period before the commencement exercises. In the view of the
Court, the student is in the custody of the school authorities as long as he is under the control and
influence of the school and within its premises, whether the semester has not yet begun or has already
ended.
It is too tenuous to argue that the student comes under the discipline of the school only upon the start
of classes notwithstanding that before that day he has already registered and thus placed himself under
its rules. Neither should such discipline be deemed ended upon the last day of classes notwithstanding
that there may still be certain requisites to be satisfied for completion of the course, such as submission
of reports, term papers, clearances and the like. During such periods, the student is still subject to the
disciplinary authority of the school and cannot consider himself released altogether from observance of
its rules.
As long as it can be shown that the student is in the school premises in pursuance of a legitimate
student objective, in the exercise of a legitimate student right, and even in the enjoyment of a legitimate
student right, and even in the enjoyment of a legitimate student privilege, the responsibility of the
school authorities over the student continues. Indeed, even if the student should be doing nothing more
than relaxing in the campus in the company of his classmates and friends and enjoying the ambience
and atmosphere of the school, he is still within the custody and subject to the discipline of the school
authorities under the provisions of Article 2180.
During all these occasions, it is obviously the teacher-in-charge who must answer for his students' torts,
in practically the same way that the parents are responsible for the child when he is in their custody. The
teacher-in-charge is the one designated by the dean, principal, or other administrative superior to
exercise supervision over the pupils in the specific classes or sections to which they are assigned. It is
not necessary that at the time of the injury, the teacher be physically present and in a position to
prevent it. Custody does not connote immediate and actual physical control but refers more to the
influence exerted on the child and the discipline instilled in him as a result of such influence. Thus, for
the injuries caused by the student, the teacher and not the parent shall be held responsible if the tort
was committed within the premises of the school at any time when its authority could be validly
exercised over him.
In any event, it should be noted that the liability imposed by this article is supposed to fall directly on
the teacher or the head of the school of arts and trades and not on the school itself. If at all, the school,
whatever its nature, may be held to answer for the acts of its teachers or even of the head thereof
under the general principle of respondeat superior, but then it may exculpate itself from liability by
proof that it had exercised the diligence of a bonus paterfamilias.
Such defense is, of course, also available to the teacher or the head of the school of arts and trades
directly held to answer for the tort committed by the student. As long as the defendant can show that
he had taken the necessary precautions to prevent the injury complained of, he can exonerate himself
from the liability imposed by Article 2180, which also states that:

"The responsibility treated of in this article shall cease when the persons herein mentioned prove that
they observed all the diligence of a good father of a family to prevent damages."
In this connection, it should be observed that the teacher will be held liable not only when he is acting in
loco parentis for the law does not require that the offending student be of minority age. Unlike the
parent, who will be liable only if his child is still a minor, the teacher is held answerable by the law for
the act of the student under him regardless of the student's age. Thus, in the Palisoc Case, liability
attached to the teacher and the head of the technical school although the wrongdoer was already of
age. In this sense, Article 2180 treats the parent more favorably than the teacher.
The Court is not unmindful of the apprehensions expressed by Justice Makalintal in his dissenting
opinion in Palisoc that the school may be unduly exposed to liability under this article in view of the
increasing activism among the students that is likely to cause violence and resulting injuries in the school
premises. That is a valid fear, to be sure. Nevertheless, it should be repeated that, under the present
ruling, it is not the school that will be held directly liable. Moreover, the defense of due diligence is
available to it in case it is sought to be held answerable as principal for the acts or omission of its head
or the teacher in its employ.
The school can show that it exercised proper measures in selecting the head or its teachers and the
appropriate supervision over them in the custody and instruction of the pupils pursuant to its rules and
regulations for the maintenance of discipline among them. In almost all cases now, in fact, these
measures are effected through the assistance of an adequate security force to help the teacher
physically enforce those rules upon the students. This should bolster the claim of the school that it has
taken adequate steps to prevent any injury that may be committed by its students.
A fortiori, the teacher himself may invoke this defense as it would otherwise be unfair to hold him
directly answerable for the damage caused by his students as long as they are in the school premises
and presumably under his influence. In this respect, the Court is disposed not to expect from the teacher
the same measure of responsibility imposed on the parent for their influence over the child is not equal
in degree. Obviously, the parent can expect more obedience from the child because the latter's
dependence on him is greater than on the teacher. It need not be stressed that such dependence
includes the child's support and sustenance whereas submission to the teacher's influence, besides
being co-terminous with the period of custody, is usually enforced only because of the students' desire
to pass the course. The parent can instill more lasting discipline on the child than the teacher and so
should be held to a greater accountability than the teacher for the tort committed by the child.
And if it is also considered that under the article in question, the teacher or the head of the school of
arts and trades is responsible for the damage caused by the student or apprentice even if he is already
of age and therefore less tractable than the minor then there should all the more be justification
to require from the school authorities less accountability as long as they can prove reasonable diligence
in preventing the injury. After all, if the parent himself is no longer liable for the student's acts because
he has reached majority age and so is no longer under the former's control, there is then all the more
reason for leniency in assessing the teacher's responsibility for the acts of the student.

Applying the foregoing considerations, the Court has arrived at the following conclusions:
1.
At the time Alfredo Amadora was fatally shot, he was still in the custody of the authorities of
Colegio de San Jose-Recoletos notwithstanding that the fourth year classes had formally ended. It was
immaterial if he was in the school auditorium to finish his physics experiment or merely to submit his
physics report for what is important is that he was there for a legitimate purpose. As previously
observed, even the mere savoring of the company of his friends in the premises of the school is a
legitimate purpose that would have also brought him in the custody of the school authorities.
2.
The rector, the high school principal and the dean of boys cannot be held liable because none of
them was the teacher-in-charge as previously defined. Each of them was exercising only a general
authority over the student body and not the direct control and influence exerted by the teacher placed
in charge of particular classes or sections and thus immediately involved in its discipline. The evidence of
the parties does not disclose who the teacher-in-charge of the offending student was. The mere fact
that Alfredo Amadora had gone to school that day in connection with his physics report did not
necessarily make the physics teacher, respondent Celestino Dicon, the teacher-in-charge of Alfredo's
killer.
3.
At any rate, assuming that he was the teacher-in-charge, there is no showing that Dicon was
negligent in enforcing discipline upon Daffon or that he had waived observance of the rules and
regulations of the school or condoned their non-observance. His absence when the tragedy happened
cannot be considered against him because he was not supposed or required to report to school on that
day. And while it is true that the offending student was still in the custody of the teacher-in-charge even
if the latter was physically absent when the tort was committed, it has not been established that it was
caused by his laxness in enforcing discipline upon the student. On the contrary, the private respondents
have proved that they had exercised due diligence, through the enforcement of the school regulations,
in maintaining that discipline.
4.
In the absence of a teacher-in-charge, it is probably the dean of boys who should be held liable,
especially in view of the unrefuted evidence that he had earlier confiscated an unlicensed gun from one
of the students and returned the same later to him without taking disciplinary action or reporting the
matter to higher authorities. While this was clearly negligence on his part, for which he deserves
sanctions from the school, it does not necessarily link him to the shooting of Amador as it has not been
shown that the confiscated and returned pistol was the gun that killed the petitioners' son.
5.
Finally, as previously observed, the Colegio de San Jose-Recoletos cannot be held directly liable
under the article because only the teacher or the head of the school of arts and trades is made
responsible for the damage caused by the student or apprentice. Neither can it be held to answer for
the tort committed by any of the other private respondents for none of them has been found to have
been charged with the custody of the offending student or has been remiss in the discharge of his duties
in connection with such custody.
In sum, the Court finds under the facts as disclosed by the record and in the light of the principles herein
announced that none of the respondents is liable for the injury inflicted by Pablito Daffon on Alfredo

Amadora that resulted in the latter's death at the auditorium of the Colegio de San Jose-Recoletos on
April 13, 1972. While we deeply sympathize with the petitioners over the loss of their son under the
tragic circumstances here related, we nevertheless are unable to extend them the material relief they
seek, as a balm to their grief, under the law they have invoked.
WHEREFORE, the petition is DENIED, without any pronouncement as to costs. It is so ordered.
Yap, Narvasa, Paras, Feliciano, Gancayco, Bidin, Sarmiento, Cortes and Grio-Aquino, JJ., concur.
Teehankee, C.J., did not participate in deliberations.
Fernan and Padilla, JJ., took no part, formerly counsel for Colegio de San Jose-Recoletos.
Separate Opinions
MELENCIO-HERRERA, J., concurring and dissenting:
I concur, except with respect to the restricted meaning given the term "teacher" in Article 2180 of the
Civil Code as "teacher-in-charge." This would limit liability to occasions where there are classes under
the immediate charge of a teacher, which does not seem to be the intendment of the law.
As I understand it, the philosophy of the law is that whoever stands in loco parentis will have the same
duties and obligations as parents whenever in such a standing. Those persons are mandatorily held
liable for the tortious acts of pupils and students so long as the latter remain in their custody, meaning
their protective and supervisory custody.
Thus, Article 349 of the Civil Code enumerates the persons who stand in loco parentis and thereby
exercise substitute parental authority:
"Art. 349.
xxx
(2)
xxx
(4)

The following persons shall exercise substitute parental authority:

xxx

xxx

Teachers and professors;

xxx

xxx

Directors of trade establishments, with regard to apprentices;"

Article 352 of the Civil Code further provides:

"Art. 352.
The relations between teacher and pupil, professor and student, are fixed by
government regulations and those of each school or institution. . . . "
But even such rules and regulations as may be fixed can not contravene the concept of substitute
parental authority. LLjur

The rationale of liability of school heads and teachers for the tortious acts of their pupils was explained
in Palisoc vs. Brillantes (41 SCRA 548), thus:
"The protective custody of the school heads and teachers is mandatorily substituted for that of the
parents, and hence, it becomes their obligation as well as that of the school itself to provide proper
supervision of the students' activities during the whole time that they are at attendance in the school,
including recess time, as well as to take the necessary precautions to protect the students in their
custody from dangers and hazards that would reasonably be anticipated, including injuries that some
students themselves may inflict wilfully or through negligence on their fellow students. (Emphasis
supplied)
Of course, as provided for in the same Article 2180, the responsibility treated of shall cease when the
persons mentioned prove that they observed all the diligence of a good father of a family to prevent
damage.
And while a school is, admittedly, not directly liable since Article 2180 speaks only of teachers and
schools heads, yet, by virtue of the same provision, the school, as their employer, may be held liable for
the failure of its teachers or school heads to perform their mandatory legal duties as substitute parents
(Sangco, Philippine Law on Torts & Damages, 1978 ed., p. 201). Again, the school may exculpate itself
from liability by proving that it had exercised the diligence of a good father of the family.
"Art. 2180.

...

"Employers shall be liable for the damages caused by their employees and household helpers acting
within the scope of their assigned tasks, even though the former are not engaged in any business or
industry.
xxx

xxx

xxx

Parenthetically, from the enumeration in Article 349 of the Civil Code, supra, it is apparent that the Code
Commission had already segregated the classification of "teachers and professors" vis-a-vis their pupils,
from "directors of trade establishments, with regard to their apprentices."
GUTIERREZ, JR., J., concurring:
I concur in the Court's opinion so carefully analyzed and crafted by Justice Isagani A. Cruz. However, I
would like to stress the need for a major amendment to, if not a complete scrapping of, Article 2180 of
the Civil Code insofar as it refers to teachers or heads of establishments of arts and trades in relation to
pupils and students or apprentices. The seventh paragraph of Art. 2180 is a relic of the past and
contemplates a situation long gone and out of date. In a Palisoc v. Brillantes (41 SCRA 548) situation, it is
bound to result in mischief and injustice.
First, we no longer have masters and apprentices toiling in schools of arts and trades. Students in
"technological colleges and universities are no different from students in liberal arts or professional
schools. Apprentices now work in regular shops and factories and their relationship to the employer is

covered by laws governing the employment relationship and not by laws governing the teacher student relationship.
Second, except for kindergarten, elementary, and perhaps early high school students, teachers are often
no longer objects of veneration who are given the respect due to substitute parents. Many students in
their late teens or early adult years view some teachers as part of a bourgeois or reactionary group
whose advice on behaviour, deportment, and other non-academic matters is not only resented but
actively rejected. It seems most unfair to hold teachers liable on a presumption juris tantum of
negligence for acts of students even under circumstances where strictly speaking there could be no in
loco parentis relationship. Why do teachers have to prove the contrary of negligence to be freed from
solidary liability for the acts of bomb-throwing or pistol packing students who would just as soon hurt
them as they would other members of the so-called establishment.
The ordinary rules on quasi-delicts should apply to teachers and schools of whatever nature insofar as
grown up students are concerned. The provision of Art. 2180 of the Civil Code involved in this case has
outlived its purpose. The Court cannot make law. It can only apply the law with its imperfections.
However, the Court can suggest that such a law should be amended or repealed.
Footnotes
1.

Rollo, pp. 63, 157.

2.

Ibid., p. 38.

3.

Id., p. 23.

4.

Id., p. 31. Climaco, J., ponente, with Pascual and Agcaoili, JJ.

5.

Id., pp. 30-31.

6.

Id., pp. 23, 272.

7.

101 Phil. 843.

8.

108 Phil. 414.

9.

41 SCRA 548.

10.

Concepcion, C.J., Reyes, Barredo, Villamor, and Makasiar, JJ.

11.

Castro, Fernando, and Zaldivar, JJ.

EN BANC
[G.R. No. L-21438. September 28, 1966.]
AIR FRANCE, petitioner, vs. RAFAEL CARRASCOSO and THE HONORABLE COURT OF APPEALS,
respondents.
Lichauco, Picazo & Agcaoili for petitioner.
Bengzon, Villegas & Zarraga for respondent R. Carrascoso.
SYLLABUS
1.
JUDGMENT; FINDINGS OF FACT; REQUIREMENT OF LAW. Courts of justice are not burdened
with the obligation to specify in the sentence every bit and piece of evidence presented by the parties
upon the issues raised. The law solely insists that a decision state the "essential ultimate facts" upon
which the court's conclusion is drawn.
2.
ID.; ID.; ID.; APPEAL AND ERROR; FAILURE TO MAKE FINDINGS ON EVIDENCE AND CONTENTIONS
OF ONE PARTY, EFFECT OF; DECISION NOT TO BE CLOGGED WITH DETAILS. The mere failure to make
specific findings of fact on the evidence presented for the defense or to specify in the decision the
contentions of the appellant and the reasons for refusing to believe them is not sufficient to hold the
same contrary to the requirement of the law and the Constitution. There is no law that so requires. A
decision is not to be clogged with details such that prolixity, if not confusion, may result.
3.
ID.; ID.; ID.; FINDINGS OF FACT BY COURTS DEFINED. Findings of fact may be defined as the
written statement of the ultimate facts as found by the court and essential to support the decision and
judgment rendered thereon; they consist of the court's "conclusions with respect to the determinative
facts on issue."
4.
ID.; ID.; ID.; QUESTION OF LAW EXPLAINED. A question of law is "one which does not call for
an examination of the probative value of the evidence presented by the parties."
5.
PLEADING AND PRACTICE; APPEAL; WHAT MAY BE RAISED ON APPEAL FROM COURT OF
APPEALS. It is not appropriately the business of the Supreme Court to alter the facts or to review the
questions of fact because, by statute, only questions of law may be raised in an appeal by certiorari from
a judgment of the Court of Appeals, which judgment is conclusive as to the facts.
6.
ID.; ID.; EFFECT OF AFFIRMANCE BY COURT OF APPEALS OF TRIAL COURT'S DECISION. When
the Court of Appeals affirms a judgment of the trial court, and the findings of fact of said appellate court
are not in any way at war with those of the trial court, nor is said affirmance upon a ground or grounds
different from those which were made the basis of the trial court's conclusions, such judgment of
affirmance is (1) a determination by the Court of Appeals that the proceeding in the lower court was
free from prejudicial error; (7) that all questions raised by the assignments of error and all questions
that might have been so raised have been finally adjudicated as free from all error.

7.
ID.; COMPLAINT; SPECIFIC MENTION OF THE TERM "BAD FAITH" IN THE COMPLAINT NOT
REQUIRED. Although there is no specific mention of the term bad faith in the complaint, the inference
of bad faith may be drawn from the facts and circumstances set forth therein. 8. EVIDENCE; FINDING OF
COURT OF APPEALS THAT RESPONDENT WAS ENTITLED TO A FIRST CLASS SEAT. The Court of Appeals
properly found that a first class-ticket holder is entitled to first class seat, given the fact that seat
availability in specific flights is therein confirmed; otherwise, an air passenger will be placed in the
hollow of the hands of an airline, because it will always be easy for an airline to strike out the very
stipulations in the ticket and say that there was verbal agreement to the contrary. If only to achieve
stability in the relations between passenger and air carrier, adherence to the ticket so issued is
desirable.
9.
ID.; LACK OF SPECIFIC AVERMENT OF BAD FAITH CURED BY NOTICE TO DEFENDANT OF WHAT
PLAINTIFF INTENDS TO PROVE AND BY EVIDENCE PRESENTED WITHOUT OBJECTION; AMENDMENT OF
COMPLAINT TO CONFORM TO EVIDENCE UNNECESSARY. If there was lack of specific averment of bad
faith in the complaint, such deficiency was cured by notice, right at the start of the trial, by plaintiff's
counsel to defendant as to what plaintiff intended to prove: while in the plane in Bangkok, plaintiff was
ousted by defendant's manager who gave his seat to a white man; and by evidence of bad faith in the
fulfillment of the contract presented without objection on the part of the defendant. An amendment of
the complaint to conform to the evidence is not even required.
10.
ID.; ADMISSIBILITY OF TESTIMONY ON AN ENTRY IN A NOTEBOOK; TESTIMONY NOT COVERED
BY BEST EVIDENCE RULE. The testimony of a witness that the purser made an entry in his notebook
reading "First Class passenger was forced to go to the tourist class against his will and that the captain
refused to intervene," is competent and admissible because the subject of the inquiry is not the entry
but the ouster incident. It does not come within the prescription of the best evidence rule.
11.
CONTRACT OF CARRIAGE; QUASI-DELICT; LIABILITY OF COMMON CARRIERS; CASE AT BAR.
Neglect or malfeasance of the carrier's employees could give ground for an action for damages.
Damages here are proper because the stress of respondent's action is placed upon his wrongful
expulsion, which is a violation of a public duty by petitioner-aircarrier a case of quasi-delict.
12.
ID.; ID.; ID.; AWARD OF MORAL DAMAGES FOR BREACH OF CONTRACT. Award of moral
damages is proper, despite petitioner's argument that respondent's action is planted upon breach of
contract, where the stress of the action is put on wrongful expulsion, the contract having been averred
only to establish the relation between the parties.
13.
ID.; ID.; ID.; EMPLOYER IS RESPONSIBLE FOR TORTIOUS ACTS OF HIS EMPLOYEE; CASE AT BAR.
The responsibility of an employer for the tortious act of his employees is well settled in law. (Art. 2130,
Civil Code). Petitioner-aircarrier must answer for the willful, malevolent act of its manager.
14.
ID.; ID.; ID.; LIABILITY FOR EXEMPLARY DAMAGES; POWER OF COURTS TO GRANT; CASE AT BAR.
The Civil Code gives the court ample power to grant exemplary damages, the only condition being
that defendant should have "acted in a wanton, fraudulent, reckless, oppressive, or malevolent

manner." As the manner of ejectment of plaintiff from his first class seat fits into this legal precept,
exemplary damages are well awarded, in addition to moral damages.
15.
ID.; ID.; LIABILITY FOR ATTORNEY'S FEES; COURT DISCRETION WELL EXERCISED SHOULD NOT BE
DISTURBED. The grant of exemplary damages justifies a similar judgment for attorney's fees. The
court below felt that it is but just and equitable that attorney's fees be given and the Supreme Court
does not intend to break faith with the tradition that discretion well-exercised as it is here should not
be disturbed.
16.
ID.; RIGHTS OF PASSENGERS. Passengers do not contract merely for transportation. They
have a right to be treated by the carrier's employees with kindness, respect, courtesy and due
consideration. They are entitled to be protected against personal misconduct, injurious language,
indignities and abuses from such employees. So, any rude or discourteous conduct on the part of
employees towards a passenger gives the latter an action for damages against the carrier. (4 R. C. L1174-1175).
17.
ID.; BREACH OF CONTRACT MAY BE A TORT. Although the relation of passenger and carrier is
contractual both in origin and nature, nevertheless, the act that breaks the contract may also be a tort.
18.
WORDS AND PHRASES; BAD FAITH DEFINED. "Bad faith", as understood in law, contemplates
a state of mind affirmatively operating with furtive design or with some motive of self-interest or ill will
or for ulterior purpose
DECISION
SANCHEZ, J p:
The Court of First Instance of Manila 1 sentenced petitioner to pay respondent Rafael Carrascoso
P25,000.00 by way of moral damages; P10,000.00 as exemplary damages; P393.20 representing the
difference in fare between first class and tourist class for the portion of the trip Bangkok-Rome, these
various amounts with interest at the legal rate, from the date of the filing of the complaint until paid;
plus P3,000.00 for attorneys' fees; and the costs of suit.
On appeal, 2 the Court of Appeals slightly reduced the amount of refund on Carrascoso's plane ticket
from P393.20 to P383.10, and voted to affirm the appealed decision "in all other respects", with costs
against petitioner.
The case is now before us for review on certiorari.
The facts declared by the Court of Appeals as "fully supported by the evidence of record", are:
"Plaintiff, a civil engineer, was a member of a group of 48 Filipino pilgrims that left Manila for Lourdes
on March 30, 1958.
On March 28, 1958, the defendant, Air France, through its authorized agent, Philippine Air Lines, Inc.,
issued to plaintiff a 'first class' round trip airplane ticket from Manila to Rome. From Manila to Bangkok,

plaintiff traveled in 'first class', but at Bangkok, the Manager of the defendant airline forced plaintiff to
vacate the 'first class' seat that he was occupying because, in the words of the witness Ernesto G.
Cuento, there was a 'white man', who, the Manager alleged, had a 'better right to the seat. When asked
to vacate his 'first class' seat, the plaintiff, as was to be expected, refused, and told defendant's Manager
that his seat would be taken over his dead body; a commotion ensued, and, according to said Ernesto G.
Cuento, many of the Filipino passengers got nervous in the tourist class; when they found out that Mr.
Carrascoso was having a hot discussion with the white man [manager], they came all across to Mr.
Carrascoso and pacified Mr. Carrascoso to give his seat to the 'white man' (Transcript, p. 12, Hearing of
May 26, 1959); and plaintiff reluctantly gave his 'first class' seat in the plane." 3
1.
The thrust of the relief petitioner now seeks is that we review "all the findings" 4 of respondent
Court of Appeals. Petitioner charges that respondent court failed to make complete findings of fact on
all the issues properly laid before it. We are asked to consider facts favorable to petitioner, and then, to
overturn the appellate court's decision.
Coming into focus is the constitutional mandate that "No decision shall be rendered by any court of
record without expressing therein clearly and distinctly the facts and the law on which it is based". 5 This
is echoed in the statutory demand that a judgment determining the merits of the case shall state
"clearly and distinctly the facts and the law on which it is based", 6 and that "Every decision of the Court
of Appeals shall contain complete findings of fact on all issues properly raised before it." 7
A decision with absolutely nothing to support it is a nullity. It is open to direct attack. 8 The law,
however, solely insists that a decision state the "essential ultimate facts" upon which the court's
conclusion is drawn. 9 A court of justice is not hidebound to write in its decision every bit and piece of
evidence 10 presented by one party and the other upon the issues raised. Neither is it to be burdened
with the obligation "to specify in the sentence the facts" which a party "considered as proved". 11 This is
but a part of the mental process from which the Court draws the essential ultimate facts. A decision is
not to be so clogged with details such that prolixity, if not confusion, may result. So long as the decision
of the Court of Appeals contains the necessary facts to warrant its conclusions, it is no error for said
court to withhold therefrom "any specific finding of facts with respect to the evidence for the defense".
Because, as this Court well observed, "There is no law that so requires". 12 Indeed, "the mere failure to
specify (in the decision) the contentions of the appellant and the reasons for refusing to believe them is
not sufficient to hold the same contrary to the requirements of the provisions of law and the
Constitution". It is in this setting that in Manigque, it was held that the mere fact that the findings "were
based entirely on the evidence for the prosecution without taking into consideration or even mentioning
the appellant's side in the controversy as shown by his own testimony", would not vitiate the judgment.
13 If the court did not recite in the decision the testimony of each witness for, or each item of evidence
presented by, the defeated party, it does not mean that the court has overlooked such testimony or
such item of evidence. 14 At any rate, the legal presumptions are that official duty has been regularly
performed, and that all the matters within an issue in a case were laid before the court and passed upon
by it. 15

Findings of fact, which the Court of Appeals is required to make, may be defined as "the written
statement of the ultimate facts as found by the court . . . and essential to support the decision and
judgment rendered thereon". 16 They consist of the court's "conclusions with respect to the
determinative facts in issue" 17 A question of law, upon the other hand, has been declared as "one
which does not call for an examination of the probative value of the evidence presented by the parties."
18
2.
By statute, "only questions of law may be raised" in an appeal by certiorari from a judgment of
the Court of Appeals 19 That judgment is conclusive as to the facts. It is not appropriately the business
of this Court to alter the facts or to review the questions of fact. 20
With these guideposts, we now face the problem of whether the findings of fact of the Court of Appeals
support its judgment.
3.

Was Carrascoso entitled to the first class seat he claims?

It is conceded in all quarters that on March 28, 1958 he paid to and received from petitioner a first class
ticket. But petitioner asserts that said ticket did not represent the true and complete intent and
agreement of the parties; that said respondent knew that he did not have confirmed reservations for
first class on any specific flight, although he had tourist class protection; that, accordingly, the issuance
of a first class ticket was no guarantee that he would have a first class ride, but that such would depend
upon the availability of first class seats.
These are matters which petitioner has thoroughly presented and discussed in its brief before the Court
of Appeals under its third assignment of error, which reads: "The trial court erred in finding that plaintiff
had confirmed reservations for, and a right to, first class seats on the 'definite' segments of his journey,
particularly that from Saigon to Beirut." 21
And, the Court of Appeals disposed of this contention thus:
"Defendant seems to capitalize on the argument that the issuance of a first-class ticket was no
guarantee that the passenger to whom the same had been issued, would be accommodated in the firstclass compartment, for as in the case of plaintiff he had yet to make arrangements upon arrival at every
station for the necessary first class reservation. We are not impressed by such a reasoning. We cannot
understand how a reputable firm like defendant airplane company could have the indiscretion to give
out ticket it never meant to honor at all. It received the corresponding amount in payment of first-class
tickets end yet it allowed the passenger to be at the mercy of its employees. It is more in keeping with
the ordinary course of business that the company should know whether or not the tickets it issues are to
be honored or not." 22
Not that the Court of Appeals is alone. The trial court similarly disposed of petitioner's contention, thus:
"On the fact that plaintiff paid for, and was issued a 'First class ticket, there can be no question. Apart
from his testimony, see plaintiffs Exhibits 'A', 'A-1' 'B', 'B-1', 'B-2', 'C' and 'C-1', and defendant's own
witness, Rafael Altonaga, confirmed plaintiff's testimony and testified as follows:

Q.

In these tickets there are marks 'O.K.' From what you know, what does this O.K. mean?

A.

That the space is confirmed.

Q.

Confirmed for first class?

A.

Yes, 'first class'. (Transcript, p. 169)

xxx

xxx

xxx

"Defendant tried to prove by the testimony of its witnesses Luis Zaldariaga and Rafael Altonaga that
although plaintiff paid for, and was issued a 'first class' airplane ticket, the ticket was subject to
confirmation in Hongkong. The court cannot give credit to the testimony of said witnesses. Oral
evidence cannot prevail over written evidence, and plaintiff's Exhibits 'A', 'A1', 'B', 'B-1', 'C' and 'C- 1'
belie the testimony of said witnesses, and clearly show that the plaintiff was issued, and paid for, a first
class ticket without any reservation whatever.
Furthermore, as hereinabove shown, defendant's own witness Rafael Altonaga testified that the
reservation for a 'first class' accommodation for the plaintiff was confirmed. The court cannot believe
that after such confirmation ,defendant had a verbal understanding with plaintiff that the 'first class'
ticket issued to him by defendant would be subject to confirmation in Hongkong." 23
We have heretofore adverted to the fact that except for a slight difference of a few pesos in the amount
refunded on Carrascoso's ticket, the decision of the Court of First Instance was affirmed by the Court of
Appeals in all other respects. We hold the view that such a judgment of affirmance has merged the
judgment of the lower court. 24 Implicit in that affirmance is a determination by the Court of Appeals
that the proceeding in the Court of First Instance was free from prejudicial error and that 'all questions
raised by the assignments of error and all questions that might have been so raised are to be regarded
as finally adjudicated against the appellant". So also, the judgment affirmed "must be regarded as free
from all error" 25 We reached this policy construction because nothing in the decision of the Court of
Appeals on this point would suggest that its findings of fact are in any way at war with those of the trial
court. Nor was said affirmance by the Court of Appeals upon a ground or grounds different from those
which were made the basis of the conclusions of the trial court. 26
If, as petitioner underscores, a first-class-ticket holder is not entitled to a first class seat,
notwithstanding the fact that seat availability in specific flights is therein confirmed, then an air
passenger is placed in the hollow of the hands of an airline. What security then can a passenger have? It
will always be an easy matter for an airline aided by its employees, to strike out the very stipulations in
the ticket, and say that there was a verbal agreement to the contrary. What if the passenger had a
schedule to fulfill? We have long learned that, as a rule, a written document speaks a uniform language;
that spoken word could be notoriously unreliable. If only to achieve stability in the relations between
passenger and air carrier, adherence to the ticket so issued is desirable. Such is the case here. The lower
courts refused to believe the oral evidence intended to defeat the covenants in the ticket.

The foregoing are the considerations which point to the conclusion that there are facts upon which the
Court of Appeals predicated the finding that respondent Carrascoso had a first class ticket and was
entitled to a first class seat at Bangkok, which is a stopover in the Saigon to Beirut leg of the flight, 27
We perceive no "welter of distortions by the Court of Appeals of petitioner's statement of its position",
as charged by petitioner. 28 Nor do we subscribe to petitioners accusation that respondent Carrascoso
"surreptitiously took a first class seat to provoke an issue". 29 And this because, as petitioner states,
Carrascoso went to see the Manager at his office in Bangkok "to confirm my seat and because from
Saigon I was told again to see the Manager. 30 Why, then, was he allowed to take a first class seat in the
plane at Bangkok, if he had no seat? Or, if another had a better right to the seat?
4.
Petitioner assails respondent court's award of moral damages. Petitioner's trenchant claim is
that Carrascoso's action is planted upon breach of contract; that to authorize an award for moral
damages there must be an averment of fraud or bad faith; 31 and that the decision of the Court of
Appeals fails to make a finding of bad faith. The pivotal allegations in the complaint bearing on this issue
are:
"3.
That . . . plaintiff entered into a contract of air carriage with the Philippine Air Lines for a
valuable consideration, the latter acting as general agents for and in behalf of the defendant, under
which aid contract, plaintiff was entitled to, as defendant agreed to furnish plaintiff, First Class passage
on defendant's plane during the entire duration of plaintiff's tour of Europe with Hongkong as starting
point up to and until plaintiff's return trip to Manila, . . .
4.
That during the first two legs of the trip from Hongkong to Saigon and from Saigon to Bangkok,
defendant furnished to the plaintiff First Class accommodation but only after protestations, arguments
and/or insistence were made by the plaintiff with defendant's employees.
5.
That finally, defendant failed to provide First Class passage, but instead furnished plaintiff only
Tourist Class accommodations from Bangkok to Teheran and/or Casablanca, . . . the plaintiff has been
compelled by defendant's employees to leave the First Class accommodation berths at Bangkok after he
was already seated.
6.
That consequently, the plaintiff, desiring no repetition of the inconvenience and
embarrassments brought by defendant's breach of contract was forced to take a Pan American World
Airways plane on his return trip from Madrid to Manila. 32
xxx

xxx

xxx

2.
That likewise, as a result of defendant's failure to furnish First Class accommodations aforesaid,
plaintiff suffered inconveniences, embarrassments, and humiliations, thereby causing plaintiff mental
anguish, serious anxiety, wounded feelings, social humiliation, and the like injury, resulting in moral
damages in the amount of P30,000.00." 33
xxx

xxx

xxx

The foregoing, in our opinion, substantially aver: First, That there was a contract to furnish plaintiff a
first class passage covering, amongst others, the Bangkok-Teheran leg; Second, That said contract was
breached when petitioner failed to furnish first class transportation at Bangkok; and Third, That there
was bad faith when petitioner's employee compelled Carrascoso to leave his first class accommodation
berth "after he was already seated" and to take a seat in the tourist class, by reason of which he
suffered inconvenience, embarrassments and humiliations, thereby causing him mental anguish, serious
anxiety, wounded feelings and social humiliation, resulting in moral damages. It is true that there is no
specific mention of the term bad faith in the complaint. But, the inference of bad faith is there; it may be
drawn from the facts and circumstances set forth therein. 34 The contract was averred to establish the
relation between the parties. But the stress of the action is put on wrongful expulsion.
Quite apart from the foregoing is that (a) right at the start of the trial, respondent's counsel placed
petitioner on guard on what Carrascoso intended to prove: That while sitting in the plane in Bangkok,
Carrascoso was ousted by petitioner's manager who gave his seat to a white man; 35 and (b) evidence of
bad faith in the fulfillment of the contract was presented without objection on the part of the petitioner.
It is, therefore, unnecessary to inquire as to whether or not there is sufficient averment in the complaint
to justify an award for moral damages. Deficiency in the complaint, if any, was cured by the evidence. An
amendment thereof to conform to the evidence is not even required. 36 On the question of bad faith,
the Court of Appeals declared:
"That the plaintiff was forced out of his seat in the first class compartment of the plane belonging to the
defendant Air France while at Bangkok, and was transferred to the tourist class not only without his
consent but against his will, has been sufficiently established by plaintiff in his testimony before the
court, corroborated by the corresponding entry made by the purser of the plane in his notebook which
notation reads as follows:
'First-class passenger was forced to go to the tourist class against his will and that the captain refused to
intervene',
and by the testimony of an eye-witness Ernesto G. Cuento, who was a co-passenger. The captain of the
plane who was asked by the manager of defendant company at Bangkok to intervene even refused to do
so. It is noteworthy that no one on behalf of defendant ever contradicted or denied this evidence for the
plaintiff. It could have been easy for defendant to present its manager at Bangkok to testify at the trial
of the case, or yet to secure his deposition; but defendant did neither. 37
The Court of Appeals further stated
"Neither is there evidence as to whether or ,not a prior reservation was made by the white man. Hence,
if the employees of the defendant at Bangkok sold a first-class ticket to him when all the seats had
already been taken, surely the plaintiff should not have been picked out as the one to suffer the
consequences and to be subjected to the humiliation and indignity of being ejected from his seat in the
presence of others. Instead of explaining to the white man the improvidence committed by defendant's
employees, the manager adopted the more drastic step of ousting the plaintiff who was then safely
ensconced in his rightful seat. We are strengthened in our belief that this probably was what happened

there, by the testimony of defendant's witness Rafael Altonaga who, when asked to explain the meaning
of the letters 'O.K., appearing on the tickets of plaintiff, said that 'the space is confirmed' for first class.
Likewise, Zenaida Faustino, another witness for defendant, who was the chief of the Reservation Office
of defendant, testified as follows:
'Q.
How does the person in the ticket-issuing office know what reservation the passenger has
arranged with you?
A.

They call us up by phone and ask for the confirmation.' (t.s.n., p. 247, June 19, 1959)

In this connection, we quote with approval what the trial Judge has said on this point:
'Why did the, using the words of witness Ernesto G. Cuento, 'white man' have a 'better right' to the seat
occupied by Mr. Carrascoso? The record is silent. The defendant airline did not prove 'any better', nay,
any right on the part of the 'white man' to the 'First class' seat that the plaintiff was occupying and for
which he paid and was issued a corresponding 'first class' ticket.
'If there was a justified reason for the action of the defendant's Manager in Bangkok, the defendant
could have easily proven it by having taken the testimony of the said Manager by deposition, but
defendant did not do so; the presumption is that evidence willfully suppressed would be adverse if
produced [Sec. 69, par. (e) Rules of Court]; and, under the circumstances, the Court is constrained to
find, as it does find, that the Manager of the defendant airline in Bangkok not merely asked but
threatened the plaintiff to throw him out of the plane if he did not give up his 'first class' seat because
the said Manager wanted to accommodate using the words of the witness Ernesto G. Cuento, the 'white
man'." 38
It is really correct to say that the Court of Appeals in the quoted portion first transcribed did not use the
term "bad faith". But can it be doubted that the recital of facts therein points to bad faith? The manager
not only prevented Carrascoso from enjoying his right to a first class seat; worse, he imposed his
arbitrary will; he forcibly ejected him from his seat, made him suffer the humiliation of having to go to
the tourist class compartment just to give way to another passenger whose right thereto has not
been established. Certainly, this is bad faith. Unless, of course, bad faith has assumed a meaning
different from what is understood in law. For, "bad faith" contemplates a "state of mind affirmatively
operating with furtive design or with some motive of self-interest or ill will or for ulterior purposes." 39
And if the foregoing were not yet sufficient, there is the express finding of bad faith in the judgment of
the Court of First Instance, thus:
"The evidence shows that defendant violated its contract of transportation with plaintiff in bad faith,
with the aggravating circumstances that defendant's Manager in Bangkok went to the extent of
threatening the plaintiff in the presence of many passengers to have him thrown out of the airplane to
give the 'first class' seat that he was occupying to, again using the words of witness Ernesto G. Cuento, a
'white man' whom he (defendant's Manager) wished to accommodate, and the defendant has not
proven that this 'white man' had any 'better right' to occupy the 'first class' seat that the plaintiff was

occupying, duly paid for, and for which the corresponding 'first class' ticket was issued by the defendant
to him." 40
5.
The responsibility of an employer for the tortuous act of its employees-need not be essayed. It is
well settled in law. 41 For the willful malevolent act of petitioner's manager, petitioner's his employer,
must answer. Article 21 of the Civil Code says:
"Art. 21.
Any person who willfully causes loss or injury to another in a manner that is contrary to
morals, good customs or public policy shall compensate the latter for the damage."
In parallel circumstances, we applied the foregoing legal precept; and, we held that upon the provisions
of Article 2219 (10), Civil Code, moral damages are recoverable. 42
6.
A contract to transport passengers is quite different in kind and degree from any other
contractual relation. 43 And this, because of the relation which an air-carrier sustains with the public. Its
business is mainly with the travelling public. It invites people to avail of the comforts and advantages it
offers. The contract of air carriage, therefore, generates a relation attended with a public duty. Neglect
or malfeasance of the carrier's employees, naturally, could give ground for an action for damages.
Passengers do not contract merely for transportation. They have a light to be treated by the carrier's
employees with kindness, respect, courtesy and due consideration. They are entitled to be protected
against personal misconduct, injurious language, indignities and abuses from such employees. So it is,
that any rude or discourteous conduct on the part of employees towards a passenger gives the latter an
action for damages against the carrier. 44
Thus, "Where a steamship company 45 had accepted a passenger's check, it was a breach of contract
and a tort, giving a right of action for its agent in the presence of third persons to falsely notify her that
the check was worthless and demand payment under threat of ejection, though the language used was
not insulting and she was not ejected. 46 And this, because, altho the relation of passenger and carrier is
"contractual both in origin and nature" nevertheless "the act that breaks the contract may be also a
tort". 47 And in another case, "Where a passenger on a railroad train, when the conductor came to
collect his fare, tendered him the cash fare to a point where the train was scheduled not to stop, and
told him that as soon as the train reached such point he would pay the cash fare from that point to
destination, there was nothing in the conduct of the passenger which justified the conductor in using
insulting language to him, as by calling him a lunatic," 48 and the Supreme Court of South Carolina there
held the carrier liable for the mental suffering of said passenger.
Petitioner's contract with Carrascoso is one attended with public duty. The stress of Carrascoso's action
as we have said, is placed upon his wrongful expulsion. This is a violation of public duty by the
petitioner-air carrier a case of quasi-delict. Damages are proper.
7.

Petitioner draws our attention to respondent Carrascoso's testimony, thus

"Q.

You mentioned about an attendant. Who is that attendant and purser?

A.
When we left already that was already in the trip I could not help it. So one of the flight
attendants approached me and requested from me my ticket and I said, What for? and she said, 'We will
note that you were transferred to the tourist class'. I said, 'Nothing of that kind. That is tantamount to
accepting my transfer.' And I also said, You are not going to note anything there because I am protesting
to this transfer.
Q.

Was she able to note it?

A.

No, because I did not give my ticket.

Q.

About that purser?

A.
Well, the seats there are so close that you feel uncomfortable and you don't have enough leg
room, I stood up and I went to the pantry that was next to me and the purser was there. He told me, 'I
have recorded the incident in my notebook.' He read it and translated it to me because it was
recorded in French 'First class passenger was forced to go to the tourist class against his will, and that
the captain refused to intervene.'
MR. VALTE
I move to strike out the last part of the testimony of the witness because the best evidence
would be the notes. Your Honor.
COURT
I will allow that as part of his testimony." 49
Petitioner charges that the finding of the Court of Appeals that the purser made an entry in his
notebooks reading "First class passenger was forced to go to the tourist class against his will, and that
the captain refused to intervene" is predicated upon evidence [Carrascoso's testimony above] which is
incompetent. We do not think so. The subject of inquiry is not the entry, but the ouster incident.
Testimony of the entry does not come within the proscription of the best evidence rule. Such testimony
is admissible. 49
Besides, from a reading of the transcript just quoted, when the dialogue happened, the impact of the
startling occurrence was still fresh and continued to be felt. The excitement had not as yet died down.
Statements then, in this environment, are admissible as part of the res gestae. 50 For, they grow "out of
the nervous excitement and mental and physical condition of the declarant". 51 The utterance of the
purser regarding his entry in the notebook was spontaneous, and related to the circumstances of the
ouster incident. Its trustworthiness has been guaranteed. 52 It thus escapes the operation of the
hearsay rule. It forms part of the res gestae.
At all events, the entry was made outside the Philippines. And, by an employee of petitioner. It would
have been an easy matter for petitioner to have contradicted Carrascoso's testimony. If it were really
true that no such entry was made, the deposition of the purser could have cleared up the matter.

We, therefore, hold that the transcribed testimony of Carrascoso is admissible in evidence.
8.
Exemplary damages are well awarded. The Civil Code gives the Court ample power to grant
exemplary damages in contracts and quasi-contracts. The only condition is that defendant should
have "acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner". 53 The manner of
ejectment of respondent Carrascoso from his first class seat fits into this legal precept. And this, in
addition to moral damages. 54
9.
The right to attorneys' fees is fully established. The grant of exemplary damages justifies a
similar judgment for attorneys' fees. The least that can be said is that the courts below felt that it is but
just and equitable that attorneys' fees be given. 55 We do not intend to break faith with the tradition
that discretion well exercised as it was here should not be disturbed.
10.
Questioned as excessive are the amounts decreed by both the trial court and the Court of
Appeals, thus: P25,000.00 as moral damages; P10,000.00, by way of exemplary damages, and P3,000.00
as attorney's fees. The task of fixing these amounts is primarily with the trial-court. 56 The Court of
Appeals did not interfere with the same. The dictates of good sense suggest that we give our imprimatur
thereto. Because, the facts and circumstances point to the reasonableness thereof. 57
On balance, we say that the judgment of the Court of Appeals does not suffer from reversible error. We
accordingly vote to affirm the same. Costs against petitioner. So ordered.
Concepcion, C.J., Reyes J.B.L., Barrera, Dizon, Regala, Makalintal, Zaldivar and Castro, JJ., concur.
Bengzon, J.P., J., did not take part.
Footnotes
1.

Civil Case No. 38810, Rafael Carrascoso, plaintiff, vs. Air France, defendant," R.A., pp. 79-80.

2.
C.A. - G.R. No. 26522-R, Rafael Carrascoso, plaintiff-appellee, vs. Air France, defendantappellant".
3.

Appendix A, petitioner's brief, pp. 146-147. See also R.A., pp. 66-67.

4.

Petitioner's brief, p. 142.

5.

Section 12, Article VIII, Constitution.

6.
Section 1, Rule 36, Rules of Court. See also Section 2, Rule 120, in reference to judgments in
criminal cases.
7.

Sec. 4, Rule 51; Sec. 33(2), Judiciary Act of 1948, as amended.

8.
Edwards vs. McCoy, 22 Phil., 598, 601; Yangco vs. Court of First Instance of Manila, et al., 29
Phil., 183, 191.

9.

Braga vs. Millora 3 Phil., 458, 465.

10.

Id.

11.

Aringo vs. Arena, 14 Phil., 263, 266, italics supplied.

12.

Reyes vs. People, 71 Phil., 598, 600.

13.
People vs. Manigque, 35 Off. Gaz., No. 94, pp. 1682, 1683 citing Section 133 of the Code of Civil
Procedure and Section 12, Art. VIII, Constitution, supra.
14.

Badger, et al., vs. Beyd, 65 S.W. (2d), pp. 601, 610.

15.

Section 5, (m) and (o), Rule 131, Rules of Court.

16.

In re Good's Estate, 266 P. (2d), pp. 719, 729.

17.

Badger, et al., vs. Boyd, supra.

18.

Goduco vs. Court of Appeals, et al., L-17647, February 28, 1964.

19.

Section 2, Rule 45, Rules of Court, formerly Section 2, Rule 46 of the Rules of Court.

20.
Medel, et al., vs. Calasanz, et al., L-14835, August 31, 1960; Astraquillo, et al., vs. Javier, et al., L20034, January 30, 1965.
21.

Petitioner's brief in the Court of Appeals, pp. 82-98.

22.

Decision of the Court of Appeals, Appendix A, petitioner's brief, pp. 148-149.

23.

R. A., pp. 67, 73.

24.

5 B. C. J. S., p. 295; 3 Am. Jur. p. 678.

25.

3 Am. Jur., pp. 677-678.

26.

See Garcia Valdez vs. Soteraa Tuason, 40 Phil., 943, 951.

27.

Carrascoso's ticket, according to petitioner (brief, pp. 7-8), shows:

Segment or leg Carrier Flight No.

Date of Departure

1.

Manila to Hongkong

PAL

March 30

2.

Hongkong to Saigon

VN

(Air Vietnam)

March 31

3.

693

Saigon to Beirut AF

300A

(Air France)

245

March 31

28.

Petitioner's brief, p. 50; see also id., pp. 37 and 46.

29.

Id., p. 103.

30.

Ibid., p. 102.

31.
Article 2220, Civil Code reads: "Willful injury to property may be a legal ground for awarding
moral damages if the court should find that, under the circumstances, such damages are justly due. The
same rule applies to breaches of contract where the defendant acted fraudulently or in bad faith."
32.

R. A., p. 2-4; Italics supplied.

33.

R. A. p. 5; second cause of action.

34.
Copeland vs. Cunehoo, et al., 138 S.E., 267, 270. See also 25 C.J.S., pp. 758-759; 15 Am. Jur., pp.
766-767.
35.
33.

Statement of Attorney Villegas for respondent Carrascoso in open court. Respondent's brief. p.

36.

Section 5, Rule 10, Rules of Court, in part reads:

"SEC. 5. Amendment to conform to or authorize presentation of evidence. When

issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be
treated in all respects, as if they had been raised in the pleadings. Such amendment of the pleadings as
may be necessary to cause them to conform to the evidence and to raise these issues may be made
upon motion of any party at any time, even after judgment; but failure so to amend does not affect the
result of the trial of these issues . . .; Co Tiamco vs. Diaz, etc., et al., 75 Phil., 672, 679; J. M. Tuason &
Co., Inc., etc., vs. Bolaos, 95 Phil., 106, 110.
37.

Decision, Court of Appeals, Appendix A of petitioner's brief, pp. 147-148.

38.

Decision of the Court of Appeals, Appendix A petitioner's brief pp. 147-151.

39.
Words & Phrases, Perm. Ed., Vol. 5, p. 13, citing Warfield Natural Gas Co., vs. Allen, 59 S.W. (2d.)
534, 538.
40.

R.A., p. 74; emphasis supplied.

41.

Article 2180, Civil Code.

42.

Philippine Refining Co. vs. Garcia, et al., L-21871 and L- 21962, September 27, 1966.

43.

See Section 4, Chapter 3, Title VIII, Civil Code.

44.

4 R.C.L., pp. 1174-1175.

45.
An air carrier is common carrier; and air transportation is similar or analogous to land and water
transportation, Mendoza vs. Philippine Air Lines, Inc., 90 Phil., 836, 841-842.
46.

Austro-American S.S. Co. vs. Thomas, 248 F.231.

47.

Id., p. 233.

48.

Lipman vs. Atlantic Coast Line R. Co., 93 S.E., 714, 716.

49.

Petitioner's brief, pp. 104-105.

49a

V. Moran, Comments on Rules of Court, 1963 ed., p. 76.

50.

Section 36. Rule 130, Rules of Court.

51.

IV Martin, Rules of Court in the Philippines, 1966 ed., p. 324.

52.

Ibid.

53.

Article 2232, Civil Code.

54.

Article 2229, Civil Code.

55.

Article 2208, (1) and (11), Civil Code.

56.
Coleongco vs. Claparols, L-18616, March 31, 1964; Corpus vs. Cuaderno, et al., L-23721, March
31, 1965.
57.
Cf. Yutuk vs. Manila Electric company, L-13016, May 31, 1961; Lopez et al., vs. Pan American
World Airways, L-22415, March 30, 1966.

EN BANC
[G.R. No. 4089. January 12, 1909.]
ARTURO PELAYO, plaintiff-appellant, vs. MARCELO LAURON, ET AL., defendants-appellees.
J. H. Junquera, for appellant.
Filemon Sotto, for appellees.

SYLLABUS
1.
RECIPROCAL OBLIGATION OF HUSBAND AND WIFE; SUPPORT. Among the reciprocal
obligations existing between a husband and wife is that of support, which obligation is established by
law.
2.
ID.; SUPPORT OF STRANGERS. The law does not compel any person to support a stranger
unless such person bound himself to do so by an express contract.
3.
ID.; SUPPORT OF WIFE. Where a husband whom the law compels to support his wife in living,
the father and mother-in-law of the latter are under no liability to provide for her.
DECISION
TORRES, J p:
On the 23d of November, 1906, Arturo Pelayo, a physician-residing in Cebu, filed a complaint against
Marcelo Lauron and Juana Abella setting forth that on or about the 13th of October of said year, at
night, the plaintiff was called to the house of the defendants, situated in San Nicolas, and that upon
arrival he was requested by them to render medical assistance to their daughter-in-law who was about
to give birth to a child; that therefore, and after consultation with the attending physician, Dr. Escano, it
was found necessary, on account of the difficult birth, to remove the fetus by means of forceps which
operation was performed by the plaintiff, who also had to remove the after birth, in which service he
was occupied until the following morning, and that afterwards, on the same day, he visited the patient
several times; that the just and equitable value of the services rendered by him was P500, which the
defendants refuse to pay without alleging any good reason there for; that for said reason he prayed that
judgment be entered in his favor as against the defendants, or any of them, for the sum of P500 and
costs, together with any other relief that might be deemed proper.
In answer to the complaint counsel for the defendants denied all of the allegations therein contained
and alleged as a special defense, that their daughter-in-law had died in consequence of the said
childbirth, and that when she was alive she lived with her husband independently and in a separate
house without any relation whatever with them, and that, if on the day when she gave birth she was in

the house of the defendants, her stay there was accidental and due to fortuitous circumstances;
therefore, he prayed that the defendants be absolved of the complaint with costs against the plaintiff.
The plaintiff demurred to the above answer, and the court below sustained the demurrer, directing the
defendants, on the 23d of January, 1907, to amend their answer. In compliance with this order the
defendants presented, on the same date, their amended answer, denying each and every one of the
allegations contained in the complaint, and requesting that the same be dismissed with costs.
As a result of the evidence adduced by both parties, judgment was entered by the court below on the
5th of April, 1907, whereby the defendants were absolved from the former complaint, on account of the
lack of sufficient evidence to establish a right of action against the defendants, with costs against the
plaintiff, who excepted to the said judgment and in addition moved for a new trial on the ground that
the judgment was contrary to law; the motion was overruled and the plaintiff excepted and in due
course presented the corresponding bill of exceptions. The motion of the defendants requesting that
the declaration contained in the judgment that the defendants had demanded he professional services
of the plaintiff he eliminated therefrom, for the reason that, according to the evidence, no such request
had been made, was also denied, and to the decision the defendants excepted.
Assuming that it is a real fact acknowledged by the defendants, that the plaintiff, by virtue of having
been sent for by the former, attended as physician and rendered professional services to a daughter-inlaw of the said defendants during a difficult and laborious childbirth, in order to decide the claim of the
said physician regarding the recovery of his fees, it becomes necessary to decide who is bound to pay
the bill, whether the father and mother-in-law of the patient, or the husband of the latter.
According to article 1089 of the Civil Code, obligations are created by law, by contracts, by quasicontracts, and by illicit acts and omissions or by those in which any kind of fault or negligence occurs.
Obligations arising from law are not presumed. Those expressly determined in the code or in special
laws, etc., are the only demandable ones. Obligations arising from contracts have legal force between
the contracting parties and must be fulfilled in accordance with their stipulations. (Arts. 1090 and 1091.)
The rendering of medical assistance in case of illness is comprised among the mutual obligations to
which spouses are bound by way of mutual support. (Arts. 142 and 143.).
If every obligation consists in giving, doing, or not doing something (art. 1088), and spouses are mutually
bound to support each other, there can be no question but that, when either of them by reason of
illness should be in need of medical assistance, the other is under the unavoidable obligation to furnish
the necessary services of a physician in order that health may be restored, and he or she may be freed
from the sickness by which life is jeopardized; the party bound to furnish such support is therefore liable
for all expenses, including the fees of the medical expert for his professional services. This liability
originates from the above-cited mutual obligation which the law has expressly established between the
married couple.

In the face of the above legal precepts it is unquestionable that the person bound to pay the fees due to
the plaintiff for the professional services that he rendered to the daughter-in-law of the defendants
during her childbirth is the husband of the patient and not her father and mother- in-law, the
defendants herein. The fact that it was not the husband who called the plaintiff and requested his
assistance for his wife is no bar to the fulfillment of the said obligation, as the defendants, in view of the
imminent danger to which the life of the patient was at that moment exposed, considered that medical
assistance was urgently needed, and the obligation of the husband to furnish his wife with the
indispensable services of a physician at such critical moments is specially established by the law, as has
been seen, and compliance therewith is unavoidable; therefore, the plaintiff, who believes that he is
entitled to recover his fees, must direct his action against the husband who is under obligation to furnish
medical assistance to his lawful wife in such an emergency.
From the foregoing it, may readily be understood that it was improper to have brought an action against
the defendants simply because they were the parties who called the plaintiff and requested him to
assist the patient during her difficult confinement, and also, possibly, because they were her father and
mother-in-law and the sickness occurred in their house. The defendants were not, nor are they now,
under any obligation by virtue of any legal provision, to pay the fees claimed, nor in consequence of any
contract entered into between them and the plaintiff from which such obligation might have arisen.
In applying the provisions of the Civil Code in an action for support, the supreme court of Spain, while
recognizing the validity and efficiency of a contract to furnish support wherein a person bound himself
to support another who was not his relative, established the rule that the law does impose the
obligation to pay for the support of a stranger, but as the liability arose out of a contract, the
stipulations of the agreement must be upheld. (Decision of May 11 1897.)
Within the meaning of the law, the father and mother law are strangers with respect to the obligation
that devolves upon the husband to provide support, among which is the furnishing of medical assistance
to his wife at the time of her confinement; and, on the other hand, it does not appear that a contract
existed between the defendants and the plaintiff physician, for which reason it is obvious that the
former can not be compelled to pay fees which they are under no liability to pay because it does not
appear that they consented to bind themselves.
The foregoing suffices to demonstrate that the first and second errors assigned to the judgment below
are unfounded, because, if the plaintiff has no right of action against the defendants, it is needless to
declare whether or not the use of forceps is a surgical operation.
Therefore, in view of the considerations hereinbefore set forth, it is our opinion that the judgment
appealed from should be affirmed with the costs against the appellant. So ordered.
Mapa and Tracey, JJ., concur.
Arellano, C.J. and Carson. J., concur in the result.
Willard, J., dissents.

FIRST DIVISION
[G.R. No. L-46179. January 31, 1978.]
CANDIDA VIRATA, TOMAS VIRATA, MANOLITO VIRATA, EDERLINDA VIRATA, NAPOLEON VIRATA,
ARACELY VIRATA, ZENAIDA VIRATA, LUZMINDA VIRATA, PACITA VIRATA, and EVANGELINA VIRATA,
petitioners, vs. VICTORIO OCHOA, MAXIMO BORILLA and THE COURT OF FIRST INSTANCE OF CAVITE, 7th
JUDICIAL DISTRICT, BRANCH V, stationed at BACOOR, CAVITE, respondents.
Remulla, Estrella & Associates for petitioners.
Exequiel C. Masangkay for respondents.
SYNOPSIS
A criminal action for reckless imprudence was filed against a driver of a jeepney. Before the criminal
case could be decided, the heirs of the victim manifested that they were filing and they so did file a
separate civil action for damages against the owner and the driver of the jeepney based on quasi-delict.
The driver was subsequently acquitted of the crime charge. The defendants in the civil case then moved
to dismiss the same, which motion the trial court granted.
The principal issue before the Supreme Court is whether the heirs of the victim can prosecute an action
for damages based on quasi-delict against the driver and owner.
The Supreme Court held that the acquittal of the driver of the crime charged is not a bar to the
prosecution of a civil case for damages based on quasi-delict.
Order of dismissal set aside and case remanded to the lower court for further proceedings.
SYLLABUS
1.
ACTIONS; CULPA AQUILIANA; AGGRIEVED PARTY MAY FILE SEPARATE ACTION BASED ON CULPA
AQUILIANA. In negligence cases the aggrieved parties may choose between an action under the
Revised Penal Code or for quasi-delict under Article 2176 of the Civil Code of the Philippines. What is
prohibited by Article 2177 of the Civil Code is to recover twice for the same negligent act.
2.
ID.; ID.; ACQUITTAL OF ACCUSED NOT A BAR TO PROSECUTION FOR DAMAGES BASED ON
QUASI-DELICT. The acquittal of the accused of the crime of homicide through reckless imprudence is
not a bar to the prosecution of a civil case for damages based on quasi-delict. The source of obligation
sought to be enforced in the civil action is quasi-delict, not an act or omission punishable by law. Under
Article 1157 of the Civil Code of the Philippines, quasi-delict and an act or omission punishable by law
are two different sources of obligation. Moreover, to prevail in the action for damages, plaintiff have
only be establish its cause of action by preponderance of evidence.
DECISION
FERNANDEZ, J p:

This is an appeal by certiorari, from the order of the Court of First Instance of Cavite, Branch V, in Civil
Case No. B-134 granting the motion of the defendants to dismiss the complaint on the ground that there
is another action pending between the same parties for the same cause 1
The record shows that on September 24, 1975 one Arsenio Virata died as a result of having been
bumped while walking along Taft Avenue, Pasay City by a passenger jeepney driven by Maximo Borilla
and registered in the name of Victorio Ochoa; that Borilla is the employee driver of Ochoa; that for the
death of Arsenio Virata, a criminal action for homicide through reckless imprudence was instituted on
September 25, 1975 against Maximo Borilla in the Court of First Instance of Rizal at Pasay City, docketed
as Criminal Case No. 3162-P of said court; that at the hearing of the said criminal case on December 12,
1975, Atty. Julio Francisco, the private prosecutor, made a reservation to face a separate civil action for
damages against the driver on his criminal liability; that on February 19, 1976 Atty. Julio Francisco filed a
motion in said criminal case to withdraw the reservation to file a separate civil action; that thereafter,
the private prosecutor actively participated in the trial and presented evidence on the damages; that on
June 29, 1976 the heirs of Arsenio Virata again reserved their right to institute in separate civil action;
that on July 29, 1977 the heirs of Arsenio Virata, petitioners herein, commenced Civil No. B-134 in the
Court of First Instance of Cavite at Bacoor, Branch V, for damages based on quasi-delict against the
driver Maximo Borilla and the registered owner of the jeepney, Victorio Ochoa; that on August 13, 1976
the defendants, private respondents herein, filed a motion to dismiss on the ground that there is
another action, Criminal Case No. 3162-P, pending between the same parties for the same cause; that
on September 8, 1976 the Court of First Instance of Rizal at Pasay City rendered in decision in Criminal
Case No. 3612-P acquitting the accused, Maximo Borilla, on the ground that he caused an injury by mere
accident; and that on January 31, 1977, the Court of First Instance of Cavite at Bacoor granted the
motion to dismiss Civil Case No. B-134 for damages 2
The principal issue is whether or not the petitioners, heirs of the deceased Arsenio Virata, can prosecute
an action for damages based on quasi-delict against Maximo Borilla and Victorio Ochoa, driver and
owner, respectively of the passenger jeepney that bumped Arsenio Virata.
It is settled that in negligence cases the aggrieved parties may choose between an action under the
Revised Penal Code or for quasi-delict under Article 2176 of the Civil Code of the Philippines. What is
prohibited by Article 2177 of the Civil Code of the Philippines is to recover twice for the same negligent
act. LLpr
The Supreme Court has held that:
"According to the Code Commission: 'The foregoing provision (Article 2177) though at first sight
startling, is not so novel or extraordinary when we consider the exact nature of criminal and civil
negligence. The former is a violation of the criminal law, while the latter is a 'culpa aquiliana' or quasidelict, of ancient origin, having always had its own foundation and individuality, separate from criminal
negligence. Such distinction between criminal negligence and 'culpa extra-contractual' or 'quasi-delito'
has been sustained by decision of the Supreme Court of Spain and maintained as clear, sound and
perfectly tenable by Maura, an outstanding Spanish jurist. Therefore, under the proposed Article 2177,

acquittal from an accusation of criminal negligence, whether on reasonable doubt or not, shall not be a
bar to a subsequent civil action, not for civil liability arising from criminal negligence, but for damages
due to a quasi-delict or 'culpa aquiliana'. But said article forestalls a double recovery." (Report of the
Code Commission, p. 162.)
Although, again, this Article 2177 does seem to literally refer to only acts of negligence, the same
argument of Justice Bocobo about construction that upholds 'the spirit that giveth life' rather than that
which is literal that killeth the intent of the lawmaker should be observed in applying the same. And
considering that the preliminary chapter on human relations of the new Civil Code definitely establishes
the separability and independence of liability in a civil action for acts criminal in character (under
Articles 29 to 32) from the civil responsibility arising from crime fixed by Article 100 of the Revised Penal
Code, and, in a sense, the Rules of Court, under Sections 2 and 3(c), Rule 111, contemplate also the
same separability, it is 'more congruent with the spirit of law, equity and justice, and more in harmony
with modern progress', to borrow the felicitous relevant language in Rakes vs. Atlantic Gulf and Pacific
Co., 7 Phil. 359, to hold, as We do hold, that Article 2176, where it refers to 'fault or negligence,' covers
not only acts 'not punishable by law' but also acts criminal in character, whether intentional and
voluntary or negligent. Consequently, a separate civil action lies against the offender in a criminal act,
whether or not he is criminally prosecuted and found guilty or acquitted, provided that the offended
party is not allowed, if he is actually charged also criminally, to recover damages on both scores, and
would be entitled in such eventuality only to the bigger award of the two, assuming the awards made in
the two cases vary. In other words, the extinction of civil liability referred to in Par (e) of Section 3, 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. Briefly stated, We here hold, in reiteration of Garcia, that culpa
aquiliana includes voluntary and negligent acts which may be punishable by law. 3
The petitioners are not seeking to recover twice for the same negligent act. Before Criminal Case No.
3162-P was decided, they manifested in said criminal case that they were filing a separate civil action for
damages against the owner and driver of the passenger jeepney based on quasi-delict. This acquittal of
the driver, Maximo Borilla, of the crime charged in Criminal Case No. 3162-P is not a bar to the
prosecution of Civil Case No. B-134 for damages based on quasi-delict. The source of the obligation
sought to be enforced in Civil Case No. B-134 is quasi-delict, not an act or omission punishable by law.
Under Article 1157 of the Civil Code of the Philippines, quasi-delict and an act or omission punishable by
law are two different sources of obligation.
Moreover, for the petitioners to prevail in the action for damages, Civil Case No. B-134, they have only
to establish their cause of action by preponderance of the evidence.
WHEREFORE, the order of dismissal appealed from is hereby set aside and Civil Case No. B-134 is
reinstated and remanded to the lower court for further proceedings, with costs against the private
respondents.

SO ORDERED.
Teehankee (Chairman), Makasiar, Muoz Palma and Guerrero, JJ., concur.
Footnotes
1.

Annex "A", Rollo, pp. 38-42.

2.

Comment of Respondents, Rollo, pp. 48-51.

3.

Elcano vs. Hill, 77 SCRA 98, 105-107.

THIRD DIVISION
[G.R. No. 105774. April 25, 2002.]
GREAT ASIAN SALES CENTER CORPORATION and TAN CHONG LIN, petitioners, vs. THE COURT OF
APPEALS and BANCASIA FINANCE AND INVESTMENT CORPORATION, respondents.
Antonio H. Garces for petitioners.
Balgos & Perez for private respondent.
Angelito Chua for Bancasia Finance & Investment Corporation.
SYNOPSIS
The board of directors of Great Asian Sales Center Corporation approved a resolution authorizing its
Treasurer and General Manager, Arsenio Lim Piat, Jr. to secure a loan from Bancasia and to sign all
documents necessary to secure the loan. After sometime, the board of directors of Great Asian
approved a second resolution authorizing Great Asian to secure a discounting line with Bancasia and
designating Arsenio as the authorized signatory, to sign all documents to secure the discounting line.
Tan Chong Lin signed two surety agreements to guarantee solidarily the debts of Great Asian to
Bancasia. Great Asian, through Arsenio, signed four (4) Deeds of Assignment of Receivables assigning to
Bancasia fifteen (15) postdated checks which were dishonored by the drawee banks. Subsequently,
Great Asian filed a petition for insolvency. Thereafter, Bancasia filed a complaint for collection of a sum
of money against Great Asian and Tan Chong Lin. The trial court decided in favor of the plaintiff. On
appeal, the Court of Appeals sustained the decision of the lower court, deleting only the award of
attorney's fees. Hence, this petition. SaHTCE
The Supreme Court ruled that Arsenio had all the proper and necessary authority from, the board of
directors of Great Asian to sign the Deeds of Assignment and to endorse the fifteen postdated checks.
Arsenio signed the Deeds of Assignment as agent and authorized signatory of Great Asian under the
authority expressly granted by its board of directors.
The failure of the drawers to pay the checks is a suspensive condition, the happening of which gives rise
to Bancasia's right to demand payment from Great Asian. This conditional obligation of Great Asian
arises from its written contracts with Bancasia as embodied in the Deeds of Assignment. ASIDTa
Indisputably, Tan Chong Lin explicitly and unconditionally bound himself to pay Bancasia, solidarily with
Great Asian, if the drawers of the checks fail to pay on their due dates. The condition on which Tan
Chong Lin's obligation hinged had happened. As surety, Tan Chong Lin automatically became liable for
the entire obligation to the same extent as Great Asian.
SYLLABUS
1.
COMMERCIAL LAW; CORPORATION LAW; PRIVATE CORPORATIONS; CORPORATE POWERS,
EXERCISED BY THE BOARD OF DIRECTORS; EXCEPTION. The Corporation Code of the Philippines vests

in the board of directors the exercise of the corporate powers of the corporation, save in those
instances where the Code requires stockholders' approval for certain specific acts. Section 23 of the
Code provides: "SEC. 23. The Board of Directors or Trustees. Unless otherwise provided in this Code, the
corporate powers of all corporations formed under this Code shall be exercised, all business conducted
and all property of such corporations controlled and held by the board of directors or trustees . . . ." In
the ordinary course of business, a corporation can borrow funds or dispose of assets of the corporation
only on authority of the board of directors. The board of directors normally designates one or more
corporate officers to sign loan documents or deeds of assignment for the corporation. CcTIAH
2.
CIVIL LAW; OBLIGATIONS AND CONTRACTS; SOURCES OF OBLIGATIONS. Obviously, there is
one vital suspensive condition in the Deeds of Assignment. That is, in case the drawers fail to pay the
checks on maturity, Great Asian obligated itself to pay Bancasia the full face value of the dishonored
checks, including penalty and attorney's fees. The failure of the drawers to pay the checks is a
suspensive condition, the happening of which gives rise to Bancasia's right to demand payment from
Great Asian. This conditional obligation of Great Asian arises from its written contracts with Bancasia as
embodied in the Deeds of Assignment. Article 1157 of the Civil Code provides that "Obligations arise
from: (1) Law; (2) Contracts; (3) Quasi-contracts; (4) Acts or omissions punished by law; and (5) Quasidelicts."
3.
ID.; ID.; OBLIGATORY FORCE OF CONTRACTS; OBLIGATIONS ARISING FROM CONTRACTS HAVE
THE FORCE OF LAW BETWEEN THE CONTRACTING PARTIES; CASE AT BAR. By express provision in the
Deeds of Assignment, Great Asian unconditionally obligated itself to pay Bancasia the full value of the
dishonored checks. In short, Great Asian sold the postdated checks on with recourse basis against itself.
This is an obligation that Great Asian is bound to faithfully comply because it has the force of law as
between Great Asian and Bancasia. Article 1159 of the Civil Code further provides that "Obligations
arising from contracts have the force of law between the contracting parties and should be complied
with in good faith." CcTHaD
4.
ID.; ID.; AUTONOMY OF CONTRACTS; CONTRACTING PARTIES MAY ESTABLISH SUCH
STIPULATIONS NOT CONTRARY TO LAW, MORALS, GOOD CUSTOMS, PUBLIC ORDER OR PUBLIC POLICY;
CASE AT BAR. Great Asian and Bancasia agreed on this specific with recourse stipulation, despite the
fact that the receivables were negotiable instruments with the endorsement of Arsenio. The contracting
parties had the right to adopt the with recourse stipulation which is separate and distinct from the
warranties of an endorser under the Negotiable Instruments Law. Article 1306 of the Civil Code provides
that "The contracting parties may establish such stipulations, clauses, terms and conditions as they
may deem convenient, provided they are not contrary to law, morals, good customs, public order, or
public policy." The explicit with recourse stipulation against Great Asian effectively enlarges, by
agreement of the parties, the liability of Great Asian beyond that of a mere endorser of a negotiable
instrument. Thus, whether or not Bancasia gives notice of dishonor to Great Asian, the latter remains
liable to Bancasia because of the with recourse stipulation which is independent of the warranties of an
endorser under the Negotiable Instruments Law.

5.
COMMERCIAL LAW; FINANCING COMPANY ACT; ASSIGNMENT OF A NEGOTIABLE INSTRUMENT,
PRINCIPAL MODE OF CONVEYING ACCOUNTS RECEIVABLE; CASE AT BAR. There is nothing in the
Negotiable Instruments Law or in the Financing Company Act (old or new), that prohibits Great Asian
and Bancasia parties from adopting the with recourse stipulation uniformly found in the Deeds of
Assignment. Instead of being negotiated, a negotiable instrument may be assigned. Assignment of a
negotiable instrument is actually the principal mode of conveying accounts receivable under the
Financing Company Act. Since in discounting of receivables the assignee is subrogated as creditor of the
receivable, the endorsement of the negotiable instrument becomes necessary to enable the assignee to
collect from the drawer. This is particularly true with checks because collecting banks will not accept
checks unless endorsed by the payee. The purpose of the endorsement is merely to facilitate collection
of the proceeds of the checks. The purpose of the endorsement is not to make the assignee finance
company a holder in due course because policy considerations militate against according finance
companies the rights of a holder in due courser. Otherwise, consumers who purchase appliances on
installment, giving their promissory notes or checks to the seller, will have no defense against the
finance company should the appliances later turn out to be defective. Thus, the endorsement does not
operate to make the finance company a holder in due course. For its own protection, therefore, the
finance company usually requires the assignor, in a separate and distinct contract, to pay the finance
company in the event of dishonor of the notes or checks. ESTcIA
6.
ID.; NEGOTIABLE INSTRUMENTS LAW; NOTICE OF DISHONOR; WHEN NOTICE NEED NOT BE
GIVEN TO THE DRAWER; CASE AT BAR. The exercise by Bancasia of its option to sue for breach of
contract under the Civil Code will not leave Great Asian holding an empty bag. Great Asian, after paying
Bancasia, is subrogated back as creditor of the receivables. Great Asian can then proceed against the
drawers who issued the checks. Even if Bancasia failed to give timely notice of dishonor, still there would
be no prejudice whatever to Great Asian. Under the Negotiable Instruments Law, notice of dishonor is
not required if the drawer has no right to expect or require the bank to honor the check, or if the drawer
has countermanded payment. In the instant case, all the checks were dishonored for any of the
following reasons: "account closed," "account under garnishment," "insufficiency of funds," or "payment
stopped." In the first three instances, the drawers had no right to expect or require the bank to honor
the checks, and in the last instance, the drawers had countermanded payment.
7.
REMEDIAL LAW; EVIDENCE; PRESUMPTIONS; ALTHOUGH THE CAUSE IS NOT STATED IN THE
CONTRACT, IT IS PRESUMED THAT IT EXISTS AND IS LAWFUL. One other issue raised by Great Asian,
that of lack of consideration for the Deeds of Assignment, is completely unsubstantiated. The Deeds of
Assignment uniformly provide that the fifteen postdated checks were assigned to Bancasia "for valuable
consideration." Moreover, Article 1354 of the Civil Code states that, "Although the cause is not stated in
the contract, it is presumed that it exists and is lawful, unless the debtor proves the contrary." The
record is devoid of any showing on the part of Great Asian rebutting this presumption. aIDHET
8.
COMMERCIAL LAW; INSOLVENCY LAW; PETITION FOR VOLUNTARY INSOLVENCY; REQUISITES.
[I]n its verified petition for voluntary insolvency, Great Asian admitted its debt to Bancasia when it listed
Bancasia as one of its creditors, an extra-judicial admission that Bancasia proved when it formally
offered in evidence the verified petition for insolvency. The Insolvency Law requires the petitioner to

submit a schedule of debts that must "contain a full and true statement of all his debts and liabilities."
The Insolvency Law even requires the petitioner to state in his verification that the schedule of debts
contains "a full, correct and true discovery of all my debts and liabilities . . . ." Great Asian cannot now
claim that the listing of Bancasia as a creditor was not an admission of its debt to Bancasia but merely an
acknowledgment that Bancasia had sent a demand letter to Great Asian.
9.
CIVIL LAW; OBLIGATIONS AND CONTRACTS; SOLIDARY OBLIGATION; NOT EXTINGUISHED IN
CASE AT BAR. Under Article 1215 of the Civil Code, what releases a solidary debtor is a "novation,
compensation, confusion or remission of the debt" made by the creditor with any of the solidary
debtors. These warranties, however, are the usual warranties made by one who discounts receivables
with a financing company or bank. The Surety Agreements, written on the letter head of "Bancasia
Finance & Investment Corporation," uniformly state that "Great Asian Sales Center . . . has obtained
and/or desires to obtain loans, overdrafts, discounts and/or other forms of credits from" Bancasia. Tan
Chong Lin was clearly on notice that he was holding himself as surety of Great Asian which was
discounting postdated checks issued by its buyers of goods and merchandise. Moreover, Tan Chong Lin,
as President of Great Asian, cannot feign ignorance of Great Asian's business activities or discounting
transactions with Bancasia. Thus, the warranties do not increase or enlarge the risks of Tan Chong Lin
under the Surety Agreements. There is, moreover, no novation of the debt of Great Asian that would
warrant release of the surety. TIaCAc
10.
ID.; ID.; ID.; WHEN IT EXISTS; CASE AT BAR. Article 1207 of the Civil Code provides, ". . . There
is a solidary liability only when the obligation expressly so states, or when the law or nature of the
obligation requires solidarity." The stipulations in the Surety Agreements undeniably mandate the
solidary liability of Tan Chong Lin with Great Asian. Moreover, the stipulations in the Surety Agreements
are sufficiently broad, expressly encompassing "all the notes, drafts, bills of exchange, overdraft and
other obligations of every kind which the PRINCIPAL may now or may hereafter owe the Creditor".
Consequently, Tan Chong Lin must be held solidarily liable with Great Asian for the nonpayment of the
fifteen dishonored checks, including penalty and attorney's fees in accordance with the Deeds of
Assignment.
11.
ID.; DAMAGES; ATTORNEY'S FEES; AWARDED IN CASE AT BAR. The award of attorney's fees in
the instant case is justified, not only because of such stipulation, but also because Great Asian and Tan
Chong Lin acted in gross and evident bad faith in refusing to pay Bancasia's plainly valid, just and
demandable claim. We deem it just and equitable that the stipulated attorney's fee should be awarded
to Bancasia. HCSAIa
DECISION
CARPIO, J p:
The Case
Before us is a Petition for Review on Certiorari under Rule 45 of the Revised Rules on Civil Procedure
assailing the June 9, 1992 Decision 1 of the Court of Appeals 2 in CA-G.R. CV No. 20167. The Court of

Appeals affirmed the January 26, 1988 Decision 3 of the Regional Trial Court of Manila, Branch 52, 4
ordering petitioners Great Asian Sales Center Corporation ("Great Asian" for brevity) and Tan Chong Lin
to pay, solidarily, respondent Bancasia Finance and Investment Corporation ("Bancasia" for brevity) the
amount of P1,042,005.00. The Court of Appeals affirmed the trial court's award of interest and costs of
suit but deleted the award of attorney's fees. ATCaDE
The Facts
Great Asian is engaged in the business of buying and selling general merchandise, in particular
household appliances. On March 17, 1981, the board of directors of Great Asian approved a resolution
authorizing its Treasurer and General Manager, Arsenio Lim Piat, Jr. ("Arsenio" for brevity) to secure a
loan from Bancasia in an amount not to exceed P1.0 million. The board resolution also authorized
Arsenio to sign all papers, documents or promissory notes necessary to secure the loan. On February 10,
1982, the board of directors of Great Asian approved a second resolution authorizing Great Asian to
secure a discounting line with Bancasia in an amount not exceeding P2.0 million. The second board
resolution also designated Arsenio as the authorized signatory to sign all instruments, documents and
checks necessary to secure the discounting line.
On March 4, 1981, Tan Chong Lin signed a Surety Agreement in favor of Bancasia to guarantee,
solidarily, the debts of Great Asian to Bancasia. On January 29, 1982, Tan Chong Lin signed a
Comprehensive and Continuing Surety Agreement in favor of Bancasia to guarantee, solidarily, the debts
of Great Asian to Bancasia. Thus, Tan Chong Lin signed two surety agreements ("Surety Agreements" for
brevity) in favor of Bancasia.
Great Asian, through its Treasurer and General Manager Arsenio, signed four (4) Deeds of Assignment of
Receivables ("Deeds of Assignment" for brevity), assigning to Bancasia fifteen (15) postdated checks.
Nine of the checks were payable to Great Asian, three were payable to "New Asian Emp.", and the last
three were payable to cash. Various customers of Great Asian issued these postdated checks in payment
for appliances and other merchandise.
Great Asian and Bancasia signed the first Deed of Assignment on January 12, 1982 covering four
postdated checks with a total face value of P244,225.82, with maturity dates not later than March 17,
1982. Of these four postdated checks, two were dishonored. Great Asian and Bancasia signed the
second Deed of Assignment also on January 12, 1982 covering four postdated checks with a total face
value of P312,819.00, with maturity dates not later than April 1, 1982. All these four checks were
dishonored. Great Asian and Bancasia signed the third Deed of Assignment on February 11, 1982
covering eight postdated checks with a total face value of P344,475.00, with maturity dates not later
than April 30, 1982. All these eight checks were dishonored. Great Asian and Bancasia signed the fourth
Deed of Assignment on March 5, 1982 covering one postdated check with a face value of P200,000.00,
with maturity date on March 18, 1982. This last check was also dishonored. Great Asian assigned the
postdated checks to Bancasia at a discount rate of less than 24% of the face value of the checks.
Arsenio endorsed all the fifteen dishonored checks by signing his name at the back of the checks. Eight
of the dishonored checks bore the endorsement of Arsenio below the stamped name of "Great Asian

Sales Center", while the rest of the dishonored checks just bore the signature of Arsenio. The drawee
banks dishonored the fifteen checks on maturity when deposited for collection by Bancasia, with any of
the following as reason for the dishonor: "account closed", "payment stopped", "account under
garnishment", and "insufficiency of funds". The total amount of the fifteen dishonored checks is
P1,042,005.00. Below is a table of the fifteen dishonored checks:
Drawee Bank

Check No.

Amount

Maturity Date

1st Deed
Solid Bank

C-A097480

Pacific Banking Corp.

P137,500.00

23950 P47,211.00

March 16, 1982

March 17, 1982

2nd Deed
Metrobank

Solidbank

030925 P68,722.00

March 19, 1982

030926 P45,230.00

March 19, 1982

C-A097478

Pacific Banking Corp.

P140,000.00

CC 769910

March 23, 1982

P58,867.00

April 1, 1982

3rd Deed
Phil. Trust Company

060835 P21,228.00

060836 P22,187.00
Allied Banking Corp.

11251624

11251625
Pacific Banking Corp.

April 21, 1982

April 28, 1982

P41,773.00

April 22, 1982

P38,592.00

April 29, 1982

237984 P37,886.00

April 23, 1982

237988 P47,385.00

April 28, 1982

237985 P46,748.00

April 30, 1982

Security Bank & Trust Co.

22061 P88,676.00

April 30, 1982

4th Deed
Pacific Banking Corp.

860178 P200,000.00

March 18, 1982

After the drawee bank dishonored Check No. 097480 dated March 16, 1982, Bancasia referred the
matter to its lawyer, Atty. Eladia Reyes, who sent by registered mail to Tan Chong Lin a letter dated
March 18, 1982, notifying him of the dishonor and demanding payment from him. Subsequently,

Bancasia sent by personal delivery a letter dated June 16, 1982 to Tan Chong Lin, notifying him of the
dishonor of the fifteen checks and demanding payment from him. Neither Great Asian nor Tan Chong
Lin paid Bancasia the dishonored checks.
On May 21, 1982, Great Asian filed with the then Court of First Instance of Manila a petition for
insolvency, verified under oath by its Corporate Secretary, Mario Tan. Attached to the verified petition
was a "Schedule and Inventory of Liabilities and Creditors of Great Asian Sales Center Corporation,"
listing Bancasia as one of the creditors of Great Asian in the amount of P1,243,632.00.
On June 23, 1982, Bancasia filed a complaint for collection of a sum of money against Great Asian and
Tan Chong Lin. Bancasia impleaded Tan Chong Lin because of the Surety Agreements he signed in favor
of Bancasia. In its answer, Great Asian denied the material allegations of the complaint claiming it was
unfounded, malicious, baseless, and unlawfully instituted since there was already a pending insolvency
proceedings, although Great Asian subsequently withdrew its petition for voluntary insolvency. Great
Asian further raised the alleged lack of authority of Arsenio to sign the Deeds of Assignment as well as
the absence of consideration and consent of all the parties to the Surety Agreements signed by Tan
Chong Lin.
Ruling of the Trial Court
The trial court rendered its decision on January 26, 1988 with the following findings and conclusions:
"From the foregoing facts and circumstances, the Court finds that the plaintiff has established its causes
of action against the defendants. The Board Resolution (Exh "T"), dated March 17, 1981, authorizing
Arsenio Lim Piat, Jr., general manager and treasurer of the defendant Great Asian to apply and negotiate
for a loan accommodation or credit line with the plaintiff Bancasia in an amount not exceeding One
Million Pesos (P1,000,000.00), and the other Board Resolution approved on February 10, 1982,
authorizing Arsenio Lim Piat, Jr., to obtain for defendant Asian Center a discounting line with Bancasia at
prevailing discounting rates in an amount not to exceed Two Million Pesos (P2,000,000.00), both of
which were intended to secure money from the plaintiff financing firm to finance the business
operations of defendant Great Asian, and pursuant to which Arsenio Lim Piat, Jr. was able to have the
aforementioned fifteen (15) checks totaling P1,042,005.00 discounted with the plaintiff, which
transactions were obviously known by the beneficiary thereof, defendant Great Asian, as in fact, in its
aforementioned Schedule and Inventory of Liabilities and Creditors (Exh. DD, DD-1) attached to its
Verified Petition for Insolvency, dated May 12, 1982 (pp. 50-56), the defendant Great Asian admitted an
existing liability to the plaintiff, in the amount of P1,243,632.00, secured by it, by way of 'financing
accommodation,' from the said financing institution Bancasia Finance and Investment Corporation,
plaintiff herein, sufficiently establish the liability of the defendant Great Asian to the plaintiff for the
amount of P1,042,005.00 sought to be recovered by the latter in this case. 5
xxx

xxx

xxx

WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the two (2) defendants
ordering the latter, jointly and severally, to pay the former:

(a)
The amount of P1,042,005.00, plus interest thereon at the legal rate from the filing of the
complaint until the same is fully paid;
(b)

Attorney's fees equivalent to twenty per cent (20%) of the total amount due; and

(c)

The costs of suit.

SO ORDERED." 6
Ruling of the Court of Appeals
On appeal, the Court of Appeals sustained the decision of the lower court, deleting only the award of
attorney's fees, as follows:
"As against appellants' bare denial of it, the Court is more inclined to accept the appellee's version, to
the effect that the subject deeds of assignment are but individual transactions which being
collectively evidentiary of the loan accommodation and/or credit line it granted the appellant
corporation should not be taken singly and distinct therefrom. In addition to its plausibility, the
proposition is, more importantly, adequately backed by the documentary evidence on record. Aside
from the aforesaid Deeds of Assignment (Exhs. "A", "D", "I", and "R") and the Board Resolutions of the
appellant corporation's Board of Directors (Exhs. "T", "U" and "V"), the appellee consistent with its
theory interposed the Surety Agreements the appellant Tan Chong Lin executed (Exhs. "W" and "X"),
as well as the demand letters it served upon the latter as surety (Exhs. "Y" and "Z"). It bears emphasis
that the second Resolution of the appellant corporation's Board of Directors (Exh. "V") even closely
coincides with the execution of the February 11, 1982 and March 5, 1982 Deeds of Assignment (Exhs. "I"
and "R"). Were the appellants' posturings true, it seems rather strange that the appellant Tan Chong Lin
did not even protest or, at least, make known to the appellee what he together with the appellant
corporation represented to be a corporate larceny to which all of them supposedly fell prey. In the
petition for voluntary insolvency it filed, the appellant corporation, instead, indirectly acknowledged its
indebtedness in terms of financing accommodations to the appellee, in an amount which, while not
exactly matching the sum herein sought to be collected, approximates the same (Exhs. "CC", "DD" and
"DD-1 ,). 7
xxx

xxx

xxx

The appellants contend that the foregoing warranties enlarged or increased the surety's risk, such that
appellant Tan Chong Lin should be released from his liabilities (pp. 37-44, Appellant's Brief). Without
saying more, the appellants' position is, however, soundly debunked by the undertaking expressed in
the Comprehensive and Continuing Surety Agreements (Exhs. "W" and "X"), to the effect that the ". . .
surety/ies, jointly and severally among themselves and likewise with the principal, hereby agree/s and
bind/s himself to pay at maturity all the notes, drafts, bills of exchange, overdrafts and other obligations
which the principal may now or may hereafter owe the creditor . . . ." With the possible exception of the
fixed ceiling for the amount of loan obtainable, the surety undertaking in the case at bar is so
comprehensive as to contemplate each and every condition, term or warranty which the principal

parties may have or may be minded to agree on. Having affixed his signature thereto, the appellant Tan
Chong Lin is expected to have, at least, read and understood the same.
xxx

xxx

xxx

With the foregoing disquisition, the Court sees little or no reason to go into the appellants' remaining
assignments of error, save the matter of attorney's fees. For want of a statement of the rationale
therefore in the body of the challenged decision, the trial court's award of attorney's fees should be
deleted and disallowed (Abrogar vs. Intermediate Appellate Court, 157 SCRA 57).
WHEREFORE, the decision appealed from is MODIFIED, to delete the trial court's award of attorney's
fees. The rest is AFFIRMED in toto.
SO ORDERED." 8
The Issues
The petition is anchored on the following assigned errors:
"1.
The respondent Court erred in not holding that the proper parties against whom this action for
collection should be brought are the drawers and indorser of the checks in question, being the real
parties in interest, and not the herein petitioners.
2.
The respondent Court erred in not holding that the petitioner-corporation is discharged from
liability for failure of the private respondent to comply with the provisions of the Negotiable
Instruments Law on the dishonor of the checks.
3.
The respondent Court erred in its appreciation and interpretation of the effect and legal
consequences of the signing of the deeds of assignment and the subsequent indorsement of the checks
by Arsenio Lim Piat, Jr. in his individual and personal capacity and without stating or indicating the name
of his supposed principal.
4.
The respondent Court erred in holding that the assignment of the checks is a loan
accommodation or credit line accorded by the private respondent to petitioner-corporation, and not a
purchase and sale thereof.
5.
The respondent Court erred in not holding that there was a material alteration of the risk
assumed by the petitioner-surety under his surety agreement by the terms, conditions, warranties and
obligations assumed by the assignor Arsenio Lim Piat, Jr. under the deeds of assignment or receivables.
6.
The respondent Court erred in holding that the petitioner-corporation impliedly admitted its
liability to private respondent when the former included the latter as one of its creditors in its petition
for voluntary insolvency, although no claim was filed and proved by the private respondent in the
insolvency court.

7.
The respondent Court erred in holding the petitioners liable to private respondent on the
transactions in question." 9
The issues to be resolved in this petition can be summarized into three:
1.
WHETHER ARSENIO HAD AUTHORITY TO EXECUTE THE DEEDS OF ASSIGNMENT AND THUS BIND
GREAT ASIAN;
2.
WHETHER GREAT ASIAN IS LIABLE TO BANCASIA UNDER THE DEEDS OF ASSIGNMENT FOR
BREACH OF CONTRACT PURSUANT TO THE CIVIL CODE, INDEPENDENT OF THE NEGOTIABLE
INSTRUMENTS LAW;
3.

WHETHER TAN CHONG LIN IS LIABLE TO GREAT ASIAN UNDER THE SURETY AGREEMENTS.

The Court's Ruling

The petition is bereft of merit.
First Issue: Authority of Arsenio to Sign the Deeds of Assignment
Great Asian asserts that Arsenio signed the Deeds of Assignment and indorsed the checks in his personal
capacity. The primordial question that must be resolved is whether Great Asian authorized Arsenio to
sign the Deeds of Assignment. If Great Asian so authorized Arsenio, then Great Asian is bound by the
Deeds of Assignment and must honor its terms.
The Corporation Code of the Philippines vests in the board of directors the exercise of the corporate
powers of the corporation, save in those instances where the Code requires stockholders' approval for
certain specific acts. Section 23 of the Code provides:
"SEC. 23.
The Board of Directors or Trustees. Unless otherwise provided in this Code, the
corporate powers of all corporations formed under this Code shall be exercised, all business conducted
and all property of such corporations controlled and held by the board of directors or trustees . . ."
In the ordinary course of business, a corporation can borrow funds or dispose of assets of the
corporation only on authority of the board of directors. The board of directors normally designates one
or more corporate officers to sign loan documents or deeds of assignment for the corporation.
To secure a credit accommodation from Bancasia, the board of directors of Great Asian adopted two
board resolutions on different dates, the first on March 17, 1981, and the second on February 10, 1982.
These two board resolutions, as certified under oath by Great Asian's Corporate Secretary Mario K. Tan,
state:
First Board Resolution
"RESOLVED, that the Treasurer of the corporation, Mr. Arsenio Lim Piat, Jr., be authorized as he is
authorized to apply for and negotiate for a loan accommodation or credit line in the amount not to
exceed ONE MILLION PESOS (P1,000,000.00), with Bancasia Finance and Investment Corporation, and

likewise to sign any and all papers, documents, and/or promissory notes in connection with said loan
accommodation or credit line, including the power to mortgage such properties of the corporation as
may be needed to effectuate the same." 10 (Italics supplied)
Second Board Resolution
"RESOLVED that Great Asian Sales Center Corp. obtain a discounting line with BANCASIA FINANCE &
INVESTMENT CORPORATION, at prevailing discounting rates, in an amount not to exceed ** TWO
MILLION PESOS ONLY (P2,000,000), ** Philippine Currency.
RESOLVED FURTHER, that the corporation secure such other forms of credit lines with BANCASIA
FINANCE & INVESTMENT CORPORATION in an amount not to exceed ** TWO MILLION PESOS ONLY
(P2,000,000.00), ** PESOS, under such terms and conditions as the signatories may deem fit and proper.
RESOLVED FURTHER, that the following persons be authorized individually, jointly or collectively to sign,
execute and deliver any and all instruments, documents, checks, sureties, etc. necessary or incidental to
secure any of the foregoing obligation:
(signed)
Specimen Signature
1.

ARSENIO LIM PIAT, JR.

2.

____________________

3.

____________________

4.

____________________

PROVIDED FINALLY that this authority shall be valid, binding and effective until revoked by the Board of
Directors in the manner prescribed by law, and that BANCASIA FINANCE & INVESTMENT CORPORATION
shall not be bound by any such revocation until such time as it is noticed in writing of such revocation."
11 (Italics supplied)
The first board resolution expressly authorizes Arsenio, as Treasurer of Great Asian, to apply for a "loan
accommodation or credit line" with Bancasia for not more than P1.0 million. Also, the first resolution
explicitly authorizes Arsenio to sign any document, paper or promissory note, including mortgage deeds
over properties of Great Asian, to secure the loan or credit line from Bancasia.
The second board resolution expressly authorizes Great Asian to secure a "discounting line" from
Bancasia for not more than P2.0 million. The second board resolution also expressly empowers Arsenio,
as the authorized signatory of Great Asian, "to sign, execute and deliver any and all documents, checks .
. . necessary or incidental to secure" the discounting line. The second board resolution specifically
authorizes Arsenio to secure the discounting line "under such terms and conditions as (he) . . . may
deem fit and proper."

As plain as daylight, the two board resolutions clearly authorize Great Asian to secure a loan or
discounting line from Bancasia. The two board resolutions also categorically designate Arsenio as the
authorized signatory to sign and deliver all the implementing documents, including checks, for Great
Asian. There is no iota of doubt whatsoever about the purpose of the two board resolutions, and about
the authority of Arsenio to act and sign for Great Asian. The second board resolution even gave Arsenio
full authority to agree with Bancasia on the terms and conditions of the discounting line. Great Asian
adopted the correct and proper board resolutions to secure a loan or discounting line from Bancasia,
and Bancasia had a right to rely on the two board resolutions of Great Asian. Significantly, the two board
resolutions specifically refer to Bancasia as the financing institution from whom Great Asian will secure
the loan accommodation or discounting line.
Armed with the two board resolutions, Arsenio signed the Deeds of Assignment selling, and endorsing,
the fifteen checks of Great Asian to Bancasia. On the face of the Deeds of Assignment, the contracting
parties are indisputably Great Asian and Bancasia as the names of these entities are expressly
mentioned therein as the assignor and assignee, respectively. Great Asian claims that Arsenio signed the
Deeds of Assignment in his personal capacity because Arsenio signed above his printed name, below
which was the word "Assignor", thereby making Arsenio the assignor. Great Asian conveniently omits to
state that the first paragraph of the Deeds expressly contains the following words: "the ASSIGNOR,
Great Asian Sales Center, a domestic corporation . . . herein represented by its Treasurer Arsenio Lim
Piat, Jr." The assignor is undoubtedly Great Asian, represented by its Treasurer, Arsenio. The only issue
to determine is whether the Deeds of Assignment are indeed the transactions the board of directors of
Great Asian authorized Arsenio to sign under the two board resolutions.
Under the Deeds of Assignment, Great Asian sold fifteen postdated checks at a discount, over three
months, to Bancasia. The Deeds of Assignment uniformly state that Great Asian,
". . . for valuable consideration received, does hereby SELL, TRANSFER, CONVEY, and ASSIGN, unto . the
ASSIGNEE, BANCASIA FINANCE & INVESTMENT CORP., a domestic corporation . . . , the following
ACCOUNTS RECEIVABLES due and payable to it, having an aggregate face value of . . ."
The Deeds of Assignment enabled Great Asian to generate instant cash from its fifteen checks, which
were still not due and demandable then. In short, instead of waiting for the maturity dates of the fifteen
postdated checks, Great Asian sold the checks to Bancasia at less than the total face value of the checks.
In exchange for receiving an amount less than the face value of the checks, Great Asian obtained
immediately much needed cash. Over three months, Great Asian entered into four transactions of this
nature with Bancasia, showing that Great Asian availed of a discounting line with Bancasia.
In the financing industry, the term "discounting line" means a credit facility with a financing company or
bank, which allows a business entity to sell, on a continuing basis, its accounts receivable at a discount.
12 The term "discount" means the sale of a receivable at less than its face value. The purpose of a
discounting line is to enable a business entity to generate instant cash out of its receivables which are
still to mature at future dates. The financing company or bank which buys the receivables makes its

profit out of the difference between the face value of the receivable and the discounted price. Thus,
Section 3 (a) of the Financing Company Act of 1998 provides:
"Financing companies" are corporations . . . primarily organized for the purpose of extending credit
facilities to consumers and to industrial, commercial or agricultural enterprises by discounting or
factoring commercial papers or accounts receivable, or by buying and selling contracts, leases, chattel
mortgages, or other evidences of indebtedness, or by financial leasing of movable as well as immovable
property." (Italics supplied)
This definition of "financing companies" is substantially the same definition as in the old Financing
Company Act (R.A. No. 5980). 13
Moreover, Section 1 (h) of the New Rules and Regulations adopted by the Securities and Exchange
Commission to implement the Financing Company Act of 1998 states:
"Discounting" is a type of receivables financing whereby evidences of indebtedness of a third party, such
as installment contracts, promissory notes and similar instruments, are purchased by, or assigned to, a
financing company in an amount or for a consideration less than their face value." (Italics supplied)
Likewise, this definition of "discounting" is an exact reproduction of the definition of "discounting" in the
implementing rules of the old Finance Company Act.
Clearly, the discounting arrangements entered into by Arsenio under the Deeds of Assignment were the
very transactions envisioned in the two board resolutions of Great Asian to raise funds for its business.
Arsenio acted completely within the limits of his authority under the two board resolutions. Arsenio did
exactly what the board of directors of Great Asian directed and authorized him to do.
Arsenio had all the proper and necessary authority from the board of directors of Great Asian to sign the
Deeds of Assignment and to endorse the fifteen postdated checks. Arsenio signed the Deeds of
Assignment as agent and authorized signatory of Great Asian under an authority expressly granted by its
board of directors. The signature of Arsenio on the Deeds of Assignment is effectively also the signature
of the board of directors of Great Asian, binding on the board of directors and on Great Asian itself.
Evidently, Great Asian shows its bad faith in disowning the Deeds of Assignment signed by its own
Treasurer, after receiving valuable consideration for the checks assigned under the Deeds.
Second Issue: Breach of Contract by Great Asian
Bancasia's complaint against Great Asian is founded on the latter's breach of contract under the Deeds
of Assignment. The Deeds of Assignment uniformly stipulate 14 as follows:
"If for any reason the receivables or any part thereof cannot be paid by the obligor/s, the ASSIGNOR
unconditionally and irrevocably agrees to pay the same, assuming the liability to pay, by way of penalty
three per cent (3%) of the total amount unpaid, for the period of delay until the same is fully paid.

In case of any litigation which the ASSIGNEE may institute to enforce the terms of this agreement, the
ASSIGNOR shall be liable for all the costs, plus attorney's fees equivalent to twenty-five (25%) per cent of
the total amount due. Further thereto, the ASSIGNOR agrees that any and all actions which may be
instituted relative hereto shall be filed before the proper courts of the City of Manila, all other
appropriate venues being hereby waived.
The last Deed of Assignment 15 contains the following added stipulation:
". . . Likewise, it is hereby understood that the warranties which the ASSIGNOR hereby made are
deemed part of the consideration for this transaction, such that any violation of any one, some, or all of
said warranties shall be deemed as deliberate misrepresentation on the part of the ASSIGNOR. In such
event, the monetary obligation herein conveyed unto the ASSIGNEE shall be conclusively deemed
defaulted, giving rise to the immediate responsibility on the part of the ASSIGNOR to make good said
obligation, and making the ASSIGNOR liable to pay the penalty stipulated hereinabove as if the original
obligor/s of the receivables actually defaulted. . . . "
Obviously, there is one vital suspensive condition in the Deeds of Assignment. That is, in case the
drawers fail to pay the checks on maturity, Great Asian obligated itself to pay Bancasia the full face value
of the dishonored checks, including penalty and attorney's fees. The failure of the drawers to pay the
checks is a suspensive condition, 16 the happening of which gives rise to Bancasia's right to demand
payment from Great Asian. This conditional obligation of Great Asian arises from its written contracts
with Bancasia as embodied in the Deeds of Assignment. Article 1157 of the Civil Code provides that
"Obligations arise from:
(1)

Law;

(2)

Contracts;

(3)

Quasi-contracts;

(4)

Acts or omissions punished by law; and

(5)

Quasi-delicts."

By express provision in the Deeds of Assignment, Great Asian unconditionally obligated itself to pay
Bancasia the full value of the dishonored checks. In short, Great Asian sold the postdated checks on with
recourse basis against itself. This is an obligation that Great Asian is bound to faithfully comply because
it has the force of law as between Great Asian and Bancasia. Article 1159 of the Civil Code further
provides that
"Obligations arising from contracts have the force of law between the contracting parties and should be
complied with in good faith."
Great Asian and Bancasia agreed on this specific with recourse stipulation, despite the fact that the
receivables were negotiable instruments with the endorsement of Arsenio. The contracting parties had

the right to adopt the with recourse stipulation which is separate and distinct from the warranties of an
endorser under the Negotiable Instruments Law. Article 1306 of the Civil Code provides that
"The contracting parties may establish such stipulations, clauses, terms and conditions as they may
deem convenient, provided they are not contrary to law, morals, good customs, public order, or public
policy."
The explicit with recourse stipulation against Great Asian effectively enlarges, by agreement of the
parties, the liability of Great Asian beyond that of a mere endorser of a negotiable instrument. Thus,
whether or not Bancasia gives notice of dishonor to Great Asian, the latter remains liable to Bancasia
because of the with recourse stipulation which is independent of the warranties of an endorser under
the Negotiable Instruments Law.
There is nothing in the Negotiable Instruments Law or in the Financing Company Act (old or new), that
prohibits Great Asian and Bancasia parties from adopting the with recourse stipulation uniformly found
in the Deeds of Assignment. Instead of being negotiated, a negotiable instrument may be assigned. 17
Assignment of a negotiable instrument is actually the principal mode of conveying accounts receivable
under the Financing Company Act. Since in discounting of receivables the assignee is subrogated as
creditor of the receivable, the endorsement of the negotiable instrument becomes necessary to enable
the assignee to collect from the drawer. This is particularly true with checks because collecting banks
will not accept checks unless endorsed by the payee. The purpose of the endorsement is merely to
facilitate collection of the proceeds of the checks.
The purpose of the endorsement is not to make the assignee finance company a holder in due course
because policy considerations militate against according finance companies the rights of a holder in due
course. 18 Otherwise, consumers who purchase appliances on installment, giving their promissory notes
or checks to the seller, will have no defense against the finance company should the appliances later
turn out to be defective. Thus, the endorsement does not operate to make the finance company a
holder in due course. For its own protection, therefore, the finance company usually requires the
assignor, in a separate and distinct contract, to pay the finance company in the event of dishonor of the
notes or checks.
As endorsee of Great Asian, Bancasia had the option to proceed against Great Asian under the
Negotiable Instruments Law. Had it so proceeded, the Negotiable Instruments Law would have
governed Bancasia's cause of action. Bancasia, however, did not choose this route. Instead, Bancasia
decided to sue Great Asian for breach of contract under the Civil Code, a right that Bancasia had under
the express with recourse stipulation in the Deeds of Assignment.
The exercise by Bancasia of its option to sue for breach of contract under the Civil Code will not leave
Great Asian holding an empty bag. Great Asian, after paying Bancasia, is subrogated back as creditor of
the receivables. Great Asian can then proceed against the drawers who issued the checks. Even if
Bancasia failed to give timely notice of dishonor, still there would be no prejudice whatever to Great
Asian. Under the Negotiable Instruments Law, notice of dishonor is not required if the drawer has no
right to expect or require the bank to honor the check, or if the drawer has countermanded payment. 19

In the instant case, all the checks were dishonored for any of the following reasons: "account closed",
"account under garnishment", insufficiency of funds", or "payment stopped". In the first three instances,
the drawers had no right to expect or require the bank to honor the checks, and in the last instance, the
drawers had countermanded payment.
Moreover, under common law, delay in notice of dishonor, where such notice is required, discharges the
drawer only to the extent of the loss caused by the delay. 20 This rule finds application in this
jurisdiction pursuant to Section 196 of the Negotiable Instruments Law which states, "Any case not
provided for in this Act shall be governed by the provisions of existing legislation, or in default thereof,
by the rules of the Law Merchant." Under Section 186 of the Negotiable Instruments Law, delay in the
presentment of checks discharges the drawer. However, Section 186 refers only to delay in presentment
of checks but is silent on delay in giving notice of dishonor. Consequently, the common law or Law
Merchant can supply this gap in accordance with Section 196 of the Negotiable Instruments Law.
One other issue raised by Great Asian, that of lack of consideration for the Deeds of Assignment, is
completely unsubstantiated. The Deeds of Assignment uniformly provide that the fifteen postdated
checks were assigned to Bancasia "for valuable consideration." Moreover, Article 1354 of the Civil Code
states that, "Although the cause is not stated in the contract, it is presumed that it exists and is lawful,
unless the debtor proves the contrary." The record is devoid of any showing on the part of Great Asian
rebutting this presumption. On the other hand, Bancasia's Loan Section Manager, Cynthia Maclan,
testified that Bancasia paid Great Asian a consideration at the discount rate of less than 24% of the face
value of the postdated checks. 21 Moreover, in its verified petition for voluntary insolvency, Great Asian
admitted its debt to Bancasia when it listed Bancasia as one of its creditors, an extra-judicial admission
that Bancasia proved when it formally offered in evidence the verified petition for insolvency. 22 The
Insolvency Law requires the petitioner to submit a schedule of debts that must "contain a full and true
statement of all his debts and liabilities." 23 The Insolvency Law even requires the petitioner to state in
his verification that the schedule of debts contains "a full, correct and true discovery of all my debts and
liabilities . . ." 24 Great Asian cannot now claim that the listing of Bancasia as a creditor was not an
admission of its debt to Bancasia but merely an acknowledgment that Bancasia had sent a demand
letter to Great Asian.
Great Asian, moreover, claims that the assignment of the checks is not a loan accommodation but a sale
of the checks. With the sale, ownership of the checks passed to Bancasia, which must now, according to
Great Asian, sue the drawers and indorser of the check who are the parties primarily liable on the
checks. Great Asian forgets that under the Deeds of Assignment, Great Asian expressly undertook to pay
the full value of the checks in case of dishonor. Again, we reiterate that this obligation of Great Asian is
separate and distinct from its warranties as indorser under the Negotiable Instruments Law.
Great Asian is, however, correct in saying that the assignment of the checks is a sale, or more properly a
discounting, of the checks and not a loan accommodation. However, it is precisely because the
transaction is a sale or a discounting of receivables, embodied in separate Deeds of Assignment, that the
relevant provisions of the Civil Code are applicable and not the Negotiable Instruments Law.

At any rate, there is indeed a fine distinction between a discounting line and a loan accommodation. If
the accounts receivable, like postdated checks, are sold for a consideration less than their face value,
the transaction is one of discounting, and is subject to the provisions of the Financing Company Act. The
assignee is immediately subrogated as creditor of the accounts receivable. However, if the accounts
receivable are merely used as collateral for the loan, the transaction is only a simple loan, and the lender
is not subrogated as creditor until there is a default and the collateral is foreclosed.
In summary, Great Asian's four contracts assigning its fifteen postdated checks to Bancasia expressly
stipulate the suspensive condition that in the event the drawers of the checks fail to pay, Great Asian
itself will pay Bancasia. Since the common condition in the contracts had transpired, an obligation on
the part of Great Asian arose from the four contracts, and that obligation is to pay Bancasia the full
value of the checks, including the stipulated penalty and attorney's fees.
Third Issue: The liability of surety Tan Chong Lin
Tan Chong Lin, the President of Great Asian, is being sued in his personal capacity based on the Surety
Agreements he signed wherein he solidarily held himself liable with Great Asian for the payment of its
debts to Bancasia. The Surety Agreements contain the following common condition:
"Upon failure of the Principal to pay at maturity, with or without demand, any of the obligations above
mentioned, or in case of the Principal's failure promptly to respond to any other lawful demand made by
the Creditor, its successors, administrators or assigns, both the Principal and the Surety/ies shall be
considered in default and the Surety/ies agree/s to pay jointly and severally to the Creditor all
outstanding obligations of the Principal, whether due or not due, and whether held by the Creditor as
Principal or agent, and it is agreed that a certified statement by the Creditor as to the amount due from
the Principal shall be accepted by the Surety/ies as correct and final for all legal intents and purposes."
Indisputably, Tan Chong Lin explicitly and unconditionally bound himself to pay Bancasia, solidarily with
Great Asian, if the drawers of the checks fail to pay on due date. The condition on which Tan Chong Lin's
obligation hinged had happened. As surety, Tan Chong Lin automatically became liable for the entire
obligation to the same extent as Great Asian.
Tan Chong Lin, however, contends that the following warranties in the Deeds of Assignment enlarge or
increase his risks under the Surety Agreements:
"The ASSIGNOR warrants:
1.

the soundness of the receivables herein assigned;

2.

that said receivables are duly noted in its books and are supported by appropriate documents;

3.

that said receivables are genuine, valid and subsisting;

4.
that said receivables represent bona fide sale of goods, merchandise, and/or services rendered
in the ordinary course of its business transactions;

5.

that the obligors of the receivables herein assigned are solvent;

6.

that it has valid and genuine title to and indefeasible right to dispose of said accounts;

7.

that said receivables are free from all liens and encumbrances;

8.
that the said receivables are freely and legally transferable, and that the obligor/s therein will
not interpose any objection to this assignment, and has in fact given his/their consent hereto."
Tan Chong Lin maintains that these warranties in the Deeds of Assignment materially altered his
obligations under the Surety Agreements, and therefore he is released from any liability to Bancasia.
Under Article 1215 of the Civil Code, what releases a solidary debtor is a "novation, compensation,
confusion or remission of the debt" made by the creditor with any of the solidary debtors. These
warranties, however, are the usual warranties made by one who discounts receivables with a financing
company or bank. The Surety Agreements, written on the letter head of "Bancasia Finance & Investment
Corporation," uniformly state that "Great Asian Sales Center . . . has obtained and/or desires to obtain
loans, overdrafts, discounts and/or other forms of credits from" Bancasia. Tan Chong Lin was clearly on
notice that he was holding himself as surety of Great Asian which was discounting postdated checks
issued by its buyers of goods and merchandise. Moreover, Tan Chong Lin, as President of Great Asian,
cannot feign ignorance of Great Asian's business activities or discounting transactions with Bancasia.
Thus, the warranties do not increase or enlarge the risks of Tan Chong Lin under the Surety Agreements.
There is, moreover, no novation of the debt of Great Asian that would warrant release of the surety.
In any event, the provisions of the Surety Agreements are broad enough to include the obligations of
Great Asian to Bancasia under the warranties. The first Surety Agreement states that:
". . . herein Surety/ies, jointly and severally among themselves and likewise with principal, hereby
agree/s, and bind/s himself/themselves to pay at maturity all the notes, drafts, bills of exchange,
overdraft and other obligations of every kind which the Principal may now or may hereafter owe the
Creditor, including extensions or renewals thereof in the sum *** ONE MILLION ONLY *** PESOS
(P1,000,000.00), Philippine Currency, plus stipulated interest thereon at the rate of sixteen percent
(16%) per annum, or at such increased rate of interest which the Creditor may charge on the Principal's
obligations or renewals or the reduced amount thereof, plus all the costs and expenses which the
Creditor may incur in connection therewith.
xxx

xxx

xxx

Upon failure of the Principal to pay at maturity, with or without demand, any of the obligations above
mentioned, or in case of the Principal's failure promptly to respond to any other lawful demand made by
the Creditor, its successors, administrators or assigns, both the Principal and the Surety/ies shall be
considered in default and the Surety/ies agree/s to pay jointly and severally to the Creditor all
outstanding obligations of the Principal, whether due or not due, and whether held by the Creditor as
Principal or agent, and it is agreed that a certified statement by the Creditor as to the amount due from

the Principal shall be accepted by the Surety/ies as correct and final for all legal intents and purposes.
(Italics supplied)
The second Surety Agreement contains the following provisions:
". . . herein Surety/ies, jointly and severally among themselves and likewise with PRINCIPAL, hereby
agree and bind themselves to pay at maturity all the notes, drafts, bills of exchange, overdraft and other
obligations of every kind which the PRINCIPAL may now or may hereafter owe the Creditor, including
extensions and/or renewals thereof in the principal sum not to exceed TWO MILLION (P2,000,000.00)
PESOS, Philippine Currency, plus stipulated interest thereon, or such increased or decreased rate of
interest which the Creditor may charge on the principal sum outstanding pursuant to the rules and
regulations which the Monetary Board may from time to time promulgate, together with all the cost and
expenses which the CREDITOR may incur in connection therewith.
If for any reason whatsoever, the PRINCIPAL should fail to pay at maturity any of the obligations or
amounts due to the CREDITOR, or if for any reason whatsoever the PRINCIPAL fails to promptly respond
to and comply with any other lawful demand made by the CREDITOR, or if for any reason whatsoever
any obligation of the PRINCIPAL in favor of any person or entity should be considered as defaulted, then
both the PRINCIPAL and the SURETY/IES shall be considered in default under the terms of this
Agreement. Pursuant thereto, the SURETY/IES agree/s to pay jointly and severally with the PRINCIPAL,
all outstanding obligations of the CREDITOR, whether due or not due, and whether owing to the
PRINCIPAL in its personal capacity or as agent of any person, endorsee, assignee or transferee. . . .
(Italics supplied)
Article 1207 of the Civil Code provides, ". . . There is a solidary liability only when the obligation
expressly so states, or when the law or nature of the obligation requires solidarity." The stipulations in
the Surety Agreements undeniably mandate the solidary liability of Tan Chong Lin with Great Asian.
Moreover, the stipulations in the Surety Agreements are sufficiently broad, expressly encompassing "all
the notes, drafts, bills of exchange, overdraft and other obligations of every kind which the PRINCIPAL
may now or may hereafter owe the Creditor". Consequently, Tan Chong Lin must be held solidarily liable
with. Great Asian for the nonpayment of the fifteen dishonored checks, including penalty and attorney's
fees in accordance with the Deeds of Assignment.
The Deeds of Assignment stipulate that in case of suit Great Asian shall pay attorney's fees equivalent to
25% of the outstanding debt. The award of attorney's fees in the instant case is justified, 25 not only
because of such stipulation, but also because Great Asian and Tan Chong Lin acted in gross and evident
bad faith in refusing to pay Bancasia's plainly valid, just and demandable claim. We deem it just and
equitable that the stipulated attorney's fee should be awarded to Bancasia.
The Deeds of Assignment also provide for a 3% penalty on the total amount due in case of failure to pay,
but the Deeds are silent on whether this penalty is a running monthly or annual penalty. Thus, the 3%
penalty can only be considered as a one-time penalty. Moreover, the Deeds of Assignment do not
provide for interest if Great Asian fails to pay. We can only award Bancasia legal interest at 12% interest
per annum, and only from the time it filed the complaint because the records do not show that Bancasia

made a written demand on Great Asian prior to filing the complaint. 26 Bancasia made an extrajudicial
demand on Tan Chong Lin, the surety, but not on the principal debtor, Great Asian. SIHCDA
WHEREFORE, the assailed Decision of the Court of Appeals in CA-G.R. CV No. 20167 is AFFIRMED with
MODIFICATION. Petitioners are ordered to pay, solidarily, private respondent the following amounts: (a)
P1,042,005.00 plus 3% penalty thereon, (b) interest on the total outstanding amount in item (a) at the
legal rate of 12% per annum from the filing of the complaint until the same is fully paid, (c) attorney's
fees equivalent to 25% of the total amount in item (a), including interest at 12% per annum on the
outstanding amount of the attorney's fees from the finality of this judgment until the same is fully paid,
and (c) costs of suit.
SO ORDERED.
Vitug and Panganiban, JJ., concur.
Melo, J., is on leave.
Sandoval-Gutierrez, J., took no part.
Footnotes
1.

Rollo, pp. 38-58.

2.
Eleventh Division composed of Justices Nathanael P. De Pano, Jr. (ponente), Jesus M. Elbinias
and Angelina S. Gutierrez (now a member of this Court).
3.

Rollo, pp. 144-157.

4.

Penned by Judge Maximo A. Savellano, Jr.

5.

Rollo, pp. 154-155.

6.

Ibid., pp. 156-157.

7.

Ibid., pp. 76-77.

8.

Ibid., pp. 79-81.

9.

Rollo, pp. 13-15.

10.

Plaintiff's Evidence, p. 15.

11.

Plaintiff's Evidence, p. 16.

12.
The following entry on "discount" in Simon & Schuster New Millennium Encyclopedia (2000 CD
Version) explains the meaning of a discounting line: "In finance, discounts are premiums or
considerations given on the purchase of promissory notes, bills of exchange, or other forms of
negotiable commercial paper in advance of their maturity dates. Such discounts make up deductions

from the face value of the discounted paper and are made at the time of purchase. The principal
agencies engaged in discounting commercial paper are commercial banks and, in a few countries,
financial institutions that specialize in that practice. When discounted paper is again put into circulation
by a bank or discount house and is discounted again, it is said to be rediscounted.
When discounted paper matures, the holders of such bills and notes receive the full face value
of the commercial paper they present for payment; therefore, the practice of discounting bills and notes
is, in effect, a means of extending credit in the form of loans; the discounts are regarded as advance
collections of interest on the loans. Rates for discounting and rediscounting commercial paper are
established by commercial banks and discount houses in accordance with the relative supply of money
available for commercial loans. In countries in which the banking system is organized on a centralized
basis, discount and rediscount rates are determined in large part by the central banks; in the U.S., these
rates are established in part by the Federal Reserve System to control the volume of credit and thus
stimulate or slow the economy."
13.
Section 3(a) of R.A. No. 5980 stated as follows: "Financing companies," hereinafter called
companies, are corporations . . . which are primarily organized for the purpose of extending credit
facilities to consumers and to industrial, commercial, or agricultural enterprises, either by discounting or
factoring commercial papers or accounts receivable, or by buying and selling contracts, leases, chattel
mortgages, or other evidences of indebtedness, . . . "
14.

Plaintiff's Evidence, Exhs. "A", "D", "I", "R", pp. 1, 3, 6 and 11-12.

15.

Plaintiff's Evidence, Exh. "R", pp. 11-12.

16.
Article 1181 of the Civil Code provides as follows: "In conditional obligations, the acquisition of
rights, as well as the extinguishment or loss of those already acquired, shall depend upon the happening
of the event which constitutes the condition."

17.

Sesbreo vs. Court of Appeals, 222 SCRA 466 (1993).

18.

See Campos & Campos, p. 128, Notes and Selected Cases on Negotiable Instruments Law (1971).

19.
Section 114 (d) and (e) of the Negotiable Instruments Law provides as follows: "When notice
need not be given to drawer. Notice of dishonor is not required to be given to the drawer in either of
the following cases: (a) . . .; (d) Where the drawer has no right to expect or require that the drawee or
acceptor will honor the instrument; (e) Where the drawer has countermanded payment."
20.

Campos & Campos, p. 516, supra., Note 18.

21.

TSN, May 7, 1984, p. 9.

22.

Original Records, Exhibits "DD", "DD-1", pp. 238-244.

23.

Act No. 1956, Section 15.

24.

Ibid., Section 17.

25.

Article 2208 of the Civil Code.

26.

Eastern Shipping Lines, Inc. vs. Court of Appeals, 234 SCRA 78 (1994).

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 158995

September 26, 2006

L.G. FOODS CORPORATION and VICTORINO GABOR, Vice-President and General Manager, petitioners,
vs.
HON. PHILADELFA B. PAGAPONG-AGRAVIADOR, in her capacity as Presiding Judge of Regional Trial
Court, Branch 43, Bacolod City, and SPS. FLORENTINO and THERESA VALLEJERA, respondents.
DECISION
GARCIA, J.:
Assailed and sought to be set aside in this petition for review on certiorari is the Decision1 dated April
25, 2003 of the Court of Appeals (CA), as reiterated in its Resolution of July 10, 2003,2 in CA-G.R. SP No.
67600, affirming an earlier Order of the Regional Trial Court (RTC) of Bacolod City, Branch 43, which
denied the petitioners' motion to dismiss in Civil Case No. 99-10845, an action for damages arising from
a vehicular accident thereat instituted by the herein private respondents - the spouses Florentino
Vallejera and Theresa Vallejera - against the petitioners.
The antecedent facts may be briefly stated as follows:
On February 26, 1996, Charles Vallereja, a 7-year old son of the spouses Florentino Vallejera and
Theresa Vallejera, was hit by a Ford Fiera van owned by the petitioners and driven at the time by their
employee, Vincent Norman Yeneza y Ferrer. Charles died as a result of the accident.
In time, an Information for Reckless Imprudence Resulting to Homicide was filed against the driver
before the Municipal Trial Court in Cities (MTCC), Bacolod City, docketed as Criminal Case No. 67787,
entitled People of the Philippines v. Vincent Norman Yeneza.
Unfortunately, before the trial could be concluded, the accused driver committed suicide, evidently
bothered by conscience and remorse. On account thereof, the MTCC, in its order of September 30,
1998, dismissed the criminal case.
On June 23, 1999, in the RTC of Bacolod City, the spouses Vallejera filed a complaint3 for damages
against the petitioners as employers of the deceased driver, basically alleging that as such employers,
they failed to exercise due diligence in the selection and supervision of their employees. Thereat
docketed as Civil Case No. 99-10845, the complaint was raffled to Branch 43 of the court.

In their Answer with Compulsory Counterclaim,4 the petitioners as defendants denied liability for the
death of the Vallejeras' 7-year old son, claiming that they had exercised the required due diligence in the
selection and supervision of their employees, including the deceased driver. They thus prayed in their
Answer for the dismissal of the complaint for lack of cause of action on the part of the Vallejera couple.
During pre-trial, the defendant petitioners insisted that their dismissal prayer be resolved. Hence, the
trial court required them to file within ten days a memorandum of authorities supportive of their
position.
Instead, however, of the required memorandum of authorities, the defendant petitioners filed a Motion
to Dismiss, principally arguing that the complaint is basically a "claim for subsidiary liability against an
employer" under the provision of Article 1035 of the Revised Penal Code. Prescinding therefrom, they
contend that there must first be a judgment of conviction against their driver as a condition sine qua
non to hold them liable. Ergo, since the driver died during the pendency of the criminal action, the sine
qua non condition for their subsidiary liability was not fulfilled, hence the of lack of cause of action on
the part of the plaintiffs. They further argue that since the plaintiffs did not make a reservation to
institute a separate action for damages when the criminal case was filed, the damage suit in question is
thereby deemed instituted with the criminal action. which was already dismissed.
In an Order dated September 4, 2001,6 the trial court denied the motion to dismiss for lack of merit and
set the case for pre-trial. With their motion for reconsideration having been denied by the same court in
its subsequent order7 of September 26, 2001, the petitioners then went on certiorari to the CA in CAG.R. SP No. 67600, imputing grave abuse of discretion on the part of the trial judge in refusing to dismiss
the basic complaint for damages in Civil Case No. 99-10845.
In the herein assailed decision8 dated April 25, 2003, the CA denied the petition and upheld the trial
court. Partly says the CA in its challenged issuance:
xxx

xxx

xxx

It is clear that the complaint neither represents nor implies that the responsibility charged was the
petitioner's subsidiary liability under Art. 103, Revised Penal Code. As pointed out [by the trial court] in
the Order of September 4, 2001, the complaint does not even allege the basic elements for such a
liability, like the conviction of the accused employee and his insolvency. Truly enough, a civil action to
enforce subsidiary liability separate and distinct from the criminal action is even unnecessary.

xxx

xxx

xxx

Specifically, Civil Case No. 99-10845 exacts responsibility for fault or negligence under Art. 2176, Civil
Code, which is entirely separate and distinct from the civil liability arising from negligence under the

Revised Penal Code. Verily, therefore, the liability under Art. 2180, Civil Code, is direct and immediate,
and not conditioned upon prior recourse against the negligent employee or prior showing of the latter's
insolvency. (Underscoring in the original.)
In time, the petitioners moved for a reconsideration but their motion was denied by the CA in its
resolution9 of July 10, 2003. Hence, the petitioners' present recourse on their submission that the
appellate court committed reversible error in upholding the trial court's denial of their motion to
dismiss.
We DENY.
As the Court sees it, the sole issue for resolution is whether the spouses Vallejeras' cause of action in
Civil Case No. 99-10845 is founded on Article 103 of the Revised Penal Code, as maintained by the
petitioners, or derived from Article 218010 of the Civil Code, as ruled by the two courts below.
It thus behooves us to examine the allegations of the complaint for damages in Civil Case No. 99-10845.
That complaint alleged, inter alia, as follows:
xxx

xxx

xxx

3. That defendant [LG Food Corporation] is the registered owner of a Ford Fiera Van with Plate No. NMS
881 and employer sometime February of 1996 of one Vincent Norman Yeneza y Ferrer, a salesman of
said corporation;
4. That sometime February 26, 1996 at around 2:00 P.M. at Rosario St., Bacolod City, the minor son of
said plaintiffs [now respondents], Charles Vallejera, 7 years old, was hit and bumped by above-described
vehicle then driven by said employee, Vincent Norman Yeneza y Ferrer;
5. That the mishap was due to the gross fault and negligence of defendant's employee, who drove said
vehicle, recklessly, negligently and at a high speed without regard to traffic condition and safety of other
road users and likewise to the fault and negligence of the owner employer, herein defendants LG Food
Corporation who failed to exercise due diligence in the selection and supervision of his employee,
Vincent Norman Yeneza y Ferrer;
6. That as a result of said incident, plaintiffs' son suffered multiple body injuries which led to his
untimely demise on that very day;
7. That a criminal case was filed against the defendant's employee, docketed as Criminal Case No.
67787, (earlier filed as Crim. Case No. 96-17570 before RTC) before MTC-Branch III, entitled "People v.
Yeneza" for "Reckless Imprudence resulting to Homicide," but the same was dismissed because pending
litigation, then remorse-stricken [accused] committed suicide;

xxx xxx xxx

8. That the injuries and complications as well as the resultant death suffered by the late minor Charles
Vallejera were due to the negligence and imprudence of defendant's employee;
9. That defendant LG Foods Corporation is civilly liable for the negligence/imprudence of its employee
since it failed to exercise the necessary diligence required of a good father of the family in the selection
and supervision of his employee, Vincent Norman Yeneza y Ferrer which diligence if exercised, would
have prevented said incident. (Bracketed words and emphasis ours.)
Nothing in the foregoing allegations suggests, even remotely, that the herein petitioners are being made
to account for their subsidiary liability under Article 103 of the Revised Penal Code. As correctly pointed
out by the trial court in its order of September 4, 2001 denying the petitioners' Motion to Dismiss, the
complaint did not even aver the basic elements for the subsidiary liability of an employer under Article
103 of the Revised Penal Code, such as the prior conviction of the driver in the criminal case filed against
him nor his insolvency.
Admittedly, the complaint did not explicitly state that plaintiff Vallejeras were suing the defendant
petitioners for damages based on quasi-delict. Clear it is, however, from the allegations of the complaint
that quasi-delict was their choice of remedy against the petitioners. To stress, the plaintiff spouses
alleged in their complaint gross fault and negligence on the part of the driver and the failure of the
petitioners, as employers, to exercise due diligence in the selection and supervision of their employees.
The spouses further alleged that the petitioners are civilly liable for the negligence/imprudence of their
driver since they failed to exercise the necessary diligence required of a good father of the family in the
selection and supervision of their employees, which diligence, if exercised, could have prevented the
vehicular accident that resulted to the death of their 7-year old son.
Section 2, Rule 2, of the 1997 Rules of Civil Procedure defines cause of action as the "act or omission by
which a party violates the right of another." Such act or omission gives rise to an obligation which may
come from law, contracts, quasi contracts, delicts or quasi-delicts.11
Corollarily, an act or omission causing damage to another may give rise to two separate civil liabilities on
the part of the offender, i.e., 1) civil liability ex delicto;12 and 2) independent civil liabilities, such as
those (a) not arising from an act or omission complained of as felony (e.g., culpa contractual or
obligations arising from law;13 the intentional torts;14 and culpa aquiliana15); or (b) where the injured
party is granted a right to file an action independent and distinct from the criminal action.16 Either of
these two possible liabilities may be enforced against the offender.17
Stated otherwise, victims of negligence or their heirs have a choice between an action to enforce the
civil liability arising from culpa criminal under Article 100 of the Revised Penal Code, and an action for
quasi-delict (culpa aquiliana) under Articles 2176 to 2194 of the Civil Code. If, as here, the action chosen
is for quasi-delict, the plaintiff may hold the employer liable for the negligent act of its employee,

subject to the employer's defense of exercise of the diligence of a good father of the family. On the
other hand, if the action chosen is for culpa criminal, the plaintiff can hold the employer subsidiarily
liable only upon proof of prior conviction of its employee.18
Article 116119 of the Civil Code provides that civil obligation arising from criminal offenses shall be
governed by penal laws subject to the provision of Article 217720 and of the pertinent provision of
Chapter 2, Preliminary Title on Human Relation, and of Title XVIII of this Book, regulating damages.
Plainly, Article 2177 provides for the alternative remedies the plaintiff may choose from in case the
obligation has the possibility of arising indirectly from the delict/crime or directly from quasi-delict/tort.
The choice is with the plaintiff who makes known his cause of action in his initiatory pleading or
complaint,21 and not with the defendant who can not ask for the dismissal of the plaintiff's cause of
action or lack of it based on the defendant's perception that the plaintiff should have opted to file a
claim under Article 103 of the Revised Penal Code.
Under Article 2180 of the Civil Code, the liability of the employer is direct or immediate. It is not
conditioned upon prior recourse against the negligent employee and a prior showing of insolvency of
such employee.22
Here, the complaint sufficiently alleged that the death of the couple's minor son was caused by the
negligent act of the petitioners' driver; and that the petitioners themselves were civilly liable for the
negligence of their driver for failing "to exercise the necessary diligence required of a good father of the
family in the selection and supervision of [their] employee, the driver, which diligence, if exercised,
would have prevented said accident."
Had the respondent spouses elected to sue the petitioners based on Article 103 of the Revised Penal
Code, they would have alleged that the guilt of the driver had been proven beyond reasonable doubt;
that such accused driver is insolvent; that it is the subsidiary liability of the defendant petitioners as
employers to pay for the damage done by their employee (driver) based on the principle that every
person criminally liable is also civilly liable.23 Since there was no conviction in the criminal case against
the driver, precisely because death intervened prior to the termination of the criminal proceedings, the
spouses' recourse was, therefore, to sue the petitioners for their direct and primary liability based on
quasi-delict.
Besides, it is worthy to note that the petitioners, in their Answer with Compulsory Counter-Claim,24
repeatedly made mention of Article 2180 of the Civil Code and anchored their defense on their
allegation that "they had exercised due diligence in the selection and supervision of [their] employees."
The Court views this defense as an admission that indeed the petitioners acknowledged the private
respondents' cause of action as one for quasi-delict under Article 2180 of the Civil Code.
All told, Civil Case No. 99-10845 is a negligence suit brought under Article 2176 - Civil Code to recover
damages primarily from the petitioners as employers responsible for their negligent driver pursuant to
Article 2180 of the Civil Code. The obligation imposed by Article 2176 is demandable not only for one's

own acts or omissions, but also for those of persons for whom one is responsible. Thus, the employer is
liable for damages caused by his employees and household helpers acting within the scope of their
assigned tasks, even though the former is not engaged in any business or industry.
Citing Maniago v. CA,25 petitioner would argue that Civil Case No. 99-10845 should have been dismissed
for failure of the respondent spouses to make a reservation to institute a separate civil action for
damages when the criminal case against the driver was filed.
The argument is specious.
To start with, the petitioners' reliance on Maniago is obviously misplaced. There, the civil case was filed
while the criminal case against the employee was still pending. Here, the criminal case against the
employee driver was prematurely terminated due to his death. Precisely, Civil Case No. 99-10845 was
filed by the respondent spouses because no remedy can be obtained by them against the petitioners
with the dismissal of the criminal case against their driver during the pendency thereof.
The circumstance that no reservation to institute a separate civil action for damages was made when
the criminal case was filed is of no moment for the simple reason that the criminal case was dismissed
without any pronouncement having been made therein. In reality, therefor, it is as if there was no
criminal case to speak of in the first place. And for the petitioners to insist for the conviction of their
driver as a condition sine qua non to hold them liable for damages is to ask for the impossible.
IN VIEW WHEREOF, the instant petition is DENIED for lack of merit.
Costs against the petitioners.
SO ORDERED.
Puno, Chairperson, Sandoval-Gutierrez, Corona, Azcuna, J.J., concur.
Footnotes
1 Penned by Associate Justice Lucas P. Bersamin with Associate Justices Ruben T. Reyes (now Presiding
Justice) and Elvi John Asuncion, concurring. Rollo, pp. 17-22.
2 Id. at 23.
3 Id. at 93-98.
4 Id. at 85-91.

5 Article 103. Subsidiary civil liability of other persons. The subsidiary liability established in the next
preceding article shall also apply to employers, teachers, persons and corporations engaged in any kind
of industry for felonies committed by their servants, pupils, workmen, apprentices, or employees in the
discharge of their duties.
6 Rollo, pp. 71-74.
7 Id. at 65.
8 Supra note 1.
9 Rollo, p. 23.
10 Article 2180. The obligation imposed by Article 2176 is demandable not only for one's own acts or
omissions, but also for those of persons for whom one is responsible.
xxx xxx xxx
Employers shall be liable for the damages caused by their employees and household helpers acting
within the scope of their assigned tasks, even though the former are not engaged in any business or
industry.
xxx xxx xxx
The responsibility treated of in this article shall cease when the persons herein mentioned prove that
they observed all the diligence of a good father of a family to prevent damage. (1903a)
11 Article 1157, Civil Code of the Philippines.
12 Article 100, Revised Penal Code.
13 Article 31, Civil Code.
14 Articles 32 and 34, Civil Code.
15 Article 2176, Civil Code.
16 Article 33, Civil Code.
17 Cancio, Jr. v. Isip, G.R. No. 133978, November 12, 2002, 391 SCRA 393.
18 Joaquin, et al. v. Aniceto, et al., 120 Phil. 1100 (1964).

19 ARTICLE 1161. Civil obligations arising from criminal offenses shall be governed by the penal laws,
subject to the provisions of article 2177, and of the pertinent provisions of Chapter 2, Preliminary Title,
on Human Relations, and of Title XVIII of this Book, regulating damages. (1092a)
20 ARTICLE 2177. Responsibility for fault or negligence under the preceding article is entirely separate
and distinct from the civil liability arising from negligence under the Penal Code. But the plaintiff cannot
recover damages twice for the same act or omission of the defendant. (n)
21 Section 3, Rule 6, 1997 Rules on Criminal Procedure.
22 Kapalaran Bus Lines v. Coronado, G.R. No. 85331, August 25, 1989, 176 SCRA 792.
23 Article 100, Revised Penal Code.
24 Supra note 4.
25 G.R. 104392, February 20, 1996, 253 SCRA 674.

THIRD DIVISION
[G.R. No. 133347, October 15, 2008]
ABS-CBN BROADCASTING CORPORATION, EUGENIO LOPEZ, JR., AUGUSTO ALMEDA-LOPEZ, AND
OSCAR M. LOPEZ, PETITIONERS, VS. OFFICE OF THE OMBUDSMAN, ROBERTO S. BENEDICTO, *
EXEQUIEL B. GARCIA, MIGUEL V. GONZALES, AND SALVADOR (BUDDY) TAN,* RESPONDENTS.
DECISION

NACHURA, J.:

At bar is a petition for certiorari under Rule 65 of the Rules of Court challenging the Joint Resolution[1]
dated May 2, 1997 of then Ombudsman Aniano Desierto in OMB-0-94-1109, dismissing the complaint
filed by petitioners against private respondents, and the Order[2] denying their motion for
reconsideration.
This case stems from an all too familiar chapter in Philippine history, i.e., the declaration of martial law
by then President Ferdinand Marcos and the simultaneous sequestration of not a few private
corporations, including one of the petitioners herein, ABS-CBN Broadcasting Corporation (ABS-CBN).
On April 18 and 26, 1994, petitioners Eugenio, Jr., Oscar and Augusto Almeda, all surnamed Lopez, as
officers and on behalf of ABS-CBN, executed separate complaint-affidavits charging private respondents
Roberto S. Benedicto, Exequiel B. Garcia, Miguel V. Gonzalez, and Salvador (Buddy) Tan with the
following crimes penalized under the Revised Penal Code (RPC): (a) Article 298 - Execution of Deeds by
Means of Violence or Intimidation; (b) Article 315 paragraphs 1[b], 2[a], 3[a] - Estafa; (c) Article 308 Theft; (d) Article 302 - Robbery; (e) Article 312 - Occupation of Real Property or Usurpation of Real
Rights in Property; and (f) Article 318 - Other Deceits.
Individual petitioners' complaint-affidavits[3] uniformly narrated the following facts:
1. The day after the declaration of martial law, or on September 22, 1972, just before midnight,
military troops arrived at the ABS-CBN Broadcast Center in Bohol Avenue, Quezon City, and
informed the officers and personnel thereat of the seizure and closure of the premises by virtue
of Letter of Instruction (LOI) No. 1 issued by President Marcos ordering the closure of all radio
and television stations in the country.
2. LOI No. 1 authorized the Secretary of National Defense to "take over or control, or cause the
taking over and control of all x x x newspapers, magazines, radio and television facilities and all

other media of communications" throughout the country. Consequently, a total of seven (7)
television stations owned and operated by ABS-CBN were closed down by the government.[4]
3. When it became apparent that petitioners would not be granted a permit to re-open, ABS-CBN
on October 31, 1972, terminated the services of all its employees, giving each employee his/her
retirement benefits. Corollary thereto, sometime in November 1972, Eugenio Lopez, Jr., then
president of ABS-CBN, wrote then Secretary of National Defense, Juan Ponce Enrile,[5] of their
desire to sell ABS-CBN to the government. In that same month, however, Eugenio Lopez, Jr. was
arrested by the military, and detained at Fort Bonifacio for almost five (5) years until his escape
therefrom on September 30, 1977.
4. Subsequently, after the proposal to sell ABS-CBN to the Marcos government did not materialize,
ABS-CBN started negotiations with then Governor of Leyte, Benjamin "Kokoy" Romualdez, who
expressed his desire and intention to acquire the former. However, the negotiations with Kokoy
Romualdez in 1973 likewise did not result in the sale and re-opening of ABS-CBN.
5. On June 6, 1973, the television and radio stations of Kanlaon Broadcasting System (KBS) on
Roxas Boulevard, Pasay City were consumed by fire. KBS was the umbrella corporation of the
Benedicto Group of broadcasting companies, including Radio Philippines Network (RPN),[6]
which operated TV Channel 9, the only television station allowed to continue operating during
the early years of the martial law regime. Respondent Benedicto, then Philippine Ambassador to
Japan, managed, controlled, and was one of the principal stockholders of RPN.
6. On even date, both Benedicto and Alfredo Montelibano, who at that time was Chairperson of
the Board of Directors (BOD) of ABS-CBN, were in Bacolod. Benedicto constituted Montelibano
as his emissary to the Lopezes, relaying his plan to temporarily use ABS-CBN's broadcast studios
in Quezon City, from which to operate TV Channel 9, for such period of time as may be
necessary to rebuild KBS' burned studios.
7. On June 8, 1973, Montelibano met with other officers and executives of ABS-CBN, including
herein petitioners Oscar and Augusto Lopez, informing them of Benedicto's request. Oscar and
Augusto, and the rest of the ABS-CBN management team, strongly opposed the request.
Eventually, however, when Montelibano mentioned that Malacaang and Romualdez had
cleared said request, the possibility of a government-ordered confiscation of ABS-CBN, and not
least of all, the possible release of Eugenio Lopez, Jr., petitioners Oscar and Augusto, as with the
rest of ABS-CBN's executives, acquiesced to Benedicto's request.
8. Thus, at noontime on the same day, representatives of KBS headed by Jose Montalvo arrived at
the Meralco Building to finalize the proposed arrangement with ABS-CBN. The transaction
between ABS-CBN and KBS is evidenced by a letter-agreement dated June 8, 1973, which reads
in relevant part:
This is to confirm the agreement arrived at between RPN and ABS-CBN to the following effect:

1. Commencing on the date hereof, ABS-CBN hereby conveys to RPN by way of lease its TV
and radio equipment (excluding TV channels and radio frequencies) and its premises at
the ABS-CBN Broadcast Center, Bohol Avenue, Quezon City (collectively called the
"leased facilities") listed in the schedule attached hereto and marked as Annex "A".
2. RPN shall pay ABS-CBN monthly rental as is reasonable compensation for the use of the
leased facilities. The amount of the rental shall be determined after a discussion with
Ambassador Roberto Benedicto.
3. The term of this lease shall commence on the date hereof and continue for such
reasonable time as may be normally necessary for the rehabilitation of RPN's facilities
unless an earlier period may be fixed by RPN and ABS-CBN after discussion with
Ambassador Benedicto.
4. RPN hereby assumes full and complete responsibility for the leased facilities and shall be
answerable for any and all losses and damages to such facilities.
xxxx
5. Upon termination of this lease, RPN shall return the possession of the leased facilities to
ABS-CBN and vacate the same without the need of notice or demand.
6. ABS-CBN, through its Chairman, Mr. Alfredo Montelibano, shall have the right to select
and designate the personnel (not to exceed 20 at any one time) to maintain and operate
all specialized TV and radio equipment.
xxxx
7. ABS-CBN shall have the right to enter the Broadcast Center at any reasonable time
during the term of this lease for the purpose of determining compliance by RPN of the
terms hereof.
xxxx
8. RPN shall not, without the prior written consent of ABS-CBN, sub-lease the leased
facilities or any part thereof nor shall any part be removed from the premises except the
equipment, which are intended for operation the Broadcast Center in due course of
operations.
9. Meanwhile, it appears that the parties were hard pressed to negotiate and fix the monthly
rental rate. Several attempts by Oscar to set up a meeting with Benedicto for the fixing of the
monthly rentals proved unsuccessful.
10. After more than four months of trying, a meeting between Oscar and Benedicto finally
materialized on October 31, 1973. At that meeting, the discussion not only covered fixing of

reasonable rentals for the lease of the ABS-CBN studios, but likewise included the possibility of
an outright sale.
11. Thereafter, the discussions and negotiations stopped as none of the petitioners were able to
meet anew with Benedicto who had supposedly referred the matter to "people above" and the
"man on top."
12. Frustrated, then Senator Lorenzo Taada, as counsel for ABS-CBN, in May 1976, wrote
Benedicto demanding vacation of the ABS-CBN Broadcast Center and payment of back rentals
for the use of the ABS-CBN studios and facilities.
13. In response, Senator Estanislao Fernandez, on behalf of Benedicto, met with Senator Taada in
June 1976. Another meeting took place between the parties' respective counsels which included
respondent Gonzales, another counsel for Benedicto. Despite these meetings, no agreement
was reached between Benedicto and ABS-CBN. On the whole, from June 8, 1973, the time KBS
occupied the ABS-CBN studios in Quezon City, no rental was paid by the former to the latter.
14. In the years following until the Marcos government was toppled in 1986, the ABS-CBN stations
were transferred to the National Media Production Center (NMPC) headed by Gregorio
Cendaa of the Ministry of Information. Starting in January 1980, KBS, on a staggered basis,
transferred possession, control and management of ABS-CBN's provincial television stations to
NMPC. Some of the radio stations of ABS-CBN were turned over to the government's Bureau of
Broadcast, while some were retained by KBS thru the Banahaw Broadcasting Corporation (BBC)
and Radio Philippines Network (RPN).
15. Parenthetically, during a military inventory in 1979-1980, and a visit by ABS-CBN executives at
ABS-CBN's radio transmitting stations in Meycauayan, Bulacan, headed by petitioner Augusto,
on August 13, 1984, ABS-CBN properties and massive equipment were found to be missing. In
addition, the musical records and radio dramas accumulated by ABS-CBN in a span of twentyfive (25) years and stored in its library were now gone.
16. In June 1986, President Corazon Aquino, acting on the request of ABS-CBN through Senator
Taada, returned to ABS-CBN these radio and TV stations on a gradual and scheduled basis.
As required by the Ombudsman, the respondents, except for Garcia, filed their respective counteraffidavits,[7] with Benedicto adopting that of Gonzales', denying petitioners' charges, and averring that:
1. The execution of the June 8, 1973 letter-agreement was a free and voluntary act of ABS-CBN
which agreed thereto fully expecting remuneration in the form of rentals, thus:
2. RPN shall pay ABS-CBN monthly rental as is reasonable compensation for the use of the
lease facilities. The amount of the rental shall be determined after a discussion with
Ambassador Roberto Benedicto.

2. In that regard, respondent Gonzales, counsel for KBS, RPN and Benedicto, participated in the
negotiations and was present at three (3) meetings for the fixing of rentals. Also in attendance
were former Senator Estanislao Fernandez, specially engaged to represent RPN and Benedicto,
and Senator Taada and petitioner Augusto for ABS-CBN.
3. Initially, the discussions centered on the possible formulas for the fixing of rentals. Later on,
however, before an agreement on the rental rate could be reached, the discussions shifted to
the possibility of an outright sale. The discussions on the sale were expanded as various
creditors of ABS-CBN had made and presented claims before respondent Garcia, then
Comptroller of KBS-RPN.
4. However, the discussions were discontinued when then Secretary of National Defense Juan
Ponce Enrile reminded KBS of the sequestered status of ABS-CBN facilities such that
arrangements undertaken for the use and lease thereof should be taken up with the
government.[8]
5. Meanwhile, in July 1974, Secretary Ponce Enrile authorized KBS, acting on behalf of BBC, to
make use of the ABS-CBN provincial stations which were not covered by the June 8, 1973 letteragreement. The authorization was granted in connection with the increased undertakings
assigned by the Department of National Defense (DND) to KBS, specifically, for the government's
mass-media developmental peace and order nationwide campaign.
7. Thereafter, in October 1977, RPN vacated the ABS-CBN studios and turned over the properties
to George Viduya, the general manager of the government station GTV-4. Viduya continued
operations of GTV-4 at the ABS-CBN properties, after which, the properties were all delivered in
1979 to the NMPC headed by Cendaa. The provincial stations were delivered and turned over
on a staggered basis, with the DZRI station in Dagupan handed over in 1979. The successive
transfer of all ABS-CBN studios and stations, in Quezon City and the provinces, were covered by
receipts which were collated by the law firm of respondent Gonzales retained by KBS for that
purpose.
8. The use of the ABS-CBN studios involved only three (3) juridical entities, RPN, ABS-CBN and the
government. The charges leveled by petitioners in their complaint-affidavits merely point to civil
liability as specified in the letter-agreement itself:
4. RPN hereby assumes full and complete responsibility for the leased facilities and shall be
answerable for any and all losses and damages to such facilities.
On the whole, the allegations of petitioners do not support the elements of the crimes charged.
9. Lastly, respondents invoke the grant of absolute immunity to Benedicto as part of the
Compromise Agreement in Sandiganbayan Civil Case No. 34 which states:
The Government hereby extends absolute immunity, as authorized under the pertinent provisions of
Executive Orders Nos. 1, 2, 14 and 14-A, to Benedicto, the members of his family, officers and

employees of the corporations above mentioned, who are included in past, present and future cases
and investigations of the Philippine Government, such that there shall be no criminal investigation or
prosecution against said persons for acts, omissions committed prior to February 25, 1986 that may be
alleged to have violated any penal law, including but not limited to Republic Act No. 3019, in relation to
the acquisition of any asset treated, mentioned or included in this Agreement.
Expectedly, the petitioners in their joint reply-affidavit refuted respondents' counter-affidavits. Contrary
to respondents' allegations, petitioners reiterated Benedicto's over-all ploy, in conspiracy with the other
respondents who were officers of KBS and/or RPN, to use and occupy ABS-CBN properties without
paying compensation therefor. Petitioners maintain that respondents' grand scheme was to take-over
ABS-CBN, albeit ostensibly covered by the letter-lease agreement, giving the take over a semblance of
legality.
Thereafter, with the issues having been joined, the Ombudsman issued the herein assailed Joint
Resolution dismissing petitioners' complaints. To the Ombudsman, the following circumstances did not
give rise to probable cause necessary to indict respondents for the various felonies charged:
1. The Letter-Agreement of June 8, 1973 belie any illegal take-over of the ABS-CBN complex.
While the Lopezes are now complaining that the letter-agreement was virtually forced unto
them thru intimidation, hence, the vitiated consent of Mr. Montelibano, there is nothing
however which the complainants adduced to prove this allegation except their threadbare
allegations of threats. On the contrary, it appears that the Lopezes blessed the letter-agreement
hoping that their financial difficulties with respect to the affairs of the ABS-CBN and their
problem concerning the continued detention of Eugenio Lopez, Jr. by the military, would at least
be mitigated. x x x
It is thus clear that the ABS-CBN complex was freely leased by Montelibano upon consultation
with the Lopezes who entertained some ulterior motives of their own which they expect would
result from the agreement, either directly or indirectly. Of course, the Lopezes may not have
realized some of these expectations (i.e., the rentals, the release of Eugenio, Jr. from detention)
but this does not change the fact that the parties' consent to the contract appears to have been
freely given. Perforce, the complaint under Article 298 of the Revised Penal Code of the
Philippines must fail.
2. Other TV and radio stations were taken over pursuant to LOI 1-A, hence no violations of Art.
312, 302 and 308 of RPC.
To the alleged violation of Art. 312 of the Revised Penal Code, the respondents contended that
their use of ABS-CBN's facilities other than those included in the lease-agreement, was in fact
with the authority of the then Department of National Defense (DND). There is no denying that
all of the ABS-CBN properties including the provincial ones are under sequestration pursuant to
Presidential Letter of Instruction No. 1-A, issued on September 28, 1972. It was under the

strength of this Presidential Letter of Instruction that KBS-RPN was authorized to enter, occupy
and operate the facilities of ABS-CBN. This was also confirmed by DND Secretary Juan Ponce
Enrile in his letter to RPN dated June 26, 1976. Unmistakably, KBS-RPN's possession of the ABSCBN's property other than those in the ABS-CBN complex is primarily anchored on the authority
pursuant to LOI 1-A. With this apparent authority, this investigation can not see in any which
way how the respondents could have illegally taken over the properties of the [petitioners],
particularly those in the province; there is therefore no convincing proof to support a charge
under Article 312 of the Revised Penal Code. It may come to mind that "occupation of real
property or usurpation of real rights in property" under Article 312 requires as one of its
elements the presence of violence against or intimidation of persons as a means in securing real
property or rights belonging to another. Plainly, this element is not shown. The complainants
may have felt intimidated by the sequestration order, but it is in the nature of such Order to be
coercive. It was an act flowing from the martial law powers of then President Marcos.
3. No unlawful taking as to justify charges for Robbery or Theft.
Robbery and Theft under Articles 302 and 308 of the Revised Penal Code were also attributed by
the [petitioners] against the respondents. From the records, it is clear that KBS-RPN has juridical
possession of the ABS-CBN properties subject of this complaint; a right which can be validly setup even against ABS-CBN itself. It can be recalled that KBS-RPN was authorized to enter, occupy
and operate ABS-CBN facilities by virtue of the authority granted by the President, pursuant to
LOI No. 1-A. Aside, the Broadcast Center itself was covered by the lease-agreement. Under these
situations, there is obviously no basis to charge the respondents for robbery and theft; for these
penal offense require as an element the act of unlawful taking or asportation. Asportation is
simply poles apart from the juridical possession which KBS-RPN enjoyed over the properties.
4. No deceit was employed to gain possession of the Broadcast Center and the provincial TV and
radio stations.
In the prosecution for estafa under [Articles 315, paragraphs 2(a), 3(a) and 318] of the Revised
Penal Code, it is indispensable that the element of deceit, consisting in the false statement of
fraudulent representation of the accused, be made prior to, or, at least simultaneously with, the
delivery of the thing by the complainants, it being essential that such false statement or
fraudulent representation constitutes the very cause or the only motive which induces the
complainants to part with the thing. If there be no such prior or simultaneous false statement or
fraudulent representation, any subsequent act of the respondent, however fraudulent or
suspicious it may appear, can not serve as basis for the prosecution of these crimes.
[From petitioners' complaint-affidavits], it is very clear that the late Alfredo Montelibano was
the one who talked with Roberto Benedicto, preparatory to the signing of the lease-agreement.
As the complainants did not identify exactly which constitute the deceitful act (or the
intimidation) which could have induced the Lopezes into accepting the lease agreement, in most

probability, the occurrences which vitiated their consent happened during this preliminary
discussion. Noticeably however, it is not Alfredo Montelibano, the one who supposedly talked
with Benedicto, who is testifying on the alleged "veiled threat" or deceits, if there are. Precisely,
because he is already dead.
x x x [I]t is submitted that the Lopezes can not now testify on something which are not derived
from their own personal perception. The bottomline is that what they are now trying to adduce,
pertaining to the alleged deceits [or intimidation] attending the negotiation of the lease
agreement are purely hearsay. This is a matter which only Alfredo Montelibano could testify
competently.[9]
The Ombudsman saw no need to discuss the defenses of prescription and immunity from suit raised by
the respondents given his dismissal of the complaint-affidavits on the merits. However, in a subsequent
Order denying petitioners Motion for Reconsideration of the Joint Resolution, the Ombudsman lifted
the Office of the Chief Legal Counsel's ratiocination for dismissing the complaint-affidavits, thus:
Incidentally, RPN has been identified as among the corporation in which respondent Benedicto has
substantial interests. In fact, it was one of the subject matters of the Compromise Agreement reached
by the government and respondent Benedicto in Sandiganbayan Civil Case no. 34.
In that Compromise Agreement, for and in consideration of respondent Benedicto's cession of equities,
and assignment of his rights and interest in corporations therein listed, among them RPN, the
government extended "absolute immunity" to Benedicto, including officers of his corporations as
therein mentioned, "such that there shall be no criminal investigation or prosecution against said
persons for acts or omissions committed prior to February 25, 1986 that may be alleged to have violated
any penal law, including but not limited to Republic Act No. 3019, in relation to the acquisition of any
asset treated or included in this Agreement."
In effect, the People of the Philippines as the offended party in criminal cases has waived its right to
proceed criminally against Benedicto, et. al., for whatever crime they may have committed relative to,
among others, the alleged plunder of ABS-CBN properties. Again, whatever liability that remains
thereabout on respondents' part is perforce only civil in nature.[10]
Hence, this recourse by the petitioners alleging grave abuse of discretion in the Ombudsman's Joint
Resolution and Order.
Before anything else, we note that on April 5, 1999 and June 13, 2000, the respective counsel for
respondents Tan and Benedicto, in compliance with Section 16,[11] Rule 3 of the Rules of Court, filed
pleadings informing the Court of their clients' demise. Benedicto's counsel filed a Notice of Death (With
Prayer for Dismissal)[12] moving that Benedicto be dropped as respondent in the instant case for the
reason "that the pending criminal cases subject of this appeal are actions which do not survive the death
of the party accused."

Petitioners opposed the move to drop Benedicto as respondent, citing Torrijos v. Court of Appeals[13]
which held that "civil liability of the accused survives his death; because death is not a valid cause for the
extinguishment of civil obligations."
Our ruling on this issue need not be arduous. The rules on whether the civil liability of an accused, upon
death, is extinguished together with his criminal liability, has long been clarified and settled in the case
of People v. Bayotas:[14]
1. Death of an accused pending appeal of his conviction extinguishes his criminal liability as well as
the civil liability based solely thereon. As opined by Justice Regalado, in this regard, "the death
of the accused prior to final judgment terminates his criminal liability and only the civil liability
directly arising from and based solely on the offense committed, i.e., civil liability ex delicto in
senso strictiore."
2. Corollarily, the claim for civil liability survives notwithstanding the death of accused, if the same
may also be predicated on a source of obligation other than delict. Article 1157 of the Civil Code
enumerates these other sources of obligation from which the civil liability may arise as a result
of the same act or omission:
a) Law
b) Contracts
c) Quasi-contracts
d) x x x
e) Quasi-delicts
3. Where the civil liability survives, as explained in Number 2 above, an action for recovery
therefor may be pursued but only by way of filing a separate civil action and subject to Section
1, Rule 111 of the 1985 Rules on Criminal Procedure[15] as amended. The separate civil action
may be enforced either against the executor/administrator or the estate of the accused,
depending on the source of obligation upon which the same is based as explained above.
4. Finally, the private offended party need not fear a forfeiture of his right to file this separate civil
action by prescription, in cases where during the prosecution of the criminal action and prior to
its extinction, the private-offended party instituted together therewith the civil action. In such
case, the statute of limitations on the civil liability is deemed interrupted during the pendency of
the criminal case, conformably with provisions of Article 1155 of the Civil Code, that should
thereby avoid any apprehension on a possible [de]privation of right by prescription.
Applying the foregoing rules, ABS-CBN's insistence that the case at bench survives because the civil
liability of the respondents subsists is stripped of merit.
To begin with, there is no criminal case as yet against the respondents. The Ombudsman did not find
probable cause to prosecute respondents for various felonies in the RPC. As such, the rule that a civil

action is deemed instituted along with the criminal action unless the offended party: (a) waives the civil
action, (b) reserves the right to institute it separately, or (c) institutes the civil action prior to the
criminal action,[16] is not applicable.
In any event, consistent with People v. Bayotas,[17] the death of the accused necessarily calls for the
dismissal of the criminal case against him, regardless of the institution of the civil case with it. The civil
action which survives the death of the accused must hinge on other sources of obligation provided in
Article 1157 of the Civil Code. In such a case, a surviving civil action against the accused founded on
other sources of obligation must be prosecuted in a separate civil action. In other words, civil liability
based solely on the criminal action is extinguished, and a different civil action cannot be continued and
prosecuted in the same criminal action.
Significantly, this Court in Benedicto v. Court of Appeals,[18] taking cognizance of respondent Benedicto's
death on May 15, 2000, has ordered that the latter be dropped as a party, and declared extinguished
any criminal as well as civil liability ex delicto that might be attributable to him in Criminal Cases Nos. 91101879 to 91-101883, 91-101884 to 101892, and 92-101959 to 92-101969 pending before the Regional
Trial Court of Manila.
Lastly, we note that petitioners appear to have already followed our ruling in People v. Bayotas[19] by
filing a separate civil action to enforce a claim against the estate of respondent Benedicto.[20] The claim
against the estate of Benedicto is based on contractthe June 8, 1973 letter- agreementin
consonance with Section 5,[21] Rule 86 of the Rules of Court. Plainly, the dropping of respondents
Benedicto and Tan as parties herein is in order.
We now come to the core issue of whether the Ombudsman committed grave abuse of discretion in
dismissing petitioners' complaint against the respondents. We rule in the negative and, accordingly,
dismiss the petition.
We cannot overemphasize the fact that the Ombudsman is a constitutional officer duty bound to
"investigate on its own, or on complaint by any person, any act or omission of any public official,
employee, office or agency, when such act or omission appears to be illegal, unjust, improper, or
inefficient."[22] The raison d 'etre for its creation and endowment of broad investigative authority is to
insulate it from the long tentacles of officialdom that are able to penetrate judges' and fiscals' offices,
and others involved in the prosecution of erring public officials, and through the execution of official
pressure and influence, quash, delay, or dismiss investigations into malfeasances and misfeasances
committed by public officers.[23]
In Presidential Commission on Good Government (PCGG) v. Desierto,[24] we dwelt on the powers,
functions and duties of the Ombudsman, to wit:
The prosecution of offenses committed by public officers is vested primarily in the Office of the
Ombudsman. It bears emphasis that the Office has been given a wide latitude of investigatory and

prosecutory powers under the Constitution and Republic Act No. 6770 (The Ombudsman Act of 1989).
This discretion is all but free from legislative, executive or judicial intervention to ensure that the Office
is insulated from any outside pressure and improper influence.
Indeed, the Ombudsman is empowered to determine whether there exist reasonable grounds to believe
that a crime has been committed and that the accused is probably guilty thereof and, thereafter, to file
the corresponding information with the appropriate courts. The Ombudsman may thus conduct an
investigation if the complaint filed is found to be in the proper form and substance. Conversely, the
Ombudsman may also dismiss the complaint should it be found insufficient in form or substance.
Unless there are good and compelling reasons to do so, the Court will refrain from interfering with the
exercise of the Ombudsman's powers, and respect the initiative and independence inherent in the latter
who, beholden to no one, acts as the champion of the people and the preserver of the integrity of public
service.
The pragmatic basis for the general rule was explained in Ocampo v. Ombudsman:
The rule is based not only upon respect for the investigatory and prosecutory powers granted by the
Constitution to the Office of the Ombudsman but upon practicality as well. Otherwise, the functions of
the courts will be grievously hampered by innumerable petitions assailing the dismissal of investigatory
proceedings conducted by the Office of the Ombudsman with regard to complaints filed before it, in
much the same way that the courts would be extremely swamped if they would be compelled to review
the exercise of discretion on the part of the fiscals or prosecuting attorneys each time they decide to file
an information in court or dismiss a complaint by private complainants.[25]
From the foregoing, it is crystal clear that we do not interfere with the Ombudsman's exercise of his
investigatory and prosecutory powers vested by the Constitution. In short, we do not review the
Ombudsman's exercise of discretion in prosecuting or dismissing a complaint except when the exercise
thereof is tainted with grave abuse of discretion.
By grave abuse of discretion is meant such capricious and whimsical exercise of judgment tantamount to
lack of jurisdiction. The abuse of discretion must be so patent and gross as to amount to an evasion of a
positive duty or a virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of
law, as where the power is exercised in an arbitrary and despotic manner by reason of passion or
hostility.[26] In this regard, petitioners utterly failed to demonstrate the Ombudsman's abuse, much less
grave abuse, of discretion.
Apart from a blanket and general charge that remaining respondents herein, Gonzales and Garcia, are
officers of KBS/RPN and/or alter egos of Benedicto, petitioners' complaint-affidavits are bereft of
sufficient ground to engender a well-founded belief that crimes have been committed and the
respondents, namely, Gonzales and Garcia, are probably guilty thereof and should be held for trial.[27]
Certainly, the Ombudsman did not commit grave abuse of discretion in dismissing petitioners'

complaint-affidavits.
From the entirety of the records, it is beyond cavil that petitioners seek to attach criminal liability to an
unequivocally civil undertaking gone awry. As pointed out by the Ombudsman, although the petitioners
may not have realized their expectations in entering into the June 8, 1973 letter-agreement, such does
not render their consent thereto defective.
The execution and validity of this letter-agreement is connected with respondents' culpability for the
felonies charged as these include the element of whether they had juridical possession of the ABS-CBN
properties. Essentially, petitioners claim they did not freely give their consent to the letter-agreement.
However, on more than one occasion, petitioners have invoked the letter-agreement's provisions, and
made claims thereunder.
First, petitioners met and discussed with respondents the fixing of the rental rate for the ABS-CBN
studios in Quezon City as provided in paragraph 2 of the letter-lease agreement. Next, petitioners'
counsel wrote a demand letter to respondents for the payment of rentals for the latter's occupation and
use of ABS-CBN properties pursuant to the letter-agreement. Last and most importantly, petitioners
have made a claim against the estate of Benedicto based on the same June 8, 1973 letter-agreement.
This action of petitioners clearly evinces their ratification of the letter-agreement. As previously
discussed, the civil liability of respondents Benedicto and Tan hinging on the charged criminal acts
herein was extinguished upon their death. But other civil liabilities founded on other sources of
obligations under Article 1157 of the Civil Code may still be prosecuted either against the estate of the
deceased if based on contract,[28] or against the executors and administrators of the deceased's estate if
based on quasi-delict.[29]
As petitioners have ratified the letter-agreement, even after the lifting of martial law and the toppling of
the Marcos government, and advanced the validity of the letter-agreement in their claim against the
estate of Benedicto, they cannot, in the same breath, aver that respondents' actuations in the execution
of the letter-agreement were criminal in nature, or that the letter-agreement was more ostensible than
real and to insist on the prosecution of respondents for felonies supposedly committed in connection
with this ubiquitous letter-agreement.[30]
In fine, the Ombudsman did not abuse his discretion in determining that the allegations of petitioners
against respondents are civil in nature, bereft of criminal character. Perforce, he was correct in
dismissing petitioners' complaint-affidavits.
WHEREFORE, premises considered, the petition is hereby DISMISSED. Roberto S. Benedicto and
Salvador Tan are dropped as private respondents without prejudice to the filing of separate civil actions
against their respective estates. The assailed Joint Resolution and Order of the Ombudsman in OMB-094-1109 are AFFIRMED.

SO ORDERED.
ANTONIO EDUARDO B. NACHURA
Associate Justice
WE CONCUR:
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson
MA. ALICIA AUSTRIA-MARTINEZ
Associate Justice
MINITA V. CHICO-NAZARIO
Associate Justice
RUBEN T. REYES
Associate Justice

Deceased.

[1]

Rollo, pp. 36-54.

[2]

Id. at 55-61.

[3]

Id. at 62-99.

[4]

Television Stations

Channel

Location

1.

TV Channel 2

Metro Manila

2.

TV Channel 4

Metro Manila

3.

Batangas Channel 3

Batangas City

4.

DZBC TV Channel 3

Baguio City

5.

DYCB TV Channel 3

Cebu City

6.

DYXL TV Channel 4

Bacolod City

7.

DXAW TV Channel 4

Davao City

Radio Stations
Frequency/Call Sign

Location

1.

DZXL (AM) 620 Khz

Metro Manila

2.

DZAQ (AM) 960 Khz

Metro Manila

3.

DZYK (FM) 101.1 Khz

Metro Manila

4.

DZMM (AM) 1000 Khz

Metro Manila

5.

DZWL (AM) 830 Khz

Metro Manila

6.

DZMY (AM) 1160 Khz

Metro Manila

7.

DZYL (AM) 1340 Khz

Metro Manila

8.

DZBC (AM) 690 Khz

Baguio

9.

DZRI (AM) 1040 Khz

Dagupan

10.

DZXI (AM) 660 Khz

Laoag

11.

DZQM (AM) 1020 Khz

Lucena

12.

DZRB (AM) 750 Khz

Naga

13.

DZBL (AM) 690 Khz

Legaspi

14.

DYPL (AM) 670 Khz

Iloilo

15.

DYXL (AM) 870 Khz

Bacolod

16.

DYCB (AM) 570 Khz

Cebu

17.

DXJW (AM) 1010 Khz

Zamboanga

18.

DXCL (AM) 700 Khz

Cagayan de Oro

19.

DXAW (AM) 640 Khz

Davao

20.

DXLI (AM) 910 Khz

Iligan

21.

[5]

DXLC (AM) 660 Khz

Cotabato

Now a senator of the Republic of the Philippines.

[6]

As alleged in petitioners' complaint-affidavits, KBS and RPN are treated as one and the same entity,
unless otherwise separately identified.
[7]

Rollo, pp. 106-119.

[8]

Letter dated June 28, 1976, id. at 151.

[9]

Id. at 40-44, 47.

[10]

Id. at 59-60.

[11]

SEC. 16. Death of party; duty of counsel. - Whenever a party to a pending action dies, and the claim is
not thereby extinguished, it shall be the duty of his counsel to inform the court within thirty (30) days
after such death of the fact thereof, and to give the name and address of his legal representative or
representatives. Failure of counsel to comply with this duty shall be a ground for disciplinary action.
The heirs of the deceased may be allowed to be substituted for the deceased, without requiring the
appointment of an executor or administrator and the court may appoint a guardian ad litem for the
minor heirs.
The court shall forthwith order said legal representative or representatives to appear and be substituted
within a period of thirty (30) days from notice.
If no legal representative is named by the counsel for the deceased party, of if the one so named shall
fail to appear within the specified period, the court may order the opposing party, within a specified
time, to procure the appointment of an executor or administrator for the estate of the deceased and the
latter shall immediately appear for and on behalf of the deceased. The court charges in procuring such
appointment, if defrayed by the opposing party, may be recovered as costs.
[12]

Rollo, pp. 395-399.

[13]

G.R. No. L-40336, October 24, 1975, 67 SCRA 394.

[14]

G.R. No. 102007, September 2, 1994, 236 SCRA 239, 255-256.

[15]

Now the 2000 Revised Rules of Criminal Procedure.

[16]

See RULES OF COURT, Rule 111, Sec. 1(a).

[17]

Supra note 14.

[18]

416 Phil. 722 (2001).

[19]

Supra note 14.

[20]

Rollo, pp. 475-491.

[21]

SEC. 5. Claims which must be filed under the notice. If not filed, barred; exceptions.--All claims from
money against the decedent, arising from contract, express or implied, whether the same be due, not
due, or contingent, all claims for funeral expenses and expenses for the last sickness of the decedent,
and judgment for money against the decedent, must be filed within the time limited in the notice;
otherwise they are barred forever, except that they may be set forth as counterclaims in any action that
the executor or administrator commences an action, or prosecutes an action already commenced by the
deceased in his lifetime, the debtor may set forth by answer the claims he has against the decedent,
instead of presenting them independent to the court as herein provided, and mutual claims may be set
off against each other in such action; and if final judgment is rendered in favor of the defendant, the
amount so determined shall be considered the true balance against the estate, as though the claim had
been presented directly before the court in the administration proceedings. Claims not yet due, or
contingent, may be approved at their present value.
[22]

1987 CONSTITUTION, Art. XI, Sec. 13(1).

[23]

Republic v. Desierto, G.R. No. 135123, January 22, 2007, 512 SCRA 57.

[24]

G.R. No. 139675, July 21, 2006, 496 SCRA 112.

[25]

Id. at 121-122.

[26]

See Presidential Commission on Good Government v. Desierto, G.R. No. 139296, November 23, 2007,
538 SCRA 207, 216.
[27]

See RULES OF COURT, Rule 112, Sec. 1.

[28]

See RULES OF COURT, Rule 86, Sec. 5.

[29]

RULES OF COURT, Rule 87, Sec, 1.

SECTION 1. Actions which may and which may not be brought against executor or administrator. - No
action upon a claim for the recovery of money or debt or interest thereon shall be commenced against

the executor or administrator; but actions to recover real or personal property, or an interest therein,
from the estate, or to enforce a lien thereon, and actions to recover damages for an injury to person or
property, real or personal, may be commenced against him.
[30]

See Articles 1390 (2), 1391, 1392, 1393 and 1396 of the Civil Code.

Art. 1390. x x x
(2) Those where the consent is vitiated by mistake, violence, intimidation, undue influence or fraud.
Art. 1391. The action for annulment shall be brought within four years.
This period shall begin: In cases of intimidation, violence or undue influence, from the time the defect of
the consent ceases.
In case of mistake or fraud, from the time of the discovery of the same.
And when the action refers to contracts entered into by minors or other incapacitated persons, from the
time the guardianship ceases.
Art. 1392. Ratification extinguishes the action to annul a voidable contract.
Art. 1393. Ratification may be effected expressly or tacitly. It is understood that there is a tacit
ratification if, with knowledge of the reason which renders the contract voidable and such reason having
ceased, the person who has a right to invoke it should execute an act which necessarily implies an
intention to waive his right.
Art. 1396. Ratification cleanses the contract from all its defects from the moment it was constituted.

THIRD DIVISION
[G.R. No. 88582. March 5, 1991.]
PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. HEINRICH S. RITTER, accused-appellant.
The Solicitor General for plaintiff-appellee.
Esteban B. Bautista for accused-appellant.
SYLLABUS
1.
REMEDIAL LAW; EVIDENCE; ADMISSIBILITY OF ORAL EVIDENCE; REQUISITES. For oral
evidence to be admissible under this Rule, the requisites are: "(1) That the declarant must be dead or
outside of the Philippines or unable to testify; (2) That pedigree is in issue; (3) That the person whose
pedigree is in question must be related to the declarant by birth or marriage; (4) That the declaration
must be made before the controversy occurred or ante litem motam; and (5) That the relationship
between the declarant and the person whose pedigree is in question must as a general rule be shown by
evidence other than such act or declaration."
2.
ID.; ID.; CREDIBILITY; HUMAN MEMORY ON DATES, FRAIL. Human memory on dates or days is
frail and unless the day is an extraordinary or unusual one for the witness, there is no reasonable
assurance of its correctness. (People v. Dasig, 93 Phil. 618, 632 [1953]).
3.
ID.; ID.; BAPTISMAL CERTIFICATE; CONCLUSIVE PROOF ONLY OF BAPTISM. A baptismal
certificate is conclusive proof only of the baptism administered, in conformity with the rites of the
Catholic Church by the priest who baptized the child, but it does not prove the veracity of the
declarations and statements contained in the certificate that concern the relationship of the person
baptized. Such declarations and statements, in order that their truth may be admitted, must
indispensably be shown by proof recognized by law. (Macadangdang v. Court of Appeals, 100 SCRA 73
[1980])
4.
ID.; ID.; BURDEN OF PROOF AND PRESUMPTIONS; IN CASES OF STATUTORY RAPE, IT IS
INCUMBENT UPON THE PROSECUTION TO PROVE VICTIM'S AGE WAS LESS THAN 12 YEARS. It is not
incumbent upon the defense to prove Rosario's age. The burden of proof lies on the prosecution to
prove that Rosario was less than 12 years old at the time of the alleged incident in a charge of statutory
rape. The prosecution failed in this respect.
5.
CRIMINAL LAW; RAPE; WHERE CARNAL KNOWLEDGE DOES NOT FALL UNDER STATUTORY RAPE,
PROSECUTION MUST ESTABLISH THAT FORCE OR INTIMIDATION ATTENDED THE CRIME; CIRCUMSTANCE
NEGATED IN CASE AT BAR. Since Rosario was not established to have been under 12 years of age at
the time of the alleged sexual violation, it was necessary to prove that the usual elements of rape were
present; i.e. that there was force of intimidation or that she was deprived of reason or otherwise
unconscious in accordance with Article 335 of the Revised Penal Code. We agree with the defense that
there was no proof of such facts. On the contrary, the evidence shows that Rosario submitted herself to

the sexual advances of the appellant. In fact, she appears to have consented to the act as she was paid
P300.00 the next morning while her companion, Jessie Ramirez was paid P200.00 . The environmental
circumstances coupled with the testimonies and evidence presented in court clearly give the impression
that Rosario Baluyot, a poor street child, was a prostitute inspite of her tender age. Circumstances in life
may have forced her to submit to sex at such a young age but the circumstances do not come under the
purview of force or intimidation needed to convict for rape. In view of these clear facts which the
prosecution failed to refute, no rape was committed.
6.
REMEDIAL LAW; EVIDENCE HEARSAY; PART OF THE RES GESTAE; STATEMENT MUST BE MADE
IMMEDIATELY AFTER A STARTLING OCCURRENCE; PRINCIPLE DOES NOT APPLY IN CASE AT BAR. Jessie
Ramirez was not all certain about the sexual vibrator because he did not actually see it in the possession
of the appellant. What he merely remembers is the revelation made by Rosario the next morning that
the foreigner inserted something inside her vagina. The trial court admitted such statement as part of
the res gestae. In a strained effort to accept such statement as part of res gestae, the trial court focused
the test of admissibility on the lapse of time between the event and the utterance. For the average 13
years old, the insertion of a mechanical device or anything for that matter into the vagina of a young girl
is undoubtedly startling. For Rosario and Jessie, however, there must be more evidence to show that the
statement, given after a night's sleep had intervened, was given instinctively because the event was so
startling. Res gestae does not apply. (Section 42, Rule 130, Rules of Court).
7.
ID.; ID.; CREDIBILITY; EVIDENCE MUST NOT ONLY PROCEED FROM THE MOUTH OF A CREDIBLE
WITNESS BUT MUST BE CREDIBLE IN ITSELF. Evidence must not only proceed from the mouth of a
credible witness but it must be credible in itself such as the common experience and observation of
mankind can approve as probable under the circumstances. (People vs. Patog, 144 SCRA 429 [1986]).
8.
ID.; ID.; EXPERT OPINION; CONTROLLING AND BINDING ON THE SUPREME COURT; CASE AT BAR.
The trial court, ruled that "there is no hard and fast rule as to the time frame wherein infection sets in
upon insertion of a foreign body in the vagina canal. It should be clarified that the time frame depends
upon the kind of foreign body lodged inside the body. The subject object is certainly not considered as
inert and based on Dr. Solis' testimony, it is more likely that infection should set in much earlier.
Considering also that the object was inserted inside the vagina which is part of the generative organ of a
woman, an organ which is lined with a very thin layer of membrane with plenty of blood supply, this
part of the body is more susceptible to infection. The truth of Dr. Solis' testimony is more probable
under the circumstances of the case. We see no reason why his opinions qualified by training and
experience should not be controlling and binding upon the Court in the determination of guilt beyond
reasonable doubt. (People v. Tolentino, 166 SCRA 469 [1988]).
9.
CRIMINAL LAW; CRIMINAL LIABILITY; DEATH OF THE VICTIM MUST BE THE LOGICAL
CONSEQUENCE OF THE WOUND INFLICTED BY THE ACCUSED. The death of the victim must be the
direct, natural and logical consequence of the wounds inflicted upon him by the accused. And since we
are dealing with a criminal conviction, the proof that the accused caused the victim's death must
convince a rational mind beyond reasonable doubt. (Urbano v. Intermediate Appellate Court 157 SCRA 1
[1988])

10.
ID.; ID.; ID.; CASE AT BAR. The evidence for the accused may be numerically less as against
the number of witnesses and preponderance of evidence presented by the prosecution but there is no
direct and convincing proof that the accused was responsible for the vibrator left inside the victim's
vagina which caused her death seven (7) months after its insertion. What the prosecution managed to
establish were mere circumstances which were not sufficient to overcome the constitutional
presumption of innocence.
11.
REMEDIAL LAW; EVIDENCE, CIRCUMSTANTIAL EVIDENCE; REQUISITES TO SUPPORT A
CONVICTION. While circumstantial evidence may suffice to support a conviction it is imperative,
though, that the following requisites should concur: (a)There is more than one circumstance; (b) The
facts from which the inferences are derived are proven; and (c) The combination of all the circumstances
is such as to produce a conviction beyond reasonable doubt. (Rule 133, Sec. 4 Revised Rules of Court)
12.
ID.; ID.; ID.; MUST EXCLUDE EVERY HYPOTHESIS OF INNOCENCE. Before conviction can be had
upon circumstantial evidence, the circumstances proved should constitute an unbroken chain which
leads to one fair and reasonable conclusion pointing to the defendant, to the exclusion of all others, as
the author of the crime (People v. Subano, 73 Phil. 692 [1942] ). It must fairly exclude every reasonable
hypothesis of innocence (Dorado v. Court of Appeals, 153 SCRA 420, 433 [1987]).
13.
ID.; ID.; GUILT BEYOND REASONABLE DOUBT; NOT PROVEN IN CASE AT BAR. It was
improbable, according to expert medical testimony, for a foreign object with active properties to cause
pain, discomfort, and serious infection only after seven months inside a young girl's vaginal canal.
Infection would have set in much earlier. The long delay of seven (7) months after the incident in
reporting the alleged crime renders the evidence for the prosecution insufficient to establish appellant's
guilty connection with the requisite moral certainty. (See People v. Mula Cruz, 129 SCRA 156 [1984]).
14
ID.; ID.; SUSPICIONS AND IMPROBABILITIES, NOT TAKEN AGAINST AN ACCUSED. Suspicions
and possibilities are not evidence and therefore should not be taken against the accused. (People v.
Tolentino, supra)
15.
ID., CRIMINAL PROCEDURE; EVERY CIRCUMSTANCE FAVORABLE TO THE ACCUSED SHOULD BE
DULY TAKEN INTO ACCOUNT. Every circumstance favorable to the accused should be duly taken into
account. This rule applies even to hardened criminals or those whose bizarre behaviour violates the
mores of civilized society. The evidence against the accused must survive the test of reason. The
strongest suspicion must not be allowed to sway judgment. (See Sacay v. Sandiganbayan, 142 SCRA 593
[1986]).
16.
ID.; EVIDENCE; PROOF BEYOND REASONABLE DOUBT, CONSTRUED. The requirement of proof
beyond reasonable doubt calls for moral certainty of guilt. It has been defined as meaning such proof 'to
the satisfaction of the court, keeping in mind the presumption of innocence, as precludes every
reasonable hypothesis except that which it is given to support. It is not sufficient for the proof to
establish a probability, even though strong, that the fact charged is more likely to be true than the
contrary. It must establish the truth of the fact to a reasonable and moral certainty a certainty that
convinces and satisfies the reason and the conscience of those who are to act upon it." (Moreno,

Philippine Law Dictionary, 1972 Edition, p. 379, citing U.S. v. Reyes, 3 Phil. 3; People v. Ng, 142 SCRA 615
[1986])
17.
CONSTITUTIONAL LAW; DECLARATION OF PRINCIPLES AND STATE POLICIES; PEDOPHILIA; AN
INFRINGEMENT THEREOF. Pedophilia is clearly a behavior offensive to public morals and violative of
the declared policy of the state to promote and protect the physical, moral, spiritual and social wellbeing of our youth. (Article II, Section 13, 1987 Constitution; Harvey v. Defensor Santiago, 162 SCRA 840,
848 [1989]).
18.
ID.; ID.; ID.; ID.; EXPULSION OF ALIEN FROM THE PHILIPPINES, WARRANTED. In this case,
there is reasonable ground to believe that the appellant committed acts injurious not only to Rosario
Baluyot but also to the public good and domestic tranquility of the people. The state has expressly
committed itself to defend the right of children to assistance and special protection from all forms of
neglect, abuse, cruelty, exploitation and other conditions prejudicial to their development. (Art. XV,
Section 3 [2] . . . (Harvey v. Santiago, supra). The appellant has abused Filipino children, enticing them
with money. The appellant should be expelled from the country.
19
REMEDIAL LAW; ACTIONS; A PERSON WHILE NOT CRIMINALLY LIABLE MAY STILL BE CIVILLY
LIABLE It does not necessarily follow that the appellant is also free from civil liability which is
impliedly instituted with the criminal action. (Rule III, Section 1) The well-settled doctrine is that a
person while not criminally liable, may still be civilly liable. The appellant is ordered to pay the amount
of P30,000.00 by way of moral and exemplary damages to the heirs of Rosario Baluyot.
DECISION
GUTIERREZ, JR., J p:
The appellant challenges his conviction of the crime involving a young girl of about 12 years old who had
been allegedly raped and who later died because of a foreign object left inside her vaginal canal. LLpr
Heinrich Stefan Ritter was charged with the crime of rape with homicide under an information which
reads:
"That on or about the tenth (10th) day of October, 1986 in the City of Olongapo, Philippines, and within
the jurisdiction of this Honorable Court, the above-named accused with lewd design and with intent to
kill one Rosario Baluyot, a woman under twelve (12) years of age, did then and there wilfully, unlawfully
and feloniously have carnal knowledge of said Rosario Baluyot and inserted a foreign object into the
vaginal canal of said Rosario Baluyot which caused her death shortly thereafter, to the damage and
prejudice of her relatives." (66)
When arraigned, the accused pleaded "Not Guilty". Thereafter, the case was set for trial on the merits.
To prove the guilt of the accused, the prosecutor presented the following witnesses, namely: (1) Jessie
Ramirez, (2) Maria Burgos y Turla, (3) P/Cpl. Mariano Victoria, (4) Policarpio Baluyot, (5) Dr. Reino
Rosete, (6) Sumulong Daniel, (7) Jessica Herrera, (8) Sister Eva Palencia, (9) Conrado Salonga, (10) Dr.

Devonne Loop, (11) Dr. Leo Cruz, (12) Paul Maclor, (13) Aida Sarmiento, (14) Patricia Prollamanta, (15)
Mel Santos, (16) Lorna Limos, (17) Eduard Lee Bungarner, (18) Ronaldo Marquez, (19) Tom Bonte, (20)
2nd Asst. City Fiscal Nini Alcala, (21) 1st Asst. City Fiscal Dorentino Z. Floresta, (22) Corazon Caber, (23)
Rodolfo Mercurio and (24) Fe Israel.
On the other hand, the defense offered in evidence Exhibits "1" to "24" and the testimonies of (1)
Heinrich S. Ritter, (2) Father Roque Villanueva, (3) Angelita Amulong, (4) Gaspar Alcantara, (5) Dr. Val
Barcinal and (6) Dr. Pedro C. Solis.
The facts of the case upon which the lower court based its finding of guilt beyond reasonable doubt are
summarized in its decision, as follows:
"The people's evidence show that on October 10, 1986 about midnight, accused Heinrich Stefan Ritter
brought a boy and girl namely: Jessie Ramirez and Rosario Baluyot inside his hotel room at MGM Hotel
along Magsaysay Drive, Olongapo City. These two (2) children were chosen from among a bunch of
street children. Once inside the hotel room accused told them to take a bath. Jessie Ramirez, alias
'Egan', was the first to take a bath and when he came out Rosario Baluyot went to the bathroom to do
the same. While Rosario Baluyot was inside the bathroom, accused Ritter took out some pictures
depicting dressed up young boys, and put them on top of the table. Other things which were taken out
and placed on top of a table were three (3) other objects which he described as like that of a vicks
inhaler. One of these objects the accused played with his hands and placed it on his palms. The color of
which is grayish blue which turned out later to be the foreign object which was inserted inside the
vagina of Rosario Baluyot. The other objects were later established to be anti-nasal inhalers against
pollution purchased by the accused in Bangkok when he went there as a tourist. While Rosario was in
the bathroom, accused told Ramirez to lay down on bed, and so did the accused. He then started
masturbating the young boy and also guided the boy's hand for him to be masturbated, so that they
masturbated each other, while they were both naked, and he gave Jessie Ramirez an erection. When
Rosario Baluyot came out of the bathroom, she was told to remove her clothes by accused and to join
him in bed. The accused then placed himself between the two (2) children and accused started fingering
Rosario.
At this time, Ramirez was already sleepy, but Rosario touched him to call his attention. He looked, and
he saw accused placing his penis against the vagina of Rosario and that he was trying to penetrate the
vagina but it would not fit. After what he saw, Ramirez did not anymore bother to look because he was
sleepy and fell asleep.
The following morning, the accused, whom the juveniles described as an 'American, paid Ramirez alias
'Egan' P200.00 and Rosario P300.00. He then left them in the hotel. After the American left, they went
downstairs, and Rosario told Egan that the American inserted something in her vagina. But they could
not do anything anymore, because the American had already left, and neither did they report the matter
to the police. Sometime the following day, Jessie saw Rosario and he asked her whether the object was
already removed from her body and Rosario said 'Yes'. However, Jessie Ramirez claimed that on the
evening of that same date, he saw Rosario and she was complaining of pain in her vagina and when Egan

asked her, she said that the foreign object was not yet removed. Then there was another occasion
wherein Jessie was summoned and when he came he saw Rosario writhing in pain and when he tried to
talk to Rosario she scolded him with defamatory remarks. Thereafter, he did not see Rosario anymore
because he already went home to his aunt's house who resided at Barrio Barretto and resumed his
studies in the primary grades.
On May 14, 1987, Gaspar Alcantara, a defense witness, while garbage scavenging at Lot 21, near the
gate of the U.S. Naval Base saw Rosario at Magsaysay Drive near the Happy Bake Shop near Lot 21,
being ogled by people because Rosario's skirt was bloodied and she was unconscious and foul smelling.
Since nobody helped Rosario, he took pity on her condition and brought her to the Olongapo City
General Hospital in an unconscious condition, via jeepney. He went to the Information desk and he was
the one who gave the personal circumstances of Rosario as to her name, age, her residence as
Nagbakulaw, Lower Kalaklan, and Gaspar Alcantara signed as 'guardian' of Rosario, while Rosario was
already in the emergency room. Although Gaspar Alcantara denied that he did not know the name of
Rosario Baluyot when he brought her to the hospital, this is belied by the testimony of the Information
clerk Lorna Limos, who was then on duty. Limos testified that it was Alcantara who supplied the
personal circumstances of Rosario. The Court gives more credence to the testimony of Miss Limos as
against Gaspar Alcantara who became a defense witness, for the reason that through his own
testimony, Gaspar Alcantara claimed that even prior to May 14, 1987, he had already known Rosario
Baluyot for more than one (1 ) year, because he has seen the said girl go to the house of his twin
brother, Melchor Alcantara, who is his immediate neighbor. Rosario used to visit a girl by the name of
'Nora' who was then in the custody of his brother. His brother Melchor was also living with their mother,
brother and sister-in-law and their two (2) children in his house. Rosario as per Gaspar's testimony even
stays for one week or a few days at his brother's house when she visits Nora. So the Court can safely
assume that of all the more than one (1) year that he had regularly seen Rosario at his brother's house,
he must have already did come to know the name of Rosario Baluyot including her age. In his testimony
in Court he stated that he even asked Rosario for movie and softdrinks money which can safely be
concluded that he knows her very well. It is against normal behavior especially to a Filipino who have a
characteristic of curiosity not to have found out the real name of the girl he claims to know only as
'Tomboy'.
While Rosario Baluyot was confined at the Olongapo City General Hospital, nobody was attending to her
since she is a street child, having stowed away from the custody of her grandmother. Three (3) good
samaritans who belong to religious and civic organizations, in the persons of Jessica Herrera, Fe Israel
and Sr. Eva Palencia, in one of their missions in the hospital chanced upon Rosario Baluyot who was all
alone with no relatives attending to her and after finding out that she was only 12 years old decided to
help her. After a short interview with Rosario, regarding her name and age only because she clamped up
about her residence and her relatives, they decided to help her by providing her the medicine she
needed during her confinement in readiness for an operation. It was Fe Israel who was able to get the
name and age of Rosario Baluyot from Rosario Baluyot herself when she saw her for the first time. For
Fe Israel, the age of Rosario Baluyot was an important factor because their program assisted only
indigent patients from infants up to 13 years old.

Rosario's first ailment at the Olongapo City General Hospital was loose bowel movement and vomiting,
which was first suspected as gastro-enteritis, but which came out later as symptoms of peritonitis due to
a massive infection in the abdominal cavity. Subsequently, on May 17, 1987, after she was examined by
the physicians at the hospital, it was found out that there was a foreign object lodged in her vaginal
canal and she had vaginal discharge tinged with blood and foul smelling odor emanating from her body.
One of the doctors who attended to her was Dr. Barcinal, an OB-GYNE. Dr. Barcinal tried to extract the
foreign object by means of a forceps, but several attempts proved futile because said object was deeply
embedded in the vaginal canal and was covered by tissues. Her abdomen was enlarged, tender and
distended, symptoms of peritonitis. The patient was feverish and incoherent when she was scheduled
for operation on May 19, 1987, after the first attempt for an operation on May 17 was aborted allegedly
because the consent of Dr. Reino Rosete, the hospital director was not obtained. The surgeon who
operated on her was Dr. Rosete himself. He testified that Rosario had to be operated even in that
condition in order to save her life. Her condition was guarded. This was corroborated by Dr. Leo Cruz,
the anesthesiologist during Rosario's operation. It was in the evening of May 19 at about 7:00 p.m. when
Dr. Rosete opened her abdomen by making a 5 inch incision on her stomach. He found out that the
fallopian tubes were congested with pus, and so with the peritonium, and the pelvic cavity, and patches
of pus in the liver, although the gallbladder and kidney appeared to have septicemia, poisoning of the
blood. The peritonitis and septicemia were traced to have been caused through infection by the foreign
object which has been lodged in the intra-vaginal canal of Rosario. The foreign object which was already
agreed upon by both parties that it is a portion of a sexual vibrator was extracted from the vagina of
Rosario while under anesthesia. Said object was coated with tissues, pus and blood. Dr. Rosete gave it to
the assisting surgical nurse for safekeeping and gave instructions to release it to the authorized person.
This object was shown by the nurse to Dr. Leo Cruz. Dr. Rosete considered the operation successful and
the patient was alive when he left her under Dr. Cruz. Dr. Cruz stayed with said patient in the ward for
about 30 minutes and thereafter he left. The following day, Rosario got serious and it was Dr. Leo Cruz
who pronounced her death at 2:00 to 2:15 in the afternoon of May 20, 1987.
Thereafter, a death certificate was prepared under the direction of Dr. Cruz which was indicated therein
that the cause of death was cardio-respiratory arrest, secondary to septicemia caused by the foreign
object lodged in the intra uteral vaginal canal of Rosario Baluyot.
The foreign object was washed by nurse Obedina, then placed it in a transparent small jar and labelled
"Rosario Baluyot". Jessica Herrera asked the nurse for the foreign object, and it was given to her under
proper receipt. Herrera then showed the same to the persons who helped financially Rosario's case, and
afterwards she gave it to Sister Eva Palencia. Sis. Palencia was in custody of the said object until Mr.
Salonga came and asked her for the object.
After Rosario Baluyot died, Sis. Palencia and a companion went to Gaspar Alcantara to ask him in
locating the relatives of Rosario. They were able to trace Rosario's grandmother, Mrs. Maria Burgos
Turla, and informed her that her granddaughter was already dead and lying in state at St. Martin Funeral
Parlor. Mrs. Turla went there with her son, who shouldered all the burial expenses for Rosario.

Subsequently, Sis. Palencia, Fr. Cullens and Mr. Salonga came to her residence at Sta. Rita and asked her
if she was interested in filing a case against the person who caused the death of her granddaughter. Of
course she agreed. Hence, she was brought to the Fiscal's (City) Office to file the same.
After the case was filed against the herein accused, Atty. Edmundo Legaspi with his messenger came to
her house and told her that the accused was willing to settle the case, but that accused Ritter had only
P15,000.00. The old woman did not accept it because she knows that the accused is liable to pay
damages anyway. After that, she received a letter from Atty. Legaspi telling her to get a lawyer for her
case. By this time, Mrs. Turla, who wanted to have the case settled once and for all giving the reason
that she can no longer bear the situation, sent her nephew, Conrado Marcelo to Atty. Legaspi. Her
nephew obliged and told her that she will be paid at the office of Atty. Legaspi. On a date not clear in
the records, she went with her nephew Conrado Marcelo, and Roberto Sundiam, an assistant barangay
tanod of Sta. Rita, and while they were there, she saw Ritter arrive at the law office. Ritter and Atty.
Legaspi talked at the office near the bathroom, and thereafter Ritter left. After he left, Atty. Legaspi told
Rosario's grandmother that they are willing to settle for P20,000.00, but that Ritter left only P15,000.00,
so she received the money with the understanding that there was a balance of P5,000.00 yet. She was
made to sign a statement, and she was asked to change the age of her granddaughter Rosario. With the
document prepared, she and the lawyer's messenger went to the Fiscal's office to have it subscribed,
and was subscribed before an assistant city fiscal. But the balance of P5,000.00 was not paid, because
later on Atty. Legaspi became the OIC of Olongapo City and he could no longer attend to it. Atty.
Legaspi, during one of the hearings before the Court even apologized to her.
As to the case, P/Cpl Marino Victoria, as criminal investigator of Station "A", was directed by Col. Daos,
Station Commander of the Olongapo Police Department to make a follow up of the case of Rosario
Baluyot. On the other hand, since the suspect who inserted the foreign object inside Rosario's vagina
was said to be an American, the NISRA, Subic Naval Base also conducted its investigation headed by
criminal investigator Agent Conrado Salonga. Coordinating with the local police and with Sister Eva
Palencia, since Rosario was a street child at Magsaysay Drive, they rounded up about 43 street children
and from some of them they learned that Rosario Baluyot was with Jessie Ramirez with an American at
the MGM Hotel when the foreign object was inserted in her vagina. After finding Jessie Ramirez, they
asked him about Rosario Baluyot. They found out that indeed he was with Rosario Baluyot sometime
before Christmas of 1986 with an American, who brought them to the said hotel. Jessie Ramirez was
taken inside the U.S. Naval Base, Olongapo City and took his statement. Then he was brought to Mr.
Edward Lee Bungarner, a cartographer, and out of the description supplied by Ramirez, a composite
drawing was photocopied and copies thereof were distributed to the local police and to the sentries at
the gate of the U.S. Naval Base. Some American servicemen who had resemblance to the composite
drawing were photographed and these were shown to Jessie Ramirez, but the result was negative. Aside
from the physical description by Ramirez about the appearance of the suspect, he also described him as
having the mannerisms of a homo-sexual.
After obtaining information that foreign homo-sexuals frequented Ermita, Manila, and thinking that the
so-called American may be European or Australian national, the team composed of Agent Salonga, Mr.
Heinsell, P/Cpl Marino Victoria and P/Cpl Andres Montaon, Jessie Ramirez and Michael Johnson, another

juvenile, proceeded to Manila. They first went to the Manila NISRA Office, and thereafter checked in a
hotel. That was on September 23, 1987. On the first night, they went to Luneta Park where foreign
homo-sexuals were said to be frequenting, but the result was negative. Then on September 25, at about
11:00 p.m., while they were standing at the corner of A. Mabini and M.H. del Pilar Street, a male
caucasian who looked like a homo-sexual stopped by admiringly infront of the two (2) juveniles, Ramirez
and Johnson. Jessie Ramirez then reported to Mr. Salonga that this foreigner had a similarity with the
American suspect, so the two minors were instructed to follow the foreigner and to strike a
conversation. They did, and when they returned, Jessie Ramirez told them that indeed the said foreigner
was the one who brought him and Rosario Baluyot to the MGM Hotel. Bobby Salonga told Ramirez that
this foreigner had no beard while the one previously described by Ramirez had a beard. Jessie Ramirez
told them that maybe he have just shaved it off. The said caucasian then entered a bar, and after several
minutes he came out, and Jessie Ramirez upon his signal with his thumbs up, as a signal to confirm that
the said foreigner is the suspect, arrested Ritter and brought him to the Manila Western Police District.
It could be mentioned at this stage that in this operation they were accompanied by two (2) policemen
from the Western Police District. The foreigner was hand cuffed and was told that he was a suspect for
Rape with Homicide. After the arrest, they first went to the pension house of the suspect in Ermita,
Manila to get his shoulder bag which contained his personal belongings, and from there they brought
him to the Western Police Department. At the said police headquarters, they were allowed a permissive
search by the foreigner of his clutch bag and his small shoulder bag and confiscated his passport, I.D., 3
inhalers, money in the form of dollars and travellers checks amounting about $1,500.00 and about
P100.00, all duly receipted for. From the passport they learned that the suspect's name was Heinrich
Stefan Ritter, an Austrian national. During the questioning of Ritter, Salonga and his team already left
the headquarters and went to their hotel, because at this time Jessie Ramirez was already shaking with
fear after he identified the accused.
The following day, they brought the accused to Olongapo and was detained at the Olongapo City Jail.
The case for Rape with Homicide was filed against him at the City Fiscal of Olongapo. At the preliminary
investigation, accused was assisted by his own counsel. The private complainant was Maria Burgos Turla
because it was she who had custody of Rosario Baluyot after her mother Anita Burgos died on January
12, 1982, and their father Policarpio Baluyot had left them under her custody. When this case was filed,
the father's whereabouts was unknown, and he only appeared when the trial of this case before the
Court was already in progress. And upon his (Policarpio Baluyot) own admission, he only learned about
the death of his daughter Rosario Baluyot from the newspaper, long after Rosario was already gone.
The defense tried to dislodge the case by claiming that there could be no crime of Rape with Homicide
because the suspect was described as an American while Ritter is an Austrian. Also advanced by the
defense is that, it is a case of mistaken identity. That Rosario Baluyot was at the time of the commission
of the offense, already more than 13 years old, she having been born on December 26, 1973 as per
baptismal certificate, wherein it appears that Rosario Baluyot was baptized on December 25, 1974 and
was born on December 26, 1973 as testified to by Fr. Roque Villanueva of St. James Parish Church who
issued the Baptismal Certificate, having custody and possession of the book of baptism for the year
1975, but admitted that he had no personal knowledge about the matters or entries entered therein.

likewise, the defense's stand is that the accused cannot be liable for Homicide because a vibrator is not
a weapon of death but it is a thing for the purpose of giving sexual pleasure, and that the death of
Rosario Baluyot was due to the incompetence of Dr. Rosete, the surgeon and Director of the Olongapo
City General Hospital, who operated on her." (Rollo, pp. 109-116)
On March 29, 1989, the trial court rendered its decision. The dispositive portion of the decision reads as
follows:
"WHEREFORE, IN VIEW OF ALL THE FOREGOING, the Court holds, that the prosecution has established
the GUILT of the accused beyond reasonable doubt for the crime of Rape with Homicide as defined and
penalized in Art. 335 No. 3 of the Revised Penal Code, and hereby sentences HEINRICH STEFAN RITTER
to a penalty of RECLUSION PERPETUA, to indemnify the heirs of the deceased in the sum of SIXTY
THOUSAND PESOS (P60,000.00) Philippine Currency, and TEN THOUSAND PESOS (P10,000.00) by way of
attorney's fees to the private prosecutors and to pay the costs." (Rollo, p. 126)
The accused now comes to this Court on the following assigned errors allegedly committed by the court:
I
THE TRIAL COURT GRAVELY ERRED AND ABUSED ITS DISCRETION IN FINDING THAT THE ALLEGED
OFFENSE WAS COMMITTED ON OCTOBER 10, 1986 AND THAT IT WAS ACCUSED-APPELLANT WHO
COMMITTED IT.
II
THE TRIAL COURT GRAVELY ERRED AND ABUSED ITS DISCRETION IN FINDING THAT ROSARIO BALUYOT
WAS LESS THAN TWELVE (12) YEARS OLD WHEN THE ALLEGED OFFENSE WAS COMMITTED AND IN
HOLDING THAT THERE WAS RAPE WITH HOMICIDE.
III
THE TRIAL COURT GRAVELY ERRED AND ABUSED ITS DISCRETION IN GIVING CREDENCE TO AND NOT
REJECTING THE PROSECUTION'S EVIDENCE AND IN NOT UPHOLDING THAT OF THE DEFENSE AND
ACQUITTING THE ACCUSED.
Inasmuch as it is the bounden duty of this Court to affirm a judgment of conviction only if the guilt of the
accused has been proved beyond reasonable doubt, it behooves us to exert the most painstaking effort
to examine the records in the light of the arguments of both parties if only to satisfy judicial conscience
that the appellant indeed committed the criminal act (See People v. Villapana, 161 SCRA 73 [1988]).
The appellant was convicted by the trial court of the crime of rape with homicide of a young girl who
died after the rape because of a foreign object, believed to be a sexual vibrator, left inside her vagina.
As stated by the trial court one crucial issue in this case is the age of the victim whether or not
Rosario Baluyot was less than twelve (12) years old at the time the alleged incident happened on
October 10, 1986. The age is important in determining whether or not there was statutory rape. Article

335 of the Revised Penal Code defines the third type of rape as having carnal knowledge of a woman
under 12 years of age, in which case force, intimidation, deprivation of reason or unconscious state do
not have to be present. prLL
The trial court found that Rosario was below 12 years old when she was sexually abused by the accused
and, therefore, rape was committed inspite of the absence of force or intimidation.
In resolving the issue, the trial court put great weight on the testimonies of the victim's grandmother
and father who testified that she was born on December 22, 1975. These oral declarations were
admitted pursuant to then Rule 130, Section 33 of the Rules of Court where, in the absence of a birth
certificate, the act or declaration about pedigree may be received in evidence on any notable fact in the
life of a member of the family. Since birth is a matter of pedigree within the rule which permits the
admission of hearsay evidence, oral declarations are therefore admissible as proof of birth (Decision, p.
54). llcd
The grandmother, Maria Burgos Turla, testified that she remembered Rosario's birth date because her
brother died in Pampanga and her daughter, Anita (Rosario's mother) was the only one who failed to
attend the funeral because the latter has just given birth allegedly to Rosario (T.S.N. p. 8, Jan. 13, 1988).
The father likewise testified that as far as he could remember, Rosario was born on December 22, 1975
(T.S.N., p. 4, Jan. 27, 1988) and he was certain that Rosario was more than one (1) year old when she
was baptized (T.S.N., p. 45, Jan. 27, 1988).
The trial court further added that their testimony is supported by the clinical record and the death
certificate indicating that she was 12 years old when she was admitted at the Olongapo City General
Hospital for treatment. The age was supplied by Rosario's alleged guardian, Gaspar Alcantara to the
hospital's clinical record clerk, Lorna Limos. Fe Israel, a social worker who interviewed Rosario Baluyot
also testified that she was told by Rosario that she was 12 years old. The trial court accepted this as
adequate evidence of the truth. Moreover, Jessie Ramirez, the principal witness in this case declared
that he was born on September 5, 1973 and that he was older than Rosario Baluyot. Therefore, since he
was 13 years old in 1986, Rosario must have been less than 12 years old in 1986. (Decision, p. 55) Cdpr
The trial court concluded that the oral declarations of the grandmother and father supported by other
independent evidence such as the clinical record, death certificate and the testimonies of Fe Israel and
Jessie Ramirez, rendered the baptismal certificate presented by the defense without any probative or
evidentiary value. (Decision, p. 55)
The findings of the trial court with respect to Rosario Baluyot's age cannot stand the application of
evidentiary rules.
The trial court relied on Section 33, Rule 130 (now Section 40 of Rule 130 of the 1989 Revised Rules of
Court).
For oral evidence to be admissible under this Rule, the requisites are:

(1)

That the declarant must be dead or outside of the Philippines or unable to testify;

(2)

That pedigree is in issue;

(3)
That the person whose pedigree is in question must be related to the declarant by birth or
marriage;
(4)

That the declaration must be made before the controversy occurred or ante litem motam; and

(5)
That the relationship between the declarant and the person whose pedigree is in question must
as a general rule be shown by evidence other than such act or declaration."
These requirements were not satisfied by the evidence for the prosecution nor do the declarations fall
within the purview of the rule.
The victim's grandmother and father whose declarations regarding Rosario's age were admitted by the
trial court are both alive, in the Philippines and able to testify as they both did testify in court. Their
declarations were made at the trial which is certainly not before the controversy arose. The other
witnesses who testified on Rosario's age are not members of the victim's family. The testimonies of
Rosario's relatives must be weighed according to their own personal knowledge of what happened and
not as hearsay evidence on matters of family history. cdphil
At this point, we find the evidence regarding Rosario's age of doubtful value.
The trial court justified the admissibility of the grandmother's testimony pursuant to the ruling laid
down in U.S. v. Bergantino, (3 Phil., 118 [1903]) where the Court accepted the testimony of the mother
that her daughter was 14 years old and 4 months old. The mother stated that she knew the age because
the child was born about the time of the cholera epidemic of 1889. This was not hearsay, but came from
one who had direct knowledge of the child's birth.
It is however, equally true that human memory on dates or days is frail and unless the day is an
extraordinary or unusual one for the witness, there is no reasonable assurance of its correctness.
(People v. Dasig, 93 Phil. 618, 632 [1953]).
With respect to the grandmother's testimony, the date of the brother's death or funeral was never
established, which indicates that the day was rather insignificant to be remembered. The father's
declaration is likewise not entirely reliable. His testimony in court does not at all show that he had direct
knowledge of his daughter's birth. He was certain though that she was more than one (1) year old at the
time she was baptized.
The other witnesses are not at all competent to testify on the victim's age, nor was there any basis
shown to establish their competence for the purpose. The clinical records were based on Gaspar
Alcantara's incompetent information given when he brought the victim to the hospital. Alcantara came
to know her only about a year before her death. He had absolutely no knowledge about the

circumstances of Rosario's birth. The death certificate relied upon by the trial court was merely based on
the clinical records. It is even less reliable as a record of birth.
All the evidence presented by the prosecution showing that Rosario Baluyot was less than 12 years old
at the time of the alleged incident are not adequate to establish the exact date of birth, much less offset
a documentary record showing a different date.
The defense presented Rosario Baluyot's baptismal certificate which the trial court rejected as being
hearsay and of no value. As against the oral declarations made by interested witnesses establishing
Rosario's age to be less than 12 years old, the evidence on record is more convincing and worthy of
belief. (See Filinvest Land, Inc. v. Court of Appeals, 183 SCRA 664, 673 [1990]).
By virtue of a subpoena duces tecum and ad testificandum, issued by the lower court to the St. James
Parish Church, Subic, Zambales, Fr. Roque Villanueva a Roman Catholic priest testified and stated that he
is the head of said parish. He brought with him Baptismal Register No. 9 entitled "Liber Baptisnorum", a
latin term for baptismal book or record. On page 151, No. 3 of the said Registry Book, there appears the
name of Rosario Baluyot who was baptized on December 25, 1974, and born on December 26, 1973.
Parents are Policarpio Baluyot and Anita Burgos, residents of Subic, Zambales. Edita R. Milan appears as
the only sponsor with Olongapo City as her address. LLjur
In the case of Macadangdang v. Court of Appeals (100 SCRA 73 [1980]), we held that:
xxx

xxx

xxx

"In our jurisprudence, this Court has been more definite in its pronouncements on the value of
baptismal certificates. It thus ruled that while baptismal and marriage certificates may be considered
public documents, they are evidence only to prove the administration of the sacraments on the dates
therein specified but not the veracity of the status or declarations made therein with respect to his
kinsfolk and/or citizenship (Paa v. Chan, L-25945, Oct. 31, 1967). Again, in the case of Fortus v. Novero
(L-22378, 23 SCRA 1331 [1968]), this Court held that a baptismal certificate is conclusive proof only of
the baptism administered, in conformity with the rites of the Catholic Church by the priest who baptized
the child, but it does not prove the veracity of the declarations and statements contained in the
certificate that concern the relationship of the person baptized. Such declarations and statements, in
order that their truth may be admitted, must indispensably be shown by proof recognized by law." (At
pp. 84-85)
In the same light, the entries made in the Registry Book may be considered as entries made in the
course of business under Section 43 of Rule 130, which is an exception to the hearsay rule. The baptisms
administered by the church are one of its transactions in the exercise of ecclesiastical duties and
recorded in a book of the church during the course of its business. (U.S. v. de Vera, 28 Phil. 105 [1914])
Hence, the certificate (Exhibit "22") presented by the defense that Rosario Baluyot was baptized on
December 25, 1974 may be admitted in evidence as proof of baptism. Policarpio Baluyot, the victim's
father testified that he had in his possession a baptismal certificate different from the one presented in
court. However, no other baptismal record was ever presented to prove a date different from that

brought by the official custodian. Since the baptismal certificate states that Rosario was baptized on
December 25, 1974, it is therefore highly improbable that Rosario could have been born on December
22, 1975. She could not have been baptized before she was born. Exhibit "22" may be proof only of
baptism but it puts a lie to the declaration that Rosario was born in 1975. With the father's assertion
that Rosario was more than one (1) year old when she was baptized, we are then more inclined to agree
that Rosario was born in 1973 as stated in the Baptismal Registry. Cdpr
In the case of People v. Rebancos (172 SCRA 425 [1989]), the Court stated:
xxx

xxx

xxx

". . . Although no birth certificate was presented because her birth had allegedly not been registered,
her baptismal certificate, coupled by her mother's testimony, was sufficient to establish that Mary Rose
was below twelve years old when she was violated by Rebancos." (At. p. 426)
Unfortunately, in the instant case, nobody could corroborate the date on a more reliable document as
to Rosario's birth which could serve as sufficient proof that she was born on December 26, 1973.
Therefore, she was more than 12 years old at the time of the alleged incident on October 10, 1986.
Moreover, it is not incumbent upon the defense to prove Rosario's age. The burden of proof lies on the
prosecution to prove that Rosario was less than 12 years old at the time of the alleged incident in a
charge of statutory rape. The prosecution failed in this respect.
Since Rosario was not established to have been under 12 years of age at the time of the alleged sexual
violation, it was necessary to prove that the usual elements of rape were present; i.e. that there was
force of intimidation or that she was deprived of reason or otherwise unconscious in accordance with
Article 335 of the Revised Penal Code.
We agree with the defense that there was no proof of such facts. On the contrary, the evidence shows
that Rosario submitted herself to the sexual advances of the appellant. In fact, she appears to have
consented to the act as she was paid P300.00 the next morning while her companion, Jessie Ramirez
was paid P200.00 (T.S.N. p. 50, January 6, 1988). The environmental circumstances coupled with the
testimonies and evidence presented in court clearly give the impression that Rosario Baluyot, a poor
street child, was a prostitute inspite of her tender age. Circumstances in life may have forced her to
submit to sex at such a young age but the circumstances do not come under the purview of force or
intimidation needed to convict for rape.
In view of these clear facts which the prosecution failed to refute, no rape was committed. But was
Ritter guilty of homicide?
The trial court justified its ruling by saying that the death of the victim was a consequence of the
insertion of the foreign object into the victim's vagina by the appellant.
We now ask "Was the appellant responsible for the sexual vibrator left inside Rosario's vagina which led
to her death?

The trial court convicted the accused based on circumstantial evidence. Unfortunately, the
circumstances are capable of varying interpretations and are not enough to justify conviction.
Jessie Ramirez, the principal witness did not actually see the object inserted in Rosario's vagina. Neither
could he identify the object (Exhibit "C-2") taken from Rosario as the same object which the appellant
was holding at that time of the alleged incident.
In his sworn statement given to the police investigator on September 4, 1987, he answered that:
xxx

xxx

xxx

"T
Habang kayo ay nasa loob ng kuwarto ng otel, mayroon ka bang napansin na inilabas ng kano sa
kanyang dala-dalahan kung mayroon man?
S
Ang Amerikano ay may dala-dalang shoulder bag na kulay itim, at napansin ko na may inilabas
siya sa kanyang bag na parang vicks inhaler, na kanyang inamoy-amoy habang nasa otel kami at
pagkatapos niya ay inilapag niya sa lamiseta.
T

Ilarawan mo nga sa akin ang bagay na nakita mong inilabas ng Amerikano?

S
Ito ay may habang tatlong pulgada at ang takip nito ay may habang dalawang pulgada. Iyong
takip ay bilog na patulis at may tabang mga kalahating pulgada. Hindi ko napansin ang hugis ng dulo ng
bagay na may takip dahil natatakpan ng kamay at ilong ng Amerikano.
T
Ipinakikita ko sa iyo ang isang larawan. Tignan mong mabuti ang larawang ito at sabihin mo nga
sa akin kung makikilala mo ang mga bagay na nasa larawang ito, na may kinalaman sa nakita mong
kinuha ng Amerikano sa kanyang bag?
S
Napansin ko na ang kulay asul na bagay sa larawan ay katulad na katulad noong takip ng bagay
na inilabas ng Amerikano sa kanyang bag. Kaya lang ay bakit naging kulay asul gayong ng makita ko ito
ay kulay puti? (Exhibit "A", p. 2; Emphasis Supplied).
Presumably, what Jessie Ramirez saw was merely the Vicks inhaler which the appellant does not deny
having possessed at that time. He was certain that the object was white. (T.S.N. p. 91, January 6, 1988).
Later, Ramirez retracted and corrected himself. He said that it was grayish in color with color blue
(Medyo kulay abo na may kulay na parang blue). (T.S.N. p. 92, January 6, 1988) The inconsistency of the
witness' testimony casts doubt as to the veracity of the statements made especially when he answered
on additional cross-examination that the reason why he concluded that Exhibit "C-2" was the same
object being held by Ritter was because it was the only one shown to him by the prosecution (T.S.N. pp.
109-110, January 6, 1988). Jessie Ramirez was not all certain about the sexual vibrator because he did
not actually see it in the possession of the appellant.
What he merely remembers is the revelation made by Rosario the next morning that the foreigner
inserted something inside her vagina. The trial court admitted such statement as part of the res gestae.
In a strained effort to accept such statement as part of res gestae, the trial court focused the test of

admissibility on the lapse of time between the event and the utterance. For the average 13 years old,
the insertion of a mechanical device or anything for that matter into the vagina of a young girl is
undoubtedly startling. For Rosario and Jessie, however, there must be more evidence to show that the
statement, given after a night's sleep had intervened, was given instinctively because the event was so
startling. Res gestae does not apply. (Section 42, Rule 130, Rules of Court).
Even if it were established that the appellant did insert something inside Rosario's vagina, the evidence
is still not adequate to impute the death of Rosario to the appellant's alleged act.
Jessie Ramirez testified that Rosario was able to remove the object inserted in her vagina. We quote:
"Q
Now, you also stated on direct examination that later on Rosario even categorically admitted to
you that she was already able to remove the object allegedly inserted inside her vagina, is that correct?
A
xxx

Yes, sir.
xxx

xxx

ATTY. CARAAN:
Q
Will you kindly tell to this Honorable Court the exact words used by Rosario Baluyot later on
when you met her when you asked her and when she told you that she was already able to remove that
object from her vagina?
A
"Oy, Jessie, natanggal na, "she told me that. I asked her, "Was it already removed?" And she
answered, 'Yes, it was removed.' But the same night, she again complained of pain of her stomach. She
sent one of her friends to call for me. And as a matter of fact, Tomboy was uttering defamatory words
against me as she was groaning in pain." (TSN, Jan. 6, 1988, pp. 72-73).
This encounter happened on the night of the day following the day after both children were invited by
the foreigner to the hotel. (T.S.N. p. 73, January 6, 1988). Rosario was said to be groaning in pain so we
can just imagine the distress she was undergoing at this point in time. If the device inserted by the
appellant caused the pain, it is highly inconceivable how she was able to endure the pain and discomfort
until May, 1987, seven (7) months after the alleged incident. Evidence must not only proceed from the
mouth of a credible witness but it must be credible in itself such as the common experience and
observation of mankind can approve as probable under the circumstances. (People vs. Patog, 144 SCRA
429 [1986]).
At this juncture, we find Dr. Pedro Solis' testimony rather significant. Dr. Pedro Solis, a witness for the
defense is considered an expert witness. (A Doctor of Medicine and a graduate of the State University in
1940, a degree of Bachelor of Laws and member of the Bar 1949, and a graduate of the Institute of
Criminology University. He was awarded Post Graduate Diploma in Criminology in 1963, and also a
graduate of United Nations Asia and Far East Asia Institute on the Prevention of Crimes in Tokyo Japan
1965. He was appointed Medico Legal Officer of the National Bureau of Investigation in 1940 until 1944.
He became Chief Medico Legal Officer in 1970 and became the Deputy Director of the NBI up to 1984.

He is at present a Professorial Lecturer on Legal Medicine at the UP, FEU, UE, and Fatima College of
Medicine; a Medico Legal Consultant of the PGH Medical Center, Makati Medical Center, UERM Medical
Center, MCU Medical Center. He has been with the NBI for 43 years. He has attended no less than 13
conferences abroad. He is the author of the textbooks entitled "Legal Medicine" and "Medical
Jurisprudence".) With his impressive legal and medical background, his testimony is too authoritative to
ignore. We quote the pertinent portions of his testimony:
Q
Now Dr. Solis, would you kindly go over this object marked as Exh. 'C-2' which object was
described as a part of a sexual vibrator battery operated. Now, given this kind of object, would you
kindly tell us what would be the probable effect upon a 12 years old girl when it is inserted into her
vagina?
A
Well, this vibrator must be considered a foreign body placed into a human being and as such be
considered a foreign object. As a foreign object, the tendency of the body may be: No. 1 expel the
foreign body No. 2. The tendency of the body is to react to that foreign body. One of the reactions
that may be manifested by the person wherein such foreign body is concerned is to cover the foreign
body with human tissue, in a way to avoid its further injury to the body.
Now, the second reaction is irritation thereby producing certain manifest symptoms and
changes in the area where the foreign body is located.
In severe cases, the symptoms' manifestation might not only be localized but may be felt all
over the body, we call it systemic reaction. Now, considering the fact that this foreign body as shown to
me is already not complete, this shows exposure of its different parts for the body to react. If there is
mechanism to cause the foreign body to vibrate, there must be some sort of power from within and that
power must be a dry cell battery. [The] composition of the battery are, manganese dioxide ammonium,
salts, water and any substance that will cause current flow. All of these substances are irritants including
areas of the container and as such, the primary reaction of the body is to cause irritation on the tissues,
thereby inflammatory changes develop and in all likelihood, aside from those inflammatory changes
would be a supervening infection in a way that the whole generative organ of the woman will suffer
from diseased process causing her the systemic reaction like fever, swelling of the area, and other
systemic symptoms. . . . (TSN., pp. 13-15, October 19, 1988)
xxx

xxx

xxx

Q
Now, given this object, how long would it take, Doctor before any reaction such as an infection
would set in, how many days after the insertion of this object in the vagina of a 12 year old girl?
A
In the example given to me, considering that one of the ends is exposed, in a way that vaginal
secretion has more chance to get in, well, liberation of this irritant chemicals would be enhanced and
therefore in a shorter period of time, there being this vaginal reaction.
Q

How many days or weeks would you say would that follow after the insertion?

A
As I said, with my experience at the NBI, insertion of any foreign body in the vaginal canal
usually developed within a period of two (2) weeks . . ..
xxx

xxx

xxx

Q
. . . [T]he subject in this case was allegedly raped, and a sexual vibrator was inserted in her
vagina on October 10, 1986 and she was operated on, on May 19, 1987 the following year, so it took
more than 7 months before this was extracted, would you say that it will take that long before any
adverse infection could set-in inside the vagina?
A

Infection and inflamatory changes will develop in a shorter time. (TSN., Oct. 19, 1988, p. 18)

xxx
Q

xxx

xxx

When you said shorter, how long would that be, Doctor?

A
As I said, in my personal experience, hair pins, cottonballs and even this lipstick of women
usually, there are only about two (2) weeks time that the patient suffer some abnormal symptoms.
Q
Now, considering that this is a bigger object to the object that you mentioned, this object has a
shorter time?
A

Yes, Sir shorter time." (TSN., Oct. 19, 1988, p. 20)

The trial court, however, ruled that "there is no hard and fast rule as to the time frame wherein
infection sets in upon insertion of a foreign body in the vagina canal. For Dr. Solis, the time frame is not
more than 10 months, and this case is still within the said time frame."
A more generous time interval may be allowed in non-criminal cases. But where an accused is facing a
penalty of reclusion perpetua, the evidence against him cannot be based on probabilities which are less
likely than those probabilities which favor him.
It should be clarified that the time frame depends upon the kind of foreign body lodged inside the body.
An examination of the object gave the following results:
(1)

Color: Blue

Size: (a) Circumference 3.031

inches (b) Length approximately
2.179 inches.
Composition: Showed the general
characteristics of a styrene- butadiene plastic.

(2)
The specimen can be electrically operated by means of a battery as per certification dated 01
June 1988, signed by Mr. Rodolfo D. Mercurio, Shipboard Electrical Systems Mechanics, Foreman II, SRF
Shop 51, Subic (see attached certification).
(3)
No comparative examination was made on specimen #1 and vibrator depicted in the catalog
because no actual physical dimensions and/or mechanical characteristics were shown in the catalog.
(Exhibit "LL")
The vibrator end was further subjected to a macro-photographic examination on the open end portion
which revealed the following:
"Result of Examination
Macro-photographic examination on the open end portion of specimen #1 shows the following
inscription:
MABUCHI MOTOR JAPAN RE 14 PAT" (Exhibit "MM")
From the above results, the subject object is certainly not considered as inert and based on Dr. Solis'
testimony, it is more likely that infection should set in much earlier. Considering also that the object was
inserted inside the vagina which is part of the generative organ of a woman, an organ which is lined with
a very thin layer of membrane with plenty of blood supply, this part of the body is more susceptible to
infection. (T.S.N. p. 34, October 19, 1988)
The truth of Dr. Solis' testimony is more probable under the circumstances of the case. We see no
reason why his opinions qualified by training and experience should not be controlling and binding upon
the Court in the determination of guilt beyond reasonable doubt. (People v. Tolentino, 166 SCRA 469
[1988]).
Dr. Barcinal, another witness for the defense also testified that he examined Rosario Baluyot on May 17,
1986 as a referral patient from the Department of Surgery to give an OB-GYN clearance to the patient
prior to operation. (T.S.N. p. 6, September 28, 1988)
Q

And how many times did you examine this patient Rosario Baluyot on that day?

I examined her twice on that day.

The first time that you examined her, what is the result of your findings, if any?

A
My first examination, I examined the patient inside the delivery room. The patient was brought
to the delivery room wheel-chaired then from the wheel chair, the patient was ambigatory (sic). She was
able to walk from the door to the examining table. On examination, the patient is conscious, she was
fairly nourished, fairly developed, she had fever, she was uncooperative at that time and examination
deals more on the abdomen which shows slightly distended abdomen with muscle guarding with
tenderness all over, with maximum tenderness over the hypogastric area. (T.S.N. p. 5, September 28,
1988)

xxx
Q

xxx

xxx

What about your second examination to the patient, what was your findings, if any?

A
In my second examination, I repeated the internal examination wherein I placed my index finger
and middle finger inside the vagina of the patient and was able to palpate a hard object. After which, I
made a speculum examination wherein I was able to visualize the inner portion of the vaginal canal,
there I saw purulent foul smelling, blood tints, discharge in the vaginal canal and a foreign body invaded
on the posterior part of the vaginal canal.
xxx

xxx

xxx

A
I referred back to Dr. Fernandez about my findings and he asked me to try to remove the said
foreign object by the use of forceps which I tried to do so also but I failed to extract the same.
Q
All this time that you were examining the patient Rosario Baluyot both in the first and second
instance, Rosario Baluyot was conscious and were you able to talk to her when you were examining her?
A

Yes, sir.

And did you ask her why there is a foreign object lodge inside her vagina?

Yes, Sir I asked her.

And what did she tell you, if any?

She said in her own words that "GINAMIT AKO NG NEGRO AT SIYA ANG NAGLAGAY NITO."

Q
Did she also tell you when, this Negro who used her and who inserted and placed the foreign
object on her vagina?
A

Yes, Sir I asked her and she said he used me three (3) months ago from the time I examined her.

Now, you said that you referred the patient to the ward, what happened next with your patient?

To my knowledge, the patient is already scheduled on operation on that date.

Meaning, May 17, 1987?

Yes, Sir I was presuming that the patient would undergo surgery after that?"

(TSN, Sept. 28, 1988, pp. 8-9; Emphasis supplied)

The trial court debunked Dr. Barcinal's testimony considering Rosario's condition at that time. It ruled
that it is inconceivable that she would be striking a normal conversation with the doctors and would be
sitting on the examination table since Gaspar Alcantara stated that when he brought Rosario Baluyot to
the hospital, she was unconscious and writhing in pain. LexLib

It was not improbable for Rosario Baluyot to still be conscious and ambulant at that time because there
were several instances testified to by different witnesses that she was still able to talk prior to her
operation:
(1)
Fe Israel, a witness for the prosecution and a member of the Olongapo Catholic Charismatic
Renewal Movement testified that as a member of this group she visits indigent children in the hospital
every Saturday and after office hours on working days.
On the Saturday prior to Rosario's death which was May 17, she was still able to talk to Rosario Baluyot.
In fact, one of her groupmates helped Rosario go to the comfort room to urinate. (T.S.N., pp. 16-19, May
25, 1988)
(2)
Angelita Amulong, a witness for the defense is another para social worker who worked at Pope
John 23rd Community Center under Sister Eva Palencia. In one of her hospital visits, she encountered
Rosario Baluyot in the month of May, 1987. She actually saw a child who happened to be Rosario
Baluyot seated on the cement floor and when she asked why she was seated there, she was told that it
was too hot in the bed. She saw Rosario Baluyot for about 2 or 3 days successively. (T.S.N. pp. 10-13,
September 7, 1988)
(3)
Gaspar Alcantara, the person who brought Rosario to the hospital actually testified that she was
conscious (T.S.N. p. 36, September 14, 1988) but writhing in pain. He took pity on her so he brought her
to the hospital (T.S.N. p. 12, September 14, 1988)
From the above testimonies, it is clear that Rosario was still conscious and could still answer questions
asked of her although she was complaining of stomach pains. Unfortunately, the medical attention given
to her failed to halt the aggravation of her condition. The operation on May 19 was too late.
Rosario died because of septicemia, which in layman's language is blood poisoning, and peritonitis,
which is massive infection, in the abdominal cavity caused by the foreign object or the cut sexual
vibrator lodged in the vagina of the victim. This led to the infection from the uterus to the fallopian
tubes and into the peritoneum and the abdominal cavity. cdrep
The trial court convicted the accused citing the rationale of Article 4 of the RPC.
"He who is the cause of the cause is the cause of the evil caused."
But before the conviction is affirmed, we must first follow the rule as stated in the case of Urbano vs.
Intermediate Appellate Court (157 SCRA 1 [1988]) to wit:
"The rule is that the death of the victim must be the direct, natural and logical consequence of the
wounds inflicted upon him by the accused. And since we are dealing with a criminal conviction, the
proof that the accused caused the victim's death must convince a rational mind beyond reasonable
doubt." (Emphasis supplied)
In People v. Tempongko, Jr., (144 SCRA 583, 592 [1986]), we explained that:

xxx

xxx

xxx

"The basic principle in every criminal prosecution is that accusation is not synonymous with guilt. The
accused is presumed innocent until the contrary is proved by the prosecution. If the prosecution fails, it
fails utterly, even if the defense is weak or, indeed, even if there is no defense at all. The defendant
faces the full panoply of state authority with all "The People of the Philippines" arrayed against him. In a
manner of speaking, he goes to that with all the bases loaded. The odds are heavily against him. It is
important, therefore, to equalize the positions of the prosecution and the defense by presuming the
innocence of the accused until the state is able to refute the presumption by proof of guilt beyond
reasonable doubt." (At. p. 592)
The evidence for the accused may be numerically less as against the number of witnesses and
preponderance of evidence presented by the prosecution but there is no direct and convincing proof
that the accused was responsible for the vibrator left inside the victim's vagina which caused her death
seven (7) months after its insertion. What the prosecution managed to establish were mere
circumstances which were not sufficient to overcome the constitutional presumption of innocence.
While circumstantial evidence may suffice to support a conviction it is imperative, though, that the
following requisites should concur:
(a)

There is more than one circumstance;

(b)

The facts from which the inferences are derived are proven; and

(c)
The combination of all the circumstances is such as to produce a conviction beyond reasonable
doubt. (Rule 133, Sec. 4 Revised Rules of Court)
For the well-entrenched rule in evidence is that "before conviction can be had upon circumstantial
evidence, the circumstances proved should constitute an unbroken chain which leads to one fair and
reasonable conclusion pointing to the defendant, to the exclusion of all others, as the author of the
crime (People v. Subano, 73 Phil. 692 [1942]; Emphasis supplied). It must fairly exclude every reasonable
hypothesis of innocence (Dorado v. Court of Appeals, 153 SCRA 420, 433 [1987]). In this case the
circumstantial evidence presented by the prosecution does not conclusively point to the liability of the
appellant for the crime charged. (People v. Tolentino, supra)
We are aware of the wide publicity given to the plight of Rosario Baluyot and how her death exemplified
starkly the daily terrors that most street children encounter as they sell their bodies in order to survive.
At an age when innocence and youthful joys should preponderate in their lives, they experience life in
its most heartless and inhuman form. Instead of nothing more than gentle disappointments occupying
their young minds, they daily cope with tragedies that even adults should never be made to carry. LLjur
It is with distressing reluctance that we have to seemingly set back the efforts of Government to
dramatize the death of Rosario Baluyot as a means of galvanizing the nation to care for its street
children. It would have meant a lot to social workers and prosecutors alike if one pedophile-killer could
be brought to justice so that his example would arouse public concern, sufficient for the formulation and

implementation of meaningful remedies. However, we cannot convict on anything less than proof
beyond reasonable doubt. The protections of the Bill of Rights and our criminal justice system are as
much, if not more so, for the perverts and outcasts of society as they are for normal, decent, and lawabiding people.
The requirement of proof which produces in an unprejudiced mind moral certainty or conviction that
the accused did commit the offense has not been satisfied.
By way of emphasis, we reiterate some of the factors arousing reasonable doubt:
1.
The evidence on Rosario Baluyot's baptism creates reasonable doubt about her being less than
12 years old when the carnal knowledge took place. If the evidence for the prosecution is to be believed,
she was not yet born on the date she was baptized.
2.
Since the proof of Rosario's being under 12 years of age is not satisfactory, the prosecution has
to prove force, intimidation, or deprivation of reason in order to convict for rape. There is no such proof.
In fact, the evidence shows a willingness to submit to the sexual act for monetary considerations.
3.
The only witness to the fact of Ritter's placing a vibrator inside the vagina of Rosario was Jessie
Ramirez. This witness did not see Ritter insert the vibrator. The morning after the insertion, he was only
told by Rosario about it. Two days later, he allegedly met Rosario who informed him that she was able to
remove the object. And yet, Ramirez testified that on the night of that second encounter, he saw
Rosario groaning because of pain in her stomach. She was even hurling invectives. Ramirez' testimony is
not only hearsay, it is also contradictory.
4.
It was improbable, according to expert medical testimony, for a foreign object with active
properties to cause pain, discomfort, and serious infection only after seven months inside a young girl's
vaginal canal. Infection would have set in much earlier. Jessie Ramirez recalled that the incident
happened in December of 1986. (TSN., January 6, 1988, pp. 15-17) The evidence, however shows that
the appellant was not here in the Philippines that December. As per the Commission on Immigration
Arrival and Departure Report, Heinrich Ritter arrived in the Philippines on October 7, 1986 and left on
October 12, 1986. He never returned until September 23, 1987 (Exhibits "DD" and "EE"). The incident
could have happened only in October, but then it would have been highly improbable for the sexual
vibrator to stay inside the vagina for seven (7) months with the kind of serious complications it creates.
5.
The gynecologist who attended to Rosario during her hospital confinement testified that she
told him "Ginamit ako ng Negro at siya ang naglagay nito." The accused is not a black.
Noteworthy is the fact that nothing was mentioned about Rosario's activities after the hotel incident.
Considering Dr. Barcinal's testimony indicating that she was "used" by a "Negro" three (3) months prior
to admission in the hospital and Rosario's unfortunate profession, there is always the possibility that she
could have allowed herself to be violated by this perverse kind of sexual behavior where a vibrator or
vibrators were inserted into her vagina between October, 1986 and May, 1987. llcd

Moreover, the long delay of seven (7) months after the incident in reporting the alleged crime renders
the evidence for the prosecution insufficient to establish appellant's guilty connection with the requisite
moral certainty. (See People v. Mula Cruz, 129 SCRA 156 [1984]).
The established facts do not entirely rule out the possibility that the appellant could have inserted a
foreign object inside Rosario's vagina. This object may have caused her death. It is possible that the
appellant could be the guilty person. However, the Court cannot base an affirmance of conviction upon
mere possibilities. Suspicions and possibilities are not evidence and therefore should not be taken
against the accused. (People v. Tolentino, supra)
Well-established is the rule that every circumstance favorable to the accused should be duly taken into
account. This rule applies even to hardened criminals or those whose bizarre behaviour violates the
mores of civilized society. The evidence against the accused must survive the test of reason. The
strongest suspicion must not be allowed to sway judgment. (See Sacay v. Sandiganbayan, 142 SCRA 593
[1986]). As stated in the case of People v. Ng, (142 SCRA 615 [1986]):
". . . [F]rom the earliest years of this Court, it has emphasized the rule that reasonable doubt in criminal
cases must be resolved in favor of the accused. The requirement of proof beyond reasonable doubt calls
for moral certainty of guilt. It has been defined as meaning such proof 'to the satisfaction of the court,
keeping in mind the presumption of innocence, as precludes every reasonable hypothesis except that
which it is given to support. It is not sufficient for the proof to establish a probability, even though
strong, that the fact charged is more likely to be true than the contrary. It must establish the truth of the
fact to a reasonable and moral certainty a certainty that convinces and satisfies the reason and the
conscience of those who are to act upon it.' (Moreno, Philippine Law Dictionary, 1972 Edition, p. 379,
citing U.S. v. Reyes, 3 Phil. 3). . . ."
In the instant case, since there are circumstances which prevent our being morally certain of the guilt of
the appellant, he is, therefore, entitled to an acquittal.
This notwithstanding, the Court can not ignore the acts of the appellant on the children, Jessie Ramirez
and Rosario Baluyot in October, 1986 at the MGM Hotel. Inspite of his flat denials, we are convinced
that he comes to this country not to look at historical sights, enrich his intellect or indulge in legitimate
pleasures but in order to satisfy the urgings of a sick mind. cdll
With the positive identification and testimony by Jessie Ramirez that it was the appellant who picked
him and Rosario from among the children and invited them to the hotel; and that in the hotel he was
shown pictures of young boys like him and the two masturbated each other, such actuations clearly
show that the appellant is a pedophile. When apprehended in Ermita, he was sizing up young children.
Dr. Solis defined pedophilia in his book entitled Legal Medicine, 1987 edition, as follows:
"Pedophilia A form of sexual perversion wherein a person has the compulsive desire to have sexual
intercourse with a child of either sex. Children of various ages participate in sexual activities, like fellatio,
cunnilingus, fondling with sex organs, or anal sexual intercourse. Usually committed by a homosexual
between a man and a boy the latter being a passive partner."

Ritter was prosecuted for rape with homicide and not pedophilia, assuming this is a crime by itself.
Pedophilia is clearly a behavior offensive to public morals and violative of the declared policy of the
state to promote and protect the physical, moral, spiritual and social well-being of our youth. (Article II,
Section 13, 1987 Constitution) (Harvey v. Defensor Santiago, 162 SCRA 840, 848 [1989]). Pedophiles,
especially thrill seeking aliens have no place in our country. LLpr
In this case, there is reasonable ground to believe that the appellant committed acts injurious not only
to Rosario Baluyot but also to the public good and domestic tranquility of the people. The state has
expressly committed itself to defend the right of children to assistance and special protection from all
forms of neglect, abuse, cruelty, exploitation and other conditions prejudicial to their development. (Art.
XV, Section 3 [2] . . . (Harvey v. Santiago, supra). The appellant has abused Filipino children, enticing
them with money. The appellant should be expelled from the country.
Furthermore, it does not necessarily follow that the appellant is also free from civil liability which is
impliedly instituted with the criminal action. (Rule 111, Section 1) The well-settled doctrine is that a
person while not criminally liable, may still be civilly liable. We reiterate what has been stated in Urbano
v. IAC, supra.
". . . While the guilt of the accused in a criminal prosecution must be established beyond reasonable
doubt, only a preponderance of evidence is required in a civil action for damages. (Article 29, Civil Code).
The judgment of acquittal extinguishes the civil liability of the accused only when it includes a
declaration that the facts from which the civil liability might arise did not exist. (Padilla v. Court of
Appeals, 129 SCRA 559).
The reason for the provisions of Article 29 of the Civil Code, which provides that the acquittal of the
accused on the ground that his guilt has not been proved beyond reasonable doubt does not necessarily
exempt him from civil liability for the same act or omission, has been explained by the Code Commission
as follows:
"'The old rule that the acquittal of the accused in a criminal case also releases him from civil liability is
one of the most serious flaws in the Philippine legal system. It has given rise to numberless instances of
miscarriage of justice, where the acquittal was due to a reasonable doubt in the mind of the court as to
the guilt of the accused. The reasoning followed is that inasmuch as the civil responsibility is derived
from the criminal offense, when the latter is not proved, civil liability cannot be demanded.
This is one of those causes where confused thinking leads to unfortunate and deplorable consequences.
Such reasoning fails to draw a clear line of demarcation between criminal liability and civil responsibility,
and to determine the logical result of the distinction The two liabilities are separate and distinct from
each other. One affects the social order and the other, private rights. One is for the punishment or
correction of the offender while the other is for the reparation of damages suffered by the aggrieved
party. The two responsibilities are so different from each other that article 1813 of the present (Spanish)
Civil Code reads thus: 'There may be a compromise upon the civil action arising from a crime; but the
public action for the imposition of the legal penalty shall not thereby be extinguished.' It is just and
proper that, for the purposes of the imprisonment of or fine upon the accused, the offense should be

proved beyond reasonable doubt. But for the purpose of indemnifying the complaining party, why
should the offense also be proved beyond reasonable doubt? Is not the invasion or violation of every
private right to be proved only by a preponderance of evidence? Is the right of the aggrieved person any
less private because the wrongful act is also punishable by the criminal law?
For these reasons, the Commission recommends the adoption of the reform under discussion. It will
correct a serious defect in our law It will close up an inexhaustible source of injusticea cause for
disillusionment on the part of the innumerable persons injured or wronged.'"
Rosario Baluyot is a street child who ran away from her grandmother's house. Circumstances forced her
to succumb and enter this unfortunate profession. Nonetheless, she has left behind heirs who have
certainly suffered mental anguish, anxiety and moral shock by her sudden and incredulous death as
reflected in the records of the case. Though we are acquitting the appellant for the crime of rape with
homicide, we emphasize that we are not ruling that he is innocent or blameless. It is only the
constitutional presumption of innocence and the failure of the prosecution to build an airtight case for
conviction which saved him, not that the facts of unlawful conduct do not exist. As earlier stated, there
is the likelihood that he did insert the vibrator whose end was left inside Rosario's vaginal canal and that
the vibrator may have caused her death. True, we cannot convict on probabilities or possibilities but civil
liability does not require proof beyond reasonable doubt. The Court can order the payment of indemnity
on the facts found in the records of this case. LLjur
The appellant certainly committed acts contrary to morals, good customs, public order or public policy
(see Article 21 Civil Code). As earlier mentioned, the appellant has abused Filipino children, enticing
them with money. We can not overstress the responsibility for proper behavior of all adults in the
Philippines, including the appellant towards young children. The sexual exploitation committed by the
appellant should not and can not be condoned. Thus, considering the circumstances of the case, we are
awarding damages to the heirs of Rosario Baluyot in the amount of P30,000.00. cdll
And finally, the Court deplores the lack of criminal laws which will adequately protect street children
from exploitation by pedophiles, pimps, and, perhaps, their own parents or guardians who profit from
the sale of young bodies. The provisions on statutory rape and other related offenses were never
intended for the relatively recent influx of pedophiles taking advantage of rampant poverty among the
forgotten segments of our society. Newspaper and magazine articles, media exposes, college
dissertations, and other studies deal at length with this serious social problem but pedophiles like the
appellant will continue to enter the Philippines and foreign publications catering to them will continue
to advertise the availability of Filipino street children unless the Government acts and acts soon. We
have to acquit the appellant because the Bill of Rights commands us to do so. We, however, express the
Court's concern about the problem of street children and the evils committed against them. Something
must be done about it. prcd
WHEREFORE, the appealed judgment is REVERSED and SET ASIDE. Appellant HEINRICH STEFAN RITTER is
ACQUITTED on grounds of reasonable doubt. The appellant is ordered to pay the amount of P30,000.00
by way of moral and exemplary damages to the heirs of Rosario Baluyot. The Commissioner of

Immigration and Deportation is hereby directed to institute proper deportation proceedings against the
appellant and to immediately expel him thereafter with prejudice to re-entry into the country.
SO ORDERED.
Fernan, C.J., Feliciano, Bidin and Davide, Jr., JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. 23769

September 16, 1925

SONG FO & COMPANY, plaintiff-appellee,

vs.
HAWAIIAN PHILIPPINE CO., defendant-appellant.
Hilado and Hilado, Ross, Lawrence and Selph and Antonio T. Carrascoso, Jr., for appellant.
Arroyo, Gurrea and Muller for appellee.
MALCOLM, J.:
In the court of First Instance of Iloilo, Song Fo & Company, plaintiff, presented a complaint with two
causes of action for breach of contract against the Hawaiian-Philippine Co., defendant, in which
judgment was asked for P70,369.50, with legal interest, and costs. In an amended answer and crosscomplaint, the defendant set up the special defense that since the plaintiff had defaulted in the
payment for the molasses delivered to it by the defendant under the contract between the parties, the
latter was compelled to cancel and rescind the said contract. The case was submitted for decision on a
stipulation of facts and the exhibits therein mentioned. The judgment of the trial court condemned the
defendant to pay to the plaintiff a total of P35,317.93, with legal interest from the date of the
presentation of the complaint, and with costs.
From the judgment of the Court of First Instance the defendant only has appealed. In this court it has
made the following assignment of errors: "I. The lower court erred in finding that appellant had agreed
to sell to the appellee 400,000, and not only 300,000, gallons of molasses. II. The lower court erred in
finding that the appellant rescinded without sufficient cause the contract for the sale of molasses
executed by it and the appellee. III. The lower court erred in rendering judgment in favor of the appellee
and not in favor of the appellant in accordance with the prayer of its answer and cross-complaint. IV.
The lower court erred in denying appellant's motion for a new trial." The specified errors raise three
questions which we will consider in the order suggested by the appellant.
1. Did the defendant agree to sell to the plaintiff 400,000 gallons of molasses or 300,000 gallons of
molasses? The trial court found the former amount to be correct. The appellant contends that the
smaller amount was the basis of the agreement.
The contract of the parties is in writing. It is found principally in the documents, Exhibits F and G. The
First mentioned exhibit is a letter addressed by the administrator of the Hawaiian-Philippine Co. to Song
Fo & Company on December 13, 1922. It reads:

SILAY, OCC. NEGROS, P.I.

December 13, 1922
Messrs. SONG FO AND CO.
Iloilo, Iloilo.
DEAR SIRS: Confirming our conversation we had today with your Mr. Song Fo, who visited this Central,
we wish to state as follows:
He agreed to the delivery of 300,000 gallons of molasses at the same price as last year under the same
condition, and the same to start after the completion of our grinding season. He requested if possible to
let you have molasses during January, February and March or in other words, while we are grinding, and
we agreed with him that we would to the best of our ability, altho we are somewhat handicapped. But
we believe we can let you have 25,000 gallons during each of the milling months, altho it interfere with
the shipping of our own and planters sugars to Iloilo. Mr. Song Fo also asked if we could supply him with
another 100,000 gallons of molasses, and we stated we believe that this is possible and will do our best
to let you have these extra 100,000 gallons during the next year the same to be taken by you before
November 1st, 1923, along with the 300,000, making 400,000 gallons in all.
Regarding the payment for our molasses, Mr. Song Fo gave us to understand that you would pay us at
the end of each month for molasses delivered to you.
Hoping that this is satisfactory and awaiting your answer regarding this matter, we remain.
Yours very truly,
HAWAIIAN-PHILIPPINE COMPANY
BY R. C. PITCAIRN
Administrator.
Exhibit G is the answer of the manager of Song Fo & Company to the Hawaiian-Philippine Co. on
December 16, 1922. This letter reads:
December 16th, 1922.
Messrs. HAWAIIAN-PHILIPPINE CO.,
Silay, Neg. Occ., P.I.
DEAR SIRS: We are in receipt of your favours dated the 9th and the 13th inst. and understood all their
contents.
In connection to yours of the 13th inst. we regret to hear that you mentioned Mr. Song Fo the one who
visited your Central, but it was not for he was Mr. Song Heng, the representative and the manager of
Messrs. Song Fo & Co.

With reference to the contents of your letter dated the 13th inst. we confirm all the arrangements you
have stated and in order to make the contract clear, we hereby quote below our old contract as
amended, as per our new arrangements.
(a) Price, at 2 cents per gallon delivered at the central.
(b) All handling charges and expenses at the central and at the dock at Mambaguid for our account.
(c) For services of one locomotive and flat cars necessary for our six tanks at the rate of P48 for the
round trip dock to central and central to dock. This service to be restricted to one trip for the six tanks.
Yours very truly,
SONG FO & COMPANY
By __________________________
Manager.
We agree with appellant that the above quoted correspondence is susceptible of but one interpretation.
The Hawaiian-Philippine Co. agreed to deliver to Song Fo & Company 300,000 gallons of molasses. The
Hawaiian-Philippine Co. also believed it possible to accommodate Song Fo & Company by supplying the
latter company with an extra 100,000 gallons. But the language used with reference to the additional
100,000 gallons was not a definite promise. Still less did it constitute an obligation.
If Exhibit T relied upon by the trial court shows anything, it is simply that the defendant did not consider
itself obliged to deliver to the plaintiff molasses in any amount. On the other hand, Exhibit A, a letter
written by the manager of Song Fo & Company on October 17, 1922, expressly mentions an
understanding between the parties of a contract for P300,000 gallons of molasses.
We sustain appellant's point of view on the first question and rule that the contract between the parties
provided for the delivery by the Hawaiian-Philippine Co. to song Fo & Company of 300,000 gallons of
molasses.
2. Had the Hawaiian-Philippine Co. the right to rescind the contract of sale made with Song Fo &
Company? The trial judge answers No, the appellant Yes.
Turning to Exhibit F, we note this sentence: "Regarding the payment for our molasses, Mr. Song Fo (Mr.
Song Heng) gave us to understand that you would pay us at the end of each month for molasses
delivered to you." In Exhibit G, we find Song Fo & Company stating that they understand the contents of
Exhibit F, and that they confirm all the arrangements you have stated, and in order to make the contract
clear, we hereby quote below our old contract as amended, as per our new arrangements. (a) Price, at 2
cents per gallon delivered at the central." In connection with the portion of the contract having
reference to the payment for the molasses, the parties have agree on a table showing the date of
delivery of the molasses, the amount and date thereof, the date of receipt of account by plaintiff, and
date of payment. The table mentioned is as follows:

Date of
delivery

Account and date thereof

1922

Date of
receipt of
account by
plaintiff

Date of
payment

1923

1923

Dec. 18

P206.16

Dec. 26/22

Jan. 5

Feb. 20

Dec. 29

206.16

Jan. 3/23

do

Do

Jan. 5

206.16

Jan. 9/23

Mar. 7 or 8

Mar. 31

Feb. 12

206.16

Mar. 12/23

do

Do

Feb. 27

206.16

do

do

Do

Mar. 5

206.16

do

do

Do

Mar. 16

206.16

Mar. 20/23

Apr. 2/23

Apr. 19

Mar. 24

206.16

Mar. 31/23

do

Do

Mar. 29

206.16

do

do

Do

1923

Some doubt has risen as to when Song Fo & Company was expected to make payments for the molasses
delivered. Exhibit F speaks of payments "at the end of each month." Exhibit G is silent on the point.
Exhibit M, a letter of March 28, 1923, from Warner, Barnes & Co., Ltd., the agent of the HawaiianPhilippine Co. to Song Fo & Company, mentions "payment on presentation of bills for each delivery."
Exhibit O, another letter from Warner, Barnes & Co., Ltd. to Song Fo & Company dated April 2, 1923, is
of a similar tenor. Exhibit P, a communication sent direct by the Hawaiian-Philippine Co. to Song Fo &
Company on April 2, 1923, by which the Hawaiian-Philippine Co. gave notice of the termination of the
contract, gave as the reason for the rescission, the breach by Song Fo & Company of this condition: "You
will recall that under the arrangements made for taking our molasses, you were to meet our accounts
upon presentation and at each delivery." Not far removed from this statement, is the allegation of

plaintiff in its complaint that "plaintiff agreed to pay defendant, at the end of each month upon
presentation accounts."
Resolving such ambiguity as exists and having in mind ordinary business practice, a reasonable
deduction is that Song Fo & Company was to pay the Hawaiian-Philippine Co. upon presentation of
accounts at the end of each month. Under this hypothesis, Song Fo & Company should have paid for the
molasses delivered in December, 1922, and for which accounts were received by it on January 5, 1923,
not later than January 31 of that year. Instead, payment was not made until February 20, 1923. All the
rest of the molasses was paid for either on time or ahead of time.
The terms of payment fixed by the parties are controlling. The time of payment stipulated for in the
contract should be treated as of the essence of the contract. Theoretically, agreeable to certain
conditions which could easily be imagined, the Hawaiian-Philippine Co. would have had the right to
rescind the contract because of the breach of Song Fo & Company. But actually, there is here present no
outstanding fact which would legally sanction the rescission of the contract by the Hawaiian-Philippine
Co.
The general rule is that rescission will not be permitted for a slight or casual breach of the contract, but
only for such breaches as are so substantial and fundamental as to defeat the object of the parties in
making the agreement. A delay in payment for a small quantity of molasses for some twenty days is not
such a violation of an essential condition of the contract was warrants rescission for non-performance.
Not only this, but the Hawaiian-Philippine Co. waived this condition when it arose by accepting payment
of the overdue accounts and continuing with the contract. Thereafter, Song Fo & Company was not in
default in payment so that the Hawaiian-Philippine co. had in reality no excuse for writing its letter of
April 2, 1923, cancelling the contract. (Warner, Barnes & Co. vs. Inza [1922], 43 Phil., 505.)
We rule that the appellant had no legal right to rescind the contract of sale because of the failure of
Song Fo & Company to pay for the molasses within the time agreed upon by the parties. We sustain the
finding of the trial judge in this respect.
3. On the basis first, of a contract for 300,000 gallons of molasses, and second, of a contract imprudently
breached by the Hawaiian-Philippine Co., what is the measure of damages? We again turn to the facts as
agreed upon by the parties.
The first cause of action of the plaintiff is based on the greater expense to which it was put in being
compelled to secure molasses from other sources. Three hundred thousand gallons of molasses was the
total of the agreement, as we have seen. As conceded by the plaintiff, 55,006 gallons of molasses were
delivered by the defendant to the plaintiff before the breach. This leaves 244,994 gallons of molasses
undelivered which the plaintiff had to purchase in the open market. As expressly conceded by the
plaintiff at page 25 of its brief, 100,000 gallons of molasses were secured from the Central North Negros
Sugar Co., Inc., at two centavos a gallon. As this is the same price specified in the contract between the
plaintiff and the defendant, the plaintiff accordingly suffered no material loss in having to make this
purchase. So 244,994 gallons minus the 100,000 gallons just mentioned leaves as a result 144,994
gallons. As to this amount, the plaintiff admits that it could have secured it and more from the Central

Victorias Milling Company, at three and one-half centavos per gallon. In other words, the plaintiff had to
pay the Central Victorias Milling company one and one-half centavos a gallon more for the molasses
than it would have had to pay the Hawaiian-Philippine Co. Translated into pesos and centavos, this
meant a loss to the plaintiff of approximately P2,174.91. As the conditions existing at the central of the
Hawaiian-Philippine Co. may have been different than those found at the Central North Negros Sugar
Co., Inc., and the Central Victorias Milling Company, and as not alone through the delay but through
expenses of transportation and incidental expenses, the plaintiff may have been put to greater cost in
making the purchase of the molasses in the open market, we would concede under the first cause of
action in round figures P3,000.
The second cause of action relates to lost profits on account of the breach of the contract. The only
evidence in the record on this question is the stipulation of counsel to the effect that had Mr. Song
Heng, the manager of Song Fo & Company, been called as a witness, he would have testified that the
plaintiff would have realized a profit of P14,948.43, if the contract of December 13, 1922, had been
fulfilled by the defendant. Indisputably, this statement falls far short of presenting proof on which to
make a finding as to damages.
In the first place, the testimony which Mr. Song Heng would have given undoubtedly would follow the
same line of thought as found in the decision of the trial court, which we have found to be
unsustainable. In the second place, had Mr. Song Heng taken the witness-stand and made the statement
attributed to him, it would have been insufficient proof of the allegations of the complaint, and the fact
that it is a part of the stipulation by counsel does not change this result. And lastly, the testimony of the
witness Song Heng, it we may dignify it as such, is a mere conclusion, not a proven fact. As to what items
up the more than P14,000 of alleged lost profits, whether loss of sales or loss of customers, or what not,
we have no means of knowing.
We rule that the plaintiff is entitled to recover damages from the defendant for breach of contract on
the first cause of action in the amount of P3,000 and on the second cause of action in no amount.
Appellant's assignments of error are accordingly found to be well taken in part and not well taken in
part.
Agreeable to the foregoing, the judgment appealed from shall be modified and the plaintiff shall have
and recover from the defendant the sum of P3,000, with legal interest form October 2, 1923, until
payment. Without special finding as to costs in either instance, it is so ordered.
Avancea, C.J., Johnson, Street, Villamor, Ostrand, Johns, Romualdez and Villa-Real, JJ., concur.

THIRD DIVISION
[G.R. No. 108346. July 11, 2001]
Spouses MARIANO Z. VELARDE and AVELINA D. VELARDE, petitioners, vs. COURT OF APPEALS, DAVID A.
RAYMUNDO and GEORGE RAYMUNDO, respondents.
DECISION
PANGANIBAN, J.:
A substantial breach of a reciprocal obligation, like failure to pay the price in the manner prescribed by
the contract, entitles the injured party to rescind the obligation. Rescission abrogates the contract from
its inception and requires a mutual restitution of benefits received.
The Case
Before us is a Petition for Review on Certiorari[1] questioning the Decision[2] of the Court of Appeals
(CA) in CA-GR CV No. 32991 dated October 9, 1992, as well as its Resolution[3] dated December 29,
1992 denying petitioners motion for reconsideration.*4+
The dispositive portion of the assailed Decision reads:
WHEREFORE, the Order dated May 15, 1991 is hereby ANNULLED and SET ASIDE and the Decision
dated November 14, 1990 dismissing the [C]omplaint is REINSTATED. The bonds posted by plaintiffsappellees and defendants-appellants are hereby RELEASED.*5+
The Facts
The factual antecedents of the case, as found by the CA, are as follows:
x x x. David Raymundo *herein private respondent+ is the absolute and registered owner of a parcel of
land, together with the house and other improvements thereon, located at 1918 Kamias St., Dasmarias
Village, Makati and covered by TCT No. 142177. Defendant George Raymundo [herein private
respondent+ is Davids father who negotiated with plaintiffs Avelina and Mariano Velarde [herein
petitioners+ for the sale of said property, which was, however, under lease (Exh. 6, p. 232, Record of
Civil Case No. 15952).
On August 8, 1986, a Deed of Sale with Assumption of Mortgage (Exh. A; Exh. 1, pp. 11-12, Record)
was executed by defendant David Raymundo, as vendor, in favor of plaintiff Avelina Velarde, as vendee,
with the following terms and conditions:

x x x

xxx

xxx

That for and in consideration of the amount of EIGHT HUNDRED THOUSAND PESOS (P800,000.00),
Philippine currency, receipt of which in full is hereby acknowledged by the VENDOR from the VENDEE,
to his entire and complete satisfaction, by these presents the VENDOR hereby SELLS, CEDES,
TRANSFERS, CONVEYS AND DELIVERS, freely and voluntarily, with full warranty of a legal and valid title
as provided by law, unto the VENDEE, her heirs, successors and assigns, the parcel of land mentioned
and described above, together with the house and other improvements thereon.
That the aforesaid parcel of land, together with the house and other improvements thereon, were
mortgaged by the VENDOR to the BANK OF THE PHILIPPINE ISLANDS, Makati, Metro Manila, to secure
the payment of a loan of ONE MILLION EIGHT HUNDRED THOUSAND PESOS (P1,800,000.00), Philippine
currency, as evidenced by a Real Estate Mortgage signed and executed by the VENDOR in favor of the
said Bank of the Philippine Islands, on______ and which Real Estate Mortgage was ratified before
Notary Public for Makati, _______, as Doc. No. ____, Page No. ___, Book No. ___, Series of 1986 of his
Notarial Register.
That as part of the consideration of this sale, the VENDEE hereby assumes to pay the mortgage
obligations on the property herein sold in the amount of ONE MILLION EIGHT HUNDRED THOUSAND
PESOS (P1,800,000.00), Philippine currency, in favor of Bank of the Philippine Islands, in the name of the
VENDOR, and further agrees to strictly and faithfully comply with all the terms and conditions appearing
in the Real Estate Mortgage signed and executed by the VENDOR in favor of BPI, including interests and
other charges for late payment levied by the Bank, as if the same were originally signed and executed by
the VENDEE.
It is further agreed and understood by the parties herein that the capital gains tax and documentary
stamps on the sale shall be for the account of the VENDOR; whereas, the registration fees and transfer
tax thereon shall be for the account of the VENDEE. (Exh. A, pp. 11-12, Record).
On the same date, and as part of the above-document, plaintiff Avelina Velarde, with the consent of
her husband, Mariano, executed an Undertaking (Exh. C, pp. 13-14, Record), the pertinent portions of
which read, as follows:
x x x

xxx

xxx

Whereas, as per Deed of Sale with Assumption of Mortgage, I paid Mr. David A. Raymundo the sum of
EIGHT HUNDRED THOUSAND PESOS (P800,000.00), Philippine currency, and assume the mortgage
obligations on the property with the Bank of the Philippine Islands in the amount of ONE MILLION EIGHT
HUNDRED THOUSAND PESOS (P1,800,000.00), Philippine currency, in accordance with the terms and
conditions of the Deed of Real Estate Mortgage dated _________, signed and executed by Mr. David A.
Raymundo with the said Bank, acknowledged before Notary Public for Makati, _____, as Doc. No. ___,
Page No. ___, Book No. __, Series of 1986 of his Notarial Register.

WHEREAS, while my application for the assumption of the mortgage obligations on the property is not
yet approved by the mortgagee Bank, I have agreed to pay the mortgage obligations on the property
with the Bank in the name of Mr. David A. Raymundo, in accordance with the terms and conditions of
the said Deed of Real Estate Mortgage, including all interests and other charges for late payment.
WHEREAS, this undertaking is being executed in favor of Mr. David A. Raymundo, for purposes of
attesting and confirming our private understanding concerning the said mortgage obligations to be
assumed.
NOW, THEREFORE, for and in consideration of the foregoing premises, and the assumption of the
mortgage obligations of ONE MILLION EIGHT HUNDRED THOUSAND PESOS (P1,800,000.00), Philippine
currency, with the Bank of the Philippine islands, I, Mrs. Avelina D. Velarde, with the consent of my
husband, Mariano Z. Velarde, do hereby bind and obligate myself, my heirs, successors and assigns, to
strictly and faithfully comply with the following terms and conditions:
1. That until such time as my assumption of the mortgage obligations on the property purchased is
approved by the mortgagee bank, the Bank of the Philippine Islands, I shall continue to pay the said
loan in accordance with the terms and conditions of the Deed of Real Estate Mortgage in the name of
Mr. David A. Raymundo, the original Mortgagor.
2. That, in the event I violate any of the terms and conditions of the said Deed of Real Estate Mortgage,
I hereby agree that my downpayment of P800,000.00, plus all payments made with the Bank of the
Philippine Islands on the mortgage loan, shall be forfeited in favor of Mr. David A. Raymundo, as and by
way of liquidated damages, without necessity of notice or any judicial declaration to that effect, and Mr.
David A Raymundo shall resume total and complete ownership and possession of the property sold by
way of Deed of Sale with Assumption of Mortgage, and the same shall be deemed automatically
cancelled and be of no further force or effect, in the same manner as if (the) same had never been
executed or entered into.
3. That I am executing this Undertaking for purposes of binding myself, my heirs, successors and
assigns, to strictly and faithfully comply with the terms and conditions of the mortgage obligations with
the Bank of the Philippine Islands, and the covenants, stipulations and provisions of this Undertaking.
That, David A. Raymundo, the vendor of the property mentioned and identified above, *does+ hereby
confirm and agree to the undertakings of the Vendee pertinent to the assumption of the mortgage
obligations by the Vendee with the Bank of the Philippine Islands. (Exh. C, pp. 13-14, Record).
This undertaking was signed by Avelina and Mariano Velarde and David Raymundo.
It appears that the negotiated terms for the payment of the balance of P1.8 million was from the
proceeds of a loan that plaintiffs were to secure from a bank with defendants help. Defendants had a

standing approved credit line with the Bank of the Philippine Islands (BPI). The parties agreed to avail of
this, subject to BPIs approval of an application for assumption of mortgage by plaintiffs. Pending BPIs
approval o[f] the application, plaintiffs were to continue paying the monthly interests of the loan
secured by a real estate mortgage.
Pursuant to said agreements, plaintiffs paid BPI the monthly interest on the loan secured by the
aforementioned mortgage for three (3) months as follows: September 19, 1986 at P27,225.00; October
20, 1986 at P23,000.00; and November 19, 1986 at P23,925.00 (Exh. E, H & J, pp. 15, 17 and 18,
Record).
On December 15, 1986, plaintiffs were advised that the Application for Assumption of Mortgage with
BPI was not approved (Exh. J, p. 133, Record). This prompted plaintiffs not to make any further
payment.
On January 5, 1987, defendants, thru counsel, wrote plaintiffs informing the latter that their nonpayment to the mortgage bank constitute[d] non-performance of their obligation (Exh. 3, p. 220,
Record).
In a Letter dated January 7, 1987, plaintiffs, thru counsel, responded, as follows:
This is to advise you, therefore, that our client is willing to pay the balance in cash not later than
January 21, 1987 provided: (a) you deliver actual possession of the property to her not later than
January 15, 1987 for her immediate occupancy; (b) you cause the release of title and mortgage from the
Bank of P.I. and make the title available and free from any liens and encumbrances; and (c) you execute
an absolute deed of sale in her favor free from any liens or encumbrances not later than January 21,
1987. (Exhs. K, 4, p. 223, Record).
On January 8, 1987, defendants sent plaintiffs a notarial notice of cancellation/rescission of the
intended sale of the subject property allegedly due to the latters failure to comply with the terms and
conditions of the Deed of Sale with Assumption of Mortgage and the Undertaking (Exh. 5, pp. 225-226,
Record).*6+
Consequently, petitioners filed on February 9, 1987 a Complaint against private respondents for specific
performance, nullity of cancellation, writ of possession and damages. This was docketed as Civil Case
No. 15952 at the Regional Trial Court of Makati, Branch 149. The case was tried and heard by then
Judge Consuelo Ynares-Santiago (now an associate justice of this Court), who dismissed the Complaint in
a Decision dated November 14, 1990.[7] Thereafter, petitioners filed a Motion for Reconsideration.[8]
Meanwhile, then Judge Ynares-Santiago was promoted to the Court of Appeals and Judge Salvador S. A.
Abad Santos was assigned to the sala she vacated. In an Order dated May 15, 1991,[9] Judge Abad
Santos granted petitioners Motion for Reconsideration and directed the parties to proceed with the
sale. He instructed petitioners to pay the balance of P1.8 million to private respondents who, in turn,

were ordered to execute a deed of absolute sale and to surrender possession of the disputed property
to petitioners.
Private respondents appealed to the CA.
Ruling of the Court of Appeals
The CA set aside the Order of Judge Abad Santos and reinstated then Judge Ynares-Santiagos earlier
Decision dismissing petitioners Complaint. Upholding the validity of the rescission made by private
respondents, the CA explained its ruling in this wise:
In the Deed of Sale with Assumption of Mortgage, it was stipulated that as part of the consideration of
this sale, the VENDEE (Velarde) would assume to pay the mortgage obligation on the subject property
in the amount of P1.8 million in favor of BPI in the name of the Vendor (Raymundo). Since the price to
be paid by the Vendee Velarde includes the downpayment of P800,000.00 and the balance of P1.8
million, and the balance of P1.8 million cannot be paid in cash, Vendee Velarde, as part of the
consideration of the sale, had to assume the mortgage obligation on the subject property. In other
words, the assumption of the mortgage obligation is part of the obligation of Velarde, as vendee, under
the contract. Velarde further agreed to strictly and faithfully comply with all the terms and conditions
appearing in the Real Estate Mortgage signed and executed by the VENDOR in favor of BPI x x x as if the
same were originally signed and executed by the Vendee. (p.2, thereof, p.12, Record). This was
reiterated by Velarde in the document entitled Undertaking wherein the latter agreed to continue
paying said loan in accordance with the terms and conditions of the Deed of Real Estate Mortgage in the
name of Raymundo. Moreover, it was stipulated that in the event of violation by Velarde of any terms
and conditions of said deed of real estate mortgage, the downpayment of P800,000.00 plus all
payments made with BPI or the mortgage loan would be forfeited and the [D]eed of [S]ale with
[A]ssumption of [M]ortgage would thereby be cancelled automatically and of no force and effect (pars.
2 & 3, thereof, pp. 13-14, Record).
From these 2 documents, it is therefore clear that part of the consideration of the sale was the
assumption by Velarde of the mortgage obligation of Raymundo in the amount of P1.8 million. This
would mean that Velarde had to make payments to BPI under the [D]eed of [R]eal [E]state [M]ortgage in
the name of Raymundo. The application with BPI for the approval of the assumption of mortgage would
mean that, in case of approval, payment of the mortgage obligation will now be in the name of Velarde.
And in the event said application is disapproved, Velarde had to pay in full. This is alleged and admitted
in Paragraph 5 of the Complaint. Mariano Velarde likewise admitted this fact during the hearing on
September 15, 1997 (p. 47, t.s.n., September 15, 1987; see also pp. 16-26, t.s.n., October 8, 1989). This
being the case, the non-payment of the mortgage obligation would result in a violation of the contract.
And, upon Velardes failure to pay the agreed price, the[n] Raymundo may choose either of two (2)
actions - (1) demand fulfillment of the contract, or (2) demand its rescission (Article 1191, Civil Code).

The disapproval by BPI of the application for assumption of mortgage cannot be used as an excuse for
Velardes non-payment of the balance of the purchase price. As borne out by the evidence, Velarde had
to pay in full in case of BPIs disapproval of the application for assumption of mortgage. What Velarde
should have done was to pay the balance of P1.8 million. Instead, Velarde sent Raymundo a letter dated
January 7, 1987 (Exh. K, 4) which was strongly given weight by the lower court in reversing the
decision rendered by then Judge Ynares-Santiago. In said letter, Velarde registered their willingness to
pay the balance in cash but enumerated 3 new conditions which, to the mind of this Court, would
constitute a new undertaking or new agreement which is subject to the consent or approval of
Raymundo. These 3 conditions were not among those previously agreed upon by Velarde and
Raymundo. These are mere offers or, at most, an attempt to novate. But then again, there can be no
novation because there was no agreement of all the parties to the new contract (Garcia, Jr. vs. Court of
Appeals, 191 SCRA 493).
It was likewise agreed that in case of violation of the mortgage obligation, the Deed of Sale with
Assumption of Mortgage would be deemed automatically cancelled and of no further force and effect,
as if the same had never been executed or entered into. While it is true that even if the contract
expressly provided for automatic rescission upon failure to pay the price, the vendee may still pay, he
may do so only for as long as no demand for rescission of the contract has been made upon him either
judicially or by a notarial act (Article 1592, Civil Code). In the case at bar, Raymundo sent Velarde a
notarial notice dated January 8, 1987 of cancellation/rescission of the contract due to the latters failure
to comply with their obligation. The rescission was justified in view of Velardes failure to pay the price
(balance) which is substantial and fundamental as to defeat the object of the parties in making the
agreement. As adverted to above, the agreement of the parties involved a reciprocal obligation wherein
the obligation of one is a resolutory condition of the obligation of the other, the non-fulfillment of which
entitles the other party to rescind the contract (Songcuan vs. IAC, 191 SCRA 28). Thus, the non-payment
of the mortgage obligation by appellees Velarde would create a right to demand payment or to rescind
the contract, or to criminal prosecution (Edca Publishing & Distribution Corporation vs. Santos, 184 SCRA
614). Upon appellees failure, therefore, to pay the balance, the contract was properly rescinded (Ruiz
vs. IAC, 184 SCRA 720). Consequently, appellees Velarde having violated the contract, they have lost
their right to its enforcement and hence, cannot avail of the action for specific performance (Voysaw vs.
Interphil Promotions, Inc., 148 SCRA 635).*10+
Hence, this appeal.[11]
The Issues
Petitioners, in their Memorandum,[12] interpose the following assignment of errors:
I.
The Court of Appeals erred in holding that the non-payment of the mortgage obligation resulted in a
breach of the contract.

II.
The Court of Appeals erred in holding that the rescission (resolution) of the contract by private
respondents was justified.
III.
The Court of Appeals erred in holding that petitioners January 7, 1987 letter gave three new
conditions constituting mere offers or an attempt to novate necessitating a new agreement between
the parties.
The Courts Ruling
The Petition is partially meritorious.
First Issue:
Breach of Contract
Petitioners aver that their nonpayment of private respondents mortgage obligation did not constitute a
breach of contract, considering that their request to assume the obligation had been disapproved by the
mortgagee bank. Accordingly, payment of the monthly amortizations ceased to be their obligation and,
instead, it devolved upon private respondents again.
However, petitioners did not merely stop paying the mortgage obligations; they also failed to pay the
balance of the purchase price. As admitted by both parties, their agreement mandated that petitioners
should pay the purchase price balance of P1.8 million to private respondents in case the request to
assume the mortgage would be disapproved. Thus, on December 15, 1986, when petitioners received
notice of the banks disapproval of their application to assume respondents mortgage, they should have
paid the balance of the P1.8 million loan.
Instead of doing so, petitioners sent a letter to private respondents offering to make such payment only
upon the fulfillment of certain conditions not originally agreed upon in the contract of sale. Such
conditional offer to pay cannot take the place of actual payment as would discharge the obligation of a
buyer under a contract of sale.
In a contract of sale, the seller obligates itself to transfer the ownership of and deliver a determinate
thing, and the buyer to pay therefor a price certain in money or its equivalent.[13] Private respondents
had already performed their obligation through the execution of the Deed of Sale, which effectively
transferred ownership of the property to petitioner through constructive delivery. Prior physical

delivery or possession is not legally required, and the execution of the Deed of Sale is deemed
equivalent to delivery.[14]
Petitioners, on the other hand, did not perform their correlative obligation of paying the contract price
in the manner agreed upon. Worse, they wanted private respondents to perform obligations beyond
those stipulated in the contract before fulfilling their own obligation to pay the full purchase price.
Second Issue
Validity of the Rescission
Petitioners likewise claim that the rescission of the contract by private respondents was not justified,
inasmuch as the former had signified their willingness to pay the balance of the purchase price only a
little over a month from the time they were notified of the disapproval of their application for
assumption of mortgage. Petitioners also aver that the breach of the contract was not substantial as
would warrant a rescission. They cite several cases[15] in which this Court declared that rescission of a
contract would not be permitted for a slight or casual breach. Finally, they argue that they have
substantially performed their obligation in good faith, considering that they have already made the
initial payment of P800,000 and three (3) monthly mortgage payments.
As pointed out earlier, the breach committed by petitioners was not so much their nonpayment of the
mortgage obligations, as their nonperformance of their reciprocal obligation to pay the purchase price
under the contract of sale. Private respondents right to rescind the contract finds basis in Article 1191
of the Civil Code, which explicitly provides as follows:
Art. 1191. -- The power to rescind obligations is implied in reciprocal ones, in case one of the obligors
should not comply with what is incumbent upon him.
The injured party may choose between fulfillment and the rescission of the obligation, with the payment
of damages in either case. He may also seek rescission even after he has chosen fulfillment, if the latter
should become impossible.
The right of rescission of a party to an obligation under Article 1191 of the Civil Code is predicated on a
breach of faith by the other party who violates the reciprocity between them.[16] The breach
contemplated in the said provision is the obligors failure to comply with an existing obligation.*17+
When the obligor cannot comply with what is incumbent upon it, the obligee may seek rescission and, in
the absence of any just cause for the court to determine the period of compliance, the court shall
decree the rescission.[18]
In the present case, private respondents validly exercised their right to rescind the contract, because of
the failure of petitioners to comply with their obligation to pay the balance of the purchase price.

Indubitably, the latter violated the very essence of reciprocity in the contract of sale, a violation that
consequently gave rise to private respondents right to rescind the same in accordance with law.
True, petitioners expressed their willingness to pay the balance of the purchase price one month after it
became due; however, this was not equivalent to actual payment as would constitute a faithful
compliance of their reciprocal obligation. Moreover, the offer to pay was conditioned on the
performance by private respondents of additional burdens that had not been agreed upon in the
original contract. Thus, it cannot be said that the breach committed by petitioners was merely slight or
casual as would preclude the exercise of the right to rescind.
Misplaced is petitioners reliance on the cases*19+ they cited because the factual circumstances in those
cases are not analogous to those in the present one. In Song Fo there was, on the part of the buyer,
only a delay of twenty (20) days to pay for the goods delivered. Moreover, the buyers offer to pay was
unconditional and was accepted by the seller. In Zepeda, the breach involved a mere one-week delay in
paying the balance of P1,000, which was actually paid. In Tan, the alleged breach was private
respondents delay of only a few days, which was for the purpose of clearing the title to the property;
there was no reference whatsoever to the nonpayment of the contract price.
In the instant case, the breach committed did not merely consist of a slight delay in payment or an
irregularity; such breach would not normally defeat the intention of the parties to the contract. Here,
petitioners not only failed to pay the P1.8 million balance, but they also imposed upon private
respondents new obligations as preconditions to the performance of their own obligation. In effect, the
qualified offer to pay was a repudiation of an existing obligation, which was legally due and demandable
under the contract of sale. Hence, private respondents were left with the legal option of seeking
rescission to protect their own interest.
Mutual Restitution
Required in Rescission
As discussed earlier, the breach committed by petitioners was the nonperformance of a reciprocal
obligation, not a violation of the terms and conditions of the mortgage contract. Therefore, the
automatic rescission and forfeiture of payment clauses stipulated in the contract does not apply.
Instead, Civil Code provisions shall govern and regulate the resolution of this controversy.
Considering that the rescission of the contract is based on Article 1191 of the Civil Code, mutual
restitution is required to bring back the parties to their original situation prior to the inception of the
contract. Accordingly, the initial payment of P800,000 and the corresponding mortgage payments in the
amounts of P27,225, P23,000 and P23,925 (totaling P874,150.00) advanced by petitioners should be
returned by private respondents, lest the latter unjustly enrich themselves at the expense of the former.

Rescission creates the obligation to return the object of the contract. It can be carried out only when
the one who demands rescission can return whatever he may be obliged to restore.[20] To rescind is to
declare a contract void at its inception and to put an end to it as though it never was. It is not merely to
terminate it and release the parties from further obligations to each other, but to abrogate it from the
beginning and restore the parties to their relative positions as if no contract has been made.[21]
Third Issue
Attempt to Novate
In view of the foregoing discussion, the Court finds it no longer necessary to discuss the third issue
raised by petitioners. Suffice it to say that the three conditions appearing on the January 7, 1987 letter
of petitioners to private respondents were not part of the original contract. By that time, it was already
incumbent upon the former to pay the balance of the sale price. They had no right to demand
preconditions to the fulfillment of their obligation, which had become due.
WHEREFORE, the assailed Decision is hereby AFFIRMED with the MODIFICATION that private
respondents are ordered to return to petitioners the amount of P874,150, which the latter paid as a
consequence of the rescinded contract, with legal interest thereon from January 8, 1987, the date of
rescission. No pronouncement as to costs.
SO ORDERED.
Melo, (Chairman), Vitug, and Sandoval-Gutierrez, JJ., concur.
Gonzaga-Reyes, J., on leave.
[1] Rollo, pp. 37-53.
[2] Rollo, pp. 68-78. Penned by Justice Regina G. Ordoez-Benitez and concurred in by Justices Gloria C.
Paras (Division chairman) and Eduardo G. Montenegro (member).
[3] Rollo, p. 81.
[4] Rollo, pp. 21-33.
[5] CA Decision, p. 11; rollo, p. 20.
[6] Rollo, pp. 68-73.
[7] Records, pp. 280-284.

[8] Records, pp. 285-293.

[9] Records, pp. 339-341.
[10] Rollo, pp. 75-78.
[11] To eradicate its backlog of old cases, the Court on February 27, 2001 resolved to redistribute longpending cases to justices who had no backlog, and who were thus tasked to prioritize them.
Consequently, this case was raffled and assigned to the undersigned ponente for study and report.
[12] Rollo, p. 227.
[13] Coronel v. CA, 263 SCRA 15, October 7, 1996.
[14] Power Commercial and Industrial Corp. v. CA, 274 SCRA 597, June 20, 1997.
[15] Song Fo & Co. v. Hawaiian-Philippine Co., 47 Phil. 821, September 16, 1925; Tan v. Court of Appeals,
175 SCRA 656, July 28, 1989; and Zepeda v. Court of Appeals, 216 SCRA 293, December 9, 1992.
[16] Uy v. Court of Appeals, 314 SCRA 69, September 9, 1999; Romero v. Court of Appeals, 250 SCRA
223, November 23, 1995.
[17] Cheng v. Genato, 300 SCRA 722, December 29, 1998.
[18] Central Philippine University v. Court of Appeals, 246 SCRA 511, July 17, 1995.
[19] See footnote 15.
[20] Co v. Court of Appeals, 312 SCRA 528, August 17, 1999. Vitug, Compendium of Civil Law and
Jurisprudence, 1993 revised ed., p. 556.
[21] Ocampo v. Court of Appeals, 233 SCRA 551, June 30, 1994.

EN BANC
[G.R. No. L-42283. March 18, 1985.]
BUENAVENTURA ANGELES, ET AL., plaintiffs-appellees, vs. URSULA TORRES CALASANZ, ET AL.,
defendants-appellants.
SYLLABUS
1.
CIVIL LAW; OBLIGATIONS AND CONTRACTS; RECIPROCAL OBLIGATIONS; RIGHT TO RESCIND;
MAY BE EXERCISED EXTRA-JUDICIALLY. Article 1191 is explicit. In reciprocal obligations, either party
has the right to rescind the contract upon the failure of the other to perform the obligation assumed
thereunder. Moreover, there is nothing in the law that prohibits the parties from entering into an
agreement that violation of the terms of the contract would cause its cancellation even without court
intervention (Froilan v. Pan Oriental Shipping, Co., et al., 12 SCRA 276) "Well settled is, however, the
rule that a judicial action for the rescission of a contract is not necessary where the contract provides
that it may be revoked and cancelled for violation of any of its terms and conditions' (Lopez v.
Commissioner of Customs, 37 SCRA 327, 334, and cases cited therein) . . . .
2.
ID.; ID.; ID.; ID.; ID.; NOTICE, INDISPENSABLE. The rule that it is not always necessary for the
injured party to resort to court for rescission of the contract when the contract itself provides that it
may be rescinded for violation of its terms and conditions, was qualified by this Court in University of
the Philippines v. De los Angeles, (35 SCRA 102) where we explained that: "Of course, it must be
understood that the act of a party in treating a contract as cancelled or resolved on account of
infractions by the other contracting party must be made known to the other and is always provisional,
being ever subject to scrutiny and review by the proper court. If the other party denies that rescission is
justified, it is free to resort to judicial action in its own behalf, and bring the matter to court. Then,
should the court, after due hearing, decide that the resolution of the contract was not warranted, the
responsible party will be sentenced to damages; in the contrary case, the resolution will be affirmed,
and the consequent indemnity awarded to the party prejudiced. . . .
3.
ID.; ID.; ID.; ID.; NOT ABSOLUTE. The right to rescind the contract for non-performance of
one of its stipulations, therefore, is not absolute. In Universal Food Corp. v. Court of Appeals (33 SCRA 1)
the Court stated that "The general rule is that rescission of a contract will not be permitted for a
slight or casual breach, but only for such substantial and fundamental breach as would defeat the very
object of the parties in making the agreement. (Song Fo & Co. v. Hawaiian-Philippine Co., 47 Phil. 821,
827) The question of whether a breach of a contract is substantial depends upon the attendant
circumstances. (Corpus v. Hon. Alikpala, et al., L-23707 & L-23720, Jan. 17, 1968)." . . . .
4.
ID.; ID.; ID.; RESCISSION NOT PROPER WHERE THERE IS SUBSTANTIAL PERFORMANCE OF
OBLIGATION. The breach of the contract adverted to by the defendants-appellants is so slight and
casual when we consider that apart from the initial downpayment of P392.00 the plaintiffs-appellees
had already paid the monthly installments for a period of almost nine (9) years. In other words, in only a
short time, the entire obligation would have been paid. Furthermore, although the principal obligation

was only P3,920.00 excluding the 7 percent interests, the plaintiffs-appellees had already paid an
aggregate amount of P4,533.38. To sanction the rescission made by the defendants-appellants will work
injustice to the plaintiffs-appellees. (See J.M. Tuazon and Co., Inc. v. Javier, 31 SCRA 829) It would
unjustly enrich the defendants-appellants. Article 1234 of the Civil Code which provides that: "If the
obligation has been substantially performed in good faith, the obligor may recover as though there had
been a strict and complete fulfillment, less damages suffered by the obligee."
5.
ID.; ID.; ID.; RIGHT OF RESCISSION; ACCEPTANCE OF DELAYED PAYMENTS OF INSTALLMENTS
CONSTITUTES WAIVER AND ESTOPPEL. The defendants-appellants' contention is without merit. We
agree with the plaintiffs-appellees that when the defendants-appellants, instead of availing of their
alleged right to rescind, have accepted and received delayed payments of installments, though the
plaintiffs-appellees have been in arrears beyond the grace period mentioned in paragraph 6 of the
contract, the defendants-appellants have waived and are now estopped from exercising their alleged
right of rescission.
6.
ID.; ID.; CONTRACT TO SELL FALLS INTO THE CATEGORY OF A CONTRACT OF ADHESION. The
contract to sell entered into by the parties has some characteristics of a contract of adhesion. The
defendants-appellants drafted and prepared the contract. The plaintiffs-appellees, eager to acquire a lot
upon which they could build a home, affixed their signatures and assented to the terms and conditions
of the contract. They had no opportunity to question nor change any of the terms of the agreement. It
was offered to them on a "take it or leave it" basis. In Sweet Lines, Inc. v. Teves (83 SCRA 361).
7.
ID.; ID.; ID.; CONSTRUED AGAINST ONE WHO CAUSED IT. The contract to sell, being a contract
of adhesion, must be construed against the party causing it. We agree with the observation of the
plaintiffs-appellees to the effect that "the terms of a contract must be interpreted against the party who
drafted the same, especially where such interpretation will help effect justice to buyers who, after
having invested a big amount of money, are now sought to be deprived of the same thru the prayed
application of a contract clever in its phraseology, condemnable in its lopsidedness and injurious in its
effect which, in essence, and in its entirety is most unfair to the buyers."
DECISION
GUTIERREZ, JR., J p:
This is an appeal from the decision of the Court of First Instance of Rizal, Seventh Judicial District, Branch
X, declaring the contract to sell as not having been validly cancelled and ordering the defendantsappellants to execute a final deed of sale in favor of the plaintiffs-appellees, to pay P500.00 attorney's
fees and costs. cdrep
The facts being undisputed, the Court of Appeals certified the case to us since only pure questions of law
have been raised for appellate review.

On December 19, 1957, defendants-appellants Ursula Torres Calasanz and Tomas Calasanz and
plaintiffs-appellees Buenaventura Angeles and Teofila Juani entered into a contract to sell a piece of
land located in Cainta, Rizal for the amount of P3,920.00 plus 7% interest per annum.
The plaintiffs-appellees made a downpayment of P392.00 upon the execution of the contract. They
promised to pay the balance in monthly installments of P41.20 until fully paid, the installments being
due and payable on the 19th day of each month. The plaintiffs-appellees paid the monthly installments
until July 1966, when their aggregate payment already amounted to P4,533.38. On numerous occasions,
the defendants-appellants accepted and received delayed installment payments from the plaintiffsappellees.
On December 7, 1966, the defendants-appellants wrote the plaintiffs-appellees a letter requesting the
remittance of past due accounts.
On January 28, 1967, the defendants-appellants cancelled the said contract because the plaintiffsappellees failed to meet subsequent payments. The plaintiffs' letter with their plea for reconsideration
of the said cancellation was denied by the defendants-appellants.
The plaintiffs-appellees filed Civil Case No. 8943 with the Court of First Instance of Rizal, Seventh Judicial
District, Branch X to compel the defendants-appellants to execute in their favor the final deed of sale
alleging inter alia that after computing all subsequent payments for the land in question, they found out
that they have already paid the total amount of P4,533.38 including interests, realty taxes and incidental
expenses for the registration and transfer of the land.
The defendants-appellants alleged in their answer that the complaint states no cause of action and that
the plaintiffs-appellees violated paragraph six (6) of the contract to sell when they failed and refused to
pay and/or offer to pay the monthly installments corresponding to the month of August, 1966 for more
than five (5) months, thereby constraining the defendants-appellants to cancel the said contract. LLphil
The lower court rendered judgment in favor of the plaintiffs-appellees. The dispositive portion of the
decision reads:
"WHEREFORE, based on the foregoing considerations, the Court hereby renders judgment in favor of the
plaintiffs and against the defendants declaring that the contract subject matter of the instant case was
NOT VALIDLY cancelled by the defendants. Consequently, the defendants are ordered to execute a final
Deed of Sale in favor of the plaintiffs and to pay the sum of P500.00 by way of attorney's fees. Costs
against the defendants."
A motion for reconsideration filed by the defendants-appellants was denied.
As earlier stated, the then Court of Appeals certified the case to us considering that the appeal involves
pure questions of law.
The defendants-appellants assigned the following alleged errors of the lower court:

First Assignment of Error

THE LOWER COURT ERRED IN NOT HOLDING THE CONTRACT TO SELL (ANNEX "A" OF COMPLIANCE) AS
HAVING BEEN LEGALLY AND VALIDLY CANCELLED.
Second Assignment of Error
EVEN ASSUMING ARGUENDO THAT THE SAID CONTRACT TO SELL HAS NOT BEEN LEGALLY AND VALIDLY
CANCELLED, THE LOWER COURT ERRED IN ORDERING DEFENDANTS TO EXECUTE A FINAL DEED OF SALE
IN FAVOR OF THE PLAINTIFF.
Third Assignment of Error
THE LOWER COURT ERRED IN ORDERING DEFENDANTS TO PAY PLAINTIFFS THE SUM OF P500.00 AS
ATTORNEY'S FEES.
The main issue to be resolved is whether or not the contract to sell has been automatically and validly
cancelled by the defendants-appellants.
The defendants-appellants submit that the contract was validly cancelled pursuant to paragraph six of
the contract which provides:
xxx

xxx

xxx

"SIXTH. In case the party of the SECOND PART fails to satisfy any monthly installments, or any other
payments herein agreed upon, he is granted a month of grace within which to make the retarded
payment, together with the one corresponding to the said month of grace; it is understood, however,
that should the month of grace herein granted to the party of the SECOND PART expired; without the
payments corresponding to both months having been satisfied, an interest of 10% per annum will be
charged on the amounts he should have paid; it is understood further, that should a period of 90 days
elapse, to begin from the expiration of the month of grace herein mentioned, and the party of SECOND
PART has not paid all the amounts he should have paid with the corresponding interest up to that date,
the party of the FIRST PART has the right to declare this contract cancelled and of no effect, and as
consequence thereof, the party of the FIRST PART may dispose of the parcel of land covered by this
contract in favor of other persons, as if this contract had never been entered into. In case of such
cancellation of the contract, all the amounts paid in accordance with this agreement together with all
the improvements made on the premises, shall be considered as rents paid for the use and occupation
of the above mentioned premises, and as payment for the damages suffered by failure of the party of
the SECOND PART to fulfill his part of the agreement, and the party of the SECOND PART hereby
renounces all his right to demand or reclaim the return of the same and obliges himself to peacefully
vacate the premises and deliver the same to the party of the FIRST PART." (Italics supplied by appellant)
xxx

xxx

xxx

The defendants-appellants argue that the plaintiffs-appellees failed to pay the August, 1966 installment
despite demands for more than four (4) months. The defendants-appellants point to Jocson v. Capitol
Subdivision (G.R. No. L-6573, February 28, 1955) where this Court upheld the right of the subdivision
owner to automatically cancel a contract to sell on the strength of a provision or stipulation similar to
paragraph 6 of the contract in this case. The defendants-appellants also argue that even in the absence
of the aforequoted provision, they had the right to cancel the contract to sell under Article 1191 of the
Civil Code of the Philippines.
The plaintiffs-appellees on the other hand contend that the Jocson ruling does not apply. They state that
paragraph 6 of the contract to sell is contrary to law insofar as it provides that in case of specified
breaches of its terms, the sellers have the right to declare the contract cancelled and of no effect,
because it granted the sellers an absolute and automatic right of rescission.
Article 1191 of the Civil Code on the rescission of reciprocal obligations provides:
"The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not
comply with what is incumbent upon him.
"The injured party may choose between the fulfillment and the rescission of the obligation, with the
payment of damages in either case. He may also seek rescission, even after he has chosen fulfillment, if
the later should become impossible."
xxx

xxx

xxx

Article 1191 is explicit. In reciprocal obligations, either party has the right to rescind the contract upon
the failure of the other to perform the obligation assumed thereunder. Moreover, there is nothing in the
law that prohibits the parties from entering into an agreement that violation of the terms of the
contract would cause its cancellation even without court intervention (Froilan v. Pan Oriental Shipping,
Co., et al., 12 SCRA 276)
"Well settled is, however, the rule that a judicial action for the rescission of a contract is not necessary
where the contract provides that it may be revoked and cancelled for violation of any of its terms and
conditions' (Lopez v. Commissioner of Customs, 37 SCRA 327, 334, and cases cited therein).
"Resort to judicial action for rescission is obviously not contemplated . . . The validity of the stipulation
can not be seriously disputed. It is in the nature of a facultative resolutory condition which in many
cases has been upheld by this Court. (Ponce Enrile v. Court of Appeals, 29 SCRA 504)."
The rule that it is not always necessary for the injured party to resort to court for rescission of the
contract when the contract itself provides that it may be rescinded for violation of its terms and
conditions, was qualified by this Court in University of the Philippines v. De los Angeles, (35 SCRA 102)
where we explained that:
"Of course, it must be understood that the act of a party in treating a contract as cancelled or resolved
on account of infractions by the other contracting party must be made known to the other and is always

provisional, being ever subject to scrutiny and review by the proper court. If the other party denies that
rescission is justified, it is free to resort to judicial action in its own behalf, and bring the matter to court.
Then, should the court, after due hearing, decide that the resolution of the contract was not warranted,
the responsible party will be sentenced to damages; in the contrary case, the resolution will be affirmed,
and the consequent indemnity awarded to the party prejudiced.
"In other words, the party who deems the contract violated many consider it resolved or rescinded, and
act accordingly, without previous court action, but it proceeds at its own risk. For it is only the final
judgment of the corresponding court that will conclusively and finally settle whether the action taken
was or was not correct in law . . .
"We see no conflict between this ruling and the previous jurisprudence of this Court invoked by
respondent declaring that judicial action is necessary for the resolution of a reciprocal obligation;
(Ocejo, Perez & Co. v. International Banking Corp., 37 Phil. 631; Republic v. Hospital de San Juan de Dios,
et al., 84 Phil. 820) since in every case where the extrajudicial resolution is contested only the final
award of the court of competent jurisdiction can conclusively settle whether the resolution was proper
or not. It is in this sense that judicial action will be necessary, as without it, the extrajudicial resolution
will remain contestable and subject to judicial invalidation, unless attack thereon should become barred
by acquiescence, estoppel or prescription."
The right to rescind the contract for non-performance of one of its stipulations, therefore, is not
absolute. In Universal Food Corp. v. Court of Appeals (33 SCRA 1) the Court stated that
"The general rule is that rescission of a contract will not be permitted for a slight or casual breach, but
only for such substantial and fundamental breach as would defeat the very object of the parties in
making the agreement. (Song Fo & Co. v. Hawaiian-Philippine Co., 47 Phil. 821, 827) The question of
whether a breach of a contract is substantial depends upon the attendant circumstances. (Corpus v.
Hon. Alikpala, et al., L-23707 & L-23720, Jan. 17, 1968)." . . .
The defendants-appellants state that the plaintiffs-appellees violated Section two of the contract to sell
which provides:
"SECOND. That in consideration of the agreement of sale of the above described property, the party
of the SECOND PART obligates himself to pay to the party of the FIRST PART the Sum of THREE
THOUSAND NINE HUNDRED TWENTY ONLY (P3,920.00), Philippine Currency, plus interest at the rate of
7% per annum, as follows:
"(a)

The amount of THREE HUNDRED NINETY TWO only (P392.00) when this contract is signed; and

"(b)
The sum of FORTY ONE AND 20/100 ONLY (P41.20) on or before the 19th day of each month,
from this date until the total payment of the price above stipulated, including interest."
because they failed to pay the August installment, despite demand, for more than four (4) months.

The breach of the contract adverted to by the defendants-appellants is so slight and casual when we
consider that apart from the initial downpayment of P392.00 the plaintiffs-appellees had already paid
the monthly installments for a period of almost nine (9) years. In other words, in only a short time, the
entire obligation would have been paid. Furthermore, although the principal obligation was only
P3,920.00 excluding the 7 percent interests, the plaintiffs-appellees had already paid an aggregate
amount of P4,533.38. To sanction the rescission made by the defendants-appellants will work injustice
to the plaintiffs-appellees. (See J.M. Tuazon and Co., Inc. v. Javier, 31 SCRA 829) It would unjustly enrich
the defendants-appellants.
Article 1234 of the Civil Code which provides that: cdphil
"If the obligation has been substantially performed in good faith, the obligor may recover as though
there had been a strict and complete fulfillment, less damages suffered by the obligee."
also militates against the unilateral act of the defendants-appellants in cancelling the contract.
We agree with the observation of the lower court to the effect that:
"Although the primary object of selling subdivided lots is business, yet, it cannot be denied that this
subdivision is likewise purposely done to afford those landless, low income group people of realizing
their dream of a little parcel of land which they can really call their own."
The defendants-appellants cannot rely on paragraph 9 of the contract which provides:
"NINTH. That whatever consideration of the party of the FIRST PART may concede to the party of the
SECOND PART, as not exacting a strict compliance with the conditions of paragraph 6 of this contract, as
well as any other condonation that the party of the FIRST PART may give to the party of the SECOND
PART with regards to the obligations of the latter, should not be interpreted as a renunciation on the
part of the party of the FIRST PART of any right granted it by this contract, in case of default or noncompliance by the party of the SECOND PART."
The defendants-appellants argue that paragraph nine clearly allows the seller to waive the observance
of paragraph 6 not merely once, but for as many times as he wishes.
The defendants-appellants' contention is without merit. We agree with the plaintiffs-appellees that
when the defendants-appellants, instead of availing of their alleged right to rescind, have accepted and
received delayed payments of installments, though the plaintiffs-appellees have been in arrears beyond
the grace period mentioned in paragraph 6 of the contract, the defendants-appellants have waived and
are now estopped from exercising their alleged right of rescission. In De Guzman v. Guieb (48 SCRA 68),
we held that:
xxx

xxx

xxx

"But defendants do not deny that in spite of the long arrearages, neither they nor their predecessor,
Teodoro de Guzman, even took steps to cancel the option or to eject the appellees from the home-lot in

question. On the contrary, it is admitted that the delayed payments were received without protest or
qualification. . . . Under these circumstances, We cannot but agree with the lower court that at the time
appellees exercised their option, appellants had already forfeited their right to invoke the above-quoted
provision regarding the nullifying effect of the non-payment of six months rentals by appellees by their
having accepted without qualification on July 21, 1964 the full payment by appellees of all their
arrearages."
The defendants-appellants contend in the second assignment of error that the ledger of payments show
a balance of P671.67 due from the plaintiffs-appellees. They submit that while it is true that the total
monthly installments paid by the plaintiffs-appellees may have exceeded P3,920.00, a substantial
portion of the said payments were applied to the interests since the contract specifically provides for a
7% interest per annum on the remaining balance. The defendants-appellants rely on paragraph 2 of the
contract which provides:
"SECOND. That in consideration of the agreement of sale of the above described property, the party
of the SECOND PART obligates himself to pay to the party of the FIRST PART the Sum of THREE
THOUSAND NINE HUNDRED TWENTY ONLY (P3,920.00), Philippine Currency, plus interest at the rate of
7% per annum . . . ." (Emphasis supplied)
The plaintiffs-appellees on the other hand are firm in their submission that since they have already paid
the defendants-appellants a total sum of P4,533.38, the defendants-appellants must now be compelled
to execute the final deed of sale pursuant to paragraph 12 of the contract which provides:
"TWELFTH. That once the payment of the sum of P3,920.00, the total price of the sale is completed,
the party to the FIRST PART will execute in favor of the party of the SECOND PART, the necessary deed
or deeds to transfer to the latter the title of the parcel of land sold, free from all liens and encumbrances
other than those expressly provided in this contract; it is understood, however, that all the expenses
which may be incurred in the said transfer of title shall be paid by the party of the SECOND PART, as
above stated."
Closely related to the second assignment of error is the submission of the plaintiffs-appellees that the
contract herein is a contract of adhesion.
We agree with the plaintiffs-appellees. The contract to sell entered into by the parties has some
characteristics of a contract of adhesion. The defendants-appellants drafted and prepared the contract.
The plaintiffs-appellees, eager to acquire a lot upon which they could build a home, affixed their
signatures and assented to the terms and conditions of the contract. They had no opportunity to
question nor change any of the terms of the agreement. It was offered to them on a "take it or leave it"
basis. In Sweet Lines, Inc. v. Teves (83 SCRA 361), we held that:
xxx

xxx

xxx

". . .' (W)hile generally, stipulations in a contract come about after deliberate drafting by the parties
thereto, .. there are certain contracts almost all the provisions of which have been drafted only by one

party, usually a corporation. Such contracts are called contracts of adhesion, because the only
participation of the party is the signing of his signature or his `adhesion' thereto. Insurance contracts,
bills of lading, contracts of sale of lots on the installment plan fall into this category.' (Paras, Civil Code of
the Philippines, Seventh ed., Vol. I, p. 80.)" (Emphasis supplied)
While it is true that paragraph 2 of the contract obligated the plaintiffs-appellees to pay the defendantsappellants the sum of P3,920.00 plus 7% interest per annum, it is likewise true that under paragraph 12
the seller is obligated to transfer the title to the buyer upon payment of the P3,920.00 price sale.
The contract to sell, being a contract of adhesion, must be construed against the party causing it. We
agree with the observation of the plaintiffs-appellees to the effect that "the terms of a contract must be
interpreted against the party who drafted the same, especially where such interpretation will help effect
justice to buyers who, after having invested a big amount of money, are now sought to be deprived of
the same thru the prayed application of a contract clever in its phraseology, condemnable in its
lopsidedness and injurious in its effect which, in essence, and in its entirety is most unfair to the buyers."
Thus, since the principal obligation under the contract is only P3,920.00 and the plaintiffs-appellees have
already paid an aggregate amount of P4,533.38, the courts should only order the payment of the few
remaining installments but not uphold the cancellation of the contract. Upon payment of the balance of
P671.67 without any interest thereon, the defendants-appellants must immediately execute the final
deed of sale in favor of the plaintiffs-appellees and execute the necessary transfer documents as
provided in paragraph 12 of the contract. The attorney's fees are justified. cdrep
WHEREFORE, the instant petition is DENIED for lack of merit. The decision appealed from is AFFIRMED
with the modification that the plaintiffs-appellees should pay the balance of SIX HUNDRED SEVENTY
ONE PESOS AND SIXTY-SEVEN CENTAVOS (671.67) without any interests. Costs against the defendantsappellants.
SO ORDERED.
Melencio-Herrera, Plana, Relova De la Fuente and Alampay, JJ., concur.
Teehankee, J., took no part.

THIRD DIVISION
[G.R. No. 55665. February 8, 1989.]
DELTA MOTOR CORPORATION, petitioner, vs. EDUARDA SAMSON GENUINO, JACINTO S. GENUINO, Jr.,
VICTOR S. GENUINO, HECTOR S. GENUINO, EVELYN S. GENUINO, and The COURT OF APPEALS,
respondents.
Alcasid, Villanueva & Associates for petitioner.
Luna, Puruganan, Sison & Ongkiko for respondents.
SYLLABUS
1.
CIVIL LAW; OBLIGATIONS AND CONTRACT; RESCISSION; ART. 1191, NEW CIVIL CODE,
CONSTRUED. Construing Art. 1191 of the new Civil Code, the Supreme Court has stated that,
"[r]escission will be ordered only where the breach complained of is substantial as to defeat the object
of the parties in entering into the agreement. It will not be granted where the breach is slight or casual."
[Phil. Amusement Enterprises, Inc. v. Natividad, G.R. No. L-21876, September 29, 1967, 21 SCRA 284,
290.] Further, "[t]he question of whether a breach of contract is substantial depends upon the attendant
circumstances."
2.
ID.; ID.; POWER TO RESCIND, NOT ABSOLUTE. The power to rescind under Art. 1191 is not
absolute. "[T]he act of a party in treating a contract as cancelled or resolved on account of infractions by
the other contracting party must be made known to the other and is always provisional, being ever
subject to scrutiny and review by the proper court."
3.
ID.; ID.; ID.; NON-PERFORMANCE OF SUSPENSIVE CONDITION. While there is merit in Delta's
claim that the sale is subject to suspensive conditions, the Court finds that it has, nevertheless, waived
performance of these conditions and opted to go on with the contracts although at a much higher price.
Art. 1545 of the Civil Code provides: "Where the obligation of either party to a contract of sale is subject
to any condition which is not performed, such party may refuse to proceed with the contract or he may
waive performance of the condition . . . [Emphasis supplied.]
4.
ID.; ID.; SALE; PERFECTION THEREOF. As provided by the Civil Code: Art. 1319. "Consent is
manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to
constitute the contract." Art. 1475. "The contract of sale is perfected at the moment there is a meeting
of minds upon the thing which is the object of the contract and upon the price." Thus, the moment
private respondents accepted the offer of Delta, the contract of sale between them was perfected and
neither party could change the terms.
DECISION
CORTES, J p:

Petitioner, through this petition for review by certiorari, appeals from the decision of respondent
appellate court in CA-G.R. No. 59848-R entitled "Eduarda Samson Genuino, et al. v. Delta Motor
Corporation" promulgated on October 27, 1980.
The facts are as follows:
Petitioner Delta Motor Corporation (hereinafter referred to as Delta) is a corporation duly organized and
existing under Philippine laws.
On the other hand, private respondents are the owners of an iceplant and cold storage located at 1879
E. Rodriguez Sr. Avenue, Quezon City doing business under the name "Espaa Extension Iceplant and
Cold Storage."
In July 1972, two letter-quotations were submitted by Delta to Hector Genuino offering to sell black iron
pipes.
The letter dated July 3, 1972 quoted Delta's selling price for 1,200 length of black iron pipes schedule 40,
2" x 20" including delivery at P66,000 with the following terms of payment:
a.
20% of the net contract price or P13,200.00 will be due and payable upon signing of the contract
papers.
b.
20% of the net contract price or P13,200.00 will be due and payable before commencement of
delivery.
c.
The balance of 60% of the net contract price or P39,600.00 with 8% financing charge per annum
will be covered by a Promissory Note bearing interest at the rate of 14% per annum and payable in
TWELVE (12) equal monthly installment (sic), the first of which will become due thirty (30) days after the
completion of delivery. Additional 14% will be charged for all delayed payments. [Exh. "A"; Exh. "1".].
The second letter-quotation dated July 18, 1972 provides for the selling price of 150 lengths of black iron
pipes schedule 40, 1 1/4" x 20" including delivery at P5,400.00 with the following terms of payment:
a.
50% of the net contract price or P2,700.00 will be due and payable upon signing of the contract
papers.
b.
50% of the net contract price or P2,700.00 will be due and payable before commencement of
delivery. [Exh. "C"; Exh. "2".]
Both letter-quotations also contain the following stipulations as to delivery and price offer:
DELIVERY.
Ex-stock subject to prior sales.
xxx

xxx

xxx

Our price offer indicated herein shall remain firm within a period of thirty (30) days from the date
hereof. Any order placed after said period will be subject to our review and confirmation. [Exhs. "A" and
"C"; Exhs. "1" and "2".]
Hector Genuino was agreeable to the offers of Delta hence, he manifested his conformity thereto by
signing his name in the space provided on July 17, 1972 and July 24, 1972 for the first and second letterquotations, respectively.
It is undisputed that private respondents made initial payments on both contracts for the first
contract, P13,200.00 and, for the second, P2,700.00 for a total sum of P15,900.00 on July 28, 1972
[Exhs. "B" and "D"].
Likewise unquestionable are the following the nondelivery of the iron pipes by Delta; the nonpayment
of the subsequent installments by the Genuinos; and the non-execution by the Genuinos of the
promissory note called for by the first contract.
The evidence presented in the trial court also showed that sometime in July 1972 Delta offered to
deliver the iron pipes but the Genuinos did not accept the offer because the construction of the ice plant
building where the pipes were to be installed was not yet finished.
Almost three years later, on April 15, 1975, Hector Genuino, in behalf of Espaa Extension Ice Plant and
Cold Storage, asked Delta to deliver the iron pipes within thirty (30) days from its receipt of the request.
At the same time private respondents manifested their preparedness to pay the second installment on
both contracts upon notice of Delta's readiness to deliver.
Delta countered that the black iron pipes cannot be delivered on the prices quoted as of July 1972. The
company called the attention of the Genuinos to the stipulation in their two (2) contracts that the
quoted prices were good only within thirty (30) days from date of offer. Whereupon Delta sent new
price quotations to the Genuinos based on its current price of black iron pipes, as follows: cdphil
P241,800.00 for 1,200 lengths of black iron pipes schedule 40, 2" x 20" [Exh. "G-1".]
P17,550.00 for 150 lengths of black iron pipes schedule 40,1 1/4" x 20" [Exh. "G-2".]
The Genuinos rejected the new quoted prices and instead filed a complaint for specific performance
with damages seeking to compel Delta to deliver the pipes. Delta, in its answer prayed for rescission of
the contracts pursuant to Art. 1191 of the New Civil Code. The case was docketed as Civil Case No. Q20120 of the then Court of First Instance of Rizal, Branch XVIII, Quezon City.
After trial the Court of First Instance ruled in favor of Delta, the dispositive portion of its decision
reading as follows:
WHEREFORE, premises considered, judgment is rendered:
1.

Declaring the contracts, Annexes "A" and "C" of the complaint rescinded;

2.
Ordering defendant to refund to plaintiffs the sum of P15,900.00 delivered by the latter as down
payments on the aforesaid contracts;
3.

Ordering plaintiffs to pay defendant the sum of P10,000.00 as attorney's fees; and,

4.

To pay the costs of suit. [CFI Decision, pp. 13-14; Rollo, pp. 53-54.].

On appeal, the Court of Appeals reversed and ordered private respondents to make the payments
specified in "Terms of Payment (b)" of the contracts and to execute the promissory note required in
the first contract and thereafter, Delta should immediately commence delivery of the black iron pipes. *
[CA Decision, p. 20; Rollo, p. 75.].
The Court of Appeals cited two main reasons why it reversed the trial court, namely:
1.
As Delta was the one who prepared the contracts and admittedly, it had knowledge of the fact
that the black iron pipes would be used by the Genuinos in their cold storage plant which was then
undergoing construction and therefore, would require sometime before the Genuinos would require
delivery, Delta should have included in said contracts a deadline for delivery but it did not. As a matter
of fact neither did it insist on delivery when the Genuinos refused to accept its offer of delivery. [CA
Decision, pp. 16-17; Rollo, pp. 71-72.]
2.
Delta's refusal to make delivery in 1975 unless the Genuinos pay a price very much higher than
the prices it previously quoted would mean an amendment of the contracts. It would be too unfair for
the plaintiffs if they will be made to bear the increase in prices of the black iron pipes when they had
already paid quite an amount for said items and defendant had made use of the advance payments.
That would be unjust enrichment on the part of the defendant at the expense of the plaintiffs and is
considered an abominable business practice. [CA Decision, pp. 18-19; Rollo, pp. 73-74.]
Respondent court denied Delta's motion for reconsideration hence this petition for review praying for
the reversal of the Court of Appeals decision and affirmance of that of the trial court.
Petitioner argues that its obligation to deliver the goods under both contracts is subject to conditions
required of private respondents as vendees. These conditions are: payment of 20% of the net contract
price or P13,200.00 and execution of a promissory note called for by the first contract; and payment of
50% of the net contract price or P2,700.00 under the second contract. These, Delta posits, are
suspensive conditions and only upon their performance or compliance would its obligation to deliver the
pipes arise [Petition, pp. 9-12; Rollo, pp. 17-20.] Thus, when private respondents did not perform their
obligations; when they refused to accept petitioner's offer to deliver the goods; and, when it took them
three (3) long years before they demanded delivery of the iron pipes that in the meantime, great and
sudden fluctuation in market prices have occurred; Delta is entitled to rescind the two (2) contracts.
Delta relies on the following provision of law on rescission:
Art. 1191.
The power to rescind obligations is implied in reciprocal ones, in case one of the obligors
should not comply with what is incumbent upon him.

The injured party may choose between the fulfillment and the rescission of the obligation, with the
payment of damages in either case. He may also seek rescission, even after he has chosen fulfillment, if
the latter should become impossible.
The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a
period.
This is understood to be without prejudice to the rights of third persons who have acquired the thing, in
accordance with articles 1385 and 1388 and the Mortgage Law.
In construing Art. 1191, the Supreme Court has stated that, "[r]escission will be ordered only where the
breach complained of is substantial as to defeat the object of the parties in entering into the agreement.
It will not be granted where the breach is slight or casual." [Phil. Amusement Enterprises, Inc. v.
Natividad, G.R. No. L-21876, September 29, 1967, 21 SCRA 284, 290.] Further, "[t]he question of
whether a breach of contract is substantial depends upon the attendant circumstances." [Universal Food
Corporation v. Court of Appeals, G. R. No. L-29155, May 13, 1970, 33 SCRA 1, 18]. cdphil
In the case at bar, the conduct of Delta indicates that the Genuinos' non-performance of its obligations
was not a substantial breach, let alone a breach of contract, as would warrant rescission.
Firstly, it is undisputed that a month after the execution of the two (2) contracts, Delta's offer to deliver
the black iron pipes was rejected by the Genuinos who were "not ready to accept delivery because the
cold storage rooms have not been constructed yet. Plaintiffs (private respondents herein) were shortfunded, and did not have the space to accommodate the pipes they ordered" [CFI Decision, p. 9; Rollo,
p. 49].
Given this answer to its offer, Delta did not do anything. As testified by Crispin Villanueva, manager of
the Technical Service department of petitioner:
Q
You stated that you sent a certain Evangelista to the Espaa Extension and Cold Storage to offer
the delivery subject matter of the contract and then you said that Mr. Evangelista reported (sic) to you
that plaintiff would not accept delivery, is that correct, as a summary of your statement?
A

Yes, sir.

Now, what did you do in the premises (sic)?

A
Yes, well, we take the word of Mr. Evangelista. We could not deliver the said black iron pipes,
because as per information the Ice Plant is not yet finished.
Q

Did you not report that fact to . . . any other defendant-officials of the Delta Motor Corporation?

No.

And you did not do anything after that?

A
Because taking the word of my Engineer we did not do anything. [TSN, December 8, 1975, pp.
18-19.]
xxx

xxx

xxx

And secondly, three (3) years later when the Genuinos offered to make payment Delta did not raise any
argument but merely demanded that the quoted prices be increased. Thus, in its answer to private
respondents' request for delivery of the pipes, Delta countered:
Thank you for your letter dated April 15, 1975, requesting for delivery of Black Iron pipes.
We regret to say, however, that we cannot base our price on our proposals dated July 3 and July 18,
1972 as per the following paragraph quoted on said proposal:
"Our price offer indicated herein shall remain firm within a period of thirty (30) days from the date
hereof. Any order placed after said period will be subject to our review and confirmation."
We are, therefore, enclosing our re-quoted proposal based on our current price. [Exh. "G".]
Moreover, the power to rescind under Art. 1191 is not absolute. "[T]he act of a party in treating a
contract as cancelled or resolved on account of infractions by the other contracting party must be made
known to the other and is always provisional, being ever subject to scrutiny and review by the proper
court." [University of the Phils. v. De los Angeles, G. R. No. L-28602, September 29, 1970, 35 SCRA 102,
107; Emphasis supplied.]
In the instant case, Delta made no manifestation whatsoever that it had opted to rescind its contracts
with the Genuinos. It only raised rescission as a defense when it was sued for specific performance by
private respondents.
Further, it would be highly inequitable for petitioner Delta to rescind the two (2) contracts considering
the fact that not only does it have in its possession and ownership the black iron pipes, but also the
P15,900.00 down payments private respondents have paid. And if petitioner Delta claims the right to
rescission, at the very least, it should have offered to return the P15,900.00 down payments [See Art.
1385, Civil Code and Hodges v. Granada, 59 Phil. 429 (1934)]. cdrep
It is for these same reasons that while there is merit in Delta's claim that the sale is subject to
suspensive conditions, the Court finds that it has, nevertheless, waived performance of these conditions
and opted to go on with the contracts although at a much higher price. Art. 1545 of the Civil Code
provides:
Art. 1545.
Where the obligation of either party to a contract of sale is subject to any condition
which is not performed, such party may refuse to proceed with the contract or he may waive
performance of the condition . . . [Emphasis supplied.]
Finally, Delta cannot ask for increased prices based on the price offer stipulation in the contracts and in
the increase in the cost of goods. Reliance by Delta on the price offer stipulation is misplaced. Said

stipulation makes reference to Delta's price offer as remaining firm for thirty (30) days and thereafter
will be subject to its review and confirmation. The offers of Delta, however, were accepted by the
private respondents within the thirty (30) day period. And as stipulated in the two (2) letter-quotations,
acceptance of the offer gives rise to a contract between the parties:
In the event that this proposal is acceptable to you, please indicate your conformity by signing the space
provided herein below which also serves as a contract of this proposal. [Exhs. "A" and "C"; Exhs. "1" and
"2".]
And as further provided by the Civil Code:
Art. 1319.
Consent is manifested by the meeting of the offer and the acceptance upon the thing
and the cause which are to constitute the contract . . .
Art. 1475.
The contract of sale is perfected at the moment there is a meeting of minds upon thing
which is the object of the contract and upon the price.
Thus, the moment private respondents accepted the offer of Delta, the contract of sale between them
was perfected and neither party could change the terms thereof. prcd
Neither could petitioner Delta rely on the fluctuation in the market price of goods to support its claim
for rescission. As testified to by petitioner's Vice-President of Marketing for the Electronics,
Airconditioning and Refrigeration division, Marcelino Caja, the stipulation in the two (2) contracts as to
delivery, ex-stock subject to prior sales, means that "the goods have not been delivered and that there
are no prior commitments other than the sale covered by the contracts . . . once the offer is accepted,
the company has no more option to change the price." [CFI Decision, p. 5; Rollo, p. 45; Emphasis
supplied.] Thus, petitioner cannot claim for higher prices for the black iron pipes due to the increase in
the cost of goods. Based on the foregoing, petitioner Delta and private respondents Genuinos should
comply with the original terms of their contracts.
WHEREFORE, the decision of the Court of Appeals is hereby AFFIRMED.
SO ORDERED.
Fernan, C.J., Gutierrez, Jr., Feliciano and Bidin, JJ., concur.
Footnotes
*
The Court of Appeals decision was penned by Justice German. Justice de la Fuente wrote a
separate concurring opinion. Justice Cenzon concurred both with Justice German's decision and Justice
de la Fuente's opinion. Justice Gancayco, however, wrote a separate dissenting opinion to which Justice
Patajo concurred.

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION

G.R. No. 101762 July 6, 1993

VERMEN REALTY DEVELOPMENT CORPORATION, petitioner,
vs.
THE COURT OF APPEALS and SENECA HARDWARE CO., INC., respondents.
Ramon P. Gutierrez for petitioner.
Adriano Velasco for private respondent.

BIDIN, J.:
Petitioner seeks a review of the decision of the Court of Appeals in CA-G.R. CV No. 15730, which set
aside the decision of the Regional Trial Court of Quezon City, Branch 92 in Civil Case No. Q-45232. The
dispositive portion of the assailed decision reads as follows:
WHEREFORE, the decision a quo is set aside. As prayed for by plaintiff-appellant, the "Offsetting
Agreement" (Exhibit "E" or "2") is hereby rescinded. Room 601 of Phase I of the Vermen Pines
Condominium should be returned by plaintiff-appellant to defendant-appellee upon payment by the
latter of the sum of P330,855.25 to the former, plus damages in the sum of P5,000.00 and P50.00 for the
furnishings of Phase I of Condo (sic) Units Nos. 601 and 602, and three (3) day rental of Room 402 during
the Holy Week of 1982, respectively. In addition, defendant-appellee is hereby ordered to pay plaintiffappellant, who was compelled to litigate and hire the services of counsel to protect its interests against
defendant-appellee's violation of their Offsetting Agreement, the sum of P10,000.00 as an award for
attorney's fee (sic) and other expenses of litigation. The claim for unrealized profits in a sum equivalent
to 10% to 20% percent or P522,000.00 not having been duly proved, is therefore DENIED. No costs.
(Rollo, p. 31)
On March 2, 1981, petitioner Vermen Realty and Development Corporation, as First Party, and private
respondent Seneca Hardware Co., Inc., as Second Party, entered into a contract denominated as
"Offsetting Agreement". The said agreement contained the following stipulations:
1. That the FIRST PARTY is the owner/developer of VERMEN PINES CONDOMINIUM located at Bakakeng
Road, Baguio City;
2. That the SECOND PARTY is in business of construction materials and other hardware items;

3. That the SECOND PARTY desires to buy from the FIRST PARTY two (2) residential condominium units,
studio type, with a total floor area of 76.22 square meter (sic) more or less worth TWO HUNDRED
SEVENTY SIX THOUSAND (P276,000.00) PESOS only;
4. That the FIRST PARTY desires to but from the SECOND PARTY construction materials mostly steel bars,
electrical materials and other related items worth FIVE HUNDRED FIFTY TWO THOUSAND (P552,000.00)
PESOS only;
5. That the FIRST PARTY shall pay the SECOND PARTY TWO HUNDRED SEVENTY SIX THOUSAND
(P276,000.00) PESOS in cash upon delivery of said construction materials and the other TWO HUNDRED
SEVENTY SIX THOUSAND (P276,000.00) PESOS shall be paid in the form of two (2) residential
condominium units, studio type, with a total floor area of 76.22 square meter (sic) more or less also
worth P276,000.00;
6. That, for every staggered delivery of construction materials, fifty percent (50%) shall be paid by the
FIRST PARTY to the SECOND PARTY C.O.D. and, fifty percent (50%) shall be credited to the said
condominium unit in favor of the SECOND PARTY;
7. That the SECOND PARTY shall deliver to the FIRST PARTY said construction materials under the agreed
price and conditions stated in the price quotation approved by both parties and made an integral part of
this document;
8. That the SECOND PARTY is obliged to start delivering to the FIRST PARTY all items in the purchase
order seven (7) days from receipt of said purchase order until such time that the whole amount of
P552,000.00 is settled;
9. That the place of delivery shall be Vermen Pines Condominium at Bakakeng Road, Baguio City;
10. That the freight cost of said materials shall be borne fifty percent (50%) by the FIRST PARTY and fifty
percent (50%) by the SECOND PARTY;
11. That the FIRST PARTY pending completion of the VERMEN PINES CONDOMINIUM PHASE II which is
the subject of this contract, shall deliver to the SECOND PARTY the possession of residential
condominium, Phase I, Unit Nos. 601 and 602, studio type with a total area of 76.22 square meters or
less, worth P276,000.00;
12. That after the completion of Vermen Pines Condominium Phase II, the SECOND PARTY shall be given
by the FIRST PARTY the first option to transfer from Phase I to Phase II under the same price, terms and
conditions. (Rollo, pp. 26-28).
As found by the appellate court and admitted by both parties, private respondent had paid petitioner
the amount of P110,151.75, and at the same time delivered construction materials worth P219,727.00.
Pending completion of Phase II of the Vermen Pines Condominiums, petitioner delivered to private
respondent units 601 and 602 at Phase I of the Vermen Pines Condominiums (Rollo, p. 28). In 1982, the
petitioner repossessed unit 602. As a consequence of the repossession, the officers of the private

respondent corporation had to rent another unit for their use when they went to Baguio on April 8,
1982. On May 10, 1982, the officers of the private respondent corporation requested for a clarification
of the petitioner's action of preventing them and their families from occupying condominium unit 602.
In its reply dated May 24, 1982, the petitioner corporation averred that Room 602 was leased to
another tenant because private respondent corporation had not paid anything for purchase of the
condominium unit. Petitioner corporation demanded payment of P27,848.25 representing the balance
of the purchase price of Room 601.
In 1983, the loan application for the construction of the Vermen Pines Condominium Phase II was
denied. Consequently, construction of the condominium project stopped and has not been resumed
since then.
On June 21, 1985, private respondent filed a complaint with the Regional Trial Court of Quezon City
(Branch 92) for rescission of the Offsetting Agreement with damages. In said complaint, private
respondent alleged that petitioner Vermen Realty Corporation had stopped issuing purchase orders of
construction materials after April, 1982, without valid reason, thus resulting in the stoppage of deliveries
of construction materials on its (Seneca Hardware) part, in violation of the Offsetting Agreement.
In its Answer filed on August 15, 1985, petitioner alleged that the fault lay with private respondent
(plaintiff therein): although petitioner issued purchase orders, it was private respondent who could not
deliver the supplies ordered, alleging that they were out of stock. (However, during a hearing on January
28, 1987, the Treasurer of petitioner corporation, when asked where the purchase orders were, alleged
that she was going to produce the same in court, but the same was never produced (Rollo, p. 30).
Moreover, private respondent quoted higher prices for the construction materials which were available.
Thus, petitioner had to resort to its other suppliers. Anent the query as to why Unit 602 was leased to
another tenant, petitioner averred that this was done because private respondent had not paid anything
for it.
As of December 16, 1986, private respondent had paid petitioner P110,151.75 in cash, made deliveries
of construction materials worth P219,727.00, leaving a balance of P27,848.25 representing the purchase
price of unit 601 (Rollo, p. 28). The price of one condominium unit was P138,000.00.
After conducting hearings, the trial court rendered a decision dismissing the complaint and ordering the
plaintiff (private respondent in this petition) to pay defendant (petitioner in this petition) on its
counterclaim in the amount of P27,848.25 representing the balance due on the purchase price of
condominium unit 601.
On appeal, respondent court reversed the trial court's decision as adverted to above.
Petitioner now comes before us with the following assignment of errors:
I

THE RESPONDENT COURT OF APPEALS ERRED, AND ITS ERROR IS REVIEWABLE BY THIS HONORABLE
COURT, WHEN IT SUPPLANTED CONTRARY TO THE EVIDENCE ON RECORD, THE TRIAL COURT'S
CONCLUSIONS THAT PETITIONER DID NOT VIOLATE THE "OFFSETTING AGREEMENT" IT ENTERED INTO
WITH THE SENECA HARDWARE CO., INC. WITH ITS TOTALLY BASELESS "PERCEPTION" THAT IT WAS
PETITIONER WHICH DISCONTINUED TO ISSUE PURCHASE ORDERS DUE TO THE STOPPAGE OF THE
CONSTRUCTION OF PHASE II OF THE CONDOMINIUM PROJECT WHEN THE LOAN ON THE SAID PROJECT
WAS STOPPED.
II
THE RESPONDENT COURT OF APPEALS ERRED, AND ITS ERROR IS REVIEWABLE BY THIS HONORABLE
COURT, WHEN IT CONCLUDED THAT IT WAS PETITIONER WHICH BREACHED THE "OFFSETTING
AGREEMENT" BECAUSE IT DID NOT SEND PURCHASE ORDERS TO PRIVATE RESPONDENT AND
DISCONTINUED THE CONSTRUCTION OF THE CONDOMINIUM PROJECT DESPITE THE FACT THAT THE
EXHIBITS ATTESTING TO THIS FACT WAS FORMALLY OFFERED IN EVIDENCE IN COURT AND MENTIONED
BY IT IN ITS DECISION.
III
THE RESPONDENT COURT OF APPEALS ERRED, AND ITS ERROR IS REVIEWABLE BY THIS HONORABLE
COURT, WHEN IT CONCLUDED THAT IT WAS PETITIONER WHICH BREACHED THE "OFFSETTING
AGREEMENT" DESPITE THE ADMISSION MADE BY PRIVATE RESPONDENT'S OWN WITNESS THAT
PETITIONER HAD THE DISCRETION TO ORDER OR NOT TO ORDER THE CONSTRUCTION MATERIAL (SIC)
FROM THE FORMER. (Rollo, p. )
The issue presented before the Court is whether or not the circumstances of the case warrant rescission
of the Offsetting Agreement as prayed for by Private Respondent when he instituted the case before the
trial court.
We rule in favor of private respondent. There is no controversy that the provisions of the Offsetting
Agreement are reciprocal in nature. Reciprocal obligations are those created or established at the same
time, out of the same cause, and which results in a mutual relationship of creditor and debtor between
parties. In reciprocal obligations, the performance of one is conditioned on the simultaneous fulfillment
of the other obligation (Abaya vs. Standard Vacuum Oil Co., 101 Phil. 1262 [1957]). Under the
agreement, private respondent shall deliver to petitioner construction materials worth P552,000.00
under the conditions set forth in the Offsetting Agreement. Petitioner's obligation under the agreement
is three-fold: he shall pay private respondent P276,000.00 in cash; he shall deliver possession of units
601 and 602, Phase I, Vermen Pines Condominiums (with total value of P276,000.00) to private
respondent; upon completion of Vermen Pines Condominiums Phase II, private respondent shall be
given option to transfer to similar units therein.
Article 1191 of the Civil Code provides the remedy of rescission in (more appropriately, the term is
"resolution") in case of reciprocal obligations, where one of the obligors fails to comply with that is
incumbent upon him.

The general rule is that rescission of a contract will not be permitted for a slight or causal breach, but
only for such substantial and fundamental breach as would defeat the very object of the parties in
executing the agreement. The question of whether a breach of contract is substantial depends upon the
attendant circumstances (Universal Food Corp. vs. Court of Appeals, 33 SCRA 1, [1970]).
In the case at bar, petitioner argues that it was private respondent who failed to perform its obligation
in the Offsetting Agreement. It averred that contrary to the appellate court's ruling, the mere stoppage
of the loan for the construction of Phase II of the Vermen Pines Condominiums should not have had any
effect on the fulfillment of the obligations set forth in the Offsetting Agreement. Petitioner moreover
stresses that contrary to private respondent's averments, purchase orders were sent, but there was
failure to deliver the materials ordered because they were allegedly out of stock. Petitioner points out
that, as admitted by private respondent's witness, petitioner had the discretion to order or not to order
constructions materials, and that it was only after petitioner approved the price, after making a canvass
from other suppliers, that the latter would issue a purchase order. Petitioner argues that this was the
agreement, and therefore the law between the parties, hence, when no purchase orders were issued,
no provision of the agreement was violated.
Private respondent, on the other hand, points out that the subject of the Offsetting Agreement is Phase
II of the Vermen Pines Condominiums. It alleges that since construction of Phase II of the Vermen Pines
Condominiums has failed to begin (Rollo, p. 104), it has reason to move for rescission of the Offsetting
Agreement, as it cannot forever wait for the delivery of the condominium units to it.
It is evident from the facts of the case that private respondent did not fail to fulfill its obligation in the
Offsetting Agreement. The discontinuance of delivery of construction materials to petitioner stemmed
from the failure of petitioner to send purchase orders to private respondent. The allegation that
petitioner had been sending purchase orders to private respondent, which the latter could not fill,
cannot be given credence. Perhaps in the beginning, it would send purchase orders to private
respondent (as evidenced by the purchase orders presented in court), and the latter would deliver the
construction materials ordered. However, according to private respondent, after April, 1982, petitioner
stopped sending purchase orders. Petitioner failed to refute this allegation. When petitioner's witness,
Treasurer of the petitioner corporation, was asked to produce the purchase orders in court, the latter
promised to do so, but this was never complied with.
On the other hand, petitioner would never able to fulfill its obligation in allowing private respondent to
exercise the option to transfer from Phase I to Phase II, as the construction of Phase II has ceased and
the subject condominium units will never be available.
The impossibility of fulfillment of the obligation on the part of petitioner necessitates resolution of the
contract for indeed, the non-fulfillment of the obligation aforementioned constitutes substantial breach
of the Offsetting Agreement. The possibility of exercising the option of whether or not to transfer to
condominium units in Phase II was one of the factors which were considered by private respondent
when it entered into the agreement. Since the construction of the Vermen Pines Condominium Phase II
has stopped, petitioner would be in no position to perform its obligation to give private respondent the

option to transfer to Phase II. It would be the height of injustice to make private respondent wait for
something that may never come.
WHEREFORE, the petition is DENIED for lack of merit. Costs against petitioner.
SO ORDERED.
Feliciano, Davide, Jr., Romero and Melo, JJ., concur.