FIRST DIVISION

[G.R. No. 118889. March 23, 1998]

FGU
INSURANCE
CORPORATION, petitioner,
vs.,
COURT OF APPEALS, FILCAR TRANSPORT, INC., and FORTUNE
INSURANCE CORPORATION, respondents.
DECISION
BELLOSILLO, J.:
For damages suffered by a third party, may an action based on quasidelict prosper against a rent-a-car company and, consequently, its insurer for
fault or negligence of the car lessee in driving the rented vehicle?
This was a two-car collision at dawn. At around 3 o'clock of 21 April 1987, two
(2) vehicles, both Mitsubishi Colt Lancers, cruising northward along Epifanio de
los Santos Avenue, Mandaluyong City, figured in a traffic accident. The car
bearing Plate No. PDG 435 owned by Lydia F. Soriano was being driven at the
outer lane of the highway by Benjamin Jacildone, while the other
car, with PlateNo. PCT 792, owned by respondent FILCAR Transport, Inc.
(FILCAR), and driven by Peter Dahl-Jensen as lessee, was at the center lane,
left of the other vehicle. Upon approaching the corner ofPioneer Street, the car
owned by FILCAR swerved to the right hitting the left side of the car of
Soriano. At that time Dahl-Jensen, a Danish tourist, did not possess a Philippine
driver's license.[1]
As a consequence, petitioner FGU Insurance Corporation, in view of its
insurance contract with Soriano, paid the latter P25,382.20. By way of
subrogation,[2] it sued Dahl-Jensen and respondent FILCAR as well as
respondent Fortune Insurance Corporation (FORTUNE) as insurer of FILCAR
for quasi-delict before the Regional Trial Court of Makati City.
Unfortunately, summons was not served on Dahl-Jensen since he was no
longer staying at his given address; in fact, upon motion of petitioner, he was
dropped from the complaint.
On 30 July 1991 the trial court dismissed the case for failure of petitioner to
substantiate its claim of subrogation.[3]
On 31 January 1995 respondent Court of Appeals affirmed the ruling of the trial
court although based on another ground, i.e., only the fault or negligence of

Dahl-Jensen was sufficiently proved but not that of respondent FILCAR.[4] In

other words, petitioner failed to establish its cause of action for sum of
money based on quasi-delict.
In this appeal, petitioner insists that respondents are liable on the strength of
the ruling in MYC-Agro-Industrial Corporation v. Vda. de Caldo[5] that the
registered owner of a vehicle is liable for damages suffered by third persons
although the vehicle is leased to another.
We find no reversible error committed by respondent court in upholding the
dismissal of petitioner's complaint. The pertinent provision is Art. 2176 of the
Civil Code which states: "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 x x x x"
To sustain a claim based thereon, the following requisites must
concur: (a) damage suffered by the plaintiff; (b) fault or negligence of the
defendant; and, (c) connection of cause and effect between the fault or
negligence of the defendant and the damage incurred by the plaintiff. [6]
We agree with respondent court that petitioner failed to prove the existence of
the second requisite, i.e., fault or negligence of defendant FILCAR, because
only the fault or negligence of Dahl-Jensen was sufficiently established, not that
of FILCAR. It should be noted that the damage caused on the vehicle of
Soriano was brought about by the circumstance that Dahl-Jensen swerved to
the right while the vehicle that he was driving was at the center lane. It is plain
that the negligence was solely attributable to Dahl-Jensen thus making the
damage suffered by the other vehicle his personal liability. Respondent FILCAR
did not have any participation therein.
Article 2180 of the same Code which deals also with quasi-delict 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.
The father and, in case of his death or incapacity, the mother, are responsible
for the damages caused by the minor children who live in their company.
Guardians are liable for damages caused by the minors or incapacitated
persons who are under their authority and live in their company.
The owners and managers of an establishment or enterprise are likewise
responsible for damages caused by their employees in the service of the
branches in which the latter are employed or on the occasion of their functions.

Employers shall be liable for the damages caused by their employees and
household helpers acting within the scope of their assigned tasks, even though
the former are not engaged in any business or industry.
The State is responsible in like manner when it acts through a special agent; but
not when the damage has been caused by the official
to whom the task done properly pertains, in which case what is provided in
article 2176 shall be applicable.
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.

that the driver was not its employee but of the lessee. The trial court was not
persuaded as it found that the true nature of the alleged lease contract was
nothing more than a disguise effected by the corporation to relieve itself of the
burdens and responsibilities of an employer. We upheld this finding and affirmed
the declaration of joint and several liability of the corporation with its driver.
WHEREFORE, the petition is DENIED. The decision of respondent Court of
Appeals dated 31 January 1995 sustaining the dismissal of petitioner's
complaint by the trial court is AFFIRMED.Costs against petitioner.
SO ORDERED.
Davide, Jr.,(Chairman), Vitug, Panganiban and Quisumbing, JJ., concur.

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.
The liability imposed by Art. 2180 arises by virtue of a presumption juris
tantum of
negligence
on
the
part
of
the
persons
made
responsible thereunder, derived from their failure to exercise due care and
vigilance over the acts of subordinates to prevent them from causing damage.
[7]
Yet, as correctly observed by respondent court, Art. 2180 is hardly applicable
because
none
of
the
circumstances mentioned therein obtains in the case under consideration. Resp
ondent FILCAR being engaged in a rent-a-car business was only the owner of
the car leased to Dahl-Jensen. As such, there was no vinculum juris between
them as employer and employee. Respondent FILCAR cannot in any way be
responsible for the negligent act of Dahl-Jensen, the former not being an
employer of the latter.
We now correlate par. 5 of Art. 2180 with Art. 2184 of the same Code which
provides: "In motor vehicle mishap, the owner is solidarily liable with his driver, if
the former, who was in the vehicle, could have by the use of due diligence,
prevented the misfortune x x x x If the owner was not in the motor vehicle, the
provisions of article 2180 are applicable." Obviously, this provision of Art.
2184 isneither applicable because of the absence of master-driver relationship
between respondent FILCAR and Dahl-Jensen. Clearly, petitioner has no cause
of action against respondent FILCAR on the basis of quasi-delict; logically, its
claim against respondent FORTUNE can neither prosper.
Petitioner's insistence on MYC-Agro-Industrial Corporation is rooted in a
misapprehension of our ruling therein. In that case, the negligent and reckless
operation of the truck owned by petitioner corporation caused injuries to several
persons and damage to property. Intending to exculpate itself from liability, the
corporation
raised
the
defense that
at
the
time
of
the
collision it had no morecontrol over the vehicle as it was leased to another; and,

Cities (MTCC) of San Pablo City rendered a decision, the dispositive portion of
which is hereunder quoted as follows:
THIRD DIVISION
[G.R. No. 122445. November 18, 1997]
DR. NINEVETCH CRUZ, petitioner, vs. COURT OF APPEALS and LYDIA
UMALI, respondents.
DECISION
FRANCISCO, J.:
"Doctorsareprotectedbyaspeciallaw.Theyarenotguarantorsofcare.Theydonot
evenwarrantagoodresult.Theyarenotinsurersagainstmishaporunusual
consequences.Furthermoretheyarenotliableforhonestmistakeofjudgment"[1]
The present case against petitioner is in the nature of a medical
malpractice suit, which in simplest term is the type of claim which a victim has
available to him or her to redress a wrong committed by a medical professional
which has cause bodily harm.[2] In this jurisdiction, however, such claims are
most often brought as a civil action for damages under Article 2176 of the Civil
Code,[3] and in some instances, as a criminal case under Article 365 of the
Revised Penal Code[4] with which the civil action for damages is impliedly
instituted. It is via the latter type of action that the heirs of the deceased sought
redress for the petitioner's alleged imprudence and negligence in treating the
deceased thereby causing her death. The petitioner and one Dr. Lina Ercillo
who was the attending anaesthesiologist during the operation of the deceased
were charged with "reckless imprudence and negligence resulting to (sic)
homicide" in an information which reads:
"ThatonoraboutMarch23,1991,intheCityofSanPablo,RepublicofthePhilippines
andwithinthejurisdictionofthisHonorableCourt,theaccusedabovenamed,being
thentheattendinganaesthesiologistandsurgeon,respectively,didthenandthere,ina
negligence(sic),careless,imprudent,andincompetentmanner,andfailingtosupplyor
storesufficientprovisionsandfacilitiesnecessarytomeetanyandallexigenciesaptto
arisebefore,duringand/orafterasurgicaloperationcausingbysuchnegligence,
carelessness,imprudence,andincompetence,andcausingbysuchfailure,includingthe
lackofpreparationandforesightneededtoavertatragedy,theuntimelydeathofsaid
LydiaUmalionthedayfollowingsaidsurgicaloperation."[5]
Trial ensued after both the petitioner and Dr. Lina Ercillo pleaded not guilty
to the above-mentioned charge. On March 4, 1994, the Municipal Trial Court in

"WHEREFORE,thecourtfindstheaccusedDr.LinaErcillonotguiltyoftheoffense
chargedforinsufficiencyofevidencewhilehercoaccusedDra.NinevetchCruzis
herebyheldresponsibleforthedeathofLydiaUmalionMarch24,1991,andtherefore
guiltyunderArt.365oftheRevisedPenalCode,andsheisherebysentencedtosuffer
thepenaltyof2monthsand1dayimprisonmentofarrestomayorwithcosts."[6]
The petitioner appealed her conviction to the Regional Trial Court (RTC) which
affirmed in toto the decision of the MTCC[7] prompting the petitioner to file a
petition for review with the Court of Appeals but to no avail. Hence this petition
for review on certiorari assailing the decision promulgated by the Court of
Appeals on October 24, 1995 affirming petitioner's conviction with modification
that she is further directed to pay the heirs of Lydia Umali P50,000.00 as
indemnity for her death.[8]
In substance, the petition brought before this Court raises the issue of
whether or not petitioner's conviction of the crime of reckless imprudence
resulting in homicide, arising from an alleged medical malpractice, is supported
by the evidence on record.
First the antecedent facts.
On March 22, 1991, prosecution witness, Rowena Umali De Ocampo,
accompanied her mother to the Perpetual Help Clinic and General Hospital
situated in Balagtas Street, San Pablo City, Laguna. They arrived at the said
hospital at around 4:30 in the afternoon of the same day. [9] Prior to March 22,
1991, Lydia was examined by the petitioner who found a "myoma" [10] in her
uterus, and scheduled her for a hysterectomy operation on March 23, 1991.
[11]
Rowena and her mother slept in the clinic on the evening of March 22, 1991
as the latter was to be operated on the next day at 1:00 o'clock in the afternoon.
[12]
According to Rowena, she noticed that the clinic was untidy and the window
and the floor were very dusty prompting her to ask the attendant for a rag to
wipe the window and the floor with. [13] Because of the untidy state of the clinic,
Rowena tried to persuade her mother not to proceed with the operation. [14] The
following day, before her mother was wheeled into the operating room, Rowena
asked the petitioner if the operation could be postponed. The petitioner called
Lydia into her office and the two had a conversation. Lydia then informed
Rowena that the petitioner told her that she must be operated on as scheduled.
[15]

Rowena and her other relatives, namely her husband, her sister and two
aunts waited outside the operating room while Lydia underwent operation. While
they were waiting, Dr. Ercillo went out of the operating room and instructed

them to buy tagamet ampules which Rowena's sister immediately bought. About
one hour had passed when Dr. Ercillo came out again this time to ask them to
buy blood for Lydia. They bought type "A" blood from the St. Gerald Blood Bank
and the same was brought by the attendant into the operating room. After the
lapse of a few hours, the petitioner informed them that the operation was
finished. The operating staff then went inside the petitioner's clinic to take their
snacks. Some thirty minutes after, Lydia was brought out of the operating room
in a stretcher and the petitioner asked Rowena and the other relatives to buy
additional blood for Lydia. Unfortunately, they were not able to comply with
petitioner's order as there was no more type "A" blood available in the blood
bank. Thereafter, a person arrived to donate blood which was later transfused to
Lydia. Rowena then noticed her mother, who was attached to an oxygen tank,
gasping for breath. Apparently the oxygen supply had run out and Rowena's
husband together with the driver of the accused had to go to the San Pablo
District Hospital to get oxygen. Lydia was given the fresh supply of oxygen as
soon as it arrived.[16] But at around 10:00 o'clock P.M. she went into shock and
her blood pressure dropped to 60/50. Lydia's unstable condition necessitated
her transfer to the San Pablo District Hospital so she could be connected to a
respirator and further examined. [17] The transfer to the San Pablo City District
Hospital was without the prior consent of Rowena nor of the other relatives
present who found out about the intended transfer only when an ambulance
arrived to take Lydia to the San Pablo District Hospital. Rowena and her other
relatives then boarded a tricycle and followed the ambulance. [18]
Upon Lydia's arrival at the San Pablo District Hospital, she was wheeled
into the operating room and the petitioner and Dr. Ercillo re-operated on her
because there was blood oozing from the abdominal incision. [19] The attending
physicians summoned Dr. Bartolome Angeles, head of the Obstetrics and
Gynecology Department of the San Pablo District Hospital. However, when Dr.
Angeles arrived, Lydia was already in shock and possibly dead as her blood
pressure was already 0/0. Dr. Angeles then informed petitioner and Dr. Ercillo
that there was nothing he could do to help save the patient. [20] While petitioner
was closing the abdominal wall, the patient died. [21] Thus, on March 24, 1991, at
3:00 o'clock in the morning, Lydia Umali was pronounced dead. Her death
certificate states "shock" as the immediate cause of death and "Disseminated
Intravascular Coagulation (DIC)" as the antecedent cause. [22]
In convicting the petitioner, the MTCC found the following circumstances
as sufficient basis to conclude that she was indeed negligent in the performance
of the operation:
"xxx,theclinicwasuntidy,therewaslackofprovisionlikebloodandoxygento
prepareforanycontingencythatmighthappenduringtheoperation.Themannerand
thefactthatthepatientwasbroughttotheSanPabloDistrictHospitalforreoperation
indicatesthattherewassomethingwronginthemannerinwhichDra.Cruzconducted

theoperation.Therewasnoshowingthatbeforetheoperation,accusedDr.Cruzhad
conductedacardiopulmonaryclearanceoranytypingofthebloodofthepatient.Itwas
(sic)saidinmedicalparlancethatthe"abdomenofthepersonisatempleofsurprises"
becauseyoudonotknowthewholethingthemomentitwasopen(sic)andsurgeon
mustbepreparedforanyeventualitythereof.Thepatient(sic)chartwhichisapublic
documentwasnotpresentedbecauseitisonlytherethatwecoulddeterminethe
conditionofthepatientbeforethesurgery.ThecourtalsonoticedinExh."F1"thatthe
sisterofthedeceasedwishedtopostponetheoperationbutthepatientwasprevailed
uponbyDra.Cruztoproceedwiththesurgery.ThecourtfindsthatLydiaUmalidied
becauseofthenegligenceandcarelessnessofthesurgeonDra.NinevetchCruzbecause
oflossofbloodduringtheoperationofthedeceasedforevidentunpreparednessandfor
lackofskill,thereasonwhythepatientwasbroughtforoperationattheSanPabloCity
DistrictHospital.Assuch,thesurgeonshouldanswerforsuchnegligence.Withrespect
toDra.LinaErcillo,theanaesthesiologist,thereisnoevidencetoindicatethatshe
shouldbeheldjointlyliablewithDra.Cruzwhoactuallydidtheoperation."[23]
The RTC reiterated the abovementioned findings of the MTCC and upheld
the latter's declaration of "incompetency, negligence and lack of foresight and
skill of appellant (herein petitioner) in handling the subject patient before and
after the operation." [24] And likewise affirming the petitioner's conviction, the
Court of Appeals echoed similar observations, thus:
"xxx.Whilewemaygrantthattheuntidinessandfilthinessoftheclinicmaynotby
itselfindicatenegligence,itneverthelessshowstheabsenceofduecareandsupervision
overhersubordinateemployees.Didthisunsanitaryconditionpermeatetheoperating
room?Werethesurgicalinstrumentsproperlysterilized?Couldtheconditionsinthe
ORhavecontributedtotheinfectionofthepatient?Onlythepetitionercouldanswer
these,butsheoptednottotestify.Thiscouldonlygiverisetothepresumptionthatshe
hasnothinggoodtotestifyonherdefense.Anyway,thealleged"unverifiedstatementof
theprosecutionwitness"remainsunchallengedandunrebutted.
Likewiseundisputedistheprosecution'sversionindicatingthefollowingfacts:thatthe
accusedaskedthepatient'srelativestobuyTagametcapsuleswhiletheoperationwas
alreadyinprogress;thatafteranhour,theywerealsoaskedtobuytype"A"bloodfor
thepatient;thatafterthesurgery,theywereagainaskedtoprocuremoretype"A"
blood,butsuchwasnotanymoreavailablefromthesource;thattheoxygengiventothe
patientwasempty;andthatthesoninlawofthepatient,togetherwithadriverofthe
petitioner,hadtorushtotheSanPabloCityDistrictHospitaltogetthemuchneeded
oxygen.Alltheseconclusivelyshowthatthepetitionerhadnotpreparedforany
unforeseencircumstancesbeforegoingintothefirstsurgery,whichwasnotemergency
innature,butwaselectiveorprescheduled;shehadnoreadyantibiotics,noprepared
blood,properlytypedandcrossmatched,andnosufficientoxygensupply.

Moreover,therearealotofquestionsthatkeepnaggingUs.Wasthepatientgivenany
cardiopulmonaryclearance,oratleastaclearancebyaninternist,whicharestandard
requirementsbeforeapatientissubjectedtosurgery.Didthepetitionerdetermineas
partofthepreoperativeevaluation,thebleedingparametersofthepatient,suchas
bleedingtimeandclottingtime?Thereisnoshowingthattheseweredone.The
petitionerjustappearstohavebeeninahurrytoperformtheoperation,evenasthe
familywantedthepostponementtoApril6,1991.Obviously,shedidnotpreparethe
patient;neitherdidshegetthefamily'sconsenttotheoperation.Moreover,shedidnot
prepareamedicalchartwithinstructionsforthepatient'scare.Ifshedidallthese,proof
thereofshouldhavebeenoffered.Butthereisnone.Indeed,theseareoverwhelming
evidenceofrecklessnessandimprudence."[25]
This court, however, holds differently and finds the foregoing
circumstances insufficient to sustain a judgment of conviction against the
petitioner for the crime of reckless imprudence resulting in homicide. The
elements of reckless imprudence are: (1) that the offender does or fails to do an
act; (2) that the doing or the failure to do that act is voluntary; (3) that it be
without malice; (4) that material damage results from the reckless imprudence;
and (5) that there is inexcusable lack of precaution on the part of the offender,
taking into consideration his employment or occupation, degree of intelligence,
physical condition, and other circumstances regarding persons, time and place.
Whether or not a physician has committed an "inexcusable lack of
precaution" in the treatment of his patient is to be determined according to the
standard of care observed by other members of the profession in good standing
under similar circumstances bearing in mind the advanced state of the
profession at the time of treatment or the present state of medical science. [26] In
the recent case of Leonila Garcia-Rueda v. Wilfred L. Pacasio, et. al.,[27] this
Court stated that in accepting a case, a doctor in effect represents that, having
the needed training and skill possessed by physicians and surgeons practicing
in the same field, he will employ such training, care and skill in the treatment of
his patients. He therefore has a duty to use at least the same level of care that
any other reasonably competent doctor would use to treat a condition under the
same circumstances. It is in this aspect of medical malpractice that expert
testimony is essential to establish not only the standard of care of the
profession but also that the physician's conduct in the treatment and care falls
below such standard.[28] Further, inasmuch as the causes of the injuries involved
in malpractice actions are determinable only in the light of scientific knowledge,
it has been recognized that expert testimony is usually necessary to support the
conclusion as to causation.[29]
Immediately apparent from a review of the records of this case is the
absence of any expert testimony on the matter of the standard of care
employed by other physicians of good standing in the conduct of similar
operations. The prosecution's expert witnesses in the persons of Dr. Floresto

Arizala and Dr. Nieto Salvador, Jr. of the National Bureau of Investigation (NBI)
only testified as to the possible cause of death but did not venture to illuminate
the court on the matter of the standard of care that petitioner should have
exercised.
All three courts below bewail the inadequacy of the facilities of the clinic
and its untidiness; the lack of provisions such as blood, oxygen, and certain
medicines; the failure to subject the patient to a cardio-pulmonary test prior to
the operation; the omission of any form of blood typing before transfusion; and
even the subsequent transfer of Lydia to the San Pablo Hospital and the
reoperation performed on her by the petitioner. But while it may be true that the
circumstances pointed out by the courts below seemed beyond cavil to
constitute reckless imprudence on the part of the surgeon, this conclusion is still
best arrived at not through the educated surmises nor conjectures of laymen,
including judges, but by the unquestionable knowledge of expert witnesses. For
whether a physician or surgeon has exercised the requisite degree of skill and
care in the treatment of his patient is, in the generality of cases, a matter of
expert opinion.[30] The deference of courts to the expert opinion of qualified
physicians stems from its realization that the latter possess unusual technical
skills which laymen in most instances are incapable of intelligently evaluating.
[31]
Expert testimony should have been offered to prove that the circumstances
cited by the courts below are constitutive of conduct falling below the standard
of care employed by other physicians in good standing when performing the
same operation. It must be remembered that when the qualifications of a
physician are admitted, as in the instant case, there is an inevitable
presumption that in proper cases he takes the necessary precaution and
employs the best of his knowledge and skill in attending to his clients, unless
the contrary is sufficiently established. [32] This presumption is rebuttable by
expert opinion which is so sadly lacking in the case at bench.
Even granting arguendo that the inadequacy of the facilities and untidiness
of the clinic; the lack of provisions; the failure to conduct pre-operation tests on
the patient; and the subsequent transfer of Lydia to the San Pablo Hospital and
the reoperation performed on her by the petitioner do indicate, even without
expert testimony, that petitioner was recklessly imprudent in the exercise of her
duties as a surgeon, no cogent proof exists that any of these circumstances
caused petitioner's death. Thus, the absence of the fourth element of reckless
imprudence: that the injury to the person or property was a consequence of the
reckless imprudence.
In litigations involving medical negligence, the plaintiff has the burden of
establishing appellant's negligence and for a reasonable conclusion of
negligence, there must be proof of breach of duty on the part of the surgeon as
well as a casual connection of such breach and the resulting death of his
patient.[33] In Chan Lugay v. St Luke's Hospital, Inc.,[34] where the attending

physician was absolved of liability for the death of the complainant's wife and
newborn baby, this court held that:
"Inorderthattheremaybearecoveryforaninjury,however,itmustbeshownthatthe
'injuryforwhichrecoveryissoughtmustbethelegitimateconsequenceofthewrong
done;theconnectionbetweenthenegligenceandtheinjurymustbeadirectandnatural
sequenceofevents,unbrokenbyinterveningefficientcauses.'Inotherwords,the
negligencemustbetheproximatecauseoftheinjury.For,'negligence,nomatterin
whatitconsists,cannotcreatearightofactionunlessitistheproximatecauseofthe
injurycomplainedof.'And'theproximatecauseofaninjuryisthatcause,which,in
naturalandcontinuoussequence,unbrokenbyanyefficientinterveningcause,produces
theinjury,andwithoutwhichtheresultwouldnothaveoccurred.'''[35](Underscoring
supplied.)
Dr. Arizala who conducted an autopsy on the body of the deceased
summarized his findings as follows:
"Atty. Cachero:
Q. You mentioned about your Autopsy Report which has been marked
as Exh. "A-1-b". There appears here a signature above the
typewritten name Floresto Arizala, Jr., whose signature is that?

Intestines and mesenteries are pale with blood clots

noted between the mesentric folds.
Hemoperitonium: 300 s.s.,
right paracolic gutter,
50 c.c., left paracolic gutter
200 c.c., mesentric area,
100 c.c., right pelvic gutter
stomach empty.
Other visceral organs, pale.',
will you please explain that on (sic) your own language or in
ordinary

A. That is my signature, sir.

A. There was a uterus which was not attached to the adnexal

structures namely ovaries which were not present and also sign
of previous surgical operation and there were (sic) clotted blood,
sir.

Q. Do you affirm the truth of all the contents of Exh. "A-1-b"?

Q. How about the ovaries and adnexal structures?

A. Only as to the autopsy report no. 91-09, the time and place and
everything after the post mortem findings, sir.

A. They are missing, sir.

Q. You mentioned on your "Post Mortem Findings" about surgical

incision, 14:0 cm., infraumbilical area, anterior abdominal area,
midline, will you please explain that in your own language?

Q. You mean to say there are no ovaries?

A. During that time there are no ovaries, sir.

A. There was incision wound (sic) the area just below the navel, sir.

Q. And there were likewise sign of surgical sutures?

Q. And the last paragraph of the postmortem findings which I read:

Uterus, pear-shaped and pale measuring 7.5 x 5.5 x 5.0 cm, with
some surface nodulation of the fundic area posteriorly. Cutsection shows diffusely pale myometrium with areas of streak
induration. The ovaries and adnexal structures are missing with
the raw surfaces patched with clotted blood. Surgical sutures
were noted on the operative site.

A. Yes, sir.
Q. How about the intestines and mesenteries are place (sic) with
blood clots noted between the mesenteric folds, will you please
explain on (sic) this?
A. In the peritoneal cavity, they are mostly perritonial blood.

Q. And what could have caused this blood?

A. Well, ordinarily blood is found inside the blood vessel. Blood were
(sic) outside as a result of the injuries which destroyed the
integrity of the vessel allowing blood to sip (sic) out, sir.
Q. By the nature of the postmortem findings indicated in Exh. A-1-B,
can you tell the court the cause of death?

was shock of diminish of blood of the circulation. She died most

probably before the actual complete blood loss, sir.
Court: Is it possible doctor that the loss of the blood was due on (sic)
operation?
A. Based on my pathology findings, sir.
Q. What could have caused this loss of blood?

A. Yes, sir. The cause of death is: Gross findings are compatible with
hemorrhagic shock.
Q. Can you tell the us what could have caused this hemorrhagic
shock?

A. Many, sir. A patient who have undergone surgery. Another may be a

blood vessel may be cut while on operation and this cause (sic)
bleeding, or may be set in the course of the operation, or may be
(sic) he died after the operation. Of course there are other cause
(sic).

A. Well hemorrhagic shock is the result of blood loss.

Atty. Cachero:
Q. What could have the effect of that loss of blood?
Q. Especially so doctor when there was no blood replacement?
[36]

A. Unattended hemorrhage, sir.

(Underscoring supplied.)
A. Yes, sir."[37] (Underscoring supplied.)

The foregoing was corroborated by Dr. Nieto Salvador:

"Q. And were you able to determine the cause of death by virtue of
the examination of the specimen submitted by Dr. Arizala?
A. Without knowledge of the autopsy findings it would be difficult for
me to determine the cause of death, sir.
Q. Have you examined the post mortem of Dr. Arizala?
A. Yes, sir, and by virtue of the autopsy report in connection with your
pathology report.
Q. What could have caused the death of the victim?

The testimonies of both doctors establish hemorrhage or hemorrhagic

shock as the cause of death. However, as likewise testified to by the expert
witnesses in open court, hemorrhage or hemorrhagic shock during surgery may
be caused by several different factors. Thus, Dr. Salvador's elaboration on the
matter:
"Atty. Pascual:
Q. Doctor, among the causes of hemorrhage that you mentioned you
said that it could be at the moment of operation when one losses
(sic) control of the presence, is that correct? During the operation
there is lost (sic) of control of the cut vessel?
A. Yes, sir.

A. This pathologic examination are (sic) compatible with the person

who died, sir.

Q. Or there is a failure to ligate a vessel of considerable size?

Q. Will you explain to us the meaning of hemorrhagic compatible?

A. Yes, sir.

A. It means that a person died of blood loss. Meaning a person died of

non-replacement of blood and so the victim before she died there

Q. Or even if the vessel were ligated the knot may have slipped later
on?

A. Yes, sir.
Q. And you also mentioned that it may be possible also to some
clotting defect, is that correct?
A. May be (sic)."[38] (Underscoring supplied).
Defense witness, Dr. Bu C. Castro also gave the following expert opinion:
"Q. Doctor even a patient after an operations (sic) would suffer
hemorrage what would be the possible causes of such
hemorrage (sic)?
A. Among those would be what we call Intravascular Coagulation and
this is the reason for the bleeding, sir, which cannot be prevented
by anyone, it will happen to anyone, anytime and to any persons
(sic), sir.
COURT:
What do you think of the cause of the bleeding, the cutting or the
operations done in the body?

According to both doctors, the possible causes of hemorrhage during an

operation are: (1) the failure of the surgeon to tie or suture a cut blood vessel;
(2) allowing a cut blood vessel to get out of control; (3) the subsequent
loosening of the tie or suture applied to a cut blood vessel; and (4) and a
clotting defect known as DIC. It is significant to state at this juncture that the
autopsy conducted by Dr. Arizala on the body of Lydia did not reveal any untied
or unsutured cut blood vessel nor was there any indication that the tie or suture
of a cut blood vessel had become loose thereby causing the hemorrhage.
[40]
Hence the following pertinent portion of Dr. Arizala's testimony:
"Q: Doctor, in examining these structures did you know whether these
were sutured ligature or plain ligature
A: Ligature, sir.
Q: We will explain that later on. Did you recall if the cut structures
were tied by first suturing it and then tying a knot or the tie was
merely placed around the cut structure and tied?
A: I cannot recall, sir.
Q: As a matter of fact, you cannot recall because you did not even
bothered (sic) to examine, is that correct?

A. Not related to this one, the bleeding here is not related to any
cutting or operation that I (sic) have done.

A: Well, I bothered enough to know that they were sutured, sir.

Q. Aside from the DIC what could another causes (sic) that could be
the cause for the hemorrhage or bleeding in a patient by an
operations (sic)?

Q: So, therefore, Doctor, you would not know whether any of the cut
structures were not sutured or tied neither were you able to
determine whether any loose suture was found in the peritoneal
cavity?

A. In general sir, if there was an operations (sic) and it is possible that

the ligature in the suture was (sic) become (sic) loose, it is (sic)
becomes loose if proven.
xxxxxxxxx
Q. If the person who performed an autopsy does not find any untight
(sic) clot (sic) blood vessel or any suture that become (sic) loose
the cause of the bleeding could not be attributed to the fault of
the subject?
A. Definitely, sir."[39] (Underscoring supplied.)

A: I could not recall any loose sutured (sic), sir." [41]

On the other hand, the findings of all three doctors do not preclude the
probability that DIC caused the hemorrhage and consequently, Lydia's death.
DIC which is a clotting defect creates a serious bleeding tendency and when
massive DIC occurs as a complication of surgery leaving raw surface, major
hemorrhage occurs.[42] And as testified to by defense witness, Dr. Bu C. Castro,
hemorrhage due to DIC "cannot be prevented, it will happen to anyone,
anytime."[43] He testified further:
"Q. Now, under the circumstance one of the possibility as you
mentioned in (sic) DIC?

A. Yes, sir.

COURT:

Q. And you mentioned that it cannot be prevented?

He is only reading the record.

A. Yes, sir.

ATTY. PASCUAL:

Q. Can you even predict if it really happen (sic)?

Yes, sir.

A. Possible, sir.

A. No, sir, there is no fault on the part of the surgeon, sir." [44]

Q. Are there any specific findings of autopsy that will tell you whether
this patient suffered among such things as DIC?
A. Well, I did reserve because of the condition of the patient.
Q. Now, Doctor you said that you went through the record of the
deceased Lydia Umali looking for the chart, the operated (sic)
records, the post mortem findings on the histophanic (sic)
examination based on your examination of record, doctor, can
you more or less says (sic) what part are (sic) concerned could
have been the caused (sic) of death of this Lydia Umali?
A. As far as the medical record is concern (sic) the caused (sic) of
death is dessimulated (sic) Intra Vascular Coagulation or the DIC
which resulted to hemorrhage or bleedings, sir.
Q. Doctor based on your findings then there is knowing (sic) the
doctor would say whether the doctor her (sic) has been (sic)
fault?
ATTY. MALVEDA:
We will moved (sic) to strike out the (sic) based on finding they just
read the chart as well as the other record.
ATTY. PASCUAL:
Precisely based on this examination.
ATTY. MALVEDA:
Not finding, there was no finding made.

This court has no recourse but to rely on the expert testimonies rendered
by both prosecution and defense witnesses that substantiate rather than
contradict petitioner's allegation that the cause of Lydia's death was DIC which,
as attested to by an expert witness, cannot be attributed to the petitioner's fault
or negligence. The probability that Lydia's death was caused by DIC was
unrebutted during trial and has engendered in the mind of this Court a
reasonable doubt as to the petitioner's guilt. Thus, her acquittal of the crime of
reckless imprudence resulting in homicide. While we condole with the family of
Lydia Umali, our hands are bound by the dictates of justice and fair dealing
which hold inviolable the right of an accused to be presumed innocent until
proven guilty beyond reasonable doubt. Nevertheless, this Court finds the
petitioner civilly liable for the death of Lydia Umali, for while a conviction of a
crime requires proof beyond reasonable doubt, only a preponderance of
evidence is required to establish civil liability.[45]
The petitioner is a doctor in whose hands a patient puts his life and limb.
For insufficiency of evidence this Court was not able to render a sentence of
conviction but it is not blind to the reckless and imprudent manner in which the
petitioner carried out her duties. A precious life has been lost and the
circumstances leading thereto exacerbated the grief of those left behind. The
heirs of the deceased continue to feel the loss of their mother up to the present
time[46] and this Court is aware that no amount of compassion and
commiseration nor words of bereavement can suffice to assuage the sorrow felt
for the loss of a loved one. Certainly, the award of moral and exemplary
damages in favor of the heirs of Lydia Umali are proper in the instant case.
WHEREFORE, premises considered, petitioner DR. NINEVETCH CRUZ is
hereby ACQUITTED of the crime of reckless imprudence resulting in homicide
but is ordered to pay the heirs of the deceased Lydia Umali the amount of
FIFTY THOUSAND PESOS (P50,000.00) as civil liability, ONE HUNDRED
THOUSAND PESOS (P100,000.00) as moral damages, and FIFTY
THOUSAND PESOS (P50,000.00) as exemplary damages.
Let the copy of this decision be furnished to the Professional Regulation
Commission (PRC) for appropriate action.

SO ORDERED.

FI RST DIVIS IO N
S PO US ES E RL INDA B ATAL AND FRA NK
B ATAL ,
Pet i ti on ers ,

G.R. No. 164601

Pres en t:
- ve rsu s -

S PO US ES
L UZ
S AN
PE DRO
KE NICH IRO TOMINA GA,
R espon den t s .

AND

PAN GA NIB AN, C .J. ,

(Ch ai rperson )
YNARE S -S ANT IA GO ,
AUS T RIA-MA RTINE Z,
CAL LE JO , S R. an d
CH ICO -NA ZARIO , JJ .

Promu l gated :

10

S ep t emb er 27, 2006

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
D E C I S I O N
AUS T RIA-MA RTINE Z, J .:
Be fore t he C ourt i s a P eti t i on for R evi e w on C ert i orari unde r
Rul e 45 of t he R ul es of C ourt quest i oni n g the De ci si on [ 1 ] dat ed
S ept em ber 29, 2003 prom ul gat ed b y the C ourt of Appeal s (C A) i n C AG.R . C V No. 71758, whi ch a ffi rm ed t he De ci si on dat ed Ma y 31, 2004
of t he R e gi onal Tri al C ourt , B ranch 7, Mal ol os, Bul ac an (RTC ); and
t he C A R esol ut i on [ 2 ] dat ed Jul y 19, 2004.
Thi s cas e ori gi nat ed from an a ct i on for dam ages fi l ed wit h t he
RTC b y S pouses Luz S an P edro and K eni chi ro Tom i na ga (r espondent s)
agai nst S pouses Erl i nda B at al and Frank Bat al (pet i t i oners) for f ai l ure
t o ex erci se due ca re and di li gen ce b y t he l at t er i n the pr epar at i on of a
surve y whi ch form ed t he basi s for the const ru ct i on of a peri m et e r
fenc e t hat was l at er di scov ered t o have en croa ched on a ri ght of w a y.
The f act s of t he case, as found b y the RTC and sum m ari z ed b y
t he C A, ar e as fol l ows:
The spouses Luz S an P edro ( Luz ) and Keni chi ro
Tom i na ga (K eni chi ro) are t he owne rs of a parc el of
l and, on whi ch t hei r house was ere ct ed, des cri bed
as Lo t 1509- C -3 wi t h an a rea of 700 square m et ers
si t uat ed i n Bar anga y Mal i s, Gui gui nt o, Bul a can. S ai d
propert y was a cqui red b y t hem from one Gui l l erm o
Nar ci so as evi den ced b y a Bi l i han ng Bahagi ng
Lupa dat ed March 18, 1992.
The spouses Luz and K eni chi ro t hen cont r act ed t he
servi c es of F rank B at al ( Frank ) who repr esent ed hi m sel f
as a surv e yo r to condu ct a surv e y of thei r l ot fo r t he
sum of P 6,500.00. As Luz and K eni chi ro want ed t o
encl ose thei r prope rt y, t he y agai n pro cured t he servi c es
of F rank fo r an addit i onal f ee of P 1,500.00 i n orde r t o
det erm i ne t he ex a ct bounda ri es of t he sam e b y whi ch
t he y wi l l base t he const ruct i on of t hei r pe ri m et er fenc e.

b y Luz and Keni chi ro i n ere ct i ng a conc ret e fenc e

m easuri n g about ei ght (8) fe et in hei ght and cost
t hem P 250,000.00 t o bui l d.
Som et i m e i n 1996, a com pl ai nt was l odged agai nst Luz
and Keni chi ro befo re the baran ga y on the gr ound t hat
t he nort hern port i on of t hei r fen ce al l egedl y en cro ached
upon a desi gnat ed ri ght - of-wa y known as Lot 1509D. Upon veri fi cat i on wi t h anot her surve yor, Luz and
Keni chi ro found t hat t hei r wal l i ndeed overl app ed t he
adj oi ni ng lot . The y al so di scover ed t hat i t was not Fr ank
but hi s wi fe Erl i nda B at al (E rl i nda), who is a li cens ed
ge odet i c engi n ee r.
Duri ng t hei r con front at i ons befo re the baran ga y, Fr ank
adm it t ed that he m ade a mi st ake and offer ed t o shar e i n
t he ex pens es for the dem ol it i on and r econst ru ct i on of
t he quest i oned port i on of Luz and Keni chi ros fen ce. He
howeve r fai l ed t o del i ver on hi s word, thus t he fi l i ng of
t he i nst ant sui t .
In thei r de fense, t he def endant s- spouses F rank and
Erl i nda B at al subm it t ed t hat F rank never repr esent ed
him sel f to be a l i censed ge odet i c engi n ee r. It was
Erl i nda who supe rvi sed her husbands work [and t ] hat t he
house and lot of pl ai nt i ffs, Luz and Keni chi ro, w ere
al re ad y f enced even befor e t he y were cont ra ct ed t o do a
resurv e y of the sam e and t he l a yi ng out of t he con cret e
m onum ent s. The spouses Fr ank and Erl i nda al so re fut ed
t he spouses Luz s and Keni chi ros al l egat i on of
negl i ge nce and av err ed t hat t he subj ect com pl ai nt was
i nst i t ut ed t o harass them . [ 3 ]
On Ma y 31, 2001, t he RTC r ender ed i t s Deci si on, t he di sposit i ve
port i on of whi ch r eads:
WHER EF OR E, j ud gm ent is hereb y rende red i n
favor of pl ai nt i ffs and agai nst def endant s, as foll ows:
1. Orde ri ng t he def endant s [ peti t i oners] t o pa y t o
pl ai nt i ffs [ respondent s] t he sum of P 6,500.00 as re fund
for t hei r professi onal fees b y reason of t he e rroneous
rel oc at i on surve y of t he prope rt y i n quest i on;

Consequ ent l y, F rank pl a ced concr et e m onum ent s m arked

P.S . on al l corne rs of t he lot whi ch were used as gui des

11

2. Orde ri ng t he def endant s t o pa y to pl ai nt i ffs the sum

of Thr ee Hundred Thousand P esos ( P 300,000.00) as
act ual dam ages;
3. Orde ri ng t he def endant s t o pa y to pl ai nt i ffs the sum
of P 50,000.00 as at t orne ys fe es; and
4. Orde ri ng t he def endant s t o pa y to pl ai nt i ffs the cost s
of t hi s sui t .
S O OR DER ED. [ 4 ]
R egardi n g t he issue whet her the pet i ti one rs fai l ed to ex erci s e
due car e and di l i genc e in t he conduct of the resu rve y whi ch ev ent ual l y
caused dam a ge t o the respondent s, the RTC hel d:
As a ga i nst t he bar e and sel f -servi n g deni al s of
t he [ pet it i oners] , the t est i m on y of [ respondent ] Luz S an
P edro t hat she const ru ct ed t he encro achi n g pe ri m et er
fenc e i n quest i on usi ng as gui d e t he c ycl one con cr et e
m onum ent s m arked P.S . t hat we re i nst all ed b y
[pet i ti one r] F rank B at al and hi s surv e y t eam , is mor e
credi bl e. As t est i fi ed t o b y [ respondent] Luz S an P edro,
she proc eed ed wi t h t he const ruct i on of the peri m et e r
fenc e i n quest i on upon assuran ce gi ven b y [pet i ti one r]
Fr ank B at al t hat she coul d al r ead y do so as t here w ere
al re ad y con cret e m onum ent s pl a ced on the boundari es of
her propert y x x x.

The RTC found t hat i ndeed the peri m et er fen ce const ru ct ed b y

t he r espondent s encro ach ed on t he ri ght - of- wa y i n quest i on; t hat the
preponde ran ce of evi denc e support s t he fi ndi n g t hat t he en croa chm ent
was caus ed b y t he negl i genc e of t he pet i ti one rs; t hat , i n part i cul a r,
respondent s const ruct ed the fenc e bas ed on t he con cret e c ycl on e
m onum ent s t hat we re i nst al l ed b y pet i t i oner Fr ank Bat al and aft e r he
ga ve hi s assur anc e that t he y can proc eed a ccordi n gl y; t hat t he
negl i ge nce i n the i nst al l at i on of t he monum ent s was due t o t he fa ct
t hat pet it i oner Erl i nda B at al , t he one t rul y qual i fi ed, di d not provi de
t he need ed supervi si on ove r t he work; and, l ast l y, t hat t he t est i m oni es
of t he pet i t i oners on t he whol e wer e not cr edi bl e.
The pet it i oners app eal ed t o the C A. On S ept em ber 29, 2003, t he
C A rend er ed i t s Deci si on affi rm i ng t he RTC de ci si on in i t s ent i ret y. [ 6 ]
In concur ri ng wi t h the fi ndi n gs of t he RTC , t he C A in addi ti on
hel d t hat t he peti t i oners cannot cl ai m t hat t he erro r of the const ru ct i on
of the f ence w as due t o the uni l at er al a ct of r espondent s in buil di n g
t he sam e wi t hout t hei r consent , si nce t he form e r gav e t hei r word that
t he ar rangem ent of t he m onum ent s of t it l e accu rat el y refl e ct ed the
boundari es of t he lot ; and t hat , as a r esul t , t he nort hern port i on of t he
fenc e had t o be dem ol i shed and r ebui lt i n orde r t o cor rect the erro r.
Henc e, t he i nst ant P et it i on assi gni ng t he fol l owi ng erro rs:
I.
The Court of App eal s err ed in rul i ng for t he
R espondent s and basi n g i t s deci si on [ o] n the fol l owi ng
j uri sprudenc e:

x x x x
It does not m at t er t hat t he l oc at i on pl an dat ed
Ma y 3, 1992 (Ex hi bit B) w as l at e r approved b y t he
DENR , as i t i s qui t e app ar ent t hat the mi st ake
com mi t t ed b y [pet it i oner] F rank B at al pe rt ai ns t o the
wrong l ocat i ons of t he conc ret e m onum ent s t hat he
pl aced on t he subj e ct prop ert y and whi ch wer e used or
rel i ed upon b y the [respond ent s] i n putt i n g up t he f ence
i n questi on. S uch m i st ak e or negl i gen ce happen ed
bec ause qui t e obvi ousl y t he i nst al l at i on of sai d concr et e
m onum ent s w as wi t hout t he needed supervi si on of
[respond ent] Erl i nda Bat al , t he one t rul y qual i fi ed t o
supervi se the sam e. x x x x
x x x x[5]

(a)

[A] part y, havi ng perform ed affi rm at i ve act s upon

whi ch anot he r person based hi s subsequent act i ons,
cannot t here aft e r refut e hi s a ct s or r enege on t he
effect s of t he sam e, to t he pr ej udi ce of t he l at t er.
(P urez a vs. C ourt of Appeal s, 290 SC R A 110); and

(b)

Fi ndi n gs of fact m ade b y t he t ri al court [ are]

ent it l ed to gre at wei ght and respe ct . ( Lopez vs.
Court of App eal s, 322 S CR A 686).
II.

The Court of App eal s err ed in rul i ng i n f avor of

R espondent s b y prem i si ng i t s D eci si on on [ a]
mi sappr ehensi on of fact s am ount i ng t o gr ave abuse of

12

disc ret i on . . . whi ch is al so a gr ound for a P et it i on for

R evi ew. [ 7 ]

ART. 1170. Those who i n the per form an ce of

t hei r obl i gat i ons a re gui lt y of fraud, ne gl i gen ce, or
del a y, and t hose who i n an y m anne r cont raven e t he t enor
t hereo f, ar e l i abl e for dam a ges.

The pet i t i on must fai l .

The pet i t i oners i nsi st t hat t her e had been no error i n thei r resurv e y,
but rat her, t he er ror oc curr ed i n respond ent s fenci n g; t hat t he
prox i m at e c ause of the dam age had be en respond ent s own ne gl i genc e
such that t he fenci n g was done uni l at eral l y and sol el y b y t hem wit hout
t he pri or app roval and supervi si on of t he pet i t i oners. And to j ust i f y
t hei r case, t he pet i ti one rs a rgue t hat the cou rt s a quo m i sappreh ended
t he fa ct s. Acco rdi ngl y, t he y ask t his C ourt t o revi e w fi ndi ngs of fa ct .
A revi ew of t he fa ct ual fi ndi n gs of t he C A and t he RTC ar e
m att e rs not ordi nari l y revi e wabl e i n a pet i t i on for r evi ew
on cert i orari . [ 8 ] Wel l -est abl i shed i s t he rul e that fact ual fi ndi n gs of the
t ri al court and the C A a re ent i t l ed t o gre at wei ght and respe ct [ 9 ] and
wi ll not be di st urb ed on appe al save i n ex cept i onal ci rcum st anc es,
[10]
none of whi ch obt ai ns i n the pres ent case. Thi s Court m ust st r ess
t hat the fi ndi ngs of fa ct of t he C A are concl usi ve on the part i es and
car r y ev en m ore wei ght when thes e coi nci de wi t h the fact u al fi ndi ngs
of t he t ri al cou rt , [ 1 1 ] as in t hi s case.
The C ourt wi l l not wei gh the evi denc e al l over agai n unl ess
t here i s a showi n g that t he fi ndi ngs of t he lowe r court are t ot al l y
devoi d of support or are cl e arl y er roneous so as t o const i t ut e seri ous
abuse of di scret i on. [ 1 2 ] The pet i t i oners fai l ed t o dem onst rat e thi s
poi nt . On t he cont rar y, t he fi ndi ng of t he court s a quo t hat t he dam age
caused t o the respondent s was due to pet i t i oners ne gl i gen ce is
suffi ci ent l y support ed b y the evi den ce on reco rd. Fo r thes e reasons,
t he pet i ti one r's cont ent i ons bea r no i m port .
Cul pa , or negl i gen ce, m a y be underst ood i n t wo di ffe rent senses:
ei t her as cul pa aquil i ana, whi ch is t he wrongful or negl i gent act or
omi ssi on whi ch c reat es a vi ncul um j uri s and gi ves ri se t o an obl i gat i on
bet we en t wo persons not fo rm al l y bound b y an y ot he r obl i gat i on, or
as cul pa cont ract ual , whi ch is t he faul t or ne gl i genc e i nci dent i n the
perfo rm anc e of an obl i gat i on whi ch al r ead y exi st ed, and whi ch
i ncre ases t he li abi l it y from such al r ead y ex i sti n g obl i gat i on.
[13]
C ul pa aquil i ana i s gov ern ed b y Art i cl e 2176 of t he Ci vi l C ode and
t he i m m edi at el y fol l owi ng Art i cl es; whil e cul pa cont ract ual i s
gov erned b y Art i cl es 1170 t o 1174 of the sam e C ode. [ 1 4 ]
Art i cl es 1170 and 1173 provi de:

ART. 1173. The faul t or ne gl i genc e of the obl i go r

consi sts i n t he om i ssi on of t hat di l i genc e whi ch is
requi r ed b y t he nat ure of t he obli gat i on and corr esponds
wi t h the ci rcum st anc es of the persons, of the ti m e and of
t he pl a ce. W hen negl i gen ce shows bad fai t h, the
provi si ons of art i cl es 1171 and 2202, par agra ph 2, shal l
appl y.
If t he l aw or cont r act does not st at e t he dil i gen ce
whi ch i s t o be observ ed i n t he per form an ce, t hat whi ch
is ex pe ct ed of a good fat h er of a fam i l y shal l be
requi r ed.
In t he pr esent cas e, i t is cl ear t hat the pet i ti one rs, i n car r yi ng
out thei r cont ra ct ual obl i gat i ons, f ai l ed t o ex er ci se t he requi si t e
dil i genc e i n t he pl a cem ent of t he m arki ngs for t he conc ret e pe ri m et er
fenc e t hat was l at e r const ruct ed. The pl acem ent of t he m arki ngs had
been done sol el y b y pet i t i oner Fr ank Bat al who i s not a geod et i c
engi n ee r. It w as l at e r di scov ered t hat it was not he but hi s wi f e,
pet it i oner Erl i nda B at al , who is the l i cens ed geod et i c engi n ee r and
who is, the refo re, t he one qual i fi ed to do t he work. P eti t i oner Fr ank
Bat al s i nst al l ati on of t he con cr et e c yc l one m onum ent s had be en done
wi t hout t he ad equat e supe rvi si on of his wi fe, Erl i nda. As a r esul t , t he
pl acem ent of t he monum ent s di d not a ccur at el y refl ect t he di m ensi ons
of t he l ot . The respondent s, upon assuranc e gi ven b y pet it i oner
Fr ank B at al t hat the y coul d pro ceed wi t h t he const ruct i on of t he
peri m et er f enc e b y rel yi n g on the purport ed accu ra c y of the pl ac em ent
of t he m onum ent s, er ect ed thei r fen ce whi ch t urned out t o enc roach on
an adj ac ent e asem ent . B ec ause of t he encro achm ent , t he respondent s
had t o dem ol i sh and re const ruct t he f enc e and, t hus, suffer ed dam a ges.
The C ourt affi rm s and adopt s the fi ndi ngs of t he C A, t o wit :
R ecords show that t he servi c es of t he [pet i t i oners] F rank
and Erl i nda were i ni t i al l y cont ra ct ed to se gr egat e Luz
and Keni chi ros prope rt y from i t s adj oi ni ng lot s. W hen
t he [ respondent ] spouses Luz and Keni chi ro pl ann ed to
fenc e t he s egre gat ed l ot , the y a gai n com mi ssi oned
[pet i ti one rs] Fr ank and Erl i nda t o conduct a resurve y in
order t o det erm i ne t he preci se bounda ri es of thei r
propert y upon whi ch t he y wil l base t he const ruct i on of

13

t hei r fenc e. It was al so shown t hat in t he course of t he

resurv e y, F rank c aused t he inst al l at i on of m onum ent s of
ti t l e on t he four (4) corn ers of Luz and Keni chi ros
propert y and t hat he inst ruct ed t hem t o j ust fol l ow the
sam e i n bui l di n g t hei r fenc e.
[P et it i oners] Frank and Erl i nda c annot t hus val i dl y
cl ai m t hat t he e rror i n the const ru ct i on of t he nort hern
port i on of t he fen ce was due to t he spouses Luz and
Keni chi ros act of bui l di ng t he sam e wi t hout t hei r
consent . Thi s is consi deri n g t hat t he form e r l ed t he
l att e r to bel i eve t he purport ed a ccur ac y of t he resurv e y
and ex act ness of t he l ot s bounda ri es based on t he
m onum ent s of ti t l e whi ch the y i nst al l ed.
It has be en rul ed that [ A] pa rt y, havi ng perfo rm ed
affi rm at i ve act s upon whi ch anot he r person based hi s
subsequent act i ons, c annot the rea ft er re fut e hi s act s or
rene ge on t he effect s of the sam e, t o t he prej udi c e of the
l att e r. (P ureza v. Court of Appeal s, 290 SC RA 110 )
The fore goi n g cl e arl y support s t he fi ndi ngs of t he RTC
t hat t he spouses Bat al com m it t ed a m ist ak e in t he
conduct of thei r busi ness t hat l ed t o the enc roachm ent of
pl ai nt i ffs-app el l ees fen ce on t he adj oi ni ng al l e y- l ot . As
a resul t , t he nort hern port i on ha[ d] t o be t orn down and
rebui l t i n order t o co rre ct the er ror i n i t s ori gi nal
const ruct i on. The
defend ant s-app el l ant s
cannot
be
ex cused from t he effect s of thei r act i ons i n t he surve y of
pl ai nt i ffs-app el l ees l ot .
We the refo re concur wi t h the fi ndi ngs of t he RTC
hol di n g de fendant s- appel l ant s l i abl e fo r dam a ges i n the
case at ba r. Fi ndi n gs of fact m ade b y t he t ri al
court i sent i tl ed t o gr eat wei ght and respe ct . (L op ez v.
Court of Appeal s, 322 SC RA 686 ) [ 1 5 ]
Bei n g gui lt y of a brea ch of thei r cont r act , pet i ti one rs are l i abl e
for dam a ges suffer ed b y t he respond ent s i n acco rdan ce wi t h Art i cl es
1170 and 2201 of the Ci vi l Code, [ 1 6 ] whi ch st at e:
Art . 1170. Those who i n the pe rform an ce of t hei r
obli gat i ons ar e gui l t y of fr aud, ne gl i genc e, or del a y and
t hose who i n an y m ann er cont rav ene t he t enor t hereo f
are li abl e for dam ages

Art . 2201. In cont ract s and quasi -cont r act s, t he

dam ages for whi ch t he obli gor who act ed in good f ai t h
is li abl e shal l be t hose t hat are t he nat ur al and probabl e
consequen ces of t he brea ch of the obl i gat i on, and whi ch
t he part i es have fo rese en or coul d have reason abl y
fores een at t he ti m e the obli gat i on was const it ut ed.
In case of fr aud, bad fai t h, m al i ce or want on
at ti t ude, t he obli gor shal l be r esponsi bl e fo r all dam a ges
whi ch m a y be r easonabl y at t ri but ed t o t he nonperfo rm anc e of the obl i gat i on.
Thus, t he C ourt a gr ees wi t h t he C As affi rm anc e of t he fi ndi ngs
of t he RTC on the m at t er of dam ages, to wi t :
Goi ng now t o t he cl ai m s fo r dam ages, Engr.
Arnol d Mart i n t est i fi ed on hi s com put at i on and est im at e
(Ex hi bit s G and G- 1) t hat t he t ot al cost for t he
dem oli t i on and r econst ruct i on of t he peri m et e r fen ce in
quest i on woul d be in t he t ot al am ount of P 428,163.90,
and t hi s was not at al l di sput ed b y t he def endant s,
whose couns el wai ved cross- ex am i nat i on. Thi s est i m at e
is pra ct i cal l y doubl e t he am ount of t he cost of
const ruct i n g sai d fen ce as t est i fi ed t o b y pl ai nt i ff Luz
S an P edro as she was t ol d t hat i t i s m uch cost l i er t o
dem oli sh and reconst ru ct a fenc e than t o si m pl y e rect
one becaus e of the add ed ex pense i nvol ved in t eari n g i t
down and haul i n g it s debri s. On the ot her hand, sai d
pl ai nt i ff st at ed t hat the i ron deco rat i ve gr i l ls of t he
fenc e, whi ch is re -usabl e, cost her P 50,000.00, and i t i s
onl y proper t o deduct sai d am ount from the tot al cost of
reconst ru ct i ng t he fen ce i n quest i on. At t he sam e t i m e,
som e fi gur es in t he sai d est i m at e appe ar t o be qui t e
ex c essi ve, such as t he est im at ed cost for dem ol i ti on
whi ch was quot ed at P 25,000.00 i n addit i on to t he
am ount of ex cavat i on pri ced at P 30,000.00 and t he cost
of haul i ng of scrap m at e ri al s at P 10,000.00. The court
bel i eves t hat t he sum of P 300,000.00 for t he dem oli t i on
and reconst ru ct i on of t he fenc e i n quest i on woul d be
reason abl e consi de ri ng t hat t he ori gi nal cost for it s
const ruct i on
was
onl y
about P 200,000.00,
and
consi deri n g fu rt her that i t s i ron gr i l ls a re re- usabl e.
The pl ai nt i ffs a re l i kewi se ent i tl ed t o r ecov er
at t orne ys fees consi deri ng t hat t he y w ere com pel l ed b y
t he def endant s t o resort to cou rt act i on i n orde r t o

14

prot ect t hei r ri ght s and i nt e rest , as defend ant s,

part i cul arl y de fendant F rank Bat al , f ai l ed and r efused
repe at edl y t o ev en at t end t he confront at i on of
conci l i at i on m eet i ngs arr anged bet ween him and t he
pl ai nt i ffs b y t he barangay aut hori t i es conc erned, and t o
honor hi s prom i se t o hel p i n shoul de ri ng t he cost of
reconst ru ct i ng t he fen ce in quest i on.
On t he ot her hand, t her e is no l e gal or fa ct ual
bases for t he cl ai m of the pl ai nt i ffs for mor al or
ex em pl ar y dam ages as t here was no showi ng at al l t hat
defend ant s act ed wi t h m ali c e or in bad fai t h.
In a lon g li ne of cas es, we have
consi st entl y rul ed t hat in t he abs enc e of a
wrongful act or omi ssi on or of fr aud or
bad fai t h, m oral dam a ge s cannot be
awa rded. (R & B S uret y Insu ran ce C o. v.
Int erm edi at e Court of Appe al s, 129 SC R A
736; Gui t a v. C ourt of Appeal s, 139 SC R A
576). [ 1 7 ]
WHER EF OR E, t he i nst ant pet i t i on i s DE NIE D and the ass ai l ed
Deci si on and R esol ut i on of t he C ourt of Appe al s are AFFIRME D .

THIRD DIVISION
JOSEPH SALUDAGA, G.R. No. 179337
Petitioner,
Present:
Ynares-Santiago, J. (Chairperson),
- versus - Austria-Martinez,
Chico-Nazario,
Nachura, and
Reyes, JJ.
FAR EASTERN UNIVERSITY and
EDILBERTO C. DE JESUS in his Promulgated:
capacity as President of FEU,
Respondents. April 30, 2008

15

x ---------------------------------------------------------------------------------------- x

P300,000.00, exemplary damages of P500,000.00,

attorneys fees of P100,000.00 and cost of the suit;

DECISION
YNARES-SANTIAGO, J.:
This Petition for Review on Certiorari[1] under Rule 45 of the Rules of Court
assails the June 29, 2007 Decision[2] of the Court of Appeals in CA-G.R. CV No. 87050,
nullifying and setting aside the November 10, 2004 Decision [3] of the Regional Trial
Court of Manila, Branch 2, in Civil Case No. 98-89483 and dismissing the complaint
filed by petitioner; as well as its August 23, 2007 Resolution [4] denying the Motion for
Reconsideration.[5]

2. Galaxy Management and Development Corp. and its

president, Col. Mariano Imperial to indemnify
jointly and severally 3rd party plaintiffs (FEU and
Edilberto de Jesus in his capacity as President of
FEU) for the above-mentioned amounts;
3. And the 4th party complaint is dismissed for lack of cause
of action. No pronouncement as to costs.
SO ORDERED.[9]

The antecedent facts are as follows:

Petitioner Joseph Saludaga was a sophomore law student of respondent Far
Eastern University (FEU) when he was shot by Alejandro Rosete (Rosete), one of the
security guards on duty at the school premises on August 18, 1996. Petitioner was
rushed to FEU-Dr. Nicanor Reyes Medical Foundation (FEU-NRMF) due to the wound
he sustained.[6] Meanwhile, Rosete was brought to the police station where he explained
that the shooting was accidental. He was eventually released considering that no formal
complaint was filed against him.
Petitioner thereafter filed a complaint for damages against respondents on the
ground that they breached their obligation to provide students with a safe and secure
environment and an atmosphere conducive to learning. Respondents, in turn, filed a
Third-Party Complaint[7] against Galaxy Development and Management Corporation
(Galaxy), the agency contracted by respondent FEU to provide security services within
its premises and Mariano D. Imperial (Imperial), Galaxys President, to indemnify them
for whatever would be adjudged in favor of petitioner, if any; and to pay attorneys fees
and cost of the suit. On the other hand, Galaxy and Imperial filed a Fourth-Party
Complaint against AFP General Insurance.[8]

Respondents appealed to the Court of Appeals which rendered the assailed

Decision, the decretal portion of which provides, viz:
WHEREFORE, the appeal is hereby GRANTED. The
Decision dated November 10, 2004 is hereby REVERSED and SET
ASIDE. The complaint filed by Joseph Saludaga against appellant Far
Eastern University and its President in Civil Case No. 98-89483 is
DISMISSED.
SO ORDERED.[10]
Petitioner filed a Motion for Reconsideration which was denied; hence, the
instant petition based on the following grounds:
THE COURT OF APPEALS SERIOUSLY ERRED IN MANNER
CONTRARY TO LAW AND JURISPRUDENCE IN RULING
THAT:
5.1. THE SHOOTING INCIDENT IS A FORTUITOUS EVENT;

On November 10, 2004, the trial court rendered a decision in favor of

petitioner, the dispositive portion of which reads:
WHEREFORE, from the foregoing, judgment is hereby
rendered ordering:
1. FEU and Edilberto de Jesus, in his capacity as president of
FEU to pay jointly and severally Joseph Saludaga
the amount of P35,298.25 for actual damages with
12% interest per annum from the filing of the
complaint until fully paid; moral damages of

5.2. RESPONDENTS ARE NOT LIABLE FOR DAMAGES FOR

THE INJURY RESULTING FROM A GUNSHOT WOUND
SUFFERED BY THE PETITIONER FROM THE HANDS OF NO
LESS THAN THEIR OWN SECURITY GUARD IN VIOLATION
OF THEIR BUILT-IN CONTRACTUAL OBLIGATION TO
PETITIONER, BEING THEIR LAW STUDENT AT THAT TIME,
TO PROVIDE HIM WITH A SAFE AND SECURE EDUCATIONAL
ENVIRONMENT;
5.3. SECURITY GAURD, ALEJANDRO ROSETE, WHO SHOT
PETITIONER WHILE HE WAS WALKING ON HIS WAY TO THE

16

LAW LIBRARY OF RESPONDENT FEU IS NOT THEIR

EMPLOYEE BY VIRTUE OF THE CONTRACT FOR SECURITY
SERVICES
BETWEEN
GALAXY
AND
FEU
NOTWITHSTANDING THE FACT THAT PETITIONER, NOT
BEING A PARTY TO IT, IS NOT BOUND BY THE SAME UNDER
THE PRINCIPLE OF RELATIVITY OF CONTRACTS; and
5.4. RESPONDENT
EXERCISED
DUE
DILIGENCE
IN
SELECTING GALAXY AS THE AGENCY WHICH WOULD
PROVIDE SECURITY SERVICES WITHIN THE PREMISES OF
RESPONDENT FEU.[11]
Petitioner is suing respondents for damages based on the alleged breach of studentschool contract for a safe learning environment. The pertinent portions of petitioners
Complaint read:
6.0. At the time of plaintiffs confinement, the defendants or any of
their representative did not bother to visit and inquire about his
condition. This abject indifference on the part of the defendants
continued even after plaintiff was discharged from the hospital when
not even a word of consolation was heard from them. Plaintiff waited
for more than one (1) year for the defendants to perform their moral
obligation but the wait was fruitless. This indifference and total lack
of concern of defendants served to exacerbate plaintiffs miserable
condition.
xxxx
11.0. Defendants are responsible for ensuring the safety of its students
while the latter are within the University premises. And that should
anything untoward happens to any of its students while they are
within the Universitys premises shall be the responsibility of the
defendants. In this case, defendants, despite being legally and morally
bound, miserably failed to protect plaintiff from injury and thereafter,
to mitigate and compensate plaintiff for said injury;
12.0. When plaintiff enrolled with defendant FEU, a contract was
entered into between them. Under this contract, defendants are
supposed to ensure that adequate steps are taken to provide an
atmosphere conducive to study and ensure the safety of the plaintiff
while inside defendant FEUs premises. In the instant case, the latter
breached this contract when defendant allowed harm to befall upon
the plaintiff when he was shot at by, of all people, their security guard
who was tasked to maintain peace inside the campus.[12]
In Philippine School of Business Administration v. Court of Appeals,[13] we held
that:

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 "builtin" obligation of providing their students with an atmosphere that
promotes or assists in attaining its primary undertaking of imparting
knowledge. Certainly, no student can absorb the intricacies of physics
or higher mathematics or explore the realm of the arts and other
sciences when bullets are flying or grenades exploding in the air or
where there looms around the school premises a constant threat to life
and limb. Necessarily, the school must ensure that adequate steps are
taken to maintain peace and order within the campus premises and to
prevent the breakdown thereof.[14]
It is undisputed that petitioner was enrolled as a sophomore law student in
respondent FEU. As such, there was created a contractual obligation between the two
parties. On petitioners part, he was obliged to comply with the rules and regulations of
the school. On the other hand, respondent FEU, as a learning institution is mandated to
impart knowledge and equip its students with the necessary skills to pursue higher
education or a profession. At the same time, it is obliged to ensure and take adequate
steps to maintain peace and order within the campus.
It is settled that in culpa contractual, the mere proof of the existence of the
contract and the failure of its compliance justify, prima facie, a corresponding right of
relief.[15] In the instant case, we find that, when petitioner was shot inside the campus by
no less the security guard who was hired to maintain peace and secure the premises,
there is a prima facie showing that respondents failed to comply with its obligation to
provide a safe and secure environment to its students.
In order to avoid liability, however, respondents aver that the shooting incident
was a fortuitous event because they could not have reasonably foreseen nor avoided the
accident caused by Rosete as he was not their employee; [16] and that they complied with
their obligation to ensure a safe learning environment for their students by having
exercised due diligence in selecting the security services of Galaxy.
After a thorough review of the records, we find that respondents failed to
discharge the burden of proving that they exercised due diligence in providing a safe
learning environment for their students. They failed to prove that they ensured that the
guards assigned in the campus met the requirements stipulated in the Security Service

17

Agreement. Indeed, certain documents about Galaxy were presented during trial;
however, no evidence as to the qualifications of Rosete as a security guard for the
university was offered.

may be recovered where it has been shown that the claimant suffered some pecuniary
loss but the amount thereof cannot be proved with certainty. Hence, the amount of
P20,000.00 as temperate damages is awarded to petitioner.

Respondents also failed to show that they undertook steps to ascertain and
confirm that the security guards assigned to them actually possess the qualifications
required in the Security Service Agreement. It was not proven that they examined the
clearances, psychiatric test results, 201 files, and other vital documents enumerated in
its contract with Galaxy. Total reliance on the security agency about these matters or
failure to check the papers stating the qualifications of the guards is negligence on the
part of respondents. A learning institution should not be allowed to completely
relinquish or abdicate security matters in its premises to the security agency it hired. To
do so would result to contracting away its inherent obligation to ensure a safe learning
environment for its students.

As regards the award of moral damages, there is no hard and fast rule in the
determination of what would be a fair amount of moral damages since each case must
be governed by its own peculiar circumstances. [22] The testimony of petitioner about his
physical suffering, mental anguish, fright, serious anxiety, and moral shock resulting
from the shooting incident[23]justify the award of moral damages. However, moral
damages are in the category of an award designed to compensate the claimant for actual
injury suffered and not to impose a penalty on the wrongdoer. The award is not meant to
enrich the complainant at the expense of the defendant, but to enable the injured party to
obtain means, diversion, or amusements that will serve to obviate the moral suffering he
has undergone. It is aimed at the restoration, within the limits of the possible, of the
spiritual status quo ante, and should be proportionate to the suffering inflicted. Trial
courts must then guard against the award of exorbitant damages; they should exercise
balanced restrained and measured objectivity to avoid suspicion that it was due to
passion, prejudice, or corruption on the part of the trial court. [24] We deem it just and
reasonable under the circumstances to award petitioner moral damages in the amount of
P100,000.00.

Consequently, respondents defense of force majeure must fail. In order

for force majeure to be considered, respondents must show that no negligence or
misconduct was committed that may have occasioned the loss. An act of God cannot be
invoked to protect a person who has failed to take steps to forestall the possible adverse
consequences of such a loss. Ones negligence may have concurred with an act of God
in producing damage and injury to another; nonetheless, showing that the immediate or
proximate cause of the damage or injury was a fortuitous event would not exempt one
from liability. When the effect is found to be partly the result of a persons participation
whether by active intervention, neglect or failure to act the whole occurrence is
humanized and removed from the rules applicable to acts of God.[17]
Article 1170 of the Civil Code provides that those who are negligent in the
performance of their obligations are liable for damages. Accordingly, for breach of
contract due to negligence in providing a safe learning environment, respondent FEU is
liable to petitioner for damages. It is essential in the award of damages that the claimant
must have satisfactorily proven during the trial the existence of the factual basis of the
damages and its causal connection to defendants acts.[18]
In the instant case, it was established that petitioner spent P35,298.25 for
his hospitalization and other medical expenses.[19] While the trial court correctly
imposed interest on said amount, however, the case at bar involves an obligation arising
from a contract and not a loan or forbearance of money. As such, the proper rate of legal
interest is six percent (6%) per annum of the amount demanded. Such interest shall
continue to run from the filing of the complaint until the finality of this Decision.
[20]
After this Decision becomes final and executory, the applicable rate shall be twelve
percent (12%) per annum until its satisfaction.
The other expenses being claimed by petitioner, such as transportation
expenses and those incurred in hiring a personal assistant while recuperating were
however not duly supported by receipts.[21] In the absence thereof, no actual damages
may be awarded. Nonetheless, temperate damages under Art. 2224 of the Civil Code

Likewise, attorneys fees and litigation expenses in the amount of P50,000.00 as

part of damages is reasonable in view of Article 2208 of the Civil Code. [25] However, the
award of exemplary damages is deleted considering the absence of proof that
respondents acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner.
We note that the trial court held respondent De Jesus solidarily liable with
respondent FEU. In Powton Conglomerate, Inc. v. Agcolicol,[26] we held that:
[A] corporation is invested by law with a personality separate and
distinct from those of the persons composing it, such that, save for
certain exceptions, corporate officers who entered into contracts in
behalf of the corporation cannot be held personally liable for the
liabilities of the latter. Personal liability of a corporate director, trustee
or officer along (although not necessarily) with the corporation may
so validly attach, as a rule, only when (1) he assents to a patently
unlawful act of the corporation, or when he is guilty of bad faith or
gross negligence in directing its affairs, or when there is a conflict of
interest resulting in damages to the corporation, its stockholders or
other persons; (2) he consents to the issuance of watered down stocks
or who, having knowledge thereof, does not forthwith file with the
corporate secretary his written objection thereto; (3) he agrees to hold
himself personally and solidarily liable with the corporation; or (4) he
is made by a specific provision of law personally answerable for his
corporate action.[27]

18

None of the foregoing exceptions was established in the instant case; hence,
respondent De Jesus should not be held solidarily liable with respondent FEU.
Incidentally, although the main cause of action in the instant case is the breach
of the school-student contract, petitioner, in the alternative, also holds respondents
vicariously liable under Article 2180 of the Civil Code, which provides:
Art. 2180. The obligation imposed by Article 2176 is
demandable not only for ones own acts or omissions, but also for
those of persons for whom one is responsible.
xxxx
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.
xxxx
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.
We agree with the findings of the Court of Appeals that respondents cannot be
held liable for damages under Art. 2180 of the Civil Code because respondents are not
the employers of Rosete. The latter was employed by Galaxy. The instructions issued by
respondents Security Consultant to Galaxy and its security guards are ordinarily no
more than requests commonly envisaged in the contract for services entered into by a
principal and a security agency. They cannot be construed as the element of control as to
treat respondents as the employers of Rosete.[28]
As held in Mercury Drug Corporation v. Libunao:[29]
In Soliman, Jr. v. Tuazon,[30] we held that where the
security agency recruits, hires and assigns the works of its watchmen
or security guards to a client, the employer of such guards or
watchmen is such agency, and not the client, since the latter has no
hand in selecting the security guards. Thus, the duty to observe the
diligence of a good father of a family cannot be demanded from the
said client:
[I]t is settled in our jurisdiction that where
the security agency, as here, recruits, hires and
assigns the work of its watchmen or security guards,
the agency is the employer of such guards or

watchmen. Liability for illegal or harmful acts

committed by the security guards attaches to the
employer agency, and not to the clients or customers
of such agency. As a general rule, a client or
customer of a security agency has no hand in
selecting who among the pool of security guards or
watchmen employed by the agency shall be
assigned to it; the duty to observe the diligence of a
good father of a family in the selection of the guards
cannot, in the ordinary course of events, be
demanded from the client whose premises or
property are protected by the security guards.
xxxx
The fact that a client company may give instructions or
directions to the security guards assigned to it, does not, by itself,
render the client responsible as an employer of the security guards
concerned and liable for their wrongful acts or omissions.[31]
We now come to respondents Third Party Claim against Galaxy. In Firestone
Tire and Rubber Company of the Philippines v. Tempengko,[32] we held that:
The third-party complaint is, therefore, a procedural device
whereby a third party who is neither a party nor privy to the act or
deed complained of by the plaintiff, may be brought into the case with
leave of court, by the defendant, who acts as third-party plaintiff to
enforce against such third-party defendant a right for contribution,
indemnity, subrogation or any other relief, in respect of the plaintiffs
claim. The third-party complaint is actually independent of and
separate and distinct from the plaintiffs complaint. Were it not for this
provision of the Rules of Court, it would have to be filed
independently and separately from the original complaint by the
defendant against the third-party. But the Rules permit defendant to
bring in a third-party defendant or so to speak, to litigate his separate
cause of action in respect of plaintiffs claim against a third-party in
the original and principal case with the object of avoiding circuitry of
action and unnecessary proliferation of law suits and of disposing
expeditiously in one litigation the entire subject matter arising from
one particular set of facts.[33]
Respondents and Galaxy were able to litigate their respective claims and
defenses in the course of the trial of petitioners complaint. Evidence duly supports the
findings of the trial court that Galaxy is negligent not only in the selection of its
employees but also in their supervision. Indeed, no administrative sanction was imposed
against Rosete despite the shooting incident; moreover, he was even allowed to go on

19

leave of absence which led eventually to his disappearance. [34] Galaxy also failed to
monitor petitioners condition or extend the necessary assistance, other than the
P5,000.00 initially given to petitioner. Galaxy and Imperial failed to make good their
pledge to reimburse petitioners medical expenses.

SO ORDERED.

For these acts of negligence and for having supplied respondent FEU with an
unqualified security guard, which resulted to the latters breach of obligation to
petitioner, it is proper to hold Galaxy liable to respondent FEU for such damages
equivalent to the above-mentioned amounts awarded to petitioner.
Unlike respondent De Jesus, we deem Imperial to be solidarily liable with
Galaxy for being grossly negligent in directing the affairs of the security agency. It was
Imperial who assured petitioner that his medical expenses will be shouldered by Galaxy
but said representations were not fulfilled because they presumed that petitioner and his
family were no longer interested in filing a formal complaint against them.[35]
WHEREFORE, the petition is GRANTED. The June 29, 2007 Decision of
the Court of Appeals in CA-G.R. CV No. 87050 nullifying the Decision of the trial
court and dismissing the complaint as well as the August 23, 2007 Resolution denying
the Motion for Reconsideration are REVERSED and SET ASIDE. The Decision of the
Regional Trial Court of Manila, Branch 2, in Civil Case No. 98-89483 finding
respondent FEU liable for damages for breach of its obligation to provide students with
a
safe
and
secure
learning
atmosphere,
isAFFIRMED with
the
following MODIFICATIONS:
a. respondent Far Eastern University (FEU) is ORDERED to pay
petitioner actual damages in the amount of P35,298.25, plus
6% interest per annum from the filing of the complaint until
the finality of this Decision. After this decision becomes
final and executory, the applicable rate shall be twelve
percent (12%) per annum until its satisfaction;
b. respondent FEU is also ORDERED to pay petitioner temperate
damages in the amount of P20,000.00; moral damages in the
amount of P100,000.00; and attorneys fees and litigation
expenses in the amount of P50,000.00;
c. the award of exemplary damages is DELETED.

SE CO ND DI VIS IO N
S PO US ES FE RNA NDO
an d LO UR DES VIL O RIA,
Pe ti ti on ers,

The Complaint against respondent Edilberto C. De Jesus is DISMISSED. The

counterclaims of respondents are likewise DISMISSED.

- versu s -

Galaxy Development and Management Corporation (Galaxy) and its president,

Mariano D. Imperial are ORDERED to jointly and severally pay respondent FEU
damages equivalent to the above-mentioned amounts awarded to petitioner.

CO NT INE NTAL AIRL INES , INC.,

Resp ond en t.

20

x--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ----- --- --- --- x
DE CIS IO N
RE YES , J.:
Thi s is a pet it i on for revi ew under Rul e 45 of t he R ul es of
Court from t he J anua r y 30, 2009 D eci si on 1 of t he S peci al Thi rt eent h
Di visi on of the C ourt of Appeal s (C A) i n C A- G.R . C V No. 88586
ent it l ed Spouses Fernando and L ourdes Vil ori a v. Cont i nent al
Ai rl i nes, In c., t he di sposi t i ve port i on of whi ch st at es:
WH E RE FO RE , t he De ci si on of t he R e gi onal Tri al C ourt ,
Br anch 74, dat ed 03 Ap ri l 2006, awa rdi ng US $800.00 or it s peso
equi val ent at t he t im e of pa ym ent , pl us l e gal rat e of i nt er est from 21
Jul y 1997 unt i l ful l y pai d, [P] 100,000.00 as m oral dam ages,
[P ]50,000.00 as ex em pl ar y dam ages, [P] 40,000.00 as at t orne ys fees
and
cost s
of
sui t
to
pl ai nt i ffs -app el l ees
is
hereb y RE VE RS E D and S ET AS IDE .
Def endant - appel l ant s count er cl ai m i s DE NIE D .
Cost s a gai nst pl ai nt i ffs- appel l ees.
SO O RDE RE D . 2
On Ap ri l 3, 2006, the R egi on al Tri al Court of Ant i pol o Ci t y,
Br anch 74 (RTC ) rend er ed a Deci si on, gi vi ng due cou rse t o t he
com pl ai nt for sum of m one y and dam a ges fi l ed b y pet i ti one rs F ern ando
Vil ori a (Fe rnando) and Lo urd es Vil ori a ( Lou rdes), col l e ct i vel y cal l ed
Spouses Vil ori a, a gai nst r espondent C onti nent al Ai rl i nes, In c . (C A I).
As cul l ed from the re cords, bel ow are t he fa ct s gi vi n g ri se t o such
com pl ai nt .
On or about Jul y 21, 1997 and whi l e i n t he Uni t ed St at es,
Fe rnando purch ased for hi m sel f and hi s wi fe, Lou rdes, t wo (2) round
t ri p ai rl i ne t i cket s from S an Di e go, C ali fo rni a t o New ark, New Jerse y
on boa rd Cont i nent al Ai rl i nes. Fe rnando purch ased t he ti cket s at
US $400.00 each from a t ravel a ge nc y cal l ed Hol i da y Trav el and was

at t ended to b y a ce rt ai n Marga ret Mager (Mager ). Ac cordi ng t o

Spouses Vil ori a, F ernando a gr eed t o bu y t he sai d ti cket s aft e r Mager
i nform ed t hem t hat the re we re no avai l abl e seat s at Am t rak, an
i nt e rci t y passen ge r t rai n servi c e provi der i n the Uni t ed St at es. P er t he
ti ck et s, S pouses Vil ori a were sch edul ed t o l eav e for New ark on August
13, 1997 and ret u rn t o S an Di ego on Au gust 21, 1997.
Subsequ ent l y, Fe rnando requ est ed Mager t o resch edul e t hei r
fl i ght t o Ne wark t o an ea rl i er dat e or August 6, 1997. Mager i nform ed
him t hat fl i ght s t o N ewa rk vi a C onti nent al Ai rl i nes w ere al r ead y ful l y
booked and offe red t he al t ernat i ve of a round t ri p fl i ght vi a Front i e r
Ai r. S inc e fl yi n g wi t h Front i er Ai r cal l ed for a hi gh er far e of
US $526.00 per pass enger and woul d m ean t ravel i n g b y ni ght , Fe rnando
opt ed t o request for a re fund. Mager, howev er, deni ed hi s r equest as
t he subj ect t i cket s a re non- refund abl e and t he onl y opti on t hat
Cont i nent al Ai rl i nes can offer i s the re -i ssuanc e of ne w ti cket s wi t hi n
one (1) ye a r from the dat e t he subj e ct ti ck et s wer e i ssued. F ern ando
deci ded t o reserv e t wo (2 ) seat s wi t h F ront i er Ai r.
As he w as havi ng second t hought s on t rav el i ng vi a Front i e r Ai r,
Fe rnando went t o the Gre yh ound S t ati on whe re he saw an Am t r ak
st at i on nea rb y. F ernando m ad e inqui ri es and was t ol d t hat t her e are
seat s av ai l abl e and he can t ravel on Am t rak an yt i m e and an y da y he
pl eased. Fe rnando t hen purchas ed t wo (2) ti ck et s for Washi n gt on, D.C .
From Am t rak, F ern ando went to Hol i da y Travel and confront ed
Mager wi t h the Am t rak ti ck et s, t el l i ng her t hat she had mi sl ed them
i nt o bu yi ng t he C ont i nent al Ai rl i nes ti cket s b y mi srep resent i n g t hat
Am t rak was al re ad y ful l y booked. Fe rnando rei t erat ed hi s dem and fo r a
refund but Mager was fi rm i n her posit i on t hat t he subj ect ti cket s are
non-re fundabl e.
Upon ret urni n g to t he Phi li ppi nes, F ern ando sent a l ett e r t o C A I
on F ebru ar y 11, 1998, dem andi n g a re fund and al l e gi n g t hat Ma ge r had
del uded t hem i nt o purchasi n g the subj ect t i cket s. 3
In a l et t er dat ed Febru ar y 24, 1998, Cont i nent al Mi cron esi a
i nform ed F ern ando t hat hi s com pl ai nt had been ref err ed t o t he
Cust om er R efund S ervi ces of C onti nent al Ai rl i nes at Houst on, Tex as. 4
In a l et t er dat ed March 24, 1998, C onti nent al Mi cronesi a
deni ed F ern andos requ est for a refund and advi sed him t hat he m a y
t ake t he subj e ct ti ck et s t o an y C onti nent al ti ck et i ng loc at i on for t he
re- i ssuan ce of new ti ck et s wit hi n t wo (2) ye a r s from the dat e t he y wer e
issued. Cont i nent al Mi cron esi a i nform ed Fe rnando that t he subj e ct

21

ti ck et s m a y be used as a form of pa ym e nt fo r the purch ase of anot her

Cont i nent al t i cket , al bei t wi t h a re- issuan ce fee. 5
On June 17, 1999, F ern ando went to C onti nent al s ti cket i n g
offi c e at Aya l a Avenu e, Makat i Ci t y t o have t he subj e ct t i cket s
repl a ced b y a si ngl e round t ri p t i cket t o Los An gel es, C al i forni a under
his nam e. The rei n, Fe rnando was i nform ed t hat Lourd es ti cket was
non-t ransf er abl e, thus, cannot be used for t he purchas e of a t i cket i n
his favo r. He was al so i nform ed t hat a round t ri p t i cket t o Lo s An gel es
was US $1,867.40 so he woul d have t o pa y what wi l l not be cover ed b y
t he val ue of hi s S an Di ego t o New ark round t ri p ti cket .
In a l et t er dat ed June 21, 1999, Fe rnando dem anded for t he
refund of t he subj ect ti ck et s as he no l on ger wi shed t o have t hem
repl a ced. In addi t i on to t he dubi ous ci r cum st an ces under whi ch t he
subj ect ti cket s we re i ssued, Fern ando cl ai m ed t hat C A Is act of
cha rgi n g hi m wi t h US $1,867.40 for a round t ri p t i cket t o Lo s Angel es,
whi ch ot he r ai rl i nes pri ced at US $856.00, and refus al to al l ow hi m t o
use Lou rdes ti ck et , br each ed it s undert aki n g under i t s Mar ch 24, 1998
l ett e r. 6
On S ept em be r 8, 2000, Spouses Vil ori a fi l ed a com pl ai nt
agai nst CA I, pr a yi n g t hat C A I be order ed to refund t he m one y t he y
used in t he purchas e of t he subj ect ti ck et s wi t h l egal i nt er est from J ul y
21, 1997 and t o pa y P 1,000,000.00 as m oral dam ages, P 500,000.00 as
ex em pl ar y dam a ges and P 250,000.00 as at t orne ys fees. 7
C A I i nt erposed the fol l owi ng defens es: (a) Spouses Vil ori a
have no ri ght t o ask for a re fund as the subj ect t i cket s are nonrefund abl e; (b) Fe rnando cannot i nsi st on usi ng t he t i cket in Lou rdes
nam e for t he purchas e of a round t ri p ti cket t o Lo s An gel es si nc e the
sam e i s non-t rans fer abl e; (c ) as Mager is not a C A I em pl o ye e, C A I i s
not li abl e for an y of her act s; (d) C A I, i t s em pl o yee s and agent s di d
not act i n bad f ai t h as t o ent it l e S pouses Vil ori a to m oral and
ex em pl ar y dam a ges and at t orn e ys fe es. C A I al so i nvoked the
fol l owi ng cl ause pri nt ed on t he subj ect t i cket s:
3. To t he ext ent not i n confl i ct wi t h t he fo regoi ng c arri a ge and
ot her servi ces pe rform ed b y e ach c arri er a re subj e ct t o: (i ) provi si ons
cont ai ned i n t hi s t i cket , (i i ) appl i c abl e t ari ffs, (i i i ) car ri er s condi ti ons
of car ri age and rel at ed regul at i ons whi ch a re m ade part her eof (and a re
avai l abl e on appl i cat i on at t he offi ces of ca rri er ), ex cept i n
t ransport at i on bet ween a pl ac e i n t he Uni t ed S t at es or C anada and an y
pl ace outsi de the reof t o whi ch t ari ffs i n forc e i n t hose count ri es
appl y. 8

Acco rdi ng t o C A I, one of the condi t i ons at t a ched to t hei r

cont ra ct of c arri a ge is t he non-t ransf erabi l i t y and non- refund abi l it y of
t he subj ect t i cket s.
Th e RTCs Ru l in g
Fol l owi ng a ful l -bl own t ri al , t he RTC rend ered i t s Apri l 3, 2006
Deci si on, hol di n g t hat S pouses Vil ori a a re ent i t l ed t o a refund i n vi ew
of Ma ge r s mi srep resent at i on in obt ai ni ng t hei r consent in t he
purchas e of the subj ect t i cket s. 9 The r el evant port i on of t he Apri l 3,
2006 Deci si on st at es:
Cont i nent al Ai rl i nes agent Ms. Ma ge r w as i n bad fai t h wh en
she was l ess c andi d and di li gent i n pr esent i ng t o pl ai nt i ffs spouses
t hei r booki n g opti ons. Pl ai nt i ff F ernando cl e arl y want ed t o t ravel vi a
AMTR AK, but def endant s a gent mi sl ed hi m int o purch asi ng
Cont i nent al
Ai rl i nes
ti ck et s
i nst ead
on
the
f raudul ent
mi srep res ent at i on that Am t rak was ful l y booked. In fa ct , def endant
Ai rl i ne di d not spe ci fi cal l y deni ed (si c) t hi s al l e gat i on.
Pl ai nl y, pl ai nt i ffs spouses, part i cul arl y pl ai nt i ff Fe rnando, we re
t ri cked i nt o bu yi n g C ont i nent al Ai rl i ne t i cket s on Ms. Mager s
mi sl eadi n g m isr epres ent at i ons. C ont i nent al Ai rl i nes agent Ms. Mager
furt her r el i ed on and expl oi t ed pl ai nt i ff F ern andos ne ed and tol d hi m
t hat the y m ust book a fl i ght i m m edi at el y or ri sk not bei n g abl e t o
t ravel at al l on the coupl e s pre fer red dat e. Unfo rt unat el y, pl ai nt i ffs
spouses fel l pre y t o t he ai rl i ne s and it s a gent s unet hi c al t act i cs for
bai ti n g t rust i ng cust om ers. 1 0
Ci t i ng Art i cl es 1868 and 1869 of the Ci vi l Code, the RTC rul ed
t hat Ma ge r is C A Is a ge nt , hence, bound b y he r bad fai t h and
mi srep res ent at i on. As f ar as t he RTC i s conce rned, t here i s no i ssue as
t o whet her Mager was C A Is a ge nt i n vi e w of C A Is i m pli ed
reco gni t i on of her st at us as such in i t s March 24, 1998 l et t er.
The act of a t ravel agent or agenc y bei ng i nvol ved here, t he
fol l owi ng are t he pert i nent N ew C i vi l C ode provi si ons on agen c y:
Art . 1868. B y t he cont r act of agenc y a pe rson bi nds hi m sel f t o
rende r som e se rvi ce or t o do som et hi n g i n rep resent at i on or on beh al f
of anot he r, wi t h t he consent or aut hori t y of t he l at t e r.
Art . 1869. Age nc y m a y be ex press, or i m pli ed f rom t he act s of
t he pri nci p al , f rom hi s si l enc e or l a ck of a ct i on, or hi s fai l ur e to

22

repudi at e t he a gen c y, knowi ng t hat anot her person i s act i n g on hi s

behal f wit hout aut hori t y.
Agenc y m a y be oral , unl ess t he l aw requi r es a spe ci fi c fo rm .
As i t s ve r y nam e im pl i es, a t ravel agen c y bi nds it sel f t o rende r
som e se rvi ce or t o do som et hi n g i n rep resent at i on or on beh al f of
anot her, wit h t he consent or aut hori t y of t he l at t er. Thi s court t ak es
j udi ci al not i c e of t he comm on se rvi ces rende red b y t ravel a ge nci es that
repr esent t hem sel ves as such, spe ci fi cal l y t he rese rvat i on and booki n g
of loc al and fo rei gn tours as wel l as the i ssuanc e of ai rl i ne t i cket s for
a com m i ssi on or fee.
The servi ces r ender ed b y Ms. Ma ge r of Hol i da y Trav el agen c y
t o the pl ai nt i ff spouses on J ul y 21, 1997 wer e no di ffer ent from t hose
offered i n an y ot he r t ravel agen c y. De fend ant ai rl i ne i m pl i edl y i f not
ex pressl y acknowl ed ge d i t s pri nci pal - agent rel at i onshi p wi t h Ms.
Mager b y i ts offe r i n t he l et t er dat ed Mar ch 24, 1998 an obvi ous
at t em pt to assu age pl ai nt i ffs spouses hurt feel i n gs. 1 1
Furt he rm ore, t he RTC rul ed t hat C A I act ed i n bad fai t h i n
rene gi n g on it s undert aki ng t o repl ac e t he subj e ct ti ck et s wi t hi n t wo
(2) ye ar s from thei r dat e of i ssue when it cha rged F ernando wi t h the
am ount of US $1,867.40 for a round t ri p t i cket t o Los An gel es and
when i t re fused t o al l ow F ern ando t o use Lo urdes ti ck et . Spe ci fi cal l y:
Ticket s m a y be rei ssued for up t o t wo ye a rs from t he ori gi n al
dat e of issue. When defend ant ai rl i ne st i ll cha rged pl ai nt i ffs spouses
US $1,867.40 or m ore t han doubl e t he t hen goi ng rat e of US $856.00 for
t he unused t i cket s when t he sam e wer e pres ent ed wi t hi n t wo (2) ye a rs
from dat e of issue, def endant ai rl i ne ex hi bi t ed c al l ous t re at m ent of
pass enger s. 1 2
Th e App el l at e Cou rt s Ru li n g
On appe al , t he C A reve rsed t he RTC s Apri l 3, 2006 D eci si on,
hol di n g t hat C A I c annot be hel d li abl e for Ma ge r s act i n t he abs ence
of an y proof t hat a pri nci pal -a ge nt rel at i onshi p exi st ed bet w een C A I
and Holi da y Travel . Ac cordi n g t o t he C A, S pouses Vil ori a, who hav e
t he burd en of proof to est abl i sh t he fa ct of a ge nc y, fai l ed t o pres ent
evi denc e dem onst rat i n g t hat Hol i da y Travel i s C A Is agent .
Furt he rm ore, cont rar y t o Spouses Vil ori as cl ai m , t he cont r act ual
rel at i onshi p bet w een Hol i da y Travel and C A I is not an a gen c y but t hat
of a sal e.

Pl ai nt i ffs- appel l e es ass ert that Ma ge r was a sub-agent of

Hol i da y Trav el who was in t urn a ti ck et i ng agent of Holi da y Travel
who was in t urn a t i cket i n g agent of Cont i nent al Ai rl i nes. P roceedi n g
from thi s prem i se, the y cont end that C ont i nent al Ai rl i nes shoul d be
hel d li abl e for the act s of Mager. The t ri al court hel d the sam e vi ew.
We do not a gr ee. B y t he cont ra ct of a ge nc y, a person bi nds
him / hers el f t o rend er som e servi ce or t o do som et hi n g i n
repr esent at i on or on behal f of anot her, wi t h the consent or aut hori t y of
t he l at t er. The el em ent s of a ge nc y are: (1) cons ent , ex press or i m pl i ed,
of the pa rt i es t o est abl i sh t he rel at i onshi p; (2) t he obj ect is t he
ex e cut i on of a j uri di c al act in rel at i on t o a t hi rd pe rson; (3) t he a gent
act s as a rep resent at i ve and not for him / hers el f; and (4 ) t he a ge nt act s
wi t hi n t he scop e of hi s/ her aut hori t y. As the basi s of agenc y i s
repr esent at i on, t her e m ust be, on t he part of t he pri nci pal , an act u al
i nt ent i on t o appoi nt , an i nt ent i on nat ural l y i nfe rabl e from t he
pri nci pal s words or act i ons. In t he sam e m anner, t here m ust be an
i nt ent i on on t he part of the a ge nt t o acc ept the appoi nt m ent and act
upon i t . Absent such m ut ual int ent , t here i s gen eral l y no agenc y. It is
li kewi s e a set t l ed rul e t hat persons de al i ng wi t h an assum ed a ge nt ar e
bound at t hei r peri l , i f the y woul d hol d the pri nci pal l i abl e, t o
asce rt ai n not onl y t he fa ct of a ge nc y but al so t he nat ure and ext ent of
aut hori t y, and i n case ei t her i s cont rov ert ed, the burden of proof i s
upon t hem to est abl i sh i t . Agenc y is never pr esum ed, nei t her i s i t
cre at ed b y the m er e use of t he word i n a t rad e or busi ness nam e. We
have perused the evi denc e and docum ent s so far pres ent ed. We fi nd
not hi n g ex c ept
ba re
al l egat i ons
of pl ai nt i ffs- appel l e es
that
Mager/ Hol i da y Travel was a ct i ng in beh al f of Cont i nent al Ai rl i nes.
From al l si des of l egal pri sm , t he t ransa ct i on in i ssue w as sim pl y a
cont ra ct of sal e, whe rei n Hol i da y Travel bu ys ai rl i ne t i cket s from
Cont i nent al Ai rl i nes and t hen, throu gh it s em pl o ye es, Mager i ncl uded,
sel l s it at a prem i um to cl i ent s. 1 3
The C A al so rul ed t hat refund i s not avai l abl e
Vil ori a as t he word non- re fundabl e was cl earl y pri nt ed
of the subj ect t i cket s, whi ch consti t ut e t hei r cont ract
Ther efor e, the gra nt of t hei r pra ye r for a re fund woul d
proscri pt i on a gai nst i m pai rm ent of cont ract s.

t o S pouses
on the f ace
wi t h C A I.
vi ol at e t he

Fi nal l y, t he C A hel d t hat C A I di d not act i n bad f ai t h when t he y

cha rged S pouses Vil ori a wi t h the hi gh er am ount of US $1,867.40 for a
round t ri p ti ck et t o Los An gel es. Accordi n g to t he C A, the re i s no
com pul si on fo r C A I t o cha rge t he l ower am ount of US $856.00, whi ch
Spouses Vil ori a cl ai m to be t he f ee cha rged b y ot her ai rl i nes. The

23

m att e r of fix in g t he pri ces fo r i ts se rvi ces is C A Is pr erogat i ve, whi ch

Spouses Vil ori a cannot int erv ene. In part i cul a r:
It i s wit hi n the resp ect i ve ri ght s of persons owni n g and/ or
operat i n g busi ness ent i t i es t o peg t he pr em i um of t he servi c es and
it em s whi ch t he y provi de at a pri c e whi ch the y de em fi t , no m at t er
how ex pensi ve or ex horbi t ant sai d pri c e m a y seem vi s-- vi s t hose of
t he com pet i n g com pani es. The S pouses Vil ori a m a y not int erv ene wi t h
t he busi ness j udgm ent of C ont i nent al Ai rl i nes. 1 4

Vil ori a from an y changes or fl uct uat i ons in t he pri ces of ai rl i ne ti cket s
and i t s onl y obl i gat i on was to appl y the val ue of the subj ect t i cket s t o
t he purch ase of t he newl y issued ti cket s.
Wit h resp ect t o S pouses Vil ori a s cl ai m t hat t he y ar e not aw are
of C A Is rest ri ct i ons on t he subj ect ti ck et s and t hat t he t erm s and
condi ti ons t hat a re pri nt ed on t hem are am bi guous, C A I deni es an y
am bi gui t y and al l eged that i t s repr esent at i ve i nform ed F ern ando t hat
t he subj e ct t i cket s are non- t ransfe rabl e wh en he appl i ed for t he
issuan ce of a ne w t i cket . On t he ot he r hand, t he word non -re fundabl e
cl ea rl y appe ars on the fac e of the subj ect t i cket s.

Th e Pet i ti on ers Case

In thi s P et i t i on, t his C ourt i s bei n g asked t o revi ew t he fi ndi ngs
and concl usi ons of t he C A, as t he l att e r s rev ersal of t he RTC s Apri l
3, 2006 Deci si on al l egedl y l acks fa ct ual and l e gal bas es. S pouses
Vil ori a cl ai m t hat CA I a ct ed i n bad fai t h when it requi r ed them t o pa y
a hi ghe r am ount for a round t ri p t i cket t o Lo s Angel es consi de ri ng
C A Is undert aki n g t o re -i ssue new ti ck et s t o them wit hi n t he pe ri od
st at ed in t hei r March 24, 1998 l et t er. CA I l i kewi se act ed in bad fai t h
when it di sal l owed Fe rnando t o use Lo urdes t i cket to purch ase a
round t ri p t o Los Angel es gi v en t hat t here i s not hi n g i n Lou rdes t i cket
i ndi c at i ng t hat it is non-t ransf erabl e. As a com m on ca rri e r, it is C A Is
dut y to i nform it s passen ge rs of the t erm s and condi t i ons of t hei r
cont ra ct and passen ge rs cannot be bound b y such t erm s and condi ti ons
whi ch t he y are not m ad e aw are of. Al so, the subj ect cont r act of
car ri age i s a cont ra ct of adh esi on; the refo re, an y am bi gui ti es shoul d be
const rued agai nst C A I. Not abl y, t he pet i t i oners ar e no l on ger
quest i oni n g t he vali di t y of t he subj ect cont ra ct s and l i mi t ed i ts cl ai m
for a refund on C A Is al l eged brea ch of it s undert aki n g in i t s March
24, 1998 l ett e r.
Th e R esp on d en ts Case
In it s Com m ent , C A I cl ai m ed t hat Spouses Vil ori as all e ga t i on
of bad fai t h i s ne ga t ed b y it s wil l i ngn ess to issue new t i cket s t o t hem
and to cr edi t t he val ue of the subj ect t i cket s agai nst t he val ue of t he
new ti ck et Fern ando request ed. CA I a rgued t hat Spouses Vil ori as sol e
basi s t o cl ai m that the pri ce at whi ch C A I w as wi l li n g t o i ssue t he new
ti ck et s is uncons ci onabl e is a pi e ce of hea rsa y evi denc e an
advert i sem ent appea ri ng on a ne wspape r st at i ng t hat ai rfa res from
Mani l a t o Los An gel es or S an F ran ci sco cost US $818.00. 1 5 Al so, the
advert i sem ent pert ai ns t o ai rf ar es i n S ept em b er 2000 and not to
ai rf ares prevai l i n g i n June 1999, t he t i m e when Fe rnando ask ed C A I t o
appl y the val ue of t he subj ect ti ck et s for t he purch ase of a new
one. 1 6 C A I l i kewi se argu ed that i t di d not undert ake t o prot ect Spouses

C A I al so deni es that it i s bound b y t he act s of Hol i da y Trav el

and Mager and t hat no pri nci pal - agen c y rel at i onshi p ex ist s bet ween
t hem . As an i ndependent cont ract or, Hol i da y Trav el was wit hout
cap aci t y t o bi nd C A I.
Issu es
To det e rm i ne the prop ri et y of di st urbi ng t he C As J anua r y 30,
2009 Deci si on and whet her Spouses Vil ori a have t he ri ght t o the
rel i efs t he y pra yed for, t his C ourt de em s i t ne cessa r y to resol ve t he
fol l owi ng issues:
a. Does a pri nci pal -a ge nt rel at i onshi p exi st bet w een C A I and
Hol i da y Trav el?
b. Assumi n g t hat an a ge nc y rel at i onshi p ex i sts bet we en C A I
and Hol i da y Travel , i s C A I bound b y t he a ct s of Hol i da y Travel s
agent s and em pl o ye es such as Ma ge r?
c. Assum i ng t hat C A I i s bound b y t he a ct s of Hol i da y Trav el s
agent s and em pl o ye es, can t he rep resent at i on of Mager as t o
unavai l abi l i t y of seat s at Am t rak be consi der ed fraudul ent as t o vi t i at e
t he consent of Spouse Vil ori a i n t he purch ase of t he subj ect t i cket s?
d. Is C A I j ust i fi ed i n i nsi st i n g that t he subj e ct ti cket s ar e nont ransfe rabl e and non- refund abl e?
e. Is C A I j ust i fi ed i n pe ggi ng a di ffe rent pri c e for t he round
t ri p ti cket to Lo s Angel es request ed b y F ernando?
f. Al t ern at i vel y, di d C A I act i n bad fai t h or rene ge it s
obli gat i on to S pouses Vil ori a t o appl y t he val ue of t he subj e ct t i cket s
i n the purchas e of new ones when i t refus ed t o al l ow F ernando t o use
Lou rdes ti ck et and i n chargi n g a hi gh er pri c e for a round t ri p ti ck et t o
Los An gel es?
Th i s Cou rts Rul i n g

24

I. A p rin ci p al -agen t rel a ti on sh ip exi sts b etw een CAI an d

H ol i d ay Travel .
Wit h resp ect t o t he fi rst i ssue, whi ch i s a quest i on of fa ct that
woul d r equi re t his C ourt t o r evi ew and re -ex ami ne t he evi den ce
present ed b y t he pa rt i es bel ow, t hi s C ourt t akes ex cept i on t o t he
ge ner al rul e that t he C As fi ndi ngs of fact ar e concl usi ve upon Us and
our juri sdi ct i on is li m i t ed t o the r evi ew of quest i ons of l aw. It i s wel l set tl ed t o the poi nt of bei n g ax i om at i c t hat t hi s Court i s aut hori z ed t o
resol ve questi ons of fact i f confront ed wi t h cont rast i n g fa ct ual
fi ndi ngs of t he t ri al court and appel l at e court and i f t he fi ndi ngs of t he
C A ar e cont r adi ct ed b y t he evi denc e on r ecord. 1 7
Acco rdi ng t o the C A, agen c y i s neve r presum ed and t hat he who
al l eges t hat i t ex i st s has t he burden of proof. Spouses Vil ori a, on
whose shoul ders such burden rest s, pres ent ed evi den ce t hat fel l short
of i ndubit abl y dem onst rat i ng t he ex i st enc e of such agenc y.
We di sa gr ee. The C A fai l ed to consi de r undi sput ed fa ct s,
disc redi t i ng C A Is deni al t hat Hol i da y Trav el i s one of it s agent s.
Furt he rm ore, in e rroneousl y char act e riz i n g t he cont r act ual rel at i onshi p
bet we en C A I and Holi da y Travel as a cont r act of sal e, t he C A fai l ed to
appl y t he fund am ent al ci vi l l aw pri nci pl es gove rni ng a gen c y and
di ffe rent i at i ng it f rom sal e.

Cont ra r y t o t he fi ndi n gs of t he C A, all t he el em ent s of an

agen c y ex i st i n t hi s c ase. The fi rst and second el em ent s are pr esent as
C A I does not den y that it concl ud ed an agre em ent wi t h Hol i da y Trav el ,
wher eb y Hol i da y Travel woul d ent e r i nt o cont ra ct s of ca rri a ge wi t h
t hi rd persons on C A Is beh al f. The t hi rd el em ent i s al so present as i t i s
undisput ed that Holi da y Travel m erel y a ct ed i n a repr esent at i ve
cap aci t y and it is C A I and not Holi da y Trav el who i s bound b y the
cont ra ct s of ca rri a ge ent er ed int o b y Hol i da y Travel on it s behal f. The
fourt h el em ent is al so pr esent consi de ri ng t hat C A I has not m ade an y
al l egat i on t hat Hol i da y Trav el ex c eed ed t he aut hori t y t hat was gr ant ed
t o it . In f act , C A I consi st ent l y m ai nt ai ns t he val i di t y of t he cont r act s
of ca rri a ge t hat Hol i da y Trav el ex ecut ed wit h S pouses Vil ori a and t hat
Mager was not gui lt y of an y fraudul ent mi srep resent at i on. That C A I
adm it s t he aut hori t y of Hol i da y Travel t o ent e r int o cont ra ct s of
car ri age on it s beh al f i s easi l y di sce rni bl e from i t s Feb ruar y 24, 1998
and March 24, 1998 l et t ers, whe re i t i m pl i edl y re cogniz ed t he val i di t y
of t he cont r act s ent e red int o b y Hol i da y Travel wi t h S pouses Vil ori a.
When Fern ando i nform ed C A I t hat i t was Hol i da y Travel who i ssued t o
t hem t he subj ect ti ck et s, C A I di d not den y that Hol i da y Travel i s i t s
aut horiz ed agent .

Out of t he above gi v en pri nci pl es, sprung t he cr eat i on and

ac cept an ce of t he rel at i onshi p of agen cy whe reb y one pa rt y, cal l ed t he
pri nci pal
( mandant e ),
aut horiz es
anot her,
cal l ed
t he
a ge nt
(mandat ari o ), t o act fo r and in hi s behal f i n t ransact i ons wi t h t hi rd
persons. Th e essent i al el em ent s of a gen c y are: (1 ) t her e i s consent ,
ex press or i m pl i ed of t he part i es to est abl i sh t he r el at i onshi p; (2) t he
obj ect is t he ex ecut i on of a juri di c al a ct i n rel at i on to a thi rd person;
(3) t he agent a ct s as a r epres ent at i ve and not for hi m sel f, and (4) t he
agent a ct s wi t hi n t he scope of hi s aut hori t y.

P ri or t o Spouses Vil ori as fil i n g of a com pl ai nt agai nst i t , C A I

never re fut ed t hat i t ga ve Hol i da y Travel t he power and aut hori t y t o
concl ude cont ra ct s of ca rri a ge on i t s behal f. As cl e arl y ex t ant from t he
reco rds, C A I r eco gni z ed the val i di t y of t he cont ra ct s of c arri a ge t hat
Hol i da y Travel ent er ed int o wit h Spouses Vil ori a and consi der ed it sel f
bound wi t h Spouses Vil ori a b y t he t erm s and condi ti ons t her eof; and
t hi s const it ut es an unequi vocal t est am ent to Hol i da y Travel s aut hori t y
t o act as i t s agent . Thi s C ourt cannot the refo re al l ow C A I t o t ake an
al t oget her di fferent posi ti on and den y t hat Hol i da y Travel i s i t s a ge nt
wi t hout condoni n g or gi vi n g i m pri m at ur t o what ev er dam age or
prej udi ce t hat m a y resul t f rom such deni al or ret r act i on t o Spouses
Vil ori a, who r el i ed on good fai t h on C A Is a ct s in r eco gni t i on of
Hol i da y Trav el s aut hori t y. Est oppel i s pri m ari l y based on t he doct ri ne
of good fai t h and t he avoi d ance of harm t hat wil l befal l an innoc ent
part y due t o it s i nj uri ous rel i anc e, t he f ai l ure t o appl y i t i n thi s cas e
woul d resul t i n gr oss t ravest y of j ust i c e. 2 0 Est oppel bars C A I from
m aki ng such deni al .

Agenc y i s basi cal l y personal , repres ent ati v e , and deri vat i ve i n
nat ure. The aut hori t y of t he a gent to a ct em anat es from t he powers
gr ant ed to hi m b y hi s pri nci pal ; hi s act i s t he act of t he pri nci pal i f
done wit hi n the scop e of t he aut hori t y. Qui f acit per ali um f aci t se .
"H e who act s t hrough anot he r act s hi m sel f." 1 9

As cat e go ri cal l y provi ded under Art i cl e 1869 of t he C i vil

Code, [ a] gen c y m a y be ex press, or i m pli ed from t he a ct s of t he
pri nci pal , from hi s si l en ce or l ack of act i on, or hi s fai l ure t o r epudi at e
t he a ge nc y, knowi ng t hat anot her person i s act i ng on hi s behal f
wi t hout aut hori t y.

In Ral l os v. Fel i x Go C han & Sons Real t y C orporat i on, 1 8 t hi s

Court expl ai ned t he nat ure of an a gen c y and spel l ed out t he essent i al
el em ent s t her eof:

25

Consi deri n g t hat the fundam ent al hall m arks of an a gen c y ar e

present , t hi s C ourt fi nds it rat he r pecul i ar t hat the C A had brand ed the
cont ra ct ual rel at i onshi p bet we en C A I and Holi da y Trav el as one of
sal e. The di st i nct i ons bet we en a sal e and an agen c y a re not di ffi cul t to
disc ern and t his C ourt , as earl y as 1970, had al r ead y form ul at ed the
gui del i nes t hat woul d ai d i n di fferent i at i n g t he t wo (2) cont r act s.
In C ommi ssi oner of Int ernal Rev enue v. Const ant i no, 2 1 t hi s C ourt
ex t rapol at ed t hat t he pri m ordi al di fferent i at i n g consi de rat i on bet we en
t he t wo (2) cont ract s is t he t rans fer of owne rshi p or t i tl e over t he
propert y subj ect of t he cont ract . In an agen c y, t he pri nci pal ret ai ns
ownershi p and cont rol over t he prope rt y and t he agent m er el y act s on
t he pri nci p al s behal f and unde r hi s i nst ru ct i ons i n furt h eran ce of t he
obj ect i ves for whi ch t he agenc y w as est abl ished. On t he ot her hand,
t he cont ra ct i s cl ea rl y a sal e i f t he part i es int end ed t hat t he del i ver y of
t he prop ert y wi ll effe ct a rel i nqui shm ent of t i tl e, cont rol and
ownershi p i n such a wa y t hat the r eci pi ent m a y do wi t h t he prope rt y as
he pl eas es.
Si nce t he com pan y r et ai ned ownershi p of t he goods, even as i t
del i vered possessi on unt o t he deal er for resal e t o cust om e rs, t he pri c e
and t erm s of whi ch we re subj ect t o t he com pan y's cont rol , the
rel at i onshi p bet we en t he com pan y and t he deal er i s one of a ge nc y,
t est ed under t he fol l owi ng cri t eri on:
The di ffi cul t y i n di st i n gui shi ng bet ween cont ra ct s of sal e and
t he c re at i on of an agen c y to sel l has l ed t o t he est abl i shm ent of rul es
b y t he appl i cat i on of whi ch thi s di ffi cul t y m a y be sol ved. The
deci si ons sa y t he t ransf er of ti t l e or agre em ent to t ransf er it for a pri ce
pai d or prom i sed i s t he essen ce of sal e. If such t ransfe r put s t he
t ransfe re e i n t he at t it ude or posi ti on of an owne r and m akes hi m li abl e
t o t he t ransfe ror as a debt or for t he agre ed pri ce, and not m er el y as an
agent who must account for t he proc eeds of a resal e, t he t ransa ct i on i s
a sal e; whi l e the essenc e of an a gen c y t o sel l i s the del i ver y to an
agent , not as hi s prope rt y, but as the propert y of t he pri nci p al , who
rem ai ns t he owner and has t he ri ght t o cont rol sal es, fix t he pri ce, and
t erm s, dem and and re cei ve the proc eeds l ess t he agent 's com m i ssi on
upon sal es m ade. 1 Mechem on S al es, S ec. 43; 1 Mech em on Age nc y,
S ec. 48; Wil l ist on on S al es, 1; Tied em an on S al es, 1. (S al i sbur y v.
Brooks, 94 SE 117, 118-119) 2 2
As t o how t he C A have a rri ved at t he con cl usi on t hat the
cont ra ct bet we en C A I and Hol i da y Trav el is a sal e i s ce rt ai nl y
confoundi n g, consi deri n g t hat C A I i s t he one bound b y t he cont ract s of
car ri age em bodi ed b y t he ti cket s bei n g sol d b y Holi da y Trav el on i ts
behal f. It is undi sput ed t hat C A I and not Holi da y Travel who i s the

part y t o t he cont r act s of car ri age ex e cut ed b y Hol i da y Travel wi t h

t hi rd persons who desi re t o t ravel vi a C ont i nent al Ai rl i nes, and t hi s
concl usi vel y i ndi cat es t he ex i st enc e of a pri nci pal - agent rel at i onshi p.
That the pri nci pal i s bound b y al l t he obl i gat i ons cont r act ed b y t he
agent wi t hi n t he scope of the aut hori t y gr ant ed t o hi m is cl ea rl y
provi ded unde r Art i cl e 1910 of the Ci vi l Code and t hi s consti t ut es t he
ver y not i on of agenc y.
II. In acti on s based on qu asi -d eli c t, a p rin ci p al can onl y b e
h eld l i ab l e f or th e tort commi t ted b y i ts agen ts e mp l oye es i f i t h as
b een estab l i sh ed b y p rep ond e ran ce of evi d en ce th at th e p ri n ci p al
was al so at fau l t or n egl i gen t or th at th e p ri n ci p al ex erci se con t rol
an d su p ervi si on over th em.
Consi deri n g that Holi da y Travel is C A Is a ge nt , does i t
nec essari l y fol l ow t hat C A I is li abl e for t he faul t or negl i ge nce of
Hol i da y Travel s em pl o yee s? C it i n g C hi na Ai r Li nes, Lt d. v. C ourt of
Appeal s, et al . , 2 3 C A I argues t hat it cannot be hel d l i abl e for t he
act i ons of t he em pl o yee of it s t i cket i n g a gent in t he absenc e of an
em pl o ye r-em pl o ye e rel at i onshi p.
An ex am i nat i on of t hi s C ourt s pronounc em ent s in C hi na Ai r
Li nes wi l l r eveal t hat an ai rl i ne com pan y is not com pl et el y ex one rat ed
from an y li abi l i t y for the tort comm i t t ed b y i t s agent s em pl o ye es. A
pri or det e rm i nat i on of t he nat ure of t he pass enger s c ause of act i on i s
nec essar y. If t he passen ge r s caus e of a ct i on agai nst t he ai rl i ne
com pan y is prem i sed on cul pa aquil i ana or quasi -del i ct for a t ort
com mi t t ed b y the em pl o yee of t he ai rl i ne com pan ys a gent , t her e must
be an indep endent showi ng t hat the ai rl i ne com pan y was at f aul t or
negl i ge nt or has cont ri but ed t o the negl i genc e or t ort uous conduct
com mi t t ed b y the em pl o yee of i t s a ge nt . The m ere fa ct t hat t he
em pl o ye e of t he ai rl i ne com pan ys agent has comm i t t ed a tort i s not
suffi ci ent to hol d t he ai rl i ne com pan y l i abl e. There i s no vi ncul um
j uri s bet w een t he ai rl i ne com pan y and it s agent s em pl o yee s and t he
cont ra ct ual rel at i onshi p bet we en t he ai rl i ne com p an y and it s agent
does not oper at e t o cr eat e a j uri di cal t i e bet w een the ai rl i ne com pan y
and i t s agent s em pl o ye es. Art i cl e 2180 of t he C i vil C ode does not
m ake t he pri nci pal vi cari ousl y l i abl e for t he t ort com m i tt ed b y it s
agent s em pl o yees and t he pri nci pal -a ge nc y rel at i onshi p per se does
not m ake t he pri nci pal a part y t o such t ort; henc e, the ne ed to prove
t he pri nci pal s own f aul t or negl i genc e.
On t he ot her hand, i f t he pass enger s c ause of act i on for
dam ages a gai nst t he ai rl i ne com pan y is based on cont ra ct ual br ea ch
or cul pa cont ract ual , i t i s not necess ar y t hat the re be evi denc e of the

26

ai rl i ne com pan ys faul t or ne gl i gen ce. As t hi s Court pr evi ousl y st at ed

i n Chi na Ai r L ines and rei t e rat ed i n Ai r France vs. Gi l l ego , 2 4 i n an
act i on based on a br each of cont r act of car ri age, t he aggri ev ed part y
does not have t o prov e that t he com m on c arri e r was at f aul t or was
negl i ge nt . Al l t hat he has t o prove is t he ex i st en ce of t he cont ra ct and
t he fa ct of i t s non-per form anc e b y the car ri er.
Spouses Vil ori as cause of a ct i on on the basi s of Ma ge r s
al l eged fr audul ent mi srep resent at i on i s cl e arl y one of tort or quasi del i ct , t here bei ng no pre -exi st i ng cont ract u al rel at i onshi p bet we en
t hem . Ther efor e, i t was i ncum bent upon S pouses Vil ori a to prov e t hat
C A I was equal l y at f aul t .
Howev er, t he reco rds ar e devoi d of an y evi den ce b y whi ch
C A Is al l eged li abi l it y can be subst ant i at ed. Ap art from thei r cl ai m
t hat C A I m ust be hel d li abl e for Mager s supposed f raud becaus e
Hol i da y Travel is C A Is a ge nt , Spouses Vil ori a di d not pr esent
evi denc e that C A I was a part y or had cont ri but ed to Mager s
com pl ai ned a ct ei t her b y inst ruct i n g or aut horiz i n g Hol i da y Trav el and
Mager t o issue the sai d mi sr epres ent at i on.
It m a y seem unj ust at fi rst gl an ce t hat C A I woul d consi der
Spouses Vil ori a bound b y t he t erm s and condi t i ons of t he subj ect
cont ra ct s, whi ch Ma ge r ent e red int o wi t h t hem on C A Is behal f, in
order t o den y Spouses Vil ori as request for a re fund or Fern andos use
of Lou rdes ti ck et for t he re -i ssuanc e of a new one, and si m ul t an eousl y
cl ai m t hat t he y ar e not bound b y Ma ge r s supposed mi sr epres ent at i on
for purpos es of avoi di n g S pouses Vil ori a s cl ai m fo r dam a ges and
m ai nt ai ni n g t he vali di t y of t he subj e ct cont ra ct s. It m a y l i kewi se be
argu ed t hat C A I c annot den y l i abi l it y as it ben efi t ed f rom Mager s
act s, whi ch wer e per form ed in com pl i anc e wi t h Hol i da y Trav el s
obli gat i ons as C A Is a ge nt .
Howev er, a person s vi ca ri ous li abi l i t y i s anchor ed on hi s
possessi on of cont rol , whet h er absol ut e or li m i t ed, on t he t ort fe asor.
Wit hout such cont rol , t here i s not hi n g whi ch coul d j ust i f y ex t endi ng
t he l i abi l it y t o a person ot her t han t he one who com m i t t ed t he t ort . As
t hi s C ourt ex pl ai ned in C angco v. Mani l a Rai l road Co. : 2 5

n egli gen c e of th ose p erson s whose acts or omi ssi on s are i mpu tab l e,
by a l egal f i cti on , to oth ers wh o are in a p osi ti on to exe rci s e an
ab sol u te or li mi t ed con t rol ove r th e m. The l egi sl at ur e whi ch adopt ed
our C i vi l C ode has el ect ed to l i mi t ext r a-cont r act ual li abi l i t y wit h
cert ai n wel l -de fi ned ex cept i ons t o cases i n whi ch m oral cul pabi l i t y
can be di rect l y i m put ed t o the persons t o be ch arge d. Thi s m oral
responsi bi li t y m a y consi st i n havi n g fai l ed t o ex erci se due c are i n
one's own a ct s, or i n havi ng fai l ed t o ex er ci se due car e i n t he sel e ct i on
and cont rol of one's a gent or serv ant s, or i n t he cont rol of persons
who, b y re asons of thei r st at us, occup y a posit i on of dep enden c y wi t h
respe ct to t he pe rson m ade li abl e for t hei r condu ct . 2 6 (em phasi s
suppl i ed)
It i s incum bent upon Spouses Vil ori a t o prove t hat C A I
ex er ci sed cont rol or supe rvi si on over Ma ge r b y preponde rant evi denc e.
The ex i st ence of cont rol or supervi si on c annot be pr esum ed and C A I i s
under no obl i gat i on t o prove i t s deni al or nugat o r y asse rt i on.
Ci t i ng Bel en v. Bel en , 2 7 t hi s Court rul ed i n Jaym e v. Apost ol , 2 8 t hat:
In Bel en v. Bel en , t hi s Court rul ed t hat it w as enough fo r
defend ant t o den y an al l eged em pl o ym ent rel at i onshi p. The de fendant
is unde r no obl i gat i on to prov e t he ne gat i v e ave rm ent . Thi s C ourt sai d:
It i s an ol d and wel l -set t l ed rul e of t he court s that t he burden
of provi ng t he act i on is upon t he pl ai nti ff, and that i f he fai l s
sat i sfact ori l y t o show t he fact s upon whi ch he bases hi s cl ai m , t he
defend ant i s under no obl i gat i on t o prove hi s ex cept i ons. Thi s [rul e] i s
i n harm on y wi t h t he provi si ons of S ect i on 297 of t he Code of Ci vi l
P rocedur e hol di n g t hat e ach part y m ust prove hi s own a ffi rm at i ve
al l egat i ons, et c. 2 9 (ci t at i ons omi t t ed)
Ther efor e, wit hout a modi cum of evi dence t hat C A I ex er ci sed
cont rol over Hol i da y Trav el s em pl o yee s or that C A I was equ al l y at
faul t , no l i abil i t y can be i m posed on C A I fo r Ma ge r s supposed
mi srep res ent at i on.
III.

With resp ect to ext ra-con t ractu al ob l i gati on ari sin g f rom
n egli gen c e, wh eth er of act or o mi ssi on , it is com pet ent for t he
l egi sl at ur e t o el e ct and our Le gi sl at ur e has so el ect ed t o li m it
such li abi l i t y t o c ases i n whi ch t he person upon whom such an
obli gat i on is im posed i s m oral l y cul pabl e or, on the cont r ar y, f or
reason s of pu bl i c pol i cy, to ext end th at li abi l i ty, w i th ou t regard to
th e lack of mo ral cul p abi l i ty, so as to in cl u d e resp on sib i li ty f or th e

Even on th e assu mp ti on th at CAI ma y b e h el d li abl e for th e

acts of Mage r, sti ll , S p ou ses Vil ori a are not en ti tl ed to a
ref un d . Mag er s stat e men t can n ot b e con si d ered a cau sal
f rau d th at wou ld ju stif y th e an nu l men t of th e su b jec t
con trac ts th at w ou l d obl i ge CAI to in d emn if y Sp ou ses
Vil ori a an d retu rn th e mon ey th ey pai d for th e su b je ct
ti ck ets.

27

Art i cl e 1390, i n rel at i on to Art i cl e 1391 of t he Ci vil C ode,

provi des that i f the cons ent of t he cont ra ct i ng part i es was obt ai ned
t hrough fraud, t he cont r act i s consi der ed voi dabl e and m a y be annul l ed
wi t hi n four (4) ye a rs from t he t i m e of t he di scov er y of t he fr aud. Onc e
a cont r act i s annul l ed, t he pa rt i es ar e obl i ged under Art i cl e 1398 of t he
sam e C ode t o rest or e t o ea ch ot her t he t hi n gs subj ect m att e r of t he
cont ra ct , i ncl udi ng thei r frui t s and i nt erest .
On the basi s of the for egoi ng and gi ven t he al l egat i on of
Spouses Vil ori a t hat Fe rnando s cons ent t o the subj ect cont r act s was
supposedl y se cured b y Ma ge r throu gh fr audul ent m eans, it is pl ai nl y
appar ent t hat t hei r dem and for a re fund i s t ant am ount to se eki ng for an
annul m ent of t he subj ect cont ra ct s on the gr ound of vi t i at ed cons ent .
Whet he r t he subj ect cont ract s are annul l abl e, t hi s Court i s
requi r ed to det erm i ne whet he r Mager s al l eged m isr epres ent at i on
const it ut es c ausal f raud. S i mi l ar t o the di sput e on the ex i st ence of an
agen c y, whet h er fraud at t end ed the ex ecut i on of a cont r act i s fa ct ual in
nat ure and t hi s C ourt , as di scussed above, m a y scrut i ni z e t he re cords
i f t he fi ndi ngs of t he C A are cont ra r y t o t hose of t he RTC .
Under Art i cl e 1338 of t he C i vil C ode, t her e i s fr aud when,
t hrough i nsi di ous words or m achi nat i ons of one of t he cont r act i n g
part i es, t he ot he r i s induc ed t o ent er i nt o a cont ra ct whi ch, wi t hout
t hem , he woul d not have a gr eed t o. In ord er t hat f raud m a y vit i at e
consent , i t m us t be the causal ( dol o causant e ), not m er el y t he
i nci dent al ( dol o i nci dent e ), i nducem ent to t he m aki n g of t he
cont ra ct . 3 0 In Samson v. C ourt of Appeal s, 3 1 c ausal fr aud was defi ned
as a dec ept i on em pl o ye d b y one part y pri or t o or sim ul t aneous to t he
cont ra ct i n order to se cure t he consent of t he ot her. 3 2
Al so, fraud m ust be seri ous and i t s ex i st ence m ust be
est abl i shed b y cl e ar and convi nci n g evi den ce. As rul ed b y t hi s Court
i n Si erra v. Hon. C ourt of Appeal s, et al . , 3 3 m ere preponde ran ce of
evi denc e i s not adequat e:
Fr aud m ust al so be di scount ed, for ac cordi n g t o t he C i vi l C ode:
Art . 1338. The re is fr aud when, t hrough i nsi di ous words or
m achi nat i ons of one of t he cont ra ct i ng part i es, t he ot her is i nduced t o
ent er int o a cont ract whi ch wi t hout them , he woul d not have agre ed t o.
Art . 1344. In ord er that f raud m a y m ake a cont ra ct voi dabl e, i t
shoul d be seri ous and shoul d not have been em pl o ye d b y bot h
cont ra ct i ng part i es.

To quot e Tol ent i no a ga i n, the m i srep resent at i on const i t ut i n g

t he fr aud m ust be est abl i shed b y ful l , cl e ar, and convi nci n g evi den ce,
and not m erel y b y a pr eponder anc e t her eof. Th e dec ei t m ust be
seri ous. The fraud i s seri ous wh en it is suffi ci ent t o i m press, or to l ead
an ordi nari l y prudent person i nt o erro r; that whi ch cannot dec ei ve a
prudent pe rson cannot be a ground for nul l it y. The ci rcum st anc es of
ea ch case shoul d be consi de red, t aki ng i nt o a ccount t he personal
condi ti ons of the vi ct im . 3 4
Aft er m et i cul ousl y pori ng over t he re cords, t hi s C ourt fi nds
t hat the fraud al l eged b y Spouses Vil ori a has not be en sat i sfact o ri l y
est abl i shed as c ausal i n nat ur e t o war rant t he annul m ent of t he subj ect
cont ra ct s. In fa ct , Spouses Vil ori a fai l ed t o prove b y cl e ar and
convi nci ng evi denc e that Mager s st at em ent was fraudul ent .
Spe ci fi cal l y, S pouses Vil ori a f ai l ed t o prove t hat ( a) t her e w ere i ndeed
avai l abl e seat s at Am t rak for a t ri p to New J erse y on August 13, 1997
at t he t im e t he y spoke wi t h Ma ge r on J ul y 21, 1997; (b ) Mager knew
about t hi s; and (c) that she purposel y i nform ed t hem ot herwi se.
Thi s C ourt fi nds t he onl y proof of Mager s al l eged fr aud, whi ch
is Fe rnando s t est im on y t hat an Am t rak had assured hi m of t he
perenni al avai l abi l i t y of seat s at Am t rak, to be want i n g. As C A I
corr ect l y poi nt ed out and as Fe rnando admi t t ed, i t was possi bl e t hat
duri ng t he i nt erveni n g peri od of t hree (3) w eeks from t he t i m e
Fe rnando purch ased t he subj e ct ti cket s t o t he ti m e he t al ked t o sai d
Am t rak em pl o ye e, ot her passen ge rs m a y have c ancel l ed t hei r booki ngs
and rese rvat i ons wi t h Am t rak, m aki n g it possi bl e for Am t r ak to
ac com m odat e t hem . In de ed, t he ex ist en ce of fraud cannot be proved b y
m ere specul at i ons and conj e ct ures. Fr aud is neve r li ght l y i nfe rred; i t i s
good f ai t h t hat i s. Under t he Rul es of C ourt , i t i s pr esum ed that " a
person i s i nnocent of cri m e or wrong" and that "p ri vat e t ransa ct i ons
have been f ai r and regul a r." 3 5 S pouses Vil ori a fai l ed to over com e t hi s
presum pt i on.
IV. Assu mi n g th e con tra ry, Sp ou ses Vil ori a are n everth el ess
d eemed to have rati fi ed th e su b jec t con t racts.
Even assum i ng t hat Ma ge r s r epres ent at i on i s causal fr aud, the
subj ect cont r act s have been im pl i edl y rat i fi ed when Spouses Vil ori a
deci ded t o ex er ci se thei r ri ght t o use t he subj e ct t i cket s for t he
purchas e of new ones. Under Art i cl e 1392 of t he Ci vi l C ode,
r at i fi cat i on ex t i ngui shes t he act i on t o annul a voi dabl e cont ra ct .

28

R ati fi c at i on of a voi dabl e cont ra ct i s defi ned under Art i cl e

1393 of t he C i vi l C ode as foll ows:
C AI cannot i nsi st on t he non- transf erabi l it y of t he subj e ct
Art . 1393. R at i fi cat i on m a y be e ffect ed ex pressl y or t aci t l y. It
is underst ood t hat t her e is a t aci t r at i fi cat i on i f, wi t h knowl ed ge of the
reason whi ch r enders t he cont ra ct voi dabl e and such re ason havi ng
ce as ed, t he person who has a ri ght t o i nvoke it shoul d ex ecut e an act
whi ch ne cessa ri l y im pl i es an i nt ent i on t o wai ve hi s ri ght .
Im pl i ed r at i fi cat i on m a y t ake di vers e form s, such as b y sil en ce
or acqui escen ce; b y act s showi n g approv al or adopt i on of the cont ra ct ;
or b y a ccept ance and r et ent i on of bene fi t s fl owi ng t here from . 3 6
Si m ult an eous wi t h t hei r dem and for a refund on t he ground of
Fe rnando s vi t i at ed consent , Spouses Vil ori a li ke wi se asked for a
refund based on C A Is supposed bad f ai t h in r enegi ng on i t s
undert aki n g t o repl ace t he subj ect t i cket s wi t h a round t ri p ti ck et from
Mani l a t o Los An gel es.
In doi ng so, Spouses Vil ori a ar e a ct ual l y aski ng for a res ci ssi on
of t he subj ect cont ract s based on cont r act ual brea ch. R esol uti on, t he
act i on re fer red to i n Art i cl e 1191, is based on t he def endant s bre ach
of fai t h, a vi ol at i on of the reci pro ci t y bet we en t he pa rt i es 3 7 and
i n Sol ar Har vest , Inc. v. Davao C orrugat ed C art on C orporati on , 3 8 t hi s
Court rul ed t hat a cl ai m for a rei m bursem ent i n vi e w of t he ot her
part ys fai l ur e t o com pl y wi t h his obl i gat i ons under the cont ra ct is one
for r esci ssi on or resol ut i on.
Howev er, annul m ent under Art i cl e 1390 of t he Ci vi l C ode and
resci ssi on under Art i cl e 1191 a re t wo (2 ) inconsi st ent rem edi es. In
resol ut i on, al l the el em ent s t o m ake the cont ra ct val i d are present ; i n
annul m ent , one of the essent i al el em ent s to a form at i on of a cont ra ct ,
whi ch i s consent , i s absent . In resol ut i on, t he def ect i s i n the
consum m at i on st age of t he cont ract when t he part i es ar e in t he process
of perfo rm i ng t hei r respe ct i ve obl i gat i ons; i n annulm ent , t he defe ct is
al re ad y pr esent at t he t i m e of t he negot i ati on and perf ect i on st ages of
t he cont r act . Accordi n gl y, b y pursui n g t he r em ed y of resci ssi on under
Art i cl e 1191, the Vil ori as had i m pl i edl y adm i tt ed t he val i dit y of t he
subj ect cont r act s, for fei t i ng t hei r ri ght t o dem and t hei r annul m ent . A
part y c annot rel y on the cont ra ct and cl ai m ri ght s or obl i gat i ons under
it and at t he sam e ti m e i m pugn it s exi st enc e or vali di t y. Ind eed,
li t i gant s ar e enj oi ned f rom t aki ng i nconsi st ent posi t i ons. 3 9
V. Con t racts can n ot b e resci nd ed for a sl i gh t or casu al
b reach .

ti c ket s.
Consi deri n g that the subj e ct cont ra ct s ar e not annul l abl e on t he
gr ound of vi t i at ed cons ent , t he nex t quest i on i s: Do S pouses Vil ori a
have t he ri ght t o r esci nd the cont r act on t he ground of C A Is supposed
brea ch of it s undert aki ng t o issue new t i cket s upon surr ender of t he
subj ect t i cket s?
Art i cl e 1191, as pres ent l y worded, st at es:
The powe r t o res ci nd obli gat i ons i s im pl i ed i n re ci proc al ones,
i n cas e one of t he obl i gors shoul d not com pl y wi t h what is incum b ent
upon him .
The i nj ured part y m a y choose bet w een the ful fi lm ent and t he
resci ssi on of the obl i gat i on, wi t h t he pa ym ent of dam ages i n eit he r
case. He m a y al so seek resci ssi on, ev en aft e r he has chosen
ful fi ll m ent , i f t he l att e r shoul d becom e im possi bl e.
The cou rt shal l decr ee the resci ssi on cl ai m ed, unl ess the re be
j ust c ause aut hori z i ng t he fi xi ng of a peri od.
Thi s i s underst ood t o be wi t hout pr ej udi ce t o t he ri ght s of t hi rd
persons who have acqui r ed t he t hi ng, i n acco rdan ce wi t h a rt i cl es 1385
and 1388 and the Mort gage Law.
Acco rdi ng t o Spouses Vil ori a, C A I act ed i n bad f ai t h and
brea ched t he subj ect cont ra ct s when i t r efused t o appl y t he val ue of
Lou rdes t i cket fo r F ernando s purchas e of a round t ri p t i cket t o Los
Angel es and i n requi ri n g hi m t o pa y an am ount hi gher t han t he pri c e
fix ed b y ot her ai rl i ne com pani es.
In it s March 24, 1998 l et t er, C A I st at ed that non- refund abl e
ti ck et s m a y be used as a form of pa ym e nt t oward the purchas e of
anot her C onti nent al t i cket for $75.00, pe r ti ck et , r ei ssue fee ($50.00,
per ti cket , for t i cket s pur chased pri or t o Oct obe r 30, 1997).
Cl e arl y, t her e is not hi n g i n t he above- quot ed sect i on of C A Is
l ett e r from whi ch t he rest ri ct i on on the non-t ransf er abi li t y of the
subj ect t i cket s can be i nfe rred. In f act , t he words used b y C A I in i t s
l ett e r support s t he posi ti on of Spouses Vil ori a, t hat ea ch of them c an

29

use t he t i cket unde r t hei r nam e for the purchas e of new t i cket s whet h er
for t hem sel ves or for som e ot her pe rson.
Moreove r, as CA I adm it t ed, it was onl y when F ern ando had
ex press ed hi s i nt e rest to use t he subj e ct t i cket s for t he purchas e of a
round t ri p ti ck et bet ween Mani l a and Los Angel es t hat he was
i nform ed t hat he cannot use the ti ck et i n Lou rdes nam e as pa ym ent .
Cont ra r y t o C A Is cl ai m , t hat the subj ect t i cket s are nont ransfe rabl e cannot be im pl i ed from a pl ai n re adi ng of t he provi si on
pri nt ed on t he subj e ct ti cket s st at i ng t hat [ t ]o t he ex t ent not in
confl i ct wi t h t he for egoi ng ca rri a ge and ot her servi c es per form ed b y
ea ch car ri er ar e subj e ct to: (a) provi si ons cont ai n ed in t hi s ti ck et , x x
x (i ii ) car ri er s condi t i ons of ca rri a ge and rel at ed regul at i ons whi ch
are m ad e part hereo f (and are av ai l abl e on appl i c at i on at t he offi ces of
car ri er ) x x x . As a com m on car ri er whose busi ness i s im bued wit h
publi c int er est , t he ex erci se of ext r aordi nar y di li gen ce requi res C A I t o
i nform S pouses Vil ori a, or all of it s passen ge rs for t hat m at t er, of al l
t he t erm s and condi t i ons governi n g t hei r cont ra ct of c arri a ge . C A I is
pros cri bed from t aki n g adv ant age of an y am bi gui t y i n t he cont r act of
car ri age t o im put e knowl ed ge on i t s passengers of and dem and
com pli an ce wit h a ce rt ai n condi t i on or undert aki n g that is not cl ea rl y
st i pul at ed. Si nce the prohi bit i on on t ransf er abi li t y i s not wri t t en on t he
fac e of the subj ect t i cket s and C A I f ai l ed to i nform S pouses Vil ori a
t hereo f, CA I c annot r efuse t o appl y t he val ue of Lou rdes t i cket as
pa ym ent for Fe rnando s pur chase of a new t i cket .
CAIs ref usal to accep t Lou rd es ti ck e t f or th e p u rch ase of a
n ew ti ck et for Fe rn an d o is on l y a casu al b rea ch .
Nonet hel ess, t he ri ght t o r esci nd a cont ract for nonperfo rm anc e of it s st i pul at i ons i s not absol ut e. The gen eral rul e i s t hat
resci ssi on of a cont ra ct wi l l not be perm i tt ed for a sli ght or c asual
brea ch, but onl y for such subst ant i al and fundam ent al vi ol at i ons as
woul d defe at t he ve r y obj ect of t he part i es in m aki n g t he
agre em ent . 4 0 W het her a bre ach is subst ant i al i s l argel y det erm i ned b y
t he at t endant ci r cum st anc es. 4 1
Whi l e C A Is re fusal t o al l ow Fe rnando t o use t he val ue of
Lou rdes ti ck et as pa ym e nt for t he purch ase of a new t i cket is
unj ust i fi ed as t he non-t rans fer abi l it y of t he subj ect t i cket s was not
cl ea rl y sti pul at ed, it c annot , howeve r be consi dered subst anti al . The
endorsabi l i t y of t he subj e ct ti ck et s i s not an essent i al part of t he
underl yi ng cont ra ct s and C A Is fai l ure t o com pl y i s not ess ent i al t o i t s
ful fi ll m ent of it s undert aki ng t o issue new t i cket s upon S pouses

Vil ori as surrend er of t he subj ect t i cket s. Thi s C ourt t akes not e of
C A Is wi ll i n gness t o per form i t s pri nci pal obl i gat i on and t hi s i s t o
appl y t he pri c e of the ti ck et i n Fern andos nam e to t he pri ce of t he
round t ri p ti ck et bet we en Mani l a and Los An gel es. C A I w as l i kewi se
wi ll i n g to ac cept the t i cket i n Lo urd es nam e as ful l or pa rt i al pa ym e nt
as the c ase m a y be for t he purchas e of an y t i cket , al bei t under her
nam e and for her ex cl usi ve use. In ot her words, C A Is wil l i ngn ess to
com pl y wi t h it s undert aki ng under it s March 24, 1998 c annot be
doubt ed, al b ei t t ai nt ed wit h it s erron eous insi st enc e that Lou rdes
ti ck et i s non-t ransf erabl e.
Moreove r, Spouses Vil ori as dem and for res ci ssi on cannot
prosper as C A I c annot be sol el y f aul t ed for the fa ct t hat thei r
agre em ent f ai l ed t o consum m at e and no new t i cket was i ssued t o
Fe rnando. S pouses Vil ori a hav e no ri ght t o insi st t hat a si n gl e round
t ri p ti cket bet ween Mani l a and Los Angel es shoul d be pri ced at around
$856.00 and re fuse t o pa y t he di fferen ce bet w een t he pri ce of t he
subj ect ti cket s and t he am ount fi x ed b y C A I. The pet it i oners f ai l ed t o
al l ege, m uch l ess prove, t hat C A I had obl i ged it sel f t o issue t o t hem
ti ck et s for an y fli ght an yw he re i n t he worl d upon t hei r surr ender of t he
subj ect t i cket s. In i t s March 24, 1998 l et t er, i t was cl earl y st at ed t hat
[ n] on-r efundabl e t i cket s m a y be used as a form of pa ym ent t oward t he
purchas e of anot her Cont i nent al t i cket 4 2 and the re is not hi ng i n it
sugge st i ng t hat C A I had obl i ged it sel f t o prot e ct S pouses Vil ori a from
an y fl uct u at i on in t he pri c es of ti cket s or t hat t he surr ender of t he
subj ect ti cket s wi l l be consi der ed as full pa ym ent for an y t i cket t hat
t he pet i t i oners i nt end t o bu y r egardl ess of a ct ual pri c e and dest i nat i on.
The C A was co rre ct i n hol di n g t hat i t is C A Is ri ght and ex cl usi ve
prero ga t i ve t o fix t he pri c es for it s servi c es and it m a y not be
com pel l ed t o observ e and m ai nt ai n t he pri ces of ot he r ai rl i ne
com pani es. 4 3
The con fl i ct as t o t he endors abi li t y of the subj e ct t i cket s i s an
al t oget her di ffer ent m at t er, whi ch does not pre cl ude C A I from fi xi ng
t he pri c e of a round t ri p ti ck et bet w een Mani l a and Los Angel es i n an
am ount it de em s proper and whi ch does not provi de S pouses Vil ori a an
ex cuse not to pa y such pri c e, al bei t subj ect to a redu ct i on comi n g f rom
t he val u e of t he subj ect ti ck et s. It cannot be deni ed t hat S pouses
Vil ori a had t he concom i t ant obli gat i on t o pa y what eve r i s not cover ed
b y t he val ue of t he subj e ct ti cket s whet he r or not t he subj e ct t i cket s
are t ransf erabl e or not .
Ther e is al so no showi ng t hat Spouses Vil ori a wer e
disc ri mi nat ed a gai nst i n bad f ai t h b y bei ng cha rged wi t h a hi gh er r at e.
The onl y evi den ce the pet it i oners present ed t o prove that the pri ce of a
round t ri p ti ck et bet we en Mani l a and Los An gel es at t hat t i m e was

30

onl y $856.00 is a newspap er adve rt i sem ent fo r anot her ai rl i ne

com pan y, whi ch i s i nadm i ssi bl e for bei n g h ea rsa y evi dence, t wi ce
rem oved. Ne wspape r cl i ppi ngs are hea rsa y i f the y wer e offer ed fo r
t he purpose of provi ng t he t rut h of t he m at t er al l eged. As rul ed
i n Feri a v. C ourt of Appeal s, : 4 4
[N] ewspap er art i cl es am ount to he arsa y evi dence, t wi c e
rem oved and are t her efor e not onl y i nadm i ssi bl e but wit hout an y
probat i ve val ue at al l whet he r obj ect ed t o or not , unl ess offered for a
purpose ot her t han provi n g t he t rut h of the m att e r asse rt ed. In thi s
case, t he news art i cl e is adm i ssi bl e onl y as evi den ce t hat such
publi c at i on does ex i st wi t h the t enor of t he news t herei n
st at ed. 4 5 ( ci t ati ons om i tt ed )
The r ecords of t his c ase dem onst r at e t hat bot h part i es wer e
equal l y i n def aul t; henc e, none of t hem can seek j udi ci al redr ess for
t he c anc el l at i on or resol ut i on of t he subj ect cont ract s and t he y ar e
t here fore bound t o thei r respe ct i ve obl i gat i ons the reunde r. As t he
1 s t sent en ce of Art i cl e 1192 provi des:
Art . 1192. In case b oth p arti es h ave co mmi tt ed a b reach of
th e obl i gati on , th e l i ab i l i ty of th e fi rst i nf rac tor sh al l b e equ i tab l y
te mp e red b y th e cou r ts . If it c annot be det erm i ned whi ch of t he
part i es fi rst vi ol at ed the cont ra ct , t he sam e shal l be deem ed
ex t i ngui shed, and e ach shal l be ar hi s own dam ages. ( em phasi s
suppl i ed)

Art i cl e 1192 of t he C i vi l C ode provi des that i n c ase bot h

part i es hav e com m i tt ed a bre ach of t hei r r eci pro cal obl i gat i ons, the
li abi l i t y of t he fi rst i nfr act or shal l be equi t abl y t em per ed b y the
court s. WE rul e t hat t he li abi l i t y of Is l and S avi n gs B ank for dam a ge s
i n not furni shi n g t he enti r e loan i s offset b y the l i abi li t y of Sul pi ci o
M. Tol ent i no for dam ages, i n t he form of penal t i es and surcha rges, for
not pa yi n g hi s overdue P17,000.00 debt . x x x. 4 7
Anot her consi der at i on t hat mi l it at es a ga i nst t he propri et y of
hol di n g C A I li abl e for m oral dam a ges i s the abs ence of a showi n g that
t he l at t er a ct ed fraudul ent l y and i n bad f ai t h. Art i cl e 2220 of t he Ci vi l
Code r equi res evi den ce of bad fai t h and f raud and m oral dam ages ar e
ge ner al l y not recov er abl e i n cul pa cont ract ual ex c ept when bad f ai t h
had been proven. 4 8 The aw ard of ex em pl a r y dam ages i s l i kewi se not
war rant ed. Ap art from t he requi rem ent t hat the de fendant act ed in a
want on, oppressi ve and m al evol ent m anner, t he cl ai m ant m ust prov e
his ent i t l em ent t o m oral dam a ge s. 4 9
WH E RE FO RE ,
is DE NIE D .

prem i ses

consi de red,

the

inst ant

P et i ti on

SO O RDE RE D .

Ther efor e, C A Is l i abi li t y for dam ages for i t s r efusal t o a ccept

Lou rdes ti ck et fo r the pur chase of F ernando s round t ri p t i cket i s
offset b y Spouses Vil ori as li abi l i t y for thei r refus al t o pa y t he
am ount , whi ch i s not cover ed b y t he subj ect ti ck et s. Moreov er, t he
cont ra ct bet we en t hem rem ai ns, hence, C A I i s dut y bound to i ssue ne w
ti ck et s for a dest i nat i on chosen b y Spouses Vil ori a upon t hei r
surrend er of t he subj e ct t i cket s and Spouses Vil ori a ar e obl i ged t o pa y
what ev er am ount i s not cover ed b y t he val ue of the subj e ct t i cket s.
Thi s C ourt m ade a si mi l ar rul i n g i n C ent ral Bank of t he
Phil i ppi nes v. C ourt of Appeal s . 4 6 Thus:
Si nce bot h part i es wer e in def aul t i n t he per form an ce of t hei r
respe ct i ve reci pro cal obl i gat i ons, t hat i s, Is l and S avi n gs Bank fai l ed t o
com pl y wi t h it s obl i gat i on t o furni sh the ent i re l oan and S ul pi ci o M.
Tol ent i no fai l ed t o com pl y wi t h hi s obl i gat i on t o pa y hi s P 17,000.00
debt wi t hi n 3 ye a rs as sti pul at ed, t he y ar e bot h l i abl e for dam ages.

THIRD DIVISION
PHILIPPINE NATIONAL RAILWAYS and VIRGILIO J.

G.R. No. 157658

31

BORJA,

Virgilio J. Borja (Borja), PNRs locomotive driver at the time of the incident, before the
RTC of Manila. The case was raffled to Branch 28 and was docketed as Civil Case No.
92-61987. In their complaint, respondents averred that the trains speedometer was
- versus YNARES-SANTIAGO,defective, and that the petitioners negligence was the proximate cause of the mishap for
Chairperson,
their failure to take precautions to prevent injury to persons and property despite the
AUSTRIA-MARTINEZ,dense population in the vicinity. They then prayed for actual and moral damages, as well
COURT OF APPEALS (Second Division), CORAZON C.
CHICO-NAZARIO, as attorneys fees.[9]
AMORES, MA. EMILIE A. MOJICA, CECILE C. SISON, NACHURA, and
DINO C. AMORES, LARISA C. AMORES, ARMAND
REYES, JJ.
In their Answer,[10] the petitioners denied the allegations, stating that the train was
JINO C. AMORES and JOHN C. AMORES,
railroad-worthy and without any defect. According to them, the proximate cause of the
Respondents.
Promulgated:
death of Amores was his own carelessness and negligence, and Amores wantonly
disregarded traffic rules and regulations in crossing the railroad tracks and trying to beat
October 15, 2007
the approaching train. They admitted that there was no crossing bar at the site of the
accident because it was merely a barangay road.[11] PNR stressed that it exercised the
x------------------------------------------------------------------------------------x
diligence of a good father of a family in the selection and supervision of the locomotive
driver and train engineer, Borja, and that the latter likewise used extraordinary diligence
and caution to avoid the accident. Petitioners further asserted that respondents had the
last clear chance to avoid the accident but recklessly failed to do so.
DECISION
Petitioners,

Present:

NACHURA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the
1997 Rules of Civil Procedure, as amended, seeking to annul and set aside the
Decision[1] of the Court of Appeals (CA) in CA-G.R. CV No. 54906 which reversed the
Decision[2] of the Regional Trial Court (RTC) of Manila, Branch 28, in Civil Case No.
92-61987.
The factual antecedents are as follows:
In the early afternoon of April 27, 1992, Jose Amores (Amores) was traversing the
railroad tracks in Kahilum II Street, Pandacan, Manila. Before crossing the railroad
track, he stopped for a while then proceeded accordingly.[3] Unfortunately, just as
Amores was at the intersection, a Philippine National Railways (PNR) train with
locomotive number T-517 turned up and collided with the car.[4]
At the time of the mishap, there was neither a signal nor a crossing bar at the
intersection to warn motorists of an approaching train. Aside from the railroad track, the
only visible warning sign at that time was the defective standard signboard STOP,
LOOK and LISTEN wherein the sign Listen was lacking while that of Look was bent.
[5]
No whistle blow from the train was likewise heard before it finally bumped the car of
Amores.[6] After impact, the car was dragged about ten (10) meters beyond the center of
the crossing.[7] Amores died as a consequence thereof.

After trial on the merits, on August 22, 1996, the RTC rendered judgment in
favor of the petitioners, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered dismissing the
complaint of the plaintiffs and the defendants counterclaim.
The costs shall be halved and paid equally by the parties.
The counsel for the defendants is hereby ordered to inform this court
who is the legal representative of the deceased defendant, Virgilio
Borja, within ten (10) days from receipt of a copy of this decision.
SO ORDERED.[12]
The RTC rationalized that the proximate cause of the collision was Amores fatal
misjudgment and the reckless course of action he took in crossing the railroad track
even after seeing or hearing the oncoming train.
On appeal, the CA reversed the RTC decision, as follows:
WHEREFORE, the assailed Decision of the Regional Trial Court of
Manila, Branch 28 is hereby REVERSED. The defendants PNR and
the estate of Virgilio J. Borja are jointly and severally liable to pay
plaintiffs the following:

On July 22, 1992, the heirs of Amores, consisting of his surviving wife and six children,
herein respondents, filed a Complaint for Damages [8] against petitioners PNR and

32

1)
2)

The amount of P122,300.00 for the cost of damage to the

car; and,
The amount of P50,000 as moral damages.

For lack of official receipts for funeral expenses and

specimen of the last pay slip of the deceased, the claim for
reimbursement of funeral expenses and claim for payment of support
is herebyDENIED for lack of basis. Costs against Defendants.
SO ORDERED.[13]
In reversing the trial courts decision, the appellate court found the petitioners
negligent. The court based the petitioners negligence on the failure of PNR to install a
semaphore or at the very least, to post a flagman, considering that the crossing is located
in a thickly populated area. Moreover, the signboard Stop, Look and Listen was found
insufficient because of its defective condition as described above. Lastly, no negligence
could be attributed to Amores as he exercised reasonable diligence in crossing the
railroad track.
Aggrieved by this reversal, the petitioners filed the present petition for review
on certiorari, raising the following grounds:
I
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION IN RENDERING ITS DECISION REVERSING THE
DECISION OF THE REGIONAL TRIAL COURT OF MANILA
BRANCH 28, IN NOT TAKING INTO CONSIDERATION THE
PROVISION OF SECTION 42, R.A. 4136 OF THE LAND
TRANSPORTATION AND TRAFFIC CODE.

that evidence showed sufficient warning signs strategically installed at the crossing to
alert both motorists and pedestrians.
Respondents, on the other hand, argue that the cause of the accident was petitioners
carelessness, imprudence and laxity in failing to provide a crossing bar and keeper at the
Kahilum II railway intersection. Considering that Kahilum II Street is in the middle of a
thickly populated squatters area, and many pedestrians cross the railroad track,
notwithstanding the fact that it is a public street and a main thoroughfare utilized in
going to Herran Street, the presence of adequate warning signals would have prevented
the untimely death of Amores. Another crucial point raised by the respondents is the
manner in which Borja applied the brakes of the train only when the locomotive was
already very near Amores car, as admitted by witness Querimit. Finally, respondents
claim that Borjas failure to blow the locomotives horn, pursuant to the usual practice of
doing the same 100 meters before reaching the Kahilum II crossing point is an earmark
of recklessness on the part of the petitioners.
The petition must fail.
The only issue to be resolved in the present case is whether the appellate court
was correct in ascribing negligence on the part of the petitioners. It was ascertained
beyond quandary that the proximate cause of the collision is the negligence and
imprudence of the petitioner PNR and its locomotive driver, Borja, in operating the
passenger train.
As the action is predicated on negligence, the relevant provision is Article 2176
of the New Civil Code, which states that:
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 was no pre-existing contractual relation
between the parties, is called quasi-delict and is governed by the
provisions of this chapter.

II
THE DECISION OF THE COURT OF APPEALS IS CONTRARY
TO THE EVIDENCE ON RECORD ADDUCED IN THE TRIAL ON
THE MERIT IN CIVIL CASE NO. 92-61987.[14]
The petitioners insist that Amores must have heard the trains whistle and heeded the
warning but, noting that the train was still a distance away and moving slowly, he must
have calculated that he could beat it to the other side of the track before the train would
arrive at the intersection. The petitioners likewise add that the train was railroad-worthy
and that its defective speedometer did not affect the trains operation. Lastly, they insist

We have thoroughly reviewed the records of the case and we find no cogent
reason to reverse the appellate courts decision. Negligence has been defined as the
failure to observe for the protection of the interests of another person that degree of
care, precaution, and vigilance which the circumstances justly demand, whereby such
other person suffers injury.[15] Using the aforementioned philosophy, it may be reliably
concluded that there is no hard and fast rule whereby such degree of care and vigilance
is calibrated; it is dependent upon the circumstances in which a person finds himself. All
that the law requires is that it is perpetually compelling upon a person to use that care
and diligence expected of sensible men under comparable circumstances. [16]
We hold that the petitioners were negligent when the collision took place. The
transcript of stenographic notes reveals that the train was running at a fast speed because

33

notwithstanding the application of the ordinary and emergency brakes, the train still
dragged the car some distance away from the point of impact. Evidence likewise unveils
the inadequate precautions taken by petitioner PNR to forewarn the public of the
impending danger. Aside from not having any crossing bar, no flagman or guard to man
the intersection at all times was posted on the day of the incident. A reliable signaling
device in good condition, not just a dilapidated Stop, Look and Listen signage because
of many years of neglect, is needed to give notice to the public. It is the responsibility of
the railroad company to use reasonable care to keep the signal devices in working
order. Failure to do so would be an indication of negligence.
As held in the case of Philippine National Railway v. Brunty,[17] it may broadly
be stated that railroad companies owe to the public a duty of exercising a reasonable
degree of care to avoid injury to persons and property at railroad crossings, which duties
pertain both to the operation of trains and to the maintenance of the
crossings. Moreover, every corporation constructing or operating a railway shall make
and construct at all points where such railway crosses any public road, good, sufficient,
and safe crossings, and erect at such points, at sufficient elevation from such road as to
admit a free passage of vehicles of every kind, a sign with large and distinct letters
placed thereon, to give notice of the proximity of the railway, and warn persons of the
necessity of looking out for trains.[18] The failure of the PNR to put a cross bar, or signal
light, flagman or switchman, or semaphore is evidence of negligence and disregard of
the safety of the public, even if there is no law or ordinance requiring it, because public
safety demands that said device or equipment be installed.
The petitioners insist that a train has a right-of-way in a railroad crossing under
the existing laws. They derive their theory from Section 42 (d), Article III of R.A. 4136,
otherwise known as the Land Transportation and Traffic Code, which states that:
The driver of a vehicle upon a highway shall bring to a full
stop such vehicle before traversing any through highway or railroad
crossing: Provided, That when it is apparent that no hazard exists, the
vehicle may be slowed down to five miles per hour instead of
bringing it to a full stop.

proceeded to cross the tracks when he saw that there was no impending danger to his
life. Under these circumstances, we are convinced that Amores did everything, with
absolute care and caution, to avoid the collision.
It is settled that every person or motorist crossing a railroad track should use
ordinary prudence and alertness to determine the proximity of a train before attempting
to cross. We are persuaded that the circumstances were beyond the control of Amores
for no person would sacrifice his precious life if he had the slightest opportunity to
evade the catastrophe. Besides, the authority in this jurisdiction is that the failure of a
railroad company to install a semaphore or at the very least, to post a flagman or
watchman to warn the public of the passing train amounts to negligence.[19]
In view of the foregoing, We will now discuss the liability of petitioner PNR.
Article 2180[20] of the New Civil Code discusses the liability of the employer once
negligence or fault on the part of the employee has been established. The employer is
actually liable on the assumption of juris tantum that the employer failed to
exercise diligentissimi patris families in

the selection and supervision of its employees. The liability is primary and can only be
negated by showing due diligence in the selection and supervision of the employee, a
factual matter that has not been demonstrated. [21] Even the existence of hiring
procedures and supervisory employees cannot be incidentally invoked to overturn the
presumption of negligence on the part of the employer.[22]
WHEREFORE, the petition is DENIED. The Decision of the Court of
Appeals dated March 31, 2003 in CA-G.R. CV No. 54906 is hereby AFFIRMED.
SO ORDERED.

They claim that motorists are enjoined by law to stop, look and listen before crossing
railroad tracks and that a heavier responsibility rests upon the motorists in avoiding
accidents at level crossings.
It is true that one driving an automobile must use his faculties of seeing and
hearing when nearing a railroad crossing. However, the obligation to bring to a full stop
vehicles moving in public highways before traversing any through street only accrues
from the time the said through street or crossing is so designated and sign-posted. From
the records of the case, it can be inferred that Amores exercised all the necessary
precautions required of him as to avoid injury to himself and to others. The witnesses
testimonies showed that Amores slackened his speed, made a full stop, and then

34

THIRD DIVISION
KEPPEL CEBU SHIPYARD, INC.,
Petitioner,

Shiprepair Agreement, Superferry 3 was already insured by WG&A with Pioneer for
US$8,472,581.78. The Shiprepair Agreement reads
G.R. Nos. 180880-81
SHIPREPAIR AGREEMENT[6]

- versus PIONEER
INSURANCE
AND
SURETY
CORPORATION,
Respondent.
X----------------------------X
PIONEER
INSURANCE
AND
SURETY
CORPORATION,
Petitioner,
]
- versus -

KEPPEL CEBU SHIPYARD, INC.,

Respondent.

Company: WG & A JEBSENS SHIPMANAGEMENT INC.

Address: Harbour Center II, Railroad & Chicago Sts.
Port Area, City of Manila
We, WG
&
A
JEBSENS
SHIPMGMT. Owner/Operator
of
M/V SUPERFERRY 3 and KEPPEL CEBU SHIPYARD, INC. (KCSI) enter into an
G.R. Nos. 180896-97
agreement that the Drydocking and Repair of the above-named vessel ordered by the
Owners Authorized Representative shall be carried out under the Keppel Cebu Shipyard
Present:
Standard Conditions of Contract for Shiprepair, guidelines and regulations on safety and
security issued by Keppel Cebu Shipyard. In addition, the following are mutually agreed
YNARES-SANTIAGO,
upon by the parties:
Chairperson,
CHICO-NAZARIO, 1.
The Owner shall inform its insurer of Clause 20 [7] and 22 (a)[8] (refer at
VELASCO, JR.,
the back hereof) and shall include Keppel Cebu Shipyard as a co-assured in its
NACHURA, and
insurance policy.
PERALTA, JJ.
2.
The Owner shall waive its right to claim for any loss of profit or loss of
use or damages consequential on such loss of use resulting from the delay in the
Promulgated: redelivery of the above vessel.

September 25, 2009

3.
Owners sub-contractors or workers are not permitted to work in the yard
without the written approval of the Vice President Operations.
x------------------------------------------------------------------------------------x
4.
In consideration of Keppel Cebu Shipyard allowing Owner to carry out
own repairs onboard the vessel, the Owner shall indemnify and hold Keppel Cebu
DECISION
Shipyard harmless from any or all claims, damages, or liabilities arising from death or
bodily injuries to Owners workers, or damages to the vessel or other property however
NACHURA, J.:
caused.

Before us are the consolidated petitions filed by the partiesPioneer Insurance

and Surety Corporation[1] (Pioneer) and Keppel Cebu Shipyard, Inc. [2] (KCSI)to review
on certiorari the Decision[3] dated December 17, 2004 and the Amended
Decision[4] dated December 20, 2007 of the Court of Appeals (CA) in CA-G.R. SP Nos.
74018 and 73934.
On January 26, 2000, KCSI and WG&A Jebsens Shipmanagement, Inc.
(WG&A) executed a Shiprepair Agreement [5] wherein KCSI would renovate and
reconstruct WG&As M/V Superferry 3 using its dry docking facilities pursuant to its
restrictive safety and security rules and regulations. Prior to the execution of the

5.
On arrival, the Owner Representative, Captain, Chief Officer and Chief
Engineer will be invited to attend a conference with our Production, Safety and Security
personnel whereby they will be briefed on, and given copies of Shipyard safety
regulations.
6.
An adequate number of officers and crew must remain on board at all
times to ensure the safety of the vessel and compliance of safety regulations by crew
and owner employed workmen.
7.
The ships officers/crew or owner appointed security personnel shall
maintain watch against pilferage and acts of sabotage.

35

8.
The yard must be informed and instructed to provide the necessary
security arrangement coverage should there be inadequate or no crew on board to
provide the expressed safety and security enforcement.
9.
The Owner shall be liable to Keppel Cebu Shipyard for any death and/or
bodily injuries for the [K]eppel Cebu Shipyards employees and/or contract workers;
theft and/or damages to Keppel Cebu Shipyards properties and other liabilities which
are caused by the workers of the Owner.
10. The invoice shall be based on quotation
211 dated December 20, 1999 tariff dated March 15, 1998.
11.

reference 99-KCSI-

Our Claim Ref: MH-NIL-H0-99-00018

US$8,472,581.78
-----------------------------------------------RECEIVED
from PIONEER
INSURANCE
&
SURETY
CORPORATION the sum of U.S. DOLLARS EIGHT MILLION FOUR
HUNDRED SEVENTY-TWO THOUSAND FIVE HUNDRED EIGHTY-ONE &
78/100 (US$ 8,472,581.78) equivalent to PESOS THREE HUNDRED SIXTY
MILLION & 00/100 (Php 360,000,000.00), in full satisfaction, compromise and
discharge of all claims for loss and expenses sustained to the vessel SUPERFERRY
3 insured under Policy Nos. MH-H0-99-0000168-00-D (H&M) and MH-H0-990000169 (I.V.) by reason as follows:

Payment term shall be as follows:

12. The Owner and Keppel Cebu Shipyard shall endeavor to settle amicably
any dispute that may arise under this Agreement. Should all efforts for an amicable
settlement fail, the disputes shall be submitted for arbitration in Metro Manila in
accordance with provisions of Executive Order No. 1008 under the auspices of the
Philippine Arbitration Commission.
(Signed)
BARRY CHIA SOO HOCK _________(Signed)__________
(Printed Name/Signature Above Name) (Printed Name/Signature Above
Name)
Vice President Operations Authorized Representative
Keppel Cebu Shipyard, Inc. for and in behalf of:
WG & A Jebsens Shipmgmt.
JAN. 26, 2000 . ________________________
Date Date
On February 8, 2000, in the course of its repair, M/V Superferry 3 was gutted
by fire. Claiming that the extent of the damage was pervasive, WG&A declared the
vessels damage as a total constructive loss and, hence, filed an insurance claim with
Pioneer.
On June 16, 2000, Pioneer paid the insurance claim of WG&A in the amount
of US$8,472,581.78. WG&A, in turn, executed a Loss and Subrogation Receipt [9] in
favor of Pioneer, to wit:
LOSS AND SUBROGATION RECEIPT
16 June 2000

Fire on board at Keppel Cebu Shipyard

on 08 February 2000
and in consideration of which the undersigned hereby assigns and transfers to
the said company each and all claims and demands against any person, persons,
corporation or property arising from or connected with such loss or damage and the said
company is subrogated in the place of and to the claims and demands of the undersigned
against said person, persons, corporation or property in the premises to the extent of the
amount above-mentioned.
WILLIAM, GOTHONG & ABOITIZ, INC.
&/OR ABOITIZ SHIPPING CORP.
By: (Signed)
______________________________________
Witnesses: (Signed)
______________________________________
(Signed)
______________________________________
Armed with the subrogation receipt, Pioneer tried to collect from KCSI, but the
latter denied any responsibility for the loss of the subject vessel. As KCSI continuously
refused to pay despite repeated demands, Pioneer, on August 7, 2000, filed a Request
for Arbitration before the Construction Industry Arbitration Commission (CIAC)
docketed as CIAC Case No. 21-2000, seeking the following reliefs:
1.
To pay to the claimant Pioneer Insurance and Surety Corporation
the sum of U.S.$8,472,581.78 or its equivalent amount in Philippine Currency, plus
interest thereon computed from the date of the Loss and Subrogation Receipt on 16 June
2000 or from the date of filing of [the] Request for Arbitration, as may be found proper;
2.
To pay to claimant WG&A, INC. and/or Aboitiz Shipping
Corporation and WG&A Jebsens Shipmanagement, Inc. the sum of P500,000,000.00

36

plus interest thereon from the date of filing [of the] Request for Arbitration or date of
the arbitral award, as may be found proper;
3.
To pay to the claimants herein the sum of P3,000,000.00 for and
as attorneys fees; plus other damages as may be established during the proceedings,
including arbitration fees and other litigation expenses, and the costs of suit.
It is likewise further prayed that Clauses 1 and 2 on the unsigned page 1 of the
Shiprepair Agreement (Annex A) as well as the hardly legible Clauses 20 and 22 (a) and
other similar clauses printed in very fine print on the unsigned dorsal page thereof, be
all declared illegal and void ab initio and without any legal effect whatsoever.[10]
KCSI and WG&A reached an amicable settlement, leading the latter to file a
Notice of Withdrawal of Claim on April 17, 2001 with the CIAC. The CIAC granted the
withdrawal on October 22, 2001, thereby dismissing the claim of WG&A against
KCSI. Hence, the arbitration proceeded with Pioneer as the remaining claimant.
In the course of the proceedings, Pioneer and KCSI stipulated, among others,
that: (1) on January 26, 2000, M/V Superferry 3 arrived at KCSI in Lapu-Lapu City,
Cebu, for dry docking and repairs; (2) on the same date, WG&A signed a ship repair
agreement with KCSI; and (3) a fire broke out on board M/V Superferry 3 on February
8, 2000, while still dry docked in KCSIs shipyard.[11]
As regards the disputed facts, below are the respective positions of the
parties, viz.:

A.
The evidence presented during the hearings indubitably proves
that respondent not only took custody but assumed responsibility and control over M/V
Superferry 3 in carrying out the dry-docking and repair of the vessel.
B.
The presence on board the M/V Superferry 3 of its officers and
crew does not relieve the respondent of its responsibility for said vessel.
C.
Respondent Keppel assumed responsibility over M/V Superferry 3
when it brought the vessel inside its graving dock and applied its own safety rules to the
dry-docking and repairs of the vessel.
D.
The practice of allowing a shipowner and its sub-contractors to
perform maintenance works while the vessel was within respondents premises does not
detract from the fact that control and custody over M/V Superferry 3 was transferred to
the yard.
From the preceding statements, Claimant claims that Keppel is clearly liable
for the loss of M/V Superferry 3.
Third, the Vessels Safety Manual cannot be relied upon as proof of the Masters
continuing control over the vessel.
Fourth, the Respondent Yard is liable under the Doctrine of Res Ipsa
Loquitur. According to Claimant, the Yard is liable under the ruling laid down by the
Supreme Court in the Manila City case. Claimant asserts that said ruling is applicable
hereto as The Law of the Case.
Fifth, the liability of Respondent does not arise merely from the application of
the Doctrine of Res Ipsa Loquitur, but from its negligence in this case.

Pioneers Theory of the Case:

First, Pioneer (as Claimant) is the real party in interest in this case and that
Pioneer has been subrogated to the claim of its assured. The Claimant claims that it has
the preponderance of evidence over that of the Respondent. Claimant cited documentary
references on the Statutory Source of the Principle of Subrogation. Claimant then
proceeded to explain that the Right of Subrogation:
Is by Operation of Law
exists in Property Insurance
is not Dependent Upon Privity of Contract.
Claimant then argued that Payment Operates as Equitable Assignment of
Rights to Insurer and that the Right of Subrogation Entitles Insurer to Recover from the
Liable Party.
Second, Respondent Keppel had custody of and control over the M/V
Superferry 3 while said vessel was in Respondent Keppels premises. In its Draft
Decision, Claimant stated:

Sixth, the Respondent Yard was the employer responsible for the negligent acts
of the welder. According to Claimant;
In contemplation of law, Sevillejo was not a loaned servant/employee. The
yard, being his employer, is solely and exclusively liable for his negligent
acts. Claimant proceeded to enumerate its reasons:
A.
The Control Test The yard exercised control over Sevillejo. The
power of control is not diminished by the failure to exercise control.
B.
There was no independent work contract between Joniga and
Sevillejo Joniga was not the employer of Sevillejo, as Sevillejo remained an employee
of the yard at the time the loss occurred.
C.
The mere fact that Dr. Joniga requested Sevillejo to perform some
of the Owners hot works under the 26 January 2000 work order did not make Dr. Joniga
the employer of Sevillejo.

37

Claimant proffers that Dr. Joniga was not a Contractor of the Hot Work Done
on Deck A. Claimant argued that:
A.

The Claimant called the attention of the Tribunal (CIAC) on the nonappearance of the welder involved in the cause of the fire, Mr. Severino
Sevillejo. Claimant claims that this is suppression of evidence by Respondent.

The yard, not Dr. Joniga, gave the welders their marching orders,

and
KCSIs Theory of the Case
B.
Dr. Jonigas authority to request the execution of owners hot works
in the passenger areas was expressly recognized by the Yard Project Superintendent
Orcullo.
Seventh, the shipowner had no legal duty to apply for a hotworks permit since
it was not required by the yard, and the owners hotworks were conducted by welders
who remained employees of the yard.Claimant contends that the need, if any, for an
owners application for a hot work permit was canceled out by the yards actual
knowledge of Sevillejos whereabouts and the fact that he was in deck A doing owners
hotworks.
Eight[h], in supplying welders and equipment as per The Work Order Dated 26
January 2000, the Yard did so at its own risk, and acted as a Less Than Prudent Ship
Repairer.
The Claimant then disputed the statements of Manuel Amagsila by claiming
that Amagsila was a disgruntled employee. Nevertheless, Claimant claims that Amagsila
affirmed that the five yard welders never became employees of the owner so as to
obligate the latter to be responsible for their conduct and performance.

1.
The Claimant has no standing to file the Request for Arbitration and the
Tribunal has no jurisdiction over the case:
(a)
There is no valid arbitration agreement between the Yard and the
Vessel Owner. On January 26, 2000, when the ship repair agreement (which includes the
arbitration agreement) was signed by WG&A Jebsens on behalf of the Vessel, the same
was still owned by Aboitiz Shipping. Consequently, when another firm, WG&A,
authorized WG&A Jebsens to manage the MV Superferry 3, it had no authority to do
so. There is, as a result, no binding arbitration agreement between the Vessel Owner and
the Yard to which the Claimant can claim to be subrogated and which can support CIAC
jurisdiction.
(b)
The Claimant is not a real party in interest and has no standing
because it has not been subrogated to the Vessel Owner. For the reason stated above, the
insurance policies on which the Claimant bases its right of subrogation were not validly
obtained. In any event, the Claimant has not been subrogated to any rights which the
Vessel may have against the Yard because:
i.
The Claimant has not proved payment of the proceeds of the
policies to any specific party. As a consequence, it has also not proved payment to the
Vessel Owner.

Claimant enumerated further badges of yard negligence.

According to Claimant:
A.
B.
C.
D.

Yards water supply was inadequate.

Yard Fire Fighting Efforts and Equipment Were Inadequate.
Yard Safety Practices and Procedures Were Unsafe or Inadequate.
Yard Safety Assistants and Firewatch-Men were Overworked.

Finally, Claimant disputed the theories propounded by the Respondent (The

Yard). Claimant presented its case against:
(i)
(ii)
(iii)
(iv)
(v)

Non-removal of the life jackets theory.

Hole-in-the[-]floor theory.
Need for a plan theory.
The unauthorized hot works theory.
The Marina report theory.

ii.
The Claimant had no legally demandable obligation to pay under
the policies and did so only voluntarily. Under the policies, the Claimant and the Vessel
agreed that there is no Constructive Total Loss unless the expense of recovering and
repairing the vessel would exceed the Agreed Value of P360 million assigned by the
parties to the Vessel, a threshold which the actual repair cost for the Vessel did not
reach. Since the Claimant opted to pay contrary to the provisions of the policies, its
payment was voluntary, and there was no resulting subrogation to the Vessel.
iii.
There was also no subrogation under Article 1236 of the Civil
Code. First, if the Claimant asserts a right of payment only by virtue of Article 1236,
then there is no legal subrogation under Article 2207 and it does not succeed to the
Vessels rights under the Ship [R]epair Agreement and the arbitration agreement. It does
not have a right to demand arbitration and will have only a purely civil law claim for
reimbursement to the extent that its payment benefited the Yard which should be filed in
court. Second, since the Yard is not liable for the fire and the resulting damage to the
Vessel, then it derived no benefit from the Claimants payment to the Vessel
Owner. Third, in any event, the Claimant has not proved payment of the proceeds to the
Vessel Owner.

38

2.
The Ship [R]epair Agreement was not imposed upon the Vessel. The
Vessel knowingly and voluntarily accepted that agreement. Moreover, there are no
signing or other formal defects that can invalidate the agreement.
3.
The proximate cause of the fire and damage to the Vessel was not any
negligence committed by Angelino Sevillejo in cutting the bulkhead door or any other
shortcoming by the Yard. On the contrary, the proximate cause of the fire was Dr.
Jonigas and the Vessels deliberate decision to have Angelino Sevillejo undertake cutting
work in inherently dangerous conditions created by them.
(a)
The Claimants material witnesses lied on the record and the
Claimant presented no credible proof of any negligence by Angelino Sevillejo.
(b)
Uncontroverted evidence proved that Dr. Joniga neglected or
decided not to obtain a hot work permit for the bulkhead cutting and also neglected or
refused to have the ceiling and the flammable lifejackets removed from underneath the
area where he instructed Angelino Sevillejo to cut the bulkhead door. These decisions or
oversights guaranteed that the cutting would be done in extremely hazardous conditions
and were the proximate cause of the fire and the resulting damage to the Vessel.
(c)
The Yards expert witness, Dr. Eric Mullen gave the only credible
account of the cause and the mechanics of ignition of the fire. He established that: i) the
fire started when the cutting of the bulkhead door resulted in sparks or hot molten slag
which fell through pre-existing holes on the deck floor and came into contact with and
ignited the flammable lifejackets stored in the ceiling void directly below; and ii) the
bottom level of the bulkhead door was immaterial, because the sparks and slag could
have come from the cutting of any of the sides of the door.Consequently, the cutting
itself of the bulkhead door under the hazardous conditions created by Dr. Joniga, rather
than the positioning of the doors bottom edge, was the proximate cause of the fire.
(d)
The Manila City case is irrelevant to this dispute and in any case,
does not establish governing precedent to the effect that when a ship is damaged in dry
dock, the shipyard is presumed at fault. Apart from the differences in the factual setting
of the two cases, the Manila City pronouncements regarding the res ipsa loquitur
doctrine are obiter dicta without value as binding precedent. Furthermore, even if the
principle were applied to create a presumption of negligence by the Yard, however, that
presumption is conclusively rebutted by the evidence on record.
(e)
The Vessels deliberate acts and its negligence created the
inherently hazardous conditions in which the cutting work that could otherwise be done
safely ended up causing a fire and the damage to the Vessel. The fire was a direct and
logical consequence of the Vessels decisions to: (1) take Angelino Sevillejo away from
his welding work at the Promenade Deck restaurant and instead to require him to do
unauthorized cutting work in Deck A; and (2) to have him do that without satisfying the
requirements for and obtaining a hot work permit in violation of the Yards Safety Rules
and without removing the flammable ceiling and life jackets below, contrary to the
requirements not only of the Yards Safety Rules but also of the demands of standard
safe practice and the Vessels own explicit safety and hot work policies.

(f)
The vessel has not presented any proof to show that the Yard was
remiss in its fire fighting preparations or in the actual conduct of fighting the 8 February
2000 fire. The Yard had the necessary equipment and trained personnel and employed
all those resources immediately and fully to putting out the 8 February 2000 fire.
4.
Even assuming that Angelino Sevillejo cut the bulkhead door close to
the deck floor, and that this circumstance rather than the extremely hazardous conditions
created by Dr. Joniga and the Vessel for that activity caused the fire, the Yard may still
not be held liable for the resulting damage.
(a)
The Yards only contractual obligation to the Vessel in respect of
the 26 January 2000 Work Order was to supply welders for the Promenade Deck
restaurant
who
would
then
perform
welding
work
per
owner[s]
instruction. Consequently, once it had provided those welders, including Angelino
Sevillejo, its obligation to the Vessel was fully discharged and no claim for contractual
breach, or for damages on account thereof, may be raised against the Yard.
(b)
The Yard is also not liable to the Vessel/Claimant on the basis of
quasi-delict.
i.
The
Vessel
exercised supervision and control over Angelino Sevillejo when he was doing work at
the Promenade Deck restaurant and especially when he was instructed by Dr. Joniga to
cut the bulkhead door. Consequently, the Vessel was the party with actual control over
his tasks and is deemed his true and effective employer for purposes of establishing
Article 2180 employer liability.
ii.
Even assuming that
the Yard was Angelino Sevillejos employer, the Yard may nevertheless not be held liable
under Article 2180 because Angelino Sevillejo was acting beyond the scope of his tasks
assigned by the Yard (which was only to do welding for the Promenade Deck restaurant)
when he cut the bulkhead door pursuant to instructions given by the Vessel.
iii.
The
Yard
is
nonetheless not liable under Article 2180 because it exercised due diligence in the
selection and supervision of Angelino Sevillejo.
5.
Assuming that the Yard is liable, it cannot be compelled to pay the full
amount of P360 million paid by the Claimant.
(a)
Under the law, the Yard may not be held liable to the Claimant, as
subrogee, for an amount greater than that which the Vessel could have recovered, even
if the Claimant may have paid a higher amount under its policies. In turn, the right of
the Vessel to recover is limited to actual damage to the MV Superferry 3, at the time of
the fire.

39

(b)
Under the Ship [R]epair Agreement, the liability of the Yard is
limited to P50 million a stipulation which, under the law and decisions of the Supreme
Court, is valid, binding and enforceable.
(c)
The Vessel breached its obligation under Clause 22 (a) of the
Yards Standard Terms to name the Yard as co-assured under the policies a breach which
makes the Vessel liable for damages.This liability should in turn be set-off against the
Claimants claim for damages.

all hotworks are to be done by the Yard, the Tribunal finds that Sevillejo remains a yard
employee. The act of Sevillejo is however mitigated in that he was not even a foreman,
and that the instructions to him was (sic) by an authorized person. The Tribunal notes
that the hotworks permit require[s] a request by at least a foreman. The fact that no
foreman was included in the five welders issued to the Vessel was never raised in this
dispute.As discussed earlier by the Tribunal, with the fact that what was ask (sic) of
Sevillejo was outside the work order, the Vessel is considered equally negligent. This
Tribunal finds the concurrent negligence of the Yard through Sevillejo and the Vessel
through Dr. Joniga as both contributory to the cause of the fire that damaged the vessel.

The Respondent listed what it believes the Claimant wanted to impress upon
the Tribunal. Respondent enumerated and disputed these as follows:

[14]

1.
Claimants counsel contends that the cutting of the bulkhead door
was covered by the 26 January 2000 Work Order.
2.
Claimants counsel contends that Dr. Joniga told Gerry Orcullo
about his intention to have Angelino Sevillejo do cutting work at the Deck A bulkhead
on the morning of 8 February 2000.
3.
Claimants counsel contends that under Article 1727 of the Civil
Code, The contractor is responsible for the work done by persons employed by him.
4.
Claimants counsel contends that [t]he second reason why there
was no job spec or job order for this cutting work, [is] the cutting work was known to
the yard and coordinated with Mr. Gerry Orcullo, the yard project superintendent.
5.
Claimants counsel also contends, to make the Vessels
unauthorized hot works activities seem less likely, that they could easily be detected
because Mr. Avelino Aves, the Yard Safety Superintendent, admitted that No hot works
could really be hidden from the Yard, your Honors, because the welding cables and the
gas hoses emanating from the dock will give these hotworks away apart from the
assertion and the fact that there were also safety assistants supposedly going around the
vessel.

Holding that the liability for damages was limited to P50,000,000.00, the
CIAC ordered KCSI to pay Pioneer the amount of P25,000,000.00, with interest at 6%
per annum from the time of the filing of the case up to the time the decision is
promulgated, and 12% interest per annum added to the award, or any balance thereof,
after it becomes final and executory. The CIAC further ordered that the arbitration costs
be imposed on both parties on a pro rata basis.[15]

Respondent disputed the above by presenting its own argument in its Final
Memorandum.[12]

Pioneer appealed to the CA and its petition was docketed as CA-G.R. SP No.
74018. KCSI likewise filed its own appeal and the same was docketed as CA-G.R. SP
No. 73934. The cases were consolidated.
On December 17, 2004, the Former Fifteenth Division of the CA rendered its
Decision, disposing as follows:
WHEREFORE, premises considered, the Petition of Pioneer (CA-G.R. SP No.
74018) is DISMISSED while the Petition of the Yard (CA-G.R. SP No. 73934) is
GRANTED, dismissing petitioners claims in its entirety. No costs.
The Yard and The WG&A are hereby ordered to pay the arbitration costs prorata.
SO ORDERED.[16]

[13]

On October 28, 2002, the CIAC rendered its Decision declaring both
WG&A and KCSI guilty of negligence, with the following findings and conclusions
The Tribunal agrees that the contractual obligation of the Yard is to provide the
welders and equipment to the promenade deck. [The] Tribunal agrees that the cutting of
the bulkhead door was not a contractual obligation of the Yard. However, by requiring,
according to its own regulations, that only Yard welders are to undertake hotworks, it
follows that there are certain qualifications of Yard welders that would be requisite of
yard welders against those of the vessel welders. To the Tribunal, this means that yard
welders are aware of the Yard safety rules and regulations on hotworks such as applying
for a hotwork permit, discussing the work in a production meeting, and complying with
the conditions of the hotwork permit prior to implementation. By the requirement that

Aggrieved, Pioneer sought reconsideration of the December 17, 2004 Decision,

insisting that it suffered from serious errors in the appreciation of the evidence and from
gross misapplication of the law and jurisprudence on negligence. KCSI, for its part,
filed a motion for partial reconsideration of the same Decision.
On December 20, 2007, an Amended Decision was promulgated by the Special
Division of Five Former Fifteenth Division of the CA in light of the dissent of Associate
Justice Lucas P. Bersamin,[17] joined by Associate Justice Japar B.
Dimaampao. The fallo of the Amended Decision reads

40

WHEREFORE, premises considered, the Court hereby decrees that:

1. Pioneers Motion for Reconsideration is PARTIALLY GRANTED, ordering
The Yard to pay Pioneer P25 Million, without legal interest, within 15 days from the
finality of this Amended Decision, subject to the following modifications:
1.1 Pioneers Petition (CA-G.R. SP No. 74018) is PARTIALLY GRANTED as
the Yard is hereby ordered to pay Pioneer P25 Million without legal interest;
2. The Yard is hereby declared as equally negligent, thus, the total
GRANTING of its Petition (CA-G.R. SP No. 73934) is now reduced to PARTIALLY
GRANTED, in so far as it is ordered to pay Pioneer P25 Million, without legal interest,
within 15 days from the finality of this Amended Decision; and

(i) THE YARD HAD CUSTODY AND CONTROL OVER THE VESSEL
(M/V SUPERFERRY 3) ON 08 FEBRUARY 2000 WHEN IT WAS GUTTED BY
FIRE;
(ii) THE DAMAGING FIRE INCIDENT HAPPENED IN THE COURSE OF
THE REPAIRS EXCLUSIVELY PERFORMED BY YARD WORKERS.
III
THE COURT OF APPEALS ERRED IN ITS RULING THAT WG&A WAS
CONCURRENTLY NEGLIGENT, CONSIDERING THAT:
A. DR. JONIGA, THE VESSELS PASSAGE TEAM LEADER, DID NOT
SUPERVISE OR CONTROL THE REPAIRS.

3. The rest of the disposition in the original Decision remains the same.
SO ORDERED.[18]
Hence, these petitions. Pioneer bases its petition on the following grounds:
I
THE
COURT
OF
APPEALS
ERRED
IN
BASING
ITS
ORIGINAL DECISION ON NON-FACTS LEADING IT TO MAKE FALSE LEGAL
CONCLUSIONS; NON-FACTS REMAIN TO INVALIDATE THE AMENDED
DECISION. THIS ALSO VIOLATES SECTION 14, ARTICLE VIII OF THE
CONSTITUTION.
II
THE COURT OF APPEALS ERRED IN LIMITING THE LEGAL
LIABILITY OF THE YARD TO THE SUM OF P50,000,000.00, IN THAT:
A. STARE DECISIS RENDERS INAPPLICABLE ANY INVOCATION OF
LIMITED LIABILITY BY THE YARD.
B. THE LIMITATION CLAUSE IS CONTRARY TO PUBLIC POLICY.
C. THE VESSEL OWNER DID NOT AGREE THAT THE YARDS
LIABILITY FOR LOSS OR DAMAGE TO THE VESSEL ARISING FROM YARDS
NEGLIGENCE IS LIMITED TO THE SUM OF P50,000,000.00 ONLY.

B. IT WAS THE YARD THROUGH ITS PROJECT SUPERINTENDENT

GERMINIANO ORCULLO THAT SUPERVISED AND CONTROLLED THE
REPAIR WORKS.
C. SINCE ONLY YARD WELDERS COULD PERFORM HOT WORKS IT
FOLLOWS THAT THEY ALONE COULD BE GUILTY OF NEGLIGENCE IN
DOING THE SAME.
D. THE YARD AUTHORIZED THE HOT WORK OF YARD WELDER
ANGELINO SEVILLEJO.
E. THE NEGLIGENCE OF
PROXIMATE CAUSE OF THE LOSS.

ANGELINO

SEVILLEJO

WAS

THE

F. WG&A WAS NOT GUILTY OF NEGLIGENCE, BE IT DIRECT OR

CONTRIBUTORY TO THE LOSS.
IV
THE COURT OF APPEALS CORRECTLY RULED THAT WG&A
SUFFERED A CONSTRUCTIVE TOTAL LOSS OF ITS VESSEL BUT ERRED BY
NOT HOLDING THAT THE YARD WAS LIABLE FOR THE VALUE OF THE FULL
CONSTRUCTIVE TOTAL LOSS.
V
THE COURT OF APPEALS ERRED IN NOT HOLDING THE YARD
LIABLE FOR INTEREST.

D. IT IS INIQUITOUS TO ALLOW THE YARD TO LIMIT LIABILITY, IN

THAT:

41

VI
THE COURT OF APPEALS ERRED IN NOT HOLDING THE YARD
SOLELY LIABLE FOR ARBITRATION COSTS.[19]
On the other hand, KCSI cites the following grounds for the allowance of its
petition, to wit:
1. ABSENCE OF YARD RESPONSIBILITY
IT WAS GRIEVOUS ERROR FOR THE COURT OF APPEALS TO ADOPT,
WITHOUT EXPLANATION, THE CIACS RULING THAT THE YARD WAS
EQUALLY NEGLIGENT BECAUSE OF ITS FAILURE TO REQUIRE A HOT
WORKS PERMIT FOR THE CUTTING WORK DONE BY ANGELINO
SEVILLEJO, AFTER THE COURT OF APPEALS ITSELF HAD SHOWN THAT
RULING TO BE COMPLETELY WRONG AND BASELESS.
2. NO CONSTRUCTIVE TOTAL LOSS
IT WAS EQUALLY GRIEVOUS ERROR FOR THE COURT OF APPEALS
TO RULE, WITHOUT EXPLANATION, THAT THE VESSEL WAS A
CONSTRUCTIVE TOTAL LOSS AFTER HAVING ITSELF EXPLAINED WHY THE
VESSEL COULD NOT BE A CONSTRUCTIVE TOTAL LOSS.

VALUE OF THE VESSEL RECOVERED AND RECEIVED BY THE INSURER,

PIONEER, TO REDUCE ANY LIABILITY ON THE PART OF THE YARD
TO P9.874 MILLION.[20]
To our minds, these errors assigned by both Pioneer and KCSI may be summed
up in the following core issues:
A. To whom may negligence over the fire that broke out on board M/V
Superferry 3 be imputed?
B. Is subrogation proper? If proper, to what extent can subrogation be made?
C. Should interest be imposed on the award of damages? If so, how much?
D. Who should bear the cost of the arbitration?
To resolve these issues, it is imperative that we digress from the general rule
that in petitions for review under Rule 45 of the Rules of Court, only questions of law
shall be entertained. Considering the disparate findings of fact of the CIAC and the CA
which led them to different conclusions, we are constrained to revisit the factual
circumstances surrounding this controversy.[21]
The Courts Ruling

3. FAILURE OR REFUSAL TO ADDRESS

KEPPELS MOTION FOR RECONSIDERATION
FINALLY, IT WAS ALSO GRIEVOUS ERROR FOR THE COURT OF
APPEALS TO HAVE EFFECTIVELY DENIED, WITHOUT ADDRESSING IT AND
ALSO WITHOUT EXPLANATION, KEPPELS PARTIAL MOTION FOR
RECONSIDERATION OF THE ORIGINAL DECISION WHICH SHOWED: 1) WHY
PIONEER WAS NOT SUBROGATED TO THE RIGHTS OF THE VESSEL OWNER
AND SO HAD NO STANDING TO SUE THE YARD; 2) WHY KEPPEL MAY NOT
BE REQUIRED TO REIMBURSE PIONEERS PAYMENTS TO THE VESSEL
OWNER IN VIEW OF THE CO-INSURANCE CLAUSE IN THE SHIPREPAIR
AGREEMENT; AND 3) WHY PIONEER ALONE SHOULD BEAR THE COSTS OF
ARBITRATION.
4. FAILURE TO CREDIT FOR SALVAGE RECOVERY
EVEN IF THE COURT OF APPEALS RULINGS ON ALL OF THE
FOREGOING ISSUES WERE CORRECT AND THE YARD MAY PROPERLY BE
HELD EQUALLY LIABLE FOR THE DAMAGE TO THE VESSEL AND
REQUIRED TO PAY HALF OF THE DAMAGES AWARDED (P25 MILLION), THE
COURT OF APPEALS STILL ERRED IN NOT DEDUCTING THE SALVAGE

A. The issue of negligence

Undeniably, the immediate cause of the fire was the hot work done by
Angelino Sevillejo (Sevillejo) on the accommodation area of the vessel, specifically on
Deck A. As established before the CIAC
The fire broke out shortly after 10:25 and an alarm was raised (Exh. 1-Ms. Aini
Ling,[22] p. 20). Angelino Sevillejo tried to put out the fire by pouring the contents of a
five-liter drinking water container on it and as he did so, smoke came up from under
Deck A. He got another container of water which he also poured whence the smoke was
coming. In the meantime, other workers in the immediate vicinity tried to fight the fire
by using fire extinguishers and buckets of water. But because the fire was inside the
ceiling void, it was extremely difficult to contain or extinguish; and it spread rapidly
because it was not possible to direct water jets or the fire extinguishers into the space at
the source. Fighting the fire was extremely difficult because the life jackets and the
construction materials of the Deck B ceiling were combustible and permitted the fire to
spread within the ceiling void. From there, the fire dropped into the Deck B
accommodation areas at various locations, where there were combustible
materials.Respondent points to cans of paint and thinner, in addition to the plywood

42

partitions and foam mattresses on deck B (Exh. 1-Mullen,[23] pp. 7-8, 18; Exh. 2-Mullen,
pp. 11-12).[24]
Pioneer contends that KCSI should be held liable because Sevillejo was its
employee who, at the time the fire broke out, was doing his assigned task, and that
KCSI was solely responsible for all the hot works done on board the vessel. KCSI
claims otherwise, stating that the hot work done was beyond the scope of Sevillejos
assigned tasks, the same not having been authorized under the Work Order [25] dated
January 26, 2000 or under the Shiprepair Agreement. KCSI further posits that WG&A
was itself negligent, through its crew, particularly Dr. Raymundo Joniga (Dr. Joniga),
for failing to remove the life jackets from the ceiling void, causing the immediate spread
of the fire to the other areas of the ship.
We rule in favor of Pioneer.
First. The Shiprepair Agreement is clear that WG&A, as owner of M/V
Superferry 3, entered into a contract for the dry docking and repair of the vessel under
KCSIs Standard Conditions of Contract for Shiprepair, and its guidelines and
regulations on safety and security. Thus, the CA erred when it said that WG&A would
renovate and reconstruct its own vessel merely using the dry docking facilities of KCSI.
Second. Pursuant to KCSIs rules and regulations on safety and security, only
employees of KCSI may undertake hot works on the vessel while it was in the graving
dock in Lapu-LapuCity, Cebu. This is supported by Clause 3 of the Shiprepair
Agreement requiring the prior written approval of KCSIs Vice President for Operations
before WG&A could effect any work performed by its own workers or subcontractors. In the exercise of this authority, KCSIs Vice-President for Operations, in the
letter dated January 2, 1997, banned any hot works from being done except by KCSIs
workers, viz.:
The Yard will restrict all hot works in the engine room, accommodation cabin,
and fuel oil tanks to be carried out only by shipyard workers x x x.[26]
WG&A recognized and complied with this restrictive directive such that,
during the arrival conference on January 26, 2000, Dr. Joniga, the vessels passage team
leader in charge of its hotel department, specifically requested KCSI to finish the hot
works started by the vessels contractors on the passenger accommodation decks. [27] This
was corroborated by the statements of the vessels hotel manager Marcelo Rabe [28] and
the vessels quality control officer Joselito Esteban. [29] KCSI knew of the unfinished hot
works in the passenger accommodation areas. Its safety supervisor Esteban Cabalhug
confirmed that KCSI was aware that the owners of this vessel (M/V Superferry 3) had
undertaken their own (hot) works prior to arrival alongside (sic) on 26 th January, and
that no hot work permits could thereafter be issued to WG&As own workers because
this was not allowed for the Superferry 3. [30] This shows that Dr. Joniga had authority

only to request the performance of hot works by KCSIs welders as needed in the repair
of the vessel while on dry dock.
Third. KCSI welders covered by the Work Order performed hot works on
various areas of the M/V Superferry 3, aside from its promenade deck. This was a
recognition of Dr. Jonigas authority to request the conduct of hot works even on the
passenger accommodation decks, subject to the provision of the January 26, 2000 Work
Order that KCSI would supply welders for the promenade deck of the ship.
At the CIAC proceedings, it was adequately shown that between February 4
and 6, 2000, the welders of KCSI: (a) did the welding works on the ceiling hangers in
the lobby of Deck A; (b) did the welding and cutting works on the deck beam to access
aircon ducts; and (c) did the cutting and welding works on the protection bars at the
tourist dining salon of Deck B, [31]at a rate of P150.00/welder/hour.[32] In fact, Orcullo,
Project Superintendent of KCSI, admitted that as early as February 3, 2000 (five days
before the fire) [the Yard] had acknowledged Dr. Jonigas authority to order such works
or additional jobs.[33]
It is evident, therefore, that although the January 26, 2000 Work Order was a
special order for the supply of KCSI welders to the promenade deck, it was not
restricted to the promenade deck only. The Work Order was only a special arrangement
between KCSI and WG&A that meant additional cost to the latter.
Fourth. At the time of the fire, Sevillejo was an employee of KCSI and was
subject to the latters direct control and supervision.
Indeed, KCSI was the employer of Sevillejopaying his salaries; retaining the
power and the right to discharge or substitute him with another welder; providing him
and the other welders with its equipment; giving him and the other welders marching
orders to work on the vessel; and monitoring and keeping track of his and the other
welders activities on board, in view of the delicate nature of their work. [34] Thus, as such
employee, aware of KCSIs Safety Regulations on Vessels Afloat/Dry, which specifically
provides that (n)o hotwork (welding/cutting works) shall be done on board [the] vessel
without [a] Safety Permit from KCSI Safety Section, [35] it was incumbent upon Sevillejo
to obtain the required hot work safety permit before starting the work he did, including
that done on Deck A where the fire started.
Fifth. There was a lapse in KCSIs supervision of Sevillejos work at the time
the fire broke out.
It was established that no hot works could be hidden from or remain
undetected by KCSI because the welding cables and the gas hoses emanating from the
dock would give the hot works away. Moreover, KCSI had roving fire watchmen and
safety assistants who were moving around the vessel.[36] This was confirmed by
Restituto Rebaca (Rebaca), KCSIs Safety Supervisor, who actually spotted Sevillejo on
Deck A, two hours before the fire, doing his cutting work without a hot work permit, a

43

fire watchman, or a fire extinguisher. KCSI contends that it did its duty when it
prohibited Sevillejo from continuing the hot work. However, it is noteworthy that, after
purportedly scolding Sevillejo for working without a permit and telling him to stop until
the permit was acquired and the other safety measures were observed, Rebaca left
without pulling Sevillejo out of the work area or making sure that the latter did as he
was told. Unfortunately for KCSI, Sevillejo reluctantly proceeded with his cutting of the
bulkhead door at Deck A after Rebaca left, even disregarding the 4-inch marking set,
thus cutting the door level with the deck, until the fire broke out.
This conclusion on the failure of supervision by KCSI was absolutely
supported by Dr. Eric Mullen of the Dr. J.H. Burgoyne & Partners (International) Ltd.,
Singapore, KCSIs own fire expert, who observed that
4.3. The foregoing would be compounded by Angelino Sevillejo being an
electric arc welder, not a cutter. The dangers of ignition occurring as a result of the two
processes are similar in that both electric arc welding and hot cutting produce heat at the
work area and sparks and incendive material that can travel some distance from the
work area. Hence, the safety precautions that are expected to be applied by the
supervisor are the same for both types of work. However, the quantity and incendivity
of the spray from the hot cutting are much greater than those of sparks from electric arc
welding, and it may well be that Angelino Sevillejo would not have a full
appreciation of the dangers involved. This made it all the more important that the
supervisor, who should have had such an appreciation, ensured that the
appropriate safety precautions were carried out.[37]
In this light, therefore, Sevillejo, being one of the specially trained welders
specifically authorized by KCSI to do the hot works on M/V Superferry 3 to the
exclusion of other workers, failed to comply with the strict safety standards of KCSI,
not only because he worked without the required permit, fire watch, fire buckets, and
extinguishers, but also because he failed to undertake other precautionary measures for
preventing the fire. For instance, he could have, at the very least, ensured that whatever
combustible material may have been in the vicinity would be protected from the sparks
caused by the welding torch. He could have easily removed the life jackets from the
ceiling void, as well as the foam mattresses, and covered any holes where the sparks
may enter.
Conjunctively, since Rebaca was already aware of the hazard, he should have
taken all possible precautionary measures, including those above mentioned, before
allowing Sevillejo to continue with his hot work on Deck A. In addition to scolding
Sevillejo, Rebaca merely checked that no fire had started yet. Nothing more. Also,
inasmuch as KCSI had the power to substitute Sevillejo with another electric arc welder,
Rebaca should have replaced him.
There is negligence when an act is done without exercising the competence
that a reasonable person in the position of the actor would recognize as necessary to

prevent an unreasonable risk of harm to another. Those who undertake any work calling
for special skills are required to exercise reasonable care in what they do. [38] Verily, there
is an obligation all persons have to take due care which, under ordinary circumstances
of the case, a reasonable and prudent man would take. The omission of that care
constitutes negligence. Generally, the degree of care required is graduated according to
the danger a person or property may be subjected to, arising from the activity that the
actor pursues or the instrumentality that he uses. The greater the danger, the greater the
degree of care required. Extraordinary risk demands extraordinary care. Similarly, the
more imminent the danger, the higher degree of care warranted.[39]In this aspect,

KCSI failed to exercise the necessary degree of caution and foresight called for
by the circumstances.
We cannot subscribe to KCSIs position that WG&A, through Dr. Joniga, was
negligent.
On the one hand, as discussed above, Dr. Joniga had authority to request the
performance of hot works in the other areas of the vessel. These hot works were deemed
included in the January 26, 2000 Work Order and the Shiprepair Agreement. In the
exercise of this authority, Dr. Joniga asked Sevillejo to do the cutting of the bulkhead
door near the staircase of Deck A.KCSI was aware of what Sevillejo was doing, but
failed to supervise him with the degree of care warranted by the attendant
circumstances.
Neither can Dr. Joniga be faulted for not removing the life jackets from the
ceiling void for two reasons (1) the life jackets were not even contributory to the
occurrence of the fire; and (2) it was not incumbent upon him to remove the same. It
was shown during the hearings before the CIAC that the removal of the life jackets
would not have made much of a difference. The fire would still have occurred due to the
presence of other combustible materials in the area. This was the uniform conclusion of
both WG&As[40] and KCSIs[41] fire experts. It was also proven during the CIAC
proceedings that KCSI did not see the life jackets as being in the way of the hot works,
thus, making their removal from storage unnecessary.[42]
These circumstances, taken collectively, yield the inevitable conclusion that
Sevillejo was negligent in the performance of his assigned task. His negligence was the
proximate cause of the fire on board M/V Superferry 3. As he was then definitely
engaged in the performance of his assigned tasks as an employee of KCSI, his
negligence gave rise to the vicarious liability of his employer [43] under Article 2180 of
the Civil Code, which provides
Art. 2180. The obligation imposed by article 2176 is demandable not only for
ones own act or omission, but also for those of persons for whom one is responsible.
xxxx

44

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.

(a) If more than three-fourths thereof in value is actually lost, or would have to
be expended to recover it from the peril;
(b) If it is injured to such an extent as to reduce its value more than threefourths; x x x.

xxxx
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.

It appears, however, that in the execution of the insurance policies over M/V
Superferry 3, WG&A and Pioneer incorporated by reference the American Institute Hull
Clauses 2/6/77, the Total Loss Provision of which reads
Total Loss

KCSI failed to prove that it exercised the necessary diligence incumbent upon
it to rebut the legal presumption of its negligence in supervising Sevillejo.
[44]
Consequently, it is responsible for the damages caused by the negligent act of its
employee, and its liability is primary and solidary. All that is needed is proof that the
employee has, by his negligence, caused damage to another in order to make the
employer responsible for the tortuous act of the former.[45] From the foregoing
disquisition, there is ample proof of the employees negligence.
B. The right of subrogation
Pioneer asseverates that there existed a total constructive loss so that it had to
pay WG&A the full amount of the insurance coverage and, by operation of law, it was
entitled to be subrogated to the rights of WG&A to claim the amount of the loss. It
further argues that the limitation of liability clause found in the Shiprepair Agreement is
null and void for being iniquitous and against public policy.
KCSI counters that a total constructive loss was not adequately proven by
Pioneer, and that there is no proof of payment of the insurance proceeds. KCSI insists
on the validity of the limited-liability clause up to P50,000,000.00, because WG&A
acceded to the provision when it executed the Shiprepair Agreement. KCSI also claims
that the salvage value of the vessel should be deducted from whatever amount it will be
made to pay to Pioneer.
We find in favor of Pioneer, subject to the claim of KCSI as to the salvage
value of M/V Superferry 3.
In marine insurance, a constructive total loss occurs under any of the
conditions set forth in Section 139 of the Insurance Code, which provides
Sec. 139. A person insured by a contract of marine insurance may abandon the
thing insured, or any particular portion hereof separately valued by the policy, or
otherwise separately insured, and recover for a total loss thereof, when the cause of the
loss is a peril insured against:

In ascertaining whether the Vessel is a constructive Total Loss the Agreed

Value shall be taken as the repaired value and nothing in respect of the damaged or
break-up value of the Vessel or wreck shall be taken into account.
There shall be no recovery for a constructive Total Loss hereunder unless the
expense of recovering and repairing the Vessel would exceed the Agreed Value in
policies on Hull and Machinery. In making this determination, only expenses incurred
or to be incurred by reason of a single accident or a sequence of damages arising from
the same accident shall be taken into account, but expenses incurred prior to tender of
abandonment shall not be considered if such are to be claimed separately under the Sue
and Labor clause. x x x.
In the course of the arbitration proceedings, Pioneer adduced in evidence the
estimates made by three (3) disinterested and qualified shipyards for the cost of the
repair of the vessel, specifically: (a) P296,256,717.00, based on the Philippine currency
equivalent of the quotation dated April 17, 2000 turned in by Tsuneishi Heavy Industries
(Cebu) Inc.; (b)P309,780,384.15, based on the Philippine currency equivalent of the
quotation of Sembawang Shipyard Pte. Ltd., Singapore; and (c) P301,839,974.00, based
on the Philippine currency equivalent of the quotation of Singapore Technologies
Marine Ltd. All the estimates showed that the repair expense would
exceed P270,000,000.00, the amount equivalent to of the vessels insured value
of P360,000,000.00. Thus, WG&A opted to abandon M/V Superferry 3 and claimed
from Pioneer the full amount of the policies. Pioneer paid WG&As claim, and now
demands from KCSI the full amount of P360,000,000.00, by virtue of subrogation.
KCSI denies the liability because, aside from its claim that it cannot be held
culpable for negligence resulting in the destructive fire, there was no constructive total
loss, as the amount of damage was only US$3,800,000.00 or P170,611,260.00, the
amount of repair expense quoted by Simpson, Spence & Young.
In the face of this apparent conflict, we hold that Section 139 of the Insurance
Code should govern, because (1) Philippine law is deemed incorporated in every locally

45

executed contract; and (2) the marine insurance policies in question expressly provided
the following:

payment of the insurance proceeds to the former, and no controverting evidence was
presented by KCSI to rebut the presumed authority of the signatory to receive such
payment.

IMPORTANT
On the matter of subrogation, Article 2207 of the Civil Code provides
This insurance is subject to English jurisdiction, except in the event that loss or
losses are payable in the Philippines, in which case if the said laws and customs of
England shall be in conflict with the laws of the Republic of the Philippines, then the
laws of the Republic of the Philippines shall govern. (Underscoring supplied.)
The CA held that Section 139 of the Insurance Code is merely permissive on
account of the word may in the provision. This is incorrect. Properly considered, the
word may in the provision is intended to grant the insured (WG&A) the option or
discretion to choose the abandonment of the thing insured (M/V Superferry 3), or any
particular portion thereof separately valued by the policy, or otherwise separately
insured, and recover for a total loss when the cause of the loss is a peril insured
against. This option or discretion is expressed as a right in Section 131 of the same
Code, to wit:
Sec. 131. A constructive total loss is one which gives to a person insured a
right to abandon under Section one hundred thirty-nine.
It cannot be denied that M/V Superferry 3 suffered widespread damage from
the fire that occurred on February 8, 2000, a covered peril under the marine insurance
policies obtained by WG&A from Pioneer. The estimates given by the three
disinterested and qualified shipyards show that the damage to the ship would
exceed P270,000,000.00, or of the total value of the policies P360,000,000.00. These
estimates constituted credible and acceptable proof of the extent of the damage
sustained by the vessel. It is significant that these estimates were confirmed by the
Adjustment Report dated June 5, 2000 submitted by Richards Hogg Lindley (Phils.),
Inc., the average adjuster that Pioneer had enlisted to verify and confirm the extent of
the damage. The Adjustment Report verified and confirmed that the damage to the
vessel amounted to a constructive total loss and that the claim for P360,000,000.00
under the policies was compensable. [46] It is also noteworthy that KCSI did not crossexamine Henson Lim, Director of Richards Hogg, whose affidavit-direct testimony
submitted to the CIAC confirmed that the vessel was a constructive total loss.
Considering the extent of the damage, WG&A opted to abandon the ship and
claimed the value of its policies. Pioneer, finding the claim compensable, paid the claim,
with WG&A issuing a Loss and Subrogation Receipt evidencing receipt of the payment
of the insurance proceeds from Pioneer. On this note, we find as unacceptable the claim
of KCSI that there was no ample proof of payment simply because the person who
signed the Receipt appeared to be an employee of Aboitiz Shipping Corporation. [47] The
Loss and Subrogation Receipt issued by WG&A to Pioneer is the best evidence of

Art. 2207. If the plaintiffs property has been insured and he has received
indemnity from the insurance company for the injury or loss arising out of the wrong or
breach of contract complained of, the insurance company shall be subrogated to the
rights of the insured against the wrongdoer or the person who has violated the
contract. If the amount paid by the insurance company does not fully cover the injury or
loss, the aggrieved party shall be entitled to recover the deficiency from the person
causing the loss or injury.
Subrogation is the substitution of one person by another with reference to a
lawful claim or right, so that he who is substituted succeeds to the rights of the other in
relation to a debt or claim, including its remedies or securities. The principle covers a
situation wherein an insurer has paid a loss under an insurance policy is entitled to all
the rights and remedies belonging to the insured against a third party with respect to any
loss covered by the policy. It contemplates full substitution such that it places the party
subrogated in the shoes of the creditor, and he may use all means that the creditor could
employ to enforce payment.[48]
We have held that payment by the insurer to the insured operates as an
equitable assignment to the insurer of all the remedies that the insured may have against
the third party whose negligence or wrongful act caused the loss. The right of
subrogation is not dependent upon, nor does it grow out of, any privity of contract. It
accrues simply upon payment by the insurance company of the insurance claim. The
doctrine of subrogation has its roots in equity. It is designed to promote and to
accomplish justice; and is the mode that equity adopts to compel the ultimate payment
of a debt by one who, in justice, equity, and good conscience, ought to pay.[49]
We cannot accept KCSIs insistence on upholding the validity Clause 20, which
provides that the limit of its liability is only up to P50,000,000.00; nor of Clause 22(a),
that KCSI stands as a co-assured in the insurance policies, as found in the Shiprepair
Agreement.
Clauses 20 and 22(a) of the Shiprepair Agreement are without factual and legal
foundation. They are unfair and inequitable under the premises. It was established
during arbitration that WG&A did not voluntarily and expressly agree to these
provisions. Engr. Elvin F. Bello, WG&As fleet manager, testified that he did not sign the
fine-print portion of the Shiprepair Agreement where Clauses 20 and 22(a) were found,
because he did not want WG&A to be bound by them. However, considering that it was
only KCSI that had shipyard facilities large enough to accommodate the dry docking
and repair of big vessels owned by WG&A, such as M/V Superferry 3, in Cebu, he had

46

to sign the front portion of the Shiprepair Agreement; otherwise, the vessel would not be
accepted for dry docking.[50]
Indeed, the assailed clauses amount to a contract of adhesion imposed on
WG&A on a take-it-or-leave-it basis. A contract of adhesion is so-called because its
terms are prepared by only one party, while the other party merely affixes his signature
signifying his adhesion thereto. Although not invalid, per se, a contract of adhesion is
void when the weaker party is imposed upon in dealing with the dominant bargaining
party, and its option is reduced to the alternative of taking it or leaving it, completely
depriving such party of the opportunity to bargain on equal footing.[51]

respectively. WG&As claim for the upkeep of the wreck until the same were sold
amounts to P8,521,737.75 (or US$157,809.96), to be deducted from the proceeds of the
sale of the machinery and the hull, for a net recovery of US$673,812.87, or equivalent
to P30,252,648.09, at P44.8977/$1, the prevailing exchange rate when the Request for
Arbitration was filed. Not considering this salvage value in the award would amount to
unjust enrichment on the part of Pioneer.
C. On the imposition of interest
Pursuant to our ruling in Eastern Shipping Lines, Inc. v. Court of Appeals,
the award in favor of Pioneer in the amount of P350,146,786.89 should earn interest
at 6% per annum from the filing of the case until the award becomes final and
executory. Thereafter, the rate of interest shall be 12% per annum from the date the
award becomes final and executory until its full satisfaction.
D. On the payment for the cost of arbitration
[55]

Clause 20 is also a void and ineffectual waiver of the right of WG&A to be

compensated for the full insured value of the vessel or, at the very least, for its actual
market value. There was clearly no intention on the part of WG&A to relinquish such
right. It is an elementary rule that a waiver must be positively proved, since a waiver by
implication is not normally countenanced. The norm is that a waiver must not only be
voluntary, but must have been made knowingly, intelligently, and with sufficient
awareness of the relevant circumstances and likely consequences. There must be
persuasive evidence to show an actual intention to relinquish the right.[52] This has not
been demonstrated in this case.
Likewise, Clause 20 is a stipulation that may be considered contrary to public
policy. To allow KCSI to limit its liability to only P50,000,000.00, notwithstanding the
fact that there was a constructive total loss in the amount of P360,000,000.00, would
sanction the exercise of a degree of diligence short of what is ordinarily required. It
would not be difficult for a negligent party to escape liability by the simple expedient of
paying an amount very much lower than the actual damage or loss sustained by the
other.[53]
Along the same vein, Clause 22(a) cannot be upheld. The intention of the
parties to make each other a co-assured under an insurance policy is to be gleaned
principally from the insurance contract or policy itself and not from any other contract
or agreement, because the insurance policy denominates the assured and the
beneficiaries of the insurance contract.Undeniably, the hull and machinery insurance
procured by WG&A from Pioneer named only the former as the assured. There was no
manifest intention on the part of WG&A to constitute KCSI as a co-assured under the
policies. To have deemed KCSI as a co-assured under the policies would have had the
effect of nullifying any claim of WG&A from Pioneer for any loss or damage caused by
the negligence of KCSI. No ship owner would agree to make a ship repairer a coassured under such insurance policy. Otherwise, any claim for loss or damage under the
policy would be rendered nugatory. WG&A could not have intended such a result.[54]

It is only fitting that both parties should share in the burden of the cost of
arbitration, on a pro rata basis. We find that Pioneer had a valid reason to institute a suit
against KCSI, as it believed that it was entitled to claim reimbursement of the amount it
paid to WG&A. However, we disagree with Pioneer that only KCSI should shoulder the
arbitration costs. KCSI cannot be faulted for defending itself for perceived wrongful
acts and conditions. Otherwise, we would be putting a price on the right to litigate on
the part of Pioneer.
WHEREFORE, the Petition of Pioneer Insurance and Surety Corporation in
G.R. No. 180896-97 and the Petition of Keppel Cebu Shipyard, Inc. in G.R. No.
180880-81 arePARTIALLY GRANTED and the Amended Decision dated December
20, 2007 of the Court of Appeals is MODIFIED. Accordingly, KCSI is ordered to pay
Pioneer the amount ofP360,000,000.00 less P30,252,648.09, equivalent to the salvage
value recovered by Pioneer from M/V Superferry 3, or the net total amount
of P329,747,351.91, with six percent (6%) interest per annum reckoned from the time
the Request for Arbitration was filed until this Decision becomes final and executory,
plus twelve percent (12%) interest per annum on the said amount or any balance thereof
from the finality of the Decision until the same will have been fully paid. The arbitration
costs shall be borne by both parties on a pro rata basis. Costs against KCSI.
SO ORDERED.

Nevertheless, we concur with the position of KCSI that the salvage value of the
damaged M/V Superferry 3 should be taken into account in the grant of any award. It
was proven before the CIAC that the machinery and the hull of the vessel were
separately sold for P25,290,000.00 (or US$468,333.33) and US$363,289.50,

47

Petitioner Norman A. Gaid was charged with the crime of reckless imprudence resulting
in homicide in an information which reads as follow:
That on or about 12:00 high noon of October 25, 2001, infront of the
Laguindingan National High School, Poblacion, Laguindingan,
Misamis Oriental, Philippines and within the jurisdiction of this
Honorable Court, the said accused mentioned above while driving a
passengers jeepney color white bearing plate no. KVG-771 owned by
barangay captain Levy Etom has no precautionary measure to
preempt the accident, did then and there willfully, unlawfully and
feloniously ran [sic] over Michael Dayata resulting of [sic] his
untimely death as pronounced by the attending physician
of NorthernMindanao Medical Center Hospital, Cagayan de Oro City.
CONTRARY TO LAW.[4]
Petitioner entered a not guilty plea. Thereafter, trial ensued.
NORMAN A. GAID, G.R. No. 171636
Petitioner,
Present:

The antecedent facts are undisputed.

QUISUMBING, J.,
Chairperson,
- versus - CARPIO MORALES,
TINGA,
VELASCO, JR., and
PERALTA, JJ.
PEOPLE OF THE PHILIPPINES,
Respondent. Promulgated:
April 7, 2009
x----------------------------------------------------------------------------x
DECISION
TINGA, J.:
Before the Court is a petition for review on certiorari [1] assailing the 12 July
2005 Decision[2] of the Court of Appeals and its subsequent Resolution [3] denying
petitioners motion for reconsideration.

At around 12:00 noon on 25 October 2001, petitioner was driving his

passenger jeepney along a two-lane road where the Laguindingan National High School
is located toward the direction of Moog in Misamis Oriental. His jeepney was filled to
seating capacity.[5] At the time several students were coming out of the school premises.
[6]
Meanwhile, a fourteen year-old student, Michael Dayata (Dayata), was seen by
eyewitness Artman Bongolto (Bongolto) sitting near a store on the left side of the
road. From where he was at the left side of the road, Dayata raised his left hand to flag
down petitioners jeepney[7] which was traveling on the right lane of the road.
[8]
However, neither did petitioner nor the conductor, Dennis Mellalos (Mellalos), saw
anybody flagging down the jeepney to ride at that point.[9]
The next thing Bongalto saw, Dayatas feet was pinned to the rear wheel of the
jeepney, after which, he laid flat on the ground behind the jeepney. [10] Another
prosecution witness, Usaffe Actub (Actub), who was also situated on the left side of the
street but directly in front of the school gate, heard a strong impact coming from the
jeep sounding as if the driver forced to accelerate in order to hurdle an obstacle.
[11]
Dayata was then seen lying on the ground[12] and caught in between the rear tires.
[13]
Petitioner felt that the left rear tire of the jeepney had bounced and the vehicle tilted
to the right side.[14]
Mellalos heard a shout that a boy was run over, prompting him to jump off the
jeepney to help the victim. Petitioner stopped and saw Mellalos carrying the body of the
victim.[15]Mellalos loaded the victim on a motorcycle and brought him to the
hospital. Dayata was first brought to the Laguindingan Health Center, but it was
closed. Mellalos then proceeded to theEl Salvador Hospital. Upon advice of its doctors,

48

however, Dayata was brought to the Northern Mindanao Medical Center where he was
pronounced dead on arrival.[16]
Dr. Tammy Uy issued an autopsy report stating cranio-cerebral injuries as the
cause of death.[17] She testified that the head injuries of Dayata could have been caused
by having run over by the jeepney.[18]
The Municipal Circuit Trial Court (MCTC) of Laguindingan [19] found
petitioner guilty beyond reasonable doubt of the crime charged. The lower court held
petitioner negligent in his driving considering that the victim was dragged to a distance
of 5.70 meters from the point of impact. He was also scored for not stopping his vehicle
after noticing that the jeepneys left rear tire jolted causing the vehicle to tilt towards the
right.[20] On appeal, the Regional Trial Court (RTC) [21] affirmed in toto the decision of
the MCTC.

The Office of the Solicitor-General (OSG) maintained that petitioner was

negligent when he continued to run towards the direction of Moog, Laguindingan,
dragging the victim a few meters from the point of impact, despite hearing that a child
had been run over.[26]
The presence or absence of negligence on the part of petitioner is determined
by the operative events leading to the death of Dayata which actually comprised of two
phases or stages.The first stage began when Dayata flagged down the jeepney while
positioned on the left side of the road and ended when he was run over by the
jeepney. The second stage covered the span between the moment immediately after the
victim was run over and the point when petitioner put the jeepney to a halt.
During the first stage, petitioner was not shown to be negligent.

The Court of Appeals affirmed the trial courts judgment with modification in
that it found petitioner guilty only of simple negligence resulting in homicide.

Reckless imprudence consists of voluntarily doing or failing to do, without

malice, an act from which material damage results by reason of an inexcusable lack of
precaution on the part of the person performing or failing to perform such act.[27]

The Court of Appeals exonerated petitioner from the charge of reckless

imprudence resulting to homicide on the ground that he was not driving recklessly at the
time of the accident.However, the appellate court still found him to be negligent when
he failed to promptly stop his vehicle to check what caused the sudden jotting of its rear
tire.[22]

In Manzanares v. People,[28] this Court convicted petitioner of the crime of

reckless imprudence resulting in multiple homicide and serious physical injuries when
he was found driving the Isuzu truck very fast before it smashed into a jeepney.
[29]
Likewise, in Pangonorom v. People,[30] a public utility driver, who was driving very
fast, failed to slow down and hit a swerving car. He was found negligent by this Court.

In its 6 February 2006 Resolution, the Court of Appeals denied petitioners

motion for reconsideration.[23]

In the instant case, petitioner was driving slowly at the time of the accident, as
testified to by two eyewitnesses. Prosecution witness Actub affirmed this fact on crossexamination, thus:

Hence, the instant petition.

Petitioner submits that the Court of Appeals erred in finding that there is (sic)
absolutely lack of precaution on the part of the petitioner when he continued even after
he had noticed that the left rear tire and the jeep tilted to its right side. [24] Petitioner
stressed that he, in fact, stopped his jeep when its left rear tire bounced and upon
hearing that somebody had been ran over.
Moreover, petitioner asserts that the Court of Appeals committed a grave abuse
of discretion in convicting him of the offense of simple negligence resulting in
homicide. Assumingarguendo that he failed to promptly stop his vehicle, petitioner
maintains that no prudent man placed in the same situation could have foreseen the
vehicular accident or could have stopped his vehicle in time when its left rear tire
bounced due to the following reasons: (1) the victim was only a trespasser; (2)
petitioners attention was focused on the road and the students outside the schools gate;
and (3) the jeepney was fully loaded with passengers and cargoes and it was impossible
for the petitioner to promptly stop his vehicle.[25]

ATTY. MACUA:
(to the witness)
Q Mr. Witness, when the passenger jeepney passed by the gate of
the Laguindingan National High School, is it running slowly,
am I correct?
A Yes, he was running slowly.[31]
The slow pace of the jeepney was seconded by Mellalos:
Q You testified that you heard somebody outside from the vehicle
shouting that a boy was ran over, am I correct?
A Yes, Sir.

49

Q Now, before you heard that shouting, did you observe any motion
from the vehicle?
A The jeep was moving slowly and I noticed that there was something
that [sic] the jeep a little bit bounced up as if a hump thats the
time I heard a shout from outside.[32]
Petitioner stated that he was driving at no more than 15 kilometers per hour.[33]
It appears from the evidence Dayata came from the left side of the
street. Petitioner, who was driving the jeepney on the right lane, did not see the victim
flag him down. He also failed to see him go near the jeepney at the left side.
Understandably, petitioner was focused on the road ahead. In Dayatas haste to board the
jeep which was then running, his feet somehow got pinned to the left rear tire, as
narrated by Bongolto. Actub only saw Dayata after he heard a strong impact coming
from the jeep.
With the foregoing facts, petitioner can not be held liable during the first
stage. Specifically, he cannot be held liable for reckless imprudence resulting in
homicide, as found by the trial court. The proximate cause of the accident and the death
of the victim was definitely his own negligence in trying to catch up with the moving
jeepney to get a ride.

In the instant case, petitioner had exercised extreme precaution as he drove

slowly upon reaching the vicinity of the school. He cannot be faulted for not having
seen the victim who came from behind on the left side.
However, the Court of Appeals found petitioner guilty of simple negligence
resulting in homicide for failing to stop driving at the time when he noticed the
bouncing of his vehicle.Verily, the appellate court was referring to the second stage of
the incident.
Negligence has been defined as the failure to observe for the protection of the
interests of another person that degree of care, precaution, and vigilance which the
circumstances justly demand, whereby such other person suffers injury.[34]
The elements of simple negligence: are (1) that there is lack of precaution on
the part of the offender; and (2) that the damage impending to be caused is not
immediate or the danger is not clearly manifest.[35]
The standard test in determining whether a person is negligent in doing an act
whereby injury or damage results to the person or property of another is this: could a
prudent man, in the position of the person to whom negligence is attributed, foresee
harm to the person injured as a reasonable consequence of the course actually pursued?

If so, the law imposes a duty on the actor to refrain from that course or to take
precautions to guard against its mischievous results, and the failure to do so constitutes
negligence. Reasonable foresight of harm, followed by the ignoring of the admonition
born of this provision, is always necessary before negligence can be held to exist.[36]

In Philippine National Construction Corporation v. Court of Appeals,[37] the

petitioner was the franchisee that operates and maintains the toll facilities in the North
and South Luzon Toll Expressways. It failed to exercise the requisite diligence in
maintaining the NLEX safe for motorists. The lighted cans and lane dividers on the
highway were removed even as flattened sugarcanes lay scattered on the ground. The
highway was still wet from the juice and sap of the flattened sugarcanes. The petitioner
should have foreseen that the wet condition of the highway would endanger motorists
passing by at night or in the wee hours of the morning. [38] Consequently, it was held
liable for damages.

In an American case, Hernandez v. Lukas,[39] a motorist traveling within the

speed limit and did all was possible to avoid striking a child who was then six years old
only. The place of the incident was a neighborhood where children were playing in the
parkways on prior occasions. The court ruled that it must be still proven that the driver
did not exercise due care. The evidence showed that the driver was proceeding in lawful
manner within the speed limit when the child ran into the street and was struck by the
drivers vehicle. Clearly, this was an emergency situation thrust upon the driver too
suddenly to avoid.
In this case, the courts below zeroed in on the fact that petitioner did not stop
the
jeepney
when
he
felt
the
bouncing
of
his
vehicle,
a
circumstance which the appellate court equateswith negligence. Petitioner contends that
he did not immediately stop because he did not see anybody go near his vehicle at the
time of the incident.[40]
Assuming arguendo that petitioner had been negligent, it must be shown that
his negligence was the proximate cause of the accident. Proximate cause is defined as
that which, in the natural and continuous sequence, unbroken by any efficient,
intervening cause, produces the injury, and without which the result would not have
occurred.[41] In order to establish a motorist's liability for the negligent operation of a
vehicle, it must be shown that there was a direct causal connection between such
negligence and the injuries or damages complained of. Thus, negligence that is not a
substantial contributing factor in the causation of the accident is not the proximate cause
of an injury.[42]
The head injuries sustained by Dayata at the point of impact proved to be the
immediate cause of his death, as indicated in the post-mortem findings. [43] His skull was

50

crushed as a result of the accident. Had petitioner immediately stopped the jeepney, it
would still not have saved the life of the victim as the injuries he suffered were fatal.
The evidence on record do not show that the jeepney dragged the victim after
he was hit and run over by the jeepney. Quite the contrary, the evidence discloses that
the victim was not dragged at all. In fact, it is the other way around. Bongolto narrated
that after the impact, he saw Dayata left behind the jeepney. [44] Actub saw Dayata in a
prone position and bleeding within seconds after impact. [45] Right after the impact,
Mellalos immediately jumped out of the jeepney and saw the victim lying on the
ground.[46] The distance of 5.70 meters is the length of space between the spot where the
victim fell to the ground and the spot where the jeepney stopped as observed by the trial
judge during the ocular inspection at the scene of the accident.[47]
Moreover, mere suspicions and speculations that the victim could have lived
had petitioner stopped can never be the basis of a conviction in a criminal case. [48] The
Court must be satisfied that the guilt of the accused had been proven beyond reasonable
doubt.[49] Conviction must rest on nothing less than a moral certainty of the guilt of the
accused. The overriding consideration is not whether the court doubts the innocence of
the accused but whether it entertains doubt as to his guilt.[50]
Clearly then, the prosecution was not able to establish that the proximate cause
of the victims death was petitioners alleged negligence, if at all, even during the second
stage of the incident.
If at all again, petitioners failure to render assistance to the victim would
constitute abandonment of ones victim punishable under Article 275 of the Revised
Penal Code. However, the omission is not covered by the information. Thus, to hold
petitioner criminally liable under the provision would be tantamount to a denial of due
process.

Therefore, petitioner must be acquitted at least on reasonable doubt. The award

of damages must also be deleted pursuant to Article 2179 of the Civil Code which states
that when the plaintiffs own negligence was the immediate and proximate cause of his
injury, he cannot recover damages.
WHEREFORE, the petition is GRANTED. The decision of the Court of
Appeals dated 12 July 2005 is REVERSED and SET ASIDE. Petitioner Norman A.
Gaid isACQUITTED of the crime of Simple Negligence Resulting in Homicide as
found by the Court of Appeals and of the charge of Reckless Imprudence Resulting in
Homicide in Criminal Case No. 1937 of the MCTC of Laguindingan, Misamis Oriental.
SO ORDERED.

51

G.R. No. 180440

December 5, 2012
DR.
GENEVIEVE
L.

HUANG, Petitioner,
vs.
PHILIPPINE HOTELIERS, INC., DUSIT THANI PUBLIC CO., LTD. And
FIRST LEPANTO TAISHO INSURANCE CORPORATION, Respondents.
DECISION
PEREZ, J.:
For this Courts resolution is a Petition for Review on Certiorari under Rule 45
of the Rules of Court, assailing the Decision1 of the Court of Appeals in CA-G.R. CV
No. 87065 dated 9 August 2007, affirming the Decision 2 of Branch 56 of the Regional
Trial Court (RTC) of Makati City in Civil Case No. 96-1367 dated 21 February 2006,
dismissing for lack of merit herein petitioner Dr. Genevieve L. Huangs Complaint for
Damages. Assailed as well is the Court of Appeals Resolution 3 dated 5 November 2007
denying for lack of merit petitioners Motion for Reconsideration.
This case stemmed from a Complaint for Damages filed on 28 August 1996 by
petitioner Dr. Genevieve L. Huang 4against herein respondents Philippine Hoteliers, Inc.
(PHI)5 and Dusit Thani Public Co., Ltd. (DTPCI),6 as owners of Dusit Thani Hotel
Manila (Dusit Hotel);7 and co-respondent First Lepanto Taisho Insurance Corporation
(First Lepanto),8 as insurer of the aforesaid hotel. The said Complaint was premised on
the alleged negligence of respondents PHI and DTPCIs staff, in the untimely putting
off all the lights within the hotels swimming pool area, as well as the locking of the
main entrance door of the area, prompting petitioner to grope for a way out. While
doing so, a folding wooden counter top fell on her head causing her serious brain injury.

The negligence was allegedly compounded by respondents PHI and DTPCIs failure to
render prompt and adequate medical assistance.
Petitioners version of the antecedents of this case is as follows:
On 11 June 1995, Delia Goldberg (Delia), a registered guest of Dusit Hotel,
invited her friend, petitioner Dr. Genevieve L. Huang, for a swim at the hotels
swimming pool facility. They started bathing at around 5:00 p.m. At around 7:00 p.m.,
the hotels swimming pool attendant informed them that the swimming pool area was
about to be closed. The two subsequently proceeded to the shower room adjacent to the
swimming pool to take a shower and dress up. However, when they came out of the
bathroom, the entire swimming pool area was already pitch black and there was no
longer any person around but the two of them. They carefully walked towards the main
door leading to the hotel but, to their surprise, the door was locked.9
Petitioner and Delia waited for 10 more minutes near the door hoping someone
would come to their rescue but they waited in vain. Delia became anxious about their
situation so petitioner began to walk around to look for a house phone. Delia followed
petitioner. After some time, petitioner saw a phone behind the lifeguards counter. While
slowly walking towards the phone, a hard and heavy object, which later turned out to be
the folding wooden counter top, fell on petitioners head that knocked her down almost
unconscious.10
Delia immediately got hold of the house phone and notified the hotel telephone
operator of the incident. Not long after, the hotel staff arrived at the main entrance door
of the swimming pool area but it took them at least 20 to 30 minutes to get inside. When
the door was finally opened, three hotel chambermaids assisted petitioner by placing an
ice pack and applying some ointment on her head. After petitioner had slightly
recovered, she requested to be assisted to the hotels coffee shop to have some rest.
Petitioner demanded the services of the hotel physician.11
Dr. Violeta Dalumpines (Dr. Dalumpines) arrived. She approached petitioner
and introduced herself as the hotel physician. However, instead of immediately
providing the needed medical assistance, Dr. Dalumpines presented a "Waiver" and
demanded that it be signed by petitioner, otherwise, the hotel management will not
render her any assistance. Petitioner refused to do so.12
After eating her dinner and having rested for a while, petitioner left the hotels
coffee shop and went home. Thereupon, petitioner started to feel extraordinary dizziness
accompanied by an uncomfortable feeling in her stomach, which lasted until the
following day. Petitioner was constrained to stay at home, thus, missing all her
important appointments with her patients. She also began experiencing "on" and "off"
severe headaches that caused her three (3) sleepless nights. 13
Petitioner, thus, decided to consult a certain Dr. Perry Noble (Dr. Noble), a
neurologist from Makati Medical Center, who required her to have an X-ray and a
Magnetic Resonance Imaging (MRI) tests.14 The MRI Report15 dated 23 August 1995
revealed the following findings:
CONSULTATION REPORT:
MRI examination of the brain shows scattered areas of intraparenchymal
contusions and involving mainly the left middle and posterior temporal and slightly the
right anterior temporal lobe.

52

Other small areas of contusions with suggestive pertechiae are seen in the left
fronto-parietal, left parieto-occipital and with deep frontal periventricular subcortical
and cortical regions. There is no mass effect nor signs of localized hemorrhagic
extravasation.
The ventricles are not enlarged, quite symmetrical without shifts or
deformities; the peripheral sulci are within normal limits.
The C-P angles, petromastoids, sella, extrasellar and retro orbital areas appear
normal.
The brainstem is unremarkable.
IMPRESSION: Scattered small intraparenchymal contusions mainly involving
the left middle-posterior temporal lobe and also right medial anterior temporal, both
deep frontal subcortical, left parieto-occipital subcortical and cortical regions. Ischemic
etiology not ruled out. No localized intra - or extracerebral hemorrhage.16
Petitioner claimed that the aforesaid MRI result clearly showed that her head
was bruised. Based also on the same MRI result, Dr. Noble told her that she has a very
serious brain injury. In view thereof, Dr. Noble prescribed the necessary medicine for
her condition.17
Petitioner likewise consulted a certain Dr. Ofelia Adapon, also a neurologist
from Makati Medical Center, who required her to undergo an Electroencephalogram
examination (EEG) to measure the electrostatic in her brain. 18Based on its result,19 Dr.
Ofelia Adapon informed her that she has a serious conditiona permanent one. Dr.
Ofelia Adapon similarly prescribed medicines for her brain injury.20
Petitioners condition did not get better. Hence, sometime in September 1995,
she consulted another neuro-surgeon by the name of Dr. Renato Sibayan (Dr. Sibayan),
who required her to have an X-ray test. 21 According to petitioner, Dr. Sibayans finding
was the same as those of the previous doctors that she had consultedshe has a serious
brain injury.22
By reason of the unfortunate 11 June 1995 incident inside the hotels
swimming pool area, petitioner also started to feel losing her memory, which greatly
affected and disrupted the practice of her chosen profession. 23 Thus, on 25 October
1995, petitioner, through counsel, sent a demand letter 24 to respondents PHI and DTPCI
seeking payment of an amount not less than P100,000,000.00 representing loss of
earnings on her remaining life span. But, petitioners demand was unheeded.
In November 1995, petitioner went to the United States of America (USA) for
further medical treatment. She consulted a certain Dr. Gerald Steinberg and a certain Dr.
Joel Dokson25 from Mount Sinai Hospital who both found that she has "post traumaticpost concussion/contusion cephalgias-vascular and neuralgia."26 She was then
prescribed to take some medications for severe pain and to undergo physical therapy.
Her condition did not improve so she returned to the Philippines.27
Petitioner, once again, consulted Dr. Sibayan, who simply told her to just relax
and to continue taking her medicines. Petitioner also consulted other neurologists, who
all advised her to just continue her medications and to undergo physical therapy for her
neck pain.28
Sometime in 1996, petitioner consulted as well a certain Dr. Victor Lopez (Dr.
Lopez), an ophthalmologist from the Makati Medical Center, because of her poor
vision, which she has experienced for several months.29 Petitioners Eye Report dated 5

March 199630 issued by Dr. Lopez stated: "IMPRESSION: Posterior vitreous

detachment, right eye of floaters." Dr. Lopez told petitioner that her detached eye is
permanent and very serious. Dr. Lopez then prescribed an eye drop to petitioner.31
For petitioners frustration to dissipate and to regain her former strength and
physical well-being, she consulted another neuro-surgeon from Makati Medical Center
by the name of Dr. Leopoldo P. Pardo, Jr. (Dr. Pardo, Jr.). 32 She disclosed to Dr. Pardo,
Jr. that at the age of 18 she suffered a stroke due to mitral valve disease and that she was
given treatments, which also resulted in thrombocytopenia. In Dr. Pardo, Jr.s medical
evaluation of petitioner dated 15 May 1996, 33 he made the following diagnosis and
opinion:
DIAGNOSIS AND OPINION:
This patient sustained a severe head injury in (sic) 11 June 1995 and as a result
of which she developed the following injuries:
1. Cerebral Concussion and Contusion
2. Post-traumatic Epilepsy
3. Post-concussional Syndrome
4. Minimal Brain Dysfunction
5. Cervical Sprain, chronic recurrent
It is my opinion that the symptoms she complained of in the foregoing history
are all related to and a result of the injury sustained on 11 June 1995.
It is further my opinion that the above diagnosis and complaints do materially
affect her duties and functions as a practicing physician and dermatologist, and that she
will require treatment for an undetermined period of time.
The percentage of disability is not calculated at this time and will require
further evaluation and observation.34
Dr. Pardo, Jr. then advised petitioner to continue her medications.35
Petitioner likewise consulted a certain Dr. Tenchavez 36 for her follow-up
EEG.37 He similarly prescribed medicine for petitioners deep brain injury. He also gave
her pain killer for her headache and advised her to undergo physical therapy. Her
symptoms, however, persisted all the more.38
In 1999, petitioner consulted another neurologist at the Makati Medical Center
by the name of Dr. Martesio Perez (Dr. Perez) because of severe fleeting pains in her
head, arms and legs; difficulty in concentration; and warm sensation of the legs, which
symptoms also occurred after the 11 June 1995 incident. Upon examination, Dr. Perez
observed that petitioner has been experiencing severe pains and she has a slight
difficulty in concentration. He likewise noted that there was a slight spasm of
petitioners neck muscle but, otherwise, there was no objective neurologic finding. The
rest of petitioners neurologic examination was essentially normal.39
Dr. Perezs neurologic evaluation40 of petitioner reflected, among others: (1)
petitioners past medical history, which includes, among others, mitral valve stenosis;
(2) an interpretation of petitioners EEG results in October 1995 and in January 1999,
i.e., the first EEG showed sharp waves seen bilaterally more on the left while the second
one was normal; and (3) interpretation of petitioners second MRI result, i.e., petitioner
has a permanent damage in the brain, which can happen either after a head injury or
after a stroke. Dr. Perez concluded that petitioner has post-traumatic or post concussion
syndrome.41

53

Respondents, on the other hand, denied all the material allegations of petitioner
and, in turn, countered the latters statement of facts, thus:
According to respondents PHI and DTPCI, a sufficient notice had been posted
on the glass door of the hotel leading to the swimming pool area to apprise the people,
especially the hotel guests, that the swimming pool area is open only from 7:00 a.m. to
7:00 p.m.42 Though the hotels swimming pool area is open only between the aforestated
time, the lights thereon are kept on until 10:00 p.m. for, (1) security reasons; (2)
housekeeping personnel to do the cleaning of the swimming pool surroundings; and (3)
people doing their exercise routine at the Slimmers World Gym adjacent to the
swimming pool area, which was then open until 10:00 p.m., to have a good view of the
hotels swimming pool. Even granting that the lights in the hotels swimming pool area
were turned off, it would not render the area completely dark as the Slimmers World
Gym near it was well-illuminated.43
Further, on 11 June 1995, at round 7:00 p.m., the hotels swimming pool
attendant advised petitioner and Delia to take their showers as it was already closing
time. Afterwards, at around 7:40 p.m., Pearlie Benedicto-Lipana (Ms. Pearlie), the hotel
staff nurse, who was at the hotel clinic located at the mezzanine floor, received a call
from the hotel telephone operator informing her that there was a guest requiring medical
assistance at the hotels swimming pool area located one floor above the clinic. 44
Immediately, Ms. Pearlie got hold of her medical kit and hurriedly went to the
hotels swimming pool area. There she saw Delia and petitioner, who told her that she
was hit on the head by a folding wooden counter top. Although petitioner looked normal
as there was no indication of any blood or bruise on her head, Ms. Pearlie still asked her
if she needed any medical attention to which petitioner replied that she is a doctor, she
was fine and she did not need any medical attention. Petitioner, instead, requested for a
hirudoid cream to which Ms. Pearlie acceded.45
At about 8:00 p.m., after attending to petitioner, Ms. Pearlie went back to the
hotel clinic to inform Dr. Dalumpines of the incident at the hotels swimming pool area.
But before she could do that, Dr. Dalumpines had already chanced upon Delia and
petitioner at the hotels coffee shop and the latter reported to Dr. Dalumpines that her
head was hit by a folding wooden counter top while she was inside the hotels
swimming pool area. When asked by Dr. Dalumpines how she was, petitioner
responded she is a doctor, she was fine and she was already attended to by the hotel
nurse, who went at the hotels swimming pool area right after the accident. Dr.
Dalumpines then called Ms. Pearlie to verify the same, which the latter confirmed. 46
Afterwards, Dr. Dalumpines went back to petitioner and checked the latters
condition. Petitioner insisted that she was fine and that the hirudoid cream was enough.
Having been assured that everything was fine, Dr. Dalumpines requested petitioner to
execute a handwritten certification47 regarding the incident that occurred that night. Dr.
Dalumpines then suggested to petitioner to have an X-ray test. Petitioner replied that it
was not necessary. Petitioner also refused further medical attention.48
On 13 June 1995, petitioner called up Dr. Dalumpines. The call, however, had
nothing to do with the 11 June 1995 incident. Instead, petitioner merely engaged in
small talk with Dr. Dalumpines while having her daily massage. The two talked about
petitioners personal matters, i.e., past medical history, differences with siblings and
family over inheritance and difficulty in practice. Petitioner even disclosed to Dr.

Dalumpines that she once fell from a horse; that she had a stroke; had hysterectomy and
is incapable of having children for her uterus had already been removed; that she had
blood disorder, particularly lack of platelets, that can cause bleeding; and she had an
"on" and "off" headaches. Petitioner oftentimes called Dr. Dalumpines at the hotel clinic
to discuss topics similar to those discussed during their 13 June 1995 conversation.49
Also, during one of their telephone conversations, petitioner requested for a
certification regarding the 11 June 1995 incident inside the hotels swimming pool area.
Dr. Dalumpines accordingly issued Certification dated 7 September 1995, which states
that:50
C E R T I F I C AT I O N
This is to certify that as per Clinic records, duty nurse Pearlie was called to
attend to an accident at the poolside at 7:45PM on 11 June 1995.
Same records show that there, she saw petitioner who claimed the folding
countertop fell on her head when she lifted it to enter the lifeguards counter to use the
phone. She asked for Hirudoid.
The same evening petitioner met Dr. Dalumpines at the Coffee Shop. After
narrating the poolside incident and declining Dr. Dalumpines offer of assistance, she
reiterated that the Hirudoid cream was enough and that petitioner being a doctor herself,
knew her condition and she was all right.
This certification is given upon the request of petitioner for whatever purpose it
may serve, 7 September 1995 at Makati City.51 (Emphasis supplied).
Petitioner personally picked up the afore-quoted Certification at the hotel clinic
without any objection as to its contents.52
From 11 June 1995 until 7 September 1995, the hotel clinic never received any
complaint from petitioner regarding the latters condition. The hotel itself neither
received any written complaint from petitioner.53
After trial, the court a quo in its Decision dated 21 February 2006 dismissed
petitioners Complaint for lack of merit.
The trial court found petitioners testimony self-serving, thus, devoid of
credibility. Petitioner failed to present any evidence to substantiate her allegation that
the lights in the hotels swimming pool area were shut off at the time of the incident.
She did not even present her friend, Delia, to corroborate her testimony. More so,
petitioners testimony was contradicted by one of the witnesses presented by the
respondents who positively declared that it has been a normal practice of the hotel
management not to put off the lights until 10:00 p.m. to allow the housekeepers to do
the cleaning of the swimming pool surroundings, including the toilets and counters.
Also, the lights were kept on for security reasons and for the people in the nearby gym
to have a good view of the swimming pool while doing their exercise routine. Besides,
there was a remote possibility that the hotels swimming pool area was in complete
darkness as the aforesaid gym was then open until 10:00 p.m., and the lights radiate to
the hotels swimming pool area. As such, petitioner would not have met the accident had
she only acted with care and caution.54
The trial court further struck down petitioners contention that the hotel
management did not extend medical assistance to her in the aftermath of the accident.
Records showed that the hotel management immediately responded after being notified
of the accident. The hotel nurse and the two chambermaids placed an ice pack on

54

petitioners head. They were willing to extend further emergency assistance but
petitioner refused and merely asked for a hirudoid cream. Petitioner even told them she
is a doctor and she was fine. Even the medical services offered by the hotel physician
were turned down by petitioner. Emphatically, petitioner cannot fault the hotel for the
injury she sustained as she herself did not heed the warning that the swimming pool area
is open only from 7:00 a.m. to 7:00 p.m. As such, since petitioners own negligence was
the immediate and proximate cause of her injury, she cannot recover damages.55
The trial court similarly observed that the records revealed no indication that
the head injury complained of by petitioner was the result of the alleged 11 June 1995
accident. Firstly, petitioner had a past medical history which might have been the cause
of her recurring brain injury. Secondly, the findings of Dr. Perez did not prove a causal
relation between the 11 June 1995 accident and the brain damage suffered by petitioner.
Even Dr. Perez himself testified that the symptoms being experienced by petitioner
might have been due to factors other than the head trauma she allegedly suffered. It
bears stressing that petitioner had been suffering from different kinds of brain problems
since she was 18 years old, which may have been the cause of the recurring symptoms
of head injury she is experiencing at present. Absent, therefore, of any proof
establishing the causal relation between the injury she allegedly suffered on 11 June
1995 and the head pains she now suffers, her claim must fail. Thirdly, Dr. Teresita
Sanchezs (Dr. Sanchez) testimony cannot be relied upon since she testified on the
findings and conclusions of persons who were never presented in court. Ergo, her
testimony thereon was hearsay. Fourthly, the medical reports/evaluations/certifications
issued by myriads of doctors whom petitioner sought for examination or treatment were
neither identified nor testified to by those who issued them. Being deemed as hearsay,
they cannot be given probative value. Even assuming that petitioner suffered head
injury as a consequence of the 11 June 1995 accident, she cannot blame anyone but
herself for staying at the hotels swimming pool area beyond its closing hours and for
lifting the folding wooden counter top that eventually hit her head.56
For petitioners failure to prove that her serious and permanent injury was the
result of the 11 June 1995 accident, thus, her claim for actual or compensatory damages,
loss of income, moral damages, exemplary damages and attorneys fees, must all fail.57
With regard to respondent First Lepantos liability, the trial court ruled that
under the contract of insurance, suffice it to state that absent any cause for any liability
against respondents PHI and DTPCI, respondent First Lepanto cannot be made liable
thereon.
Dissatisfied, petitioner elevated the matter to the Court of Appeals with the
following assignment of errors: (1) the trial court erred in finding that the testimony of
petitioner is self-serving and thus void of credibility; (2) the trial court erred in applying
the doctrine of proximate cause in cases of breach of contract and even assuming
arguendo that the doctrine is applicable, petitioner was able to prove by sufficient
evidence the causal connection between her injuries and respondents PHI and DTPCIs
negligent act; and (3) the trial court erred in holding that petitioner is not entitled to
damages.58
On 9 August 2007, the Court of Appeals rendered a Decision affirming the
findings and conclusions of the trial court.
The Court of Appeals ratiocinated in this wise:

At the outset, it is necessary for our purpose to determine whether to decide

this case on the theory that herein respondents PHI and DTPCI are liable for breach of
contract or on the theory of quasi-delict.
xxxx
It cannot be gainsaid that herein petitioners use of the hotels pool was only
upon the invitation of Delia, the hotels registered guest. As such, she cannot claim
contractual relationship between her and the hotel. Since the circumstances of the
present case do not evince a contractual relation between petitioner and respondents, the
rules on quasi-delict , thus, govern.
The pertinent provision of Art. 2176 of the Civil Code which states: "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 quasi-delict."
A perusal of Article 2176 shows that obligations arising from quasi-delict or
tort, also known as extra-contractual obligations, arise only between parties not
otherwise bound by contract, whether express or implied. Thus, to sustain a claim
liability under quasi-delict, the following requisites must concur: (a) damages suffered
by the plaintiff; (b) fault or negligence of the defendant, or some other person for whose
acts he must respond; and (c) the connection of cause and effect between the fault or
negligence of the defendant and the damages incurred by the plaintiff.
Viewed from the foregoing, the question now is whether respondents PHI and
DTPCI and its employees were negligent? We do not think so. Several factors militate
against petitioners contention.
One. Petitioner recognized the fact that the pool areas closing time is 7:00
p.m.. She, herself, admitted during her testimony that she was well aware of the sign
when she and Delia entered the pool area. Hence, upon knowing, at the outset, of the
pools closing time, she took the risk of overstaying when she decided to take shower
and leave the area beyond the closing hour. In fact, it was only upon the advise of the
pool attendants that she thereafter took her shower.
Two. She admitted, through her certification that she lifted the wooden bar
countertop, which then fell onto her head. The admission in her certificate proves the
circumstances surrounding the occurrence that transpired on the night of 11 June 1995.
This is contrary to her assertion in the complaint and testimony that, while she was
passing through the counter door, she was suddenly knocked out by a hard and heavy
object. In view of the fact that she admitted having lifted the counter top, it was her own
doing, therefore, that made the counter top fell on to her head.
Three. We cannot likewise subscribe to petitioners assertion that the pool area
was totally dark in that she herself admitted that she saw a telephone at the counter after
searching for one. It must be noted that petitioner and Delia had walked around the pool
area with ease since they were able to proceed to the glass entrance door from shower
room, and back to the counter area where the telephone was located without
encountering any untoward incident. Otherwise, she could have easily stumbled over, or
slid, or bumped into something while searching for the telephone. This negates her
assertion that the pool area was completely dark, thereby, totally impairing her vision.
xxxx

55

The aforementioned circumstances lead us to no other conclusion than that the

proximate and immediate cause of the injury of petitioner was due to her own
negligence.
Moreover, petitioner failed to sufficiently substantiate that the medical
symptoms she is currently experiencing are the direct result of the head injury she
sustained on 11 June 1995 as was aptly discussed in the lower courts findings.
xxxx
It bears stressing that in civil cases, the law requires that the party who alleges
a fact and substantially asserts the affirmative of the issue has the burden of proving it.
Hence, for petitioner to be entitled to damages, she must show that she had suffered an
actionable injury. Regrettably, petitioner failed in this regard. 59 (Emphasis supplied).
Petitioners Motion for Reconsideration was denied for lack of merit in a
Resolution dated 5 November 2007.
Hence, this Petition raising the following issues:
(1) Whether or not the findings of fact of the trial court and of the Court of
Appeals are conclusive in this case.
(2) Whether or not herein respondents PHI and DTPCI are responsible by
implied contract to exercise due care for the safety and welfare of the petitioner.
(3) Whether or not the cause of action of the petitioner can be based on both
breach of contract and tort.
(4) Whether or not it is respondents PHI and DTPCI and its employees who are
liable to the petitioner for negligence, applying the well-established doctrines of res ipsa
loquitur and respondeat superior.
(5) Whether the petitioners debilitating and permanent injuries were a result of
the accident she suffered at the hotel on 11 June 1995.
(6) Whether or not the petitioner is entitled to the payment of damages,
attorneys fees, interest, and the costs of suit.
(7) Whether or not the respondent insurance company is liable, even directly,
to the petitioner.
(8) Whether or not petitioners motion for reconsideration of the decision of
the Court of Appeals is pro forma.60
Petitioner argues that the rule that "findings of fact of the lower courts are
conclusive and must be respected on appeal" finds no application herein because this
case falls under the jurisprudentially established exceptions. Moreover, since the
rationale behind the afore-mentioned rule is that "the trial judge is in a vantage point to
appreciate the conduct and behavior of the witnesses and has the unexcelled opportunity
to evaluate their testimony," one logical exception to the rule that can be deduced
therefrom is when the judge who decided the case is not the same judge who heard and
tried the case.
Petitioner further faults the Court of Appeals in ruling that no contractual
relationship existed between her and respondents PHI and DTPCI since her use of the
hotels swimming pool facility was only upon the invitation of the hotels registered
guest. On the contrary, petitioner maintains that an implied contract existed between
them in view of the fact that the hotel guest status extends to all those who avail of its
servicesits patrons and invitees. It follows then that all those who patronize the hotel
and its facilities, including those who are invited to partake of those facilities, like

petitioner, are generally regarded as guests of the hotel. As such, respondents PHI and
DTPCI are responsible by implied contract for the safety and welfare of petitioner while
the latter was inside their premises by exercising due care, which they failed to do.
Petitioner even asserts that the existence of a contract between the parties does
not bar any liability for tort since the act that breaks a contract may also be a tort.
Hence, the concept of change of theory of cause of action pointed to by respondents is
irrelevant.
Petitioner similarly avows that the doctrines of res ipsa loquitur and respondeat
superior are applicable in this case. She argues that a person who goes in a hotel without
a "bukol" or hematoma and comes out of it with a "bukol" or hematoma is a clear case
of res ipsa loquitur. It was an accident caused by the fact that the hotel staff was not
present to lift the heavy counter top for petitioner as is normally expected of them
because they negligently locked the main entrance door of the hotels swimming pool
area. Following the doctrine of res ipsa loquitur, respondents PHI and DTPCIs
negligence is presumed and it is incumbent upon them to prove otherwise but they
failed to do so. Further, respondents PHI and DTPCI failed to observe all the diligence
of a good father of a family in the selection and supervision of their employees, hence,
following the doctrine of respondeat superior, they were liable for the negligent acts of
their staff in not verifying if there were still people inside the swimming pool area
before turning off the lights and locking the door. Had respondents PHI and DTPCIs
employees done so, petitioner would not have been injured. Since respondents PHI and
DTPCIs negligence need not be proved, the lower courts erred in shifting the burden to
petitioner and, thereafter, holding the hotel and its employees not negligent for
petitioners failure to prove their negligence. Moreover, petitioner alleges that there was
no contributory negligence on her part for she did not do anything that could have
contributed to her injury. And, even if there was, the same does not bar recovery.
Petitioner equally declares that the evidence on record, including the objective
medical findings, had firmly established that her permanent debilitating injuries were
the direct result of the 11 June 1995 accident inside the hotels swimming pool area.
This fact has not been totally disputed by the respondents. Further, the medical experts
who had been consulted by petitioner were in unison in their diagnoses of her condition.
Petitioner was also able to prove that the falling of the folding wooden counter top on
her head while she was at the hotels swimming pool area was the cause of her head, eye
and neck injuries.
Petitioner reiterates her claim for an award of damages, to wit: actual,
including loss of income; moral, exemplary; as well as attorneys fees, interest and costs
of suit. She states that respondents PHI and DTPCI are liable for quasi-delict under
Articles 19, 2176 and 2180 of the New Civil Code. At the same time, they are liable
under an implied contract for they have a public duty to give due courtesy, to exercise
reasonable care and to provide safety to hotel guests, patrons and invitees. Respondent
First Lepanto, on the other hand, is directly liable under the express contract of
insurance.
Lastly, petitioner contends that her Motion for Reconsideration before the
Court of Appeals was not pro forma for it specifically pointed out the alleged errors in
the Court of Appeals Decision.
The instant Petition is devoid of merit.

56

Primarily, only errors of law and not of facts are reviewable by this Court in a
Petition for Review on Certiorari under Rule 45 of the Rules of Court. 61 This Court is
not a trier of facts and it is beyond its function to re-examine and weigh anew the
respective evidence of the parties.62 Besides, this Court adheres to the long standing
doctrine that the factual findings of the trial court, especially when affirmed by the
Court of Appeals, are conclusive on the parties and this Court. 63 Nonetheless, this Court
has, at times, allowed exceptions thereto, to wit:
(a) When the findings are grounded entirely on speculation, surmises, or
conjectures;
(b) When the inference made is manifestly mistaken, absurd, or impossible;
(c) When there is grave abuse of discretion;
(d) When the judgment is based on a misapprehension of facts;
(e) When the findings of facts are conflicting;
(f) When in making its findings the Court of Appeals went beyond the issues of
the case, or its findings are contrary to the admissions of both the appellant and the
appellee;
(g) When the Court of Appeals findings are contrary to those by the trial court;
(h) When the findings are conclusions without citation of specific evidence on
which they are based;
(i) When the facts set forth in the petition as well as in the petitioners main
and reply briefs are not disputed by the respondent;
(j) When the findings of fact are premised on the supposed absence of evidence
and contradicted by the evidence on record; or
(k) When the Court of Appeals manifestly overlooked certain relevant facts not
disputed by the parties, which, if properly considered, would justify a different
conclusion.64
Upon meticulous perusal of the records, however, this Court finds that none of
these exceptions is obtaining in this case. No such justifiable or compelling reasons
exist for this Court to depart from the general rule. This Court will not disturb the
factual findings of the trial court as affirmed by the Court of Appeals and adequately
supported by the evidence on record.
Also, this Court will not review the factual findings of the trial court simply
because the judge who heard and tried the case was not the same judge who penned the
decision. This fact alone does not diminish the veracity and correctness of the factual
findings of the trial court.65 Indeed, "the efficacy of a decision is not necessarily
impaired by the fact that its writer only took over from a colleague who had earlier
presided at the trial, unless there is showing of grave abuse of discretion in the factual
findings reached by him."66 In this case, there was none.
It bears stressing that in this jurisdiction there is a disputable presumption that
the trial courts decision is rendered by the judge in the regular performance of his
official duties. While the said presumption is only disputable, it is satisfactory unless
contradicted or overcame by other evidence. Encompassed in this presumption of
regularity is the presumption that the trial court judge, in resolving the case and drafting
the decision, reviewed, evaluated, and weighed all the evidence on record. That the said
trial court judge is not the same judge who heard the case and received the evidence is

of little consequence when the records and transcripts of stenographic notes (TSNs) are
complete and available for consideration by the former,67 just like in the present case.
Irrefragably, the fact that the judge who penned the trial courts decision was
not the same judge who heard the case and received the evidence therein does not
render the findings in the said decision erroneous and unreliable. While the conduct and
demeanor of witnesses may sway a trial court judge in deciding a case, it is not, and
should not be, his only consideration. Even more vital for the trial court judges decision
are the contents and substance of the witnesses testimonies, as borne out by the TSNs,
as well as the object and documentary evidence submitted and made part of the records
of the case.68
This Court examined the records, including the TSNs, and found no reason to
disturb the factual findings of both lower courts. This Court, thus, upholds their
conclusiveness.
In resolving the second and third issues, a determination of the cause of action
on which petitioners Complaint for Damages was anchored upon is called for.
Initially, petitioner was suing respondents PHI and DTPCI mainly on account
of their negligence but not on any breach of contract. Surprisingly, when the case was
elevated on appeal to the Court of Appeals, petitioner had a change of heart and later
claimed that an implied contract existed between her and respondents PHI and DTPCI
and that the latter were liable for breach of their obligation to keep her safe and out of
harm. This allegation was never an issue before the trial court. It was not the cause of
action relied upon by the petitioner not until the case was before the Court of Appeals.
Presently, petitioner claims that her cause of action can be based both on quasi-delict
and breach of contract.
A perusal of petitioners Complaint evidently shows that her cause of action
was based solely on quasi-delict. Telling are the following allegations in petitioners
Complaint:
6. THAT, in the evening of 11 June 1995, between the hours from 7:00 to 8:00
oclock, after herein petitioner and her friend from New York, Delia, the latter being
then a Hotel guest, were taking their shower after having a dip in the hotels swimming
pool, without any notice or warning, the Hotels staff put off all the lights within the
pool area including the lights on the hallway and also locked the main entrance door of
the pool area, x x x;
7. THAT, Hotel guest Delia started to panic while petitioner pacified her by
telling her not to worry as they would both find their way out. Petitioner knowing that
within the area there is a house phone, started to look around while Delia was following
her, eventually petitioner saw a phone behind the counter x x x, that while slowly
moving on towards the phone on a stooping manner due to the darkness CAUSED BY
UNTIMELY AND NEGLIGENTLY PUTTING OFF WITH THE LIGHTS BY THE
HEREIN RESPONDENTS PHI AND DTPCIS EMPLOYEE while passing through the
open counter door with its Folding Counter Top also opened, x x x, a hard and heavy
object fell onto the head of the petitioner that knocked her down almost unconscious
which hard and heavy object turned out to be the Folding Counter Top;
8. THAT, Delia immediately got hold of the house phone and notified the Hotel
Telephone Operator about the incident, immediately the hotel staffs (sic) arrived but
they were stranded behind the main door of the pool entrance and it too (sic) them more

57

than twenty (20) minutes to locate the hotel maintenance employee who holds the key
of the said main entrance door;
9. THAT, when the door was opened, two Hotel Chamber Maids assisted the
petitioner to get out of the counter door. Petitioner being a Physician tried to control her
feelings although groggy and requested for a HURIDOID, a medicine for
HEMATOMA, as a huge lump developed on her head while the two Chamber Maids
assisted petitioner by holding the bag of ice on her head and applying the medicine on
the huge lump;
10. THAT, petitioner after having recovered slightly from her nightmare,
though still feeling weak, asked to be assisted to the Hotel Coffee Shop to take a rest but
requested for the hotels Physician. Despite her insistent requests, the Dusit Hotel
refused to lift a finger to assists petitioner who was then in distress until a lady
approached and introduced herself as the Hotels house Doctor. Instead however of
assisting petitioner by asking her what kind of assistance the Hotel could render, in a
DISCOURTEOUS MANNER presented instead a paper and demanding petitioner to
affix her signature telling her that the Hotel Management would only assists and answer
for all expenses incurred if petitioner signs the paper presented, but she refused and
petitioner instead wrote a marginal note on the said paper stating her reason therefore,
said paper later on turned out to be a WAIVER OF RIGHT or QUIT CLAIM;
xxxx
14. THAT, due to the unfortunate incident caused by respondents PHI and
DTPCIs gross negligence despite medical assistance, petitioner started to feel losing
her memory that greatly affected and disrupted the practice of her chosen profession x x
x.
xxxx
19. THAT, due to respondents PHI and DTPCIs gross negligence as being
narrated which caused petitioner to suffer sleepless nights, depression, mental anguish,
serious anxiety, wounded feelings, and embarrassment with her Diplomate friends in the
profession and industry, her social standing in the community was greatly affected and
hence, respondents PHI and DTPCI must be imposed the hereunder damages, prayed
for x x x and Artile (sic) 2176 and 2199 of the New Civil Code of the Philippines x x x.
xxxx
22. THAT, as to Moral, Exemplary and Actual Damages, as well as petitioners
Loss of Income, the amounts are stated in its prayer hereunder.69
It is clear from petitioners allegations that her Complaint for Damages was
predicated on the alleged negligence of respondents PHI and DTPCIs staff in the
untimely putting off of all the lights within the hotels swimming pool area, as well as
the locking of its main door, prompting her to look for a way out leading to the fall of
the folding wooden counter top on her head causing her serious brain injury. The said
negligence was allegedly compounded by respondents PHI and DTPCIs failure to
render prompt and adequate medical assistance. These allegations in petitioners
Complaint constitute a cause of action for quasi-delict, which under the New Civil Code
is defined as an act, or omission which causes damage to another, there being fault or
negligence.70
It is evident from petitioners Complaint and from her open court testimony
that the reliance was on the alleged tortious acts committed against her by respondents

PHI and DTPCI, through their management and staff. It is now too late in the day to
raise the said argument for the first time before this Court.71
Petitioners belated reliance on breach of contract as her cause of action cannot
be sanctioned by this Court. Well-settled is the rule that a party is not allowed to change
the theory of the case or the cause of action on appeal. Matters, theories or arguments
not submitted before the trial court cannot be considered for the first time on appeal or
certiorari.72 When a party adopts a certain theory in the court below, he will not be
permitted to change his theory on appeal for to permit him to do so would not only be
unfair to the other party but it would also be offensive to the basic rules of fair play,
justice and due process.73 Hence, a party is bound by the theory he adopts and by the
cause of action he stands on and cannot be permitted after having lost thereon to
repudiate his theory and cause of action and adopt another and seek to re-litigate the
matter anew either in the same forum or on appeal.74
In that regard, this Court finds it significant to take note of the following
differences between quasi-delict (culpa aquilina) and breach of contract (culpa
contractual). In quasi-delict, negligence is direct, substantive and independent, while in
breach of contract, negligence is merely incidental to the performance of the contractual
obligation; there is a pre-existing contract or obligation. 75 In quasi-delict, the defense of
"good father of a family" is a complete and proper defense insofar as parents, guardians
and employers are concerned, while in breach of contract, such is not a complete and
proper defense in the selection and supervision of employees. 76 In quasi- delict , there is
no presumption of negligence and it is incumbent upon the injured party to prove the
negligence of the defendant, otherwise, the formers complaint will be dismissed, while
in breach of contract, negligence is presumed so long as it can be proved that there was
breach of the contract and the burden is on the defendant to prove that there was no
negligence in the carrying out of the terms of the contract; the rule of respondeat
superior is followed.77
Viewed from the foregoing, petitioners change of theory or cause of action
from quasi-delict to breach of contract only on appeal would necessarily cause injustice
to respondents PHI and DTPCI. First, the latter will have no more opportunity to present
evidence to contradict petitioners new argument. Second, the burden of proof will be
shifted from petitioner to respondents PHI and DTPCI. Petitioners change of theory
from quasi-delict to breach ofcontract must be repudiated.
As petitioners cause of action is based on quasi-delict, it is incumbent upon
her to prove the presence of the following requisites before respondents PHI and DTPCI
can be held liable, to wit: (a) damages suffered by the plaintiff; (b) fault or negligence of
the defendant, or some other person for whose acts he must respond; and (c) the
connection of cause and effect between the fault or negligence of the defendant and the
damages incurred by the plaintiff. 78 Further, since petitioners case is for quasi-delict ,
the negligence or fault should be clearly established as it is the basis of her action. 79 The
burden of proof is upon petitioner. Section 1, Rule 131 of the Rules of Court provides
that "burden of proof is the duty of a party to present evidence on the facts in issue
necessary to establish his claim or defense by the amount of evidence required by law."
It is then up for the plaintiff to establish his cause of action or the defendant to establish
his defense. Therefore, if the plaintiff alleged in his complaint that he was damaged
because of the negligent acts of the defendant, he has the burden of proving such

58

negligence. It is even presumed that a person takes ordinary care of his concerns. The
quantum of proof required is preponderance of evidence.80
In this case, as found by the trial court and affirmed by the Court of Appeals,
petitioner utterly failed to prove the alleged negligence of respondents PHI and DTPCI.
Other than petitioners self-serving testimony that all the lights in the hotels swimming
pool area were shut off and the door was locked, which allegedly prompted her to find a
way out and in doing so a folding wooden counter top fell on her head causing her
injury, no other evidence was presented to substantiate the same. Even her own
companion during the night of the accident inside the hotels swimming pool area was
never presented to corroborate her allegations. Moreover, petitioners aforesaid
allegations were successfully rebutted by respondents PHI and DTPCI. Here, we quote
with conformity the observation of the trial court, thus:
x x x Besides not being backed up by other supporting evidence, said statement
is being contradicted by the testimony of Engineer Dante L. Costas, 81 who positively
declared that it has been a normal practice of the Hotel management not to put off the
lights until 10:00P.M. in order to allow the housekeepers to do the cleaning of the pools
surrounding, the toilets and the counters. It was also confirmed that the lights were kept
on for security reasons and so that the people exercising in the nearby gym may be able
to have a good view of the swimming pool. This Court also takes note that the nearby
gymnasium was normally open until 10:00 P.M. so that there was a remote possibility
the pool area was in complete darkness as was alleged by herein petitioner, considering
that the illumination which reflected from the gym. Ergo, considering that the area were
sufficient (sic) illuminated when the alleged incident occurred, there could have been no
reason for the petitioner to have met said accident, much less to have been injured as a
consequence thereof, if she only acted with care and caution, which every ordinary
person is expected to do.82
More telling is the ratiocination of the Court of Appeals, to wit:
Viewed from the foregoing, the question now is whether respondents PHI and
DTPCI and its employees were negligent? We do not think so. Several factors militate
against petitioners contention.
One. Petitioner recognized the fact that the pool areas closing time is 7:00
p.m.. She, herself, admitted during her testimony that she was well aware of the sign
when she and Delia entered the pool area. Hence, upon knowing, at the outset, of the
pools closing time, she took the risk of overstaying when she decided to take shower
and leave the area beyond the closing hour. In fact, it was only upon the advise of the
pool attendants that she thereafter took her shower.
Two. She admitted, through her certification, that she lifted the wooden bar
countertop, which then fell on to her head. The admission in her certificate proves the
circumstances surrounding the occurrence that transpired on the night of 11 June 1995.
This is contrary to her assertion in the complaint and testimony that, while she was
passing through the counter door, she was suddenly knocked out by a hard and heavy
object. In view of the fact that she admitted having lifted the countertop, it was her own
doing, therefore, that made the counter top fell on to her head.
Three. We cannot likewise subscribe to petitioners assertion that the pool area
was totally dark in that she herself admitted that she saw a telephone at the counter after
searching for one. It must be noted that petitioner and Delia had walked around the pool

area with ease since they were able to proceed to the glass entrance door from the
shower room, and back to the counter area where the telephone was located without
encountering any untoward incident. Otherwise, she could have easily stumbled over, or
slid, or bumped into something while searching for the telephone. This negates her
assertion that the pool area was completely dark, thereby, totally impairing her vision.
xxxx
The aforementioned circumstances lead us to no other conclusion than that the
proximate and immediate cause of the injury of petitioner was due to her own
negligence.83 (Emphasis supplied).
Even petitioners assertion of negligence on the part of respondents PHI and
DTPCI in not rendering medical assistance to her is preposterous. Her own Complaint
affirmed that respondents PHI and DTPCI afforded medical assistance to her after she
met the unfortunate accident inside the hotels swimming pool facility. Below is the
portion of petitioners Complaint that would contradict her very own statement, thus:
14. THAT, due to the unfortunate incident caused by respondents PHI and
DTPCIs gross negligence despite medical assistance, petitioner started to feel losing
her memory that greatly affected and disrupted the practice of her chosen profession. x
x x.84 (Emphasis supplied).
Also, as observed by the trial court, respondents PHI and DTPCI, indeed,
extended medical assistance to petitioner but it was petitioner who refused the same.
The trial court stated, thus:
Further, herein petitioners asseverations that the Hotel Management did not
extend medical assistance to her in the aftermath of the alleged accident is not true.
Again, this statement was not supported by any evidence other that the sole and selfserving testimony of petitioner. Thus, this Court cannot take petitioners statement as a
gospel truth. It bears stressing that the Hotel Management immediately responded after
it received notice of the incident. As a matter of fact, Ms. Pearlie, the Hotel nurse, with
two chambermaids holding an ice bag placed on petitioners head came to the petitioner
to extend emergency assistance when she was notified of the incident, but petitioner
merely asked for Hirudoid, saying she was fine, and that she was a doctor and know
how to take care of herself. Also, the Hotel, through its in-house physician, Dr.
Dalumpines offered its medical services to petitioner when they met at the Hotels
coffee shop, but again petitioner declined the offer. Moreover, the Hotel as a show of
concern for the petitioners welfare, shouldered the expenses for the MRI services
performed on petitioner at the Makati Medical Center. Emphatically, petitioner herself
cannot fault the Hotel for the injury she allegedly suffered because she herself did not
heed the warning at the pool to the effect that it was only open from 7:00 to 7:00 P.M.
Thus, when the petitioners own negligence was the immediate and proximate cause of
his injury, shecannot recover damages x x x.85
With the foregoing, the following were clearly established, to wit: (1)
petitioner stayed in the hotels swimming pool facility beyond its closing hours; (2) she
lifted the folding wooden counter top that eventually hit her head; and (3) respondents
PHI and DTPCI extended medical assistance to her. As such, no negligence can be
attributed either to respondents PHI and DTPCI or to their staff and/or management.
Since the question of negligence is one of fact, this Court is bound by the said factual
findings made by the lower courts. It has been repeatedly held that the trial court's

59

factual findings, when affirmed by the Court of Appeals, are conclusive and binding
upon this Court, if they are not tainted with arbitrariness or oversight of some fact or
circumstance of significance and influence. Petitioner has not presented sufficient
ground to warrant a deviation from this rule.86
With regard to petitioners contention that the principles of res ipsa loquitur
and respondeat superior are applicable in this case, this Court holds otherwise.
Res ipsa loquitur is a Latin phrase which literally means "the thing or the
transaction speaks for itself." It relates to the fact of an injury that sets out an inference
to the cause thereof or establishes the plaintiffs prima facie case. The doctrine rests on
inference and not on presumption. The facts of the occurrence warrant the supposition
of negligence and they furnish circumstantial evidence of negligence when direct
evidence is lacking.87 Simply stated, this doctrine finds no application if there is direct
proof of absence or presence of negligence. If there is sufficient proof showing the
conditions and circumstances under which the injury occurred, then the creative reason
for the said doctrine disappears.88
Further, the doctrine of res ipsa loquitur applies where, (1) the accident was of
such character as to warrant an inference that it would not have happened except for the
defendants negligence; (2) the accident must have been caused by an agency or
instrumentality within the exclusive management or control of the person charged with
the negligence complained of; and (3) the accident must not have been due to any
voluntary action or contribution on the part of the person injured.89
In the case at bench, even granting that respondents PHI and DTPCIs staff
negligently turned off the lights and locked the door, the folding wooden counter top
would still not fall on petitioners head had she not lifted the same. Although the folding
wooden counter top is within the exclusive management or control of respondents PHI
and DTPCI, the falling of the same and hitting the head of petitioner was not due to the
negligence of the former. As found by both lower courts, the folding wooden counter
top did not fall on petitioners head without any human intervention. Records showed
that petitioner lifted the said folding wooden counter top that eventually fell and hit her
head. The same was evidenced by the, (1) 11 June 1995 handwritten certification of
petitioner herself; (2) her Letter dated 30 August 1995 addressed to Mr. Yoshikazu
Masuda (Mr. Masuda), General Manager of Dusit Hotel; and, (3) Certification dated 7
September 1995 issued to her by Dr. Dalumpines upon her request, which contents she
never questioned.
Here, we, respectively, quote the 11 June 1995 handwritten certification of
petitioner; her letter to Mr. Masuda dated 30 August 1995; and Dr. Dalumpines
Certification dated 7 September 1995, to wit:
Petitioners 11 June 1995 Handwritten Certification:
I was requested by Dr. Dalumpines to write that I was assured of assistance
should it be necessary with regard an accident at the pool. x x x The phone was in an
enclosed area on a chair I lifted the wooden bar counter top which then fell on my
head producing a large hematoma x x x.90
Petitioners Letter addressed to Mr. Masuda dated 30 August 1995:
Dear Mr. Masuda,
xxxx

x x x We searched and saw a phone on a chair behind a towel counter.

However, in order to get behind the counter I had to lift a hinged massive wooden
section of the counter which subsequently fell and knocked me on my head x x x.91
Dr. Dalumpines Certification dated 7 September 1995:
C E R T I F I C AT I O N
This is to certify that as per Clinic records, duty nurse Pearlie was called to
attend to an accident at the poolside at 7:45PM on 11 June 1995.
Same records show that there, she saw petitioner who claimed the folding
countertop fell on her head when she lifted it to enter the lifeguards counter to use the
phone. She asked for Hirudoid.
The same evening petitioner met Dr. Dalumpnes at the Coffee Shop. After
narrating the poolside incident and declining Dr. Dalumpines offer of assistance, she
reiterated that the Hirudoid cream was enough and that petitioner]being a doctor herself,
knew her condition and she was all right.
This certification is given upon the request of petitioner for whatever purpose it
may serve, 7 September 1995 at Makati City.92 (Emphasis supplied).
This Court is not unaware that in petitioners Complaint and in her open court
testimony, her assertion was, "while she was passing through the counter door, she was
suddenly knocked out by a hard and heavy object, which turned out to be the folding
wooden counter top." However, in her open court testimony, particularly during crossexamination, petitioner confirmed that she made such statement that "she lifted the
hinge massive wooden section of the counter near the swimming pool." 93 In view
thereof, this Court cannot acquiesce petitioners theory that her case is one of res ipsa
loquitur as it was sufficiently established how petitioner obtained that "bukol" or
"hematoma."
The doctrine of respondeat superior finds no application in the absence of any
showing that the employees of respondents PHI and DTPCI were negligent. Since in
this case, the trial court and the appellate court found no negligence on the part of the
employees of respondents PHI and DTPCI, thus, the latter cannot also be held liable for
negligence and be made to pay the millions of pesos damages prayed for by petitioner.
The issue on whether petitioners debilitating and permanent injuries were the
result of the accident she suffered at the hotels swimming pool area on 11 June 1995 is
another question of fact, which is beyond the function of this Court to resolve. More so,
this issue has already been properly passed upon by the trial court and the Court of
Appeals. To repeat, this Court is bound by the factual findings of the lower courts and
there is no cogent reason to depart from the said rule.
The following observations of the trial court are controlling on this matter:
Firstly, petitioner had a past medical history which might have been the cause
of her recurring brain injury.
Secondly, the findings of Dr. Perez did not prove a causal relation between the
11 June 1995 accident and the brain damage suffered by petitioner. Dr. Perez himself
testified that the symptoms being experienced by petitioner might have been due to
factors other than the head trauma she allegedly suffered. Emphasis must be given to the
fact that petitioner had been suffering from different kinds of brain problems since she
was 18 years old, which may have been the cause of the recurring symptoms of head
injury she is experiencing at present.

60

Thirdly, Dr. Sanchezs testimony cannot be relied upon since she testified on
the findings and conclusions of persons who were never presented in court. Ergo, her
testimony thereon was hearsay. A witness can testify only with regard to facts of which
they have personal knowledge. Testimonial or documentary evidence is hearsay if it is
based, not on the personal knowledge of the witness, but on the knowledge of some
other person not on the witness stand. Consequently, hearsay evidence -- whether
objected to or not -- has no probative value.94
Fourthly, the medical reports/evaluations/certifications issued by myriads of
doctors whom petitioner sought for examination or treatment were neither identified nor
testified to by those who issued them. Being deemed as hearsay, they cannot be given
probative value.1wphi1
The aforesaid medical reports/evaluations/certifications of different doctors in
favor of petitioner cannot be given probative value and their contents cannot be deemed
to constitute proof of the facts stated therein. It must be stressed that a document or
writing which is admitted not as independent evidence but merely as part of the
testimony of a witness does not constitute proof of the facts related therein. 95 In the
same vein, the medical certificate which was identified and interpreted in court by
another doctor was not accorded probative value because the doctor who prepared it
was not presented for its identification. Similarly, in this case, since the doctors who
examined petitioner were not presented to testify on their findings, the medical
certificates issued on their behalf and identified by another doctor cannot be admitted as
evidence. Since a medical certificate involves an opinion of one who must first be
established as an expert witness, it cannot be given weight or credit unless the doctor
who issued it is presented in court to show his qualifications. 96 Thus, an unverified and
unidentified private document cannot be accorded probative value. It is precluded
because the party against whom it is presented is deprived of the right and opportunity
to cross-examine the person to whom the statements or writings are attributed. Its
executor or author should be presented as a witness to provide the other party to the
litigation the opportunity to question its contents. Being mere hearsay evidence, failure
to present the author of the letter renders its contents suspect and of no probative
value.97
All told, in the absence of negligence on the part of respondents PHI and
DTPCI, as well as their management and staff, they cannot be made Iiable to pay for the
millions of damages prayed for by the petitioner. Since respondents PHI and DTPCI arc
not liable, it necessarily follows that respondent First Lepanto cannot also be made
liable under the contract or Insurance.
WHEREFORE, premises considered, the Decision and Resolution or the Court
of Appeals in CA-G.R. CV No. 87065 dated 9 August 2007 and 5 November 2007,
respectively, are hereby AFFIRMED. Costs against petitioner.
SO ORDERED.

61

- versus - CARPIO,
CORONA,
LEONARDO-DE CASTRO, and
BERSAMIN, JJ.
RODOLFO BEDANIA Promulgated:
and RODOLFO DE SILVA,
Respondents. May 21, 2009
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
CARPIO, J.:
The Case
This is a petition for review[1] of the 3 June 2003 Decision[2] and the 23 March 2004
Resolution[3] of the Court of Appeals in CA-G.R. CV No. 69289. The 3 June 2003
Decision set aside the 5 December 2000 Decision [4] of the Regional Trial Court, Branch
30, Manila (trial court). The 23 March 2004 Resolution denied the motion for
reconsideration.
The Facts
On 25 October 1994, at about 5:45 in the afternoon, petitioner Genaro M. Guillang
(Genaro) was driving his brand new Toyota Corolla GLI sedan with conduction sticker
no. 54-DFT (car) along Emilio Aguinaldo Highway (highway) in Cavite. Genaro,
Antero Guillang (Antero), Felipe Jurilla, Jose Dignadice (Dignadice), and Alvin Llanillo
(Llanillo) had all just left from Golden City, Dasmarias, Cavite, and were on their way
to Manila. At the other side of the highway, respondent Rodolfo A. Bedania (Bedania)
was driving a ten-wheeler Isuzu cargo truck with plate no. CAC-923 (truck) towards
Tagaytay City. The truck was owned by respondent Rodolfo de Silva (de Silva).
SOFIA M. GUILLANG, represented G.R. No. 162987
by SUSAN GUILLANG-CABATBAT,
REYNALDO, GERARDO,
BIENVENIDO, DAWNA, and NELLIE,
all surnamed GUILLANG,
GENARO GUILLANG,
JOSE DIGNADICE, and
ALVIN LLANILLO,
Petitioners,
Present:

Along the highway and the road leading to the Orchard Golf Course, Bedania negotiated
a U-turn. When the truck entered the opposite lane of the highway, Genaros car hit the
right portion of the truck. The truck dragged Genaros car some five meters to the right
of the road.
As a consequence, all the passengers of the car were rushed to the De La Salle
University Medical Center in Dasmarias, Cavite for treatment. Because of severe
injuries, Antero was later transferred to the Philippine General Hospital. However, on 3
November 1994, Antero died due to the injuries he sustained from the collision. The car
was a total wreck while the truck sustained minor damage.

PUNO, C.J., Chairperson,

62

On 24 April 1995, petitioners Genaro, Llanillo, Dignadice, and the heirs of

Antero[5] instituted a complaint for damages based on quasi-delict against respondents
Bedania and de Silva.
On 5 December 2000, the trial court rendered a decision in favor of petitioners. The trial
court found Bedania grossly negligent for recklessly maneuvering the truck by making a
sudden U-turn in the highway without due regard to traffic rules and the safety of other
motorists. The trial court also declared de Silva grossly negligent in the selection and
supervision of his driver, Bedania. The dispositive portion of the decision provides:
WHEREFORE, judgment is hereby rendered ordering defendants
Rodolfo A. Bedania and Rodolfo de Silva, jointly and severally, to pay
plaintiffs, as follows:
1.
The
sum
of P508,566.03
representing
the
damage/repair costs of the Toyota to plaintiff Genaro M.
Guillang.
2.
The sum of P50,000.00 for the death of Antero
Guillang plus P185,000.00 for his burial expenses, to the
heirs of Antero Guillang.
3.
For hospital and medical expenses as reflected in
Exhibits E, E-1 to E-30 to plaintiffs Genaro M. Guillang,
Jose Dignadice and Alvin Llanillo.
4.
The sum of P50,000.00 as moral damages for the heirs
of the deceased Antero Guillang.
5.
The sum of P50,000.00 as moral damages each to
plaintiffs Jose Dignadice, Alvin Llanillo and Genaro
Guillang.
6.

The sum of P50,000.00 as exemplary damages.

7.

The sum of P100,000.00 as and for attorneys fess.

8.

The costs of the suit.

SO ORDERED.[6]
Respondents appealed to the Court of Appeals.
On 3 June 2003, the Court of Appeals rendered its decision in favor of respondents. The
dispositive portion of the decision provides:

IN VIEW OF ALL THE FOREGOING, the appealed decision

is REVERSED and SET ASIDE. The complaint of the herein
appellees in Civil Case No. 95-73666 is DISMISSED, for lack of
merit. The appellants counterclaims in the instant case are
likewise DISMISSED. No pronouncement as to cost.
SO ORDERED.[7]
Petitioners filed a motion for reconsideration. On 23 March 2004, the Court of Appeals
denied the motion.
Hence, this petition.
The Ruling of the Regional Trial Court
According to the trial court, there is a presumption that a person driving a motor vehicle
has been negligent if at the time of the mishap, he was violating any traffic regulation.
[8]
In this case, the trial court found that the Traffic Accident Investigation Report
(report),[9] corroborated by the testimonies of the witnesses, showed that the truck
committed a traffic violation by executing a U-turn without signal lights. The trial court
also declared that Bedania violated Sections 45(b), [10] 48,[11] and 54[12] of Republic Act
No. 4136[13] when he executed the sudden U-turn. The trial court added that Bedania
violated another traffic rule when he abandoned the victims after the collision. [14] The
trial court concluded that Bedania was grossly negligent in his driving and held him
liable for damages.
Moreover, the trial court found that Bedania did not make the U-turn at an
intersection. According to the trial court, vehicles trying to maneuver to change
directions must seek an intersection where it is safer to maneuver and not recklessly
make a U-turn in a highway. The trial court said Bedania should have observed extreme
caution in making a U-turn because it was unexpected that a long cargo truck would
execute a U-turn along the highway.
The trial court also said that Bedanias gross negligence raised the legal presumption that
de Silva, as Bedanias employer, was negligent in the selection and supervision of his
employees.The trial court said that, under Articles 2176 [15] and 2180[16] of the Civil
Code, de Silvas liability was based on culpa aquiliana which holds the employer
primarily liable for tortious acts of his employees, subject to the defense that he
exercised all the diligence of a good father of a family in the selection and supervision
of his employees. The trial court ruled that de Silva failed to prove this defense and,
consequently, held him liable for damages.
The Ruling of the Court of Appeals

63

The Court of Appeals reversed the trial courts decision and said that the trial court
overlooked substantial facts and circumstances which, if properly considered, would
justify a different conclusion and alter the results of the case.
The Court of Appeals dismissed the testimonies of the witnesses and declared that they
were contrary to human observation, knowledge and experience. The Court of Appeals
also said that the following were the physical evidences in the case:

The Court of Appeals also relied on the testimony of Police Traffic Investigator Efren
Videna (Videna) that the car was running at a fast speed and overtook another vehicle
just before the collision occurred.[18] The Court of Appeals concluded that Genaro did
not see the truck as the other vehicle temporarily blocked his view of the
intersection. The Court of Appeals also gave weight to Videnas testimony that it was
normal for a ten-wheeler truck to make a U-turn on that part of the highway because the
entrance to Orchard Golf Course was spacious.[19]
The Issues

1.

It was not yet dark when the incident transpired;

Petitioners raise the following issues:

2.
The four-lane highway the appellees were cruising on
was wide, straight, dry, relatively plain and with no obstructions to
the drivers vision;
3.
The point of impact of the collision is on the lane where
the car was cruising and the car hit the gas tank of the truck located at
its right middle portion, which indicates that the truck had
alreadyproperly positioned itself and had already executed the Uturn before the impact occurred;
4.
Genaro Guillang was not able to stop the car in time and
the cars front portion was totally wrecked. This negates
appellees contention that they were traveling at a moderate speed; and
5.
The sheer size of the truck makes it improbable for the
said vehicle to negotiate a U-turn at a sudden and fast speed as
appellees vigorously suggest without toppling over on its side.
[17]
(Citationsomitted)
The Court of Appeals concluded that the collision was caused by Genaros
negligence. The Court of Appeals declared that the truck arrived at the intersection way
ahead of the car and had already executed the U-turn when the car, traveling at a fast
speed, hit the trucks side. The Court of Appeals added that considering the time and the
favorable visibility of the road and the road conditions, Genaro, if he was alert, had
ample time to react to the changing conditions of the road. The Court of Appeals found
no reason for Genaro not to be prudent because he was approaching an intersection and
there was a great possibility that vehicles would be traversing the intersection either
going to or from Orchard Golf Course. The Court of Appeals said Genaro should have
slowed down upon reaching the intersection. The Court of Appeals concluded that
Genaros failure to observe the necessary precautions was the proximate cause of
Anteros death and the injuries of the petitioners.

1.
Did the Court of Appeals decide a question of
substance in this case in a way probably not in accord with law
or with the applicable decisions of the Honorable Supreme Court?
2.
Did the Court of Appeals depart from the accepted
and usual course of judicial proceedings particularly when it revised,
and recast the findings of facts of the trial courtpertaining to
credibility of witnesses of which the trial court was at the vantage
point to evaluate?
3.
Did the Court of Appeals act with grave abuse
of discretion amounting to lack of jurisdiction when it rendered the
palpably questionable Court of Appeals Decision that tampered with
the findings of fact of the trial court for no justifiable reason?
4.
Is the Court of Appeals judgment and resolution reversing
the decision of the trial court supported by the evidence and the law
and jurisprudence applicable?[20]

The issue in this case is who is liable for the damages suffered by petitioners. The trial
court held Bedania and de Silva, as Bedanias employer, liable because the proximate
cause of the collision was the sudden U-turn executed by Bedania without any signal
lights. On the other hand, the Court of Appeals reversed the trial courts decision and
held Genaro liable because the proximate cause of the collision was Genaros failure to
stop the car despite seeing that Bedania was making a U-turn.
The Ruling of the Court
The principle is well-established that this Court is not a trier of facts. Therefore, in an
appeal by certiorari under Rule 45 of the Rules of Court, only questions of law may be
raised. The resolution of factual issues is the function of the lower courts whose

64

findings on these matters are received with respect and are, as a rule, binding on this
Court.[21]

records also showed that Bedania was arrested by the police at his barracks in Anabu,
Imus, Cavite and was turned over to the police only on 26 October 1994.[32]

However, this rule is subject to certain exceptions. One of these is when the findings of
the appellate court are contrary to those of the trial court. [22] Findings of fact of the trial
court and the Court of Appeals may also be set aside when such findings are not
supported by the evidence or where the lower courts conclusions are based on a
misapprehension of facts.[23] Such is the situation in this case and we shall re-examine
the facts and evidence presented before the lower courts.

Under Article 2185 of the Civil Code, unless there is proof to the contrary, a person
driving a vehicle is presumed negligent if at the time of the mishap, he was violating
any traffic regulation.

Article 2176 of the Civil Code provides that 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 relations between the parties,
is called a quasi-delict. To sustain a claim based on quasi-delict, the following requisites
must concur: (a) damage suffered by the plaintiff; (b) fault or negligence of defendant;
and (c) connection of cause and effect between the fault or negligence of defendant and
the damage incurred by the plaintiff.[24]
There is no dispute that petitioners suffered damages because of the collision. However,
the issues on negligence and proximate cause are disputed.

In this case, the report[33] showed that the truck, while making the U-turn, failed to
signal, a violation of traffic rules. The police records also stated that, after the collision,
Bedania escaped and abandoned the petitioners and his truck. [34] This is another
violation of a traffic regulation.[35] Therefore, the presumption arises that Bedania was
negligent at the time of the mishap.
The evidence presented in this case also does not support the conclusion of the Court of
Appeals that the truck had already executed the U-turn before the impact occurred. If
the truck had fully made the U-turn, it should have been hit on its rear. [36] If the truck
had already negotiated even half of the turn and is almost on the other side of the
highway, then the truck should have been hit in the middle portion of the trailer or cargo
compartment. But the evidence clearly shows, and the Court of Appeals even declared,
that the car hit the trucks gas tank, located at the trucks right middle portion, which
disproves the conclusion of the Court of Appeals that the truck had already executed the
U-turn when it was hit by the car.

On the Presumption of Negligence and Proximate Cause

Negligence is defined as the failure to observe for the protection of the interest of
another person that degree of care, precaution, and vigilance which the circumstances
justly demand, whereby such other person suffers injury. In Picart v. Smith,[25] we held
that the test of negligence is whether the defendant in doing the alleged negligent act
used that reasonable care and caution which an ordinary person would have used in the
same situation.
The conclusion of the Court of Appeals that Genaro was negligent is not supported by
the evidence on record. In ruling that Genaro was negligent, the Court of Appeals gave
weight and credence to Videnas testimony. However, we find that Videnas testimony
was inconsistent with the police records and report that he made on the day of the
collision. First, Videna testified that the car was running fast and overtook another
vehicle that already gave way to the truck. [26] But this was not indicated in either the
report or the police records. Moreover, if the car was speeding, there should have been
skid marks on the road when Genaro stepped on the brakes to avoid the collision. But
the sketch of the accident showed no skid marks made by the car.[27] Second, Videna
testified that the petitioners came from a drinking spree because he was able to smell
liquor.[28] But in the report,[29] Videna indicated that the condition of Genaro was
normal. Videna did not indicate in the report that Genaro had been drinking liquor or
that Genaro was obviously drunk. Third, Videna testified that when he arrived at the
scene, Bedania was inside his truck.[30] This contradicts the police records where Videna
stated that after the collision Bedania escaped and abandoned the victims. [31] The police

Moreover, the Court of Appeals said that the point of impact was on the lane where the
car was cruising. Therefore, the car had every right to be on that road and the car had
the right of way over the truck that was making a U-turn. Clearly, the truck encroached
upon the cars lane when it suddenly made the U-turn.
The Court of Appeals also concluded that Bedania made the U-turn at an
intersection. Again, this is not supported by the evidence on record. The police
sketch[37] does not indicate an intersection and only shows that there was a road leading
to the Orchard Golf Course near the place of the collision. Furthermore, U-turns are
generally not advisable particularly on major streets. [38] Contrary to Videnas testimony,
it is not normal for a truck to make a U-turn on a highway. We agree with the trial court
that if Bedania wanted to change direction, he should seek an intersection where it is
safer to maneuver the truck. Bedania should have also turned on his signal lights and
made sure that the highway was clear of vehicles from the opposite direction before
executing the U-turn.
The finding of the Court of Appeals that it was not yet dark when the collision occurred
is also not supported by the evidence on record. The report stated that the daylight
condition at the time of the collision was darkness.[39]
Contrary to the conclusion of the Court of Appeals, the sheer size of the truck does not
make it improbable for the truck to execute a sudden U-turn. The trial courts decision
did not state that the truck was traveling at a fast speed when it made the U-turn. The
trial court said the truck made a sudden U-turn, meaning the U-turn was made

65

unexpectedly and with no warning, as shown by the fact that the trucks signal lights
were not turned on.
Clearly, Bedanias negligence was the proximate cause of the collision which claimed
the life of Antero and injured the petitioners. Proximate cause is that which, in the
natural and continuous sequence, unbroken by any efficient, intervening cause,
produces the injury, and without which the result would not have occurred. [40] The cause
of the collision is traceable to the negligent act of Bedania for if the U-turn was
executed with the proper precaution, the mishap in all probability would not have
happened. The sudden U-turn of the truck without signal lights posed a serious risk to
oncoming motorists. Bedania failed to prevent or minimize that risk. The trucks sudden
U-turn triggered a series of events that led to the collision and, ultimately, to the death
of Antero and the injuries of petitioners.
We agree with the trial court that de Silva, as Bedanias employer, is also liable for the
damages suffered by petitioners. De Silva failed to prove that he exercised all the
diligence of a good father of a family in the selection and supervision of his employees.
On the Award of Damages and Attorneys Fees
According to prevailing jurisprudence, civil indemnity for death caused by a quasidelict is pegged at P50,000.[41] Moral damages in the amount of P50,000 is also awarded
to the heirs of the deceased taking into consideration the pain and anguish they suffered.
[42]
Bienvenido Guillang (Bienvenido), Anteros son, testified that Sofia, Anteros wife
and his mother, became depressed after Anteros death and that Sofia died a year after.
[43]
Bienvenido also testified on the pain and anguish their family suffered as a
consequence of their fathers death. [44] We sustain the trial courts award of P50,000 as
indemnity for death and P50,000 as moral damages to the heirs of Antero.

We affirm the trial courts award of P508,566.03 for the repair of the car. The Court
notes that there is no dispute that Genaro was driving a brand new Toyota Corolla GLI
sedan and that, after the collision, the car was a total wreck. In this case, the repair order
presented by Genaro is sufficient proof of the damages sustained by the car.[54]
Moral damages may be recovered in quasi-delicts causing physical injuries. [55] However,
in accordance with prevailing jurisprudence, we reduce the award of moral damages
fromP50,000 to P30,000 each to Llanillo, Dignadice, and Genaro since they only
suffered physical injuries brought about by the collision.[56]
In quasi-delicts, exemplary damages may be granted if the defendant acted with gross
negligence.[57] While the amount of exemplary damages need not be proved, the plaintiff
must show that he is entitled to moral, temperate or compensatory damages before the
court may consider the question of whether or not exemplary damages should be
awarded.[58] In this case, Bedania was grossly negligent in suddenly making a U-turn in
the highway without signal lights. To serve as an example for the public good, we affirm
the trial courts award of exemplary damages in the amount of P50,000.
Finally, we affirm the trial courts award of attorneys fees in the amount
of P100,000. Under Article 2208 of the Civil Code, attorneys fees may be recovered
when, as in this case, exemplary damages are awarded.
WHEREFORE, we REVERSE the 3 June 2003 Decision and 23 March 2004
Resolution
of
the
Court
of
Appeals
in
CA-G.R.
CV
No.
69289. We REINSTATE with MODIFICATIONSthe 5 December 2000 Decision of
the Regional Trial Court, Branch 30, Manila. We ORDER Rodolfo Bedania and
Rodolfo de Silva, jointly and severally, to pay the following amounts:
1.

As to funeral and burial expenses, the court can only award such amount as are
supported by proper receipts.[45] In this case, petitioners proved funeral and burial
expenses of P55,000 as evidenced by Receipt No. 1082,[46] P65,000 as evidenced by
Receipt No. 1146[47] and P15,000 as evidenced by Receipt No. 1064,[48] all issued by the
Manila South Cemetery Association, Inc., aggregating P135,000. We reduce the trial
courts award of funeral and burial expenses from P185,000 to P135,000.

Funeral and Burial Expenses of P135,000 to the heirs of

Antero Guillang;
2.
Hospitalization Expenses of P27,000.98 to the heirs of Antero
Guillang, P10,881.60 to Alvin Llanillo, P5,436.77 to Jose Dignadice,
and P300 to Genaro Guillang; and
3.
Moral damages of P30,000 each to Alvin Llanillo, Jose Dignadice, and
Genaro Guillang.
SO ORDERED.

As to hospitalization expenses, only substantiated and proven expenses, or those that

appear to have been genuinely incurred in connection with the hospitalization of the
victims will be recognized in court. [49] In this case, the trial court did not specify the
amount of hospitalization expenses to be awarded to the petitioners. Since petitioners
presented receipts for hospitalization expenses during the trial, we will determine the
proper amounts to be awarded to each of them. We award hospitalization expenses
of P27,000.98 to the heirs of Antero,[50]P10,881.60 to Llanillo,[51] P5,436.77 to
Dignadice,[52] and P300 to Genaro[53] because these are the amounts duly substantiated
by receipts.

66

FIRST DIVISION
G.R. No. 157917
August 29, 2012
SPOUSES
TEODORO1 and
NANETTE

PERENA, Petitioners,
vs.
SPOUSES TERESITA PHILIPPINE NICOLAS and L. ZARATE, NATIONAL
RAILWAYS, and the COURT OF APPEALS Respondents.
DECISION
BERSAMIN, J.:

The operator of a. school bus service is a common carrier in the eyes of the
law. He is bound to observe extraordinary diligence in the conduct of his business. He is
presumed to be negligent when death occurs to a passenger. His liability may include
indemnity for loss of earning capacity even if the deceased passenger may only be an
unemployed high school student at the time of the accident.
The Case
By petition for review on certiorari, Spouses Teodoro and Nanette Perefia
(Perefias) appeal the adverse decision promulgated on November 13, 2002, by which
the Court of Appeals (CA) affirmed with modification the decision rendered on
December 3, 1999 by the Regional Trial Court (RTC), Branch 260, in Paraaque City
that had decreed them jointly and severally liable with Philippine National Railways
(PNR), their co-defendant, to Spouses Nicolas and Teresita Zarate (Zarates) for the
death of their 15-year old son, Aaron John L. Zarate (Aaron), then a high school student
of Don Bosco Technical Institute (Don Bosco).
Antecedents
The Pereas were engaged in the business of transporting students from their
respective residences in Paraaque City to Don Bosco in Pasong Tamo, Makati City,
and back. In their business, the Pereas used a KIA Ceres Van (van) with Plate No. PYA
896, which had the capacity to transport 14 students at a time, two of whom would be
seated in the front beside the driver, and the others in the rear, with six students on either
side. They employed Clemente Alfaro (Alfaro) as driver of the van.
In June 1996, the Zarates contracted the Pereas to transport Aaron to and from
Don Bosco. On August 22, 1996, as on previous school days, the van picked Aaron up
around 6:00 a.m. from the Zarates residence. Aaron took his place on the left side of the
van near the rear door. The van, with its air-conditioning unit turned on and the stereo
playing loudly, ultimately carried all the 14 student riders on their way to Don Bosco.
Considering that the students were due at Don Bosco by 7:15 a.m., and that they were
already running late because of the heavy vehicular traffic on the South Superhighway,
Alfaro took the van to an alternate route at about 6:45 a.m. by traversing the narrow
path underneath the Magallanes Interchange that was then commonly used by Makatibound vehicles as a short cut into Makati. At the time, the narrow path was marked by
piles of construction materials and parked passenger jeepneys, and the railroad crossing
in the narrow path had no railroad warning signs, or watchmen, or other responsible
persons manning the crossing. In fact, the bamboo barandilla was up, leaving the
railroad crossing open to traversing motorists.
At about the time the van was to traverse the railroad crossing, PNR Commuter
No. 302 (train), operated by Jhonny Alano (Alano), was in the vicinity of the
Magallanes Interchange travelling northbound. As the train neared the railroad crossing,
Alfaro drove the van eastward across the railroad tracks, closely tailing a large
passenger bus. His view of the oncoming train was blocked because he overtook the
passenger bus on its left side. The train blew its horn to warn motorists of its approach.
When the train was about 50 meters away from the passenger bus and the van, Alano
applied the ordinary brakes of the train. He applied the emergency brakes only when he
saw that a collision was imminent. The passenger bus successfully crossed the railroad
tracks, but the van driven by Alfaro did not. The train hit the rear end of the van, and the
impact threw nine of the 12 students in the rear, including Aaron, out of the van. Aaron

67

landed in the path of the train, which dragged his body and severed his head,
instantaneously killing him. Alano fled the scene on board the train, and did not wait for
the police investigator to arrive.
Devastated by the early and unexpected death of Aaron, the Zarates
commenced this action for damages against Alfaro, the Pereas, PNR and Alano. The
Pereas and PNR filed their respective answers, with cross-claims against each other,
but Alfaro could not be served with summons.
At the pre-trial, the parties stipulated on the facts and issues, viz:
A. FACTS:
(1) That spouses Zarate were the legitimate parents of Aaron John L. Zarate;
(2) Spouses Zarate engaged the services of spouses Perea for the adequate
and safe transportation carriage of the former spouses' son from their residence in
Paraaque to his school at the Don Bosco Technical Institute in Makati City;
(3) During the effectivity of the contract of carriage and in the implementation
thereof, Aaron, the minor son of spouses Zarate died in connection with a
vehicular/train collision which occurred while Aaron was riding the contracted carrier
Kia Ceres van of spouses Perea, then driven and operated by the latter's
employee/authorized driver Clemente Alfaro, which van collided with the train of PNR,
at around 6:45 A.M. of August 22, 1996, within the vicinity of the Magallanes
Interchange in Makati City, Metro Manila, Philippines;
(4) At the time of the vehicular/train collision, the subject site of the
vehicular/train collision was a railroad crossing used by motorists for crossing the
railroad tracks;
(5) During the said time of the vehicular/train collision, there were no
appropriate and safety warning signs and railings at the site commonly used for railroad
crossing;
(6) At the material time, countless number of Makati bound public utility and
private vehicles used on a daily basis the site of the collision as an alternative route and
short-cut to Makati;
(7) The train driver or operator left the scene of the incident on board the
commuter train involved without waiting for the police investigator;
(8) The site commonly used for railroad crossing by motorists was not in fact
intended by the railroad operator for railroad crossing at the time of the vehicular
collision;
(9) PNR received the demand letter of the spouses Zarate;
(10) PNR refused to acknowledge any liability for the vehicular/train
collision;
(11) The eventual closure of the railroad crossing alleged by PNR was an
internal arrangement between the former and its project contractor; and
(12) The site of the vehicular/train collision was within the vicinity or less
than 100 meters from the Magallanes station of PNR.
B. ISSUES
(1) Whether or not defendant-driver of the van is, in the performance of his
functions, liable for negligence constituting the proximate cause of the vehicular
collision, which resulted in the death of plaintiff spouses' son;

(2) Whether or not the defendant spouses Perea being the employer of
defendant Alfaro are liable for any negligence which may be attributed to defendant
Alfaro;
(3) Whether or not defendant Philippine National Railways being the operator
of the railroad system is liable for negligence in failing to provide adequate safety
warning signs and railings in the area commonly used by motorists for railroad
crossings, constituting the proximate cause of the vehicular collision which resulted in
the death of the plaintiff spouses' son;
(4) Whether or not defendant spouses Perea are liable for breach of the
contract of carriage with plaintiff-spouses in failing to provide adequate and safe
transportation for the latter's son;
(5) Whether or not defendants spouses are liable for actual, moral damages,
exemplary damages, and attorney's fees;
(6) Whether or not defendants spouses Teodorico and Nanette Perea observed
the diligence of employers and school bus operators;
(7) Whether or not defendant-spouses are civilly liable for the accidental death
of Aaron John Zarate;
(8) Whether or not defendant PNR was grossly negligent in operating the
commuter train involved in the accident, in allowing or tolerating the motoring public to
cross, and its failure to install safety devices or equipment at the site of the accident for
the protection of the public;
(9) Whether or not defendant PNR should be made to reimburse defendant
spouses for any and whatever amount the latter may be held answerable or which they
may be ordered to pay in favor of plaintiffs by reason of the action;
(10) Whether or not defendant PNR should pay plaintiffs directly and fully on
the amounts claimed by the latter in their Complaint by reason of its gross negligence;
(11) Whether or not defendant PNR is liable to defendants spouses for actual,
moral and exemplary damages and attorney's fees.2
The Zarates claim against the Pereas was upon breach of the contract of
carriage for the safe transport of Aaron; but that against PNR was based on quasi-delict
under Article 2176, Civil Code.
In their defense, the Pereas adduced evidence to show that they had exercised
the diligence of a good father of the family in the selection and supervision of Alfaro, by
making sure that Alfaro had been issued a drivers license and had not been involved in
any vehicular accident prior to the collision; that their own son had taken the van daily;
and that Teodoro Perea had sometimes accompanied Alfaro in the vans trips
transporting the students to school.
For its part, PNR tended to show that the proximate cause of the collision had
been the reckless crossing of the van whose driver had not first stopped, looked and
listened; and that the narrow path traversed by the van had not been intended to be a
railroad crossing for motorists.
Ruling of the RTC
On December 3, 1999, the RTC rendered its decision,3 disposing:
WHEREFORE, premises considered, judgment is hereby rendered in favor of
the plaintiff and against the defendants ordering them to jointly and severally pay the
plaintiffs as follows:

68

(1) (for) the death of Aaron- Php50,000.00;

(2) Actual damages in the amount of Php100,000.00;
(3) For the loss of earning capacity- Php2,109,071.00;
(4) Moral damages in the amount of Php4,000,000.00;
(5) Exemplary damages in the amount of Php1,000,000.00;
(6) Attorneys fees in the amount of Php200,000.00; and
(7) Cost of suit.
SO ORDERED.
On June 29, 2000, the RTC denied the Pereas motion for
reconsideration,4 reiterating that the cooperative gross negligence of the Pereas and
PNR had caused the collision that led to the death of Aaron; and that the damages
awarded to the Zarates were not excessive, but based on the established circumstances.
The CAs Ruling
Both the Pereas and PNR appealed (C.A.-G.R. CV No. 68916).
PNR assigned the following errors, to wit:5
The Court a quo erred in:
1. In finding the defendant-appellant Philippine National Railways jointly and
severally liable together with defendant-appellants spouses Teodorico and Nanette
Perea and defendant-appellant Clemente Alfaro to pay plaintiffs-appellees for the death
of Aaron Zarate and damages.
2. In giving full faith and merit to the oral testimonies of plaintiffs-appellees
witnesses despite overwhelming documentary evidence on record, supporting the case
of defendants-appellants Philippine National Railways.
The Pereas ascribed the following errors to the RTC, namely:
The trial court erred in finding defendants-appellants jointly and severally
liable for actual, moral and exemplary damages and attorneys fees with the other
defendants.
The trial court erred in dismissing the cross-claim of the appellants Pereas
against the Philippine National Railways and in not holding the latter and its train driver
primarily responsible for the incident.
The trial court erred in awarding excessive damages and attorneys fees.
The trial court erred in awarding damages in the form of deceaseds loss of
earning capacity in the absence of sufficient basis for such an award.
On November 13, 2002, the CA promulgated its decision, affirming the
findings of the RTC, but limited the moral damages to P 2,500,000.00; and deleted the
attorneys fees because the RTC did not state the factual and legal bases, to wit:6
WHEREFORE, premises considered, the assailed Decision of the Regional
Trial Court, Branch 260 of Paraaque City is AFFIRMED with the modification that the
award of Actual Damages is reduced to P59,502.76; Moral Damages is reduced
to P 2,500,000.00; and the award for Attorneys Fees is Deleted.
SO ORDERED.
The CA upheld the award for the loss of Aarons earning capacity, taking
cognizance of the ruling in Cariaga v. Laguna Tayabas Bus Company and Manila
Railroad Company,7 wherein the Court gave the heirs of Cariaga a sum representing the
loss of the deceaseds earning capacity despite Cariaga being only a medical student at

the time of the fatal incident. Applying the formula adopted in the American Expectancy
Table of Mortality:
2/3 x (80 - age at the time of death) = life expectancy
the CA determined the life expectancy of Aaron to be 39.3 years upon
reckoning his life expectancy from age of 21 (the age when he would have graduated
from college and started working for his own livelihood) instead of 15 years (his age
when he died). Considering that the nature of his work and his salary at the time of
Aarons death were unknown, it used the prevailing minimum wage of P 280.00/day to
compute Aarons gross annual salary to be P110,716.65, inclusive of the thirteenth
month pay. Multiplying this annual salary by Aarons life expectancy of 39.3 years, his
gross income would aggregate to P 4,351,164.30, from which his estimated expenses in
the sum of P2,189,664.30 was deducted to finally arrive at P 2,161,500.00 as net
income. Due to Aarons computed net income turning out to be higher than the amount
claimed by the Zarates, only P 2,109,071.00, the amount expressly prayed for by them,
was granted.
On April 4, 2003, the CA denied the Pereas motion for reconsideration.8
Issues
In this appeal, the Pereas list the following as the errors committed by the CA,
to wit:
I. The lower court erred when it upheld the trial courts decision holding the
petitioners jointly and severally liable to pay damages with Philippine National
Railways and dismissing their cross-claim against the latter.
II. The lower court erred in affirming the trial courts decision awarding
damages for loss of earning capacity of a minor who was only a high school student at
the time of his death in the absence of sufficient basis for such an award.
III. The lower court erred in not reducing further the amount of damages
awarded, assuming petitioners are liable at all.
Ruling
The petition has no merit.
1.
Were
the
Pereas
and
PNR
jointly
and severally liable for damages?
The Zarates brought this action for recovery of damages against both the
Pereas and the PNR, basing their claim against the Pereas on breach of contract of
carriage and against the PNR on quasi-delict.
The RTC found the Pereas and the PNR negligent. The CA affirmed the
findings.
We concur with the CA.
To start with, the Pereas defense was that they exercised the diligence of a
good father of the family in the selection and supervision of Alfaro, the van driver, by
seeing to it that Alfaro had a drivers license and that he had not been involved in any
vehicular accident prior to the fatal collision with the train; that they even had their own
son travel to and from school on a daily basis; and that Teodoro Perea himself
sometimes accompanied Alfaro in transporting the passengers to and from school. The
RTC gave scant consideration to such defense by regarding such defense as
inappropriate in an action for breach of contract of carriage.

69

We find no adequate cause to differ from the conclusions of the lower courts
that the Pereas operated as a common carrier; and that their standard of care was
extraordinary diligence, not the ordinary diligence of a good father of a family.
Although in this jurisdiction the operator of a school bus service has been
usually regarded as a private carrier,9primarily because he only caters to some specific
or privileged individuals, and his operation is neither open to the indefinite public nor
for public use, the exact nature of the operation of a school bus service has not been
finally settled. This is the occasion to lay the matter to rest.
A carrier is a person or corporation who undertakes to transport or convey
goods or persons from one place to another, gratuitously or for hire. The carrier is
classified either as a private/special carrier or as a common/public carrier. 10 A private
carrier is one who, without making the activity a vocation, or without holding himself or
itself out to the public as ready to act for all who may desire his or its services,
undertakes, by special agreement in a particular instance only, to transport goods or
persons from one place to another either gratuitously or for hire. 11 The provisions on
ordinary contracts of the Civil Code govern the contract of private carriage.The
diligence required of a private carrier is only ordinary, that is, the diligence of a good
father of the family. In contrast, a common carrier is a person, corporation, firm or
association engaged in the business of carrying or transporting passengers or goods or
both, by land, water, or air, for compensation, offering such services to the
public.12 Contracts of common carriage are governed by the provisions on common
carriers of the Civil Code, the Public Service Act, 13 and other special laws relating to
transportation. A common carrier is required to observe extraordinary diligence, and is
presumed to be at fault or to have acted negligently in case of the loss of the effects of
passengers, or the death or injuries to passengers.14
In relation to common carriers, the Court defined public use in the following
terms in United States v. Tan Piaco,15viz:
"Public use" is the same as "use by the public". The essential feature of the
public use is not confined to privileged individuals, but is open to the indefinite public.
It is this indefinite or unrestricted quality that gives it its public character. In
determining whether a use is public, we must look not only to the character of the
business to be done, but also to the proposed mode of doing it. If the use is merely
optional with the owners, or the public benefit is merely incidental, it is not a public use,
authorizing the exercise of the jurisdiction of the public utility commission. There must
be, in general, a right which the law compels the owner to give to the general public. It
is not enough that the general prosperity of the public is promoted. Public use is not
synonymous with public interest. The true criterion by which to judge the character of
the use is whether the public may enjoy it by right or only by permission.
In De Guzman v. Court of Appeals, 16 the Court noted that Article 1732 of the
Civil Code avoided any distinction between a person or an enterprise offering
transportation on a regular or an isolated basis; and has not distinguished a carrier
offering his services to the general public, that is, the general community or population,
from one offering his services only to a narrow segment of the general population.
Nonetheless, the concept of a common carrier embodied in Article 1732 of the
Civil Code coincides neatly with the notion of public service under the Public Service

Act, which supplements the law on common carriers found in the Civil Code. Public
service, according to Section 13, paragraph (b) of the Public Service Act, includes:
x x x every person that now or hereafter may own, operate, manage, or control
in the Philippines, for hire or compensation, with general or limited clientle, whether
permanent or occasional, and done for the general business purposes, any common
carrier, railroad, street railway, traction railway, subway motor vehicle, either for freight
or passenger, or both, with or without fixed route and whatever may be its classification,
freight or carrier service of any class, express service, steamboat, or steamship line,
pontines, ferries and water craft, engaged in the transportation of passengers or freight
or both, shipyard, marine repair shop, ice-refrigeration plant, canal, irrigation system,
gas, electric light, heat and power, water supply and power petroleum, sewerage system,
wire or wireless communications systems, wire or wireless broadcasting stations and
other similar public services. x x x.17
Given the breadth of the aforequoted characterization of a common carrier, the
Court has considered as common carriers pipeline operators,18 custom brokers and
warehousemen,19 and barge operators20 even if they had limited clientle.
As all the foregoing indicate, the true test for a common carrier is not the
quantity or extent of the business actually transacted, or the number and character of the
conveyances used in the activity, but whether the undertaking is a part of the activity
engaged in by the carrier that he has held out to the general public as his business or
occupation. If the undertaking is a single transaction, not a part of the general business
or occupation engaged in, as advertised and held out to the general public, the individual
or the entity rendering such service is a private, not a common, carrier. The question
must be determined by the character of the business actually carried on by the carrier,
not by any secret intention or mental reservation it may entertain or assert when charged
with the duties and obligations that the law imposes.21
Applying these considerations to the case before us, there is no question that
the Pereas as the operators of a school bus service were: (a) engaged in transporting
passengers generally as a business, not just as a casual occupation; (b) undertaking to
carry passengers over established roads by the method by which the business was
conducted; and (c) transporting students for a fee. Despite catering to a limited clientle,
the Pereas operated as a common carrier because they held themselves out as a ready
transportation indiscriminately to the students of a particular school living within or
near where they operated the service and for a fee.
The common carriers standard of care and vigilance as to the safety of the
passengers is defined by law. Given the nature of the business and for reasons of public
policy, the common carrier is bound "to observe extraordinary diligence in the vigilance
over the goods and for the safety of the passengers transported by them, according to all
the circumstances of each case."22 Article 1755 of the Civil Code specifies that the
common carrier should "carry the passengers safely as far as human care and foresight
can provide, using the utmost diligence of very cautious persons, with a due regard for
all the circumstances." To successfully fend off liability in an action upon the death or
injury to a passenger, the common carrier must prove his or its observance of that
extraordinary diligence; otherwise, the legal presumption that he or it was at fault or
acted negligently would stand.23 No device, whether by stipulation, posting of notices,

70

statements on tickets, or otherwise, may dispense with or lessen the responsibility of the
common carrier as defined under Article 1755 of the Civil Code. 24
And, secondly, the Pereas have not presented any compelling defense or
reason by which the Court might now reverse the CAs findings on their liability. On the
contrary, an examination of the records shows that the evidence fully supported the
findings of the CA.
As earlier stated, the Pereas, acting as a common carrier, were already
presumed to be negligent at the time of the accident because death had occurred to their
passenger.25 The presumption of negligence, being a presumption of law, laid the burden
of evidence on their shoulders to establish that they had not been negligent. 26 It was the
law no less that required them to prove their observance of extraordinary diligence in
seeing to the safe and secure carriage of the passengers to their destination. Until they
did so in a credible manner, they stood to be held legally responsible for the death of
Aaron and thus to be held liable for all the natural consequences of such death.
There is no question that the Pereas did not overturn the presumption of their
negligence by credible evidence. Their defense of having observed the diligence of a
good father of a family in the selection and supervision of their driver was not legally
sufficient. According to Article 1759 of the Civil Code, their liability as a common
carrier did not cease upon proof that they exercised all the diligence of a good father of
a family in the selection and supervision of their employee. This was the reason why the
RTC treated this defense of the Pereas as inappropriate in this action for breach of
contract of carriage.
The Pereas were liable for the death of Aaron despite the fact that their driver
might have acted beyond the scope of his authority or even in violation of the orders of
the common carrier.27 In this connection, the records showed their drivers actual
negligence. There was a showing, to begin with, that their driver traversed the railroad
tracks at a point at which the PNR did not permit motorists going into the Makati area to
cross the railroad tracks. Although that point had been used by motorists as a shortcut
into the Makati area, that fact alone did not excuse their driver into taking that route. On
the other hand, with his familiarity with that shortcut, their driver was fully aware of the
risks to his passengers but he still disregarded the risks. Compounding his lack of care
was that loud music was playing inside the air-conditioned van at the time of the
accident. The loudness most probably reduced his ability to hear the warning horns of
the oncoming train to allow him to correctly appreciate the lurking dangers on the
railroad tracks. Also, he sought to overtake a passenger bus on the left side as both
vehicles traversed the railroad tracks. In so doing, he lost his view of the train that was
then coming from the opposite side of the passenger bus, leading him to miscalculate
his chances of beating the bus in their race, and of getting clear of the train. As a result,
the bus avoided a collision with the train but the van got slammed at its rear, causing the
fatality. Lastly, he did not slow down or go to a full stop before traversing the railroad
tracks despite knowing that his slackening of speed and going to a full stop were in
observance of the right of way at railroad tracks as defined by the traffic laws and
regulations.28He thereby violated a specific traffic regulation on right of way, by virtue
of which he was immediately presumed to be negligent.29
The omissions of care on the part of the van driver constituted
negligence,30 which, according to Layugan v. Intermediate Appellate Court, 31 is "the

omission to do something which a reasonable man, guided by those considerations

which ordinarily regulate the conduct of human affairs, would do, or the doing of
something which a prudent and reasonable man would not do, 32 or as Judge Cooley
defines it, (t)he failure to observe for the protection of the interests of another person,
that degree of care, precaution, and vigilance which the circumstances justly demand,
whereby such other person suffers injury."33
The test by which to determine the existence of negligence in a particular case
has been aptly stated in the leading case of Picart v. Smith,34 thuswise:
The test by which to determine the existence of negligence in a particular case
may be stated as follows: Did the defendant in doing the alleged negligent act use that
reasonable care and caution which an ordinarily prudent person would have used in the
same situation? If not, then he is guilty of negligence. The law here in effect adopts the
standard supposed to be supplied by the imaginary conduct of the discreet paterfamilias
of the Roman law. The existence of negligence in a given case is not determined by
reference to the personal judgment of the actor in the situation before him. The law
considers what would be reckless, blameworthy, or negligent in the man of ordinary
intelligence and prudence and determines liability by that.
The question as to what would constitute the conduct of a prudent man in a
given situation must of course be always determined in the light of human experience
and in view of the facts involved in the particular case. Abstract speculation cannot here
be of much value but this much can be profitably said: Reasonable men govern their
conduct by the circumstances which are before them or known to them. They are not,
and are not supposed to be, omniscient of the future. Hence they can be expected to take
care only when there is something before them to suggest or warn of danger. Could a
prudent man, in the case under consideration, foresee harm as a result of the course
actually pursued? If so, it was the duty of the actor to take precautions to guard against
that harm. Reasonable foresight of harm, followed by the ignoring of the suggestion
born of this prevision, is always necessary before negligence can be held to exist. Stated
in these terms, the proper criterion for determining the existence of negligence in a
given case is this: Conduct is said to be negligent when a prudent man in the position of
the tortfeasor would have foreseen that an effect harmful to another was sufficiently
probable to warrant his foregoing the conduct or guarding against its consequences.
(Emphasis supplied)
Pursuant to the Picart v. Smith test of negligence, the Pereas driver was
entirely negligent when he traversed the railroad tracks at a point not allowed for a
motorists crossing despite being fully aware of the grave harm to be thereby caused to
his passengers; and when he disregarded the foresight of harm to his passengers by
overtaking the bus on the left side as to leave himself blind to the approach of the
oncoming train that he knew was on the opposite side of the bus.
Unrelenting, the Pereas cite Phil. National Railways v. Intermediate Appellate
Court,35 where the Court held the PNR solely liable for the damages caused to a
passenger bus and its passengers when its train hit the rear end of the bus that was then
traversing the railroad crossing. But the circumstances of that case and this one share no
similarities. In Philippine National Railways v. Intermediate Appellate Court, no
evidence of contributory negligence was adduced against the owner of the bus. Instead,
it was the owner of the bus who proved the exercise of extraordinary diligence by

71

preponderant evidence. Also, the records are replete with the showing of negligence on
the part of both the Pereas and the PNR. Another distinction is that the passenger bus
in Philippine National Railways v. Intermediate Appellate Court was traversing the
dedicated railroad crossing when it was hit by the train, but the Pereas school van
traversed the railroad tracks at a point not intended for that purpose.
At any rate, the lower courts correctly held both the Pereas and the PNR
"jointly and severally" liable for damages arising from the death of Aaron. They had
been impleaded in the same complaint as defendants against whom the Zarates had the
right to relief, whether jointly, severally, or in the alternative, in respect to or arising out
of the accident, and questions of fact and of law were common as to the
Zarates.36 Although the basis of the right to relief of the Zarates (i.e., breach of contract
of carriage) against the Pereas was distinct from the basis of the Zarates right to relief
against the PNR (i.e., quasi-delict under Article 2176, Civil Code), they nonetheless
could be held jointly and severally liable by virtue of their respective negligence
combining to cause the death of Aaron. As to the PNR, the RTC rightly found the PNR
also guilty of negligence despite the school van of the Pereas traversing the railroad
tracks at a point not dedicated by the PNR as a railroad crossing for pedestrians and
motorists, because the PNR did not ensure the safety of others through the placing of
crossbars, signal lights, warning signs, and other permanent safety barriers to prevent
vehicles or pedestrians from crossing there. The RTC observed that the fact that a
crossing guard had been assigned to man that point from 7 a.m. to 5 p.m. was a good
indicium that the PNR was aware of the risks to others as well as the need to control the
vehicular and other traffic there. Verily, the Pereas and the PNR were joint tortfeasors.
2.
Was
the
indemnity
for
loss
of
Aarons earning capacity proper?
The RTC awarded indemnity for loss of Aarons earning capacity. Although
agreeing with the RTC on the liability, the CA modified the amount. Both lower courts
took into consideration that Aaron, while only a high school student, had been enrolled
in one of the reputable schools in the Philippines and that he had been a normal and
able-bodied child prior to his death. The basis for the computation of Aarons earning
capacity was not what he would have become or what he would have wanted to be if not
for his untimely death, but the minimum wage in effect at the time of his death.
Moreover, the RTCs computation of Aarons life expectancy rate was not reckoned
from his age of 15 years at the time of his death, but on 21 years, his age when he would
have graduated from college.
We find the considerations taken into account by the lower courts to be
reasonable and fully warranted.
Yet, the Pereas submit that the indemnity for loss of earning capacity was
speculative and unfounded.1wphi1 They cited People v. Teehankee, Jr., 37 where the
Court deleted the indemnity for victim Jussi Leinos loss of earning capacity as a pilot
for being speculative due to his having graduated from high school at the International
School in Manila only two years before the shooting, and was at the time of the
shooting only enrolled in the first semester at the Manila Aero Club to pursue his
ambition to become a professional pilot. That meant, according to the Court, that he was
for all intents and purposes only a high school graduate.

We reject the Pereas submission.

First of all, a careful perusal of the Teehankee, Jr. case shows that the situation
there of Jussi Leino was not akin to that of Aaron here. The CA and the RTC were not
speculating that Aaron would be some highly-paid professional, like a pilot (or, for that
matter, an engineer, a physician, or a lawyer). Instead, the computation of Aarons
earning capacity was premised on him being a lowly minimum wage earner despite his
being then enrolled at a prestigious high school like Don Bosco in Makati, a fact that
would have likely ensured his success in his later years in life and at work.
And, secondly, the fact that Aaron was then without a history of earnings
should not be taken against his parents and in favor of the defendants whose negligence
not only cost Aaron his life and his right to work and earn money, but also deprived his
parents of their right to his presence and his services as well. Our law itself states that
the loss of the earning capacity of the deceased shall be the liability of the guilty party
in favor of the heirs of the deceased, and shall in every case be assessed and awarded by
the court "unless the deceased on account of permanent physical disability not caused
by the defendant, had no earning capacity at the time of his death." 38 Accordingly, we
emphatically hold in favor of the indemnification for Aarons loss of earning capacity
despite him having been unemployed, because compensation of this nature is awarded
not for loss of time or earnings but for loss of the deceaseds power or ability to earn
money.39
This favorable treatment of the Zarates claim is not unprecedented. In Cariaga
v. Laguna Tayabas Bus Company and Manila Railroad Company, 40 fourth-year medical
student Edgardo Carriagas earning capacity, although he survived the accident but his
injuries rendered him permanently incapacitated, was computed to be that of the
physician that he dreamed to become. The Court considered his scholastic record
sufficient to justify the assumption that he could have finished the medical course and
would have passed the medical board examinations in due time, and that he could have
possibly earned a modest income as a medical practitioner. Also, in People v.
Sanchez,41the Court opined that murder and rape victim Eileen Sarmienta and murder
victim Allan Gomez could have easily landed good-paying jobs had they graduated in
due time, and that their jobs would probably pay them high monthly salaries
from P 10,000.00 to P 15,000.00 upon their graduation. Their earning capacities were
computed at rates higher than the minimum wage at the time of their deaths due to their
being already senior agriculture students of the University of the Philippines in Los
Baos, the countrys leading educational institution in agriculture.
3.
Were the amounts of damages excessive?
The Pereas plead for the reduction of the moral and exemplary damages
awarded to the Zarates in the respective amounts of P 2,500,000.00 and P 1,000,000.00
on the ground that such amounts were excessive.
The plea is unwarranted.
The moral damages of P 2,500,000.00 were really just and reasonable under
the established circumstances of this case because they were intended by the law to
assuage the Zarates deep mental anguish over their sons unexpected and violent death,
and their moral shock over the senseless accident. That amount would not be too much,
considering that it would help the Zarates obtain the means, diversions or amusements

72

that would alleviate their suffering for the loss of their child. At any rate, reducing the
amount as excessive might prove to be an injustice, given the passage of a long time
from when their mental anguish was inflicted on them on August 22, 1996.
Anent the P 1,000,000.00 allowed as exemplary damages, we should not
reduce the amount if only to render effective the desired example for the public good.
As a common carrier, the Pereas needed to be vigorously reminded to observe their
duty to exercise extraordinary diligence to prevent a similarly senseless accident from
happening again. Only by an award of exemplary damages in that amount would suffice
to instill in them and others similarly situated like them the ever-present need for greater
and constant vigilance in the conduct of a business imbued with public interest.
WHEREFORE,
we DENY the
petition
for
review
on certiorari; AFFIRM the decision promulgated on November 13, 2002;
and ORDER the petitioners to pay the costs of suit.
SO ORDERED.
FIRST DIVISION
G.R. No. 157917
August 29, 2012
SPOUSES
TEODORO1 and
NANETTE
PERENA, Petitioners,
vs.
SPOUSES TERESITA PHILIPPINE NICOLAS and L. ZARATE, NATIONAL
RAILWAYS, and the COURT OF APPEALS Respondents.
DECISION
BERSAMIN, J.:
The operator of a. school bus service is a common carrier in the eyes of the
law. He is bound to observe extraordinary diligence in the conduct of his business. He is
presumed to be negligent when death occurs to a passenger. His liability may include
indemnity for loss of earning capacity even if the deceased passenger may only be an
unemployed high school student at the time of the accident.
The Case
By petition for review on certiorari, Spouses Teodoro and Nanette Perefia
(Perefias) appeal the adverse decision promulgated on November 13, 2002, by which
the Court of Appeals (CA) affirmed with modification the decision rendered on
December 3, 1999 by the Regional Trial Court (RTC), Branch 260, in Paraaque City
that had decreed them jointly and severally liable with Philippine National Railways
(PNR), their co-defendant, to Spouses Nicolas and Teresita Zarate (Zarates) for the
death of their 15-year old son, Aaron John L. Zarate (Aaron), then a high school student
of Don Bosco Technical Institute (Don Bosco).
Antecedents
The Pereas were engaged in the business of transporting students from their
respective residences in Paraaque City to Don Bosco in Pasong Tamo, Makati City,
and back. In their business, the Pereas used a KIA Ceres Van (van) with Plate No. PYA
896, which had the capacity to transport 14 students at a time, two of whom would be
seated in the front beside the driver, and the others in the rear, with six students on either
side. They employed Clemente Alfaro (Alfaro) as driver of the van.
In June 1996, the Zarates contracted the Pereas to transport Aaron to and from
Don Bosco. On August 22, 1996, as on previous school days, the van picked Aaron up
around 6:00 a.m. from the Zarates residence. Aaron took his place on the left side of the

van near the rear door. The van, with its air-conditioning unit turned on and the stereo
playing loudly, ultimately carried all the 14 student riders on their way to Don Bosco.
Considering that the students were due at Don Bosco by 7:15 a.m., and that they were
already running late because of the heavy vehicular traffic on the South Superhighway,
Alfaro took the van to an alternate route at about 6:45 a.m. by traversing the narrow
path underneath the Magallanes Interchange that was then commonly used by Makatibound vehicles as a short cut into Makati. At the time, the narrow path was marked by
piles of construction materials and parked passenger jeepneys, and the railroad crossing
in the narrow path had no railroad warning signs, or watchmen, or other responsible
persons manning the crossing. In fact, the bamboo barandilla was up, leaving the
railroad crossing open to traversing motorists.
At about the time the van was to traverse the railroad crossing, PNR Commuter
No. 302 (train), operated by Jhonny Alano (Alano), was in the vicinity of the
Magallanes Interchange travelling northbound. As the train neared the railroad crossing,
Alfaro drove the van eastward across the railroad tracks, closely tailing a large
passenger bus. His view of the oncoming train was blocked because he overtook the
passenger bus on its left side. The train blew its horn to warn motorists of its approach.
When the train was about 50 meters away from the passenger bus and the van, Alano
applied the ordinary brakes of the train. He applied the emergency brakes only when he
saw that a collision was imminent. The passenger bus successfully crossed the railroad
tracks, but the van driven by Alfaro did not. The train hit the rear end of the van, and the
impact threw nine of the 12 students in the rear, including Aaron, out of the van. Aaron
landed in the path of the train, which dragged his body and severed his head,
instantaneously killing him. Alano fled the scene on board the train, and did not wait for
the police investigator to arrive.
Devastated by the early and unexpected death of Aaron, the Zarates
commenced this action for damages against Alfaro, the Pereas, PNR and Alano. The
Pereas and PNR filed their respective answers, with cross-claims against each other,
but Alfaro could not be served with summons.
At the pre-trial, the parties stipulated on the facts and issues, viz:
A. FACTS:
(1) That spouses Zarate were the legitimate parents of Aaron John L. Zarate;
(2) Spouses Zarate engaged the services of spouses Perea for the adequate
and safe transportation carriage of the former spouses' son from their residence in
Paraaque to his school at the Don Bosco Technical Institute in Makati City;
(3) During the effectivity of the contract of carriage and in the implementation
thereof, Aaron, the minor son of spouses Zarate died in connection with a
vehicular/train collision which occurred while Aaron was riding the contracted carrier
Kia Ceres van of spouses Perea, then driven and operated by the latter's
employee/authorized driver Clemente Alfaro, which van collided with the train of PNR,
at around 6:45 A.M. of August 22, 1996, within the vicinity of the Magallanes
Interchange in Makati City, Metro Manila, Philippines;
(4) At the time of the vehicular/train collision, the subject site of the
vehicular/train collision was a railroad crossing used by motorists for crossing the
railroad tracks;

73

(5) During the said time of the vehicular/train collision, there were no
appropriate and safety warning signs and railings at the site commonly used for railroad
crossing;
(6) At the material time, countless number of Makati bound public utility and
private vehicles used on a daily basis the site of the collision as an alternative route and
short-cut to Makati;
(7) The train driver or operator left the scene of the incident on board the
commuter train involved without waiting for the police investigator;
(8) The site commonly used for railroad crossing by motorists was not in fact
intended by the railroad operator for railroad crossing at the time of the vehicular
collision;
(9) PNR received the demand letter of the spouses Zarate;
(10) PNR refused to acknowledge any liability for the vehicular/train
collision;
(11) The eventual closure of the railroad crossing alleged by PNR was an
internal arrangement between the former and its project contractor; and
(12) The site of the vehicular/train collision was within the vicinity or less
than 100 meters from the Magallanes station of PNR.
B. ISSUES
(1) Whether or not defendant-driver of the van is, in the performance of his
functions, liable for negligence constituting the proximate cause of the vehicular
collision, which resulted in the death of plaintiff spouses' son;
(2) Whether or not the defendant spouses Perea being the employer of
defendant Alfaro are liable for any negligence which may be attributed to defendant
Alfaro;
(3) Whether or not defendant Philippine National Railways being the operator
of the railroad system is liable for negligence in failing to provide adequate safety
warning signs and railings in the area commonly used by motorists for railroad
crossings, constituting the proximate cause of the vehicular collision which resulted in
the death of the plaintiff spouses' son;
(4) Whether or not defendant spouses Perea are liable for breach of the
contract of carriage with plaintiff-spouses in failing to provide adequate and safe
transportation for the latter's son;
(5) Whether or not defendants spouses are liable for actual, moral damages,
exemplary damages, and attorney's fees;
(6) Whether or not defendants spouses Teodorico and Nanette Perea observed
the diligence of employers and school bus operators;
(7) Whether or not defendant-spouses are civilly liable for the accidental death
of Aaron John Zarate;
(8) Whether or not defendant PNR was grossly negligent in operating the
commuter train involved in the accident, in allowing or tolerating the motoring public to
cross, and its failure to install safety devices or equipment at the site of the accident for
the protection of the public;

(9) Whether or not defendant PNR should be made to reimburse defendant

spouses for any and whatever amount the latter may be held answerable or which they
may be ordered to pay in favor of plaintiffs by reason of the action;
(10) Whether or not defendant PNR should pay plaintiffs directly and fully on
the amounts claimed by the latter in their Complaint by reason of its gross negligence;
(11) Whether or not defendant PNR is liable to defendants spouses for actual,
moral and exemplary damages and attorney's fees.2
The Zarates claim against the Pereas was upon breach of the contract of
carriage for the safe transport of Aaron; but that against PNR was based on quasi-delict
under Article 2176, Civil Code.
In their defense, the Pereas adduced evidence to show that they had exercised
the diligence of a good father of the family in the selection and supervision of Alfaro, by
making sure that Alfaro had been issued a drivers license and had not been involved in
any vehicular accident prior to the collision; that their own son had taken the van daily;
and that Teodoro Perea had sometimes accompanied Alfaro in the vans trips
transporting the students to school.
For its part, PNR tended to show that the proximate cause of the collision had
been the reckless crossing of the van whose driver had not first stopped, looked and
listened; and that the narrow path traversed by the van had not been intended to be a
railroad crossing for motorists.
Ruling of the RTC
On December 3, 1999, the RTC rendered its decision,3 disposing:
WHEREFORE, premises considered, judgment is hereby rendered in favor of
the plaintiff and against the defendants ordering them to jointly and severally pay the
plaintiffs as follows:
(1) (for) the death of Aaron- Php50,000.00;
(2) Actual damages in the amount of Php100,000.00;
(3) For the loss of earning capacity- Php2,109,071.00;
(4) Moral damages in the amount of Php4,000,000.00;
(5) Exemplary damages in the amount of Php1,000,000.00;
(6) Attorneys fees in the amount of Php200,000.00; and
(7) Cost of suit.
SO ORDERED.
On June 29, 2000, the RTC denied the Pereas motion for
reconsideration,4 reiterating that the cooperative gross negligence of the Pereas and
PNR had caused the collision that led to the death of Aaron; and that the damages
awarded to the Zarates were not excessive, but based on the established circumstances.
The CAs Ruling
Both the Pereas and PNR appealed (C.A.-G.R. CV No. 68916).
PNR assigned the following errors, to wit:5
The Court a quo erred in:
1. In finding the defendant-appellant Philippine National Railways jointly and
severally liable together with defendant-appellants spouses Teodorico and Nanette
Perea and defendant-appellant Clemente Alfaro to pay plaintiffs-appellees for the death
of Aaron Zarate and damages.

74

2. In giving full faith and merit to the oral testimonies of plaintiffs-appellees

witnesses despite overwhelming documentary evidence on record, supporting the case
of defendants-appellants Philippine National Railways.
The Pereas ascribed the following errors to the RTC, namely:
The trial court erred in finding defendants-appellants jointly and severally
liable for actual, moral and exemplary damages and attorneys fees with the other
defendants.
The trial court erred in dismissing the cross-claim of the appellants Pereas
against the Philippine National Railways and in not holding the latter and its train driver
primarily responsible for the incident.
The trial court erred in awarding excessive damages and attorneys fees.
The trial court erred in awarding damages in the form of deceaseds loss of
earning capacity in the absence of sufficient basis for such an award.
On November 13, 2002, the CA promulgated its decision, affirming the
findings of the RTC, but limited the moral damages to P 2,500,000.00; and deleted the
attorneys fees because the RTC did not state the factual and legal bases, to wit:6
WHEREFORE, premises considered, the assailed Decision of the Regional
Trial Court, Branch 260 of Paraaque City is AFFIRMED with the modification that the
award of Actual Damages is reduced to P59,502.76; Moral Damages is reduced
to P 2,500,000.00; and the award for Attorneys Fees is Deleted.
SO ORDERED.
The CA upheld the award for the loss of Aarons earning capacity, taking
cognizance of the ruling in Cariaga v. Laguna Tayabas Bus Company and Manila
Railroad Company,7 wherein the Court gave the heirs of Cariaga a sum representing the
loss of the deceaseds earning capacity despite Cariaga being only a medical student at
the time of the fatal incident. Applying the formula adopted in the American Expectancy
Table of Mortality:
2/3 x (80 - age at the time of death) = life expectancy
the CA determined the life expectancy of Aaron to be 39.3 years upon
reckoning his life expectancy from age of 21 (the age when he would have graduated
from college and started working for his own livelihood) instead of 15 years (his age
when he died). Considering that the nature of his work and his salary at the time of
Aarons death were unknown, it used the prevailing minimum wage of P 280.00/day to
compute Aarons gross annual salary to be P110,716.65, inclusive of the thirteenth
month pay. Multiplying this annual salary by Aarons life expectancy of 39.3 years, his
gross income would aggregate to P 4,351,164.30, from which his estimated expenses in
the sum of P2,189,664.30 was deducted to finally arrive at P 2,161,500.00 as net
income. Due to Aarons computed net income turning out to be higher than the amount
claimed by the Zarates, only P 2,109,071.00, the amount expressly prayed for by them,
was granted.
On April 4, 2003, the CA denied the Pereas motion for reconsideration.8
Issues
In this appeal, the Pereas list the following as the errors committed by the CA,
to wit:

I. The lower court erred when it upheld the trial courts decision holding the
petitioners jointly and severally liable to pay damages with Philippine National
Railways and dismissing their cross-claim against the latter.
II. The lower court erred in affirming the trial courts decision awarding
damages for loss of earning capacity of a minor who was only a high school student at
the time of his death in the absence of sufficient basis for such an award.
III. The lower court erred in not reducing further the amount of damages
awarded, assuming petitioners are liable at all.
Ruling
The petition has no merit.
1.
Were
the
Pereas
and
PNR
jointly
and severally liable for damages?
The Zarates brought this action for recovery of damages against both the
Pereas and the PNR, basing their claim against the Pereas on breach of contract of
carriage and against the PNR on quasi-delict.
The RTC found the Pereas and the PNR negligent. The CA affirmed the
findings.
We concur with the CA.
To start with, the Pereas defense was that they exercised the diligence of a
good father of the family in the selection and supervision of Alfaro, the van driver, by
seeing to it that Alfaro had a drivers license and that he had not been involved in any
vehicular accident prior to the fatal collision with the train; that they even had their own
son travel to and from school on a daily basis; and that Teodoro Perea himself
sometimes accompanied Alfaro in transporting the passengers to and from school. The
RTC gave scant consideration to such defense by regarding such defense as
inappropriate in an action for breach of contract of carriage.
We find no adequate cause to differ from the conclusions of the lower courts
that the Pereas operated as a common carrier; and that their standard of care was
extraordinary diligence, not the ordinary diligence of a good father of a family.
Although in this jurisdiction the operator of a school bus service has been
usually regarded as a private carrier,9primarily because he only caters to some specific
or privileged individuals, and his operation is neither open to the indefinite public nor
for public use, the exact nature of the operation of a school bus service has not been
finally settled. This is the occasion to lay the matter to rest.
A carrier is a person or corporation who undertakes to transport or convey
goods or persons from one place to another, gratuitously or for hire. The carrier is
classified either as a private/special carrier or as a common/public carrier. 10 A private
carrier is one who, without making the activity a vocation, or without holding himself or
itself out to the public as ready to act for all who may desire his or its services,
undertakes, by special agreement in a particular instance only, to transport goods or
persons from one place to another either gratuitously or for hire. 11 The provisions on
ordinary contracts of the Civil Code govern the contract of private carriage.The
diligence required of a private carrier is only ordinary, that is, the diligence of a good
father of the family. In contrast, a common carrier is a person, corporation, firm or
association engaged in the business of carrying or transporting passengers or goods or

75

both, by land, water, or air, for compensation, offering such services to the
public.12 Contracts of common carriage are governed by the provisions on common
carriers of the Civil Code, the Public Service Act, 13 and other special laws relating to
transportation. A common carrier is required to observe extraordinary diligence, and is
presumed to be at fault or to have acted negligently in case of the loss of the effects of
passengers, or the death or injuries to passengers.14
In relation to common carriers, the Court defined public use in the following
terms in United States v. Tan Piaco,15viz:
"Public use" is the same as "use by the public". The essential feature of the
public use is not confined to privileged individuals, but is open to the indefinite public.
It is this indefinite or unrestricted quality that gives it its public character. In
determining whether a use is public, we must look not only to the character of the
business to be done, but also to the proposed mode of doing it. If the use is merely
optional with the owners, or the public benefit is merely incidental, it is not a public use,
authorizing the exercise of the jurisdiction of the public utility commission. There must
be, in general, a right which the law compels the owner to give to the general public. It
is not enough that the general prosperity of the public is promoted. Public use is not
synonymous with public interest. The true criterion by which to judge the character of
the use is whether the public may enjoy it by right or only by permission.
In De Guzman v. Court of Appeals, 16 the Court noted that Article 1732 of the
Civil Code avoided any distinction between a person or an enterprise offering
transportation on a regular or an isolated basis; and has not distinguished a carrier
offering his services to the general public, that is, the general community or population,
from one offering his services only to a narrow segment of the general population.
Nonetheless, the concept of a common carrier embodied in Article 1732 of the
Civil Code coincides neatly with the notion of public service under the Public Service
Act, which supplements the law on common carriers found in the Civil Code. Public
service, according to Section 13, paragraph (b) of the Public Service Act, includes:
x x x every person that now or hereafter may own, operate, manage, or control
in the Philippines, for hire or compensation, with general or limited clientle, whether
permanent or occasional, and done for the general business purposes, any common
carrier, railroad, street railway, traction railway, subway motor vehicle, either for freight
or passenger, or both, with or without fixed route and whatever may be its classification,
freight or carrier service of any class, express service, steamboat, or steamship line,
pontines, ferries and water craft, engaged in the transportation of passengers or freight
or both, shipyard, marine repair shop, ice-refrigeration plant, canal, irrigation system,
gas, electric light, heat and power, water supply and power petroleum, sewerage system,
wire or wireless communications systems, wire or wireless broadcasting stations and
other similar public services. x x x.17
Given the breadth of the aforequoted characterization of a common carrier, the
Court has considered as common carriers pipeline operators, 18 custom brokers and
warehousemen,19 and barge operators20 even if they had limited clientle.
As all the foregoing indicate, the true test for a common carrier is not the
quantity or extent of the business actually transacted, or the number and character of the
conveyances used in the activity, but whether the undertaking is a part of the activity
engaged in by the carrier that he has held out to the general public as his business or

occupation. If the undertaking is a single transaction, not a part of the general business
or occupation engaged in, as advertised and held out to the general public, the individual
or the entity rendering such service is a private, not a common, carrier. The question
must be determined by the character of the business actually carried on by the carrier,
not by any secret intention or mental reservation it may entertain or assert when charged
with the duties and obligations that the law imposes.21
Applying these considerations to the case before us, there is no question that
the Pereas as the operators of a school bus service were: (a) engaged in transporting
passengers generally as a business, not just as a casual occupation; (b) undertaking to
carry passengers over established roads by the method by which the business was
conducted; and (c) transporting students for a fee. Despite catering to a limited clientle,
the Pereas operated as a common carrier because they held themselves out as a ready
transportation indiscriminately to the students of a particular school living within or
near where they operated the service and for a fee.
The common carriers standard of care and vigilance as to the safety of the
passengers is defined by law. Given the nature of the business and for reasons of public
policy, the common carrier is bound "to observe extraordinary diligence in the vigilance
over the goods and for the safety of the passengers transported by them, according to all
the circumstances of each case."22 Article 1755 of the Civil Code specifies that the
common carrier should "carry the passengers safely as far as human care and foresight
can provide, using the utmost diligence of very cautious persons, with a due regard for
all the circumstances." To successfully fend off liability in an action upon the death or
injury to a passenger, the common carrier must prove his or its observance of that
extraordinary diligence; otherwise, the legal presumption that he or it was at fault or
acted negligently would stand.23 No device, whether by stipulation, posting of notices,
statements on tickets, or otherwise, may dispense with or lessen the responsibility of the
common carrier as defined under Article 1755 of the Civil Code. 24
And, secondly, the Pereas have not presented any compelling defense or
reason by which the Court might now reverse the CAs findings on their liability. On the
contrary, an examination of the records shows that the evidence fully supported the
findings of the CA.
As earlier stated, the Pereas, acting as a common carrier, were already
presumed to be negligent at the time of the accident because death had occurred to their
passenger.25 The presumption of negligence, being a presumption of law, laid the burden
of evidence on their shoulders to establish that they had not been negligent. 26 It was the
law no less that required them to prove their observance of extraordinary diligence in
seeing to the safe and secure carriage of the passengers to their destination. Until they
did so in a credible manner, they stood to be held legally responsible for the death of
Aaron and thus to be held liable for all the natural consequences of such death.
There is no question that the Pereas did not overturn the presumption of their
negligence by credible evidence. Their defense of having observed the diligence of a
good father of a family in the selection and supervision of their driver was not legally
sufficient. According to Article 1759 of the Civil Code, their liability as a common
carrier did not cease upon proof that they exercised all the diligence of a good father of
a family in the selection and supervision of their employee. This was the reason why the

76

RTC treated this defense of the Pereas as inappropriate in this action for breach of
contract of carriage.
The Pereas were liable for the death of Aaron despite the fact that their driver
might have acted beyond the scope of his authority or even in violation of the orders of
the common carrier.27 In this connection, the records showed their drivers actual
negligence. There was a showing, to begin with, that their driver traversed the railroad
tracks at a point at which the PNR did not permit motorists going into the Makati area to
cross the railroad tracks. Although that point had been used by motorists as a shortcut
into the Makati area, that fact alone did not excuse their driver into taking that route. On
the other hand, with his familiarity with that shortcut, their driver was fully aware of the
risks to his passengers but he still disregarded the risks. Compounding his lack of care
was that loud music was playing inside the air-conditioned van at the time of the
accident. The loudness most probably reduced his ability to hear the warning horns of
the oncoming train to allow him to correctly appreciate the lurking dangers on the
railroad tracks. Also, he sought to overtake a passenger bus on the left side as both
vehicles traversed the railroad tracks. In so doing, he lost his view of the train that was
then coming from the opposite side of the passenger bus, leading him to miscalculate
his chances of beating the bus in their race, and of getting clear of the train. As a result,
the bus avoided a collision with the train but the van got slammed at its rear, causing the
fatality. Lastly, he did not slow down or go to a full stop before traversing the railroad
tracks despite knowing that his slackening of speed and going to a full stop were in
observance of the right of way at railroad tracks as defined by the traffic laws and
regulations.28He thereby violated a specific traffic regulation on right of way, by virtue
of which he was immediately presumed to be negligent.29
The omissions of care on the part of the van driver constituted
negligence,30 which, according to Layugan v. Intermediate Appellate Court, 31 is "the
omission to do something which a reasonable man, guided by those considerations
which ordinarily regulate the conduct of human affairs, would do, or the doing of
something which a prudent and reasonable man would not do, 32 or as Judge Cooley
defines it, (t)he failure to observe for the protection of the interests of another person,
that degree of care, precaution, and vigilance which the circumstances justly demand,
whereby such other person suffers injury."33
The test by which to determine the existence of negligence in a particular case
has been aptly stated in the leading case of Picart v. Smith,34 thuswise:
The test by which to determine the existence of negligence in a particular case
may be stated as follows: Did the defendant in doing the alleged negligent act use that
reasonable care and caution which an ordinarily prudent person would have used in the
same situation? If not, then he is guilty of negligence. The law here in effect adopts the
standard supposed to be supplied by the imaginary conduct of the discreet paterfamilias
of the Roman law. The existence of negligence in a given case is not determined by
reference to the personal judgment of the actor in the situation before him. The law
considers what would be reckless, blameworthy, or negligent in the man of ordinary
intelligence and prudence and determines liability by that.
The question as to what would constitute the conduct of a prudent man in a
given situation must of course be always determined in the light of human experience
and in view of the facts involved in the particular case. Abstract speculation cannot here

be of much value but this much can be profitably said: Reasonable men govern their
conduct by the circumstances which are before them or known to them. They are not,
and are not supposed to be, omniscient of the future. Hence they can be expected to take
care only when there is something before them to suggest or warn of danger. Could a
prudent man, in the case under consideration, foresee harm as a result of the course
actually pursued? If so, it was the duty of the actor to take precautions to guard against
that harm. Reasonable foresight of harm, followed by the ignoring of the suggestion
born of this prevision, is always necessary before negligence can be held to exist. Stated
in these terms, the proper criterion for determining the existence of negligence in a
given case is this: Conduct is said to be negligent when a prudent man in the position of
the tortfeasor would have foreseen that an effect harmful to another was sufficiently
probable to warrant his foregoing the conduct or guarding against its consequences.
(Emphasis supplied)
Pursuant to the Picart v. Smith test of negligence, the Pereas driver was
entirely negligent when he traversed the railroad tracks at a point not allowed for a
motorists crossing despite being fully aware of the grave harm to be thereby caused to
his passengers; and when he disregarded the foresight of harm to his passengers by
overtaking the bus on the left side as to leave himself blind to the approach of the
oncoming train that he knew was on the opposite side of the bus.
Unrelenting, the Pereas cite Phil. National Railways v. Intermediate Appellate
Court,35 where the Court held the PNR solely liable for the damages caused to a
passenger bus and its passengers when its train hit the rear end of the bus that was then
traversing the railroad crossing. But the circumstances of that case and this one share no
similarities. In Philippine National Railways v. Intermediate Appellate Court, no
evidence of contributory negligence was adduced against the owner of the bus. Instead,
it was the owner of the bus who proved the exercise of extraordinary diligence by
preponderant evidence. Also, the records are replete with the showing of negligence on
the part of both the Pereas and the PNR. Another distinction is that the passenger bus
in Philippine National Railways v. Intermediate Appellate Court was traversing the
dedicated railroad crossing when it was hit by the train, but the Pereas school van
traversed the railroad tracks at a point not intended for that purpose.
At any rate, the lower courts correctly held both the Pereas and the PNR
"jointly and severally" liable for damages arising from the death of Aaron. They had
been impleaded in the same complaint as defendants against whom the Zarates had the
right to relief, whether jointly, severally, or in the alternative, in respect to or arising out
of the accident, and questions of fact and of law were common as to the
Zarates.36 Although the basis of the right to relief of the Zarates (i.e., breach of contract
of carriage) against the Pereas was distinct from the basis of the Zarates right to relief
against the PNR (i.e., quasi-delict under Article 2176, Civil Code), they nonetheless
could be held jointly and severally liable by virtue of their respective negligence
combining to cause the death of Aaron. As to the PNR, the RTC rightly found the PNR
also guilty of negligence despite the school van of the Pereas traversing the railroad
tracks at a point not dedicated by the PNR as a railroad crossing for pedestrians and
motorists, because the PNR did not ensure the safety of others through the placing of
crossbars, signal lights, warning signs, and other permanent safety barriers to prevent
vehicles or pedestrians from crossing there. The RTC observed that the fact that a

77

crossing guard had been assigned to man that point from 7 a.m. to 5 p.m. was a good
indicium that the PNR was aware of the risks to others as well as the need to control the
vehicular and other traffic there. Verily, the Pereas and the PNR were joint tortfeasors.
2.
Was
the
indemnity
for
loss
of
Aarons earning capacity proper?
The RTC awarded indemnity for loss of Aarons earning capacity. Although
agreeing with the RTC on the liability, the CA modified the amount. Both lower courts
took into consideration that Aaron, while only a high school student, had been enrolled
in one of the reputable schools in the Philippines and that he had been a normal and
able-bodied child prior to his death. The basis for the computation of Aarons earning
capacity was not what he would have become or what he would have wanted to be if not
for his untimely death, but the minimum wage in effect at the time of his death.
Moreover, the RTCs computation of Aarons life expectancy rate was not reckoned
from his age of 15 years at the time of his death, but on 21 years, his age when he would
have graduated from college.
We find the considerations taken into account by the lower courts to be
reasonable and fully warranted.
Yet, the Pereas submit that the indemnity for loss of earning capacity was
speculative and unfounded.1wphi1 They cited People v. Teehankee, Jr., 37 where the
Court deleted the indemnity for victim Jussi Leinos loss of earning capacity as a pilot
for being speculative due to his having graduated from high school at the International
School in Manila only two years before the shooting, and was at the time of the
shooting only enrolled in the first semester at the Manila Aero Club to pursue his
ambition to become a professional pilot. That meant, according to the Court, that he was
for all intents and purposes only a high school graduate.
We reject the Pereas submission.
First of all, a careful perusal of the Teehankee, Jr. case shows that the situation
there of Jussi Leino was not akin to that of Aaron here. The CA and the RTC were not
speculating that Aaron would be some highly-paid professional, like a pilot (or, for that
matter, an engineer, a physician, or a lawyer). Instead, the computation of Aarons
earning capacity was premised on him being a lowly minimum wage earner despite his
being then enrolled at a prestigious high school like Don Bosco in Makati, a fact that
would have likely ensured his success in his later years in life and at work.
And, secondly, the fact that Aaron was then without a history of earnings
should not be taken against his parents and in favor of the defendants whose negligence
not only cost Aaron his life and his right to work and earn money, but also deprived his
parents of their right to his presence and his services as well. Our law itself states that
the loss of the earning capacity of the deceased shall be the liability of the guilty party
in favor of the heirs of the deceased, and shall in every case be assessed and awarded by
the court "unless the deceased on account of permanent physical disability not caused
by the defendant, had no earning capacity at the time of his death." 38 Accordingly, we
emphatically hold in favor of the indemnification for Aarons loss of earning capacity
despite him having been unemployed, because compensation of this nature is awarded
not for loss of time or earnings but for loss of the deceaseds power or ability to earn
money.39

This favorable treatment of the Zarates claim is not unprecedented. In Cariaga

v. Laguna Tayabas Bus Company and Manila Railroad Company, 40 fourth-year medical
student Edgardo Carriagas earning capacity, although he survived the accident but his
injuries rendered him permanently incapacitated, was computed to be that of the
physician that he dreamed to become. The Court considered his scholastic record
sufficient to justify the assumption that he could have finished the medical course and
would have passed the medical board examinations in due time, and that he could have
possibly earned a modest income as a medical practitioner. Also, in People v.
Sanchez,41the Court opined that murder and rape victim Eileen Sarmienta and murder
victim Allan Gomez could have easily landed good-paying jobs had they graduated in
due time, and that their jobs would probably pay them high monthly salaries
from P 10,000.00 to P 15,000.00 upon their graduation. Their earning capacities were
computed at rates higher than the minimum wage at the time of their deaths due to their
being already senior agriculture students of the University of the Philippines in Los
Baos, the countrys leading educational institution in agriculture.
3.
Were the amounts of damages excessive?
The Pereas plead for the reduction of the moral and exemplary damages
awarded to the Zarates in the respective amounts of P 2,500,000.00 and P 1,000,000.00
on the ground that such amounts were excessive.
The plea is unwarranted.
The moral damages of P 2,500,000.00 were really just and reasonable under
the established circumstances of this case because they were intended by the law to
assuage the Zarates deep mental anguish over their sons unexpected and violent death,
and their moral shock over the senseless accident. That amount would not be too much,
considering that it would help the Zarates obtain the means, diversions or amusements
that would alleviate their suffering for the loss of their child. At any rate, reducing the
amount as excessive might prove to be an injustice, given the passage of a long time
from when their mental anguish was inflicted on them on August 22, 1996.
Anent the P 1,000,000.00 allowed as exemplary damages, we should not
reduce the amount if only to render effective the desired example for the public good.
As a common carrier, the Pereas needed to be vigorously reminded to observe their
duty to exercise extraordinary diligence to prevent a similarly senseless accident from
happening again. Only by an award of exemplary damages in that amount would suffice
to instill in them and others similarly situated like them the ever-present need for greater
and constant vigilance in the conduct of a business imbued with public interest.
WHEREFORE,
we DENY the
petition
for
review
on certiorari; AFFIRM the decision promulgated on November 13, 2002;
and ORDER the petitioners to pay the costs of suit.
SO ORDERED.

78

FIRST DIVISION
PROFESSIONAL SERVICES, INC.,

G.R. No. 126297

Petitioner,

- versus NATIVIDAD and ENRIQUE AGANA,

Respondents.
x-----------------------x
NATIVIDAD (Substituted by her children
MARCELINO AGANA III, ENRIQUE
AGANA, JR., EMMA AGANA ANDAYA,
JESUS AGANA, and RAYMUND AGANA)
and ENRIQUE AGANA,
Petitioners,

G.R. No. 126467

- versus JUAN FUENTES,

Respondent.
x- - - - - - - - - - - - - - - - - - - -- - - - x
MIGUEL AMPIL,
Petitioner,
- versus G.R. No. 127590
Present:
NATIVIDAD AGANA and ENRIQUEAGANA,
Respondents.

PUNO, C.J., Chairperson

SANDOVAL-GUTIERREZ,

79

CORONA,
AZCUNA, and
*
GARCIA, JJ.
Promulgated:
January 31, 2007
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
DECISION

of Natividads husband, Enrique Agana, to permit Dr. Juan Fuentes, respondent in G.R.
No. 126467, to perform hysterectomy on her.

After Dr. Fuentes had completed the hysterectomy, Dr. Ampil took over, completed the
operation and closed the incision.

However, the operation appeared to be flawed. In the corresponding Record of

Operation dated April 11, 1984, the attending nurses entered these remarks:

SANDOVAL-GUTIERREZ, J.:
sponge count lacking 2
announced to surgeon searched (sic) done but to
no avail continue for closure.

Hospitals, having undertaken one of mankinds most important and delicate endeavors,
must assume the grave responsibility of pursuing it with appropriate care. The care and
service dispensed through this high trust, however technical, complex and esoteric its
character may be, must meet standards of responsibility commensurate with the
undertaking to preserve and protect the health, and indeed, the very lives of those placed
in the hospitals keeping.[1]

On April 24, 1984, Natividad was released from the hospital. Her hospital and medical
bills, including the doctors fees, amounted to P60,000.00.

Assailed in these three consolidated petitions for review on certiorari is the Court of
Appeals Decision[2] dated September 6, 1996 in CA-G.R. CV No. 42062 and CA-G.R.
SP No. 32198 affirming with modification the Decision [3] dated March 17, 1993 of the
Regional Trial Court (RTC), Branch 96, Quezon City in Civil Case No. Q-43322 and
nullifying its Order datedSeptember 21, 1993.

After a couple of days, Natividad complained of excruciating pain in her anal region.
She consulted both Dr. Ampil and Dr. Fuentes about it. They told her that the pain was
the natural consequence of the surgery. Dr. Ampil then recommended that she consult an
oncologist to examine the cancerous nodes which were not removed during the
operation.

The facts, as culled from the records, are:

On May 9, 1984, Natividad, accompanied by her husband, went to the United States to
seek further treatment. After four months of consultations and laboratory examinations,
Natividad was told she was free of cancer. Hence, she was advised to return to
the Philippines.

On April
4,
1984,
Natividad
Agana
was
rushed
to
the Medical City General Hospital (Medical City Hospital) because of difficulty of
bowel movement and bloody anal discharge. After a series of medical examinations, Dr.
Miguel Ampil, petitioner in G.R. No. 127590, diagnosed her to be suffering from cancer
of the sigmoid.

On August 31, 1984, Natividad flew back to the Philippines, still suffering from
pains. Two weeks thereafter, her daughter found a piece of gauze protruding from her
vagina. Upon being informed about it, Dr. Ampil proceeded to her house where he
managed to extract by hand a piece of gauze measuring 1.5 inches in width. He then
assured her that the pains would soon vanish.

On April 11, 1984, Dr. Ampil, assisted by the medical staff [4] of
the Medical City Hospital, performed an anterior resection surgery on Natividad. He
found that the malignancy in her sigmoid area had spread on her left ovary,
necessitating the removal of certain portions of it. Thus, Dr. Ampil obtained the consent

80

Dr. Ampils assurance did not come true. Instead, the pains intensified, prompting
Natividad to seek treatment at the Polymedic General Hospital. While confined there,
Dr. Ramon Gutierrez detected the presence of another foreign object in her vagina -- a
foul-smelling gauze measuring 1.5 inches in width which badly infected her vaginal
vault. A recto-vaginal fistula had formed in her reproductive organs which forced stool
to excrete through the vagina. Another surgical operation was needed to remedy the
damage. Thus, in October 1984, Natividad underwent another surgery.

On November 12, 1984, Natividad and her husband filed with the RTC, Branch
96, Quezon City a complaint for damages against the Professional Services, Inc. (PSI),
owner of theMedical City Hospital, Dr. Ampil, and Dr. Fuentes, docketed as Civil Case
No. Q-43322. They alleged that the latter are liable for negligence for leaving two
pieces of gauze inside Natividads body and malpractice for concealing their acts of
negligence.

Meanwhile, Enrique Agana also filed with the Professional Regulation Commission
(PRC) an administrative complaint for gross negligence and malpractice against Dr.
Ampil and Dr. Fuentes, docketed as Administrative Case No. 1690. The PRC Board of
Medicine heard the case only with respect to Dr. Fuentes because it failed to acquire
jurisdiction over Dr. Ampil who was then in the United States.

On February 16, 1986, pending the outcome of the above cases, Natividad died and was
duly substituted by her above-named children (the Aganas).

a.

The equivalent in Philippine Currency of

the total of US$19,900.00 at the rate
of P21.60-US$1.00, as reimbursement of
actual expenses incurred in the United States
of America;

b.

The sum of P4,800.00 as travel taxes of

plaintiffs and their physician daughter;

c.

The total sum of P45,802.50, representing

the
cost
of
hospitalization
at Polymedic Hospital, medical fees, and cost
of the saline solution;

2.

As moral damages, the sum of P2,000,000.00;

3.

As exemplary damages, the sum of P300,000.00;

4.

As attorneys fees, the sum of P250,000.00;

5.
6.

Legal interest on items 1 (a), (b), and (c); 2; and 3 hereinabove,

from date of filing of the complaint until full payment; and
Costs of suit.

SO ORDERED.
Aggrieved, PSI, Dr. Fuentes and Dr. Ampil interposed an appeal to the Court of
Appeals, docketed as CA-G.R. CV No. 42062.

On March 17, 1993, the RTC rendered its Decision in favor of the Aganas, finding PSI,
Dr. Ampil and Dr. Fuentes liable for negligence and malpractice, the decretal part of
which reads:

WHEREFORE, judgment is hereby rendered for the plaintiffs

ordering the defendants PROFESSIONAL SERVICES, INC., DR.
MIGUEL AMPIL and DR. JUAN FUENTES to pay to the
plaintiffs, jointly and severally, except in respect of the award for
exemplary damages and the interest thereon which are the liabilities
of defendants Dr. Ampil and Dr. Fuentes only, as follows:
1.

As actual damages, the following amounts:

Incidentally, on April 3, 1993, the Aganas filed with the RTC a motion for a partial
execution of its Decision, which was granted in an Order dated May 11,
1993. Thereafter, the sheriff levied upon certain properties of Dr. Ampil and sold them
for P451,275.00 and delivered the amount to the Aganas.

Following their receipt of the money, the Aganas entered into an agreement with PSI
and Dr. Fuentes to indefinitely suspend any further execution of the RTC
Decision. However, not long thereafter, the Aganas again filed a motion for an alias writ
of execution against the properties of PSI and Dr. Fuentes. On September 21, 1993, the
RTC granted the motion and issued the corresponding writ, prompting Dr. Fuentes to
file with the Court of Appeals a petition for certiorari and prohibition, with prayer for
preliminary injunction, docketed as CA-G.R. SP No. 32198. During its pendency, the

81

Court of Appeals issued a Resolution[5] dated October 29, 1993 granting Dr. Fuentes
prayer for injunctive relief.

On January 24, 1994, CA-G.R. SP No. 32198 was consolidated with CA-G.R. CV No.
42062.

Meanwhile, on January 23, 1995, the PRC Board of Medicine rendered its Decision [6] in
Administrative Case No. 1690 dismissing the case against Dr. Fuentes. The Board held
that the prosecution failed to show that Dr. Fuentes was the one who left the two pieces
of gauze inside Natividads body; and that he concealed such fact from Natividad.

Hence, the instant consolidated petitions.

In G.R. No. 126297, PSI alleged in its petition that the Court of Appeals erred in holding
that: (1) it is estopped from raising the defense that Dr. Ampil is not its employee; (2) it
is solidarily liable with Dr. Ampil; and (3) it is not entitled to its counterclaim against
the Aganas. PSI contends that Dr. Ampil is not its employee, but a mere consultant or
independent contractor. As such, he alone should answer for his negligence.

In G.R. No. 126467, the Aganas maintain that the Court of Appeals erred in finding that
Dr. Fuentes is not guilty of negligence or medical malpractice, invoking the doctrine
of res ipsa loquitur. They contend that the pieces of gauze are prima facie proofs that
the operating surgeons have been negligent.

On September 6, 1996, the Court of Appeals rendered its Decision jointly disposing of
CA-G.R. CV No. 42062 and CA-G.R. SP No. 32198, thus:

WHEREFORE, except for the modification that the case against

defendant-appellant Dr. Juan Fuentes is hereby DISMISSED, and
with the pronouncement that defendant-appellant Dr. Miguel Ampil
is liable to reimburse defendant-appellant Professional Services,
Inc., whatever amount the latter will pay or had paid to the plaintiffsappellees, the decision appealed from is hereby AFFIRMED and the
instant appeal DISMISSED.
Concomitant with the above, the petition for certiorari and
prohibition filed by herein defendant-appellant Dr. Juan Fuentes in
CA-G.R. SP No. 32198 is hereby GRANTED and the challenged
order of the respondent judge dated September 21, 1993, as well as
the alias writ of execution issued pursuant thereto are
hereby NULLIFIED and SET ASIDE. The bond posted by the
petitioner in connection with the writ of preliminary injunction
issued by this Court on November 29, 1993 is hereby cancelled.
Costs
against
defendants-appellants Dr.
Ampil and Professional Services, Inc.

Miguel

SO ORDERED.
Only Dr. Ampil filed a motion for reconsideration, but it was denied in a
Resolution[7] dated December 19, 1996.

Finally, in G.R. No. 127590, Dr. Ampil asserts that the Court of Appeals erred in finding
him liable for negligence and malpractice sans evidence that he left the two pieces of
gauze in Natividads vagina. He pointed to other probable causes, such as: (1) it was Dr.
Fuentes who used gauzes in performing the hysterectomy; (2) the attending nurses
failure to properly count the gauzes used during surgery; and (3) the medical
intervention of the American doctors who examined Natividad in the United States of
America.

For our resolution are these three vital issues: first, whether the Court of
Appeals erred in holding Dr. Ampil liable for negligence and
malpractice; second, whether the Court of Appeals erred in absolving Dr. Fuentes of any
liability; and third, whether PSI may be held solidarily liable for the negligence of Dr.
Ampil.

I - G.R. No. 127590

Whether the Court of Appeals Erred in Holding Dr. Ampil
Liable for Negligence and Malpractice.

Dr. Ampil, in an attempt to absolve himself, gears the Courts attention to other possible
causes of Natividads detriment. He argues that the Court should not discount either of
the following possibilities: first, Dr. Fuentes left the gauzes in Natividads body after
performing hysterectomy; second, the attending nurses erred in counting the gauzes;

82

and third, the American doctors were the ones who placed the gauzes in Natividads
body.

delay, still, it is his legal duty to so inform his patient within a reasonable time
thereafter by advising her of what he had been compelled to do. This is in order that
she might seek relief from the effects of the foreign object left in her body as her
condition might permit. The ruling in Smith v. Zeagler[10] is explicit, thus:

Dr. Ampils arguments are purely conjectural and without basis. Records show
that he did not present any evidence to prove that the American doctors were the ones
who put or left the gauzes in Natividads body. Neither did he submit evidence to rebut
the correctness of the record of operation, particularly the number of gauzes used. As to
the alleged negligence of Dr. Fuentes, we are mindful that Dr. Ampil examined his (Dr.
Fuentes) work and found it in order.

The removal of all sponges used is part of a surgical

operation, and when a physician or surgeon fails to remove a sponge
he has placed in his patients body that should be removed as part of
the operation, he thereby leaves his operation uncompleted
and creates a new condition which imposes upon him the legal
duty of calling the new condition to his patients attention, and
endeavoring with the means he has at hand to minimize and
avoid untoward results likely to ensue therefrom.

The glaring truth is that all the major circumstances, taken together, as specified by the
Court of Appeals, directly point to Dr. Ampil as the negligent party, thus:

First, it is not disputed that the surgeons used gauzes as

sponges to control the bleeding of the patient during the surgical
operation.
Second, immediately after the operation, the nurses who
assisted in the surgery noted in their report that the sponge count
(was) lacking 2; that such anomaly was announced to surgeon
and that a search was done but to no avail prompting Dr. Ampil
to continue for closure x x x.
Third, after the operation, two (2) gauzes were extracted
from the same spot of the body of Mrs. Agana where the surgery was
performed.
An operation requiring the placing of sponges in the incision is not complete
until the sponges are properly removed, and it is settled that the leaving of sponges or
other foreign substances in the wound after the incision has been closed is at
least prima facie negligence by the operating surgeon.[8] To put it simply, such act is
considered so inconsistent with due care as to raise an inference of negligence. There
are even legions of authorities to the effect that such act is negligence per se.[9]

Of course, the Court is not blind to the reality that there are times when danger
to a patients life precludes a surgeon from further searching missing sponges or foreign
objects left in the body. But this does not leave him free from any obligation. Even if
it has been shown that a surgeon was required by the urgent necessities of the case to
leave a sponge in his patients abdomen, because of the dangers attendant upon

Here, Dr. Ampil did not inform Natividad about the missing two pieces of
gauze. Worse, he even misled her that the pain she was experiencing was the
ordinary consequence of her operation. Had he been more candid, Natividad could
have taken the immediate and appropriate medical remedy to remove the gauzes from
her body. To our mind, what was initially an act of negligence by Dr. Ampil has ripened
into a deliberate wrongful act of deceiving his patient.

This is a clear case of medical malpractice or more appropriately, medical

negligence. To successfully pursue this kind of case, a patient must only prove that a
health care provider either failed to do something which a reasonably prudent health
care provider would have done, or that he did something that a reasonably prudent
provider would not have done; and that failure or action caused injury to the patient.
[11]
Simply put, the elements are duty, breach, injury and proximate causation. Dr,
Ampil, as the lead surgeon, had the duty to remove all foreign objects, such as gauzes,
from Natividads body before closure of the incision. When he failed to do so, it was his
duty to inform Natividad about it. Dr. Ampil breached both duties. Such breach caused
injury to Natividad, necessitating her further examination by American doctors and
another surgery. That Dr. Ampils negligence is the proximate cause [12] of Natividads
injury could be traced from his act of closing the incision despite the information
given by the attending nurses that two pieces of gauze were still missing. That they
were later on extracted from Natividads vagina established the causal link between Dr.
Ampils negligence and the injury. And what further aggravated such injury was his
deliberate concealment of the missing gauzes from the knowledge of Natividad and her
family.

II - G.R. No. 126467

Whether the Court of Appeals Erred in Absolving
Dr. Fuentes of any Liability

83

The Aganas assailed the dismissal by the trial court of the case against Dr. Fuentes on
the ground that it is contrary to the doctrine of res ipsa loquitur. According to them, the
fact that the two pieces of gauze were left inside Natividads body is a prima
facie evidence of Dr. Fuentes negligence.

We are not convinced.

Literally, res ipsa loquitur means the thing speaks for itself. It is the rule that the fact of
the occurrence of an injury, taken with the surrounding circumstances, may permit an
inference or raise a presumption of negligence, or make out a plaintiffs prima facie case,
and present a question of fact for defendant to meet with an explanation. [13] Stated
differently, where the thing which caused the injury, without the fault of the injured, is
under the exclusive control of the defendant and the injury is such that it should not
have occurred if he, having such control used proper care, it affords reasonable
evidence, in the absence of explanation that the injury arose from the defendants want
of care, and the burden of proof is shifted to him to establish that he has observed due
care and diligence.[14]

From the foregoing statements of the rule, the requisites for the applicability of the
doctrine of res ipsa loquitur are: (1) the occurrence of an injury; (2) the thing which
caused the injury was under the control and management of the defendant; (3) the
occurrence was such that in the ordinary course of things, would not have happened if
those who had control or management used proper care; and (4) the absence of
explanation by the defendant. Of the foregoing requisites, the most instrumental is
the control and management of the thing which caused the injury.[15]

We find the element of control and management of the thing which caused the injury to
be wanting. Hence, the doctrine of res ipsa loquitur will not lie.

It was duly established that Dr. Ampil was the lead surgeon during the operation of
Natividad. He requested the assistance of Dr. Fuentes only to perform hysterectomy
when he (Dr. Ampil) found that the malignancy in her sigmoid area had spread to her
left ovary. Dr. Fuentes performed the surgery and thereafter reported and showed his
work to Dr. Ampil. The latter examined it and finding everything to be in order,
allowed Dr. Fuentes to leave the operating room. Dr. Ampil then resumed operating
on Natividad. He was about to finish the procedure when the attending nurses informed

him that two pieces of gauze were missing. A diligent search was conducted, but the
misplaced gauzes were not found. Dr. Ampil then directed that the incision be
closed. During this entire period, Dr. Fuentes was no longer in the operating room and
had, in fact, left the hospital.

Under the Captain of the Ship rule, the operating surgeon is the person in complete
charge of the surgery room and all personnel connected with the operation. Their duty is
to obey his orders.[16] As stated before, Dr. Ampil was the lead surgeon. In other
words, he was the Captain of the Ship. That he discharged such role is evident from his
following conduct: (1)calling Dr. Fuentes to perform a hysterectomy; (2) examining the
work of Dr. Fuentes and finding it in order; (3) granting Dr. Fuentes permission to
leave; and (4) ordering the closure of the incision. To our mind, it was this act of
ordering the closure of the incision notwithstanding that two pieces of gauze
remained unaccounted for, that caused injury to Natividads body. Clearly, the
control and management of the thing which caused the injury was in the hands of Dr.
Ampil, not Dr. Fuentes.

In this jurisdiction, res ipsa loquitur is not a rule of substantive law, hence, does not per
se create or constitute an independent or separate ground of liability, being a mere
evidentiary rule.[17] In other words, mere invocation and application of the doctrine does
not dispense with the requirement of proof of negligence. Here, the negligence was
proven to have been committed by Dr. Ampil and not by Dr. Fuentes.
III - G.R. No. 126297
Whether PSI Is Liable for the Negligence of Dr. Ampil
The third issue necessitates a glimpse at the historical development of hospitals and the
resulting theories concerning their liability for the negligence of physicians.

Until the mid-nineteenth century, hospitals were generally charitable institutions,

providing medical services to the lowest classes of society, without regard for a patients
ability to pay.[18]Those who could afford medical treatment were usually treated at home
by their doctors.[19] However, the days of house calls and philanthropic health care are
over. The modern health care industry continues to distance itself from its charitable
past and has experienced a significant conversion from a not-for-profit health care to
for-profit hospital businesses. Consequently, significant changes in health law have
accompanied the business-related changes in the hospital industry. One important legal
change is an increase in hospital liability for medical malpractice. Many courts now

84

allow claims for hospital vicarious liability under the theories of respondeat superior,
apparent authority, ostensible authority, or agency by estoppel.[20]

In this jurisdiction, the statute governing liability for negligent acts is Article
2176 of the Civil Code, which reads:

Art. 2176. Whoever by act or omission causes damage to another,

there being fault or negligence, is obliged to pay for the damage
done. Such fault or negligence, if there is no pre-existing contractual
relation between the parties, is called a quasi-delict and is governed
by the provisions of this Chapter.
A derivative of this provision is Article 2180, the rule governing vicarious
liability under the doctrine of respondeat superior, thus:

ART. 2180. The obligation imposed by Article 2176 is demandable

not only for ones own acts or omissions, but also for those of persons
for whom one is responsible.
xxxxxx
The owners and managers of an establishment or enterprise are
likewise responsible for damages caused by their employees in the
service of the branches in which the latter are employed or on the
occasion of their functions.
Employers shall be liable for the damages caused by their employees
and household helpers acting within the scope of their assigned tasks
even though the former are not engaged in any business or industry.
xxxxxx
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.

A prominent civilist commented that professionals engaged by an employer, such as

physicians, dentists, and pharmacists, are not employees under this article because the
manner in which they perform their work is not within the control of the latter

(employer). In other words, professionals are considered personally liable for the
fault or negligence they commit in the discharge of their duties, and their employer
cannot be held liable for such fault or negligence. In the context of the present case, a
hospital cannot be held liable for the fault or negligence of a physician or surgeon in the
treatment or operation of patients.[21]

The foregoing view is grounded on the traditional notion that the professional status
and the very nature of the physicians calling preclude him from being classed as an
agent or employee of a hospital, whenever he acts in a professional capacity.[22] It has
been said that medical practice strictly involves highly developed and specialized
knowledge,[23] such that physicians are generally free to exercise their own skill and
judgment in rendering medical services sans interference.[24] Hence, when a doctor
practices medicine in a hospital setting, the hospital and its employees are deemed to
subserve him in his ministrations to the patient and his actions are of his own
responsibility.[25]

The case of Schloendorff v. Society of New York Hospital [26] was then considered an
authority for this view. The Schloendorff doctrine regards a physician, even if employed
by a hospital, as an independent contractor because of the skill he exercises and the
lack of control exerted over his work. Under this doctrine, hospitals are exempt from the
application of therespondeat superior principle for fault or negligence committed by
physicians in the discharge of their profession.

However, the efficacy of the foregoing doctrine has weakened with the
significant developments in medical care. Courts came to realize that modern hospitals
are increasingly taking active role in supplying and regulating medical care to patients.
No longer were a hospitals functions limited to furnishing room, food, facilities for
treatment and operation, and attendants for its patients. Thus, in Bing v. Thunig,[27] the
New York Court of Appeals deviated from the Schloendorff doctrine, noting that modern
hospitals actually do far more than provide facilities for treatment. Rather, they
regularly employ, on a salaried basis, a large staff of physicians, interns, nurses,
administrative and manual workers. They charge patients for medical care and
treatment, even collecting for such services through legal action, if necessary. The court
then concluded that there is no reason to exempt hospitals from the universal rule
ofrespondeat superior.

In our shores, the nature of the relationship between the hospital and the physicians is
rendered inconsequential in view of our categorical pronouncement in Ramos v. Court
of Appeals[28]that for purposes of apportioning responsibility in medical negligence

85

cases, an employer-employee relationship in effect exists between hospitals and

their attending and visiting physicians. This Court held:

We now discuss the responsibility of the hospital in this

particular incident. The unique practice (among private hospitals) of
filling up specialist staff with attending and visiting consultants, who
are allegedly not hospital employees, presents problems in
apportioning responsibility for negligence in medical malpractice
cases. However, the difficulty is more apparent than real.
In the first place, hospitals exercise significant control in
the hiring and firing of consultants and in the conduct of their
work within the hospital premises. Doctors who apply for
consultant slots, visiting or attending, are required to submit
proof of completion of residency, their educational qualifications,
generally, evidence of accreditation by the appropriate board
(diplomate), evidence of fellowship in most cases, and references.
These requirements are carefully scrutinized by members of the
hospital administration or by a review committee set up by the
hospital who either accept or reject the application. x x x.
After a physician is accepted, either as a visiting or
attending consultant, he is normally required to attend clinicopathological conferences, conduct bedside rounds for clerks,
interns and residents, moderate grand rounds and patient audits
and perform other tasks and responsibilities, for the privilege of
being able to maintain a clinic in the hospital, and/or for the
privilege of admitting patients into the hospital. In addition to
these, the physicians performance as a specialist is generally
evaluated by a peer review committee on the basis of mortality and
morbidity statistics, and feedback from patients, nurses, interns and
residents. A consultant remiss in his duties, or a consultant who
regularly falls short of the minimum standards acceptable to the
hospital or its peer review committee, is normally politely
terminated.
In other words, private hospitals, hire, fire and exercise
real control over their attending and visiting consultant staff.
While consultants are not, technically employees, x x x, the
control exercised, the hiring, and the right to terminate
consultants all fulfill the important hallmarks of an employeremployee relationship, with the exception of the payment of
wages. In assessing whether such a relationship in fact exists, the
control test is determining. Accordingly, on the basis of the
foregoing, we rule that for the purpose of allocating

responsibility in medical negligence cases, an employer-employee

relationship in effect exists between hospitals and their attending
and visiting physicians.

But the Ramos pronouncement is not our only basis in sustaining PSIs
liability. Its liability is also anchored upon the agency principle of apparent
authority or agency
by
estoppeland
the
doctrine
of corporate
negligence which have gained acceptance in the determination of a hospitals liability
for negligent acts of health professionals. The present case serves as a perfect platform
to test the applicability of these doctrines, thus, enriching our jurisprudence.

Apparent authority, or what is sometimes referred to as the holding

out theory, or doctrine of ostensible agency or agency by estoppel,[29] has its origin
from the law of agency. It imposes liability, not as the result of the reality of a
contractual relationship, but rather because of the actions of a principal or an employer
in somehow misleading the public into believing that the relationship or the authority
exists.[30] The concept is essentially one of estoppel and has been explained in this
manner:

The principal is bound by the acts of his agent with the apparent
authority which he knowingly permits the agent to assume, or which
he holds the agent out to the public as possessing. The question in
every case is whether the principal has by his voluntary act placed
the agent in such a situation that a person of ordinary prudence,
conversant with business usages and the nature of the particular
business, is justified in presuming that such agent has authority to
perform the particular act in question.[31]
The applicability of apparent authority in the field of hospital liability was
upheld long time ago in Irving v. Doctor Hospital of Lake Worth, Inc. [32] There, it was
explicitly stated that there does not appear to be any rational basis for excluding the
concept of apparent authority from the field of hospital liability. Thus, in cases
where it can be shown that a hospital, by its actions, has held out a particular physician
as its agent and/or employee and that a patient has accepted treatment from that
physician in the reasonable belief that it is being rendered in behalf of the hospital, then
the hospital will be liable for the physicians negligence.

86

Our jurisdiction recognizes the concept of an agency by implication or

estoppel. Article 1869 of the Civil Code reads:

ART. 1869. Agency may be express, or implied from the acts of the
principal, from his silence or lack of action, or his failure to
repudiate the agency, knowing that another person is acting on his
behalf without authority.

In this case, PSI publicly displays in the lobby of the Medical City Hospital the names
and specializations of the physicians associated or accredited by it, including those of
Dr. Ampil and Dr. Fuentes. We concur with the Court of Appeals conclusion that it is
now estopped from passing all the blame to the physicians whose names it proudly
paraded in the public directory leading the public to believe that it vouched for
their skill and competence. Indeed, PSIs act is tantamount to holding out to the public
that Medical City Hospital, through its accredited physicians, offers quality health
care services. By accrediting Dr. Ampil and Dr. Fuentes and publicly advertising their
qualifications, the hospital created the impression that they were its agents, authorized
to perform medical or surgical services for its patients. As expected, these patients,
Natividad being one of them, accepted the services on the reasonable belief that such
were being rendered by the hospital or its employees, agents, or servants. The trial court
correctly pointed out:

x x x regardless of the education and status in life of the

patient, he ought not be burdened with the defense of absence of
employer-employee relationship between the hospital and the
independent physician whose name and competence are certainly
certified to the general public by the hospitals act of listing him
and his specialty in its lobby directory, as in the case herein. The
high costs of todays medical and health care should at least exact
on the hospital greater, if not broader, legal responsibility for the
conduct of treatment and surgery within its facility by its
accredited physician or surgeon, regardless of whether he is
independent or employed.[33]

The wisdom of the foregoing ratiocination is easy to discern. Corporate

entities, like PSI, are capable of acting only through other individuals, such as
physicians. If these accredited physicians do their job well, the hospital succeeds in its

mission of offering quality medical services and thus profits financially. Logically,
where negligence mars the quality of its services, the hospital should not be allowed to
escape liability for the acts of its ostensible agents.

We now proceed to the doctrine of corporate negligence or corporate responsibility.

One allegation in the complaint in Civil Case No. Q-43332 for negligence and
malpractice is that PSI as owner, operator and manager of Medical City Hospital, did
not perform the necessary supervision nor exercise diligent efforts in the
supervision of Drs. Ampil and Fuentes and its nursing staff, resident doctors, and
medical interns who assisted Drs. Ampil and Fuentes in the performance of their
duties as surgeons.[34] Premised on the doctrine of corporate negligence, the trial court
held that PSI is directly liable for such breach of duty.

We agree with the trial court.

Recent years have seen the doctrine of corporate negligence as the judicial answer to the
problem of allocating hospitals liability for the negligent acts of health practitioners,
absent facts to support the application of respondeat superior or apparent authority. Its
formulation proceeds from the judiciarys acknowledgment that in these modern times,
the duty of providing quality medical service is no longer the sole prerogative and
responsibility of the physician. The modern hospitals have changed structure. Hospitals
now tend to organize a highly professional medical staff whose competence and
performance need to be monitored by the hospitals commensurate with their inherent
responsibility to provide quality medical care.[35]

The doctrine has its genesis in Darling v. Charleston Community Hospital.

There, the Supreme Court of Illinois held that the jury could have found a hospital
negligent, inter alia, in failing to have a sufficient number of trained nurses
attending the patient; failing to require a consultation with or examination by
members of the hospital staff; and failing to review the treatment rendered to the
patient. On the basis of Darling, other jurisdictions held that a hospitals corporate
negligence extends to permitting a physician known to be incompetent to practice
at the hospital.[37] With the passage of time, more duties were expected from hospitals,
among them: (1) the use of reasonable care in the maintenance of safe and adequate
facilities and equipment; (2) the selection and retention of competent
physicians; (3) the overseeing or supervision of all persons who practice medicine
within its walls; and (4) the formulation, adoption and enforcement of adequate rules
[36]

87

and policies that ensure quality care for its patients. [38] Thus, in Tucson Medical Center,
Inc. v. Misevich,[39] it was held that a hospital, following the doctrine of corporate
responsibility, has the duty to see that it meets the standards of responsibilities for the
care of patients.Such duty includes the proper supervision of the members of its
medical staff. And in Bost v. Riley,[40] the court concluded that a patient who enters a
hospital does so with the reasonable expectation that it will attempt to cure him. The
hospital accordingly has the duty to make a reasonable effort to monitor and
oversee the treatment prescribed and administered by the physicians practicing in
its premises.

In the present case, it was duly established that PSI operates

the Medical City Hospital for the purpose and under the concept of providing
comprehensive medical services to the public. Accordingly, it has the duty to
exercise reasonable care to protect from harm all patients admitted into its facility
for medical treatment. Unfortunately, PSI failed to perform such duty. The findings of
the trial court are convincing, thus:

x x x PSIs liability is traceable to its failure to conduct an

investigation of the matter reported in the nota bene of the count
nurse. Such failure established PSIs part in the dark conspiracy of
silence and concealment about the gauzes. Ethical considerations, if
not also legal, dictated the holding of an immediate inquiry into the
events, if not for the benefit of the patient to whom the duty is
primarily owed, then in the interest of arriving at the truth. The Court
cannot accept that the medical and the healing professions, through
their members like defendant surgeons, and their institutions like PSIs
hospital facility, can callously turn their backs on and disregard even a
mere probability of mistake or negligence by refusing or failing to
investigate a report of such seriousness as the one in Natividads case.
It is worthy to note that Dr. Ampil and Dr. Fuentes operated on Natividad with
the assistance of the Medical City Hospitals staff, composed of resident doctors, nurses,
and interns.As such, it is reasonable to conclude that PSI, as the operator of the hospital,
has actual or constructive knowledge of the procedures carried out, particularly the
report of the attending nurses that the two pieces of gauze were missing. In Fridena
v. Evans,[41] it was held that a corporation is bound by the knowledge acquired by or
notice given to its agents or officers within the scope of their authority and in reference
to a matter to which their authority extends. This means that the knowledge of any of
the staff of Medical City Hospital constitutes knowledge of PSI. Now, the failure of PSI,
despite the attending nurses report, to investigate and inform Natividad regarding the
missing gauzes amounts to callous negligence. Not only did PSI breach its duties to
oversee or supervise all persons who practice medicine within its walls, it also

failed to take an active step in fixing the negligence committed. This renders PSI, not
only vicariously liable for the negligence of Dr. Ampil under Article 2180 of the Civil
Code, but also directly liable for its own negligence under Article 2176. In Fridena,the
Supreme Court of Arizona held:

x x x In recent years, however, the duty of care owed to the

patient by the hospital has expanded. The emerging trend is to hold
the hospital responsible where the hospital has failed to monitor
and review medical services being provided within its
walls. See Kahn Hospital Malpractice Prevention, 27 De Paul . Rev.
23 (1977).
Among the cases indicative of the emerging trend is Purcell
v. Zimbelman, 18 Ariz. App. 75,500 P. 2d 335 (1972). In Purcell, the
hospital argued that it could not be held liable for the malpractice of
a medical practitioner because he was an independent contractor
within the hospital. The Court of Appeals pointed out that the
hospital had created a professional staff whose competence and
performance was to be monitored and reviewed by the governing
body of the hospital, and the court held that a hospital would be
negligent where it had knowledge or reason to believe that a
doctor using the facilities was employing a method of treatment
or care which fell below the recognized standard of care.
Subsequent to the Purcell decision, the Arizona Court of
Appeals held that a hospital has certain inherent responsibilities
regarding the quality of medical care furnished to patients
within its walls and it must meet the standards of responsibility
commensurate
with
this
undertaking. Beeck
v. Tucson
General Hospital, 18 Ariz. App. 165, 500 P. 2d 1153 (1972). This
court has confirmed the rulings of the Court of Appeals that a
hospital has the duty of supervising the competence of the doctors on
its staff. x x x.
xxxxxx
In the amended complaint, the plaintiffs did plead that the
operation was performed at the hospital with its knowledge, aid, and
assistance, and that the negligence of the defendants was the
proximate cause of the patients injuries. We find that such general
allegations of negligence, along with the evidence produced at the
trial of this case, are sufficient to support the hospitals liability
based on the theory of negligent supervision.

88

Anent the corollary issue of whether PSI is solidarily liable with Dr. Ampil for
damages, let it be emphasized that PSI, apart from a general denial of its responsibility,
failed to adduce evidence showing that it exercised the diligence of a good father of a
family in the accreditation and supervision of the latter. In neglecting to offer such
proof, PSI failed to discharge its burden under the last paragraph of Article 2180 cited
earlier, and, therefore, must be adjudged solidarily liable with Dr. Ampil. Moreover, as
we have discussed, PSI is also directly liableto the Aganas.

One final word. Once a physician undertakes the treatment and care of a patient, the law
imposes on him certain obligations. In order to escape liability, he must possess that
reasonable degree of learning, skill and experience required by his profession. At the
same time, he must apply reasonable care and diligence in the exercise of his skill and
the application of his knowledge, and exert his best judgment.

WHEREFORE, we DENY all the petitions and AFFIRM the challenged Decision of
the Court of Appeals in CA-G.R. CV No. 42062 and CA-G.R. SP No. 32198.

Costs against petitioners PSI and Dr. Miguel Ampil.

SO ORDERED.

FIRST DIVISION
OSCAR DEL CARMEN, JR.,

G.R. No. 173870

Petitioner,
- versus GERONIMO BACOY, Guardian and

Present:
CORONA, C.J., Chairperson,

89

representing the children, namely:

LEONARDO-DE CASTRO,
Defendants refused to assume civil liability for the victims deaths. Oscar Sr. averred
that
the
Monsaluds
have no cause of action against them because he and his wife do not own the
MARY MARJORIE B. MONSALUD,
BERSAMIN,
jeep and that they were never the employers of Allan.[8] For his part, Oscar Jr. claimed to be a
ERIC B. MONSALUD, METZIE ANN
DEL CASTILLO, and
victim himself. He alleged that Allan and his friends[9] stole his jeep while it was parked beside
his drivers rented house to take it for a joyride. Both he and a vehicle mechanic testified that the
B. MONSALUD, KAREEN B.
VILLARAMA, JR., JJ.
subject jeep can easily be started by mere pushing sans the ignition key. The vehicles engine
MONSALUD, LEONARDO B.
shall then run but without any headlights on.[10] And implying that this was the manner by which
MONSALUD, JR., and CRISTINA B.
the vehicle was illegally taken, Oscar Jr. submitted as part of his documentary evidence the
MONSALUD,
Promulgated:
statements[11] of Jemar Alarcon (Jemar) and Benjamin Andujar (Benjamin). The two, who were
Respondents.
April 25, 2012
with Allan in the jeep at the time of the accident, declared before the investigating officer that
x-------------------------------------------------------------------x
during said time, the vehicles headlights were off.Because of this allegation, Oscar Jr. even filed
before the same trial court a carnapping case against Allan and his companions docketed as
DECISION
Criminal Case No. 93-10380.[12] The case was, however, dismissed for insufficiency of evidence.
[13]

DEL CASTILLO, J.:

In this Petition for Review on Certiorari,[1] the registered owner of a motor vehicle challenges the
Decision[2] dated July 11, 2006 of the Court of Appeals (CA) in CA-G.R. CV No. 67764 which
held him liable for damages to the heirs of the victims who were run over by the said vehicle.
Factual Antecedents
At dawn on New Years Day of 1993, Emilia Bacoy Monsalud (Emilia), along with her spouse
Leonardo Monsalud, Sr. and their daughter Glenda Monsalud, were on their way home from a
Christmas party they attended in Poblacion, Sominot, Zamboanga Del Sur. Upon
reaching Purok Paglaom in Sominot, they were run over by a Fuso passenger jeep bearing plate
number UV-PEK-600 that was being driven by Allan Maglasang (Allan). The jeep was
registered in the name of petitioner Oscar del Carmen, Jr. (Oscar Jr.) and used as a public utility
vehicle plying the Molave, Zamboanga del Sur to Sominot, Zamboanga del Sur and vice versa
route.
Because of the unfortunate incident, Criminal Case No. 93-10347 [3] for Reckless
Imprudence Resulting in Multiple Homicide was filed against Allan before the Regional Trial
Court of Molave, Zamboanga del Sur, Branch 23. In a Decision dated March 13, 1997, said court
declared Allan guilty beyond reasonable doubt of the crime charged.[4]
During the pendency of said criminal case, Emilias father, Geronimo Bacoy
(Geronimo), in behalf of the six minor children[5] of the Monsaluds, filed Civil Case No. 9620219,[6] an independent civil action for damages based on culpa aquiliana. Aside from Allan,
also impleaded therein were his alleged employers, namely, the spouses Oscar del Carmen, Sr.
(Oscar Sr.) and Norma del Carmen(Spouses del Carmen) and the registered owner of the jeep,
their son Oscar Jr. Geronimo prayed for the reimbursement of funeral and burial expenses, as
well as the award of attorneys fees, moral and exemplary damages resulting from the death of the
three victims, and loss of net income earnings of Emilia who was employed as a public school
teacher at the time of her death.[7]

Oscar Jr. clarified that Allan was his jeep conductor and that it was the latters brother,
Rodrigo Maglasang (Rodrigo), who was employed as the driver.[14] In any event, Allans
employment as conductor was already severed before the mishap occurred on January 1, 1993
since he served as such conductor only from the first week of December until December 14,
1992.[15] In support of this, Oscar Jr. presented as witnesses Faustino Sismundo (Faustino) and
Cresencio Junior Baobao (Cresencio). Faustino, a resident of Molave, testified that when he
boarded the jeep heading to Sominot on December 31, 1992, it was Cresencio who was the
conductor. He also believed that Crecencio started to work as such at around December 15 or 16,
1992.[16] Cresencio, for his part, testified that he worked as Oscar Jr.s conductor from December
15, 1992 to January 1, 1993 and that Rodrigo was his driver.[17] He stated that upon learning that
the jeep figured in an accident, he never bothered to verify the news. Instead, he went to Midsalip
to work there as a conductor for his brothers vehicle, thereby terminating his employment with
Oscar Jr.[18]
Oscar Jr. likewise testified that it was routinary that after a days trip, the jeep would be
parked beside Rodrigos rented house[19] for the next early-morning operation.
Geronimo, on the other hand, averred that Allan was still Oscar Jr.s employee
subsequent to December 14, 1992. To prove this, he presented as witnesses Saturnino Jumawan
(Saturnino) and Jose Navarro (Jose). Saturnino testified that he would pay his fare to Allan every
time he would board the jeep in going to Molave and that the last time he rode the subject vehicle
was on December 23, 1992.He also claimed that immediately before January 1, 1993, Rodrigo
and Allan used to park the jeep at the yard of his house. [20] Jose likewise attested that Allan was
still the jeep conductor during the said period as he had ridden the jeep many times in midDecember of 1992.[21]
Ruling of the Regional Trial Court
In its Decision[22] dated April 17, 2000, the RTC exculpated the spouses del Carmen
from civil liability for insufficiency of evidence. However, their son Oscar Jr. was held civilly
liable in a subsidiary capacity. The RTC anchored its ruling primarily on the principle of res ipsa

90

loquitur, i.e., that a presumption of negligence on the part of a defendant may be inferred if the
thing that caused an injury is shown to be under his management and that in the ordinary course
of things, the accident would not have happened had there been an exercise of care. Said court
ratiocinated that Oscar Jr., as the registered owner of the jeep, managed and controlled the same
through his driver Rodrigo, in whose house the jeep was usually parked. Since both Oscar Jr. and
Rodrigo were well aware that the jeep could easily be started by a mere push even without the
ignition key, they should have taken the necessary precaution to prevent the vehicle from being
used by unauthorized persons like Allan. The RTC thus concluded that such lack of proper
precaution, due care and foresight constitute negligence making the registered owner of the
vehicle civilly liable for the damage caused by the same.
The RTC disposed of the case as follows:
Wherefore, judgment is hereby entered in favor of the plaintiffs and
against the defendants Allan Maglasang and Oscar del Carmen, Jr. ordering
1.

Defendant ALLAN MAGLASANG to pay the plaintiffs, and in

case of insolvency, for defendant OSCAR DEL CARMEN, JR., to pay
the plaintiffs, the following sums:
a.
b.
c.
d.
e.
f.
g.

2.

P73,112.00 for their funeral and burial expenses;

P1,000,000.00 moral damages for the death of the late
Emilia Monsalud;
P250,000.00 moral damages for the death of the late
Leonardo Monsalud, Sr.;
P250,000.00 moral damages for the death of the late Glenda
Monsalud;
P40, 000.00, for exemplary damages;
P20,000.00 attorneys fees; and
The cost of this proceedings.

The dismissal of the complaint as against the spouses OSCAR

DEL CARMEN SR. and NORMA DEL CARMEN.
SO ORDERED.[23]

Oscar Jr. moved for reconsideration[24] contending that the provision on vicarious
liability of the employer under Article 2180 of the Civil Code[25] requires the existence of
employer-employee relationship and that the employee was acting within the scope of his
employment when the tort occurred. He stressed that even assuming that Allan was his employee,
he was hired not as a driver but as a conductor. Hence, Allan acted beyond the scope of his
employment when he drove the jeep.
Oscar Jr. also stressed that the fact that the jeep was running without its headlights on at
the time of the accident indubitably shows that the same was stolen. He further alleged that the

jeep could not have been taken by only one person. As Rodrigo declared in Criminal Case No.
93-10380 (carnapping case), based on his experience, the jeep cannot be pushed by only one
person but by at least five people in order for it to start. This was due to the vehicles mass and the
deep canal which separates the parking area from the curved road that was obstructed by a house.
[26]

Setting aside its earlier decision, the lower court in its Order [27] dated June 21, 2000
granted the Motion for Reconsideration and absolved Oscar Jr. from civil liability. It cited Article
103 of the Revised Penal Code which provides that for an employer to be subsidiarily liable for
the criminal acts of his employee, the latter should have committed the same in the discharge of
his duties. The court agreed with Oscar Jr. that this condition is wanting in Allans case as he was
not acting in the discharge of his duties as a conductor when he drove the jeep.
The court also declared the doctrine of res ipsa loquitur inapplicable since the property
owner cannot be made responsible for the damages caused by his property by reason of the
criminal acts of another. It then adjudged that only Allan should bear the consequences of his
criminal acts. Thus:
WHEREFORE, premises considered, the MOTION FOR
RECONSIDERATION is granted, and defendant OSCAR DEL CARMEN
JR. is hereby absolved from all civil liability arising from the felonious acts of
convicted accused ALLAN MAGLASANG.
IT IS SO ORDERED.[28]
Geronimo appealed.
Ruling of the Court of Appeals
In its July 11, 2006 Decision,[29] the CA granted the appeal.
In resolving the case, the CA first determined the preliminary issue of whether there
was an employer-employee relationship between Oscar Jr. and Allan at the time of the accident. It
ruled in the affirmative and gave more credence to the testimonies of Geronimos witnesses than
to those of Oscar Jr.s witnesses, Faustino and Cresencio. The CA ratiocinated that unlike the
witness presented by Geronimo, Faustino never resided in Poblacion and thus has limited
knowledge of the place. His testimony was also unreliable considering that he only rode the
subject jeep twice[30] during the last two weeks of December 1992. As regards Cresencios
testimony, the appellate court found it puzzling why he appeared to have acted uninterested upon
learning that the jeep was the subject of an accident when it was his bread and butter. Said court
likewise considered questionable Oscar Jr.s asseveration that Cresencio replaced Allan as
conductor when Cresencio testified that he replaced a certain Sumagang Jr.[31]
With regard to the main issue, the CA adjudged Oscar Jr. liable to the heirs of the
victims based on the principle that the registered owner of a vehicle is directly and primarily
responsible for the injuries or death of third parties caused by the operation of such
vehicle. It disbelieved Oscar Jr.s defense that the jeep was stolen not only because the carnapping

91

case filed against Allan and his companions was dismissed but also because, given the
circumstances, Oscar Jr. is deemed to have given Allan the implied permission to use the subject
vehicle. To support its conclusion, the CA cited the following circumstances: siblings Rodrigo
and Allan were both employees assigned to the said jeep; after a days work, said vehicle would be
parked just beside Rodrigos house where Allan also lived; the jeep could easily be started even
without the use of an ignition key; the said parking area was not fenced or secured to prevent the
unauthorized use of the vehicle which can be started even without the ignition key.
The dispositive portion of the CA Decision reads:
WHEREFORE, premises considered, the instant appeal is
GRANTED. The assailed Order dated 21 June 2000 of the Regional Trial
Court (Branch 23), Molave, Zamboanga del Sur, in Civil Case No. 96-20,219
is SET ASIDE and a new one is hereby entered. OSCAR DEL CARMEN, Jr.
and ALLAN MAGLASANG are held primarily liable, jointly and severally,
to pay plaintiffs-appellants:
1. Civil indemnity for the death of Emilia Bacoy Monsalud,
Leonardo Monsalud Sr., and Glenda Monsalud in the amount of Fifty
thousand pesos (P50,000.00) each or for the total amount of One hundred
fifty thousand pesos (P150,000.00);
2. Temperate damages in the amount of Twenty-five Thousand
Pesos (P25,000.00) each for the death of Emilia Monsalud, Leonardo
Monsalud Sr., and Glenda Monsalud (collectively the Monsaluds) or for the
total amount of Seventy-five thousand pesos (P75,000.00);
3.
Moral damages in the amount of Fifty Thousand Pesos
(P50,000.00) each for the death of the Monsaluds or for a total amount of
One Hundred Fifty Thousand Pesos (P150,000.00);
4.
(P40,000.00).

Exemplary damages of Forty Thousand Pesos

1.

x x x basing its conclusions and findings on speculations,

surmises and conjectures; misapprehension of facts which are in
conflict with the findings of the trial court;

2.

x x x declaring a question of substance not in accord with

law and with the applicable decisions of the Supreme Court;

3.

x x x departing from the regular course of the judicial

proceedings in the disposition of the appeal and [in going] beyond
the issues of the case.[33]

Oscar Jr. points out that the CA failed to consider the RTCs ruling in its June 21, 2000
Order which was in accord with Article 2180 of the Civil Code, i.e., that the tort committed by an
employee should have been done within the scope of his assigned tasks for an employer to be
held liable under culpa aquiliana. However, the CA never touched upon this matter even if it was
glaring that Allans driving the subject vehicle was not within the scope of his previous
employment as conductor. Moreover, Oscar Jr. insists that his jeep was stolen and stresses that the
liability of a registered owner of a vehicle as to third persons, as well as the doctrine of res ipsa
loquitur, should not apply to him. He asserts that although Allan and his companions were not
found to have committed the crime of carnapping beyond reasonable doubt, it was nevertheless
established that the jeep was illicitly taken by them from a well secured area. This is considering
that the vehicle was running without its headlights on at the time of the accident, a proof that it
was started without the ignition key.
Our Ruling
Petitioners own evidence casts doubt
on his claim that his jeep was stolen
by Allan and his alleged
cohorts. Negligence is presumed
under the doctrine of res ipsa
loquitur.

No pronouncement as to costs.
Oscar Jr.s core defense to release him from responsibility for the death of the Monsaluds is that
his jeep was stolen. He highlights that the unauthorized taking of the jeep from the parking area
was indeed carried out by the clandestine and concerted efforts of Allan and his five companions,
notwithstanding the obstacles surrounding the parking area and the weight of the jeep.

SO ORDERED. [32]

Issues
As a result of the adverse judgment, Oscar Jr. filed this Petition for Review
on Certiorari alleging that the CA erred in:

Notably, the carnapping case filed against Allan and his group was already dismissed by
the RTC for insufficiency of evidence. But even in this civil case and as correctly concluded by
the CA, the evidentiary standard of preponderance of evidence required was likewise not met to
support Oscar Jr.s claim that his jeep was unlawfully taken.

92

Two of Allans co-accused in the carnapping case, Jemar and Benjamin, declared before
the police that when Allan invited them to ride with him, he was already driving the jeep:
04. Q- On that night, on or about 11:30 oclock on December 31, 1992,
where were you?
A- I went to the disco near [the] Public Market[,] Sominot, Zamboanga del
Sur.
05. Q- While you were in disco place, do you know if there was an incident
[that] happened?
A- No sir but when I was in the disco place, at about 3:30 at dawn more or
less[,] January 1, 1993, Allan Maglasang arrived driving the jeep
and he invited me to ride together with Benjamin Andujar,
Dioscoro Sol, Arniel Rezada and Joven Orot.[34]
xxxx
04. Q- On that night, on or about 9:00 oclock in the evening more or less on
December 31, 1992, where were you?
A- I went to the disco at [the] Public Market[,] Sominot, Zamboanga del Sur.
05. Q- While you were in the disco place, do you know if there was an
incident [that] happened?
A- No, sir, but when I was in the disco place, at about 3:30 at dawn more or
less[,] January 1, 1993, Allan Maglasang arrive[d] driving the jeep
and he invited me to ride together with Jemar Alarcon, Dioscoro
Sol, Arniel Rizada and Joven Orot.[35]
There were six accused in the carnapping case. If Jemar and Benjamin were fetched by Allan
who was driving the jeep, this would mean that only three men pushed the jeep contrary to
Rodrigos testimony in Criminal Case No. 93-10380 that it has to be pushed by at least five people
so that it could start without the ignition key.
On direct examination,[36] Oscar Jr. was asked as to what Rodrigo, his driver who had informed
him about the accident on January 1, 1993 at around 7:00 a.m., turned over to him after the
incident, viz:
Q: When Rodrigo Maglasang, your driver informed you about the accident,
what did he carry with him if any and turned over to you?
A: The OR (Official Receipt) and the CR (Certificate of Registration) Sir.
Q: How about the key of the vehicle?
A: It was not turned over, Sir.[37]

Assuming arguendo that Allan stole the jeep by having the same pushed by a group, the ignition
key should then be with Rodrigo as he was entrusted with the jeeps possession. Thus, at the time
Rodrigo faced his employer hours after the incident, it is reasonable to expect that the driver
should have also returned the key to the operator together with the Official Receipt and Certificate
of Registration.Notably, Rodrigo did not do so and instead, the key was allegedly handed over to
the police for reasons unexplained and not available from the records. Interestingly, Oscar Jr.
never presented Rodrigo as his witness. Neither was he able to attest on cross-examination that
Allan really stole the jeep by pushing or that the key was handed over to him by Rodrigo:
Q: On December 31, 1992, you did not know that it was Rodrigo Maglasang
who gave the key to Allan Maglasang. Is that correct?
A: I was not there. So, I do not know but he had an affidavit to show that he
turned it over to the police.
Q: What I was asking you is that, [o]n the night of December 31, 1992, when
it was driven by Allan Maglasang, you did not know that the key
was voluntarily given by Rodrigo Maglasang to Allan Maglasang?
A: I was not there.
Q: So, you could not testify on that, is that correct?
A: Yes Sir, I was not there.[38]
Furthermore, Oscar Jr. acknowledged the dismissal of the carnapping case, thus:
Q: Now, there was a case filed against Allan Maglasang and [his] x x x coaccused x x x [n]amely: Benjamin Andojar, Dioscoro Sol, Joven
Orot, [Jemar Azarcon] and [Arniel] Rizada, for carnapping. Is that
correct?
A: Yes Sir.
Q: That case was filed by you because you alleged that on December 31,
1992, your jeep was carnapped by Allan Maglasang and his coaccused, the said mentioned, is that correct?
A: Yes Sir.
Q: You testified on the case in Aurora, is that correct?
A: Yes, Sir.
Q: And you could well remember that this representation is the counsel of the
co-accused of Allan Maglasang, is that correct?
A: Yes Sir.
Q: And that case for carnapping was dismissed, is that correct?
A: Yes Sir.
Q: Even the case of Allan Maglasang, was also dismissed, is that correct

93

A: Yes Sir.
Q: Because there was no sufficient evidence to establish that the jeep was
carnapped, is that correct?
A: Yes Sir.[39]
While Oscar Jr. highlights that the headlights were not on to support his claim that his
jeep was stolen, this circumstance by itself will not prove that it really was stolen. The reason why
the headlights were not on at the time of the accident was not sufficiently established during the
trial. Besides, the fact that the headlights were not on cannot be exclusively attributed to the lack
of ignition key in starting the jeep as there may be other possibilities such as electrical problems,
broken headlights, or that they were simply turned off.
Hence, sans the testimony of witnesses and other relevant evidence to support the
defense of unauthorized taking, we cannot subscribe to Oscar Jr.s claim that his jeep was
stolen. The evidence on record brings forth more questions than clear-cut answers.
Oscar Jr. alleges that the presumption of negligence under the doctrine of res ipsa
loquitur (literally, the thing speaks for itself) should not have been applied because he was
vigilant in securing his vehicle. He claims that the jeep was parked in a well secured area not
remote to the watchful senses of its driver Rodrigo.
Under the doctrine of res ipsa loquitur, [w]here the thing that caused the injury
complained of is shown to be under the management of the defendant or his servants; and the
accident, in the ordinary course of things, would not happen if those who had management or
control used proper care, it affords reasonable evidence in the absence of a sufficient, reasonable
and logical explanation by defendant that the accident arose from or was caused by the
defendants want of care.[40] Res ipsa loquitur is merely evidentiary, a mode of proof, or a mere
procedural convenience, since it furnishes a substitute for, and relieves a plaintiff of, the burden of
producing a specific proof of negligence.[41] It recognizes that parties may establish prima
facie negligence without direct proof, thus, it allows the principle to substitute for specific proof
of negligence. It permits the plaintiff to present along with proof of the accident, enough of the
attending circumstances to invoke the doctrine, create an inference or presumption of negligence
and thereby place on the defendant the burden of proving that there was no negligence on his part.
[42]
The doctrine is based partly on the theory that the defendant in charge of the instrumentality
which causes the injury either knows the cause of the accident or has the best opportunity of
ascertaining it while the plaintiff has no such knowledge, and is therefore compelled to allege
negligence in general terms.[43]
The requisites of the doctrine of res ipsa loquitur as established by jurisprudence are as
follows:
1) the accident is of a kind which does not ordinarily occur unless
someone is negligent;

2) the cause of the injury was under the exclusive control of the
person in charge and
3) the injury suffered must not have been due to any voluntary
action or contribution on the part of the person injured.[44]
The above requisites are all present in this case. First, no person just
walking along the road would suddenly be sideswiped and run over by an on-rushing vehicle
unless the one in charge of the said vehicle had been negligent. Second, the jeep which caused the
injury was under the exclusive control of Oscar Jr. as its owner. When Oscar Jr. entrusted the
ignition key to Rodrigo, he had the power to instruct him with regard to the specific restrictions of
the jeeps use, including who or who may not drive it. As he is aware that the jeep may run
without the ignition key, he also has the responsibility to park it safely and securely and to instruct
his driver Rodrigo to observe the same precaution. Lastly, there was no showing that the death of
the victims was due to any voluntary action or contribution on their part.
The aforementioned requisites having been met, there now arises a presumption of
negligence against Oscar Jr. which he could have overcome by evidence that he exercised due
care and diligence in preventing strangers from using his jeep. Unfortunately, he failed to do so.
What this Court instead finds worthy of credence is the CAs conclusion that Oscar Jr.
gave his implied permission for Allan to use the jeep. This is in view of Oscar Jr.s failure to
provide solid proof that he ensured that the parking area is well secured and that he had expressly
imposed restrictions as to the use of the jeep when he entrusted the same to his driver Rodrigo. As
fittingly inferred by the CA, the jeep could have been endorsed to Allan by his brother Rodrigo
since as already mentioned, Oscar Jr. did not give Rodrigo any specific and strict instructions on
matters regarding its use.Rodrigo therefore is deemed to have been given the absolute discretion
as to the vehicles operation, including the discretion to allow his brother Allan to use it.
The operator on record of a vehicle is
primarily responsible to third persons
for the deaths or injuries consequent
to its operation, regardless of whether
the employee drove the registered
owners vehicle in connection with his
employment.
Without disputing the factual finding of the CA that Allan was still his
employee at the time of the accident, a finding which we see no reason to disturb, Oscar Jr.
contends that Allan drove the jeep in his private capacity and thus, an employers vicarious liability
for the employees fault under Article 2180 of the Civil Code cannot apply to him.
The contention is no longer novel. In Aguilar Sr. v. Commercial Savings Bank,[45] the
car of therein respondent bank caused the death of Conrado Aguilar, Jr. while being driven by its
assistant vice president. Despite Article 2180, we still held the bank liable for damages for the

94

accident as said provision should defer to the settled doctrine concerning accidents involving
registered motor vehicles, i.e., that the registered owner of any vehicle, even if not used for public
service, would primarily be responsible to the public or to third persons for injuries caused the
latter while the vehicle was being driven on the highways or streets. [46] We have already
ratiocinated that:
The main aim of motor vehicle registration is to identify the owner so that if
any accident happens, or that any damage or injury is caused by the vehicle
on the public highways, responsibility therefor can be fixed on a definite
individual, the registered owner. Instances are numerous where vehicles
running on public highways caused accidents or injuries to pedestrians or
other vehicles without positive identification of the owner or drivers, or with
very scant means of identification. It is to forestall these circumstances, so
inconvenient or prejudicial to the public, that the motor vehicle registration is
primarily ordained, in the interest of the determination of persons responsible
for damages or injuries caused on public highways.[47]
Absent the circumstance of unauthorized use[48] or that the subject vehicle was
stolen which are valid defenses available to a registered owner, Oscar Jr. cannot escape liability
for quasi-delictresulting from his jeeps use.
[49]

All told and considering that the amounts of damages awarded are in accordance with
prevailing jurisprudence, the Court concurs with the findings of the CA and sustains the awards
made. In addition, pursuant to Eastern Shipping Lines, Inc. v. Court of Appeals,[50] an interest of
six percent (6%) per annum on the amounts awarded shall be imposed, computed from the time
the judgment of the RTC is rendered on April 17, 2000 and twelve percent (12%) per annum on
such amount upon finality of this Decision until the payment thereof.
WHEREFORE, premises considered, the instant petition is DENIED. The Decision
dated July 11, 2006 of the Court of Appeals in CA-G.R. CV No. 67764 is
hereby AFFIRMED with further MODIFICATION that an interest of six percent (6%) per
annum on the amounts awarded shall be imposed, computed from the time the judgment of the
Regional Trial Court, Branch 23, Molave, Zamboanga del Sur is rendered on April 17, 2000 and
twelve percent (12%) per annum on such amount upon finality of this Decision until the payment
thereof.
SO ORDERED.

THIRD DIVISION

95

MALAYAN INSURANCE CO., INC.,

Petitioner,

G.R. No. 194320

Previously, particularly on December 15, 1994, Malayan Insurance issued Car

Insurance Policy No. PV-025-00220 in favor of First Malayan Leasing and Finance
Corporation (the assured), insuring the aforementioned Mitsubishi Galant against third
- versus VELASCO, JR., J., Chairperson,
party liability, own damage and theft, among others. Having insured the vehicle against
PERALTA,
such risks, Malayan Insurance claimed in its Complaint dated October 18, 1999 that it
MENDOZA,
paid the damages sustained by the assured amounting to PhP 700,000.[6]
*
RODELIO ALBERTO and
REYES, and
ENRICO ALBERTO REYES,
PERLAS-BERNABE, JJ.
Maintaining that it has been subrogated to the rights and interests of the
Respondents.
assured by operation of law upon its payment to the latter, Malayan Insurance sent
Promulgated:
several demand letters to respondents Rodelio Alberto (Alberto) and Enrico Alberto
February 1, 2012
Reyes (Reyes), the registered owner and the driver, respectively, of the Fuzo Cargo
Truck, requiring them to pay the amount it had paid to the assured. When respondents
x-----------------------------------------------------------------------------------------x
refused to settle their liability, Malayan Insurance was constrained to file a complaint
for damages for gross negligence against respondents.[7]
DECISION
In their Answer, respondents asserted that they cannot be held liable for the
vehicular accident, since its proximate cause was the reckless driving of the Nissan Bus
VELASCO, JR., J.:
driver. They alleged that the speeding bus, coming from the service road of EDSA,
maneuvered its way towards the middle lane without due regard to Reyes right of
The Case
way. When the Nissan Bus abruptly stopped, Reyes stepped hard on the brakes but the
braking action could not cope with the inertia and failed to gain sufficient traction. As a
Before Us is a Petition for Review on Certiorari under Rule 45, seeking to consequence, the Fuzo Cargo Truck hit the rear end of the Mitsubishi Galant, which, in
reverse and set aside the July 28, 2010 Decision [1] of the Court of Appeals (CA) and its turn, hit the rear end of the vehicle in front of it. The Nissan Bus, on the other hand,
October 29, 2010 Resolution[2] denying the motion for reconsideration filed by sideswiped the Fuzo Cargo Truck, causing damage to the latter in the amount of PhP
petitioner Malayan Insurance Co., Inc. (Malayan Insurance). The July 28, 2010 CA 20,000. Respondents also controverted the results of the Police Report, asserting that it
Decision reversed and set aside the Decision [3] dated February 2, 2009 of the Regional was based solely on the biased narration of the Nissan Bus driver.[8]
Trial Court, Branch 51 in Manila.
After the termination of the pre-trial proceedings, trial ensued. Malayan
Insurance presented the testimony of its lone witness, a motor car claim adjuster, who
The Facts
attested that he processed the insurance claim of the assured and verified the documents
submitted to him. Respondents, on the other hand, failed to present any evidence.
At around 5 oclock in the morning of December 17, 1995, an accident occurred
at the corner of EDSA and Ayala Avenue, Makati City, involving four (4) vehicles, to
In its Decision dated February 2, 2009, the trial court, in Civil Case No. 99wit: (1) a Nissan Bus operated by Aladdin Transit with plate number NYS 381; (2) an
95885, ruled in favor of Malayan Insurance and declared respondents liable for
Isuzu Tanker with plate number PLR 684; (3) a Fuzo Cargo Truck with plate number damages. The dispositive portion reads:
PDL 297; and (4) a Mitsubishi Galant with plate number TLM 732.[4]
WHEREFORE, judgment is hereby rendered in favor of the
Based on the Police Report issued by the on-the-spot investigator, Senior
plaintiff against defendants jointly and severally to pay plaintiff the
Police Officer 1 Alfredo M. Dungga (SPO1 Dungga), the Isuzu Tanker was in front of
following:
the Mitsubishi Galant with the Nissan Bus on their right side shortly before the
1. The amount of P700,000.00 with legal interest
vehicular incident. All three (3) vehicles were at a halt along EDSA facing the south
from the time of the filing of the complaint;
direction when the Fuzo Cargo Truck simultaneously bumped the rear portion of the
2. Attorneys fees of P10,000.00 and;
Mitsubishi Galant and the rear left portion of the Nissan Bus. Due to the strong impact,
3. Cost of suit.
these two vehicles were shoved forward and the front left portion of the Mitsubishi
Galant rammed into the rear right portion of the Isuzu Tanker.[5]
SO ORDERED.[9]
Present:

96

On the other hand, respondents submit the following issues in its

Memorandum[15] dated July 7, 2011:
Dissatisfied, respondents filed an appeal with the CA, docketed as CA-G.R.
CV No. 93112. In its Decision dated July 28, 2010, the CA reversed and set aside the
Decision of the trial court and ruled in favor of respondents, disposing:

I
WHETHER THE CA IS CORRECT IN DISMISSING THE
COMPLAINT FOR FAILURE OF MALAYAN INSURANCE TO
OVERCOME THE BURDEN OF PROOF REQUIRED TO
ESTABLISH THE NEGLIGENCE OF RESPONDENTS.

WHEREFORE, the foregoing considered, the instant appeal

is hereby GRANTED and the assailed Decision dated 2 February
2009 REVERSED and SET ASIDE. The Complaint dated 18
October 1999 is hereby DISMISSED for lack of merit. No costs.

II
WHETHER THE PIECES OF EVIDENCE PRESENTED BY
MALAYAN INSURANCE ARE SUFFICIENT TO CLAIM FOR
THE AMOUNT OF DAMAGES.

SO ORDERED.[10]
The CA held that the evidence on record has failed to establish not only
negligence on the part of respondents, but also compliance with the other requisites and
the consequent right of Malayan Insurance to subrogation.[11] It noted that the police
report, which has been made part of the records of the trial court, was not properly
identified by the police officer who conducted the on-the-spot investigation of the
subject collision. It, thus, held that an appellate court, as a reviewing body, cannot
rightly appreciate firsthand the genuineness of an unverified and unidentified document,
much less accord it evidentiary value.[12]
Subsequently, Malayan Insurance filed its Motion for Reconsideration, arguing
that a police report is a prima facie evidence of the facts stated in it. And inasmuch as
they never questioned the presentation of the report in evidence, respondents are
deemed to have waived their right to question its authenticity and due execution.[13]
In its Resolution dated October 29, 2010, the CA denied the motion for
reconsideration. Hence, Malayan Insurance filed the instant petition.
The Issues
In its Memorandum[14] dated June 27, 2011, Malayan Insurance raises the
following issues for Our consideration:
I
WHETHER THE CA ERRED IN REFUSING ADMISSIBILITY OF
THE POLICE REPORT SINCE THE POLICE INVESTIGATOR
WHO PREPARED THE SAME DID NOT ACTUALLY TESTIFY IN
COURT THEREON.
II
WHETHER THE SUBROGATION OF MALAYAN INSURANCE IS
IMPAIRED AND/OR DEFICIENT.

III
WHETHER THE SUBROGATION OF MALAYAN INSURANCE
HAS PASSED COMPLIANCE AND REQUISITES AS PROVIDED
UNDER PERTINENT LAWS.

Essentially, the issues boil down to the following: (1) the admissibility of the
police report; (2) the sufficiency of the evidence to support a claim for gross negligence;
and (3) the validity of subrogation in the instant case.
Our Ruling
The petition has merit.
Admissibility of the Police Report
Malayan Insurance contends that, even without the presentation of the police
investigator who prepared the police report, said report is still admissible in evidence,
especially since respondents failed to make a timely objection to its presentation in
evidence.[16] Respondents counter that since the police report was never confirmed by
the investigating police officer, it cannot be considered as part of the evidence on
record.[17]
Indeed, under the rules of evidence, a witness can testify only to those facts
which the witness knows of his or her personal knowledge, that is, which are derived
from the witness own perception.[18] Concomitantly, a witness may not testify on matters
which he or she merely learned from others either because said witness was told or read
or heard those matters.[19] Such testimony is considered hearsay and may not be received
as proof of the truth of what the witness has learned. This is known as the hearsay rule.
[20]

97

As discussed in D.M. Consunji, Inc. v. CA,[21] Hearsay is not limited to oral

testimony or statements; the general rule that excludes hearsay as evidence applies to
written, as well as oral statements.
There are several exceptions to the hearsay rule under the Rules of Court,
among which are entries in official records.[22] Section 44, Rule 130 provides:
Entries in official records made in the performance of his
duty by a public officer of the Philippines, or by a person in the
performance of a duty specially enjoined by law are prima facie
evidence of the facts therein stated.
In Alvarez v. PICOP Resources,[23] this Court reiterated the requisites for the
admissibility in evidence, as an exception to the hearsay rule of entries in official
records, thus: (a) that the entry was made by a public officer or by another person
specially enjoined by law to do so; (b) that it was made by the public officer in the
performance of his or her duties, or by such other person in the performance of a duty
specially enjoined by law; and (c) that the public officer or other person had sufficient
knowledge of the facts by him or her stated, which must have been acquired by the
public officer or other person personally or through official information.
Notably, the presentation of the police report itself is admissible as an
exception to the hearsay rule even if the police investigator who prepared it was not
presented in court, as long as the above requisites could be adequately proved.[24]
Here, there is no dispute that SPO1 Dungga, the on-the-spot investigator,
prepared the report, and he did so in the performance of his duty. However, what is not
clear is whether SPO1 Dungga had sufficient personal knowledge of the facts contained
in his report. Thus, the third requisite is lacking.
Respondents failed to make a timely objection to the police reports
presentation in evidence; thus, they are deemed to have waived their right to do so.
[25]
As a result, the police report is still admissible in evidence.

Sufficiency of Evidence
Malayan Insurance contends that since Reyes, the driver of the Fuzo Cargo
truck, bumped the rear of the Mitsubishi Galant, he is presumed to be negligent unless
proved otherwise. It further contends that respondents failed to present any evidence to
overturn the presumption of negligence. [26] Contrarily, respondents claim that since
Malayan Insurance did not present any witness who shall affirm any negligent act of
Reyes in driving the Fuzo Cargo truck before and after the incident, there is no evidence
which would show negligence on the part of respondents.[27]

We agree with Malayan Insurance. Even if We consider the inadmissibility of

the police report in evidence, still, respondents cannot evade liability by virtue of the res
ipsa loquiturdoctrine. The D.M. Consunji, Inc. case is quite elucidating:
Petitioners contention, however, loses relevance in the face
of the application of res ipsa loquitur by the CA. The effect of the
doctrine is to warrant a presumption or inference that the mere fall of
the elevator was a result of the person having charge of the
instrumentality was negligent. As a rule of evidence, the doctrine
of res ipsa loquitur is peculiar to the law of negligence which
recognizes thatprima facie negligence may be established without
direct proof and furnishes a substitute for specific proof of negligence.
The concept of res ipsa loquitur has been explained in this
wise:
While negligence is not ordinarily inferred or
presumed, and while the mere happening of an accident or
injury will not generally give rise to an inference or
presumption that it was due to negligence on defendants part,
under the doctrine of res ipsa loquitur, which means,
literally, the thing or transaction speaks for itself, or in one
jurisdiction, that the thing or instrumentality speaks for itself,
the facts or circumstances accompanying an injury may be
such as to raise a presumption, or at least permit an inference
of negligence on the part of the defendant, or some other
person who is charged with negligence.
x x x where it is shown that the thing or
instrumentality which caused the injury complained of was
under the control or management of the defendant, and that
the occurrence resulting in the injury was such as in the
ordinary course of things would not happen if those who had
its control or management used proper care, there is
sufficient evidence, or, as sometimes stated, reasonable
evidence, in the absence of explanation by the defendant, that
the injury arose from or was caused by the defendants want
of care.
One of the theoretical bases for the doctrine is its necessity,
i.e., that necessary evidence is absent or not available.
The res ipsa loquitur doctrine is based in part upon
the theory that the defendant in charge of the instrumentality
which causes the injury either knows the cause of the

98

accident or has the best opportunity of ascertaining it and

that the plaintiff has no such knowledge, and therefore is
compelled to allege negligence in general terms and to rely
upon the proof of the happening of the accident in order to
establish negligence. The inference which the doctrine
permits is grounded upon the fact that the chief evidence of
the true cause, whether culpable or innocent, is practically
accessible to the defendant but inaccessible to the injured
person.
It has been said that the doctrine of res ipsa
loquitur furnishes a bridge by which a plaintiff, without
knowledge of the cause, reaches over to defendant who
knows or should know the cause, for any explanation of care
exercised by the defendant in respect of the matter of which
the plaintiff complains. The res ipsa loquitur doctrine,
another court has said, is a rule of necessity, in that it
proceeds on the theory that under the peculiar circumstances
in which the doctrine is applicable, it is within the power of
the defendant to show that there was no negligence on his
part, and direct proof of defendants negligence is beyond
plaintiffs power. Accordingly, some courts add to the three
prerequisites for the application of the res ipsa
loquitur doctrine the further requirement that for the res ipsa
loquitur doctrine to apply, it must appear that the injured
party had no knowledge or means of knowledge as to the
cause of the accident, or that the party to be charged with
negligence has superior knowledge or opportunity for
explanation of the accident.
The CA held that all the requisites of res ipsa loquitur are
present in the case at bar:
There is no dispute that appellees husband fell down
from the 14th floor of a building to the basement while he
was working with appellants construction project, resulting
to his death. The construction site is within the exclusive
control and management of appellant. It has a safety
engineer, a project superintendent, a carpenter leadman and
others who are in complete control of the situation therein.
The circumstances of any accident that would occur therein
are peculiarly within the knowledge of the appellant or its
employees. On the other hand, the appellee is not in a
position to know what caused the accident. Res ipsa
loquitur is a rule of necessity and it applies where evidence is
absent or not readily available, provided the following

requisites are present: (1) the accident was of a kind which

does not ordinarily occur unless someone is negligent; (2) the
instrumentality or agency which caused the injury was under
the exclusive control of the person charged with negligence;
and (3) the injury suffered must not have been due to any
voluntary action or contribution on the part of the person
injured. x x x.
No worker is going to fall from the 14th floor of a
building to the basement while performing work in a
construction site unless someone is negligent[;] thus, the first
requisite for the application of the rule of res ipsa loquitur is
present. As explained earlier, the construction site with all its
paraphernalia and human resources that likely caused the
injury is under the exclusive control and management of
appellant[;] thus[,] the second requisite is also present. No
contributory negligence was attributed to the appellees
deceased husband[;] thus[,] the last requisite is also present.
All the requisites for the application of the rule of res ipsa
loquitur are present, thus a reasonable presumption or
inference of appellants negligence arises. x x x.
Petitioner does not dispute the existence of the requisites for
the application of res ipsa loquitur, but argues that the presumption or
inference that it was negligent did not arise since it proved that it
exercised due care to avoid the accident which befell respondents
husband.
Petitioner apparently misapprehends the procedural effect of
the doctrine. As stated earlier, the defendants negligence is presumed
or inferred when the plaintiff establishes the requisites for the
application of res ipsa loquitur. Once the plaintiff makes out a prima
facie case of all the elements, the burden then shifts to defendant to
explain. The presumption or inference may be rebutted or overcome
by other evidence and, under appropriate circumstances a disputable
presumption, such as that of due care or innocence, may outweigh the
inference. It is not for the defendant to explain or prove its defense to
prevent the presumption or inference from arising. Evidence by the
defendant of say, due care, comes into play only after the
circumstances for the application of the doctrine has been established.
[28]

In the case at bar, aside from the statement in the police report, none of the
parties disputes the fact that the Fuzo Cargo Truck hit the rear end of the Mitsubishi
Galant, which, in turn, hit the rear end of the vehicle in front of it. Respondents,
however, point to the reckless driving of the Nissan Bus driver as the proximate cause

99

of the collision, which allegation is totally unsupported by any evidence on record. And
assuming that this allegation is, indeed, true, it is astonishing that respondents never
even bothered to file a cross-claim against the owner or driver of the Nissan Bus.
What is at once evident from the instant case, however, is the presence of all
the requisites for the application of the rule of res ipsa loquitur. To reiterate, res ipsa
loquitur is a rule of necessity which applies where evidence is absent or not readily
available. As explained in D.M. Consunji, Inc., it is partly based upon the theory that the
defendant in charge of the instrumentality which causes the injury either knows the
cause of the accident or has the best opportunity of ascertaining it and that the plaintiff
has no such knowledge, and, therefore, is compelled to allege negligence in general
terms and to rely upon the proof of the happening of the accident in order to establish
negligence.
As mentioned above, the requisites for the application of the res ipsa
loquitur rule are the following: (1) the accident was of a kind which does not ordinarily
occur unless someone is negligent; (2) the instrumentality or agency which caused the
injury was under the exclusive control of the person charged with negligence; and (3)
the injury suffered must not have been due to any voluntary action or contribution on
the part of the person injured.[29]
In the instant case, the Fuzo Cargo Truck would not have had hit the rear end
of the Mitsubishi Galant unless someone is negligent. Also, the Fuzo Cargo Truck was
under the exclusive control of its driver, Reyes. Even if respondents avert liability by
putting the blame on the Nissan Bus driver, still, this allegation was self-serving and
totally unfounded. Finally, no contributory negligence was attributed to the driver of the
Mitsubishi Galant. Consequently, all the requisites for the application of the doctrine
of res ipsa loquitur are present, thereby creating a reasonable presumption of negligence
on the part of respondents.
It is worth mentioning that just like any other disputable presumptions or
inferences, the presumption of negligence may be rebutted or overcome by other
evidence to the contrary. It is unfortunate, however, that respondents failed to present
any evidence before the trial court. Thus, the presumption of negligence remains.
Consequently, the CA erred in dismissing the complaint for Malayan Insurances
adverted failure to prove negligence on the part of respondents.
Validity of Subrogation
Malayan Insurance contends that there was a valid subrogation in the instant
case, as evidenced by the claim check voucher [30] and the Release of Claim and
Subrogation Receipt[31] presented by it before the trial court. Respondents, however,
claim that the documents presented by Malayan Insurance do not indicate certain
important details that would show proper subrogation.

As noted by Malayan Insurance, respondents had all the opportunity, but failed
to object to the presentation of its evidence. Thus, and as We have mentioned earlier,
respondents are deemed to have waived their right to make an objection. As this Court
held in Asian Construction and Development Corporation v. COMFAC Corporation:
The rule is that failure to object to the offered evidence
renders it admissible, and the court cannot, on its own, disregard
such evidence. We note that ASIAKONSTRUCTs counsel of record
before the trial court, Atty. Bernard Dy, who actively participated in
the initial stages of the case stopped attending the hearings when
COMFAC was about to end its presentation. Thus,
ASIAKONSTRUCT could not object to COMFACs offer of evidence
nor present evidence in its defense; ASIAKONSTRUCT was deemed
by the trial court to have waived its chance to do so.
Note also that when a party desires the court to reject the
evidence offered, it must so state in the form of a timely objection
and it cannot raise the objection to the evidence for the first time
on appeal. Because of a partys failure to timely object, the
evidence becomes part of the evidence in the case. Thereafter, all
the parties are considered bound by any outcome arising from the
offer of evidence properly presented.[32] (Emphasis supplied.)
Bearing in mind that the claim check voucher and the Release of Claim and
Subrogation Receipt presented by Malayan Insurance are already part of the evidence
on record, and since it is not disputed that the insurance company, indeed, paid PhP
700,000 to the assured, then there is a valid subrogation in the case at bar. As explained
in Keppel Cebu Shipyard, Inc. v. Pioneer Insurance and Surety Corporation:
Subrogation is the substitution of one person by another with
reference to a lawful claim or right, so that he who is substituted
succeeds to the rights of the other in relation to a debt or claim,
including its remedies or securities. The principle covers a situation
wherein an insurer has paid a loss under an insurance policy is entitled
to all the rights and remedies belonging to the insured against a third
party with respect to any loss covered by the policy. It contemplates
full substitution such that it places the party subrogated in the shoes of
the creditor, and he may use all means that the creditor could employ
to enforce payment.
We have held that payment by the insurer to the insured
operates as an equitable assignment to the insurer of all the remedies
that the insured may have against the third party whose negligence or

100

wrongful act caused the loss. The right of subrogation is not

dependent upon, nor does it grow out of, any privity of contract. It
accrues simply upon payment by the insurance company of the
insurance claim. The doctrine of subrogation has its roots in equity. It
is designed to promote and to accomplish justice; and is the mode that
equity adopts to compel the ultimate payment of a debt by one who, in
justice, equity, and good conscience, ought to pay.[33]
Considering the above ruling, it is only but proper that Malayan Insurance be
subrogated to the rights of the assured.
WHEREFORE, the petition is hereby GRANTED. The CAs July 28, 2010
Decision and October 29, 2010 Resolution in CA-G.R. CV No. 93112 are
hereby REVERSED and SET ASIDE. The Decision dated February 2, 2009 issued by
the trial court in Civil Case No. 99-95885 is hereby REINSTATED.
No pronouncement as to cost.
SO ORDERED.

SECOND DIVISION

101

G.R. No. 160889

April 27, 2007
DR. MILAGROS L. CANTRE, Petitioner,

vs.
SPS. JOHN DAVID Z. GO and NORA S. GO, Respondents.
DECISION
QUISUMBING, J.:
For review on certiorari are the Decision 1 dated October 3,
2002 and Resolution2 dated November 19, 2003 of the Court of
Appeals in CA-G.R. CV No. 58184, which affirmed with modification
the Decision3 dated March 3, 1997 of the Regional Trial Court of
Quezon City, Branch 98, in Civil Case No. Q-93-16562.
The facts, culled from the records, are as follows:
Petitioner Dr. Milagros L. Cantre is a specialist in Obstetrics and
Gynecology at the Dr. Jesus Delgado Memorial Hospital. She was the
attending physician of respondent Nora S. Go, who was admitted at
the said hospital on April 19, 1992.
At 1:30 a.m. of April 20, 1992, Nora gave birth to her fourth
child, a baby boy. However, at around 3:30 a.m., Nora suffered
profuse bleeding inside her womb due to some parts of the placenta
which were not completely expelled from her womb after delivery.
Consequently, Nora suffered hypovolemic shock, resulting in a drop in
her blood pressure to "40" over "0." Petitioner and the assisting
resident physician performed various medical procedures to stop the
bleeding and to restore Noras blood pressure. Her blood pressure was
frequently monitored with the use of a sphygmomanometer. While
petitioner was massaging Noras uterus for it to contract and stop
bleeding, she ordered a droplight to warm Nora and her baby. 4 Nora
remained unconscious until she recovered.
While in the recovery room, her husband, respondent John
David Z. Go noticed a fresh gaping wound two and a half (2 ) by
three and a half (3 ) inches in the inner portion of her left arm, close
to the armpit.5 He asked the nurses what caused the injury. He was
informed it was a burn. Forthwith, on April 22, 1992, John David filed a
request for investigation.6 In response, Dr. Rainerio S. Abad, the
medical director of the hospital, called petitioner and the assisting
resident physician to explain what happened. Petitioner said the blood
pressure cuff caused the injury.
On May 7, 1992, John David brought Nora to the National
Bureau of Investigation for a physical examination, which was
conducted by medico-legal officer Dr. Floresto Arizala, Jr. 7 The medicolegal officer later testified that Noras injury appeared to be a burn
and that a droplight when placed near the skin for about 10 minutes
could cause such burn.8 He dismissed the likelihood that the wound
was caused by a blood pressure cuff as the scar was not around the
arm, but just on one side of the arm.9

On May 22, 1992, Noras injury was referred to a plastic

surgeon at the Dr. Jesus Delgado Memorial Hospital for skin
grafting.10 Her wound was covered with skin sourced from her
abdomen, which consequently bore a scar as well. About a year after,
on April 30, 1993, scar revision had to be performed at the same
hospital.11 The surgical operation left a healed linear scar in Noras left
arm about three inches in length, the thickest portion rising about
one-fourth (1/4) of an inch from the surface of the skin. The costs of
the skin grafting and the scar revision were shouldered by the
hospital.12
Unfortunately,
Noras
arm
would
never
be
the
same.1a\^/phi1.net Aside from the unsightly mark, the pain in her left
arm remains. When sleeping, she has to cradle her wounded arm. Her
movements now are also restricted. Her children cannot play with the
left side of her body as they might accidentally bump the injured arm,
which aches at the slightest touch.
Thus, on June 21, 1993, respondent spouses filed a
complaint13 for damages against petitioner, Dr. Abad, and the
hospital. Finding in favor of respondent spouses, the trial court
decreed:
In view of the foregoing consideration, judgment is hereby
rendered in favor of the plaintiffs and against the defendants,
directing the latters, (sic) jointly and severally
(a) to pay the sum of Five Hundred Thousand Pesos
(P500,000.00) in moral damages;
(b) to pay the sum of One Hundred Fifty Thousand Pesos
(P150,000.00) exemplary damages;
(c) to pay the sum of Eighty Thousand Pesos (P80,000.00)
nominal damages;
(d) to pay Fifty Thousand Pesos (P50,000.00) for and as
attorneys fees; and
(e) to pay Six Thousand Pesos (P6,000.00) litigation expenses.
SO ORDERED.14
Petitioner, Dr. Abad, and the hospital all appealed to the Court
of Appeals, which affirmed with modification the trial court decision,
thus:
WHEREFORE, in view of all the foregoing, and finding no
reversible error in the appealed Decision dated March 3, 1997 of
Branch 98 of the Regional Trial Court of Quezon City in Civil Case No.
Q-93-16562, the same is hereby AFFIRMED, with the following
MODIFICATIONS:
1. Ordering defendant-appellant Dra. Milagros [L.] Cantre only
to pay plaintiffs-appellees John David Go and Nora S. Go the sum of
P200,000.00 as moral damages;
2. Deleting the award [of] exemplary damages, attorneys fees
and expenses of litigation;1awphi1.nt

102

3. Dismissing the complaint with respect to defendantsappellants Dr. Rainerio S. Abad and Delgado Clinic, Inc.;
4. Dismissing the counterclaims of defendants-appellants for
lack of merit; and
5. Ordering defendant-appellant Dra. Milagros [L.] Cantre only
to pay the costs.
SO ORDERED.15
Petitioners motion for reconsideration was denied by the Court
of Appeals. Hence, the instant petition assigning the following as
errors and issues:
I.
WHETHER OR NOT, THE LOWER COURT, AND THE COURT OF
APPEALS COMMITTED GRAVE ABUSE OF THEIR DISCRETION WHEN,
NOTWITHSTANDING THAT BOTH PARTIES HAVE RESTED THEIR
RESPECTIVE CASES, THE LOWER COURT ADMITTED THE ADDITIONAL
EXHIBITS FURTHER OFFERED BY RESPONDENTS NOT TESTIFIED TO BY
ANY WITNESS AND THIS DECISION OF THE LOWER COURT WAS
UPHELD BY THE COURT OF APPEALS LIKEWISE COMMITTING GRAVE
ABUSE OF DISCRETION;
II.
WHETHER OR NOT THE LOWER COURT COMMITTED GRAVE
ABUSE OF ITS DISCRETION WHEN, CONTRARY TO PREPONDERANCE
OF EVIDENCE PRESENTED BY THE PETITIONER, IT RULED THAT THE
PETITIONER HAS NOT AMPLY SHOWED THAT THE DROPLIGHT DID NOT
TOUCH THE BODY OF MRS. NORA GO, AND THIS DECISION OF THE
LOWER COURT WAS UPHELD BY THE COURT OF APPEALS LIKEWISE
COMMITTING GRAVE ABUSE OF DISCRETION;
III.
WHETHER OR NOT THE LOWER COURT COMMITTED GRAVE
ABUSE OF ITS DISCRETION WHEN, CONTRARY TO PREPONDERANCE
OF EVIDENCE PRESENTED BY THE PETITIONER, IT RULED THAT
PETITIONER DRA. CANTRE WAS NOT ABLE TO AMPLY EXPLAIN HOW
THE INJURY (BLISTERS) IN THE LEFT INNER ARM OF RESPONDENT
MRS. GO CAME ABOUT;
IV.
WHETHER OR NOT THE COURT OF APPEALS COMMITTED
GRAVE ABUSE OF ITS DISCRETION WHEN IT MADE A RULING ON THE
RESPONDENTS INJURY QUOTING THE TESTIMONY OF SOMEONE WHO
WAS NOT PRESENT AND HAS NOT SEEN THE ORIGINAL, FRESH INJURY
OF RESPONDENT MRS. NORA GO;
V.
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ABUSING
ITS DISCRETION RULED THAT PETITIONER DRA. CANTRE SHOULD
HAVE INTENDED TO INFLICT THE INJURY TO SAVE THE LIFE OF
RESPONDENT MRS. GO;
VI.

WHETHER OR NOT THE LOWER COURT AND THE COURT [OF]

APPEALS COMMITTED GRAVE ABUSE OF DISCRETION WHEN,
CONTRARY TO THE DETAILED PROCEDURES DONE BY PETITIONER,
BOTH RULED THAT THE RESPONDENT WAS LEFT TO THE CARE OF THE
NURSING STAFF;
VII.
WHETHER OR NOT THE LOWER COURT COMMITTED GRAVE
ABUSE OF DISCRETION WHEN, CONTRARY TO THE MEDICAL
PURPOSES OF COSMETIC SURGERY, IT RULED THAT THE COSMETIC
SURGERY MADE THE SCARS EVEN MORE UGLY AND DECLARED THE
COSMETIC SURGERY A FAILURE;
VIII.
WHETHER OR NOT THE LOWER COURT GRAVELY ABUSE OF
(SIC) DISCRETION WHEN, CONTRARY TO RESPONDENTS CONTRARY
TESTIMONIES AND THE ABSENCE OF ANY TESTIMONY, IT RULED THAT
THEY ARE ENTITLED TO DAMAGES AND WHICH WAS UPHELD,
ALTHOUGH MODIFIED, BY THE COURT OF APPEALS LIKEWISE ABUSING
ITS DISCRETION.16
Petitioner contends that additional documentary exhibits not
testified to by any witness are inadmissible in evidence because they
deprived her of her constitutional right to confront the witnesses
against her. Petitioner insists the droplight could not have touched
Noras body. She maintains the injury was due to the constant taking
of Noras blood pressure. Petitioner also insinuates the Court of
Appeals was misled by the testimony of the medico-legal officer who
never saw the original injury before plastic surgery was performed.
Finally, petitioner stresses that plastic surgery was not intended to
restore respondents injury to its original state but rather to prevent
further complication.
Respondents, however, counter that the genuineness and due
execution of the additional documentary exhibits were duly admitted
by petitioners counsel. Respondents point out that petitioners blood
pressure cuff theory is highly improbable, being unprecedented in
medical history and that the injury was definitely caused by the
droplight. At any rate, they argue, even if the injury was brought
about by the blood pressure cuff, petitioner was still negligent in her
duties as Noras attending physician.
Simply put, the threshold issues for resolution are: (1) Are the
questioned additional exhibits admissible in evidence? (2) Is petitioner
liable for the injury suffered by respondent Nora Go? Thereafter, the
inquiry is whether the appellate court committed grave abuse of
discretion in its assailed issuances.
As to the first issue, we agree with the Court of Appeals that
said exhibits are admissible in evidence. We note that the questioned
exhibits consist mostly of Noras medical records, which were
produced by the hospital during trial pursuant to a subpoena duces

103

tecum. Petitioners counsel admitted the existence of the same when

they were formally offered for admission by the trial court. In any
case, given the particular circumstances of this case, a ruling on the
negligence of petitioner may be made based on the res ipsa
loquitur doctrine even in the absence of such additional exhibits.
Petitioners contention that the medico-legal officer who
conducted Noras physical examination never saw her original injury
before plastic surgery was performed is without basis and
contradicted by the records. Records show that the medico-legal
officer conducted the physical examination on May 7, 1992, while the
skin grafting and the scar revision were performed on Nora on May
22, 1992 and April 30, 1993, respectively.
Coming now to the substantive matter, is petitioner liable for
the injury suffered by respondent Nora Go?
The Hippocratic Oath mandates physicians to give primordial
consideration to the well-being of their patients. If a doctor fails to live
up to this precept, he is accountable for his acts. This
notwithstanding, courts face a unique restraint in adjudicating
medical negligence cases because physicians are not guarantors of
care and, they never set out to intentionally cause injury to their
patients. However, intent is immaterial in negligence cases because
where negligence exists and is proven, it automatically gives the
injured a right to reparation for the damage caused.17
In cases involving medical negligence, the doctrine of res ipsa
loquitur allows the mere existence of an injury to justify a
presumption of negligence on the part of the person who controls the
instrument causing the injury, provided that the following requisites
concur:
1. The accident is of a kind which ordinarily does not occur in
the absence of someones negligence;
2. It is caused by an instrumentality within the exclusive
control of the defendant or defendants; and
3. The possibility of contributing conduct which would make
the plaintiff responsible is eliminated.18
As to the first requirement, the gaping wound on Noras arm is
certainly not an ordinary occurrence in the act of delivering a baby,
far removed as the arm is from the organs involved in the process of
giving birth. Such injury could not have happened unless negligence
had set in somewhere.
Second, whether the injury was caused by the droplight or by
the blood pressure cuff is of no moment. Both instruments are
deemed within the exclusive control of the physician in charge under
the "captain of the ship" doctrine. This doctrine holds the surgeon in
charge of an operation liable for the negligence of his assistants
during the time when those assistants are under the surgeons
control.19 In this particular case, it can be logically inferred that

petitioner, the senior consultant in charge during the delivery of

Noras baby, exercised control over the assistants assigned to both
the use of the droplight and the taking of Noras blood pressure.
Hence, the use of the droplight and the blood pressure cuff is also
within petitioners exclusive control.
Third, the gaping wound on Noras left arm, by its very nature
and considering her condition, could only be caused by something
external to her and outside her control as she was unconscious while
in hypovolemic shock. Hence, Nora could not, by any stretch of the
imagination, have contributed to her own injury.
Petitioners defense that Noras wound was caused not by the
droplight but by the constant taking of her blood pressure, even if the
latter was necessary given her condition, does not absolve her from
liability. As testified to by the medico-legal officer, Dr. Arizala, Jr., the
medical practice is to deflate the blood pressure cuff immediately
after each use. Otherwise, the inflated band can cause injury to the
patient similar to what could have happened in this case. Thus, if
Noras wound was caused by the blood pressure cuff, then the taking
of Noras blood pressure must have been done so negligently as to
have inflicted a gaping wound on her arm, 20 for which petitioner
cannot escape liability under the "captain of the ship" doctrine.
Further, petitioners argument that the failed plastic surgery
was not intended as a cosmetic procedure, but rather as a measure to
prevent complication does not help her case. It does not negate
negligence on her part.
Based on the foregoing, the presumption that petitioner was
negligent in the exercise of her profession stands unrebutted. In this
connection, the Civil Code provides:
ART. 2176. Whoever by act or omission causes damage to
another, there being fault or negligence, is obliged to pay for the
damage done.
ART. 2217. Moral damages include physical suffering, mental
anguish, fright, serious anxiety, besmirched reputation, wounded
feelings, moral shock, social humiliation, and similar injury. Though
incapable of pecuniary computation, moral damages may be
recovered if they are the proximate result of the defendants wrongful
act or omission.
Clearly, under the law, petitioner is obliged to pay Nora for
moral damages suffered by the latter as a proximate result of
petitioners negligence.
We note, however, that petitioner has served well as Noras
obstetrician for her past three successful deliveries. This is the first
time petitioner is being held liable for damages due to negligence in
the practice of her profession. The fact that petitioner promptly took
care of Noras wound before infection and other complications set in
is also indicative of petitioners good intentions. We also take note of

104

the fact that Nora was suffering from a critical condition when the
injury happened, such that saving her life became petitioners
elemental concern. Nonetheless, it should be stressed that all these
could not justify negligence on the part of petitioner.
Hence, considering the specific circumstances in the instant
case, we find no grave abuse of discretion in the assailed decision and
resolution of the Court of Appeals. Further, we rule that the Court of
Appeals award of Two Hundred Thousand Pesos (P200,000) as moral
damages in favor of respondents and against petitioner is just and
equitable.21
WHEREFORE, the petition is DENIED. The Decision dated
October 3, 2002 and Resolution dated November 19, 2003 of the
Court of Appeals in CA-G.R. CV No. 58184 are AFFIRMED.
No pronouncement as to costs.
SO ORDERED.

THE COURT OF APPEALS and NATIVIDAD and

ENRIQUE AGANA,
Respondents,
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - x
NATIVIDAD (Substituted by her children
MARCELINO AGANA III, ENRIQUE AGANA, JR.,
EMMA AGANA ANDAYA, JESUS AGANA, and
RAYMUND AGANA) and ENRIQUE AGANA,
Petitioners,

G.R. No. 126467

- versus THE COURT OF APPEALS and JUANFUENTES,

Respondents,
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - x
MIGUEL AMPIL,
Petitioner,
G.R. No. 127590
- versus Present:
THE
COURT
OF
APPEALS
and
NATIVIDAD AGANA and ENRIQUEAGANA,
Respondents.

PUNO, C.J.,
SANDOVAL-GUTIERREZ,
CORONA,
AZCUNA, and
LEONARDO-DE CASTRO,

Promulgated:
February 11, 2008
x---------------------------------------------------------x

RESOLUTION
SANDOVAL-GUTIERREZ, J.:

PROFESSIONAL SERVICES, INC.,

G.R. No. 126297

Petitioner,

As the hospital industry changes, so must the laws and jurisprudence governing hospital
liability. The immunity from medical malpractice traditionally accorded to hospitals has
to be eroded if we are to balance the interest of the patients and hospitals under the
present setting.

- versus -

105

Before this Court is a motion for reconsideration filed by Professional Services, Inc.
(PSI), petitioner in G.R. No. 126297, assailing the Courts First Division Decision
dated January 31, 2007, finding PSI and Dr. Miguel Ampil, petitioner in G.R. No.
127590, jointly and severally liable for medical negligence.

On August 31, 1984, Natividad flew back to the Philippines, still suffering from
pains. Two (2) weeks thereafter, her daughter found a piece of gauze protruding from
her vagina. Dr. Ampil was immediately informed. He proceeded to Natividads house
where he managed to extract by hand a piece of gauze measuring 1.5 inches in
width. Dr. Ampil then assured Natividad that the pains would soon vanish.

A brief revisit of the antecedent facts is imperative.

On April
4,
1984,
Natividad
Agana
was
admitted
at
the Medical City General Hospital (Medical City) because of difficulty of bowel
movement and bloody anal discharge. Dr. Ampil diagnosed her to be suffering from
cancer of the sigmoid. Thus, on April 11, 1984, Dr. Ampil, assisted by the medical
staff[1] of Medical City, performed an anterior resection surgery upon her. During the
surgery, he found that the malignancy in her sigmoid area had spread to her left ovary,
necessitating the removal of certain portions of it. Thus, Dr. Ampil obtained the consent
of Atty. Enrique Agana, Natividads husband, to permit Dr. Juan Fuentes, respondent in
G.R. No. 126467, to perform hysterectomy upon Natividad.

Dr. Fuentes performed and completed the hysterectomy. Afterwards, Dr. Ampil took
over, completed the operation and closed the incision. However, the operation appeared
to be flawed. In the corresponding Record of Operation dated April 11, 1984, the
attending nurses entered these remarks:

sponge count lacking 2

announced to surgeon searched done (sic) but to no
avail continue for closure.
After a couple of days, Natividad complained of excruciating pain in her anal
region. She consulted both Dr. Ampil and Dr. Fuentes about it. They told her that the
pain was the natural consequence of the surgical operation performed upon her. Dr.
Ampil recommended that Natividad consult an oncologist to treat the cancerous nodes
which were not removed during the operation.

On May 9, 1984, Natividad, accompanied by her husband, went to the United States to
seek further treatment. After four (4) months of consultations and laboratory
examinations, Natividad was told that she was free of cancer. Hence, she was advised to
return to the Philippines.

Despite Dr. Ampils assurance, the pains intensified, prompting Natividad to seek
treatment at the Polymedic General Hospital. While confined thereat, Dr. Ramon
Gutierrez detected the presence of a foreign object in her vagina -- a foul-smelling
gauze measuring 1.5 inches in width. The gauze had badly infected her vaginal vault. A
recto-vaginal fistula had formed in her reproductive organ which forced stool to excrete
through the vagina. Another surgical operation was needed to remedy the
situation. Thus, in October 1984, Natividad underwent another surgery.

On November 12, 1984, Natividad and her husband filed with the Regional Trial Court,
Branch 96, Quezon City a complaint for damages against PSI (owner of Medical City),
Dr. Ampil and Dr. Fuentes.

On February 16, 1986, pending the outcome of the above case, Natividad
died. She was duly substituted by her above-named children (the Aganas).

On March 17, 1993, the trial court rendered judgment in favor of

spouses Agana finding PSI, Dr. Ampil and Dr. Fuentes jointly and severally liable. On
appeal, the Court of Appeals, in its Decision dated September 6, 1996, affirmed the
assailed judgment with modification in the sense that the complaint against Dr. Fuentes
was dismissed.

PSI, Dr. Ampil and the Aganas filed with this Court separate petitions for review
on certiorari. On January 31, 2007, the Court, through its First Division, rendered a
Decision holding that PSI is jointly and severally liable with Dr. Ampil for the following
reasons: first, there is an employer-employee relationship between Medical City and Dr.
Ampil. The Court relied onRamos v. Court of Appeals,[2] holding that for the purpose of
apportioning responsibility in medical negligence cases, an employer-employee
relationship in effect exists between hospitals and their attending and visiting
physicians; second, PSIs act of publicly displaying in the lobby of the Medical City the
names and specializations of its accredited physicians, including Dr. Ampil, estopped it
from denying the existence of an employer-employee relationship between them under
the doctrine of ostensible agency or agency by estoppel; and third, PSIs failure to

106

supervise Dr. Ampil and its resident physicians and nurses and to take an active step in
order to remedy their negligence rendered it directly liable under the doctrine of
corporate negligence.

In its motion for reconsideration, PSI contends that the Court erred in finding it
liable under Article 2180 of the Civil Code, there being no employer-employee
relationship between it and its consultant, Dr. Ampil. PSI stressed that the Courts
Decision in Ramos holding that an employer-employee relationship in effect exists
between hospitals and their attending and visiting physicians for the purpose of
apportioning responsibility had been reversed in a subsequent Resolution. [3] Further, PSI
argues that the doctrine of ostensible agency or agency by estoppel cannot apply
because spouses Agana failed to establish one requisite of the doctrine, i.e., that
Natividad relied on the representation of the hospital in engaging the services of Dr.
Ampil. And lastly, PSI maintains that the doctrine of corporate negligence is
misplaced because the proximate cause of Natividads injury was Dr. Ampils negligence.

The motion lacks merit.

As earlier mentioned, the First Division, in its assailed Decision, ruled that an
employer-employee relationship in effect exists between the Medical City and Dr.
Ampil.Consequently, both are jointly and severally liable to the Aganas. This ruling
proceeds from the following ratiocination in Ramos:

We now discuss the responsibility of the hospital in this

particular incident. The unique practice (among private hospitals) of
filling up specialist staff with attending and visiting consultants, who
are allegedly not hospital employees, presents problems in
apportioning responsibility for negligence in medical malpractice
cases. However, the difficulty is only more apparent than real.
In the first place, hospitals exercise significant control in
the hiring and firing of consultants and in the conduct of their
work within the hospital premises. Doctors who apply for
consultant slots, visiting or attending, are required to submit proof of
completion of residency, their educational qualifications; generally,
evidence of accreditation by the appropriate board (diplomate),
evidence of fellowship in most cases, and references. These
requirements are carefully scrutinized by members of the hospital
administration or by a review committee set up by the hospital who

either accept or reject the application. This is particularly true with

respondent hospital.
After a physician is accepted, either as a visiting or
attending consultant, he is normally required to attend clinicopathological conferences, conduct bedside rounds for clerks,
interns and residents, moderate grand rounds and patient audits
and perform other tasks and responsibilities, for the privilege of
being able to maintain a clinic in the hospital, and/or for the
privilege of admitting patients into the hospital. In addition to
these, the physicians performance as a specialist is generally
evaluated by a peer review committee on the basis of mortality
and morbidity statistics, and feedback from patients, nurses,
interns and residents. A consultant remiss in his duties, or a
consultant who regularly falls short of the minimum standards
acceptable to the hospital or its peer review committee, is
normally politely terminated.
In other words, private hospitals hire, fire and exercise real
control over their attending and visiting consultant staff. While
consultants are not, technically employees, a point which
respondent hospital asserts in denying all responsibility for the
patients condition, the control exercised, the hiring, and the right
to terminate consultants all fulfill the important hallmarks of an
employer-employee relationship, with the exception of the
payment of wages. In assessing whether such a relationship in
fact exists, the control test is determining. Accordingly, on the
basis of the foregoing, we rule that for the purpose of allocating
responsibility in medical negligence cases, an employer-employee
relationship in effect exists between hospitals and their attending
and visiting physicians. This being the case, the question now arises
as to whether or not respondent hospital is solidarily liable with
respondent doctors for petitioners condition.
The basis for holding an employer solidarily responsible for
the negligence of its employee is found in Article 2180 of the Civil
Code which considers a person accountable not only for his own acts
but also for those of others based on the formers responsibility under
a relationship of partia ptetas.

Clearly, in Ramos, the Court considered the peculiar relationship between a

hospital and its consultants on the bases of certain factors. One such factor is the control
test wherein the hospital exercises control in the hiring and firing of consultants, like Dr.
Ampil, and in the conduct of their work.

107

Actually, contrary to PSIs contention, the Court did not reverse its ruling
in Ramos. What it clarified was that the De Los Santos Medical Clinic did not exercise
control over its consultant, hence, there is no employer-employee relationship between
them. Thus, despite the granting of the said hospitals motion for reconsideration, the
doctrine in Ramos stays, i.e., for the purpose of allocating responsibility in medical
negligence cases, an employer-employee relationship exists between hospitals and their
consultants.

In the instant cases, PSI merely offered a general denial of responsibility,

maintaining that consultants, like Dr. Ampil, are independent contractors, not employees
of the hospital.Even assuming that Dr. Ampil is not an employee of Medical City, but an
independent contractor, still the said hospital is liable to the Aganas.

The doctrine of apparent authority is a specie of the doctrine

of estoppel. Article 1431 of the Civil Code provides that [t]hrough
estoppel, an admission or representation is rendered conclusive upon
the person making it, and cannot be denied or disproved as against the
person relying thereon. Estoppel rests on this rule: Whether a party
has, by his own declaration, act, or omission, intentionally and
deliberately led another to believe a particular thing true, and to act
upon such belief, he cannot, in any litigation arising out of such
declaration, act or omission, be permitted to falsify it. (De Castro v.
Ginete, 137 Phil. 453 [1969], citing Sec. 3, par. A, Rule 131 of the
Rules of Court. See also King v. Mitchell, 31 A.D.3rd 958, 819
N.Y.S.2d 169 [2006]).
xxx

In Nograles, et al. v. Capitol Medical Center, et al.,[4] through Mr. Justice

Antonio T. Carpio, the Court held:

The second factor focuses on the patients reliance. It is

sometimes characterized as an inquiry on whether the plaintiff acted
in reliance upon the conduct of the hospital or its agent, consistent
with ordinary care and prudence. (Diggs v. Novant Health, Inc.)

The question now is whether CMC is automatically exempt

from liability considering that Dr. Estrada is an independent
contractor-physician.

PSI argues that the doctrine of apparent authority cannot

apply to these cases because spouses Agana failed to establish proof
of their reliance on the representation of MedicalCity that Dr. Ampil is
its employee.

In general, a hospital is not liable for the negligence of an

independent contractor-physician. There is, however, an exception to
this principle. The hospital may be liable if the physician is the
ostensible agent of the hospital. (Jones v. Philpott, 702 F. Supp. 1210
[1988]) This exception is also known as the doctrine of apparent
authority. (Sometimes referred to as the apparent or ostensible agency
theory. [King v. Mitchell, 31 A.D.3rd 958, 819 N.Y. S.2d 169 (2006)].

The argument lacks merit.

Atty. Agana categorically testified that one of the reasons why he chose Dr.
Ampil was that he knew him to be a staff member of Medical City, a prominent and
known hospital.

xxx
The doctrine of apparent authority essentially involves two
factors to determine the liability of an independent contractorphysician.
The first factor focuses on the hospitals manifestations and is
sometimes described as an inquiry whether the hospital acted in a
manner which would lead a reasonable person to conclude that the
individual who was alleged to be negligent was an employee or agent
of the hospital. (Diggs v. Novant Health, Inc., 628 S.E.2d 851 (2006)
citing Hylton v. Koontz, 138 N.C. App. 629 (2000). In this regard,
the hospital need not make express representations to the patient
that the treating physician is an employee of the hospital; rather a
representation may be general and implied. (Id.)

Q Will you tell us what transpired in your visit to Dr. Ampil?

A Well, I saw Dr. Ampil at the Medical City, I know him to be a
staff member there, and I told him about the case of my
wife and he asked me to bring my wife over so she could be
examined. Prior to that, I have known Dr. Ampil, first, he
was staying in front of our house, he was a neighbor,
second, my daughter was his student in the University of
the East School of Medicine at Ramon Magsaysay; and
when my daughter opted to establish a hospital or a clinic,
Dr. Ampil was one of our consultants on how to
establish that hospital. And from there, I have known that
he was a specialist when it comes to that illness.

108

Atty. Agcaoili
On that particular occasion, April 2, 1984, what was your reason for
choosing to contact Dr. Ampil in connection with your
wifes illness?
A First, before that, I have known him to be a specialist on that part
of the body as a surgeon; second, I have known him to be
a staff member of the Medical City which is a
prominent and known hospital. And third, because he is a
neighbor, I expect more than the usual medical service to
be given to us, than his ordinary patients.[5]

Clearly, PSI is estopped from passing the blame solely to Dr. Ampil. Its act of
displaying his name and those of the other physicians in the public directory at the
lobby of the hospital amounts to holding out to the public that it offers quality medical
service through the listed physicians. This justifies Atty. Aganas belief that Dr. Ampil
was a member of the hospitals staff. It must be stressed that under the doctrine of
apparent authority, the question in every case is whether the principal has by his
voluntary act placed the agent in such a situation that a person of ordinary
prudence, conversant with business usages and the nature of the particular
business, is justified in presuming that such agent has authority to perform the
particular act in question.[6] In these cases, the circumstances yield a positive answer
to the question.

The challenged Decision also anchors its ruling on the doctrine of corporate
responsibility.[7] The duty of providing quality medical service is no longer the sole
prerogative and responsibility of the physician. This is because the modern hospital now
tends to organize a highly-professional medical staff whose competence and
performance need also to be monitored by the hospital commensurate with its inherent
responsibility to provide quality medical care. [8] Such responsibility includes the
proper supervision of the members of its medical staff. Accordingly, the hospital
has the duty to make a reasonable effort to monitor and oversee the treatment
prescribed and administered by the physicians practicing in its premises.

Unfortunately, PSI had been remiss in its duty. It did not conduct
an immediate investigation on the reported missing gauzes to the great prejudice and
agony of its patient. Dr. Jocson, a member of PSIs medical staff, who testified on
whether the hospital conducted an investigation, was evasive, thus:

Q We go back to the operative technique, this was signed by Dr.

Puruganan, was this submitted to the hospital?
A Yes, sir, this was submitted to the hospital with the record of
the patient.
Q Was the hospital immediately informed about the missing
sponges?
A That is the duty of the surgeon, sir.
Q As a witness to an untoward incident in the operating room,
was it not your obligation, Dr., to also report to the
hospital because you are under the control and direction
of the hospital?
A The hospital already had the record of the two OS missing, sir.
Q If you place yourself in the position of the hospital, how will
you recover.
A You do not answer my question with another question.
Q Did the hospital do anything about the missing gauzes?
A The hospital left it up to the surgeon who was doing the
operation, sir.
Q Did the hospital investigate the surgeon who did the
operation?
A I am not in the position to answer that, sir.
Q You never did hear the hospital investigating the doctors
involved in this case of those missing sponges, or did you
hear something?
xxxxxx
A I think we already made a report by just saying that two
sponges were missing, it is up to the hospital to make
the move.
Atty. Agana
Precisely, I am asking you if the hospital did a move, if the
hospital did a move.
A I cannot answer that.
Court

109

By that answer, would you mean to tell the Court that you were
aware if there was such a move done by the hospital?
A I cannot answer that, your honor, because I did not have any
more follow-up of the case that happened until now.[9]
The above testimony obviously shows Dr. Jocsons lack of concern for the
patients. Such conduct is reflective of the hospitals manner of supervision. Not
only did PSI breach its duty to oversee or supervise all persons who practice
medicine within its walls, it also failed to take an active step in fixing the
negligence committed. This renders PSI, not only vicariously liable for the negligence
of Dr. Ampil under Article 2180 of the Civil Code, but also directly liable for its own
negligence under Article 2176.

Moreover, there is merit in the trial courts finding that the failure of PSI to
conduct an investigation established PSIs part in the dark conspiracy of silence and
concealment about the gauzes. The following testimony of Atty. Agana supports such
findings, thus:

Q You said you relied on the promise of Dr. Ampil and despite the
promise you were not able to obtain the said record. Did
you go back to the record custodian?
A I did not because I was talking to Dr. Ampil. He promised me.
Q After your talk to Dr. Ampil, you went to the record
custodian?
A I went to the record custodian to get the clinical record of my
wife, and I was given a portion of the records consisting
of the findings, among them, the entries of the dates, but
not the operating procedure and operative report.[10]

In sum, we find no merit in the motion for reconsideration.

WHEREFORE, we DENY PSIs motion for reconsideration with finality.

SO ORDERED.

EN BANC
PROFESSIONAL SERVICES, G.R. No. 126297
INC.,
Petitioner, Present:
PUNO, C.J.,
CARPIO,
CORONA,
CARPIO MORALES,
VELASCO, JR.,
NACHURA,
- v e r s u s - LEONARDO-DE CASTRO,
BRION,
PERALTA,
BERSAMIN,
DEL CASTILLO,
ABAD,
VILLARAMA, JR.,
PEREZ and
MENDOZA, JJ.
THE
COURT
OF
APPEALS
and NATIVIDAD and ENRIQUE
AGANA,
Respondents.
x-------------------x
NATIVIDAD [substituted by her G.R. No. 126467
children Marcelino Agana III,
Enrique Agana, Jr.,
Emma Agana-Andaya,
Jesus Agana and Raymund
Agana] and ENRIQUE AGANA,
Petitioners,
-

versus-

THE
COURT
OF
and JUAN FUENTES,
Respondents.

APPEALS

x-------------------x
MIGUEL AMPIL, G.R. No. 127590
Petitioner,
-versusNATIVIDAD and ENRIQUE

110

AGANA,
Respondents.

The Court premised the direct liability of PSI to the Aganas on the following
facts and law:

Promulgated:
February 2, 2010
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
RE SOLUTION
CORONA, J.:
With prior leave of court,[1] petitioner Professional Services, Inc. (PSI)
filed a second motion for reconsideration[2] urging referral thereof to the Court en
banc and seeking modification of the decision dated January 31, 2007 and resolution
dated February 11, 2008 which affirmed its vicarious and direct liability for damages to
respondents Enrique Agana and the heirs of Natividad Agana (Aganas).
Manila Medical Services, Inc. (MMSI), [3] Asian Hospital, Inc. (AHI),[4] and Private
Hospital Association of the Philippines (PHAP) [5] all sought to intervene in these
cases invoking the common ground that, unless modified, the assailed decision and
resolution will jeopardize the financial viability of private hospitals and jack up the cost
of health care.
The Special First Division of the Court granted the motions for intervention of
MMSI, AHI and PHAP (hereafter intervenors),[6] and referred en consulta to the
Court en banc the motion for prior leave of court and the second motion for
reconsideration of PSI.[7]
Due to paramount public interest, the Court en banc accepted the referral[8] and heard
the parties on oral arguments on one particular issue: whether a hospital may be held
liable for the negligence of physicians-consultants allowed to practice in its premises. [9]
To recall the salient facts, PSI, together with Dr. Miguel Ampil (Dr. Ampil) and
Dr. Juan Fuentes (Dr. Fuentes), was impleaded by Enrique Agana and Natividad Agana
(later substituted by her heirs), in a complaint [10] for damages filed in the Regional Trial
Court (RTC) of Quezon City, Branch 96, for the injuries suffered by Natividad when Dr.
Ampil and Dr. Fuentes neglected to remove from her body two gauzes [11] which were
used in the surgery they performed on her on April 11, 1984 at the Medical City General
Hospital. PSI was impleaded as owner, operator and manager of the hospital.
In a decision[12] dated March 17, 1993, the RTC held PSI solidarily liable with Dr. Ampil
and Dr. Fuentes for damages.[13] On appeal, the Court of Appeals (CA), absolved Dr.
Fuentesbut affirmed the liability of Dr. Ampil and PSI, subject to the right of PSI to
claim reimbursement from Dr. Ampil.[14]
On petition for review, this Court, in its January 31, 2007 decision, affirmed the CA
decision.[15] PSI filed a motion for reconsideration[16] but the Court denied it in a
resolution datedFebruary 11, 2008.[17]

First, there existed between PSI and Dr. Ampil an employer-employee relationship as
contemplated in the December 29, 1999 decision in Ramos v. Court of Appeals[18] that
for purposes of allocating responsibility in medical negligence cases, an employeremployee relationship exists between hospitals and their consultants. [19] Although the
Court in Ramos later issued a Resolution dated April 11, 2002 [20] reversing its earlier
finding on the existence of an employment relationship between hospital and doctor, a
similar reversal was not warranted in the present case because the defense raised by PSI
consisted of a mere general denial of control or responsibility over the actions of Dr.
Ampil.[21]
Second, by accrediting Dr. Ampil and advertising his qualifications, PSI
created the public impression that he was its agent. [22] Enrique testified that it was on
account of Dr. Ampil's accreditation with PSI that he conferred with said doctor about
his wife's (Natividad's) condition.[23] After his meeting with Dr. Ampil, Enrique asked
Natividad to personally consult Dr. Ampil. [24] In effect, when Enrigue and Natividad
engaged the services of Dr. Ampil, at the back of their minds was that the latter was a
staff member of a prestigious hospital. Thus, under the doctrine of apparent authority
applied in Nogales, et al. v. Capitol Medical Center, et al.,[25] PSI was liable for the
negligence of Dr. Ampil.
Finally, as owner and operator of Medical City General Hospital, PSI was
bound by its duty to provide comprehensive medical services to Natividad Agana, to
exercise reasonable care to protect her from harm, [26] to oversee or supervise all persons
who practiced medicine within its walls, and to take active steps in fixing any form of
negligence committed within its premises. [27] PSI committed a serious breach of its
corporate duty when it failed to conduct an immediate investigation into the reported
missing gauzes.[28]
PSI is now asking this Court to reconsider the foregoing rulings for these
reasons:
I
The declaration in the 31 January 2007 Decision vis-a-vis the 11
February 2009 Resolution that the ruling in Ramos vs. Court of
Appeals (G.R. No. 134354, December 29, 1999) that an employeremployee relations exists between hospital and their consultants stays
should be set aside for being inconsistent with or contrary to the import
of the resolution granting the hospital's motion for reconsideration in
Ramos vs. Court of Appeals (G.R. No. 134354, April 11, 2002), which
is applicable to PSI since the Aganas failed to prove an employeremployee relationship between PSI and Dr. Ampil and PSI proved that
it has no control over Dr. Ampil. In fact, the trial court has found that

111

there is no employer-employee relationship in this case and that the

doctor's are independent contractors.
II
Respondents Aganas engaged Dr. Miguel Ampil as their doctor and did
not primarily and specifically look to the Medical City Hospital (PSI)
for medical care and support; otherwise stated, respondents Aganas did
not select Medical City Hospital (PSI) to provide medical care because
of any apparent authority of Dr. Miguel Ampil as its agent since the
latter was chosen primarily and specifically based on his qualifications
and being friend and neighbor.

may still be vicariously liable under Article 2176 in relation to Article 1431 [36] and
Article 1869[37] of the Civil Code or the principle of apparent authority. [38] Moreover,
regardless of its relationship with the doctor, the hospital may be held directly liable to
the patient for its own negligence or failure to follow established standard of conduct to
which it should conform as a corporation.[39]
This Court still employs the control test to determine the existence of an
employer-employee relationship between hospital and doctor. In Calamba Medical
Center, Inc. v. National Labor Relations Commission, et al.[40] it held:
Under the "control test", an employment relationship exists between a
physician and a hospital if the hospital controls both the means and the
details of the process by which the physician is to accomplish his task.

III
PSI cannot be liable under doctrine of corporate negligence since the
proximate cause of Mrs. Agana's injury was the negligence of Dr.
Ampil, which is an element of the principle of corporate negligence.[29]
In their respective memoranda, intervenors raise parallel arguments that the
Court's ruling on the existence of an employer-employee relationship between private
hospitals and consultants will force a drastic and complex alteration in the longestablished and currently prevailing relationships among patient, physician and hospital,
with burdensome operational and financial consequences and adverse effects on all
three parties.[30]
The Aganas comment that the arguments of PSI need no longer be entertained
for they have all been traversed in the assailed decision and resolution.[31]
After gathering its thoughts on the issues, this Court holds that PSI is liable to the
Aganas, not under the principle of respondeat superior for lack of evidence of an
employment relationship with Dr. Ampil but under the principle of ostensible agency for
the negligence of Dr. Ampil and, pro hac vice, under the principle of corporate
negligence for its failure to perform its duties as a hospital.
While in theory a hospital as a juridical entity cannot practice medicine, [32] in
reality it utilizes doctors, surgeons and medical practitioners in the conduct of its
business of facilitating medical and surgical treatment. [33] Within that reality, three legal
relationships crisscross: (1) between the hospital and the doctor practicing within its
premises; (2) between the hospital and the patient being treated or examined within its
premises and (3) between the patient and the doctor. The exact nature of each
relationship determines the basis and extent of the liability of the hospital for the
negligence of the doctor.
Where an employment relationship exists, the hospital may be held vicariously
liable under Article 2176[34] in relation to Article 2180[35] of the Civil Code or the
principle ofrespondeat superior. Even when no employment relationship exists but it is
shown that the hospital holds out to the patient that the doctor is its agent, the hospital

xx xx xx
As priorly stated, private respondents maintained specific workschedules, as determined by petitioner through its medical director,
which consisted of 24-hour shifts totaling forty-eight hours each week
and which were strictly to be observed under pain of administrative
sanctions.
That petitioner exercised control over respondents gains
light from the undisputed fact that in the emergency room, the
operating room, or any department or ward for that matter,
respondents' work is monitored through its nursing supervisors,
charge nurses and orderlies. Without the approval or consent of
petitioner or its medical director, no operations can be undertaken
in those areas. For control test to apply, it is not essential for the
employer to actually supervise the performance of duties of the
employee, it being enough that it has the right to wield the
power. (emphasis supplied)
Even
in
its December
29,
1999 decision[41] and April
[42]
2002 resolution in Ramos, the Court found the control test decisive.

11,

In the present case, it appears to have escaped the Court's attention that both
the RTC and the CA found no employment relationship between PSI and Dr. Ampil, and
that the Aganas did not question such finding. In its March 17, 1993 decision, the
RTC found that defendant doctors were not employees of PSI in its hospital, they being
merely consultants without any employer-employee relationship and in the capacity of
independent contractors.[43] The Aganas never questioned such finding.
PSI, Dr. Ampil and Dr. Fuentes appealed [44] from the RTC decision but only on
the issues of negligence, agency and corporate liability. In its September 6,
1996 decision, the CA mistakenly referred to PSI and Dr. Ampil as employer-employee,

112

but it was clear in its discussion on the matter that it viewed their relationship as one of
mere apparent agency.[45]
The Aganas appealed from the CA decision, but only to question the exoneration of Dr.
Fuentes.[46] PSI also appealed from the CA decision, and it was then that the issue of
employment, though long settled, was unwittingly resurrected.
In fine, as there was no dispute over the RTC finding that PSI and Dr. Ampil
had no employer-employee relationship, such finding became final and conclusive even
to this Court.[47] There was no reason for PSI to have raised it as an issue in its petition.
Thus, whatever discussion on the matter that may have ensued was purely academic.
Nonetheless, to allay the anxiety of the intervenors, the Court holds that, in this
particular instance, the concurrent finding of the RTC and the CA that PSI was not the
employer of Dr. Ampil is correct. Control as a determinative factor in testing the
employer-employee relationship between doctor and hospital under which the hospital
could be held vicariously liable to a patient in medical negligence cases is a requisite
fact to be established by preponderance of evidence. Here, there was insufficient
evidence that PSI exercised the power of control or wielded such power over the means
and the details of the specific process by which Dr. Ampil applied his skills in the
treatment of Natividad. Consequently, PSI cannot be held vicariously liable for the
negligence of Dr. Ampil under the principle of respondeat superior.
There is, however, ample evidence that the hospital (PSI) held out to the
patient (Natividad)[48] that the doctor (Dr. Ampil) was its agent. Present are the two
factors that determine apparent authority: first, the hospital's implied manifestation to
the patient which led the latter to conclude that the doctor was the hospital's agent; and
second, the patients reliance upon the conduct of the hospital and the doctor, consistent
with ordinary care and prudence.[49]
Enrique testified that on April 2, 1984, he consulted Dr. Ampil regarding the
condition of his wife; that after the meeting and as advised by Dr. Ampil, he asked [his]
wife to go to Medical City to be examined by [Dr. Ampil]; and that the next day, April
3, he told his daughter to take her mother to Dr. Ampil.[50] This timeline indicates that it
was Enrique who actually made the decision on whom Natividad should consult and
where, and that the latter merely acceded to it. It explains the testimony of Natividad
that she consulted Dr. Ampil at the instigation of her daughter.[51]
Moreover, when asked what impelled him to choose Dr. Ampil, Enrique testified:
Atty. Agcaoili
On that particular occasion, April 2, 1984, what was your reason for
choosing Dr. Ampil to contact with in connection with your wife's
illness?
A. First, before that, I have known him to be a specialist on that part of
the body as a surgeon, second, I have known him to be a staff

member of
the Medical City which
is
a prominent
and
knownhospital. And third, because he is a neighbor, I expect more than
the usual medical service to be given to us, than his ordinary patients.
[52]
(emphasis supplied)
Clearly, the decision made by Enrique for Natividad to consult Dr. Ampil was
significantly influenced by the impression that Dr. Ampil was a staff member
of Medical City GeneralHospital, and that said hospital was well known and prominent.
Enrique looked upon Dr. Ampil not as independent of but as integrally related
to Medical City.
PSI's acts tended to confirm and reinforce, rather than negate, Enrique's view. It is of
record that PSI required a consent for hospital care [53] to be signed preparatory to the
surgery of Natividad. The form reads:
Permission is hereby given to the medical, nursing and laboratory staff
of the Medical City General Hospital to perform such diagnostic
procedures and to administer such medications and treatments as may
be deemed necessary or advisable by the physicians of this
hospital for and during the confinement of xxx. (emphasis supplied)
By such statement, PSI virtually reinforced the public impression that Dr. Ampil was a
physician of its hospital, rather than one independently practicing in it; that the
medications and treatments he prescribed were necessary and desirable; and that the
hospital staff was prepared to carry them out.
PSI pointed out in its memorandum that Dr. Ampil's hospital affiliation was not
the exclusive basis of the Aganas decision to have Natividad treated
in Medical City GeneralHospital, meaning that, had Dr. Ampil been affiliated with
another hospital, he would still have been chosen by the Aganas as Natividad's surgeon.
[54]

The Court cannot speculate on what could have been behind the Aganas decision but
would rather adhere strictly to the fact that, under the circumstances at that time,
Enrique decided to consult Dr. Ampil for he believed him to be a staff member of a
prominent and known hospital. After his meeting with Dr. Ampil, Enrique advised his
wife Natividad to go to the MedicalCity General Hospital to be examined by said
doctor, and the hospital acted in a way that fortified Enrique's belief.
This Court must therefore maintain the ruling that PSI is vicariously liable for
the negligence of Dr. Ampil as its ostensible agent.
Moving on to the next issue, the Court notes that PSI made the following admission in
its Motion for Reconsideration:
51. Clearly, not being an agent or employee of petitioner PSI, PSI [sic]
is not liable for Dr. Ampil's acts during the operation. Considering

113

further that Dr. Ampil was personally engaged as a doctor by Mrs.

Agana, it is incumbent upon Dr. Ampil, as Captain of the Ship, and as
the Agana's doctor to advise her on what to do with her situation vis-avis the two missing gauzes. In addition to noting the missing gauzes,
regular check-ups were made and no signs of complications were
exhibited during her stay at the hospital, which could have alerted
petitioner PSI's hospital to render and provide post-operation
services to and tread on Dr. Ampil's role as the doctor of Mrs.
Agana. The absence of negligence of PSI from the patient's
admission up to her discharge is borne by the finding of facts in
this case. Likewise evident therefrom is the absence of any
complaint from Mrs. Agana after her discharge from the hospital
which had she brought to the hospital's attention, could have
alerted petitioner PSI to act accordingly and bring the matter to
Dr. Ampil's attention. But this was not the case. Ms. Agana
complained ONLY to Drs. Ampil and Fuentes, not the hospital.
How then could PSI possibly do something to fix the negligence
committed by Dr. Ampil when it was not informed about it at all.
[55]
(emphasis supplied)
PSI reiterated its admission when it stated that had Natividad Agana informed
the hospital of her discomfort and pain, the hospital would have been obliged to act on
it.[56]
The significance of the foregoing statements is critical.
First, they constitute judicial admission by PSI that while it had no power to
control the means or method by which Dr. Ampil conducted the surgery on Natividad
Agana, it had thepower to review or cause the review of what may have irregularly
transpired within its walls strictly for the purpose of determining whether some form of
negligence may have attended any procedure done inside its premises, with the ultimate
end of protecting its patients.
Second, it is a judicial admission that, by virtue of the nature of its business as
well as its prominence[57] in the hospital industry, it assumed a duty to tread on the
captain of the ship role of any doctor rendering services within its premises for the
purpose of ensuring the safety of the patients availing themselves of its services and
facilities.
Third, by such admission, PSI defined the standards of its corporate conduct
under the circumstances of this case, specifically: (a) that it had a corporate duty to
Natividad even after her operation to ensure her safety as a patient; (b) that its corporate
duty was not limited to having its nursing staff note or record the two missing gauzes
and (c) that its corporate duty extended to determining Dr. Ampil's role in it, bringing
the matter to his attention, and correcting his negligence.

And finally, by such admission, PSI barred itself from arguing in its second
motion for reconsideration that the concept of corporate responsibility was not yet in
existence at the time Natividad underwent treatment; [58] and that if it had any corporate
responsibility, the same was limited to reporting the missing gauzes and did not include
taking an active step in fixing the negligence committed. [59] An admission made in the
pleading cannot be controverted by the party making such admission and is conclusive
as to him, and all proofs submitted by him contrary thereto or inconsistent therewith
should be ignored, whether or not objection is interposed by a party.[60]
Given the standard of conduct that PSI defined for itself, the next relevant
inquiry is whether the hospital measured up to it.
PSI excuses itself from fulfilling its corporate duty on the ground that Dr. Ampil
assumed the personal responsibility of informing Natividad about the two missing
gauzes.[61] Dr. Ricardo Jocson, who was part of the group of doctors that attended to
Natividad, testified that toward the end of the surgery, their group talked about the
missing gauzes but Dr. Ampil assured them that he would personally notify the patient
about it.[62] Furthermore, PSI claimed that there was no reason for it to act on the report
on the two missing gauzes because Natividad Agana showed no signs of complications.
She did not even inform the hospital about her discomfort.[63]
The excuses proffered by PSI are totally unacceptable.
To begin with, PSI could not simply wave off the problem and nonchalantly
delegate to Dr. Ampil the duty to review what transpired during the operation. The
purpose of such review would have been to pinpoint when, how and by whom two
surgical gauzes were mislaid so that necessary remedial measures could be taken to
avert any jeopardy to Natividads recovery. Certainly, PSI could not have expected that
purpose to be achieved by merely hoping that the person likely to have mislaid the
gauzes might be able to retrace his own steps. By its own standard of corporate conduct,
PSI's duty to initiate the review was non-delegable.
While Dr. Ampil may have had the primary responsibility of notifying Natividad about
the missing gauzes, PSI imposed upon itself the separate and independent responsibility
of initiating the inquiry into the missing gauzes. The purpose of the first would have
been to apprise Natividad of what transpired during her surgery, while the purpose of
the second would have been to pinpoint any lapse in procedure that led to the gauze
count discrepancy, so as to prevent a recurrence thereof and to determine corrective
measures that would ensure the safety of Natividad. That Dr. Ampil negligently failed to
notify Natividad did not release PSI from its self-imposed separate responsibility.
Corollary to its non-delegable undertaking to review potential incidents of
negligence committed within its premises, PSI had the duty to take notice of medical
records prepared by its own staff and submitted to its custody, especially when these
bear earmarks of a surgery gone awry. Thus, the record taken during the operation of

114

Natividad which reported a gauze count discrepancy should have given PSI sufficient
reason to initiate a review. It should not have waited for Natividad to complain.
As it happened, PSI took no heed of the record of operation and consequently
did not initiate a review of what transpired during Natividads operation. Rather, it
shirked its responsibility and passed it on to others to Dr. Ampil whom it expected to
inform Natividad, and to Natividad herself to complain before it took any meaningful
step. By its inaction, therefore, PSI failed its own standard of hospital care. It committed
corporate negligence.
It should be borne in mind that the corporate negligence ascribed to PSI is
different from the medical negligence attributed to Dr. Ampil. The duties of the hospital
are distinct from those of the doctor-consultant practicing within its premises in relation
to the patient; hence, the failure of PSI to fulfill its duties as a hospital corporation gave
rise to a direct liability to the Aganas distinct from that of Dr. Ampil.
All this notwithstanding, we make it clear that PSIs hospital liability based on
ostensible agency and corporate negligence applies only to this case, pro hac vice. It is
not intended to set a precedent and should not serve as a basis to hold hospitals liable
for every form of negligence of their doctors-consultants under any and all
circumstances. The ruling is unique to this case, for the liability of PSI arose from an
implied agency with Dr. Ampil and an admitted corporate duty to Natividad. [64]
Other circumstances peculiar to this case warrant this ruling, [65] not the least of
which being that the agony wrought upon the Aganas has gone on for 26 long years,
with Natividad coming to the end of her days racked in pain and
agony. Such wretchedness could have been avoided had PSI simply done what was

logical: heed the report of a guaze count discrepancy, initiate a review of what went
wrong and take corrective measures to ensure the safety of Nativad. Rather, for 26
years, PSI hemmed and hawed at every turn, disowning any such responsibility to its
patient. Meanwhile, the options left to the Aganas have all but dwindled, for the status
of Dr. Ampil can no longer be ascertained.[66]
Therefore, taking all the equities of this case into consideration, this Court
believes P15 million would be a fair and reasonable liability of PSI, subject to 12% p.a.
interest from the finality of this resolution to full satisfaction.
WHEREFORE, the second motion for reconsideration is DENIED and the motions for
intervention are NOTED.
Professional Services, Inc. is ORDERED pro hac vice to pay Natividad (substituted by
her children Marcelino Agana III, Enrique Agana, Jr., Emma Agana-Andaya, Jesus
Agana and Raymund Agana) and Enrique Agana the total amount of P15
million, subject to 12% p.a. interest from the finality of this resolution to full
satisfaction.
No further pleadings by any party shall be entertained in this case.
Let the long-delayed entry of judgment be made in this case upon receipt by all
concerned parties of this resolution.
SO ORDERED.

115