G.R. No. L-48006 July 8, 1942 ... We cannot agree to the defendant's contention.
... We cannot agree to the defendant's contention. The liability sought to be imposed upon him in
FAUSTO BARREDO vs.SEVERINO GARCIA and TIMOTEA ALMARIO
BOCOBO, J.:
This case comes up from the Court of Appeals which held the petitioner herein, Fausto Barredo, liable
in damages for the death of Faustino Garcia caused by the negligence of Pedro Fontanilla, a taxi driver
employed by said Fausto Barredo.
At about half past one in the morning of May 3, 1936, on the road between Malabon and Navotas,
Province of Rizal, there was a head-on collision between a taxi of the Malate Taxicab driven by Pedro
Fontanilla and a carretela guided by Pedro Dimapalis. The carretela was overturned, and one of its
passengers, 16-year-old boy Faustino Garcia, suffered injuries from which he died two days later. A
criminal action was filed against Fontanilla in the Court of First Instance of Rizal, and he was convicted
and sentenced to an indeterminate sentence of one year and one day to two years of prision
correccional. The court in the criminal case granted the petition that the right to bring a separate civil
action be reserved. The Court of Appeals affirmed the sentence of the lower court in the criminal case.
Severino Garcia and Timotea Almario, parents of the deceased on March 7, 1939, brought an action in
the Court of First Instance of Manila against Fausto Barredo as the sole proprietor of the Malate
Taxicab and employer of Pedro Fontanilla. On July 8, 1939, the Court of First Instance of Manila
awarded damages in favor of the plaintiffs for P2,000 plus legal interest from the date of the complaint.
This decision was modified by the Court of Appeals by reducing the damages to P1,000 with legal
interest from the time the action was instituted. It is undisputed that Fontanilla 's negligence was the
cause of the mishap, as he was driving on the wrong side of the road, and at high speed. As to
Barredo's responsibility, the Court of Appeals found:
... It is admitted that defendant is Fontanilla's employer. There is proof that he exercised the
diligence of a good father of a family to prevent damage. (See p. 22, appellant's brief.) In fact it is
shown he was careless in employing Fontanilla who had been caught several times for violation of
the Automobile Law and speeding (Exhibit A) — violation which appeared in the records of the
Bureau of Public Works available to be public and to himself. Therefore, he must indemnify
plaintiffs under the provisions of article 1903 of the Civil Code.
The main theory of the defense is that the liability of Fausto Barredo is governed by the Revised Penal
Code; hence, his liability is only subsidiary, and as there has been no civil action against Pedro
Fontanilla, the person criminally liable, Barredo cannot be held responsible in the case. The petitioner's
brief states on page 10:
... The Court of Appeals holds that the petitioner is being sued for his failure to exercise all the
diligence of a good father of a family in the selection and supervision of Pedro Fontanilla to prevent
damages suffered by the respondents. In other words, The Court of Appeals insists on applying in
the case article 1903 of the Civil Code. Article 1903 of the Civil Code is found in Chapter II, Title 16,
Book IV of the Civil Code. This fact makes said article to a civil liability arising from a crime as in
the case at bar simply because Chapter II of Title 16 of Book IV of the Civil Code, in the precise
words of article 1903 of the Civil Code itself, is applicable only to "those (obligations) arising from
wrongful or negligent acts or commission not punishable by law.
The gist of the decision of the Court of Appeals is expressed thus:
this action is not a civil obligation arising from a felony or a misdemeanor (the crime of Pedro
Fontanilla,), but an obligation imposed in article 1903 of the Civil Code by reason of his negligence
in the selection or supervision of his servant or employee.
The pivotal question in this case is whether the plaintiffs may bring this separate civil action against
Fausto Barredo, thus making him primarily and directly, responsible under article 1903 of the Civil Code
as an employer of Pedro Fontanilla. The defendant maintains that Fontanilla's negligence being
punishable by the Penal Code, his (defendant's) liability as an employer is only subsidiary, according to
said Penal code, but Fontanilla has not been sued in a civil action and his property has not been
exhausted. To decide the main issue, we must cut through the tangle that has, in the minds of many
confused and jumbled together delitos and cuasi delitos, or crimes under the Penal Code and fault or
negligence under articles 1902-1910 of the Civil Code. This should be done, because justice may be
lost in a labyrinth, unless principles and remedies are distinctly envisaged. Fortunately, we are aided in
our inquiry by the luminous presentation of the perplexing subject by renown jurists and we are likewise
guided by the decisions of this Court in previous cases as well as by the solemn clarity of the
consideration in several sentences of the Supreme Tribunal of Spain.
Authorities support the proposition that a quasi-delict or "culpa aquiliana " is a separate legal institution
under the Civil Code with a substantivity all its own, and individuality that is entirely apart and
independent from delict or crime. Upon this principle and on the wording and spirit article 1903 of the
Civil Code, the primary and direct responsibility of employers may be safely anchored.
The pertinent provisions of the Civil Code and Revised Penal Code are as follows:
CIVIL CODE
ART. 1089 Obligations arise from law, from contracts and quasi-contracts, and from acts and
omissions which are unlawful or in which any kind of fault or negligence intervenes.
xxx xxx xxx
ART. 1092. Civil obligations arising from felonies or misdemeanors shall be governed by the
provisions of the Penal Code.
ART. 1093. Those which are derived from acts or omissions in which fault or negligence, not
punishable by law, intervenes shall be subject to the provisions of Chapter II, Title XVI of this
book.
xxx xxx xxx
ART 1902. Any person who by an act or omission causes damage to another by his fault or
negligence shall be liable for the damage so done.
ART. 1903. The obligation imposed by the next preceding article is enforcible, not only for personal
acts and omissions, but also for those of persons for whom another is responsible.
The father and in, case of his death or incapacity, the mother, are liable for any damages caused
by the minor children who live with them.
Guardians are liable for damages done by minors or incapacitated persons subject to their authority
and living with them.
Owners or directors of an establishment or business are equally liable for any damages caused by
their employees while engaged in the branch of the service in which employed, or on occasion of
the performance of their duties.
The State is subject to the same liability when it acts through a special agent, but not if the damage
shall have been caused by the official upon whom properly devolved the duty of doing the act
performed, in which case the provisions of the next preceding article shall be applicable.
Finally, teachers or directors of arts trades are liable for any damages caused by their pupils or
apprentices while they are under their custody.
The liability imposed by this article shall cease in case the persons mentioned therein prove that
they are exercised all the diligence of a good father of a family to prevent the damage.
ART. 1904. Any person who pays for damage caused by his employees may recover from the latter
what he may have paid.
REVISED PENAL CODE
ART. 100. Civil liability of a person guilty of felony. — Every person criminally liable for a felony is
also civilly liable.
ART. 101. Rules regarding civil liability in certain cases. — The exemption from criminal liability
established in subdivisions 1, 2, 3, 5, and 6 of article 12 and in subdivision 4 of article 11 of this
Code does not include exemption from civil liability, which shall be enforced to the following rules:
First. In cases of subdivision, 1, 2 and 3 of article 12 the civil liability for acts committed by any
imbecile or insane person, and by a person under nine years of age, or by one over nine but under
fifteen years of age, who has acted without discernment shall devolve upon those having such
person under their legal authority or control, unless it appears that there was no fault or negligence
on their part.
Should there be no person having such insane, imbecile or minor under his authority, legal
guardianship, or control, or if such person be insolvent, said insane, imbecile, or minor shall
respond with their own property, excepting property exempt from execution, in accordance with the
civil law.
Second. In cases falling within subdivision 4 of article 11, the person for whose benefit the harm
has been prevented shall be civilly liable in proportion to the benefit which they may have received.
The courts shall determine, in their sound discretion, the proportionate amount for which each one shall
be liable.
When the respective shares can not be equitably determined, even approximately, or when the liability
also attaches to the Government, or to the majority of the inhabitants of the town, and, in all events,
whenever the damage has been caused with the consent of the authorities or their agents,
indemnification shall be made in the manner prescribed by special laws or regulations.
Third. In cases falling within subdivisions 5 and 6 of article 12, the persons using violence or causing
the fear shall be primarily liable and secondarily, or, if there be no such persons, those doing the act
shall be liable, saving always to the latter that part of their property exempt from execution.
ART. 102. Subsidiary civil liability of innkeepers, tavern keepers and proprietors of establishment.
— In default of persons criminally liable, innkeepers, tavern keepers, and any other persons or
corporation shall be civilly liable for crimes committed in their establishments, in all cases where a
violation of municipal ordinances or some general or special police regulation shall have been
committed by them or their employees.
Innkeepers are also subsidiarily liable for the restitution of goods taken by robbery or theft within
their houses lodging therein, or the person, or for the payment of the value thereof, provided that
such guests shall have notified in advance the innkeeper himself, or the person representing him,
of the deposit of such goods within the inn; and shall furthermore have followed the directions
which such innkeeper or his representative may have given them with respect to the care of and
vigilance over such goods. No liability shall attach in case of robbery with violence against or
intimidation against or intimidation of persons unless committed by the innkeeper's employees.
ART. 103. Subsidiary civil liability of other persons. — The subsidiary liability established in the
next preceding article shall also apply to employers, teachers, persons, and corporations engaged
in any kind of industry for felonies committed by their servants, pupils, workmen, apprentices, or
employees in the discharge of their duties.
xxx xxx xxx
ART. 365. Imprudence and negligence. — Any person who, by reckless imprudence, shall
commit any act which, had it been intentional, would constitute a grave felony, shall suffer the
penalty of arresto mayor in its maximum period to prision correccional in its minimum period; if
it would have constituted a less grave felony, the penalty of arresto mayor in its minimum and
medium periods shall be imposed.
Any person who, by simple imprudence or negligence, shall commit an act which would
otherwise constitute a grave felony, shall suffer the penalty of arresto mayor in its medium and
maximum periods; if it would have constituted a less serious felony, the penalty of arresto
mayor in its minimum period shall be imposed."
It will thus be seen that while the terms of articles 1902 of the Civil Code seem to be broad enough to
cover the driver's negligence in the instant case, nevertheless article 1093 limits cuasi-delitos to acts or
omissions "not punishable by law." But inasmuch as article 365 of the Revised Penal Code punishes
not only reckless but even simple imprudence or negligence, the fault or negligence under article 1902
of the Civil Code has apparently been crowded out. It is this overlapping that makes the "confusion
worse confounded." However, a closer study shows that such a concurrence of scope in regard to
negligent acts does not destroy the distinction between the civil liability arising from a crime and the
responsibility for cuasi-delitos or culpa extra-contractual. The same negligent act causing damages may
produce civil liability arising from a crime under article 100 of the Revised Penal Code, or create an
action for cuasi-delito or culpa extra-contractual under articles 1902-1910 of the Civil Code.
The individuality of cuasi-delito or culpa extra-contractual looms clear and unmistakable. This legal
institution is of ancient lineage, one of its early ancestors being the Lex Aquilia in the Roman Law. In
fact, in Spanish legal terminology, this responsibility is often referred to as culpa aquiliana. The Partidas
also contributed to the genealogy of the present fault or negligence under the Civil Code; for instance,
Law 6, Title 15, of Partida 7, says: "Tenudo es de fazer emienda, porque, como quier que el non fizo a
sabiendas en daño al otro, pero acaescio por su culpa."
The distinctive nature of cuasi-delitos survives in the Civil Code. According to article 1089, one of the
five sources of obligations is this legal institution of cuasi-delito or culpa extra-contractual: "los actos . . .
en que intervenga cualquier genero de culpa o negligencia." Then article 1093 provides that this kind of
obligation shall be governed by Chapter II of Title XVI of Book IV, meaning articles 1902-0910. This
portion of the Civil Code is exclusively devoted to the legal institution of culpa aquiliana.
Some of the differences between crimes under the Penal Code and the culpa aquiliana or cuasi-
delito under the Civil Code are:
1. That crimes affect the public interest, while cuasi-delitos are only of private concern.
2. That, consequently, the Penal Code punishes or corrects the criminal act, while the Civil Code, by
means of indemnification, merely repairs the damage.
3. That delicts are not as broad as quasi-delicts, because the former are punished only if there is a
penal law clearly covering them, while the latter, cuasi-delitos, include all acts in which "any king of fault
or negligence intervenes." However, it should be noted that not all violations of the penal law produce
civil responsibility, such as begging in contravention of ordinances, violation of the game laws, infraction
of the rules of traffic when nobody is hurt. (See Colin and Capitant, "Curso Elemental de Derecho Civil,"
Vol. 3, p. 728.)
Let us now ascertain what some jurists say on the separate existence of quasi-delicts and the
employer's primary and direct liability under article 1903 of the Civil Code.
Dorado Montero in his essay on "Responsibilidad" in the "Enciclopedia Juridica Española" (Vol. XXVII,
p. 414) says:
El concepto juridico de la responsabilidad civil abarca diversos aspectos y comprende a diferentes personas.
Asi, existe una responsabilidad civil propiamente dicha, que en ningun casl lleva aparejada responsabilidad
criminal alguna, y otra que es consecuencia indeclinable de la penal que nace de todo delito o falta."
The juridical concept of civil responsibility has various aspects and comprises different persons.
Thus, there is a civil responsibility, properly speaking, which in no case carries with it any criminal
responsibility, and another which is a necessary consequence of the penal liability as a result of
every felony or misdemeanor."
Maura, an outstanding authority, was consulted on the following case: There had been a collision
between two trains belonging respectively to the Ferrocarril Cantabrico and the Ferrocarril del Norte. An
employee of the latter had been prosecuted in a criminal case, in which the company had been made a
party as subsidiarily responsible in civil damages. The employee had been acquitted in the criminal
case, and the employer, the Ferrocarril del Norte, had also been exonerated. The question asked was
whether the Ferrocarril Cantabrico could still bring a civil action for damages against the Ferrocarril del
Norte. Maura's opinion was in the affirmative, stating in part (Maura, Dictamenes, Vol. 6, pp. 511-513):
Quedando las cosas asi, a proposito de la realidad pura y neta de los hechos, todavia menos parece sostenible
que exista cosa juzgada acerca de la obligacion civil de indemnizar los quebrantos y menoscabos inferidos por
el choque de los trenes. El titulo en que se funda la accion para demandar el resarcimiento, no puede
confundirse con las responsabilidades civiles nacidas de delito, siquiera exista en este, sea el cual sea,
una culpa rodeada de notas agravatorias que motivan sanciones penales, mas o menos severas. La lesion
causada por delito o falta en los derechos civiles, requiere restituciones, reparaciones o indemnizaciones, que
cual la pena misma atañen al orden publico; por tal motivo vienen encomendadas, de ordinario, al Ministerio
Fiscal; y claro es que si por esta via se enmiendan los quebrantos y menoscabos, el agraviado excusa procurar
el ya conseguido desagravio; pero esta eventual coincidencia de los efectos, no borra la diversidad originaria
de las acciones civiles para pedir indemnizacion.
Estas, para el caso actual (prescindiendo de culpas contractuales, que no vendrian a cuento y que tiene otro
regimen), dimanan, segun el articulo 1902 del Codigo Civil, de toda accion u omision, causante de daños o
perjuicios, en que intervenga culpa o negligencia. Es trivial que acciones semejantes son ejercitadas ante los
Tribunales de lo civil cotidianamente, sin que la Justicia punitiva tenga que mezclarse en los asuntos. Los
articulos 18 al 21 y 121 al 128 del Codigo Penal, atentos al espiritu y a los fines sociales y politicos del mismo,
desenvuelven y ordenan la materia de responsabilidades civiles nacidas de delito, en terminos separados del
regimen por ley comun de la culpa que se denomina aquiliana, por alusion a precedentes legislativos
del Corpus Juris. Seria intempestivo un paralelo entre aquellas ordenaciones, y la de la obligacion de
indemnizar a titulo de culpa civil; pero viene al caso y es necesaria una de las diferenciaciones que en el tal
paralelo se notarian.
Los articulos 20 y 21 del Codigo Penal, despues de distribuir a su modo las responsabilidades civiles, entre los
que sean por diversos conceptos culpables del delito o falta, las hacen extensivas a las empresas y los
establecimientos al servicio de los cuales estan los delincuentes; pero con caracter subsidiario, o sea, segun el
texto literal, en defecto de los que sean responsables criminalmente. No coincide en ello el Codigo Civil, cuyo
articulo 1903, dice; La obligacion que impone el articulo anterior es exigible, no solo por los actos y omisiones
propios, sino por los de aquellas personas de quienes se debe responder; personas en la enumeracion de las
cuales figuran los dependientes y empleados de los establecimientos o empresas, sea por actos del servicio,
sea con ocasion de sus funciones. Por esto acontece, y se observa en la jurisprudencia, que las empresas,
despues de intervenir en las causas criminales con el caracter subsidiario de su responsabilidad civil por razon
del delito, son demandadas y condenadas directa y aisladamente, cuando se trata de la obligacion, ante los
tribunales civiles.
Siendo como se ve, diverso el titulo de esta obligacion, y formando verdadero postulado de nuestro regimen
judicial la separacion entre justicia punitiva y tribunales de lo civil, de suerte que tienen unos y otros normas de
fondo en distintos cuerpos legales, y diferentes modos de proceder, habiendose, por añadidura, abstenido de
asistir al juicio criminal la Compañia del Ferrocarril Cantabrico, que se reservo ejercitar sus acciones, parece
innegable que la de indemnizacion por los daños y perjuicios que le irrogo el choque, no estuvo sub judice ante
el Tribunal del Jurado, ni fue sentenciada, sino que permanecio intacta, al pronunciarse el fallo de 21 de marzo.
Aun cuando el veredicto no hubiese sido de inculpabilidad, mostrose mas arriba, que tal accion quedaba
legitimamente reservada para despues del proceso; pero al declararse que no existio delito, ni responsabilidad
dimanada de delito, materia unica sobre que tenian jurisdiccion aquellos juzgadores, se redobla el motivo para
la obligacion civil ex lege, y se patentiza mas y mas que la accion para pedir su cumplimiento permanece
incolume, extraña a la cosa juzgada.
As things are, apropos of the reality pure and simple of the facts, it seems less tenable that there
should be res judicata with regard to the civil obligation for damages on account of the losses
caused by the collision of the trains. The title upon which the action for reparation is based cannot
be confused with the civil responsibilities born of a crime, because there exists in the latter,
whatever each nature, a culpa surrounded with aggravating aspects which give rise to penal
measures that are more or less severe. The injury caused by a felony or misdemeanor upon civil
rights requires restitutions, reparations, or indemnifications which, like the penalty itself, affect
public order; for this reason, they are ordinarily entrusted to the office of the prosecuting attorney;
and it is clear that if by this means the losses and damages are repaired, the injured party no
longer desires to seek another relief; but this coincidence of effects does not eliminate the peculiar
nature of civil actions to ask for indemnity.
Such civil actions in the present case (without referring to contractual faults which are not pertinent
and belong to another scope) are derived, according to article 1902 of the Civil Code, from every
act or omission causing losses and damages in which culpa or negligence intervenes. It is
unimportant that such actions are every day filed before the civil courts without the criminal courts
interfering therewith. Articles 18 to 21 and 121 to 128 of the Penal Code, bearing in mind the spirit
and the social and political purposes of that Code, develop and regulate the matter of civil
responsibilities arising from a crime, separately from the regime under common law, of culpa which
is known as aquiliana, in accordance with legislative precedent of the Corpus Juris. It would be
unwarranted to make a detailed comparison between the former provisions and that regarding the
obligation to indemnify on account of civil culpa; but it is pertinent and necessary to point out to one
of such differences.
Articles 20 and 21 of the Penal Code, after distriburing in their own way the civil responsibilities
among those who, for different reasons, are guilty of felony or misdemeanor, make such civil
responsibilities applicable to enterprises and establishments for which the guilty parties render
service, but with subsidiary character, that is to say, according to the wording of the Penal Code, in
default of those who are criminally responsible. In this regard, the Civil Code does not coincide
because article 1903 says: "The obligation imposed by the next preceding article is demandable,
not only for personal acts and omissions, but also for those of persons for whom another is
responsible." Among the persons enumerated are the subordinates and employees of
establishments or enterprises, either for acts during their service or on the occasion of their
functions. It is for this reason that it happens, and it is so observed in judicial decisions, that the
companies or enterprises, after taking part in the criminal cases because of their subsidiary civil
responsibility by reason of the crime, are sued and sentenced directly and separately with regard to
the obligation, before the civil courts.
Seeing that the title of this obligation is different, and the separation between punitive justice and
the civil courts being a true postulate of our judicial system, so that they have different fundamental
norms in different codes, as well as different modes of procedure, and inasmuch as the Compaña
del Ferrocarril Cantabrico has abstained from taking part in the criminal case and has reserved the
right to exercise its actions, it seems undeniable that the action for indemnification for the losses
and damages caused to it by the collision was not sub judice before the Tribunal del Jurado, nor
was it the subject of a sentence, but it remained intact when the decision of March 21 was
rendered. Even if the verdict had not been that of acquittal, it has already been shown that such
action had been legitimately reserved till after the criminal prosecution; but because of the
declaration of the non-existence of the felony and the non-existence of the responsibility arising
from the crime, which was the sole subject matter upon which the Tribunal del Jurado had
jurisdiction, there is greater reason for the civil obligation ex lege, and it becomes clearer that the
action for its enforcement remain intact and is not res judicata.
Laurent, a jurist who has written a monumental work on the French Civil Code, on which the Spanish
Civil Code is largely based and whose provisions on cuasi-delito or culpa extra-contractual are similar to
those of the Spanish Civil Code, says, referring to article 1384 of the French Civil Code which
corresponds to article 1903, Spanish Civil Code:
The action can be brought directly against the person responsible (for another), without
including the author of the act. The action against the principal is accessory in the sense that it
implies the existence of a prejudicial act committed by the employee, but it is not subsidiary in
the sense that it can not be instituted till after the judgment against the author of the act or at
least, that it is subsidiary to the principal action; the action for responsibility (of the employer) is
in itself a principal action. (Laurent, Principles of French Civil Law, Spanish translation, Vol. 20,
pp. 734-735.)
Amandi, in his "Cuestionario del Codigo Civil Reformado" (Vol. 4, pp. 429, 430), declares that the
responsibility of the employer is principal and not subsidiary. He writes:
Cuestion 1. La responsabilidad declarada en el articulo 1903 por las acciones u omisiones de aquellas
personas por las que se debe responder, es subsidiaria? es principal? Para contestar a esta pregunta es
necesario saber, en primer lugar, en que se funda el precepto legal. Es que realmente se impone una
responsabilidad por una falta ajena? Asi parece a primera vista; pero semejante afirmacion seria contraria a la
justicia y a la maxima universal, segun la que las faltas son personales, y cada uno responde de aquellas que
le son imputables. La responsabilidad de que tratamos se impone con ocasion de un delito o culpa, pero no por
causa de ellos, sino por causa del causi delito, esto es, de la imprudencia o de la negligencia del padre, del
tutor, del dueño o director del establecimiento, del maestro, etc. Cuando cualquiera de las personas que
enumera el articulo citado (menores de edad, incapacitados, dependientes, aprendices) causan un daño, la ley
presume que el padre, el tutor, el maestro, etc., han cometido una falta de negligencia para prevenir o evitar el
daño. Esta falta es la que la ley castiga. No hay, pues, responsabilidad por un hecho ajeno, sino en la
apariencia; en realidad la responsabilidad se exige por un hecho propio. La idea de que esa responsabilidad
sea subsidiaria es, por lo tanto, completamente inadmisible.
Question No. 1. Is the responsibility declared in article 1903 for the acts or omissions of those
persons for who one is responsible, subsidiary or principal? In order to answer this question it is
necessary to know, in the first place, on what the legal provision is based. Is it true that there is a
responsibility for the fault of another person? It seems so at first sight; but such assertion would be
contrary to justice and to the universal maxim that all faults are personal, and that everyone is liable
for those faults that can be imputed to him. The responsibility in question is imposed on the
occasion of a crime or fault, but not because of the same, but because of the cuasi-delito, that is to
say, the imprudence or negligence of the father, guardian, proprietor or manager of the
establishment, of the teacher, etc. Whenever anyone of the persons enumerated in the article
referred to (minors, incapacitated persons, employees, apprentices) causes any damage, the law
presumes that the father, guardian, teacher, etc. have committed an act of negligence in not
preventing or avoiding the damage. It is this fault that is condemned by the law. It is, therefore, only
apparent that there is a responsibility for the act of another; in reality the responsibility exacted is
for one's own act. The idea that such responsibility is subsidiary is, therefore, completely
inadmissible.
Oyuelos, in his "Digesto: Principios, Doctrina y Jurisprudencia, Referentes al Codigo Civil Español,"
says in Vol. VII, p. 743:
Es decir, no responde de hechos ajenos, porque se responde solo de su propia culpa, doctrina del articulo
1902; mas por excepcion, se responde de la ajena respecto de aquellas personas con las que media algun
 nexo o vinculo, que motiva o razona la responsabilidad. Esta responsabilidad, es directa o es subsidiaria? En el
orden penal, el Codigo de esta clase distingue entre menores e incapacitados y los demas, declarando directa
la primera (articulo 19) y subsidiaria la segunda (articulos 20 y 21); pero en el orden civil, en el caso del articulo
1903, ha de entenderse directa, por el tenor del articulo que impone la responsabilidad precisamente "por los
actos de aquellas personas de quienes se deba responder."
That is to say, one is not responsible for the acts of others, because one is liable only for his own
faults, this being the doctrine of article 1902; but, by exception, one is liable for the acts of those
persons with whom there is a bond or tie which gives rise to the responsibility. Is this responsibility
direct or subsidiary? In the order of the penal law, the Penal Code distinguishes between minors
and incapacitated persons on the one hand, and other persons on the other, declaring that the
responsibility for the former is direct (article 19), and for the latter, subsidiary (articles 20 and 21);
but in the scheme of the civil law, in the case of article 1903, the responsibility should be
understood as direct, according to the tenor of that articles, for precisely it imposes responsibility
"for the acts of those persons for whom one should be responsible."
Coming now to the sentences of the Supreme Tribunal of Spain, that court has upheld the principles
above set forth: that a quasi-delict or culpa extra-contractual is a separate and distinct legal institution,
independent from the civil responsibility arising from criminal liability, and that an employer is, under
article 1903 of the Civil Code, primarily and directly responsible for the negligent acts of his employee.
One of the most important of those Spanish decisions is that of October 21, 1910. In that case, Ramon
Lafuente died as the result of having been run over by a street car owned by the "compañia Electric
Madrileña de Traccion." The conductor was prosecuted in a criminal case but he was acquitted.
Thereupon, the widow filed a civil action against the street car company, paying for damages in the
amount of 15,000 pesetas. The lower court awarded damages; so the company appealed to the
Supreme Tribunal, alleging violation of articles 1902 and 1903 of the Civil Code because by final
judgment the non-existence of fault or negligence had been declared. The Supreme Court of Spain
dismissed the appeal, saying:
Considerando que el primer motivo del recurso se funda en el equivocado supuesto de que el Tribunal a quo, al
condonar a la compañia Electrica Madrileña al pago del daño causado con la muerte de Ramon La fuente
Izquierdo, desconoce el valor y efectos juridicos de la sentencia absolutoria deictada en la causa criminal que
se siguio por el mismo hecho, cuando es lo cierto que de este han conocido las dos jurisdicciones bajo
diferentes as pectos, y como la de lo criminal declrao dentro de los limites de su competencia que el hecho de
que se trata no era constitutivo de delito por no haber mediado descuido o negligencia graves, lo que no
excluye, siendo este el unico fundamento del fallo absolutorio, el concurso de la culpa o negligencia no
califacadas, fuente de obligaciones civiles segun el articulo 1902 del Codigo, y que alcanzan, segun el 1903,
netre otras perosnas, a los Directores de establecimientos o empresas por los daños causados por sus
dependientes en determinadas condiciones, es manifesto que la de lo civil, al conocer del mismo hehco baho
este ultimo aspecto y al condenar a la compañia recurrente a la indemnizacion del daño causado por uno de
sus empleados, lejos de infringer los mencionados textos, en relacion con el articulo 116 de la Ley de
Enjuciamiento Criminal, se ha atenido estrictamente a ellos, sin invadir atribuciones ajenas a su jurisdiccion
propia, ni contrariar en lo mas minimo el fallo recaido en la causa.
Considering that the first ground of the appeal is based on the mistaken supposition that the trial
court, in sentencing the Compañia Madrileña to the payment of the damage caused by the death of
Ramon Lafuente Izquierdo, disregards the value and juridical effects of the sentence of acquittal
rendered in the criminal case instituted on account of the same act, when it is a fact that the two
jurisdictions had taken cognizance of the same act in its different aspects, and as the criminal
jurisdiction declared within the limits of its authority that the act in question did not constitute a
felony because there was no grave carelessness or negligence, and this being the only basis of
acquittal, it does no exclude the co-existence of fault or negligence which is not qualified, and is a
source of civil obligations according to article 1902 of the Civil Code, affecting, in accordance with
article 1903, among other persons, the managers of establishments or enterprises by reason of the
damages caused by employees under certain conditions, it is manifest that the civil jurisdiccion in
taking cognizance of the same act in this latter aspect and in ordering the company, appellant
herein, to pay an indemnity for the damage caused by one of its employees, far from violating said
legal provisions, in relation with article 116 of the Law of Criminal Procedure, strictly followed the
same, without invading attributes which are beyond its own jurisdiction, and without in any way
contradicting the decision in that cause. (Emphasis supplied.)
It will be noted, as to the case just cited:
First. That the conductor was not sued in a civil case, either separately or with the street car company.
This is precisely what happens in the present case: the driver, Fontanilla, has not been sued in a civil
action, either alone or with his employer.
Second. That the conductor had been acquitted of grave criminal negligence, but the Supreme Tribunal
of Spain said that this did not exclude the co-existence of fault or negligence, which is not qualified, on
the part of the conductor, under article 1902 of the Civil Code. In the present case, the taxi driver was
found guilty of criminal negligence, so that if he had even sued for his civil responsibility arising from the
crime, he would have been held primarily liable for civil damages, and Barredo would have been held
subsidiarily liable for the same. But the plaintiffs are directly suing Barredo, on his primary responsibility
because of his own presumed negligence — which he did not overcome — under article 1903. Thus,
there were two liabilities of Barredo: first, the subsidiary one because of the civil liability of the taxi driver
arising from the latter's criminal negligence; and, second, Barredo's primary liability as an employer
under article 1903. The plaintiffs were free to choose which course to take, and they preferred the
second remedy. In so doing, they were acting within their rights. It might be observed in passing, that
the plaintiff choose the more expeditious and effective method of relief, because Fontanilla was either in
prison, or had just been released, and besides, he was probably without property which might be seized
in enforcing any judgment against him for damages.
Third. That inasmuch as in the above sentence of October 21, 1910, the employer was held liable
civilly, notwithstanding the acquittal of the employee (the conductor) in a previous criminal case, with
greater reason should Barredo, the employer in the case at bar, be held liable for damages in a civil suit
filed against him because his taxi driver had been convicted. The degree of negligence of the conductor
in the Spanish case cited was less than that of the taxi driver, Fontanilla, because the former was
acquitted in the previous criminal case while the latter was found guilty of criminal negligence and was
sentenced to an indeterminate sentence of one year and one day to two years of prision correccional.
(See also Sentence of February 19, 1902, which is similar to the one above quoted.)
In the Sentence of the Supreme Court of Spain, dated February 14, 1919, an action was brought
against a railroad company for damages because the station agent, employed by the company, had
unjustly and fraudulently, refused to deliver certain articles consigned to the plaintiff. The Supreme
Court of Spain held that this action was properly under article 1902 of the Civil Code, the court saying:
Considerando que la sentencia discutida reconoce, en virtud de los hechos que consigna con relacion a las
pruebas del pleito: 1.º, que las expediciones facturadas por la compañia ferroviaria a la consignacion del actor
de las vasijas vacias que en su demanda relacionan tenian como fin el que este las devolviera a sus remitentes
con vinos y alcoholes; 2.º, que llegadas a su destino tales mercanias no se quisieron entregar a dicho
 consignatario por el jefe de la estacion sin motivo justificado y con intencion dolosa, y 3.º, que la falta de
entrega de estas expediciones al tiempo de reclamarlas el demandante le originaron daños y perjuicios en
cantidad de bastante importancia como expendedor al por mayor que era de vinos y alcoholes por las
ganancias que dejo de obtener al verse privado de servir los pedidos que se le habian hecho por los remitentes
en los envases:
Considerando que sobre esta base hay necesidad de estimar los cuatro motivos que integran este recurso,
porque la demanda inicial del pleito a que se contrae no contiene accion que nazca del incumplimiento del
contrato de transporte, toda vez que no se funda en el retraso de la llegada de las mercancias ni de ningun otro
vinculo contractual entre las partes contendientes, careciendo, por tanto, de aplicacion el articulo 371 del
Codigo de Comercio, en que principalmente descansa el fallo recurrido, sino que se limita a pedir la reparaction
de los daños y perjuicios producidos en el patrimonio del actor por la injustificada y dolosa negativa del
porteador a la entrega de las mercancias a su nombre consignadas, segun lo reconoce la sentencia, y cuya
responsabilidad esta claramente sancionada en el articulo 1902 del Codigo Civil, que obliga por el siguiente a
la Compañia demandada como ligada con el causante de aquellos por relaciones de caracter economico y de
jurarquia administrativa.
Considering that the sentence, in question recognizes, in virtue of the facts which it declares, in
relation to the evidence in the case: (1) that the invoice issued by the railroad company in favor of
the plaintiff contemplated that the empty receptacles referred to in the complaint should be returned
to the consignors with wines and liquors; (2) that when the said merchandise reached their
destination, their delivery to the consignee was refused by the station agent without justification and
with fraudulent intent, and (3) that the lack of delivery of these goods when they were demanded by
the plaintiff caused him losses and damages of considerable importance, as he was a wholesale
vendor of wines and liquors and he failed to realize the profits when he was unable to fill the orders
sent to him by the consignors of the receptacles:
Considering that upon this basis there is need of upholding the four assignments of error, as the
original complaint did not contain any cause of action arising from non-fulfillment of a contract of
transportation, because the action was not based on the delay of the goods nor on any contractual
relation between the parties litigant and, therefore, article 371 of the Code of Commerce, on which
the decision appealed from is based, is not applicable; but it limits to asking for reparation for
losses and damages produced on the patrimony of the plaintiff on account of the unjustified
and fraudulent refusal of the carrier to deliver the goods consigned to the plaintiff as stated by the
sentence, and the carrier's responsibility is clearly laid down in article 1902 of the Civil Code which
binds, in virtue of the next article, the defendant company, because the latter is connected with the
person who caused the damage by relations of economic character and by administrative
hierarchy. (Emphasis supplied.)
The above case is pertinent because it shows that the same act may come under both the Penal Code
and the Civil Code. In that case, the action of the agent was unjustified and fraudulent and therefore
could have been the subject of a criminal action. And yet, it was held to be also a proper subject of a
civil action under article 1902 of the Civil Code. It is also to be noted that it was the employer and not
the employee who was being sued.
Let us now examine the cases previously decided by this Court.
In the leading case of Rakes vs. Atlantic Gulf and Pacific Co. (7 Phil., 359, 362-365 [year 1907]), the
trial court awarded damages to the plaintiff, a laborer of the defendant, because the latter had
negligently failed to repair a tramway in consequence of which the rails slid off while iron was being
transported, and caught the plaintiff whose leg was broken. This Court held:
It is contended by the defendant, as its first defense to the action that the necessary conclusion
from these collated laws is that the remedy for injuries through negligence lies only in a criminal
action in which the official criminally responsible must be made primarily liable and his employer
held only subsidiarily to him. According to this theory the plaintiff should have procured the arrest of
the representative of the company accountable for not repairing the track, and on his prosecution a
suitable fine should have been imposed, payable primarily by him and secondarily by his employer.
This reasoning misconceived the plan of the Spanish codes upon this subject. Article 1093 of the
Civil Code makes obligations arising from faults or negligence not punished by the law, subject to
the provisions of Chapter II of Title XVI. Section 1902 of that chapter reads:
"A person who by an act or omission causes damage to another when there is fault or negligence
shall be obliged to repair the damage so done.
"SEC. 1903. The obligation imposed by the preceeding article is demandable, not only for personal
acts and omissions, but also for those of the persons for whom they should be responsible.
"The father, and on his death or incapacity, the mother, is liable for the damages caused by the
minors who live with them.
xxx xxx xxx
"Owners or directors of an establishment or enterprise are equally liable for the damages caused
by their employees in the service of the branches in which the latter may be employed or in the
performance of their duties.
xxx xxx xxx
"The liability referred to in this article shall cease when the persons mentioned therein prove that
they employed all the diligence of a good father of a family to avoid the damage."
As an answer to the argument urged in this particular action it may be sufficient to point out that
nowhere in our general statutes is the employer penalized for failure to provide or maintain safe
appliances for his workmen. His obligation therefore is one 'not punished by the laws' and falls
under civil rather than criminal jurisprudence. But the answer may be a broader one. We should be
reluctant, under any conditions, to adopt a forced construction of these scientific codes, such as is
proposed by the defendant, that would rob some of these articles of effect, would shut out litigants
against their will from the civil courts, would make the assertion of their rights dependent upon the
selection for prosecution of the proper criminal offender, and render recovery doubtful by reason of
the strict rules of proof prevailing in criminal actions. Even if these articles had always stood alone,
such a construction would be unnecessary, but clear light is thrown upon their meaning by the
provisions of the Law of Criminal Procedure of Spain (Ley de Enjuiciamiento Criminal), which,
though never in actual force in these Islands, was formerly given a suppletory or explanatory effect.
Under article 111 of this law, both classes of action, civil and criminal, might be prosecuted jointly
or separately, but while the penal action was pending the civil was suspended. According to article
112, the penal action once started, the civil remedy should be sought therewith, unless it had been
waived by the party injured or been expressly reserved by him for civil proceedings for the future. If
the civil action alone was prosecuted, arising out of a crime that could be enforced only on private
complaint, the penal action thereunder should be extinguished. These provisions are in harmony
with those of articles 23 and 133 of our Penal Code on the same subject.
An examination of this topic might be carried much further, but the citation of these articles suffices
to show that the civil liability was not intended to be merged in the criminal nor even to be
suspended thereby, except as expressly provided in the law. Where an individual is civilly liable for
a negligent act or omission, it is not required that the injured party should seek out a third person
criminally liable whose prosecution must be a condition precedent to the enforcement of the civil
right.
Under article 20 of the Penal Code the responsibility of an employer may be regarded as subsidiary
in respect of criminal actions against his employees only while they are in process of prosecution,
or in so far as they determine the existence of the criminal act from which liability arises, and his
obligation under the civil law and its enforcement in the civil courts is not barred thereby unless by
the election of the injured person. Inasmuch as no criminal proceeding had been instituted, growing
our of the accident in question, the provisions of the Penal Code can not affect this action. This
construction renders it unnecessary to finally determine here whether this subsidiary civil liability in
penal actions has survived the laws that fully regulated it or has been abrogated by the American
civil and criminal procedure now in force in the Philippines.
The difficulty in construing the articles of the code above cited in this case appears from the briefs
before us to have arisen from the interpretation of the words of article 1093, "fault or negligence not
punished by law," as applied to the comprehensive definition of offenses in articles 568 and 590 of
the Penal Code. It has been shown that the liability of an employer arising out of his relation to his
employee who is the offender is not to be regarded as derived from negligence punished by the
law, within the meaning of articles 1902 and 1093. More than this, however, it cannot be said to fall
within the class of acts unpunished by the law, the consequence of which are regulated by articles
1902 and 1903 of the Civil Code. The acts to which these articles are applicable are understood to
be those not growing out of pre-existing duties of the parties to one another. But where relations
already formed give rise to duties, whether springing from contract or quasi contract, then breaches
of those duties are subject to articles 1101, 1103, and 1104 of the same code. A typical application
of this distinction may be found in the consequences of a railway accident due to defective
machinery supplied by the employer. His liability to his employee would arise out of the contract of
employment, that to the passengers out of the contract for passage, while that to the injured
bystander would originate in the negligent act itself.
In Manzanares vs. Moreta, 38 Phil., 821 (year 1918), the mother of the 8 of 9-year-old child
Salvador Bona brought a civil action against Moreta to recover damages resulting from the death of
the child, who had been run over by an automobile driven and managed by the defendant. The trial
court rendered judgment requiring the defendant to pay the plaintiff the sum of P1,000 as
indemnity: This Court in affirming the judgment, said in part:
If it were true that the defendant, in coming from the southern part of Solana Street, had to stop his
auto before crossing Real Street, because he had met vehicles which were going along the latter
street or were coming from the opposite direction along Solana Street, it is to be believed that,
when he again started to run his auto across said Real Street and to continue its way along Solana
Street northward, he should have adjusted the speed of the auto which he was operating until he
had fully crossed Real Street and had completely reached a clear way on Solana Street. But, as
the child was run over by the auto precisely at the entrance of Solana Street, this accident could
not have occurred if the auto had been running at a slow speed, aside from the fact that the
defendant, at the moment of crossing Real Street and entering Solana Street, in a northward
direction, could have seen the child in the act of crossing the latter street from the sidewalk on the
right to that on the left, and if the accident had occurred in such a way that after the automobile had
run over the body of the child, and the child's body had already been stretched out on the ground,
the automobile still moved along a distance of about 2 meters, this circumstance shows the fact
that the automobile entered Solana Street from Real Street, at a high speed without the defendant
having blown the horn. If these precautions had been taken by the defendant, the deplorable
accident which caused the death of the child would not have occurred.
It will be noticed that the defendant in the above case could have been prosecuted in a criminal case
because his negligence causing the death of the child was punishable by the Penal Code. Here is
therefore a clear instance of the same act of negligence being a proper subject-matter either of a
criminal action with its consequent civil liability arising from a crime or of an entirely separate and
independent civil action for fault or negligence under article 1902 of the Civil Code. Thus, in this
jurisdiction, the separate individually of a cuasi-delito or culpa aquiliana under the Civil Code has been
fully and clearly recognized, even with regard to a negligent act for which the wrongdoer could have
been prosecuted and convicted in a criminal case and for which, after such a conviction, he could have
been sued for this civil liability arising from his crime.
Years later (in 1930) this Court had another occasion to apply the same doctrine. In Bernal and Enverso
vs. House and Tacloban Electric & Ice Plant, Ltd., 54 Phil., 327, the parents of the five-year-old child,
Purificacion Bernal, brought a civil action to recover damages for the child's death as a result of burns
caused by the fault and negligence of the defendants. On the evening of April 10, 1925, the Good
Friday procession was held in Tacloban, Leyte. Fortunata Enverso with her daughter Purificacion Bernal
had come from another municipality to attend the same. After the procession the mother and the
daughter with two others were passing along Gran Capitan Street in front of the offices of the Tacloban
Electric & Ice Plant, Ltd., owned by defendants J. V. House, when an automobile appeared from the
opposite direction. The little girl, who was slightly ahead of the rest, was so frightened by the automobile
that she turned to run, but unfortunately she fell into the street gutter where hot water from the electric
plant was flowing. The child died that same night from the burns. The trial courts dismissed the action
because of the contributory negligence of the plaintiffs. But this Court held, on appeal, that there was no
contributory negligence, and allowed the parents P1,000 in damages from J. V. House who at the time
of the tragic occurrence was the holder of the franchise for the electric plant. This Court said in part:
Although the trial judge made the findings of fact hereinbefore outlined, he nevertheless was
led to order the dismissal of the action because of the contributory negligence of the plaintiffs.
It is from this point that a majority of the court depart from the stand taken by the trial judge.
The mother and her child had a perfect right to be on the principal street of Tacloban, Leyte, on
the evening when the religious procession was held. There was nothing abnormal in allowing
the child to run along a few paces in advance of the mother. No one could foresee the
coincidence of an automobile appearing and of a frightened child running and falling into a
ditch filled with hot water. The doctrine announced in the much debated case of Rakes vs.
Atlantic Gulf and Pacific Co. ([1907]), 7 Phil., 359), still rule. Article 1902 of the Civil Code must
again be enforced. The contributory negligence of the child and her mother, if any, does not
operate as a bar to recovery, but in its strictest sense could only result in reduction of the
damages.
It is most significant that in the case just cited, this Court specifically applied article 1902 of the Civil
Code. It is thus that although J. V. House could have been criminally prosecuted for reckless or simple
negligence and not only punished but also made civilly liable because of his criminal negligence,
nevertheless this Court awarded damages in an independent civil action for fault or negligence under
article 1902 of the Civil Code.
In Bahia vs. Litonjua and Leynes (30 Phil., 624 [year 1915), the action was for damages for the death of
the plaintiff's daughter alleged to have been caused by the negligence of the servant in driving an
automobile over the child. It appeared that the cause of the mishap was a defect in the steering gear.
The defendant Leynes had rented the automobile from the International Garage of Manila, to be used
by him in carrying passengers during the fiesta of Tuy, Batangas. Leynes was ordered by the lower
court to pay P1,000 as damages to the plaintiff. On appeal this Court reversed the judgment as to
Leynes on the ground that he had shown that the exercised the care of a good father of a family, thus
overcoming the presumption of negligence under article 1903. This Court said:
As to selection, the defendant has clearly shown that he exercised the care and diligence of a good
father of a family. He obtained the machine from a reputable garage and it was, so far as appeared,
in good condition. The workmen were likewise selected from a standard garage, were duly licensed
by the Government in their particular calling, and apparently thoroughly competent. The machine
had been used but a few hours when the accident occurred and it is clear from the evidence that
the defendant had no notice, either actual or constructive, of the defective condition of the steering
gear.
The legal aspect of the case was discussed by this Court thus:
Article 1903 of the Civil Code not only establishes liability in cases of negligence, but also
provides when the liability shall cease. It says:
"The liability referred to in this article shall cease when the persons mentioned therein
prove that they employed all the diligence of a good father of a family to avoid the
damage."
From this article two things are apparent: (1) That when an injury is caused by the negligence
of a servant or employee there instantly arises a presumption of law that there was negligence
on the part of the matter or employer either in the selection of the servant or employee, or in
supervision over him after the selection, or both; and (2) that presumption is juris tantum and
not juris et de jure, and consequently, may be rebutted. It follows necessarily that if the
employer shows to the satisfaction of the court that in selection and supervision he has
exercised the care and diligence of a good father of a family, the presumption is overcome and
he is relieve from liability.
This theory bases the responsibility of the master ultimately on his own negligence and not on
that of his servant.
The doctrine of the case just cited was followed by this Court in Cerf vs. Medel (33 Phil., 37 [year
1915]). In the latter case, the complaint alleged that the defendant's servant had so negligently driven
an automobile, which was operated by defendant as a public vehicle, that said automobile struck and
damaged the plaintiff's motorcycle. This Court, applying article 1903 and following the rule in Bahia vs.
Litonjua and Leynes, said in part (p. 41) that:
The master is liable for the negligent acts of his servant where he is the owner or director of a
business or enterprise and the negligent acts are committed while the servant is engaged in
his master's employment as such owner.
Another case which followed the decision in Bahia vs. Litonjua and Leynes was Cuison vs. Norton &
Harrison Co., 55 Phil., 18 (year 1930). The latter case was an action for damages brought by Cuison for
the death of his seven-year-old son Moises. The little boy was on his way to school with his sister
Marciana. Some large pieces of lumber fell from a truck and pinned the boy underneath, instantly killing
him. Two youths, Telesforo Binoya and Francisco Bautista, who were working for Ora, an employee of
defendant Norton & Harrison Co., pleaded guilty to the crime of homicide through reckless negligence
and were sentenced accordingly. This Court, applying articles 1902 and 1903, held:
The basis of civil law liability is not respondent superior but the relationship of pater familias.
This theory bases the liability of the master ultimately on his own negligence and not on that of
his servant. (Bahia vs.Litonjua and Leynes [1915], 30 Phil., 624; Cangco vs. Manila Railroad
Co. [1918], 38 Phil., 768.)
In Walter A. Smith & Co. vs. Cadwallader Gibson Lumber Co., 55 Phil., 517 (year 1930) the plaintiff
brought an action for damages for the demolition of its wharf, which had been struck by the steamer
Helen C belonging to the defendant. This Court held (p. 526):
The evidence shows that Captain Lasa at the time the plaintiff's wharf collapsed was a duly
licensed captain, authorized to navigate and direct a vessel of any tonnage, and that the
appellee contracted his services because of his reputation as a captain, according to F. C.
Cadwallader. This being so, we are of the opinion that the presumption of liability against the
defendant has been overcome by the exercise of the care and diligence of a good father of a
family in selecting Captain Lasa, in accordance with the doctrines laid down by this court in the
cases cited above, and the defendant is therefore absolved from all liability.
It is, therefore, seen that the defendant's theory about his secondary liability is negatived by the six
cases above set forth. He is, on the authority of these cases, primarily and directly responsible in
damages under article 1903, in relation to article 1902, of the Civil Code.
Let us now take up the Philippine decisions relied upon by the defendant. We study first, City of Manila
vs. Manila Electric Co., 52 Phil., 586 (year 1928). A collision between a truck of the City of Manila and a
street car of the Manila Electric Co. took place on June 8, 1925. The truck was damaged in the amount
of P1,788.27. Sixto Eustaquio, the motorman, was prosecuted for the crime of damage to property and
slight injuries through reckless imprudence. He was found guilty and sentenced to pay a fine of P900, to
indemnify the City of Manila for P1,788.27, with subsidiary imprisonment in case of insolvency. Unable
to collect the indemnity from Eustaquio, the City of Manila filed an action against the Manila Electric
Company to obtain payment, claiming that the defendant was subsidiarily liable. The main defense was
that the defendant had exercised the diligence of a good father of a family to prevent the damage. The
lower court rendered judgment in favor of the plaintiff. This Court held, in part, that this case was
governed by the Penal Code, saying:
With this preliminary point out of the way, there is no escaping the conclusion that the provisions of
the Penal Code govern. The Penal Code in easily understandable language authorizes the
determination of subsidiary liability. The Civil Code negatives its application by providing that civil
obligations arising from crimes or misdemeanors shall be governed by the provisions of the Penal
 Code. The conviction of the motorman was a misdemeanor falling under article 604 of the Penal
Code. The act of the motorman was not a wrongful or negligent act or omission not punishable by
law. Accordingly, the civil obligation connected up with the Penal Code and not with article 1903 of
the Civil Code. In other words, the Penal Code affirms its jurisdiction while the Civil Code negatives
its jurisdiction. This is a case of criminal negligence out of which civil liability arises and not a case
of civil negligence.
xxx xxx xxx
Our deduction, therefore, is that the case relates to the Penal Code and not to the Civil Code.
Indeed, as pointed out by the trial judge, any different ruling would permit the master to escape
scot-free by simply alleging and proving that the master had exercised all diligence in the selection
and training of its servants to prevent the damage. That would be a good defense to a strictly civil
action, but might or might not be to a civil action either as a part of or predicated on conviction for a
crime or misdemeanor. (By way of parenthesis, it may be said further that the statements here
made are offered to meet the argument advanced during our deliberations to the effect that article
0902 of the Civil Code should be disregarded and codal articles 1093 and 1903 applied.)
It is not clear how the above case could support the defendant's proposition, because the Court of
Appeals based its decision in the present case on the defendant's primary responsibility under article
1903 of the Civil Code and not on his subsidiary liability arising from Fontanilla's criminal negligence. In
other words, the case of City of Manila vs. Manila Electric Co., supra, is predicated on an entirely
different theory, which is the subsidiary liability of an employer arising from a criminal act of his
employee, whereas the foundation of the decision of the Court of Appeals in the present case is the
employer's primary liability under article 1903 of the Civil Code. We have already seen that this is a
proper and independent remedy.
Arambulo vs. Manila Electric Co. (55 Phil., 75), is another case invoked by the defendant. A motorman
in the employ of the Manila Electric Company had been convicted o homicide by simple negligence and
sentenced, among other things, to pay the heirs of the deceased the sum of P1,000. An action was then
brought to enforce the subsidiary liability of the defendant as employer under the Penal Code. The
defendant attempted to show that it had exercised the diligence of a good father of a family in selecting
the motorman, and therefore claimed exemption from civil liability. But this Court held:
In view of the foregoing considerations, we are of opinion and so hold, (1) that the exemption
from civil liability established in article 1903 of the Civil Code for all who have acted with the
diligence of a good father of a family, is not applicable to the subsidiary civil liability provided in
article 20 of the Penal Code.
The above case is also extraneous to the theory of the defendant in the instant case, because the
action there had for its purpose the enforcement of the defendant's subsidiary liability under the Penal
Code, while in the case at bar, the plaintiff's cause of action is based on the defendant's primary and
direct responsibility under article 1903 of the Civil Code. In fact, the above case destroys the
defendant's contention because that decision illustrates the principle that the employer's primary
responsibility under article 1903 of the Civil Code is different in character from his subsidiary liability
under the Penal Code.
In trying to apply the two cases just referred to, counsel for the defendant has failed to recognize the
distinction between civil liability arising from a crime, which is governed by the Penal Code, and the
responsibility for cuasi-delito or culpa aquiliana under the Civil Code, and has likewise failed to give the
importance to the latter type of civil action.
The defendant-petitioner also cites Francisco vs. Onrubia (46 Phil., 327). That case need not be set
forth. Suffice it to say that the question involved was also civil liability arising from a crime. Hence, it is
as inapplicable as the two cases above discussed.
The foregoing authorities clearly demonstrate the separate individuality of cuasi-delitos or culpa
aquiliana under the Civil Code. Specifically they show that there is a distinction between civil liability
arising from criminal negligence (governed by the Penal Code) and responsibility for fault or negligence
under articles 1902 to 1910 of the Civil Code, and that the same negligent act may produce either a civil
liability arising from a crime under the Penal Code, or a separate responsibility for fault or negligence
under articles 1902 to 1910 of the Civil Code. Still more concretely, the authorities above cited render it
inescapable to conclude that the employer — in this case the defendant-petitioner — is primarily and
directly liable under article 1903 of the Civil Code.
The legal provisions, authors, and cases already invoked should ordinarily be sufficient to dispose of
this case. But inasmuch as we are announcing doctrines that have been little understood in the past, it
might not be inappropriate to indicate their foundations.
Firstly, the Revised Penal Code in article 365 punishes not only reckless but also simple negligence. If
we were to hold that articles 1902 to 1910 of the Civil Code refer only to fault or negligence not
punished by law, according to the literal import of article 1093 of the Civil Code, the legal institution of
culpa aquiliana would have very little scope and application in actual life. Death or injury to persons and
damage to property through any degree of negligence — even the slightest — would have to be
indemnified only through the principle of civil liability arising from a crime. In such a state of affairs, what
sphere would remain for cuasi-delito or culpa aquiliana? We are loath to impute to the lawmaker any
intention to bring about a situation so absurd and anomalous. Nor are we, in the interpretation of the
laws, disposed to uphold the letter that killeth rather than the spirit that giveth life. We will not use the
literal meaning of the law to smother and render almost lifeless a principle of such ancient origin and
such full-grown development as culpa aquiliana or cuasi-delito, which is conserved and made enduring
in articles 1902 to 1910 of the Spanish Civil Code.
Secondly, to find the accused guilty in a criminal case, proof of guilt beyond reasonable doubt is
required, while in a civil case, preponderance of evidence is sufficient to make the defendant pay in
damages. There are numerous cases of criminal negligence which can not be shown beyond
reasonable doubt, but can be proved by a preponderance of evidence. In such cases, the defendant
can and should be made responsible in a civil action under articles 1902 to 1910 of the Civil Code.
Otherwise, there would be many instances of unvindicated civil wrongs. Ubi jus ibi remedium.
Thirdly, to hold that there is only one way to make defendant's liability effective, and that is, to sue the
driver and exhaust his (the latter's) property first, would be tantamount to compelling the plaintiff to
follow a devious and cumbersome method of obtaining relief. True, there is such a remedy under our
laws, but there is also a more expeditious way, which is based on the primary and direct responsibility
of the defendant under article 1903 of the Civil Code. Our view of the law is more likely to facilitate
remedy for civil wrongs, because the procedure indicated by the defendant is wasteful and productive of
delay, it being a matter of common knowledge that professional drivers of taxis and similar public
conveyance usually do not have sufficient means with which to pay damages. Why, then, should the
plaintiff be required in all cases to go through this roundabout, unnecessary, and probably useless
procedure? In construing the laws, courts have endeavored to shorten and facilitate the pathways of
right and justice.

At this juncture, it should be said that the primary and direct responsibility of employers and their
presumed negligence are principles calculated to protect society. Workmen and employees should be
carefully chosen and supervised in order to avoid injury to the public. It is the masters or employers who
principally reap the profits resulting from the services of these servants and employees. It is but right
that they should guarantee the latter's careful conduct for the personnel and patrimonial safety of
others. As Theilhard has said, "they should reproach themselves, at least, some for their weakness,
others for their poor selection and all for their negligence." And according to Manresa, "It is much more
equitable and just that such responsibility should fall upon the principal or director who could have
chosen a careful and prudent employee, and not upon the injured person who could not exercise such
selection and who used such employee because of his confidence in the principal or director." (Vol. 12,
p. 622, 2nd Ed.) Many jurists also base this primary responsibility of the employer on the principle of
representation of the principal by the agent. Thus, Oyuelos says in the work already cited (Vol. 7, p.
747) that before third persons the employer and employee "vienen a ser como una sola personalidad,
por refundicion de la del dependiente en la de quien le emplea y utiliza." ("become as one personality
by the merging of the person of the employee in that of him who employs and utilizes him.") All these
observations acquire a peculiar force and significance when it comes to motor accidents, and there is
need of stressing and accentuating the responsibility of owners of motor vehicles.

Fourthly, because of the broad sweep of the provisions of both the Penal Code and the Civil Code on
this subject, which has given rise to the overlapping or concurrence of spheres already discussed, and
for lack of understanding of the character and efficacy of the action for culpa aquiliana, there has grown
up a common practice to seek damages only by virtue of the civil responsibility arising from a crime,
forgetting that there is another remedy, which is by invoking articles 1902-1910 of the Civil Code.
Although this habitual method is allowed by our laws, it has nevertheless rendered practically useless
and nugatory the more expeditious and effective remedy based on culpa aquiliana or culpa extra-
contractual. In the present case, we are asked to help perpetuate this usual course. But we believe it is
high time we pointed out to the harm done by such practice and to restore the principle of responsibility
for fault or negligence under articles 1902 et seq. of the Civil Code to its full rigor. It is high time we
caused the stream of quasi-delict or culpa aquiliana to flow on its own natural channel, so that its waters
may no longer be diverted into that of a crime under the Penal Code. This will, it is believed, make for
the better safeguarding of private rights because it re-establishes an ancient and additional remedy, and
for the further reason that an independent civil action, not depending on the issues, limitations and
results of a criminal prosecution, and entirely directed by the party wronged or his counsel, is more
likely to secure adequate and efficacious redress.

In view of the foregoing, the judgment of the Court of Appeals should be and is hereby affirmed, with
costs against the defendant-petitioner.

Yulo, C.J., Moran, Ozaeta and Paras, JJ., concur.

G.R. No. L-21291 March 28, 1969
PRECIOLITA V. CORLISS vs. THE MANILA RAILROAD CO.
FERNANDO, J.:
Youth, the threshold of life, is invariably accompanied by that euphoric sense of well-being, and with
reason. The future, bright with promise, looms ahead. One's powers are still to be tested, but one feels
ready for whatever challenge may come his way. There is that heady atmosphere of self-confidence, at
times carried to excess. The temptation to take risks is there, ever so often, difficult, if not impossible, to
resist. There could be then a lessening of prudence and foresight, qualities usually associated with age.
For death seems so remote and contingent an event. Such is not always the case though, and a slip
may be attended with consequences at times unfortunate, even fatal.
Some such thought apparently was in the mind of the lower court when it dismissed the complaint for
recovery of damages filed by plaintiff-appellant, Preciolita V. Corliss whose husband, the late Ralph W.
Corliss, was, at the tender age of twenty-one, the victim of a grim tragedy, when the jeep he was driving
collided with a locomotive of defendant-appellee Manila Railroad Company, close to midnight on the
evening of Feb 21, 1957, at the railroad crossing in Balibago, Angeles, Pampanga, in front of the Clark
Air Force Base. In the decision appealed from, the lower court, after summarizing the evidence,
concluded that the deceased "in his eagerness to beat, so to speak, the oncoming locomotive, took the
risk and attempted to reach the other side, but unfortunately he became the victim of his own
miscalculation." 1
The negligence imputed to defendant-appellee was thus ruled out by the lower court, satisfactory proof
to that effect, in its opinion, being lacking. Hence this appeal direct to us, the amount sought in the
concept of damages reaching the sum of P282,065.40. An examination of the evidence of record fails to
yield a basis for a reversal of the decision appealed from. We affirm.
According to the decision appealed from, there is no dispute as to the following: "In December 1956,
plaintiff, 19 years of age, married Ralph W. Corliss Jr., 21 years of age, ...; that Corliss Jr. was an air
police of the Clark Air Force Base; that at the time of the accident, he was driving the fatal jeep; that he
was then returning in said jeep, together with a P.C. soldier, to the Base; and that Corliss Jr. died of
serious burns at the Base Hospital the next day, while the soldier sustained serious physical injuries
and burns." 2
Then came a summary of the testimony of two of the witnesses for plaintiff-appellant. Thus: "Ronald J.
Ennis, a witness of the plaintiff, substantially declared in his deposition, ..., that at the time of the
accident, he also awaiting transportation at the entrance of Clark Field, which was about 40 to 50 yards
away from the tracks and that while there he saw the jeep coming towards the Base. He said that said
jeep slowed down before reaching the crossing, that it made a brief stop but that it did not stop — dead
stop. Elaborating, he declared that while it was slowing down, Corliss Jr. shifted into first gear and that
was what he meant by a brief stop. He also testified that he could see the train coming from the
direction of San Fernando and that he heard a warning but that it was not sufficient enough to avoid the
accident." 3 Also: "Virgilio de la Paz, another witness of the plaintiff, testified that on the night of
February 21, 1957, he was at the Balibago checkpoint and saw the train coming from Angeles and a
jeep going towards the direction of Clark Field. He stated that he heard the whistle of the locomotive
and saw the collision. The jeep, which caught fire, was pushed forward. He helped the P.C. soldier. He
stated that he saw the jeep running fast and heard the tooting of the horn. It did not stop at the railroad
crossing, according to him." 4
After which reference was made to the testimony of the main witness for defendant-appellee,
Teodorico Capili, "who was at the engine at the time of the mishap," and who "testified that before the
locomotive, which had been previously inspected and found to be in good condition approached, the
crossing, that is, about 300 meters away, he blew the siren and repeated it in compliance with the
regulations until he saw the jeep suddenly spurt and that although the locomotive was running between
20 and 25 kilometers an hour and although he had applied the brakes, the jeep was caught in the
middle of the tracks." 5
1. The above finding as to the non-existence of negligence attributable to defendant-appellee Manila
Railroad Company comes to us encased in the armor of what admittedly appears to be a careful judicial
appraisal and scrutiny of the evidence of record. It is thus proof against any attack unless sustained and
overwhelming. Not that it is invulnerable, but it is likely to stand firm in the face of even the most
formidable barrage.
In the more traditional terminology, the lower court judgment has in its favor the presumption of
correctness. It is entitled to great respect. After all, the lower court had the opportunity of weighing
carefully what was testified to and apparently did not neglect it. There is no affront to justice then if its
finding be accorded acceptance subject of course the contingency of reversal if error or errors,
substantial in character, be shown in the conclusion thus arrived at. It is a fair statement of the
governing, principle to say that the appellate function is exhausted when there is found to be a rational
basis for the result reached by the trial court.
As was held in a 1961 decision: "We have already ruled, that when the credibility of witnesses is the
one at issue, the trial court's judgment as to their degree of credence deserves serious consideration by
this Court." 6 An earlier expression of the same view is found in Jai-Alai Corporation v. Ching Kiat: "After
going over the record, we find no reason for rejecting the findings of the court below. The questions
raised hinge on credibility and it is well-settled that in the absence of compelling reasons, its
determination is best left to the trial judge why had the advantage of hearing the parties testify and
observing their demeanor on the witness stand." 7
In a 1964 opinion, we adhered to such an approach. Thus: "'Nothing in the record suggests any
arbitrary or abusive conduct on the part of the trial judge in the formulation of the ruling. His conclusion
on the matter is sufficiently borne out by the evidence presented. We are denied, therefore, the
prerogative to disturb that finding, consonant to the time honored tradition of the Tribunal to hold trial
judges better situated to make conclusions on questions of fact'." 8 On this ground alone we can rest the
affirmance of the judgment appealed from.lâwphi1.ñet
2. Nor is the result different even if no such presumption were indulged in and the matter examined as
if we were exercising original and not appellate jurisdiction. The sad and deplorable situation in which
plaintiff-appellant now finds herself, to the contrary notwithstanding we find no reason for reversing the
judgment of the lower court.
This action is predicated on negligence, the Civil Code making clear that whoever by act or omission
causes damage to another, there being negligence, is under obligation to pay for the damage
done. 9 Unless it could be satisfactorily shown, therefore, that defendant-appellee was guilty of
negligence then it could not be held liable. The crucial question, therefore, is the existence of
negligence.
The above Civil Code provision, which is a reiteration of that found in the Civil Code of Spain, formerly
applicable in this jurisdiction, 10 had been interpreted in earlier decisions. Thus, in Smith v. Cadwallader
Gibson Lumber Co., 11Manresa was cited to the following effect "'Among the questions most frequently
raised and upon which the majority of cases have been decided with respect to the application of this
liability, are those referring to the determination of the damage or prejudice, and to the fault or
negligence of the person responsible therefor. These are the two indispensable factors in the
obligations under discussion, for without damage or prejudice there can be no liability, and although this
element is present no indemnity can be awarded unless arising from some person's fault or
negligence'."
Negligence was defined by us in two 1912 decisions, United States v. Juanillo 12 and United States v.
Barias. 13Cooley' formulation was quoted with approval in both the Juanillo and Barias decisions. Thus:
"Judge Cooley in his work on Torts (3d ed.), Sec. 1324, defines negligence to be: "The failure to
observe for the protection of the interests of another person that degree of care, precaution and
vigilance which the circumstance justly demand whereby such other person suffers injury." There was
likewise a reliance on Ahern v. Oregon Telephone Co. 14 Thus: "Negligence is want of the care required
by the circumstances. It is a relative or comparative, not an absolute term and its application depends
upon the situation of the parties and the degree of care and vigilance which the circumstances
reasonably require. Where the danger is great, a high degree of care is necessary, and the failure to
observe it is a want of ordinary care under the circumstances."
To repeat, by such a test, no negligence could be imputed to defendant-appellee, and the action of
plaintiff-appellee must necessary fail. The facts being what they are, compel the conclusion that the
liability sought to be fastened on defendant-appellee had not arisen.
3. Plaintiff-appellant, in her brief, however, would seek a reversal of the judgment appealed from on
the ground that there was a failure to appreciate the true situation. Thus the first three assigned errors
are factual in character. The third assigned error could be summarily disposed of. It would go against
the evidence to maintain the view that the whistle was not sounded and the brakes not applied at a
distance of 300 meters before reaching the crossing.
The first two assigned errors would make much of the failure of the lower court to hold that the
crossing bars not having been put down and there being no guard at the gate-house, there still was a
duty on the part of Corliss to stop his jeep to avoid a collision and that Teodorico Capili, who drove the
engine, was not qualified to do so at the time of the accident. For one cannot just single out
circumstance and then confidently assign to it decisive weight and significance. Considered separately,
neither of the two above errors assigned would call for a judgment different in character. Nor would a
combination of acts allegedly impressed with negligence suffice to alter the result. The quantum of proof
required still not been met. The alleged errors fail of their said effect. The case for plaintiff-appellant,
such as it had not been improved. There is no justification for reversing the judgment of the lower court.
It cannot be stressed too much that the decisive considerations are too variable, too dependent in the
lid analysis upon a common sense estimate of the situation as it presented itself to the parties for us to
be able to say that this or that element having been isolated, negligence is shown. The factors that
enter the judgment are too many and diverse for us to imprison them in a formula sufficient of itself to
yield the correct answer to the multi-faceted problems the question of negligence poses. Every case
must be dependent on its facts. The circumstances indicative of lack of due care must be judged in the
light of what could reasonably be expected of the parties. If the objective standard of prudence be met,
then negligence is ruled out.
In this particular case, it would be to show less than fidelity to the controlling facts to impute negligence
to defendant-appellee. The first three errors assigned certainly do not call for that conclusion.
4. The fourth assigned error is deserving of a more extended treatment. Plaintiff-appellant apparently
had in mind this portion of the opinion of the lower court: "The weight of authorities is to the effect that a
railroad track is in itself a warning or a signal of danger to those who go upon it, and that those who, for
reasons of their own, ignore such warning, do so at their own risk and responsibility. Corliss Jr., who
undoubtedly had crossed the checkpoint frequently, if not daily, must have known that locomotive
engines and trains usually pass at that particular crossing where the accident had taken place." 15
Her assignment of error, however, would single out not the above excerpt from the decision appealed
from but what to her is the apparent reliance of the lower court on Mestres v. Manila Electric Railroad &
Light Co. 16 and United States v. Manlabat & Pasibi. 17 In the Manabat case, the doctrine announced by
this Court follows: "A person in control of an automobile who crosses a railroad, even at a regular road
crossing, and who does not exercise that precaution and that control over it as to be able to stop the
same almost immediately upon the appearance of a train, is guilty of criminal negligence, providing a
collision occurs and injury results. Considering the purposes and the general methods adopted for the
management of railroads and railroad trains, we think it is incumbent upon one approaching a railroad
crossing to use all of his faculties of seeing and hearing. He should approach a railroad crossing
cautiously and carefully. He should look and listen and do everything that a reasonably prudent man
would do before he attempts to cross the track." The Mestres doctrine in a suit arising from a collision
between an automobile and a street car is substantially similar. Thus: "It may be said, however, that,
where a person is nearing a street crossing toward which a car is approaching, the duty is on the party
to stop and avoid a collision who can most readily adjust himself to the exigencies of the case, and
where such person can do so more readily, the motorman has a right to presume that such duty will be
performed."
It is true, as plaintiff-appellant would now allege that there has been a drift away from the apparent
rigid and inflexible doctrine thus set forth in the two above cases evidenced by Lilius v. Manila Railroad
Co., 18 the controlling facts of which, however, are easily distinguishable from what had been correctly
ascertained in the present case. Such a deviation from the earlier principle announced is not only true of
this jurisdiction but also of the United States.
This is made clear by Prosser. Speaking of a 1927 decision by Justice Holmes, he had the following to
say: "Especially noteworthy in this respect is the attempt Mr. Justice Holmes, in Baltimore & Ohio
Railway v. Goodman, to 'lay down a standard once for all,' which would require an automobile driver
approaching a railroad crossing with an obstructed view to stop, look and listen, and if he cannot be
sure otherwise that no train is coming to get out of the car. The basic idea behind this is sound enough:
it is by no means proper care to cross a railroad track without taking reasonable precautions against a
train, and normally such precautions will require looking, hearing, and a stop, or at least slow speed,
where the view is obstructed." 19
Then, barely seven years later, in 1934, came Pakora v. Wabash Railway, 20 where, according to
Prosser, it being shown that "the only effective stop must be made upon the railway tracks themselves,
in a position of obligation danger, the court disregarded any such uniform rule, rejecting the 'get out of
the car' requirement as 'an uncommon precaution, likely to be futile and sometimes even dangerous,'
and saying that the driver need not always stop. 'Illustrations such as these,' said Mr. Justice Cardozo
'bear witness to the need for caution in framing standards of behavior that amount to rules of law....
Extraordinary situations may not wisely or fairly be subjected to tests or regulations that are fitting for
the commonplace or normal." 21

What Justice Cardozo announced would merely emphasize what was set forth earlier that each and
every, case on questions of negligence is to be decided in accordance with the peculiar circumstances
that present themselves. There can be no hard and fast rule. There must be that observance of that
degree of care, precaution, and vigilance which the situation demands. Thus defendant-appellee acted.
It is undeniable then that no negligence can rightfully be imputed to it.

What commends itself for acceptance is this conclusion arrived at by the lower court: "Predicated on
the testimonies of the plaintiff's witnesses, on the knowledge of the deceased and his familiarity with the
setup of the checkpoint, the existence of the tracks; and on the further fact that the locomotive had
blown its siren or whistle, which was heard by said witnesses, it is clear that Corliss Jr. was so
sufficiently warned in advance of the oncoming train that it was incumbent upon him to avoid a possible
accident — and this consisted simply in stopping his vehicle before the crossing and allowing the train
to move on. A prudent man under similar circumstances would have acted in this manner. This,
unfortunately, Corliss, Jr. failed to do." 22

WHEREFORE, the decision of the lower court of November 29, 1962 dismissing the complaint, is
affirmed. Without pronouncement as to costs.
G.R. No. L-21438 September 28, 1966
AIR FRANCE, vs. RAFAEL CARRASCOSO and the HONORABLE CA
SANCHEZ, J.:
The Court of First Instance of Manila 1 sentenced petitioner to pay respondent Rafael Carrascoso
P25,000.00 by way of moral damages; P10,000.00 as exemplary damages; P393.20 representing the
difference in fare between first class and tourist class for the portion of the trip Bangkok-Rome, these
various amounts with interest at the legal rate, from the date of the filing of the complaint until paid; plus
P3,000.00 for attorneys' fees; and the costs of suit.
On appeal,2 the Court of Appeals slightly reduced the amount of refund on Carrascoso's plane ticket
from P393.20 to P383.10, and voted to affirm the appealed decision "in all other respects", with costs
against petitioner.
The case is now before us for review on certiorari.
The facts declared by the Court of Appeals as " fully supported by the evidence of record", are:
Plaintiff, a civil engineer, was a member of a group of 48 Filipino pilgrims that left Manila for
Lourdes on March 30, 1958.
On March 28, 1958, the defendant, Air France, through its authorized agent, Philippine Air Lines,
Inc., issued to plaintiff a "first class" round trip airplane ticket from Manila to Rome. From Manila to
Bangkok, plaintiff travelled in "first class", but at Bangkok, the Manager of the defendant airline
forced plaintiff to vacate the "first class" seat that he was occupying because, in the words of the
witness Ernesto G. Cuento, there was a "white man", who, the Manager alleged, had a "better
right" to the seat. When asked to vacate his "first class" seat, the plaintiff, as was to be expected,
refused, and told defendant's Manager that his seat would be taken over his dead body; a
commotion ensued, and, according to said Ernesto G. Cuento, "many of the Filipino passengers
got nervous in the tourist class; when they found out that Mr. Carrascoso was having a hot
discussion with the white man [manager], they came all across to Mr. Carrascoso and pacified Mr.
Carrascoso to give his seat to the white man" (Transcript, p. 12, Hearing of May 26, 1959); and
plaintiff reluctantly gave his "first class" seat in the plane. 3
1. The trust of the relief petitioner now seeks is that we review "all the findings" 4 of respondent Court of
Appeals. Petitioner charges that respondent court failed to make complete findings of fact on all the
issues properly laid before it. We are asked to consider facts favorable to petitioner, and then, to
overturn the appellate court's decision.
Coming into focus is the constitutional mandate that "No decision shall be rendered by any court of
record without expressing therein clearly and distinctly the facts and the law on which it is based". 5 This
is echoed in the statutory demand that a judgment determining the merits of the case shall state "clearly
and distinctly the facts and the law on which it is based"; 6 and that "Every decision of the Court of
Appeals shall contain complete findings of fact on all issues properly raised before it". 7
A decision with absolutely nothing to support it is a nullity. It is open to direct attack. 8 The law, however,
solely insists that a decision state the "essential ultimate facts" upon which the court's conclusion is
drawn. 9 A court of justice is not hidebound to write in its decision every bit and piece of
evidence 10 presented by one party and the other upon the issues raised. Neither is it to be burdened
with the obligation "to specify in the sentence the facts" which a party "considered as proved". 11 This is
but a part of the mental process from which the Court draws the essential ultimate facts. A decision is
not to be so clogged with details such that prolixity, if not confusion, may result. So long as the decision
of the Court of Appeals contains the necessary facts to warrant its conclusions, it is no error for said
court to withhold therefrom "any specific finding of facts with respect to the evidence for the defense".
Because as this Court well observed, "There is no law that so requires". 12 Indeed, "the mere failure to
specify (in the decision) the contentions of the appellant and the reasons for refusing to believe them is
not sufficient to hold the same contrary to the requirements of the provisions of law and the
Constitution". It is in this setting that in Manigque, it was held that the mere fact that the findings "were
based entirely on the evidence for the prosecution without taking into consideration or even mentioning
the appellant's side in the controversy as shown by his own testimony", would not vitiate the
judgment. 13 If the court did not recite in the decision the testimony of each witness for, or each item of
evidence presented by, the defeated party, it does not mean that the court has overlooked such
testimony or such item of evidence. 14 At any rate, the legal presumptions are that official duty has been
regularly performed, and that all the matters within an issue in a case were laid before the court and
passed upon by it. 15
Findings of fact, which the Court of Appeals is required to make, maybe defined as "the written
statement of the ultimate facts as found by the court ... and essential to support the decision and
judgment rendered thereon". 16They consist of the court's "conclusions" with respect to the
determinative facts in issue". 17 A question of law, upon the other hand, has been declared as "one
which does not call for an examination of the probative value of the evidence presented by the
parties." 18
2. By statute, "only questions of law may be raised" in an appeal by certiorari from a judgment of the
Court of Appeals. 19 That judgment is conclusive as to the facts. It is not appropriately the business of
this Court to alter the facts or to review the questions of fact. 20
With these guideposts, we now face the problem of whether the findings of fact of the Court of Appeals
support its judgment.
3. Was Carrascoso entitled to the first class seat he claims?
It is conceded in all quarters that on March 28, 1958 he paid to and received from petitioner a first class
ticket. But petitioner asserts that said ticket did not represent the true and complete intent and
agreement of the parties; that said respondent knew that he did not have confirmed reservations for first
class on any specific flight, although he had tourist class protection; that, accordingly, the issuance of a
first class ticket was no guarantee that he would have a first class ride, but that such would depend
upon the availability of first class seats.
These are matters which petitioner has thoroughly presented and discussed in its brief before the Court
of Appeals under its third assignment of error, which reads: "The trial court erred in finding that plaintiff
had confirmed reservations for, and a right to, first class seats on the "definite" segments of his journey,
particularly that from Saigon to Beirut". 21
And, the Court of Appeals disposed of this contention thus:
Defendant seems to capitalize on the argument that the issuance of a first-class ticket was no
guarantee that the passenger to whom the same had been issued, would be accommodated in the
first-class compartment, for as in the case of plaintiff he had yet to make arrangements upon arrival
at every station for the necessary first-class reservation. We are not impressed by such a
reasoning. We cannot understand how a reputable firm like defendant airplane company could
have the indiscretion to give out tickets it never meant to honor at all. It received the corresponding
amount in payment of first-class tickets and yet it allowed the passenger to be at the mercy of its
employees. It is more in keeping with the ordinary course of business that the company should
know whether or riot the tickets it issues are to be honored or not. 22
Not that the Court of Appeals is alone. The trial court similarly disposed of petitioner's contention, thus:
On the fact that plaintiff paid for, and was issued a "First class" ticket, there can be no question. Apart
from his testimony, see plaintiff's Exhibits "A", "A-1", "B", "B-1," "B-2", "C" and "C-1", and defendant's
own witness, Rafael Altonaga, confirmed plaintiff's testimony and testified as follows:
Q. In these tickets there are marks "O.K." From what you know, what does this OK mean?
A. That the space is confirmed.
Q. Confirmed for first class?
A. Yes, "first class". (Transcript, p. 169)
xxx xxx xxx
Defendant tried to prove by the testimony of its witnesses Luis Zaldariaga and Rafael Altonaga that
although plaintiff paid for, and was issued a "first class" airplane ticket, the ticket was subject to
confirmation in Hongkong. The court cannot give credit to the testimony of said witnesses. Oral
evidence cannot prevail over written evidence, and plaintiff's Exhibits "A", "A-l", "B", "B-l", "C" and "C-1"
belie the testimony of said witnesses, and clearly show that the plaintiff was issued, and paid for, a first
class ticket without any reservation whatever.
Furthermore, as hereinabove shown, defendant's own witness Rafael Altonaga testified that the
reservation for a "first class" accommodation for the plaintiff was confirmed. The court cannot believe
that after such confirmation defendant had a verbal understanding with plaintiff that the "first class"
ticket issued to him by defendant would be subject to confirmation in Hongkong. 23
We have heretofore adverted to the fact that except for a slight difference of a few pesos in the amount
refunded on Carrascoso's ticket, the decision of the Court of First Instance was affirmed by the Court of
Appeals in all other respects. We hold the view that such a judgment of affirmance has merged the
judgment of the lower court. 24Implicit in that affirmance is a determination by the Court of Appeals that
the proceeding in the Court of First Instance was free from prejudicial error and "all questions raised by
the assignments of error and all questions that might have been raised are to be regarded as finally
adjudicated against the appellant". So also, the judgment affirmed "must be regarded as free from all
error". 25 We reached this policy construction because nothing in the decision of the Court of Appeals on
this point would suggest that its findings of fact are in any way at war with those of the trial court. Nor
was said affirmance by the Court of Appeals upon a ground or grounds different from those which were
made the basis of the conclusions of the trial court. 26
If, as petitioner underscores, a first-class-ticket holder is not entitled to a first class seat, notwithstanding
the fact that seat availability in specific flights is therein confirmed, then an air passenger is placed in
the hollow of the hands of an airline. What security then can a passenger have? It will always be an
easy matter for an airline aided by its employees, to strike out the very stipulations in the ticket, and say
that there was a verbal agreement to the contrary. What if the passenger had a schedule to fulfill? We
have long learned that, as a rule, a written document speaks a uniform language; that spoken word
could be notoriously unreliable. If only to achieve stability in the relations between passenger and air
carrier, adherence to the ticket so issued is desirable. Such is the case here. The lower courts refused
to believe the oral evidence intended to defeat the covenants in the ticket.
The foregoing are the considerations which point to the conclusion that there are facts upon which the
Court of Appeals predicated the finding that respondent Carrascoso had a first class ticket and was
entitled to a first class seat at Bangkok, which is a stopover in the Saigon to Beirut leg of the
flight. 27 We perceive no "welter of distortions by the Court of Appeals of petitioner's statement of its
position", as charged by petitioner. 28 Nor do we subscribe to petitioner's accusation that respondent
Carrascoso "surreptitiously took a first class seat to provoke an issue". 29And this because, as petitioner
states, Carrascoso went to see the Manager at his office in Bangkok "to confirm my seat and because
from Saigon I was told again to see the Manager". 30 Why, then, was he allowed to take a first class
seat in the plane at Bangkok, if he had no seat? Or, if another had a better right to the seat?
4. Petitioner assails respondent court's award of moral damages. Petitioner's trenchant claim is that
Carrascoso's action is planted upon breach of contract; that to authorize an award for moral damages
there must be an averment of fraud or bad faith;31 and that the decision of the Court of Appeals fails to
make a finding of bad faith. The pivotal allegations in the complaint bearing on this issue are:
3. That ... plaintiff entered into a contract of air carriage with the Philippine Air Lines for a valuable
consideration, the latter acting as general agents for and in behalf of the defendant, under which
said contract, plaintiff was entitled to, as defendant agreed to furnish plaintiff, First Class passage
on defendant's plane during the entire duration of plaintiff's tour of Europe with Hongkong as
starting point up to and until plaintiff's return trip to Manila, ... .
4. That, during the first two legs of the trip from Hongkong to Saigon and from Saigon to Bangkok,
defendant furnished to the plaintiff First Class accommodation but only after protestations,
arguments and/or insistence were made by the plaintiff with defendant's employees.
5. That finally, defendant failed to provide First Class passage, but instead furnished plaintiff
only Tourist Class accommodations from Bangkok to Teheran and/or Casablanca, ... the plaintiff
has been compelled by defendant's employees to leave the First Class accommodation berths at
Bangkok after he was already seated.
6. That consequently, the plaintiff, desiring no repetition of the inconvenience and embarrassments
brought by defendant's breach of contract was forced to take a Pan American World Airways plane
on his return trip from Madrid to Manila.32
xxx xxx xxx
2. That likewise, as a result of defendant's failure to furnish First Class accommodations aforesaid,
plaintiff suffered inconveniences, embarrassments, and humiliations, thereby causing plaintiff mental
anguish, serious anxiety, wounded feelings, social humiliation, and the like injury, resulting in moral
damages in the amount of P30,000.00. 33
xxx xxx xxx
The foregoing, in our opinion, substantially aver: First, That there was a contract to furnish plaintiff a first
class passage covering, amongst others, the Bangkok-Teheran leg; Second, That said contract was
breached when petitioner failed to furnish first class transportation at Bangkok; and Third, that there
was bad faith when petitioner's employee compelled Carrascoso to leave his first class accommodation
berth "after he was already, seated" and to take a seat in the tourist class, by reason of which he
suffered inconvenience, embarrassments and humiliations, thereby causing him mental anguish,
serious anxiety, wounded feelings and social humiliation, resulting in moral damages. It is true that
there is no specific mention of the term bad faith in the complaint. But, the inference of bad faith is
there, it may be drawn from the facts and circumstances set forth therein. 34 The contract was averred
to establish the relation between the parties. But the stress of the action is put on wrongful expulsion.
Quite apart from the foregoing is that (a) right the start of the trial, respondent's counsel placed
petitioner on guard on what Carrascoso intended to prove: That while sitting in the plane in Bangkok,
Carrascoso was ousted by petitioner's manager who gave his seat to a white man; 35 and (b) evidence
of bad faith in the fulfillment of the contract was presented without objection on the part of the petitioner.
It is, therefore, unnecessary to inquire as to whether or not there is sufficient averment in the complaint
to justify an award for moral damages. Deficiency in the complaint, if any, was cured by the evidence.
An amendment thereof to conform to the evidence is not even required. 36 On the question of bad faith,
the Court of Appeals declared:
That the plaintiff was forced out of his seat in the first class compartment of the plane
belonging to the defendant Air France while at Bangkok, and was transferred to the tourist
class not only without his consent but against his will, has been sufficiently established by
plaintiff in his testimony before the court, corroborated by the corresponding entry made by the
purser of the plane in his notebook which notation reads as follows:
"First-class passenger was forced to go to the tourist class against his will, and that
the captain refused to intervene",
and by the testimony of an eye-witness, Ernesto G. Cuento, who was a co-passenger. The
captain of the plane who was asked by the manager of defendant company at Bangkok to
intervene even refused to do so. It is noteworthy that no one on behalf of defendant ever
contradicted or denied this evidence for the plaintiff. It could have been easy for defendant to
present its manager at Bangkok to testify at the trial of the case, or yet to secure his
disposition; but defendant did neither. 37
The Court of appeals further stated —
Neither is there evidence as to whether or not a prior reservation was made by the white man.
Hence, if the employees of the defendant at Bangkok sold a first-class ticket to him when all
the seats had already been taken, surely the plaintiff should not have been picked out as the
one to suffer the consequences and to be subjected to the humiliation and indignity of being
ejected from his seat in the presence of others. Instead of explaining to the white man the
improvidence committed by defendant's employees, the manager adopted the more drastic
step of ousting the plaintiff who was then safely ensconsced in his rightful seat. We are
strengthened in our belief that this probably was what happened there, by the testimony of
defendant's witness Rafael Altonaga who, when asked to explain the meaning of the letters
"O.K." appearing on the tickets of plaintiff, said "that the space is confirmed for first class.
Likewise, Zenaida Faustino, another witness for defendant, who was the chief of the
Reservation Office of defendant, testified as follows:
"Q How does the person in the ticket-issuing office know what reservation the
passenger has arranged with you?
A They call us up by phone and ask for the confirmation." (t.s.n., p. 247, June 19,
1959)
In this connection, we quote with approval what the trial Judge has said on this point:
Why did the, using the words of witness Ernesto G. Cuento, "white man" have a "better
right" to the seat occupied by Mr. Carrascoso? The record is silent. The defendant airline
did not prove "any better", nay, any right on the part of the "white man" to the "First class"
seat that the plaintiff was occupying and for which he paid and was issued a
corresponding "first class" ticket.
If there was a justified reason for the action of the defendant's Manager in Bangkok, the
defendant could have easily proven it by having taken the testimony of the said Manager
by deposition, but defendant did not do so; the presumption is that evidence willfully
suppressed would be adverse if produced [Sec. 69, par (e), Rules of Court]; and, under
the circumstances, the Court is constrained to find, as it does find, that the Manager of the
defendant airline in Bangkok not merely asked but threatened the plaintiff to throw him out
of the plane if he did not give up his "first class" seat because the said Manager wanted to
accommodate, using the words of the witness Ernesto G. Cuento, the "white man". 38
It is really correct to say that the Court of Appeals in the quoted portion first transcribed did not
use the term "bad faith". But can it be doubted that the recital of facts therein points to bad
faith? The manager not only prevented Carrascoso from enjoying his right to a first class seat;
worse, he imposed his arbitrary will; he forcibly ejected him from his seat, made him suffer the
humiliation of having to go to the tourist class compartment - just to give way to another
passenger whose right thereto has not been established. Certainly, this is bad faith. Unless, of
course, bad faith has assumed a meaning different from what is understood in law. For, "bad
faith" contemplates a "state of mind affirmatively operating with furtive design or with some
motive of self-interest or will or for ulterior purpose." 39
And if the foregoing were not yet sufficient, there is the express finding of bad faith in the
judgment of the Court of First Instance, thus:
The evidence shows that the defendant violated its contract of transportation with plaintiff
in bad faith, with the aggravating circumstances that defendant's Manager in Bangkok
went to the extent of threatening the plaintiff in the presence of many passengers to have
him thrown out of the airplane to give the "first class" seat that he was occupying to, again
 using the words of the witness Ernesto G. Cuento, a "white man" whom he (defendant's
Manager) wished to accommodate, and the defendant has not proven that this "white
man" had any "better right" to occupy the "first class" seat that the plaintiff was occupying,
duly paid for, and for which the corresponding "first class" ticket was issued by the
defendant to him.40
5. The responsibility of an employer for the tortious act of its employees need not be essayed. It is well
settled in law. 41 For the willful malevolent act of petitioner's manager, petitioner, his employer, must
answer. Article 21 of the Civil Code says:
ART. 21. Any person who willfully causes loss or injury to another in a manner that is contrary
to morals, good customs or public policy shall compensate the latter for the damage.
In parallel circumstances, we applied the foregoing legal precept; and, we held that upon the provisions
of Article 2219 (10), Civil Code, moral damages are recoverable. 42
6. A contract to transport passengers is quite different in kind and degree from any other contractual
relation. 43 And this, because of the relation which an air-carrier sustains with the public. Its business is
mainly with the travelling public. It invites people to avail of the comforts and advantages it offers. The
contract of air carriage, therefore, generates a relation attended with a public duty. Neglect or
malfeasance of the carrier's employees, naturally, could give ground for an action for damages.
Passengers do not contract merely for transportation. They have a right to be treated by the carrier's
employees with kindness, respect, courtesy and due consideration. They are entitled to be protected
against personal misconduct, injurious language, indignities and abuses from such employees. So it is,
that any rule or discourteous conduct on the part of employees towards a passenger gives the latter an
action for damages against the carrier. 44
Thus, "Where a steamship company 45 had accepted a passenger's check, it was a breach of contract
and a tort, giving a right of action for its agent in the presence of third persons to falsely notify her that
the check was worthless and demand payment under threat of ejection, though the language used was
not insulting and she was not ejected." 46 And this, because, although the relation of passenger and
carrier is "contractual both in origin and nature" nevertheless "the act that breaks the contract may be
also a tort". 47 And in another case, "Where a passenger on a railroad train, when the conductor came
to collect his fare tendered him the cash fare to a point where the train was scheduled not to stop, and
told him that as soon as the train reached such point he would pay the cash fare from that point to
destination, there was nothing in the conduct of the passenger which justified the conductor in using
insulting language to him, as by calling him a lunatic," 48 and the Supreme Court of South Carolina there
held the carrier liable for the mental suffering of said passenger.1awphîl.nèt
Petitioner's contract with Carrascoso is one attended with public duty. The stress of Carrascoso's action
as we have said, is placed upon his wrongful expulsion. This is a violation of public duty by the
petitioner air carrier — a case of quasi-delict. Damages are proper.
7. Petitioner draws our attention to respondent Carrascoso's testimony, thus —
Q You mentioned about an attendant. Who is that attendant and purser?
A When we left already — that was already in the trip — I could not help it. So one of the flight
attendants approached me and requested from me my ticket and I said, What for? and she
said, "We will note that you transferred to the tourist class". I said, "Nothing of that kind. That is
tantamount to accepting my transfer." And I also said, "You are not going to note anything
there because I am protesting to this transfer".
Q Was she able to note it?
A No, because I did not give my ticket.
Q About that purser?
A Well, the seats there are so close that you feel uncomfortable and you don't have enough leg
room, I stood up and I went to the pantry that was next to me and the purser was there. He told
me, "I have recorded the incident in my notebook." He read it and translated it to me —
because it was recorded in French — "First class passenger was forced to go to the tourist
class against his will, and that the captain refused to intervene."
Mr. VALTE —
I move to strike out the last part of the testimony of the witness because the best evidence
would be the notes. Your Honor.
COURT —
I will allow that as part of his testimony. 49
Petitioner charges that the finding of the Court of Appeals that the purser made an entry in his notebook
reading "First class passenger was forced to go to the tourist class against his will, and that the captain
refused to intervene" is predicated upon evidence [Carrascoso's testimony above] which is incompetent.
We do not think so. The subject of inquiry is not the entry, but the ouster incident. Testimony on the
entry does not come within the proscription of the best evidence rule. Such testimony is admissible. 49a
Besides, from a reading of the transcript just quoted, when the dialogue happened, the impact of the
startling occurrence was still fresh and continued to be felt. The excitement had not as yet died down.
Statements then, in this environment, are admissible as part of the res gestae. 50 For, they grow "out of
the nervous excitement and mental and physical condition of the declarant". 51 The utterance of the
purser regarding his entry in the notebook was spontaneous, and related to the circumstances of the
ouster incident. Its trustworthiness has been guaranteed. 52 It thus escapes the operation of the hearsay
rule. It forms part of the res gestae.
At all events, the entry was made outside the Philippines. And, by an employee of petitioner. It would
have been an easy matter for petitioner to have contradicted Carrascoso's testimony. If it were really
true that no such entry was made, the deposition of the purser could have cleared up the matter.
We, therefore, hold that the transcribed testimony of Carrascoso is admissible in evidence.
8. Exemplary damages are well awarded. The Civil Code gives the court ample power to grant
exemplary damages — in contracts and quasi- contracts. The only condition is that defendant should
have "acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner." 53 The manner of
ejectment of respondent Carrascoso from his first class seat fits into this legal precept. And this, in
addition to moral damages.54

9. The right to attorney's fees is fully established. The grant of exemplary damages justifies a similar
judgment for attorneys' fees. The least that can be said is that the courts below felt that it is but just and
equitable that attorneys' fees be given. 55 We do not intend to break faith with the tradition that
discretion well exercised — as it was here — should not be disturbed.

10. Questioned as excessive are the amounts decreed by both the trial court and the Court of Appeals,
thus: P25,000.00 as moral damages; P10,000.00, by way of exemplary damages, and P3,000.00 as
attorneys' fees. The task of fixing these amounts is primarily with the trial court. 56 The Court of Appeals
did not interfere with the same. The dictates of good sense suggest that we give our imprimatur thereto.
Because, the facts and circumstances point to the reasonableness thereof.57

On balance, we say that the judgment of the Court of Appeals does not suffer from reversible error. We
accordingly vote to affirm the same. Costs against petitioner. So ordered.
[G.R. No. 114791. May 29, 1997]
NANCY GO AND ALEX GO, vs. THE HONORABLE COURT OF APPEALS, HERMOGENES ONG
and JANE C. ONG
ROMERO, J.:
No less than the Constitution commands us to protect marriage as an inviolable social institution
and the foundation of the family.[1] In our society, the importance of a wedding ceremony cannot be
underestimated as it is the matrix of the family and, therefore, an occasion worth reliving in the
succeeding years.
It is in this light that we narrate the following undisputed facts:
Private respondents spouses Hermogenes and Jane Ong were married on June 7, 1981, in
Dumaguete City. The video coverage of the wedding was provided by petitioners at a contract price
of P1,650.00. Three times thereafter, the newlyweds tried to claim the video tape of their wedding,
which they planned to show to their relatives in the United States where they were to spend their
honeymoon, and thrice they failed because the tape was apparently not yet processed. The parties then
agreed that the tape would be ready upon private respondents return.
When private respondents came home from their honeymoon, however, they found out that the
tape had been erased by petitioners and therefore, could no longer be delivered.
Furious at the loss of the tape which was supposed to be the only record of their wedding, private
respondents filed on September 23, 1981 a complaint for specific performance and damages against
petitioners before the Regional Trial Court, 7th Judicial District, Branch 33, Dumaguete City. After a
protracted trial, the court a quo rendered a decision, to wit:
WHEREFORE, judgment is hereby granted:
1. Ordering the rescission of the agreement entered into between plaintiff Hermogenes Ong and
defendant Nancy Go;
2. Declaring defendants Alex Go and Nancy Go jointly and severally liable to plaintiffs Hermogenes Ong
and Jane C. Ong for the following sums:
a) P450.00, the down payment made at contract time;
b) P75,000.00, as moral damages;
c) P20,000.00, as exemplary damages;
d) P5,000.00, as attorneys fees; and
e) P2,000.00, as litigation expenses;
Defendants are also ordered to pay the costs.
SO ORDERED.
Dissatisfied with the decision, petitioners elevated the case to the Court of Appeals which, on
September 14, 1993, dismissed the appeal and affirmed the trial courts decision.
Hence, this petition.
Petitioners contend that the Court of Appeals erred in not appreciating the evidence they
presented to prove that they acted only as agents of a certain Pablo Lim and, as such, should not have
been held liable. In addition, they aver that there is no evidence to show that the erasure of the tape
was done in bad faith so as to justify the award of damages.[2]
The petition is not meritorious.
Petitioners claim that for the video coverage, the cameraman was employed by Pablo Lim who
also owned the video equipment used. They further assert that they merely get a commission for all
customers solicited for their principal.[3]
This contention is primarily premised on Article 1883 of the Civil Code which states thus:
ART. 1883. If an agent acts in his own name, the principal has no right of action against the persons
with whom the agent has contracted; neither have such persons against the principal.
In such case the agent is the one directly bound in favor of the person with whom he has contracted, as
if the transaction were his own, except when the contract involves things belonging to the principal.
xxx xxx xxx
Petitioners argument that since the video equipment used belonged to Lim and thus the contract
was actually entered into between private respondents and Lim is not deserving of any serious
consideration. In the instant case, the contract entered into is one of service, that is, for the video
coverage of the wedding. Consequently, it can hardly be said that the object of the contract was the
video equipment used. The use by petitioners of the video equipment of another person is of no
consequence.
It must also be noted that in the course of the protracted trial below, petitioners did not even
present Lim to corroborate their contention that they were mere agents of the latter. It would not be
unwarranted to assume that their failure to present such a vital witness would have had an adverse
result on the case.[4]
As regards the award of damages, petitioners would impress upon this Court their lack of malice
or fraudulent intent in the erasure of the tape. They insist that since private respondents did not claim
the tape after the lapse of thirty days, as agreed upon in their contract, the erasure was done in
consonance with consistent business practice to minimize losses.[5]
We are not persuaded.
As correctly observed by the Court of Appeals, it is contrary to human nature for any newlywed
couple to neglect to claim the video coverage of their wedding; the fact that private respondents filed a
case against petitioners belies such assertion. Clearly, petitioners are guilty of actionable delay for
having failed to process the video tape. Considering that private respondents were about to leave for
the United States, they took care to inform petitioners that they would just claim the tape upon their
return two months later. Thus, the erasure of the tape after the lapse of thirty days was unjustified.
In this regard, Article 1170 of the Civil Code provides that those who in the performance of their
obligations are guilty of fraud, negligence or delay, and those who is any manner contravene the tenor
thereof, are liable for damages.
In the instant case, petitioners and private respondents entered into a contract whereby, for a fee,
the former undertook to cover the latters wedding and deliver to them a video copy of said event. For
whatever reason, petitioners failed to provide private respondents with their tape. Clearly, petitioners
are guilty of contravening their obligation to said private respondents and are thus liable for damages.
The grant of actual or compensatory damages in the amount of P450.00 is justified, as
reimbursement of the downpayment paid by private respondents to petitioners. [6]
Generally, moral damages cannot be recovered in an action for breach of contract because this
case is not among those enumerated in Article 2219 of the Civil Code. However, it is also accepted in
this jurisdiction that liability for a quasi-delict may still exist despite the presence of contractual relations,
that is, the act which violates the contract may also constitute a quasi-delict.[7] Consequently, moral
damages are recoverable for the breach of contract which was palpably wanton, reckless, malicious or
in bad faith, oppresive or abusive.[8]
Petitioners act or omission in recklessly erasing the video coverage of private respondents
wedding was precisely the cause of the suffering private respondents had to undergo.
As the appellate court aptly observed:

Considering the sentimental value of the tapes and the fact that the event therein recorded a wedding
which in our culture is a significant milestone to be cherished and remembered could no longer be
reenacted and was lost forever, the trial court was correct in awarding the appellees moral damages
albeit in the amount of P75,000.00, which was a great reduction from plaintiffs demand in the complaint,
in compensation for the mental anguish, tortured feelings, sleepless nights and humiliation that the
appellees suffered and which under the circumstances could be awarded as allowed under Articles
2217 and 2218 of the Civil Code.[9]

Considering the attendant wanton negligence committed by petitioners in the case at bar, the
award of exemplary damages by the trial court is justified [10] to serve as a warning to all entities
engaged in the same business to observe due diligence in the conduct of their affairs.
The award of attorneys fees and litigation expenses are likewise proper, consistent with Article
2208[11] of the Civil Code.
Finally, petitioner Alex Go questions the finding of the trial and appellate courts holding him jointly
and severally liable with his wife Nancy regarding the pecuniary liabilities imposed.He argues that when
his wife entered into the contract with private respondent, she was acting alone for her sole interest. [12]
We find merit in this contention. Under Article 117 of the Civil Code (now Article 73 of the Family
Code), the wife may exercise any profession, occupation or engage in business without the consent of
the husband. In the instant case, we are convinced that it was only petitioner Nancy Go who entered
into the contract with private respondent. Consequently, we rule that she is solely liable to private
respondents for the damages awarded below, pursuant to the principle that contracts produce effect
only as between the parties who execute them.[13]
WHEREFORE, the assailed decision dated September 14, 1993 is hereby AFFIRMED with the
MODIFICATION that petitioner Alex Go is absolved from any liability to private respondents and that
petitioner Nancy Go is solely liable to said private respondents for the judgment award. Costs against
petitioners.
SO ORDERED.
Regalado, (Chairman), Puno, Mendoza, and Torres, Jr., JJ., concur.
G.R. No. L-24837 June 27, 1968 inadvertently committed, resulting in the temporary freezing of the account of the plaintiff with the
said bank for a short time.
JULIAN C. SINGSON and RAMONA DEL CASTILLO vs. BANK OF THE PHILIPPINE ISLANDS and
SANTIAGO FREIXAS, in his capacity as President of the said Bank xxx xxx xxx

CONCEPCION, C.J.: On May 8, 1963, the Singsong commenced the present action against the Bank and its president,
Santiago Freixas, for damages1 in consequence of said illegal freezing of plaintiffs' account.1äwphï1.ñët
Appeal by plaintiffs, Julian Singson and his wife, Ramona del Castillo, from a decision of the Court of
First Instance of Manila dismissing their complaint against defendants herein, the Bank of the Philippine After appropriate proceedings, the Court of First Instance of Manila rendered judgment dismissing the
Islands and Santiago Freixas. complaint upon the ground that plaintiffs cannot recover from the defendants upon the basis of a quasi-
delict, because the relation between the parties is contractual in nature; because this case does not fall
It appears that Singson, was one of the defendants in civil case No. 23906 of the Court of First under Article 2219 of our Civil Code, upon which plaintiffs rely; and because plaintiffs have not
Instance, Manila, in which judgment had been rendered sentencing him and his co-defendants therein, established the amount of damages allegedly sustained by them.
namely, Celso Lobregat and Villa-Abrille & Co., to pay the sum of P105,539.56 to the plaintiff therein,
Philippine Milling Co. Singson and Lobregat had seasonably appealed from said judgment, but not Villa- The lower court held that plaintiffs' claim for damages cannot be based upon a tort or quasi-delict, their
Abrille & Co., as against which said judgment, accordingly, became final and executory. In due course, relation with the defendants being contractual in nature. We have repeatedly held, however, that the
a writ of garnishment was subsequently served upon the Bank of the Philippine Islands — in which the existence of a contract between the parties does not bar the commission of a tort by the one against the
Singsons had a current account — insofar as Villa-Abrille's credits against the Bank were concerned. order and the consequent recovery of damages therefor.2 Indeed, this view has been, in effect,
What happened thereafter is set forth in the decision appealed from, from which we quote: reiterated in a comparatively recent case. Thus, in Air France vs. Carrascoso,3 involving an airplane
passenger who, despite his first-class ticket, had been illegally ousted from his first-class
Upon receipt of the said Writ of Garnishment, a clerk of the bank in charge of all matters of accommodation and compelled to take a seat in the tourist compartment, was held entitled to recover
execution and garnishment, upon reading the name of the plaintiff herein in the title of the Writ of damages from the air-carrier, upon the ground of tort on the latter's part, for, although the relation
Garnishment as a party defendants, without further reading the body of the said garnishment and between a passenger and a carrier is "contractual both in origin and nature ... the act that breaks the
informing himself that said garnishment was merely intended for the deposits of defendant Villa- contract may also be a tort".
Abrille & Co., Valentin Teus, Fernando F. de Villa-Abrille and Joaquin Bona, prepared a letter for
the signature of the President of the Bank informing the plaintiff Julian C. Singson of the In view, however, of the facts obtaining in the case at bar, and considering, particularly, the
garnishment of his deposits by the plaintiff in that case. Another letter was also prepared and circumstance, that the wrong done to the plaintiff was remedied as soon as the President of the bank
signed by the said President of the Bank for the Special Sheriff dated April 17, 1963. realized the mistake he and his subordinate employee had committed, the Court finds that an award of
nominal damages — the amount of which need not be proven4 — in the sum of P1,000, in addition to
Subsequently, two checks issued by the plaintiff Julian C. Singson, one for the amount of P383 in attorney's fees in the sum of P500, would suffice to vindicate plaintiff's rights.5
favor of B. M. Glass Service dated April 16, 1963 and bearing No. C-424852, and check No. C-
394996 for the amount of P100 in favor of the Lega Corporation, and drawn against the said Bank, WHEREFORE, the judgment appealed from is hereby reversed, and another one shall be entered
were deposited by the said drawers with the said bank. Believing that the plaintiff Singson, the sentencing the defendant Bank of the Philippine Islands to pay to the plaintiffs said sums of P1,000, as
drawer of the check, had no more control over the balance of his deposits in the said bank, the nominal damages, and P500, as attorney's fees, apart from the costs. It is so ordered.
checks were dishonored and were refused payment by the said bank. After the first check was
returned by the bank to the B. M. Glass Service, the latter wrote plaintiff Julian C. Singson a letter,
dated April 19, 1963, advising him that his check for P383.00 bearing No. C-424852 was not
honored by the bank for the reason that his account therein had already been garnished. The said
B. M. Glass Service further stated in the said letter that they were constrained to close his credit
account with them. In view thereof, plaintiff Julian C. Singson wrote the defendant bank a letter on
April 19, 1963, claiming that his name was not included in the Writ of Execution and Notice of
Garnishment, which was served upon the bank. The defendant President Santiago Freixas of the
said bank took steps to verify this information and after having confirmed the same, apologized to
the plaintiff Julian C. Singson and wrote him a letter dated April 22, 1963, requesting him to
disregard their letter of April 17, 1963, and that the action of garnishment from his account had
already been removed. A similar letter was written by the said official of the bank on April 22, 1963
to the Special Sheriff informing him that his letter dated April 17, 1963 to the said Special Sheriff
was considered cancelled and that they had already removed the Notice of Garnishment from
plaintiff Singson's account. Thus, the defendants lost no time to rectify the mistake that had been
G.R. No. L-17500 May 16, 1967
PEOPLE'S BANK AND TRUST CO. and ATLANTIC GULF AND PACIFIC CO. OF MANILA
vs.DAHICAN LUMBER COMPANY, DAHICAN AMERICAN LUMBER CORPORATION and
CONNELL BROS. CO. (PHIL.)
On September 8, 1948, Atlantic Gulf & Pacific Company of Manila, a West Virginia corporation licensed
to do business in the Philippines — hereinafter referred to as ATLANTIC — sold and assigned all its
rights in the Dahican Lumber concession to Dahican Lumber Company — hereinafter referred to as
DALCO — for the total sum of $500,000.00, of which only the amount of $50,000.00 was paid.
Thereafter, to develop the concession, DALCO obtained various loans from the People's Bank & Trust
Company — hereinafter referred to as the BANK — amounting, as of July 13, 1950, to P200,000.00. In
addition, DALCO obtained, through the BANK, a loan of $250,000.00 from the Export-Import Bank of
Washington D.C., evidenced by five promissory notes of $50,000.00 each, maturing on different dates,
executed by both DALCO and the Dahican America Lumber Corporation, a foreign corporation and a
stockholder of DALCO, — hereinafter referred to as DAMCO, all payable to the BANK or its order.
As security for the payment of the abovementioned loans, on July 13, 1950 DALCO executed in favor of
the BANK — the latter acting for itself and as trustee for the Export-Import Bank of Washington D.C. —
a deed of mortgage covering five parcels of land situated in the province of Camarines Norte together
with all the buildings and other improvements existing thereon and all the personal properties of the
mortgagor located in its place of business in the municipalities of Mambulao and Capalonga, Camarines
Norte (Exhibit D). On the same date, DALCO executed a second mortgage on the same properties in
favor of ATLANTIC to secure payment of the unpaid balance of the sale price of the lumber concession
amounting to the sum of $450,000.00 (Exhibit G). Both deeds contained the following provision
extending the mortgage lien to properties to be subsequently acquired — referred to hereafter as "after
acquired properties" — by the mortgagor:
All property of every nature and description taken in exchange or replacement, and all buildings,
machinery, fixtures, tools equipment and other property which the Mortgagor may hereafter
acquire, construct, install, attach, or use in, to, upon, or in connection with the premises, shall
immediately be and become subject to the lien of this mortgage in the same manner and to the
same extent as if now included therein, and the Mortgagor shall from time to time during the
existence of this mortgage furnish the Mortgagee with an accurate inventory of such substituted
and subsequently acquired property.
Both mortgages were registered in the Office of the Register of Deeds of Camarines Norte. In addition
thereto DALCO and DAMCO pledged to the BANK 7,296 shares of stock of DALCO and 9,286 shares
of DAMCO to secure the same obligations.
Upon DALCO's and DAMCO's failure to pay the fifth promissory note upon its maturity, the BANK paid
the same to the Export-Import Bank of Washington D.C., and the latter assigned to the former its credit
and the first mortgage securing it. Subsequently, the BANK gave DALCO and DAMCO up to April 1,
1953 to pay the overdue promissory note.
After July 13, 1950 — the date of execution of the mortgages mentioned above — DALCO purchased
various machineries, equipment, spare parts and supplies in addition to, or in replacement of some of
those already owned and used by it on the date aforesaid. Pursuant to the provision of the mortgage
deeds quoted theretofore regarding "after acquired properties," the BANK requested DALCO to submit
complete lists of said properties but the latter failed to do so. In connection with these purchases, there
appeared in the books of DALCO as due to Connell Bros. Company (Philippines) — a domestic
corporation who was acting as the general purchasing agent of DALCO — thereinafter called
CONNELL — the sum of P452,860.55 and to DAMCO, the sum of P2,151,678.34.
On December 16, 1952, the Board of Directors of DALCO, in a special meeting called for the purpose,
passed a resolution agreeing to rescind the alleged sales of equipment, spare parts and supplies by
CONNELL and DAMCO to it. Thereafter, the corresponding agreements of rescission of sale were
executed between DALCO and DAMCO, on the one hand and between DALCO and CONNELL, on the
other.
On January 13, 1953, the BANK, in its own behalf and that of ATLANTIC, demanded that said
agreements be cancelled but CONNELL and DAMCO refused to do so. As a result, on February 12,
1953; ATLANTIC and the BANK, commenced foreclosure proceedings in the Court of First Instance of
Camarines Norte against DALCO and DAMCO. On the same date they filed an ex-parte application for
the appointment of a Receiver and/or for the issuance of a writ of preliminary injunction to restrain
DALCO from removing its properties. The court granted both remedies and appointed George H. Evans
as Receiver. Upon defendants' motion, however, the court, in its order of February 21, 1953, discharged
the Receiver.
On March 2, 1953, defendants filed their answer denying the material allegations of the complaint and
alleging several affirmative defenses and a counterclaim.
On March 4 of the same year, CONNELL, filed a motion for intervention alleging that it was the owner
and possessor of some of the equipments, spare parts and supplies which DALCO had acquired
subsequent to the execution of the mortgages sought to be foreclosed and which plaintiffs claimed were
covered by the lien. In its order of March 18,1953 the Court granted the motion, as well as plaintiffs'
motion to set aside the order discharging the Receiver. Consequently, Evans was reinstated.
On April 1, 1953, CONNELL filed its answer denying the material averment of the complaint, and
asserting affirmative defenses and a counterclaim.
Upon motion of the parties the Court, on September 30, 1953, issued an order transferring the venue of
the action to the Court of First Instance of Manila where it was docketed as Civil Case No. 20987.
On August 30, 1958, upon motion of all the parties, the Court ordered the sale of all the machineries,
equipment and supplies of DALCO, and the same were subsequently sold for a total consideration of
P175,000.00 which was deposited in court pending final determination of the action. By a similar
agreement one-half (P87,500.00) of this amount was considered as representing the proceeds obtained
from the sale of the "undebated properties" (those not claimed by DAMCO and CONNELL), and the
other half as representing those obtained from the sale of the "after acquired properties".
After due trial, the Court, on July 15, 1960, rendered judgment as follows:
IN VIEW WHEREFORE, the Court:
 1. Condemns Dahican Lumber Co. to pay unto People's Bank the sum of P200,000,00 with 7%
interest per annum from July 13, 1950, Plus another sum of P100,000.00 with 5% interest per
annum from July 13, 1950; plus 10% on both principal sums as attorney's fees;
2. Condemns Dahican Lumber Co. to pay unto Atlantic Gulf the sum of P900,000.00 with 4%
interest per annum from July 3, 1950, plus 10% on both principal as attorney's fees;
3. Condemns Dahican Lumber Co. to pay unto Connell Bros, the sum of P425,860.55, and to pay
unto Dahican American Lumber Co. the sum of P2,151,678.24 both with legal interest from the
date of the filing of the respective answers of those parties, 10% of the principals as attorney's fees;
4. Orders that of the sum realized from the sale of the properties of P175,000.00, after deducting
the recognized expenses, one-half thereof be adjudicated unto plaintiffs, the court no longer
specifying the share of each because of that announced intention under the stipulation of facts to
"pool their resources"; as to the other one-half, the same should be adjudicated unto both plaintiffs,
and defendant Dahican American and Connell Bros. in the proportion already set forth on page 9,
lines 21, 22 and 23 of the body of this decision; but with the understanding that whatever plaintiffs
and Dahican American and Connell Bros. should receive from the P175,000.00 deposited in the
Court shall be applied to the judgments particularly rendered in favor of each;
5. No other pronouncement as to costs; but the costs of the receivership as to the debated
properties shall be borne by People's Bank, Atlantic Gulf, Connell Bros., and Dahican American
Lumber Co., pro-rata.
On the following day, the Court issued the following supplementary decision:
IN VIEW WHEREOF, the dispositive part of the decision is hereby amended in order to add
the following paragraph 6:
6. If the sums mentioned in paragraphs 1 and 2 are not paid within ninety (90) days, the Court
orders the sale at public auction of the lands object of the mortgages to satisfy the said
mortgages and costs of foreclosure.
From the above-quoted decision, all the parties appealed.
Main contentions of plaintiffs as appellants are the following: that the "after acquired properties" were
subject to the deeds of mortgage mentioned heretofore; that said properties were acquired from
suppliers other than DAMCO and CONNELL; that even granting that DAMCO and CONNELL were the
real suppliers, the rescission of the sales to DALCO could not prejudice the mortgage lien in favor of
plaintiffs; that considering the foregoing, the proceeds obtained from the sale of the "after acquired
properties" as well as those obtained from the sale of the "undebated properties" in the total sum of
P175,000.00 should have been awarded exclusively to plaintiffs by reason of the mortgage lien they
had thereon; that damages should have been awarded to plaintiffs against defendants, all of them being
guilty of an attempt to defraud the former when they sought to rescind the sales already mentioned for
the purpose of defeating their mortgage lien, and finally, that defendants should have been made to
bear all the expenses of the receivership, costs and attorney's fees.
On the other hand, defendants-appellants contend that the trial court erred: firstly, in not holding that
plaintiffs had no cause of action against them because the promissory note sued upon was not yet due
when the action to foreclose the mortgages was commenced; secondly, in not holding that the
mortgages aforesaid were null and void as regards the "after acquired properties" of DALCO because
they were not registered in accordance with the Chattel Mortgage Law, the court erring, as a
consequence, in holding that said properties were subject to the mortgage lien in favor of plaintiffs;
thirdly, in not holding that the provision of the fourth paragraph of each of said mortgages did not
automatically make subject to such mortgages the "after acquired properties", the only meaning thereof
being that the mortgagor was willing to constitute a lien over such properties; fourthly, in not ruling that
said stipulation was void as against DAMCO and CONNELL and in not awarding the proceeds obtained
from the sale of the "after acquired properties" to the latter exclusively; fifthly, in appointing a Receiver
and in holding that the damages suffered by DAMCO and CONNELL by reason of the depreciation or
loss in value of the "after acquired properties" placed under receivership was damnum absque
injuria and, consequently, in not awarding, to said parties the corresponding damages claimed in their
counterclaim; lastly, in sentencing DALCO and DAMCO to pay attorney's fees and in requiring DAMCO
and CONNELL to pay the costs of the Receivership, instead of sentencing plaintiffs to pay attorney's
fees.
Plaintiffs' brief as appellants submit six assignments of error, while that of defendants also as appellants
submit a total of seventeen. However, the multifarious issues thus before Us may be resolved, directly
or indirectly, by deciding the following issues:
Firstly, are the so-called "after acquired properties" covered by and subject to the deeds of mortgage
subject of foreclosure?; secondly, assuming that they are subject thereto, are the mortgages valid and
binding on the properties aforesaid inspite of the fact that they were not registered in accordance with
the provisions of the Chattel Mortgage Law?; thirdly, assuming again that the mortgages are valid and
binding upon the "after acquired properties", what is the effect thereon, if any, of the rescission of sales
entered into, on the one hand, between DAMCO and DALCO, and between DALCO and CONNELL, on
the other?; and lastly, was the action to foreclose the mortgages premature?
A. Under the fourth paragraph of both deeds of mortgage, it is crystal clear that all property of every
nature and description taken in exchange or replacement, as well as all buildings, machineries, fixtures,
tools, equipments, and other property that the mortgagor may acquire, construct, install, attach; or use
in, to upon, or in connection with the premises — that is, its lumber concession — "shall immediately be
and become subject to the lien" of both mortgages in the same manner and to the same extent as if
already included therein at the time of their execution. As the language thus used leaves no room for
doubt as to the intention of the parties, We see no useful purpose in discussing the matter extensively.
Suffice it to say that the stipulation referred to is common, and We might say logical, in all cases where
the properties given as collateral are perishable or subject to inevitable wear and tear or were intended
to be sold, or to be used — thus becoming subject to the inevitable wear and tear — but with the
understanding — express or implied — that they shall be replaced with others to be thereafter acquired
by the mortgagor. Such stipulation is neither unlawful nor immoral, its obvious purpose being to
maintain, to the extent allowed by circumstances, the original value of the properties given as security.
Indeed, if such properties were of the nature already referred to, it would be poor judgment on the part
of the creditor who does not see to it that a similar provision is included in the contract.
B. But defendants contend that, granting without admitting, that the deeds of mortgage in question
cover the "after acquired properties" of DALCO, the same are void and ineffectual because they were
not registered in accordance with the Chattel Mortgage Law. In support of this and of the proposition
that, even if said mortgages were valid, they should not prejudice them, the defendants argue (1) that
the deeds do not describe the mortgaged chattels specifically, nor were they registered in accordance
with the Chattel Mortgage Law; (2) that the stipulation contained in the fourth paragraph thereof
constitutes "mere executory agreements to give a lien" over the "after acquired properties" upon their
acquisition; and (3) that any mortgage stipulation concerning "after acquired properties" should not
prejudice creditors and other third persons such as DAMCO and CONNELL.
The stipulation under consideration strongly belies defendants contention. As adverted to hereinbefore,
it states that all property of every nature, building, machinery etc. taken in exchange or replacement by
the mortgagor "shall immediately be and become subject to the lien of this mortgage in the same
manner and to the same extent as if now included therein". No clearer language could have been
chosen.
Conceding, on the other hand, that it is the law in this jurisdiction that, to affect third persons, a chattel
mortgage must be registered and must describe the mortgaged chattels or personal properties
sufficiently to enable the parties and any other person to identify them, We say that such law does not
apply to this case.
As the mortgages in question were executed on July 13, 1950 with the old Civil Code still in force, there
can be no doubt that the provisions of said code must govern their interpretation and the question of
their validity. It happens however, that Articles 334 and 1877 of the old Civil Code are substantially
reproduced in Articles 415 and 2127, respectively, of the new Civil Code. It is, therefore, immaterial in
this case whether we take the former or the latter as guide in deciding the point under consideration.
Article 415 does not define real property but enumerates what are considered as such, among them
being machinery, receptacles, instruments or replacements intended by owner of the tenement for an
industry or works which may be carried on in a building or on a piece of land, and shall tend directly to
meet the needs of the said industry or works.
On the strength of the above-quoted legal provisions, the lower court held that inasmuch as "the
chattels were placed in the real properties mortgaged to plaintiffs, they came within the operation of Art.
415, paragraph 5 and Art. 2127 of the New Civil Code".
We find the above ruling in agreement with our decisions on the subject:
(1) In Berkenkotter vs. Cu Unjieng, 61 Phil. 663, We held that Article 334, paragraph 5 of the Civil Code
(old) gives the character of real property to machinery, liquid containers, instruments or replacements
intended by the owner of any building or land for use in connection with any industry or trade being
carried on therein and which are expressly adapted to meet the requirements of such trade or industry.
(2) In Cu Unjieng e Hijos vs. Mabalacat Sugar Co., 58 Phil. 439, We held that a mortgage constituted on
a sugar central includes not only the land on which it is built but also the buildings, machinery and
accessories installed at the time the mortgage was constituted as well as the buildings, machinery and
accessories belonging to the mortgagor, installed after the constitution thereof .
It is not disputed in the case at bar that the "after acquired properties" were purchased by DALCO in
connection with, and for use in the development of its lumber concession and that they were purchased
in addition to, or in replacement of those already existing in the premises on July 13, 1950. In Law,
therefore, they must be deemed to have been immobilized, with the result that the real estate
mortgages involved herein — which were registered as such — did not have to be registered a second
time as chattel mortgages in order to bind the "after acquired properties" and affect third parties.
But defendants, invoking the case of Davao Sawmill Company vs. Castillo, 61 Phil. 709, claim that the
"after acquired properties" did not become immobilized because DALCO did not own the whole area of
its lumber concession all over which said properties were scattered.
The facts in the Davao Sawmill case, however, are not on all fours with the ones obtaining in the
present. In the former, the Davao Sawmill Company, Inc., had repeatedly treated the machinery therein
involved as personal property by executing chattel mortgages thereon in favor of third parties, while in
the present case the parties had treated the "after acquired properties" as real properties by expressly
and unequivocally agreeing that they shall automatically become subject to the lien of the real estate
mortgages executed by them. In the Davao Sawmill decision it was, in fact, stated that "the
characterization of the property as chattels by the appellant is indicative of intention and impresses
upon the property the character determined by the parties" (61 Phil. 112, emphasis supplied). In the
present case, the characterization of the "after acquired properties" as real property was made not only
by one but by both interested parties. There is, therefore, more reason to hold that such consensus
impresses upon the properties the character determined by the parties who must now be held in
estoppel to question it.
Moreover, quoted in the Davao Sawmill case was that of Valdez vs. Central Altagracia, Inc. (225 U.S.
58) where it was held that while under the general law of Puerto Rico, machinery placed on property by
a tenant does not become immobilized, yet, when the tenant places it there pursuant to contract that it
shall belong to the owner, it then becomes immobilized as to that tenant and even as against his
assignees and creditors who had sufficient notice of such stipulation. In the case at bar it is not disputed
that DALCO purchased the "after acquired properties" to be placed on, and be used in the development
of its lumber concession, and agreed further that the same shall become immediately subject to the lien
constituted by the questioned mortgages. There is also abundant evidence in the record that DAMCO
and CONNELL had full notice of such stipulation and had never thought of disputed validity until the
present case was filed. Consequently all of them must be deemed barred from denying that the
properties in question had become immobilized.
What We have said heretofore sufficiently disposes all the arguments adduced by defendants in support
their contention that the mortgages under foreclosure are void, and, that, even if valid, are ineffectual as
against DAMCO and CONNELL.
Now to the question of whether or not DAMCO CONNELL have rights over the "after acquired
properties" superior to the mortgage lien constituted thereon in favor of plaintiffs. It is defendants'
contention that in relation to said properties they are "unpaid sellers"; that as such they had not only a
superior lien on the "after acquired properties" but also the right to rescind the sales thereof to DALCO.
This contention — it is obvious — would have validity only if it were true that DAMCO and CONNELL
were the suppliers or vendors of the "after acquired properties". According to the record, plaintiffs did
not know their exact identity and description prior to the filing of the case bar because DALCO, in
violation of its obligation under the mortgages, had failed and refused theretofore to submit a complete
list thereof. In the course of the proceedings, however, when defendants moved to dissolve the order of
receivership and the writ of preliminary injunction issued by the lower court, they attached to their
motion the lists marked as Exhibits 1, 2 and 3 describing the properties aforesaid. Later on, the parties
agreed to consider said lists as identifying and describing the "after acquire properties," and engaged
the services of auditors to examine the books of DALCO so as to bring out the details thereof. The
report of the auditors and its annexes (Exhibits V, V-1 — V4) show that neither DAMCO nor CONNELL
had supplied any of the goods of which they respective claimed to be the unpaid seller; that all items
were supplied by different parties, neither of whom appeared to be DAMCO or CONNELL that, in fact,
CONNELL collected a 5% service charge on the net value of all items it claims to have sold to DALCO
and which, in truth, it had purchased for DALCO as the latter's general agent; that CONNELL had to
issue its own invoices in addition to those o f the real suppliers in order to collect and justify such
service charge.
Taking into account the above circumstances together with the fact that DAMCO was a stockholder and
CONNELL was not only a stockholder but the general agent of DALCO, their claim to be the suppliers
of the "after acquired required properties" would seem to be preposterous. The most that can be
claimed on the basis of the evidence is that DAMCO and CONNELL probably financed some of the
purchases. But if DALCO still owes them any amount in this connection, it is clear that, as financiers,
they can not claim any right over the "after acquired properties" superior to the lien constituted thereon
by virtue of the deeds of mortgage under foreclosure. Indeed, the execution of the rescission of sales
mentioned heretofore appears to be but a desperate attempt to better or improve DAMCO and
CONNELL's position by enabling them to assume the role of "unpaid suppliers" and thus claim a
vendor's lien over the "after acquired properties". The attempt, of course, is utterly ineffectual, not only
because they are not the "unpaid sellers" they claim to be but also because there is abundant evidence
in the record showing that both DAMCO and CONNELL had known and admitted from the beginning
that the "after acquired properties" of DALCO were meant to be included in the first and second
mortgages under foreclosure.
The claim that Belden, of ATLANTIC, had given his consent to the rescission, expressly or otherwise, is
of no consequence and does not make the rescission valid and legally effective. It must be stated
clearly, however, in justice to Belden, that, as a member of the Board of Directors of DALCO, he
opposed the resolution of December 15, 1952 passed by said Board and the subsequent rescission of
the sales.
Finally, defendants claim that the action to foreclose the mortgages filed on February 12, 1953 was
premature because the promissory note sued upon did not fall due until April 1 of the same year,
concluding from this that, when the action was commenced, the plaintiffs had no cause of action. Upon
this question the lower court says the following in the appealed judgment;
The other is the defense of prematurity of the causes of action in that plaintiffs, as a matter of
grace, conceded an extension of time to pay up to 1 April, 1953 while the action was filed on
12 February, 1953, but, as to this, the Court taking it that there is absolutely no debate that
Dahican Lumber Co., was insolvent as of the date of the filing of the complaint, it should follow
that the debtor thereby lost the benefit to the period.
x x x unless he gives a guaranty or security for the debt . . . (Art. 1198, New Civil Code);
and as the guaranty was plainly inadequate since the claim of plaintiffs reached in the
aggregate, P1,200,000 excluding interest while the aggregate price of the "after-acquired"
chattels claimed by Connell under the rescission contracts was P1,614,675.94, Exh. 1, Exh. V,
report of auditors, and as a matter of fact, almost all the properties were sold afterwards for
only P175,000.00, page 47, Vol. IV, and the Court understanding that when the law permits the
debtor to enjoy the benefits of the period notwithstanding that he is insolvent by his giving a
guaranty for the debt, that must mean a new and efficient guaranty, must concede that the
causes of action for collection of the notes were not premature.
Very little need be added to the above. Defendants, however, contend that the lower court had no basis
for finding that, when the action was commenced, DALCO was insolvent for purposes related to Article
1198, paragraph 1 of the Civil Code. We find, however, that the finding of the trial court is sufficiently
supported by the evidence particularly the resolution marked as Exhibit K, which shows that on
December 16, 1952 — in the words of the Chairman of the Board — DALCO was "without funds,
neither does it expect to have any funds in the foreseeable future." (p. 64, record on appeal).
The remaining issues, namely, whether or not the proceeds obtained from the sale of the "after acquired
properties" should have been awarded exclusively to the plaintiffs or to DAMCO and CONNELL, and if
in law they should be distributed among said parties, whether or not the distribution should be pro-rata
or otherwise; whether or not plaintiffs are entitled to damages; and, lastly, whether or not the expenses
incidental to the Receivership should be borne by all the parties on a pro-rata basis or exclusively by
one or some of them are of a secondary nature as they are already impliedly resolved by what has been
said heretofore.
As regard the proceeds obtained from the sale of the of after acquired properties" and the "undebated
properties", it is clear, in view of our opinion sustaining the validity of the mortgages in relation thereto,
that said proceeds should be awarded exclusively to the plaintiffs in payment of the money obligations
secured by the mortgages under foreclosure.
On the question of plaintiffs' right to recover damages from the defendants, the law (Articles 1313 and
1314 of the New Civil Code) provides that creditors are protected in cases of contracts intended to
defraud them; and that any third person who induces another to violate his contract shall be liable for
damages to the other contracting party. Similar liability is demandable under Arts. 20 and 21 — which
may be given retroactive effect (Arts. 225253) — or under Arts. 1902 and 2176 of the Old Civil Code.
The facts of this case, as stated heretofore, clearly show that DALCO and DAMCO, after failing to pay
the fifth promissory note upon its maturity, conspired jointly with CONNELL to violate the provisions of
the fourth paragraph of the mortgages under foreclosure by attempting to defeat plaintiffs' mortgage lien
on the "after acquired properties". As a result, the plaintiffs had to go to court to protect their rights thus
jeopardized. Defendants' liability for damages is therefore clear.
However, the measure of the damages suffered by the plaintiffs is not what the latter claim, namely, the
difference between the alleged total obligation secured by the mortgages amounting to around
P1,200,000.00, plus the stipulated interest and attorney's fees, on the one hand, and the proceeds
obtained from the sale of "after acquired properties", and of those that were not claimed neither by
DAMCO nor CONNELL, on the other. Considering that the sale of the real properties subject to the
mortgages under foreclosure has not been effected, and considering further the lack of evidence
showing that the true value of all the properties already sold was not realized because their sale was
under stress, We feel that We do not have before Us the true elements or factors that should determine
the amount of damages that plaintiffs are entitled recover from defendants. It is, however, our
considered opinion that, upon the facts established, all the expenses of the Receivership, which was
deemed necessary to safeguard the rights of the plaintiffs, should be borne by the defendants, jointly
and severally, in the same manner that all of them should pay to the plaintiffs, jointly a severally,
attorney's fees awarded in the appealed judgment.
In consonance with the portion of this decision concerning the damages that the plaintiffs are entitled to
recover from the defendants, the record of this case shall be remanded below for the corresponding
proceedings.Modified as above indicated, the appealed judgment is affirmed in all other respects. With
costs.