January 18, 2017

SPOUSES VILLALUZ vs. LAND BANK

JARDELEZA, J.:

The Civil Code sets the default rule that an agent may appoint a substitute if the principal has not
prohibited him from doing so.

FACTS:

Agbisit, mother of May Villaluz, requested the latter to provide her with collateral for a loan.

May convinced her husband, Johnny Villaluz, to allow Agbisit to use their land as collateral.

They executed a Special Power of Attorney in favor of Agbisit authorizing her to, among others,
"negotiate for the sale mortgage, or other forms of disposition a parcel of land covered by Transfer
Certificate of Title No. T-202276" and "sign in our behalf all documents relating to the sale, loan
or mortgage, or other disposition of the aforementioned property. " The one-page power of attorney
neither specified the conditions under which the special powers may be exercised nor stated the
amounts for which the subject land may be sold or mortgaged.

Agbisit executed her own Special Power of Attorney, appointing Milflores Cooperative as
attorney-in-fact in obtaining a loan from and executing a real mortgage in favor of Land Bank.

Milflores Cooperative, in a representative capacity, executed a Real Estate Mortgage in favor of

Land Bank.

Unfortunately, Milflores Cooperative was unable to pay its obligations to Land Bank. Thus, Land
Bank filed a petition for extra-judicial foreclosure sale. Land Bank won the auction sale as the sole
bidder.

The Spouses Villaluz filed a complaint seeking the annulment of the foreclosure sale.

ISSUE

Whether Agbisit could have validly delegated her authority as attorney-in-fact to Milflores
Cooperative. - YES

RULING

Articles 1892 and 1893 of the Civil Code provide the rules regarding the appointment of a
substitute by an agent:

Art. 1892. The agent may appoint a substitute if the principal has not prohibited him from doing
so; but he shall be responsible for the acts of the substitute:

(1) When he was not given the power to appoint one;

 (2) When he was given such power, but without designating the person, and the person
appointed was notoriously incompetent or insolvent.

All acts of the substitute appointed against the prohibition of the principal shall be void.

Art. 1893. In the cases mentioned in Nos. 1 and 2 of the preceding article, the principal may
furthermore bring an action against the substitute with respect to the obligations which the latter
has contracted under the substitution.

The law creates a presumption that an agent has the power to appoint a substitute. The consequence
of the presumption is that, upon valid appointment of a substitute by the agent, there ipso
jure arises an agency relationship between the principal and the substitute, i.e., the substitute
becomes the agent of the principal. As a result, the principal is bound by the acts of the substitute
as if these acts had been performed by the principal's appointed agent. Concomitantly, the
substitute assumes an agent's obligations to act within the scope of authority, to act in accordance
with the principal's instructions, and to carry out the agency, among others. In order to make the
presumption inoperative and relieve himself from its effects, it is incumbent upon the principal to
prohibit the agent from appointing a substitute.

Although the law presumes that the agent is authorized to appoint a substitute, it also imposes an
obligation upon the agent to exercise this power conscientiously. To protect the principal, Article
1892 allocates responsibility to the agent for the acts of the substitute when the agent was not
expressly authorized by the principal to appoint a substitute; and, if so authorized but a specific
person is not designated, the agent appoints a substitute who is notoriously incompetent or
insolvent. In these instances, the principal has a right of action against both the agent and the
substitute if the latter commits acts prejudicial to the principal.

The Spouses Villaluz understandably feel shorthanded because their property was foreclosed by
reason of another person's inability to pay. However, they were not coerced to grant a special
power of attorney in favor of Agbisit. Nor were they prohibited from prescribing conditions on
how such power may be exercised. Absent such express limitations, the law recognizes Land
Bank's right to rely on the terms of the power of attorney as written."Courts cannot follow one
every step of his life and extricate him from bad bargains, protect him from unwise investments,
relieve him from one-sided contracts, or annul the effects of [unwise] acts."The remedy afforded
by the Civil Code to the Spouses Villaluz is to proceed against the agent and the substitute in
accordance with A1iicles 1892 and 1893.
March 1, 2017
OSMEÑA-JALANDONI vs ENCOMIENDA
PERALTA, J.:

FACTS

Jalandoni called Encomienda to ask if she could borrow money for the search and rescue operation
of her children in Manila, who were allegedly taken by their father, Luis Jalandoni.

Encomienda then went to Jalandoni's house and handed ₱l00,000.00 in a sealed envelope to the
latter's security guard. While in Manila, Jalandoni again borrowed money for some errands.

Jalandoni borrowed ₱l Million from Encomienda and promised that she would pay the same when
her money in the bank matured. Thereafter, Encomienda went to Manila to attend the hearing of
Jalandoni's habeas corpus case before the CA where ₱100,000.00 more was requested.

Jalandoni asked if Encomienda could lend her an additional. Encomienda still acceded, albeit
already feeling annoyed. All in all, Encomienda spent around ₱3,245,836.02 and $6,638.20 for
Jalandoni.

When Jalandoni came back to Cebu, she never informed Encomienda. Encomienda then later gave
Jalandoni six (6) weeks to settle her debts. Despite several demands, no payment was made.
Jalandoni insisted that the amounts given were not in the form of loans.

Encomienda filed a complaint.

For her defense, Jalandoni claimed that there was never a discussion or even just an allusion about
a loan. She confirmed that Encomienda would indeed deposit money in her bank account and pay
her bills in Cebu. But when asked, Encomienda would tell her that she just wanted to extend some
help and that it was not a loan.

ISSUE

Whether or not Encomienda is entitled to be reimbursed for the amounts she defrayed for
Jalandoni. - YES

RULING

The RTC harped on the fact that if Encomienda really intended the amounts to be a loan, normal
human behavior would have prompted at least a handwritten acknowledgment or a promissory
note the moment she parted with her money for the purpose of granting a loan. This would be
particularly true if the loan obtained was part of a business dealing and not one extended to a close
friend who suddenly needed monetary aid. In fact, in case of loans between friends and relatives,
the absence of acknowledgment receipts or promissory notes is more natural and real. In a similar
case, the Court upheld the CA' s pronouncement that the existence of a contract of loan cannot be
denied merely because it was not reduced in writing. Surely, there can be a verbal loan. Contracts
are binding between the parties, whether oral or written. The law is explicit that contracts shall be
obligatory in whatever form they may have been entered into, provided all the essential requisites
for their validity are present. A simple loan or mutuum exists when a person receives a loan of
money or any other fungible thing and acquires its ownership. He is bound to pay to the creditor
the equal amount of the same kind and quality. Jalandoni posits that the more logical reason behind
the disbursements would be what Encomienda candidly told the trial court, that her acts were
plainly an "unselfish display of Christian help" and done out of "genuine concern for Georgia's
children." However, the "display of Christian help" is not inconsistent with the existence of a loan.
Encomienda immediately offered a helping hand when a friend asked for it. But this does not mean
that she had already waived her right to collect in the future. Indeed, when Encomienda felt that
Jalandoni was beginning to avoid her, that was when she realized that she had to protect her right
to demand payment. The fact that Encomienda kept the receipts even for the smallest amounts she
had advanced, repeatedly sent demand letters, and immediately filed the instant case when
Jalandoni stubbornly refused to heed her demands sufficiently disproves the latter’s belief that all
the sums of money she received were merely given out of charity.

The principle of unjust enrichment finds application in this case. Unjust enrichment exists when a
person unfairly retains a benefit to the loss of another, or when a person retains money or property
of another against the fundamental principles of justice, equity, and good conscience. There is
unjust enrichment under Article 22 of the Civil Code when (1) a person is unjustly benefited, and
(2) such benefit is derived at the expense of or with damages to another. The principle of unjust
enrichment essentially contemplates payment when there is no duty to pay, and the person who
receives the payment has no right to receive it.
April 19, 2017
PHILIPPINE STEEL COATING CORP vs EDUARD QUINONES
SERENO, CJ:

FACTS

Lopez, a sales engineer of PhilSteel, offered Quinones their new product: primer-coated, long-
span, rolled galvanized iron (G.I.) sheets. The latter showed interest, but asked Lopez if the primer-
coated sheets were compatible with the Guilder acrylic paint process used by Amianan Motors in
the finishing of its assembled buses.

Uncertain, Lopez referred the query to his immediate superior, Ferdinand Angbengco, PhilSteel’s
sales manager.

Angbengco assured Quinones that the quality of their new product was superior to that of the non-
primer coated G.I. sheets being used by the latter in his business. Quinones expressed reservations,
as the new product might not be compatible with the paint process used by Amianan Motors.

PhilSteel further guaranteed that a laboratory test had in fact been conducted, and that the results
proved that the two products were compatible; hence, Quinones was induced to purchase the
product and use it in the manufacture of bus units.

However, Quinones received several complaints from customers who had bought bus units,
claiming that the paint or finish used on the purchased vehicles was breaking and peeling off.

Quinones then sent a letter-complaint to PhilSteel invoking the warranties given by the latter.

According to its own investigation, PhilSteel discovered that the breaking and peeling off of the
paint was caused by the erroneous painting application done by Quinones.

ISSUES

Whether vague oral statements made by seller on the characteristics of a generic good can be
considered warranties that may be invoked to warrant payment of damages;

RULING

This Court agrees with the CA that this is a case of express warranty under Article 1546 of the
Civil Code, which provides:

Any affirmation of fact or any promise by the seller relating to the thing is an express warranty if
the natural tendency of such affirmation or promise is to induce the buyer to purchase the same,
and if the buyer purchases the thing relying thereon. No affirmation of the value of the thing, nor
any statement purporting to be a statement of the seller's opinion only, shall be construed as a
warranty, unless the seller made such affirmation or statement as an expert and it was relied upon
by the buyer.

As held in Carrascoso, Jr. v. CA, the following requisites must be established in order to prove
that there is an express warranty in a contract of sale: (1) the express warranty must be an
affirmation of fact or any promise by the seller relating to the subject matter of the sale; (2) the
natural effect of the affirmation or promise is to induce the buyer to purchase the thing; and (3) the
buyer purchases the thing relying on that affirmation or promise.

An express warranty can be oral when it is a positive affirmation of a fact that the buyer relied
on.

A warranty is a statement or representation made by the seller of goods-contemporaneously and

as part of the contract of sale-that has reference to the character, quality or title of the goods; and
is issued to promise or undertake to insure that certain facts are or shall be as the seller represents
them. A warranty is not necessarily written. It may be oral as long as it is not given as a mere
opinion or judgment. Rather, it is a positive affirmation of a fact that buyers rely upon, and that
influences or induces them to purchase the product.

Under Article 1546 of the Civil Code, “[n]o affirmation of the value of the thing, nor any statement
purporting to be a statement of the seller's opinion only, shall be construed as a warranty, unless
the seller made such affirmation or statement as an expert and it was relied upon by the buyer.”
Despite its claims to the contrary, petitioner was an expert in the eyes of the buyer Quinones. The
latter had asked if the primer-coated G.I. sheets were compatible with Amianan Motors' acrylic
painting process. Petitioner's former employee, Lopez, testified that he had to refer Quinones to
the former's immediate supervisor, Angbengco, to answer that question. As the sales manager of
PhilSteel, Angbengco made repeated assurances and affirmations and even invoked laboratory
tests that showed compatibility. In the eyes of the buyer Quinones, PhilSteel-through its
representative, Angbengco-was an expert whose word could be relied upon.

Angbengco undisputedly assured Quinones that laboratory tests had been undertaken, and that
those tests showed that the acrylic paint used by Quinones was compatible with the primer-coated
G.I. sheets of Philsteel. Thus, Angbengco was no longer giving a mere seller’s opinion or making
an exaggeration in trade. Rather, he was making it appear to Quinones that PhilSteel had already
subjected the latter's primed G.I. sheets to product testing. PhilSteel, through its representative,
was in effect inducing in the mind of the buyer the belief that the former was an expert on the
primed G.I. sheets in question; and that the statements made by petitioner's representatives,
particularly Angbengco (its sales manager), could be relied on. Thus, petitioner did induce the
buyer to purchase the former's G.I. sheets.

The nonpayment of the unpaid purchase price was justified, since a breach of warranty was
proven.
April 26, 2017
CARBONELL vs. METROPOLITAN BANK AND TRUST COMPANY
BERSAMIN, J:

FACTS

The petitioners initiated an action for damages, alleging that they had experienced emotional
shock, mental anguish, public ridicule, humiliation, insults and embarrassment during their trip to
Thailand because of the respondent’s release to them of five US$100 bills that later on turned out
to be counterfeit. They claimed that they had travelled to Bangkok, Thailand after withdrawing
US$1,000.00 in US$100 notes from their dollar account at the respondent’s Pateros branch; that
while in Bangkok, they had exchanged five US$100 bills into Baht, but only four of the US$100
bills had been accepted by the foreign exchange dealer because the fifth one was “no good;” that
unconvinced by the reason for the rejection, they had asked a companion to exchange the same
bill at Norkthon Bank in Bangkok; that the bank teller thereat had then informed them and their
companion that the dollar bill was fake; that the teller had then confiscated the US$100 bill and
had threatened to report them to the police if they insisted in getting the fake dollar bill back; and
that they had to settle for a Foreign Exchange Note receipt.

The petitioners claimed that later on, they had bought jewelry from a shop owner by using four of
the remaining US$100 bills as payment; that on the next day, however, they had been confronted
by the shop owner at the hotel lobby because their four US$100 bills had turned out to be
counterfeit; that the shop owner had shouted at them: “You Filipinos, you are all cheaters!;” and
that the incident had occurred within the hearing distance of fellow travelers and several foreigners.

The petitioners continued that upon their return to the Philippines, they had confronted the manager
of the respondent’s Pateros branch on the fake dollar bills, but the latter had insisted that the dollar
bills she had released to them were genuine inasmuch as the bills had come from the head office;
that in order to put the issue to rest, the counsel of the petitioners had submitted the subject US$100
bills to the Bangko Sentral ng Pilipinas (BSP) for examination; that the BSP had certified that the
four US$100 bills were near perfect genuine notes; and that their counsel had explained by letter
their unfortunate experience caused by the respondent’s release of the fake US dollar bills to them,
and had demanded moral damages of P10 Million and exemplary damages.

ISSUE

Whether the respondent’s failure to exercise the degree of diligence required in handling the affairs
of its clients showed that it was liable not just for simple negligence but for misrepresentation and
bad faith amounting to fraud.

RULING

The General Banking Act of 2000 demands of banks the highest standards of integrity and
performance. As such, the banks are under obligation to treat the accounts of their depositors with
meticulous care. However, the banks’ compliance with this degree of diligence is to be determined
in accordance with the particular circumstances of each case.
Gross negligence connotes want of care in the performance of one’s duties; it is a negligence
characterized by the want of even slight care, acting or omitting to act in a situation where there is
duty to act, not inadvertently but wilfully and intentionally, with a conscious indifference to
consequences insofar as other persons may be affected. It evinces a thoughtless disregard of
consequences without exerting any effort to avoid them.

In order for gross negligence to exist as to warrant holding the respondent liable therefor, the
petitioners must establish that the latter did not exert any effort at all to avoid unpleasant
consequences, or that it wilfully and intentionally disregarded the proper protocols or procedure
in the handling of US dollar notes and in selecting and supervising its employees.

The CA and the RTC both found that the respondent had exercised the diligence required by law
in observing the standard operating procedure, in taking the necessary precautions for handling the
US dollar bills in question, and in selecting and supervising its employees. Such factual findings
by the trial court are entitled to great weight and respect especially after being affirmed by the
appellate court, and could be overturned only upon a showing of a very good reason to warrant
deviating from them.

In this connection, it is significant that the BSP certified that the falsity of the US dollar notes in
question, which were “near perfect genuine notes,” could be detected only with extreme difficulty
even with the exercise of due diligence. Ms. Nanette Malabrigo, BSP’s Senior Currency Analyst,
testified that the subject dollar notes were “highly deceptive” inasmuch as the paper used for them
were similar to that used in the printing of the genuine notes. She observed that the security fibers
and the printing were perfect except for some microscopic defects, and that all lines were clear,
sharp and well defined.
With the respondent having established that the characteristics of the subject dollar notes had made
it difficult even for the BSP itself as the country’s own currency note expert to identify the
counterfeiting with ease despite adhering to all the properly laid out standard operating procedure
and precautions in the handling of US dollar bills, holding it liable for damages in favor of the
petitioners would be highly unwarranted in the absence of proof of bad faith, malice or fraud on
its part. That it formally apologized to them and even offered to reinstate the USD$500.00 in their
account as well as to give them the all-expense-paid round trip ticket to Hong Kong as means to
assuage their inconvenience did not necessarily mean it was liable. In civil cases, an offer of
compromise is not an admission of liability, and is inadmissible as evidence against the offeror.
Also, the petitioners’ allegation of misrepresentation on the part of the respondent was factually
unsupported. They had been satisfied with the services of the respondent for about three years prior
to the incident in question. The incident was but an isolated one. Under the law, moral damages
for culpa contractual or breach of contract are recoverable only if the defendant acted fraudulently
or in bad faith, or is found guilty of gross negligence amounting to bad faith, or in wanton disregard
of his contractual obligations. The breach must be wanton, reckless, malicious or in bad faith,
oppressive or abusive. In order to maintain their action for damages, the petitioners must establish
that their injury resulted from a breach of duty that the respondent had owed to them, that is, there
must be the concurrence of injury caused to them as the plaintiffs and legal responsibility on the
part of the respondent. Underlying the award of damages is the premise that an individual was
injured in contemplation of law. In this regard, there must first be a breach of some duty and the
imposition of liability for that breach before damages may be awarded; and the breach of such
duty should be the proximate cause of the injury. That was not so in this case.

It is true that the petitioners suffered embarrassment and humiliation in Bangkok. Yet, we should
distinguish between damage and injury. In The Orchard Golf & Country Club, Inc. v. Yu, the Court
has fittingly pointed out the distinction, viz.:

xxx Injury is the illegal invasion of a legal right, damage is the loss, hurt, or harm which results
from the injury; and damages are the recompense or compensation awarded for the damage
suffered. Thus, there can be damage without injury in those instances in which the loss or harm
was not the result of a violation of a legal duty. These situations are often called damnum absque
injuria.

In every situation of damnum absque injuria, therefore, the injured person alone bears the
consequences because the law affords no remedy for damages resulting from an act that does not
amount to a legal injury or wrong. For instance, in BPI Express Card Corporation v. Court of
Appeals, the Court turned down the claim for damages of a cardholder whose credit card had been
cancelled after several defaults in payment, holding therein that there could be damage without
injury where the loss or harm was not the result of a violation of a legal duty towards the plaintiff.
In such situation, the injured person alone should bear the consequences because the law afforded
no remedy for damages resulting from an act that did not amount to a legal injury or wrong. Indeed,
the lack of malice in the conduct complained of precluded the recovery of damages.

Here, although the petitioners suffered humiliation resulting from their unwitting use of the
counterfeit US dollar bills, the respondent, by virtue of its having observed the proper protocols
and procedure in handling the US dollar bills involved, did not violate any legal duty towards
them. Being neither guilty of negligence nor remiss in its exercise of the degree of diligence
required by law or the nature of its obligation as a banking institution, the latter was not liable for
damages. Given the situation being one of damnum absque injuria, they could not be compensated
for the damage sustained.
March 22, 2017
OUR LADY OF LOURDES HOSPITAL vs SPOUSES CAPANZANA
SERENO, CJ.:

FACTS

Regina a 40-year-old nurse and clinical instructor pregnant with her third child, was scheduled for
her third caesarean section.However, a week earlier, she went into active labor and was brought to
petitioner hospital for an emergency C-section. She first underwent a preoperative physical
examination by Dr. Ramos and Dr. Santos the same attending physicians in her prior childbirths.
She was found fit for anesthesia after she responded negatively to questions about tuberculosis,
rheumatic fever, and cardiac diseases. On that same day, she gave birth to a baby boy. When her
condition stabilized, she was discharged from the recovery room and transferred to a regular
hospital room.

13 hours after her operation, Regina who was then under watch by her niece, Balad, complained
of a headache, a chilly sensation, restlessness, and shortness of breath. She asked for oxygen and
later became cyanotic. After undergoing an x-ray, she was found to be suffering from pulmonary
edema. She was eventually transferred to the Intensive Care Unit, where she was hooked to a
mechanical ventilator. The impression then was that she was showing signs of amniotic fluid
embolism.

When her condition still showed no improvement, Regina was transferred to the Cardinal Santos
Hospital. The doctors thereat found that she was suffering from rheumatic heart disease mitral
stenosis with mild pulmonary hypertension, which contributed to the onset of fluid in her lung
tissue (pulmonary edema). This development resulted in cardiopulmonary arrest and,
subsequently, brain damage. Regina lost the use of her speech, eyesight, hearing and limbs. She
was discharged, still in a vegetative state.

Respondent spouses Capanzana filed a complaint for damages.

OUR RULING

In order to successfully pursue a claim in a medical negligence case, the plaintiff must prove that
a health professional either failed to do something which a reasonably prudent health professional
would have or have not done; and that the action or omission caused injury to the patient.
Proceeding from this guideline, the plaintiff must show the following elements by a preponderance
of evidence: duty of the health professional, breach of that duty, injury of the patient, and
proximate causation between the breach and the injury. Meanwhile, in fixing a standard by which
a court may determine whether the physician properly performed the requisite duty toward the
patient, expert medical testimonies from both plaintiff and defense are resorted to.

In this case, the expert testimony of witness for the respondent Dr. Godfrey Robeniol, a
neurosurgeon, provided that the best time to treat hypoxic encephalopathy is at the time of its
occurrence; i.e., when the patient is experiencing difficulty in breathing and showing signs of
cardiac arrest.
To recall, the records, including petitioner's Nurses' Notes, indisputably show that Regina
complained of difficulty in breathing before eventually showing signs of cyanosis. We agree with
the courts below in their finding that when she was gasping for breath and turning cyanotic, it was
the duty of the nurses to intervene immediately by informing the resident doctor. Had they done
so, proper oxygenation could have been restored and other interventions performed without
wasting valuable time. That such high degree of care and responsiveness was needed cannot be
overemphasized - considering that according to expert medical evidence in the records, it takes
only five minutes of oxygen deprivation for irreversible brain damage to set in. Indeed, the Court
has emphasized that a higher degree of caution and an exacting standard of diligence in patient
management and health care are required of a hospital's staff, as they deal with the lives of patients
who seek urgent medical assistance. It is incumbent upon nurses to take precautions or undertake
steps to safeguard patients under their care from any possible injury that may arise in the course
of the latter's treatment and care.

The Court further notes that the immediate response of the nurses was especially imperative, since
Regina herself had asked for oxygen. They should have been prompted to respond immediately
when Regina herself expressed her needs, especially in that emergency situation when it was not
easy to determine with certainty the cause of her breathing difficulty. Indeed, even if the patient
had not asked for oxygen, the mere fact that her breathing was labored to an abnormal degree
should have impelled the nurses to immediately call the doctor and to administer oxygen.

Taken together, the above instances of delay convinced the courts below, as well as this Court,
that there was a breach of duty on the part of the hospital's nurses. The CA therefore correctly
affirmed the finding of the trial court that the nurses responded late, and that Regina was already
cyanotic when she was referred to the resident doctor.

Regina suffered from brain damage, particularly hypoxic encephalopathy, which is caused by lack
of oxygen in the brain. The testimonies of Dr. Dizon and Dr. Robeniol proved this fact. And the
proximate cause of the brain damage was the delay in responding to Regina's call for help and for
oxygen. The trial court said:

Had the nurses exercised certain degree of promptness and diligence in responding to the patient[']s
call for help[,] the occurrence of "hypoxic encephalopathy" could have been avoided since lack or
inadequate supply of oxygen to the brain for 5 minutes will cause damage to it.

We affirm the findings of the courts below that the negligent delay on the part of the nurses was
the proximate cause of the brain damage suffered by Regina. In Ramos, the Court defines
proximate cause as follows:

Proximate cause has been defined as that which, in natural and continuous sequence,
unbroken by any efficient intervening cause, produces injury, and without which the result
would not have occurred. An injury or damage is proximately caused by an act or a failure
to act, whenever it appears from the evidence in the case, that the act or omission played a
substantial part in bringing about or actually causing the injury or damage; and that the
injury or damage was either a direct result or a reasonably probable consequence of the act
 or omission. It is the dominant, moving or producing cause. (Underscoring supplied;
citations omitted).

Thus, a failure to act may be the proximate cause if it plays a substantial part in bringing about an
injury. Note also that the omission to perform a duty may also constitute the proximate cause of
an injury, but only where the omission would have prevented the injury.The Court also emphasizes
that the injury need only be a reasonably probable consequence of the failure to act. In other words,
there is no need for absolute certainty that the injury is a consequence of the omission.

Applying the above definition to the facts in the present case, the omission of the nurses - their
failure to check on Regina and to refer her to the resident doctor and, thereafter, to immediately
provide oxygen - was clearly the proximate cause that led to the brain damage suffered by the
patient. As the trial court and the CA both held, had the nurses promptly responded, oxygen would
have been immediately administered to her and the risk of brain damage lessened, if not avoided.

For the negligence of its nurses, petitioner is thus liable under Article 2180 in relation to Article
2176 of the Civil Code. Under Article 2180, an employer like petitioner hospital may be held liable
for the negligence of its employees based on its responsibility under a relationship of patria
potestas. The liability of the employer under this provision is "direct and immediate; it is not
conditioned upon a prior recourse against the negligent employee or a prior showing of the
insolvency of that employee." The employer may only be relieved of responsibility upon a showing
that it exercised the diligence of a good father of a family in the selection and supervision of its
employees. The rule is that once negligence of the employee is shown, the burden is on the
employer to overcome the presumption of negligence on the latter's part by proving observance of
the required diligence.

In the instant case, there is no dispute that petitioner was the employer of the nurses who have been
found to be negligent in the performance of their duties. This fact has never been in issue. Hence,
petitioner had the burden of showing that it exercised the diligence of a good father of a family not
only in the selection of the negligent nurses, but also in their supervision.

After a careful review of the records, we find that the preponderance of evidence supports the
finding of the CA that the hospital failed to discharge its burden of proving due diligence in the
supervision of its nurses and is therefore liable for their negligence. It must be emphasized that
even though it proved due diligence in the selection of its nurses, the hospital was able to dispose
of only half the burden it must overcome.

In the present case, there is no proof of actual supervision of the employees' work or actual
implementation and monitoring of consistent compliance with the rules. The testimony of
petitioner's Assistant Nursing Service Director, Lourdes H. Nicolas is belied by the actual
records of petitioner. These show that Nurses David and Padolina had been observed to be
latecomers and absentees; yet they were never sanctioned by those supposedly supervising them.
While the question of diligent supervision depends on the circumstances of employment, we find
that by the very nature of a hospital, the proper supervision of the attendance of its nurses, who
are its frontline health professionals, is crucial considering that patients' conditions can change
drastically in a matter of minutes. Petitioner's Employee Handbook recognized exactly this as it
decreed the proper procedure in availing of unavoidable absences and the commensurate
penalties of verbal reprimand, written warning, suspension from work, and dismissal in instances
of unexcused absence or tardiness. Petitioner's failure to sanction the tardiness of the defendant
nurses shows an utter lack of actual implementation and monitoring of compliance with the rules
and ultimately of supervision over its nurses.