TORTS CASES

No. 1

G.R. No. L-10073 December 24, 1915

BUTARO YAMADA, plaintiff-appellee,

vs.
THE MANILA RAILROAD CO., defendant, and BACHRACH GARAGE & TAXICAB
CO., defendant-appellant.

G.R. No. L-10074 December 24, 1915

KENJIRO KARABAYASHI, plaintiff-appellee,

vs.
THE MANILA RAILROAD CO., defendant, and BACHRACH GARAGE & TAXICAB
CO., defendant-appellant.

G.R. No. L-10075 December 24, 1915

TAKUTARU UYEHARA, plaintiff-appellee,

vs.
THE MANILA RAILROAD CO., defendant, and BACHRACH GARAGE & TAXICAB
CO., defendant-appellant.

D.R. Williams for appellant.

Rohde and Wright for appellees.

MORELAND, J.:

The three cases dealt with in this decision differ in their facts only with respect to the injury suffered
by the respective plaintiffs. The law applicable to them is the same and, at the request of counsel,
they will be decided at the same time. Plaintiffs claim damages against both the railroad and the
garage company because of injuries suffered by them in a collision between a train owned by and
operated over tracks belonging to the railroad company and an automobile the property of the
Bachrach Garage & Taxicab Co.

On January 2, 1913, the plaintiffs, together with three companions, hired an automobile from the
defendant taxicab company for a trip to Cavite Viejo. The automobile was secured at a certain price
hour and was driven and controlled by a chauffeur supplied by the taxicab company. The journey to
Cavite Viejo was made without incident but, on the return trip, while crossing the tracks of defendant
railroad company in the barrio of San Juan, municipality of Cavite Viejo, the automobile was struck
by a train and the plaintiffs injured.

The trial court dismissed the complaint on the merits as to the Manila Railroad Company and held
the defendant taxicab company liable for damages to the plaintiffs in various amounts. The taxicab
company appealed.

It appears from the record, and was found by the trial court, that the driver of the automobile drove
his machine upon the railroad tracks without observing the precautions which ordinary care and
prudence would require, without reducing speed and without taking any precaution looking to
determining whether there was danger from a train or locomotive. The trial court accordingly found
that the driver was guilty of gross negligence and that said negligence was the proximate cause of
the accident. It also found that the driver had been, in effect, instructed by the taxicab company to
approach and pass over railroad tracks in the manner and form followed and observed on the
occasion in question, and that, for that reason, the taxicab company was liable for the damages
caused.

Several errors are assigned by the appellant. The first one relates to the finding of the trial court:
"That the driver of the automobile did not slacken speed, which was fast, upon approaching the
railroad crossing, which was clearly visible and had to be approached on an upward grade, or take
any other precaution to avert accident. ... and I can but conclude that the driver of the automobile
was grossly negligent and careless in not taking such precaution as would have notified him of the
coming of the train. On the contrary, he proceeded with reckless speed and regardless of possible or
threatened danger. If he had been driving the automobile at a proper rate of speed for going over
railroad crossing he could easily have stopped before going over the railroad crossing after seeing
the train."

The argument of the appellant which is devoted to this findings seems to admit impliedly at least that
the driver of the automobile maintained his rate of speed as he approached and went upon the
railroad crossing; and that he took no precaution to ascertain the approach of a train.1awphil.net

The appellant contended on the trial and offered evidence to prove that, on approaching the railroad
crossing from the direction in which the automobile was travelling at the time, the view of the railroad
tracks in both directions was obstructed by bushes and trees growing alongside thereof, and that it
was impossible for a person approaching the crossing even though on guard, to detect by sight the
approach of a train. If that were the case, it was clearly the duty of the driver to reduce the speed of
his car and the noise thereof to such an extent that he would be able to determine from the
unrestricted and uninterrupted use of all his faculties whether or not a train was near. It is the law
that a person must use ordinary care and prudence in passing over a railroad crossing. While we are
not prepared to lay down any absolute rule as to what precise acts of precaution are necessary to be
done or left undone by a person who may have need to pass over a railroad crossing, we may say
that it is always incumbent on him to use ordinary care and diligence. What acts are necessary to
constitute such care and diligence must depend on the circumstances of each particular case. The
degree of care differs in different cases. Greater care is necessary in crossing a road where the cars
are running at a high rate of speed and close together than where they are running at less speed
and remote from one another. But in every case due care should be exercised. It is very possible
that where, on approaching a crossing, the view of the tracks in both directions is unobstructed for
such a distance as to render it perfectly safe to pass over without the use of any other faculty than
sight, such use alone is sufficient and it is not necessary to stop or even to slacken speed or listen.
On the other hand, where the view of the tracks is obstructed, them it is driver's duty to slacken
speed, to reduce the noise, if any, of the vehicle, to look and to listen, if necessary, or do any other
act necessary to determine that a train is not in dangerous proximity to the crossing.

In the case at bar the appellant's own showing is to the effect that the view of the track in the
direction from which the train was coming was obstructed in such manner that neither the track nor a
train could be seen as a traveler approached the crossing; and yet, in spite of that fact, the chauffeur
drove upon the tracks without investigation or precaution of any kind. The very fact that a train was
approaching and was so near as to collide with the automobile is strong evidence of the fact that no
precautions were taken to determine that fact. It is undoubted that if the driver had taken the
simplest means of permitting his own faculties to exercise themselves fairly, there would have been
no accident, as the presence of the train would have been discovered in an instant; but he chose,
rather, to give his senses no opportunity to protect him or his passengers and drove on the track at
full speed with all the noise which an automobile produces at such speed on an upgrade and the
sense of hearing impaired by the rush of the wind. Railroad trains rarely pass over tracks without
noise and their presence, generally speaking, is easily detected by persons who take ordinary
precautions.

Under this assignment the appellant's main effort is being to the demonstration of the fact that there
was a custom established among automobile drivers of Manila by which they habitually drove their
cars over railroad crossings in the manner in which the automobile was driven by defendant's
servant on the occasion in controversy. To prove that custom counsel presents the evidence of the
president of the defendant company, Mr. Bachrach, who testified on the trial that all of his drivers,
including the one in charge of the car on the night of the accident, operated cars in that manner and
that it was the custom among automobile drivers generally. Counsel also cites the testimony of the
witness Palido, living near the scene of the accident, who testified that, as a general rule,
automobiles passed over the railroad crossing without changing speed. This testimony was
corroborated by the defendant company's driver who had the automobile in charge at the time of the
occurrence. Basing himself on this alleged custom counsel contends that "When a person does what
is usual and customary, i. e., proceeds as he and others engaged in a like occupation have been
accustomed to proceed, the action cannot be characterized as reckless, nor, strictly speaking as
negligent." To this the obvious reply may be made, for the moment admitting the existence of the
custom, that a practice which is dangerous to human life cannot ripen into a custom which will
protect anyone who follows it. To go upon a railroad crossing without making any effort to ascertain
the approach of a train is so hazardous an act and one so dangerous to life, that no one may be
permitted to excuse himself who does it, provided injury result. One who performs an act so
inherently dangerous cannot, when an accident occurs, take refuge behind the plea that others have
performed the same act safely.

Under the second error assigned, the appellant contends with much vigor that the plaintiffs cannot
recover for the reason that the negligence of the driver of the automobile, if any, was imputable to
them, they having permitted the driver to approach and pass over the railroad crossing without the
use of ordinary care and diligence to determine the proximity of a train or locomotive, and having
made no effort to caution or instruct him or compel him to take reasonable care in making the
crossing. With this contention we cannot agree. We think the better rule, and one more consonant
with the weight of authority, is that a person who hires a public automobile and gives the driver
direction as to the place to which he wishes to be conveyed, but exercise no other control over the
conduct of the driver, is not responsible for acts of negligence of the latter or prevented from
recovering for injuries suffered from a collision between the automobile and a train, caused by the
negligence either of the locomotive engineer or the automobile driver. (Little vs. Hackett, 116 U.S.,
366.) The theory on which the negligence of the driver has in some instances been imputed to the
occupant of the vehicle is that, having trusted the driver by selecting the particular conveyance, the
plaintiff so far identified himself with the owner and his servants that, in case of injury resulting from
their negligence, he was considered a party thereto. This was the theory upon which the case of
Thorogood vs. Bryan (8 C.B., 115) was decided, which is the leading case in favor of the principle
contended for by appellant. The Supreme Court of the United States, however, in Little vs. Hackett
(116 U.S., 366), had this to say concerning the ground on which the Thorogood case was decided:
"The truth is, the decision in Thorogood vs. Bryan rests upon indefensible ground. The identification
of the passenger with the negligent driver or the owner, without his personal cooperation or
encouragement, is a gratuitous assumption. There is no such identity. The parties are not in the
same position. The owner of public conveyance is a carrier, and the driver or the servant of the
passenger, and his asserted identity with them is contradicted by the daily experience of the world."

Further discussing the same question the court said: "There is no distinction in principle whether the
passenger be on public conveyance like a railroad train or an omnibus, or be on a hack hired from a
public stand in the street for a drive. Those on a hack do not become responsible for the negligence
of the driver if they exercise no control over him further than to indicate the route they wish to travel
or the places to which they wish to go. If he is their agent so that his negligence can be imputed to
them to prevent their recovery against a third party, he must be their agent in all other respects, so
far as the management of the carriage is concerned, and responsibility to third parties would attach
to them for injuries caused by his negligence in the course of his employment. But, as we have
already stated, responsibility cannot, within any recognized rules of law, be fastened upon one who
has in no way interfered with and the with and controlled in the matter causing the injury. From the
simple fact of hiring the carriage or riding in it no such liability can arise. The party hiring or riding
must in some way have cooperated in producing the injury complained of before he incur any liability
for it. 'If the law were otherwise,' as said by Mr. Justice Depue in his elaborate opinion in the latest
case in New Jersey, 'not only the hirer of the coach but also all the passengers in it would be under a
constraint to mount the box and superintend the conduct of the driver in the management and
control of his team, or be put for remedy exclusively to an action against the irresponsible driver or
equally irresponsible owner of a coach taken, it may be, from a coach stand, for the consequences
of an injury which was the product of the cooperating wrongful acts of the driver and of a third
person, and that too, though the passengers were ignorant of the character of the driver, and of the
responsibility of the owner of the team, and strangers to the route over which they were to be
carried.' (New York, Lake Erie & Western Railroad vs. Steinbrenner, 47 N.J.L. [18 Vroom], 161,
171.)"

We are of the opinion, therefore, that the rule is as we have stated it. Ordinarily where one rides in
public vehicle with the driver thereof and is injured by the negligence of a third person, to which
negligence that of the driver contributes his contributory negligence is not imputable to the
passenger unless said passenger has or is in the position to have and exercise some control over
the driver with reference to the matter wherein he was negligent. Whether the person injured
exercises any control over the conduct of the driver further than to indicate the place to which he
wishes to drive is a question of fact to be determined by the trial court on all of the evidence in the
case. (Duval vs. Railroad Co., 134 N. C., 331; Hampel vs. Detroit etc. R. R. Co., 110 Am. St. Rep.,
275; Cotton vs. Willmar etc. R. R. Co., 99 Minn., 366; Shultz vs. Old Colony Street Ry. Co., 193
Mass., 309; Wilson vs. Puget Sound Elec. Ry. Co., 52 Wash., 522; Johnson vs. Coey, 237 Ill., 88;
Hindu vs. Steere, 209 Mass. 442.)

The appellant assigns as the third error the finding of the trial court "that the defendant Manila
Railroad Company was not guilty of negligence which contributed to the causing of the accident
complained of."

In this connection it appears that, prior to the beginning of the action now before us, two actions
were instituted, both growing out of the accident which forms the basis of the actions before us: (1) A
criminal action against the engineer of the train, in which the engineer was acquitted; and (2) a civil
action for damages by the garage and taxicab company, the appellant herein, against the defendant
railroad company, for damages to the automobile which was destroyed as a result of the accident, in
which judgment was for defendant. There is evidence in the record showing that the locomotive
engineer gave due and timely signals on approaching the crossing in question. The trial court found
that the employees of the railroad company fully performed their duty as the train approached the
crossing on the night in question and that, therefore, the railroad company in nowise contributed to
the accident. We do not believe that the record will justify us in a reversal of this finding. There is
abundant evidence to support it and we have nothing before us by which that evidence may be
impeached. That the bell was rung and the whistle was blown on nearing the crossing, giving due
and timely warning to all persons approaching, was testified to not only by servants of the
corporation but by passengers on the train. We find nothing in the record which materially impairs
the credibility of these witnesses or to show that their evidence is improbable or unreasonable; and
we would be going far under such circumstances in discarding it and reversing a judgment based
thereon.

The appellant under this assignment of error presents other facts which he claims show necessarily
that the company was negligent. He asserts: "(1) That this accident occurred in the heart of the
barrio of San Juan (Cavite Viejo), within approximately one hundred meters of the railroad station,
that is, in a populous community; (2) that the railroad company did not maintain either a flagman or
protecting gates at the grade crossing where the accident occurred, while the sign "Railroad
Crossing" was broken on the side toward the road; (3) that trees and undergrowth had been
permitted to grow on and adjoining the right of way and houses were constructed thereon, in such
manner as to obstruct the view of persons approaching the railroad track until within a few meters
thereof; and (4) that the approach to the crossing is twisting, and on either side thereof are ditches
about two meters deep."

With respect to the existence of trees and undergrowth on the railroad company's right of way, the
evidence is conflicting, plaintiff maintaining and attempting to prove that such trees and undergrowth
existed, while defendant company contended and offered evidence to show that no such growth
existed at the time of the accident. On this conflict of evidence the trial court found: "Evidence on the
part of the defendant Bachrach Garage & Taxicab Co. is to the effect that the view from the crossing
along the track towards Manila was obstructed by bushes growing on the railroad right to way along
the track, while the preponderance of the evidence discloses that for a distance of twelve or fifteen
meters from the a view of the track for a considerable distance is wholly unobstructed, and I can but
conclude that the driver of the unobstructed, and I can but conclude that the driver of the automobile
was grossly negligent and careless in not taking such precaution as would have notified him of the
coming of the train. On the contrary, he proceeded with reckless speed and regardless of possible or
threatened danger."

Here again we are met with a contradiction in the evidence of witnesses who, so far as appears, are
equally entitled to credit, which conflict has been resolved by the trial court in favor of the witnesses
for the defendant railroad company. Counsel for appellant has failed to give any reason why we
should we should accept the testimony of appellant's witnesses rather than those of the railroad
company and he has also neglected to point out any error committed by the trial court in making its
finding in this regard. A careful examination of the record discloses no reason why the judgment of
the trial court on this point should be disturbed, there appearing nothing on which we could base a
judgment declaring that the trial court erred in making its decision.

As to the other facts set forth on which appellant predicates negligence on the part of the railroad
company, we find them, even if admitted, to be insufficient to establish negligence. It is not
negligence on the part of the railroad company to maintain grade crossing, even in populous district;
nor is it negligence not to maintain a flagman at such crossing. It is true that a railroad company is
held to greater caution in the more thronged streets of the densely populated portions of the city than
in the less frequented streets in suburban parts or in towns; but this does not mean that it is
negligence to maintain grade crossing in such densely populated portions or that it is negligence not
to maintain a flagman at crossings located in such districts. It simply means that the company in
operating its trains over such crossings must exercise care commensurate with the use of crossings
in any given locality.

The main contention of the appellant is based on the claim that, even admitting as proved all of the
facts alleged by the plaintiffs, the appellant is not liable. It is maintained that up to the time the
accident occurred the defendant taxicab company had fully performed its duty to the public, it being
undisputed in the record that the driver was competent and had a long and satisfactory record,
having driven cars for the defendant for 5 or 6 years without accident or misadventure, and that his
negligence, if any, in attempting to pass over the crossing on the occasion before us, cannot legally
be imputed to the taxicab company so as to make it liable for the damages resulting therefrom. In
supporting of this argument the case of Johnson vs. David (5 Phil., Rep., 663), is cited as
determinative of the question under consideration. The appellant, however, having denied the fact of
negligence, we might, before entering on a discussion of the applicability of the principles enunciated
in Johnson vs. David to the facts before us, repeat what we have already said, that it appears from
the record, and was found by the trial court, that the driver of the automobile drove his machine upon
the railroad tracks without observing the precautions which ordinary care and prudence would have
required. He made substantially no effort toward ascertaining whether there was danger from a train
or locomotive. The trial court found, as was quite necessary under the facts, that the driver was
guilty of gross negligence and that such negligence was the proximate cause of the accident. It also
found that the taxicab company had permitted its drivers to approach and pass over railroad tracks
in the manner and form followed and observed on the occasion in question until it had become a
custom among its drivers, known and sanctioned by the company; and that, for that reason, the
taxicab company was liable for the damages caused. We are of the opinion that the trial court is fully
supported in the finding that the conduct of the officials of the taxicab company, and notably the
president thereof, amounted, in law, to a sanction of the custom established among its automobile
drivers in passing over railroad crossings. Counsel is met, therefore, at the opening of his discussion
on this branch of the case, with the question: Did the defendant taxicab company fully discharge its
duty when it furnished a suitable and proper car and selected driver who had been with the company
for 5 or 6 years and who had not had an accident or misadventure before? We think not. It was the
duty of the company not only to furnish a suitable and proper car and select a competent operator,
but also to supervise and, where necessary, instruct him properly.

Returning now to the applicability of the case of Johnson vs. David to the facts before us:

The Civil Code, in dealing with the liability of a master for the negligent acts of his servant, makes a
distinction between private individuals and public enterprises. (Art. 1903, Civil Code.) That article,
together with the preceding article, is as follows:
itc-a1f

ART 1902. 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.

ART. 1903. The obligation imposed by the preceding article is demandable, not only for
personal acts and omissions, but also for 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.

Guardians are liable for the damages caused by minors or incapacitated persons who are
under their authority and live with them.

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 on account of their duties.

The State is liable in this sense when it acts through a special agent, but not when the
damage should have been caused by the official to whom properly it pertained to do the act
performed, in which case the provisions of the proceeding article shall be applicable.

Finally, master or directors of arts and trades are liable for the damages caused by their
pupils or apprentices while they are under their custody.
 The liability referred to in this articles 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.

These two articles are found under chapter 2, title 16, of the Civil Code, dealing with "obligations
which arise from fault or negligence;" and set out the cases, generally speaking, in which the master
is liable for the acts of his servant. That chapter also contains articles providing for liability for
negligent acts of servants in special cases, among them 1905, which provides that "the possessor of
an animal, or the one who uses it, is liable for the damages it may cause even when said animal
escapes from him or strays," but that this liability shall cease "in the case the damage should arise
from force majeure or from the fault of the person who may have suffered it;" 1906, which declares
that "the owner of a game preserve shall be liable for damages caused by the game to neighboring
estates, should he not have done what may have been necessary to avoid increase of the same or
should he have hindered the efforts of the owners of said estates to hunt;" 1907, which provides for
the liability of the owner of a building "for damages which may result from the collapse of the whole
or a part thereof, if it should occur through the absence of necessary repairs;" 1908, which states
that "owners shall be liable for damages caused by the explosion of machines which may not have
been cared for with due diligence, and been placed in a safe and proper place;" "by excessive
smoke, which may be noxious to persons of property;" "by the fall of trees, located in places of
transit, when not caused by force majeure;" "by the emanations of sewers or deposits of infectious
matters, when constructed without precautions proper for the place where they are located;" and "the
head of a family who dwells in a house, or in a part of the same, is liable for the damages by the
things which may be thrown or which may fall therefrom."

These are the only cases under the Civil Code in which damages may be recovered from the master
for the negligent of his servant. As is seen from a reading of article 1903, a person being driven
about by his servant's negligent acts except under certain circumstances. (Chapman vs. Underwood,
27 Phil., Rep., 374; Johnson vs. David, supra.) On the other hand, 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.

The distinction made in the Code has been observed, as would naturally be expected, by the
decisions of this court. In the case of Johnson vs. David, supra, we held that the defendant was not
liable for the acts of his servant in negligently driving a horse and carriage against plaintiff, who was
at the time riding a bicycle in the streets of Manila, throwing him to the ground and injuring him and
his bicycle. It appeared in that case that the vehicle was owned by the defendant, that it was being
driven by the defendant's coachman on the private affairs of the owner, that it was not a public
conveyance driven for hire or as a part of a business or enterprise. In that case we said: "It would
seem, from an examination of these various provisions, that the obligation to respond for the
negligent acts of another was limited to the particular cases mentioned; in other words, we are of the
opinion and so hold that it was the intention of the legislature in enacting said chapter 2 to
enumerate all the persons for whose negligent acts third persons are responsible. Article 1902
provides when a person himself is liable for negligence. Articles 1903, 1904, 1905, 1906, 1907,
1908, and 1910 provide when a person shall be liable for injuries caused, not by his own negligence
but by the negligence of other persons or things.

xxx xxx xxx

These sections do not include a liability on the part of the plaintiff for injuries resulting from acts of
negligence such as are complained of in the present cause . . . ."

These case of Chapman vs. Underwood, (27 Phil., Rep., 374) was similar in its facts and the
principles governing it, to that of Johnson vs. David. In that case the plaintiff, while about to board a
street car, was struck by an automobile which, at the time, was being driven on the wrong side of the
street. The automobile was in charge of the servant of the owner, who was present in the automobile
at the time the accident occurred. The automobile was not a part of defendant's business nor was it
being used at the time as a part or adjunct of any business or enterprise owned or conducted by
him. Although the act of the driver was negligent, and was so declared by this court, it was,
nevertheless, held that the master was not liable for the results of the act. We said:

The defendant, however, is not responsible for the negligence of his driver, under the facts
and circumstances of this case. As we have said in the case of Johnson vs. David (5 Phil.,
Rep., 663), the driver does not fall within the list of person in article 1903 of the Civil Code for
whose acts the defendant would be responsible.
 Although in the David case the owner of the vehicle was not present at the time the alleged
negligent acts were committed by the driver, the same rule applies where the owner is
present, unless the negligent acts of the driver are continued for such a length of time as to
give the owner a reasonable opportunity to observe them and to direct his driver to desist
therefrom. An owner who sits in his automobile, or other vehicle, and permits his driver to
continue in a violation of the law by the performance of negligent acts, after he has had a
reasonable opportunity to observe them and to direct that the driver, becomes himself
responsible for such acts. The owner of an automobile who permits his chauffeur to drive up
the Escolta, for example, at a speed of 60 miles an hour, without any effort to stop him,
although he has had a reasonable opportunity to do so, becomes himself responsible, both
criminally and civilly, for the results produced by the acts of his chauffeur. On the other hand,
if the driver, by a sudden act of negligence, and without the owner having a reasonable
opportunity to prevent the act or its continuance, injures a person or violates the criminal law,
the owner of the automobile, although present therein at the time the act was committed, is
not responsible, either civilly or criminally, therefor. The act complained of must be continued
in the presence of the owner for such a length of time that the owner, by his acquiescence,
makes his driver's act his own.

In the case before us it does not appear from the record that, from the time the automobile
took the wrong side of the road to the commission of the injury, sufficient time intervened to
afford the defendant an opportunity correct the act of his driver. Instead, it appears with fair
clearness that the interval between the turning out to meet and pass the street car and the
happening of the accident was so short as not to be sufficient to charge defendant with the
negligence of the driver.

The case of Bahia vs. Litonjua and Leynes (30 Phil., Rep., 624), was a case of a different character.
There an automobile was being operated by the defendant as a public vehicle carrying passengers
from Balayan to Tuy (Province of Batangas) and return for hire. On one to the trips, the machine, by
reason of a defect in the steering gear, refused to respond to the guidance of the driver and, as a
result a child was run over and killed. That case, as is seem at a glance, is quite different from the
case of Johnson vs. David and that of Chapman vs. Underwood, in that the automobile was
operated as a business or enterprise on which the defendant had entered for gain; and this is the
particular distinction which is made in article 1903 of the Civil Code which holds the masters
responsible for the negligent acts of the servant when the master is the owner "of an establishment
or enterprise," and the acts complained of are committed within the scope of the servant's
employment in such business. In the case under discussion we held that, in addition to the
requirement to furnish and use proper and safe machines, it was the duty of a person or corporation
operating automobiles for hire to exercise ordinary care and diligence in the selection of the drivers
of his or its automobiles and in supervision over them while in his or its employ, including the
promulgation of proper rules and regulations and the formulation and due publication of proper
instructions for their guidance in cases where such rules, regulations and the formulation and due
publication of proper instructions for their guidance in cases where such rules, regulations and
instruction are necessary. Discussion article 1903 of the Civil Code, which, as we have seen, not
only established liability in case of negligence but also provides when that liability ceases, the court
in that case said:

From this article two things are apparent: (1) That when an injury is caused by the
negligence of a servant or employee there instantly arises a presumption of law that there
was negligence on the part of the master or employer either in the selection of the selection
of the servant or employee or in supervision over him after the selection, or both; and (2) that
that presumption is juris tantum and not juris et de jure and consequently may be rebutted. It
follows necessarily that if the employer shows to the satisfaction of the court that in selection
and supervision he has exercised the care and diligence of a good father of a family, the
presumption is overcome and he is relieved from liability.

This theory bases the responsibility of the master ultimately on his own negligence and not
on that of his servant. This is the notable peculiarity of the Spanish law of negligence. It is, of
course, in striking contrast to the American doctrine that, in relations with strangers, the
negligence of the servant is conclusively the negligence of the master.

In the case before us the death of the child caused by a defect in the steering gear of the
automobile immediately raised the presumption that Leynes was negligent in selecting a
defective automobile or in his failure to maintain it in good condition after selection and the
 burden of proof was on him to show that he had exercised the care of a good father of a
family.

In that case we further said: "From the commencement of the use of the machine until the accident
occurred sufficient time had not elapsed to require an examination of the machine by the defendant
as a part of his duty of inspection and supervision. While it does not appear that the defendant
formulated rules and regulations for the guidance of the drivers and gave them proper instructions,
designed for the protection of the public and the passengers, the evidence shows, as we have seen,
that the death of the child was not caused by a failure to promulgate rules and regulations. It was
caused by a defect in the machine as to which the defendant has shown himself free from
responsibility."

We, therefore, see that taxicab company did not perform its full duty when it furnished a safe and
proper car and a driver with a long and satisfactory record. It failed to comply with one of the
essential requirements of the law of negligence in this jurisdiction, that of supervision and instruction,
including the promulgation of proper rules and regulations and the formulation and publication of
proper instructions for their guidance in cases where such rules and regulations and instructions are
necessary. To repeat, it was found by the trial court, and that finding is fully sustained by the record,
that it was the custom of the driver who operated the machine on the night of the accident, to
approach and pass over railroad crossings without adequate precautions, and that such custom was
known to and had been sanctioned by the officials of the taxicab company, the president of the
company testifying that none of its drivers, especially the one who operated the car on the night of
the accident, were accustomed to stop or even reduce speed or take any other precaution in
approaching and passing over railroad crossings, no matter of what nature, unless they heard "the
signal of a car." He testified that he himself had ridden behind several of his drivers, among them the
one who handled the automobile on the night of the accident, and that it was settled practice, to
which he made no objection and as to which he gave no instructions, to approach and pass over
railroad crossings without any effort to ascertain the proximity of a train. These facts and
circumstances bring the case within the doctrine enunciated in the Litonjua case to which reference
has already been made, and, at the same time, remove it from that class of cases governed by
Johnson vs. David. Not only has the defendant taxicab company failed to rebut the presumption of
negligence arising from the carelessness of its servant, but it has, in effect, made those negligent
acts its own by having observed and known the custom of its drivers without disapproving it and
without issuing instructions designed to supersede it.

We are of the opinion that the trial court erred in fixing the amount of damages which the plaintiffs
suffered. Under the law, each of the plaintiffs, is entitled to recover the time, doctors' bills and
hospital bills and hospital bills and medicines, and any other item of expense which it was found
necessary to undergo by reason of the damages sustained.

The plaintiff Butaro Yamada is entitled to be reimbursed for his hospital bill of P49, for the P50 which
he paid to Dr. Strahan, and for the loss of time which he suffered at the rate of P100 a month. The
trial court allowed him for certain alleged fees of doctors and expenses in hospitals and at hot
springs in Japan. He was also allowed P150 alleged by him to have been paid to a Japanese doctor
in Manila. We do not believe that the record warrants these allowances. As to the expenses in
Japan, we may say that the injury occurred to plaintiff on the 2nd of January and he remained in
Manila for nearly 6 months before going to Japan. According to the testimony of Dr. Strahan the
plaintiff was in good physical condition long before he left this country for Japan. His testimony is to
the effect that the plaintiff suffered no permanent injuries, the damage being limited to temporary
shocks and bruises, and that he would be ready for his usual occupation in about 3 months.
According to plaintiff's own testimony he went back to work 2 months after the injury, but, claiming
he still felt pains, went to Japan. We do not believe that we ought to accept the plaintiff's bare
statement as to his physical condition after leaving the Philippine Islands in defiance of the testimony
of Dr. Strahan as to his physical condition 3 months after the injury was received and particularly in
view of the fact that he returned to work at the end of 2 months. As to the P150 alleged to have been
paid to a Japanese doctor in Manila, we have grave doubts whether he had sufficiently proved that
item of expenditure. He does not give the name of the physician to whom he paid the money and he
presents no receipt or voucher from the person whom he paid. He made no memorandum of the
payment at the time or of the person to whom he paid it or of the date on which it was paid. All of his
testimony relating to the items which constitute his damage was based on a memorandum made
from memory on the morning of the trial. It seems to us that where the sources of knowledge are to
so large an extent within the knowledge and control of the person who presents the evidence, he
should be held rather strictly to presenting the best evidence that the circumstances permit. If he had
offered the Japanese doctor as a witness or if he had even produced receipts from him, the matter
would have borne quite a different aspect.

We are accordingly of the opinion that the judgment in favor of this plaintiff should consist simply of
the loss of time, amounting to 2 months at P100 a month, his hospital bill of P49 and his doctor's bill
of P50, in all P299, with costs.

With respect to the plaintiff Takutaru Uyehara, the judgment in his favor must be also modified.
Concerning his condition we have substantially the same testimony by the same doctor that we had
in the case of Yamada. There were no permanent injuries. The plaintiff suffered merely from shock
and bruises. He was quite recovered in 3 months. It appears that he was earning P200 a month at
the time of his injury and that his hospital expense, including attendance of a physician, was P350.
We are satisfied from the record that he is entitled to P600 for 3 months' loss of wages and to P350
for hospital expenses and medical attendance. As to the claim for P150 paid to a Japanese doctor,
we have in substance the same circumstances found in connection with the claim of the plaintiff
Yamada, — no name, no date, no memorandum, no receipt; nothing but the testimony of the plaintiff
himself based upon date prepared from memory. It is worthy of note also that both this plaintiff and
plaintiff Yamada claim to have paid exactly the same amount to Japanese doctors in Manila.

Judgment is hereby rendered in favor of the plaintiff Takutaru Uyehara for the sum of P950, and
costs.

With respect to the judgment in favor of the plaintiff Kenjiro Karabayashi, we are clear that it must be
reduced in amount. This plaintiff was able, immediately after the accident occurred, to move about
readily an to assist his injured companions. He did not go to a hospital, or, so far as appeared,
consult a physician until some time after the accident. He alleges that he paid to Japanese doctors
P310 and to massage doctors P130, and that he paid P365 for medicines. The injury was received
on the 2d of January, 1913, and this caution was commenced in October of the same year. It seem
to us incredible that the plaintiff, who suffered and suffers from no physical injury testified to by any
physician, should have paid out during that time more than P800 for medicines and doctors. That
sum exceeds the sums claimed to have been paid out by the other plaintiffs, who were so badly
injured that they were carried in a semiconscious condition to the hospital and were unable to move
without assistance for some days.

This plaintiff complains of loss of memory as the only result of his injuries and claims that he is
unable to obtain a salary equivalent to that which he was receiving before the accident. He presents
no evidence of such loss of memory except his own statement, his physical condition at the time of
the trial being apparently perfect and there being at that time no evidence, as he himself admitted, of
loss of memory. He presented no doctor to testify as to services rendered, indeed, he does not even
furnish the name of the person to whom the money was paid, and he shows no receipts and
produces no evidence except his own statement with respect to the amount paid out for medicines.
We believe that, under this testimony, no damages should be allowed to this plaintiff except possibly
salary for the short period during which, by reason of shock, he may have been unable to render
active service. He testified that he lost two and one-half months' time, during which he did not work
at all, and that his services were worth P160 a month.

The judgment of the Court of First Instance with respect to this plaintiff, Kenjiro Karabayashi, is
modified and judgment in his favor and against the Bachrach Garage & Taxicab Co. for P400 is
hereby decreed, with costs.

It may be urged that the reductions in the amounts allowed the several plaintiffs by the trial court are
arbitrary, the evidence as to the damages sustained being uncontradicted and the trial court having
based its judgment thereon. It is clear, however, that we are in no way interfering with the rule so
many times laid down by this court that we will not interfere with the judgment of the trial court as to
the credibility of witnesses except where it appears that the court overlooked or misapplied facts or
circumstances of weight and influence appearing in the case. Here the trial court seems to have
overlooked those facts and circumstances top which we have adverted and which we have made the
basis of the modification. It nowhere appears in the decision of the trial court or elsewhere in the
record that it took any of those facts and circumstances into consideration. So ordered.
No. 2

G.R. No. 169891 November 2, 2006

PHILIPPINE NATIONAL RAILWAYS, Petitioner,

vs.
ETHEL BRUNTY and JUAN MANUEL M. GARCIA, Respondents.

DECISION

CALLEJO, SR., J.:

This is a Petition for Review on Certiorari of the Decision1 of the Court of Appeals (CA) in CA-G.R.
CV No. 47567 and its Resolution2 denying the motion for reconsideration thereof. The assailed
decision affirmed with partial modification the ruling3 of the Regional Trial Court (RTC) of Manila,
Branch 20, directing petitioner Philippine National Railways (PNR) to indemnify respondents Ethel
Brunty and Juan Manuel M. Garcia for the death of Rhonda Brunty, and to pay actual and moral
damages, attorney’s fees and cost of suit.

Rhonda Brunty, daughter of respondent Ethel Brunty and an American citizen, came to the
Philippines for a visit sometime in January 1980. Prior to her departure, she, together with her
Filipino host Juan Manuel M. Garcia, traveled to Baguio City on board a Mercedes Benz sedan with
plate number FU 799, driven by Rodolfo L. Mercelita. It was about 12:00 midnight, January 25, 1980.
By then, PNR Train No. T-71, driven by Alfonso Reyes, was on its way to Tutuban, Metro Manila4 as
it had left the La Union station at 11:00 p.m., January 24, 1980.

By 2:00 a.m., Rhonda Brunty, Garcia and Mercelita were already approaching the railroad crossing
at Barangay Rizal, Moncada, Tarlac. Mercelita, driving at approximately 70 km/hr, drove past a
vehicle, unaware of the railroad track up ahead and that they were about to collide with PNR Train
No. T-71. Mercelita was instantly killed when the Mercedes Benz smashed into the train; the two
other passengers suffered serious physical injuries.5 A certain James Harrow6 brought Rhonda
Brunty to the Central Luzon Doctor’s Hospital in Tarlac, where she was pronounced dead after ten
minutes from arrival. Garcia, who had suffered severe head injuries, was brought via ambulance to
the same hospital. He was transferred to the Manila Doctor’s Hospital, and later to the Makati
Medical Center for further treatment.7

On July 28, 1981, Ethel Brunty sent a demand letter8 to the PNR demanding payment of actual,
compensatory, and moral damages, as a result of her daughter’s death. When PNR did not respond,
Ethel Brunty and Garcia, filed a complaint9 for damages against the PNR before the RTC of Manila.
The case was raffled to Branch 20 and was docketed as Civil Case No. 83-18645. They alleged that
the death of Mercelita and Rhonda Brunty, as well as the physical injuries suffered by Garcia, were
the direct and proximate result of the gross and reckless negligence of PNR in not providing the
necessary equipment at the railroad crossing in Barangay Rizal, Municipality of Moncada, Tarlac.
They pointed out that there was no flagbar or red light signal to warn motorists who were about to
cross the railroad track, and that the flagman or switchman was only equipped with a hand
flashlight.10 Plaintiffs likewise averred that PNR failed to supervise its employees in the performance
of their respective tasks and duties, more particularly the pilot and operator of the train.11 They
prayed for the payment of the following damages:

1.) ₱200,000.00 as actual and compensatory damages to plaintiff Ethel Brunty;

2.) ₱2,800,000.00 for compensatory damages to plaintiff Ethel Brunty representing lost or
unearned income of Rhonda Brunty;

3.) Such amounts of moral and exemplary damages as may be warranted by the evidence
adduced, to plaintiff Ethel Brunty;

4.) At least ₱64,057.61 as actual damages representing medical expenses to plaintiff Juan
Manuel M. Garcia and at least ₱1,000,000.00 as unearned or lost income of said plaintiff;
 5.) At least ₱72,760.00 as actual damages representing cost of the Mercedes Benz car to
plaintiff Juan Manuel M. Garcia;

6.) Such amounts of moral and exemplary damages as may be warranted by the evidence
adduced, to plaintiff Juan Manuel M. Garcia; and

7.) Attorney’s fees equivalent to at least 15% of the total award to plaintiffs herein.12

In its Answer,13 PNR claimed that it exercised the diligence of a good father of a family not only in the
selection but also in the supervision of its employees.14 By way of special and affirmative defense, it
stressed that it had the right of way on the railroad crossing in question, and that it has no legal duty
to put up a bar or red light signal in any such crossing. It insisted that there were adequate, visible,
and clear warning signs strategically posted on the sides of the road before the railroad crossing. It
countered that the immediate and proximate cause of the accident was Mercelita’s negligence, and
that he had the last clear chance to avoid the accident. The driver disregarded the warning signs, the
whistle blasts of the oncoming train and the flashlight signals to stop given by the guard.15 As
counterclaim, it prayed that it be awarded actual and compensatory damages, and litigation
expenses.16

Plaintiffs filed an Amended Complaint17 dated July 28, 1986 to include, as party plaintiff, Chemical
Industries of the Philippines, Inc. (Chemphil), Garcia’s employer, who claimed to have paid for the
latter’s medical and hospitalization expenses, the services rendered by the funeral parlor of the
deceased, and the expenses in transferring the remains of Rhonda Brunty to the United States.18

After trial on the merits, the RTC rendered its Decision19 on May 21, 1990 in favor of plaintiffs. The
fallo reads:

WHEREFORE, judgment is hereby rendered in favor of the plaintiffs Ethel Brunty and Juan Manuel
M. Garcia and against the defendant Philippine National Railways directing the latter to pay the
former the sum of:

1. Thirty Thousand Pesos (₱30,000.00) Philippine Currency, for the death of Rhonda Brunty
formerly a resident of 1595 Ashland Avenue, Des Plaines, Illinois, U.S.A.;

2. One Million Pesos (₱1,000,000.00) Philippine Currency for moral and actual damages due
the heirs of Rhonda Brunty;

3. Seventy-Two Thousand Seven Hundred Sixty Pesos (₱72,760.00) Philippine Currency for
damages sustained by the Mercedes Benz;

4. Fifty Thousand Pesos (₱50,000.00) Philippine Currency as and for attorney's fees, and;

5. Costs of suit.

SO ORDERED.20

Aggrieved, the PNR appealed the case to the CA, raising the following errors:

I.

THE TRIAL COURT ERRED IN ADJUDGING DEFENDANT-APPELLANT PNR LIABLE FOR

THE DEATH OF RHONDA BRUNTY AND THE CONSEQUENT AWARD OF DAMAGES
DUE THE HEIRS OF RHONDA BRUNTY.

II.

THE TRIAL COURT ERRED IN ADJUDGING DEFENDANT-APPELLANT PNR LIABLE FOR

THE DAMAGES SUFFERED BY PLAINTIFF-APPELLEE’S MERCEDES BENZ IN THE
AMOUNT OF SEVENTY-TWO THOUSAND SEVEN HUNDRED AND SIXTY PESOS
(₱72,760.00).

III.
 THE LOWER COURT ERRED IN AWARDING ATTORNEY’S FEES TO THE PLAINTIFFS-
APPELLEES.21

In its Brief, PNR insisted that the sole and proximate cause of the accident was the negligence and
recklessness of Garcia and Mercelita.22 It insisted that it had provided adequate warning signals at
the railroad crossing23 and had exercised due care in the selection and supervision of its
employees.24 The RTC erred in awarding damages to Rhonda Brunty as she cannot be allowed to
receive what she is not in a position to give, having been a non-resident alien who did not own a
property in the Philippines.25 It likewise questioned the award of damages on the Mercedes Benz as
well as the grant of attorney’s fees.26 At the very least, Mercelita was guilty of contributory
negligence.27

For their part, appellees countered that appellant was grossly and recklessly negligent in not
properly providing the necessary equipment at the railroad crossing in Rizal, Moncada,
Tarlac;28 appellant was negligent in not exercising due diligence of a good father of a family in the
supervision of its employees, particularly the train operator Alfonso Reyes;29 the car was driven in a
careful and diligent manner, and at a moderate speed, with due regard to all traffic rules and
regulations at that particular time;30 the doctrine of "last clear chance" is not applicable;31 Ethel
Brunty is a non-resident alien who can rightfully file the instant case;32 and they are entitled to
recover damages from appellant.33

The CA rendered the assailed Decision34 on August 15, 2005. The dispositive portion reads:

WHEREFORE, premises considered, the assailed decision is hereby AFFIRMED with PARTIAL
MODIFICATIONS, increasing the death indemnity award from ₱30,000.00 to ₱50,000.00, and
deleting the award for damages sustained by the Mercedes Benz.

SO ORDERED.35

The appellate court affirmed the findings of the RTC as to the negligence of the PNR. Considering
the circumstances prevailing at the time of the fatal accident, it ruled that the alleged safety
measures installed by the PNR at the railroad crossing were not merely inadequate – they did not
satisfy the well-settled safety standards in transportation.36 However, the CA did not agree with the
RTC’s findings on the contributory negligence of Mercelita, the driver of the Mercedes Benz. It held
that Mercelita could not have foreseen the harm that would befall him and the two other passengers
under the prevailing circumstances, thus, could not be considered guilty of contributory negligence.37

The PNR, now petitioner, comes before this Court in this Petition for Review on Certiorari on the
following grounds:

I.

THE COURT OF APPEALS ERRED IN MANIFESTLY OVERLOOKING CERTAIN RELEVANT

FACTS NOT DISPUTED BY THE PARTIES AND WHICH, IF PROPERLY CONSIDERED, WOULD
JUSTIFY A DIFFERENT CONCLUSION SUCH AS:

THE RESPONDENTS’ DRIVER OVERTOOK ANOTHER VEHICLE BY ACCELERATING AT 70

KILOMETERS PER HOUR WITHIN JUST 50 YARDS AWAY FROM THE RAILROAD TRACKS.

II.

THE FINDINGS OF FACT OF THE COURT OF APPEALS ARE CONTRARY TO THOSE OF THE
TRIAL COURT REGARDING CONTRIBUTORY NEGLIGENCE OF THE RESPONDENTS’ DRIVER.

III.

THE COURT OF APPEALS ERRED IN NOT APPLYING THE DOCTRINE OF LAST CLEAR
CHANCE IN THE INSTANT CASE.38

Petitioner insists that the proximate cause of the mishap was Mercelita’s disregard of traffic rules
and regulations. Had the court considered the fact that Mercelita had overtaken another vehicle a
few yards before the railroad track, it would have reached a different conclusion.39 Moreover,
petitioner asserts, considering that the decisions of the RTC and the CA vary as to whether or not
Mercelita was guilty of contributory negligence, the findings of the RTC should prevail. Thus,
Mercelita’s contributory negligence should not have been ignored.40 Lastly, petitioner avers that
since there is freedom of control and greater maneuverability on the part of motor vehicles, it is
obvious that in railroad crossings, they have the last clear chance to prevent or avoid an unwanted
accident from taking place.41

In their Comment42 on the petition, respondents reiterate the findings of the RTC and the CA that the
breach by petitioner of its legal duty to provide adequate and necessary public safety device and
equipment within the area or scene of the accident was the proximate cause of the mishap.43 While it
is true that as a general rule, the trial court is in the best position to evaluate and observe the
conduct and demeanor of the witnesses presented during the trial, the CA, in the exercise of its
appellate jurisdiction, has the vested right to modify, reject, or set aside the trial court’s evaluation
and findings.44 As to the application of the doctrine of last clear chance, respondents claim that said
issue is being raised for the first time in this petition.45 Lastly, respondents cite foreign jurisprudence
stating that if the violation is one which gives rise to liability per se for any resulting injury, the
defenses ordinarily available in actions for diligence are barred and the contributory negligence of
the person injured is no defense.46

The Court is thus tasked to answer the following factual questions: (1) As between petitioner and
Mercelita, whose negligence resulted in the unfortunate collision? (2) Is Mercelita (the driver of the
Mercedes Benz) guilty of contributory negligence? Finally, the application in this case of the doctrine
of last clear chance is likewise in question.

Negligence is the omission to do something which a reasonable man, guided by those

considerations which ordinarily regulate the conduct of human affairs, would do, or the doing of
something which a prudent and reasonable man would not do.47 In Corliss v. Manila Railroad
Company,48 this Court held that 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.49 In
determining whether or not there is negligence on the part of the parties in a given situation,
jurisprudence50 has laid down the following test: Did defendant, in doing the alleged negligent act,
use that reasonable care and caution which an ordinarily prudent person would have used in the
same situation? If not, the person is guilty of negligence. The law, in effect, adopts the standard
supposed to be supplied by the imaginary conduct of the discreet pater familias of the Roman law.

The issue of who, between the parties, was negligent was thoroughly discussed by both the RTC
and the CA. In petitions for review under Rule 45 of the Revised Rules of Court, only questions of
law may be put into issue, and questions of fact as a general rule, cannot be entertained. The finding
of negligence by the RTC, as affirmed by the CA, is a question of fact which this Court cannot pass
upon as it would entail going into factual matters on which the finding of negligence was
based.51 The established rule is that factual findings of the CA affirming those of the trial court are
conclusive and binding on this Court.52

The records of the instant case show that both the RTC and the CA carefully examined the factual
circumstances surrounding the case, and we find no cogent reason to disturb the same. It is,
however, worthy to emphasize that petitioner was found negligent because of its failure to provide
the necessary safety device to ensure the safety of motorists in crossing the railroad track. As such,
it is liable for damages for violating the provisions of Article 2176 of the New Civil Code, viz:

Article 2176. Whoever, by act or omission, causes damage to another, there being fault or
negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-
existing contractual relation between the parties, is called a quasi-delict and is governed by the
provisions of this Chapter.

In a long line of cases, the Court held that in order to sustain a claim based on quasi-delict, the
following requisites must concur: (1) damage to plaintiff; (2) negligence, by act or omission, of which
defendant, or some person for whose acts he must respond was guilty; and (3) connection of cause
and effect between such negligence and damage.53 Applying the foregoing requisites, the CA
correctly made the following conclusions:

It was clearly established that plaintiffs-appellees (respondents herein) sustained damage or injury
as a result of the collision. That there was negligence on the part of PNR is, likewise, beyond cavil.
Considering the circumstances prevailing at the time of the fatal accident, the alleged safety
measures installed by the PNR at the railroad crossing is not only inadequate but does not satisfy
well-settled safety standards in transportation. x x x

xxxx

x x x An examination of the photographs of the railroad crossing at Moncada, Tarlac presented as

evidence by PNR itself would yield the following: (1.) absence of flagbars or safety railroad bars; (2.)
inadequacy of the installed warning signals; and (3.) lack of proper lighting within the area. Thus,
even if there was a flagman stationed at the site as claimed by PNR (petitioner), it would still be
impossible to know or see that there is a railroad crossing/tracks ahead, or that there is an
approaching train from the Moncada side of the road since one’s view would be blocked by a cockpit
arena. x x x54

Moreover, the CA held that a vehicle coming from the Moncada side would have difficulty in knowing
that there is an approaching train because of the slight curve, more so, at an unholy hour as 2:00
a.m. Thus, it is imperative on the part of the PNR to provide adequate safety equipment in the area.55

It may broadly be stated that railroad companies owe to the public a duty of exercising a reasonable
degree of care to avoid injury to persons and property at railroad crossings, which duties pertain
both in the operation of trains and in the maintenance of the crossings.56 Moreover, every
corporation constructing or operating a railway shall make and construct at all points where such
railway crosses any public road, good, sufficient, and safe crossings and erect at such points, at a
sufficient elevation from such road as to admit a free passage of vehicles of every kind, a sign with
large and distinct letters placed thereon, to give notice of the proximity of the railway, and warn
persons of the necessity of looking out for trains.57

This Court has previously determined the liability of the PNR for damages for its failure to put a cross
bar, or signal light, flagman or switchman, or semaphores. Such failure is evidence of negligence
and disregard of the safety of the public, even if there is no law or ordinance requiring it because
public safety demands that said device or equipment be installed.58

In view of the foregoing, we affirm the factual findings of the CA as well as its conclusion on
petitioner’s negligence.

As to whether or not Mercelita was guilty of contributory negligence, we agree with petitioner.
Contributory negligence is conduct on the part of the injured party, contributing as a legal cause to
the harm he has suffered, which falls below the standard to which he is required to conform for his
own protection.59 To hold a person as having contributed to his injuries, it must be shown that he
performed an act that brought about his injuries in disregard of warning or signs of an impending
danger to health and body.60 To prove contributory negligence, it is still necessary to establish a
causal link, although not proximate, between the negligence of the party and the succeeding injury.
In a legal sense, negligence is contributory only when it contributes proximately to the injury, and not
simply a condition for its occurrence.61

The court below found that there was a slight curve before approaching the tracks; the place was not
properly illuminated; one’s view was blocked by a cockpit arena; and Mercelita was not familiar with
the road. Yet, it was also established that Mercelita was then driving the Mercedes Benz at a speed
of 70 km/hr and, in fact, had overtaken a vehicle a few yards before reaching the railroad track.
Mercelita should not have driven the car the way he did. However, while his acts contributed to the
collision, they nevertheless do not negate petitioner’s liability. Pursuant to Article 217962 of the New
Civil Code, the only effect such contributory negligence could have is to mitigate liability, which,
however, is not applicable in this case, as will be discussed later.
1âwphi1

As to whether or not the doctrine of last clear chance is applicable, we rule in the negative. The
doctrine of last clear chance states that where both parties are negligent but the negligent act of one
is appreciably later than that of the other, or where it is impossible to determine whose fault or
negligence caused the loss, the one who had the last clear opportunity to avoid the loss but failed to
do so, is chargeable with the loss. Stated differently, the antecedent negligence of plaintiff does not
preclude him from recovering damages caused by the supervening negligence of defendant, who
had the last fair chance to prevent the impending harm by the exercise of due diligence.63 The
proximate cause of the injury having been established to be the negligence of petitioner, we hold
that the above doctrine finds no application in the instant case.
We note that the damages awarded by the appellate court consist of (1) ₱50,000.00 as indemnity for
the death of Rhonda Brunty; (2) ₱1,000,000.00 as actual and moral damages due the heirs of
Rhonda Brunty; and (3) ₱50,000.00 as and by way of attorney’s fees. No damages, however, were
awarded for the injuries suffered by Garcia, yet, the latter never interposed an appeal before the CA
nor even before this Court. The record is, likewise, bereft of any allegation and proof as to the
relationship between Mercelita (the driver) and Rhonda Brunty. Hence, the earlier finding of
contributory negligence on the part of Mercelita, which generally has the effect of mitigation of
liability, does not apply.

As to the amount of damages awarded, a modification of the same is in order, specifically on the
award of actual and moral damages in the aggregate amount of ₱1,000,000.00.

Actual or compensatory damages are those awarded in order to compensate a party for an injury or
loss he suffered. They arise out of a sense of natural justice, aimed at repairing the wrong done. To
be recoverable, they must be duly proved with a reasonable degree of certainty. A court cannot rely
on speculation, conjecture, or guesswork as to the fact and amount of damages, but must depend
upon competent proof that they have suffered, and on evidence of the actual amount
thereof.64 Respondents, however, failed to present evidence for such damages; hence, the award of
actual damages cannot be sustained. However, as the heirs of Rhonda Brunty undeniably incurred
expenses for the wake and burial of the latter, we deem it proper to award temperate damages in the
amount of ₱25,000.00 pursuant to prevailing jurisprudence.65 This is in lieu of actual damages as it
would be unfair for the victim’s heirs to get nothing, despite the death of their kin, for the reason
alone that they cannot produce receipts.66

The relatives of the victim who incurred physical injuries in a quasi-delict are not proscribed from
recovering moral damages in meritorious cases.67 We, therefore, sustain the award of moral
damages in favor of the heirs of Rhonda Brunty.

Moral damages are not punitive in nature, but are designed to compensate and alleviate in some
way the physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded
feelings, moral shock, social humiliation, and similar injury unjustly caused a person. Although
incapable of pecuniary computation, moral damages must nevertheless be somehow proportional to
and in approximation of the suffering inflicted.68 In the instant case, the moral suffering of the heirs of
Rhonda Brunty was sufficiently established by Ethel Brunty in her deposition,69 viz:

Q: What have you felt as a result of the death of Rhonda?

A: I felt earnest anguish and mixed feelings of anger and extreme sorrow because she died so far
away and alone, and because her death could so easily be prevented if there had been adequate
and appropriate warning signals at the railroad crossing and it is just an unbearable and irreparable
loss. In so many ways, she was my life. It seemed to me that losing her was just like losing my own
life, or worst, and even now, there is no end to our bereavement. I am still on constant medication to
be able to sleep and to be able to perform my duties effectively in my job but it does not take away
the pain of loss.70

In People v. Teehankee, Jr.,71 and in Metro Manila Transit Corporation v. Court of Appeals,72 we
awarded moral damages in the amount of ₱1,000,000.00 to the heirs of the deceased. In Victory
Liner, Inc. v. Heirs of Malecdan,73the award of ₱100,000.00 as moral damages was held in keeping
with the purpose of the law, while in Macalinao v. Ong,74 the amount of ₱50,000.00 was held
sufficient.
1âw phi 1

Considering the circumstances attendant in this case, we find that an award of ₱500,000.00 as
moral damages to the heirs of Rhonda Brunty is proper. In view of recent jurisprudence, indemnity of
₱50,000.00 for the death of Rhonda Brunty and attorney’s fees amounting to ₱50,000.00 is likewise
proper.

WHEREFORE, premises considered, the Decision of the Court of Appeals dated August 15, 2005 is
AFFIRMED WITH MODIFICATIONS. The award of actual damages is deleted, and in lieu thereof,
temperate damages of ₱25,000.00 is awarded to the heirs of Rhonda Brunty. The award of moral
damages is reduced to ₱500,000.00.

SO ORDERED.
No. 3

G.R. No. 168512 March 20, 2007

ORLANDO D. GARCIA, JR., doing business under the name and style COMMUNITY
DIAGNOSTIC CENTER and BU CASTRO,1 Petitioners,
vs.
RANIDA D. SALVADOR and RAMON SALVADOR, Respondents.

DECISION

YNARES-SANTIAGO, J.:

This is a petition for review2 under Rule 45 of the Rules of Court assailing the February 27, 2004
Decision3 of the Court of Appeals in CA-G.R. CV No. 58668 finding petitioner Orlando D. Garcia
liable for gross negligence; and its June 16, 2005 Resolution4 denying petitioner’s motion for
reconsideration.

On October 1, 1993, respondent Ranida D. Salvador started working as a trainee in the Accounting
Department of Limay Bulk Handling Terminal, Inc. (the Company). As a prerequisite for regular
employment, she underwent a medical examination at the Community Diagnostic Center (CDC).
Garcia who is a medical technologist, conducted the HBs Ag (Hepatitis B Surface Antigen) test and
on October 22, 1993, CDC issued the test result5 indicating that Ranida was "HBs Ag: Reactive."
The result bore the name and signature of Garcia as examiner and the rubber stamp signature of
Castro as pathologist.

When Ranida submitted the test result to Dr. Sto. Domingo, the Company physician, the latter
apprised her that the findings indicated that she is suffering from Hepatitis B, a liver disease. Thus,
based on the medical report6submitted by Sto. Domingo, the Company terminated Ranida’s
employment for failing the physical examination.7

When Ranida informed her father, Ramon, about her ailment, the latter suffered a heart attack and
was confined at the Bataan Doctors Hospital. During Ramon’s confinement, Ranida underwent
another HBs Ag test at the said hospital and the result8 indicated that she is non-reactive. She
informed Sto. Domingo of this development but was told that the test conducted by CDC was more
reliable because it used the Micro-Elisa Method.

Thus, Ranida went back to CDC for confirmatory testing, and this time, the Anti-HBs test conducted
on her indicated a "Negative" result.9

Ranida also underwent another HBs Ag test at the Bataan Doctors Hospital using the Micro-Elisa
Method. The result indicated that she was non-reactive.10

Ranida submitted the test results from Bataan Doctors Hospital and CDC to the Executive Officer of
the Company who requested her to undergo another similar test before her re-employment would be
considered. Thus, CDC conducted another HBs Ag test on Ranida which indicated a "Negative"
result.11 Ma. Ruby G. Calderon, Med-Tech Officer-in-Charge of CDC, issued a Certification
correcting the initial result and explaining that the examining medical technologist (Garcia)
interpreted the delayed reaction as positive or reactive.12

Thereafter, the Company rehired Ranida.

On July 25, 1994, Ranida and Ramon filed a complaint13 for damages against petitioner Garcia and
a purportedly unknown pathologist of CDC, claiming that, by reason of the erroneous interpretation
of the results of Ranida’s examination, she lost her job and suffered serious mental anxiety, trauma
and sleepless nights, while Ramon was hospitalized and lost business opportunities.

On September 26, 1994, respondents amended their complaint14 by naming Castro as the "unknown
pathologist."

Garcia denied the allegations of gross negligence and incompetence and reiterated the scientific
explanation for the "false positive" result of the first HBs Ag test in his December 7, 1993 letter to the
respondents.15

For his part, Castro claimed that as pathologist, he rarely went to CDC and only when a case was
referred to him; that he did not examine Ranida; and that the test results bore only his rubber-stamp
signature.

On September 1, 1997,16 the trial court dismissed the complaint for failure of the respondents to
present sufficient evidence to prove the liability of Garcia and Castro. It held that respondents should
have presented Sto. Domingo because he was the one who interpreted the test result issued by
CDC. Likewise, respondents should have presented a medical expert to refute the testimonies of
Garcia and Castro regarding the medical explanation behind the conflicting test results on Ranida.17

Respondents appealed to the Court of Appeals which reversed the trial court’s findings, the
dispositive portion of which states:

WHEREFORE, the decision appealed from is REVERSED and SET ASIDE and another one entered
ORDERING defendant-appellee Orlando D. Garcia, Jr. to pay plaintiff-appellant Ranida D. Salvador
moral damages in the amount of P50,000.00, exemplary damages in the amount of P50,000.00 and
attorney’s fees in the amount of P25,000.00.

SO ORDERED.18

The appellate court found Garcia liable for damages for negligently issuing an erroneous HBs Ag
result. On the other hand, it exonerated Castro for lack of participation in the issuance of the results.

After the denial of his motion for reconsideration, Garcia filed the instant petition.

The main issue for resolution is whether the Court of Appeals, in reversing the decision of the trial
court, correctly found petitioner liable for damages to the respondents for issuing an incorrect
HBsAG test result.

Garcia maintains he is not negligent, thus not liable for damages, because he followed the
appropriate laboratory measures and procedures as dictated by his training and experience; and that
he did everything within his professional competence to arrive at an objective, impartial and
impersonal result.

At the outset, we note that the issues raised are factual in nature. Whether a person is negligent or
not is a question of fact which we cannot pass upon in a petition for review on certiorari which is
limited to reviewing errors of law.19

Negligence is the failure to observe for the protection of the interest of another person that degree of
care, precaution and vigilance which the circumstances justly demand,20 whereby such other person
suffers injury. For health care providers, the test of the existence of negligence is: did the health care
provider either fail to do something which a reasonably prudent health care provider would have
done, or that he or she did something that a reasonably prudent health care provider would not have
done; and that failure or action caused injury to the patient;21 if yes, then he is guilty of negligence.

Thus, the elements of an actionable conduct are: 1) duty, 2) breach, 3) injury, and 4) proximate
causation.

All the elements are present in the case at bar.

Owners and operators of clinical laboratories have the duty to comply with statutes, as well as rules
and regulations, purposely promulgated to protect and promote the health of the people by
preventing the operation of substandard, improperly managed and inadequately supported clinical
laboratories and by improving the quality of performance of clinical laboratory examinations.22 Their
business is impressed with public interest, as such, high standards of performance are expected
from them.

In F.F. Cruz and Co., Inc. v. Court of Appeals, we found the owner of a furniture shop liable for the
destruction of the plaintiff’s house in a fire which started in his establishment in view of his failure to
comply with an ordinance which required the construction of a firewall. In Teague v. Fernandez, we
stated that where the very injury which was intended to be prevented by the ordinance has
happened, non-compliance with the ordinance was not only an act of negligence, but also the
proximate cause of the death.23

In fine, violation of a statutory duty is negligence. Where the law imposes upon a person the duty to
do something, his omission or non-performance will render him liable to whoever may be injured
thereby.

Section 2 of Republic Act (R.A.) No. 4688, otherwise known as The Clinical Laboratory Law,
provides:

Sec. 2. It shall be unlawful for any person to be professionally in-charge of a registered clinical
laboratory unless he is a licensed physician duly qualified in laboratory medicine and authorized by
the Secretary of Health, such authorization to be renewed annually.

No license shall be granted or renewed by the Secretary of Health for the operation and
maintenance of a clinical laboratory unless such laboratory is under the administration, direction and
supervision of an authorized physician, as provided for in the preceding paragraph.

Corollarily, Sections 9(9.1)(1), 11 and 25(25.1)(1) of the DOH Administrative Order No. 49-B Series
of 1988, otherwise known as the Revised Rules and Regulations Governing the Registration,
Operation and Maintenance of Clinical Laboratories in the Philippines, read:

Sec. 9. Management of the Clinical Laboratory:

9.1 Head of the Clinical Laboratory: The head is that person who assumes technical and
administrative supervision and control of the activities in the laboratory.

For all categories of clinical laboratories, the head shall be a licensed physician certified by the
Philippine Board of Pathology in either Anatomic or Clinical Pathology or both provided that:

(1) This shall be mandatory for all categories of free-standing clinical laboratories; all tertiary
category hospital laboratories and for all secondary category hospital laboratories located in areas
with sufficient available pathologist.

xxxx

Sec. 11. Reporting: All laboratory requests shall be considered as consultations between the
requesting physician and pathologist of the laboratory. As such all laboratory reports on various
examinations of human specimens shall be construed as consultation report and shall bear the
name of the pathologist or his associate. No person in clinical laboratory shall issue a report, orally
or in writing, whole portions thereof without a directive from the pathologist or his authorized
associate and only to the requesting physician or his authorized representative except in
emergencies when the results may be released as authorized by the pathologist.

xxxx

Sec. 25. Violations:

25.1 The license to operate a clinical laboratory may be suspended or revoked by the
Undersecretary of Health for Standards and Regulation upon violation of R.A. 4688 or the rules and
regulations issued in pursuance thereto or the commission of the following acts by the persons
owning or operating a clinical laboratory and the persons under their authority.
(1) Operation of a Clinical Laboratory without a certified pathologist or qualified licensed physician
authorized by the Undersecretary of Health or without employing a registered medical technologist
or a person not registered as a medical technologist in such a position.

And Section 29(b) of R.A. No. 5527, otherwise known as The Philippine Medical Technology Act of
1969, reads:

Section 29. Penal Provisions.- Without prejudice to the provision of the Medical Act of 1959, as
amended relating to illegal practice of Medicine, the following shall be punished by a fine of not less
than two thousand pesos nor more than five thousand pesos, or imprisonment for not less than six
months nor more than two years, or both, in the discretion of the court:

xxxx

(b) Any medical technologist, even if duly registered, who shall practice medical technology in the
Philippines without the necessary supervision of a qualified pathologist or physician authorized by
the Department of Health;

From the foregoing laws and rules, it is clear that a clinical laboratory must be administered, directed
and supervised by a licensed physician authorized by the Secretary of Health, like a pathologist who
is specially trained in methods of laboratory medicine; that the medical technologist must be under
the supervision of the pathologist or a licensed physician; and that the results of any examination
may be released only to the requesting physician or his authorized representative upon the direction
of the laboratory pathologist.

These rules are intended for the protection of the public by preventing performance of substandard
clinical examinations by laboratories whose personnel are not properly supervised. The public
demands no less than an effective and efficient performance of clinical laboratory examinations
through compliance with the quality standards set by laws and regulations.

We find that petitioner Garcia failed to comply with these standards.

First, CDC is not administered, directed and supervised by a licensed physician as required by law,
but by Ma. Ruby C. Calderon, a licensed Medical Technologist.24 In the License to Open and
Operate a Clinical Laboratory for the years 1993 and 1996 issued by Dr. Juan R. Nañagas, M.D.,
Undersecretary for Health Facilities, Standards and Regulation, defendant-appellee Castro was
named as the head of CDC.25 However, in his Answer with Counterclaim, he stated:

3. By way of affirmative and special defenses, defendant pathologist further avers and plead as
follows:

Defendant pathologist is not the owner of the Community Diagnostic Center nor an employee of the
same nor the employer of its employees. Defendant pathologist comes to the Community Diagnostic
Center when and where a problem is referred to him. Its employees are licensed under the Medical
Technology Law (Republic Act No. 5527) and are certified by, and registered with, the Professional
Regulation Commission after having passed their Board Examinations. They are competent within
the sphere of their own profession in so far as conducting laboratory examinations and are allowed
to sign for and in behalf of the clinical laboratory. The defendant pathologist, and all pathologists in
general, are hired by laboratories for purposes of complying with the rules and regulations and
orders issued by the Department of Health through the Bureau of Research and Laboratories.
Defendant pathologist does not stay that long period of time at the Community Diagnostic Center but
only periodically or whenever a case is referred to him by the laboratory. Defendant pathologist does
not appoint or select the employees of the laboratory nor does he arrange or approve their
schedules of duty.26

Castro’s infrequent visit to the clinical laboratory barely qualifies as an effective administrative
supervision and control over the activities in the laboratory. "Supervision and control" means the
authority to act directly whenever a specific function is entrusted by law or regulation to a
subordinate; direct the performance of duty; restrain the commission of acts; review, approve, revise
or modify acts and decisions of subordinate officials or units.27

Second, Garcia conducted the HBsAG test of respondent Ranida without the supervision of
defendant-appellee Castro, who admitted that:
[He] does not know, and has never known or met, the plaintiff-patient even up to this time nor has he
personally examined any specimen, blood, urine or any other tissue, from the plaintiff-patient
otherwise his own handwritten signature would have appeared in the result and not merely stamped
as shown in Annex "B" of the Amended Complaint.28

Last, the disputed HBsAG test result was released to respondent Ranida without the authorization of
defendant-appellee Castro.29

Garcia may not have intended to cause the consequences which followed after the release of the
HBsAG test result. However, his failure to comply with the laws and rules promulgated and issued
for the protection of public safety and interest is failure to observe that care which a reasonably
prudent health care provider would observe. Thus, his act or omission constitutes a breach of duty.

Indubitably, Ranida suffered injury as a direct consequence of Garcia’s failure to comply with the
mandate of the laws and rules aforequoted. She was terminated from the service for failing the
physical examination; suffered anxiety because of the diagnosis; and was compelled to undergo
several more tests. All these could have been avoided had the proper safeguards been scrupulously
followed in conducting the clinical examination and releasing the clinical report.

Article 20 of the New Civil Code provides:

Art. 20. Every person who, contrary to law, willfully or negligently causes damage to another, shall
indemnify the latter for the same.

The foregoing provision provides the legal basis for the award of damages to a party who suffers
damage whenever one commits an act in violation of some legal provision.30 This was incorporated
by the Code Commission to provide relief to a person who suffers damage because another has
violated some legal provision.31

We find the Court of Appeals’ award of moral damages reasonable under the circumstances bearing
in mind the mental trauma suffered by respondent Ranida who thought she was afflicted by Hepatitis
B, making her "unfit or unsafe for any type of employment."32 Having established her right to moral
damages, we see no reason to disturb the award of exemplary damages and attorney’s fees.
Exemplary damages are imposed, by way of example or correction for the public good, in addition to
moral, temperate, liquidated or compensatory damages,33 and attorney’s fees may be recovered
when, as in the instant case, exemplary damages are awarded.34

WHEREFORE, the Decision of the Court of Appeals in CA-G.R. CV No. 58668 dated February 27,
2004 finding petitioner Orlando D. Garcia, Jr. guilty of gross negligence and liable to pay to
respondents ₱50,000.00 as moral damages, ₱50,000.00 as exemplary damages, and ₱25,000.00
as attorney’s fees, is AFFIRMED.

SO ORDERED.
No. 4

G.R. No. 158995 September 26, 2006

L.G. FOODS CORPORATION and VICTORINO GABOR, Vice-President and General

Manager, petitioners,
vs.
HON. PHILADELFA B. PAGAPONG-AGRAVIADOR, in her capacity as Presiding Judge of
Regional Trial Court, Branch 43, Bacolod City, and SPS. FLORENTINO and THERESA
VALLEJERA, respondents.

DECISION

GARCIA, J.:

Assailed and sought to be set aside in this petition for review on certiorari is the Decision1 dated April
25, 2003 of the Court of Appeals (CA), as reiterated in its Resolution of July 10, 2003,2 in CA-G.R.
SP No. 67600, affirming an earlier Order of the Regional Trial Court (RTC) of Bacolod City, Branch
43, which denied the petitioners' motion to dismiss in Civil Case No. 99-10845, an action for
damages arising from a vehicular accident thereat instituted by the herein private respondents - the
spouses Florentino Vallejera and Theresa Vallejera - against the petitioners.

The antecedent facts may be briefly stated as follows:

On February 26, 1996, Charles Vallereja, a 7-year old son of the spouses Florentino Vallejera and
Theresa Vallejera, was hit by a Ford Fiera van owned by the petitioners and driven at the time by
their employee, Vincent Norman Yeneza y Ferrer. Charles died as a result of the accident.

In time, an Information for Reckless Imprudence Resulting to Homicide was filed against the driver
before the Municipal Trial Court in Cities (MTCC), Bacolod City, docketed as Criminal Case No.
67787, entitled People of the Philippines v. Vincent Norman Yeneza.

Unfortunately, before the trial could be concluded, the accused driver committed suicide, evidently
bothered by conscience and remorse. On account thereof, the MTCC, in its order of September 30,
1998, dismissed the criminal case.

On June 23, 1999, in the RTC of Bacolod City, the spouses Vallejera filed a complaint3 for damages
against the petitioners as employers of the deceased driver, basically alleging that as such
employers, they failed to exercise due diligence in the selection and supervision of their employees.
Thereat docketed as Civil Case No. 99-10845, the complaint was raffled to Branch 43 of the court.

In their Answer with Compulsory Counterclaim,4 the petitioners as defendants denied liability for the
death of the Vallejeras' 7-year old son, claiming that they had exercised the required due diligence in
the selection and supervision of their employees, including the deceased driver. They thus prayed in
their Answer for the dismissal of the complaint for lack of cause of action on the part of the Vallejera
couple.

During pre-trial, the defendant petitioners insisted that their dismissal prayer be resolved. Hence, the
trial court required them to file within ten days a memorandum of authorities supportive of their
position.

Instead, however, of the required memorandum of authorities, the defendant petitioners filed
a Motion to Dismiss, principally arguing that the complaint is basically a "claim for subsidiary liability
against an employer" under the provision of Article 1035 of the Revised Penal Code. Prescinding
therefrom, they contend that there must first be a judgment of conviction against their driver as a
condition sine qua non to hold them liable. Ergo, since the driver died during the pendency of the
criminal action, the sine qua non condition for their subsidiary liability was not fulfilled, hence the of
lack of cause of action on the part of the plaintiffs. They further argue that since the plaintiffs did not
make a reservation to institute a separate action for damages when the criminal case was filed, the
damage suit in question is thereby deemed instituted with the criminal action. which was already
dismissed.

In an Order dated September 4, 2001,6 the trial court denied the motion to dismiss for lack of merit
and set the case for pre-trial. With their motion for reconsideration having been denied by the same
court in its subsequent order7 of September 26, 2001, the petitioners then went on certiorari to
the CA in CA-G.R. SP No. 67600, imputing grave abuse of discretion on the part of the trial judge in
refusing to dismiss the basic complaint for damages in Civil Case No. 99-10845.

In the herein assailed decision8 dated April 25, 2003, the CA denied the petition and upheld the trial
court. Partly says the CA in its challenged issuance:

xxx xxx xxx

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

xxx xxx xxx

Specifically, Civil Case No. 99-10845 exacts responsibility for fault or negligence under Art.
2176, Civil Code, which is entirely separate and distinct from the civil liability arising from
negligence under the Revised Penal Code. Verily, therefore, the liability under Art. 2180,
Civil Code, is direct and immediate, and not conditioned upon prior recourse against the
negligent employee or prior showing of the latter's insolvency. (Underscoring in the original.)

In time, the petitioners moved for a reconsideration but their motion was denied by the CA in its
resolution9 of July 10, 2003. Hence, the petitioners' present recourse on their submission that the
appellate court committed reversible error in upholding the trial court's denial of their motion to
dismiss.

We DENY.

As the Court sees it, the sole issue for resolution is whether the spouses Vallejeras' cause of action
in Civil Case No. 99-10845 is founded on Article 103 of the Revised Penal Code, as maintained by
the petitioners, or derived from Article 218010 of the Civil Code, as ruled by the two courts below.

It thus behooves us to examine the allegations of the complaint for damages in Civil Case No. 99-
10845. That complaint alleged, inter alia, as follows:

xxx xxx xxx

3. That defendant [LG Food Corporation] is the registered owner of a Ford Fiera Van with
Plate No. NMS 881 and employer sometime February of 1996 of one Vincent Norman
Yeneza y Ferrer, a salesman of said corporation;

4. That sometime February 26, 1996 at around 2:00 P.M. at Rosario St., Bacolod City, the
minor son of said plaintiffs [now respondents], Charles Vallejera, 7 years old, was hit and
bumped by above-described vehicle then driven by said employee, Vincent Norman Yeneza
y Ferrer;

5. That the mishap was due to the gross fault and negligence of defendant's employee, who
drove said vehicle, recklessly, negligently and at a high speed without regard to traffic
condition and safety of other road users and likewise to the fault and negligence of the owner
employer, herein defendants LG Food Corporation who failed to exercise due diligence in the
selection and supervision of his employee, Vincent Norman Yeneza y Ferrer;
 6. That as a result of said incident, plaintiffs' son suffered multiple body injuries which led to
his untimely demise on that very day;

7. That a criminal case was filed against the defendant's employee, docketed as Criminal
Case No. 67787, (earlier filed as Crim. Case No. 96-17570 before RTC) before MTC-Branch
III, entitled "People v. Yeneza" for "Reckless Imprudence resulting to Homicide," but the
same was dismissed because pending litigation, then remorse-stricken [accused] committed
suicide;

xxx xxx xxx

8. That the injuries and complications as well as the resultant death suffered by the late
minor Charles Vallejera were due to the negligence and imprudence of defendant's
employee;

9. That defendant LG Foods Corporation is civilly liable for the negligence/imprudence

of its employee since it failed to exercise the necessary diligence required of a good
father of the family in the selection and supervision of his employee, Vincent Norman
Yeneza y Ferrer which diligence if exercised, would have prevented said
incident. (Bracketed words and emphasis ours.)

Nothing in the foregoing allegations suggests, even remotely, that the herein petitioners are being
made to account for their subsidiary liability under Article 103 of the Revised Penal Code. As
correctly pointed out by the trial court in its order of September 4, 2001 denying the
petitioners' Motion to Dismiss, the complaint did not even aver the basic elements for the subsidiary
liability of an employer under Article 103 of the Revised Penal Code, such as the prior conviction of
the driver in the criminal case filed against him nor his insolvency.

Admittedly, the complaint did not explicitly state that plaintiff Vallejeras were suing the defendant
petitioners for damages based on quasi-delict. Clear it is, however, from the allegations of the
complaint that quasi-delict was their choice of remedy against the petitioners. To stress, the plaintiff
spouses alleged in their complaint gross fault and negligence on the part of the driver and the failure
of the petitioners, as employers, to exercise due diligence in the selection and supervision of their
employees. The spouses further alleged that the petitioners are civilly liable for the
negligence/imprudence of their driver since they failed to exercise the necessary diligence required
of a good father of the family in the selection and supervision of their employees, which diligence, if
exercised, could have prevented the vehicular accident that resulted to the death of their 7-year old
son.

Section 2, Rule 2, of the 1997 Rules of Civil Procedure defines cause of action as the "act or
omission by which a party violates the right of another." Such act or omission gives rise to an
obligation which may come from law, contracts, quasi contracts, delicts or quasi-delicts.11

Corollarily, an act or omission causing damage to another may give rise to two separate civil
liabilities on the part of the offender, i.e., 1) civil liability ex delicto;12 and 2) independent civil
liabilities, such as those (a) not arising from an act or omission complained of as felony (e.g., culpa
contractual or obligations arising from law;13 the intentional torts;14 and culpa aquiliana15); or (b)
where the injured party is granted a right to file an action independent and distinct from the criminal
action.16 Either of these two possible liabilities may be enforced against the offender.17

Stated otherwise, victims of negligence or their heirs have a choice between an action to enforce the
civil liability arising from culpa criminal under Article 100 of the Revised Penal Code, and an action
for quasi-delict (culpa aquiliana) under Articles 2176 to 2194 of the Civil Code. If, as here, the action
chosen is for quasi-delict, the plaintiff may hold the employer liable for the negligent act of its
employee, subject to the employer's defense of exercise of the diligence of a good father of the
family. On the other hand, if the action chosen is for culpa criminal, the plaintiff can hold the
employer subsidiarily liable only upon proof of prior conviction of its employee.18

Article 116119 of the Civil Code provides that civil obligation arising from criminal offenses shall be
governed by penal laws subject to the provision of Article 217720 and of the pertinent provision of
Chapter 2, Preliminary Title on Human Relation, and of Title XVIII of this Book, regulating damages.
Plainly, Article 2177 provides for the alternative remedies the plaintiff may choose from in case the
obligation has the possibility of arising indirectly from the delict/crime or directly from quasi-delict/tort.
The choice is with the plaintiff who makes known his cause of action in his initiatory pleading or
complaint,21 and not with the defendant who can not ask for the dismissal of the plaintiff's cause of
action or lack of it based on the defendant's perception that the plaintiff should have opted to file a
claim under Article 103 of the Revised Penal Code.

Under Article 2180 of the Civil Code, the liability of the employer is direct or immediate. It is not
conditioned upon prior recourse against the negligent employee and a prior showing of insolvency of
such employee.22

Here, the complaint sufficiently alleged that the death of the couple's minor son was caused by the
negligent act of the petitioners' driver; and that the petitioners themselves were civilly liable for the
negligence of their driver for failing "to exercise the necessary diligence required of a good father of
the family in the selection and supervision of [their] employee, the driver, which diligence, if
exercised, would have prevented said accident."

Had the respondent spouses elected to sue the petitioners based on Article 103 of the Revised
Penal Code, they would have alleged that the guilt of the driver had been proven beyond reasonable
doubt; that such accused driver is insolvent; that it is the subsidiary liability of the defendant
petitioners as employers to pay for the damage done by their employee (driver) based on the
principle that every person criminally liable is also civilly liable.23 Since there was no conviction in the
criminal case against the driver, precisely because death intervened prior to the termination of the
criminal proceedings, the spouses' recourse was, therefore, to sue the petitioners for their direct and
primary liability based on quasi-delict.

Besides, it is worthy to note that the petitioners, in their Answer with Compulsory Counter-
Claim,24 repeatedly made mention of Article 2180 of the Civil Code and anchored their defense on
their allegation that "they had exercised due diligence in the selection and supervision of [their]
employees." The Court views this defense as an admission that indeed the petitioners
acknowledged the private respondents' cause of action as one for quasi-delict under Article 2180 of
the Civil Code.

All told, Civil Case No. 99-10845 is a negligence suit brought under Article 2176 - Civil Code to
recover damages primarily from the petitioners as employers responsible for their negligent driver
pursuant to Article 2180 of the Civil Code. The obligation imposed by Article 2176 is demandable not
only for one's own acts or omissions, but also for those of persons for whom one is responsible.
Thus, the employer is liable for damages caused by his employees and household helpers acting
within the scope of their assigned tasks, even though the former is not engaged in any business or
industry.

Citing Maniago v. CA,25 petitioner would argue that Civil Case No. 99-10845 should have been
dismissed for failure of the respondent spouses to make a reservation to institute a separate civil
action for damages when the criminal case against the driver was filed.

The argument is specious.

To start with, the petitioners' reliance on Maniago is obviously misplaced. There, the civil case was
filed while the criminal case against the employee was still pending. Here, the criminal case against
the employee driver was prematurely terminated due to his death. Precisely, Civil Case No. 99-
10845 was filed by the respondent spouses because no remedy can be obtained by them against
the petitioners with the dismissal of the criminal case against their driver during the pendency
thereof.

The circumstance that no reservation to institute a separate civil action for damages was made when
the criminal case was filed is of no moment for the simple reason that the criminal case was
dismissed without any pronouncement having been made therein. In reality, therefor, it is as if there
was no criminal case to speak of in the first place. And for the petitioners to insist for the conviction
of their driver as a condition sine qua non to hold them liable for damages is to ask for the
impossible.

IN VIEW WHEREOF, the instant petition is DENIED for lack of merit.

Costs against the petitioners.

SO ORDERED.
 QUASI-DELICT CASES
No. 5

G.R. No. L-48006 July 8, 1942

FAUSTO BARREDO, petitioner,

vs.
SEVERINO GARCIA and TIMOTEA ALMARIO, respondents.

Celedonio P. Gloria and Antonio Barredo for petitioner.

Jose G. Advincula for respondents.

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:

... We cannot agree to the defendant's contention. The liability sought to be imposed upon
him in this action is not a civil obligation arising from a felony or a misdemeanor (the crime of
Pedro Fontanilla,), but an obligation imposed in article 1903 of the Civil Code by reason of
his negligence in the selection or supervision of his servant or employee.

The pivotal question in this case is whether the plaintiffs may bring this separate civil action against
Fausto Barredo, thus making him primarily and directly, responsible under article 1903 of the Civil
Code as an employer of Pedro Fontanilla. The defendant maintains that Fontanilla's negligence
being punishable by the Penal Code, his (defendant's) liability as an employer is only subsidiary,
according to said Penal code, but Fontanilla has not been sued in a civil action and his property has
not been exhausted. To decide the main issue, we must cut through the tangle that has, in the minds
of many confused and jumbled together delitos and cuasi delitos, or crimes under the Penal Code
and fault or negligence under articles 1902-1910 of the Civil Code. This should be done, because
justice may be lost in a labyrinth, unless principles and remedies are distinctly envisaged.
Fortunately, we are aided in our inquiry by the luminous presentation of 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.

No. 6

G.R. No. L-35095 August 31, 1973

GERMAN C. GARCIA, LUMINOSA L. GARCIA, and ESTER FRANCISCO, petitioners,

vs.
THE HONORABLE MARIANO M. FLORIDO OF THE COURT OF FIRST INSTANCE OF MISAMIS
OCCIDENTAL, MARCELINO INESIN, RICARDO VAYSON, MACTAN TRANSIT CO., INC., and
PEDRO TUMALA Y DIGAL, respondents.

Paulino A. Conol for petitioners.

Dominador M. Canastra and Wilfredo C. Martinez for private respondents.

Hon. Mariano M. Florido for and in his own behalf.

ANTONIO, J.:

Appeal by certiorari from the decision of the Court of First Instance of Misamis Occidental, Branch
III, in Civil Case No. 2850 (German C. Garcia, et al. vs. Marcelino Inesin et al.) dated October 21,
1971, dismissing petitioners' action for damages against respondents, Mactan Transit Co., Inc. and
Pedro Tumala "without prejudice to refiling the said civil action after conviction of the defendants in
the criminal case filed by the Chief of Police of Sindangan Zamboanga del Norte", and from the
order of said Court dated January 21, 1972, denying petitioners' motion for reconsideration.

On August 4, 1971, petitioners, German C. Garcia, Chief of the Misamis Occidental Hospital,
together with his wife, Luminosa L. Garcia, and Ester Francisco, bookkeeper of said hospital, hired
and boarded a PU car with plate No. 241-8 G Ozamis 71 owned and operated by respondent,
Marcelino Inesin, and driven by respondent, Ricardo Vayson, for a round-trip from Oroquieta City to
Zamboanga City, for the purpose of attending a conference of chiefs of government hospitals,
hospital administrative officers, and bookkeepers of Regional Health Office No. 7 at Zamboanga
City. At about 9:30 a.m., while the PU car was negotiating a slight curve on the national highway at
kilometer 21 in Barrio Guisukan, Sindangan, Zamboanga del Norte, said car collided with an
oncoming passenger bus (No. 25) with plate No. 77-4 W Z.N. 71 owned and operated by the Mactan
Transit Co., Inc. and driven by defendant, Pedro Tumala. As a result of the aforesaid collision,
petitioners sustained various physical injuries which necessitated their medical treatment and
hospitalization.

Alleging that both drivers of the PU car and the passenger bus were at the time of the accident
driving their respective vehicles at a fast clip, in a reckless, grossly negligent and imprudent manner
in gross violation of traffic rules and without due regard to the safety of the passengers aboard the
PU car, petitioners, German C. Garcia, Luminosa L. Garcia, and Ester Francisco, filed on September
1, 1971 with respondent Court of First Instance of Misamis Occidental an action for damages (Civil
Case No. 2850) against the private respondents, owners and drivers, respectively, of the PU car and
the passenger bus that figured in the collision, with prayer for preliminary attachment.

On September 16, 1971, Marcelino Inesin and Ricardo Vayson filed their answer in the
aforementioned Civil Case No. 2850 admitting the contract of carriage with petitioners but alleged,
by way of defense, that the accident was due to the negligence and reckless imprudence of the bus
driver, as when Ricardo Vayson, driver of the PU car, saw the oncoming passenger bus No. 25
coming from the opposite direction ascending the incline at an excessive speed, chasing another
passenger bus, he had to stop the PU car in order to give way to the passenger bus, but, in spite of
such precaution, the passenger bus bumped the PU car, thus causing the accident in question, and,
therefore, said private respondents could not be held liable for the damages caused on petitioners.
On September 29, 1971, respondents, Mactan Transit Co., Inc. and Pedro Tumala, filed a motion to
dismiss on three (3) grounds, namely: 1) that the plaintiffs (petitioners) had no cause of action; 2)
that the complaint carries with it a prayer for attachment but without the requisite verification, hence
defective under the provision of Sec. 3, Rule 57 of the Rules of Court; and 3) that the defendants
(respondents), Mactan Transit Co., Inc. and its driver, accused Pedro Tumala, had operated said
passenger bus with maximum care and prudence.

The principal argument advanced in said motion to dismiss was that the petitioners had no cause of
action for on August 11, 1971, or 20 days before the filing of the present action for damages,
respondent Pedro Tumala was charged in Criminal Case No. 4960 of the Municipal Court of
Sindangan, Zamboanga del Norte, in a complaint filed by the Chief of Police for "double serious and
less serious physical injuries through reckless imprudence", and that, with the filing of the aforesaid
criminal case, no civil action could be filed subsequent thereto unless the criminal case has been
finally adjudicated, pursuant to Sec. 3 of Rule 111 of the Rules of Court, and, therefore, the filing of
the instant civil action is premature, because the liability of the employer is merely subsidiary and
does not arise until after final judgment has been rendered finding the driver, Pedro Tumala guilty of
negligence; that Art. 33 of the New Civil Code, is not applicable because Art. 33 applied only to the
crimes of physical injuries or homicide, not to the negligent act or imprudence of the driver.

On October 14, 1971, petitioners filed an opposition to said motion to dismiss alleging that the
aforesaid action for damages was instituted not to enforce the civil liability of the respondents under
Art. 100 of the Revised Penal Code but for their civil liability on quasi-delicts pursuant to Articles
2176-2194, as the same negligent act causing damages may produce civil liability arising from a
crime under the Revised Penal Code or create an action for quasi-delict or culpa extra-contractual
under the Civil Code, and the party seeking recovery is free to choose which remedy to enforce.

In dismissing the complaint for damages in Civil Case No. 2850, the lower court sustained the
arguments of respondents, Mactan Transit Co., Inc. and Pedro Tumala, and declared that whether
or not "the action for damages is based on criminal negligence or civil negligence known as culpa
aquiliana in the Civil Code or tort under American law" there "should be a showing that the offended
party expressly waived the civil action or reserved his right to institute it separately" and that "the
allegations of the complaint in culpa aquiliana must not be tainted by any assertion of violation of law
or traffic rules or regulations" and because of the prayer in the complaint asking the Court to declare
the defendants jointly and severally liable for moral, compensatory and exemplary damages, the
Court is of the opinion that the action was not based on "culpa aquiliana or quasi-delict."

Petitioners' motion for reconsideration was denied by the trial court on January 21, 1972, hence this
appeal on certiorari.

There is no question that from a careful consideration of the allegations contained in the complaint in
Civil Case No. 2850, the essential averments for a quasi-delictual action under Articles 2176-2194 of
the New Civil Code are present, namely: a) act or omission of the private respondents; b) presence
of fault or negligence or the lack of due care in the operation of the passenger bus No. 25 by
respondent Pedro Tumala resulting in the collision of the bus with the passenger car; c) physical
injuries and other damages sustained by petitioners as a result of the collision; d) existence of direct
causal connection between the damage or prejudice and the fault or negligence of private
respondents; and e) the absence of pre-existing contractual relations between the parties. The
circumstance that the complaint alleged that respondents violated traffic rules in that the driver drove
the vehicle "at a fast clip in a reckless, grossly negligent and imprudent manner in violation of traffic
rules and without due regard to the safety of the passengers aboard the PU car" does not detract
from the nature and character of the action, as one based on culpa aquiliana. The violation of traffic
rules is merely descriptive of the failure of said driver to observe for the protection of the interests of
others, that degree of care, precaution and vigilance which the circumstances justly demand, which
failure resulted in the injury on petitioners. Certainly excessive speed in violation of traffic rules is a
clear indication of negligence. Since the same negligent act resulted in the filing of the criminal
action by the Chief of Police with the Municipal Court (Criminal Case No. 4960) and the civil action
by petitioners, it is inevitable that the averments on the drivers' negligence in both complaints would
substantially be the same. It should be emphasized that the same negligent act causing damages
may produce a civil liability arising from a crime under Art. 100 of the Revised Penal Code or create
an action for quasi-delict or culpa extra-contractual under Arts. 2176-2194 of the New Civil Code.
This distinction has been amply explained in Barredo vs. Garcia, et al. (73 Phil. 607, 620-621).1

It is true that under Sec. 2 in relation to Sec. 1 of Rule 111 of the Revised Rules of Court which
became effective on January 1, 1964, in the cases provided for by Articles 31, 33, 39 and 2177 of
the Civil Code, an independent civil action entirely separate and distinct from the civil action, may be
instituted by the injured party during the pendency of the criminal case, provided said party has
reserved his right to institute it separately, but it should be noted, however, that neither Section 1 nor
Section 2 of Rule 111 fixes a time limit when such reservation shall be made. In Tactaquin v.
Palileo,2 where the reservation was made after the tort-feasor had already pleaded guilty and after
the private prosecutor had entered his appearance jointly with the prosecuting attorney in the course
of the criminal proceedings, and the tort-feasor was convicted and sentenced to pay damages to the
offended party by final judgment in said criminal case, We ruled that such reservation is legally
ineffective because the offended party cannot recover damages twice for the same act or omission
of the defendant. We explained in Meneses vs. Luat3that when the criminal action for physical
injuries against the defendant did not proceed to trial as he pleaded guilty upon arraignment and the
Court made no pronouncement on the matter or damages suffered by the injured party, the mere
appearance of private counsel in representation of the offended party in said criminal case does not
constitute such active intervention as could impart an intention to press a claim for damages in the
same action, and, therefore, cannot bar a separate civil action for damages subsequently instituted
on the same ground under Article 33 of the New Civil Code.

In the case at bar, there is no question that petitioners never intervened in the criminal action
instituted by the Chief of Police against respondent Pedro Tumala, much less has the said criminal
action been terminated either by conviction or acquittal of said accused.

It is, therefore, evident that by the institution of the present civil action for damages, petitioners have
in effect abandoned their right to press recovery for damages in the criminal case, and have opted
instead to recover them in the present civil case.

As a result of this action of petitioners the civil liability of private respondents to the former has
ceased to be involved in the criminal action. Undoubtedly an offended party loses his right to
intervene in the prosecution of a criminal case, not only when he has waived the civil action or
expressly reserved his right to institute, but also when he has actually instituted the civil action. For
by either of such actions his interest in the criminal case has disappeared.

As we have stated at the outset, the same negligent act causing damages may produce a civil
liability arising from crime or create an action for quasi-delict or culpa extra-contractual. The former
is a violation of the criminal law, while the latter is a distinct and independent negligence, having
always had its own foundation and individuality. Some legal writers are of the view that in
accordance with Article 31, the civil action based upon quasi-delict may proceed independently of
the criminal proceeding for criminal negligence and regardless of the result of the latter. Hence, "the
proviso in Section 2 of Rule 111 with reference to ... Articles 32, 33 and 34 of the Civil Code is
contrary to the letter and spirit of the said articles, for these articles were drafted ... and are intended
to constitute as exceptions to the general rule stated in what is now Section 1 of Rule 111.
The proviso which is procedural, may also be regarded as an unauthorized amendment of
substantive law, Articles 32, 33 and 34 of the Civil Code, which do not provide for the reservation
required in the proviso."4 But in whatever way We view the institution of the civil action for recovery of
damages under quasi-delict by petitioners, whether as one that should be governed by the
provisions of Section 2 of Rule 111 of the Rules which require reservation by the injured party
considering that by the institution of the civil action even before the commencement of the trial of the
criminal case, petitioners have thereby foreclosed their right to intervene therein, or one where
reservation to file the civil action need not be made, for the reason that the law itself (Article 33 of the
Civil Code) already makes the reservation and the failure of the offended party to do so does not bar
him from bringing the action, under the peculiar circumstances of the case, We find no legal
justification for respondent court's order of dismissal.

WHEREFORE, the decision and order appealed from are hereby reversed and set aside, and the
court a quo is directed to proceed with the trial of the case. Costs against private respondents.

Zaldivar, Castro Fernando, Teehankee, Makasiar and Esguerra, JJ., concur.

Makalintal, Actg., C.J., concurs in the result.

Separate Opinions

BARREDO, J., concurring:

I would like to limit my concurrence.

I believe that the only substantive legal provision involved in this case are Articles 2176 and 2177 of
the Civil Code which read as follows:

ART 2176. Whoever by act or omission causes damage to another, there being fault
or negligence, is obliged to pay for the damage done. Such fault or negligence, if
there is no pre-existing contractual relation between the parties, is called a quasi-
delict and is governed by the provisions of this Chapter.

ART 2177. Responsibility for fault or negligence under the preceding article is
entirely separate and distinct from the civil liability arising from negligence under the
Penal Code. But the plaintiff cannot recover damages twice for the same act or
omission of the defendant.

These provisions definitely create a civil liability distinct and different from the civil action arising from
the offense of negligence under the Revised Penal Code. Since Civil Case No. 2850 is predicated
on the above civil code articles and not on the civil liability imposed by the Revised Penal Code, I
cannot see why a reservation had to be made in the criminal case. As to the specific mention of
Article 2177 in Section 2 of the Rule 111, it is my considered view that the latter provision is
inoperative, it being substantive in character and is not within the power of the Supreme Court to
promulgate, and even if it were not substantive but adjective, it cannot stand because of its
inconsistency with Article 2177, an enactment of the legislature superseding the Rules of 1940.

Besides, the actual filing of Civil Case No. 2850 should be deemed as the reservation required, there
being no showing that prejudice could be caused by doing so.

Accordingly, I concur in the judgment reversing the order of dismissal of the trial court in order that
Civil Case No. 2850 may proceed, subject to the limitation mentioned in the last sentence of Article
2177 of the Civil Code, which means that of the two possible judgments, the injured party is entitled
exclusively to the bigger one.

.
No. 7

G.R. No. L-32599 June 29, 1979

EDGARDO E. MENDOZA, petitioner

vs.
HON. ABUNDIO Z. ARRIETA, Presiding Judge of Branch VIII, Court of First Instance of Manila,
FELINO TIMBOL, and RODOLFO SALAZAR, respondents.

David G. Nitafan for petitioner.

Arsenio R. Reyes for respondent Timbol.

Armando M. Pulgado for respondent Salazar.

MELENCIO-HERRERA, J:

Petitioner, Edgardo Mendoza, seeks a review on certiorari of the Orders of respondent Judge in Civil
Case No. 80803 dismissing his Complaint for Damages based on quasi-delict against respondents
Felino Timbol and Rodolfo Salazar.

The facts which spawned the present controversy may be summarized as follows:

On October 22, 1969, at about 4:00 o'clock in the afternoon, a three- way vehicular accident
occurred along Mac-Arthur Highway, Marilao, Bulacan, involving a Mercedes Benz owned and
driven by petitioner; a private jeep owned and driven by respondent Rodolfo Salazar; and a gravel
and sand truck owned by respondent Felipino Timbol and driven by Freddie Montoya. As a
consequence of said mishap, two separate Informations for Reckless Imprudence Causing Damage
to Property were filed against Rodolfo Salazar and Freddie Montoya with the Court of First Instance
of Bulacan. The race against truck-driver Montoya, docketed as Criminal Case No. SM-227, was for
causing damage to the jeep owned by Salazar, in the amount of Pl,604.00, by hitting it at the right
rear portion thereby causing said jeep to hit and bump an oncoming car, which happened to be
petitioner's Mercedes Benz. The case against jeep-owner-driver Salazar, docketed as Criminal Case
No. SM 228, was for causing damage to the Mercedes Benz of petitioner in the amount of P8,890.00

At the joint trial of the above cases, petitioner testified that jeep-owner- driver Salazar overtook the
truck driven by Montoya, swerved to the left going towards the poblacion of Marilao, and hit his car
which was bound for Manila. Petitioner further testified that before the impact, Salazar had jumped
from the jeep and that he was not aware that Salazar's jeep was bumped from behind by the truck
driven by Montoya. Petitioner's version of the accident was adopted by truck driver Montoya. Jeep-
owner-driver Salazar, on the other hand, tried to show that, after overtaking the truck driven by
Montoya, he flashed a signal indicating his intention to turn left towards the poblacion of Marilao but
was stopped at the intersection by a policeman who was directing traffic; that while he was at a stop
position, his jeep was bumped at the rear by the truck driven by Montova causing him to be thrown
out of the jeep, which then swerved to the left and hit petitioner's car, which was coming from the
opposite direction.

On July 31, 1970, the Court of First Instance of Bulacan, Branch V, Sta. Maria, rendered judgment,
stating in its decretal portion:

IN VIEW OF THE FOREGOING, this Court finds the accused Freddie Montoya
GUILTY beyond reasonable doubt of the crime of damage to property thru reckless
imprudence in Crime. Case No. SM-227, and hereby sentences him to pay a fine of
P972.50 and to indemnify Rodolfo Salazar in the same amount of P972.50 as actual
damages, with subsidiary imprisonment in case of insolvency, both as to fine and
indemnity, with costs.
 Accused Rodolfo Salazar is hereby ACQUITTED from the offense charged in Crime.
Case No. SM-228, with costs de oficio, and his bond is ordered canceled

SO ORDERED. 1

Thus, the trial Court absolved jeep-owner-driver Salazar of any liability, civil and criminal, in view of
its findings that the collision between Salazar's jeep and petitioner's car was the result of the former
having been bumped from behind by the truck driven by Montoya. Neither was petitioner awarded
damages as he was not a complainant against truck-driver Montoya but only against jeep-owner-
driver Salazar.

On August 22, 1970, or after the termination of the criminal cases, petitioner filed Civil Case No.
80803 with the Court of First Instance of Manila against respondents jeep-owner-driver Salazar and
Felino Timbol, the latter being the owner of the gravel and sand truck driven by Montoya, for
indentification for the damages sustained by his car as a result of the collision involving their
vehicles. Jeep-owner-driver Salazar and truck-owner Timbol were joined as defendants, either in the
alternative or in solidum allegedly for the reason that petitioner was uncertain as to whether he was
entitled to relief against both on only one of them.

On September 9, 1970, truck-owner Timbol filed a Motion to Dismiss Civil Case No. 80803 on the
grounds that the Complaint is barred by a prior judgment in the criminal cases and that it fails to
state a cause of action. An Opposition thereto was filed by petitioner.

In an Order dated September 12, 1970, respondent Judge dismissed the Complaint against truck-
owner Timbol for reasons stated in the afore- mentioned Motion to Dismiss On September 30, 1970,
petitioner sought before this Court the review of that dismissal, to which petition we gave due
course.

On January 30, 1971, upon motion of jeep-owner-driver Salazar, respondent Judge also dismissed
the case as against the former. Respondent Judge reasoned out that "while it is true that an
independent civil action for liability under Article 2177 of the Civil Code could be prosecuted
independently of the criminal action for the offense from which it arose, the New Rules of Court,
which took effect on January 1, 1964, requires an express reservation of the civil action to be made
in the criminal action; otherwise, the same would be barred pursuant to Section 2, Rule 111
... 2 Petitioner's Motion for Reconsideration thereof was denied in the order dated February 23, 1971,
with respondent Judge suggesting that the issue be raised to a higher Court "for a more decisive
interpretation of the rule. 3

On March 25, 1971, petitioner then filed a Supplemental Petition before us, also to review the last
two mentioned Orders, to which we required jeep-owner-driver Salazar to file an Answer.

The Complaint against

truck-owner Timbol

We shall first discuss the validity of the Order, dated September 12, 1970, dismissing petitioner's
Complaint against truck-owner Timbol.

In dismissing the Complaint against the truck-owner, respondent Judge sustained Timbol's
allegations that the civil suit is barred by the prior joint judgment in Criminal Cases Nos. SM-227 and
SM-228, wherein no reservation to file a separate civil case was made by petitioner and where the
latter actively participated in the trial and tried to prove damages against jeep-driver-Salazar only;
and that the Complaint does not state a cause of action against truck-owner Timbol inasmuch as
petitioner prosecuted jeep-owner-driver Salazar as the one solely responsible for the damage
suffered by his car.

Well-settled is the rule that for a prior judgment to constitute a bar to a subsequent case, the
following requisites must concur: (1) it must be a final judgment; (2) it must have been rendered by a
Court having jurisdiction over the subject matter and over the parties; (3) it must be a judgment on
the merits; and (4) there must be, between the first and second actions, Identity of parties, Identity of
subject matter and Identity of cause of action.
It is conceded that the first three requisites of res judicata are present. However, we agree with
petitioner that there is no Identity of cause of action between Criminal Case No. SM-227 and Civil
Case No. 80803. Obvious is the fact that in said criminal case truck-driver Montoya was not
prosecuted for damage to petitioner's car but for damage to the jeep. Neither was truck-owner
Timbol a party in said case. In fact as the trial Court had put it "the owner of the Mercedes Benz
cannot recover any damages from the accused Freddie Montoya, he (Mendoza) being a
complainant only against Rodolfo Salazar in Criminal Case No. SM-228. 4 And more importantly, in
the criminal cases, the cause of action was the enforcement of the civil liability arising from criminal
negligence under Article l of the Revised Penal Code, whereas Civil Case No. 80803 is based
on quasi-delict under Article 2180, in relation to Article 2176 of the Civil Code As held in Barredo vs.
Garcia, et al. 5

The foregoing authorities clearly demonstrate the separate in. individuality of cuasi-
delitos or culpa aquiliana under the Civil Code. Specifically they show that there is a
distinction between civil liability arising from criminal negligence (governed by the
Penal Code) and responsibility for fault or negligence under articles 1902 to 1910 of
the Civil Code, and that the same negligent act may produce either a civil liability
arising from a crime under the Penal Code, or a separate responsibility for fault or
negligence under articles 1902 to 1910 of the Civil Code. Still more concretely, the
authorities above cited render it inescapable to conclude that the employer in this
case the defendant- petitioner is primarily and directly liable under article 1903 of the
Civil Code.

That petitioner's cause of action against Timbol in the civil case is based on quasi-delict is evident
from the recitals in the complaint to wit: that while petitioner was driving his car along MacArthur
Highway at Marilao, Bulacan, a jeep owned and driven by Salazar suddenly swerved to his
(petitioner's) lane and collided with his car That the sudden swerving of Salazar's jeep was caused
either by the negligence and lack of skill of Freddie Montoya, Timbol's employee, who was then
driving a gravel and sand truck iii the same direction as Salazar's jeep; and that as a consequence of
the collision, petitioner's car suffered extensive damage amounting to P12,248.20 and that he
likewise incurred actual and moral damages, litigation expenses and attorney's fees. Clearly,
therefore, the two factors that a cause of action must consist of, namely: (1) plaintiff's primary right,
i.e., that he is the owner of a Mercedes Benz, and (2) defendant's delict or wrongful act or omission
which violated plaintiff's primary right, i.e., the negligence or lack of skill either of jeep-owner Salazar
or of Timbol's employee, Montoya, in driving the truck, causing Salazar's jeep to swerve and collide
with petitioner's car, were alleged in the Complaint. 6

Consequently, petitioner's cause of action being based on quasi-delict, respondent Judge committed
reversible error when he dismissed the civil suit against the truck-owner, as said case may proceed
independently of the criminal proceedings and regardless of the result of the latter.

Art. 31. When the civil action is based on an obligation not arising from the act or
omission complained of as a felony, such civil action may proceed independently of
the criminal proceedings and regardless of the result of the latter.

But it is truck-owner Timbol's submission (as well as that of jeep-owner-driver Salazar) that
petitioner's failure to make a reservation in the criminal action of his right to file an independent civil
action bars the institution of such separate civil action, invoking section 2, Rule 111, Rules of Court,
which says:

Section 2. — Independent civil action. — In the cases provided for in Articles 31, 32,
33, 34 and 2177 of the Civil Code of the Philippines, an independent civil action
entirely separate and distinct from the criminal action may be brought by the injured
party during the pendency of the criminal case, provided the right is reserved as
required in the preceding section. Such civil action shau proceed independently of
the criminal prosecution, and shall require only a preponderance of evidence.

Interpreting the above provision, this Court, in Garcia vs. Florida 7 said:

As we have stated at the outset, the same negligent act causing damages may
produce a civil liability arising from crime or create an action for quasi-delict or culpa
extra-contractual. The former is a violation of the criminal law, while the latter is a
distinct and independent negligence, having always had its own foundation and
individuality. Some legal writers are of the view that in accordance with Article 31, the
 civil action based upon quasi-delict may proceed independently of the criminal
proceeding for criminal negligence and regardless of the result of the latter. Hence,
'the proviso in Section 2 of Rule 111 with reference to ... Articles 32, 33 and 34 of the
Civil Code is contrary to the letter and spirit of the said articles, for these articles
were drafted ... and are intended to constitute as exceptions to the general rule
stated in what is now Section 1 of Rule 111. The proviso, which is procedural, may
also be regarded as an unauthorized amendment of substantive law, Articles 32, 33
and 34 of the Civil Code, which do not provide for the reservation required in the
proviso ... .

In his concurring opinion in the above case, Mr. Justice Antonio Barredo further observed that
inasmuch as Articles 2176 and 2177 of the Civil Code create a civil liability distinct and different from
the civil action arising from the offense of negligence under the Revised Penal Code, no reservation,
therefore, need be made in the criminal case; that Section 2 of Rule 111 is inoperative, "it being
substantive in character and is not within the power of the Supreme Court to promulgate; and even if
it were not substantive but adjective, it cannot stand because of its inconsistency with Article 2177,
an enactment of the legislature superseding the Rules of 1940."

We declare, therefore, that in so far as truck-owner Timbol is concerned, Civil Case No. 80803 is not
barred by the fact that petitioner failed to reserve, in the criminal action, his right to file an
independent civil action based on quasi-delict.

The suit against

jeep-owner-driver Salazar

The case as against jeep-owner-driver Salazar, who was acquitted in Criminal Case No. SM-228,
presents a different picture altogether.

At the outset it should be clarified that inasmuch as civil liability co-exists with criminal responsibility
in negligence cases, the offended party has the option between an action for enforcement of civil
liability based on culpa criminalunder Article 100 of the Revised Penal Code, and an action for
recovery of damages based on culpa aquiliana under Article 2177 of the Civil Code. The action for
enforcement of civil liability based on culpa criminal under section 1 of Rule 111 of the Rules of
Court is deemed simultaneously instituted with the criminal action, unless expressly waived or
reserved for separate application by the offended party. 8

The circumstances attendant to the criminal case yields the conclusion that petitioner had opted to
base his cause of action against jeep-owner-driver Salazar on culpa criminal and not on culpa
aquiliana as evidenced by his active participation and intervention in the prosecution of the criminal
suit against said Salazar. The latter's civil liability continued to be involved in the criminal action until
its termination. Such being the case, there was no need for petitioner to have reserved his right to
file a separate civil action as his action for civil liability was deemed impliedly instituted in Criminal
Case No. SM-228.

Neither would an independent civil action he. Noteworthy is the basis of the acquittal of jeep-owner-
driver Salazar in the criminal case, expounded by the trial Court in this wise:

In view of what has been proven and established during the trial, accused Freddie
Montoya would be held able for having bumped and hit the rear portion of the jeep
driven by the accused Rodolfo Salazar,

Considering that the collision between the jeep driven by Rodolfo Salazar and the car
owned and driven by Edgardo Mendoza was the result of the hitting on the rear of
the jeep by the truck driven by Freddie Montoya, this Court behaves that accused
Rodolfo Salazar cannot be held able for the damages sustained by Edgardo
Mendoza's car. 9

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

Sec. 3. Other civil actions arising from offenses. — In all cases not included in the
preceding section the following rules shall be observed:

xxx xxx xxx

c) Extinction of the penal action does not carry with it extinction of the civil, unless the
extinction proceeds from a declaration in a final judgment that the fact from which the
civil night arise did not exist. ...

And even if petitioner's cause of action as against jeep-owner-driver Salazar were not ex-delictu, the
end result would be the same, it being clear from the judgment in the criminal case that Salazar's
acquittal was not based upon reasonable doubt, consequently, a civil action for damages can no
longer be instituted. This is explicitly provided for in Article 29 of the Civil Code quoted here under:

Art. 29. When the accused in a criminal prosecution is acquitted on the ground that
his guilt has not been proved beyond reasonable doubt, a civil action for damages for
the same act or omission may be instituted. Such action requires only a
preponderance of evidence ...

If in a criminal case the judgment of acquittal is based upon reasonable doubt, the
court shall so declare. In the absence of any declaration to that effect, it may be
inferred from the text of the decision whether or not the acquittal is due to that
ground.

In so far as the suit against jeep-owner-driver Salazar is concerned, therefore, we sustain

respondent Judge's Order dated January 30, 1971 dismissing the complaint, albeit on different
grounds.

WHEREFORE, 1) the Order dated September 12, 1970 dismissing Civil Case No. 80803 against
private respondent Felino Timbol is set aside, and respondent Judge, or his successor, hereby
ordered to proceed with the hearing on the merits; 2) but the Orders dated January 30, 1971 and
February 23, 1971 dismissing the Complaint in Civil Case No. 80803 against respondent Rodolfo
Salazar are hereby upheld.

No costs.

SO ORDERED.
 QUASI-DELICT | TORTS | CRIME
No. 8

G.R. No. 150157 January 25, 2007

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

vs.
MODESTO CALAUNAN, Respondent.

DECISION

CHICO-NAZARIO, J.:

Assailed before Us is the decision1 of the Court of Appeals in CA-G.R. CV No. 55909 which affirmed
in toto the decision2 of the Regional Trial Court (RTC) of Dagupan City, Branch 42, in Civil Case No.
D-10086, finding petitioners Mauricio Manliclic and Philippine Rabbit Bus Lines, Inc. (PRBLI)
solidarily liable to pay damages and attorney’s fees to respondent Modesto Calaunan.

The factual antecedents are as follows:

The vehicles involved in this case are: (1) Philippine Rabbit Bus No. 353 with plate number CVD-
478, owned by petitioner PRBLI and driven by petitioner Mauricio Manliclic; and (2) owner-type jeep
with plate number PER-290, owned by respondent Modesto Calaunan and driven by Marcelo
Mendoza.

At around 6:00 to 7:00 o’clock in the morning of 12 July 1988, respondent Calaunan, together with
Marcelo Mendoza, was on his way to Manila from Pangasinan on board his owner-type jeep. The
Philippine Rabbit Bus was likewise bound for Manila from Concepcion, Tarlac. At approximately
Kilometer 40 of the North Luzon Expressway in Barangay Lalangan, Plaridel, Bulacan, the two
vehicles collided. The front right side of the Philippine Rabbit Bus hit the rear left side of the jeep
causing the latter to move to the shoulder on the right and then fall on a ditch with water resulting to
further extensive damage. The bus veered to the left and stopped 7 to 8 meters from point of
collision.

Respondent suffered minor injuries while his driver was unhurt. He was first brought for treatment to
the Manila Central University Hospital in Kalookan City by Oscar Buan, the conductor of the
Philippine Rabbit Bus, and was later transferred to the Veterans Memorial Medical Center.

By reason of such collision, a criminal case was filed before the RTC of Malolos, Bulacan, charging
petitioner Manliclic with Reckless Imprudence Resulting in Damage to Property with Physical
Injuries, docketed as Crim. Case No. 684-M-89. Subsequently on 2 December 1991, respondent
filed a complaint for damages against petitioners Manliclic and PRBLI before the RTC of Dagupan
City, docketed as Civil Case No. D-10086. The criminal case was tried ahead of the civil case.
Among those who testified in the criminal case were respondent Calaunan, Marcelo Mendoza and
Fernando Ramos.

In the civil case (now before this Court), the parties admitted the following:

1. The parties agreed on the capacity of the parties to sue and be sued as well as the venue
and the identities of the vehicles involved;
 2. The identity of the drivers and the fact that they are duly licensed;

3. The date and place of the vehicular collision;

4. The extent of the injuries suffered by plaintiff Modesto Calaunan and the existence of the
medical certificate;

5. That both vehicles were going towards the south; the private jeep being ahead of the bus;

6. That the weather was fair and the road was well paved and straight, although there was a
ditch on the right side where the jeep fell into.3

When the civil case was heard, counsel for respondent prayed that the transcripts of stenographic
notes (TSNs)4 of the testimonies of respondent Calaunan, Marcelo Mendoza and Fernando Ramos
in the criminal case be received in evidence in the civil case in as much as these witnesses are not
available to testify in the civil case.

Francisco Tuliao testified that his brother-in-law, respondent Calaunan, left for abroad sometime in
November, 1989 and has not returned since then. Rogelio Ramos took the stand and said that his
brother, Fernando Ramos, left for Amman, Jordan, to work. Rosalia Mendoza testified that her
husband, Marcelo Mendoza, left their residence to look for a job. She narrated that she thought her
husband went to his hometown in Panique, Tarlac, when he did not return after one month. She
went to her husband’s hometown to look for him but she was informed that he did not go there. 1awphil.net

The trial court subpoenaed the Clerk of Court of Branch 8, RTC, Malolos, Bulacan, the court where
Criminal Case No. 684-M-89 was tried, to bring the TSNs of the testimonies of respondent
Calaunan,5 Marcelo Mendoza6 and Fernando Ramos7 in said case, together with other documentary
evidence marked therein. Instead of the Branch Clerk of Court, it was Enrique Santos Guevara,
Court Interpreter, who appeared before the court and identified the TSNs of the three afore-named
witnesses and other pertinent documents he had brought.8 Counsel for respondent wanted to mark
other TSNs and documents from the said criminal case to be adopted in the instant case, but since
the same were not brought to the trial court, counsel for petitioners compromised that said TSNs and
documents could be offered by counsel for respondent as rebuttal evidence.

For the defendants, petitioner Manliclic and bus conductor Oscar Buan testified. The TSN9 of the
testimony of Donato Ganiban, investigator of the PRBLI, in Criminal Case No. 684-M-89 was marked
and allowed to be adopted in the civil case on the ground that he was already dead.

Respondent further marked, among other documents, as rebuttal evidence, the TSNs10 of the
testimonies of Donato Ganiban, Oscar Buan and petitioner Manliclic in Criminal Case No. 684-M-89.

The disagreement arises from the question: Who is to be held liable for the collision?

Respondent insists it was petitioner Manliclic who should be liable while the latter is resolute in
saying it was the former who caused the smash up.

The versions of the parties are summarized by the trial court as follows:

The parties differed only on the manner the collision between the two (2) vehicles took place.
According to the plaintiff and his driver, the jeep was cruising at the speed of 60 to 70 kilometers per
hour on the slow lane of the expressway when the Philippine Rabbit Bus overtook the jeep and in
the process of overtaking the jeep, the Philippine Rabbit Bus hit the rear of the jeep on the left side.
At the time the Philippine Rabbit Bus hit the jeep, it was about to overtake the jeep. In other words,
the Philippine Rabbit Bus was still at the back of the jeep when the jeep was hit. Fernando Ramos
corroborated the testimony of the plaintiff and Marcelo Mendoza. He said that he was on another
jeep following the Philippine Rabbit Bus and the jeep of plaintiff when the incident took place. He
said, the jeep of the plaintiff overtook them and the said jeep of the plaintiff was followed by the
Philippine Rabbit Bus which was running very fast. The bus also overtook the jeep in which he was
riding. After that, he heard a loud sound. He saw the jeep of the plaintiff swerved to the right on a
grassy portion of the road. The Philippine Rabbit Bus stopped and they overtook the Philippine
Rabbit Bus so that it could not moved (sic), meaning they stopped in front of the Philippine Rabbit
Bus. He testified that the jeep of plaintiff swerved to the right because it was bumped by the
Philippine Rabbit bus from behind.
Both Mauricio Manliclic and his driver, Oscar Buan admitted that the Philippine Rabbit Bus bumped
the jeep in question. However, they explained that when the Philippine Rabbit bus was about to go
to the left lane to overtake the jeep, the latter jeep swerved to the left because it was to overtake
another jeep in front of it. Such was their testimony before the RTC in Malolos in the criminal case
and before this Court in the instant case. [Thus, which of the two versions of the manner how the
collision took place was correct, would be determinative of who between the two drivers was
negligent in the operation of their respective vehicles.]11

Petitioner PRBLI maintained that it observed and exercised the diligence of a good father of a family
in the selection and supervision of its employee, specifically petitioner Manliclic.

On 22 July 1996, the trial court rendered its decision in favor of respondent Calaunan and against
petitioners Manliclic and PRBLI. The dispositive portion of its decision reads:

WHEREFORE, judgment is rendered in favor of the plaintiff and against the defendants ordering the
said defendants to pay plaintiff jointly and solidarily the amount of P40,838.00 as actual damages for
the towing as well as the repair and the materials used for the repair of the jeep in
question; P100,000.00 as moral damages and another P100,000.00 as exemplary damages
and P15,000.00 as attorney’s fees, including appearance fees of the lawyer. In addition, the
defendants are also to pay costs.12

Petitioners appealed the decision via Notice of Appeal to the Court of Appeals.13

In a decision dated 28 September 2001, the Court of Appeals, finding no reversible error in the
decision of the trial court, affirmed it in all respects.14

Petitioners are now before us by way of petition for review assailing the decision of the Court of
Appeals. They assign as errors the following:

THE COURT OF APPEALS ERRED ON A QUESTION OF LAW IN AFFIRMING THE TRIAL

COURT’S QUESTIONABLE ADMISSION IN EVIDENCE OF THE TSN’s AND OTHER
DOCUMENTS PRESENTED IN THE CRIMINAL CASE.

II

THE COURT OF APPEALS ERRED ON A QUESTION OF LAW IN AFFIRMING THE TRIAL

COURT’S RELIANCE ON THE VERSION OF THE RESPONDENT ON HOW THE ACCIDENT
SUPPOSEDLY OCCURRED.

III

THE COURT OF APPEALS ERRED ON A QUESTION OF LAW IN AFFIRMING THE TRIAL

COURT’S UNFAIR DISREGARD OF HEREIN PETITIONER PRBL’s DEFENSE OF EXERCISE OF
DUE DILIGENCE IN THE SELECTION AND SUPERVISION OF ITS EMPLOYEES.

IV

THE COURT OF APPEALS ERRED ON A QUESTION OF LAW IN AFFIRMING THE TRIAL

COURT’S QUESTIONABLE AWARD OF DAMAGES AND ATTORNEY’S FEE.

With the passing away of respondent Calaunan during the pendency of this appeal with this Court,
we granted the Motion for the Substitution of Respondent filed by his wife, Mrs. Precila Zarate Vda.
De Calaunan, and children, Virgilio Calaunan, Carmelita Honeycomb, Evelyn Calaunan, Marko
Calaunan and Liwayway Calaunan.15

In their Reply to respondent’s Comment, petitioners informed this Court of a Decision16 of the Court
of Appeals acquitting petitioner Manliclic of the charge17 of Reckless Imprudence Resulting in
Damage to Property with Physical Injuries attaching thereto a photocopy thereof.
On the first assigned error, petitioners argue that the TSNs containing the testimonies of respondent
Calaunan,18Marcelo Mendoza19 and Fernando Ramos20 should not be admitted in evidence for failure
of respondent to comply with the requisites of Section 47, Rule 130 of the Rules of Court.

For Section 47, Rule 13021 to apply, the following requisites must be satisfied: (a) the witness is dead
or unable to testify; (b) his testimony or deposition was given in a former case or proceeding, judicial
or administrative, between the same parties or those representing the same interests; (c) the former
case involved the same subject as that in the present case, although on different causes of action;
(d) the issue testified to by the witness in the former trial is the same issue involved in the present
case; and (e) the adverse party had an opportunity to cross-examine the witness in the former
case.22

Admittedly, respondent failed to show the concurrence of all the requisites set forth by the Rules for
a testimony given in a former case or proceeding to be admissible as an exception to the hearsay
rule. Petitioner PRBLI, not being a party in Criminal Case No. 684-M-89, had no opportunity to
cross-examine the three witnesses in said case. The criminal case was filed exclusively against
petitioner Manliclic, petitioner PRBLI’s employee. The cases dealing with the subsidiary liability of
employers uniformly declare that, strictly speaking, they are not parties to the criminal cases
instituted against their employees.23

Notwithstanding the fact that petitioner PRBLI was not a party in said criminal case, the testimonies
of the three witnesses are still admissible on the ground that petitioner PRBLI failed to object on their
admissibility.

It is elementary that an objection shall be made at the time when an alleged inadmissible document
is offered in evidence; otherwise, the objection shall be treated as waived, since the right to object is
merely a privilege which the party may waive. Thus, a failure to except to the evidence because it
does not conform to the statute is a waiver of the provisions of the law. Even assuming ex gratia
argumenti that these documents are inadmissible for being hearsay, but on account of failure to
object thereto, the same may be admitted and considered as sufficient to prove the facts therein
asserted.24 Hearsay evidence alone may be insufficient to establish a fact in a suit but, when no
objection is made thereto, it is, like any other evidence, to be considered and given the importance it
deserves.25

In the case at bar, petitioner PRBLI did not object to the TSNs containing the testimonies of
respondent Calaunan, Marcelo Mendoza and Fernando Ramos in the criminal case when the same
were offered in evidence in the trial court. In fact, the TSNs of the testimonies of Calaunan and
Mendoza were admitted by both petitioners.26 Moreover, petitioner PRBLI even offered in evidence
the TSN containing the testimony of Donato Ganiban in the criminal case. If petitioner PRBLI argues
that the TSNs of the testimonies of plaintiff’s witnesses in the criminal case should not be admitted in
the instant case, why then did it offer the TSN of the testimony of Ganiban which was given in the
criminal case? It appears that petitioner PRBLI wants to have its cake and eat it too. It cannot argue
that the TSNs of the testimonies of the witnesses of the adverse party in the criminal case should not
be admitted and at the same time insist that the TSN of the testimony of the witness for the accused
be admitted in its favor. To disallow admission in evidence of the TSNs of the testimonies of
Calaunan, Marcelo Mendoza and Fernando Ramos in the criminal case and to admit the TSN of the
testimony of Ganiban would be unfair.

We do not subscribe to petitioner PRBLI’s argument that it will be denied due process when the
TSNs of the testimonies of Calaunan, Marcelo Mendoza and Fernando Ramos in the criminal case
are to be admitted in the civil case. It is too late for petitioner PRBLI to raise denial of due process in
relation to Section 47, Rule 130 of the Rules of Court, as a ground for objecting to the admissibility of
the TSNs. For failure to object at the proper time, it waived its right to object that the TSNs did not
comply with Section 47.

In Mangio v. Court of Appeals,27 this Court, through Associate Justice Reynato S. Puno,28 admitted in
evidence a TSN of the testimony of a witness in another case despite therein petitioner’s assertion
that he would be denied due process. In admitting the TSN, the Court ruled that the raising of denial
of due process in relation to Section 47, Rule 130 of the Rules of Court, as a ground for objecting to
the admissibility of the TSN was belatedly done. In so doing, therein petitioner waived his right to
object based on said ground.

Petitioners contend that the documents in the criminal case should not have been admitted in the
instant civil case because Section 47 of Rule 130 refers only to "testimony or deposition." We find
such contention to be untenable. Though said section speaks only of testimony and deposition, it
does not mean that documents from a former case or proceeding cannot be admitted. Said
documents can be admitted they being part of the testimonies of witnesses that have been admitted.
Accordingly, they shall be given the same weight as that to which the testimony may be entitled.29

On the second assigned error, petitioners contend that the version of petitioner Manliclic as to how
the accident occurred is more credible than respondent’s version. They anchor their contention on
the fact that petitioner Manliclic was acquitted by the Court of Appeals of the charge of Reckless
Imprudence Resulting in Damage to Property with Physical Injuries.

To be resolved by the Court is the effect of petitioner Manliclic’s acquittal in the civil case.

From the complaint, it can be gathered that the civil case for damages was one arising from, or
based on, quasi-delict.30 Petitioner Manliclic was sued for his negligence or reckless imprudence in
causing the collision, while petitioner PRBLI was sued for its failure to exercise the diligence of a
good father in the selection and supervision of its employees, particularly petitioner Manliclic. The
allegations read:

"4. That sometime on July 12, 1988 at around 6:20 A.M. plaintiff was on board the above-
described motor vehicle travelling at a moderate speed along the North Luzon Expressway
heading South towards Manila together with MARCELO MENDOZA, who was then driving
the same;

"5. That approximately at kilometer 40 of the North Luzon Express Way, the above-described
motor vehicle was suddenly bumped from behind by a Philippine Rabbit Bus with Body No.
353 and with plate No. CVD 478 then being driven by one Mauricio Manliclic of San Jose,
Concepcion, Tarlac, who was then travelling recklessly at a very fast speed and had
apparently lost control of his vehicle;

"6. That as a result of the impact of the collision the above-described motor vehicle was
forced off the North Luzon Express Way towards the rightside where it fell on its driver’s side
on a ditch, and that as a consequence, the above-described motor vehicle which maybe
valued at EIGHTY THOUSAND PESOS (P80,000) was rendered a total wreck as shown by
pictures to be presented during the pre-trial and trial of this case;

"7. That also as a result of said incident, plaintiff sustained bodily injuries which compounded
plaintiff’s frail physical condition and required his hospitalization from July 12, 1988 up to and
until July 22, 1988, copy of the medical certificate is hereto attached as Annex "A" and made
an integral part hereof;

"8. That the vehicular collision resulting in the total wreckage of the above-described motor
vehicle as well as bodily (sic) sustained by plaintiff, was solely due to the reckless
imprudence of the defendant driver Mauricio Manliclic who drove his Philippine Rabbit Bus
No. 353 at a fast speed without due regard or observance of existing traffic rules and
regulations;

"9. That defendant Philippine Rabbit Bus Line Corporation failed to exercise the diligence of
a good father of (sic) family in the selection and supervision of its drivers; x x x"31

Can Manliclic still be held liable for the collision and be found negligent notwithstanding the
declaration of the Court of Appeals that there was an absence of negligence on his part?

In exonerating petitioner Manliclic in the criminal case, the Court of Appeals said:

To the following findings of the court a quo, to wit: that accused-appellant was negligent "when the
bus he was driving bumped the jeep from behind"; that "the proximate cause of the accident was his
having driven the bus at a great speed while closely following the jeep"; x x x

We do not agree.

The swerving of Calaunan’s jeep when it tried to overtake the vehicle in front of it was beyond the
control of accused-appellant.
 xxxx

Absent evidence of negligence, therefore, accused-appellant cannot be held liable for Reckless
Imprudence Resulting in Damage to Property with Physical Injuries as defined in Article 365 of the
Revised Penal Code.32

From the foregoing declaration of the Court of Appeals, it appears that petitioner Manliclic was
acquitted not on reasonable doubt, but on the ground that he is not the author of the act complained
of which is based on Section 2(b) of Rule 111 of the Rules of Criminal Procedure which reads:

(b) Extinction of the penal action does not carry with it extinction of the civil, unless the extinction
proceeds from a declaration in a final judgment that the fact from which the civil might arise did not
exist.

In spite of said ruling, petitioner Manliclic can still be held liable for the mishap. The afore-quoted
section applies only to a civil action arising from crime or ex delicto and not to a civil action arising
from quasi-delict or culpa aquiliana. The extinction of civil liability referred to in Par. (e) of Section 3,
Rule 111 [now Section 2 (b) of Rule 111], refers exclusively to civil liability founded on Article 100 of
the Revised Penal Code, whereas the civil liability for the same act considered as a quasi-delict
only and not as a crime is not extinguished even by a declaration in the criminal case that the
criminal act charged has not happened or has not been committed by the accused.33

A quasi-delict or culpa aquiliana is a separate legal institution under the Civil Code with a
substantivity all its own, and individuality that is entirely apart and independent from a delict
or crime – a distinction exists between the civil liability arising from a crime and the
responsibility for quasi-delicts or culpa extra-contractual. The same negligence causing
damages may produce civil liability arising from a crime under the Penal Code, or create an action
for quasi-delicts or culpa extra-contractual under the Civil Code.34 It is now settled that acquittal of
the accused, even if based on a finding that he is not guilty, does not carry with it the
extinction of the civil liability based on quasi delict.35

In other words, if an accused is acquitted based on reasonable doubt on his guilt, his civil liability
arising from the crime may be proved by preponderance of evidence only. However, if an accused is
acquitted on the basis that he was not the author of the act or omission complained of (or that there
is declaration in a final judgment that the fact from which the civil might arise did not exist), said
acquittal closes the door to civil liability based on the crime or ex delicto. In this second instance,
there being no crime or delict to speak of, civil liability based thereon or ex delicto is not possible. In
this case, a civil action, if any, may be instituted on grounds other than the delict complained of.

As regards civil liability arising from quasi-delict or culpa aquiliana, same will not be extinguished by
an acquittal, whether it be on ground of reasonable doubt or that accused was not the author of the
act or omission complained of (or that there is declaration in a final judgment that the fact from which
the civil liability might arise did not exist). The responsibility arising from fault or negligence in
a quasi-delict is entirely separate and distinct from the civil liability arising from negligence under the
Penal Code.36 An acquittal or conviction in the criminal case is entirely irrelevant in the civil
case37 based on quasi-delict or culpa aquiliana.

Petitioners ask us to give credence to their version of how the collision occurred and to disregard
that of respondent’s. Petitioners insist that while the PRBLI bus was in the process of overtaking
respondent’s jeep, the latter, without warning, suddenly swerved to the left (fast) lane in order to
overtake another jeep ahead of it, thus causing the collision.

As a general rule, questions of fact may not be raised in a petition for review. The factual findings of
the trial court, especially when affirmed by the appellate court, are binding and conclusive on the
Supreme Court.38 Not being a trier of facts, this Court will not allow a review thereof unless:

(1) the conclusion is a finding grounded entirely on speculation, surmise and conjecture; (2) the
inference made is manifestly mistaken; (3) there is grave abuse of discretion; (4) the judgment is
based on a misapprehension of facts; (5) the findings of fact are conflicting; (6) the Court of Appeals
went beyond the issues of the case and its findings are contrary to the admissions of both appellant
and appellees; (7) the findings of fact of the Court of Appeals are contrary to those of the trial court;
(8) said findings of fact are conclusions without citation of specific evidence on which they are
based; (9) the facts set forth in the petition as well as in the petitioner's main and reply briefs are not
disputed by the respondents; and (10) the findings of fact of the Court of Appeals are premised on
the supposed absence of evidence and contradicted by the evidence on record.39

After going over the evidence on record, we do not find any of the exceptions that would warrant our
departure from the general rule. We fully agree in the finding of the trial court, as affirmed by the
Court of Appeals, that it was petitioner Manliclic who was negligent in driving the PRBLI bus which
was the cause of the collision. In giving credence to the version of the respondent, the trial court has
this say:

x x x Thus, which of the two versions of the manner how the collision took place was correct, would
be determinative of who between the two drivers was negligent in the operation of their respective
vehicle.

In this regard, it should be noted that in the statement of Mauricio Manliclic (Exh. 15) given to the
Philippine Rabbit Investigator CV Cabading no mention was made by him about the fact that the
driver of the jeep was overtaking another jeep when the collision took place. The allegation that
another jeep was being overtaken by the jeep of Calaunan was testified to by him only in Crim. Case
No. 684-M-89 before the Regional Trial Court in Malolos, Bulacan and before this Court. Evidently, it
was a product of an afterthought on the part of Mauricio Manliclic so that he could explain why he
should not be held responsible for the incident. His attempt to veer away from the truth was also
apparent when it would be considered that in his statement given to the Philippine Rabbit
Investigator CV Cabading (Exh. 15), he alleged that the Philippine Rabbit Bus bumped the jeep of
Calaunan while the Philippine Rabbit Bus was behind the said jeep. In his testimony before the
Regional Trial Court in Malolos, Bulacan as well as in this Court, he alleged that the Philippine
Rabbit Bus was already on the left side of the jeep when the collision took place. For this
inconsistency between his statement and testimony, his explanation regarding the manner of how
the collision between the jeep and the bus took place should be taken with caution. It might be true
that in the statement of Oscar Buan given to the Philippine Rabbit Investigator CV Cabading, it was
mentioned by the former that the jeep of plaintiff was in the act of overtaking another jeep when the
collision between the latter jeep and the Philippine Rabbit Bus took place. But the fact, however, that
his statement was given on July 15, 1988, one day after Mauricio Manliclic gave his statement
should not escape attention. The one-day difference between the giving of the two statements would
be significant enough to entertain the possibility of Oscar Buan having received legal advise before
giving his statement. Apart from that, as between his statement and the statement of Manliclic
himself, the statement of the latter should prevail. Besides, in his Affidavit of March 10, 1989, (Exh.
14), the unreliability of the statement of Oscar Buan (Exh. 13) given to CV Cabading rear its "ugly
head" when he did not mention in said affidavit that the jeep of Calaunan was trying to overtake
another jeep when the collision between the jeep in question and the Philippine Rabbit bus took
place.

xxxx

If one would believe the testimony of the defendant, Mauricio Manliclic, and his conductor, Oscar
Buan, that the Philippine Rabbit Bus was already somewhat parallel to the jeep when the collision
took place, the point of collision on the jeep should have been somewhat on the left side thereof
rather than on its rear. Furthermore, the jeep should have fallen on the road itself rather than having
been forced off the road. Useless, likewise to emphasize that the Philippine Rabbit was running very
fast as testified to by Ramos which was not controverted by the defendants.40

Having ruled that it was petitioner Manliclic’s negligence that caused the smash up, there arises the
juris tantum presumption that the employer is negligent, rebuttable only by proof of observance of
the diligence of a good father of a family.41 Under Article 218042 of the New Civil Code, when an
injury is caused by the negligence of the employee, there instantly arises a presumption of law that
there was negligence on the part of the master or employer either in the selection of the servant or
employee, or in supervision over him after selection or both. The liability of the employer under
Article 2180 is direct and immediate; it is not conditioned upon prior recourse against the negligent
employee and a prior showing of the insolvency of such employee. Therefore, it is incumbent upon
the private respondents to prove that they exercised the diligence of a good father of a family in the
selection and supervision of their employee.43

In the case at bar, petitioner PRBLI maintains that it had shown that it exercised the required
diligence in the selection and supervision of its employees, particularly petitioner Manliclic. In the
matter of selection, it showed the screening process that petitioner Manliclic underwent before he
became a regular driver. As to the exercise of due diligence in the supervision of its employees, it
argues that presence of ready investigators (Ganiban and Cabading) is sufficient proof that it
exercised the required due diligence in the supervision of its employees.

In the selection of prospective employees, employers are required to examine them as to their
qualifications, experience and service records. In the supervision of employees, the employer must
formulate standard operating procedures, monitor their implementation and impose disciplinary
measures for the breach thereof. To fend off vicarious liability, employers must submit concrete
proof, including documentary evidence, that they complied with everything that was incumbent on
them.44

In Metro Manila Transit Corporation v. Court of Appeals,45 it was explained that:

Due diligence in the supervision of employees on the other hand, includes the formulation of suitable
rules and regulations for the guidance of employees and the issuance of proper instructions intended
for the protection of the public and persons with whom the employer has relations through his or its
employees and the imposition of necessary disciplinary measures upon employees in case of
breach or as may be warranted to ensure the performance of acts indispensable to the business of
and beneficial to their employer. To this, we add that actual implementation and monitoring of
consistent compliance with said rules should be the constant concern of the employer, acting
through dependable supervisors who should regularly report on their supervisory functions.

In order that the defense of due diligence in the selection and supervision of employees may be
deemed sufficient and plausible, it is not enough to emptily invoke the existence of said company
guidelines and policies on hiring and supervision. As the negligence of the employee gives rise to
the presumption of negligence on the part of the employer, the latter has the burden of proving that it
has been diligent not only in the selection of employees but also in the actual supervision of their
work. The mere allegation of the existence of hiring procedures and supervisory policies, without
anything more, is decidedly not sufficient to overcome such presumption.

We emphatically reiterate our holding, as a warning to all employers, that "the formulation of various
company policies on safety without showing that they were being complied with is not sufficient to
exempt petitioner from liability arising from negligence of its employees. It is incumbent upon
petitioner to show that in recruiting and employing the erring driver the recruitment procedures and
company policies on efficiency and safety were followed." x x x.

The trial court found that petitioner PRBLI exercised the diligence of a good father of a family in the
selection but not in the supervision of its employees. It expounded as follows:

From the evidence of the defendants, it seems that the Philippine Rabbit Bus Lines has a very good
procedure of recruiting its driver as well as in the maintenance of its vehicles. There is no evidence
though that it is as good in the supervision of its personnel. There has been no iota of evidence
introduced by it that there are rules promulgated by the bus company regarding the safe operation of
its vehicle and in the way its driver should manage and operate the vehicles assigned to them. There
is no showing that somebody in the bus company has been employed to oversee how its driver
should behave while operating their vehicles without courting incidents similar to the herein case. In
regard to supervision, it is not difficult to observe that the Philippine Rabbit Bus Lines, Inc. has been
negligent as an employer and it should be made responsible for the acts of its employees,
particularly the driver involved in this case.

We agree. The presence of ready investigators after the occurrence of the accident is not enough to
exempt petitioner PRBLI from liability arising from the negligence of petitioner Manliclic. Same does
not comply with the guidelines set forth in the cases above-mentioned. The presence of the
investigators after the accident is not enough supervision. Regular supervision of employees, that is,
prior to any accident, should have been shown and established. This, petitioner failed to do. The lack
of supervision can further be seen by the fact that there is only one set of manual containing the
rules and regulations for all the drivers of PRBLI. 46 How then can all the drivers of petitioner PRBLI
know and be continually informed of the rules and regulations when only one manual is being lent to
all the drivers?

For failure to adduce proof that it exercised the diligence of a good father of a family in the selection
and supervision of its employees, petitioner PRBLI is held solidarily responsible for the damages
caused by petitioner Manliclic’s negligence.
We now go to the award of damages. The trial court correctly awarded the amount of P40,838.00 as
actual damages representing the amount paid by respondent for the towing and repair of his
jeep.47 As regards the awards for moral and exemplary damages, same, under the circumstances,
must be modified. The P100,000.00 awarded by the trial court as moral damages must be reduced
to P50,000.00.48 Exemplary damages are imposed by way of example or correction for the public
good.49 The amount awarded by the trial court must, likewise, be lowered to P50,000.00.50 The
award of P15,000.00 for attorney’s fees and expenses of litigation is in order and authorized by
law.51

WHEREFORE, premises considered, the instant petition for review is DENIED. The decision of the
Court of Appeals in CA-G.R. CV No. 55909 is AFFIRMED with the MODIFICATION that (1) the
award of moral damages shall be reduced to P50,000.00; and (2) the award of exemplary damages
shall be lowered to P50,000.00. Costs against petitioners.

SO ORDERED.
 CONTRACTS CASES
No. 9

G.R. No. L-12191 October 14, 1918

JOSE CANGCO, plaintiff-appellant,

vs.
MANILA RAILROAD CO., defendant-appellee.

Ramon Sotelo for appellant.

Kincaid & Hartigan for appellee.

FISHER, J.:

At the time of the occurrence which gave rise to this litigation the plaintiff, Jose Cangco, was in the
employment of Manila Railroad Company in the capacity of clerk, with a monthly wage of P25. He
lived in the pueblo of San Mateo, in the province of Rizal, which is located upon the line of the
defendant railroad company; and in coming daily by train to the company's office in the city of Manila
where he worked, he used a pass, supplied by the company, which entitled him to ride upon the
company's trains free of charge. Upon the occasion in question, January 20, 1915, the plaintiff arose
from his seat in the second class-car where he was riding and, making, his exit through the door,
took his position upon the steps of the coach, seizing the upright guardrail with his right hand for
support.

On the side of the train where passengers alight at the San Mateo station there is a cement platform
which begins to rise with a moderate gradient some distance away from the company's office and
extends along in front of said office for a distance sufficient to cover the length of several coaches.
As the train slowed down another passenger, named Emilio Zuñiga, also an employee of the railroad
company, got off the same car, alighting safely at the point where the platform begins to rise from
the level of the ground. When the train had proceeded a little farther the plaintiff Jose Cangco
stepped off also, but one or both of his feet came in contact with a sack of watermelons with the
result that his feet slipped from under him and he fell violently on the platform. His body at once
rolled from the platform and was drawn under the moving car, where his right arm was badly
crushed and lacerated. It appears that after the plaintiff alighted from the train the car moved forward
possibly six meters before it came to a full stop.

The accident occurred between 7 and 8 o'clock on a dark night, and as the railroad station was
lighted dimly by a single light located some distance away, objects on the platform where the
accident occurred were difficult to discern especially to a person emerging from a lighted car.

The explanation of the presence of a sack of melons on the platform where the plaintiff alighted is
found in the fact that it was the customary season for harvesting these melons and a large lot had
been brought to the station for the shipment to the market. They were contained in numerous sacks
which has been piled on the platform in a row one upon another. The testimony shows that this row
of sacks was so placed of melons and the edge of platform; and it is clear that the fall of the plaintiff
was due to the fact that his foot alighted upon one of these melons at the moment he stepped upon
the platform. His statement that he failed to see these objects in the darkness is readily to be
credited.

The plaintiff was drawn from under the car in an unconscious condition, and it appeared that the
injuries which he had received were very serious. He was therefore brought at once to a certain
hospital in the city of Manila where an examination was made and his arm was amputated. The
result of this operation was unsatisfactory, and the plaintiff was then carried to another hospital
where a second operation was performed and the member was again amputated higher up near the
shoulder. It appears in evidence that the plaintiff expended the sum of P790.25 in the form of
medical and surgical fees and for other expenses in connection with the process of his curation.

Upon August 31, 1915, he instituted this proceeding in the Court of First Instance of the city of
Manila to recover damages of the defendant company, founding his action upon the negligence of
the servants and employees of the defendant in placing the sacks of melons upon the platform and
leaving them so placed as to be a menace to the security of passenger alighting from the company's
trains. At the hearing in the Court of First Instance, his Honor, the trial judge, found the facts
substantially as above stated, and drew therefrom his conclusion to the effect that, although
negligence was attributable to the defendant by reason of the fact that the sacks of melons were so
placed as to obstruct passengers passing to and from the cars, nevertheless, the plaintiff himself
had failed to use due caution in alighting from the coach and was therefore precluded form
recovering. Judgment was accordingly entered in favor of the defendant company, and the plaintiff
appealed.

It can not be doubted that the employees of the railroad company were guilty of negligence in piling
these sacks on the platform in the manner above stated; that their presence caused the plaintiff to
fall as he alighted from the train; and that they therefore constituted an effective legal cause of the
injuries sustained by the plaintiff. It necessarily follows that the defendant company is liable for the
damage thereby occasioned unless recovery is barred by the plaintiff's own contributory negligence.
In resolving this problem it is necessary that each of these conceptions of liability, to-wit, the primary
responsibility of the defendant company and the contributory negligence of the plaintiff should be
separately examined.

It is important to note that the foundation of the legal liability of the defendant is the contract of
carriage, and that the obligation to respond for the damage which plaintiff has suffered arises, if at
all, from the breach of that contract by reason of the failure of defendant to exercise due care in its
performance. That is to say, its liability is direct and immediate, differing essentially, in legal
viewpoint from that presumptive responsibility for the negligence of its servants, imposed by article
1903 of the Civil Code, which can be rebutted by proof of the exercise of due care in their selection
and supervision. Article 1903 of the Civil Code is not applicable to obligations arising ex contractu,
but only to extra-contractual obligations — or to use the technical form of expression, that article
relates only to culpa aquiliana and not to culpa contractual.

Manresa (vol. 8, p. 67) in his commentaries upon articles 1103 and 1104 of the Civil Code, clearly
points out this distinction, which was also recognized by this Court in its decision in the case of
Rakes vs. Atlantic, Gulf and Pacific Co. (7 Phil. rep., 359). In commenting upon article 1093 Manresa
clearly points out the difference between "culpa, substantive and independent, which of itself
constitutes the source of an obligation between persons not formerly connected by any legal tie"
and culpa considered as an accident in the performance of an obligation already existing . . . ."

In the Rakes case (supra) the decision of this court was made to rest squarely upon the proposition
that article 1903 of the Civil Code is not applicable to acts of negligence which constitute the breach
of a contract.

Upon this point the Court said:

The acts to which these articles [1902 and 1903 of the Civil Code] 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 article 1101, 1103, and 1104 of
the same code. (Rakes vs. Atlantic, Gulf and Pacific Co., 7 Phil. Rep., 359 at 365.)
This distinction is of the utmost importance. The liability, which, under the Spanish law, is, in certain
cases imposed upon employers with respect to damages occasioned by the negligence of their
employees to persons to whom they are not bound by contract, is not based, as in the English
Common Law, upon the principle of respondeat superior — if it were, the master would be liable in
every case and unconditionally — but upon the principle announced in article 1902 of the Civil Code,
which imposes upon all persons who by their fault or negligence, do injury to another, the obligation
of making good the damage caused. One who places a powerful automobile in the hands of a
servant whom he knows to be ignorant of the method of managing such a vehicle, is himself guilty of
an act of negligence which makes him liable for all the consequences of his imprudence. The
obligation to make good the damage arises at the very instant that the unskillful servant, while acting
within the scope of his employment causes the injury. The liability of the master is personal and
direct. But, if the master has not been guilty of any negligence whatever in the selection and
direction of the servant, he is not liable for the acts of the latter, whatever done within the scope of
his employment or not, if the damage done by the servant does not amount to a breach of the
contract between the master and the person injured.

It is not accurate to say that proof of diligence and care in the selection and control of the servant
relieves the master from liability for the latter's acts — on the contrary, that proof shows that the
responsibility has never existed. As Manresa says (vol. 8, p. 68) the liability arising from extra-
contractual culpa is always based upon a voluntary act or omission which, without willful
intent, but by mere negligence or inattention, has caused damage to another. A master who
exercises all possible care in the selection of his servant, taking into consideration the qualifications
they should possess for the discharge of the duties which it is his purpose to confide to them, and
directs them with equal diligence, thereby performs his duty to third persons to whom he is bound by
no contractual ties, and he incurs no liability whatever if, by reason of the negligence of his servants,
even within the scope of their employment, such third person suffer damage. True it is that under
article 1903 of the Civil Code the law creates a presumption that he has been negligent in the
selection or direction of his servant, but the presumption is rebuttable and yield to proof of due care
and diligence in this respect.

The supreme court of Porto Rico, in interpreting identical provisions, as found in the Porto Rico
Code, has held that these articles are applicable to cases of extra-contractual culpa exclusively.
(Carmona vs. Cuesta, 20 Porto Rico Reports, 215.)

This distinction was again made patent by this Court in its decision in the case of Bahia vs. Litonjua
and Leynes, (30 Phil. rep., 624), which was an action brought upon the theory of the extra-
contractual liability of the defendant to respond for the damage caused by the carelessness of his
employee while acting within the scope of his employment. The Court, after citing the last paragraph
of article 1903 of the Civil Code, said:

From this article two things are apparent: (1) That when an injury is caused by the
negligence of a servant or employee there instantly arises a presumption of law that there
was negligence on the part of the master or employer either in selection of the servant or
employee, or in supervision over him after the selection, or both; and (2) that that
presumption is juris tantum and not juris et de jure, and consequently, may be rebutted. It
follows necessarily that if the employer shows to the satisfaction of the court that in selection
and supervision he has exercised the care and diligence of a good father of a family, the
presumption is overcome and he is relieved from liability.

This theory bases the responsibility of the master ultimately on his own negligence and not
on that of his servant. This is the notable peculiarity of the Spanish law of negligence. It is, of
course, in striking contrast to the American doctrine that, in relations with strangers, the
negligence of the servant in conclusively the negligence of the master.

The opinion there expressed by this Court, to the effect that in case of extra-contractual culpa based
upon negligence, it is necessary that there shall have been some fault attributable to the defendant
personally, and that the last paragraph of article 1903 merely establishes a rebuttable presumption,
is in complete accord with the authoritative opinion of Manresa, who says (vol. 12, p. 611) that the
liability created by article 1903 is imposed by reason of the breach of the duties inherent in the
special relations of authority or superiority existing between the person called upon to repair the
damage and the one who, by his act or omission, was the cause of it.

On the other hand, the liability of masters and employers for the negligent acts or omissions of their
servants or agents, when such acts or omissions cause damages which amount to the breach of a
contact, is not based upon a mere presumption of the master's negligence in their selection or
control, and proof of exercise of the utmost diligence and care in this regard does not relieve the
master of his liability for the breach of his contract.

Every legal obligation must of necessity be extra-contractual or contractual. Extra-contractual

obligation has its source in the breach or omission of those mutual duties which civilized society
imposes upon it members, or which arise from these relations, other than contractual, of certain
members of society to others, generally embraced in the concept of status. The legal rights of each
member of society constitute the measure of the corresponding legal duties, mainly negative in
character, which the existence of those rights imposes upon all other members of society. The
breach of these general duties whether due to willful intent or to mere inattention, if productive of
injury, give rise to an obligation to indemnify the injured party. The fundamental distinction between
obligations of this character and those which arise from contract, rests upon the fact that in cases of
non-contractual obligation it is the wrongful or negligent act or omission itself which creates
the vinculum juris, whereas in contractual relations the vinculum exists independently of the breach
of the voluntary duty assumed by the parties when entering into the contractual relation.

With respect to extra-contractual obligation arising from negligence, whether of act or omission, it is
competent for the legislature to elect — and our Legislature has so elected — whom such an
obligation is imposed is morally culpable, or, on the contrary, for reasons of public policy, to extend
that liability, without regard to the lack of moral culpability, so as to include responsibility for the
negligence of those person who acts or mission are imputable, by a legal fiction, to others who are in
a position to exercise an absolute or limited control over them. The legislature which adopted our
Civil Code has elected to limit extra-contractual liability — with certain well-defined exceptions — to
cases in which moral culpability can be directly imputed to the persons to be charged. This moral
responsibility may consist in having failed to exercise due care in the selection and control of one's
agents or servants, or in the control of persons who, by reason of their status, occupy a position of
dependency with respect to the person made liable for their conduct.

The position of a natural or juridical person who has undertaken by contract to render service to
another, is wholly different from that to which article 1903 relates. When the sources of the obligation
upon which plaintiff's cause of action depends is a negligent act or omission, the burden of proof
rests upon plaintiff to prove the negligence — if he does not his action fails. But when the facts
averred show a contractual undertaking by defendant for the benefit of plaintiff, and it is alleged that
plaintiff has failed or refused to perform the contract, it is not necessary for plaintiff to specify in his
pleadings whether the breach of the contract is due to willful fault or to negligence on the part of the
defendant, or of his servants or agents. Proof of the contract and of its nonperformance is
sufficient prima facie to warrant a recovery.

As a general rule . . . it is logical that in case of extra-contractual culpa, a suing creditor

should assume the burden of proof of its existence, as the only fact upon which his action is
based; while on the contrary, in a case of negligence which presupposes the existence of a
contractual obligation, if the creditor shows that it exists and that it has been broken, it is not
necessary for him to prove negligence. (Manresa, vol. 8, p. 71 [1907 ed., p. 76]).

As it is not necessary for the plaintiff in an action for the breach of a contract to show that the breach
was due to the negligent conduct of defendant or of his servants, even though such be in fact the
actual cause of the breach, it is obvious that proof on the part of defendant that the negligence or
omission of his servants or agents caused the breach of the contract would not constitute a defense
to the action. If the negligence of servants or agents could be invoked as a means of discharging the
liability arising from contract, the anomalous result would be that person acting through the medium
of agents or servants in the performance of their contracts, would be in a better position than those
acting in person. If one delivers a valuable watch to watchmaker who contract to repair it, and the
bailee, by a personal negligent act causes its destruction, he is unquestionably liable. Would it be
logical to free him from his liability for the breach of his contract, which involves the duty to exercise
due care in the preservation of the watch, if he shows that it was his servant whose negligence
caused the injury? If such a theory could be accepted, juridical persons would enjoy practically
complete immunity from damages arising from the breach of their contracts if caused by negligent
acts as such juridical persons can of necessity only act through agents or servants, and it would no
doubt be true in most instances that reasonable care had been taken in selection and direction of
such servants. If one delivers securities to a banking corporation as collateral, and they are lost by
reason of the negligence of some clerk employed by the bank, would it be just and reasonable to
permit the bank to relieve itself of liability for the breach of its contract to return the collateral upon
the payment of the debt by proving that due care had been exercised in the selection and direction
of the clerk?

This distinction between culpa aquiliana, as the source of an obligation, and culpa contractual as a
mere incident to the performance of a contract has frequently been recognized by the supreme court
of Spain. (Sentencias of June 27, 1894; November 20, 1896; and December 13, 1896.) In the
decisions of November 20, 1896, it appeared that plaintiff's action arose ex contractu, but that
defendant sought to avail himself of the provisions of article 1902 of the Civil Code as a defense.
The Spanish Supreme Court rejected defendant's contention, saying:

These are not cases of injury caused, without any pre-existing obligation, by fault or
negligence, such as those to which article 1902 of the Civil Code relates, but of damages
caused by the defendant's failure to carry out the undertakings imposed by the contracts . . .
.

A brief review of the earlier decision of this court involving the liability of employers for damage done
by the negligent acts of their servants will show that in no case has the court ever decided that the
negligence of the defendant's servants has been held to constitute a defense to an action for
damages for breach of contract.

In the case of Johnson vs. David (5 Phil. Rep., 663), the court held that the owner of a carriage was
not liable for the damages caused by the negligence of his driver. In that case the court commented
on the fact that no evidence had been adduced in the trial court that the defendant had been
negligent in the employment of the driver, or that he had any knowledge of his lack of skill or
carefulness.

In the case of Baer Senior & Co's Successors vs. Compania Maritima (6 Phil. Rep., 215), the plaintiff
sued the defendant for damages caused by the loss of a barge belonging to plaintiff which was
allowed to get adrift by the negligence of defendant's servants in the course of the performance of a
contract of towage. The court held, citing Manresa (vol. 8, pp. 29, 69) that if the "obligation of the
defendant grew out of a contract made between it and the plaintiff . . . we do not think that the
provisions of articles 1902 and 1903 are applicable to the case."

In the case of Chapman vs. Underwood (27 Phil. Rep., 374), plaintiff sued the defendant to recover
damages for the personal injuries caused by the negligence of defendant's chauffeur while driving
defendant's automobile in which defendant was riding at the time. The court found that the damages
were caused by the negligence of the driver of the automobile, but held that the master was not
liable, although he was present at the time, saying:

. . . unless the negligent acts of the driver are continued for a length of time as to give the
owner a reasonable opportunity to observe them and to direct the driver to desist therefrom. .
. . The act complained of must be continued in the presence of the owner for such length of
time that the owner by his acquiescence, makes the driver's acts his own.

In the case of Yamada vs. Manila Railroad Co. and Bachrach Garage & Taxicab Co. (33 Phil. Rep.,
8), it is true that the court rested its conclusion as to the liability of the defendant upon article 1903,
although the facts disclosed that the injury complaint of by plaintiff constituted a breach of the duty to
him arising out of the contract of transportation. The express ground of the decision in this case was
that article 1903, in dealing with the liability of a master for the negligent acts of his servants "makes
the distinction between private individuals and public enterprise;" that as to the latter the law creates
a rebuttable presumption of negligence in the selection or direction of servants; and that in the
particular case the presumption of negligence had not been overcome.

It is evident, therefore that in its decision Yamada case, the court treated plaintiff's action as though
founded in tort rather than as based upon the breach of the contract of carriage, and an examination
of the pleadings and of the briefs shows that the questions of law were in fact discussed upon this
theory. Viewed from the standpoint of the defendant the practical result must have been the same in
any event. The proof disclosed beyond doubt that the defendant's servant was grossly negligent and
that his negligence was the proximate cause of plaintiff's injury. It also affirmatively appeared that
defendant had been guilty of negligence in its failure to exercise proper discretion in the direction of
the servant. Defendant was, therefore, liable for the injury suffered by plaintiff, whether the breach of
the duty were to be regarded as constituting culpa aquiliana or culpa contractual. As Manresa points
out (vol. 8, pp. 29 and 69) whether negligence occurs an incident in the course of the performance of
a contractual undertaking or its itself the source of an extra-contractual undertaking obligation, its
essential characteristics are identical. There is always an act or omission productive of damage due
to carelessness or inattention on the part of the defendant. Consequently, when the court holds that
a defendant is liable in damages for having failed to exercise due care, either directly, or in failing to
exercise proper care in the selection and direction of his servants, the practical result is identical in
either case. Therefore, it follows that it is not to be inferred, because the court held in the Yamada
case that defendant was liable for the damages negligently caused by its servants to a person to
whom it was bound by contract, and made reference to the fact that the defendant was negligent in
the selection and control of its servants, that in such a case the court would have held that it would
have been a good defense to the action, if presented squarely upon the theory of the breach of the
contract, for defendant to have proved that it did in fact exercise care in the selection and control of
the servant.

The true explanation of such cases is to be found by directing the attention to the relative spheres of
contractual and extra-contractual obligations. The field of non- contractual obligation is much more
broader than that of contractual obligations, comprising, as it does, the whole extent of juridical
human relations. These two fields, figuratively speaking, concentric; that is to say, the mere fact that
a person is bound to another by contract does not relieve him from extra-contractual liability to such
person. When such a contractual relation exists the obligor may break the contract under such
conditions that the same act which constitutes the source of an extra-contractual obligation had no
contract existed between the parties.

The contract of defendant to transport plaintiff carried with it, by implication, the duty to carry him in
safety and to provide safe means of entering and leaving its trains (civil code, article 1258). That
duty, being contractual, was direct and immediate, and its non-performance could not be excused by
proof that the fault was morally imputable to defendant's servants.

The railroad company's defense involves the assumption that even granting that the negligent
conduct of its servants in placing an obstruction upon the platform was a breach of its contractual
obligation to maintain safe means of approaching and leaving its trains, the direct and proximate
cause of the injury suffered by plaintiff was his own contributory negligence in failing to wait
until the train had come to a complete stop before alighting. Under the doctrine of comparative
negligence announced in the Rakes case (supra), if the accident was caused by plaintiff's own
negligence, no liability is imposed upon defendant's negligence and plaintiff's negligence merely
contributed to his injury, the damages should be apportioned. It is, therefore, important to ascertain if
defendant was in fact guilty of negligence.

It may be admitted that had plaintiff waited until the train had come to a full stop before alighting, the
particular injury suffered by him could not have occurred. Defendant contends, and cites many
authorities in support of the contention, that it is negligence per se for a passenger to alight from a
moving train. We are not disposed to subscribe to this doctrine in its absolute form. We are of the
opinion that this proposition is too badly stated and is at variance with the experience of every-day
life. In this particular instance, that the train was barely moving when plaintiff alighted is shown
conclusively by the fact that it came to stop within six meters from the place where he stepped from
it. Thousands of person alight from trains under these conditions every day of the year, and sustain
no injury where the company has kept its platform free from dangerous obstructions. There is no
reason to believe that plaintiff would have suffered any injury whatever in alighting as he did had it
not been for defendant's negligent failure to perform its duty to provide a safe alighting place.

We are of the opinion that the correct doctrine relating to this subject is that expressed in
Thompson's work on Negligence (vol. 3, sec. 3010) as follows:

The test by which to determine whether the passenger has been guilty of negligence in
attempting to alight from a moving railway train, is that of ordinary or reasonable care. It is to
be considered whether an ordinarily prudent person, of the age, sex and condition of the
passenger, would have acted as the passenger acted under the circumstances disclosed by
the evidence. This care has been defined to be, not the care which may or should be used
by the prudent man generally, but the care which a man of ordinary prudence would use
under similar circumstances, to avoid injury." (Thompson, Commentaries on Negligence, vol.
3, sec. 3010.)

Or, it we prefer to adopt the mode of exposition used by this court in Picart vs. Smith (37 Phil. rep.,
809), we may say that the test is this; Was there anything in the circumstances surrounding the
plaintiff at the time he alighted from the train which would have admonished a person of average
prudence that to get off the train under the conditions then existing was dangerous? If so, the plaintiff
should have desisted from alighting; and his failure so to desist was contributory negligence. 1aw ph!l.net

As the case now before us presents itself, the only fact from which a conclusion can be drawn to the
effect that plaintiff was guilty of contributory negligence is that he stepped off the car without being
able to discern clearly the condition of the platform and while the train was yet slowly moving. In
considering the situation thus presented, it should not be overlooked that the plaintiff was, as we
find, ignorant of the fact that the obstruction which was caused by the sacks of melons piled on the
platform existed; and as the defendant was bound by reason of its duty as a public carrier to afford
to its passengers facilities for safe egress from its trains, the plaintiff had a right to assume, in the
absence of some circumstance to warn him to the contrary, that the platform was clear. The place,
as we have already stated, was dark, or dimly lighted, and this also is proof of a failure upon the part
of the defendant in the performance of a duty owing by it to the plaintiff; for if it were by any
possibility concede that it had right to pile these sacks in the path of alighting passengers, the
placing of them adequately so that their presence would be revealed.

As pertinent to the question of contributory negligence on the part of the plaintiff in this case the
following circumstances are to be noted: The company's platform was constructed upon a level
higher than that of the roadbed and the surrounding ground. The distance from the steps of the car
to the spot where the alighting passenger would place his feet on the platform was thus reduced,
thereby decreasing the risk incident to stepping off. The nature of the platform, constructed as it was
of cement material, also assured to the passenger a stable and even surface on which to alight.
Furthermore, the plaintiff was possessed of the vigor and agility of young manhood, and it was by no
means so risky for him to get off while the train was yet moving as the same act would have been in
an aged or feeble person. In determining the question of contributory negligence in performing such
act — that is to say, whether the passenger acted prudently or recklessly — the age, sex, and
physical condition of the passenger are circumstances necessarily affecting the safety of the
passenger, and should be considered. Women, it has been observed, as a general rule are less
capable than men of alighting with safety under such conditions, as the nature of their wearing
apparel obstructs the free movement of the limbs. Again, it may be noted that the place was
perfectly familiar to the plaintiff as it was his daily custom to get on and of the train at this station.
There could, therefore, be no uncertainty in his mind with regard either to the length of the step
which he was required to take or the character of the platform where he was alighting. Our
conclusion is that the conduct of the plaintiff in undertaking to alight while the train was yet slightly
under way was not characterized by imprudence and that therefore he was not guilty of contributory
negligence.

The evidence shows that the plaintiff, at the time of the accident, was earning P25 a month as a
copyist clerk, and that the injuries he has suffered have permanently disabled him from continuing
that employment. Defendant has not shown that any other gainful occupation is open to plaintiff. His
expectancy of life, according to the standard mortality tables, is approximately thirty-three years. We
are of the opinion that a fair compensation for the damage suffered by him for his permanent
disability is the sum of P2,500, and that he is also entitled to recover of defendant the additional sum
of P790.25 for medical attention, hospital services, and other incidental expenditures connected with
the treatment of his injuries.

The decision of lower court is reversed, and judgment is hereby rendered plaintiff for the sum of
P3,290.25, and for the costs of both instances. So ordered.

Arellano, C.J., Torres, Street and Avanceña, JJ., concur.

Separate Opinions

MALCOLM, J., dissenting:

With one sentence in the majority decision, we are of full accord, namely, "It may be admitted that
had plaintiff waited until the train had come to a full stop before alighting, the particular injury
suffered by him could not have occurred." With the general rule relative to a passenger's contributory
negligence, we are likewise in full accord, namely, "An attempt to alight from a moving train is
negligence per se." Adding these two points together, should be absolved from the complaint, and
judgment affirmed.
No. 10

G.R. No. L-11318 October 26, 1918

THE MANILA RAILROAD CO., plaintiff-appellant,

vs.
LA COMPAÑIA TRANSATLANTICA, defendant-appellee. and
THE ATLANTIC GULF & PACIFIC CO., defendant-appellant.

William A. Kincaid & Thomas L. Hartigan for plaintiff-appellant.

Lawrence, Ross & Block for defendant-appellant Atlantic, Gulf & Pacific Co.
Gilbert, Cohn & Fisher for defendant-appellee Compañia Transatlantica.

STREET, J.:

In March 1914, the steamship Alicante, belonging to the Compañia Transatlantica de Barcelona,
arrived at Manila with two locomotive boilers aboard, the property of The Manila Railroad Company.
The equipment of the ship for discharging heavy cargo was not sufficiently strong to handle these
boilers, and it was therefore necessary for the Steamship Company to procure assistance in the port
of Manila.

The Atlantic, Gulf and Pacific Company (hereafter called the Atlantic Company) was accordingly
employed by the Steamship Company, as having probably the best equipment for this purpose of
any contracting company in the city. The service to be performed by the Atlantic Company consisted
in bringing it s floating crane alongside the Alicante, lifting the boilers our of the ship's hold, and
transferring them to a barge which would be placed ready to receive them.

Upon the arrival of the Alicante, the Atlantic company sent out its crane in charge of one Leyden. In
preparing to hoist the first boiler the sling was unfortunately adjusted near the middle of the boiler,
and it was thus raised nearly in an horizontal position. The boiler was too long to clear the hatch in
this position, and after one end of the boiler had emerged on one side of the hatch, the other still
remained below on the other side. When the boiler had been gotten into this position and was being
hoisted still further, a river near the head of the boiler was caught under the edge of the hatch. The
weight on the crane was thus increased by a strain estimated at fifteen tons with the result that the
cable of the sling parted and the boiler fell to the bottom of the ship's hold. The sling was again
adjusted to the boiler but instead of being placed near the middle it was now slung nearer one of the
ends, as should have been done at first. The boiler was gain lifted; but as it was being brought up,
the bolt at the end of the derrick book broke, and again the boiler fell.

The crane was repaired and the boiler discharged, but it was found to be so badly damaged that it
had to be reshipped to England where it was rebuilt, and afterwards was returned to Manila. The
Railroad Company's damage by reason of the cost of repairs, expenses and loss of the use of the
boiler proved to be P23,343.29; and as to the amount of the damage so resulting there is practically
no dispute. To recover these damages the present action was instituted by the Railroad Company
against the Steamship Company. the latter caused the Atlantic Company to be brought in as a
codefendant, and insisted that whatever liability existed should be fixed upon the Atlantic Company
as an independent contractor who had undertaken to discharge the boilers and had become
responsible for such damage as had been done.

The judge of the Court of First Instance gave judgment in favor of the plaintiff against the Atlantic
Company, but the absolved the Steamship Company from the complaint. The plaintiff has appealed
from the action of the court in failing to give judgment against the Steamship company, while the
Atlantic company has appealed from the judgment against it.

The mishap was undoubtedly due, as the lower court found, to the negligence of one Leyden, the
foreman in charge; and we may add that the evidence tends to show that his negligence was of a
type which may without exaggeration be denominated gross. The sling was in the first place
improperly adjusted, and the attention of Leyden was at once called to this by the man in charge of
the stevedores. Nevertheless he proceeded and, instead of lowering the boiler when it was seen that
it could not readily pass through the hatch, he attempted to force it through; and the ship's tackle
was brought into use to assist in this maneuver. The second fall was, it appears, caused by the
weakening of the bolt at the head of the derrick boom, due to the shock incident to the first accident.
This defect was possibly such as not to be patent to external observation but we are of the opinion
that a person of sufficient skill to be trusted with the operation of machinery of this character should
be trusted with the operation of machinery of this character should have known that the crane had
possibly been weakened by the jar received in the first accident. The foreman was therefore guilty of
negligence in attempting to hoist the boiler the second time under the conditions that had thus
developed. It should be noted that the operation was at all its states entirely under Leyden's control;
and, although in the first lift he utilized the ship's tackle to aid in hoisting the boiler, everything was
done under his immediate supervision. There is no evidence tending to show that the first fall of the
boiler might have been due to any hidden defect in the lifting apparatus; and if it had not been for the
additional strain caused by one end of the boiler catching under the hatch, the operation would
doubtless have been accomplished without difficulty. The accident is therefore to be attributed to the
failure of Leyden to exercise the degree of care which an ordinarily competent and prudent person
would have exhibited under the circumstances which then confronted him. This conclusion of fact
cannot be refuted; and, indeed, no attempt is here made by the appellant to reverse this finding of
the trial court.

Three questions are involved in the case, namely: (1) Is the steamship company liable to the plaintiff
by reason of having delivered the boiler in question in a damaged condition? (2) Is the atlantic
company liable to be made to respond to the steamship company for the amount the latter may be
required to pay to the plaintiff for the damage done? Is the Atlantic company directly liable to the
plaintiff, as the trial court held?

It will be observed that the contractual relation existed between the railroad company and the
steamship company; and the duties of the latter with respect to the carrying and delivery of the
boilers are to be discovered by considering the terms and legal effect of that contract. A contractual
relation also existed between the Steamship company and the atlantic company; and the duties
owing by the latter to the former with respect to the lifting and the transferring of the boiler are
likewise to be discovered by considering the terms and legal effect of the contract between these
parties. On the other hand, no contractual relation existed directly between the Railroad Company
and the Atlantic Company.

We are all agreed, that, under the contract for transportation from England to Manila, the Steamship
company is liable to the plaintiff for the injury done to the boiler while it was being discharged from
the ship. The obligation to transport the boiler necessarily involves the duty to convey and deliver it
in a proper condition according to its nature, and conformably with good faith, custom, and the law
(art. 1258, Civ. Code). The contract to convey import the duty to convey and deliver safely and
securely with reference to the degree of care which, under the circumstances, are required by law
and custom applicable to the case. The duty to carry and to carry safely is all one.

Such being the contract of the Steamship Company, said company is necessarily liable, under
articles 1103 and 1104 of the Civil Code, for the consequences of the omission of the care
necessary to the proper performance of this obligation. The contact to transport and deliver at the
port of Manila a locomotive boiler, which was received by it in proper condition, is not complied with
the delivery at the port of destination of a mass of iron the utility of which had been destroyed.

Nor does the Steamship Company escape liability by reason of the fact that it employed a competent
independent contractor to discharge the boilers. The law applicable to this feature of the case will be
more fully discussed further on in this opinion. At this point we merely observe that in the
performance of this service the Atlantic company, and it has never yet been held that the failure to
comply with a contractual obligation can be excused by showing that such delinquency was due to
the negligence of one to whom the contracting party had committed the performance of the contract.

Coming to the question of the liability of the Atlantic Company to respond to the Steamship
Company for the damages which the latter will be compelled to pay to the plaintiff, we observe that
the defense of the Atlantic company comprises two contentions, to-wit, first, that by the terms of the
engagement in accordance with which the Atlantic company agreed to render the service, all risk
incident to the discharge of the boilers was assumed by the steamship company, and secondly, that
the atlantic company should be absolved under the last paragraph of article 1903 of the civil code,
inasmuch as it had used due care in the selection of the employee whose negligent act caused the
damage in question.

At the hearing in first instance the Atlantic Company introduced four witnesses to prove that at the
time said company agreed to lift the boilers out of the Alicante, as upon other later occasions, the
steamship company not be responsible for damage. The vice-president of the atlantic company
testified that hew as present upon the occasion when the agent of the Steamship company made
arrangements for the discharge of the boilers and he heard the conversation between the president
and said agent. According to this witness the substance of the agreement was that, while the Atlantic
Company would use all due care in getting the boilers out, no responsibility was assumed for
damage done either to ship or cargo. The intermediary who acted as agent for the Steamship
Company in arranging for the performance of this service stoutly denied that any such terms were
announced by the officials or anybody else connected with the Atlantic Company at any time while
the arrangements were pending.

In the conflict of the evidence, we recognize that, by a preponderance of the evidence, some
reservation or other was made as to the responsibility of the Atlantic Company; was made to the
responsibility of the atlantic company and though the agent who acted on behalf of the steamship
company possibly never communicated this reservation to his principal, the latter should
nevertheless be held bound thereby. It thus becomes necessary to discover what the exact terms of
this supposed reservation were.

We think that we must put aside at once the words of studies precision with which the president of
the Atlantic company could exclude the possibility of any liability attaching to his company, though
we may accept his statement as showing that the excepted risk contemplated breakage of the lifting
equipment. There is undoubtedly a larger element of truth in the more reasonable statement by the
vice-president of the company. According to this witness the contract combined two features,
namely, an undertaking on the part of the Atlantic Company to use all due care, combined with a
reservation concerning the company's liability for damage.

The Atlantic Company offered in evidence, a number of letters which had been written by it at
different times, extending over a period of years, in response to inquiries made by other firms and
person in Manila concerning the terms upon which the Atlantic Company was not accustomed to
assume the risk incident to such work and required the parties for whom the service might be
rendered either to carry the risk or insure against it. One such letter, dated nearly four years prior to
the occurrence such letter, dated nearly four years prior to the occurrences which gave rise to this
lawsuit, was addressed to the Compañia Transatlantica de Barcelona one of the defendants in this
case. It was stated in this communication that the company's derrick would be subject to inspection
prior to making the lift but that the Atlantic Company would not assume responsibility for damage
that might occur either to ship or cargo from any whatsoever. The steamship company rejected the
services of the Atlantic company in that instance as being too onerous.

The letters directed to this parties, it may observed, would not, generally speaking, be admissible as
against the plaintiff for the purpose of proving that a similar reservation was inserted in the contract
with it on this occasion; but if knowledge of such custom is brought home to the steamship company,
the fact that such reservation was commonly made is of some probative force. Reference to a
number of these letters will show that no particular formula was used by the Atlantic Company in
defining its exemption, and the tenor of these various communications differs materially. We think,
however, that some of the letters are of value as an aid in interpreting the reservation which the
Atlantic Company may have intended to make. We therefore quote from some of these letters as
follows:

We will use our best endeavors to carry out the work successfully and will ask you to inspect
our plant but we wish it distinctly understood that we cannot assume responsibility for
 damage which may occur . . . while the lift is being made. (To Rear Admiral, U.S.N., Oct. 4,
1909.)

Our quotation is based on the understanding that we assume no responsibility from any
accident which may happen during our operations. We always insert this clause as
precautionary measure, but we have never had to avail ourselves of it as yet and do not
expect to now. (To "El Varadero de Manila," Nov. 1, 1913.)

As is customary in these cases, we will use all precaution as necessary to handle the gun in
a proper manner. Our equipment has been tested and will be again, before making the lift,
but we do not assume any responsibility for damage to the gun ship, or cargo. (To Warner,
Barnes & Co., June 7, 1909.)

The idea expressed in these letters is, we think entirely consonant with the interpretation which the
vice-president of the company placed upon the contract which was made with the steamship
company upon this occasion, that is, the company recognized its duty to exercise due supervisory
care; and the exemption from liability, whatever may have been its precise words had reference to
disasters which might result from some inherent hidden defect in the lifting apparatus or other
unforeseen occurrence not directly attributable to negligence of the company in the lifting operations.
Neither party could have supposed for a moment that it was intended to absolve the Atlantic
Company from its duty to use due care in the work.

It is not pretended that negligence on the part of the Atlantic Company or its employees was
expressly included in the excepted risk, and we are of the opinion that the contract should not be
understood as covering such an exemption. It is a rudimentary principle that the contractor is
responsible for the work executed by persons whom he employees in its performance, and this
expressed in the Civil Code in the form of a positive rule of law (art. 1596). It is also expressly
declared by law that liability arising from negligence is demandable in the fulfillment of all kinds of
obligations (art. 1103, Civil Code). Every contract for the presentation of service therefore has
annexed to it, as an inseparable implicit obligation, the duty to exercise due care in the
accomplishment of the work; and no reservation whereby the person rendering the services seeks to
escape from the consequences of a violation of this obligations can viewed with favor.

Contracts against liability for negligence are not favored by law. In some instances, such as
common carriers, they are prohibited as against public policy. In all cases such contracts
should be construed strictly, with every intendment against the party seeking its protection.
(Crew vs. Bradstreet Company, 134 Pa. St., 161; 7 L. R. A., 661; 19 Am. St. Rep., 681.)

The strictness with which contracts conferring such an unusual exemption are construed is
illustrated in Bryan vs. Eastern & Australian S. S. Co. (28 Phil. Rep., 310). The decision in that case
is not precisely applicable to the case at bar, since the court was there applying the law of a foreign
jurisdiction, and the question at issue involved a doctrine peculiar to contracts of common carriers.
Nevertheless the case is instructive as illustrating the universal attitude of courts upon the right of a
contracting party to stipulate against the consequences of his own negligence. It there appeared that
the plaintiff had purchased from the defendant company a ticket for the transportation of himself and
baggage from Hongkong to Manila By the terms of the contract printed in legible type upon the back
of the ticket it was provided that the company could not hold itself responsible for any loss or
damage to luggage, under any circumstances whatsoever, unless it had been paid for as freight. It
was held that this limitation upon the liability of the defendant company did not relieve it from liability
of the defendant company for negligence of its servants by which the baggage of the passenger was
lost. Said the court: Ordinarily this language would seem to be broad enough to cover every possible
contingency, including the negligent act of the defendant's servants. To so hold, however, would run
counter to the established law of England and the United States on that subject. The court then
quoted the following proposition from the decision of the King's Bench Division in Price & Co. vs.
Union Lighterage Co. ([1903], 1 K. B. D., 750, 754):

"An exemption in general words not expressly relating to negligence, even though the words
are wide enough to include loss by negligence or default of carriers' servants' must be
construed as limiting the liability of the carrier as assurer, and not as relieving from the duty
of the exercising reasonable skill and care."

Even admitting that, generally speaking, a person may stipulate against liability for the
consequences of negligence, at least in those cases where the negligence is not gross or willful, the
contract conferring such exemption must be so clear as to leave no room for the operation of the
ordinary rules of liability consecrated by experience and sanctioned by the express provisions of law.

If the exemption should be understood in the scene that counsel for the Atlantic Company now
insists it should bear, that is, as an absolute exemption from all responsibility for negligence, it is
evident that the agreement was a most inequitable and unfair one, and hence it is one that the
steamship company can not be lightly assumed to have made. Understood in that sense it is the
equivalent of licensing the Atlantic Company to perform its tasks in any manner and fashion that it
might please, and to hold it harmless from the consequences.

It is true that, in these days insurance can usually be obtained in the principal ports of commerce by
parties circumstanced as was the steamship company in the case now before us. But the best
insurance against disasters of this kind is found in the exercise of due care; and the chief incentive
to the exercise of care is a feeling of responsibility on the part of him who undertakes the work.
Naturally the courts are little inclined to aid tin the efforts of contractors to evade this responsibility.

There may have been in the minds of the officials of the Atlantic Company an idea that the promise
to use due care in the lifting operations was not accompanied by a legal obligation, such promise
being intended merely for its moral effect as an assurance to the steamship company that the latter
might rely upon competence and diligence of the employees of the Atlantic Company to accomplish
the work in a proper way. The contract can not be permitted to operate in this one-sided manner.
The two features of the engagement, namely, the promise to use due care and the exemption from
liability for damage should be so construed as to give some legal effect to both. The result is, as
already indicated, that the Atlantic Company was bound by its undertaking to use due care and that
he exemption was intended to cover accidents use to hidden defects in the apparatus or other
unforeseeable occurrences not having their origin in the immediate personal negligence of the party
in charge of the operations.

We now proceed to consider the contention that the Atlantic Company under the last paragraph of
article 1903 of the Civil Code, which declares that the liability there referred to 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. In this connection the conclusion of fact must be conceded in favor of the Atlantic
Company that it had used proper care in the selection of Leyden and that , so far as the company
was aware, he was a person to whom might properly be committed the task of discharging the
boilers. The answer to the contention, however is the obligation of the Atlantic Company was created
by contract, and article 1903 is not applicable to negligence arising in the course of the performance
of a contractual obligation. Article 1903 is exclusively concerned with cases where the negligence
arises in the absence of agreement.

In discussing the liability of the Steamship Company to the plaintiff Railroad Company we have
already shown that a party is bound to the full performance of his contractual engagements under
articles 1101 et seq. of the Civil Code, and other special provisions of the Code relative to
contractual obligations; and if he falls short of complete performance by reason of his own
negligence or that of any person to whom he may commit the work, he is liable for the damages
resulting therefrom. What was there said is also applicable with reference to the liability of the
Atlantic Company upon its contract with the Steamship Company, and the same need not be here
repeated. It is desirable, however, in this connection, to bring out somewhat more fully the distinction
between negligence in the performance of a contractual obligation (culpa contractual) and neligence
considered as an independent source of obligation between parties not previously bound (culpa
aquiliana).

This distinction is well established in legal jurisprudence and is fully recognized in the provisions of
the Civil Code. As illustrative of this, we quote the following passage from the opinion of this Court in
the well-known case of Rakes vs. Atlantic, Gulf & Pacific Co. (7 Phil. Rep., 359, 365), and in this
quotation we reproduce the first paragraph of here presenting a more correct English version of said
passage.

The acts to which these articles are applicable are understood to be those not growing out of
preexisting duties of the parties to one another. But where relations already formed give
arise to duties, whether springing form 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 for passage, while that of the injured by-stander would originate in the negligent act
itself. This distinction is thus clearly set forth by Manresa in his commentary on article 1093:

"We see with reference to such obligations, that culpa, or negligence, may be
understood in two different senses, either as culpa, substantive and independent,
which of itself constitutes the source of an obligation between two person not
formerly bound by any other obligation; or as an incident in the performance of an
obligation which already existed, and which increases the liability arising from the
already existing obligation."

Justice Tracey, the author of the opinion from which we have quoted, proceeds to observe that
Manresa, in commenting on articles 1101 and 1104, has described these two species of negligence
as contractual and extra-contractual, the latter being the culpa aquiliana of the Roman law. "This
terminology is unreservedly accepted by Sanchez Roman (Derecho Civil, fourth section, chapter XI,
article II, No. 12), and the principle stated is supported by decisions of the supreme court of Spain,.
among them those of November 29, 11896 (80 Jurisprudencia Civil, No. 151), and June 27, 1894
(75 Jurisprudencia Civil, No. 182.)"

The principle that negligence in the performance of a contract is not governed by article of the Civil
Code but rather by article 1104 of the same Code was directly applied by this court in the case of
Baer Senior & Co.'s successors vs. Compañía Maritima (6 Phil. Rep., 215); and the same idea has
been impliedly if not expressly recognized in other cases (N. T. Hashim & Co. vs. Rocha & Co., 18
Phil. Rep., 315; Tan Chiong Sian vs. Inchausti & Co., 22 Phil. Rep., 152).

What has been said suffices in our opinion to demonstrate that the Atlantic Company is liable to the
Steamship Company for the damages brought upon the latter by the failure of the Atlantic company
to use due care in discharging the boiler, regardless of the fact that the damage was caused by the
negligence of an employee who was qualified for the work and who had been chosen by the Atlantic
Company with due care.

This brings us to the last question here to be answered, which is, Can the Atlantic Company be held
directly liable to the Railroad Company? In other words, can the judgement entered in the trial court
directly in favor of the plaintiff against the Atlantic Company be sustained? To answer this it is
necessary to examine carefully the legal relations existing between the Atlantic Company and the
Railroad Company with reference to this affair; and we shall for a moment ignore the existence of
the contract between the steamship company and the atlantic company, to which the railroad
company was not a party.

Having regard then to the bare fact that the Atlantic Company undertook to remove the boiler from
the ship's hold and for this purpose took the property into its power and control, there arose a duty to
the owner to use due care in the performance of that service and to avoid damaging was obviously
in existence before the negligent act may, if we still ignore the existence of the express contract, be
considered as an act done in violation of this duty.

The duty thus to use due care is an implied obligation, of a quasi contractual nature, since it is
created by implication of liability with which we are here confronted is somewhat similar to that which
is revealed in the case of the depositary, or commodatary, whose legal duty with respect to the
property committed to their care is defined by law even in the absence of express contract; and it
can not be doubted that a person who takes possession of the property of another for the purpose of
moving or conveying it from one place to another, or for the purpose of performing any other service
in connection therewith (locatio operis faciendi), owes to the owner a positive duty to refrain from
damaging it, to the same extent as if an agreement for the performance of such service had been
expressly made with the owner. The obligation as if an agreement made with the owner. The
obligation here is really a species of contract re, and it has its source and explanation in vital fact,
that the active party has taken upon himself to do something with or to the property and has taken it
into his power and control for the purpose of performing such service. (Compare art. 1889, Civil
Code.)

In the passage which we have already from the decision in the Rakes case this Court recognized the
fact that the violation of a quasi-contractual duty is subject to articles 1101, 1103, 1104 of the Civil
Code, and not within the purview of article 1903. Manresa also, in the paragraph reproduced above
is of the opinion that negligence, considered a substantive and independent source of liability, does
not include cases where the parties are previously bound by any other obligation. Again, it is
instructive in this connection to refer to the contents of article 1103 of the Civil Code, where it is
demandable in the fulfillment of all kinds of obligations. These words evidently comprehend both
forms of positive obligations, whether arising from express contract or from implied contract (quasi
contract).

In this connection it is instructive to recall celebrate case of Coggs vs. Bernard (2 Ld. Raym, 909),
decided in the court of the King's Bench of England in the year of 1803. The action was brought by
the owner of certain casks of brandy to recover damages from a person who had undertaken to
transport them from one place to another. It was alleged that in so doing the defendant so
negligently and improvidently put then down that one of the casks was staved and the brandy lost.
The complaint did not allege that the defendant was a common carrier or that he was to be paid for
his services. It was therefore considered that the compliant did not state facts sufficient to support an
action for breach of any express contract. This made it necessary for the court to go back to
fundamental principles and to place liability on the ground of a violation of the legal duty incident to
the mere fact of carriage. Said Powell, J.: "An action indeed will not lie for not doing the thing, for
want of a sufficient consideration; but yet if the bailee will take the goods into his custody, he shall be
answerable for them; for the taking of the goods into his custody is his own act." S9 Gould, J.: ". . .
any man that undertakes to carry goods in liable to an action, be he a common carrier or whatever
he is, if through his neglect they are lost or come to any damage: . . . . " Behind these expressions
was an unbroken line of ancient English precedents holding persons liable for damage inflicted by
reason of a misfeasance in carrying out an undertaking. The principle determined by the court in the
case cited is expressed in the syllabus in these words: 'If a man undertakes to carry goods safely
and securely, he is responsible for any damage they may sustain in the carriage through his neglect,
though he was not a common carrier and was to have nothing for the carriage." Though not stated in
so many words, this decision recognizes that from the mere fact that a person takes the property of
another into his possession and control there arises an obligation in the nature of an assumpsit that
he will use due care with respect thereto. This must be considered a principle of universal
jurisprudence, for it is consonant with justice and common sense and as we have already seen
harmonizes with the doctrine above deduced from the provisions of the Civil Code.

The conclusion must therefore be that if there had been no contract of any sort between the Atlantic
company and the Steamship Company, an action could have been maintained by the Railroad
Company, as owner, against the Atlantic Company to recover the damages sustained by the former.
Such damages would have been demandable under article 1103 of the Civil Code and the action
would not have been subject to the qualification expressed in the last paragraph of article 1903.

The circumstance that a contract was made between the Atlantic Company and the Steamship
company introduces, however, an important, and in our opinion controlling factor into this branch of
the case. It cannot be denied that the Steamship company has possession of this boiler in the
capacity of carrier and that as such it was authorized to make a contract with Atlantic Company to
discharge the same from the ship. Indeed, it appears in evidence that even before the contract of
affreightment was made the Railroad Company was informed that it would necessary for steamship
company to procure the services of some contractor in the port of Manila to handle the discharge, as
the ship's tackle was inadequate to handle heavy cargo. It is therefore to be assumed that the
Railroad Company had in fact assented to the employment of a contractor to perform this service.

Now, it cannot be admitted that a person who contract to do a service like that rendered by the
Atlantic company in this case incurs a double responsibility upon entering upon performance,
namely, a responsibility to the party with whom he contracted, and another entirely different
responsibility to the owner, based on an implied contract. The two liabilities can not in our opinion
coexist. It is a general rule that an implied conract never arises where an express contract has been
made.

If double responsibility existed in such case as this, it would result that a person who had limited his
liability by express stipulation might find himself liable to the owner without regard to the limitation
which he had seen fit to impose by contract. There appears to be no possibility of reconciling the
conflict that would be developed in attempting to give effect to those inconsistent liabilities. The
contract which was in fact made, in our opinion, determine not only the character and extent of the
liability of the Atlantic company but also the person or entity by whom the obligation is eligible. It is of
course quite clear that if the Atlantic company had refused to carry out its agreement to discharge
the cargo, the plaintiff could have enforced specific performance and could not have recovered
damages for non-performance. (Art. 1257, Civil Code; Donaldson, Sim & Co. vs. Smith, Bell & Co., 2
Phil. Rep., 766; Uy Tam and Uy Yet vs. Leonard, 30 Phil. Rep., 471.) In view of the preceding
discussion it is equally obvious that, for lack of privity with the contract, the Railroad Company can
have no right of action to recover damages from the Atlantic Company for the wrongful act which
constituted the violation of said contract. The rights of the plaintiff can only be made effective
through the Compañia Trasatlantica de Barcelona with whom the contract of affreightment was
made.

The judgment entered in the Court of First Instance must, therefore be reversed not only with
respect to the judgment entered in favor of the plaintiff directly against the Atlantic company but also
with respect to the absolution of the steamship company and the further failure of the court to enter
judgment in favor of the latter against the Atlantic Company. The Compañía Transatlantic de
Barcelona should be and is hereby adjudged to pay to the Manila Railroad Company the sum of
twenty nine thousand three hundred forty three pesos and twenty nine centavos (P23,343.29) with
interest from May 11, 1914, until paid; and when this judgment is satisfied, the Compañia
Transatlantic de Barcelona is declared to be entitled to recover the same amount from the Atlantic &
Pacific Gulf Company, against whom judgment is to this end hereby rendered in favor of
the Compañia Transatlantica de Barcelona. No express adjudication of costs of either instance will
be made. So ordered.

Arellano, C.J., Torres, Araullo and Avanceña, JJ., concur.

Separate Opinions

JOHNSON, J., dissenting:

The only question presented by the appellant the Atlantic Gulf & Pacific Company is whether or not it
is liable, either to the Manila railroad company or to the Compañía Transatlantica de Barcelona for
the damage caused to a certain locomotive boiler while being discharged at the port of Manila.

The essential facts important for a decision upon the rights and liabilities of the Atlantic, Gulf &
Pacific Company may be stated as follows:

(1) That the Manila Railroad Company purchased certain locomotive boilers in Europe and
contracted with the Compañia Transatlantica de Barcelona to transport the same to Manila by its
steamship Alicante; (2) That the tackle and equipment of the steamship Alicante being insufficient to
discharge said locomotive boilers, the Compañía Transatlantica entered into a contract with the
Atlantic, Gulf & Pacific Company by virtue of the terms of which the latter company agreed to
discharge the said locomotive boilers from the said steamship Alicante by using its tackle and
equipment for that purpose;' (3) that in the effort of the Atlantic Gulf & Pacific Company to discharge
in the manner described in the complaint and damaged to the amount found by the lower court (4)
That while the Atlantic Gulf & Pacific Company attempted to show, during the trial for the cause, that
it and its employees exercised due care and diligence, it admitted in this court that its employees
had perhaps been negligent in the performance of their duties.

Considering that the relations between the Compañía Transatlantica and the Atlantic Gulf & Pacific
Company were contractual, it becomes important to ascertain what were the terms of the contract, in
order to properly understand the rights and liabilities of the parties thereto, in relation tot he
admission of the Atlantic Gulf & Pacific Company that is employees had perhaps been guilty of
negligence in the discharge of said boiler.

The contract was not wholly reduced to writing; it was partly written and partly oral. The Compania
Transatlantica alleged that under the terms of the contract said boilers form the steamship Alicante,
using its tackle and apparatus therefore, and that no condition of any character was imposed, while
the Atlantic, Gulf & Pacific Company alleged that it agreed to discharge said boilers and to use its
tackle and equipment for that purpose, but with the express conditions that it was, under no
circumstances or conditions, to assume any responsibility for any damage whatever which might be
occasioned thereby, either to the cargo ship or persons.

In support of the allegation of the Compañía Transatlantica, it really presented but one witness, while
the Atlantic, Gulf & Pacific Company presented several witnesses, including its president, vice-
president and several others, together with a number of documents showing that the contract was in
conformity with its usual custom in making similar contracts. The Atlantic, Gulf & Pacific Company
also showed that the Compañía Transatlantica had actual knowledge of such custom.
A careful examination of the proof in our opinion, clearly shows by a large preponderance that the
contract in question was as the Atlantic Gulf & Pacific Company alleged and that by its terms said
company was relieved of any responsibility for any damage which might occur either to the ship,
cargo or persons, from any cause whatsoever."

The contract is the law governing the rights and obligations of the parties, subject to certain well
defined exceptions. Persons have a right to enter into any contact with any clauses, or conditions, or
limitations which they may deem convenient and advisable so long as such clauses or conditions do
not conflict with the existing laws, morals or public order. (Art. 1255, Civil Code.) There are some
well defined exceptions to that rule, the most notable of which are contracts with common carriers.
(Hartford F. Ins. Co., vs. Chicago, M. & St. P. Railway Co., 175 U.S., 91, 97.) The Atlantic, Gulf &
Pacific Company, so far as the record shows, is not a common carrier, and the exception, therefore,
just noted does not apply to it. Neither was the contract between the Compañía Transatlantica and
the Atlantic a company for the carriage of merchandise. It was a contract for services of an entirely
different character from that of a common carrier.

If then, generally speaking, persons may enter into contractual relations with any clauses or
conditions which they may deem advisable and convenient, which do not conflict with existing laws,
morals, or public order, we may ask: Is a contract of the character of that before us in which one of
the parties stipulates that he will not assume any responsibility for any damage which may occur
from any cause whatsoever in the execution of said contract, contrary to the laws morals or public
order?

The contract in question was not one which the parties were obliged to enter into. In that respect, it
differed from contracts with common carriers, wherein the latter have no option, generally speaking.
In the preset case, the Atlantic, Gulf & Pacific Company has a perfect right to refuse to enter into the
contract in question until and unless its terms were satisfactory and acceptable. The parties being at
perfect liberty to enter into the contract or to refuse to do, they must be bound by the law which they
themselves have made for themselves. Having voluntarily made the law (contract), they must abide
by its terms until it can be shown that the same is contrary to the laws, morals or public order.

It is a fundamental rule of the law that what one may resume to do entirely, he may agree to do upon
such terms as her pleases so long as he does not contravene the laws, morals or public order. The
atlantic, Gulf & Pacific Company having had the right to refuse to enter into it except upon just such
terms and conditions as it was fir to require. The Atlantic, Gulf & Pacific Company, therefore, had a
right to refuse to enter into the contract in question until and unless the Compañía
Transatlantica agreed to relive it of all responsibility for any damages which might occur either to the
ship, cargo or persons from any cause whatsoever. By the terms of the contract the Compañia
Trasatlantica assumed all responsibility for damages in the discharge of the said locomotive boilers.
That must be true considering that, by the terms of the contract, the Atlantic, Gulf & Pacific Company
was relieved from any and all damages whatsoever which might occur. 1aw ph!l .net

The only purpose on the part of the Atlantic Gulf & Pacific Company, in imposing the condition
above-mentioned was to avoid the consequences of the negligence of its agent or employees or of
any act or accident which might cause damage, and to avoid possible lawsuits growing out of the
alleged negligent acts.

The question which we are discussing is not a new one in jurisprudence. The courts have been
called upon many times to interpret contract with conditions like those contained in the contract
before us. (Coup vs. Wabash, St. Louis & Pac. Railway Co., 56 Mich., 111; 56 Am. Rep., 374; Mann
vs. Pere Marquette R. Co., 135 Mich., 210; Stephens vs. Southern Pacific co., 109 Cal., 86; 29 L. R.
A., 751; Quimby vs. Boston & Maine R., 150 Mass., 365; 5 L. R. A., 846; Pittsburgh, etc. Railway Co.
vs. Mahoney, 148 Ind., 196; Russell vs. Pittsburgh, etc., R. Co., 157 Ind., 305; 55 L. R. A., 253;
Hartford Fire Ins. Co. vs. Chicago, M. & St. P. Railway Co., 175 U. S., 91, 97; Baltimore, etc.
Railway Co. vs. Voigt, 176 U. S., 498; Osgood vs. Railway Co., 77 Vermont, 334; 70 L. R. A., 930.)

In the case of the Hartford Insurance Company vs. Chicago, M. & St. P. Railway Co. (175 U. S., 91,
97, supra) a contract was made by which one of the parties was relieved from all liability for damage,
et cetera, et cetera, even the liability for damage which might result "from the careless ness or
negligence of employees or agents of said railway company," and the Supreme Court of the United
States held that such a condition in contracts of that character was not void as against public policy,
or public morals or contrary to law. (Baltimore, etc. Railaway Co. vs. Voigt, 176 U. S., 498; Osgood
vs. Central Vermont R. Co., 77 Vermont, 334; 70 L. R. A., 930.)
Court must not forget that they are not to extend, arbitrarily, those rules which say that a given
contract is void as being against public policy, or public laws, because if there is one thing which
more than another public policy requires, it is that men of full age and competent understanding shall
have the utmost liberty of contracting, and that the contracts when entered into freely and voluntarily
shall be held sacred and must be enforced in courts of justice. Courts should not lightly interfere with
the freedom of contracts. (Baltimore, etc., Railway Co. vs. Voigt, 176 U.S., 498; Printing, etc.
Company vs. Sampson, Law Reps., 19 Equity, 465; Osgood vs. Central Vermont R. Co., 77
Vermont, 334.)

The record shows that the Atlantic, Gulf & Pacific Company had, at various times, discharged other
freight from steamships in Manila Bay of much greater weight than the boiler in question, by means
of the same tackle and equipment and by the same employees which were used in the present case.
the records also shows that the tackle and equipment was ample and that the men incharged were
experience in the work they were to perform., The record further shows that the Atlantic, Gulf &
Pacific Company undertook the discharge of said boilers at a very low price, for the very reason that
they were relived of all liability whatsoever for damages in the discharge of the same. The record
further shows that the representative for the Compañía Transatlantica who made the contract in
question, was requested to and did make a causal examination of the tackle equipment which were
to be used in the discharge of the boilers. The records further shows that said company, after
receiving the information that the tackel and equipment and employees of the Atlantic, Gulf & Pacific
Company had discharged, on various occasions, other and heavier freight without accident or
mishap, and after having made a casual examination of such equipment, voluntarily and willingly and
without any objection or protest for and on behalf of the Compañia Trasatlantica, entered into the
contract as above described, accepting fully and without protest the conditions imposed by the
Atlantic, Gulf & Pacific Company. Having entered into the contract in question and the same not
being in contravention of the laws, morals or public order, the Compania Trasatlantica is bound by its
terms.

The rule above announced may seem to be a hard one, but when we remember that the right to
enter into contracts carries with it the freedom to impose such conditions as the parties may see fit to
impose, subject to specific limitations, the hardship if any, is one self-imposed by the parties.

An example may serve to make the rule which we have announced plainer:

A is the owner of an automobile at Manila which desires to deliver at Baguio. B. is the owner of a
garage at Manila and has in his employ experienced chauffeurs. A desires to employ B to take the
automobile to Baguio and offers a certain price for the services. B accepts A's proposition with the
condition that he will assume no responsibility whatever for any damages which might occur to the
said automobile in the course of its delivery. In passing the zigzag on the way to Baguio, an
unforseen accident happens through the casual neglect or lack of care on the part of the chauffeur
and the automobile is damaged. Can B held liable, in an action upon the contract, for the damages
in the face of the fact that A had relieved him of all liability for any damages which might occur? The
cases which we have cited above, together with many others which might be cited, all answer that
question in the negative. That question is answered in the negative upon the theory that A, by the
terms of his contract, relieved B, in an action upon the contract from all liability whatsoever.

It must not be forgotten that what we have said relates the actions upon the contract with the
conditions mentioned and not t actions for damages in an action ex delicto resulting from the
negligent performance of duties and obligations assumed.

The appellant, the Atlantic, Gulf & Pacific company, contends that inasmuch as it had exercised the
care of a good father of a family in selecting its employees, that it should be relieved from all liability
by virtue of the provisions of article 1903 of the Civil Code. We do not believe that the provisions of
said article can be invoked when the rights and liabilities of parties to an action depend upon a
contract. The right of parties are defined by the contract and there is no occasion t invoke the
statute. The argument employed by the Atlantic, Gulf & Pacific Company if valid, would also relieve
the Compañia Transatlantic had not exercised the care of a good father of a family in selecting it for
the discharge of said boilers. Neither d we believe that the provisions of article 1902 of the Civil
Code can be invoked in favor of the Compañia Transatlantica for the reason that the contract
governs the rights and liabilities and by the terms of the contract the Atlantic, Gulf & Pacific
Company is relieved from all liability whatsoever. A relief from all liability is a relief from any liability
caused by negligence, especially so when the action is based upon a contract. Whether or not the
rule should be followed in an action of tort growing out of willful negligence, square?
From all the foregoing, we are persuaded that the judgment of the lower court should be modified
and that the Atlantic, Gulf & Pacific Company should be relieved from all liability under the complaint.

G.R. No. 98695 January 27, 1993

JUAN J. SYQUIA, CORAZON C. SYQUIA, CARLOTA C. SYQUIA, CARLOS C. SYQUIA and

ANTHONY C. SYQUIA, petitioners,
vs.
THE HONORABLE COURT OF APPEALS, and THE MANILA MEMORIAL PARK CEMETERY,
INC., respondents.

Pacis & Reyes Law Offices for petitioners.

Augusto S. San Pedro & Ari-Ben C. Sebastian for private respondents.

CAMPOS, JR., J.:

Herein petitioners, Juan J. Syquia and Corazon C. Syquia, Carlota C. Syquia, Carlos C. Syquia, and
Anthony Syquia, were the parents and siblings, respectively, of the deceased Vicente Juan Syquia.
On March 5, 1979, they filed a complaint1 in the then Court of First Instance against herein private
respondent, Manila Memorial Park Cemetery, Inc. for recovery of damages arising from breach of
contract and/or quasi-delict. The trial court dismissed the complaint.

The antecedent facts, as gathered by the respondent Court, are as follows:

On March 5, 1979, Juan, Corazon, Carlota and Anthony all surnamed Syquia,
plaintiff-appellants herein, filed a complaint for damages against defendant-appellee,
Manila Memorial Park Cemetery, Inc.

The complaint alleged among others, that pursuant to a Deed of Sale (Contract No.
6885) dated August 27, 1969 and Interment Order No. 7106 dated July 21, 1978
executed between plaintiff-appellant Juan J. Syquia and defendant-appellee, the
former, father of deceased Vicente Juan J. Syquia authorized and instructed
defendant-appellee to inter the remains of deceased in the Manila Memorial Park
Cemetery in the morning of July 25, 1978 conformably and in accordance with
defendant-appellant's (sic) interment procedures; that on September 4, 1978,
preparatory to transferring the said remains to a newly purchased family plot also at
the Manila Memorial Park Cemetery, the concrete vault encasing the coffin of the
deceased was removed from its niche underground with the assistance of certain
employees of defendant-appellant (sic); that as the concrete vault was being raised
to the surface, plaintiffs-appellants discovered that the concrete vault had a hole
approximately three (3) inches in diameter near the bottom of one of the walls closing
out the width of the vault on one end and that for a certain length of time (one hour,
more or less), water drained out of the hole; that because of the aforesaid discovery,
plaintiffs-appellants became agitated and upset with concern that the water which
had collected inside the vault might have risen as it in fact did rise, to the level of the
coffin and flooded the same as well as the remains of the deceased with ill effects
thereto; that pursuant to an authority granted by the Municipal Court of Parañaque,
 Metro Manila on September 14, 1978, plaintiffs-appellants with the assistance of
licensed morticians and certain personnel of defendant-appellant (sic) caused the
opening of the concrete vault on September 15, 1978; that upon opening the vault,
the following became apparent to the plaintiffs-appellants: (a) the interior walls of the
concrete vault showed evidence of total flooding; (b) the coffin was entirely damaged
by water, filth and silt causing the wooden parts to warp and separate and to crack
the viewing glass panel located directly above the head and torso of the deceased;
(c) the entire lining of the coffin, the clothing of the deceased, and the exposed parts
of the deceased's remains were damaged and soiled by the action of the water and
silt and were also coated with filth.

Due to the alleged unlawful and malicious breach by the defendant-appellee of its
obligation to deliver a defect-free concrete vault designed to protect the remains of
the deceased and the coffin against the elements which resulted in the desecration
of deceased's grave and in the alternative, because of defendant-appellee's gross
negligence conformably to Article 2176 of the New Civil Code in failing to seal the
concrete vault, the complaint prayed that judgment be rendered ordering defendant-
appellee to pay plaintiffs-appellants P30,000.00 for actual damages, P500,000.00 for
moral damages, exemplary damages in the amount determined by the court, 20% of
defendant-appellee's total liability as attorney's fees, and expenses of litigation and
costs of suit.2

In dismissing the complaint, the trial court held that the contract between the parties did not
guarantee that the cement vault would be waterproof; that there could be no quasi-delict because
the defendant was not guilty of any fault or negligence, and because there was a pre-existing
contractual relation between the Syquias and defendant Manila Memorial Park Cemetery, Inc.. The
trial court also noted that the father himself, Juan Syquia, chose the gravesite despite knowing that
said area had to be constantly sprinkled with water to keep the grass green and that water would
eventually seep through the vault. The trial court also accepted the explanation given by defendant
for boring a hole at the bottom side of the vault: "The hole had to be bored through the concrete vault
because if it has no hole the vault will (sic) float and the grave would be filled with water and the
digging would caved (sic) in the earth, the earth would caved (sic) in the (sic) fill up the grave."3

From this judgment, the Syquias appealed. They alleged that the trial court erred in holding that the
contract allowed the flooding of the vault; that there was no desecration; that the boring of the hole
was justifiable; and in not awarding damages.

The Court of Appeals in the Decision4 dated December 7, 1990 however, affirmed the judgment of
dismissal. Petitioner's motion for reconsideration was denied in a Resolution dated April 25, 1991.5

Unsatisfied with the respondent Court's decision, the Syquias filed the instant petition. They allege
herein that the Court of Appeals committed the following errors when it:

1. held that the contract and the Rules and Resolutions of private respondent allowed
the flooding of the vault and the entrance thereto of filth and silt;

2. held that the act of boring a hole was justifiable and corollarily, when it held that no
act of desecration was committed;

3. overlooked and refused to consider relevant, undisputed facts, such as those

which have been stipulated upon by the parties, testified to by private respondent's
witnesses, and admitted in the answer, which could have justified a different
conclusion;

4. held that there was no tort because of a pre-existing contract and the absence of
fault/negligence; and

5. did not award the P25,000.00 actual damages which was agreed upon by the
parties, moral and exemplary damages, and attorney's fees.

At the bottom of the entire proceedings is the act of boring a hole by private respondent on the vault
of the deceased kin of the bereaved petitioners. The latter allege that such act was either a breach
of private respondent's contractual obligation to provide a sealed vault, or, in the alternative, a
negligent act which constituted a quasi-delict. Nonetheless, petitioners claim that whatever kind of
negligence private respondent has committed, the latter is liable for desecrating the grave of
petitioners' dead.

In the instant case, We are called upon to determine whether the Manila Memorial Park Cemetery,
Inc., breached its contract with petitioners; or, alternatively, whether private respondent was guilty of
a tort.

We understand the feelings of petitioners and empathize with them. Unfortunately, however, We are
more inclined to answer the foregoing questions in the negative. There is not enough ground, both in
fact and in law, to justify a reversal of the decision of the respondent Court and to uphold the pleas
of the petitioners.

With respect to herein petitioners' averment that private respondent has committed culpa aquiliana,
the Court of Appeals found no negligent act on the part of private respondent to justify an award of
damages against it. Although a pre-existing contractual relation between the parties does not
preclude the existence of a culpa aquiliana, We find no reason to disregard the respondent's Court
finding that there was no negligence.

Art. 2176. Whoever by act or omission causes damage to another, there being fault
or negligence, is obliged to pay for the damage done. Such fault or negligence, if
there is no pre-existing contractual relation between the parties, is called a quasi-
delict . . . . (Emphasis supplied).

In this case, it has been established that the Syquias and the Manila Memorial Park
Cemetery, Inc., entered into a contract entitled "Deed of Sale and Certificate of Perpetual
Care"6 on August 27, 1969. That agreement governed the relations of the parties and defined
their respective rights and obligations. Hence, had there been actual negligence on the part
of the Manila Memorial Park Cemetery, Inc., it would be held liable not for a quasi-
delict or culpa aquiliana, but for culpa contractual as provided by Article 1170 of the Civil
Code, to wit:

Those who in the performance of their obligations are guilty of fraud, negligence, or
delay, and those who in any manner contravene the tenor thereof, are liable for
damages.

The Manila Memorial Park Cemetery, Inc. bound itself to provide the concrete box to be send in the
interment. Rule 17 of the Rules and Regulations of private respondent provides that:

Rule 17. Every earth interment shall be made enclosed in a concrete box, or in an
outer wall of stone, brick or concrete, the actual installment of which shall be made
by the employees of the Association.7

Pursuant to this above-mentioned Rule, a concrete vault was provided on July 27, 1978, the day
before the interment, and was, on the same day, installed by private respondent's employees in the
grave which was dug earlier. After the burial, the vault was covered by a cement lid.

Petitioners however claim that private respondent breached its contract with them as the latter held
out in the brochure it distributed that the . . . lot may hold single or double internment (sic)
underground in sealed concrete vault."8 Petitioners claim that the vault provided by private
respondent was not sealed, that is, not waterproof. Consequently, water seeped through the cement
enclosure and damaged everything inside it.

We do not agree. There was no stipulation in the Deed of Sale and Certificate of Perpetual Care and
in the Rules and Regulations of the Manila Memorial Park Cemetery, Inc. that the vault would be
waterproof. Private respondent's witness, Mr. Dexter Heuschkel, explained that the term "sealed"
meant "closed."9 On the other hand, the word "seal" is defined as . . . any of various closures or
fastenings . . . that cannot be opened without rupture and that serve as a check against tampering or
unauthorized opening." 10 The meaning that has been given by private respondent to the word
conforms with the cited dictionary definition. Moreover, it is also quite clear that "sealed" cannot be
equated with "waterproof". Well settled is the rule that when the terms of the contract are clear and
leave no doubt as to the intention of the contracting parties, then the literal meaning of the stipulation
shall control. 11 Contracts should be interpreted according to their literal meaning and should not be
interpreted beyond their obvious intendment. 12 As ruled by the respondent Court:

When plaintiff-appellant Juan J. Syquia affixed his signature to the Deed of Sale
(Exhibit "A") and the attached Rules and Regulations (Exhibit "1"), it can be assumed
that he has accepted defendant-appellee's undertaking to merely provide a concrete
vault. He can not now claim that said concrete vault must in addition, also be
waterproofed (sic). It is basic that the parties are bound by the terms of their contract,
which is the law between them (Rizal Commercial Banking Corporation vs. Court of
Appeals, et al. 178 SCRA 739). Where there is nothing in the contract which is
contrary to law, morals, good customs, public order, or public policy, the validity of
the contract must be sustained (Phil. American Insurance Co. vs. Judge Pineda, 175
SCRA 416). Consonant with this ruling, a contracting party cannot incur a liability
more than what is expressly specified in his undertaking. It cannot be extended by
implication, beyond the terms of the contract (Rizal Commercial Banking Corporation
vs. Court of Appeals, supra). And as a rule of evidence, where the terms of an
agreement are reduced to writing, the document itself, being constituted by the
parties as the expositor of their intentions, is the only instrument of evidence in
respect of that agreement which the law will recognize, so long as its (sic) exists for
the purpose of evidence (Starkie, Ev., pp. 648, 655, Kasheenath vs. Chundy, 5 W.R.
68 cited in Francisco, Revised Rules of Court in the Phil. p. 153, 1973 Ed.). And if the
terms of the contract are clear and leave no doubt upon the intention of the
contracting parties, the literal meaning of its stipulations shall control (Santos vs. CA,
et al., G. R. No. 83664, Nov. 13, 1989; Prudential Bank & Trust Co. vs. Community
Builders Co., Inc., 165 SCRA 285; Balatero vs. IAC, 154 SCRA 530). 13

We hold, therefore, that private respondent did not breach the tenor of its obligation to the Syquias.
While this may be so, can private respondent be liable for culpa aquiliana for boring the hole on the
vault? It cannot be denied that the hole made possible the entry of more water and soil than was
natural had there been no hole.

The law defines negligence as the "omission of that diligence which is required by the nature of the
obligation and corresponds with the circumstances of the persons, of the time and of the place." 14 In
the absence of stipulation or legal provision providing the contrary, the diligence to be observed in
the performance of the obligation is that which is expected of a good father of a family.

The circumstances surrounding the commission of the assailed act — boring of the hole — negate
the allegation of negligence. The reason for the act was explained by Henry Flores, Interment
Foreman, who said that:

Q It has been established in this particular case that a certain Vicente

Juan Syquia was interred on July 25, 1978 at the Parañaque
Cemetery of the Manila Memorial Park Cemetery, Inc., will you
please tell the Hon. Court what or whether you have participation in
connection with said internment (sic)?

A A day before Juan (sic) Syquia was buried our personnel dug a
grave. After digging the next morning a vault was taken and placed in
the grave and when the vault was placed on the grave a hole was
placed on the vault so that water could come into the vault because it
was raining heavily then because the vault has no hole the vault will
float and the grave would be filled with water and the digging would
caved (sic) in and the earth, the earth would (sic) caved in and fill up
the grave. 15 (Emphasis ours)

Except for the foreman's opinion that the concrete vault may float should there be a heavy rainfall,
from the above-mentioned explanation, private respondent has exercised the diligence of a good
father of a family in preventing the accumulation of water inside the vault which would have resulted
in the caving in of earth around the grave filling the same with earth.

Thus, finding no evidence of negligence on the part of private respondent, We find no reason to
award damages in favor of petitioners.
In the light of the foregoing facts, and construed in the language of the applicable laws and
jurisprudence, We are constrained to AFFIRM in toto the decision of the respondent Court of
Appeals dated December 7, 1990. No costs.

SO ORDERED.

G.R. No. 145804 February 6, 2003

LIGHT RAIL TRANSIT AUTHORITY & RODOLFO ROMAN, petitioners,

vs.
MARJORIE NAVIDAD, Heirs of the Late NICANOR NAVIDAD & PRUDENT SECURITY
AGENCY, respondents.

DECISION

VITUG, J.:

The case before the Court is an appeal from the decision and resolution of the Court of Appeals,
promulgated on 27 April 2000 and 10 October 2000, respectively, in CA-G.R. CV No. 60720, entitled
"Marjorie Navidad and Heirs of the Late Nicanor Navidad vs. Rodolfo Roman, et. al.," which has
modified the decision of 11 August 1998 of the Regional Trial Court, Branch 266, Pasig City,
exonerating Prudent Security Agency (Prudent) from liability and finding Light Rail Transit Authority
(LRTA) and Rodolfo Roman liable for damages on account of the death of Nicanor Navidad.

On 14 October 1993, about half an hour past seven o’clock in the evening, Nicanor Navidad, then
drunk, entered the EDSA LRT station after purchasing a "token" (representing payment of the fare).
While Navidad was standing on the platform near the LRT tracks, Junelito Escartin, the security
guard assigned to the area approached Navidad. A misunderstanding or an altercation between the
two apparently ensued that led to a fist fight. No evidence, however, was adduced to indicate how
the fight started or who, between the two, delivered the first blow or how Navidad later fell on the
LRT tracks. At the exact moment that Navidad fell, an LRT train, operated by petitioner Rodolfo
Roman, was coming in. Navidad was struck by the moving train, and he was killed instantaneously.

On 08 December 1994, the widow of Nicanor, herein respondent Marjorie Navidad, along with her
children, filed a complaint for damages against Junelito Escartin, Rodolfo Roman, the LRTA, the
Metro Transit Organization, Inc. (Metro Transit), and Prudent for the death of her husband. LRTA
and Roman filed a counterclaim against Navidad and a cross-claim against Escartin and Prudent.
Prudent, in its answer, denied liability and averred that it had exercised due diligence in the selection
and supervision of its security guards.

The LRTA and Roman presented their evidence while Prudent and Escartin, instead of presenting
evidence, filed a demurrer contending that Navidad had failed to prove that Escartin was negligent in
his assigned task. On 11 August 1998, the trial court rendered its decision; it adjudged:

"WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendants
Prudent Security and Junelito Escartin ordering the latter to pay jointly and severally the plaintiffs the
following:

"a) 1) Actual damages of P44,830.00;

 2) Compensatory damages of P443,520.00;

3) Indemnity for the death of Nicanor Navidad in the sum of P50,000.00;

"b) Moral damages of P50,000.00;

"c) Attorney’s fees of P20,000;

"d) Costs of suit.

"The complaint against defendants LRTA and Rodolfo Roman are dismissed for lack of merit.

"The compulsory counterclaim of LRTA and Roman are likewise dismissed."1

Prudent appealed to the Court of Appeals. On 27 August 2000, the appellate court promulgated its
now assailed decision exonerating Prudent from any liability for the death of Nicanor Navidad and,
instead, holding the LRTA and Roman jointly and severally liable thusly:

"WHEREFORE, the assailed judgment is hereby MODIFIED, by exonerating the appellants from any
liability for the death of Nicanor Navidad, Jr. Instead, appellees Rodolfo Roman and the Light Rail
Transit Authority (LRTA) are held liable for his death and are hereby directed to pay jointly and
severally to the plaintiffs-appellees, the following amounts:

a) P44,830.00 as actual damages;

b) P50,000.00 as nominal damages;

c) P50,000.00 as moral damages;

d) P50,000.00 as indemnity for the death of the deceased; and

e) P20,000.00 as and for attorney’s fees."2

The appellate court ratiocinated that while the deceased might not have then as yet boarded the
train, a contract of carriage theretofore had already existed when the victim entered the place where
passengers were supposed to be after paying the fare and getting the corresponding token therefor.
In exempting Prudent from liability, the court stressed that there was nothing to link the security
agency to the death of Navidad. It said that Navidad failed to show that Escartin inflicted fist blows
upon the victim and the evidence merely established the fact of death of Navidad by reason of his
having been hit by the train owned and managed by the LRTA and operated at the time by Roman.
The appellate court faulted petitioners for their failure to present expert evidence to establish the fact
that the application of emergency brakes could not have stopped the train.

The appellate court denied petitioners’ motion for reconsideration in its resolution of 10 October
2000.

In their present recourse, petitioners recite alleged errors on the part of the appellate court; viz:

"I.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED BY DISREGARDING THE

FINDINGS OF FACTS BY THE TRIAL COURT

"II.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT PETITIONERS

ARE LIABLE FOR THE DEATH OF NICANOR NAVIDAD, JR.

"III.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT RODOLFO

ROMAN IS AN EMPLOYEE OF LRTA."3
Petitioners would contend that the appellate court ignored the evidence and the factual findings of
the trial court by holding them liable on the basis of a sweeping conclusion that the presumption of
negligence on the part of a common carrier was not overcome. Petitioners would insist that
Escartin’s assault upon Navidad, which caused the latter to fall on the tracks, was an act of a
stranger that could not have been foreseen or prevented. The LRTA would add that the appellate
court’s conclusion on the existence of an employer-employee relationship between Roman and
LRTA lacked basis because Roman himself had testified being an employee of Metro Transit and
not of the LRTA.

Respondents, supporting the decision of the appellate court, contended that a contract of carriage
was deemed created from the moment Navidad paid the fare at the LRT station and entered the
premises of the latter, entitling Navidad to all the rights and protection under a contractual relation,
and that the appellate court had correctly held LRTA and Roman liable for the death of Navidad in
failing to exercise extraordinary diligence imposed upon a common carrier.

Law and jurisprudence dictate that a common carrier, both from the nature of its business and for
reasons of public policy, is burdened with the duty of exercising utmost diligence in ensuring the
safety of passengers.4 The Civil Code, governing the liability of a common carrier for death of or
injury to its passengers, provides:

"Article 1755. A common carrier is bound to carry the passengers safely as far as human care and
foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all
the circumstances.

"Article 1756. In case of death of or injuries to passengers, common carriers are presumed to have
been at fault or to have acted negligently, unless they prove that they observed extraordinary
diligence as prescribed in articles 1733 and 1755."

"Article 1759. Common carriers are liable for the death of or injuries to passengers through the
negligence or willful acts of the former’s employees, although such employees may have acted
beyond the scope of their authority or in violation of the orders of the common carriers.

"This liability of the common carriers does not cease upon proof that they exercised all the diligence
of a good father of a family in the selection and supervision of their employees."

"Article 1763. A common carrier is responsible for injuries suffered by a passenger on account of the
willful acts or negligence of other passengers or of strangers, if the common carrier’s employees
through the exercise of the diligence of a good father of a family could have prevented or stopped
the act or omission."

The law requires common carriers to carry passengers safely using the utmost diligence of very
cautious persons with due regard for all circumstances.5 Such duty of a common carrier to provide
safety to its passengers so obligates it not only during the course of the trip but for so long as the
passengers are within its premises and where they ought to be in pursuance to the contract of
carriage.6 The statutory provisions render a common carrier liable for death of or injury to passengers
(a) through the negligence or wilful acts of its employees or b) on account of wilful acts or negligence
of other passengers or of strangers if the common carrier’s employees through the exercise of due
diligence could have prevented or stopped the act or omission.7 In case of such death or injury, a
carrier is presumed to have been at fault or been negligent, and8 by simple proof of injury, the
passenger is relieved of the duty to still establish the fault or negligence of the carrier or of its
employees and the burden shifts upon the carrier to prove that the injury is due to an unforeseen
event or to force majeure.9 In the absence of satisfactory explanation by the carrier on how the
accident occurred, which petitioners, according to the appellate court, have failed to show, the
presumption would be that it has been at fault,10 an exception from the general rule that negligence
must be proved.11

The foundation of LRTA’s liability is the contract of carriage and its obligation to indemnify the victim
arises from the breach of that contract by reason of its failure to exercise the high diligence required
of the common carrier. In the discharge of its commitment to ensure the safety of passengers, a
carrier may choose to hire its own employees or avail itself of the services of an outsider or an
independent firm to undertake the task. In either case, the common carrier is not relieved of its
responsibilities under the contract of carriage.
Should Prudent be made likewise liable? If at all, that liability could only be for tort under the
provisions of Article 217612 and related provisions, in conjunction with Article 2180,13 of the Civil Code.
The premise, however, for the employer’s liability is negligence or fault on the part of the employee.
Once such fault is established, the employer can then be made liable on the basis of the
presumption juris tantum that the employer failed to exercise diligentissimi patris families in the
selection and supervision of its employees. The liability is primary and can only be negated by
showing due diligence in the selection and supervision of the employee, a factual matter that has not
been shown. Absent such a showing, one might ask further, how then must the liability of the
common carrier, on the one hand, and an independent contractor, on the other hand, be described?
It would be solidary. A contractual obligation can be breached by tort and when the same act or
omission causes the injury, one resulting in culpa contractual and the other in culpa aquiliana, Article
219414 of the Civil Code can well apply.15 In fine, a liability for tort may arise even under a contract,
where tort is that which breaches the contract.16 Stated differently, when an act which constitutes a
breach of contract would have itself constituted the source of a quasi-delictual liability had no
contract existed between the parties, the contract can be said to have been breached by tort,
thereby allowing the rules on tort to apply.17

Regrettably for LRT, as well as perhaps the surviving spouse and heirs of the late Nicanor Navidad,
this Court is concluded by the factual finding of the Court of Appeals that "there is nothing to link
(Prudent) to the death of Nicanor (Navidad), for the reason that the negligence of its employee,
Escartin, has not been duly proven x x x." This finding of the appellate court is not without substantial
justification in our own review of the records of the case.

There being, similarly, no showing that petitioner Rodolfo Roman himself is guilty of any culpable act
or omission, he must also be absolved from liability. Needless to say, the contractual tie between the
LRT and Navidad is not itself a juridical relation between the latter and Roman; thus, Roman can be
made liable only for his own fault or negligence.

The award of nominal damages in addition to actual damages is untenable. Nominal damages are
adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant,
may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss
suffered by him.18 It is an established rule that nominal damages cannot co-exist with compensatory
damages.19

WHEREFORE, the assailed decision of the appellate court is AFFIRMED with MODIFICATION but
only in that (a) the award of nominal damages is DELETED and (b) petitioner Rodolfo Roman is
absolved from liability. No costs.

SO ORDERED.
 [G.R. No. 138569. September 11, 2003]

THE CONSOLIDATED BANK and TRUST CORPORATION, petitioner, vs. COURT OF APPEALS
and L.C. DIAZ and COMPANY, CPAs, respondents.

DECISION
CARPIO, J.:

The Case

Before us is a petition for review of the Decision[1] of the Court of Appeals dated 27 October 1998
and its Resolution dated 11 May 1999. The assailed decision reversed the Decision[2]of the Regional
Trial Court of Manila, Branch 8, absolving petitioner Consolidated Bank and Trust Corporation, now
known as Solidbank Corporation (Solidbank), of any liability. The questioned resolution of the
appellate court denied the motion for reconsideration of Solidbank but modified the decision by
deleting the award of exemplary damages, attorneys fees, expenses of litigation and cost of suit.

The Facts

Solidbank is a domestic banking corporation organized and existing under Philippine laws. Private
respondent L.C. Diaz and Company, CPAs (L.C. Diaz), is a professional partnership engaged in the
practice of accounting.
Sometime in March 1976, L.C. Diaz opened a savings account with Solidbank, designated as
Savings Account No. S/A 200-16872-6.
On 14 August 1991, L.C. Diaz through its cashier, Mercedes Macaraya (Macaraya), filled up a
savings (cash) deposit slip for P990 and a savings (checks) deposit slip for P50.Macaraya instructed
the messenger of L.C. Diaz, Ismael Calapre (Calapre), to deposit the money with Solidbank. Macaraya
also gave Calapre the Solidbank passbook.
Calapre went to Solidbank and presented to Teller No. 6 the two deposit slips and the
passbook. The teller acknowledged receipt of the deposit by returning to Calapre the duplicate copies
of the two deposit slips. Teller No. 6 stamped the deposit slips with the words DUPLICATE and
SAVING TELLER 6 SOLIDBANK HEAD OFFICE. Since the transaction took time and Calapre had to
make another deposit for L.C. Diaz with Allied Bank, he left the passbook with Solidbank. Calapre then
went to Allied Bank. When Calapre returned to Solidbank to retrieve the passbook, Teller No. 6
informed him that somebody got the passbook.[3] Calapre went back to L.C. Diaz and reported the
incident to Macaraya.
 Macaraya immediately prepared a deposit slip in duplicate copies with a check
of P200,000. Macaraya, together with Calapre, went to Solidbank and presented to Teller No. 6 the
deposit slip and check. The teller stamped the words DUPLICATE and SAVING TELLER 6
SOLIDBANK HEAD OFFICE on the duplicate copy of the deposit slip. When Macaraya asked for the
passbook, Teller No. 6 told Macaraya that someone got the passbook but she could not remember to
whom she gave the passbook. When Macaraya asked Teller No. 6 if Calapre got the passbook, Teller
No. 6 answered that someone shorter than Calapre got the passbook. Calapre was then standing
beside Macaraya.
Teller No. 6 handed to Macaraya a deposit slip dated 14 August 1991 for the deposit of a check
for P90,000 drawn on Philippine Banking Corporation (PBC). This PBC check of L.C. Diaz was a check
that it had long closed.[4] PBC subsequently dishonored the check because of insufficient funds and
because the signature in the check differed from PBCs specimen signature. Failing to get back the
passbook, Macaraya went back to her office and reported the matter to the Personnel Manager of L.C.
Diaz, Emmanuel Alvarez.
The following day, 15 August 1991, L.C. Diaz through its Chief Executive Officer, Luis C. Diaz
(Diaz), called up Solidbank to stop any transaction using the same passbook until L.C. Diaz could
open a new account.[5] On the same day, Diaz formally wrote Solidbank to make the same request. It
was also on the same day that L.C. Diaz learned of the unauthorized withdrawal the day before, 14
August 1991, of P300,000 from its savings account. The withdrawal slip for the P300,000 bore the
signatures of the authorized signatories of L.C. Diaz, namely Diaz and Rustico L. Murillo. The
signatories, however, denied signing the withdrawal slip. A certain Noel Tamayo received
the P300,000.
In an Information[6] dated 5 September 1991, L.C. Diaz charged its messenger, Emerano Ilagan
(Ilagan) and one Roscon Verdazola with Estafa through Falsification of Commercial Document. The
Regional Trial Court of Manila dismissed the criminal case after the City Prosecutor filed a Motion to
Dismiss on 4 August 1992.
On 24 August 1992, L.C. Diaz through its counsel demanded from Solidbank the return of its
money. Solidbank refused.
On 25 August 1992, L.C. Diaz filed a Complaint[7] for Recovery of a Sum of Money against
Solidbank with the Regional Trial Court of Manila, Branch 8. After trial, the trial court rendered on 28
December 1994 a decision absolving Solidbank and dismissing the complaint.
L.C. Diaz then appealed[8] to the Court of Appeals. On 27 October 1998, the Court of Appeals
issued its Decision reversing the decision of the trial court.
On 11 May 1999, the Court of Appeals issued its Resolution denying the motion for
reconsideration of Solidbank. The appellate court, however, modified its decision by deleting the
award of exemplary damages and attorneys fees.

The Ruling of the Trial Court

In absolving Solidbank, the trial court applied the rules on savings account written on the
passbook. The rules state that possession of this book shall raise the presumption of ownership and
any payment or payments made by the bank upon the production of the said book and entry therein
of the withdrawal shall have the same effect as if made to the depositor personally.[9]
At the time of the withdrawal, a certain Noel Tamayo was not only in possession of the passbook,
he also presented a withdrawal slip with the signatures of the authorized signatories of L.C. Diaz. The
specimen signatures of these persons were in the signature cards. The teller stamped the withdrawal
slip with the words Saving Teller No. 5. The teller then passed on the withdrawal slip to Genere Manuel
(Manuel) for authentication. Manuel verified the signatures on the withdrawal slip. The withdrawal slip
was then given to another officer who compared the signatures on the withdrawal slip with the
specimen on the signature cards. The trial court concluded that Solidbank acted with care and
observed the rules on savings account when it allowed the withdrawal of P300,000 from the savings
account of L.C. Diaz.
The trial court pointed out that the burden of proof now shifted to L.C. Diaz to prove that the
signatures on the withdrawal slip were forged. The trial court admonished L.C. Diaz for not offering in
evidence the National Bureau of Investigation (NBI) report on the authenticity of the signatures on the
withdrawal slip for P300,000. The trial court believed that L.C. Diaz did not offer this evidence because
it is derogatory to its action.
 Another provision of the rules on savings account states that the depositor must keep the
passbook under lock and key.[10] When another person presents the passbook for withdrawal prior to
Solidbanks receipt of the notice of loss of the passbook, that person is considered as the owner of the
passbook. The trial court ruled that the passbook presented during the questioned transaction was
now out of the lock and key and presumptively ready for a business transaction.[11]
Solidbank did not have any participation in the custody and care of the passbook. The trial court
believed that Solidbanks act of allowing the withdrawal of P300,000 was not the direct and proximate
cause of the loss. The trial court held that L.C. Diazs negligence caused the unauthorized
withdrawal. Three facts establish L.C. Diazs negligence: (1) the possession of the passbook by a
person other than the depositor L.C. Diaz; (2) the presentation of a signed withdrawal receipt by an
unauthorized person; and (3) the possession by an unauthorized person of a PBC check long closed
by L.C. Diaz, which check was deposited on the day of the fraudulent withdrawal.
The trial court debunked L.C. Diazs contention that Solidbank did not follow the precautionary
procedures observed by the two parties whenever L.C. Diaz withdrew significant amounts from its
account. L.C. Diaz claimed that a letter must accompany withdrawals of more than P20,000. The letter
must request Solidbank to allow the withdrawal and convert the amount to a managers check. The
bearer must also have a letter authorizing him to withdraw the same amount. Another person driving
a car must accompany the bearer so that he would not walk from Solidbank to the office in making the
withdrawal. The trial court pointed out that L.C. Diaz disregarded these precautions in its past
withdrawal. On 16 July 1991, L.C. Diaz withdrew P82,554 without any separate letter of authorization
or any communication with Solidbank that the money be converted into a managers check.
The trial court further justified the dismissal of the complaint by holding that the case was a last
ditch effort of L.C. Diaz to recover P300,000 after the dismissal of the criminal case against Ilagan.
The dispositive portion of the decision of the trial court reads:

IN VIEW OF THE FOREGOING, judgment is hereby rendered DISMISSING the complaint.

The Court further renders judgment in favor of defendant bank pursuant to its counterclaim the
amount of Thirty Thousand Pesos (P30,000.00) as attorneys fees.

With costs against plaintiff.

SO ORDERED.[12]

The Ruling of the Court of Appeals

The Court of Appeals ruled that Solidbanks negligence was the proximate cause of the
unauthorized withdrawal of P300,000 from the savings account of L.C. Diaz. The appellate court
reached this conclusion after applying the provision of the Civil Code on quasi-delict, to wit:

Article 2176. Whoever by act or omission causes damage to another, there being fault or
negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-
existing contractual relation between the parties, is called a quasi-delict and is governed by the
provisions of this chapter.

The appellate court held that the three elements of a quasi-delict are present in this case, namely: (a)
damages suffered by the plaintiff; (b) fault or negligence of the defendant, or some other person for
whose acts he must respond; and (c) the connection of cause and effect between the fault or
negligence of the defendant and the damage incurred by the plaintiff.
The Court of Appeals pointed out that the teller of Solidbank who received the withdrawal slip
for P300,000 allowed the withdrawal without making the necessary inquiry. The appellate court stated
that the teller, who was not presented by Solidbank during trial, should have called up the depositor
because the money to be withdrawn was a significant amount. Had the teller called up L.C. Diaz,
Solidbank would have known that the withdrawal was unauthorized. The teller did not even verify the
identity of the impostor who made the withdrawal. Thus, the appellate court found Solidbank liable for
its negligence in the selection and supervision of its employees.
The appellate court ruled that while L.C. Diaz was also negligent in entrusting its deposits to its
messenger and its messenger in leaving the passbook with the teller, Solidbank could not escape
liability because of the doctrine of last clear chance. Solidbank could have averted the injury suffered
by L.C. Diaz had it called up L.C. Diaz to verify the withdrawal.
The appellate court ruled that the degree of diligence required from Solidbank is more than that
of a good father of a family. The business and functions of banks are affected with public interest.
Banks are obligated to treat the accounts of their depositors with meticulous care, always having in
mind the fiduciary nature of their relationship with their clients. The Court of Appeals found Solidbank
remiss in its duty, violating its fiduciary relationship with L.C. Diaz.
The dispositive portion of the decision of the Court of Appeals reads:

WHEREFORE, premises considered, the decision appealed from is hereby REVERSED and a new
one entered.

1. Ordering defendant-appellee Consolidated Bank and Trust Corporation to pay plaintiff-

appellant the sum of Three Hundred Thousand Pesos (P300,000.00), with interest
thereon at the rate of 12% per annum from the date of filing of the complaint until
paid, the sum of P20,000.00 as exemplary damages, and P20,000.00 as attorneys
fees and expenses of litigation as well as the cost of suit; and

2. Ordering the dismissal of defendant-appellees counterclaim in the amount of P30,000.00

as attorneys fees.

SO ORDERED.[13]

Acting on the motion for reconsideration of Solidbank, the appellate court affirmed its decision but
modified the award of damages. The appellate court deleted the award of exemplary damages and
attorneys fees. Invoking Article 2231[14] of the Civil Code, the appellate court ruled that exemplary
damages could be granted if the defendant acted with gross negligence. Since Solidbank was guilty
of simple negligence only, the award of exemplary damages was not justified. Consequently, the
award of attorneys fees was also disallowed pursuant to Article 2208 of the Civil Code. The expenses
of litigation and cost of suit were also not imposed on Solidbank.
The dispositive portion of the Resolution reads as follows:

WHEREFORE, foregoing considered, our decision dated October 27, 1998 is affirmed with
modification by deleting the award of exemplary damages and attorneys fees, expenses of litigation
and cost of suit.

SO ORDERED.[15]

Hence, this petition.

The Issues

Solidbank seeks the review of the decision and resolution of the Court of Appeals on these
grounds:

I. THE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER BANK SHOULD

SUFFER THE LOSS BECAUSE ITS TELLER SHOULD HAVE FIRST CALLED
PRIVATE RESPONDENT BY TELEPHONE BEFORE IT ALLOWED THE
WITHDRAWAL OF P300,000.00 TO RESPONDENTS MESSENGER EMERANO
ILAGAN, SINCE THERE IS NO AGREEMENT BETWEEN THE PARTIES IN THE
OPERATION OF THE SAVINGS ACCOUNT, NOR IS THERE ANY BANKING LAW,
WHICH MANDATES THAT A BANK TELLER SHOULD FIRST CALL UP THE
DEPOSITOR BEFORE ALLOWING A WITHDRAWAL OF A BIG AMOUNT IN A
SAVINGS ACCOUNT.

II. THE COURT OF APPEALS ERRED IN APPLYING THE DOCTRINE OF LAST CLEAR
CHANCE AND IN HOLDING THAT PETITIONER BANKS TELLER HAD THE LAST
OPPORTUNITY TO WITHHOLD THE WITHDRAWAL WHEN IT IS UNDISPUTED
THAT THE TWO SIGNATURES OF RESPONDENT ON THE WITHDRAWAL SLIP
ARE GENUINE AND PRIVATE RESPONDENTS PASSBOOK WAS DULY
 PRESENTED, AND CONTRARIWISE RESPONDENT WAS NEGLIGENT IN THE
SELECTION AND SUPERVISION OF ITS MESSENGER EMERANO ILAGAN, AND
IN THE SAFEKEEPING OF ITS CHECKS AND OTHER FINANCIAL DOCUMENTS.

III. THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE INSTANT CASE IS A
LAST DITCH EFFORT OF PRIVATE RESPONDENT TO RECOVER
ITS P300,000.00 AFTER FAILING IN ITS EFFORTS TO RECOVER THE SAME
FROM ITS EMPLOYEE EMERANO ILAGAN.

IV. THE COURT OF APPEALS ERRED IN NOT MITIGATING THE DAMAGES AWARDED
AGAINST PETITIONER UNDER ARTICLE 2197 OF THE CIVIL CODE,
NOTWITHSTANDING ITS FINDING THAT PETITIONER BANKS NEGLIGENCE
WAS ONLY CONTRIBUTORY.[16]

The Ruling of the Court

The petition is partly meritorious.

Solidbanks Fiduciary Duty under the Law

The rulings of the trial court and the Court of Appeals conflict on the application of the law. The
trial court pinned the liability on L.C. Diaz based on the provisions of the rules on savings account, a
recognition of the contractual relationship between Solidbank and L.C. Diaz, the latter being a
depositor of the former. On the other hand, the Court of Appeals applied the law on quasi-delict to
determine who between the two parties was ultimately negligent. The law on quasi-delict or culpa
aquiliana is generally applicable when there is no pre-existing contractual relationship between the
parties.
We hold that Solidbank is liable for breach of contract due to negligence, or culpa contractual.
The contract between the bank and its depositor is governed by the provisions of the Civil Code
on simple loan.[17] Article 1980 of the Civil Code expressly provides that x x x savings x x x deposits
of money in banks and similar institutions shall be governed by the provisions concerning simple
loan. There is a debtor-creditor relationship between the bank and its depositor.The bank is the debtor
and the depositor is the creditor. The depositor lends the bank money and the bank agrees to pay the
depositor on demand. The savings deposit agreement between the bank and the depositor is the
contract that determines the rights and obligations of the parties.
The law imposes on banks high standards in view of the fiduciary nature of banking. Section 2 of
Republic Act No. 8791 (RA 8791),[18] which took effect on 13 June 2000, declares that the State
recognizes the fiduciary nature of banking that requires high standards of integrity and
performance.[19] This new provision in the general banking law, introduced in 2000, is a statutory
affirmation of Supreme Court decisions, starting with the 1990 case of Simex International v. Court
of Appeals,[20] holding that the bank is under obligation to treat the accounts of its depositors
with meticulous care, always having in mind the fiduciary nature of their relationship.[21]
This fiduciary relationship means that the banks obligation to observe high standards of integrity
and performance is deemed written into every deposit agreement between a bank and its depositor.
The fiduciary nature of banking requires banks to assume a degree of diligence higher than that of a
good father of a family. Article 1172 of the Civil Code states that the degree of diligence required of
an obligor is that prescribed by law or contract, and absent such stipulation then the diligence of a
good father of a family.[22] Section 2 of RA 8791 prescribes the statutory diligence required from banks
that banks must observe high standards of integrity and performance in servicing their
depositors. Although RA 8791 took effect almost nine years after the unauthorized withdrawal of
the P300,000 from L.C. Diazs savings account, jurisprudence[23] at the time of the withdrawal already
imposed on banks the same high standard of diligence required under RA No. 8791.
However, the fiduciary nature of a bank-depositor relationship does not convert the contract
between the bank and its depositors from a simple loan to a trust agreement, whether express or
implied. Failure by the bank to pay the depositor is failure to pay a simple loan, and not a breach of
trust.[24] The law simply imposes on the bank a higher standard of integrity and performance in
complying with its obligations under the contract of simple loan, beyond those required of non-bank
debtors under a similar contract of simple loan.
The fiduciary nature of banking does not convert a simple loan into a trust agreement because
banks do not accept deposits to enrich depositors but to earn money for themselves. The law allows
banks to offer the lowest possible interest rate to depositors while charging the highest possible
interest rate on their own borrowers. The interest spread or differential belongs to the bank and not to
the depositors who are not cestui que trust of banks. If depositors are cestui que trust of banks, then
the interest spread or income belongs to the depositors, a situation that Congress certainly did not
intend in enacting Section 2 of RA 8791.

Solidbanks Breach of its Contractual Obligation

Article 1172 of the Civil Code provides that responsibility arising from negligence in the
performance of every kind of obligation is demandable. For breach of the savings deposit agreement
due to negligence, or culpa contractual, the bank is liable to its depositor.
Calapre left the passbook with Solidbank because the transaction took time and he had to go to
Allied Bank for another transaction. The passbook was still in the hands of the employees of Solidbank
for the processing of the deposit when Calapre left Solidbank. Solidbanks rules on savings account
require that the deposit book should be carefully guarded by the depositor and kept under lock and
key, if possible. When the passbook is in the possession of Solidbanks tellers during withdrawals, the
law imposes on Solidbank and its tellers an even higher degree of diligence in safeguarding the
passbook.
Likewise, Solidbanks tellers must exercise a high degree of diligence in insuring that they return
the passbook only to the depositor or his authorized representative. The tellers know, or should know,
that the rules on savings account provide that any person in possession of the passbook is
presumptively its owner. If the tellers give the passbook to the wrong person, they would be clothing
that person presumptive ownership of the passbook, facilitating unauthorized withdrawals by that
person. For failing to return the passbook to Calapre, the authorized representative of L.C. Diaz,
Solidbank and Teller No. 6 presumptively failed to observe such high degree of diligence in
safeguarding the passbook, and in insuring its return to the party authorized to receive the same.
In culpa contractual, once the plaintiff proves a breach of contract, there is a presumption that the
defendant was at fault or negligent. The burden is on the defendant to prove that he was not at fault
or negligent. In contrast, in culpa aquiliana the plaintiff has the burden of proving that the defendant
was negligent. In the present case, L.C. Diaz has established that Solidbank breached its contractual
obligation to return the passbook only to the authorized representative of L.C. Diaz. There is thus a
presumption that Solidbank was at fault and its teller was negligent in not returning the passbook to
Calapre. The burden was on Solidbank to prove that there was no negligence on its part or its
employees.
Solidbank failed to discharge its burden. Solidbank did not present to the trial court Teller No. 6,
the teller with whom Calapre left the passbook and who was supposed to return the passbook to
him. The record does not indicate that Teller No. 6 verified the identity of the person who retrieved the
passbook. Solidbank also failed to adduce in evidence its standard procedure in verifying the identity
of the person retrieving the passbook, if there is such a procedure, and that Teller No. 6 implemented
this procedure in the present case.
Solidbank is bound by the negligence of its employees under the principle of respondeat
superior or command responsibility. The defense of exercising the required diligence in the selection
and supervision of employees is not a complete defense in culpa contractual, unlike in culpa
aquiliana.[25]
The bank must not only exercise high standards of integrity and performance, it must also insure
that its employees do likewise because this is the only way to insure that the bank will comply with its
fiduciary duty. Solidbank failed to present the teller who had the duty to return to Calapre the passbook,
and thus failed to prove that this teller exercised the high standards of integrity and performance
required of Solidbanks employees.

Proximate Cause of the Unauthorized Withdrawal

 Another point of disagreement between the trial and appellate courts is the proximate cause of
the unauthorized withdrawal. The trial court believed that L.C. Diazs negligence in not securing its
passbook under lock and key was the proximate cause that allowed the impostor to withdraw
the P300,000. For the appellate court, the proximate cause was the tellers negligence in processing
the withdrawal without first verifying with L.C. Diaz. We do not agree with either court.
Proximate cause is that cause which, in natural and continuous sequence, unbroken by any
efficient intervening cause, produces the injury and without which the result would not have
occurred.[26] Proximate cause is determined by the facts of each case upon mixed considerations of
logic, common sense, policy and precedent.[27]
L.C. Diaz was not at fault that the passbook landed in the hands of the impostor. Solidbank was
in possession of the passbook while it was processing the deposit. After completion of the transaction,
Solidbank had the contractual obligation to return the passbook only to Calapre, the authorized
representative of L.C. Diaz. Solidbank failed to fulfill its contractual obligation because it gave the
passbook to another person.
Solidbanks failure to return the passbook to Calapre made possible the withdrawal of
the P300,000 by the impostor who took possession of the passbook. Under Solidbanks rules on
savings account, mere possession of the passbook raises the presumption of ownership. It was the
negligent act of Solidbanks Teller No. 6 that gave the impostor presumptive ownership of the
passbook. Had the passbook not fallen into the hands of the impostor, the loss of P300,000 would not
have happened. Thus, the proximate cause of the unauthorized withdrawal was Solidbanks
negligence in not returning the passbook to Calapre.
We do not subscribe to the appellate courts theory that the proximate cause of the unauthorized
withdrawal was the tellers failure to call up L.C. Diaz to verify the withdrawal. Solidbank did not have
the duty to call up L.C. Diaz to confirm the withdrawal. There is no arrangement between Solidbank
and L.C. Diaz to this effect. Even the agreement between Solidbank and L.C. Diaz pertaining to
measures that the parties must observe whenever withdrawals of large amounts are made does not
direct Solidbank to call up L.C. Diaz.
There is no law mandating banks to call up their clients whenever their representatives withdraw
significant amounts from their accounts. L.C. Diaz therefore had the burden to prove that it is the usual
practice of Solidbank to call up its clients to verify a withdrawal of a large amount of money. L.C. Diaz
failed to do so.
Teller No. 5 who processed the withdrawal could not have been put on guard to verify the
withdrawal. Prior to the withdrawal of P300,000, the impostor deposited with Teller No. 6 theP90,000
PBC check, which later bounced. The impostor apparently deposited a large amount of money to
deflect suspicion from the withdrawal of a much bigger amount of money. The appellate court thus
erred when it imposed on Solidbank the duty to call up L.C. Diaz to confirm the withdrawal when no
law requires this from banks and when the teller had no reason to be suspicious of the transaction.
Solidbank continues to foist the defense that Ilagan made the withdrawal. Solidbank claims that
since Ilagan was also a messenger of L.C. Diaz, he was familiar with its teller so that there was no
more need for the teller to verify the withdrawal. Solidbank relies on the following statements in the
Booking and Information Sheet of Emerano Ilagan:

xxx Ilagan also had with him (before the withdrawal) a forged check of PBC and indicated the
amount of P90,000 which he deposited in favor of L.C. Diaz and Company. After successfully
withdrawing this large sum of money, accused Ilagan gave alias Rey (Noel Tamayo) his share of the
loot. Ilagan then hired a taxicab in the amount of P1,000 to transport him (Ilagan) to his home
province at Bauan, Batangas.Ilagan extravagantly and lavishly spent his money but a big part of his
loot was wasted in cockfight and horse racing. Ilagan was apprehended and meekly admitted his
guilt.[28] (Emphasis supplied.)

L.C. Diaz refutes Solidbanks contention by pointing out that the person who withdrew
the P300,000 was a certain Noel Tamayo. Both the trial and appellate courts stated that this Noel
Tamayo presented the passbook with the withdrawal slip.
We uphold the finding of the trial and appellate courts that a certain Noel Tamayo withdrew
the P300,000. The Court is not a trier of facts. We find no justifiable reason to reverse the factual
finding of the trial court and the Court of Appeals. The tellers who processed the deposit of the P90,000
check and the withdrawal of the P300,000 were not presented during trial to substantiate Solidbanks
claim that Ilagan deposited the check and made the questioned withdrawal. Moreover, the entry
quoted by Solidbank does not categorically state that Ilagan presented the withdrawal slip and the
passbook.
 Doctrine of Last Clear Chance

The doctrine of last clear chance states that where both parties are negligent but the negligent
act of one is appreciably later than that of the other, or where it is impossible to determine whose fault
or negligence caused the loss, the one who had the last clear opportunity to avoid the loss but failed
to do so, is chargeable with the loss.[29] Stated differently, the antecedent negligence of the plaintiff
does not preclude him from recovering damages caused by the supervening negligence of the
defendant, who had the last fair chance to prevent the impending harm by the exercise of due
diligence.[30]
We do not apply the doctrine of last clear chance to the present case. Solidbank is liable for
breach of contract due to negligence in the performance of its contractual obligation to L.C. Diaz. This
is a case of culpa contractual, where neither the contributory negligence of the plaintiff nor his last
clear chance to avoid the loss, would exonerate the defendant from liability.[31]Such contributory
negligence or last clear chance by the plaintiff merely serves to reduce the recovery of damages by
the plaintiff but does not exculpate the defendant from his breach of contract.[32]

Mitigated Damages

Under Article 1172, liability (for culpa contractual) may be regulated by the courts, according to
the circumstances. This means that if the defendant exercised the proper diligence in the selection
and supervision of its employee, or if the plaintiff was guilty of contributory negligence, then the courts
may reduce the award of damages. In this case, L.C. Diaz was guilty of contributory negligence in
allowing a withdrawal slip signed by its authorized signatories to fall into the hands of an
impostor. Thus, the liability of Solidbank should be reduced.
In Philippine Bank of Commerce v. Court of Appeals,[33] where the Court held the depositor
guilty of contributory negligence, we allocated the damages between the depositor and the bank on a
40-60 ratio. Applying the same ruling to this case, we hold that L.C. Diaz must shoulder 40% of the
actual damages awarded by the appellate court. Solidbank must pay the other 60% of the actual
damages.
WHEREFORE, the decision of the Court of Appeals
is AFFIRMED with MODIFICATION. Petitioner Solidbank Corporation shall pay private respondent
L.C. Diaz and Company, CPAs only 60% of the actual damages awarded by the Court of Appeals. The
remaining 40% of the actual damages shall be borne by private respondent L.C. Diaz and Company,
CPAs.Proportionate costs.
SO ORDERED.
G.R. No. 164601 September 27, 2006

SPOUSES ERLINDA BATAL AND FRANK BATAL, petitioners,

vs.
SPOUSES LUZ SAN PEDRO AND KENICHIRO TOMINAGA, respondents.

DECISION

AUSTRIA-MARTINEZ, J.:

Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court
questioning the Decision1dated September 29, 2003 promulgated by the Court of Appeals (CA) in
CA-G.R. CV No. 71758, which affirmed the Decision dated May 31, 2004 of the Regional Trial Court,
Branch 7, Malolos, Bulacan (RTC); and the CA Resolution2 dated July 19, 2004.

This case originated from an action for damages filed with the RTC by Spouses Luz San Pedro and
Kenichiro Tominaga (respondents) against Spouses Erlinda Batal and Frank Batal (petitioners) for
failure to exercise due care and diligence by the latter in the preparation of a survey which formed
the basis for the construction of a perimeter fence that was later discovered to have encroached on
a right of way.

The facts of the case, as found by the RTC and summarized by the CA, are as follows:

The spouses Luz San Pedro (Luz) and Kenichiro Tominaga (Kenichiro) are the owners of a
parcel of land, on which their house was erected, described as Lot 1509-C-3 with an area of
700 square meters situated in Barangay Malis, Guiguinto, Bulacan. Said property was
acquired by them from one Guillermo Narciso as evidenced by a "Bilihan ng Bahagi ng
Lupa" dated March 18, 1992.

The spouses Luz and Kenichiro then contracted the services of Frank Batal (Frank) who
represented himself as a surveyor to conduct a survey of their lot for the sum of P6,500.00.
As Luz and Kenichiro wanted to enclose their property, they again procured the services of
Frank for an additional fee of P1,500.00 in order to determine the exact boundaries of the
same by which they will base the construction of their perimeter fence.

Consequently, Frank placed concrete monuments marked P.S. on all corners of the lot which
were used as guides by Luz and Kenichiro in erecting a concrete fence measuring about
eight (8) feet in height and cost them P250,000.00 to build.

Sometime in 1996, a complaint was lodged against Luz and Kenichiro before the barangay
on the ground that the northern portion of their fence allegedly encroached upon a
 designated right-of-way known as Lot 1509-D. Upon verification with another surveyor, Luz
and Kenichiro found that their wall indeed overlapped the adjoining lot. They also discovered
that it was not Frank but his wife Erlinda Batal (Erlinda), who is a licensed geodetic engineer.

During their confrontations before the barangay, Frank admitted that he made a mistake and
offered to share in the expenses for the demolition and reconstruction of the questioned
portion of Luz and Kenichiro's fence. He however failed to deliver on his word, thus the filing
of the instant suit.

In their defense, the defendants-spouses Frank and Erlinda Batal submitted that Frank never
represented himself to be a licensed geodetic engineer. It was Erlinda who supervised her
husband's work [and t]hat the house and lot of plaintiffs, Luz and Kenichiro, were already
fenced even before they were contracted to do a resurvey of the same and the laying out of
the concrete monuments. The spouses Frank and Erlinda also refuted the spouses Luz's
and Kenichiro's allegation of negligence and averred that the subject complaint was
instituted to harass them.3

On May 31, 2001, the RTC rendered its Decision, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of plaintiffs and against defendants, as

follows:

1. Ordering the defendants [petitioners] to pay to plaintiffs [respondents] the sum

of P6,500.00 as refund for their professional fees by reason of the erroneous relocation
survey of the property in question;

2. Ordering the defendants to pay to plaintiffs the sum of Three Hundred Thousand Pesos
(P300,000.00) as actual damages;

3. Ordering the defendants to pay to plaintiffs the sum of P50,000.00 as attorney's fees; and

4. Ordering the defendants to pay to plaintiffs the costs of this suit.

SO ORDERED.4

Regarding the issue whether the petitioners failed to exercise due care and diligence in the conduct
of the resurvey which eventually caused damage to the respondents, the RTC held:

As against the bare and self-serving denials of the [petitioners], the testimony of [respondent]
Luz San Pedro that she constructed the encroaching perimeter fence in question using as
guide the cyclone concrete monuments marked P.S. that were installed by [petitioner] Frank
Batal and his survey team, is more credible. As testified to by [respondent] Luz San Pedro,
she proceeded with the construction of the perimeter fence in question upon assurance
given by [petitioner] Frank Batal that she could already do so as there were already concrete
monuments placed on the boundaries of her property x x x.

xxxx

It does not matter that the location plan dated May 3, 1992 (Exhibit "B") was later approved
by the DENR, as it is quite apparent that the mistake committed by [petitioner] Frank Batal
pertains to the wrong locations of the concrete monuments that he placed on the subject
property and which were used or relied upon by the [respondents] in putting up the fence in
question. Such mistake or negligence happened because quite obviously the installation of
said concrete monuments was without the needed supervision of [respondent] Erlinda Batal,
the one truly qualified to supervise the same. x x x x

x x x x5

The RTC found that indeed the perimeter fence constructed by the respondents encroached on the
right-of-way in question; that the preponderance of evidence supports the finding that the
encroachment was caused by the negligence of the petitioners; that, in particular, respondents
constructed the fence based on the concrete cyclone monuments that were installed by petitioner
Frank Batal and after he gave his assurance that they can proceed accordingly; that the negligence
in the installation of the monuments was due to the fact that petitioner Erlinda Batal, the one truly
qualified, did not provide the needed supervision over the work; and, lastly, that the testimonies of
the petitioners on the whole were not credible.

The petitioners appealed to the CA. On September 29, 2003, the CA rendered its Decision affirming
the RTC decision in its entirety.6

In concurring with the findings of the RTC, the CA in addition held that the petitioners cannot claim
that the error of the construction of the fence was due to the unilateral act of respondents in building
the same without their consent, since the former gave their word that the arrangement of the
monuments of title accurately reflected the boundaries of the lot; and that, as a result, the northern
portion of the fence had to be demolished and rebuilt in order to correct the error.

Hence, the instant Petition assigning the following errors:

I.

The Court of Appeals erred in ruling for the Respondents and basing its decision [o]n the
following jurisprudence:

(a) "[A] party, having performed affirmative acts upon which another person based his
subsequent actions, cannot thereafter refute his acts or renege on the effects of the same, to
the prejudice of the latter. (Pureza vs. Court of Appeals, 290 SCRA 110)"; and

(b) "Findings of fact made by the trial court [are] entitled to great weight and respect. (Lopez
vs. Court of Appeals, 322 SCRA 686).

II.

The Court of Appeals erred in ruling in favor of Respondents by premising its Decision on [a]
misapprehension of facts amounting to grave abuse of discretion . . . which is also a ground
for a Petition for Review.7

The petition must fail.

The petitioners insist that there had been no error in their resurvey, but rather, the error occurred in
respondents' fencing; that the proximate cause of the damage had been respondents' own
negligence such that the fencing was done unilaterally and solely by them without the prior approval
and supervision of the petitioners. And to justify their case, the petitioners argue that the courts a
quo misapprehended the facts. Accordingly, they ask this Court to review findings of fact.

A review of the factual findings of the CA and the RTC are matters not ordinarily reviewable in a
petition for review on certiorari.8 Well-established is the rule that factual findings of the trial court and
the CA are entitled to great weight and respect9 and will not be disturbed on appeal save in
exceptional circumstances,10 none of which obtains in the present case. This Court must stress that
the findings of fact of the CA are conclusive on the parties and carry even more weight when these
coincide with the factual findings of the trial court,11 as in this case.

The Court will not weigh the evidence all over again unless there is a showing that the findings of the
lower court are totally devoid of support or are clearly erroneous so as to constitute serious abuse of
discretion.12 The petitioners failed to demonstrate this point. On the contrary, the finding of the
courts a quo that the damage caused to the respondents was due to petitioners' negligence is
sufficiently supported by the evidence on record. For these reasons, the petitioner's contentions bear
no import.

Culpa, or negligence, may be understood in two different senses: either as culpa aquiliana, which is
the wrongful or negligent act or omission which creates a vinculum juris and gives rise to an
obligation between two persons not formally bound by any other obligation, or as culpa
contractual, which is the fault or negligence incident in the performance of an obligation which
already existed, and which increases the liability from such already existing obligation.13 Culpa
aquiliana is governed by Article 2176 of the Civil Code and the immediately following Articles;
while culpa contractual is governed by Articles 1170 to 1174 of the same Code.14
Articles 1170 and 1173 provide:

ART. 1170. Those who in the performance of their obligations are guilty of fraud, negligence,
or delay, and those who in any manner contravene the tenor thereof, are liable for damages.

ART. 1173. The fault or negligence of the obligor consists in the omission of that diligence
which is required by the nature of the obligation and corresponds with the circumstances of
the persons, of the time and of the place. When negligence shows bad faith, the provisions
of articles 1171 and 2202, paragraph 2, shall apply.

If the law or contract does not state the diligence which is to be observed in the performance,
that which is expected of a good father of a family shall be required.

In the present case, it is clear that the petitioners, in carrying out their contractual obligations, failed
to exercise the requisite diligence in the placement of the markings for the concrete perimeter fence
that was later constructed. The placement of the markings had been done solely by petitioner Frank
Batal who is not a geodetic engineer. It was later discovered that it was not he but his wife, petitioner
Erlinda Batal, who is the licensed geodetic engineer and who is, therefore, the one qualified to do
the work. Petitioner Frank Batal's installation of the concrete cyclone monuments had been done
without the adequate supervision of his wife, Erlinda. As a result, the placement of the monuments
did not accurately reflect the dimensions of the lot. The respondents, upon assurance given by
petitioner Frank Batal that they could proceed with the construction of the perimeter fence by relying
on the purported accuracy of the placement of the monuments, erected their fence which turned out
to encroach on an adjacent easement. Because of the encroachment, the respondents had to
demolish and reconstruct the fence and, thus, suffered damages.

The Court affirms and adopts the findings of the CA, to wit:

Records show that the services of the [petitioners] Frank and Erlinda were initially contracted
to segregate Luz and Kenichiro's property from its adjoining lots. When the [respondent]
spouses Luz and Kenichiro planned to fence the segregated lot, they again commissioned
[petitioners] Frank and Erlinda to conduct a resurvey in order to determine the precise
boundaries of their property upon which they will base the construction of their fence. It was
also shown that in the course of the resurvey, Frank caused the installation of monuments of
title on the four (4) corners of Luz and Kenichiro's property and that he instructed them to just
follow the same in building their fence.

[Petitioners] Frank and Erlinda cannot thus validly claim that the error in the construction of
the northern portion of the fence was due to the spouses Luz and Kenichiro's act of building
the same without their consent. This is considering that the former led the latter to believe
the purported accuracy of the resurvey and exactness of the lot's boundaries based on the
monuments of title which they installed.

It has been ruled that "[A] party, having performed affirmative acts upon which another
person based his subsequent actions, cannot thereafter refute his acts or renege on the
effects of the same, to the prejudice of the latter." (Pureza v. Court of Appeals, 290 SCRA
110)

The foregoing clearly supports the findings of the RTC that the spouses Batal committed a
mistake in the conduct of their business that led to the encroachment of plaintiffs-appellees'
fence on the adjoining alley-lot. As a result, the northern portion ha[d] to be torn down and
rebuilt in order to correct the error in its original construction. The defendants-appellants
cannot be excused from the effects of their actions in the survey of plaintiffs-appellees' lot.

We therefore concur with the findings of the RTC holding defendants-appellants liable for
damages in the case at bar. "Findings of fact made by the trial court is entitled to great
weight and respect." (Lopez v. Court of Appeals, 322 SCRA 686)15

Being guilty of a breach of their contract, petitioners are liable for damages suffered by the
respondents in accordance with Articles 1170 and 2201 of the Civil Code,16 which state:

Art. 1170. Those who in the performance of their obligations are guilty of fraud, negligence,
or delay and those who in any manner contravene the tenor thereof are liable for damages
 Art. 2201. In contracts and quasi-contracts, the damages for which the obligor who acted in
good faith is liable shall be those that are the natural and probable consequences of the
breach of the obligation, and which the parties have foreseen or could have reasonably
foreseen at the time the obligation was constituted.

In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all
damages which may be reasonably attributed to the non-performance of the obligation.

Thus, the Court agrees with the CA's affirmance of the findings of the RTC on the matter of
damages, to wit:

Going now to the claims for damages, Engr. Arnold Martin testified on his computation and
estimate (Exhibits "G" and "G-1) that the total cost for the demolition and reconstruction of
the perimeter fence in question would be in the total amount of P428,163.90, and this was
not at all disputed by the defendants, whose counsel waived cross-examination. This
estimate is practically double the amount of the cost of constructing said fence as testified to
by plaintiff Luz San Pedro as she was told that it is much costlier to demolish and reconstruct
a fence than to simply erect one because of the added expense involved in tearing it down
and hauling its debris. On the other hand, said plaintiff stated that the iron decorative grills of
the fence, which is re-usable, cost her P50,000.00, and it is only proper to deduct said
amount from the total cost of reconstructing the fence in question. At the same time, some
figures in the said estimate appear to be quite excessive, such as the estimated cost for
demolition which was quoted at P25,000.00 in addition to the amount of excavation priced
at P30,000.00 and the cost of hauling of scrap materials at P10,000.00. The court believes
that the sum of P300,000.00 for the demolition and reconstruction of the fence in question
would be reasonable considering that the original cost for its construction was only
about P200,000.00, and considering further that its iron grills are re-usable.

The plaintiffs are likewise entitled to recover attorney's fees considering that they were
compelled by the defendants to resort to court action in order to protect their rights and
interest, as defendants, particularly defendant Frank Batal, failed and refused repeatedly to
even attend the confrontation of conciliation meetings arranged between him and the
plaintiffs by the barangay authorities concerned, and to honor his promise to help in
shouldering the cost of reconstructing the fence in question.

On the other hand, there is no legal or factual bases for the claim of the plaintiffs for moral or
exemplary damages as there was no showing at all that defendants acted with malice or in
bad faith.

In a long line of cases, we have consistently ruled that in the absence of a wrongful
act or omission or of fraud or bad faith, moral damages cannot be awarded. (R & B
Surety Insurance Co. v. Intermediate Court of Appeals, 129 SCRA 736; Guita v.
Court of Appeals, 139 SCRA 576).17

WHEREFORE, the instant petition is DENIED and the assailed Decision and Resolution of the Court
of Appeals are AFFIRMED.

Costs against petitioners.

SO ORDERED.
G.R. No. L-21438 September 28, 1966

AIR FRANCE, petitioner,

vs.
RAFAEL CARRASCOSO and the HONORABLE COURT OF APPEALS, respondents.

Lichauco, Picazo and Agcaoili for petitioner.

Bengzon Villegas and Zarraga for respondent R. Carrascoso.

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. 110295 October 18, 1993

COCA-COLA BOTTLERS PHILIPPINES, INC.,

vs.

THE HONORABLE COURT OF APPEALS (Fifth Division) and MS. LYDIA GERONIMO,
respondents.

Angara, Abello, Concepcion, Regala & Cruz Law Offices for petitioner.

Alejandro M. Villamil for private respondent.

DAVIDE, JR., J.:

This case concerns the proprietress of a school canteen which had to close down as a consequence
of the big drop in its sales of soft drinks triggered by the discovery of foreign substances in certain
beverages sold by it. The interesting issue posed is whether the subsequent action for damages by
the proprietress against the soft drinks manufacturer should be treated as one for breach of implied
warranty against hidden defects or merchantability, as claimed by the manufacturer, the petitioner
herein which must therefore be filed within six months from the delivery of the thing sold pursuant to
Article 1571 of the Civil Code, or one for quasi-delict, as held by the public respondent, which can be
filed within four years pursuant to Article 1146 of the same Code.

On 7 May 1990, Lydia L. Geronimo, the herein private respondent, filed a complaint for damages
against petitioner with the Regional Trial Court (RTC) of Dagupan City. 1 The case was docketed as
Civil Case No. D-9629. She alleges in her complaint that she was the proprietress of Kindergarten
Wonderland Canteen docketed as located in Dagupan City, an enterprise engaged in the sale of soft
drinks (including Coke and Sprite) and other goods to the students of Kindergarten Wonderland and
to the public; on or about 12 August 1989, some parents of the students complained to her that the
Coke and Sprite soft drinks sold by her contained fiber-like matter and other foreign substances or
particles; he then went over her stock of softdrinks and discovered the presence of some fiber-like
substances in the contents of some unopened Coke bottles and a plastic matter in the contents of an
unopened Sprite bottle; she brought the said bottles to the Regional Health Office of the Department
of Health at San Fernando, La Union, for examination; subsequently, she received a letter from the
Department of Health informing her that the samples she submitted "are adulterated;" as a
consequence of the discovery of the foreign substances in the beverages, her sales of soft drinks
severely plummeted from the usual 10 cases per day to as low as 2 to 3 cases per day resulting in
losses of from P200.00 to P300.00 per day, and not long after that she had to lose shop on 12
December 1989; she became jobless and destitute; she demanded from the petitioner the payment
of damages but was rebuffed by it. She prayed for judgment ordering the petitioner to pay her
P5,000.00 as actual damages, P72,000.00 as compensatory damages, P500,000.00 as moral
damages, P10,000.00 as exemplary damages, the amount equal to 30% of the damages awarded
as attorney's fees, and the costs. 2

The petitioner moved to dismiss 3 the complaint on the grounds of failure to exhaust administrative
remedies and prescription. Anent the latter ground, the petitioner argued that since the complaint is
for breach of warranty under Article 1561 of the said Code. In her Comment 4 thereto, private
respondent alleged that the complaint is one for damages which does not involve an administrative
action and that her cause of action is based on an injury to plaintiff's right which can be brought
within four years pursuant to Article 1146 of the Civil Code; hence, the complaint was seasonably
filed. Subsequent related pleadings were thereafter filed by the parties. 5

In its Order of 23 January 1991, 6 the trial court granted the motion to dismiss. It ruled that the
doctrine of exhaustion of administrative remedies does not apply as the existing administrative
remedy is not adequate. It also stated that the complaint is based on a contract, and not on quasi-
delict, as there exists pre-existing contractual relation between the parties; thus, on the basis of
Article 1571, in relation to Article 1562, the complaint should have been filed within six months from
the delivery of the thing sold.

Her motion for the reconsideration of the order having been denied by the trial court in its Order of
17 April 1991, 7the private respondent came to this Court via a petition for review on certiorari which
we referred to the public respondent "for proper determination and disposition. 8 The public
respondent docketed the case as CA-G.R. SP No. 25391.

In a decision promulgated on 28 January 1992, 9 the public respondent annulled the questioned
orders of the RTC and directed it to conduct further proceedings in Civil Case No. D-9629. In holding
for the private respondent, it ruled that:

Petitioner's complaint being one for quasi-delict, and not for breach of warranty as
respondent contends, the applicable prescriptive period is four years.

It should be stressed that the allegations in the complaint plainly show that it is an
action or damages arising from respondent's act of "recklessly and negligently
manufacturing adulterated food items intended to be sold or public consumption" (p.
25, rollo). It is truism in legal procedure that what determines the nature of an action
are the facts alleged in the complaint and those averred as a defense in the
defendant's answer (I Moran 126; Calo v. Roldan, 76 Phil. 445; Alger Electric, Inc. v.
CA, 135 SCRA 340).

Secondly, despite the literal wording of Article 2176 of the Civil code, the existence of
contractual relations between the parties does not absolutely preclude an action by
one against the other for quasi-delict arising from negligence in the performance of a
contract.

In Singson v. Court of Appeals (23 SCRA 1117), the Supreme Court ruled:

It has been repeatedly held: that the existence of a contract between

the parties does not bar the commission of a tort by the one against
the other and the consequent recovery of damages therefor
. . . . Thus in Air France vs. Carrascoso, . . . (it was held that)
although the relation between a passenger and a carrier is
"contractual both in origin and in nature the act that breaks the
contract may also be a tort.

Significantly, in American jurisprudence, from which Our law on Sales was taken, the
authorities are one in saying that he availability of an action or breach of warranty
does not bar an action for torts in a sale of defective goods. 10

Its motion for the reconsideration of the decision having been denied by the public respondent in its
Resolution of 14 May 1993, 11 the petitioner took his recourse under Rule 45 of the Revised Rules of
Court. It alleges in its petition that:

I.
 THE HONORABLE COURT OF APPEALS COMMITTED A GRAVE AND
REVERSIBLE ERROR IN RULING THAT ARTICLE 2176, THE GENERAL
PROVISION ON QUASI-DELICTS, IS APPLICABLE IN THIS CASE WHEN THE
ALLEGATIONS OF THE COMPLAINT CLEARLY SHOW THAT PRIVATE
RESPONDENT'S CAUSE OF ACTION IS BASEDON BREACH OF A SELLER'S
IMPLIED WARRANTIES UNDER OUR LAW ON SALES.

II.

CORROLARILY, THE HONORABLE COURT OF APPEALS COMMITTED A GRAVE

AND REVERSIBLE ERROR IN OVERRULING PETITIONER'S ARGUMENT THAT
PRIVATE RESPONDENT'S CAUSE OF ACTION HAD PRESCRIBED UNDER
ARTICLE 1571 OF THE CIVIL CODE. 12

The petitioner insists that a cursory reading of the complaint will reveal that the primary legal basis
for private respondent's cause of action is not Article 2176 of the Civil Code on quasi-delict — for the
complaint does not ascribe any tortious or wrongful conduct on its part — but Articles 1561 and 1562
thereof on breach of a seller's implied warranties under the law on sales. It contends the existence of
a contractual relation between the parties (arising from the contract of sale) bars the application of
the law on quasi-delicts and that since private respondent's cause of action arose from the breach of
implied warranties, the complaint should have been filed within six months room delivery of the soft
drinks pursuant to Article 171 of the Civil Code.

In her Comment the private respondent argues that in case of breach of the seller's implied
warranties, the vendee may, under Article 1567 of the Civil Code, elect between withdrawing from
the contract or demanding a proportionate reduction of the price, with damages in either case. She
asserts that Civil Case No. D-9629 is neither an action for rescission nor for proportionate reduction
of the price, but for damages arising from a quasi-delict and that the public respondent was correct
in ruling that the existence of a contract did not preclude the action for quasi-delict. As to the issue of
prescription, the private respondent insists that since her cause of action is based on quasi-delict,
the prescriptive period therefore is four (4) years in accordance with Article 1144 of the Civil Code
and thus the filing of the complaint was well within the said period.

We find no merit in the petition. The public respondent's conclusion that the cause of action in Civil
Case No. D-9629 is found on quasi-delict and that, therefore, pursuant to Article 1146 of the Civil
Code, it prescribes in four (4) years is supported by the allegations in the complaint, more
particularly paragraph 12 thereof, which makes reference to the reckless and negligent manufacture
of "adulterated food items intended to be sold for public consumption."

The vendee's remedies against a vendor with respect to the warranties against hidden defects of or
encumbrances upon the thing sold are not limited to those prescribed in Article 1567 of the Civil
Code which provides:

Art. 1567. In the case of Articles 1561, 1562, 1564, 1565 and 1566, the vendee may
elect between withdrawing from the contract and demanding a proportionate
reduction of the price, with damages either
case. 13

The vendee may also ask for the annulment of the contract upon proof of error or fraud, in which
case the ordinary rule on obligations shall be applicable. 14 Under the law on obligations,
responsibility arising from fraud is demandable in all obligations and any waiver of an action for
future fraud is void. Responsibility arising from negligence is also demandable in any obligation, but
such liability may be regulated by the courts, according to the circumstances. 15 Those guilty of fraud,
negligence, or delay in the performance of their obligations and those who in any manner
contravene the tenor thereof are liable for damages. 16

The vendor could likewise be liable for quasi-delict under Article 2176 of the Civil Code, and an
action based thereon may be brought by the vendee. While it may be true that the pre-existing
contract between the parties may, as a general rule, bar the applicability of the law on quasi-delict,
the liability may itself be deemed to arise fromquasi-delict, i.e., the acts which breaks the contract
may also be a quasi-delict. Thus, in Singson vs. Bank of the Philippine Islands, 17 this Court stated:

We have repeatedly held, however, that the existence of a contract between the
parties does not bar the commission of a tort by the one against the other and the
 consequent recovery of damages therefor. 18 Indeed, this view has been, in effect,
reiterated in a comparatively recent case. Thus, in Air France
vs. Carrascoso, 19 involving an airplane passenger who, despite hi first-class ticket,
had been illegally ousted from his first-class accommodation and compelled to take a
seat in the tourist compartment, was held entitled to recover damages from the air-
carrier, upon the ground of tort on the latter's part, for, although the relation between
the passenger and a carrier is "contractual both in origin and nature . . . the act that
breaks the contract may also be a tort.

Otherwise put, liability for quasi-delict may still exist despite the presence of contractual
relations. 20

Under American law, the liabilities of a manufacturer or seller of injury-causing products may
be based on negligence, 21 breach of warranty, 22 tort, 23 or other grounds such as fraud,
deceit, or misrepresentation. 24Quasi-delict, as defined in Article 2176 of the Civil Code,
(which is known in Spanish legal treaties as culpa aquiliana, culpa extra-contractual or cuasi-
delitos) 25 is homologous but not identical to tort under the common law, 26 which includes not
only negligence, but also intentional criminal acts, such as assault and battery, false
imprisonment and deceit. 27

It must be made clear that our affirmance of the decision of the public respondent should by no
means be understood as suggesting that the private respondent's claims for moral damages have
sufficient factual and legal basis.

IN VIEW OF ALL THE FOREGOING, the instant petition is hereby DENIED for lack of merit, with
costs against the petitioner.

SO ORDERED.
 BASIC ELEMENTS OF
TORTS
G.R. No. L-29462 March 7, 1929

IGNACIO DEL PRADO, plaintiff-appellee,

vs.
MANILA ELECTRIC CO., defendant-appellant.

Ross, Lawrence and Selph and Antonio T. Carrascoso, jr., for appellant.
Vicente Sotto for appellee.

STREET, J.:

This action was instituted in the Court of First Instance of Manila by Ignacio del Prado to recover
damages in the amount of P50,000 for personal injuries alleged to have been caused by the
negligence of te defendant, the Manila Electric Company, in the operation of one of its street cars in
the City of Manila. Upon hearing the cause the trial court awarded to the plaintiff the sum of P10,000,
as damages, with costs of suit, and the defendant appealed.

The appellant, the Manila Electric Company, is engaged in operating street cars in the City for the
conveyance of passengers; and on the morning of November 18, 1925, one Teodorico Florenciano,
as appellant's motorman, was in charge of car No. 74 running from east to west on R. Hidalgo
Street, the scene of the accident being at a point near the intersection of said street and Mendoza
Street. After the car had stopped at its appointed place for taking on and letting off passengers, just
east of the intersection, it resumed its course at a moderate speed under the guidance of the
motorman. The car had proceeded only a short distance, however, when the plaintiff, Ignacio del
Prado, ran across the street to catch the car, his approach being made from the left. The car was of
the kind having entrance and exist at either end, and the movement of the plaintiff was so timed that
he arrived at the front entrance of the car at the moment when the car was passing.

The testimony of the plaintiff and of Ciriaco Guevara, one of his witnesses, tends to shows that the
plaintiff, upon approaching the car, raised his hand as an indication to the motorman of his desire to
board the car, in response to which the motorman eased up a little, without stopping. Upon this the
plaintiff seized, with his hand, the front perpendicular handspot, at the same time placing his left foot
upon the platform. However, before the plaintiff's position had become secure, and even before his
raised right foot had reached the flatform, the motorman applied the power, with the result that the
car gave a slight lurch forward. This sudden impulse to the car caused the plaintiff's foot to slip, and
his hand was jerked loose from the handpost, He therefore fell to the ground, and his right foot was
caught and crushed by the moving car. The next day the member had to be amputated in the
hospital. The witness, Ciriaco Guevara, also stated that, as the plaintiff started to board the car, he
grasped the handpost on either side with both right and left hand. The latter statement may possibly
be incorrect as regards the use of his right hand by the plaintiff, but we are of the opinion that the
finding of the trial court to the effect that the motorman slowed up slightly as the plaintiff was
boarding the car that the plaintiff's fall was due in part at lease to a sudden forward movement at the
moment when the plaintiff put his foot on the platform is supported by the evidence and ought not to
be disturbed by us.

The motorman stated at the trial that he did not see the plaintiff attempting to board the car; that he
did not accelerate the speed of the car as claimed by the plaintiff's witnesses; and that he in fact
knew nothing of the incident until after the plaintiff had been hurt and some one called to him to stop.
We are not convinced of the complete candor of this statement, for we are unable to see how a
motorman operating this car could have failed to see a person boarding the car under the
circumstances revealed in this case. It must be remembered that the front handpost which, as all
witness agree, was grasped by the plaintiff in attempting to board the car, was immediately on the
left side of the motorman.

With respect to the legal aspects of the case we may observe at the outset that there is no obligation
on the part of a street railway company to stop its cars to let on intending passengers at other points
than those appointed for stoppage. In fact it would be impossible to operate a system of street cars if
a company engage in this business were required to stop any and everywhere to take on people
who were too indolent, or who imagine themselves to be in too great a hurry, to go to the proper
places for boarding the cars. Nevertheless, although the motorman of this car was not bound to stop
to let the plaintiff on, it was his duty to do act that would have the effect of increasing the plaintiff's
peril while he was attempting to board the car. The premature acceleration of the car was, in our
opinion, a breach of this duty.

The relation between a carrier of passengers for hire and its patrons is of a contractual nature; and
in failure on the part of the carrier to use due care in carrying its passengers safely is a breach of
duty (culpa contructual) under articles 1101, 1103 and 1104 of the Civil Code. Furthermore, the duty
that the carrier of passengers owes to its patrons extends to persons boarding the cars as well as to
those alighting therefrom. The case of Cangco vs. Manila Railroad Co. (38 Phil., 768), supplies an
instance of the violation of this duty with respect to a passenger who was getting off of a train. In that
case the plaintiff stepped off of a moving train, while it was slowing down in a station, and at the time
when it was too dark for him to see clearly where he was putting his feet. The employees of the
company had carelessly left watermelons on the platform at the place where the plaintiff alighted,
with the result that his feet slipped and he fell under the car, where his right arm badly injured. This
court held that the railroad company was liable for breach positive duty (culpa contractual), and the
plaintiff was awarded damages in the amount of P2,500 for the loss of his arm. In the opinion in that
case the distinction is clearly drawn between a liability for negligence arising from breach of
contructual duty and that arising articles 1902 and 1903 of the Civil Code (culpa aquiliana).

The distiction between these two sorts of negligence is important in this jurisdiction, for the reason
that where liability arises from a mere tort (culpa aquiliana), not involving a breach of positive
obligation, an employer, or master, may exculpate himself, under the last paragraph of article 1903
of the Civil Code, by providing that he had exercised due degligence to prevent the damage;
whereas this defense is not available if the liability of the master arises from a breach of contrauctual
duty (culpa contractual). In the case bfore us the company pleaded as a special defense that it had
used all the deligence of a good father of a family to prevent the damage suffered by the plaintiff;
and to establish this contention the company introduced testimony showing that due care had been
used in training and instructing the motorman in charge of this car in his art. But this proof is
irrelevant in view of the fact that the liability involved was derived from a breach of obligation under
article 1101 of the Civil Code and related provisions. (Manila Railroad Co. vs. Compana
Transatlantica and Atlantic, Gulf & Pacific Co., 38 Phil., 875, 887; De Guia vs. Manila Electric
Railroad & Light Co., 40 Phil., 706, 710.)

Another practical difference between liability for negligence arising under 1902 of the Civil Code and
liability arising from negligence in the performance of a positive duty, under article 1101 and related
provisions of the Civil Code, is that, in dealing with the latter form of negligence, the court is given a
discretion to mitigate liability according to the circumstances of the case (art 1103). No such general
discretion is given by the Code in dealing with liability arising under article 1902; although possibly
the same end is reached by courts in dealing with the latter form of liability because of the latitude of
the considerations pertinent to cases arising under this article.

As to the contributory negligence of the plaintiff, we are of the opinion that it should be treated, as in
Rakes vs. Atlantic, Gulf and Pacific Co. (7 Phil., 359), as a mitigating circumstance under article
1103 of the Civil Code. It is obvious that the plaintiff's negligence in attempting to board the moving
car was not the proximate cause of the injury. The direct and proximate cause of the injury was the
act of appellant's motorman in putting on the power prematurely. A person boarding a moving car
must be taken to assume the risk of injury from boarding the car under the conditions open to his
view, but he cannot fairly be held to assume the risk that the motorman, having the situation in view,
will increase his peril by accelerating the speed of the car before he is planted safely on the platform.
Again, the situation before us is one where the negligent act of the company's servant succeeded
the negligent act of the plaintiff, and the negligence of the company must be considered the
proximate cause of the injury. The rule here applicable seems to be analogous to, if not identical with
that which is sometimes referred to as the doctrine of "the last clear chance." In accordance with this
doctrine, the contributory negligence of the party injured will not defeat the action if it be shown that
the defendant might, by the exercise of reasonable care and prudence, have avoided the
consequences of the negligence of the injured party (20 R. C. L., p. 139; Carr vs. Interurban Ry. Co.,
185 Iowa, 872; 171 N. W., 167). The negligence of the plaintiff was, however, contributory to the
accident and must be considered as a mitigating circumstance.

With respect to the effect of this injury upon the plaintiff's earning power, we note that, although he
lost his foot, he is able to use an artificial member without great inconvenience and his earning
capacity has probably not been reduced by more than 30 per centum. In view of the precedents
found in our decisions with respect to the damages that ought to be awarded for the loss of limb, and
more particularly Rakes vs. Atlantic, Gulf and Pacific Co. (7 Phil., 359); Cangco vs. Manila Railroad
Co. (38 Phil., 768); and Borromeo vs. Manila Electric Railroad and Light Co. (44 Phil., 165), and in
view of all the circumstances connected with the case, we are of the opinion that the plaintiff will be
adequately compensated by an award of P2,500.

It being understood, therefore, that the appealed judgment is modified by reducing the recovery to
the sum of P2,500, the judgment, as thus modified, is affirmed. So ordered, with costs against the
appellant.

Malcolm, Villamor, Ostrand, Romualdez and Villa-Real, JJ., concur.

Separate Opinions

JOHNSON, J., dissenting:

This appeal presents a hard case, whichever way it is decided.

I read the entire record in this case before it was submitted to the second division for decision. I was
then theponente. I was then convinced, as I am now, after a re-examination of the record, that the
judgment of the lower court should be revoked for the following reasons:

(a) That the motorman managed the car carefully and with ordinary prudence at the moment
the alleged accident occured;

(b) That the appellee acted with imprudence and lack of due care in attempting to board a
street car while the same was in motion; and

(c) That he contributed to his own injury, without any negligence or malice or imprudence on
the part of the defendant.

There is nothing in the record which even remotely justifies a contribution of damages between the
appellee and the appellant. The appellee should be required to suffer the damages which he himself,
through his own negligence, occasioned, without any negligence, imprudence or malice on the part
of the appellant.

Therefore, the judgment of the court a quo should be revoked, and the appellant absolved from all
liability under the complaint.

G.R. No. L-33380 December 17, 1930

TEODORA ASTUDILLO, plaintiff-appellee,

vs.
MANILA ELECTRIC COMPANY, defendant-appellant.

Ross, Lawrence and Selph and Antonio T. Carrascoso, Jr. for appellant.
Vicente Sotto and Adolfo Brillantes for appellee.

MALCOLM, J.:

In August, 1928, a young man by the name of Juan Diaz Astudillo met his death through
electrocution, when he placed his right hand on a wire connected with an electric light pole situated
near Santa Lucia Gate, Intramuros, in the City of Manila. Shortly thereafter, the mother of the
deceased instituted an action in the Court of First Instance of Manila to secure from the Manila
Electric Company damages in the amount of P30,000. The answer of the company set up as special
defenses that the death of Juan Diaz Astudillo was due solely to his negligence and lack of care, and
that the company had employed the diligence of a good father of a family to prevent the injury. After
trial, which included an ocular inspection of the place where the fatality occurred, judgment was
rendered in favor of the plaintiff and against the defendant for the sum of P15,000, and costs.

As is well known, a wall surrounds the District of Intramuros, in the City of Manila. At intervals, gates
for the ingress and egress of pedestrians and vehicles penetrate the wall. One of these openings
toward Manila Bay is known as the Santa Lucia Gate. Above this gate and between the wall and a
street of Intramuros is a considerable space sodded with grass with the portion directly over the gate
paved with stone. Adjoining this place in Intramuros are the buildings of the Ateneo de Manila, the
Agustinian Convent, the Bureau of Public Works, and the Santa Lucia Barracks. The proximity to
these structures and to the congested district in the Walled City has made this a public place where
persons come to stroll, to rest, and to enjoy themselves. An employee of the City of Manila, a
number of years ago, put up some wire to keep persons from dirtying the premises, but this wire has
fallen down and is no obstacle to those desiring to make use of the place. No prohibitory signs have
been posted.

Near this place in the street of Intramuros is an electric light pole with the corresponding wires. The
pole presumably was located by the municipal authorities and conforms in height to the
requirements of the franchise of the Manila Electric Company. The feeder wires are of the insulated
type, known as triple braid weather proof, required by the franchise. The pole, with its wires, was
erected in 1920. It was last inspected by the City Electrician in 1923 or 1924. The pole was located
close enough to the public place here described, so that a person, by reaching his arm out the full
length, would be able to take hold of one of the wires. It would appear, according to the City
Electrician, that even a wire of the triple braid weather proof type, if touched by a person, would
endanger the life of that person by electrocution.

About 6 o'clock in the evening of August 14, 1928, a group of boys or young men came to this public
place. Two of them named Juan Diaz Astudillo and Alejo Ponsoy sauntered over to where the
electric post was situated. They were there looking out towards Intramuros. For exactly what reason,
no one will ever know, but Juan Diaz Astudillo, placing one foot on a projection, reached out and
grasped a charged electric wire. Death resulted almost instantly.

The matter principally discussed is the question of the defendant company's liability under the
circumstances stated. It is well established that the liability of electric light companies for damages
for personal injuries is governed by the rules of negligence. Such companies are, however, not
insurers of the safety of the public. But considering that electricity is an agency, subtle and deadly,
the measure of care required of electric companies must be commensurate with or proportionate to
the danger. The duty of exercising this high degree of diligence and care extends to every place
where persons have a right to be. The poles must be so erected and the wires and appliances must
be so located the persons rightfully near the place will not be injured. Particularly must there be
proper insulation of the wires and appliances in places where there is probable likelihood of human
contact therewith. (20 C. J., pp. 320 et seq.; San Juan Light & Transit Co. vs. Requena [1912], 224
U. S., 89.)

We cannot agree with the defense of the Manila Electric Company in the lower court to the effect
that the death of Juan Diaz Astudillo was due exclusively to his negligence. He only did the natural
thing to be expected of one not familiar with the danger arising from touching an electric wire, and
was wholly unconscious of his peril. Had not the wire caused the death of this young man, it would
undoubtedly have been only a question of time when someone else, like a playful boy, would have
been induced to take hold of the wire, with fatal results. The cause of the injury was one which could
have been foreseen and guarded against. The negligence came from the act of the Manila Electric
Company in so placing its pole and wires as to be within proximity to a place frequented by many
people, with the possibility ever present of one of them losing his life by coming in contact with a
highly charged and defectively insulated wire.

As we understand the position of the Manila Electric Company on appeal, its principal defense now
is that it has fully complied with the provisions of its franchise and of the ordinances of the City of
Manila. It is undeniable that the violation of franchise, an ordinance, or a statute might constitute
negligence. But the converse is not necessarily true, and compliance with a franchise, an ordinance,
or a statute is not conclusive proof that there was no negligence. The franchise, ordinance, or statute
merely states the minimum conditions. The fulfillment of these conditions does not render
unnecessary other precautions required by ordinary care. (Moore vs. Hart [1916], 171 Ky., 725;
Oliver vs. Weaver [1923], 72 Colo., 540; Caldwell vs. New Jersey Steamboat Co. [1872], 47 N. Y.,
282; Consolidated Electric Light & Power Co. vs. Healy [1902], 65 Kan., 798.)

The company further defends in this court on the ground that it has not been proven that the
deceased is an acknowledged natural child of the plaintiff mother. Technically this is correct. (Civil
Code, art. 944). At the same time, it should first of all be mentioned that, so far as we know, this
point was not raised in the lower court. Further, while the mother may thus be precluded from
succeeding to the estate of the son, yet we know of no reason why she cannot be permitted to
secure damages from the company when the negligence of this company resulted in the death of
her child.
lawphi1> net

We, therefore, conclude that the plaintiff is entitled to damages. But the evidence indicative of the
true measure of those damages is sadly deficient. All that we know certainly is that the deceased
was less than 20 years of age, a student, and working in the Ateneo de Manila, but at what wages
we are not told. We are also shown that approximately P200 was needed to defray the travel and
funeral expenses. As would happen in the case of a jury who have before them one of the parents,
her position to life, and the age and sex of the child, varying opinions, have been disclosed in the
court regarding the estimate of the damages with reference to the next of kin. Various sums have
been suggested, beginning as low as P1,000 and extending as high as P5,000. A majority of the
court finally arrived at the sum of P1,500 as appropriate damages in this case. The basis of this
award would be the P1,000 which have been allowed in other cases for the death of young children
without there having been tendered any special proof of the amount of damages suffered, in
connection with which should be taken into account the more mature age of the boy in the case at
bar, together with the particular expenses caused by his death. (Manzanares vs Moreta [1918], 38
Phil., 821; Bernal and Enverso vs. House and Tacloban Electric & Ice Plant [1930], 54 Phil., 327;
Cuison vs. Norton & Harrison Co. [1930], p. 18, ante.)

In the light of the foregoing, the various errors assigned by the appellant will in the main be
overruled, but as above indicated, the judgment will be modified by allowing the plaintiff to recover
from the defendant the sum of P1,500, and the costs of both instances.

Separate Opinions

JOHNSON, J., dissenting:

I dissent, I find nothing in the record which even remotely justifies a judgment for damages against
the Manila Electric Company. There is not a word in the testimony which shows in the slightest
degree any culpability or negligence on the part of the appellant. The judgment appealed from
should therefore be revoked.

G.R. No. L-7760 October 1, 1914

E. M. WRIGHT, plaintiff-appellant,
vs.
MANILA ELECTRIC R.R. & LIGHT CO., defendant-appellant.

W. A. Kincaid, Thomas L. Hartigan, and Jose Robles Lahesa for plaintiff.

Bruce, Lawrence, Ross & Block for defendant.

MORELAND, J.:

This is an action brought to recover damages for injuries sustained in an accident which occurred in
Caloocan on the night of August 8, 1909.

The defendant is a corporation engaged in operating an electric street railway in the city of Manila
and its suburbs, including the municipality of Caloocan. The plaintiff's residence in Caloocan fronts
on the street along which defendant's tracks run, so that to enter his premises from the street plaintiff
is obliged to cross defendant's tracks. On the night mentioned plaintiff drove home in a calesa and in
crossing the tracks to enter his premises the horse stumbled, leaped forward, and fell, causing the
vehicle with the rails, resulting in a sudden stop, threw plaintiff from the vehicle and caused the
injuries complained of.

It is undisputed that at the point where plaintiff crossed the tracks on the night in question not only
the rails were above-ground, but that the ties upon which the rails rested projected from one-third to
one-half of their depth out of the ground, thus making the tops of the rails some 5 or 6 inches or
more above the level of the street.

It is admitted that the defendant was negligent in maintaining its tracks as described, but it is
contended that the plaintiff was also negligent in that he was intoxicated to such an extent at the
time of the accident that he was unable to take care of himself properly and that such intoxication
was the primary cause of the accident.
The trial court held that both parties were negligent, but that the plaintiff's negligence was not as
great as defendant's and under the authority of the case of Rakes vs. A. G. & P. Co. (7 Phil. Rep.,
359) apportioned the damages and awarded plaintiff a judgment of P1,000.

The question before us is stated by the defendant thus: "Accepting the findings of the trial court that
both plaintiff and defendant were guilty of negligence, the only question to be considered is whether
the negligence of plaintiff contributed t the 'principal occurrence' or 'only to his own injury.' If the
former, he cannot recover; if the latter, the trial court was correct in apportioning the damages."

The questioned as stated by plaintiff is as follows: "The main question at issue is whether or not the
plaintiff was negligent, and, if so, to what extent. If the negligence of the plaintiff was the primary
cause of the accident then, of course, he cannot recover; if his negligence had nothing to do with the
accident but contributed to his injury, then the court was right in apportioning the damages, but if
there was no negligence on the part of the plaintiff, then he should be awarded damages adequates
to the injury sustained."

In support of the defendant's contention counsel says: "Defendant's negligence was its failure
properly to maintain the track; plaintiff's negligence was his intoxication; the 'principal occurrence'
was plaintiff's fall from his calesa. It seems clear that plaintiff's intoxication contributed to the fall; if
he had been sober, it can hardly be doubted that he would have crossed the track safely, as he had
done a hundred times before."

While both parties appealed from the decision, the defendant on the ground that it was not liable and
the plaintiff on the ground that the damages were insufficient according to the evidence, and while
the plaintiff made a motion for a new trial upon the statutory grounds and took proper exception to
the denial thereof, thus conferring upon this court jurisdiction to determine the question of fact,
nevertheless, not all of the testimony taken on the trial, so far as can be gathered from the record,
has been brought to this court. There seems to have been two hearings, one on the 31st of August
and the other on the 28th of September. The evidence taken on the first hearing is here; that taken
on the second is not. Not all the evidence taken on the hearings being before the court, we must
refuse, under our rules, to consider even that evidence which is here; and, in the decision of this
case, we are, therefore, relegated to the facts stated in the opinion of the court and the pleadings
filed.

A careful reading of the decision of the trial court leads us to the conclusion that there is nothing in
the opinion which sustains the conclusion of the court that the plaintiff was negligent with reference
to the accident which is the basis of this action. Mere intoxication establish a want of ordinary care. It
is but a circumstance to be considered with the other evidence tending to prove negligence. It is the
general rule that it is immaterial whether a man is drunk or sober if no want of ordinary care or
prudence can be imputed to him, and no greater degree of care is required than by a sober one. If
one's conduct is characterized by a proper degree of care and prudence, it is immaterial whether he
is drunk or sober. (Ward vs. Chicago etc., R. R. Co., 85 Wis., 601; H & T. C. R. Co. vs. Reason, 61
Tex., 613; Alger vs. Lowell, 3 Allen, Mass., 402; Central R. R. Co. vs. Phinazee, 93 Ga., 488;
Maguire vs. Middlesex R. R. Co., 115 Mass., 239; Meyer vs. Pacific R. R. Co., 40 Mo., 151.,
Chicago & N. W. R. R. Co. vs. Drake, 33 Ill. App., 114.)

If intoxication is not in itself negligence, what are the facts found by the trial court and stated in its
opinion upon which may be predicated the finding that the plaintiff did not use ordinary care and
prudence and that the intoxication contributed to the injury complained of? After showing clearly and
forcibly the negligence of the defendant in leaving its tracks in the condition in which they were on
the night of the injury, the court has the following to say, and it is all that can be found in its opinion,
with reference to the negligence of the plaintiff: "With respect to the condition in which Mr. Wright
was on returning to his house on the night in question, the testimony of Doctor Kneedler, who was
the physician who attended him an hour after the accident, demonstrates that he was intoxicated. . .
..

If the defendant or its employees were negligent by reason of having left the rails and a part
of the ties uncovered in a street where there is a large amount of travel, the plaintiff was no
less negligent, he not having abstained from his custom of taking more wine than he could
carry without disturbing his judgment and his self-control, he knowing that he had to drive a
horse and wagon and to cross railroad tracks which were to a certain extent dangerous by
reason of the rails being elevated above the level of the street.
 If the plaintiff had been prudent on the night in question and had not attempted to drive his
conveyance while in a drunken condition, he would certainly have avoided the damages
which he received, although the company, on its part, was negligent in maintaining its tracks
in a bad condition for travel.

Both parties, therefore, were negligent and both contributed to the damages resulting to the
plaintiff, although the plaintiff, in the judgment of the court, contributed in greater proportion
to the damages that did the defendant.

As is clear from reading the opinion, no facts are stated therein which warrant the conclusion that the
plaintiff was negligent. The conclusion that if he had been sober he would not have been injured is
not warranted by the facts as found. It is impossible to say that a sober man would not have fallen
from the vehicle under the conditions described. A horse crossing the railroad tracks with not only
the rails but a portion of the ties themselves aboveground, stumbling by reason of the unsure footing
and falling, the vehicle crashing against the rails with such force as to break a wheel, this might be
sufficient to throw a person from the vehicle no matter what his condition; and to conclude that,
under such circumstances, a sober man would not have fallen while a drunken man did, is to draw a
conclusion which enters the realm of speculation and guesswork.

It having been found that the plaintiff was not negligent, it is unnecessary to discuss the question
presented by the appellant company with reference to the applicability of the case of Rakes vs. A. G.
& P. Co., above; and we do not find facts in the opinion of the court below which justify a larger
verdict than the one found.

Arellano, C.J., Torres and Araullo, JJ., concur.

Separate Opinions

CARSON, J., dissenting:

I dissent. I think, in the first place, that before pronouncing judgment the parties should have an
opportunity, if they so desire, to correct the manifestly accidental omission from the record of a part
of the transcript of the record. It is very clear that when the case was submitted, and the brief filed,
both parties were under the mistaken impression that all the evidence was in the record.

I think, furthermore, that if the case is to be decided on the findings of fact by the trial judge, these
findings sufficiently establish the negligence of the plaintiff.
1awphil.net

The trail judge expressly found that —

If the plaintiff had been prudent on the night in question and had not attempted to drive his
conveyance while in a drunken condition, he would certainly have avoided the damages
which he received, although the company, on its part was negligent in maintaining its tracks
in a bad condition for travel.

This is a finding of fact — the fact of negligence — and I know of no rule which requires the trial
court to set forth not only the ultimate facts found by it, but also all the evidentiary facts on which
such conclusions are based. The finding is not in conflict with the other facts found by the trial judge,
and though it is not fully sustained thereby, we must assume, if we decline to examine the record,
that there were evidentiary facts disclosed at the trial which were sufficient to sustain the finding if
negligence. "The statement of facts must contain only those facts which are essential to a clear
understanding of the issues presented and the facts involved." (Act No. 190, sec. 133.)

The facts required to be found are the ultimate facts forming the issues presented by the
pleadings, and which constitute the fundation for a judgment, and not those that are merely
 evidentiary facts, or to set forth and explain the means or processes by which he arrived at
such findings. Neither evidence, argument, nor comment has any legitimate place in findings
of facts. (Conlan vs. Grace, 36 Minn., 276, 282.)

G.R. No. 159617 August 8, 2007

ROBERTO C. SICAM and AGENCIA de R.C. SICAM, INC., petitioners,

vs.
LULU V. JORGE and CESAR JORGE, respondents.

DECISION

AUSTRIA-MARTINEZ, J.:

Before us is a Petition for Review on Certiorari filed by Roberto C. Sicam, Jr. (petitioner Sicam)
and Agencia de R.C. Sicam, Inc. (petitioner corporation) seeking to annul the Decision1 of the Court
of Appeals dated March 31, 2003, and its Resolution2 dated August 8, 2003, in CA G.R. CV No.
56633.

It appears that on different dates from September to October 1987, Lulu V. Jorge (respondent Lulu)
pawned several pieces of jewelry with Agencia de R. C. Sicam located at No. 17 Aguirre Ave., BF
Homes Parañaque, Metro Manila, to secure a loan in the total amount of P59,500.00.

On October 19, 1987, two armed men entered the pawnshop and took away whatever cash and
jewelry were found inside the pawnshop vault. The incident was entered in the police blotter of the
Southern Police District, Parañaque Police Station as follows:

Investigation shows that at above TDPO, while victims were inside the office, two (2) male
unidentified persons entered into the said office with guns drawn. Suspects(sic) (1) went
straight inside and poked his gun toward Romeo Sicam and thereby tied him with an electric
wire while suspects (sic) (2) poked his gun toward Divina Mata and Isabelita Rodriguez and
ordered them to lay (sic) face flat on the floor. Suspects asked forcibly the case and assorted
pawned jewelries items mentioned above.

Suspects after taking the money and jewelries fled on board a Marson Toyota unidentified
plate number.3

Petitioner Sicam sent respondent Lulu a letter dated October 19, 1987 informing her of the loss of
her jewelry due to the robbery incident in the pawnshop. On November 2, 1987, respondent Lulu
then wrote a letter4 to petitioner Sicam expressing disbelief stating that when the robbery happened,
all jewelry pawned were deposited with Far East Bank near the pawnshop since it had been the
practice that before they could withdraw, advance notice must be given to the pawnshop so it could
withdraw the jewelry from the bank. Respondent Lulu then requested petitioner Sicam to prepare the
pawned jewelry for withdrawal on November 6, 1987 but petitioner Sicam failed to return the jewelry.

On September 28, 1988, respondent Lulu joined by her husband, Cesar Jorge, filed a complaint
against petitioner Sicam with the Regional Trial Court of Makati seeking indemnification for the loss
of pawned jewelry and payment of actual, moral and exemplary damages as well as attorney's fees.
The case was docketed as Civil Case No. 88-2035.

Petitioner Sicam filed his Answer contending that he is not the real party-in-interest as the pawnshop
was incorporated on April 20, 1987 and known as Agencia de R.C. Sicam, Inc; that petitioner
corporation had exercised due care and diligence in the safekeeping of the articles pledged with it
and could not be made liable for an event that is fortuitous.

Respondents subsequently filed an Amended Complaint to include petitioner corporation.

Thereafter, petitioner Sicam filed a Motion to Dismiss as far as he is concerned considering that he
is not the real party-in-interest. Respondents opposed the same. The RTC denied the motion in an
Order dated November 8, 1989.5

After trial on the merits, the RTC rendered its Decision6 dated January 12, 1993, dismissing
respondents’ complaint as well as petitioners’ counterclaim. The RTC held that petitioner Sicam
could not be made personally liable for a claim arising out of a corporate transaction; that in the
Amended Complaint of respondents, they asserted that "plaintiff pawned assorted jewelries in
defendants' pawnshop"; and that as a consequence of the separate juridical personality of a
corporation, the corporate debt or credit is not the debt or credit of a stockholder.

The RTC further ruled that petitioner corporation could not be held liable for the loss of the pawned
jewelry since it had not been rebutted by respondents that the loss of the pledged pieces of jewelry
in the possession of the corporation was occasioned by armed robbery; that robbery is a fortuitous
event which exempts the victim from liability for the loss, citing the case of Austria v. Court of
Appeals;7 and that the parties’ transaction was that of a pledgor and pledgee and under Art. 1174 of
the Civil Code, the pawnshop as a pledgee is not responsible for those events which could not be
foreseen.

Respondents appealed the RTC Decision to the CA. In a Decision dated March 31, 2003, the CA
reversed the RTC, the dispositive portion of which reads as follows:

WHEREFORE, premises considered, the instant Appeal is GRANTED, and the Decision
dated January 12, 1993,of the Regional Trial Court of Makati, Branch 62, is hereby
REVERSED and SET ASIDE, ordering the appellees to pay appellants the actual value of
the lost jewelry amounting to P272,000.00, and attorney' fees of P27,200.00.8

In finding petitioner Sicam liable together with petitioner corporation, the CA applied the doctrine of
piercing the veil of corporate entity reasoning that respondents were misled into thinking that they
were dealing with the pawnshop owned by petitioner Sicam as all the pawnshop tickets issued to
them bear the words "Agencia de R.C. Sicam"; and that there was no indication on the pawnshop
tickets that it was the petitioner corporation that owned the pawnshop which explained why
respondents had to amend their complaint impleading petitioner corporation.

The CA further held that the corresponding diligence required of a pawnshop is that it should take
steps to secure and protect the pledged items and should take steps to insure itself against the loss
of articles which are entrusted to its custody as it derives earnings from the pawnshop trade which
petitioners failed to do; that Austria is not applicable to this case since the robbery incident
happened in 1961 when the criminality had not as yet reached the levels attained in the present day;
that they are at least guilty of contributory negligence and should be held liable for the loss of
jewelries; and that robberies and hold-ups are foreseeable risks in that those engaged in the
pawnshop business are expected to foresee.

The CA concluded that both petitioners should be jointly and severally held liable to respondents for
the loss of the pawned jewelry.
Petitioners’ motion for reconsideration was denied in a Resolution dated August 8, 2003.

Hence, the instant petition for review with the following assignment of errors:

THE COURT OF APPEALS ERRED AND WHEN IT DID, IT OPENED ITSELF TO

REVERSAL, WHEN IT ADOPTED UNCRITICALLY (IN FACT IT REPRODUCED AS ITS
OWN WITHOUT IN THE MEANTIME ACKNOWLEDGING IT) WHAT THE RESPONDENTS
ARGUED IN THEIR BRIEF, WHICH ARGUMENT WAS PALPABLY UNSUSTAINABLE.

THE COURT OF APPEALS ERRED, AND WHEN IT DID, IT OPENED ITSELF TO

REVERSAL BY THIS HONORABLE COURT, WHEN IT AGAIN ADOPTED UNCRITICALLY
(BUT WITHOUT ACKNOWLEDGING IT) THE SUBMISSIONS OF THE RESPONDENTS IN
THEIR BRIEF WITHOUT ADDING ANYTHING MORE THERETO DESPITE THE FACT
THAT THE SAID ARGUMENT OF THE RESPONDENTS COULD NOT HAVE BEEN
SUSTAINED IN VIEW OF UNREBUTTED EVIDENCE ON RECORD.9

Anent the first assigned error, petitioners point out that the CA’s finding that petitioner Sicam is
personally liable for the loss of the pawned jewelries is "a virtual and uncritical reproduction of the
arguments set out on pp. 5-6 of the Appellants’ brief."10

Petitioners argue that the reproduced arguments of respondents in their Appellants’ Brief suffer from
infirmities, as follows:

(1) Respondents conclusively asserted in paragraph 2 of their Amended Complaint that

Agencia de R.C. Sicam, Inc. is the present owner of Agencia de R.C. Sicam Pawnshop, and
therefore, the CA cannot rule against said conclusive assertion of respondents;

(2) The issue resolved against petitioner Sicam was not among those raised and litigated in
the trial court; and

(3) By reason of the above infirmities, it was error for the CA to have pierced the corporate
veil since a corporation has a personality distinct and separate from its individual
stockholders or members.

Anent the second error, petitioners point out that the CA finding on their negligence is likewise an
unedited reproduction of respondents’ brief which had the following defects:

(1) There were unrebutted evidence on record that petitioners had observed the diligence
required of them, i.e, they wanted to open a vault with a nearby bank for purposes of
safekeeping the pawned articles but was discouraged by the Central Bank (CB) since CB
rules provide that they can only store the pawned articles in a vault inside the pawnshop
premises and no other place;

(2) Petitioners were adjudged negligent as they did not take insurance against the loss of the
pledged jelweries, but it is judicial notice that due to high incidence of crimes, insurance
companies refused to cover pawnshops and banks because of high probability of losses due
to robberies;

(3) In Hernandez v. Chairman, Commission on Audit (179 SCRA 39, 45-46), the victim of
robbery was exonerated from liability for the sum of money belonging to others and lost by
him to robbers.

Respondents filed their Comment and petitioners filed their Reply thereto. The parties subsequently
submitted their respective Memoranda.

We find no merit in the petition.

To begin with, although it is true that indeed the CA findings were exact reproductions of the
arguments raised in respondents’ (appellants’) brief filed with the CA, we find the same to be not
fatally infirmed. Upon examination of the Decision, we find that it expressed clearly and distinctly the
facts and the law on which it is based as required by Section 8, Article VIII of the Constitution. The
discretion to decide a case one way or another is broad enough to justify the adoption of the
arguments put forth by one of the parties, as long as these are legally tenable and supported by law
and the facts on records.11

Our jurisdiction under Rule 45 of the Rules of Court is limited to the review of errors of law
committed by the appellate court. Generally, the findings of fact of the appellate court are deemed
conclusive and we are not duty-bound to analyze and calibrate all over again the evidence adduced
by the parties in the court a quo.12 This rule, however, is not without exceptions, such as where the
factual findings of the Court of Appeals and the trial court are conflicting or contradictory13 as is
obtaining in the instant case.

However, after a careful examination of the records, we find no justification to absolve petitioner
Sicam from liability.

The CA correctly pierced the veil of the corporate fiction and adjudged petitioner Sicam liable
together with petitioner corporation. The rule is that the veil of corporate fiction may be pierced when
made as a shield to perpetrate fraud and/or confuse legitimate issues. 14 The theory of corporate
entity was not meant to promote unfair objectives or otherwise to shield them.15

Notably, the evidence on record shows that at the time respondent Lulu pawned her jewelry, the
pawnshop was owned by petitioner Sicam himself. As correctly observed by the CA, in all the
pawnshop receipts issued to respondent Lulu in September 1987, all bear the words "Agencia de R.
C. Sicam," notwithstanding that the pawnshop was allegedly incorporated in April 1987. The receipts
issued after such alleged incorporation were still in the name of "Agencia de R. C. Sicam," thus
inevitably misleading, or at the very least, creating the wrong impression to respondents and the
public as well, that the pawnshop was owned solely by petitioner Sicam and not by a corporation.

Even petitioners’ counsel, Atty. Marcial T. Balgos, in his letter16 dated October 15, 1987 addressed to
the Central Bank, expressly referred to petitioner Sicam as the proprietor of the pawnshop
notwithstanding the alleged incorporation in April 1987.

We also find no merit in petitioners' argument that since respondents had alleged in their Amended
Complaint that petitioner corporation is the present owner of the pawnshop, the CA is bound to
decide the case on that basis.

Section 4 Rule 129 of the Rules of Court provides that an admission, verbal or written, made by a
party in the course of the proceedings in the same case, does not require proof. The admission may
be contradicted only by showing that it was made through palpable mistake or that no such
admission was made.

Thus, the general rule that a judicial admission is conclusive upon the party making it and does not
require proof, admits of two exceptions, to wit: (1) when it is shown that such admission was made
through palpable mistake, and (2) when it is shown that no such admission was in fact made. The
latter exception allows one to contradict an admission by denying that he made such an
admission.17

The Committee on the Revision of the Rules of Court explained the second exception in this wise:

x x x if a party invokes an "admission" by an adverse party, but cites the admission "out of
context," then the one making the "admission" may show that he made no "such" admission,
or that his admission was taken out of context.

x x x that the party can also show that he made no "such admission", i.e., not in the
sense in which the admission is made to appear.

That is the reason for the modifier "such" because if the rule simply states that the admission
may be contradicted by showing that "no admission was made," the rule would not really be
providing for a contradiction of the admission but just a denial.18 (Emphasis supplied).

While it is true that respondents alleged in their Amended Complaint that petitioner corporation is the
present owner of the pawnshop, they did so only because petitioner Sicam alleged in his Answer to
the original complaint filed against him that he was not the real party-in-interest as the pawnshop
was incorporated in April 1987. Moreover, a reading of the Amended Complaint in its entirety shows
that respondents referred to both petitioner Sicam and petitioner corporation where they
(respondents) pawned their assorted pieces of jewelry and ascribed to both the failure to observe
due diligence commensurate with the business which resulted in the loss of their pawned jewelry.

Markedly, respondents, in their Opposition to petitioners’ Motion to Dismiss Amended Complaint,

insofar as petitioner Sicam is concerned, averred as follows:

Roberto C. Sicam was named the defendant in the original complaint because the pawnshop
tickets involved in this case did not show that the R.C. Sicam Pawnshop was a corporation.
In paragraph 1 of his Answer, he admitted the allegations in paragraph 1 and 2 of the
Complaint. He merely added "that defendant is not now the real party in interest in this case."

It was defendant Sicam's omission to correct the pawnshop tickets used in the subject
transactions in this case which was the cause of the instant action. He cannot now ask for
the dismissal of the complaint against him simply on the mere allegation that his pawnshop
business is now incorporated. It is a matter of defense, the merit of which can only be
reached after consideration of the evidence to be presented in due course.19

Unmistakably, the alleged admission made in respondents' Amended Complaint was taken "out of
context" by petitioner Sicam to suit his own purpose. Ineluctably, the fact that petitioner Sicam
continued to issue pawnshop receipts under his name and not under the corporation's name
militates for the piercing of the corporate veil.

We likewise find no merit in petitioners' contention that the CA erred in piercing the veil of corporate
fiction of petitioner corporation, as it was not an issue raised and litigated before the RTC.

Petitioner Sicam had alleged in his Answer filed with the trial court that he was not the real party-in-
interest because since April 20, 1987, the pawnshop business initiated by him was incorporated and
known as Agencia de R.C. Sicam. In the pre-trial brief filed by petitioner Sicam, he submitted that as
far as he was concerned, the basic issue was whether he is the real party in interest against whom
the complaint should be directed.20 In fact, he subsequently moved for the dismissal of the complaint
as to him but was not favorably acted upon by the trial court. Moreover, the issue was squarely
passed upon, although erroneously, by the trial court in its Decision in this manner:

x x x The defendant Roberto Sicam, Jr likewise denies liability as far as he is concerned for
the reason that he cannot be made personally liable for a claim arising from a corporate
transaction.

This Court sustains the contention of the defendant Roberto C. Sicam, Jr. The amended
complaint itself asserts that "plaintiff pawned assorted jewelries in defendant's pawnshop." It
has been held that " as a consequence of the separate juridical personality of a corporation,
the corporate debt or credit is not the debt or credit of the stockholder, nor is the
stockholder's debt or credit that of a corporation.21

Clearly, in view of the alleged incorporation of the pawnshop, the issue of whether petitioner Sicam
is personally liable is inextricably connected with the determination of the question whether the
doctrine of piercing the corporate veil should or should not apply to the case.

The next question is whether petitioners are liable for the loss of the pawned articles in their
possession.

Petitioners insist that they are not liable since robbery is a fortuitous event and they are not negligent
at all.

We are not persuaded.

Article 1174 of the Civil Code provides:

Art. 1174. Except in cases expressly specified by the law, or when it is otherwise declared by
stipulation, or when the nature of the obligation requires the assumption of risk, no person
shall be responsible for those events which could not be foreseen or which, though foreseen,
were inevitable.
Fortuitous events by definition are extraordinary events not foreseeable or avoidable. It is therefore,
not enough that the event should not have been foreseen or anticipated, as is commonly believed
but it must be one impossible to foresee or to avoid. The mere difficulty to foresee the happening is
not impossibility to foresee the same. 22

To constitute a fortuitous event, the following elements must concur: (a) the cause of the unforeseen
and unexpected occurrence or of the failure of the debtor to comply with obligations must be
independent of human will; (b) it must be impossible to foresee the event that constitutes
the caso fortuito or, if it can be foreseen, it must be impossible to avoid; (c) the occurrence must be
such as to render it impossible for the debtor to fulfill obligations in a normal manner; and, (d) the
obligor must be free from any participation in the aggravation of the injury or loss. 23

The burden of proving that the loss was due to a fortuitous event rests on him who invokes it.24 And,
in order for a fortuitous event to exempt one from liability, it is necessary that one has committed no
negligence or misconduct that may have occasioned the loss. 25

It has been held that an act of God cannot be invoked to protect a person who has failed to take
steps to forestall the possible adverse consequences of such a loss. One's negligence may have
concurred with an act of God in producing damage and injury to another; nonetheless, showing that
the immediate or proximate cause of the damage or injury was a fortuitous event would not exempt
one from liability. When the effect is found to be partly the result of a person's participation --
whether by active intervention, neglect or failure to act -- the whole occurrence is humanized and
removed from the rules applicable to acts of God. 26

Petitioner Sicam had testified that there was a security guard in their pawnshop at the time of the
robbery. He likewise testified that when he started the pawnshop business in 1983, he thought of
opening a vault with the nearby bank for the purpose of safekeeping the valuables but was
discouraged by the Central Bank since pawned articles should only be stored in a vault inside the
pawnshop. The very measures which petitioners had allegedly adopted show that to them the
possibility of robbery was not only foreseeable, but actually foreseen and anticipated. Petitioner
Sicam’s testimony, in effect, contradicts petitioners’ defense of fortuitous event.

Moreover, petitioners failed to show that they were free from any negligence by which the loss of the
pawned jewelry may have been occasioned.

Robbery per se, just like carnapping, is not a fortuitous event. It does not foreclose the possibility of
negligence on the part of herein petitioners. In Co v. Court of Appeals,27 the Court held:

It is not a defense for a repair shop of motor vehicles to escape liability simply because the
damage or loss of a thing lawfully placed in its possession was due to carnapping.
Carnapping per se cannot be considered as a fortuitous event. The fact that a thing was
unlawfully and forcefully taken from another's rightful possession, as in cases of
carnapping, does not automatically give rise to a fortuitous event. To be considered
as such, carnapping entails more than the mere forceful taking of another's property.
It must be proved and established that the event was an act of God or was done solely
by third parties and that neither the claimant nor the person alleged to be negligent
has any participation. In accordance with the Rules of Evidence, the burden of proving
that the loss was due to a fortuitous event rests on him who invokes it — which in this
case is the private respondent. However, other than the police report of the alleged
carnapping incident, no other evidence was presented by private respondent to the effect
that the incident was not due to its fault. A police report of an alleged crime, to which only
private respondent is privy, does not suffice to establish the carnapping. Neither does it
prove that there was no fault on the part of private respondent notwithstanding the parties'
agreement at the pre-trial that the car was carnapped. Carnapping does not foreclose the
possibility of fault or negligence on the part of private respondent.28

Just like in Co, petitioners merely presented the police report of the Parañaque Police Station on the
robbery committed based on the report of petitioners' employees which is not sufficient to establish
robbery. Such report also does not prove that petitioners were not at fault.

On the contrary, by the very evidence of petitioners, the CA did not err in finding that petitioners are
guilty of concurrent or contributory negligence as provided in Article 1170 of the Civil Code, to wit:
 Art. 1170. Those who in the performance of their obligations are guilty of fraud, negligence,
or delay, and those who in any manner contravene the tenor thereof, are liable for
damages.29

Article 2123 of the Civil Code provides that with regard to pawnshops and other establishments
which are engaged in making loans secured by pledges, the special laws and regulations concerning
them shall be observed, and subsidiarily, the provisions on pledge, mortgage and antichresis.

The provision on pledge, particularly Article 2099 of the Civil Code, provides that the creditor shall
take care of the thing pledged with the diligence of a good father of a family. This means that
petitioners must take care of the pawns the way a prudent person would as to his own property.

In this connection, Article 1173 of the Civil Code further provides:

Art. 1173. The fault or negligence of the obligor consists in the omission of that diligence
which is required by the nature of the obligation and corresponds with the circumstances of
the persons, of time and of the place. When negligence shows bad faith, the provisions of
Articles 1171 and 2201, paragraph 2 shall apply.

If the law or contract does not state the diligence which is to be observed in the performance,
that which is expected of a good father of a family shall be required.

We expounded in Cruz v. Gangan30 that negligence is the omission to do something which a

reasonable man, guided by those considerations which ordinarily regulate the conduct of human
affairs, would do; or the doing of something which a prudent and reasonable man would not do.31 It is
want of care required by the circumstances.

A review of the records clearly shows that petitioners failed to exercise reasonable care and caution
that an ordinarily prudent person would have used in the same situation. Petitioners were guilty of
negligence in the operation of their pawnshop business. Petitioner Sicam testified, thus:

Court:

Q. Do you have security guards in your pawnshop?

A. Yes, your honor.

Q. Then how come that the robbers were able to enter the premises when according to you
there was a security guard?

A. Sir, if these robbers can rob a bank, how much more a pawnshop.

Q. I am asking you how were the robbers able to enter despite the fact that there was a
security guard?

A. At the time of the incident which happened about 1:00 and 2:00 o'clock in the afternoon
and it happened on a Saturday and everything was quiet in the area BF Homes Parañaque
they pretended to pawn an article in the pawnshop, so one of my employees allowed him to
come in and it was only when it was announced that it was a hold up.

Q. Did you come to know how the vault was opened?

A. When the pawnshop is official (sic) open your honor the pawnshop is partly open. The
combination is off.

Q. No one open (sic) the vault for the robbers?

A. No one your honor it was open at the time of the robbery.

Q. It is clear now that at the time of the robbery the vault was open the reason why the
robbers were able to get all the items pawned to you inside the vault.
 A. Yes sir.32

revealing that there were no security measures adopted by petitioners in the operation of the
pawnshop. Evidently, no sufficient precaution and vigilance were adopted by petitioners to protect
the pawnshop from unlawful intrusion. There was no clear showing that there was any security guard
at all. Or if there was one, that he had sufficient training in securing a pawnshop. Further, there is no
showing that the alleged security guard exercised all that was necessary to prevent any untoward
incident or to ensure that no suspicious individuals were allowed to enter the premises. In fact, it is
even doubtful that there was a security guard, since it is quite impossible that he would not have
noticed that the robbers were armed with caliber .45 pistols each, which were allegedly poked at the
employees.33 Significantly, the alleged security guard was not presented at all to corroborate
petitioner Sicam's claim; not one of petitioners' employees who were present during the robbery
incident testified in court.

Furthermore, petitioner Sicam's admission that the vault was open at the time of robbery is clearly a
proof of petitioners' failure to observe the care, precaution and vigilance that the circumstances justly
demanded. Petitioner Sicam testified that once the pawnshop was open, the combination was
already off. Considering petitioner Sicam's testimony that the robbery took place on a Saturday
afternoon and the area in BF Homes Parañaque at that time was quiet, there was more reason for
petitioners to have exercised reasonable foresight and diligence in protecting the pawned jewelries.
Instead of taking the precaution to protect them, they let open the vault, providing no difficulty for the
robbers to cart away the pawned articles.

We, however, do not agree with the CA when it found petitioners negligent for not taking steps to
insure themselves against loss of the pawned jewelries.

Under Section 17 of Central Bank Circular No. 374, Rules and Regulations for Pawnshops, which
took effect on July 13, 1973, and which was issued pursuant to Presidential Decree No. 114,
Pawnshop Regulation Act, it is provided that pawns pledged must be insured, to wit:

Sec. 17. Insurance of Office Building and Pawns- The place of business of a pawnshop and
the pawns pledged to it must be insured against fire and against burglary as well as for
the latter(sic), by an insurance company accredited by the Insurance Commissioner.

However, this Section was subsequently amended by CB Circular No. 764 which took effect on
October 1, 1980, to wit:

Sec. 17 Insurance of Office Building and Pawns – The office building/premises and pawns of
a pawnshop must be insured against fire. (emphasis supplied).

where the requirement that insurance against burglary was deleted. Obviously, the Central Bank
considered it not feasible to require insurance of pawned articles against burglary.

The robbery in the pawnshop happened in 1987, and considering the above-quoted amendment,
there is no statutory duty imposed on petitioners to insure the pawned jewelry in which case it was
error for the CA to consider it as a factor in concluding that petitioners were negligent.

Nevertheless, the preponderance of evidence shows that petitioners failed to exercise the diligence
required of them under the Civil Code.

The diligence with which the law requires the individual at all times to govern his conduct varies with
the nature of the situation in which he is placed and the importance of the act which he is to
perform.34 Thus, the cases of Austria v. Court of Appeals,35 Hernandez v. Chairman, Commission on
Audit36 and Cruz v. Gangan37 cited by petitioners in their pleadings, where the victims of robbery
were exonerated from liability, find no application to the present case.

In Austria, Maria Abad received from Guillermo Austria a pendant with diamonds to be sold on
commission basis, but which Abad failed to subsequently return because of a robbery committed
upon her in 1961. The incident became the subject of a criminal case filed against several persons.
Austria filed an action against Abad and her husband (Abads) for recovery of the pendant or its
value, but the Abads set up the defense that the robbery extinguished their obligation. The RTC
ruled in favor of Austria, as the Abads failed to prove robbery; or, if committed, that Maria Abad was
guilty of negligence. The CA, however, reversed the RTC decision holding that the fact of robbery
was duly established and declared the Abads not responsible for the loss of the jewelry on account
of a fortuitous event. We held that for the Abads to be relieved from the civil liability of returning the
pendant under Art. 1174 of the Civil Code, it would only be sufficient that the unforeseen event, the
robbery, took place without any concurrent fault on the debtor’s part, and this can be done by
preponderance of evidence; that to be free from liability for reason of fortuitous event, the debtor
must, in addition to the casus itself, be free of any concurrent or contributory fault or negligence.38

We found in Austria that under the circumstances prevailing at the time the Decision was
promulgated in 1971, the City of Manila and its suburbs had a high incidence of crimes against
persons and property that rendered travel after nightfall a matter to be sedulously avoided without
suitable precaution and protection; that the conduct of Maria Abad in returning alone to her house in
the evening carrying jewelry of considerable value would have been negligence per se and would
not exempt her from responsibility in the case of robbery. However we did not hold Abad liable for
negligence since, the robbery happened ten years previously; i.e., 1961, when criminality had not
reached the level of incidence obtaining in 1971.

In contrast, the robbery in this case took place in 1987 when robbery was already prevalent and
petitioners in fact had already foreseen it as they wanted to deposit the pawn with a nearby bank for
safekeeping. Moreover, unlike in Austria, where no negligence was committed, we found petitioners
negligent in securing their pawnshop as earlier discussed.

In Hernandez, Teodoro Hernandez was the OIC and special disbursing officer of the Ternate Beach
Project of the Philippine Tourism in Cavite. In the morning of July 1, 1983, a Friday, he went to
Manila to encash two checks covering the wages of the employees and the operating expenses of
the project. However for some reason, the processing of the check was delayed and was completed
at about 3 p.m. Nevertheless, he decided to encash the check because the project employees would
be waiting for their pay the following day; otherwise, the workers would have to wait until July 5, the
earliest time, when the main office would open. At that time, he had two choices: (1) return to
Ternate, Cavite that same afternoon and arrive early evening; or (2) take the money with him to his
house in Marilao, Bulacan, spend the night there, and leave for Ternate the following day. He chose
the second option, thinking it was the safer one. Thus, a little past 3 p.m., he took a passenger jeep
bound for Bulacan. While the jeep was on Epifanio de los Santos Avenue, the jeep was held up and
the money kept by Hernandez was taken, and the robbers jumped out of the jeep and ran.
Hernandez chased the robbers and caught up with one robber who was subsequently charged with
robbery and pleaded guilty. The other robber who held the stolen money escaped. The Commission
on Audit found Hernandez negligent because he had not brought the cash proceeds of the checks to
his office in Ternate, Cavite for safekeeping, which is the normal procedure in the handling of funds.
We held that Hernandez was not negligent in deciding to encash the check and bringing it home to
Marilao, Bulacan instead of Ternate, Cavite due to the lateness of the hour for the following reasons:
(1) he was moved by unselfish motive for his co-employees to collect their wages and salaries the
following day, a Saturday, a non-working, because to encash the check on July 5, the next working
day after July 1, would have caused discomfort to laborers who were dependent on their wages for
sustenance; and (2) that choosing Marilao as a safer destination, being nearer, and in view of the
comparative hazards in the trips to the two places, said decision seemed logical at that time. We
further held that the fact that two robbers attacked him in broad daylight in the jeep while it was on a
busy highway and in the presence of other passengers could not be said to be a result of his
imprudence and negligence.

Unlike in Hernandez where the robbery happened in a public utility, the robbery in this case took
place in the pawnshop which is under the control of petitioners. Petitioners had the means to screen
the persons who were allowed entrance to the premises and to protect itself from unlawful intrusion.
Petitioners had failed to exercise precautionary measures in ensuring that the robbers were
prevented from entering the pawnshop and for keeping the vault open for the day, which paved the
way for the robbers to easily cart away the pawned articles.

In Cruz, Dr. Filonila O. Cruz, Camanava District Director of Technological Education and Skills
Development Authority (TESDA), boarded the Light Rail Transit (LRT) from Sen. Puyat Avenue to
Monumento when her handbag was slashed and the contents were stolen by an unidentified person.
Among those stolen were her wallet and the government-issued cellular phone. She then reported
the incident to the police authorities; however, the thief was not located, and the cellphone was not
recovered. She also reported the loss to the Regional Director of TESDA, and she requested that
she be freed from accountability for the cellphone. The Resident Auditor denied her request on the
ground that she lacked the diligence required in the custody of government property and was
ordered to pay the purchase value in the total amount of P4,238.00. The COA found no sufficient
justification to grant the request for relief from accountability. We reversed the ruling and found that
riding the LRT cannot per se be denounced as a negligent act more so because Cruz’s mode of
transit was influenced by time and money considerations; that she boarded the LRT to be able to
arrive in Caloocan in time for her 3 pm meeting; that any prudent and rational person under similar
circumstance can reasonably be expected to do the same; that possession of a cellphone should not
hinder one from boarding the LRT coach as Cruz did considering that whether she rode a jeep or
bus, the risk of theft would have also been present; that because of her relatively low position and
pay, she was not expected to have her own vehicle or to ride a taxicab; she did not have a
government assigned vehicle; that placing the cellphone in a bag away from covetous eyes and
holding on to that bag as she did is ordinarily sufficient care of a cellphone while traveling on board
the LRT; that the records did not show any specific act of negligence on her part and negligence can
never be presumed.

Unlike in the Cruz case, the robbery in this case happened in petitioners' pawnshop and they were
negligent in not exercising the precautions justly demanded of a pawnshop.

WHEREFORE, except for the insurance aspect, the Decision of the Court of Appeals dated March
31, 2003 and its Resolution dated August 8, 2003, are AFFIRMED.

Costs against petitioners.

SO ORDERED.

G.R. No. 129792 December 21, 1999

JARCO MARKETING CORPORATION, LEONARDO KONG, JOSE TIOPE and ELISA PANELO,
petitioners,

vs.

HONORABLE COURT OF APPEALS, CONRADO C. AGUILAR and CRISELDA R. AGUILAR,

respondents.

DAVIDE, JR., J.:

In this petition for review on certiorari under Rule 45 of the Rules of Court, petitioners seek the reversal
of the 17 June 1996 decision 1 of the Court of Appeals in C.A. G.R. No. CV 37937 and the resolution
2 denying their motion for reconsideration. The assailed decision set aside the 15 January 1992
judgment of the Regional Trial Court (RTC), Makati City, Branch 60 in Civil Case No. 7119 and ordered
petitioners to pay damages and attorney's fees to private respondents Conrado and Criselda
(CRISELDA) Aguilar.

Petitioner Jarco Marketing Corporation is the owner of Syvel's Department Store, Makati City.
Petitioners Leonardo Kong, Jose Tiope and Elisa Panelo are the store's branch manager, operations
manager, and supervisor, respectively. Private respondents are spouses and the parents of Zhieneth
Aguilar (ZHIENETH).

In the afternoon of 9 May 1983, CRISELDA and ZHIENETH were at the 2nd floor of Syvel's
Department Store, Makati City. CRISELDA was signing her credit card slip at the payment and
verification counter when she felt a sudden gust of wind and heard a loud thud. She looked behind
her. She then beheld her daughter ZHIENETH on the floor, her young body pinned by the bulk of the
store's gift-wrapping counter/structure. ZHIENETH was crying and screaming for help. Although
shocked, CRISELDA was quick to ask the assistance of the people around in lifting the counter and
retrieving ZHIENETH from the floor. 3

ZHIENETH was quickly rushed to the Makati Medical Center where she was operated on. The next
day ZHIENETH lost her speech and thereafter communicated with CRISELDA by writing on a magic
slate. The injuries she sustained took their toil on her young body. She died fourteen (14) days after
the accident or on 22 May 1983, on the hospital bed. She was six years old. 4
The cause of her death was attributed to the injuries she sustained. The provisional medical certificate
5 issued by ZHIENETH's attending doctor described the extent of her injuries:

Diagnoses:

1. Shock, severe, sec. to intra-abdominal injuries due to blunt injury

2. Hemorrhage, massive, intraperitoneal sec. to laceration, (L) lobe liver

3. Rupture, stomach, anterior & posterior walls

4. Complete transection, 4th position, duodenum

5. Hematoma, extensive, retroperitoneal

6. Contusion, lungs, severe

CRITICAL

After the burial of their daughter, private respondents demanded upon petitioners the reimbursement
of the hospitalization, medical bills and wake and funeral expenses 6 which they had incurred.
Petitioners refused to pay. Consequently, private respondents filed a complaint for damages, docketed
as Civil Case No. 7119 wherein they sought the payment of P157,522.86 for actual damages,
P300,000 for moral damages, P20,000 for attorney's fees and an unspecified amount for loss of
income and exemplary damages.

In their answer with counterclaim, petitioners denied any liability for the injuries and consequent death
of ZHIENETH. They claimed that CRISELDA was negligent in exercising care and diligence over her
daughter by allowing her to freely roam around in a store filled with glassware and appliances.
ZHIENETH too, was guilty of contributory negligence since she climbed the counter, triggering its
eventual collapse on her. Petitioners also emphasized that the counter was made of sturdy wood with
a strong support; it never fell nor collapsed for the past fifteen years since its construction.

Additionally, petitioner Jarco Marketing Corporation maintained that it observed the diligence of a good
father of a family in the selection, supervision and control of its employees. The other petitioners
likewise raised due care and diligence in the performance of their duties and countered that the
complaint was malicious for which they suffered besmirched reputation and mental anguish. They
sought the dismissal of the complaint and an award of moral and exemplary damages and attorney's
fees in their favor.

In its decision 7 the trial court dismissed the complaint and counterclaim after finding that the
preponderance of the evidence favored petitioners. It ruled that the proximate cause of the fall of the
counter on ZHIENETH was her act of clinging to it. It believed petitioners' witnesses who testified that
ZHIENETH clung to the counter, afterwhich the structure and the girl fell with the structure falling on
top of her, pinning her stomach. In contrast, none of private respondents' witnesses testified on how
the counter fell. The trial court also held that CRISELDA's negligence contributed to ZHIENETH's
accident.

In absolving petitioners from any liability, the trial court reasoned that the counter was situated at the
end or corner of the 2nd floor as a precautionary measure hence, it could not be considered as an
attractive nuisance. 8 The counter was higher than ZHIENETH. It has been in existence for fifteen
years. Its structure was safe and well-balanced. ZHIENETH, therefore, had no business climbing on
and clinging to it.

Private respondents appealed the decision, attributing as errors of the trial court its findings that: (1)
the proximate cause of the fall of the counter was ZHIENETH's misbehavior; (2) CRISELDA was
negligent in her care of ZHIENETH; (3) petitioners were not negligent in the maintenance of the
counter; and (4) petitioners were not liable for the death of ZHIENETH.

Further, private respondents asserted that ZHIENETH should be entitled to the conclusive
presumption that a child below nine (9) years is incapable of contributory negligence. And even if
ZHIENETH, at six (6) years old, was already capable of contributory negligence, still it was physically
impossible for her to have propped herself on the counter. She had a small frame (four feet high and
seventy pounds) and the counter was much higher and heavier than she was. Also, the testimony of
one of the store's former employees, Gerardo Gonzales, who accompanied ZHIENETH when she was
brought to the emergency room of the Makati Medical Center belied petitioners' theory that ZHIENETH
climbed the counter. Gonzales claimed that when ZHIENETH was asked by the doctor what she did,
ZHIENETH replied, "[N]othing, I did not come near the counter and the counter just fell on me." 9
Accordingly, Gonzales' testimony on ZHIENETH's spontaneous declaration should not only be
considered as part of res gestae but also accorded credit.

Moreover, negligence could not be imputed to CRISELDA for it was reasonable for her to have let go
of ZHIENETH at the precise moment that she was signing the credit card slip.

Finally, private respondents vigorously maintained that the proximate cause of ZHIENETH's death,
was petitioners' negligence in failing to institute measures to have the counter permanently nailed.

On the other hand, petitioners argued that private respondents raised purely factual issues which could
no longer be disturbed. They explained that ZHIENETH's death while unfortunate and tragic, was an
accident for which neither CRISELDA nor even ZHIENETH could entirely be held faultless and
blameless. Further, petitioners adverted to the trial court's rejection of Gonzales' testimony as
unworthy of credence.

As to private respondent's claim that the counter should have been nailed to the ground, petitioners
justified that it was not necessary. The counter had been in existence for several years without any
prior accident and was deliberately placed at a corner to avoid such accidents. Truth to tell, they acted
without fault or negligence for they had exercised due diligence on the matter. In fact, the criminal
case 10 for homicide through simple negligence filed by private respondents against the individual
petitioners was dismissed; a verdict of acquittal was rendered in their favor.

The Court of Appeals, however, decided in favor of private respondents and reversed the appealed
judgment. It found that petitioners were negligent in maintaining a structurally dangerous counter. The
counter was shaped like an inverted "L" 11 with a top wider than the base. It was top heavy and the
weight of the upper portion was neither evenly distributed nor supported by its narrow base. Thus, the
counter was defective, unstable and dangerous; a downward pressure on the overhanging portion or
a push from the front could cause the counter to fall. Two former employees of petitioners had already
previously brought to the attention of the management the danger the counter could cause. But the
latter ignored their concern. The Court of Appeals faulted the petitioners for this omission, and
concluded that the incident that befell ZHIENETH could have been avoided had petitioners repaired
the defective counter. It was inconsequential that the counter had been in use for some time without
a prior incident.

The Court of Appeals declared that ZHIENETH, who was below seven (7) years old at the time of the
incident, was absolutely incapable of negligence or other tort. It reasoned that since a child under nine
(9) years could not be held liable even for an intentional wrong, then the six-year old ZHIENETH could
not be made to account for a mere mischief or reckless act. It also absolved CRISELDA of any
negligence, finding nothing wrong or out of the ordinary in momentarily allowing ZHIENETH to walk
while she signed the document at the nearby counter.

The Court of Appeals also rejected the testimonies of the witnesses of petitioners. It found them biased
and prejudiced. It instead gave credit to the testimony of disinterested witness Gonzales. The Court
of Appeals then awarded P99,420.86 as actual damages, the amount representing the hospitalization
expenses incurred by private respondents as evidenced by the hospital's statement of account. 12 It
denied an award for funeral expenses for lack of proof to substantiate the same. Instead, a
compensatory damage of P50,000 was awarded for the death of ZHIENETH.

We quote the dispositive portion of the assailed decision, 13 thus:

WHEREFORE, premises considered, the judgment of the lower court is SET ASIDE and another one
is entered against [petitioners], ordering them to pay jointly and severally unto [private respondents]
the following:

1. P50,000.00 by way of compensatory damages for the death of Zhieneth Aguilar, with legal
interest (6% p.a.) from 27 April 1984;
2. P99,420.86 as reimbursement for hospitalization expenses incurred; with legal interest (6%
p.a.) from 27 April 1984;

3. P100,000.00 as moral and exemplary damages;

4. P20,000.00 in the concept of attorney's fees; and

5. Costs.

Private respondents sought a reconsideration of the decision but the same was denied in the Court of
Appeals' resolution 14 of 16 July 1997.

Petitioners now seek the reversal of the Court of Appeals' decision and the reinstatement of the
judgment of the trial court. Petitioners primarily argue that the Court of Appeals erred in disregarding
the factual findings and conclusions of the trial court. They stress that since the action was based on
tort, any finding of negligence on the part of the private respondents would necessarily negate their
claim for damages, where said negligence was the proximate cause of the injury sustained. The injury
in the instant case was the death of ZHIENETH. The proximate cause was ZHIENETH's act of clinging
to the counter. This act in turn caused the counter to fall on her. This and CRISELDA's contributory
negligence, through her failure to provide the proper care and attention to her child while inside the
store, nullified private respondents' claim for damages. It is also for these reasons that parents are
made accountable for the damage or injury inflicted on others by their minor children. Under these
circumstances, petitioners could not be held responsible for the accident that befell ZHIENETH.

Petitioners also assail the credibility of Gonzales who was already separated from Syvel's at the time
he testified; hence, his testimony might have been tarnished by ill-feelings against them.

For their part, private respondents principally reiterated their arguments that neither ZHIENETH nor
CRISELDA was negligent at any time while inside the store; the findings and conclusions of the Court
of Appeals are substantiated by the evidence on record; the testimony of Gonzales, who heard
ZHIENETH comment on the incident while she was in the hospital's emergency room should receive
credence; and finally, ZHIENETH's part of the res gestae declaration "that she did nothing to cause
the heavy structure to fall on her" should be considered as the correct version of the gruesome events.

We deny the petition.

The two issues to be resolved are: (1) whether the death of ZHIENETH was accidental or attributable
to negligence; and (2) in case of a finding of negligence, whether the same was attributable to private
respondents for maintaining a defective counter or to CRISELDA and ZHIENETH for failing to exercise
due and reasonable care while inside the store premises.

An accident pertains to an unforeseen event in which no fault or negligence attaches to the defendant.
15 It is "a fortuitous circumstance, event or happening; an event happening without any human agency,
or if happening wholly or partly through human agency, an event which under the circumstances is
unusual or unexpected by the person to whom it happens." 16

On the other hand, negligence is the omission to do something which a reasonable man, guided by
those considerations which ordinarily regulate the conduct of human affairs, would do, or the doing of
something which a prudent and reasonable man would not do. 17 Negligence is "the failure to observe,
for the protection of the interest of another person, that degree of care, precaution and vigilance which
the circumstances justly demand, whereby such other person suffers injury." 18

Accident and negligence are intrinsically contradictory; one cannot exist with the other. Accident
occurs when the person concerned is exercising ordinary care, which is not caused by fault of any
person and which could not have been prevented by any means suggested by common prudence. 19

The test in determining the existence of negligence is enunciated in the landmark case of Plicart v.
Smith, 20 thus: Did the defendant in doing the alleged negligent act use that reasonable care and
caution which an ordinarily prudent person would have used in the same situation? If not, then he is
guilty of negligence. 21

We rule that the tragedy which befell ZHIENETH was no accident and that ZHIENETH's death could
only be attributed to negligence.
We quote the testimony of Gerardo Gonzales who was at the scene of the incident and accompanied
CRISELDA and ZHIENETH to the hospital:

Q While at the Makati Medical Center, did you hear or notice anything while the child was being
treated?

A At the emergency room we were all surrounding the child. And when the doctor asked the child
"what did you do," the child said "nothing, I did not come near the counter and the counter just fell on
me."

Q (COURT TO ATTY. BELTRAN)

You want the words in Tagalog to be translated?

ATTY. BELTRAN

Yes, your Honor.

COURT

Granted. Intercalate "wala po, hindi po ako lumapit doon. Basta bumagsak." 22

This testimony of Gonzales pertaining to ZHIENETH's statement formed (and should be admitted as)
part of the res gestae under Section 42, Rule 130 of the Rules of Court, thus:

Part of res gestae. Statements made by a person while a startling occurrence is taking place or
immediately prior or subsequent thereto with respect to the circumstances thereof, may be given in
evidence as part of the res gestae. So, also, statements accompanying an equivocal act material to
the issue, and giving it a legal significance, may be received as part of the res gestae.

It is axiomatic that matters relating to declarations of pain or suffering and statements made to a
physician are generally considered declarations and admissions. 23 All that is required for their
admissibility as part of the res gestae is that they be made or uttered under the influence of a startling
event before the declarant had the time to think and concoct a falsehood as witnessed by the person
who testified in court. Under the circumstances thus described, it is unthinkable for ZHIENETH, a child
of such tender age and in extreme pain, to have lied to a doctor whom she trusted with her life. We
therefore accord credence to Gonzales' testimony on the matter, i.e., ZHIENETH performed no act
that facilitated her tragic death. Sadly, petitioners did, through their negligence or omission to secure
or make stable the counter's base.

Gonzales' earlier testimony on petitioners' insistence to keep and maintain the structurally unstable
gift-wrapping counter proved their negligence, thus:

Q When you assumed the position as gift wrapper at the second floor, will you please describe
the gift wrapping counter, were you able to examine?

A Because every morning before I start working I used to clean that counter and since not nailed
and it was only standing on the floor, it was shaky.

xxx xxx xxx

Q Will you please describe the counter at 5:00 o'clock [sic] in the afternoon on [sic] May 9 1983?

A At that hour on May 9, 1983, that counter was standing beside the verification counter. And
since the top of it was heavy and considering that it was not nailed, it can collapse at anytime, since
the top is heavy.

xxx xxx xxx

Q And what did you do?

A I informed Mr. Maat about that counter which is [sic] shaky and since Mr. Maat is fond of putting
display decorations on tables, he even told me that I would put some decorations. But since I told him
that it not [sic] nailed and it is shaky he told me "better inform also the company about it." And since
the company did not do anything about the counter, so I also did not do anything about the counter.
24 [Emphasis supplied]

Ramon Guevarra, another former employee, corroborated the testimony of Gonzales, thus:

Q Will you please described [sic] to the honorable Court the counter where you were assigned
in January 1983?

xxx xxx xxx

A That counter assigned to me was when my supervisor ordered me to carry that counter to
another place. I told him that the counter needs nailing and it has to be nailed because it might cause
injury or accident to another since it was shaky.

Q When that gift wrapping counter was transferred at the second floor on February 12, 1983, will
you please describe that to the honorable Court?

A I told her that the counter wrapper [sic] is really in good [sic] condition; it was shaky. I told her
that we had to nail it.

Q When you said she, to whom are you referring to [sic]?

A I am referring to Ms. Panelo, sir.

Q And what was the answer of Ms. Panelo when you told her that the counter was shaky?

A She told me "Why do you have to teach me. You are only my subordinate and you are to teach
me?" And she even got angry at me when I told her that.

xxx xxx xxx

Q From February 12, 1983 up to May 9, 1983, what if any, did Ms. Panelo or any employee of
the management do to that (sic)

xxx xxx xxx

Witness:

None, sir. They never nailed the counter. They only nailed the counter after the accident happened.
25 [Emphasis supplied]

Without doubt, petitioner Panelo and another store supervisor were personally informed of the danger
posed by the unstable counter. Yet, neither initiated any concrete action to remedy the situation nor
ensure the safety of the store's employees and patrons as a reasonable and ordinary prudent man
would have done. Thus, as confronted by the situation petitioners miserably failed to discharge the
due diligence required of a good father of a family.

On the issue of the credibility of Gonzales and Guevarra, petitioners failed to establish that the former's
testimonies were biased and tainted with partiality. Therefore, the allegation that Gonzales and
Guevarra's testimonies were blemished by "ill feelings" against petitioners — since they (Gonzales
and Guevarra) were already separated from the company at the time their testimonies were offered in
court — was but mere speculation and deserved scant consideration.

It is settled that when the issue concerns the credibility of witnesses, the appellate courts will not as a
general rule disturb the findings of the trial court, which is in a better position to determine the same.
The trial court has the distinct advantage of actually hearing the testimony of and observing the
deportment of the witnesses. 26 However, the rule admits of exceptions such as when its evaluation
was reached arbitrarily or it overlooked or failed to appreciate some facts or circumstances of weight
and substance which could affect the result of the case. 27 In the instant case, petitioners failed to
bring their claim within the exception.

Anent the negligence imputed to ZHIENETH, we apply the conclusive presumption that favors children
below nine (9) years old in that they are incapable of contributory negligence. In his book, 28 former
Judge Cezar S. Sangco stated:

In our jurisdiction, a person under nine years of age is conclusively presumed to have acted without
discernment, and is, on that account, exempt from criminal liability. The same presumption and a like
exemption from criminal liability obtains in a case of a person over nine and under fifteen years of age,
unless it is shown that he has acted with discernment. Since negligence may be a felony and a quasi-
delict and required discernment as a condition of liability, either criminal or civil, a child under nine
years of age is, by analogy, conclusively presumed to be incapable of negligence; and that the
presumption of lack of discernment or incapacity for negligence in the case of a child over nine but
under fifteen years of age is a rebuttable one, under our law. The rule, therefore, is that a child under
nine years of age must be conclusively presumed incapable of contributory negligence as a matter of
law. [Emphasis supplied]

Even if we attribute contributory negligence to ZHIENETH and assume that she climbed over the
counter, no injury should have occurred if we accept petitioners' theory that the counter was stable
and sturdy. For if that was the truth, a frail six-year old could not have caused the counter to collapse.
The physical analysis of the counter by both the trial court and Court of Appeals and a scrutiny of the
evidence 29 on record reveal otherwise, i.e., it was not durable after all. Shaped like an inverted "L,"
the counter was heavy, huge, and its top laden with formica. It protruded towards the customer waiting
area and its base was not secured. 30

CRISELDA too, should be absolved from any contributory negligence. Initially, ZHIENETH held on to
CRISELDA's waist, later to the latter's hand. 31 CRISELDA momentarily released the child's hand
from her clutch when she signed her credit card slip. At this precise moment, it was reasonable and
usual for CRISELDA to let go of her child. Further, at the time ZHIENETH was pinned down by the
counter, she was just a foot away from her mother; and the gift-wrapping counter was just four meters
away from CRISELDA. 32 The time and distance were both significant. ZHIENETH was near her
mother and did not loiter as petitioners would want to impress upon us. She even admitted to the
doctor who treated her at the hospital that she did not do anything; the counter just fell on her.

WHEREFORE, in view of all the foregoing, the instant petition is DENIED and the challenged decision
of the Court of Appeals of 17 June 1996 in C.A. G.R. No. CV 37937 is hereby AFFIRMED.

Costs against petitioners.

SO ORDERED.
G.R. No. L-33722 July 29, 1988

FEDERICO YLARDE and ADELAIDA DORONIO petitioners,

vs.
EDGARDO AQUINO, MAURO SORIANO and COURT OF APPEALS, respondents.

Buenaventura C. Evangelista for petitioners.

Modesto V. Cabanela for respondent Edgardo Aquino.

Manuel P. Pastor for respondent Mauro Soriano.

GANCAYCO, J.:

In this petition for review on certiorari seeking the reversal of the decision of the Court of Appeals in CA-G.R. No. 36390-R entitled "Federico
Ylarde, et al. vs. Edgardo Aquino, et al.," a case which originated from the Court of First Instance of Pangasinan, We are again caned upon
determine the responsibility of the principals and teachers towards their students or pupils.

In 1963, private respondent Mariano Soriano was the principal of the Gabaldon Primary School, a
public educational institution located in Tayug, Pangasinan-Private respondent Edgardo Aquino was
a teacher therein. At that time, the school was fittered with several concrete blocks which were
remnants of the old school shop that was destroyed in World War II. Realizing that the huge stones
were serious hazards to the schoolchildren, another teacher by the name of Sergio Banez started
burying them one by one as early as 1962. In fact, he was able to bury ten of these blocks all by
himself.

Deciding to help his colleague, private respondent Edgardo Aquino gathered eighteen of his male
pupils, aged ten to eleven, after class dismissal on October 7, 1963. Being their teacher-in-charge,
he ordered them to dig beside a one-ton concrete block in order to make a hole wherein the stone
can be buried. The work was left unfinished. The following day, also after classes, private
respondent Aquino called four of the original eighteen pupils to continue the digging. These four
pupils — Reynaldo Alonso, Francisco Alcantara, Ismael Abaga and Novelito Ylarde, dug until the
excavation was one meter and forty centimeters deep. At this point, private respondent Aquino alone
continued digging while the pupils remained inside the pit throwing out the loose soil that was
brought about by the digging.

When the depth was right enough to accommodate the concrete block, private respondent Aquino
and his four pupils got out of the hole. Then, said private respondent left the children to level the
loose soil around the open hole while he went to see Banez who was about thirty meters away.
Private respondent wanted to borrow from Banez the key to the school workroom where he could
get some rope. Before leaving. , private respondent Aquino allegedly told the children "not to touch
the stone."

A few minutes after private respondent Aquino left, three of the four kids, Alonso, Alcantara and
Ylarde, playfully jumped into the pit. Then, without any warning at all, the remaining Abaga jumped
on top of the concrete block causing it to slide down towards the opening. Alonso and Alcantara
were able to scramble out of the excavation on time but unfortunately fo Ylarde, the concrete block
caught him before he could get out, pinning him to the wall in a standing position. As a result thereof,
Ylarde sustained the following injuries:

1. Contusion with hematoma, left inguinal region and suprapubic region.

2. Contusion with ecchymosis entire scrotal region.

3. Lacerated wound, left lateral aspect of penile skin with phimosis

4. Abrasion, gluteal region, bilateral.

5. Intraperitoneal and extrapertitoneal extravasation of blood and urine about 2 liters.

6. Fracture, simple, symphesis pubis

7. Ruptured (macerated) urinary bladder with body of bladder almost entirely

separated from its neck.

REMARKS:

1. Above were incurred by crushing injury.

2. Prognosis very poor.

(Sgd.) MELQUIADES
A. BRAVO

Physici
an on
Duty. 1

Three days later, Novelito Ylarde died.

Ylarde's parents, petitioners in this case, filed a suit for damages against both private respondents
Aquino and Soriano. The lower court dismissed the complaint on the following grounds: (1) that the
digging done by the pupils is in line with their course called Work Education; (2) that Aquino
exercised the utmost diligence of a very cautious person; and (3) that the demise of Ylarde was due
to his own reckless imprudence. 2

On appeal, the Court of Appeals affirmed the Decision of the lower court.

Petitioners base their action against private respondent Aquino on Article 2176 of the Civil Code for
his alleged negligence that caused their son's death while the complaint against respondent Soriano
as the head of school is founded on Article 2180 of the same Code.

Article 2176 of the Civil Code provides:

 Art. 2176. Whoever by act or omission causes damage to another, there being fault
or negligence, is obliged to pay for the damage done. Such fault or negligence, if
there is no pre- existing contractual relation between the parties, is called a quasi-
delict and is governed by the provisions of this Chapter.

On the other hand, the applicable provision of Article 2180 states:

Art. 2180. x x x

xxx xxx xxx

Lastly, teachers or heads of establishments of arts and trades shall be liable for
damages caused by their pupils and students or apprentices, so long as they remain
in their custody. 3

The issue to be resolved is whether or not under the cited provisions, both private respondents can
be held liable for damages.

As regards the principal, We hold that he cannot be made responsible for the death of the child
Ylarde, he being the head of an academic school and not a school of arts and trades. This is in line
with Our ruling in Amadora vs. Court of Appeals, 4 wherein this Court thoroughly discussed the
doctrine that under Article 2180 of the Civil Code, it is only the teacher and not the head of an
academic school who should be answerable for torts committed by their students. This Court went
on to say that in a school of arts and trades, it is only the head of the school who can be held liable.
In the same case, We explained:

After an exhaustive examination of the problem, the Court has come to the
conclusion that the provision in question should apply to all schools, academic as
well as non-academic. Where the school is academic rather than technical or
vocational in nature, responsibility for the tort committed by the student will attach to
the teacher in charge of such student, following the first part of the provision. This is
the general rule. In the case of establishments of arts and trades, it is the head
thereof, and only he, who shall be held liable as an exception to the general rule. In
other words, teachers in general shall be liable for the acts of their students except
where the school is technical in nature, in which case it is the head thereof who shall
be answerable. Following the canon of reddendo singula sinquilis 'teachers' should
apply to the words "pupils and students' and 'heads of establishments of arts and
trades to the word "apprentices."

Hence, applying the said doctrine to this case, We rule that private respondent Soriano, as principal,
cannot be held liable for the reason that the school he heads is an academic school and not a school
of arts and trades. Besides, as clearly admitted by private respondent Aquino, private respondent
Soriano did not give any instruction regarding the digging.

From the foregoing, it can be easily seen that private respondent Aquino can be held liable under
Article 2180 of the Civil Code as the teacher-in-charge of the children for being negligent in his
supervision over them and his failure to take the necessary precautions to prevent any injury on their
persons. However, as earlier pointed out, petitioners base the alleged liability of private respondent
Aquino on Article 2176 which is separate and distinct from that provided for in Article 2180.

With this in mind, the question We need to answer is this: Were there acts and omissions on the part
of private respondent Aquino amounting to fault or negligence which have direct causal relation to
the death of his pupil Ylarde? Our answer is in the affirmative. He is liable for damages.

From a review of the record of this case, it is very clear that private respondent Aquino acted with
fault and gross negligence when he: (1) failed to avail himself of services of adult manual laborers
and instead utilized his pupils aged ten to eleven to make an excavation near the one-ton concrete
stone which he knew to be a very hazardous task; (2) required the children to remain inside the pit
even after they had finished digging, knowing that the huge block was lying nearby and could be
easily pushed or kicked aside by any pupil who by chance may go to the perilous area; (3) ordered
them to level the soil around the excavation when it was so apparent that the huge stone was at the
brink of falling; (4) went to a place where he would not be able to check on the children's safety; and
(5) left the children close to the excavation, an obviously attractive nuisance.
The negligent act of private respondent Aquino in leaving his pupils in such a dangerous site has a
direct causal connection to the death of the child Ylarde. Left by themselves, it was but natural for
the children to play around. Tired from the strenuous digging, they just had to amuse themselves
with whatever they found. Driven by their playful and adventurous instincts and not knowing the risk
they were facing three of them jumped into the hole while the other one jumped on the stone. Since
the stone was so heavy and the soil was loose from the digging, it was also a natural consequence
that the stone would fall into the hole beside it, causing injury on the unfortunate child caught by its
heavy weight. Everything that occurred was the natural and probable effect of the negligent acts of
private respondent Aquino. Needless to say, the child Ylarde would not have died were it not for the
unsafe situation created by private respondent Aquino which exposed the lives of all the pupils
concerned to real danger.

We cannot agree with the finding of the lower court that the injuries which resulted in the death of the
child Ylarde were caused by his own reckless imprudence, It should be remembered that he was
only ten years old at the time of the incident, As such, he is expected to be playful and daring. His
actuations were natural to a boy his age. Going back to the facts, it was not only him but the three of
them who jumped into the hole while the remaining boy jumped on the block. From this, it is clear
that he only did what any other ten-year old child would do in the same situation.

In ruling that the child Ylarde was imprudent, it is evident that the lower court did not consider his
age and maturity. This should not be the case. The degree of care required to be exercised must
vary with the capacity of the person endangered to care for himself. A minor should not be held to
the same degree of care as an adult, but his conduct should be judged according to the average
conduct of persons of his age and experience. 5 The standard of conduct to which a child must
conform for his own protection is that degree of care ordinarily exercised by children of the same
age, capacity, discretion, knowledge and experience under the same or similar
circumstances. 6 Bearing this in mind, We cannot charge the child Ylarde with reckless imprudence.

The court is not persuaded that the digging done by the pupils can pass as part of their Work
Education. A single glance at the picture showing the excavation and the huge concrete
block 7 would reveal a dangerous site requiring the attendance of strong, mature laborers and not
ten-year old grade-four pupils. We cannot comprehend why the lower court saw it otherwise when
private respondent Aquino himself admitted that there were no instructions from the principal
requiring what the pupils were told to do. Nor was there any showing that it was included in the
lesson plan for their Work Education. Even the Court of Appeals made mention of the fact that
respondent Aquino decided all by himself to help his co-teacher Banez bury the concrete remnants
of the old school shop. 8 Furthermore, the excavation should not be placed in the category of school
gardening, planting trees, and the like as these undertakings do not expose the children to any risk
that could result in death or physical injuries.

The contention that private respondent Aquino exercised the utmost diligence of a very cautious
person is certainly without cogent basis. A reasonably prudent person would have foreseen that
bringing children to an excavation site, and more so, leaving them there all by themselves, may
result in an accident. An ordinarily careful human being would not assume that a simple warning "not
to touch the stone" is sufficient to cast away all the serious danger that a huge concrete block
adjacent to an excavation would present to the children. Moreover, a teacher who stands in loco
parentis to his pupils would have made sure that the children are protected from all harm in his
company.

We close by categorically stating that a truly careful and cautious person would have acted in all
contrast to the way private respondent Aquino did. Were it not for his gross negligence, the
unfortunate incident would not have occurred and the child Ylarde would probably be alive today, a
grown- man of thirty-five. Due to his failure to take the necessary precautions to avoid the hazard,
Ylarde's parents suffered great anguish all these years.

WHEREFORE, in view of the foregoing, the petition is hereby GRANTED and the questioned
judgment of the respondent court is REVERSED and SET ASIDE and another judgment is hereby
rendered ordering private respondent Edagardo Aquino to pay petitioners the following:

(1) Indemnity for the death of Child Ylarde P30,000.00

(2) Exemplary damages 10,000.00

(3) Moral damages 20,000.00

SO ORDERED.

G.R. No. 82508 September 29, 1989

FILINVEST CREDIT CORPORATION, petitioner,

vs.
THE COURT OF APPEALS, JOSE SY BANG and ILUMINADA TAN SY BANG,*respondents.

Labaquis, Loyola, Angara and Associates for petitioner.

Alfredo 1. Raya for private respondents.

SARMIENTO, J.:

This is a petition for review on certiorari of the decision, 1 dated March 17, 1988, of the Court of
Appeals which affirmed with modification the decision 2 of the Regional Trial Court of Quezon,
Branch LIX, Lucena City. The controversy stemmed from the following facts: The private
respondents, the spouses Jose Sy Bang and Iluminada Tan, were engaged in the sale of gravel
produced from crushed rocks and used for construction purposes. In order to increase their
production, they engaged the services of Mr. Ruben Mercurio, the proprietor of Gemini Motor Sales
in Lucena City, to look for a rock crusher which they could buy. Mr. Mercurio referred the private
respondents to the Rizal Consolidated Corporation which then had for sale one such machinery
described as:

ONE UNIT LIPPMAN PORTABLE CRUSHING PLANT (RECONDITIONED) [sic]

JAW CRUSHER-10xl6 DOUBLE ROLL CRUSHER 16x16

3 UNITS PRODUCT CONVEYOR

75 HP ELECTRIC MOTOR

8 PCS. BRAND NEW TIRES CHASSIS NO. 19696 GOOD RUNNING CONDITION 3
Oscar Sy Bang, a brother of private respondent Jose Sy Bang, went to inspect the machine at the
Rizal Consolidated's plant site. Apparently satisfied with the machine, the private respondents
signified their intent to purchase the same. They were however confronted with a problem-the rock
crusher carried a cash price tag of P 550,000.00. Bent on acquiring the machinery, the private
respondents applied for financial assistance from the petitioner, Filinvest Credit Corporation. The
petitioner agreed to extend to the private respondents financial aid on the following conditions: that
the machinery be purchased in the petitioner's name; that it be leased (with option to purchase upon
the termination of the lease period) to the private respondents; and that the private respondents
execute a real estate mortgage in favor of the petitioner as security for the amount advanced by the
latter. Accordingly, on May 18,1981, a contract of lease of machinery (with option to purchase) was
entered into by the parties whereby the private respondents agreed to lease from the petitioner the
rock crusher for two years starting from July 5, 1 981 payable as follows:

P10,000.00 - first 3 months

23,000.00 - next 6 months

24,800.00 - next 15 months

The contract likewise stipulated that at the end of the two-year period, the machine would be owned
by the private respondents. Thus, the private respondents issued in favor of the petitioner a check
for P150,550.00, as initial rental (or guaranty deposit), and twenty-four (24) postdated checks
corresponding to the 24 monthly rentals. In addition, to guarantee their compliance with the lease
contract, the private respondents executed a real estate mortgage over two parcels of land in favor
of the petitioner. The rock crusher was delivered to the private respondents on June 9, 1981. Three
months from the date of delivery, or on September 7, 1981, however, the private respondents,
claiming that they had only tested the machine that month, sent a letter-complaint to the petitioner,
alleging that contrary to the 20 to 40 tons per hour capacity of the machine as stated in the lease
contract, the machine could only process 5 tons of rocks and stones per hour. They then demanded
that the petitioner make good the stipulation in the lease contract. They followed that up with similar
written complaints to the petitioner, but the latter did not, however, act on them. Subsequently, the
private respondents stopped payment on the remaining checks they had issued to the petitioner. 5

As a consequence of the non-payment by the private respondents of the rentals on the rock crusher
as they fell due despite the repeated written demands, the petitioner extrajudicially foreclosed the
real estate mortgage. 6 On April 18, 1983, the private respondents received a Sheriff s Notice of
Auction Sale informing them that their mortgaged properties were going to be sold at a public
auction on May 25, 1983 at 10:00 o'clock in the morning at the Office of the Provincial Sheriff in
Lucena City to satisfy their indebtedness to the petitioner. 7 To thwart the impending auction of their
properties, the private respondents filed before the Regional Trial Court of Quezon, on May 4,
1983, 8 a complaint against the petitioner, for the rescission of the contract of lease, annullment of
the real estate mortgage, and for injunction and damages, with prayer for the issuance of a writ of
preliminary injunction.9 On May 23, 1983, three days before the scheduled auction sale, the trial
court issued a temporary restraining order commanding the Provincial Sheriff of Quezon, and the
petitioner, to refrain and desist from proceeding with the public auction. 10 Two years later, on
September 4, 1985, the trial court rendered a decision in favor of the private respondents, the
dispositive portion of which reads:

WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered:

1. making the injunction permanent;

2. rescinding the contract of lease of the machinery and equipment and ordering the
plaintiffs to return to the defendant corporation the machinery subject of the lease
contract, and the defendant corporation to return to plaintiffs the sum of P470,950.00
it received from the latter as guaranty deposit and rentals with legal interest thereon
until the amount is fully restituted;

3. annulling the real estate mortgage constituted over the properties of the plaintiffs
covered by Transfer Certificate of Title Nos. T32480 and T-5779 of the Registry of
Deeds of Lucena City;

4. ordering the defendant corporation to pay plaintiffs P30,000.00 as attorney's fees

and the costs of the suit.
SO ORDERED. 11

Dissatisfied with the trial court's decision, the petitioner elevated the case to the respondent Court of
Appeals.

On March 17, 1988, the appellate court, finding no error in the appealed judgment, affirmed the
same in toto. 12Hence, this petition.

Before us, the petitioner reasserts that the private respondents' cause of action is not against it (the
petitioner), but against either the Rizal Consolidated Corporation, the original owner-seller of the
subject rock crusher, or Gemini Motors Sales which served as a conduit facilitator of the purchase of
the said machine. The petitioner argues that it is a financing institution engaged in quasi-banking
activities, primarily the lending of money to entrepreneurs such as the private respondents and the
general public, but certainly not the leasing or selling of heavy machineries like the subject rock
crusher. The petitioner denies being the seller of the rock crusher and only admits having financed
its acquisition by the private respondents. Further, the petitioner absolves itself of any liability arising
out of the lease contract it signed with the private respondents due to the waiver of warranty made
by the latter. The petitioner likewise maintains that the private respondents being presumed to be
knowledgeable about machineries, should be held responsible for the detection of defects in the
machine they had acquired, and on account of that, they are estopped from claiming any breach of
warranty. Finally, the petitioner interposed the defense of prescription, invoking Article 1571 of the
Civil Code, which provides:

Art. 1571. Actions arising from the provisions of the preceding ten articles shall be barred after six
months, from the delivery of the thing sold.

We find the petitioner's first contention untenable. While it is accepted that the petitioner is a
financing institution, it is not, however, immune from any recourse by the private respondents.
Notwithstanding the testimony of private respondent Jose Sy Bang that he did not purchase the rock
crusher from the petitioner, the fact that the rock crusher was purchased from Rizal Consolidated
Corporation in the name and with the funds of the petitioner proves beyond doubt that the ownership
thereof was effectively transferred to it. It is precisely this ownership which enabled the petitioner to
enter into the "Contract of Lease of Machinery and Equipment" with the private respondents.

Be that as it may, the real intention of the parties should prevail. The nomenclature of the agreement
cannot change its true essence, i.e., a sale on installments. It is basic that a contract is what the law
defines it and the parties intend it to be, not what it is called by the parties. 13 It is apparent here
thatthe intent of the parties to the subject contract is for the so-called rentals to be the installment
payments. Upon the completion of the payments, then the rock crusher, subject matter of the
contract, would become the property of the private respondents. This form of agreement has been
criticized as a lease only in name. Thus in Vda. de Jose v. Barrueco 14 we stated:

Sellers desirous of making conditional sales of their goods, but who do not wish openly to make a
bargain in that form, for one reason or another, have frequently resorted to the device of making
contracts in the form of leases either with options to the buyer to purchase for a small consideration
at the end of term, provided the so-called rent has been duly paid, or with stipulations that if the rent
throughout the term is paid, title shall thereupon vest in the lessee. It is obvious that such
transactions are leases only in name. The so-called rent must necessarily be regarded as payment
of the price in installments since the due payment of the agreed amount results, by the terms of
bargain, in the transfer of title to the lessee. 15

The importance of the criticism is heightened in the light of Article 1484 of the new Civil Code which
provides for the remedies of an unpaid seller of movables on installment basis.

Article 1484. In a contract of sale of personal property the price of which is payable in
installments, the vendor may exercise any of the following remedies:

(1) Exact fulfillment of the obligation, should the vendee fail to pay;

(2) Cancel the sale, should the vendee's failure to pay cover two or more
installments;
 (3) Foreclose the chattel mortgage or the thing sold, if one has been constituted,
should the vendee's failure to pay cover two or more installments. In this case, he
shall have no further action against the purchaser to recover any unpaid balance of
the price. Any agreement to the contrary shall be void.

Under the aforequoted provision, the seller of movables in installments, in case the buyer fails to pay
two or more installments may elect to pursue either of the following remedies: (1) exact fulfillment by
the purchaser of the obligation; (2) cancel the sale; or (3) foreclose the mortgage on the purchased
property if one was constituted thereon. It is now settled that the said remedies are alternative and
not cumulative and therefore, the exercise of one bars the exercise of the others.

Indubitably, the device contract of lease with option to buy is at times resorted to as a means to
circumvent Article 1484, particularly paragraph (3) thereof.Through the set-up, the vendor, by
retaining ownership over the property in the guise of being the lessor, retains, likewise, the right to
repossess the same, without going through the process of foreclosure, in the event the vendee-
lessee defaults in the payment of the installments. There arises therefore no need to constitute a
chattel mortgage over the movable sold. More important, the vendor, after repossessing the property
and, in effect, canceling the contract of sale, gets to keep all the installments-cum-rentals already
paid. It is thus for these reasons that Article 1485 of the new Civil Code provides that:

Article 1485. The preceding article shall be applied to contracts purporting to be

leases of personal property with option to buy, when the lessor has deprived the
lessee of possession or enjoyment of the thing. (Emphasis ours.)

Unfortunately, even with the foregoing findings, we however fail to find any reason to hold the
petitioner liable for the rock crusher's failure to produce in accordance with its described capacity.
According to the petitioner, it was the private respondents who chose, inspected, and tested the
subject machinery. It was only after they had inspected and tested the machine, and found it to their
satisfaction, that the private respondents sought financial aid from the petitioner. These allegations
of the petitioner had never been rebutted by the private respondents. In fact, they were even
admitted by the private respondents in the contract they signed. Thus:

LESSEE'S SELECTION, INSPECTION AND VERIFICATION.-The LESSEE hereby confirms and

acknowledges that he has independently inspected and verified the leased property and has
selected and received the same from the Dealer of his own choosing in good order and excellent
running and operating condition and on the basis of such verification, etc. the LESSEE has agreed
to enter into this Contract." 16

Moreover, considering that between the parties, it is the private respondents, by reason of their
business, who are presumed to be more knowledgeable, if not experts, on the machinery subject of
the contract, they should not therefore be heard now to complain of any alleged deficiency of the
said machinery. It is their failure or neglect to exercise the caution and prudence of an expert, or, at
least, of a prudent man, in the selection, testing, and inspection of the rock crusher that gave rise to
their difficulty and to this conflict. A well- established principle in law is that between two parties, he,
who by his negligence caused the loss, shall bear the same.

At any rate, even if the private respondents could not be adjudged as negligent, they still are
precluded from imputing any liability on the petitioner. One of the stipulations in the contract they
entered into with the petitioner is an express waiver of warranties in favor of the latter. By so signing
the agreement, the private respondents absolved the petitioner from any liability arising from any
defect or deficiency of the machinery they bought. The stipulation on the machine's production
capacity being "typewritten" and that of the waiver being "printed" does not militate against the
latter's effectivity. As such, whether "a capacity of 20 to 40 tons per hour" is a condition or a
description is of no moment. What stands is that the private respondents had expressly exempted
the petitioner from any warranty whatsoever. Their Contract of Lease Of Machinery And Equipment
states:

WARRANTY-LESSEE absolutely releases the lessor from any liability whatsoever as to any and all
matters in relation to warranty in accordance with the provisions hereinafter stipulated. 17

Taking into account that due to the nature of its business and its mode of providing financial
assistance to clients, the petitioner deals in goods over which it has no sufficient know-how or
expertise, and the selection of a particular item is left to the client concerned, the latter, therefore,
shoulders the responsibility of protecting himself against product defects. This is where the waiver of
warranties is of paramount importance. Common sense dictates that a buyer inspects a product
before purchasing it (under the principle of caveat emptor or "buyer beware") and does not return it
for defects discovered later on, particularly if the return of the product is not covered by or stipulated
in a contract or warranty. In the case at bar, to declare the waiver as non-effective, as the lower
courts did, would impair the obligation of contracts. Certainly, the waiver in question could not be
considered a mere surplusage in the contract between the parties. Moreover, nowhere is it shown in
the records of the case that the private respondent has argued for its nullity or illegality. In any event,
we find no ambiguity in the language of the waiver or the release of warranty. There is therefore no
room for any interpretation as to its effect or applicability vis-a- vis the deficient output of the rock
crusher. Suffice it to say that the private respondents have validly excused the petitioner from any
warranty on the rock crusher. Hence, they should bear the loss for any defect found therein.

WHEREFORE, the Petition is GRANTED; the Decision of the Court of Appeals dated March 17,
1988 is hereby REVERSED AND SET ASIDE, and another one rendered DISMISSING the
complaint. Costs against the private respondents.

SO ORDERED.

ASSUMPTION OF RISKS
[G.R. No. 154259. February 28, 2005]

NIKKO HOTEL MANILA GARDEN and RUBY LIM, petitioners, vs. ROBERTO REYES, a.k.a.
AMAY BISAYA, respondent.

DECISION
CHICO-NAZARIO, J.:

In this petition for review on certiorari, petitioners Nikko Hotel Manila Garden (Hotel Nikko)[1] and
Ruby Lim assail the Decision[2] of the Court of Appeals dated 26 November 2001 reversing the
Decision[3] of the Regional Trial Court (RTC) of Quezon City, Branch 104, as well as the Resolution[4] of
the Court of Appeals dated 09 July 2002 which denied petitioners motion for reconsideration.
The cause of action before the trial court was one for damages brought under the human relations
provisions of the New Civil Code. Plaintiff thereat (respondent herein) Roberto Reyes, more popularly
known by the screen name Amay Bisaya, alleged that at around 6:00 oclock in the evening of 13
October 1994, while he was having coffee at the lobby of Hotel Nikko,[5] he was spotted by his friend
of several years, Dr. Violeta Filart, who then approached him.[6] Mrs. Filart invited him to join her in a
party at the hotels penthouse in celebration of the natal day of the hotels manager, Mr. Masakazu
Tsuruoka.[7] Mr. Reyes asked if she could vouch for him for which she replied: of course.[8] Mr. Reyes
then went up with the party of Dr. Filart carrying the basket of fruits which was the latters present for
the celebrant.[9] At the penthouse, they first had their picture taken with the celebrant after which Mr.
Reyes sat with the party of Dr. Filart.[10]After a couple of hours, when the buffet dinner was ready, Mr.
Reyes lined-up at the buffet table but, to his great shock, shame and embarrassment, he was stopped
by petitioner herein, Ruby Lim, who claimed to speak for Hotel Nikko as Executive Secretary
thereof.[11] In a loud voice and within the presence and hearing of the other guests who were making
a queue at the buffet table, Ruby Lim told him to leave the party (huwag ka nang kumain, hindi ka
imbitado, bumaba ka na lang).[12] Mr. Reyes tried to explain that he was invited by Dr. Filart.[13] Dr.
Filart, who was within hearing distance, however, completely ignored him thus adding to his shame
and humiliation.[14] Not long after, while he was still recovering from the traumatic experience, a Makati
policeman approached and asked him to step out of the hotel.[15] Like a common criminal, he was
escorted out of the party by the policeman.[16] Claiming damages, Mr. Reyes asked for One Million
Pesos actual damages, One Million Pesos moral and/or exemplary damages and Two Hundred
Thousand Pesos attorneys fees.[17]
Ruby Lim, for her part, admitted having asked Mr. Reyes to leave the party but not under the
ignominious circumstance painted by the latter. Ms. Lim narrated that she was the Hotels Executive
Secretary for the past twenty (20) years.[18] One of her functions included organizing the birthday party
of the hotels former General Manager, Mr. Tsuruoka.[19] The year 1994 was no different. For Mr.
Tsuruokas party, Ms. Lim generated an exclusive guest list and extended invitations
accordingly.[20] The guest list was limited to approximately sixty (60) of Mr. Tsuruokas closest friends
and some hotel employees and that Mr. Reyes was not one of those invited.[21] At the party, Ms. Lim
first noticed Mr. Reyes at the bar counter ordering a drink.[22]Mindful of Mr. Tsuruokas wishes to keep
the party intimate, Ms. Lim approached Mr. Boy Miller, the captain waiter, to inquire as to the presence
of Mr. Reyes who was not invited.[23] Mr. Miller replied that he saw Mr. Reyes with the group of Dr.
Filart.[24] As Dr. Filart was engaged in conversation with another guest and as Ms. Lim did not want to
interrupt, she inquired instead from the sister of Dr. Filart, Ms. Zenaida Fruto, who told her that Dr.
Filart did not invite Mr. Reyes.[25] Ms. Lim then requested Ms. Fruto to tell Mr. Reyes to leave the party
as he was not invited.[26] Mr. Reyes, however, lingered prompting Ms. Lim to inquire from Ms. Fruto
who said that Mr. Reyes did not want to leave.[27] When Ms. Lim turned around, she saw Mr. Reyes
conversing with a Captain Batung whom she later approached.[28] Believing that Captain Batung and
Mr. Reyes knew each other, Ms. Lim requested from him the same favor from Ms. Fruto, i.e., for
Captain Batung to tell Mr. Reyes to leave the party as he was not invited.[29] Still, Mr. Reyes lingered.
When Ms. Lim spotted Mr. Reyes by the buffet table, she decided to speak to him herself as there
were no other guests in the immediate vicinity.[30] However, as Mr. Reyes was already helping himself
to the food, she decided to wait.[31] When Mr. Reyes went to a corner and started to eat, Ms. Lim
approached him and said: alam ninyo, hindo ho kayo dapat nandito. Pero total nakakuha na ho kayo
ng pagkain, ubusin na lang ninyo at pagkatapos kung pwede lang po umalis na kayo.[32] She then
turned around trusting that Mr. Reyes would show enough decency to leave, but to her surprise, he
began screaming and making a big scene, and even threatened to dump food on her.[33]
Dr. Violeta Filart, the third defendant in the complaint before the lower court, also gave her version
of the story to the effect that she never invited Mr. Reyes to the party.[34] According to her, it was Mr.
Reyes who volunteered to carry the basket of fruits intended for the celebrant as he was likewise going
to take the elevator, not to the penthouse but to Altitude 49.[35] When they reached the penthouse, she
reminded Mr. Reyes to go down as he was not properly dressed and was not invited.[36] All the while,
she thought that Mr. Reyes already left the place, but she later saw him at the bar talking to Col.
Batung.[37] Then there was a commotion and she saw Mr. Reyes shouting.[38] She ignored Mr.
Reyes.[39] She was embarrassed and did not want the celebrant to think that she invited him.[40]
After trial on the merits, the court a quo dismissed the complaint,[41] giving more credence to the
testimony of Ms. Lim that she was discreet in asking Mr. Reyes to leave the party. The trial court
likewise ratiocinated that Mr. Reyes assumed the risk of being thrown out of the party as he was
uninvited:

Plaintiff had no business being at the party because he was not a guest of Mr. Tsuruoka, the
birthday celebrant. He assumed the risk of being asked to leave for attending a party to which he
was not invited by the host. Damages are pecuniary consequences which the law imposes for the
breach of some duty or the violation of some right. Thus, no recovery can be had against defendants
Nikko Hotel and Ruby Lim because he himself was at fault (Garciano v. Court of Appeals, 212 SCRA
436). He knew that it was not the party of defendant Violeta Filart even if she allowed him to join her
and took responsibility for his attendance at the party. His action against defendants Nikko Hotel and
Ruby Lim must therefore fail.[42]

On appeal, the Court of Appeals reversed the ruling of the trial court as it found more commanding
of belief the testimony of Mr. Reyes that Ms. Lim ordered him to leave in a loud voice within hearing
distance of several guests:

In putting appellant in a very embarrassing situation, telling him that he should not finish his food and
to leave the place within the hearing distance of other guests is an act which is contrary to morals,
good customs . . ., for which appellees should compensate the appellant for the damage suffered by
the latter as a consequence therefore (Art. 21, New Civil Code). The liability arises from the acts
which are in themselves legal or not prohibited, but contrary to morals or good customs. Conversely,
even in the exercise of a formal right, [one] cannot with impunity intentionally cause damage to
another in a manner contrary to morals or good customs.[43]

The Court of Appeals likewise ruled that the actuation of Ms. Lim in approaching several people to
inquire into the presence of Mr. Reyes exposed the latter to ridicule and was uncalled for as she should
have approached Dr. Filart first and both of them should have talked to Mr. Reyes in private:

Said acts of appellee Lim are uncalled for. What should have been done by appellee Lim was to
approach appellee Mrs. Filart and together they should have told appellant Reyes in private that the
latter should leave the party as the celebrant only wanted close friends around. It is necessary that
Mrs. Filart be the one to approach appellant because it was she who invited appellant in that
occasion. Were it not for Mrs. Filarts invitation, appellant could not have suffered such humiliation.
For that, appellee Filart is equally liable.

...

The acts of [appellee] Lim are causes of action which are predicated upon mere rudeness or lack of
consideration of one person, which calls not only protection of human dignity but respect of such
dignity. Under Article 20 of the Civil Code, every person who violates this duty becomes liable for
damages, especially if said acts were attended by malice or bad faith. Bad faith does not simply
connote bad judgment or simple negligence. It imports a dishonest purpose or some moral obliquity
and conscious doing of a wrong, a breach of a known duty to some motive or interest or ill-will that
partakes of the nature of fraud (Cojuangco, Jr. v. CA, et al., 309 SCRA 603).[44]

Consequently, the Court of Appeals imposed upon Hotel Nikko, Ruby Lim and Dr. Violeta Filart
the solidary obligation to pay Mr. Reyes (1) exemplary damages in the amount of Two Hundred
Thousand Pesos (P200,000); (2) moral damages in the amount of Two Hundred Thousand Pesos
(P200,000); and (3) attorneys fees in the amount of Ten Thousand Pesos (P10,000).[45] On motion for
reconsideration, the Court of Appeals affirmed its earlier decision as the argument raised in the motion
had been amply discussed and passed upon in the decision sought to be reconsidered.[46]
Thus, the instant petition for review. Hotel Nikko and Ruby Lim contend that the Court of Appeals
seriously erred in
I.

NOT APPLYING THE DOCTRINE OF VOLENTI NON FIT INJURIA CONSIDERING THAT BY ITS
OWN FINDINGS, AMAY BISAYA WAS A GATE-CRASHER

II.

HOLDING HOTEL NIKKO AND RUBY LIM JOINTLY AND SEVERALLY LIABLE WITH DR. FILART
FOR DAMAGES SINCE BY ITS OWN RULING, AMAY BISAYA COULD NOT HAVE SUFFERED
SUCH HUMILIATION, WERE IT NOT FOR DR. FILARTS INVITATION

III.

DEPARTING FROM THE FINDINGS OF FACT OF THE TRIAL COURT AS REGARDS THE
CIRCUMSTANCES THAT ALLEGEDLY CAUSED THE HUMILIATION OF AMAY BISAYA

IV.

IN CONCLUDING THAT AMAY BISAYA WAS TREATED UNJUSTLY BECAUSE OF HIS

POVERTY, CONSIDERING THAT THIS WAS NEVER AN ISSUE AND NO EVIDENCE WAS
PRESENTED IN THIS REGARD

V.

IN FAILING TO PASS UPON THE ISSUE ON THE DEFECTS OF THE APPELLANTS BRIEF,
THEREBY DEPARTING FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL
PROCEEDINGS
 Petitioners Lim and Hotel Nikko contend that pursuant to the doctrine of volenti non fit injuria, they
cannot be made liable for damages as respondent Reyes assumed the risk of being asked to leave
(and being embarrassed and humiliated in the process) as he was a gate-crasher.
The doctrine of volenti non fit injuria (to which a person assents is not esteemed in law as injury[47])
refers to self-inflicted injury[48] or to the consent to injury[49] which precludes the recovery of damages
by one who has knowingly and voluntarily exposed himself to danger, even if he is not negligent in
doing so.[50] As formulated by petitioners, however, this doctrine does not find application to the case
at bar because even if respondent Reyes assumed the risk of being asked to leave the party,
petitioners, under Articles 19 and 21 of the New Civil Code, were still under obligation to treat him
fairly in order not to expose him to unnecessary ridicule and shame.
Thus, the threshold issue is whether or not Ruby Lim acted abusively in asking Roberto Reyes,
a.k.a. Amay Bisaya, to leave the party where he was not invited by the celebrant thereof thereby
becoming liable under Articles 19 and 21 of the Civil Code. Parenthetically, and if Ruby Lim were so
liable, whether or not Hotel Nikko, as her employer, is solidarily liable with her.
As the trial court and the appellate court reached divergent and irreconcilable conclusions
concerning the same facts and evidence of the case, this Court is left without choice but to use its
latent power to review such findings of facts. Indeed, the general rule is that we are not a trier of facts
as our jurisdiction is limited to reviewing and revising errors of law.[51] One of the exceptions to this
general rule, however, obtains herein as the findings of the Court of Appeals are contrary to those of
the trial court.[52] The lower court ruled that Ms. Lim did not abuse her right to ask Mr. Reyes to leave
the party as she talked to him politely and discreetly. The appellate court, on the other hand, held that
Ms. Lim is liable for damages as she needlessly embarrassed Mr. Reyes by telling him not to finish
his food and to leave the place within hearing distance of the other guests. Both courts, however, were
in agreement that it was Dr. Filarts invitation that brought Mr. Reyes to the party.
The consequential question then is: Which version is credible?
From an in depth review of the evidence, we find more credible the lower courts findings of fact.
First, let us put things in the proper perspective.
We are dealing with a formal party in a posh, five-star hotel,[53] for-invitation-only, thrown for the
hotels former Manager, a Japanese national. Then came a person who was clearly uninvited (by the
celebrant)[54] and who could not just disappear into the crowd as his face is known by many, being an
actor. While he was already spotted by the organizer of the party, Ms. Lim, the very person who
generated the guest list, it did not yet appear that the celebrant was aware of his presence. Ms. Lim,
mindful of the celebrants instruction to keep the party intimate, would naturally want to get rid of the
gate-crasher in the most hush-hush manner in order not to call attention to a glitch in an otherwise
seamless affair and, in the process, risk the displeasure of the celebrant, her former boss. To
unnecessarily call attention to the presence of Mr. Reyes would certainly reflect badly on Ms. Lims
ability to follow the instructions of the celebrant to invite only his close friends and some of the hotels
personnel. Mr. Reyes, upon whom the burden rests to prove that indeed Ms. Lim loudly and rudely
ordered him to leave, could not offer any satisfactory explanation why Ms. Lim would do that and risk
ruining a formal and intimate affair. On the contrary, Mr. Reyes, on cross-examination, had unwittingly
sealed his fate by admitting that when Ms. Lim talked to him, she was very close. Close enough for
him to kiss:
Q: And, Mr. Reyes, you testified that Miss Lim approached you while you were at the buffet
table? How close was she when she approached you?
A: Very close because we nearly kissed each other.
Q: And yet, she shouted for you to go down? She was that close and she shouted?
A: Yes. She said, wag kang kumain, hindi ka imbitado dito, bumaba ka na lang.
Q: So, you are testifying that she did this in a loud voice?

...

A: Yes. If it is not loud, it will not be heard by many.[55]

In the absence of any proof of motive on the part of Ms. Lim to humiliate Mr. Reyes and expose him
to ridicule and shame, it is highly unlikely that she would shout at him from a very close distance. Ms.
Lim having been in the hotel business for twenty years wherein being polite and discreet are virtues
to be emulated, the testimony of Mr. Reyes that she acted to the contrary does not inspire belief and
is indeed incredible. Thus, the lower court was correct in observing that
Considering the closeness of defendant Lim to plaintiff when the request for the latter to leave the
party was made such that they nearly kissed each other, the request was meant to be heard by him
only and there could have been no intention on her part to cause embarrassment to him. It was
plaintiffs reaction to the request that must have made the other guests aware of what transpired
between them. . .

Had plaintiff simply left the party as requested, there was no need for the police to take him out.[56]

Moreover, another problem with Mr. Reyess version of the story is that it is unsupported. It is a
basic rule in civil cases that he who alleges proves. Mr. Reyes, however, had not presented any
witness to back his story up. All his witnesses Danny Rodinas, Pepito Guerrero and Alexander Silva -
proved only that it was Dr. Filart who invited him to the party.[57]
Ms. Lim, not having abused her right to ask Mr. Reyes to leave the party to which he was not
invited, cannot be made liable to pay for damages under Articles 19 and 21 of the Civil Code.
Necessarily, neither can her employer, Hotel Nikko, be held liable as its liability springs from that of its
employee.[58]
Article 19, known to contain what is commonly referred to as the principle of abuse of rights,[59] is
not a panacea for all human hurts and social grievances. Article 19 states:

Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with
justice, give everyone his due, and observe honesty and good faith.

Elsewhere, we explained that when a right is exercised in a manner which does not conform with the
norms enshrined in Article 19 and results in damage to another, a legal wrong is thereby committed
for which the wrongdoer must be responsible.[60] The object of this article, therefore, is to set certain
standards which must be observed not only in the exercise of ones rights but also in the performance
of ones duties.[61] These standards are the following: act with justice, give everyone his due and
observe honesty and good faith.[62] Its antithesis, necessarily, is any act evincing bad faith or intent to
injure. Its elements are the following: (1) There is a legal right or duty; (2) which is exercised in bad
faith; (3) for the sole intent of prejudicing or injuring another.[63] When Article 19 is violated, an action
for damages is proper under Articles 20 or 21 of the Civil Code. Article 20 pertains to damages arising
from a violation of law[64] which does not obtain herein as Ms. Lim was perfectly within her right to ask
Mr. Reyes to leave. Article 21, on the other hand, states:

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.

Article 21[65] refers to acts contra bonus mores and has the following elements: (1) There is an act
which is legal; (2) but which is contrary to morals, good custom, public order, or public policy; and (3)
it is done with intent to injure.[66]
A common theme runs through Articles 19 and 21,[67] and that is, the act complained of must be
intentional.[68]
As applied to herein case and as earlier discussed, Mr. Reyes has not shown that Ms. Lim was
driven by animosity against him. These two people did not know each other personally before the
evening of 13 October 1994, thus, Mr. Reyes had nothing to offer for an explanation for Ms. Lims
alleged abusive conduct except the statement that Ms. Lim, being single at 44 years old, had a very
strong bias and prejudice against (Mr. Reyes) possibly influenced by her associates in her work at the
hotel with foreign businessmen.[69] The lameness of this argument need not be belabored. Suffice it to
say that a complaint based on Articles 19 and 21 of the Civil Code must necessarily fail if it has nothing
to recommend it but innuendos and conjectures.
Parenthetically, the manner by which Ms. Lim asked Mr. Reyes to leave was likewise acceptable
and humane under the circumstances. In this regard, we cannot put our imprimatur on the appellate
courts declaration that Ms. Lims act of personally approaching Mr. Reyes (without first verifying from
Mrs. Filart if indeed she invited Mr. Reyes) gave rise to a cause of action predicated upon mere
rudeness or lack of consideration of one person, which calls not only protection of human dignity but
respect of such dignity.[70] Without proof of any ill-motive on her part, Ms. Lims act of by-passing Mrs.
Filart cannot amount to abusive conduct especially because she did inquire from Mrs. Filarts
companion who told her that Mrs. Filart did not invite Mr. Reyes.[71] If at all, Ms. Lim is guilty only of
bad judgment which, if done with good intentions, cannot amount to bad faith.
 Not being liable for both actual and moral damages, neither can petitioners Lim and Hotel Nikko
be made answerable for exemplary damages[72] especially for the reason stated by the Court of
Appeals. The Court of Appeals held

Not a few of the rich people treat the poor with contempt because of the latters lowly station in life.
This has to be limited somewhere. In a democracy, such a limit must be established. Social equality
is not sought by the legal provisions under consideration, but due regard for decency and propriety
(Code Commission, pp. 33-34). And by way of example or correction for public good and to avert
further commission of such acts, exemplary damages should be imposed upon appellees.[73]

The fundamental fallacy in the above-quoted findings is that it runs counter with the very facts of the
case and the evidence on hand. It is not disputed that at the time of the incident in question, Mr. Reyes
was an actor of long standing; a co-host of a radio program over DZRH; a Board Member of the Music
Singer Composer (MUSICO) chaired by popular singer Imelda Papin; a showbiz Coordinator of Citizen
Crime Watch; and 1992 official candidate of the KBL Party for Governor of Bohol; and an awardee of
a number of humanitarian organizations of the Philippines.[74] During his direct examination on rebuttal,
Mr. Reyes stressed that he had income[75] and nowhere did he say otherwise. On the other hand, the
records are bereft of any information as to the social and economic standing of petitioner Ruby Lim.
Consequently, the conclusion reached by the appellate court cannot withstand scrutiny as it is without
basis.
All told, and as far as Ms. Lim and Hotel Nikko are concerned, any damage which Mr. Reyes
might have suffered through Ms. Lims exercise of a legitimate right done within the bounds of propriety
and good faith, must be his to bear alone.
WHEREFORE, premises considered, the petition filed by Ruby Lim and Nikko Hotel Manila
Garden is GRANTED. The Decision of the Court of Appeals dated 26 November 2001 and its
Resolution dated 09 July 2002 are hereby REVERSED and SET ASIDE. The Decision of the Regional
Trial Court of Quezon City, Branch 104, dated 26 April 1999 is hereby AFFIRMED. No costs.
SO ORDERED.

NEGLIGENCE AND FAULT

G.R. No. 126297 January 31, 2007

PROFESSIONAL SERVICES, INC., Petitioner,

vs.
NATIVIDAD and ENRIQUE AGANA, Respondents.

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

G.R. No. 126467 January 31, 2007

NATIVIDAD (Substituted by her children MARCELINO AGANA III, ENRIQUE AGANA, JR.,
EMMA AGANA ANDAYA, JESUS AGANA, and RAYMUND AGANA) and ENRIQUE
AGANA, Petitioners,
vs.
JUAN FUENTES, Respondent.

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

G.R. No. 127590 January 31, 2007

MIGUEL AMPIL, Petitioner,

vs.
NATIVIDAD AGANA and ENRIQUE AGANA, Respondents.

DECISION
SANDOVAL-GUTIERREZ, J.:

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

Assailed in these three consolidated petitions for review on certiorari is the Court of Appeals’
Decision2 dated September 6, 1996 in CA-G.R. CV No. 42062 and CA-G.R. SP No. 32198 affirming
with modification the Decision3dated March 17, 1993 of the Regional Trial Court (RTC), Branch 96,
Quezon City in Civil Case No. Q-43322 and nullifying its Order dated September 21, 1993.

The facts, as culled from the records, are:

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

On April 11, 1984, Dr. Ampil, assisted by the medical staff4 of the Medical City Hospital, performed
an anterior resection surgery on Natividad. He found that the malignancy in her sigmoid area had
spread on her left ovary, necessitating the removal of certain portions of it. Thus, Dr. Ampil obtained
the consent of Natividad’s husband, Enrique Agana, to permit Dr. Juan Fuentes, respondent in G.R.
No. 126467, to perform hysterectomy on her.

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

However, the operation appeared to be flawed. In the corresponding Record of Operation dated April
11, 1984, the attending nurses entered these remarks:

"sponge count lacking 2

"announced to surgeon searched (sic) done but to no avail continue for closure."

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

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

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

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

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

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

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

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

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

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

1. As actual damages, the following amounts:

a. The equivalent in Philippine Currency of the total of US$19,900.00 at the rate of

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

b. The sum of P4,800.00 as travel taxes of plaintiffs and their physician daughter;

c. The total sum of P45,802.50, representing the cost of hospitalization at Polymedic

Hospital, medical fees, and cost of the saline solution;

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

3. As exemplary damages, the sum of P300,000.00;

4. As attorney’s fees, the sum of P250,000.00;

5. Legal interest on items 1 (a), (b), and (c); 2; and 3 hereinabove, from date of filing of the
complaint until full payment; and

6. Costs of suit.

SO ORDERED.

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

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

Following their receipt of the money, the Aganas entered into an agreement with PSI and Dr.
Fuentes to indefinitely suspend any further execution of the RTC Decision. However, not long
thereafter, the Aganas again filed a motion for an alias writ of execution against the properties of PSI
and Dr. Fuentes. On September 21, 1993, the RTC granted the motion and issued the
corresponding writ, prompting Dr. Fuentes to file with the Court of Appeals a petition for certiorari
and prohibition, with prayer for preliminary injunction, docketed as CA-G.R. SP No. 32198. During its
pendency, the Court of Appeals issued a Resolution5 dated October 29, 1993 granting Dr. Fuentes’
prayer for injunctive relief.

On January 24, 1994, CA-G.R. SP No. 32198 was consolidated with CA-G.R. CV No. 42062.
Meanwhile, on January 23, 1995, the PRC Board of Medicine rendered its Decision6 in
Administrative Case No. 1690 dismissing the case against Dr. Fuentes. The Board held that the
prosecution failed to show that Dr. Fuentes was the one who left the two pieces of gauze inside
Natividad’s body; and that he concealed such fact from Natividad.

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

WHEREFORE, except for the modification that the case against defendant-appellant Dr. Juan
Fuentes is hereby DISMISSED, and with the pronouncement that defendant-appellant Dr. Miguel
Ampil is liable to reimburse defendant-appellant Professional Services, Inc., whatever amount the
latter will pay or had paid to the plaintiffs-appellees, the decision appealed from is hereby
AFFIRMED and the instant appeal DISMISSED.

Concomitant with the above, the petition for certiorari and prohibition filed by herein defendant-
appellant Dr. Juan Fuentes in CA-G.R. SP No. 32198 is hereby GRANTED and the challenged order
of the respondent judge dated September 21, 1993, as well as the alias writ of execution issued
pursuant thereto are hereby NULLIFIED and SET ASIDE. The bond posted by the petitioner in
connection with the writ of preliminary injunction issued by this Court on November 29, 1993 is
hereby cancelled.

Costs against defendants-appellants Dr. Miguel Ampil and Professional Services, Inc.

SO ORDERED.

Only Dr. Ampil filed a motion for reconsideration, but it was denied in a Resolution7 dated December
19, 1996.

Hence, the instant consolidated petitions.

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

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

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

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

I - G.R. No. 127590

Whether the Court of Appeals Erred in Holding Dr. Ampil

Liable for Negligence and Malpractice.

Dr. Ampil, in an attempt to absolve himself, gears the Court’s attention to other possible causes of
Natividad’s detriment. He argues that the Court should not discount either of the following
possibilities: first, Dr. Fuentes left the gauzes in Natividad’s body after performing hysterectomy;
second, the attending nurses erred in counting the gauzes; and third, the American doctors were the
ones who placed the gauzes in Natividad’s body.

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

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

First, it is not disputed that the surgeons used gauzes as sponges to control the bleeding of
the patient during the surgical operation.

Second, immediately after the operation, the nurses who assisted in the surgery noted in
their report that the ‘sponge count (was) lacking 2’; that such anomaly was ‘announced to
surgeon’ and that a ‘search was done but to no avail’ prompting Dr. Ampil to ‘continue for
closure’ x x x.

Third, after the operation, two (2) gauzes were extracted from the same spot of the body of
Mrs. Agana where the surgery was performed.

An operation requiring the placing of sponges in the incision is not complete until the sponges are
properly removed, and it is settled that the leaving of sponges or other foreign substances in the
wound after the incision has been closed is at least prima facie negligence by the operating
surgeon.8 To put it simply, such act is considered so inconsistent with due care as to raise an
inference of negligence. There are even legions of authorities to the effect that such act is
negligence per se.9

Of course, the Court is not blind to the reality that there are times when danger to a patient’s life
precludes a surgeon from further searching missing sponges or foreign objects left in the body. But
this does not leave him free from any obligation. Even if it has been shown that a surgeon was
required by the urgent necessities of the case to leave a sponge in his patient’s abdomen, because
of the dangers attendant upon delay, still, it is his legal duty to so inform his patient within a
reasonable time thereafter by advising her of what he had been compelled to do. This is in order that
she might seek relief from the effects of the foreign object left in her body as her condition might
permit. The ruling in Smith v. Zeagler10 is explicit, thus:

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

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

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

successfully pursue this kind of case, a patient must only prove that a health care provider either
failed to do something which a reasonably prudent health care provider would have done, or that he
did something that a reasonably prudent provider would not have done; and that failure or action
caused injury to the patient.11 Simply put, the elements are duty, breach, injury and proximate
causation. Dr, Ampil, as the lead surgeon, had the duty to remove all foreign objects, such as
gauzes, from Natividad’s body before closure of the incision. When he failed to do so, it was his duty
to inform Natividad about it. Dr. Ampil breached both duties. Such breach caused injury to Natividad,
necessitating her further examination by American doctors and another surgery. That Dr. Ampil’s
negligence is the proximate cause12 of Natividad’s injury could be traced from his act of closing the
incision despite the information given by the attending nurses that two pieces of gauze were still
missing. That they were later on extracted from Natividad’s vagina established the causal link
between Dr. Ampil’s negligence and the injury. And what further aggravated such injury was his
deliberate concealment of the missing gauzes from the knowledge of Natividad and her family.

II - G.R. No. 126467

Whether the Court of Appeals Erred in Absolving

Dr. Fuentes of any Liability

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

We are not convinced.

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

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

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

It was duly established that Dr. Ampil was the lead surgeon during the operation of Natividad. He
requested the assistance of Dr. Fuentes only to perform hysterectomy when he (Dr. Ampil) found
that the malignancy in her sigmoid area had spread to her left ovary. Dr. Fuentes performed the
surgery and thereafter reported and showed his work to Dr. Ampil. The latter examined it and finding
everything to be in order, allowed Dr. Fuentes to leave the operating room. Dr. Ampil then resumed
operating on Natividad. He was about to finish the procedure when the attending nurses informed
him that two pieces of gauze were missing. A "diligent search" was conducted, but the misplaced
gauzes were not found. Dr. Ampil then directed that the incision be closed. During this entire period,
Dr. Fuentes was no longer in the operating room and had, in fact, left the hospital.

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

In this jurisdiction, res ipsa loquitur is not a rule of substantive law, hence, does not per se create or
constitute an independent or separate ground of liability, being a mere evidentiary rule.17 In other
words, mere invocation and application of the doctrine does not dispense with the requirement of
proof of negligence. Here, the negligence was proven to have been committed by Dr. Ampil and not
by Dr. Fuentes.

III - G.R. No. 126297

Whether PSI Is Liable for the Negligence of Dr. Ampil

The third issue necessitates a glimpse at the historical development of hospitals and the resulting
theories concerning their liability for the negligence of physicians.

Until the mid-nineteenth century, hospitals were generally charitable institutions, providing medical
services to the lowest classes of society, without regard for a patient’s ability to pay.18 Those who
could afford medical treatment were usually treated at home by their doctors.19 However, the days of
house calls and philanthropic health care are over. The modern health care industry continues to
distance itself from its charitable past and has experienced a significant conversion from a not-for-
profit health care to for-profit hospital businesses. Consequently, significant changes in health law
have accompanied the business-related changes in the hospital industry. One important legal
change is an increase in hospital liability for medical malpractice. Many courts now allow claims for
hospital vicarious liability under the theories of respondeat superior, apparent authority, ostensible
authority, or agency by estoppel. 20

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

Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is
obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual
relation between the parties, is called a quasi-delict and is governed by the provisions of this
Chapter.

A derivative of this provision is Article 2180, the rule governing vicarious liability under the doctrine of
respondeat superior, thus:

ART. 2180. The obligation imposed by Article 2176 is demandable not only for one’s own acts or
omissions, but also for those of persons for whom one is responsible.

x x x x x x

The owners and managers of an establishment or enterprise are likewise responsible for damages
caused by their employees in the service of the branches in which the latter are employed or on the
occasion of their functions.

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

x x x x x x

The responsibility treated of in this article shall cease when the persons herein mentioned prove that
they observed all the diligence of a good father of a family to prevent damage.

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

dentists, and pharmacists, are not "employees" under this article because the manner in which they
perform their work is not within the control of the latter (employer). In other words, professionals are
considered personally liable for the fault or negligence they commit in the discharge of their duties,
and their employer cannot be held liable for such fault or negligence. In the context of the present
case, "a hospital cannot be held liable for the fault or negligence of a physician or surgeon in the
treatment or operation of patients."21

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

The case of Schloendorff v. Society of New York Hospital26 was then considered an authority for this
view. The "Schloendorff doctrine" regards a physician, even if employed by a hospital, as an
independent contractor because of the skill he exercises and the lack of control exerted over his
work. Under this doctrine, hospitals are exempt from the application of the respondeat superior
principle for fault or negligence committed by physicians in the discharge of their profession.

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

In our shores, the nature of the relationship between the hospital and the physicians is rendered
inconsequential in view of our categorical pronouncement in Ramos v. Court of Appeals28 that for
purposes of apportioning responsibility in medical negligence cases, an employer-employee
relationship in effect exists between hospitals and their attending and visiting physicians. This Court
held:

"We now discuss the responsibility of the hospital in this particular incident. The unique practice
(among private hospitals) of filling up specialist staff with attending and visiting "consultants," who
are allegedly not hospital employees, presents problems in apportioning responsibility for negligence
in medical malpractice cases. However, the difficulty is more apparent than real.

In the first place, hospitals exercise significant control in the hiring and firing of consultants and in the
conduct of their work within the hospital premises. Doctors who apply for ‘consultant’ slots, visiting or
attending, are required to submit proof of completion of residency, their educational qualifications,
generally, evidence of accreditation by the appropriate board (diplomate), evidence of fellowship in
most cases, and references. These requirements are carefully scrutinized by members of the
hospital administration or by a review committee set up by the hospital who either accept or reject
the application. x x x.

After a physician is accepted, either as a visiting or attending consultant, he is normally required to

attend clinico-pathological conferences, conduct bedside rounds for clerks, interns and residents,
moderate grand rounds and patient audits and perform other tasks and responsibilities, for the
privilege of being able to maintain a clinic in the hospital, and/or for the privilege of admitting patients
into the hospital. In addition to these, the physician’s performance as a specialist is generally
evaluated by a peer review committee on the basis of mortality and morbidity statistics, and
feedback from patients, nurses, interns and residents. A consultant remiss in his duties, or a
consultant who regularly falls short of the minimum standards acceptable to the hospital or its peer
review committee, is normally politely terminated.

In other words, private hospitals, hire, fire and exercise real control over their attending and visiting
‘consultant’ staff. While ‘consultants’ are not, technically employees, x x x, the control exercised, the
hiring, and the right to terminate consultants all fulfill the important hallmarks of an employer-
employee relationship, with the exception of the payment of wages. In assessing whether such a
relationship in fact exists, the control test is determining. Accordingly, on the basis of the foregoing,
we rule that for the purpose of allocating responsibility in medical negligence cases, an employer-
employee relationship in effect exists between hospitals and their attending and visiting physicians. "

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

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

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

"The principal is bound by the acts of his agent with the apparent authority which he knowingly
permits the agent to assume, or which he holds the agent out to the public as possessing. The
question in every case is whether the principal has by his voluntary act placed the agent in such a
situation that a person of ordinary prudence, conversant with business usages and the nature of the
particular business, is justified in presuming that such agent has authority to perform the particular
act in question.31

The applicability of apparent authority in the field of hospital liability was upheld long time ago in
Irving v. Doctor Hospital of Lake Worth, Inc.32 There, it was explicitly stated that "there does not
appear to be any rational basis for excluding the concept of apparent authority from the field of
hospital liability." Thus, in cases where it can be shown that a hospital, by its actions, has held out a
particular physician as its agent and/or employee and that a patient has accepted treatment from
that physician in the reasonable belief that it is being rendered in behalf of the hospital, then the
hospital will be liable for the physician’s negligence.

Our jurisdiction recognizes the concept of an agency by implication or estoppel. Article 1869 of the
Civil Code reads:

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

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

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

The wisdom of the foregoing ratiocination is easy to discern. Corporate entities, like PSI, are capable
of acting only through other individuals, such as physicians. If these accredited physicians do their
job well, the hospital succeeds in its mission of offering quality medical services and thus profits
financially. Logically, where negligence mars the quality of its services, the hospital should not be
allowed to escape liability for the acts of its ostensible agents.

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

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

We agree with the trial court.

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

The doctrine has its genesis in Darling v. Charleston Community Hospital.36 There, the Supreme
Court of Illinois held that "the jury could have found a hospital negligent, inter alia, in failing to have a
sufficient number of trained nurses attending the patient; failing to require a consultation with or
examination by members of the hospital staff; and failing to review the treatment rendered to the
patient." On the basis of Darling, other jurisdictions held that a hospital’s corporate negligence
extends to permitting a physician known to be incompetent to practice at the hospital.37 With the
passage of time, more duties were expected from hospitals, among them: (1) the use of reasonable
care in the maintenance of safe and adequate facilities and equipment; (2) the selection and
retention of competent physicians; (3) the overseeing or supervision of all persons who practice
medicine within its walls; and (4) the formulation, adoption and enforcement of adequate rules and
policies that ensure quality care for its patients.38 Thus, in Tucson Medical Center, Inc. v.
Misevich,39 it was held that a hospital, following the doctrine of corporate responsibility, has the duty
to see that it meets the standards of responsibilities for the care of patients. Such duty includes the
proper supervision of the members of its medical staff. And in Bost v. Riley,40 the court concluded
that a patient who enters a hospital does so with the reasonable expectation that it will attempt to
cure him. The hospital accordingly has the duty to make a reasonable effort to monitor and oversee
the treatment prescribed and administered by the physicians practicing in its premises.

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

x x x PSI’s liability is traceable to its failure to conduct an investigation of the matter reported in the
nota bene of the count nurse. Such failure established PSI’s part in the dark conspiracy of silence
and concealment about the gauzes. Ethical considerations, if not also legal, dictated the holding of
an immediate inquiry into the events, if not for the benefit of the patient to whom the duty is primarily
owed, then in the interest of arriving at the truth. The Court cannot accept that the medical and the
healing professions, through their members like defendant surgeons, and their institutions like PSI’s
hospital facility, can callously turn their backs on and disregard even a mere probability of mistake or
negligence by refusing or failing to investigate a report of such seriousness as the one in Natividad’s
case.

It is worthy to note that Dr. Ampil and Dr. Fuentes operated on Natividad with the assistance of the
Medical City Hospital’s staff, composed of resident doctors, nurses, and interns. As such, it is
reasonable to conclude that PSI, as the operator of the hospital, has actual or constructive
knowledge of the procedures carried out, particularly the report of the attending nurses that the two
pieces of gauze were missing. In Fridena v. Evans,41 it was held that a corporation is bound by the
knowledge acquired by or notice given to its agents or officers within the scope of their authority and
in reference to a matter to which their authority extends. This means that the knowledge of any of
the staff of Medical City Hospital constitutes knowledge of PSI. Now, the failure of PSI, despite the
attending nurses’ report, to investigate and inform Natividad regarding the missing gauzes amounts
to callous negligence. Not only did PSI breach its duties to oversee or supervise all persons who
practice medicine within its walls, it also failed to take an active step in fixing the negligence
committed. This renders PSI, not only vicariously liable for the negligence of Dr. Ampil under Article
2180 of the Civil Code, but also directly liable for its own negligence under Article 2176. In Fridena,
the Supreme Court of Arizona held:

x x x In recent years, however, the duty of care owed to the patient by the hospital has expanded.
The emerging trend is to hold the hospital responsible where the hospital has failed to monitor and
review medical services being provided within its walls. See Kahn Hospital Malpractice Prevention,
27 De Paul . Rev. 23 (1977).
Among the cases indicative of the ‘emerging trend’ is Purcell v. Zimbelman, 18 Ariz. App. 75,500 P.
2d 335 (1972). In Purcell, the hospital argued that it could not be held liable for the malpractice of a
medical practitioner because he was an independent contractor within the hospital. The Court of
Appeals pointed out that the hospital had created a professional staff whose competence and
performance was to be monitored and reviewed by the governing body of the hospital, and the court
held that a hospital would be negligent where it had knowledge or reason to believe that a doctor
using the facilities was employing a method of treatment or care which fell below the recognized
standard of care.

Subsequent to the Purcell decision, the Arizona Court of Appeals held that a hospital has certain
inherent responsibilities regarding the quality of medical care furnished to patients within its walls
and it must meet the standards of responsibility commensurate with this undertaking. Beeck v.
Tucson General Hospital, 18 Ariz. App. 165, 500 P. 2d 1153 (1972). This court has confirmed the
rulings of the Court of Appeals that a hospital has the duty of supervising the competence of the
doctors on its staff. x x x.

x x x x x x

In the amended complaint, the plaintiffs did plead that the operation was performed at the hospital
with its knowledge, aid, and assistance, and that the negligence of the defendants was the
proximate cause of the patient’s injuries. We find that such general allegations of negligence, along
with the evidence produced at the trial of this case, are sufficient to support the hospital’s liability
based on the theory of negligent supervision."

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

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

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

Costs against petitioners PSI and Dr. Miguel Ampil.

SO ORDERED.
PROFESSIONAL SERVICES, INC., vs THE COURT OF APPEALS and NATIVIDAD and
ENRIQUE AGANA (February 11, 2008)

SANDOVAL-GUTIERREZ, J.:

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

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

A brief revisit of the antecedent facts is imperative.

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

sponge count lacking 2

announced to surgeon searched done (sic) but to no avail continue for
closure.

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

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

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

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

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

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

On March 17, 1993, the trial court rendered judgment in favor of spouses Agana finding PSI,
Dr. Ampil and Dr. Fuentes jointly and severally liable. On appeal, the Court of Appeals, in its Decision
dated September 6, 1996, affirmed the assailed judgment with modification in the sense that the
complaint against Dr. Fuentes was dismissed.

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

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

The motion lacks merit.

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

We now discuss the responsibility of the hospital in this particular

incident. The unique practice (among private hospitals) of filling up specialist staff
with attending and visiting consultants, who are allegedly not hospital employees,
presents problems in apportioning responsibility for negligence in medical malpractice
cases. However, the difficulty is only more apparent than real.

In the first place, hospitals exercise significant control in the hiring and
firing of consultants and in the conduct of their work within the hospital
premises. Doctors who apply for consultant slots, visiting or attending, are required
to submit proof of completion of residency, their educational qualifications; generally,
evidence of accreditation by the appropriate board (diplomate), evidence of fellowship
in most cases, and references. These requirements are carefully scrutinized by
members of the hospital administration or by a review committee set up by the
hospital who either accept or reject the application. This is particularly true with
respondent hospital.

After a physician is accepted, either as a visiting or attending

consultant, he is normally required to attend clinico-pathological conferences,
conduct bedside rounds for clerks, interns and residents, moderate grand
rounds and patient audits and perform other tasks and responsibilities, for the
privilege of being able to maintain a clinic in the hospital, and/or for the
privilege of admitting patients into the hospital. In addition to these, the
physicians performance as a specialist is generally evaluated by a peer review
committee on the basis of mortality and morbidity statistics, and feedback from
patients, nurses, interns and residents. A consultant remiss in his duties, or a
consultant who regularly falls short of the minimum standards acceptable to
the hospital or its peer review committee, is normally politely terminated.

In other words, private hospitals hire, fire and exercise real control over their
attending and visiting consultant staff. While consultants are not, technically
employees, a point which respondent hospital asserts in denying all
responsibility for the patients condition, the control exercised, the hiring, and
the right to terminate consultants all fulfill the important hallmarks of an
employer-employee relationship, with the exception of the payment of
wages. In assessing whether such a relationship in fact exists, the control test
is determining.Accordingly, on the basis of the foregoing, we rule that for the
purpose of allocating responsibility in medical negligence cases, an employer-
employee relationship in effect exists between hospitals and their attending
 and visiting physicians. This being the case, the question now arises as to whether
or not respondent hospital is solidarily liable with respondent doctors for petitioners
condition.

The basis for holding an employer solidarily responsible for the negligence of
its employee is found in Article 2180 of the Civil Code which considers a person
accountable not only for his own acts but also for those of others based on the formers
responsibility under a relationship of partia ptetas.

Clearly, in Ramos, the Court considered the peculiar relationship between a hospital and its
consultants on the bases of certain factors. One such factor is the control test wherein the hospital
exercises control in the hiring and firing of consultants, like Dr. Ampil, and in the conduct of their work.

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

In the instant cases, PSI merely offered a general denial of responsibility, maintaining that
consultants, like Dr. Ampil, are independent contractors, not employees of the hospital. Even
assuming that Dr. Ampil is not an employee of Medical City, but an independent contractor, still the
said hospital is liable to the Aganas.

In Nograles, et al. v. Capitol Medical Center, et al.,[4] through Mr. Justice Antonio T. Carpio,
the Court held:

The question now is whether CMC is automatically exempt from liability

considering that Dr. Estrada is an independent contractor-physician.
In general, a hospital is not liable for the negligence of an independent
contractor-physician. There is, however, an exception to this principle. The hospital
may be liable if the physician is the ostensible agent of the hospital. (Jones v. Philpott,
702 F. Supp. 1210 [1988]) This exception is also known as the doctrine of apparent
authority. (Sometimes referred to as the apparent or ostensible agency theory. [King
v. Mitchell, 31 A.D.3rd 958, 819 N.Y. S.2d 169 (2006)].
xxx
The doctrine of apparent authority essentially involves two factors to determine
the liability of an independent contractor-physician.
The first factor focuses on the hospitals manifestations and is sometimes
described as an inquiry whether the hospital acted in a manner which would lead a
reasonable person to conclude that the individual who was alleged to be negligent was
an employee or agent of the hospital. (Diggs v. Novant Health, Inc., 628 S.E.2d 851
(2006) citing Hylton v. Koontz, 138 N.C. App. 629 (2000). In this regard, the hospital
need not make express representations to the patient that the treating physician
is an employee of the hospital; rather a representation may be general and
implied. (Id.)
The doctrine of apparent authority is a specie of the doctrine of estoppel.
Article 1431 of the Civil Code provides that [t]hrough estoppel, an admission or
representation is rendered conclusive upon the person making it, and cannot be
denied or disproved as against the person relying thereon. Estoppel rests on this rule:
Whether a party has, by his own declaration, act, or omission, intentionally and
deliberately led another to believe a particular thing true, and to act upon such belief,
he cannot, in any litigation arising out of such declaration, act or omission, be permitted
to falsify it. (De Castro v. Ginete, 137 Phil. 453 [1969], citing Sec. 3, par. A, Rule 131
 of the Rules of Court. See also King v. Mitchell, 31 A.D.3rd 958, 819 N.Y.S.2d 169
[2006]).
xxx
The second factor focuses on the patients reliance. It is sometimes
characterized as an inquiry on whether the plaintiff acted in reliance upon the conduct
of the hospital or its agent, consistent with ordinary care and prudence. (Diggs v.
Novant Health, Inc.)

PSI argues that the doctrine of apparent authority cannot apply to these cases because
spouses Agana failed to establish proof of their reliance on the representation of Medical City that Dr.
Ampil is its employee.

The argument lacks merit.

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

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

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

Atty. Agcaoili

On that particular occasion, April 2, 1984, what was your reason for choosing to
contact Dr. Ampil in connection with your wifes illness?

A First, before that, I have known him to be a specialist on that part of the body as a
surgeon; second, I have known him to be a staff member of the Medical
City which is a prominent and known hospital. And third, because he is a
neighbor, I expect more than the usual medical service to be given to us, than
his ordinary patients.[5]

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

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

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

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

was this submitted to the hospital?
A Yes, sir, this was submitted to the hospital with the record of the patient.

Q Was the hospital immediately informed about the missing sponges?

A That is the duty of the surgeon, sir.

Q As a witness to an untoward incident in the operating room, was it not your

obligation, Dr., to also report to the hospital because you are under the
control and direction of the hospital?
A The hospital already had the record of the two OS missing, sir.

Q If you place yourself in the position of the hospital, how will you recover.
A You do not answer my question with another question.

Q Did the hospital do anything about the missing gauzes?

A The hospital left it up to the surgeon who was doing the operation, sir.

Q Did the hospital investigate the surgeon who did the operation?
A I am not in the position to answer that, sir.

Q You never did hear the hospital investigating the doctors involved in this case
of those missing sponges, or did you hear something?

xxxxxx

A I think we already made a report by just saying that two sponges were
missing, it is up to the hospital to make the move.

Atty. Agana

Precisely, I am asking you if the hospital did a move, if the hospital did a move.
A I cannot answer that.

Court
By that answer, would you mean to tell the Court that you were aware if there
was such a move done by the hospital?
A I cannot answer that, your honor, because I did not have any more follow-up
of the case that happened until now.[9]

The above testimony obviously shows Dr. Jocsons lack of concern for the patients. Such
conduct is reflective of the hospitals manner of supervision. Not only did PSI breach its duty
to oversee or supervise all persons who practice medicine within its walls, it also failed to take
an active step in fixing the negligence committed.This renders PSI, not only vicariously liable for
the negligence of Dr. Ampil under Article 2180 of the Civil Code, but also directly liable for its own
negligence under Article 2176.
 Moreover, there is merit in the trial courts finding that the failure of PSI to conduct an
investigation established PSIs part in the dark conspiracy of silence and concealment about the
gauzes. The following testimony of Atty. Agana supports such findings, thus:

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

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

WHEREFORE, we DENY PSIs motion for reconsideration with finality.

SO ORDERED.

G.R. No. 126297 February 2, 2010

PROFESSIONAL SERVICES, INC., Petitioner,

vs.
THE COURT OF APPEALS and NATIVIDAD and ENRIQUE AGANA, Respondents.

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

G.R. No. 126467

NATIVIDAD [substituted by her children Marcelino Agana III, Enrique Agana, Jr., Emma
Agana-Andaya, Jesus Agana and Raymund Agana] and ENRIQUE AGANA, Petitioners,
vs.
THE COURT OF APPEALS and JUAN FUENTES, Respondents.

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

G.R. No. 127590

MIGUEL AMPIL, Petitioner,

vs.
NATIVIDAD and ENRIQUE AGANA, Respondents.

RESOLUTION
CORONA, J.:

With prior leave of court,1 petitioner Professional Services, Inc. (PSI) filed a second motion for
reconsideration2urging referral thereof to the Court en banc and seeking modification of the decision
dated January 31, 2007 and resolution dated February 11, 2008 which affirmed its vicarious and
direct liability for damages to respondents Enrique Agana and the heirs of Natividad Agana
(Aganas).

Manila Medical Services, Inc. (MMSI),3 Asian Hospital, Inc. (AHI),4 and Private Hospital Association
of the Philippines (PHAP)5 all sought to intervene in these cases invoking the common ground that,
unless modified, the assailed decision and resolution will jeopardize the financial viability of private
hospitals and jack up the cost of health care.

The Special First Division of the Court granted the motions for intervention of MMSI, AHI and PHAP
(hereafter intervenors),6 and referred en consulta to the Court en banc the motion for prior leave of
court and the second motion for reconsideration of PSI.7

Due to paramount public interest, the Court en banc accepted the referral8 and heard the parties on
oral arguments on one particular issue: whether a hospital may be held liable for the negligence of
physicians-consultants allowed to practice in its premises.9

To recall the salient facts, PSI, together with Dr. Miguel Ampil (Dr. Ampil) and Dr. Juan Fuentes (Dr.
Fuentes), was impleaded by Enrique Agana and Natividad Agana (later substituted by her heirs), in
a complaint10 for damages filed in the Regional Trial Court (RTC) of Quezon City, Branch 96, for the
injuries suffered by Natividad when Dr. Ampil and Dr. Fuentes neglected to remove from her body
two gauzes11 which were used in the surgery they performed on her on April 11, 1984 at the Medical
City General Hospital. PSI was impleaded as owner, operator and manager of the hospital.

In a decision12 dated March 17, 1993, the RTC held PSI solidarily liable with Dr. Ampil and Dr.
Fuentes for damages.13 On appeal, the Court of Appeals (CA), absolved Dr. Fuentes but affirmed the
liability of Dr. Ampil and PSI, subject to the right of PSI to claim reimbursement from Dr. Ampil.141avv phi 1

On petition for review, this Court, in its January 31, 2007 decision, affirmed the CA decision.15 PSI
filed a motion for reconsideration16 but the Court denied it in a resolution dated February 11, 2008.17

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

First, there existed between PSI and Dr. Ampil an employer-employee relationship as contemplated
in the December 29, 1999 decision in Ramos v. Court of Appeals18 that "for purposes of allocating
responsibility in medical negligence cases, an employer-employee relationship exists between
hospitals and their consultants."19Although the Court in Ramos later issued a Resolution dated April
11, 200220 reversing its earlier finding on the existence of an employment relationship between
hospital and doctor, a similar reversal was not warranted in the present case because the defense
raised by PSI consisted of a mere general denial of control or responsibility over the actions of Dr.
Ampil.21

Second, by accrediting Dr. Ampil and advertising his qualifications, PSI created the public
impression that he was its agent.22 Enrique testified that it was on account of Dr. Ampil's
accreditation with PSI that he conferred with said doctor about his wife's (Natividad's)
condition.23 After his meeting with Dr. Ampil, Enrique asked Natividad to personally consult Dr.
Ampil.24 In effect, when Enrigue and Natividad engaged the services of Dr. Ampil, at the back of their
minds was that the latter was a staff member of a prestigious hospital. Thus, under the doctrine of
apparent authority applied in Nogales, et al. v. Capitol Medical Center, et al.,25 PSI was liable for the
negligence of Dr. Ampil.

Finally, as owner and operator of Medical City General Hospital, PSI was bound by its duty to
provide comprehensive medical services to Natividad Agana, to exercise reasonable care to protect
her from harm,26 to oversee or supervise all persons who practiced medicine within its walls, and to
take active steps in fixing any form of negligence committed within its premises.27 PSI committed a
serious breach of its corporate duty when it failed to conduct an immediate investigation into the
reported missing gauzes.28

PSI is now asking this Court to reconsider the foregoing rulings for these reasons:
 I

The declaration in the 31 January 2007 Decision vis-a-vis the 11 February 2009 Resolution that the
ruling in Ramos vs. Court of Appeals (G.R. No. 134354, December 29, 1999) that "an employer-
employee relations exists between hospital and their consultants" stays should be set aside for being
inconsistent with or contrary to the import of the resolution granting the hospital's motion for
reconsideration in Ramos vs. Court of Appeals (G.R. No. 134354, April 11, 2002), which is
applicable to PSI since the Aganas failed to prove an employer-employee relationship between PSI
and Dr. Ampil and PSI proved that it has no control over Dr. Ampil. In fact, the trial court has found
that there is no employer-employee relationship in this case and that the doctor's are independent
contractors.

II

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

III

PSI cannot be liable under doctrine of corporate negligence since the proximate cause of Mrs.
Agana's injury was the negligence of Dr. Ampil, which is an element of the principle of corporate
negligence.29

In their respective memoranda, intervenors raise parallel arguments that the Court's ruling on the
existence of an employer-employee relationship between private hospitals and consultants will force
a drastic and complex alteration in the long-established and currently prevailing relationships among
patient, physician and hospital, with burdensome operational and financial consequences and
adverse effects on all three parties.30

The Aganas comment that the arguments of PSI need no longer be entertained for they have all
been traversed in the assailed decision and resolution.31

After gathering its thoughts on the issues, this Court holds that PSI is liable to the Aganas, not under
the principle of respondeat superior for lack of evidence of an employment relationship with Dr.
Ampil but under the principle of ostensible agency for the negligence of Dr. Ampil and, pro hac
vice, under the principle of corporate negligence for its failure to perform its duties as a hospital.

While in theory a hospital as a juridical entity cannot practice medicine,32 in reality it utilizes doctors,
surgeons and medical practitioners in the conduct of its business of facilitating medical and surgical
treatment.33 Within that reality, three legal relationships crisscross: (1) between the hospital and the
doctor practicing within its premises; (2) between the hospital and the patient being treated or
examined within its premises and (3) between the patient and the doctor. The exact nature of each
relationship determines the basis and extent of the liability of the hospital for the negligence of the
doctor.

Where an employment relationship exists, the hospital may be held vicariously liable under Article
217634 in relation to Article 218035 of the Civil Code or the principle of respondeat superior. Even
when no employment relationship exists but it is shown that the hospital holds out to the patient that
the doctor is its agent, the hospital may still be vicariously liable under Article 2176 in relation to
Article 143136 and Article 186937 of the Civil Code or the principle of apparent authority.38 Moreover,
regardless of its relationship with the doctor, the hospital may be held directly liable to the patient for
its own negligence or failure to follow established standard of conduct to which it should conform as
a corporation.39

This Court still employs the "control test" to determine the existence of an employer-employee
relationship between hospital and doctor. In Calamba Medical Center, Inc. v. National Labor
Relations Commission, et al.40 it held:
Under the "control test", an employment relationship exists between a physician and a hospital if the
hospital controls both the means and the details of the process by which the physician is to
accomplish his task.

xxx xxx xxx

As priorly stated, private respondents maintained specific work-schedules, as determined by

petitioner through its medical director, which consisted of 24-hour shifts totaling forty-eight hours
each week and which were strictly to be observed under pain of administrative sanctions.

That petitioner exercised control over respondents gains light from the undisputed fact that
in the emergency room, the operating room, or any department or ward for that matter,
respondents' work is monitored through its nursing supervisors, charge nurses and
orderlies. Without the approval or consent of petitioner or its medical director, no operations
can be undertaken in those areas. For control test to apply, it is not essential for the
employer to actually supervise the performance of duties of the employee, it being enough
that it has the right to wield the power. (emphasis supplied)

Even in its December 29, 1999 decision41 and April 11, 2002 resolution42 in Ramos, the Court found
the control test decisive.

In the present case, it appears to have escaped the Court's attention that both the RTC and the CA
found no employment relationship between PSI and Dr. Ampil, and that the Aganas did not
question such finding. In its March 17, 1993 decision, the RTC found "that defendant doctors were
not employees of PSI in its hospital, they being merely consultants without any employer-employee
relationship and in the capacity of independent contractors."43 The Aganas never questioned such
finding.

PSI, Dr. Ampil and Dr. Fuentes appealed44 from the RTC decision but only on the issues of
negligence, agency and corporate liability. In its September 6, 1996 decision, the CA mistakenly
referred to PSI and Dr. Ampil as employer-employee, but it was clear in its discussion on the matter
that it viewed their relationship as one of mere apparent agency.45

The Aganas appealed from the CA decision, but only to question the exoneration of Dr.
Fuentes.46 PSI also appealed from the CA decision, and it was then that the issue of employment,
though long settled, was unwittingly resurrected.

In fine, as there was no dispute over the RTC finding that PSI and Dr. Ampil had no employer-
employee relationship, such finding became final and conclusive even to this Court.47 There was no
reason for PSI to have raised it as an issue in its petition. Thus, whatever discussion on the matter
that may have ensued was purely academic.

Nonetheless, to allay the anxiety of the intervenors, the Court holds that, in this particular instance,
the concurrent finding of the RTC and the CA that PSI was not the employer of Dr. Ampil is correct.
Control as a determinative factor in testing the employer-employee relationship between doctor and
hospital under which the hospital could be held vicariously liable to a patient in medical negligence
cases is a requisite fact to be established by preponderance of evidence. Here, there was
insufficient evidence that PSI exercised the power of control or wielded such power over the means
and the details of the specific process by which Dr. Ampil applied his skills in the treatment of
Natividad. Consequently, PSI cannot be held vicariously liable for the negligence of Dr. Ampil under
the principle of respondeat superior.

There is, however, ample evidence that the hospital (PSI) held out to the patient (Natividad)48 that
the doctor (Dr. Ampil) was its agent. Present are the two factors that determine apparent authority:
first, the hospital's implied manifestation to the patient which led the latter to conclude that the doctor
was the hospital's agent; and second, the patient’s reliance upon the conduct of the hospital and the
doctor, consistent with ordinary care and prudence.49

Enrique testified that on April 2, 1984, he consulted Dr. Ampil regarding the condition of his wife; that
after the meeting and as advised by Dr. Ampil, he "asked [his] wife to go to Medical City to be
examined by [Dr. Ampil]"; and that the next day, April 3, he told his daughter to take her mother to
Dr. Ampil.50 This timeline indicates that it was Enrique who actually made the decision on whom
Natividad should consult and where, and that the latter merely acceded to it. It explains the
testimony of Natividad that she consulted Dr. Ampil at the instigation of her daughter.51

Moreover, when asked what impelled him to choose Dr. Ampil, Enrique testified:

Atty. Agcaoili

On that particular occasion, April 2, 1984, what was your reason for choosing Dr. Ampil to contact
with in connection with your wife's illness?

A. First, before that, I have known him to be a specialist on that part of the body as a surgeon,
second, I have known him to be a staff member of the Medical City which is a prominent and
known hospital. And third, because he is a neighbor, I expect more than the usual medical service
to be given to us, than his ordinary patients.52 (emphasis supplied)

Clearly, the decision made by Enrique for Natividad to consult Dr. Ampil was significantly influenced
by the impression that Dr. Ampil was a staff member of Medical City General Hospital, and that said
hospital was well known and prominent. Enrique looked upon Dr. Ampil not as independent of but as
integrally related to Medical City.

PSI's acts tended to confirm and reinforce, rather than negate, Enrique's view. It is of record that PSI
required a "consent for hospital care"53 to be signed preparatory to the surgery of Natividad. The
form reads:

Permission is hereby given to the medical, nursing and laboratory staff of the Medical City General
Hospital to perform such diagnostic procedures and to administer such medications and
treatments as may be deemed necessary or advisable by the physicians of this hospital for
and during the confinement of xxx. (emphasis supplied)

By such statement, PSI virtually reinforced the public impression that Dr. Ampil was a
physician of its hospital, rather than one independently practicing in it; that the medications and
treatments he prescribed were necessary and desirable; and that the hospital staff was prepared to
carry them out. 1avv phi 1

PSI pointed out in its memorandum that Dr. Ampil's hospital affiliation was not the exclusive basis of
the Aganas’ decision to have Natividad treated in Medical City General Hospital, meaning that, had
Dr. Ampil been affiliated with another hospital, he would still have been chosen by the Aganas as
Natividad's surgeon.54

The Court cannot speculate on what could have been behind the Aganas’ decision but would rather
adhere strictly to the fact that, under the circumstances at that time, Enrique decided to consult Dr.
Ampil for he believed him to be a staff member of a prominent and known hospital. After his meeting
with Dr. Ampil, Enrique advised his wife Natividad to go to the Medical City General Hospital to be
examined by said doctor, and the hospital acted in a way that fortified Enrique's belief.

This Court must therefore maintain the ruling that PSI is vicariously liable for the negligence of Dr.
Ampil as its ostensible agent.

Moving on to the next issue, the Court notes that PSI made the following admission in its Motion for
Reconsideration:

51. Clearly, not being an agent or employee of petitioner PSI, PSI [sic] is not liable for Dr. Ampil's
acts during the operation. Considering further that Dr. Ampil was personally engaged as a doctor by
Mrs. Agana, it is incumbent upon Dr. Ampil, as "Captain of the Ship", and as the Agana's doctor to
advise her on what to do with her situation vis-a-vis the two missing gauzes. In addition to noting
the missing gauzes, regular check-ups were made and no signs of complications were
exhibited during her stay at the hospital, which could have alerted petitioner PSI's hospital to
render and provide post-operation services to and tread on Dr. Ampil's role as the doctor of
Mrs. Agana. The absence of negligence of PSI from the patient's admission up to her
discharge is borne by the finding of facts in this case. Likewise evident therefrom is the
absence of any complaint from Mrs. Agana after her discharge from the hospital which had
she brought to the hospital's attention, could have alerted petitioner PSI to act accordingly
and bring the matter to Dr. Ampil's attention. But this was not the case. Ms. Agana
complained ONLY to Drs. Ampil and Fuentes, not the hospital. How then could PSI possibly
do something to fix the negligence committed by Dr. Ampil when it was not informed about it
at all.55 (emphasis supplied)

PSI reiterated its admission when it stated that had Natividad Agana "informed the hospital of her
discomfort and pain, the hospital would have been obliged to act on it."56

The significance of the foregoing statements is critical.

First, they constitute judicial admission by PSI that while it had no power to control the means or
method by which Dr. Ampil conducted the surgery on Natividad Agana, it had the power to review
or cause the review of what may have irregularly transpired within its walls strictly for the purpose
of determining whether some form of negligence may have attended any procedure done inside its
premises, with the ultimate end of protecting its patients.

Second, it is a judicial admission that, by virtue of the nature of its business as well as its
prominence57 in the hospital industry, it assumed a duty to "tread on" the "captain of the ship" role of
any doctor rendering services within its premises for the purpose of ensuring the safety of the
patients availing themselves of its services and facilities.

Third, by such admission, PSI defined the standards of its corporate conduct under the
circumstances of this case, specifically: (a) that it had a corporate duty to Natividad even after her
operation to ensure her safety as a patient; (b) that its corporate duty was not limited to having its
nursing staff note or record the two missing gauzes and (c) that its corporate duty extended to
determining Dr. Ampil's role in it, bringing the matter to his attention, and correcting his negligence.

And finally, by such admission, PSI barred itself from arguing in its second motion for
reconsideration that the concept of corporate responsibility was not yet in existence at the time
Natividad underwent treatment;58 and that if it had any corporate responsibility, the same was limited
to reporting the missing gauzes and did not include "taking an active step in fixing the negligence
committed."59 An admission made in the pleading cannot be controverted by the party making such
admission and is conclusive as to him, and all proofs submitted by him contrary thereto or
inconsistent therewith should be ignored, whether or not objection is interposed by a party.60

Given the standard of conduct that PSI defined for itself, the next relevant inquiry is whether the
hospital measured up to it.

PSI excuses itself from fulfilling its corporate duty on the ground that Dr. Ampil assumed the
personal responsibility of informing Natividad about the two missing gauzes.61 Dr. Ricardo Jocson,
who was part of the group of doctors that attended to Natividad, testified that toward the end of the
surgery, their group talked about the missing gauzes but Dr. Ampil assured them that he would
personally notify the patient about it.62 Furthermore, PSI claimed that there was no reason for it to act
on the report on the two missing gauzes because Natividad Agana showed no signs of
complications. She did not even inform the hospital about her discomfort.63

The excuses proffered by PSI are totally unacceptable.

To begin with, PSI could not simply wave off the problem and nonchalantly delegate to Dr. Ampil the
duty to review what transpired during the operation. The purpose of such review would have been to
pinpoint when, how and by whom two surgical gauzes were mislaid so that necessary remedial
measures could be taken to avert any jeopardy to Natividad’s recovery. Certainly, PSI could not
have expected that purpose to be achieved by merely hoping that the person likely to have mislaid
the gauzes might be able to retrace his own steps. By its own standard of corporate conduct, PSI's
duty to initiate the review was non-delegable.

While Dr. Ampil may have had the primary responsibility of notifying Natividad about the missing
gauzes, PSI imposed upon itself the separate and independent responsibility of initiating the inquiry
into the missing gauzes. The purpose of the first would have been to apprise Natividad of what
transpired during her surgery, while the purpose of the second would have been to pinpoint any
lapse in procedure that led to the gauze count discrepancy, so as to prevent a recurrence thereof
and to determine corrective measures that would ensure the safety of Natividad. That Dr. Ampil
negligently failed to notify Natividad did not release PSI from its self-imposed separate responsibility.
Corollary to its non-delegable undertaking to review potential incidents of negligence committed
within its premises, PSI had the duty to take notice of medical records prepared by its own staff and
submitted to its custody, especially when these bear earmarks of a surgery gone awry. Thus, the
record taken during the operation of Natividad which reported a gauze count discrepancy should
have given PSI sufficient reason to initiate a review. It should not have waited for Natividad to
complain.

As it happened, PSI took no heed of the record of operation and consequently did not initiate a
review of what transpired during Natividad’s operation. Rather, it shirked its responsibility and
passed it on to others – to Dr. Ampil whom it expected to inform Natividad, and to Natividad herself
to complain before it took any meaningful step. By its inaction, therefore, PSI failed its own standard
of hospital care. It committed corporate negligence.

It should be borne in mind that the corporate negligence ascribed to PSI is different from the medical
negligence attributed to Dr. Ampil. The duties of the hospital are distinct from those of the doctor-
consultant practicing within its premises in relation to the patient; hence, the failure of PSI to fulfill its
duties as a hospital corporation gave rise to a direct liability to the Aganas distinct from that of Dr.
Ampil.

All this notwithstanding, we make it clear that PSI’s hospital liability based on ostensible agency and
corporate negligence applies only to this case, pro hac vice. It is not intended to set a precedent and
should not serve as a basis to hold hospitals liable for every form of negligence of their doctors-
consultants under any and all circumstances. The ruling is unique to this case, for the liability of PSI
arose from an implied agency with Dr. Ampil and an admitted corporate duty to Natividad.64

Other circumstances peculiar to this case warrant this ruling,65 not the least of which being that the
agony wrought upon the Aganas has gone on for 26 long years, with Natividad coming to the end of
her days racked in pain and agony. Such wretchedness could have been avoided had PSI simply
done what was logical: heed the report of a guaze count discrepancy, initiate a review of what went
wrong and take corrective measures to ensure the safety of Nativad. Rather, for 26 years, PSI
hemmed and hawed at every turn, disowning any such responsibility to its patient. Meanwhile, the
options left to the Aganas have all but dwindled, for the status of Dr. Ampil can no longer be
ascertained.66

Therefore, taking all the equities of this case into consideration, this Court believes ₱15 million would
be a fair and reasonable liability of PSI, subject to 12% p.a. interest from the finality of this resolution
to full satisfaction.

WHEREFORE, the second motion for reconsideration is DENIED and the motions for intervention
are NOTED.

Professional Services, Inc. is ORDERED pro hac vice to pay Natividad (substituted by her children
Marcelino Agana III, Enrique Agana, Jr., Emma Agana-Andaya, Jesus Agana and Raymund Agana)
and Enrique Agana the total amount of ₱15 million, subject to 12% p.a. interest from the finality of
this resolution to full satisfaction.

No further pleadings by any party shall be entertained in this case.

Let the long-delayed entry of judgment be made in this case upon receipt by all concerned parties of
this resolution.

SO ORDERED.
G.R. No. 118231 July 5, 1996

DR. VICTORIA L. BATIQUIN and ALLAN BATIQUIN, petitioners,

vs.
COURT OF APPEALS, SPOUSES QUEDO D. ACOGIDO and FLOTILDE G.
VILLEGAS, respondents.

DAVIDE, JR., J.:p

Throughout history, patients have consigned their fates and lives to the skill of their doctors. For a breach of this trust, men have been quick
to demand retribution. Some 4,000 years ago, the Code of Hammurabi1 then already provided: "If a physician make a deep incision upon a
man with his bronze lancet and cause the man's death, or operate on the eye socket of a man with his bronze lancet and destroy the man's
eyes, they shall cut off his hand." 2 Subsequently, Hippocrates3wrote what was to become part of the healer's oath: "I will follow that method
of treatment which according to my ability and judgment, I consider for the benefit of my patients, and abstain from whatever is deleterious
and mischievous. . . . While I continue to keep this oath unviolated may it be granted me to enjoy life and practice the art, respected by all
men at all times but should I trespass and violate this oath, may the reverse be my lot." At present, the primary objective of the medical
profession if the preservation of life and maintenance of the health of the people.4

Needless to say then, when a physician strays from his sacred duty and endangers instead the life
of his patient, he must be made to answer therefor. Although society today cannot and will not
tolerate the punishment meted out by the ancients, neither will it and this Court, as this case would
show, let the act go uncondemned.
The petitioners appeal from the decision5 of the Court of Appeals of 11 May 1994 in CA-G.R. CV No.
30851, which reversed the decision6 of 21 December 1990 of Branch 30 of the Regional Trial Court
(RTC) of Negros Oriental in Civil Case No. 9492.

The facts, as found by the trial court, are as follows:

Dr. Batiquin was a Resident Physician at the Negros Oriental Provincial Hospital,
Dumaguete City from January 9, 1978 to September 1989. Between 1987 and
September, 1989 she was also the Actg. Head of the Department of Obstetrics and
Gynecology at the said Hospital.

Mrs. Villegas is a married woman who submitted to Dr. Batiquin for prenatal care as
the latter's private patient sometime before September 21, 1988.

In the morning of September 21, 1988 Dr. Batiquin, with the assistance of Dr. Doris
Teresita Sy who was also a Resident Physician at the same Hospital, C.I. and O.R.
Nurse Arlene Diones and some student nurses performed a simple caesarean
section on Mrs. Villegas at the Negros Oriental Provincial Hospital and after 45
minutes Mrs. Villegas delivered her first child, Rachel Acogido, at about 11:45 that
morning. Thereafter, Plaintiff remained confined at the Hospital until September 27,
1988 during which period of confinement she was regularly visited by Dr. Batiquin.
On September 28, 1988 Mrs. Villegas checked out of the Hospital. . . and on that
same day she paid Dr. Batiquin, thru the latter's secretary, the amount of P1,500.00
as "professional fee". . . .

Soon after leaving the Hospital Mrs. Villegas began to suffer abdominal pains and
complained of being feverish. She also gradually lost her appetite, so she consulted
Dr. Batiquin at the latter's polyclinic who prescribed for her certain medicines. . .
which she had been taking up to December, 1988.

In the meantime, Mrs. Villegas was given a Medical Certificate by Dr. Batiquin on
October 31, 1988. . . certifying to her physical fitness to return to her work on
November 7, 1988. So, on the second week of November, 1988 Mrs. Villegas
returned to her work at the Rural Bank of Ayungon, Negros Oriental.

The abdominal pains and fever kept on recurring and bothered Mrs. Villegas no end
despite the medications administered by Dr. Batiquin. When the pains became
unbearable and she was rapidly losing weight she consulted Dr. Ma. Salud Kho at
the Holy Child's Hospital in Dumaguete City on January 20, 1989.

The evidence of Plaintiffs show that when Dr. Ma. Salud Kho examined Mrs. Villegas
at the Holy Child's Hospital on January 20, 1989 she found Mrs. Villegas to be
feverish, pale and was breathing fast. Upon examination she felt an abdominal mass
one finger below the umbilicus which she suspected to be either a tumor of the
uterus or an ovarian cyst, either of which could be cancerous. She had an x-ray
taken of Mrs. Villegas' chest, abdomen and kidney. She also took blood tests of
Plaintiff. A blood count showed that Mrs. Villegas had [an] infection inside her
abdominal cavity. The results of all those examinations impelled Dr. Kho to suggest
that Mrs. Villegas submit to another surgery to which the latter agreed.

When Dr. Kho opened the abdomen of Mrs. Villegas she found whitish-yellow
discharge inside, an ovarian cyst on each of the left and right ovaries which gave out
pus, dirt and pus behind the uterus, and a piece of rubber material on the right side
of the uterus embedded on [sic] the ovarian cyst, 2 inches by 3/4 inch in size. This
piece of rubber material which Dr. Kho described as a "foreign body" looked like a
piece of a "rubber glove". . . and which is [sic] also "rubber-drain like". . . . It could
have been a torn section of a surgeon's gloves or could have come from other
sources. And this foreign body was the cause of the infection of the ovaries and
consequently of all the discomfort suffered by Mrs. Villegas after her delivery on
September 21, 1988.7

The piece of rubber allegedly found near private respondent Flotilde Villegas's uterus was not
presented in court, and although Dr. Ma. Salud Kho Testified that she sent it to a pathologist in Cebu
City for examination,8 it was not mentioned in the pathologist's Surgical Pathology Report.9
Aside from Dr. Kho's testimony, the evidence which mentioned the piece of rubber are a Medical
Certificate,10 a Progress Record,11 an Anesthesia Record,12 a Nurse's Record,13 and a Physician's
Discharge Summary.14 The trial court, however, regarded these documentary evidence as mere
hearsay, "there being no showing that the person or persons who prepared them are deceased or
unable to testify on the facts therein stated. . . . Except for the Medical Certificate (Exhibit "F"), all the
above documents were allegedly prepared by persons other than Dr. Kho, and she merely affixed
her signature on some of them to express her agreement thereto. . . ."15 The trial court also refused
to give weight to Dr. Kho's testimony regarding the subject piece of rubber as Dr. Kho "may not have
had first-hand knowledge" thereof,16 as could be gleaned from her statement, thus:

A . . . I have heard somebody that [sic] says [sic] there is [sic] a

foreign body that goes with the tissues but unluckily I don't know
where the rubber was. 17

The trial court deemed vital Dr. Victoria Batiquin's testimony that when she confronted Dr. Kho
regarding the piece of rubber, "Dr. Kho answered that there was rubber indeed but that she threw it
away."18 This statement, the trial court noted, was never denied nor disputed by Dr. Kho, leading it to
conclude:

There are now two different versions on the whereabouts of that offending "rubber"
— (1) that it was sent to the Pathologist in Cebu as testified to in Court by Dr. Kho
and (2) that Dr. Kho threw it away as told by her to Defendant. The failure of the
Plaintiffs to reconcile these two different versions serve only to weaken their claim
against Defendant Batiquin.19

All told, the trial court held in favor of the petitioners herein.

The Court of Appeals reviewed the entirety of Dr. Kho's testimony and, even without admitting the
private respondents' documentary evidence, deemed Dr. Kho's positive testimony to definitely
establish that a piece of rubber was found near private respondent Villegas's uterus. Thus, the Court
of Appeals reversed the decision of the trial court, holding:

4. The fault or negligence of appellee Dr. Batiquin is established by preponderance

of evidence. The trial court itself had narrated what happened to appellant Flotilde
after the caesarean operation made by appellee doctor. . . . After the second
operation, appellant Flotilde became well and healthy. Appellant Flotilde's troubles
were caused by the infection due to the "rubber" that was left inside her abdomen.
Both appellant; testified that after the operation made by appellee doctor, they did not
go to any other doctor until they finally decided to see another doctor in January,
1989 when she was not getting any better under the care of appellee Dr. Batiquin. . .
. Appellee Dr. Batiquin admitted on the witness stand that she alone decided when to
close the operating area; that she examined the portion she operated on before
closing the same. . . Had she exercised due diligence, appellee Dr. Batiquin would
have found the rubber and removed it before closing the operating area.20

The appellate court then ruled:

Appellants' evidence show[s] that they paid a total of P17,000.00 [deposit of

P7,100.00 (Exh. G-1-A) plus hospital and medical expenses together with doctor's
fees in the total amount P9,900.00 (Exhs. G and G-2)] for the second operation that
saved her life.

For the miseries appellants endured for more than three (3) months, due to the
negligence of appellee Dr. Batiquin they are entitled to moral damages in the amount
of P100,000.00; exemplary damages in the amount of P20,000.00 and attorney's
fees in the amount of P25,000.00.

The fact that appellant Flotilde can no longer bear children because her uterus and
ovaries were removed by Dr. Kho is not taken into consideration as it is not shown
that the removal of said organs were the direct result of the rubber left by appellee
Dr. Batiquin near the uterus. What is established is that the rubber left by appellee
caused infection, placed the life of appellant Flotilde in jeopardy and caused
appellant fear, worry and anxiety. . . .
 WHEREFORE, the appealed judgment, dismissing the complaint for damages is
REVERSED and SET ASIDE. Another judgment is hereby entered ordering
defendants-appellees to pay plaintiffs-appellants the amounts of P17,000.00 as and
for actual damages; P100,000.00 as and for moral damages; P20,000.00 as and for
exemplary damages; and P25,000.00 as and for attorney's fees plus the costs of
litigation.

SO ORDERED.21

From the above judgment, the petitioners appealed to this Court claiming that the appellate court: (1)
committed grave abuse of discretion by resorting to findings of fact not supported by the evidence on
record, and (2) exceeded its discretion, amounting to lack or excess of jurisdiction, when it gave
credence to testimonies punctured with contradictions and falsities.

The private respondents commented that the petition raised only questions of fact, which were not
proper for review by this Court.

While the rule is that only questions of law may be raised in a petition for review on certiorari, there
are exceptions, among which are when the factual findings of the trial court and the appellate court
conflict, when the appealed decision is clearly contradicted by the evidence on record, or when the
appellate court misapprehended the facts.22

After deciphering the cryptic petition, we find that the focal point of the instant appeal is the
appreciation of Dr. Kho's testimony. The petitioners contend that the Court of Appeals
misappreciated the following portion of Dr. Kho's testimony:

Q What is the purpose of the examination?

A Just in case, I was just thinking at the back of my mind, just in case
this would turn out to be a medico-legal
case, I have heard somebody that [sic] says [sic] there is [sic] a
foreign body that goes with the tissues but unluckily I don't know wher
e the rubber was. It was not in the Lab, it was not in
Cebu. 23 (emphasis supplied)

The petitioners prefer the trial court's interpretation of the above testimony, i.e., that Dr.
Kho's knowledge of the piece of rubber was based on hearsay. The Court of Appeals, on the
other hand, concluded that the underscored phrase was taken out of context by the trial
court. According to the Court of Appeals, the trial court should have likewise considered the
other portions of Dr. Kho's testimony, especially the following:

Q So you did actually conduct the operation on her?

A Yes, I did.

Q And what was the result?

A Opening up her abdomen, there was whitish-yellow discharge

inside the abdomen, there was an ovarian cyst on the left and side
and there was also an ovarian cyst on the right which, on opening up
or freeing it up from the uterus, turned out to be pus. Both ovaries
turned out. . . to have pus. And then, cleaning up the uterus, at the
back of the uterus it was very dirty, it was full of pus. And there was a
[piece of] rubber, we found a [piece of] rubber on the right
side. 24

We agree with the Court of Appeals. The phrase relied upon by the trial court does not negate the
fact that Dr. Kho saw a piece of rubber in private respondent Villegas's abdomen, and that she sent
it to a laboratory and then to Cebu City for examination by a pathologist.25 Not even the Pathologist's
Report, although devoid of any mention of a piece of rubber, could alter what Dr. Kho saw.
Furthermore, Dr. Kho's knowledge of the piece of rubber could not be based on other than first-hand
knowledge for, as she asserted before the trial court:
 Q But you are sure you have seen [the piece of rubber]?

A Oh yes. I was not the only one who saw it. 26

The petitioners emphasize that the private respondents never reconciled Dr. Kho's testimony with
Dr. Batiquin's claim on the witness stand that when Dr. Batiquin confronted Dr. Kho about the foreign
body, the latter said that there was a piece of rubber but that she threw it away. Although hearsay,
Dr. Batiquin's claim was not objected to, and hence, the same is admissible27 but it carries no
probative value.28 Nevertheless, assuming otherwise, Dr. Batiquin's statement cannot belie the fact
that Dr. Kho found a piece of rubber near private respondent Villegas's uterus. And even if we were
to doubt Dr. Kho as to what she did to the piece of rubber, i.e., whether she threw it away or sent it
to Cebu City, we are not justified in distrusting her as to her recovery of a piece of rubber from
private respondent Villegas's abdomen. On this score, it is perfectly reasonable to believe the
testimony of a witness with respect to some facts and disbelieve his testimony with respect to other
facts. And it has been aptly said that even when a witness is found to have deliberately falsified in
some material particulars, it is not required that the whole of his uncorroborated testimony be
rejected, but such portions thereof deemed worthy of belief may be credited.29

It is here worth noting that the trial court paid heed to the following portions of Dr. Batiquin's
testimony: that no rubber drain was used in the operation,30 and that there was neither any tear on
Dr. Batiquin's gloves after the operation nor blood smears on her hands upon removing her
gloves.31 Moreover, the trial court pointed out that the absence of a rubber drain was corroborated by
Dr. Doris Sy, Dr. Batiquin's assistant during the operation on private respondent Villegas.32 But the
trial court failed to recognize that the assertions of Drs. Batiquin and Sy were denials or negative
testimonies. Well-settled is the rule that positive testimony is stronger than negative testimony.33 Of
course, as the petitioners advocate, such positive testimony must come from a credible source,
which leads us to the second assigned error.

While the petitioners claim that contradictions and falsities punctured Dr. Kho's testimony, a
regarding of the said testimony reveals no such infirmity and establishes Dr. Kho as a credible
witness. Dr. Kho was frank throughout her turn on the witness stand. Furthermore, no motive to state
any untruth was ever imputed against Dr. Kho, leaving her trustworthiness unimpaired.34 The trial
court's following declaration shows that while it was critical of the lack of care with which Dr. Kho
handled the piece of rubber, it was not prepared to doubt Dr. Kho's credibility, thus only supporting
our appraisal of Dr. Kho's trustworthiness:

This is not to say that she was less than honest when she testified about her
findings, but it can also be said that she did not take the most appropriate precaution
to preserve that "piece of rubber" as an eloquent evidence of what she would reveal
should there be a "legal problem" which she claim[s] to have anticipated.35

Considering that we have assessed Dr. Kho to be a credible witness, her positive testimony [that a
piece of rubber was indeed found in private respondent Villega's abdomen] prevails over the
negative testimony in favor of the petitioners.

As such, the rule of res ipsa loquitur comes to fore. This Court has had occasion to delve into the
nature and operation of this doctrine:

This doctrine [res ipsa loquitur] is stated thus: "Where the thing which causes injury is
shown to be under the management of the defendant, and the accident is such as in
the ordinary course of things does not happen in those who have the management
use proper care, it affords reasonable evidence, in the absence of an explanation by
the defendant, that the accident arose from want of care." Or
as Black's Law Dictionary puts it:

Res ipsa loquitur. The thing speaks for itself. Rebuctable presumption
or inference that defendant was negligent, which arises upon proof
that [the] instrumentality causing injury was in defendant's exclusive
control, and that the accident was one which ordinary does not
happen in absence of negligence. Res ipsa loquitur is [a] rule of
evidence whereby negligence of [the] alleged wrongdoer may be
inferred from [the] mere fact that [the] accident happened provided
[the] character of [the] accident and circumstances attending it lead
reasonably to belief that in [the] absence of negligence it would not
 have occurred and that thing which caused injury is shown to have
been under [the] management and control of [the] alleged wrongdoer.
. . . Under [this] doctrine
. . . the happening of an injury permits an inference of negligence
where plaintiff produces substantial evidence that [the] injury was
caused by an agency or instrumentality under [the] exclusive control
and management of defendant, and that the occurrence [sic] was
such that in the ordinary course of things would not happen if
reasonable care had been used.

xxx xxx xxx

The doctrine of [r]es ipsa loquitur as a rule of evidence is peculiar to

the law of negligence which recognizes that prima facie negligence
may be established without direct proof and furnishes a substitute for
specific proof of negligence. The doctrine is not a rule of substantive
law, but merely a mode of proof or a mere procedural convenience.
The rule, when applicable to the facts and circumstances of a
particular case, is not intended to and does not dispense with the
requirement of proof of culpable negligence on the party charged. It
merely determines and regulates what shall be prima facie evidence
thereof and facilitates the burden of plaintiff of proving a breach of the
duty of due care. The doctrine can be invoked when and only when,
under the circumstances involved, direct evidence is absent and not
readily available.36

In the instant case, all the requisites for recourse to the doctrine are present. First, the entire
proceedings of the caesarean section were under the exclusive control of Dr. Batiquin. In this light,
the private respondents were bereft of direct evidence as to the actual culprit or the exact cause of
the foreign object finding its way into private respondent Villegas's body, which, needless to say,
does not occur unless through the intersection of negligence. Second, since aside from the
caesarean section, private respondent Villegas underwent no other operation which could have
caused the offending piece of rubber to appear in her uterus, it stands to reason that such could only
have been a by-product of the caesarean section performed by Dr. Batiquin. The petitioners, in this
regard, failed to overcome the presumption of negligence arising from resort to the doctrine of res
ipsa loquitur. Dr. Batiquin is therefore liable for negligently leaving behind a piece of rubber in private
respondent Villegas's abdomen and for all the adverse effects thereof.

As a final word, this Court reiterates its recognition of the vital role the medical profession plays in
the lives of the people,3 7 and the State's compelling interest to enact measures to protect the public
from "the potentially deadly effects of incompetence and ignorance in those who would undertake to
treat our bodies and minds for disease or trauma."38 Indeed, a physician is bound to serve the
interest of his patients "with the greatest of solicitude, giving them always his best talent and
skill."39 Through her tortious conduct, the petitioner endangered the life of Flotilde Villegas, in
violation of her profession's rigid ethical code and in contravention of the legal standards set forth for
professionals, in general,40 and members of the medical profession,41 in particular.

WHEREFORE, the challenged decision of 11 May 1994 of the Court of Appeals in CA-G.R. CV No.
30851 is hereby AFFIRMED in toto.

Costs against the petitioners.

SO ORDERED.
G.R. No. 160889 April 27, 2007

DR. MILAGROS L. CANTRE, Petitioner,

vs.
SPS. JOHN DAVID Z. GO and NORA S. GO, Respondents.

DECISION

QUISUMBING, J.:

For review on certiorari are the Decision1 dated October 3, 2002 and Resolution2 dated November
19, 2003 of the Court of Appeals in CA-G.R. CV No. 58184, which affirmed with modification the
Decision3 dated March 3, 1997 of the Regional Trial Court of Quezon City, Branch 98, in Civil Case
No. Q-93-16562.

The facts, culled from the records, are as follows:

Petitioner Dr. Milagros L. Cantre is a specialist in Obstetrics and Gynecology at the Dr. Jesus
Delgado Memorial Hospital. She was the attending physician of respondent Nora S. Go, who was
admitted at the said hospital on April 19, 1992.

At 1:30 a.m. of April 20, 1992, Nora gave birth to her fourth child, a baby boy. However, at around
3:30 a.m., Nora suffered profuse bleeding inside her womb due to some parts of the placenta which
were not completely expelled from her womb after delivery. Consequently, Nora suffered
hypovolemic shock, resulting in a drop in her blood pressure to "40" over "0." Petitioner and the
assisting resident physician performed various medical procedures to stop the bleeding and to
restore Nora’s blood pressure. Her blood pressure was frequently monitored with the use of a
sphygmomanometer. While petitioner was massaging Nora’s uterus for it to contract and stop
bleeding, she ordered a droplight to warm Nora and her baby.4 Nora remained unconscious until she
recovered.

While in the recovery room, her husband, respondent John David Z. Go noticed a fresh gaping
wound two and a half (2 ½) by three and a half (3 ½) inches in the inner portion of her left arm, close
to the armpit.5 He asked the nurses what caused the injury. He was informed it was a burn.
Forthwith, on April 22, 1992, John David filed a request for investigation.6 In response, Dr. Rainerio
S. Abad, the medical director of the hospital, called petitioner and the assisting resident physician to
explain what happened. Petitioner said the blood pressure cuff caused the injury.

On May 7, 1992, John David brought Nora to the National Bureau of Investigation for a physical
examination, which was conducted by medico-legal officer Dr. Floresto Arizala, Jr.7 The medico-legal
officer later testified that Nora’s injury appeared to be a burn and that a droplight when placed near
the skin for about 10 minutes could cause such burn.8 He dismissed the likelihood that the wound
was caused by a blood pressure cuff as the scar was not around the arm, but just on one side of the
arm.9

On May 22, 1992, Nora’s injury was referred to a plastic surgeon at the Dr. Jesus Delgado Memorial
Hospital for skin grafting.10 Her wound was covered with skin sourced from her abdomen, which
consequently bore a scar as well. About a year after, on April 30, 1993, scar revision had to be
performed at the same hospital.11 The surgical operation left a healed linear scar in Nora’s left arm
about three inches in length, the thickest portion rising about one-fourth (1/4) of an inch from the
surface of the skin. The costs of the skin grafting and the scar revision were shouldered by the
hospital.12

Unfortunately, Nora’s arm would never be the same. Aside from the unsightly mark, the pain in her
1a\^/phi 1.net

left arm remains. When sleeping, she has to cradle her wounded arm. Her movements now are also
restricted. Her children cannot play with the left side of her body as they might accidentally bump the
injured arm, which aches at the slightest touch.

Thus, on June 21, 1993, respondent spouses filed a complaint13 for damages against petitioner, Dr.
Abad, and the hospital. Finding in favor of respondent spouses, the trial court decreed:

In view of the foregoing consideration, judgment is hereby rendered in favor of the plaintiffs and
against the defendants, directing the latters, (sic) jointly and severally –

(a) to pay the sum of Five Hundred Thousand Pesos (P500,000.00) in moral damages;

(b) to pay the sum of One Hundred Fifty Thousand Pesos (P150,000.00) exemplary
damages;

(c) to pay the sum of Eighty Thousand Pesos (P80,000.00) nominal damages;

(d) to pay Fifty Thousand Pesos (P50,000.00) for and as attorney’s fees; and

(e) to pay Six Thousand Pesos (P6,000.00) litigation expenses.

SO ORDERED.14

Petitioner, Dr. Abad, and the hospital all appealed to the Court of Appeals, which affirmed with
modification the trial court decision, thus:

WHEREFORE, in view of all the foregoing, and finding no reversible error in the appealed Decision
dated March 3, 1997 of Branch 98 of the Regional Trial Court of Quezon City in Civil Case No. Q-93-
16562, the same is hereby AFFIRMED, with the following MODIFICATIONS:

1. Ordering defendant-appellant Dra. Milagros [L.] Cantre only to pay plaintiffs-appellees

John David Go and Nora S. Go the sum of P200,000.00 as moral damages;

2. Deleting the award [of] exemplary damages, attorney’s fees and expenses of litigation; 1aw phi 1.nét
 3. Dismissing the complaint with respect to defendants-appellants Dr. Rainerio S. Abad and
Delgado Clinic, Inc.;

4. Dismissing the counterclaims of defendants-appellants for lack of merit; and

5. Ordering defendant-appellant Dra. Milagros [L.] Cantre only to pay the costs.

SO ORDERED.15

Petitioner’s motion for reconsideration was denied by the Court of Appeals. Hence, the instant
petition assigning the following as errors and issues:

I.

WHETHER OR NOT, THE LOWER COURT, AND THE COURT OF APPEALS COMMITTED
GRAVE ABUSE OF THEIR DISCRETION WHEN, NOTWITHSTANDING THAT BOTH PARTIES
HAVE RESTED THEIR RESPECTIVE CASES, THE LOWER COURT ADMITTED THE
ADDITIONAL EXHIBITS FURTHER OFFERED BY RESPONDENTS NOT TESTIFIED TO BY ANY
WITNESS AND THIS DECISION OF THE LOWER COURT WAS UPHELD BY THE COURT OF
APPEALS LIKEWISE COMMITTING GRAVE ABUSE OF DISCRETION;

II.

WHETHER OR NOT THE LOWER COURT COMMITTED GRAVE ABUSE OF ITS DISCRETION
WHEN, CONTRARY TO PREPONDERANCE OF EVIDENCE PRESENTED BY THE PETITIONER,
IT RULED THAT THE PETITIONER HAS NOT AMPLY SHOWED THAT THE DROPLIGHT DID
NOT TOUCH THE BODY OF MRS. NORA GO, AND THIS DECISION OF THE LOWER COURT
WAS UPHELD BY THE COURT OF APPEALS LIKEWISE COMMITTING GRAVE ABUSE OF
DISCRETION;

III.

WHETHER OR NOT THE LOWER COURT COMMITTED GRAVE ABUSE OF ITS DISCRETION
WHEN, CONTRARY TO PREPONDERANCE OF EVIDENCE PRESENTED BY THE PETITIONER,
IT RULED THAT PETITIONER DRA. CANTRE WAS NOT ABLE TO AMPLY EXPLAIN HOW THE
INJURY (BLISTERS) IN THE LEFT INNER ARM OF RESPONDENT MRS. GO CAME ABOUT;

IV.

WHETHER OR NOT THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF ITS

DISCRETION WHEN IT MADE A RULING ON THE RESPONDENT’S INJURY QUOTING THE
TESTIMONY OF SOMEONE WHO WAS NOT PRESENT AND HAS NOT SEEN THE ORIGINAL,
FRESH INJURY OF RESPONDENT MRS. NORA GO;

V.

WHETHER OR NOT THE COURT OF APPEALS GRAVELY ABUSING ITS DISCRETION RULED
THAT PETITIONER DRA. CANTRE SHOULD HAVE INTENDED TO INFLICT THE INJURY TO
SAVE THE LIFE OF RESPONDENT MRS. GO;

VI.

WHETHER OR NOT THE LOWER COURT AND THE COURT [OF] APPEALS COMMITTED
GRAVE ABUSE OF DISCRETION WHEN, CONTRARY TO THE DETAILED PROCEDURES DONE
BY PETITIONER, BOTH RULED THAT THE RESPONDENT WAS LEFT TO THE CARE OF THE
NURSING STAFF;

VII.

WHETHER OR NOT THE LOWER COURT COMMITTED GRAVE ABUSE OF DISCRETION

WHEN, CONTRARY TO THE MEDICAL PURPOSES OF COSMETIC SURGERY, IT RULED THAT
THE COSMETIC SURGERY MADE THE SCARS EVEN MORE UGLY AND DECLARED THE
COSMETIC SURGERY A FAILURE;

VIII.

WHETHER OR NOT THE LOWER COURT GRAVELY ABUSE OF (SIC) DISCRETION WHEN,
CONTRARY TO RESPONDENTS’ CONTRARY TESTIMONIES AND THE ABSENCE OF ANY
TESTIMONY, IT RULED THAT THEY ARE ENTITLED TO DAMAGES AND WHICH WAS UPHELD,
ALTHOUGH MODIFIED, BY THE COURT OF APPEALS LIKEWISE ABUSING ITS DISCRETION.16

Petitioner contends that additional documentary exhibits not testified to by any witness are
inadmissible in evidence because they deprived her of her constitutional right to confront the
witnesses against her. Petitioner insists the droplight could not have touched Nora’s body. She
maintains the injury was due to the constant taking of Nora’s blood pressure. Petitioner also
insinuates the Court of Appeals was misled by the testimony of the medico-legal officer who never
saw the original injury before plastic surgery was performed. Finally, petitioner stresses that plastic
surgery was not intended to restore respondent’s injury to its original state but rather to prevent
further complication.

Respondents, however, counter that the genuineness and due execution of the additional
documentary exhibits were duly admitted by petitioner’s counsel. Respondents point out that
petitioner’s blood pressure cuff theory is highly improbable, being unprecedented in medical history
and that the injury was definitely caused by the droplight. At any rate, they argue, even if the injury
was brought about by the blood pressure cuff, petitioner was still negligent in her duties as Nora’s
attending physician.

Simply put, the threshold issues for resolution are: (1) Are the questioned additional exhibits
admissible in evidence? (2) Is petitioner liable for the injury suffered by respondent Nora Go?
Thereafter, the inquiry is whether the appellate court committed grave abuse of discretion in its
assailed issuances.

As to the first issue, we agree with the Court of Appeals that said exhibits are admissible in
evidence. We note that the questioned exhibits consist mostly of Nora’s medical records, which were
produced by the hospital during trial pursuant to a subpoena duces tecum. Petitioner’s counsel
admitted the existence of the same when they were formally offered for admission by the trial court.
In any case, given the particular circumstances of this case, a ruling on the negligence of petitioner
may be made based on the res ipsa loquitur doctrine even in the absence of such additional exhibits.

Petitioner’s contention that the medico-legal officer who conducted Nora’s physical examination
never saw her original injury before plastic surgery was performed is without basis and contradicted
by the records. Records show that the medico-legal officer conducted the physical examination on
May 7, 1992, while the skin grafting and the scar revision were performed on Nora on May 22, 1992
and April 30, 1993, respectively.

Coming now to the substantive matter, is petitioner liable for the injury suffered by respondent Nora
Go?

The Hippocratic Oath mandates physicians to give primordial consideration to the well-being of their
patients. If a doctor fails to live up to this precept, he is accountable for his acts. This
notwithstanding, courts face a unique restraint in adjudicating medical negligence cases because
physicians are not guarantors of care and, they never set out to intentionally cause injury to their
patients. However, intent is immaterial in negligence cases because where negligence exists and is
proven, it automatically gives the injured a right to reparation for the damage caused.17

In cases involving medical negligence, the doctrine of res ipsa loquitur allows the mere existence of
an injury to justify a presumption of negligence on the part of the person who controls the instrument
causing the injury, provided that the following requisites concur:

1. The accident is of a kind which ordinarily does not occur in the absence of someone’s
negligence;

2. It is caused by an instrumentality within the exclusive control of the defendant or

defendants; and
 3. The possibility of contributing conduct which would make the plaintiff responsible is
eliminated.18

As to the first requirement, the gaping wound on Nora’s arm is certainly not an ordinary occurrence
in the act of delivering a baby, far removed as the arm is from the organs involved in the process of
giving birth. Such injury could not have happened unless negligence had set in somewhere.

Second, whether the injury was caused by the droplight or by the blood pressure cuff is of no
moment. Both instruments are deemed within the exclusive control of the physician in charge under
the "captain of the ship" doctrine. This doctrine holds the surgeon in charge of an operation liable for
the negligence of his assistants during the time when those assistants are under the surgeon’s
control.19 In this particular case, it can be logically inferred that petitioner, the senior consultant in
charge during the delivery of Nora’s baby, exercised control over the assistants assigned to both the
use of the droplight and the taking of Nora’s blood pressure. Hence, the use of the droplight and the
blood pressure cuff is also within petitioner’s exclusive control.

Third, the gaping wound on Nora’s left arm, by its very nature and considering her condition, could
only be caused by something external to her and outside her control as she was unconscious while
in hypovolemic shock. Hence, Nora could not, by any stretch of the imagination, have contributed to
her own injury.

Petitioner’s defense that Nora’s wound was caused not by the droplight but by the constant taking of
her blood pressure, even if the latter was necessary given her condition, does not absolve her from
liability. As testified to by the medico-legal officer, Dr. Arizala, Jr., the medical practice is to deflate
the blood pressure cuff immediately after each use. Otherwise, the inflated band can cause injury to
the patient similar to what could have happened in this case. Thus, if Nora’s wound was caused by
the blood pressure cuff, then the taking of Nora’s blood pressure must have been done so
negligently as to have inflicted a gaping wound on her arm,20 for which petitioner cannot escape
liability under the "captain of the ship" doctrine.

Further, petitioner’s argument that the failed plastic surgery was not intended as a cosmetic
procedure, but rather as a measure to prevent complication does not help her case. It does not
negate negligence on her part.

Based on the foregoing, the presumption that petitioner was negligent in the exercise of her
profession stands unrebutted. In this connection, the Civil Code provides:

ART. 2176. Whoever by act or omission causes damage to another, there being fault or negligence,
is obliged to pay for the damage done.…

ART. 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though
incapable of pecuniary computation, moral damages may be recovered if they are the proximate
result of the defendant’s wrongful act or omission.

Clearly, under the law, petitioner is obliged to pay Nora for moral damages suffered by the latter as a
proximate result of petitioner’s negligence.

We note, however, that petitioner has served well as Nora’s obstetrician for her past three
successful deliveries. This is the first time petitioner is being held liable for damages due to
negligence in the practice of her profession. The fact that petitioner promptly took care of Nora’s
wound before infection and other complications set in is also indicative of petitioner’s good
intentions. We also take note of the fact that Nora was suffering from a critical condition when the
injury happened, such that saving her life became petitioner’s elemental concern. Nonetheless, it
should be stressed that all these could not justify negligence on the part of petitioner.

Hence, considering the specific circumstances in the instant case, we find no grave abuse of
discretion in the assailed decision and resolution of the Court of Appeals. Further, we rule that the
Court of Appeals’ award of Two Hundred Thousand Pesos (₱200,000) as moral damages in favor of
respondents and against petitioner is just and equitable.21

WHEREFORE, the petition is DENIED. The Decision dated October 3, 2002 and Resolution dated
November 19, 2003 of the Court of Appeals in CA-G.R. CV No. 58184 are AFFIRMED.
No pronouncement as to costs.

SO ORDERED.

RES IPSA LOQUITUR

G.R. No. L-12986 March 31, 1966

THE SPOUSES BERNABE AFRICA and SOLEDAD C. AFRICA, and the HEIRS OF DOMINGA
ONG, petitioners-appellants,
vs.
CALTEX (PHIL.), INC., MATEO BOQUIREN and THE COURT OF APPEALS, respondents-
appellees.

Ross, Selph, Carrascoso and Janda for the respondents.

Bernabe Africa, etc. for the petitioners.

MAKALINTAL., J.:

This case is before us on a petition for review of the decision of the Court of Appeals, which affirmed
that of the Court of First Instance of Manila dismissing petitioners' second amended complaint
against respondents.

The action is for damages under Articles 1902 and 1903 of the old Civil Code. It appears that in the
afternoon of March 18, 1948 a fire broke out at the Caltex service station at the corner of Antipolo
street and Rizal Avenue, Manila. It started while gasoline was being hosed from a tank truck into the
underground storage, right at the opening of the receiving tank where the nozzle of the hose was
inserted. The fire spread to and burned several neighboring houses, including the personal
properties and effects inside them. Their owners, among them petitioners here, sued respondents
Caltex (Phil.), Inc. and Mateo Boquiren, the first as alleged owner of the station and the second as
its agent in charge of operation. Negligence on the part of both of them was attributed as the cause
of the fire.

The trial court and the Court of Appeals found that petitioners failed to prove negligence and that
respondents had exercised due care in the premises and with respect to the supervision of their
employees.

The first question before Us refers to the admissibility of certain reports on the fire prepared by the
Manila Police and Fire Departments and by a certain Captain Tinio of the Armed Forces of the
Philippines. Portions of the first two reports are as follows:

1. Police Department report: —

Investigation disclosed that at about 4:00 P.M. March 18, 1948, while Leandro Flores
was transferring gasoline from a tank truck, plate No. T-5292 into the underground
tank of the Caltex Gasoline Station located at the corner of Rizal Avenue and
Antipolo Street, this City, an unknown Filipino lighted a cigarette and threw the
burning match stick near the main valve of the said underground tank. Due to the
gasoline fumes, fire suddenly blazed. Quick action of Leandro Flores in pulling off the
gasoline hose connecting the truck with the underground tank prevented a terrific
explosion. However, the flames scattered due to the hose from which the gasoline
was spouting. It burned the truck and the following accessorias and residences.

2. The Fire Department report: —

In connection with their allegation that the premises was (sic) subleased for the installation of
a coca-cola and cigarette stand, the complainants furnished this Office a copy of a
photograph taken during the fire and which is submitted herewith. it appears in this picture
that there are in the premises a coca-cola cooler and a rack which according to information
gathered in the neighborhood contained cigarettes and matches, installed between the
gasoline pumps and the underground tanks.

The report of Captain Tinio reproduced information given by a certain Benito Morales regarding the
history of the gasoline station and what the chief of the fire department had told him on the same
subject.

The foregoing reports were ruled out as "double hearsay" by the Court of Appeals and hence
inadmissible. This ruling is now assigned as error. It is contended: first, that said reports were
admitted by the trial court without objection on the part of respondents; secondly, that with respect to
the police report (Exhibit V-Africa) which appears signed by a Detective Zapanta allegedly "for
Salvador Capacillo," the latter was presented as witness but respondents waived their right to cross-
examine him although they had the opportunity to do so; and thirdly, that in any event the said
reports are admissible as an exception to the hearsay rule under section 35 of Rule 123, now Rule
130.

The first contention is not borne out by the record. The transcript of the hearing of September 17,
1953 (pp. 167-170) shows that the reports in question, when offered as evidence, were objected to
by counsel for each of respondents on the ground that they were hearsay and that they were
"irrelevant, immaterial and impertinent." Indeed, in the court's resolution only Exhibits J, K, K-5 and
X-6 were admitted without objection; the admission of the others, including the disputed ones,
carried no such explanation.

On the second point, although Detective Capacillo did take the witness stand, he was not examined
and he did not testify as to the facts mentioned in his alleged report (signed by Detective Zapanta).
All he said was that he was one of those who investigated "the location of the fire and, if possible,
gather witnesses as to the occurrence, and that he brought the report with him. There was nothing,
therefore, on which he need be cross-examined; and the contents of the report, as to which he did
not testify, did not thereby become competent evidence. And even if he had testified, his testimony
would still have been objectionable as far as information gathered by him from third persons was
concerned.
Petitioners maintain, however, that the reports in themselves, that is, without further testimonial
evidence on their contents, fall within the scope of section 35, Rule 123, which provides that "entries
in official records made in the performance of his duty by a public officer of the Philippines, or by a
person in the performance of a duty specially enjoined by law, are prima facie evidence of the facts
therein stated."

There are three requisites for admissibility under the rule just mentioned: (a) that the entry was made
by a public officer, or by another person specially enjoined by law to do so; (b) that it was made by
the public officer in the performance of his duties, or by such other person in the performance of a
duty specially enjoined by law; and (c) that the public officer or other person had sufficient
knowledge of the facts by him stated, which must have been acquired by him personally or through
official information (Moran, Comments on the Rules of Court, Vol. 3 [1957] p. 398).

Of the three requisites just stated, only the last need be considered here. Obviously the material
facts recited in the reports as to the cause and circumstances of the fire were not within the personal
knowledge of the officers who conducted the investigation. Was knowledge of such facts, however,
acquired by them through official information? As to some facts the sources thereof are not even
identified. Others are attributed to Leopoldo Medina, referred to as an employee at the gas station
were the fire occurred; to Leandro Flores, driver of the tank truck from which gasoline was being
transferred at the time to the underground tank of the station; and to respondent Mateo Boquiren,
who could not, according to Exhibit V-Africa, give any reason as to the origin of the fire. To qualify
their statements as "official information" acquired by the officers who prepared the reports, the
persons who made the statements not only must have personal knowledge of the facts stated but
must have the duty to give such statements for record.1

The reports in question do not constitute an exception to the hearsay rule; the facts stated therein
were not acquired by the reporting officers through official information, not having been given by the
informants pursuant to any duty to do so.

The next question is whether or not, without proof as to the cause and origin of the fire, the doctrine
of res ipsa loquitur should apply so as to presume negligence on the part of appellees. Both the trial
court and the appellate court refused to apply the doctrine in the instant case on the grounds that "as
to (its) applicability ... in the Philippines, there seems to he nothing definite," and that while the rules
do not prohibit its adoption in appropriate cases, "in the case at bar, however, we find no practical
use for such doctrine." The question deserves more than such summary dismissal. The doctrine has
actually been applied in this jurisdiction, in the case of Espiritu vs. Philippine Power and
Development Co. (CA-G.R. No. 3240-R, September 20, 1949), wherein the decision of the Court of
Appeals was penned by Mr. Justice J.B.L. Reyes now a member of the Supreme Court.

The facts of that case are stated in the decision as follows:

In the afternoon of May 5, 1946, while the plaintiff-appellee and other companions were
loading grass between the municipalities of Bay and Calauan, in the province of Laguna, with
clear weather and without any wind blowing, an electric transmission wire, installed and
maintained by the defendant Philippine Power and Development Co., Inc. alongside the
road, suddenly parted, and one of the broken ends hit the head of the plaintiff as he was
about to board the truck. As a result, plaintiff received the full shock of 4,400 volts carried by
the wire and was knocked unconscious to the ground. The electric charge coursed through
his body and caused extensive and serious multiple burns from skull to legs, leaving the
bone exposed in some parts and causing intense pain and wounds that were not completely
healed when the case was tried on June 18, 1947, over one year after the mishap.

The defendant therein disclaimed liability on the ground that the plaintiff had failed to show any
specific act of negligence, but the appellate court overruled the defense under the doctrine of res
ipsa loquitur. The court said:

The first point is directed against the sufficiency of plaintiff's evidence to place appellant on
its defense. While it is the rule, as contended by the appellant, that in case of noncontractual
negligence, or culpa aquiliana, the burden of proof is on the plaintiff to establish that the
proximate cause of his injury was the negligence of the defendant, it is also a recognized
principal that "where the thing which caused injury, without fault of the injured person, is
under the exclusive control of the defendant and the injury is such as in the ordinary course
of things does not occur if he having such control use proper care, it affords reasonable
 evidence, in the absence of the explanation, that the injury arose from defendant's want of
care."

And the burden of evidence is shifted to him to establish that he has observed due care and
diligence. (San Juan Light & Transit Co. v. Requena, 244, U.S. 89, 56 L. ed. 680.) This rule
is known by the name of res ipsa loquitur (the transaction speaks for itself), and is peculiarly
applicable to the case at bar, where it is unquestioned that the plaintiff had every right to be
on the highway, and the electric wire was under the sole control of defendant company. In
the ordinary course of events, electric wires do not part suddenly in fair weather and injure
people, unless they are subjected to unusual strain and stress or there are defects in their
installation, maintenance and supervision; just as barrels do not ordinarily roll out of the
warehouse windows to injure passersby, unless some one was negligent. (Byrne v. Boadle,
2 H & Co. 722; 159 Eng. Reprint 299, the leading case that established that rule).
Consequently, in the absence of contributory negligence (which is admittedly not present),
the fact that the wire snapped suffices to raise a reasonable presumption of negligence in its
installation, care and maintenance. Thereafter, as observed by Chief Baron Pollock, "if there
are any facts inconsistent with negligence, it is for the defendant to prove."

It is true of course that decisions of the Court of Appeals do not lay down doctrines binding on the
Supreme Court, but we do not consider this a reason for not applying the particular doctrine of res
ipsa loquitur in the case at bar. Gasoline is a highly combustible material, in the storage and sale of
which extreme care must be taken. On the other hand, fire is not considered a fortuitous event, as it
arises almost invariably from some act of man. A case strikingly similar to the one before Us is
Jones vs. Shell Petroleum Corporation, et al., 171 So. 447:

Arthur O. Jones is the owner of a building in the city of Hammon which in the year 1934 was
leased to the Shell Petroleum Corporation for a gasoline filling station. On October 8, 1934,
during the term of the lease, while gasoline was being transferred from the tank wagon, also
operated by the Shell Petroleum Corporation, to the underground tank of the station, a fire
started with resulting damages to the building owned by Jones. Alleging that the damages to
his building amounted to $516.95, Jones sued the Shell Petroleum Corporation for the
recovery of that amount. The judge of the district court, after hearing the testimony,
concluded that plaintiff was entitled to a recovery and rendered judgment in his favor for
$427.82. The Court of Appeals for the First Circuit reversed this judgment, on the ground the
testimony failed to show with reasonable certainty any negligence on the part of the Shell
Petroleum Corporation or any of its agents or employees. Plaintiff applied to this Court for a
Writ of Review which was granted, and the case is now before us for decision. 1äwphï1.ñët

In resolving the issue of negligence, the Supreme Court of Louisiana held:

Plaintiff's petition contains two distinct charges of negligence — one relating to the cause of
the fire and the other relating to the spreading of the gasoline about the filling station.

Other than an expert to assess the damages caused plaintiff's building by the fire, no
witnesses were placed on the stand by the defendant.

Taking up plaintiff's charge of negligence relating to the cause of the fire, we find it
established by the record that the filling station and the tank truck were under the control of
the defendant and operated by its agents or employees. We further find from the
uncontradicted testimony of plaintiff's witnesses that fire started in the underground tank
attached to the filling station while it was being filled from the tank truck and while both the
tank and the truck were in charge of and being operated by the agents or employees of the
defendant, extended to the hose and tank truck, and was communicated from the burning
hose, tank truck, and escaping gasoline to the building owned by the plaintiff.

Predicated on these circumstances and the further circumstance of defendant's failure to

explain the cause of the fire or to show its lack of knowledge of the cause, plaintiff has
evoked the doctrine of res ipsa loquitur. There are many cases in which the doctrine may be
successfully invoked and this, we think, is one of them.

Where the thing which caused the injury complained of is shown to be under the
management of defendant or his servants and the accident is such as in the ordinary course
of things does not happen if those who have its management or control use proper care, it
 affords reasonable evidence, in absence of explanation by defendant, that the accident
arose from want of care. (45 C.J. #768, p. 1193).

This statement of the rule of res ipsa loquitur has been widely approved and adopted by the
courts of last resort. Some of the cases in this jurisdiction in which the doctrine has been
applied are the following, viz.: Maus v. Broderick, 51 La. Ann. 1153, 25 So. 977; Hebert v.
Lake Charles Ice, etc., Co., 111 La. 522, 35 So. 731, 64 L.R.A. 101, 100 Am. St. Rep. 505;
Willis v. Vicksburg, etc., R. Co., 115 La. 63, 38 So. 892; Bents v. Page, 115 La. 560, 39 So.
599.

The principle enunciated in the aforequoted case applies with equal force here. The gasoline station,
with all its appliances, equipment and employees, was under the control of appellees. A fire occurred
therein and spread to and burned the neighboring houses. The persons who knew or could have
known how the fire started were appellees and their employees, but they gave no explanation
thereof whatsoever. It is a fair and reasonable inference that the incident happened because of want
of care.

In the report submitted by Captain Leoncio Mariano of the Manila Police Department (Exh. X-1
Africa) the following appears:

Investigation of the basic complaint disclosed that the Caltex Gasoline Station complained of
occupies a lot approximately 10 m x 10 m at the southwest corner of Rizal Avenue and
Antipolo. The location is within a very busy business district near the Obrero Market, a
railroad crossing and very thickly populated neighborhood where a great number of people
mill around t

until

gasoline

tever be theWactjvities of these peopleor lighting a cigarette cannot be excluded and this
constitute a secondary hazard to its operation which in turn endangers the entire
neighborhood to conflagration.

Furthermore, aside from precautions already taken by its operator the concrete walls south
and west adjoining the neighborhood are only 2-1/2 meters high at most and cannot avoid
the flames from leaping over it in case of fire.

Records show that there have been two cases of fire which caused not only material
damages but desperation and also panic in the neighborhood.

Although the soft drinks stand had been eliminated, this gasoline service station is also used
by its operator as a garage and repair shop for his fleet of taxicabs numbering ten or more,
adding another risk to the possible outbreak of fire at this already small but crowded gasoline
station.

The foregoing report, having been submitted by a police officer in the performance of his duties on
the basis of his own personal observation of the facts reported, may properly be considered as an
exception to the hearsay rule. These facts, descriptive of the location and objective circumstances
surrounding the operation of the gasoline station in question, strengthen the presumption of
negligence under the doctrine of res ipsa loquitur, since on their face they called for more stringent
measures of caution than those which would satisfy the standard of due diligence under ordinary
circumstances. There is no more eloquent demonstration of this than the statement of Leandro
Flores before the police investigator. Flores was the driver of the gasoline tank wagon who, alone
and without assistance, was transferring the contents thereof into the underground storage when the
fire broke out. He said: "Before loading the underground tank there were no people, but while the
loading was going on, there were people who went to drink coca-cola (at the coca-cola stand) which
is about a meter from the hole leading to the underground tank." He added that when the tank was
almost filled he went to the tank truck to close the valve, and while he had his back turned to the
"manhole" he, heard someone shout "fire."

Even then the fire possibly would not have spread to the neighboring houses were it not for another
negligent omission on the part of defendants, namely, their failure to provide a concrete wall high
enough to prevent the flames from leaping over it. As it was the concrete wall was only 2-1/2 meters
high, and beyond that height it consisted merely of galvanized iron sheets, which would predictably
crumple and melt when subjected to intense heat. Defendants' negligence, therefore, was not only
with respect to the cause of the fire but also with respect to the spread thereof to the neighboring
houses.

There is an admission on the part of Boquiren in his amended answer to the second amended
complaint that "the fire was caused through the acts of a stranger who, without authority, or
permission of answering defendant, passed through the gasoline station and negligently threw a
lighted match in the premises." No evidence on this point was adduced, but assuming the allegation
to be true — certainly any unfavorable inference from the admission may be taken against Boquiren
— it does not extenuate his negligence. A decision of the Supreme Court of Texas, upon facts
analogous to those of the present case, states the rule which we find acceptable here. "It is the rule
that those who distribute a dangerous article or agent, owe a degree of protection to the public
proportionate to and commensurate with a danger involved ... we think it is the generally accepted
rule as applied to torts that 'if the effects of the actor's negligent conduct actively and continuously
operate to bring about harm to another, the fact that the active and substantially simultaneous
operation of the effects of a third person's innocent, tortious or criminal act is also a substantial factor
in bringing about the harm, does not protect the actor from liability.' (Restatement of the Law of
Torts, vol. 2, p. 1184, #439). Stated in another way, "The intention of an unforeseen and unexpected
cause, is not sufficient to relieve a wrongdoer from consequences of negligence, if such negligence
directly and proximately cooperates with the independent cause in the resulting injury." (MacAfee, et
al. vs. Traver's Gas Corporation, 153 S.W. 2nd 442.)

The next issue is whether Caltex should be held liable for the damages caused to appellants. This
issue depends on whether Boquiren was an independent contractor, as held by the Court of
Appeals, or an agent of Caltex. This question, in the light of the facts not controverted, is one of law
and hence may be passed upon by this Court. These facts are: (1) Boquiren made an admission that
he was an agent of Caltex; (2) at the time of the fire Caltex owned the gasoline station and all the
equipment therein; (3) Caltex exercised control over Boquiren in the management of the state; (4)
the delivery truck used in delivering gasoline to the station had the name of CALTEX painted on it;
and (5) the license to store gasoline at the station was in the name of Caltex, which paid the license
fees. (Exhibit T-Africa; Exhibit U-Africa; Exhibit X-5 Africa; Exhibit X-6 Africa; Exhibit Y-Africa).

In Boquiren's amended answer to the second amended complaint, he denied that he directed one of
his drivers to remove gasoline from the truck into the tank and alleged that the "alleged driver, if one
there was, was not in his employ, the driver being an employee of the Caltex (Phil.) Inc. and/or the
owners of the gasoline station." It is true that Boquiren later on amended his answer, and that among
the changes was one to the effect that he was not acting as agent of Caltex. But then again, in his
motion to dismiss appellants' second amended complaint the ground alleged was that it stated no
cause of action since under the allegations thereof he was merely acting as agent of Caltex, such
that he could not have incurred personal liability. A motion to dismiss on this ground is deemed to be
an admission of the facts alleged in the complaint.

Caltex admits that it owned the gasoline station as well as the equipment therein, but claims that the
business conducted at the service station in question was owned and operated by Boquiren. But
Caltex did not present any contract with Boquiren that would reveal the nature of their relationship at
the time of the fire. There must have been one in existence at that time. Instead, what was
presented was a license agreement manifestly tailored for purposes of this case, since it was
entered into shortly before the expiration of the one-year period it was intended to operate. This so-
called license agreement (Exhibit 5-Caltex) was executed on November 29, 1948, but made
effective as of January 1, 1948 so as to cover the date of the fire, namely, March 18, 1948. This
retroactivity provision is quite significant, and gives rise to the conclusion that it was designed
precisely to free Caltex from any responsibility with respect to the fire, as shown by the clause that
Caltex "shall not be liable for any injury to person or property while in the property herein licensed, it
being understood and agreed that LICENSEE (Boquiren) is not an employee, representative or
agent of LICENSOR (Caltex)."

But even if the license agreement were to govern, Boquiren can hardly be considered an
independent contractor. Under that agreement Boquiren would pay Caltex the purely nominal sum of
P1.00 for the use of the premises and all the equipment therein. He could sell only Caltex Products.
Maintenance of the station and its equipment was subject to the approval, in other words control, of
Caltex. Boquiren could not assign or transfer his rights as licensee without the consent of Caltex.
The license agreement was supposed to be from January 1, 1948 to December 31, 1948, and
thereafter until terminated by Caltex upon two days prior written notice. Caltex could at any time
cancel and terminate the agreement in case Boquiren ceased to sell Caltex products, or did not
conduct the business with due diligence, in the judgment of Caltex. Termination of the contract was
therefore a right granted only to Caltex but not to Boquiren. These provisions of the contract show
the extent of the control of Caltex over Boquiren. The control was such that the latter was virtually an
employee of the former.

Taking into consideration the fact that the operator owed his position to the company and the
latter could remove him or terminate his services at will; that the service station belonged to
the company and bore its tradename and the operator sold only the products of the
company; that the equipment used by the operator belonged to the company and were just
loaned to the operator and the company took charge of their repair and maintenance; that an
employee of the company supervised the operator and conducted periodic inspection of the
company's gasoline and service station; that the price of the products sold by the operator
was fixed by the company and not by the operator; and that the receipts signed by the
operator indicated that he was a mere agent, the finding of the Court of Appeals that the
operator was an agent of the company and not an independent contractor should not be
disturbed.

To determine the nature of a contract courts do not have or are not bound to rely upon the
name or title given it by the contracting parties, should thereby a controversy as to what they
really had intended to enter into, but the way the contracting parties do or perform their
respective obligations stipulated or agreed upon may be shown and inquired into, and should
such performance conflict with the name or title given the contract by the parties, the former
must prevail over the latter. (Shell Company of the Philippines, Ltd. vs. Firemens' Insurance
Company of Newark, New Jersey, 100 Phil. 757).

The written contract was apparently drawn for the purpose of creating the apparent
relationship of employer and independent contractor, and of avoiding liability for the
negligence of the employees about the station; but the company was not satisfied to allow
such relationship to exist. The evidence shows that it immediately assumed control, and
proceeded to direct the method by which the work contracted for should be performed. By
reserving the right to terminate the contract at will, it retained the means of compelling
submission to its orders. Having elected to assume control and to direct the means and
methods by which the work has to be performed, it must be held liable for the negligence of
those performing service under its direction. We think the evidence was sufficient to sustain
the verdict of the jury. (Gulf Refining Company v. Rogers, 57 S.W. 2d, 183).

Caltex further argues that the gasoline stored in the station belonged to Boquiren. But no cash
invoices were presented to show that Boquiren had bought said gasoline from Caltex. Neither was
there a sales contract to prove the same.

As found by the trial court the Africas sustained a loss of P9,005.80, after deducting the amount of
P2,000.00 collected by them on the insurance of the house. The deduction is now challenged as
erroneous on the ground that Article 2207 of the New Civil Code, which provides for the subrogation
of the insurer to the rights of the insured, was not yet in effect when the loss took place. However,
regardless of the silence of the law on this point at that time, the amount that should be recovered be
measured by the damages actually suffered, otherwise the principle prohibiting unjust enrichment
would be violated. With respect to the claim of the heirs of Ong P7,500.00 was adjudged by the
lower court on the basis of the assessed value of the property destroyed, namely, P1,500.00,
disregarding the testimony of one of the Ong children that said property was worth P4,000.00. We
agree that the court erred, since it is of common knowledge that the assessment for taxation
purposes is not an accurate gauge of fair market value, and in this case should not prevail over
positive evidence of such value. The heirs of Ong are therefore entitled to P10,000.00.

Wherefore, the decision appealed from is reversed and respondents-appellees are held liable
solidarily to appellants, and ordered to pay them the aforesaid sum of P9,005.80 and P10,000.00,
respectively, with interest from the filing of the complaint, and costs.
G.R. No. L-21749 September 29, 1967

REPUBLIC OF THE PHILIPPINES, plaintiff-appellee,

vs.
LUZON STEVEDORING CORPORATION, defendant-appellant.

Office of the Solicitor General for plaintiff-appellee.

H. San Luis and L.V. Simbulan for defendant-appellant.

REYES, J.B.L., J.:

The present case comes by direct appeal from a decision of the Court of First Instance of Manila
(Case No. 44572) adjudging the defendant-appellant, Luzon Stevedoring Corporation, liable in
damages to the plaintiff-appellee Republic of the Philippines.

In the early afternoon of August 17, 1960, barge L-1892, owned by the Luzon Stevedoring
Corporation was being towed down the Pasig river by tugboats "Bangus" and "Barbero"1 also
belonging to the same corporation, when the barge rammed against one of the wooden piles of the
Nagtahan bailey bridge, smashing the posts and causing the bridge to list. The river, at the time, was
swollen and the current swift, on account of the heavy downpour of Manila and the surrounding
provinces on August 15 and 16, 1960.

Sued by the Republic of the Philippines for actual and consequential damage caused by its
employees, amounting to P200,000 (Civil Case No. 44562, CFI of Manila), defendant Luzon
Stevedoring Corporation disclaimed liability therefor, on the grounds that it had exercised due
diligence in the selection and supervision of its employees; that the damages to the bridge were
caused by force majeure; that plaintiff has no capacity to sue; and that the Nagtahan bailey bridge is
an obstruction to navigation.
After due trial, the court rendered judgment on June 11, 1963, holding the defendant liable for the
damage caused by its employees and ordering it to pay to plaintiff the actual cost of the repair of the
Nagtahan bailey bridge which amounted to P192,561.72, with legal interest thereon from the date of
the filing of the complaint.

Defendant appealed directly to this Court assigning the following errors allegedly committed by the
court a quo, to wit:

I — The lower court erred in not holding that the herein defendant-appellant had exercised
the diligence required of it in the selection and supervision of its personnel to prevent
damage or injury to others. 1awphîl.nèt

II — The lower court erred in not holding that the ramming of the Nagtahan bailey bridge by
barge L-1892 was caused by force majeure.

III — The lower court erred in not holding that the Nagtahan bailey bridge is an obstruction, if
not a menace, to navigation in the Pasig river.

IV — The lower court erred in not blaming the damage sustained by the Nagtahan bailey
bridge to the improper placement of the dolphins.

V — The lower court erred in granting plaintiff's motion to adduce further evidence in chief
after it has rested its case.

VI — The lower court erred in finding the plaintiff entitled to the amount of P192,561.72 for
damages which is clearly exorbitant and without any factual basis.

However, it must be recalled that the established rule in this jurisdiction is that when a party appeals
directly to the Supreme Court, and submits his case there for decision, he is deemed to have waived
the right to dispute any finding of fact made by the trial Court. The only questions that may be raised
are those of law (Savellano vs. Diaz, L-17441, July 31, 1963; Aballe vs. Santiago, L-16307, April 30,
1963; G.S.I.S. vs. Cloribel, L-22236, June 22, 1965). A converso, a party who resorts to the Court of
Appeals, and submits his case for decision there, is barred from contending later that his claim was
beyond the jurisdiction of the aforesaid Court. The reason is that a contrary rule would encourage
the undesirable practice of appellants' submitting their cases for decision to either court in
expectation of favorable judgment, but with intent of attacking its jurisdiction should the decision be
unfavorable (Tyson Tan, et al. vs. Filipinas Compañia de Seguros) et al., L-10096, Res. on Motion to
Reconsider, March 23, 1966). Consequently, we are limited in this appeal to the issues of law raised
in the appellant's brief.

Taking the aforesaid rules into account, it can be seen that the only reviewable issues in this appeal
are reduced to two:

1) Whether or not the collision of appellant's barge with the supports or piers of the Nagtahan
bridge was in law caused by fortuitous event or force majeure, and

2) Whether or not it was error for the Court to have permitted the plaintiff-appellee to
introduce additional evidence of damages after said party had rested its case.

As to the first question, considering that the Nagtahan bridge was an immovable and stationary
object and uncontrovertedly provided with adequate openings for the passage of water craft,
including barges like of appellant's, it is undeniable that the unusual event that the barge, exclusively
controlled by appellant, rammed the bridge supports raises a presumption of negligence on the part
of appellant or its employees manning the barge or the tugs that towed it. For in the ordinary course
of events, such a thing does not happen if proper care is used. In Anglo American Jurisprudence,
the inference arises by what is known as the "res ipsa loquitur" rule (Scott vs. London Docks Co., 2
H & C 596; San Juan Light & Transit Co. vs. Requena, 224 U.S. 89, 56 L. Ed., 680; Whitwell vs.
Wolf, 127 Minn. 529, 149 N.W. 299; Bryne vs. Great Atlantic & Pacific Tea Co., 269 Mass. 130; 168
N.E. 540; Gribsby vs. Smith, 146 S.W. 2d 719).

The appellant strongly stresses the precautions taken by it on the day in question: that it assigned
two of its most powerful tugboats to tow down river its barge L-1892; that it assigned to the task the
more competent and experienced among its patrons, had the towlines, engines and equipment
double-checked and inspected; that it instructed its patrons to take extra precautions; and concludes
that it had done all it was called to do, and that the accident, therefore, should be held due to force
majeure or fortuitous event.

These very precautions, however, completely destroy the appellant's defense. For caso
fortuito or force majeure(which in law are identical in so far as they exempt an obligor from
liability)2 by definition, are extraordinary events not foreseeable or avoidable, "events that could
not be foreseen, or which, though foreseen, were inevitable" (Art. 1174, Civ. Code of the
Philippines). It is, therefore, not enough that the event should not have been foreseen or anticipated,
as is commonly believed, but it must be one impossible to foresee or to avoid. The mere difficulty to
foresee the happening is not impossibility to foresee the same: "un hecho no constituye caso fortuito
por la sola circunstancia de que su existencia haga mas dificil o mas onerosa la accion diligente del
presento ofensor" (Peirano Facio, Responsibilidad Extra-contractual, p. 465; Mazeaud Trait de la
Responsibilite Civil, Vol. 2, sec. 1569). The very measures adopted by appellant prove that the
possibility of danger was not only foreseeable, but actually foreseen, and was not caso fortuito.

Otherwise stated, the appellant, Luzon Stevedoring Corporation, knowing and appreciating the perils
posed by the swollen stream and its swift current, voluntarily entered into a situation involving
obvious danger; it therefore assured the risk, and can not shed responsibility merely because the
precautions it adopted turned out to be insufficient. Hence, the lower Court committed no error in
holding it negligent in not suspending operations and in holding it liable for the damages caused.

It avails the appellant naught to argue that the dolphins, like the bridge, were improperly located.
Even if true, these circumstances would merely emphasize the need of even higher degree of care
on appellant's part in the situation involved in the present case. The appellant, whose barges and
tugs travel up and down the river everyday, could not safely ignore the danger posed by these
allegedly improper constructions that had been erected, and in place, for years.

On the second point: appellant charges the lower court with having abused its discretion in the
admission of plaintiff's additional evidence after the latter had rested its case. There is an insinuation
that the delay was deliberate to enable the manipulation of evidence to prejudice defendant-
appellant.

We find no merit in the contention. Whether or not further evidence will be allowed after a party
offering the evidence has rested his case, lies within the sound discretion of the trial Judge, and this
discretion will not be reviewed except in clear case of abuse.3

In the present case, no abuse of that discretion is shown. What was allowed to be introduced, after
plaintiff had rested its evidence in chief, were vouchers and papers to support an item of P1,558.00
allegedly spent for the reinforcement of the panel of the bailey bridge, and which item already
appeared in Exhibit GG. Appellant, in fact, has no reason to charge the trial court of being unfair,
because it was also able to secure, upon written motion, a similar order dated November 24, 1962,
allowing reception of additional evidence for the said defendant-appellant.4

WHEREFORE, finding no error in the decision of the lower Court appealed from, the same is hereby
affirmed. Costs against the defendant-appellant.
G.R. No. L-52732 August 29, 1988

F.F. CRUZ and CO., INC., petitioner,

vs.
THE COURT OF APPEALS, GREGORIO MABLE as substituted by his wife LUZ ALMONTE
MABLE and children DOMING, LEONIDAS, LIGAYA, ELENA, GREGORIO, JR., SALOME,
ANTONIO, and BERNARDO all surnamed MABLE, respondents.

Luis S. Topacio for petitioner.

Mauricio M. Monta for respondents.

CORTES, J.:

This petition to review the decision of the Court of Appeals puts in issue the application of the common law doctrine of res ipsa loquitur.

The essential facts of the case are not disputed.

The furniture manufacturing shop of petitioner in Caloocan City was situated adjacent to the
residence of private respondents. Sometime in August 1971, private respondent Gregorio Mable first
approached Eric Cruz, petitioner's plant manager, to request that a firewall be constructed between
the shop and private respondents' residence. The request was repeated several times but they fell
on deaf ears. In the early morning of September 6, 1974, fire broke out in petitioner's shop.
Petitioner's employees, who slept in the shop premises, tried to put out the fire, but their efforts
proved futile. The fire spread to private respondents' house. Both the shop and the house were
razed to the ground. The cause of the conflagration was never discovered. The National Bureau of
Investigation found specimens from the burned structures negative for the presence of inflammable
substances.

Subsequently, private respondents collected P35,000.00 on the insurance on their house and the
contents thereof.
On January 23, 1975, private respondents filed an action for damages against petitioner, praying for
a judgment in their favor awarding P150,000.00 as actual damages, P50,000.00 as moral damages,
P25,000.00 as exemplary damages, P20,000.00 as attorney's fees and costs. The Court of First
Instance held for private respondents:

WHEREFORE, the Court hereby renders judgment, in favor of plaintiffs, and against
the defendant:

1. Ordering the defendant to pay to the plaintiffs the amount of P80,000.00 for
damages suffered by said plaintiffs for the loss of their house, with interest of 6%
from the date of the filing of the Complaint on January 23, 1975, until fully paid;

2. Ordering the defendant to pay to the plaintiffs the sum of P50,000.00 for the loss
of plaintiffs' furnitures, religious images, silverwares, chinawares, jewelries, books,
kitchen utensils, clothing and other valuables, with interest of 6% from date of the
filing of the Complaint on January 23, 1975, until fully paid;

3. Ordering the defendant to pay to the plaintiffs the sum of P5,000.00 as moral
damages, P2,000.00 as exemplary damages, and P5,000.00 as and by way of
attorney's fees;

4. With costs against the defendant;

5. Counterclaim is ordered dismissed, for lack of merit. [CA Decision, pp. 1-2; Rollo,
pp. 29-30.]

On appeal, the Court of Appeals, in a decision promulgated on November 19, 1979, affirmed the
decision of the trial court but reduced the award of damages:

WHEREFORE, the decision declaring the defendants liable is affirmed. The

damages to be awarded to plaintiff should be reduced to P70,000.00 for the house
and P50,000.00 for the furniture and other fixtures with legal interest from the date of
the filing of the complaint until full payment thereof. [CA Decision, p. 7; Rollo, p. 35.]

A motion for reconsideration was filed on December 3, 1979 but was denied in a resolution dated
February 18, 1980. Hence, petitioner filed the instant petition for review on February 22, 1980. After
the comment and reply were filed, the Court resolved to deny the petition for lack of merit on June
11, 1980.

However, petitioner filed a motion for reconsideration, which was granted, and the petition was given
due course on September 12, 1980. After the parties filed their memoranda, the case was submitted
for decision on January 21, 1981.

Petitioner contends that the Court of Appeals erred:

1. In not deducting the sum of P35,000.00, which private respondents recovered on the insurance on
their house, from the award of damages.

2. In awarding excessive and/or unproved damages.

3. In applying the doctrine of res ipsa loquitur to the facts of the instant case.

The pivotal issue in this case is the applicability of the common law doctrine of res ipsa loquitur, the
issue of damages being merely consequential. In view thereof, the errors assigned by petitioner shall
be discussed in the reverse order.

1. The doctrine of res ipsa loquitur, whose application to the instant case petitioner objects to, may
be stated as follows:

Where the thing which caused the injury complained of is shown to be under the
management of the defendant or his servants and the accident is such as in the
ordinary course of things does not happen if those who have its management or
 control use proper care, it affords reasonable evidence, in the absence of
explanation by the defendant, that the accident arose from want of care. [Africa v.
Caltex (Phil.), Inc., G.R. No. L-12986, March 31, 1966, 16 SCRA 448.]

Thus, in Africa, supra, where fire broke out in a Caltex service station while gasoline from a tank
truck was being unloaded into an underground storage tank through a hose and the fire spread to
and burned neighboring houses, this Court, applying the doctrine of res ipsa loquitur, adjudged
Caltex liable for the loss.

The facts of the case likewise call for the application of the doctrine, considering that in the normal
course of operations of a furniture manufacturing shop, combustible material such as wood chips,
sawdust, paint, varnish and fuel and lubricants for machinery may be found thereon.

It must also be noted that negligence or want of care on the part of petitioner or its employees was
not merely presumed. The Court of Appeals found that petitioner failed to construct a firewall
between its shop and the residence of private respondents as required by a city ordinance; that the
fire could have been caused by a heated motor or a lit cigarette; that gasoline and alcohol were used
and stored in the shop; and that workers sometimes smoked inside the shop [CA Decision, p. 5;
Rollo, p. 33.]

Even without applying the doctrine of res ipsa loquitur, petitioner's failure to construct a firewall in
accordance with city ordinances would suffice to support a finding of negligence.

Even then the fire possibly would not have spread to the neighboring houses were it
not for another negligent omission on the part of defendants, namely, their failure to
provide a concrete wall high enough to prevent the flames from leaping over it. As it
was the concrete wall was only 2-1/2 meters high, and beyond that height it
consisted merely of galvanized iron sheets, which would predictably crumble and
melt when subjected to intense heat. Defendant's negligence, therefore, was not only
with respect to the cause of the fire but also with respect to the spread thereof to the
neighboring houses.[Africa v. Caltex (Phil.), Inc., supra; Emphasis supplied.]

In the instant case, with more reason should petitioner be found guilty of negligence since it had
failed to construct a firewall between its property and private respondents' residence which
sufficiently complies with the pertinent city ordinances. The failure to comply with an ordinance
providing for safety regulations had been ruled by the Court as an act of negligence [Teague v.
Fernandez, G.R. No. L-29745, June 4, 1973, 51 SCRA 181.]

The Court of Appeals, therefore, had more than adequate basis to find petitioner liable for the loss
sustained by private respondents.

2. Since the amount of the loss sustained by private respondents constitutes a finding of fact, such
finding by the Court of Appeals should not be disturbed by this Court [M.D. Transit & Taxi Co., Inc. v.
Court of Appeals, G.R. No. L-23882, February 17, 1968, 22 SCRA 559], more so when there is no
showing of arbitrariness.

In the instant case, both the CFI and the Court of Appeals were in agreement as to the value of
private respondents' furniture and fixtures and personal effects lost in the fire (i.e. P50,000.00). With
regard to the house, the Court of Appeals reduced the award to P70,000.00 from P80,000.00. Such
cannot be categorized as arbitrary considering that the evidence shows that the house was built in
1951 for P40,000.00 and, according to private respondents, its reconstruction would cost
P246,000.00. Considering the appreciation in value of real estate and the diminution of the real
value of the peso, the valuation of the house at P70,000.00 at the time it was razed cannot be said
to be excessive.

3. While this Court finds that petitioner is liable for damages to private respondents as found by the
Court of Appeals, the fact that private respondents have been indemnified by their insurer in the
amount of P35,000.00 for the damage caused to their house and its contents has not escaped the
attention of the Court. Hence, the Court holds that in accordance with Article 2207 of the Civil Code
the amount of P35,000.00 should be deducted from the amount awarded as damages. Said article
provides:
 Art. 2207. If the plaintiffs property has been insured, and he has received indemnity
from the insurance company for the injury or loss arising out of the wrong or breach
of contract complained of, the insurance company is subrogated to the rights of the
insured against the wrongdoer or the person who violated the contract. If the amount
paid by the insurance company does not fully cover the injury or loss, the aggrieved
party shall be entitled to recover the deficiency from the person causing the loss or
injury. (Emphasis supplied.]

The law is clear and needs no interpretation. Having been indemnified by their insurer, private
respondents are only entitled to recover the deficiency from petitioner.

On the other hand, the insurer, if it is so minded, may seek reimbursement of the amount it
indemnified private respondents from petitioner. This is the essence of its right to be subrogated to
the rights of the insured, as expressly provided in Article 2207. Upon payment of the loss incurred by
the insured, the insurer is entitled to be subrogated pro tanto to any right of action which the insured
may have against the third person whose negligence or wrongful act caused the loss [Fireman's
Fund Insurance Co. v. Jamila & Co., Inc., G.R. No. L-27427, April 7, 1976, 70 SCRA 323.]

Under Article 2207, the real party in interest with regard to the indemnity received by the insured is
the insurer [Phil. Air Lines, Inc. v. Heald Lumber Co., 101 Phil. 1031, (1957).] Whether or not the
insurer should exercise the rights of the insured to which it had been subrogated lies solely within
the former's sound discretion. Since the insurer is not a party to the case, its identity is not of record
and no claim is made on its behalf, the private respondent's insurer has to claim his right to
reimbursement of the P35,000.00 paid to the insured.

WHEREFORE, in view of the foregoing, the decision of the Court of Appeals is hereby AFFIRMED
with the following modifications as to the damages awarded for the loss of private respondents'
house, considering their receipt of P35,000.00 from their insurer: (1) the damages awarded for the
loss of the house is reduced to P35,000.00; and (2) the right of the insurer to subrogation and thus
seek reimbursement from petitioner for the P35,000.00 it had paid private respondents is
recognized.

SO ORDERED.

G.R. No. L-2075 November 29, 1949

MARGARITA AFIALDA, plaintiff-appellant,

vs.
BASILIO HISOLE and FRANCISCO HISOLE, defendants-appellees.

Nicolas P. Nonato for appellant.

Gellada, Mirasol and Ravena for appellees.

REYES, J.:

This is an action for damages arising from injury caused by an animal. The complaint alleges that
the now deceased, Loreto Afialda, was employed by the defendant spouses as caretaker of their
carabaos at a fixed compensation; that while tending the animals he was, on March 21, 1947, gored
by one of them and later died as a consequence of his injuries; that the mishap was due neither to
his own fault nor to force majeure; and that plaintiff is his elder sister and heir depending upon him
for support.

Before filing their answer, defendants moved for the dismissal of the complaint for lack of a cause of
action, and the motion having been granted by the lower court, plaintiff has taken this appeal.

Plaintiff seeks to hold defendants liable under article 1905 of the Civil Code, which reads:

The possessor of an animal, or the one who uses the same, is liable for any damages it may
cause, even if such animal should escape from him or stray away.

This liability shall cease only in case, the damage should arise from force majeure or from
the fault of the person who may have suffered it.
The question presented is whether the owner of the animal is liable when damage is caused to its
caretaker.

The lower court took the view that under the above-quoted provision of the Civil Code, the owner of
an animal is answerable only for damages caused to a stranger, and that for damage caused to the
caretaker of the animal the owner would be liable only if he had been negligent or at fault under
article 1902 of the same code. Claiming that the lower court was in error, counsel for plaintiff
contends that the article 1905 does not distinguish between damage caused to the caretaker and
makes the owner liable whether or not he has been negligent or at fault. For authority counsel cites
the following opinion which Manresa quotes from a decision of the Spanish Supreme Court:

El articulo 1905 del codigo Civil no consienta otra interpretacion que la que, clara y
evidentemente, se deriva de sus terminos literales, bastando, segun el mismo, que un
animal cause perjuicio para que nasca la responsibilidad del dueno, aun no imputandose a
este ninguna clase de culpa o negligencia, habida,sin duda, cuenta por el lgislador de que
tal concepto de dueno es suficiente para que arrastre las consecuencias favorables o
adversas de esta clase de propiedad, salvo la exception en el mismo contenida. (12
Manresa, Commentaries on the Spanish CivilCode, 573.)

This opinion, however, appears to have been rendered in a case where an animal caused injury to a
stranger or third person. It is therefore no authority for a case like the present where the person
injured was the caretaker of the animal. The distinction is important. For the statute names
the possessor or user of the animal as the person liable for "any damages it may cause," and this for
the obvious reason that the possessor or user has the custody and control of the animal and is
therefore the one in a position to prevent it from causing damage.

In the present case, the animal was in custody and under the control of the caretaker, who was paid
for his work as such. Obviously, it was the caretaker's business to try to prevent the animal from
causing injury or damage to anyone, including himself. And being injured by the animal under those
circumstances, was one of the risks of the occupation which he had voluntarily assumed and for
which he must take the consequences.

In a decision of the Spanish Supreme Court, cited by Manresa in his Commentaries (Vol. 12, p.
578), the death of an employee who was bitten by a feline which his master had asked him to take to
his establishment was by said tribunal declared to be "a veritable accident of labor" which should
come under the labor laws rather than under article 1905 of the Civil Code. The present action,
however, is not brought under the Workmen's Compensation Act, there being no allegation that,
among other things, defendant's business, whatever that might be, had a gross income of P20,000.
As already stated, defendant's liability is made to rest on article 1905 of the Civil Code. but action
under that article is not tenable for the reasons already stated. On the other hand, if action is to be
based on article 1902 of the Civil Code, it is essential that there be fault or negligence on the part of
the defendants as owners of the animal that caused the damage. But the complaint contains no
allegation on those points.

There being no reversible error in the order appealed from, the same is hereby affirmed, but without
costs in view of the financial situation of the appellant.
 NEGLIGENCE ULIT…
CONCEPCION ILAO-ORETA, G.R. No. 172406
Petitioner,
Present:

QUISUMBING, J., Chairperson,

CARPIO,
- versus - CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.

Promulgated:
SPOUSES EVA MARIE and BENEDICTO October 11, 2007
NOEL RONQUILLO,
Respondents.

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

DECISION

CARPIO MORALES, J.:

Respondents, spouses Eva Marie Ronquillo (Eva Marie) and Noel Benedicto
(Noel) Ronquillo (the Ronquillo spouses or the spouses), had not been blessed with a child despite
several years of marriage. They thus consulted petitioner, Dr. Concepcion Ilao-Oreta (Dr. Ilao-Oreta),
an obstetrician-gynecologist-consultant at the St. Lukes MedicalCenter where she was, at the time
material to the case, the chief of the Reproductive Endocrinology and Infertility Section.

Upon Dr. Ilao-Oretas advice, Eva Marie agreed to undergo a laparoscopic procedure whereby
a laparascope would be inserted through the patients abdominal wall to get a direct view of her internal
reproductive organ in order to determine the real cause of her infertility.
The procedure was scheduled on April 5, 1999 at 2:00 p.m., to be performed by Dr. Ilao-
Oreta. At around 7:00 a.m. of said date, Eva Marie, accompanied by her husband Noel, checked in at
the St. Lukes Medical Center and underwent pre-operative procedures including the administration of
intravenous fluid and enema.

Dr. Ilao-Oreta did not arrive at the scheduled time for the procedure, however, and no prior
notice of its cancellation was received. It turned out that the doctor was on a return flight
from Hawaii to, and arrived at 10:00 p.m. of April 5, 1999 in, Manila.

On May 18, 1999, the Ronquillo spouses filed a complaint[1] against Dr. Ilao-Oreta and the St.
Lukes Medical Center for breach of professional and service contract and for damages before the
Regional Trial Court (RTC) of Batangas City. They prayed for the award of actual damages including
alleged loss of income of Noel while accompanying his wife to the hospital, moral damages, exemplary
damages, the costs of litigation, attorneys fees, and other available reliefs and remedies.[2]

In her Answer,[3] Dr. Ilao-Oreta gave her side of the case as follows: She went on a honeymoon
to Hawaii and was scheduled to leave Hawaii at 3:00 p.m. of April 4, 1999for Manila. Aware that her
trip from Hawaii to Manila would take about 12 hours, inclusive of a stop-over at
the Narita Airport in Japan, she estimated that she would arrive in Manila in the early morning of April
5, 1999. She thus believed in utmost good faith that she would be back in Manila in time for the
scheduled conduct of the laparoscopic procedure. She failed to consider the time difference
between Hawaii and the Philippines, however.

In its Answer,[4] the St. Lukes Medical Center contended that the spouses have no cause of
action against it since it performed the pre-operative procedures without delay, and any cause of action
they have would be against Dr. Ilao-Oreta.

By Decision[5] of March 9, 2001, Branch 84 of the Batangas RTC, finding that the failure of the
doctor to arrive on time was not intentional, awarded Eva Marie only actual damages in the total
amount of P9,939 and costs of suit. It found no adequate proof that Noel had been deprived of any
job contract while attending to his wife in the hospital.

On appeal by the spouses, the Court of Appeals, by Decision[6] of April 21, 2006, finding
Dr. Ilao-Oreta grossly negligent,[7] modified the trial courts decision as follows:

WHEREFORE, the trial Courts decision dated March 9, 2001 is affirmed,

subject to the modification that the amount of actual damages, for which both
 defendants-appellees are jointly and severally liable to plaintiffs-appellants,
is increased to P16,069.40. Furthermore, defendant-appellee Dr. Ilao-Oreta is also
held liable to pay plaintiff-appellants the following:

(a) P50,000.00 as moral damages;

(b) P25,000.00 as exemplary damages; and

(c) P20,000.00 as attorneys fees.

SO ORDERED.[8] (Underscoring supplied)

Hence, the present Petition for Review[9] of Dr. Ilao-Oreta raising the following arguments:

THE COURT A QUO ERRED IN FINDING PETITIONER TO HAVE ACTED

WITH GROSS NEGLIGENCE AND AWARDING MORAL DAMAGES TO
RESPONDENTS.[10]

THE COURT A QUO ERRED IN AWARDING EXEMPLARY DAMAGES TO

RESPONDENTS.[11]

THE COURT A QUO [ERRED] IN AWARDING ATTORNEYS FEES TO

RESPONDENTS.[12]

THE COURT A QUO ERRED IN INCREASING THE AWARD OF ACTUAL

DAMAGES IN FAVOR OF RESPONDENTS.[13]

Gross negligence implies a want or absence of or failure to exercise slight care or diligence,
or the entire absence of care. It evinces a thoughtless disregard of consequences without exerting any
effort to avoid them.[14] It is characterized by want of even slight care, acting or omitting to act in a
situation where there is a duty to act, not inadvertently but willfully and intentionally with a conscious
indifference to consequences in so far as other persons may be affected.[15]

The records show that before leaving for Hawaii, Dr. Ilao-Oreta left an admitting order with her
secretary for one of the spouses to pick up, apprised Eva Marie of the necessary preparations for the
procedure, and instructed the hospital staff to perform pre-operative treatments.[16] These acts of the
doctor reflect an earnest intention to perform the procedure on the day and time scheduled.

The records also show that on realizing that she missed the scheduled procedure, Dr. Ilao-
Oreta, upon arrival in Manila, immediately sought to rectify the same, thus:

[ATTY SINJAN] Q: So, can you tell us the reason why you missed that operation?

[DR. ILAO-ORETA] A: When I scheduled her for the surgery, I looked at my ticket and
so I was to leave Hawaii on April 4 at around 4:00 oclock in the afternoon, so I
was computing 12 hours of travel including stop-over, then probably I would
be in Manila early morning of April 5, then I have so much time and I can easily
do the case at 2:00 oclock, you know it skipped my mind the change in time.

Q: So when you arrived at 10:00 [PM] in Manila, what did you do?

A: I called immediately the hospital and I talked with the nurses, I asked about the
patient, Mrs. Ronquillo, and they told me that she has already left at
around 7:00.
 Q: And after calling the hospital, what happened?

A: I wanted to call the plaintiffs, but I didnt have their number at that time, so in the
morning I went to my office early at 8:00 and looked for her chart, because her
telephone number was written in the chart. So, I called them right away.

Q: Were you able to contact them?

A: I was able to reach Mr. Ronquillo.

Q: In the course of your conversation, what did you tell Mr. Ronquillo?

A: I apologized to him, I said I was sorry about the time that I missed the surgery, and
I told him that I can do the case right that same day without Mrs. Ronquillo
having to undergo another [b]arium enema.

Q: What else did you tell him, if any?

A: I asked him whether I can talk with Mrs. Ronquillo because I wanted to apologize to
her personally.

Q: And what did he say?

A: I could hear on the background that Mrs. Ronquillo was shouting angrily that she
didnt want to talk to me, and that she didnt want re-scheduling of the surgery .
..

ATTY LONTOK: May we move, your Honor, for the striking out of the answer, this is
purely hearsay.

COURT: Remain on the record.

WITNESS [DR. ILAO-ORETA]: . . . and then Mr. Ronquillo told me Im sorry, Dra., we
cannot re-schedule the surgery.[17] (Underscoring supplied)

Noel admitted that indeed Dr. Ilao-Oreta called him up after she arrived in Manila as related by her.[18]

The evidence then shows that Dr. Ilao-Oreta, who had traveled more than twice to the United
States where she obtained a fellowship in Reproductive Endocrinology and Infertility was indeed
negligent when she scheduled to perform professional service at 2:00 p.m. on April 5, 1999 without
considering the time difference between the Philippinesand Hawaii.

The doctors act did not, however, reflect gross negligence as defined above. Her argument
that

Although petitioner failed to take into consideration the time difference between
the Philippines and Hawaii, the situation then did not present any clear and apparent
harm or injury that even a careless person may perceive. Unlike in situations where
the Supreme Court had found gross negligence to exist, petitioner could not have been
conscious of any foreseeable danger that may occur since she actually believed that
she would make it to the operation that was elective in nature, the only purpose of
which was to determine the real cause of infertility and not to treat and cure a life
threatening disease. Thus, in merely fixing the date of her appointment with
respondent Eva Marie Ronquillo, petitioner was not in the pursuit or performance of
conduct which any ordinary person may deem to probably and naturally result in
injury,[19] (Underscoring in original)
thus persuades.

It bears noting that when she was scheduling the date of her performance of the procedure,
Dr. Ilao-Oreta had just gotten married and was preparing for her honeymoon,[20] and it is of common
human knowledge that excitement attends its preparations. Her negligence could then be partly
attributed to human frailty which rules out its characterization as gross.

The doctors negligence not being gross, the spouses are not entitled to recover moral
damages.

Neither are the spouses entitled to recover exemplary damages in the absence of a showing
that Dr. Ilao-Oreta acted in a wanton, fraudulent, reckless, oppressive or malevolent manner,[21] nor to
award of attorneys fees as, contrary to the finding of the Court of Appeals that the spouses were
compelled to litigate and incur expenses to protect their interest,[22] the records show that they did not
exert enough efforts to settle the matter before going to court. Eva Marie herself testified:

ATTY. SINJIAN:
Q: Isnt it true that before instituting this present case, you did not make any demand
on Dr. Ilao-Oreta regarding the claims which you have allegedly incurred,
because of the failed laparoscopic surgery operation?

A [EVA MARIE]: I will tell the truth. Dr. Augusto Reyes of St. Lukes . . .

Q: But did you demand?

A: No, I did not demand because

ATTY. SINJIAN: That will be all, your Honor.

ATTY. LONTOK: The witness is still explaining.

WITNESS: Im explaining first. Dr. Augusto Reyes told me that he will hold the meeting
for me and Dr. Oreta to settle things and reimburse all the money that I spent
from the hospital, and he even suggested Dr. Oreta to personally talk to me.

ATTY. SINJIAN:
Q: So it was to Dr. Augusto Reyes that you talked?
A: Yes.

Q: But you did not demand anything or write to Dr. Oreta?

A: No.

Q: Before instituting this case?

A: No.[23] (Underscoring supplied)

Finally, Dr. Ilao-Oretas prayer for the reduction of actual damages is well-taken. Article 2201 of
the Civil Code provides:

In contracts and quasi-contracts, the damages for which the obligor who acted
in good faith is liable shall be those which are the natural and probable consequences
of the breach of the obligation, and which the parties have foreseen or could have
reasonably foreseen at the time the obligation was constituted.
In fixing the amount of actual damages, the Court of Appeals and the trial court included expenses
which the spouses incurred prior to April 5, 1999 when the breach of contract complained of
occurred.[24] The Court of Appeals also included the alleged P300 spent on fuel consumption from the
spouses residence at San Pascual, Batangas to the St. Lukes Medical Center in Quezon City and the
alleged P500 spent on food in the hospital canteen, both of which are unsubstantiated by independent
or competent proof.[25] The only piece of documentary evidence supporting the food and fuel expenses
is an unsigned listing.[26] As the fuel and food expenses are not adequately substantiated, they cannot
be included in the computation of the amount of actual damages. So Premiere Development Bank v.
Court of Appeals[27] instructs:

In the instant case, the actual damages were proven through the sole
testimony of Themistocles Ruguero, the vice president for administration
of Panacor. In his testimony, the witness affirmed that Panacor incurred losses,
specifically, in terms of training and seminars, leasehold acquisition, procurement of
vehicles and office equipment without, however, adducing receipts to substantiate the
same. The documentary evidence marked as Exhibit W, which was an ordinary private
writing allegedly itemizing the capital expenditures and losses from the failed operation
of Panacor, was not testified to by any witness to ascertain the veracity of its
content. Although the lower court fixed the sum of P4,520,000.00 as the total
expenditures incurred by Panacor, it failed to show how and in what manner the same
were substantiated by the claimant with reasonable certainty. Hence, the claim for
actual damages should be received with extreme caution since it is only based on bare
assertion without support from independent evidence. Premieres failure to prove
actual expenditure consequently conduces to a failure of its claim. In determining
actual damages, the court cannot rely on mere assertions, speculations, conjectures
or guesswork but must depend on competent proof and on the best evidence
obtainable regarding the actual amount of loss.[28] (Underscoring supplied)

The list of expenses cannot replace receipts when they should have been issued as a matter of course
in business transactions[29] as in the case of purchase of gasoline and of food.

The documented claim for hospital and medical expenses of the spouses is detailed in the
Statement of Account issued by the hospital, the pertinent entries of which read:

xxxx

GROSS HOSPITAL CHARGES 2,416.50

4/5/1999 1699460 DEPOSITOFFICIAL
RECEIPT (5,000.00)
(5,000.00)
________
4/5/1999 SECOND 0284893 UNUSED MED 0439534 (65.55)
FLOOR HINOX 500 MG CAP
SECOND 0284894 UNUSED MED 0439893 (62.25)
FLOOR PHENERGAN 2 ML
50MG ______ (127.80)
BALANCE DUE (2,711.30)[30]
=======

As extrapolated from the above-quoted entries in the Statement of Account, P2,288.70 (the gross
hospital charges of P2,416.50 less the unused medicine in the amount of P127.80) was debited from
the P5,000 deposit[31] to thus leave a balance of the deposit in the amount of P2,711.30, which the trial
court erroneously denominated as confinement fee. The remaining balance of P2,711.30 was the
amount refundable to the spouses.

Following Eastern Shipping Lines, Inc. v. Court of Appeals,[32] this Court awards interest on the
actual damages to be paid by Dr. Ilao-Oreta at the rate of 6% per annumfrom the time of the filing of
the complaint on May 18, 1999, and at 12% per annum from the finality of this judgment until its
satisfaction.

WHEREFORE, the petition is GRANTED. The decision appealed from is MODIFIED in that

1) the award to respondents-spouses Noel and Eva Marie Ronquillo of actual damages
is REDUCED to P2,288.70, to bear interest at a rate of 6% per annum from the time of the filing of the
complaint on May 18, 1999 and, upon finality of this judgment, at the rate of 12% per annum until
satisfaction; and

2. The award of moral and exemplary damages and attorneys fees is DELETED.

SO ORDERED.

G.R. No. L-30741 January 30, 1930

TOMAS BERNAL and FORTUNATA ENVERSO, plaintiffs-appellants,

vs.
J. V. HOUSE and TACLOBAN ELECTRIC and ICE PLANT, LTD., defendants-appellee.

Kapunan and Kapunan for appellants.

Camus and Delgado for appellees.

MALCOLM, J.:

The parents of the five-year old child, Purificacion Bernal, appeal from a judgment of the Court of
First Instance of Leyte, which denied them P15,000 damages from J.V. House and the Tacloban
Electric & Ice Plant, Ltd., for the death of the child as a consequence of burns alleged to have been
caused by the fault and negligence of the defendants.

The salient facts as found by the trial judge are the following:

On the evening of April 10, 1925, the procession of Holy Friday was held in Tacloban, Leyte.
Fortunata Enverso with her daughter Purificacion Bernal came from another municipality to attend
the religious celebration. After the procession was over, the woman and her daughter, accompanied
by two other persons by the names of Fausto and Elias, passed along a public street named Gran
Capitan. The little girl was allowed to get a short distance in advance of her mother and her friends.
When in front of the offices of the Tacloban Electric & Ice Plant, Ltd., and automobile appeared from
the opposite direction which so frightened the child that she turned to run, with the result that she fell
into the street gutter. At that time there was hot water in this gutter or ditch coming from the Electric
Ice Plant of J.V. House. When the mother and her companions reached the child, they found her
face downward in the hot water. Her clothes were immediately removed and, then covered with a
garment, the girl was taken to the provincial hospital. There she was attended by the resident
physician, Dr. Victoriano A. Benitez. Despite his efforts, the child died that same night at 11:40
o'clock.

Dr. Benitez, who, of course, was in a better position than any one to know the cause of the death,
and who had no reason to depart from the true facts, certified that the cause of death was "Burns,
3rd Degree, whole Body", and that the contributory causes were "Congestion of the Brain and
visceras of the chest & abdomen". The same physician in his general record in the Leyte Hospital for
this patient, under diagnosis in full, stated: "Burned 3rd Degree, whole body". The treatment record
of the attending nurse was much to the same effect.

The defense was that the hot water was permitted to flow down the side of the street Gran Captain
with the knowledge and consent of the authorities; that the cause of death was other than the hot
water; and that in the death the plaintiffs contributed by their own fault and negligence. The trial
judge, however, after examination of the evidence presented by the defendants, failed to sustain
their theory of the case, except as to the last mentioned special defense. We are shown no good
reason for the departing from the conclusion of the trial judge to the effect that the sudden death of
the child Purification Bernal was due principally to the nervous shock and organic calefaction
produced by the extensive burns from the hot water. "The danger from burns is proportional rather to
the extent of surface involved than to the depth of the burn". (Wharton & Stille's Medical
Jurisprudence, vol. 3, p. 263). The same authority continues. "Burns of the first degree, covering
two-thirds of the body surface, are rarely recovered from. . . . Children seem especially susceptible
to the effect of burns." (Pp. 263, 264).

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 doctrines
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.

Having reached the conclusion that liability exists, we next turn to discover who can recover
damages for the obligation, and against whom the action will lie. The plaintiffs are Tomas Bernal and
Fortunata Enverso. The latter was the mother of Purificacion Bernal and the former was the natural
father, who had never legally recognized his child. The daughter lived with the mother, and
presumably was supported by her. Under these facts, recovery should be permitted the mother but
not the father. As to the defendants, they are J.V. House and the Tacloban Electric & Ice Plant, Ltd.,
J.V. House was granted a franchise by Act No. 2700 of the Philippine Legislature approved on
March 9, 1917. He only transferred this franchise formally to the Tacloban Electric & Ice Plant, Ltd.
on March 30, 1926, that is, nearly a year after the death of the child Purificacion Bernal. Under these
facts, J.V. House is solely responsible.

Counsel for appellees point out that there is no satisfactory proof to establish the pecuniary loss.
That is true. But in cases of this character the law presumes a loss because of the impossibility of
exact computation. There is not enough money in the entire world to compensate a mother for the
death of her child. In criminal cases, the rule has been to allow as a matter of course P1,000 as
indemnity to the heirs of the deceased. In the case of Manzanares vs.Moreta ([1918], 38 Phil., 821),
which in many respects is on all fours with the case at bar, the same amount of P1,000 was allowed
the mother of the dead boy eight or nine years of age. The same criterion will have to be followed in
this instance.

The result will, therefore, be to accept the findings of fact made by the trial judge; to set aside the
legal deductions flowing from those facts; to hold that the death of the child Purificacion Bernal was
the result of fault and negligence in permitting hot water to flow through the public streets, there to
endanger the lives of passers-by who were unfortunately enough to fall into it; to rule that the proper
plaintiff is the mother Fortunata Enverso and not the natural father Tomas Bernal; to likewise rule
that the person responsible to the plaintiff is J.V. House and not the entity the Tacloban Electric &
Ice Plant, Ltd.; and finally to adjudge that the amount of recovery, without the tendering of special
proof, should be fixed, as in other cases, at P1,000.
Concordant with the pronouncements just made, the judgment appealed from shall in part be
reversed and in the court of origin another judgment shall issue in favor of Fortunata Enverso and
against J.V. House for the amount of P1,000, and for the costs of both instances.

Street, Villamor, Ostrand, Johns and Villa-Real, JJ., concur.

Johnson, J., dissents.

Separate Opinions

ROMUALDEZ, J., dissenting:

Even taking the finding that the defendant by its negligence helped to bring about the accident which
resulted in the death of the child Purificacion Bernal, as not subject to question now, not being a
matter discussed in this instance, I nevertheless deem the trial court's other finding sufficiently
proved in the record, to the effect that the plaintiff, by negligence, contributed to that most regrettable
result.

With due respect to the majority opinion, I believe the judgment appealed from should be affirmed.

G.R. No. 83491 August 27, 1990

MA-AO SUGAR CENTRAL CO., INC. and GUILLERMO ARANETA, petitioners,

vs.
HON. COURT OF APPEALS and HERMINIA FAMOSO, respondents.

Jalandoni, Herrera, Del Castillo & Associates for petitioners.

Napoleon Corral for private respondent.

CRUZ, J.:

To say the least, the Court views with regret the adamant refusal of petitioner Ma-ao Sugar Central to recompense the private respondent for
the death of Julio Famoso, their main source of support, who was killed in line of duty while in its employ. It is not only a matter of law but
also of compassion on which we are called upon to rule today. We shall state at the outset that on both counts the petition must fail.

On March 22, 1980, Famoso was riding with a co-employee in the caboose or "carbonera" of
Plymouth No. 12, a cargo train of the petitioner, when the locomotive was suddenly derailed. He and
his companion jumped off to escape injury, but the train fell on its side, caught his legs by its wheels
and pinned him down. He was declared dead on the spot. 1

The claims for death and other benefits having been denied by the petitioner, the herein private
respondent filed suit in the Regional Trial Court of Bago City. Judge Marietta Hobilla-Alinio ruled in
her favor but deducted from the total damages awarded 25% thereof for the decedent's contributory
negligence and the total pension of P41,367.60 private respondent and her children would be
receiving from the SSS for the next five years. The dispositive portion of the decision read:
 WHEREFORE, in view of the foregoing facts and circumstances present in this case,
the Court order, as it does hereby order the defendant Ma-ao Sugar Central thru its
Manager Mr. Guillermo Y. Araneta to pay plaintiff the following amount:

P30,000.00 — for the death of plaintiff's husband, the late

Julio Famoso

P30,000.00 — for actual, exemplary and moral damages

P10,000.00 — loss of earnings for twenty (20) years

P3,000.00 — funeral expenses

—————

P73,000.00 — Total Damages

Less: P18,250.00 — 25% for the deceased's contributory

negligence

Less: P41,367.60 — pension plaintiff and her minor children would

—————
be receiving for five (5) years from the SSS

Pl3,382.40

Plus: P3,000.00 — Attorney's fees and cost of this suit

—————

Pl6,382.40 — Total amount payable to the plaintiff.

—————

SO ORDERED.

The widow appealed, claiming that the deductions were illegal. So did the petitioner, but on the
ground that it was not negligent and therefore not liable at all.

In its own decision, the Court of Appeals 2 sustained the rulings of the trial court except as to the
contributory negligence of the deceased and disallowed the deductions protested by the private
respondent. Thus, the respondent court declared:

WHEREFORE, the decision appealed from is MODIFIED by ordering the defendant-

appellant to pay the plaintiff-appellee the following amounts:

P30,000.00, for the death of Julio Famoso

P30,000.00, for actual, exemplary and moral damages

P10,000.00, for loss of earnings for twenty (20) years

P3,000.00, for funeral expenses

P3,000.00, for attorney's fees

————

P76,000.00 Total Amount

 ========

In this petition, the respondent court is faulted for finding the petitioner guilty of negligence
notwithstanding its defense of due diligence under Article 2176 of the Civil Code and for disallowing
the deductions made by the trial court.

Investigation of the accident revealed that the derailment of the locomotive was caused by
protruding rails which had come loose because they were not connected and fixed in place by fish
plates. Fish plates are described as strips of iron 8" to 12" long and 3 1/2" thick which are attached
to the rails by 4 bolts, two on each side, to keep the rails aligned. Although they could be removed
only with special equipment, the fish plates that should have kept the rails aligned could not be found
at the scene of the accident.

There is no question that the maintenance of the rails, for the purpose inter alia of preventing
derailments, was the responsibility of the petitioner, and that this responsibility was not discharged.
According to Jose Treyes, its own witness, who was in charge of the control and supervision of its
train operations, cases of derailment in the milling district were frequent and there were even times
when such derailments were reported every hour. 3 The petitioner should therefore have taken more
prudent steps to prevent such accidents instead of waiting until a life was finally lost because of its
negligence.

The argument that no one had been hurt before because of such derailments is of course not
acceptable. And neither are we impressed by the claim that the brakemen and the conductors were
required to report any defect in the condition of the railways and to fill out prescribed forms for the
purpose. For what is important is that the petitioner should act on these reports and not merely
receive and file them. The fact that it is not easy to detect if the fish plates are missing is no excuse
either. Indeed, it should stress all the more the need for the responsible employees of the petitioner
to make periodic checks and actually go down to the railroad tracks and see if the fish plates were in
place.

It is argued that the locomotive that was derailed was on its way back and that it had passed the
same rails earlier without accident. The suggestion is that the rails were properly aligned then, but
that does not necessarily mean they were still aligned afterwards. It is possible that the fish plates
were loosened and detached during its first trip and the rails were as a result already mis-aligned
during the return trip. But the Court feels that even this was unlikely, for, as earlier noted, the fish
plates were supposed to have been bolted to the rails and could be removed only with special tools.
The fact that the fish plates were not found later at the scene of the mishap may show they were
never there at all to begin with or had been removed long before.

At any rate, the absence of the fish plates – whatever the cause or reason – is by itself alone proof
of the negligence of the petitioner. Res ipsa loquitur. The doctrine was described recently in Layugan
v. Intermediate Appellate Court, 4 thus:

Where the thing which causes injury is shown to be under the management of the
defendant, and the accident is such as in the ordinary course of things does not
happen if those who have the management use proper care, it affords reasonable
evidence, in the absence of an explanation by the defendant, that the accident arose
from want of care.

The petitioner also disclaims liability on the ground of Article 2176 of the Civil Code, contending it
has exercised due diligence in the selection and supervision of its employees. The Court cannot
agree. The record shows it was in fact lax in requiring them to exercise the necessary vigilance in
maintaining the rails in good condition to prevent the derailments that sometimes happened "every
hour." Obviously, merely ordering the brakemen and conductors to fill out prescribed forms reporting
derailments-which reports have not been acted upon as shown by the hourly derailments is-not the
kind of supervision envisioned by the Civil Code.

We also do not see how the decedent can be held guilty of contributory negligence from the mere
fact that he was not at his assigned station when the train was derailed. That might have been a
violation of company rules but could not have directly contributed to his injury, as the petitioner
suggests. It is pure speculation to suppose that he would not have been injured if he had stayed in
the front car rather than at the back and that he had been killed because he chose to ride in the
caboose.
Contributory negligence has been defined as "the act or omission amounting to want of ordinary care
on the part of the person injured which, concurring with the defendant's negligence, is the proximate
cause of the
injury." 5 It has been held that "to hold a person as having contributed to his injuries, it must be
shown that he performed an act that brought about his injuries in disregard of warnings or signs of
an impending danger to health and body." 6 There is no showing that the caboose where Famoso
was riding was a dangerous place and that he recklessly dared to stay there despite warnings or
signs of impending danger.

The last point raised by the petitioner is easily resolved. Citing the case of Floresca v. Philex Mining
Corporation, 7 it argues that the respondent court erred in disauthorizing the deduction from the total
damages awarded the private respondent of the amount of P41,367.60, representing the pension to
be received by the private respondent from the Social Security System for a period of five years. The
argument is that such deduction was quite proper because of Art. 173 of the Labor Code, as
amended. This article provides that any amount received by the heirs of a deceased employee from
the Employees Compensation Commission, whose funds are administered by the SSS, shall be
exclusive of all other amounts that may otherwise be claimed under the Civil Code and other
pertinent laws.

The amount to be paid by the SSS represents the usual pension received by the heirs of a deceased
employee who was a member of the SSS at the time of his death and had regularly contributed his
premiums as required by the System. The pension is the benefit derivable from such contributions. It
does not represent the death benefits payable under the Workmen's Compensation Act to an
employee who dies as a result of a work-connected injury. Indeed, the certification from the
SSS 8 submitted by the petitioner is simply to the effect that:

TO WHOM IT MAY CONCERN:

This is to certify that Mrs. Herminia Vda. de Famoso is a recipient of a monthly

pension from the Social Security System arising from the death of her late husband,
Julio Famoso, an SSS member with SSS No. 07-018173-1.

This certification is issued to Ma-ao Sugar Central for whatever legal purpose it may
serve best.

Issued this 8th day of April 1983 in Bacolod City, Philippines.

GODOFREDO
S. SISON

Regional
Manager

By: (SGD.)
COSME Q.
BERMEO, JR.

Chief, Benefits
Branch

It does not indicate that the pension is to be taken from the funds of the ECC. The certification would
have said so if the pension represented the death benefits accruing to the heirs under the
Workmen's Compensation Act.

This conclusion is supported by the express provision of Art. 173 as amended, which categorically
states that:

Art. 173. Exclusiveness of liability. — Unless otherwise provided, the liability of the
State Insurance Fund under this Title shall be exclusive and in place of all other
liabilities of the employer to the employee, his dependents or anyone otherwise
entitled to receive damages on behalf of the employee or his dependents. The
payment of compensation under this Title shall not bar the recovery of benefits as
provided for in Section 699 of the Revised Administrative Code, Republic Act
 Numbered Eleven hundred sixty-one, as amended, Commonwealth Act Numbered
One hundred eighty-six, as amended, Republic Act Numbered Six hundred ten, as
amended, Republic Act Numbered Forty-eight hundred sixty-four, as amended and
other laws whose benefits are administered by the System or by other agencies of
the government. (Emphasis supplied).

Rep. Act No. 1161, as amended, is the Social Security Law.

As observed by Justice J.B.L. Reyes in the case of Valencia v. Manila Yacht Club, 9 which is still
controlling:

. . . By their nature and purpose, the sickness or disability benefits to which a

member of the System may be entitled under the Social Security law (Rep. Act No.
1161, as amended by Rep. Acts Nos. 1792 and 2658) are not the same as the
compensation that may be claimed against the employer under the Workmen's
Compensation Act or the Civil Code, so that payment to the member employee of
social security benefits would not wipe out or extinguish the employer's liability for the
injury or illness contracted by his employee in the course of or during the
employment. It must be realized that, under the Workmen's Compensation Act (or
the Civil Code, in a proper case), the employer is required to compensate the
employee for the sickness or injury arising in the course of the employment because
the industry is supposed to be responsible therefore; whereas, under the Social
Security Act, payment is being made because the hazard specifically covered by the
membership, and for which the employee had put up his own money, had taken
place. As this Court had said:

. . . To deny payment of social security benefits because the death or

injury or confinement is compensable under the Workmen's
Compensation Act would be to deprive the employees members of
the System of the statutory benefits bought and paid for by them,
since they contributed their money to the general common fund out of
which benefits are paid. In other words, the benefits provided for in
the Workmen's Compensation Act accrues to the employees
concerned due to the hazards involved in their employment and is
made a burden on the employment itself However, social security
benefits are paid to the System's members, by reason of their
membership therein for which they contribute their money to a
general common fund . . . .

It may be added that whereas social security benefits are intended to

provide insurance or protection against the hazards or risks for which
they are established, e.g., disability, sickness, old age or death,
irrespective of whether they arose from or in the course of the
employment or not, the compensation receivable under the
Workmen's Compensation law is in the nature of indemnity for the
injury or damage suffered by the employee or his dependents on
account of the employment. (Rural Transit Employees Asso. vs.
Bachrach Trans. Co., 21 SCRA 1263 [19671])

And according to Justice Jesus G. Barrera in Benguet Consolidated, Inc. v. Social Security
System:" 10

The philosophy underlying the Workmen's Compensation Act is to make the payment
of the benefits provided for therein as a responsibility of the industry, on the ground
that it is industry which should bear the resulting death or injury to employees
engaged in the said industry. On the other hand, social security sickness benefits are
not paid as a burden on the industry, but are paid to the members of the System as a
matter of right, whenever the hazards provided for in the law occurs. To deny
payment of social security benefits because the death or injury or confinement is
compensable under the Workmen's Compensation Act would be to deprive the
employees-members of the System of the statutory benefits bought and paid for by
them, since they contribute their money to the general common fund out of which
benefits are paid. In other words, the benefits provided for in the Workmen's
Compensation Act accrues to the employees concerned, due to the hazards involved
 in their employment and is made a burden on the employment itself However, social
security benefits are paid to the System's members, by reason of their membership
therein for which they contributed their money to a general common fund.

Famoso's widow and nine minor children have since his death sought to recover the just
recompense they need for their support. Instead of lending a sympathetic hand, the petitioner has
sought to frustrate their efforts and has even come to this Court to seek our assistance in defeating
their claim. That relief-and we are happy to say this must be withheld.

WHEREFORE, the appealed decision is AFFIRMED in toto. The petition is DENIED, with costs
against the petitioner.

SO ORDERED.

G.R. No. L-35283 November 5, 1932

JULIAN DEL ROSARIO, plaintiff-appellant,

vs.
MANILA ELECTRIC COMPANY, defendant-appellee.

Vicente Sotto for appellant.

Ross, Lawrence & Selph and Antonio T. Carrascoso, Jr. for appellee.

STREET, J.:

This action was instituted by Julian del Rosario for the purpose of recovering damages from the
Manila Electric Company for the death of his son, Alberto del Rosario, resulting from a shock from a
wire used by the defendant for the transmission of electricity. The accident occurred on Dimas-Alang
Street, in the municipality of Caloocan, Province of Rizal. Damages are claimed in the complaint in
the amount of P30,000. Upon hearing the cause the trial court absolved the defendant, and the
plaintiff appealed.

Shortly after 2 o'clock on the afternoon of August 4, 1930, trouble developed in a wire used by the
defendant on Dimas-Alang Street for the purpose of conducting electricity used in lighting the City of
Manila and its suburbs. Jose Noguera, who had charge of a tienda nearby, first noticed that the wire
was burning and its connections smoking. In a short while the wire parted and one of the ends of the
wire fell to the ground among some shrubbery close to the way. As soon as Noguera took
cognizance of the trouble, he stepped into a garage which was located nearby and asked Jose
Soco, the timekeeper, to telephone the Malabon station of the Manila Electric Company that an
electrical wire was burning at that place. Soco transmitted the message at 2.25 p.m. and received
answer from the station to the effect that they would send an inspector. From the testimony of the
two witnesses mentioned we are justified in the conclusion that information to the effect that the
electric wire at the point mentioned had developed trouble was received by the company's servant at
the time stated. At the time that message was sent the wire had not yet parted, but from the
testimony of Demetrio Bingao, one of the witnesses for the defense, it is clear that the end of the
wire was on the ground shortly after 3 p.m.

At 4 p. m. the neighborhood school was dismissed and the children went home. Among these was
Alberto del Rosario, of the age of 9 years, who was a few paces ahead of two other boys, all
members of the second grade in the public school. These other two boys were Jose Salvador, of the
age of 8, and Saturnino Endrina, of the age of 10. As the three neared the place where the wire was
down, Saturnino made a motion as if it touch it. His companion, Jose Salvador, happened to be the
son of an electrician and his father had cautioned him never to touch a broken electrical wire, as it
might have a current. Jose therefore stopped Saturnino, telling him that the wire might be charged.
Saturnino yielded to this admonition and desisted from his design, but Alberto del Rosario, who was
somewhat ahead, said, I have for some time been in the habit of touching wires ("Yo desde hace
tiempo cojo alambres"). Jose Salvador rejoined that he should into touch wires as they carry a
current, but Alberto, no doubt feeling that he was challenged in the matter, put out his index finger
and touch the wire. He immediately fell face downwards, exclaiming "Ay! madre". The end of the
wire remained in contact with his body which fell near the post. A crowd soon collected, and some
one cut the wire and disengaged the body. Upon being taken to St. Luke's Hospital the child was
pronounced dead.

The wire was an ordinary number 6 triple braid weather proof wire, such as is commonly used by the
defendant company for the purpose of conducting electricity for lighting. The wire was cased in the
usual covering, but this had been burned off for some distance from the point where the wire parted.
The engineer of the company says that it was customary for the company to make a special
inspection of these wires at least once in six months, and that all of the company's inspectors were
required in their daily rounds to keep a lookout for trouble of this kind. There is nothing in the record
indicating any particular cause for the parting of the wire.
lawphil.net

We are of the opinion that the presumption of negligence on the part of the company from the
breakage of this wire has not been overcome, and the defendant is in our opinion responsible for the
accident. Furthermore, when notice was received at the Malabon station at 2.25 p. m., somebody
should have been dispatched to the scene of the trouble at once, or other measures taken to guard
the point of danger; but more than an hour and a half passed before anyone representing the
company appeared on the scene, and in the meantime this child had been claimed as a victim.

It is doubtful whether contributory negligence can properly be imputed to the deceased, owing to his
immature years and the natural curiosity which a child would feel to do something out of the
ordinary, and the mere fact that the deceased ignored the caution of a companion of the age of 8
years does not, in our opinion, alter the case. But even supposing that contributory negligence could
in some measure be properly imputed to the deceased, — a proposition upon which the members of
the court do not all agree, — yet such negligence would not be wholly fatal to the right of action in
this case, not having been the determining cause of the accident. (Rakes vs. Atlantic, Gulf and
Pacific Co., 7 Phil., 359.)

With respect to the amount of damages recoverable the majority of the members of this court are of
the opinion that the plaintiff is entitled to recover P250 for expenses incurred in connection with the
death and burial of the boy. For the rest, in accordance with the precedents cited in Astudillo vs.
Manila Electric Company (55 Phil., 427), the majority of the court are of the opinion that the plaintiff
should recover the sum of P1,000 as general damages for loss of service.

The judgment appealed from is therefore reversed and the plaintiff will recover of the defendant the
sum of P1,250, with costs of both instances. So ordered.

Avanceña, C.J., Malcolm, Ostrand, Villa-Real, Vickers, Imperial and Butte, JJ., concur.
Separate Opinions

ABAD SANTOS, J., concurring in part and dissenting in part:

I concur in so far as the defendant company is held liable for the death of the plaintiff's son, but I
dissent in so far as the decision allows the plaintiff to recover of the defendant the sum of P1,250
only.

It is well settled in this jurisdiction that an action will lie to recover damages for death caused by the
wrongful act. (Manzanares vs. Moreta, 38 Phil., 821.) The question, however, arises as to the
amount of damages recoverable in this case. In criminal cases, this court has adopted the rule of
allowing, as a matter of course, the sum of P1,000 as indemnity to the heirs of the deceased.
Following that rule, the court has allowed the plaintiff in this case to recover the sum of P1,000 as
general damages for loss of service. Whatever may be the reasons for the rule followed in criminal
cases, I am of the opinion that those reasons do not obtain in fixing the amount of the damages
recoverable in the present case. The indemnity allowed in criminal case is merely incidental to the
main object sought, which is the punishment of the guilty party. In a civil action, the principal object is
the recovery of damages for wrongful death; and where, as in this case, the defendant is a
corporation, not subject to criminal prosecution for the act complained of, the question assumes a
vastly different aspect. Both in reason and in justice, there should be a distinction between the civil
liability of an ordinary person who, by wrongful act, has caused the death of another; and the civil
liability of a corporation, organized primarily for profit, which has caused the death of a person by
failure to exercise due care in the prosecution of its business. The liability of such a corporation for
damages must be regarded as a part of the risks which it assumes when it undertakes to promote its
own business; and just as it is entitled to earn adequate profits from its business, so it should be
made adequately to compensate those who have suffered damage by its negligence.

Considering the circumstances of this case, I am of the opinion that the plaintiff should recover the
sum of P2,250 as damages.

[G.R. No. 160709. February 23, 2005]

NELEN LAMBERT, assisted by her husband, GLENROY ALOYSUIS LAMBERT, petitioners, vs.
HEIRS OF RAY CASTILLON, Represented by MARILOU T. CASTILLON and SERGIO
LABANG, respondents.

DECISION
YNARES-SANTIAGO, J.:

This is a petition for review under Rule 45 of the Rules of Court seeking the reversal of the
decision[1] of the Court of Appeals dated October 21, 2002 in CA-G.R. CV No. 43734, which affirmed
the June 29, 1993 decision of the Regional Trial Court of Iligan City, Branch 06, in Civil Case No. 06-
2086.
In the evening of January 13, 1991, Ray Castillon visited the house of his brother Joel Castillon
at Tambo, Iligan City and borrowed his motorcycle. He then invited his friend, Sergio Labang, to roam
around Iligan City. Ray drove the motorcycle with Sergio as the backrider.[2]
At around past 10:00 p.m., after eating supper at Honas Restaurant and imbibing a bottle of beer,
they traversed the highway towards Tambo at a high speed. Upon reaching Brgy. Sto. Rosario, they
figured in an accident with a Tamaraw jeepney, owned by petitioner Nelen Lambert and driven by
Reynaldo Gamot, which was traveling on the same direction but made a sudden left turn. The incident
resulted in the instantaneous death of Ray and injuries to Sergio.[3]
 Respondents, the heirs of Ray Castillon, thus filed an action for damages with prayer for
preliminary attachment against the petitioner Nelen Lambert. The complaint was docketed as Civil
Case No. 06-2086 of the RTC of Iligan City, Branch 06.[4] The complaint was subsequently amended
to include the claim by Joel Castillon for the damages caused to the motorcycle.[5]
On June 29, 1993, after a full-blown trial, the court a quo rendered a decision in favor of herein
private respondents but reduced petitioners liability by 20% in view of the contributory negligence of
Ray. The dispositive portion of the decision reads:

WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendants,
directing the latter, jointly and severally, to pay the former the following:

1. The sum of SIX HUNDRED THIRTY-THREE THOUSAND AND NINETY-ONE (P633,091)

PESOS, representing loss of support, death indemnity, funeral and related expenses, moral
damages and attorneys fees and

2. Costs of the suit.

For lack of merit, defendants counterclaim is dismissed.

On the claim of Joel Castillon, the evidence shows that he is not the real owner of the motorcycle.
He is not the real party in interest. Accordingly, his complaint is dismissed.

On the third-party complaint, the third-party defendant Zenith Insurance Corporation is ordered to
pay the sum of P16,500.00 directly to the plaintiffs. This sum, if paid, should be deducted from the
amount adjudged in par. 1 above.

SO ORDERED.[6]

The Court of Appeals affirmed the decision of the trial court.[7] Hence the present petition, based
on the following arguments:

1. The Honorable Court of Appeals committed serious error of law and grave abuse of discretion
when it did not apply the ruling of this Honorable Court in the case of Philippine Rabbit Bus Lines vs.
The Honorable Intermediate Appellate Court and Casiano Pascua, Et. Al., [189 SCRA 168, August
30, 1990], as reiterated recently in the case of Edna A. Raynera vs. Freddie Hiceta and Jimmy
Orpilla [306 SCRA 102, April 21, 1999], in which this Honorable Court enunciated that drivers of
vehicles who bump the rear of another vehicle are presumed to be the cause of the accident.

2. The erroneous conclusion of the Honorable Trial Court as affirmed by the Honorable Court of
Appeals that the act of tailgating, at high speed, constitutes contributory negligence only, is contrary
to the rulings of this Honorable Court in the case of Sanitary Steam Laundry, INC. vs. The Honorable
Court of Appeals [300 SCRA 20, December 10, 1998] and the case of Edna A. Raynera vs. Freddie
Hiceta and Jimmy Orpilla [306 SCRA 102, April 21, 1999].

3. The Honorable Court of Appeals grossly erred in its conclusion that petitioners driver was
negligent, without taking into consideration the presumptions enunciated by this Honorable Court in
the case of Philippine Rabbit Bus Lines vs. The Honorable Intermediate Appellate Court and
Casiano Pascua, Et. Al., [189 SCRA 168, August 30, 1990], and the case of Edna A. Raynera vs.
Freddie Hiceta and Jimmy Orpilla [306 SCRA 102, April 21, 1999].

4. As an alternative relief, petitioner most respectfully assigns as error the Honorable Trial Courts
computation as to the loss of earning capacity of Ray Castillon. Such computation is contrary to the
formula enunciated by this Honorable Court in the case of Villa Rey Transit, Inc. vs. The Honorable
Court of Appeals [31 SCRA 511 (1970)].

5. The Honorable Trial Courts award of moral damages is contrary to the pronunciation of this
Honorable Court in the case of Ace Haulers Corporation vs. The Honorable Court of Appeals and
Abiva [338 SCRA 572, August 23, 2000], wherein the award of moral damages was disallowed
absent any evidence of bad faith or ill-motive.[8]

Petitioner insists that the negligence of Ray Castillon was the proximate cause of his unfortunate
death and therefore she is not liable for damages.
 In petitions for review on certiorari under Rule 45 of the Rules of Court, only questions of law may
be put into issue. Questions of fact cannot be entertained. The finding of negligence by the Court of
Appeals is a question of fact which we cannot pass upon as it would entail going into factual matters
on which the finding of negligence was based. As a rule, factual findings of the trial court, especially
those affirmed by the Court of Appeals, are conclusive on this Court when supported by the evidence
on record.[9]
Our examination of the records shows that both the trial court and the Court of Appeals carefully
considered the factual backdrop of the case. No cogent reason exists for disturbing the following
findings of the trial court, which the Court of Appeals affirmed:

To the mind of the court, this is exactly what happened. When Reynaldo Gamot was approaching
the side road, he slightly veered to the right for his allowance. Ray Castillon, who was following
closely behind, instinctively veered to the left but it was also the moment when Reynaldo Gamot
sharply turned to the left towards the side road. At this juncture both were moving obliquely to the
left. Thus the motorcycle sliced into the side of the jeepney throwing the driver forward so that his
forehead hit the angle bar on the left front door of the jeepney even as the motorcycle shot forward
and the jeepney veered back to the right and sped away.

The testimonies of the witnesses Frias, Opada, Labang and Sumile show that he did not stop even
for a second, or less before making the left turn. On the contrary, he slightly veered to the right
immediately followed by the abrupt and sudden turn to the left in order to enter the side road. It is
apparent that Reynaldo Gamot did not keep a lookout for vehicles or persons following him before
proceeding to turn left. He failed to take into account the possibility that others may be following him.
He did not employ the necessary precaution to see to it that the road was clear.[10]

Clearly, the abrupt and sudden left turn by Reynaldo, without first establishing his right of way,
was the proximate cause of the mishap which claimed the life of Ray and injured Sergio. Proximate
cause is defined as that which, in the natural and continuous sequence, unbroken by any efficient,
intervening cause, produces the injury, and without which the result would not have occurred.[11] The
cause of the collision is traceable to the negligent act of Reynaldo for, as the trial court correctly
held, without that left turn executed with no precaution, the mishap in all probability would not have
happened.[12]
Petitioner misunderstood our ruling in Raynera v. Hiceta.[13] That case also involved a motorcycle
crashing into the left rear portion of another vehicle, and we declared therein that drivers of vehicles
who bump the rear of another vehicle are presumed to be the cause of the accident, unless
contradicted by other evidence.[14] In Raynera, the death of the victim was solely attributable to his
own negligence in bumping the rear of the trailer truck which was traveling ahead of him at 20 to 30
kilometers per hour. Raynera, being the driver of the rear vehicle, had full control of the situation as
he was in a position to observe the vehicle in front of him. The trailer truck therein did not make a
sudden left turn as in the case at bar. Thus, the theory that drivers of vehicles who bump the rear of
another vehicle are presumed to be the cause of the accident is, as in this case, sufficiently
contradicted by evidence, which is the sudden left turn made by Reynaldo which proximately caused
the collision.
While we agree with the trial court that Ray was likewise guilty of contributory negligence as
defined under Article 2179 of the Civil Code, we find it equitable to increase the ratio of apportionment
of damages on account of the victims negligence.
Article 2179 reads as follows:

When the plaintiffs negligence was the immediate and proximate cause of his injury, he cannot
recover damages. But if his negligence was only contributory, the immediate and proximate cause of
the injury being the defendants lack of due care, the plaintiff may recover damages, but the courts
shall mitigate the damages to be awarded.

The underlying precept on contributory negligence is that a plaintiff who is partly responsible for
his own injury should not be entitled to recover damages in full but must bear the consequences of his
own negligence. The defendant must thus be held liable only for the damages actually caused by his
negligence.[15] The determination of the mitigation of the defendants liability varies depending on the
circumstances of each case. The Court had sustained a mitigation of 50% in Rakes v. AG &
P;[16] 20% in Phoenix Construction, Inc. v. Intermediate Appellate Court[17] and LBC Air Cargo, Inc. v.
Court of Appeals;[18] and 40% in Bank of the Philippine Islands v. Court of Appeals[19] and Philippine
Bank of Commerce v. Court of Appeals.[20]
 In the case at bar, it was established that Ray, at the time of the mishap: (1) was driving the
motorcycle at a high speed; (2) was tailgating the Tamaraw jeepney; (3) has imbibed one or two bottles
of beer; and (4) was not wearing a protective helmet.[21] These circumstances, although not
constituting the proximate cause of his demise and injury to Sergio, contributed to the same result.
The contribution of these circumstances are all considered and determined in terms of percentages of
the total cause. Hence, pursuant to Rakes v. AG & P, the heirs of Ray Castillon shall recover damages
only up to 50% of the award. In other words, 50% of the damage shall be borne by the private
respondents; the remaining 50% shall be paid by the petitioner.
Anent the award of loss of earning capacity, we agree with the petitioner that the trial court erred
in the computation of the net earnings.
In considering the earning capacity of the victim as an element of damages, the following factors
are considered in determining the compensable amount of lost earnings: (1) the number of years for
which the victim would otherwise have lived; and (2) the rate of loss sustained by the heirs of the
deceased. Jurisprudence provides that the first factor, i.e., life expectancy, is computed by applying
the formula (2/3 x [80 - age at death]) adopted in the American Expectancy Table of Mortality or the
Actuarial Combined Experience Table of Mortality. As to the second factor, it is computed by
multiplying the life expectancy by the net earnings of the deceased, i.e., the total earnings less
expenses necessary in the creation of such earnings or income and less living and other incidental
expenses. The net earning is ordinarily computed at fifty percent (50%) of the gross
earnings. Thus, the formula used by this Court in computing loss of earning capacity is: Net Earning
Capacity = [2/3 x (80 age at time of death) x (gross annual income reasonable and necessary
living expenses)].[22]
It was established that Ray was 35 at the time of his death and was earning a gross annual
income of P31,876.00 as a driver at the Mindanao State University. In arriving at the net earnings, the
trial court deducted from the gross annual income the annual living expenses in the amount of
P9,672.00, broken down as follows: P20.00 a day for travel or P520.00 per month; P60.00 a month
for cigarettes; P26.00 for drinks; and other personal expenses like clothing, toiletries, etc. estimated
at P200.00 per month.[23] The amount of P9,672.00, however, appears unrealistic, and constitutes only
30.34% of the gross earnings. It even includes expenses for cigarettes which by no means can be
classified as a necessary expense. Using the cited formula with the net earnings computed at 50% of
the gross earnings, a detailed computation is as follows:

NET EARNING = LIFE EXPECTANCY [2/3 x GROSS ANNUAL - LIVING EXPENSES

CAPACITY (X) (80-age at the time of death)] INCOME (GAI) (50% of GAI)
X = [2/3 (80-35)] x [P31,876.00
-50% x P31,876.00]
X = [2/3 (45)] x [P31,876.00 - P15,938.00]
X = 30 x 15,938.00
X = P478,140.00
We sustain the awards of P33,215.00 as funeral and burial expenses being supported with
receipts;[24] P50,000.00 as death indemnity; and P50,000.00 as moral damages. However, the award
of P20,000.00 as attorneys fees must be deleted for lack of basis.
The indemnity for death caused by a quasi-delict used to be pegged at P3,000.00,[25] based on
Article 2206 of the Civil Code, which reads:

ART. 2206. The amount of damages for death caused by a crime or quasi-delict shall be at
least three thousand pesos, even though there may have been mitigating circumstances. In
addition:

(1) The defendant shall be liable for the loss of the earning capacity of the deceased, and the
indemnity shall be paid to the heirs of the latter; such indemnity shall in every case be assessed and
awarded by the court, unless the deceased on account of permanent physical disability not caused
by the defendant, had no earning capacity at the time of his death;
(2) If the deceased was obliged to give support according to the provisions of article 291, the
recipient who is not an heir called to the decedents inheritance by the law of testate or intestate
succession, may demand support from the person causing the death, for a period of not exceeding
five years, the exact duration to be fixed by the court;

(3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased may
demand moral damages for mental anguish by reason of the death of the deceased.

However, the amount has been gradually increased through the years. At present, prevailing
jurisprudence fixes the amount at P50,000.00.[26]
Paragraph 3 of the same provision also serves as the basis for the award of moral damages
in quasi-delict. The reason for the grant of moral damages has been explained, thus:

the award of moral damages is aimed at a restoration, within the limits possible, of the spiritual
status quo ante; and therefore, it must be proportionate to the suffering inflicted. The intensity of the
pain experienced by the relatives of the victim is proportionate to the intensity of affection for him
and bears no relation whatsoever with the wealth or means of the offender.[27]

While it is true that there can be no exact or uniform rule for measuring the value of human life
and the measure of damages cannot be arrived at by a precise mathematical calculation,[28] we hold
that the trial courts award of moral damages of P50,000.00 for the death of Ray Castillon is in accord
with the prevailing jurisprudence.[29]
With respect to attorneys fees, it is well settled that the same should not be awarded in the
absence of stipulation except under the instances enumerated in Article 2208 of the Civil Code. The
trial court did not indicate the basis for its award. As we have held in Rizal Surety and Insurance
Company v. Court of Appeals:[30]

Article 2208 of the Civil Code allows attorneys fess to be awarded by a court when its claimant is
compelled to litigate with third persons or to incur expenses to protect his interest by reason of an
unjustified act or omission of the party from whom it is sought. While judicial discretion is here
extant, an award thereof demands, nevertheless, a factual, legal or equitable justification. The matter
cannot and should not be left to speculation and conjecture (Mirasol vs. De la Cruz, 84 SCRA 337;
Stronghold Insurance Company, Inc. vs. Court of Appeals, 173 SCRA 619).

In the case at bench, the records do not show enough basis for sustaining the award for attorneys
fees and to adjudge its payment by petitioner

Likewise, this Court held in Stronghold Insurance Company, Inc. vs. Court of Appeals that:

In Abrogar v. Intermediate Appellate Court [G.R. No. 67970, January 15, 1988, 157 SCRA 57] the
Court had occasion to state that [t]he reason for the award of attorneys fees must be stated in the
text of the courts decision, otherwise, if it is stated only in the dispositive portion of the decision, the
same must be disallowed on appeal.

WHEREFORE, in view of the foregoing, the petition is DENIED. The assailed decision of the
Court of Appeals is AFFIRMED with the MODIFICATION that the net earnings is computed at 50% of
the gross annual income to conform with the prevailing jurisprudence, and the FURTHER
MODIFICATION that petitioner NELEN LAMBERT is ordered to pay the heirs of Ray Castillon only
50% of the damages herein awarded, except attorneys fees which is DELETED for lack of basis.
SO ORDERED.