RUEL TUANO Y HERNANDEZ vs. PEOPLE OF THE
PHILIPPINES e) Quasi-delicts
Facts: RTC convicted accused for violation of RA 9165
for having in his possession illegal drugs. On appeal, the
CA affirmed the ruling of the RTC. Accused moved for
reconsideration , but the Motion was denied by the CA.
SC sustained the conviction of accused, thus affirming
the ruling of the Court of Appeals. Accused moved for
reconsideration, questioning this Court's unsigned
Resolution and praying for his acquittal.
On June 27, 2016, this Court issued the Resolution 17
reconsidering its June 23, 2014 unsigned Resolution.
This Court acquitted accused for failure of the
prosecution to prove his guilt beyond reasonable doubt.
On July 22, 2016, this Court received from the Director
General of the Bureau of Corrections a letter 20 dated
July 15, 2016 informing this Court that accused died on
March 1, 2015, prior to the issuance of this Court's June
27, 2016 Resolution. A certified machine copy of
accused's Death Certificate was attached to the letter.
Issue: W/N the criminal liability and the civil liability are
totally extinguished upon the death of the accused.
Ruling: Yes. Death of the accused pending appeal of his
conviction extinguishes his criminal liability as well as the
civil liability ex delicto.
The death of accused extinguishes his criminal
liability. Article 89, paragraph 1 of the Revised Penal
Code provides:
Art. 89. How criminal liability is totally extinguished.
— Criminal liability is totally extinguished:
1. By the death of the convict, as to the personal
penalties; and as to pecuniary penalties, liability
therefore is extinguished only when the death of the
offender occurs before final judgment[.]
Likewise, the civil liability of the accused arising
from his criminal liability is extinguished upon his
death. In People v. Bayotas:
1. Death of the accused pending appeal of his
conviction extinguishes his criminal liability as well as the
civil liability based solely thereon. As opined by Justice
Regalado, in this regard, "the death of the accused prior
to final judgment terminates his criminal liability and only
the civil liability directly arising from and based solely on
the offense committed, i.e., civil liability ex delicto in
senso strictiore."
2. Corollarily, the claim for civil liability survives
notwithstanding the death of accused, if the same may
also be predicated on a source of obligation other than
delict. Article 1157 of the Civil Code enumerates these
other sources of obligation from which the civil liability
may arise as a result of the same act or omission:
a) Law
b) Contracts
c) Quasi-contracts
d) . . . .
3. Where the civil liability survives, as explained in
Number 2 above, an action for recovery therefor may
be pursued but only by way of filing a separate civil
action and subject to Section 1, Rule 111 of the 1985
Rules on Criminal Procedure as amended. This
separate civil action may be enforced either against
the executor/administrator or the estate of the
accused, depending on the source of obligation
which the same is based as explained above.
(Emphasis supplied, citations omitted)
In People v. Paras, this Court rendered judgment in
a criminal case without being informed earlier that the
accused had already passed away. Premised on the
principle that the death of the accused extinguishes his
criminal liability, the Court set aside its decision and
dismissed the criminal case.
Considering accused's death pending appeal
extinguishes his criminal liability and civil liability ex
delicto, the criminal action must be dismissed since there
is no longer a defendant to stand as the accused.
Therefore, when accused died on March 1, 2015
during the pendency of his appeal and prior to this
Court's Resolution dated June 27, 2016, his criminal
liability has already been extinguished. From that point
on, the criminal action had no defendant upon which the
action is based. This Court's June 27, 2016 Resolution
had become ineffectual and must be set aside. Likewise,
the criminal action must be dismissed.
CHIQUITA BRANDS vs. GEORGE E. OMELIO
Facts: On August 1993, thousands of banana plantation
workers instituted a class suit in the US for damages
against 11 foreign corporations, Chiquita Brands being
one of them. The claimants claimed to have been
exposed to dibromochloropropane (DBCP) while working
in the plantation. As a result, these workers suffered
serious and permanent injuries to their reproductive
system.
However, the US courts dismissed the complaint based
on forum non conveniens and directed the claimants to
file actions in their respective home countries.
On May 1996, the claimants filed a complaint on the
same 11 corporations in the RTC of Panabo City, Davao.
Before the pre-trial, the petitioner and the claimants
entered into a compromise agreement. The agreement
provided, among others, that the settlement amount
should be deposited in an escrow account, which should
be administered by a mediator.
The RTC of Panabo approved the compromise
agreement and dismissed the petition of the claimant.

After dismissal of the civil case, the claimants moved for
the execution of the compromise agreement.
The petitioner opposed the execution on the ground of
mootness; they argued that they had already complied
with their obligation by depositing the settlement amount
into an escrow account.
However, RTC of Panabo granted the motion for
execution because there was no proof that the settlement
amounts had been withdrawn and delivered to each
individual claimant.
On May 2003, petitioner filed a motion to suspend the
execution and be allowed to present evidence on their
behalf.
During the hearing of the case, the claimants picketed
outside the court room and accused the RTC judge of
Panabo as a corrupt official who delayed the execution.
Petitioner requested for change of venue and was
granted.
The case was transferred and now under the jurisdiction
of the RTC of Davao city.
On July 2009, the RTC of Davao city through Judge
Omelio ordered the execution of the compromise
agreement.
Aggrieved by the RTC’s decision, the petitioner filed for a
petition for certiorari even without a prior appeal to the
CA.
Petitioner allege that the respondent Judge committed
grave abuse of discretion in issuing the writ of execution
and ordering them to directly pay each of the claimant
contrary to the compromise agreement between
petitioner and claimant.
Issue: W/N the respondent Judge committed grave
abuse of discretion in issuing the writ of execution and
ordering them to directly pay each of the claimant.
Ruling: Yes.
In any case, a compromise validly entered into has the
authority and effect of res judicata as between the
parties. Moreover, a judicial compromise is regarded as
a "determination of the controversy" between the parties
and "has the force and effect of final judgment." In other
words, it is both a contract and "a judgment on the
merits." It may neither be disturbed nor set aside except
in cases where there is forgery or when either of the
parties' consent has been vitiated.
The doctrine on immutability of judgments applies to
compromise agreements approved by the courts in the
same manner that it applies to judgments that have been
rendered on the basis of a full-blown trial.
In this case, the Writ of Execution ordering the collection
of the settlement amount directly from petitioners and its
co-defendants in the civil case is void.
Under the judicially approved Compromise Agreement,
petitioners are obliged to deposit the settlement amount
in escrow within 10 business days after they receive a
signed Compromise Agreement from the counsel of the
claimants.
There was nothing in the Compromise Agreement that
required petitioners to ensure the distribution of the
settlement amount to each claimant. Petitioners'
obligation under the Compromise Agreement was limited
to depositing the settlement amount in escrow. On the
other hand, the actual distribution of the settlement
amounts was delegated to the chosen mediator, Mr.
Mills. To require proof that the settlement amounts have
been withdrawn and delivered to each claimant would
enlarge the obligation of petitioners under the
Compromise Agreement.
TANKEH vs. DEVELOPMENT BANK OF THE
PHILIPPINES
Facts:
Sometime in 1980, Alejandro was approached by his
brother, Ruperto (president of SSL) informing him that
the latter was operating a new shipping line business and
offered him 1000 shares worth P1M to be a director of
the business. Alejandro accepted the offer based on
the promised that he be part of the admin staff so that he
can oversee the operation of the business plus his son,
who is a practicing lawyer would be given a position in
the company.
A loan was applied from DBP for financing of an
ocean-going vessel with the conditions that the first
mortgage is obtained over the vessel, the future earnings
of the mortgage including proceeds should be assigned
to DBP and DBP is assigned to no less than 67% of the
voting shares of the company. Alejandro signed the
Assignment of Shares of Stock with Voting Rights and
the promissory note making him liable jointly and
severally for the amount of the loan. After the vessel is
acquired, a deed of assignment was executed in favor of
DBP. On 1983, upon realizing that he was only being
made a tool to realize the purposes of Ruperto, Alejandro
officially informed the company by means of letter that he
has severed his connection with the company and asking
the board to pass a resolution to released him from his
liabilities with DBP and notify the latter about this.
On 1986, the account of SSL in the DBP were transferred
to Asset Privatization Trust by virtue of Presidential
Proclamation No. 50. The asset including loan in favor
of DBP were ordered to be transferred to the national
government. Despite the assignment and cash equity
contribution of SSL to cover part of the acquisition cost of
the vessel and the like, the promissory note still
subsisted. Hence, Alejandro is still bound as a debtor
because of the promissory note.
Alejandro’s contention: The promisorry note must be
declared as null and void and he be absolved from any
liability. Ruperto exercised deceit and fraud in causing
him to bind himself jointly and severally to pay DBP the
amount of the mortgage loan. All the money
supposedly invested by him were put by Ruperto, hence
he had never invested any money. He was invited to
attend the board meeting only once and he was never
compensated by SSL for being called director and
stockholder. None of the promises of Ruperto was
complied with.
Issue:
1. WON the fraud perpetrated by Ruperto is serious
enough to warrant annulment of the contract?
2. WON Ruperto is liable for moral and exemplary
damages
Ruling:
Issue 1:
No. Only incidental fraud exists in this case. Therefore it
is not sufficient to warrant the annulment of the contracts
petitioner entered into but respondent Ruperto is liable to
pay him damages. The distinction between fraud as a
ground for rendering a contract voidable or as basis for
an award of damages is provided in Article 1344: In
order that fraud may make a contract voidable, it should
be serious and should not have been employed by both
contracting parties. Incidental fraud only obliges the
person employing it to pay damages.
Given the standing and stature of the petitioner, he was
in a position to ascertain more information about the
contract. The following facts show that petitioner was
fully aware of the magnitude of his undertaking: First,
petitioner was fully aware of the financial reverses that
SSL had been undergoing, and he took great pains to
release himself from the obligation. Second, his
background as a doctor, as a bank organizer, and as a
businessman with experience in the textile business and
real estate should have apprised him of the irregularity in
the contract that he would be undertaking. This meant
that at the time petitioner gave his consent to become a
part of the corporation, he had been fully aware of the
circumstances and the risks of his participation. Intent is
determined by the acts. Finally, the records showed
that petitioner had been fully aware of the effect of his
signing the promissory note. The bare assertion that he
was not privy to the records cannot counteract the fact
that petitioner himself had admitted that after he had
severed ties with his brother, he had written a letter
seeking to reach an amicable settlement with respondent
Rupert. Petitioner’s actions defied his claim of a complete
lack of awareness regarding the circumstances and the
contract he had been entering.
The required standard of proof – clear and convincing
evidence – was not met. There was no dolo causante or
fraud used to obtain the petitioner’s consent to enter into
the contract. Petitioner had the opportunity to become
aware of the facts that attended the signing of the
promissory note. He even admitted that he has a
lawyer-son who the petitioner had hoped would assist
him in the administration of Sterling Shipping Lines, Inc.
The totality of the facts on record belies petitioner’s claim
that fraud was used to obtain his consent to the contract
given his personal circumstances and the applicable law.
However, in refusing to allow petitioner to participate in
the management of the business, respondent Ruperto
Tankeh was liable for the commission of incidental fraud.
In Geraldez, this Court defined incidental fraud as "those
which are not serious in character and without which the
other party would still have entered into the contract.
Although there was no fraud that had been undertaken to
obtain petitioner’s consent, there was fraud in the
performance of the contract.
Issue 2: Yes.
The Obligation to Pay Damages (TORTS TOPIC)
As such, respondent Ruperto Tankeh is liable to his
older brother, petitioner Alejandro, for damages. The
liability of Ruperto is based on the law, under Article
1344, which provides that the commission of incidental
fraud obliges the person employing it to pay damages.
In addition to this obligation, as the result of the contract
between petitioner and respondents, there was also a
patent abuse of right on the part of Ruperto Tankeh. This
abuse of right is included in Articles 19 and 21 of the Civil
Code which provide that:
Article 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.
Article 21. Any person who wilfully causes loss or injury
to another in manner that is contrary to morals, good
customs or public policy shall compensate the latter for
the damage.
Respondent Ruperto V. Tankeh abused his right to
pursue undertakings in the interest of his business
operations. This is because of his failure to at least act in
good faith and be transparent with petitioner regarding
Sterling Shipping Lines, Inc.'s daily operations.
First, petitioner was informed by Development Bank of
the Philippines that it would still pursue his liability for the
payment of the promissory note. This would not have
happened if petitioner had allowed himself to be fully
apprised of Sterling Shipping Lines, Inc.'s financial straits
and if he felt that he could still participate in the
company's operations. There is no evidence that
respondent Ruperto V. Tankeh showed an earnest effort
to at least allow the possibility of making petitioner part of
the administration a reality. The respondent was the
brother of the petitioner and was also the primary party
that compelled petitioner Alejandro Tankeh to be
solidarily bound to the promissory note. Ruperto V.
Tankeh should have done his best to ensure that he had
exerted the diligence to comply with the obligations
attendant to the participation of petitioner.
Second, respondent Ruperto V. Tankeh's refusal to
enter into an agreement or settlement with petitioner after
the latter's discovery of the sale of the M/V Sterling Ace
was an action that constituted bad faith. Due to Ruperto's
refusal, his brother, petitioner Alejandro, became
solidarily liable for an obligation that the latter could have
avoided if he had been given an opportunity to participate
in the operations of Sterling Shipping Lines, Inc. The
simple sale of all of petitioner's shares would not have
solved petitioner's problems, as it would not have
negated his liability under the terms of the promissory
note.
Finally, petitioner is still bound to the creditors of Sterling
Shipping Lines, Inc., namely, public respondents
Development Bank of the Philippines and Asset
Privatization Trust. This is an additional financial burden
for petitioner. Nothing in the records suggested the
possibility that Development Bank of the Philippines or
Asset Privatization Trust through the Privatization
Management Office will not pursue or is precluded from
pursuing its claim against the petitioner. Although
petitioner Alejandro voluntarily signed the promissory
note and became a stockholder and board member,
respondent should have treated him with fairness,
transparency, and consideration to minimize the risk of
incurring grave financial reverses.
An award of moral damages would require certain
conditions to be met, to wit: (1) first, there must be an
injury, whether physical, mental or psychological, clearly
sustained by the claimant; (2) second, there must be
culpable act or omission factually established; (3) third,
the wrongful act or omission of the defendant is the
proximate cause of the injury sustained by the claimant;
and (4) fourth, the award of damages is predicated on
any of the cases stated in Article 2219 of the Civil Code.
In this case, the four elements cited in Francisco are
present. First, petitioner suffered an injury due to the
mental duress of being bound to such an onerous debt to
Development Bank of the Philippines and Asset
Privatization Trust. Second, the wrongful acts of undue
exclusion done by respondent Ruperto V. Tankeh clearly
fulfilled the same requirement. Third, the proximate
cause of his injury was the failure of respondent Ruperto
V. Tankeh to comply with his obligation to allow petitioner
to either participate in the business or to fulfill his
fiduciary responsibilities with candor and good faith.
Finally, Article 2219 83 of the Civil Code provides that
moral damages may be awarded in case of acts and
actions referred to in Article 21, which, as stated, had
been found to be attributed to respondent Ruperto V.
Tankeh.
In addition to moral damages, this Court may also
impose the payment of exemplary damages.
Exemplary damages are further discussed in Articles
2233 and 2234, particularly regarding the prerequisites of
ascertaining moral damages and the fact that it is
discretionary upon this Court to award them or not:
ART. 2233. Exemplary damages cannot be recovered as
a matter of right; the court will decide whether or not they
should be adjudicated.
ART. 2234. While the amount of the exemplary damages
need not be proven, the plaintiff must show that he is
entitled to moral, temperate or compensatory damages
before the court may consider the question of whether or
not exemplary damages should be awarded.
To justify an award for exemplary damages, the wrongful
act must be accompanied by bad faith, and an award of
damages would be allowed only if the guilty party acted
in a wanton, fraudulent, reckless or malevolent manner.
In this case, this Court finds that respondent Ruperto V.
Tankeh acted in a fraudulent manner through the finding
of dolo incidente due to his failure to act in a manner
consistent with propriety, good morals, and prudence.
ORION FREIGHT INTERNATIONAL V. KEIHIN
EVERETT FORWARDING
Facts: Respondent Keihin entered into a Trucking
Service Agreement Matsushita Corporation. On the
same day, respondent sub-contracted petitioner for the
latter to provide services for Matsushita’s trucking
requirements. Subsequently, Matsushita contacted
respondent Keihin about a news of an alleged stolen
truck filled with video monitors and CCTV system owned
by the former. When contacted about the news, petitioner
merely informed by respondent that the same merely
involved a breakdown and towing of a truck and that it
was subsequently released and did not miss the intended
time for the shipment.
Subsequently when the shipment arrived, it was however
found that some items were missing. It was found out
that the truck was subjected to pilferage. This prompted
Matsushita to terminate its contract with respondent for
non-disclosure of material facts amounting to fraud and
uttered disregard to rule of law. Respondent on the other
hand sent a demand letter to the petitioner for purposes
of reimbursement for loss of income. Respondent
subsequently filed a case against petitioner for non
payment. Respondent prayed for compensation for lost
of income with legal interest, exemplary damage,
attorney’s fees, litigation expenses, and the costs of the
suit.
Issue: WON petitioner is liable for damages for the loss
of income of respondent?
Ruling: Yes. Articles 2200 and 2201 of the Civil
Code provide for the liability for damages in contractual
obligations:
Article 2200. Indemnification for damages shall
comprehend not only the value of the loss suffered, but
also that of the profits which the obligee failed to obtain.
Article 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.
In Central Bank of the Philippines v. Court of Appeals,
this Court explained the principles underlying Articles
2200 and 2201:
Construing these provisions, the following is what this
Court held in Cerrano vs. Tan Chuco, 38 Phil. 392:". . .
Article 1106 (now 2200) of the Civil Code establishes
the rule that prospective profits may be recovered as
damages, while article 1107 (now 2201) of the same
Code provides that the damages recoverable for the
breach of obligations not originating in fraud (dolo) are
those which were or might have been foreseen at the
time the contract was entered into. Applying these
principles to the facts in this case, we think that it is
unquestionable that defendant must be deemed to
have foreseen at the time he made the contract that in
the event of his failure to perform it, the plaintiff would
be damaged by the loss of the profit he might
reasonably have expected to derive from its use.
"When the existence of a loss is established, absolute
certainty as to its amount is not required. The benefit to
be derived from a contract which one of the parties has
absolutely failed to perform is of necessity to some
extent, a matter of speculation, but the injured party is
not to be denied all remedy for that reason alone. He
must produce the best evidence of which his case is
susceptible and if that evidence warrants the inference
that he has been damaged by the loss of profits which
he might with reasonable certainty have anticipated but
for the defendant's wrongful act, he is entitled to
recover. As stated in Sedgwick on Damages (Ninth Ed.,
par. 177):
The general rule is, then, that a plaintiff may recover
compensation for any gain which he can make it appear
with reasonable certainty the defendant's wrongful act
prevented him from acquiring, . . .' (See also Algarra vs.
Sandejas, 27 Phil. Rep., 284, 289; Hicks vs. Manila
Hotel Co., 28 Phil. Rep., 325.)" (At pp. 398-399.)
The lower courts established that petitioner's
negligence resulted in Matsushita's cancellation of its
contract with respondent. The Regional Trial Court
found:
In the letter dated June 6, 2002, Matsushita
pre-terminated its In-House Brokerage Service
Agreement with plaintiff Keihin for violation of the terms
of said contract. Its President, KenGo Toda, stated that
because of the incident that happened on April 17,
2002 involving properties which the plaintiff failed to
inform them, Matsushita has lost confidence in
plaintiff's capability to handle its brokerage and
forwarding requirements. There was clearly a breach of
trust as manifested by plaintiff's failure to disclose facts
was when it had the duty to reveal them and it
constitutes fraud. Moreover, the negligence of plaintiff
personnel cannot be tolerated as Matsushita is bound
to protect the integrity of the company.
It could be reasonably foreseen that the failure to
disclose the true facts of an incident, especially when it
turned out that a crime might have been committed,
would lead to a loss of trust and confidence in the party
which was bound to disclose these facts. Petitioner
caused the loss of trust and confidence when it misled
respondent and Matsushita into believing that the
incident had been irresponsibly reported and merely
involved a stalled truck. Thus, petitioner is liable to
respondent for the loss of profit sustained due to
Matsushita's termination of the In-House Brokerage
Service Agreement.
\
PEOPLE OF THE PHILIPPINES, vs. JULITO
DIVINAGRACIA, SR
FACTS:
Divinagracia and CCC were husband and
wife with seven (7) children. The family lived in a one
(1)-room house at Jagobiao, Mandaue City near the
boundary of Riverside, Consolacion.
Sometime in November 1996, Divinagracia
and CCC quarrelled, prompting CCC to leave and
spend the night at her sibling's house. Their
daughters AAA (8 years old) and BBB (9 years old)
were then left by themselves since their other siblings
were either at their grandmother's house or with their
friends.
Later that evening, while AAA and BBB were
sleeping side by side inside their house, BBB
suddenly woke up to her father's tight embrace from
behind and felt him roughly running his hand over her
leg and breasts. BBB then felt her father poking his
hard penis against her buttocks. BBB begged her
father to stop, saying that she still had to go to school
the following day. Divinagracia moved away from
BBB and went out of the house. A few minutes later,
Divinagracia went back inside the house and lay
down beside AAA, and proceeded to rape her.
When CCC arrived later that day, AAA told
her that she was molested by Divinagracia. AAA did
not say that she was raped because she was afraid
that her parents would only quarrel again. However,
CCC did not believe her daughter.
A little over two (2) years after the incident,
Sister Mary Ann Abuna (Sister Mary Ann), CCC's
sister and a nun, visited her family in Cebu.
That same day, AAA told Sister Mary Ann
that she wanted to stop her schooling and begged to
go with her back to Manila because she did not want
 to see her father anymore, and confided that he even
almost raped them.
Sister Mary Ann asked the sisters to leave
Cebu and go back with her to Manila to prevent their
father from further molesting them. She brought AAA,
BBB, their other sister, and CCC back with her to
Manila. While in Pampanga, AAA saw CCC crying
because she wanted to go back to Cebu. AAA then
went to Sister Mary Ann and declared that if CCC
would return to Cebu, she would not go back with her.
It was at this point that AAA opened up to Sister Mary
Ann about the sexual abuse she suffered from her
father.
Sister Mary Ann brought AAA to the Hospital
Ning in Angeles City to be examined by a
doctor. After examining AAA, Dr. Lauro C. Biag
issued a medical certificate finding lacerations in the
hymen of the victim indicative of rape. As a result, a
complaint was filed for rape and acts of
lasciviousness against their father, Divinagracia.
The trial court and the CA convicted their
father. However, both decisions of the lower courts
lack the award of civil indemnity and other damages.
The Regional Trial Court, as affirmed by the Court of
Appeals, held that since Divinagracia, as the father of
AAA and BBB, stood to benefit from the monetary
award, it would not be proper to award civil indemnity:
The Court shall not award
civil indemnity to the private
complainant. The accused as the
father of the private complainants
stands to benefit from the monetary
award if adjudicated to his daughters
since he is a compulsory heir. The
concept of indemnification is not
served if the very person made to
pay for his crime shall benefit from it.
ISSUE: W/N an award for civil indemnity is proper in
this case. –YES
RULING: Yes, the lower courts are mistaken.
Civil indemnity ex delicto, as a form of
monetary restitution or compensation to the victim,
attaches upon a finding of criminal liability because
"[e]very person criminally liable for a felony is also
civilly liable."'
On the other hand, moral damages are
treated as "compensatory damages awarded for
mental pain and suffering or mental anguish resulting
from a wrong." The award of moral damages is meant
to restore the status quo ante; thus, it must be
commensurate to the suffering and anguish
experienced by the victim.
Finally, exemplary or corrective damages are
imposed as an example to the public, serving as a
deterrent to the commission of similar acts.
Exemplary damages are also awarded "as a part of
the civil liability may be imposed when the crime was
committed with one or more aggravating
circumstances."
In view of the depravity of the acts committed
by Divinagracia against his minor daughters, this
Court imposes the following monetary awards, in
accordance with jurisprudence:
For rape against AAA, Divinagracia is
directed to pay AAA P100,000.00 as civil indemnity,
P100,000.00 as moral damages, and P100,000.00 as
exemplary damages.
For acts of lasciviousness against BBB, this
Court adopts the ruling in People v. Santos and
directs Divinagracia to pay BBB P20,000.00 as civil
indemnity and P30,000.00 as moral damages.
However, in light of the heinous nature of the crime
committed, exemplary damages are increased from
P2,000.00 to P20,000.00.
In addition, interest at the legal rate of six
percent (6%) per annum shall be imposed on all
damages awarded from the date of finality of this
judgment until fully paid.
CARAVAN TRAVEL V ABEJAR, GR 170631, 10
FEBRUARY 2016
FACTS
Jesmariane R. Reyes (Reyes) was walking along the
west-bound lane of Sampaguita Street, Parañaque
City. A Mitsubishi L-300 van was travelling along the
east-bound lane, opposite Reyes. To avoid an incoming
vehicle, the van swerved to its left and hit Reyes. A
witness to the accident went to her aid and loaded her in
the back of the van and told the driver of the van, Jimmy
Bautista (Bautista), to bring Reyes to the hospital.
Instead, Bautista appeared to have left the van parked
inside a nearby subdivision with Reyes still in the van.
Fortunately, an unidentified civilian came to help and
drove Reyes to the hospital. Upon investigation, it was
found that the registered owner of the van was Caravan.
Caravan shouldered the hospitalization expenses of
Reyes. Despite medical attendance, Reyes died two (2)
days after the accident.
Respondent Ermilinda R. Abejar (Abejar), Reyes'
paternal aunt filed a Complaint for damages against
Bautista and Caravan. In her Complaint, Abejar alleged
that Bautista was an employee of Caravan and that
Caravan is the registered owner of the van that hit
Reyes. Abejar argues that since Caravan is the
registered owner of the van, it is directly, primarily, and
solidarily liable for the tortious acts of its driver.
Caravan argues that Abejar has no personality to bring
this suit because she is not a real party in
interest. According to Caravan, only the victim herself or
her heirs can enforce an action based on culpa aquiliana
such as Abejar's action for damages. Furthermore,
Caravan argues that Abejar offered no documentary or
testimonial evidence to prove that Bautista, the driver,
acted "within the scope of his assigned tasks” when the
accident occurred.
ISSUES
• Whether respondent Ermilinda R. Abejar is a real
party in interest who may bring an action for
damages against petitioner Caravan Travel and
Tours International, Inc. on account of
Jesmariane R. Reyes' death; and
• Whether petitioner should be held liable as an
employer, pursuant to Article 2180 of the Civil
Code.
RULING
Aunt is a real party in interest
Having exercised substitute parental authority,
respondent suffered actual loss and is, thus, a real party
in interest in this case. Respondent properly filed an
action based on quasi-delict. The article does not limit or
specify the active subjects, much less the relation that
must exist between the victim of the culpa aquiliana and
the person who may recover damages, thus warranting
the inference that, in principle, anybody who suffers any
damage from culpa aquiliana, whether a relative or not of
the victim, may recover damages from the person
responsible therefor.
Caravan Travel is liable as an employer
The plaintiff may first prove the employer's ownership of
the vehicle involved in a mishap by presenting the
vehicle's registration in evidence. Thereafter, a
disputable presumption that the requirements for an
employer's liability under Article 2180 of the Civil Code
have been satisfied will arise. The burden of evidence
then shifts to the defendant to show that no liability under
Article 2180 has ensued.
The registered owner cannot use the defenses available
under Article 2180 of the Civil Code — that the employee
acts beyond the scope of his assigned task or that it
exercised the due diligence of a good father of a family to
prevent damage — because the motor vehicle
registration law, to a certain extent, modified Article 2180
of the Civil Code by making these defenses unavailable
to the registered owner of the motor vehicle. Thus, for as
long as one is the registered owner of the car involved in
the vehicular accident, it could not escape primary
liability for the damages caused.
It is now up to petitioner to establish that it incurred no
liability under Article 2180. This it can do by presenting
proof of any of the following: first, that it had no
employment relationship with Bautista; second, that
Bautista acted outside the scope of his assigned tasks;
or third, that it exercised the diligence of a good father of
a family in the selection and supervision of Bautista.
Evidently, petitioner did not only fail to exercise due
diligence when it selected Bautista as service driver; it
also committed an actual violation of law. Employing a
person holding a non-professional driver's license to
operate another's motor vehicle violates Section 24 of
the Land Transportation and Traffic Code. The mere
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.
The liability imposed on the registered owner is direct
and primary. It does not depend on the inclusion of the
negligent driver in the action. Petitioner's interest and
liability is distinct from that of its driver. Regardless of
petitioner's employer-employee relationship with
Bautista, liability attaches to petitioner on account of its
being the registered owner of a vehicle that figures in a
mishap. Instead of insisting that Bautista — who was
nothing more than a necessary party — should not have
been dropped as a defendant, or that petitioner, along
with Bautista, should have been dropped, petitioner
could have opted to file a cross- claim against Bautista as
its remedy.
Award of damages is correct
Actual damages
The Court of Appeals committed no reversible error when
it awarded actual damages to respondent. Respondent's
claim for actual damages was based on the Certificate
issued and signed by a certain Peñaloza showing that
respondent paid Peñaloza P35,000.00 for funeral
expenses. Respondent had personal knowledge of the
facts sought to be proved by the Certificate, i.e., that she
spent P35,000.00 for the funeral expenses of Reyes.
Thus, the Certificate that she identified and testified to is
not hearsay. It was not an error to admit this Certificate
as evidence and basis for awarding P35,000.00 as actual
damages to respondent
Civil indemnity and exemplary damages
The Court of Appeals likewise did not err in awarding civil
indemnity and exemplary damages. Both the Court of
Appeals and the Regional Trial Court found Bautista
grossly negligent in driving the van and concluded that
Bautista's gross negligence was the proximate cause of
Reyes' death. The evidentiary bases for the award of civil
indemnity and exemplary damages stand. As such,
petitioner must pay the exemplary damages arising from
the negligence of its driver. For the same reasons, the
award of P50,000.00 by way of civil indemnity is justified.
Moral damages
The award of moral damages is likewise proper. For
deaths caused by quasi-delict, the recovery of moral
damages is limited to the spouse, legitimate and
illegitimate descendants, and ascendants of the
deceased. Persons exercising substitute parental
authority are to be considered ascendants for the
purpose of awarding moral damages. Persons exercising
substitute parental authority are intended to stand in
place of a child's parents.
Moral damages are awarded to compensate the claimant
for his or her actual injury, and not to penalize the
wrongdoer. Moral damages enable the injured party to
alleviate the moral suffering resulting from the
defendant's actions. It aims to restore — to the extent
possible — "the spiritual status quo ante.” Hence,
respondent is entitled to moral damages.
Attorney’s fees
As exemplary damages have been awarded and as
respondent was compelled to litigate in order to protect
her interests, she is rightly entitled to attorney's fees.
Interest
Interest of 6% per annum is awarded and is to be applied
to
• Actual damages from the time it was judicially or
extrajudicially demanded from petitioner
Caravan Travel and Tours International, Inc. until
full satisfaction;
• Moral damages, exemplary damages, and
attorney's fees from the date of the Regional
Trial Court Decision until full satisfaction; and
• Civil indemnity from the date of the Court of
Appeals Decision until full satisfaction.
RAUL S. IMPERIAL, Petitioner, v. HEIRS OF NEIL
BAYABAN, AND MARY LOU BAYABAN, Respondents.
ONE-LINER: The burden of proving that a negligent act
of an employee was performed within the scope of his or
her assigned tasks rests with the plaintiff. When the
plaintiff has discharged this burden, as in this case, the
presumption that the employer was negligent arises, and
the employer must put forward evidence showing that he
or she had exercised the due diligence of a good father
of a family in the selection and supervision of the
employee. Failing to dispute this presumption renders
the employer solidarily liable with the employee for the
quasi-delict.
Facts:
Two (2) vehicles, a van and a tricycle, figured in an
accident along Sumulong Highway, Antipolo City. The
Mitsubishi L-300 van with plate number USX 931 was
owned and registered under Imperial's name, and was
driven by Laraga. The tricycle with plate number DU
8833 was driven by Gerardo Mercado (Mercado).
On board the tricycle were the Bayaban Spouses (Neil
and Mary Lou), who sustained injuries. For the injuries
they sustained, the Bayaban Spouses had to undergo
therapy and post-medical treatment.
The Bayaban Spouses demanded compensation from
Imperial, Laraga, and Mercado for the hospital bills and
loss of income that they sustained while undergoing
therapy and post-medical treatment. They filed before
the RTC a complaint for damages impleading Imperial,
Laraga, and Mercado as defendants.Neil's unearned
income as a second-mate seaman, P7,600.00 per month
representing Mary Lou's unearned income as
pharmacist, P200,000.00 as moral damages, and
P20,000.00 as attorney's fees.
The Regional Trial Court ruled in favor of the Bayaban
Spouses . It found Laraga negligent and the proximate
cause of the accident, i.e., overtaking another vehicle
and, in the process, colliding with the tricycle that carried
the Bayaban Spouses on the other side of the road. As
for Imperial, it ruled that he failed to prove that he had
exercised due diligence in the selection and supervision
of Laraga, his employee; thus, he was presumed
negligent and was likewise held liable for damages to the
Bayaban Spouses.
The Regional Trial Court held that the official receipts
presented in evidence substantiated the Bayaban
Spouses' claim for reimbursement of medical and
hospital expenses. However, it found the certificates of
employment inadequate to prove the amount of their
unearned income. Nevertheless, Mary Lou, for her own
behalf, and the Heirs of Neil Bayaban were awarded
P100,000.00 as temperate damages. Moral damages
and exemplary damages of P50,000.00 each and
attorney's fees of P25,000.00 plus costs of suit were
awarded to them as well.
The CA affirmed the decision of the RTC but deleted the
award of temperate damages. CA ruled that temperate
and actual damages were mutually exclusive and could
not be awarded at the same time.
Imperial (Petitioner) filed a petition for certiorari before
the SC.
Imperial’s Defenses:
-the van was under the custody of one Rosalia Pascua
where he lent the van to her to fix some pipes in
Imperial’s Greenhouse in Antipolo
-he exercised due diligence in the selection and
supervision of Laraga (the driver); He even allegedly
sponsored Laraga's formal driving lessons
-Laraga was allegedly acting outside the scope of his
duties when the accident happened considering that it
was a Sunday, his rest day
ISSUES:
1. W/N Respondents proved that Laraga was
acting within the scope of his assigned task?
YES
2. W/N original receipts of the medical and hospital
bills presented by respondents Neil Bayaban and
Mary Lou Bayaban are competent evidence of
the actual damages that they have sustained
considering that the receipts were not
authenticated? YES
 3. W/N Respondents are entitled to temperate
damages? YES
HELD:
1. Articles 2176 and 2180 of the Civil Code were
derived from Articles 1902 and 1903 of the
Spanish Civil Code of 1889. Article 2176 defines
"quasi-delict" as the fault or negligence that
causes damage to another, there being no
pre-existing contractual relations between the
parties. On the other hand, Article 2180
enumerates persons who are vicariously liable
for the fault or negligence of persons over whom
they exercise control, whether absolute or
limited.
Specifically for employers, they are deemed liable or
morally responsible for the fault or negligence of their
employees but only if the employees are acting within the
scope of their assigned tasks. An act is deemed an
assigned task if it is "done by an employee, in
furtherance of the interests of the employer or for the
account of the employer at the time of the infliction of the
injury or damage.
The SC, in a case, said that the burden of proving the
existence of an employer-employee relationship and that
the employee was acting within the scope of his or her
assigned tasks rests with the plaintiff under the Latin
maxim "ei incumbit probatio qui dicit, non qui negat" or
"he who asserts, not he who denies, must prove."
Therefore, it is not incumbent on the employer to prove
that the employee was not acting within the scope of his
assigned tasks. Once the plaintiff establishes the
requisite facts, the presumption that the employer was
negligent in the selection and supervision of the
employee arises, disputable with evidence that the
employer has observed all the diligence of a good father
of a family to prevent damage. Though vicarious, the
liability of employers under Article 2180 is personal and
direct.
Applying the foregoing, this Court finds that respondents
have discharged the burden of proof necessary to hold
Imperial vicariously liable under Article 2180 of the Civil
Code.
There is no question here that Laraga was petitioner's
driver, hence, his employee, as this fact was admitted by
petitioner. This Court likewise finds that respondents
have established that Laraga was acting within the scope
of his assigned tasks at the time of the accident. It was
3:00 p.m. and Laraga was driving in Antipolo City, where,
as alleged by petitioner, his greenhouse and garden were
located. It is worth noting that according to petitioner, he
loaned the van to one Pascua for the maintenance of his
greenhouse and the repair of the water line pipes in his
garden. The logical conclusion is that Laraga was driving
the van in connection with the upkeep of petitioner's
Antipolo greenhouse and garden. Laraga was driving the
van in furtherance of the interests of petitioner at the time
of the accident.
The defense that Sunday was supposedly Laraga's day
off fails to convince. There is no proof whatsoever of the
truthfulness of this allegation, with Laraga not having
appeared in court to testify on this matter.
With respondents having discharged their burden of
proof, the disputable presumption that petitioner Imperial
was negligent in the selection and supervision of Laraga
arises.
Unfortunately for petitioner, he miserably failed to dispute
the presumption of negligence in his selection and
supervision of Laraga. As the Regional Trial Court and
the Court of Appeals found, he only gave self-serving
testimonies without the requisite documentary proof that
he had enrolled Laraga in a formal driving school. At
best, he only established that he had financed the fees
needed for Laraga to obtain his driver's license, which is
hardly the due diligence contemplated in Article 2180 of
the Civil Code.
Considering that petitioner failed to dispute the
presumption of negligence on his part, he was correctly
deemed liable for the damages incurred by the Bayaban
Spouses when the tricycle they were riding collided with
the van driven by petitioner's employee, Laraga.
2. Under the rules of evidence, documents are either
public or private. Public documents are those exclusively
enumerated in Rule 132, Section 19 of the Rules of
Court. These include written official acts, or records of
the official acts of the sovereign authority, official bodies
and tribunals, and public officers, whether of the
Philippines, or of a foreign country; documents
acknowledged before a notary public except last wills
and testaments; and public records, kept in the
Philippines, of private documents required by law to be
entered there. When public documents are presented in
evidence, they are prima facie evidence of the facts
stated there, and thus, need not be authenticated.
As for private documents, i.e., those not enumerated in
Rule 132, Section 19, they must be authenticated, or
their due execution and authenticity proven, per Rule
132, Section 20 of the Rules of Court.
Official receipts of hospital and medical expenses are not
among those enumerated in Rule 132, Section 19. These
official receipts, therefore, are private documents which
may be authenticated either by presenting as witness
anyone who saw the document executed or written, or by
presenting an evidence of the genuineness of the
signature or handwriting of the maker.
Respondent Mary Lou testified as to the circumstances
of the accident and the expenses she and Neil had
incurred as a result of it. The official receipts were issued
to her and Neil upon payment of the expenses. Since the
official receipts were issued to respondent Mary Lou, her
testimony, therefore, is a competent evidence of the
execution of the official receipts.
With respondent Mary Lou testifying as to the execution
and issuance of the official receipts, they were duly
authenticated, contrary to petitioner's claim.
3. Temperate or moderate damages, which are more
than nominal but less than actual or compensatory
damages, may be recovered when the court finds that
some pecuniary loss has been suffered, but its amount
cannot, from the nature of the case, be proved with
certainty. Temperate damages must be reasonable under
the circumstances.
While respondents failed to put forward definite proof of
income lost during confinement and post-therapy, they
still suffered pecuniary loss when they were
incapacitated to work. Under the circumstances, the
P100,000.00 awarded by the Regional Trial Court is
reasonable to compensate them for the income that the
Bayaban Spouses could have earned as a second-mate
seaman and a pharmacist, respectively.
As opposed to the Court of Appeals' ruling, temperate
damages may still be awarded to respondents despite
previous award of actual damages because the damages
cover distinct pecuniary losses. The temperate damages
awarded cover the loss of earning capacity while the
actual damages cover the medical and hospital
expenses.
Petition DENIED.
VIVIAN B. TORREON and FELOMINA F. ABELLANA,
vs.
GENEROSO APARRA, JR., FELIX CABALLES, and
CARMELO SIMOLDE
On November 1, 1989, Vivian's husband, Rodolfo
Torreon (Rodolfo), and daughters, Monalisa Torreon
(Monalisa) and Johanna Ava Torreon (Johanna), arrived
with Felomina Abellana (Abellana) at the municipal wharf
of Jetafe, Bohol. They came from Cebu City aboard M/B
Island Traders, a motor boat owned and operated by
Carmelo Simolde (Simolde).
After disembarking from the motor boat, they boarded a
cargo truck to transport them from the wharf to the
poblacion of Jetafe. Abellana was seated in front while
Rodolfo and his daughters were at the back of the truck.
There were no proper seats at the back and the 30 or
more passengers were either standing or sitting on their
bags. Caballes is the official truck driver and allowed
Aparra, a chief diesel mechanic to drive the truck while
he sat beside him. Aparra maneuvered to the right of the
road hitting a parked bicycle. As he turned, Aparra had to
swerve to the left to avoid hitting Subiano who was
standing on the side of the road. Because the road was
only 4 meters and 24 inches wide, Aparra lost control of
the truck and it fell off the ward. Rodolfo and Monalisa
died while Johanna and Abellana were injured.
Vivian and Abellana filed a criminal complaint for
Reckless Imprudence resulting to Double Homicide,
Multiple Serious Physical Injuries and Damage to
Property against Aparra and Caballes and a sepearate
complaint for damages against Simolde, Caballes and
Aparra.
Issue:
1. W/n actual damages for loss of earning capacity
should be awarded to petitioner Vivian
2. W/n the value of the other awarded damages should
be increased
Ruling:
Not related to damages
Abellana is barred from instituting this case as she did
not reserve her right to institute a separate civil action,
her cause of action for damages was deemed impliedly
instituted with the criminal case.
Article 2176 of the Civil Code provides that those who
commit acts consituting a quasi-delict are liable to pay
damages. The elements to establish a quasi-delict case
are:
a. Damages to the plaintiff
b. Negligence, by act or omission of the defendant
c. Connection of the cause and effect between the
negligence and the damages
Caballes was grossly negligent in allowing Aparra to
drive the truck despite being an inexperienced driver.
Such inexperience caused the accident that led to the
deaths of Rodolfo and Monalisa. Their deaths caused
damage to Vivian. The elemets are present.
Article 2180 of the Civil Code provides that an
employer is vicariously liable with his employees for any
damage caused while performing their duties. Simolde is
solidarily liable with Caballes and Aparra for the payment
of damages for failing to exercise diligence in the
supervision of his employees.
DAMAGES
As to the loss of earning capacity of Rodolfo
Applying Article 2206 in awarding lost earning capacity in
addition to civil/death indemnity (50,000), the formula is
Net Earning Capacity = 2/3 x (80 - age at time of
death) x (gross annual income- reasonable and
necessary living expenses)
To be awarded with the claim on loss of earning capacity,
Vivian is only required to present preponderance of
evidence and testimonial evidence is allowed to prove
such loss in civil cases. Testimony of Abellana who is
Rodolfo’s employer is sufficient.

Respondents are liable to compensate for the income the
heirs would have received had he lived in the amount of
1,919,700.
Life expectancy= 2/3 x 80-48
LE= 21.33 years
Loss of Earning Capacity = 21.33 x 180000/2
LEC= 1,919,700
As to the funeral and burial expenses for daughter
Monalisa
Vivan failed to produce any receipt or evidence to
support this claim. Hence, she cannot be entitled to an
award of actual damages for Monalisa’s loss
As to the award of moral damages
Although the CC grants compensation for mental
anguish by the heirs of the loss of their loved on, this
award is not meant to enrich the petitioner. The increase
sought by Vivian cannot be granted. It shall remain as
50,000 to the heirs of Rodolfo and another 50,000 to the
heirs Monalisa
As to the award of exemplary damages
It is imposed as a punishment for highly reprehensible
conduct, meant to deter serious wrong doing.
In quasi- delicts, there must be gross negligence for
this to be granted.
In the present case, each respondent clearly acted with
gross negligence. Aparra drove without a license and
jeopardized the life of the passengers. Caballes allowed
Aparra to drive and also permitted passengers to board
the truck despite knowing it is not designed to transport
people. Simolde was also grossly negligent in tolerating
his employees’ negligent behavior.
The exemplary damage of 10,000 is to be awarded to the
heirs of Rodolfo and Monalisa.
As to the award of litigation expenses and atty fees
Considering the protracted litigation of this dispute, an
award of 100,000 as attys fees and 50,000 for litigation
expenses be awarded to Vivian.
As to interest (also known as moratory damages)
In the absence of an exress stipulation as to rate of
interest, the prevailing rate of interest is 6% per annum.
In case of non-payment of judgment award, an interest at
the legal rate of 6% shall be imposed on the total
judgment award reckoned from the finality of judgment
until full payment.
MERCURY DRUG VS HUANG
Tortious Act: Collision of a 16 wheeler truck and a Sedan
causing paralysis to the driver.
See Art 2205.
Facts:
Petitioner Mercury Drug Corporation (Mercury Drug) is
the registered owner of a six-wheeler truck with. It has in
its employ petitioner Rolando J. del Rosario as driver.
Respondent spouses Richard and Carmen Huang are the
parents of respondent Stephen Huang and owners of the
red 1991 Toyota Corolla GLI Sedan.
These two vehicles figured in a road accident on
December 20, 1996 at around 10:30 p.m. within the
municipality of Taguig, Metro Manila. Both were
traversing the C-5 Highway, north bound, coming from
the general direction of Alabang going to Pasig City.
The car was on the left innermost lane while the truck
was on the next lane to its right. When the truck suddenly
swerved to its left and slammed into the front right side of
the car. The collision hurled the car over the island where
it hit a lamppost, spun around and landed on the opposite
lane.
At the time of the accident, petitioner Del Rosario only
had a Traffic Violation Receipt (TVR). His driver’s license
had been confiscated because he had been previously
apprehended for reckless driving.
The car, valued at P300,000.00, was a total wreck.
Respondent Stephen Huang sustained massive injuries
to his spinal cord, head, face, and lung. Despite a series
of operations, respondent Stephen Huang is paralyzed
for life from his chest down and requires continuous
medical and rehabilitation treatment.
In contrast, petitioners allege that the immediate and
proximate cause of the accident was respondent
Stephen Huang’s recklessness. According to petitioner
Del Rosario, he was driving on the left innermost lane
when the car bumped the truck’s front right tire.
Issue: Whether or not the persumption of negligence was
properly rebutted by Mercury Drug
Ruling: NO.
We now come to the liability of petitioner Mercury Drug
as employer of Del Rosario. Articles 2176 and 2180 of
the Civil Code provide:
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. 2180. The obligation imposed by article 2176 is
demandable not only for one’s own acts or omissions, but
also for those of persons for whom one is responsible.
xxx
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.
xxx
The liability of the employer under Art. 2180 of the Civil
Code is direct or immediate. It is not conditioned on a
prior recourse against the negligent employee, or a prior
showing of insolvency of such employee. It is also joint
and solidary with the employee.
To be relieved of liability, petitioner Mercury Drug should
show that it exercised the diligence of a good father of a
family, both in the selection of the employee and in the
supervision of the performance of his duties. Thus, in the
selection of its prospective employees, the employer is
required to examine them as to their qualifications,
experience, and service records. With respect to the
supervision of its employees, the employer should
formulate standard operating procedures, monitor their
implementation, and impose disciplinary measures for
their breach. To establish compliance with these
requirements, employers must submit concrete proof,
including documentary evidence.
In the instant case, petitioner Mercury Drug
presented testimonial evidence on its hiring
procedure. According to Mrs. Merlie Caamic, the
Recruitment and Training Manager of petitioner
Mercury Drug, applicants are required to take
theoretical and actual driving tests, and
psychological examination. In the case of petitioner
Del Rosario, however, Mrs. Caamic admitted that he
took the driving tests and psychological examination
when he applied for the position of Delivery Man, but
not when he applied for the position of Truck Man.
Mrs. Caamic also admitted that petitioner Del Rosario
used a Galant which is a light vehicle, instead of a
truck during the driving tests. Further, no tests were
conducted on the motor skills development,
perceptual speed, visual attention, depth
visualization, eye and hand coordination and
steadiness of petitioner Del Rosario. No NBI and
police clearances were also presented. Lastly,
petitioner Del Rosario attended only three driving
seminars – on June 30, 2001, February 5, 2000 and
July 7, 1984. In effect, the only seminar he attended
before the accident which occurred in 1996 was held
twelve years ago in 1984.
It also appears that petitioner Mercury Drug does not
provide for a back-up driver for long trips. At the time of
the accident, petitioner Del Rosario has been out on the
road for more than thirteen hours, without any alternate.
Mrs. Caamic testified that she does not know of any
company policy requiring back-up drivers for long trips.
Petitioner Mercury Drug likewise failed to show that it
exercised due diligence on the supervision and discipline
over its employees. In fact, on the day of the accident,
petitioner Del Rosario was driving without a license. He
was holding a TVR for reckless driving. He testified that
he reported the incident to his superior, but nothing was
done about it. He was not suspended or reprimanded. No
disciplinary action whatsoever was taken against
petitioner Del Rosario. We therefore affirm the finding
that petitioner Mercury Drug has failed to discharge its
burden of proving that it exercised due diligence in the
selection and supervision of its employee, petitioner Del
Rosario.
No discussion jud for damages by the SC but ila gi
reiterate ang sa lower court:
Although Stephen survived the accident, the doctors
are unanimous in saying that Stephen needs
continuous rehabilitation for the rest of his life. Dr.
Sibayan's prognosis with regard to Stephen's future
recovery is nil, or zero. The best thing that can be
done for Stephen is for the latter to maintain some
kind of rehabilitation program with the aim of
preventing complications, particularly bed sores,
infection of the bladder, inability to move. There are
no dedicated and speci5c centers in the Philippines
with spinal cord injury rehabilitation program.
Notwithstanding the presentation by plaintiffs of the
rehabilitation programs which the plaintiff Stephen
may avail of at Kessler Institute for Rehabilitation,
New Jersey, USA, together with the estimated
expenses which may be incurred by plaintiffs,
(Exhibits Y, Z-3), this Court deems it proper not to
include the said amount because as far as the
records are concerned, the enrollment of Stephen
thereat remained a plan. The plaintiffs Spouses
Richard and Carmen Huang merely contemplated the
sending of their son, Stephen to Kessler Institute.
Accordingly, the defendants must not only pay for
the actual expenses incurred by plaintiffs for the
hospitalization and medical treatment of Stephen,
they must also pay plaintiffs for the natural and
probable expenses which the plaintiffs will in the
future likely incur as a result of the injuries he
suffered. In 1997[,] Stephen[']s average monthly
expense was P21,500.00 and for 1998 it was for
P16,280.00 more or less, (TSN, p. 11, January 11,
1999). It is expected that he will continue to incur
these expenses for the rest of his life. The chance of
Stephen regaining his normal ability to walk and
perform the most basic body movements is remote.
Thus, he shall be dependent 5nancially and
physically on the care, assistance, and support of his
family throughout his life. Based on the actuarial
computation of the remaining years that Stephen is
expected to live, the life care cost will amount to
P23,461,062.00 more or less. Plaintiffs must be
compensated.
To determine how much to be awarded for decreased
earning capacity, the health of the injured party, and
his mental and physical ability to maintain himself
before the injury as compared with his condition in
this respect afterwards have to be considered. The
rule necessarily permits an inquiry into the capacity
of plaintiff prior to the injury, including his physical
condition, and his ability to labor or follow his usual
vocation, his age, his state of health, and his
probable life expectancy. The plaintiff's ability and Mariveles Terminal Expansion Project was between
disposition to labor or his business or professional Liquigaz and Whessoe UK, an entity separate and
habits may also be taken into consideration . . . distinct from petitioner.

Petitioner maintains that it cannot be bound by the

contract between Whessoe UK and Petrotech simply
NOELL WHESSOE, INC. vs. INDEPENDENT TESTING
because it sent a letter to Petrotech expressing
CONSULTANTS, INC., PETROTECH SYSTEMS, INC.,
dissatisfaction or disapproval of respondent Independent
and LIQUIGAZ PHILIPPINES CORP.
Testing Consultants' services. It likewise points out that
even assuming that there was privity of contract,
Whessoe UK had already paid in full its contractual
Facts:
obligations to Petrotech.
Petrotech, a subcontractor of Liquigaz, engaged the
Thus, it asserts that it was entitled to moral damages of
services of Independent Testing Consultants to conduct
P1,000,000.00 since "the filing of this baseless and
non-destructive testing on Liquigaz's piping systems and
unfounded case . . . has tarnished its good business
liquefied petroleum gas storage tanks located in
name and standing by giving the erroneous and false
Barangay Alas-Asin, Mariveles, Bataan.
impression to the public that it is a company that reneges
on its obligations."
Independent Testing Consultants conducted the agreed
tests. It later billed Petrotech. However, despite demand,
ISSUES:
Petrotech refused to pay.
Whether or not petitioner Noell Whessoe, Inc. can be
Independent Testing Consultants led a Complaint 8 for
held solidarily liable with respondents Liquigaz
collection of sum of money with damages against
Philippines Corporation and Petrotech Systems, Inc. for
Petrotech, Liquigaz, and Noell Whessoe. It joined Noell
unpaid fees to respondent Independent Testing
Whessoe as a defendant, alleging that it was Liquigaz's
Consultants, Inc. NO.
contractor that subcontracted Petrotech
Assuming that petitioner Noell Whessoe, Inc. was not
Noell Whessoe denied that it was Liquigaz's contractor
liable, this Court is further asked to resolve the issue of
and that its basic role was merely to supervise the
whether or not it was entitled to moral damages. NO.
construction of its gas plants. It argued that any privity
of contract was only with Petrotech. Thus, it asserted that
Petrotech alone should be liable to Independent Testing
RULING:
Consultants.

Petrotech alleged that upon Noell Whessoe's approval,

To resolve the issue of whether petitioner is solidarily
Independent Testing Consultants was chosen to conduct
liable with Liquigaz and Petrotech, this Court must first
the non-destructive testing on Liquigaz's liquefied
pass upon petitioner's argument that it is a separate and
petroleum gas storage. However, it averred that it later
distinct entity from Whessoe UK, the signatory of the
received a letter from Noell Whessoe withdrawing its
contracts with them.
approval for Independent Testing Consultants' continued
services.
As of April 12, 1997, petitioner referred to itself as a
"wholly owned subsidiary" of Whessoe UK. It alleged,
Regional Trial Court found Liquigaz, Noell Whessoe, and
however, that on June 5, 1997, it was registered with the
Petrotech solidarily liable to Independent Testing
Securities and Exchange Commission as a domestic
Consultants.
corporation engaged in general construction and other
allied businesses. Unfortunately, no evidence was
The Court of Appeals affirmed the RTC. Noell Whessoe
presented to prove that it was incorporated as a separate
could not disclaim knowledge that Petrotech engaged the
corporation by June 5, 1997.
services of Independent Testing Consultants,
considering its admission that it later sent a letter to
Petitioner argues that the execution of this contract did
Petrotech withdrawing its approval of the engagement.
not make it the contractor for the Mariveles Terminal
The Court of Appeals, however, held that Noell
Expansion Project. It asserts that it was merely a
Whessoe's liability did not preclude it from demanding
subcontractor hired by Whessoe UK to oversee the
reimbursement from Petrotech for any amount paid.
management of the site and the other subcontractors'
activities. Records, however, show that during the
Noell Whessoe’s arguments
negotiations for the Pipework and Mechanical Equipment
Installation Subcontract with Petrotech, Petrotech made
Petitioner asserts that it should not have been made
no distinction between petitioner and Whessoe UK. This
solidarily liable to respondent Independent Testing
letter did not state that Whessoe UK, through petitioner,
Consultants since it had no privity of contract with the
was withdrawing approval. It states that petitioner was
latter. It maintains that the Contract Agreement for the
withdrawing approval. shock, humiliation, and physical or mental suffering.

Under Article 1729, respondent Independent Testing
Consultants had a cause of action against Liquigaz and
petitioner, even if its contract was only with Petrotech.
The Regional Trial Court and the Court of Appeals,
therefore, did not err in concluding that petitioner was
solidarily liable with Liquigaz and Petrotech for unpaid
fees to respondent Independent Testing Consultants.
Mental suffering can be experienced only by one having
a nervous system and it flows from real ills, sorrows, and
griefs of life. A corporation, not having a nervous system
or a human body, does not experience physical suffering,
mental anguish, embarrassment, or wounded feelings.
Thus, a corporation cannot be awarded moral damages.

Article 1729 creates a solidary liability between the

owner, the contractor, and the subcontractor. A solidary
obligation is "one in which each debtor is liable for the
entire obligation, and each creditor is entitled to demand
the whole obligation."

Respondent Independent Testing Consultants may

demand payment for all of its unpaid fees from Liquigaz,
petitioner, or Petrotech, even if its contract was only with
the latter.

However, Article 1729, while serving as an exception to

the general rule on the privity of contracts, likewise
provides for an exception to this exception. The
contractor is solidarily liable with the owner and
subcontractor for any liabilities against a supplier despite
the absence of contract between the contractor and the
supplier, except when the subcontractor has already
been fully paid for its services.

Since Whessoe UK and petitioner should be considered

the same entity for the purposes of the Mariveles
Terminal Expansion Project, Whessoe UK's full payment
to Petrotech would serve as a valid defense against
petitioner's solidary liability. Thus, petitioner still cannot
be held solidarily liable with Liquigaz and Petrotech for
any remaining receivables from respondent Independent
Testing Consultants. Any remaining obligations to it
should be solidarily borne by the owner, Liquigaz, and
the subcontractor, Petrotech.

While petitioner is absolved from its solidary liability, it is

not, however, entitled to any moral damages. Petitioner
asserts that it was entitled to moral damages of
P1,000,000.00 on the basis that respondent Independent
Testing Consultants' collection suit has tarnished its good
business name and standing.

Moral damages are awarded when the claimant suffers

physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock,
social humiliation, and similar injury. These damages
must be understood to be in the concept of grants, not
punitive or corrective in nature, calculated to compensate
the claimant for the injury suffered. Its award 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.

A corporation is not a natural person. It is a creation of

legal fiction and has no feelings, no emotions, no
senses. A corporation is incapable of fright, anxiety,