SECOND DIVISION

POLO S. PANTALEON, G.R. No. 174269

Petitioner,
Present:
CARPIO MORALES, J.,*
Acting Chairperson,
- versus - TINGA,
VELASCO,
LEONARDO-DE CASTRO,** and
BRION, JJ.
AMERICAN EXPRESS
INTERNATIONAL, INC., Promulgated:
Respondent.
May 8, 2009
x---------------------------------------------------------------------------x

DECISION
TINGA, J.:
The petitioner, lawyer Polo Pantaleon, his wife Julialinda, daughter Anna
Regina and son Adrian Roberto, joined an escorted tour of Western
Europe organized by Trafalgar Tours of Europe, Ltd., in October of 1991.
The tour group arrived in Amsterdam in the afternoon of 25 October
1991, the second to the last day of the tour. As the group had arrived late
in the city, they failed to engage in any sight-seeing. Instead, it was
agreed upon that they would start early the next day to see the entire city
before ending the tour.
The following day, the last day of the tour, the group arrived at the
Coster Diamond House in Amsterdam around 10 minutes before 9:00
a.m. The group had agreed that the visit to Coster should end by 9:30
a.m. to allow enough time to take in a guided city tour of Amsterdam.
The group was ushered into Coster shortly before 9:00 a.m., and listened
to a lecture on the art of diamond polishing that lasted for around ten

minutes.[1] Afterwards, the group was led to the stores showroom to allow
them to select items for purchase. Mrs. Pantaleon had already planned to
purchase even before the tour began a 2.5 karat diamond brilliant cut, and
she found a diamond close enough in approximation that she decided to
buy.[2] Mrs. Pantaleon also selected for purchase a pendant and a chain,
[3]
all of which totaled U.S. $13,826.00.
To pay for these purchases, Pantaleon presented his American
Express credit card together with his passport to the Coster sales clerk.
This occurred at around 9:15 a.m., or 15 minutes before the tour group
was slated to depart from the store. The sales clerk took the cards imprint,
and asked Pantaleon to sign the charge slip. The charge purchase was
then referred electronically to respondents Amsterdam office at 9:20 a.m.

Ten minutes later, the store clerk informed Pantaleon that his
AmexCard had not yet been approved. His son, who had already boarded
the tour bus, soon returned to Coster and informed the other members of
the Pantaleon family that the entire tour group was waiting for them. As it
was already 9:40 a.m., and he was already worried about further
inconveniencing the tour group, Pantaleon asked the store clerk to cancel
the sale. The store manager though asked plaintiff to wait a few more
minutes. After 15 minutes, the store manager informed Pantaleon that
respondent had demanded bank references. Pantaleon supplied the names
of his depositary banks, then instructed his daughter to return to the bus
and apologize to the tour group for the delay.
At around 10:00 a.m, or around 45 minutes after Pantaleon had
presented his AmexCard, and 30 minutes after the tour group was
supposed to have left the store, Coster decided to release the items even
without respondents approval of the purchase. The spouses Pantaleon
returned to the bus. It is alleged that their offers of apology were met by
their tourmates with stony silence.[4] The tour groups visible irritation was
aggravated when the tour guide announced that the city tour
of Amsterdam was to be canceled due to lack of remaining time, as they
had to catch a 3:00 p.m. ferry at Calais, Belgium to London.[5] Mrs.

Pantaleon ended up weeping, while her husband had to take a tranquilizer

to calm his nerves.

It later emerged that Pantaleons purchase was first transmitted for

approval to respondents Amsterdam office at 9:20 a.m., Amsterdam time,
then referred to respondents Manila office at 9:33 a.m, then finally
approved at 10:19 a.m., Amsterdam time.[6] The Approval Code was
transmitted to respondents Amsterdam office at 10:38 a.m., several
minutes after petitioner had already left Coster, and 78 minutes from the
time the purchases were electronically transmitted by the jewelry store to
respondents Amsterdam office.
After the star-crossed tour had ended, the Pantaleon family proceeded to
the United States before returning to Manila on 12 November 1992.
While in the United States, Pantaleon continued to use his AmEx card,
several times without hassle or delay, but with two other incidents similar
to the Amsterdam brouhaha. On 30 October 1991, Pantaleon purchased
golf equipment amounting to US $1,475.00 using his AmEx card, but he
cancelled his credit card purchase and borrowed money instead from a
friend, after more than 30 minutes had transpired without the purchase
having been approved. On 3 November 1991, Pantaleon used the card to
purchase childrens shoes worth $87.00 at a store in Boston, and it took 20
minutes before this transaction was approved by respondent.
On 4 March 1992, after coming back to Manila, Pantaleon sent a
letter[7] through counsel to the respondent, demanding an apology for the
inconvenience, humiliation and embarrassment he and his family thereby
suffered for respondents refusal to provide credit authorization for the
aforementioned purchases.[8] In response, respondent sent a letter dated 24
March 1992,[9] stating among others that the delay in authorizing the
purchase from Coster was attributable to the circumstance that the
charged purchase of US $13,826.00 was out of the usual charge purchase
pattern established.[10] Since respondent refused to accede to Pantaleons
demand for an apology, the aggrieved cardholder instituted an action for
damages with the Regional Trial Court (RTC) of Makati City, Branch

145.[11] Pantaleon prayed that he be awarded P2,000,000.00, as moral

damages;P500,000.00, as exemplary damages; P100,000.00, as attorneys
fees; and P50,000.00 as litigation expenses.[12]
On 5 August 1996, the Makati City RTC rendered a decision[13] in favor
of Pantaleon, awarding him P500,000.00 as moral damages, P300,000.00
as exemplary damages,P100,000.00 as attorneys fees, and P85,233.01 as
expenses of litigation. Respondent filed a Notice of Appeal, while
Pantaleon moved for partial reconsideration, praying that the trial court
award the increased amount of moral and exemplary damages he had
prayed for.[14] The RTC denied Pantaleons motion for partial
reconsideration, and thereafter gave due course to respondents Notice of
Appeal.[15]
On 18 August 2006, the Court of Appeals rendered a decision[16] reversing
the award of damages in favor of Pantaleon, holding that respondent had
not breached its obligations to petitioner. Hence, this petition.
The key question is whether respondent, in connection with the
aforementioned transactions, had committed a breach of its obligations to
Pantaleon. In addition, Pantaleon submits that even assuming that
respondent had not been in breach of its obligations, it still remained
liable for damages under Article 21 of the Civil Code.
The RTC had concluded, based on the testimonial representations of
Pantaleon and respondents credit authorizer, Edgardo Jaurigue, that the
normal approval time for purchases was a matter of seconds. Based on
that standard, respondent had been in clear delay with respect to the three
subject transactions. As it appears, the Court of Appeals conceded that
there had been delay on the part of respondent in approving the
purchases. However, it made two critical conclusions in favor of
respondent. First, the appellate court ruled that the delay was not attended
by bad faith, malice, or gross negligence. Second, it ruled that respondent
had exercised diligent efforts to effect the approval of the purchases,
which were not in accordance with the charge pattern petitioner had
established for himself, as exemplified by the fact that at Coster, he was
making his very first single charge purchase of US$13,826, and the

record of [petitioner]s past spending with [respondent] at the time does

not favorably support his ability to pay for such purchase.[17]
On the premise that there was an obligation on the part of respondent to
approve or disapprove with dispatch the charge purchase, petitioner
argues that the failure to timely approve or disapprove the purchase
constituted mora solvendi on the part of respondent in the performance of
its obligation. For its part, respondent characterizes the depiction by
petitioner of its obligation to him as to approve purchases instantaneously
or in a matter of seconds.
Petitioner correctly cites that under mora solvendi, the three
requisites for a finding of default are that the obligation is demandable
and liquidated; the debtor delays performance; and the creditor judicially
or extrajudicially requires the debtors performance.[18] Petitioner asserts
that the Court of Appeals had wrongly applied the principle ofmora
accipiendi, which relates to delay on the part of the obligee in accepting
the performance of the obligation by the obligor. The requisites of mora
accipiendi are: an offer of performance by the debtor who has the
required capacity; the offer must be to comply with the prestation as it
should be performed; and the creditor refuses the performance without
just cause.[19] The error of the appellate court, argues petitioner, is in
relying on the invocation by respondent of just cause for the delay, since
while just cause is determinative of mora accipiendi, it is not so with the
case of mora solvendi.
We can see the possible source of confusion as to which type
of mora to appreciate. Generally, the relationship between a credit card
provider and its card holders is that of creditor-debtor,[20] with the card
company as the creditor extending loans and credit to the card holder,
who as debtor is obliged to repay the creditor. This relationship already
takes exception to the general rule that as between a bank and its
depositors, the bank is deemed as the debtor while the depositor is
considered as the creditor.[21] Petitioner is asking us, not baselessly, to
again shift perspectives and again see the credit card company as the
debtor/obligor, insofar as it has the obligation to the customer as
creditor/obligee to act promptly on its purchases on credit.

Ultimately, petitioners perspective appears more sensible than if we

were to still regard respondent as the creditor in the context of this cause
of action. If there was delay on the part of respondent in its normal role as
creditor to the cardholder, such delay would not have been in the
acceptance of the performance of the debtors obligation (i.e., the
repayment of the debt), but it would be delay in the extension of the
credit in the first place. Such delay would not fall under mora accipiendi,
which contemplates that the obligation of the debtor, such as the actual
purchases on credit, has already been constituted. Herein, the
establishment of the debt itself (purchases on credit of the jewelry) had
not yet been perfected, as it remained pending the approval or consent of
the respondent credit card company.
Still, in order for us to appreciate that respondent was in mora
solvendi, we will have to first recognize that there was indeed an
obligation on the part of respondent to act on petitioners purchases with
timely dispatch, or for the purposes of this case, within a period
significantly less than the one hour it apparently took before the purchase
at Coster was finally approved.
The findings of the trial court, to our mind, amply established that
the tardiness on the part of respondent in acting on petitioners purchase at
Coster did constitute culpable delay on its part in complying with its
obligation to act promptly on its customers purchase request, whether
such action be favorable or unfavorable. We quote the trial court, thus:
As to the first issue, both parties have testified that
normal approval time for purchases was a matter of seconds.
Plaintiff testified that his personal experience with the
use of the card was that except for the three charge purchases
subject of this case, approvals of his charge purchases were
always obtained in a matter of seconds.
Defendants credit authorizer Edgardo Jaurique likewise
testified:
Q. You also testified that on normal
occasions, the normal approval time for charges
would be 3 to 4 seconds?

A. Yes, Maam.
Both parties likewise presented evidence that the
processing and approval of plaintiffs charge purchase at the
Coster Diamond House was way beyond the normal approval
time of a matter of seconds.
Plaintiff testified that he presented his AmexCard to the
sales clerk at Coster, at 9:15 a.m. and by the time he had to
leave the store at 10:05 a.m., no approval had yet been
received. In fact, the Credit Authorization System (CAS)
record of defendant at Phoenix Amex shows that defendants
Amsterdam office received the request to approve plaintiffs
charge purchase at 9:20 a.m., Amsterdam time or 01:20,
Phoenix time, and that the defendant relayed its approval to
Coster at 10:38 a.m., Amsterdam time, or 2:38, Phoenix time,
or a total time lapse of one hour and [18] minutes. And even
then, the approval was conditional as it directed in
computerese [sic] Positive Identification of Card holder
necessary further charges require bank information due to high
exposure. By Jack Manila.
The delay in the processing is apparent to be undue as
shown from the frantic successive queries of Amexco
Amsterdam which reads: US$13,826. Cardmember buying
jewels. ID seen. Advise how long will this take? They were
sent
at 01:33, 01:37, 01:40, 01:45, 01:52 and 02:08,
all
times Phoenix. Manila Amexco could be unaware of the need
for speed in resolving the charge purchase referred to it, yet it
sat on its hand, unconcerned.
xxx
To repeat, the Credit Authorization System (CAS)
record
on
the Amsterdam transaction
shows
how
Amexco Netherlands viewed the delay as unusually frustrating.
In sequence expressed in Phoenix time from 01:20 when the
charge purchased was referred for authorization, defendants
own record shows:
01:22 the authorization is referred to Manila
Amexco

01:32 Netherlands gives information that the

identification of the cardmember has
been presented and he is buying
jewelries worth US $13,826.
01:33 Netherlands asks How long will this
take?
02:08 Netherlands is still asking How long
will this take?
The Court is convinced that defendants delay
constitute[s] breach of its contractual obligation to act on his
use of the card abroad with special handling. [22] (Citations
omitted)
xxx

Notwithstanding the popular notion that credit card purchases are

approved within seconds, there really is no strict, legally determinative
point of demarcation on how long must it take for a credit card company
to approve or disapprove a customers purchase, much less one
specifically contracted upon by the parties. Yet this is one of those
instances when youd know it when youd see it, and one hour appears to
be an awfully long, patently unreasonable length of time to approve or
disapprove a credit card purchase. It is long enough time for the customer
to walk to a bank a kilometer away, withdraw money over the counter,
and return to the store.
Notably, petitioner frames the obligation of respondent as to
approve or disapprove the purchase in timely dispatch, and not to approve
the purchase instantaneously or within seconds. Certainly, had respondent
disapproved petitioners purchase within seconds or within a timely
manner, this particular action would have never seen the light of day.
Petitioner and his family would have returned to the bus without delay
internally humiliated perhaps over the rejection of his card yet spared the
shame of being held accountable by newly-made friends for making them
miss the chance to tour the city of Amsterdam.
We do not wish do dispute that respondent has the right, if not the
obligation, to verify whether the credit it is extending upon on a particular

purchase was indeed contracted by the cardholder, and that the cardholder
is within his means to make such transaction. The culpable failure of
respondent herein is not the failure to timely approve petitioners
purchase, but the more elemental failure to timely act on the same,
whether favorably or unfavorably. Even assuming that respondents credit
authorizers did not have sufficient basis on hand to make a judgment, we
see no reason why respondent could not have promptly informed
petitioner the reason for the delay, and duly advised him that resolving
the same could take some time. In that way, petitioner would have had
informed basis on whether or not to pursue the transaction at Coster,
given the attending circumstances. Instead, petitioner was left
uncomfortably dangling in the chilly autumn winds in a foreign land and
soon forced to confront the wrath of foreign folk.
Moral damages avail in cases of breach of contract where the
defendant acted fraudulently or in bad faith, and the court should find that
under the circumstances, such damages are due. The findings of the trial
court are ample in establishing the bad faith and unjustified neglect of
respondent, attributable in particular to the dilly-dallying of
respondents Manila credit authorizer, Edgardo Jaurique.[23] Wrote the trial
court:
While it is true that the Cardmembership Agreement,
which defendant prepared, is silent as to the amount of time it
should take defendant to grant authorization for a charge
purchase, defendant acknowledged that the normal time for
approval should only be three to four seconds. Specially so
with cards used abroad which requires special handling,
meaning with priority. Otherwise, the object of credit or charge
cards would be lost; it would be so inconvenient to use that
buyers and consumers would be better off carrying bundles of
currency or travellers checks, which can be delivered and
accepted quickly. Such right was not accorded to plaintiff in
the instances complained off for reasons known only to
defendant at that time. This, to the Courts mind, amounts to a
wanton and deliberate refusal to comply with its contractual
obligations, or at least abuse of its rights, under the contract. [24]
xxx
The delay committed by defendant was clearly attended
by unjustified neglect and bad faith, since it alleges to have

consumed more than one hour to simply go over plaintiffs past

credit history with defendant, his payment record and his credit
and bank references, when all such data are already stored and
readily available from its computer. This Court also takes note
of the fact that there is nothing in plaintiffs billing history that
would warrant the imprudent suspension of action by
defendant in processing the purchase. Defendants witness
Jaurique admits:
Q. But did you discover that he did not have any
outstanding account?
A. Nothing in arrears at that time.
Q. You were well aware of this fact on this very
date?
A. Yes, sir.
Mr. Jaurique further testified that there were no
delinquencies in plaintiffs account.[25]

It should be emphasized that the reason why petitioner is entitled to

damages is not simply because respondent incurred delay, but because the
delay, for which culpability lies under Article 1170, led to the particular
injuries under Article 2217 of the Civil Code for which moral damages
are remunerative.[26] Moral damages do not avail to soothe the plaints of
the simply impatient, so this decision should not be cause for relief for
those who time the length of their credit card transactions with a
stopwatch. The somewhat unusual attending circumstances to the
purchase at Coster that there was a deadline for the completion of that
purchase by petitioner before any delay would redound to the injury of
his several traveling companions gave rise to the moral shock, mental
anguish, serious anxiety, wounded feelings and social humiliation
sustained by the petitioner, as concluded by the RTC.[27] Those
circumstances are fairly unusual, and should not give rise to a general
entitlement for damages under a more mundane set of facts.

We sustain the amount of moral damages awarded to petitioner by

the RTC. There is no hard-and-fast rule in determining what would be a
fair and reasonable amount of moral damages, since each case must be
governed by its own peculiar facts, however, it must be commensurate to
the loss or injury suffered.[28] Petitioners original prayer forP5,000,000.00
for moral damages is excessive under the circumstances, and the amount
awarded by the trial court of P500,000.00 in moral damages more seemly.
Likewise, we deem exemplary damages available under the
circumstances, and the amount of P300,000.00 appropriate. There is
similarly no cause though to disturb the determined award
of P100,000.00 as attorneys fees, and P85,233.01 as expenses of
litigation.
WHEREFORE, the petition is GRANTED. The assailed Decision
of the Court of Appeals is REVERSED and SET ASIDE. The Decision
of the Regional Trial Court of Makati, Branch 145 in Civil Case No. 921665 is hereby REINSTATED. Costs against respondent.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 116100

February 9, 1996

SPOUSES CRISTINO and BRIGIDA CUSTODIO and SPOUSES LITO and MARIA
CRISTINA SANTOS,petitioners,
vs.
COURT OF APPEALS, HEIRS OF PACIFICO C. MABASA and REGIONAL TRIAL
COURT OF PASIG, METRO MANILA, BRANCH 181, respondents.
DECISION
REGALADO, J.:
This petition for review on certiorari assails the decision of respondent Court of Appeals
in CA-G.R. CV No. 29115, promulgated on November 10, 1993, which affirmed with
modification the decision of the trial court, as well as its resolution dated July 8, 1994
denying petitioner's motion for reconsideration. 1
On August 26, 1982, Civil Case No. 47466 for the grant of an easement of right of way
was filed by Pacifico Mabasa against Cristino Custodio, Brigida R. Custodio, Rosalina R.
Morato, Lito Santos and Maria Cristina C. Santos before the Regional Trial Court of Pasig
and assigned to Branch 22 thereof.2
The generative facts of the case, as synthesized by the trial court and adopted by the
Court of Appeals, are as follows:
Perusing the record, this Court finds that the original plaintiff Pacifico Mabasa
died during the pendency of this case and was substituted by Ofelia Mabasa, his
surviving spouse [and children].
The plaintiff owns a parcel of land with a two-door apartment erected thereon
situated at Interior P. Burgos St., Palingon, Tipas, Tagig, Metro Manila. The
plaintiff was able to acquire said property through a contract of sale with spouses
Mamerto Rayos and Teodora Quintero as vendors last September 1981. Said
property may be described to be surrounded by other immovables pertaining to
defendants herein. Taking P. Burgos Street as the point of reference, on the left
side, going to plaintiff's property, the row of houses will be as follows: That of
defendants Cristino and Brigido Custodio, then that of Lito and Maria Cristina
Santos and then that of Ofelia Mabasa. On the right side (is) that of defendant
Rosalina Morato and then a Septic Tank (Exhibit "D"). As an access to P. Burgos
Street from plaintiff's property, there are two possible passageways. The first
passageway is approximately one meter wide and is about 20 meters distan(t)
from Mabasa's residence to P. Burgos Street. Such path is passing in between
the previously mentioned row of houses. The second passageway is about 3
meters in width and length from plaintiff Mabasa's residence to P. Burgos Street;
it is about 26 meters. In passing thru said passageway, a less than a meter wide
path through the septic tank and with 5-6 meters in length, has to be traversed.

When said property was purchased by Mabasa, there were tenants occupying
the remises and who were acknowledged by plaintiff Mabasa as
tenants. However, sometime in February, 1982, one of said tenants vacated the
apartment and when plaintiff Mabasa went to see the premises, he saw that
there had been built an adobe fence in the first passageway making it narrower
in width. Said adobe fence was first constructed by defendants Santoses along
their property which is also along the first passageway. Defendant Morato
constructed her adobe fence and even extended said fence in such a way that
the entire passageway was enclosed. (Exhibit "1-Santoses and Custodios, Exh.
"D" for plaintiff, Exhs. "1-C", "1-D" and "1-E") And it was then that the remaining
tenants of said apartment vacated the area. Defendant Ma. Cristina Santos
testified that she constructed said fence because there was an incident when her
daughter was dragged by a bicycle pedalled by a son of one of the tenants in
said apartment along the first passageway. She also mentioned some other
inconveniences of having (at) the front of her house a pathway such as when
some of the tenants were drunk and would bang their doors and windows. Some
of their footwear were even lost. . . .3 (Emphasis in original text; corrections in
parentheses supplied)
On February 27, 1990, a decision was rendered by the trial court, with this dispositive
part:
Accordingly, judgment is hereby rendered as follows:
1) Ordering defendants Custodios and Santoses to give plaintiff permanent
access ingress and egress, to the public street;
2) Ordering the plaintiff to pay defendants Custodios and Santoses the sum of
Eight Thousand Pesos (P8,000) as indemnity for the permanent use of the
passageway.
The parties to shoulder their respective litigation expenses. 4
Not satisfied therewith, therein plaintiff represented by his heirs, herein private
respondents, went to the Court of Appeals raising the sole issue of whether or not the
lower court erred in not awarding damages in their favor. On November 10, 1993, as
earlier stated, the Court of Appeals rendered its decision affirming the judgment of the
trial court with modification, the decretal portion of which disposes as follows:
WHEREFORE, the appealed decision of the lower court is hereby AFFIRMED
WITH MODIFICATION only insofar as the herein grant of damages to plaintiffsappellants. The Court hereby orders defendants-appellees to pay plaintiffsappellants the sum of Sixty Five Thousand (P65,000) Pesos as Actual Damages,
Thirty Thousand (P30,000) Pesos as Moral Damages, and Ten Thousand
(P10,000) Pesos as Exemplary Damages. The rest of the appealed decision is
affirmed to all respects.5
On July 8, 1994, the Court of Appeals denied petitioner's motion for
reconsideration.6 Petitioners then took the present recourse to us, raising two issues,
namely, whether or not the grant of right of way to herein private respondents is proper,
and whether or not the award of damages is in order.
With respect to the first issue, herein petitioners are already barred from raising the
same. Petitioners did not appeal from the decision of the court a quo granting private
respondents the right of way, hence they are presumed to be satisfied with the

adjudication therein. With the finality of the judgment of the trial court as to petitioners,
the issue of propriety of the grant of right of way has already been laid to rest.
For failure to appeal the decision of the trial court to the Court of Appeals, petitioners
cannot obtain any affirmative relief other than those granted in the decision of the trial
court. That decision of the court below has become final as against them and can no
longer be reviewed, much less reversed, by this Court. The rule in this jurisdiction is that
whenever an appeal is taken in a civil case, an appellee who has not himself appealed
may not obtain from the appellate court any affirmative relief other than what was granted
in the decision of the lower court. The appellee can only advance any argument that he
may deem necessary to defeat the appellant's claim or to uphold the decision that is
being disputed, and he can assign errors in his brief if such is required to strengthen the
views expressed by the court a quo. These assigned errors, in turn, may be considered
by the appellate court solely to maintain the appealed decision on other grounds, but not
for the purpose of reversing or modifying the judgment in the appellee's favor and giving
him other affirmative reliefs.7
However, with respect to the second issue, we agree with petitioners that the Court of
Appeals erred in awarding damages in favor of private respondents. The award of
damages has no substantial legal basis. A reading of the decision of the Court of Appeals
will show that the award of damages was based solely on the fact that the original
plaintiff, Pacifico Mabasa, incurred losses in the form of unrealized rentals when the
tenants vacated the leased premises by reason of the closure of the passageway.
However, the mere fact that the plaintiff suffered losses does not give rise to a right to
recover damages. To warrant the recovery of damages, there must be both a right of
action for a legal wrong inflicted by the defendant, and damage resulting to the plaintiff
therefrom. Wrong without damage, or damage without wrong, does not constitute a
cause of action, since damages are merely part of the remedy allowed for the injury
caused by a breach or wrong.8
There is a material distinction between damages and injury. Injury is the illegal invasion
of a legal right; damage is the loss, hurt, or harm which results from the injury; and
damages are the recompense or compensation awarded for the damage suffered. Thus,
there can be damage without injury in those instances in which the loss or harm was not
the result of a violation of a legal duty. These situations are often called damnum absque
injuria.9
In order that a plaintiff may maintain an action for the injuries of which he complains, he
must establish that such injuries resulted from a breach of duty which the defendant
owed to the plaintiff a concurrence of injury to the plaintiff and legal responsibility by the
person causing it.10 The underlying basis for the award of tort damages is the premise
that an individual was injured in contemplation of law. Thus, there must first be the
breach of some duty and the imposition of liability for that breach before damages may
be awarded; it is not sufficient to state that there should be tort liability merely because
the plaintiff suffered some pain and suffering.11
Many accidents occur and many injuries are inflicted by acts or omissions which cause
damage or loss to another but which violate no legal duty to such other person, and
consequently create no cause of action in his favor. In such cases, the consequences
must be borne by the injured person alone. The law affords no remedy for damages
resulting from an act which does not amount to a legal injury or wrong. 12
In other words, in order that the law will give redress for an act causing damage, that act
must be not only hurtful, but wrongful. There must be damnum et injuria.13 If, as may
happen in many cases, a person sustains actual damage, that is, harm or loss to his

person or property, without sustaining any legal injury, that is, an act or omission which
the law does not deem an injury, the damage is regarded as damnum absque injuria.14
In the case at bar, although there was damage, there was no legal injury. Contrary to the
claim of private respondents, petitioners could not be said to have violated the principle
of abuse of right. In order that the principle of abuse of right provided in Article 21 of the
Civil Code can be applied, it is essential that the following requisites concur: (1) The
defendant should have acted in a manner that is contrary to morals, good customs or
public policy; (2) The acts should be willful; and (3) There was damage or injury to the
plaintiff.15
The act of petitioners in constructing a fence within their lot is a valid exercise of their
right as owners, hence not contrary to morals, good customs or public policy. The law
recognizes in the owner the right to enjoy and dispose of a thing, without other limitations
than those established by law.16 It is within the right of petitioners, as owners, to enclose
and fence their property. Article 430 of the Civil Code provides that "(e)very owner may
enclose or fence his land or tenements by means of walls, ditches, live or dead hedges,
or by any other means without detriment to servitudes constituted thereon."
At the time of the construction of the fence, the lot was not subject to any servitudes.
There was no easement of way existing in favor of private respondents, either by law or
by contract. The fact that private respondents had no existing right over the said
passageway is confirmed by the very decision of the trial court granting a compulsory
right of way in their favor after payment of just compensation. It was only that decision
which gave private respondents the right to use the said passageway after payment of
the compensation and imposed a corresponding duty on petitioners not to interfere in the
exercise of said right.
Hence, prior to said decision, petitioners had an absolute right over their property and
their act of fencing and enclosing the same was an act which they may lawfully perform
in the employment and exercise of said right. To repeat, whatever injury or damage may
have been sustained by private respondents by reason of the rightful use of the said land
by petitioners is damnum absque injuria.17
A person has a right to the natural use and enjoyment of his own property, according to
his pleasure, for all the purposes to which such property is usually applied. As a general
rule, therefore, there is no cause of action for acts done by one person upon his own
property in a lawful and proper manner, although such acts incidentally cause damage or
an unavoidable loss to another, as such damage or loss is damnum absque
injuria. 18 When the owner of property makes use thereof in the general and ordinary
manner in which the property is used, such as fencing or enclosing the same as in this
case, nobody can complain of having been injured, because the incovenience arising
from said use can be considered as a mere consequence of community life. 19
The proper exercise of a lawful right cannot constitute a legal wrong for which an action
will lie, 20 although the act may result in damage to another, for no legal right has been
invaded. 21 One may use any lawful means to accomplish a lawful purpose and though
the means adopted may cause damage to another, no cause of action arises in the
latter's favor. An injury or damage occasioned thereby is damnum absque injuria. The
courts can give no redress for hardship to an individual resulting from action reasonably
calculated to achieve a lawful means. 22
WHEREFORE, under the compulsion of the foregoing premises, the appealed decision
of respondent Court of Appeals is hereby REVERSED and SET ASIDE and the judgment
of the trial court is correspondingly REINSTATED.

Romero and Puno, JJ., concur.

Mendoza, J., took no part.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
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 Zuiga, 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 ofrespondeat 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 extracontractual 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 extracontractual 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. Extracontractual 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
sufficientprima 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 nonperformance 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.
1awph!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 Avancea, 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.
Johnson, J., concur.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION

G.R. No. 84698 February 4, 1992

PHILIPPINE SCHOOL OF BUSINESS ADMINISTRATION, JUAN D. LIM, BENJAMIN P.
PAULINO, ANTONIO M. MAGTALAS, COL. PEDRO SACRO and LT. M.
SORIANO, petitioners,
vs.
COURT OF APPEALS, HON. REGINA ORDOEZ-BENITEZ, in her capacity as
Presiding Judge of Branch 47, Regional Trial Court, Manila, SEGUNDA R.
BAUTISTA and ARSENIA D. BAUTISTA, respondents.
Balgos and Perez for petitioners.
Collantes, Ramirez & Associates for private respondents.

PADILLA, J.:
A stabbing incident on 30 August 1985 which caused the death of Carlitos Bautista while
on the second-floor premises of the Philippine School of Business Administration (PSBA)
prompted the parents of the deceased to file suit in the Regional Trial Court of Manila
(Branch 47) presided over by Judge (now Court of Appeals justice) Regina OrdoezBenitez, for damages against the said PSBA and its corporate officers. At the time of his
death, Carlitos was enrolled in the third year commerce course at the PSBA. It was
established that his assailants were not members of the school's academic community
but were elements from outside the school.
Specifically, the suit impleaded the PSBA and the following school authorities: Juan D.
Lim (President), Benjamin P. Paulino (Vice-President), Antonio M. Magtalas
(Treasurer/Cashier), Col. Pedro Sacro (Chief of Security) and a Lt. M. Soriano (Assistant
Chief of Security). Substantially, the plaintiffs (now private respondents) sought to
adjudge them liable for the victim's untimely demise due to their alleged negligence,
recklessness and lack of security precautions, means and methods before, during and
after the attack on the victim. During the proceedings a quo, Lt. M. Soriano terminated his
relationship with the other petitioners by resigning from his position in the school.
Defendants a quo (now petitioners) sought to have the suit dismissed, alleging that since
they are presumably sued under Article 2180 of the Civil Code, the complaint states no
cause of action against them, as jurisprudence on the subject is to the effect
that academic institutions, such as the PSBA, are beyond the ambit of the rule in the
afore-stated article.

The respondent trial court, however, overruled petitioners' contention and thru an order
dated 8 December 1987, denied their motion to dismiss. A subsequent motion for
reconsideration was similarly dealt with by an order dated 25 January 1988. Petitioners
then assailed the trial court's disposition before the respondent appellate court which, in
a decision * promulgated on 10 June 1988, affirmed the trial court's orders. On 22 August
1988, the respondent appellate court resolved to deny the petitioners' motion for
reconsideration. Hence, this petition.
At the outset, it is to be observed that the respondent appellate court primarily anchored
its decision on the law ofquasi-delicts, as enunciated in Articles 2176 and 2180 of the
Civil Code. 1 Pertinent portions of the appellate court's now assailed ruling state:
Article 2180 (formerly Article 1903) of the Civil Code is an adoption from
the old Spanish Civil Code. The comments of Manresa and learned
authorities on its meaning should give way to present day changes. The
law is not fixed and flexible (sic); it must be dynamic. In fact, the greatest
value and significance of law as a rule of conduct in (sic) its flexibility to
adopt to changing social conditions and its capacity to meet the new
challenges of progress.
Construed in the light of modern day educational system, Article 2180
cannot be construed in its narrow concept as held in the old case
of Exconde vs. Capuno 2 and Mercado vs. Court of Appeals; 3hence, the
ruling in the Palisoc 4 case that it should apply to all kinds of educational
institutions, academic or vocational.
At any rate, the law holds the teachers and heads of the school staff liable
unless they relieve themselves of such liability pursuant to the last
paragraph of Article 2180 by "proving that they observed all the diligence
to prevent damage." This can only be done at a trial on the merits of the
case. 5
While we agree with the respondent appellate court that the motion to dismiss the
complaint was correctly denied and the complaint should be tried on the merits, we do
not however agree with the premises of the appellate court's ruling.
Article 2180, in conjunction with Article 2176 of the Civil Code, establishes the rule
of in loco parentis. This Court discussed this doctrine in the afore-cited cases
of Exconde, Mendoza, Palisoc and, more recently, in Amadora vs.Court of Appeals. 6 In
all such cases, it had been stressed that the law (Article 2180) plainly provides that the
damage should have been caused or inflicted by pupils or students of he educational
institution sought to be held liable for the acts of its pupils or students while in its custody.
However, this material situation does not exist in the present case for, as earlier indicated, the
assailants of Carlitos were not students of the PSBA, for whose acts the school could be
made liable.
However, does the appellate court's failure to consider such material facts mean the
exculpation of the petitioners from liability? It does not necessarily follow.
When an academic institution accepts students for enrollment, there is established
a contract between them, resulting in bilateral obligations which both parties are bound to
comply with. 7 For its part, the school undertakes to provide the student with an education
that would presumably suffice to equip him with the necessary tools and skills to pursue
higher education or a profession. On the other hand, the student covenants to abide by the
school's academic requirements and observe its rules and regulations.

Institutions of learning must also meet the implicit or "built-in" obligation of providing their
students with an atmosphere that promotes or assists in attaining its primary undertaking
of imparting knowledge. Certainly, no student can absorb the intricacies of physics or
higher mathematics or explore the realm of the arts and other sciences when bullets are
flying or grenades exploding in the air or where there looms around the school premises
a constant threat to life and limb. Necessarily, the school must ensure that adequate
steps are taken to maintain peace and order within the campus premises and to prevent
the breakdown thereof.
Because the circumstances of the present case evince a contractual relation between the
PSBA and Carlitos Bautista, the rules on quasi-delict do not really govern. 8 A perusal of Article
2176 shows that obligations arising from quasi-delicts or tort, also known as extra-contractual obligations, arise only between
parties not otherwise bound by contract, whether express or implied. However, this impression has not prevented this Court
from determining the existence of a tort even when there obtains a contract. In Air France vs. Carrascoso (124 Phil. 722), the
private respondent was awarded damages for his unwarranted expulsion from a first-class seat aboard the petitioner airline.
It is noted, however, that the Court referred to the petitioner-airline's liability as one arising from tort, not one arising from a
contract of carriage. In effect, Air France is authority for the view that liability from tort may exist even if there is a contract, for
the act that breaks the contract may be also a tort. (Austro-America S.S. Co. vs. Thomas, 248 Fed. 231).

This view was not all that revolutionary, for even as early as 1918, this Court was already
of a similar mind. InCangco vs. Manila Railroad (38 Phil. 780), Mr. Justice Fisher
elucidated thus:
The field of non-contractual obligation is much broader than that of
contractual obligation, 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 a breach of the
contract would have constituted the source of an extra-contractual
obligation had no contract existed between the parties.
Immediately what comes to mind is the chapter of the Civil Code on Human Relations,
particularly Article 21, which provides:
Any person who wilfully causes loss or injury to another in a manner that
is contrary to morals, good custom or public policy shall compensate the
latter for the damage. (emphasis supplied).
Air France penalized the racist policy of the airline which emboldened the petitioner's
employee to forcibly oust the private respondent to cater to the comfort of a white man
who allegedly "had a better right to the seat." InAustro-American, supra, the public
embarrassment caused to the passenger was the justification for the Circuit Court of
Appeals, (Second Circuit), to award damages to the latter. From the foregoing, it can be
concluded that should the act which breaches a contract be done in bad faith and be
violative of Article 21, then there is a cause to view the act as constituting a quasi-delict.
In the circumstances obtaining in the case at bar, however, there is, as yet, no finding
that the contract between the school and Bautista had been breached thru the former's
negligence in providing proper security measures. This would be for the trial court to
determine. And, even if there be a finding of negligence, the same could give rise
generally to a breach of contractual obligation only. Using the test of Cangco, supra, the
negligence of the school would not be relevant absent a contract. In fact, that negligence
becomes material only because of the contractual relation between PSBA and Bautista.
In other words, a contractual relation is a condition sine qua nonto the school's liability.
The negligence of the school cannot exist independently of the contract, unless the
negligence occurs under the circumstances set out in Article 21 of the Civil Code.

This Court is not unmindful of the attendant difficulties posed by the obligation of schools,
above-mentioned, for conceptually a school, like a common carrier, cannot be an insurer
of its students against all risks. This is specially true in the populous student communities
of the so-called "university belt" in Manila where there have been reported several
incidents ranging from gang wars to other forms of hooliganism. It would not be equitable
to expect of schools to anticipate all types of violent trespass upon their premises, for
notwithstanding the security measures installed, the same may still fail against an
individual or group determined to carry out a nefarious deed inside school premises and
environs. Should this be the case, the school may still avoid liability by proving that the
breach of its contractual obligation to the students was not due to its negligence, here
statutorily defined to be the omission of that degree of diligence which is required by the
nature of the obligation and corresponding to the circumstances of persons, time and
place. 9
As the proceedings a quo have yet to commence on the substance of the private
respondents' complaint, the record is bereft of all the material facts. Obviously, at this
stage, only the trial court can make such a determination from the evidence still to unfold.
WHEREFORE, the foregoing premises considered, the petition is DENIED. The court of
origin (RTC, Manila, Br. 47) is hereby ordered to continue proceedings consistent with
this ruling of the Court. Costs against the petitioners.
SO ORDERED.
Melencio-Herrera, Paras, Regalado and Nocon, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION

G.R. No. 112576 October 26, 1994

(CA-GR CV No. 26571)
METROPOLITAN BANK AND TRUST COMPANY, petitioner,
vs.
THE HON. COURT OF APPEALS, RURAL BANK OF PADRE GARCIA, INC. and
ISABEL R. KATIGBAK,respondents.
Makalintal, Barot, Torres & Ibarra for petitioner.
Fornier, Lava & Fornier for private respondents.

ROMERO, J.:
This petition for certiorari seeks to annul the decision of respondent Court of Appeals
dated October 29, 1992 in CA GR CV No. 26571 affirming the decision of the Regional
Trial Court of Lipa, Batangas Branch XIII for damages, and the Resolution dated
November 11, 1993 denying petitioner's motion for reconsideration of the aforesaid
decision.
The case emanated from a dispute between the Rural Bank of Padre Garcia, Inc.
(RBPG) and Metropolitan Bank and Trust Company (MBTC) relative to a credit
memorandum dated April 5, 1982 from the Central Bank in the amount of P304,000.00 in
favor of RBPG.
The records show that Isabel Katigbak is the president and director of RBPG, owning
65% of the shares thereof. Metropolitan Bank and Trust Company (MBTC) is the rural
bank's depository bank, where Katigbak maintains current accounts with MBTC's main
office in Makati as well as its Lipa City branch.
On April 6, 1982, MBTC received from the Central Bank a credit memo dated April 5,
1982 that its demand deposit account was credited with P304,000.00 for the account of
RBPG, representing loans granted by the Central Bank to RBPG. On the basis of said
credit memo, Isabel Katigbak issued several checks against its account with MBTC in the
total amount of P300,000.00, two (2) of which (Metrobank Check Nos. 0069 and 0070)
were payable to Dr. Felipe C. Roque and Mrs. Eliza Roque for P25,000.00 each. Said
checks issued to Dr. and Mrs. Roque were deposited by the Roques with the Philippine
Banking Corporation, Novaliches Branch in Quezon City. When these checks were
forwarded to MBTC on April 12, 1982 for payment (six (6) days from receipt of the Credit
Memo), the checks were returned by MBTC with the annotations "DAIF TNC" (Drawn

Against Insufficient Funds Try Next Clearing) so they were redeposited on April 14,
1982. These
were however again dishonored and returned unpaid for the following reason: "DAIF
TNC NO ADVICE FROM CB."
After the second dishonor of the two (2) checks, Dr. Felipe Roque, a member of the
Board of Directors of Philippine Banking Corporation, allegedly went to the Office of
Antonio Katigbak, an officer of RBPG, chiding him for the bouncing checks. In order to
appease the doctor, RBPG paid Dr. Roque P50,000.00 in cash to replace the aforesaid
checks.
On April 13, 1982, Isabel Katigbak who was in Hongkong on a
business-vacation trip together with her sons Alfredo and Antonio, both of whom were
also officers of RBPG, received overseas phone calls from Mrs. Maris Katigbak-San Juan
at her residence in San Lorenzo Village, Makati, informing Isabel Katigbak that a certain
Mr. Rizal Dungo, Assistant Cashier of MBTC insisted on talking to her (Mrs. San Juan),
berating her about the checks which bounced, saying "Nag-issue kayo ng tseke, wala
namang pondo," even if it was explained to Mr. Dungo that Mrs. San Juan was not in any
way connected with RBPG.
Mrs. Katigbak testified that she informed Mrs. San Juan to request defendant MBTC to
check and verify the records regarding the aforementioned Central Bank credit memo for
P304,000.00 in favor of RBPG as she was certain that the checks were sufficiently
covered by the CB credit memo as early as April 6, 1994, but the following day, Mrs. San
Juan received another insulting call from Mr. Dungo ("Bakit kayo nag-issue ng tseke na
wala namang pondo, Three Hundred Thousand na.") 1 When Mrs. San Juan explained to
him the need to verify the records regarding the Central Bank memo, he merely brushed it
aside, telling her sarcastically that he was very sure that no such credit memo existed. Mrs.
San Juan was constrained to place another long distance call to Mrs. Katigbak in Hongkong
that evening. Tense and angered, the Katigbaks had to cut short their Hongkong stay with
their respective families and flew back to Manila, catching the first available flight on April 15,
1982.
Immediately upon arrival, Mrs. Katigbak called up MBTC, through a
Mr. Cochico, for a re-examination of the records of MBTC regarding the Central Bank
credit memo dated April 5, 1982 for P304,000.00. Mr. Dungo, to whom Cochico handed
over the phone, allegedly arrogantly said: "Bakit kayo magagalit, wala naman kayong
pondo?" These remarks allegedly so shocked Mrs. Katigbak that her blood pressure rose
to a dangerous level and she had to undergo medical treatment at the Makati Medical
Center for two (2) days.
Metrobank not only dishonored the checks issued by RBPG, the latter was issued four
(4) debit memos representing service and penalty charges for the returned checks.
RBPG and Isabel Katigbak filed Civil Case No. V-329 in the RTC of Lipa, Batangas
Branch XIII against the Metropolitan Bank and Trust Company for damages on April 26,
1983.
The ultimate facts as alleged by the defendant MBTC in its answer are as follows: that on
April 6, 1982, its messenger, Elizer Gonzales, received from the Central Bank several
credit advices on rural bank accounts, which included that of plaintiff RBPG in the
amount of P304,000.00; that due to the inadvertence of said messenger, the credit
advice issued in favor of plaintiff RBPG was not delivered to the department in charge of
processing the same; consequently, when MBTC received from the clearing department
the checks in question, the stated balance in RBPG's account was only P5,498.58 which
excluded the unprocessed credit advice of P304,000.00 resulting in the dishonor of the

aforementioned checks; that as regards the P304,000.00 which was

a re-discounting loan from the Central Bank, the same was credited only on April 15,
1982 after the Central Bank finally confirmed that a credit advice was indeed issued in
favor of RBPG; that after the confirmation, MBTC credited the amount of the credit advice
to plaintiff RBPG's account and thru its officers, allegedly conveyed personally on two
occasions its apologies to plaintiffs to show that the bank and its officers acted with no
deliberate intent on their part to cause injury or damage to plaintiffs, explaining the
circumstances that gave rise to the bouncing checks situation. Metrobank's negligence
arising from their messenger's misrouting of the credit advice resulting in the return of the
checks in question, despite daily reporting of credit memos and a corresponding daily
radio message confirmation, (as shown by Exhibit "I," the Investigation Report of the
bank's Mr. Valentino Elevado) and Mr. Dungo's improper handling of clients led to the
messenger's dismissal from service and Mr. Dungo's transfer from Metro Manila to
Mindoro.
The threshold issue was whether or not, under the facts and circumstances of the case,
plaintiff may be allowed to recover actual, moral and exemplary damages, including
attorney's fees, litigation expenses and the costs of the suit. On August 25, 1989, the
RTC of Lipa City rendered a decision 2 in favor of plaintiffs and against the defendant MBTC,
ordering the latter to:
1. pay plaintiff Isabel Katigbak P50,000.00 as temperate damages;
2. pay P500,000.00 as moral damages, considering that RBPG's credit
standing and business reputation were damaged by the wrongful acts of
defendant's employees, coupled with the rude treatment received by
Isabel Katigbak at the hands of Mr. Dungo, all of which impelled her to
seek medical treatment;
3. pay P100,000.00 as attorney's fees and litigation expenses; and.
4. pay the costs of suit.
The lower court did not award actual damages in the amount of P50,000.00 representing
the amount of the two (2) checks payable to Dr. Felipe C. Roque and Mrs. Elisa Roque
for P25,000 each, as it found no showing that Mr. Antonio Katigbak who allegedly paid
the amount was actually reimbursed by plaintiff RBPG. Moreover, the court held that no
actual damages could have been suffered by plaintiff RBPG because on April 15, 1982,
the Central Bank credit advice in the amount of P304,000 which included the two (2)
checks issued to the Roque spouses in the sum of P50,000.00 were already credited to
the account of RBPG and the service, as well as penalty charges, were all reversed.
MBTC appealed from the decision to the Court of Appeals in CA GR CV No. 26571,
alleging that the trial court erred in awarding temperate and moral damages, as well as
attorney's fees, plus costs and expenses of litigation without factual or legal basis
therefor.
On October 29, 1992, the Court of Appeals rendered a decision 3 affirming that of the trial
court, except for the deletion of the award of temperate damages, the reduction of moral
damages from P500,000.00 to P50,000.00 in favor of RBPG and P100,000.00 for Isabel
Katigbak and P50,000.00, as attorney's fees. Plaintiffs-appellees filed a motion for
reconsideration of the decision, questioning the deletion of the award of temperate damages
and the reduction of the award of moral damages and attorney's fees. The motion was
denied.
MBTC filed this petition, presenting the following issues for resolution:

1. whether or not private respondents RBPG and Isabel Rodriguez are

legally entitled to moral damages and attorney's fees, and
2. assuming that they are so entitled, whether or not the amounts
awarded are excessive and unconscionable.
The petition is devoid of merit.
The case at bench was instituted to seek damages caused by the dishonor through
negligence of respondent bank's checks which were actually sufficiently funded, and the
insults from petitioner bank's officer directed against private respondent Isabel R.
Katigbak. The presence of malice and the evidence of besmirched reputation or loss of
credit and business standing, as well as a reappraisal of its probative value, involves
factual matters which, having been already thoroughly discussed and analyzed in the
courts below, are no longer reviewable here. While this rule admits of exceptions, this
case does not fall under any of these.
There is no merit in petitioner's argument that it should not be considered negligent,
much less be held liable for damages on account of the inadvertence of its bank
employee as Article 1173 of the Civil Code only requires it to exercise the diligence of a
good pater familias.
As borne out by the records, the dishonoring of the respondent's checks committed
through negligence by the petitioner bank on April 6, 1982 was rectified only on April 15,
1992 or nine (9) days after receipt of the credit memo. Clearly, petitioner bank was
remiss in its duty and obligation to treat private respondent's account with the highest
degree of care, considering the fiduciary nature of their relationship. The bank is under
obligation to treat the accounts of its depositors with meticulous care, whether such
account consists only of a few hundred pesos or of millions. It must bear the blame for
failing to discover the mistake of its employee despite the established procedure
requiring bank papers to pass through bank personnel whose duty it is to check and
countercheck them for possible errors. 4 Responsibility arising from negligence in the
performance of every kind of obligation is demandable. 5 While the bank's negligence may not
have been attended with malice and bad faith, nevertheless, it caused serious anxiety,
embarrassment and humiliation to private respondents for which they are entitled to recover
reasonable moral damages. 6
As the records bear out, insult was added to injury by petitioner bank's issuance of debit
memoranda representing service and penalty charges for the returned checks, not to
mention the insulting remarks from its Assistant Cashier.
In the case of Leopoldo Araneta v. Bank of America, 7 we held that:
The financial credit of a businessman is a prized and valuable asset, it
being a significant part of the foundation of his business. Any adverse
reflection thereon constitutes some financial loss to him. As stated in the
case of Atlanta National Bank vs. Davis, 96 Ga 334, 23 SE 190, citing 2
Morse Banks, Sec. 458, "it can hardly be possible that a customer's
check can be wrongfully refused payment without some impeachment of
his credit, which must in fact be an actual injury, though he cannot, from
the nature of the case, furnish independent, distinct proof thereof".
It was established that when Mrs. Katigbak learned that her checks were not being
honored and Mr. Dungo repeatedly made the insulting phone calls, her wounded feelings
and the mental anguish suffered by her caused her blood pressure to rise beyond normal
limits, necessitating medical attendance for two (2) days at a hospital.

The damage to private respondents' reputation and social standing entitles them to moral
damages. Moral damages include physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation and
similar injury. 8 Temperate or moderate damages which are more than nominal but less than
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. 9 Temperate damages may be allowed in cases where from the nature of the case,
definite proof of pecuniary loss cannot be adduced, although the court is convinced that there
has been such loss. The appellate court, however, justified its deletion when MBTC reasoned
out that the amount of P50,000.00 is not part of the relief prayed for in the complaint, aside
from the fact that the amount allegedly suffered by Mrs. Katigbak is susceptible of proof. 10
Moral and temperate damages which are not susceptible of pecuniary estimation are not
awarded to penalize the petitioner but to compensate the respondents for injuries
suffered as a result of the former's fault and negligence, taking into account the latter's
credit and social standing in the banking community, particularly since this is the very first
time such humiliation has befallen private respondents. The amount of such losses need
not be established with exactitude, precisely due to their nature. 11
The carelessness of petitioner bank, aggravated by the lack of promptness in repairing
the error and the arrogant attitude of the bank officer handling the matter, justifies the
grant of moral damages, which are clearly not excessive and unconscionable.
Moreover, considering the nature and extent of the services rendered by private
respondent's counsel, both in the trial and appellate courts, the Court deems it just and
equitable that attorney's fees in the amount of P50,000.00 be awarded.
WHEREFORE, the decision of respondent Court of Appeals is AFFIRMED in all respects.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-10126

October 22, 1957

SALUD VILLANUEVA VDA. DE BATACLAN and the minors NORMA, LUZVIMINDA,

ELENITA, OSCAR and ALFREDO BATACLAN, represented by their Natural guardian,
SALUD VILLANUEVA VDA. DE BATACLAN, plaintiffs-appellants,
vs.
MARIANO MEDINA, defendant-appellant.
Lope E. Adriano, Emmanuel Andamo and Jose R. Francisco for plaintiffs-appellants.
Fortunato Jose for defendant and appellant.
MONTEMAYOR, J.:
Shortly after midnight, on September 13, 1952 bus no. 30 of the Medina Transportation,
operated by its owner defendant Mariano Medina under a certificate of public
convenience, left the town of Amadeo, Cavite, on its way to Pasay City, driven by its
regular chauffeur, Conrado Saylon. There were about eighteen passengers, including the
driver and conductor. Among the passengers were Juan Bataclan, seated beside and to
the right of the driver, Felipe Lara, sated to the right of Bataclan, another passenger
apparently from the Visayan Islands whom the witnesses just called Visaya, apparently
not knowing his name, seated in the left side of the driver, and a woman named Natalia
Villanueva, seated just behind the four last mentioned. At about 2:00 o'clock that same
morning, while the bus was running within the jurisdiction of Imus, Cavite, one of the front
tires burst and the vehicle began to zig-zag until it fell into a canal or ditch on the right
side of the road and turned turtle. Some of the passengers managed to leave the bus the
best way they could, others had to be helped or pulled out, while the three passengers
seated beside the driver, named Bataclan, Lara and the Visayan and the woman behind
them named Natalia Villanueva, could not get out of the overturned bus. Some of the
passengers, after they had clambered up to the road, heard groans and moans from
inside the bus, particularly, shouts for help from Bataclan and Lara, who said they could
not get out of the bus. There is nothing in the evidence to show whether or not the
passengers already free from the wreck, including the driver and the conductor, made
any attempt to pull out or extricate and rescue the four passengers trapped inside the
vehicle, but calls or shouts for help were made to the houses in the neighborhood. After
half an hour, came about ten men, one of them carrying a lighted torch made of bamboo
with a wick on one end, evidently fueled with petroleum. These men presumably
approach the overturned bus, and almost immediately, a fierce fire started, burning and
all but consuming the bus, including the four passengers trapped inside it. It would
appear that as the bus overturned, gasoline began to leak and escape from the gasoline
tank on the side of the chassis, spreading over and permeating the body of the bus and
the ground under and around it, and that the lighted torch brought by one of the men who
answered the call for help set it on fire.

That same day, the charred bodies of the four deemed passengers inside the bus were
removed and duly identified that of Juan Bataclan. By reason of his death, his widow,
Salud Villanueva, in her name and in behalf of her five minor children, brought the
present suit to recover from Mariano Medina compensatory, moral, and exemplary
damages and attorney's fees in the total amount of P87,150. After trial, the Court of First
Instance of Cavite awarded P1,000 to the plaintiffs plus P600 as attorney's fee, plus
P100, the value of the merchandise being carried by Bataclan to Pasay City for sale and
which was lost in the fire. The plaintiffs and the defendants appealed the decision to the
Court of Appeals, but the latter endorsed the appeal to us because of the value involved
in the claim in the complaint.
Our new Civil Code amply provides for the responsibility of common carrier to its
passengers and their goods. For purposes of reference, we are reproducing the pertinent
codal provisions:
ART. 1733. Common carriers, from the nature of their business and for reasons of
public policy, are bound to observe extraordinary diligence in the vigilance over
the goods and for the safety of the passengers transported by them, according to
all the circumstances of each case.
Such extraordinary diligence in the vigilance over the goods is further expressed
in articles 1734, 1735, and 1745, Nos. 5, 6, and 7, while the extra ordinary
diligence for the safety of the passengers is further set forth in articles 1755 and
1756.
ART. 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.
ART. 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
ART. 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 order 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.
ART. 1763. A common carrier 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.
We agree with the trial court that the case involves a breach of contract of transportation
for hire, the Medina Transportation having undertaken to carry Bataclan safely to his
destination, Pasay City. We also agree with the trial court that there was negligence on
the part of the defendant, through his agent, the driver Saylon. There is evidence to show
that at the time of the blow out, the bus was speeding, as testified to by one of the
passengers, and as shown by the fact that according to the testimony of the witnesses,
including that of the defense, from the point where one of the front tires burst up to the
canal where the bus overturned after zig-zaging, there was a distance of about 150

meters. The chauffeur, after the blow-out, must have applied the brakes in order to stop
the bus, but because of the velocity at which the bus must have been running, its
momentum carried it over a distance of 150 meters before it fell into the canal and turned
turtle.
There is no question that under the circumstances, the defendant carrier is liable. The
only question is to what degree. The trial court was of the opinion that the proximate
cause of the death of Bataclan was not the overturning of the bus, but rather, the fire that
burned the bus, including himself and his co-passengers who were unable to leave it;
that at the time the fire started, Bataclan, though he must have suffered physical injuries,
perhaps serious, was still alive, and so damages were awarded, not for his death, but for
the physical injuries suffered by him. We disagree. A satisfactory definition of proximate
cause is found in Volume 38, pages 695-696 of American jurisprudence, cited by
plaintiffs-appellants in their brief. It is as follows:
. . . '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.' And more comprehensively, 'the proximate legal cause
is that acting first and producing the injury, either immediately or by setting other
events in motion, all constituting a natural and continuous chain of events, each
having a close causal connection with its immediate predecessor, the final event
in the chain immediately effecting the injury as a natural and probable result of
the cause which first acted, under such circumstances that the person
responsible for the first event should, as an ordinary prudent and intelligent
person, have reasonable ground to expect at the moment of his act or default that
an injury to some person might probably result therefrom.
It may be that ordinarily, when a passenger bus overturns, and pins down a passenger,
merely causing him physical injuries, if through some event, unexpected and
extraordinary, the overturned bus is set on fire, say, by lightning, or if some highwaymen
after looting the vehicle sets it on fire, and the passenger is burned to death, one might
still contend that the proximate cause of his death was the fire and not the overturning of
the vehicle. But in the present case under the circumstances obtaining in the same, we
do not hesitate to hold that the proximate cause was the overturning of the bus, this for
the reason that when the vehicle turned not only on its side but completely on its back,
the leaking of the gasoline from the tank was not unnatural or unexpected; that the
coming of the men with a lighted torch was in response to the call for help, made not only
by the passengers, but most probably, by the driver and the conductor themselves, and
that because it was dark (about 2:30 in the morning), the rescuers had to carry a light
with them, and coming as they did from a rural area where lanterns and flashlights were
not available; and what was more natural than that said rescuers should innocently
approach the vehicle to extend the aid and effect the rescue requested from them. In
other words, the coming of the men with a torch was to be expected and was a natural
sequence of the overturning of the bus, the trapping of some of its passengers and the
call for outside help. What is more, the burning of the bus can also in part be attributed to
the negligence of the carrier, through is driver and its conductor. According to the witness,
the driver and the conductor were on the road walking back and forth. They, or at least,
the driver should and must have known that in the position in which the overturned bus
was, gasoline could and must have leaked from the gasoline tank and soaked the area in
and around the bus, this aside from the fact that gasoline when spilled, specially over a
large area, can be smelt and directed even from a distance, and yet neither the driver nor
the conductor would appear to have cautioned or taken steps to warn the rescuers not to
bring the lighted torch too near the bus. Said negligence on the part of the agents of the
carrier come under the codal provisions above-reproduced, particularly, Articles 1733,
1759 and 1763.

As regard the damages to which plaintiffs are entitled, considering the earning capacity of
the deceased, as well as the other elements entering into a damage award, we are
satisfied that the amount of SIX THOUSAND (P6,000) PESOS would constitute
satisfactory compensation, this to include compensatory, moral, and other damages. We
also believe that plaintiffs are entitled to attorney's fees, and assessing the legal services
rendered by plaintiffs' attorneys not only in the trial court, but also in the course of the
appeal, and not losing sight of the able briefs prepared by them, the attorney's fees may
well be fixed at EIGHT HUNDRED (P800) PESOS for the loss of merchandise carried by
the deceased in the bus, is adequate and will not be disturbed.
There is one phase of this case which disturbs if it does not shock us. According to the
evidence, one of the passengers who, because of the injuries suffered by her, was
hospitalized, and while in the hospital, she was visited by the defendant Mariano Medina,
and in the course of his visit, she overheard him speaking to one of his bus inspectors,
telling said inspector to have the tires of the bus changed immediately because they were
already old, and that as a matter of fact, he had been telling the driver to change the said
tires, but that the driver did not follow his instructions. If this be true, it goes to prove that
the driver had not been diligent and had not taken the necessary precautions to insure
the safety of his passengers. Had he changed the tires, specially those in front, with new
ones, as he had been instructed to do, probably, despite his speeding, as we have
already stated, the blow out would not have occurred. All in all, there is reason to believe
that the driver operated and drove his vehicle negligently, resulting in the death of four of
his passengers, physical injuries to others, and the complete loss and destruction of their
goods, and yet the criminal case against him, on motion of the fiscal and with his
consent, was provisionally dismissed, because according to the fiscal, the witnesses on
whose testimony he was banking to support the complaint, either failed or appear or were
reluctant to testify. But the record of the case before us shows the several witnesses,
passengers, in that bus, willingly and unhesitatingly testified in court to the effect of the
said driver was negligent. In the public interest the prosecution of said erring driver
should be pursued, this, not only as a matter of justice, but for the promotion of the safety
of passengers on public utility buses. Let a copy of this decision be furnished the
Department of Justice and the Provincial Fiscal of Cavite.
In view of the foregoing, with the modification that the damages awarded by the trial court
are increased from ONE THOUSAND (P1,000) PESOS TO SIX THOUSAND (P6,000)
PESOS, and from SIX HUNDRED PESOS TO EIGHT HUNDRED (P800) PESOS, for the
death of Bataclan and for the attorney's fees, respectively, the decision appealed is from
hereby affirmed, with costs.
Paras, C. J., Bengzon, Padilla, Reyes, A., Bautista Angelo, Labrador, Concepcion,
Reyes, J. B. L., Endencia, and Felix, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. L-44264 September 19, 1988
HEDY GAN y YU, petitioner,
vs.
THE HONORABLE COURT OF APPEALS and the PEOPLE OF THE
PHILIPPINES, respondents.
Pacis, Baluyot, Reyes & De Leon for petitioner.
The Solicitor General for respondents.

FERNAN, C.J.:
Petitioner Hedy Gan was convicted of the crime of Homicide thru Reckless Imprudence
in Criminal Case No. 10201 of the then Court of First Instance of Manila, Branch XXII
presided by Judge Federico C. Alikpala. She was sentenced to an indeterminate penalty
of four (4) months and one (1) day of arresto mayor as minimum and two (2) years, four
(4) months and one (1) day of prision correccional as maximum and was made to
indemnify the heirs of the victim the sum of P12,000.00 without any subsidiary
imprisonment in case of insolvency and to pay the costs. On appeal, the trial court's
decision was modified and petitioner was convicted only of Homicide thru Simple
Imprudence. Still unsatisfied with the decision of the Court of Appeals, 1 petitioner has
come to this Court for a complete reversal of the judgment below.
The facts of the case as found by the appellate court are as follows:
In the morning of July 4, 1972 at about 8:00 o'clock, the accused Hedy
Gan was driving a Toyota car along North Bay Boulevard, Tondo, Manila.
While in front of house no. 694 of North Bay Boulevard, there were two
vehicles, a truck and a jeepney parked on one side of the road, one
following the other about two to three meters from each other. As the car
driven by the accused approached the place where the two vehicles were
parked, there was a vehicle coming from the opposite direction, followed
by another which tried to overtake and bypass the one in front of it and
thereby encroached the lane of the car driven by the accused. To avoid a
head-on collision with the oncoming vehicle, the defendant swerved to
the right and as a consequence, the front bumper of the Toyota Crown
Sedan hit an old man who was about to cross the boulevard from south to
north, pinning him against the rear of the parked jeepney. The force of the
impact caused the parked jeepney to move forward hitting the rear of the

parts truck ahead of it. The pedestrian was injured, the Toyota Sedan was
damaged on its front, the jeep suffered damages on its rear and front
paints, and the truck sustained scratches at the wooden portion of its rear.
The body of the old man who was later Identified as Isidoro Casino was
immediately brought to the Jose Reyes Memorial Hospital but was
(pronounced) dead on arrival. 2
An information for Homicide thru Reckless Imprudence was filed against petitioner in
view of the above incident. She entered a plea of not guilty upon arraignment and the
case was set for trial.
Meanwhile, petitioner sought and was granted a re-investigation by the City Fiscal, as a
result of which the trial fiscal moved for the dismissal of the case against petitioner during
the resumption of hearing on September 7, 1972. The grounds cited therefor were lack of
interest on the part of the complaining witness to prosecute the case as evidenced by an
affidavit of desistance submitted to the trial court and lack of eyewitness to sustain the
charge.
The motion to dismiss filed by the fiscal was never resolved. The Court instead ordered
the prosecution to present its evidence. After the prosecution rested its case, the
petitioner filed a motion to dismiss the case on the ground of insufficiency of evidence.
On December 22, 1972, the trial court rendered judgment finding petitioner guilty beyond
reasonable doubt of the of- offense charged.
Petitioner appealed to the Court of Appeals in CA-G.R. No. 14472-CR. On May 3, 1976,
the Court of Appeals rendered a decision, the dispositive portion of which reads as
follows:
Wherefore, as modified, the accused Hedy Gan is guilty beyond
reasonable doubt of the crime of homicide thru simple imprudence and,
pursuant to paragraph 2, Article 365 of the Revised Penal Code, she is
hereby sentenced to the indeterminate penalty of three (3) months and
eleven (11) days of arresto mayor and to indemnify the heirs of Isidoro
Casino in the sum of Twelve Thousand Pesos (Pl2,000.00) without,
however, any subsidiary imprisonment in case of insolvency, and to pay
the costs. 3
Petitioner now appeals to this Court on the following assignments of errors:
I
The Court of Appeals erred in holding that when the petitioner saw a car
travelling directly towards her, she should have stepped on the brakes
immediately or in swerving her vehicle to the right should have also
stepped on the brakes or lessened her speed, to avoid the death of a
pedestrian.
II
The Court of Appeals erred in convicting the petitioner of the crime of
Homicide thru Simple Imprudence.
III

The Court of Appeals erred in adjudging the petitioner liable to indemnify

the deceased in the sum of P12,000.00. 4
We reverse.
The test for determining whether or not a person is negligent in doing an act whereby
injury or damage results to the person or property of another is this: Would a prudent
man in the position of the person to whom negligence is attributed foresee harm to the
person injured as a reasonable consequence of the course about to be pursued? If so,
the law imposes the duty oil the doer to take precaution against its mischievous results
and the failure to do so constitutes negligence. 5
A corollary rule is what is known in the law as the emergency rule. "Under that rule, one
who suddenly finds himself in a place of danger, and is required to act without time to
consider the best means that may be adopted to avoid the impending danger, is not guilty
of negligence, if he fails to adopt what subsequently and upon reflection may appear to
have been a better method, unless the emergency in which he finds himself is brought
about by his own negligence." 6
Applying the above test to the case at bar, we find the petitioner not guilty of the crime of
Simple Imprudence resulting in Homicide.
The appellate court in finding the petitioner guilty said:
The accused should have stepped on the brakes when she saw the car
going in the opposite direction followed by another which overtook the
first by passing towards its left. She should not only have swerved the car
she was driving to the right but should have also tried to stop or lessen
her speed so that she would not bump into the pedestrian who was
crossing at the time but also the jeepney which was then parked along
the street. 7
The course of action suggested by the appellate court would seem reasonable were it not
for the fact that such suggestion did not take into account the amount of time afforded
petitioner to react to the situation she was in. For it is undeniable that the suggested
course of action presupposes sufficient time for appellant to analyze the situation
confronting her and to ponder on which of the different courses of action would result in
the least possible harm to herself and to others.
Due to the lack of eyewitnesses, no evidence was presented by the prosecution with
respect to the relative distances of petitioner to the parked jeepney and the oncoming
overtaking vehicle that would tend to prove that petitioner did have sufficient time to
reflect on the consequences of her instant decision to swerve her car to the light without
stepping on her brakes. In fact, the evidence presented by the prosecution on this point is
the petitioner's statement to the police 8 stating::
And masasabi ko lang ho umiwas ho ako sa isang sasakyan
na biglang nagovertake sa sasakyan na aking kasalubong kung kaya ay
aking kinabig sa kanan ang akin kotse subalit siya
naman biglangpagtawid ng tao o victim at hindi ko na ho naiwasan at ako
ay wala ng magawa . Iyan ho ang buong pangyayari nang nasabing
aksidente. 9 (Emphasis supplied)
The prosecution having presented this exhibit as its own evidence, we cannot but deem
its veracity to have been admitted by it. Thus, under the circumstances narrated by
petitioner, we find that the appellate court is asking too much from a mere mortal like the

petitioner who in the blink of an eye had to exercise her best judgment to extricate herself
from a difficult and dangerous situation caused by the driver of the overtaking vehicle.
Petitioner certainly could not be expected to act with all the coolness of a person under
normal conditions. 10 The danger confronting petitioner was real and imminent, threatening
her very existence. She had no opportunity for rational thinking but only enough time to heed
the very powerfull instinct of self-preservation.
Also, the respondent court itself pronounced that the petitioner was driving her car within
the legal limits. We therefore rule that the "emergency rule" enunciated above applies
with full force to the case at bar and consequently absolve petitioner from any criminal
negligence in connection with the incident under consideration.
We further set aside the award of damages to the heirs of the victim, who by executing a
release of the claim due them, had effectively and clearly waived their right thereto.
WHEREFORE, judgment is hereby rendered acquitting petitioner HEDY GAN y YU of the
crime of Homicide thru Simple Imprudence. She is no longer liable for the P12,000.00
civil indemnity awarded by the appellate court to the heirs of the victim.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION

G.R. No. 119850 June 20, 1996

MANDARIN VILLA, INC., petitioner,
vs.
COURT OF APPEALS, and CLODUALDO DE JESUS, respondents.
RESOLUTION

FRANCISCO, J.:p
With ample evidentiary support are the following antecedent facts:
In the evening of October 19, 1989, private respondent, Clodualdo de Jesus, a practicing
lawyer and businessman, hosted a dinner for his friends at the petitioner's restaurant, the
Mandarin Villa Seafoods Village Greenhills, Mandaluyong City. After dinner the waiter
handed to him the bill in the amount of P2,658.50. Private respondent offered to pay the
bill through his credit card issued by Philippine Commercial Credit Card Inc. (BANKARD).
This card was accepted by the waiter who immediately proceeded to the restaurant's
cashier for card verification. Ten minutes later, however, the waiter returned and audibly
informed private respondent that his credit card had expired. 1 Private respondent
remonstrated that said credit card had yet to expire on September 1990, as embossed on its
face. 2 The waiter was unmoved, thus, private respondent and two of his guests approached
the restaurant's cashier who again passed the credit card over the verification computer. The
same information was produced,i.e., CARD EXPIRED. Private respondent and his guests
returned to their table and at this juncture, Professor Lirag, another guest, uttered the
following remarks: "Clody [referring to Clodualdo de Jesus], may problema ba? Baka
kailangang maghugas na kami ng pinggan?" 3 Thereupon, private respondent left the
restaurant and got his BPI Express Credit Card from his car and offered it to pay their bill.
This was accepted and honored by the cashier after verification. 4 Petitioner and his
companions left afterwards.
The incident triggered the filing of a suit for damages by private respondent. Following a
full-dress trial, judgment was rendered directing the petitioner and BANKARD to pay
jointly and severally the private respondent: (a) moral damages in the amount of
P250,000.00; (b) exemplary damages in the amount of P100,000.00, and (c) attorney's
fees and litigation expenses in the amount of P50,000.00.

Both the petitioner and BANKARD appealed to the respondent Court of Appeals which
rendered a decision, thus:
WHEREFORE, the decision appealed from is hereby MODIFIED by:
1. Finding appellant MANDARIN solely responsible for damages in favor
of appellee;
2. Absolving appellant BANKARD of any responsibility for damages;
3. Reducing moral damages awarded to appellee to TWENTY FIVE
THOUSAND and 00/100 (P25,000.00) PESOS;
4. Reducing exemplary damages awarded to appellee to TEN
THOUSAND and 00/100 (P10,000.00) PESOS;
5. Reversing and setting aside the award of P250,000.00 for attorney's
fees as well as interest awarded, and
6. AFFIRMING the dismissal of all counterclaims and cross-claims.
Costs against appellant Mandarin.
SO ORDERED. 5
Mandarin Villa, thus, interposed this present petition, faulting the respondent court with
six (6) assigned errors which may be reduced to the following issues, to wit: (1) whether
or not petitioner is bound to accept payment by means of credit card; (2) whether or not
petitioner is negligent under the circumstances obtaining in this case; and (3) if negligent,
whether or not such negligence is the proximate cause of the private respondent's
damage.
Petitioner contends that it cannot be faulted for its cashier's refusal to accept private
respondent's BANKARD credit card, the same not being a legal tender. It argues that
private respondent's offer to pay by means of credit card partook of the nature of a
proposal to novate an existing obligation for which petitioner, as creditor, must first give
its consent otherwise there will be no binding contract between them. Petitioner cannot
seek refuge behind this averment.
We note that Mandarin Villa Seafood Village is affiliated with BANKARD. In fact, an
"Agreement" 6 entered into by petitioner and BANKARD dated June 23, 1989, provides inter
alia:
The MERCHANT shall honor validly issued PCCCI credit cards presented
by their corresponding holders in the purchase of goods and/or services
supplied by it provided that the card expiration date has not elapsed and
the card number does not appear on the latest cancellation bulletin of
lost, suspended and canceled PCCCI credit cards and, no signs of
tampering, alterations or irregularities appear on the face of the credit
card. 7
While private respondent, may not be a party to the said agreement, the above-quoted
stipulation conferred a favor upon the private respondent, a holder of credit card validly
issued by BANKARD. This stipulation is a stipulation pour autri and under Article 1311 of
the Civil Code private respondent may demand its fulfillment provided he communicated

his acceptance to the petitioner before its revocation. 8 In this case, private respondent's
offer to pay by means of his BANKARD credit card constitutes not only an acceptance of the
said stipulation but also an explicit communication of his acceptance to the obligor.
In addition, the record shows that petitioner posted a logo inside Mandarin Villa Seafood
Village stating that "Bankard is accepted here. 9 This representation is conclusive upon the
petitioner which it cannot deny or disprove as against the private respondent, the party relying
thereon. Petitioner, therefore, cannot disclaim its obligation to accept private respondent's
BANKARD credit card without violating the equitable principle of estoppel. 10
Anent the second issue, petitioner insists that it is not negligent. In support thereof,
petitioner cites its good faith in checking, not just once but twice, the validity of the
aforementioned credit card prior to its dishonor. It argues that since the verification
machine flashed an information that the credit card has expired, petitioner could not be
expected to honor the same much less be adjudged negligent for dishonoring it. Further,
petitioner asseverates that it only followed the guidelines and instructions issued by
BANKARD in dishonoring the aforementioned credit card. The argument is untenable.
The test for determining the existence of negligence in a particular case may be stated as
follows: Did the defendant in doing the alleged negligent act use the reasonable care and
caution which an ordinary prudent person would have used in the same situation? If not,
then he is guilty of negligence. 11 The Point of Sale (POS) Guidelines which outlined the
steps that petitioner must follow under the circumstances provides.
xxx xxx xxx
CARD EXPIRED
a. Check expiry date on card.
b. If unexpired, refer to CB.
b.1. If valid, honor up to maximum of SPL only.
b.2. If in CB as Lost, do procedures 2a to 2e.,
b.3. If in CB as Suspended/Cancelled, do not honor card.
c. If expired, do not honor card. 12
A cursory reading of said rule reveals that whenever the words CARD EXPIRED flashes
on the screen of the verification machine, petitioner should check the credit card's expiry
date embossed on the card itself. If unexpired, petitioner should honor the card provided
it is not invalid, cancelled or otherwise suspended. But if expired, petitioner should not
honor the card. In this case, private respondent's BANKARD credit card has an
embossed expiry date of September 1990. 13 Clearly, it has not yet expired on October 19,
1989, when the same was wrongfully dishonored by the petitioner. Hence, petitioner did not
use the reasonable care and caution which an ordinary prudent person would have used in
the same situation and as such petitioner is guilty of negligence. In this connection, we quote
with approval the following observations of the respondent Court.
Mandarin argues that based on the POS Guidelines (supra), it has three
options in case the verification machine flashes "CARD EXPIRED". It
chose to exercise option (c) by not honoring appellee's credit card.
However, appellant apparently intentionally glossed over option "(a)
Check expiry date on card" (id.) which would have shown without any

shadow of doubt that the expiry date embossed on the BANKARD was
"SEP 90". (Exhibit "D".) A cursory look at the appellee's BANKARD would
also reveal that appellee had been as of that date a cardholder since
1982, a fact which would have entitled the customer the courtesy of better
treatment. 14
Petitioner, however, argues that private respondent's own negligence in not bringing with
him sufficient cash was the proximate cause of his damage. It likewise sought
exculpation by contending that the remark of Professor Lirag 15 is a supervening event and
at the same time the proximate cause of private respondent's injury.
We find this contention also devoid of merit. While it is true that private respondent did
not have sufficient cash on hand when he hosted a dinner at petitioner's restaurant, this
fact alone does not constitute negligence on his part. Neither can it be claimed that the
same was the proximate cause of private respondent's damage. We take judicial
notice 16 of the current practice among major establishments, petitioner included, to accept
payment by means of credit cards in lieu of cash. Thus, petitioner accepted private
respondent's BPI Express Credit Card after verifying its validity, 17 a fact which all the more
refutes petitioner's imputation of negligence on the private respondent.
Neither can we conclude that the remark of Professor Lirag was a supervening event and
the proximate cause of private respondent's injury. The humiliation and embarrassment
of the private respondent was brought about not by such a remark of Professor Lirag but
by the fact of dishonor by the petitioner of private respondent's valid BANKARD credit
card. If at all, the remark of Professor Lirag served only to aggravate the embarrassment
then felt by private respondent, albeit silently within himself.
WHEREFORE, the instant petition is hereby DISMISSED.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 77679 September 30, 1987
VICENTE VERGARA, petitioner,
vs.
THE COURT OF APPEALS and AMADEO AZARCON, respondents.
RESOLUTION

PADILLA, J.:
An action for damages based on quasi-delict (Art. 2176 of the Civil Code) was filed by
private respondent against petitioner. The action arose from a vehicular accident that
occurred on 5 August 1979 in Gapan, Nueva Ecija, when Martin Belmonte, while driving
a cargo truck belonging to petitioner, rammed "head-on" the store-residence of the
private respondent, causing damages thereto which were inventoried and assessed at
P53,024.22.
In his answer to the complaint, the petitioner alleged principally: "that his driver Martin
Belmonte operated said cargo truck in a very diligent (and) careful manner; that the
steering wheel refused to respond to his effort and as a result of a blown-out tire and
despite application of his brakes, the said cargo truck hit the store-residence of plaintiff
(private respondent) and that the said accident was an act of God for which he cannot be
held liable." 1
Petitioner also filed a third party complaint against Travellers Insurance and Surety
Corporation, alleging that said cargo truck involved in the vehicular accident, belonging to
the petitioner, was insured by the third party defendant insurance company. Petitioner
asked that the latter be ordered to pay him whatever amount he may be ordered by the
court to pay to the private respondent.
The trial court rendered judgment in favor of private respondent. Upon appeal to the
Court of Appeals, the latter court affirmed in toto the decision of the trial court, which
ordered Petitioner to pay, jointly and severally with Travellers Insurance and Surety
Corporation, to the private, respondent the following: (a) P53,024.22 as actual damages;
(b) P10,000.00 as moral damages; (c) P10,000.00 as exemplary damages; and (d) the

sum of P5,000.00 for attorney's fees and the costs. On the third party complaint, the
insurance company was sentenced to pay to the petitioner the following: (a) P50,000.00
for third party liability under its comprehensive accident insurance policy; and (b)
P3,000.00 for and as attorney's fees.
Hence, this petition for review on certiorari.
Petitioner's contention that the respondent court erred in finding him guilty of fault or
negligence is not tenable. It was established by competent evidence that the requisites of
a quasi-delict are present in the case at bar. These requisites are: (1) damages to the
plaintiff; (2) negligence, by act or omission, of which defendant, or some person for
whose acts he must respond, was guilty; and (3) the connection of cause and effect
between such negligence and the damages.
It is undisputed that private respondent suffered damages as a result of an act or
omission of petitioner. The issue of whether or not this act or omission can be considered
as a "negligent" act or omission was passed upon by the trial court. The findings of said
court, affirmed by the respondent court, which we are not prepared to now disturb, show
that the fact of occurrence of the "vehicular accident" was sufficiently established by the
policy report and the testimony of Patrolman Masiclat. And the fact of negligence may be
deduced from the surrounding circumstances thereof. According to the police report, "the
cargo truck was travelling on the right side of the road going to Manila and then it crossed
to the center line and went to the left side of the highway; it then bumped a tricycle; and
then another bicycle; and then said cargo truck rammed the store warehouse of the
plaintiff." 2
According to the driver of the cargo truck, he applied the brakes but the latter did not
work due to mechanical defect. Contrary to the claim of the petitioner, a mishap caused
by defective brakes can not be consideration as fortuitous in character. Certainly, the
defects were curable and the accident preventable.
Furthermore, the petitioner failed to adduce any evidence to overcome the disputable
presumption of negligence on his part in the selection and supervision of his driver.
Based on the foregoing finding by the respondent Court that there was negligence on the
part of the petitioner, the petitioner's contention that the respondent court erred in
awarding private respondent actual, moral and exemplary damages as well as attorney's
fees and costs, is untenable.
ACCORDINGLY, the petition is DENIED.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-12219

March 15, 1918

AMADO PICART, plaintiff-appellant,

vs.
FRANK SMITH, JR., defendant-appellee.
Alejo Mabanag for appellant.
G. E. Campbell for appellee.
STREET, J.:
In this action the plaintiff, Amado Picart, seeks to recover of the defendant, Frank Smith,
jr., the sum of P31,000, as damages alleged to have been caused by an automobile
driven by the defendant. From a judgment of the Court of First Instance of the Province of
La Union absolving the defendant from liability the plaintiff has appealed.
The occurrence which gave rise to the institution of this action took place on December
12, 1912, on the Carlatan Bridge, at San Fernando, La Union. It appears that upon the
occasion in question the plaintiff was riding on his pony over said bridge. Before he had
gotten half way across, the defendant approached from the opposite direction in an
automobile, going at the rate of about ten or twelve miles per hour. As the defendant
neared the bridge he saw a horseman on it and blew his horn to give warning of his
approach. He continued his course and after he had taken the bridge he gave two more
successive blasts, as it appeared to him that the man on horseback before him was not
observing the rule of the road.
The plaintiff, it appears, saw the automobile coming and heard the warning signals.
However, being perturbed by the novelty of the apparition or the rapidity of the approach,
he pulled the pony closely up against the railing on the right side of the bridge instead of
going to the left. He says that the reason he did this was that he thought he did not have
sufficient time to get over to the other side. The bridge is shown to have a length of about
75 meters and a width of 4.80 meters. As the automobile approached, the defendant
guided it toward his left, that being the proper side of the road for the machine. In so
doing the defendant assumed that the horseman would move to the other side. The pony
had not as yet exhibited fright, and the rider had made no sign for the automobile to stop.
Seeing that the pony was apparently quiet, the defendant, instead of veering to the right
while yet some distance away or slowing down, continued to approach directly toward the

horse without diminution of speed. When he had gotten quite near, there being then no
possibility of the horse getting across to the other side, the defendant quickly turned his
car sufficiently to the right to escape hitting the horse alongside of the railing where it as
then standing; but in so doing the automobile passed in such close proximity to the
animal that it became frightened and turned its body across the bridge with its head
toward the railing. In so doing, it as struck on the hock of the left hind leg by the flange of
the car and the limb was broken. The horse fell and its rider was thrown off with some
violence. From the evidence adduced in the case we believe that when the accident
occurred the free space where the pony stood between the automobile and the railing of
the bridge was probably less than one and one half meters. As a result of its injuries the
horse died. The plaintiff received contusions which caused temporary unconsciousness
and required medical attention for several days.
The question presented for decision is whether or not the defendant in maneuvering his
car in the manner above described was guilty of negligence such as gives rise to a civil
obligation to repair the damage done; and we are of the opinion that he is so liable. As
the defendant started across the bridge, he had the right to assume that the horse and
the rider would pass over to the proper side; but as he moved toward the center of the
bridge it was demonstrated to his eyes that this would not be done; and he must in a
moment have perceived that it was too late for the horse to cross with safety in front of
the moving vehicle. In the nature of things this change of situation occurred while the
automobile was yet some distance away; and from this moment it was not longer within
the power of the plaintiff to escape being run down by going to a place of greater safety.
The control of the situation had then passed entirely to the defendant; and it was his duty
either to bring his car to an immediate stop or, seeing that there were no other persons
on the bridge, to take the other side and pass sufficiently far away from the horse to
avoid the danger of collision. Instead of doing this, the defendant ran straight on until he
was almost upon the horse. He was, we think, deceived into doing this by the fact that
the horse had not yet exhibited fright. But in view of the known nature of horses, there
was an appreciable risk that, if the animal in question was unacquainted with
automobiles, he might get exited and jump under the conditions which here confronted
him. When the defendant exposed the horse and rider to this danger he was, in our
opinion, negligent in the eye of the law.
The test by which to determine the existence of negligence in a particular case may be
stated as follows: Did the defendant in doing the alleged negligent act use that person
would have used in the same situation? If not, then he is guilty of negligence. The law
here in effect adopts the standard supposed to be supplied by the imaginary conduct of
the discreet paterfamilias of the Roman law. The existence of negligence in a given case
is not determined by reference to the personal judgment of the actor in the situation
before him. The law considers what would be reckless, blameworthy, or negligent in the
man of ordinary intelligence and prudence and determines liability by that.
The question as to what would constitute the conduct of a prudent man in a given
situation must of course be always determined in the light of human experience and in
view of the facts involved in the particular case. Abstract speculations cannot here be of
much value but this much can be profitably said: Reasonable men govern their conduct
by the circumstances which are before them or known to them. They are not, and are not
supposed to be, omniscient of the future. Hence they can be expected to take care only
when there is something before them to suggest or warn of danger. Could a prudent
man, in the case under consideration, foresee harm as a result of the course actually
pursued? If so, it was the duty of the actor to take precautions to guard against that harm.
Reasonable foresight of harm, followed by ignoring of the suggestion born of this
prevision, is always necessary before negligence can be held to exist. Stated in these
terms, the proper criterion for determining the existence of negligence in a given case is
this: Conduct is said to be negligent when a prudent man in the position of the tortfeasor

would have foreseen that an effect harmful to another was sufficiently probable to warrant
his foregoing conduct or guarding against its consequences.
Applying this test to the conduct of the defendant in the present case we think that
negligence is clearly established. A prudent man, placed in the position of the defendant,
would in our opinion, have recognized that the course which he was pursuing was fraught
with risk, and would therefore have foreseen harm to the horse and the rider as
reasonable consequence of that course. Under these circumstances the law imposed on
the defendant the duty to guard against the threatened harm.
It goes without saying that the plaintiff himself was not free from fault, for he was guilty of
antecedent negligence in planting himself on the wrong side of the road. But as we have
already stated, the defendant was also negligent; and in such case the problem always is
to discover which agent is immediately and directly responsible. It will be noted that the
negligent acts of the two parties were not contemporaneous, since the negligence of the
defendant succeeded the negligence of the plaintiff by an appreciable interval. Under
these circumstances the law is that the person who has the last fair chance to avoid the
impending harm and fails to do so is chargeable with the consequences, without
reference to the prior negligence of the other party.
The decision in the case of Rkes vs. Atlantic, Gulf and Pacific Co. (7 Phil. Rep., 359)
should perhaps be mentioned in this connection. This Court there held that while
contributory negligence on the part of the person injured did not constitute a bar to
recovery, it could be received in evidence to reduce the damages which would otherwise
have been assessed wholly against the other party. The defendant company had there
employed the plaintiff, as a laborer, to assist in transporting iron rails from a barge in
Manila harbor to the company's yards located not far away. The rails were conveyed
upon cars which were hauled along a narrow track. At certain spot near the water's edge
the track gave way by reason of the combined effect of the weight of the car and the
insecurity of the road bed. The car was in consequence upset; the rails slid off; and the
plaintiff's leg was caught and broken. It appeared in evidence that the accident was due
to the effects of the typhoon which had dislodged one of the supports of the track. The
court found that the defendant company was negligent in having failed to repair the bed
of the track and also that the plaintiff was, at the moment of the accident, guilty of
contributory negligence in walking at the side of the car instead of being in front or
behind. It was held that while the defendant was liable to the plaintiff by reason of its
negligence in having failed to keep the track in proper repair nevertheless the amount of
the damages should be reduced on account of the contributory negligence in the plaintiff.
As will be seen the defendant's negligence in that case consisted in an omission only.
The liability of the company arose from its responsibility for the dangerous condition of its
track. In a case like the one now before us, where the defendant was actually present
and operating the automobile which caused the damage, we do not feel constrained to
attempt to weigh the negligence of the respective parties in order to apportion the
damage according to the degree of their relative fault. It is enough to say that the
negligence of the defendant was in this case the immediate and determining cause of the
accident and that the antecedent negligence of the plaintiff was a more remote factor in
the case.
A point of minor importance in the case is indicated in the special defense pleaded in the
defendant's answer, to the effect that the subject matter of the action had been previously
adjudicated in the court of a justice of the peace. In this connection it appears that soon
after the accident in question occurred, the plaintiff caused criminal proceedings to be
instituted before a justice of the peace charging the defendant with the infliction of
serious injuries (lesiones graves). At the preliminary investigation the defendant was
discharged by the magistrate and the proceedings were dismissed. Conceding that the
acquittal of the defendant at the trial upon the merits in a criminal prosecution for the
offense mentioned would be res adjudicata upon the question of his civil liability arising

from negligence -- a point upon which it is unnecessary to express an opinion -- the

action of the justice of the peace in dismissing the criminal proceeding upon the
preliminary hearing can have no effect. (See U. S. vs. Banzuela and Banzuela, 31 Phil.
Rep., 564.)
From what has been said it results that the judgment of the lower court must be reversed,
and judgment is her rendered that the plaintiff recover of the defendant the sum of two
hundred pesos (P200), with costs of other instances. The sum here awarded is estimated
to include the value of the horse, medical expenses of the plaintiff, the loss or damage
occasioned to articles of his apparel, and lawful interest on the whole to the date of this
recovery. The other damages claimed by the plaintiff are remote or otherwise of such
character as not to be recoverable. So ordered.
Arellano, C.J., Torres, Carson, Araullo, Avancea, and Fisher, JJ., concur.
Johnson, J., reserves his vote.

Separate Opinions
MALCOLM, J., concurring:
After mature deliberation, I have finally decided to concur with the judgment in this case. I
do so because of my understanding of the "last clear chance" rule of the law of
negligence as particularly applied to automobile accidents. This rule cannot be invoked
where the negligence of the plaintiff is concurrent with that of the defendant. Again, if a
traveler when he reaches the point of collision is in a situation to extricate himself and
avoid injury, his negligence at that point will prevent a recovery. But Justice Street finds
as a fact that the negligent act of the interval of time, and that at the moment the plaintiff
had no opportunity to avoid the accident. Consequently, the "last clear chance" rule is
applicable. In other words, when a traveler has reached a point where he cannot
extricate himself and vigilance on his part will not avert the injury, his negligence in
reaching that position becomes the condition and not the proximate cause of the injury
and will not preclude a recovery. (Note especially Aiken vs. Metcalf [1917], 102 Atl., 330.)

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 70493 May 18, 1989
GLAN PEOPLE'S LUMBER AND HARDWARE, GEORGE LIM, FABIO S. AGAD, FELIX
LIM and PAUL ZACARIAS y INFANTE, petitioners,
vs.
INTERMEDIATE APPELLATE COURT, CECILIA ALFEREZ VDA. DE CALIBO, Minors
ROYCE STEPHEN, JOYCE JOAN, JANISE MARIE, JACQUELINE BRIGITTE
JOCELINE CORAZON, JULIET GERALDINE, JENNIFER JILL, all surnamed CALIBO,
represented by their mother, CECILIA A. VDA. DE CALIBO,respondents.
Rufino Mayor and Isidro M. Ampig for petitioners.
Manuel L. Hontanosas for private respondents.

NARVASA, J.:
There is a two-fold message in this judgment that bears stating at the outset. The first, an
obvious one, is that it is the objective facts established by proofs presented in a
controversy that determine the verdict, not the plight of the persons involved, no matter
how deserving of sympathy and commiseration because, for example, an accident of
which they are the innocent victims has brought them to. reduced circumstances or
otherwise tragically altered their lives. The second is that the doctrine laid done many,
many years ago in Picart vs. Smith 1continues to be good law to this day.
The facts giving rise to the controversy at bar are tersely and quite accurately recounted
by the Trial Court as follows: 2
Engineer Orlando T. Calibo, Agripino Roranes, and Maximo Patos were
on the jeep owned by the Bacnotan Consolidated Industries, Inc., with
Calibo at the wheel, as it approached from the South Lizada Bridge going
towards the direction of Davao City at about 1:45 in the afternoon of July
4,1979. At about that time, the cargo track, loaded with cement bags, GI
sheets, plywood, driven by defendant Paul Zacarias y Infants, coming
from the opposite direction of Davao City and bound for Glan, South

Cotabato, had just crossed said bridge. At about 59 yards after crossing
the bridge, the cargo truck and the jeep collided as a consequence of
which Engineer Calibo died while Roranes and Patos sustained physical
injuries. Zacarias was unhurt. As a result of the impact, the left side of the
truck was slightly damaged while the left side of the jeep, including its
fender and hood, was extensively damaged. After the impact, the jeep fell
and rested on its right side on the asphalted road a few meters to the rear
of the truck, while the truck stopped on its wheels on the road.
On November 27, 1979, the instant case for damages was filed by the
surviving spouse and children of the late Engineer Calibo who are
residents of Tagbilaran City against the driver and owners of the cargo
truck.
For failure to file its answer to the third party complaint, third party
defendant, which insured the cargo truck involved, was declared in
default.
The case filed by the heirs of Engineer Calibo his widow and minor children, private
respondents herein was docketed as
Civil Case No. 3283 of the Court of First Instance of Bohol. 3 Named defendants in the
complaint were "Felix S. Agad, George Lim and Felix Lim . . . (who) appear to be the coowners of the Glan People's Lumber and Hardware . . . (and) Paul Zacarias y Infante." 4 The
defendants' answer however alleged that the lumber and hardware business was exclusively
owned by George Y. Lim, this being evidenced by the Certificate of Registration issued by the
Bureau of Domestic Trade; Fabio S. Agad was not a co-owner thereof but "merely employed
by . . . George Y. Lim as bookkeeper"; and Felix Lim had no connection whatever with said
business, "he being a child only eight (8) years of age." 5
"After (trial, and) a careful evaluation of the evidence, both testimonial and documentary,"
the Court reached the conclusion "that the plaintiffs failed to establish by preponderance
of evidence the negligence, and thus the liability, of the defendants." Accordingly, the
Court dismissed the complaint (and defendants' counterclaim) "for insufficiency of
evidence." Likewise dismissed was third-party complaint presented by the defendants
against the insurer of the truck. The circumstances leading to the Court's conclusion just
mentioned, are detailed in the Court's decision, as follows:
1. Moments before its collission with the truck being operated by
Zacarias, the jeep of the deceased Calibo was "zigzagging." 6
2. Unlike Zacarias who readily submitted himself to investigation by the
police, Calibo's companions, Roranes (an accountant), and Patos, who
suffered injuries on account of the collision, refused to be so investigated
or give statements to the police officers. This, plus Roranes' waiver of the
right to institute criminal proceedings against Zacarias, and the fact that
indeed no criminal case was ever instituted in Court against Zacarias,
were "telling indications that they did not attribute the happening to
defendant Zacarias' negligence or fault." 7
3. Roranes' testimony, given in plaintiffs' behalf, was "not as clear and
detailed as that of . . . Zacarias," and was "uncertain and even
contradicted by the physical facts and the police investigators Dimaano
and Esparcia." 8

4. That there were skid marks left by the truck's tires at the scene, and
none by the jeep, demonstrates that the driver of the truck had applied
the brakes and the jeep's driver had not; and that the jeep had on impact
fallen on its right side is indication that it was running at high speed.
Under the circumstances, according to the Court, given "the curvature of
the road and the descending grade of the jeep's lane, it was negligence
on the part of the driver of the jeep, Engr. Calibo, for not reducing his
speed upon sight of the truck and failing to apply the brakes as he got
within collision range with the truck."
5. Even if it be considered that there was some antecedent negligence on
the part of Zacarias shortly before the collision, in that he had caused his
truck to run some 25 centimeters to the left of the center of the road,
Engr. Calibo had the last clear chance of avoiding the accident because
he still had ample room in his own lane to steer clear of the truck, or he
could simply have braked to a full stop.
The Court of Appeals saw things differently. It rendered judgment 9 on the plaintiffs'
appeal, l0 reversing the decision of the Trial Court. It found Zacarias to be negligent on the basis of the following
circumstances, to wit:

1) "the truck driven by defendant Zacarias occupied the lane of the jeep
when the collision occurred,' and although Zacarias saw the jeep from a
distance of about 150 meters, he "did not drive his truck back to his lane
in order to avoid collision with the oncoming jeep . . .;" 11 what is worse,
"the truck driver suddenly applied his brakes even as he knew that he was
still within the lane of the jeep;" 12 had both vehicles stayed in their respective
lanes, the collision would never have occurred, they would have passed
"along side each other safely;" 13
2) Zacarias had no license at the time; what he handed to Pfc. Esparcia, on
the latter's demand, was the 'driver's license of his co-driver Leonardo
Baricuatro;" 14

3) the waiver of the right to file criminal charges against Zacarias should
not be taken against "plaintiffs" Roranes and Patos who had the right,
under the law, to opt merely to bring a civil suit. 15
The Appellate Court opined that Zacarias' negligence "gave rise to the presumption of
negligence on the part of his employer, and their liability is both primary and solidary." It
therefore ordered "the defendants jointly and solidarily to indemnify the plaintiffs the
following amounts:
(1) P30,000.00 for the death of Orlando Calibo;
(2) P378,000.00 for the loss of earning capacity of the deceased
(3) P15,000.00 for attorney's fees;
(4) Cost of suit. 16
The defendants George Lim, Felix Lim, Fabio S. Agad and Paul Zacarias have appealed
to this Court on certiorariand pray for a reversal of the judgment of the Intermediate
Appellate Court which, it is claimed, ignored or ran counter to the established facts. A
review of the record confirms the merit of this assertion and persuades this Court that

said judgment indeed disregarded facts clearly and undisputably demonstrated by the
proofs. The appealed judgment, consequently, will have to be reversed.
The finding that "the truck driven by defendant Paul Zacarias occupied the lane of the
jeep when the collision occurred" is a loose one, based on nothing more than the
showing that at the time of the accident, the truck driven by Zacarias had edged over the
painted center line of the road into the opposite lane by a width of twenty-five (25)
centimeters. It ignores the fact that by the uncontradicted evidence, the actual center line
of the road was not that indicated by the painted stripe but, according to measurements
made and testified by Patrolman Juanita Dimaano, one of the two officers who
investigated the accident, correctly lay thirty-six (36) centimeters farther to the left of the
truck's side of said stripe.
The unimpugned testimony of Patrolman Dimaano, a witness for the private respondents,
is to the effect that the jeep's lane was three (3) meters and seventy-five (75) centimeters
wide, and that of the truck three (3) meters and three (3) centimeters, measured from the
center stripe to the corresponding side lines or outer edges of the road. 17 The total width
of the road being, therefore, six (6) meters and seventy-eight (78) centimeters, the true center
line equidistant from both side lines would divide the road into two lanes each three (meters)
and thirty-nine (39) centimeters wide. Thus, although it was not disputed that the truck
overrode the painted stripe by twenty-five (25) centimeters, it was still at least eleven (11)
centimeters away from its side of the true center line of the road and well inside its own lane
when the accident occurred. By this same reckoning, since it was unquestionably the jeep
that rammed into the stopped truck, it may also be deduced that it (the jeep) was at the time
travelling beyond its own lane and intruding into the lane of the truck by at least the same 11centimeter width of space.
Not only was the truck's lane, measured from the incorrectly located center stripe
uncomfortably narrow, given that vehicle's width of two (2) meters and forty-six (46)
centimeters; the adjacent road shoulder was also virtually impassable, being about three
(3) inches lower than the paved surface of the road and "soft--not firm enough to offer
traction for safe passage besides which, it sloped gradually down to a three foot-deep
ravine with a river below. 18 The truck's lane as erroneously demarcated by the center stripe
gave said vehicle barely half a meter of clearance from the edge of the road and the
dangerous shoulder and little room for maneuver, in case this was made necessary by traffic
contingencies or road conditions, if it always kept to said lane. It being also shown that the
accident happened at or near the point of the truck's approach to a curve, 19 which called for
extra precautions against driving too near the shoulder, it could hardly be accounted negligent
on the part of its driver to intrude temporarily, and by only as small as a twenty-five centimeter
wide space (less than ten inches), into the opposite lane in order to insure his vehicle's safety.
This, even supposing that said maneuver was in fact an intrusion into the opposite lane,
which was not the case at all as just pointed out.
Nor was the Appellate Court correct in finding that Paulino Zacarias had acted negligently
in applying his brakes instead of getting back inside his lane upon qqqespying the
approaching jeep. Being well within his own lane, as has already been explained, he had
no duty to swerve out of the jeep's way as said Court would have had him do. And even
supposing that he was in fact partly inside the opposite lane, coming to a full stop with
the jeep still thirty (30) meters away cannot be considered an unsafe or imprudent action,
there also being uncontradicted evidence that the jeep was "zigzagging" 20 and hence no
way of telling in which direction it would go as it approached the truck.
Also clearly erroneous is the finding of the Intermediate Appellate Court that Zacarias had
no driver's license at the time. The traffic accident report attests to the proven fact that
Zacarias voluntarily surrendered to the investigating officers his driver's license, valid for
1979, that had been renewed just the day before the accident, on July 3, 1979. 21 The
Court was apparently misled by the circumstance that when said driver was first asked to

show his license by the investigators at the scene of the collision, he had first inadvertently
produced the license of a fellow driver, Leonardo Baricuatro, who had left said license in
Davao City and had asked Zacarias to bring it back to him in Glan, Cotabato. 22

The evidence not only acquits Zacarias of any negligence in the matter; there are also
quite a few significant indicators that it was rather Engineer Calibo's negligence that was
the proximate cause of the accident. Zacarias had told Patrolman Dimaano at the scene
of the collision and later confirmed in his written statement at the police
headquarters 23 that the jeep had been "zigzagging," which is to say that it was travelling or
being driven erratically at the time. The other investigator, Patrolman Jose Esparcia, also
testified that eyewitnesses to the accident had remarked on the jeep's "zigzagging." 24 There
is moreover more than a suggestion that Calibo had been drinking shortly before the accident.
The decision of the Trial Court adverts to further testimony of Esparcia to the effect that three
of Calibo's companions at the beach party he was driving home from when the collision
occurred, who, having left ahead of him went to the scene when they heard about the
accident, had said that there had been a drinking spree at the party and, referring to Calibo,
had remarked: "Sabi na huag nang mag drive . . . . pumipilit," (loosely translated, "He was
advised not to drive, but he insisted.")
It was Calibo whose driver's license could not be found on his person at the scene of the
accident, and was reported by his companions in the jeep as having been lost with his
wallet at said scene, according to the traffic accident report, Exhibit "J". Said license
unexplainedly found its way into the record some two years later.
Reference has already been made to the finding of the Trial Court that while Zacarias
readily submitted to interrogation and gave a detailed statement to the police
investigators immediately after the accident, Calibo's two companions in the jeep and
supposed eyewitnesses, Agripino Roranes and Maximo Patos, refused to give any
statements. Furthermore, Roranes who, together with Patos, had sustained injuries as a
result of the collision, waived his right to file a criminal case against Zacarias. 25
Even, however, ignoring these telltale indicia of negligence on the part of Calibo, and
assuming some antecedent negligence on the part of Zacarias in failing to keep within his
designated lane, incorrectly demarcated as it was, the physical facts, either expressly
found by the Intermediate Appellate Court or which may be deemed conceded for lack of
any dispute, would still absolve the latter of any actionable responsibility for the accident
under the rule of the last clear chance.
Both drivers, as the Appellate Court found, had had a full view of each other's vehicle
from a distance of one hundred fifty meters. Both vehicles were travelling at a speed of
approximately thirty kilometers per hour. 26 The private respondents have admitted that the
truck was already at a full stop when the jeep plowed into it. And they have not seen fit to
deny or impugn petitioners' imputation that they also admitted the truck had been brought to a
stop while the jeep was still thirty meters away. 27 From these facts the logical conclusion
emerges that the driver of the jeep had what judicial doctrine has appropriately called the last
clear chance to avoid the accident, while still at that distance of thirty meters from the truck,
by stopping in his turn or swerving his jeep away from the truck, either of which he had
sufficient time to do while running at a speed of only thirty kilometers per hour. In those
circumstances, his duty was to seize that opportunity of avoidance, not merely rely on a
supposed right to expect, as the Appellate Court would have it, the truck to swerve and leave
him a clear path.
The doctrine of the last clear chance provides as valid and complete a defense to
accident liability today as it did when invoked and applied in the 1918 case of Picart vs.
Smith, supra, which involved a similar state of facts. Of those facts, which should be
familiar to every student of law, it is only necessary to recall the summary made in
the syllabus of this Court's decision that:

(t)he plaintiff was riding a pony on a bridge. Seeing an automobile ahead

he improperly pulled his horse over to the railing on the right. The driver
of the automobile, however guided his car toward the plaintiff without
diminution of speed until he was only few feet away. He then turned to the
right but passed so closely to the horse that the latter being frightened,
jumped around and was killed by the passing car. . . . .
Plaintiff Picart was thrown off his horse and suffered contusions which required several
days of medical attention. He sued the defendant Smith for the value of his animal,
medical expenses and damage to his apparel and obtained judgment from this Court
which, while finding that there was negligence on the part of both parties, held that that of
the defendant was the immediate and determining cause of the accident and that of the
plaintiff ". . . the more remote factor in the case":
It goes without saying that the plaintiff himself was not free from fault, for
he was guilty of antecedent negligence in planting himself on the wrong
side of the road. But as we have already stated, the defendant was also
negligent; and in such case the problem always is to discover which
agent is immediately and directly responsible. It will be noted that the
negligent acts of the two parties were not contemporaneous, since the
negligence of the defendant succeeded the negligence of the plaintiff by
an appreciable interval. Under these circumstances the law is that the
person who has the last fair chance to avoid the impending harm and fails
to do so is chargeable with the consequences, without reference to the
prior negligence of the other party.
Since said ruling clearly applies to exonerate petitioner Zacarias and his employer (and
co-petitioner) George Lim, an inquiry into whether or not the evidence supports the
latter's additional defense of due diligence in the selection and supervision of said driver
is no longer necessary and wig not be undertaken. The fact is that there is such evidence
in the record which has not been controverted.
It must be pointed out, however, that the Intermediate Appellate Court also seriously
erred in holding the petitioners Pablo S. Agad and Felix Lim solidarily liable for the
damages awarded in its appealed decision, as alleged owners, with petitioner George
Lim, of Glan People's Lumber and Hardware, employer of petitioner Zacarias. This
manifestly disregarded, not only the certificate of registration issued by the Bureau of
Domestic Trade identifying Glan People's Lumber and Hardware as a business name
registered by George Lim, 28 but also unimpugned allegations into the petitioners' answer to
the complaint that Pablo S. Agad was only an employee of George Lim and that Felix Lim,
then a child of only eight (8) years, was in no way connected with the business.
In conclusion, it must also be stated that there is no doubt of this Court's power to review
the assailed decision of the Intermediate Appellate Court under the authority of
precedents recognizing exceptions to the familiar rule binding it to observe and respect
the latter's findings of fact. Many of those exceptions may be cited to support the review
here undertaken, but only the most obvious that said findings directly conflict with
those of the Trial Court will suffice. 29 In the opinion of this Court and after a careful review
of the record, the evidence singularly fails to support the findings of the Intermediate Appellate
Court which, for all that appears, seem to have been prompted rather by sympathy for the
heirs of the deceased Engineer Calibo than by an objective appraisal of the proofs and a
correct application of the law to the established facts. Compassion for the plight of those
whom an accident has robbed of the love and support of a husband and father is an entirely
natural and understandable sentiment. It should not, however, be allowed to stand in the way
of, much less to influence, a just verdict in a suit at law.

WHEREFORE, the appealed judgment of the Intermediate Appellate Court is hereby

REVERSED, and the complaint against herein petitioners in Civil Case No. 3283 of the
Court of First Instance of Bohol, Branch IV, is DISMISSED. No pronouncement as to
costs.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION

G.R. No. L-68102 July 16, 1992

GEORGE MCKEE and ARACELI KOH MCKEE, petitioners,
vs.
INTERMEDIATE APPELLATE COURT, JAIME TAYAG and ROSALINDA
MANALO, respondents.
G.R. No. L-68103 July 16, 1992
CARMEN DAYRIT KOH, LETICIA KOH, JULIETA KOH TUQUERO, ARACELI KOH
MCKEE, ANTONIO KOH and ELIZABETH KOH TURLA, petitioners,
vs.
INTERMEDIATE APPELLATE COURT, JAIME TAYAG and ROSALINDA
MANALO, respondents.

DAVIDE, JR., J.:

Petitioners urge this Court to review and reverse the Resolution of the Court of Appeals
in C.A.-G.R. CV Nos. 69040-41, promulgated on 3 April 1984, which set aside its
previous Decision dated 29 November 1983 reversing the Decision of the trial court
which dismissed petitioners' complaints in Civil Case No. 4477 and Civil Case No. 4478
of the then Court of First Instance (now Regional Trial Court) of Pampanga entitled
"Carmen Dayrit Koh, Leticia Koh, Julieta Koh Tuquero, Araceli Koh McKee and Elizabeth
Koh Turla vs. Jaime Tayag and Rosalinda Manalo," and "George McKee and Araceli Koh
McKee vs. Jaime Tayag and Rosalinda Manalo," respectively, and granted the private
respondents' counterclaim for moral damages, attorney's fees and litigation expenses.
The said civil cases for damages based on quasi-delict were filed as a result of a
vehicular accident which led to the deaths of Jose Koh, Kim Koh McKee and Loida

Bondoc and caused physical injuries to George Koh McKee, Christopher Koh McKee and
petitioner Araceli Koh McKee.
Petitioners in G.R. No. 68102, parents of the minors George Koh McKee, Christopher
Koh McKee and the deceased Kim Koh McKee, were the plaintiffs in Civil Case No.
4478, while petitioner Carmen Dayrit Koh and her co-petitioners in G.R. No. 68103, who
are the wife and children, respectively, of the late Jose Koh, were the plaintiffs in Civil
Case No. 4477. Upon the other hand, private respondents are the owners of the cargo
truck which figured in the mishap; a certain Ruben Galang was the driver of the truck at
the time of the accident.
The antecedent facts are not disputed.
Between nine and ten o'clock in the morning of 8 January 1977, in Pulong Pulo Bridge
along MacArthur Highway, between Angeles City and San Fernando, Pampanga, a headon-collision took place between an International cargo truck, Loadstar, with Plate No.
RF912-T Philippines '76 owned by private respondents, and driven by Ruben Galang,
and a Ford Escort car bearing Plate No. S2-850 Pampanga '76 driven by Jose Koh. The
collision resulted in the deaths of Jose Koh, Kim Koh McKee and Loida Bondoc, and
physical injuries to George Koh McKee, Christopher Koh McKee and Araceli Koh McKee,
all passengers of the Ford Escort.
Jose Koh was the father of petitioner Araceli Koh McKee, the mother of minors George,
Christopher and Kim Koh McKee. Loida Bondoc, on the other hand, was the baby sitter
of one and a half year old Kim. At the time of the collision, Kim was seated on the lap of
Loida Bondoc who was at the front passenger's seat of the car while Araceli and her two
(2) sons were seated at the car's back seat.
Immediately before the collision, the cargo truck, which was loaded with two hundred
(200) cavans of rice weighing about 10,000 kilos, was traveling southward from Angeles
City to San Fernando Pampanga, and was bound for Manila. The Ford Escort, on the
other hand, was on its way to Angeles City from San Fernando. When the northbound car
was about (10) meters away from the southern approach of the bridge, two (2) boys
suddenly darted from the right side of the road and into the lane of the car. The boys
were moving back and forth, unsure of whether to cross all the way to the other side or
turn back. Jose Koh blew the horn of the car, swerved to the left and entered the lane of
the truck; he then switched on the headlights of the car, applied the brakes and thereafter
attempted to return to his lane. Before he could do so, his car collided with the truck. The
collision occurred in the lane of the truck, which was the opposite lane, on the said
bridge.
The incident was immediately reported to the police station in Angeles City;
consequently, a team of police officers was forthwith dispatched to conduct an on the
spot investigation. In the sketch 1 prepared by the investigating officers, the bridge is
described to be sixty (60) "footsteps" long and fourteen (14) "footsteps" wide seven (7)
"footsteps" from the center line to the inner edge of the side walk on both sides. 2 Pulong Pulo
Bridge, which spans a dry brook, is made of concrete with soft shoulders and concrete
railings on both sides about three (3) feet high.
The sketch of the investigating officer discloses that the right rear portion of the cargo
truck was two (2) "footsteps" from the edge of the right sidewalk, while its left front portion
was touching the center line of the bridge, with the smashed front side of the car resting
on its front bumper. The truck was about sixteen (16) "footsteps" away from the northern
end of the bridge while the car was about thirty-six (36) "footsteps" from the opposite
end. Skid marks produced by the right front tire of the truck measured nine (9)

"footsteps", while skid marks produced by the left front tire measured five (5) "footsteps."
The two (2) rear tires of the truck, however, produced no skid marks.
In his statement to the investigating police officers immediately after the accident, Galang
admitted that he was traveling at thirty (30) miles (48 kilometers) per hour.
As a consequence of the collision, two (2) cases, Civil Case No. 4477 and No. 4478,
were filed on 31 January 1977 before the then Court of First Instance of Pampanga and
were raffled to Branch III and Branch V of the said court, respectively. In the first, herein
petitioners in G.R. No. 68103 prayed for the award of P12,000.00 as indemnity for the
death of Jose Koh, P150,000.00 as moral damages, P60,000.00 as exemplary damages,
P10,000.00 for litigation expenses, P6,000.00 for burial expenses, P3,650.00 for the
burial lot and P9,500.00 for the tomb, plus attorney's fees. 3 In the second case, petitioners
in G.R. No. 68102 prayed for the following: (a) in connection with the death of Kim McKee, the
sum of P12,000.00 as death benefit, P3,150.00 for funeral services, P3,650.00 for the
cemetery lot, P3,000.00 for the tomb, P50,000.00 as moral damages, P10,000.00 as
exemplary damages and P2,000.00 as miscellaneous damages; (b) in the case of Araceli Koh
McKee, in connection with the serious physical injuries suffered, the sum of P100,000.00 as
moral damages, P20,000.00 as exemplary damages, P12,000.00 for loss of earnings,
P5,000.00 for the hospitalization expenses up to the date of the filing of the complaint; and (c)
with respect to George McKee, Jr., in connection with the serious physical injuries suffered,
the sum of P50,000.00 as moral damages, P20,000.00 as exemplary damages and the
following medical expenses: P3,400 payable to the Medical Center, P3,500.00 payable to the
St. Francis Medical Center, P5,175.00 payable to the Clark Air Base Hospital, and
miscellaneous expenses amounting to P5,000.00. They also sought an award of attorney's
fees amounting to 25% of the total award plus traveling and hotel expenses, with costs. 4
On 1 March 1977, an Information charging Ruben Galang with the crime of "Reckless
Imprudence Resulting to (sic) Multiple Homicide and Physical Injuries and Damage to
Property" was filed with the trial court. It was docketed as Criminal Case No. 3751 and
was raffled to Branch V of the court, the same Branch where Civil Case No. 4478 was
assigned. 5
In their Answer with Counterclaim in Civil Case No. 4477, private respondents asserted
that it was the Ford Escort car which "invaded and bumped (sic) the lane of the truck
driven by Ruben Galang and, as counterclaim, prayed for the award of P15,000.00 as
attorney's fees, P20,000.00 as actual and liquidated damages, P100,000.00 as moral
damages and P30,000.00 as business losses. 6 In Civil Case No. 4478, private
respondents first filed a motion to dismiss on grounds of pendency of another action (Civil
Case No. 4477) and failure to implead an indispensable party, Ruben Galang, the truck driver;
they also filed a motion to consolidate the case with Civil Case No. 4477 pending before
Branch III of the same court, which was opposed by the plaintiffs. 7 Both motions were denied
by Branch V, then presided over by Judge Ignacio Capulong. Thereupon, private respondents
filed their Answer with Counter-claim 8 wherein they alleged that Jose Koh was the person "at fault having
approached the lane of the truck driven by Ruben Galang, . . . which was on the right lane going towards Manila and at a
moderate speed observing all traffic rules and regulations applicable under the circumstances then prevailing;" in their
counterclaim, they prayed for an award of damages as may be determined by the court after due hearing, and the sums of
P10,000.00 as attorney's fees and P5,000.00 as expenses of litigation.

Petitioners filed their Answers to the Counterclaims in both cases.

To expedite the proceedings, the plaintiffs in Civil Case No. 4478 filed on 27 March 1978
a motion to adopt the testimonies of witnesses taken during the hearing of Criminal Case
No. 3751, which private respondents opposed and which the court denied. 9 Petitioners
subsequently moved to reconsider the order denying the motion for consolidation, 10 which
Judge Capulong granted in the Order of 5 September 1978; he then directed that Civil Case
No. 4478 be consolidated with Civil Case No. 4477 in Branch III of the court then presided
over by Judge Mario Castaeda, Jr.

Left then with Branch V of the trial court was Criminal Case No. 3751.
In the civil cases, the plaintiffs presented as witnesses Araceli Koh McKee, Fernando
Nuag, Col. Robert Fitzgerald, Primitivo Parel, Eugenio Tanhueco, Carmen Koh and
Antonio Koh, 11 and offered several documentary exhibits. Upon the other hand, private
respondents presented as witnesses Ruben Galang, Zenaida Soliman, Jaime Tayag and
Roman Dayrit. 12
In the criminal case, the prosecution presented as witnesses Mrs. Araceli McKee, Salud
Samia, Pfc. Fernando Nuag, Dr. Ramon Panlilio, Dr. Robert Fitzgerald, Dr. Roberto
Yuson, Dr. Hector, Ulanday, Pfc. Benigno de Leon, Marina Bolos, Primitivo Parel, Rogelio
Pineda, Benito Caraan and Eugenio Tanhueco, and offered several documentary
exhibits. 13 Upon the other hand, the defense presented the accused Ruben Galang, Luciano
Punzalan, Zenaida Soliman and Roman Dayrit, and offered documentary exhibits. 14
On 1 October 1980, Judge Capulong rendered a decision against the accused Ruben
Galang in the aforesaid criminal case. The dispositive portion of the decision reads as
follows:
WHEREFORE, in view of the foregoing, judgment is hereby rendered
finding the accused Ruben Galang guilty beyond reasonable doubt of the
crime charged in the information and after applying the provisions of
Article 365 of the Revised Penal Code and indeterminate sentence law,
this Court, imposes upon said accused Ruben Galang the penalty of six
(6) months of arresto mayor as minimum to two (2) years, four (4) months
and one (1) day of prision correccional as maximum; the accused is
further sentenced to pay and indemnify the heirs of Loida Bondoc the
amount of P12,000.00 as indemnity for her death; to reimburse the heirs
of Loida Bondoc the amount of P2,000.00 representing the funeral
expenses; to pay the heirs of Loida Bondoc the amount of P20,000.00
representing her loss of income; to indemnify and pay the heirs of the
deceased Jose Koh the value of the car in the amount of P53,910.95, and
to pay the costs. 15
The aforecited decision was promulgated only on 17 November 1980; on the same day,
counsel for petitioners filed with Branch III of the court where the two (2) civil cases
were pending a manifestation to that effect and attached thereto a copy of the
decision. 16
Upon the other hand, Judge Mario Castaeda, Jr. dismissed the two (2) civil cases on 12
November 1980 and awarded the private respondents moral damages, exemplary
damages and attorney's fees. 17 The dispositive portion of the said decision reads as follows:
WHEREFORE, finding the preponderance of evidence to be in favor of
the defendants and against the plaintiffs, these cases are hereby ordered
DISMISSED with costs against the plaintiffs. The defendants had proven
their counter-claim, thru evidences (sic) presented and unrebutted.
Hence, they are hereby awarded moral and exemplary damages in the
amount of P100,000.00 plus attorney's fee of P15,000.00 and litigation
expenses for (sic) P2,000.00. The actual damages claimed for (sic) by the
defendants is (sic) hereby dismissing for lack of proof to that effect (sic). 18
A copy of the decision was sent by registered mail to the petitioners on 28 November
1980 and was received on 2 December 1980. 19

Accused Ruben Galang appealed the judgment of conviction to the Court of Appeals.
The appeal was docketed as C.A.-G.R. Blg. 24764-CR and was assigned to the court's
Third Division. Plaintiffs in Civil Cases Nos. 4477 and 4478 likewise separately appealed
the 12 November 1980 decision to the appellate court. The appeals were docketed as
C.A.-G.R. No. 69041-R and C.A.-G.R. No. 69040-R, respectively, and were assigned to
the Fourth Civil Cases Division.
On 4 October 1982, the respondent Court promulgated its decision 20 in C.A.-G.R. Blg.
24764-CR affirming the conviction of Galang. 21 The dispositive portion of the decision reads:
DAHIL DITO, ang hatol na paksa ng naritong paghahabol ay Aming
pinagtitibay sa kanyang kabuuan. Ang naghahabol pa rin ang
pinagbabayad ng gugol ng paghahabol.
A motion for reconsideration of the decision was denied by the respondent Court in
its Kapasiyahan promulgated on 25 November 1982. 22 A petition for its review 23 was filed
with this Court; said petition was subsequently denied. A motion for its reconsideration was
denied with finality in the Resolution of 20 April 1983. 24
On 29 November 1983, respondent Court, by then known as the Intermediate Appellate
Court, promulgated its consolidated decision in A.C.-G.R. CV Nos. 69040 and
69041, 25 the dispositive portion of which reads:
WHEREFORE, the decision appealed from it hereby reversed and set
aside and another one is rendered, ordering defendants-appellees to pay
plaintiffs-appellants as follows:
For the death of Jose Koh:
P 50,000.00 as moral damages
P 12,000.00 as death indemnity
P 16,000.00 for the lot and tomb (Exhs. U and U-1)
P 4,000.00 expenses for holding a wake (p. 9, tsn April 19,
1979)
P 950.00 for the casket (Exh. M)
P 375.00 for the vault services (Exhs. V and V-1)
For the death of Kim Koh McKee:
P 50,000.00 as moral damages
P 12,000.00 as death indemnity
P 1,000.00 for the purchase of the burial lot (Exh. M)
P 950.00 for funeral services (Exh. M-1)
P 375.00 for vault services (Exhs. V and V-1)
For the physical injuries suffered by George Koh McKee:
P 25,000.00 as moral damages
P 672.00 for Clark Field Hospital (Exh. E)
P 4,384.00 paid to Angeles Medical Clinic (Exhs. D, D-1
and
D-2)
P 1,555.00 paid to St. Francis Medical Center (Exhs. B
and B-1)

For the physical injuries suffered by Araceli Koh McKee:

P 25,000.00 as moral damages
P 1,055.00 paid to St. Francis Medical Center (Exhs. G
and
G-1)
P 75.00 paid to St. Francis Medical Center (Exhs. G-2 and
G-3)
P 428.00 to Carmelite General Hospital (Exh. F)
P 114.20 to Muoz Clinic (Exh. MM)
For the physical injuries suffered by Christopher Koh McKee:
P 10,000.00 as moral damages
P 1,231.10 to St. Francis Medical Center (Exhs. L and L1)
P 321.95 to F.C.E.A. Hospital (Exhs. G and D-1)
In addition, We award P10,000.00 as counsel (sic) fees in Civil Case No.
4477 and another P10,000.00; as counsel (sic) fees in Civil Case No.
4478.
No pronouncement as to costs.
SO ORDERED. 26
The decision is anchored principally on the respondent Court's findings that it was Ruben
Galang's inattentiveness or reckless imprudence which caused the accident. The
appellate court further said that the law presumes negligence on the part of the
defendants (private respondents), as employers of Galang, in the selection and
supervision of the latter; it was further asserted that these defendants did not allege in
their Answers the defense of having exercised the diligence of a good father of a family in
selecting and supervising the said employee. 27 This conclusion of reckless imprudence is
based on the following findings of fact:
In the face of these diametrically opposed judicial positions, the
determinative issue in this appeal is posited in the fourth assigned error
as follows:
IV
THE TRIAL COURT ERRED WHEN IT HELD THE (sic) DRIVER OF THE
TRUCK STOPPED HIS TRUCK BLEW HIS HORN SWITCHED ON HIS
HEADLIGHTS AND COULD NOT SWERVE TO THE RIGHT.
Supportive of plaintiffs' version, principal witness Araceli Koh McKee testified thus:
Q What happened after that, as you approached the
bridge?
A When we were approaching the bridge, two (2) boys
tried to cross the right lane on the right side of the
highway going to San Fernando. My father, who is (sic)
the driver of the car tried to avoid the two (2) boys who
were crossing, he blew his horn and swerved to the left to

avoid hitting the two (2) boys. We noticed the truck, he

switched on the headlights to warn the truck driver, to
slow down to give us the right of way to come back to our
right lane.
Q Did the truck slow down?
A No, sir, it did not, just (sic) continued on its way.
Q What happened after that?
A After avoiding the two (2) boys, the car tried to go back
to the right lane since the truck is (sic) coming, my father
stepped on the brakes and all what (sic) I heard is the
sound of impact (sic), sir. (tsn, pp. 5-6, July 22, 1977); or
(Exhibit "O" in these Civil Cases).
xxx xxx xxx
Q Mrs. how did you know that the truck driven by the
herein accused, Ruben Galang did not reduce its speed
before the actual impact of collision (sic) as you narrated
in this Exhibit "1," how did you know (sic)?
A It just kept on coming, sir. If only he reduced his speed,
we could have got (sic) back to our right lane on side (sic)
of the highway, sir. (tsn. pp. 33-34 July 22, 1977) or
(Exhibit "O" in these Civil Cases) (pp. 30-31, Appellants'
Brief).
Plaintiffs' version was successfully corroborated to Our satisfaction by the following facts
and circumstances:
1. An impartial eye-witness to the mishap, Eugenio Tanhueco, declared
that the truck stopped only when it had already collided with the car:
xxx xxx xxx
Tanhueco repeated the same testimony during the hearing in the criminal
case:
xxx xxx xxx
Tanhueco could (sic) not be tagged as an accommodation witness
because he was one of the first to arrive at the scene of the accident. As
a matter of fact, he brought one of the injured passengers to the hospital.
We are not prepared to accord faith and credit to defendants' witnesses,
Zenaida Soliman, a passenger of the truck, and Roman Dayrit, who
supposedly lived across the street.
Regarding Soliman, experience has shown that in the ordinary course of
events people usually take the side of the person with whom they are
associated at the time of the accident, because, as a general rule, they do
not wish to be identified with the person who was at fault. Thus an

imaginary bond is unconsciously created among the several persons

within the same group (People vs. Vivencio, CA-G.R. No. 00310-CR, Jan.
31, 1962).
With respect to Dayrit, We can not help suspecting (sic) that he is an
accommodation witness. He did not go to the succor of the injured
persons. He said he wanted to call the police authorities about the
mishap, but his phone had no dial tone. Be this (sic) as it may, the trial
court in the criminal case acted correctly in refusing to believe Dayrit.
2. Exhibit 2, the statement of Galang, does not include the claim that
Galang stopped his truck at a safe distance from the car, according to
plaintiffs (p. 25, Appellants' Brief). This contention of appellants was
completely passed sub-silencio or was not refuted by appellees in their
brief. Exhibit 2 is one of the exhibits not included in the record. According
to the Table of Contents submitted by the court below, said Exhibit 2 was
not submitted by defendants-appellees. In this light, it is not far-fetched to
surmise that Galang's claim that he stopped was an eleventh-hour
desperate attempt to exculpate himself from imprisonment and damages.
3. Galang divulged that he stopped after seeing the car about 10 meters
away:
ATTY. SOTTO:
Q Do I understand from your testimony that inspite of the
fact that you admitted that the road is straight and you
may be able to (sic) see 500-1000 meters away from you
any vehicle, you first saw that car only about ten (10)
meters away from you for the first time?
xxx xxx xxx
A I noticed it, sir, that it was about ten (10) meters away.
ATTY. SOTTO:
Q So, for clarification, you clarify and state under your
oath that you have (sic) not noticed it before that ten (10)
meters? (Tsn. 3 to 5, Sept. 18, 1979). (p. 16, Appellants'
Brief)
Galang's testimony substantiate (sic) Tanhueco's statement that Galang
stopped only because of the impact. At ten (10) meters away, with the
truck running at 30 miles per hour, as revealed in Galang's affidavit (Exh.
2; p. 25, Appellants' brief), it is well-nigh impossible to avoid a collision on
a bridge.
5. Galang's truck stopped because of the collision, and not because he
waited for Jose Koh to return to his proper lane. The police investigator,
Pfc. Fernando L. Nuag, stated that he found skid marks under the truck
but there were not (sic) skid marks behind the truck (pp. 19-20, t.s.n.,
Nov. 3, 1978). The presence of skid marks show (sic) that the truck was
speeding. Since the skid marks were found under the truck and none
were found at the rear of the truck, the reasonable conclusion is that the

skid marks under the truck were caused by the truck's front wheels when
the trucks (sic) suddenly stopped seconds before the mishap in an
endeavor to avoid the same. But, as aforesaid, Galang saw the car at
barely 10 meters away, a very short distance to avoid a collision, and in
his futile endeavor to avoid the collision he abruptly stepped on his
brakes but the smashup happened just the same.
For the inattentiveness or reckless imprudence of Galang, the law
presumes negligence on the part of the defendants in the selection of
their driver or in the supervision over him. Appellees did not allege such
defense of having exercised the duties of a good father of a family in the
selection and supervision of their employees in their answers. They did
not even adduce evidence that they did in fact have methods of selection
and programs of supervision. The inattentiveness or negligence of
Galang was the proximate cause of the mishap. If Galang's attention was
on the highway, he would have sighted the car earlier or at a very safe
distance than (sic) 10 meters. He proceeded to cross the bridge, and tried
to stop when a collision was already inevitable, because at the time that
he entered the bridge his attention was not riveted to the road in front of
him.
On the question of damages, the claims of appellants were amply proven,
but the items must be reduced. 28
A motion for reconsideration alleging improper appreciation of the facts was subsequently
filed by private respondents on the basis of which the respondent Court, in its Resolution
of 3 April 1984, 29 reconsidered and set aside its 29 November 1983 decision and affirmed in
toto the trial court's judgment of 12 November 1980. A motion to reconsider this Resolution
was denied by the respondent Court on 4 July 1984. 30
Hence, this petition.
Petitioners allege that respondent Court:
I
. . . COMMITTED A VERY SERIOUS AND GRAVE ERROR WHEN IT
TOTALLY REVERSED ITS DECISION BY MERELY BASING IT FROM
(sic) A MERE "PRESUMPTION," TOTALLY DISREGARDING THE
PRIVATE RESPONDENTS' DRIVER'S ADMISSIONS AND
CONFESSIONS, WHO EXCLUSIVELY COMMITTED THE PROXIMATE
CAUSE OF THE ACCIDENT (sic), FURTHER, IT ALSO DISREGARDED
THE EVIDENCE ADDUCED AND FOUND IN THE RECORDS;
THEREFORE, RESPONDENT COURT'S RESOLUTIONS (ANNEXES A
and B, PETITION) ARE CLEARLY ERRONEOUS, PURELY BASED ON
SPECULATIONS, CONJECTURES AND WITHOUT SURE
FOUNDATION IN THE EVIDENCE.
II
. . . GRAVELY ABUSED ITS DISCRETION AND ERRED WHEN IN
EFFECT IT DISREGARDED A DOCTRINE LAID DOWN BY THIS
HONORABLE COURT BY STATING AMONG OTHERS, "IT CANNOT
CATEGORICALLY ADOPT THE FINDINGS OF GUILT IN THE CRIMINAL
CASE WHERE THE DRIVER OF THE TRUCK INVOLVED IN THE
ACCIDENT WAS INDICTED.

III
. . . PATENTLY COMMITTED GRAVE ABUSE OF DISCRETION AND
MADE A MISLEADING PRONOUNCEMENT, WHEN IT HELD: "IT IS
THUS INCUMBENT UPON THE PLAINTIFFS-APPELLANTS
(APPELLEES WRONGLY MENTIONED IN THE RESOLUTION) TO
PROVE THEIR ALLEGATIONS THAT THE PROXIMATE CAUSE OF THE
ACCIDENT WAS THE NEGLIGENCE OF PRIVATE RESPONDENTS'
DRIVER.
IV
. . . COMMITTED ANOTHER GRIEVIOUS (sic) ERROR; COMMITTED
GRAVE ABUSE OF DISCRETION AND CITED ANOTHER CASE WHICH
IS CLEARLY INAPPLICABLE TO THESE CASES.
V
. . . COMMITTED A PATENT ERROR AND GRAVELY ABUSED ITS
DISCRETION IN ADOPTING THE FINDINGS OF THE TRIAL COURT
WHICH ARE CLEARLY ERRONEOUS AND CONTRARY TO THE
EVIDENCE FOUND IN THE RECORDS, SPECIALLY THEY (sic) ARE
CONTRARY TO THE ADMITTED FACTS AND JUDICIAL ADMISSIONS
MADE BY THE PRIVATE RESPONDENTS' DRIVER.
VI
. . . EXCEEDED ITS JURISDICTION, COMMITTED GRAVE ABUSE OF
DISCRETION AND GRAVELY ERRED WHEN IT AWARDED DAMAGES
TO THE PRIVATE RESPONDENTS WHEN SAID AWARD IS NOT
SUPPORTED BY EVIDENCE, IN THE RECORDS, AND SAID AWARD IS
NOT ALLOWED BY LAW AND THE CONSISTENT DECISIONS OF THIS
HONORABLE COURT.
VII
. . . EXCEEDED ITS JURISDICTION, COMMITTED GRAVE ABUSE OF
DISCRETION AND GRAVELY ERRED WHEN IT ERRONEOUSLY SET
ASIDE ITS DECISION AWARDING DAMAGES TO PETITIONERS
WHICH IS CLEARLY IN ACCORDANCE WITH THE EVIDENCE, THE
LAW AND JURISPRUDENCE RELATIVE TO THE AWARD OF
DAMAGES. 31
In the Resolution of 12 September 1984, We required private respondents to Comment
on the petition. 32 After the said Comment 33 was filed, petitioners submitted a
Reply 34 thereto; this Court then gave due course to the instant petitions and required
petitioners to file their Brief, 35 which they accordingly complied with.
There is merit in the petition. Before We take on the main task of dissecting the
arguments and counter-arguments, some observations on the procedural vicissitudes of
these cases are in order.
Civil Cases Nos. 4477 and 4478, which were for the recovery of civil liability arising from
a quasi-delict under Article 2176 in relation to Article 2180 of the Civil Code, were filed
ahead of Criminal Case No. 3751. Civil Case No. 4478 was eventually consolidated with

Civil Case No. 4477 for joint trial in Branch III of the trial court. The records do not
indicate any attempt on the part of the parties, and it may therefore be reasonably
concluded that none was made, to consolidate Criminal Case No. 3751 with the civil
cases, or vice-versa. The parties may have then believed, and understandably so, since
by then no specific provision of law or ruling of this Court expressly allowed such a
consolidation, that an independent civil action, authorized under Article 33 in relation to
Article 2177 of the Civil Code, such as the civil cases in this case, cannot be consolidated
with the criminal case. Indeed, such consolidation could have been farthest from their
minds as Article 33 itself expressly provides that the "civil action shall proceed
independently of the criminal prosecution, and shall require only a preponderance of
evidence." Be that as it may, there was then no legal impediment against such
consolidation. Section 1, Rule 31 of the Rules of Court, which seeks to avoid a multiplicity
of suits, guard against oppression and abuse, prevent delays, clear congested dockets to
simplify the work of the trial court, or in short, attain justice with the least expense to the
parties litigants, 36 would have easily sustained a consolidation, thereby preventing the
unseeming, if no ludicrous, spectacle of two (2) judges appreciating, according to their
respective orientation, perception and perhaps even prejudice, the same facts differently, and
thereafter rendering conflicting decisions. Such was what happened in this case. It should not,
hopefully, happen anymore. In the recent case of Cojuangco vs. Court or Appeals, 37 this
Court held that the present provisions of Rule 111 of the Revised Rules of Court allow a
consolidation of an independent civil action for the recovery of civil liability authorized under
Articles 32, 33, 34 or 2176 of the Civil Code with the criminal action subject, however, to the
condition that no final judgment has been rendered in that criminal case.
Let it be stressed, however, that the judgment in Criminal Case No. 3751 finding Galang
guilty of reckless imprudence, although already final by virtue of the denial by no less
than this Court of his last attempt to set aside the respondent Court's affirmance of the
verdict of conviction, has no relevance or importance to this case.
As We held in Dionisio vs. Alvendia, 38 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. And, as more concretely stated in the concurring opinion of Justice
J.B.L. Reyes, "in the case of independent civil actions under the new Civil Code, the result of
the criminal case, whether acquittal or conviction, would be entirely irrelevant to the civil
action." 39 In Salta vs. De Veyra and PNB vs. Purisima, 40 this Court stated:
. . . It seems perfectly reasonable to conclude that the civil actions
mentioned in Article 33, permitted in the same manner to be filed
separately from the criminal case, may proceed similarly regardless of
the result of the criminal case.
Indeed, when the law has allowed a civil case related to a criminal case,
to be filed separately and to proceed independently even during the
pendency of the latter case, the intention is patent to make the court's
disposition of the criminal case of no effect whatsoever on the separate
civil case. This must be so because the offenses specified in Article 33
are of such a nature, unlike other offenses not mentioned, that they may
be made the subject of a separate civil action because of the distinct
separability of their respective juridical cause or basis of action . . . .
What remains to be the most important consideration as to why the decision in the
criminal case should not be considered in this appeal is the fact that private respondents
were not parties therein. It would have been entirely different if the petitioners' cause of
action was for damages arising from a delict, in which case private respondents' liability
could only be subsidiary pursuant to Article 103 of the Revised Penal Code. In the
absence of any collusion, the judgment of conviction in the criminal case against Galang

would have been conclusive in the civil cases for the subsidiary liability of the private
respondents. 41
And now to the merits of the petition.
It is readily apparent from the pleadings that the principal issue raised in this petition is
whether or not respondent Court's findings in its challenged resolution are supported by
evidence or are based on mere speculations, conjectures and presumptions.
The principle is well-established that this Court is not a trier of facts. Therefore, in an
appeal by certiorari under Rule 45 of the Revised Rules of Court, only questions of law
may be raised. The resolution of factual issues is the function of the lower courts whose
findings on these matters are received with respect and are, as a rule, binding on this
Court. 42
The foregoing rule, however, is not without exceptions. Findings of facts of the trial courts
and the Court of Appeals may be set aside when such findings are not supported by the
evidence or when the trial court failed to consider the material facts which would have led
to a conclusion different from what was stated in its judgment. 43The same is true where
the appellate court's conclusions are grounded entirely on conjectures, speculations and
surmises44 or where the conclusions of the lower courts are based on a misapprehension of
facts. 45
It is at once obvious to this Court that the instant case qualifies as one of the
aforementioned exceptions as the findings and conclusions of the trial court and the
respondent Court in its challenged resolution are not supported by the evidence, are
based on an misapprehension of facts and the inferences made therefrom are manifestly
mistaken. The respondent Court's decision of 29 November 1983 makes the correct
findings of fact.
In the assailed resolution, the respondent Court held that the fact that the car improperly
invaded the lane of the truck and that the collision occurred in said lane gave rise to the
presumption that the driver of the car, Jose Koh, was negligent. On the basis of this
presumed negligence, the appellate court immediately concluded that it was Jose Koh's
negligence that was the immediate and proximate cause of the collision. This is an
unwarranted deduction as the evidence for the petitioners convincingly shows that the
car swerved into the truck's lane because as it approached the southern end of the
bridge, two (2) boys darted across the road from the right sidewalk into the lane of the
car. As testified to by petitioner Araceli Koh McKee:
Q What happened after that, as you approached the
bridge?
A When we were approaching the bridge, two (2) boys
tried to cross the right lane on the right side of the
highway going to San Fernando. My father, who is (sic)
the driver of the car tried to avoid the two (2) boys who
were crossing, he blew his horn and swerved to the left to
avoid hitting the two (2) boys. We noticed the truck, he
switched on the headlights to warn the truck driver, to
slow down to give us the right of way to come back to our
right lane.
Q Did the truck slow down?
A No sir, it did not, just (sic) continued on its way.

Q What happened after that?

A After avoiding the two (2) boys, the car tried to go back
to the right lane since the truck is (sic) coming, my father
stepped on the brakes and all what (sic) I heard is the
sound of impact (sic), sir. 46
Her credibility and testimony remained intact even during cross examination. Jose Koh's
entry into the lane of the truck was necessary in order to avoid what was, in his mind at
that time, a greater peril death or injury to the two (2) boys. Such act can hardly be
classified as negligent.
Negligence was defined and described by this Court in Layugan vs. Intermediate
Appellate Court, 47 thus:
. . . 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 (Black's Law Dictionary, Fifth Edition, 930),
or as Judge Cooley defines it, "(T)he failure to observe for the protection
of the interests of another person, that degree of care, precaution, and
vigilance which the circumstances justly demand, whereby such other
person suffers injury." (Cooley on Torts, Fourth Edition, vol. 3, 265)
In Picart vs. Smith (37 Phil 809, 813), decided more than seventy years
ago but still a sound rule, (W)e held:
The test by which to determine the existence of
negligence in a particular case may be stated as follows:
Did the defendant in doing the alleged negligent act use
that(reasonable care and caution which an ordinarily
prudent person would have used in the same situation?) If
not, then he is guilty of negligence. The law here in effect
adopts the standard supposed to be supplied by the
imaginary conduct of the discreet paterfamiliasof the
Roman
law. . . .
In Corliss vs. Manila Railroad Company, 48 We held:
. . . Negligence is want of the care required by the circumstances. It is a
relative or comparative, not an absolute, term and its application depends
upon the situation of the parties and the degree of care and vigilance
which the circumstances reasonably require. Where the danger is great, a
high degree of care is necessary, and the failure to observe it is a want of
ordinary care under the circumstances. (citing Ahern v. Oregon Telephone
Co., 35 Pac. 549 (1894).
On the basis of the foregoing definition, the test of negligence and the facts obtaining in
this case, it is manifest that no negligence could be imputed to Jose Koh. Any reasonable
and ordinary prudent man would have tried to avoid running over the two boys by
swerving the car away from where they were even if this would mean entering the
opposite lane. Avoiding such immediate peril would be the natural course to take
particularly where the vehicle in the opposite lane would be several meters away and
could very well slow down, move to the side of the road and give way to the oncoming
car. Moreover, under what is known as the emergency rule, "one who suddenly finds

himself in a place of danger, and is required to act without time to consider the best
means that may be adopted to avoid the impending danger, is not guilty of negligence, if
he fails to adopt what subsequently and upon reflection may appear to have been a
better method, unless the emergency in which he finds himself is brought about by his
own negligence." 49
Considering the sudden intrusion of the two (2) boys into the lane of the car, We find that
Jose Koh adopted the best means possible in the given situation to avoid hitting them.
Applying the above test, therefore, it is clear that he was not guilty of negligence.
In any case, assuming, arguendo that Jose Koh is negligent, it cannot be said that his
negligence was the proximate cause of the collision. Proximate cause has been defined
as:
. . . 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. And more comprehensively, the
proximate legal cause is that acting first and producing the injury, either
immediately or by setting other events in motion, all constituting a natural
and continuous chain of events, each having a close causal connection
with its immediate predecessor, the final event in the chain immediately
effecting the injury as a natural and probable result of the cause which
first acted, under such circumstances that the person responsible for the
first event should, as an ordinary prudent and intelligent person, have
reasonable ground to expect at the moment of his act or default that an
injury to some person might probably result therefrom. 50
Applying the above definition, although it may be said that the act of Jose Koh, if at all
negligent, was the initial act in the chain of events, it cannot be said that the same
caused the eventual injuries and deaths because of the occurrence of a sufficient
intervening event, the negligent act of the truck driver, which was the actual cause of the
tragedy. The entry of the car into the lane of the truck would not have resulted in the
collision had the latter heeded the emergency signals given by the former to slow down
and give the car an opportunity to go back into its proper lane. Instead of slowing down
and swerving to the far right of the road, which was the proper precautionary measure
under the given circumstances, the truck driver continued at full speed towards the car.
The truck driver's negligence becomes more apparent in view of the fact that the road is
7.50 meters wide while the car measures 1.598 meters and the truck, 2.286 meters, in
width. This would mean that both car and truck could pass side by side with a clearance
of 3.661 meters to spare. 51 Furthermore, the bridge has a level sidewalk which could have
partially accommodated the truck. Any reasonable man finding himself in the given situation
would have tried to avoid the car instead of meeting it head-on.
The truck driver's negligence is apparent in the records. He himself said that his truck
was running at 30 miles (48 kilometers) per hour along the bridge while the maximum
speed allowed by law on a bridge 52 is only 30 kilometers per hour. Under Article 2185 of the
Civil Code, a person driving a vehicle is presumed negligent if at the time of the mishap, he
was violating any traffic regulation. We cannot give credence to private respondents' claim
that there was an error in the translation by the investigating officer of the truck driver's
response in Pampango as to whether the speed cited was in kilometers per hour or miles per
hour. The law presumes that official duty has been regularly performed; 53 unless there is
proof to the contrary, this presumption holds. In the instant case, private respondents' claim is
based on mere conjecture.
The truck driver's negligence was likewise duly established through the earlier quoted
testimony of petitioner Araceli Koh McKee which was duly corroborated by the testimony
of Eugenio Tanhueco, an impartial eyewitness to the mishap.

Araceli Koh McKee testified further, thus:

xxx xxx xxx
Q Mrs. how did you know that the truck driven by the
herein accused, Ruben Galang did not reduce its speed
before the actual impact of collision as you narrated in this
Exhibit "1," how did you know?
A It just kept on coming, sir. If only he reduced his speed,
we could have got (sic) back to our right lane on side (sic)
of the highway, sir. (tsn, pp. 33-34, July 22, 1977) or
(Exhibit; "O" in these Civil Cases) (pp. 30-31, Appellants'
Brief) 54
while Eugenio Tanhueco testified thus:
Q When you saw the truck, how was it moving?
A It was moving 50 to 60 kilometers per hour, sir.
Q Immediately after you saw this truck, do you know what
happened?
A I saw the truck and a car collided (sic), sir, and I went to
the place to help the victims. (tsn. 28, April 19, 1979)
xxx xxx xxx
Q From the time you saw the truck to the time of the
impact, will you tell us if the said truck ever stopped?
A I saw it stopped (sic) when it has (sic) already collided
with the car and it was already motionless. (tsn. 31, April
19, 1979; Emphasis Supplied). (p. 27, Appellants' Brief). 55
Clearly, therefore, it was the truck driver's subsequent negligence in failing to take the
proper measures and degree of care necessary to avoid the collision which was the
proximate cause of the resulting accident.
Even if Jose Koh was indeed negligent, the doctrine of last clear chance finds application
here. Last clear chance is a doctrine in the law of torts which states that the contributory
negligence of the party injured will not defeat the claim for damages if it is shown that the
defendant might, by the exercise of reasonable care and prudence, have avoided the
consequences of the negligence of the injured party. In such cases, the person who had
the last clear chance to avoid the mishap is considered in law solely responsible for the
consequences thereof. 56
In Bustamante vs. Court of Appeals, 57 We held:
The respondent court adopted the doctrine of "last clear chance." The
doctrine, stated broadly, is that the negligence of the plaintiff does not
preclude a recovery for the negligence of the defendant where it appears
that the defendant, by exercising reasonable care and prudence, might
have avoided injurious consequences to the plaintiff notwithstanding the

plaintiff's negligence. In other words, the doctrine of last clear chance

means that even though a person's own acts may have placed him in a
position of peril, and an injury results, the injured person is entitled to
recovery (sic). As the doctrine is usually stated, a person who has the last
clear chance or opportunity of avoiding an accident, notwithstanding the
negligent acts of his opponent or that of a third person imputed to the
opponent is considered in law solely responsible for the consequences of
the accident. (Sangco, Torts and Damages, 4th Ed., 1986, p. 165).
The practical import of the doctrine is that a negligent defendant is held
liable to a negligent plaintiff, or even to a plaintiff who has been grossly
negligent in placing himself in peril, if he, aware of the plaintiff's peril, or
according to some authorities, should have been aware of it in the
reasonable exercise of due care, had in fact an opportunity later than that
of the plaintiff to avoid an accident (57 Am. Jur., 2d, pp. 798-799).
In Pantranco North Express, Inc., vs. Baesa,

58

We ruled:

The doctrine of last clear chance was defined by this Court in the case of
Ong v. Metropolitan Water District, 104 Phil. 397 (1958), in this wise:
The doctrine of the last clear chance simply, means that
the negligence of a claimant does not preclude a recovery
for the negligence of defendant where it appears that the
latter, by exercising reasonable care and prudence, might
have avoided injurious consequences to claimant
notwithstanding his negligence.
The doctrine applies only in a situation where the plaintiff was guilty of
prior or antecedent negligence but the defendant, who had the last fair
chance to avoid the impending harm and failed to do so, is made liable
for all the consequences of the accident notwithstanding the prior
negligence of the plaintiff [Picart v. Smith, 37 Phil. 809 (1918); Glan
People's Lumber and Hardware, et al. vs. Intermediate Appellate Court,
Cecilia Alferez Vda. de Calibo, et al., G.R. No. 70493, May, 18, 1989].
The subsequent negligence of the defendant in failing to exercise
ordinary care to avoid injury to plaintiff becomes the immediate or
proximate cause of the accident which intervenes between the accident
and the more remote negligence of the plaintiff, thus making the
defendant liable to the plaintiff [Picart v. Smith, supra].
Generally, the last clear chance doctrine is invoked for the purpose of
making a defendant liable to a plaintiff who was guilty of prior or
antecedent negligence, although it may also be raised as a defense to
defeat claim (sic) for damages.
Applying the foregoing doctrine, it is not difficult to rule, as We now rule, that it was the
truck driver's negligence in failing to exert ordinary care to avoid the collision which was,
in law, the proximate cause of the collision. As employers of the truck driver, the private
respondents are, under Article 2180 of the Civil Code, directly and primarily liable for the
resulting damages. The presumption that they are negligent flows from the negligence of
their employee. That presumption, however, is only juris tantum, not juris et de
jure. 59 Their only possible defense is that they exercised all the diligence of a good father of a
family to prevent the damage. Article 2180 reads as follows:

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 xxx xxx
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.
xxx xxx xxx
The responsibility treated of in this article shall cease when the persons
herein mentioned prove that they observed all the diligence of a good
father of a family to prevent damage.
The diligence of a good father referred to means the diligence in the selection and
supervision of employees. 60The answers of the private respondents in Civil Cases Nos.
4477 and 4478 did not interpose this defense. Neither did they attempt to prove it.
The respondent Court was then correct in its Decision of 29 November 1983 in reversing
the decision of the trial court which dismissed Civil Cases Nos. 4477 and 4478. Its
assailed Resolution of 3 April 1984 finds no sufficient legal and factual moorings.
In the light of recent decisions of this Court,
increased from P12,000.00 to P50,000.00.

61

the indemnity for death must, however, be

WHEREFORE, the instant petition is GRANTED. The assailed Resolution of the

respondent Court of 3 April 1984 is SET ASIDE while its Decision of 29 November 1983
in C.A.-G.R. CV Nos. 69040-41 is REINSTATED, subject to the modification that the
indemnity for death is increased from P12,000.00 to P50,000.00 each for the death of
Jose Koh and Kim Koh McKee.
Costs against private respondents.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION

G.R. No. 97626 March 14, 1997

PHILIPPINE BANK OF COMMERCE, now absorbed by PHILIPPINE COMMERCIAL
INTERNATIONAL BANK, ROGELIO LACSON, DIGNA DE LEON, MARIA ANGELITA
PASCUAL, et al., petitioners,
vs.
THE COURT OF APPEALS, ROMMEL'S MARKETING CORP., represented by
ROMEO LIPANA, its President & General Manager, respondents.

HERMOSISIMA, JR., J.:

Challenged in this petition for review is the Decision dated February 28, 1991 1 rendered
by public respondent Court of Appeals which affirmed the Decision dated November 15, 1985
of the Regional Trial Court, National Capital Judicial Region, Branch CLX (160), Pasig City, in
Civil Case No. 27288 entitled "Rommel's Marketing Corporation, etc. v. Philippine Bank of
Commerce, now absorbed by Philippine Commercial and Industrial Bank."
The case stemmed from a complaint filed by the private respondent Rommel's Marketing
Corporation (RMC for brevity), represented by its President and General Manager
Romeo Lipana, to recover from the former Philippine Bank of Commerce (PBC for
brevity), now absorbed by the Philippine Commercial International Bank, the sum of
P304,979.74 representing various deposits it had made in its current account with said
bank but which were not credited to its account, and were instead deposited to the
account of one Bienvenido Cotas, allegedly due to the gross and inexcusable negligence
of the petitioner bank.
RMC maintained two (2) separate current accounts, Current Account Nos. 53-01980-3
and 53-01748-7, with the Pasig Branch of PBC in connection with its business of selling
appliances.
In the ordinary and usual course of banking operations, current account deposits are
accepted by the bank on the basis of deposit slips prepared and signed by the depositor,

or the latter's agent or representative, who indicates therein the current account number
to which the deposit is to be credited, the name of the depositor or current account
holder, the date of the deposit, and the amount of the deposit either in cash or checks.
The deposit slip has an upper portion or stub, which is detached and given to the
depositor or his agent; the lower portion is retained by the bank. In some instances,
however, the deposit slips are prepared in duplicate by the depositor. The original of the
deposit slip is retained by the bank, while the duplicate copy is returned or given to the
depositor.
From May 5, 1975 to July 16, 1976, petitioner Romeo Lipana claims to have entrusted
RMC funds in the form of cash totalling P304,979.74 to his secretary, Irene Yabut, for the
purpose of depositing said funds in the current accounts of RMC with PBC. It turned out,
however, that these deposits, on all occasions, were not credited to RMC's account but
were instead deposited to Account No. 53-01734-7 of Yabut's husband, Bienvenido
Cotas who likewise maintains an account with the same bank. During this period,
petitioner bank had, however, been regularly furnishing private respondent with monthly
statements showing its current accounts balances. Unfortunately, it had never been the
practice of Romeo Lipana to check these monthly statements of account reposing
complete trust and confidence on petitioner bank.
Irene Yabut's modus operandi is far from complicated. She would accomplish two (2)
copies of the deposit slip, an original and a duplicate. The original showed the name of
her husband as depositor and his current account number. On the duplicate copy was
written the account number of her husband but the name of the account holder was left
blank. PBC's teller, Azucena Mabayad, would, however, validate and stamp both the
original and the duplicate of these deposit slips retaining only the original copy despite
the lack of information on the duplicate slip. The second copy was kept by Irene Yabut
allegedly for record purposes. After validation, Yabut would then fill up the name of RMC
in the space left blank in the duplicate copy and change the account number written
thereon, which is that of her husband's, and make it appear to be RMC's account
number, i.e., C.A. No. 53-01980-3. With the daily remittance records also prepared by
Ms. Yabut and submitted to private respondent RMC together with the validated duplicate
slips with the latter's name and account number, she made her company believe that all
the while the amounts she deposited were being credited to its account when, in truth
and in fact, they were being deposited by her and credited by the petitioner bank in the
account of Cotas. This went on in a span of more than one (1) year without private
respondent's knowledge.
Upon discovery of the loss of its funds, RMC demanded from petitioner bank the return of
its money, but as its demand went unheeded, it filed a collection suit before the Regional
Trial Court of Pasig, Branch 160. The trial court found petitioner bank negligent and ruled
as follows:
WHEREFORE, judgment is hereby rendered sentencing defendant
Philippine Bank of Commerce, now absorbed by defendant Philippine
Commercial & Industrial Bank, and defendant Azucena Mabayad to pay
the plaintiff, jointly and severally, and without prejudice to any criminal
action which may be instituted if found warranted:
1. The sum of P304,979.72, representing plaintiffs lost deposit, plus
interest thereon at the legal rate from the filing of the complaint;
2. A sum equivalent to 14% thereof, as exemplary damages;
3. A sum equivalent to 25% of the total amount due, as and for attorney's
fees; and

4. Costs.
Defendants' counterclaim is hereby dismissed for lack of merit. 2
On appeal, the appellate court affirmed the foregoing decision with modifications, viz:
WHEREFORE, the decision appealed from herein is MODIFIED in the
sense that the awards of exemplary damages and attorney's fees
specified therein are eliminated and instead, appellants are ordered to
pay plaintiff, in addition to the principal sum of P304,979.74 representing
plaintiff's lost deposit plus legal interest thereon from the filing of the
complaint, P25,000.00 attorney's fees and costs in the lower court as well
as in this Court. 3
Hence, this petition anchored on the following grounds:
1) The proximate cause of the loss is the negligence of respondent
Rommel Marketing Corporation and Romeo Lipana in entrusting cash to a
dishonest employee.
2) The failure of respondent Rommel Marketing Corporation to crosscheck the bank's statements of account with its own records during the
entire period of more than one (1) year is the proximate cause of the
commission of subsequent frauds and misappropriation committed by Ms.
Irene Yabut.
3) The duplicate copies of the deposit slips presented by respondent
Rommel Marketing Corporation are falsified and are not proof that the
amounts appearing thereon were deposited to respondent Rommel
Marketing Corporation's account with the bank,
4) The duplicate copies of the deposit slips were used by Ms. Irene Yabut
to cover up her fraudulent acts against respondent Rommel Marketing
Corporation, and not as records of deposits she made with the bank. 4
The petition has no merit.
Simply put, the main issue posited before us is: What is the proximate cause of the loss,
to the tune of P304,979.74, suffered by the private respondent RMC petitioner bank's
negligence or that of private respondent's?
Petitioners submit that the proximate cause of the loss is the negligence of respondent
RMC and Romeo Lipana in entrusting cash to a dishonest employee in the person of Ms.
Irene Yabut. 5 According to them, it was impossible for the bank to know that the money
deposited by Ms. Irene Yabut belong to RMC; neither was the bank forewarned by RMC that
Yabut will be depositing cash to its account. Thus, it was impossible for the bank to know the
fraudulent design of Yabut considering that her husband, Bienvenido Cotas, also maintained
an account with the bank. For the bank to inquire into the ownership of the cash deposited by
Ms. Irene Yabut would be irregular. Otherwise stated, it was RMC's negligence in entrusting
cash to a dishonest employee which provided Ms. Irene Yabut the opportunity to defraud
RMC. 6
Private respondent, on the other hand, maintains that the proximate cause of the loss
was the negligent act of the bank, thru its teller Ms. Azucena Mabayad, in validating the
deposit slips, both original and duplicate, presented by Ms. Yabut to Ms. Mabayad,
notwithstanding the fact that one of the deposit slips was not completely accomplished.

We sustain the private respondent.

Our law on quasi-delicts states:
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.
There are three elements of a quasi-delict: (a) damages suffered by the plaintiff; (b) fault
or negligence of the defendant, or some other person for whose acts he must respond;
and (c) the connection of cause and effect between the fault or negligence of the
defendant and the damages incurred by the plaintiff. 7
In the case at bench, there is no dispute as to the damage suffered by the private
respondent (plaintiff in the trial court) RMC in the amount of P304,979.74. It is in
ascribing fault or negligence which caused the damage where the parties point to each
other as the culprit.
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 do. The seventy-eight
(78)-year-old, yet still relevant, case of Picart v. Smith, 8 provides the test by which to
determine the existence of negligence in a particular case which may be stated as follows:
Did the defendant in doing the alleged negligent act use that reasonable care and caution
which an ordinarily prudent person would have used in the same situation? If not, then he is
guilty of negligence. The law here in effect adopts the standard supposed to be supplied by
the imaginary conduct of the discreet paterfamilias of the Roman law. The existence of
negligence in a given case is not determined by reference to the personal judgment of the
actor in the situation before him. The law considers what would be reckless, blameworthy, or
negligent in the man of ordinary intelligence and prudence and determines liability by that.
Applying the above test, it appears that the bank's teller, Ms. Azucena Mabayad, was
negligent in validating, officially stamping and signing all the deposit slips prepared and
presented by Ms. Yabut, despite the glaring fact that the duplicate copy was not
completely accomplished contrary to the self-imposed procedure of the bank with respect
to the proper validation of deposit slips, original or duplicate, as testified to by Ms.
Mabayad herself, thus:
Q: Now, as teller of PCIB, Pasig Branch, will you please
tell us Mrs. Mabayad your important duties and functions?
A: I accept current and savings deposits from depositors
and encashments.
Q: Now in the handling of current account deposits of
bank clients, could you tell us the procedure you follow?
A: The client or depositor or the authorized representative
prepares a deposit slip by filling up the deposit slip with
the name, the account number, the date, the cash
breakdown, if it is deposited for cash, and the check
number, the amount and then he signs the deposit slip.

Q: Now, how many deposit slips do you normally require

in accomplishing current account deposit, Mrs. Mabayad?
A: The bank requires only one copy of the deposit
although some of our clients prepare the deposit slip in
duplicate.
Q: Now in accomplishing current account deposits from
your clients, what do you issue to the depositor to
evidence the deposit made?
A: We issue or we give to the clients the depositor's stub
as a receipt of the deposit.
Q: And who prepares the deposit slip?
A: The depositor or the authorized representative sir?
Q: Where does the depositor's stub comes (sic) from Mrs.
Mabayad, is it with the deposit slip?
A: The depositor's stub is connected with the deposit slip
or the bank's copy. In a deposit slip, the upper portion is
the depositor's stub and the lower portion is the bank's
copy, and you can detach the bank's copy from the
depositor's stub by tearing it sir.
Q: Now what do you do upon presentment of the deposit
slip by the depositor or the depositor's authorized
representative?
A: We see to it that the deposit slip 9 is properly
accomplished and then we count the money and then we
tally it with the deposit slip sir.
Q: Now is the depositor's stub which you issued to your
clients validated?
A: Yes, sir. 10 [Emphasis ours]
Clearly, Ms. Mabayad failed to observe this very important procedure. The fact
that the duplicate slip was not compulsorily required by the bank in accepting
deposits should not relieve the petitioner bank of responsibility. The odd
circumstance alone that such duplicate copy lacked one vital information that
of the name of the account holder should have already put Ms. Mabayad on
guard. Rather than readily validating the incomplete duplicate copy, she should
have proceeded more cautiously by being more probing as to the true reason
why the name of the account holder in the duplicate slip was left blank while that
in the original was filled up. She should not have been so naive in accepting
hook, line and sinker the too shallow excuse of Ms. Irene Yabut to the effect that
since the duplicate copy was only for her personal record, she would simply fill up
the blank space later on. 11 A "reasonable man of ordinary prudence" 12 would not
have given credence to such explanation and would have insisted that the space left
blank be filled up as a condition for validation. Unfortunately, this was not how bank
teller Mabayad proceeded thus resulting in huge losses to the private respondent.

Negligence here lies not only on the part of Ms. Mabayad but also on the part of the bank
itself in its lackadaisical selection and supervision of Ms. Mabayad. This was exemplified
in the testimony of Mr. Romeo Bonifacio, then Manager of the Pasig Branch of the
petitioner bank and now its Vice-President, to the effect that, while he ordered the
investigation of the incident, he never came to know that blank deposit slips were
validated in total disregard of the bank's validation procedures, viz:
Q: Did he ever tell you that one of your cashiers affixed
the stamp mark of the bank on the deposit slips and they
validated the same with the machine, the fact that those
deposit slips were unfilled up, is there any report similar to
that?
A: No, it was not the cashier but the teller.
Q: The teller validated the blank deposit slip?
A: No it was not reported.
Q: You did not know that any one in the bank tellers or
cashiers validated the blank deposit slip?
A: I am not aware of that.
Q: It is only now that you are aware of that?
A: Yes, sir. 13
Prescinding from the above, public respondent Court of Appeals aptly observed:
xxx xxx xxx
It was in fact only when he testified in this case in February, 1983, or after
the lapse of more than seven (7) years counted from the period when the
funds in question were deposited in plaintiff's accounts (May, 1975 to July,
1976) that bank manager Bonifacio admittedly became aware of the
practice of his teller Mabayad of validating blank deposit slips.
Undoubtedly, this is gross, wanton, and inexcusable negligence in the
appellant bank's supervision of its employees. 14
It was this negligence of Ms. Azucena Mabayad, coupled by the negligence of the
petitioner bank in the selection and supervision of its bank teller, which was the proximate
cause of the loss suffered by the private respondent, and not the latter's act of entrusting
cash to a dishonest employee, as insisted by the petitioners.
Proximate cause is determined on the facts of each case upon mixed considerations of
logic, common sense, policy and precedent. 15 Vda. de Bataclan v. Medina, 16 reiterated in
the case of Bank of the Phil. Islands v. Court of Appeals, 17 defines proximate cause as "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. . . ." In this
case, absent the act of Ms. Mabayad in negligently validating the incomplete duplicate copy of
the deposit slip, Ms. Irene Yabut would not have the facility with which to perpetrate her
fraudulent scheme with impunity. Apropos, once again, is the pronouncement made by the
respondent appellate court, to wit:

. . . . Even if Yabut had the fraudulent intention to misappropriate the

funds entrusted to her by plaintiff, she would not have been able to
deposit those funds in her husband's current account, and then make
plaintiff believe that it was in the latter's accounts wherein she had
deposited them, had it not been for bank teller Mabayad's aforesaid gross
and reckless negligence. The latter's negligence was thus the proximate,
immediate and efficient cause that brought about the loss claimed by
plaintiff in this case, and the failure of plaintiff to discover the same soon
enough by failing to scrutinize the monthly statements of account being
sent to it by appellant bank could not have prevented the fraud and
misappropriation which Irene Yabut had already completed when she
deposited plaintiff's money to the account of her husband instead of to the
latter's accounts. 18
Furthermore, under the doctrine of "last clear chance" (also referred to, at times as
"supervening negligence" or as "discovered peril"), petitioner bank was indeed the
culpable party. This doctrine, in essence, states that where both parties are negligent, but
the negligent act of one is appreciably later in time than that of the other, or when it is
impossible to determine whose fault or negligence should be attributed to the incident,
the one who had the last clear opportunity to avoid the impending harm and failed to do
so is chargeable with the consequences thereof. 19 Stated differently, the rule would also
mean that an antecedent negligence of a person does not preclude the recovery of damages
for the supervening negligence of, or bar a defense against liability sought by another, if the
latter, who had thelast fair chance, could have avoided the impending harm by the exercise of
due diligence. 20 Here, assuming that private respondent RMC was negligent in entrusting
cash to a dishonest employee, thus providing the latter with the opportunity to defraud the
company, as advanced by the petitioner, yet it cannot be denied that the petitioner bank, thru
its teller, had the last clear opportunity to avert the injury incurred by its client, simply by
faithfully observing their self-imposed validation procedure.
At this juncture, it is worth to discuss the degree of diligence ought to be exercised by
banks in dealing with their clients.
The New Civil Code 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 the 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. (1104a)
In the case of banks, however, the degree of diligence required is more than that of
a good father of a family. Considering the fiduciary nature of their relationship with their
depositors, banks are duty bound to treat the accounts of their clients with the highest
degree of care. 21
As elucidated in Simex International (Manila), Inc. v. Court of Appeals, 22 in every case, the
depositor expects the bank to treat his account with the utmost fidelity, whether such account
consists only of a few hundred pesos or of millions. The bank must record every single
transaction accurately, down to the last centavo, and as promptly as possible. This has to be
done if the account is to reflect at any given time the amount of money the depositor can
dispose as he sees fit, confident that the bank will deliver it as and to whomever he directs. A
blunder on the part of the bank, such as the failure to duly credit him his deposits as soon as

they are made, can cause the depositor not a little embarrassment if not financial loss and
perhaps even civil and criminal litigation.

The point is that as a business affected with public interest and because of the nature of
its functions, 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. In the
case before us, it is apparent that the petitioner bank was remiss in that duty and violated
that relationship.
Petitioners nevertheless aver that the failure of respondent RMC to cross-check the
bank's statements of account with its own records during the entire period of more than
one (1) year is the proximate cause of the commission of subsequent frauds and
misappropriation committed by Ms. Irene Yabut.
We do not agree.
While it is true that had private respondent checked the monthly statements of account
sent by the petitioner bank to RMC, the latter would have discovered the loss early on,
such cannot be used by the petitioners to escape liability. This omission on the part of the
private respondent does not change the fact that were it not for the wanton and reckless
negligence of the petitioners' employee in validating the incomplete duplicate deposit
slips presented by Ms. Irene Yabut, the loss would not have occurred. Considering,
however, that the fraud was committed in a span of more than one (1) year covering
various deposits, common human experience dictates that the same would not have
been possible without any form of collusion between Ms. Yabut and bank teller Mabayad.
Ms. Mabayad was negligent in the performance of her duties as bank teller nonetheless.
Thus, the petitioners are entitled to claim reimbursement from her for whatever they shall
be ordered to pay in this case.
The foregoing notwithstanding, it cannot be denied that, indeed, private respondent was
likewise negligent in not checking its monthly statements of account. Had it done so, the
company would have been alerted to the series of frauds being committed against RMC
by its secretary. The damage would definitely not have ballooned to such an amount if
only RMC, particularly Romeo Lipana, had exercised even a little vigilance in their
financial affairs. This omission by RMC amounts to contributory negligence which shall
mitigate the damages that may be awarded to the private respondent 23 under Article 2179
of the New Civil Code, to wit:
. . . When the plaintiff's own 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 defendant's lack of due care, the plaintiff may recover damages, but
the courts shall mitigate the damages to be awarded.
In view of this, we believe that the demands of substantial justice are satisfied by
allocating the damage on a 60-40 ratio. Thus, 40% of the damage awarded by
the respondent appellate court, except the award of P25,000.00 attorney's fees,
shall be borne by private respondent RMC; only the balance of 60% needs to be
paid by the petitioners. The award of attorney's fees shall be borne exclusively by
the petitioners.
WHEREFORE, the decision of the respondent Court of Appeals is modified by reducing
the amount of actual damages private respondent is entitled to by 40%. Petitioners may
recover from Ms. Azucena Mabayad the amount they would pay the private respondent.
Private respondent shall have recourse against Ms. Irene Yabut. In all other respects, the
appellate court's decision is AFFIRMED.

Proportionate costs.
SO ORDERED.
Bellosillo, Vitug and Kapunan, JJ., concur.

Separate Opinions

PADILLA, J., dissenting:

I regret that I cannot join the majority in ruling that the proximate cause of the damage
suffered by Rommel's Marketing Corporation (RMC) is mainly "the wanton and reckless
negligence of the petitioner's employee in validating the incomplete duplicate deposit
slips presented by Ms. Irene Yabut" (Decision, p. 15). Moreover, I find it difficult to agree
with the ruling that "petitioners are entitled to claim reimbursement from her (the bank
teller) for whatever they shall be ordered to pay in this case."
It seems that an innocent bank teller is being unduly burdened with what should fall on
Ms. Irene Yabut, RMC's own employee, who should have been charged with estafa or
estafa through falsification of private document. Interestingly, the records are silent on
whether RMC had ever filed any criminal case against Ms. Irene Yabut, aside from the
fact that she does not appear to have been impleaded even as a party defendant in any
civil case for damages. Why is RMC insulating Ms. Irene Yabut from liability when in fact
she orchestrated the entire fraud on RMC, her employer?
To set the record straight, it is not completely accurate to state that from 5 May 1975 to
16 July 1976, Miss Irene Yabut had transacted with PCIB (then PBC) through
only one teller in the person of Azucena Mabayad. In fact, when RMC filed a complaint
for estafa before the Office of the Provincial Fiscal of Rizal, it indicted all the tellers of
PCIB in the branch who were accused of conspiracy to defraud RMC of its current
account deposits. (See Annex B, Rollo p. 22 and 47).
Even private respondent RMC, in its Comment, maintains that "when the
petitioner's tellers" allowed Irene Yabut to carry out her modus operandi undetected over
a period of one year, "their negligence cannot but be gross." (Rollo, p. 55; see
also Rollo pp. 58 to 59). This rules out the possibility that there may have been some
form of collusion between Yabut and bank teller Mabayad. Mabayad was just unfortunate
that private respondent's documentary evidence showed that she was the attending teller
in the bulk of Yabut's transactions with the bank.
Going back to Yabut's modus operandi, it is not disputed that each time Yabut would
transact business with PBC's tellers, she would accomplish two (2) copies of the current
account deposit slip. PBC's deposit slip, as issued in 1975, had two parts. The upper part
was called the depositor's stub and the lower part was called the bank copy. Both parts
were detachable from each other. The deposit slip was prepared and signed by the
depositor or his representative, who indicated therein the current account number to
which the deposit was to be credited, the name of the depositor or current account

holder, the date of the deposit, and the amount of the deposit either in cash or in checks.
(Rollo, p. 137)
Since Yabut deposited money in cash, the usual bank procedure then was for the teller to
count whether the cash deposit tallied with the amount written down by the depositor in
the deposit slip. If it did, then the teller proceeded to verify whether the current account
number matched with the current account name as written in the deposit slip.
In the earlier days before the age of full computerization, a bank normally maintained a
ledger which served as a repository of accounts to which debits and credits resulting from
transactions with the bank were posted from books of original entry. Thus, it was
only after the transaction was posted in the ledger that the teller proceeded to machine
validate the deposit slip and then affix his signature or initial to serve as proof of the
completed transaction.
It should be noted that the teller validated the depositor's stub in the upper portion and
the bank copy on the lower portion on both the original and duplicate copies of the
deposit slips presented by Yabut. The teller, however, detached the validated depositor's
stub on the original deposit slip and allowed Yabut to retain thewhole validated duplicate
deposit slip that bore the same account number as the original deposit slip, but with the
account name purposely left blank by Yabut, on the assumption that it would serve no
other purpose but for a personal record to complement the original validated depositor's
stub.
Thus, when Yabut wrote the name of RMC on the blank account name on the validated
duplicate copy of the deposit slip, tampered with its account number, and superimposed
RMC's account number, said act only served to cover-up the loss already caused by her
to RMC, or after the deposit slip was validated by the teller in favor of Yabut's husband.
Stated otherwise, when there is a clear evidence of tampering with any of the material
entries in a deposit slip, the genuineness and due execution of the document become an
issue in resolving whether or not the transaction had been fair and regular and whether
the ordinary course of business had been followed by the bank.
It is logical, therefore, to conclude that the legal or proximate cause of RMC's loss was
when Yabut, its employee, deposited the money of RMC in her husband's name and
account number instead of that of RMC, the rightful owner of such deposited funds.
Precisely, it was the criminal act of Yabut that directly caused damage to RMC, her
employer, not the validation of the deposit slip by the teller as the deposit slip was made
out by Yabut in her husband's name and to his account.
Even if the bank teller had required Yabut to completely fill up the duplicate deposit slip,
the original deposit slip would nonetheless still be validated under the account of Yabut's
husband. In fine, the damage had already been done to RMC when Yabut deposited its
funds in the name and account number of her husband with petitioner bank. It is then
entirely left to speculation what Yabut would have done afterwards like tampering both
the account number and the account name on the stub of the original deposit slip and on
the duplicate copy in order to cover up her crime.
Under the circumstances in this case, there was no way for PBC's bank tellers to
reasonably foresee that Yabut might or would use the duplicate deposit slip to cover up
her crime. In the first place, the bank tellers were absolutely unaware that a crime had
already been consummated by Yabut when her transaction by her sole doing was posted
in the ledger and validated by the teller in favor of her husband's account even if the
funds deposited belonged to RMC.

The teller(s) in this case were not in any way proven to be parties to the crime either as
accessories or accomplices. Nor could it be said that the act of posting and validation
was in itself a negligent act because the teller(s) simply had no choice but to accept and
validate the deposit as written in the original deposit slip under the account number and
name of Yabut's husband. Hence, the act of validating the duplicate copy was not the
proximate cause of RMC's injury but merely a remote cause which an independent cause
or agency merely took advantage of to accomplish something which was not the
probable or natural effect thereof. That explains why Yabut still had to tamper with the
account number of the duplicate deposit slip after filling in the name of RMC in the blank
space.
Coming now to the doctrine of "last clear chance," it is my considered view that the
doctrine assumes that the negligence of the defendant was subsequent to the negligence
of the plaintiff and the same must be the proximate cause of the injury. In short, there
must be a last and a clear chance, not a last possible chance, to avoid the accident or
injury. It must have been a chance as would have enabled a reasonably prudent man in
like position to have acted effectively to avoid the injury and the resulting damage to
himself.
In the case at bar, the bank was not remiss in its duty of sending monthly bank
statements to private respondent RMC so that any error or discrepancy in the entries
therein could be brought to the bank's attention at the earliest opportunity. Private
respondent failed to examine these bank statements not because it was prevented by
some cause in not doing so, but because it was purposely negligent as it admitted that it
does not normally check bank statements given by banks.
It was private respondent who had the last and clear chance to prevent any further
misappropriation by Yabut had it only reviewed the status of its current accounts on the
bank statements sent to it monthly or regularly. Since a sizable amount of cash was
entrusted to Yabut, private respondent should, at least, have taken ordinary care of its
concerns, as what the law presumes. Its negligence, therefore, is not contributory but the
immediate and proximate cause of its injury.
I vote to grant the petition.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-19495

February 2, 1924

HONORIO LASAM, ET AL., plaintiffs-appellants,

vs.
FRANK SMITH, JR., defendant-appellant.
Palma and Leuterio for plaintiffs-appellants.
Mariano Alisangco for defendant-appellant.
OSTRAND, J.:
The plaintiff are husband and wife and this action is brought to recover damages in the
sum of P20,000 for physical injuries sustained by them in an automobile accident. The
trial court rendered a judgment in their favor for the sum of P1,254.10, with legal interest
from the date of the judgment. Both the plaintiffs and the defendant appeal, the former
maintaining that the damages awarded are insufficient while the latter denies all liability
for any damages whatever.
It appears from the evidence that on February 27, 1918, the defendant was the owner of
a public garage in the town of San Fernando, La Union, and engaged in the business of
carrying passengers for hire from the one point to another in the Province of La Union
and the surrounding provinces. On the date mentioned, he undertook to convey the
plaintiffs from San Fernando to Currimao, Ilocos Norte, in a Ford automobile. On leaving
San Fernando, the automobile was operated by a licensed chauffeur, but after having
reached the town of San Juan, the chauffeur allowed his assistant, Remigio Bueno, to
drive the car. Bueno held no driver's license, but had some experience in driving, and
with the exception of some slight engine trouble while passing through the town of Luna,
the car functioned well until after the crossing of the Abra River in Tagudin, when,
according to the testimony of the witnesses for the plaintiffs, defects developed in the
steering gear so as to make accurate steering impossible, and after zigzagging for a
distance of about half a kilometer, the car left the road and went down a steep
embankment.

The defendant, in his testimony, maintains that there was no defect in the steering gear,
neither before nor after the accident, and expresses the opinion that the swaying or
zigzagging of the car must have been due to its having been driven at an excessive rate
of speed. This may possibly be true, but it is, from our point of view, immaterial whether
the accident was caused by negligence on the part of the defendant's employees, or
whether it was due to defects in the automobile; the result would be practically the same
in either event.
In going over the bank of the road, the automobile was overturned and the plaintiffs
pinned down under it. Mr. Lasam escaped with a few contusions and a "dislocated" rib ,
but his wife, Joaquina Sanchez, received serious injuries, among which was a compound
fracture of one of the bones in her left wrist. She also appears to have suffered a nervous
breakdown from which she had not fully recovered at the time of the trial.
The complaint in the case was filed about a year and a half after the occurrence above
related. It alleges, among other things, that the accident was due to defects in the
automobile as well as to the incompetence and negligence of the chauffeur, and the case
appears to have been tried largely upon the theory that it sounds in tort and that the
liability of the defendant is governed by article 1903 of the Civil Code. The trial court held,
however, that the cause of action rests on the defendant's breach of the contract of
carriage and that, consequently, articles 1101-1107 of the Civil Code, and not article
1903, are applicable. The court further found that the breach of the contract was not due
to fortuitous events and that, therefore, the defendant was liable in damages.
In our opinion, the conclusions of the court below are entirely correct. That upon the facts
stated the defendant's liability, if any, is contractual, is well settled by previous decisions
of the court, beginning with the case of Rakes vs. Atlantic, Gulf & Pacific Co. (7 Phil.,
359), and the distinction between extra-contractual liability and contractual liability has
been so ably and exhaustively discussed in various other cases, that nothing further
need here be said upon that subject. (See Cangco vs. Manila Railroad Co., 38 Phil., 768;
Manila Railroad Co. vs. Compania Trasatlantica and Atlantic, Gulf & Pacific Co., 38 Phil.,
875; De Guia vs. Manila Electric Railroad & Light Co., 40 Phil., 706.) It is sufficient to
reiterate that the source of the defendant's legal liability is the contract of carriage; that by
entering into that contract he bound himself to carry the plaintiffs safely and securely to
their destination; and that having failed to do so he is liable in damages unless he shows
that the failure to fulfill his obligation was due to causes mentioned in article 1105 of the
Civil Code, which reads as follows:
No one shall be liable for events which could not be foreseen or which, even if
foreseen, were inevitable, with the exception of the cases in which the law
expressly provides otherwise and those in which the obligation itself imposes
such liability.
This brings us to the principal question in the case:
What is meant by "events which cannot be foreseen and which, having been foreseen,
are inevitable?" The Spanish authorities regard the language employed as an effort to
define the term caso fortuito and hold that the two expressions are synonymous.
(Manresa, Comentarios al Codigo Civil Espaol, vol. 8, pp. 88 et seq.; Scvola, Codigo
Civil, vol. 19, pp. 526 et seq.)
The antecedent to article 1105 is found in Law 11, Title 33, Partida 7, which defines caso
fortuito as "occasion que a case por aventura de que non se puede ante ver. E son
estos, derrivamientos de casas e fuego que se enciende a so ora, e quebrantamiento de
navio, fuerca de ladrones. . . . (An event that takes place by accident and could not have

been foreseen. Examples of this are destruction of houses, unexpected fire, shipwreck,
violence of robbers. . . .)"
Escriche defines caso fortuito as "an unexpected event or act of God which could either
be foreseen nor resisted, such as floods, torrents, shipwrecks, conflagrations, lightning,
compulsion, insurrections, destructions, destruction of buildings by unforseen accidents
and other occurrences of a similar nature."
In discussing and analyzing the term caso fortuito the Enciclopedia Juridica
Espaola says: "In a legal sense and, consequently, also in relation to contracts, a caso
fortuito presents the following essential characteristics: (1) The cause of the unforeseen
and unexpected occurrence, or of the failure of the debtor to comply with his obligation,
must be independent of the human will. (2) It must be impossible to foresee the event
which constitutes the caso fortuito, or if it can be foreseen, it must be impossible to avoid.
(3) The occurrence must be such as to render it impossible for the debtor to fulfill his
obligation in a normal manner. And (4) the obligor (debtor) must be free from any
participation in the aggravation of the injury resulting to the creditor." (5 Enciclopedia
Juridica Espaola, 309.)
As will be seen, these authorities agree that some extraordinary circumstance
independent of the will of the obligor, or of his employees, is an essential element of
a caso fortuito. Turning to the present case, it is at once apparent that this element is
lacking. It is not suggested that the accident in question was due to an act of God or to
adverse road conditions which could not have been foreseen. As far as the records
shows, the accident was caused either by defects in the automobile or else through the
negligence of its driver. That is not a caso fortuito.
We agree with counsel that neither under the American nor Spanish law is a carrier of
passengers an absolute insurer against the risks of travel from which the passenger may
protect himself by exercising ordinary care and diligence. The case of Alba vs. Sociedad
Anonima de Tranvias, Jurisprudencia Civil, vol. 102, p. 928, cited by the defendant in
support of his contentions, affords a good illustration of the application of this principle. In
that case Alba, a passenger on a street car, was standing on the platform of the car while
it was in motion. The car rounded a curve causing Alba to lose his balance and fall off the
platform, sustaining severe injuries. In an action brought by him to recover damages, the
supreme court of Spain held that inasmuch as the car at the time of the accident was
travelling at a moderate rate of speed and there was no infraction of the regulations, and
the plaintiff was exposed to no greater danger than that inherent in that particular mode
of travel, the plaintiff could not recover, especially so since he should have been on his
guard against a contingency as natural as that of losing his balance to a greater or less
extent when the car rounded the curve.
But such is not the present case; here the passengers had no means of avoiding the
danger or escaping the injury.
The plaintiffs maintain that the evidence clearly establishes that they are entitled to
damages in the sum of P7,832.80 instead of P1,254.10 as found by the trial court, and
their assignments of error relate to this point only.
There can be no doubt that the expenses incurred by the plaintiffs as a result of the
accident greatly exceeded the amount of the damages awarded. But bearing in mind that
in determining the extent of the liability for losses or damages resulting from negligence
in the fulfillment of a contractual obligation, the courts have "a discretionary power to
moderate the liability according to the circumstances" (De Guia vs. Manila Electric
Railroad & Light Co., 40 Phil., 706; art. 1103, Civil Code), we do not think that the
evidence is such as to justify us in interfering with the discretion of the court below in this

respect. As pointed out by that court in its well-reasoned and well-considered decision, by
far the greater part of the damages claimed by the plaintiffs resulted from the fracture of a
bone in the left wrist of Joaquina Sanchez and from her objections to having a decaying
splinter of the bone removed by a surgical operation. As a consequence of her refusal to
submit such an operation, a series of infections ensued and which required constant and
expensive medical treatment for several years. We agree with the court below that the
defendant should not be charged with these expenses.
For the reasons stated, the judgment appealed from is affirmed, without costs in this
instance. So ordered.
Araullo, C.J., Street, Malcolm, Johns and Romualdez, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
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. T5292 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 crossexamined; 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.
1wph1.t

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 cocacola (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.

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
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. L12986, 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.

THIRD DIVISION

[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.
DECISION

DAVIDE, JR., J.:

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
Hammurabi[1] 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, Hippocrates[3] wrote 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 is 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 decision[5] of the Court of Appeals
of 11 May 1994 in CA-G.R. CV No. 30851, which reversed the
decision[6] 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 cesarean 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 the
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 and despite the medications administered by Dr.
Batiquin. When the pains become 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 xray 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 result 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 materials 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' 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'
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 cesarean 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 appellants 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 cause infection, placed the life of appellant
Flotilde in jeopardy and caused appellants 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 cost 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 where the rubber was. It was not in the Lab, it was not in Cebu.
[23]

(Italics 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' 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 admissible[27] 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' 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' 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 nothing 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 reading 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 out
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 Villegas' 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 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." Or as Black's Law Dictionary puts it:
Res ipsa loquitur. The thing speaks for itself. Rebuttable 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 cesarean 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' body, which, needless to say, does not
occur unless through the intervention of negligence. Second, since
aside from the cesarean 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 cesarean 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' 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,[37] and 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 the 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.

Republic of the Philippines

Supreme Court
Manila
SECOND DIVISION

EQUITABLE PCI BANK,

Petitioner,

G.R. No. 165339

Present:
CARPIO, J., Chairperson,
NACHURA,
PERALTA,
ABAD, and
MENDOZA, JJ.

- versus-

Promulgated:
ARCELITO B. TAN,
August 23, 2010
Respondent.
x-------------------------------------------------x
DECISION
PERALTA, J.:
Before this Court is a petition for review on certiorari under Rule 45 of
the Rules of Court seeking to set aside the Decision [1] and the
Resolution[2] of the Court of Appeals (CA) in CA-G.R. CV No. 41928.
The antecedents are as follows:
Respondent Arcelito B.Tan maintained a current and savings account with
Philippine Commercial International Bank (PCIB), now petitioner
Equitable PCI Bank.[3] On May 13, 1992, respondent issued PCIB Check
No. 275100 postdated May 30, 1992[4] in the amount of P34,588.72 in
favor of Sulpicio Lines, Inc. As of May 14, 1992, respondent's balance
with petitioner was P35,147.59. On May 14, 1992, Sulpicio Lines, Inc.
deposited the aforesaid check to its account with Solid Bank, Carbon
Branch, Cebu City. After clearing, the amount of the check was
immediately debited by petitioner from respondent's account thereby
leaving him with a balance of only P558.87.

Meanwhile, respondent issued three checks from May 9 to May 16, 1992,
specifically, PCIB Check No. 275080 dated May 9, 1992, payable to
Agusan del Sur Electric Cooperative Inc. (ASELCO) for the amount
of P6,427.68; PCIB Check No. 275097 dated May 10, 1992 payable to
Agusan del Norte Electric Cooperative Inc., (ANECO) for the amount
of P6,472.01; and PCIB Check No. 314104 dated May 16, 1992 payable
in cash for the amount of P10,000.00. When presented for payment, PCIB
Check Nos. 275080, 275097 and 314014 were dishonored for being
drawn against insufficient funds.
As a result of the dishonor of Check Nos. 275080 and 275097 which were
payable to ASELCO and ANECO, respectively, the electric power supply
for the two mini-sawmills owned and operated by respondent, located in
Talacogon, Agusan del Sur; and in Golden Ribbon, Butuan City, was cut
off on June 1, 1992 and May 28, 1992, respectively, and it was restored
only on July 20 and August 24, 1992, respectively.
Due to the foregoing, respondent filed with the Regional Trial Court
(RTC) of Cebu City a complaint against petitioner, praying for payment
of losses consisting of unrealized income in the amount of P1,864,500.00.
He also prayed for payment of moral damages, exemplary damages,
attorney's fees and litigation expenses.
Respondent claimed that Check No. 275100 was a postdated check in
payment of Bills of Lading Nos. 15, 16 and 17, and that his account with
petitioner would have had sufficient funds to cover payment of the three
other checks were it not for the negligence of petitioner in immediately
debiting from his account Check No. 275100, in the amount
of P34,588.72, even as the said check was postdated to May 30, 1992. As
a consequence of petitioner's error, which brought about the dishonor of
the two checks paid to ASELCO and ANECO, the electric supply to his
two mini-sawmills was cut off, the business operations thereof were
stopped, and purchase orders were not duly served causing tremendous
losses to him.

In its defense, petitioner denied that the questioned check was postdated
May 30, 1992 and claimed that it was a current check dated May 3, 1992.
It alleged further that the disconnection of the electric supply to
respondent's sawmills was not due to the dishonor of the checks, but for
other reasons not attributable to the bank.
After trial, the RTC, in its Decision[5] dated June 21, 1993, ruled in favor
of petitioner and dismissed the complaint.
Aggrieved by the Decision, respondent filed a Notice of Appeal.[6] In its
Decision dated May 31, 2004, the Court of Appeals reversed the decision
of the trial court and directed petitioner to pay respondent the sum
of P1,864,500.00 as actual damages, P50,000.00 by way of moral
damages, P50,000.00 as exemplary damages and attorney's fees in the
amount of P30,000.00. Petitioner filed a motion for reconsideration,
which the CA denied in a Resolution dated August 24, 2004.
Hence, the instant petition assigning the following errors:
I
THE FOURTH DIVISION OF THE COURT OF APPEALS DEFIED
OFFICE ORDER NO. 82-04-CG BY HOLDING ON TO THIS CASE
AND DECIDING IT INSTEAD OF UNLOADING IT AND HAVING
IT RE-RAFFLED AMONG THE DIVISIONS IN CEBU CITY.
II
THE COURT OF APPEALS ERRED IN REVERSING THE
FINDING OF THE REGIONAL TRIAL COURT THAT CHECK NO.
275100 WAS DATED MAY 3, 1992.
III
THE COURT OF APPEALS ERRED IN NOT HOLDING THAT
RESPONDENT'S WAY OF WRITING THE DATE ON CHECK NO.
275100 WAS THE PROXIMATE CAUSE OF THE DISHONOR OF
HIS THREE OTHER CHECKS.
IV
THE COURT OF APPEALS ERRED IN AWARDING ACTUAL
DAMAGES, MORAL DAMAGES, EXEMPLARY DAMAGES AND
ATTORNEY'S FEES.

Anent the first issue, petitioner submits that the CA defied Office Order
No. 82-04-CG dated April 5, 2004 issued by then CA Presiding Justice
Cancio C. Garcia when it failed to unload CA-G.R. CV No. 41928 so that
it may be re-raffled among the Divisions in Cebu City.
Office Order No. 82-04-CG[7] provides:
xxxx
In view of the reorganization of the different Divisions due to
the appointment of eighteen (18) new Justices to the additional
divisions in the cities of Cebu and Cagayan de Oro, the raffle of civil,
criminal and special cases submitted for decision and falling within the
jurisdiction of the additional divisions shall commence on April 6,
2004.
The raffle of newly-filed cases and those for completion
likewise falling within the jurisdiction of the additional divisions, shall
start on April 12, 2004.
xxxx

Petitioner alleged that since the aforementioned Office Order directed the
raffle of civil, criminal and special cases submitted for decision and
falling within the jurisdiction of the additional divisions on April 6, 2004,
CA-G.R. CV No. 41928 should have been unloaded by the CA's Fourth
Division and re-raffled to the CA's Division in Cebu City instead of
deciding the case on May 31, 2004.
Respondent argued that the CA's Fourth Division correctly acted in taking
cognizance of the case. The CA defended its jurisdiction by ruling that
cases already submitted for decision as of the effectivity of Republic Act
(R.A.) 8246[8] on February 1, 1997 were no longer included for re-raffle
to the newly-created Visayas and Mindanao Divisions of the CA,
conformable to Section 5 of the said statute.
Petitioner's argument is misplaced. Under Section 3 of R.A. 8246, it is
provided that:
Section 3. Section 10 of Batas Pambansa Blg. 129, as amended,
is hereby further amended to read as follows:
Sec. 10. Place of Holding Sessions. The Court of Appeals shall
have its permanent stations as follows: The first seventeen (17)

divisions shall be stationed in the City of Manila for cases coming from
the First to the Fifth Judicial Regions; the Eighteenth, Nineteenth, and
Twentieth Divisions shall be in Cebu City for cases coming from the
Sixth, Seventh and Eighth Judicial Regions; the Twenty-first, Twentysecond and Twenty-third Divisions shall be in Cagayan de Oro City for
cases coming from the Ninth, Tenth, Eleventh, and Twelfth Judicial
Regions. Whenever demanded by public interest, or whenever justified
by an increase in case load, the Supreme Court, upon its own initiative
or upon recommendation of the Presiding Justice of the Court of
Appeals, may authorize any division of the Court to hold sessions
periodically, or for such periods and at such places as the Supreme
Court may determine, for the purpose of hearing and deciding cases.
Trials or hearings in the Court of Appeals must be continuous and must
be completed within three (3) months unless extended by the Chief
Justice of the Supreme Court.

Further, Section 5 of the same Act provides:

Upon the effectivity of this Act, all pending cases, except those
which have been submitted for resolution, shall be referred to the
proper division of the Court of Appeals.[9]

Although CA-G.R. CV No. 41928 originated from Cebu City and is thus
referable to the CA's Divisions in Cebu City, the said case was already
submitted for decision as of July 25, 1994. [10] Hence, CA-G.R. CV No.
41928, which was already submitted for decision as of the effectivity of
R.A. 8246, i.e., February 1, 1997, can no longer be referred to the CA's
Division in Cebu City. Thus, the CA's Former Fourth Division correctly
ruled that CA-G.R. CV No. 41928 pending in its division was not among
those cases that had to be re-raffled to the newly-created CA Divisions in
the Visayas Region.
Further, administrative issuances must not override, supplant or modify
the law, but must remain consistent with the law they intend to carry out.
[11]
Thus, Office Order No. 82-04-CG cannot defeat the provisions of R.A.
8246.
As to the second issue, petitioner maintains that the CA erred in reversing
the finding of the RTC that Check No. 275100 was dated May 3, 1992.
Petitioner argued that in arriving at the conclusion that Check No. 275100

was postdated May 30, 1992, the CA just made a visual examination of
the check, unlike the RTC which verified the truth of respondent's
testimony relative to the issuance of Check No. 275100. Respondent
argued that the check was carefully examined by the CA which correctly
found that Check No. 275100 was postdated to May 30, 1992 and not
May 3, 1992.
The principle is well established that this Court is not a trier of facts.
Therefore, in an appeal by certiorari under Rule 45 of the Rules of Court,
only questions of law may be raised. The resolution of factual issues is
the function of the lower courts whose findings on these matters are
received with respect and are, as a rule, binding on this Court.However,
this rule is subject to certain exceptions. One of these is when the
findings of the appellate court are contrary to those of the trial court.
[12]
Due to the divergence of the findings of the CA and the RTC, We shall
re-examine the facts and evidence presented before the lower courts.
The RTC ruled that:
xxxx
The issue to be resolved in this case is whether or not the date of PCIB
Check No. 275100 is May 3, 1992 as contended by the defendant, or
May 30, 1992 as claimed by the plaintiff. The date of the check is
written as follows 5/3/0/92. From the manner by which the date of the
check is written, the Court cannot really make a pronouncement as to
whether the true date of the check is May 3 or May 30, 1992, without
inquiring into the background facts leading to the issuance of said
check.
According to the plaintiff, the check was issued to Sulpicio Lines in
payment of bill of lading nos. 15, 16 and 17. An examination of bill of
lading no. 15, however, shows that the same was issued, not in favor of
plaintiff but in favor of Coca Cola Bottlers Philippines, Inc. Bill of
Lading No. 16 is issued in favor of Suson Lumber and not to plaintiff.
Likewise, Bill of Lading No. 17 shows that it was issued to Jazz Cola
and not to plaintiff. Furthermore, the receipt for the payment of the
freight for the shipments reflected in these three bills of lading shows
that the freight was paid by Coca Cola Bottlers Philippines, Inc. and
not by plaintiff.
Moreover, the said receipt shows that it was paid in cash and not by
check. From the foregoing, the evidence on record does not support the

claim of the plaintiff that Check No. 275100 was issued in payment of
bills of lading nos. 15, 16 and 17.
Hence, the conclusion of the Court is that the date of the check was
May 3, 1992 and not May 30, 1992.[13]
xxxx

In fine, the RTC concluded that the check was dated May 3, 1992 and not
May 30, 1992, because the same check was not issued to pay for Bills of
Lading Nos. 15, 16 and 17, as respondent claims. The trial court's
conclusion is preposterous and illogical. The purpose for the issuance of
the check has no logical connection with the date of the check. Besides,
the trial court need not look into the purpose for which the check was
issued. A reading of Check No. 275100[14] would readily show that it was
dated May 30, 1992. As correctly observed by the CA:
On the first issue, we agree with appellant that appellee Bank
apparently erred in misappreciating the date of Check No. 275100. We
have carefully examined the check in question (Exh. DDDD) and we
are convinced that it was indeed postdated to May 30, 1992 and not
May 3, 1992 as urged by appellee. The date written on the check
clearly appears as 5/30/1992 (Exh. DDDD-4). The first bar (/) which
separates the numbers 5 and 30 and the second bar (/) which further
separates the number 30 from the year 1992 appear to have been done
in heavy, well-defined and bold strokes, clearly indicating the date of
the check as 5/30/1992 which obviously means May 30, 1992. On the
other hand, the alleged bar (/) which appellee points out as allegedly
separating the numbers 3 and 0, thereby leading it to read the date as
May 3, 1992, is not actually a bar or a slant but appears to be more of
an unintentional marking or line done with a very light stroke. The
presence of the figure 0 after the number 3 is quite significant. In fact,
a close examination thereof would unerringly show that the said
number zero or 0 is connected to the preceeding number 3. In other
words, the drawer of the check wrote the figures 30 in one continuous
stroke, thereby contradicting appellees theory that the number 3 is
separated from the figure 0 by a bar. Besides, appellees theory that the
date of the check is May 3, 1992 is clearly untenable considering the
presence of the figure 0 after 3 and another bar before the year 1992.
And if we were to accept appellees theory that what we find to be an
unintentional mark or line between the figures 3 and 0 is a bar
separating the two numbers, the date of the check would then appear as
5/3/0/1992, which is simply absurd. Hence, we cannot go along with
appellees theory which will lead us to an absurd result. It is therefore
our conclusion that the check was postdated to May 30, 1992 and
appellee Bank or its personnel erred in debiting the amount of the
check from appellants account even before the checks due date.
Undoubtedly, had not appellee bank prematurely debited the amount of

the check from appellants account before its due date, the two other
checks (Exhs. LLLL and GGGG) successively dated May 9, 1992 and
May 16, 1992 which were paid by appellant to ASELCO and ANECO,
respectively, would not have been dishonored and the said payees
would not have disconnected their supply of electric power to
appellants sawmills, and the latter would not have suffered losses.

The law imposes on banks high standards in view of the fiduciary nature of
banking. Section 2 of R.A. 8791[15] decrees:
Declaration of Policy. The State recognizes the vital role of banks in
providing an environment conducive to the sustained development of
the national economy and the fiduciary nature of banking that requires
high standards of integrity and performance. In furtherance thereof, the
State shall promote and maintain a stable and efficient banking and
financial system that is globally competitive, dynamic and responsive
to the demands of a developing economy.

Although R.A. 8791 took effect only in the year 2000, the Court had
already imposed on banks the same high standard of diligence required
under R.A. 8791 at the time of the untimely debiting of respondent's
account by petitioner in May 1992. In Simex International (Manila), Inc.
v. Court of Appeals,[16] which was decided in 1990, the Court held that as
a business affected with public interest and because of the nature of its
functions, 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.
The diligence required of banks, therefore, is more than that of a good
father of a family.[17] In every case, the depositor expects the bank to treat
his account with the utmost fidelity, whether such account consists only
of a few hundred pesos or of millions. The bank must record every single
transaction accurately, down to the last centavo, and as promptly as
possible. This has to be done if the account is to reflect at any given time
the amount of money the depositor can dispose of as he sees fit, confident
that the bank will deliver it as and to whomever he directs. [18] From the
foregoing, it is clear that petitioner bank did not exercise the degree
of diligence that it ought to have exercised in dealing with its client.

With respect to the third issue, petitioner submits that respondent's way of
writing the date on Check No. 275100 was the proximate cause of the
dishonor of his three other checks. Contrary to petitioners view, the Court
finds that its negligence is the proximate cause of respondents loss.
Proximate cause is that cause which, in a natural and continuous
sequence, unbroken by any efficient intervening cause, produces the
injury, and without which the result would not have occurred.
[19]
The proximate cause of the loss is not respondent's manner of writing
the date of the check, as it was very clear that he intended Check No.
275100 to be dated May 30, 1992 and not May 3, 1992.
The proximate cause is petitioners own negligence in debiting the account
of the respondent prior to the date as appearing in the check, which
resulted in the subsequent dishonor of several checks issued by the
respondent and the disconnection by ASELCO and ANECO of his
electric supply.
The bank on which the check is drawn, known as the drawee bank, is
under strict liability to pay to the order of the payee in accordance with
the drawers instructions as reflected on the face and by the terms of the
check.[20] Thus, payment made before the date specified by the drawer is
clearly against the drawee bank's duty to its client.
In its memorandum[21] filed before the RTC, petitioner submits that
respondent caused confusion on the true date of the check by writing the
date of the check as 5/3/0/92. If, indeed, petitioner was confused on
whether the check was dated May 3 or May 30 because of the / which
allegedly separated the number 3 from the 0, petitioner should have
required respondent drawer to countersign the said / in order to ascertain
the true intent of the drawer before honoring the check. As a matter of
practice, bank tellers would not receive nor honor such checks which they
believe to be unclear, without the counter-signature of its
drawer. Petitioner should have exercised the highest degree of diligence

required of it by ascertaining from the respondent the accuracy of the

entries therein, in order to settle the confusion, instead of proceeding to
honor and receive the check.
Further, petitioner's branch manager, Pedro D. Tradio, in a
letter[22] addressed to ANECO, explained the circumstances surrounding
the dishonor of PCIB Check No. 275097. Thus:
June 11, 1992
ANECO
Agusan del Norte
Gentlemen:
This refer (sic) to PCIB Check No. 275097 dated May 16, 1992 in the
amount of P6,472.01 payable to your goodselves issued by Mr. Arcelito
B. Tan (MANWOOD Industries) which was returned by PCIB
Mandaue Branch for insufficiency of funds.
Please be advised that the return of the aforesaid check was a result of
an earlier negotiation to PCIB-Mandaue Branch through a deposit
made on May 14, 1992 with SOLIDBANK Carbon Branch, or through
Central Bank clearing via Philippine Clearing House Corporation
facilities, of a postdated check which ironically and without bad faith
passed undetected through several eyes from the payee of the check
down to the depository bank and finally the drawee bank (PCIB) the
aforesaid Check No. 275097 issued to you would have been honored
because it would have been sufficiently funded at the time it was
negotiated. It should be emphasized, however, that Mr. Arcelito B. Tan
was in no way responsible for the dishonor of said PCIB Check No.
275097.
We hope that the foregoing will sufficiently explain the circumstances
of the dishonor of PCIB Check No. 275097 and would clear the name
and credit of Mr. Arcelito Tan from any misimpressions which may
have resulted from the dishonor of said check.
Thank you.
xxxx

Although petitioner failed to specify in the letter the other details of this
postdated check, which passed undetected from the eyes of the payee
down to the petitioner drawee bank, the Court finds that petitioner was

evidently referring to no other than Check No. 275100 which was

deposited to Solidbank, and was postdated May 30, 1992. As correctly
found by the CA:
In the aforequoted letter of its Manager, appellee Bank
expressly acknowledged that Check No. 275097 (Exh. GGGG) which
appellant paid to ANECO was sufficiently funded at the time it was
negotiated, but it was dishonored as a result of an earlier negotiation to
PCIB-Mandaue Branch through a deposit made on May 14, 1992 with
SOLIDBANK xxx xxx xxx of a postdated check which xxx xxx
passed undetected. He further admitted that Mr. Arcelito B. Tan was in
no way responsible for the dishonor of said PCIB Check No. 275097.
Needless to state, since appellee's Manager has cleared appellant of
any fault in the dishonor of the ANECO check, it [necessarily] follows
that responsibility therefor or fault for the dishonor of the check
should fall on appellee bank. Appellee's attempt to extricate itself from
its inadvertence must therefore fail in the face of its Manager's explicit
acknowledgment of responsibility for the inadvertent dishonor of the
ANECO check.[23]

Evidently, the bank's negligence was the result of lack of due care
required of its managers and employees in handling the accounts of its
clients. Petitioner was negligent in the selection and supervision of its
employees. In Citibank, N.A. v. Cabamongan,[24] the Court ruled:
x x x Banks handle daily transactions involving millions
of pesos. By the very nature of their works the degree
of responsibility, care and trustworthiness expected of their employees
and officials is far greater than those of ordinary clerks
and employees. Banks are expected to exercise the highest degree of
diligence in the selection and supervision of their employees.

We now resolve the question on the award of actual, moral and exemplary
damages, as well as attorney's fees by the CA to the respondent.
The CA based the award of actual damages in the amount
of P1,864,500.00 on the purchase orders[25] submitted by respondent. The
CA ruled that:
x x x In the case at bar, appellant [respondent herein] presented
adequate evidence to prove losses consisting of unrealized income that

he sustained as a result of the appellee Bank's gross negligence.

Appellant identified certain Purchase Orders from various customers
which were not met by reason of the disruption of the operation of his
sawmills when ANECO and ASELCO disconnected their supply of
electricity thereto. x x x

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 and are aimed at repairing the wrong done. Except
as provided by law or by stipulation, a party is entitled to an adequate
compensation only for such pecuniary loss as he has duly proven. [26] To
recover actual damages, not only must the amount of loss be capable of
proof; it must also be actually proven with a reasonable degree of
certainty, premised upon competent proof or the best evidence obtainable.
[27]

Respondent's claim for damages was based on purchase orders from

various customers which were allegedly not met due to the disruption of
the operation of his sawmills. However, aside from the purchase orders
and his testimony, respondent failed to present competent proof on the
specific amount of actual damages he suffered during the entire period his
power was cut off. No other evidence was provided by respondent to
show that the foregoing purchase orders were not met or were canceled
by his various customers. The Court cannot simply rely on speculation,
conjecture or guesswork in determining the amount of damages.[28]
Moreover, an examination of the purchase orders and job orders reveal
that the orders were due for delivery prior to the period when the power
supply of respondent's two sawmills was cut off on June 1, 1992 to July
20, 1992 and May 28, 1992 to August 24, 1992, respectively. Purchase
Order No. 9906[29] delivery date is May 4, 1992; Purchase Order No.
9269[30] delivery date is March 19, 1992; Purchase Order No. 147796 [31] is
due for delivery on January 31, 1992; Purchase Order No.
76000[32] delivery date is February and March 1992; and Job Order No.
1824,[33] dated March 18, 1992, has a 15 days duration of work. Clearly,

the disconnection of his electricity during the period May 28, 1992 to
August 24, 1992 could not possibly affect his sawmill operations and
prior orders therefrom.
Given the dearth of respondent's evidence on the matter, the Court
resolves to delete the award of actual damages rendered by the CA in
favor of respondent for his unrealized income.
Nonetheless, in the absence of competent proof on the actual damages
suffered, respondent is entitled to temperate damages. Under Article 2224
of the Civil Code of the Philippines, temperate or moderate damages,
which are more than nominal but less than 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.[34] The allowance of temperate damages when actual
damages were not adequately proven is ultimately a rule drawn from
equity, the principle affording relief to those definitely injured who are
unable to prove how definite the injury.[35]
It is apparent that respondent suffered pecuniary loss. The negligence of
petitioner triggered the disconnection of his electrical supply, which
temporarily halted his business operations and the consequent loss of
business opportunity. However, due to the insufficiency of evidence
before Us, We cannot place its amount with certainty. Article 2216[36]of
the Civil Code instructs that assessment of damages is left to the
discretion of the court according to the circumstances of each case. Under
the circumstances, the sum ofP50,000.00 as temperate damages is
reasonable.
Anent the award of moral damages, it is settled that moral damages are
meant to compensate the claimant for any physical suffering, mental
anguish, fright, serious anxiety, besmirched reputation, wounded
feelings, moral shock, social humiliation and similar injuries unjustly

caused.[37] In Philippine National Bank v. Court of Appeals,[38] the Court

held that a bank is under obligation to treat the accounts of its depositors
with meticulous care whether such account consists only of a few
hundred pesos or of millions of pesos. Responsibility arising from
negligence in the performance of every kind of obligation is demandable.
While petitioner's negligence in that case may not have been attended
with malice and bad faith, the banks' negligence caused respondent to
suffer mental anguish, serious anxiety, embarrassment and humiliation. In
said case, We ruled that respondent therein was entitled to recover
reasonable moral damages.
In this case, the unexpected cutting off of respondent's electricity, which
resulted in the stoppage of his business operations, had caused him to
suffer humiliation, mental anguish and serious anxiety. The award
of P50,000.00 is reasonable, considering the reputation and social
standing of respondent. As found by the CA, as an accredited supplier,
respondent had been reposed with a certain degree of trust by various
reputable and well- established corporations.
On the award of exemplary damages, Article 2229 of the Civil Code
states:
Art. 2229. Exemplary or corrective damages are imposed, by
way of example or correction for the public good, in addition to
the moral, temperate, liquidated or compensatory damages.

The law allows the grant of exemplary damages to set an example for the
public good. The banking system has become an indispensable
institution in the modern world and plays a vital role in the economic life
of every civilized society. Whether as mere passive entities for the
safekeeping and saving of money or as active instruments of business and
commerce, banks have attained an ubiquitous presence among the people,
who have come to regard them with respect and even gratitude and most
of all, confidence. For this reason, banks should guard against injury

attributable to negligence or bad faith on its part. Without a doubt, it has

been repeatedly emphasized that since the banking business is impressed
with public interest, of paramount importance thereto is the trust and
confidence of the public in general. Consequently, the highest degree of
diligence is expected, and high standards of integrity and performance are
even required of it.[39] Petitioner, having failed in this respect, the award
of exemplary damages in the amount ofP50,000.00 is in order.
As to the award of attorney's fees, Article 2208[40] of the Civil Code
provides, among others, that attorney's fees may be recovered when
exemplary damages are awarded or when the defendant's act or omission
has compelled the plaintiff to litigate with third persons or to incur
expenses to protect his interest.[41] Respondent has been forced to undergo
unnecessary trouble and expense to protect his interest. The Court affirms
the appellate courts award of attorneys fees in the amount of P30,000.00.

WHEREFORE, the petition is PARTIALLY GRANTED. The Decision

and Resolution of the Court of Appeals in CA-G.R. CV No. 41928, dated
May 31, 2004 and August 24, 2004, respectively, are AFFIRMED with
the following MODIFICATIONS:
1. The award of One Million Eight Hundred Sixty-Four Thousand and
Five Hundred Pesos (P1,864,500.00) as actual damages, in favor of
respondent Arcelito B. Tan, isDELETED; and
2. Petitioner Equitable PCI Bank is instead directed to pay respondent the
amount of Fifty Thousand Pesos (P50,000.00) as temperate damages.
SO ORDERED.

Republic of the Philippines

Supreme Court
Baguio City

FIRST DIVISION
PHILIPPINE NATIONAL BANK,
Petitioner,

G.R. No. 170865

- versus SPOUSES CHEAH CHEE CHONG

and OFELIA CAMACHO CHEAH,
Respondents.
x--------------------------------x
SPOUSES
CHEAH
CHEE
CHONG
and
OFELIA
CAMACHO
CHEAH,
Petitioners,

- versus -

G.R. No. 170892

Present:
CORONA, C.J., Chairperson,
LEONARDO-DE CASTRO,
BERSAMIN,
DEL CASTILLO, and
VILLARAMA, JR., JJ.

PHILIPPINE NATIONAL BANK,

Promulgated:
Respondent.
April 25, 2012
x------------------------------------------------------------------x

DECISION
DEL CASTILLO, J.:
Law favoreth diligence, and therefore, hateth folly and
negligence.Wingates Maxim.
In doing a friend a favor to help the latters friend collect the proceeds of
a foreign check, a woman deposited the check in her and her husbands dollar
account. The local bank accepted the check for collection and immediately
credited the proceeds thereof to said spouses account even before the lapse of
the clearing period. And just when the money had been withdrawn and
distributed among different beneficiaries, it was discovered that all along, to the

horror of the woman whose intention to accommodate a friends friend

backfired, she and her
bank had dealt with a rubber check.
These consolidated[1] Petitions for Review on Certiorari filed by the
Philippine National Bank (PNB)[2] and by the spouses Cheah Chee Chong and
Ofelia Camacho Cheah (spouses Cheah)[3] both assail the August 22, 2005
Decision[4] and December 21, 2005 Resolution [5]of the Court of Appeals (CA)
in CA-G.R. CV No. 63948 which declared both parties equally negligent and,
hence, should equally suffer the resulting loss. For its part, PNB questions why
it was declared blameworthy together with its depositors, spouses Cheah, for
the amount wrongfully paid the latter, while the spouses Cheah plead that they
be declared entirely faultless.
Factual Antecedents
On November 4, 1992, Ofelia Cheah (Ofelia) and her friend Adelina
Guarin (Adelina) were having a conversation in the latters office when
Adelinas friend, Filipina Tuazon (Filipina), approached her to ask if she could
have Filipinas check cleared and encashed for a service fee of 2.5%. The
check is Bank of America Check No. 190[6] under the account of Alejandria
Pineda and Eduardo Rosales and drawn by Atty. Eduardo Rosales against Bank
of America Alhambra Branch in California, USA, with a face amount of
$300,000.00, payable to cash. Because Adelina does not have a dollar account
in which to deposit the check, she asked Ofelia if she could accommodate
Filipinas request since she has a joint dollar savings account with her
Malaysian husband Cheah Chee Chong (Chee Chong) under Account No. 265705612-2 with PNB Buendia Branch.
Ofelia agreed.
That same day, Ofelia and Adelina went to PNB Buendia Branch. They
met with Perfecto Mendiola of the Loans Department who referred them to
PNB Division Chief Alberto Garin (Garin). Garin discussed with them the
process of clearing the subject check and they were told that it normally takes
15 days.[7] Assured that the deposit and subsequent clearance of the check is a
normal transaction, Ofelia deposited Filipinas check. PNB then sent it for
clearing through its correspondent bank, Philadelphia National Bank. Five
days later, PNB received a credit advice [8] from Philadelphia National Bank

that the proceeds of the subject check had been temporarily credited to PNBs
account as of November 6, 1992. On November 16, 1992, Garin called up
Ofelia to inform her that the check had already been cleared. [9] The following
day, PNB Buendia Branch, after deducting the bank charges, credited
$299,248.37 to the account of the spouses Cheah. [10] Acting on Adelinas
instruction to withdraw the credited amount, Ofelia that day personally
withdrew $180,000.00.[11] Adelina was able to withdraw the remaining amount
the next day after having been authorized by Ofelia.[12] Filipina received all the
proceeds.
In the meantime, the Cable Division of PNB Head Office in Escolta,
Manila received on November 16, 1992 a SWIFT [13] message from
Philadelphia National Bank dated November 13, 1992 with Transaction
Reference Number (TRN) 46506218, informing PNB of the return of the
subject check for insufficient funds.[14] However, the PNB Head Office could
not ascertain to which branch/office it should forward the same for proper
action. Eventually, PNB Head Office sent Philadelphia National Bank a
SWIFT message informing the latter that SWIFT message with TRN
46506218 has been relayed to PNBs various divisions/departments but was
returned to PNB Head Office as it seemed misrouted. PNB Head Office thus
requested for Philadelphia National Banks advice on said SWIFT messages
proper disposition.[15] After a few days, PNB Head Office ascertained that the
SWIFT message was intended for PNB Buendia Branch.
PNB Buendia Branch learned about the bounced check when it received
on November 20, 1992 a debit advice,[16] followed by a letter[17] on November
24, 1992, from Philadelphia National Bank to which the November 13, 1992
SWIFT message was attached. Informed about the bounced check and upon
demand by PNB Buendia Branch to return the money withdrawn, Ofelia
immediately contacted Filipina to get the money back. But the latter told her
that all the money had already been given to several people who asked for the
checks encashment. In their effort to recover the money, spouses Cheah then
sought the help of the National Bureau of Investigation. Said agencys AntiFraud and Action Division was later able to apprehend some of the
beneficiaries of the proceeds of the check and recover from them $20,000.00.
Criminal charges were then filed against these suspect beneficiaries.[18]

Meanwhile, the spouses Cheah have been constantly meeting with the
bank officials to discuss matters regarding the incident and the recovery of the
value of the check while the cases against the alleged perpetrators remain
pending. Chee Chong in the end signed a PNB drafted[19] letter[20] which states
that the spouses Cheah are offering their condominium units as collaterals for
the amount withdrawn. Under this setup, the amount withdrawn would be
treated as a loan account with deferred interest while the spouses try to recover
the money from those who defrauded them. Apparently, Chee Chong signed
the letter after the Vice President and Manager of PNB Buendia Branch, Erwin
Asperilla (Asperilla), asked the spouses Cheah to help him and the other bank
officers as they were in danger of losing their jobs because of the
incident. Asperilla likewise assured the spouses Cheah that the letter was a
mere formality and that the mortgage will be disregarded once PNB receives
its claim for indemnity from Philadelphia National Bank.
Although some of the officers of PNB were amenable to the proposal,
the same did not materialize. Subsequently, PNB sent a demand letter to
spouses Cheah for the return of the amount of the check,[22] froze their peso and
dollar deposits in the amounts of P275,166.80 and $893.46,[23] and filed a
complaint[24] against them for Sum of Money with Branch 50 of the Regional
Trial Court (RTC) of Manila, docketed as Civil Case No. 94-71022. In said
complaint, PNB demanded payment of around P8,202,220.44, plus
interests[25] and attorneys fees, from the spouses Cheah.
[21]

As their main defense, the spouses Cheah claimed that the proximate
cause of PNBs injury was its own negligence of paying a US dollar
denominated check
without waiting for the 15-day clearing period, in violation of its bank practice
as mandated by its own bank circular, i.e., PNB General Circular No. 52101/88.[26] Because of this, spouses Cheah averred that PNB is barred from
claiming what it had lost. They further averred that it is unjust for them to pay
back the amount disbursed as they never really benefited therefrom. As
counterclaim, they prayed for the return of their frozen deposits, the
recoupment of P400,000.00 representing the amount they had so far spent in
recovering the value of the check, and payment of moral and exemplary
damages, as well as attorneys fees.
Ruling of the Regional Trial Court

The RTC ruled in PNBs favor. The dispositive portion of its

Decision[27] dated May 20, 1999 reads:
WHEREFORE, premises considered, judgment is hereby rendered
in favor of the plaintiff Philippine National Bank [and] against
defendants Mr. Cheah Chee Chong and Ms. Ofelia Camacho
Cheah, ordering the latter to pay jointly and severally the herein
plaintiffs bank the amount:
1.
of US$298,950.25 or its peso equivalent based on
Central Bank Exchange Rate prevailing at the time the proceeds of
the BA Check No. 190 were withdrawn or the prevailing Central
Bank Rate at the time the amount is to be reimbursed by the
defendants to plaintiff or whatever is lower. This is without
prejudice however, to the rights of the defendants (accommodating
parties) to go against the group of Adelina Guarin, Atty. Eduardo
Rosales, Filipina Tuazon, etc., (Beneficiaries- accommodated
parties) who are privy to the defendants.
No pronouncement as to costs.
No other award of damages for non[e] has been proven.
SO ORDERED.[28]

The RTC held that spouses Cheah were guilty of contributory negligence.
Because Ofelia trusted a friends friend whom she did not know and
considering the amount of the check made payable to cash, the RTC opined
that Ofelia showed lack of vigilance in her dealings. She should have exercised
due care by investigating the negotiability of the check and the identity of the
drawer. While the court found that the proximate cause of the wrongful
payment of the check was PNBs negligence in not observing the 15-day
guarantee period rule, it ruled that spouses Cheah still cannot escape liability to
reimburse PNB the value of the check as an accommodation party pursuant to
Section 29 of the Negotiable Instruments Law.[29] It likewise applied the
principle of solutio indebiti under the Civil Code. With regard to the award of
other forms of damages, the RTC held that each party must suffer the
consequences of their own acts and thus left both parties as they are.

Unwilling to accept the judgment, the spouses Cheah appealed to the

CA.
Ruling of the Court of Appeals
While the CA recognized the spouses Cheah as victims of a scam who
nevertheless have to suffer the consequences of Ofelias lack of care and
prudence in immediately trusting a stranger, the appellate court did not hold
PNB scot-free. It ruled in its August 22, 2005 Decision,[30] viz:
As both parties were equally negligent, it is but right and just
that both parties should equally suffer and shoulder the loss. The
scam would not have been possible without the negligence of both
parties. As earlier stated, the complaint of PNB cannot be dismissed
because the Cheah spouses were negligent and Ms. Cheah took an
active part in the deposit of the check and the withdrawal of the
subject amounts.On the other hand, the Cheah spouses cannot
entirely bear the loss because PNB allowed her to withdraw without
waiting for the clearance of the check. The remedy of the parties is
to go after those who perpetrated, and benefited from, the scam.
WHEREFORE, the May 20, 1999 Decision of the Regional
Trial Court, Branch 5, Manila, in Civil Case No. 94-71022, is
hereby REVERSED and SET ASIDE and another one entered
DECLARING both parties equally negligent and should suffer and
shoulder the loss.
Accordingly, PNB is hereby ordered to credit to the peso and dollar
accounts of the Cheah spouses the amount due to them.
SO ORDERED.[31]

In so ruling, the CA ratiocinated that PNB Buendia Branchs non-receipt of the

SWIFT message from Philadelphia National Bank within the 15-day clearing
period is not an acceptable excuse.Applying the last clear chance doctrine, the
CA held that PNB had the last clear opportunity to avoid the impending loss of
the money and yet, it glaringly exhibited its negligence in allowing the
withdrawal of funds without exhausting the 15-day clearing period which has
always been a standard banking practice as testified to by PNBs own officers,
and as provided in its own General Circular No. 52/101/88. To the CA, PNB
cannot claim from spouses Cheah even if the latter are accommodation parties

under the law as the banks own negligence is the proximate cause of the
damage it sustained. Nevertheless, it also found Ofelia guilty of contributory
negligence. Thus, both parties should be made equally responsible for the
resulting loss.
Both parties filed their respective Motions for Reconsideration [32] but
same were denied in a Resolution[33] dated December 21, 2005.
Hence, these Petitions for Review on Certiorari.
Our Ruling
The petitions for review lack merit. Hence, we affirm the ruling of the CA.
PNBs act of releasing the proceeds of
the check prior to the lapse of the 15day clearing period was the
proximate cause of the loss.
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. x x x To determine the
proximate cause of a controversy, the question that needs to be asked is: If the
event did not happen, would the injury have resulted? If the answer is no, then
the event is the proximate cause.[34]
Here, while PNB highlights Ofelias fault in accommodating a strangers
check and depositing it to the bank, it remains mum in its release of the
proceeds thereof without exhausting the 15-day clearing period, an act which
contravened established banking rules and practice.
It is worthy of notice that the 15-day clearing period alluded to is
construed as 15 banking days. As declared by Josephine Estella, the
Administrative Service Officer who was the banks Remittance Examiner, what
was unusual in the processing of the check was that the lapse of 15 banking
days was not observed.[35] Even PNBs agreement with Philadelphia National
Bank[36] regarding the rules on the collection of the proceeds of US dollar
checks refers to business/ banking days. Ofelia deposited the subject check
on November 4, 1992. Hence, the 15thbanking day from the date of said

deposit should fall on November 25, 1992. However, what happened was that
PNB Buendia Branch, upon calling up Ofelia that the check had been cleared,
allowed the proceeds thereof to be withdrawn on November 17 and 18, 1992, a
week before the lapse of the standard 15-day clearing period.
This Court already held that the payment of the amounts of checks
without previously clearing them with the drawee bank especially so where the
drawee bank is a foreign bank and the amounts involved were large is contrary
to normal or ordinary banking practice. [37] Also, in Associated Bank v. Tan,
[38]
wherein the bank allowed the withdrawal of the value of a check prior to its
clearing, we said that [b]efore the check shall have been cleared for deposit, the
collecting bank can only assume at its own risk x x x that the check would be
cleared and paid out.The delay in the receipt by PNB Buendia Branch of the
November 13, 1992 SWIFT message notifying it of the dishonor of the subject
check is of no moment, because had PNB Buendia Branch waited for the
expiration of the clearing period and had never released during that time the
proceeds of the check, it would have already been duly notified of its dishonor.
Clearly, PNBs disregard of its preventive and protective measure against the
possibility of being victimized by bad checks had brought upon itself the injury
of losing a significant amount of money.
It bears stressing that the diligence required of banks is more than that of
a Roman pater familias or a good father of a family. The highest degree of
diligence is expected.[39] PNB miserably failed to do its duty of exercising
extraordinary diligence and reasonable business prudence. The disregard of its
own banking policy amounts to gross negligence, which the law defines as
negligence characterized by the want of even slight care, acting or omitting to
act in a situation where there is duty to act, not inadvertently but wilfully and
intentionally with a conscious indifference to consequences in so far as other
persons may be affected.[40] With regard to collection or encashment of checks,
suffice it to say that the law imposes on the collecting bank the duty to
scrutinize diligently the checks deposited with it for the purpose of determining
their genuineness and regularity. The collecting bank, being primarily engaged
in banking, holds itself out to the public as the expert on this field, and the law
thus holds it to a high standard of conduct. [41] A bank is expected to be an
expert in banking procedures and it has the necessary means to ascertain
whether a check, local or foreign, is sufficiently funded.

Incidentally, PNB obliges the spouses Cheah to return the withdrawn money
under the principle of solutio indebiti, which is laid down in Article 2154 of the
Civil Code:[42]
Art. 2154. If something is received when there is no right to demand
it, and it was unduly delivered through mistake, the obligation to return it
arises.

[T]he indispensable requisites of the juridical relation known as solutio

indebiti, are, (a) that he who paid was not under obligation to do so; and (b)
that the payment was made by reason of an essential mistake of fact.[43]
In the case at bench, PNB cannot recover the proceeds of the check
under the principle it invokes. In the first place, the gross negligence of PNB,
as earlier discussed, can never be equated with a mere mistake of fact, which
must be something excusable and which requires the exercise of prudence. No
recovery is due if the mistake done is one of gross negligence.
The spouses Cheah are guilty of
contributory negligence and are
bound to share the loss with the bank
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.[44]
The CA found Ofelias credulousness blameworthy. We agree. Indeed,
Ofelia failed to observe caution in giving her full trust in accommodating a
complete stranger and this led her and her husband to be swindled. Considering
that Filipina was not personally known to her and the amount of the foreign
check to be encashed was $300,000.00, a higher degree of care is expected of
Ofelia which she, however, failed to exercise under the circumstances. Another
circumstance which should have goaded Ofelia to be more circumspect in her
dealings was when a bank officer called her up to inform that the Bank of
America check has already been cleared way earlier than the 15-day clearing
period. The fact that the check was cleared after only eight banking days from
the time it was deposited or contrary to what Garin told her that clearing takes
15 days should have already put Ofelia on guard. She should have first verified
the regularity of such hasty clearance considering that if something goes wrong

with the transaction, it is she and her husband who would be put at risk and not
the accommodated party. However, Ofelia chose to ignore the same and
instead actively participated in immediately withdrawing the proceeds of the
check. Thus, we are one with the CA in ruling that Ofelias prior consultation
with PNB officers is not enough to totally absolve her of any liability. In the
first place, she should have shunned any participation in that palpably shady
transaction.
In any case, the complaint against the spouses Cheah could not be
dismissed. As PNBs client, Ofelia was the one who dealt with PNB and
negotiated the check such that its value was credited in her and her husbands
account. Being the ones in privity with PNB, the spouses Cheah are therefore
the persons who should return to PNB the money released to them.
All told, the Court concurs with the findings of the CA that PNB and the
spouses Cheah are equally negligent and should therefore equally suffer the
loss. The two must both bear the consequences of their mistakes.
WHEREFORE, premises considered, the Petitions for Review
on Certiorari in G.R. No. 170865 and in G.R. No. 170892 are
both DENIED. The assailed August 22, 2005 Decision and December 21,
2005 Resolution of the Court of Appeals in CA-G.R. CV No. 63948 are
hereby AFFIRMED in toto.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC
G.R. No. L-21486

May 14, 1966

LA MALLORCA and PAMPANGA BUS COMPANY, petitioner,

vs.
VALENTIN DE JESUS, MANOLO TOLENTINO and COURT OF
APPEALS, respondents.
Manuel O. Chan for petitioners.
Sixto T. Antonio for respondents.
MAKALINTAL, J.:
La Mallorca and Pampanga Bus Company, Inc., commonly known as La MallorcaPambusco, filed this appeal bycertiorari from the decision of the Court of Appeals which
affirmed that rendered by the Court of First Instance of Bulacan in its civil case No. 2100,
entitled "Valentin de Jesus and Manolo Tolentino vs. La Mallorca-Pambusco." The
court a quo sentenced the defendant, now petitioner, "to pay to plaintiffs the amount of
P2,132.50 for actual damages; P14,400.00 as compensatory damages; P10,000.00 to
each plaintiff by way of moral damages; and P3,000.00 as counsel fees."
Two errors are attributed to the appellate Court: (1) "in sustaining the decision (of the
court a quo) holding that the petitioners were liable for the accident which was caused by
a blow-out of one of the tires of the bus and in not considering the same as caso fortuito,"
and (2) in holding petitioners liable for moral damages.
The suit arose by reason of the death of Lolita de Jesus, 20-year old daughter of Valentin
de Jesus and wife of Manolo Tolentino, in a head-on collision between petitioner's bus,
on which she was a passenger, and a freight truck traveling in the opposite direction, in a
barrio in Marilao Bulacan, in the morning of October 8, 1959. The immediate cause of the
collision was the fact that the driver of the bus lost control of the wheel when its left front
tire suddenly exploded.
Petitioner maintains that a tire blow-out is a fortuitous event and gives rise to no liability
for negligence, citing the rulings of the Court of Appeals in Rodriguez vs. Red Line
Transportation Co., CA-G.R. No. 8136, December 29, 1954, and People vs. Palapad,
CA-G.R. No. 18480, June 27, 1958. These rulings, however, not only are not not binding
on this Court but were based on considerations quite different from those that obtain in
the at bar. The appellate Court there made no findings of any specified acts of negligence
on the part of the defendants and confined itself to the question of whether or not a tire
blow-out, by itself alone and without a showing as to the causative factors, would
generate liability. In the present case, the cause of the blow-out was known. The inner
tube of the left front tire, according to petitioner's own evidence and as found by the
Court of Appeals "was pressed between the inner circle of the left wheel and the rim
which had slipped out of the wheel." This was, said Court correctly held, a mechanical
defect of the conveyance or a fault in its equipment which was easily discoverable if the
bus had been subjected to a more thorough, or rigid check-up before it took to the road
that morning.
Then again both the trial court and the Court of Appeals found as a fact that the bus was
running quite fast immediately before the accident. Considering that the tire which
exploded was not new petitioner describes it as "hindi masyadong kalbo," or not so
very worn out the plea of caso fortuito cannot be entertained.
1wph1.t

The second issue raised by petitioner is already a settled one. In this jurisdiction moral
damages are recoverable by reason of the death of a passenger caused by the breach of
contract of a common carrier, as provided in Article 1764, in relation to Article 2206, of the
Civil Code. These articles have been applied by this Court in a number of cases, among
them Necesito, etc. vs. Paras, et al., L-10605-06, June 30, 1958; Mercado vs. Lira, L13328-29, Sept. 29, 1961; Villa-Rey Transit vs. Bello, L-18957, April 23, 1963.
Wherefore, the judgment appealed from is affirmed, with costs against petitioners.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-10605

June 30, 1958

PRECILLANO NECESITO, ETC., plaintiff-appellant,

vs.
NATIVIDAD PARAS, ET AL., defendants-appellees.
x---------------------------------------------------------x
G.R. No. L-10606

June 30, 1958

GERMAN NECESITO, ET AL., plaintiffs-appellants,

vs.
NATIVIDAD PARAS, ET AL., defendants-appellees.
Tomas Besa and Federico Agrava for appellants.
Jose W. Diokno for appellees.
REYES, J. B. L., J.:
These cases involve ex contractu against the owners and operators of the common
carrier known as Philippine Rabbit Bus Lines, filed by one passenger, and the heirs of
another, who injured as a result of the fall into a river of the vehicle in which they were
riding.
In the morning of January 28, 1964, Severina Garces and her one-year old son,
Precillano Necesito, carrying vegetables, boarded passenger auto truck or bus No. 199
of the Philippine Rabbit Bus Lines at Agno, Pangasinan. The passenger truck, driven by
Francisco Bandonell, then proceeded on its regular run from Agno to Manila. After
passing Mangatarem, Pangasinan truck No. 199 entered a wooden bridge, but the front
wheels swerved to the right; the driver lost control, and after wrecking the bridge's
wooden rails, the truck fell on its right side into a creek where water was breast deep.
The mother, Severina Garces, was drowned; the son, Precillano Necesito, was injured,
suffering abrasions and fracture of the left femur. He was brought to the Provincial
Hospital at Dagupan, where the fracture was set but with fragments one centimeter out of
line. The money, wrist watch and cargo of vegetables were lost.
Two actions for damages and attorney's fees totalling over P85,000 having been filed in
the Court of First Instance of Tarlac (Cases Nos. 908 and 909) against the carrier, the
latter pleaded that the accident was due to "engine or mechanical trouble" independent
or beyond the control of the defendants or of the driver Bandonell.
After joint trial, the Court of First Instance found that the bus was proceeding slowly due
to the bad condition of the road; that the accident was caused by the fracture of the right
steering knuckle, which was defective in that its center or core was not compact but
"bubbled and cellulous", a condition that could not be known or ascertained by the carrier
despite the fact that regular thirty-day inspections were made of the steering knuckle,
since the steel exterior was smooth and shiny to the depth of 3/16 of an inch all around;
that the knuckles are designed and manufactured for heavy duty and may last up to ten
years; that the knuckle of bus No. 199 that broke on January 28, 1954, was last

inspected on January 5, 1954, and was due to be inspected again on February 5th.
Hence, the trial court, holding that the accident was exclusively due to fortuitous event,
dismissed both actions. Plaintiffs appealed directly to this Court in view of the amount in
controversy.
We are inclined to agree with the trial court that it is not likely that bus No. 199 of the
Philippine Rabbit Lines was driven over the deeply rutted road leading to the bridge at a
speed of 50 miles per hour, as testified for the plaintiffs. Such conduct on the part of the
driver would have provoked instant and vehement protest on the part of the passengers
because of the attendant discomfort, and there is no trace of any such complaint in the
records. We are thus forced to assume that the proximate cause of the accident was the
reduced strength of the steering knuckle of the vehicle caused by defects in casting it.
While appellants hint that the broken knuckle exhibited in court was not the real fitting
attached to the truck at the time of the accident, the records they registered no objection
on that ground at the trial below. The issue is thus reduced to the question whether or not
the carrier is liable for the manufacturing defect of the steering knuckle, and whether the
evidence discloses that in regard thereto the carrier exercised the diligence required by
law (Art. 1755, new Civil Code).
ART. 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 the all the circumstances.
It is clear that the carrier is not an insurer of the passengers' safety. His liability rests
upon negligence, his failure to exercise the "utmost" degree of diligence that the law
requires, and by Art. 1756, in case of a passenger's death or injury the carrier bears the
burden of satisfying the court that he has duly discharged the duty of prudence required.
In the American law, where the carrier is held to the same degree of diligence as under
the new Civil Code, the rule on the liability of carriers for defects of equipment is thus
expressed: "The preponderance of authority is in favor of the doctrine that a passenger is
entitled to recover damages from a carrier for an injury resulting from a defect in an
appliance purchased from a manufacturer, whenever it appears that the defect would
have been discovered by the carrier if it had exercised the degree of care which under
the circumstances was incumbent upon it, with regard to inspection and application of the
necessary tests. For the purposes of this doctrine, the manufacturer is considered as
being in law the agent or servant of the carrier, as far as regards the work of constructing
the appliance. According to this theory, the good repute of the manufacturer will not
relieve the carrier from liability" (10 Am. Jur. 205, s, 1324; see also Pennsylvania R. Co.
vs. Roy, 102 U. S. 451; 20 L. Ed. 141; Southern R. Co. vs. Hussey, 74 ALR 1172; 42 Fed.
2d 70; and Ed Note, 29 ALR 788; Ann. Cas. 1916E 929).
The rationale of the carrier's liability is the fact that the passenger has neither choice nor
control over the carrier in the selection and use of the equipment and appliances in use
by the carrier. Having no privity whatever with the manufacturer or vendor of the defective
equipment, the passenger has no remedy against him, while the carrier usually has. It is
but logical, therefore, that the carrier, while not in insurer of the safety of his passengers,
should nevertheless be held to answer for the flaws of his equipment if such flaws were
at all discoverable. Thus Hannen, J., in Francis vs. Cockrell, LR 5 Q. B. 184, said:
In the ordinary course of things, the passenger does not know whether the carrier
has himself manufactured the means of carriage, or contracted with someone
else for its manufacture. If the carrier has contracted with someone else the
passenger does not usually know who that person is, and in no case has he any
share in the selection. The liability of the manufacturer must depend on the terms
of the contract between him and the carrier, of which the passenger has no
knowledge, and over which he can have no control, while the carrier can

introduce what stipulations and take what securities he may think proper. For
injury resulting to the carrier himself by the manufacturer's want of care, the
carrier has a remedy against the manufacturer; but the passenger has no remedy
against the manufacturer for damage arising from a mere breach of contract with
the carrier . . . . Unless, therefore, the presumed intention of the parties be that
the passenger should, in the event of his being injured by the breach of the
manufacturer's contract, of which he has no knowledge, be without remedy, the
only way in which effect can be given to a different intention is by supposing that
the carrier is to be responsible to the passenger, and to look for his indemnity to
the person whom he selected and whose breach of contract has caused the
mischief. (29 ALR 789)
And in the leading case of Morgan vs. Chesapeake & O. R. Co. 15 LRA (NS) 790, 16
Ann. Cas. 608, the Court, in holding the carrier responsible for damages caused by the
fracture of a car axle, due to a "sand hole" in the course of moulding the axle, made the
following observations.
The carrier, in consideration of certain well-known and highly valuable rights
granted to it by the public, undertakes certain duties toward the public, among
them being to provide itself with suitable and safe cars and vehicles in which
carry the traveling public. There is no such duty on the manufacturer of the cars.
There is no reciprocal legal relation between him and the public in this respect.
When the carrier elects to have another build its cars, it ought not to be absolved
by that facts from its duty to the public to furnish safe cars. The carrier cannot
lessen its responsibility by shifting its undertaking to another's shoulders. Its duty
to furnish safe cars is side by side with its duty to furnish safe track, and to
operate them in a safe manner. None of its duties in these respects can be sublet
so as to relieve it from the full measure primarily exacted of it by law. The carrier
selects the manufacturer of its cars, if it does not itself construct them, precisely
as it does those who grade its road, and lay its tracks, and operate its trains. That
it does not exercise control over the former is because it elects to place that
matter in the hands of the manufacturer, instead of retaining the supervising
control itself. The manufacturer should be deemed the agent of the carrier as
respects its duty to select the material out of which its cars and locomotive are
built, as well as in inspecting each step of their construction. If there be tests
known to the crafts of car builders, or iron moulders, by which such defects might
be discovered before the part was incorporated into the car, then the failure of the
manufacturer to make the test will be deemed a failure by the carrier to make it.
This is not a vicarious responsibility. It extends, as the necessity of this business
demands, the rule of respondeat superior to a situation which falls clearly within
its scope and spirit. Where an injury is inflicted upon a passenger by the breaking
or wrecking of a part of the train on which he is riding, it is presumably the result
of negligence at some point by the carrier. As stated by Judge Story, in Story on
Bailments, sec. 601a: "When the injury or damage happens to the passenger by
the breaking down or overturning of the coach, or by any other accident occurring
on the ground, the presumption prima facie is that it occurred by the negligence
of the coachmen, and onus probandi is on the proprietors of the coach to
establish that there has been no negligence whatever, and that the damage or
injury has been occasioned by inevitable casualty, or by some cause which
human care and foresight could not prevent; for the law will, in tenderness to
human life and limb, hold the proprietors liable for the slightest negligence, and
will compel them to repel by satisfactory proofs every imputation thereof." When
the passenger has proved his injury as the result of a breakage in the car or the
wrecking of the train on which he was being carried, whether the defect was in
the particular car in which he was riding or not, the burden is then cast upon the
carrier to show that it was due to a cause or causes which the exercise of the
utmost human skill and foresight could not prevent. And the carrier in this

connection must show, if the accident was due to a latent defect in the material or
construction of the car, that not only could it not have discovered the defect by
the exercise of such care, but that the builders could not by the exercise of the
same care have discovered the defect or foreseen the result. This rule applies the
same whether the defective car belonged to the carrier or not.
In the case now before us, the record is to the effect that the only test applied to the
steering knuckle in question was a purely visual inspection every thirty days, to see if any
cracks developed. It nowhere appears that either the manufacturer or the carrier at any
time tested the steering knuckle to ascertain whether its strength was up to standard, or
that it had no hidden flaws would impair that strength. And yet the carrier must have been
aware of the critical importance of the knuckle's resistance; that its failure or breakage
would result in loss of balance and steering control of the bus, with disastrous effects
upon the passengers. No argument is required to establish that a visual inspection could
not directly determine whether the resistance of this critically important part was not
impaired. Nor has it been shown that the weakening of the knuckle was impossible to
detect by any known test; on the contrary, there is testimony that it could be detected. We
are satisfied that the periodical visual inspection of the steering knuckle as practiced by
the carrier's agents did not measure up to the required legal standard of "utmost
diligence of very cautious persons" "as far as human care and foresight can provide",
and therefore that the knuckle's failure can not be considered a fortuitous event that
exempts the carrier from responsibility (Lasam vs. Smith, 45 Phil. 657; Son vs. Cebu
Autobus Co., 94 Phil., 892.)
It may be impracticable, as appellee argues, to require of carriers to test the strength of
each and every part of its vehicles before each trip; but we are of the opinion that a due
regard for the carrier's obligations toward the traveling public demands adequate
periodical tests to determine the condition and strength of those vehicle portions the
failure of which may endanger the safe of the passengers.
As to the damages suffered by the plaintiffs, we agree with appellee that no allowance
may be made for moral damages, since under Article 2220 of the new Civil Code, in case
of suits for breach of contract, moral damages are recoverable only where the defendant
acted fraudulently or in bad faith, and there is none in the case before us. As to
exemplary damages, the carrier has not acted in a "wanton, fraudulent, reckless,
oppressive or malevolent manner" to warrant their award. Hence, we believe that for the
minor Precillano Necesito (G. R. No. L-10605), an indemnity of P5,000 would be
adequate for the abrasions and fracture of the femur, including medical and
hospitalization expenses, there being no evidence that there would be any permanent
impairment of his faculties or bodily functions, beyond the lack of anatomical symmetry.
As for the death of Severina Garces (G. R. No. L-10606) who was 33 years old, with
seven minor children when she died, her heirs are obviously entitled to indemnity not only
for the incidental loses of property (cash, wrist watch and merchandise) worth P394 that
she carried at the time of the accident and for the burial expenses of P490, but also for
the loss of her earnings (shown to average P120 a month) and for the deprivation of her
protection, guidance and company. In our judgment, an award of P15,000 would be
adequate (cf Alcantara vs. Surro, 49 Off. Gaz. 2769; 93 Phil., 472).
The low income of the plaintiffs-appellants makes an award for attorney's fees just and
equitable (Civil Code, Art. 2208, par. 11). Considering that he two cases filed were tried
jointly, a fee of P3,500 would be reasonable.
In view of the foregoing, the decision appealed from is reversed, and the defendantsappellees are sentenced to indemnify the plaintiffs-appellants in the following amounts:
P5,000 to Precillano Necesito, and P15,000 to the heirs of the deceased Severina

Garces, plus P3,500 by way of attorney's fees and litigation expenses. Costs against
defendants-appellees. So ordered.
Paras, C. J., Bengzon, Reyes, A., Bautista Angelo, Concepcion, and Endencia,
JJ., concur.
Felix, J., concurs in the result.

RESOLUTION

September 11, 1958

REYES, J. B. L., J.:
Defendants-appellees have Submitted a motion asking this Court to reconsider its
decision of June 30, 1958, and that the same be modified with respect to (1) its holding
the carrier liable for the breakage of the steering knuckle that caused the autobus No.
199 to overturn, whereby the passengers riding in it were injured; (2) the damages
awarded, that appellees argue to be excessive; and (3) the award of attorneys' fees.
(1) The rule prevailing in this jurisdiction as established in previous decisions of this
Court, cited in our main opinion, is that a carrier is liable to its passengers for damages
caused by mechanical defects of the conveyance. As early as 1924, in Lasam vs. Smith,
45 Phil. 659 this Court ruled:
As far as the record shows, the accident was caused either by defects in the
automobile or else through the negligence of its driver. That is not caso fortuito.
And in Son vs. Cebu Autobus Company, 94 Phil., 892, this Court held a common carrier
liable in damages to passenger for injuries cause by an accident due to the breakage of a
faulty drag-link spring.
It can be seen that while the courts of the United States are at variance on the question
of a carrier's liability for latent mechanical defects, the rule in this jurisdiction has been
consistent in holding the carrier responsible. This Court has quoted from American and
English decisions, not because it felt bound to follow the same, but merely in approval of
the rationale of the rule as expressed therein, since the previous Philippine cases did not
enlarge on the ideas underlying the doctrine established thereby.
The new evidence sought to be introduced do not warrant the grant of a new trial, since
the proposed proof available when the original trial was held. Said evidence is not newly
discovered.
(2) With regard to the indemnity awarded to the child Precilliano Necesito, the injuries
suffered by him are incapable of accurate pecuniary estimation, particularly because the
full effect of the injury is not ascertainable immediately. This uncertainty, however, does
not preclude the right to an indemnity, since the injury is patent and not denied (Civil
Code, Art. 2224). The reasons behind this award are expounded by the Code
Commission in its report:

There are cases where from the nature of the case, definite proof of pecuniary
loss cannot be offered, although the court is convinced that there has been such
loss. For instance, injury to one's commercial credit or to the goodwill of a
business firm is often hard to show with certainty in terms of money. Should
damages be denied for that reason? The judge should be empowered to
calculate moderate damages in such cases, rather than that the plaintiff should
suffer, without redress, from the defendant's wrongful act." (Report of the Code
Commission, p. 75)
In awarding to the heirs of the deceased Severina Garces an indemnity for the loss of her
"guidance, protection and company," although it is but moral damage, the Court took into
account that the case of a passenger who dies in the course of an accident, due to the
carrier's negligence constitutes an exception to the general rule. While, as pointed out in
the main decision, under Article 2220 of the new Civil Code there can be no recovery of
moral damages for a breach of contract in the absence of fraud malice or bad faith, the
case of a violation of the contract of carriage leading to a passenger's death escapes this
general rule, in view of Article 1764 in connection with Article 2206, No. 3 of the new Civil
Code.
ART. 1764. Damages in cases comprised in this Section shall be awarded in
accordance with Title XVIII of this Book, concerning Damages. Article 2206 shall
also apply to the death of a passenger caused by the breach of contract by a
comman carrier. ART. 2206. . . .
(3) The spouse, legitimate and eligimate descendants and ascendants of the
deceased may demand moral damages for mental anguish by reason of the
death of the deceased.
Being a special rule limited to cases of fatal injuries, these articles prevail over the
general rule of Art. 2220. Special provisions control general ones (Lichauco & Co. vs.
Apostol, 44 Phil. 138; Sancio vs. Lizarraga, 55 Phil. 601).
It thus appears that under the new Civil Code, in case of accident due to a carrier's
negligence, the heirs of a deceased passenger may recover moral damages, even
though a passenger who is injured, but manages to survive, is not entitled to them. There
is, therefore, no conflict between our main decision in the instant case and that
of Cachero vs. Manila Yellow Taxi Cab Co., 101 Phil., 523, where the passenger suffered
injuries, but did not lose his life.
(3) In the Cachero case this Court disallowed attorneys' fees to the injured plaintiff
because the litigation arose out of his exaggerated and unreasonable deeds for an
indemnity that was out of proportion with the compensatory damages to which he was
solely entitled. But in the present case, plaintiffs' original claims can not be deemed a
priori wholly unreasonable, since they had a right to indemnity for moral damages
besides compensatory ones, and moral damages are not determined by set and
invariable bounds.
Neither does the fact that the contract between the passengers and their counsel was on
a contingent basis affect the former's right to counsel fees. As pointed out for appellants,
the Court's award is an party and not to counsel. A litigant who improvidently stipulate
higher counsel fees than those to which he is lawfully entitled, does not for that reason
earn the right to a larger indemnity; but, by parity of reasoning, he should not be deprived
of counsel fees if by law he is entitled to recover them.
We find no reason to alter the main decision heretofore rendered. Ultimately, the position
taken by this Court is that a common carrier's contract is not to be regarded as a game of

chance wherein the passenger stakes his limb and life against the carrier's property and
profits.
Wherefore, the motion for reconsideration is hereby denied. So ordered.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
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". 29 And 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 TouristClass accommodations from Bangkok to Teheran
and/or Casablanca, ... the plaintiff has been compelledby 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 oustedby 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 copassenger. 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 firstclass 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. 43And 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.
1awphl.nt

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.

THIRD DIVISION
G.R. No. 199886, December 03, 2014
CAGAYAN II ELECTRIC COOPERATIVE, INC., REPRESENTED BY ITS MANAGER AND
CHIEF EXECUTIVE OFFICER, GABRIEL A. TORDESILLAS, Petitioner, v. ALLAN RAPANAN
AND MARY GINE TANGONAN, Respondents.
DECISION
VILLARAMA, JR., J.:
This is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as
amended, assailing the December 8, 2011 Decision1 of the Court of Appeals (CA) in C.A. G.R.
CV No. 77659. The appellate court granted the appeal of respondents Allan Rapanan and Mary
Gine Tangonan and held petitioner Cagayan II Electric Cooperative, Inc. liable for quasi-delict
resulting in the death of Camilo Tangonan and physical injuries of Rapanan, and ordering it to
pay respondents damages and attorneys fees.
The antecedents of the case follow:

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On October 31, 1998, around 9:00 p.m., a motorcycle with three passengers figured in a
mishap along the National Highway of Maddalero, Buguey, Cagayan. It was driven by its owner
Camilo Tangonan who died from the accident, while his companions respondent Rapanan and
one Erwin Coloma suffered injuries.
On March 29, 2000, Rapanan and Camilos common law wife, respondent Mary Gine Tangonan,
filed before the Regional Trial Court (RTC) of Aparri, Cagayan a complaint 2 for damages against
petitioner. They alleged that while the victims were traversing the national highway, they were
struck and electrocuted by a live tension wire from one of the electric posts owned by petitioner.
They contended that the mishap was due to petitioners negligence when it failed to fix and
change said live tension wire despite being immediately informed by residents in the area that it
might pose an immediate danger to persons, animals and vehicles passing along the national
highway.
Mary Gine prayed that she be awarded P50,000 civil indemnity, P25,000 burial expenses,
P1,584,000 indemnity for loss of earning capacity and P100,000 moral and exemplary damages.
Rapanan, on the other hand, prayed for P10,000 for his medical treatment and P50,000 moral
and exemplary damages. Both Mary Gine and Rapanan prayed for 30% of the total award
representing attorneys fees.
In its Answer,3 petitioner alleged that the typhoons that struck its areas of responsibility caused
some of its electric poles to fall and high tension wires to snap or cut-off which caused
brownouts in said areas. It claimed that they cannot be faulted for negligence if there were
electric wires dangling along the national road since they were caused by typhoons which are
fortuitous events. It also alleged that it was able to clear the said areas of fallen electric poles
and dangling or hanging high tension wires immediately after the typhoons, to secure the safety
of persons and vehicles traveling in said areas. It likewise contended that the proximate cause
of the mishap was the victims negligence and imprudence in operating and driving the
motorcycle they were riding on.
During the trial, respondents testified and also presented Dr. Triffany C. Hasim as witness.
Mary Gine testified4 that she is not married to Camilo but they are living together and that they
have one child. She also testified that she spent P20,776 for the funeral expenses of Camilo.
She herself prepared an itemized list and computation of said expenses. She also claimed that
Camilo worked as a jeepney driver earning P150 per day and that as a result of Camilos death,
she suffered sleepless nights and lost weight.

Rapanan testified5 that he, Camilo and one Erwin Coloma were riding a motorcycle along the
National Highway of Maddalero, Buguey, Cagayan on October 31, 1998, around 9:00 in the
evening. He claimed that they saw a wire dangling from an electric post and because of a strong
wind that blew, they got wound by said dangling wire. He suffered physical injuries and electric
burns and was hospitalized for seven days. He claimed to have spent around P10,000 for his
medicines, and also complained of sleepless nights because of the mishap.
Dr. Triffany C. Hasim, the physician who attended to the victims when they were rushed to the
Alfonso Ponce Enrile Memorial District Hospital, also testified 6 for the respondents. According to
Dr. Hasim, the abrasions of Rapanan were caused by pressure when the body was hit by a hard
object or by friction but she is uncertain as to whether a live electric wire could have caused
them. She further said that she did not find any electrical burns on Rapanan. As with Camilo,
she found abrasions and hematoma on his body and that the cause of death was due to cardio
respiratory arrest secondary to strangulation. She also opined that the strangulation could have
been caused by an electric wire entangled around Camilos neck.
Petitioner, for its part, presented four witnesses among whom were SPO2 Pedro Tactac,
Tranquilino Rasos and Rodolfo Adviento.
SPO2 Tactac, who investigated the incident, testified7 that there was a skid mark on the
cemented portion of the road caused by the motorycles foot rest which was about 30 meters
long. According to him, it appears that the motorcycle was overspeeding because of said skid
mark.
Rasos and Adviento, employees of petitioner, both testified 8 that as a result of the onslaught of
typhoons Iliang and Loleng in Buguey and Sta. Ana, Cagayan, the power lines were cut off
because the electric wires snapped and the electric poles were destroyed. After the said
typhoons, petitioners employees inspected the affected areas. The dangling wires were then
removed from the electric poles and were placed at the foot of the poles which were located four
to five meters from the road.
On December 9, 2002, the RTC rendered a decision 9 in favor of petitioner and dismissed the
complaint for damages of respondents. It held that the proximate cause of the incident is the
negligence and imprudence of Camilo in driving the motorcycle. It further held that respondent
Mary Gine has no legal personality to institute the action since such right is only given to the
legal heir of the deceased. Mary Gine is not a legal heir of Camilo since she is only his common
law wife.
On appeal, the CA reversed the RTC and held petitioner liable for quasi-delict. The fallo reads:
WHEREFORE, premises considered, the present appeal is GRANTED. The assailed decision
dated December 9, 2002 of the Regional Trial Court of Appari, Cagayan, Branch 10 in Civil Case
No. 10-305 is hereby REVERSED and SET ASIDE and a NEW ONE ENTERED holding the
defendant-appellee CAGEL[C]O II liable for quasi-delict which resulted in the death of Camilo
Tangonan and the physical injuries of Allan Rapanan, and ordering the payment of 50% of the
following damages, except the attorneys fees which should be borne by the defendantappellant:
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To the plaintiff-appellant Allan Rapanan:

1. temperate damages in the amount of P10,000.00; and
2. moral damages in the amount of P50,000.00;
To the legal heirs of the deceased Camilo Tangonan:
1. indemnity for death in the amount of P50,000.00;
2. indemnity for loss of earning capacity in the amount of P1,062,000.00;
3. temperate damages in the amount of P20,000.00; and
[4.] moral damages in the amount of P50,000.00.
To both the plaintiff-appellant Allan Rapanan and the legal heirs of the deceased Camilo
Tangonan:
1. exemplary damages in the amount [of] P50,000.00; and
2. attorneys fees amounting to 20% of the total amount adjudged.
SO ORDERED.10

In ruling against petitioner, the CA found that despite the different versions of how the incident
occurred, one fact was consistent the protruding or dangling CAGELCO wire to which the
victims were strangled or trapped. It likewise ruled that the police blotter and medical
certificates together with the testimony of one of the passengers of the motorcycle, respondent
Rapanan, was able to establish the truth of the allegations of respondents all of which were
not controverted by petitioner. The appellate court held that clearly, the cause of the mishap
which claimed the life of Camilo and injured Rapanan was the dangling wire which struck them.
Without the dangling wire which struck the victims, the CA held that they would not have fallen
down and sustained injuries. The CA found that if petitioner had not been negligent in
maintaining its facilities, and making sure that every facility needing repairs had been repaired,
the mishap could have been prevented.
The appellate court nevertheless ruled that the victims were partly responsible for the injuries
they sustained. At the time of the mishap, they were over-speeding and were not wearing
protective helmets. Moreover, the single motorcycle being driven carried three persons. While
said circumstances were not the proximate cause of Camilos death and Rapanans injuries, they
contributed to the occurrence of the unfortunate event.
Hence this petition raising the following arguments for this Courts consideration:
1.

THE CONCLUSION OF THE COURT OF APPEALS THAT PETITIONER WAS NEGLIGENT IN

THE MAINTENANCE OF ITS POWER LINES IS MANIFESTLY ABSURD AND PREMISED ON
A SERIOUS MISAPPREHENSION OF FACTS.

2.

THE COURT OF APPEALS DISREGARDED THE EVIDENCE ON RECORD AND COMMITTED

SERIOUS MISAPPREHENSION OF FACTS AND GRAVE ABUSE OF DISCRETION WHEN IT
CONCLUDED THAT THE CAUSE OF THE MISHAP WAS A DANGLING ELECTRIC WIRE
THAT STRUCK AND WOUND UPON THE VICTIMS.
THE COURT OF APPEALS SERIOUSLY ERRED AND COMMITTED GRAVE ABUSE OF
DISCRETION IN AWARDING DAMAGES TO THE HEIRS OF CAMILO TANGONAN
NOTWITHSTANDING THE FACT THAT THEY WERE NEVER IMPLEADED AS PARTIES TO
THE ACTION.

3.

4.

ASSUMING, FOR ARGUMENTS SAKE, THAT THE PETITIONER CAN BE HELD LIABLE FOR
THE MISHAP, DAMAGES AND ATTORNEYS FEES COULD NOT BE AWARDED TO THE
HEIRS OF CAMILO TANGONAN; AND THE AWARD OF MORAL, TEMPERATE AND
EXEMPLARY DAMAGES, AS WELL AS ATTORNEYS FEES, TO ALLAN RAPANAN IS
WITHOUT BASIS.11

Thus, there are two main issues that need to be resolved by this Court: (1) Was petitioners
negligence in maintenance of its facilities the proximate cause of the death of Camilo and the
injuries of Rapanan? and (2) In the event that petitioners negligence is found to be the
proximate cause of the accident, should damages be awarded in favor of Camilos heirs even if
they were not impleaded?
Petitioner contends that it cannot be accused of negligence as its crew cleared the roads of
fallen electric poles and snapped wires to ensure the safety of motorists and pedestrians. They
rolled the snapped wires and placed them behind nearby electric poles away from the roads as
temporary remedy considering that the snapped wires could not be collected all at once. It cites
the report of SPO2 Pedro Tactac and testimony of Tranquilino Rasos stating that the electric wire
was placed at the shoulder of the road. The photograph of the wire also shows that it was
placed among banana plants which petitioner submits to be a clear indication that it was safely
tucked away from the road. Petitioner contends that the trial court correctly observed that
Camilo drove the motorcycle at a high speed causing it to careen to the shoulder of the road
where the electric wire was and had Camilo driven the motorcycle at an average speed, that
would not have happened. Thus, petitioner submits, as found by the trial court, the proximate
cause of the mishap was due to recklessness and imprudence of Camilo and not of petitioner.
Respondents, for their part, insist that the appellate court erred in ruling that it was petitioners
negligence that caused the mishap resulting to the death of Camilo and injuries of Rapanan.
They argued that had petitioner properly maintained its facilities by making sure that every
facility needing restoration is repaired, the mishap could have been prevented.
The petition is meritorious.
Negligence is defined as the failure to observe for the protection of the interest of another
person that degree of care, precaution, and vigilance which the circumstances justly demand,

whereby such other person suffers injury.12 Article 2176 of the Civil Code provides that
[w]hoever 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 a quasi-delict. Under this provision, the elements
necessary to establish a quasi-delict case are: (1) damages to the plaintiff; (2) negligence, by
act or omission, of the defendant or by some person for whose acts the defendant must
respond, was guilty; and (3) the connection of cause and effect between such negligence and
the damages.13
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The presence of the first element is undisputed because the unfortunate incident brought about
the death of Camilo and physical injuries to Rapanan. This Court, however, finds that the second
and third elements are lacking thus precluding the award of damages in favor of respondents.
Adviento, petitioners employee testified that their electric poles along the highways, including
the one where the mishap took place, were erected about four to five meters from the shoulder
of the road. Another employee of petitioner, Rasos, testified that after the typhoons hit Cagayan,
he together with his co-employees, after checking the damage to the electric lines, rolled the
fallen electric wires and placed them at the foot of the electric poles so as to prevent mishaps to
pedestrians and vehicles passing by. Their testimonies were corroborated by what was recorded
in the Police Blotter of the Buguey Police Station, Buguey, Cagayan after SPO2 Tactac
investigated on the incident. The pertinent excerpt from the blotter is quoted verbatim:
xxxx
TEAM LED BY SPO2 PEDRO R TACTAC JUMPED OFF AND PROCEEDED TO BRGY MADDALERO,
BUGUEY, CAGAYAN TO CONDUCT INVEST AT THE SAID VEHICULAR ACCIDENT AT THE SAME
PLACE AND RET STN WITH THE REPT THAT ON OR ABOUT 8:45 PM 31 OCTOBER 98 ONE
MOTORCYCLE SUZUKI X4 WITH TEMPORARY PLATE NUMBER 14592 DRIVEN BY ONE CAMILO
TANGONAN y ROSETE 21 years old, MARRIED, DRIVER AND A RESIDENT OF BRGY MASI, STA
TERESITA, CAGAYAN (DEAD ON THE SPOT) AND TWO COMPANIONS EDWIN COLOMA y
MABANAG, 23 YEARS OLD, MARRIED, DRIVER AND A RESIDENT OF MASI AND ALLAN RAFANAN
y GUILLERMO, 19 YEARS OLD, SINGLE, CONDUCTOR AND A RESIDENT OF BRGY BUYUN STA
TERESITA CAGAYAN WASACCIDENTALLY TRAPPED BY A PROTRUDING CAGELCO WIRE AT
THE SHOULDER OF THE ROAD WHILE THEY WERE BOUND TO STA TERESITA FROM
APARRI THIS PROVINCE DUE TO THE OVER SPEED OF MOTOR VEHICLE THE WIRE STRANGLED
THE NECK OF THE VICTIMS WHICH CAUSED THE INSTANTANEOUS DEATH OF THE DRIVER,
CAMILO TANGONAN AND ABRASIONS ON DIFFERENT PARTS OF THE BODY OF THE TWO OTHER
VICTIMS THE SAID TWO OTHER VICTIMS WERE BROUGHT TO ALFONSO ENRILE HOSPITAL,
GONZAGA, CAGAYAN FOR MEDICAL TREATMENT.14 (Emphasis and underscoring supplied)
Thus, there is no negligence on the part of petitioner that was allegedly the proximate cause of
Camilos death and Rapanans injuries. From the testimonies of petitioners employees and the
excerpt from the police blotter, this Court can reasonably conclude that, at the time of that fatal
mishap, said wires were quietly sitting on the shoulder of the road, far enough from the
concrete portion so as not to pose any threat to passing motor vehicles and even pedestrians.
Hence, if the victims of the mishap were strangled by said wires, it can only mean that either
the motorcycle careened towards the shoulder or even more likely, since the police found the
motorcycle not on the shoulder but still on the road, that the three passengers were thrown off
from the motorcycle to the shoulder of the road and caught up with the wires. As to how that
happened cannot be blamed on petitioner but should be attributed to Camilos over speeding as
concluded by the police after it investigated the mishap. SPO2 Tactac, in his testimony,
explained how they made such conclusion:

ATTY. TUMARU:
Q: x x x My question is, you said that the motor vehicle was
overspeeding, when you went to the place, what made you
conclude that the motor vehicle where the three rode which
caused the death of Camilo Tangonan, was overspeeding? Please
explain that before this court[.]
ATTY. RAPANAN:
Incompetent, you honor.

COURT:
Answer.
A: I stated in the police blotter over speeding when we went to
investigate. We reflected in the report/police blotter that there
was over speeding because of the skid mark that lasted up to 30
meters from the start to the place where the motorcycle fell, sir.
Q: In this skid mark that you have seen, at the point of the start of
the skid mark to the place where you found the motor vehicle,
where was the motor vehicle that time?
A: It was at the road, sir.
Q: What road?
A: At the edge of the cemented pavement, sir.
Q: Where was the victim found?
ATTY. RAPANAN:
Immaterial, your honor.
COURT:
Sustained.
ATTY. TUMARU:
Q: And did you try to investigate what was the cause [of death] of
the victim?
ATTY. RAPANAN:
Incompetent, your honor.
ATTY. TUMARU:
Q: Per your investigation, did you find out the cause of death of the
victim and the others (sic)?
A: There was abrasion at the neck of the victim, sir.
COURT:

Q: Who among the victims?

A: The driver Camilo Tangonan, sir.
Q: What about the two others?
A: When we arrived at the scene, the two companions of the victim
were brought to the Gonzaga Alfonso Ponce Enrile hospital by
the PNP of Sta. Teresita police station, sir.
xxxx
ATTY. RAPANAN:
Q: Do you know that a motorcycle is provided with the
speedometer?
A: Yes, sir.
Q: When you arrived at the scene, you no longer bother yourself to
see the speedometer of the motorcycle, is that correct?
ATTY. TUMARU:
Incompetent, your honor.
COURT:
Answer.
A: I did not bother to see the speedometer, sir.
Q: You only conclude in saying that the driver of the motorcycle
was running his motorcycle in a very speed[y] manner because
of the skid mark measuring 30 meters, you did not include that
in your report?
ATTY. TUMARU:
The document is the best evidence, your honor.
ATTY. RAPANAN:
This is a new matter, your honor.
COURT:

Answer.
A: We saw the skid mark so we concluded that there was an over
speeding due to the skid mark, sir.
Q: Do you know that a skid on the surface of a cemented road
shows that something happened to the motorcycle o[r] its
[d]river?
ATTY. TUMARU:
That calls for an opinion, your honor.
COURT:
Answer.
A: There was an accident, sir.
Q: Do you know that when a vehicle even if running with slow
speed if a driver suddenly applied a break, there was always a
skid mark on the road?
A: It is the footrest of the motorcycle that caused the skid mark,
sir.
COURT:
Q: Which is which now, you found a skid mark of the tire and
footrest or only the skid mark of the footrest?
A: The footrest, sir.
Q: How do you know that the skid mark was caused by the
footrest?
A: Because the skid mark was caused by the footrest because the
place where the motorcycle fell (sic), the footrest was still
pointing [to] the skid mark [on] the cemented road, sir.15
The foregoing shows that the motorcycle was probably running too fast that it lost control and
started tilting and sliding eventually which made its foot rest cause the skid mark on the road.
Therefore, the mishap already occurred even while they were on the road and away from
petitioners electric wires and was not caused by the latter as alleged by respondents. It just so
happened that after the motorcycle tilted and slid, the passengers were thrown off to the
shoulder where the electric wires were. This Court hence agrees with the trial court that the
proximate cause of the mishap was the negligence of Camilo. Had Camilo driven the motorcycle
at an average speed, the three passengers would not have been thrown off from the vehicle
towards the shoulder and eventually strangulated by the electric wires sitting thereon. Moreover,
it was also negligent of Camilo to have allowed two persons to ride with him and for Rapanan to
ride with them when the maximum number of passengers of a motorcycle is two including the
driver. This most likely even aggravated the situation because the motorcycle was overloaded

which made it harder to drive and control. When the plaintiffs own negligence was the
immediate and proximate cause of his injury, he cannot recover damages. 16
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As to the second issue, assuming arguendo that petitioner was indeed negligent, the appellate
court erred in awarding damages in favor of Camilos legal heirs since they were not impleaded
in the case. It should be noted that it was Mary Gine, the common law wife of Camilo, who is
the complainant in the case. As a mere common law wife of Camilo, she is not considered a
legal heir of the latter, and hence, has no legal personality to institute the action for damages
due to Camilos death.
WHEREFORE, the petition is hereby GRANTED. The April 8, 2011 Decision of the Court of
Appeals in C.A. G.R. CV No. 77659 is hereby REVERSED and SET ASIDE. The December 9,
2002 Decision of the Regional Trial Court of Aparri, Cagayan, Branch 10 in Civil Case No. 10-305
dismissing the complaint for damages of respondents Allan Rapanan and Mary Gine Tangonan
is REINSTATED.
No pronouncement as to costs.
SO ORDERED.

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THIRD DIVISION
G.R. No. 174161, February 18, 2015
R TRANSPORT CORPORATION, Petitioner, v. LUISITO G. YU, Respondent.
DECISION
PERALTA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking
to reverse and set aside the Decision1 and Resolution,2 dated September 9, 2005 and August 8,
2006, respectively, of the Court of Appeals (CA) in CA-G.R. CV No. 84175.
The antecedent facts are as follows:
At around 8:45 in the morning of December 12, 1993, Loreta J. Yu, after having alighted from a
passenger bus in front of Robinsons Galleria along the north-bound lane of Epifanio de los
Santos Avenue (EDSA), was hit and run over by a bus driven by Antonio P. Gimena, who was
then employed by petitioner R Transport Corporation. Loreta was immediately rushed to Medical
City Hospital where she was pronounced dead on arrival. 3
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On February 3, 1994, the husband of the deceased, respondent Luisito G. Yu, filed a Complaint
for damages before the Regional Trial Court (RTC) of Makati City against petitioner R Transport,
Antonio Gimena, and Metro Manila Transport Corporation (MMTC) for the death of his wife.
MMTC denied its liability reasoning that it is merely the registered owner of the bus involved in
the incident, the actual owner, being petitioner R Transport.4 It explained that under the Bus
Installment Purchase Program of the government, MMTC merely purchased the subject bus,
among several others, for resale to petitioner R Transport, which will in turn operate the same
within Metro Manila. Since it was not actually operating the bus which killed respondents wife,
nor was it the employer of the driver thereof, MMTC alleged that the complaint against it should
be dismissed.5 For its part, petitioner R Transport alleged that respondent had no cause of action
against it for it had exercised due diligence in the selection and supervision of its employees and
drivers and that its buses are in good condition. Meanwhile, the driver Antonio Gimena was
declared in default for his failure to file an answer to the complaint.
After trial on the merits, wherein the parties presented their respective witnesses and
documentary evidence, the trial court rendered judgment in favor of respondent Yu ruling that
petitioner R Transport failed to prove that it exercised the diligence required of a good father of
a family in the selection and supervision of its driver, who, by its negligence, ran over the
deceased resulting in her death. It also held that MMTC should be held solidarily liable with
petitioner R Transport because it would unduly prejudice a third person who is a victim of a tort
to look beyond the certificate of registration and prove who the actual owner is in order to
enforce a right of action. Thus, the trial court ordered the payment of damages in its
Decision6 dated June 3, 2004, the dispositive portion of which reads:
chanRoblesvirtualLawlibrary

WHEREFORE, foregoing premises considered, judgment is hereby rendered ordering defendants

Rizal Transport and Metro Manila Transport Corporation to be primarily and solidarily liable and
defendant Antonio Parraba Gimena subsidiarily liable to plaintiff Luisito Yu as follows:
1. Actual damages in the amount of Php78,357.00 subject to interest at the legal rate
from the filing of the complaint until fully paid;
2. Loss of income in the amount of Php500,000.00;
3. Moral damages in the amount of P150,000.00;
4. Exemplary damages in the amount of P20,000.00;
5. Attorneys fees in the amount of P10,000.00; and

6.

Costs of suit.7

On September 9, 2005, the CA affirmed the Decision of the RTC with modification that
defendant Antonio Gimena is made solidarily liable for the damages caused to respondent.
According to the appellate court, considering that the negligence of Antonio Gimena was
sufficiently proven by the records of the case, and that no evidence of whatever nature was
presented by petitioner to support its defense of due diligence in the selection and supervision
of its employees, petitioner, as the employer of Gimena, may be held liable for the damage
caused. The CA noted that the fact that petitioner is not the registered owner of the bus which
caused the death of the victim does not exculpate it from liability.8 Thereafter, petitioners
Motion for Reconsideration was further denied by the CA in its Resolution 9 dated August 8, 2006.
Hence, the present petition.
Petitioner essentially invokes the following ground to support its petition:

chanRoblesvirtualLawlibrary

I.
THE COURT OF APPEALS ERRED IN AFFIRMING THE RULING OF THE REGIONAL TRIAL COURT
FINDING PETITIONER LIABLE FOR THE DAMAGES CAUSED BY THE NEGLIGENCE OF ITS
EMPLOYEE, WHICH WAS NOT SUPPORTED BY THE EVIDENCE ON RECORD.
Petitioner insists that the CA and the RTC were incorrect in ruling that its driver was negligent
for aside from the mere speculations and uncorroborated testimonies of the police officers on
duty at the time of the accident, no other evidence had been adduced to prove that its driver
was driving in a reckless and imprudent manner. It asserts that contrary to the findings of the
courts below, the bus from which the victim alighted is actually the proximate cause of the
victims death for having unloaded its passengers on the lane where the subject bus was
traversing. Moreover, petitioner reiterates its argument that since it is not the registered owner
of the bus which bumped the victim, it cannot be held liable for the damage caused by the
same.
We disagree.
Time and again, it has been ruled that whether a person is negligent or not is a question of fact
which this Court cannot pass upon in a petition for review on certiorari, as its jurisdiction is
limited to reviewing errors of law.10 This Court is not bound to weigh all over again the evidence
adduced by the parties, particularly where the findings of both the trial and the appellate courts
on the matter of petitioners negligence coincide. As a general rule, therefore, the resolution of
factual issues is a function of the trial court, whose findings on these matters are binding on this
Court, more so where these have been affirmed by the Court of Appeals, 11save for the following
exceptional and meritorious circumstances: (1) when the factual findings of the appellate court
and the trial court are contradictory; (2) when the findings of the trial court are grounded
entirely on speculation, surmises or conjectures; (3) when the lower courts inference from its
factual findings is manifestly mistaken, absurd or impossible; (4) when there is grave abuse of
discretion in the appreciation of facts; (5) when the findings of the appellate court go beyond
the issues of the case, or fail to notice certain relevant facts which, if properly considered, will
justify a different conclusion; (6) when there is a misappreciation of facts; (7) when the findings
of fact are themselves conflicting; and (8) when the findings of fact are conclusions without
mention of the specific evidence on which they are based, are premised on the absence of
evidence, or are contradicted by evidence on record.12
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After a review of the records of the case, we find no cogent reason to reverse the rulings of the
courts below for none of the aforementioned exceptions are present herein. Both the trial and
appellate courts found driver Gimena negligent in hitting and running over the victim and ruled
that his negligence was the proximate cause of her death. Negligence has been defined as "the
failure to observe for the protection of the interests of another person that degree of care,
precaution, and vigilance which the circumstances justly demand, whereby such other person
suffers injury.13Verily, foreseeability is the fundamental test of negligence. 14 It 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.15
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In this case, the records show that driver Gimena was clearly running at a reckless speed. As
testified by the police officer on duty at the time of the incident16 and indicated in the Autopsy
Report,17 not only were the deceaseds clothes ripped off from her body, her brain even spewed
out from her skull and spilled over the road. Indeed, this Court is not prepared to believe
petitioners contention that its bus was travelling at a normal speed in preparation for a full

stop in view of the fatal injuries sustained by the deceased. Moreover, the location wherein the
deceased was hit and run over further indicates Gimenas negligence. As borne by the records,
the bus driven by Gimena bumped the deceased in a loading and unloading area of a
commercial center. The fact that he was approaching such a busy part of EDSA should have
already cautioned the driver of the bus. In fact, upon seeing that a bus has stopped beside his
lane should have signalled him to step on his brakes to slow down for the possibility that said
bus was unloading its passengers in the area. Unfortunately, he did not take the necessary
precaution and instead, drove on and bumped the deceased despite being aware that he was
traversing a commercial center where pedestrians were crossing the street. Ultimately, Gimena
should have observed due diligence of a reasonably prudent man by slackening his speed and
proceeding cautiously while passing the area.
Under Article 218018 of the New Civil Code, employers are liable for the damages caused by their
employees acting within the scope of their assigned tasks. Once negligence on the part of the
employee is established, a presumption instantly arises that the employer was remiss in the
selection and/or supervision of the negligent employee. To avoid liability for the quasi-delict
committed by its employee, it is incumbent upon the employer to rebut this presumption by
presenting adequate and convincing proof that it exercised the care and diligence of a good
father of a family in the selection and supervision of its employees. 19
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Unfortunately, however, the records of this case are bereft of any proof showing the exercise by
petitioner of the required diligence. As aptly observed by the CA, no evidence of whatever
nature was ever presented depicting petitioners due diligence in the selection and supervision of
its driver, Gimena, despite several opportunities to do so. In fact, in its petition, apart from
denying the negligence of its employee and imputing the same to the bus from which the victim
alighted, petitioner merely reiterates its argument that since it is not the registered owner of the
bus which bumped the victim, it cannot be held liable for the damage caused by the same.
Nowhere was it even remotely alleged that petitioner had exercised the required diligence in the
selection and supervision of its employee. Because of this failure, petitioner cannot now avoid
liability for the quasi-delict committed by its negligent employee.
At this point, it must be noted that petitioner, in its relentless attempt to evade liability, cites our
rulings in Vargas v. Langcay20 and Tamayo v. Aquino21 insisting that it should not be held
solidarily liable with MMTC for it is not the registered owner of the bus which killed the
deceased. However, this Court, in Jereos v. Court of Appeals, et al.,22 rejected such contention in
the following wise:
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Finally, the petitioner, citing the case of Vargas vs. Langcay, contends that it is the
registered owner of the vehicle, rather than the actual owner, who must be jointly and
severally liable with the driver of the passenger vehicle for damages incurred by third
persons as a consequence of injuries or death sustained in the operation of said
vehicle.
The contention is devoid of merit. While the Court therein ruled that the registered
owner or operator of a passenger vehicle is jointly and severally liable with the driver
of the said vehicle for damages incurred by passengers or third persons as a
consequence of injuries or death sustained in the operation of the said vehicle, the
Court did so to correct the erroneous findings of the Court of Appeals that the liability
of the registered owner or operator of a passenger vehicle is merely subsidiary, as
contemplated in Art. 103 of the Revised Penal Code. In no case did the Court exempt
the actual owner of the passenger vehicle from liability. On the contrary, it adhered to the
rule followed in the cases of Erezo vs. Jepte, Tamayo vs. Aquino, and De Peralta vs. Mangusang,
among others, that the registered owner or operator has the right to be indemnified by the real
or actual owner of the amount that he may be required to pay as damage for the injury caused.
The right to be indemnified being recognized, recovery by the registered owner or operator may
be made in any form-either by a cross-claim, third-party complaint, or an independent action.
The result is the same.23
Moreover, while We held in Tamayo that the responsibility of the registered owner and actual
operator of a truck which caused the death of its passenger is not solidary, We noted therein
that the same is due to the fact that the action instituted was one for breach of contract, to
wit:
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The decision of the Court of Appeals is also attacked insofar as it holds that inasmuch as the
third-party defendant had used the truck on a route not covered by the registered owner's
franchise, both the registered owner and the actual owner and operator should be considered as

joint tortfeasors and should be made liable in accordance with Article 2194 of the Civil Code.
This Article is as follows:
Art. 2194. The responsibility of two or more persons who are liable for a quasi-delict is solidary.
But the action instituted in the case at bar is one for breach of contract, for failure of
the defendant to carry safely the deceased for her destination. The liability for which
he is made responsible, i.e., for the death of the passenger, may not be considered as
arising from a quasi-delict. As the registered owner Tamayo and his transferee Rayos
may not be held guilty of tort or a quasi-delict; their responsibility is not solidary as
held by the Court of Appeals.
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The question that poses, therefore, is how should the holder of the certificate of public
convenience, Tamayo, participate with his transferee, operator Rayos, in the damages
recoverable by the heirs of the deceased passenger, if their liability is not that of Joint
tortfeasors in accordance with Article 2194 of the Civil Code. The following considerations must
be borne in mind in determining this question. As Tamayo is the registered owner of the truck,
his responsibility to the public or to any passenger riding in the vehicle or truck must be direct,
for the reasons given in our decision in the case of Erezo vs. Jepte, supra, as quoted above. But
as the transferee, who operated the vehicle when the passenger died, is the one directly
responsible for the accident and death he should in turn be made responsible to the registered
owner for what the latter may have been adjudged to pay. In operating the truck without
transfer thereof having been approved by the Public Service Commission, the transferee acted
merely as agent of the registered owner and should be responsible to him (the registered
owner), for any damages that he may cause the latter by his negligence. 24
However, it must be noted that the case at hand does not involve a breach of contract of
carriage, as in Tamayo, but a tort or quasi-delict under Article 2176, 25 in relation to Article
218026 of the New Civil Code. As such, the liability for which petitioner is being made
responsible actually arises not from a pre-existing contractual relation between petitioner and
the deceased, but from a damage caused by the negligence of its employee. Petitioner cannot,
therefore, rely on our ruling in Tamayo and escape its solidary liability for the liability of the
employer for the negligent conduct of its subordinate is direct and primary, subject only to the
defense of due diligence in the selection and supervision of the employee. 27
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Indeed, this Court has consistently been of the view that it is for the better protection of the
public for both the owner of record and the actual operator to be adjudged jointly and severally
liable with the driver.28 As aptly stated by the appellate court, the principle of holding the
registered owner liable for damages notwithstanding that ownership of the offending vehicle has
already been transferred to another is designed to protect the public and not as a shield on the
part of unscrupulous transferees of the vehicle to take refuge in, inorder to free itself from
liability arising from its own negligent act.29
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Hence, considering that the negligence of driver Gimena was sufficiently proven by the records
of the case, and that no evidence of whatever nature was presented by petitioner to support its
defense of due diligence in the selection and supervision of its employees, petitioner, as the
employer of Gimena, may be held liable for damages arising from the death of respondent Yus
wife.
WHEREFORE, premises considered, the instant petition is DENIED. The Decision and
Resolution, dated September 9, 2005 and August 8, 2006, respectively, of the Court of Appeals
in CA-G.R. CV No. 84175 are hereby AFFIRMED.
SO ORDERED.

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