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Republic of the Philippines


SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 121810
December 7, 2001
SPOUSES INOCENCIO AND ADORACION SAN ANTONIO,
petitioners,
vs.
COURT OF APPEALS AND SPOUSES MARIO AND
GREGORIO GERONIMO, respondents.
QUISUMBING, J.:
This is a petition for review seeking the reversal of the
decision1 dated April 28, 1995, of the Court of Appeals in CAG.R. SP No. 35271 affirming the orders dated May 5, 1994, 2
July 12, 19943 and September 1, 1994,4 respectively, of the
Regional Trial Court of Malolos Bulacan, Branch 22, granting
the motion for execution of compromise judgment dated
September 22, 1993 in Civil Case No. 233-M-92.
The facts, as culled from the records, are as follows:
Private respondents spouses Mario and Gregoria Geronimo
obtained a loan in the amount of One Million Twenty Eight
Thousand Pesos (P1,028,000) from petitioners, the spouses
Inocencio and Adoracion San Antonio. To secure the loan,
private respondents mortgaged two parcels of land covered by
TCT No. RT-6653 with an area of 10,390 square meters and
TCT No. RT-6652 with an area of 2,556 square meters, both
situated in Barrio Tabe, Guiguinto, Bulacan. Subsequently,
private respondents obtained an additional loan of Nine
Hundred Fifty Nine Pesos (P991,859) with an interest of 3.33%
per month, thus making their total obligation in the amount of
Two Million Nineteen Thousand Eight Hundred Fifty Nine
Pesos (P2,019,859), payable on or before February 15, 1991.
Private respondents failed to pay the loan and the interest on
the due date, hence, the mortgage was extra-judicially
foreclosed. During the auction sale, petitioners, being the
highest bidder bought the two parcels of land.
Before the one-year redemption period expired, private
respondents filed a complaint for annulment of extra-judicial
foreclosure with preliminary mandatory injunction, docketed as
Civil Case No. 233-M-92, with the Regional Trial Court of
Bulacan, Branch 22. After the parties presented their
respective evidence, they submitted to the court on September
16, 1993, a compromise agreement dated August 25, 1993,
the terms and conditions of which are quoted as follows:
COME NOW parties assisted by their respective counsels and
before the Honorable Court most respectfully submit this
compromise agreement, the terms and conditions of which are:
1. For a consideration of TWO MILLION PESOS
(P2,000,000.00) Philippine Currency in hand received today by
the defendants spouses Inocencio and Adoracion San Antonio
from the plaintiffs, defendants San Antonio will execute a deed
of resale/reconveyance/redemption of that subject property
covered by TCT No. RT-6653 (T-209250) of the Registry of
Deeds of Bulacan including its improvements;
2. For the release/resale/reconveyance of the other property
involved in the case described in TCT No. RT-6652 (T-296744)
of the other property involved in the case described in TCT No.
RT-6652 (T-296744) of the Registry of Deeds of Bulacan
together with its improvements, plaintiffs obligate themselves

to transfer the ownership of the following to the defendants


San Antonio.
a. That lot including its improvements situated in Brgy.
Tuctucan, Municipality of Guiguinto, Bulcan, covered by TCT
No. 29832, Blk. 4, Lot No. 3 consisting of 135 square meters;
b. That lot situated in Brgy. Tuctucan, Municipality of Guiguinto,
Bulcan covered by TCT No. 30078, Blk. 9, Lot 27 consisting of
78 square meters;
c. Another lot situated in Brgy. Tuctucan, Municipality of
Guiguinto, Bulcan, covered by TCT No. 30079, Blk. No. 38
consisting of 75 square meters.
Within six (6) months from signing of this compromise
agreement simultaneous to which delivery of the title to the
afore-mentioned properties in the names of the defendants
San Antonio, the defendants San Antonio will execute the
corresponding instrument of resale/reconveyance/redemption
over that properly together with its improvements covered by
TCT No. RT-6652 (T-296744), for the purpose of the
cancellation of the annulment of the sale in the title subject to
the condition that should plaintiffs fail to deliver the titles to the
three lots heretofore mentioned to the defendants San Antonio,
the said plaintiffs shall be deemed to have waived and
renounced any all rights, claims and demands whatsoever they
may have over that property covered by TCT No. RT-6652 (T296744) including its improvements and thenceforth bind
themselves to respect the right of ownership, and possession
of the defendants San Antonio over said property, or to pay
Two Million Pesos (P2,000,000.00) within the same period;
3. That the parties further agree to set aside any claim,
damages and counter-claims they may have against each
other;
4. That in the meantime, the possession of the plaintiffs of the
subject property covering TCT No. 6652 (T-296744) and TCT
No. RT-6653 (T-209250) shall it be respect; (SIC)
5. This compromise agreement shall be in full settlement of the
obligations of the plaintiffs with respect to Kasulatan ng
Sanglaan dated February 14, 1989 and the Susog ng
Kasulatan ng Sanglaan dated July 16, 1990, subject matter of
the complaint, and those related there.
6. This compromise agreement is immediately executory
(underscoring supplied).5
Finding the above to be in order, the trial court approved the
same in its order dated September 22, 1993, thus:
A careful perusal of the Compromise Agreement dated August
25, 1993 reveals that the terms and conditions thereof are not
contrary to law, morals and public policy.
ACCORDINGLY, the compromise agreement dated August 25,
1993 is hereby APPROVED. The parties are enjoined to
comply faithfully with their obligation under said agreement.
SO ORDERED.6
In accordance with the stipulations in paragraph 1 of the
Compromise Agreement, petitioners executed a Certificate of
Redemption and Cancellation of Sale covering TCT No. RT6653 after private respondents paid them Two Million Pesos
(P2,000,000). Private respondents, however, failed to transfer
the ownership and deliver the titles of the three parcels of land
described in paragraph 2 of the agreement or to pay 2 Million
Pesos within the six-month period from August 25, 1993. It was
only on March 4, 1994, after the lapse of six months that

2
private respondents delivered the three titles to petitioners. As
the delivery was beyond the agreed six-month period,
petitioners refused to accept the same or execute an
instrument for the resale, reconveyance or redemption of the
property covered by TCT No. RT-6652. Consequently, TCT No.
RT-6652 was cancelled and in lieu thereof, TCT No. T-47229
was issued in the names of petitioners.
Private respondents filed a motion for execution of the
September 22, 1993 order with the trial court. This was granted
on May 5, 1994. Petitioners filed a motion for reconsideration
but this was denied on July 12, 1994. A second motion for
reconsideration by petitioners was likewise denied in an order
dated September 1, 1994.
Petitioners filed a Petition for Certiorari with application for a
Temporary Restraining Order and/or Writ of Preliminary
Injunction with the Court of Appeals. As said earlier, the Court
of Appeals denied the petition on April 28, 1995, thus:
WHEREFORE, the petition for certiorari is hereby DENIED
DUE COURSE, and is DISMISSED. The Orders of respondent
court dated May 1[5], July 12, and September 1, 1994 are
AFFIRMED.
SO ORDERED.7
Hence this petition for review wherein petitioners aver that the
Court of Appeals erred in:
I. RULING THAT THE ORDER DATED MAY 5, 1994 DID
NOT
SUBSTANTIALLY AMEND
THE
FINAL AND
EXECUTORY JUDGMENT RENDERED BASED ON A
COMPROMISE AGREEMENT.
II. RULING THAT THE PRINCIPLE OF EQUITY IS A
GROUND TO JUSTIFY THE AMENDMENT OF A FINAL AND
EXECUTORY JUDGMENT.
III. RULING THAT THE DELAY IN THE DELIVERY OF THE
TITLES IS ATTRIBUTABLE TO THE REGISTER OF DEEDS
OF BULACAN.
IV. APPLYING ARTICLE 1191 OF THE NEW CIVIL CODE.
V. NOT RULING THAT THE COMPROMISE AGREEMENT
IS IMMEDIATELY EXECUTORY AS PROVIDED IN
PARAGRAPH 6 THEREOF.
VI. NOT RULING THAT PETITIONERS HAVE ALREADY
COMPLIED WITH PARAGRAPH 1 OF THE COMPROMISE
AGREEMENT.8
In sum, petitioners raise the following issues for our resolution:
1. Did the trial court err in granting the writ to execute the
compromise judgment?
2. Is Article 1191 of the New Civil Code applicable in this case?
On the first issue, did the trial court err in granting the writ to
execute the compromise judgment? Petitioners claim that the
trial court did. The compromise agreement approved by the
trial court in its order dated September 22, 1993, provided that
private respondents had six months within which to deliver the
titles. If they failed, ownership of the land covered by TCT No.
RT-6652 would be transferred to petitioners. Petitioners
contend that judgement based on a compromise is conclusive
upon the parties and is immediately executory. It has the force
and effect of res judicata, hence it cannot be modified. The trial
court therefore, cannot compel petitioners, via a writ of
execution, to accept the three titles beyond the six-month
period, because it is in effect an amendment to the
compromise agreement, petitioners said. They explain that

even on equitable considerations this was not allowed because


once a decision becomes final, the court which rendered it
loses jurisdiction over the case and it can no longer be
modified except for clerical errors.
Petitioners also contend that private respondents should not
blame the Register of Deeds for the delay in the delivery of the
three titles since private respondents submitted the registration
documents to the Register of Deeds only on March 2, 1994,
beyond the six-month period deadline.
Further, petitioners deny that they are guilty of delay for not
executing the deed of resale, reconveyance or redemption
despite their receipt of two million pesos. They said that as
early as August 25, 1993, they already executed a Certificate
of Redemption and Cancellation of Sale of the land covered by
TCT No. RT-6653.
Private respondents counter that there has been no
modification of the final judgment when the trial judge issued
the writ of execution, as the judge issued the writ of execution,
as the judge was merely performing a ministerial duty. Also,
private respondents deny that they delivered the three titles
late and if ever the delivery was delayed it was the Register of
Deeds who was to blame. Private respondents additionally
point out that in reciprocal obligations, like the ones in this
case, delay sets in only when one part fulfills his obligation and
the other is unable to perform his part of the obligation.
Likewise, a person obligated to deliver something incurs in
delay only after demand. As herein petitioners have not yet
made demand and as they have not yet performed their part of
the agreement, which was the execution of the deed of
reconveyance, delay by private respondents has not yet
occurred.
We find petitioners' petition impressed with merit.
A compromise agreement, once approved by final order of the
court, has the force of res judicata between the parties and
should not be disturbed except for vices of consent or forgery.9
In this case, the compromise agreement clearly provided
private respondents six months, i.e., from August 25, 1993 to
February 25, 1994, to deliver the titles to the three parcels of
land described in the agreement. If after the lapse of the said
period and no delivery is yet made by private respondents,
ownership over the land covered by TCT No. RT-6652 would
be transferred to petitioners. As the facts of this case show,
private respondents failed to deliver the titles on February 25,
1994, as it was only on March 4, 1994, when they gave the
titles to petitioners. Hence, pursuant to the terms of the
compromise agreement, petitioners could rightfully refuse
acceptance of the titles. It was error therefore for the trial court
to grant the writ of execution in favor of private respondents
because it effectively compelled petitioners to accept delivery
of the three titles in exchange for the release of the land
covered by TCT No. RT-6652 even after the lapse of the sixmonth period.
Private respondents claim that the trial court, in issuing the
writ, was merely performing a ministerial duty. While it
becomes the trial court's ministerial duty to issue a writ of
execution may be refused on equitable grounds. 10 In this case,
it will be unjust to petitioners if we compel them to accept the
three titles despite the lapse of the agreed period. Contractual
obligations between parties have the force of law between

3
them and absent any allegation that the same are contrary to
law, morals, good customs, public order or public policy, they
must be complied with in good faith.11
Both the trial court and the Court of Appeals attributed to the
Register of Deeds private respondents' delay in the delivery of
the three titles. But as shown in their decisions, private
respondents submitted to the Register of Deeds the pertinent
documents for registration of the three titles in petitioners'
name only on March 2, 1994, beyond the six-month period. 12
Private respondents could have done so earlier, but they did
not. This only shows that private respondents did not intend to
truly comply with their obligations.
As to the alleged delay on the part of petitioners in executing
the Deed of Resale and Reconveyance, we find that this point
serves only to confuse the Court on the real facts of the case.
Despite the fact that the compromise agreement involved two
parcels of land up for redemption, private respondents did not
indicate as to which parcel of land petitioners did not execute a
deed of resale.13 Nevertheless, private respondents admitted
that petitioners already executed a Certificate of Redemption. 14
For us, this was sufficient compliance of petitioners' duty under
the Compromise Agreement.
Lastly, is Article 1191 of the New Civil Code 15 applicable in this
case? According to petitioners, the Court of Appeals erred
when it found that private respondents' delay did not constitute
substantial breach to warrant rescission of the compromise
agreement. They assert that they were not seeking rescission
of the compromise agreement but its full enforcement
regardless of whether the delay is slight or substantial.
While indeed private respondents did not meet head on this
issue, we find that it should be properly addressed. In filing the
petition before the Court of Appeals, petitioners sought the
appellate court's declaration that the trial court committed
grave abuse of discretion. In their view, the trial court should
have enforced the compromise agreement instead of
rescinding it. Thus, it was error for the Court of Appeals to
apply Article 1191 of the New Civil Code which concerns
rescission of contract. Applicable here is Article 1159 which
enjoins compliance in good faith by the parties who entered
into a valid contract.16 Compromise agreements are contracts,
whereby the parties undertake reciprocal obligations to avoid
litigation, or put an end to one already commenced.17
WHEREFORE, the petition is GRANTED. The decision dated
April 28, 1995, and resolution dated September 11, 1995, of
the Court of Appeals in CA-G.R. SP No. 35271 are
REVERSED AND SET ASIDE. Accordingly, the orders dated
May 5, 1994, July 12, 1994 and September 1, 1994, of the
Regional Trial Court of Malolos, Bulacan, Branch 22, are
hereby declared NULL AND VOID. Private respondents are
ordered to cease and desist from disturbing the ownership and
possession by petitioners of the parcel of land covered by TCT
No. RT-6652. Costs against private respondents.
SO ORDERED.
Bellosillo, Mendoza, De Leon Jr., JJ, concur.
Buena, on official leave.
Footnotes
1
Rollo, pp. 31-39.
2
Id. at 61-69.

Id. at 70-80.
4
Id. at 81-83.
5
CA Records, pp. 5-7.
6
Id. at 42.
7
Rollo, p. 38.
8
Id. at 18.
9
National Electrification Administration vs. Court of Appeals,
G.R. No. 103585, 280 SCRA 199, 205 (1997).
10
Medina vs. City Sheriff, Manila, G.R. No. 113235m 276
SCRA 133, 140 (1997).
11
Ayala Corporation vs. Rosa-Diana Realty and Development
Corp., G.R. No. 134284, December 1, 2000, p. 13, citing Article
1159 of the New Civil Code, to wit: "Obligations arising from
contracts have the force of law between the contracting parties
and should be complied with in good faith."
12
Rollo, p. 37.
13
Id. at 112.
14
Ibid.
15
Art. 1191. The power to rescind obligations is implied in
reciprocal ones, in case one of the obligors should not comply
with what is incumbent upon him.
The injured party may choose between the fulfillment and the
rescission of the obligation, with the payment of damages in
either case. He may also seek rescission, even after he has
chosen fulfillment, if the latter should become impossible.
The court shall decree the rescission claimed, unless there be
just cause authorizing the fixing of a period.
This is understood to be without prejudice to the rights of third
persons who have acquired the thing, in accordance with
articles 1385 and 1388 and the Mortgage Law.
16
Art. 1159, Civil Code: Obligations arising from contracts have
the force of law between the contracting parties and should be
complied with in good faith.
17
Sanchez vs. Court of Appeals, G.R. No. 108947, 279 SCRA
647, 675 (1997).

4
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 142830
March 24, 2006
WILLIAM GOLANGCO CONSTRUCTION CORPORATION,
Petitioner,
vs.
PHILIPPINE COMMERCIAL INTERNATIONAL BANK *,
Respondent
DECISION
CORONA, J.:
The facts of this case are straightforward.1
William Golangco Construction Corporation (WGCC) and the
Philippine Commercial International Bank (PCIB) entered into a
contract for the construction of the extension of PCIB Tower II
(denominated as PCIB Tower II, Extension Project [project]) 2
on October 20, 1989. The project included, among others, the
application of a granitite wash-out finish 3 on the exterior walls
of the building.
PCIB, with the concurrence of its consultant TCGI Engineers
(TCGI), accepted the turnover of the completed work by
WGCC in a letter dated June 1, 1992. To answer for any defect
arising within a period of one year, WGCC submitted a
guarantee bond dated July 1, 1992 issued by Malayan
Insurance Company, Inc. in compliance with the construction
contract.4
The controversy arose when portions of the granitite wash-out
finish of the exterior of the building began peeling off and
falling from the walls in 1993. WGCC made minor repairs after
PCIB requested it to rectify the construction defects. In 1994,
PCIB entered into another contract with Brains and Brawn
Construction and Development Corporation to re-do the entire
granitite wash-out finish after WGCC manifested that it was
"not in a position to do the new finishing work," though it was
willing to share part of the cost. PCIB incurred expenses
amounting to P11,665,000 for the repair work.
PCIB filed a request for arbitration with the Construction
Industry Arbitration Commission (CIAC) for the reimbursement
of its expenses for the repairs made by another contractor. It
complained of WGCCs alleged non-compliance with their
contractual terms on materials and workmanship. WGCC
interposed a counterclaim for P5,777,157.84 for material cost
adjustment.
The CIAC declared WGCC liable for the construction defects in
the project.5 WGCC filed a petition for review with the Court of
Appeals (CA) which dismissed it for lack of merit. 6 Its motion
for reconsideration was similarly denied.7
In this petition for review on certiorari, WGCC raises this main
question of law: whether or not petitioner WGCC is liable for
defects in the granitite wash-out finish that occurred after the
lapse of the one-year defects liability period provided in Art. XI
of the construction contract.8
We rule in favor of WGCC.
The controversy pivots on a provision in the construction contract
referred to as the defects liability period:
ARTICLE XI GUARANTEE
Unless otherwise specified for specific works, and without prejudice to
the rights and causes of action of the OWNER under Article 1723 of
the Civil Code, the CONTRACTOR hereby guarantees the work

stipulated in this Contract, and shall make good any defect in


materials and workmanship which [becomes] evident within one
(1) year after the final acceptance of the work. The CONTRACTOR
shall leave the work in perfect order upon completion and present the
final certificate to the ENGINEER promptly.
If in the opinion of the OWNER and ENGINEER, the CONTRACTOR
has failed to act promptly in rectifying any defect in the work which
appears within the period mentioned above, the OWNER and the
ENGINEER may, at their own discretion, using the Guarantee Bond
amount for corrections, have the work done by another contractor at
the expense of the CONTRACTOR or his bondsmen.
However, nothing in this section shall in any way affect or relieve
the CONTRACTORS responsibility to the OWNER. On the
completion of the [w]orks, the CONTRACTOR shall clear away and
remove from the site all constructional plant, surplus materials, rubbish
and temporary works of every kind, and leave the whole of the [s]ite
and [w]orks clean and in a workmanlike condition to the satisfaction of
the ENGINEER and OWNER.9 (emphasis ours)
Although both parties based their arguments on the same stipulations,
they reached conflicting conclusions. A careful reading of the
stipulations, however, leads us to the conclusion that WGCCs
arguments are more tenable.
Autonomy of contracts
The autonomous nature of contracts is enunciated in Article 1306 of
the Civil Code.
Article 1306. The contracting parties may establish such stipulations,
clauses, terms and conditions as they may deem convenient, provided
they are not contrary to law, morals, good customs, public order, or
public policy.
Obligations arising from contracts have the force of law between the
parties and should be complied with in good faith. 10 In characterizing
the contract as having the force of law between the parties, the law
stresses the obligatory nature of a binding and valid agreement.
The provision in the construction contract providing for a defects
liability period was not shown as contrary to law, morals, good
customs, pubic order or public policy. By the nature of the obligation in
such contract, the provision limiting liability for defects and fixing
specific guaranty periods was not only fair and equitable; it was also
necessary. Without such limitation, the contractor would be expected to
make a perpetual guarantee on all materials and workmanship.
The adoption of a one-year guarantee, as done by WGCC and PCIB,
is established usage in the Philippines for private and government
construction contracts.11 The contract did not specify a different period
for defects in the granitite wash-out finish; hence, any defect therein
should have been brought to WGCCs attention within the one-year
defects liability period in the contract.
We cannot countenance an interpretation that undermines a
contractual stipulation freely and validly agreed upon. The courts will
not relieve a party from the effects of an unwise or unfavorable
contract freely entered into.12
[T]he inclusion in a written contract for a piece of work [,] such as the
one in question, of a provision defining a warranty period against
defects, is not uncommon. This kind of a stipulation is of particular
importance to the contractor, for as a general rule, after the lapse of
the period agreed upon therein, he may no longer be held accountable
for whatever defects, deficiencies or imperfections that may be
discovered in the work executed by him.13
Interpretation of contracts
To challenge the guarantee period provided in Article XI of the contract,
PCIB calls our attention to Article 62.2 which provides:
62.2 Unfulfilled Obligations
Notwithstanding the issue of the Defects Liability Certificate[,] the
Contractor and the Owner shall remain liable for the fulfillment of
any obligation[,] incurred under the provisions of the Contract
prior to the issue of the Defects Liability Certificate[,] which
remains unperformed at the time such Defects Liability Certificate
is issued[. And] for the purpose of determining the nature and extent

5
of any such obligation, the Contract shall be deemed to remain in force
between the parties of the Contract. (emphasis ours)
The defects in the granitite wash-out finish were not the "obligation"
contemplated in Article 62.2. It was not an obligation that remained
unperformed or unfulfilled at the time the defects liability certificate was
issued. The alleged defects occurred more than a year from the final
acceptance by PCIB.
An examination of Article 1719 of the Civil Code is enlightening:
Art. 1719. Acceptance of the work by the employer relieves the
contractor of liability for any defect in the work, unless:
(1) The defect is hidden and the employer is not, by his special
knowledge, expected to recognize the same; or
(2) The employer expressly reserves his rights against the contractor
by reason of the defect.
The lower courts conjectured that the peeling off of the granitite washout finish was probably due to "defective materials and workmanship."
This they characterized as hidden or latent defects. We, however, do
not agree with the conclusion that the alleged defects were hidden.
First, PCIBs team of experts14 (who were specifically employed to
detect such defects early on) supervised WGCCs workmanship.
Second, WGCC regularly submitted progress reports and photographs.
Third, WGCC worked under fair and transparent circumstances. PCIB
had access to the site and it exercised reasonable supervision over
WGCCs work. Fourth, PCIB issued several "punch lists" for WGCCs
compliance before the issuance of PCIBs final certificate of
acceptance. Fifth, PCIB supplied the materials for the granitite washout finish. And finally, PCIBs team of experts gave their concurrence to
the turnover of the project.
The purpose of the defects liability period was precisely to give PCIB
additional, albeit limited, opportunity to oblige WGCC to make good
any defect, hidden or otherwise, discovered within one year.
Contrary to the CAs conclusion, the first sentence of the third
paragraph of Article XI on guarantee previously quoted did not operate
as a blanket exception to the one-year guarantee period under the first
paragraph. Neither did it modify, extend, nullify or supersede the
categorical terms of the defects liability period.
Under the circumstances, there were no hidden defects for which
WGCC could be held liable. Neither was there any other defect for
which PCIB made any express reservation of its rights against WGCC.
Indeed, the contract should not be interpreted to favor the one who
caused the confusion, if any. The contract was prepared by TCGI for
PCIB.15
WHEREFORE, the petition is hereby GRANTED. The decision of the
Court of Appeals in CA-G.R. SP No. 41152 is ANNULED and SET
ASIDE.
SO ORDERED.
RENATO C. CORONA
Associate Justice
WE CONCUR:
REYNATO S. PUNO
Associate Justice
Chairperson
ANGELINA SANDOVALGUTIERREZ
Associate Justice

ADOLFO S.
AZCUNA
Asscociate Justice

CANCIO C. GARCIA
Associate Justice
AT T E S TAT I O N
I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion
of the Courts Division.
REYNATO S. PUNO
Associate Justice
Chairperson, Second Division
C E R TI F I CATI O N

Pursuant to Section 13, Article VIII of the Constitution and the Division
Chairpersons Attestation, I certify that the conclusions in the above
decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Courts Division.
ARTEMIO V. PANGANIBAN
Chief Justice
Footnotes
*
Now known as Equitable PCI Bank.
1
CA Decision, rollo, pp. 81-83.
2
The extension of PCIB Tower II consist of the fifth up to and including
the twenty-first floor. A supplement to the contract included
construction work up to and including the twenty-third roof deck level.
3
The CA referred to this as "pebble washout finish" though both parties
already settled that the subject of the controversy was actually the
"granitite wash-out finish."
4
PCIB Tower II Extension Project: Contract and General Conditions
(General Construction Work), rollo, p. 125.
5
Decision in CIAC Case No. 07-95, rollo, p. 106.
6
Penned by Associate Justice Wenceslao I. Agnir, Jr. and concurred in
by Associate Justices Ramon Mabutas, Jr. and Hilarion L. Aquino of
the Tenth Division; rollo, pp. 80-92.
7
Penned by Associate Justice Wenceslao I. Agnir Jr. and concurred in
by Associate Justices Ramon Mabutas, Jr. and Hilarion L. Aquino of
the former Tenth Division of the Court of Appeals; rollo, p. 94.
8
Petition, Rollo, p. 21. In conjunction with the main issue are the
following:
xxx xxx xxx
2. Whether or not the [CA] and the CIAC Arbitral Tribunal unjustly failed
to observe the rule in evidence that respondent PCIB had the burden
of proof to prove its claims of alleged defects in the granitite washout
finish, which respondent PCIB failed dismally to discharge; and
3. Whether or not the [CA] and the CIAC Arbitral Tribunal unjustly failed
to observe the standard of substantial evidence required in arbitration
cases.
9
PCIB Tower II Extension Project: Contract and General Conditions
(General Construction Work), rollo, pp. 123-124.
10
Article 1159, Civil Code.
11
See Uniform General Conditions of Contract for Government
Construction (CIAP Document 101); Interim Uniform General
Conditions of Contract for Private Construction (CIAP Document 102).
12
Philippine Aluminum Wheels, Inc. v. Fasgi Enterprises, Inc., 396 Phil.
893, 913 (2000); Villareal v. Ramirez,406 Phil. 145, 154 (2003) citing
Esguerra v. Court of Appeals, 335 Phil. 58, 69 (1997); Sanchez v.
Court of Appeals, 345 Phil. 155, 190-191 (1997).
13
Philippine American General Insurance Co. v. Court of Appeals, 199
Phil. 248 (1982).
14
PCIBs Engineer and Project Manager was TCGI. Its architect was
Leandro V. Locsin & Partners.
15
Rollo, p. 110.

6
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 179105
July 26, 2010
METROPOLITAN BANK AND TRUST COMPANY, Petitioner,
vs.
LARRY MARIAS, Respondent.
DECISION
NACHURA, J.:
This is a petition for review on certiorari under Rule 45 of the
Rules of Court, seeking to annul and set aside the Court of
Appeals (CA) Decision1 dated July 31, 2007, affirming with
modification the Regional Trial Court (RTC) decision2 dated
October 14, 2004.
The factual and procedural antecedents are as follows:
Sometime in April 1998, respondent Larry Marias returned to
the Philippines from the United States of America. He opened
a personal dollar savings account3 by depositing
US$100,000.00 with petitioner Metropolitan Bank and Trust
Company. On April 13, 1998, respondent obtained a loan from
petitioner in the amount of P2,300,000.00, evidenced by
Promissory Note No. 355873.4 From the initial deposit of
US$100,000.00, respondent withdrew5US$67,227.95,6 then
deposited it under Account No. 0-26400171-6 (Foreign
Currency Deposit [FCD] No. 505671),7which he used as
security8 for the P2,300,000.00 loan.
Respondent subsequently opened two more foreign currency
accounts Account No. 0-26400244-5 (FCD No. 505688) 9
and Account No. 0-264-00357-3 (FCD No. 739809) 10
depositing therein US$25,000.00 and US$17,000.00,
respectively. On April 30, 1999, respondent obtained a second
loan of P645,150.00,11 secured12 by Account No. 0-264-003573 (FCD No. 739809).
When he inquired about his dollar deposits, respondent
discovered that petitioner made deductions against the
formers accounts. On May 31, 1999, respondent, through his
counsel, demanded from petitioner a proper and complete
accounting of his dollar deposits, and the restoration of his
deposits to their proper amount without the deductions. 13 In
response, petitioner explained that the deductions made from
respondents dollar accounts were used to pay the interest due
on the latters loan with the former. These deductions,
according to petitioner, were authorized by respondent through
the Deeds of Assignment with Power of Attorney voluntarily
executed by respondent.14
Unsatisfied, and believing that the deductions were
unauthorized, respondent commenced an action for Damages
against petitioner and its Kabihasnan, Paraaque City Branch
Manager Expedito Fernandez (Fernandez) before the RTC,
Las Pias City. The case was docketed as Civil Case No. 990172 and was raffled to Branch 255. While admitting the
existence of the P2,300,000.00 and P645,150.00 loans,
respondent claimed that when he signed the loan documents,
they were all in blank and they were actually filled up by
petitioner. Aside from the complete accounting of his dollar
accounts and the restoration of the true amounts of his
deposits, respondent sought the payment of P400,000.00 as

moral damages, P100,000.00 as exemplary damages, and


P100,000.00 as attorneys fees.15
On its part, petitioner insisted that respondent freely and
voluntarily signed the loan documents. While admitting the full
payment of respondents P2,300,000.00 and P645,150.00
loans, petitioner claimed that the payments were made using
the formers US$67,227.95, US$25,000.00, and US$17,000.00
time deposits. Accordingly, there was nothing to account for
and restore. By way of counterclaim, petitioner prayed for the
payment of P200,000.00 as attorneys fees, P1,000,000.00 as
moral damages, and P500,000.00 as exemplary damages.16
As no amicable settlement was reached, trial on the merits
ensued.
On October 14, 2004, the RTC rendered a decision in favor of
respondent, the dispositive portion of which reads:
WHEREFORE, the foregoing considered, judgment is hereby
rendered in favor of plaintiff Larry Mari[]as, and against the
defendants Metropolitan Bank and Trust Company and
Expedito Fernandez, ordering the said defendants to account
for the dollar deposits of the plaintiff in the amounts of
US$30,000.00 and US$25,000.00, respectively, and then
return the same, including the interests due thereon reckoned
from 31 May 1999 until fully paid.
Likewise, the defendants are hereby directed to pay to the
herein plaintiff the following amounts, to wit:
1. P100,000.00 in moral damages;
2. P50,000.00 in exemplary damages;
3. P50,000.00 as and by way of attorneys fees; and
4. Costs of suit.
SO ORDERED.17
The RTC sustained the validity and regularity of the loan
documents signed by respondent, and consequently the
existence of the P2,300,000.00 and P645,150.00 loans
obtained from petitioner. Acknowledging the full payment of
both loans, the trial court found that the payments were made
from respondents foreign currency deposits, particularly
Account Numbers 0-26400171-6 (FCD No. 505671) and 0264-00357-3 (FCD No. 739809), amounting to US$67,227.95
and US$17,000.00, respectively. There is no doubt that
respondent specifically assigned these accounts to secure the
payment of his loans pursuant to the Deeds of Assignment with
Power of Attorney. Hence, the deductions made from such
accounts were valid. However, the RTC found that petitioner
should account for and eventually return the US$30,000.00
and US$25,000.00 deposits of respondent since they were not
assigned to answer for the latters loans, and that any
deductions made from these accounts were, therefore, illegal.
Consequently, petitioner was made to answer for damages
suffered by respondent.18 Being the petitioners Kabihasnan
Branch Manager, Fernandez was declared solidarily liable with
petitioner.
On appeal, the CA modified the RTC decision by absolving
Fernandez from liability. The appellate court held that
Fernandez could not be made to answer for acts done in the
performance of his duty absent any showing that he assented
to patently unlawful acts of the corporation or was guilty of bad
faith or gross negligence in directing its affairs, or that he
agreed to hold himself personally and solidarily liable with the
corporation.19 No proof was adduced in this regard.

7
Hence, the instant petition raising the following issues:
1. WHETHER OR NOT THE HONORABLE COURT OF
APPEALS ERRED IN ORDERING PETITIONER TO
ACCOUNT FOR AND RETURN TO RESPONDENT THE
SUMS OF US$30,000.00 AND US$25,000.00.
2. WHETHER OR NOT THE HONORABLE COURT OF
APPEALS ERRED IN HOLDING PETITIONER LIABLE TO
RESPONDENT FOR MORAL AND EXEMPLARY DAMAGES,
AS WELL AS ATTORNEYS FEES AND COSTS OF SUIT.20
Petitioner assails the CA Decision affirming the formers
culpability for making unlawful deductions from respondents
dollar accounts without the latters consent. Additionally, it
questions the award of moral and exemplary damages, as well
as attorneys fees.
We agree with the CAs factual findings as to the deposits and
withdrawals made and loans obtained by respondent. We do
not, however, agree with its conclusion that petitioner
absolutely lacked the authority to make deductions from
respondents deposits for the payment of his outstanding
obligations.
It is apt to stress the well-settled principle that factual findings
of the trial court, affirmed by the CA, are binding and
conclusive upon this Court.21 In the absence of any showing
that the findings complained of are totally devoid of support in
the evidence on record, or that they are so glaringly erroneous
as to constitute serious abuse of discretion, such findings must
stand.22 The Court is not a trier of facts, its jurisdiction being
limited to reviewing only errors of law that may have been
committed by the lower courts.23 It is not the function of the
Court to analyze or weigh all over again the evidence or
premises supportive of such factual determination.24 The law
creating the CA was intended mainly to take away from the
Supreme Court the work of examining the evidence, so that it
may confine its task to the determination of questions which do
not call for the reading and study of transcripts containing the
testimony of witnesses.25
In the present case, we find no justification to deviate from the
factual findings of the trial court and the appellate court.
Petitioner has utterly failed to convince us that the assailed
findings are devoid of basis or are not supported by substantial
evidence.
It is noteworthy that respondent opened four accounts with petitioner:
1) Account No. 2264-00145-0 for US$100,000.00; 2) Account No. 026400171-6 (FCD No. 505671) for US$67,227.95; 3) Account No. 026400244-5 (FCD No. 505688) for US$25,000.00; and 4) Account No.
0-264-00357-3 (FCD No. 739809) for US$17,000.00. Admittedly,
respondent withdrew $70,000.00 from Account No. 2264-00145-0,
leaving a balance of $30,000.00.
It is likewise undisputed that respondent obtained two separate loans
from petitioner in amounts of P2,300,000.00 and P645,150.00. These
were evidenced by promissory notes and secured by respondents two
dollar accounts Account Numbers 0-26400171-6 (FCD No. 505671)
and 0-264-00357-3 (FCD No. 739809) for US$67,227.95 and
US$17,000.00, respectively. Respondents first loan of P2,300,000.00,
obtained on April 13, 1998, was payable on April 8, 1999; while the
second loan of P645,150.00, obtained on April 30, 1999, was payable
on April 24, 2000. Records show that the first loan was paid on April
21, 1999, with the payment therefor taken from Account No. 026400171-6. The second loan, on the other hand, was paid on May 10,
1999, out of respondents Account No. 0-264-00357-3. It should be
clarified, though, that these payments referred only to the payment of
the principal (P2,300,000.00 and P645,150.00) of respondents loans,

exclusive of interests stipulated in the promissory notes executed by


the latter.
Aside from obligating himself to pay P2,300,000.00 as principal,
respondent also agreed to pay interest at the rate of 22.929% per
annum (not monthly) from April 13, 1998 until full payment. As
respondent made full payment of the principal on April 21, 1999,
respondent was also obliged to pay interest until that date. As to the
P645,150.00 loan, respondent agreed to pay interest at the rate of
16.987% per annum.
Respondent later discovered that his accounts with petitioner were all
depleted. Upon inquiry from petitioner, it explained that pursuant to the
Deeds of Assignment with Power of Attorney executed by respondent,
it deducted from respondents accounts the interest due on his
loans.1avvphi1
Contrary to the conclusions of the RTC and the CA, we find that
petitioner is empowered to make lawful deductions from respondents
accounts for such amounts due it. This is authorized in the Promissory
Notes and Deeds of Assignment with Power of Attorney executed by
respondent, to wit:
I/We hereby give the Bank a general lien upon, and/or right of set-off
and/or right to hold and/or apply to the loan account, or any claim of
the Bank against any of us, all my/our rights, title and interest in and to
the balance of every deposit account, money, negotiable instruments,
commercial papers, notes, bonds, stocks, dividends, securities,
interest, credits, chose in action, claims, demands, funds or any
interest in any thereof, and in any other property, rights and interest of
any of us or any evidence thereof, which have been, or at any time
shall be delivered to, or otherwise come into the possession, control or
custody of the Bank or any of its subsidiaries, affiliates, agents or
correspondents now or anytime hereafter, for any purpose, whether or
not accepted for the purpose or purposes for which they are delivered
or intended. For this purpose, I/We hereby appoint the Bank as my/our
irrevocable Attorney-in-fact with full power of substitution/delegation to
sign or endorse any and all documents and perform any and all acts
and things required or necessary in the premises.26
Effective upon default in the payment of CREDIT, or any part thereof,
the ASSIGNOR hereby grants to the ASSIGNEE, full power and
authority to collect/withdraw the deposit/proceeds/receivables/
investments/securities and apply the collection/deposit to the payment
of the outstanding principal, interest and other charges on the CREDIT.
For this purpose, the ASSIGNOR hereby names, constitutes and
appoints the ASSIGNEE as his/its true and lawful Attorney-in-Fact, with
powers of substitution, to ask, demand, collect, sue for, recover and
receive the deposit/proceeds/receivables/investments/securities or any
part thereof, as well as to encash, negotiate and endorse checks,
drafts and other commercial papers/instruments received by and paid
to the ASSIGNEE, incident thereto and to execute all instruments and
agreements connected therewith. A written Certification by the
ASSIGNEE of the amount of its claims from the ASSIGNOR and/or the
BORROWER shall be conclusive on the ASSIGNOR and/or the
BORROWER absent manifest error.27
As provided in Article 1159 of the Civil Code, "obligations arising from
contract have the force of law between the contracting parties and
should be complied with in good faith." Verily, parties may freely
stipulate their duties and obligations which perforce would be binding
on them. Not being repugnant to any legal proscription, the agreement
entered into between petitioner and respondent must be respected and
given the force of law between them.28
Upon the maturity of the first loan on April 8, 1999, petitioner was
authorized to automatically deduct, by way of offsetting, respondents
outstanding debt (including interests) to it from the latters deposit
accounts and their accumulated interest. Respondent did not object to
the deduction made from the proceeds of Account No. 0-26400171-6,
but would limit such deduction only to the payment of the principal of
P2,300,000.00. However, it should be borne in mind that in addition to
the authority to effect the said deduction for the principal loan amount,

8
petitioner was authorized to make further deductions for interest
payments at the rate of 22.929% per annum until April 21, 1999.
With respect to the second loan, barely a month after the execution of
the promissory note and definitely prior to the maturity date,
respondent already paid the principal of P645,150.00 out of the
deposited amount in Account No. 0-264-00357-3. Pursuant to the
promissory note, respondent agreed to pay interest at the rate of
16.987% per annum. While it is conceded that petitioner had the right
to offset the unpaid interests due it against the deposits of respondent,
the issue of whether it acted judiciously is an entirely different matter.29
As business affected with public interest, and because of the nature of
their functions, banks are under obligation to treat the accounts of their
depositors with meticulous care, always having in mind the fiduciary
nature of their relationship.30
Pursuant to the above disquisition, it is clear that despite such
authority, petitioner should still account for whatever excess deductions
made on respondents deposits and return to respondent such
amounts taken from him. To be sure, respondent had interest-earning
deposits with petitioner in accordance with their agreement. On the
other hand, after respondent paid the principal on April 21, 1999 and
May 10, 1999 on the two loans which he obtained from petitioner, the
latter had the authority to make deductions for the payment of interest
as stipulated in respondents promissory notes.
When we consider the total amount of respondents deposits in his
dollar accounts inclusive of interests earned vis--vis his total
obligations to petitioner, we find that the total depletion of his accounts
is not warranted. Hence, we find no reason to disturb the CA
conclusion on the award of damages. As aptly explained in Bank of the
Philippine Islands v. Court of Appeals:
For the above reasons, the Court finds no reason to disturb the award
of damages granted by the CA against petitioner. This whole incident
would have been avoided had petitioner adhered to the standard of
diligence expected of one engaged in the banking business. A
depositor has the right to recover reasonable moral damages even if
the banks negligence may not have been attended with malice and
bad faith, if the former suffered mental anguish, serious anxiety,
embarrassment and humiliation. Moral damages are not meant to
enrich a complainant at the expense of defendant. It is only intended to
alleviate the moral suffering she has undergone. The award of
exemplary damages is justified, on the other hand, when the acts of
the bank are attended by malice, bad faith or gross negligence. The
award of reasonable attorneys fees is proper where exemplary
damages are awarded. It is proper where depositors are compelled to
litigate to protect their interest.31
WHEREFORE, premises considered, the Court of Appeals Decision
dated July 31, 2007 is hereby AFFIRMED with MODIFICATION.
Petitioner is ordered to account for respondents dollar deposits
inclusive of interests, subject to its right to deduct from the said
deposits his loan obligations amounting to P2,300,000.00, plus interest
at 22.929% per annum until full payment on April 21, 1999; and
P645,150.00, plus interest at 16.987% per annum until full payment on
May 10, 1999. After such accounting, petitioner shall restore to
respondent whatever excess amounts may have been deducted from
such deposits, together with the earned interests.
All other aspects of the assailed decision STAND.
SO ORDERED.
ANTONIO EDUARDO B. NACHURA
Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson
DIOSDADO M. PERALTA
Associate Justice

ROBERTO A. ABAD
Associate Justice

JOSE CATRAL MENDOZA


Associate Justice

AT T E S TAT I O N
I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion
of the Courts Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division
C E R TI F I CATI O N
Pursuant to Section 13, Article VIII of the Constitution and the Division
Chairperson's Attestation, I certify that the conclusions in the above
Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Courts Division.
RENATO C. CORONA
Chief Justice
Footnotes
1
Penned by Associate Justice Myrna Dimaranan Vidal, with Associate Justices
Jose L. Sabio, Jr. and Jose C. Reyes, Jr., concurring; rollo, pp. 32-42.
2
Penned by Judge Raul Bautista Villanueva; records, pp. 425-439.
3
Covered by Account No. 2264-00145-0; id. at 137.
4
Id. at 138.
5
Evidenced by the Debit Account Slip signed by respondent; id. at 246.
6
Or US$70,000.00.
7
Records, p. 248.
8
Evidenced by the Deed of Assignment with Power of Attorney; id. at 140.
9
Id. at 142.
10
Id. at 256.
11
Evidenced by Promissory Note No. 355961; id. at 252.
12
Evidenced by Deed of Assignment with Power of Attorney; id. at 254.
13
Id. at 143.
14
Id. at 258.
15
Id. at 2-13.
16
Id. at 38-52.
17
Supra note 2, at 439.
18
Records, pp. 10-13.
19
Supra note 1.
20
Rollo, p. 18.
21
Citibank, N.A. v. Jimenez, Sr., G.R. No. 166878, December 18, 2007, 540
SCRA 573, 581.
22
Philippine National Bank v. Pike, G.R. No. 157845, September 20, 2005, 470
SCRA 328, 340.
23
Prudential Bank v. Lim, G.R. No. 136371, November 11, 2005, 474 SCRA 485,
491.
24
Id.
25
Citibank, N.A. v. Jimenez, Sr., supra note 21, at 581, citing Sta. Ana, et al. v.
Hernandez, 125 Phil. 61 (1966).
26
Records, pp. 138 and 252.
27
Id. at 140 and 254.
28
National Sugar Trading v. Philippine National Bank, 444 Phil. 599 (2003).
29
Bank of the Philippine Islands v. Court of Appeals, G.R. No. 136202, January
25, 2007, 512 SCRA 620; Associated Bank v. Tan, 487 Phil. 512 (2004).
30
Bank of the Philippine Islands v. Court of Appeals, supra, at 638-639.
31
Id. at 641.

9
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 185066
October 2, 2009
PHILIPPINE CHARTER INSURANCE CORPORATION,
Petitioner,
vs.
PHILIPPINE NATIONAL CONSTRUCTION CORPORATION,
Respondent.
RESOLUTION
BRION, J.:
Petitioner Philippine Charter Insurance Corporation (PCIC)
submits the present motion for the reconsideration 1 of our
Resolution dated December 17, 2008, which denied due
course to its petition for review on certiorari.2 It seeks to
reinstate the petition and effect a reversal of the Court of
Appeals (CA) Decision3 and Resolution4 dated January 7, 2008
and October 29, 2008, respectively, in CA-G.R. CV No. 86948.
In its petition, the petitioner imputes reversible error on the
appellate court for ruling that it is liable under PCIC Bond No.
27547 and under PCIC Bond No. 27546, as the latter bond
was not covered by the complaint for collection of sum of
money filed by respondent Philippine National Construction
Corporation (PNCC).5
The facts, as drawn from the records, are briefly summarized
below.
PNCC is engaged in the construction business and tollway
operations. On October 16, 1997, PNCC conducted a public
bidding for the supply of labor, materials, tools, supervision,
equipment, and other incidentals necessary for the fabrication
and delivery of 27 tollbooths to be used for the automation of
toll collection along the expressways. Orlando Kalingo
(Kalingo) won in the bidding and was awarded the contract.
On November 13, 1997, PNCC issued in favor of Kalingo
Purchase Order (P.O.) No. 71024L for 25 units of tollbooths for
a total of P2,100,000.00, and P.O. No. 71025L for two units of
tollbooths amounting to P168,000.00. These issuances were
subject to the condition, among others, that each P.O. shall be
covered by a surety bond equivalent to 100% of the total down
payment (50% of the total cost reflected on the P.O.), and that
the surety bond shall continue in full force until the supplier
shall have complied with all the undertakings and covenants to
the full satisfaction of PNCC.
Kalingo, hence, posted surety bonds Surety Bond Nos.
27546 and 27547 issued by the PCIC and whose terms and
conditions read:
Surety Bond No. 27546
To supply labor, materials, tools, supervision equipment, and
other incidentals necessary for the fabrication and delivery of
Two (2) Units Toll Booth at San Fernando Interchange SB
Entry as per Purchase Order No. 71025L, copy of which is
attached as Annex "A." This bond also guarantees the
repayment of the down payment or whatever balance thereof
in the event of failure on the part of the Principal to finish the
project due to his own fault.
It is understood that the liability of the Surety under this bond
shall in no case exceed the sum of P84,000.00, Philippine
Currency.6

Surety Bond No. 27547


To supply labor, materials, tools, supervision equipment, and
other incidentals necessary for the fabrication and delivery of
Twenty-five (25) Units Toll Booth at designated Toll Plaza as
per Purchase Order No. 71024L, copy of which is attached as
Annex "A." This bond also guarantees the repayment of the
down payment or whatever balance thereof in the event of
failure on the part of the Principal to finish the project due to his
own fault.
It is understood that the liability of the Surety under this bond
shall in no case exceed the sum of P1,050,000.00, Philippine
Currency.7
To illustrate, the PCIC surety bonds are in the amounts
corresponding to down payments on each P.O., as follows:
Surety
Bond
No.

Purchase
Order

Units
Cove
red

Total
Cost

Surety
Amount(eq
uivalent to
50% down
payment)

Bond No.
27547

P.O. No.
71024L

25

P2,100,
000

P1,050,000

Bond No.
27546

P.O. No.
71025L

P
168,000

P 84,000

Both surety bonds also contain the following conditions: (1) the
liability of PCIC under the bonds expires on March 16, 1998;
and (2) a written extrajudicial demand must first be
tendered to the surety, PCIC, within 15 days from the
expiration date; otherwise PCIC shall not be liable
thereunder and the obligee waives the right to claim or file
any court action to collect on the bond. The following
stipulation appears in the last paragraph of these bonds:
The liability of PHILIPPINE CHARTER INSURANCE
CORPORATION under this bond will expire on March 16,
1998. Furthermore, it is hereby agreed and understood that
PHILIPPINE CHARTER INSURANCE CORPORATIONwill
not be liable for any claim not presented to it in writing
within FIFTEEN (15) DAYS from the expiration of this bond,
and that the Obligee hereby waives its right to claim or file
any court action against the Surety after the termination of
FIFTEEN (15) DAYS from the time its cause of action
accrues.8 (Emphasis supplied.)
PNCC released two checks to Kalingo representing the down
payment of 50% of the total project cost, which were properly
receipted by Kalingo.9 Kalingo in turn submitted the two PCIC
surety bonds securing the down payments, which bonds were
accepted by PNCC.
On March 3, 4, and 5, 1998, Kalingo made partial/initial
delivery of four units of tollbooths under P.O. No. 71024L.
However, the tollbooths delivered were incomplete or were not
fabricated according to PNCC specifications. Kalingo failed to
deliver the other 23 tollbooths up to the time of filing of the
complaint; despite demands, he failed and refused to comply
with his obligation under the POs.
On March 9, 1998, six days before the expiration of the surety
bonds and after the expiration of the delivery period provided
for under the award, PNCC filed a written extrajudicial claim
against PCIC notifying it of Kalingos default and demanding
the repayment of the down payment on P.O. No. 71024L as

10
secured by PCIC Bond No. 27547, in the amount of
P1,050,000.00. The claim went unheeded despite repeated
demands. For this reason, on April 24, 2001, PNCC filed with
the Regional Trial Court (RTC), Mandaluyong City a complaint
for collection of a sum of money against Kalingo and PCIC.10
PNCC's complaint against PCIC called solely on PCIC Bond
No. 27547; it did not raise or plead collection under PCIC Bond
No. 27546 which secured the down payment of P84,000.00 on
P.O. No. 71025L.
PCIC, in its answer, argued that the partial delivery of four out
of the 25 units of tollbooth by Kalingo under P.O. No. 71024L
should reduce Kalingo's obligation.
The RTC, by Decision of October 31, 2005, ruled in favor of
PNCC and ordered PCIC and Kalingo to jointly and severally
pay the latter P1,050,000.00, representing the value of PCIC
Bond No. 27547, plus legal interest from last demand, and
P50,000.00 as attorney's fees. Reconsideration of the trial
court's decision was denied. The trial court made no ruling on
PCICs liability under PCIC Bond No. 27546, a claim that was
not pleaded in the complaint.
On appeal, the CA, by Decision11 of January 7, 2008, held that
the RTC erred in ruling that PCIC's liability is limited only to the
payment of P1,050,000.00 under PCIC Bond No. 27547 which
secured the down payment on P.O. No. 71024L. The appellate
court held that PCIC, as surety, is liable jointly and severally
with Kalingo for the amount of the two bonds securing the two
POs to Kalingo; thus, the CA also held PCIC liable under PCIC
Bond No. 27546 which secured the P84,000.00 down payment
on P.O. No. 71025L.
Reconsideration having been denied by the appellate court in
its Resolution12 of October 29, 2008, the PCIC lodged a
petition for review on certiorari13 before this Court.
The Court, by Resolution of December 17, 2008, denied due
course to the petition.14 Hence, the PCIC filed the present
motion for reconsideration submitting the following issues for
our resolution:
I. WHETHER THE APPELLATE COURT ERRED IN RULING
THAT PCIC SHOULD ALSO BE HELD LIABLE UNDER BOND
NO. 27546, COLLECTION UNDER WHICH WAS NOT
SUBJECT OF RESPONDENT PNCC's COMPLAINT FOR
COLLECTION OF SUM OF MONEY;
II. WHETHER THE CHECKS ISSUED IN "1997" BY
RESPONDENT PNCC TO KALINGO WERE GIVEN 10
MONTHS PRIOR TO THE AWARD OF THE PROJECT AND
AMOUNTS TO CONCEALMENT OF MATERIAL FACT
VITIATING THE SURETY BONDS ISSUED BY THE
PETITIONER; and
III. WHETHER THE APPELLATE COURT ERRED IN
HOLDING PETITIONER PCIC LIABLE FOR ATTORNEY'S
FEES.
The second issue is a factual matter not proper in proceedings
before this Court. The PCICs position that the checks were
issued 10 months prior to the award had already been rejected
by both the RTC and the CA; both found that the year "1997"
appearing on the checks was a mere typographical error which
should have been written as "1998." 15 Consequently, we shall
no longer discuss the PCIC's allegation of material
concealment; the factual findings of the RTC, as affirmed by
the CA, are conclusive on us.

Our consideration shall focus on the remaining two issues.


The PCIC presents, as its first issue, the argument that "[w]hen
the Court of Appeals rendered judgment on Bond No. 27546,
which was not subject of respondent's complaint, on the
ground that respondent was incorrect in not filing suit for Bond
No. 27546, the Court of Appeals virtually acted as lawyer for
respondent."16
We find the PCICs position meritorious.
The issue before us calls for a discussion of a courts basic
appreciation of allegations in a complaint. The fundamental
rule is that reliefs granted a litigant are limited to those
specifically prayed for in the complaint; other reliefs prayed for
may be granted only when related to the specific prayer(s) in
the pleadings and supported by the evidence on record.
Necessarily, any such relief may be granted only where a
cause of action therefor exists, based on the complaint, the
pleadings, and the evidence on record.
Section 2, Rule 2 of the 1997 Rules of Civil Procedure defines
a cause of action as the act or omission by which a party
violates the right of another. It is the delict or the wrongful act
or omission committed by the defendant in violation of the
primary right of the plaintiff.17 Its essential elements are as
follows:
1. A right in favor of the plaintiff by whatever means and under
whatever law it arises or is created;
2. An obligation on the part of the named defendant to respect
or not to violate such right; and
3. Act or omission on the part of such defendant in violation of
the right of the plaintiff or constituting a breach of the obligation
of the defendant to the plaintiff for which the latter may
maintain an action for recovery of damages or other
appropriate relief.18
Only upon the occurrence of the last element does a cause of
action arise, giving the plaintiff the right to maintain an action in
court for recovery of damages or other appropriate relief.19
Each of the surety bonds issued by PCIC created a right in
favor of PNCC to collect the repayment of the bonded down
payments made on the two POs if contractor Kalingo defaults
on his obligation under the award to fabricate and deliver to
PNCC the tollbooths contracted for. Concomitantly, PCIC, as
surety, had the obligation to comply with its undertaking under
the bonds to repay PNCC the down payments the latter made
on the POs if Kalingo defaults.
It must be borne in mind that each of the two bonds is a distinct
contract by itself, subject to its own terms and conditions. They
each contain a provision that the surety, PCIC, will not be liable
for any claim not presented to it in writing within 15 days from
the expiration of the bond, and that the obligee (PNCC)
thereby waives its right to claim or file any court action against
the surety (PCIC) after the termination of 15 days from the time
its cause of action accrues. This written claim provision
creates a condition precedent for the accrual of: (1) PCICs
obligation to comply with its promise under the particular
bond, and of (2) PNCC's right to collect or sue on these
bonds. PCICs liability to repay the bonded down
payments arises only upon PNCC's filing of a written claim
notifying PCIC of principal Kalingos default and
demanding collection under the bond within 15 days
from the bonds expiry date. PNCCs failure to comply with

11
the written claim provision has the effect of extinguishing
PCICs liability and constitutes a waiver by PNCC of the
right to claim or sue under the bond.
Liability on a bond is contractual in nature and is ordinarily
restricted to the obligation expressly assumed therein. We
have repeatedly held that the extent of a surety's liability is
determined only by the clause of the contract of suretyship and
by the conditions stated in the bond. It cannot be extended by
implication beyond the terms of the contract.20 Equally basic is
the principle that obligations arising from contracts have the
force of law between the parties and should be complied with
in good faith.21 Nothing can stop the parties from establishing
stipulations, clauses, terms and conditions as they may deem
convenient, provided they are not contrary to law, morals, good
customs, public order, or public policy.22 Here, nothing in the
records shows the invalidity of the written claim provision;
therefore, the parties must strictly and in good faith comply with
this requirement.
The records reveal that PNCC complied with the written claim
provision, but only with respect to PCIC Bond No. 27547.
PNCC filed an extrajudicial demand with PCIC informing it of
Kalingos default under the award and demanding the
repayment of the bonded down payment on P.O. No. 71024L.
Conversely, nothing in the records shows that PNCC ever
complied with the provision with respect to PCIC Bond No.
27546. Why PNCC complied with the written claim provision
with respect to PCIC Bond No. 27547, but not with respect to
PCIC Bond No. 27546, has not been explained by PNCC.
Under the circumstances, PNCCs cause of action with
respect to PCIC Bond No. 27546 did not and cannot exist,
such that no relief for collection thereunder may be validly
awarded.
Hence, the trial courts decision finding PCIC liable solely
under PCIC Bond No. 27547 is correct not only because
collection under the other bond, PCIC Bond No. 27546,
was not raised or pleaded in the complaint, but for the
more important reason that no cause of action arose in
PNCCs favor with respect to this bond. Consequently, the
appellate court was in error for including liability under
PCIC Bond No. 27546.
PNCC insists that conformably with the ruling of the CA, it
should be entitled to collection under PCIC Bond No. 27546,
although collection thereunder was not specifically raised or
pleaded in its complaint, because the bond was attached to the
complaint and formed part of the records. Also, considering
that PCICs liability as surety has been duly proven before the
trial and appellate courts, PNCC posits that it is entitled to
repayment under PCIC Bond No. 27546.
PNCC might be alluding to Section 2(c), Rule 7 of the Rules of
Court, which provides that a pleading shall specify the relief
sought, but may add a general prayer for such further or other
reliefs as may be deemed just and equitable. Under this rule, a
court can grant the relief warranted by the allegation and the
proof even if it is not specifically sought by the injured party; 23
the inclusion of a general prayer may justify the grant of a
remedy different from or together with the specific remedy
sought,24 if the facts alleged in the complaint and the evidence
introduced so warrant.25

We find PNCCs argument to be misplaced. A general prayer


for "other reliefs just and equitable" appearing on a complaint
or pleading normally enables the court to award reliefs
supported by the complaint or other pleadings, by the facts
admitted at the trial, and by the evidence adduced by the
parties, even if these reliefs are not specifically prayed for in
the complaint. We cannot, however, grant PNCC the "other
relief" of recovering under PCIC Bond No. 27546 because of
the respect due the contractual stipulations of the parties.
While it is true that PCICs liability under PCIC Bond No. 27546
would have been clear under ordinary circumstances
(considering that Kalingo's default under his contract with
PNCC is now beyond dispute), it cannot be denied that the
bond contains a written claim provision, and compliance with it
is essential for the accrual of PCICs liability and PNCCs right
to collect under the bond.
As already discussed, this provision is the law between the
parties on the matter of liability and collection under the bond.
Knowing fully well that PCIC Bond No. 27546 is a matter of
record, duly proven and susceptible of the courts scrutiny, the
trial and appellate courts must respect the terms of the bond
and cannot just disregard its terms and conditions in the
absence of any showing that they are contrary to law, morals,
good customs, public order, or public policy. For its failure to
file a written claim with PCIC within 15 days from the bonds
expiry date, PNCC clearly waived its right to collect under
PCIC Bond No. 27546. That, wittingly or unwittingly, PNCC did
not collect under one bond in favor of calling on the other
creates no other conclusion than that the right to collect under
the former had been lost. Consequently, PNCCs cause of
action with respect to PCIC Bond No. 27546 cannot juridically
exist and no relief therefore may be validly given. Hence, the
CA invalidly rendered judgment with respect to PCIC Bond No.
27546, and its award based on this bond must be deleted.
On the third issue, we hold that PCIC should be held liable for
the attorney's fees PNCC incurred in bringing suit. PCICs
unjust refusal to pay despite PNCCs written claim compelled
the latter to hire the services of an attorney to collect on PCIC
Bond No. 27547.
WHEREFORE, premises considered, we SET ASIDE our
Resolution of December 17, 2008 and GRANT the present
motion for reconsideration. The petition for review on certiorari
is PARTLY GRANTED. The assailed Court of Appeals
Decision of January 7, 2008 and Resolution of October 29,
2008 are hereby AFFIRMED with MODIFICATION, deleting
petitioner PCIC's liability under PCIC Bond No. 27546. All other
matters in the assailed Court of Appeals decision and
resolution are AFFIRMED.
SO ORDERED.
ARTURO D. BRION
Associate Justice
WE CONCUR:
CONCHITA CARPIO-MORALES
Associate Justice
Acting Chairperson
CONSUELO YNARESSANTIAGO*
Associate Justice

MARIANO C. DEL
CASTILLO
Associate Justice

12
ROBERTO A. ABAD
Associate Justice
ATTESTATION
I attest that the conclusions in the above Resolution had been
reached in consultation before the case was assigned to the
writer of the opinion of the Courts Division.
CONCHITA CARPIO-MORALES**
Associate Justice
Acting Chairperson
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the
Acting Division Chairpersons Attestation, it is hereby certified
that the conclusions in the above Resolution were reached in
consultation before the case was assigned to the writer of the
opinion of the Courts Division.
REYNATO S. PUNO
Chief Justice
Footnotes
*
Designated additional Member of the Second Division per
Special Order No. 691 dated September 4, 2009.
**
Designated Acting Chairperson of the Second Division per
Special Order No. 690 dated September 4, 2009.
1
Rollo, pp. 59-68.
2
Under Rule 45 of the Rules of Court.
3
Penned by Associate Justice Monina Arevalo-Zenarosa, and
concurred in by Associate Justice Conrado M. Vasquez, Jr. and
Associate Justice Edgardo F. Sundiam; rollo, pp. 26-37.
4
Id., pp. 40-42.
5
Id., pp. 51-57.
6
CA Decision, id., p. 30.
7
Id., p. 31.
8
PCIC's Motion for Reconsideration, id., pp. 64-65.
9
The date appearing on the checks was erroneously placed as
"26 January 1997." As clarified by the RTC, and affirmed by the
CA, the year "1997" appearing on the checks was a mere
typographical error which should have been written as "1998";
id., pp. 28 and 35.
10
Id., pp. 51-57.
11
Id., pp. 26-38.
12
Id., pp. 40-42.
13
Id., pp. 8-21.
14
Id., p. 58.
15
Id., pp. 28 and 35.
16
See Motion for Reconsideration, id., p. 59.
17
Ferrer v. Ferrer, G.R. No. 166496, November 29, 2006, 508
SCRA 570, 578-579; Danfoss, Incorporated v. Continental
Cement Corporation, G.R. No. 143788, September 9, 2005,
469 SCRA 505, 511.
18
Agoy v. Court of Appeals, G.R. No. 162927, March 6, 2007,
517 SCRA 535, 541; Swagman Hotels and Travel, Inc. v. Court
of Appeals, G.R. No. 161135, April 8, 2005, 455 SCRA 175,
183.
19
Zepeda v. China Banking Corporation, G.R. No. 172175,
October 9, 2006, 504 SCRA 126, 131; Swagman Hotels and
Travel, Inc. v. Court of Appeals, supra note 18.
20
Philippine Commercial & Industrial Bank v. Court of Appeals,
G.R. No. L-34959, March 18, 1988, 159 SCRA 24, citing

Zenith Insurance Corp. v. Court of Appeals, G.R. No. 57957,


December 29, 1982, 119 SCRA 485.
21
CIVIL CODE, Article 1159.
22
Id., Article 1306.
23
De Guzman v. NLRC, G.R. No. 90856, July 23, 1992, 211
SCRA 723, 732.
24
Sps. Gutierrez v. Sps. Valiente, G.R. No. 166802, July 4,
2008, 557 SCRA 211, 225-226; BPI Family Bank v.
Buenaventura, G.R. Nos. 148196 & 148259, September 30,
2005, 471 SCRA 431.
25
Eugenio, Sr. v. Velez, G.R. No. 85140, May 17, 1990, 185
SCRA 425, 432-433.

13
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-5671
August 24, 1910
BENITO DE LOS REYES, plaintiff-appellant,
vs.
VERONICA ALOJADO, defendant-appellee.
Ramon Diokno, for appellant.
No appearance for appellee.
TORRES, J.:
On or about January 22, 1905, Veronica Alojado received, as a
loan, from Benito de los Reyes that the sum P67 .60, for the
purpose of paying a debt she owed to Olimpia Zaballa. It was
agreed between Alojado and Reyes that the debtor should
remain as a servant in the house and in the service of her
creditor, without any renumeration whatever, until she should
find some one who would furnish her with the said sum where
with to repeat the loan. The defendant, Veronica Alojado,
afterwards left the house of the plaintiff, on March 12, 1906,
without having paid him her debt, nor did she do so at any
subsequent date, notwithstanding his demands. The plaintiff,
therefore, on the 15th of march, 1906, filed suit in the court of
the justice of the peace of Santa Rosa, La Laguna, against
Veronica Alojado to recover the said sum or, in a contrary case,
to compel her to return to his service. The trial having been
had, the justice of the peace, on April 14, 1906, rendered
judgment whereby he sentenced the defendant to pay to the
plaintiff the sum claimed and declared that, in case the debtor
should be insolvent, she should be obliged to fulfill the
agreement between her and the plaintiff. The costs of the trial
were assessed against the defendant.
The defendant appealed from the said judgment to the Court of
First Instance to which the plaintiff, after the case had been
docketed by the clerk of court, made a motion on May 4, 1906,
requesting that the appeal interposed by the defendant be
disallowed, with the costs of both instances against her. The
grounds alleged in support of this motion. were that the appeal
had been filed on the sixth day following that when judgment
was rendered in the trial, on April 14th, and that it, therefore,
did not come within the period of the five days prescribed by
section 76 of the Code of Civil Procedure, as proven by the
certificate issued by the justice of the peace of Santa Rosa.
The Court of First Instance, however, by order of July 16, 1906,
overruled the motion of the plaintiff-appellee, for the reasons
therein stated, namely, that the defendant was not notified of
the judgment rendered in the case on April 14th of that year
until the 16th of the same month, and the appeal having been
filed four days later, on the 20th, it could having seen that the
five days specified by section 76 of the Code of Civil Procedure
had not expired. The plaintiff was advised to reproduce his
complaint within ten days, in order that due procedure might he
had thereupon.
The plaintiff took exception to the aforementioned order and at
the same time reproduced the complaint he had filed in the
court of the justice of the peace, in which, after relating to the
facts hereinbefore stated, added that the defendant, besides
the sum above-mentioned, had also received from the plaintiff,
under the same conditions, various small amounts between the

dates of January 22, 1905, and March 10, 1906, aggregating


altogether P11.97, and that they had not been repaid to him.
He therefore asked that judgment be rendered sentencing the
defendant to comply with the said contract and to pay to the
plaintiff the sums referred to, amounting in all to P79.57, and
that until this amount should have been in paid, the defendant
should remain gratuitously in the service of plaintiff's
household, and that she should pay the costs of the trial.
The defendant, in her written answer of August 15, 1906, to the
aforesaid complaint, denied the allegations contained in
paragraphs 1 and 2 of the complaint and alleged that, although
she had left the plaintiff's service, it was because the latter had
paid her no sum whatever for the services she had rendered in
his house. The defendant likewise denied the conditions
expressed in paragraph 4 of the complaint, averring that the
effects purchased, to the amount of P11.97, were in the
possession of the plaintiff, who refused to deliver them to her.
She therefore asked that she be absolved from the complaint
and that the plaintiff be absolved from the complaint the wages
due her for the services she had rendered.
The case came to trial on October 19, 1906, and, after the
production of testimony by both parties, the judge, on
November 21st of the same year, rendered judgment absolving
the defendant from the complain, with the costs against the
plaintiff, and sentencing the latter to pay to the former the sum
of P2.43, the balance found to exist between the defendant's
debt of P79.57 and the wages due her by the plaintiff, which
amounted to P82. The plaintiff, on the 6th of December, filed a
written exception to the judgment aforesaid through the regular
channels, and moved for a new trial on the ground that the
findings of fact set forth in the judgment were manifestly
contrary to the weight of the evidence. This motion was
overruled on the 17th of the same month, to which exception
was taken by the appellant, who afterwards filed the proper bill
of exceptions, which was approved, certified, and forwarded to
the clerk of this court.
The present suit, initiated in a justice of the peace court and
appealed to the Court of First Instance of La Laguna at a time
prior to the enactment of Act No. 1627, which went into effect
on July 1, 1907, which limited to two instances the procedure
to be observed in verbal actions, concerns the collection of
certain sum received as a loan by the defendant from the
plaintiff, and of the wages earned by the former for services
rendered as a servant in the said plaintiff's house.
Notwithstanding the denial of the defendant, it is a fact clearly
proven, as found in the judgment appealed from, that the
plaintiff did deliver to Hermenegildo de los Santos the sum of
P67.60 to pay a debt was paid by De los Santos with the
knowledge and in behalf of the said defendant who, of her free
will, entered the service of the plaintiff and promised to pay him
as soon as she should find the money wherewith to do so.
The duty to pay the said sum, as well as that of P11.97
delivered to the defendant in small amounts during the time
that she was in the plaintiff's house, is unquestionable,
inasmuch as it is a positive debt demandable of the defendant
by her creditor. (Arts. 1754, 1170, Civil Code.) However, the
reason alleged by the plaintiff as a basis for the loan is
untenable, to wit, that the defendant was obliged to render
service in his house as a servant without remuneration

14
whatever and to remain therein so long as she had not paid
her debt, inasmuch as this condition is contrary to law and
morality. (Art. 1255, Civil Code.)
Domestic services are always to be remunerated, and no
agreement may subsist in law in which it is stipulated that any
domestic service shall be absolutely gratuitous, unless it be
admitted that slavery may be established in this country
through a covenant entered into between the interested
parties.
Articles 1583, 1584, and 1585 of the Civil Code prescribe rules
governing the hiring of services of domestics servants, the
conditions of such hire, the term during which the service may
rendered and the wages that accrue to the servant, also the
duties of the latter and of the master. The first of the articles
cited provides that a hiring for life by either of the contracting
parties is void, and, according to the last of three articles just
mentioned, besides what is prescribed in the preceding articles
with regard to masters and servants, the provisions of special
laws and local ordinances shall be observed.
During the regime of the former sovereignty, the police
regulations governing domestic service, of the date of
September 9, 1848, were in force, article 19 of which it is
ordered that all usurious conduct toward the servants and
employees of every class is prohibited, and the master who,
under pretext of an advance of pay or of having paid the debts
or the taxes of his servant, shall have succeeded in retaining
the latter in his service at his house, shall be compelled to pay
to such servant all arrears due him and any damages he may
have occasioned him, and the master shall also be fined.
The aforementioned article 1585 of the Civil Code undoubtedly
refers to the provisions of the regulations just cited.
When legal regulations prohibit even a usurious contract and
all abuses prejudicial to subordinates and servant, in
connection with their salaries and wages, it will be understood
at once that the compact whereby service rendered by a
domestic servant in the house of any inhabitant of this country
is to be gratuitous, is in all respects reprehensible and
censurable; and consequently, the contention of the plaintiff,
that until the defendant shall have paid him her debt she must
serve him in his house gratuitously is absolutely inadmissible.
The trial record discloses no legal reason for the rejection of
the findings of fact and of law contained in the judgment
appealed from, nor for an allowance of the errors attributed
appealed from, nor for an allowance of the errors attributed
thereto; on the contrary, the reasons hereinabove stated show
the propriety of the said judgment.
For the foregoing reasons, and accepting those set forth in the
judgment appealed from, it is proper, in our opinion, to affirm
and we hereby affirm the said judgment, with the costs against
the appellant.
Arellano, C. J., Johnson, Moreland and Trent, JJ., concur.

15
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-4244
September 20, 1907
RAFAEL MOLINA Y SALVADOR, petitioner,
vs.
ANTONIO DE LA RIVA, ET AL., respondents.
Kinney, Odlin and Lawrence, for petitioner.
Chicote and Miranda, for respondents.
WILLARD, J.:
In Molina vs. De la Riva (6 Phil., Rep., 12) a judgment in this
case in favor of the plaintiff and against De la Riva was
affirmed and the case remanded for execution of the judgment.
Upon the return of the record to the court below, a motion was
made that Somes and Spalding, the sureties upon the appeal
bond, be cited to appear and show cause why execution
should not be issued against them as well as against the
defendant, De la Riva. They appeared and showed cause and
a judgment or order was entered holding them liable upon the
bond and ordering an execution to issue against them. From
this order they appealed to this court, where the order was
affirmed. (Molina vs. De la Riva, 7 Phil., Rep., 345.)
The order made by this court upon that appeal is as follows:
We accordingly affirm the order of the court below, with the
costs of this instance. After the expiration of ten days let
judgment be entered in accordance herewith, and the case be
remanded to the court below for execution.
Judgment was entered in this court in accordance with such
order and the case remanded to the court below on the 6th of
February, 1907.
The case is now before us upon a proceeding brought by
Somes and Spalding, the sureties, under section 499 of the
Code of Civil Procedure, for the purpose of compelling the
judge of the court below to sign a bill of exceptions containing
the proceedings which took place in the case after it was
remanded in pursuance of the order of this court reported in 7
Phil. Rep., 345. An order was issued by this court requiring the
judge of the court below to state his reasons for refusing to
sign the bill of exceptions.
The court has answered, stating its reasons, and the question
to be determined is, whether such reasons are sufficient. An
original suit in this court for a mandamus to compel that court
to sign a bill of exceptions has been dismissed. (Somes et al.,
vs. Crossfield et al.,1 5 Off. Gaz., 462.)
On the 6th day of February an order of that court was made
directing an execution to issue against De la Riva and the
sureties for the collection of the judgment. On the same day
the defendant and the sureties made a motion for a
modification of this order; this motion was granted on the 9th of
February, and on the 26th of February the court, upon motion
of the plaintiff, Molina, vacated its order of modification, and
ordered an execution to issue against the sureties as directed
by the judgment of this court.
To this order Somes and Spalding excepted, and this is one of
the exceptions which they claim the right to have reviewed by
this court. In substance it is nothing more than an exception to
the order of the Court of First Instance directing the execution
of the judgment of this court. It is very apparent that no

exception lies to such an order. If it did, a case could never


end, for as often as an order for the execution of the judgment
was made, it could be excepted to and the case brought here
for review.
On the 27th day of February, after the sureties had excepted to
the order above mentioned, they presented a motion in which
they claim that, by reason of acts executed by the creditor
Molina, they had been relieved of their responsibility as
sureties in accordance with the provisions of article 1852 of the
Civil Code, and they asked that the order of the 26th of
February be modified so as to declare that they had been
released from all obligation upon the bond in question. This
motion was denied, and to the order denying it the sureties
excepted. This is the other exception which they seek now to
have reviewed in this court. Their claim is that after a case has
been tried in this court, a judgment ordered for the plaintiff, and
the case remanded to the court below for the execution of the
judgment, and an order made by that court such purpose, they
can, by motion, present new issues of fact and law upon the
question of whether they are liable at all or not upon their
obligation and that stage of the case have a further trial upon
such issues. This contention can not be sustained. Some of
the facts set out in their motion took place before any judgment
was rendered against the,. These facts they by amended or
supplemental answer. Some the facts set out in the petition
seem to have occurred after the judgment of this court dated in
February, 1907. The Code of Civil Procedure (sec. 105) allows
supplemental pleadings to be filed, by that section does not
allow supplemental answer to be filed and a trial thereon had
after the case has passed to final judgment and an order made
for the execution of the sentence. In such circumstances a
defendant must commence an original action asking that the
proceedings for the execution of the sentence be enjoined.
It is true that in this very case we allowed a bill of exceptions
relating to matter occurring after final judgment had been
entered herein against the defendant De la Riva, but that bill of
exceptions related exclusively to the liability of the sureties
Somes and Spalding, who were brought into case for the first
time after the final judgment against De la Riva, and who, as
we held, were entitled to have the question of their liability for
this debt passed upon by court. That has been done and it has
been finally determined that they are so liable. No further bill of
exceptions relating to that liability can be allowed in this case.
We hold that the reasons given by the court below for refusing
to sign the bill of exceptions are sufficient, and this proceeding
is hereby dismissed. So ordered.
Arellano, C. J., Torres, Johnson, and Tracey, JJ., concur.

16
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 104392
February 20, 1996
RUBEN MANIAGO, petitioner,
vs.
THE COURT OF APPEALS (First Division) HON. RUBEN C.
AYSON, in his capacity as Acting Presiding Judge,
Regional Trial Court, Branch IV, Baguio City, and
ALFREDO BOADO, respondents.
DECISION
MENDOZA, J.:
Petitioner Ruben Maniago was the owner of shuttle buses
which were used in transporting employees of the Texas
Instruments, (Phils.), Inc. from Baguio City pLoakan, Baguio
City.roper to its plant site at the Export Processing Authority in
On January 7, 1990, one of his buses figured in a vehicular
accident with a passenger jeepney owned by private
respondent Alfredo Boado along Loakan Road, Baguio City. As
a result of the accident, a criminal case for reckless
imprudence resulting in damage to property and multiple
physical injuries was filed on March 2, 1990 against petitioner's
driver, Herminio Andaya, with the Regional Trial Court of
Baguio City, Branch III, where it was docketed as Criminal
Case No. 7514-R. A month later, on April 19, 1990, a civil case
for damages was filed by private respondent Boado against
petitioner himself. The complaint, docketed as Civil Case No.
2050-R, was assigned to Branch IV of the same court.
Petitioner moved for the suspension of the proceedings in the
civil case against him, citing the pendency of the criminal case
against his driver. But the trial court, in its order dated August
30, 1991, denied petitioner's motion on the ground that
pursuant to the Civil Code, the action could proceed
independently of the criminal action, in addition to the fact that
the petitioner was not the accused in the criminal case.
Petitioner took the matter on certiorari and prohibition to the
Court of Appeals, maintaining that the civil action could not
proceed independently of the criminal case because no
reservation of the right to bring it separately had been made in
the criminal case.
On January 31, 1992, the Court of Appeals dismissed his
petition on the authority of Garcia v. Florido,1 and Abellana v.
Marave,2 which it held allowed a civil action for damages to be
filed independently of the criminal action even though no
reservation to file the same has been made. Therefore, it was
held, the trial court correctly denied petitioner's motion to
suspend the proceedings in the civil case.3
Hence this petition for review on certiorari. There is no dispute
that private respondent, as offended party in the criminal case,
did not reserve the right to bring a separate civil action, based
on the same accident, either against the driver, Herminio
Andaya, or against the latter's employer, herein petitioner
Ruben Maniago. The question is whether despite the absence
of such reservation, private respondent may nonetheless bring
an action for damages against petitioner under the following
provisions of the Civil Code:

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 preexisting contractual relation between the parties, is called a
quasi-delict and is governed by the provisions of this Chapter.
Art. 2180.
The obligation imposed by Article 2176 is
demandable not only for one's own acts or omissions, but also
for those of persons for whom one is responsible.
....
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.
Art. 2177 states that responsibility for fault or negligence under
the above-quoted provisions is entirely separate and distinct
from the civil liability arising from negligence under the Revised
Penal Code.
However, Rule III of the Revised Rules of Criminal Procedure,
while reiterating that a civil action under these provisions of the
Civil Code may be brought separately from the criminal action,
provides that the right to bring it must be reserved. This Rule
reads:
Sec. I. Institution of criminal and civil actions. - When a
criminal action is instituted, the civil action for the recovery of
civil liability is impliedly instituted with the criminal action,
unless the offended party waives the civil action, reserves his
right to institute it separately, or institutes the civil action prior
to the criminal action.
Such civil action includes recovery of indemnity under the
Revised Penal Code, and damages under Articles 32, 33, and
2176 of the Civil Code of the Philippines arising from the same
act or omission of the accused.
....
The reservation of the right to institute the separate civil
actions shall be made before the prosecution starts to present
its evidence and under circumstances affording the offended
party a reasonable opportunity to make such reservation.
Sec. 3. When civil action may proceed independently. - In the
cases provided for in Articles 32, 33, 34 and 2176 of the Civil
Code of the Philippines, the independent civil action which has
been reserved may be brought by the offended party, shall
proceed independently of the criminal action, and shall require
only a preponderance of evidence.
Based on these provisions, petitioner argues that the civil
action against him was impliedly instituted in the criminal action
previously filed against his employee because private
respondent did not reserve his right to bring this action
separately. (The records show that while this case was
pending in the Court of Appeals, the criminal action was
dismissed on July 10, 1992 for failure of the prosecution to file
a formal offer of its evidence, with the consequence that the
prosecution failed to prosecute its case. Accordingly, it seems
to be petitioner's argument that since the civil action to recover
damages was impliedly instituted with the criminal action, the
dismissal of the criminal case brought with it the dismissal of
the civil action.)
Private respondent admits that he did not reserve the right to
institute the present civil action against Andaya's employer. He
contends, however, that the rights provided in Arts. 2176 and

17
2177 of the Civil Code are substantive rights and, as such,
their enforcement cannot be conditioned on a reservation to
bring the action to enforce them separately. Private respondent
cites in support of his position statements made in Abellana v.
Marave,4 Tayag v. Alcantara,5 Madeja v. Caro,6 and Jarantilla v.
Court of Appeals,7 to the effect that the requirement to reserve
the civil action is substantive in character and, therefore, is
beyond the rule making power of this Court under the
Constitution.8
After considering the arguments of the parties, we have
reached the conclusion that the right to bring an action for
damages under the Civil Code must be reserved as required
by Rule III, 1, otherwise it should be dismissed.
I.
A.
To begin with, 1 quite clearly requires that a
reservation must be made to institute separately all civil actions
for the recovery of civil liability, otherwise they will be deemed
to have been instituted with the criminal case. Such civil
actions are not limited to those which arise "from the offense
charged," as originally provided in Rule III before the
amendment of the Rules of Court in 1988. In other words the
right of the injured party to sue separately for the recovery of
the civil liability whether arising from crimes (ex delicto) or from
quasi delict under Art. 2176 of the Civil Code must be reserved
otherwise they will be deemed instituted with the criminal
action.9
Thus Rule III, 1 of the Revised Rules of Criminal Procedure
expressly provides:
Sec. 1. Institution of criminal and civil actions. - When a
criminal action is instituted, the civil action for the recovery of
civil liability is impliedly instituted with the criminal action,
unless the offended party waives the civil action, reserves his
right to institute it separately, or institutes the civil action prior
to the criminal action.
Such civil action includes recovery of indemnity under the
Revised Penal Code, and damages under Articles 32, 33, 34
and 2176 of the Civil Code of the Philippines arising from the
same act or omission of the accused.
B.
There are statements in some cases implying that
Rule III, 1 and 3 are beyond the rule making power of the
Supreme Court under the Constitution. A careful examination
of the cases, however, will show that approval of the filing of
separate civil action for damages even though no reservation
of the right to institute such civil action had been reserved rests
on considerations other than that no reservation is needed.
In Garcia v. Florido10 the right of an injured person to bring an
action for damages even if he did not make a reservation of his
action in the criminal prosecution for physical injuries through
reckless imprudence was upheld on the ground that by
bringing the civil action the injured parties had "in effect
abandoned their right to press for recovery of damages in the
criminal case. . . . Undoubtedly an offended party loses his
right to intervene in the prosecution of a criminal case, not only
when he has waived the civil action or expressly reserved his
right to institute, but also when he has actually instituted the
civil action. For by either of such actions his interest in the
criminal case has disappeared."11 The statement that Rule III,
1 of the 1964 Rules is "an unauthorized amendment of
substantive law, Articles 32, 33, and 34 of the Civil Code, which

do not provide for the reservation" is not the ruling of the Court
but only an aside, quoted from an observation made in the
footnote of a decision in another case.12
Another case cited by private respondent in support of his
contention that the civil case need not be reserved in the
criminal case is Abellana v. Marave13 in which the right of
persons injured in a vehicular accident to bring a separate
action for damages was sustained despite the fact that the
right to bring it separately was not reserved. But the basis of
the decision in that case was the fact that the filing of the civil
case was equivalent to a reservation because it was made
after the decision of the City Court convicting the accused had
been appealed. Pursuant to Rule 123, 7 of the 1964 Rules,
this had the effect of vacating the decision in the criminal case
so that technically, the injured parties could still reserve their
right to institute a civil action while the criminal case was
pending in the Court of First Instance. The statement "the right
of a party to sue for damages independently of the criminal
action is a substantive right which cannot be frittered away by
a construction that could render it nugatory" without raising a
"serious constitutional question"14 was thrown in only as
additional support for the ruling of the Court.
On the other hand, in Madeja v. Caro15 the Court held that a
civil action for damages could proceed even while the criminal
case for homicide through reckless imprudence was pending
and did not have to await the termination of the criminal case
precisely because the widow of the deceased had reserved her
right to file a separate civil action for damages. We do not see
how this case can lend support to the view of private
respondent.
In Jarantilla v. Court of Appeals16 the ruling is that the acquittal
of the accused in the criminal case for physical injuries through
reckless imprudence on the ground of reasonable doubt is not
a bar to the filing of an action for damages even though the
filing of the latter action was not reserved. This is because of
Art. 29 of the Civil Code which provides that "when an accused
is acquitted on the ground that his guilt has not been proved
beyond reasonable doubt, a civil action for damages for the
same act or omission may be instituted." This ruling obviously
cannot apply to this case because the basis of the dismissal of
the criminal case against the driver is the fact that the
prosecution failed to prove its case as a result of its failure to
make a formal offer of its evidence. Rule 132, 34 of the
Revised Rules on Evidence provides that "The court shall
consider no evidence which has not been formally offered. The
purpose for which the evidence is offered must be specified."
To the same effect are the holdings in Tayag, Sr. v. Alcantara,17
Bonite v. Zosa18 and Diong Bi Chu v. Court of Appeals.19 Since
Art. 29 of the Civil Code authorizes the bringing of a separate
civil action in case of acquittal on reasonable doubt and under
the Revised Rules of Criminal procedure such action is not
required to be reserved, it is plain that the statement in these
cases that to require a reservation to be made would be to
sanction an unauthorized amendment of the Civil Code
provisions is a mere dictum. As already noted in connection
with the case of Garcia v. Florido, that statement was not the
ruling of the Court but only an observation borrowed from
another case.20

18
The short of it is that the rulings in these cases are consistent
with the proposition herein made that, on the basis of Rule III,
1-3, a civil action for the recovery of civil liability is, as a
general rule, impliedly instituted with the criminal action, except
only (1) when such action arising from the same act or
omission, which is the subject of the criminal action, is waived;
(2) the right to bring it separately is reserved or (3) such action
has been instituted prior to the criminal action. Even if an
action has not been reserved or it was brought before the
institution of the criminal case, the acquittal of the accused will
not bar recovery of civil liability unless the acquittal is based on
a finding that the act from which the civil liability might arise did
not exist because of Art. 29 of the Civil Code.
Indeed the question on whether the criminal action and the
action for recovery of the civil liability must be tried in a single
proceeding has always been regarded a matter of procedure
and, since the rule making power has been conferred by the
Constitution on this Court, it is in the keeping of this Court.
Thus the subject was provided for by G.O. No. 58, the first
Rules of Criminal Procedure under the American rule. Sec. 107
of these Orders provided:
The privileges now secured by law to the person claiming to be
injured by the commission of an offense to take part in the
prosecution of the offense and to recover damages for the
injury sustained by reason of the same shall not be held to be
abridged by the provisions of this order; but such person may
appear and shall be heard either individually or by attorney at
all stages of the case, and the court upon conviction of the
accused may enter judgment against him for the damages
occasioned by his wrongful act. It shall, however, be the duty of
the promotor fiscal to direct the prosecution, subject to the right
of the person injured to appeal from any decision of the court
denying him a legal right.
This was superseded by the 1940 Rules of Court, Rule 106 of
which provided:
Sec. 15. Intervention of the offended party in criminal action. Unless the offended party has waived the civil action or
expressly reserved the right to institute it after the termination
of the criminal case, and subject to the provisions of section 4
hereof, he may intervene, personally or by attorney, in the
prosecution of the offense.
This Rule was amended thrice, in 1964, in 1985 and lastly in
1988. Through all the shifts or changes in policy as to the civil
action arising from the same act or omission for which a
criminal action is brought, one thing is clear: The change has
been effected by this Court. Whatever contrary impression may
have been created by Garcia v. Florido21 and its progeny22
must therefore be deemed to have been clarified and settled
by the new rules which require reservation of the right to
recover the civil liability, otherwise the action will be deemed to
have been instituted with the criminal action.
Contrary to private respondent's contention, the requirement
that before a separate civil action may be brought it must be
reserved does not impair, diminish or defeat substantive rights,
but only regulates their exercise in the general interest of
orderly procedure. The requirement is merely procedural in
nature. For that matter the Revised Penal Code, by providing
in Art. 100 that any person criminally liable is also civilly liable,
gives the offended party the right to bring a separate civil

action, yet no one has ever questioned the rule that such
action must be reserved before it may be brought separately.
Indeed, the requirement that the right to institute actions under
the Civil Code separately must be reserved is not incompatible
with the independent character of such actions. There is a
difference between allowing the trial of civil actions to proceed
independently of the criminal prosecution and requiring that,
before they may be instituted at all, a reservation to bring them
separately must be made. Put in another way, it is the conduct
of the trial of the civil action - not its institution through the filing
of a complaint - which is allowed to proceed independently of
the outcome of the criminal case.
C.
There is a practical reason for requiring that the right
to bring an independent civil action under the Civil Code
separately must be reserved. It is to avoid the filing of more
than one action for the same act or omission against the same
party. Any award made against the employer, whether based
on his subsidiary civil liability under Art. 103 of the Revised
Penal Code or his primary liability under Art. 2180 of the Civil
Code, is ultimately recoverable from the accused.23
In the present case, the criminal action was filed against the
employee, bus driver. Had the driver been convicted and found
insolvent, his employer would have been held subsidiarily
liable for damages. But if the right to bring a separate civil
action (whether arising from the crime or from quasi delict) is
reserved, there would be no possibility that the employer would
be held liable because in such a case there would be no
pronouncement as to the civil liability of the accused. In such a
case the institution of a separate and independent civil action
under the Civil Code would not result in the employee being
held liable for the same act or omission. The rule requiring
reservation in the end serves to implement the prohibition
against double recovery for the same act or omission. 24 As
held in Barredo v. Garcia,25 the injured party must choose
which of the available causes of action for damages he will
bring. If he fails to reserve the filing of a separate civil action he
will be deemed to have elected to recover damages from the
bus driver on the basis of the crime. In such a case his cause
of action against the employer will be limited to the recovery of
the latter's subsidiary liability under Art. 103 of the Revised
Penal Code.
II.
Nor does it matter that the action is against the employer to
enforce his vicarious liability under Art. 2180 of the Civil Code.
Though not an accused in the criminal case, the employer is
very much a party, as long as the right to bring or institute a
separate action (whether arising from crime or from quasi
delict) is not reserved.26 The ruling that a decision convicting
the employee is binding and conclusive upon the employer "not
only with regard to its civil liability but also with regard to its
amount because the liability of an employer cannot be
separated but follows that of his employee" 27 is true not only
with respect to the civil liability arising from crime but also with
respect to the civil liability under the Civil Code. Since
whatever is recoverable against the employer is ultimately
recoverable by him from the employee, the policy against
double recovery requires that only one action be maintained for
the same act or omission whether the action is brought against
the employee or against his employer. Thus in Dulay v. Court

19
of Appeals28 this Court held that an employer may be sued
under Art. 2180 of the Civil Code and that the right to bring the
action did not have to be reserved because, having been
instituted before the criminal case against the employee, the
filing of the civil action against the employer constituted an
express reservation of the right to institute it separately.
WHEREFORE, the decision appealed from is REVERSED and
the complaint against petitioner is DISMISSED.
SO ORDERED.
Regalado, Romero and Puno, JJ., concur.
Footnotes
1
52 SCRA 420 (1973).
2
57 SCRA 106 (1974).
3
Per Justice Antonio M. Martinez concurred in by Justices
Asaali S. Isnani and Regina G. Ordoez-Benitez.
4
Supra at note 2.
5
98 SCRA 723 (1980).
6
126 SCRA 293 (1983).
7
171 SCRA 429 (1989).
8
Art. VIII, 5 (5) of the Constitution provides that the Supreme
Court shall have the power to "Promulgate rules concerning
the protection and enforcement of constitutional rights,
pleading, practice, and procedure in all courts, the admission
to the practice of law, the Integrated Bar, and legal assistance
to the under privileged. Such rules shall provide a simplified
and inexpensive procedure for the speedy disposition of cases,
shall be uniform for all courts of the same grade, and shall not
diminish, increase, or modify substantive rights. Rules of
procedure of special courts and quasi-judicial bodies shall
remain effective unless disapproved by the Supreme Court."
9
Dulay v. Court of Appeals, 243 SCRA 220 (1995); Yakult v.
Court of Appeals, 190 SCRA 357 (1990).
10
52 SCRA 420 (1973).
11
Id. at 428.
12
Corpus v. Paje, 28 SCRA 1062, n. 2 at 1069 (1969).
13
57 SCRA 106 (1974).
14
Id. at 112.
15
126 SCRA 293 (1983).
16
171 SCRA 429 (1989).
17
98 SCRA 723 (1980).
18
162 SCRA 173 (1988).
19
192 SCRA 554 (1990).
20
Supra p. 8.
21
Supra at note 1.
22
Abellana v. Marave, 57 SCRA 106 (1974); Tayag v.
Alcantara, 98 SCRA 723 (1980); Madeja v. Caro, 126 SCRA
293 (1983); Jarantilla v. Court of Appeals, 171 SCRA 429
(1989); Bonite v. Zosa, 162 SCRA 173 (1988); Diong Bi Chu v.
Court of Appeals, 192 SCRA 554 (1990).
23
Civil Code, Art. 2181; Emerencia v. Gonzales, 104 Phil. 1059
(1958).
24
Yakult v. Court of Appeals, 190 SCRA 347 (1990).
25
73 Phil. 607 (1942). Accord, Joaquin v. Aniceto, 120 Phil.
1100 (1964).
26
Yasay v. Adil, 164 SCRA 494 (1988); Pajarito v. Seneris, 87
SCRA 275 (1978).
27
Miranda v. Malate Garage and Taxicab, Inc., 99 Phil. 670
(1956).

28

Supra at note 9.

20
Republic of the Philippines
SUPREME COURT
Baguio City
SECOND DIVISION
G.R. No. 119771 April 24, 1998
SAN ILDEFONSO LINES, INC., and EDUARDO JAVIER,
petitioners,
vs.
COURT OF APPEALS (Thirteenth Division) and PIONEER
INSURANCE and SURETY CORPORATION,respondents.
MARTINEZ, J.:
At around 3:30 in the afternoon of June 24, 1991, a Toyota Lite
Ace Van being driven by its owner Annie U. Jao and a
passenger bus of herein petitioner San Ildefonso Lines, Inc.
(hereafter, SILI) figured in a vehicular mishap at the
intersection of Julia Vargas Avenue and Rodriguez Lanuza
Avenue in Pasig, Metro Manila, totally wrecking the Toyota van
and injuring Ms. Jao and her two (2) passengers in the
process.
A criminal case was thereafter filed with the Regional Trial
Court of Pasig on September 18, 1991 charging the driver of
the bus, herein petitioner Eduardo Javier, with reckless
imprudence resulting in damage to property with multiple
physical injuries.
About four (4) months later, or on January 13, 1992, herein
private respondent Pioneer Insurance and Surety Corporation
(PISC), as insurer of the van and subrogee, filed a case for
damages against petitioner SILI with the Regional Trial Court
of Manila, seeking to recover the sums it paid the assured
under a motor vehicle insurance policy as well as other
damages,
totaling
P564,500.00
(P454,000.00
as
actual/compensatory damages; P50,000.00 as exemplary
damages; P50,000.00 as attorney's fees; P10,000.00 as
litigation expenses; and P500.00 as appearance fees.) 1
With the issues having been joined upon the filing of the
petitioners' answer to the complaint for damages and after
submission by the parties of their respective pre-trial briefs,
petitioners filed on September 18, 1992 a Manifestation and
Motion to Suspend Civil Proceedings grounded on the
pendency of the criminal case against petitioner Javier in the
Pasig RTC and the failure of respondent PISC to make a
reservation to file a separate damage suit in said criminal
action. This was denied by the Manila Regional Trial Court in
its Order dated July 21, 1993, 2 ruling thus:
Answering the first question thus posed, the court holds that
plaintiff may legally institute the present civil action even in the
absence of a reservation in the criminal action. This is so
because it falls among the very exceptions to the rule cited by
the movant.
It is true that the general rule is that once a criminal action has
been instituted, then civil action based thereon is deemed
instituted together with the criminal action, such that if the
offended party did not reserve the filing of the civil action when
the criminal action was filed, then such filing of the civil action
is therefore barred; on the other hand, if there was such
reservation, still the civil action cannot be instituted until final
judgment has been rendered in the criminal action;

But, this rule (Section 2, Rule 111, Revised Rules of Court) is


subject to exemptions, the same being those provided for in
Section 3 of the same rule which states:
Sec. 3. When civil action may proceed independently. In
the cases provided for in Articles 32, 33, 34 and 2176 of the
Civil Code of the Philippines, the independent civil action which
was been reserved may be brought by the offended party, shall
proceed independently of the criminal action, and shall require
only a preponderance of evidence.
Besides, the requirement in Section 2 of Rule 111 of the former
Rules on Criminal Procedure that there be a reservation in the
criminal case of the right to institute an independent civil action
has been declared as not in accordance with law. It is regarded
as an unauthorized amendment to our substantive law, i.e., the
Civil Code which does not require such reservation. In fact, the
reservation of the right to file an independent civil action has
been deleted from Section 2, Rule 111 of the 1985 Rules on
Criminal Procedure, in consonance with the decisions of this
Court declaring such requirement of a reservation as
ineffective. (Bonite vs. Zosa, 162 SCRA 180).
Further, the Court rules that a subrogee-plaintiff may institute
and prosecute the civil action, it being allowed by Article 2207
of the Civil Code.
After their motion for reconsideration of said July 21, 1993
Order was denied, petitioners elevated the matter to this Court
via petition for certiorari which was, however, referred to public
respondent Court of Appeals for disposition. On February 24,
1995, a decision adverse to petitioners once again was
rendered by respondent court, upholding the assailed Manila
Regional Trial Court Order in this wise:
A separate civil action lies against the offender in a criminal
act, whether or not he is criminally prosecuted and found guilty
or acquitted, provided that the offended party is not allowed (if
the tortfeasor is actually charged also criminally), to recover
damages on both scores, and would be entitled in such
eventuality only to the bigger award of the two, assuming the
awards made in the two cases vary.
To subordinate the civil action contemplated in the said articles
to the result of the criminal prosecution whether it be
conviction or acquittal would render meaningless the
independent character of the civil action and the clear
injunction in Art. 31, that this action may proceed
independently of the criminal proceedings and regardless of
the result of the latter.
In Yakult Phil. vs. CA, the Supreme Court said:
Even if there was no reservation in the criminal case and that
the civil action was not filed before the filing of the criminal
action but before the prosecution presented evidence in the
criminal action, and the judge handling the criminal case was
informed thereof, then the actual filing of the civil action is even
far better than a compliance with the requirement of an
express reservation that should be made by the offended party
before the prosecution presented its evidence.
The purpose of this rule requiring reservation is to prevent the
offended party from recovering damages twice for the same
act or omission.
Substantial compliance with the reservation requirement may,
therefore, be made by making a manifestation in the criminal

21
case that the private respondent has instituted a separate and
independent civil action for damages.
Oft-repeated is the dictum that courts should not place undue
importance on technicalities when by so doing substantial
justice is sacrificed. While the rules of procedure require
adherence, it must be remembered that said rules of procedure
are intended to promote, not defeat, substantial justice, and
therefore, they should not be applied in a very rigid and
technical sense.
Hence, this petition for review after a motion for
reconsideration of said respondent court judgment was denied.
The two (2) crucial issues to be resolved, as posited by
petitioners, are:
1)
If a criminal case was filed, can an independent civil
action based on quasi-delict under Article 2176 of the Civil
Code be filed if no reservation was made in the said criminal
case?
2)
Can a subrogee of an offended party maintain an
independent civil action during the pendency of a criminal
action when no reservation of the right to file an independent
civil action was made in the criminal action and despite the fact
that the private complainant is actively participating through a
private prosecutor in the aforementioned criminal case?
We rule for petitioners.
On the chief issue of "reservation", at the fore is Section 3,
Rule 111 of the Rules of Court which reads:
Sec. 3. When civil action may proceed independently. In
the cases provided for in Articles 32, 33, 34 and 2176 of the
Civil Code of the Philippines, the independent civil action which
has been reserved may be brought by the offended party, shall
proceed independently of the criminal action, and shall require
only a preponderance of evidence.
There is no dispute that these so-called "independent civil
actions" based on the aforementioned Civil Code articles are
the exceptions to the primacy of the criminal action over the
civil action as set forth in Section 2 of Rule 111. 3 However, it is
easily deducible from the present wording of Section 3 as
brought about by the 1988 amendments to the Rules on
Criminal Procedure particularly the phrase ". . . which has
been reserved" that the "independent" character of these
civil actions does not do away with the reservation
requirement. In other words, prior reservation is a condition
sine qua non before any of these independent civil actions can
be instituted and thereafter have a continuous determination
apart from or simultaneous with the criminal action. That this
should now be the controlling procedural rule is confirmed by
no less than retired Justice Jose Y. Feria, remedial law expert
and a member of the committee which drafted the 1988
amendments, whose learned explanation on the matter was
aptly pointed out by petitioners, to wit:
The 1988 amendment expands the scope of the civil action
which his deemed impliedly instituted with the criminal action
unless waived, reserved or previously instituted. . . .
Under the present Rule as amended, such a civil action
includes not only recovery of indemnity under the Revised
Penal Code and damages under Articles 32, 33, 34 of the Civil
Code of the Philippines, but also damages under Article 2176
of the said code. . . .

Objections were raised to the inclusion in this Rule of quasidelicts under Article 2176 of the Civil Code of the Philippines.
However, in view of Article 2177 of the said code which
provides that the offended party may not recover twice for the
same act or omission of the accused, and in line with the policy
of avoiding multiplicity of suits, these objections were
overruled. In any event, the offended party is not precluded
from filing a civil action to recover damages arising from quasidelict before the institution of the criminal action, or from
reserving his right to file such a separate civil action, just as he
is not precluded from filing a civil action for damages under
Articles 32, 33 and 34 before the institution of the criminal
action, or from reserving his right to file such a separate civil
action. It is only in those cases where the offended party has
not previously filed a civil action or has not reserved his right to
file a separate civil action that his civil action is deemed
impliedly instituted with the criminal action.
It should be noted that while it was ruled in Abella vs. Marave
(57 SCRA 106) that a reservation of the right to file an
independent civil action is not necessary, such a reservation is
necessary under the amended rule. Without such reservation,
the civil action is deemed impliedly instituted with the criminal
action, unless previously waived or instituted. (Emphasis ours,
Justice Jose Y. Feria [Ret.], 1988 Amendments to the 1985
Rules on Criminal Procedure, a pamphlet, published by Central
Lawbook Publishing Co., Inc., Philippine Legal Studies, Series
No. 3, 5-6). 4
Sharing the same view on the indispensability of a prior
reservation is Mr. Justice Florenz D. Regalado, whose analysis
of the historical changes in Rule 111 since the 1964 Rules of
Court is equally illuminating. Thus,
1.
Under Rule 111 of the 1964 Rules of Court, the civil
liability arising from the offense charged was impliedly
instituted with the criminal action, unless such civil action was
expressly waived or reserved. The offended party was
authorized to bring an independent civil action in the cases
provided for in Articles 31, 32, 33, 34 and 2177 of the Civil
Code provided such right was reserved.
In the 1985 Rules on Criminal Procedure, the same Rule 111
thereof reiterated said provision on the civil liability arising from
the offense charged. The independent civil actions, however,
were limited to the cases provided for in Articles 32, 33 and 34
of the Civil Code, obviously because the actions contemplated
in Articles 31 and 2177 of said Code are not liabilities exdelicto. Furthermore, no reservation was required in order the
civil actions in said Articles 32, 33 and 34 may be pursued
separately.
2.
The present amendments introduced by the Supreme
Court have the following notable features on this particular
procedural aspect, viz:
a.
The civil action which is impliedly instituted with the
criminal action, barring a waiver, reservation or prior institution
thereof, need not arise from the offense charged, as the
phrase "arising from the offense charged" which creates that
nexus has been specifically eliminated.
b.
The independent civil actions contemplated in the
present Rule 111 include the quasi-delictsprovided for in Art.
2176 of the Civil Code, in addition to the cases provided in
Arts. 32, 33 and 34 thereof. It is necessary, however, that the

22
civil liability under all the said articles arise "from the same act
or omission of the accused." Furthermore, a reservation of the
right to institute these separate civil actions is again required
otherwise, said civil actions are impliedly instituted with the
criminal action, unless the former are waived or filed ahead of
the criminal action. (Emphasis supplied.) 5
In fact, a deeper reading of the "Yakult Phils. vs. CA" case 6
relied upon by respondent court reveals an acknowledgment of
the reservation requirement. After recognizing that the civil
case instituted by private respondent therein Roy Camaso
(represented by his father David Camaso) against petitioner
Yakult Phils. (the owner of the motorcycle that sideswiped Roy
Camaso, only five years old at the time of the accident) and
Larry Salvado (the driver of the motorcycle) during the
pendency of the criminal case against Salvado for reckless
imprudence resulting to slight physical injuries, as one based
on tort, this Court said:
The civil liability sought arising from the act or omission of the
accused in this case is a quasi-delict as defined under Article
2176 of the Civil Code as follows:
xxx
xxx
xxx
The aforecited rule [referring to the amended Section l, Rule
111] requiring, such previous reservation also covers quasidelict as defined under Article 2176 of the Civil Code arising
from the same act or omission of the accused (emphasis
supplied).
But what prompted the Court to validate the institution and
non-suspension of the civil case involved in "Yakult" was the
peculiar facts attendant therein. Thus,
Although the separate civil action filed in this case was without
previous reservation in the criminal case, nevertheless since it
was instituted before the prosecution presented evidence in
the criminal action, and the judge handling the criminal case
was informed thereof, then the actual filing of the civil action is
even far better than a compliance with the requirement of an
express reservation that should be made by the offended party
before the prosecution presents its evidence.
The distinct factual scenario in "Yakult" simply does not obtain
in this case. No satisfactory proof exists to show that private
respondent PISC's damage suit was instituted before the
prosecution presented its evidence in the criminal case
pending in the Pasig Regional Trial Court. Neither is there any
indication that the judge presiding over the criminal action has
been made aware of the civil case. It is in this light that reliance
on the "Yakult" case is indeed misplaced.
Now that the necessity of a prior reservation is the standing
rule that shall govern the institution of the independent civil
actions referred to in Rule 111 of the Rules of Court, past
pronouncements that view the reservation requirement as an
"unauthorized amendment" to substantive law i.e., the Civil
Code, should no longer be controlling. There must be a
renewed adherence to the time-honored dictum that procedural
rules are designed, not to defeat, but to safeguard the ends of
substantial justice. And for this noble reason, no less than the
Constitution itself has mandated this Court to promulgate rules
concerning the enforcement of rights with the end in view of
providing a simplified and inexpensive procedure for the
speedy disposition of cases which should not diminish,
increase or modify substantive rights. 7 Far from altering

substantive rights, the primary purpose of the reservation is, to


borrow the words of the Court in "Caos v. Peralta": 8
. . . to avoid multiplicity of suits, to guard against oppression
and abuse, to prevent delays, to clear congested dockets, to
simplify the work of the trial court; in short, the attainment of
justice with the least expense and vexation to the partieslitigants.
Clearly then, private respondent PISC, as subrogee under Article 2207
of the Civil Code, 9 is not exempt from the reservation requirement with
respect to its damages suit based on quasi-delict arising from the
same act or ommission of petitioner Javier complained of in the
criminal case. As private respondent PISC merely stepped into the
shoes of Ms. Jao (as owner of the insured Toyota van), then it is bound
to observe the procedural requirements which Ms. Jao ought to follow
had she herself instituted the civil case.
WHEREFORE, premises considered, the assailed decision of the
Court of Appeals dated February 24, 1995 and the Resolution dated
April 3, 1995 denying the motion for reconsideration thereof are hereby
REVERSED and SET ASIDE. The "MANIFESTATION AND MOTION
TO SUSPEND CIVIL PROCEEDINGS" filed by petitioners is
GRANTED.
SO ORDERED.
Regalado, Melo, Puno and Mendoza, JJ., concur.
Footnotes
1
See Complaint, Rollo, pp. 35-38.
2
Annex F, Rollo, pp. 43-47.
3
Section 2, Rule 111 of the Rules of Court reads in part:
Sec. 2.
Institution of separate civil action. Except in the cases provided for
in Section 3 hereof, after the criminal action has been commenced, the civil
action which has been reserved cannot be instituted until final judgment has
been rendered in the criminal action.
xxx
xxx
xxx
4
Petition, pp. 10-11; Rollo, pp. 11-12.
5
Regalado, Remedial Law Compendium, Volume II, 1995 Edition, p.
275.
6
190 SCRA 357, October 5, 1990.
7
Article VIII, Section 5(5), 1987 Constitution.
8
115 SCRA 843.
9
Article 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 shall be subrogated to the rights of the insured against the wrongdoer
or the person who has violated the contract. If the amount paid by the insurance
company does not fully cover the injury or loss, the aggrieved a party shall be
entitled to recover the deficiency from the person causing the loss or injury.

23
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-18719
October 31, 1964
PILAR JOAQUIN, ET AL., plaintiffs-appellants,
vs.
FELIX ANICETO, ET AL., defendants-appellee.
Arturo B. Atienza & F. B. del Rosario for plaintiff appellants.
D. A. Karganilla for defendants-appellees.
REGALA, J.:
This case comes to Us for review directly from the Court of
First Instance of Manila. The facts are not in dispute. They are
as follows:
While Pilar Joaquin was on the sidewalk of Aviles Street,
Manila, on April 27, 1960, a taxicab driven by Felix Aniceto and
owned by Ruperto Rodelas bumped her As a result, she
suffered physical injuries.
Aniceto was charged with serious physical injuries through
reckless imprudence in the Municipal Court (now the City
Court) of Manila. He was subsequently found guilty and
sentenced to imprisonment. However, no ruling was made on
his civil liability to the offended party in view of the latter's
reservation to file a separate civil action for damages for the
injuries suffered by her.
Aniceto appealed the judgment of conviction to the Court of
First Instance of Manila. While the criminal case was thus
pending appeal, Pilar Joaquin, the injured party, filed this case
for damages in the Court of First Instance of Manila, in
accordance with the reservation which she had earlier made.
Felix Aniceto and Ruperto Rodelas, driver and owner,
respectively, of the taxicab were made party defendants.
At the trial of this case, the plaintiff blocked all attempts of
Rodelas to prove that, as employer, he had exercised due
diligence in the selection and supervision of his employee, on
the ground that such a defense is not available in a civil action
brought under the Penal Code to recover the subsidiary civil
liability arising from the crime. The lower court sustained
plaintiff's objection. However, it dismissed the case on the
ground that in the absence of a final judgment of conviction
against the driver in the criminal case, any action to enforce
the employer's subsidiary civil liability would be premature.
Such liability, the trial court added, may only be enforced on
proof of the insolvency of the employee. Hence, this appeal.
The issue in this case is: May an employee's primary civil
liability for crime and his employer's subsidiary liability therefor
be proved in a separate civil action even while the criminal
case against the employee is still pending?
To begin with, obligations arise from law, contract, quasicontract, crime and quasi-delict.1According to appellant, her
action is one to enforce the civil liability arising from crimes.
With respect to obligations arising from crimes, Article 1161 of
the New Civil Code provides:
Civil obligations arising from criminal offenses shall be
governed by the penal laws, subject to the provisions of article
2177, and of the pertinent provisions of Chapter 2, Preliminary,
Title, on Human Relations, and of Title XVIII of this Book,
regulating damages. (Emphasis supplied)

The Revised Penal Code provides in turn that "every person


criminally liable for a felony is also civilly liable" 2and that in
default of the persons criminally liable, employers, teachers
persons and corporations engaged in any kind of industry shall
be civilly liable for felonies committed by their servants, pupils,
workmen, apprentices or employees in the discharge of their
duties.3
As this Court held in City of Manila v. Manila Electric Co., 52
Phil. 586:
... The Penal Code authorizes the determination of subsidiary
liability. The Civil Code negatives its applicability providing that
civil obligations arising from crimes or misdemeanors shall be
governed by the provisions of the Penal Code. In other words,
the Penal Code affirms its jurisdiction while the Civil Code
negatives its jurisdiction.
It is now settled that for an employer to be subsidiarily liable,
the following requisites must be present: (1) That an employee
has committed a crime in the discharge of his duties; (2) that
said employee is insolvent and has not satisfied his civil
liability; (3) that the employer is engaged in some kind of
industry. (1 Padilla, Criminal Law, Revised Penal Code 794
[1964])
Without the conviction of the employee, the employer cannot
be subsidiarily liable.
Now, it is no reason to bring such action against the employer
on the ground that in cases of defamation, fraud and physical
injuries, Article 33 of the Civil Code authorizes a civil action
that is "entirely separate, and distinct from the criminal action,"
(Carangdang v. Santiago, 51 O.G. 2878; Reyes v. De la Rosa,
52 O.G. 6548; Dyogi v. Yatco, G. R. No. L-9623, January 22,
1957).
Can Article 33 above cited be made applicable to an employer
in a civil action for subsidiary liability? The answer to this
question is undoubtedly in the negative.
What this article 33 authorizes is an action against the
employee on his primary civil liability. It cannot apply to an
action against the employer to enforce his subsidiary civil
liability as stated above, because such liability arises only after
conviction of the employee in the criminal case. Any action
brought against him before the conviction of his employee is
premature.
In cases of negligence, the injured party or his heirs has the
choice, between an action to enforce the civil liability arising
from crime under Article 100 of the Revised Penal Code and
an action for quasi-delict under Articles 2176-2194 of the Civil
Code. (See Barredo v. Garcia and Almario, 73 Phil. 607;
Parker v. Panlilio, et al., 91 Phil. 1)
If he chooses an action for quasi-delict, he may hold an
employer liable for the negligent act of the employee subject,
however, to the employer's defense of exercise of the diligence
of a good father of the family. (Art. 2180, Civil Code)
On the other hand, should he choose to prosecute his action
under Article 100 of the Penal Code, he can hold the employer
subsidiarily liable only upon prior conviction of the employee.
While a separate and independent civil action for damages
may be brought against the employee under Article 33 of the
Civil Code, no such action may be filed against the employer
on the latter's subsidiary civil liability because such liability is
governed not by the Civil Code but by the Penal Code, under

24
which conviction of the employee is a condition sine qua non
for the employer's subsidiary liability. If the court trying the
employee's liability adjudges the employee liable, but the court
trying the criminal action acquits the employee, the subsequent
insolvency of the employee cannot make the employer
subsidiary liable to the offended party or to the latter's heirs.
WHEREFORE, the decision appealed from is affirmed, without
pronouncement as to costs.
Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L.,
Barrera, Paredes, Dizon, Makalintal, Bengzon, J.P., and
Zaldivar, JJ., concur.
Footnotes
1
Art. 1157, Civil Code.
2
Art. 100.
3
Art. 103 in relation to Art. 102.

25
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 169467
February 25, 2010
ALFREDO P. PACIS and CLEOPATRA D. PACIS, Petitioners,
vs.
JEROME JOVANNE MORALES, Respondent.
DECISION
CARPIO, J.:
The Case
This petition for review1 assails the 11 May 2005 Decision2 and
the 19 August 2005 Resolution of the Court of Appeals in CAG.R. CV No. 60669.
The Facts
On 17 January 1995, petitioners Alfredo P. Pacis and
Cleopatra D. Pacis (petitioners) filed with the trial court a civil
case for damages against respondent Jerome Jovanne
Morales (respondent). Petitioners are the parents of Alfred
Dennis Pacis, Jr. (Alfred), a 17-year old student who died in a
shooting incident inside the Top Gun Firearms and
Ammunitions Store (gun store) in Baguio City. Respondent is
the owner of the gun store.
The facts as found by the trial court are as follows:
On January 19, 1991, Alfred Dennis Pacis, then 17 years old
and a first year student at the Baguio Colleges Foundation
taking up BS Computer Science, died due to a gunshot wound
in the head which he sustained while he was at the Top Gun
Firearm[s] and Ammunition[s] Store located at Upper Mabini
Street, Baguio City. The gun store was owned and operated by
defendant Jerome Jovanne Morales.
With Alfred Pacis at the time of the shooting were Aristedes
Matibag and Jason Herbolario. They were sales agents of the
defendant, and at that particular time, the caretakers of the gun
store.
The bullet which killed Alfred Dennis Pacis was fired from a
gun brought in by a customer of the gun store for repair.
The gun, an AMT Automag II Cal. 22 Rimfire Magnum with
Serial No. SN-H34194 (Exhibit "Q"), was left by defendant
Morales in a drawer of a table located inside the gun store.
Defendant Morales was in Manila at the time. His employee
Armando Jarnague, who was the regular caretaker of the gun
store was also not around. He left earlier and requested sales
agents Matibag and Herbolario to look after the gun store while
he and defendant Morales were away. Jarnague entrusted to
Matibag and Herbolario a bunch of keys used in the gun store
which included the key to the drawer where the fatal gun was
kept.
It appears that Matibag and Herbolario later brought out the
gun from the drawer and placed it on top of the table. Attracted
by the sight of the gun, the young Alfred Dennis Pacis got hold
of the same. Matibag asked Alfred Dennis Pacis to return the
gun. The latter followed and handed the gun to Matibag. It
went off, the bullet hitting the young Alfred in the head.
A criminal case for homicide was filed against Matibag before
branch VII of this Court. Matibag, however, was acquitted of
the charge against him because of the exempting
circumstance of "accident" under Art. 12, par. 4 of the Revised
Penal Code.

By agreement of the parties, the evidence adduced in the


criminal case for homicide against Matibag was reproduced
and adopted by them as part of their evidence in the instant
case.3
On 8 April 1998, the trial court rendered its decision in favor of
petitioners. The dispositive portion of the decision reads:
WHEREFORE, premises considered, judgment is hereby
rendered in favor of the plaintiffs [Spouses Alfredo P. Pacis and
Cleopatra D. Pacis] and against the defendant [Jerome
Jovanne Morales] ordering the defendant to pay plaintiffs
(1) P30,000.00 as indemnity for the death of Alfred Pacis;
(2) P29,437.65 as actual damages for the hospitalization and
burial expenses incurred by the plaintiffs;
(3) P100,000.00 as compensatory damages;
(4) P100,000.00 as moral damages;
(5) P50,000.00 as attorneys fees.
SO ORDERED.4
Respondent appealed to the Court of Appeals. In its Decision5
dated 11 May 2005, the Court of Appeals reversed the trial
courts Decision and absolved respondent from civil liability
under Article 2180 of the Civil Code.6
Petitioners filed a motion for reconsideration, which the Court
of Appeals denied in its Resolution dated 19 August 2005.
Hence, this petition.
The Trial Courts Ruling
The trial court held respondent civilly liable for the death of
Alfred under Article 2180 in relation to Article 2176 of the Civil
Code.7 The trial court held that the accidental shooting of Alfred
which caused his death was partly due to the negligence of
respondents employee Aristedes Matibag (Matibag). Matibag
and Jason Herbolario (Herbolario) were employees of
respondent even if they were only paid on a commission basis.
Under the Civil Code, respondent is liable for the damages
caused by Matibag on the occasion of the performance of his
duties, unless respondent proved that he observed the
diligence of a good father of a family to prevent the damage.
The trial court held that respondent failed to observe the
required diligence when he left the key to the drawer
containing the loaded defective gun without instructing his
employees to be careful in handling the loaded gun.
The Court of Appeals Ruling
The Court of Appeals held that respondent cannot be held
civilly liable since there was no employer-employee
relationship between respondent and Matibag. The Court of
Appeals found that Matibag was not under the control of
respondent with respect to the means and methods in the
performance of his work. There can be no employer-employee
relationship where the element of control is absent. Thus,
Article 2180 of the Civil Code does not apply in this case and
respondent cannot be held liable.
Furthermore, the Court of Appeals ruled that even if
respondent is considered an employer of Matibag, still
respondent cannot be held liable since no negligence can be
attributed to him. As explained by the Court of Appeals:
Granting arguendo that an employer-employee relationship
existed between Aristedes Matibag and the defendantappellant, we find that no negligence can be attributed to him.
Negligence is best exemplified in the case of Picart vs. Smith
(37 Phil. 809). The test of negligence is this:

26
"x x x. Could 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 a duty on the actor to refrain
from that course or take precaution against its mischievous
results, and the failure to do so constitutes negligence. x x x."
Defendant-appellant maintains that he is not guilty of
negligence and lack of due care as he did not fail to observe
the diligence of a good father of a family. He submits that he
kept the firearm in one of his table drawers, which he locked
and such is already an indication that he took the necessary
diligence and care that the said gun would not be accessible to
anyone. He puts [sic] that his store is engaged in selling
firearms and ammunitions. Such items which are per se
dangerous are kept in a place which is properly secured in
order that the persons coming into the gun store would not be
able to take hold of it unless it is done intentionally, such as
when a customer is interested to purchase any of the firearms,
ammunitions and other related items, in which case, he may be
allowed to handle the same.
We agree. Much as We sympathize with the family of the
deceased, defendant-appellant is not to be blamed. He
exercised due diligence in keeping his loaded gun while he
was on a business trip in Manila. He placed it inside the drawer
and locked it. It was taken away without his knowledge and
authority. Whatever happened to the deceased was purely
accidental.8
The Issues
Petitioners raise the following issues:
I. THE APPELLATE COURT COMMITTED SERIOUS ERROR
IN RENDERING THE DECISION AND RESOLUTION IN
QUESTION IN DISREGARD OF LAW AND JURISPRUDENCE
BY REVERSING THE ORDER OF THE REGIONAL TRIAL
COURT
(BRANCH
59)
OF
BAGUIO
CITY
NOTWITHSTANDING CLEAR, AUTHENTIC RECORDS AND
TESTIMONIES PRESENTED DURING THE TRIAL WHICH
NEGATE AND CONTRADICT ITS FINDINGS.
II. THE APPELLATE COURT COMMITTED GRAVE,
REVERSIBLE ERROR IN RENDERING THE DECISION AND
RESOLUTION IN QUESTION BY DEPARTING FROM THE
ACCEPTED AND USUAL COURSE OF JUDICIAL
PROCEEDINGS THEREBY IGNORING THE FACTUAL
FINDINGS OF THE REGIONAL TRIAL COURT (BRANCH 59)
OF BAGUIO CITY SHOWING PETITIONERS CLEAR
RIGHTS TO THE AWARD OF DAMAGES.9
The Ruling of the Court
We find the petition meritorious.
This case for damages arose out of the accidental shooting of
petitioners son. Under Article 116110 of the Civil Code,
petitioners may enforce their claim for damages based on the
civil liability arising from the crime under Article 100 11 of the
Revised Penal Code or they may opt to file an independent
civil action for damages under the Civil Code. In this case,
instead of enforcing their claim for damages in the homicide
case filed against Matibag, petitioners opted to file an
independent civil action for damages against respondent whom
they alleged was Matibags employer. Petitioners based their
claim for damages under Articles 2176 and 2180 of the Civil
Code.

Unlike the subsidiary liability of the employer under Article


10312 of the Revised Penal Code,13 the liability of the employer,
or any person for that matter, under Article 2176 of the Civil
Code is primary and direct, based on a persons own
negligence. Article 2176 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 preexisting contractual relation between the parties, is called
quasi-delict and is governed by the provisions of this Chapter.
This case involves the accidental discharge of a firearm inside
a gun store.1avvphi1 Under PNP Circular No. 9, entitled the
"Policy on Firearms and Ammunition Dealership/Repair," a
person who is in the business of purchasing and selling of
firearms and ammunition must maintain basic security and
safety requirements of a gun dealer, otherwise his License to
Operate Dealership will be suspended or canceled.14
Indeed, a higher degree of care is required of someone who
has in his possession or under his control an instrumentality
extremely dangerous in character, such as dangerous
weapons or substances. Such person in possession or control
of dangerous instrumentalities has the duty to take exceptional
precautions to prevent any injury being done thereby.15 Unlike
the ordinary affairs of life or business which involve little or no
risk, a business dealing with dangerous weapons requires the
exercise of a higher degree of care.
As a gun store owner, respondent is presumed to be
knowledgeable about firearms safety and should have known
never to keep a loaded weapon in his store to avoid
unreasonable risk of harm or injury to others. Respondent has
the duty to ensure that all the guns in his store are not loaded.
Firearms should be stored unloaded and separate from
ammunition when the firearms are not needed for readyaccess defensive use.16 With more reason, guns accepted by
the store for repair should not be loaded precisely because
they are defective and may cause an accidental discharge
such as what happened in this case. Respondent was clearly
negligent when he accepted the gun for repair and placed it
inside the drawer without ensuring first that it was not loaded.
In the first place, the defective gun should have been stored in
a vault. Before accepting the defective gun for repair,
respondent should have made sure that it was not loaded to
prevent any untoward accident. Indeed, respondent should
never accept a firearm from another person, until the cylinder
or action is open and he has personally checked that the
weapon is completely unloaded.17 For failing to insure that the
gun was not loaded, respondent himself was negligent.
Furthermore, it was not shown in this case whether respondent
had a License to Repair which authorizes him to repair
defective firearms to restore its original composition or
enhance or upgrade firearms.18
Clearly, respondent did not exercise the degree of care and
diligence required of a good father of a family, much less the
degree of care required of someone dealing with dangerous
weapons, as would exempt him from liability in this case.
WHEREFORE, we GRANT the petition. We SET ASIDE the 11
May 2005 Decision and the 19 August 2005 Resolution of the
Court of Appeals in CA-G.R. CV No. 60669. We REINSTATE
the trial courts Decision dated 8 April 1998.

27
SO ORDERED.
ANTONIO T. CARPIO
Associate Justice
WE CONCUR:
ARTURO D. BRION
Associate Justice
MARIANO C. DEL
CASTILLO
Associate Justice

ROBERTO A. ABAD
Associate Justice

JOSE P. PEREZ
Associate Justice
AT T E S TAT I O N
I attest that the conclusions in the above Decision had been
reached in consultation before the case was assigned to the
writer of the opinion of the Courts Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson
C E R T I F I C AT I O N
Pursuant to Section 13, Article VIII of the Constitution, and the
Division Chairpersons Attestation, I certify that the conclusions
in the above Decision had been reached in consultation before
the case was assigned to the writer of the opinion of the
Courts Division.
REYNATO S. PUNO
Chief Justice
Footnotes
1
Under Rule 45 of the 1997 Rules of Civil Procedure.
2
Penned by Associate Justice Jose Catral Mendoza (now
Supreme Court Justice) with Associate Justices Romeo A.
Brawner and Edgardo P. Cruz, concurring.
3
Rollo, pp. 43-44.
4
Id. at 50.
5
Id. at 29-39.
6
The dispositive portion of the Court of Appeals decision reads:
WHEREFORE, the April 8, 1998 Decision of the Regional Trial
Court, Branch 59, Baguio City, is REVERSED and SET ASIDE
and a new one entered dismissing the defendant-appellant
from civil liability under Article 2180 of the Civil Code.
SO ORDERED.
7
Articles 2176 and 2180 of the Civil Code provide:
Art. 2176. Whoever by act or omission causes damage to
another, there being fault or negligence, is obliged to pay for
the damage done. Such fault or negligence, if there is no preexisting contractual relation between the parties, is called
quasi-delict and is governed by the provisions of this Chapter.
Art. 2180. The obligation imposed by article 2176 is
demandable not only for ones own acts or omissions, but also
of those persons for whom one is responsible.
xxx
The owners and managers of an establishment or enterprise
are likewise responsible for damages caused by their
employees in the service of the branches in which the latter are
employed or on the occasion of their functions.
xxx

The 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.
8
Rollo, pp. 38-39.
9
Id. at 15.
10
Article 1161 of the Civil Code provides: "Civil obligations
arising from criminal offenses shall be governed by the penal
laws, subject to the provisions of Article 2177, and of the
pertinent provisions of Chapter 2, Preliminary Title, on Human
Relations, and Title XVIII of this Book regulating damages."
11
Article 100 of the Revised Penal Code provides that "[e]very
person criminally liable for a felony is also civilly liable."
12
Article 103 of the Revised Penal Code states that "[t]he
subsidiary liability in the next preceding article shall also apply
to employers, teachers, persons, and corporations engaged in
any kind of industry for felonies committed by their servants,
pupils, workmen, apprentices, or employees in the discharge of
their duties."
13
Maniago v. Court of Appeals, 324 Phil. 34 (1996).
14
See PNP Circular No. 9, Policy on Firearms and Ammunition
Dealership/Repair, <http://www.fed.org.ph/fed/download/PNP
Circulars/PNP Circular No. 9.pdf> (visited 18 February 2010).
The pertinent provision of the PNP Circular No. 9 reads:
Administrative Sanction
a. There shall be an Administrative Sanction of suspension or
cancellation of license depending on the gravity and nature of
the offense on the following prohibited acts:
1) Selling of ammunition to unauthorized persons, entities,
security agencies, etc.
2) Selling of display firearm without authority.
3) Failure to maintain the basic security and safety
requirements of a gun dealer and gun repair shop such as
vault, fire fighting equipment and maintenance of security
guards from a licensed security agency.
4) Failure to submit monthly sales report on time to FED, CSG
[Firearms and Explosives Division of the PNP Civil Security
Group].
5) Unauthorized disposition or selling of firearms intended for
demonstration/test/evaluation and display during gun show
purposes.
6) Submission of spurious documents in the application for
licenses.
7) Other similar offenses. (Emphasis supplied)
15
1 J.C. Sanco, Torts and Damages 24-25 (5th ed., 1994).
16
See The Fundamentals of Firearms Safety by the Firearms
and Explosives Division of the PNP Civil Security Group, <
http://www.fed.org.ph/gunsafety.html> (visited 18 February
2010).
17
Id.
18
See PNP Circular No. 9, Policy on Firearms and Ammunition
Dealership/Repair, <http://www.fed.org.ph/fed/download/PNP
Circulars/PNP Circular No. 9.pdf> (visited 18 February 2010).

28
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

29
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.)

30
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 120639 September 25, 1998
BPI EXPRESS CARD CORPORATION, petitioner,
vs.
COURT OF APPEALS and RICARDO J. MARASIGAN,
respondents.
KAPUNAN, J.:
The question before this Court is whether private respondent
can recover moral damages arising from the cancellation of his
credit card by petitioner credit card corporation.
The facts of the case are as stated in the decision of the
respondent court, 1 to wit:
The case arose from the dishonor of the credit card of the
plaintiff Atty. Ricardo J. Marasigan by Caf Adriatico, a
business establishment accredited with the defendantappellate BPI Express Card Corporation (BECC for brevity), on
December 8, 1989 when the plaintiff entertained some guests
thereat.
The records of this case show that plaintiff, who is a lawyer by
profession, was a complimentary member of BECC from
February 1988 to February 1989 and was issued Credit Card
No. 100-012-5534 with a credit limit of P3,000.00 and with a
monthly billing every 27th of the month (Exh. N), subject to the
terms and conditions stipulated in the contract (Exh. 1-b). His
membership was renewed for another year or until February
1990 and the credit limit was increased to P5,000.00 (Exh. A).
The plaintiffs oftentimes exceeded his credit limits (Exhs. I, I-1
to I-12) but this was never taken against him by the defendant
and even his mode of paying his monthly bills in check was
tolerated. Their contractual relations went on smoothly until his
statement of account for October 1989 amounting to P8,987.84
was not paid in due time. The plaintiff admitted having
inadvertently failed to pay his account for the said month
because he was in Quezon province attending to some
professional and personal commitments. He was informed by
his secretary that defendant was demanding immediate
payment of his outstanding account, was requiring him to issue
a check for P15,000.00 which would include his future bills,
and was threatening to suspend his credit card. Plaintiff issued
Far East Bank and Trust Co. Check No. 494675 in the amount
of P15,000.00, postdated December 15, 1989 which was
received on November 23, 1989 by Tess Lorenzo, an
employee of the defendant (Exhs. J and J-1), who in turn gave
the said check to Jeng Angeles, a co-employee who handles
the account of the plaintiff. The check remained in the custody
of Jeng Angeles. Mr. Roberto Maniquiz, head of the collection
department of defendant was formally informed of the
postdated check about a week later. On November 28, 2989,
defendant served plaintiff a letter by ordinary mail informing
him of the temporary suspension of the privileges of his credit
card and the inclusion of his account number in their Caution
List. He was also told to refrain from further use of his credit

card to avoid any inconvenience/embarrassment and that


unless he settles his outstanding account with the defendant
within 5 days from receipt of the letter, his membership will be
permanently cancelled (Exh. 3). There is no showing that the
plaintiff received this letter before December 8, 1989.
Confidential that he had settled his account with the issuance
of the postdated check, plaintiff invited some guests on
December 8, 1989 and entertained them at Caf Adriatico.
When he presented his credit card to Caf Adriatico for the bill
amounting to P735.32, said card was dishonored. One of his
guests, Mary Ellen Ringler, paid the bill by using her own credit
card a Unibankard (Exhs. M, M-1 and M-2).
In a letter addressed to the defendant dated December 12,
1989, plaintiff requested that he be sent the exact billing due
him as of December 15, 1989, to withhold the deposit of his
postdated check and that said check be returned to him
because he had already instructed his bank to stop the
payment thereof as the defendant violated their agreement that
the plaintiff issue the check to the defendant to cover his
account amounting to only P8,987.84 on the condition that the
defendant will not suspend the effectivity of the card (Exh. D).
A letter dated December 16, 1989 was sent by the plaintiff to
the manager of FEBTC, Ramada Branch, Manila requesting
the bank to stop the payment of the check (Exhs. E, E-1). No
reply was received by plaintiff from the defendant to his letter
dated December 12, 1989. Plaintiff sent defendant another
letter dated March 12, 1990 reminding the latter that he had
long rescinded and cancelled whatever arrangement he
entered into with defendant and requesting for his correct
billing, less the improper charges and penalties, and for an
explanation within five (5) days from receipt thereof why his
card was dishonored on December 8, 1989 despite assurance
to the contrary by defendant's personnel-in-charge, otherwise
the necessary court action shall be filed to hold defendant
responsible for the humiliation and embarrassment suffered by
him (Exh. F). Plaintiff alleged further that after a few days, a
certain Atty. Albano, representing himself to be working with
the office of Atty. Lopez, called him inquiring as to how the
matter can be threshed out extrajudicially but the latter said
that such is a serious matter cannot be discussed over the
phone. The defendant served its final demand to the plaintiff
dated March 21, 1990 requiring him to pay in full his overdue
account, including stipulated fees and charges, within 5 days
from receipt thereof or face court action and also to replace the
postdated check with cash within the same period or face
criminal suit for violation of Bouncing Check Law (Exh. G/Exh.
13). The plaintiff in a reply letter dated April 5, 1990 (Exh. H),
demanded defendant's compliance with his request in his first
letter dated March 12, 1990 within three (3) days from receipt,
otherwise the plaintiff will file a case against them, . . . . 2
Thus, on May 7, 1990 private respondent filed a complaint for
damages against petitioner before the Regional Trial Court of
Makati, Branch 150, docketed as Civil Case No. 90-1174.
After trial the trial court ruled for private respondent, finding
that herein petitioner abused its right in contravention of Article
19 of the Civil Code. 3 The dispositive portion of the decision
reads:
Wherefore, judgment is hereby rendered ordering the
defendant to pay plaintiff the following:

31
1.
P 100,000.00 as moral damages;
2.
P 50,000.00 as exemplary damages; and
3.
P 20,000.00 by way of attorney's fees.
On the other hand, plaintiff is ordered to pay defendant its
outstanding obligation in the amount of P14,439.41, amount
due as of December 15, 1989. 4
The trial court's ruling was based on its findings and
conclusions, to wit:
There is no question that plaintiff had been in default in the
payment of his billings for more than two months, prompting
defendant to call him and reminded him of his obligation.
Unable to personally talk with him, this Court is convinced that
somehow one or another employee of defendant called him up
more that once.
However, while it is true that as indicated in the terms and
conditions of the application for BPI credit card upon failure of
the cardholder to pay his outstanding obligation for more that
thirty (30) days, the defendant can automatically suspend or
cancel the credit card, that reserved right should not have been
abused as it was in fact abused, in plaintiff's case. What is
more peculiar here is that there have been admitted
communications between plaintiff and defendant prior to the
suspension or cancellation of plaintiff's credit card and his
inclusion in the cautions list. However, nowhere in any of these
communications was there ever a hint given to plaintiff that his
card had already been suspended or cancelled. In fact, the
Court observed that while defendant was trying its best to
persuade plaintiff to update its account and pay its obligation, it
had already taken steps to suspend/cancel plaintiff's card and
include him in the caution list. While the Court admires
defendant's diplomacy in dealing with its clients, it cannot help
but frown upon the backhanded way defendant deal with
plaintiff's case. For despite Tess Lorenzo's denial, there is
reason to believe that plaintiff was indeed assured by
defendant of the continued honoring of his credit card so long
as he pays his obligation of P15,000.00. Worst, upon receipt of
the postdated check, defendant kept the same until a few days
before it became due and said check was presented to the
head of the collection department, Mr. Maniquiz, to take steps
thereon, resulting to the embarrassing situations plaintiff found
himself in on December 8, 1989. Moreover, Mr. Maniquiz
himself admitted that his request for plaintiff to replace the
check with cash was not because it was a postdated check but
merely to tally the payment with the account due.
Likewise, the Court is not persuaded by the sweeping denials
made by Tess Lorenzo and her claim that her only participation
was to receive the subject check. Her immediate superior, Mr.
Maniquiz testified that he had instructed Lorenzo to
communicate with plaintiff once or twice to request the latter to
replace the questioned check with cash, thus giving support to
the testimony of plaintiff's witness, Dolores Quizon, that it was
one Tess Lorenzo whom she had talked over the phone
regarding plaintiff's account and plaintiff's own statement that it
was this woman who assured him that his card has not yet
been and will not be cancelled/suspended if he would pay
defendant the sum of P15,000.00.
Now, on the issue of whether or not upon receipt of the subject
check defendant had agreed that the card shall remain
effective the Court takes note of the following:

1.
An employee of defendant corporation unconditionally
accepted the subject check upon its delivery despite its being a
postdated one; and the amount did not tally with plaintiff's
obligation;
2.
Defendant did not deny nor controvert plaintiff's claim
that all of his payments were made in checks;
3.
Defendant's main witness, Mr. Maniquiz, categorically
stated that the request for plaintiff to replace his postdated
check with a cash was merely for the purpose of tallying
plaintiff's outstanding obligation with his payment and not to
question the postdated check;
4.
That the card was suspended almost a week after
receipt of the postdated check;
5.
That despite the many instances that defendant could
have informed plaintiff over the phone of the cancellation or
suspension of his credit card, it did not do so, which could have
prevented the incident of December 8, 1989, the notice
allegedly sent thru ordinary mail is not only unreliable but takes
a long time. Such action as suspension of credit card must be
immediately relayed to the person affected so as to avoid
embarrassing situations.
6.
And that the postdated check was deposited on
December 20, 1989.
In view of the foregoing observations, it is needless to say that
there was indeed an arrangement between plaintiff and the
defendant, as can be inferred from the acts of the defendant's
employees, that the subject credit card is still good and could
still be used by the plaintiff as it would be honored by the duly
accredited establishment of defendant.
Not satisfied with the Regional Trial Court's decision, petitioner
appealed to the Court of Appeals, which in a decision
promulgated on March 9, 1995 ruled in its dispositive portion.
WHEREFORE, premises considered the decision appealed
from is hereby AFFIRMED with the MODIFICATION that the
defendant-appellant shall pay the plaintiff-appellee the
following: P50,000.00 as moral damages: P25,000.00 as
exemplary damages; and P10,000.00 by way of attorney's
fees.
SO ORDERED. 6
Hence, the present petition on the following assignment of
errors:
I
THE LOWER COURT ERRED IN DECLARING THAT THERE
WAS INDEED AN AGREEMENT OR ARRANGEMENT
ENTERED INTO BETWEEN THE PARTIES WHEREIN THE
DEFENDANT REQUIRED THE PLAINTIFF TO ISSUE A
POSTDATED CHECK IN ITS FAVOR IN THE AMOUNT OF
P15,000.00 AS PAYMENT FOR HIS OVERDUE ACCOUNTS,
WITH THE CONDITION THAT THE PLAINTIFF'S CREDIT
CARD WILL NOT BE SUSPENDED OR CANCELLED.
II
THE LOWER COURT ERRED IN HOLDING DEFENDANT
LIABLE FOR DAMAGES AND ATTORNEY'S FEES ARISING
OUT FROM THE DISHONOR OF THE PLAINTIFF'S CREDIT
CARD. 7
We find the petition meritorious.
The first issue to be resolved is whether petitioner had the right
to suspend the credit card of the private respondent.

32
Under the terms and conditions of the credit card, signed by
the private respondent, any card with outstanding balances
after thirty (30) days from original billing/statement shall
automatically be suspended, thus:
PAYMENT OF CHARGES BECC shall furnish the
Cardholder a monthly statement of account made through the
use of the CARD and the Cardholder agrees that all charges
made through the use of the CARD shall be paid by the
Cardholder on or before the last day for payment, which is
twenty (20) days from the date of the said statement of
account; and such payment due date may be changed to an
earlier date if the Cardholder's account is considered overdue
and/or with balances in excess of the approved credit limit; or
to such other date as may be deemed proper by the CARD
issuer with notice to the Cardholder on the same monthly
statement of account. If the last day for payment falls on a
Saturday, Sunday or Holiday, the last day for payment
automatically becomes the last working day prior to the said
payment date. However, notwithstanding the absence or lack
of proof of service of the statement of charges to the
Cardholder, the latter shall pay any or all charges made
through the use of the CARD within thirty (30) days from the
date or dates thereof. Failure of Cardholder to pay any and all
charges made through the CARD within the payment period as
stated in the statement of charges or with in thirty (30) days
from actual date or dates whichever occur earlier, shall render
him in default without the necessity of demand from BECC,
which the Cardholder expressly waives. These charges or
balance thereof remaining unpaid after the payment due date
indicated on the monthly statement of account shall bear
interest of 3% per month and an additional penalty fee
equivalent to another 3% of the amount due for every month or
a fraction of a month's delay. PROVIDED, that if there occurs
any changes on the prevailing market rates BECC shall have
the option to adjust the rate of interest and/or penalty fee due
on the outstanding obligation with prior notice to the
Cardholder.
xxx
xxx
xxx
Any CARD with outstanding balances unpaid after thirty (30)
days from original billing/statement date shall automatically be
suspended and those with accounts unpaid after sixty (60)
days from said original billing/statement date shall
automatically be cancelled without prejudice to BECC's right to
suspend or cancel any CARD any time and for whatever
reason. In case of default in his obligation as provided for in
the preceding paragraph, Cardholder shall surrender his CARD
to BECC and shall in addition to the interest and penalty
charges aforementioned, pay the following liquidated damages
and/or fees (a) a collection fee of 25% of the amount due if the
account is referred to a collection agency or attorney; (b) a
service fee of P100 for every dishonored check issued by the
Cardholder's in payment of his account, without prejudice;
however to BECC's right of considering Cardholder's obligation
unpaid; cable cost for demanding payment or advising
cancellation of membership shall also be for Cardholder's
account; and (c) a final fee equivalent to 25% of the unpaid
balance, exclusive of litigation expenses and judicial costs, if
the payment of the account is enforced through court action. 8

The aforequoted provision of the card cannot be any clearer.


By his own admission private respondent no payment within
thirty days for his billing/statement dated 27 September 1989.
Neither did he make payment for his original billing/statement
dated 27 October 1989. Consequently as early as 28 October
1989 thirty days from the non-payment of his billing dated 27
September 1989, petitioner corporation could automatically
suspend his credit card.
The next issue is whether prior to the suspension of private
respondent's credit card on 28 November 1989 the parties
entered into an agreement whereby the card could still be used
and would be duly honored by duly accredited establishments.
We agree with the findings of the respondent court, that there
was an arrangement between the parties, wherein the
petitioner required the private respondent to issue a check
worth P15,000.00 as payment for the latter's billings. However
we find that the private respondent was not able to comply with
this obligation.
As the testimony of private respondent himself bears out, the
agreement was for the immediate payment of the outstanding
account:
Q
In said statement of account that you are supposed to
pay the P8,974.84 the charge of interest and penalties, did you
note that?
A
Yes, sir I noted the date.
Q
When?
A
When I returned from the Quezon province, sir
Q
When?
A
I think November 22, sir.
Q
So that before you used again the credit card you
were not able to pay immediately this P8,987.84 in cash?
A
I paid P15,000.00, sir.
Q
My question Mr. witness is, did you pay this
P8,987.84 in charge of interest and penalties immediately in
cash?
A
In cash no, but in check, sir.
Q
You said that you noted the word "immediately" in
bold letters in your statement of accounts, why did not pay
immediately?
A
Because I received that late, sir.
Q
Yes, on November 22 when you received from the
secretary of the defendant telling you to pay the principal
amount of P8,987.84, why did you not pay?
A
There was a communication between me and the
defendant, I was required to pay P8,000.00 but I paid in check
for P15,000.00, sir.
Q
Do you have any evidence to show that the defendant
required you to pay in check for P15,000.00?
A
Yes, sir.
Q
Where is it?
A
It was telecommunication, sir.
Q
So there is no written communication between you
and the defendant?
A
There was none, sir.
Q
There is no written agreement which says that
P8,987.84 should be paid for P15,000.00 in check, there is
none?
A
Yes, no written agreement, sir.

33
Q
And you as a lawyer you know that a check is not
considered as cash specially when it is postdated sent to the
defendant?
A
That is correct, sir.
Clearly the purpose of the arrangement between the parties on
November 22, 1989, was for the immediate payment of the
private respondent's outstanding account, in order that his
credit card would not be suspended.
As agreed upon by the parties, on the following day, private
respondent did issue a check for P15,000.00. However, the
check was postdated 15 December 1989. Settled is the
doctrine that a check is only a substitute for money and not
money, the delivery of such an instrument does not, by itself
operate as payment. 9 This is especially true in the case of a
postdated check.
Thus, the issuance by the private respondent of the postdated
check was not effective payment. It did not comply with his
obligation under the arrangement with Miss Lorenzo. Petitioner
corporation was therefore justified in suspending his credit
card.
Finally, we find no legal and factual basis for private
respondent's assertion that in canceling the credit card of the
private respondent, petitioner abused its right under the terms
and conditions of the contract.
To find the existence of an abuse of right Article 19 the
following elements must be present (1) There is a legal right or
duty; (2) which is exercised in bad faith; (3) for the sole intent
of prejudicing or injuring another. 10
Time and again this Court has held that good faith is presumed
and the burden of proving bad faith is on the party alleging it. 11
This private respondent failed to do. In fact, the action of the
petitioner belies the existence of bad faith. As early as 28
October 1989, petitioner could have suspended private
respondent's card outright. Instead, petitioner allowed private
respondent to use his card for several weeks. Petitioner had
even notified private respondent of the impending suspension
of his credit card and made special accommodations for him
for setting his outstanding account. As such, petitioner cannot
be said to have capriciously and arbitrarily canceled the private
respondent's credit card.
We do not dispute the findings of the lower court that private
respondent suffered damages as a result of the cancellation of
his credit card. However, 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
results of a violation of a legal duty. 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. These situations
are often called damnum absque
injuria. 12
In other words, in order that the plaintiff may maintain an action
for the injuries of which he complaints, 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. 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 a breach of some duty and the imposition of
liability for that breach before damages may be awarded; 13
and the breach of such duty should be the proximate cause of
the injury.
We therefore disagree with the ruling of the respondent court
that the dishonor of the credit card of the private respondent by
Caf Adriatico is attributable to petitioner for its willful or gross
neglect to inform the private respondent of the suspension of
his credit card, the unfortunate consequence of which brought
social humiliation and embarrassment to the private
respondent. 14
It was petitioner's failure to settle his obligation which caused
the suspension of his credit card and subsequent dishonor at
Caf Adriatico. He can not now pass the blame to the petitioner
for not notifying him of the suspension of his card. As quoted
earlier, the application contained the stipulation that the
petitioner could automatically suspend a card whose billing has
not been paid for more than thirty days. Nowhere is it stated in
the terms and conditions of the application that there is a need
of notice before suspension may be affected as private
respondent claims. 15
This notwithstanding on November 28, 1989, the day of the
suspension of private respondent's card, petitioner sent a letter
by ordinary mail notifying private respondent that his card had
been temporarily suspended. Under the Rules on Evidence,
there is a disputable presumption that letters duly directed and
mailed were received on the regular course of mail. 16 Aside
from the private respondent's bare denial he failed to present
evidence to rebut the presumption that he received said notice.
In fact upon cross examination private respondent admitted
that he did receive the letter notifying him of the cancellation:
Q
Now you were saying that there was a first letter sent
to you by the defendant?
A
Your letter, sir.
Q
Was that the first letter that you received?
A
Yes, sir.
Q
It is that there was a communication first between you
and the defendant?
A
There was none, sir. I received a cancellation notice
but that was after November 27. 17
As it was private respondent's own negligence which was the
proximate cause of his embarrassing and humiliating
experience, we find the award of damages by the respondent
court clearly unjustified. We take note of the fact that private
respondent has not yet paid his outstanding account with
petitioner.
IN VIEW OF THE FOREGOING, the decision of the Court of
Appeals ordering petitioner to pay private respondent
P100,000.00 as moral damages P50,000.00 as exemplary
damages and P20,000.00 as attorney's fees, is SET ASIDE.
Private respondent is DIRECTED to pay his outstanding
obligation with the petitioner in the amount of P14,439.41.
SO ORDERED.
Narvasa, C.J. and Romero, JJ., concur.
Purisima, J., took no part.
Footnotes
1
CA decision penned by: Justice Salome A. Montoya, concurred by:
Justices Fidel P. Purisima and Godardo A. Jacinto, Rollo, p. 12.

34
2
Id., at 24-26.
3
Art. 19. Every person must, in the exercise of his rights and in the
performance of his duties, act with justice, give everyone his due, and observe
honestly and good faith.
4
See note 1, p. 45.
5
Id., at 42-44.
6
Id., at 35.
7
Id., at 6.
8
Records, p. 104.
9
Roman Catholic Bishop of Malolos, Inc. vs. IAC, 191 SCRA 411
(1990).
10
Albenson Enterprises Corp. vs. CA, 217 SCRA 16, 25 (1993).
11
Barons Marketing Corp. vs. Court of Appeals and Phelps Dodge
Phils., Inc., G.R No. 126486, February 9, 1998.
12
Custodio vs. CA, 253 SCRA 483 (1996) citing 22 Am Jur 2d,
Damages, Sec. 4, 35-36.
13
Ibid.
14
See note 1, p. 33.
15
During cross-examination of plaintiff-private respondent Ricardo
Marasigan by counsel for the defendant-petitioner the following exchange
ensued:
Q
Now you know that after using the credit card you have to pay the
monthly charges as they fall due in accordance with the obligation/application
that you signed?
A
Yes, sir.
Q
And if the payments were not made on time they are supposed to
earn interest?
A
Yes, sir.
Q
They also earn charges, may we know your answer Mr. Witness?
A
Yes, sir.
Q
Thank you. In case collection suit is filed you know that there were
litigation charges that will be claimed against you, is it not?
A
I don't know, sir.
Q
But you as practicing lawyer?
A
Yes, as a matter of fact that is the procedure.
Q
But you did not read the contests?
A
Yes, sir.
Q
But how did you come to know that you are supposed to pay the
charges since you have not read the contents?
A
By the statement of account, sir.
Q
What about the date when you should pay your monthly charges, did
you know when to pay it?
A
It is also stated there, sir.
Q
In the monthly statement of account?
A
Yes, sir.
Q
When you received this monthly statement of account did you not
complain to the defendant the credit card since you have not read the contents of
your application?
A
No, sir I did not.
Q
You continued using that credit card until it was suspended and
terminated?
A
Yes, sir.
Q
Now do you also know from the terms and conditions of the contract
between you and the defendant that if the charges for the use of the credit card
are not paid it will be suspended?
A
Yes, sir. But there has got to be a prior notice.
Q
Thank you. After a suspension is still not paid you credit card has to
be terminated?
A
I think is the procedure, sir. (TSN, November 5, 1990, pp. 39-42).
16
Revised Rules of Court, Rule 131 Sec. 3 (m).
17
TSN, November 5, 1990, pp. 51-52.

35
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 72964 January 7, 1988
FILOMENO URBANO, petitioner,
vs.
HON. INTERMEDIATE APPELLATE COURT AND PEOPLE
OF THE PHILIPPINES, respondents.
GUTIERREZ, JR., J.:
This is a petition to review the decision of the then Intermediate
Appellate Court which affirmed the decision of the then Circuit
Criminal Court of Dagupan City finding petitioner Filomeno
Urban guilty beyond reasonable doubt of the crime of
homicide.
The records disclose the following facts of the case.
At about 8:00 o'clock in the morning of October 23, 1980,
petitioner Filomeno Urbano went to his ricefield at Barangay
Anonang, San Fabian, Pangasinan located at about 100
meters from the tobacco seedbed of Marcelo Javier. He found
the place where he stored his palay flooded with water coming
from the irrigation canal nearby which had overflowed. Urbano
went to the elevated portion of the canal to see what happened
and there he saw Marcelo Javier and Emilio Erfe cutting grass.
He asked them who was responsible for the opening of the
irrigation canal and Javier admitted that he was the one.
Urbano then got angry and demanded that Javier pay for his
soaked palay. A quarrel between them ensued. Urbano
unsheathed his bolo (about 2 feet long, including the handle,
by 2 inches wide) and hacked Javier hitting him on the right
palm of his hand, which was used in parrying the bolo hack.
Javier who was then unarmed ran away from Urbano but was
overtaken by Urbano who hacked him again hitting Javier on
the left leg with the back portion of said bolo, causing a
swelling on said leg. When Urbano tried to hack and inflict
further injury, his daughter embraced and prevented him from
hacking Javier.
Immediately thereafter, Antonio Erfe, Emilio Erfe, and Felipe
Erfe brought Javier to his house about 50 meters away from
where the incident happened. Emilio then went to the house of
Barangay Captain Menardo Soliven but not finding him there,
Emilio looked for barrio councilman Felipe Solis instead. Upon
the advice of Solis, the Erfes together with Javier went to the
police station of San Fabian to report the incident. As
suggested by Corporal Torio, Javier was brought to a
physician. The group went to Dr. Guillermo Padilla, rural health
physician of San Fabian, who did not attend to Javier but
instead suggested that they go to Dr. Mario Meneses because
Padilla had no available medicine.
After Javier was treated by Dr. Meneses, he and his
companions returned to Dr. Guillermo Padilla who conducted a
medico-legal examination. Dr. Padilla issued a medico-legal
certificate (Exhibit "C" dated September 28, 1981) which reads:
TO WHOM IT MAY CONCERN:
This is to certify that I have examined the wound of Marcelo
Javier, 20 years of age, married, residing at Barangay
Anonang, San Fabian, Pangasinan on October 23, 1980 and
found the following:

1
-Incised wound 2 inches in length at the upper portion
of the lesser palmar prominence, right.
As to my observation the incapacitation is from (7-9) days
period. This wound was presented to me only for medico-legal
examination, as it was already treated by the other doctor. (p.
88, Original Records)
Upon the intercession of Councilman Solis, Urbano and Javier
agreed to settle their differences. Urbano promised to pay
P700.00 for the medical expenses of Javier. Hence, on
October 27, 1980, the two accompanied by Solis appeared
before the San Fabian Police to formalize their amicable
settlement. Patrolman Torio recorded the event in the police
blotter (Exhibit A), to wit:
xxx
xxx
xxx
Entry Nr 599/27 Oct '80/103OH/ Re entry Nr 592 on page 257
both parties appeared before this Station accompanied by
brgy. councilman Felipe Solis and settled their case amicably,
for they are neighbors and close relatives to each other.
Marcelo Javier accepted and granted forgiveness to Filomeno
Urbano who shoulder (sic) all the expenses in his medical
treatment, and promising to him and to this Office that this will
never be repeated anymore and not to harbour any grudge
against each other. (p. 87, Original Records.)
Urbano advanced P400.00 to Javier at the police station. On
November 3, 1980, the additional P300.00 was given to Javier
at Urbano's house in the presence of barangay captain
Soliven.
At about 1:30 a.m. on November 14, 1980, Javier was rushed
to the Nazareth General Hospital in a very serious condition.
When admitted to the hospital, Javier had lockjaw and was
having convulsions. Dr. Edmundo Exconde who personally
attended to Javier found that the latter's serious condition was
caused by tetanus toxin. He noticed the presence of a healing
wound in Javier's palm which could have been infected by
tetanus.
On November 15, 1980 at exactly 4:18 p.m., Javier died in the
hospital. The medical findings of Dr. Exconde are as follows:
Date Diagnosis
11-14-80 ADMITTED due to trismus
adm. at DX TETANUS
1:30 AM Still having frequent muscle spasm. With diffi#35, 421 culty opening his mouth. Restless at times. Febrile
11-15-80 Referred. Novaldin 1 amp. inj. IM. Sudden cessation of respiration and HR after muscular spasm.
02 inhalation administered. Ambo bag resuscitation and cardiac massage done but to no avail.
Pronounced dead by Dra. Cabugao at 4:18 P.M.
PMC done and cadaver brought home by relatives. (p. 100, Original Records)
In an information dated April 10, 1981, Filomeno Urbano was
charged with the crime of homicide before the then Circuit
Criminal Court of Dagupan City, Third Judicial District.
Upon arraignment, Urbano pleaded "not guilty." After trial, the
trial court found Urbano guilty as charged. He was sentenced
to suffer an indeterminate prison term of from TWELVE (12)
YEARS of prision mayor, as minimum to SEVENTEEN (17)
years, FOUR (4) MONTHS and ONE (1) DAY of reclusion
temporal, as maximum, together with the accessories of the
law, to indemnify the heirs of the victim, Marcelo Javier, in the

36
amount of P12,000.00 without subsidiary imprisonment in case
of insolvency, and to pay the costs. He was ordered confined
at the New Bilibid Prison, in Muntinlupa, Rizal upon finality of
the decision, in view of the nature of his penalty.
The then Intermediate Appellate Court affirmed the conviction
of Urbano on appeal but raised the award of indemnity to the
heirs of the deceased to P30,000.00 with costs against the
appellant.
The appellant filed a motion for reconsideration and/or new
trial. The motion for new trial was based on an affidavit of
Barangay Captain Menardo Soliven (Annex "A") which states:
That in 1980, I was the barrio captain of Barrio Anonang, San
Fabian, Pangasinan, and up to the present having been reelected to such position in the last barangay elections on May
17, 1982;
That sometime in the first week of November, 1980, there was
a typhoon that swept Pangasinan and other places of Central
Luzon including San Fabian, a town of said province;
That during the typhoon, the sluice or control gates of the Bued
irrigation dam which irrigates the ricefields of San Fabian were
closed and/or controlled so much so that water and its flow to
the canals and ditches were regulated and reduced;
That due to the locking of the sluice or control gates of the dam
leading to the canals and ditches which will bring water to the
ricefields, the water in said canals and ditches became shallow
which was suitable for catching mudfishes;
That after the storm, I conducted a personal survey in the area
affected, with my secretary Perfecto Jaravata;
That on November 5, 1980, while I was conducting survey, I
saw the late Marcelo Javier catching fish in the shallow
irrigation canals with some companions;
That few days there after,or on November l5, l980, I came to
know that said Marcelo Javier died of tetanus. (p. 33, Rollo)
The motion was denied. Hence, this petition.
In a resolution dated July 16, 1986, we gave due course to the
petition.
The case involves the application of Article 4 of the Revised
Penal Code which provides that "Criminal liability shall be
incurred: (1) By any person committing a felony (delito)
although the wrongful act done be different from that which he
intended ..." Pursuant to this provision "an accused is
criminally responsible for acts committed by him in violation of
law and for all the natural and logical consequences resulting
therefrom." (People v. Cardenas, 56 SCRA 631).
The record is clear that Marcelo Javier was hacked by the
petitioner who used a bolo as a result of which Javier suffered
a 2-inch incised wound on his right palm; that on November 14,
1981 which was the 22nd day after the incident, Javier was
rushed to the hospital in a very serious condition and that on
the following day, November 15, 1981, he died from tetanus.
Under these circumstances, the lower courts ruled that Javier's
death was the natural and logical consequence of Urbano's
unlawful act. Hence, he was declared responsible for Javier's
death. Thus, the appellate court said:
The claim of appellant that there was an efficient cause which
supervened from the time the deceased was wounded to the
time of his death, which covers a period of 23 days does not
deserve serious consideration. True, that the deceased did not
die right away from his wound, but the cause of his death was

due to said wound which was inflicted by the appellant. Said


wound which was in the process of healing got infected with
tetanus which ultimately caused his death.
Dr. Edmundo Exconde of the Nazareth General Hospital
testified that the victim suffered lockjaw because of the
infection of the wound with tetanus. And there is no other way
by which he could be infected with tetanus except through the
wound in his palm (tsn., p. 78, Oct. 5, 1981). Consequently, the
proximate cause of the victim's death was the wound which got
infected with tetanus. And the settled rule in this jurisdiction is
that an accused is liable for all the consequences of his
unlawful act. (Article 4, par. 1, R.P.C. People v. Red, CA 43
O.G. 5072; People v. Cornel 78 Phil. 418).
Appellant's allegation that the proximate cause of the victim's
death was due to his own negligence in going back to work
without his wound being properly healed, and lately, that he
went to catch fish in dirty irrigation canals in the first week of
November, 1980, is an afterthought, and a desperate attempt
by appellant to wiggle out of the predicament he found himself
in. If the wound had not yet healed, it is impossible to conceive
that the deceased would be reckless enough to work with a
disabled hand. (pp. 20-21, Rollo)
The petitioner reiterates his position that the proximate cause
of the death of Marcelo Javier was due to his own negligence,
that Dr. Mario Meneses found no tetanus in the injury, and that
Javier got infected with tetanus when after two weeks he
returned to his farm and tended his tobacco plants with his
bare hands exposing the wound to harmful elements like
tetanus germs.
The evidence on record does not clearly show that the wound
inflicted by Urbano was infected with tetanus at the time of the
infliction of the wound. The evidence merely confirms that the
wound, which was already healing at the time Javier suffered
the symptoms of the fatal ailment, somehow got infected with
tetanus However, as to when the wound was infected is not
clear from the record.
In Vda. de Bataclan, et al. v. Medina (102 Phil. 1181), we
adopted the following definition of proximate cause:
xxx
xxx
xxx
... 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 ordinarily 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." (at pp. 185-186)
The issue, therefore, hinges on whether or not there was an
efficient intervening cause from the time Javier was wounded

37
until his death which would exculpate Urbano from any liability
for Javier's death.
We look into the nature of tetanusThe incubation period of tetanus, i.e., the time between injury
and the appearance of unmistakable symptoms, ranges from 2
to 56 days. However, over 80 percent of patients become
symptomatic within 14 days. A short incubation period
indicates severe disease, and when symptoms occur within 2
or 3 days of injury the mortality rate approaches 100 percent.
Non-specific premonitory symptoms such as restlessness,
irritability, and headache are encountered occasionally, but the
commonest presenting complaints are pain and stiffness in the
jaw, abdomen, or back and difficulty swallowing. As the
progresses, stiffness gives way to rigidity, and patients often
complain of difficulty opening their mouths. In fact, trismus in
the commonest manifestation of tetanus and is responsible for
the familiar descriptive name of lockjaw. As more muscles are
involved, rigidity becomes generalized, and sustained
contractions called risus sardonicus. The intensity and
sequence of muscle involvement is quite variable. In a small
proportion of patients, only local signs and symptoms develop
in the region of the injury. In the vast majority, however, most
muscles are involved to some degree, and the signs and
symptoms encountered depend upon the major muscle groups
affected.
Reflex spasm usually occur within 24 to 72 hours of the first
symptom, an interval referred to as the onset time. As in the
case of the incubation period, a short onset time is associated
with a poor prognosis. Spasms are caused by sudden
intensification of afferent stimuli arising in the periphery, which
increases rigidity and causes simultaneous and excessive
contraction of muscles and their antagonists. Spasms may be
both painful and dangerous. As the disease progresses,
minimal or inapparent stimuli produce more intense and longer
lasting spasms with increasing frequency. Respiration may be
impaired by laryngospasm or tonic contraction of respiratory
muscles which prevent adequate ventilation. Hypoxia may then
lead to irreversible central nervous system damage and death.
Mild tetanus is characterized by an incubation period of at
least 14 days and an onset time of more than 6 days. Trismus
is usually present, but dysphagia is absent and generalized
spasms are brief and mild. Moderately severe tetanus has a
somewhat shorter incubation period and onset time; trismus is
marked, dysphagia and generalized rigidity are present, but
ventilation remains adequate even during spasms. The criteria
for severe tetanus include a short incubation time, and an
onset time of 72 hrs., or less, severe trismus, dysphagia and
rigidity and frequent prolonged, generalized convulsive
spasms. (Harrison's Principle of Internal Medicine, 1983
Edition, pp. 1004-1005; Emphasis supplied)
Therefore, medically speaking, the reaction to tetanus found
inside a man's body depends on the incubation period of the
disease.
In the case at bar, Javier suffered a 2-inch incised wound on
his right palm when he parried the bolo which Urbano used in
hacking him. This incident took place on October 23, 1980.
After 22 days, or on November 14, 1980, he suffered the
symptoms of tetanus, like lockjaw and muscle spasms. The
following day, November 15, 1980, he died.

If, therefore, the wound of Javier inflicted by the appellant was


already infected by tetanus germs at the time, it is more
medically probable that Javier should have been infected with
only a mild cause of tetanus because the symptoms of tetanus
appeared on the 22nd day after the hacking incident or more
than 14 days after the infliction of the wound. Therefore, the
onset time should have been more than six days. Javier,
however, died on the second day from the onset time. The
more credible conclusion is that at the time Javier's wound was
inflicted by the appellant, the severe form of tetanus that killed
him was not yet present. Consequently, Javier's wound could
have been infected with tetanus after the hacking incident.
Considering the circumstance surrounding Javier's death, his
wound could have been infected by tetanus 2 or 3 or a few but
not 20 to 22 days before he died.
The rule is that the death of the victim must be the direct,
natural, and logical consequence of the wounds inflicted upon
him by the accused. (People v. Cardenas, supra) And since we
are dealing with a criminal conviction, the proof that the
accused caused the victim's death must convince a rational
mind beyond reasonable doubt. The medical findings,
however, lead us to a distinct possibility that the infection of the
wound by tetanus was an efficient intervening cause later or
between the time Javier was wounded to the time of his death.
The infection was, therefore, distinct and foreign to the crime.
(People v. Rellin, 77 Phil. 1038).
Doubts are present. There is a likelihood that the wound was
but the remote cause and its subsequent infection, for failure to
take necessary precautions, with tetanus may have been the
proximate cause of Javier's death with which the petitioner had
nothing to do. As we ruled in Manila Electric Co. v. Remoquillo,
et al. (99 Phil. 118).
"A prior and remote cause cannot be made the be of an action
if such remote cause did nothing more than furnish the
condition or give rise to the occasion by which the injury was
made possible, if there intervened between such prior or
remote cause and the injury a distinct, successive, unrelated,
and efficient cause of the injury, even though such injury would
not have happened but for such condition or occasion. If no
danger existed in the condition except because of the
independent cause, such condition was not the proximate
cause. And if an independent negligent act or defective
condition sets into operation the instances which result in injury
because of the prior defective condition, such subsequent act
or condition is the proximate cause." (45 C.J. pp. 931-932). (at
p. 125)
It strains the judicial mind to allow a clear aggressor to go scot
free of criminal liability. At the very least, the records show he
is guilty of inflicting slight physical injuries. However, the
petitioner's criminal liability in this respect was wiped out by the
victim's own act. After the hacking incident, Urbano and Javier
used the facilities of barangay mediators to effect a
compromise agreement where Javier forgave Urbano while
Urbano defrayed the medical expenses of Javier. This
settlement of minor offenses is allowed under the express
provisions of Presidential Decree G.R. No. 1508, Section 2(3).
(See also People v. Caruncho, 127 SCRA 16).
We must stress, however, that our discussion of proximate
cause and remote cause is limited to the criminal aspects of

38
this rather unusual case. It does not necessarily follow that the
petitioner is also free of civil liability. The well-settled doctrine is
that a person, while not criminally liable, may still be civilly
liable. Thus, in the recent case of People v. Rogelio Ligon y
Tria, et al. (G.R. No. 74041, July 29, 1987), we said:
xxx
xxx
xxx
... While the guilt of the accused in a criminal prosecution must
be established beyond reasonable doubt, only a
preponderance of evidence is required in a civil action for
damages. (Article 29, Civil Code). The judgment of acquittal
extinguishes the civil liability of the accused only when it
includes a declaration that the facts from which the civil liability
might arise did not exist. (Padilla v. Court of Appeals, 129
SCRA 559).
The reason for the provisions of article 29 of the Civil Code,
which provides that the acquittal of the accused on the ground
that his guilt has not been proved beyond reasonable doubt
does not necessarily exempt him from civil liability for the same
act or omission, has been explained by the Code Commission
as follows:
The old rule that the acquittal of the accused in a criminal case
also releases him from civil liability is one of the most serious
flaws in the Philippine legal system. It has given use to
numberless instances of miscarriage of justice, where the
acquittal was due to a reasonable doubt in the mind of the
court as to the guilt of the accused. The reasoning followed is
that inasmuch as the civil responsibility is derived from the
criminal offense, when the latter is not proved, civil liability
cannot be demanded.
This is one of those causes where confused thinking leads to
unfortunate and deplorable consequences. Such reasoning
fails to draw a clear line of demarcation between criminal
liability and civil responsibility, and to determine the logical
result of the distinction. The two liabilities are separate and
distinct from each other. One affects the social order and the
other, private rights. One is for the punishment or correction of
the offender while the other is for reparation of damages
suffered by the aggrieved party. The two responsibilities are so
different from each other that article 1813 of the present
(Spanish) Civil Code reads thus: "There may be a compromise
upon the civil action arising from a crime; but the public action
for the imposition of the legal penalty shall not thereby be
extinguished." It is just and proper that, for the purposes of the
imprisonment of or fine upon the accused, the offense should
be proved beyond reasonable doubt. But for the purpose of
indemnity the complaining party, why should the offense also
be proved beyond reasonable doubt? Is not the invasion or
violation of every private right to be proved only by a
preponderance of evidence? Is the right of the aggrieved
person any less private because the wrongful act is also
punishable by the criminal law?
"For these reasons, the Commission recommends the adoption
of the reform under discussion. It will correct a serious defect in
our law. It will close up an inexhaustible source of injustice-a
cause for disillusionment on the part of the innumerable
persons injured or wronged."
The
respondent
court
increased
the
P12,000.00
indemnification imposed by the trial court to P30,000.00.
However, since the indemnification was based solely on the

finding of guilt beyond reasonable doubt in the homicide case,


the civil liability of the petitioner was not thoroughly examined.
This aspect of the case calls for fuller development if the heirs
of the victim are so minded.
WHEREFORE, the instant petition is hereby GRANTED. The
questioned decision of the then Intermediate Appellate Court,
now Court of Appeals, is REVERSED and SET ASIDE. The
petitioner is ACQUITTED of the crime of homicide. Costs de
oficio.
SO ORDERED.
Fernan, (Chairman), Feliciano, Bidin and,Cortes, JJ., concur.

39
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-15688
November 19, 1921
REMIGIO RODRIGUEZ, ET AL., plaintiffs-appellees,
vs.
THE MANILA RAILROAD COMPANY, defendant-appellant.
Orense & Vera for appellant.
Domingo Imperial for appellees.
STREET, J.:
This action was instituted jointly by Remigio Rodrigueza and
three others in the Court of First Instance of the Province of
Albay to recover a sum of money of the Manila Railroad
Company as damages resulting from a fire kindled by sparks
from a locomotive engine under the circumstances set out
below. Upon hearing the cause upon the complaint, answer
and an agreed statement of facts, the trial judge rendered
judgment against the defendant company in favor of the
plaintiffs and awarded to them the following sums respectively
as damages, to wit, (1) to Remigio Rodrigueza, P3,000; (2) to
Domingo Gonzaga, P400; (3) to Cristina Luna, P300; and (4)
to Perfecta Losantas, P150; all with lawful interest from March
21, 1919. From this judgment the defendant appealed.
The facts as appearing from the agreed statement, in relation
with the complaint, are to the effect that the defendant Railroad
Company operates a line through the district of Daraga in the
municipality of Albay; that on January 29, 1918, as one of its
trains passed over said line, a great quantity of sparks were
emitted from the smokestack of the locomotive, and fire was
thereby communicated to four houses nearby belonging to the
four plaintiffs respectively, and the same were entirely
consumed. All of these houses were of light construction with
the exception of the house of Remigio Rodrigueza, which was
of strong materials, though the roof was covered with nipa and
cogon. The fire occurred immediately after the passage of the
train, and a strong wind was blowing at the time. It does not
appear either in the complaint or in the agreed statement
whose house caught fire first, though it is stated in the
appellant's brief that the fire was first communicated to the
house of Remigio Rodrigueza, from whence it spread to the
others.
In the fourth paragraph of the complaint which is admitted to
be true it is alleged that the defendant Railroad Company
was conspicuously negligent in relation to the origin of said fire,
in the following respects, namely, first, in failing to exercise
proper supervision over the employees in charge of the
locomotive; secondly, in allowing the locomotive which emitted
these sparks to be operated without having the smokestack
protected by some device for arresting sparks; thirdly, in using
in its locomotive upon this occasion Bataan coal, a fuel of
known inferior quality which, upon combustion, produces
sparks in great quantity.
The sole ground upon which the defense is rested is that the
house of Remigio Rodrigueza stood partly within the limits of
the land owned by the defendant company, though exactly how
far away from the company's track does not appear. It further
appears that, after the railroad track was laid, the company

notified Rodrigueza to get his house off the land of the


company and to remove it from its exposed position.
Rodrigueza did not comply with this suggestion, though he
promised to put an iron roof on his house, which he never did.
Instead, he changed the materials of the main roof to nipa,
leaving the kitchen and media-aguas covered with cogon.
Upon this fact it is contended for the defense that there was
contributory negligence on the part of Remigio Rodrigueza in
having his house partly on the premises of the Railroad
Company, and that for this reason the company is not liable.
This position is in our opinion untenable for the reasons which
we shall proceed to state.
In the first place, it will be noted that the fact suggested as
constituting a defense to this action could not in any view of the
case operate as a bar to recovery by the three plaintiffs other
than Remigio Rodrigueza, even assuming that the fire was first
communicated to his house; for said three plaintiffs are in
nowise implicated in the act which supposedly constitutes the
defense. In this connection it will be observed that the right of
action of each of these plaintiffs is totally distinct from that of
his co-plaintiff, so much so that each might have sued
separately, and the defendant if it had seen fit to do so, might
in this case have demurred successfully to the complaint for
misjoinder of parties plaintiff. The fact that the several rights of
action of the different plaintiffs arose simultaneously out of one
act of the defendant is not sufficient of itself to require, or even
permit, the joinder of such parties as coplaintiffs in a single
action (30 Cyc., 114) if objection had been made thereto.
Domingo Gonzaga, Cristina Luna, and Perfecta Losantas are
therefore entitled to recover upon the admitted fact that this fire
originated in the negligent acts of the defendant; and the
circumstance that the fire may have been communicated to
their houses through the house of Remegio Rodrigueza,
instead of having been directly communicated from the
locomotive, is immaterial. (See 38 Am. Dec., 64, 77; 1 11 R. C.
L., 968-971; Kansas City, etc. Railroad Co. vs. Blaker, 64 L. R.
A., 81 Pennsylvania Railroad Co. vs. Hope, 80 Pa. St., 373; 21
Am. Rep. 100.)
With respect to the case of Remegio Rodrigueza it is to be
inferred that his house stood upon this ground before the
Railroad Company laid its line over this course; and at any rate
there is no proof that this plaintiff had unlawfully intruded upon
the railroad's property in the act of building his house. What
really occurred undoubtedly is that the company, upon making
this extension, had acquired the land only, leaving the owner of
the house free to remove it. Hence he cannot be considered to
have been a trespasser in the beginning. Rather, he was there
at the sufferance of the defendant company, and so long as his
house remained in this exposed position, he undoubtedly
assumed the risk of any loss that might have resulted from
fires occasioned by the defendant's locomotives if operated
and managed with ordinary care. But he cannot be held to
have assumed the risk of any damage that might result from
the unlawful negligence acts of the defendant. Nobody is
bound to anticipate and defend himself against the possible
negligence of another. Rather he has a right to assume that the
other will use the care of the ordinary prudent man.
(Philadelphia and Reading Railroad Co. vs. Hendrickson, 80
Pa. St., 182; 21 Am. Rep., 97.)

40
In the situation now under consideration the proximate and
only cause of the damage that occurred was the negligent act
of the defendant in causing this fire. The circumstance that
Remigio Rodrigueza's house was partly on the property of the
defendant company and therefore in dangerous proximity to
passing locomotives was an antecedent condition that may in
fact have made the disaster possible, but that circumstance
cannot be imputed to him as contributory negligence
destructive of his right of action, because, first, that condition
was not created by himself; secondly, because his house
remained on this ground by the toleration, and therefore with
the consent of the Railroad Company; and thirdly, because
even supposing the house to be improperly there, this fact
would not justify the defendant in negligently destroying it.
(Grand Trunk Railway of Canada vs. Richardson, 91 U. S.,
454; 23 L. ed., 356; Norfolk etc. Ry. Co. vs. Perrow, 101 Va.,
345, 350.)lawphil.net
The circumstance that the defendant company, upon planting
its line near Remigio Rodrigueza's house, had requested or
directed him to remove it, did not convert his occupancy into a
trespass, or impose upon him any additional responsibility over
and above what the law itself imposes in such situation. In this
connection it must be remembered that the company could at
any time have removed said house in the exercise of the
power of eminent domain, but it elected not to do so.
Questions similar to that now before us have been under the
consideration of American courts many times, and their
decisions are found to be uniformly favorable to recovery
where the property destroyed has been placed in whole or in
part on the right of way of the railroad company with its
express or implied consent. (L. R. Martin Timber Co. vs.Great
Northern Railway Co., 123 Minn., 423; Ann. Cas., 1915A, p.
496, note; Burroughs vs. Housatonic R.R. Co., 15 Conn., 124;
38 Am. Dec., 64; 74; Southern Ry. Co. vs. Patterson, 105 Va.
6; 8 Ann. Cas., 44.) And the case for the plaintiff is apparently
stronger where the company constructs its line in proximity to a
house already built and fails to condemn it and remove it from
its right of way.
From what has been said it is apparent that the judgment
appealed from is in all respect in conformity with the law, and
the same is accordingly affirmed, with costs. So ordered.
Johnson, Araullo, Avancea and Villamor, JJ., concur.
Footnotes
1
Burroughs vs. Housatonic R. R. Co.

41
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-69901
July 31, 1987
ANTONIO RAMON ONGSIAKO, petitioner,
vs.
INTERMEDIATE APPELLATE COURT and THE PEOPLE OF
THE PHILIPPINES, respondents.
CRUZ, J.:
Prosecuted for reckless imprudence resulting in multiple
physical injuries and damage to property, the petitioner was
convicted by the trial court* of only simple negligence resulting
in serious physical injuries and damage to property. He was
sentenced to two months of arresto mayor and to pay a total
indemnity of P143,131.04 for medical expenses, unearned
salaries and as moral damages.1 On appeal, the conviction
was affirmed but the respondent court ** reduced the moral
damages by P84,000.00, thus lowering the total indemnity to
P61,131,04.2 Still not satisfied, the petitioner has come to this
Court for a complete reversal of the judgment below.
This case arose from a collision between the car being driven
by the petitioner and the jeep of Robert Ha on December 30,
1981, at about 4 o'clock in the afternoon. at MacArthur
Highway, in Moncada, Tarlac. The petitioner had a companion,
Leon Miguel Heras, who was seated beside him. Robert Ha
was at the wheel of his vehicle, which had seven other
passengers. It appears that the petitioner was south-bound,
toward Manila, and the jeep was coming from the opposite
direction; that a Philippine Rabbit bus ahead of the jeep
swerved into the petitioner's lane to overtake and bypass a
tricycle; and that as a result of this sudden move, the petitioner,
to avoid a head-on collision, immediately veered his car to the
shoulder of the highway. The car went out of control when it hit
the soft shoulder, moved back diagonally across the cemented
highway, then collided with Ha's jeep, damaging it and causing
multiple injuries to its passengers. The Philippine Rabbit bus
sped away.3
After considering the arguments of the parties in the petition
itself, the comment thereon of the public respondent and the
reply thereto, we gave due course to this petition and required
the parties to file simultaneous memoranda. The petitioner
complied in due time but the Solicitor General, to avoid
repetitiousness, as he put it, merely adopted his sketchy
comment as the memorandum for the respondent.4
While this Court is ordinarily not a trier of facts, it has the
authority to review and reverse the factual findings of the lower
courts if it finds that they do not conform to the evidence of
record. We so find in this case, for reasons to be discussed
presently.
The trial court held, and the respondent court affirmed, that
"the jeep was still about 150 meters away from the Philippine
Rabbit bus when the accused drove his car toward the road
shulder to avoid the collision with the oncoming bus. In other
words, there was sufficient time for Antonio Ramon Ongsiako
to avail of a feasible time to avert hitting the jeep." 5 The judge
should have been more careful in reaching this conclusion for it
is not founded on the facts as established. The evidence of
record is that the distance was not 150 meters but 150 feet,

which makes quite a difference, indeed. The correct distance,


incidentally, was established by no less than the trial court itself
which, in its examination of Robert Ha, the principal
prosecution witness, elicited from him the said information in
the following exchange:
COURT:
Q: How far was the Philippine Rabbit bus ahead of you before
the car swerved to your lane?
WITNESS
A: Approximately about 150 feet ahead of me, Your Honor. 6
The Court considers this discrepancy important because the
finding of negligence by the trial court is based on whether or
not the accused had enough opportunity to avoid the collision.
And that opportunity depended on the distance between the
two vehicles. If the trial judge had carefully considered the
evidence and discovered that the distance was 150 feet and
not meters, it is doubtful that he would have concluded as he
did that the accused was negligent. The distance of 150 feet is
less than one-third of 150 meters, which means that the
sufficient time imagined by the trial judge would have been
correspondingly and significantly reduced by two-thirds of
the actual period. The time as shortened could not have, if we
apply the trial judge's own calculations, prevented the
petitioner from avoiding the collision.
Another indication of carelessness, this time on the part of the
respondent court, is its observation, in rejecting the petitioner's
version of the collision, that "the police sketch of the collision
scene fails to reveal any skidmarks of the appellant's car"7 on
the highway. What is rather odd about this finding is that the
trial court, and the respondent court later, never considered the
fact that the sketch was made five days after the collision, as
clearly emphasized by the petitioner in his brief. Apparently, it
did not occur to the courts below and this is also somewhat
puzzling that all skidmarks would have disappeared by that
time on the busy highway.
There was also apparent disregard of the record when the
respondent court observed that the petitioner had not
presented his companion to testify on his behalf, concluding
that "such failure to present Heras raises the presumption that
his testimony, had it been presented, would have been adverse
to the appellant's cause (Orfanel v. People, 30 SCRA 825)."8
This is another careless conclusion. The premise is incorrect,
and so the conclusion must also be rejected. In fact, the
petitioner did present Heras, and Heras did testify in support of
the petitioner, substantially corroborating the petitioner's
account of the collision. A reading of the transcript of the
stenographic notes in the hearing of the case on July 27, 1983,
will readily disclose this.9
The Court is also perplexed by the following portion of the
appealed decision:
If it was true that appellant lost control of his vehicle as early as
when his car hit the shoulder of the road, it was extremely
stupid of him to move his car back to the highway while his car
was still out of control. This is especially true in the face of his
own admission that he saw the Rabbit bus for the first time
when it was stin about 200 meters away overtaking a vehicle
(jeep of Robert Ha) which was immediately behind a tricycle (p.
2, Ibid.). Assuming that appellant indeed lost control of his car
as he hit the shoulder, he should have applied full not a little

42
pressure upon his brakes. He should have stopped his vehicle
instead of driving it back to the highway and risking collision
with oncoming vehicles. 10
As the car was "still out of control," why is it assumed that the
petitioner would nonetheless be able, although this would be
"extremely stupid," to move it back to the highway? It is really
mystifying that the respondent court would still expect the
petitioner to control the car which, as it says so itself, was then
"out of control." "Assuming the appellant indeed lost control of
his car as he hit the shoulder," the decision adds, "he should
have stopped his vehicle instead of driving it back to the
highway and risking collision with oncoming vehicles." This is
hardly logical. The court cannot assume that the petitioner lost
control of his vehicle and on that assumption fault him for not
correctly controlling it. That would be impossible, to say the
least. When one loses control of his car, he cannot direct it the
way he wants, or move it in the direction he chooses, or
accelerate or stop it, for the simple reason that it is precisely
out of control. A car out of control is simply out of control,
period. As for the "little pressure" the petitioner says he applied
on the brakes, the purpose, according to him, was to prevent
his car from turning turtle as a result of a sudden stop that
would have been caused by his jamming on the brakes.
The real culprit in this unfortunate incident, as the Court sees
it, could be the driver of the Philippine Rabbit bus whose
recklessness was the cause of the collision between the
petitioner's car and Robert Ha's jeep. We notice that the trial
court made the meaningful observation that "the Philippine
Rabbit bus may be faulted," but added rather helplessly, that "it
is not here charged."11 We hope it did not mean by this that
someone else had to be made liable, to vindicate the victims'
rights.
It seems to us that a simple investigation would have
uncovered the Identity and whereabouts of the Rabbit bus
driver, with a view to his prosecution for his involvement in the
collision. Why this was not done reflects on the sense of duty
of the law-enforcement officers who investigated this matter
and on the resourcefulness of the petitioner and his counsel
whose cause could have improved with the indictment of the
said driver.
At any rate, it is the finding of the Court, in view of the
misappreciation of the evidence of record by the respondent
court and the trial court, that the guilt of the petitioner has not
been proved beyond reasonable doubt. Consequently, he
should not have been held guilty of even simple negligence
and instead is entitled to be completely absolved of criminal
responsibility.
The civil liability is, however, a different question.
While the quantum of proof necessary for conviction has not
been established, there is, in our view, a preponderance of
evidence to hold the petitioner liable in damages for the injuries
sustained by the victims of this accident. Although it is really
doubtful that he was criminally negligent, we find there is
enough evidence to sustain the conclusion that a little more
caution and discretion on his part in reacting to the threat of a
head-on collision with the oncoming bus, could have avoided
the unfortunate accident. For this shortcoming, we hold him
liable for the hospitalization expenses and unearned salaries of
the victims as itemized by the trial court and affirmed by the

respondent court. We absolve him, however, from the payment


of moral damages and so reduce his total civil liability to
P46,131.04.
We apply here the doctrine announced in the recent case of
People v. Ligon,12 where the accused was acquitted of the
crime of homicide for lack of clear and convincing proof that he
had criminally caused a cigarette vendor to fall to his death
from the jeep where he was hanging onto. Nevertheless, from
the totality of the facts presented, we declared there was a
preponderance of evidence to hold the accused liable in
damages for the tragic mishap that befell the victim. We make
a similar finding in this case and hold the petitioner civilly
answerable for his quasi-delict.
WHEREFORE, the petitioner is ACQUITTED and his
conviction is REVERSED, but he is held liable in the total sum
of P46,131.04 for damages as above specified. No costs.
SO ORDERED.
Teehankee, C.J., Narvasa, Paras and Gancayco, JJ., concur.
Footnotes
*
Presided by Judge Romeo D. Magat.
**
J.A. Sison, ponente, Nocon and Alfonso, JJ.
1
Rollo, pp. 27-28.
2
Rollo, pp. 36-37.
3
Ibid., p. 20.
4
Id., pp. 96-97.
5
id., p. 30.
6
id., P. 14; TSN, May 5, 1983, pp. 22-23.
7
id, p. 31.
8
id, p. 32.
9
id, p. 22.
10
Decision, P. 6.
11
Rollo, p. 30.
12
G.R. No. 74041, prom. July 29, 1987.

43
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-6913
November 21, 1913
THE ROMAN CATHOLIC BISHOP OF JARO, plaintiffappellee,
vs.
GREGORIO DE LA PEA, administrator of the estate of
Father Agustin de la Pea, defendant-appellant.
J. Lopez Vito, for appellant.
Arroyo and Horrilleno, for appellee.
MORELAND, J.:
This is an appeal by the defendant from a judgment of the
Court of First Instance of Iloilo, awarding to the plaintiff the sum
of P6,641, with interest at the legal rate from the beginning of
the action.
It is established in this case that the plaintiff is the trustee of a
charitable bequest made for the construction of a leper hospital
and that father Agustin de la Pea was the duly authorized
representative of the plaintiff to receive the legacy. The
defendant is the administrator of the estate of Father De la
Pea.
In the year 1898 the books Father De la Pea, as trustee,
showed that he had on hand as such trustee the sum of
P6,641, collected by him for the charitable purposes aforesaid.
In the same year he deposited in his personal account P19,000
in the Hongkong and Shanghai Bank at Iloilo. Shortly thereafter
and during the war of the revolution, Father De la Pea was
arrested by the military authorities as a political prisoner, and
while thus detained made an order on said bank in favor of the
United States Army officer under whose charge he then was
for the sum thus deposited in said bank. The arrest of Father
De la Pea and the confiscation of the funds in the bank were
the result of the claim of the military authorities that he was an
insurgent and that the funds thus deposited had been collected
by him for revolutionary purposes. The money was taken from
the bank by the military authorities by virtue of such order, was
confiscated and turned over to the Government.
While there is considerable dispute in the case over the
question whether the P6,641 of trust funds was included in the
P19,000 deposited as aforesaid, nevertheless, a careful
examination of the case leads us to the conclusion that said
trust funds were a part of the funds deposited and which were
removed and confiscated by the military authorities of the
United States.
That branch of the law known in England and America as the
law of trusts had no exact counterpart in the Roman law and
has none under the Spanish law. In this jurisdiction, therefore,
Father De la Pea's liability is determined by those portions of
the Civil Code which relate to obligations. (Book 4, Title 1.)
Although the Civil Code states that "a person obliged to give
something is also bound to preserve it with the diligence
pertaining to a good father of a family" (art. 1094), it also
provides, following the principle of the Roman law, major casus
est, cui humana infirmitas resistere non potest, that "no one
shall be liable for events which could not be foreseen, or which

having been foreseen were inevitable, with the exception of the


cases expressly mentioned in the law or those in which the
obligation so declares." (Art. 1105.)
By placing the money in the bank and mixing it with his
personal funds De la Pea did not thereby assume an
obligation different from that under which he would have lain if
such deposit had not been made, nor did he thereby make
himself liable to repay the money at all hazards. If the had
been forcibly taken from his pocket or from his house by the
military forces of one of the combatants during a state of war, it
is clear that under the provisions of the Civil Code he would
have been exempt from responsibility. The fact that he placed
the trust fund in the bank in his personal account does not add
to his responsibility. Such deposit did not make him a debtor
who must respond at all hazards.
We do not enter into a discussion for the purpose of
determining whether he acted more or less negligently by
depositing the money in the bank than he would if he had left it
in his home; or whether he was more or less negligent by
depositing the money in his personal account than he would
have been if he had deposited it in a separate account as
trustee. We regard such discussion as substantially fruitless,
inasmuch as the precise question is not one of negligence.
There was no law prohibiting him from depositing it as he did
and there was no law which changed his responsibility be
reason of the deposit. While it may be true that one who is
under obligation to do or give a thing is in duty bound, when he
sees events approaching the results of which will be
dangerous to his trust, to take all reasonable means and
measures to escape or, if unavoidable, to temper the effects of
those events, we do not feel constrained to hold that, in
choosing between two means equally legal, he is culpably
negligent in selecting one whereas he would not have been if
he had selected the other.
The court, therefore, finds and declares that the money which
is the subject matter of this action was deposited by Father De
la Pea in the Hongkong and Shanghai Banking Corporation of
Iloilo; that said money was forcibly taken from the bank by the
armed forces of the United States during the war of the
insurrection; and that said Father De la Pea was not
responsible for its loss.
The judgment is therefore reversed, and it is decreed that the
plaintiff shall take nothing by his complaint.
Arellano, C.J., Torres and Carson, JJ., concur.

Separate Opinions
TRENT, J., dissenting:
I dissent. Technically speaking, whether Father De la Pea
was a trustee or an agent of the plaintiff his books showed that
in 1898 he had in his possession as trustee or agent the sum
of P6,641 belonging to the plaintiff as the head of the church.
This money was then clothed with all the immunities and
protection with which the law seeks to invest trust funds. But
when De la Pea mixed this trust fund with his own and
deposited the whole in the bank to hispersonal account or
credit, he by this act stamped on the said fund his own private
marks and unclothed it of all the protection it had. If this money
had been deposited in the name of De la Pea as trustee or

44
agent of the plaintiff, I think that it may be presumed that the
military authorities would not have confiscated it for the reason
that they were looking for insurgent funds only. Again, the
plaintiff had no reason to suppose that De la Pea would
attempt to strip the fund of its identity, nor had he said or done
anything which tended to relieve De la Pea from the legal
reponsibility which pertains to the care and custody of trust
funds.
The Supreme Court of the United States in the United State vs.
Thomas (82 U. S., 337), at page 343, said: "Trustees are only
bound to exercise the same care and solicitude with regard to
the trust property which they would exercise with regard to
their own. Equity will not exact more of them. They are not
liable for a loss by theft without their fault. But this exemption
ceases when they mix the trust-money with their own, whereby
it loses its identity, and they become mere debtors."
If this proposition is sound and is applicable to cases arising in
this jurisdiction, and I entertain no doubt on this point, the
liability of the estate of De la Pea cannot be doubted. But this
court in the majority opinion says: "The fact that he (Agustin de
la Pea) placed the trust fund in the bank in his personal
account does not add to his responsibility. Such deposit did not
make him a debtor who must respond at all hazards. . . . There
was no law prohibiting him from depositing it as he did, and
there was no law which changed his responsibility, by reason
of the deposit."
I assume that the court in using the language which appears in
the latter part of the above quotation meant to say that there

was no statutory law regulating the question. Questions of this


character are not usually governed by statutory law. The law is
to be found in the very nature of the trust itself, and, as a
general rule, the courts say what facts are necessary to hold
the trustee as a debtor.
If De la Pea, after depositing the trust fund in his personal
account, had used this money for speculative purposes, such
as the buying and selling of sugar or other products of the
country, thereby becoming a debtor, there would have been no
doubt as to the liability of his estate. Whether he used this
money for that purpose the record is silent, but it will be noted
that a considerable length of time intervened from the time of
the deposit until the funds were confiscated by the military
authorities. In fact the record shows that De la Pea deposited
on June 27, 1898, P5,259, on June 28 of that year P3,280, and
on August 5 of the same year P6,000. The record also shows
that these funds were withdrawn and again deposited all
together on the 29th of May, 1900, this last deposit amounting
to P18,970. These facts strongly indicate that De la Pea had
as a matter of fact been using the money in violation of the
trust imposed in him. lawph!1.net
If the doctrine announced in the majority opinion be followed in
cases hereafter arising in this jurisdiction trust funds will be
placed in precarious condition. The position of the trustee will
cease to be one of trust.