1

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. 1719 January 23, 1907
M. H., RAKES, plaintiff-appellee,
vs.
THE ATLANTIC, GULF AND PACIFIC COMPANY, defendant-appellant.
A. D. Gibbs for appellant.
F. G. Waite, & Thimas Kepner for appellee.
TRACEY, J.:
This is an action for damages. The plaintiff, one of a gang of eight negro laborers in the employment of the defendant, was at work transporting iron
rails from a barge in the harbor to the company's yard near the malecon in Manila. Plaintiff claims that but one hand car was used in this work. The
defendant has proved that there were two immediately following one another, upon which were piled lengthwise seven rails, each weighing 560
pounds, so that the ends of the rails lay upon two crosspieces or sills secured to the cars, but without side pieces or guards to prevent them from
slipping off. According to the testimony of the plaintiff, the men were either in the rear of the car or at its sides. According to that defendant, some of
them were also in front, hauling by a rope. At a certain spot at or near the water's edge the track sagged, the tie broke, the car either canted or upset,
the rails slid off and caught the plaintiff, breaking his leg, which was afterwards amputated at about the knee.
This first point for the plaintiff to establish was that the accident happened through the negligence of the defendant. The detailed description by the
defendant's witnesses of the construction and quality of the track proves that if was up to the general stranded of tramways of that character, the
foundation consisting on land of blocks or crosspieces of wood, by 8 inches thick and from 8 to 10 feet long laid, on the surface of the ground, upon
which at a right angle rested stringers of the same thickness, but from 24 to 30 feet in length. On the across the stringers the parallel with the blocks
were the ties to which the tracks were fastened. After the road reached the water's edge, the blocks or crosspieces were replaced with pilling, capped
by timbers extending from one side to the other. The tracks were each about 2 feet wide and the two inside rails of the parallel tracks about 18 inches
apart. It was admitted that there were no side pieces or guards on the car; that where no ends of the rails of the track met each other and also where
the stringers joined, there were no fish plates. the defendant has not effectually overcome the plaintiff's proof that the joints between the rails were
immediately above the joints between the underlying stringers.
The cause of the sagging of the tracks and the breaking of the tie, which was the immediate occasion of the accident, is not clear in the evidence, but
is found by the trial court and is admitted in the briefs and in the argument to have been the dislodging of the crosspiece or piling under the stringer
by the water of the bay raised by a recent typhoon. The superintendent of the company attributed it to the giving way of the block laid in the sand. No
effort was made to repair the injury at the time of the occurrence. According to plaintiffs witnesses, a depression of the track, varying from one half
inch to one inch and a half, was therafter apparent to the eye, and a fellow workman of the plaintiff swears that the day before the accident he called
the attention of McKenna, the foreman, to it and asked by simply straightening out the crosspiece, resetting the block under the stringer and renewing
the tie, but otherwise leaving the very same timbers as before. It has not proven that the company inspected the track after the typhoon or had any
proper system of inspection.
In order to charge the defendant with negligence, it was necessary to show a breach of duty on its part in failing either to properly secure the load on
iron to vehicles transporting it, or to skillfully build the tramway or to maintain it in proper condition, or to vigilantly inspect and repair the roadway as
soon as the depression in it became visible. It is upon the failure of the defendant to repair the weakened track, after notice of its condition, that the
judge below based his judgment.
This case presents many important matters for our decision, and first among them is the standard of duty which we shall establish in our jurisprudence
on the part of employees toward employees.
The lack or the harshness of legal rules on this subject has led many countries to enact designed to put these relations on a fair basis in the form of
compensation or liability laws or the institution of insurance. In the absence of special legislation we find no difficulty in so applying the general
principles of our law as to work out a just result.
Article 1092 of the Civil Code provides:
Civil obligations, arising from crimes or misdemeanors, shall be governed by the provisions of the Penal Code.
And article 568 of the latter code provides:
He who shall execute through reckless negligence an act that if done with malice would constitute a grave crime, shall be punished.
And article 590 provides that the following shall be punished:
4. Those who by simple imprudence or negligence, without committing any infraction of regulations, shall cause an injury which, had malice intervened,
would have constituted a crime or misdemeanor.
And finally by articles 19 and 20, the liability of owners and employers for the faults of their servants and representatives is declared to be civil and
subsidiary in its character.
It is contented by the defendant, as its first defense to the action, that the necessary conclusion from these collated laws is that the remedy for injuries
through negligence lies only in a criminal action in which the official criminally responsible must be made primarily liable and his employer held only
subsidiarily to him. According to this theory the plaintiff should have procured the arrest of the representative of the company accountable for not
repairing the tract, and on his prosecution a suitable fine should have been imposed, payable primarily by him and secondarily by his employer.
This reasoning misconceived the plan of the Spanish codes upon this subject. Article 1093 of the Civil Code makes obligations arising from faults or
negligence not punished by the law, subject to the provisions of Chapter 11 of Title XVI. Section 1902 of that chapter reads:
A person who by an act or omission causes damage to another when there is fault or negligence shall be obliged to repair the damage so done.
SEC. 1903. The obligation imposed by the preceding article is demandable, not only for personal acts and omissions, but also for those of the persons
for whom they should be responsible.
The father, and on his death or incapacity, the mother, is liable for the damages caused by the minors who live with them.
xxx xxx xxx
Owners or directors of an establishment or enterprise are equally liable for the damages caused by their employees in the service of the branches in
which the latter may be employed or in the performance of their duties.
xxx xxx xxx
The liability referred to in this article shall cease when the persons mentioned therein prove that they employed all the diligence of a good father of a
family to avoid the damages.
As an answer to the argument urged in this particular action it may be sufficient to point out that nowhere in our general statutes is the employer
penalized for failure to provide or maintain safe appliances for his workmen. His obligation therefore is one "not punished by the law " and falls under
civil rather than criminal jurisprudence. But the answer may be a broader one. We should be reluctant, under any conditions, to adopt a forced
construction of these scientific codes, such as is proposed by the defendant, that would rob some of these articles of effect, would shut out litigants
their will from the civil courts, would make the assertion of their rights dependent upon the selection for prosecution of the proper criminal offender,
and render recovery doubtful by reason of the strict rules of proof prevailing in criminal actions. Even if these articles had always stood alone, such a
construction would be unnecessary, but clear light is thrown upon their meaning by the provisions of the Law of Criminal Procedure of Spain (Ley de
Enjuiciamiento Criminal), which, though n ever in actual force in these Islands, was formerly given a suppletory or explanatory effect. Under article 111
of this law, both classes of action, civil and criminal, might be prosecuted jointly or separately, but while the penal action was pending the civil was
suspended. According to article 112, the penal action once started, the civil remedy should be sought therewith, unless it had been waived by the party
injured or been expressly reserved by him for civil proceedings for the future. If the civil action alone was prosecuted, arising out of a crime that could
be enforced by only on private complaint, the penal action thereunder should be extinguished. These provisions are in harmony with those of articles
23 and 133 of our Penal Code on the same subject.
An examination of this topic might be carried much further, but the citations of these articles suffices to show that the civil liability was not intended
to be merged in the criminal nor even to be suspended thereby, except as expressly provided by law. Where an individual is civilly liable for a negligent
act or omission, it is not required that the inured party should seek out a third person criminally liable whose prosecution must be a condition precedent
to the enforcement of the civil right.
Under article 20 of the Penal Code the responsibility of an employer may be regarded as subsidiary in respect of criminal actions against his employees
only while they are process of prosecution, or in so far as they determinate the existence of the criminal act from which liability arises, and his obligation
under the civil law and its enforcement in the civil courts is not barred thereby unless by election of the injured person. Inasmuch as no criminal in
question, the provisions of the Penal Code can not affect this action. This construction renders it unnecessary to finally determine here whether this
subsidiary civil liability in penal actions survived the laws that fully regulated it or has been abrogated by the American civil and criminal procedure now
in force in the Philippines.
The difficulty in construing the articles of the code above cited in this case appears from the briefs before us to have arisen from the interpretation of
the words of article 1093, "fault or negligence not punished by law," as applied to the comprehensive definition of offenses in articles 568 and 590 of
the Penal Code. It has been shown that the liability of an employer arising out of his relation to his employee who is the offender is not to be regarded
as derived from negligence punished by the law, within the meaning of articles 1092 and 1093. More than this, however, it can not be said to fall within
the class of acts unpunished by the law, the consequences of which are regulated by articles 1902 and 1903 of the Civil Code. The acts to which these
articles are applicable are understood to be those and growing out of preexisting duties of the parties to one another. But were relations already
formed give rise to duties, whether springing from contract or quasi contract, then breaches of those duties are subject to articles 1101, 1103, and
1104, of the same code. A typical application of the distinction may be found in the consequences of a railway accident due to defective machinery
supplied by the employer. His liability to his employee would arise out of the contract of employment, that to the passengers out of the contract for
passage. while that to that injured bystander would originate in the negligent act itself. This distinction is thus clearly set forth by Manresa in his
commentary on article 1093.
We are with reference to such obligations, that culpa, or negligence, may be understood in two difference senses; either as culpa,
substantive and independent, which on account of its origin arises in an obligation between two persons not formerly bound by any other obligation;
or as an incident in the performance of an obligation; or as already existed, which can not be presumed to exist without the other, and which increases
the liability arising from the already exiting obligation.
Of these two species of culpa the first one mentioned, existing by itself, may be also considered as a real source of an independent obligation, and, as
chapter 2, title 16 of this book of the code is devoted to it, it is logical to presume that the reference contained in article 1093 is limited thereto and
that it does not extend to those provisions relating to the other species of culpa (negligence), the nature of which we will discuss later. (Vol. 8, p. 29.)
And in his commentary on articles 1102 and 1104 he says that these two species of negligence may be somewhat inexactly described as contractual
and extra-contractual, the letter being the culpa aquiliana of the Roman law and not entailing so strict an obligation as the former. This terminology is
unreservedly accepted by Sanchez-Roman (Derecho Civil, fourth section, Chapter XI, Article II, No. 12), and the principle stated is supported be decisions
of the supreme court of Spain, among them those of November 20, 1896 (80 Jurisprudencia Civil, No. 151), and June 27, 1894 (75 Jurisprudencia Civil,
No. 182). The contract is one for hire and not one of mandate. (March 10, 1897, 81 Jurisprudencia Civil, No. 107.)
Spanish Jurisprudencia prior to the adoption of the Working Men's Accident Law of January 30, 1900, throws uncertain light on the relation between
master and workman. Moved by the quick industrial development of their people, the courts of France early applied to the subject the principles
common to the law of both countries, which are lucidly discussed by the leading French commentators.
The original French theory, resting the responsibility of owners of industrial enterprises upon articles 1382, 1383, and 1384 of the Code Napoleon,
corresponding in scope to articles 1902 and 1903 of the Spanish Code, soon yielded to the principle that the true basis is the contractual obligation of
the employer and employee. (See 18 Dalloz, 196, Title Travail, 331.)
Later the hardships resulting from special exemptions inserted in contracts for employment led to the discovery of a third basis for liability in an article
of he French Code making the possessor of any object answerable for damage done by it while in his charge. Our law having no counterpart of this
article, applicable to every kind of object, we need consider neither the theory growing out of it nor that of "professional risk" more recently imposed
by express legislation, but rather adopting the interpretation of our Civil Code above given, find a rule for this case in the contractual obligation. This
contractual obligation, implied from the relation and perhaps so inherent in its nature to be invariable by the parties, binds the employer to provide
safe appliances for the use of the employee, thus closely corresponding to English and American Law. On these principles it was the duty of the
defendant to build and to maintain its track in reasonably sound condition, so as to protect its workingmen from unnecessary danger. It is plain that in
one respect or the other it failed in its duty, otherwise the accident could not have occurred; consequently the negligence of the defendant is
established.
Another contention of the defense is that the injury resulted to the plaintiff as a risk incident to his employment and, as such, one assumed by him. It
is evident that this can not be the case if the occurrence was due to the failure to repair the track or to duly inspect, it for the employee is not presumed
to have stipulated that the employer might neglect his legal duty. Nor may it be excused upon the ground that the negligence leading to the accident
was that of a fellow-servant of the injured man. It is not apparent to us that the intervention of a third person can relieve the defendant from the
performance of its duty nor impose upon the plaintiff the consequences of an act or omission not his own. Sua cuique culpa nocet. This doctrine, known
as "the fellow-servant, rule," we are not disposed to introduce into our jurisprudence. Adopted in England by Lord Abinger in the case of
Prescott vs. Fowler (3 Meeson & Welsby, 1) in 1837, it has since been effectually abrogated by "the Employers' Liability Acts" and the "Compensation
Law." The American States which applied it appear to be gradually getting rid of it; for instance, the New York State legislature of 1906 did away with
it in respect to railroad companies, and had in hand a scheme for its total abolition. It has never found place in the civil law of continental Europe.
(Dalloz, vol. 39, 1858, Title Responsibilite, 630, and vol. 15, 1895, same title, 804. Also more recent instances in Fuzier-Herman, Title Responsibilite
Civile, 710.)
The French Cour de Cassation clearly laid down the contrary principle in its judgment of June 28, 1841, in the case of Reygasse, and has since adhered
to it.
The most controverted question in the case is that of the negligence of the plaintiff, contributing to the accident, to what extent it existed in fact and
what legal effect is to be given it. In two particulars is he charged with carelessness:
First. That having noticed the depression in the track he continued his work; and
Second. That he walked on the ends of the ties at the side of the car instead of along the boards, either before or behind it.
As to the first point, the depression in the track night indicate either a serious or a rival difficulty. There is nothing in the evidence to show that the
plaintiff did or could see the displaced timber underneath the sleeper. The claim that he must have done so is a conclusion drawn from what is assumed
to have been a probable condition of things not before us, rather than a fair inference from the testimony. While the method of construction may have
been known to the men who had helped build the road, it was otherwise with the plaintiff who had worked at this job less than two days. A man may
easily walk along a railway without perceiving a displacement of the underlying timbers. The foreman testified that he knew the state of the track on
the day of the accident and that it was then in good condition, and one Danridge, a witness for the defendant, working on the same job, swore that he
never noticed the depression in the track and never saw any bad place in it. The sagging of the track this plaintiff did perceive, but that was reported
in his hearing to the foreman who neither promised nor refused to repair it. His lack of caution in continuing at his work after noticing the slight
depression of the rail was not of so gross a nature as to constitute negligence, barring his recovery under the severe American rule. On this point we
accept the conclusion of the trial judge who found as facts that "the plaintiff did not know the cause of the one rail being lower than then other" and
"it does not appear in this case that the plaintiff knew before the accident occurred that the stringers and rails joined in the same place."
Were we not disposed to agree with these findings they would, nevertheless, be binding upon us, because not "plainly and manifestly against the
weight of evidence," as those words of section 497, paragraph 3 of the Code of Civil Procedure were interpreted by the Supreme Court of the United
States in the De la Rama case (201 U. S., 303).
In respect of the second charge of negligence against the plaintiff, the judgment below is not so specific. While the judge remarks that the evidence
does not justify the finding that the car was pulled by means of a rope attached to the front end or to the rails upon it, and further that the circumstances
in evidence make it clear that the persons necessary to operate the car could not walk upon the plank between the rails and that, therefore, it was
necessary for the employees moving it to get hold upon it as best they could, there is no specific finding upon the instruction given by the defendant
to its employees to walk only upon the planks, nor upon the necessity of the plaintiff putting himself upon the ties at the side in order to get hold upon
the car. Therefore the findings of the judge below leave the conduct of the plaintiff in walking along the side of the loaded car, upon the open ties,
over the depressed track, free to our inquiry.
While the plaintiff and his witnesses swear that not only were they not forbidden to proceed in this way, but were expressly directed by the foreman
to do so, both the officers of the company and three of the workmen testify that there was a general prohibition frequently made known to all the
gang against walking by the side of the car, and the foreman swears that he repeated the prohibition before the starting of this particular load. On this
contradiction of proof we think that the preponderance is in favor of the defendant's contention to the extent of the general order being made known
to the workmen. If so, the disobedience of the plaintiff in placing himself in danger contributed in some degree to the injury as a proximate, although
not as its primary cause. This conclusion presents sharply the question, What effect is to be given such an act of contributory negligence? Does it defeat
a recovery, according to the American rule, or is it to be taken only in reduction of damages?
While a few of the American States have adopted to a greater or less extent the doctrine of comparative negligence, allowing a recovery by a plaintiff
whose own act contributed to his injury, provided his negligence was slight as compared with that of the defendant, and some others have accepted
the theory of proportional damages, reducing the award to a plaintiff in proportion to his responsibility for the accident, yet the overwhelming weight
of adjudication establishes the principle in American jurisprudence that any negligence, however slight, on the part of the person injured which is one
of the causes proximately contributing to his injury, bars his recovery. (English and American Encyclopedia of law, Titles "Comparative Negligence" and
Contributory Negligence.")
In Grant Trunk Railway Company vs. Ives (144 U. S., 408, at page 429) the Supreme Court of the United States thus authoritatively states the present
rule of law:
Although the defendant's' negligence may have been the primary cause of the injury complained of, yet an action for such injury can not be maintained
if the proximate and immediate cause of the injury can be traced to the want of ordinary care and caution in the person injured; subject to this
qualification, which has grown up in recent years (having been first enunciated in Davies vs. Mann, 10 M. & W., 546) that the contributory negligence
of the party injured will not defeat the action if it be shown that the defendant might, by the exercise of reasonable care and prudence, have avoided
the consequences of the injured party's negligence.
There are may cases in the supreme court of Spain in which the defendant was exonerated, but when analyzed they prove to have been decided either
upon the point that he was not negligent or that the negligence of the plaintiff was the immediate cause of the casualty or that the accident was due
to casus fortuitus. Of the first class in the decision of January 26, 1887 (38 Jurisprudencia Criminal, No. 70), in which a railway employee, standing on a
car, was thrown therefrom and killed by the shock following the backing up of the engine. It was held that the management of the train and engine
being in conformity with proper rules of the company, showed no fault on its part.
Of the second class are the decision of the 15th of January, the 19th of February, and the 7th of March, 1902, stated in Alcubilla's Index of that year;
and of the third class the decision of the 4th of June, 1888 (64 Jurisprudencia Civil, No. 1), in which the breaking down of plaintiff's dam by the logs of
the defendant impelled against it by the Tajo River, was held due to a freshet as a fortuitous cause.
The decision of the 7th of March, 1902, on which stress has been laid, rested on two bases, one, that the defendant was not negligent, because
expressly relieved by royal order from the common obligation imposed by the police law of maintaining a guard at the road crossing; the other, because
the act of the deceased in driving over level ground with unobstructed view in front of a train running at speed, with the engine whistle blowing was
the determining cause of the accident. It is plain that the train was doing nothing but what it had a right to do and that the only fault lay with the
injured man. His negligence was not contributory, it was sole, and was of such an efficient nature that without it no catastrophe could have happened.
On the other hand, there are many cases reported in which it seems plain that the plaintiff sustaining damages was not free from contributory
negligence; for instance, the decision of the 14th of December, 1894 (76 Jurisprudencia Civil, No. 134), in which the owner of a building was held liable
for not furnishing protection to workmen engaged in hanging out flags, when the latter must have perceived beforehand the danger attending the
work.
None of those cases define the effect to be given the negligence of a plaintiff which contributed to his injury as one of its causes, though not the
principal one, and we are left to seek the theory of the civil law in the practice of other countries.
In France in the case of Marquant, August 20, 1879, the cour de cassation held that the carelessness of the victim did not civilly relieve the person
without whose fault the accident could not have happened, but that the contributory negligence of the injured man had the effect only of reducing
the damages. The same principle was applied in the case of Recullet, November 10, 1888. and that of Laugier of the 11th of November, 1896. (Fuzier-
Herman, Title Responsibilite Cirile, 411, 412.) Of like tenor are citations in Dalloz (vol. 18, 1806, Title Trail, 363, 364, and vol. 15, 1895, Title
Responsibilite, 193, 198).
In the Canadian Province of Quebee, which has retained for the most part the French Civil Law, now embodied in a code following the Code Napoleon,
a practice in accord with that of France is laid down in many cases collected in the annotations to article 1053 of the code edited by Beauchamps,
1904. One of these is Luttrell vs. Trottier, reported in La Revue de Jurisprudence, volume 6, page 90, in which the court of Kings bench, otherwise known
as the court of appeals, the highest authority in the Dominion of Canada on points of French law, held that contributory negligence did not exonerate
the defendants whose fault had been the immediate cause of the accident, but entitled him to a reduction of damages. Other similar cases in the
provincial courts have been overruled by appellate tribunals made up of common law judges drawn from other provinces, who have preferred to
impose uniformally throughout the Dominion the English theory of contributory negligence. Such decisions throw no light upon the doctrines of the
civil law. Elsewhere we find this practice embodied in legislation; for instance, section 2 of article 2398 of the Code of Portugal reads as follows:
If in the case of damage there was fault or negligence on the part of the person injured or in the part of some one else, the indemnification shall be
reduced in the first case, and in the second case it shall be appropriated in proportion to such fault or negligence as provided in paragraphs 1 and 2 of
section 2372.
And in article 1304 of the Austrian Code provides that the victim who is partly changeable with the accident shall stand his damages in proportion to
his fault, but when that proportion is incapable of ascertainment, he shall share the liability equally with the person principally responsible. The principle
of proportional damages appears to be also adopted in article 51 of the Swiss Code. Even in the United States in admirality jurisdictions, whose
principles are derived from the civil law, common fault in cases of collision have been disposed of not on the ground of contradictor negligence, but
on that of equal loss, the fault of the one part being offset against that of the other. (Ralli vs. Troop, 157 U. S. 386; 97.)
The damage of both being added together and the sum equally divided, a decree is entered in favor of the vessel sustaining the greater loss against
the other for the excess of her damages over one-half of the aggregate sum. (The Manitoba, 122 U. S., 97)
Exceptional practice appears to prevail in maritime law in other jurisdictions. The Spanish Code of Commerce, article 827, makes each vessel for its
own damage when both are the fault; this provision restricted to a single class of the maritime accidents, falls for short of a recognition of the principle
of contributory negligence as understood in American Law, with which, indeed, it has little in common. This is a plain from other articles of the same
code; for instance, article 829, referring to articles 826, 827, and 828, which provides: "In the cases above mentioned the civil action of the owner
against the person liable for the damage is reserved, as well as the criminal liability which may appear."
The rule of the common law, a hard and fast one, not adjustable with respects of the faults of the parties, appears to have grown out the original
method of trial by jury, which rendered difficult a nice balancing of responsibilities and which demanded an inflexible standard as a safeguard against
too ready symphaty for the injured. It was assumed that an exact measure of several concurring faults was unattainable.
The reason why, in cases of mutual concurring negligence, neither party can maintain an action against the other, is, not the wrong of the one is set
off against the wrong of the other; it that the law can not measure how much of the damage suffered is attributable to the plaintiff's own fault. If he
were allowed to recover, it might be that he would obtain from the other party compensation for hiss own misconduct. (Heil vs. Glanding, 42 Penn. St.
Rep., 493, 499.)
The parties being mutually in fault, there can be no appointment of damages. The law has no scales to determine in such cases whose wrongdoing
weighed most in the compound that occasioned the mischief. (Railroad vs. Norton, 24 Penn. St. 565, 469.)
Experience with jury trials in negligence cases has brought American courts to review to relax the vigor of the rule by freely exercising the power of
setting aside verdicts deemed excessive, through the device of granting new trials, unless reduced damages are stipulated for, amounting to a partial
revision of damages by the courts. It appears to us that the control by the court of the subject matter may be secured on a moral logical basis and its
judgment adjusted with greater nicety to the merits of the litigants through the practice of offsetting their respective responsibilities. In the civil law
system the desirable end is not deemed beyond the capacity of its tribunals.
Whatever may prove to be the doctrine finally adopted in Spain or in other countries under the stress and counter stress of novel schemers of
legislation, we find the theory of damages laid down in the judgment the most consistent with the history and the principals of our law in these Islands
and with its logical development.
Difficulty seems to be apprehended in deciding which acts of the injured party shall be considered immediate causes of the accident. The test is simple.
Distinction must be between the accident and the injury, between the event itself, without which there could have been no accident, and those acts
of the victim not entering into it, independent of it, but contributing under review was the displacement of the crosspiece or the failure to replace it.
this produced the event giving occasion for damages that is, the shinking of the track and the sliding of the iron rails. To this event, the act of the
plaintiff in walking by the side of the car did not contribute, although it was an element of the damage which came to himself. Had the crosspiece been
out of place wholly or partly thorough his act of omission of duty, the last would have been one of the determining causes of the event or accident, for
which he would have been responsible. Where he contributes to the principal occurrence, as one of its determining factors, he can not recover. Where,
in conjunction with the occurrence, he contributes only to his own injury, he may recover the amount that the defendant responsible for the event
should pay for such injury, less a sum deemed a suitable equivalent for his own imprudence.
Accepting, though with some hesitation, the judgment of the trial court, fixing the damage incurred by the plaintiff at 5,000 pesos, the equivalent of
2,500 dollars, United States money, we deduct therefrom 2,500 pesos, the amount fairly attributable to his negligence, and direct judgment to be
entered in favor of the plaintiff for the resulting sum of 2,500 pesos, with cost of both instances, and ten days hereafter let the case be remanded to
the court below for proper action. So ordered.
Arellano, C.J. Torres and Mapa, JJ., concur.
SUPREME COURT
Republic of the Philippines
Manila
EN BANC
G.R. No. L-12219 March 15, 1918
AMADO PICART, plaintiff-appellant,
vs.
FRANK SMITH, JR., defendant-appellee.
Alejo Mabanag for appellant.
G. E. Campbell for appellee.

STREET, J.:
In this action the plaintiff, Amado Picart, seeks to recover of the defendant, Frank Smith, jr., the sum of P31,000, as damages alleged to have been
caused by an automobile driven by the defendant. From a judgment of the Court of First Instance of the Province of La Union absolving the defendant
from liability the plaintiff has appealed.
The occurrence which gave rise to the institution of this action took place on December 12, 1912, on the Carlatan Bridge, at San Fernando, La Union.
It appears that upon the occasion in question the plaintiff was riding on his pony over said bridge. Before he had gotten half way across, the defendant
approached from the opposite direction in an automobile, going at the rate of about ten or twelve miles per hour. As the defendant neared the bridge
he saw a horseman on it and blew his horn to give warning of his approach. He continued his course and after he had taken the bridge he gave two
more successive blasts, as it appeared to him that the man on horseback before him was not observing the rule of the road.
The plaintiff, it appears, saw the automobile coming and heard the warning signals. However, being perturbed by the novelty of the apparition or the
rapidity of the approach, he pulled the pony closely up against the railing on the right side of the bridge instead of going to the left. He says that the
reason he did this was that he thought he did not have sufficient time to get over to the other side. The bridge is shown to have a length of about 75
meters and a width of 4.80 meters. As the automobile approached, the defendant guided it toward his left, that being the proper side of the road for
the machine. In so doing the defendant assumed that the horseman would move to the other side. The pony had not as yet exhibited fright, and the
rider had made no sign for the automobile to stop. Seeing that the pony was apparently quiet, the defendant, instead of veering to the right while yet
some distance away or slowing down, continued to approach directly toward the horse without diminution of speed. When he had gotten quite near,
there being then no possibility of the horse getting across to the other side, the defendant quickly turned his car sufficiently to the right to escape
hitting the horse alongside of the railing where it as then standing; but in so doing the automobile passed in such close proximity to the animal that it
became frightened and turned its body across the bridge with its head toward the railing. In so doing, it as struck on the hock of the left hind leg by the
flange of the car and the limb was broken. The horse fell and its rider was thrown off with some violence. From the evidence adduced in the case we
believe that when the accident occurred the free space where the pony stood between the automobile and the railing of the bridge was probably less
than one and one half meters. As a result of its injuries the horse died. The plaintiff received contusions which caused temporary unconsciousness and
required medical attention for several days.
The question presented for decision is whether or not the defendant in maneuvering his car in the manner above described was guilty of negligence
such as gives rise to a civil obligation to repair the damage done; and we are of the opinion that he is so liable. As the defendant started across the
bridge, he had the right to assume that the horse and the rider would pass over to the proper side; but as he moved toward the center of the bridge it
was demonstrated to his eyes that this would not be done; and he must in a moment have perceived that it was too late for the horse to cross with
safety in front of the moving vehicle. In the nature of things this change of situation occurred while the automobile was yet some distance away; and
from this moment it was not longer within the power of the plaintiff to escape being run down by going to a place of greater safety. The control of the
situation had then passed entirely to the defendant; and it was his duty either to bring his car to an immediate stop or, seeing that there were no other
persons on the bridge, to take the other side and pass sufficiently far away from the horse to avoid the danger of collision. Instead of doing this, the
defendant ran straight on until he was almost upon the horse. He was, we think, deceived into doing this by the fact that the horse had not yet exhibited
fright. But in view of the known nature of horses, there was an appreciable risk that, if the animal in question was unacquainted with automobiles, he
might get exited and jump under the conditions which here confronted him. When the defendant exposed the horse and rider to this danger he was,
in our opinion, negligent in the eye of the law.
The test by which to determine the existence of negligence in a particular case may be stated as follows: Did the defendant in doing the alleged
negligent act use that person would have used in the same situation? If not, then he is guilty of negligence. The law here in effect adopts the standard
supposed to be supplied by the imaginary conduct of the discreet paterfamilias of the Roman law. The existence of negligence in a given case is not
determined by reference to the personal judgment of the actor in the situation before him. The law considers what would be reckless, blameworthy,
or negligent in the man of ordinary intelligence and prudence and determines liability by that.
The question as to what would constitute the conduct of a prudent man in a given situation must of course be always determined in the light of human
experience and in view of the facts involved in the particular case. Abstract speculations cannot here be of much value but this much can be profitably
said: Reasonable men govern their conduct by the circumstances which are before them or known to them. They are not, and are not supposed to be,
omniscient of the future. Hence they can be expected to take care only when there is something before them to suggest or warn of danger. Could a
prudent man, in the case under consideration, foresee harm as a result of the course actually pursued? If so, it was the duty of the actor to take
precautions to guard against that harm. Reasonable foresight of harm, followed by ignoring of the suggestion born of this prevision, is always necessary
before negligence can be held to exist. Stated in these terms, the proper criterion for determining the existence of negligence in a given case is this:
Conduct is said to be negligent when a prudent man in the position of the tortfeasor would have foreseen that an effect harmful to another was
sufficiently probable to warrant his foregoing conduct or guarding against its consequences.
Applying this test to the conduct of the defendant in the present case we think that negligence is clearly established. A prudent man, placed in the
position of the defendant, would in our opinion, have recognized that the course which he was pursuing was fraught with risk, and would therefore
have foreseen harm to the horse and the rider as reasonable consequence of that course. Under these circumstances the law imposed on the defendant
the duty to guard against the threatened harm.
It goes without saying that the plaintiff himself was not free from fault, for he was guilty of antecedent negligence in planting himself on the wrong
side of the road. But as we have already stated, the defendant was also negligent; and in such case the problem always is to discover which agent is
immediately and directly responsible. It will be noted that the negligent acts of the two parties were not contemporaneous, since the negligence of
the defendant succeeded the negligence of the plaintiff by an appreciable interval. Under these circumstances the law is that the person who has the
last fair chance to avoid the impending harm and fails to do so is chargeable with the consequences, without reference to the prior negligence of the
other party.
The decision in the case of Rkes vs. Atlantic, Gulf and Pacific Co. (7 Phil. Rep., 359) should perhaps be mentioned in this connection. This Court there
held that while contributory negligence on the part of the person injured did not constitute a bar to recovery, it could be received in evidence to reduce
the damages which would otherwise have been assessed wholly against the other party. The defendant company had there employed the plaintiff, as
a laborer, to assist in transporting iron rails from a barge in Manila harbor to the company's yards located not far away. The rails were conveyed upon
cars which were hauled along a narrow track. At certain spot near the water's edge the track gave way by reason of the combined effect of the weight
of the car and the insecurity of the road bed. The car was in consequence upset; the rails slid off; and the plaintiff's leg was caught and broken. It
appeared in evidence that the accident was due to the effects of the typhoon which had dislodged one of the supports of the track. The court found
that the defendant company was negligent in having failed to repair the bed of the track and also that the plaintiff was, at the moment of the accident,
guilty of contributory negligence in walking at the side of the car instead of being in front or behind. It was held that while the defendant was liable to
the plaintiff by reason of its negligence in having failed to keep the track in proper repair nevertheless the amount of the damages should be reduced
on account of the contributory negligence in the plaintiff. As will be seen the defendant's negligence in that case consisted in an omission only. The
liability of the company arose from its responsibility for the dangerous condition of its track. In a case like the one now before us, where the defendant
was actually present and operating the automobile which caused the damage, we do not feel constrained to attempt to weigh the negligence of the
respective parties in order to apportion the damage according to the degree of their relative fault. It is enough to say that the negligence of the
defendant was in this case the immediate and determining cause of the accident and that the antecedent negligence of the plaintiff was a more remote
factor in the case.
A point of minor importance in the case is indicated in the special defense pleaded in the defendant's answer, to the effect that the subject matter of
the action had been previously adjudicated in the court of a justice of the peace. In this connection it appears that soon after the accident in question
occurred, the plaintiff caused criminal proceedings to be instituted before a justice of the peace charging the defendant with the infliction of serious
injuries (lesiones graves). At the preliminary investigation the defendant was discharged by the magistrate and the proceedings were dismissed.
Conceding that the acquittal of the defendant at the trial upon the merits in a criminal prosecution for the offense mentioned would be res adjudicata
upon the question of his civil liability arising from negligence -- a point upon which it is unnecessary to express an opinion -- the action of the justice of
the peace in dismissing the criminal proceeding upon the preliminary hearing can have no effect. (See U. S. vs. Banzuela and Banzuela, 31 Phil. Rep.,
564.)
From what has been said it results that the judgment of the lower court must be reversed, and judgment is her rendered that the plaintiff recover of
the defendant the sum of two hundred pesos (P200), with costs of other instances. The sum here awarded is estimated to include the value of the
horse, medical expenses of the plaintiff, the loss or damage occasioned to articles of his apparel, and lawful interest on the whole to the date of this
recovery. The other damages claimed by the plaintiff are remote or otherwise of such character as not to be recoverable. So ordered.
Arellano, C.J., Torres, Carson, Araullo, Avancea, and Fisher, JJ., concur.
Johnson, J., reserves his vote.

FIRST DIVISION

[G.R. No. 9308. December 23, 1914. ]

JUAN BERNARDO, Plaintiff-Appellant, v. M. B. LEGASPI, Defendant-Appellee.

Roman de Jesus for Appellant.

No appearance for Appellee.

SYLLABUS
1. NEGLIGENCE; AUTOMOBILES; COLLISION TROUGH MUTUAL NEGLIGENCE. Where two automobiles, going in opposite directions, collide on turning
a street corner, and it appears from the evidence and is found by the trial court that the drivers thereof were equally negligent and contributed equally
to the principal occurrence as determining causes thereof, neither can recover of the other for the damages suffered.
DECISION
MORELAND, J. :
This is an appeal from a judgment of the Court of First Instance of the city of Manila dismissing the complaint on the merits filed in an action to
recover damages for injuries sustained by plaintiffs automobile by reason of defendants negligence in causing a collision between his automobile
and that of plaintiff. The court in its judgment also dismissed a cross-complaint filed by the defendant, praying for damages against the plaintiff on
the ground that the injuries sustained by defendants automobile in the collision referred to, as well as those to plaintiffs machine, were caused by
the negligence of the plaintiff in handling his automobile.

The court found upon the evidence that both the plaintiff and the defendant were negligent in handling their automobiles and that said negligence
was of such a character and extent on the part of both as to prevent either from recovering.

Upon the facts, as they appear of record, the judgment must be affirmed, as the evidence clearly supports the decision of the trial court. The law
applicable to the facts also requires an affirmance of the judgment appealed from. Where the plaintiff in a negligence action, by his own carelessness
contributes to the principal occurrence, that is, to the accident, as one of the determining causes thereof, he cannot recover. This is equally true of
the defendant; and as both of them, by their negligent acts, contributed to the determining cause of the accident, neither can recover.

The judgment appealed from is affirmed, with costs against the Appellant.

Arellano, C.J., Torres, Johnson, Carson, Trent, and Araullo, JJ., concur.

G.R. No. L-12986 March 31, 1966

THE SPOUSES BERNABE AFRICA and SOLEDAD C. AFRICA, and the HEIRS OF DOMINGA ONG, petitioners-appellants,
vs.
CALTEX (PHIL.), INC., MATEO BOQUIREN and THE COURT OF APPEALS, respondents-appellees.
Ross, Selph, Carrascoso and Janda for the respondents.
Bernabe Africa, etc. for the petitioners.
MAKALINTAL., J.:
This case is before us on a petition for review of the decision of the Court of Appeals, which affirmed that of the Court of First Instance of Manila
dismissing petitioners' second amended complaint against respondents.
The action is for damages under Articles 1902 and 1903 of the old Civil Code. It appears that in the afternoon of March 18, 1948 a fire broke out at the
Caltex service station at the corner of Antipolo street and Rizal Avenue, Manila. It started while gasoline was being hosed from a tank truck into the
underground storage, right at the opening of the receiving tank where the nozzle of the hose was inserted. The fire spread to and burned several
neighboring houses, including the personal properties and effects inside them. Their owners, among them petitioners here, sued respondents Caltex
(Phil.), Inc. and Mateo Boquiren, the first as alleged owner of the station and the second as its agent in charge of operation. Negligence on the part of
both of them was attributed as the cause of the fire.
The trial court and the Court of Appeals found that petitioners failed to prove negligence and that respondents had exercised due care in the premises
and with respect to the supervision of their employees.
The first question before Us refers to the admissibility of certain reports on the fire prepared by the Manila Police and Fire Departments and by a
certain Captain Tinio of the Armed Forces of the Philippines. Portions of the first two reports are as follows:
1. Police Department report:
Investigation disclosed that at about 4:00 P.M. March 18, 1948, while Leandro Flores was transferring gasoline from a tank truck, plate No. T-5292 into
the underground tank of the Caltex Gasoline Station located at the corner of Rizal Avenue and Antipolo Street, this City, an unknown Filipino lighted a
cigarette and threw the burning match stick near the main valve of the said underground tank. Due to the gasoline fumes, fire suddenly blazed. Quick
action of Leandro Flores in pulling off the gasoline hose connecting the truck with the underground tank prevented a terrific explosion. However, the
flames scattered due to the hose from which the gasoline was spouting. It burned the truck and the following accessorias and residences.
2. The Fire Department report:
In connection with their allegation that the premises was (sic) subleased for the installation of a coca-cola and cigarette stand, the complainants
furnished this Office a copy of a photograph taken during the fire and which is submitted herewith. it appears in this picture that there are in the
premises a coca-cola cooler and a rack which according to information gathered in the neighborhood contained cigarettes and matches, installed
between the gasoline pumps and the underground tanks.
The report of Captain Tinio reproduced information given by a certain Benito Morales regarding the history of the gasoline station and what the chief
of the fire department had told him on the same subject.
The foregoing reports were ruled out as "double hearsay" by the Court of Appeals and hence inadmissible. This ruling is now assigned as error. It is
contended: first, that said reports were admitted by the trial court without objection on the part of respondents; secondly, that with respect to the
police report (Exhibit V-Africa) which appears signed by a Detective Zapanta allegedly "for Salvador Capacillo," the latter was presented as witness but
respondents waived their right to cross-examine him although they had the opportunity to do so; and thirdly, that in any event the said reports are
admissible as an exception to the hearsay rule under section 35 of Rule 123, now Rule 130.
The first contention is not borne out by the record. The transcript of the hearing of September 17, 1953 (pp. 167-170) shows that the reports in
question, when offered as evidence, were objected to by counsel for each of respondents on the ground that they were hearsay and that they were
"irrelevant, immaterial and impertinent." Indeed, in the court's resolution only Exhibits J, K, K-5 and X-6 were admitted without objection; the admission
of the others, including the disputed ones, carried no such explanation.
On the second point, although Detective Capacillo did take the witness stand, he was not examined and he did not testify as to the facts mentioned in
his alleged report (signed by Detective Zapanta). All he said was that he was one of those who investigated "the location of the fire and, if possible,
gather witnesses as to the occurrence, and that he brought the report with him. There was nothing, therefore, on which he need be cross-examined;
and the contents of the report, as to which he did not testify, did not thereby become competent evidence. And even if he had testified, his testimony
would still have been objectionable as far as information gathered by him from third persons was concerned.
Petitioners maintain, however, that the reports in themselves, that is, without further testimonial evidence on their contents, fall within the scope of
section 35, Rule 123, which provides that "entries in official records made in the performance of his duty by a public officer of the Philippines, or by a
person in the performance of a duty specially enjoined by law, are prima facie evidence of the facts therein stated."
There are three requisites for admissibility under the rule just mentioned: (a) that the entry was made by a public officer, or by another person specially
enjoined by law to do so; (b) that it was made by the public officer in the performance of his duties, or by such other person in the performance of a
duty specially enjoined by law; and (c) that the public officer or other person had sufficient knowledge of the facts by him stated, which must have
been acquired by him personally or through official information (Moran, Comments on the Rules of Court, Vol. 3 [1957] p. 398).
Of the three requisites just stated, only the last need be considered here. Obviously the material facts recited in the reports as to the cause and
circumstances of the fire were not within the personal knowledge of the officers who conducted the investigation. Was knowledge of such facts,
however, acquired by them through official information? As to some facts the sources thereof are not even identified. Others are attributed to Leopoldo
Medina, referred to as an employee at the gas station were the fire occurred; to Leandro Flores, driver of the tank truck from which gasoline was being
transferred at the time to the underground tank of the station; and to respondent Mateo Boquiren, who could not, according to Exhibit V-Africa, give
any reason as to the origin of the fire. To qualify their statements as "official information" acquired by the officers who prepared the reports, the
persons who made the statements not only must have personal knowledge of the facts stated but must have the duty to give such statements for
record.1
The reports in question do not constitute an exception to the hearsay rule; the facts stated therein were not acquired by the reporting officers through
official information, not having been given by the informants pursuant to any duty to do so.
The next question is whether or not, without proof as to the cause and origin of the fire, the doctrine of res ipsa loquitur should apply so as to presume
negligence on the part of appellees. Both the trial court and the appellate court refused to apply the doctrine in the instant case on the grounds that
"as to (its) applicability ... in the Philippines, there seems to he nothing definite," and that while the rules do not prohibit its adoption in appropriate
cases, "in the case at bar, however, we find no practical use for such doctrine." The question deserves more than such summary dismissal. The doctrine
has actually been applied in this jurisdiction, in the case of Espiritu vs. Philippine Power and Development Co. (CA-G.R. No. 3240-R, September 20, 1949),
wherein the decision of the Court of Appeals was penned by Mr. Justice J.B.L. Reyes now a member of the Supreme Court.
The facts of that case are stated in the decision as follows:
In the afternoon of May 5, 1946, while the plaintiff-appellee and other companions were loading grass between the municipalities of Bay and Calauan,
in the province of Laguna, with clear weather and without any wind blowing, an electric transmission wire, installed and maintained by the defendant
Philippine Power and Development Co., Inc. alongside the road, suddenly parted, and one of the broken ends hit the head of the plaintiff as he was
about to board the truck. As a result, plaintiff received the full shock of 4,400 volts carried by the wire and was knocked unconscious to the ground.
The electric charge coursed through his body and caused extensive and serious multiple burns from skull to legs, leaving the bone exposed in some
parts and causing intense pain and wounds that were not completely healed when the case was tried on June 18, 1947, over one year after the mishap.
The defendant therein disclaimed liability on the ground that the plaintiff had failed to show any specific act of negligence, but the appellate court
overruled the defense under the doctrine of res ipsa loquitur. The court said:
The first point is directed against the sufficiency of plaintiff's evidence to place appellant on its defense. While it is the rule, as contended by the
appellant, that in case of noncontractual negligence, or culpa aquiliana, the burden of proof is on the plaintiff to establish that the proximate cause of
his injury was the negligence of the defendant, it is also a recognized principal that "where the thing which caused injury, without fault of the injured
person, is under the exclusive control of the defendant and the injury is such as in the ordinary course of things does not occur if he having such control
use proper care, it affords reasonable evidence, in the absence of the explanation, that the injury arose from defendant's want of care."
And the burden of evidence is shifted to him to establish that he has observed due care and diligence. (San Juan Light & Transit Co. v. Requena, 244,
U.S. 89, 56 L. ed. 680.) This rule is known by the name of res ipsa loquitur (the transaction speaks for itself), and is peculiarly applicable to the case at
bar, where it is unquestioned that the plaintiff had every right to be on the highway, and the electric wire was under the sole control of defendant
company. In the ordinary course of events, electric wires do not part suddenly in fair weather and injure people, unless they are subjected to unusual
strain and stress or there are defects in their installation, maintenance and supervision; just as barrels do not ordinarily roll out of the warehouse
windows to injure passersby, unless some one was negligent. (Byrne v. Boadle, 2 H & Co. 722; 159 Eng. Reprint 299, the leading case that established
that rule). Consequently, in the absence of contributory negligence (which is admittedly not present), the fact that the wire snapped suffices to raise a
reasonable presumption of negligence in its installation, care and maintenance. Thereafter, as observed by Chief Baron Pollock, "if there are any facts
inconsistent with negligence, it is for the defendant to prove."
It is true of course that decisions of the Court of Appeals do not lay down doctrines binding on the Supreme Court, but we do not consider this a reason
for not applying the particular doctrine of res ipsa loquitur in the case at bar. Gasoline is a highly combustible material, in the storage and sale of which
extreme care must be taken. On the other hand, fire is not considered a fortuitous event, as it arises almost invariably from some act of man. A case
strikingly similar to the one before Us is Jones vs. Shell Petroleum Corporation, et al., 171 So. 447:
Arthur O. Jones is the owner of a building in the city of Hammon which in the year 1934 was leased to the Shell Petroleum Corporation for a gasoline
filling station. On October 8, 1934, during the term of the lease, while gasoline was being transferred from the tank wagon, also operated by the Shell
Petroleum Corporation, to the underground tank of the station, a fire started with resulting damages to the building owned by Jones. Alleging that the
damages to his building amounted to $516.95, Jones sued the Shell Petroleum Corporation for the recovery of that amount. The judge of the district
court, after hearing the testimony, concluded that plaintiff was entitled to a recovery and rendered judgment in his favor for $427.82. The Court of
Appeals for the First Circuit reversed this judgment, on the ground the testimony failed to show with reasonable certainty any negligence on the part
of the Shell Petroleum Corporation or any of its agents or employees. Plaintiff applied to this Court for a Writ of Review which was granted, and the
case is now before us for decision.1wph1.t
In resolving the issue of negligence, the Supreme Court of Louisiana held:
Plaintiff's petition contains two distinct charges of negligence one relating to the cause of the fire and the other relating to the spreading of the
gasoline about the filling station.
Other than an expert to assess the damages caused plaintiff's building by the fire, no witnesses were placed on the stand by the defendant.
Taking up plaintiff's charge of negligence relating to the cause of the fire, we find it established by the record that the filling station and the tank truck
were under the control of the defendant and operated by its agents or employees. We further find from the uncontradicted testimony of plaintiff's
witnesses that fire started in the underground tank attached to the filling station while it was being filled from the tank truck and while both the tank
and the truck were in charge of and being operated by the agents or employees of the defendant, extended to the hose and tank truck, and was
communicated from the burning hose, tank truck, and escaping gasoline to the building owned by the plaintiff.
Predicated on these circumstances and the further circumstance of defendant's failure to explain the cause of the fire or to show its lack of knowledge
of the cause, plaintiff has evoked the doctrine of res ipsa loquitur. There are many cases in which the doctrine may be successfully invoked and this,
we think, is one of them.
Where the thing which caused the injury complained of is shown to be under the management of defendant or his servants and the accident is such
as in the ordinary course of things does not happen if those who have its management or control use proper care, it affords reasonable evidence, in
absence of explanation by defendant, that the accident arose from want of care. (45 C.J. #768, p. 1193).
This statement of the rule of res ipsa loquitur has been widely approved and adopted by the courts of last resort. Some of the cases in this jurisdiction
in which the doctrine has been applied are the following, viz.: Maus v. Broderick, 51 La. Ann. 1153, 25 So. 977; Hebert v. Lake Charles Ice, etc., Co., 111
La. 522, 35 So. 731, 64 L.R.A. 101, 100 Am. St. Rep. 505; Willis v. Vicksburg, etc., R. Co., 115 La. 63, 38 So. 892; Bents v. Page, 115 La. 560, 39 So. 599.
The principle enunciated in the aforequoted case applies with equal force here. The gasoline station, with all its appliances, equipment and employees,
was under the control of appellees. A fire occurred therein and spread to and burned the neighboring houses. The persons who knew or could have
known how the fire started were appellees and their employees, but they gave no explanation thereof whatsoever. It is a fair and reasonable inference
that the incident happened because of want of care.
In the report submitted by Captain Leoncio Mariano of the Manila Police Department (Exh. X-1 Africa) the following appears:
Investigation of the basic complaint disclosed that the Caltex Gasoline Station complained of occupies a lot approximately 10 m x 10 m at the southwest
corner of Rizal Avenue and Antipolo. The location is within a very busy business district near the Obrero Market, a railroad crossing and very thickly
populated neighborhood where a great number of people mill around t
until
gasoline
tever be theWactjvities of these peopleor lighting a cigarette cannot be excluded and this constitute a secondary hazard to its operation which in turn
endangers the entire neighborhood to conflagration.
Furthermore, aside from precautions already taken by its operator the concrete walls south and west adjoining the neighborhood are only 2-1/2 meters
high at most and cannot avoid the flames from leaping over it in case of fire.
Records show that there have been two cases of fire which caused not only material damages but desperation and also panic in the neighborhood.
Although the soft drinks stand had been eliminated, this gasoline service station is also used by its operator as a garage and repair shop for his fleet of
taxicabs numbering ten or more, adding another risk to the possible outbreak of fire at this already small but crowded gasoline station.
The foregoing report, having been submitted by a police officer in the performance of his duties on the basis of his own personal observation of the
facts reported, may properly be considered as an exception to the hearsay rule. These facts, descriptive of the location and objective circumstances
surrounding the operation of the gasoline station in question, strengthen the presumption of negligence under the doctrine of res ipsa loquitur, since
on their face they called for more stringent measures of caution than those which would satisfy the standard of due diligence under ordinary
circumstances. There is no more eloquent demonstration of this than the statement of Leandro Flores before the police investigator. Flores was the
driver of the gasoline tank wagon who, alone and without assistance, was transferring the contents thereof into the underground storage when the
fire broke out. He said: "Before loading the underground tank there were no people, but while the loading was going on, there were people who went
to drink coca-cola (at the coca-cola stand) which is about a meter from the hole leading to the underground tank." He added that when the tank was
almost filled he went to the tank truck to close the valve, and while he had his back turned to the "manhole" he, heard someone shout "fire."
Even then the fire possibly would not have spread to the neighboring houses were it not for another negligent omission on the part of defendants,
namely, their failure to provide a concrete wall high enough to prevent the flames from leaping over it. As it was the concrete wall was only 2-1/2
meters high, and beyond that height it consisted merely of galvanized iron sheets, which would predictably crumple and melt when subjected to
intense heat. Defendants' negligence, therefore, was not only with respect to the cause of the fire but also with respect to the spread thereof to the
neighboring houses.
There is an admission on the part of Boquiren in his amended answer to the second amended complaint that "the fire was caused through the acts of
a stranger who, without authority, or permission of answering defendant, passed through the gasoline station and negligently threw a lighted match
in the premises." No evidence on this point was adduced, but assuming the allegation to be true certainly any unfavorable inference from the
admission may be taken against Boquiren it does not extenuate his negligence. A decision of the Supreme Court of Texas, upon facts analogous to
those of the present case, states the rule which we find acceptable here. "It is the rule that those who distribute a dangerous article or agent, owe a
degree of protection to the public proportionate to and commensurate with a danger involved ... we think it is the generally accepted rule as applied
to torts that 'if the effects of the actor's negligent conduct actively and continuously operate to bring about harm to another, the fact that the active
and substantially simultaneous operation of the effects of a third person's innocent, tortious or criminal act is also a substantial factor in bringing about
the harm, does not protect the actor from liability.' (Restatement of the Law of Torts, vol. 2, p. 1184, #439). Stated in another way, "The intention of
an unforeseen and unexpected cause, is not sufficient to relieve a wrongdoer from consequences of negligence, if such negligence directly and
proximately cooperates with the independent cause in the resulting injury." (MacAfee, et al. vs. Traver's Gas Corporation, 153 S.W. 2nd 442.)
The next issue is whether Caltex should be held liable for the damages caused to appellants. This issue depends on whether Boquiren was an
independent contractor, as held by the Court of Appeals, or an agent of Caltex. This question, in the light of the facts not controverted, is one of law
and hence may be passed upon by this Court. These facts are: (1) Boquiren made an admission that he was an agent of Caltex; (2) at the time of the
fire Caltex owned the gasoline station and all the equipment therein; (3) Caltex exercised control over Boquiren in the management of the state; (4)
the delivery truck used in delivering gasoline to the station had the name of CALTEX painted on it; and (5) the license to store gasoline at the station
was in the name of Caltex, which paid the license fees. (Exhibit T-Africa; Exhibit U-Africa; Exhibit X-5 Africa; Exhibit X-6 Africa; Exhibit Y-Africa).
In Boquiren's amended answer to the second amended complaint, he denied that he directed one of his drivers to remove gasoline from the truck into
the tank and alleged that the "alleged driver, if one there was, was not in his employ, the driver being an employee of the Caltex (Phil.) Inc. and/or the
owners of the gasoline station." It is true that Boquiren later on amended his answer, and that among the changes was one to the effect that he was
not acting as agent of Caltex. But then again, in his motion to dismiss appellants' second amended complaint the ground alleged was that it stated no
cause of action since under the allegations thereof he was merely acting as agent of Caltex, such that he could not have incurred personal liability. A
motion to dismiss on this ground is deemed to be an admission of the facts alleged in the complaint.
Caltex admits that it owned the gasoline station as well as the equipment therein, but claims that the business conducted at the service station in
question was owned and operated by Boquiren. But Caltex did not present any contract with Boquiren that would reveal the nature of their relationship
at the time of the fire. There must have been one in existence at that time. Instead, what was presented was a license agreement manifestly tailored
for purposes of this case, since it was entered into shortly before the expiration of the one-year period it was intended to operate. This so-called license
agreement (Exhibit 5-Caltex) was executed on November 29, 1948, but made effective as of January 1, 1948 so as to cover the date of the fire, namely,
March 18, 1948. This retroactivity provision is quite significant, and gives rise to the conclusion that it was designed precisely to free Caltex from any
responsibility with respect to the fire, as shown by the clause that Caltex "shall not be liable for any injury to person or property while in the property
herein licensed, it being understood and agreed that LICENSEE (Boquiren) is not an employee, representative or agent of LICENSOR (Caltex)."
But even if the license agreement were to govern, Boquiren can hardly be considered an independent contractor. Under that agreement Boquiren
would pay Caltex the purely nominal sum of P1.00 for the use of the premises and all the equipment therein. He could sell only Caltex Products.
Maintenance of the station and its equipment was subject to the approval, in other words control, of Caltex. Boquiren could not assign or transfer his
rights as licensee without the consent of Caltex. The license agreement was supposed to be from January 1, 1948 to December 31, 1948, and thereafter
until terminated by Caltex upon two days prior written notice. Caltex could at any time cancel and terminate the agreement in case Boquiren ceased
to sell Caltex products, or did not conduct the business with due diligence, in the judgment of Caltex. Termination of the contract was therefore a right
granted only to Caltex but not to Boquiren. These provisions of the contract show the extent of the control of Caltex over Boquiren. The control was
such that the latter was virtually an employee of the former.
Taking into consideration the fact that the operator owed his position to the company and the latter could remove him or terminate his services at
will; that the service station belonged to the company and bore its tradename and the operator sold only the products of the company; that the
equipment used by the operator belonged to the company and were just loaned to the operator and the company took charge of their repair and
maintenance; that an employee of the company supervised the operator and conducted periodic inspection of the company's gasoline and service
station; that the price of the products sold by the operator was fixed by the company and not by the operator; and that the receipts signed by the
operator indicated that he was a mere agent, the finding of the Court of Appeals that the operator was an agent of the company and not an independent
contractor should not be disturbed.
To determine the nature of a contract courts do not have or are not bound to rely upon the name or title given it by the contracting parties, should
thereby a controversy as to what they really had intended to enter into, but the way the contracting parties do or perform their respective obligations
stipulated or agreed upon may be shown and inquired into, and should such performance conflict with the name or title given the contract by the
parties, the former must prevail over the latter. (Shell Company of the Philippines, Ltd. vs. Firemens' Insurance Company of Newark, New Jersey, 100
Phil. 757).
The written contract was apparently drawn for the purpose of creating the apparent relationship of employer and independent contractor, and of
avoiding liability for the negligence of the employees about the station; but the company was not satisfied to allow such relationship to exist. The
evidence shows that it immediately assumed control, and proceeded to direct the method by which the work contracted for should be performed. By
reserving the right to terminate the contract at will, it retained the means of compelling submission to its orders. Having elected to assume control
and to direct the means and methods by which the work has to be performed, it must be held liable for the negligence of those performing service
under its direction. We think the evidence was sufficient to sustain the verdict of the jury. (Gulf Refining Company v. Rogers, 57 S.W. 2d, 183).
Caltex further argues that the gasoline stored in the station belonged to Boquiren. But no cash invoices were presented to show that Boquiren had
bought said gasoline from Caltex. Neither was there a sales contract to prove the same.
As found by the trial court the Africas sustained a loss of P9,005.80, after deducting the amount of P2,000.00 collected by them on the insurance of
the house. The deduction is now challenged as erroneous on the ground that Article 2207 of the New Civil Code, which provides for the subrogation
of the insurer to the rights of the insured, was not yet in effect when the loss took place. However, regardless of the silence of the law on this point at
that time, the amount that should be recovered be measured by the damages actually suffered, otherwise the principle prohibiting unjust enrichment
would be violated. With respect to the claim of the heirs of Ong P7,500.00 was adjudged by the lower court on the basis of the assessed value of the
property destroyed, namely, P1,500.00, disregarding the testimony of one of the Ong children that said property was worth P4,000.00. We agree that
the court erred, since it is of common knowledge that the assessment for taxation purposes is not an accurate gauge of fair market value, and in this
case should not prevail over positive evidence of such value. The heirs of Ong are therefore entitled to P10,000.00.
Wherefore, the decision appealed from is reversed and respondents-appellees are held liable solidarily to appellants, and ordered to pay them the
aforesaid sum of P9,005.80 and P10,000.00, respectively, with interest from the filing of the complaint, and costs.
Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera, Regala, Bengzon, J.P., Zaldivar and Sanchez, JJ., concur.
Dizon, J., took no part.

G.R. No. L-24101 September 30, 1970

MARIA TERESA Y. CUADRA, minor represented by her father ULISES P. CUADRA, ET AL., plaintiffs-appellees,
vs.
ALFONSO MONFORT, defendant-appellant.
Rodolfo J. Herman for plaintiffs-appellees.
Luis G. Torres and Abraham E. Tionko for defendant-appellant.

MAKALINTAL, J.:
This is an action for damages based on quasi-delict, decided by the Court of First Instance of Negros Occidental favorably to the plaintiffs and appealed
by the defendant to the Court of Appeals, which certified the same to us since the facts are not in issue.
Maria Teresa Cuadra, 12, and Maria Teresa Monfort, 13, were classmates in Grade Six at the Mabini Elementary School in Bacolod City. On July 9, 1962
their teacher assigned them, together with three other classmates, to weed the grass in the school premises. While thus engaged Maria Teresa Monfort
found a plastic headband, an ornamental object commonly worn by young girls over their hair. Jokingly she said aloud that she had found an earthworm
and, evidently to frighten the Cuadra girl, tossed the object at her. At that precise moment the latter turned around to face her friend, and the object
hit her right eye. Smarting from the pain, she rubbed the injured part and treated it with some powder. The next day, July 10, the eye became swollen
and it was then that the girl related the incident to her parents, who thereupon took her to a doctor for treatment. She underwent surgical operation
twice, first on July 20 and again on August 4, 1962, and stayed in the hospital for a total of twenty-three days, for all of which the parents spent the
sum of P1,703.75. Despite the medical efforts, however, Maria Teresa Cuadra completely lost the sight of her right eye.
In the civil suit subsequently instituted by the parents in behalf of their minor daughter against Alfonso Monfort, Maria Teresa Monfort's father, the
defendant was ordered to pay P1,703.00 as actual damages; P20,000.00 as moral damages; and P2,000.00 as attorney's fees, plus the costs of the suit.
The legal issue posed in this appeal is the liability of a parent for an act of his minor child which causes damage to another under the specific facts
related above and the applicable provisions of the Civil Code, particularly Articles 2176 and 2180 thereof, which read:
ART. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault
or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict and is governed by 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.
The father and, in case of his death or incapacity are responsible for the damages caused by the minor children who live in their company.
xxx xxx xxx
The responsibility treated of in this Article shall cease when the persons herein mentioned prove that they observed all the diligence of a good father
of a family to prevent damage.
The underlying basis of the liability imposed by Article 2176 is the fault or negligence accompanying the act or the omission, there being no willfulness
or intent to cause damage thereby. When the act or omission is that of one person for whom another is responsible, the latter then becomes himself
liable under Article 2180, in the different cases enumerated therein, such as that of the father or the mother under the circumstances above quoted.
The basis of this vicarious, although primary, liability is, as in Article 2176, fault or negligence, which is presumed from that which accompanied the
causative act or omission. The presumption is merely prima facie and may therefore be rebutted. This is the clear and logical inference that may be
drawn from the last paragraph of Article 2180, which states "that 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."
Since the fact thus required to be proven is a matter of defense, the burden of proof necessarily rests on the defendant. But what is the exact degree
of diligence contemplated, and how does a parent prove it in connection with a particular act or omission of a minor child, especially when it takes
place in his absence or outside his immediate company? Obviously there can be no meticulously calibrated measure applicable; and when the law
simply refers to "all the diligence of a good father of the family to prevent damage," it implies a consideration of the attendant circumstances in every
individual case, to determine whether or not by the exercise of such diligence the damage could have been prevented.
In the present case there is nothing from which it may be inferred that the defendant could have prevented the damage by the observance of due
care, or that he was in any way remiss in the exercise of his parental authority in failing to foresee such damage, or the act which caused it. On the
contrary, his child was at school, where it was his duty to send her and where she was, as he had the right to expect her to be, under the care and
supervision of the teacher. And as far as the act which caused the injury was concerned, it was an innocent prank not unusual among children at play
and which no parent, however careful, would have any special reason to anticipate much less guard against. Nor did it reveal any mischievous
propensity, or indeed any trait in the child's character which would reflect unfavorably on her upbringing and for which the blame could be attributed
to her parents.
The victim, no doubt, deserves no little commiseration and sympathy for the tragedy that befell her. But if the defendant is at all obligated to
compensate her suffering, the obligation has no legal sanction enforceable in court, but only the moral compulsion of good conscience.
The decision appealed from is reversed, and the complaint is dismissed, without pronouncement as to costs.
Reyes, J.B.L., Actg. C.J., Dizon, Zaldivar, Castro, Teehankee, Villamor and Makasiar, JJ., concur.
Concepcion, C.J., is on leave.
Fernando, J., took no part.

FIRST DIVISION
[G.R. No. 141538. March 23, 2004]
Hermana R. Cerezo, petitioner, vs. David Tuazon, respondent.
DECISION
CARPIO, J.:

The Case
This is a petition for review on certiorari[1] to annul the Resolution[2] dated 21 October 1999 of the Court of Appeals in CA-G.R. SP No. 53572, as well as
its Resolution dated 20 January 2000 denying the motion for reconsideration. The Court of Appeals denied the petition for annulment of the
Decision[3] dated 30 May 1995 rendered by the Regional Trial Court of AngelesCity, Branch 56 (trial court), in Civil Case No. 7415. The trial court
ordered petitioner Hermana R. Cerezo (Mrs. Cerezo) to pay respondent David Tuazon (Tuazon) actual damages, loss of earnings, moral damages, and
costs of suit.
Antecedent Facts
Around noontime of 26 June 1993, a Country Bus Lines passenger bus with plate number NYA 241 collided with a tricycle bearing plate number TC RV
126 along Captain M. Palo Street, Sta. Ines, Mabalacat, Pampanga. On 1 October 1993, tricycle driver Tuazon filed a complaint for damages against
Mrs. Cerezo, as owner of the bus line, her husband Attorney Juan Cerezo (Atty. Cerezo), and bus driver Danilo A. Foronda (Foronda). The complaint
alleged that:
7. At the time of the incident, plaintiff [Tuazon] was in his proper lane when the second-named defendant [Foronda], being then the driver and person
in charge of the Country Bus with plate number NYA 241, did then and there willfully, unlawfully, and feloniously operate the said motor vehicle in a
negligent, careless, and imprudent manner without due regard to traffic rules and regulations, there being a Slow Down sign near the scene of the
incident, and without taking the necessary precaution to prevent loss of lives or injuries, his negligence, carelessness and imprudence resulted to
severe damage to the tricycle and serious physical injuries to plaintiff thus making him unable to walk and becoming disabled, with his thumb and
middle finger on the left hand being cut[.][4]
On 1 October 1993, Tuazon filed a motion to litigate as a pauper. Subsequently, the trial court issued summons against Atty. Cerezo and Mrs. Cerezo
(the Cerezo spouses) at the Makati address stated in the complaint. However, the summons was returned unserved on 10 November 1993 as the
Cerezo spouses no longer held office nor resided in Makati. On 18 April 1994, the trial court issued alias summons against the Cerezo spouses at their
address in Barangay Sta. Maria, Camiling, Tarlac. The alias summons and a copy of the complaint were finally served on 20 April 1994 at the office of
Atty. Cerezo, who was then working as Tarlac Provincial Prosecutor. Atty. Cerezo reacted angrily on learning of the service of summons upon his
person. Atty. Cerezo allegedly told Sheriff William Canlas: Punyeta, ano ang gusto mong mangyari? Gusto mong hindi ka makalabas ng buhay
dito? Teritoryo ko ito. Wala ka sa teritoryo mo.[5]
The records show that the Cerezo spouses participated in the proceedings before the trial court. The Cerezo spouses filed a comment with motion for
bill of particulars dated 29 April 1994 and a reply to opposition to comment with motion dated 13 June 1994.[6] On 1 August 1994, the trial court issued
an order directing the Cerezo spouses to file a comment to the opposition to the bill of particulars. Atty. Elpidio B. Valera (Atty. Valera) of Valera and
Valera Law Offices appeared on behalf of the Cerezo spouses. On 29 August 1994, Atty. Valera filed an urgent ex-parte motion praying for the resolution
of Tuazons motion to litigate as a pauper and for the issuance of new summons on the Cerezo spouses to satisfy proper service in accordance with the
Rules of Court.[7]
On 30 August 1994, the trial court issued an order resolving Tuazons motion to litigate as a pauper and the Cerezo spouses urgent ex-parte motion. The
order reads:
At the hearing on August 30, 1994, the plaintiff [Tuazon] testified that he is presently jobless; that at the time of the filing of this case, his son who is
working in Malaysia helps him and sends him once in a while P300.00 a month, and that he does not have any real property. Attached to the Motion
to Litigate as Pauper are his Affidavit that he is unemployed; a Certification by the Barangay Captain of his poblacion that his income is not enough for
his familys subsistence; and a Certification by the Office of the Municipal Assessor that he has no landholding in
the Municipality of Mabalacat, Province of Pampanga.
The Court is satisfied from the unrebutted testimony of the plaintiff that he is entitled to prosecute his complaint in this case as a pauper under existing
rules.
On the other hand, the Court denies the prayer in the Appearance and Urgent Ex-Parte Motion requiring new summons to be served to the
defendants. The Court is of the opinion that any infirmity in the service of the summons to the defendant before plaintiff was allowed to prosecute his
complaint in this case as a pauper has been cured by this Order.
If within 15 days from receipt of this Order, the defendants do not question on appeal this Order of this Court, the Court shall proceed to resolve the
Motion for Bill of Particulars.[8]
On 27 September 1994, the Cerezo spouses filed an urgent ex-parte motion for reconsideration. The trial court denied the motion for reconsideration.
On 14 November 1994, the trial court issued an order directing the Cerezo spouses to file their answer within fifteen days from receipt of the order. The
Cerezo spouses did not file an answer. On 27 January 1995, Tuazon filed a motion to declare the Cerezo spouses in default. On 6 February 1995, the
trial court issued an order declaring the Cerezo spouses in default and authorizing Tuazon to present his evidence. [9]
On 30 May 1995, after considering Tuazons testimonial and documentary evidence, the trial court ruled in Tuazons favor. The trial court made no
pronouncement on Forondas liability because there was no service of summons on him. The trial court did not hold Atty. Cerezo liable as Tuazon failed
to show that Mrs. Cerezos business benefited the family, pursuant to Article 121(3) of the Family Code. The trial court held Mrs. Cerezo solely liable
for the damages sustained by Tuazon arising from the negligence of Mrs. Cerezos employee, pursuant to Article 2180 of the Civil Code. The dispositive
portion of the trial courts decision reads:
WHEREFORE, judgment is hereby rendered ordering the defendant Hermana Cerezo to pay the plaintiff:
a) For Actual Damages
1) Expenses for operation and medical
Treatment - P69,485.35
2) Cost of repair of the tricycle - 39,921.00
b) For loss of earnings - 43,300.00
c) For moral damages - 20,000.00
d) And to pay the cost of the suit.
The docket fees and other expenses in the filing of this suit shall be lien on whatever judgment may be rendered in favor of the plaintiff.
SO ORDERED.[10]
Mrs. Cerezo received a copy of the decision on 25 June 1995. On 10 July 1995, Mrs. Cerezo filed before the trial court a petition for relief from judgment
on the grounds of fraud, mistake or excusable negligence. Testifying before the trial court, both Mrs. Cerezo and Atty. Valera denied receipt of notices
of hearings and of orders of the court. Atty. Valera added that he received no notice before or during the 8 May 1995 elections, when he was a
senatorial candidate for the KBL Party, and very busy, using his office and residence as Party National Headquarters. Atty. Valera claimed that he was
able to read the decision of the trial court only after Mrs. Cerezo sent him a copy.[11]
Tuazon did not testify but presented documentary evidence to prove the participation of the Cerezo spouses in the case. Tuazon presented the
following exhibits:
Exhibit 1 - Sheriffs return and summons;
Exhibit 1-A - Alias summons dated April 20, 1994;
Exhibit 2 - Comment with Motion;
Exhibit 3 - Minutes of the hearing held on August 1, 1994;
Exhibit 3-A - Signature of defendants counsel;
Exhibit 4 - Minutes of the hearing held on August 30, 1994;
Exhibit 4-A - Signature of the defendants counsel;
Exhibit 5 - Appearance and Urgent Ex-Parte Motion;
Exhibit 6 - Order dated November 14, 1994;
Exhibit 6-A - Postal certification dated January 13, 1995;
Exhibit 7 - Order dated February [illegible];
Exhibit 7-A - Courts return slip addressed to Atty. Elpidio
Valera;
Exhibit 7-B - Courts return slip addressed to Spouses Juan
and Hermana Cerezo;
Exhibit 8 - Decision dated May [30], 1995
Exhibit 8-A - Courts return slip addressed to defendant Hermana
Cerezo;
Exhibit 8-B - Courts return slip addressed to defendants counsel,
Atty. Elpidio Valera;
Exhibit 9 - Order dated September 21, 1995;
Exhibit 9-A - Second Page of Exhibit 9;
Exhibit 9-B - Third page of Exhibit 9;
Exhibit 9-C - Fourth page of Exhibit 9;
Exhibit 9-D - Courts return slip addressed to Atty. Elpidio Valera;
and
Exhibit 9-E - Courts return slip addressed to plaintiffs counsel,
Atty. Norman Dick de Guzman.[12]
On 4 March 1998, the trial court issued an order[13] denying the petition for relief from judgment. The trial court stated that having received the decision
on 25 June 1995, the Cerezo spouses should have filed a notice of appeal instead of resorting to a petition for relief from judgment. The trial court
refused to grant relief from judgment because the Cerezo spouses could have availed of the remedy of appeal. Moreover, the Cerezo spouses not only
failed to prove fraud, accident, mistake or excusable negligence by conclusive evidence, they also failed to prove that they had a good and substantial
defense. The trial court noted that the Cerezo spouses failed to appeal because they relied on an expected settlement of the case.
The Cerezo spouses subsequently filed before the Court of Appeals a petition for certiorari under Section 1 of Rule 65. The petition was docketed as
CA-G.R. SP No. 48132.[14] The petition questioned whether the trial court acquired jurisdiction over the case considering there was no service of
summons on Foronda, whom the Cerezo spouses claimed was an indispensable party. In a resolution[15] dated 21 January 1999, the Court of Appeals
denied the petition for certiorari and affirmed the trial courts order denying the petition for relief from judgment. The Court of Appeals declared that
the Cerezo spouses failure to file an answer was due to their own negligence, considering that they continued to participate in the proceedings without
filing an answer. There was also nothing in the records to show that the Cerezo spouses actually offered a reasonable settlement to Tuazon. The Court
of Appeals also denied Cerezo spouses motion for reconsideration for lack of merit.
The Cerezo spouses filed before this Court a petition for review on certiorari under Rule 45. Atty. Cerezo himself signed the petition, docketed as G.R.
No. 137593. On 13 April 1999, this Court rendered a resolution denying the petition for review on certiorari for failure to attach an affidavit of service
of copies of the petition to the Court of Appeals and to the adverse parties. Even if the petition complied with this requirement, the Court would still
have denied the petition as the Cerezo spouses failed to show that the Court of Appeals committed a reversible error. The Courts resolution was
entered in the Book of Entries and Judgments when it became final and executory on 28 June 1999.[16]
Undaunted, the Cerezo spouses filed before the Court of Appeals on 6 July 1999 a petition for annulment of judgment under Rule 47 with prayer for
restraining order. Atty. Valera and Atty. Dionisio S. Daga (Atty. Daga) represented Mrs. Cerezo in the petition, docketed as CA-G.R. SP No. 53572.[17] The
petition prayed for the annulment of the 30 May 1995 decision of the trial court and for the issuance of a writ of preliminary injunction enjoining
execution of the trial courts decision pending resolution of the petition.
The Court of Appeals denied the petition for annulment of judgment in a resolution dated 21 October 1999. The resolution reads in part:
In this case, records show that the petitioner previously filed with the lower court a Petition for Relief from Judgment on the ground that they were
wrongfully declared in default while waiting for an amicable settlement of the complaint for damages. The court a quo correctly ruled that such petition
is without merit. The defendant spouses admit that during the initial hearing they appeared before the court and even mentioned the need for an
amicable settlement. Thus, the lower court acquired jurisdiction over the defendant spouses.
Therefore, petitioner having availed of a petition for relief, the remedy of an annulment of judgment is no longer available. The proper action for the
petitioner is to appeal the order of the lower court denying the petition for relief.
Wherefore, the instant petition could not be given due course and should accordingly be dismissed.
SO ORDERED.[18]
On 20 January 2000, the Court of Appeals denied the Cerezo spouses motion for reconsideration.[19] The Court of Appeals stated:
A distinction should be made between a courts jurisdiction over a person and its jurisdiction over the subject matter of a case. The former is acquired
by the proper service of summons or by the parties voluntary appearance; while the latter is conferred by law.
Resolving the matter of jurisdiction over the subject matter, Section 19(1) of B[atas] P[ambansa] 129 provides that Regional Trial Courts shall exercise
exclusive original jurisdiction in all civil actions in which the subject of the litigation is incapable of pecuniary estimation. Thus it was proper for the
lower court to decide the instant case for damages.
Unlike jurisdiction over the subject matter of a case which is absolute and conferred by law; any defects [sic] in the acquisition of jurisdiction over a
person (i.e., improper filing of civil complaint or improper service of summons) may be waived by the voluntary appearance of parties.
The lower court admits the fact that no summons was served on defendant Foronda. Thus, jurisdiction over the person of defendant Foronda was not
acquired, for which reason he was not held liable in this case. However, it has been proven that jurisdiction over the other defendants was validly
acquired by the court a quo.
The defendant spouses admit to having appeared in the initial hearings and in the hearing for plaintiffs motion to litigate as a pauper. They even
mentioned conferences where attempts were made to reach an amicable settlement with plaintiff. However, the possibility of amicable settlement is
not a good and substantial defense which will warrant the granting of said petition.
xxx
Assuming arguendo that private respondent failed to reserve his right to institute a separate action for damages in the criminal action, the petitioner
cannot now raise such issue and question the lower courts jurisdiction because petitioner and her husband have waived such right by voluntarily
appearing in the civil case for damages. Therefore, the findings and the decision of the lower court may bind them.
Records show that the petitioner previously filed with the lower court a Petition for Relief from Judgment on the ground that they were wrongfully
declared in default while waiting for an amicable settlement of the complaint for damages. The court a quo correctly ruled that such petition is without
merit, jurisdiction having been acquired by the voluntary appearance of defendant spouses.
Once again, it bears stressing that having availed of a petition for relief, the remedy of annulment of judgment is no longer available.
Based on the foregoing, the motion for reconsideration could not be given due course and is hereby DENIED.
SO ORDERED.[20]
The Issues
On 7 February 2000, Mrs. Cerezo, this time with Atty. Daga alone representing her, filed the present petition for review on certiorari before this
Court. Mrs. Cerezo claims that:
1. In dismissing the Petition for Annulment of Judgment, the Court of Appeals assumes that the issues raised in the petition for annulment is based on
extrinsic fraud related to the denied petition for relief notwithstanding that the grounds relied upon involves questions of lack of jurisdiction.
2. In dismissing the Petition for Annulment, the Court of Appeals disregarded the allegation that the lower court[s] findings of negligence against
defendant-driver Danilo Foronda [whom] the lower court did not summon is null and void for want of due process and consequently, such findings of
negligence which is [sic] null and void cannot become the basis of the lower court to adjudge petitioner-employer liable for civil damages.
3. In dismissing the Petition for Annulment, the Court of Appeals ignored the allegation that defendant-driver Danilo A. Foronda whose negligence is
the main issue is an indispensable party whose presence is compulsory but [whom] the lower court did not summon.
4. In dismissing the Petition for Annulment, the Court of Appeals ruled that assuming arguendo that private respondent failed to reserve his right to
institute a separate action for damages in the criminal action, the petitioner cannot now raise such issue and question the lower courts jurisdiction
because petitioner [has] waived such right by voluntarily appearing in the civil case for damages notwithstanding that lack of jurisdiction cannot be
waived.[21]
The Courts Ruling
The petition has no merit. As the issues are interrelated, we shall discuss them jointly.
Remedies Available
to a Party Declared in Default
An examination of the records of the entire proceedings shows that three lawyers filed and signed pleadings on behalf of Mrs. Cerezo, namely, Atty.
Daga, Atty. Valera, and Atty. Cerezo.Despite their number, Mrs. Cerezos counsels failed to avail of the proper remedies. It is either by sheer ignorance
or by malicious manipulation of legal technicalities that they have managed to delay the disposition of the present case, to the detriment of pauper
litigant Tuazon.
Mrs. Cerezo claims she did not receive any copy of the order declaring the Cerezo spouses in default. Mrs. Cerezo asserts that she only came to know
of the default order on 25 June 1995, when she received a copy of the decision. On 10 July 1995, Mrs. Cerezo filed before the trial court a petition for
relief from judgment under Rule 38, alleging fraud, mistake, or excusable negligence as grounds. On 4 March 1998, the trial court denied Mrs. Cerezos
petition for relief from judgment. The trial court stated that Mrs. Cerezo could have availed of appeal as a remedy and that she failed to prove that the
judgment was entered through fraud, accident, mistake, or excusable negligence. Mrs. Cerezo then filed before the Court of Appeals a petition
for certiorari under Section 1 of Rule 65 assailing the denial of the petition for relief from judgment. On 21 January 1999, the Court of Appeals dismissed
Mrs. Cerezos petition. On 24 February 1999, the appellate court denied Mrs. Cerezos motion for reconsideration. On 11 March 1999, Mrs. Cerezo filed
before this Court a petition for review on certiorariunder Rule 45, questioning the denial of the petition for relief from judgment. We denied the
petition and our resolution became final and executory on 28 June 1999.
On 6 July 1999, a mere eight days after our resolution became final and executory, Mrs. Cerezo filed before the Court of Appeals a petition for
annulment of the judgment of the trial court under Rule 47. Meanwhile, on 25 August 1999, the trial court issued over the objection of Mrs. Cerezo an
order of execution of the judgment in Civil Case No. 7415. On 21 October 1999, the Court of Appeals dismissed the petition for annulment of
judgment. On 20 January 2000, the Court of Appeals denied Mrs. Cerezos motion for reconsideration. On 7 February 2000, Mrs. Cerezo filed the
present petition for review on certiorari under Rule 45 challenging the dismissal of her petition for annulment of judgment.
Lina v. Court of Appeals[22] enumerates the remedies available to a party declared in default:
a) The defendant in default may, at any time after discovery thereof and before judgment, file a motion under oath to set aside the order of default on
the ground that his failure to answer was due to fraud, accident, mistake or excusable negligence, and that he has a meritorious defense (Sec. 3, Rule
18 [now Sec. 3(b), Rule 9]);
b) If the judgment has already been rendered when the defendant discovered the default, but before the same has become final and executory, he
may file a motion for new trial under Section 1 (a) of Rule 37;
c) If the defendant discovered the default after the judgment has become final and executory, he may file a petition for relief under Section 2 [now
Section 1] of Rule 38; and
d) He may also appeal from the judgment rendered against him as contrary to the evidence or to the law, even if no petition to set aside the order of
default has been presented by him (Sec. 2, Rule 41). (Emphasis added)
Moreover, a petition for certiorari to declare the nullity of a judgment by default is also available if the trial court improperly declared a party in default,
or even if the trial court properly declared a party in default, if grave abuse of discretion attended such declaration.[23]
Mrs. Cerezo admitted that she received a copy of the trial courts decision on 25 June 1995. Based on this admission, Mrs. Cerezo had at least three
remedies at her disposal: an appeal, a motion for new trial, or a petition for certiorari.
Mrs. Cerezo could have appealed under Rule 41[24] from the default judgment within 15 days from notice of the judgment. She could have availed of
the power of the Court of Appeals to try cases and conduct hearings, receive evidence, and perform all acts necessary to resolve factual issues raised
in cases falling within its appellate jurisdiction.[25]
Mrs. Cerezo also had the option to file under Rule 37[26] a motion for new trial within the period for taking an appeal. If the trial court grants a new
trial, the original judgment is vacated, and the action will stand for trial de novo. The recorded evidence taken in the former trial, as far as the same is
material and competent to establish the issues, shall be used at the new trial without retaking the same.[27]
Mrs. Cerezo also had the alternative of filing under Rule 65[28] a petition for certiorari assailing the order of default within 60 days from notice of the
judgment. An order of default is interlocutory, and an aggrieved party may file an appropriate special civil action under Rule 65. [29] In a petition
for certiorari, the appellate court may declare void both the order of default and the judgment of default.
Clearly, Mrs. Cerezo had every opportunity to avail of these remedies within the reglementary periods provided under the Rules of Court. However,
Mrs. Cerezo opted to file a petition for relief from judgment, which is available only in exceptional cases. A petition for relief from judgment should be
filed within the reglementary period of 60 days from knowledge of judgment and six months from entry of judgment, pursuant to
Rule 38 of the Rules of Civil Procedure.[30] Tuason v. Court of Appeals[31] explained the nature of a petition for relief from judgment:
When a party has another remedy available to him, which may either be a motion for new trial or appeal from an adverse decision of the trial court,
and he was not prevented by fraud, accident, mistake or excusable negligence from filing such motion or taking such appeal, he cannot avail himself
of this petition. Indeed, relief will not be granted to a party who seeks avoidance from the effects of the judgment when the loss of the remedy at law
was due to his own negligence; otherwise the petition for relief can be used to revive the right to appeal which has been lost thru inexcusable
negligence.
Evidently, there was no fraud, accident, mistake, or excusable negligence that prevented Mrs. Cerezo from filing an appeal, a motion for new trial or a
petition for certiorari. It was error for her to avail of a petition for relief from judgment.
After our resolution denying Mrs. Cerezos petition for relief became final and executory, Mrs. Cerezo, in her last ditch attempt to evade liability, filed
before the Court of Appeals a petition for annulment of the judgment of the trial court. Annulment is available only on the grounds of extrinsic fraud
and lack of jurisdiction. If based on extrinsic fraud, a party must file the petition within four years from its discovery, and if based on lack of jurisdiction,
before laches or estoppel bars the petition. Extrinsic fraud is not a valid ground if such fraud was used as a ground, or could have been used as a
ground, in a motion for new trial or petition for relief from judgment.[32]
Mrs. Cerezo insists that lack of jurisdiction, not extrinsic fraud, was her ground for filing the petition for annulment of judgment. However, a party may
avail of the remedy of annulment of judgment under Rule 47 only if the ordinary remedies of new trial, appeal, petition for relief from judgment, or
other appropriate remedies are no longer available through no fault of the party.[33] Mrs. Cerezo could have availed of a new trial or appeal but through
her own fault she erroneously availed of the remedy of a petition for relief, which was denied with finality. Thus, Mrs. Cerezo may no longer avail of
the remedy of annulment.
In any event, the trial court clearly acquired jurisdiction over Mrs. Cerezos person. Mrs. Cerezo actively participated in the proceedings before the trial
court, submitting herself to the jurisdiction of the trial court. The defense of lack of jurisdiction fails in light of her active participation in the trial court
proceedings. Estoppel or laches may also bar lack of jurisdiction as a ground for nullity especially if raised for the first time on appeal by a party who
participated in the proceedings before the trial court, as what happened in this case.[34]
For these reasons, the present petition should be dismissed for utter lack of merit. The extraordinary action to annul a final judgment is restricted to
the grounds specified in the rules.The reason for the restriction is to prevent this extraordinary action from being used by a losing party to make a
complete farce of a duly promulgated decision that has long become final and executory. There would be no end to litigation if parties who have
unsuccessfully availed of any of the appropriate remedies or lost them through their fault could still bring an action for annulment of
judgment.[35] Nevertheless, we shall discuss the issues raised in the present petition to clear any doubt about the correctness of the decision of the
trial court.
Mrs. Cerezos Liability and the
Trial Courts Acquisition of Jurisdiction
Mrs. Cerezo contends that the basis of the present petition for annulment is lack of jurisdiction. Mrs. Cerezo asserts that the trial court could not validly
render judgment since it failed to acquire jurisdiction over Foronda. Mrs. Cerezo points out that there was no service of summons on
Foronda. Moreover, Tuazon failed to reserve his right to institute a separate civil action for damages in the criminal action. Such contention betrays a
faulty foundation. Mrs. Cerezos contention proceeds from the point of view of criminal law and not of civil law, while the basis of the present action of
Tuazon is quasi-delict under the Civil Code, not delict under the Revised Penal Code.
The same negligent act may produce civil liability arising from a delict under Article 103 of the Revised Penal Code, or may give rise to an action for a
quasi-delict under Article 2180 of the Civil Code. An aggrieved party may choose between the two remedies. An action based on a quasi-delict may
proceed independently from the criminal action.[36] There is, however, a distinction between civil liability arising from a delict and civil liability arising
from a quasi-delict. The choice of remedy, whether to sue for a delict or a quasi-delict, affects the procedural and jurisdictional issues of the action.[37]
Tuazon chose to file an action for damages based on a quasi-delict. In his complaint, Tuazon alleged that Mrs. Cerezo, without exercising due care and
diligence in the supervision and management of her employees and buses, hired Foronda as her driver. Tuazon became disabled because of Forondas
recklessness, gross negligence and imprudence, aggravated by Mrs. Cerezos lack of due care and diligence in the selection and supervision of her
employees, particularly Foronda.[38]
The trial court thus found Mrs. Cerezo liable under Article 2180 of the Civil Code. Article 2180 states in part:
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.
Contrary to Mrs. Cerezos assertion, Foronda is not an indispensable party to the case. An indispensable party is one whose interest is affected by the
courts action in the litigation, and without whom no final resolution of the case is possible.[39] However, Mrs. Cerezos liability as an employer in an
action for a quasi-delict is not only solidary, it is also primary and direct.Foronda is not an indispensable party to the final resolution of Tuazons action
for damages against Mrs. Cerezo.
The responsibility of two or more persons who are liable for a quasi-delict is solidary.[40] Where there is a solidary obligation on the part of debtors, as
in this case, each debtor is liable for the entire obligation. Hence, each debtor is liable to pay for the entire obligation in full. There is no merger or
renunciation of rights, but only mutual representation.[41] Where the obligation of the parties is solidary, either of the parties is indispensable, and the
other is not even a necessary party because complete relief is available from either.[42] Therefore, jurisdiction over Foronda is not even necessary as
Tuazon may collect damages from Mrs. Cerezo alone.
Moreover, an employers liability based on a quasi-delict is primary and direct, while the employers liability based on a delict is merely subsidiary.[43] The
words primary and direct, as contrasted with subsidiary, refer to the remedy provided by law for enforcing the obligation rather than to the character
and limits of the obligation.[44] Although liability under Article 2180 originates from the negligent act of the employee, the aggrieved party may sue the
employer directly. When an employee causes damage, the law presumes that the employer has himself committed an act of negligence in not
preventing or avoiding the damage. This is the fault that the law condemns. While the employer is civilly liable in a subsidiary capacity for the employees
criminal negligence, the employer is also civilly liable directly and separately for his own civil negligence in failing to exercise due diligence in selecting
and supervising his employee. The idea that the employers liability is solely subsidiary is wrong.[45]
The action can be brought directly against the person responsible (for another), without including the author of the act. The action against the principal
is accessory in the sense that it implies the existence of a prejudicial act committed by the employee, but it is not subsidiary in the sense that it can not
be instituted till after the judgment against the author of the act or at least, that it is subsidiary to the principal action; the action for responsibility (of
the employer) is in itself a principal action.[46]
Thus, there is no need in this case for the trial court to acquire jurisdiction over Foronda. The trial courts acquisition of jurisdiction over Mrs. Cerezo is
sufficient to dispose of the present case on the merits.
In contrast, an action based on a delict seeks to enforce the subsidiary liability of the employer for the criminal negligence of the employee as provided
in Article 103 of the Revised Penal Code. To hold the employer liable in a subsidiary capacity under a delict, the aggrieved party must initiate a criminal
action where the employees delict and corresponding primary liability are established.[47] If the present action proceeds from a delict, then the trial
courts jurisdiction over Foronda is necessary. However, the present action is clearly for the quasi-delict of Mrs. Cerezo and not for the delict of Foronda.
The Cerezo spouses contention that summons be served anew on them is untenable in light of their participation in the trial court proceedings. To
uphold the Cerezo spouses contention would make a fetish of a technicality.[48] Moreover, any irregularity in the service of summons that might have
vitiated the trial courts jurisdiction over the persons of the Cerezo spouses was deemed waived when the Cerezo spouses filed a petition for relief from
judgment.[49]
We hold that the trial court had jurisdiction and was competent to decide the case in favor of Tuazon and against Mrs. Cerezo even in the absence of
Foronda. Contrary to Mrs. Cerezos contention, Foronda is not an indispensable party to the present case. It is not even necessary for Tuazon to reserve
the filing of a separate civil action because he opted to file a civil action for damages against Mrs. Cerezo who is primarily and directly liable for her
own civil negligence. The words of Justice Jorge Bocobo in Barredo v. Garcia still hold true today as much as it did in 1942:
x x x [T]o hold that there is only one way to make defendants liability effective, and that is, to sue the driver and exhaust his (the latters) property first,
would be tantamount to compelling the plaintiff to follow a devious and cumbersome method of obtaining relief. True, there is such a remedy under
our laws, but there is also a more expeditious way, which is based on the primary and direct responsibility of the defendant under article [2180] of the
Civil Code. Our view of the law is more likely to facilitate remedy for civil wrongs, because the procedure indicated by the defendant is wasteful and
productive of delay, it being a matter of common knowledge that professional drivers of taxis and other similar public conveyances do not have
sufficient means with which to pay damages. Why, then, should the plaintiff be required in all cases to go through this roundabout, unnecessary, and
probably useless procedure? In construing the laws, courts have endeavored to shorten and facilitate the pathways of right and justice.[50]
Interest at the rate of 6% per annum is due on the amount of damages adjudged by the trial court.[51] The 6% per annum interest shall commence
from 30 May 1995, the date of the decision of the trial court. Upon finality of this decision, interest at 12% per annum, in lieu of 6% per annum, is due
on the amount of damages adjudged by the trial court until full payment.
WHEREFORE, we DENY the instant petition for review. The Resolution dated 21 October 1999 of the Court of Appeals in CA-G.R. SP No. 53572, as well
as its Resolution dated 20 January 2000 denying the motion for reconsideration, is AFFIRMED with the MODIFICATION that the amount due shall earn
legal interest at 6% per annum computed from 30 May 1995, the date of the trial courts decision. Upon finality of this decision, the amount due shall
earn interest at 12% per annum, in lieu of 6% per annum, until full payment.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Ynares-Santiago, and Azcuna, JJ., concur. Panganiban, J., on official leave.
CASTILEX INDUSTRIAL CORPORATION, petitioner, vs. VICENTE VASQUEZ, JR. and LUISA SO VASQUEZ, and CEBU DOCTORS HOSPITAL, INC., respondents.
DECISION
DAVIDE, JR., C.J.:
The pivotal issue in this petition is whether an employer may be held vicariously liable for the death resulting from the negligent operation by a
managerial employee of a company-issued vehicle.
The antecedents, as succinctly summarized by the Court of Appeals, are as follows:
On 28 August 1988, at around 1:30 to 2:00 in the morning, Romeo So Vasquez, was driving a Honda motorcycle around Fuente Osmea Rotunda. He
was traveling counter-clockwise, (the normal flow of traffic in a rotunda) but without any protective helmet or goggles. He was also only carrying a
Students Permit to Drive at the time. Upon the other hand, Benjamin Abad [was a] manager of Appellant Castilex Industrial Corporation, registered
owner [of] a Toyota Hi-Lux Pick-up with plate no. GBW-794. On the same date and time, Abad drove the said company car out of a parking lot but
instead of going around the Osmea rotunda he made a short cut against [the] flow of the traffic in proceeding to his route to General Maxilom St. or
to Belvic St.
In the process, the motorcycle of Vasquez and the pick-up of Abad collided with each other causing severe injuries to the former. Abad stopped his
vehicle and brought Vasquez to the Southern Islands Hospital and later to the Cebu Doctors Hospital.
On September 5, 1988, Vasquez died at the Cebu Doctors Hospital. It was there that Abad signed an acknowledgment of Responsible Party (Exhibit K)
wherein he agreed to pay whatever hospital bills, professional fees and other incidental charges Vasquez may incur.
After the police authorities had conducted the investigation of the accident, a Criminal Case was filed against Abad but which was subsequently
dismissed for failure to prosecute. So, the present action for damages was commenced by Vicente Vasquez, Jr. and Luisa So Vasquez, parents of the
deceased Romeo So Vasquez, against Jose Benjamin Abad and Castilex Industrial Corporation. In the same action, Cebu Doctors Hospital intervened to
collect unpaid balance for the medical expense given to Romeo So Vasquez.[1]
The trial court ruled in favor of private respondents Vicente and Luisa Vasquez and ordered Jose Benjamin Abad (hereafter ABAD) and petitioner
Castilex Industrial Corporation (hereafter CASTILEX) to pay jointly and solidarily (1) Spouses Vasquez, the amounts of P8,000.00 for burial
expenses; P50,000.00 as moral damages; P10,000.00 as attorneys fees; and P778,752.00 for loss of earning capacity; and (2) Cebu Doctors Hospital,
the sum of P50,927.83 for unpaid medical and hospital bills at 3% monthly interest from 27 July 1989 until fully paid, plus the costs of litigation.[2]
CASTILEX and ABAD separately appealed the decision.
In its decision[3] of 21 May 1997, the Court of Appeals affirmed the ruling of the trial court holding ABAD and CASTILEX liable but held that the liability
of the latter is only vicarious and not solidary with the former. It reduced the award of damages representing loss of earning capacity from P778,752.00
to P214,156.80; and the interest on the hospital and medical bills, from 3% per month to 12% per annum from 5 September 1988 until fully paid.
Upon CASTILEXs motion for reconsideration, the Court of Appeals modified its decision by (1) reducing the award of moral damages from P50,000
to P30,000 in view of the deceaseds contributory negligence; (b) deleting the award of attorneys fees for lack of evidence; and (c) reducing the interest
on hospital and medical bills to 6% per annum from 5 September 1988 until fully paid.[4]
Hence, CASTILEX filed the instant petition contending that the Court of Appeals erred in (1) applying to the case the fifth paragraph of Article 2180 of
the Civil Code, instead of the fourth paragraph thereof; (2) that as a managerial employee, ABAD was deemed to have been always acting within the
scope of his assigned task even outside office hours because he was using a vehicle issued to him by petitioner; and (3) ruling that petitioner had the
burden to prove that the employee was not acting within the scope of his assigned task.
Jose Benjamin ABAD merely adopted the statement of facts of petitioner which holds fast on the theory of negligence on the part of the deceased.
On the other hand, respondents Spouses Vasquez argue that their sons death was caused by the negligence of petitioners employee who was driving
a vehicle issued by petitioner and who was on his way home from overtime work for petitioner; and that petitioner is thus liable for the resulting injury
and subsequent death of their son on the basis of the fifth paragraph of Article 2180. Even if the fourth paragraph of Article 2180 were applied,
petitioner cannot escape liability therefor. They moreover argue that the Court of Appeals erred in reducing the amount of compensatory damages
when the award made by the trial court was borne both by evidence adduced during the trial regarding deceaseds wages and by jurisprudence on life
expectancy. Moreover, they point out that the petition is procedurally not acceptable on the following grounds: (1) lack of an explanation for serving
the petition upon the Court of Appeals by registered mail, as required under Section 11, Rule 13 of the Rules of Civil Procedure; and (2) lack of a
statement of the dates of the expiration of the original reglementary period and of the filing of the motion for extension of time to file a petition for
review.
For its part, respondent Cebu Doctors Hospital maintains that petitioner CASTILEX is indeed vicariously liable for the injuries and subsequent death of
Romeo Vasquez caused by ABAD, who was on his way home from taking snacks after doing overtime work for petitioner. Although the incident occurred
when ABAD was not working anymore the inescapable fact remains that said employee would not have been situated at such time and place had he
not been required by petitioner to do overtime work. Moreover, since petitioner adopted the evidence adduced by ABAD, it cannot, as the latters
employer, inveigle itself from the ambit of liability, and is thus estopped by the records of the case, which it failed to refute.
We shall first address the issue raised by the private respondents regarding some alleged procedural lapses in the petition.
Private respondents contention of petitioners violation of Section 11 of Rule 13 and Section 4 of Rule 45 of the 1997 Rules of Civil Procedure holds no
water.
Section 11 of Rule 13 provides:
SEC. 11. Priorities in modes of service and filing. -- Whenever practicable, the service and filing of pleadings and other papers shall be done
personally. Except with respect to papers emanating from the court, a resort to other modes must be accompanied by a written explanation why the
service or filing was not done personally. A violation of this Rule may be cause to consider the paper as not filed.
The explanation why service of a copy of the petition upon the Court of Appeals was done by registered mail is found on Page 28 of the petition. Thus,
there has been compliance with the aforequoted provision.
As regards the allegation of violation of the material data rule under Section 4 of Rule 45, the same is unfounded. The material dates required to be
stated in the petition are the following: (1) the date of receipt of the judgment or final order or resolution subject of the petition; (2) the date of filing
of a motion for new trial or reconsideration, if any; and (3) the date of receipt of the notice of the denial of the motion. Contrary to private respondents
claim, the petition need not indicate the dates of the expiration of the original reglementary period and the filing of a motion for extension of time to
file the petition. At any rate, aside from the material dates required under Section 4 of Rule 45, petitioner CASTILEX also stated in the first page of the
petition the date it filed the motion for extension of time to file the petition.
Now on the merits of the case.
The negligence of ABAD is not an issue at this instance. Petitioner CASTILEX presumes said negligence but claims that it is not vicariously liable for the
injuries and subsequent death caused by ABAD.
Petitioner contends that the fifth paragraph of Article 2180 of the Civil Code should only apply to instances where the employer is not engaged in
business or industry. Since it is engaged in the business of manufacturing and selling furniture it is therefore not covered by said provision. Instead, the
fourth paragraph should apply.
Petitioners interpretation of the fifth paragraph is not accurate. The phrase even though the former are not engaged in any business or industry found
in the fifth paragraph should be interpreted to mean that it is not necessary for the employer to be engaged in any business or industry to be liable for
the negligence of his employee who is acting within the scope of his assigned task.[5]
A distinction must be made between the two provisions to determine what is applicable. Both provisions apply to employers: the fourth paragraph, to
owners and managers of an establishment or enterprise; and the fifth paragraph, to employers in general, whether or not engaged in any business or
industry. The fourth paragraph covers negligent acts of employees committed either in the service of the branches or on the occasion of their functions,
while the fifth paragraph encompasses negligent acts of employees acting within the scope of their assigned task. The latter is an expansion of the
former in both employer coverage and acts included. Negligent acts of employees, whether or not the employer is engaged in a business or industry,
are covered so long as they were acting within the scope of their assigned task, even though committed neither in the service of the branches nor on
the occasion of their functions. For, admittedly, employees oftentimes wear different hats. They perform functions which are beyond their office, title
or designation but which, nevertheless, are still within the call of duty.
This court has applied the fifth paragraph to cases where the employer was engaged in a business or industry such as truck operators[6] and banks.[7] The
Court of Appeals cannot, therefore, be faulted in applying the said paragraph of Article 2180 of the Civil Code to this case.
Under the fifth paragraph of Article 2180, whether or not engaged in any business or industry, an employer is liable for the torts committed by
employees within the scope of his assigned tasks. But it is necessary to establish the employer-employee relationship; once this is done, the plaintiff
must show, to hold the employer liable, that the employee was acting within the scope of his assigned task when the tort complained of was
committed. It is only then that the employer may find it necessary to interpose the defense of due diligence in the selection and supervision of the
employee.[8]
It is undisputed that ABAD was a Production Manager of petitioner CASTILEX at the time of the tort occurrence. As to whether he was acting within
the scope of his assigned task is a question of fact, which the court a quo and the Court of Appeals resolved in the affirmative.
Well-entrenched in our jurisprudence is the rule that the factual findings of the Court of Appeals are entitled to great respect, and even finality at
times. This rule is, however, subject to exceptions such as when the conclusion is grounded on speculations, surmises, or conjectures.[9] Such exception
obtain in the present case to warrant review by this Court of the finding of the Court of Appeals that since ABAD was driving petitioners vehicle he was
acting within the scope of his duties as a manager.
Before we pass upon the issue of whether ABAD was performing acts within the range of his employment, we shall first take up the other reason
invoked by the Court of Appeals in holding petitioner CASTILEX vicariously liable for ABADs negligence, i.e., that the petitioner did not present evidence
that ABAD was not acting within the scope of his assigned tasks at the time of the motor vehicle mishap. Contrary to the ruling of the Court of Appeals,
it was not incumbent upon the petitioner to prove the same. It was enough for petitioner CASTILEX to deny that ABAD was acting within the scope of
his duties; petitioner was not under obligation to prove this negative averment. Ei incumbit probatio qui dicit, non qui negat (He who asserts, not he
who denies, must prove). The Court has consistently applied the ancient rule that if the plaintiff, upon whom rests the burden of proving his cause of
action, fails to show in a satisfactory manner facts which he bases his claim, the defendant is under no obligation to prove his exception or defense.[10]
Now on the issue of whether the private respondents have sufficiently established that ABAD was acting within the scope of his assigned tasks.
ABAD, who was presented as a hostile witness, testified that at the time of the incident, he was driving a company-issued vehicle, registered under the
name of petitioner. He was then leaving the restaurant where he had some snacks and had a chat with his friends after having done overtime work for
the petitioner.
No absolutely hard and fast rule can be stated which will furnish the complete answer to the problem of whether at a given moment, an employee is
engaged in his employers business in the operation of a motor vehicle, so as to fix liability upon the employer because of the employees action or
inaction; but rather, the result varies with each state of facts.[11]
In Filamer Christian Institute v. Intermediate Appellate Court,[12] this Court had the occasion to hold that acts done within the scope of the employees
assigned tasks includes any act done by an employee in furtherance of the interests of the employer or for the account of the employer at the time of
the infliction of the injury or damages.
The court a quo and the Court of Appeals were one in holding that the driving by a manager of a company-issued vehicle is within the scope of his
assigned tasks regardless of the time and circumstances.
We do not agree. The mere fact that ABAD was using a service vehicle at the time of the injurious incident is not of itself sufficient to charge petitioner
with liability for the negligent operation of said vehicle unless it appears that he was operating the vehicle within the course or scope of his employment.

The following are principles in American Jurisprudence on the employers liability for the injuries inflicted by the negligence of an employee in the use
of an employers motor vehicle:
I. Operation of Employers Motor Vehicle in Going to or from Meals

It has been held that an employee who uses his employers vehicle in going from his work to a place where he intends to eat or in returning to work
from a meal is not ordinarily acting within the scope of his employment in the absence of evidence of some special business benefit to the
employer. Evidence that by using the employers vehicle to go to and from meals, an employee is enabled to reduce his time-off and so devote more
time to the performance of his duties supports the finding that an employee is acting within the scope of his employment while so driving the vehicle.[13]
II. Operation of Employers Vehicle in Going to or from Work

In the same vein, traveling to and from the place of work is ordinarily a personal problem or concern of the employee, and not a part of his services to
his employer. Hence, in the absence of some special benefit to the employer other than the mere performance of the services available at the place
where he is needed, the employee is not acting within the scope of his employment even though he uses his employers motor vehicle.[14]
The employer may, however, be liable where he derives some special benefit from having the employee drive home in the employers vehicle as when
the employer benefits from having the employee at work earlier and, presumably, spending more time at his actual duties. Where the employees
duties require him to circulate in a general area with no fixed place or hours of work, or to go to and from his home to various outside places of work,
and his employer furnishes him with a vehicle to use in his work, the courts have frequently applied what has been called the special errand or roving
commission rule, under which it can be found that the employee continues in the service of his employer until he actually reaches home. However,
even if the employee be deemed to be acting within the scope of his employment in going to or from work in his employers vehicle, the employer is
not liable for his negligence where at the time of the accident, the employee has left the direct route to his work or back home and is pursuing a
personal errand of his own.
III. Use of Employers Vehicle Outside Regular Working Hours

An employer who loans his motor vehicle to an employee for the latters personal use outside of regular working hours is generally not liable for the
employees negligent operation of the vehicle during the period of permissive use, even where the employer contemplates that a regularly assigned
motor vehicle will be used by the employee for personal as well as business purposes and there is some incidental benefit to the employer. Even where
the employees personal purpose in using the vehicle has been accomplished and he has started the return trip to his house where the vehicle is
normally kept, it has been held that he has not resumed his employment, and the employer is not liable for the employees negligent operation of the
vehicle during the return trip.[15]
The foregoing principles and jurisprudence are applicable in our jurisdiction albeit based on the doctrine of respondeat superior, not on the principle
of bonus pater familias as in ours. Whether the fault or negligence of the employee is conclusive on his employer as in American law or jurisprudence,
or merely gives rise to the presumption juris tantum of negligence on the part of the employer as in ours, it is indispensable that the employee was
acting in his employers business or within the scope of his assigned task.[16]
In the case at bar, it is undisputed that ABAD did some overtime work at the petitioners office, which was located in Cabangcalan, Mandaue
City. Thereafter, he went to Goldies Restaurant in Fuente Osmea, Cebu City, which is about seven kilometers away from petitioners place of
business.[17] A witness for the private respondents, a sidewalk vendor, testified that Fuente Osmea is a lively place even at dawn because Goldies
Restaurant and Back Street were still open and people were drinking thereat. Moreover, prostitutes, pimps, and drug addicts littered the place.[18]
At the Goldies Restaurant, ABAD took some snacks and had a chat with friends. It was when ABAD was leaving the restaurant that the incident in
question occurred. That same witness for the private respondents testified that at the time of the vehicular accident, ABAD was with a woman in his
car, who then shouted: Daddy, Daddy![19] This woman could not have been ABADs daughter, for ABAD was only 29 years old at the time.
To the mind of this Court, ABAD was engaged in affairs of his own or was carrying out a personal purpose not in line with his duties at the time he
figured in a vehicular accident. It was then about 2:00 a.m. of 28 August 1988, way beyond the normal working hours. ABADs working day had ended;
his overtime work had already been completed. His being at a place which, as petitioner put it, was known as a haven for prostitutes, pimps, and drug
pushers and addicts, had no connection to petitioners business; neither had it any relation to his duties as a manager. Rather, using his service vehicle
even for personal purposes was a form of a fringe benefit or one of the perks attached to his position.
Since there is paucity of evidence that ABAD was acting within the scope of the functions entrusted to him, petitioner CASTILEX had no duty to show
that it exercised the diligence of a good father of a family in providing ABAD with a service vehicle. Thus, justice and equity require that petitioner be
relieved of vicarious liability for the consequences of the negligence of ABAD in driving its vehicle.[20]
WHEREFORE, the petition is GRANTED, and the appealed decision and resolution of the Court of Appeals is AFFIRMED with the modification that
petitioner Castilex Industrial Corporation be absolved of any liability for the damages caused by its employee, Jose Benjamin Abad.
SO ORDERED.
Puno, Kapunan, Pardo, and Ynares-Santiago, JJ., concur.
SPOUSES VILORIA V. CONTINENTAL AIRLINES

REYES, J.:

This is a petition for review under Rule 45 of the Rules of Court from the January 30, 2009 Decision1 of the Special Thirteenth Division of the Court of
Appeals (CA) in CA-G.R. CV No. 88586 entitled Spouses Fernando and Lourdes Viloria v. Continental Airlines, Inc., the dispositive portion of which
states:

WHEREFORE, the Decision of the Regional Trial Court, Branch 74, dated 03 April 2006, awarding US$800.00 or its peso equivalent at the time of
payment, plus legal rate of interest from 21 July 1997 until fully paid, [P]100,000.00 as moral damages, [P]50,000.00 as exemplary damages,
[P]40,000.00 as attorneys fees and costs of suit to plaintiffs-appellees is hereby REVERSED and SET ASIDE.

Defendant-appellants counterclaim is DENIED.

Costs against plaintiffs-appellees.

SO ORDERED.

On April 3, 2006, the Regional Trial Court of Antipolo City, Branch 74 (RTC) rendered a Decision, giving due course to the complaint for sum of money
and damages filed by petitioners Fernando Viloria (Fernando) and Lourdes Viloria (Lourdes), collectively called Spouses Viloria, against respondent
Continental Airlines, Inc. (CAI). As culled from the records, below are the facts giving rise to such complaint.

On or about July 21, 1997 and while in the United States, Fernando purchased for himself and his wife, Lourdes, two (2) round trip airline tickets from
San Diego, California to Newark, New Jersey on board Continental Airlines. Fernando purchased the tickets at US$400.00 each from a travel agency
called Holiday Travel and was attended to by a certain Margaret Mager (Mager). According to Spouses Viloria, Fernando agreed to buy the said
tickets after Mager informed them that there were no available seats at Amtrak, an intercity passenger train service provider in the United States. Per
the tickets, Spouses Viloria were scheduled to leave for Newark on August 13, 1997 and return to San Diego on August 21, 1997.

Subsequently, Fernando requested Mager to reschedule their flight to Newark to an earlier date or August 6, 1997. Mager informed him that flights to
Newark via Continental Airlines were already fully booked and offered the alternative of a round trip flight via Frontier Air. Since flying with Frontier
Air called for a higher fare of US$526.00 per passenger and would mean traveling by night, Fernando opted to request for a refund. Mager, however,
denied his request as the subject tickets are non-refundable and the only option that Continental Airlines can offer is the re-issuance of new tickets
within one (1) year from the date the subject tickets were issued. Fernando decided to reserve two (2) seats with Frontier Air.
As he was having second thoughts on traveling via Frontier Air, Fernando went to the Greyhound Station where he saw an Amtrak station nearby.
Fernando made inquiries and was told that there are seats available and he can travel on Amtrak anytime and any day he pleased. Fernando then
purchased two (2) tickets for Washington, D.C.

From Amtrak, Fernando went to Holiday Travel and confronted Mager with the Amtrak tickets, telling her that she had misled them into buying the
Continental Airlines tickets by misrepresenting that Amtrak was already fully booked. Fernando reiterated his demand for a refund but Mager was firm
in her position that the subject tickets are non-refundable.

Upon returning to the Philippines, Fernando sent a letter to CAI on February 11, 1998, demanding a refund and alleging that Mager had deluded them
into purchasing the subject tickets.

In a letter dated February 24, 1998, Continental Micronesia informed Fernando that his complaint had been referred to the Customer Refund Services
of Continental Airlines at Houston, Texas.

In a letter dated March 24, 1998, Continental Micronesia denied Fernandos request for a refund and advised him that he may take the subject tickets
to any Continental ticketing location for the re-issuance of new tickets within two (2) years from the date they were issued. Continental Micronesia
informed Fernando that the subject tickets may be used as a form of payment for the purchase of another Continental ticket, albeit with a re-issuance
fee.5

On June 17, 1999, Fernando went to Continentals ticketing office at Ayala Avenue, Makati City to have the subject tickets replaced by a single round
trip ticket to Los Angeles, California under his name. Therein, Fernando was informed that Lourdes ticket was non-transferable, thus, cannot be used
for the purchase of a ticket in his favor. He was also informed that a round trip ticket to Los Angeles was US$1,867.40 so he would have to pay what
will not be covered by the value of his San Diego to Newark round trip ticket.

In a letter dated June 21, 1999, Fernando demanded for the refund of the subject tickets as he no longer wished to have them replaced. In addition to
the dubious circumstances under which the subject tickets were issued, Fernando claimed that CAIs act of charging him with US$1,867.40 for a round
trip ticket to Los Angeles, which other airlines priced at US$856.00, and refusal to allow him to use Lourdes ticket, breached its undertaking under its
March 24, 1998 letter.

On September 8, 2000, Spouses Viloria filed a complaint against CAI, praying that CAI be ordered to refund the money they used in the purchase of
the subject tickets with legal interest from July 21, 1997 and to pay P1,000,000.00 as moral damages, P500,000.00 as exemplary damages
and P250,000.00 as attorneys fees.7
CAI interposed the following defenses: (a) Spouses Viloria have no right to ask for a refund as the subject tickets are non-refundable; (b) Fernando
cannot insist on using the ticket in Lourdes name for the purchase of a round trip ticket to Los Angeles since the same is non-transferable; (c) as Mager
is not a CAI employee, CAI is not liable for any of her acts; (d) CAI, its employees and agents did not act in bad faith as to entitle Spouses Viloria to moral
and exemplary damages and attorneys fees. CAI also invoked the following clause printed on the subject tickets:

3. To the extent not in conflict with the foregoing carriage and other services performed by each carrier are subject to: (i) provisions contained in this
ticket, (ii) applicable tariffs, (iii) carriers conditions of carriage and related regulations which are made part hereof (and are available on application at
the offices of carrier), except in transportation between a place in the United States or Canada and any place outside thereof to which tariffs in force
in those countries apply.

According to CAI, one of the conditions attached to their contract of carriage is the non-transferability and non-refundability of the subject tickets.
The RTCs Ruling

Following a full-blown trial, the RTC rendered its April 3, 2006 Decision, holding that Spouses Viloria are entitled to a refund in view of Magers
misrepresentation in obtaining their consent in the purchase of the subject tickets.9 The relevant portion of the April 3, 2006 Decision states:

Continental Airlines agent Ms. Mager was in bad faith when she was less candid and diligent in presenting to plaintiffs spouses their booking options.
Plaintiff Fernando clearly wanted to travel via AMTRAK, but defendants agent misled him into purchasing Continental Airlines tickets instead on the
fraudulent misrepresentation that Amtrak was fully booked. In fact, defendant Airline did not specifically denied (sic) this allegation.

Plainly, plaintiffs spouses, particularly plaintiff Fernando, were tricked into buying Continental Airline tickets on Ms. Magers misleading
misrepresentations. Continental Airlines agent Ms. Mager further relied on and exploited plaintiff Fernandos need and told him that they must book
a flight immediately or risk not being able to travel at all on the couples preferred date. Unfortunately, plaintiffs spouses fell prey to the airlines and
its agents unethical tactics for baiting trusting customers.

Citing Articles 1868 and 1869 of the Civil Code, the RTC ruled that Mager is CAIs agent, hence, bound by her bad faith and misrepresentation. As far
as the RTC is concerned, there is no issue as to whether Mager was CAIs agent in view of CAIs implied recognition of her status as such in its March
24, 1998 letter.

The act of a travel agent or agency being involved here, the following are the pertinent New Civil Code provisions on agency:

Art. 1868. By the contract of agency a person binds himself to render some service or to do something in representation or on behalf of another, with
the consent or authority of the latter.
Art. 1869. Agency may be express, or implied from the acts of the principal, from his silence or lack of action, or his failure to repudiate the agency,
knowing that another person is acting on his behalf without authority
Agency may be oral, unless the law requires a specific form.

As its very name implies, a travel agency binds itself to render some service or to do something in representation or on behalf of another, with the
consent or authority of the latter. This court takes judicial notice of the common services rendered by travel agencies that represent themselves as
such, specifically the reservation and booking of local and foreign tours as well as the issuance of airline tickets for a commission or fee.

The services rendered by Ms. Mager of Holiday Travel agency to the plaintiff spouses on July 21, 1997 were no different from those offered in any
other travel agency. Defendant airline impliedly if not expressly acknowledged its principal-agent relationship with Ms. Mager by its offer in the letter
dated March 24, 1998 an obvious attempt to assuage plaintiffs spouses hurt feelings.11
Furthermore, the RTC ruled that CAI acted in bad faith in reneging on its undertaking to replace the subject tickets within two (2) years from their date
of issue when it charged Fernando with the amount of US$1,867.40 for a round trip ticket to Los Angeles and when it refused to allow Fernando to use
Lourdes ticket. Specifically:
Tickets may be reissued for up to two years from the original date of issue. When defendant airline still charged plaintiffs spouses US$1,867.40 or more
than double the then going rate of US$856.00 for the unused tickets when the same were presented within two (2) years from date of issue, defendant
airline exhibited callous treatment of passengers.12
The Appellate Courts Ruling
On appeal, the CA reversed the RTCs April 3, 2006 Decision, holding that CAI cannot be held liable for Magers act in the absence of any proof that a
principal-agent relationship existed between CAI and Holiday Travel. According to the CA, Spouses Viloria, who have the burden of proof to establish
the fact of agency, failed to present evidence demonstrating that Holiday Travel is CAIs agent. Furthermore, contrary to Spouses Vilorias claim, the
contractual relationship between Holiday Travel and CAI is not an agency but that of a sale.
Plaintiffs-appellees assert that Mager was a sub-agent of Holiday Travel who was in turn a ticketing agent of Holiday Travel who was in turn a ticketing
agent of Continental Airlines. Proceeding from this premise, they contend that Continental Airlines should be held liable for the acts of Mager. The trial
court held the same view.
We do not agree. By the contract of agency, a person binds him/herself to render some service or to do something in representation or on behalf of
another, with the consent or authority of the latter. The elements of agency are: (1) consent, express or implied, of the parties to establish the
relationship; (2) the object is the execution of a juridical act in relation to a third person; (3) the agent acts as a representative and not for him/herself;
and (4) the agent acts within the scope of his/her authority. As the basis of agency is representation, there must be, on the part of the principal, an
actual intention to appoint, an intention naturally inferable from the principals words or actions. In the same manner, there must be an intention on
the part of the agent to accept the appointment and act upon it. Absent such mutual intent, there is generally no agency. It is likewise a settled rule
that persons dealing with an assumed agent are bound at their peril, if they would hold the principal liable, to ascertain not only the fact of agency but
also the nature and extent of authority, and in case either is controverted, the burden of proof is upon them to establish it. Agency is never presumed,
neither is it created by the mere use of the word in a trade or business name. We have perused the evidence and documents so far presented. We find
nothing except bare allegations of plaintiffs-appellees that Mager/Holiday Travel was acting in behalf of Continental Airlines. From all sides of legal
prism, the transaction in issue was simply a contract of sale, wherein Holiday Travel buys airline tickets from Continental Airlines and then, through its
employees, Mager included, sells it at a premium to clients.
The CA also ruled that refund is not available to Spouses Viloria as the word non-refundable was clearly printed on the face of the subject tickets,
which constitute their contract with CAI. Therefore, the grant of their prayer for a refund would violate the proscription against impairment of contracts.

Finally, the CA held that CAI did not act in bad faith when they charged Spouses Viloria with the higher amount of US$1,867.40 for a round trip ticket
to Los Angeles. According to the CA, there is no compulsion for CAI to charge the lower amount of US$856.00, which Spouses Viloria claim to be the
fee charged by other airlines. The matter of fixing the prices for its services is CAIs prerogative, which Spouses Viloria cannot intervene. In particular:

It is within the respective rights of persons owning and/or operating business entities to peg the premium of the services and items which they provide
at a price which they deem fit, no matter how expensive or exhorbitant said price may seem vis--vis those of the competing companies. The Spouses
Viloria may not intervene with the business judgment of Continental Airlines.14

The Petitioners Case

In this Petition, this Court is being asked to review the findings and conclusions of the CA, as the latters reversal of the RTCs April 3, 2006 Decision
allegedly lacks factual and legal bases. Spouses Viloria claim that CAI acted in bad faith when it required them to pay a higher amount for a round trip
ticket to Los Angeles considering CAIs undertaking to re-issue new tickets to them within the period stated in their March 24, 1998 letter. CAI likewise
acted in bad faith when it disallowed Fernando to use Lourdes ticket to purchase a round trip to Los Angeles given that there is nothing in Lourdes
ticket indicating that it is non-transferable. As a common carrier, it is CAIs duty to inform its passengers of the terms and conditions of their contract
and passengers cannot be bound by such terms and conditions which they are not made aware of. Also, the subject contract of carriage is a contract
of adhesion; therefore, any ambiguities should be construed against CAI. Notably, the petitioners are no longer questioning the validity of the subject
contracts and limited its claim for a refund on CAIs alleged breach of its undertaking in its March 24, 1998 letter.

The Respondents Case

In its Comment, CAI claimed that Spouses Vilorias allegation of bad faith is negated by its willingness to issue new tickets to them and to credit the
value of the subject tickets against the value of the new ticket Fernando requested. CAI argued that Spouses Vilorias sole basis to claim that the price
at which CAI was willing to issue the new tickets is unconscionable is a piece of hearsay evidence an advertisement appearing on a newspaper stating
that airfares from Manila to Los Angeles or San Francisco cost US$818.00.15 Also, the advertisement pertains to airfares in September 2000 and not to
airfares prevailing in June 1999, the time when Fernando asked CAI to apply the value of the subject tickets for the purchase of a new one.16 CAI
likewise argued that it did not undertake to protect Spouses Viloria from any changes or fluctuations in the prices of airline tickets and its only obligation
was to apply the value of the subject tickets to the purchase of the newly issued tickets.
With respect to Spouses Vilorias claim that they are not aware of CAIs restrictions on the subject tickets and that the terms and conditions that are
printed on them are ambiguous, CAI denies any ambiguity and alleged that its representative informed Fernando that the subject tickets are non-
transferable when he applied for the issuance of a new ticket. On the other hand, the word non-refundable clearly appears on the face of the subject
tickets.

CAI also denies that it is bound by the acts of Holiday Travel and Mager and that no principal-agency relationship exists between them. As an
independent contractor, Holiday Travel was without capacity to bind CAI.
Issues
To determine the propriety of disturbing the CAs January 30, 2009 Decision and whether Spouses Viloria have the right to the reliefs they prayed for,
this Court deems it necessary to resolve the following issues:

a. Does a principal-agent relationship exist between CAI and Holiday Travel?

b. Assuming that an agency relationship exists between CAI and Holiday Travel, is CAI bound by the acts of Holiday Travels agents and employees such
as Mager?
c. Assuming that CAI is bound by the acts of Holiday Travels agents and employees, can the representation of Mager as to unavailability of seats at
Amtrak be considered fraudulent as to vitiate the consent of Spouse Viloria in the purchase of the subject tickets?
d. Is CAI justified in insisting that the subject tickets are non-transferable and non-refundable?
e. Is CAI justified in pegging a different price for the round trip ticket to Los Angeles requested by Fernando?
f. Alternatively, did CAI act in bad faith or renege its obligation to Spouses Viloria to apply the value of the subject tickets in the purchase of new ones
when it refused to allow Fernando to use Lourdes ticket and in charging a higher price for a round trip ticket to Los Angeles?
This Courts Ruling
I. A principal-agent relationship exists between CAI and Holiday Travel.
With respect to the first issue, which is a question of fact that would require this Court to review and re-examine the evidence presented by the parties
below, this Court takes exception to the general rule that the CAs findings of fact are conclusive upon Us and our jurisdiction is limited to the review
of questions of law. It is well-settled to the point of being axiomatic that this Court is authorized to resolve questions of fact if confronted with
contrasting factual findings of the trial court and appellate court and if the findings of the CA are contradicted by the evidence on record.17
According to the CA, agency is never presumed and that he who alleges that it exists has the burden of proof. Spouses Viloria, on whose shoulders
such burden rests, presented evidence that fell short of indubitably demonstrating the existence of such agency.
We disagree. The CA failed to consider undisputed facts, discrediting CAIs denial that Holiday Travel is one of its agents. Furthermore, in erroneously
characterizing the contractual relationship between CAI and Holiday Travel as a contract of sale, the CA failed to apply the fundamental civil law
principles governing agency and differentiating it from sale.
In Rallos v. Felix Go Chan & Sons Realty Corporation,18 this Court explained the nature of an agency and spelled out the essential elements thereof:
Out of the above given principles, sprung the creation and acceptance of the relationship of agency whereby one party, called the principal (mandante),
authorizes another, called the agent (mandatario), to act for and in his behalf in transactions with third persons. The essential elements of agency are:
(1) there is consent, express or implied of the parties to establish the relationship; (2) the object is the execution of a juridical act in relation to a third
person; (3) the agent acts as a representative and not for himself, and (4) the agent acts within the scope of his authority.
Agency is basically personal, representative, and derivative in nature. The authority of the agent to act emanates from the powers granted to him by
his principal; his act is the act of the principal if done within the scope of the authority. Qui facit per alium facit se. "He who acts through another acts
himself."19
Contrary to the findings of the CA, all the elements of an agency exist in this case. The first and second elements are present as CAI does not deny that
it concluded an agreement with Holiday Travel, whereby Holiday Travel would enter into contracts of carriage with third persons on CAIs behalf. The
third element is also present as it is undisputed that Holiday Travel merely acted in a representative capacity and it is CAI and not Holiday Travel who
is bound by the contracts of carriage entered into by Holiday Travel on its behalf. The fourth element is also present considering that CAI has not made
any allegation that Holiday Travel exceeded the authority that was granted to it. In fact, CAI consistently maintains the validity of the contracts of
carriage that Holiday Travel executed with Spouses Viloria and that Mager was not guilty of any fraudulent misrepresentation. That CAI admits the
authority of Holiday Travel to enter into contracts of carriage on its behalf is easily discernible from its February 24, 1998 and March 24, 1998 letters,
where it impliedly recognized the validity of the contracts entered into by Holiday Travel with Spouses Viloria. When Fernando informed CAI that it was
Holiday Travel who issued to them the subject tickets, CAI did not deny that Holiday Travel is its authorized agent.
Prior to Spouses Vilorias filing of a complaint against it, CAI never refuted that it gave Holiday Travel the power and authority to conclude contracts of
carriage on its behalf. As clearly extant from the records, CAI recognized the validity of the contracts of carriage that Holiday Travel entered into with
Spouses Viloria and considered itself bound with Spouses Viloria by the terms and conditions thereof; and this constitutes an unequivocal testament
to Holiday Travels authority to act as its agent. This Court cannot therefore allow CAI to take an altogether different position and deny that Holiday
Travel is its agent without condoning or giving imprimatur to whatever damage or prejudice that may result from such denial or retraction to Spouses
Viloria, who relied on good faith on CAIs acts in recognition of Holiday Travels authority. Estoppel is primarily based on the doctrine of good faith and
the avoidance of harm that will befall an innocent party due to its injurious reliance, the failure to apply it in this case would result in gross travesty of
justice.20 Estoppel bars CAI from making such denial.
As categorically provided under Article 1869 of the Civil Code, [a]gency may be express, or implied from the acts of the principal, from his silence or
lack of action, or his failure to repudiate the agency, knowing that another person is acting on his behalf without authority.
Considering that the fundamental hallmarks of an agency are present, this Court finds it rather peculiar that the CA had branded the contractual
relationship between CAI and Holiday Travel as one of sale. The distinctions between a sale and an agency are not difficult to discern and this Court, as
early as 1970, had already formulated the guidelines that would aid in differentiating the two (2) contracts. In Commissioner of Internal Revenue v.
Constantino,21 this Court extrapolated that the primordial differentiating consideration between the two (2) contracts is the transfer of ownership or
title over the property subject of the contract. In an agency, the principal retains ownership and control over the property and the agent merely acts
on the principals behalf and under his instructions in furtherance of the objectives for which the agency was established. On the other hand, the
contract is clearly a sale if the parties intended that the delivery of the property will effect a relinquishment of title, control and ownership in such a
way that the recipient may do with the property as he pleases.
Since the company retained ownership of the goods, even as it delivered possession unto the dealer for resale to customers, the price and terms of
which were subject to the company's control, the relationship between the company and the dealer is one of agency, tested under the following
criterion:
The difficulty in distinguishing between contracts of sale and the creation of an agency to sell has led to the establishment of rules by the application
of which this difficulty may be solved. The decisions say the transfer of title or agreement to transfer it for a price paid or promised is the essence of
sale. If such transfer puts the transferee in the attitude or position of an owner and makes him liable to the transferor as a debtor for the agreed price,
and not merely as an agent who must account for the proceeds of a resale, the transaction is a sale; while the essence of an agency to sell is the delivery
to an agent, not as his property, but as the property of the principal, who remains the owner and has the right to control sales, fix the price, and terms,
demand and receive the proceeds less the agent's commission upon sales made. 1 Mechem on Sales, Sec. 43; 1 Mechem on Agency, Sec. 48; Williston
on Sales, 1; Tiedeman on Sales, 1. (Salisbury v. Brooks, 94 SE 117, 118-119)22
As to how the CA have arrived at the conclusion that the contract between CAI and Holiday Travel is a sale is certainly confounding, considering that
CAI is the one bound by the contracts of carriage embodied by the tickets being sold by Holiday Travel on its behalf. It is undisputed that CAI and not
Holiday Travel who is the party to the contracts of carriage executed by Holiday Travel with third persons who desire to travel via Continental Airlines,
and this conclusively indicates the existence of a principal-agent relationship. That the principal is bound by all the obligations contracted by the agent
within the scope of the authority granted to him is clearly provided under Article 1910 of the Civil Code and this constitutes the very notion of agency.
II. In actions based on quasi-delict, a principal can only be held liable for the tort committed by its agents employees if it has been established by
preponderance of evidence that the principal was also at fault or negligent or that the principal exercise control and supervision over them.
Considering that Holiday Travel is CAIs agent, does it necessarily follow that CAI is liable for the fault or negligence of Holiday Travels employees?
Citing China Air Lines, Ltd. v. Court of Appeals, et al.,23 CAI argues that it cannot be held liable for the actions of the employee of its ticketing agent in
the absence of an employer-employee relationship.
An examination of this Courts pronouncements in China Air Lines will reveal that an airline company is not completely exonerated from any liability
for the tort committed by its agents employees. A prior determination of the nature of the passengers cause of action is necessary. If the passengers
cause of action against the airline company is premised on culpa aquiliana or quasi-delict for a tort committed by the employee of the airline companys
agent, there must be an independent showing that the airline company was at fault or negligent or has contributed to the negligence or tortuous
conduct committed by the employee of its agent. The mere fact that the employee of the airline companys agent has committed a tort is not sufficient
to hold the airline company liable. There is no vinculum juris between the airline company and its agents employees and the contractual relationship
between the airline company and its agent does not operate to create a juridical tie between the airline company and its agents employees. Article
2180 of the Civil Code does not make the principal vicariously liable for the tort committed by its agents employees and the principal-agency
relationship per se does not make the principal a party to such tort; hence, the need to prove the principals own fault or negligence.
On the other hand, if the passengers cause of action for damages against the airline company is based on contractual breach or culpa contractual, it
is not necessary that there be evidence of the airline companys fault or negligence. As this Court previously stated in China Air Lines and reiterated
in Air France vs. Gillego,24 in an action based on a breach of contract of carriage, the aggrieved party does not have to prove that the common carrier
was at fault or was negligent. All that he has to prove is the existence of the contract and the fact of its non-performance by the carrier.
Spouses Vilorias cause of action on the basis of Magers alleged fraudulent misrepresentation is clearly one of tort or quasi-delict, there being no pre-
existing contractual relationship between them. Therefore, it was incumbent upon Spouses Viloria to prove that CAI was equally at fault.
However, the records are devoid of any evidence by which CAIs alleged liability can be substantiated. Apart from their claim that CAI must be held
liable for Magers supposed fraud because Holiday Travel is CAIs agent, Spouses Viloria did not present evidence that CAI was a party or had contributed
to Magers complained act either by instructing or authorizing Holiday Travel and Mager to issue the said misrepresentation.
It may seem unjust at first glance that CAI would consider Spouses Viloria bound by the terms and conditions of the subject contracts, which Mager
entered into with them on CAIs behalf, in order to deny Spouses Vilorias request for a refund or Fernandos use of Lourdes ticket for the re-issuance
of a new one, and simultaneously claim that they are not bound by Magers supposed misrepresentation for purposes of avoiding Spouses Vilorias
claim for damages and maintaining the validity of the subject contracts. It may likewise be argued that CAI cannot deny liability as it benefited from
Magers acts, which were performed in compliance with Holiday Travels obligations as CAIs agent.
However, a persons vicarious liability is anchored on his possession of control, whether absolute or limited, on the tortfeasor. Without such control,
there is nothing which could justify extending the liability to a person other than the one who committed the tort. As this Court explained in Cangco v.
Manila Railroad Co.:25
With respect to extra-contractual obligation arising from negligence, whether of act or omission, it is competent for the legislature to elect and our
Legislature has so elected to limit such liability to cases in which the person upon whom such an obligation is imposed is morally culpable or, on the
contrary, for reasons of public policy, to extend that liability, without regard to the lack of moral culpability, so as to include responsibility for the
negligence of those persons whose acts or omissions are imputable, by a legal fiction, to others who are in a position to exercise an absolute or limited
control over them. The legislature which adopted our Civil Code has elected to limit extra-contractual liability with certain well-defined exceptions
to cases in which moral culpability can be directly imputed to the persons to be charged. This moral responsibility may consist in having failed to
exercise due care in one's own acts, or in having failed to exercise due care in the selection and control of one's agent or servants, or in the control of
persons who, by reasons of their status, occupy a position of dependency with respect to the person made liable for their conduct.26 (emphasis
supplied)
It is incumbent upon Spouses Viloria to prove that CAI exercised control or supervision over Mager by preponderant evidence. The existence of control
or supervision cannot be presumed and CAI is under no obligation to prove its denial or nugatory assertion. Citing Belen v. Belen,27 this Court ruled
in Jayme v. Apostol,28 that:
In Belen v. Belen, this Court ruled that it was enough for defendant to deny an alleged employment relationship. The defendant is under no obligation
to prove the negative averment. This Court said:
It is an old and well-settled rule of the courts that the burden of proving the action is upon the plaintiff, and that if he fails satisfactorily to show the
facts upon which he bases his claim, the defendant is under no obligation to prove his exceptions. This [rule] is in harmony with the provisions of
Section 297 of the Code of Civil Procedure holding that each party must prove his own affirmative allegations, etc.29 (citations omitted)
Therefore, without a modicum of evidence that CAI exercised control over Holiday Travels employees or that CAI was equally at fault, no liability can
be imposed on CAI for Magers supposed misrepresentation.

III. Even on the assumption that CAI may be held liable for the acts of Mager, still, Spouses Viloria are not entitled to a refund. Magers statement
cannot be considered a causal fraud that would justify the annulment of the subject contracts that would oblige CAI to indemnify Spouses Viloria
and return the money they paid for the subject tickets.

Article 1390, in relation to Article 1391 of the Civil Code, provides that if the consent of the contracting parties was obtained through fraud, the contract
is considered voidable and may be annulled within four (4) years from the time of the discovery of the fraud. Once a contract is annulled, the parties
are obliged under Article 1398 of the same Code to restore to each other the things subject matter of the contract, including their fruits and interest.
On the basis of the foregoing and given the allegation of Spouses Viloria that Fernandos consent to the subject contracts was supposedly secured by
Mager through fraudulent means, it is plainly apparent that their demand for a refund is tantamount to seeking for an annulment of the subject
contracts on the ground of vitiated consent.
Whether the subject contracts are annullable, this Court is required to determine whether Magers alleged misrepresentation constitutes causal fraud.
Similar to the dispute on the existence of an agency, whether fraud attended the execution of a contract is factual in nature and this Court, as discussed
above, may scrutinize the records if the findings of the CA are contrary to those of the RTC.
Under Article 1338 of the Civil Code, there is fraud when, through insidious words or machinations of one of the contracting parties, the other is
induced to enter into a contract which, without them, he would not have agreed to. In order that fraud may vitiate consent, it must be the causal (dolo
causante), not merely the incidental (dolo incidente), inducement to the making of the contract.30 In Samson v. Court of Appeals,31 causal fraud was
defined as a deception employed by one party prior to or simultaneous to the contract in order to secure the consent of the other.32
Also, fraud must be serious and its existence must be established by clear and convincing evidence. As ruled by this Court in Sierra v. Hon. Court of
Appeals, et al.,33 mere preponderance of evidence is not adequate:
Fraud must also be discounted, for according to the Civil Code:
Art. 1338. There is fraud when, through insidious words or machinations of one of the contracting parties, the other is induced to enter into a contract
which without them, he would not have agreed to.
Art. 1344. In order that fraud may make a contract voidable, it should be serious and should not have been employed by both contracting parties.
To quote Tolentino again, the misrepresentation constituting the fraud must be established by full, clear, and convincing evidence, and not merely by
a preponderance thereof. The deceit must be serious. The fraud is serious when it is sufficient to impress, or to lead an ordinarily prudent person into
error; that which cannot deceive a prudent person cannot be a ground for nullity. The circumstances of each case should be considered, taking into
account the personal conditions of the victim.
After meticulously poring over the records, this Court finds that the fraud alleged by Spouses Viloria has not been satisfactorily established as causal in
nature to warrant the annulment of the subject contracts. In fact, Spouses Viloria failed to prove by clear and convincing evidence that Magers
statement was fraudulent. Specifically, Spouses Viloria failed to prove that (a) there were indeed available seats at Amtrak for a trip to New Jersey on
August 13, 1997 at the time they spoke with Mager on July 21, 1997; (b) Mager knew about this; and (c) that she purposely informed them otherwise.
This Court finds the only proof of Magers alleged fraud, which is Fernandos testimony that an Amtrak had assured him of the perennial availability of
seats at Amtrak, to be wanting. As CAI correctly pointed out and as Fernando admitted, it was possible that during the intervening period of three (3)
weeks from the time Fernando purchased the subject tickets to the time he talked to said Amtrak employee, other passengers may have cancelled
their bookings and reservations with Amtrak, making it possible for Amtrak to accommodate them. Indeed, the existence of fraud cannot be proved
by mere speculations and conjectures. Fraud is never lightly inferred; it is good faith that is. Under the Rules of Court, it is presumed that "a person is
innocent of crime or wrong" and that "private transactions have been fair and regular."35 Spouses Viloria failed to overcome this presumption.
IV. Assuming the contrary, Spouses Viloria are nevertheless deemed to have ratified the subject contracts.
Even assuming that Magers representation is causal fraud, the subject contracts have been impliedly ratified when Spouses Viloria decided to exercise
their right to use the subject tickets for the purchase of new ones. Under Article 1392 of the Civil Code, ratification extinguishes the action to annul a
voidable contract.
Ratification of a voidable contract is defined under Article 1393 of the Civil Code as follows:
Art. 1393. Ratification may be effected expressly or tacitly. It is understood that there is a tacit ratification if, with knowledge of the reason which
renders the contract voidable and such reason having ceased, the person who has a right to invoke it should execute an act which necessarily implies
an intention to waive his right.
Implied ratification may take diverse forms, such as by silence or acquiescence; by acts showing approval or adoption of the contract; or by acceptance
and retention of benefits flowing therefrom.36
Simultaneous with their demand for a refund on the ground of Fernandos vitiated consent, Spouses Viloria likewise asked for a refund based on CAIs
supposed bad faith in reneging on its undertaking to replace the subject tickets with a round trip ticket from Manila to Los Angeles.
In doing so, Spouses Viloria are actually asking for a rescission of the subject contracts based on contractual breach. Resolution, the action referred to
in Article 1191, is based on the defendants breach of faith, a violation of the reciprocity between the parties 37 and in Solar Harvest, Inc. v. Davao
Corrugated Carton Corporation,38 this Court ruled that a claim for a reimbursement in view of the other partys failure to comply with his obligations
under the contract is one for rescission or resolution.
However, annulment under Article 1390 of the Civil Code and rescission under Article 1191 are two (2) inconsistent remedies. In resolution, all the
elements to make the contract valid are present; in annulment, one of the essential elements to a formation of a contract, which is consent, is absent.
In resolution, the defect is in the consummation stage of the contract when the parties are in the process of performing their respective obligations;
in annulment, the defect is already present at the time of the negotiation and perfection stages of the contract. Accordingly, by pursuing the remedy
of rescission under Article 1191, the Vilorias had impliedly admitted the validity of the subject contracts, forfeiting their right to demand their
annulment. A party cannot rely on the contract and claim rights or obligations under it and at the same time impugn its existence or validity. Indeed,
litigants are enjoined from taking inconsistent positions.39

V. Contracts cannot be rescinded for a slight or casual breach.

CAI cannot insist on the non-transferability of the subject tickets.
Considering that the subject contracts are not annullable on the ground of vitiated consent, the next question is: Do Spouses Viloria have the right to
rescind the contract on the ground of CAIs supposed breach of its undertaking to issue new tickets upon surrender of the subject tickets?
Article 1191, as presently worded, states:
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 fulfilment and the rescission of the obligation, with the payment of damages in either case. He may also seek
rescission, even after he has chosen fulfilment, 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.

According to Spouses Viloria, CAI acted in bad faith and breached the subject contracts when it refused to apply the value of Lourdes ticket for
Fernandos purchase of a round trip ticket to Los Angeles and in requiring him to pay an amount higher than the price fixed by other airline companies.
In its March 24, 1998 letter, CAI stated that non-refundable tickets may be used as a form of payment toward the purchase of another Continental
ticket for $75.00, per ticket, reissue fee ($50.00, per ticket, for tickets purchased prior to October 30, 1997).
Clearly, there is nothing in the above-quoted section of CAIs letter from which the restriction on the non-transferability of the subject tickets can be
inferred. In fact, the words used by CAI in its letter supports the position of Spouses Viloria, that each of them can use the ticket under their name for
the purchase of new tickets whether for themselves or for some other person.
Moreover, as CAI admitted, it was only when Fernando had expressed his interest to use the subject tickets for the purchase of a round trip ticket
between Manila and Los Angeles that he was informed that he cannot use the ticket in Lourdes name as payment.
Contrary to CAIs claim, that the subject tickets are non-transferable cannot be implied from a plain reading of the provision printed on the subject
tickets stating that [t]o the extent not in conflict with the foregoing carriage and other services performed by each carrier are subject to: (a) provisions
contained in this ticket, x x x (iii) carriers conditions of carriage and related regulations which are made part hereof (and are available on application
at the offices of carrier) x x x. As a common carrier whose business is imbued with public interest, the exercise of extraordinary diligence requires CAI
to inform Spouses Viloria, or all of its passengers for that matter, of all the terms and conditions governing their contract of carriage. CAI is proscribed
from taking advantage of any ambiguity in the contract of carriage to impute knowledge on its passengers of and demand compliance with a certain
condition or undertaking that is not clearly stipulated. Since the prohibition on transferability is not written on the face of the subject tickets and CAI
failed to inform Spouses Viloria thereof, CAI cannot refuse to apply the value of Lourdes ticket as payment for Fernandos purchase of a new ticket.
CAIs refusal to accept Lourdes ticket for the purchase of a new ticket for Fernando is only a casual breach.
Nonetheless, the right to rescind a contract for non-performance of its stipulations is not absolute. The general rule is that rescission of a contract will
not be permitted for a slight or casual breach, but only for such substantial and fundamental violations as would defeat the very object of the parties
in making the agreement.40 Whether a breach is substantial is largely determined by the attendant circumstances.41
While CAIs refusal to allow Fernando to use the value of Lourdes ticket as payment for the purchase of a new ticket is unjustified as the non-
transferability of the subject tickets was not clearly stipulated, it cannot, however be considered substantial. The endorsability of the subject tickets is
not an essential part of the underlying contracts and CAIs failure to comply is not essential to its fulfillment of its undertaking to issue new tickets upon
Spouses Vilorias surrender of the subject tickets. This Court takes note of CAIs willingness to perform its principal obligation and this is to apply the
price of the ticket in Fernandos name to the price of the round trip ticket between Manila and Los Angeles. CAI was likewise willing to accept the ticket
in Lourdes name as full or partial payment as the case may be for the purchase of any ticket, albeit under her name and for her exclusive use. In other
words, CAIs willingness to comply with its undertaking under its March 24, 1998 cannot be doubted, albeit tainted with its erroneous insistence that
Lourdes ticket is non-transferable.
Moreover, Spouses Vilorias demand for rescission cannot prosper as CAI cannot be solely faulted for the fact that their agreement failed to
consummate and no new ticket was issued to Fernando. Spouses Viloria have no right to insist that a single round trip ticket between Manila and Los
Angeles should be priced at around $856.00 and refuse to pay the difference between the price of the subject tickets and the amount fixed by CAI.
The petitioners failed to allege, much less prove, that CAI had obliged itself to issue to them tickets for any flight anywhere in the world upon their
surrender of the subject tickets. In its March 24, 1998 letter, it was clearly stated that [n]on-refundable tickets may be used as a form of payment
toward the purchase of another Continental ticket42 and there is nothing in it suggesting that CAI had obliged itself to protect Spouses Viloria from
any fluctuation in the prices of tickets or that the surrender of the subject tickets will be considered as full payment for any ticket that the petitioners
intend to buy regardless of actual price and destination. The CA was correct in holding that it is CAIs right and exclusive prerogative to fix the prices
for its services and it may not be compelled to observe and maintain the prices of other airline companies.43
The conflict as to the endorsability of the subject tickets is an altogether different matter, which does not preclude CAI from fixing the price of a round
trip ticket between Manila and Los Angeles in an amount it deems proper and which does not provide Spouses Viloria an excuse not to pay such price,
albeit subject to a reduction coming from the value of the subject tickets. It cannot be denied that Spouses Viloria had the concomitant obligation to
pay whatever is not covered by the value of the subject tickets whether or not the subject tickets are transferable or not.

There is also no showing that Spouses Viloria were discriminated against in bad faith by being charged with a higher rate. The only evidence the
petitioners presented to prove that the price of a round trip ticket between Manila and Los Angeles at that time was only $856.00 is a newspaper
advertisement for another airline company, which is inadmissible for being hearsay evidence, twice removed. Newspaper clippings are hearsay if
they were offered for the purpose of proving the truth of the matter alleged. As ruled in Feria v. Court of Appeals,:44

[N]ewspaper articles amount to hearsay evidence, twice removed and are therefore not only inadmissible but without any probative value at all
whether objected to or not, unless offered for a purpose other than proving the truth of the matter asserted. In this case, the news article is admissible
only as evidence that such publication does exist with the tenor of the news therein stated.45(citations omitted)

The records of this case demonstrate that both parties were equally in default; hence, none of them can seek judicial redress for the cancellation or
resolution of the subject contracts and they are therefore bound to their respective obligations thereunder. As the 1st sentence of Article 1192 provides:
Art. 1192. In case both parties have committed a breach of the obligation, the liability of the first infractor shall be equitably tempered by the courts. If it
cannot be determined which of the parties first violated the contract, the same shall be deemed extinguished, and each shall bear his own damages.
(emphasis supplied)
Therefore, CAIs liability for damages for its refusal to accept Lourdes ticket for the purchase of Fernandos round trip ticket is offset by Spouses
Vilorias liability for their refusal to pay the amount, which is not covered by the subject tickets. Moreover, the contract between them remains, hence,
CAI is duty bound to issue new tickets for a destination chosen by Spouses Viloria upon their surrender of the subject tickets and Spouses Viloria are
obliged to pay whatever amount is not covered by the value of the subject tickets.

This Court made a similar ruling in Central Bank of the Philippines v. Court of Appeals.46 Thus:

Since both parties were in default in the performance of their respective reciprocal obligations, that is, Island Savings Bank failed to comply with its
obligation to furnish the entire loan and Sulpicio M. Tolentino failed to comply with his obligation to pay his P17,000.00 debt within 3 years as stipulated,
they are both liable for damages.

Article 1192 of the Civil Code provides that in case both parties have committed a breach of their reciprocal obligations, the liability of the first infractor
shall be equitably tempered by the courts. WE rule that the liability of Island Savings Bank for damages in not furnishing the entire loan is offset by the
liability of Sulpicio M. Tolentino for damages, in the form of penalties and surcharges, for not paying his overdue P17,000.00 debt. x x x.47

Another consideration that militates against the propriety of holding CAI liable for moral damages is the absence of a showing that the latter acted
fraudulently and in bad faith. Article 2220 of the Civil Code requires evidence of bad faith and fraud and moral damages are generally not recoverable
in culpa contractual except when bad faith had been proven.48The award of exemplary damages is likewise not warranted. Apart from the requirement
that the defendant acted in a wanton, oppressive and malevolent manner, the claimant must prove his entitlement to moral damages.49

WHEREFORE, premises considered, the instant Petition is DENIED.

SO ORDERED.
BIENVENIDO L. REYES
Associate Justice

G.R. No. L-25142 March 25, 1975

PHILIPPINE RABBIT BUS LINES, INC. and FELIX PANGALANGAN, plaintiffs-appellants,
vs.
PHIL-AMERICAN FORWARDERS, INC., ARCHIMEDES J. BALINGIT and FERNANDO PINEDA, defendants-appellees.
Angel A. Sison for plaintiffs-appellants.
Fidel Zosimo U. Canilao for defendants-appellees.

AQUINO, J.:
Philippine Rabbit Bus Lines, Inc. and Felix Pangalangan appealed on pure questions of law from the order of the Court of First Instance of Tarlac,
dismissing their complaint against Archimedes J. Balingit.
The dismissal was based on the ground that Balingit as the manager of Phil-American Forwarders, Inc., which together with Fernando Pineda and
Balingit, was sued for damages in an action based on quasi-delict or culpa aquiliana, is not the manager of an establishment contemplated in article
2180 of the Civil Code (Civil Case No. 3865).
In the complaint for damages filed by the bus company and Pangalangan against Phil-American Forwarders, Inc., Balingit and Pineda, it was alleged
that on November 24, 1962, Pineda drove recklessly a freight truck, owned by Phil-American Forwarders, Inc., along the national highway at Sto. Tomas,
Pampanga. The truck bumped the bus driven by Pangalangan, which was owned by Philippine Rabbit Bus Lines, Inc. As a result of the bumping,
Pangalangan suffered injuries and the bus was damaged and could not be used for seventy-nine days, thus depriving the company of earnings
amounting to P8,665.51. Balingit was the manager of Phil-American Forwarders, Inc.
Among the defenses interposed by the defendants in their answer was that Balingit was not Pineda's employer.
Balingit moved that the complaint against him be dismissed on the ground that the bus company and the bus driver had no cause of action against
him. As already stated, the lower court dismissed the action as to Balingit. The bus company and its driver appealed.
The Civil Code provides:
ART. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault
or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this
Chapter.
ART. 2180. The obligation imposed by article 2176 is demandable not only for one's own acts or omissions, but also for those of persons for whom one
is responsible.
xxx xxx 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.
Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks, even
though the former are not engaged in any business or industry.
xxx xxx xxx
The responsibility treated of in this article shall cease when the persons herein mentioned prove that they observed all the diligence of a good father
of a family to prevent damage. (1903a)
The novel and unprecedented legal issue in this appeal is whether the terms "employers" and "owners and managers of an establishment or enterprise"
(dueos o directores de un establicimiento o empresa) used in article 2180 of the Civil Code, formerly article 1903 of the old Code, embrace the manager
of a corporation owning a truck, the reckless operation of which allegedly resulted in the vehicular accident from which the damage arose.
We are of the opinion that those terms do not include the manager of a corporation. It may be gathered from the context of article 2180 that the term
"manager" ("director" in the Spanish version) is used in the sense of "employer".
Hence, under the allegations of the complaint, no tortious or quasi-delictual liability can be fastened on Balingit as manager of Phil-American
Forwarders, Inc., in connection with the vehicular accident already mentioned because he himself may be regarded as an employee or dependiente of
his employer, Phil-American Forwarders, Inc.
Thus, it was held "que es dependiente, a los efectos de la responsabilidad subsidiaria establecida en el num 3.0del (art.) 1903, el director de un periodico
explotado por una sociedad, porque cualquiera que sea su jerarquia y aunque Ileve la direccion de determinadas convicciones politicas no por eso deja
de estar subordinado a la superior autoridad de la Empresa" (Decision of Spanish Supreme Court dated December 6, 1912 cited in 12 Manresa, Codigo
Civil Espaol 5th Ed. 662; 1913 Enciclopedia Juridica Espaola 992).
The bus company and its driver, in their appellants' brief, injected a new factual issue which was not alleged in their complaint. They argue that Phil-
American Forwarders, Inc. is merely a business conduit of Balingit because out of its capital stock with a par value of P41,200, Balingit and his wife had
subscribed P40,000 and they paid P10,000 on their subscription, while the other incorporators, namely, Rodolfo Limjuco, Ponciano Caparas and Rafael
Suntay paid P250.25 and P25, respectively.
That argument implies that the veil of corporate fiction should be pierced and that Phil-American Forwarders, Inc. and Balingit and his wife should be
treated as one and the same civil personality.
We cannot countenance that argument in this appeal. It was not raised in the lower court. The case has to be decided on the basis of the pleadings
filed in the trial court where it was assumed that Phil-American Forwarders, Inc. has a personality separate and distinct from that of the Balingit spouses.
The legal issue, which the plaintiffs-appellants can ventilate in this appeal, is one which was raised in the lower court and which is within the issues
framed by the parties (Sec. 18, Rule 46, Rules of Court).
When a party deliberately adopts a certain theory and the case is decided upon that theory in the court below, he will not be permitted to change his
theory on appeal because, to permit him to do so, could be unfair to the adverse party (2 Moran's Comments on the Rules of Court, 1970 Ed. p. 505).
WHEREFORE, the lower court's order of dismissal is affirmed. Costs against the plaintiffs-appellants.
SO ORDERED.
Fernando (Chairman), Barredo, Antonio and Fernandez, JJ., concur.
G.R. No. L-29025 October 4, 1971
Spouses MOISES P. PALISOC and BRIGIDA P. PALISOC, plaintiffs-appellants,
vs.
ANTONIO C. BRILLANTES and TEODOSIO V. VALENTON, owner and President, respectively, of a school of arts and trades, known under the name and
style of "Manila Technical Institute" (M.I.T.), VIRGILIO L. DAFFON and SANTIAGO M. QUIBULUE, defendants-appellees.
Leovillo C. Agustin for plaintiffs-appellants. .
Honorato S. Reyes for appellee Brillantes, et al. .
Villareal, Almacen Navarra & Amores for appellee Daffon. .

TEEHANKEE, J.:
An appeal in forma pauperis on pure questions of law from a decision of the Court of First Instance of Manila. .
Plaintiffs-appellants as parents of their sixteen-year old son, Dominador Palisoc, and a student in automotive mechanics at the Manila Technical
Institute, Quezon Boulevard, Manila, had filed on May 19, 1966, the action below for damages arising from the death on March 10, 1966 of their son
at the hands of a fellow student, defendant Virgilio L. Daffon, at the laboratory room of the said Institute. .
Defendants, per the trial court's decision, are: "(T)he defendant Antonio C. Brillantes, at the time when the incident which gave rise to his action
occurred was a member of the Board of Directors of the institute; 1 the defendant Teodosio Valenton, the president thereof; the defendant Santiago
M. Quibulue, instructor of the class to which the deceased belonged; and the defendant Virgilio L. Daffon, a fellow student of the deceased. At the
beginning the Manila Technical Institute was a single proprietorship, but lately on August 2, 1962, it was duly incorporated."
The facts that led to the tragic death of plaintiffs' son were thus narrated by the trial court: "(T)he deceased Dominador Palisoc and the defendant
Virgilio L. Daffon were classmates, and on the afternoon of March 10, 1966, between two and three o'clock, they, together with another classmate
Desiderio Cruz were in the laboratory room located on the ground floor. At that time the classes were in recess. Desiderio Cruz and Virgilio L. Daffon
were working on a machine while Dominador Palisoc was merely looking on at them. Daffon made a remark to the effect that Palisoc was acting like a
foreman. Because of this remark Palisoc slapped slightly Daffon on the face. Daffon, in retaliation, gave Palisoc a strong flat blow on the face, which
was followed by other fist blows on the stomach. Palisoc retreated apparently to avoid the fist blows, but Daffon followed him and both exchanged
blows until Palisoc stumbled on an engine block which caused him to fall face downward. Palisoc became pale and fainted. First aid was administered
to him but he was not revived, so he was immediately taken to a hospital. He never regained consciousness; finally he died. The foregoing is the
substance of the testimony of Desiderio Cruz, the lone witness to the incident."
The trial court expressly gave credence to this version of the incident, as testified to by the lone eyewitness, Desiderio Cruz, a classmate of the
protagonists, as that of a disinterested witness who "has no motive or reason to testify one way or another in favor of any party" and rejected the self-
exculpatory version of defendant Daffon denying that he had inflicted any fist blows on the deceased. .
With the postmortem findings of Dr. Angelo Singian of the Manila Police Department who performed the autopsy re "Cause of death: shock due to
traumatic fracture of theribs (6th and 7th, left, contusion of the pancreas and stomach with intra-gastric hemorrhage and slight subarachnoid
hemorrhage on the brain," and his testimony that these internal injuries of the deceased were caused "probably by strong fist blows," the trial court
found defendant Daffon liable for the quasi delict under Article 2176 of the Civil Code. 3 It held that "(T)he act, therefore, of the accused Daffon in
giving the deceased strong fistblows in the stomach which ruptured his internal organs and caused his death falls within the purview of this article of
the Code." 4
The trial court, however, absolved from liability the three other defendants-officials of the Manila Technical Institute, in this wise:
... Their liabilities are based on the provisions of Article 2180 of the New Civil Code which reads:
Art. 2180. Lastly, teachers or heads of establishments of arts and trades shall be liable for damages caused by their pupils and students and apprentices,
so long as they remain in their custody.
In the opinion of the Court, this article of the Code is not applicable to the case at bar, since this contemplates the situation where the control or
influence of the teachers and heads of school establishments over the conduct and actions by the pupil supersedes those of the parents.
CIVIL LAW: DAMAGES ART 2180. NEW CIVIL CODE CONSTRUED: The clause "so long as they remain in their custody" contained in Article 2180 of the
new civil code contemplated a situation where the pupil lives and boards with the teacher, such that the control or influence on the pupil supersedes
those of the parents. In those circumstances the control or influence over the conduct and actions of the pupil as well as the responsibilities for their
sort would pass from the father and mother to the teachers. (Ciriaco L. Mercado, Petitioner vs. the Court of Appeals, Manuel Quisumbing, Jr., et al.,
respondents, G.R. No. L-14862, May 30, 1960). 5
There is no evidence that the accused Daffon lived and boarded with his teacher or the other defendant officials of the school. These defendants
cannot therefore be made responsible for the tort of the defendant Daffon.
Judgment was therefore rendered by the trial court as follows:
1. Sentencing the defendant Virgilio L. Daffon to pay the plaintiffs as heirs of the deceased Dominador Palisoc (a) P6,000.00 for the death of Dominador
Palisoc; (b) P3,375.00 for actual and compensatory expenses; (c) P5,000.00 for moral damages; (d) P10,000.00 for loss of earning power, considering
that the deceased was only between sixteen and seventeen years, and in good health when he died, and (e) P2,000.00 for attorney's fee, plus the costs
of this action. .
2. Absolving the other defendants. .
3. Dismissing the defendants' counterclaim for lack of merit.
Plaintiffs' appeal raises the principal legal question that under the factual findings of the trial court, which are now beyond review, the trial court erred
in absolving the defendants-school officials instead of holding them jointly and severally liable as tortfeasors, with defendant Daffon, for the damages
awarded them as a result of their son's death. The Court finds the appeal, in the main, to be meritorious. .
1. The lower court absolved defendants-school officials on the ground that the provisions of Article 2180, Civil Code, which expressly hold "teachers or
heads of establishments of arts and trades ... liable for damages caused by their pupils and students and apprentices, so long as they remain in their
custody," are not applicable to to the case at bar, since "there is no evidence that the accused Daffon [who inflicted the fatal fistblows] 6 lived and
boarded with his teacher or the other defendants-officials of the school. These defendants cannot therefore be made responsible for the tort of the
defendant Daffon."
The lower court based its legal conclusion expressly on the Court's dictum in Mercado vs. Court of Appeals, 7 that "(I)t would seem that the clause "so
long as they remain in their custody," contemplates a situation where the pupil lives and boards with the teacher, such that the control, direction and
influence on the pupil supersedes those of the parents. In these circumstances the control or influence over the conduct and actions of the pupil would
pass from the father and mother to the teacher; and so would the responsibility for the torts of the pupil. Such a situation does not appear in the case
at bar; the pupils appear to go to school during school hours and go back to their homes with their parents after school is over." This dictum had been
made in rejecting therein petitioner father's contention that his minor son's school, Lourdes Catholic School at Kanlaon, Quezon City [which was not a
party to the case] should be held responsible, rather than him as father, for the moral damages of P2,000.00 adjudged against him for the physical
injury inflicted by his son on a classmate. [A cut on the right cheek with a piece of razor which costs only P50.00 by way of medical expenses to treat
and cure, since the wound left no scar.] The moral damages award was after all set aside by the Court on the ground that none of the specific cases
provided in Article 2219, Civil Code, for awarding moral damages had been established, petitioner's son being only nine years old and not having been
shown to have "acted with discernment" in inflicting the injuries on his classmate. .
The dictum in Mercado was based in turn on another dictum in the earlier case of Exconde vs. Capuno, 8 where the only issue involved as expressly
stated in the decision, was whether the therein defendant-father could be civilly liable for damages resulting from a death caused in a motor vehicle
accident driven unauthorizedly and negligently by his minor son, (which issue was resolved adversely against the father). Nevertheless, the dictum in
such earlier case that "It is true that under the law abovequoted, teachers or directors of arts and trades are liable for any damage caused by their
pupils or apprentices while they are under their custody, but this provision only applies to an institution of arts and trades and not to any academic
educational institution" was expressly cited and quoted in Mercado. .
2. The case at bar was instituted directly against the school officials and squarely raises the issue of liability of teachers and heads of schools under
Article 2180, Civil Code, for damages caused by their pupils and students against fellow students on the school premises. Here, the parents of the
student at fault, defendant Daffon, are not involved, since Daffon was already of age at the time of the tragic incident. There is no question, either,
that the school involved is a non-academic school, 9 the Manila Technical Institute being admittedly a technical vocational and industrial school. .
The Court holds that under the cited codal article, defendants head and teacher of the Manila Technical Institute (defendants Valenton and Quibulue,
respectively) are liable jointly and severally for damages to plaintiffs-appellants for the death of the latter's minor son at the hands of defendant Daffon
at the school's laboratory room. No liability attaches to defendant Brillantes as a mere member of the school's board of directors. The school itself
cannot be held similarly liable, since it has not been properly impleaded as party defendant. While plaintiffs sought to so implead it, by impleading
improperly defendant Brillantes, its former single proprietor, the lower court found that it had been incorporated since August 2, 1962, and therefore
the school itself, as thus incorporated, should have been brought in as party defendant. Plaintiffs failed to do so, notwithstanding that Brillantes and
his co-defendants in their reply to plaintiffs' request for admission had expressly manifested and made of record that "defendant Antonio C. Brillantes
is not the registered owner/head of the "Manila Technical Institute" which is now a corporation and is not owned by any individual person." 10
3. The rationale of such liability of school heads and teachers for the tortious acts of their pupils and students, so long as they remain in their custody,
is that they stand, to a certain extent, as to their pupils and students, in loco parentis and are called upon to "exercise reasonable supervision over the
conduct of the child." 11 This is expressly provided for in Articles 349, 350 and 352 of the Civil Code. 12 In the law of torts, the governing principle is that
the protective custody of the school heads and teachers is mandatorily substituted for that of the parents, and hence, it becomes their obligation as
well as that of the school itself to provide proper supervision of the students' activities during the whole time that they are at attendance in the school,
including recess time, as well as to take the necessary precautions to protect the students in their custody from dangers and hazards that would
reasonably be anticipated, including injuries that some student themselves may inflict willfully or through negligence on their fellow students. .
4. As tersely summarized by Mr. Justice J.B.L. Reyes in his dissenting opinion in Exconde, "the basis of the presumption of negligence of Art. 1903 [now
2180] is some culpa in vigilando that the parents, teachers, etc. are supposed to have incurred in the exercise of their authority" 13 and "where the
parent places the child under the effective authority of the teacher, the latter, and not the parent, should be the one answerable for the torts
committed while under his custody, for the very reason that the parent is not supposed to interfere with the discipline of the school nor with the
authority and supervision of the teacher while the child is under instruction." The school itself, likewise, has to respond for the fault or negligence of
its school head and teachers under the same cited article. 14
5. The lower court therefore erred in law in absolving defendants-school officials on the ground that they could be held liable under Article 2180, Civil
Code, only if the student who inflicted the fatal fistblows on his classmate and victim "lived and boarded with his teacher or the other defendants
officials of the school." As stated above, the phrase used in the cited article "so long as (the students) remain in their custody" means the protective
and supervisory custody that the school and its heads and teachers exercise over the pupils and students for as long as they are at attendance in the
school, including recess time. There is nothing in the law that requires that for such liability to attach the pupil or student who commits the tortious
act must live and board in the school, as erroneously held by the lower court, and the dicta in Mercado (as well as in Exconde) on which it relied, must
now be deemed to have been set aside by the present decision. .
6. Defendants Valenton and Quibulue as president and teacher-in-charge of the school must therefore be held jointly and severally liable for the quasi-
delict of their co-defendant Daffon in the latter's having caused the death of his classmate, the deceased Dominador Palisoc. The unfortunate death
resulting from the fight between the protagonists-students could have been avoided, had said defendants but complied with their duty of providing
adequate supervision over the activities of the students in the school premises to protect their students from harm, whether at the hands of fellow
students or other parties. At any rate, the law holds them liable unless they relieve themselves of such liability, in compliance with the last paragraph
of Article 2180, Civil Code, by "(proving) that they observed all the diligence of a good father of a family to prevent damage." In the light of the factual
findings of the lower court's decision, said defendants failed to prove such exemption from liability. .
7. Plaintiffs-appellees' contention that the award of P6,000.00 as indemnity for the death of their son should be increased to P12,000.00 as set by the
Court in People vs. Pantoja, 15 and observed in all death indemnity cases thereafter is well taken. The Court, in Pantoja, after noting the decline in the
purchasing power of the Philippine peso, had expressed its "considered opinion that the amount of award of compensatory damages for death caused
by a crime or quasi-delict should now be P12,000.00." The Court thereby adjusted the minimum amount of "compensatory damages for death caused
by a crime or quasi-delict" as per Article 2206, Civil Code, from the old stated minimum of P3,000.00 to P12,000.00, which amount is to be awarded
"even though there may have been mitigating circumstances" pursuant to the express provisions of said codal article. .
8. Plaintiffs-appellees' other claims on appeal that the lower court should have awarded exemplary damages and imposed legal interest on the total
damages awarded, besides increasing the award of attorney's fees all concern matters that are left by law to the discretion of the trial court and the
Court has not been shown any error or abuse in the exercise of such discretion on the part of the trial court. 16 Decisive here is the touchstone provision
of Article 2231, Civil Code, that "In quasi-delicts, exemplary damages may be granted if the defendant acted with gross negligence." No gross negligence
on the part of defendants was found by the trial court to warrant the imposition of exemplary damages, as well as of interest and increased attorney's
fees, and the Court has not been shown in this appeal any compelling reason to disturb such finding. .
ACCORDINGLY, the judgment appealed from is modified so as to provide as follows: .
1. Sentencing the defendants Virgilio L. Daffon, TeodosioV. Valenton and Santiago M. Quibulue jointly and severallyto pay plaintiffs as heirs of the
deceased Dominador Palisoc (a) P12,000.00 for the death of Dominador Palisoc; (b) P3,375.00 for actual and compensatory expenses; (c) P5,000.00
for moral, damages; (d) P10,000.00 for loss of earning power and (e) P2,000.00 for attorney's fee, plus the costs of this action in both instances; 2.
absolving defendant Antonio C. Brillantes from the complaint; and 3. dismissing defendants' counterclaims. .
Concepcion, C.J., Villamor and Makasiar, JJ., concur. .
Dizon, J., took no part. .
REYES, J.B.L., J., concurring: .
I concur with the opinion of Mr. Justice Teehankee but would like to clarify that the argument of the dissenting opinion of the effect that the
responsibility of teachers and school officers under Articles 2180 should be limited to pupils who are minors (below the age of majority) is not in accord
with the plain text of the law. Article 2180 of the Civil Code of the Philippines is to the following effect: .
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. .
The father and, in case of his death or incapacity, the mother, are responsible for the damages caused by the minor children who live in their company.
.
Guardians are liable for damages caused by the minors or incapacitated persons who are under their authority and live in their company. .
The owners and managers of an establishment or enterprise are likewise responsible for damages caused by their employees in the service of the
branches in which the latter are employed or on the occasion of their functions. .
Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks, even
though the former are not engaged in any business or industry. .
The State is responsible in like manner when it acts through a special agent; but not when the damage has been caused by the official to whom the
task done properly pertains, in which case what is provided in article 2176 shall be applicable. .
Lastly, teachers or heads of establishments of arts and trades shall be liable for damages caused by their pupils and students or apprentices, so long as
they remain in their custody.
The responsibility treated of in this article shall cease when the persons herein mentioned prove that they observe all the diligence of a good father of
a family to prevent damages.
Examination of the article shows that where the responsibility prescribed therein is limited to illegal acts during minority, the article expressly so
provides, as in the case of the parents and of the guardians. It is natural to expect that if the law had intended to similarly restrict the civil responsibility
of the other categories of persons enumerated in the article, it would have expressly so stated. The fact that it has not done so indicates an intent that
the liability be not restricted to the case of persons under age. Further, it is not without significance that the teachers and heads of scholarly
establishments are not grouped with parents and guardians but ranged with owners and managers of enterprises, employers and the state, as to whom
no reason is discernible to imply that they should answer only for minors. .
I submit, finally, that while in the case of parents and guardians, their authority and supervision over the children and wards end by law upon the latter
reaching majority age, the authority and custodial supervision over pupils exist regardless of the age of the latter. A student over twenty-one, by
enrolling and attending a school, places himself under the custodial supervision and disciplinary authority of the school authorities, which is the basis
of the latter's correlative responsibility for his torts, committed while under such authority. Of course, the teachers' control is not as plenary as when
the student is a minor; but that circumstance can only affect the decree of the responsibility but cannot negate the existence thereof. It is only a factor
to be appreciated in determining whether or not the defendant has exercised due diligence in endeavoring to prevent the injury, as prescribed in the
last paragraph of Article 2180.
Barredo, J., concurs.
11
G.R. No. L-23052 January 29, 1968
CITY OF MANILA, petitioner,
vs.
GENARO N. TEOTICO and COURT OF APPEALS, respondents.
City Fiscal Manuel T. Reyes for petitioner.
Sevilla, Daza and Associates for respondents.
CONCEPCION, C.J.:
Appeal by certiorari from a decision of the Court of Appeals.
On January 27, 1958, at about 8:00 p.m., Genaro N. Teotico was at the corner of the Old Luneta and P. Burgos Avenue, Manila, within a "loading and
unloading" zone, waiting for a jeepney to take him down town. After waiting for about five minutes, he managed to hail a jeepney that came along to
a stop. As he stepped down from the curb to board the jeepney, and took a few steps, he fell inside an uncovered and unlighted catch basin or manhole
on P. Burgos Avenue. Due to the fall, his head hit the rim of the manhole breaking his eyeglasses and causing broken pieces thereof to pierce his left
eyelid. As blood flowed therefrom, impairing his vision, several persons came to his assistance and pulled him out of the manhole. One of them brought
Teotico to the Philippine General Hospital, where his injuries were treated, after which he was taken home. In addition to the lacerated wound in his
left upper eyelid, Teotico suffered contusions on the left thigh, the left upper arm, the right leg and the upper lip apart from an abrasion on the right
infra-patella region. These injuries and the allergic eruption caused by anti-tetanus injections administered to him in the hospital, required further
medical treatment by a private practitioner who charged therefor P1,400.00.
As a consequence of the foregoing occurrence, Teotico filed, with the Court of First Instance of Manila, a complaint which was, subsequently,
amended for damages against the City of Manila, its mayor, city engineer, city health officer, city treasurer and chief of police. As stated in the
decision of the trial court, and quoted with approval by the Court of Appeals,
At the time of the incident, plaintiff was a practicing public accountant, a businessman and a professor at the University of the East. He held responsible
positions in various business firms like the Philippine Merchandising Co., the A.U. Valencia and Co., the Silver Swan Manufacturing Company and the
Sincere Packing Corporation. He was also associated with several civic organizations such as the Wack Wack Golf Club, the Chamber of Commerce of
the Philippines, Y's Men Club of Manila and the Knights of Rizal. As a result of the incident, plaintiff was prevented from engaging in his customary
occupation for twenty days. Plaintiff has lost a daily income of about P50.00 during his incapacity to work. Because of the incident, he was subjected
to humiliation and ridicule by his business associates and friends. During the period of his treatment, plaintiff was under constant fear and anxiety for
the welfare of his minor children since he was their only support. Due to the filing of this case, plaintiff has obligated himself to pay his counsel the
sum of P2,000.00.
On the other hand, the defense presented evidence, oral and documentary, to prove that the Storm Drain Section, Office of the City Engineer of Manila,
received a report of the uncovered condition of a catchbasin at the corner of P. Burgos and Old Luneta Streets, Manila, on January 24, 1958, but the
same was covered on the same day (Exhibit 4); that again the iron cover of the same catch basin was reported missing on January 30, 1958, but the
said cover was replaced the next day (Exhibit 5); that the Office of the City Engineer never received any report to the effect that the catchbasin in
question was not covered between January 25 and 29, 1968; that it has always been a policy of the said office, which is charged with the duty of
installation, repair and care of storm drains in the City of Manila, that whenever a report is received from whatever source of the loss of a catchbasin
cover, the matter is immediately attended to, either by immediately replacing the missing cover or covering the catchbasin with steel matting that
because of the lucrative scrap iron business then prevailing, stealing of iron catchbasin covers was rampant; that the Office of the City Engineer has
filed complaints in court resulting from theft of said iron covers; that in order to prevent such thefts, the city government has changed the position
and layout of catchbasins in the City by constructing them under the sidewalks with concrete cement covers and openings on the side of the gutter;
and that these changes had been undertaken by the city from time to time whenever funds were available.
After appropriate proceedings the Court of First Instance of Manila rendered the aforementioned decision sustaining the theory of the defendants and
dismissing the amended complaint, without costs.
On appeal taken by plaintiff, this decision was affirmed by the Court of Appeals, except insofar as the City of Manila is concerned, which was sentenced
to pay damages in the aggregate sum of P6,750.00. 1 Hence, this appeal by the City of Manila.
The first issue raised by the latter is whether the present case is governed by Section 4 of Republic Act No. 409 (Charter of the City of Manila) reading:
The city shall not be liable or held for damages or injuries to persons or property arising from the failure of the Mayor, the Municipal Board, or any
other city officer, to enforce the provisions of this chapter, or any other law or ordinance, or from negligence of said Mayor, Municipal Board, or other
officers while enforcing or attempting to enforce said provisions.
or by Article 2189 of the Civil Code of the Philippines which provides:
Provinces, cities and municipalities shall be liable for damages for the death of, or injuries suffered by, any person by reason of defective conditions of
road, streets, bridges, public buildings, and other public works under their control or supervision.
Manila maintains that the former provision should prevail over the latter, because Republic Act 409, is a special law, intended exclusively for the City
of Manila, whereas the Civil Code is a general law, applicable to the entire Philippines.
The Court of Appeals, however, applied the Civil Code, and, we think, correctly. It is true that, insofar as its territorial application is concerned, Republic
Act No. 409 is a special law and the Civil Code a general legislation; but, as regards the subject-matter of the provisions above quoted, Section 4 of
Republic Act 409 establishes a general rule regulating the liability of the City of Manila for: "damages or injury to persons or property arising from the
failure of" city officers "to enforce the provisions of" said Act "or any other law or ordinance, or from negligence" of the city "Mayor, Municipal Board,
or other officers while enforcing or attempting to enforce said provisions." Upon the other hand, Article 2189 of the Civil Code constitutes a particular
prescription making "provinces, cities and municipalities . . . liable for damages for the death of, or injury suffered by any person by reason"
specifically "of the defective condition of roads, streets, bridges, public buildings, and other-public works under their control or supervision." In other
words, said section 4 refers to liability arising from negligence, in general, regardless of the object thereof, whereas Article 2189 governs liability due
to "defective streets," in particular. Since the present action is based upon the alleged defective condition of a road, said Article 2189 is decisive
thereon.
It is urged that the City of Manila cannot be held liable to Teotico for damages: 1) because the accident involving him took place in a national highway;
and 2) because the City of Manila has not been negligent in connection therewith.
As regards the first issue, we note that it is based upon an allegation of fact not made in the answer of the City. Moreover, Teotico alleged in his
complaint, as well as in his amended complaint, that his injuries were due to the defective condition of a street which is "under the supervision and
control" of the City. In its answer to the amended complaint, the City, in turn, alleged that "the streets aforementioned were and have been constantly
kept in good condition and regularly inspected and the storm drains and manholes thereof covered by the defendant City and the officers concerned"
who "have been ever vigilant and zealous in the performance of their respective functions and duties as imposed upon them by law." Thus, the City had,
in effect, admitted that P. Burgos Avenue was and is under its control and supervision.
Moreover, the assertion to the effect that said Avenue is a national highway was made, for the first time, in its motion for reconsideration of the
decision of the Court of Appeals. Such assertion raised, therefore, a question of fact, which had not been put in issue in the trial court, and cannot be
set up, for the first time, on appeal, much less after the rendition of the decision of the appellate court, in a motion for the reconsideration thereof.
At any rate, under Article 2189 of the Civil Code, it is not necessary for the liability therein established to attach that the defective roads or
streets belong to the province, city or municipality from which responsibility is exacted. What said article requires is that the province, city or
municipality have either "control or supervision" over said street or road. Even if P. Burgos Avenue were, therefore, a national highway, this
circumstance would not necessarily detract from its "control or supervision" by the City of Manila, under Republic Act 409. In fact Section 18(x) thereof
provides:
Sec. 18. Legislative powers. The Municipal Board shall have the following legislative powers:
xxx xxx xxx
(x) Subject to the provisions of existing law to provide for the laying out, construction and improvement, and to regulate the use of streets, avenues,
alleys, sidewalks, wharves, piers, parks, cemeteries, and other public places; to provide for lighting, cleaning, and sprinkling of streets and public places;
. . . to provide for the inspection of, fix the license fees for and regulate the openings in the same for the laying of gas, water, sewer and other pipes,
the building and repair of tunnels, sewers, and drains, and all structures in and under the same and the erecting of poles and the stringing of wires
therein; to provide for and regulate cross-works, curbs, and gutters therein, . . . to regulate traffic and sales upon the streets and other public places;
to provide for the abatement of nuisances in the same and punish the authors or owners thereof; to provide for the construction and maintenance,
and regulate the use, of bridges, viaducts and culverts; to prohibit and regulate ball playing, kite-flying, hoop rolling, and other amusements which
may annoy persons using the streets and public places, or frighten horses or other animals; to regulate the speed of horses and other animals, motor
and other vehicles, cars, and locomotives within the limits of the city; to regulate the lights used on all vehicles, cars, and locomotives; . . . to provide
for and change the location, grade, and crossing of railroads, and compel any such railroad to raise or lower its tracks to conform to such provisions or
changes; and to require railroad companies to fence their property, or any part thereof, to provide suitable protection against injury to persons or
property, and to construct and repair ditches, drains, sewers, and culverts along and under their tracks, so that the natural drainage of the streets and
adjacent property shall not be obstructed.
This authority has been neither withdrawn nor restricted by Republic Act No. 917 and Executive Order No. 113, dated May 2, 1955, upon which the
City relies. Said Act governs the disposition or appropriation of the highway funds and the giving of aid to provinces, chartered cities and municipalities
in the construction of roads and streets within their respective boundaries, and Executive Order No. 113 merely implements the provisions of said
Republic Act No. 917, concerning the disposition and appropriation of the highway funds. Moreover, it provides that "the
construction, maintenance and improvement of national primary, national secondary and national aid provincial and city roads shall be accomplished
by the Highway District Engineers and Highway City Engineers under the supervision of the Commissioner of Public Highways and shall be financed
from such appropriations as may be authorized by the Republic of the Philippines in annual or special appropriation Acts."
Then, again, the determination of whether or not P. Burgos Avenue is under the control or supervision of the City of Manila and whether the latter is
guilty of negligence, in connection with the maintenance of said road, which were decided by the Court of Appeals in the affirmative, is one of fact,
and the findings of said Court thereon are not subject to our review.
WHEREFORE, the decision appealed from should be as it is hereby affirmed, with costs against the City of Manila. It is so ordered. Reyes, J.B.L., Dizon,
Makalintal, Bengzon, J.P., Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ., concur.