charRepublic of the Philippines the judgment appealed from.

Where the plaintiff in a negligence

SUPREME COURT action, by his own carelessness contributes to the principal
Manila occurrence, that is, to the accident, as one of the determining
EN BANC causes thereof, he cannot recover. This is equally true of the
G.R. No. L-9308 December 23, 1914 defendant; and as both of them, by their negligent acts,
JUAN BERNARDO, plaintiff-appellant, contributed to the determining cause of the accident, neither can
vs. recover.
M. B. LEGASPI, defendant-appellee. The judgment appealed from is affirmed, with costs against the
Roman de Jesus for appellant. appellant.itc-alf
No appearance for appellee.

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 plaintiff's
automobile by reason of defendant's 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 the defendant's automobile in the
collision referred to, as well as those to plaintiff's 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.1awphil.net
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

Page 1 of 205
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-57079 September 29, 1989
PHILIPPINE LONG DISTANCE TELEPHONE CO., INC., petitioner,
vs.
COURT OF APPEALS and SPOUSES ANTONIO ESTEBAN and
GLORIA ESTEBAN, respondents.
REGALADO, J.:
This case had its inception in an action for damages instituted
in the former Court of First Instance of Negros Occidental 1 by
private respondent spouses against petitioner Philippine Long
Distance Telephone Company (PLDT, for brevity) for the
injuries they sustained in the evening of July 30, 1968 when
their jeep ran over a mound of earth and fell into an open
trench, an excavation allegedly undertaken by PLDT for the
installation of its underground conduit system. The complaint
alleged that respondent Antonio Esteban failed to notice the
open trench which was left uncovered because of the creeping
darkness and the lack of any warning light or signs. As a result
of the accident, respondent Gloria Esteban allegedly sustained
injuries on her arms, legs and face, leaving a permanent scar
on her cheek, while the respondent husband suffered cut lips.
In addition, the windshield of the jeep was shattered. 2
PLDT, in its answer, denies liability on the contention that the
injuries sustained by respondent spouses were the result of
their own negligence and that the entity which should be held
responsible, if at all, is L.R. Barte and Company (Barte, for
short), an independent contractor which undertook the
construction of the manhole and the conduit system. 3
Accordingly, PLDT filed a third-party complaint against Barte
alleging that, under the terms of their agreement, PLDT should in
no manner be answerable for any accident or injuries arising from
the negligence or carelessness of Barte or any of its employees. 4 In
answer thereto, Barte claimed that it was not aware nor was it
notified of the accident involving respondent spouses and that it
had complied with the terms of its contract with PLDT by installing
the necessary and appropriate standard signs in the vicinity of the
work site, with barricades at both ends of the excavation and with
red lights at night along the excavated area to warn the traveling
public of the presence of excavations. 5
On October 1, 1974, the trial court rendered a decision in favor of
private respondents, the decretal part of which reads:
IN VIEW OF THE FOREGOING considerations the
defendant Philippine Long Distance Telephone
Company is hereby ordered (A) to pay the plaintiff
Gloria Esteban the sum of P20,000.00 as moral
damages and P5,000.00 exemplary damages; to
plaintiff Antonio Esteban the sum of P2,000.00 as
moral damages and P500.00 as exemplary damages,
with legal rate of interest from the date of the filing
of the complaint until fully paid. The defendant is
hereby ordered to pay the plaintiff the sum of
P3,000.00 as attorney's fees.
(B) The third-party defendant is hereby ordered to
reimburse whatever amount the defendant-third
party plaintiff has paid to the plaintiff. With costs
against the defendant. 6
Page 2 of 205
From this decision both PLDT and private respondents appealed,
the latter appealing only as to the amount of damages. Third-party
defendant Barte did not appeal.
On September 25, 1979, the Special Second Division of the Court
of Appeals rendered a decision in said appealed case, with Justice
Corazon Juliano Agrava as ponente, reversing the decision of the
lower court and dismissing the complaint of respondent spouses. It
held that respondent Esteban spouses were negligent and
consequently absolved petitioner PLDT from the claim for damages.
7 A copy of this decision was received by private respondents on
October 10, 1979. 8 On October 25, 1979, said respondents filed a
motion for reconsideration dated October 24, 1979. 9 On January
24, 1980, the Special Ninth Division of the Court of Appeals denied
said motion for reconsideration. 10 This resolution was received by
respondent spouses on February 22, 1980. 11
On February 29, 1980, respondent Court of Appeals received
private respondents' motion for leave of court to file a second
motion for reconsideration, dated February 27, 1980. 12 On March
11, 1980, respondent court, in a resolution likewise penned by
Justice Agrava, allowed respondents to file a second motion for
reconsideration, within ten (10) days from notice thereof. 13 Said
resolution was received by private respondents on April 1, 1980
but prior thereto, private respondents had already filed their
second motion for reconsideration on March 7, 1980. 14
On April 30,1980 petitioner PLDT filed an opposition to and/or
motion to dismiss said second motion for reconsideration. 15 The
Court of Appeals, in view of the divergent opinions on the
resolution of the second motion for reconsideration, designated two
additional justices to form a division of five. 16 On September 3,
1980, said division of five promulgated its resolution, penned by
Justice Mariano A. Zosa, setting aside the decision dated
September 25, 1979, as well as the resolution dated, January
24,1980, and affirming in toto the decision of the lower court. 17
On September 19, 1980, petitioner PLDT filed a motion to set aside
and/or for reconsideration of the resolution of September 3, 1980,
contending that the second motion for reconsideration of private
respondent spouses was filed out of time and that the decision of
September 25, 1979 penned by Justice Agrava was already final. It
further submitted therein that the relationship of Barte and
petitioner PLDT should be viewed in the light of the contract
between them and, under the independent contractor rule, PLDT is
not liable for the acts of an independent contractor. 18 On May 11,
1981, respondent Court of Appeals promulgated its resolution
denying said motion to set aside and/or for reconsideration and
affirming in toto the decision of the lower court dated October 1,
1974. 19
Coming to this Court on a petition for review on certiorari,
petitioner assigns the following errors:
1. Respondent Court of Appeals erred in not denying private
respondents' second motion for reconsideration on the ground that
the decision of the Special Second Division, dated September 25,
1979, and the resolution of the Special Ninth Division, dated
January 24, 1980, are already final, and on the additional ground
that said second motion for reconsideration is pro forma.
2. Respondent court erred in reversing the aforesaid decision and
resolution and in misapplying the independent contractor rule in
holding PLDT liable to respondent Esteban spouses.
A convenient resume of the relevant proceedings in the respondent
court, as shown by the records and admitted by both parties, may
be graphically presented as follows:
Page 3 of 205
 (a) September 25, 1979, a decision was rendered by
the Court of Appeals with Justice Agrava as ponente;
(b) October 10, 1979, a copy of said decision was
received by private respondents;
(c) October 25, 1979, a motion for reconsideration
was filed by private respondents;
(d) January 24, 1980, a resolution was issued
denying said motion for reconsideration;
(e) February 22, 1980, a copy of said denial
resolution was received by private respondents;
(f) February 29, 1980, a motion for leave to file a
second motion for reconsideration was filed by
private respondents
(g) March 7, 1980, a second motion for
reconsideration was filed by private respondents;
(h) March 11, 1980, a resolution was issued allowing
respondents to file a second motion for
reconsideration within ten (10) days from receipt;
and
(i) September 3, 1980, a resolution was issued,
penned by Justice Zosa, reversing the original
decision dated September 25, 1979 and setting
aside the resolution dated January 24, 1980.
From the foregoing chronology, we are convinced that both the
motion for leave to file a second motion for reconsideration and,
consequently, said second motion for reconsideration itself were
filed out of time.
Section 1, Rule 52 of the Rules of Court, which had procedural
governance at the time, provided that a second motion for
reconsideration may be presented within fifteen (15) days from
notice of the order or judgment deducting the time in which the
first motion has been pending. 20 Private respondents having filed
their first motion for reconsideration on the last day of the
reglementary period of fifteen (15) days within which to do so, they
had only one (1) day from receipt of the order denying said motion
to file, with leave of court, a second motion for reconsideration. 21
In the present case, after their receipt on February 22, 1980 of the
resolution denying their first motion for reconsideration, private
respondents had two remedial options. On February 23, 1980, the
remaining one (1) day of the aforesaid reglementary period, they
could have filed a motion for leave of court to file a second motion
for reconsideration, conceivably with a prayer for the extension of
the period within which to do so. On the other hand, they could
have appealed through a petition for review on certiorari to this
Court within fifteen (15) days from February 23, 1980. 22 Instead,
they filed a motion for leave to file a second motion 'for
reconsideration on February 29, 1980, and said second motion for
reconsideration on March 7, 1980, both of which motions were by
then time-barred.
Consequently, after the expiration on February 24, 1980 of the
original fifteen (15) day period, the running of which was
suspended during the pendency of the first motion for
reconsideration, the Court of Appeals could no longer validly take
further proceedings on the merits of the case, much less to alter,
modify or reconsider its aforesaid decision and/or resolution. The
filing of the motion for leave to file a second motion for
reconsideration by herein respondents on February 29, 1980 and
the subsequent filing of the motion itself on March 7, 1980, after
the expiration of the reglementary period to file the same, produced
no legal effects. Only a motion for re-hearing or reconsideration
Page 4 of 205
filed in time shall stay the final order or judgment sought to be re-
examined. 23
The consequential result is that the resolution of respondent court
of March 11, 1980 granting private respondents' aforesaid motion
for leave and, giving them an extension of ten (10) days to file a
second motion for reconsideration, is null and void. The period for
filing a second motion for reconsideration had already expired
when private respondents sought leave to file the same, and
respondent court no longer had the power to entertain or grant the
said motion. The aforesaid extension of ten (10) days for private
respondents to file their second motion for reconsideration was of
no legal consequence since it was given when there was no more
period to extend. It is an elementary rule that an application for
extension of time must be filed prior to the expiration of the period
sought to be extended. 24 Necessarily, the discretion of respondent
court to grant said extension for filing a second motion for
reconsideration is conditioned upon the timeliness of the motion
seeking the same.
No appeal having been taken seasonably, the respondent court's
decision, dated September 25, 1979, became final and executory
on March 9, 1980. The subsequent resolutions of respondent
court, dated March 11, 1980 and September 3, 1980, allowing
private respondents to file a second motion for reconsideration and
reversing the original decision are null and void and cannot disturb
the finality of the judgment nor restore jurisdiction to respondent
court. This is but in line with the accepted rule that once a
decision has become final and executory it is removed from the
power and jurisdiction of the court which rendered it to further
alter or amend, much less revoke it. 25 The decision rendered anew
is null and void. 26 The court's inherent power to correct its own
errors should be exercised before the finality of the decision or
order sought to be corrected, otherwise litigation will be endless
and no question could be considered finally settled. Although the
granting or denial of a motion for reconsideration involves the
exercise of discretion, 27 the same should not be exercised
whimsically, capriciously or arbitrarily, but prudently in conformity
with law, justice, reason and equity. 28
Prescinding from the aforesaid procedural lapses into the
substantive merits of the case, we find no error in the findings
of the respondent court in its original decision that the
accident which befell private respondents was due to the lack
of diligence of respondent Antonio Esteban and was not
imputable to negligent omission on the part of petitioner
PLDT. Such findings were reached after an exhaustive assessment
and evaluation of the evidence on record, as evidenced by the
respondent court's resolution of January 24, 1980 which we quote
with approval:
First. Plaintiff's jeep was running along the inside
lane of Lacson Street. If it had remained on that
inside lane, it would not have hit the ACCIDENT
MOUND.
Exhibit B shows, through the tire marks, that the
ACCIDENT MOUND was hit by the jeep swerving
from the left that is, swerving from the inside lane.
What caused the swerving is not disclosed; but, as
the cause of the accident, defendant cannot be made
liable for the damages suffered by plaintiffs. The
accident was not due to the absence of warning
signs, but to the unexplained abrupt swerving of the
jeep from the inside lane. That may explain plaintiff-
Page 5 of 205
husband's insistence that he did not see the
ACCIDENT MOUND for which reason he ran into it.
Second. That plaintiff's jeep was on the inside lane
before it swerved to hit the ACCIDENT MOUND
could have been corroborated by a picture showing
Lacson Street to the south of the ACCIDENT
MOUND.
It has been stated that the ditches along Lacson
Street had already been covered except the 3 or 4
meters where the ACCIDENT MOUND was located.
Exhibit B-1 shows that the ditches on Lacson Street
north of the ACCIDENT MOUND had already been
covered, but not in such a way as to allow the outer
lane to be freely and conveniently passable to
vehicles. The situation could have been worse to the
south of the ACCIDENT MOUND for which reason
no picture of the ACCIDENT MOUND facing south
was taken.
Third. Plaintiff's jeep was not running at 25
kilometers an hour as plaintiff-husband claimed. At
that speed, he could have braked the vehicle the
moment it struck the ACCIDENT MOUND. The jeep
would not have climbed the ACCIDENT MOUND
several feet as indicated by the tiremarks in Exhibit
B. The jeep must have been running quite fast. If the
jeep had been braked at 25 kilometers an hour,
plaintiff's would not have been thrown against the
windshield and they would not have suffered their
injuries.
Fourth. If the accident did not happen because the
jeep was running quite fast on the inside lane and
for some reason or other it had to swerve suddenly
to the right and had to climb over the ACCIDENT
MOUND, then plaintiff-husband had not exercised
the diligence of a good father of a family to avoid the
accident. With the drizzle, he should not have run
on dim lights, but should have put on his regular
lights which should have made him see the
ACCIDENT MOUND in time. If he was running on
the outside lane at 25 kilometers an hour, even on
dim lights, his failure to see the ACCIDENT MOUND
in time to brake the car was negligence on his part.
The ACCIDENT MOUND was relatively big and
visible, being 2 to 3 feet high and 1-1/2 feet wide. If
he did not see the ACCIDENT MOUND in time, he
would not have seen any warning sign either. He
knew of the existence and location of the ACCIDENT
MOUND, having seen it many previous times. With
ordinary precaution, he should have driven his jeep
on the night of the accident so as to avoid hitting the
ACCIDENT MOUND. 29
The above findings clearly show that the negligence of respondent
Antonio Esteban was not only contributory to his injuries and
those of his wife but goes to the very cause of the occurrence of the
accident, as one of its determining factors, and thereby precludes
their right to recover damages. 30 The perils of the road were known
to, hence appreciated and assumed by, private respondents. By
exercising reasonable care and prudence, respondent Antonio
Esteban could have avoided the injurious consequences of his act,
Page 6 of 205
even assuming arguendo that there was some alleged negligence on
the part of petitioner.
The presence of warning signs could not have completely prevented
the accident; the only purpose of said signs was to inform and
warn the public of the presence of excavations on the site. The
private respondents already knew of the presence of said
excavations. It was not the lack of knowledge of these excavations
which caused the jeep of respondents to fall into the excavation but
the unexplained sudden swerving of the jeep from the inside lane
towards the accident mound. As opined in some quarters, the
omission to perform a duty, such as the placing of warning signs
on the site of the excavation, constitutes the proximate cause only
when the doing of the said omitted act would have prevented the
injury. 31 It is basic that private respondents cannot charge PLDT
for their injuries where their own failure to exercise due and
reasonable care was the cause thereof. It is both a societal norm
and necessity that one should exercise a reasonable degree of
caution for his own protection. Furthermore, respondent Antonio
Esteban had the last clear chance or opportunity to avoid the
accident, notwithstanding the negligence he imputes to petitioner
PLDT. As a resident of Lacson Street, he passed on that street
almost everyday and had knowledge of the presence and location of
the excavations there. It was his negligence that exposed him and
his wife to danger, hence he is solely responsible for the
consequences of his imprudence.
Moreover, we also sustain the findings of respondent Court of
Appeals in its original decision that there was insufficient evidence
to prove any negligence on the part of PLDT. We have for
consideration only the self-serving testimony of respondent Antonio
Esteban and the unverified photograph of merely a portion of the
scene of the accident. The absence of a police report of the incident
and the non-submission of a medical report from the hospital
where private respondents were allegedly treated have not even
been satisfactorily explained.
As aptly observed by respondent court in its aforecited extended
resolution of January 24, 1980
(a) There was no third party eyewitness of the
accident. As to how the accident occurred, the Court
can only rely on the testimonial evidence of plaintiffs
themselves, and such evidence should be very
carefully evaluated, with defendant, as the party
being charged, being given the benefit of any doubt.
Definitely without ascribing the same motivation to
plaintiffs, another person could have deliberately
engineered a similar accident in the hope and
expectation that the Court can grant him
substantial moral and exemplary damages from the
big corporation that defendant is. The statement is
made only to stress the disadvantageous position of
defendant which would have extreme difficulty in
contesting such person's claim. If there were no
witness or record available from the police
department of Bacolod, defendant would not be able
to determine for itself which of the conflicting
testimonies of plaintiffs is correct as to the report or
non-report of the accident to the police department.
32
A person claiming damages for the negligence of another has
the burden of proving the existence of such fault or negligence
causative thereof. The facts constitutive of negligence must be
Page 7 of 205
affirmatively established by competent evidence. 33 Whosoever
relies on negligence for his cause of action has the burden in
the first instance of proving the existence of the same if
contested, otherwise his action must fail.
WHEREFORE, the resolutions of respondent Court of Appeals,
dated March 11, 1980 and September 3,1980, are hereby SET
ASIDE. Its original decision, promulgated on September 25,1979,
is hereby REINSTATED and AFFIRMED.
SO ORDERED.

Page 8 of 205
EN BANC
[G.R. No. L-8328. May 18, 1956.]
MANILA ELECTRIC COMPANY, Petitioner, vs. SOTERO
REMOQUILLO, in his own behalf and as guardian of the minors
MANUEL, BENJAMIN, NESTOR, MILAGROS, CORAZON,
CLEMENTE and AURORA, all surnamed MAGNO, SALUD
MAGNO, and the COURT OF APPEALS (Second Division),
Respondents.
DECISION
MONTEMAYOR, J.:
On August 22, 1950, Efren Magno went to the 3-story house of
Antonio Pealoza, his stepbrother, located on Rodriguez
Lanuza Street, Manila, to repair a media agua said to be in a
leaking condition. The media agua was just below the
window of the third story. Standing on said media agua,
Magno received from his son thru that window a 3 X 6
galvanized iron sheet to cover the leaking portion, turned
around and in doing so the lower end of the iron sheet came
into contact with the electric wire of the Manila Electric
Company (later referred to as the Company) strung parallel to
the edge of the media agua and 2 1/2 feet from it, causing
his death by electrocution. His widow and children fled suit to
recover damages from the company. After hearing, the trial court
rendered judgment in their favor P10,000 as compensatory
damages; chan roblesvirtualawlibraryP784 as actual damages;
chan roblesvirtualawlibraryP2,000 as moral and exemplary
damages; chan roblesvirtualawlibraryand P3,000 as attorneys fees,
with costs. On appeal to the Court of Appeals, the latter affirmed
the judgment with slight modification by reducing the attorneys
fees from P3,000 to P1,000 with costs. The electric company has
appealed said decision to us.
The findings of fact made by the Court of Appeals which are
conclusive are stated in the following portions of its decision which
we reproduce below:chanroblesvirtuallawlibrary
The electric wire in question was an exposed, uninsulated primary
wire stretched between poles on the street and carrying a charge of
3,600 volts. It was installed there some two years before Pealozas
house was constructed. The record shows that during the
construction of said house a similar incident took place, although
fortunate]y with much less tragic consequences. A piece of wood
which a carpenter was holding happened to come in contact with
the same wire, producing some sparks. The owner of the house
forthwith complained to Defendant about the danger which the
wire presented, and as a result Defendant moved one end of the
wire farther from the house by means of a brace, but left the other
end where it was.
At any rate, as revealed by the ocular inspection of the premises
ordered by the trial court, the distance from the electric wire to the
edge of the media agua on which the deceased was making repairs
was only 30 inches or 2 1/2 feet. Regulations of the City of Manila
required that all wires be kept three feet from the building.
Appellant contends that in applying said regulations to the case at
bar the reckoning should not be from the edge of the media agua
but from the side of the house and that, thus measured, the
distance was almost 7 feet, or more then the minimum prescribed.
This contention is manifestly groundless, for not only is a media
agua an integral part of the building to which it is attached but to
exclude it in measuring the distance would defeat the purpose of
the regulation. Appellant points out, nevertheless, that even
Page 9 of 205
assuming that the distance, within the meaning of the city
regulations, should be measured from the edge of the media agua,
the fact that in the case of the house involved herein such distance
was actually less than 3 feet was due to the fault of the owner of
said house, because the city authorities gave him a permit to
construct a media agua only one meter or 39 1/2 inches wide, but
instead he built one having a width of 65 3/4 inches, 17 3/8
inches more than the width permitted by the authorities, thereby
reducing the distance to the electric wire to less than the
prescribed minimum of 3 feet.
It is a fact that the owner of the house exceeded the limit fixed in
the permit given to him by the city authorities for the construction
of the media agua, and that if he had not done so Appellants wire
would have been 11 3/8 (inches) more than the required distance
of three feet from the edge of the media agua. It is also a fact,
however, that after the media agua was constructed the owner
was given a final permit of occupancy of the house cralaw .
cralaw The wire was an exposed, high tension wire carrying a
load of 3,600 volts. There was, according to Appellant, no
insulation that could have rendered it safe, first, because there is
no insulation material in commercial use for such kind of wire;
chan roblesvirtualawlibraryand secondly, because the only
insulation material that may be effective is still in the experimental
stage of development and, anyway, its costs would be prohibitive
The theory followed by the appellate court in finding for the Plaintiff
is that although the owner of the house in constructing the media
agua in question exceeded the limits fixed in the permit, still, after
making that media agua, its construction though illegal, was
finally approved because he was given a final permit to occupy the
house; chan roblesvirtualawlibrarythat it was the company that
was at fault and was guilty of negligence because although the
electric wire in question had been installed long before the
construction of the house and in accordance with the ordinance
fixing a minimum of 3 feet, mere compliance with the regulations
does not satisfy the requirement of due diligence nor avoid the
need for adopting such other precautionary measures as may be
warranted; chan roblesvirtualawlibrarythat negligence cannot be
determined by a simple matter of inches; chan
roblesvirtualawlibrarythat all that the city did was to prescribe
certain minimum conditions and that just because the ordinance
required that primary electric wires should be not less than 3 feet
from any house, the obligation of due diligence is not fulfilled by
placing such wires at a distance of 3 feet and one inch, regardless
of other factors. The appellate court, however, refrained from
stating or suggesting what other precautionary measures could
and should have been adopted.
After a careful study and discussion of the case and the
circumstances surrounding the same, we are inclined to agree to
the contention of Petitioner Company that the death of Magno was
primarily caused by his own negligence and in some measure by
the too close proximity of the media agua or rather its edge to the
electric wire of the company by reason of the violation of the
original permit given by the city and the subsequent approval of
said illegal construction of the media agua. We fail to see how the
Company could be held guilty of negligence or as lacking in due
diligence. Although the city ordinance called for a distance of 3 feet
of its wires from any building, there was actually a distance of 7
feet and 2 3/4 inches of the wires from the side of the house of
Pealoza. Even considering said regulation distance of 3 feet as
Page 10 of 205
referring not to the side of a building, but to any projecting part
thereof, such as a media agua, had the house owner followed the
terms of the permit given him by the city for the construction of his
media agua, namely, one meter or 39 3/8 inches wide, the
distance from the wires to the edge of said media agua would
have been 3 feet and 11 3/8 inches. In fixing said one meter width
for the media agua the city authorities must have wanted to
preserve the distance of at least 3 feet between the wires and any
portion of a building. Unfortunately, however, the house owner
disregarding the permit, exceeded the one meter fixed by the same
by 17 3/8 inches and leaving only a distance of 2 1/2 feet between
the Media agua as illegally constructed and the electric wires.
And added to this violation of the permit by the house owner, was
its approval by the city through its agent, possibly an inspector.
Surely we cannot lay these serious violations of a city ordinance
and permit at the door of the Company, guiltless of breach of any
ordinance or regulation. The Company cannot be expected to be
always on the lookout for any illegal construction which reduces
the distance between its wires and said construction, and after
finding that said distance of 3 feet had been reduced, to change the
stringing or installation of its wires so as to preserve said distance.
It would be much easier for the City, or rather it is its duty, to be
ever on the alert and to see to it that its ordinances are strictly
followed by house owners and to condemn or disapprove all illegal
constructions. Of course, in the present case, the violation of the
permit for the construction of the media agua was not the direct
cause of the accident. It merely contributed to it. Had said media
agua been only one meter wide as allowed by the permit, Magno
standing on it, would instinctively have stayed closer to or hugged
the side of the house in order to keep a safe margin between the
edge of the media agua and the yawning 2-story distance or
height from the ground, and possibly if not probably avoided the
fatal contact between the lower end of the iron sheet and the wires.
We realize that the presence of the wires in question quite close to
the house or its media agua was always a source of danger
considering their high voltage and uninsulated as they were, but
the claim of the company and the reasons given by it for not
insulating said wires were unrefuted as we gather from the findings
of the Court of Appeals, and so we have to accept them as
satisfactory. Consequently, we may not hold said company as
guilty of negligence or wanting in due diligence in failing to insulate
said wires. As to their proximity to the house it is to be supposed
that distance of 3 feet was considered sufficiently safe by the
technical men of the city such as its electrician or engineer. Of
course, a greater distance of say 6 feet or 12 feet would have
increased the margin of safety but other factors had to be
considered such as that the wires could not be strung or the posts
supporting them could not be located too far toward the middle of
the street. Thus, the real cause of the accident or death was the
reckless or negligent act of Magno himself. When he was called by
his stepbrother to repair the media agua just below the third
story window, it is to be presumed that due to his age and
experience he was qualified to do so. Perhaps he was a tinsmith or
carpenter and had training and experience for the job. So, he could
not have been entirely a stranger to electric wires and the danger
lurking in them. But unfortunately, in the instant care, his training
and experience failed him, and forgetting where he was standing,
holding the 6-feet iron sheet with both hands and at arms length,
evidently without looking, and throwing all prudence and
Page 11 of 205
discretion to the winds, he turned around swinging his arms with
the motion of his body, thereby causing his own electrocution.
In support of its theory and holding that Defendant-Appellant was
liable for damages the Court of Appeals cites the case of Astudillo
vs. Manila Electric Co., 55 Phil., 427. We do not think the case is
exactly applicable. There, the premises involved was that elevated
portion or top of the walls of Intramuros, Manila, just above the
Sta. Lucia Gate. In the words of the Court, it was a public place
where persons come to stroll, to rest and to enjoy themselves. The
electric company was clearly negligent in placing its wires so near
the place that without much difficulty or exertion, a person by
stretching his hand out could touch them. A boy named Astudillo,
placing one foot on a projection, reached out and actually grasped
the electric wire and was electrocuted. The person electrocuted in
said case was a boy who was in no position to realize the danger.
In the present case, however, the wires were well high over the
street where there was no possible danger to pedestrians. The only
possible danger was to persons standing on the media agua, but
a media agua can hardly be considered a public place where
persons usually gather. Moreover, a person standing on the media
agua could not have reached the wires with his hands alone. It
was necessary as was done by Magno to hold something long
enough to reach the wire. Furthermore, Magno was not a boy or a
person immature but the father of a family, supposedly a tinsmith
trained and experienced in the repair of galvanized iron roofs and
media agua. Moreover, in that very case of Astudillo vs. Manila
Electric Co., supra, the court said that although it is a well-
established rule that the liability of electric companies for damages
or personal injuries is governed by the rules of negligence,
nevertheless such companies are not insurers of the safety of the
public.
But even assuming for a moment that under the facts of the
present case the Defendant electric company could be considered
negligent in installing its electric wires so close to the house and
media agua in question, and in failing to properly insulate those
wires (although according to the unrefuted claim of said company
it was impossible to make the insulation of that kind of wire),
nevertheless to hold the Defendant liable in damages for the death
of Magno, such supposed negligence of the company must have
been the proximate and principal cause of the accident,
because if the act of Magno in turning around and swinging the
galvanized iron sheet with his hands was the proximate and
principal cause of the electrocution, then his heirs may not
recover. Such was the holding of this Court in the case of Taylor
vs. Manila Electric Railroad and Light Company, 16 Phil., 8. In that
case, the electric company was found negligent in leaving scattered
on its premises fulminating caps which Taylor, a 15- year old boy
found and carried home. In the course of experimenting with said
fulminating caps, he opened one of them, held it out with his
hands while another boy applied a lighted match to it, causing it to
explode and injure one of his eyes eventually causing blindness in
said eye. Said this Tribunal in denying recovery for the
injury:chanroblesvirtuallawlibrary
cralaw, so that while it may be true that these injuries would
not have been incurred but for the negligent act of the
Defendant in leaving the caps exposed on its premises,
nevertheless Plaintiffs own act was the proximate and
principal cause of the accident which inflicted the injury.
Page 12 of 205
To us it is clear that the principal and proximate cause of the thoroughfares may greatly minimize danger to pedestrians because
electrocution was not the electric wire, evidently a remote cause, drivers of motor vehicles may expect danger and slow down or even
but rather the reckless and negligent act of Magno in turning stop and take other necessary precaution upon approaching said
around and swinging the galvanized iron sheet without taking any lanes, so, a similar way may possibly be found. Since these high
precaution, such as looking back toward the street and at the wire voltage wires cannot be properly insulated and at reasonable cost,
to avoid its contacting said iron sheet, considering the latters they might perhaps be strung only up to the outskirts of the city
length of 6 feet. For a better understanding of the rule on where there are few houses and few pedestrians and there step-
remote and proximate cause with respect to injuries, we find down to a voltage where the wires carrying the same to the city
the following citation helpful:chanroblesvirtuallawlibrary could be properly insulated for the better protection of the public.
A prior and remote cause cannot be made the basis of an In view of all the foregoing, the appealed decision of the Court of
action if such remote cause did nothing more than furnish the Appeals is hereby reversed and the complaint filed against the
condition or give rise to the occasion by which the injury was Company is hereby dismissed. No costs.
made possible, if there intervened between such prior or
remote cause and the injury a distinct, successive, unrelated,
and efficient cause of the injury, even though such injury
would not have happened but for such condition or occasion. If
no danger existed in the condition except because of the
independent cause, such condition was not the proximate
cause. And if an independent negligent act or defective
condition sets into operation the circumstances which result
in injury because of the prior defective condition, such
subsequent act or condition is the proximate cause. (45 C.J.
pp. 931-332.).
We realize that the stringing of wires of such high voltage (3,600
volts), uninsulated and so close to houses is a constant source of
danger, even death, especially to persons who having occasion to
be near said wires, do not adopt the necessary precautions. But
may be, the City of Manila authorities and the electric company
could get together and devise means of minimizing this danger to
the public. Just as the establishment of pedestrian lanes in city

Page 13 of 205
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 83491 August 27, 1990
MA-AO SUGAR CENTRAL CO., INC. and GUILLERMO ARANETA,
petitioners,
vs.
HON. COURT OF APPEALS and HERMINIA FAMOSO,
respondents.
Jalandoni, Herrera, Del Castillo & Associates for petitioners.
Napoleon Corral for private respondent.
CRUZ, J.:
To say the least, the Court views with regret the adamant refusal of
petitioner Ma-ao Sugar Central to recompense the private
respondent for the death of Julio Famoso, their main source of
support, who was killed in line of duty while in its employ. It is not
only a matter of law but also of compassion on which we are called
upon to rule today. We shall state at the outset that on both
counts the petition must fail.
On March 22, 1980, Famoso was riding with a co-employee in the
caboose or "carbonera" of Plymouth No. 12, a cargo train of the
petitioner, when the locomotive was suddenly derailed. He and his
companion jumped off to escape injury, but the train fell on its
side, caught his legs by its wheels and pinned him down. He was
declared dead on the spot. 1
The claims for death and other benefits having been denied by the
petitioner, the herein private respondent filed suit in the Regional
Trial Court of Bago City. Judge Marietta Hobilla-Alinio ruled in her
favor but deducted from the total damages awarded 25% thereof
for the decedent's contributory negligence and the total pension of
P41,367.60 private respondent and her children would be receiving
from the SSS for the next five years. The dispositive portion of the
decision read:
WHEREFORE, in view of the foregoing facts and
circumstances present in this case, the Court order,
as it does hereby order the defendant Ma-ao Sugar
Central thru its Manager Mr. Guillermo Y. Araneta
to pay plaintiff the following amount:
P30,000.00 for the death of plaintiff's husband,
the late
Julio Famoso
P30,000.00 for actual, exemplary and moral
damages
P10,000.00 loss of earnings for twenty (20) years
P3,000.00 funeral expenses
P73,000.00 Total Damages
Less: P18,250.00 25% for the deceased's
contributory
negligence
Less: P41,367.60 pension plaintiff and her minor
children would
be receiving for five (5) years from the SSS
Pl3,382.40
Plus: P3,000.00 Attorney's fees and cost of this
suit
Page 14 of 205
 Pl6,382.40 Total amount payable to the plaintiff.
to keep the rails aligned. Although they could be removed only with
SO ORDERED.
The widow appealed, claiming that the deductions were illegal. So
did the petitioner, but on the ground that it was not negligent and
therefore not liable at all.
In its own decision, the Court of Appeals 2 sustained the rulings of
the trial court except as to the contributory negligence of the
deceased and disallowed the deductions protested by the private
respondent. Thus, the respondent court declared:
WHEREFORE, the decision appealed from is
MODIFIED by ordering the defendant-appellant to
pay the plaintiff-appellee the following amounts:
P30,000.00, for the death of Julio Famoso
P30,000.00, for actual, exemplary and moral
damages
P10,000.00, for loss of earnings for twenty (20) years
P3,000.00, for funeral expenses
P3,000.00, for attorney's fees
important is that the petitioner should act on these reports and not
P76,000.00 Total Amount
========
In this petition, the respondent court is faulted for finding the
petitioner guilty of negligence notwithstanding its defense of due
diligence under Article 2176 of the Civil Code and for disallowing
the deductions made by the trial court.
Investigation of the accident revealed that the derailment of the
locomotive was caused by protruding rails which had come loose
because they were not connected and fixed in place by fish plates.
Fish plates are described as strips of iron 8" to 12" long and 3 1/2"
thick which are attached to the rails by 4 bolts, two on each side,
special equipment, the fish plates that should have kept the rails
aligned could not be found at the scene of the accident.
There is no question that the maintenance of the rails, for the
purpose inter alia of preventing derailments, was the responsibility
of the petitioner, and that this responsibility was not discharged.
According to Jose Treyes, its own witness, who was in charge of the
control and supervision of its train operations, cases of derailment
in the milling district were frequent and there were even times
when such derailments were reported every hour. 3 The petitioner
should therefore have taken more prudent steps to prevent such
accidents instead of waiting until a life was finally lost because of
its negligence.
The argument that no one had been hurt before because of such
derailments is of course not acceptable. And neither are we
impressed by the claim that the brakemen and the conductors
were required to report any defect in the condition of the railways
and to fill out prescribed forms for the purpose. For what is
merely receive and file them. The fact that it is not easy to detect if
the fish plates are missing is no excuse either. Indeed, it should
stress all the more the need for the responsible employees of the
petitioner to make periodic checks and actually go down to the
railroad tracks and see if the fish plates were in place.
It is argued that the locomotive that was derailed was on its way
back and that it had passed the same rails earlier without
accident. The suggestion is that the rails were properly aligned
then, but that does not necessarily mean they were still aligned
afterwards. It is possible that the fish plates were loosened and
Page 15 of 205
detached during its first trip and the rails were as a result already
mis-aligned during the return trip. But the Court feels that even
this was unlikely, for, as earlier noted, the fish plates were
supposed to have been bolted to the rails and could be removed
only with special tools. The fact that the fish plates were not found
later at the scene of the mishap may show they were never there at
all to begin with or had been removed long before.
At any rate, the absence of the fish plates whatever the cause or
reason is by itself alone proof of the negligence of the petitioner.
Res ipsa loquitur. The doctrine was described recently in Layugan
v. Intermediate Appellate Court, 4 thus:
Where the thing which causes injury is shown to
be under the management of the defendant, and
the accident is such as in the ordinary course of
things does not happen if those who have the
management use proper care, it affords
reasonable evidence, in the absence of an
explanation by the defendant, that the accident
arose from want of care.
The petitioner also disclaims liability on the ground of Article 2176
of the Civil Code, contending it has exercised due diligence in the
selection and supervision of its employees. The Court cannot agree.
The record shows it was in fact lax in requiring them to exercise
the necessary vigilance in maintaining the rails in good condition
to prevent the derailments that sometimes happened "every hour."
Obviously, merely ordering the brakemen and conductors to fill out
prescribed forms reporting derailments-which reports have not
been acted upon as shown by the hourly derailments is-not the
kind of supervision envisioned by the Civil Code.
We also do not see how the decedent can be held guilty of
contributory negligence from the mere fact that he was not at his
assigned station when the train was derailed. That might have
been a violation of company rules but could not have directly
contributed to his injury, as the petitioner suggests. It is pure
speculation to suppose that he would not have been injured if he
had stayed in the front car rather than at the back and that he had
been killed because he chose to ride in the caboose.
Contributory negligence has been defined as "the act or
omission amounting to want of ordinary care on the part of
the person injured which, concurring with the defendant's
negligence, is the proximate cause of the
injury." 5 It has been held that "to hold a person as having
contributed to his injuries, it must be shown that he
performed an act that brought about his injuries in disregard
of warnings or signs of an impending danger to health and
body." 6 There is no showing that the caboose where Famoso
was riding was a dangerous place and that he recklessly dared
to stay there despite warnings or signs of impending danger.
The last point raised by the petitioner is easily resolved. Citing the
case of Floresca v. Philex Mining Corporation, 7 it argues that the
respondent court erred in disauthorizing the deduction from the
total damages awarded the private respondent of the amount of
P41,367.60, representing the pension to be received by the private
respondent from the Social Security System for a period of five
years. The argument is that such deduction was quite proper
because of Art. 173 of the Labor Code, as amended. This article
provides that any amount received by the heirs of a deceased
employee from the Employees Compensation Commission, whose
funds are administered by the SSS, shall be exclusive of all other
Page 16 of 205
amounts that may otherwise be claimed under the Civil Code and
other pertinent laws. S
The amount to be paid by the SSS represents the usual pension .
received by the heirs of a deceased employee who was a member of
the SSS at the time of his death and had regularly contributed his S
premiums as required by the System. The pension is the benefit I
derivable from such contributions. It does not represent the death S
benefits payable under the Workmen's Compensation Act to an O
employee who dies as a result of a work-connected injury. Indeed, N
the certification from the SSS 8 submitted by the petitioner is R
simply to the effect that: e
TO WHOM IT MAY CONCERN: g
This is to certify that Mrs. Herminia Vda. de Famoso i
is a recipient of a monthly pension from the Social o
Security System arising from the death of her late n
husband, Julio Famoso, an SSS member with SSS a
No. 07-018173-1. l
This certification is issued to Ma-ao Sugar Central
for whatever legal purpose it may serve best. M
Issued this 8th day of April 1983 in Bacolod City, a
Philippines. n
G a
O g
D e
O r
F B
R y
E :
D
O (

Page 17 of 205
 S f
G ,
D
. B
) e
n
C e
O f
S i
M t
E s

Q B
. r
a
B n
E c
R h
It doesMnot indicate that the pension is to be taken from the funds
of theEECC. The certification would have said so if the pension
represented
O the death benefits accruing to the heirs under the
Workmen's
, Compensation Act.
This conclusion is supported by the express provision of Art. 173
as amended,
J which categorically states that:
R Art. 173. Exclusiveness of liability. Unless
. otherwise provided, the liability of the State
C Insurance Fund under this Title shall be exclusive
h and in place of all other liabilities of the employer to
i the employee, his dependents or anyone otherwise
e entitled to receive damages on behalf of the

Page 18 of 205
 employee or his dependents. The payment of
compensation under this Title shall not bar the
recovery of benefits as provided for in Section 699 of
the Revised Administrative Code, Republic Act
Numbered Eleven hundred sixty-one, as amended,
Commonwealth Act Numbered One hundred eighty-
six, as amended, Republic Act Numbered Six
hundred ten, as amended, Republic Act Numbered
Forty-eight hundred sixty-four, as amended and
other laws whose benefits are administered by the
System or by other agencies of the government.
(Emphasis supplied).
Rep. Act No. 1161, as amended, is the Social Security Law.
As observed by Justice J.B.L. Reyes in the case of Valencia v.
Manila Yacht Club, 9 which is still controlling:
. . . By their nature and purpose, the sickness or
disability benefits to which a member of the System
may be entitled under the Social Security law (Rep.
Act No. 1161, as amended by Rep. Acts Nos. 1792
and 2658) are not the same as the compensation
that may be claimed against the employer under the
Workmen's Compensation Act or the Civil Code, so
that payment to the member employee of social
security benefits would not wipe out or extinguish
the employer's liability for the injury or illness
contracted by his employee in the course of or
during the employment. It must be realized that,
under the Workmen's Compensation Act (or the Civil
Code, in a proper case), the employer is required to
compensate the employee for the sickness or injury
arising in the course of the employment because the
industry is supposed to be responsible therefore;
whereas, under the Social Security Act, payment is
being made because the hazard specifically covered
by the membership, and for which the employee had
put up his own money, had taken place. As this
Court had said:
. . . To deny payment of social
security benefits because the death or
injury or confinement is compensable
under the Workmen's Compensation
Act would be to deprive the employees
members of the System of the
statutory benefits bought and paid for
by them, since they contributed their
money to the general common fund
out of which benefits are paid. In
other words, the benefits provided for
in the Workmen's Compensation Act
accrues to the employees concerned
due to the hazards involved in their
employment and is made a burden on
the employment itself However, social
security benefits are paid to the
System's members, by reason of their
membership therein for which they
contribute their money to a general
common fund . . . .
It may be added that whereas social
security benefits are intended to
Page 19 of 205
 provide insurance or protection
against the hazards or risks for which
they are established, e.g., disability,
sickness, old age or death,
irrespective of whether they arose
from or in the course of the
employment or not, the compensation
receivable under the Workmen's
Compensation law is in the nature of
indemnity for the injury or damage
suffered by the employee or his
dependents on account of the
employment. (Rural Transit
Employees Asso. vs. Bachrach Trans.
Co., 21 SCRA 1263 [19671])
And according to Justice Jesus G. Barrera in Benguet
Consolidated, Inc. v. Social Security System:" 10
The philosophy underlying the Workmen's
Compensation Act is to make the payment of the
benefits provided for therein as a responsibility of
the industry, on the ground that it is industry which
should bear the resulting death or injury to
employees engaged in the said industry. On the
other hand, social security sickness benefits are not
paid as a burden on the industry, but are paid to
the members of the System as a matter of right,
whenever the hazards provided for in the law occurs.
To deny payment of social security benefits because
the death or injury or confinement is compensable
under the Workmen's Compensation Act would be to
deprive the employees-members of the System of the
statutory benefits bought and paid for by them,
since they contribute their money to the general
common fund out of which benefits are paid. In
other words, the benefits provided for in the
Workmen's Compensation Act accrues to the
employees concerned, due to the hazards involved in
their employment and is made a burden on the
employment itself However, social security benefits
are paid to the System's members, by reason of their
membership therein for which they contributed their
money to a general common fund.
Famoso's widow and nine minor children have since his death
sought to recover the just recompense they need for their support.
Instead of lending a sympathetic hand, the petitioner has sought to
frustrate their efforts and has even come to this Court to seek our
assistance in defeating their claim. That relief-and we are happy to
say this must be withheld.
WHEREFORE, the appealed decision is AFFIRMED in toto. The
petition is DENIED, with costs against the petitioner.
SO ORDERED.
Page 20 of 205
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 130003 October 20, 2004
JONAS AONUEVO, Petitioner.
vs.
HON. COURT OF APPEALS and JEROME VILLAGRACIA,
Respondent.
DECISION
TINGA, J.:
The bicycle provides considerable speed and freedom of movement
to the rider. It derives a certain charm from being unencumbered
by any enclosure, affording the cyclist the perception of relative
liberty. It also carries some obvious risks on the part of the user
and has become the subject of regulation, if not by the government,
then by parental proscription.
The present petition seeks to bar recovery by an injured cyclist of
damages from the driver of the car which had struck him. The
argument is hinged on the cyclists failure to install safety devices
on his bicycle. However, the lower courts agreed that the motorist
himself caused the collision with his own negligence. The facts are
deceptively simple, but the resolution entails thorough
consideration of fundamental precepts on negligence.
The present petition raises little issue with the factual findings of
the Regional Trial Court (RTC), Branch 160, of Pasig City, as
affirmed by the Court of Appeals. Both courts adjudged petitioner,
Jonas Aonuevo ( Aonuevo ), liable for the damages for the
injuries sustained by the cyclist, Jerome Villagracia (Villagracia).
Instead, the petition hinges on a sole legal question, characterized
as "novel" by the petitioner: whether Article 2185 of the New
Civil Code, which presumes the driver of a motor vehicle
negligent if he was violating a traffic regulation at the time of
the mishap, should apply by analogy to non-motorized
vehicles.1
As found by the RTC, and affirmed by the Court of Appeals, the
accident in question occurred on 8 February 1989, at around nine
in the evening, at the intersection of Boni Avenue and Barangka
Drive in Mandaluyong (now a city). Villagracia was traveling along
Boni Avenue on his bicycle, while Aonuevo, traversing the
opposite lane was driving his Lancer car with plate number PJJ
359. The car was owned by Procter and Gamble Inc., the employer
of Aonuevos brother, Jonathan. Aonuevo was in the course of
making a left turn towards Libertad Street when the collision
occurred. Villagracia sustained serious injuries as a result, which
necessitated his hospitalization several times in 1989, and forced
him to undergo four (4) operations.
On 26 October 1989, Villagracia instituted an action for damages
against Procter and Gamble Phils., Inc. and Aonuevo before the
RTC.2 He had also filed a criminal complaint against Aonuevo
before the Metropolitan Trial Court of Mandaluyong, but the latter
was subsequently acquitted of the criminal charge. 3 Trial on the
civil action ensued, and in a Decision dated 9 March 1990, the RTC
rendered judgment against Procter and Gamble and Aonuevo,
ordering them to pay Villagracia the amounts of One Hundred Fifty
Thousand Pesos (P150, 000.00). for actual damages, Ten Thousand
Pesos (P10,000.00) for moral damages, and Twenty Thousand
Pesos (P20,000.00) for attorneys fees, as well as legal costs. 4 Both
defendants appealed to the Court of Appeals.
Page 21 of 205
In a Decision5 dated 8 May 1997, the Court of Appeals Fourth
Division affirmed the RTC Decision in toto6. After the Court of
Appeals denied the Motion for Reconsideration in a Resolution7
dated 22 July 1997, Procter and Gamble and Aonuevo filed their
respective petitions for review with this Court. Procter and
Gambles petition was denied by this Court in a Resolution dated
24 November 1997. Aonuevos petition, 8 on the other hand, was
given due course,9 and is the subject of this Decision.
In arriving at the assailed Decision, the Court of Appeals affirmed
the factual findings of the RTC. Among them: that it was
Aonuevos vehicle which had struck Villagracia;10 that Aonuevos a 1948 municipal ordinance.18 Nor was it duly registered with the
vehicle had actually hit Villagracias left mid-thigh, thus causing a
comminuted fracture;11 that as testified by eyewitness Alfredo
Sorsano, witness for Villagracia, Aonuevo was "umaarangkada,"
or speeding as he made the left turn into Libertad; 12 that
considering Aonuevos claim that a passenger jeepney was
obstructing his path as he made the turn. Aonuevo had enough
warning to control his speed;13 and that Aonuevo failed to
exercise the ordinary precaution, care and diligence required of
him in order that the accident could have been avoided. 14 Notably,
Aonuevo, in his current petition, does not dispute the findings of
tortious conduct on his part made by the lower courts, hinging his
appeal instead on the alleged negligence of Villagracia. Aonuevo
proffers no exculpatory version of facts on his part, nor does he
dispute the conclusions made by the RTC and the Court of
Appeals. Accordingly, the Court, which is not a trier of facts, 15 is
not compelled to review the factual findings of the lower courts,
which following jurisprudence have to be received with respect and
are in fact generally binding.16
Notwithstanding, the present petition presents interesting
questions for resolution. Aonuevos arguments are especially
fixated on a particular question of law: whether Article 2185 of the
New Civil Code should apply by analogy to non-motorized
vehicles.17 In the same vein, Aonuevo insists that Villagracias
own fault and negligence serves to absolve the former of any
liability for damages.
Its is easy to discern why Aonuevo chooses to employ this line of
argument. Aonuevo points out that Villagracias bicycle had no
safety gadgets such as a horn or bell, or headlights, as invoked by
Office of the Municipal Treasurer, as required by the same
ordinance. Finally, as admitted by Villagracia, his bicycle did not
have foot brakes.19 Before this Court, Villagracia does not dispute
these allegations, which he admitted during the trial, but directs
our attention instead to the findings of Aonuevos own
negligence.20 Villagracia also contends that, assuming there was
contributory negligence on his part, such would not exonerate
Aonuevo from payment of damages. The Court of Appeals likewise
acknowledged the lack of safety gadgets on Villagracias bicycle,
but characterized the contention as "off-tangent" and insufficient to
obviate the fact that it was Aonuevos own negligence that caused
the accident.21
Aonuevo claims that Villagracia violated traffic regulations when
he failed to register his bicycle or install safety gadgets thereon. He
posits that Article 2185 of the New Civil Code applies by analogy.
The provision reads:
Article 2185. Unless there is proof to the contrary, it is
presumed that a person driving a motor vehicle has been
Page 22 of 205
negligent if at the time of the mishap he was violating any
traffic regulation.
The provision was introduced for the first time in this jurisdiction
with the adoption in 1950 of the New Civil Code.22 Its applicability
is expressly qualified to motor vehicles only, and there is no ground
to presume that the law intended a broader coverage.
Still, Aonuevo hypothesizes that Article 2185 should apply by
analogy to all types of vehicles23. He points out that modern-day
travel is more complex now than when the Code was enacted, the
number and types of vehicles now in use far more numerous than
as of then. He even suggests that at the time of the enactment of
the Code, the legislators "must have seen that only motor vehicles
were of such public concern that they had to be specifically
mentioned," yet today, the interaction of vehicles of all types and
nature has "inescapably become matter of public concern" so as to
expand the application of the law to be more responsive to the
times.24
What Aonuevo seeks is for the Court to amend the explicit
command of the legislature, as embodied in Article 2185, a task
beyond the pale of judicial power. The Court interprets, and not
creates, the law. However, since the Court is being asked to
consider the matter, it might as well examine whether Article 2185
could be interpreted to include non-motorized vehicles.
At the time Article 2185 was formulated, there existed a whole
array of non-motorized vehicles ranging from human-powered
contraptions on wheels such as bicycles, scooters, and animal-
drawn carts such as calesas and carromata. These modes of
transport were even more prevalent on the roads of the 1940s and
1950s than they are today, yet the framers of the New Civil Code
chose then to exclude these alternative modes from the scope of
Article 2185 with the use of the term "motorized vehicles." If
Aonuevo seriously contends that the application of Article 2185
be expanded due to the greater interaction today of all types of
vehicles, such argument contradicts historical experience. The
ratio of motorized vehicles as to non-motorized vehicles, as it stood
in 1950, was significantly lower than as it stands today. This will
be certainly affirmed by statistical data, assuming such has been
compiled, much less confirmed by persons over sixty. Aonuevos
characterization of a vibrant intra-road dynamic between motorized
and non-motorized vehicles is more apropos to the past than to the
present.
There is a fundamental flaw in Aonuevos analysis of Art. 2185, as
applicable today. He premises that the need for the distinction
between motorized and non-motorized vehicles arises from the
relative mass of number of these vehicles. The more pertinent basis
for the segregate classification is the difference in type of these
vehicles. A motorized vehicle operates by reason of a motor engine
unlike a non-motorized vehicle, which runs as a result of a direct
exertion by man or beast of burden of direct physical force. A
motorized vehicle, unimpeded by the limitations in physical
exertion. is capable of greater speeds and acceleration than non-
motorized vehicles. At the same time, motorized vehicles are more
capable in inflicting greater injury or damage in the event of an
accident or collision. This is due to a combination of factors
peculiar to the motor vehicle, such as the greater speed, its relative
greater bulk of mass, and greater combustability due to the fuels
that they use.
There long has been judicial recognition of the peculiar dangers
posed by the motor vehicle. As far back as 1912, in the U.S. v.
Juanillo25, the Court has recognized that an automobile is capable
Page 23 of 205
of great speed, greater than that of ordinary vehicles hauled by
animals, "and beyond doubt it is highly dangerous when used on
country roads, putting to great hazard the safety and lives of the
mass of the people who travel on such roads."26 In the same case,
the Court emphasized:
A driver of an automobile, under such circumstances, is required
to use a greater degree of care than drivers of animals, for the
reason that the machine is capable of greater destruction, and
furthermore, it is absolutely under the power and control of the
driver; whereas, a horse or other animal can and does to some
extent aid in averting an accident. It is not pleasant to be obliged to
slow down automobiles to accommodate persons riding, driving, or
walking. It is probably more agreeable to send the machine along
and let the horse or person get out of the way in the best manner
possible; but it is well to understand, if this course is adopted and
an accident occurs, that the automobile driver will be called upon
to account for his acts. An automobile driver must at all times use
all the care and caution which a careful and prudent driver would
have exercised under the circumstances. 27
American jurisprudence has had occasion to explicitly rule on the
relationship between the motorist and the cyclist. Motorists are
required to exercise ordinary or reasonable care to avoid collision
with bicyclists.28 While the duty of using ordinary care falls alike
on the motorist and the rider or driver of a bicycle, it is obvious, for
reasons growing out of the inherent differences in the two vehicles,
that more is required from the former to fully discharge the duty
than from the latter.29
The Code Commission was cognizant of the difference in the
natures and attached responsibilities of motorized and non-
motorized vehicles. Art. 2185 was not formulated to compel or
ensure obeisance by all to traffic rules and regulations. If such
were indeed the evil sought to be remedied or guarded against,
then the framers of the Code would have expanded the provision to
include non-motorized vehicles or for that matter, pedestrians. Yet,
that was not the case; thus the need arises to ascertain the
peculiarities attaching to a motorized vehicle within the dynamics
of road travel. The fact that there has long existed a higher degree
of diligence and care imposed on motorized vehicles, arising from
the special nature of motor vehicle, leads to the inescapable
conclusion that the qualification under Article 2185 exists precisely
to recognize such higher standard. Simply put, the standards
applicable to motor vehicle are not on equal footing with other
types of vehicles.
Thus, we cannot sustain the contention that Art. 2185 should
apply to non-motorized vehicles, even if by analogy. There is factual
and legal basis that necessitates the distinction under Art. 2185,
and to adopt Aonuevos thesis would unwisely obviate this
distinction.
Even if the legal presumption under Article 2185 should not apply
to Villagracia, this should not preclude any possible finding of
negligence on his part. While the legal argument as formulated by
Aonuevo is erroneous, his core contention that Villagracia was
negligent for failure to comply with traffic regulations warrants
serious consideration, especially since the imputed negligent acts
were admitted by Villagracia himself.
The Civil Code characterizes negligence as the omission of
that diligence which is required by the nature of the obligation
and corresponds with the circumstances of the persons, of the
time and of the place.30 However, the existence of negligence
in a given case is not determined by the personal judgment of
Page 24 of 205
the actor in a given situation, but rather, it is the law which
determines what would be reckless or negligent.31
Aonuevo, asserts that Villagracia was negligent as the latter had
transgressed a municipal ordinance requiring the registration of
bicycles and the installation of safety devices thereon. This view
finds some support if anchored on the long standing principle of
negligence per se.
The generally accepted view is that the violation of a statutory duty
constitutes negligence, negligence as a matter of law, or negligence
per se.32 In Teague vs. Fernandez,33 the Court cited with approval
American authorities elucidating on the rule:
"The mere fact of violation of a statute is not sufficient basis for an
inference that such violation was the proximate cause of the injury
complained. However, if the very injury has happened which was
intended to be prevented by the statute, it has been held that
violation of the statute will be deemed to be the proximate cause of
the injury." (65 C.J.S. 1156)
"The generally accepted view is that violation of a statutory duty
constitutes negligence, negligence as a matter of law, or, according
to the decisions on the question, negligence per se, for the reason
that non-observance of what the legislature has prescribed as a
suitable precaution is failure to observe that care which an
ordinarily prudent man would observe, and, when the state regards
certain acts as so liable to injure others as to justify their absolute
prohibition, doing the forbidden act is a breach of duty with
respect to those who may be injured thereby; or, as it has been
otherwise expressed, when the standard of care is fixed by law,
failure to conform to such standard is negligence, negligence per se
or negligence in and of itself, in the absence of a legal excuse.
According to this view it is immaterial, where a statute has been
violated, whether the act or omission constituting such violation
would have been regarded as negligence in the absence of any
statute on the subject or whether there was, as a matter of fact,
any reason to anticipate that injury would result from such
violation. x x x." (65 C.J.S. pp.623-628)
"But the existence of an ordinance changes the situation. If a driver
causes an accident by exceeding the speed limit, for example, we
do not inquire whether his prohibited conduct was unreasonably
dangerous. It is enough that it was prohibited. Violation of an
ordinance intended to promote safety is negligence. If by
creating the hazard which the ordinance was intended to avoid it
brings about the harm which the ordinance was intended to
prevent, it is a legal cause of the harm. This comes only to saying
that in such circumstances the law has no reason to ignore the
causal relation which obviously exists in fact. The law has
excellent reason to recognize it, since it is the very relation which
the makers of the ordinance anticipated. This court has applied
these principles to speed limits and other regulations of the
manner of driving." (Ross vs. Hartman, 139 Fed. 2d 14 at 15).
"x x x However, the fact that other happenings causing or
contributing toward an injury intervened between the violation of a
statute or ordinance and the injury does not necessarily make the
result so remote that no action can be maintained. The test is to
be found not in the number of intervening events or agents,
but in their character and in the natural and probable
connection between the wrong done and the injurious
consequence. The general principle is that the violation of a
statute or ordinance is not rendered remote as the cause of an
injury by the intervention of another agency if the occurrence
of the accident, in the manner in which it happened, was the
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very thing which the statute or ordinance was intended to
prevent." (38 Am Jur 841)34
In Teague, the owner of a vocational school stricken by a fire
resulting in fatalities was found negligent, base on her failure to
provide adequate fire exits in contravention of a Manila city
ordinance.35 In F.F. Cruz and Co., Inc. v. Court of Appeals 36, the
failure of the petitioner to construct a firewall in accordance with
city ordinances sufficed to support a finding of negligence. 37 In
Cipriano v. Court of Appeals, 38the Court found that the failure of
the petitioner to register and insure his auto rust proofing shop in
accordance with the statute constituted negligence per se, thus
holding him liable for the damages for the destruction by fire of a
customers vehicle garaged therein.
Should the doctrine of negligence per se apply to Villagracia,
resulting from his violation of an ordinance? It cannot be denied
that the statutory purpose for requiring bicycles to be equipped
with headlights or horns is to promote road safety and to minimize
the occurrence of road accidents involving bicycles. At face value,
Villagracias mishap was precisely the danger sought to be guarded
against by the ordinance he violated. Aonuevo argues that
Villagracias violation should bar the latters recovery of damages,
and a simplistic interpretation of negligence per se might vindicate
such an argument.
But this is by no means a simple case. There is the fact which we
consider as proven, that Aonuevo was speeding as he made the
left turn, and such negligent act was the proximate cause of the
accident. This reckless behavior would have imperiled anyone
unlucky enough within the path of Aonuevos car as it turned into
the intersection, whether they are fellow motorists, pedestrians, or
cyclists. We are hard put to conclude that Villagracia would have
avoided injury had his bicycle been up to par with safety
regulations, especially considering that Aonuevo was already
speeding as he made the turn, or before he had seen Villagracia.
Even assuming that Aonuevo had failed to see Villagracia because
the bicycle was not equipped with headlights, such lapse on the
cyclists part would not have acquitted the driver of his duty to
slow down as he proceeded to make the left turn.
This court has appreciated that negligence per se, arising from the
mere violation of a traffic statute, need not be sufficient in itself in
establishing liability for damages. In Sanitary Steam Laundry, Inc.
v. Court of Appeals,39 a collision between a truck and a privately-
owned Cimarron van caused the death of three of the vans
passengers. The petitioner therein, the owner of the truck, argued
that the driver of the Cimarron was committing multiple violations
of the Land Transportation and Traffic Code40 at the time of the
accident. Among these violations: the Cimarron was overloaded at
the time of the accident; the front seat of the van was occupied by
four adults, including the driver; and the van had only one
functioning headlight. Similar as in this case, petitioner therein
invoked Article 2185 and argued that the driver of the Cimarron
should be presumed negligent. The Court, speaking through
Justice Mendoza, dismissed these arguments:
[It] has not been shown how the alleged negligence of the Cimarron
driver contributed to the collision between the vehicles. Indeed,
petitioner has the burden of showing a causal connection
between the injury received and the violation of the Land
Transportation and Traffic Code. He must show that the
violation of the statute was the proximate or legal cause of the
injury or that it substantially contributed thereto. Negligence
consisting in whole or in part, of violation of law, like any
Page 26 of 205
other negligence, is without legal consequence unless it is a
contributing cause of the injury. Petitioner says that "driving an
overloaded vehicle with only one functioning headlight during
nighttime certainly increases the risk of accident," that because the
Cimarron had only one headlight, there was "decreased visibility,"
and that the fact that the vehicle was overloaded and its front seat
overcrowded "decreased its maneuverability." However, mere
allegations such as these are not sufficient to discharge its burden
of proving clearly that such alleged negligence was the contributing
cause of the injury.41
Sanitary Steam42 is controlling in this case. The bare fact that
Villagracia was violating a municipal ordinance at the time of the
accident may have sufficiently established some degree of
negligence on his part, but such negligence is without legal
consequence unless it is shown that it was a contributing cause of
the injury. If anything at all, it is but indicative of Villagracias
failure in fulfilling his obligation to the municipal government,
which would then be the proper party to initiate corrective action
as a result. But such failure alone is not determinative of
Villagracias negligence in relation to the accident. Negligence is
relative or comparative, dependent upon the situation of the parties
and the degree of care and vigilance which the particular
circumstances reasonably require.43 To determine if Villagracia was
negligent, it is not sufficient to rely solely on the violations of the
municipal ordinance, but imperative to examine Villagracias
behavior in relation to the contemporaneous circumstances of the
accident.
The rule on negligence per se must admit qualifications that may
arise from the logical consequences of the facts leading to the
mishap. The doctrine (and Article 2185, for that matter) is
undeniably useful as a judicial guide in adjudging liability, for it
seeks to impute culpability arising from the failure of the actor to
perform up to a standard established by a legal fiat. But the
doctrine should not be rendered inflexible so as to deny relief when
in fact there is no causal relation between the statutory violation
and the injury sustained. Presumptions in law, while convenient,
are not intractable so as to forbid rebuttal rooted in fact. After all,
tort law is remunerative in spirit, aiming to provide compensation
for the harm suffered by those whose interests have been invaded
owing to the conduct of others.44
Under American case law, the failures imputed on Villagracia
are not grievous enough so as to negate monetary relief. In the
absence of statutory requirement, one is not negligent as a
matter of law for failing to equip a horn, bell, or other warning
devise onto a bicycle.45 In most cases, the absence of proper
lights on a bicycle does not constitute negligence as a matter
of law46 but is a question for the jury whether the absence of
proper lights played a causal part in producing a collision with
a motorist.47 The absence of proper lights on a bicycle at night, as
required by statute or ordinance, may constitute negligence barring
or diminishing recovery if the bicyclist is struck by a motorist as
long as the absence of such lights was a proximate cause of the
collision;48 however, the absence of such lights will not preclude or
diminish recovery if the scene of the accident was well illuminated
by street lights,49 if substitute lights were present which clearly
rendered the bicyclist visible,50 if the motorist saw the bicycle in
spite of the absence of lights thereon,51 or if the motorist would
have been unable to see the bicycle even if it had been equipped
with lights.52 A bicycle equipped with defective or ineffective brakes
may support a finding of negligence barring or diminishing
Page 27 of 205
recovery by an injured bicyclist where such condition was a
contributing cause of the accident.53
The above doctrines reveal a common thread. The failure of the
bicycle owner to comply with accepted safety practices,
whether or not imposed by ordinance or statute, is not
sufficient to negate or mitigate recovery unless a causal
connection is established between such failure and the injury
sustained. The principle likewise finds affirmation in Sanitary
Steam, wherein we declared that the violation of a traffic
statute must be shown as the proximate cause of the injury, or
that it substantially contributed thereto.54 Aonuevo had the
burden of clearly proving that the alleged negligence of
Villagracia was the proximate or contributory cause of the
latters injury.
On this point, the findings of the Court of Appeals are well-worth
citing:
[As] admitted by appellant Aonuevo, he first saw appellee
Villagracia at a distance of about ten (10) meters before the
accident. Corrolarily, therefore, he could have avoided the accident
had he [stopped] alongside with an earlier (sic) jeep which was
already at a full stop giving way to appellee. But according to
[eyewitness] Sorsano, he saw appellant Aonuevo "umaarangkada"
and hit the leg of Villagracia (TSN March 14, 1990 p. 30). This
earlier (sic) jeep at a full stop gave way to Villagracia to proceed but
Aonuevo at an unexpected motion (umarangkada) came out
hitting Villagracia (TSN March 9, 1990 p. 49). Appellant Aonuevo
admitted that he did not blow his horn when he crossed Boni
Avenue (TSN March 21, 1990 p. 47).55
By Aonuevos own admission, he had seen Villagracia at a good
distance of ten (10) meters. Had he been decelerating, as he
should, as he made the turn, Aonuevo would have had ample
opportunity to avoid hitting Villagracia. Moreover, the fact that
Aonuevo had sighted Villagracia before the accident would negate
any possibility that the absence of lights on the bike contributed to
the cause of the accident.56 A motorist has been held liable for
injury to or death of a bicyclist where the motorist turned suddenly
into the bicyclist so as to cause a collision. 57
Neither does Aonuevo attempt before this Court to establish a
causal connection between the safety violations imputed to
Villagracia and the accident itself. Instead, he relied on a putative
presumption that these violations in themselves sufficiently
established negligence appreciable against Villagracia. Since the
onus on Aonuevo is to conclusively prove the link between the
violations and the accident, we can deem him as having failed to
discharge his necessary burden of proving Villagracias own
liability.
Neither can we can adjudge Villagracia with contributory
negligence.1wphi1 The leading case in contributory negligence,
Rakes v. Atlantic Gulf 58 clarifies that damages may be mitigated
if the claimant "in conjunction with the occurrence,
[contributes] only to his injury."59 To hold a person as having
contributed to his injuries, it must be shown that he
performed an act that brought about his injuries in disregard
of warnings or signs of an impending danger to health and
body.60 To prove contributory negligence, it is still necessary
to establish a causal link, although not proximate, between the
negligence of the party and the succeeding injury. In a legal
sense, negligence is contributory only when it contributes
proximately to the injury, and not simply a condition for its
occurrence.61
Page 28 of 205
As between Aonuevo and Villagracia, the lower courts adjudged
Aonuevo as solely responsible for the accident. The petition does
not demonstrate why this finding should be reversed. It is hard to
imagine that the same result would not have occurred even if
Villagracias bicycle had been equipped with safety equipment.
Aonuevo himself admitted having seen Villagracia from ten (10)
meters away, thus he could no longer claim not having been
sufficiently warned either by headlights or safety horns. The fact
that Aonuevo was recklessly speeding as he made the turn
likewise leads us to believe that even if Villagracias bicycle had
been equipped with the proper brakes, the cyclist would not have
had opportunity to brake in time to avoid the speeding car.
Moreover, it was incumbent on Aonuevo to have established that
Villagracias failure to have installed the proper brakes contributed
to his own injury. The fact that Aonuevo failed to adduce proof to
that effect leads us to consider such causal connection as not
proven.
All told, there is no reason to disturb the assailed judgment.
WHEREFORE, the Petition is DENIED. The Decision of the Court of
Appeals is AFFIRMED. Costs against petitioner.
SO ORDERED.

Page 29 of 205
Republic of the Philippines feet. This posed a great threat to passersby who were exposed to
SUPREME COURT the danger of electrocution especially during the wet season.
Manila As early as 1991, the leaders of Ampucao, Itogon made verbal and
THIRD DIVISION written requests for NPC to institute safety measures to protect
G.R. No. 165969 November 27, 2008 users of the trail from their high tension wires. On June 18, 1991
NATIONAL POWER CORPORATION, petitioner, and February 11, 1993, Pablo and Pedro Ngaosie, elders of the
vs. community, wrote Engr. Paterno Banayot, Area Manager of NPC, to
HEIRS OF NOBLE CASIONAN, respondents. make immediate and appropriate repairs of the high tension wires.
DECISION They reiterated the danger it posed to small-scale miners especially
REYES, R.T., J.: during the wet season. They related an incident where one boy was
PETITIONING power company pleads for mitigation of awarded nearly electrocuted.
damages on ground of contributory negligence. But is the victim in In a letter dated March 1, 1995, Engr. Banayot informed Itogon
this case partly to blame for his electrocution and eventual demise? Mayor Cresencio Pacalso that NPC had installed nine additional
This is a review on certiorari of the Decision1 of the Court of poles on their Beckel-Philex 60 KV line. They likewise identified a
Appeals (CA) which found the National Power Corporation (NPC) possible rerouting scheme with an estimated total cost of 1.7
liable for damages for the death of Noble Casionan due to million pesos to improve the distance from its deteriorating lines to
electrocution from the companys high tension transmission lines. the ground.
The Facts On June 27, 1995, Noble and his co-pocket miner, Melchor
The facts, as found by the trial court are as follows: Jimenez, were at Dalicno. They cut two bamboo poles for their
Respondents are the parents of Noble Casionan, 19 years old at the pocket mining. One was 18 to 19 feet long and the other was 14
time of the incident that claimed his life on June 27, 1995. He feet long. Each man carried one pole horizontally on his shoulder:
would have turned 20 years of age on November 9 of that year. Noble carried the shorter pole while Melchor carried the longer
Noble was originally from Cervantes, Ilocos Sur. He worked as a pole. Noble walked ahead as both passed through the trail
pocket miner in Dalicno, Ampucao, Itogon, Benguet. underneath the NPC high tension transmission lines on their way
A trail leading to Sangilo, Itogon, existed in Dalicno and this trail to their work place.
was regularly used by members of the community. Sometime in the As Noble was going uphill and turning left on a curve, the tip of the
1970s, petitioner NPC installed high-tension electrical bamboo pole he was carrying touched one of the dangling high
transmission lines of 69 kilovolts (KV) traversing the trail. tension wires. Melchor, who was walking behind him, narrated that
Eventually, some of the transmission lines sagged and dangled he heard a buzzing sound when the tip of Nobles pole touched the
reducing their distance from the ground to only about eight to ten wire for only about one or two seconds. Thereafter, he saw Noble

Page 30 of 205
fall to the ground. Melchor rushed to Noble and shook him but the
latter was already dead. Their co-workers heard Melchors shout
for help and together they brought the body of Noble to their camp.
A post-mortem examination by Dra. Ignacia Reyes Ciriaco,
Municipal Health Officer of Itogon, Benguet, determined the cause
of death to be cardiac arrest, secondary to ventricular fibulation,
secondary to electrocution.2 She also observed a small burned area
in the middle right finger of the victim.
Police investigators who visited the site of the incident confirmed
that portions of the high tension wires above the trail hung very
low, just about eight to ten feet above the ground. They noted that
the residents, school children, and pocket miners usually used the
trail and had to pass directly underneath the wires. The trail was
the only viable way since the other side was a precipice. In
addition, they did not see any danger warning signs installed in the
trail.
The elders and leaders of the community, through Mayor Cresencio
Pacalso, informed the General Manager of NPC in Itogon of the
incident. After learning of the electrocution, NPC repaired the
dangling and sagging transmission lines and put up warning signs
around the area.
Consequently, the heirs of the deceased Noble filed a claim for
damages against the NPC before the Regional Trial Court (RTC) in
Benguet. In its answer, NPC denied being negligent in maintaining
the safety of the high tension transmission lines. It averred that
there were danger and warning signs installed but these were
stolen by children. Excavations were also made to increase the
necessary clearance from the ground to about 17 to 18 feet but
some towers or poles sank due to pocket mining in the area.
At the trial, NPC witnesses testified that the cause of death could
not have been electrocution because the victim did not suffer
extensive burns despite the strong 69 KV carried by the
transmission lines. NPC argued that if Noble did die by
electrocution, it was due to his own negligence. The company
counter-claimed for attorneys fees and cost of litigation.
RTC Disposition
On February 17, 1998, the RTC decided in favor of respondents.
The fallo of its decision reads:
WHEREFORE, judgment is hereby rendered in favor of the
plaintiffs and against the defendant NPC as follows:
1. Declaring defendant NPC guilty of Negligence
(Quasi-Delict) in connection with the death of Noble
Casionan;
2. Ordering NPC as a consequence of its negligence,
to pay the plaintiffs Jose and Linda Casionan, as
heirs of the deceased, Noble Casionan, the following
Damages:
a. P50,000.00 as indemnity for the death of
their son Noble Casionan;
b. P100,000.00 as moral damages;
c. P50,000.00 as exemplary damages;
d. P52,277.50 as actual damages incurred
for the expenses of burial and wake in
connection with the death of Noble Casionan;
e. P720,000.00 as the loss of unearned
income; and
f. P20,000.00 as attorneys fees and the cost
of suit; and
Page 31 of 205
 3. Dismissing the counter claim of the NPC for lack
of merit.3
The RTC gave more credence to the testimony of witnesses for
respondents than those of NPC who were not actually present at
the time of the incident. The trial court observed that witnesses for
NPC were biased witnesses because they were all employed by the
company, except for the witness from the Department of
Environment and Natural Resources (DENR). The RTC found:
Melchor Jimenez was very vivid in his account. He declared
that he and Noble Casionan cut two bamboo poles, one 14
feet and the other about 18 feet. The shorter bamboo pole
was carried by Noble Casionan and the longer bamboo pole
was carried by him. And they walked along the trail
underneath the transmission lines. He was following Noble
Casionan. And when they were going uphill in the trail and
Noble Casionan was to turn left in a curve, the bamboo pole
of Casionan swung around and its tip at the back touched
for one or two seconds or for a split moment the
transmission line that was dangling and a buzzing sound
was heard. And Casionan immediately fell dead and simply
stopped breathing. What better account would there be than
this? Melchor Jimenez was an eye witness as to how it all
happened.4 (Emphasis added)
The RTC ruled that the negligence of NPC in maintaining the high-
tension wires was established by preponderance of evidence. On
this score, the RTC opined:
2. On the matter of whether plaintiffs have a cause of action
against defendant NPC, obviously, they would have. x x x
This negligence of the NPC was well established and cannot
be denied because previous to this incident, the attention of
NPC has already been called by several requests and
demands in 1991, 1993 and 1995 by elders and leaders of
the community in the area to the fact that their transmission
lines were dangling and sagging and the clearance thereof
from the line to the ground was only 8 to 10 feet and not
within the standard clearance of 18 to 20 feet but no safety
measures were taken. They did not even put danger and
warning signs so as to warn persons passing underneath. 5
(Emphasis added)
Disagreeing with the ruling of the trial court, NPC elevated the case
to the CA. In its appeal, it argued that the RTC erred in ruling that
NPC was liable for Nobles death. Further, even assuming that
Noble died of electrocution, the RTC erred in not finding that he
was guilty of contributory negligence and in awarding excessive
damages.
CA Disposition
On June 30, 2004, the CA promulgated its decision, disposing as
follows:
WHEREFORE, the appealed Decision is hereby AFFIRMED,
with the MODIFICATION that the amount of moral damages
is REDUCED to Fifty Thousand Pesos (P50,000.00); and the
award of attorneys fees in the sum of Twenty Thousand
Pesos (P20,000.00) is DELETED.6
The CA sustained the findings of fact of the trial court but reduced
the award of moral damages from P100,000.00 to P50,000.00. The
CA further disallowed the award of attorneys fees because the
reason for the award was not expressly stated in the body of the
decision.
Issues
Page 32 of 205
The following issues are presented for Our consideration: (i)
Whether the award for damages should be deleted in view of the
contributory negligence of the victim; and (ii) Whether the award
for unearned income, exemplary, and moral damages should be
deleted for lack of factual and legal bases.7
Our Ruling
I transmission lines were properly maintained by petitioner, the
That the victim Noble died from being electrocuted by the high-
tension transmission wires of petitioner is not contested by
petitioner. We are, however, asked to delete or mitigate the
damages awarded by the trial and appellate courts in view of what
petitioner alleges to be contributory negligence on the part of the
victim.
As a rule, only questions of law may be entertained on appeal by
certiorari under Rule 45. The finding of negligence on the part of
petitioner by the trial court and affirmed by the CA is a question of
fact which We cannot pass upon since it would entail going into
factual matters on which the finding of negligence was based. 8
Corollary to this, the finding by both courts of the lack of
contributory negligence on the part of the victim is a factual issue
which is deemed conclusive upon this Court absent any compelling
reason for Us to rule otherwise.
But even if We walk the extra mile, the finding of liability on
the part of petitioner must stay.
Petitioner contends that the mere presence of the high tension
wires above the trail did not cause the victims death. Instead, it
was Nobles negligent carrying of the bamboo pole that caused his
death. It insists that Noble was negligent when he allowed the
bamboo pole he was carrying to touch the high tension wires. This
is especially true because other people traversing the trail have not
been similarly electrocuted.
Petitioners contentions are absurd.
The sagging high tension wires were an accident waiting to happen.
As established during trial, the lines were sagging around 8 to 10
feet in violation of the required distance of 18 to 20 feet. If the
bamboo pole carried by Noble would not have touched the wires.
He would not have been electrocuted.
Petitioner cannot excuse itself from its failure to properly maintain
the wires by attributing negligence to the victim. In Ma-ao Sugar
Central Co., Inc. v. Court of Appeals,9 this Court held that the
responsibility of maintaining the rails for the purpose of preventing
derailment accidents belonged to the company. The company
should not have been negligent in ascertaining that the rails were
fully connected than to wait until a life was lost due to an accident.
Said the Court:
In this petition, the respondent court is faulted for finding
the petitioner guilty of negligence notwithstanding its
defense of due diligence under Article 2176 of the Civil Code
and for disallowing the deductions made by the trial court.
Investigation of the accident revealed that the derailment of
the locomotive was caused by protruding rails which had
come loose because they were not connected and fixed in
place by fish plates. Fish plates are described as strips of
iron 8" to 12" long and 3 " thick which are attached to the
rails by 4 bolts, two on each side, to keep the rails aligned.
Although they could be removed only with special
equipment, the fish plates that should have kept the rails
aligned could not be found at the scene of the accident.
Page 33 of 205
 There is no question that the maintenance of the rails, for the
purpose, inter alia, of preventing derailments, was the
responsibility of the petitioner, and that this responsibility
was not discharged. According to Jose Reyes, its own
witness, who was in charge of the control and supervision
of its train operations, cases of derailment in the milling
district were frequent and there were even times when such
derailments were reported every hour. The petitioner should
therefore have taken more prudent steps to prevent such
accidents instead of waiting until a life was finally lost
because of its negligence.10
Moreover, We find no contributory negligence on Nobles part.
Negligence is the failure to observe, for the protection of the
interest of another person, that degree of care, precaution, and
vigilance which the circumstances justly demand, whereby
such other person suffers injury.11 On the other hand,
contributory negligence is conduct on the part of the injured
party, contributing as a legal cause to the harm he has
suffered, which falls below the standard which he is required
to conform for his own protection.12 There is contributory
negligence when the partys act showed lack of ordinary care and
foresight that such act could cause him harm or put his life in
danger.13 It is an act or omission amounting to want of ordinary
care on the part of the person injured which, concurring with the
defendants negligence, is the proximate cause of the injury. 14
The underlying precept on contributory negligence is that a
plaintiff who is partly responsible for his own injury should not be
entitled to recover damages in full but must bear the consequences
of his own negligence.15 If indeed there was contributory negligence
on the part of the victim, then it is proper to reduce the award for
damages. This is in consonance with the Civil Code provision that
liability will be mitigated in consideration of the contributory
negligence of the injured party. Article 2179 of the Civil Code is
explicit on this score:
When the plaintiffs own negligence was the immediate
and proximate cause of his injury, he cannot recover
damages. But if his negligence was only contributory,
the immediate and proximate cause of the injury being
the defendants lack of due care, the plaintiff may
recover damages, but the courts shall mitigate the
damages to be awarded.
In Ma-ao Sugar Central, it was held that to hold a person as having
contributed to his injuries, it must be shown that he performed an
act that brought about his injuries in disregard of warnings or
signs on an impending danger to health and body. This Court held
then that the victim was not guilty of contributory negligence as
there was no showing that the caboose where he was riding was a
dangerous place and that he recklessly dared to stay there despite
warnings or signs of impending danger.16
In this case, the trail where Noble was electrocuted was regularly
used by members of the community. There were no warning signs
to inform passersby of the impending danger to their lives should
they accidentally touch the high tension wires. Also, the trail was
the only viable way from Dalicon to Itogon. Hence, Noble should
not be faulted for simply doing what was ordinary routine to other
workers in the area.
Petitioner further faults the victim in engaging in pocket mining,
which is prohibited by the DENR in the area.
In Aonuevo v. Court of Appeals,17 this Court ruled that the
violation of a statute is not sufficient to hold that the violation was
Page 34 of 205
the proximate cause of the injury, unless the very injury that
happened was precisely what was intended to be prevented by the
statute. In said case, the allegation of contributory negligence on
the part of the injured party who violated traffic regulations when
he failed to register his bicycle or install safety gadgets thereon was
struck down. We quote:
x x x The bare fact that Villagracia was violating a municipal
ordinance at the time of the accident may have sufficiently
established some degree of negligence on his part, but such
negligence is without legal consequence unless it is shown
that it was a contributing cause of the injury. If anything at
all, it is but indicative of Villagracias failure in fulfilling his
obligation to the municipal government, which would then
be the proper party to initiate corrective action as a result.
But such failure alone is not determinative of Villagracias
negligence in relation to the accident. Negligence is relative
or comparative, dependent upon the situation of the parties
and the degree of care and vigilance which the particular
circumstances reasonably require. To determine if
Villagracia was negligent, it is not sufficient to rely solely on
the violations of the municipal ordinance, but imperative to
examine Villagracias behavior in relation to the
contemporaneous circumstances of the accident.
xxxx
Under American case law, the failures imputed on
Villagracia are not grievous enough so as to negate
monetary relief. In the absence of statutory requirement,
one is not negligent as a matter of law for failing to equip a
horn, bell, or other warning devise onto a bicycle. In most
cases, the absence of proper lights on a bicycle does not
constitute negligence as a matter of law but is a question
for the jury whether the absence of proper lights played a
causal part in producing a collision with a motorist. The
absence of proper lights on a bicycle at night, as required by
statute or ordinance, may constitute negligence barring or
diminishing recovery if the bicyclist is struck by a motorist as
long as the absence of such lights was a proximate cause of
the collision; however, the absence of such lights will not
preclude or diminish recovery if the scene of the accident was
well illuminated by street lights, if substitute lights were
present which clearly rendered the bicyclist visible, if the
motorist saw the bicycle in spite of the absence of lights
thereon, or if the motorist would have been unable to see the
bicycle even if it had been equipped with lights. A bicycle
equipped with defective or ineffective brakes may support a
finding of negligence barring or diminishing recovery by an
injured bicyclist where such condition was a contributing
cause of the accident.
The above doctrines reveal a common thread. The failure of
the bicycle owner to comply with accepted safety practices,
whether or not imposed by ordinance or statute, is not
sufficient to negate or mitigate recovery unless a causal
connection is established between such failure and the injury
sustained. The principle likewise finds affirmation in
Sanitary Steam, wherein we declared that the violation of a
traffic statute must be shown as the proximate cause of the
injury, or that it substantially contributed thereto.
Aonuevo had the burden of clearly proving that the alleged
negligence of Villagracia was the proximate or contributory
cause of the latters injury.18 (Emphasis added)
Page 35 of 205
That the pocket miners were unlicensed was not a justification for
petitioner to leave their transmission lines dangling. We quote with
approval the observation of the RTC on this matter:
The claim of NPC that the pocket miners have no right to
operate within the area of Dalicno, Itogon, Benguet as there
was no permit issued by DENR is beside the point. The fact
is that there were not only pocket miners but also there
were many residents in the area of Dalicno, Ampucao,
Itogon, Benguet using the trail. These residents were using
this trail underneath the transmission lines x x x. They
were using this trail even before the transmission lines were
installed in the 1970s by NPC. The pocket miners, although
they have no permit to do pocket mining in the area, are also
human beings who have to eke out a living in the only way
they know how. The fact that they were not issued a permit
by the DENR to do pocket mining is no justification for NPC to
simply leave their transmission lines dangling or hanging 8
to 10 feet above the ground posing danger to the life and limb
of everyone in said community. x x x19 (Emphasis added)
In sum, the victim was not guilty of contributory negligence.
Hence, petitioner is not entitled to a mitigation of its liability.
II
We now determine the propriety of the awards for loss of
unearned income, moral, and exemplary damages.
From the testimony of the victims mother, it was duly established
during trial that he was earning P3,000.00 a month. To determine
the compensable amount of lost earnings, We consider (1) the
number of years for which the victim would otherwise have lived
(life expectancy); and (2) the rate of loss sustained by the heirs of
the deceased. Life expectancy is computed by applying the formula
(2/3 x [80 - age at death]) adopted in the American Expectancy
Table of Mortality or the Actuarial Combined Experience Table of
Mortality. The second factor is computed by multiplying the life
expectancy by the net earnings of the deceased, i.e., the total
earnings less expenses necessary in the creation of such earnings
or income and less living and other incidental expenses. The net
earning is ordinarily computed at fifty percent (50%) of the gross
earnings. Thus, the formula used by this Court in computing loss
of earning capacity is: Net Earning Capacity = [2/3 x (80 age at
time of death) x (gross annual income reasonable and necessary
living expenses)].20
We sustain the trial court computation of unearned income of the
victim:
x x x the loss of his unearned income can be computed as
follows: two-thirds of 80 years, minus 20 years, times
P36,000.00 per year, equals P1,440,000.00. This is because
Noble Casionan, at the time of his death, was 20 years old
and was healthy and strong. And, therefore, his life
expectancy would normally reach up to 80 years old in
accordance with the above formula illustrated in the
aforesaid cases. Thus, Noble Casionan had 60 more years
life expectancy since he was 20 years old at the time of his
death on June 27, 1995. Two-thirds of 60 years times
P36,000.00 since he was earning about P3,000.00 a month
of P36,000.00 a year would be P1,440,000.00.
However, in determining the unearned income, the basic
concern is to determine the damages sustained by the heirs
or dependents of the deceased Casionan. And here, the
damages consist not of the full amount of his earnings but
the support they would have received from the deceased
Page 36 of 205
 had he not died as a consequence of the unlawful act of the the wrongdoer. It is not meant to enrich the complainant but to
NPC. x x x The amount recoverable is not the loss of the enable the injured party to obtain means to obviate the moral
entire earnings but the loss of that portion of the earnings suffering experience. Trial courts should guard against the award
which the heirs would have received as support. Hence, of exorbitant damages lest they be accused of prejudice or
from the amount of P1,440,000.00, a reasonable amount corruption in their decision making.24 We find that the CA correctly
for the necessary expenses of Noble Casionan had he lived reduced the award from P100,000.00 to P50,000.00.
would be deducted. Following the ruling in People v. As for the award for attorneys fees, well-settled is the rule that the
Quilaton, 205 SCRA 279, the Court deems that 50 percent reason for the award must be discussed in the text of the courts
of the gross earnings of the deceased of P1,440,000.00 decision and not only in the dispositive portion. 25 Except for the
should be deducted for his necessary expenses had he fallo, a discussion on the reason for the award for attorneys fees
lived, thus leaving the other half of about P720,000.00 as was not included by the RTC in its decision. The CA thus correctly
the net earnings that would have gone for the support of his disallowed it on appeal.
heirs. This is the unearned income of which the heirs were WHREFORE, the petition is DENIED and the appealed decision of
deprived of.21 the Court of Appeals AFFIRMED.
In quasi delicts, exemplary damages are awarded where the SO ORDERED.
offender was guilty of gross negligence.22 Gross negligence has
been defined to be the want or absence of even slight care or
diligence as to amount to a reckless disregard of the safety of
person or property. It evinces a thoughtless disregard of
consequences without exerting any effort to avoid them.23
Petitioner demonstrated its disregard for the safety of the members
of the community of Dalicno who used the trail regularly when it
failed to address the sagging high tension wires despite numerous
previous requests and warnings. It only exerted efforts to rectify
the danger it posed after a death from electrocution already
occurred. Gross negligence was thus apparent, warranting the
award of exemplary damages.
As to the award of moral damages, We sustain the CA reduction of
the award. Moral damages are designed to compensate the
claimant for actual injury suffered and not to impose a penalty on

Page 37 of 205
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 160709 February 23, 2005
NELEN LAMBERT, assisted by her husband, GLENROY
ALOYSUIS LAMBERT, petitioners,
vs.
HEIRS OF RAY CASTILLON, Represented by MARILOU T.
CASTILLON and SERGIO LABANG, respondents.
DECISION
YNARES-SANTIAGO, J.:
This is a petition for review under Rule 45 of the Rules of Court
seeking the reversal of the decision1 of the Court of Appeals dated
October 21, 2002 in CA-G.R. CV No. 43734, which affirmed the
June 29, 1993 decision of the Regional Trial Court of Iligan City,
Branch 06, in Civil Case No. 06-2086.
In the evening of January 13, 1991, Ray Castillon visited the house
of his brother Joel Castillon at Tambo, Iligan City and borrowed his
motorcycle. He then invited his friend, Sergio Labang, to roam
around Iligan City. Ray drove the motorcycle with Sergio as the
backrider.2
At around past 10:00 p.m., after eating supper at Honas
Restaurant and imbibing a bottle of beer, they traversed the
highway towards Tambo at a high speed. Upon reaching Brgy. Sto.
Rosario, they figured in an accident with a Tamaraw jeepney,
owned by petitioner Nelen Lambert and driven by Reynaldo Gamot,
which was traveling on the same direction but made a sudden left
turn. The incident resulted in the instantaneous death of Ray and
injuries to Sergio.3
Respondents, the heirs of Ray Castillon, thus filed an action for
damages with prayer for preliminary attachment against the
petitioner Nelen Lambert. The complaint was docketed as Civil
Case No. 06-2086 of the RTC of Iligan City, Branch 06.4 The
complaint was subsequently amended to include the claim by Joel
Castillon for the damages caused to the motorcycle. 51vvphi1.nt
On June 29, 1993, after a full-blown trial, the court a quo rendered
a decision in favor of herein private respondents but reduced
petitioners liability by 20% in view of the contributory negligence
of Ray. The dispositi ve portion of the decision reads:
WHEREFORE, judgment is hereby rendered in favor of the
plaintiffs and against the defendants, directing the latter, jointly
and severally, to pay the former the following:
1. The sum of SIX HUNDRED THIRTY-THREE THOUSAND
AND NINETY-ONE (P633,091) PESOS, representing loss of
support, death indemnity, funeral and related expenses,
moral damages and attorneys fees and
2. Costs of the suit.
For lack of merit, defendants counterclaim is dismissed.
On the claim of Joel Castillon, the evidence shows that he is not
the real owner of the motorcycle. He is not the real party in
interest. Accordingly, his complaint is dismissed.
On the third-party complaint, the third-party defendant Zenith
Insurance Corporation is ordered to pay the sum of P16,500.00
directly to the plaintiffs. This sum, if paid, should be deducted
from the amount adjudged in par. 1 above.
SO ORDERED.6
The Court of Appeals affirmed the decision of the trial court. 7
Hence the present petition, based on the following arguments:
Page 38 of 205
1. The Honorable Court of Appeals committed serious error
of law and grave abuse of discretion when it did not apply
the ruling of this Honorable Court in the case of Philippine
Rabbit Bus Lines vs. The Honorable Intermediate Appellate
Court and Casiano Pascua, Et. Al., [189 SCRA 168, August
30, 1990], as reiterated recently in the case of Edna A.
Raynera vs. Freddie Hiceta and Jimmy Orpilla [306 SCRA
102, April 21, 1999], in which this Honorable Court
enunciated that drivers of vehicles "who bump the rear of
another vehicle" are presumed to be the cause of the
accident.
2. The erroneous conclusion of the Honorable Trial Court as
affirmed by the Honorable Court of Appeals that the act of
tailgating, at high speed, constitutes contributory
negligence only, is contrary to the rulings of this Honorable
Court in the case of Sanitary Steam Laundry, INC. vs. The
Honorable Court of Appeals [300 SCRA 20, December 10,
1998] and the case of Edna A. Raynera vs. Freddie Hiceta
and Jimmy Orpilla [306 SCRA 102, April 21, 1999].
3. The Honorable Court of Appeals grossly erred in its
conclusion that petitioners driver was negligent, without
taking into consideration the presumptions enunciated by
this Honorable Court in the case of Philippine Rabbit Bus
Lines vs. The Honorable Intermediate Appellate Court and
Casiano Pascua, Et. Al., [189 SCRA 168, August 30, 1990],
and the case of Edna A. Raynera vs. Freddie Hiceta and
Jimmy Orpilla [306 SCRA 102, April 21, 1999].
4. As an alternative relief, petitioner most respectfully
assigns as error the Honorable Trial Courts computation as
to the loss of earning capacity of Ray Castillon. Such
computation is contrary to the formula enunciated by this
Honorable Court in the case of Villa Rey Transit, Inc. vs.
The Honorable Court of Appeals [31 SCRA 511 (1970)].
5. The Honorable Trial Courts award of moral damages is
contrary to the pronunciation of this Honorable Court in
the case of Ace Haulers Corporation vs. The Honorable
Court of Appeals and Abiva [338 SCRA 572, August 23,
2000], wherein the award of moral damages was disallowed
absent any evidence of bad faith or ill-motive.8
Petitioner insists that the negligence of Ray Castillon was the
proximate cause of his unfortunate death and therefore she is not
liable for damages.
In petitions for review on certiorari under Rule 45 of the Rules of
Court, only questions of law may be put into issue. Questions of
fact cannot be entertained. The finding of negligence by the Court
of Appeals is a question of fact which we cannot pass upon as it
would entail going into factual matters on which the finding of
negligence was based. As a rule, factual findings of the trial court,
especially those affirmed by the Court of Appeals, are conclusive on
this Court when supported by the evidence on record. 9
Our examination of the records shows that both the trial court and
the Court of Appeals carefully considered the factual backdrop of
the case. No cogent reason exists for disturbing the following
findings of the trial court, which the Court of Appeals affirmed:
To the mind of the court, this is exactly what happened. When
Reynaldo Gamot was approaching the side road, he slightly veered
to the right for his allowance. Ray Castillon, who was following
closely behind, instinctively veered to the left but it was also the
moment when Reynaldo Gamot sharply turned to the left towards
the side road. At this juncture both were moving obliquely to the
Page 39 of 205
left.l^vvphi1.net Thus the motorcycle sliced into the side of the
jeepney throwing the driver forward so that his forehead hit the
angle bar on the left front door of the jeepney even as the
motorcycle shot forward and the jeepney veered back to the right
and sped away.
trailer truck therein did not make a sudden left turn as in the case
The testimonies of the witnesses Frias, Opada, Labang and Sumile
show that he did not stop even for a second, or less before making
the left turn. On the contrary, he slightly veered to the right
immediately followed by the abrupt and sudden turn to the left in
order to enter the side road. It is apparent that Reynaldo Gamot
did not keep a lookout for vehicles or persons following him before
proceeding to turn left. He failed to take into account the possibility
that others may be following him. He did not employ the necessary
precaution to see to it that the road was clear. 10
Clearly, the abrupt and sudden left turn by Reynaldo, without first
establishing his right of way, was the proximate cause of the
mishap which claimed the life of Ray and injured Sergio.
Proximate cause is defined as that which, in the natural and
continuous sequence, unbroken by any efficient, intervening
cause, produces the injury, and without which the result would
not have occurred.11 The cause of the collision is traceable to the
negligent act of Reynaldo for, as the trial court correctly held,
without that left turn executed with no precaution, the mishap in all
probability would not have happened.12
Petitioner misunderstood our ruling in Raynera v. Hiceta.13 That
case also involved a motorcycle crashing into the left rear portion of
another vehicle, and we declared therein that drivers of vehicles
"who bump the rear of another vehicle" are presumed to be "the
cause of the accident, unless contradicted by other evidence".14
In Raynera, the death of the victim was solely attributable to his
own negligence in bumping the rear of the trailer truck which was
traveling ahead of him at 20 to 30 kilometers per hour. Raynera,
being the driver of the rear vehicle, had full control of the situation
as he was in a position to observe the vehicle in front of him. The
at bar. Thus, the theory that drivers of vehicles "who bump the
rear of another vehicle" are presumed to be the cause of the
accident is, as in this case, sufficiently contradicted by evidence,
which is the sudden left turn made by Reynaldo which proximately
caused the collision.
While we agree with the trial court that Ray was likewise guilty of
contributory negligence as defined under Article 2179 of the Civil
Code, we find it equitable to increase the ratio of apportionment of
damages on account of the victims negligence.
Article 2179 reads as follows:
When the plaintiffs negligence was the immediate and proximate
cause of his injury, he cannot recover damages. But if his negligence
was only contributory, the immediate and proximate cause of the
injury being the defendants lack of due care, the plaintiff may
recover damages, but the courts shall mitigate the damages to be
awarded.
The underlying precept on contributory negligence is that a
plaintiff who is partly responsible for his own injury should not
be entitled to recover damages in full but must bear the
consequences of his own negligence. The defendant must thus
be held liable only for the damages actually caused by his
negligence.15 The determination of the mitigation of the defendants
liability varies depending on the circumstances of each case. The
Court had sustained a mitigation of 50% in Rakes v. AG & P;1620%
Page 40 of 205
in Phoenix Construction, Inc. v. Intermediate Appellate Court17 and creation of such earnings or income and less living and other
LBC Air Cargo, Inc. v. Court of Appeals;18 and 40% in Bank of the incidental expenses. The net earning is ordinarily computed at
Philippine Islands v. Court of Appeals19 and Philippine Bank of fifty percent (50%) of the gross earnings. Thus, the formula
Commerce v. Court of Appeals.201awphi1.nt used by this Court in computing loss of earning capacity is: Net
In the case at bar, it was established that Ray, at the time of the Earning Capacity = [2/3 x (80 age at time of death) x (gross
mishap: (1) was driving the motorcycle at a high speed; (2) was annual income reasonable and necessary living expenses)].22
tailgating the Tamaraw jeepney; (3) has imbibed one or two bottles It was established that Ray was 35 at the time of his death and
of beer; and (4) was not wearing a protective helmet. 21 These was earning a gross annual income of P31,876.00 as a driver at the
circumstances, although not constituting the proximate cause of Mindanao State University. In arriving at the net earnings, the trial
his demise and injury to Sergio, contributed to the same result. court deducted from the gross annual income the annual living
The contribution of these circumstances are all considered and expenses in the amount of P9,672.00, broken down as follows:
determined in terms of percentages of the total cause. Hence, P20.00 a day for travel or P520.00 per month; P60.00 a month for
pursuant to Rakes v. AG & P, the heirs of Ray Castillon shall cigarettes; P26.00 for drinks; and other personal expenses like
recover damages only up to 50% of the award. In other words, 50% clothing, toiletries, etc. estimated at P200.00 per month. 23 The
of the damage shall be borne by the private respondents; the amount of P9,672.00, however, appears unrealistic, and
remaining 50% shall be paid by the petitioner. constitutes only 30.34% of the gross earnings. It even includes
Anent the award of loss of earning capacity, we agree with the expenses for cigarettes which by no means can be classified as a
petitioner that the trial court erred in the computation of the net necessary expense. Using the cited formula with the net earnings
earnings. computed at 50% of the gross earnings, a detailed computation is
In considering the earning capacity of the victim as an element of as follows:
damages, the following factors are considered in determining the 1vvphi1.nt
compensable amount of lost earnings: (1) the number of years for = LIFE
which the victim would otherwise have lived; and (2) the rate of NET x GROSS
EXPECTANCY - LIVING
loss sustained by the heirs of the deceased. Jurisprudence EARNING ANNUAL
[2/3 (80-age at EXPENSES
provides that the first factor, i.e., life expectancy, is computed by CAPACITY INCOME
the time of (50% of GAI)
applying the formula (2/3 x [80 - age at death]) adopted in the (X) (GAI)
death)]
American Expectancy Table of Mortality or the Actuarial Combined
Experience Table of Mortality. As to the second factor, it is x -50% x
X = [2/3 (80-35)]
computed by multiplying the life expectancy by the net earnings of [P31,876.00 P31,876.00]
the deceased, i.e., the total earnings less expenses necessary in the
X = [2/3 (45)] x - P15,938.00]

Page 41 of 205
 [P31,876.00
X = 30 x 15,938.00
X = P478,140.00
We sustain the awards of P33,215.00 as funeral and burial
expenses being supported with receipts;24 P50,000.00 as death
indemnity; and P50,000.00 as moral damages. However, the award
of P20,000.00 as attorneys fees must be deleted for lack of basis.
The indemnity for death caused by a quasi-delict used to be pegged
at P3,000.00,25 based on Article 2206 of the Civil Code, which
reads:
ART. 2206. The amount of damages for death caused by a crime or
quasi-delict shall be at least three thousand pesos, even though
there may have been mitigating circumstances. In addition:
(1) The defendant shall be liable for the loss of the
earning capacity of the deceased, and the indemnity
shall be paid to the heirs of the latter; such indemnity
shall in every case be assessed and awarded by the court,
unless the deceased on account of permanent physical
disability not caused by the defendant, had no earning
capacity at the time of his death;
(2) If the deceased was obliged to give support according
to the provisions of article 291, the recipient who is
not an heir called to the decedents inheritance by the
law of testate or intestate succession, may demand
support from the person causing the death, for a
period of not exceeding five years, the exact duration to
be fixed by the court;
(3) The spouse, legitimate and illegitimate descendants
and ascendants of the deceased may demand moral
damages for mental anguish by reason of the death of the
deceased.
However, the amount has been gradually increased through the
years. At present, prevailing jurisprudence fixes the amount at
P50,000.00.26
Paragraph 3 of the same provision also serves as the basis for the
award of moral damages in quasi-delict. The reason for the grant of
moral damages has been explained, thus:
the award of moral damages is aimed at a restoration,
within the limits possible, of the spiritual status quo ante; and
therefore, it must be proportionate to the suffering inflicted.
The intensity of the pain experienced by the relatives of the victim
is proportionate to the intensity of affection for him and bears no
relation whatsoever with the wealth or means of the offender. 27
While it is true that there can be no exact or uniform rule for
measuring the value of human life and the measure of damages
cannot be arrived at by a precise mathematical calculation, 28 we
hold that the trial courts award of moral damages of P50,000.00
for the death of Ray Castillon is in accord with the prevailing
jurisprudence.29
With respect to attorneys fees, it is well settled that the same
should not be awarded in the absence of stipulation except under
the instances enumerated in Article 2208 of the Civil Code. The
trial court did not indicate the basis for its award. As we have held
in Rizal Surety and Insurance Company v. Court of Appeals:30
"Article 2208 of the Civil Code allows attorneys fess to be awarded
by a court when its claimant is compelled to litigate with third
persons or to incur expenses to protect his interest by reason of an
unjustified act or omission of the party from whom it is
sought.l^vvphi1.net While judicial discretion is here extant, an
Page 42 of 205
award thereof demands, nevertheless, a factual, legal or equitable
justification.1a\^/phi1.net The matter cannot and should not be
left to speculation and conjecture (Mirasol vs. De la Cruz, 84 SCRA
337; Stronghold Insurance Company, Inc. vs. Court of Appeals, 173
SCRA 619).
In the case at bench, the records do not show enough basis for
sustaining the award for attorneys fees and to adjudge its payment
by petitioner"
Likewise, this Court held in Stronghold Insurance Company, Inc. vs.
Court of Appeals that:
"In Abrogar v. Intermediate Appellate Court [G.R. No. 67970,
January 15, 1988, 157 SCRA 57] the Court had occasion to state
that [t]he reason for the award of attorneys fees must be
stated in the text of the courts decision, otherwise, if it is
stated only in the dispositive portion of the decision, the same
must be disallowed on appeal. 1awphi1.nt
WHEREFORE, in view of the foregoing, the petition is DENIED.
The assailed decision of the Court of Appeals is AFFIRMED with
the MODIFICATION that the net earnings is computed at 50% of
the gross annual income to conform with the prevailing
jurisprudence, and the FURTHER MODIFICATION that petitioner
NELEN LAMBERT is ordered to pay the heirs of Ray Castillon only
50% of the damages herein awarded, except attorneys fees which
is DELETED for lack of basis.
SO ORDERED.

Page 43 of 205
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 169891 November 2, 2006
PHILIPPINE NATIONAL RAILWAYS, Petitioner,
vs.
ETHEL BRUNTY and JUAN MANUEL M. GARCIA, Respondents.
DECISION
CALLEJO, SR., J.:
This is a Petition for Review on Certiorari of the Decision 1 of the
Court of Appeals (CA) in CA-G.R. CV No. 47567 and its Resolution2
denying the motion for reconsideration thereof. The assailed
decision affirmed with partial modification the ruling3 of the
Regional Trial Court (RTC) of Manila, Branch 20, directing
petitioner Philippine National Railways (PNR) to indemnify
respondents Ethel Brunty and Juan Manuel M. Garcia for the
death of Rhonda Brunty, and to pay actual and moral damages,
attorneys fees and cost of suit.
Rhonda Brunty, daughter of respondent Ethel Brunty and an
American citizen, came to the Philippines for a visit sometime in
January 1980. Prior to her departure, she, together with her
Filipino host Juan Manuel M. Garcia, traveled to Baguio City on
board a Mercedes Benz sedan with plate number FU 799, driven by
Rodolfo L. Mercelita. It was about 12:00 midnight, January 25,
1980. By then, PNR Train No. T-71, driven by Alfonso Reyes, was
on its way to Tutuban, Metro Manila4 as it had left the La Union
station at 11:00 p.m., January 24, 1980.
By 2:00 a.m., Rhonda Brunty, Garcia and Mercelita were already
approaching the railroad crossing at Barangay Rizal, Moncada,
Tarlac. Mercelita, driving at approximately 70 km/hr, drove past a
vehicle, unaware of the railroad track up ahead and that they were
about to collide with PNR Train No. T-71. Mercelita was instantly
killed when the Mercedes Benz smashed into the train; the two
other passengers suffered serious physical injuries.5 A certain
James Harrow6 brought Rhonda Brunty to the Central Luzon
Doctors Hospital in Tarlac, where she was pronounced dead after
ten minutes from arrival. Garcia, who had suffered severe head
injuries, was brought via ambulance to the same hospital. He was
transferred to the Manila Doctors Hospital, and later to the Makati
Medical Center for further treatment.7
On July 28, 1981, Ethel Brunty sent a demand letter8 to the PNR
demanding payment of actual, compensatory, and moral damages,
as a result of her daughters death. When PNR did not respond,
Ethel Brunty and Garcia, filed a complaint9 for damages against
the PNR before the RTC of Manila. The case was raffled to Branch
20 and was docketed as Civil Case No. 83-18645. They alleged that
the death of Mercelita and Rhonda Brunty, as well as the physical
injuries suffered by Garcia, were the direct and proximate result of
the gross and reckless negligence of PNR in not providing the
necessary equipment at the railroad crossing in Barangay Rizal,
Municipality of Moncada, Tarlac. They pointed out that there was
no flagbar or red light signal to warn motorists who were about to
cross the railroad track, and that the flagman or switchman was
only equipped with a hand flashlight.10 Plaintiffs likewise averred
that PNR failed to supervise its employees in the performance of
their respective tasks and duties, more particularly the pilot and
operator of the train.11 They prayed for the payment of the following
damages:
Page 44 of 205
 1.) P200,000.00 as actual and compensatory damages to
plaintiff Ethel Brunty;
2.) P2,800,000.00 for compensatory damages to plaintiff
Ethel Brunty representing lost or unearned income of
Rhonda Brunty;
3.) Such amounts of moral and exemplary damages as may
be warranted by the evidence adduced, to plaintiff Ethel
Brunty;
4.) At least P64,057.61 as actual damages representing
medical expenses to plaintiff Juan Manuel M. Garcia and at
least P1,000,000.00 as unearned or lost income of said
plaintiff;
5.) At least P72,760.00 as actual damages representing cost
of the Mercedes Benz car to plaintiff Juan Manuel M.
Garcia;
6.) Such amounts of moral and exemplary damages as may
be warranted by the evidence adduced, to plaintiff Juan
Manuel M. Garcia; and
7.) Attorneys fees equivalent to at least 15% of the total
award to plaintiffs herein.12
In its Answer,13 PNR claimed that it exercised the diligence of a
good father of a family not only in the selection but also in the
supervision of its employees.14 By way of special and affirmative
defense, it stressed that it had the right of way on the railroad
crossing in question, and that it has no legal duty to put up a bar
or red light signal in any such crossing. It insisted that there were
adequate, visible, and clear warning signs strategically posted on
the sides of the road before the railroad crossing. It countered that
the immediate and proximate cause of the accident was Mercelitas
negligence, and that he had the last clear chance to avoid the
accident. The driver disregarded the warning signs, the whistle
blasts of the oncoming train and the flashlight signals to stop given
by the guard.15 As counterclaim, it prayed that it be awarded
actual and compensatory damages, and litigation expenses. 16
Plaintiffs filed an Amended Complaint17 dated July 28, 1986 to
include, as party plaintiff, Chemical Industries of the Philippines,
Inc. (Chemphil), Garcias employer, who claimed to have paid for
the latters medical and hospitalization expenses, the services
rendered by the funeral parlor of the deceased, and the expenses in
transferring the remains of Rhonda Brunty to the United States. 18
After trial on the merits, the RTC rendered its Decision 19 on May
21, 1990 in favor of plaintiffs. The fallo reads:
WHEREFORE, judgment is hereby rendered in favor of the
plaintiffs Ethel Brunty and Juan Manuel M. Garcia and against the
defendant Philippine National Railways directing the latter to pay
the former the sum of:
1. Thirty Thousand Pesos (P30,000.00) Philippine Currency,
for the death of Rhonda Brunty formerly a resident of 1595
Ashland Avenue, Des Plaines, Illinois, U.S.A.;
2. One Million Pesos (P1,000,000.00) Philippine Currency
for moral and actual damages due the heirs of Rhonda
Brunty;
3. Seventy-Two Thousand Seven Hundred Sixty Pesos
(P72,760.00) Philippine Currency for damages sustained by
the Mercedes Benz;
4. Fifty Thousand Pesos (P50,000.00) Philippine Currency
as and for attorney's fees, and;
5. Costs of suit.
SO ORDERED.20
Page 45 of 205
Aggrieved, the PNR appealed the case to the CA, raising the
following errors:
I.
THE TRIAL COURT ERRED IN ADJUDGING DEFENDANT-
APPELLANT PNR LIABLE FOR THE DEATH OF RHONDA
BRUNTY AND THE CONSEQUENT AWARD OF DAMAGES
DUE THE HEIRS OF RHONDA BRUNTY.
II.
THE TRIAL COURT ERRED IN ADJUDGING DEFENDANT-
APPELLANT PNR LIABLE FOR THE DAMAGES SUFFERED
BY PLAINTIFF-APPELLEES MERCEDES BENZ IN THE
AMOUNT OF SEVENTY-TWO THOUSAND SEVEN
HUNDRED AND SIXTY PESOS (P72,760.00).
III.
THE LOWER COURT ERRED IN AWARDING ATTORNEYS
FEES TO THE PLAINTIFFS-APPELLEES.21
In its Brief, PNR insisted that the sole and proximate cause of the
accident was the negligence and recklessness of Garcia and
Mercelita.22 It insisted that it had provided adequate warning
signals at the railroad crossing23 and had exercised due care in the
selection and supervision of its employees.24 The RTC erred in
awarding damages to Rhonda Brunty as she cannot be allowed to
receive what she is not in a position to give, having been a non-
resident alien who did not own a property in the Philippines. 25 It
likewise questioned the award of damages on the Mercedes Benz as
well as the grant of attorneys fees.26 At the very least, Mercelita
was guilty of contributory negligence.27
For their part, appellees countered that appellant was grossly and
recklessly negligent in not properly providing the necessary
equipment at the railroad crossing in Rizal, Moncada, Tarlac; 28
appellant was negligent in not exercising due diligence of a good
father of a family in the supervision of its employees, particularly
the train operator Alfonso Reyes;29 the car was driven in a careful
and diligent manner, and at a moderate speed, with due regard to
all traffic rules and regulations at that particular time; 30 the
doctrine of "last clear chance" is not applicable;31 Ethel Brunty is a
non-resident alien who can rightfully file the instant case;32 and
they are entitled to recover damages from appellant. 33
The CA rendered the assailed Decision34 on August 15, 2005. The
dispositive portion reads:
WHEREFORE, premises considered, the assailed decision is hereby
AFFIRMED with PARTIAL MODIFICATIONS, increasing the death
indemnity award from P30,000.00 to P50,000.00, and deleting the
award for damages sustained by the Mercedes Benz.
SO ORDERED.35
The appellate court affirmed the findings of the RTC as to the
negligence of the PNR. Considering the circumstances prevailing at
the time of the fatal accident, it ruled that the alleged safety
measures installed by the PNR at the railroad crossing were not
merely inadequate they did not satisfy the well-settled safety
standards in transportation.36 However, the CA did not agree with
the RTCs findings on the contributory negligence of Mercelita, the
driver of the Mercedes Benz. It held that Mercelita could not have
foreseen the harm that would befall him and the two other
passengers under the prevailing circumstances, thus, could not be
considered guilty of contributory negligence.37
The PNR, now petitioner, comes before this Court in this Petition
for Review on Certiorari on the following grounds:
I.
Page 46 of 205
THE COURT OF APPEALS ERRED IN MANIFESTLY
OVERLOOKING CERTAIN RELEVANT FACTS NOT DISPUTED BY
THE PARTIES AND WHICH, IF PROPERLY CONSIDERED, WOULD
JUSTIFY A DIFFERENT CONCLUSION SUCH AS:
THE RESPONDENTS DRIVER OVERTOOK ANOTHER VEHICLE BY
ACCELERATING AT 70 KILOMETERS PER HOUR WITHIN JUST 50
YARDS AWAY FROM THE RAILROAD TRACKS.
II.
THE FINDINGS OF FACT OF THE COURT OF APPEALS ARE
CONTRARY TO THOSE OF THE TRIAL COURT REGARDING
CONTRIBUTORY NEGLIGENCE OF THE RESPONDENTS DRIVER.
III.
THE COURT OF APPEALS ERRED IN NOT APPLYING THE
DOCTRINE OF LAST CLEAR CHANCE IN THE INSTANT CASE. 38
Petitioner insists that the proximate cause of the mishap was
Mercelitas disregard of traffic rules and regulations. Had the court
considered the fact that Mercelita had overtaken another vehicle a
few yards before the railroad track, it would have reached a
different conclusion.39 Moreover, petitioner asserts, considering
that the decisions of the RTC and the CA vary as to whether or not
Mercelita was guilty of contributory negligence, the findings of the
RTC should prevail. Thus, Mercelitas contributory negligence
should not have been ignored.40 Lastly, petitioner avers that since
there is freedom of control and greater maneuverability on the part
of motor vehicles, it is obvious that in railroad crossings, they have
the last clear chance to prevent or avoid an unwanted accident
from taking place.41
In their Comment42 on the petition, respondents reiterate the
findings of the RTC and the CA that the breach by petitioner of its
legal duty to provide adequate and necessary public safety device
and equipment within the area or scene of the accident was the
proximate cause of the mishap.43 While it is true that as a general
rule, the trial court is in the best position to evaluate and observe
the conduct and demeanor of the witnesses presented during the
trial, the CA, in the exercise of its appellate jurisdiction, has the
vested right to modify, reject, or set aside the trial courts
evaluation and findings.44 As to the application of the doctrine of
last clear chance, respondents claim that said issue is being raised
for the first time in this petition.45 Lastly, respondents cite foreign
jurisprudence stating that if the violation is one which gives rise to
liability per se for any resulting injury, the defenses ordinarily
available in actions for diligence are barred and the contributory
negligence of the person injured is no defense.46
The Court is thus tasked to answer the following factual
questions: (1) As between petitioner and Mercelita, whose
negligence resulted in the unfortunate collision? (2) Is
Mercelita (the driver of the Mercedes Benz) guilty of
contributory negligence? Finally, the application in this case
of the doctrine of last clear chance is likewise in question.
Negligence is the omission to do something which a reasonable
man, guided by those considerations which ordinarily regulate
the conduct of human affairs, would do, or the doing of
something which a prudent and reasonable man would not
do.47 In Corliss v. Manila Railroad Company,48 this Court held that
negligence is want of the care required by the circumstances. It is a
relative or comparative, not an absolute, term and its application
depends upon the situation of the parties and the degree of care
and vigilance which the circumstances reasonably require.49 In
determining whether or not there is negligence on the part of the
parties in a given situation, jurisprudence50 has laid down the
Page 47 of 205
following test: Did defendant, in doing the alleged negligent act, use
that reasonable care and caution which an ordinarily prudent
person would have used in the same situation? If not, the person is
guilty of negligence. The law, in effect, adopts the standard
supposed to be supplied by the imaginary conduct of the discreet
pater familias of the Roman law.
The issue of who, between the parties, was negligent was
thoroughly discussed by both the RTC and the CA. In petitions for
review under Rule 45 of the Revised Rules of Court, only questions
of law may be put into issue, and questions of fact as a general
rule, cannot be entertained. The finding of negligence by the RTC,
as affirmed by the CA, is a question of fact which this Court cannot
pass upon as it would entail going into factual matters on which
the finding of negligence was based.51 The established rule is that
factual findings of the CA affirming those of the trial court are
conclusive and binding on this Court.52
The records of the instant case show that both the RTC and the CA
carefully examined the factual circumstances surrounding the
case, and we find no cogent reason to disturb the same. It is,
however, worthy to emphasize that petitioner was found
negligent because of its failure to provide the necessary safety
device to ensure the safety of motorists in crossing the
railroad track. As such, it is liable for damages for violating the
provisions of Article 2176 of the New Civil Code, viz:
Article 2176. Whoever, by act or omission, causes damage to
another, there being fault or negligence, is obliged to pay for
the damage done. Such fault or negligence, if there is no pre-
existing contractual relation between the parties, is called a
quasi-delict and is governed by the provisions of this Chapter.
In a long line of cases, the Court held that in order to sustain a
claim based on quasi-delict, the following requisites must
concur: (1) damage to plaintiff; (2) negligence, by act or
omission, of which defendant, or some person for whose acts
he must respond was guilty; and (3) connection of cause and
effect between such negligence and damage.53 Applying the
foregoing requisites, the CA correctly made the following
conclusions:
It was clearly established that plaintiffs-appellees (respondents
herein) sustained damage or injury as a result of the collision. That
there was negligence on the part of PNR is, likewise, beyond cavil.
Considering the circumstances prevailing at the time of the fatal
accident, the alleged safety measures installed by the PNR at the
railroad crossing is not only inadequate but does not satisfy well-
settled safety standards in transportation. x x x
xxxx
x x x An examination of the photographs of the railroad crossing at
Moncada, Tarlac presented as evidence by PNR itself would yield
the following: (1.) absence of flagbars or safety railroad bars; (2.)
inadequacy of the installed warning signals; and (3.) lack of proper
lighting within the area. Thus, even if there was a flagman
stationed at the site as claimed by PNR (petitioner), it would still be
impossible to know or see that there is a railroad crossing/tracks
ahead, or that there is an approaching train from the Moncada side
of the road since ones view would be blocked by a cockpit arena. x
x x54
Moreover, the CA held that a vehicle coming from the Moncada side
would have difficulty in knowing that there is an approaching train
because of the slight curve, more so, at an unholy hour as 2:00
Page 48 of 205
a.m. Thus, it is imperative on the part of the PNR to provide
adequate safety equipment in the area.55
It may broadly be stated that railroad companies owe to the public
a duty of exercising a reasonable degree of care to avoid injury to
persons and property at railroad crossings, which duties pertain
both in the operation of trains and in the maintenance of the
crossings.56 Moreover, every corporation constructing or operating
a railway shall make and construct at all points where such
railway crosses any public road, good, sufficient, and safe
crossings and erect at such points, at a sufficient elevation from
such road as to admit a free passage of vehicles of every kind, a
sign with large and distinct letters placed thereon, to give notice of
the proximity of the railway, and warn persons of the necessity of
looking out for trains.57
This Court has previously determined the liability of the PNR for
damages for its failure to put a cross bar, or signal light, flagman
or switchman, or semaphores. Such failure is evidence of
negligence and disregard of the safety of the public, even if there is
no law or ordinance requiring it because public safety demands
that said device or equipment be installed.58
In view of the foregoing, we affirm the factual findings of the CA as
well as its conclusion on petitioners negligence.
As to whether or not Mercelita was guilty of contributory
negligence, we agree with petitioner. Contributory negligence is
conduct on the part of the injured party, contributing as a
legal cause to the harm he has suffered, which falls below the
standard to which he is required to conform for his own
protection.59 To hold a person as having contributed to his
injuries, it must be shown that he performed an act that brought
about his injuries in disregard of warning or signs of an impending
danger to health and body.60 To prove contributory negligence, it is
still necessary to establish a causal link, although not proximate,
between the negligence of the party and the succeeding injury. In a
legal sense, negligence is contributory only when it contributes
proximately to the injury, and not simply a condition for its
occurrence.61
The court below found that there was a slight curve before
approaching the tracks; the place was not properly illuminated;
ones view was blocked by a cockpit arena; and Mercelita was not
familiar with the road. Yet, it was also established that Mercelita
was then driving the Mercedes Benz at a speed of 70 km/hr and, in
fact, had overtaken a vehicle a few yards before reaching the
railroad track. Mercelita should not have driven the car the way he
did. However, while his acts contributed to the collision, they
nevertheless do not negate petitioners liability. Pursuant to Article
217962 of the New Civil Code, the only effect such contributory
negligence could have is to mitigate liability, which, however, is not
applicable in this case, as will be discussed later.1wphi1
As to whether or not the doctrine of last clear chance is applicable,
we rule in the negative. The doctrine of last clear chance states
that where both parties are negligent but the negligent act of
one is appreciably later than that of the other, or where it is
impossible to determine whose fault or negligence caused the
loss, the one who had the last clear opportunity to avoid the
loss but failed to do so, is chargeable with the loss. Stated
differently, the antecedent negligence of plaintiff does not preclude
him from recovering damages caused by the supervening
negligence of defendant, who had the last fair chance to prevent
the impending harm by the exercise of due diligence.63 The
proximate cause of the injury having been established to be the
Page 49 of 205
negligence of petitioner, we hold that the above doctrine finds no
application in the instant case.
We note that the damages awarded by the appellate court consist
of (1) P50,000.00 as indemnity for the death of Rhonda Brunty; (2)
P1,000,000.00 as actual and moral damages due the heirs of
Rhonda Brunty; and (3) P50,000.00 as and by way of attorneys
fees. No damages, however, were awarded for the injuries suffered
by Garcia, yet, the latter never interposed an appeal before the CA
nor even before this Court. The record is, likewise, bereft of any
allegation and proof as to the relationship between Mercelita (the
driver) and Rhonda Brunty. Hence, the earlier finding of
contributory negligence on the part of Mercelita, which generally
has the effect of mitigation of liability, does not apply.
As to the amount of damages awarded, a modification of the same
is in order, specifically on the award of actual and moral damages
in the aggregate amount of P1,000,000.00.
Actual or compensatory damages are those awarded in order to
compensate a party for an injury or loss he suffered. They
arise out of a sense of natural justice, aimed at repairing the
wrong done. To be recoverable, they must be duly proved with
a reasonable degree of certainty. A court cannot rely on
speculation, conjecture, or guesswork as to the fact and amount of
damages, but must depend upon competent proof that they have
suffered, and on evidence of the actual amount thereof. 64
Respondents, however, failed to present evidence for such
damages; hence, the award of actual damages cannot be sustained.
However, as the heirs of Rhonda Brunty undeniably incurred
expenses for the wake and burial of the latter, we deem it proper to
award temperate damages in the amount of P25,000.00 pursuant
to prevailing jurisprudence.65 This is in lieu of actual damages as it
would be unfair for the victims heirs to get nothing, despite the
death of their kin, for the reason alone that they cannot produce
receipts.66
The relatives of the victim who incurred physical injuries in a
quasi-delict are not proscribed from recovering moral damages in
meritorious cases.67 We, therefore, sustain the award of moral
damages in favor of the heirs of Rhonda Brunty.
Moral damages are not punitive in nature, but are designed to
compensate and alleviate in some way the physical suffering,
mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation,
and similar injury unjustly caused a person. Although
incapable of pecuniary computation, moral damages must
nevertheless be somehow proportional to and in approximation
of the suffering inflicted.68 In the instant case, the moral
suffering of the heirs of Rhonda Brunty was sufficiently established
by Ethel Brunty in her deposition, 69 viz:
Q: What have you felt as a result of the death of Rhonda?
A: I felt earnest anguish and mixed feelings of anger and extreme
sorrow because she died so far away and alone, and because her
death could so easily be prevented if there had been adequate and
appropriate warning signals at the railroad crossing and it is just
an unbearable and irreparable loss. In so many ways, she was my
life. It seemed to me that losing her was just like losing my own
life, or worst, and even now, there is no end to our bereavement. I
am still on constant medication to be able to sleep and to be able to
perform my duties effectively in my job but it does not take away
the pain of loss.70
In People v. Teehankee, Jr.,71 and in Metro Manila Transit
Corporation v. Court of Appeals,72 we awarded moral damages in
Page 50 of 205
the amount of P1,000,000.00 to the heirs of the deceased. In
Victory Liner, Inc. v. Heirs of Malecdan, 73 the award of
P100,000.00 as moral damages was held in keeping with the
purpose of the law, while in Macalinao v. Ong, 74 the amount of
P50,000.00 was held sufficient.1wphi1
Considering the circumstances attendant in this case, we find that
an award of P500,000.00 as moral damages to the heirs of Rhonda
Brunty is proper. In view of recent jurisprudence, indemnity of
P50,000.00 for the death of Rhonda Brunty and attorneys fees
amounting to P50,000.00 is likewise proper.
WHEREFORE, premises considered, the Decision of the Court of
Appeals dated August 15, 2005 is AFFIRMED WITH
MODIFICATIONS. The award of actual damages is deleted, and in
lieu thereof, temperate damages of P25,000.00 is awarded to the
heirs of Rhonda Brunty. The award of moral damages is reduced to
P500,000.00.
SO ORDERED.

Page 51 of 205
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-40452 October 12, 1989
GREGORIO GENOBIAGON, petitioner,
vs.
COURT OF APPEALS and PEOPLE OF THE PHILIPPINES,
respondents.
Mario D. Ortiz for petitioner.
GRIO-AQUINO, J.:
This is a petition for review of the Court of Appeals' decision in CA-
G.R. No. 09949-CR, dated October 10, 1974, affirming the
conviction of the petitioner of the crime of homicide thru reckless
imprudence.
As found by the Court of Appeals, the facts of this case are:
On December 31,1959, at about 7:30 o'clock in the
evening, a rig driven by appellant bumped an old
woman who was crossing T. Padilla St., Cebu City,
at the right side of T. Padilla Market. The appellant's
rig was following another at a distance of two
meters. The old woman started to cross when the
first rig was approaching her, but as appellant's
vehicle was going so fast not only because of the
steep down-grade of the road, but also because he
was trying to overtake the rig ahead of him, the
appellant's rig bumped the old woman, who as a
consequence, fell at the middle of the road. The
appellant continued to drive on, but a by-stander,
one Vicente Mangyao, who just closed his store in
market in order to celebrate the coming of the New
Year, and who saw the incident right before him,
shouted at the appellant to stop. He ran after
appellant when the latter refused to stop.
Overtaking the appellant, Mangyao asked him why
he bumped the old woman and his answer was, 'it
was the old woman that bumped him.' The appellant
went back to the place where the old woman was
struck by his rig. The old woman was unconscious,
and the food and viands she was carrying were
scattered on her body. The victim was then loaded in
a jeep and brought to the hospital where she died
three hours later (Exh. C). The findings after an
autopsy are as follows:
Contusion with Hematoma Left,
Frontal and Occipito-Parietal
Regionas Fracture Occipito-Parietal
Bone Cerebral Hemorrhage.
The deceased was an eighty-one-year old woman
named Rita B. Cabrera. (pp. 31-32, Rollo.)
Petitioner was charged with homicide thru reckless imprudence in
the Court of First Instance of Cebu (Crim. Case No. V7855). The
trial court found petitioner guilty of the felony charged and
sentenced him to "suffer an indeterminate penalty of three (3)
months of arresto mayor as minimum to one (1) year, one (1)
month and eleven (11) days of prision correccional as maximum, to
indemnify the heirs of Rita Banzon Cabrera the sum of P6,000 with
subsidiary imprisonment in case of insolvency, not to exceed 1/3 of
Page 52 of 205
the principal penalty and to pay the costs" (p. 3, Appellant's Brief,
p. 56, Rollo).
The petitioner appealed to the Court of Appeals (CA-G.R. 09949-
CR)which,on October 10,1974,conviction of the accused but
increased his civil liability to P12,000. The dispositive portion of its
decision reads:
WHEREFORE, finding no error in the judgment
appealed from except in the amount of indemnity to
be paid to the heirs of the deceased, Rita B. Cabrera,
which is the sum of P6,000.00 with subsidiary
imprisonment in case of insolvency which should be
raised to P12,000.00 (People vs. Pantoja, G.R. No. L-
18793, October 11, 1968, 25 SCRA 468) but without
subsidiary imprisonment in case of insolvency, the
same should be, as it is hereby affirmed in all other
respects with costs. (P. 37, Rollo.)
After his motion for reconsideration of the Court of Appeals'
decision was denied, he filed a petition for review in this Court,
alleging that the Court of Appeals erred:
1. in not finding that the reckless negligence of the
victim was the proximate cause of the accident
which led to her death;
2. in not acquitting the petitioner on the ground of
reasonable doubt; and
3. in unjustly increasing the civil liability of the
petitioner from P6,000.00 to P12,000.00, although
the circumstances of the victim and the accused
(petitioner) do not warrant such increase.
It is quite evident that all the issues raised in the petition for
review are factual. Well-entrenched in our jurisprudence is the rule
that findings of fact of the trial court and the Court of Appeals are
binding upon us (Bernardo vs. Bernardo, 101 SCRA 351; Vda. De
Roxas vs. IAC, 143 SCRA 77; Republic vs. IAC, 144 SCRA 705).
The alleged contributory negligence of the victim, if any, does not
exonerate the accused. "The defense of contributory negligence
does not apply in criminal cases committed through reckless
imprudence, since one cannot allege the negligence of another
to evade the effects of his own negligence (People vs. Orbeta,
CA-G.R. No. 321, March 29,1947)." (People vs. Quinones, 44 O.G.
1520).
The petitioner's contention that the Court of Appeals unjustly
increased his civil liability to P12,000, is devoid of merit. The
prevailing jurisprudence in fact provides that indemnity for death
in homicide or murder is P30,000 (People vs. De la Fuente,
[1983]126 SCRA 518; People vs. Centeno, 130 SCRA 198).
Accordingly, the civil liability of the petitioner is increased to
P30,000.
WHEREFORE, the appealed decision is affirmed with modification
as to the civil liability of the petitioner which is hereby increased to
P30,000. Costs against petitioner.
SO ORDERED.
Page 53 of 205
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 159617 August 8, 2007
ROBERTO C. SICAM and AGENCIA de R.C. SICAM, INC.,
petitioners,
vs.
LULU V. JORGE and CESAR JORGE, respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
Before us is a Petition for Review on Certiorari filed by Roberto C.
Sicam, Jr. (petitioner Sicam) and Agencia de R.C. Sicam, Inc.
(petitioner corporation) seeking to annul the Decision 1 of the Court
of Appeals dated March 31, 2003, and its Resolution 2 dated August
8, 2003, in CA G.R. CV No. 56633.
It appears that on different dates from September to October 1987,
Lulu V. Jorge (respondent Lulu) pawned several pieces of jewelry
with Agencia de R. C. Sicam located at No. 17 Aguirre Ave., BF
Homes Paraaque, Metro Manila, to secure a loan in the total
amount of P59,500.00.
On October 19, 1987, two armed men entered the pawnshop and
took away whatever cash and jewelry were found inside the
pawnshop vault. The incident was entered in the police blotter of
the Southern Police District, Paraaque Police Station as follows:
Investigation shows that at above TDPO, while victims were
inside the office, two (2) male unidentified persons entered
into the said office with guns drawn. Suspects(sic) (1) went
straight inside and poked his gun toward Romeo Sicam and
thereby tied him with an electric wire while suspects (sic)
(2) poked his gun toward Divina Mata and Isabelita
Rodriguez and ordered them to lay (sic) face flat on the
floor. Suspects asked forcibly the case and assorted pawned
jewelries items mentioned above.
Suspects after taking the money and jewelries fled on board
a Marson Toyota unidentified plate number.3
Petitioner Sicam sent respondent Lulu a letter dated October 19,
1987 informing her of the loss of her jewelry due to the robbery
incident in the pawnshop. On November 2, 1987, respondent Lulu
then wrote a letter4 to petitioner Sicam expressing disbelief stating
that when the robbery happened, all jewelry pawned were
deposited with Far East Bank near the pawnshop since it had been
the practice that before they could withdraw, advance notice must
be given to the pawnshop so it could withdraw the jewelry from the
bank. Respondent Lulu then requested petitioner Sicam to prepare
the pawned jewelry for withdrawal on November 6, 1987 but
petitioner Sicam failed to return the jewelry.
On September 28, 1988, respondent Lulu joined by her husband,
Cesar Jorge, filed a complaint against petitioner Sicam with the
Regional Trial Court of Makati seeking indemnification for the loss
of pawned jewelry and payment of actual, moral and exemplary
damages as well as attorney's fees. The case was docketed as Civil
Case No. 88-2035.
Petitioner Sicam filed his Answer contending that he is not the real
party-in-interest as the pawnshop was incorporated on April 20,
1987 and known as Agencia de R.C. Sicam, Inc; that petitioner
corporation had exercised due care and diligence in the
safekeeping of the articles pledged with it and could not be made
liable for an event that is fortuitous.
Page 54 of 205
Respondents subsequently filed an Amended Complaint to include
petitioner corporation.
Thereafter, petitioner Sicam filed a Motion to Dismiss as far as he
is concerned considering that he is not the real party-in-interest.
Respondents opposed the same. The RTC denied the motion in an
Order dated November 8, 1989.5
After trial on the merits, the RTC rendered its Decision 6 dated
January 12, 1993, dismissing respondents complaint as well as
petitioners counterclaim. The RTC held that petitioner Sicam could
not be made personally liable for a claim arising out of a corporate
transaction; that in the Amended Complaint of respondents, they
asserted that "plaintiff pawned assorted jewelries in defendants'
pawnshop"; and that as a consequence of the separate juridical
personality of a corporation, the corporate debt or credit is not the
debt or credit of a stockholder.
The RTC further ruled that petitioner corporation could not be held
liable for the loss of the pawned jewelry since it had not been
rebutted by respondents that the loss of the pledged pieces of
jewelry in the possession of the corporation was occasioned by
armed robbery; that robbery is a fortuitous event which exempts
the victim from liability for the loss, citing the case of Austria v.
Court of Appeals;7 and that the parties transaction was that of a
pledgor and pledgee and under Art. 1174 of the Civil Code, the
pawnshop as a pledgee is not responsible for those events which
could not be foreseen.
Respondents appealed the RTC Decision to the CA. In a Decision
dated March 31, 2003, the CA reversed the RTC, the dispositive
portion of which reads as follows:
WHEREFORE, premises considered, the instant Appeal is
GRANTED, and the Decision dated January 12, 1993,of the
Regional Trial Court of Makati, Branch 62, is hereby
REVERSED and SET ASIDE, ordering the appellees to pay
appellants the actual value of the lost jewelry amounting to
P272,000.00, and attorney' fees of P27,200.00.8
In finding petitioner Sicam liable together with petitioner
corporation, the CA applied the doctrine of piercing the veil of
corporate entity reasoning that respondents were misled into
thinking that they were dealing with the pawnshop owned by
petitioner Sicam as all the pawnshop tickets issued to them bear
the words "Agencia de R.C. Sicam"; and that there was no
indication on the pawnshop tickets that it was the petitioner
corporation that owned the pawnshop which explained why
respondents had to amend their complaint impleading petitioner
corporation.
The CA further held that the corresponding diligence required of a
pawnshop is that it should take steps to secure and protect the
pledged items and should take steps to insure itself against the
loss of articles which are entrusted to its custody as it derives
earnings from the pawnshop trade which petitioners failed to do;
that Austria is not applicable to this case since the robbery
incident happened in 1961 when the criminality had not as yet
reached the levels attained in the present day; that they are at
least guilty of contributory negligence and should be held liable for
the loss of jewelries; and that robberies and hold-ups are
foreseeable risks in that those engaged in the pawnshop business
are expected to foresee.
The CA concluded that both petitioners should be jointly and
severally held liable to respondents for the loss of the pawned
jewelry.
Page 55 of 205
Petitioners motion for reconsideration was denied in a Resolution
dated August 8, 2003.
Hence, the instant petition for review with the following assignment
of errors:
THE COURT OF APPEALS ERRED AND WHEN IT DID, IT
OPENED ITSELF TO REVERSAL, WHEN IT ADOPTED
UNCRITICALLY (IN FACT IT REPRODUCED AS ITS OWN
WITHOUT IN THE MEANTIME ACKNOWLEDGING IT) WHAT
THE RESPONDENTS ARGUED IN THEIR BRIEF, WHICH
ARGUMENT WAS PALPABLY UNSUSTAINABLE.
THE COURT OF APPEALS ERRED, AND WHEN IT DID, IT
OPENED ITSELF TO REVERSAL BY THIS HONORABLE
COURT, WHEN IT AGAIN ADOPTED UNCRITICALLY (BUT
WITHOUT ACKNOWLEDGING IT) THE SUBMISSIONS OF
THE RESPONDENTS IN THEIR BRIEF WITHOUT ADDING
ANYTHING MORE THERETO DESPITE THE FACT THAT
THE SAID ARGUMENT OF THE RESPONDENTS COULD
NOT HAVE BEEN SUSTAINED IN VIEW OF UNREBUTTED
EVIDENCE ON RECORD.9
Anent the first assigned error, petitioners point out that the CAs
finding that petitioner Sicam is personally liable for the loss of the
pawned jewelries is "a virtual and uncritical reproduction of the
arguments set out on pp. 5-6 of the Appellants brief."10
Petitioners argue that the reproduced arguments of respondents in
their Appellants Brief suffer from infirmities, as follows:
(1) Respondents conclusively asserted in paragraph 2 of
their Amended Complaint that Agencia de R.C. Sicam, Inc.
is the present owner of Agencia de R.C. Sicam Pawnshop,
and therefore, the CA cannot rule against said conclusive
assertion of respondents;
(2) The issue resolved against petitioner Sicam was not
among those raised and litigated in the trial court; and
(3) By reason of the above infirmities, it was error for the CA
to have pierced the corporate veil since a corporation has a
personality distinct and separate from its individual
stockholders or members.
Anent the second error, petitioners point out that the CA finding on
their negligence is likewise an unedited reproduction of
respondents brief which had the following defects:
(1) There were unrebutted evidence on record that
petitioners had observed the diligence required of them, i.e,
they wanted to open a vault with a nearby bank for
purposes of safekeeping the pawned articles but was
discouraged by the Central Bank (CB) since CB rules
provide that they can only store the pawned articles in a
vault inside the pawnshop premises and no other place;
(2) Petitioners were adjudged negligent as they did not take
insurance against the loss of the pledged jelweries, but it is
judicial notice that due to high incidence of crimes,
insurance companies refused to cover pawnshops and
banks because of high probability of losses due to
robberies;
(3) In Hernandez v. Chairman, Commission on Audit (179
SCRA 39, 45-46), the victim of robbery was exonerated from
liability for the sum of money belonging to others and lost
by him to robbers.
Respondents filed their Comment and petitioners filed their Reply
thereto. The parties subsequently submitted their respective
Memoranda.
We find no merit in the petition.
Page 56 of 205
To begin with, although it is true that indeed the CA findings were
exact reproductions of the arguments raised in respondents
(appellants) brief filed with the CA, we find the same to be not
fatally infirmed. Upon examination of the Decision, we find that it
expressed clearly and distinctly the facts and the law on which it is
based as required by Section 8, Article VIII of the Constitution. The
discretion to decide a case one way or another is broad enough to
justify the adoption of the arguments put forth by one of the
parties, as long as these are legally tenable and supported by law
and the facts on records.11
Our jurisdiction under Rule 45 of the Rules of Court is limited to
the review of errors of law committed by the appellate court.
Generally, the findings of fact of the appellate court are deemed
conclusive and we are not duty-bound to analyze and calibrate all
over again the evidence adduced by the parties in the court a quo.12
This rule, however, is not without exceptions, such as where the
factual findings of the Court of Appeals and the trial court are
conflicting or contradictory13 as is obtaining in the instant case.
However, after a careful examination of the records, we find no
justification to absolve petitioner Sicam from liability.
The CA correctly pierced the veil of the corporate fiction and
adjudged petitioner Sicam liable together with petitioner
corporation. The rule is that the veil of corporate fiction may be
pierced when made as a shield to perpetrate fraud and/or confuse
legitimate issues. 14 The theory of corporate entity was not meant
to promote unfair objectives or otherwise to shield them.15
Notably, the evidence on record shows that at the time respondent
Lulu pawned her jewelry, the pawnshop was owned by petitioner
Sicam himself. As correctly observed by the CA, in all the
pawnshop receipts issued to respondent Lulu in September 1987,
all bear the words "Agencia de R. C. Sicam," notwithstanding that
the pawnshop was allegedly incorporated in April 1987. The
receipts issued after such alleged incorporation were still in the
name of "Agencia de R. C. Sicam," thus inevitably misleading, or at
the very least, creating the wrong impression to respondents and
the public as well, that the pawnshop was owned solely by
petitioner Sicam and not by a corporation.
Even petitioners counsel, Atty. Marcial T. Balgos, in his letter 16
dated October 15, 1987 addressed to the Central Bank, expressly
referred to petitioner Sicam as the proprietor of the pawnshop
notwithstanding the alleged incorporation in April 1987.
We also find no merit in petitioners' argument that since
respondents had alleged in their Amended Complaint that
petitioner corporation is the present owner of the pawnshop, the
CA is bound to decide the case on that basis.
Section 4 Rule 129 of the Rules of Court provides that an
admission, verbal or written, made by a party in the course of the
proceedings in the same case, does not require proof. The
admission may be contradicted only by showing that it was made
through palpable mistake or that no such admission was made.
Thus, the general rule that a judicial admission is conclusive upon
the party making it and does not require proof, admits of two
exceptions, to wit: (1) when it is shown that such admission was
made through palpable mistake, and (2) when it is shown that no
such admission was in fact made. The latter exception allows
one to contradict an admission by denying that he made such
an admission.17
The Committee on the Revision of the Rules of Court explained the
second exception in this wise:
Page 57 of 205
 x x x if a party invokes an "admission" by an adverse party,
but cites the admission "out of context," then the one
making the "admission" may show that he made no "such"
admission, or that his admission was taken out of
context.
x x x that the party can also show that he made no
"such admission", i.e., not in the sense in which the
admission is made to appear.
That is the reason for the modifier "such" because if the
rule simply states that the admission may be contradicted
by showing that "no admission was made," the rule would
not really be providing for a contradiction of the admission
but just a denial.18 (Emphasis supplied).
While it is true that respondents alleged in their Amended
Complaint that petitioner corporation is the present owner of the
pawnshop, they did so only because petitioner Sicam alleged in his
Answer to the original complaint filed against him that he was not
the real party-in-interest as the pawnshop was incorporated in
April 1987. Moreover, a reading of the Amended Complaint in its
entirety shows that respondents referred to both petitioner Sicam
and petitioner corporation where they (respondents) pawned their
assorted pieces of jewelry and ascribed to both the failure to
observe due diligence commensurate with the business which
resulted in the loss of their pawned jewelry.
Markedly, respondents, in their Opposition to petitioners Motion to
Dismiss Amended Complaint, insofar as petitioner Sicam is
concerned, averred as follows:
Roberto C. Sicam was named the defendant in the original
complaint because the pawnshop tickets involved in this
case did not show that the R.C. Sicam Pawnshop was a
corporation. In paragraph 1 of his Answer, he admitted the
allegations in paragraph 1 and 2 of the Complaint. He
merely added "that defendant is not now the real party in
interest in this case."
It was defendant Sicam's omission to correct the pawnshop
tickets used in the subject transactions in this case which
was the cause of the instant action. He cannot now ask for
the dismissal of the complaint against him simply on the
mere allegation that his pawnshop business is now
incorporated. It is a matter of defense, the merit of which
can only be reached after consideration of the evidence to
be presented in due course.19
Unmistakably, the alleged admission made in respondents'
Amended Complaint was taken "out of context" by petitioner Sicam
to suit his own purpose. Ineluctably, the fact that petitioner Sicam
continued to issue pawnshop receipts under his name and not
under the corporation's name militates for the piercing of the
corporate veil.
We likewise find no merit in petitioners' contention that the CA
erred in piercing the veil of corporate fiction of petitioner
corporation, as it was not an issue raised and litigated before the
RTC.
Petitioner Sicam had alleged in his Answer filed with the trial court
that he was not the real party-in-interest because since April 20,
1987, the pawnshop business initiated by him was incorporated
and known as Agencia de R.C. Sicam. In the pre-trial brief filed by
petitioner Sicam, he submitted that as far as he was concerned,
the basic issue was whether he is the real party in interest against
whom the complaint should be directed.20 In fact, he subsequently
moved for the dismissal of the complaint as to him but was not
Page 58 of 205
favorably acted upon by the trial court. Moreover, the issue was
squarely passed upon, although erroneously, by the trial court in
its Decision in this manner:
x x x The defendant Roberto Sicam, Jr likewise denies
liability as far as he is concerned for the reason that he
cannot be made personally liable for a claim arising from a
corporate transaction.
This Court sustains the contention of the defendant
Roberto C. Sicam, Jr. The amended complaint itself asserts
that "plaintiff pawned assorted jewelries in defendant's
pawnshop." It has been held that " as a consequence of the
separate juridical personality of a corporation, the corporate
debt or credit is not the debt or credit of the stockholder,
nor is the stockholder's debt or credit that of a
corporation.21
Clearly, in view of the alleged incorporation of the pawnshop, the
issue of whether petitioner Sicam is personally liable is inextricably
connected with the determination of the question whether the
doctrine of piercing the corporate veil should or should not apply to
the case.
The next question is whether petitioners are liable for the loss of
the pawned articles in their possession.
Petitioners insist that they are not liable since robbery is a
fortuitous event and they are not negligent at all.
We are not persuaded.
Article 1174 of the Civil Code provides:
Art. 1174. Except in cases expressly specified by the law, or
when it is otherwise declared by stipulation, or when the
nature of the obligation requires the assumption of risk, no
person shall be responsible for those events which could
not be foreseen or which, though foreseen, were inevitable.
Fortuitous events by definition are extraordinary events not
foreseeable or avoidable. It is therefore, not enough that the event
should not have been foreseen or anticipated, as is commonly
believed but it must be one impossible to foresee or to avoid. The
mere difficulty to foresee the happening is not impossibility to
foresee the same. 22
To constitute a fortuitous event, the following elements must
concur: (a) the cause of the unforeseen and unexpected occurrence
or of the failure of the debtor to comply with obligations must be
independent of human will; (b) it must be impossible to foresee the
event that constitutes the caso fortuito or, if it can be foreseen, it
must be impossible to avoid; (c) the occurrence must be such as to
render it impossible for the debtor to fulfill obligations in a normal
manner; and, (d) the obligor must be free from any participation in
the aggravation of the injury or loss. 23
The burden of proving that the loss was due to a fortuitous event
rests on him who invokes it.24 And, in order for a fortuitous event
to exempt one from liability, it is necessary that one has committed
no negligence or misconduct that may have occasioned the loss. 25
It has been held that an act of God cannot be invoked to protect a
person who has failed to take steps to forestall the possible adverse
consequences of such a loss. One's negligence may have concurred
with an act of God in producing damage and injury to another;
nonetheless, showing that the immediate or proximate cause of the
damage or injury was a fortuitous event would not exempt one
from liability. When the effect is found to be partly the result of a
person's participation -- whether by active intervention, neglect or
Page 59 of 205
failure to act -- the whole occurrence is humanized and removed
from the rules applicable to acts of God. 26
Petitioner Sicam had testified that there was a security guard in
their pawnshop at the time of the robbery. He likewise testified that
when he started the pawnshop business in 1983, he thought of
opening a vault with the nearby bank for the purpose of
safekeeping the valuables but was discouraged by the Central
Bank since pawned articles should only be stored in a vault inside
the pawnshop. The very measures which petitioners had allegedly
adopted show that to them the possibility of robbery was not only
foreseeable, but actually foreseen and anticipated. Petitioner
Sicams testimony, in effect, contradicts petitioners defense of
fortuitous event.
Moreover, petitioners failed to show that they were free from any
negligence by which the loss of the pawned jewelry may have been
occasioned.
Robbery per se, just like carnapping, is not a fortuitous event. It
does not foreclose the possibility of negligence on the part of herein
petitioners. In Co v. Court of Appeals,27 the Court held:
It is not a defense for a repair shop of motor vehicles to
escape liability simply because the damage or loss of a
thing lawfully placed in its possession was due to
carnapping. Carnapping per se cannot be considered as a
fortuitous event. The fact that a thing was unlawfully and
forcefully taken from another's rightful possession, as
in cases of carnapping, does not automatically give rise
to a fortuitous event. To be considered as such,
carnapping entails more than the mere forceful taking
of another's property. It must be proved and established
that the event was an act of God or was done solely by
third parties and that neither the claimant nor the
person alleged to be negligent has any participation. In
accordance with the Rules of Evidence, the burden of
proving that the loss was due to a fortuitous event rests
on him who invokes it which in this case is the
private respondent. However, other than the police report
of the alleged carnapping incident, no other evidence was
presented by private respondent to the effect that the
incident was not due to its fault. A police report of an
alleged crime, to which only private respondent is privy,
does not suffice to establish the carnapping. Neither does it
prove that there was no fault on the part of private
respondent notwithstanding the parties' agreement at the
pre-trial that the car was carnapped. Carnapping does not
foreclose the possibility of fault or negligence on the part of
private respondent.28
Just like in Co, petitioners merely presented the police report of the
Paraaque Police Station on the robbery committed based on the
report of petitioners' employees which is not sufficient to establish
robbery. Such report also does not prove that petitioners were not
at fault.
On the contrary, by the very evidence of petitioners, the CA did not
err in finding that petitioners are guilty of concurrent or
contributory negligence as provided in Article 1170 of the Civil
Code, to wit:
Art. 1170. Those who in the performance of their
obligations are guilty of fraud, negligence, or delay, and
those who in any manner contravene the tenor thereof, are
liable for damages.29
Page 60 of 205
Article 2123 of the Civil Code provides that with regard to
pawnshops and other establishments which are engaged in making
loans secured by pledges, the special laws and regulations
concerning them shall be observed, and subsidiarily, the provisions
on pledge, mortgage and antichresis.
The provision on pledge, particularly Article 2099 of the Civil Code,
provides that the creditor shall take care of the thing pledged with
the diligence of a good father of a family. This means that
petitioners must take care of the pawns the way a prudent person
would as to his own property.
In this connection, Article 1173 of the Civil Code further provides:
Art. 1173. The fault or negligence of the obligor consists in
the omission of that diligence which is required by the
nature of the obligation and corresponds with the
circumstances of the persons, of time and of the place.
When negligence shows bad faith, the provisions of Articles
1171 and 2201, paragraph 2 shall apply.
If the law or contract does not state the diligence which is to
be observed in the performance, that which is expected of a
good father of a family shall be required.
We expounded in Cruz v. Gangan30 that negligence is the omission
to do something which a reasonable man, guided by those
considerations which ordinarily regulate the conduct of human
affairs, would do; or the doing of something which a prudent and
reasonable man would not do.31 It is want of care required by the
circumstances.
A review of the records clearly shows that petitioners failed to
exercise reasonable care and caution that an ordinarily prudent
person would have used in the same situation. Petitioners were
guilty of negligence in the operation of their pawnshop business.
Petitioner Sicam testified, thus:
Court:
Q. Do you have security guards in your pawnshop?
A. Yes, your honor.
Q. Then how come that the robbers were able to enter the
premises when according to you there was a security
guard?
A. Sir, if these robbers can rob a bank, how much more a
pawnshop.
Q. I am asking you how were the robbers able to enter
despite the fact that there was a security guard?
A. At the time of the incident which happened about 1:00
and 2:00 o'clock in the afternoon and it happened on a
Saturday and everything was quiet in the area BF Homes
Paraaque they pretended to pawn an article in the
pawnshop, so one of my employees allowed him to come in
and it was only when it was announced that it was a hold
up.
Q. Did you come to know how the vault was opened?
A. When the pawnshop is official (sic) open your honor the
pawnshop is partly open. The combination is off.
Q. No one open (sic) the vault for the robbers?
A. No one your honor it was open at the time of the robbery.
Q. It is clear now that at the time of the robbery the vault
was open the reason why the robbers were able to get all
the items pawned to you inside the vault.
A. Yes sir.32
revealing that there were no security measures adopted by
petitioners in the operation of the pawnshop. Evidently, no
Page 61 of 205
sufficient precaution and vigilance were adopted by petitioners to
protect the pawnshop from unlawful intrusion. There was no clear
showing that there was any security guard at all. Or if there was
one, that he had sufficient training in securing a pawnshop.
Further, there is no showing that the alleged security guard
exercised all that was necessary to prevent any untoward incident
or to ensure that no suspicious individuals were allowed to enter
the premises. In fact, it is even doubtful that there was a security
guard, since it is quite impossible that he would not have noticed
that the robbers were armed with caliber .45 pistols each, which
were allegedly poked at the employees. 33 Significantly, the alleged
security guard was not presented at all to corroborate petitioner
Sicam's claim; not one of petitioners' employees who were present
during the robbery incident testified in court.
Furthermore, petitioner Sicam's admission that the vault was open
at the time of robbery is clearly a proof of petitioners' failure to
observe the care, precaution and vigilance that the circumstances
justly demanded. Petitioner Sicam testified that once the pawnshop
was open, the combination was already off. Considering petitioner
Sicam's testimony that the robbery took place on a Saturday
afternoon and the area in BF Homes Paraaque at that time was
quiet, there was more reason for petitioners to have exercised
reasonable foresight and diligence in protecting the pawned
jewelries. Instead of taking the precaution to protect them, they let
open the vault, providing no difficulty for the robbers to cart away
the pawned articles.
We, however, do not agree with the CA when it found petitioners
negligent for not taking steps to insure themselves against loss of
the pawned jewelries.
Under Section 17 of Central Bank Circular No. 374, Rules and
Regulations for Pawnshops, which took effect on July 13, 1973,
and which was issued pursuant to Presidential Decree No. 114,
Pawnshop Regulation Act, it is provided that pawns pledged must
be insured, to wit:
Sec. 17. Insurance of Office Building and Pawns- The place
of business of a pawnshop and the pawns pledged to it
must be insured against fire and against burglary as well
as for the latter(sic), by an insurance company accredited
by the Insurance Commissioner.
However, this Section was subsequently amended by CB Circular
No. 764 which took effect on October 1, 1980, to wit:
Sec. 17 Insurance of Office Building and Pawns The office
building/premises and pawns of a pawnshop must be
insured against fire. (emphasis supplied).
where the requirement that insurance against burglary was
deleted. Obviously, the Central Bank considered it not feasible to
require insurance of pawned articles against burglary.
The robbery in the pawnshop happened in 1987, and considering
the above-quoted amendment, there is no statutory duty imposed
on petitioners to insure the pawned jewelry in which case it was
error for the CA to consider it as a factor in concluding that
petitioners were negligent.
Nevertheless, the preponderance of evidence shows that petitioners
failed to exercise the diligence required of them under the Civil
Code.
The diligence with which the law requires the individual at all
times to govern his conduct varies with the nature of the situation
in which he is placed and the importance of the act which he is to
perform.34 Thus, the cases of Austria v. Court of Appeals,35
Page 62 of 205
Hernandez v. Chairman, Commission on Audit36 and Cruz v.
Gangan37 cited by petitioners in their pleadings, where the victims
of robbery were exonerated from liability, find no application to the
present case.
In Austria, Maria Abad received from Guillermo Austria a pendant
with diamonds to be sold on commission basis, but which Abad
failed to subsequently return because of a robbery committed upon
her in 1961. The incident became the subject of a criminal case
filed against several persons. Austria filed an action against Abad
and her husband (Abads) for recovery of the pendant or its value,
but the Abads set up the defense that the robbery extinguished
their obligation. The RTC ruled in favor of Austria, as the Abads
failed to prove robbery; or, if committed, that Maria Abad was
guilty of negligence. The CA, however, reversed the RTC decision
holding that the fact of robbery was duly established and declared
the Abads not responsible for the loss of the jewelry on account of
a fortuitous event. We held that for the Abads to be relieved from
the civil liability of returning the pendant under Art. 1174 of the
Civil Code, it would only be sufficient that the unforeseen event,
the robbery, took place without any concurrent fault on the
debtors part, and this can be done by preponderance of evidence;
that to be free from liability for reason of fortuitous event, the
debtor must, in addition to the casus itself, be free of any
concurrent or contributory fault or negligence. 38
We found in Austria that under the circumstances prevailing at the
time the Decision was promulgated in 1971, the City of Manila and
its suburbs had a high incidence of crimes against persons and
property that rendered travel after nightfall a matter to be
sedulously avoided without suitable precaution and protection;
that the conduct of Maria Abad in returning alone to her house in
the evening carrying jewelry of considerable value would have been
negligence per se and would not exempt her from responsibility in
the case of robbery. However we did not hold Abad liable for
negligence since, the robbery happened ten years previously; i.e.,
1961, when criminality had not reached the level of incidence
obtaining in 1971.
In contrast, the robbery in this case took place in 1987 when
robbery was already prevalent and petitioners in fact had already
foreseen it as they wanted to deposit the pawn with a nearby bank
for safekeeping. Moreover, unlike in Austria, where no negligence
was committed, we found petitioners negligent in securing their
pawnshop as earlier discussed.
In Hernandez, Teodoro Hernandez was the OIC and special
disbursing officer of the Ternate Beach Project of the Philippine
Tourism in Cavite. In the morning of July 1, 1983, a Friday, he
went to Manila to encash two checks covering the wages of the
employees and the operating expenses of the project. However for
some reason, the processing of the check was delayed and was
completed at about 3 p.m. Nevertheless, he decided to encash the
check because the project employees would be waiting for their pay
the following day; otherwise, the workers would have to wait until
July 5, the earliest time, when the main office would open. At that
time, he had two choices: (1) return to Ternate, Cavite that same
afternoon and arrive early evening; or (2) take the money with him
to his house in Marilao, Bulacan, spend the night there, and leave
for Ternate the following day. He chose the second option, thinking
it was the safer one. Thus, a little past 3 p.m., he took a passenger
jeep bound for Bulacan. While the jeep was on Epifanio de los
Santos Avenue, the jeep was held up and the money kept by
Hernandez was taken, and the robbers jumped out of the jeep and
Page 63 of 205
ran. Hernandez chased the robbers and caught up with one robber
who was subsequently charged with robbery and pleaded guilty.
The other robber who held the stolen money escaped. The
Commission on Audit found Hernandez negligent because he had
not brought the cash proceeds of the checks to his office in
Ternate, Cavite for safekeeping, which is the normal procedure in
the handling of funds. We held that Hernandez was not negligent
in deciding to encash the check and bringing it home to Marilao,
Bulacan instead of Ternate, Cavite due to the lateness of the hour
for the following reasons: (1) he was moved by unselfish motive for
his co-employees to collect their wages and salaries the following
day, a Saturday, a non-working, because to encash the check on
July 5, the next working day after July 1, would have caused
discomfort to laborers who were dependent on their wages for
sustenance; and (2) that choosing Marilao as a safer destination,
being nearer, and in view of the comparative hazards in the trips to
the two places, said decision seemed logical at that time. We
further held that the fact that two robbers attacked him in broad
daylight in the jeep while it was on a busy highway and in the
presence of other passengers could not be said to be a result of his
imprudence and negligence.
Unlike in Hernandez where the robbery happened in a public
utility, the robbery in this case took place in the pawnshop which
is under the control of petitioners. Petitioners had the means to
screen the persons who were allowed entrance to the premises and
to protect itself from unlawful intrusion. Petitioners had failed to
exercise precautionary measures in ensuring that the robbers were
prevented from entering the pawnshop and for keeping the vault
open for the day, which paved the way for the robbers to easily cart
away the pawned articles.
In Cruz, Dr. Filonila O. Cruz, Camanava District Director of
Technological Education and Skills Development Authority
(TESDA), boarded the Light Rail Transit (LRT) from Sen. Puyat
Avenue to Monumento when her handbag was slashed and the
contents were stolen by an unidentified person. Among those
stolen were her wallet and the government-issued cellular phone.
She then reported the incident to the police authorities; however,
the thief was not located, and the cellphone was not recovered. She
also reported the loss to the Regional Director of TESDA, and she
requested that she be freed from accountability for the cellphone.
The Resident Auditor denied her request on the ground that she
lacked the diligence required in the custody of government property
and was ordered to pay the purchase value in the total amount of
P4,238.00. The COA found no sufficient justification to grant the
request for relief from accountability. We reversed the ruling and
found that riding the LRT cannot per se be denounced as a
negligent act more so because Cruzs mode of transit was
influenced by time and money considerations; that she boarded the
LRT to be able to arrive in Caloocan in time for her 3 pm meeting;
that any prudent and rational person under similar circumstance
can reasonably be expected to do the same; that possession of a
cellphone should not hinder one from boarding the LRT coach as
Cruz did considering that whether she rode a jeep or bus, the risk
of theft would have also been present; that because of her relatively
low position and pay, she was not expected to have her own vehicle
or to ride a taxicab; she did not have a government assigned
vehicle; that placing the cellphone in a bag away from covetous
eyes and holding on to that bag as she did is ordinarily sufficient
care of a cellphone while traveling on board the LRT; that the
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records did not show any specific act of negligence on her part and
negligence can never be presumed.
Unlike in the Cruz case, the robbery in this case happened in
petitioners' pawnshop and they were negligent in not exercising the
precautions justly demanded of a pawnshop.
WHEREFORE, except for the insurance aspect, the Decision of the
Court of Appeals dated March 31, 2003 and its Resolution dated
August 8, 2003, are AFFIRMED.
Costs against petitioners.
SO ORDERED.

Page 65 of 205
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-45637 May 31, 1985
ROBERTO JUNTILLA, petitioner,
vs.
CLEMENTE FONTANAR, FERNANDO BANZON and BERFOL
CAMORO, respondents.
Valentin A. Zozobrado for petitioner.
Ruperto N. Alfarara for respondents.
GUTIERREZ, JR., J.:
This is a petition for review, on questions of law, of the decision of
the Court of First Instance of Cebu which reversed the decision of
the City Court of Cebu and exonerated the respondents from any
liability arising from a vehicular accident.
The background facts which led to the filing of a complaint for
breach of contract and damages against the respondents are
summarized by the Court of First Instance of Cebu as follows:
The facts established after trial show that the
plaintiff was a passenger of the public utility jeepney
bearing plate No. PUJ-71-7 on the course of the trip
from Danao City to Cebu City. The jeepney was
driven by defendant Berfol Camoro. It was registered
under the franchise of defendant Clemente Fontanar
but was actually owned by defendant Fernando
Banzon. When the jeepney reached Mandaue City,
the right rear tire exploded causing the vehicle to
turn turtle. In the process, the plaintiff who was
sitting at the front seat was thrown out of the
vehicle. Upon landing on the ground, the plaintiff
momentarily lost consciousness. When he came to
his senses, he found that he had a lacerated wound
on his right palm. Aside from this, he suffered
injuries on his left arm, right thigh and on his back.
(Exh. "D"). Because of his shock and injuries, he
went back to Danao City but on the way, he
discovered that his "Omega" wrist watch was lost.
Upon his arrival in Danao City, he immediately
entered the Danao City Hospital to attend to his
injuries, and also requested his father-in-law to
proceed immediately to the place of the accident and
look for the watch. In spite of the efforts of his
father-in-law, the wrist watch, which he bought for
P 852.70 (Exh. "B") could no longer be found.
xxx xxx xxx
Petitioner Roberto Juntilla filed Civil Case No. R-17378 for breach
of contract with damages before the City Court of Cebu City,
Branch I against Clemente Fontanar, Fernando Banzon and Berfol
Camoro.
The respondents filed their answer, alleging inter alia that the
accident that caused losses to the petitioner was beyond the
control of the respondents taking into account that the tire that
exploded was newly bought and was only slightly used at the time
it blew up.
After trial, Judge Romulo R. Senining of the Civil Court of Cebu
rendered judgment in favor of the petitioner and against the
respondents. The dispositive portion of the decision reads:
Page 66 of 205
 WHEREFORE, judgment is hereby rendered in favor
of the plaintiff and against the defendants and the
latter are hereby ordered, jointly and severally, to
pay the plaintiff the sum of P750.00 as
reimbursement for the lost Omega wrist watch, the
sum of P246.64 as unrealized salary of the plaintiff
from his employer, the further sum of P100.00 for
the doctor's fees and medicine, an additional sum of
P300.00 for attorney's fees and the costs.
The respondents appealed to the Court of First Instance of Cebu,
Branch XIV.
Judge Leonardo B. Canares reversed the judgment of the City
Court of Cebu upon a finding that the accident in question was
due to a fortuitous event. The dispositive portion of the decision
reads:
WHEREFORE, judgment is hereby rendered
exonerating the defendants from any liability to the
plaintiff without pronouncement as to costs.
A motion for reconsideration was denied by the Court of First
Instance.
The petitioner raises the following alleged errors committed by the
Court of First Instance of Cebu on appeal
a. The Honorable Court below committed grave
abuse of discretion in failing to take cognizance of
the fact that defendants and/or their employee
failed to exercise "utmost and/or extraordinary
diligence" required of common carriers contemplated
under Art. 1755 of the Civil Code of the Philippines.
b. The Honorable Court below committed grave
abuse of discretion by deciding the case contrary to
the doctrine laid down by the Honorable Supreme
Court in the case of Necesito et al. v. Paras, et al.
We find the petition impressed with merit.
The City Court and the Court of First Instance of Cebu found that
the right rear tire of the passenger jeepney in which the petitioner
was riding blew up causing the vehicle to fall on its side. The
petitioner questions the conclusion of the respondent court drawn
from this finding of fact.
The Court of First Instance of Cebu erred when it absolved the
carrier from any liability upon a finding that the tire blow out is a
fortuitous event. The Court of First Instance of Cebu ruled that:
After reviewing the records of the case, this Court
finds that the accident in question was due to a
fortuitous event. A tire blow-out, such as what
happened in the case at bar, is an inevitable
accident that exempts the carrier from liability,
there being absence of a showing that there was
misconduct or negligence on the part of the operator
in the operation and maintenance of the vehicle
involved. The fact that the right rear tire exploded,
despite being brand new, constitutes a clear case of
caso fortuito which can be a proper basis for
exonerating the defendants from liability. ...
The Court of First Instance relied on the ruling of the Court of
Appeals in Rodriguez v. Red Line Transportation Co., CA G.R. No.
8136, December 29, 1954, where the Court of Appeals ruled that:
A tire blow-out does not constitute negligence unless
the tire was already old and should not have been
used at all. Indeed, this would be a clear case of
fortuitous event.
Page 67 of 205
The foregoing conclusions of the Court of First Instance of Cebu
are based on a misapprehension of overall facts from which a
conclusion should be drawn. The reliance of the Court of First
Instance on the Rodriguez case is not in order. In La Mallorca and
Pampanga Bus Co. v. De Jesus, et al. (17 SCRA 23), we held that:
Petitioner maintains that a tire blow-out is a
fortuitous event and gives rise to no liability for
negligence, citing the rulings of the Court of Appeals
in Rodriguez v. Red Line Transportation Co., CA
G.R. No. 8136, December 29, 1954, and People v.
Palapad, CA-G.R. No. 18480, June 27, 1958. These
rulings, however, not only are not binding on this
Court but were based on considerations quite
different from those that obtain in the case at bar.
The appellate court there made no findings of any
specific acts of negligence on the part of the
defendants and confined itself to the question of
whether or not a tire blow-out, by itself alone and
without a showing as to the causative factors, would
generate liability. ...
In the case at bar, there are specific acts of negligence on the part
of the respondents. The records show that the passenger jeepney
turned turtle and jumped into a ditch immediately after its right
rear tire exploded. The evidence shows that the passenger jeepney
was running at a very fast speed before the accident. We agree with
the observation of the petitioner that a public utility jeep running
at a regular and safe speed will not jump into a ditch when its right
rear tire blows up. There is also evidence to show that the
passenger jeepney was overloaded at the time of the accident. The
petitioner stated that there were three (3) passengers in the front
seat and fourteen (14) passengers in the rear.
While it may be true that the tire that blew-up was still good
because the grooves of the tire were still visible, this fact alone does
not make the explosion of the tire a fortuitous event. No evidence
was presented to show that the accident was due to adverse road
conditions or that precautions were taken by the jeepney driver to
compensate for any conditions liable to cause accidents. The
sudden blowing-up, therefore, could have been caused by too
much air pressure injected into the tire coupled by the fact that the
jeepney was overloaded and speeding at the time of the accident.
In Lasam v. Smith (45 Phil. 657), we laid down the following
essential characteristics of caso fortuito:
xxx xxx xxx
... In a legal sense and, consequently, also in
relation to contracts, a caso fortuito presents the
following essential characteristics: (1) The cause of
the unforeseen and unexpected occurrence, or of the
failure of the debtor to comply with his obligation,
must be independent of the human will. (2) It must
be impossible to foresee the event which constitutes
the caso fortuito, or if it can be foreseen, it must be
impossible to avoid. (3) The occurrence must be
such as to render it impossible for the debtor to
fulfill his obligation in a normal manner. And (4) the
obligor (debtor) must be free from any participation
in the aggravation of the injury resulting to the
creditor. (5 Encyclopedia Juridica Espanola, 309.)
In the case at bar, the cause of the unforeseen and unexpected
occurrence was not independent of the human will. The accident
Page 68 of 205
was caused either through the negligence of the driver or because
of mechanical defects in the tire. Common carriers should teach
their drivers not to overload their vehicles, not to exceed safe and
legal speed limits, and to know the correct measures to take when
a tire blows up thus insuring the safety of passengers at all times.
Relative to the contingency of mechanical defects, we held in
Necesito, et al. v. Paras, et al. (104 Phil. 75), that:
... The preponderance of authority is in favor of the
doctrine that a passenger is entitled to recover
damages from a carrier for an injury resulting from
a defect in an appliance purchased from a
manufacturer, whenever it appears that the defect
would have been discovered by the carrier if it had
exercised the degree of care which under the
circumstances was incumbent upon it, with regard
to inspection and application of the necessary tests.
For the purposes of this doctrine, the manufacturer
is considered as being in law the agent or servant of
the carrier, as far as regards the work of
constructing the appliance. According to this theory,
the good repute of the manufacturer will not relieve
the carrier from liability' (10 Am. Jur. 205, s, 1324;
see also Pennsylvania R. Co. v. Roy, 102 U.S. 451;
20 L. Ed. 141; Southern R. Co. v. Hussey, 74 ALR
1172; 42 Fed. 2d 70; and Ed Note, 29 ALR 788.:
Ann. Cas. 1916E 929).
The rationale of the carrier's liability is the fact that
the passenger has neither choice nor control over
the carrier in the selection and use of the equipment
and appliances in use by the carrier. Having no
privity whatever with the manufacturer or vendor of
the defective equipment, the passenger has no
remedy against him, while the carrier usually has. It
is but logical, therefore, that the carrier, while not
an insurer of the safety of his passengers, should
nevertheless be held to answer for the flaws of his
equipment if such flaws were at all discoverable. ...
It is sufficient to reiterate that the source of a common carrier's
legal liability is the contract of carriage, and by entering into the
said contract, it binds itself to carry the passengers safely as far as
human care and foresight can provide, using the utmost diligence
of a very cautious person, with a due regard for all the
circumstances. The records show that this obligation was not met
by the respondents.
The respondents likewise argue that the petitioner cannot recover
any amount for failure to prove such damages during the trial. The
respondents submit that if the petitioner was really injured, why
was he treated in Danao City and not in Mandaue City where the
accident took place. The respondents argue that the doctor who
issued the medical certificate was not presented during the trial,
and hence not cross-examined. The respondents also claim that
the petitioner was not wearing any wrist watch during the accident.
It should be noted that the City Court of Cebu found that the
petitioner had a lacerated wound on his right palm aside from
injuries on his left arm, right thigh and on his back, and that on
his way back to Danao City, he discovered that his "Omega" wrist
watch was lost. These are findings of facts of the City Court of
Cebu which we find no reason to disturb. More so when we
consider the fact that the Court of First Instance of Cebu impliedly
Page 69 of 205
concurred in these matters when it confined itself to the question
of whether or not the tire blow out was a fortuitous event.
WHEREFORE, the decision of the Court of First Instance of Cebu,
Branch IV appealed from is hereby REVERSED and SET ASIDE,
and the decision of the City Court of Cebu, Branch I is
REINSTATED, with the modification that the damages shall earn
interest at 12% per annum and the attorney's fees are increased to
SIX HUNDRED PESOS (P600.00). Damages shall earn interests
from January 27, 1975.
SO ORDERED.

Page 70 of 205
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 126389 July 10, 1998
SOUTHEASTERN COLLEGE INC., petitioner,
vs.
COURT OF APPEALS, JUANITA DE JESUS VDA. DE DIMAANO,
EMERITA DIMAANO, REMEDIOS DIMAANO, CONSOLACION
DIMAANO and MILAGROS DIMAANO, respondents.
PURISIMA, J.:
Petition for review under Rule 45 of the Rules of Court seeking to
set aside the Decision 1 promulgated on July 31, 1996, and
Resolution 2 dated September 12, 1996 of the Court of Appeals 3 in
CA-G.R. No. 41422, entitled "Juanita de Jesus vda. de Dimaano, et
al. vs. Southeastern College, Inc.", which reduced the moral
damages awarded below from P1,000,000.00 to P200,000.00. 4 The
Resolution under attack denied petitioner's motion for
reconsideration.
Private respondents are owners of a house at 326 College Road,
Pasay City, while petitioner owns a four-storey school building
along the same College Road. On October 11, 1989, at about 6:30
in the morning, a powerful typhoon "Saling" hit Metro Manila.
Buffeted by very strong winds, the roof of petitioner's building was
partly ripped off and blown away, landing on and destroying
portions of the roofing of private respondents' house. After the
typhoon had passed, an ocular inspection of the destroyed building
was conducted by a team of engineers headed by the city building
official, Engr. Jesus L. Reyna. Pertinent aspects of the latter's
Report 5 dated October 18, 1989 stated, as follows:
5. One of the factors that may have led to this
calamitous event is the formation of the building in
the area and the general direction of the wind.
Situated in the peripheral lot is an almost U-shaped
formation of 4-storey building. Thus, with the strong
winds having a westerly direction, the general
formation of the building becomes a big funnel-like
structure, the one situated along College Road,
receiving the heaviest impact of the strong winds.
Hence, there are portions of the roofing, those
located on both ends of the building, which
remained intact after the storm.
6. Another factor and perhaps the most likely reason
for the dislodging of the roofing structural trusses is
the improper anchorage of the said trusses to the
roof beams. The 1/2' diameter steel bars embedded
on the concrete roof beams which serve as truss
anchorage are not bolted nor nailed to the trusses.
Still, there are other steel bars which were not even
bent to the trusses, thus, those trusses are not
anchored at all to the roof beams.
It then recommended that "to avoid any further loss and
damage to lives, limbs and property of persons living in the
vicinity," the fourth floor of subject school building be
declared as a "structural hazard."
In their Complaint 6 before the Regional Trial Court of Pasay City,
Branch 117, for damages based on culpa aquiliana, private
respondents alleged that the damage to their house rendered the
Page 71 of 205
same uninhabitable, forcing them to stay temporarily in others' c) P100,000.00 as
houses. And so they sought to recover from petitioner P117,116.00, attorney's fees;
as actual damages, P1,000,000.00, as moral damages, d) Costs of the instant
P300,000.00, as exemplary damages and P100,000.00, for and as suit.
attorney's fees; plus costs. The claim for exemplary damages is denied for the
In its Answer, petitioner averred that subject school building had reason that the defendants (sic) did in a wanton
withstood several devastating typhoons and other calamities in the fraudulent, reckless, oppressive or malevolent
past, without its roofing or any portion thereof giving way; that it manner.
has not been remiss in its responsibility to see to it that said school In its appeal to the Court of Appeals, petitioner assigned as errors,
building, which houses school children, faculty members, and 8 that:

employees, is "in tip-top condition"; and furthermore, typhoon I

"Saling" was "an act of God and therefore beyond human control" THE TRIAL COURT ERRED IN HOLDING THAT
such that petitioner cannot be answerable for the damages TYPHOON "SALING", AS AN ACT OF GOD, IS NOT
wrought thereby, absent any negligence on its part. "THE SOLE AND ABSOLUTE REASON" FOR THE
The trial court, giving credence to the ocular inspection report to RIPPING-OFF OF THE SMALL PORTION OF THE
the effect that subject school building had a "defective roofing ROOF OF SOUTHEASTERN'S FOUR (4) STOREY
structure," found that, while typhoon "Saling" was accompanied by SCHOOL BUILDING.
strong winds, the damage to private respondents' houses "could II
have been avoided if the construction of the roof of [petitioner's] THE TRIAL COURT ERRED IN HOLDING THAT "THE
building was not faulty." The dispositive portion of the lower court's CONSTRUCTION OF THE ROOF OF DEFENDANT'S
decision 7 reads, thus: SCHOOL BUILDING WAS FAULTY"
WHEREFORE, in view of the foregoing, the Court NOTWITHSTANDING THE ADMISSION THAT
renders judgment (sic) in favor of the plaintiff (sic) THERE WERE TYPHOONS BEFORE BUT NOT AS
and against the defendants, (sic) ordering the latter GRAVE AS TYPHOON "SALING" WHICH IS THE
to pay jointly and severally the former as follows: DIRECT AND PROXIMATE CAUSE OF THE
a) P117,116.00, as INCIDENT.
actual damages, plus III
litigation expenses; THE TRIAL COURT ERRED IN AWARDING ACTUAL
b) P1,000,000.00 as AND MORAL DAMAGES AS WELL AS ATTORNEY'S
moral damages; FEES AND LITIGATION EXPENSES AND COSTS OF

Page 72 of 205
 SUIT TO DIMAANOS WHEN THEY HAVE NOT
INCURRED ACTUAL DAMAGES AT ALL AS
DIMAANOS HAVE ALREADY SOLD THEIR
PROPERTY, AN INTERVENING EVENT THAT
RENDERS THIS CASE MOOT AND ACADEMIC.
IV
THE TRIAL COURT ERRED IN ORDERING THE
ISSUANCE OF THE WRIT OF EXECUTION INSPITE
OF THE PERFECTION OF SOUTHEASTERN'S
APPEAL WHEN THERE IS NO COMPELLING
REASON FOR THE ISSUANCE THERETO.
As mentioned earlier, respondent Court of Appeals affirmed with
modification the trial court's disposition by reducing the award of
moral damages from P1,000,000.00 to P200,000.00. Hence,
petitioner's resort to this Court, raising for resolution the issues of:
1. Whether or not the award of actual damages [sic]
to respondent Dimaanos on the basis of speculation
or conjecture, without proof or receipts of actual
damage, [sic] legally feasible or justified.
2. Whether or not the award of moral damages to
respondent Dimaanos, with the latter having
suffered, actual damage has legal basis.
3. Whether or not respondent Dimaanos who are no
longer the owner of the property, subject matter of
the case, during its pendency, has the right to
pursue their complaint against petitioner when the
case was already moot and academic by the sale of
the property to third party.
4. Whether or not the award of attorney's fees when
the case was already moot academic [sic] legally
justified.
5. Whether or not petitioner is liable for damage
caused to others by typhoon "Saling" being an act of
God.
6. Whether or not the issuance of a writ of execution
pending appeal, ex-parte or without hearing, has
support in law.
The pivot of inquiry here, determinative of the other issues, is
whether the damage on the roof of the building of private
respondents resulting from the impact of the falling portions of the
school building's roof ripped off by the strong winds of typhoon
"Saling", was, within legal contemplation, due to fortuitous event?
If so, petitioner cannot be held liable for the damages suffered by
the private respondents. This conclusion finds support in Article
1174 of Civil Code, which provides:
Art 1174. Except in cases expressly specified by the
law, or when it is otherwise declared by stipulation,
or when the nature of the obligation requires the
assumption of risk, no person shall be responsible
for those events which could not be foreseen, or
which, though foreseen, were inevitable.
The antecedent of fortuitous event or caso fortuito is found in the
Partidas which defines it as "an event which takes place by
accident and could not have been foreseen." 9 Escriche elaborates
it as "an unexpected event or act of God which could neither be
foreseen nor resisted." 10 Civilist Arturo M. Tolentino adds that
"[f]ortuitous events may be produced by two general causes: (1) by
nature, such as earthquakes, storms, floods, epidemics, fires, etc.
Page 73 of 205
and (2) by the act of man, such as an armed invasion, attack by
bandits, governmental prohibitions, robbery, etc." 11
In order that a fortuitous event may exempt a person from liability,
it is necessary that he be free from any previous negligence or
misconduct by reason of which the loss may have been occasioned.
12 An act of God cannot be invoked for the protection of a person
who has been guilty of gross negligence in not trying to forestall its
possible adverse consequences. When a person's negligence
concurs with an act of God in producing damage or injury to
another, such person is not exempt from liability by showing that
the immediate or proximate cause of the damages or injury was a
fortuitous event. When the effect is found to be partly the result of
the participation of man whether it be from active intervention,
or neglect, or failure to act the whole occurrence is hereby
humanized, and removed from the rules applicable to acts of God.
13
In the case under consideration, the lower court accorded full
credence to the finding of the investigating team that subject
school building's roofing had "no sufficient anchorage to hold it in
position especially when battered by strong winds." Based on such
finding, the trial court imputed negligence to petitioner and
adjudged it liable for damages to private respondents.
After a thorough study and evaluation of the evidence on record,
this Court believes otherwise, notwithstanding the general rule that
factual findings by the trail court, especially when affirmed by the
appellate court, are binding and conclusive upon this Court. 14
After a careful scrutiny of the records and the pleadings submitted
by the parties, we find exception to this rule and hold that the
lower courts misappreciated the evidence proffered.
There is no question that a typhoon or storm is a fortuitous event,
a natural occurrence which may be foreseen but is unavoidable
despite any amount of foresight, diligence or care. 15 In order to be
exempt from liability arising from any adverse consequence
engendered thereby, there should have been no human
participation amounting to a negligent act. 16 In other words; the
person seeking exoneration from liability must not be guilty of
negligence. Negligence, as commonly understood, is conduct which
naturally or reasonably creates undue risk or harm to others. It
may be the failure to observe that degree of care, precaution, and
vigilance which the circumstances justify demand, 17 or the
omission to do something which a prudent and reasonable man,
guided by considerations which ordinarily regulate the conduct of
human affairs, would
do. 18 From these premises, we proceed to determine whether
petitioner was negligent, such that if it were not, the damage
caused to private respondents' house could have been avoided?
At the outset, it bears emphasizing that a person claiming damages
for the negligence of another has the burden of proving the
existence of fault or negligence causative of his injury or loss. The
facts constitutive of negligence must be affirmatively established by
competent evidence, 19 not merely by presumptions and
conclusions without basis in fact. Private respondents, in
establishing the culpability of petitioner, merely relied on the
aforementioned report submitted by a team which made an ocular
inspection of petitioner's school building after the typhoon. As the
term imparts, an ocular inspection is one by means of actual sight
or viewing. 20 What is visual to the eye through, is not always
reflective of the real cause behind. For instance, one who hears a
gunshot and then sees a wounded person, cannot always definitely
Page 74 of 205
conclude that a third person shot the victim. It could have been
self-inflicted or caused accidentally by a stray bullet. The
relationship of cause and effect must be clearly shown.
In the present case, other than the said ocular inspection, no
investigation was conducted to determine the real cause of the
partial unroofing of petitioner's school building. Private
respondents did not even show that the plans, specifications and
design of said school building were deficient and defective. Neither
did they prove any substantial deviation from the approved plans
and specifications. Nor did they conclusively establish that the
construction of such building was basically flawed. 21
On the other hand, petitioner elicited from one of the witnesses of
private respondents, city building official Jesus Reyna, that the
original plans and design of petitioner's school building were
approved prior to its construction. Engr. Reyna admitted that it
was a legal requirement before the construction of any building to
obtain a permit from the city building official (city engineer, prior to
the passage of the Building Act of 1977). In like manner, after
construction of the building, a certification must be secured from
the same official attesting to the readiness for occupancy of the
edifice. Having obtained both building permit and certificate of
occupancy, these are, at the very least, prima facie evidence of the
regular and proper construction of subject school building. 22
Furthermore, when part of its roof needed repairs of the damage
inflicted by typhoon "Saling", the same city official gave the go-
signal for such repairs without any deviation from the original
design and subsequently, authorized the use of the entire fourth
floor of the same building. These only prove that subject building
suffers from no structural defect, contrary to the report that its "U-
shaped" form was "structurally defective." Having given his
unqualified imprimatur, the city building official is presumed to
have properly performed his duties 23 in connection therewith.
In addition, petitioner presented its vice president for finance and
administration who testified that an annual maintenance
inspection and repair of subject school building were regularly
undertaken. Petitioner was even willing to present its maintenance
supervisor to attest to the extent of such regular inspection but
private respondents agreed to dispense with his testimony and
simply stipulated that it would be corroborative of the vice
president's narration.
Moreover, the city building official, who has been in the city
government service since 1974, admitted in open court that no
complaint regarding any defect on the same structure has ever
been lodged before his office prior to the institution of the case at
bench. It is a matter of judicial notice that typhoons are common
occurrences in this country. If subject school building's roofing was
not firmly anchored to its trusses, obviously, it could not have
withstood long years and several typhoons even stronger than
"Saling."
In light of the foregoing, we find no clear and convincing evidence
to sustain the judgment of the appellate court. We thus hold that
petitioner has not been shown negligent or at fault regarding the
construction and maintenance of its school building in question
and that typhoon "Saling" was the proximate cause of the damage
suffered by private respondents' house.
With this disposition on the pivotal issue, private respondents'
claim for actual and moral damages as well as attorney's fees must
fail. 24 Petitioner cannot be made to answer for a purely fortuitous
event. 25 More so because no bad faith or willful act to cause
damage was alleged and proven to warrant moral damages.
Page 75 of 205
Private respondents failed to adduce adequate and competent proof
of the pecuniary loss they actually incurred. 26 It is not enough
that the damage be capable of proof but must be actually proved
with a reasonable degree of certainty, pointing out specific facts
that afford a basis for measuring whatever compensatory damages
are borne. 27 Private respondents merely submitted an estimated
amount needed for the repair of the roof their subject building.
What is more, whether the "necessary repairs" were caused ONLY
by petitioner's alleged negligence in the maintenance of its school
building, or included the ordinary wear and tear of the house itself,
is an essential question that remains indeterminable.
The Court deems unnecessary to resolve the other issues posed by
petitioner.
As regards the sixth issue, however, the writ of execution issued on
April 1, 1993 by the trial court is hereby nullified and set aside.
Private respondents are ordered to reimburse any amount or
return to petitioner any property which they may have received by
virtue of the enforcement of said writ.
WHEREFORE, the petition is GRANTED and the challenged
Decision is REVERSED. The complaint of private respondents in
Civil Case No. 7314 before the trial court a quo is ordered
DISMISSED and the writ of execution issued on April 1, 1993 in
said case is SET ASIDE. Accordingly, private respondents are
ORDERED to return to petitioner any amount or property received
by them by virtue of said writ. Costs against the private
respondents.
SO ORDERED.

Page 76 of 205
Republic of the Philippines This liability shall cease only in case, the damage should
SUPREME COURT arise from force majeure or from the fault of the person who
Manila may have suffered it.
EN BANC The question presented is whether the owner of the animal is liable
G.R. No. L-2075 November 29, 1949 when damage is caused to its caretaker.
MARGARITA AFIALDA, plaintiff-appellant, The lower court took the view that under the above-quoted
vs. provision of the Civil Code, the owner of an animal is answerable
BASILIO HISOLE and FRANCISCO HISOLE, defendants- only for damages caused to a stranger, and that for damage caused
appellees. to the caretaker of the animal the owner would be liable only if he
Nicolas P. Nonato for appellant. had been negligent or at fault under article 1902 of the same code.
Gellada, Mirasol and Ravena for appellees. Claiming that the lower court was in error, counsel for plaintiff
REYES, J.: contends that the article 1905 does not distinguish between
This is an action for damages arising from injury caused by an damage caused to the caretaker and makes the owner liable
animal. The complaint alleges that the now deceased, Loreto whether or not he has been negligent or at fault. For authority
Afialda, was employed by the defendant spouses as caretaker of counsel cites the following opinion which Manresa quotes from a
their carabaos at a fixed compensation; that while tending the decision of the Spanish Supreme Court:
animals he was, on March 21, 1947, gored by one of them and El articulo 1905 del codigo Civil no consienta otra
later died as a consequence of his injuries; that the mishap was interpretacion que la que, clara y evidentemente, se deriva
due neither to his own fault nor to force majeure; and that plaintiff de sus terminos literales, bastando, segun el mismo, que
is his elder sister and heir depending upon him for support. un animal cause perjuicio para que nasca la
Before filing their answer, defendants moved for the dismissal of responsibilidad del dueno, aun no imputandose a este
the complaint for lack of a cause of action, and the motion having ninguna clase de culpa o negligencia, habida,sin duda,
been granted by the lower court, plaintiff has taken this appeal. cuenta por el lgislador de que tal concepto de dueno es
Plaintiff seeks to hold defendants liable under article 1905 of the suficiente para que arrastre las consecuencias favorables o
Civil Code, which reads: adversas de esta clase de propiedad, salvo la exception en el
The possessor of an animal, or the one who uses the same, mismo contenida. (12 Manresa, Commentaries on the
is liable for any damages it may cause, even if such animal Spanish CivilCode, 573.)
should escape from him or stray away. This opinion, however, appears to have been rendered in a case
where an animal caused injury to a stranger or third person. It is
therefore no authority for a case like the present where the person

Page 77 of 205
injured was the caretaker of the animal. The distinction is There being no reversible error in the order appealed from, the
important. For the statute names the possessor or user of the same is hereby affirmed, but without costs in view of the financial
animal as the person liable for "any damages it may cause," and situation of the appellant.
this for the obvious reason that the possessor or user has the
custody and control of the animal and is therefore the one in a
position to prevent it from causing damage.
In the present case, the animal was in custody and under the
control of the caretaker, who was paid for his work as such.
Obviously, it was the caretaker's business to try to prevent the
animal from causing injury or damage to anyone, including
himself. And being injured by the animal under those
circumstances, was one of the risks of the occupation which he
had voluntarily assumed and for which he must take the
consequences.
In a decision of the Spanish Supreme Court, cited by Manresa in
his Commentaries (Vol. 12, p. 578), the death of an employee who
was bitten by a feline which his master had asked him to take to
his establishment was by said tribunal declared to be "a veritable
accident of labor" which should come under the labor laws rather
than under article 1905 of the Civil Code. The present action,
however, is not brought under the Workmen's Compensation Act,
there being no allegation that, among other things, defendant's
business, whatever that might be, had a gross income of P20,000.
As already stated, defendant's liability is made to rest on article
1905 of the Civil Code. but action under that article is not tenable
for the reasons already stated. On the other hand, if action is to be
based on article 1902 of the Civil Code, it is essential that there be
fault or negligence on the part of the defendants as owners of the
animal that caused the damage. But the complaint contains no
allegation on those points.

Page 78 of 205
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-53401 November 6, 1989
THE ILOCOS NORTE ELECTRIC COMPANY, petitioner,
vs.
HONORABLE COURT OF APPEALS, (First Division) LILIAN
JUAN LUIS, JANE JUAN YABES, VIRGINIA JUAN CID, GLORIA
JUAN CARAG, and PURISIMA JUAN, respondents.
Herman D. Coloma for petitioner.
Glicerio S. Ferrer for private respondents.
PARAS, J.:
Sought to be reversed in this petition is the Decision * of the
respondent Court of Appeals' First Division, setting aside the
judgment of the then Court of First Instance (CFI) of Ilocos Norte,
with the following dispositive portion:
WHEREFORE, the appealed judgment is hereby set
aside and another rendered in its stead whereby
defendant is hereby sentenced to pay plaintiffs
actual damages of P30,229.45; compensatory
damages of P50,000.00; exemplary damages of
P10,000.00; attorney's fees of P3,000.00; plus the
costs of suit in both instances. (p. 27 Rollo)
Basically, this case involves a clash of evidence whereby both
patties strive for the recognition of their respective versions of the
scenario from which the disputed claims originate. The respondent
Court of Appeals (CA) summarized the evidence of the parties as
follows:
From the evidence of plaintiffs it appears that in the
evening of June 28 until the early morning of June
29, 1967 a strong typhoon by the code name
"Gening" buffeted the province of Ilocos Norte,
bringing heavy rains and consequent flooding in its
wake. Between 5:30 and 6:00 A.M. on June 29,
1967, after the typhoon had abated and when the
floodwaters were beginning to recede the deceased
Isabel Lao Juan, fondly called Nana Belen, ventured
out of the house of her son-in-law, Antonio Yabes,
on No. 19 Guerrero Street, Laoag City, and
proceeded northward towards the direction of the
Five Sisters Emporium, of which she was the owner
and proprietress, to look after the merchandise
therein that might have been damaged. Wading in
waist-deep flood on Guerrero, the deceased was
followed by Aida Bulong, a Salesgirl at the Five
Sisters Grocery, also owned by the deceased, and by
Linda Alonzo Estavillo, a ticket seller at the YJ
Cinema, which was partly owned by the deceased.
Aida and Linda walked side by side at a distance of
between 5 and 6 meters behind the deceased,
Suddenly, the deceased screamed "Ay" and quickly
sank into the water. The two girls attempted to help,
but fear dissuaded them from doing so because on
the spot where the deceased sank they saw an
electric wire dangling from a post and moving in
snake-like fashion in the water. Upon their shouts
for help, Ernesto dela Cruz came out of the house of
Antonio Yabes. Ernesto tried to go to the deceased,
Page 79 of 205
but at four meters away from her he turned back
shouting that the water was grounded. Aida and
Linda prodded Ernesto to seek help from Antonio
Yabes at the YJ Cinema building which was four or
five blocks away.
When Antonio Yabes was informed by Ernesto that
his mother-in law had been electrocuted, he acted
immediately. With his wife Jane, together with
Ernesto and one Joe Ros, Yabes passed by the City
Hall of Laoag to request the police to ask the people
of defendant Ilocos Norte Electric Company or
INELCO to cut off the electric current. Then the
party waded to the house on Guerrero Street. The
floodwater was receding and the lights inside the
house were out indicating that the electric current
had been cut off in Guerrero. Yabes instructed his
boys to fish for the body of the deceased. The body
was recovered about two meters from an electric
post.
In another place, at about 4:00 A.M. on that fateful
date, June 29, 1967, Engineer Antonio Juan, Power
Plant Engineer of the National Power Corporation at
the Laoag Diesel-Electric Plant, noticed certain
fluctuations in their electric meter which indicated
such abnormalities as grounded or short-circuited
lines. Between 6:00 and 6:30 A.M., he set out of the
Laoag NPC Compound on an inspection. On the
way, he saw grounded and disconnected lines.
Electric lines were hanging from the posts to the
ground. Since he could not see any INELCO
lineman, he decided to go to the INELCO Office at
the Life Theatre on Rizal Street by way of Guerrero.
As he turned right at the intersection of Guerrero
and Rizal, he saw an electric wire about 30 meters
long strung across the street "and the other end was
seeming to play with the current of the water." (p.
64, TSN, Oct. 24, 1972) Finding the Office of the
INELCO still closed, and seeing no lineman therein,
he returned to the NPC Compound.
At about 8:10 A.M., Engr. Juan went out of the
compound again on another inspection trip. Having
learned of the death of Isabel Lao Juan, he passed
by the house of the deceased at the corner of
Guerrero and M.H. del Pilar streets to which the
body had been taken. Using the resuscitator which
was a standard equipment in his jeep and employing
the skill he acquired from an in service training on
resuscitation, he tried to revive the deceased. His
efforts proved futile. Rigor mortis was setting in. On
the left palm of the deceased, Engr. Juan noticed a
hollow wound. Proceeding to the INELCO Office, he
met two linemen on the way. He told them about the
grounded lines of the INELCO In the afternoon of the
same day, he went on a third inspection trip
preparatory to the restoration of power. The
dangling wire he saw on Guerrero early in the
morning of June 29, 1967 was no longer there.
Many people came to the house at the corner of
Guerrero and M.H. del Pilar after learning that the
deceased had been electrocuted. Among the
Page 80 of 205
sympathizers was Dr. Jovencio Castro, Municipal
Health Officer of Sarrat, Ilocos Norte. Upon the
request of the relatives of the deceased, Dr. Castro
examined the body at about 8:00 A.M. on June 29,
1967. The skin was grayish or, in medical parlance,
cyanotic, which indicated death by electrocution. On
the left palm, the doctor found an "electrically
charged wound" (Exh. C-1: p. 101, TSN, Nov. 28,
1972) or a first degree burn. About the base of the
thumb on the left hand was a burned wound. (Exh.
C-2, pp. 102-103, Ibid.) The certificate of death
prepared by Dr. Castro stated the cause of' death as
,'circulatory shock electrocution" (Exh. I; p. 103,
Ibid.).
In defense and exculpation, defendant presented the
testimonies of its officers and employees, namely,
Conrado Asis, electric engineer; Loreto Abijero,
collector-inspector; Fabico Abijero, lineman; and
Julio Agcaoili, president-manager of INELCO
Through the testimonies of these witnesses,
defendant sought to prove that on and even before
June 29, 1967 the electric service system of the
INELCO in the whole franchise area, including Area
No. 9 which covered the residence of Antonio Yabes
at No. 18 Guerrero Street, did not suffer from any
defect that might constitute a hazard to life and
property. The service lines, devices and other
INELCO equipment in Area No. 9 had been newly-
installed prior to the date in question. As a public
service operator and in line with its business of
supplying electric current to the public, defendant
had installed safety devices to prevent and avoid
injuries to persons and damage to property in case
of natural calamities such as floods, typhoons, fire
and others. Defendant had 12 linesmen charged
with the duty of making a round-the-clock check-up
of the areas respectively assigned to them.
Defendant asserts that although a strong typhoon
struck the province of Ilocos Norte on June 29,
1967, putting to streets of Laoag City under water,
only a few known places in Laoag were reported to
have suffered damaged electric lines, namely, at the
southern approach of the Marcos Bridge which was
washed away and where the INELCO lines and posts
collapsed; in the eastern part near the residence of
the late Governor Simeon Mandac; in the far north
near the defendant's power plant at the corner of
Segundo and Castro Streets, Laoag City and at the
far northwest side, near the premises of the Ilocos
Norte National High School. Fabico Abijero, testified
that in the early morning before 6 o'clock on June
29, 1967 he passed by the intersection of Rizal and
Guerrero Streets to switch off the street lights in
Area No. 9. He did not see any cut or broken wires
in or near the vicinity. What he saw were many
people fishing out the body of Isabel Lao Juan.
A witness in the person of Dr. Antonio Briones was
presented by the defense to show that the deceased
could not have died of electrocution Substantially,
the testimony of the doctor is as follows: Without an
Page 81 of 205
 autopsy on the cadaver of the victim, no doctor, not
even a medicolegal expert, can speculate as to the
real cause of death. Cyanosis could not have been
found in the body of the deceased three hours after
her death, because cyanosis which means lack of
oxygen circulating in the blood and rendering the
color of the skin purplish, appears only in a live
person. The presence of the elongated burn in the
left palm of the deceased (Exhibits C-1 and C-2) is
not sufficient to establish her death by
electrocution; since burns caused by electricity are
more or less round in shape and with points of entry
and exit. Had the deceased held the lethal wire for a
long time, the laceration in her palm would have
been bigger and the injury more massive. (CA
Decision, pp. 18-21, Rollo)
An action for damages in the aggregate amount of P250,000 was
instituted by the heirs of the deceased with the aforesaid CFI on
June 24, 1968. In its Answer (Vide, Record on Appeal, p. 55, Rollo),
petitioner advanced the theory, as a special defense, that the
deceased could have died simply either by drowning or by
electrocution due to negligence attributable only to herself and not
to petitioner. In this regard, it was pointed out that the deceased,
without petitioner's knowledge, caused the installation of a burglar
deterrent by connecting a wire from the main house to the iron
gate and fence of steel matting, thus, charging the latter with
electric current whenever the switch is on. Petitioner then
conjectures that the switch to said burglar deterrent must have
been left on, hence, causing the deceased's electrocution when she
tried to open her gate that early morning of June 29, 1967. After
due trial, the CFI found the facts in favor of petitioner and
dismissed the complaint but awarded to the latter P25,000 in
moral damages and attorney's fees of P45,000. An appeal was filed
with the CA which issued the controverted decision.
In this petition for review the petitioner assigns the following errors
committed by the respondent CA:
1. The respondent Court of Appeals
committed grave abuse of discretion
and error in considering the purely
hearsay alleged declarations of
Ernesto de la Cruz as part of the res
gestae.
2. The respondent Court of Appeals
committed grave abuse of discretion
and error in holding that the strong
typhoon "Gening" which struck Laoag
City and Ilocos Norte on June 29,
1967 and the flood and deluge it
brought in its wake were not
fortuitous events and did not
exonerate petitioner-company from
liability for the death of Isabel Lao
Juan.
3. The respondent Court of Appeals
gravely abused its discretion and
erred in not applying the legal
principle of "assumption of risk" in
the present case to bar private
respondents from collecting damages
from petitioner company.
Page 82 of 205
 4. That the respondent Court of
Appeals gravely erred and abused its
discretion in completely reversing the
findings of fact of the trial court.
5. The findings of fact of the
respondent Court of Appeals are
reversible under the recognized
exceptions.
6. The trial court did not err in
awarding moral damages and
attorney's fees to defendant
corporation, now petitioner company.
7. Assuming arguendo that petitioner
company may be held liable from the
death of the late Isabel Lao Juan, the
damages granted by respondent
Court of Appeals are improper and
exhorbitant. (Petitioners
Memorandum, p. 133, Rollo)
Basically, three main issues are apparent: (1) whether or not the
deceased died of electrocution; (2) whether or not petitioner may be
held liable for the deceased's death; and (3) whether or not the
respondent CA's substitution of the trial court's factual findings for
its own was proper.
In considering the first issue, it is Our view that the same be
resolved in the affirmative. By a preponderance of evidence, private
respondents were able to show that the deceased died of
electrocution, a conclusion which can be primarily derived from the
photographed burnt wounds (Exhibits "C", "C-1", "C-2") on the left
palm of the former. Such wounds undoubtedly point to the fact
that the deceased had clutched a live wire of the petitioner. This
was corroborated by the testimony of Dr. Jovencio Castro who
actually examined the body of the deceased a few hours after the
death and described the said burnt wounds as a "first degree burn"
(p. 144, TSN, December 11, 1972) and that they were "electrically
charged" (p. 102, TSN, November 28, 1972). Furthermore,
witnesses Linda Alonzo Estavillo and Aida Bulong added that after
the deceased screamed "Ay" and sank into the water, they tried to
render some help but were overcome with fear by the sight of an
electric wire dangling from an electric post, moving in the water in
a snake-like fashion (supra). The foregoing therefore justifies the
respondent CA in concluding that "(t)he nature of the wounds as
described by the witnesses who saw them can lead to no other
conclusion than that they were "burns," and there was nothing else
in the street where the victim was wading thru which could cause a
burn except the dangling live wire of defendant company" (CA
Decision, p. 22, Rollo).
But in order to escape liability, petitioner ventures into the theory
that the deceased was electrocuted, if such was really the case
when she tried to open her steel gate, which was electrically
charged by an electric wire she herself caused to install to serve as
a burglar deterrent. Petitioner suggests that the switch to said
burglar alarm was left on. But this is mere speculation, not backed
up with evidence. As required by the Rules, "each party must prove
his own affirmative allegations." (Rule 131, Sec. 1). Nevertheless,
the CA significantly noted that "during the trial, this theory was
abandoned" by the petitioner (CA Decision, p. 23, Rollo).
Furthermore the CA properly applied the principle of res gestae.
The CA said:
Page 83 of 205
 Linda Alonzo Estavillo, a ticket seller, and Aida
Bulong, a salesgirl, were with the deceased during
that fateful morning of June 29, 1967. This Court
has not been offered any sufficient reason to
discredit the testimonies of these two young ladies.
They were one in the affirmation that the deceased,
while wading in the waist-deep flood on Guerrero
Street five or six meters ahead of them, suddenly
screamed "Ay" and quickly sank into the water.
When they approached the deceased to help, they
were stopped by the sight of an electric wire
dangling from a post and moving in snake-like
fashion in the water. Ernesto dela Cruz also tried to
approach the deceased, but he turned back
shouting that the water was grounded. These bits of
evidence carry much weight. For the subject of the
testimonies was a startling occurrence, and the
declarations may be considered part of the res
gestae. (CA Decision, p. 21, Rollo)
For the admission of the res gestae in evidence, the following
requisites must be present: (1) that the principal act, the res
gestae, be a startling occurrence; (2) that the statements were
made before the declarant had time to contrive or devise; (3) that
the statements made must concern the occurrence in question and
its immediately attending circumstances (People vs. Ner, 28 SCRA
1151; People vs. Balbas, 122 SCRA 959). We do not find any abuse
of discretion on the CA' part in view of the satisfaction of said
requisites in the case at bar.
The statements made relative to the startling occurrence are
admitted in evidence precisely as an exception to the hearsay rule
on the grounds of trustworthiness and necessity. "Trustworthiness"
because the statements are made instinctively (Wesley vs. State, 53
Ala. 182), and "necessity" because such natural and spontaneous
utterances are more convincing than the testimony of the same
person on the stand (Mobile vs. Ascraft 48 Ala. 31). Therefore, the
fact that the declarant, Ernesto de la Cruz, was not presented to
testify does not make the testimony of Linda Alonzo Estavillo and
Aida Bulong hearsay since the said declaration is part of the res
gestae. Similarly, We considered part of the res gestae a
conversation between two accused immediately after commission of
the crime as overheard by a prosecution witness (People vs. Reyes,
82 Phil. 563).
While it may be true that, as petitioner argues (vide petitioner's
Memorandum, p. 135, Rollo), Ernesto de la Cruz was not an actual
witness to the instant when the deceased sank into the waist-deep
water, he acted upon the call of help of Aida Bulong and Linda
Alonzo Estavillo with the knowledge of, and immediately after, the
sinking of the deceased. In fact the startling event had not yet
ceased when Ernesto de la Cruz entered the scene considering that
the victim remained submerged. Under such a circumstance, it is
undeniable that a state of mind characterized by nervous
excitement had been triggered in Ernesto de la Cruz's being as
anybody under the same contingency could have experienced. As
such, We cannot honestly exclude his shouts that the water was
grounded from the res gestae just because he did not actually see
the sinking of the deceased nor hear her scream "Ay."
Neither can We dismiss the said declaration as a mere opinion of
Ernesto de la Cruz. While We concede to the submission that the
statement must be one of facts rather than opinion, We cannot
agree to the proposition that the one made by him was a mere
Page 84 of 205
opinion. On the contrary, his shout was a translation of an
actuality as perceived by him through his sense of touch.
Finally, We do not agree that the taking of Ernesto de la Cruz'
testimony was suppressed by the private respondents, thus, is
presumed to be adverse to them pursuant to Section 5(e), Rule
131. For the application of said Rule as against a party to a case, it
is necessary that the evidence alleged to be suppressed is available
only to said party (People vs. Tulale, L-7233, 18 May 1955, 97 Phil.
953). The presumption does not operate if the evidence in question
is equally available to both parties (StaplesHowe Printing Co. vs.
Bldg. and Loan Assn., 36 Phil. 421). It is clear from the records
that petitioner could have called Ernesto de la Cruz to the witness
stand. This, precisely, was Linda Alonzo Estavillo's suggestion to
petitioner's counsel when she testified on cross examination:
Q. And that Erning de la Cruz, how far did
he reach from the gate of the house?
A. Well, you can ask that matter from him sir
because he is here. (TSN, p. 30, 26 Sept.
1972)
The foregoing shows that petitioner had the opportunity to verify
the declarations of Ernesto de la Cruz which, if truly adverse to
private respondent, would have helped its case. However, due to
reasons known only to petitioner, the opportunity was not taken.
Coming now to the second issue, We tip the scales in the private
respondents' favor. The respondent CA acted correctly in disposing
the argument that petitioner be exonerated from liability since
typhoons and floods are fortuitous events. While it is true that
typhoons and floods are considered Acts of God for which no
person may be held responsible, it was not said eventuality which
directly caused the victim's death. It was through the intervention
of petitioner's negligence that death took place. We subscribe to the
conclusions of the respondent CA when it found:
On the issue whether or not the defendant incurred
liability for the electrocution and consequent death
of the late Isabel Lao Juan, defendant called to the
witness-stand its electrical engineer, chief lineman,
and lineman to show exercise of extraordinary
diligence and to negate the charge of negligence. The
witnesses testified in a general way about their
duties and the measures which defendant usually
adopts to prevent hazards to life and limb. From
these testimonies, the lower court found "that the
electric lines and other equipment of defendant
corporation were properly maintained by a well-
trained team of lineman, technicians and engineers
working around the clock to insure that these
equipments were in excellent condition at all times."
(P. 40, Record on Appeal) The finding of the lower
court, however, was based on what the defendant's
employees were supposed to do, not on what they
actually did or failed to do on the date in question,
and not on the occasion of the emergency situation
brought about by the typhoon.
The lower court made a mistake in assuming that
defendant's employees worked around the clock
during the occurrence of the typhoon on the night of
June 28 and until the early morning of June 29,
1967, Engr. Antonio Juan of the National Power
Corporation affirmed that when he first set out on
an inspection trip between 6:00 and 6:30 A.M. on
Page 85 of 205
June 29, 1967, he saw grounded and disconnected
electric lines of the defendant but he saw no INELCO
lineman. The INELCO Office at the Life theatre on
Rizal Street was still closed. (pp. 63-64, TSN, Oct.
24, 1972) Even the witnesses of defendant
contradict the finding of the lower court. Conrado
Asis, defendant's electrical engineer, testified that he
conducted a general inspection of the franchise area
of the INELCO only on June 30, 1967, the day
following the typhoon. The reason he gave for the
delay was that all their vehicles were submerged. (p.
337, TSN, July 20, 1973) According to Asis, he
arrived at his office at 8:00 A.M. on June 30 and
after briefing his men on what to do they started
out. (p. 338, lbid) One or two days after the typhoon,
the INELCO people heard "rumors that someone was
electrocuted" so he sent one of his men to the place
but his man reported back that there was no
damaged wire. (p. 385, Id.) Loreto Abijero, chief
lineman of defendant, corroborated Engr. Juan. He
testified that at about 8:00 A.M. on June 29, 1967
Engr. Juan came to the INELCO plant and asked
the INELCO people to inspect their lines. He went
with Engr. Juan and their inspection lasted from
8:00 A.M. to 12:00 noon. (pp. 460, 465, TSN, Jan.
28, 1975) Fabico Abijero lineman of defendant,
testified that at about 6:00 on June 29, 1967 the
typhoon ceased. At that time, he was at the main
building of the Divine Word College of Laoag where
he had taken his family for refuge. (pp. 510-511,
Ibid.)
In times of calamities such as the one which
occurred in Laoag City on the night of June 28 until
the early hours of June 29, 1967, extraordinary
diligence requires a supplier of electricity to be in
constant vigil to prevent or avoid any probable
incident that might imperil life or limb. The evidence
does not show that defendant did that. On the
contrary, evidence discloses that there were no men
(linemen or otherwise) policing the area, nor even
manning its office. (CA Decision, pp. 24-25, Rollo)
Indeed, under the circumstances of the case, petitioner was
negligent in seeing to it that no harm is done to the general
public"... considering that electricity is an agency, subtle and
deadly, the measure of care required of electric companies must be
commensurate with or proportionate to the danger. The duty of
exercising this high degree of diligence and care extends to every
place where persons have a right to be" (Astudillo vs. Manila
Electric, 55 Phil. 427). The negligence of petitioner having been
shown, it may not now absolve itself from liability by arguing that
the victim's death was solely due to a fortuitous event. "When an
act of God combines or concurs with the negligence of the
defendant to produce an injury, the defendant is liable if the injury
would not have resulted but for his own negligent conduct or
omission" (38 Am. Jur., p. 649).
Likewise, the maxim "volenti non fit injuria" relied upon by
petitioner finds no application in the case at bar. It is imperative to
note the surrounding circumstances which impelled the deceased
to leave the comforts of a roof and brave the subsiding typhoon. As
Page 86 of 205
testified by Linda Alonzo Estavillo (see TSN, p. 5, 26 Sept. 1972)
and Aida Bulong (see TSN, p. 43, 26 Sept. 1972), the deceased,
accompanied by the former two, were on their way to the latter's
grocery store "to see to it that the goods were not flooded." As such,
shall We punish her for exercising her right to protect her property
from the floods by imputing upon her the unfavorable presumption
that she assumed the risk of personal injury? Definitely not. For it
has been held that a person is excused from the force of the rule,
that when he voluntarily assents to a known danger he must abide
by the consequences, if an emergency is found to exist or if the life
or property of another is in peril (65A C.S.C. Negligence(174(5), p.
301), or when he seeks to rescue his endangered property (Harper
and James, "The Law of Torts." Little, Brown and Co., 1956, v. 2, p.
1167). Clearly, an emergency was at hand as the deceased's
property, a source of her livelihood, was faced with an impending
loss. Furthermore, the deceased, at the time the fatal incident
occurred, was at a place where she had a right to be without regard
to petitioner's consent as she was on her way to protect her
merchandise. Hence, private respondents, as heirs, may not be
barred from recovering damages as a result of the death caused by
petitioner's negligence (ibid., p. 1165, 1166).
But petitioner assails the CA for having abused its discretion in
completely reversing the trial court's findings of fact, pointing to
the testimonies of three of its employees its electrical engineer,
collector-inspector, lineman, and president-manager to the effect
that it had exercised the degree of diligence required of it in
keeping its electric lines free from defects that may imperil life and
limb. Likewise, the said employees of petitioner categorically
disowned the fatal wires as they appear in two photographs taken
on the afternoon of June 29, 1967 (Exhs. "D" and "E"), suggesting
that said wires were just hooked to the electric post (petitioner's
Memorandum, p. 170, Rollo). However, as the CA properly held,
"(t)he finding of the lower court ... was based on what the
defendant's employees were supposed to do, not on what they
actually did or failed to do on the date in question, and not on the
occasion of the emergency situation brought about by the typhoon"
(CA Decision, p. 25, Rollo). And as found by the CA, which We have
already reiterated above, petitioner was in fact negligent. In a like
manner, petitioner's denial of ownership of the several wires
cannot stand the logical conclusion reached by the CA when it held
that "(t)he nature of the wounds as described by the witnesses who
saw them can lead to no other conclusion than that they were
'burns', and there was nothing else in the street where the victim
was wading thru which could cause a burn except the dangling live
wire of defendant company" (supra).
"When a storm occurs that is liable to prostrate the wires, due care
requires prompt efforts to discover and repair broken lines" (Cooley
on Torts, 4th ed., v. 3, p. 474). The fact is that when Engineer
Antonio Juan of the National Power Corporation set out in the early
morning of June 29, 1967 on an inspection tour, he saw grounded
and disconnected lines hanging from posts to the ground but did
not see any INELCO lineman either in the streets or at the INELCO
office (vide, CA Decision, supra). The foregoing shows that
petitioner's duty to exercise extraordinary diligence under the
circumstance was not observed, confirming the negligence of
petitioner. To aggravate matters, the CA found:
. . .even before June 28 the people in Laoag were
already alerted about the impending typhoon,
through radio announcements. Even the fire
department of the city announced the coming of the
Page 87 of 205
 big flood. (pp. 532-534, TSN, March 13, 1975) At the of P12,000 to P30,000, thus, increasing the total actual damages to
INELCO irregularities in the flow of electric current P48,229.45.
were noted because "amperes of the switch volts The exclusion of moral damages and attorney's fees awarded by the
were moving". And yet, despite these danger signals, lower court was properly made by the respondent CA, the charge of
INELCO had to wait for Engr. Juan to request that malice and bad faith on the part of respondents in instituting his
defendant's switch be cut off but the harm was case being a mere product of wishful thinking and speculation.
done. Asked why the delay, Loreto Abijero answered Award of damages and attorney's fees is unwarranted where the
that he "was not the machine tender of the electric action was filed in good faith; there should be no penalty on the
plant to switch off the current." (pp. 467-468, Ibid.) right to litigate (Espiritu vs. CA, 137 SCRA 50). If damage results
How very characteristic of gross inefficiency! (CA from a person's exercising his legal rights, it is damnum absque
Decision, p. 26, Rollo) injuria (Auyong Hian vs. CTA, 59 SCRA 110).
From the preceding, We find that the CA did not abuse its WHEREFORE, the questioned decision of the respondent, except
discretion in reversing the trial court's findings but tediously for the slight modification that actual damages be increased to
considered the factual circumstances at hand pursuant to its P48,229.45 is hereby AFFIRMED.
power to review questions of fact raised from the decision of the SO ORDERED.
Regional Trial Court, formerly the Court of First Instance (see sec.
9, BP 129).
In considering the liability of petitioner, the respondent CA
awarded the following in private respondent's favor: P30,229.45 in
actual damages (i.e., P12,000 for the victim's death and
P18,229.45 for funeral expenses); P50,000 in compensatory
damages, computed in accordance with the formula set in the
Villa-Rey Transit case (31 SCRA 511) with the base of P15,000 as
average annual income of the deceased; P10,000 in exemplary
damages; P3,000 attorney's fees; and costs of suit. Except for the
award of P12,000 as compensation for the victim's death, We affirm
the respondent CA's award for damages and attorney's fees.
Pusuant to recent jurisprudence (People vs. Mananquil, 132 SCRA
196; People vs. Traya, 147 SCRA 381), We increase the said award

Page 88 of 205
Republic of the Philippines was doing so, an Isuzu truck driven by Iglecerio Verena and owned
SUPREME COURT by Francisco Salva bumped the left rear portion of the jeepney. As
Manila a result, Sunga was injured. She sustained a fracture of the "distal
SECOND DIVISION third of the left tibia-fibula with severe necrosis of the underlying
skin." Closed reduction of the fracture, long leg circular casting,
G.R. No. 122039 May 31, 2000 and case wedging were done under sedation. Her confinement in
VICENTE CALALAS, petitioner, the hospital lasted from August 23 to September 7, 1989. Her
vs. attending physician, Dr. Danilo V. Oligario, an orthopedic surgeon,
COURT OF APPEALS, ELIZA JUJEURCHE SUNGA and certified she would remain on a cast for a period of three months
FRANCISCO SALVA, respondents. and would have to ambulate in crutches during said period.
On October 9, 1989, Sunga filed a complaint for damages against
MENDOZA, J.: Calalas, alleging violation of the contract of carriage by the former
This is a petition for review on certiorari of the decision1 of the in failing to exercise the diligence required of him as a common
Court of Appeals, dated March 31, 1991, reversing the contrary carrier. Calalas, on the other hand, filed a third-party complaint
decision of the Regional Trial Court, Branch 36, Dumaguete City, against Francisco Salva, the owner of the Isuzu truck.
and awarding damages instead to private respondent Eliza The lower court rendered judgment against Salva as third-party
Jujeurche Sunga as plaintiff in an action for breach of contract of defendant and absolved Calalas of liability, holding that it was the
carriage. driver of the Isuzu truck who was responsible for the accident. It
The facts, as found by the Court of Appeals, are as follows: took cognizance of another case (Civil Case No. 3490), filed by
At 10 o'clock in the morning of August 23, 1989, private Calalas against Salva and Verena, for quasi-delict, in which
respondent Eliza Jujeurche G. Sunga, then a college freshman Branch 37 of the same court held Salva and his driver Verena
majoring in Physical Education at the Siliman University, took a jointly liable to Calalas for the damage to his jeepney.
passenger jeepney owned and operated by petitioner Vicente On appeal to the Court of Appeals, the ruling of the lower court
Calalas. As the jeepney was filled to capacity of about 24 was reversed on the ground that Sunga's cause of action was based
passengers, Sunga was given by the conductor an "extension seat," on a contract of carriage, not quasi-delict, and that the common
a wooden stool at the back of the door at the rear end of the carrier failed to exercise the diligence required under the Civil
vehicle. Code. The appellate court dismissed the third-party complaint
On the way to Poblacion Sibulan, Negros Occidental, the jeepney against Salva and adjudged Calalas liable for damages to Sunga.
stopped to let a passenger off. As she was seated at the rear of the The dispositive portion of its decision reads:
vehicle, Sunga gave way to the outgoing passenger. Just as she

Page 89 of 205
 WHEREFORE, the decision appealed from is hereby
REVERSED and SET ASIDE, and another one is
entered ordering defendant-appellee Vicente Calalas
to pay plaintiff-appellant:
(1) P50,000.00 as actual and compensatory
damages;
(2) P50,000.00 as moral damages;
(3) P10,000.00 as attorney's fees; and
(4) P1,000.00 as expenses of litigation; and
(5) to pay the costs.
SO ORDERED.
Hence, this petition. Petitioner contends that the ruling in Civil
Case No. 3490 that the negligence of Verena was the proximate
cause of the accident negates his liability and that to rule
otherwise would be to make the common carrier an insurer of the
safety of its passengers. He contends that the bumping of the
jeepney by the truck owned by Salva was a caso fortuito. Petitioner
further assails the award of moral damages to Sunga on the
ground that it is not supported by evidence.
The petition has no merit.
The argument that Sunga is bound by the ruling in Civil Case No.
3490 finding the driver and the owner of the truck liable for quasi-
delict ignores the fact that she was never a party to that case and,
therefore, the principle of res judicata does not apply.
Nor are the issues in Civil Case No. 3490 and in the present case
the same. The issue in Civil Case No. 3490 was whether Salva and
his driver Verena were liable for quasi-delict for the damage caused
to petitioner's jeepney. On the other hand, the issue in this case is
whether petitioner is liable on his contract of carriage. The first,
quasi-delict, also known as culpa aquiliana or culpa extra
contractual, has as its source the negligence of the tortfeasor. The
second, breach of contract or culpa contractual, is premised upon
the negligence in the performance of a contractual obligation.
Consequently, in quasi-delict, the negligence or fault should be
clearly established because it is the basis of the action, whereas in
breach of contract, the action can be prosecuted merely by proving
the existence of the contract and the fact that the obligor, in this
case the common carrier, failed to transport his passenger safely to
his destination.2 In case of death or injuries to passengers, Art.
1756 of the Civil Code provides that common carriers are
presumed to have been at fault or to have acted negligently unless
they prove that they observed extraordinary diligence as defined in
Arts. 1733 and 1755 of the Code. This provision necessarily shifts
to the common carrier the burden of proof.
There is, thus, no basis for the contention that the ruling in Civil
Case No. 3490, finding Salva and his driver Verena liable for the
damage to petitioner's jeepney, should be binding on Sunga. It is
immaterial that the proximate cause of the collision between the
jeepney and the truck was the negligence of the truck driver. The
doctrine of proximate cause is applicable only in actions for quasi-
delict, not in actions involving breach of contract. The doctrine is a
device for imputing liability to a person where there is no relation
between him and another party. In such a case, the obligation is
created by law itself. But, where there is a pre-existing contractual
relation between the parties, it is the parties themselves who create
the obligation, and the function of the law is merely to regulate the
relation thus created. Insofar as contracts of carriage are
concerned, some aspects regulated by the Civil Code are those
respecting the diligence required of common carriers with regard to
Page 90 of 205
the safety of passengers as well as the presumption of negligence in
cases of death or injury to passengers. It provides:
Art. 1733. Common carriers, from the nature of
their business and for reasons of public policy, are
bound to observe extraordinary diligence in the
vigilance over the goods and for the safety of the
passengers transported by them, according to all the
circumstances of each case.
Such extraordinary diligence in the vigilance over
the goods is further expressed in articles 1734,
1735, and 1746, Nos. 5, 6, and 7, while the
extraordinary diligence for the safety of the
passengers is further set forth in articles 1755 and
1756.
Art. 1755. A common carrier is bound to carry the
passengers safely as far as human care and
foresight can provide, using the utmost diligence of
very cautious persons, with due regard for all the
circumstances.
Art. 1756. In case of death of or injuries to
passengers, common carriers are presumed to have
been at fault or to have acted negligently, unless
they prove that they observed extraordinary
diligence as prescribed by articles 1733 and 1755.
In the case at bar, upon the happening of the accident, the
presumption of negligence at once arose, and it became the duty of
petitioner to prove that he had to observe extraordinary diligence in
the care of his passengers.
Now, did the driver of jeepney carry Sunga "safely as far as human
care and foresight could provide, using the utmost diligence of very
cautious persons, with due regard for all the circumstances" as
required by Art. 1755? We do not think so. Several factors militate
against petitioner's contention.
First, as found by the Court of Appeals, the jeepney was not
properly parked, its rear portion being exposed about two meters
from the broad shoulders of the highway, and facing the middle of
the highway in a diagonal angle. This is a violation of the R.A. No.
4136, as amended, or the Land Transportation and Traffic Code,
which provides:
Sec. 54. Obstruction of Traffic. No person shall
drive his motor vehicle in such a manner as to
obstruct or impede the passage of any vehicle, nor,
while discharging or taking on passengers or loading
or unloading freight, obstruct the free passage of
other vehicles on the highway.
Second, it is undisputed that petitioner's driver took in more
passengers than the allowed seating capacity of the jeepney, a
violation of 32(a) of the same law. It provides:
Exceeding registered capacity. No person
operating any motor vehicle shall allow more
passengers or more freight or cargo in his vehicle
than its registered capacity.
The fact that Sunga was seated in an "extension seat" placed her in
a peril greater than that to which the other passengers were
exposed. Therefore, not only was petitioner unable to overcome the
presumption of negligence imposed on him for the injury sustained
by Sunga, but also, the evidence shows he was actually negligent
in transporting passengers.
We find it hard to give serious thought to petitioner's contention
that Sunga's taking an "extension seat" amounted to an implied
Page 91 of 205
assumption of risk. It is akin to arguing that the injuries to the
many victims of the tragedies in our seas should not be
compensated merely because those passengers assumed a greater
risk of drowning by boarding an overloaded ferry. This is also true
of petitioner's contention that the jeepney being bumped while it
was improperly parked constitutes caso fortuito. A caso fortuito is
an event which could not be foreseen, or which, though foreseen,
was inevitable.3 This requires that the following requirements be
present: (a) the cause of the breach is independent of the debtor's
will; (b) the event is unforeseeable or unavoidable; (c) the event is
such as to render it impossible for the debtor to fulfill his
obligation in a normal manner, and (d) the debtor did not take part
in causing the injury to the
creditor. Petitioner should have foreseen the danger of parking his
4 As a general rule, moral damages are not recoverable in actions for
jeepney with its body protruding two meters into the highway.
Finally, petitioner challenges the award of moral damages alleging
that it is excessive and without basis in law. We find this
contention well taken.
In awarding moral damages, the Court of Appeals stated:
Plaintiff-appellant at the time of the accident was a
first-year college student in that school year 1989-
1990 at the Silliman University, majoring in Physical
Education. Because of the injury, she was not able
to enroll in the second semester of that school year.
She testified that she had no more intention of
continuing with her schooling, because she could
not walk and decided not to pursue her degree,
major in Physical Education "because of my leg
which has a defect already."
Plaintiff-appellant likewise testified that even while
she was under confinement, she cried in pain
because of her injured left foot. As a result of her
injury, the Orthopedic Surgeon also certified that
she has "residual bowing of the fracture side." She
likewise decided not to further pursue Physical
Education as her major subject, because "my left leg
. . . has a defect already."
Those are her physical pains and moral sufferings,
the inevitable bedfellows of the injuries that she
suffered. Under Article 2219 of the Civil Code, she is
entitled to recover moral damages in the sum of
P50,000.00, which is fair, just and reasonable.
damages predicated on a breach of contract for it is not one of the
items enumerated under Art. 2219 of the Civil Code.5 As an
exception, such damages are recoverable: (1) in cases in which the
mishap results in the death of a passenger, as provided in Art.
1764, in relation to Art. 2206(3) of the Civil Code; and (2) in the
cases in which the carrier is guilty of fraud or bad faith, as
provided in Art. 2220. 6
In this case, there is no legal basis for awarding moral damages
since there was no factual finding by the appellate court that
petitioner acted in bad faith in the performance of the contract of
carriage. Sunga's contention that petitioner's admission in open
court that the driver of the jeepney failed to assist her in going to a
nearby hospital cannot be construed as an admission of bad faith.
The fact that it was the driver of the Isuzu truck who took her to
the hospital does not imply that petitioner was utterly indifferent to
Page 92 of 205
the plight of his injured passenger. If at all, it is merely implied
recognition by Verena that he was the one at fault for the accident.
WHEREFORE, the decision of the Court of Appeals, dated March
31, 1995, and its resolution, dated September 11, 1995, are
AFFIRMED, with the MODIFICATION that the award of moral
damages is DELETED.
SO ORDERED.

Page 93 of 205
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 154259 February 28, 2005
NIKKO HOTEL MANILA GARDEN and RUBY LIM, petitioners,
vs.
ROBERTO REYES, a.k.a. "AMAY BISAYA," respondent.
DECISION
CHICO-NAZARIO, J.:
In this petition for review on certiorari, petitioners Nikko Hotel
Manila Garden (Hotel Nikko)1 and Ruby Lim assail the Decision2 of
the Court of Appeals dated 26 November 2001 reversing the
Decision3 of the Regional Trial Court (RTC) of Quezon City, Branch
104, as well as the Resolution4 of the Court of Appeals dated 09
July 2002 which denied petitioners motion for reconsideration.
The cause of action before the trial court was one for damages
brought under the human relations provisions of the New Civil
Code. Plaintiff thereat (respondent herein) Roberto Reyes, more
popularly known by the screen name "Amay Bisaya," alleged that
at around 6:00 oclock in the evening of 13 October 1994, while he
was having coffee at the lobby of Hotel Nikko,5 he was spotted by
his friend of several years, Dr. Violeta Filart, who then approached
him.6 Mrs. Filart invited him to join her in a party at the hotels
penthouse in celebration of the natal day of the hotels manager,
Mr. Masakazu Tsuruoka.7 Mr. Reyes asked if she could vouch for
him for which she replied: "of course."8 Mr. Reyes then went up
with the party of Dr. Filart carrying the basket of fruits which was
the latters present for the celebrant.9 At the penthouse, they first
had their picture taken with the celebrant after which Mr. Reyes
sat with the party of Dr. Filart.10 After a couple of hours, when the
buffet dinner was ready, Mr. Reyes lined-up at the buffet table but,
to his great shock, shame and embarrassment, he was stopped by
petitioner herein, Ruby Lim, who claimed to speak for Hotel Nikko
as Executive Secretary thereof.11 In a loud voice and within the
presence and hearing of the other guests who were making a queue
at the buffet table, Ruby Lim told him to leave the party ("huwag ka
nang kumain, hindi ka imbitado, bumaba ka na lang").12 Mr. Reyes
tried to explain that he was invited by Dr. Filart. 13 Dr. Filart, who
was within hearing distance, however, completely ignored him thus
adding to his shame and humiliation.14 Not long after, while he was
still recovering from the traumatic experience, a Makati policeman
approached and asked him to step out of the hotel.15 Like a
common criminal, he was escorted out of the party by the
policeman.16 Claiming damages, Mr. Reyes asked for One Million
Pesos actual damages, One Million Pesos moral and/or exemplary
damages and Two Hundred Thousand Pesos attorneys fees. 17
Ruby Lim, for her part, admitted having asked Mr. Reyes to leave
the party but not under the ignominious circumstance painted by
the latter. Ms. Lim narrated that she was the Hotels Executive
Secretary for the past twenty (20) years.18 One of her functions
included organizing the birthday party of the hotels former General
Manager, Mr. Tsuruoka.19 The year 1994 was no different. For Mr.
Tsuruokas party, Ms. Lim generated an exclusive guest list and
extended invitations accordingly. 20 The guest list was limited to
approximately sixty (60) of Mr. Tsuruokas closest friends and some
hotel employees and that Mr. Reyes was not one of those invited. 21
At the party, Ms. Lim first noticed Mr. Reyes at the bar counter
ordering a drink.22 Mindful of Mr. Tsuruokas wishes to keep the
party intimate, Ms. Lim approached Mr. Boy Miller, the "captain
Page 94 of 205
waiter," to inquire as to the presence of Mr. Reyes who was not
invited.23 Mr. Miller replied that he saw Mr. Reyes with the group of
Dr. Filart.24 As Dr. Filart was engaged in conversation with another
guest and as Ms. Lim did not want to interrupt, she inquired
instead from the sister of Dr. Filart, Ms. Zenaida Fruto, who told
her that Dr. Filart did not invite Mr. Reyes.25 Ms. Lim then
requested Ms. Fruto to tell Mr. Reyes to leave the party as he was
not invited.26 Mr. Reyes, however, lingered prompting Ms. Lim to
inquire from Ms. Fruto who said that Mr. Reyes did not want to
leave.27 When Ms. Lim turned around, she saw Mr. Reyes
conversing with a Captain Batung whom she later approached. 28
Believing that Captain Batung and Mr. Reyes knew each other, Ms.
Lim requested from him the same favor from Ms. Fruto, i.e., for
Captain Batung to tell Mr. Reyes to leave the party as he was not
invited.29 Still, Mr. Reyes lingered. When Ms. Lim spotted Mr.
Reyes by the buffet table, she decided to speak to him herself as
there were no other guests in the immediate vicinity. 30 However, as
Mr. Reyes was already helping himself to the food, she decided to
wait.31 When Mr. Reyes went to a corner and started to eat, Ms.
Lim approached him and said: "alam ninyo, hindo ho kayo dapat
nandito. Pero total nakakuha na ho kayo ng pagkain, ubusin na
lang ninyo at pagkatapos kung pwede lang po umalis na kayo."32
She then turned around trusting that Mr. Reyes would show
enough decency to leave, but to her surprise, he began screaming
and making a big scene, and even threatened to dump food on
her.331awphi1.nt
Dr. Violeta Filart, the third defendant in the complaint before the
lower court, also gave her version of the story to the effect that she
never invited Mr. Reyes to the party.34 According to her, it was Mr.
Reyes who volunteered to carry the basket of fruits intended for the
celebrant as he was likewise going to take the elevator, not to the
penthouse but to Altitude 49.35 When they reached the penthouse,
she reminded Mr. Reyes to go down as he was not properly dressed
and was not invited.36 All the while, she thought that Mr. Reyes
already left the place, but she later saw him at the bar talking to
Col. Batung.37 Then there was a commotion and she saw Mr. Reyes
shouting.38 She ignored Mr. Reyes.39 She was embarrassed and did
not want the celebrant to think that she invited him. 40
After trial on the merits, the court a quo dismissed the complaint,41
giving more credence to the testimony of Ms. Lim that she was
discreet in asking Mr. Reyes to leave the party. The trial court
likewise ratiocinated that Mr. Reyes assumed the risk of being
thrown out of the party as he was uninvited:
Plaintiff had no business being at the party because he was not a
guest of Mr. Tsuruoka, the birthday celebrant. He assumed the
risk of being asked to leave for attending a party to which he was
not invited by the host. Damages are pecuniary consequences
which the law imposes for the breach of some duty or the violation
of some right. Thus, no recovery can be had against defendants
Nikko Hotel and Ruby Lim because he himself was at fault
(Garciano v. Court of Appeals, 212 SCRA 436). He knew that it was
not the party of defendant Violeta Filart even if she allowed him to
join her and took responsibility for his attendance at the party. His
action against defendants Nikko Hotel and Ruby Lim must
therefore fail.42
On appeal, the Court of Appeals reversed the ruling of the trial
court as it found more commanding of belief the testimony of Mr.
Reyes that Ms. Lim ordered him to leave in a loud voice within
hearing distance of several guests:
Page 95 of 205
In putting appellant in a very embarrassing situation, telling him
that he should not finish his food and to leave the place within the
hearing distance of other guests is an act which is contrary to
morals, good customs . . ., for which appellees should compensate
the appellant for the damage suffered by the latter as a
consequence therefore (Art. 21, New Civil Code). The liability arises
from the acts which are in themselves legal or not prohibited, but
contrary to morals or good customs. Conversely, even in the
exercise of a formal right, [one] cannot with impunity intentionally
cause damage to another in a manner contrary to morals or good
customs.43
The Court of Appeals likewise ruled that the actuation of Ms. Lim
in approaching several people to inquire into the presence of Mr.
Reyes exposed the latter to ridicule and was uncalled for as she
should have approached Dr. Filart first and both of them should
have talked to Mr. Reyes in private:
Said acts of appellee Lim are uncalled for. What should have been
done by appellee Lim was to approach appellee Mrs. Filart and
together they should have told appellant Reyes in private that the
latter should leave the party as the celebrant only wanted close
friends around. It is necessary that Mrs. Filart be the one to
approach appellant because it was she who invited appellant in
that occasion. Were it not for Mrs. Filarts invitation, appellant
could not have suffered such humiliation. For that, appellee Filart
is equally liable.
...
The acts of [appellee] Lim are causes of action which are predicated
upon mere rudeness or lack of consideration of one person, which
calls not only protection of human dignity but respect of such
dignity. Under Article 20 of the Civil Code, every person who
violates this duty becomes liable for damages, especially if said acts
were attended by malice or bad faith. Bad faith does not simply
connote bad judgment or simple negligence. It imports a dishonest
purpose or some moral obliquity and conscious doing of a wrong, a
breach of a known duty to some motive or interest or ill-will that
partakes of the nature of fraud (Cojuangco, Jr. v. CA, et al., 309
SCRA 603).44
Consequently, the Court of Appeals imposed upon Hotel Nikko,
Ruby Lim and Dr. Violeta Filart the solidary obligation to pay Mr.
Reyes (1) exemplary damages in the amount of Two Hundred
Thousand Pesos (P200,000); (2) moral damages in the amount of
Two Hundred Thousand Pesos (P200,000); and (3) attorneys fees
in the amount of Ten Thousand Pesos (P10,000). 45 On motion for
reconsideration, the Court of Appeals affirmed its earlier decision
as the argument raised in the motion had "been amply discussed
and passed upon in the decision sought to be reconsidered." 46
Thus, the instant petition for review. Hotel Nikko and Ruby Lim
contend that the Court of Appeals seriously erred in
I.
NOT APPLYING THE DOCTRINE OF VOLENTI NON FIT INJURIA
CONSIDERING THAT BY ITS OWN FINDINGS, AMAY BISAYA WAS
A GATE-CRASHER
II.
HOLDING HOTEL NIKKO AND RUBY LIM JOINTLY AND
SEVERALLY LIABLE WITH DR. FILART FOR DAMAGES SINCE BY
ITS OWN RULING, AMAY BISAYA "COULD NOT HAVE SUFFERED
SUCH HUMILIATION," "WERE IT NOT FOR DR. FILARTS
INVITATION"
III.
Page 96 of 205
 DEPARTING FROM THE FINDINGS OF FACT OF THE TRIAL
COURT AS REGARDS THE CIRCUMSTANCES THAT ALLEGEDLY
CAUSED THE HUMILIATION OF AMAY BISAYA
IV.
IN CONCLUDING THAT AMAY BISAYA WAS TREATED
UNJUSTLY BECAUSE OF HIS POVERTY, CONSIDERING THAT
THIS WAS NEVER AN ISSUE AND NO EVIDENCE WAS
PRESENTED IN THIS REGARD
V.
IN FAILING TO PASS UPON THE ISSUE ON THE DEFECTS OF
THE APPELLANTS BRIEF, THEREBY DEPARTING FROM THE
ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS
Petitioners Lim and Hotel Nikko contend that pursuant to the
doctrine of volenti non fit injuria, they cannot be made liable for
damages as respondent Reyes assumed the risk of being asked to
leave (and being embarrassed and humiliated in the process) as he
was a "gate-crasher."
The doctrine of volenti non fit injuria ("to which a person assents is
not esteemed in law as injury"47 ) refers to self-inflicted injury48 or
to the consent to injury49 which precludes the recovery of damages
by one who has knowingly and voluntarily exposed himself to
danger, even if he is not negligent in doing so.50 As formulated by
petitioners, however, this doctrine does not find application to the
case at bar because even if respondent Reyes assumed the risk of
being asked to leave the party, petitioners, under Articles 19 and
21 of the New Civil Code, were still under obligation to treat him
fairly in order not to expose him to unnecessary ridicule and
shame.
Thus, the threshold issue is whether or not Ruby Lim acted
abusively in asking Roberto Reyes, a.k.a. "Amay Bisaya," to leave
the party where he was not invited by the celebrant thereof thereby
becoming liable under Articles 19 and 21 of the Civil Code.
Parenthetically, and if Ruby Lim were so liable, whether or not
Hotel Nikko, as her employer, is solidarily liable with her.
As the trial court and the appellate court reached divergent and
irreconcilable conclusions concerning the same facts and evidence
of the case, this Court is left without choice but to use its latent
power to review such findings of facts. Indeed, the general rule is
that we are not a trier of facts as our jurisdiction is limited to
reviewing and revising errors of law.51 One of the exceptions to this
general rule, however, obtains herein as the findings of the Court of
Appeals are contrary to those of the trial court. 52 The lower court
ruled that Ms. Lim did not abuse her right to ask Mr. Reyes to
leave the party as she talked to him politely and discreetly. The
appellate court, on the other hand, held that Ms. Lim is liable for
damages as she needlessly embarrassed Mr. Reyes by telling him
not to finish his food and to leave the place within hearing distance
of the other guests. Both courts, however, were in agreement that it
was Dr. Filarts invitation that brought Mr. Reyes to the party.
The consequential question then is: Which version is credible?
From an in depth review of the evidence, we find more credible the
lower courts findings of fact.
First, let us put things in the proper perspective.
We are dealing with a formal party in a posh, five-star hotel,53 for-
invitation-only, thrown for the hotels former Manager, a Japanese
national. Then came a person who was clearly uninvited (by the
celebrant)54 and who could not just disappear into the crowd as his
face is known by many, being an actor. While he was already
spotted by the organizer of the party, Ms. Lim, the very person who
generated the guest list, it did not yet appear that the celebrant
Page 97 of 205
was aware of his presence. Ms. Lim, mindful of the celebrants
instruction to keep the party intimate, would naturally want to get
rid of the "gate-crasher" in the most hush-hush manner in order
not to call attention to a glitch in an otherwise seamless affair and,
in the process, risk the displeasure of the celebrant, her former
boss. To unnecessarily call attention to the presence of Mr. Reyes
would certainly reflect badly on Ms. Lims ability to follow the
instructions of the celebrant to invite only his close friends and
some of the hotels personnel. Mr. Reyes, upon whom the burden
rests to prove that indeed Ms. Lim loudly and rudely ordered him
to leave, could not offer any satisfactory explanation why Ms. Lim
would do that and risk ruining a formal and intimate affair. On the
contrary, Mr. Reyes, on cross-examination, had unwittingly sealed
his fate by admitting that when Ms. Lim talked to him, she was
very close. Close enough for him to kiss:
Q: And, Mr. Reyes, you testified that Miss Lim approached
you while you were at the buffet table? How close was she
when she approached you?
A: Very close because we nearly kissed each other.
Q: And yet, she shouted for you to go down? She was that
close and she shouted?
A: Yes. She said, "wag kang kumain, hindi ka imbitado dito,
bumaba ka na lang."
Q: So, you are testifying that she did this in a loud voice?
...
A: Yes. If it is not loud, it will not be heard by many. 55
In the absence of any proof of motive on the part of Ms. Lim to
humiliate Mr. Reyes and expose him to ridicule and shame, it is
highly unlikely that she would shout at him from a very close
distance. Ms. Lim having been in the hotel business for twenty
years wherein being polite and discreet are virtues to be emulated,
the testimony of Mr. Reyes that she acted to the contrary does not
inspire belief and is indeed incredible. Thus, the lower court was
correct in observing that
Considering the closeness of defendant Lim to plaintiff when the
request for the latter to leave the party was made such that they
nearly kissed each other, the request was meant to be heard by
him only and there could have been no intention on her part to
cause embarrassment to him. It was plaintiffs reaction to the
request that must have made the other guests aware of what
transpired between them. . .
Had plaintiff simply left the party as requested, there was no need
for the police to take him out.56
Moreover, another problem with Mr. Reyess version of the story is
that it is unsupported. It is a basic rule in civil cases that he who
alleges proves. Mr. Reyes, however, had not presented any witness
to back his story up. All his witnesses Danny Rodinas, Pepito
Guerrero and Alexander Silva - proved only that it was Dr. Filart
who invited him to the party.57
Ms. Lim, not having abused her right to ask Mr. Reyes to leave the
party to which he was not invited, cannot be made liable to pay for
damages under Articles 19 and 21 of the Civil Code. Necessarily,
neither can her employer, Hotel Nikko, be held liable as its liability
springs from that of its employee. 58
Article 19, known to contain what is commonly referred to as the
principle of abuse of rights,59 is not a panacea for all human hurts
and social grievances. Article 19 states:
Art. 19. Every person must, in the exercise of his rights and in the
performance of his duties, act with justice, give everyone his due,
and observe honesty and good faith.1awphi1.nt
Page 98 of 205
Elsewhere, we explained that when "a right is exercised in a
manner which does not conform with the norms enshrined in
Article 19 and results in damage to another, a legal wrong is
thereby committed for which the wrongdoer must be responsible."60
The object of this article, therefore, is to set certain standards
which must be observed not only in the exercise of ones rights but
also in the performance of ones duties.61 These standards are the
following: act with justice, give everyone his due and observe
honesty and good faith.62 Its antithesis, necessarily, is any act
evincing bad faith or intent to injure. Its elements are the following:
(1) There is a legal right or duty; (2) which is exercised in bad faith;
(3) for the sole intent of prejudicing or injuring another. 63 When
Article 19 is violated, an action for damages is proper under
Articles 20 or 21 of the Civil Code. Article 20 pertains to damages
arising from a violation of law64 which does not obtain herein as
Ms. Lim was perfectly within her right to ask Mr. Reyes to leave.
Article 21, on the other hand, states:
Art. 21. Any person who willfully causes loss or injury to another
in a manner that is contrary to morals, good customs or public
policy shall compensate the latter for the damage.
Article 2165 refers to acts contra bonus mores and has the following
elements: (1) There is an act which is legal; (2) but which is
contrary to morals, good custom, public order, or public policy;
and (3) it is done with intent to injure.66
A common theme runs through Articles 19 and 21,67 and that is,
the act complained of must be intentional. 68
As applied to herein case and as earlier discussed, Mr. Reyes has
not shown that Ms. Lim was driven by animosity against him.
These two people did not know each other personally before the
evening of 13 October 1994, thus, Mr. Reyes had nothing to offer
for an explanation for Ms. Lims alleged abusive conduct except the
statement that Ms. Lim, being "single at 44 years old," had a "very
strong bias and prejudice against (Mr. Reyes) possibly influenced
by her associates in her work at the hotel with foreign
businessmen."69 The lameness of this argument need not be
belabored. Suffice it to say that a complaint based on Articles 19
and 21 of the Civil Code must necessarily fail if it has nothing to
recommend it but innuendos and conjectures.
Parenthetically, the manner by which Ms. Lim asked Mr. Reyes to
leave was likewise acceptable and humane under the
circumstances. In this regard, we cannot put our imprimatur on
the appellate courts declaration that Ms. Lims act of personally
approaching Mr. Reyes (without first verifying from Mrs. Filart if
indeed she invited Mr. Reyes) gave rise to a cause of action
"predicated upon mere rudeness or lack of consideration of one
person, which calls not only protection of human dignity but
respect of such dignity."70 Without proof of any ill-motive on her
part, Ms. Lims act of by-passing Mrs. Filart cannot amount to
abusive conduct especially because she did inquire from Mrs.
Filarts companion who told her that Mrs. Filart did not invite Mr.
Reyes.71 If at all, Ms. Lim is guilty only of bad judgment which, if
done with good intentions, cannot amount to bad faith.
Not being liable for both actual and moral damages, neither can
petitioners Lim and Hotel Nikko be made answerable for exemplary
damages72 especially for the reason stated by the Court of Appeals.
The Court of Appeals held
Not a few of the rich people treat the poor with contempt because
of the latters lowly station in life.l^vvphi1.net This has to be limited
somewhere. In a democracy, such a limit must be established.
Social equality is not sought by the legal provisions under
Page 99 of 205
consideration, but due regard for decency and propriety (Code
Commission, pp. 33-34). And by way of example or correction for
public good and to avert further commission of such acts,
exemplary damages should be imposed upon appellees. 73
The fundamental fallacy in the above-quoted findings is that it
runs counter with the very facts of the case and the evidence on
hand.l^vvphi1.net It is not disputed that at the time of the incident
in question, Mr. Reyes was "an actor of long standing; a co-host of
a radio program over DZRH; a Board Member of the Music Singer
Composer (MUSICO) chaired by popular singer Imelda Papin; a
showbiz Coordinator of Citizen Crime Watch; and 1992 official
candidate of the KBL Party for Governor of Bohol; and an awardee
of a number of humanitarian organizations of the Philippines." 74
During his direct examination on rebuttal, Mr. Reyes stressed that
he had income75 and nowhere did he say otherwise. On the other
hand, the records are bereft of any information as to the social and
economic standing of petitioner Ruby Lim. Consequently, the
conclusion reached by the appellate court cannot withstand
scrutiny as it is without basis.
All told, and as far as Ms. Lim and Hotel Nikko are concerned, any
damage which Mr. Reyes might have suffered through Ms. Lims
exercise of a legitimate right done within the bounds of propriety
and good faith, must be his to bear alone.
WHEREFORE, premises considered, the petition filed by Ruby Lim
and Nikko Hotel Manila Garden is GRANTED. The Decision of the
Court of Appeals dated 26 November 2001 and its Resolution dated
09 July 2002 are hereby REVERSED and SET ASIDE. The Decision
of the Regional Trial Court of Quezon City, Branch 104, dated 26
April 1999 is hereby AFFIRMED. No costs.
SO ORDERED.

Page 100 of 205

Republic of the Philippines
SUPREME COURT
Manila
SPECIAL SECOND DIVISION
G.R. No. 174269 August 25, 2010
POLO S. PANTALEON, Petitioner,
vs.
AMERICAN EXPRESS INTERNATIONAL, INC., Respondent.
RESOLUTION
BRION, J.:
We resolve the motion for reconsideration filed by respondent
American Express International, Inc. (AMEX) dated June 8, 2009, 1
seeking to reverse our Decision dated May 8, 2009 where we ruled
that AMEX was guilty of culpable delay in fulfilling its obligation to
its cardholder petitioner Polo Pantaleon. Based on this conclusion,
we held AMEX liable for moral and exemplary damages, as well as
attorneys fees and costs of litigation.2
FACTUAL ANTECEDENTS
The established antecedents of the case are narrated below.
AMEX is a resident foreign corporation engaged in the business of
providing credit services through the operation of a charge card
system. Pantaleon has been an AMEX cardholder since 1980. 3
In October 1991, Pantaleon, together with his wife (Julialinda),
daughter (Regina), and son (Adrian Roberto), went on a guided
European tour. On October 25, 1991, the tour group arrived in
Amsterdam. Due to their late arrival, they postponed the tour of
the city for the following day.4
The next day, the group began their sightseeing at around 8:50
a.m. with a trip to the Coster Diamond House (Coster). To have
enough time for take a guided city tour of Amsterdam before their
departure scheduled on that day, the tour group planned to leave
Coster by 9:30 a.m. at the latest.
While at Coster, Mrs. Pantaleon decided to purchase some
diamond pieces worth a total of US$13,826.00. Pantaleon
presented his American Express credit card to the sales clerk to
pay for this purchase. He did this at around 9:15 a.m. The sales
clerk swiped the credit card and asked Pantaleon to sign the
charge slip, which was then electronically referred to AMEXs
Amsterdam office at 9:20 a.m.5
At around 9:40 a.m., Coster had not received approval from AMEX
for the purchase so Pantaleon asked the store clerk to cancel the
sale. The store manager, however, convinced Pantaleon to wait a
few more minutes. Subsequently, the store manager informed
Pantaleon that AMEX was asking for bank references; Pantaleon
responded by giving the names of his Philippine depository banks.
At around 10 a.m., or 45 minutes after Pantaleon presented his
credit card, AMEX still had not approved the purchase. Since the
city tour could not begin until the Pantaleons were onboard the
tour bus, Coster decided to release at around 10:05 a.m. the
purchased items to Pantaleon even without AMEXs approval.
When the Pantaleons finally returned to the tour bus, they found
their travel companions visibly irritated. This irritation intensified
when the tour guide announced that they would have to cancel the
tour because of lack of time as they all had to be in Calais, Belgium
by 3 p.m. to catch the ferry to London. 6
From the records, it appears that after Pantaleons purchase was
transmitted for approval to AMEXs Amsterdam office at 9:20 a.m.;
was referred to AMEXs Manila office at 9:33 a.m.; and was
approved by the Manila office at 10:19 a.m. At 10:38 a.m., AMEXs
Manila office finally transmitted the Approval Code to AMEXs
Page 101 of 205
Amsterdam office. In all, it took AMEX a total of 78 minutes to
approve Pantaleons purchase and to transmit the approval to the
jewelry store.7
After the trip to Europe, the Pantaleon family proceeded to the
United States. Again, Pantaleon experienced delay in securing
approval for purchases using his American Express credit card on
two separate occasions. He experienced the first delay when he
wanted to purchase golf equipment in the amount of US$1,475.00
at the Richard Metz Golf Studio in New York on October 30, 1991.
Another delay occurred when he wanted to purchase childrens
shoes worth US$87.00 at the Quiency Market in Boston on
November 3, 1991.
Upon return to Manila, Pantaleon sent AMEX a letter demanding
an apology for the humiliation and inconvenience he and his family
experienced due to the delays in obtaining approval for his credit
card purchases. AMEX responded by explaining that the delay in
Amsterdam was due to the amount involved the charged
purchase of US$13,826.00 deviated from Pantaleons established
charge purchase pattern. Dissatisfied with this explanation,
Pantaleon filed an action for damages against the credit card
company with the Makati City Regional Trial Court (RTC).
On August 5, 1996, the RTC found AMEX guilty of delay, and
awarded Pantaleon P500,000.00 as moral damages, P300,000.00
as exemplary damages, P100,000.00 as attorneys fees, and
P85,233.01 as litigation expenses.
On appeal, the CA reversed the awards.8 While the CA recognized
that delay in the nature of mora accipiendi or creditors default
attended AMEXs approval of Pantaleons purchases, it disagreed
with the RTCs finding that AMEX had breached its contract,
noting that the delay was not attended by bad faith, malice or
gross negligence. The appellate court found that AMEX exercised
diligent efforts to effect the approval of Pantaleons purchases; the
purchase at Coster posed particularly a problem because it was at
variance with Pantaleons established charge pattern. As there was
no proof that AMEX breached its contract, or that it acted in a
wanton, fraudulent or malevolent manner, the appellate court
ruled that AMEX could not be held liable for any form of damages.
Pantaleon questioned this decision via a petition for review on
certiorari with this Court.
In our May 8, 2009 decision, we reversed the appellate courts
decision and held that AMEX was guilty of mora solvendi, or
debtors default. AMEX, as debtor, had an obligation as the credit
provider to act on Pantaleons purchase requests, whether to
approve or disapprove them, with "timely dispatch." Based on the
evidence on record, we found that AMEX failed to timely act on
Pantaleons purchases.
Based only, actual obligations. 271,ct; moral damages le. uitable
that attorney'workers;plaitniff' the testimony of AMEXs credit
authorizer Edgardo Jaurique, the approval time for credit card
charges would be three to four seconds under regular
circumstances. In Pantaleons case, it took AMEX 78 minutes to
approve the Amsterdam purchase. We attributed this delay to
AMEXs Manila credit authorizer, Edgardo Jaurique, who had to go
over Pantaleons past credit history, his payment record and his
credit and bank references before he approved the purchase.
Finding this delay unwarranted, we reinstated the RTC decision
and awarded Pantaleon moral and exemplary damages, as well as
attorneys fees and costs of litigation.
THE MOTION FOR RECONSIDERATION
Page 102 of 205
In its motion for reconsideration, AMEX argues that this Court
erred when it found AMEX guilty of culpable delay in complying
with its obligation to act with timely dispatch on Pantaleons
purchases. While AMEX admits that it normally takes seconds to
approve charge purchases, it emphasizes that Pantaleon
experienced delay in Amsterdam because his transaction was not a
normal one. To recall, Pantaleon sought to charge in a single
transaction jewelry items purchased from Coster in the total
amount of US$13,826.00 or P383,746.16. While the total amount
of Pantaleons previous purchases using his AMEX credit card did
exceed US$13,826.00, AMEX points out that these purchases were
made in a span of more than 10 years, not in a single transaction.
Because this was the biggest single transaction that Pantaleon ever
made using his AMEX credit card, AMEX argues that the
transaction necessarily required the credit authorizer to carefully
review Pantaleons credit history and bank references. AMEX
maintains that it did this not only to ensure Pantaleons protection
(to minimize the possibility that a third party was fraudulently
using his credit card), but also to protect itself from the risk that
Pantaleon might not be able to pay for his purchases on credit.
This careful review, according to AMEX, is also in keeping with the
extraordinary degree of diligence required of banks in handling its
transactions. AMEX concluded that in these lights, the thorough
review of Pantaleons credit record was motivated by legitimate
concerns and could not be evidence of any ill will, fraud, or
negligence by AMEX.
AMEX further points out that the proximate cause of Pantaleons
humiliation and embarrassment was his own decision to proceed
with the purchase despite his awareness that the tour group was
waiting for him and his wife. Pantaleon could have prevented the
humiliation had he cancelled the sale when he noticed that the
credit approval for the Coster purchase was unusually delayed.
In his Comment dated February 24, 2010, Pantaleon maintains
that AMEX was guilty of mora solvendi, or delay on the part of the
debtor, in complying with its obligation to him. Based on
jurisprudence, a just cause for delay does not relieve the debtor in
delay from the consequences of delay; thus, even if AMEX had a
justifiable reason for the delay, this reason would not relieve it
from the liability arising from its failure to timely act on
Pantaleons purchase.
In response to AMEXs assertion that the delay was in keeping with
its duty to perform its obligation with extraordinary diligence,
Pantaleon claims that this duty includes the timely or prompt
performance of its obligation.
As to AMEXs contention that moral or exemplary damages cannot
be awarded absent a finding of malice, Pantaleon argues that evil
motive or design is not always necessary to support a finding of
bad faith; gross negligence or wanton disregard of contractual
obligations is sufficient basis for the award of moral and exemplary
damages.
OUR RULING
We GRANT the motion for reconsideration.
Brief historical background
A credit card is defined as "any card, plate, coupon book, or other
credit device existing for the purpose of obtaining money, goods,
property, labor or services or anything of value on credit." 9 It traces
its roots to the charge card first introduced by the Diners Club in
New York City in 1950.10 American Express followed suit by
introducing its own charge card to the American market in 1958. 11
Page 103 of 205
In the Philippines, the now defunct Pacific Bank was responsible
for bringing the first credit card into the country in the 1970s. 12
However, it was only in the early 2000s that credit card use gained
wide acceptance in the country, as evidenced by the surge in the
number of credit card holders then.13
Nature of Credit Card Transactions
To better understand the dynamics involved in credit card
transactions, we turn to the United States case of Harris Trust &
Savings Bank v. McCray14 which explains:
The bank credit card system involves a tripartite relationship
between the issuer bank, the cardholder, and merchants
participating in the system. The issuer bank establishes an
account on behalf of the person to whom the card is issued, and
the two parties enter into an agreement which governs their
relationship. This agreement provides that the bank will pay for
cardholders account the amount of merchandise or services
purchased through the use of the credit card and will also make
cash loans available to the cardholder. It also states that the
cardholder shall be liable to the bank for advances and payments
made by the bank and that the cardholders obligation to pay the
bank shall not be affected or impaired by any dispute, claim, or
demand by the cardholder with respect to any merchandise or
service purchased.
The merchants participating in the system agree to honor the
banks credit cards. The bank irrevocably agrees to honor and pay
the sales slips presented by the merchant if the merchant performs
his undertakings such as checking the list of revoked cards before
accepting the card. x x x.
These slips are forwarded to the member bank which originally
issued the card. The cardholder receives a statement from the bank
periodically and may then decide whether to make payment to the
bank in full within a specified period, free of interest, or to defer
payment and ultimately incur an interest charge.
We adopted a similar view in CIR v. American Express
International, Inc. (Philippine branch),15 where we also recognized
that credit card issuers are not limited to banks. We said:
Under RA 8484, the credit card that is issued by banks in general,
or by non-banks in particular, refers to "any card x x x or other
credit device existing for the purpose of obtaining x x x goods x x x
or services x x x on credit;" and is being used "usually on a
revolving basis." This means that the consumer-credit arrangement
that exists between the issuer and the holder of the credit card
enables the latter to procure goods or services "on a continuing
basis as long as the outstanding balance does not exceed a
specified limit." The card holder is, therefore, given "the power to
obtain present control of goods or service on a promise to pay for
them in the future."
Business establishments may extend credit sales through the use
of the credit card facilities of a non-bank credit card company to
avoid the risk of uncollectible accounts from their customers.
Under this system, the establishments do not deposit in their bank
accounts the credit card drafts that arise from the credit sales.
Instead, they merely record their receivables from the credit card
company and periodically send the drafts evidencing those
receivables to the latter.
The credit card company, in turn, sends checks as payment to
these business establishments, but it does not redeem the drafts at
full price. The agreement between them usually provides for
discounts to be taken by the company upon its redemption of the
drafts. At the end of each month, it then bills its credit card
Page 104 of 205
holders for their respective drafts redeemed during the previous
month. If the holders fail to pay the amounts owed, the company
sustains the loss.
Simply put, every credit card transaction involves three contracts,
namely: (a) the sales contract between the credit card holder and
the merchant or the business establishment which accepted the
credit card; (b) the loan agreement between the credit card issuer
and the credit card holder; and lastly, (c) the promise to pay
between the credit card issuer and the merchant or business
establishment.16
Credit card issuer cardholder relationship
When a credit card company gives the holder the privilege of
charging items at establishments associated with the issuer, 17 a
necessary question in a legal analysis is when does this
relationship begin? There are two diverging views on the matter. In
City Stores Co. v. Henderson,18 another U.S. decision, held that:
The issuance of a credit card is but an offer to extend a line of open
account credit. It is unilateral and supported by no consideration.
The offer may be withdrawn at any time, without prior notice, for
any reason or, indeed, for no reason at all, and its withdrawal
breaches no duty for there is no duty to continue it and violates
no rights.
Thus, under this view, each credit card transaction is considered a
separate offer and acceptance.
Novack v. Cities Service Oil Co.19 echoed this view, with the court
ruling that the mere issuance of a credit card did not create a
contractual relationship with the cardholder.
On the other end of the spectrum is Gray v. American Express
Company20 which recognized the card membership agreement itself
as a binding contract between the credit card issuer and the card
holder. Unlike in the Novack and the City Stores cases, however,
the cardholder in Gray paid an annual fee for the privilege of being
an American Express cardholder.
In our jurisdiction, we generally adhere to the Gray ruling,
recognizing the relationship between the credit card issuer and the
credit card holder as a contractual one that is governed by the
terms and conditions found in the card membership agreement. 21
This contract provides the rights and liabilities of a credit card
company to its cardholders and vice versa.
We note that a card membership agreement is a contract of
adhesion as its terms are prepared solely by the credit card issuer,
with the cardholder merely affixing his signature signifying his
adhesion to these terms.22 This circumstance, however, does not
render the agreement void; we have uniformly held that contracts
of adhesion are "as binding as ordinary contracts, the reason being
that the party who adheres to the contract is free to reject it
entirely."23 The only effect is that the terms of the contract are
construed strictly against the party who drafted it. 24
On AMEXs obligations to Pantaleon
We begin by identifying the two privileges that Pantaleon assumes
he is entitled to with the issuance of his AMEX credit card, and on
which he anchors his claims. First, Pantaleon presumes that since
his credit card has no pre-set spending limit, AMEX has the
obligation to approve all his charge requests. Conversely, even if
AMEX has no such obligation, at the very least it is obliged to act
on his charge requests within a specific period of time.
i. Use of credit card a mere offer to enter into loan agreements
Although we recognize the existence of a relationship between the
credit card issuer and the credit card holder upon the acceptance
by the cardholder of the terms of the card membership agreement
Page 105 of 205
(customarily signified by the act of the cardholder in signing the
back of the credit card), we have to distinguish this contractual
relationship from the creditor-debtor relationship which only arises
after the credit card issuer has approved the cardholders purchase
request. The first relates merely to an agreement providing for
credit facility to the cardholder. The latter involves the actual credit
on loan agreement involving three contracts, namely: the sales
contract between the credit card holder and the merchant or the
business establishment which accepted the credit card; the loan
agreement between the credit card issuer and the credit card
holder; and the promise to pay between the credit card issuer and
the merchant or business establishment.
From the loan agreement perspective, the contractual relationship
begins to exist only upon the meeting of the offer 25 and acceptance
of the parties involved. In more concrete terms, when cardholders
use their credit cards to pay for their purchases, they merely offer
to enter into loan agreements with the credit card company. Only
after the latter approves the purchase requests that the parties
enter into binding loan contracts, in keeping with Article 1319 of
the Civil Code, which provides:
Article 1319. Consent is manifested by the meeting of the offer and
the acceptance upon the thing and the cause which are to
constitute the contract. The offer must be certain and the
acceptance absolute. A qualified acceptance constitutes a counter-
offer.
This view finds support in the reservation found in the card
membership agreement itself, particularly paragraph 10, which
clearly states that AMEX "reserve[s] the right to deny
authorization for any requested Charge." By so providing, AMEX
made its position clear that it has no obligation to approve any and
all charge requests made by its card holders.
ii. AMEX not guilty of culpable delay
Since AMEX has no obligation to approve the purchase requests of
its credit cardholders, Pantaleon cannot claim that AMEX defaulted
in its obligation. Article 1169 of the Civil Code, which provides the
requisites to hold a debtor guilty of culpable delay, states:
Article 1169. Those obliged to deliver or to do something incur in
delay from the time the obligee judicially or extrajudicially
demands from them the fulfillment of their obligation. x x x.
The three requisites for a finding of default are: (a) that the
obligation is demandable and liquidated; (b) the debtor delays
performance; and (c) the creditor judicially or extrajudicially
requires the debtors performance. 26
Based on the above, the first requisite is no longer met because
AMEX, by the express terms of the credit card agreement, is not
obligated to approve Pantaleons purchase request. Without a
demandable obligation, there can be no finding of default.
Apart from the lack of any demandable obligation, we also find that
Pantaleon failed to make the demand required by Article 1169 of
the Civil Code.
As previously established, the use of a credit card to pay for a
purchase is only an offer to the credit card company to enter a loan
agreement with the credit card holder. Before the credit card
issuer accepts this offer, no obligation relating to the loan
agreement exists between them. On the other hand, a demand is
defined as the "assertion of a legal right; xxx an asking with
authority, claiming or challenging as due."27 A demand
presupposes the existence of an obligation between the
parties.
Page 106 of 205
Thus, every time that Pantaleon used his AMEX credit card to pay
for his purchases, what the stores transmitted to AMEX were his
offers to execute loan contracts. These obviously could not be
classified as the demand required by law to make the debtor in
default, given that no obligation could arise on the part of AMEX
until after AMEX transmitted its acceptance of Pantaleons offers.
Pantaleons act of "insisting on and waiting for the charge
purchases to be approved by AMEX" 28 is not the demand
contemplated by Article 1169 of the Civil Code.
For failing to comply with the requisites of Article 1169,
Pantaleons charge that AMEX is guilty of culpable delay in
approving his purchase requests must fail.
iii. On AMEXs obligation to act on the offer within a specific
period of time
Even assuming that AMEX had the right to review his credit card
history before it approved his purchase requests, Pantaleon insists
that AMEX had an obligation to act on his purchase requests,
either to approve or deny, in "a matter of seconds" or "in timely
dispatch." Pantaleon impresses upon us the existence of this
obligation by emphasizing two points: (a) his card has no pre-set
spending limit; and (b) in his twelve years of using his AMEX card,
AMEX had always approved his charges in a matter of seconds.
Pantaleons assertions fail to convince us.
We originally held that AMEX was in culpable delay when it acted
on the Coster transaction, as well as the two other transactions in
the United States which took AMEX approximately 15 to 20
minutes to approve. This conclusion appears valid and reasonable
at first glance, comparing the time it took to finally get the Coster
purchase approved (a total of 78 minutes), to AMEXs "normal"
approval time of three to four seconds (based on the testimony of
Edgardo Jaurigue, as well as Pantaleons previous experience). We
come to a different result, however, after a closer look at the factual
and legal circumstances of the case.
AMEXs credit authorizer, Edgardo Jaurigue, explained that having
no pre-set spending limit in a credit card simply means that the
charges made by the cardholder are approved based on his ability
to pay, as demonstrated by his past spending, payment patterns,
and personal resources.29 Nevertheless, every time Pantaleon
charges a purchase on his credit card, the credit card company
still has to determine whether it will allow this charge, based
on his past credit history. This right to review a card holders
credit history, although not specifically set out in the card
membership agreement, is a necessary implication of AMEXs right
to deny authorization for any requested charge.
As for Pantaleons previous experiences with AMEX (i.e., that in the
past 12 years, AMEX has always approved his charge requests in
three or four seconds), this record does not establish that
Pantaleon had a legally enforceable obligation to expect AMEX to
act on his charge requests within a matter of seconds. For one,
Pantaleon failed to present any evidence to support his assertion
that AMEX acted on purchase requests in a matter of three or four
seconds as an established practice. More importantly, even if
Pantaleon did prove that AMEX, as a matter of practice or custom,
acted on its customers purchase requests in a matter of seconds,
this would still not be enough to establish a legally demandable
right; as a general rule, a practice or custom is not a source of a
legally demandable or enforceable right.30
We next examine the credit card membership agreement, the
contract that primarily governs the relationship between AMEX
and Pantaleon. Significantly, there is no provision in this
Page 107 of 205
agreement that obligates AMEX to act on all cardholder
purchase requests within a specifically defined period of time.
Thus, regardless of whether the obligation is worded was to "act in
a matter of seconds" or to "act in timely dispatch," the fact remains
that no obligation exists on the part of AMEX to act within a
specific period of time. Even Pantaleon admits in his testimony that
he could not recall any provision in the Agreement that guaranteed
AMEXs approval of his charge requests within a matter of
minutes.31
Nor can Pantaleon look to the law or government issuances as the
source of AMEXs alleged obligation to act upon his credit card
purchases within a matter of seconds. As the following survey of
Philippine law on credit card transactions demonstrates, the State
does not require credit card companies to act upon its cardholders
purchase requests within a specific period of time.
Republic Act No. 8484 (RA 8484), or the Access Devices Regulation
Act of 1998, approved on February 11, 1998, is the controlling
legislation that regulates the issuance and use of access devices, 32
including credit cards. The more salient portions of this law
include the imposition of the obligation on a credit card company
to disclose certain important financial information33 to credit card
applicants, as well as a definition of the acts that constitute access
device fraud.
As financial institutions engaged in the business of providing
credit, credit card companies fall under the supervisory powers of
the Bangko Sentral ng Pilipinas (BSP).34 BSP Circular No. 398
dated August 21, 2003 embodies the BSPs policy when it comes to
credit cards
The Bangko Sentral ng Pilipinas (BSP) shall foster the development
of consumer credit through innovative products such as credit
cards under conditions of fair and sound consumer credit
practices. The BSP likewise encourages competition and
transparency to ensure more efficient delivery of services and fair
dealings with customers. (Emphasis supplied)
Based on this Circular, "x x x [b]efore issuing credit cards, banks
and/or their subsidiary credit card companies must exercise
proper diligence by ascertaining that applicants possess good
credit standing and are financially capable of fulfilling their credit
commitments."35 As the above-quoted policy expressly states, the
general intent is to foster "fair and sound consumer credit
practices."
Other than BSP Circular No. 398, a related circular is BSP Circular
No. 454, issued on September 24, 2004, but this circular merely
enumerates the unfair collection practices of credit card companies
a matter not relevant to the issue at hand.
In light of the foregoing, we find and so hold that AMEX is neither
contractually bound nor legally obligated to act on its cardholders
purchase requests within any specific period of time, much less a
period of a "matter of seconds" that Pantaleon uses as his
standard. The standard therefore is implicit and, as in all
contracts, must be based on fairness and reasonableness, read in
relation to the Civil Code provisions on human relations, as will be
discussed below.
AMEX acted with good faith
Thus far, we have already established that: (a) AMEX had neither a
contractual nor a legal obligation to act upon Pantaleons
purchases within a specific period of time; and (b) AMEX has a
right to review a cardholders credit card history. Our recognition
of these entitlements, however, does not give AMEX an
unlimited right to put off action on cardholders purchase
Page 108 of 205
requests for indefinite periods of time. In acting on cardholders
purchase requests, AMEX must take care not to abuse its rights
and cause injury to its clients and/or third persons. We cite in this
regard Article 19, in conjunction with Article 21, of the Civil Code,
which provide:
Article 19. Every person must, in the exercise of his rights and in
the performance of his duties, act with justice, give everyone his
due and observe honesty and good faith.
Article 21. Any person who willfully causes loss or injury to
another in a manner that is contrary to morals, good customs or
public policy shall compensate the latter for the damage.
Article 19 pervades the entire legal system and ensures that a
person suffering damage in the course of anothers exercise of right
or performance of duty, should find himself without relief. 36 It sets
the standard for the conduct of all persons, whether artificial or
natural, and requires that everyone, in the exercise of rights and
the performance of obligations, must: (a) act with justice, (b) give
everyone his due, and (c) observe honesty and good faith. It is not
because a person invokes his rights that he can do anything, even
to the prejudice and disadvantage of another.37
While Article 19 enumerates the standards of conduct, Article 21
provides the remedy for the person injured by the willful act, an
action for damages. We explained how these two provisions
correlate with each other in GF Equity, Inc. v. Valenzona:38
[Article 19], known to contain what is commonly referred to as the
principle of abuse of rights, sets certain standards which must be
observed not only in the exercise of one's rights but also in the
performance of one's duties. These standards are the following: to
act with justice; to give everyone his due; and to observe honesty
and good faith. The law, therefore, recognizes a primordial
limitation on all rights; that in their exercise, the norms of human
conduct set forth in Article 19 must be observed. A right, though
by itself legal because recognized or granted by law as such,
may nevertheless become the source of some illegality. When a
right is exercised in a manner which does not conform with
the norms enshrined in Article 19 and results in damage to
another, a legal wrong is thereby committed for which the
wrongdoer must be held responsible. But while Article 19 lays
down a rule of conduct for the government of human relations and
for the maintenance of social order, it does not provide a remedy
for its violation. Generally, an action for damages under either
Article 20 or Article 21 would be proper.
In the context of a credit card relationship, although there is
neither a contractual stipulation nor a specific law requiring the
credit card issuer to act on the credit card holders offer within a
definite period of time, these principles provide the standard by
which to judge AMEXs actions.
According to Pantaleon, even if AMEX did have a right to review his
charge purchases, it abused this right when it unreasonably
delayed the processing of the Coster charge purchase, as well as
his purchase requests at the Richard Metz Golf Studio and Kids
Unlimited Store; AMEX should have known that its failure to act
immediately on charge referrals would entail inconvenience and
result in humiliation, embarrassment, anxiety and distress to its
cardholders who would be required to wait before closing their
transactions.39
It is an elementary rule in our jurisdiction that good faith is
presumed and that the burden of proving bad faith rests upon the
party alleging it.40 Although it took AMEX some time before it
approved Pantaleons three charge requests, we find no evidence to
Page 109 of 205
suggest that it acted with deliberate intent to cause Pantaleon any
loss or injury, or acted in a manner that was contrary to morals,
good customs or public policy. We give credence to AMEXs claim
that its review procedure was done to ensure Pantaleons own
protection as a cardholder and to prevent the possibility that the
credit card was being fraudulently used by a third person.
Pantaleon countered that this review procedure is primarily
intended to protect AMEXs interests, to make sure that the
cardholder making the purchase has enough means to pay for the
credit extended. Even if this were the case, however, we do not find
any taint of bad faith in such motive. It is but natural for AMEX to
want to ensure that it will extend credit only to people who will
have sufficient means to pay for their purchases. AMEX, after all,
is running a business, not a charity, and it would simply be
ludicrous to suggest that it would not want to earn profit for its
services. Thus, so long as AMEX exercises its rights, performs its
obligations, and generally acts with good faith, with no intent to
cause harm, even if it may occasionally inconvenience others, it
cannot be held liable for damages.
We also cannot turn a blind eye to the circumstances surrounding
the Coster transaction which, in our opinion, justified the wait. In
Edgardo Jaurigues own words:
Q 21: With reference to the transaction at the Coster
Diamond House covered by Exhibit H, also Exhibit 4 for the
defendant, the approval came at 2:19 a.m. after the request
was relayed at 1:33 a.m., can you explain why the approval
came after about 46 minutes, more or less?
A21: Because we have to make certain considerations and
evaluations of [Pantaleons] past spending pattern with
[AMEX] at that time before approving plaintiffs request
because [Pantaleon] was at that time making his very first
single charge purchase of US$13,826 [this is below the
US$16,112.58 actually billed and paid for by the plaintiff
because the difference was already automatically approved
by [AMEX] office in Netherland[s] and the record of
[Pantaleons] past spending with [AMEX] at that time
does not favorably support his ability to pay for such
purchase. In fact, if the foregoing internal policy of [AMEX]
had been strictly followed, the transaction would not have
been approved at all considering that the past spending
pattern of the plaintiff with [AMEX] at that time does not
support his ability to pay for such purchase.41
xxxx
Q: Why did it take so long?
A: It took time to review the account on credit, so, if there is
any delinquencies [sic] of the cardmember. There are
factors on deciding the charge itself which are standard
measures in approving the authorization. Now in the case of
Mr. Pantaleon although his account is single charge
purchase of US$13,826. [sic] this is below the US$16,000.
plus actually billed x x x we would have already declined
the charge outright and asked him his bank account to
support his charge. But due to the length of his
membership as cardholder we had to make a decision on
hand.42
As Edgardo Jaurigue clarified, the reason why Pantaleon had to
wait for AMEXs approval was because he had to go over
Pantaleons credit card history for the past twelve months. 43 It
would certainly be unjust for us to penalize AMEX for merely
Page 110 of 205
exercising its right to review Pantaleons credit history
meticulously.
Finally, we said in Garciano v. Court of Appeals that "the right to
recover [moral damages] under Article 21 is based on equity, and
he who comes to court to demand equity, must come with clean
hands. Article 21 should be construed as granting the right to
recover damages to injured persons who are not themselves at
fault."44 As will be discussed below, Pantaleon is not a blameless
party in all this.
Pantaleons action was the proximate cause for his injury
Pantaleon mainly anchors his claim for moral and exemplary
damages on the embarrassment and humiliation that he felt when
the European tour group had to wait for him and his wife for
approximately 35 minutes, and eventually had to cancel the
Amsterdam city tour. After thoroughly reviewing the records of this
case, we have come to the conclusion that Pantaleon is the
proximate cause for this embarrassment and humiliation.
As borne by the records, Pantaleon knew even before entering
Coster that the tour group would have to leave the store by 9:30
a.m. to have enough time to take the city tour of Amsterdam before
they left the country. After 9:30 a.m., Pantaleons son, who had
boarded the bus ahead of his family, returned to the store to
inform his family that they were the only ones not on the bus and
that the entire tour group was waiting for them. Significantly,
Pantaleon tried to cancel the sale at 9:40 a.m. because he did not
want to cause any inconvenience to the tour group. However, when
Costers sale manager asked him to wait a few more minutes for
the credit card approval, he agreed, despite the knowledge that he
had already caused a 10-minute delay and that the city tour could
not start without him.
In Nikko Hotel Manila Garden v. Reyes,45 we ruled that a person
who knowingly and voluntarily exposes himself to danger cannot
claim damages for the resulting injury:
The doctrine of volenti non fit injuria ("to which a person assents is
not esteemed in law as injury") refers to self-inflicted injury or to
the consent to injury which precludes the recovery of damages by
one who has knowingly and voluntarily exposed himself to danger,
even if he is not negligent in doing so.
This doctrine, in our view, is wholly applicable to this case.
Pantaleon himself testified that the most basic rule when travelling
in a tour group is that you must never be a cause of any delay
because the schedule is very strict.46 When Pantaleon made up his
mind to push through with his purchase, he must have known
that the group would become annoyed and irritated with him. This
was the natural, foreseeable consequence of his decision to make
them all wait.
We do not discount the fact that Pantaleon and his family did feel
humiliated and embarrassed when they had to wait for AMEX to
approve the Coster purchase in Amsterdam. We have to
acknowledge, however, that Pantaleon was not a helpless victim in
this scenario at any time, he could have cancelled the sale so that
the group could go on with the city tour. But he did not.
More importantly, AMEX did not violate any legal duty to Pantaleon
under the circumstances under the principle of damnum absque
injuria, or damages without legal wrong, loss without injury.47 As
we held in BPI Express Card v. CA:48
We do not dispute the findings of the lower court that private
respondent suffered damages as a result of the cancellation of his
credit card. However, there is a material distinction between
damages and injury. Injury is the illegal invasion of a legal right;
Page 111 of 205
damage is the loss, hurt, or harm which results from the injury;
and damages are the recompense or compensation awarded for the
damage suffered. Thus, there can be damage without injury in
those instances in which the loss or harm was not the result of a
violation of a legal duty. In such cases, the consequences must be
borne by the injured person alone, the law affords no remedy for
damages resulting from an act which does not amount to a legal
injury or wrong. These situations are often called damnum absque
injuria.
In other words, in order that a plaintiff may maintain an action for
the injuries of which he complains, he must establish that such
injuries resulted from a breach of duty which the defendant owed
to the plaintiff - a concurrence of injury to the plaintiff and legal
responsibility by the person causing it. The underlying basis for
the award of tort damages is the premise that an individual was
injured in contemplation of law. Thus, there must first be a breach
of some duty and the imposition of liability for that breach before
damages may be awarded; and the breach of such duty should be
the proximate cause of the injury.
Pantaleon is not entitled to damages
Because AMEX neither breached its contract with Pantaleon, nor
acted with culpable delay or the willful intent to cause harm, we
find the award of moral damages to Pantaleon unwarranted.
Similarly, we find no basis to award exemplary damages. In
contracts, exemplary damages can only be awarded if a defendant
acted "in a wanton, fraudulent, reckless, oppressive or malevolent
manner."49 The plaintiff must also show that he is entitled to
moral, temperate, or compensatory damages before the court may
consider the question of whether or not exemplary damages should
be awarded.50
As previously discussed, it took AMEX some time to approve
Pantaleons purchase requests because it had legitimate concerns
on the amount being charged; no malicious intent was ever
established here. In the absence of any other damages, the award
of exemplary damages clearly lacks legal basis.1avvphi1
Neither do we find any basis for the award of attorneys fees and
costs of litigation. No premium should be placed on the right to
litigate and not every winning party is entitled to an automatic
grant of attorney's fees.51 To be entitled to attorneys fees and
litigation costs, a party must show that he falls under one of the
instances enumerated in Article 2208 of the Civil Code. 52 This,
Pantaleon failed to do. Since we eliminated the award of moral and
exemplary damages, so must we delete the award for attorney's
fees and litigation expenses.
Lastly, although we affirm the result of the CA decision, we do so
for the reasons stated in this Resolution and not for those found in
the CA decision.
WHEREFORE, premises considered, we SET ASIDE our May 8,
2009 Decision and GRANT the present motion for reconsideration.
The Court of Appeals Decision dated August 18, 2006 is hereby
AFFIRMED. No costs.
SO ORDERED.
Page 112 of 205
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-83524 October 13, 1989
ERNESTO KRAMER, JR. and MARIA KRAMER, petitioners,
vs.
HON. COURT OF APPEALS and TRANS-ASIA SHIPPING LINES,
INC., respondents.
Rodolfo D. Mapile for petitioners.
Jose Al. Perez for private respondent.
GANCAYCO, J.:
The principal issue in this Petition for Review is whether or not a
Complaint for damages instituted by the petitioners against the
private respondent arising from a marine collision is barred by the
statute of limitations.
The record of the case discloses that in the early morning of April
8, 1976, the F/B Marjolea, a fishing boat owned by the petitioners
Ernesto Kramer, Jr. and Marta Kramer, was navigating its way
from Marinduque to Manila. Somewhere near Maricabon Island
and Cape Santiago, the boat figured in a collision with an inter-
island vessel, the M/V Asia Philippines owned by the private
respondent Trans-Asia Shipping Lines, Inc. As a consequence of
the collision, the F/B Marjolea sank, taking with it its fish catch.
After the mishap, the captains of both vessels filed their respective
marine protests with the Board of Marine Inquiry of the Philippine
Coast Guard. The Board conducted an investigation for the
purpose of determining the proximate cause of the maritime
collision.
On October 19, 1981, the Board concluded that the loss of the F/B
Marjolea and its fish catch was attributable to the negligence of the
employees of the private respondent who were on board the M/V
Asia Philippines during the collision. The findings made by the
Board served as the basis of a subsequent Decision of the
Commandant of the Philippine Coast Guard dated April 29, 1982
wherein the second mate of the M/V Asia Philippines was
suspended from pursuing his profession as a marine officer. 1
On May 30, 1985, the petitioners instituted a Complaint for
damages against the private respondent before Branch 117 of the
Regional Trial Court in Pasay City. 2 The suit was docketed as Civil
Case No. 2907-P.
The private respondent filed a Motion seeking the dismissal of the
Complaint on the ground of prescription. He argued that under
Article 1146 of the Civil Code, 3 the prescriptive period for
instituting a Complaint for damages arising from a quasi-delict like
a maritime collision is four years. He maintained that the
petitioners should have filed their Complaint within four years from
the date when their cause of action accrued, i.e., from April 8, 1976
when the maritime collision took place, and that accordingly, the
Complaint filed on May 30, 1985 was instituted beyond the four-
year prescriptive period.
For their part, the petitioners contended that maritime collisions
have peculiarities and characteristics which only persons with
special skill, training and experience like the members of the Board
of Marine Inquiry can properly analyze and resolve. The petitioners
argued that the running of the prescriptive period was tolled by the
filing of the marine protest and that their cause of action accrued
only on April 29, 1982, the date when the Decision ascertaining the
negligence of the crew of the M/V Asia Philippines had become
Page 113 of 205
final, and that the four-year prescriptive period under Article 1146 1. Board of Marine
of the Civil Code should be computed from the said date. The Inquiry (BMI) Shall
petitioners concluded that inasmuch as the Complaint was filed on have the jurisdiction to
May 30, 1985, the same was seasonably filed. investigate marine
In an Order dated September 25, 1986, 4 the trial court denied the accidents or casualties
Motion filed by the private respondent. The trial court observed relative to the liability
that in ascertaining negligence relating to a maritime collision, of shipowners and
there is a need to rely on highly technical aspects attendant to officers, exclusive
such collision, and that the Board of Marine Inquiry was jurisdiction to
constituted pursuant to the Philippine Merchant Marine Rules and investigate
Regulations, which took effect on January 1, 1975 by virtue of cases/complaints
Letter of Instruction No. 208 issued on August 12, 1974 by then against the marine
President Ferdinand E. Marcos, precisely to answer the need. The officers; and to review
trial court went on to say that the four-year prescriptive period all proceedings or
provided in Article 1146 of the Civil Code should begin to run only investigation
from April 29, 1982, the date when the negligence of the crew of conducted by the
the M/V Asia Philippines had been finally ascertained. The Special Boards of
pertinent portions of the Order of the trial court are as follows Marine Inquiry.
Considering that the action concerns an incident 2. Special Board of
involving a collision at sea of two vehicles and to Marine Inquiry. Shall
determine negligence for that incident there is an have original
absolute need to rely on highly technical aspects jurisdiction to
attendant to such collisions. It is obviously to investigate marine
answer such a need that the Marine Board of casualties and
Inquiry (Sic) was constituted pursuant to the disasters which occur
Philippine Merchant Marine Rules and Regulations or are committed
which became effective January 1, 1975 under within the limits of the
Letter of Instruction(s) No. 208 dated August 12, Coast Guard District
1974. The relevant section of that law (Art. XVI/b/ concerned or those
provided as follow(s):

Page 114 of 205

 referred by the
Commandant.
The Court finds reason in the argument of the
plaintiff that marine incidents have those
'peculiarities which only persons of special skill,
training and exposure can rightfully decipher and
resolve on the matter of the negligence and liabilities
of parties involved and inasmuch as the report of
the Board of Inquiry (sic) admittedly came out only
on April 29, 1982, the prescriptive period provided x
x x under Art. 1146 of the Civil Code should begin to
run only from that date. The complaint was filed
with this Court on May 10, 1985, hence the statute
of limitations can not constitute a bar to the filing of
this case. 5
The private respondent elevated the case to the Court of Appeals by
way of a special civil action for certiorari and prohibition, alleging
therein that the trial court committed a grave abuse of discretion in
refusing to dismiss the Complaint filed by the petitioners. The case
was assigned to the Second Division of the appellate court and was
docketed as Case No. CA-G.R. SP No. 12032. 6
In a Decision dated November 27, 1987, 7 and clarified in a
Resolution dated January 12, 1988, 8 the Court of Appeals granted
the Petition filed by the private respondent and ordered the trial
court to dismiss the Complaint. The pertinent portions of the
Decision of the appellate court are as follows
It is clear that the cause of action of private
respondent (the herein petitioners Ernesto Kramer,
Jr. and Marta Kramer) accrued from the occurrence
of the mishap because that is the precise time when
damages were inflicted upon and sustained by the
aggrieved party and from which relief from the court
is presently sought. Private respondents should
have immediately instituted a complaint for
damages based on a quasi-delict within four years
from the said marine incident because its cause of
action had already definitely ripened at the onset of
the collision. For this reason, he (sic) could cite the
negligence on the part of the personnel of the
petitioner to exercise due care and lack of (sic)
diligence to prevent the collision that resulted in the
total loss of their x x x boat.
We can only extend scant consideration to
respondent judge's reasoning that in view of the
nature of the marine collision that allegedly involves
highly technical aspects, the running of the
prescriptive period should only commence from the
finality of the investigation conducted by the Marine
Board of Inquiry (sic) and the decision of the
Commandant, Philippine Coast Guard, who has
original jurisdiction over the mishap. For one, while
it is true that the findings and recommendation of
the Board and the decision of the Commandant may
be helpful to the court in ascertaining which of the
parties are at fault, still the former (court) is not
bound by said findings and decision. Indeed, the
same findings and decision could be entirely or
partially admitted, modified, amended, or
disregarded by the court according to its lights and
judicial discretion. For another, if the accrual of a
Page 115 of 205
 cause of action will be made to depend on the action
to be taken by certain government agencies, then
necessarily, the tolling of the prescriptive period
would hinge upon the discretion of such agencies.
Said alternative it is easy to foresee would be
fraught with hazards. Their investigations might be
delayed and lag and then witnesses in the meantime
might not be available or disappear, or certain
documents may no longer be available or might be
mislaid. ... 9
The petitioners filed a Motion for the reconsideration of the said
Decision but the same was denied by the Court of Appeals in a
Resolution dated May 27, 1988. 10
Hence, the instant Petition wherein the arguments raised by the
petitioner before the trial court are reiterated. 11 In addition
thereto, the petitioner contends that the Decision of the Court of
Appeals 12 The private respondent filed its Comment on the Petition
seeking therein the dismissal of the same. 13 It is also contended by
the private respondent that the ruling of the Court in Vasquez is
not applicable to the case at bar because the said case involves a
maritime collision attributable to a fortuitous event. In a
subsequent pleading, the private respondent argues that the
Philippine Merchant Marine Rules and Regulations cannot have
the effect of repealing the provisions of the Civil Code on
prescription of actions. 14
On September 19,1988, the Court resolved to give due course to
the petition. 15 After the parties filed their respective memoranda,
the case was deemed submitted for decision.
The petition is devoid of merit. Under Article 1146 of the Civil
Code, an action based upon a quasi-delict must be instituted
within four (4) years. The prescriptive period begins from the day
the quasi-delict is committed. In Paulan vs. Sarabia, 16 this Court
ruled that in an action for damages arising from the collision of two
(2) trucks, the action being based on a quasi-delict, the four (4)
year prescriptive period must be counted from the day of the
collision.
In Espanol vs. Chairman, Philippine Veterans Administration, 17 this
Court held as follows-
The right of action accrues when there exists a
cause of action, which consists of 3 elements,
namely: a) a right in favor of the plaintiff by
whatever means and under whatever law it arises or
is created; b) an obligation on the part of defendant
to respect such right; and c) an act or omission on
the part of such defendant violative of the right of
the plaintiff ... It is only when the last element
occurs or takes place that it can be said in law that
a cause of action has arisen ... .
From the foregoing ruling, it is clear that the prescriptive period
must be counted when the last element occurs or takes place, that
is, the time of the commission of an act or omission violative of the
right of the plaintiff, which is the time when the cause of action
arises.
It is therefore clear that in this action for damages arising from the
collision of two (2) vessels the four (4) year prescriptive period must
be counted from the day of the collision. The aggrieved party need
not wait for a determination by an administrative body like a Board
of Marine Inquiry, that the collision was caused by the fault or
negligence of the other party before he can file an action for
damages. The ruling in Vasquez does not apply in this case.
Page 116 of 205
Immediately after the collision the aggrieved party can seek relief
from the courts by alleging such negligence or fault of the owners,
agents or personnel of the other vessel.
Thus, the respondent court correctly found that the action of
petitioner has prescribed. The collision occurred on April 8, 1976.
The complaint for damages was filed iii court only on May 30, 1
985, was beyond the four (4) year prescriptive period.
WHEREFORE, the petition is dismissed. No costs.
SO ORDERED.

Page 117 of 205

Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-10126 October 22, 1957
SALUD VILLANUEVA VDA. DE BATACLAN and the minors
NORMA, LUZVIMINDA, ELENITA, OSCAR and ALFREDO
BATACLAN, represented by their Natural guardian, SALUD
VILLANUEVA VDA. DE BATACLAN, plaintiffs-appellants,
vs.
MARIANO MEDINA, defendant-appellant.
Lope E. Adriano, Emmanuel Andamo and Jose R. Francisco for
plaintiffs-appellants.
Fortunato Jose for defendant and appellant.
MONTEMAYOR, J.:
Shortly after midnight, on September 13, 1952 bus no. 30 of the
Medina Transportation, operated by its owner defendant Mariano
Medina under a certificate of public convenience, left the town of
Amadeo, Cavite, on its way to Pasay City, driven by its regular
chauffeur, Conrado Saylon. There were about eighteen passengers,
including the driver and conductor. Among the passengers were
Juan Bataclan, seated beside and to the right of the driver, Felipe
Lara, sated to the right of Bataclan, another passenger apparently
from the Visayan Islands whom the witnesses just called Visaya,
apparently not knowing his name, seated in the left side of the
driver, and a woman named Natalia Villanueva, seated just behind
the four last mentioned. At about 2:00 o'clock that same morning,
while the bus was running within the jurisdiction of Imus, Cavite,
one of the front tires burst and the vehicle began to zig-zag until it
fell into a canal or ditch on the right side of the road and turned
turtle. Some of the passengers managed to leave the bus the best
way they could, others had to be helped or pulled out, while the
three passengers seated beside the driver, named Bataclan, Lara
and the Visayan and the woman behind them named Natalia
Villanueva, could not get out of the overturned bus. Some of the
passengers, after they had clambered up to the road, heard groans
and moans from inside the bus, particularly, shouts for help from
Bataclan and Lara, who said they could not get out of the bus.
There is nothing in the evidence to show whether or not the
passengers already free from the wreck, including the driver and
the conductor, made any attempt to pull out or extricate and
rescue the four passengers trapped inside the vehicle, but calls or
shouts for help were made to the houses in the neighborhood. After
half an hour, came about ten men, one of them carrying a lighted
torch made of bamboo with a wick on one end, evidently fueled
with petroleum. These men presumably approach the overturned
bus, and almost immediately, a fierce fire started, burning and all
but consuming the bus, including the four passengers trapped
inside it. It would appear that as the bus overturned, gasoline
began to leak and escape from the gasoline tank on the side of the
chassis, spreading over and permeating the body of the bus and
the ground under and around it, and that the lighted torch brought
by one of the men who answered the call for help set it on fire.
That same day, the charred bodies of the four deemed passengers
inside the bus were removed and duly identified that of Juan
Bataclan. By reason of his death, his widow, Salud Villanueva, in
her name and in behalf of her five minor children, brought the
present suit to recover from Mariano Medina compensatory, moral,
and exemplary damages and attorney's fees in the total amount of
P87,150. After trial, the Court of First Instance of Cavite awarded
Page 118 of 205
P1,000 to the plaintiffs plus P600 as attorney's fee, plus P100, the
value of the merchandise being carried by Bataclan to Pasay City
for sale and which was lost in the fire. The plaintiffs and the
defendants appealed the decision to the Court of Appeals, but the
latter endorsed the appeal to us because of the value involved in
the claim in the complaint.
Our new Civil Code amply provides for the responsibility of
common carrier to its passengers and their goods. For purposes of
reference, we are reproducing the pertinent codal provisions:
ART. 1733. Common carriers, from the nature of their
business and for reasons of public policy, are bound to
observe extraordinary diligence in the vigilance over the
goods and for the safety of the passengers transported by
them, according to all the circumstances of each case.
Such extraordinary diligence in the vigilance over the goods
is further expressed in articles 1734, 1735, and 1745, Nos.
5, 6, and 7, while the extra ordinary diligence for the safety
of the passengers is further set forth in articles 1755 and
1756.
ART. 1755. A common carrier is bound to carry the
passengers safely as far as human care and foresight can
provide, using the utmost diligence of very cautious
persons, with a due regard for all the circumstances.
ART. 1756. In case of death of or injuries to passengers,
common carriers are presumed to have been at fault or to
have acted negligently, unless they prove that they observed
extraordinary diligence as prescribed in articles 1733 and
1755
ART. 1759. Common carriers are liable for the death of or
injuries to passengers through the negligence or willful acts
of the former's employees, although such employees may
have acted beyond the scope of their authority or in
violation of the order of the common carriers.
This liability of the common carriers does not cease upon
proof that they exercised all the diligence of a good father of
a family in the selection and supervision of their employees.
ART. 1763. A common carrier responsible for injuries
suffered by a passenger on account of the willful acts or
negligence of other passengers or of strangers, if the
common carrier's employees through the exercise of the
diligence of a good father of a family could have prevented
or stopped the act or omission.
We agree with the trial court that the case involves a breach of
contract of transportation for hire, the Medina Transportation
having undertaken to carry Bataclan safely to his destination,
Pasay City. We also agree with the trial court that there was
negligence on the part of the defendant, through his agent, the
driver Saylon. There is evidence to show that at the time of the
blow out, the bus was speeding, as testified to by one of the
passengers, and as shown by the fact that according to the
testimony of the witnesses, including that of the defense, from the
point where one of the front tires burst up to the canal where the
bus overturned after zig-zaging, there was a distance of about 150
meters. The chauffeur, after the blow-out, must have applied the
brakes in order to stop the bus, but because of the velocity at
which the bus must have been running, its momentum carried it
over a distance of 150 meters before it fell into the canal and
turned turtle.
There is no question that under the circumstances, the defendant
carrier is liable. The only question is to what degree. The trial court
Page 119 of 205
was of the opinion that the proximate cause of the death of
Bataclan was not the overturning of the bus, but rather, the fire
that burned the bus, including himself and his co-passengers who
were unable to leave it; that at the time the fire started, Bataclan,
though he must have suffered physical injuries, perhaps serious,
was still alive, and so damages were awarded, not for his death,
but for the physical injuries suffered by him. We disagree. A
satisfactory definition of proximate cause is found in Volume 38,
pages 695-696 of American jurisprudence, cited by plaintiffs-
appellants in their brief. It is as follows:
. . . 'that cause, which, in natural and continuous
sequence, unbroken by any efficient intervening cause,
produces the injury, and without which the result would
not have occurred.' And more comprehensively, 'the
proximate legal cause is that acting first and producing the
injury, either immediately or by setting other events in
motion, all constituting a natural and continuous chain of
events, each having a close causal connection with its
immediate predecessor, the final event in the chain
immediately effecting the injury as a natural and probable
result of the cause which first acted, under such
circumstances that the person responsible for the first
event should, as an ordinary prudent and intelligent
person, have reasonable ground to expect at the moment of
his act or default that an injury to some person might
probably result therefrom.
It may be that ordinarily, when a passenger bus overturns, and
pins down a passenger, merely causing him physical injuries, if
through some event, unexpected and extraordinary, the overturned
bus is set on fire, say, by lightning, or if some highwaymen after
looting the vehicle sets it on fire, and the passenger is burned to
death, one might still contend that the proximate cause of his
death was the fire and not the overturning of the vehicle. But in the
present case under the circumstances obtaining in the same, we do
not hesitate to hold that the proximate cause was the overturning
of the bus, this for the reason that when the vehicle turned not
only on its side but completely on its back, the leaking of the
gasoline from the tank was not unnatural or unexpected; that the
coming of the men with a lighted torch was in response to the call
for help, made not only by the passengers, but most probably, by
the driver and the conductor themselves, and that because it was
dark (about 2:30 in the morning), the rescuers had to carry a light
with them, and coming as they did from a rural area where
lanterns and flashlights were not available; and what was more
natural than that said rescuers should innocently approach the
vehicle to extend the aid and effect the rescue requested from
them. In other words, the coming of the men with a torch was to be
expected and was a natural sequence of the overturning of the bus,
the trapping of some of its passengers and the call for outside help.
What is more, the burning of the bus can also in part be attributed
to the negligence of the carrier, through is driver and its conductor.
According to the witness, the driver and the conductor were on the
road walking back and forth. They, or at least, the driver should
and must have known that in the position in which the overturned
bus was, gasoline could and must have leaked from the gasoline
tank and soaked the area in and around the bus, this aside from
the fact that gasoline when spilled, specially over a large area, can
be smelt and directed even from a distance, and yet neither the
driver nor the conductor would appear to have cautioned or taken
steps to warn the rescuers not to bring the lighted torch too near
Page 120 of 205
the bus. Said negligence on the part of the agents of the carrier
come under the codal provisions above-reproduced, particularly,
Articles 1733, 1759 and 1763.
As regard the damages to which plaintiffs are entitled, considering
the earning capacity of the deceased, as well as the other elements
entering into a damage award, we are satisfied that the amount of
SIX THOUSAND (P6,000) PESOS would constitute satisfactory
compensation, this to include compensatory, moral, and other
damages. We also believe that plaintiffs are entitled to attorney's
fees, and assessing the legal services rendered by plaintiffs'
attorneys not only in the trial court, but also in the course of the
appeal, and not losing sight of the able briefs prepared by them,
the attorney's fees may well be fixed at EIGHT HUNDRED (P800)
PESOS for the loss of merchandise carried by the deceased in the
bus, is adequate and will not be disturbed.
There is one phase of this case which disturbs if it does not shock
us. According to the evidence, one of the passengers who, because
of the injuries suffered by her, was hospitalized, and while in the
hospital, she was visited by the defendant Mariano Medina, and in
the course of his visit, she overheard him speaking to one of his
bus inspectors, telling said inspector to have the tires of the bus
changed immediately because they were already old, and that as a
matter of fact, he had been telling the driver to change the said
tires, but that the driver did not follow his instructions. If this be
true, it goes to prove that the driver had not been diligent and had
not taken the necessary precautions to insure the safety of his
passengers. Had he changed the tires, specially those in front, with
new ones, as he had been instructed to do, probably, despite his
speeding, as we have already stated, the blow out would not have
occurred. All in all, there is reason to believe that the driver
operated and drove his vehicle negligently, resulting in the death of
four of his passengers, physical injuries to others, and the
complete loss and destruction of their goods, and yet the criminal
case against him, on motion of the fiscal and with his consent, was
provisionally dismissed, because according to the fiscal, the
witnesses on whose testimony he was banking to support the
complaint, either failed or appear or were reluctant to testify. But
the record of the case before us shows the several witnesses,
passengers, in that bus, willingly and unhesitatingly testified in
court to the effect of the said driver was negligent. In the public
interest the prosecution of said erring driver should be pursued,
this, not only as a matter of justice, but for the promotion of the
safety of passengers on public utility buses. Let a copy of this
decision be furnished the Department of Justice and the Provincial
Fiscal of Cavite.
In view of the foregoing, with the modification that the damages
awarded by the trial court are increased from ONE THOUSAND
(P1,000) PESOS TO SIX THOUSAND (P6,000) PESOS, and from SIX
HUNDRED PESOS TO EIGHT HUNDRED (P800) PESOS, for the
death of Bataclan and for the attorney's fees, respectively, the
decision appealed is from hereby affirmed, with costs.
Page 121 of 205
Republic of the Philippines November 6, 1993 at 9:00 p.m., November 7 at 6:00 a.m., and
SUPREME COURT November 8 at 7:30 a.m.
Manila On November 8 or on the third day he took the medicine,
FIRST DIVISION respondent figured in a vehicular accident. The car he was driving
G.R. No. 156037 May 28, 2007 collided with the car of one Josie Peralta. Respondent fell asleep
MERCURY DRUG CORPORATION, Petitioner, while driving. He could not remember anything about the collision
vs. nor felt its impact.
SEBASTIAN M. BAKING, Respondent. Suspecting that the tablet he took may have a bearing on his
DECISION physical and mental state at the time of the collision, respondent
SANDOVAL-GUTIERREZ, J.: returned to Dr. Sys clinic. Upon being shown the medicine, Dr. Sy
For our resolution is the instant Petition for Review on Certiorari1 was shocked to find that what was sold to respondent was
assailing the Decision2 dated May 30, 2002 and Resolution dated Dormicum, instead of the prescribed Diamicron.
November 5, 2002 of the Court of Appeals in CA-G.R. CV No. Thus, on April 14, 1994, respondent filed with the Regional Trial
57435, entitled "Sebastian M. Baking, plaintiff-appellee, versus Court (RTC), Branch 80 of Quezon City a complaint for damages
Mercury Drug Co. Inc., defendant-appellant." against petitioner, docketed as Civil Case No. Q-94-20193.
The facts are: After hearing, the trial court rendered its Decision dated March 18,
On November 25, 1993, Sebastian M. Baking, respondent, went to 1997 in favor of respondent, thus:
the clinic of Dr. Cesar Sy for a medical check-up. On the following WHEREFORE, premises considered, by preponderance of evidence,
day, after undergoing an ECG, blood, and hematology the Court hereby renders judgment in favor of the plaintiff and
examinations and urinalysis, Dr. Sy found that respondents blood against the defendant ordering the latter to pay mitigated damages
sugar and triglyceride were above normal levels. Dr. Sy then gave as follows:
respondent two medical prescriptions Diamicron for his blood 1. P250,000.00 as moral damages;
sugar and Benalize tablets for his triglyceride. 2. P20,000.00 as attorneys fees and litigation expenses;
Respondent then proceeded to petitioner Mercury Drug 3. plus % of the cost of the suit.
Corporation (Alabang Branch) to buy the prescribed medicines. SO ORDERED.
However, the saleslady misread the prescription for Diamicron as a On appeal, the Court of Appeals, in its Decision, affirmed in toto
prescription for Dormicum. Thus, what was sold to respondent was the RTC judgment. Petitioner filed a motion for reconsideration but
Dormicum, a potent sleeping tablet. it was denied in a Resolution dated November 5, 2002.
Unaware that what was given to him was the wrong medicine, Hence, this petition.
respondent took one pill of Dormicum on three consecutive days

Page 122 of 205

Petitioner contends that the Decision of the Court of Appeals is not
in accord with law or prevailing jurisprudence.
Respondent, on the other hand, maintains that the petition lacks
merit and, therefore, should be denied.
The issues for our resolution are:
1. Whether petitioner was negligent, and if so, whether such
negligence was the proximate cause of respondents
accident; and
2. Whether the award of moral damages, attorneys fees,
litigation expenses, and cost of the suit is justified.
Article 2176 of the New 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.
To sustain a claim based on the above provision, the following
requisites must concur: (a) damage suffered by the plaintiff; (b)
fault or negligence of the defendant; and, (c) connection of cause
and effect between the fault or negligence of the defendant and the
damage incurred by the plaintiff.3
There is no dispute that respondent suffered damages.
It is generally recognized that the drugstore business is imbued
with public interest. The health and safety of the people will be put
into jeopardy if drugstore employees will not exercise the highest
degree of care and diligence in selling medicines. Inasmuch as the
matter of negligence is a question of fact, we defer to the findings of
the trial court affirmed by the Court of Appeals.
Obviously, petitioners employee was grossly negligent in selling to
respondent Dormicum, instead of the prescribed Diamicron.
Considering that a fatal mistake could be a matter of life and death
for a buying patient, the said employee should have been very
cautious in dispensing medicines. She should have verified
whether the medicine she gave respondent was indeed the one
prescribed by his physician. The care required must be
commensurate with the danger involved, and the skill employed
must correspond with the superior knowledge of the business
which the law demands.41awphi1.nt
Petitioner contends that the proximate cause of the accident was
respondents negligence in driving his car.
We disagree.
Proximate cause is defined as any cause that produces injury in a
natural and continuous sequence, unbroken by any efficient
intervening cause, such that the result would not have occurred
otherwise. Proximate cause is determined from the facts of each
case, upon a combined consideration of logic, common sense,
policy, and precedent.5
Here, the vehicular accident could not have occurred had
petitioners employee been careful in reading Dr. Sys prescription.
Without the potent effects of Dormicum, a sleeping tablet, it was
unlikely that respondent would fall asleep while driving his car,
resulting in a collision.
Complementing Article 2176 is Article 2180 of the same Code
which states:
ART. 2180. The obligation imposed by Article 2176 is demandable
not only for ones own acts or omissions, but also for those of
persons for whom one is responsible.
xxx
The owners and managers of an establishment or enterprise are
likewise responsible for damages caused by their employees in the
Page 123 of 205
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
The responsibility treated of in this article shall cease when the
persons herein mentioned prove that they observed the diligence of
a good father of a family to prevent damage.
It is thus clear that the employer of a negligent employee is liable
for the damages caused by the latter. When an injury is caused by
the negligence of an employee, there instantly arises a presumption
of the law that there has been negligence on the part of the
employer, either in the selection of his employee or in the
supervision over him, after such selection. The presumption,
however, may be rebutted by a clear showing on the part of the
employer that he has exercised the care and diligence of a good
father of a family in the selection and supervision of his employee.6
Here, petitioner's failure to prove that it exercised the due diligence
of a good father of a family in the selection and supervision of its
employee will make it solidarily liable for damages caused by the
latter.
As regards the award of moral damages, we hold the same to be in
order. Moral damages may be awarded whenever the defendants
wrongful act or omission is the proximate cause of the plaintiffs
physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social
humiliation, and similar injury in the cases specified or analogous
to those provided in Article 2219 of the Civil Code.7
Respondent has adequately established the factual basis for the
award of moral damages when he testified that he suffered mental
anguish and anxiety as a result of the accident caused by the
negligence of petitioners employee.
There is no hard-and-fast rule in determining what would be a fair
and reasonable amount of moral damages, since each case must be
governed by its own peculiar facts. However, it must be
commensurate to the loss or injury suffered.8 Taking into
consideration the attending circumstances here, we are convinced
that the amount awarded by the trial court is exorbitant. Thus, we
reduce the amount of moral damages from P250,000.00 to
P50,000.00 only.
In addition, we also deem it necessary to award exemplary
damages. Article 2229 allows the grant of exemplary damages by
way of example or correction for the public good. As mentioned
earlier, the drugstore business is affected with public interest.
Petitioner should have exerted utmost diligence in the selection
and supervision of its employees. On the part of the employee
concerned, she should have been extremely cautious in dispensing
pharmaceutical products. Due to the sensitive nature of its
business, petitioner must at all times maintain a high level of
meticulousness. Therefore, an award of exemplary damages in the
amount of P25,000.00 is in order.1awphi1.nt
On the matter of attorneys fees and expenses of litigation, it is
settled that the reasons or grounds for the award thereof must be
set forth in the decision of the court.9 Since the trial courts
decision did not give the basis of the award, the same must be
deleted. In Vibram Manufacturing Corporation v. Manila Electric
Company,10 we held:
Page 124 of 205
Likewise, the award for attorneys fees and litigation expenses
should be deleted. Well-enshrined is that "an award for attorneys
fees must be stated in the text of the courts decision and not in
the dispositive portion only" (Consolidated Bank and Trust
Corporation (Solidbank) v. Court of Appeals, 246 SCRA 193 [1995]
and Keng Hua Paper Products, Inc. v. Court of Appeals, 286 SCRA
257 [1998]). This is also true with the litigation expenses where the
body of the decision discussed nothing for its basis.
WHEREFORE, we DENY the petition. The challenged Decision and
Resolution of the Court of Appeals in CA-G.R. CV No. 57435 are
AFFIRMED with modification in the sense that (a) the award of
moral damages to respondent is reduced from P250,000.00 to
P50,000.00; (b) petitioner is likewise ordered to pay said
respondent exemplary damages in the amount of P25,000.00; and
(c) the award of attorneys fees and litigation expenses is deleted.
Costs against petitioner.
SO ORDERED.

Page 125 of 205

Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 105410 July 25, 1994
PILIPINAS BANK, petitioner,
vs.
HON. COURT OF APPEALS AND FLORENCIO REYES,
respondents.
Gella Reyes Danguilan & Associates for petitioner.
Santos V. Pampolina, Jr. for private respondent.
PUNO, J.:
This is a petition for review of the Decision of the respondent court
1 in CA-G.R. CV No. 29524 dated May 13, 1992 which ordered
petitioner to pay the private respondent the sum of P50,000.00 as
moral damages, P25,000.00 as attorney's fees and cost of suit.
The facts as found both by the trial court 2 and the respondent
court are:
As payments for the purchased shoe materials and
rubber shoes, Florencio Reyes issued postdated
checks to Winner Industrial Corporation for
P20,927.00 and Vicente Tui, for P11,419.50, with
due dates on October 10 and 12, 1979, respectively.
To cover the face value of the checks, plaintiff, on
October 10, 1979, requested PCIB Money Shop's
manager Mike Potenciano to effect the withdrawal of
P32,000.00 from his savings account therein and
have it deposited with his current account with
Pilipinas Bank (then Filman Bank), Bian Branch.
Roberto Santos was requested to make the deposit.
In depositing in the name of FLORENCIO REYES, he
inquired from the teller the current account number
of Florencio Reyes to complete the deposit slip he
was accomplishing. He was informed that it was
"815" and so this was the same current account
number he placed on the deposit slip below the
depositor's name FLORENCIO REYES.
Nothing that the account number coincided with the
name Florencio, Efren Alagasi, then Current
Account Bookkeeper of Pilipinas Bank, thought it
was for Florencio Amador who owned the listed
account number. He, thus, posted the deposted in
the latter's account not noticing that the depositor's
surname in the deposit slip was REYES.
On October 11, 1979, the October 10, check in favor
of Winner Industrial Corporation was presented for
payment. Since the ledger of Florencio Reyes
indicated that his account had only a balance of
P4,078.43, it was dishonored and the payee was
advised to try it for next clearing.
On October 15, 1979, the October 10, 1979 check
was redeposited but was again dishonored.
Likewise, the October 12, 1979 check in favor of
Vicente Tui when presented for payment on that
same date met the same fate but was advised to try
the next clearing. Two days after the October 10
check was again dishonored, the payee returned the
same to Florencio Reyes and demanded a cash
Page 126 of 205
 payment of its face value which he did if only to save
his name. The October 12, 1979 check was
redeposited on October 18, 1979, but again
dishonored for the reason that the check was drawn
against insufficient fund.
Furious over the incident, he immediately proceeded
to the bank and urged an immediate verification of
his account.
Upon verification, the bank noticed the error. The
P32,000.00 deposit posted in the account of
Florencio Amador was immediately transferred to
the account of Reyes upon being cleared by
Florencio Amador that he did not effect a deposit in
the amount of P32,000.00. The transfer having been
effected, the bank then honored the October 12,
1979, check (Exh. "C").
On the basis of these facts, the trial court ordered petitioner to pay
to the private respondent: (1) P200,000.00 as compensatory
damages; (2) P100,000.00 as moral damages; (3) P25,000.00 as
attorney's fees, and (4) the costs of suit. On appeal to the
respondent court, the judgment was modified as aforestated.
In this petition for review, petitioner argues:
I. Respondent Court of Appeals erred on a matter of
law, in not applying the first sentence of Article
2179, New Civil Code, in view of its own finding that
respondent Reyes' own representative committed the
mistake in writing down the correct account
number;
II. Respondent Court of Appeals erred, on a matter
of law, in holding that respondent Reyes has the
right to recover moral damages and in awarding the
amount of P50,000.00, when there is no legal nor
factual basis for it;
III. The Honorable Court of Appeals erred, on a
matter of law, in holding petitioner liable for
attorney's fees in the amount of P20,000.00, when
there is no legal nor factual basis for it.
We find no merit in the petition.
First. For Article 2179 3 of the Civil Code to apply, it must be
established that private respondent's own negligence was the
immediate and proximate cause of his injury. The concept of
proximate cause is well defined in our corpus of jurisprudence as
"any cause which, in natural and continuous sequence, unbroken
by any efficient intervening cause, produces the result complained
of and without which would not have occurred and from which it
ought to have been forseen or reasonably anticipated by a person
of ordinary case that the injury complained of or some similar
injury, would result therefrom as a natural and probable
consequence." 4 In the case at bench, the proximate cause of the
injury is the negligence of petitioner's employee in erroneously
posting the cash deposit of private respondent in the name of
another depositor who had a similar first name. As held by the trial
court:
xxx xxx xxx
Applying the test, the bank employee is, on that
basis, deemed to have failed to exercise the degree of
care required in the performance of his duties. As
earlier stated, the bank employee posted the cash
deposit in the account of Florencio Amador from his
assumption that the name Florencio appearing on
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 the ledger without, however, going through the full
name, is the same Florencio stated in the deposit
slip. He should have continuously gone beyond mere
assumption, which was proven to be erroneous, and
proceeded with clear certainty, considering the
amount involved and the repercussions it would
create on the totality of the person notable of which
is the credit standing of the person involved should
a mistake happen. The checks issued by the plaintiff
in the course of his business were dishonored by the
bank because the ledger of Florencio Reyes indicated
a balance insufficient to cover the face value of
checks.
Second. In light of this negligence, the liability of petitioner for
moral damages cannot be impugned. So we held in Bank of the
Philippine Islands vs. IAC, et al. 5
The bank is not expected to be infallible but, as
correctly observed by respondent Appellate Court, in
this instance, it must bear the blame for not
discovering the mistake of its teller despite the
established procedure requiring the papers and
bank books to pass through a battery of bank
personnel whose duty it is to check and
countercheck them for possible errors. Apparently,
the officials and employees tasked to do that did not
perform their duties with due care, as may be
gathered from the testimony of the bank's lone
witness, Antonio Enciso, who casually declared that
"the approving officer does not have to see the
account numbers and all those things. Those are
very petty things for the approving manager to look
into" (p. 78, Record on Appeal). Unfortunately, it was
a "petty thing," like the incorrect account number
that the bank teller wrote on the initial deposit slip
for the newly-opened joint current account of the
Canlas spouses, that sparked this half-a-million-
peso damage suit against the bank.
While the bank's negligence may not have been
attended with malice and bad faith, nevertheless, it
caused serious anxiety, embarrassment and
humiliation to the private respondents for which
they are entitled to recover reasonable moral
damages (American Express International, Inc. IAC,
167 SCRA 209). The award of reasonable attorney's
fees is proper for the private respondent's were
compelled to litigate to protect their interest (Art.
2208, Civil Code). However, the absence of malice
and bad faith renders the award of exemplary
damages improper (Globe Mackay Cable and Radio
Corp. vs. Court of Appeals, 176 SCRA 778).
IN VIEW WHEREOF, the petition is denied there being no
reversible error in the Decision of the respondent court. Cost
against petitioner.
SO ORDERED.
Page 128 of 205
Republic of the Philippines towards the van. In between the two vehicles was a parked prime
SUPREME COURT mover with a trailer, owned by private respondent Liberty Forest,
Manila Inc.3
THIRD DIVISION The night before, at around 10:00 p.m., the prime mover with
G.R. No. 161803 February 4, 2008 trailer suffered a tire blowout. The driver, private respondent
DY TEBAN TRADING, INC., petitioner, Cresilito Limbaga, parked the prime mover askew occupying a
vs. substantial portion of the national highway, on the lane of the
JOSE CHING AND/OR LIBERTY FOREST, INC. and CRESILITO passenger bus. He parked the prime mover with trailer at the
M. LIMBAGA, respondents. shoulder of the road with the left wheels still on the cemented
DECISION highway and the right wheels on the sand and gravel shoulder of
REYES, R.T., J.: the highway.4 The prime mover was not equipped with triangular,
THE vehicular collision resulting in damages and injuries in this collapsible reflectorized plates, the early warning device required
case could have been avoided if the stalled prime mover with trailer under Letter of Instruction No. 229. As substitute, Limbaga placed
were parked properly and equipped with an early warning device. It a banana trunk with leaves on the front and the rear portion of the
is high time We sounded the call for strict enforcement of the law prime mover to warn incoming motorists. It is alleged that Limbaga
and regulation on traffic and vehicle registration. Panahon na para likewise placed kerosene lighted tin cans on the front and rear of
mahigpit na ipatupad ang batas at regulasyon sa trapiko at the trailer.5
pagpapatala ng sasakyan. To avoid hitting the parked prime mover occupying its lane, the
Before Us is a petition for review on certiorari of the Decision1 of the incoming passenger bus swerved to the right, onto the lane of the
Court of Appeals (CA) modifying that2 of the Regional Trial Court approaching Nissan van. Ortiz saw two bright and glaring
(RTC) in Butuan City finding private respondents Liberty Forest, headlights and the approaching passenger bus. He pumped his
Inc. and Cresilito Limbaga liable to petitioner Dy Teban Trading, break slowly, swerved to the left to avoid the oncoming bus but the
Inc. for damages. van hit the front of the stationary prime mover. The passenger bus
Facts hit the rear of the prime mover.6
On July 4, 1995, at around 4:45 a.m., Rogelio Ortiz, with helper Ortiz and Catamora only suffered minor injuries. The Nissan van,
Romeo Catamora, was driving a Nissan van owned by petitioner Dy however, became inoperable as a result of the incident. After the
Teban Trading, Inc. along the National Highway in Barangay collision, SPO4 Teofilo Pame conducted an investigation and
Sumilihon, Butuan City, going to Surigao City. They were submitted a police traffic incident investigation report. 7
delivering commercial ice to nearby barangays and municipalities. On October 31, 1995, petitioner Nissan van owner filed a complaint
A Joana Paula passenger bus was cruising on the opposite lane for damages8 against private respondents prime mover owner and

Page 129 of 205

driver with the RTC in Butuan City. The Joana Paula passenger
bus was not impleaded as defendant in the complaint.
RTC Disposition
On August 7, 2001, the RTC rendered a decision in favor of
petitioner Dy Teban Trading, Inc. with a fallo reading:
WHEREFORE, judgment is hereby rendered directing,
ordaining and ordering:
a) That defendants Liberty Forest, Inc. and Cresilito M.
Limbaga pay, jointly and solidarily, plaintiff Dy Teban
Trading, Inc. the amounts of P279,832.00 as actual and
compensatory damages, P30,000.00 as attorneys fees and
P5,000.00 as expenses of litigation;
b) That all money claims of plaintiff Rogelio C. Ortiz are
dismissed;
c) That defendant Jose Ching is absolved from any civil
liability or the case against him dismissed;
d) That the counterclaim of all the defendants is dismissed;
and
e) That defendants Liberty Forest, Inc. and Cresilito M.
Limbaga to pay, jointly and solidarily, the costs.
SO ORDERED.9
The RTC held that the proximate cause of the three-way vehicular
collision was improper parking of the prime mover on the national
highway and the absence of an early warning device on the vehicle,
thus:
The court finds that the proximate cause of the incidents is
the negligence and carelessness attributable to the
defendants. When the trailer being pulled by the prime
mover suffered two (2) flat tires at Sumilihon, the prime
mover and trailer were parked haphazardly, as the right
tires of the prime mover were the only ones on the sand and
gravel shoulder of the highway while the left tires and all
the tires of the trailer were on the cemented pavement of
the highway, occupying almost the whole of the right lane
on the direction the prime mover and trailer were traveling.
The statement of Limbaga that he could not park the prime
mover and trailer deeper into the sand and gravel shoulder
of the highway to his right because there were banana
plants is contradicted by the picture marked Exhibit "F."
The picture shows that there was ample space on the
shoulder. If defendant Limbaga was careful and prudent
enough, he should have the prime mover and trailer
traveled more distance forward so that the bodies of the
prime mover and trailer would be far more on the shoulder
rather than on the cemented highway when they were
parked. x x x The court has some doubts on the statement
of witness-driver Limbaga that there were banana trunks
with leaves and lighted tin cans with crude oil placed 3
strides in front of the prime mover and behind the trailer
because the testimonies of witnesses Rogelio C. Ortiz, driver
of the ice van, Romeo D. Catamora, helper of the ice van,
and Police Traffic Investigator SPO3 Teofilo M. Pame show
that there were no banana trunks with leaves and lighted
tin cans at the scene of the incident. But even assuming
that there were banana trunks with leaves but they were
placed close to the prime mover and trailer as they were
placed 3 strides away which to the mind of the court is
equivalent approximately to 3 meters and with this
distance, approaching vehicles would have no sufficient
time and space to make a complete stop, especially if the
Page 130 of 205
vehicles are heavy and loaded. If there were lighted tin
cans, it was not explained by the defendants why the driver,
especially driver witness Ortiz, did not see them.
xxxx
Defendant Liberty Forest, Inc. did not exercise the diligence
of a good father of a family in managing and running its
business. The evidence on record shows that it failed to
provide its prime mover and trailer with the required "early
warning devices" with reflectors and it did not keep proper
maintenance and condition of the prime mover and the
trailer. The circumstances show that the trailer were
provided with wornout tires and with only one (1) piece of
spare tire. The pictures marked Exhibit "3" and "4" show
that two (2) flat tires suffered by the trailer and these two
(2) tires were attached to one of the two (2) I-beams or axles
attached to the rear of the trailer which axle is very near
but behind the other axle and with the location of the 2 I-
beams, it would have the other I-beam that would have
suffered the flat tires as it has to bear the brunt of weight of
the D-8 bulldozer. The bulldozer was not loaded directly
above the two (2) I-beams as 2 I-beams, as a pair, were
attached at the far rear end of the trailer.
xxxx
However, defendant Jose Ching should be absolved of any
liability as there is no showing that he is the manager or
CEO of defendant Liberty Forest, Inc. Although in the
answer, it is admitted that he is an officer of the defendant
corporation, but it is not clarified what kind of position he
is holding, as he could be an officer as one of the members
of the Board of Directors or a cashier and treasurer of the
corporation. Witness Limbaga in his testimony mentioned a
certain Boy Ching as the Manager but it was never clarified
whether or not Boy Ching and defendant Jose Ching is one
and the same person.10
Private respondents appealed to the CA.
CA Disposition
On August 28, 2003, the CA reversed the RTC decision, disposing
as follows:
WHEREFORE, premises considered, the decision dated
August 7, 2001 of the Regional Trial Court, Branch 2,
Butuan City in Civil Case No. 4360 is hereby PARTLY
MODIFIED by absolving the defendants-
appellants/appellees of any liability to plaintiffs-
appellants/appellees by reason of the incident on July 4,
1995.
The dismissal of the case against Jose Ching, the
counterclaim of defendants-appellants/appellees and the
money claim of Rogelio Ortiz STANDS.
SO ORDERED.11
In partly reversing or partly modifying the RTC decision, the CA
held that the proximate cause of the vehicular collision was the
failure of the Nissan van to give way or yield to the right of way of
the passenger bus, thus:
It was stated that the Joana Paula bus in trying to avoid a
head-on collision with the truck, sideswept the parked
trailer loaded with bulldozer.
Evidently, the driver of the Joana Paula bus was aware of
the presence on its lane of the parked trailer with bulldozer.
For this reason, it proceeded to occupy what was left of its
lane and part of the opposite lane. The truck occupying the
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opposite lane failed to give way or yield the right of way to
the oncoming bus by proceeding with the same speed. The
two vehicles were, in effect, trying to beat each other in
occupying a single lane. The bus was the first to occupy the
said lane but upon realizing that the truck refused to give
way or yield the right of way, the bus, as a precaution,
geared to its right where the trailer was parked.
Unfortunately, the bus miscalculated its distance from the
parked trailer and its rear right side hit the protruding
blade of the bulldozer then on the top of the parked trailer.
The impact of the collision on its right rear side with the
blade of the bulldozer threw the bus further to the opposite
lane, landing its rear portion on the shoulder of the
opposite lane.
xxxx
Facts of the case reveal that when Ortiz, the driver of the
truck, failed to give the Joana Paula bus the space on the
road it needed, the latter vehicle scraped its rear right side
on the protruded bulldozer blade and the impact threw the
bus directly on the path of the oncoming truck. This made
plaintiffs-appellants/appellees conclude that the Joana
Paula bus occupied its lane which forced Ortiz, the driver of
the truck, to swerve to its left and ram the front of the
parked trailer.
xxxx
The trailer was parked because its two (2) rear-left tires
were blown out. With a bulldozer on top of the trailer and
two (2) busted tires, it would be dangerous and quite
impossible for the trailer to further park on the graveled
shoulder of the road. To do so will cause the flat car to tilt
and may cause the bulldozer to fall from where it was
mounted. In fact, it appeared that the driver of the trailer
tried its best to park on the graveled shoulder since the
right-front tires were on the graveled shoulder of the road.
The lower court erred in stating that the Joana Paula bus
swerved to the left of the truck because it did not see the
parked trailer due to lack of warning sign of danger of any
kind that can be seen from a distance. The damage suffered
by the Joana Paula bus belied this assessment. As stated
before, the Joana Paula bus, with the intention of passing
first which it did, first approached the space beside the
parked trailer, veered too close to the parked trailer thereby
hitting its rear right side on the protruding bulldozer blade.
Since the damage was on the rear right most of the bus, it
was clearly on the space which was wide enough for a
single passing vehicle but not sufficient for two (2) passing
vehicles. The bus was thrown right to the path of the truck
by the impact of the collision of its rear right side with the
bulldozer blade.12
The CA disagreed with the RTC that the prime mover did not have
an early warning device. The appellate court accepted the claim of
private respondent that Limbaga placed kerosene lighted tin cans
on the front and rear of the trailer which, in Baliwag Transit, Inc. v.
Court of Appeals,13 may act as substitute early warning device. The
CA stated:
Likewise, it was incorrect for the lower court to state that
there was no warning sign of danger of any kind, most
probably referring to the absence of the triangular
reflectorized plates. The police sketch clearly indicated the
stack of banana leaves placed at the rear of the parked
Page 132 of 205
trailer. The trailers driver testified that they placed
kerosene lighted tin can at the back of the parked trailer.
A pair of triangular reflectorized plates is not the only early
warning device allowed by law. The Supreme Court (in
Baliwag Transit, Inc. v. Court of Appeals) held that:
"x x x Col. Dela Cruz and Romano testified that they
did not see any early warning device at the scene of
the accident. They were referring to the triangular
reflectorized plates in red and yellow issued by the
Land Transportation Office. However, the evidence
shows that Recontique and Ecala placed a kerosene
lamp or torch at the edge of the road, near the rear
portion of the truck to serve as an early warning
device. This substantially complies with Section
34(g) of the Land Transportation and Traffic Code x
xx
Baliwags argument that the kerosene lamp or torch
does not substantially comply with the law is
untenable. The aforequoted law clearly allows the
use not only of an early warning device of the
triangular reflectorized plates variety but also
parking lights or flares visible one hundred meters
away. x x x."
This Court holds that the defendants-appellants/appellees
were not negligent in parking the trailer on the scene of the
accident. It would have been different if there was only one
flat tire and defendant-appellant/appellee Limbaga failed to
change the same and left immediately.
As such, defendants-appellants/appellees are not liable for
the damages suffered by plaintiffs-appellants/appellees.
Whatever damage plaintiffs-appellants/appellees suffered,
they alone must bear them.14
Issues
Petitioner raises two issues15 for Our consideration, to wit:
I.
THE HONORABLE COURT OF APPEALS, WITHOUT ANY
AVAILABLE CONCRETE EVIDENCE, ERRONEOUSLY
DETERMINED THAT THERE WERE EARLY WARNING
DEVICES PLACED IN FRONT OF THE DEFENDANT-
APPELLANTS/APPELLEES TRUCK AND FLAT CAR TO
WARN PLAINTIFF-APPELLANT/APPELLEE ROGELIO ORTIZ
OF THEIR PRESENCE.
II.
WITH DUE RESPECT, IT IS HIGH TIME TO ENFORCE THE
LAW ON EARLY WARNING DEVICES IN THE PUBLIC
INTEREST.
Our Ruling
The petition is meritorious.
The meat of the petition is whether or not the prime mover is liable
for the damages suffered by the Nissan van. The RTC ruled in the
affirmative holding that the proximate cause of the vehicular
collision was the negligence of Limbaga in parking the prime mover
on the national highway without an early warning device on the
vehicle. The CA reversed the RTC decision, holding that the
proximate cause of the collision was the negligence of Ortiz in not
yielding to the right of way of the passenger bus.
Article 2176 of the Civil Code provides that 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
Page 133 of 205
the parties, is called a quasi-delict. To sustain a claim based on
quasi-delict, the following requisites must concur: (a) damage
suffered by plaintiff; (b) fault or negligence of defendant; and (c)
connection of cause and effect between the fault or negligence of
defendant and the damage incurred by plaintiff. 16
There is no dispute that the Nissan van suffered damage. That is
borne by the records and conceded by the parties. The outstanding
issues are negligence and proximate cause. Tersely put, the twin
issues are: (a) whether or not prime mover driver Limbaga was
negligent in parking the vehicle; and (b) whether or not his
negligence was the proximate cause of the damage to the Nissan
van.
Limbaga was negligent in parking the prime mover on the
national highway; he failed to prevent or minimize the risk to
oncoming motorists.
Negligence is defined as the failure to observe for the protection of
the interests of another person that degree of care, precaution, and
vigilance which the circumstances justly demand, whereby such
other person suffers injury.17 The Supreme Court stated the test of
negligence in the landmark case Picart v. Smith18 as follows:
The test by which to determine the existence or negligence
in a particular case may be stated as follows: Did the
defendant in doing the alleged negligent act use that
reasonable care and caution which an ordinary 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.
(Underscoring supplied)
The test of negligence is objective. We measure the act or omission
of the tortfeasor with that of an ordinary reasonable person in the
same situation. The test, as applied to this case, is whether
Limbaga, in parking the prime mover, used that reasonable care
and caution which an ordinary reasonable person would have used
in the same situation.
We find that Limbaga was utterly negligent in parking the prime
mover askew on the right side of the national highway. The vehicle
occupied a substantial portion of the national road on the lane of
the passenger bus. It was parked at the shoulder of the road with
its left wheels still on the cemented highway and the right wheels
on the sand and gravel shoulder of the highway. It is common
sense that the skewed parking of the prime mover on the national
road posed a serious risk to oncoming motorists. It was incumbent
upon Limbaga to take some measures to prevent that risk, or at
least minimize it.
We are unable to agree with the CA conclusion "it would have been
dangerous and quite impossible to further park the prime mover on
the graveled shoulder of the road because the prime mover may tilt
and the bulldozer may fall off." The photographs taken after the
incident show that it could have been possible for Limbaga to park
the prime mover completely on the shoulder of the national road
without risk to oncoming motorists. We agree with the RTC
observation on this point, thus:
x x x The statement of Limbaga that he could not park the
prime mover and trailer deeper into the sand and gravel
Page 134 of 205
 shoulder of the highway to his right because there were
banana plants is contradicted by the picture marked
Exhibit "F." The picture shows that there was ample space
on the shoulder. If defendant Limbaga was careful and
prudent enough, he should have the prime mover and
trailer traveled more distance forward so that the bodies of
the prime mover and trailer would be far more on the
shoulder rather than on the cemented highway when they
were parked. Although at the time of the incident, it was
about 4:45 in the morning and it was drizzling but there is
showing that it was pitch dark that whoever travels along
the highway must be extra careful. If the Joana Paula bus
swerved to the lane on which the "Nissan" ice van was
properly traveling, as prescribed by Traffic Rules and
Regulations, it is because the driver of the bus did not see
at a distance the parked prime mover and trailer on the
bus proper lane because there was no warning signs of
danger of any kind that can be seen from a distance. 19
Limbaga also failed to take proper steps to minimize the risk posed
by the improperly parked prime mover. He did not immediately
inform his employer, private respondent Liberty Forest, Inc., that
the prime mover suffered two tire blowouts and that he could not
have them fixed because he had only one spare tire. Instead of
calling for help, Limbaga took it upon himself to simply place
banana leaves on the front and rear of the prime mover to serve as
warning to oncoming motorists. Worse, Limbaga slept on the prime
mover instead of standing guard beside the vehicle. By his own
account, Limbaga was sleeping on the prime mover at the time of
the collision and that he was only awakened by the impact of the
Nissan van and the passenger bus on the prime mover. 20
Limbaga also admitted on cross-examination that it was his first
time to drive the prime mover with trailer loaded with a D-8
caterpillar bulldozer.21 We find that private respondent Liberty
Forest, Inc. was utterly negligent in allowing a novice driver, like
Limbaga, to operate a vehicle, such as a truck loaded with a
bulldozer, which required highly specialized driving skills.
Respondent employer clearly failed to properly supervise Limbaga
in driving the prime mover.
The RTC noted that private respondent Liberty Forest, Inc. also
failed to keep the prime mover in proper condition at the time of
the collision. The prime mover had worn out tires. It was only
equipped with one spare tire. It was for this reason that Limbaga
was unable to change the two blown out tires because he had only
one spare. The bulldozer was not even loaded properly on the
prime mover, which caused the tire blowouts.
All told, We agree with the RTC that private respondent Limbaga
was negligent in parking the prime mover on the national highway.
Private respondent Liberty Forest, Inc. was also negligent in failing
to supervise Limbaga and in ensuring that the prime mover was in
proper condition.
The case of Baliwag Transit, Inc. v. Court of Appeals is
inapplicable; Limbaga did not put lighted kerosene tin cans
on the front and rear of the prime mover.
Anent the absence of an early warning device on the prime mover,
the CA erred in accepting the bare testimony of Limbaga that he
placed kerosene lighted tin cans on the front and rear of the prime
mover. The evidence on records belies such claim. The CA reliance
on Baliwag Transit, Inc. v. Court of Appeals22 as authority for the
proposition that kerosene lighted tin cans may act as substitute
early warning device is misplaced.
Page 135 of 205
First, the traffic incident report did not mention any lighted tin
cans on the prime mover or within the immediate vicinity of the
accident. Only banana leaves were placed on the prime mover. The
report reads:
VIII RESULT OF INVESTIGATION: A Joana Pa_ula Bus,
with Body No. 7788, with Plate No. LVA-137, driven by one
Temestocles Relova v. Antero, of legal age, married and a
resident of San Roque, Kitcharao, Agusan del Norte, while
traveling along the National Highway, coming from the east
going to the west direction, as it moves along the way and
upon reaching Brgy. Sumilihon, Butuan City to evade
bumping to the approaching Nissan Ice Van with Plate No.
PNT-247, driven by one Rogelio Cortez y Ceneza. As the
result, the Joana Paula Bus accidentally busideswept (sic)
to the parked Prime Mover with Trailer loaded with
Bulldozer without early warning device, instead placing
only dry banana leaves three (3) meters at the rear portion
of the Trailer, while failure to place at the front portion, and
the said vehicle occupied the whole lane. As the result, the
Joana Paula Bus hit to the left edge blade of the Bulldozer.
Thus, causing the said bus swept to the narrow
shouldering, removing the rear four (4) wheels including the
differential and injuring the above-stated twelve (12)
passengers and damaged to the right side fender above the
rear wheel. Thus, causing damage on it. While the Nissan
Ice Van in evading, accidentally swerved to the left lane and
accidentally bumped to the front bumper of the parked
Prime Mover with Trailer loaded with Bulldozer. Thus,
causing heavy damage to said Nissan Ice Van including the
cargoes of the said van.23
Second, SPO4 Pame, who investigated the collision, testified24 that
only banana leaves were placed on the front and rear of the prime
mover. He did not see any lighted tin cans in the immediate vicinity
of the collision.
Third, the claim of Limbaga that he placed lighted tin cans on the
front and rear of the prime mover belatedly surfaced only during
his direct examination. No allegation to this effect was made by
private respondents in their Answer to the complaint for damages.
Petitioners counsel promptly objected to the testimony of Limbaga,
thus:
ATTY. ROSALES:
Q. Now you mentioned about placing some word signs in
front and at the rear of the prime mover with trailer, will
you please describe to us what this word signs are?
A. We placed a piece of cloth on tin cans and filled them
with crude oil. And these tin cans were lighted and they are
like torches. These two lights or torches were placed in front
and at the rear side of the prime mover with trailer. After
each torch, we placed banana trunk. The banana trunk is
placed between the two (2) torches and the prime mover,
both on the rear and on the front portion of the prime
mover.
Q. How far was the lighted tin cans with wick placed in
front of the prime mover.
ATTY. ASIS:
At this point, we will be objecting to questions particularly
referring to the alleged tin cans as some of the warning-sign
devices, considering that there is no allegation to that effect
in the answer of the defendants. The answer was just
limited to the numbers 4 & 5 of the answer. And, therefore,
Page 136 of 205
 if we follow the rule of the binding effect of an allegation in
the complaint, then the party will not be allowed to
introduce evidence to attack jointly or rather the same,
paragraph 5 states, warning device consisting of 3 banana
trunks, banana items and leaves were filed. He can be
cross-examined in the point, Your Honor.
COURT:
Q. Put that on record that as far as this tin cans are
concerned, the plaintiffs are interposing continuing
objections. But the Court will allow the question. 25
We thus agree with the RTC that Limbaga did not place lighted tin
cans on the front and rear of the prime mover. We give more
credence to the traffic incident report and the testimony of SPO4
Pame that only banana leaves were placed on the vehicle. Baliwag
Transit, Inc. v. Court of Appeals26 thus finds no application to the
case at bar.
The skewed parking of the prime mover was the proximate
cause of the collision.
Proximate cause is defined as that cause, which, in natural and
continuous sequence, unbroken by any efficient intervening cause,
produces the injury, and without which the result would not have
occurred. More comprehensively, proximate cause is that cause
acting first and producing the injury, either immediately or by
setting other events in motion, all constituting a natural and
continuous chain of events, each having a close causal connection
with its immediate predecessor, the final event in the chain
immediately effecting the injury as natural and probable result of
the cause which first acted, under such circumstances that the
person responsible for the first event should, as an ordinarily
prudent and intelligent person, have reasonable ground to expect
at the moment of his act or default that an injury to some person
might probably result therefrom.27
There is no exact mathematical formula to determine proximate
cause. It is based upon mixed considerations of logic, common
sense, policy and precedent.28 Plaintiff must, however, establish a
sufficient link between the act or omission and the damage or
injury. That link must not be remote or far-fetched; otherwise, no
liability will attach. The damage or injury must be a natural and
probable result of the act or omission. In the precedent-setting
Vda. de Bataclan v. Medina,29 this Court discussed the necessary
link that must be established between the act or omission and the
damage or injury, viz.:
It may be that ordinarily, when a passenger bus overturns,
and pins down a passenger, merely causing him physical
injuries, if through some event, unexpected and
extraordinary, the overturned bus is set on fire, say, by
lightning, or if some highwaymen after looting the vehicle
sets it on fire, and the passenger is burned to death, one
might still contend that the proximate cause of his death
was the fire and not the overturning of the vehicle. But in
the present case and under the circumstances obtaining in
the same, we do not hesitate to hold that the proximate
cause of the death of Bataclan was the overturning of the
bus, this for the reason that when the vehicle turned not
only on its side but completely on its back, the leaking of
the gasoline from the tank was not unnatural or
unexpected; that the coming of the men with a lighted torch
was in response to the call for help, made not only by the
passengers, but most probably, by the driver and the
conductor themselves, and that because it was very dark
Page 137 of 205
 (about 2:30 in the morning), the rescuers had to carry a
light with them; and coming as they did from a rural area
where lanterns and flashlights were not available, they had
to use a torch, the most handy and available; and what was
more natural than that said rescuers should innocently
approach the overturned vehicle to extend the aid and effect
the rescue requested from them. In other words, the coming
of the men with the torch was to be expected and was
natural sequence of the overturning of the bus, the trapping
of some of its passengers bus, the trapping of some of its
passengers and the call for outside help.
The ruling in Bataclan has been repeatedly cited in subsequent
cases as authority for the proposition that the damage or injury
must be a natural or probable result of the act or omission. Here,
We agree with the RTC that the damage caused to the Nissan van
was a natural and probable result of the improper parking of the
prime mover with trailer. As discussed, the skewed parking of the
prime mover posed a serious risk to oncoming motorists. Limbaga
failed to prevent or minimize that risk. The skewed parking of the
prime mover triggered the series of events that led to the collision,
particularly the swerving of the passenger bus and the Nissan van.
Private respondents Liberty Forest, Inc. and Limbaga are liable for
all damages that resulted from the skewed parking of the prime
mover. Their liability includes those damages resulting from
precautionary measures taken by other motorist in trying to avoid
collision with the parked prime mover. As We see it, the passenger
bus swerved to the right, onto the lane of the Nissan van, to avoid
colliding with the improperly parked prime mover. The driver of the
Nissan van, Ortiz, reacted swiftly by swerving to the left, onto the
lane of the passenger bus, hitting the parked prime mover. Ortiz
obviously would not have swerved if not for the passenger bus
abruptly occupying his vans lane. The passenger bus, in turn,
would not have swerved to the lane of the Nissan van if not for the
prime mover improperly parked on its lane. The skewed parking is
the proximate cause of the damage to the Nissan van.
In Phoenix Construction, Inc. v. Intermediate Appellate Court,30 this
Court held that a similar vehicular collision was caused by the
skewed parking of a dump truck on the national road, thus:
The conclusion we draw from the factual circumstances
outlined above is that private respondent Dionisio was
negligent the night of the accident. He was hurrying home
that night and driving faster than he should have been.
Worse, he extinguished his headlights at or near the
intersection of General Lacuna and General Santos Streets
and thus did not see the dump truck that was parked
askew and sticking out onto the road lane.
Nonetheless, we agree with the Court of First Instance and
the Intermediate Appellate Court that the legal and
proximate cause of the accident and of Dionisios injuries
was the wrongful or negligent manner in which the dump
truck was parked in other words, the negligence of
petitioner Carbonel. That there was a reasonable
relationship between petitioner Carbonels negligence on the
one hand and the accident and respondents injuries on the
other hand, is quite clear. Put in a slightly different
manner, the collision of Dionisios car with the dump truck
was a natural and foreseeable consequence of the truck
drivers negligence.
xxxx
Page 138 of 205
 We believe, secondly, that the truck drivers negligence far
from being a "passive and static condition" was rather an
indispensable and efficient cause. The collision between the
dump truck and the private respondents car would in all
probability not have occurred had the dump truck not been
parked askew without any warning lights or reflector
devices. The improper parking of the dump truck created an
unreasonable risk of injury for anyone driving down
General Lacuna Street and for having so created this risk,
the truck driver must be held responsible. In our view,
Dionisios negligence, although later in point of time than
the truck drivers negligence and, therefore, closer to the
accident, was not an efficient intervening or independent
cause. What the Petitioner describes as an "intervening
cause" was no more than a foreseeable consequence of the
risk created by the negligent manner in which the truck
driver had parked the dump truck. In other words, the
petitioner truck driver owed a duty to private respondent
Dionisio and others similarly situated not to impose upon
them the very risk the truck driver had created. Dionisios
negligence was not of an independent and overpowering
nature as to cut, as it were, the chain of causation in fact
between the improper parking of the dump truck and the
accident, nor to sever the juris vinculum of liability. x x x
(Underscoring supplied)
We cannot rule on the proportionate or contributory liability
of the passenger bus, if any, because it was not a party to the
case; joint tortfeasors are solidarily liable.
The CA also faults the passenger bus for the vehicular collision.
The appellate court noted that the passenger bus was "aware" of
the presence of the prime mover on its lane, but it still proceeded
to occupy the lane of the Nissan van. The passenger bus also
miscalculated its distance from the prime mover when it hit the
vehicle.
We cannot definitively rule on the proportionate or contributory
liability of the Joana Paula passenger bus vis--vis the prime mover
because it was not a party to the complaint for damages. Due
process dictates that the passenger bus must be given an
opportunity to present its own version of events before it can be
held liable. Any contributory or proportionate liability of the
passenger bus must be litigated in a separate action, barring any
defense of prescription or laches. Insofar as petitioner is
concerned, the proximate cause of the collision was the improper
parking of the prime mover. It was the improper parking of the
prime mover which set in motion the series of events that led to the
vehicular collision.
Even granting that the passenger bus was at fault, its fault will not
necessarily absolve private respondents from liability. If at fault,
the passenger bus will be a joint tortfeasor along with private
respondents. The liability of joint tortfeasors is joint and solidary.
This means that petitioner may hold either of them liable for
damages from the collision. In Philippine National Construction
Corporation v. Court of Appeals,31 this Court held:
According to the great weight of authority, where the
concurrent or successive negligent acts or omission of two
or more persons, although acting independently of each
other, are, in combination, the direct and proximate cause
of a single injury to a third person and it is impossible to
determine in what proportion each contributed to the
injury, either is responsible for the whole injury, even
Page 139 of 205
 though his act alone might not have caused the entire
injury, or the same damage might have resulted from the
acts of the other tort-feasor x x x.
In Far Eastern Shipping Company v. Court of Appeals, the Court
declared that the liability of joint tortfeasors is joint and solidary,
to wit:
It may be said, as a general rule, that negligence in order to
render a person liable need not be the sole cause of an
injury. It is sufficient that his negligence, concurring with
one or more efficient causes other than plaintiffs, is the
proximate cause of the injury. Accordingly, where several
causes combine to produce injuries, a person is not relieved
from liability because he is responsible for only one of them,
it being sufficient that the negligence of the person charged
with injury is an efficient cause without which the injury
would not have resulted to as great an extent, and that
such cause is not attributable to the person injured. It is no
defense to one of the concurrent tortfeasors that the injury
would not have resulted from his negligence alone, without
the negligence or wrongful acts of the other concurrent
tortfeasors. Where several causes producing an injury are
concurrent and each is an efficient cause without which the
injury would not have happened, the injury may be
attributed to all or any of the causes and recovery may be
had against any or all of the responsible persons although
under the circumstances of the case, it may appear that
one of them was more culpable, and that the duty owed by
them to the injured person was not the same. No actors
negligence ceases to be a proximate cause merely because it
does not exceed the negligence of other actors. Each
wrongdoer is responsible for the entire result and is liable
as though his acts were the sole cause of the injury.
There is no contribution between joint tortfeasors whose
liability is solidary since both of them are liable for the total
damage. Where the concurrent or successive negligent acts
or omissions of two or more persons, although acting
independently, are in combination with the direct and
proximate cause of a single injury to a third person, it is
impossible to determine in what proportion each
contributed to the injury and either of them is responsible
for the whole injury. Where their concurring negligence
resulted in injury or damage to a third party, they become
joint tortfeasors and are solidarily liable for the resulting
damage under Article 2194 of the Civil Code. (Underscoring
supplied)
All told, all the elements of quasi delict have been proven by clear
and convincing evidence. The CA erred in absolving private
respondents from liability for the vehicular collision.
Final Note
It is lamentable that the vehicular collision in this case could have
been easily avoided by following basic traffic rules and regulations
and road safety standards. In hindsight, private respondent
Limbaga could have prevented the three-way vehicular collision if
he had properly parked the prime mover on the shoulder of the
national road. The improper parking of vehicles, most especially
along the national highways, poses a serious and unnecessary risk
to the lives and limbs of other motorists and passengers. Drivers
owe a duty of care to follow basic traffic rules and regulations and
to observe road safety standards. They owe that duty not only for
their own safety, but also for that of other motorists. We can
Page 140 of 205
prevent most vehicular accidents by simply following basic traffic
rules and regulations.
We also note a failure of implementation of basic safety standards,
particularly the law on early warning devices. This applies even
more to trucks and big vehicles, which are prone to mechanical
breakdown on the national highway. The law, as crafted, requires
vehicles to be equipped with triangular reflectorized plates. 32
Vehicles without the required early warning devices are ineligible
for registration.33 Vehicle owners may also be arrested and fined for
non-compliance with the law.34
The Land Transportation Office (LTO) owes a duty to the public to
ensure that all vehicles on the road meet basic and minimum
safety features, including that of early warning devices. It is most
unfortunate that We still see dilapidated and rundown vehicles on
the road with substandard safety features. These vehicles not only
pose a hazard to the safety of their occupants but that of other
motorists. The prime mover truck in this case should not have
been granted registration because it failed to comply with the
minimum safety features required for vehicles on the road.
It is, indeed, time for traffic enforcement agencies and the LTO to
strictly enforce all pertinent laws and regulations within their
mandate.
WHEREFORE, the petition is GRANTED. The Court of Appeals
decision dated August 28, 2003 is hereby SET ASIDE. The RTC
decision dated August 7, 2001 is REINSTATED IN FULL.
SO ORDERED.

Page 141 of 205

Republic of the Philippines that he himself had called this carromata first. The driver, one
SUPREME COURT Julio Pagnaya, replied to the effect that he had not heard or seen
Manila the call of Araneta, and that he had taken up the two passengers
EN BANC then in the carromata as the first who had offered employment. At
G.R. No. L-15674 October 17, 1921 or about the same time Pagnaya pulled on the reins of the bridle to
CONSOLACION GABETO, in her own right and as guardian ad free the horse from the control of Agaton Araneta, in order that the
litem of her three children, plaintiff-appellee, vehicle might pass on. Owing, however, to the looseness of the
vs. bridle on the horse's head or to the rottenness of the material of
AGATON ARANETA, defendant-appellant. which it was made, the bit came out of the horse's mouth; and it
Jose E. Locsin for appellant. became necessary for the driver to get out, which he did, in order
Block, Johnston and Greenbaum for appellee. to find the bridle. The horse was then pulled over to near the curb,
by one or the other it makes no difference which and Pagnaya
STREET, J.: tried to fix the bridle.
This action was instituted in the Court of First Instance of Iloilo by While he was thus engaged, the horse, being free from the control
Consolacion Gabeto, in her own right as widow of Proceso of the bit, became disturbed and moved forward, in doing which he
Gayetano, and as guardian ad litem of the three children, Conchita pulled one of the wheels of the carromata up on the sidewalk and
Gayetano, Rosita Gayetano, and Fermin Gayetano, for the purpose pushed Julio Pagnaya over. After going a few years further the side
of recovering damages incurred by the plaintiff as a result of the of the carromata struck a police telephone box which was fixed to a
death of the said Proceso Gayetano, supposedly cause by the post on the sidewalk, upon which the box came down with a crash
wrongful act of the defendant Agaton Araneta. Upon hearing the and frightened the horse to such an extent that he set out at full
evidence, his Honor, Judge L. M. Southworth, awarded damages to speed up the street.
the plaintiff in the amount of P3,000, from which judgment the Meanwhile one of the passengers, to wit. Basilio Ilano, had alighted
defendant appealed. while the carromata was as yet alongside the sidewalk; but the
It appears in evidence that on August 4, 1918. Basilio Ilano and other, Proceso Gayetano, had unfortunately retained his seat, and
Proceso Gayetano took a carromata near Plaza Gay, in the City of after the runaway horse had proceeded up the street to a point in
Iloilo, with a view to going to a cockpit on Calle Ledesma in the front of the Mission Hospital, the said Gayetano jumped or fell from
same City. When the driver of the carromata had turned his horse the rig, and in so doing received injuries from which he soon died.
and started in the direction indicated, the defendant, Agaton As to the facts above stated the evidence cannot be said to be
Araneta, stepped out into the street, and laying his hands on the materially in conflict; but there is decided conflict upon the point of
reins, stopped the horse, at the same time protesting to the driver the exact relation of the defendant Agaton Araneta, to the runaway.

Page 142 of 205

The evidence for the plaintiff on this point consists chiefly of the
testimony of Julio Pagnaya and of Basilio Ilano. They both say that
while yet in the middle of the street, the defendant jerked the
bridle, which caused the bit to come out of the horse's mouth, and
Julio says that at that juncture the throat latch of the bridle was
broken. Be this as it may, we are of the opinion that the mere fact
that the defendant interfered with the carromata by stopping the
horse in the manner stated would not make him liable for the
death of Proceso Gayetano; because it is admitted by Julio Pagnaya
that he afterwards got out of the carromata and went to the horse's
head to fix the bridle. The evidence is furthermore convincing to
the effect that, after Julio Pagnaya alighted, the horse was
conducted to the curb and that an appreciable interval of time
elapsed same witnesses say several minutes before the horse
started on his career up the street. 1awph!l.net
It is therefore evident that the stopping of the rig by Agaton
Araneta in the middle of the street was too remote from the
accident that presently ensued to be considered the legal or
proximate cause thereof. Moreover, by getting out and taking his
post at the head of the horse, the driver was the person primarily
responsible for the control of the animal, and the defendant cannot
be charged with liability for the accident resulting from the action
of the horse thereafter.
Julio Pagnaya testifies to one fact which, if it were fully accredited,
would possibly put a different complexion on the case; for he says
that when the horse was pulled over to the curb, the defendant, by
way of emphasizing his verbal denunciation of Pagnaya,
gesticulated with one of his arms and incidentally brought his
hand down on the horse's nose. This, according to Pagnaya, is
what made the horse run away. There is no other witness who
testifies to this; and it is noteworthy that Basilio Ilano does not
mention it. A decided preponderance of the evidence in our opinion
is against it.
The evidence indicates that the bridle was old, and the leather of
which it was made was probably so weak as to be easily broken.
Julio Pagnaya had a natural interest in refuting this fact, as well as
in exculpating himself in other respects; and we are of the opinion
that the several witnesses who testified for the defendant gave a
more credible account of the affair than the witnesses for the
plaintiff. According to the witnesses for the defendant, it was Julio
who jerked the rein, thereby causing the bit it come out of the
horse's mouth; and they say that Julio, after alighting, led the
horse over to the curb, and proceeded to fix the bridle; and that in
so doing the bridle was slipped entirely off, when the horse, feeling
himself free from control, started to go away as previously stated.
Upon the whole we are constrained to hold that the defendant is
not legally responsible for the death of Proceso Gayetano; and
though reluctant to interfere with the findings of fact of a trial
court when there is a conflict of testimony, the evidence in this
case so clearly preponderates in favor of the defendant, that we
have no recourse but to reverse the judgment.
The judgment will therefore be reversed, and the defendant will be
absolved from the complaint; and it is so ordered, without express
finding as to costs of either instance. So ordered.
Page 143 of 205
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-65295 March 10, 1987
PHOENIX CONSTRUCTION, INC. and ARMANDO U. CARBONEL,
petitioners,
vs.
THE INTERMEDIATE APPELLATE COURT and LEONARDO
DIONISIO, respondents.
FELICIANO, J:
In the early morning of 15 November 1975 at about 1:30 a.m.
private respondent Leonardo Dionisio was on his way home he
lived in 1214-B Zamora Street, Bangkal, Makati from a
cocktails-and-dinner meeting with his boss, the general manager of
a marketing corporation. During the cocktails phase of the evening,
Dionisio had taken "a shot or two" of liquor. Dionisio was driving
his Volkswagen car and had just crossed the intersection of
General Lacuna and General Santos Streets at Bangkal, Makati,
not far from his home, and was proceeding down General Lacuna
Street, when his car headlights (in his allegation) suddenly failed.
He switched his headlights on "bright" and thereupon he saw a
Ford dump truck looming some 2-1/2 meters away from his car.
The dump truck, owned by and registered in the name of petitioner
Phoenix Construction Inc. ("Phoenix"), was parked on the right
hand side of General Lacuna Street (i.e., on the right hand side of a
person facing in the same direction toward which Dionisio's car
was proceeding), facing the oncoming traffic. The dump truck was
parked askew (not parallel to the street curb) in such a manner as
to stick out onto the street, partly blocking the way of oncoming
traffic. There were no lights nor any so-called "early warning"
reflector devices set anywhere near the dump truck, front or rear.
The dump truck had earlier that evening been driven home by
petitioner Armando U. Carbonel, its regular driver, with the
permission of his employer Phoenix, in view of work scheduled to
be carried out early the following morning, Dionisio claimed that he
tried to avoid a collision by swerving his car to the left but it was
too late and his car smashed into the dump truck. As a result of
the collision, Dionisio suffered some physical injuries including
some permanent facial scars, a "nervous breakdown" and loss of
two gold bridge dentures.
Dionisio commenced an action for damages in the Court of First
Instance of Pampanga basically claiming that the legal and
proximate cause of his injuries was the negligent manner in which
Carbonel had parked the dump truck entrusted to him by his
employer Phoenix. Phoenix and Carbonel, on the other hand,
countered that the proximate cause of Dionisio's injuries was his
own recklessness in driving fast at the time of the accident, while
under the influence of liquor, without his headlights on and
without a curfew pass. Phoenix also sought to establish that it had
exercised due rare in the selection and supervision of the dump
truck driver.
The trial court rendered judgment in favor of Dionisio and against
Phoenix and Carbonel and ordered the latter:
(1) To pay plaintiff jointly and severally the sum of P
15,000.00 for hospital bills and the replacement of
the lost dentures of plaintiff;
(2) To pay plaintiff jointly and severally the sum of P
1,50,000.-00 as loss of expected income for plaintiff
Page 144 of 205
 brought about the accident in controversy and
which is the result of the negligence of the
defendants;
(3) To pay the plaintiff jointly and severally the sum
of P 10,000. as moral damages for the unexpected
and sudden withdrawal of plaintiff from his lifetime
career as a marketing man; mental anguish,
wounded feeling, serious anxiety, social humiliation,
besmirched reputation, feeling of economic
insecurity, and the untold sorrows and frustration
in life experienced by plaintiff and his family since
the accident in controversy up to the present time;
(4) To pay plaintiff jointly and severally the sum of P
10,000.00 as damages for the wanton disregard of
defendants to settle amicably this case with the
plaintiff before the filing of this case in court for a
smaller amount.
(5) To pay the plaintiff jointly and severally the sum
of P 4,500.00 due as and for attorney's fees; and
(6) The cost of suit. (Emphasis supplied)
Phoenix and Carbonel appealed to the Intermediate Appellate
Court. That court in CA-G.R. No. 65476 affirmed the decision of
the trial court but modified the award of damages to the following
extent:
1. The award of P15,000.00 as
compensatory damages was reduced
to P6,460.71, the latter being the only
amount that the appellate court
found the plaintiff to have proved as
actually sustained by him;
2. The award of P150,000.00 as loss
of expected income was reduced to
P100,000.00, basically because
Dionisio had voluntarily resigned his
job such that, in the opinion of the
appellate court, his loss of income
"was not solely attributable to the
accident in question;" and
3. The award of P100,000.00 as moral
damages was held by the appellate
court as excessive and
unconscionable and hence reduced to
P50,000.00.
The award of P10,000.00 as
exemplary damages and P4,500.00 as
attorney's fees and costs remained
untouched.
This decision of the Intermediate Appellate Court is now before us
on a petition for review.
Both the trial court and the appellate court had made fairly explicit
findings of fact relating to the manner in which the dump truck
was parked along General Lacuna Street on the basis of which
both courts drew the inference that there was negligence on the
part of Carbonel, the dump truck driver, and that this negligence
was the proximate cause of the accident and Dionisio's injuries. We
note, however, that both courts failed to pass upon the defense
raised by Carbonel and Phoenix that the true legal and proximate
cause of the accident was not the way in which the dump truck
had been parked but rather the reckless way in which Dionisio had
driven his car that night when he smashed into the dump truck.
Page 145 of 205
The Intermediate Appellate Court in its questioned decision
casually conceded that Dionisio was "in some way, negligent" but
apparently failed to see the relevance of Dionisio's negligence and
made no further mention of it. We have examined the record both
before the trial court and the Intermediate Appellate Court and we
find that both parties had placed into the record sufficient evidence
on the basis of which the trial court and the appellate court could
have and should have made findings of fact relating to the alleged
reckless manner in which Dionisio drove his car that night. The
petitioners Phoenix and Carbonel contend that if there was
negligence in the manner in which the dump truck was parked,
that negligence was merely a "passive and static condition" and
that private respondent Dionisio's recklessness constituted an
intervening, efficient cause determinative of the accident and the
injuries he sustained. The need to administer substantial justice as
between the parties in this case, without having to remand it back
to the trial court after eleven years, compels us to address directly
the contention put forward by the petitioners and to examine for
ourselves the record pertaining to Dionisio's alleged negligence
which must bear upon the liability, or extent of liability, of Phoenix
and Carbonel.
There are four factual issues that need to be looked into: (a)
whether or not private respondent Dionisio had a curfew pass valid
and effective for that eventful night; (b) whether Dionisio was
driving fast or speeding just before the collision with the dump
truck; (c) whether Dionisio had purposely turned off his car's
headlights before contact with the dump truck or whether those
headlights accidentally malfunctioned moments before the
collision; and (d) whether Dionisio was intoxicated at the time of
the accident.
As to the first issue relating to the curfew pass, it is clear that no
curfew pass was found on the person of Dionisio immediately after
the accident nor was any found in his car. Phoenix's evidence here
consisted of the testimony of Patrolman Cuyno who had taken
Dionisio, unconscious, to the Makati Medical Center for emergency
treatment immediately after the accident. At the Makati Medical
Center, a nurse took off Dionisio's clothes and examined them
along with the contents of pockets together with Patrolman Cuyno.
1 Private respondent Dionisio was not able to produce any curfew
pass during the trial. Instead, he offered the explanation that his
family may have misplaced his curfew pass. He also offered a
certification (dated two years after the accident) issued by one
Major Benjamin N. Libarnes of the Zone Integrated Police
Intelligence Unit of Camp Olivas, San Fernando, Pampanga, which
was said to have authority to issue curfew passes for Pampanga
and Metro Manila. This certification was to the effect that private
respondent Dionisio had a valid curfew pass. This certification did
not, however, specify any pass serial number or date or period of
effectivity of the supposed curfew pass. We find that private
respondent Dionisio was unable to prove possession of a valid
curfew pass during the night of the accident and that the
preponderance of evidence shows that he did not have such a pass
during that night. The relevance of possession or non-possession of
a curfew pass that night lies in the light it tends to shed on the
other related issues: whether Dionisio was speeding home and
whether he had indeed purposely put out his headlights before the
accident, in order to avoid detection and possibly arrest by the
police in the nearby police station for travelling after the onset of
curfew without a valid curfew pass.
Page 146 of 205
On the second issue whether or not Dionisio was speeding home
that night both the trial court and the appellate court were
completely silent.
The defendants in the trial court introduced the testimony of
Patrolman Cuyno who was at the scene of the accident almost
immediately after it occurred, the police station where he was
based being barely 200 meters away. Patrolman Cuyno testified
that people who had gathered at the scene of the accident told him
that Dionisio's car was "moving fast" and did not have its
headlights on. 2 Dionisio, on the other hand, claimed that he was
travelling at a moderate speed at 30 kilometers per hour and had
just crossed the intersection of General Santos and General
Lacuna Streets and had started to accelerate when his headlights
failed just before the collision took place. 3
Private respondent Dionisio asserts that Patrolman Cuyno's
testimony was hearsay and did not fag within any of the recognized
exceptions to the hearsay rule since the facts he testified to were
not acquired by him through official information and had not been
given by the informants pursuant to any duty to do so. Private
respondent's objection fails to take account of the fact that the
testimony of Patrolman Cuyno is admissible not under the official
records exception to the hearsay rule 4 but rather as part of the res
gestae. 5 Testimonial evidence under this exception to the hearsay
rule consists of excited utterances made on the occasion of an
occurrence or event sufficiently startling in nature so as to render
inoperative the normal reflective thought processes of the observer
and hence made as a spontaneous reaction to the occurrence or
event, and not the result of reflective thought. 6
We think that an automobile speeding down a street and suddenly
smashing into a stationary object in the dead of night is a
sufficiently startling event as to evoke spontaneous, rather than
reflective, reactions from observers who happened to be around at
that time. The testimony of Patrolman Cuyno was therefore
admissible as part of the res gestae and should have been
considered by the trial court. Clearly, substantial weight should
have been ascribed to such testimony, even though it did not, as it
could not, have purported to describe quantitatively the precise
velocity at winch Dionisio was travelling just before impact with the
Phoenix dump truck.
A third related issue is whether Dionisio purposely turned off his
headlights, or whether his headlights accidentally malfunctioned,
just moments before the accident. The Intermediate Appellate
Court expressly found that the headlights of Dionisio's car went off
as he crossed the intersection but was non-committal as to why
they did so. It is the petitioners' contention that Dionisio purposely
shut off his headlights even before he reached the intersection so
as not to be detected by the police in the police precinct which he
(being a resident in the area) knew was not far away from the
intersection. We believe that the petitioners' theory is a more
credible explanation than that offered by private respondent
Dionisio i.e., that he had his headlights on but that, at the
crucial moment, these had in some mysterious if convenient way
malfunctioned and gone off, although he succeeded in switching
his lights on again at "bright" split seconds before contact with the
dump truck.
A fourth and final issue relates to whether Dionisio was intoxicated
at the time of the accident. The evidence here consisted of the
testimony of Patrolman Cuyno to the effect that private respondent
Dionisio smelled of liquor at the time he was taken from his
smashed car and brought to the Makati Medical Center in an
Page 147 of 205
unconscious condition. 7 This testimony has to be taken in
conjunction with the admission of Dionisio that he had taken "a
shot or two" of liquor before dinner with his boss that night. We do
not believe that this evidence is sufficient to show that Dionisio
was so heavily under the influence of liquor as to constitute his
driving a motor vehicle per se an act of reckless imprudence. 8
There simply is not enough evidence to show how much liquor he
had in fact taken and the effects of that upon his physical faculties
or upon his judgment or mental alertness. We are also aware that
"one shot or two" of hard liquor may affect different people
differently.
The conclusion we draw from the factual circumstances outlined
above is that private respondent Dionisio was negligent the night of
the accident. He was hurrying home that night and driving faster
than he should have been. Worse, he extinguished his headlights
at or near the intersection of General Lacuna and General Santos
Streets and thus did not see the dump truck that was parked
askew and sticking out onto the road lane.
Nonetheless, we agree with the Court of First Instance and the
Intermediate Appellate Court that the legal and proximate cause of
the accident and of Dionisio's injuries was the wrongful or
negligent manner in which the dump truck was parked in other
words, the negligence of petitioner Carbonel. That there was a
reasonable relationship between petitioner Carbonel's negligence
on the one hand and the accident and respondent's injuries on the
other hand, is quite clear. Put in a slightly different manner, the
collision of Dionisio's car with the dump truck was a natural and
foreseeable consequence of the truck driver's negligence.
The petitioners, however, urge that the truck driver's negligence
was merely a "passive and static condition" and that private
respondent Dionisio's negligence was an "efficient intervening
cause and that consequently Dionisio's negligence must be
regarded as the legal and proximate cause of the accident rather
than the earlier negligence of Carbonel. We note that the
petitioners' arguments are drawn from a reading of some of the
older cases in various jurisdictions in the United States but we are
unable to persuade ourselves that these arguments have any
validity for our jurisdiction. We note, firstly, that even in the United
States, the distinctions between "cause" and "condition" which the
'petitioners would have us adopt have already been "almost entirely
discredited." Professors and Keeton make this quite clear:
Cause and condition. Many courts have sought to
distinguish between the active "cause" of the harm
and the existing "conditions" upon which that cause
operated. If the defendant has created only a passive
static condition which made the damage possible,
the defendant is said not to be liable. But so far as
the fact of causation is concerned, in the sense of
necessary antecedents which have played an
important part in producing the result it is quite
impossible to distinguish between active forces and
passive situations, particularly since, as is invariably
the case, the latter are the result of other active forces
which have gone before. The defendant who spills
gasoline about the premises creates a "condition,"
but the act may be culpable because of the danger
of fire. When a spark ignites the gasoline, the
condition has done quite as much to bring about the
fire as the spark; and since that is the very risk
which the defendant has created, the defendant will
Page 148 of 205
 not escape responsibility. Even the lapse of a
considerable time during which the "condition"
remains static will not necessarily affect liability; one
who digs a trench in the highway may still be liable
to another who fans into it a month afterward.
"Cause" and "condition" still find occasional mention
in the decisions; but the distinction is now almost
entirely discredited. So far as it has any validity at
all, it must refer to the type of case where the forces
set in operation by the defendant have come to rest
in a position of apparent safety, and some new force
intervenes. But even in such cases, it is not the
distinction between "cause" and "condition" which is
important but the nature of the risk and the character
of the intervening cause. 9
We believe, secondly, that the truck driver's negligence far from
being a "passive and static condition" was rather an indispensable
and efficient cause. The collision between the dump truck and the
private respondent's car would in an probability not have occurred
had the dump truck not been parked askew without any warning
lights or reflector devices. The improper parking of the dump truck
created an unreasonable risk of injury for anyone driving down
General Lacuna Street and for having so created this risk, the
truck driver must be held responsible. In our view, Dionisio's
negligence, although later in point of time than the truck driver's
negligence and therefore closer to the accident, was not an efficient
intervening or independent cause. What the Petitioners describe as
an "intervening cause" was no more than a foreseeable consequent
manner which the truck driver had parked the dump truck. In
other words, the petitioner truck driver owed a duty to private
respondent Dionisio and others similarly situated not to impose
upon them the very risk the truck driver had created. Dionisio's
negligence was not of an independent and overpowering nature as
to cut, as it were, the chain of causation in fact between the
improper parking of the dump truck and the accident, nor to sever
the juris vinculum of liability. It is helpful to quote once more from
Professor and Keeton:
Foreseeable Intervening Causes. If the intervening
cause is one which in ordinary human experience is
reasonably to be anticipated or one which the
defendant has reason to anticipate under the
particular circumstances, the defendant may be
negligence among other reasons, because of failure to
guard against it; or the defendant may be negligent
only for that reason. Thus one who sets a fire may be
required to foresee that an ordinary, usual and
customary wind arising later wig spread it beyond
the defendant's own property, and therefore to take
precautions to prevent that event. The person who
leaves the combustible or explosive material exposed
in a public place may foresee the risk of fire from
some independent source. ... In all of these cases
there is an intervening cause combining with the
defendant's conduct to produce the result and in each
case the defendant's negligence consists in failure to
protect the plaintiff against that very risk.
Obviously the defendant cannot be relieved from
liability by the fact that the risk or a substantial and
important part of the risk, to which the defendant has
subjected the plaintiff has indeed come to pass.
Page 149 of 205
 Foreseeable intervening forces are within the scope
original risk, and hence of the defendant's negligence.
The courts are quite generally agreed that
intervening causes which fall fairly in this category
will not supersede the defendant's responsibility.
Thus it has been held that a defendant will be
required to anticipate the usual weather of the
vicinity, including all ordinary forces of nature such
as usual wind or rain, or snow or frost or fog or even
lightning; that one who leaves an obstruction on the
road or a railroad track should foresee that a vehicle
or a train will run into it; ...
The risk created by the defendant may include the
intervention of the foreseeable negligence of others. ...
[The standard of reasonable conduct may require the
defendant to protect the plaintiff against 'that
occasional negligence which is one of the ordinary
incidents of human life, and therefore to be
anticipated.' Thus, a defendant who blocks the
sidewalk and forces the plaintiff to walk in a street
where the plaintiff will be exposed to the risks of
heavy traffic becomes liable when the plaintiff is run
down by a car, even though the car is negligently
driven; and one who parks an automobile on the
highway without lights at night is not relieved of
responsibility when another negligently drives into it.
--- 10
We hold that private respondent Dionisio's negligence was "only
contributory," that the "immediate and proximate cause" of the
injury remained the truck driver's "lack of due care" and that
consequently respondent Dionisio may recover damages though
such damages are subject to mitigation by the courts (Article 2179,
Civil Code of the Philippines).
Petitioners also ask us to apply what they refer to as the "last clear
chance" doctrine. The theory here of petitioners is that while the
petitioner truck driver was negligent, private respondent Dionisio
had the "last clear chance" of avoiding the accident and hence his
injuries, and that Dionisio having failed to take that "last clear
chance" must bear his own injuries alone. The last clear chance
doctrine of the common law was imported into our jurisdiction by
Picart vs. Smith 11 but it is a matter for debate whether, or to what
extent, it has found its way into the Civil Code of the Philippines.
The historical function of that doctrine in the common law was to
mitigate the harshness of another common law doctrine or rule
that of contributory negligence. 12 The common law rule of
contributory negligence prevented any recovery at all by a plaintiff
who was also negligent, even if the plaintiff's negligence was
relatively minor as compared with the wrongful act or omission of
the defendant. 13 The common law notion of last clear chance
permitted courts to grant recovery to a plaintiff who had also been
negligent provided that the defendant had the last clear chance to
avoid the casualty and failed to do so. 14 Accordingly, it is difficult
to see what role, if any, the common law last clear chance doctrine
has to play in a jurisdiction where the common law concept of
contributory negligence as an absolute bar to recovery by the
plaintiff, has itself been rejected, as it has been in Article 2179 of
the Civil Code of the Philippines. 15
Is there perhaps a general concept of "last clear chance" that may
be extracted from its common law matrix and utilized as a general
rule in negligence cases in a civil law jurisdiction like ours? We do
Page 150 of 205
not believe so. Under Article 2179, the task of a court, in technical
terms, is to determine whose negligence the plaintiff's or the
defendant's was the legal or proximate cause of the injury. That
task is not simply or even primarily an exercise in chronology or
physics, as the petitioners seem to imply by the use of terms like
"last" or "intervening" or "immediate." The relative location in the
continuum of time of the plaintiff's and the defendant's negligent
acts or omissions, is only one of the relevant factors that may be
taken into account. Of more fundamental importance are the
nature of the negligent act or omission of each party and the
character and gravity of the risks created by such act or omission
for the rest of the community. The petitioners urge that the truck
driver (and therefore his employer) should be absolved from
responsibility for his own prior negligence because the unfortunate
plaintiff failed to act with that increased diligence which had
become necessary to avoid the peril precisely created by the truck
driver's own wrongful act or omission. To accept this proposition is
to come too close to wiping out the fundamental principle of law
that a man must respond for the forseeable consequences of his
own negligent act or omission. Our law on quasi-delicts seeks to
reduce the risks and burdens of living in society and to allocate
them among the members of society. To accept the petitioners' pro-
position must tend to weaken the very bonds of society.
Petitioner Carbonel's proven negligence creates a presumption of
negligence on the part of his employer Phoenix 16 in supervising
its employees properly and adequately. The respondent appellate
court in effect found, correctly in our opinion, that Phoenix was not
able to overcome this presumption of negligence. The circumstance
that Phoenix had allowed its truck driver to bring the dump truck
to his home whenever there was work to be done early the following
morning, when coupled with the failure to show any effort on the
part of Phoenix to supervise the manner in which the dump truck
is parked when away from company premises, is an affirmative
showing of culpa in vigilando on the part of Phoenix.
Turning to the award of damages and taking into account the
comparative negligence of private respondent Dionisio on one hand
and petitioners Carbonel and Phoenix upon the other hand, 17 we
believe that the demands of substantial justice are satisfied by
allocating most of the damages on a 20-80 ratio. Thus, 20% of the
damages awarded by the respondent appellate court, except the
award of P10,000.00 as exemplary damages and P4,500.00 as
attorney's fees and costs, shall be borne by private respondent
Dionisio; only the balance of 80% needs to be paid by petitioners
Carbonel and Phoenix who shall be solidarity liable therefor to the
former. The award of exemplary damages and attorney's fees and
costs shall be borne exclusively by the petitioners. Phoenix is of
course entitled to reimbursement from Carbonel. 18 We see no
sufficient reason for disturbing the reduced award of damages
made by the respondent appellate court.
WHEREFORE, the decision of the respondent appellate court is
modified by reducing the aggregate amount of compensatory
damages, loss of expected income and moral damages private
respondent Dionisio is entitled to by 20% of such amount. Costs
against the petitioners.
SO ORDERED.
Page 151 of 205
Republic of the Philippines Engineer Orlando T. Calibo, Agripino Roranes, and
SUPREME COURT Maximo Patos were on the jeep owned by the
Manila Bacnotan Consolidated Industries, Inc., with Calibo
FIRST DIVISION at the wheel, as it approached from the South
G.R. No. 70493 May 18, 1989 Lizada Bridge going towards the direction of Davao
GLAN PEOPLE'S LUMBER AND HARDWARE, GEORGE LIM, City at about 1:45 in the afternoon of July 4,1979.
FABIO S. AGAD, FELIX LIM and PAUL ZACARIAS y INFANTE, At about that time, the cargo track, loaded with
petitioners, cement bags, GI sheets, plywood, driven by
vs. defendant Paul Zacarias y Infants, coming from the
INTERMEDIATE APPELLATE COURT, CECILIA ALFEREZ VDA. opposite direction of Davao City and bound for Glan,
DE CALIBO, Minors ROYCE STEPHEN, JOYCE JOAN, JANISE South Cotabato, had just crossed said bridge. At
MARIE, JACQUELINE BRIGITTE JOCELINE CORAZON, JULIET about 59 yards after crossing the bridge, the cargo
GERALDINE, JENNIFER JILL, all surnamed CALIBO, truck and the jeep collided as a consequence of
represented by their mother, CECILIA A. VDA. DE CALIBO, which Engineer Calibo died while Roranes and Patos
respondents. sustained physical injuries. Zacarias was unhurt. As
Rufino Mayor and Isidro M. Ampig for petitioners. a result of the impact, the left side of the truck was
Manuel L. Hontanosas for private respondents. slightly damaged while the left side of the jeep,
including its fender and hood, was extensively
NARVASA, J.: damaged. After the impact, the jeep fell and rested
There is a two-fold message in this judgment that bears stating at on its right side on the asphalted road a few meters
the outset. The first, an obvious one, is that it is the objective facts to the rear of the truck, while the truck stopped on
established by proofs presented in a controversy that determine the its wheels on the road.
verdict, not the plight of the persons involved, no matter how On November 27, 1979, the instant case for
deserving of sympathy and commiseration because, for example, damages was filed by the surviving spouse and
an accident of which they are the innocent victims has brought children of the late Engineer Calibo who are
them to. reduced circumstances or otherwise tragically altered residents of Tagbilaran City against the driver and
their lives. The second is that the doctrine laid done many, many owners of the cargo truck.
years ago in Picart vs. Smith 1 continues to be good law to this day. For failure to file its answer to the third party
The facts giving rise to the controversy at bar are tersely and quite complaint, third party defendant, which insured the
accurately recounted by the Trial Court as follows: 2 cargo truck involved, was declared in default.

Page 152 of 205

The case filed by the heirs of Engineer Calibo his widow and minor
children, private respondents herein was docketed as
Civil Case No. 3283 of the Court of First Instance of Bohol. 3
Named defendants in the complaint were "Felix S. Agad, George
Lim and Felix Lim . . . (who) appear to be the co-owners of the Glan
People's Lumber and Hardware . . . (and) Paul Zacarias y Infante." 4
The defendants' answer however alleged that the lumber and
hardware business was exclusively owned by George Y. Lim, this
being evidenced by the Certificate of Registration issued by the
Bureau of Domestic Trade; Fabio S. Agad was not a co-owner
thereof but "merely employed by . . . George Y. Lim as bookkeeper";
and Felix Lim had no connection whatever with said business, "he
being a child only eight (8) years of age." 5
"After (trial, and) a careful evaluation of the evidence, both
testimonial and documentary," the Court reached the conclusion
"that the plaintiffs failed to establish by preponderance of evidence
the negligence, and thus the liability, of the defendants."
Accordingly, the Court dismissed the complaint (and defendants'
counterclaim) "for insufficiency of evidence." Likewise dismissed
was third-party complaint presented by the defendants against the
insurer of the truck. The circumstances leading to the Court's
conclusion just mentioned, are detailed in the Court's decision, as
follows:
1. Moments before its collission with the truck being
operated by Zacarias, the jeep of the deceased
Calibo was "zigzagging." 6
2. Unlike Zacarias who readily submitted himself to
investigation by the police, Calibo's companions,
Roranes (an accountant), and Patos, who suffered
injuries on account of the collision, refused to be so
investigated or give statements to the police officers.
This, plus Roranes' waiver of the right to institute
criminal proceedings against Zacarias, and the fact
that indeed no criminal case was ever instituted in
Court against Zacarias, were "telling indications that
they did not attribute the happening to defendant
Zacarias' negligence or fault." 7
3. Roranes' testimony, given in plaintiffs' behalf, was
"not as clear and detailed as that of . . . Zacarias,"
and was "uncertain and even contradicted by the
physical facts and the police investigators Dimaano
and Esparcia." 8
4. That there were skid marks left by the truck's
tires at the scene, and none by the jeep,
demonstrates that the driver of the truck had
applied the brakes and the jeep's driver had not;
and that the jeep had on impact fallen on its right
side is indication that it was running at high speed.
Under the circumstances, according to the Court,
given "the curvature of the road and the descending
grade of the jeep's lane, it was negligence on the part
of the driver of the jeep, Engr. Calibo, for not
reducing his speed upon sight of the truck and
failing to apply the brakes as he got within collision
range with the truck."
5. Even if it be considered that there was some
antecedent negligence on the part of Zacarias
shortly before the collision, in that he had caused
his truck to run some 25 centimeters to the left of
the center of the road, Engr. Calibo had the last
Page 153 of 205
 clear chance of avoiding the accident because he
still had ample room in his own lane to steer clear of
the truck, or he could simply have braked to a full
stop.
The Court of Appeals saw things differently. It rendered judgment 9
on the plaintiffs' appeal, l0 reversing the decision of the Trial
Court. It found Zacarias to be negligent on the basis of the
following circumstances, to wit:
1) "the truck driven by defendant Zacarias occupied
the lane of the jeep when the collision occurred,' and
although Zacarias saw the jeep from a distance of
about 150 meters, he "did not drive his truck back
to his lane in order to avoid collision with the
oncoming jeep . . .;" 11 what is worse, "the truck
driver suddenly applied his brakes even as he knew
that he was still within the lane of the jeep;" 12 had
both vehicles stayed in their respective lanes, the
collision would never have occurred, they would
have passed "along side each other safely;" 13
2) Zacarias had no license at the time; what he
handed to Pfc. Esparcia, on the latter's demand, was
the 'driver's license of his co-driver Leonardo
Baricuatro;" 14
3) the waiver of the right to file criminal charges
against Zacarias should not be taken against
"plaintiffs" Roranes and Patos who had the right,
under the law, to opt merely to bring a civil suit. 15
The Appellate Court opined that Zacarias' negligence "gave rise to
the presumption of negligence on the part of his employer, and
their liability is both primary and solidary." It therefore ordered
"the defendants jointly and solidarily to indemnify the plaintiffs the
following amounts:
(1) P30,000.00 for the death of Orlando Calibo;
(2) P378,000.00 for the loss of earning capacity of
the deceased
(3) P15,000.00 for attorney's fees;
(4) Cost of suit. 16
The defendants George Lim, Felix Lim, Fabio S. Agad and Paul
Zacarias have appealed to this Court on certiorari and pray for a
reversal of the judgment of the Intermediate Appellate Court which,
it is claimed, ignored or ran counter to the established facts. A
review of the record confirms the merit of this assertion and
persuades this Court that said judgment indeed disregarded facts
clearly and undisputably demonstrated by the proofs. The appealed
judgment, consequently, will have to be reversed.
The finding that "the truck driven by defendant Paul Zacarias
occupied the lane of the jeep when the collision occurred" is a loose
one, based on nothing more than the showing that at the time of
the accident, the truck driven by Zacarias had edged over the
painted center line of the road into the opposite lane by a width of
twenty-five (25) centimeters. It ignores the fact that by the
uncontradicted evidence, the actual center line of the road was not
that indicated by the painted stripe but, according to
measurements made and testified by Patrolman Juanita Dimaano,
one of the two officers who investigated the accident, correctly lay
thirty-six (36) centimeters farther to the left of the truck's side of
said stripe.
The unimpugned testimony of Patrolman Dimaano, a witness for
the private respondents, is to the effect that the jeep's lane was
three (3) meters and seventy-five (75) centimeters wide, and that of
Page 154 of 205
the truck three (3) meters and three (3) centimeters, measured
from the center stripe to the corresponding side lines or outer
edges of the road. 17 The total width of the road being, therefore,
six (6) meters and seventy-eight (78) centimeters, the true center
line equidistant from both side lines would divide the road into two
lanes each three (meters) and thirty-nine (39) centimeters wide.
Thus, although it was not disputed that the truck overrode the
painted stripe by twenty-five (25) centimeters, it was still at least
eleven (11) centimeters away from its side of the true center line of
the road and well inside its own lane when the accident occurred.
By this same reckoning, since it was unquestionably the jeep that
rammed into the stopped truck, it may also be deduced that it (the
jeep) was at the time travelling beyond its own lane and intruding
into the lane of the truck by at least the same 11-centimeter width
of space.
Not only was the truck's lane, measured from the incorrectly
located center stripe uncomfortably narrow, given that vehicle's
width of two (2) meters and forty-six (46) centimeters; the adjacent
road shoulder was also virtually impassable, being about three (3)
inches lower than the paved surface of the road and "soft--not firm
enough to offer traction for safe passage besides which, it sloped
gradually down to a three foot-deep ravine with a river below. 18
The truck's lane as erroneously demarcated by the center stripe
gave said vehicle barely half a meter of clearance from the edge of
the road and the dangerous shoulder and little room for maneuver,
in case this was made necessary by traffic contingencies or road
conditions, if it always kept to said lane. It being also shown that
the accident happened at or near the point of the truck's approach
to a curve, 19 which called for extra precautions against driving too
near the shoulder, it could hardly be accounted negligent on the
part of its driver to intrude temporarily, and by only as small as a
twenty-five centimeter wide space (less than ten inches), into the
opposite lane in order to insure his vehicle's safety. This, even
supposing that said maneuver was in fact an intrusion into the
opposite lane, which was not the case at all as just pointed out.
Nor was the Appellate Court correct in finding that Paulino
Zacarias had acted negligently in applying his brakes instead of
getting back inside his lane upon qqqespying the approaching jeep.
Being well within his own lane, as has already been explained, he
had no duty to swerve out of the jeep's way as said Court would
have had him do. And even supposing that he was in fact partly
inside the opposite lane, coming to a full stop with the jeep still
thirty (30) meters away cannot be considered an unsafe or
imprudent action, there also being uncontradicted evidence that
the jeep was "zigzagging" 20 and hence no way of telling in which
direction it would go as it approached the truck.
Also clearly erroneous is the finding of the Intermediate Appellate
Court that Zacarias had no driver's license at the time. The traffic
accident report attests to the proven fact that Zacarias voluntarily
surrendered to the investigating officers his driver's license, valid
for 1979, that had been renewed just the day before the accident,
on July 3, 1979. 21 The Court was apparently misled by the
circumstance that when said driver was first asked to show his
license by the investigators at the scene of the collision, he had
first inadvertently produced the license of a fellow driver, Leonardo
Baricuatro, who had left said license in Davao City and had asked
Zacarias to bring it back to him in Glan, Cotabato. 22
The evidence not only acquits Zacarias of any negligence in the
matter; there are also quite a few significant indicators that it was
rather Engineer Calibo's negligence that was the proximate cause
Page 155 of 205
of the accident. Zacarias had told Patrolman Dimaano at the scene
of the collision and later confirmed in his written statement at the
police headquarters 23 that the jeep had been "zigzagging," which is
to say that it was travelling or being driven erratically at the time.
The other investigator, Patrolman Jose Esparcia, also testified that
eyewitnesses to the accident had remarked on the jeep's
"zigzagging." 24 There is moreover more than a suggestion that
Calibo had been drinking shortly before the accident. The decision
of the Trial Court adverts to further testimony of Esparcia to the
effect that three of Calibo's companions at the beach party he was
driving home from when the collision occurred, who, having left
ahead of him went to the scene when they heard about the
accident, had said that there had been a drinking spree at the
party and, referring to Calibo, had remarked: "Sabi na huag nang
mag drive . . . . pumipilit," (loosely translated, "He was advised not
to drive, but he insisted.")
It was Calibo whose driver's license could not be found on his
person at the scene of the accident, and was reported by his
companions in the jeep as having been lost with his wallet at said
scene, according to the traffic accident report, Exhibit "J". Said
license unexplainedly found its way into the record some two years
later.
Reference has already been made to the finding of the Trial Court
that while Zacarias readily submitted to interrogation and gave a
detailed statement to the police investigators immediately after the
accident, Calibo's two companions in the jeep and supposed
eyewitnesses, Agripino Roranes and Maximo Patos, refused to give
any statements. Furthermore, Roranes who, together with Patos,
had sustained injuries as a result of the collision, waived his right
to file a criminal case against Zacarias. 25
Even, however, ignoring these telltale indicia of negligence on the
part of Calibo, and assuming some antecedent negligence on the
part of Zacarias in failing to keep within his designated lane,
incorrectly demarcated as it was, the physical facts, either
expressly found by the Intermediate Appellate Court or which may
be deemed conceded for lack of any dispute, would still absolve the
latter of any actionable responsibility for the accident under the
rule of the last clear chance.
Both drivers, as the Appellate Court found, had had a full view of
each other's vehicle from a distance of one hundred fifty meters.
Both vehicles were travelling at a speed of approximately thirty
kilometers per hour. 26 The private respondents have admitted that
the truck was already at a full stop when the jeep plowed into it.
And they have not seen fit to deny or impugn petitioners'
imputation that they also admitted the truck had been brought to
a stop while the jeep was still thirty meters away. 27 From these
facts the logical conclusion emerges that the driver of the jeep had
what judicial doctrine has appropriately called the last clear
chance to avoid the accident, while still at that distance of thirty
meters from the truck, by stopping in his turn or swerving his jeep
away from the truck, either of which he had sufficient time to do
while running at a speed of only thirty kilometers per hour. In
those circumstances, his duty was to seize that opportunity of
avoidance, not merely rely on a supposed right to expect, as the
Appellate Court would have it, the truck to swerve and leave him a
clear path.
The doctrine of the last clear chance provides as valid and
complete a defense to accident liability today as it did when
invoked and applied in the 1918 case of Picart vs. Smith, supra,
which involved a similar state of facts. Of those facts, which should
Page 156 of 205
be familiar to every student of law, it is only necessary to recall the
summary made in the syllabus of this Court's decision that:
(t)he plaintiff was riding a pony on a bridge. Seeing
an automobile ahead he improperly pulled his horse
over to the railing on the right. The driver of the
automobile, however guided his car toward the
plaintiff without diminution of speed until he was
only few feet away. He then turned to the right but
passed so closely to the horse that the latter being
frightened, jumped around and was killed by the
passing car. . . . .
Plaintiff Picart was thrown off his horse and suffered contusions
which required several days of medical attention. He sued the
defendant Smith for the value of his animal, medical expenses and
damage to his apparel and obtained judgment from this Court
which, while finding that there was negligence on the part of both
parties, held that that of the defendant was the immediate and
determining cause of the accident and that of the plaintiff ". . . the
more remote factor in the case":
It goes without saying that the plaintiff himself was
not free from fault, for he was guilty of antecedent
negligence in planting himself on the wrong side of
the road. But as we have already stated, the
defendant was also negligent; and in such case the
problem always is to discover which agent is
immediately and directly responsible. It will be noted
that the negligent acts of the two parties were not
contemporaneous, since the negligence of the
defendant succeeded the negligence of the plaintiff
by an appreciable interval. Under these
circumstances the law is that the person who has
the last fair chance to avoid the impending harm
and fails to do so is chargeable with the
consequences, without reference to the prior
negligence of the other party.
Since said ruling clearly applies to exonerate petitioner Zacarias
and his employer (and co-petitioner) George Lim, an inquiry into
whether or not the evidence supports the latter's additional defense
of due diligence in the selection and supervision of said driver is no
longer necessary and wig not be undertaken. The fact is that there
is such evidence in the record which has not been controverted.
It must be pointed out, however, that the Intermediate Appellate
Court also seriously erred in holding the petitioners Pablo S. Agad
and Felix Lim solidarily liable for the damages awarded in its
appealed decision, as alleged owners, with petitioner George Lim, of
Glan People's Lumber and Hardware, employer of petitioner
Zacarias. This manifestly disregarded, not only the certificate of
registration issued by the Bureau of Domestic Trade identifying
Glan People's Lumber and Hardware as a business name registered
by George Lim, 28 but also unimpugned allegations into the
petitioners' answer to the complaint that Pablo S. Agad was only an
employee of George Lim and that Felix Lim, then a child of only
eight (8) years, was in no way connected with the business.
In conclusion, it must also be stated that there is no doubt of this
Court's power to review the assailed decision of the Intermediate
Appellate Court under the authority of precedents recognizing
exceptions to the familiar rule binding it to observe and respect the
latter's findings of fact. Many of those exceptions may be cited to
support the review here undertaken, but only the most obvious
that said findings directly conflict with those of the Trial Court
Page 157 of 205
will suffice. 29 In the opinion of this Court and after a careful review
of the record, the evidence singularly fails to support the findings
of the Intermediate Appellate Court which, for all that appears,
seem to have been prompted rather by sympathy for the heirs of
the deceased Engineer Calibo than by an objective appraisal of the
proofs and a correct application of the law to the established facts.
Compassion for the plight of those whom an accident has robbed of
the love and support of a husband and father is an entirely natural
and understandable sentiment. It should not, however, be allowed
to stand in the way of, much less to influence, a just verdict in a
suit at law.
WHEREFORE, the appealed judgment of the Intermediate Appellate
Court is hereby REVERSED, and the complaint against herein
petitioners in Civil Case No. 3283 of the Court of First Instance of
Bohol, Branch IV, is DISMISSED. No pronouncement as to costs.
SO ORDERED.

Page 158 of 205

Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 112160 February 28, 2000
OSMUNDO S. CANLAS and ANGELINA CANLAS, petitioner,
vs.
COURT OF APPEALS, ASIAN SAVINGS BANK, MAXIMO C.
CONTRARES and VICENTE MAOSCA, respondents.
PURISIMA, J.:
At bar is a Petition for Review on Certiorari under Rule 45 of the
Rules of Court, seeking to review and set aside the Decision 1 of the
Court of Appeals in CA-G.R. CV No. 25242, which reversed the
Decision2 of Branch 59 of the Regional Trial Court of Makati City in
Civil Case No. M-028; the dispositive portion of which reads:
WHEREFORE, the decision appealed from is hereby
REVERSED and SET ASIDE and a new one is hereby
entered DISMISSING the complaint of the spouses
Osmundo and Angelina Canlas. On the counterclaim of
defendant Asian Savings Bank, the plaintiffs Canlas
spouses are hereby ordered to pay the defendant Asian
Savings Bank the amount of P50,000.00 as moral and
exemplary damages, plus P15,000.00 as and for attorney's
fees.
With costs against appellees.
SO ORDERED.3
The facts that matter:
Sometime in August, 1982, the petitioner, Osmundo S. Canlas,
and private respondent, Vicente Maosca, decided to venture in
business and to raise the capital needed therefor. The former then
executed a Special Power of Attorney authorizing the latter to
mortgage two parcels of land situated in San Dionisio, (BF Homes)
Paranaque, Metro Manila, each lot with semi-concrete residential
house existing thereon, and respectively covered by Transfer
Certificate of Title No. 54366 in his (Osmundo's) name and
Transfer Certificate of Title No. S-78498 in the name of his wife
Angelina Canlas.
Subsequently, Osmundo Canlas agreed to sell the said parcels of
land to Vicente Maosca, for and in consideration of P850,000.00,
P500,000.00 of which payable within one week, and the balance of
P350,000.00 to serve as his (Osmundo's) investment in the
business. Thus, Osmundo Canlas delivered to Vicente Maosca the
transfer certificates of title of the parcels of land involved. Vicente
Maosca, as his part of the transaction, issued two postdated
checks in favor of Osmundo Canlas in the amounts of P40,000.00
and P460,000.00, respectively, but it turned out that the check
covering the bigger amount was not sufficiently funded. 4
On September 3, 1982, Vicente Maosca was able to mortgage the
same parcels of land for P100,000.00 to a certain Attorney Manuel
Magno, with the help of impostors who misrepresented themselves
as the spouses, Osmundo Canlas and Angelina Canlas.5
On September 29, 1982, private respondent Vicente Maosca was
granted a loan by the respondent Asian Savings Bank (ASB) in the
amount of P500,000.00, with the use of subject parcels of land as
security, and with the involvement of the same impostors who
again introduced themselves as the Canlas spouses. 6 When the
loan it extended was not paid, respondent bank extrajudicially
foreclosed the mortgage.
On January 15, 1983, Osmundo Canlas wrote a letter informing
the respondent bank that the execution of subject mortgage over
Page 159 of 205
the two parcels of land in question was without their (Canlas
spouses) authority, and request that steps be taken to annul
and/or revoke the questioned mortgage. On January 18, 1983,
petitioner Osmundo Canlas also wrote the office of Sheriff Maximo
O. Contreras, asking that the auction sale scheduled on February
3, 1983 be cancelled or held in abeyance. But respondents Maximo
C. Contreras and Asian Savings Bank refused to heed petitioner
Canlas' stance and proceeded with the scheduled auction sale. 7
Consequently, on February 3, 1983 the herein petitioners
instituted the present case for annulment of deed of real estate
mortgage with prayer for the issuance of a writ of preliminary
injunction; and on May 23, 1983, the trial court issued an Order
restraining the respondent sheriff from issuing the corresponding
Certificate of Sheriff's Sale.8
For failure to file his answer, despite several motions for extension
of time for the filing thereof, Vicente Maosca was declared in
default.9
On June 1, 1989, the lower court a quo came out with a decision
annulling subject deed of mortgage and disposing, thus:
Premises considered, judgment is hereby rendered as
follows.1wphi1.nt
1. Declaring the deed of real estate mortgage
(Exhibit "L") involving the properties of the plaintiffs
as null and void;
2. Declaring the public auction sale conducted by
the defendant Sheriff, involving the same properties
as illegal and without binding effect;
3. Ordering the defendants, jointly and severally, to
pay the plaintiffs the sum of P20,000.00
representing attorney's fees;
4. On defendant ASB's crossclaim: ordering the
cross-defendant Vicente Maosca to pay the
defendant ASB the sum of P350,000.00,
representing the amount which he received as
proceeds of the loan secured by the void mortgage,
plus interest at the legal rate, starting February 3,
1983, the date when the original complaint was
filed, until the amount is fully paid;
5. With costs against the defendants.
SO ORDERED.10
From such Decision below, Asian Savings Bank appealed to the
Court of Appeals, which handed down the assailed judgment of
reversal, dated September 30, 1983, in CA-G.R. CV No. 25242.
Dissatisfied therewith, the petitioners found their way to this Court
via the present Petition; theorizing that:
I
RESPONDENT COURT OF APPEALS ERRED IN HOLDING THAT
THE MORTGAGE OF THE PROPERTIES SUBJECT OF THIS CASE
WAS VALID.
II
RESPONDENT COURT OF APPEALS ERRED IN HIOLDING THAT
PETITIONERS ARE NOT ENTITLED TO RELIEF BECAUSE THEY
WERE NEGLIGENT AND THEREFORE MUST BEAR THE LOSS.
III
RESPONDENT COURT OF APPEALS ERRED IN HOLDING THAT
RESPONDENT ASB EXERCISED DUE DILIGENCE IN GRANTING
THE LOAN APPLICATION OF RESPONDENT.
IV
RESPONDENT COURT OF APPEALS ERRED IN HOLDING THAT
RESPONDENT ASB DID NOT ACT WITH BAD FAITH IN
Page 160 of 205
PROCEEDING WITH THE FORECLOSURE SALE OF THE
PROPERTIES.
V representations simply on the basis of the residence certificates
RESPONDENT COURT OF APPEALS ERRED IN AWARDING
RESPONDENT ASB MORAL DAMAGES.11
The Petition is impressed with merit.
Art. 1173 of the Civil Code, provides:
Art. 1173. The fault or negligence of the obligor consist in
the omission of that diligence which is required by the
nature of the obligation and corresponds with the
circumstances of the persons, of the time and of the place.
When negligence shows bad faith, the provisions of articles
1171 and 2201, paragraph 2, shall apply.
If the law or contract does not state the diligence which is to
be observed in the performance, that which is expected of a
good father of a family shall be required. (1104)
The degree of diligence required of banks is more than that of a
good father of a family;12 in keeping with their responsibility to
exercise the necessary care and prudence in dealing even on a
registered or titled property. The business of a bank is affected with
public interest, holding in trust the money of the depositors, which
bank deposits the bank should guard against loss due to
negligence or bad faith, by reason of which the bank would be
denied the protective mantle of the land registration law, accorded
only to purchasers or mortgagees for value and in good faith. 13
In the case under consideration, from the evidence on hand it can
be gleaned unerringly that respondent bank did not observe the
requisite diligence in ascertaining or verifying the real identity of
the couple who introduced themselves as the spouses Osmundo
Canlas and Angelina Canlas. It is worthy to note that not even a
single identification card was exhibited by the said impostors to
show their true identity; and yet, the bank acted on their
bearing signatures which tended to match the signatures affixed on
a previous deed of mortgage to a certain Atty. Magno, covering the
same parcels of land in question. Felizado Mangubat, Assistant
Vice President of Asian Savings Bank, thus testified inter alia:
xxx xxx xxx
Q: According to you, the basis for your having
recommended for the approval of MANASCO's (sic) loan
particularly that one involving the property of plaintiff in
this case, the spouses OSMUNDO CANLAS and ANGELINA
CANLAS, the basis for such approval was that according to
you all the signatures and other things taken into account
matches with that of the document previously executed by
the spouses CANLAS?
Q: That is the only basis for accepting the signature
on the mortgage, the basis for the recommendation of the
approval of the loan are the financial statement of
MAOSCA?
A: Yes; among others the signature and TAX Account
Number, Residence Certificate appearing on the previous
loan executed by the spouses CANLAS, I am referring to
EXHIBIT 5, mortgage to ATTY. MAGNO, those were made
the basis.
A: That is just the basis of accepting the signature,
because at that time the loan have been approved already
on the basis of the financial statement of the client the
Bank Statement. Wneh (sic) it was approved we have to
base it on the Financial statement of the client, the
Page 161 of 205
signatures were accepted only for the purpose of signing the
mortgage not for the approval, we don't (sic) approve loans
on the signature.
ATTY. CLAROS:
Would you agree that as part of ascertaining the
identify of the parties particularly the mortgage, you
don't consider also the signature, the Residence
Certificate, the particular address of the parties
involved.
A: I think the question defers (sic) from what you
asked a while ago.
Q: Among others?
A: We have to accept the signature on the basis of
the other signatures given to us it being a public
instrument.
ATTY. CARLOS:
You mean to say the criteria of ascertaining the
identity of the mortgagor does not depend so much
on the signature on the residence certificate they
have presented.
A: We have to accept that.
xxx xxx xxx
A: We accepted the signature on the basis of the
mortgage in favor of ATTY. MAGNO duly notarized which I
have been reiterrting (sic) entitled to full faith considering
that it is a public instrument.
ATTY. CARLOS:
What other requirement did you take into account in
ascertaining the identification of the parties
particularly the mortgagor in this case.
A: Residence Certificate.
Q: Is that all, is that the only requirement?
A: We requested for others but they could not
produce, and because they presented to us the Residence
Certificate which matches on the signature on the
Residence Certificate in favor of Atty. Magno.14
Evidently, the efforts exerted by the bank to verify the identity of
the couple posing as Osmundo Canlas and Angelina Canlas fell
short of the responsibility of the bank to observe more than the
diligence of a good father of a family. The negligence of respondent
bank was magnified by the fact that the previous deed of mortgage
(which was used as the basis for checking the genuineness of the
signatures of the supposed Canlas spouses) did not bear the tax
account number of the spouses,15 as well as the Community Tax
Certificate of Angelina Canlas.16 But such fact notwithstanding, the
bank did not require the impostors to submit additional proof of
their true identity.
Under the doctrine of last clear chance, which is applicable here,
the respondent bank must suffer the resulting loss. In essence,
the doctrine of last clear chance is to the effect that where
both parties are negligent but the negligent act of one is
appreciably later in point of time than that of the other, or
where it is impossible to determine whose fault or negligence
brought about the occurrence of the incident, the one who had
the last clear opportunity to avoid the impending harm but
failed to do so, is chargeable with the consequences arising
therefrom. Stated differently, the rule is that the antecedent
negligence of a person does not preclude recovery of damages
caused by the supervening negligence of the latter, who had
Page 162 of 205
the last fair chance to prevent the impending harm by the
exercise of due diligence.17
Assuming that Osmundo Canlas was negligent in giving Vicente
Maosca the opportunity to perpetrate the fraud, by entrusting to
latter the owner's copy of the transfer certificates of title of subject
parcels of land, it cannot be denied that the bank had the last clear
chance to prevent the fraud, by the simple expedient of faithfully
complying with the requirements for banks to ascertain the identity
of the persons transacting with them.
For not observing the degree of diligence required of banking
institutions, whose business is impressed with public interest,
respondent Asian Savings Bank has to bear the loss sued upon.
In ruling for respondent bank, the Court of Appeals concluded that
the petitioner Osmundo Canlas was a party to the fraudulent
scheme of Maosca and therefore, estopped from impugning the
validity of subject deed of mortgage; ratiocinating thus:
xxx xxx xxx
Thus, armed with the titles and the special power of
attorney, Maosca went to the defendant bank and applied
for a loan. And when Maosca came over to the bank to
submit additional documents pertinent to his loan
application, Osmundo Canlas was with him, together with a
certain Rogelio Viray. At that time, Osmundo Canlas was
introduced to the bank personnel as "Leonardo Rey".
When he was introduced as "Leonardo Rey" for the first
time Osmundo should have corrected Maosca right away.
But he did not. Instead, he even allowed Maosca to avail of
his (Osmundo's) membership privileges at the Metropolitan
Club when Maosca invited two officers of the defendant
bank to a luncheon meeting which Osmundo also attended.
And during that meeting, Osmundo did not say who he
really is, but even let Maosca introduced him again as
"Leonardo Rey", which all the more indicates that he
connived with Maosca in deceiving the defendant bank.
Finally after the loan was finally approved, Osmundo
accompanied Maosca to the bank when the loan was
released. At that time, a manger's check for P200,000.00
was issued in the name of Oscar Motorworks, which
Osmundo admits he owns and operates.
Collectively, the foregoing circumstances cannot but
conjure to a single conclusion that Osmundo active
participated in the loan application of defendant Asian
Savings Bank, which culminated in his receiving a portion
of the process thereof:18
A meticulous and painstaking scrutiny of the Records on hand,
reveals, however, that the findings arrived at by the Court of
Appeals are barren of any sustainable basis. For instance, the
execution of the deeds of mortgages constituted by Maosca on
subject pieces of property of petitioners were made possible not by
the Special Power of Attorney executed by Osmundo Canlas in
favor of Maosca but through the use of impostors who
misrepresented themselves as the spouses Angelina Canlas and
Osmundo Canlas. It cannot be said therefore, that the petitioners
authorized Vicente Maosca to constitute the mortgage on their
parcels of land.
What is more, Osmundo Canlas was introduced as "Leonardo Rey"
by Vicente Maosca, only on the occasion of the luncheon meeting
at the Metropolitan Club.19 Thereat, the failure of Osmundo Canlas
to rectify Maosca's misrepresentations could not be taken as a
fraudulent act. As well explained by the former, he just did not
Page 163 of 205
want to embarrass Maosca, so that he waited for the end of the Not only that; while it is true that Osmundo Canlas was with
meeting to correct Maosca.20 Vicente Maosca when the latter submitted the documents needed
Then, too, Osmundo Canlas recounted that during the said for his loan application, and when the check of P200,000.00 was
luncheon meeting, they did not talk about the security or collateral released, the former did not know that the collateral used by
for the loan of Maosca with ASB.21 So also, Mrs. Josefina Rojo, Maosca for the said loan were their (Canlas spouses') properties.
who was the Account Officer of Asian Savings Bank when Maosca Osmundo happened to be with Maosca at the time because he
applied for subject loan, corroborated the testimony of Osmundo wanted to make sure that Maosca would make good his promise
Canlas, she testified: to pay the balance of the purchase price of the said lots out of the
xxx xxx xxx proceeds of the loan. 23
QUESTION: Now could you please describe out the The receipt by Osmundo Canlas of the P200,000.00 check from
lunch conference at the Metro Club in Makati? ASB could not estop him from assailing the validity of the mortgage
ANSWER: Mr. Mangubat, Mr. Maosca and I did not because the said amount was in payment of the parcels of land he
discuss with respect to the loan application and discuss sold to Maosca.24
primarily his business. What is decisively clear on record is that Maosca managed to keep
xxx xxx xxx Osmundo Canlas uninformed of his (Maosca's) intention to use
QUESTION: So, what is the main topic of your the parcels of land of the Canlas spouses as security for the loan
discussion during the meeting? obtained from Asian Savings Bank. Since Vicente Maosca showed
ANSWER: The main topic war then, about his Osmundo Canlas several certificates of title of lots which,
business although, Mr. Leonardo Rey, who actually turned according to Maosca were the collaterals, Osmundo Canlas was
out as Mr. Canlas, supplier of Mr. Maosca. confident that their (Canlases') parcels of land were not involved in
QUESTION: I see . . . other than the business of Mr. the loan transactions with the Asian Savings Bank.25 Under the
Maosca, were there any other topic discussed? attendant facts and circumstances, Osmundo Canlas was
ANSWER: YES. undoubtedly negligent, which negligence made them (petitioners)
QUESTION: And what was the topic: undeserving of an award of attorney's fees.
ANSWER: General Economy then. Settled is the rule that a contract of mortgage must be constituted
xxx xxx x x x22 only by the absolute owner on the property mortgaged;26 a
Verily, Osmundo Canlas was left unaware of the illicit plan of mortgage, constituted by an impostor is void.27 Considering that it
Maosca, explaining thus why he (Osmundo) did not bother to was established indubitably that the contract of mortgage sued
correct what Maosca misrepresented and to assert ownership over upon was entered into and signed by impostors who
the two parcels of land in question. misrepresented themselves as the spouses Osmundo Canlas and

Page 164 of 205

Angelina Canlas, the Court is of the ineluctible conclusion and
finding that subject contract of mortgage is a complete nullity.
WHEREFORE, the Petition is GRANTED and the Decision of the
Court of Appeals, dated September 30, 1993, in CA-G.R. CV No.
25242 SET ASIDE. The Decision of Branch 59 of the Regional Trial
Court of Makati City in Civil Case No. M-028 is hereby
REINSTATED. No pronouncement as to costs.
SO ORDERED.1

Page 165 of 205

Republic of the Philippines Berenguel4 (Berenguel) and Deocampo. Respondent alleged that his
SUPREME COURT pick-up was slowing down to about five to ten kilometers per hour
Manila (kph) and was making a left turn preparatory to turning south
SECOND DIVISION when it was bumped from behind by the crewcab which was
G.R. No. 153076 June 21, 2007 running at around 60 to 70 kph. The crewcab stopped 21 meters
LAPANDAY AGRICULTURAL and DEVELOPMENT from the point of impact. Respondent alleged that he heard a
CORPORATION (LADECO), HENRY BERENGUEL, and screeching sound before the impact. Respondent was seated beside
APOLONIO R. DEOCAMPO, petitioners, the driver and was looking at the speedometer when the accident
vs. took place. Respondent testified that Borres made a signal because
MICHAEL RAYMOND ANGALA, respondent. he noticed a blinking light while looking at the speedometer. 5
DECISION Respondent sent a demand letter to LADECO for the payment of
CARPIO, J.: the damages he incurred because of the accident but he did not
The Case receive any reply. Thus, respondent filed the case against LADECO,
Before the Court is a petition for review1 assailing the 25 July 2001 Berenguel, and Deocampo.
Decision2 and 11 March 2002 Resolution3 of the Court of Appeals Deocampo alleged that the pick-up and the crewcab he was driving
in CA-G.R. CV No. 51134. were both running at about 40 kph. The pick-up was running
The Antecedent Facts along the outer lane. The pick-up was about 10 meters away when
On 4 May 1993, at about 2:45 p.m., a Datsun crewcab with plate it made a U-turn towards the left. Deocampo testified that he did
no. PEC-903 driven by Apolonio Deocampo (Deocampo) bumped not see any signal from the pick-up.6 Deocampo alleged that he
into a 1958 Chevy pick-up with plate no. MAM-475 owned by tried to avoid the pick-up but he was unable to avoid the collision.
Michael Raymond Angala (respondent) and driven by Bernulfo Deocampo stated that he did not apply the brakes because he
Borres (Borres). Lapanday Agricultural and Development knew the collision was unavoidable. Deocampo admitted that he
Corporation (LADECO) owned the crewcab which was assigned to stepped on the brakes only after the collision.
its manager Manuel Mendez (Mendez). Deocampo was the driver The Ruling of the Trial Court
and bodyguard of Mendez. Both vehicles were running along Rafael In its 3 March 1995 Decision, 7 the Regional Trial Court of Davao
Castillo St., Agdao, Davao City heading north towards Lanang, City, Branch 15 (trial court) ruled:
Davao City. The left door, front left fender, and part of the front WHEREFORE, judgment is hereby rendered ordering the
bumper of the pick-up were damaged. defendants LADECO and Apolonio Deocampo to solidarily
Respondent filed an action for Quasi-Delict, Damages, and pay the plaintiffs the following sums:
Attorneys Fees against LADECO, its administrative officer Henry

Page 166 of 205

 1. Twenty three thousand two hundred (P23,200.00)
pesos as actual damages.
2. Ten thousand (P10,000.00) pesos as moral
damages.
3. Ten thousand (P10,000.00) pesos as attorneys
fees.
4. Costs of suit.
SO ORDERED.8
The trial court found that the crewcab was running very fast while
following the pick-up and that the crewcabs speed was the
proximate cause of the accident. The trial court observed that the
crewcab stopped 21 meters away from the point of impact despite
Deocampos claim that he stepped on the brakes moments after the
collision. The trial court ruled that Deocampo had the last
opportunity to avoid the accident.
The trial court found that Berenguel was not liable because he was
not the owner of the crewcab.
LADECO and Deocampo (petitioners)9 filed a motion for
reconsideration. The trial court denied petitioners motion in its 13
June 1995 Order.10
Petitioners filed an appeal before the Court of Appeals.
The Ruling of the Court of Appeals
The Court of Appeals affirmed in toto the trial courts decision.
The Court of Appeals sustained the finding of the trial court that
Deocampo was negligent. The Court of Appeals applied the doctrine
of last clear chance and ruled that Deocampo had the
responsibility of avoiding the pick-up.
The Court of Appeals also sustained the solidary liability of
LADECO and Deocampo. The Court of Appeals ruled that under
Article 2180 of the Civil Code, the negligence of the driver is
presumed to be the negligence of the owner of the vehicle.
The dispositive portion of the Court of Appeals Decision reads:
WHEREFORE, premises considered, the appeal is
DISMISSED for lack of merit, and the assailed Decision of
the Court a quo in Civil Case No. 22067-93 is AFFIRMED in
toto. Costs against defendants-appellants.
SO ORDERED.11
Petitioners filed a motion for reconsideration. In its 11 March 2002
Resolution, the Court of Appeals denied the motion for lack of
merit.
Hence, the petition before this Court.
The Issues
The issues before the Court are the following:
1. Whether the provisions of Section 45(b) of Republic Act
No. 413612 (RA 4136) and Article 2185 of the Civil Code
apply to this case; and
2. Whether respondent is entitled to the damages awarded.
The Ruling of this Court
The petition is partly meritorious.
Both Drivers are Negligent
Both the trial court and the Court of Appeals found that Deocampo
was at fault because he was driving very fast prior to the collision.
The Court of Appeals sustained the trial courts finding that
Deocampo was running more than the normal cruising speed. Both
the trial court and the Court of Appeals noted that the crewcab
stopped 21 meters away from the point of impact. Deocampo
admitted that he stepped on the brakes only after the collision.
Petitioners allege that Borres did not take the proper lane before
executing the U-turn. Petitioners allege that Borres violated Section
Page 167 of 205
45(b) of RA 4136 and it was his recklessness that was the
proximate cause of the accident.
Section 45(b) of RA 4136 states:
Sec. 45. Turning at intersections. x x x
(b) The driver of a vehicle intending to turn to the left shall
approach such intersection in the lane for traffic to the
right of and nearest to the center line of the highway, and,
in turning, shall pass to the left of the center of the
intersection, except that, upon highways laned for traffic
and upon one-way highways, a left turn shall be made from
the left lane of traffic in the direction in which the vehicle is
proceeding.
Petitioners further allege that since Borres was violating a traffic
rule at the time of the accident, respondent and Borres were the
parties at fault. Petitioners cite Article 2185 of the Civil Code, thus:
Art. 2185. Unless there is proof to the contrary, it is
presumed that a person driving a motor vehicle has been
negligent if at the time of the mishap, he was violating any
traffic regulation.
We rule that both parties were negligent in this case. Borres was at
the outer lane when he executed a U-turn. Following Section 45(b)
of RA 4136, Borres should have stayed at the inner lane which is
the lane nearest to the center of the highway. However, Deocampo
was equally negligent. Borres slowed down the pick-up preparatory
to executing the U-turn. Deocampo should have also slowed down
when the pick-up slowed down. Deocampo admitted that he
noticed the pick-up when it was still about 20 meters away from
him.13 Vehicular traffic was light at the time of the incident. The
pick-up and the crewcab were the only vehicles on the road. 14
Deocampo could have avoided the crewcab if he was not driving
very fast before the collision, as found by both the trial court and
the Court of Appeals. We sustain this finding since factual findings
of the Court of Appeals affirming those of the trial court are
conclusive and binding on this Court.15 Further, the crewcab
stopped 21 meters from the point of impact. It would not have
happened if Deocampo was not driving very fast.
Doctrine of Last Clear Chance Applies
Since both parties are at fault in this case, the doctrine of last clear
chance applies.
The doctrine of last clear chance states that where both parties are
negligent but the negligent act of one is appreciably later than that
of the other, or where it is impossible to determine whose fault or
negligence caused the loss, the one who had the last clear
opportunity to avoid the loss but failed to do so is chargeable with
the loss.16 In this case, Deocampo had the last clear chance to
avoid the collision. Since Deocampo was driving the rear vehicle, he
had full control of the situation since he was in a position to
observe the vehicle in front of him.17 Deocampo had the
responsibility of avoiding bumping the vehicle in front of him. 18 A
U-turn is done at a much slower speed to avoid skidding and
overturning, compared to running straight ahead. 19 Deocampo
could have avoided the vehicle if he was not driving very fast while
following the pick-up. Deocampo was not only driving fast, he also
admitted that he did not step on the brakes even upon seeing the
pick-up. He only stepped on the brakes after the collision.
Petitioners are Solidarily Liable
LADECO alleges that it should not be held jointly and severally
liable with Deocampo because it exercised due diligence in the
supervision and selection of its employees. Aside from this
statement, LADECO did not proffer any proof to show how it
Page 168 of 205
exercised due diligence in the supervision and selection of its
employees. LADECO did not show its policy in hiring its drivers, or
the manner in which it supervised its drivers. LADECO failed to
substantiate its allegation that it exercised due diligence in the
supervision and selection of its employees.
Hence, we hold LADECO solidarily liable with Deocampo.
Respondent is Entitled to Moral Damages
We sustain the award of moral damages. Moral damages are
awarded to allow a plaintiff to obtain means, diversion, or
amusement that will serve to alleviate the moral suffering he has
undergone due to the defendants culpable action.20 The trial court
found that respondent, who was on board the pick-up when the
collision took place, suffered shock, serious anxiety, and fright
when the crewcab bumped his pick-up. We sustain the trial court
and the Court of Appeals in ruling that respondent sufficiently
showed that he suffered shock, serious anxiety, and fright which
entitle him to moral damages.
Both the trial court and the Court of Appeals failed to give any
justification for the award of attorneys fees. Awards of attorneys
fees must be based on findings of fact and of law and stated in the
decision of the trial court.21 Further, no premium should be placed
on the right to litigate.22 Hence, we delete the award of attorneys
fees.
WHEREFORE, we AFFIRM the 25 July 2001 Decision and 11
March 2002 Resolution of the Court of Appeals in CA-G.R. CV No.
51134 with MODIFICATION by deleting the award of attorneys
fees.
SO ORDERED.

Page 169 of 205

Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 97626 March 14, 1997
PHILIPPINE BANK OF COMMERCE, now absorbed by
PHILIPPINE COMMERCIAL INTERNATIONAL BANK, ROGELIO
LACSON, DIGNA DE LEON, MARIA ANGELITA PASCUAL, et al.,
petitioners,
vs.
THE COURT OF APPEALS, ROMMEL'S MARKETING CORP.,
represented by ROMEO LIPANA, its President & General
Manager, respondents.
HERMOSISIMA, JR., J.:
Challenged in this petition for review is the Decision dated
February 28, 1991 1 rendered by public respondent Court of
Appeals which affirmed the Decision dated November 15, 1985 of
the Regional Trial Court, National Capital Judicial Region, Branch
CLX (160), Pasig City, in Civil Case No. 27288 entitled "Rommel's
Marketing Corporation, etc. v. Philippine Bank of Commerce, now
absorbed by Philippine Commercial and Industrial Bank."
The case stemmed from a complaint filed by the private respondent
Rommel's Marketing Corporation (RMC for brevity), represented by
its President and General Manager Romeo Lipana, to recover from
the former Philippine Bank of Commerce (PBC for brevity), now
absorbed by the Philippine Commercial International Bank, the
sum of P304,979.74 representing various deposits it had made in
its current account with said bank but which were not credited to
its account, and were instead deposited to the account of one
Bienvenido Cotas, allegedly due to the gross and inexcusable
negligence of the petitioner bank.
RMC maintained two (2) separate current accounts, Current
Account Nos. 53-01980-3 and 53-01748-7, with the Pasig Branch
of PBC in connection with its business of selling appliances.
In the ordinary and usual course of banking operations, current
account deposits are accepted by the bank on the basis of deposit
slips prepared and signed by the depositor, or the latter's agent or
representative, who indicates therein the current account number
to which the deposit is to be credited, the name of the depositor or
current account holder, the date of the deposit, and the amount of
the deposit either in cash or checks. The deposit slip has an upper
portion or stub, which is detached and given to the depositor or his
agent; the lower portion is retained by the bank. In some instances,
however, the deposit slips are prepared in duplicate by the
depositor. The original of the deposit slip is retained by the bank,
while the duplicate copy is returned or given to the depositor.
From May 5, 1975 to July 16, 1976, petitioner Romeo Lipana
claims to have entrusted RMC funds in the form of cash totalling
P304,979.74 to his secretary, Irene Yabut, for the purpose of
depositing said funds in the current accounts of RMC with PBC. It
turned out, however, that these deposits, on all occasions, were not
credited to RMC's account but were instead deposited to Account
No. 53-01734-7 of Yabut's husband, Bienvenido Cotas who
likewise maintains an account with the same bank. During this
period, petitioner bank had, however, been regularly furnishing
private respondent with monthly statements showing its current
accounts balances. Unfortunately, it had never been the practice of
Page 170 of 205
Romeo Lipana to check these monthly statements of account
reposing complete trust and confidence on petitioner bank.
Irene Yabut's modus operandi is far from complicated. She would
accomplish two (2) copies of the deposit slip, an original and a
duplicate. The original showed the name of her husband as
depositor and his current account number. On the duplicate copy
was written the account number of her husband but the name of
the account holder was left blank. PBC's teller, Azucena Mabayad,
would, however, validate and stamp both the original and the
duplicate of these deposit slips retaining only the original copy
despite the lack of information on the duplicate slip. The second
copy was kept by Irene Yabut allegedly for record purposes. After
validation, Yabut would then fill up the name of RMC in the space
left blank in the duplicate copy and change the account number
written thereon, which is that of her husband's, and make it
appear to be RMC's account number, i.e., C.A. No. 53-01980-3.
With the daily remittance records also prepared by Ms. Yabut and
submitted to private respondent RMC together with the validated
duplicate slips with the latter's name and account number, she
made her company believe that all the while the amounts she
deposited were being credited to its account when, in truth and in
fact, they were being deposited by her and credited by the
petitioner bank in the account of Cotas. This went on in a span of
more than one (1) year without private respondent's knowledge.
Upon discovery of the loss of its funds, RMC demanded from
petitioner bank the return of its money, but as its demand went
unheeded, it filed a collection suit before the Regional Trial Court
of Pasig, Branch 160. The trial court found petitioner bank
negligent and ruled as follows:
WHEREFORE, judgment is hereby rendered
sentencing defendant Philippine Bank of Commerce,
now absorbed by defendant Philippine Commercial
& Industrial Bank, and defendant Azucena Mabayad
to pay the plaintiff, jointly and severally, and
without prejudice to any criminal action which may
be instituted if found warranted:
1. The sum of P304,979.72, representing plaintiffs
lost deposit, plus interest thereon at the legal rate
from the filing of the complaint;
2. A sum equivalent to 14% thereof, as exemplary
damages;
3. A sum equivalent to 25% of the total amount due,
as and for attorney's fees; and
4. Costs.
Defendants' counterclaim is hereby dismissed for
lack of merit. 2
On appeal, the appellate court affirmed the foregoing decision with
modifications, viz:
WHEREFORE, the decision appealed from herein is
MODIFIED in the sense that the awards of
exemplary damages and attorney's fees specified
therein are eliminated and instead, appellants are
ordered to pay plaintiff, in addition to the principal
sum of P304,979.74 representing plaintiff's lost
deposit plus legal interest thereon from the filing of
the complaint, P25,000.00 attorney's fees and costs
in the lower court as well as in this Court. 3
Hence, this petition anchored on the following grounds:
Page 171 of 205
 1) The proximate cause of the loss is the negligence
of respondent Rommel Marketing Corporation and
Romeo Lipana in entrusting cash to a dishonest
employee.
2) The failure of respondent Rommel Marketing
Corporation to cross-check the bank's statements of
account with its own records during the entire
period of more than one (1) year is the proximate
cause of the commission of subsequent frauds and
misappropriation committed by Ms. Irene Yabut.
3) The duplicate copies of the deposit slips presented
by respondent Rommel Marketing Corporation are
falsified and are not proof that the amounts
appearing thereon were deposited to respondent
Rommel Marketing Corporation's account with the
bank,
4) The duplicate copies of the deposit slips were
used by Ms. Irene Yabut to cover up her fraudulent
acts against respondent Rommel Marketing
Corporation, and not as records of deposits she
made with the bank. 4
The petition has no merit.
Simply put, the main issue posited before us is: What is the
proximate cause of the loss, to the tune of P304,979.74, suffered
by the private respondent RMC petitioner bank's negligence or
that of private respondent's?
Petitioners submit that the proximate cause of the loss is the
negligence of respondent RMC and Romeo Lipana in entrusting
cash to a dishonest employee in the person of Ms. Irene Yabut. 5
According to them, it was impossible for the bank to know that the
money deposited by Ms. Irene Yabut belong to RMC; neither was
the bank forewarned by RMC that Yabut will be depositing cash to
its account. Thus, it was impossible for the bank to know the
fraudulent design of Yabut considering that her husband,
Bienvenido Cotas, also maintained an account with the bank. For
the bank to inquire into the ownership of the cash deposited by
Ms. Irene Yabut would be irregular. Otherwise stated, it was RMC's
negligence in entrusting cash to a dishonest employee which
provided Ms. Irene Yabut the opportunity to defraud RMC. 6
Private respondent, on the other hand, maintains that the
proximate cause of the loss was the negligent act of the bank, thru
its teller Ms. Azucena Mabayad, in validating the deposit slips,
both original and duplicate, presented by Ms. Yabut to Ms.
Mabayad, notwithstanding the fact that one of the deposit slips
was not completely accomplished.
We sustain the private respondent.
Our law on quasi-delicts states:
Art. 2176. Whoever by act or omission causes
damage to another, there being fault or negligence,
is obliged to pay for the damage done. Such fault or
negligence, if there is no pre-existing contractual
relation between the parties, is called a quasi-delict
and is governed by the provisions of this Chapter.
There are three elements of a quasi-delict: (a) damages suffered by
the plaintiff; (b) fault or negligence of the defendant, or some other
person for whose acts he must respond; and (c) the connection of
cause and effect between the fault or negligence of the defendant
and the damages incurred by the plaintiff. 7
In the case at bench, there is no dispute as to the damage suffered
by the private respondent (plaintiff in the trial court) RMC in the
Page 172 of 205
amount of P304,979.74. It is in ascribing fault or negligence which Mabayad your important duties and
caused the damage where the parties point to each other as the functions?
culprit. A: I accept current and savings
Negligence is the omission to do something which a reasonable deposits from depositors and
man, guided by those considerations which ordinarily regulate the encashments.
conduct of human affairs, would do, or the doing of something Q: Now in the handling of current
which a prudent and reasonable man would do. The seventy-eight account deposits of bank clients,
(78)-year-old, yet still relevant, case of Picart v. Smith, 8 provides could you tell us the procedure you
the test by which to determine the existence of negligence in a follow?
particular case which may be stated as follows: Did the defendant A: The client or depositor or the
in doing the alleged negligent act use that reasonable care and authorized representative prepares a
caution which an ordinarily prudent person would have used in deposit slip by filling up the deposit
the same situation? If not, then he is guilty of negligence. The law slip with the name, the account
here in effect adopts the standard supposed to be supplied by the number, the date, the cash
imaginary conduct of the discreet paterfamilias of the Roman law. breakdown, if it is deposited for cash,
The existence of negligence in a given case is not determined by and the check number, the amount
reference to the personal judgment of the actor in the situation and then he signs the deposit slip.
before him. The law considers what would be reckless, Q: Now, how many deposit slips do
blameworthy, or negligent in the man of ordinary intelligence and you normally require in
prudence and determines liability by that. accomplishing current account
Applying the above test, it appears that the bank's teller, Ms. deposit, Mrs. Mabayad?
Azucena Mabayad, was negligent in validating, officially stamping A: The bank requires only one copy of
and signing all the deposit slips prepared and presented by Ms. the deposit although some of our
Yabut, despite the glaring fact that the duplicate copy was not clients prepare the deposit slip in
completely accomplished contrary to the self-imposed procedure of duplicate.
the bank with respect to the proper validation of deposit slips, Q: Now in accomplishing current
original or duplicate, as testified to by Ms. Mabayad herself, thus: account deposits from your clients,
Q: Now, as teller of PCIB, Pasig what do you issue to the depositor to
Branch, will you please tell us Mrs. evidence the deposit made?

Page 173 of 205

 A: We issue or we give to the clients
the depositor's stub as a receipt of the
deposit.
Q: And who prepares the deposit slip?
A: The depositor or the authorized
representative sir?
Q: Where does the depositor's stub
comes (sic) from Mrs. Mabayad, is it
with the deposit slip?
A: The depositor's stub is connected
with the deposit slip or the bank's
copy. In a deposit slip, the upper
portion is the depositor's stub and
the lower portion is the bank's copy,
and you can detach the bank's copy
from the depositor's stub by tearing it
sir.
Q: Now what do you do upon
presentment of the deposit slip by the
depositor or the depositor's
authorized representative?
A: We see to it that the deposit slip 9 is
properly accomplished and then we
count the money and then we tally it
with the deposit slip sir.
Q: Now is the depositor's stub which
you issued to your clients validated?
A: Yes, sir. 10 [Emphasis ours]
Clearly, Ms. Mabayad failed to observe this very important
procedure. The fact that the duplicate slip was not
compulsorily required by the bank in accepting deposits
should not relieve the petitioner bank of responsibility. The
odd circumstance alone that such duplicate copy lacked
one vital information that of the name of the account
holder should have already put Ms. Mabayad on guard.
Rather than readily validating the incomplete duplicate
copy, she should have proceeded more cautiously by being
more probing as to the true reason why the name of the
account holder in the duplicate slip was left blank while
that in the original was filled up. She should not have been
so naive in accepting hook, line and sinker the too shallow
excuse of Ms. Irene Yabut to the effect that since the
duplicate copy was only for her personal record, she would
simply fill up the blank space later on. 11 A "reasonable
man of ordinary prudence" 12 would not have given
credence to such explanation and would have insisted that
the space left blank be filled up as a condition for
validation. Unfortunately, this was not how bank teller
Mabayad proceeded thus resulting in huge losses to the
private respondent.
Negligence here lies not only on the part of Ms. Mabayad but also
on the part of the bank itself in its lackadaisical selection and
supervision of Ms. Mabayad. This was exemplified in the testimony
of Mr. Romeo Bonifacio, then Manager of the Pasig Branch of the
petitioner bank and now its Vice-President, to the effect that, while
he ordered the investigation of the incident, he never came to know
that blank deposit slips were validated in total disregard of the
bank's validation procedures, viz:
Q: Did he ever tell you that one of
your cashiers affixed the stamp mark
Page 174 of 205
 of the bank on the deposit slips and
they validated the same with the
machine, the fact that those deposit
slips were unfilled up, is there any
report similar to that?
A: No, it was not the cashier but the
teller.
Q: The teller validated the blank
deposit slip?
A: No it was not reported.
Q: You did not know that any one in
the bank tellers or cashiers validated
the blank deposit slip?
A: I am not aware of that.
Q: It is only now that you are aware of
that?
A: Yes, sir. 13
Prescinding from the above, public respondent Court of Appeals
aptly observed:
xxx xxx xxx
It was in fact only when he testified in this case in
February, 1983, or after the lapse of more than
seven (7) years counted from the period when the
funds in question were deposited in plaintiff's
accounts (May, 1975 to July, 1976) that bank
manager Bonifacio admittedly became aware of the
practice of his teller Mabayad of validating blank
deposit slips. Undoubtedly, this is gross, wanton,
and inexcusable negligence in the appellant bank's
supervision of its employees. 14
It was this negligence of Ms. Azucena Mabayad, coupled by the
negligence of the petitioner bank in the selection and supervision of
its bank teller, which was the proximate cause of the loss suffered
by the private respondent, and not the latter's act of entrusting
cash to a dishonest employee, as insisted by the petitioners.
Proximate cause is determined on the facts of each case upon
mixed considerations of logic, common sense, policy and
precedent. 15 Vda. de Bataclan v. Medina, 16 reiterated in the case
of Bank of the Phil. Islands v. Court of Appeals, 17 defines proximate
cause as "that cause, which, in natural and continuous sequence,
unbroken by any efficient intervening cause, produces the injury,
and without which the result would not have occurred. . . ." In this
case, absent the act of Ms. Mabayad in negligently validating the
incomplete duplicate copy of the deposit slip, Ms. Irene Yabut
would not have the facility with which to perpetrate her fraudulent
scheme with impunity. Apropos, once again, is the pronouncement
made by the respondent appellate court, to wit:
. . . . Even if Yabut had the fraudulent intention to
misappropriate the funds entrusted to her by
plaintiff, she would not have been able to deposit
those funds in her husband's current account, and
then make plaintiff believe that it was in the latter's
accounts wherein she had deposited them, had it
not been for bank teller Mabayad's aforesaid gross
and reckless negligence. The latter's negligence was
thus the proximate, immediate and efficient cause
that brought about the loss claimed by plaintiff in
this case, and the failure of plaintiff to discover the
same soon enough by failing to scrutinize the
monthly statements of account being sent to it by
Page 175 of 205
 appellant bank could not have prevented the fraud
and misappropriation which Irene Yabut had
already completed when she deposited plaintiff's
money to the account of her husband instead of to
the latter's accounts. 18
Furthermore, under the doctrine of "last clear chance" (also
referred to, at times as "supervening negligence" or as "discovered
peril"), petitioner bank was indeed the culpable party. This
doctrine, in essence, states that where both parties are negligent,
but the negligent act of one is appreciably later in time than that of
the other, or when it is impossible to determine whose fault or
negligence should be attributed to the incident, the one who had
the last clear opportunity to avoid the impending harm and failed
to do so is chargeable with the consequences thereof. 19 Stated
differently, the rule would also mean that an antecedent negligence
of a person does not preclude the recovery of damages for the
supervening negligence of, or bar a defense against liability sought
by another, if the latter, who had the last fair chance, could have
avoided the impending harm by the exercise of due diligence. 20
Here, assuming that private respondent RMC was negligent in
entrusting cash to a dishonest employee, thus providing the latter
with the opportunity to defraud the company, as advanced by the
petitioner, yet it cannot be denied that the petitioner bank, thru its
teller, had the last clear opportunity to avert the injury incurred by
its client, simply by faithfully observing their self-imposed
validation procedure.
At this juncture, it is worth to discuss the degree of diligence ought
to be exercised by banks in dealing with their clients.
The New Civil Code provides:
Art. 1173. The fault or negligence of the obligor
consists in the omission of that diligence which is
required by the nature of the obligation and
corresponds with the circumstances of the persons,
of the time and of the place. When negligence shows
bad faith, the provisions of articles 1171 and 2201,
paragraph 2, shall apply.
If the law or contract does not state the diligence
which is to be observed in the performance, that
which is expected of a good father of a family shall
be required. (1104a)
In the case of banks, however, the degree of diligence required is
more than that of a good father of a family. Considering the
fiduciary nature of their relationship with their depositors, banks
are duty bound to treat the accounts of their clients with the
highest degree of care. 21
As elucidated in Simex International (Manila), Inc. v. Court of
Appeals, 22 in every case, the depositor expects the bank to treat
his account with the utmost fidelity, whether such account
consists only of a few hundred pesos or of millions. The bank must
record every single transaction accurately, down to the last
centavo, and as promptly as possible. This has to be done if the
account is to reflect at any given time the amount of money the
depositor can dispose as he sees fit, confident that the bank will
deliver it as and to whomever he directs. A blunder on the part of
the bank, such as the failure to duly credit him his deposits as
soon as they are made, can cause the depositor not a little
embarrassment if not financial loss and perhaps even civil and
criminal litigation.
Page 176 of 205
The point is that as a business affected with public interest and
because of the nature of its functions, the bank is under obligation
to treat the accounts of its depositors with meticulous care, always
having in mind the fiduciary nature of their relationship. In the
case before us, it is apparent that the petitioner bank was remiss
in that duty and violated that relationship.
Petitioners nevertheless aver that the failure of respondent RMC to
cross-check the bank's statements of account with its own records
during the entire period of more than one (1) year is the proximate
cause of the commission of subsequent frauds and
misappropriation committed by Ms. Irene Yabut.
We do not agree.
While it is true that had private respondent checked the monthly
statements of account sent by the petitioner bank to RMC, the
latter would have discovered the loss early on, such cannot be used
by the petitioners to escape liability. This omission on the part of
the private respondent does not change the fact that were it not for
the wanton and reckless negligence of the petitioners' employee in
validating the incomplete duplicate deposit slips presented by Ms.
Irene Yabut, the loss would not have occurred. Considering,
however, that the fraud was committed in a span of more than one
(1) year covering various deposits, common human experience
dictates that the same would not have been possible without any
form of collusion between Ms. Yabut and bank teller Mabayad. Ms.
Mabayad was negligent in the performance of her duties as bank
teller nonetheless. Thus, the petitioners are entitled to claim
reimbursement from her for whatever they shall be ordered to pay
in this case.
The foregoing notwithstanding, it cannot be denied that, indeed,
private respondent was likewise negligent in not checking its
monthly statements of account. Had it done so, the company
would have been alerted to the series of frauds being committed
against RMC by its secretary. The damage would definitely not
have ballooned to such an amount if only RMC, particularly Romeo
Lipana, had exercised even a little vigilance in their financial
affairs. This omission by RMC amounts to contributory negligence
which shall mitigate the damages that may be awarded to the
private respondent 23 under Article 2179 of the New Civil Code, to
wit:
. . . When the plaintiff's own negligence was the
immediate and proximate cause of his injury, he
cannot recover damages. But if his negligence was
only contributory, the immediate and proximate
cause of the injury being the defendant's lack of due
care, the plaintiff may recover damages, but the
courts shall mitigate the damages to be awarded.
In view of this, we believe that the demands of substantial
justice are satisfied by allocating the damage on a 60-40
ratio. Thus, 40% of the damage awarded by the respondent
appellate court, except the award of P25,000.00 attorney's
fees, shall be borne by private respondent RMC; only the
balance of 60% needs to be paid by the petitioners. The
award of attorney's fees shall be borne exclusively by the
petitioners.
WHEREFORE, the decision of the respondent Court of Appeals is
modified by reducing the amount of actual damages private
respondent is entitled to by 40%. Petitioners may recover from Ms.
Azucena Mabayad the amount they would pay the private
respondent. Private respondent shall have recourse against Ms.
Page 177 of 205
Irene Yabut. In all other respects, the appellate court's decision is
AFFIRMED.
Proportionate costs.
SO ORDERED.

Page 178 of 205

FIRST DIVISION
[G.R. No. 138569. September 11, 2003]
THE CONSOLIDATED BANK and TRUST CORPORATION,
petitioner, vs. COURT OF APPEALS and L.C. DIAZ and COMPANY,
CPAs, respondents.
DECISION
CARPIO, J.:
The Case
Before us is a petition for review of the Decision1[1] of the Court of
Appeals dated 27 October 1998 and its Resolution dated 11 May
1999. The assailed decision reversed the Decision2[2] of the
Regional Trial Court of Manila, Branch 8, absolving petitioner
Consolidated Bank and Trust Corporation, now known as
Solidbank Corporation (Solidbank), of any liability. The questioned
resolution of the appellate court denied the motion for
reconsideration of Solidbank but modified the decision by deleting
the award of exemplary damages, attorneys fees, expenses of
litigation and cost of suit.
The Facts
Solidbank is a domestic banking corporation organized and
existing under Philippine laws. Private respondent L.C. Diaz and
Company, CPAs (L.C. Diaz), is a professional partnership engaged
in the practice of accounting.
Sometime in March 1976, L.C. Diaz opened a savings account with
Solidbank, designated as Savings Account No. S/A 200-16872-6.
On 14 August 1991, L.C. Diaz through its cashier, Mercedes
Macaraya (Macaraya), filled up a savings (cash) deposit slip for
P990 and a savings (checks) deposit slip for P50. Macaraya
instructed the messenger of L.C. Diaz, Ismael Calapre (Calapre), to
deposit the money with Solidbank. Macaraya also gave Calapre the
Solidbank passbook.
Calapre went to Solidbank and presented to Teller No. 6 the two
deposit slips and the passbook. The teller acknowledged receipt of
the deposit by returning to Calapre the duplicate copies of the two
deposit slips. Teller No. 6 stamped the deposit slips with the words
DUPLICATE and SAVING TELLER 6 SOLIDBANK HEAD OFFICE.
Since the transaction took time and Calapre had to make another
deposit for L.C. Diaz with Allied Bank, he left the passbook with
Solidbank. Calapre then went to Allied Bank. When Calapre
returned to Solidbank to retrieve the passbook, Teller No. 6
informed him that somebody got the passbook.3[3] Calapre went
back to L.C. Diaz and reported the incident to Macaraya.
Macaraya immediately prepared a deposit slip in duplicate copies
with a check of P200,000. Macaraya, together with Calapre, went
to Solidbank and presented to Teller No. 6 the deposit slip and
check. The teller stamped the words DUPLICATE and SAVING
TELLER 6 SOLIDBANK HEAD OFFICE on the duplicate copy of the
Page 179 of 205
deposit slip. When Macaraya asked for the passbook, Teller No. 6
told Macaraya that someone got the passbook but she could not
remember to whom she gave the passbook. When Macaraya asked
Teller No. 6 if Calapre got the passbook, Teller No. 6 answered that
someone shorter than Calapre got the passbook. Calapre was then
standing beside Macaraya.
Teller No. 6 handed to Macaraya a deposit slip dated 14 August
1991 for the deposit of a check for P90,000 drawn on Philippine
Banking Corporation (PBC). This PBC check of L.C. Diaz was a
check that it had long closed.4[4] PBC subsequently dishonored
the check because of insufficient funds and because the signature
in the check differed from PBCs specimen signature. Failing to get
back the passbook, Macaraya went back to her office and reported
the matter to the Personnel Manager of L.C. Diaz, Emmanuel
Alvarez.
The following day, 15 August 1991, L.C. Diaz through its Chief
Executive Officer, Luis C. Diaz (Diaz), called up Solidbank to stop
any transaction using the same passbook until L.C. Diaz could
open a new account.5[5] On the same day, Diaz formally wrote
Solidbank to make the same request. It was also on the same day
that L.C. Diaz learned of the unauthorized withdrawal the day
before, 14 August 1991, of P300,000 from its savings account. The
withdrawal slip for the P300,000 bore the signatures of the
authorized signatories of L.C. Diaz, namely Diaz and Rustico L.
Murillo. The signatories, however, denied signing the withdrawal
slip. A certain Noel Tamayo received the P300,000.
In an Information6[6] dated 5 September 1991, L.C. Diaz charged
its messenger, Emerano Ilagan (Ilagan) and one Roscon Verdazola
with Estafa through Falsification of Commercial Document. The
Regional Trial Court of Manila dismissed the criminal case after the
City Prosecutor filed a Motion to Dismiss on 4 August 1992.
On 24 August 1992, L.C. Diaz through its counsel demanded from
Solidbank the return of its money. Solidbank refused.
On 25 August 1992, L.C. Diaz filed a Complaint7[7] for Recovery of
a Sum of Money against Solidbank with the Regional Trial Court of
Manila, Branch 8. After trial, the trial court rendered on 28
December 1994 a decision absolving Solidbank and dismissing the
complaint.
L.C. Diaz then appealed8[8] to the Court of Appeals. On 27 October
1998, the Court of Appeals issued its Decision reversing the
decision of the trial court.
Page 180 of 205
On 11 May 1999, the Court of Appeals issued its Resolution
denying the motion for reconsideration of Solidbank. The appellate
court, however, modified its decision by deleting the award of
exemplary damages and attorneys fees.
The Ruling of the Trial Court
In absolving Solidbank, the trial court applied the rules on savings
account written on the passbook. The rules state that possession of
this book shall raise the presumption of ownership and any
payment or payments made by the bank upon the production of
the said book and entry therein of the withdrawal shall have the
same effect as if made to the depositor personally.9[9]
At the time of the withdrawal, a certain Noel Tamayo was not only
in possession of the passbook, he also presented a withdrawal slip
with the signatures of the authorized signatories of L.C. Diaz. The
specimen signatures of these persons were in the signature cards.
The teller stamped the withdrawal slip with the words Saving Teller
No. 5. The teller then passed on the withdrawal slip to Genere
Manuel (Manuel) for authentication. Manuel verified the signatures
on the withdrawal slip. The withdrawal slip was then given to
another officer who compared the signatures on the withdrawal
slip with the specimen on the signature cards. The trial court
concluded that Solidbank acted with care and observed the rules
on savings account when it allowed the withdrawal of P300,000
from the savings account of L.C. Diaz.
The trial court pointed out that the burden of proof now shifted to
L.C. Diaz to prove that the signatures on the withdrawal slip were
forged. The trial court admonished L.C. Diaz for not offering in
evidence the National Bureau of Investigation (NBI) report on the
authenticity of the signatures on the withdrawal slip for P300,000.
The trial court believed that L.C. Diaz did not offer this evidence
because it is derogatory to its action.
Another provision of the rules on savings account states that the
depositor must keep the passbook under lock and key.10[10] When
another person presents the passbook for withdrawal prior to
Solidbanks receipt of the notice of loss of the passbook, that
person is considered as the owner of the passbook. The trial court
ruled that the passbook presented during the questioned
transaction was now out of the lock and key and presumptively
ready for a business transaction.11[11]
Solidbank did not have any participation in the custody and care of
the passbook. The trial court believed that Solidbanks act of
allowing the withdrawal of P300,000 was not the direct and
proximate cause of the loss. The trial court held that L.C. Diazs
negligence caused the unauthorized withdrawal. Three facts
establish L.C. Diazs negligence: (1) the possession of the passbook
by a person other than the depositor L.C. Diaz; (2) the presentation
of a signed withdrawal receipt by an unauthorized person; and (3)
the possession by an unauthorized person of a PBC check long
Page 181 of 205
closed by L.C. Diaz, which check was deposited on the day of the
fraudulent withdrawal.
The trial court debunked L.C. Diazs contention that Solidbank did
not follow the precautionary procedures observed by the two
parties whenever L.C. Diaz withdrew significant amounts from its
account. L.C. Diaz claimed that a letter must accompany
withdrawals of more than P20,000. The letter must request
Solidbank to allow the withdrawal and convert the amount to a
managers check. The bearer must also have a letter authorizing
him to withdraw the same amount. Another person driving a car
must accompany the bearer so that he would not walk from
Solidbank to the office in making the withdrawal. The trial court
pointed out that L.C. Diaz disregarded these precautions in its past
withdrawal. On 16 July 1991, L.C. Diaz withdrew P82,554 without
any separate letter of authorization or any communication with
Solidbank that the money be converted into a managers check.
The trial court further justified the dismissal of the complaint by
holding that the case was a last ditch effort of L.C. Diaz to recover
P300,000 after the dismissal of the criminal case against Ilagan.
The dispositive portion of the decision of the trial court reads:
IN VIEW OF THE FOREGOING, judgment is hereby rendered
DISMISSING the complaint.
The Court further renders judgment in favor of defendant bank
pursuant to its counterclaim the amount of Thirty Thousand Pesos
(P30,000.00) as attorneys fees.
With costs against plaintiff.
SO ORDERED.12[12]
The Ruling of the Court of Appeals
The Court of Appeals ruled that Solidbanks negligence was the
proximate cause of the unauthorized withdrawal of P300,000 from
the savings account of L.C. Diaz. The appellate court reached this
conclusion after applying the provision of the Civil Code on quasi-
delict, to wit:
Article 2176. Whoever by act or omission causes damage to
another, there being fault or negligence, is obliged to pay for the
damage done. Such fault or negligence, if there is no pre-existing
contractual relation between the parties, is called a quasi-delict
and is governed by the provisions of this chapter.
The appellate court held that the three elements of a quasi-delict
are present in this case, namely: (a) damages suffered by the
plaintiff; (b) fault or negligence of the defendant, or some other
person for whose acts he must respond; and (c) the connection of
cause and effect between the fault or negligence of the defendant
and the damage incurred by the plaintiff.
The Court of Appeals pointed out that the teller of Solidbank who
received the withdrawal slip for P300,000 allowed the withdrawal
without making the necessary inquiry. The appellate court stated
that the teller, who was not presented by Solidbank during trial,
should have called up the depositor because the money to be
withdrawn was a significant amount. Had the teller called up L.C.
Diaz, Solidbank would have known that the withdrawal was
unauthorized. The teller did not even verify the identity of the
impostor who made the withdrawal. Thus, the appellate court
found Solidbank liable for its negligence in the selection and
supervision of its employees.
Page 182 of 205
The appellate court ruled that while L.C. Diaz was also negligent in
entrusting its deposits to its messenger and its messenger in
leaving the passbook with the teller, Solidbank could not escape
liability because of the doctrine of last clear chance. Solidbank
could have averted the injury suffered by L.C. Diaz had it called up
L.C. Diaz to verify the withdrawal.
The appellate court ruled that the degree of diligence required from
Solidbank is more than that of a good father of a family. The
business and functions of banks are affected with public interest.
Banks are obligated to treat the accounts of their depositors with
meticulous care, always having in mind the fiduciary nature of
their relationship with their clients. The Court of Appeals found
Solidbank remiss in its duty, violating its fiduciary relationship
with L.C. Diaz.
The dispositive portion of the decision of the Court of Appeals
reads:
WHEREFORE, premises considered, the decision appealed from is
hereby REVERSED and a new one entered.
1. Ordering defendant-appellee Consolidated Bank and
Trust Corporation to pay plaintiff-appellant the sum
of Three Hundred Thousand Pesos (P300,000.00),
with interest thereon at the rate of 12% per annum
from the date of filing of the complaint until paid,
the sum of P20,000.00 as exemplary damages, and
P20,000.00 as attorneys fees and expenses of
litigation as well as the cost of suit; and
2. Ordering the dismissal of defendant-appellees
counterclaim in the amount of P30,000.00 as
attorneys fees.
SO ORDERED.13[13]
Acting on the motion for reconsideration of Solidbank, the
appellate court affirmed its decision but modified the award of
damages. The appellate court deleted the award of exemplary
damages and attorneys fees. Invoking Article 223114[14] of the
Civil Code, the appellate court ruled that exemplary damages could
be granted if the defendant acted with gross negligence. Since
Solidbank was guilty of simple negligence only, the award of
exemplary damages was not justified. Consequently, the award of
attorneys fees was also disallowed pursuant to Article 2208 of the
Civil Code. The expenses of litigation and cost of suit were also not
imposed on Solidbank.
The dispositive portion of the Resolution reads as follows:
WHEREFORE, foregoing considered, our decision dated October
27, 1998 is affirmed with modification by deleting the award of
exemplary damages and attorneys fees, expenses of litigation and
cost of suit.
SO ORDERED.15[15]
Page 183 of 205
Hence, this petition.
The Issues
Solidbank seeks the review of the decision and resolution of the
Court of Appeals on these grounds:
I. THE COURT OF APPEALS ERRED IN HOLDING
THAT PETITIONER BANK SHOULD SUFFER THE
LOSS BECAUSE ITS TELLER SHOULD HAVE FIRST
CALLED PRIVATE RESPONDENT BY TELEPHONE
BEFORE IT ALLOWED THE WITHDRAWAL OF
P300,000.00 TO RESPONDENTS MESSENGER
EMERANO ILAGAN, SINCE THERE IS NO
AGREEMENT BETWEEN THE PARTIES IN THE
OPERATION OF THE SAVINGS ACCOUNT, NOR IS
THERE ANY BANKING LAW, WHICH MANDATES
THAT A BANK TELLER SHOULD FIRST CALL UP
THE DEPOSITOR BEFORE ALLOWING
WITHDRAWAL OF A BIG AMOUNT IN A SAVINGS
ACCOUNT.
II. THE COURT OF APPEALS ERRED IN APPLYING
THE DOCTRINE OF LAST CLEAR CHANCE AND IN
HOLDING THAT PETITIONER BANKS TELLER HAD
THE LAST OPPORTUNITY TO WITHHOLD THE
WITHDRAWAL WHEN IT IS UNDISPUTED THAT
THE TWO SIGNATURES OF RESPONDENT ON THE
WITHDRAWAL SLIP ARE GENUINE AND PRIVATE
RESPONDENTS PASSBOOK WAS
PRESENTED, AND CONTRARIWISE RESPONDENT
WAS NEGLIGENT IN THE SELECTION AND
SUPERVISION OF ITS MESSENGER EMERANO
ILAGAN, AND IN THE SAFEKEEPING OF ITS
CHECKS AND OTHER FINANCIAL DOCUMENTS.
III. THE COURT OF APPEALS ERRED IN NOT FINDING
THAT THE INSTANT CASE IS A LAST DITCH
EFFORT OF PRIVATE RESPONDENT TO RECOVER
ITS P300,000.00 AFTER FAILING IN ITS EFFORTS
TO RECOVER THE SAME FROM ITS EMPLOYEE
EMERANO ILAGAN.
IV. THE COURT OF APPEALS ERRED IN NOT
MITIGATING THE DAMAGES AWARDED AGAINST
PETITIONER UNDER ARTICLE 2197 OF THE CIVIL
CODE, NOTWITHSTANDING ITS FINDING THAT
PETITIONER BANKS NEGLIGENCE WAS ONLY
CONTRIBUTORY.16[16]
The Ruling of the Court
A The petition is partly meritorious.
Solidbanks Fiduciary Duty under the Law
The rulings of the trial court and the Court of Appeals conflict on
the application of the law. The trial court pinned the liability on
L.C. Diaz based on the provisions of the rules on savings account,
a recognition of the contractual relationship between Solidbank
and L.C. Diaz, the latter being a depositor of the former. On the
other hand, the Court of Appeals applied the law on quasi-delict to
determine who between the two parties was ultimately negligent.
The law on quasi-delict or culpa aquiliana is generally applicable
DULY
Page 184 of 205
when there is no pre-existing contractual relationship between the
parties.
We hold that Solidbank is liable for breach of contract due to
negligence, or culpa contractual.
The contract between the bank and its depositor is governed by the
provisions of the Civil Code on simple loan.17[17] Article 1980 of
the Civil Code expressly provides that x x x savings x x x deposits
of money in banks and similar institutions shall be governed by the
provisions concerning simple loan. There is a debtor-creditor
relationship between the bank and its depositor. The bank is the
debtor and the depositor is the creditor. The depositor lends the
bank money and the bank agrees to pay the depositor on demand.
The savings deposit agreement between the bank and the depositor
is the contract that determines the rights and obligations of the
parties.
The law imposes on banks high standards in view of the fiduciary
nature of banking. Section 2 of Republic Act No. 8791 (RA
8791),18[18] which took effect on 13 June 2000, declares that the
State recognizes the fiduciary nature of banking that requires high
standards of integrity and performance.19[19] This new provision
in the general banking law, introduced in 2000, is a statutory
affirmation of Supreme Court decisions, starting with the 1990
case of Simex International v. Court of Appeals,20[20] holding
that the bank is under obligation to treat the accounts of its
depositors with meticulous care, always having in mind the
fiduciary nature of their relationship.21[21]
This fiduciary relationship means that the banks obligation to
observe high standards of integrity and performance is deemed
written into every deposit agreement between a bank and its
depositor. The fiduciary nature of banking requires banks to
assume a degree of diligence higher than that of a good father of a
family. Article 1172 of the Civil Code states that the degree of
diligence required of an obligor is that prescribed by law or
contract, and absent such stipulation then the diligence of a good
father of a family.22[22] Section 2 of RA 8791 prescribes the
statutory diligence required from banks that banks must observe
Page 185 of 205
high standards of integrity and performance in servicing their
depositors. Although RA 8791 took effect almost nine years after
the unauthorized withdrawal of the P300,000 from L.C. Diazs
savings account, jurisprudence23[23] at the time of the withdrawal
already imposed on banks the same high standard of diligence
required under RA No. 8791.
However, the fiduciary nature of a bank-depositor relationship does
not convert the contract between the bank and its depositors from
a simple loan to a trust agreement, whether express or implied.
Failure by the bank to pay the depositor is failure to pay a simple
loan, and not a breach of trust.24[24] The law simply imposes on
the bank a higher standard of integrity and performance in
complying with its obligations under the contract of simple loan,
beyond those required of non-bank debtors under a similar
contract of simple loan.
The fiduciary nature of banking does not convert a simple loan into
a trust agreement because banks do not accept deposits to enrich
depositors but to earn money for themselves. The law allows banks
to offer the lowest possible interest rate to depositors while
charging the highest possible interest rate on their own borrowers.
The interest spread or differential belongs to the bank and not to
the depositors who are not cestui que trust of banks. If depositors
are cestui que trust of banks, then the interest spread or income
belongs to the depositors, a situation that Congress certainly did
not intend in enacting Section 2 of RA 8791.
Solidbanks Breach of its Contractual Obligation
Article 1172 of the Civil Code provides that responsibility arising
from negligence in the performance of every kind of obligation is
demandable. For breach of the savings deposit agreement due to
negligence, or culpa contractual, the bank is liable to its depositor.
Calapre left the passbook with Solidbank because the transaction
took time and he had to go to Allied Bank for another transaction.
The passbook was still in the hands of the employees of Solidbank
for the processing of the deposit when Calapre left Solidbank.
Solidbanks rules on savings account require that the deposit book
should be carefully guarded by the depositor and kept under lock
and key, if possible. When the passbook is in the possession of
Solidbanks tellers during withdrawals, the law imposes on
Solidbank and its tellers an even higher degree of diligence in
safeguarding the passbook.
Likewise, Solidbanks tellers must exercise a high degree of
diligence in insuring that they return the passbook only to the
depositor or his authorized representative. The tellers know, or
should know, that the rules on savings account provide that any
person in possession of the passbook is presumptively its owner. If
the tellers give the passbook to the wrong person, they would be
clothing that person presumptive ownership of the passbook,
facilitating unauthorized withdrawals by that person. For failing to
return the passbook to Calapre, the authorized representative of
L.C. Diaz, Solidbank and Teller No. 6 presumptively failed to
observe such high degree of diligence in safeguarding the
Page 186 of 205
passbook, and in insuring its return to the party authorized to
receive the same.
In culpa contractual, once the plaintiff proves a breach of contract,
there is a presumption that the defendant was at fault or negligent.
The burden is on the defendant to prove that he was not at fault or
negligent. In contrast, in culpa aquiliana the plaintiff has the
burden of proving that the defendant was negligent. In the present
case, L.C. Diaz has established that Solidbank breached its
contractual obligation to return the passbook only to the
authorized representative of L.C. Diaz. There is thus a presumption
that Solidbank was at fault and its teller was negligent in not
returning the passbook to Calapre. The burden was on Solidbank
to prove that there was no negligence on its part or its employees.
Solidbank failed to discharge its burden. Solidbank did not present
to the trial court Teller No. 6, the teller with whom Calapre left the
passbook and who was supposed to return the passbook to him.
The record does not indicate that Teller No. 6 verified the identity of
the person who retrieved the passbook. Solidbank also failed to
adduce in evidence its standard procedure in verifying the identity
of the person retrieving the passbook, if there is such a procedure,
and that Teller No. 6 implemented this procedure in the present
case.
Solidbank is bound by the negligence of its employees under the
principle of respondeat superior or command responsibility. The
defense of exercising the required diligence in the selection and
supervision of employees is not a complete defense in culpa
contractual, unlike in culpa aquiliana.25[25]
The bank must not only exercise high standards of integrity and
performance, it must also insure that its employees do likewise
because this is the only way to insure that the bank will comply
with its fiduciary duty. Solidbank failed to present the teller who
had the duty to return to Calapre the passbook, and thus failed to
prove that this teller exercised the high standards of integrity and
performance required of Solidbanks employees.
Proximate Cause of the Unauthorized Withdrawal
Another point of disagreement between the trial and appellate
courts is the proximate cause of the unauthorized withdrawal. The
trial court believed that L.C. Diazs negligence in not securing its
passbook under lock and key was the proximate cause that allowed
the impostor to withdraw the P300,000. For the appellate court,
the proximate cause was the tellers negligence in processing the
withdrawal without first verifying with L.C. Diaz. We do not agree
with either court.
Proximate cause is that cause which, in natural and continuous
sequence, unbroken by any efficient intervening cause, produces
the injury and without which the result would not have
occurred.26[26] Proximate cause is determined by the facts of each
case upon mixed considerations of logic, common sense, policy and
precedent.27[27]
Page 187 of 205
L.C. Diaz was not at fault that the passbook landed in the hands of
the impostor. Solidbank was in possession of the passbook while it
was processing the deposit. After completion of the transaction,
Solidbank had the contractual obligation to return the passbook
only to Calapre, the authorized representative of L.C. Diaz.
Solidbank failed to fulfill its contractual obligation because it gave
the passbook to another person.
Solidbanks failure to return the passbook to Calapre made possible
the withdrawal of the P300,000 by the impostor who took
possession of the passbook. Under Solidbanks rules on savings
account, mere possession of the passbook raises the presumption
of ownership. It was the negligent act of Solidbanks Teller No. 6
that gave the impostor presumptive ownership of the passbook.
Had the passbook not fallen into the hands of the impostor, the
loss of P300,000 would not have happened. Thus, the proximate
cause of the unauthorized withdrawal was Solidbanks negligence
in not returning the passbook to Calapre.
We do not subscribe to the appellate courts theory that the
proximate cause of the unauthorized withdrawal was the tellers
failure to call up L.C. Diaz to verify the withdrawal. Solidbank did
not have the duty to call up L.C. Diaz to confirm the withdrawal.
There is no arrangement between Solidbank and L.C. Diaz to this
effect. Even the agreement between Solidbank and L.C. Diaz
pertaining to measures that the parties must observe whenever
withdrawals of large amounts are made does not direct Solidbank
to call up L.C. Diaz.
There is no law mandating banks to call up their clients whenever
their representatives withdraw significant amounts from their
accounts. L.C. Diaz therefore had the burden to prove that it is the
usual practice of Solidbank to call up its clients to verify a
withdrawal of a large amount of money. L.C. Diaz failed to do so.
Teller No. 5 who processed the withdrawal could not have been put
on guard to verify the withdrawal. Prior to the withdrawal of
P300,000, the impostor deposited with Teller No. 6 the P90,000
PBC check, which later bounced. The impostor apparently
deposited a large amount of money to deflect suspicion from the
withdrawal of a much bigger amount of money. The appellate court
thus erred when it imposed on Solidbank the duty to call up L.C.
Diaz to confirm the withdrawal when no law requires this from
banks and when the teller had no reason to be suspicious of the
transaction.
Solidbank continues to foist the defense that Ilagan made the
withdrawal. Solidbank claims that since Ilagan was also a
messenger of L.C. Diaz, he was familiar with its teller so that there
was no more need for the teller to verify the withdrawal. Solidbank
relies on the following statements in the Booking and Information
Sheet of Emerano Ilagan:
xxx Ilagan also had with him (before the withdrawal) a forged check
of PBC and indicated the amount of P90,000 which he deposited in
favor of L.C. Diaz and Company. After successfully withdrawing
this large sum of money, accused Ilagan gave alias Rey (Noel
Tamayo) his share of the loot. Ilagan then hired a taxicab in the
amount of P1,000 to transport him (Ilagan) to his home province at
Bauan, Batangas. Ilagan extravagantly and lavishly spent his
money but a big part of his loot was wasted in cockfight and horse
Page 188 of 205
racing. Ilagan was apprehended and meekly admitted his
guilt.28[28] (Emphasis supplied.)
L.C. Diaz refutes Solidbanks contention by pointing out that the
person who withdrew the P300,000 was a certain Noel Tamayo.
Both the trial and appellate courts stated that this Noel Tamayo
presented the passbook with the withdrawal slip.
We uphold the finding of the trial and appellate courts that a
certain Noel Tamayo withdrew the P300,000. The Court is not a
trier of facts. We find no justifiable reason to reverse the factual
finding of the trial court and the Court of Appeals. The tellers who
processed the deposit of the P90,000 check and the withdrawal of
the P300,000 were not presented during trial to substantiate
Solidbanks claim that Ilagan deposited the check and made the
questioned withdrawal. Moreover, the entry quoted by Solidbank
does not categorically state that Ilagan presented the withdrawal
slip and the passbook.
Doctrine of Last Clear Chance
The doctrine of last clear chance states that where both parties are
negligent but the negligent act of one is appreciably later than that
of the other, or where it is impossible to determine whose fault or
negligence caused the loss, the one who had the last clear
opportunity to avoid the loss but failed to do so, is chargeable with
the loss.29[29] Stated differently, the antecedent negligence of the
plaintiff does not preclude him from recovering damages caused by
the supervening negligence of the defendant, who had the last fair
chance to prevent the impending harm by the exercise of due
diligence.30[30]
We do not apply the doctrine of last clear chance to the present
case. Solidbank is liable for breach of contract due to negligence in
the performance of its contractual obligation to L.C. Diaz. This is a
case of culpa contractual, where neither the contributory negligence
of the plaintiff nor his last clear chance to avoid the loss, would
exonerate the defendant from liability.31[31] Such contributory
negligence or last clear chance by the plaintiff merely serves to
reduce the recovery of damages by the plaintiff but does not
exculpate the defendant from his breach of contract.32[32]
Page 189 of 205
Mitigated Damages
Under Article 1172, liability (for culpa contractual) may be regulated
by the courts, according to the circumstances. This means that if
the defendant exercised the proper diligence in the selection and
supervision of its employee, or if the plaintiff was guilty of
contributory negligence, then the courts may reduce the award of
damages. In this case, L.C. Diaz was guilty of contributory
negligence in allowing a withdrawal slip signed by its authorized
signatories to fall into the hands of an impostor. Thus, the liability
of Solidbank should be reduced.
In Philippine Bank of Commerce v. Court of Appeals,33[33]
where the Court held the depositor guilty of contributory
negligence, we allocated the damages between the depositor and
the bank on a 40-60 ratio. Applying the same ruling to this case,
we hold that L.C. Diaz must shoulder 40% of the actual damages
awarded by the appellate court. Solidbank must pay the other 60%
of the actual damages.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED
with MODIFICATION. Petitioner Solidbank Corporation shall pay
private respondent L.C. Diaz and Company, CPAs only 60% of the
actual damages awarded by the Court of Appeals. The remaining
40% of the actual damages shall be borne by private respondent
L.C. Diaz and Company, CPAs. Proportionate costs.
SO ORDERED.

Page 190 of 205

Republic of the Philippines The facts giving rise to the controversy at bar are recounted by the
SUPREME COURT trial court as follows:
Manila At about 6:30 in the morning of April 20, 1983, a collision
FIRST DIVISION occurred between a gravel and sand truck, with Plate No.
G.R. No. 89880 February 6, 1991 DAP 717, and a Mazda passenger bus with Motor No.
EMMA ADRIANO BUSTAMANTE, in her own behalf as Guardian- Y2231 and Plate No. DVT 259 along the national road at
Ad-Litem of minors: ROSSEL, GLORIA, YOLANDA, ERIC SON Calibuyo, Tanza, Cavite. The front left side portion
and EDERIC, all surnamed BUSTAMANTE, Spouses SALVADOR (barandilla) of the body of the truck sideswiped the left side
JOCSON and PATRIA BONE-JOCSON, Spouses JOSE RAMOS wall of the passenger bus, ripping off the said wall from the
and ENRIQUETA CEBU-RAMOS, Spouses NARCISO-HIMAYA and driver's seat to the last rear seat.
ADORACION MARQUEZ-HIMAYA, and Spouses JOSE Due to the impact, several passengers of the bus were
BERSAMINA and MA. COMMEMORACION PEREA- thrown out and died as a result of the injuries they
BUSTAMANTE, petitioners, sustained, Among those killed were the following:
vs. 1. Rogelio Bustamante, 40, husband of plaintiff Emma
THE HONORABLE COURT OF APPEALS, FEDERICO DEL PILAR Adriano Bustamante and father of plaintiffs Rossel, Gloria,
AND EDILBERTO MONTESIANO, respondents. Yolanda, Ericson, and Ederic, all surnamed Bustamante;
Dolorfino and Dominguez Law Offices for petitioners. 2. Maria Corazon Jocson, 16, daughter of plaintiffs spouses
J.C. Baldoz & Associates for private respondents. Salvador and Patria Jocson;
3. Jolet C. Ramos, 16, daughter of plaintiffs spouses Jose
MEDIALDEA, J.: and Enriqueta Ramos;
This is a petition for review on certiorari seeking the reversal of the 4. Enrico Himaya, 18, son of plaintiffs spouses Narciso and
decision of the respondent Court of Appeals dated February 15, Adoracion Himaya; and
1989 which reversed and set aside the decision of the Regional 5. Noel Bersamina, 17, son of plaintiffs spouses Jose and
Trial Court of Cavite, Branch XV ordering the defendants to pay Ma. Commemoracion Bersamina. (Rollo, p. 48)
jointly and severally the plaintiffs indemnity for death and During the incident, the cargo truck was driven by defendant
damages; and in further dismissing the complaint insofar as Montesiano and owned by defendant Del Pilar; while the passenger
defendants-appellants Federico del Pilar and Edilberto Montesiano bus was driven by defendant Susulin. The vehicle was registered in
are concerned; and its resolution dated August 17, 1989 denying the name of defendant Novelo but was owned and/or operated as a
the motion for reconsideration for lack of merit. passenger bus jointly by defendants Magtibay and Serrado, under
a franchise, with a line from Naic, Cavite, to Baclaran, Paranaque,

Page 191 of 205

Metro Manila, and vice versa, which Novelo sold to Magtibay on
November 8, 1981, and which the latter transferred to Serrado
(Cerrado) on January 18, 1983.
Immediately before the collision, the cargo truck and the passenger
bus were approaching each other, coming from the opposite
directions of the highway. While the truck was still about 30
meters away, Susulin, the bus driver, saw the front wheels of the
vehicle wiggling. He also observed that the truck was heading
towards his lane. Not minding this circumstance due to his belief
that the driver of the truck was merely joking, Susulin shifted from
fourth to third gear in order to give more power and speed to the
bus, which was ascending the inclined part of the road, in order to
overtake or pass a Kubota hand tractor being pushed by a person
along the shoulder of the highway. While the bus was in the
process of overtaking or passing the hand tractor and the truck
was approaching the bus, the two vehicles sideswiped each other
at each other's left side. After the impact, the truck skidded
towards the other side of the road and landed on a nearby
residential lot, hitting a coconut tree and felling it." (Rollo, pp. 48-
50)
After a careful perusal of the circumstances of the case, the trial
court reached the conclusion "that the negligent acts of both
drivers contributed to or combined with each other in directly
causing the accident which led to the death of the aforementioned
persons. It could not be determined from the evidence that it was
only the negligent act of one of them which was the proximate
cause of the collision. In view of this, the liability of the two drivers
for their negligence must be solidary. (Rollo, pp. 50-51)
Accordingly, the trial court rendered a decision on March 7, 1986,
the dispositive portion is hereunder quoted as follows:
WHEREFORE, defendants Valeriano Magtibay, Simplicio
Serrado, Ricardo Susulin, Efren Novelo, Federico del Pilar
and Edilberto Montesiano are hereby ordered to pay jointly
and severally to the plaintiffs, as follows:
1. To plaintiffs Emma Adriano Bustamante and her minor
children, the sum of P30,000.00 as indemnity for the death
of Rogelio Bustamante; U.S. $127,680.00 as indemnity for
the loss of the earning capacity of the said deceased, at its
prevailing rate in pesos at the time this decision shall have
become final and executory; P10,000.00 as moral damages;
and P5,000.00 as exemplary damages;
2. To plaintiffs Salvador and Patria Jocson, the sum of
P30,000.00 as indemnity for the death of their daughter,
Maria Corazon Jocson; P10,000.00 as moral damages; and
P5,000.00 as exemplary damages;
3. To plaintiffs Jose and Enriqueta Ramos, the sum of
P30,000.00 as indemnity for the death of their daughter,
Jolet Ramos; P10,000.00 as moral damages; and P5,000.00
as exemplary damages; and
4. To plaintiffs Narciso and Adoracion Himaya, the amount
of P30,000.00 as indemnity for the death of their son,
Enrico Himaya, P10,000.00 as moral damages; and
P5,000.00 as exemplary damages; and
5. To plaintiffs Jose and Ma. Commemoracion Bersamina,
the sum of P30,000.00 as indemnity for the death of their
son, Noel Bersamina, P10,000.00 as moral damages and
P5,000.00 as exemplary damages.
The defendants are also required to pay the plaintiffs the
sum of P10,000.00 as attorney's fees and to pay the costs of
the suit.
Page 192 of 205
 The cross-claim of defendant Novelo is hereby allowed, and
defendants Magtibay and Serrado, the actual owners
and/or operators of the passenger bus concerned, are
hereby ordered to indemnify Novelo in such amount as he
may be required to pay as damages to the plaintiffs.
The cross-claims and counter-claims of the other
defendants are hereby dismissed for lack of merit.
SO ORDERED. (pp. 55-57, Rollo)
From said decision, only defendants Federico del Pilar and
Edilberto Montesiano, owner and driver, respectively, of the sand
and gravel truck have interposed an appeal before the respondent
Court of Appeals. The Court of Appeals decided the appeal on a
different light. It rendered judgment on February 15, 1989, to wit:
WHEREFORE, the appealed judgment is hereby REVERSED
and SET ASIDE and the complaint dismissed insofar as
defendants-appellants Federico del Pilar and Edilberto
Montesiano are concerned. No costs in this instance.
SO ORDERED. (p. 96, Rollo)
On March 9, 1989, the plaintiffs-appellees filed a motion for
reconsideration of the aforementioned Court of Appeals' decision.
However, respondent Court of Appeals in a resolution dated August
17, 1989 denied the motion for lack of merit. Hence, this petition.
Petitioners raised the following questions of law, namely:
First. Whether the respondent Court can legally and validly
absolve defendants-appellants from liability despite its own
finding, as well as that of the trial court that defendant-
appellant Edilberto Montesiano, the cargo truck driver, was
driving an old vehicle very fast, with its wheels already
wiggling, such that he had no more control of his truck.
Second. Whether the respondent court can validly and
legally disregard the findings of fact made by the trial court
which was in a better position to observe the conduct and
demeanor of the witnesses, particularly appellant Edilberto
Montesiano, cargo truck driver, and which conclusively
found appellant Montesiano as jointly and severally
negligent in driving his truck very fast and had lost control
of his truck.
Third. Whether the respondent court has properly and
legally applied the doctrine of "last clear chance" in the
present case despite its own finding that appellant cargo
truck driver Edilberto Montesiano was admittedly negligent
in driving his cargo truck very fast on a descending road
and in the presence of the bus driver coming from the
opposite direction.
Fourth. Whether the respondent court has applied the
correct law and the correct doctrine so as to reverse and set
aside the judgment with respect to defendants-appellants.
(Rollo, pp. 133-134)
As a rule, findings of fact of the Court of Appeals are final and
conclusive and cannot be reviewed on appeal, provided, they are
borne out by the record or are based on substantial evidence
However, this rule admits of certain exceptions, as when the
findings of facts are conclusions without citation of specific
evidence on which they are based; or the appellate court's findings
are contrary to those of the trial court. (Sese v. Intermediate
Appellate Court, G.R. 66168, 31 July 1987, 152 SCRA 585).
Furthermore, only questions of law may be raised in a petition for
review on certiorari under Rule 45 of the Revised Rules of Court.
The jurisdiction of the Supreme Court in cases brought to it from
Page 193 of 205
the Court of Appeals is limited to reviewing and revising the errors
of law imputed to it, its findings of fact being conclusive. It is not
the function of the Supreme Court to analyze or weigh such
evidence all over again, its jurisdiction being limited to reviewing
errors of law that might have been committed. Barring, therefore, a
showing that the findings complained of are totally devoid of
support in the records, or that they are so glaringly erroneous as to
constitute serious abuse of discretion, such findings must stand
for the Supreme Court is not expected or required to examine or
contrast the oral and documentary evidence submitted by the
parties. (Andres v. Manufacturers Hanover and Trust Corp., G.R.
82670, 15 September 1989, 177 SCRA 618).
Bearing in mind these basic principles, We have opted to re-
examine the findings of fact mainly because the appellate court's
findings are contrary to those of the trial court.
The trial court, in declaring that the negligent acts of both drivers
directly caused the accident which led to the death of the
aforementioned persons, considered the following:
It was negligent on the part of driver Montesiano to have
driven his truck fast, considering that it was an old vehicle,
being a 1947 model as admitted by its owner, defendant Del
Pilar; that its front wheels were wiggling; that the road was
descending; and that there was a passenger bus
approaching it. Likewise, driver Susulin was also guilty of
negligence in not taking the necessary precaution to avoid
the collision, in the light of his admission that, at a distance
of 30 meters, he already saw the front wheels of the truck
wiggling and that the vehicle was usurping his lane coming
towards his direction. Had he exercised ordinary prudence,
he could have stopped his bus or swerved it to the side of
the road even down to its shoulder. And yet, Susulin shifted
to third gear so as to, as claimed by him, give more power
and speed to his bus in overtaking or passing a hand
tractor which was being pushed along the shoulder of the
road. (Rollo, p. 50)
The respondent Court of Appeals ruling on the contrary, opined
that "the bus driver had the last clear chance to avoid the collision
and his reckless negligence in proceeding to overtake the hand
tractor was the proximate cause of the collision." (Rollo, p. 95). Said
court also noted that "the record also discloses that the bus driver
was not a competent and responsible driver. His driver's license
was confiscated for a traffic violation on April 17, 1983 and he was
using a ticket for said traffic violation on the day of the accident in
question (pp. 16-18, TSN, July 23, 1984). He also admitted that he
was not a regular driver of the bus that figured in the mishap and
was not given any practical examination. (pp. 11, 96, TSN, supra)."
(Rollo, p96)
The respondent Court quoting People v. Vender, CA-G.R. 11114-
41-CR, August 28, 1975 held that "We are not prepared to uphold
the trial court's finding that the truck was running fast before the
impact. The national road, from its direction, was descending.
Courts can take judicial notice of the fact that a motor vehicle
going down or descending is more liable to get out of control than
one that is going up or ascending for the simple reason that the
one which is going down gains added momentum while that which
is going up loses its initial speeding in so doing."
On the other hand, the trial court found and We are convinced that
the cargo truck was running fast. It did not overlook the fact that
the road was descending as in fact it mentioned this circumstance
as one of the factors disregarded by the cargo truck driver along
Page 194 of 205
with the fact that he was driving an old 1947 cargo truck whose
front wheels are already wiggling and the fact that there is a
passenger bus approaching it. In holding that the driver of the
cargo truck was negligent, the trial court certainly took into
account all these factors so it was incorrect for the respondent
court to disturb the factual findings of the trial court, which is in a
better position to decide the question, having heard the witness
themselves and observed their deportment.
The respondent court adopted the doctrine of "last clear chance."
The doctrine, stated broadly, is that the negligence of the plaintiff
does not preclude a recovery for the negligence of the defendant
where it appears that the defendant, by exercising reasonable care
and prudence, might have avoided injurious consequences to the
plaintiff notwithstanding the plaintiff's negligence. In other words,
the doctrine of last clear chance means that even though a
person's own acts may have placed him in a position of peril, and
an injury results, the injured person is entitled to recovery. As the
doctrine is usually stated, a person who has the last clear chance
or opportunity of avoiding an accident, notwithstanding the
negligent acts of his opponent or that of a third person imputed to
the opponent is considered in law solely responsible for the
consequences of the accident. (Sangco, Torts and Damages, 4th
Ed., 1986, p. 165).
The practical import of the doctrine is that a negligent defendant is
held liable to a negligent plaintiff, or even to a plaintiff who has
been grossly negligent in placing himself in peril, if he, aware of the
plaintiffs peril, or according to some authorities, should have been
aware of it in the reasonable exercise of due case, had in fact an
opportunity later than that of the plaintiff to avoid an accident (57
Am. Jur., 2d, pp. 798-799).
In the recent case of Philippine Rabbit Bus Lines, Inc. v.
Intermediate Appellate Court, et al. (G.R. Nos. 66102-04, August
30, 1990), the Court citing the landmark decision held in the case
of Anuran, et al. v. Buno, et al. (123 Phil. 1073) ruled that the
principle of "last clear chance" applies "in a suit between the
owners and drivers of colliding vehicles. It does not arise where a
passenger demands responsibility from the carrier to enforce its
contractual obligations. For it would be inequitable to exempt the
negligent driver of the jeepney and its owners on the ground that
the other driver was likewise guilty of negligence."
Furthermore, "as between defendants: The doctrine cannot be
extended into the field of joint tortfeasors as a test of whether only
one of them should be held liable to the injured person by reason
of his discovery of the latter's peril, and it cannot be invoked as
between defendants concurrently negligent. As against third
persons, a negligent actor cannot defend by pleading that another
had negligently failed to take action which could have avoided the
injury." (57 Am. Jur. 2d, pp. 806-807).
All premises considered, the Court is convinced that the
respondent Court committed an error of law in applying the
doctrine of last clear chance as between the defendants, since the
case at bar is not a suit between the owners and drivers of the
colliding vehicles but a suit brought by the heirs of the deceased
passengers against both owners and drivers of the colliding
vehicles. Therefore, the respondent court erred in absolving the
owner and driver of the cargo truck from liability.
Pursuant to the new policy of this Court to grant an increased
death indemnity to the heirs of the deceased, their respective
awards of P30,000.00 are hereby increased to P50,000.00.
Page 195 of 205
ACCORDINGLY, the petition is GRANTED; the appealed judgment
and resolution of the Court of Appeals are hereby REVERSED and
SET ASIDE and the judgment of the lower court is REINSTATED
with the modification on the indemnity for death of each of the
victims which is hereby increased to P50,000.00 each. No
pronouncement as to costs.
SO ORDERED.

Page 196 of 205

THIRD DIVISION INSTANTANEOUSLY OR BY AVAILABLE MEANS. This doctrine
of last chance has no application to a case where a person is to act
[G.R. Nos. 79050-51. November 14, 1989.] instantaneously, and if the injury cannot be avoided by using all
means available after the peril is or should have been discovered.
PANTRANCO NORTH EXPRESS, INC., Petitioner, v. MARICAR
BASCOS BAESA, thru her personal guardian FRANCISCA O. 4. ID.; ID.; PROVISION OF R.A. NO. 4136 RE VEHICLE ENTERING
BASCOS, FE O. ICO, in her behalf and in behalf of her minor A THROUGH HIGHWAY OR A STOP INTERSECTION. Section 43
children, namely ERWIN, OLIVE, EDMUNDO and SHARON ICO, (c), Article III, Chapter IV of Republic Act No. 1436 cannot apply to
Respondents. case a bar where at the time of the accident, the jeepney had
already crossed the intersection.
Efren N. Ambrosio & Associates for petitioner PNEI.
5. ID.; ID.; NEGLIGENCE; BURDEN OF PROOF LIES ON THE
Emiliano S. Micu for Respondents. EMPLOYER. A finding of negligence on the part of the driver
establishes a presumption that the employer has been negligent
SYLLABUS and the latter has the burden of proof that it has exercised due
negligence not only in the selection of its employees but also in
1. CIVIL LAW; DAMAGES; LAST CLEAR CHANCE DOCTRINE; adequately supervising their work.
WHEN APPLICABLE. The doctrine of last clear chance applies
only in a situation where the defendant, having the last fair chance 6. ID.; ID.; FAILURE TO PRESENT EVIDENCE TO SUPPORT CLAIM
to avoid the impending harm and failed to do so, becomes liable for FOR DAMAGES. Plaintiffs failure to present documentary
all the consequences of the accident notwithstanding the prior evidence to support their claim for damages for loss of earning
negligence of the plaintiff. capacity of the deceased victim does not bar recovery of the
damages, if such loss may be based sufficiently on their
2. ID.; ID.; ID.; CONDITION TO MAKE DOCTRINE APPLICABLE. testimonies.
In order that the doctrine of last clear chance may be applied, it
must be shown that the person who allegedly had the last 7. ID.; ID.; INDEMNITY FIXED AT P30,000. The indemnity for
opportunity to avert the accident was aware of the existence of the the death of a person was fixed by this Court at (P30,000.00).
peril or with exercise of due care should have been aware of it.
DECISION
3. ID.; ID.; ID.; NOT APPLICABLE TO PERSON ACTING

Page 197 of 205

CORTES, J.:
In this Petition, Pantranco North Express Inc. (PANTRANCO), asks
the Court to review the decision of the Court of Appeals in CA-G.R.
No. 05494-95 which affirmed the decisions of the Court of First
Instance of Rosales, Pangasinan in Civil Case No. 561-R and Civil
Case No. 589-R wherein PANTRANCO was ordered to pay damages
and attorneys fees to herein private respondents.chanrobles
virtual lawlibrary
The pertinent fact are as follows:chanrob1es virtual 1aw library
At about 7:00 oclock in the morning of June 12, 1981, the spouses
Ceasar and Marilyn Baesa and their children Harold Jim,
Marcelino and Maricar, together with spouses David Ico and Fe O.
Ico with their son Erwin Ico and seven other persons, were aboard
a passenger jeepney on their way to a picnic at Malalam River,
Ilagan, Isabela, to celebrate the fifth wedding anniversary of Ceasar
and Marilyn Baesa.
The group, numbering fifteen (15) persons, rode in the passenger
jeepney driven by David Ico, who was also the registered owner
thereof. From Ilagan, Isabela, they proceeded to Barrio Capayacan
to deliver some viands to one Mrs. Bascos and thenceforth to San
Felipe, taking the highway going to Malalam River. Upon reaching
the highway, the jeepney turned right and proceeded to Malalam
River at a speed of about 20 kph. While they were proceeding
towards Malalam River, a speeding PANTRANCO bus from Aparri,
on its regular route to Manila, encroached on the jeepneys lane
while negotiating a curve, and collided with it.
As a result of the accident David Ico, spouses Ceasar Baesa and
Marilyn Baesa and their children, Harold Jim and Marcelino
Baesa, died while the rest of the passengers suffered injuries. The
jeepney was extensively damaged. After the accident the driver of
the PANTRANCO Bus, Ambrosio Ramirez, boarded a car and
proceeded to Santiago, Isabela. From that time on up to the
present, Ramirez has never been seen and has apparently
remained in hiding.
All the victims and/or their surviving heirs except herein private
respondents settled the case amicably under the "No Fault"
insurance coverage of PANTRANCO.
Maricar Baesa through her guardian Francisca O. Bascos and Fe
O. Ico for herself and for her minor children, filed separate actions
for damages arising from quasi-delict against PANTRANCO,
respectively docketed as Civil Case No. 561-R and 589-R of the
Court of First Instance of Pangasinan.
In its answer, PANTRANCO, aside from pointing to the late David
Icos alleged negligence as the proximate cause of the accident,
invoked the defense of due diligence in the selection and
supervision of its driver, Ambrosio
Ramirez.chanroblesvirtualawlibrary
On July 3, 1984, the CFI of Pangasinan rendered a decision
against PANTRANCO awarding the total amount of Two Million
Three Hundred Four Thousand Six Hundred Forty-Seven
(P2,304,647.00) as damages, plus 10% thereof as attorneys fees
Page 198 of 205
and costs to Maricar Baesa in Civil Case No. 561-R, and the total and Marcelino Baesa P30,000.00;
amount of Six Hundred Fifty Two Thousand Six Hundred Seventy-
Two Pesos (P652,672.00) as damages, plus 10% thereof as D) For the loss of earnings of Ceasar Baesa P630,000.00;
attorneys fees and costs to Fe Ico and her children in Civil Case
No. 589-R. On appeal, the cases were consolidated and the Court E) For the loss of earnings of Marilyn Bascos Baesa
of Appeals modified the decision of the trial court by ordering P375,000.00;
PANTRANCO to pay the total amount of One Million One Hundred
Eighty-Nine Thousand Nine Hundred Twenty Seven Pesos F) For the burial expenses of the deceased Ceasar and Marilyn
(P1,189,927.00) as damages, plus Twenty Thousand Pesos Baesa P41,200.00;
(P20,000.00) as attorneys fees to Maricar Baesa, and the total
amount of Three Hundred Forty-Four Thousand Pesos G) For hospitalization expenses of Maricar Baesa P3,727.00;
(P344,000.00) plus Ten Thousand Pesos (P10,000.00) as attorneys
fees to Fe Ico and her children, and to pay the costs in both cases. H) As moral damages P50,000.00;
The dispositive portion of the assailed decision reads as
follows:chanrob1es virtual 1aw library I) As attorneys fees P20,000.00;

WHEREFORE, the decision appealed from is hereby modified by II. The plaintiffs in Civil Case No. 589-R, the following
ordering the defendant PANTRANCO North Express, Inc. to damages:chanrob1es virtual 1aw library
pay:chanrob1es virtual 1aw library
A) As compensatory damages for the death of David Ico
I. The plaintiff in Civil Case No. 561-R, Maricar Bascos Baesa, the P30,000.00;
following damages:chanrob1es virtual 1aw library
B) For loss of earning capacity of David Ico P252,000.00;
A) As compensatory damages for the death of Ceasar Baesa
P30,000.00; C) As moral damages for the death of David Ico and the injury of Fe
Ico P30,000.00
B) As compensatory damages for the death of Marilyn Baesa
P30,000.00; D) As payment for the jeepney P20,000.00;

C) As compensatory damages for the death of Harold Jim Baesa E) For the hospitalization of Fe Ico P12,000.000;

Page 199 of 205

 the case of Ong v. Metropolitan Water District, 104 Phil. 397
F) And for attorneys fees P10,000.00; (1958), in this wise:chanrob1es virtual 1aw library

and to pay the costs in both cases. The doctrine of the last clear chance simply, means that the
negligence of a claimant does not preclude a recovery for the
The amount of P25,000 paid to Maricar Bascos Baesa, plaintiff in negligence of defendant where it appears that the latter, by
Civil Case No. 561-R, and the medical expenses in the sum of exercising reasonable care and prudence, might have avoided
P3,273.55, should be deducted from the award in her injurious consequences to claimant notwithstanding his
favor.chanrobles virtual lawlibrary negligence.

All the foregoing amounts herein awarded except the costs shall The doctrine applies only in a situation where the plaintiff was
earn interest at the legal rate from date of this decision until fully guilty of prior or antecedent negligence but the defendant, who had
paid. [CA Decision, pp. 14-15; Rollo, pp. 57-58.] the last fair chance to avoid the impending harm and failed to do
so, is made liable for all the consequences of the accident
PANTRANCO filed a motion for reconsideration of the Court of notwithstanding the prior negligence of the plaintiff [Picart v.
Appeals decision, but on June 26, 1987, it denied the same for Smith, 37 Phil. 809 (1918); Glan Peoples Lumber and Hardware,
lack of merit. PANTRANCO then filed the instant petition for Et. Al. v. Intermediate Appellate Court, Cecilia Alferez Vda. de
review. Calibo, Et Al., G.R. No. 70493, May 18, 1989]. The subsequent
I negligence of the defendant in failing to exercise ordinary care to
avoid injury to plaintiff becomes the immediate or proximate cause
of the accident which intervenes between the accident and the
Petitioner faults the Court of Appeals for not applying the doctrine more remote negligence of the plaintiff, thus making the defendant
of the "last clear chance" against the jeepney driver. Petitioner liable to the plaintiff [Picart v. Smith, supra].
claims that under the circumstances of the case, it was the driver
of the passenger jeepney who had the last clear chance to avoid the Generally, the last clear chance doctrine is invoked for the purpose
collision and was therefore negligent in failing to utilize with of making a defendant liable to a plaintiff who was guilty of prior or
reasonable care and competence his then existing opportunity to antecedent negligence, although it may also be raised as a defense
avoid the harm. to defeat claim for damages.chanrobles lawlibrary : rednad

The doctrine of the last clear chance was defined by this Court in To avoid liability for the negligence of its driver, petitioner claims

Page 200 of 205

that the original negligence of its driver was not the proximate
cause of the accident and that the sole proximate cause was the
supervening negligence of the jeepney driver David Ico in failing to
avoid the accident. It is petitioners position that even assuming
arguendo, that the bus encroached into the lane of the jeepney, the
driver of the latter could have swerved the jeepney towards the
spacious dirt shoulder on his right without danger to himself or his
passengers.
The above contention of petitioner is manifestly devoid of merit.
Contrary to the petitioners contention, the doctrine of "last clear
chance" finds no application in this case. For the doctrine to be
applicable, it is necessary to show that the person who allegedly
had the last opportunity to avert the accident was aware of the
existence of the peril or should, with exercise of due care, have
been aware of it. One cannot be expected to avoid an accident or
injury if he does not know or could not have known the existence
of the peril. In this case, there is nothing to show that the jeepney
driver David Ico knew of the impending danger. When he saw at a
distance that the approaching bus was encroaching on his lane, he
did not immediately swerve the jeepney to the dirt shoulder on his
right since he must have assumed that the bus driver will return
the bus to its own lane upon seeing the jeepney approaching from
the opposite direction. As held by this Court in the case of Vda. De
Bonifacio v. BLTB, G.R. No. L-26810, August 31, 1970, 34 SCRA
618, a motorist who is properly proceeding on his own side of the
highway is generally entitled to assume that an approaching
vehicle coming towards him on the wrong side, will return to his
proper lane of traffic. There was nothing to indicate to David Ico
that the bus could not return to its own lane or was prevented from
returning to the proper lane by anything beyond the control of its
driver. Leo Marantan, an alternate driver of the Pantranco bus who
was seated beside the driver Ramirez at the time of the accident,
testified that Ramirez had no choice but to swerve the steering
wheel to the left and encroach on the jeepneys lane because there
was a steep precipice on the right [CA Decision, p. 2; Rollo, p. 45].
However, this is belied by the evidence on record which clearly
shows that there was enough space to swerve the bus back to its
own lane without any danger [CA Decision, p. 7; Rollo, p. 50].
Moreover, both the trial court and the Court of Appeals found that
at the time of the accident the Pantranco bus was speeding
towards Manila [CA Decision, p. 2; Rollo, p. 45]. By the time David
Ico must have realized that the bus was not returning to its own
lane, it was already too late to swerve the jeepney to his right to
prevent an accident. The speed at which the approaching bus was
running prevented David Ico from swerving the jeepney to the right
shoulder of the road in time to avoid the collision. Thus, even
assuming that the jeepney driver perceived the danger a few
seconds before the actual collision, he had no opportunity to avoid
it. This Court has held that the last clear chance doctrine "can
never apply where the party charged is required to act
instantaneously, and if the injury cannot be avoided by the
application of all means at hand after the peril is or should have
been discovered" [Ong v. Metropolitan Water District,
supra].chanrobles.com : virtual law library
Petitioner likewise insists that David Ico was negligent in failing to
observe Section 43 (c), Article III Chapter IV of Republic Act No.
Page 201 of 205
4136 * which provides that the driver of a vehicle entering a
through highway or a stop intersection shall yield the right of way
to all vehicles approaching in either direction on such through
highway.
Petitioners misplaced reliance on the aforesaid law is readily
apparent in this case. The cited law itself provides that it applies
only to vehicles entering a through highway or a stop intersection.
At the time of the accident, the jeepney had already crossed the
intersection and was on its way to Malalam River. Petitioner itself
cited Fe Icos testimony that the accident occurred after the
jeepney had travelled a distance of about two (2) meters from the
point of intersection [Petition p. 10; Rollo, p. 27]. In fact, even the
witness for the petitioner, Leo Marantan, testified that both
vehicles were coming from opposite directions [CA Decision, p. 7;
Rollo, p. 50], clearly indicating that the jeepney had already
crossed the intersection.
Considering the foregoing, the Court finds that the negligence of
petitioners driver in encroaching into the lane of the incoming
jeepney and in failing to return the bus to its own lane immediately
upon seeing the jeepney coming from the opposite direction was
the sole and proximate cause of the accident without which the
collision would not have occurred. There was no supervening or
intervening negligence on the part of the jeepney driver which
would have made the prior negligence of petitioners driver a mere
remote cause of the accident.
II
On the issue of its liability as an employer, petitioner claims that it
had observed the diligence of a good father of a family to prevent
damage, conformably to the last paragraph of Article 2180 of the
Civil Code. Petitioner adduced evidence to show that in hiring its
drivers, the latter are required to have professional drivers license
and police clearance. The drivers must also pass written
examinations, interviews and practical driving tests, and are
required to undergo a six-month training period. Rodrigo San
Pedro, petitioners Training Coordinator, testified on petitioners
policy of conducting regular and continuing training programs and
safety seminars for its drivers, conductors, inspectors and
supervisors at a frequency rate of at least two (2) seminars a
month.
On this point, the Court quotes with approval the following
findings of the trial court which was adopted by the Court of
Appeals in its challenged decision:chanrob1es virtual 1aw library
When an injury is caused by the negligence of an employee, there
instantly arises a presumption that the employer has been
negligent either in the selection of his employees or in the
supervision over their acts. Although this presumption is only a
disputable presumption which could be overcome by proof of
diligence of a good father of a family, this Court believes that the
evidence submitted by the defendant to show that it exercised the
diligence of a good father of a family in the case of Ramirez, as a
company driver is far from sufficient. No support evidence has
been adduced. The professional drivers license of Ramirez has not
been produced. There is no proof that he is between 25 to 38 years
old. There is also no proof as to his educational attainment, his
Page 202 of 205
age, his weight and the fact that he is married or not. Neither are
the result of the written test, psychological and physical test,
among other tests, have been submitted in evidence [sic]. His NBI
or police clearances and clearances from previous employment
were not marked in evidence. No evidence was presented that
Ramirez actually and really attended the seminars. Vital evidence
should have been the certificate of attendance or certificate of
participation or evidence of such participation like a logbook signed
by the trainees when they attended the seminars. If such records
are not available, the testimony of the classmates that Ramirez was
their classmate in said seminar (should have been presented) [CA
Decision, pp. 8-9; Rollo, pp. 51-52].chanrobles law library
Petitioner contends that the fact that Ambrosio Ramirez was
employed and remained as its driver only means that he
underwent the same rigid selection process and was subjected to
the same strict supervision imposed by petitioner on all applicants
and employees. It is argued by the petitioner that unless proven
otherwise, it is presumed that petitioner observed its usual
recruitment procedure and company polices on safety and
efficiency [Petition, p. 20; Rollo, p. 37].
The Court finds the above contention unmeritorious.
The finding of negligence on the part of its driver Ambrosio Ramirez
gave rise to the presumption of negligence on the part of petitioner
and the burden of proving that it exercised due diligence not only
in the selection of its employees but also in adequately supervising
their work rests with the petitioner [Lilius v. Manila Railroad
Company, 59 Phil. 758 (1934); Umali v. Bacani, G.R. No. L-40570,
June 30, 1976, 69 SCRA 623]. Contrary to petitioners claim, there
is no presumption that the usual recruitment procedures and
safety standards were observed. The mere issuance of rules and
regulations and the formulation of various company policies on
safety, without showing that they are being complied with, are not
sufficient to exempt petitioner from liability arising from the
negligence of its employee. It is incumbent upon petitioner to show
that in recruiting and employing the erring driver, the recruitment
procedures and company policies on efficiency and safety were
followed. Petitioner failed to do this. Hence, the Court finds no
cogent reason to disturb the finding of both the trial court and the
Court of Appeals that the evidence presented by the petitioner,
which consists mainly of the uncorroborated testimony of its
Training Coordinator, is insufficient to overcome the presumption
of negligence against petitioner.cralawnad
III
On the question of damages, petitioner claims that the Court of
Appeals erred in fixing the damages for the loss of earning capacity
of the deceased victims. Petitioner assails respondent courts
findings because no documentary evidence in support thereof,
such as income tax returns, pay-rolls, pay slips or invoices
obtained in the usual course of business, were presented [Petition,
p. 22; Rollo, p. 39]. Petitioner argues that the "bare and self-serving
testimonies of the wife of the deceased David Ico and the mother of
the deceased Marilyn Baesa . . . have no probative value to sustain
in law the Court of Appeals conclusion on the respective earnings
of the deceased victims." [Petition, pp. 21-22; Rollo, pp. 38-39.] It is
petitioners contention that the evidence presented by the private
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respondent does not meet the requirements of clear and
satisfactory evidence to prove actual and compensatory damages.
The Court finds that the Court of Appeals committed no reversible
error in fixing the amount of damages for the loss of earning
capacity of the deceased victims. While it is true that private
respondents should have presented documentary evidence to
support their claim for damages for loss of earning capacity of the
deceased victims, the absence thereof does not necessarily bar the
recovery of the damages in question. The testimony of Fe Ico and
Francisca Bascos as to the earning capacity of David Ico, and the
spouses Baesa, respectively, are sufficient to establish a basis from
which the court can make a fair and reasonable estimate of the
damages for the loss of earning capacity of the three deceased
victims. Moreover, in fixing the damages for loss of earning
capacity of a deceased victim, the court can consider the nature of
his occupation, his educational attainment and the state of his
health at the time of death.
In the instant case, David Ico was thirty eight (38) years old at the
time of his death in 1981 and was driving his own passenger
jeepney. The spouses Ceasar and Marilyn Baesa were both thirty
(30) years old at the time of their death. Ceasar Baesa was a
commerce degree holder and the proprietor of the Cauayan Press,
printer of the Cauayan Valley Newspaper and the Valley Times at
Cauayan, Isabela. Marilyn Baesa graduated as a nurse in 1976
and at the time of her death, was the company nurse, personnel
manager, treasurer and cashier of the Ilagan Press at Ilagan,
Isabela. Respondent court duly considered these factors, together
with the uncontradicted testimonies of Fe Ico and Francisca
Bascos, in fixing the amount of damages for the loss of earning
capacity of David Ico and the spouses
Baesa.chanrobles.com:cralaw:red
However, it should be pointed out that the Court of Appeals
committed error in fixing the compensatory damages for the death
of Harold Jim Baesa and Marcelino Baesa. Respondent court
awarded to plaintiff (private respondent) Maricar Baesa Thirty
Thousand Pesos (P30,000.00) as "compensatory damages for the
death of Harold Jim Baesa and Marcelino Baesa." [CA Decision, p.
14; Rollo, 57]. In other words, the Court of Appeals awarded only
Fifteen Thousand Pesos (P15,000.00) as indemnity for the death of
Harold Jim Baesa and another Fifteen Thousand Pesos
(P15,000.00) for the death of Marcelino Baesa. This is clearly
erroneous. In the case of People v. de la Fuente, G.R. Nos. 63251-
52, December 29, 1983, 126 SCRA 518, the indemnity for the
death of a person was fixed by this Court at Thirty Thousand Pesos
(P30,000.00). Plaintiff Maricar Baesa should therefore be awarded
Sixty Thousand Pesos (P60,000.00) as indemnity for the death of
her brothers, Harold Jim Baesa and Marcelino Baesa or Thirty
Thousand Pesos (P30,000.00) for the death of each brother.
The other items of damages awarded by respondent court which
were not challenged by the petitioner are hereby affirmed.
WHEREFORE, premises considered, the petition is DENIED, and
the decision of respondent Court of Appeals is hereby AFFIRMED
with the modification that the amount of compensatory damages
for the death of Harold Jim Baesa and Marcelino Baesa are
increased to Thirty Thousand Pesos (P30,000.00) each.chanrobles
Page 204 of 205
law library

SO ORDERED.

Page 205 of 205