Areola vs CA Facts 1.

Prudential Guarantee cancelled Areolas personal accident insurance on the grounds that the latter failed to pay his premiums 7 months after issuing the policy. Areola was supposed to pay the total amount of P1,609.6 which included the premium of P1,!70.00, documentary stamp of P110." and "# premium ta$ of P"9.!0. %he statement of account had a stipulation not considering it a receipt. &t also reminded the customer to as' for a receipt after payment. %here was also a stipulation calling for a demand for a pro(isional receipt after payment to an agent. A pro(isional receipt was sent to petitioner telling him that the pro(isional receipt would )e confirmed )y an official one. %he company then cancelled the policy for non*payment of premiums. ". After )eing surprised, Areola confronted a company agent and demanded an official receipt. %he latter told him that it was a mista'e, )ut ne(er ga(e him an official receipt. Areola sent a letter demanding that he )e reinstated or he would file for damages if his demand was not met. %he company then told him that his payments werent in full yet. %he company replied to Areola )y telling him that there was reason to )elie(e that no payment has )een made since no official receipt was issued. %he company then told him that they would still hold him under the policy. %he company then confirmed that he paid the premium and that they would e$tend the policy )y one year. +. %here)y, the company offered to reinstate same policy it had pre(iously cancelled and e(en proposed to e$tend its lifetime on finding that the cancellation was erroneous and that the premiums were paid in full )y petitioner*insured )ut were not remitted )y the company,s )ranch manager, -r. -alapit. !. .owe(er, they were too late for Areola already filed an action for )reach of contract in the trial court. . %he companys defense lay in rectifying its omission/ hence, there was no )reach of contract. 6. %he court ruled in fa(or of Areola and as'ed Prudential to pay " 0,000 pesos in moral and e$emplary damages. %he court held that the company

was in )ad faith in cancelling the policy. .ad the insured met an accident at that time, he wouldnt )e co(ered )y the policy. 7. 0espondent appealed to 1A. 1A ruled in fa(or of respondent on the grounds that it was not moti(ated )y negligence, malice or )ad faith in cancelling su)2ect policy. 0ather, the cancellation of the insurance policy was )ased on what the e$isting records showed. %he court e(en added that the errant manager who didnt remit the profits was forced to resign. Areola then filed for a petition in the 3upreme 1ourt. Issue 1. 456 the erroneous act of cancelling su)2ect insurance policy entitle petitioner*insured to payment of damages7 ". 456 the su)se8uent act of reinstating the wrongfully cancelled insurance policy )y respondent insurance company, in an effort to rectify such error, o)literate whate(er lia)ility for damages it may ha(e to )ear, thus a)sol(ing it7 Ruling 1. 9es. 6o. Petition granted. Petitioner alleged that the managers misappropriation of his premium payments is the pro$imate cause of the cancellation of the insurance policy. 3u)se8uent reinstatement could not possi)ly a)sol(e respondent insurance company from lia)ility, due to the )reach of contract. .e contended that damage had already )een done. Prudential a(erred that the e8uita)le relief sought )y petitioner*insured was granted to the filing of the complaint, petitioner*insured is left without a cause of action. 0einstatement effecti(ely restored petitioner*insured to all his rights under the policy. %he court held that -alapit,s fraudulent act of misappropriating the premiums paid )y petitioner*insured is directly imputa)le to respondent insurance company. A corporation, such as respondent insurance company, acts solely thru its employees. %he latters, acts are considered as its own. -alapit

represented its interest and acted in its )ehalf. .is act of recei(ing the premiums collected is well within the pro(ince of his authority. %hus, his receipt of said premiums is receipt )y pri(ate respondent insurance company who, )y pro(ision of law is )ound )y the acts of its agent. Article 1910 thus reads: %he principal must comply with all the o)ligations which the agent may ha(e contracted within the scope of his authority. As for any o)ligation wherein the agent has e$ceeded his power, the principal is not )ound e$cept when he ratifies it e$pressly or tacitly.

-alapit,s failure to remit the premiums he recei(ed cannot constitute a defense for pri(ate respondent insurance company/ no e$oneration from lia)ility could result therefrom. %he fact that pri(ate respondent insurance company was itself defrauded due to the anomalies that too' place does not free the same from its o)ligation to petitioner Areola. As held in Prudential ;an' (. 1ourt of Appeals: <A )an' is lia)le for wrongful acts of its officers done in the interests of the )an' or in the course of dealings of the officers scope in of their their representati(e capacity )ut not for acts outside the

authority. Accordingly, a )an'ing corporation is lia)le to innocent third persons where the representation is made in the course of its )usiness )y an agent acting within the general scope of his authority authority and e(en though the agent is secretly a)using his person.= Prudential is lia)le for damages for the fraudulent acts committed )y -alapit. 0einstating the insurance policy cannot o)literate the in2ury inflicted. A contract of insurance creates reciprocal o)ligations for )oth insurer and insured. 0eciprocal o)ligations are those which arise from the same cause and in which each party is )oth a de)tor and a creditor of the other, such that

attempting to perpetrate a fraud upon his principal or some other

the o)ligation of one is dependent upon the o)ligation of the other. ". >ue to the agreement to enter into a contract of insurance where Prudential promised to e$tend protection to petitioner*insured against the ris' insured, there was a de)tor creditor relationship )etween the two parties. ?nder Article 1191, the in2ured party is gi(en a choice )etween fulfillment or rescission of the o)ligation in case one of the o)ligors fails to comply with what is incum)ent upon him. .owe(er, said article entitles the in2ured party to payment of damages, regardless of whether he demands fulfillment or rescission of the o)ligation. %he damages would )e nominal )ecause the insurance company too' steps to rectify the contract . %here was also no actual or su)stantial damage inflicted. Nominal damages are @recoverable where a legal right is technically violated and must be vindicated against an invasion that has produced no actual present loss of any kind, or where there has been a breach of contract and no substantial injury or actual damages whatsoever have been or can be shown.=

icart vs !mith Facts 1. 5n the 1arlatan ;ridge in Aa ?nion. Picart was riding on his pony o(er said )ridge. ;efore he had gotten half way across, 3mith approached from the opposite direction in an automo)ile. As the defendant neared the )ridge he saw a horseman on it and )lew his horn to gi(e warning of his approach. .e continued his course and after he had ta'en the )ridge he ga(e two more successi(e )lasts, as it appeared to him that the man on horse)ac' )efore him was not o)ser(ing the rule of the road. ". Picart saw the automo)ile coming and heard the warning signals. .owe(er, )eing pertur)ed )y the no(elty of the apparition or the rapidity of the approach, he pulled the pony closely up against the railing on the right side of the )ridge instead of going to the left. .e says that the reason he did this was that he thought he did not ha(e sufficient time to get o(er to the other side. +. As the automo)ile approached, 3mith guided it toward his left, that )eing the proper side of the road for the machine. &n so doing the defendant assumed that the horseman would mo(e to the other side. 3eeing that the pony was apparently 8uiet, the defendant, instead of (eering to the right while yet some distance away or slowing down, continued to approach directly toward the horse without diminution of speed. !. 4hen he had gotten 8uite near, there )eing then no possi)ility of the horse getting across to the other side, the defendant 8uic'ly turned his car sufficiently to the right to escape hitting the horse/ )ut in so doing the automo)ile passed in such close pro$imity to the animal that it )ecame frightened and turned its )ody across the )ridge, got hit )y the car and the lim) was )ro'en. . %he horse fell and its rider was thrown off with some (iolenceAs a result of its in2uries the horse died. %he plaintiff recei(ed contusions which caused temporary unconsciousness and re8uired medical attention for se(eral days. 6. Picart has appealed from a 2udgment of the 1B& of Aa ?nion a)sol(ing 3mith from lia)ility

Issue 1. 456 3mith was guilty of negligence so as to gi(e rise to a ci(il o)ligation to repair the damage done Ruling 1. 9es, 3mith was negligent. %he test by which to determine the e"istence of negligence in a particular case may )e stated as follows: #id the defendant in doing the alleged negligent act use that person would have used in the same situation$ If not, then he is guilty of negligence% %he e$istence of negligence in a gi(en case is not determined )y reference to the personal 2udgment of the actor in the situation )efore him. %he law considers what would )e rec'less, )lameworthy, or negligent in the man of ordinary intelligence and prudence and determines lia)ility )y that. %he 8uestion as to what would constitute the conduct of a prudent man in a gi(en situation must of course )e always determined in the light of human e"perience and in view of the facts involved in the particular case. Could a prudent man, in the case under consideration, foresee harm as a result of the course actually pursued$ If so, it was the duty of the actor to take precautions of harm, to guard against by that harm% of the Reasonable foresight followed ignoring

suggestion born of this prevision, is always necessary before negligence can be held to e"ist% 3tated in these terms, the proper criterion for determining the e$istence of negligence in a gi(en case is this: 1onduct is said to )e negligent when a prudent man in the position of the tortfeasor would ha(e foreseen that an effect harmful to another was sufficiently pro)a)le to warrant his foregoing conduct or guarding against its conse8uences. Applying this test to the conduct of the defendant in the present case we thin' that negligence is clearly esta)lished. A prudent man, placed in the position of the defendant, would in our opinion, ha(e recogniCed that the course which he was pursuing was fraught with ris', and would therefore

ha(e foreseen harm to the horse and the rider as reasona)le conse8uence of that course. ?nder these circumstances the law imposed on the 3mith the duty to guard against the threatened harm. #octrine of &ast Clear Chance &t 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. ;ut as we ha(e already stated, 3mith was also negligent/ and in such case the pro)lem always is to disco(er which agent is immediately and directly responsi)le. &t will )e 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. ?nder 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 conse'uences, without reference to the prior negligence of the other party%

&ayugan vs IAC Facts 1. Pedro %. Aayugan filed an action for damages against Godofredo &sidro, alleging that while at ;aret)et, ;aga)ag, 6ue(a DiCcaya, the Plaintiff and a companion were repairing the tire of their cargo truc' which was par'ed along the right side of the 6ational .ighway/ that defendant,s truc', dri(en rec'lessly )y >aniel 3errano )umped the plaintiff, that as a result, plaintiff was in2ured and hospitaliCed where he incurred and will incur more e$penses as he recuperates from said in2uries/ Plaintiff,s right leg was amputated and that )ecause of said in2uries he would )e depri(ed of a lifetime income. ". %o free themsel(es from lia)ility, defendants &sidro EownerF and 3errano Edri(erF a(erred that he 'nows his responsi)ilities as a dri(er and further contends that it was the negligence of plaintiff that was the pro$imate cause of the accident. %hey alleged that plaintiff par'ed his truc' in a manner which occupied a part of the highway and he did not e(en put a warning sign. +. 3u)se8uently, a third*party complaint was filed )y the defendant against his insurer, the %ra(ellers -ulti &ndemnity 1orporation/ that the third* party plaintiff E&sidroF, without admitting his lia)ility to the plaintiff, claimed that the third*party defendant E%ra(ellersF is lia)le to the former for contri)ution, indemnity and su)rogation )y (irtue of their insurance contract which co(ers the insurer,s lia)ility for damages arising from death, )odily in2uries and damage to property. %he &nsurance company argued that it is only lia)le for the amount agreed in the policy and the complaint was premature since no claim was made to it. !. %he 0%1 ruled in fa(or of the Petitioners. %he 1A re(ersed the decision, stating that it is the petitioners who were negligent since they did not e$ercise caution )y putting warning signs that their truc' is par' on the shoulder of the highway. Issue 1. 456 the >octrine of 0es &psa Ao8uitur is applica)le in this case **** 65 ". 456 &sidro is lia)le as employer of 3errano **** 9G3

Ruling 1. 6o, it is not applica)le. (he #octrine of Res Ipsa &o'uitur states that <4here the thing which causes in2ury is shown to )e under the management of the defendant, and the accident is such as in the ordinary course of things does not happen if those who ha(e the management used proper care, it affords reasona)le e(idence, in the a)sence of an e$planation )y the defendant, that the accident arose from want of care.= %he doctrine of Res ipsa loquitur as a rule of e(idence is peculiar to the law of negligence which recogniCes that prima facie negligence may )e esta)lished without direct proof and furnishes a su)stitute for specific proof of negligence. %he doctrine is not a rule of su)stanti(e law )ut merely a mode of proof or a mere procedural con(enience. %he rule, when applica)le to the facts and circumstances of a particular case, is not intended to and does not dispense with the re8uirement of proof of culpa)le negligence on the part of the party charged. &t merely determines and regulates what shall )e prima facie e(idence thereof and facilitates the )urden of plaintiff of pro(ing a )reach of the duty of due care. (he doctrine can be invoked when and only when, under the circumstances in(ol(ed, direct evidence is absent and not readily available% .ence, it has generally )een held that the presumption of inference arising from the doctrine cannot be availed of, or is overcome, a. where plaintiff has 'nowledge and testifies or presents e(idence as to the specific act of negligence which is the cause of the in2ury complained of ). where there is direct e(idence as to the precise cause of the accident and all the facts and circumstances attendant on the occurrence clearly appear Binally, once the actual cause of in2ury is esta)lished )eyond contro(ersy, whether )y the plaintiff or )y the defendant, no presumptions will )e in(ol(ed and the doctrine )ecomes inapplica)le when the circumstances ha(e )een so completely eludicated that no inference of defendant,s lia)ility can reasona)ly )e made, whate(er the source of the e(idence, as in this case.

". 9es, &sidro is lia)le as 3erranos employer. %he 31 held that the 1A erroneously appreciated the e(idence. &t was pro(en that the petitioner

placed a warning sign within + to ! meters from their truc' in the form of a lighted 'erosene lamp. %he e$istence of this warning sings was corro)orated )y 3errano, respondent,s dri(er, and further stated that when he saw a par'ed truc', he 'ept on stepping on the )ra'e pedal )ut it did not function. the truc' of petitioner. %he pri(ate respondent is sued under Art. "176 in relation to Art. "1H0, paragraph , of the 1i(il 1ode. &n the latter, when an in2ury is caused )y the negligence of a ser(ant or employee there instantly arises a presumption of law that there was negligence on the part of the master or employer either in the selection of the ser(ant or employee, or in super(ision o(er him after selection, or )oth. 3uch presumption is 2uris tantum and not 2uris et de 2ure and conse8uently, may )e re)utted. &f follows necessarily that if the employer shows to the satisfaction of the court that in the selection and in the super(ision he has e$ercised the care and diligence of a good father of a family, the presumption is o(ercome and he is relie(ed from lia)ility. &n disclaiming lia)ility for the incident, the pri(ate respondent stresses that the negligence of his employee has already )een ade8uately o(ercome )y his dri(er,s statement that he 'new his responsi)ilities as a dri(er and that the truc' owner used to instruct him to )e careful in dri(ing. 4e do not agree with the pri(ate respondent in his su)mission. &n the first place, it is clear that the dri(er did not 'now his responsi)ilities )ecause he apparently did not chec' his (ehicle )efore he too' it on the road. &f he did he could ha(e disco(ered earlier that the )ra'e fluid pipe on the right was cut, and could ha(e repaired it and thus the accident could ha(e )een a(oided. -o(eo(er, to our mind, the fact that the pri(ate respondent used to instruct his dri(er to )e careful in his dri(ing, that the dri(er was licensed, and the fact that he had no record of any accident, as found )y the respondent court, are not sufficient to destroy the finding of negligence of the 0egional %rial %hus despite this warning signs, the truc' rec'lessly dri(en )y 3errano and owned )y 0espondent &sidro )umped

1ourt gi(en the facts esta)lished at the trial. %he pri(ate respondent or his mechanic, who must )e competent, should ha(e conducted a thorough inspection of his (ehicle )efore allowing his dri(er to dri(e it. &n the light of the circumstances o)taining in the case, we hold that &sidro failed to pro(e that the diligence of a good father of a family in the super(ision of his employees which would e$culpate him from solidary lia)ility with his dri(er to the petitioner. ;ut e(en if we concede that the diligence of a good father of a family was o)ser(ed )y &sidro in the super(ision of his dri(er, there is not an iota of e(idence on record of the o)ser(ance )y &sidro of the same 8uantum of diligence in the super(ision of his mechanic, if any, who would )e directly in charge in maintaining the road worthiness of his I&sidro,sJ truc'. ;ut that is not all. %here is paucity of proof that &sidro e$ercised the diligence of a good father of a family in the selection of his dri(er, >aniel 3errano, as well as in the selection of his mechanic, if any, in order to insure the safe operation of his truc' and thus pre(ent damage to others. Accordingly, the responsi)ility of &sidro as employer treated in Article "1H0, paragraph , of the 1i(il 1ode has not ceased.

Additional Notes) &ndeed, it is an elementary rule in the re(iew of decisions of the 1ourt of Appeals that its findings of fact are entitled to great respect and will not ordinarily )e distur)ed )y this 1ourt. 3urely there are esta)lished e$ceptions K when the 1ourt should re(iew and rectify the findings of fact of the lower court, such as: 1. when the conclusion is a finding grounded entirely on speculation, surmise, or con2ecture ". the inference made is manifestly mista'en +. there is gra(e a)use of discretion !. the 2udgment is )ased on misapprehension of facts . the 1ourt of Appeals went )eyond the issues of the case if the findings are contrary to the admission of )oth the appellant and the appellee 6. the findings of the 1ourt of Appeals are contrary to those of the trial court 7. the said findings of fact are conclusions without citation of specific

e(idence on which they are )ased H. the facts set forth in the petition as well as in the petitioner,s main and reply )riefs are not disputed )y the respondents/ 9. when the findings of fact of the 1ourt of Appeals are premised on the a)sence of e(idence and are contradicted on record.

N* vs CA and Facts

ujol

1. 3ome )efore "+ 5cto)er 1990, Aily Pu2ol opened a <com)o account= with P6; -andaluyong which com)ined a sa(ings and current account in Pu2ols ;usiness a'a Pu2ol %rading. ?nder the com)o account, chec's drawn in her chec'ing account could )e charged with her sa(ings account should the amount in her current account would )e insufficient to co(er the (alue of her chec's. ". &n "+ 5cto)er 1990, Pu2ol issued a P+0,000 chec' in fa(or of her daughter*in*law. 4hen presented for payment, the chec' was dishonored allegedly )ecause Pu2ol had insufficient funds in her sa(ings account. %he same thing happened on "! 5cto)er 1990, when Pu2ol issued a chec' for her daughter. 5n ! 6o(em)er 1990, P6; realiCed its mista'e and accepted and honored the second chec' and recredited the P" 0 de)ited as penalty to Pu2ols account. +. Pu2ol filed a case for moral and e$emplary damages for dishonoring her account despite sufficiency of her funds in the )an'. !. &n its answer, P6; admitted that Pu2ol opened a <com)o account= )ut 2ustified its dishonoring Pu2ols chec's )ecause her account was not yet operational due to lac' of documentary re8uirements ie 1ert. of ;usiness 0egistration, Permit to 5perate ;usiness, &> card, 1om)ination agreement. P6; further alleged that despite the lac' of these documents, it still put the <com)o flag= in her account out its generosity. . %he 0%1 awarded Pu2ol P100,000 moral damages, and P"0,000 Attorneys fees. &t found that Pu2ol suffered mental anguish and )esmirched reputation as a result of the dishonor of her chec's, and that )eing a former mem)er of the 2udiciary who was e$pected to )e the em)odiment of integrity and good )eha(ior, she was su)2ected to em)arrassment due to the erroneous dishonor of her chec's )y P6;. %he 1A affirmed the decision of the 0%1. 6. .ence this petition. Issue 1. &s the P6; estopped from denying the e$istence of the com)o account

and the fact that it was operational7 ". Are the awards inordinately unconsciona)le7 Ruling 1. 9es. P6; is estopped. .er pass)oo' had the words <1om)o >eposit Plan= without any 8ualification. Althout P6; ga(e e(idence that some documents were lac'ing, it failed to show that Pu2ol 'new that the account was not yet operational. ;ecause of the words on her pass)oo', Pu2ol was 2ustified in thin'ing that her accounts were co(ered )y the arrangement. 4hen the chec'sE%he first chec' was to refloat " (essels that san' which )elonged to the daughter in law. %he second chec' was to pay for round trip tic'ets to the ?3.F were dishonored, Pu2ol was su)2ected to humiliation )ecause she was confronted )y her daughter in law and her son*in*law would no longer hold her in high*esteem. ". 6o. (he !upreme Court has ruled before that a bank is under obligation to treat the accounts of its depositors with meticulous care whether such account consists only of a few hundred pesos or of millions of pesos% Responsibility arising from negligence in the performance of every kind of obligation is demandable% While PNB's negligence in this case may not have been attended with malice and bad faith, nevertheless, it caused serious anxiety, and humiliation to Pujol for which she is entitled to recover reasonable moral damages. >amages are not intended to enrich the complainant at the e$pense of the defendant, and there is no hard*and* fast rule in the determination of what would )e a fair amount of moral damages since each case must )e go(erned )y its own peculiar facts. %he yardstic' should )e that it is not palpa)ly and scandalously e$cessi(e. &n this case, the award of P100,000.00 is reasona)le considering the reputation and social standing of Pu2ol Iformer 2udgeJ and applying our rulings in similar cases in(ol(ing )an's, negligence with regard to the accounts of their depositors. %he award of attorney,s fees in the amount of P"0,000.00 is proper for Pu2ol was compelled to litigate to protect her interest.

N* vs Facts

ike

1. 0espondent opened a dollar sa(ings account with petitioner )an' sometime in 1991. ". 0espondent alleged that he 'ept his pass)oo' under loc' and 'ey )efore he left for Lapan on -arch 1H, 199+ where he wor'ed as a gay entertainer and that when he returned on April 19, 199+, he disco(ered that the pass)oo' was missing along with se(eral other (alua)les and that he immediately reported to the police which resulted in the arrest and prosecution of -r. Loy -anuel >a(asol. +. 0espondent a(erred that >a(asol made " unauthoriCed withdrawals from his dollar sa(ings account with the petitioner )an' amounting to M7 00. !. 0espondent went to the )an' and complained (er)ally and demanded the return of the M7 00 on the ground that he ne(er authoriCed anyone to withdraw from his account and that the signatures on the withdrawal slip were clearly forgeries and alleged that the )an' did not e$ercise due diligence in handling the account. . Petitioner )an' claims that they did e$ercise due diligence and that the respondent e(en wrote them on -ay 6, 199+ re8uesting to withdraw the remaining )alance and nothing else and a(erred that on -arch 1 , 199+, respondent went to the )an' together with a Loy >a(asol to withdraw M"000 and that respondent informed the ADP that he is lea(ing for Lapan and made (er)al instruction to honor all transactions and withdrawals made )y his talent manager and choreographer Loy >a(asol who shall present pre*signed withdrawal slips )earing the respondents signature. Petitioner )an' also claims that on April 19, 199+, a certain Losephine ;almaceda claiming to )e the respondents sister went to the )an' to inform them of the theft of the pass)oo' since allegedly, the respondent was still in Lapan and that the -ay 6 letter also contained a promise made )y the respondent not to hold the )an' and its officers responsi)le for the withdrawals. 6. %1 ruled in fa(or of the respondent on the grounds that the )an' did not e$ercise due diligence. 7. -otion for reconsideration was denied. 5n appeal, 1A affirmed A1s

decision )ut changed the amount of damages. H. .ence this petition. Issue 1. 456 the petitioner e$ercised due diligence in handling the respondents account Ruling 1. 6o, negligence of )an'ing institutions should ne(er )e countenanced. %he negligence here lies in the lac'adaisical attitude e$hi)ited )y employees of petitioner P6; in their treatment of respondent Pi'e,s ?3 >ollar 3a(ings Account that resulted in the unauthoriCed withdrawal of M7, 00.00. 6e(ertheless, though its employees may )e the ones negligent, a )an',s lia)ility as an o)ligor is not merely (icarious )ut primary, as )an's are e$pected to e$ercise the highest degree of diligence in the selection and super(ision of their employees, and ha(ing such o)ligation, this 1ourt cannot ignore the circumstances surrounding the case at )ar K how the employees of petitioner P6; turned their heads, nay, closed their eyes to the suspicious circumstances enfolding the two withdrawals su)2ect of the case at )ar. &t may e(en )e said that they went out of their ways to disregard standard operating procedures formulated to ensure the security of each and e(ery account that they are handling. Petitioner P6; does not deny that the withdrawal slips used were in )reach of standard operating procedures of )an's in the ordinary and usual course of )an'ing operations. +ith banks, the degree of diligence re'uired, contrary to the position of petitioner N*, is more than that of a good father of a family considering that the business of banking is imbued with public interest due to the nature of their functions% (he stability of banks largely depends on the confidence of the people in the honesty and efficiency of banks% (hus, the law imposes on banks a high degree of obligation to treat the accounts of its depositors with meticulous care, always having in mind the fiduciary nature of banking. 3ection " of 0epu)lic Act 6o. H791, which too' effect on 1+ Lune

"000, ma'es a categorical declaration that the 3tate recogniCes the @fiduciary nature of )an'ing that re8uires high standards of integrity and performance.@ %hough passed long after the unauthoriCed withdrawals in this case, the afore8uoted pro(ision is a statutory affirmation of 3upreme 1ourt decisions already in esse at the time of such withdrawals. 4e is under elucidated in

the 1990 case of Simex International, Inc. v. Court of Appeals, that @the )an' o)ligation to treat the accounts of its depositors with meticulous care, always ha(ing in mind the fiduciary nature of their relationship.@ 3pecifically, in culpa contractual or )reach of contract, as here, moral damages are reco(era)le only if the defendant has acted fraudulently or in )ad faith, or is found guilty of gross negligence amounting to )ad faith, or in wanton disregard of his contractual o)ligations. Derily, the )reach must )e wanton, rec'less, malicious, or in )ad faith, oppressi(e or a)usi(e. %here is no reason to distur) the trial court,s finding of petitioner )an',s employees, negligence in their treatment of respondent Pi'e,s account. &n the case on hand, the 1ourt of Appeals sustained, and rightly so, that an award of moral damages is warranted. Bor, as found )y said appellate court, citing the case of Prudential ;an' (. 1ourt of Appeals, @the )an',s negligence is a result of lac' of due care and caution re8uired of managers and employees of a firm engaged in so sensiti(e and demanding )usiness, as )an'ing, hence, the award of P"0,000.00 as moral damages, is proper. %he award of e$emplary damages is also proper as a warning to petitioner P6; and all concerned not to rec'lessly disregard their o)ligation to e$ercise the highest and strictest diligence in ser(ing their depositors.

!amson vs CA Facts 1. %he su)2ect matter of this case is a commercial unit at the -adrigal ;uilding, located at 1laro -. 0ecto A(enue, 3ta. 1ruC, -anila. %he )uilding is owned )y 3usana 0ealty 1orporation and the su)2ect premises was leased to pri(ate respondent Angel 3antos. %he lessee,s ha)erdashery store, 3antos N 3ons, &nc., occupied the premises for almost twenty I"0J years on a yearly )asis. %hus, the lease contract in force )etween the parties in the year 19H+ pro(ided that the term of the lease shall )e one I1J year, starting on August 1, 19H+ until Luly +1, 19H!. ". 5n Lune "H, 19H!, lessor informed lessee that they will not renew the lease which will e$pire on Luly +1, 199!.

3.

6onetheless, pri(ate respondent,s lease contract was e$tended until >ecem)er +1, 19H!. Pri(ate respondent also continued to occupy the leased premises )eyond the e$tended term.

4.

5n Be)ruary , 19H , pri(ate respondent recei(ed a letter from the lessor, through its 0eal Gstate Accountant Lane B. ;artolome, informing him of the increase in rentals, retroacti(e to Lanuary 19H , pending renewal of his contract until the arrival of Ms. Ma. Rosa Madrigal Ione of the owners of 3usana 0ealtyJ.

. Bour

days

later

or

on

Be)ruary

9,

19H ,

petitioner

-anolo 3amson saw pri(ate respondent in the latter,s house and offered to )uy the store of 3antos N 3ons and his right to lease the su)2ect premises Petitioner was ad(ised to return after a wee'. 6. 1ounter proposal included <The lease contract etween Santos and Sons, Inc. and Madrigal was impliedl! renewed. It will renewed this monthl! when Tan!a Madrigal arrives .= e formall!

7.

3ale concluded. All went well for a few months. &n Luly 19H ,

howe(er,

petitioner

recei(ed

notice

from

3usana

0ealty,

addressed to 3antos N 3ons, &nc., directing the latter to (acate the leased premises on or )efore Luly 1 , 19H . Pri(ate respondent failed to renew his lease o(er the premises and petitioner was forced to (acate the same on Luly 16, 19H . H. Petitioner then filed an action for damages against pri(ate respondent. .e imputed fraud and )ad faith against pri(ate respondent when the latter stated in his letter*proposal that his lease contract with 3usana 0ealty has )een impliedly renewed. Petitioner claimed that this misrepresentation induced him to purchase the store of 3antos N 3ons and the leasehold right of pri(ate respondent. 9. %1 ruled in fa(or of petitioner on the ground that pri(ate respondent e$ercised )ad faith. 5n appeal, 1A modified the award gi(en )y the %1 remo(ing the moral and e$emplary damages since it was found that pri(ate respondent did not e$ercise )ad faith. 10. .ence this petition.

Issue 1. 456 pri(ate respondent Angel 3antos committed fraud or )ad faith in representing to petitioner that his contract of lease o(er the su)2ect premises has )een impliedly renewed )y 3usana 0ealty

Ruling 1. 6o, pri(ate respondent did not commit )ad faith.

Bad faith is essentially a state of mind affirmati(ely operating with furti(e

design or with some moti(e of ill*will. &t does not simply connote )ad 2udgment or negligence. &t imports a dishonest purpose or some moral o)li8uity and conscious doing of wrong. ;ad faith is thus synonymous with fraud and in(ol(es a design to mislead or decei(e another, not prompted )y an honest mista'e as to one,s rights or duties, )ut )y some interested or sinister moti(e.

&n contracts, the 'ind of fraud that will (itiate consent is one where, through insidious words or machinations of one of the contracting parties, the other is induced to enter into a contract which, without them, he would not ha(e agreed to. %his is 'nown as dolo causante or causal fraud which is )asically a deception employed )y one party prior to or simultaneous to the contract in order to secure the consent of the other.

After carefully e$amining the records, we sustain the finding of pu)lic respondent 1ourt of Appeals that pri(ate respondent was neither guilty of fraud nor )ad faith in claiming that there was implied renewal of his contract of lease with 3usana 0ealty. %he records will )ear that the original contract of lease )etween the lessor 3usana 0ealty and the lessee pri(ate respondent was for a period of one year, commencing on August 1, 19H+ until Luly +1, 19H!. 3u)se8uently, howe(er, pri(ate respondent,s lease was e$tended until >ecem)er +1, 19H!. At this point, it was clear that the lessor had no intention to renew the lease contract of pri(ate respondent for another year.

&ndeed, petitioner had e(ery opportunity to (erify the status of the lease contract of pri(ate respondent with 3usana 0ealty. As held )y this 1ourt in the case of Caram, "r. v. #aureta, the rule caveat emptor re8uires the purchaser to )e aware of the supposed title of the (endor and he who )uys without chec'ing the (endor,s title ta'es all the ris's and losses conse8uent to such failure. &n the case at )ench, the means of (erifying for himself the status of pri(ate respondent,s lease contract with 3usana 0ealty was open to

petitioner. 6onetheless, no effort was e$erted )y petitioner to confirm the status of the su)2ect lease right. .e cannot now claim that he has )een decei(ed.

&n sum, we hold that under the facts pro(ed, pri(ate respondent cannot )e held guilty of fraud or )ad faith when he entered into the su)2ect contract with petitioner. 1ausal fraud or )ad faith on the part of one of the contracting parties which allegedly induced the other to enter into a contract must )e pro(ed )y clear and con(incing e(idence. %his petitioner failed to do.

#io'uino vs &aureano

Facts 1. Attorney Pedro >io8uino is the owner of a car. .e went to the office of the -D5, -as)ate, to register the same where he met the defendant Bederico Aaureano, a patrol officer of said -D5 office. >io8uino re8uested Aaureano to introduce him to one of the cler's in the -D5 5ffice, who could facilitate the registration of his car and the re8uest was attended to. Aaureano rode on the car of Atty. >io8uino on his way to the P.1. ;arrac's at -as)ate. ". 4hile a)out to reach their destination, the car dri(en )y plaintiff,s dri(er and with Aaureano as the sole passenger was stoned )y some ,mischie(ous )oys,, and its windshield was )ro'en. Aaureano chased the )oys and he was a)le to catch one of them. +. %he plaintiff and Aaureano with the )oy returned to the P.1. )arrac's and the father of the )oy was called, )ut no satisfactory arrangements were made a)out the damage to the windshield. &t was li'ewise noted in the decision now on appeal: @%he defendant Bederico Aaureano refused to file any charges against the )oy and his parents )ecause he thought that the stone*throwing was merely accidental and that it was due to force ma2eure. !. 3o he did not want to ta'e any action and after delaying the settlement, after perhaps consulting a lawyer, the defendant Bederico Aaureano refused to pay the windshield himself and challenged that the case )e )rought to court for 2udicial ad2udication. . %here is no 8uestion that the plaintiff tried to con(ince the defendant Bederico Aaureano 2ust to pay the (alue of the windshield and he e(en came to the e$tent of as'ing the wife to con(ince her hus)and to settle the matter amica)ly )ut the defendant Bederico Aaureano refused to

ma'e any settlement, clinging to the )elief that he could not )e held lia)le )ecause a minor child threw a stone accidentally on the windshield and therefore, the same was due to force ma2eure.@

Issue 1. 456 Bederico Aaureano may )e held lia)le for the payment of the windshield of Atty >io8uino7

Ruling 1. 6o. %he law )eing what it is, such a )elief on the part of defendant Bederico Aaureano was 2ustified. %he e$press language of Art% ,,-. of the present Civil Code which is a restatement of Art. 110 the assumption of ris', compels such a conclusion. ". &t reads thus: @/"cept in cases e"pressly specified by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation re'uires the assumption of risk, no person shall be responsible for those events which could not be, foreseen, or which, though foreseen were inevitable.@ +. G(en under the old 1i(il 1ode then, as stressed )y us in the first decision dating )ac' to 190H, in an opinion )y Lustice -apa, the rule was well* settled that in the a)sence of a legal pro(ision or an e$press co(enant, @no one should )e held to account for fortuitous cases.@ &ts )asis, as Lustice -oreland stressed, is the 0oman law principle ma2or casus est, cui humana infirmitas resistere non potest. Authorities of repute are in agreement, more specifically concerning an o)ligation arising from contract @that some e$traordinary circumstance independent of the will of the o)ligor, or of his employees, is an essential element of a caso fortuito.@ of the 5ld 1i(il 1ode, e$cept for the addition of the nature of an o)ligation re8uiring

!. &f it could )e shown that such indeed was the case, lia)ility is ruled out. %here is no re8uirement of @diligence )eyond what human care and foresight can pro(ide.@ %he error committed )y the lower court in holding defendant Bederico Aaureano lia)le appears to )e thus o)(ious. &ts own findings of fact repel the motion that he should )e made to respond in damages to the plaintiff for the )ro'en windshield. . 4hat happened was clearly unforeseen. &t was a fortuitous e(ent resulting in a loss which must )e )orne )y the owner of the car. &t was misled, apparently, )y the inclusion of the e$emption from the operation of such a pro(ision of a party assuming the ris', considering the nature of the o)ligation underta'en. 6. A more careful analysis would ha(e led the lower court to a different and correct interpretation. %he (ery wording of the law dispels any dou)t that what is therein contemplated is the resulting lia)ility e(en if caused )y a fortuitous e(ent where the party charged may )e considered as ha(ing assumed the ris' incident in the nature of the o)ligation to )e performed. 7. &t would )e an affront, not only to the logic )ut to the realities of the situation, if in the light of what transpired, as found )y the lower court, defendant Bederico Aaureano could )e held as )ound to assume a ris' of this nature. %here was no such o)ligation on his part. H. %he decision of the lower court of 6o(em)er ", 196 insofar as it orders

defendant Bederico Aaureano to pay plaintiff the amount of P+0,000.00 as damages plus the payment of costs, is here)y re(ersed. &t is affirmed insofar as it dismissed the case against the other two defendants, Luanita Aaureano and Aida de Aaureano, and declared that no moral damages should )e awarded the parties.

&a 0allorca vs CA

Bacts: 1. Plaintiffs hus)and and wife, together with their three minor children, namely, -ilagros, 0a8uel and Be )oarded the Pam)usco ;us 6o. + " )earing plate %P? 6o. 7 7 owned and operated )y Aa-allorca at 3an Bernando, Pampanga, )ound for Anao, -e$ico, Pampanga. At the time, they were carrying with them four pieces of )aggages containing their personal )elonging. %he conductorIhalf*)rother of ;eltranJ of the )us issued three tic'ets co(ering the full fares of the plaintiff and their eldest child, -ilagros. 6o fare was charged on 0a8uel and Be, since )oth were )elow the height at which fare is charged in accordance with the appellant,s rules and regulations. ". After a)out an hour,s trip and after ;eltrans family got off, -ariano ;eltran went )ac' to the )us to get the )aggage he had left under one of the seats near the door while the rest was waiting on a shaded area, he did not notice that 0a8uel was following him. +. 4hile said -ariano ;eltran was on the running )oard of the )us waiting for the conductor to hand him his )ayong, the )us, whose motor was not shut off while unloading, suddenly started mo(ing forward, e(idently to resume its trip, notwithstanding the fact that the conductor has not gi(en the dri(er the customary signal to start, since said conductor was still attending to the )aggage left )ehind )y -ariano ;eltran. !. &ncidentally, when the )us was again placed into a complete stop, it had tra(elled a)out ten meters from the point where the plaintiffs had gotten off. 3ensing that the )us was again in motion, -ariano ;eltran immediately 2umped from the running )oard without getting his )ayong from the conductor. .e landed on the side of the road almost in front of the shaded place where he left his wife and children. . At that precise time, he saw people )eginning to gather around the )ody of a child lying prostrate on the ground, her s'ull crushed, and without life. %he child was none other than his daughter 0a8uel, who was run

o(er )y the )us in which she rode earlier together with her parents. &ssue 1. 4hether or not Aa -allorca is lia)le for the negligence of its dri(er and for the death of ;eltrans daughter. 0uling 1. Aa -allorca is lia)le for damages. &t was pointed out that e(en though, -. ;eltrans family already alighted from the )us, the fact that ;eltran went )ac' to the )us to retrie(e his )ayong, the relation of carrier* passenger relation )etween Aa -allorca and ;eltran still su)sist. ". &t has )een recogniCed as a rule that the relation of carrier and passenger does not cease at the moment the passenger alights from the carrier,s (ehicle at a place selected )y the carrier at the point of destination, )ut continues until the passenger has had a reasona)le time or a reasona)le opportunity to lea(e the carrier,s premises. +. And, what is a reasona)le time or a reasona)le delay within this rule is to )e determined from all the circumstances. &n the circumstances, it cannot )e claimed that the carrier,s agent had e$ercised the @utmost diligence@ of a@ (ery cautious person@ re8uired )y Article 17 o)ligation to transport safely its passengers. !. &n the first place, the dri(er, although stopping the )us, ne(ertheless did not put off the engine. 3econdly, he started to run the )us e(en )efore the )us conductor ga(e him the signal to go and while the latter was still unloading part of the )aggages of the passengers -ariano ;eltran and family. %he presence of said passengers near the )us was not unreasona)le and they are, therefore, to )e considered still as passengers of the carrier, entitled to the protection under their contract of carriage. . ;ut e(en assuming arguendo that the contract of carriage has already terminated, herein petitioner can )e held lia)le for the negligence of its dri(er, as ruled )y the 1ourt of Appeals, pursuant to Article "1H0 of the 1i(il 1ode. Paragraph 7 of the complaint, which reads %hat aside from the aforesaid )reach of contract, the death of 0a8uel ;eltran, plaintiffs, of the 1i(il 1ode to )e o)ser(ed )y a common carrier in the discharge of its

daughter, was caused )y the negligence and want of e$ercise of the utmost diligence of a (ery cautious person on the part of the defendants and their agent, necessary to transport plaintiffs and their daughter safely as far as human care and foresight can pro(ide in the operation of their (ehicle. %he dri(er did not e$ercise utmost diligence re8uired of him/ hence, petitioner must )e ad2udged peculiarly lia)le for the death of the child 0a8uel ;eltran

A& vs CA

Facts 1. 3amson is a licensed a(iator employed )y the Philippine Airlines. .e was partnered with another pilot ;ustamante. 3amson had complained on pre(ious occasions to PAA that ;ustamante was slow in reacting and was ha(ing lapses of poor 2udgment during flights. PAA howe(er still allowed ;ustamante to continue flying. ". 5n a certain flight, ;ustamante o(ershot the airfield while landing the plane at the >aet airport. 3amson tried to control the plane, )ut did not succeed. %he plane crash*landed )eyond the runway into a mangro(e. 3amson hit his head on the windshield due to the impact of the crash. .e suffered head in2uries such as )rain concussions and wounds on his forehead. %o ma'e matters worse, plaintiff was discharged from employment. 3amson then filed an action for damages against PAA. Issue 1. 4hether or not PAA is lia)le for damages. 1eld 1. %he 1ourt held that PAA is lia)le for damages. %here was gross negligence on the part of PAA )ecause despite the 'nowledge of ;ustamantes condition the still allowed him to continue flying. ;ustamante had a tumor in his nasopharyn$ which affected his (ision. As pro(ided in Articles 17+", 17++, and 17 6 of the 611, PAA )eing a common carrier should ha(e e$ercised e$traordinary diligence in the super(ision of their employees and utmost diligence in )ringing passengers to their destination. %he court affirmed the decision of the trial court in awarding damages. Pri(ate respondent is entitled to P19H,000.00 as unearned income or compulsory damages, PH0,000.00 for moral damages, P"0,000 as attorneys fees and P ,000 as e$penses for litigation. %his claim of the plaintiff for loss

and impairment of earning capacity is )ased on the pro(ision of Art. ""0 , 611. G(en from the standpoint of the petitioner that there is employer* employee relationship )etween it and pri(ate respondent arising from the contract of employment, pri(ate respondent is still entitled to moral damages in (iew of the finding of )ad faith or malice, applying the pro(isions of Art. """0 of the 611.

hilippine National Construction Corporation vs CA Facts 1. PA3?>G15, sugarcane transporter, re8uested permission from %oll 0egulatory ;oard I%0;J to pass through 61AGO as the national )ridges along A)acan*Angeles and 3apang -aragul (ia -agalang, Pampanga were hea(ily damaged )y the eruption of -t. Pinatu)o in 1991. P611, franchisee that operates and maintains 61AGO, was furnished with the copy of the re8uest to comment on. ". %hereafter, %0; and PA3?>G15 entered into a -emorandum Agreement wherein P611 was also furnished with a copy. %he latter was allowed to enter and pass through the 6AGO pro(ided they a)ide to the terms and conditions agreed upon. +. At around ":+0 a.m. on Lanuary "+, 199+, Ale$ 3endin, the P611 security super(isor, and his co*employees Gduardo >ucusin and Dicente Pascual were patrolling Pm. 7" going north of the 6AGO and saw a pile of sugarcane in the middle portion. 3undin, >ucusin and Pascual re8uested PA3?>G15 to clear the area as it was haCardous for the tra(elers. !. .owe(er, Gngineer 5scar -allari, PA3?>G15,s e8uipment super(isor and transportation superintendent, told them that no e8uipment operator was a(aila)le as it was still (ery early. %hereafter, 3endin and company went )ac' to Pm. 7" and manned the traffic. . At around !:00 a.m., fi(eI JPA3?>G15 men arri(ed, and started clearing the highway of the sugarcane. %hey stac'ed the sugarcane at the side of the road lea(ing a few flattened sugarcanes scattered on the road. As the )ul' of the sugarcanes had )een piled and transferred along the roadside, 3endin thought there was no longer a need to man the traffic. 6. As dawn was already approaching, 3endin and company remo(ed the lighted cans and lane di(iders. 3endin went to his office in 3ta. 0ita, Guiguinto, ;ulacan, and made the necessary report. 7. At a)out 6:+0 a.m., 0odrigo 3. ArnaiC was dri(ing his two*door %oyota 1orolla with plate num)er BAG 961 along the 6AGO at a)out 6 'ilometers per hour. .e was with his sister 0egina Aatagan, and his

friend 0icardo Generalao on their way to ;aguio to attend their grandmother,s first death anni(ersary. H. As the (ehicle ran o(er the scattered sugarcane, it flew out of control and turned turtle se(eral times. %he accident threw the car a)out fifteen paces away from the scattered sugarcane. Aatagan sustained in2uries and ArnaiC car was totally wrec'ed.

ssue 1. 4hether or not there was gross negligence on the part of Pasudeco and P611 and the latter )e made to pay for damages.

Ruling 1. Pasudeco and P611 are 2ointly and solidarily lia)le. %here are three elements of a 8uasi*delict: aJ damages suffered )y the plaintiff/ )J fault or negligence of the defendant, or some other person for whose acts he must respond/ and cJ the connection of cause and effect )etween the fault or negligence of the defendant and the damages incurred )y the plaintiff. Article "176 of the 6ew 1i(il 1ode pro(ides: +hoever by act or omission causes damage to

another, there being fault or negligence, is obliged to pay for the damage done% !uch fault or negligence, if there is no pre2e"isting contractual relation between the parties, is called a 'uasi2delict and is governed by the provisions of this Chapter% 6egligence is the omission to do something which a reasona)le man, guided )y those considerations which ordinarily regulate the conduct of human affairs, would do, or the doing of something which a prudent and reasona)le man would do. &t also refers to the conduct which creates undue ris' of harm to another, the failure to o)ser(e that degree of care, precaution and (igilance that the circumstance 2ustly demand, where)y that other person

suffers in2ury. %he 1ourt declared the test )y which to determine the e$istence of negligence in Picart (. 3mith (iC : &n the case at )ar, it is clear that the petitioner failed to e$ercise the re8uisite diligence in maintaining the 6AGO safe for motorists. %he petitioner should ha(e foreseen that the wet condition of the highway would endanger motorists passing )y at night or in the wee hours of the morning. %he petitioner cannot escape lia)ility under the -5A )etween PA3?>G15 and %0;, since respondent Aatagan was not a party thereto. 4e agree with the following ruling of the 1A: ;oth defendants, appellant PA3?>G15 and appellee P611, should )e held lia)le. P611, in charge of the maintenance of the e$pressway, has )een negligent in the performance of its duties. %he o)ligation of P611 should not )e relegated to, )y (irtue of a pri(ate agreement, to other parties. P611 declared the area free from o)struction since there were no piles of sugarcane, )ut e(idence shows there were still pieces of sugarcane stal's left flattened )y motorists.

%here must )e an o)ser(ance of that degree of care, precaution, and (igilance which the situation demands. %here should ha(e )een sufficient warning de(ices considering that there were scattered sugarcane stal's still left along the tollway. %he records show, and as admitted )y the parties, that ArnaiC,s car ran o(er scattered sugarcanes spilled from a hauler truc'. -oreo(er, the -5A refers to accidents or damages to the toll facilities. &t does not co(er damages to property or in2uries caused to motorists on the 6AGO who are not pri(ies to the -5A .PA3?>G15,s negligence in transporting sugarcanes without proper harnessQstraps, and that of P611 in remo(ing the emergency warning de(ices, were two successi(e negligent acts which were the direct and pro$imate cause of Aatagan,s in2uries.

As such, PA3?>G15 and P611 are 2ointly and se(erally lia)le.