SECOND DIVISION

L.G. FOODS CORPORATION and

VICTORINO
GABOR,
VicePresident and General Manager,
Petitioners,
- versus -

G.R. No. 158995

Present:
PUNO, J., Chairperson,
SANDOVAL-GUTIERREZ,
CORONA,
AZCUNA, and
GARCIA, JJ.

HON.
PHILADELFA
B.
PAGAPONG-AGRAVIADOR, in
her capacity as Presiding Judge of
Regional Trial Court, Branch 43,
Promulgated:
Bacolod
City,
and
SPS.
FLORENTINO and THERESA
September 26, 2006
VALLEJERA,
Respondents.
x------------------------------------------------------------------------------------x

DECISION
GARCIA, J.:

Assailed and sought to be set aside in this petition for review on certiorari is
the Decision[1] dated April 25, 2003 of the Court of Appeals (CA), as reiterated in
its Resolution of July 10, 2003,[2] in CA-G.R. SP No. 67600, affirming an earlier
Order of the Regional Trial Court (RTC) of Bacolod City, Branch 43, which denied
the petitioners motion to dismiss in Civil Case No. 99-10845, an action for
damages arising from a vehicular accident thereat instituted by the herein private
respondents - the spouses Florentino Vallejera and Theresa Vallejera - against the
petitioners.
The antecedent facts may be briefly stated as follows:

On February 26, 1996, Charles Vallereja, a 7-year old son of the spouses
Florentino Vallejera and Theresa Vallejera, was hit by a Ford Fiera van owned by
the petitioners and driven at the time by their employee, Vincent Norman Yeneza y
Ferrer. Charles died as a result of the accident.
In time, an Information for Reckless Imprudence Resulting to Homicide was
filed against the driver before the Municipal Trial Court in Cities
(MTCC), Bacolod City, docketed as Criminal Case No. 67787, entitled People of
the Philippines v. Vincent Norman Yeneza.
Unfortunately, before the trial could be concluded, the accused driver
committed suicide, evidently bothered by conscience and remorse. On account
thereof, the MTCC, in its order of September 30, 1998, dismissed the criminal
case.
On June 23, 1999, in the RTC of Bacolod City, the spouses Vallejera filed a
complaint[3] for damages against the petitioners as employers of the deceased
driver, basically alleging that as such employers, they failed to exercise due
diligence in the selection and supervision of their employees. Thereat docketed as
Civil Case No. 99-10845, the complaint was raffled to Branch 43 of the court.
In their Answer with Compulsory Counterclaim,[4] the petitioners as
defendants denied liability for the death of the Vallejeras 7-year old son, claiming
that they had exercised the required due diligence in the selection and supervision
of their employees, including the deceased driver. They thus prayed in their
Answer for the dismissal of the complaint for lack of cause of action on the part of
the Vallejera couple.

During pre-trial, the defendant petitioners insisted that their dismissal prayer
be resolved. Hence, the trial court required them to file within ten days a
memorandum of authorities supportive of their position.
Instead, however, of the required memorandum of authorities, the defendant
petitioners filed a Motion to Dismiss, principally arguing that the complaint is
basically a claim for subsidiary liability against an employer under the provision
of Article 103[5] of the Revised Penal Code. Prescinding therefrom, they contend
that there must first be a judgment of conviction against their driver as a
condition sine qua non to hold them liable. Ergo, since the driver died during the
pendency of the criminal action, the sine qua non condition for their subsidiary
liability was not fulfilled, hence the of lack of cause of action on the part of the
plaintiffs. They further argue that since the plaintiffs did not make a reservation to
institute a separate action for damages when the criminal case was filed, the
damage suit in question is thereby deemed instituted with the criminal action.
which was already dismissed.
In an Order dated September 4, 2001,[6] the trial court denied the motion to
dismiss for lack of merit and set the case for pre-trial. With their motion for
reconsideration having been denied by the same court in its subsequent
order[7] of September 26, 2001, the petitioners then went on certiorari to the CA
in CA-G.R. SP No. 67600, imputing grave abuse of discretion on the part of the
trial judge in refusing to dismiss the basic complaint for damages in Civil Case No.
99-10845.
In the herein assailed decision[8] dated April 25, 2003, the CA denied the
petition and upheld the trial court. Partly says the CA in its challenged issuance:
xxx
xxx
xxx
It is clear that the complaint neither represents nor implies that the
responsibility charged was the petitioners subsidiary liability under Art.

103, Revised Penal Code. As pointed out [by the trial court] in the Order
of September 4, 2001, the complaint does not even allege the basic elements for
such a liability, like the conviction of the accused employee and his insolvency.
Truly enough, a civil action to enforce subsidiary liability separate and distinct
from the criminal action is even unnecessary.
xxx

xxx

xxx

Specifically, Civil Case No. 99-10845 exacts responsibility for fault or

negligence
under
Art.
2176, Civil
Code, which
is
entirely separate and distinct from the civil liability arising from negligence under
the Revised Penal Code. Verily, therefore, the liability under Art. 2180, Civil
Code, is direct and immediate, and not conditioned upon prior recourse against
the negligent employee or prior showing of the latters insolvency. (Underscoring
in the original.)

In time, the petitioners moved for a reconsideration but their motion was
denied by the CA in its resolution [9] of July 10, 2003. Hence, the petitioners
present recourse on their submission that the appellate court committed reversible
error in upholding the trial courts denial of their motion to dismiss.
We DENY.
As the Court sees it, the sole issue for resolution is whether the spouses
Vallejeras cause of action in Civil Case No. 99-10845 is founded on Article 103 of
the Revised Penal Code, as maintained by the petitioners, or derived from Article
2180[10] of the Civil Code, as ruled by the two courts below.
It thus behooves us to examine the allegations of the complaint for damages
in Civil Case No. 99-10845. That complaint alleged, inter alia, as follows:
xxx

xxx

xxx

3.
That defendant [LG Food Corporation] is the registered owner of a
Ford Fiera Van with Plate No. NMS 881 and employer sometime February of
1996 of one Vincent Norman Yeneza y Ferrer, a salesman of said corporation;

4.
That sometime February 26, 1996 at around 2:00 P.M. at Rosario
St., Bacolod City, the minor son of said plaintiffs [now respondents], Charles
Vallejera, 7 years old, was hit and bumped by above-described vehicle then driven
by said employee, Vincent Norman Yeneza y Ferrer;
5.
That the mishap was due to the gross fault and negligence of
defendants employee, who drove said vehicle, recklessly, negligently and at a
high speed without regard to traffic condition and safety of other road users and
likewise to the fault and negligence of the owner employer, herein defendants LG
Food Corporation who failed to exercise due diligence in the selection and
supervision of his employee, Vincent Norman Yeneza y Ferrer;
6.
That as a result of said incident, plaintiffs son suffered multiple
body injuries which led to his untimely demise on that very day;
7.
That a criminal case was filed against the defendants employee,
docketed as Criminal Case No. 67787, (earlier filed as Crim. Case No. 96-17570
before RTC) before MTC-Branch III, entitled People v. Yeneza for Reckless
Imprudence resulting to Homicide, but the same was dismissed because pending
litigation, then remorse-stricken [accused] committed suicide;
xxx
xxx
xxx
8.
That the injuries and complications as well as the resultant death
suffered by the late minor Charles Vallejera were due to the negligence and
imprudence of defendants employee;
9.
That defendant LG Foods Corporation is civilly liable for the
negligence/imprudence of its employee since it failed to exercise the necessary
diligence required of a good father of the family in the selection and
supervision of his employee, Vincent Norman Yeneza y Ferrer which
diligence if exercised, would have prevented said incident. (Bracketed words
and emphasis ours.)

Nothing in the foregoing allegations suggests, even remotely, that the herein
petitioners are being made to account for their subsidiary liability under Article
103 of the Revised Penal Code. As correctly pointed out by the trial court in its
order of September 4, 2001 denying the petitioners Motion to Dismiss, the
complaint did not even aver the basic elements for the subsidiary liability of an
employer under Article 103 of the Revised Penal Code, such as the prior
conviction of the driver in the criminal case filed against him nor his insolvency.

Admittedly, the complaint did not explicitly state that plaintiff

Vallejeras were suing the defendant petitioners for damages based on quasi-delict.
Clear it is, however, from the allegations of the complaint that quasi-delict was
their choice of remedy against the petitioners. To stress, the plaintiff spouses
alleged in their complaint gross fault and negligence on the part of the driver and
the failure of the petitioners, as employers, to exercise due diligence in the
selection and supervision of their employees. The spouses further alleged that the
petitioners are civilly liable for the negligence/imprudence of their driver since
they failed to exercise the necessary diligence required of a good father of the
family in the selection and supervision of their employees, which diligence, if
exercised, could have prevented the vehicular accident that resulted to the death of
their 7-year old son.
Section 2, Rule 2, of the 1997 Rules of Civil Procedure defines cause of
action as the act or omission by which a party violates the right of another. Such
act or omission gives rise to an obligation which may come from law,
contracts, quasi contracts, delicts or quasi-delicts.[11]
Corollarily, an act or omission causing damage to another may give rise to
two separate civil liabilities on the part of the offender, i.e., 1) civil liability ex
delicto;[12] and 2) independent civil liabilities, such as those (a) not arising from an
act or omission complained of as felony (e.g., culpa contractual or obligations
arising from law;[13] the intentional torts;[14] and culpa aquiliana[15]); or (b) where
the injured party is granted a right to file an action independent and distinct from
the criminal action.[16] Either of these two possible liabilities may be enforced
against the offender.[17]
Stated otherwise, victims of negligence or their heirs have a choice between
an action to enforce the civil liability arising from culpa criminal under Article 100
of the Revised Penal Code, and an action for quasi-delict (culpa aquiliana) under

Articles 2176 to 2194 of the Civil Code. If, as here, the action chosen is for quasidelict, the plaintiff may hold the employer liable for the negligent act of its
employee, subject to the employers defense of exercise of the diligence of a good
father of the family. On the other hand, if the action chosen is for culpa
criminal, the plaintiff can hold the employer subsidiarily liable only upon proof
of prior conviction of its employee.[18]
Article 1161[19] of the Civil Code provides that civil obligation arising from
criminal offenses shall be governed by penal laws subject to the provision of
Article 2177[20]and of the pertinent provision of Chapter 2, Preliminary Title on
Human Relation, and of Title XVIII of this Book, regulating damages. Plainly,
Article 2177 provides for the alternative remedies the plaintiff may choose from in
case the obligation has the possibility of arising indirectly from the delict/crime or
directly from quasi-delict/tort. The choice is with the plaintiff who makes known
his cause of action in his initiatory pleading or complaint, [21] and not with the
defendant who can not ask for the dismissal of the plaintiffs cause of action or
lack of it based on the defendants perception that the plaintiff should have opted to
file a claim under Article 103 of the Revised Penal Code.
Under Article 2180 of the Civil Code, the liability of the employer is direct
or immediate. It is not conditioned upon prior recourse against the negligent
employee and a prior showing of insolvency of such employee.[22]
Here, the complaint sufficiently alleged that the death of the couples
minor son was caused by the negligent act of the petitioners driver; and that
the petitioners themselves were civilly liable for the negligence of their driver for
failing to exercise the necessary diligence required of a good father of the family
in the selection and supervision of [their] employee, the driver, which diligence, if
exercised, would have prevented said accident.

Had the respondent spouses elected to sue the petitioners based on

Article 103 of the Revised Penal
Code, they would have
alleged
that
the guilt of the driver had been proven beyond reasonable doubt; that such
accused driver is insolvent; that it is the subsidiary liability of the defendant
petitioners as employers to pay for the damage done by their employee (driver)
based on the principle that every person criminally liable is also civilly liable.
[23]
Since there was no conviction in the criminal case against the driver, precisely
because death intervened prior to the termination of the criminal proceedings, the
spouses recourse was, therefore, to sue the petitioners for their direct and primary
liability based on quasi-delict.
Besides, it is worthy to note that the petitioners, in their Answer with
Compulsory Counter-Claim,[24] repeatedly made mention of Article 2180 of the
Civil Code and anchored their defense on their allegation that they had exercised
due diligence in the selection and supervision of [their] employees. The Court
views this defense as an admission that indeed the petitioners acknowledged the
private respondents cause of action as one for quasi-delict under Article 2180 of
the Civil Code.
All told, Civil Case No. 99-10845 is a negligence suit brought under
Article 2176 - Civil Code to recover damages primarily from the petitioners as
employers responsible for their negligent driver pursuant to Article 2180 of
the Civil Code. 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. Thus, the employer is liable for damages caused by his employees and
household helpers acting within the scope of their assigned tasks, even though the
former is not engaged in any business or industry.
Citing Maniago v. CA,[25] petitioner would argue that Civil Case No. 9910845 should have been dismissed for failure of the respondent spouses to make a

reservation to institute a separate civil action for damages when the criminal case
against the driver was filed.
The argument is specious.
To start with, the petitioners reliance on Maniago is obviously misplaced.
There, the civil case was filed while the criminal case against the employee was
still pending. Here, the criminal case against the employee driver was prematurely
terminated due to his death. Precisely, Civil Case No. 99-10845 was filed by the
respondent spouses because no remedy can be obtained by them against the
petitioners with the dismissal of the criminal case against their driver during the
pendency thereof.
The circumstance that no reservation to institute a separate civil action for
damages was made when the criminal case was filed is of no moment for the
simple reason that the criminal case was dismissed without any pronouncement
having been made therein. In reality, therefor, it is as if there was no criminal case
to speak of in the first place. And for the petitioners to insist for the conviction of
their driver as a condition sine qua non to hold them liable for damages is to ask
for the impossible.
IN VIEW WHEREOF, the instant petition is DENIED for lack of merit.
Costs against the petitioners.
SO ORDERED.

CANCIO C. GARCIA

Associate Justice

WE CONCUR:

REYNATO S. PUNO
Associate Justice
Chairperson

ANGELINA SANDOVAL-GUTIERREZ
Associate Justice

RENATO C. CORONA
Associate Justice

ADOLFO S. AZCUNA
Associate Justice

AT T E S TAT I O N
I attest that the conclusions in the above decision were reached in
consultation before the case was assigned to the writer of the opinion of the Courts
Division.

REYNATO S. PUNO
Associate Justice
Chairperson, Second Division

C E R T I F I C AT I O N
Pursuant to Article VIII, Section 13 of the Constitution, and the Division
Chairperson's Attestation, it is hereby certified that the conclusions in the above
decision were reached in consultation before the case was assigned to the writer of
the opinion of the Court.
ARTEMIO V. PANGANIBAN
Chief Justice

[1]

[2]
[3]
[4]
[5]

[6]
[7]
[8]
[9]
[10]

Penned by Associate Justice Lucas P. Bersamin with Associate Justices Ruben T. Reyes (now Presiding
Justice) and Elvi John Asuncion, concurring. Rollo, pp. 17-22.
Id. at 23.
Id. at 93-98.
Id. at 85-91.
Article 103. Subsidiary civil liability of other persons. The subsidiary liability established in the next
preceding article shall also apply to employers, teachers, persons and corporations engaged in any kind of
industry for felonies committed by their servants, pupils, workmen, apprentices, or employees in the
discharge of their duties.
Rollo, pp. 71-74.
Id. at 65.
Supra note 1.
Rollo, p. 23.
Article 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

xxx

xxx

Employers shall be liable for the damages caused by their employees and household helpers
acting within the scope of their assigned tasks, even though the former are not engaged in any business or
industry.
xxx

[11]
[12]
[13]
[14]
[15]
[16]
[17]
[18]
[19]

xxx

xxx

The responsibility treated of in this article shall cease when the persons herein mentioned prove
that they observed all the diligence of a good father of a family to prevent damage. (1903a)
Article 1157, Civil Code of the Philippines.
Article 100, Revised Penal Code.
Article 31, Civil Code.
Articles 32 and 34, Civil Code.
Article 2176, Civil Code.
Article 33, Civil Code.
Cancio, Jr. v. Isip, G.R. No. 133978, November 12, 2002, 391 SCRA 393.
Joaquin, et al. v. Aniceto, et al., 120 Phil. 1100 (1964).
ARTICLE 1161. Civil obligations arising from criminal offenses shall be governed by the penal laws,
subject to the provisions of article 2177, and of the pertinent provisions of Chapter 2, Preliminary Title, on
Human Relations, and of Title XVIII of this Book, regulating damages. (1092a)

[20]

[21]
[22]

[23]
[24]
[25]

ARTICLE 2177. Responsibility for fault or negligence under the preceding article is entirely separate and
distinct from the civil liability arising from negligence under the Penal Code. But the plaintiff cannot
recover damages twice for the same act or omission of the defendant. (n)
Section 3, Rule 6, 1997 Rules on Criminal Procedure.
Kapalaran Bus Lines v. Coronado, G.R. No. 85331, August 25, 1989, 176 SCRA 792.
Article 100, Revised Penal Code.
Supra note 4.
G.R. 104392, February 20, 1996, 253 SCRA 674.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 141910
August 6, 2002
FGU INSURANCE CORPORATION, petitioner,
vs.
G.P. SARMIENTO TRUCKING CORPORATION and LAMBERT M. EROLES, respondents.
VITUG, J.:
G.P. Sarmiento Trucking Corporation (GPS) undertook to deliver on 18 June 1994 thirty (30) units of
Condura S.D. white refrigerators aboard one of its Isuzu truck, driven by Lambert Eroles, from the
plant site of Concepcion Industries, Inc., along South Superhighway in Alabang, Metro Manila, to the
Central Luzon Appliances in Dagupan City. While the truck was traversing the north diversion road
along McArthur highway in Barangay Anupol, Bamban, Tarlac, it collided with an unidentified truck,
causing it to fall into a deep canal, resulting in damage to the cargoes.
FGU Insurance Corporation (FGU), an insurer of the shipment, paid to Concepcion Industries, Inc.,
the value of the covered cargoes in the sum of P204,450.00. FGU, in turn, being the subrogee of the
rights and interests of Concepcion Industries, Inc., sought reimbursement of the amount it had paid
to the latter from GPS. Since the trucking company failed to heed the claim, FGU filed a complaint
for damages and breach of contract of carriage against GPS and its driver Lambert Eroles with the
Regional Trial Court, Branch 66, of Makati City. In its answer, respondents asserted that GPS was
the exclusive hauler only of Concepcion Industries, Inc., since 1988, and it was not so engaged in
business as a common carrier. Respondents further claimed that the cause of damage was purely
accidental.
The issues having thus been joined, FGU presented its evidence, establishing the extent of damage
to the cargoes and the amount it had paid to the assured. GPS, instead of submitting its evidence,
filed with leave of court a motion to dismiss the complaint by way of demurrer to evidence on the
ground that petitioner had failed to prove that it was a common carrier.
The trial court, in its order of 30 April 1996,1 granted the motion to dismiss, explaining thusly:
"Under Section 1 of Rule 131 of the Rules of Court, it is provided that Each party must prove
his own affirmative allegation, xxx.
"In the instant case, plaintiff did not present any single evidence that would prove that
defendant is a common carrier.
"x x x
xxx
xxx
"Accordingly, the application of the law on common carriers is not warranted and the
presumption of fault or negligence on the part of a common carrier in case of loss, damage
or deterioration of goods during transport under 1735 of the Civil Code is not availing.
"Thus, the laws governing the contract between the owner of the cargo to whom the plaintiff
was subrogated and the owner of the vehicle which transports the cargo are the laws on
obligation and contract of the Civil Code as well as the law on quasi delicts.
"Under the law on obligation and contract, negligence or fault is not presumed. The law on
quasi delict provides for some presumption of negligence but only upon the attendance of
some circumstances. Thus, Article 2185 provides:
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.
"Evidence for the plaintiff shows no proof that defendant was violating any traffic regulation.
Hence, the presumption of negligence is not obtaining.
1wphi1.nt

"Considering that plaintiff failed to adduce evidence that defendant is a common carrier and
defendants driver was the one negligent, defendant cannot be made liable for the damages
of the subject cargoes."2
The subsequent motion for reconsideration having been denied,3 plaintiff interposed an appeal to the
Court of Appeals, contending that the trial court had erred (a) in holding that the appellee corporation
was not a common carrier defined under the law and existing jurisprudence; and (b) in dismissing
the complaint on a demurrer to evidence.
The Court of Appeals rejected the appeal of petitioner and ruled in favor of GPS. The appellate
court, in its decision of 10 June 1999,4 discoursed, among other things, that "x x x in order for the presumption of negligence provided for under the law governing
common carrier (Article 1735, Civil Code) to arise, the appellant must first prove that the
appellee is a common carrier. Should the appellant fail to prove that the appellee is a
common carrier, the presumption would not arise; consequently, the appellant would have to
prove that the carrier was negligent.
"x x x
xxx
xxx
"Because it is the appellant who insists that the appellees can still be considered as a
common carrier, despite its `limited clientele, (assuming it was really a common carrier), it
follows that it (appellant) has the burden of proving the same. It (plaintiff-appellant) `must
establish his case by a preponderance of evidence, which means that the evidence as a
whole adduced by one side is superior to that of the other. (Summa Insurance Corporation
vs. Court of Appeals, 243 SCRA 175). This, unfortunately, the appellant failed to do -- hence,
the dismissal of the plaintiffs complaint by the trial court is justified.
"x x x
xxx
xxx
"Based on the foregoing disquisitions and considering the circumstances that the appellee
trucking corporation has been `its exclusive contractor, hauler since 1970, defendant has no
choice but to comply with the directive of its principal, the inevitable conclusion is that the
appellee is a private carrier.
"x x x
xxx
xxx
"x x x the lower court correctly ruled that 'the application of the law on common carriers is not
warranted and the presumption of fault or negligence on the part of a common carrier in case
of loss, damage or deterioration of good[s] during transport under [article] 1735 of the Civil
Code is not availing.' x x x.
"Finally, We advert to the long established rule that conclusions and findings of fact of a trial
court are entitled to great weight on appeal and should not be disturbed unless for strong
and valid reasons."5
Petitioner's motion for reconsideration was likewise denied; 6 hence, the instant petition,7 raising the
following issues:
I
WHETHER RESPONDENT GPS MAY BE CONSIDERED AS A COMMON CARRIER AS
DEFINED UNDER THE LAW AND EXISTING JURISPRUDENCE.
II
WHETHER RESPONDENT GPS, EITHER AS A COMMON CARRIER OR A PRIVATE
CARRIER, MAY BE PRESUMED TO HAVE BEEN NEGLIGENT WHEN THE GOODS IT
UNDERTOOK TO TRANSPORT SAFELY WERE SUBSEQUENTLY DAMAGED WHILE IN
ITS PROTECTIVE CUSTODY AND POSSESSION.
III
WHETHER THE DOCTRINE OF RES IPSA LOQUITUR IS APPLICABLE IN THE INSTANT
CASE.

On the first issue, the Court finds the conclusion of the trial court and the Court of Appeals to be
amply justified. GPS, being an exclusive contractor and hauler of Concepcion Industries, Inc.,
rendering or offering its services to no other individual or entity, cannot be considered a common
carrier. Common carriers are persons, corporations, firms or associations engaged in the business of
carrying or transporting passengers or goods or both, by land, water, or air, for hire or compensation,
offering their services to the public,8 whether to the public in general or to a limited clientele in
particular, but never on an exclusive basis.9 The true test of a common carrier is the carriage of
passengers or goods, providing space for those who opt to avail themselves of its transportation
service for a fee.10 Given accepted standards, GPS scarcely falls within the term "common carrier."
The above conclusion nothwithstanding, GPS cannot escape from liability.
In culpa contractual, upon which the action of petitioner rests as being the subrogee of Concepcion
Industries, Inc., the mere proof of the existence of the contract and the failure of its compliance
justify, prima facie, a corresponding right of relief.11 The law, recognizing the obligatory force of
contracts,12 will not permit a party to be set free from liability for any kind of misperformance of the
contractual undertaking or a contravention of the tenor thereof. 13 A breach upon the contract confers
upon the injured party a valid cause for recovering that which may have been lost or suffered. The
remedy serves to preserve the interests of the promisee that may include his "expectation interest,"
which is his interest in having the benefit of his bargain by being put in as good a position as he
would have been in had the contract been performed, or his "reliance interest," which is his interest
in being reimbursed for loss caused by reliance on the contract by being put in as good a position as
he would have been in had the contract not been made; or his "restitution interest," which is his
interest in having restored to him any benefit that he has conferred on the other party.14 Indeed,
agreements can accomplish little, either for their makers or for society, unless they are made the
basis for action.15 The effect of every infraction is to create a new duty, that is, to make recompense
to the one who has been injured by the failure of another to observe his contractual
obligation16 unless he can show extenuating circumstances, like proof of his exercise of due
diligence (normally that of the diligence of a good father of a family or, exceptionally by stipulation or
by law such as in the case of common carriers, that of extraordinary diligence) or of the attendance
of fortuitous event, to excuse him from his ensuing liability.
Respondent trucking corporation recognizes the existence of a contract of carriage between it and
petitioners assured, and admits that the cargoes it has assumed to deliver have been lost or
damaged while in its custody. In such a situation, a default on, or failure of compliance with, the
obligation in this case, the delivery of the goods in its custody to the place of destination - gives
rise to a presumption of lack of care and corresponding liability on the part of the contractual obligor
the burden being on him to establish otherwise. GPS has failed to do so.
Respondent driver, on the other hand, without concrete proof of his negligence or fault, may not
himself be ordered to pay petitioner. The driver, not being a party to the contract of carriage between
petitioners principal and defendant, may not be held liable under the agreement. A contract can only
bind the parties who have entered into it or their successors who have assumed their personality or
their juridical position.17 Consonantly with the axiom res inter alios acta aliis neque nocet prodest,
such contract can neither favor nor prejudice a third person. Petitioners civil action against the driver
can only be based on culpa aquiliana, which, unlike culpa contractual, would require the claimant for
damages to prove negligence or fault on the part of the defendant. 18
A word in passing. Res ipsa loquitur, a doctrine being invoked by petitioner, holds a defendant liable
where the thing which caused the injury complained of is shown to be under the latters management
and the accident is such that, in the ordinary course of things, cannot be expected to happen if those
who have its management or control use proper care. It affords reasonable evidence, in the absence
of explanation by the defendant, that the accident arose from want of care. 19 It is not a rule of
substantive law and, as such, it does not create an independent ground of liability. Instead, it is
regarded as a mode of proof, or a mere procedural convenience since it furnishes a substitute for,
and relieves the plaintiff of, the burden of producing specific proof of negligence. The maxim simply
places on the defendant the burden of going forward with the proof. 20 Resort to the doctrine,

however, may be allowed only when (a) the event is of a kind which does not ordinarily occur in the
absence of negligence; (b) other responsible causes, including the conduct of the plaintiff and third
persons, are sufficiently eliminated by the evidence; and (c) the indicated negligence is within the
scope of the defendant's duty to the plaintiff.21 Thus, it is not applicable when an unexplained
accident may be attributable to one of several causes, for some of which the defendant could not be
responsible.22
Res ipsa loquitur generally finds relevance whether or not a contractual relationship exists between
the plaintiff and the defendant, for the inference of negligence arises from the circumstances and
nature of the occurrence and not from the nature of the relation of the parties. 23 Nevertheless, the
requirement that responsible causes other than those due to defendants conduct must first be
eliminated, for the doctrine to apply, should be understood as being confined only to cases of pure
(non-contractual) tort since obviously the presumption of negligence in culpa contractual, as
previously so pointed out, immediately attaches by a failure of the covenant or its tenor. In the case
of the truck driver, whose liability in a civil action is predicated on culpa acquiliana, while he
admittedly can be said to have been in control and management of the vehicle which figured in the
accident, it is not equally shown, however, that the accident could have been exclusively due to his
negligence, a matter that can allow, forthwith, res ipsa loquitur to work against him.
If a demurrer to evidence is granted but on appeal the order of dismissal is reversed, the movant
shall be deemed to have waived the right to present evidence. 24 Thus, respondent corporation may
no longer offer proof to establish that it has exercised due care in transporting the cargoes of the
assured so as to still warrant a remand of the case to the trial court.
WHEREFORE, the order, dated 30 April 1996, of the Regional Trial Court, Branch 66, of Makati City,
and the decision, dated 10 June 1999, of the Court of Appeals, are AFFIRMED only insofar as
respondent Lambert M. Eroles is concerned, but said assailed order of the trial court and decision of
the appellate court are REVERSEDas regards G.P. Sarmiento Trucking Corporation which, instead,
is hereby ordered to pay FGU Insurance Corporation the value of the damaged and lost cargoes in
the amount of P204,450.00. No costs.
SO ORDERED.
Davide, Jr., C.J., Kapunan, Ynares-Santiago, and Austria-Martinez, JJ., concur.
1wphi1.nt

Footnotes
1
Rollo, p. 14.
2
Rollo, pp. 14-15.
3
Rollo, p. 17
4
Rollo, p. 20.
5
Rollo, pp. 24-28.
6
Rollo, p. 32.
7
Rollo, p. 3.
8
Article 1732, Civil Code.
9
Sec. 13[b], Public Service Act as amended; see also Guzman vs. Court of Appeals, G.R. L47822, 22 December 1988.
10
National Steel Corporation vs. Court of Appeals, 283 SCRA 45.
11
Calalas vs. Court of Appeals, 332 SCRA 356; Sabena Belgian World Airlines vs. Court of
Appeals, 255 SCRA 38.
12
See Articles 1159, 1308, 1315, 1356, Civil Code.
13
Anson on Contracts, 1939, p. 424; 17A Am Jur 2d, p. 728 citing Parks vs. Parks, 187 P2d
145.
14
Restatement, Second, Contracts, 344.

Fuller and Purdue, The Reliance Interest in Contract Damages, 46 Yale L.J.61 (1936).
Richardson on Contracts, 1951, p. 309.
17
Article 1311, Civil Code.
18
Calalas vs. Court of Appeals, supra; See Article 2176, Civil Code.
19
Africa vs. Caltex (Phils.) Inc., 16 SCRA 448; Layugan vs. Intermediate Appellate Court, 167
SCRA 376.
20
Ramos vs. Court of Appeals, 321 SCRA 600.
21
Sangco, Torts and Damages V.1, 1993, p. 29, citing 58 Am Jur 2d, pp. 56-58. See Ramos
vs. Court of Appeals, supra.
22
Words and Phrases Vol. 37, p. 483.
23
57B Am Jur 2d, p. 496.
24
Section 1, Rule 35, Rules of Court; Section 1, Rule 33, 1997 Rules of Civil Procedure.
15
16

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-12163

March 4, 1959

PAZ FORES, petitioner,

vs.
IRENEO MIRANDA, respondent.
Alberto O. Villaraza for petitioner.
Almazan and Ereneta for respondent.
REYES, J.B.L., J.:
Defendant-petitioner Paz Fores brings this petition for review of the decision of the Court of Appeals
(C.A. Case No. 1437-R) awarding to the plaintiff-respondent Ireneo Miranda the sums of P5,000 by
way of actual damages and counsel fees, and P10,000 as moral damages, with costs.
Respondent was one of the passengers on a jeepney driven by Eugenio Luga. While the vehicle
was descending the Sta. Mesa bridge at an excessive rate of speed, the driver lost control thereof,
causing it to swerve and to his the bridge wall. The accident occurred on the morning of March 22,
1953. Five of the passengers were injured, including the respondent who suffered a fracture of the
upper right humerus. He was taken to the National Orthopedic Hospital for treatment, and later was
subjected to a series of operations; the first on May 23, 1953, when wire loops were wound around
the broken bones and screwed into place; a second, effected to insert a metal splint, and a third one
to remove such splint. At the time of the trial, it appears that respondent had not yet recovered the
use of his right arm.
The driver was charged with serious physical injuries through reckless imprudence, and upon
interposing a plea of guilty was sentenced accordingly.
The contention that the evidence did not sufficiently establish the identity of the vehicle as the
belonging to the petitioner was rejected by the appellate court which found, among other things, that
is carried plate No. TPU-1163, SERIES OF 1952, Quezon City, registered in the name of Paz Fores,
(appellant herein) and that the vehicle even had the name of "Doa Paz" painted below its wind
shield. No evidence to the contrary was introduced by the petitioner, who relied on an attack upon
the credibility of the two policemen who went to the scene of the incident.
A point to be further remarked is petitioner's contention that on March 21, 1953, or one day before
the accident happened, she allegedly sold the passenger jeep that was involved therein to a certain
Carmen Sackerman.
The initial problem raised by the petitioner in this appeal may be formulated thus "Is the approval
of the Public Service Commission necessary for the sale of a public service vehicle even without
conveying therewith the authority to operate the same?" Assuming the dubious sale to be a fact, the
court of Appeals answered the query in the affirmative. The ruling should be upheld.
Section 20 of the Public Service Act (Commonwealth Act No. 146) provides:
Sec. 20. Subject to established limitations and exceptions and saving provisions to the
contrary, it shall be unlawful for any public service or for the owner, lessee or operator
thereof, without the previous approval and authority of the Commission previously had
xxx

xxx

xxx

(g) To sell, alienate, mortgage, encumber or lease its property, franchises, certificates,
privileges, or rights, or any part thereof; or merge or consolidate its property, franchises,
privileges or rights, or any part thereof, with those of any other public service. The approval
herein required shall be given, after notice to the public and after hearing the persons
interested at a public hearing, if it be shown that there are just and reasonable grounds for
making the mortgage or encumbrance, for liabilities of more than one year maturity, or the
sale, alienation, lease, merger, or consolidation to be approved and that the same are not
detrimental to the public interest, and in case of a sale, the date on which the same is to be
consummated shall be fixed in the order of approval: Provided, however, That nothing herein
contained shall be construed to prevent the transaction from being negotiated or completed
before its approval or to prevent the sale, alienation, or lease by any public service of any of
its property in the ordinary course of its business.
Interpreting the effects of this particular provision of law, we have held in the recent cases
of Montoya vs. Ignacio,* 50 Off. Gaz. No. 1, p. 108; Timbol vs. Osias, et al., G. R. No. L-7547, April
30, 1955, and Medina vs. Cresencia, 99 Phil., 506; 52 Off. Gaz. No. 10, p. 4606, that a transfer
contemplated by the law, if made without the requisite approval of the Public Service Commission, is
not effective and binding in so far as the responsibility of the grantee under the franchise in relation
to the public is concerned. Petitioner assails, however, the applicability of these rulings to the instant
case, contending that in those cases, the operator did not convey, by lease or by sale, the vehicle
independently of his rights under the franchise. This line of reasoning does not find support in the
law. The provisions of the statute are clear and prohibit the sale, alienation, lease, or encumbrance
of the property, franchise, certificate, privileges or rights, or any part thereof of the owner or operator
of the public service Commission. The law was designed primarily for the protection of the public
interest; and until the approval of the public Service Commission is obtained the vehicle is, in
contemplation of law, still under the service of the owner or operator standing in the records of the
Commission which the public has a right to rely upon.
The proviso contained in the aforequoted law, to the effect that nothing therein shall be construed "to
prevent the transaction from being negotiated or complete before its approval", means only that the
sale without the required approval is still valid and binding between the parties (Montoya vs.
Ignacio, supra). The phrase "in the ordinary course of its business" found in the other proviso" or to
prevent the sale, alienation, or lease by any public service of any of its property". As correctly
observed by the lower court, could not have been intended to include the sale of the vehicle itself,
but at most may refer only to such property that may be conceivably disposed or by the carrier in the
ordinary course of its business, like junked equipment or spare parts.
The case of Indalecio de Torres vs. Vicente Ona (63 Phil., 594, 597) is enlightening; and there, it
was held:
Under the law, the Public Service Commission has not only general supervision and
regulation of, but also full jurisdiction and control over all public utilities including the property,
equipment and facilities used, and the property rights and franchise enjoyed by every
individual and company engaged i the performance of a public service in the sense this
phrase is used in the Public Service Act or Act No. 3108). By virtue of the provisions of said
Act, motor vehicles used in the performance of a service, as the transportation of freightfrom
one point to another, have to this date been considered and they cannot but be so
considered-public service property; and, by reason of its own nature, a TH truck, which
means that the operator thereof places it at the disposal of anybody who is willing to pay a
rental of its use, when he desires to transfer or carry his effects, merchandise or any other

cargo from one place to another, is necessarily a public service property. (Emphasis
supplied)
Of course, this court has held in the case of Bachrach Motor co. vs. Zamboanga Transportation Co.,
52 Phil., 244, that there may be a nunc pro tunc authorization which has the effect of having the
approval retroact to the date of the transfer; but such outcome cannot prejudice rights intervening in
the meantime. It appears that no such approval was given by the Commission before the accident
occurred.
The P10,000 actual damages awarded by the Court of First Instance of Manila were reduced by the
Court of Appeals to only P2,000, on the ground that a review of the records failed to disclose a
sufficient basis for the trial court's appraisal, since the only evidence presented on this point
consisted of respondent's bare statement that his expenses and loss of income amounted to
P20,000. On the other hand, "it cannot be denied," the lower court said, "that appellee (respondent)
did incur expenses"' It is well to note further that respondent was a painter by profession and a
professor of Fine Arts, so that the amount of P2,000 awarded cannot be said to be excessive (see
Arts. 2224 and 2225, Civil Code of the Philippines). The attorney's fees in the sum of P3,000 also
awarded to the respondent are assailed on the ground that the Court of First Instance did not
provided for the same, and since no appeal was interposed by said respondent, it was allegedly
error for the Court of Appeals to award themmotu proprio. Petitioner fails to note that attorney's fees
are included in the concept of actual damages under the Civil Code and may be awarded whenever
the court deems it is just and equitable (Art. 2208, Civil Code of the Philippines). We see no reason
to alter these awards.
Anent the moral damages ordered to be paid to the respondent, the same must be discarded. We
have repeatedly ruled (Cachero vs. Manila Yellow Taxicab Co. Inc., 101 Phil., 523; 54 Off. Gaz., [26],
6599; Necesito, et al vs. Paras, 104 Phil., 75; 56 Off. Gaz., [23] 4023, that moral damages are not
recoverable in damage actions predicted on a breach of the contract of transportation, in view of
Articles 2219 and 2220 of the new Civil Code, which provide as follows:
Art. 2219. Moral damages may be recovered in the following and analogous cases:
(1) A criminal offense resulting in physical injuries;
(2) Quasi-delicts causing physical injuries;
xxx

xxx

xxx

Art. 2220. Willful injury to property may be a legal ground for awarding moral damages if the
court should find that, under circumstances, such damages are justify due. The same rule
applies to breaches of contract where the defendant acted fraudulently or in bad faith.
By contrasting the provisions of these two article it immediately becomes apparent that:
(a) In case of breach of contract (including one of transportation) proof of bad faith or fraud (dolus),
i.e., wanton or deliberately injurious conduct, is essential to justify an award of moral damages; and
(b) That a breach of contract can not be considered included in the descriptive term "analogous
cases" used in Art. 2219; not only because Art. 2220 specifically provides for the damages that are
caused by contractual breach, but because the definition of quasi-delict in Art. 2176 of the Code
expressly excludes the cases where there is a "preexisting contractual relation between the parties."
Art. 2176. Whoever by act or omission causes damage to another, there being fault or
negligence, is obliged to pay for the damage dome. 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 exception to the basic rule of damages now under consideration is a mishap resulting in the
death of a passenger, in which case Article 1764 makes the common carrier expressly subject to the
rule of Art. 2206, that entitles the deceased passenger to "demand moral damages for mental
anguish by reason of the death of the deceased" (Necesito vs. Paras, 104 Phil., 84, Resolution on
motion to reconsider, September 11, 1958). But the exceptional rule of Art. 1764 makes it all the
more evident that where the injured passenger does not die, moral damages are not recoverable
unless it is proved that the carrier was guilty of malice or bad faith. We think it is clear that the mere
carelessness of the carrier's driver does not per se constitute of justify an inference of malice or bad
faith on the part of the carrier; and in the case at bar there is no other evidence of such malice to
support the award of moral damages by the Court of Appeals. To award moral damages for breach
of contract, therefore, without proof of bad faith or malice on the part of the defendant, as required by
Art. 220, would be to violate the clear provisions of the law, and constitute unwarranted judicial
legislation.
The Court of Appeals has invoked our rulings in Castro vs. Acro Taxicab Co., G.R. No. 49155,
December 14, 1948 and Layda vs. Court of Appeals, 90 Phil., 724; but these doctrines were
predicated upon our former law of damages, before judicial discretion in fixing them became limited
by the express provisions of the new Civil Code (previously quoted). Hence, the aforesaid rulings are
now inapplicable.
Upon the other hand, the advantageous position of a party suing a carrier for breach of the contract
of transportations explains, to some extent, the limitations imposed by the new Code on the amount
of the recovery. The action for breach of contract imposes on the defendant carrier a presumption of
liability upon mere proof of injury to the passenger; that latter is relieved from the duty to established
the fault of the carrier, or of his employees, and the burden is placed on the carrier to prove that it
was due to an unforseen event or to force majeure (Cangco vs. Manila Railroad Co., 38 Phil., 768,
777). Moreover, the carrier, unlike in suits for quasi-delict, may not escape liability by proving that it
has exercised due diligence in the selection and supervision of its employees (Art. 1759, new civil
code; Cangco vs. Manila Railroad Co., supra; Prado vs. Manila Electric Co., 51 Phil., 900).
The difference in conditions, defenses and proof, as well as the codal concept of quasi-delict as
essentially extracontractual negligence, compel us to differentiate between action ex contractu, and
actions quasi ex delicto, and prevent us from viewing the action for breach of contract as
simultaneously embodying an action on tort. Neither can this action be taken as one to enforce on
employee's liability under Art. 103 of the Revised Penal Code, since the responsibility is not alleged
to be subsidiary, nor is there on record any averment or proof that the driver of appellant was
insolvent. In fact, he is not even made a party to the suit.
It is also suggested that a carrier's violation of its engagement to safety transport the passenger
involves a breach of the passenger's confidence, and therefore should be regarded as a breach of
contract in bad faith, justifying recovery of moral damages under Art. 2220. This theory is untenable,
for under it the carrier would always be deemed in bad faith, in every case its obligation to the
passenger is infringed, and it would be never accountable for simple negligence; while under the law
(Art. 1756). the presumption is that common carriers acted negligently(and not maliciously), and Art.
1762 speaks of negligence of the common carrier.
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 article 1733 and 1755.

ART. 1762. The contributory negligence of the passenger does not bar recovery of damages
for his death or injuries, if the proximate cause thereof is the negligence of the common
carrier, but the amount of damages shall be equitably reduced.
The distinction between fraud, bad faith or malice in the sense of deliberate or wanton wrong doing
and negligence (as mere carelessness) is too fundamental in our law to be ignored (Arts. 11701172); their consequences being clearly differentiated by the Code.
ART. 2201. In contracts and quasi-contracts, the damages for which the obligor who acted in
good faith is liable shall be those that are the natural and probable consequences of the
breach of the obligation, and which the parties have foreseen or could have reasonably
foreseen at the time the obligation was constituted.
In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all
damages which may be reasonably attributed to the non-performance of the obligation.
It is to be presumed, in the absence of statutory provision to the contrary, that this difference was in
the mind of the lawmakers when in Art. 2220 they limited recovery of moral damages to breaches of
contract in bad faith. It is true that negligence may be occasionally so gross as to amount to malice;
but that fact must be shown in evidence, and a carrier's bad faith is not to be lightly inferred from a
mere finding that the contract was breached through negligence of the carrier's employees.
In view of the foregoing considerations, the decision of the Court of Appeals is modified by
eliminating the award of P5,000.00 by way of moral damages. (Court of Appeals Resolution of May
5, 1957). In all other respects, the judgment is affirmed. No costs in this instance. So ordered.
Paras, C.J., Bengzon, Padilla, Montemayor, Reyes, A., Bautista Angelo, Labrador, Concepcion and
Endencia, JJ.,concur.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
September 28, 1966

G.R. No. L-21438

AIR FRANCE, petitioner,
vs.
RAFAEL CARRASCOSO and the HONORABLE COURT OF APPEALS, respondents.
Lichauco, Picazo and Agcaoili for petitioner.
Bengzon Villegas and Zarraga for respondent R. Carrascoso.
SANCHEZ, J.:
The Court of First Instance of Manila 1 sentenced petitioner to pay respondent Rafael
Carrascoso P25,000.00 by way of moral damages; P10,000.00 as exemplary damages; P393.20
representing the difference in fare between first class and tourist class for the portion of the trip
Bangkok-Rome, these various amounts with interest at the legal rate, from the date of the filing of
the complaint until paid; plus P3,000.00 for attorneys' fees; and the costs of suit.
On appeal,2 the Court of Appeals slightly reduced the amount of refund on Carrascoso's plane
ticket from P393.20 to P383.10, and voted to affirm the appealed decision "in all other respects", with
costs against petitioner.
The case is now before us for review on certiorari.
The facts declared by the Court of Appeals as " fully supported by the evidence of record", are:
Plaintiff, a civil engineer, was a member of a group of 48 Filipino pilgrims that left
Manila for Lourdes on March 30, 1958.
On March 28, 1958, the defendant, Air France, through its authorized agent, Philippine
Air Lines, Inc., issued to plaintiff a "first class" round trip airplane ticket from Manila to Rome.
From Manila to Bangkok, plaintiff travelled in "first class", but at Bangkok, the Manager of the
defendant airline forced plaintiff to vacate the "first class" seat that he was occupying
because, in the words of the witness Ernesto G. Cuento, there was a "white man", who, the
Manager alleged, had a "better right" to the seat. When asked to vacate his "first class" seat,
the plaintiff, as was to be expected, refused, and told defendant's Manager that his seat
would be taken over his dead body; a commotion ensued, and, according to said Ernesto G.
Cuento, "many of the Filipino passengers got nervous in the tourist class; when they found
out that Mr. Carrascoso was having a hot discussion with the white man [manager], they
came all across to Mr. Carrascoso and pacified Mr. Carrascoso to give his seat to the white
man" (Transcript, p. 12, Hearing of May 26, 1959); and plaintiff reluctantly gave his "first
class" seat in the plane.3
1. The trust of the relief petitioner now seeks is that we review "all the findings" 4 of respondent
Court of Appeals. Petitioner charges that respondent court failed to make complete findings of fact
on all the issues properly laid before it. We are asked to consider facts favorable to petitioner, and
then, to overturn the appellate court's decision.
Coming into focus is the constitutional mandate that "No decision shall be rendered by any
court of record without expressing therein clearly and distinctly the facts and the law on which it is
based". 5 This is echoed in the statutory demand that a judgment determining the merits of the case
shall state "clearly and distinctly the facts and the law on which it is based"; 6 and that "Every
decision of the Court of Appeals shall contain complete findings of fact on all issues properly raised
before it". 7
A decision with absolutely nothing to support it is a nullity. It is open to direct attack. 8 The law,
however, solely insists that a decision state the "essential ultimate facts" upon which the court's
conclusion is drawn. 9 A court of justice is not hidebound to write in its decision every bit and piece of

evidence 10 presented by one party and the other upon the issues raised. Neither is it to be burdened
with the obligation "to specify in the sentence the facts" which a party "considered as proved". 11 This
is but a part of the mental process from which the Court draws the essential ultimate facts. A
decision is not to be so clogged with details such that prolixity, if not confusion, may result. So long
as the decision of the Court of Appeals contains the necessary facts to warrant its conclusions, it is
no error for said court to withhold therefrom "any specific finding of facts with respect to the evidence
for the defense". Because as this Court well observed, "There is no law that so requires". 12 Indeed,
"the mere failure to specify (in the decision) the contentions of the appellant and the reasons for
refusing to believe them is not sufficient to hold the same contrary to the requirements of the
provisions of law and the Constitution". It is in this setting that in Manigque, it was held that the mere
fact that the findings "were based entirely on the evidence for the prosecution without taking into
consideration or even mentioning the appellant's side in the controversy as shown by his own
testimony", would not vitiate the judgment. 13 If the court did not recite in the decision the testimony of
each witness for, or each item of evidence presented by, the defeated party, it does not mean that
the court has overlooked such testimony or such item of evidence. 14 At any rate, the legal
presumptions are that official duty has been regularly performed, and that all the matters within an
issue in a case were laid before the court and passed upon by it. 15
Findings of fact, which the Court of Appeals is required to make, maybe defined as "the written
statement of the ultimate facts as found by the court ... and essential to support the decision and
judgment rendered thereon".16 They consist of the court's "conclusions" with respect to the
determinative facts in issue". 17 A question of law, upon the other hand, has been declared as "one
which does not call for an examination of the probative value of the evidence presented by the
parties." 18
2. By statute, "only questions of law may be raised" in an appeal by certiorari from a judgment
of the Court of Appeals. 19 That judgment is conclusive as to the facts. It is not appropriately the
business of this Court to alter the facts or to review the questions of fact. 20
With these guideposts, we now face the problem of whether the findings of fact of the Court of
Appeals support its judgment.
3. Was Carrascoso entitled to the first class seat he claims?
It is conceded in all quarters that on March 28, 1958 he paid to and received from petitioner a
first class ticket. But petitioner asserts that said ticket did not represent the true and complete intent
and agreement of the parties; that said respondent knew that he did not have confirmed reservations
for first class on any specific flight, although he had tourist class protection; that, accordingly, the
issuance of a first class ticket was no guarantee that he would have a first class ride, but that such
would depend upon the availability of first class seats.
These are matters which petitioner has thoroughly presented and discussed in its brief before
the Court of Appeals under its third assignment of error, which reads: "The trial court erred in finding
that plaintiff had confirmed reservations for, and a right to, first class seats on the "definite" segments
of his journey, particularly that from Saigon to Beirut". 21
And, the Court of Appeals disposed of this contention thus:
Defendant seems to capitalize on the argument that the issuance of a first-class ticket
was no guarantee that the passenger to whom the same had been issued, would be
accommodated in the first-class compartment, for as in the case of plaintiff he had yet to
make arrangements upon arrival at every station for the necessary first-class reservation.
We are not impressed by such a reasoning. We cannot understand how a reputable firm like
defendant airplane company could have the indiscretion to give out tickets it never meant to
honor at all. It received the corresponding amount in payment of first-class tickets and yet it
allowed the passenger to be at the mercy of its employees. It is more in keeping with the
ordinary course of business that the company should know whether or riot the tickets it
issues are to be honored or not.22

Not that the Court of Appeals is alone. The trial court similarly disposed of petitioner's
contention, thus:
On the fact that plaintiff paid for, and was issued a "First class" ticket, there can be no
question. Apart from his testimony, see plaintiff's Exhibits "A", "A-1", "B", "B-1," "B-2", "C" and "C-1",
and defendant's own witness, Rafael Altonaga, confirmed plaintiff's testimony and testified as
follows:
Q. In these tickets there are marks "O.K." From what you know, what does this OK mean?
A. That the space is confirmed.
Q. Confirmed for first class?
A. Yes, "first class". (Transcript, p. 169)
xxx
xxx
xxx
Defendant tried to prove by the testimony of its witnesses Luis Zaldariaga and Rafael Altonaga
that although plaintiff paid for, and was issued a "first class" airplane ticket, the ticket was subject to
confirmation in Hongkong. The court cannot give credit to the testimony of said witnesses. Oral
evidence cannot prevail over written evidence, and plaintiff's Exhibits "A", "A-l", "B", "B-l", "C" and "C1" belie the testimony of said witnesses, and clearly show that the plaintiff was issued, and paid for,
a first class ticket without any reservation whatever.
Furthermore, as hereinabove shown, defendant's own witness Rafael Altonaga testified that
the reservation for a "first class" accommodation for the plaintiff was confirmed. The court cannot
believe that after such confirmation defendant had a verbal understanding with plaintiff that the "first
class" ticket issued to him by defendant would be subject to confirmation in Hongkong. 23
We have heretofore adverted to the fact that except for a slight difference of a few pesos in the
amount refunded on Carrascoso's ticket, the decision of the Court of First Instance was affirmed by
the Court of Appeals in all other respects. We hold the view that such a judgment of affirmance has
merged the judgment of the lower court. 24 Implicit in that affirmance is a determination by the Court
of Appeals that the proceeding in the Court of First Instance was free from prejudicial error and "all
questions raised by the assignments of error and all questions that might have been raised are to be
regarded as finally adjudicated against the appellant". So also, the judgment affirmed "must be
regarded as free from all error". 25 We reached this policy construction because nothing in the
decision of the Court of Appeals on this point would suggest that its findings of fact are in any way at
war with those of the trial court. Nor was said affirmance by the Court of Appeals upon a ground or
grounds different from those which were made the basis of the conclusions of the trial court. 26
If, as petitioner underscores, a first-class-ticket holder is not entitled to a first class seat,
notwithstanding the fact that seat availability in specific flights is therein confirmed, then an air
passenger is placed in the hollow of the hands of an airline. What security then can a passenger
have? It will always be an easy matter for an airline aided by its employees, to strike out the very
stipulations in the ticket, and say that there was a verbal agreement to the contrary. What if the
passenger had a schedule to fulfill? We have long learned that, as a rule, a written document speaks
a uniform language; that spoken word could be notoriously unreliable. If only to achieve stability in
the relations between passenger and air carrier, adherence to the ticket so issued is desirable. Such
is the case here. The lower courts refused to believe the oral evidence intended to defeat the
covenants in the ticket.
The foregoing are the considerations which point to the conclusion that there are facts upon
which the Court of Appeals predicated the finding that respondent Carrascoso had a first class ticket
and was entitled to a first class seat at Bangkok, which is a stopover in the Saigon to Beirut leg of
the flight. 27 We perceive no "welter of distortions by the Court of Appeals of petitioner's statement of
its position", as charged by petitioner. 28 Nor do we subscribe to petitioner's accusation that
respondent Carrascoso "surreptitiously took a first class seat to provoke an issue". 29 And this
because, as petitioner states, Carrascoso went to see the Manager at his office in Bangkok "to
confirm my seat and because from Saigon I was told again to see the Manager". 30 Why, then, was

he allowed to take a first class seat in the plane at Bangkok, if he had no seat? Or, if another had a
better right to the seat?
4. Petitioner assails respondent court's award of moral damages. Petitioner's trenchant claim
is that Carrascoso's action is planted upon breach of contract; that to authorize an award for moral
damages there must be an averment of fraud or bad faith;31 and that the decision of the Court of
Appeals fails to make a finding of bad faith. The pivotal allegations in the complaint bearing on this
issue are:
3. That ... plaintiff entered into a contract of air carriage with the Philippine Air Lines for a
valuable consideration, the latter acting as general agents for and in behalf of the defendant,
under which said contract, plaintiff was entitled to, as defendant agreed to furnish plaintiff,
First Class passage on defendant's plane during the entire duration of plaintiff's tour of
Europe with Hongkong as starting point up to and until plaintiff's return trip to Manila, ... .
4. That, during the first two legs of the trip from Hongkong to Saigon and from Saigon to
Bangkok, defendant furnished to the plaintiff First Class accommodation but only after
protestations, arguments and/or insistence were made by the plaintiff with defendant's
employees.
5. That finally, defendant failed to provide First Class passage, but instead furnished plaintiff
only TouristClass accommodations from Bangkok to Teheran and/or Casablanca, ... the
plaintiff has been compelled by defendant's employees to leave the First Class
accommodation berths at Bangkok after he was already seated.
6. That consequently, the plaintiff, desiring no repetition of the inconvenience and
embarrassments brought by defendant's breach of contract was forced to take a Pan
American World Airways plane on his return trip from Madrid to Manila.32
xxx
xxx
xxx
2. That likewise, as a result of defendant's failure to furnish First Class accommodations
aforesaid, plaintiff suffered inconveniences, embarrassments, and humiliations, thereby causing
plaintiff mental anguish, serious anxiety, wounded feelings, social humiliation, and the like injury,
resulting in moral damages in the amount of P30,000.00. 33
xxx
xxx
xxx
The foregoing, in our opinion, substantially aver: First, That there was a contract to furnish
plaintiff a first class passage covering, amongst others, the Bangkok-Teheran leg; Second, That said
contract was breached when petitioner failed to furnish first class transportation at Bangkok;
and Third, that there was bad faith when petitioner's employee compelled Carrascoso to leave his
first class accommodation berth "after he was already, seated" and to take a seat in the tourist class,
by reason of which he suffered inconvenience, embarrassments and humiliations, thereby causing
him mental anguish, serious anxiety, wounded feelings and social humiliation, resulting in moral
damages. It is true that there is no specific mention of the term bad faith in the complaint. But, the
inference of bad faith is there, it may be drawn from the facts and circumstances set forth
therein. 34 The contract was averred to establish the relation between the parties. But the stress of
the action is put on wrongful expulsion.
Quite apart from the foregoing is that (a) right the start of the trial, respondent's counsel placed
petitioner on guard on what Carrascoso intended to prove: That while sitting in the plane in Bangkok,
Carrascoso wasousted by petitioner's manager who gave his seat to a white man; 35 and (b)
evidence of bad faith in the fulfillment of the contract was presented without objection on the part of
the petitioner. It is, therefore, unnecessary to inquire as to whether or not there is sufficient averment
in the complaint to justify an award for moral damages. Deficiency in the complaint, if any, was cured
by the evidence. An amendment thereof to conform to the evidence is not even required. 36 On the
question of bad faith, the Court of Appeals declared:
That the plaintiff was forced out of his seat in the first class compartment of the plane
belonging to the defendant Air France while at Bangkok, and was transferred to the tourist
class not only without his consent but against his will, has been sufficiently established by

plaintiff in his testimony before the court, corroborated by the corresponding entry made by
the purser of the plane in his notebook which notation reads as follows:
"First-class passenger was forced to go to the tourist class against his will, and
that the captain refused to intervene",
and by the testimony of an eye-witness, Ernesto G. Cuento, who was a co-passenger.
The captain of the plane who was asked by the manager of defendant company at Bangkok
to intervene even refused to do so. It is noteworthy that no one on behalf of defendant ever
contradicted or denied this evidence for the plaintiff. It could have been easy for defendant to
present its manager at Bangkok to testify at the trial of the case, or yet to secure his
disposition; but defendant did neither. 37
The Court of appeals further stated
Neither is there evidence as to whether or not a prior reservation was made by the
white man. Hence, if the employees of the defendant at Bangkok sold a first-class ticket to
him when all the seats had already been taken, surely the plaintiff should not have been
picked out as the one to suffer the consequences and to be subjected to the humiliation and
indignity of being ejected from his seat in the presence of others. Instead of explaining to the
white man the improvidence committed by defendant's employees, the manager adopted the
more drastic step of ousting the plaintiff who was then safely ensconsced in his rightful seat.
We are strengthened in our belief that this probably was what happened there, by the
testimony of defendant's witness Rafael Altonaga who, when asked to explain the meaning
of the letters "O.K." appearing on the tickets of plaintiff, said "that the space is confirmed for
first class. Likewise, Zenaida Faustino, another witness for defendant, who was the chief of
the Reservation Office of defendant, testified as follows:
"Q How does the person in the ticket-issuing office know what reservation the
passenger has arranged with you?
A They call us up by phone and ask for the confirmation." (t.s.n., p. 247, June 19,
1959)
In this connection, we quote with approval what the trial Judge has said on this point:
Why did the, using the words of witness Ernesto G. Cuento, "white man" have
a "better right" to the seat occupied by Mr. Carrascoso? The record is silent. The
defendant airline did not prove "any better", nay, any right on the part of the "white
man" to the "First class" seat that the plaintiff was occupying and for which he paid
and was issued a corresponding "first class" ticket.
If there was a justified reason for the action of the defendant's Manager in
Bangkok, the defendant could have easily proven it by having taken the testimony of
the said Manager by deposition, but defendant did not do so; the presumption is that
evidence willfully suppressed would be adverse if produced [Sec. 69, par (e), Rules
of Court]; and, under the circumstances, the Court is constrained to find, as it does
find, that the Manager of the defendant airline in Bangkok not merely asked but
threatened the plaintiff to throw him out of the plane if he did not give up his "first
class" seat because the said Manager wanted to accommodate, using the words of
the witness Ernesto G. Cuento, the "white man".38
It is really correct to say that the Court of Appeals in the quoted portion first transcribed
did not use the term "bad faith". But can it be doubted that the recital of facts therein points to
bad faith? The manager not only prevented Carrascoso from enjoying his right to a first class
seat; worse, he imposed his arbitrary will; he forcibly ejected him from his seat, made him
suffer the humiliation of having to go to the tourist class compartment - just to give way to
another passenger whose right thereto has not been established. Certainly, this is bad faith.
Unless, of course, bad faith has assumed a meaning different from what is understood in
law. For, "bad faith" contemplates a "state of mind affirmatively operating with furtive design
or with some motive of self-interest or will or for ulterior purpose." 39

And if the foregoing were not yet sufficient, there is the express finding of bad faith in
the judgment of the Court of First Instance, thus:
The evidence shows that the defendant violated its contract of transportation
with plaintiff in bad faith, with the aggravating circumstances that defendant's
Manager in Bangkok went to the extent of threatening the plaintiff in the presence of
many passengers to have him thrown out of the airplane to give the "first class" seat
that he was occupying to, again using the words of the witness Ernesto G. Cuento, a
"white man" whom he (defendant's Manager) wished to accommodate, and the
defendant has not proven that this "white man" had any "better right" to occupy the
"first class" seat that the plaintiff was occupying, duly paid for, and for which the
corresponding "first class" ticket was issued by the defendant to him.40
5. The responsibility of an employer for the tortious act of its employees need not be essayed.
It is well settled in law. 41 For the willful malevolent act of petitioner's manager, petitioner, his
employer, must answer. Article 21 of the Civil Code says:
ART. 21. Any person who willfully causes loss or injury to another in a manner that is
contrary to morals, good customs or public policy shall compensate the latter for the
damage.
In parallel circumstances, we applied the foregoing legal precept; and, we held that upon the
provisions of Article 2219 (10), Civil Code, moral damages are recoverable. 42
6. A contract to transport passengers is quite different in kind and degree from any other
contractual relation. 43 And this, because of the relation which an air-carrier sustains with the public.
Its business is mainly with the travelling public. It invites people to avail of the comforts and
advantages it offers. The contract of air carriage, therefore, generates a relation attended with a
public duty. Neglect or malfeasance of the carrier's employees, naturally, could give ground for an
action for damages.
Passengers do not contract merely for transportation. They have a right to be treated by the
carrier's employees with kindness, respect, courtesy and due consideration. They are entitled to be
protected against personal misconduct, injurious language, indignities and abuses from such
employees. So it is, that any rule or discourteous conduct on the part of employees towards a
passenger gives the latter an action for damages against the carrier. 44
Thus, "Where a steamship company 45 had accepted a passenger's check, it was a breach of
contract and a tort, giving a right of action for its agent in the presence of third persons to falsely
notify her that the check was worthless and demand payment under threat of ejection, though the
language used was not insulting and she was not ejected." 46 And this, because, although the
relation of passenger and carrier is "contractual both in origin and nature" nevertheless "the act that
breaks the contract may be also a tort". 47 And in another case, "Where a passenger on a railroad
train, when the conductor came to collect his fare tendered him the cash fare to a point where the
train was scheduled not to stop, and told him that as soon as the train reached such point he would
pay the cash fare from that point to destination, there was nothing in the conduct of the passenger
which justified the conductor in using insulting language to him, as by calling him a lunatic," 48 and
the Supreme Court of South Carolina there held the carrier liable for the mental suffering of said
passenger.
Petitioner's contract with Carrascoso is one attended with public duty. The stress of
Carrascoso's action as we have said, is placed upon his wrongful expulsion. This is a violation of
public duty by the petitioner air carrier a case of quasi-delict. Damages are proper.
7. Petitioner draws our attention to respondent Carrascoso's testimony, thus
Q You mentioned about an attendant. Who is that attendant and purser?
A When we left already that was already in the trip I could not help it. So one of the
flight attendants approached me and requested from me my ticket and I said, What for? and
she said, "We will note that you transferred to the tourist class". I said, "Nothing of that kind.
1awphl.nt

That is tantamount to accepting my transfer." And I also said, "You are not going to note
anything there because I am protesting to this transfer".
Q Was she able to note it?
A No, because I did not give my ticket.
Q About that purser?
A Well, the seats there are so close that you feel uncomfortable and you don't have enough
leg room, I stood up and I went to the pantry that was next to me and the purser was there.
He told me, "I have recorded the incident in my notebook." He read it and translated it to me
because it was recorded in French "First class passenger was forced to go to the
tourist class against his will, and that the captain refused to intervene."
Mr. VALTE
I move to strike out the last part of the testimony of the witness because the best evidence
would be the notes. Your Honor.
COURT
I will allow that as part of his testimony. 49
Petitioner charges that the finding of the Court of Appeals that the purser made an entry in his
notebook reading "First class passenger was forced to go to the tourist class against his will, and
that the captain refused to intervene" is predicated upon evidence [Carrascoso's testimony above]
which is incompetent. We do not think so. The subject of inquiry is not the entry, but the ouster
incident. Testimony on the entry does not come within the proscription of the best evidence rule.
Such testimony is admissible. 49a
Besides, from a reading of the transcript just quoted, when the dialogue happened, the impact
of the startling occurrence was still fresh and continued to be felt. The excitement had not as yet died
down. Statements then, in this environment, are admissible as part of the res gestae. 50 For, they
grow "out of the nervous excitement and mental and physical condition of the declarant". 51 The
utterance of the purser regarding his entry in the notebook was spontaneous, and related to the
circumstances of the ouster incident. Its trustworthiness has been guaranteed. 52 It thus escapes the
operation of the hearsay rule. It forms part of the res gestae.
At all events, the entry was made outside the Philippines. And, by an employee of petitioner. It
would have been an easy matter for petitioner to have contradicted Carrascoso's testimony. If it were
really true that no such entry was made, the deposition of the purser could have cleared up the
matter.
We, therefore, hold that the transcribed testimony of Carrascoso is admissible in evidence.
8. Exemplary damages are well awarded. The Civil Code gives the court ample power to grant
exemplary damages in contracts and quasi- contracts. The only condition is that defendant should
have "acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner." 53 The manner of
ejectment of respondent Carrascoso from his first class seat fits into this legal precept. And this, in
addition to moral damages.54
9. The right to attorney's fees is fully established. The grant of exemplary damages justifies a
similar judgment for attorneys' fees. The least that can be said is that the courts below felt that it is
but just and equitable that attorneys' fees be given. 55 We do not intend to break faith with the
tradition that discretion well exercised as it was here should not be disturbed.
10. Questioned as excessive are the amounts decreed by both the trial court and the Court of
Appeals, thus: P25,000.00 as moral damages; P10,000.00, by way of exemplary damages, and
P3,000.00 as attorneys' fees. The task of fixing these amounts is primarily with the trial court. 56 The
Court of Appeals did not interfere with the same. The dictates of good sense suggest that we give
our imprimatur thereto. Because, the facts and circumstances point to the reasonableness thereof. 57
On balance, we say that the judgment of the Court of Appeals does not suffer from reversible
error. We accordingly vote to affirm the same. Costs against petitioner. So ordered.

Concepcion, C.J., Reyes, J.B.L., Barrera, Dizon, Regala, Makalintal, Zaldivar and Castro, JJ.,
concur.
Bengzon, J.P., J., took no part.
Footnotes
1
Civil Case No. 38810, "Rafael Carrascoso, plaintiff, vs. Air France, defendant," R.A., pp. 7980.
2
C.A.-G.R. No. 26522-R, "Rafael Carrascoso, plaintiff-appellee, vs. Air France, defendantappellant."
3
Appendix A, petitioner's brief, pp 146-147. See also R.A., pp. 66-67.
4
Petitioner's brief, p. 142.
5
Section 12, Article VIII, Constitution.
6
Section 1, Rule 36, Rules of Court. See also Section 2, Rule 120, in reference to judgments
in criminal cases.
7
Sec. 4. Rule 51; Sec. 33(2), Judiciary Act of 1948, as amended.
8
Edwards vs. McCoy, 22 Phil. 598, 601; Yangco vs. Court of First Instance of Manila, et al.,
29 Phil. 183, 191.
9
Braga vs. Millora, 3 Phil. 458, 465.
10
Id.
11
Aringo vs. Arena 14 Phil. 263, 266; emphasis supplied.
12
Reyes vs. People. 71 Phil. 598, 600.
13
People vs. Manigque 35 O.G., No. 94, pp. 1682, 1683, citing Section 133 of the Code of
Civil Procedure and Section 12, Art. VIII, Constitution, supra.
14
Badger et al. vs. Boyd, 65 S.W. (2d), pp. 601, 610.
15
Section 5, (m) and (o), Rule 131, Rules of Court.
16
In re Good's Estate, 266 P. (2d), pp. 719, 729.
17
Badger et al. vs. Boyd, supra.
18
Goduco vs. Court of Appeals, et al., L-17647, February 28, 1964.
19
Section 2, Rule 45, Rules of Court, formerly Section 2, Rule 46 of the Rules of Court.
20
Medel, et al. vs. Calasanz, et al. L-14835, August 31, 1960; Astraquillo, et al. vs. Javier, et
al., L-20034, January 30, 1965.
21
Petitioner's brief in the Court of Appeals, pp. 82-98.
22
Decision of the Court of Appeals, Appendix A, petitioner's brief, pp. 148-149.
23
R.A., pp. 67, 73.
24
5 B C.J.S., p. 295; 3 Am. Jur. p. 678.
25
3 Am. Jur., pp. 677-678.
26
See Garcia Valdez vs. Seterana Tuason, 40 Phil, 943, 951.
27
Carrascoso's ticket, according to petitioner (brief, pp. 7-8), shows:
Date of
Segment or leg
Carrier
Flight No.
Departure
1. Manila to
PAL
300A
March 30
Hongkong
2. Hongkong to
VN(Air
693
March 31
Saigon
Vietnam)
3. Saigon to Beirut AF(Air France) 245
March 31
28
Petitioner's brief, p. 50; see also id., pp. 37 and 46.
29
Id., p. 103.

Ibid., p. 102.
Article 2220, Civil Code reads: "Willful injury to property may be a legal ground for awarding
moral damages if the court should find that, under the circumstances, such damages are
justly due. The same rule applies to breaches of contract where the defendant acted
fraudulently or in bad faith."
32
R.A., p. 2-4; emphasis supplied.
33
R.A., P. 5; second cause of action.
34
Copeland vs. Dunehoo et al., 138 S.E., 267, 270. See also 25 C.J.S., pp. 758-759; 15 Am.
Jur., pp. 766-767.
35
Statement of Attorney Villegas for respondent Carrascoso in open court. Respondent's
brief, p. 33.
36
Section 5, Rule 10, Rules of Court, in part reads: "SEC. 5. Amendment to conform to or
authorize presentation of evidence.When issues not raised by the pleadings are tried by
express or implied consent of the parties, they shall be treated in all respects, as if they had
been raised in the pleadings. Such amendment of the pleadings as may be necessary to
cause them to conform to the evidence and to raise these issues may be made upon motion
of any party at any time, even after judgment; but failure so to amend does not affect the
result of the trial of these issues ..."; Co Tiamco vs. Diaz, etc., et al., 75 Phil. 672, 679; J.M.
Tuason & Co., Inc., etc. vs. Bolanos, 95 Phil. 106, 110.
37
Decision, Court of Appeals, Appendix A of petitioner's brief, pp. 147-148.
38
Decision of the Court of Appeals, Appendix A of petitioner's brief, pp. 147-151.
39
Words & Phrases, Perm. Ed., Vol. 5, p. 13, citing Warfield Natural Gas Co. vs. Allen, 59
S.W. (2d) 534, 538.
40
R.A., p.74; emphasis supplied.
41
Article 2180, Civil Code.
42
Philippine Refining Co. vs. Garcia, et al., L-21871 and L-21962, September 27, 1966.
43
See Section 4, Chapter 3, Title VIII, Civil Code.
44
4 R.C.L., pp. 1174-1175.
45
An air carrier is a common carrier; and air transportation is similar or analogous to land and
water transportation. Mendoza vs. Philippine Air Lines, Inc., 90 Phil. 836, 841-842.
46
Austro-American S.S. Co. vs. Thomas, 248 F. 231.
47
Id., p. 233.
48
Lipman vs. Atlantic Coast Line R. Co., 93 S.E. 714, 716.
49
Petitioner's brief, pp, 104-105.
49a
V Moran, Comments on the Rules of Court, 1963 ed., p. 76.
50
Section 36, Rule 130, Rules of Court.
51
IV Martin, Rules of Court in the Philippines, 1963 ed., p. 324.
52
Ibid.
53
Article 2232, Civil Code.
54
Article 2229, Civil Code.
55
Article 2208, (1) and (11), Civil Code.
56
Coleongco vs. Claparols, L-18616, March 31, 1964; Corpus vs. Cuaderno, et al., L-23721,
March 31, 1965.
57
Cf. Yutuk vs. Manila Electric Company, L-13016, May 31, 1961; Lopez et al. vs. Pan
American World Airways, L-22415, March 30, 1966.
30
31

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. 108164 February 23, 1995
FAR EAST BANK AND TRUST COMPANY, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, LUIS A. LUNA and CLARITA S. LUNA, respondents.
VITUG, J.:
Some time in October 1986, private respondent Luis A. Luna applied for, and was accorded, a
FAREASTCARD issued by petitioner Far East Bank and Trust Company ("FEBTC") at its Pasig
Branch. Upon his request, the bank also issued a supplemental card to private respondent Clarita S.
Luna.
In August 1988, Clarita lost her credit card. FEBTC was forthwith informed. In order to replace the
lost card, Clarita submitted an affidavit of loss. In cases of this nature, the bank's internal security
procedures and policy would appear to be to meanwhile so record the lost card, along with the
principal card, as a "Hot Card" or "Cancelled Card" in its master file.
On 06 October 1988, Luis tendered a despedida lunch for a close friend, a Filipino-American, and
another guest at the Bahia Rooftop Restaurant of the Hotel Intercontinental Manila. To pay for the
lunch, Luis presented his FAREASTCARD to the attending waiter who promptly had it verified
through a telephone call to the bank's Credit Card Department. Since the card was not honored, Luis
was forced to pay in cash the bill amounting to P588.13. Naturally, Luis felt embarrassed by this
incident.
In a letter, dated 11 October 1988, private respondent Luis Luna, through counsel, demanded from
FEBTC the payment of damages. Adrian V. Festejo, a vice-president of the bank, expressed the
bank's apologies to Luis. In his letter, dated 03 November 1988, Festejo, in part, said:
In cases when a card is reported to our office as lost, FAREASTCARD undertakes the
necessary action to avert its unauthorized use (such as tagging the card as hotlisted), as it is
always our intention to protect our cardholders.
An investigation of your case however, revealed that FAREASTCARD failed to inform you about
its security policy. Furthermore, an overzealous employee of the Bank's Credit Card Department
did not consider the possibility that it may have been you who was presenting the card at that
time (for which reason, the unfortunate incident occurred). 1

Festejo also sent a letter to the Manager of the Bahia Rooftop Restaurant to assure the latter that
private respondents were "very valued clients" of FEBTC. William Anthony King, Food and Beverage
Manager of the Intercontinental Hotel, wrote back to say that the credibility of private respondent had
never been "in question." A copy of this reply was sent to Luis by Festejo.
Still evidently feeling aggrieved, private respondents, on 05 December 1988, filed a complaint for
damages with the Regional Trial Court ("RTC") of Pasig against FEBTC.
On 30 March 1990, the RTC of Pasig, given the foregoing factual settings, rendered a decision
ordering FEBTC to pay private respondents (a) P300,000.00 moral damages; (b) P50,000.00
exemplary damages; and (c) P20,000.00 attorney's fees.

On appeal to the Court of Appeals, the appellate court affirmed the decision of the trial court.
Its motion for reconsideration having been denied by the appellate court, FEBTC has come to this
Court with this petition for review.
There is merit in this appeal.
In culpa contractual, moral damages may be recovered where the defendant is shown to have acted
in bad faith or with malice in the breach of the contract. 2 The Civil Code provides:
Art. 2220. Willful injury to property may be a legal ground for awarding moral damages if the
court should find that, under the circumstances, such damages are justly due. The same rule
applies to breaches of contract where the defendant acted fraudulently or in bad faith.
(Emphasis supplied)
Bad faith, in this context, includes gross, but not simple, negligence. 3 Exceptionally, in a contract
of carriage, moral damages are also allowed in case of death of a passenger attributable to the fault
(which is presumed 4) of the common carrier. 5
Concededly, the bank was remiss in indeed neglecting to personally inform Luis of his own card's
cancellation. Nothing in the findings of the trial court and the appellate court, however, can
sufficiently indicate any deliberate intent on the part of FEBTC to cause harm to private respondents.
Neither could FEBTC's negligence in failing to give personal notice to Luis be considered so gross
as to amount to malice or bad faith.
Malice or bad faith implies a conscious and intentional design to do a wrongful act for a dishonest
purpose or moral obliquity; it is different from the negative idea of negligence in that malice or bad
faith contemplates a state of mind affirmatively operating with furtive design or ill will. 6
We are not unaware of the previous rulings of this Court, such as in American Express International,
Inc., vs.Intermediate Appellate Court (167 SCRA 209) and Bank of Philippine Islands
vs. Intermediate Appellate Court(206 SCRA 408), sanctioning the application of Article 21, in relation
to Article 2217 and Article 2219 7 of the Civil Code to a contractual breach similar to the case at
bench. Article 21 states:
Art. 21. Any person who wilfully 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 21 of the Code, it should be observed, contemplates a conscious act to cause harm. Thus,
even if we are to assume that the provision could properly relate to a breach of contract, its
application can be warranted only when the defendant's disregard of his contractual obligation is so
deliberate as to approximate a degree of misconduct certainly no less worse than fraud or bad faith.
Most importantly, Article 21 is a mere declaration of a general principle in human relations that
clearly must, in any case, give way to the specific provision of Article 2220 of the Civil Code
authorizing the grant of moral damages in culpa contractual solely when the breach is due to fraud
or bad faith.
Mr. Justice Jose B.L. Reyes, in his ponencia in Fores vs. Miranda 8 explained with great clarity the
predominance that we should give to Article 2220 in contractual relations; we quote:
Anent the moral damages ordered to be paid to the respondent, the same must be
discarded. We have repeatedly ruled (Cachero vs. Manila Yellow Taxicab Co. Inc., 101 Phil.
523; 54 Off. Gaz., [26], 6599; Necesito, et al. vs. Paras, 104 Phil., 75; 56 Off. Gaz., [23]
4023), that moral damages are not recoverable in damage actions predicated on a breach of
the contract of transportation, in view of Articles 2219 and 2220 of the new Civil Code, which
provide as follows:

Art. 2219. Moral damages may be recovered in the following and analogous
cases:
(1) A criminal offense resulting in physical injuries;
(2) Quasi-delicts causing physical injuries;
xxx xxx xxx
Art. 2220. Wilful injury to property may be a legal ground for awarding moral
damages if the court should find that, under the circumstances, such
damages are justly due. The same rule applies to breaches of contract where
the defendant acted fraudulently or in bad faith.
By contrasting the provisions of these two articles it immediately becomes apparent that:
(a) In case of breach of contract (including one of transportation) proof of bad faith or fraud
(dolus), i.e., wanton or deliberately injurious conduct, is essential to justify an award of moral
damages; and
(b) That a breach of contract can not be considered included in the descriptive term
"analogous cases" used in Art. 2219; not only because Art. 2220 specifically provides for the
damages that are caused contractual breach, but because the definition of quasi-delict in Art.
2176 of the Code expressly excludes the cases where there is a "preexisitng contractual
relations between the parties."
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.
The exception to the basic rule of damages now under consideration is a mishap resulting in
the death of a passenger, in which case Article 1764 makes the common carrier expressly
subject to the rule of Art. 2206, that entitles the spouse, descendants and ascendants of the
deceased passenger to "demand moral damages for mental anguish by reason of the death
of the deceased" (Necesito vs. Paras, 104 Phil. 84, Resolution on motion to reconsider,
September 11, 1958). But the exceptional rule of Art. 1764 makes it all the more evident that
where the injured passenger does not die, moral damages are not recoverable unless it is
proved that the carrier was guilty of malice or bad faith. We think it is clear that the mere
carelessness of the carrier's driver does not per se constitute or justify an inference of malice
or bad faith on the part of the carrier; and in the case at bar there is no other evidence of
such malice to support the award of moral damages by the Court of Appeals. To award moral
damages for breach of contract, therefore, without proof of bad faith or malice on the part of
the defendant, as required by Art. 2220, would be to violate the clear provisions of the law,
and constitute unwarranted judicial legislation.
xxx xxx xxx
The distinction between fraud, bad faith or malice in the sense of deliberate or wanton wrong
doing and negligence (as mere carelessness) is too fundamental in our law to be ignored
(Arts. 1170-1172); their consequences being clearly differentiated by the Code.
Art. 2201. In contracts and quasi-contracts, the damages for which the
obligor who acted in good faith is liable shall be those that are the natural and
probable consequences of the breach of the obligation, and which the parties

have foreseen or could have reasonably foreseen at the time the obligation
was constituted.
In case of fraud, bad faith, malice or wanton attitude, the obligor shall be
responsible for all damages which may be reasonably attributed to the nonperformance of the obligation.
It is to be presumed, in the absence of statutory provision to the contrary, that this difference
was in the mind of the lawmakers when in Art. 2220 they limited recovery of moral damages
to breaches of contract in bad faith. It is true that negligence may be occasionally so gross
as to amount to malice; but the fact must be shown in evidence, and a carrier's bad faith is
not to be lightly inferred from a mere finding that the contract was breached through
negligence of the carrier's employees.
The Court has not in the process overlooked another rule that a quasi-delict can be the cause for
breaching a contract that might thereby permit the application of applicable principles on tort 9 even
where there is a pre-existing contract between the plaintiff and the defendant (Phil. Airlines vs. Court
of Appeals, 106 SCRA 143; Singson vs. Bank of Phil. Islands, 23 SCRA 1117; and Air France vs.
Carrascoso, 18 SCRA 155). This doctrine, unfortunately, cannot improve private respondents' case
for it can aptly govern only where the act or omission complained of would constitute an actionable
tort independently of the contract. The test (whether a quasi-delict can be deemed to underlie the
breach of a contract) can be stated thusly: Where, without a pre-existing contract between two
parties, an act or omission can nonetheless amount to an actionable tort by itself, the fact that the
parties are contractually bound is no bar to the application of quasi-delict provisions to the case.
Here, private respondents' damage claim is predicated solely on their contractual relationship;
without such agreement, the act or omission complained of cannot by itself be held to stand as a
separate cause of action or as an independent actionable tort.
The Court finds, therefore, the award of moral damages made by the court a quo, affirmed by the
appellate court, to be inordinate and substantially devoid of legal basis.
Exemplary or corrective damages, in turn, are intended to serve as an example or as correction for
the public good in addition to moral, temperate, liquidated or compensatory damages (Art. 2229,
Civil Code; seePrudenciado vs. Alliance Transport System, 148 SCRA 440; Lopez vs. Pan American
World Airways, 16 SCRA 431). In criminal offenses, exemplary damages are imposed when the
crime is committed with one or more aggravating circumstances (Art. 2230, Civil Code). In quasidelicts, such damages are granted if the defendant is shown to have been so guilty of gross
negligence as to approximate malice (See Art. 2231, Civil Code; CLLC E.G. Gochangco Workers
Union vs. NLRC, 161 SCRA 655; Globe Mackay Cable and Radio Corp. vs. CA, 176 SCRA 778).
In contracts and quasi-contracts, the court may award exemplary damages if the defendant is found
to have acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner (Art. 2232, Civil
Code; PNB vs. Gen. Acceptance and Finance Corp., 161 SCRA 449).
Given the above premises and the factual circumstances here obtaining, it would also be just as
arduous to sustain the exemplary damages granted by the courts below (see De Leon vs. Court of
Appeals, 165 SCRA 166).
Nevertheless, the bank's failure, even perhaps inadvertent, to honor its credit card issued to private
respondent Luis should entitle him to recover a measure of damages sanctioned under Article 2221
of the Civil Code providing thusly:

Art. 2221. Nominal damages are adjudicated in order that a right of the plaintiff, which has
been violated or invaded by the defendant, may be vindicated or recognized, and not for the
purpose of indemnifying the plaintiff for any loss suffered by him.
Reasonable attorney's fees may be recovered where the court deems such recovery to be just and
equitable (Art. 2208, Civil Code). We see no issue of sound discretion on the part of the appellate
court in allowing the award thereof by the trial court.
WHEREFORE, the petition for review is given due course. The appealed decision is MODIFIED by
deleting the award of moral and exemplary damages to private respondents; in its stead, petitioner is
ordered to pay private respondent Luis A. Luna an amount of P5,000.00 by way of nominal
damages. In all other respects, the appealed decision is AFFIRMED. No costs.
SO ORDERED.
Narvasa, C.J., Feliciano, Padilla, Bidin, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Quiason,
Puno, Kapunan, Mendoza and Francisco, JJ., concur.
Footnotes
1 Rollo, p. 52.
2 Necesito vs. Paras, 104 Phil. 75; Panay Electric Co. vs. CA, 119 SCRA 456; Sweet
Lines, Inc. vs. CA, 121 SCRA 769; Rex Taxicab Co., Inc. vs. Bautista, 109 Phil. 712.
3 Philippine Airlines vs. Court of Appeals, 106 SCRA 143.
4 Art. 1756, Civil Code.
5 Art. 1764. Damages in cases comprised in this Section shall be awarded in
accordance with the Title XVIII of this Book, concerning Damages. Article 2206 shall
also apply to the death of a passenger caused by the breach of contract by a
common carrier.
6 See Luzon Brokerage, Co., Inc. vs. Maritime Building, Co., Inc., 43 SCRA 93; also
Black's Law Dictionary.
7 Art. 2217. Moral damages include physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation,
and similar injury. Though incapable of pecuniary computation, moral damages may
be recovered if they are the proximate result of the defendant's wrongful act for
omission.
Art. 2219. Moral damages may be recovered in the following and analogous cases:
(1) A criminal offense resulting in physical injuries;
(2) Quasi-delicts causing physical injuries;
(3) Seduction, abduction, rape, or other lascivious acts;
(4) Adultery or concubinage;
(5) Illegal or arbitrary detention or arrest;
(6) Illegal search;
(7) Libel, slander or any other form of defamation;
(8) Malicious prosecution;
(9) Acts mentioned in article 309;
(10) Acts and actions referred to in articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.

The parents of the female seduced, abducted, raped, or abused, referred to in No. 3
of this article, may also recover moral damages.
The spouse, descendants, ascendants, and brother and sisters may bring action
mentioned in No. 9 of this article, in the order named.
8 105 Phil. 266, 273-276.
9 In culpa aquiliana, moral damages may be recovered when the act or omission
complained of causes physical injuries or where the defendant is guilty of intentional
tort (Article 2219 [2][10], Civil Code).

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 84698 February 4, 1992
PHILIPPINE SCHOOL OF BUSINESS ADMINISTRATION, JUAN D. LIM, BENJAMIN P. PAULINO,
ANTONIO M. MAGTALAS, COL. PEDRO SACRO and LT. M. SORIANO, petitioners,
vs.
COURT OF APPEALS, HON. REGINA ORDOEZ-BENITEZ, in her capacity as Presiding Judge
of Branch 47, Regional Trial Court, Manila, SEGUNDA R. BAUTISTA and ARSENIA D.
BAUTISTA, respondents.
Balgos and Perez for petitioners.
Collantes, Ramirez & Associates for private respondents.
PADILLA, J.:
A stabbing incident on 30 August 1985 which caused the death of Carlitos Bautista while on the
second-floor premises of the Philippine School of Business Administration (PSBA) prompted the
parents of the deceased to file suit in the Regional Trial Court of Manila (Branch 47) presided over
by Judge (now Court of Appeals justice) Regina Ordoez-Benitez, for damages against the said
PSBA and its corporate officers. At the time of his death, Carlitos was enrolled in the third year
commerce course at the PSBA. It was established that his assailants were not members of the
school's academic community but were elements from outside the school.
Specifically, the suit impleaded the PSBA and the following school authorities: Juan D. Lim
(President), Benjamin P. Paulino (Vice-President), Antonio M. Magtalas (Treasurer/Cashier), Col.
Pedro Sacro (Chief of Security) and a Lt. M. Soriano (Assistant Chief of Security). Substantially, the
plaintiffs (now private respondents) sought to adjudge them liable for the victim's untimely demise
due to their alleged negligence, recklessness and lack of security precautions, means and methods
before, during and after the attack on the victim. During the proceedings a quo, Lt. M. Soriano
terminated his relationship with the other petitioners by resigning from his position in the school.
Defendants a quo (now petitioners) sought to have the suit dismissed, alleging that since they are
presumably sued under Article 2180 of the Civil Code, the complaint states no cause of action
against them, as jurisprudence on the subject is to the effect that academic institutions, such as the
PSBA, are beyond the ambit of the rule in the afore-stated article.
The respondent trial court, however, overruled petitioners' contention and thru an order dated 8
December 1987, denied their motion to dismiss. A subsequent motion for reconsideration was
similarly dealt with by an order dated 25 January 1988. Petitioners then assailed the trial court's
disposition before the respondent appellate court which, in a decision * promulgated on 10 June
1988, affirmed the trial court's orders. On 22 August 1988, the respondent appellate court resolved
to deny the petitioners' motion for reconsideration. Hence, this petition.
At the outset, it is to be observed that the respondent appellate court primarily anchored its decision
on the law ofquasi-delicts, as enunciated in Articles 2176 and 2180 of the Civil Code. 1 Pertinent
portions of the appellate court's now assailed ruling state:

Article 2180 (formerly Article 1903) of the Civil Code is an adoption from the old
Spanish Civil Code. The comments of Manresa and learned authorities on its
meaning should give way to present day changes. The law is not fixed and flexible
(sic); it must be dynamic. In fact, the greatest value and significance of law as a rule
of conduct in (sic) its flexibility to adopt to changing social conditions and its capacity
to meet the new challenges of progress.
Construed in the light of modern day educational system, Article 2180 cannot be
construed in its narrow concept as held in the old case of Exconde
vs. Capuno 2 and Mercado vs. Court of Appeals; 3 hence, the ruling in the Palisoc 4 case
that it should apply to all kinds of educational institutions, academic or vocational.
At any rate, the law holds the teachers and heads of the school staff liable unless they
relieve themselves of such liability pursuant to the last paragraph of Article 2180 by
"proving that they observed all the diligence to prevent damage." This can only be done
at a trial on the merits of the case. 5

While we agree with the respondent appellate court that the motion to dismiss the complaint was
correctly denied and the complaint should be tried on the merits, we do not however agree with the
premises of the appellate court's ruling.
Article 2180, in conjunction with Article 2176 of the Civil Code, establishes the rule of in loco
parentis. This Court discussed this doctrine in the afore-cited cases of Exconde, Mendoza,
Palisoc and, more recently, in Amadora vs.Court of Appeals. 6 In all such cases, it had been stressed
that the law (Article 2180) plainly provides that the damage should have been caused or inflicted
by pupils or students of he educational institution sought to be held liable for the acts of its pupils or
students while in its custody. However, this material situation does not exist in the present case for,
as earlier indicated, the assailants of Carlitos were not students of the PSBA, for whose acts the
school could be made liable.
However, does the appellate court's failure to consider such material facts mean the exculpation of
the petitioners from liability? It does not necessarily follow.
When an academic institution accepts students for enrollment, there is established
a contract between them, resulting in bilateral obligations which both parties are bound to comply
with. 7 For its part, the school undertakes to provide the student with an education that would
presumably suffice to equip him with the necessary tools and skills to pursue higher education or a
profession. On the other hand, the student covenants to abide by the school's academic
requirements and observe its rules and regulations.
Institutions of learning must also meet the implicit or "built-in" obligation of providing their students
with an atmosphere that promotes or assists in attaining its primary undertaking of imparting
knowledge. Certainly, no student can absorb the intricacies of physics or higher mathematics or
explore the realm of the arts and other sciences when bullets are flying or grenades exploding in the
air or where there looms around the school premises a constant threat to life and limb. Necessarily,
the school must ensure that adequate steps are taken to maintain peace and order within the
campus premises and to prevent the breakdown thereof.
Because the circumstances of the present case evince a contractual relation between the PSBA and
Carlitos Bautista, the rules on quasi-delict do not really govern. 8 A perusal of Article 2176 shows that
obligations arising from quasi-delicts or tort, also known as extra-contractual obligations, arise only
between parties not otherwise bound by contract, whether express or implied. However, this
impression has not prevented this Court from determining the existence of a tort even when there

obtains a contract. In Air France vs. Carrascoso (124 Phil. 722), the private respondent was
awarded damages for his unwarranted expulsion from a first-class seat aboard the petitioner airline.
It is noted, however, that the Court referred to the petitioner-airline's liability as one arising from tort,
not one arising from a contract of carriage. In effect, Air France is authority for the view that liability
from tort may exist even if there is a contract, for the act that breaks the contract may be also a tort.
(Austro-America S.S. Co. vs. Thomas, 248 Fed. 231).
This view was not all that revolutionary, for even as early as 1918, this Court was already of a similar
mind. InCangco vs. Manila Railroad (38 Phil. 780), Mr. Justice Fisher elucidated thus:
The field of non-contractual obligation is much broader than that of contractual
obligation, comprising, as it does, the whole extent of juridical human relations.
These two fields, figuratively speaking, concentric; that is to say, the mere fact that a
person is bound to another by contract does not relieve him from extra-contractual
liability to such person. When such a contractual relation exists the obligor may break
the contract under such conditions that the same act which constitutes a breach of
the contract would have constituted the source of an extra-contractual obligation had
no contract existed between the parties.
Immediately what comes to mind is the chapter of the Civil Code on Human Relations, particularly
Article 21, which provides:
Any person who wilfully causes loss or injury to another in a manner that is contrary
to morals, good custom or public policy shall compensate the latter for the damage.
(emphasis supplied).
Air France penalized the racist policy of the airline which emboldened the petitioner's employee to
forcibly oust the private respondent to cater to the comfort of a white man who allegedly "had a
better right to the seat." In Austro-American, supra, the public embarrassment caused to the
passenger was the justification for the Circuit Court of Appeals, (Second Circuit), to award damages
to the latter. From the foregoing, it can be concluded that should the act which breaches a contract
be done in bad faith and be violative of Article 21, then there is a cause to view the act as
constituting a quasi-delict.
In the circumstances obtaining in the case at bar, however, there is, as yet, no finding that the
contract between the school and Bautista had been breached thru the former's negligence in
providing proper security measures. This would be for the trial court to determine. And, even if there
be a finding of negligence, the same could give rise generally to a breach of contractual obligation
only. Using the test of Cangco, supra, the negligence of the school would not be relevant absent a
contract. In fact, that negligence becomes material only because of the contractual relation between
PSBA and Bautista. In other words, a contractual relation is a condition sine qua nonto the school's
liability. The negligence of the school cannot exist independently of the contract, unless the
negligence occurs under the circumstances set out in Article 21 of the Civil Code.
This Court is not unmindful of the attendant difficulties posed by the obligation of schools, abovementioned, for conceptually a school, like a common carrier, cannot be an insurer of its students
against all risks. This is specially true in the populous student communities of the so-called
"university belt" in Manila where there have been reported several incidents ranging from gang wars
to other forms of hooliganism. It would not be equitable to expect of schools to anticipate all types of
violent trespass upon their premises, for notwithstanding the security measures installed, the same
may still fail against an individual or group determined to carry out a nefarious deed inside school
premises and environs. Should this be the case, the school may still avoid liability by proving that the

breach of its contractual obligation to the students was not due to its negligence, here statutorily
defined to be the omission of that degree of diligence which is required by the nature of the
obligation and corresponding to the circumstances of persons, time and place. 9
As the proceedings a quo have yet to commence on the substance of the private respondents'
complaint, the record is bereft of all the material facts. Obviously, at this stage, only the trial court
can make such a determination from the evidence still to unfold.
WHEREFORE, the foregoing premises considered, the petition is DENIED. The court of origin (RTC,
Manila, Br. 47) is hereby ordered to continue proceedings consistent with this ruling of the Court.
Costs against the petitioners.
SO ORDERED.
Melencio-Herrera, Paras, Regalado and Nocon, JJ., concur.
Footnotes
* Penned by Justice Jose C. Campos, Jr. and concurred in by Justices Ricardo J.
Francisco and Alfredo L. Benipayo.
1 Article 2176 provides:
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.
Article 2180 provides:
The obligation imposed by article 2176 is demandable not only for one's own acts or
omissions, but also for those of persons for whom one is responsible.
xxx xxx xxx
Lastly, teachers or heads of establishments of arts and trades shall be liable for
damages caused by their pupils and students or apprentices, so long as they remain
in their custody.
The responsibility treated of in this article shall cease when the person herein
mentioned prove that they observed all the diligence of a good father of a family to
prevent damage."
2 101 Phil. 843
3 108 Phil. 414
4 G.R. No. L-29025, 4 October 1971, 41 SCRA 548.
5 Rollo, p. 75.
6 G.R. No. L-47745, 15 April 1988, 160 SCRA 315.
7 In Non vs. Dames II, G.R. No. 89317, 20 May 1990, 185 SCRA 535, it was held
that the contract between school and student is one "imbued with public interest" but
a contract nonetheless.
8 Article 2176, Civil Code is re-quoted for stress:
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. (emphasis supplied)
9 Article 1173, Civil Code provides:
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.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 98695 January 27, 1993
JUAN J. SYQUIA, CORAZON C. SYQUIA, CARLOTA C. SYQUIA, CARLOS C. SYQUIA and
ANTHONY C. SYQUIA, petitioners,
vs.
THE HONORABLE COURT OF APPEALS, and THE MANILA MEMORIAL PARK CEMETERY,
INC., respondents.
Pacis & Reyes Law Offices for petitioners.
Augusto S. San Pedro & Ari-Ben C. Sebastian for private respondents.
CAMPOS, JR., J.:
Herein petitioners, Juan J. Syquia and Corazon C. Syquia, Carlota C. Syquia, Carlos C. Syquia, and
Anthony Syquia, were the parents and siblings, respectively, of the deceased Vicente Juan Syquia.
On March 5, 1979, they filed a complaint 1 in the then Court of First Instance against herein private
respondent, Manila Memorial Park Cemetery, Inc. for recovery of damages arising from breach of
contract and/or quasi-delict. The trial court dismissed the complaint.
The antecedent facts, as gathered by the respondent Court, are as follows:
On March 5, 1979, Juan, Corazon, Carlota and Anthony all surnamed Syquia,
plaintiff-appellants herein, filed a complaint for damages against defendant-appellee,
Manila Memorial Park Cemetery, Inc.
The complaint alleged among others, that pursuant to a Deed of Sale (Contract No.
6885) dated August 27, 1969 and Interment Order No. 7106 dated July 21, 1978
executed between plaintiff-appellant Juan J. Syquia and defendant-appellee, the
former, father of deceased Vicente Juan J. Syquia authorized and instructed
defendant-appellee to inter the remains of deceased in the Manila Memorial Park
Cemetery in the morning of July 25, 1978 conformably and in accordance with
defendant-appellant's (sic) interment procedures; that on September 4, 1978,
preparatory to transferring the said remains to a newly purchased family plot also at
the Manila Memorial Park Cemetery, the concrete vault encasing the coffin of the
deceased was removed from its niche underground with the assistance of certain
employees of defendant-appellant (sic); that as the concrete vault was being raised
to the surface, plaintiffs-appellants discovered that the concrete vault had a hole
approximately three (3) inches in diameter near the bottom of one of the walls closing
out the width of the vault on one end and that for a certain length of time (one hour,
more or less), water drained out of the hole; that because of the aforesaid discovery,
plaintiffs-appellants became agitated and upset with concern that the water which
had collected inside the vault might have risen as it in fact did rise, to the level of the
coffin and flooded the same as well as the remains of the deceased with ill effects
thereto; that pursuant to an authority granted by the Municipal Court of Paraaque,
Metro Manila on September 14, 1978, plaintiffs-appellants with the assistance of

licensed morticians and certain personnel of defendant-appellant (sic) caused the

opening of the concrete vault on September 15, 1978; that upon opening the vault,
the following became apparent to the plaintiffs-appellants: (a) the interior walls of the
concrete vault showed evidence of total flooding; (b) the coffin was entirely damaged
by water, filth and silt causing the wooden parts to warp and separate and to crack
the viewing glass panel located directly above the head and torso of the deceased;
(c) the entire lining of the coffin, the clothing of the deceased, and the exposed parts
of the deceased's remains were damaged and soiled by the action of the water and
silt and were also coated with filth.
Due to the alleged unlawful and malicious breach by the defendant-appellee of its
obligation to deliver a defect-free concrete vault designed to protect the remains of the
deceased and the coffin against the elements which resulted in the desecration of
deceased's grave and in the alternative, because of defendant-appellee's gross
negligence conformably to Article 2176 of the New Civil Code in failing to seal the
concrete vault, the complaint prayed that judgment be rendered ordering defendantappellee to pay plaintiffs-appellants P30,000.00 for actual damages, P500,000.00 for
moral damages, exemplary damages in the amount determined by the court, 20% of
defendant-appellee's total liability as attorney's fees, and expenses of litigation and costs
of suit. 2

In dismissing the complaint, the trial court held that the contract between the parties did not
guarantee that the cement vault would be waterproof; that there could be no quasi-delict because
the defendant was not guilty of any fault or negligence, and because there was a pre-existing
contractual relation between the Syquias and defendant Manila Memorial Park Cemetery, Inc.. The
trial court also noted that the father himself, Juan Syquia, chose the gravesite despite knowing that
said area had to be constantly sprinkled with water to keep the grass green and that water would
eventually seep through the vault. The trial court also accepted the explanation given by defendant
for boring a hole at the bottom side of the vault: "The hole had to be bored through the concrete vault
because if it has no hole the vault will (sic) float and the grave would be filled with water and the
digging would caved (sic) in the earth, the earth would caved (sic) in the (sic) fill up the grave." 3
From this judgment, the Syquias appealed. They alleged that the trial court erred in holding that the
contract allowed the flooding of the vault; that there was no desecration; that the boring of the hole
was justifiable; and in not awarding damages.
The Court of Appeals in the Decision 4 dated December 7, 1990 however, affirmed the judgment of
dismissal. Petitioner's motion for reconsideration was denied in a Resolution dated April 25, 1991. 5
Unsatisfied with the respondent Court's decision, the Syquias filed the instant petition. They allege
herein that the Court of Appeals committed the following errors when it:
1. held that the contract and the Rules and Resolutions of private respondent allowed
the flooding of the vault and the entrance thereto of filth and silt;
2. held that the act of boring a hole was justifiable and corollarily, when it held that no
act of desecration was committed;
3. overlooked and refused to consider relevant, undisputed facts, such as those
which have been stipulated upon by the parties, testified to by private respondent's
witnesses, and admitted in the answer, which could have justified a different
conclusion;

4. held that there was no tort because of a pre-existing contract and the absence of
fault/negligence; and
5. did not award the P25,000.00 actual damages which was agreed upon by the
parties, moral and exemplary damages, and attorney's fees.
At the bottom of the entire proceedings is the act of boring a hole by private respondent on the vault
of the deceased kin of the bereaved petitioners. The latter allege that such act was either a breach
of private respondent's contractual obligation to provide a sealed vault, or, in the alternative, a
negligent act which constituted a quasi-delict. Nonetheless, petitioners claim that whatever kind of
negligence private respondent has committed, the latter is liable for desecrating the grave of
petitioners' dead.
In the instant case, We are called upon to determine whether the Manila Memorial Park Cemetery,
Inc., breached its contract with petitioners; or, alternatively, whether private respondent was guilty of
a tort.
We understand the feelings of petitioners and empathize with them. Unfortunately, however, We are
more inclined to answer the foregoing questions in the negative. There is not enough ground, both in
fact and in law, to justify a reversal of the decision of the respondent Court and to uphold the pleas of
the petitioners.
With respect to herein petitioners' averment that private respondent has committed culpa aquiliana,
the Court of Appeals found no negligent act on the part of private respondent to justify an award of
damages against it. Although a pre-existing contractual relation between the parties does not
preclude the existence of a culpa aquiliana, We find no reason to disregard the respondent's Court
finding that there was no negligence.
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 quasidelict . . . . (Emphasis supplied).
In this case, it has been established that the Syquias and the Manila Memorial Park
Cemetery, Inc., entered into a contract entitled "Deed of Sale and Certificate of Perpetual
Care" 6 on August 27, 1969. That agreement governed the relations of the parties and
defined their respective rights and obligations. Hence, had there been actual negligence on
the part of the Manila Memorial Park Cemetery, Inc., it would be held liable not for a quasidelict or culpa aquiliana, but for culpa contractual as provided by Article 1170 of the Civil
Code, to wit:
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.
The Manila Memorial Park Cemetery, Inc. bound itself to provide the concrete box to be send in the
interment. Rule 17 of the Rules and Regulations of private respondent provides that:
Rule 17. Every earth interment shall be made enclosed in a concrete box, or in an outer
wall of stone, brick or concrete, the actual installment of which shall be made by the
employees of the Association. 7

Pursuant to this above-mentioned Rule, a concrete vault was provided on July 27, 1978, the day
before the interment, and was, on the same day, installed by private respondent's employees in the
grave which was dug earlier. After the burial, the vault was covered by a cement lid.

Petitioners however claim that private respondent breached its contract with them as the latter held
out in the brochure it distributed that the . . . lot may hold single or double internment (sic)
underground in sealed concrete vault." 8 Petitioners claim that the vault provided by private
respondent was not sealed, that is, not waterproof. Consequently, water seeped through the cement
enclosure and damaged everything inside it.
We do not agree. There was no stipulation in the Deed of Sale and Certificate of Perpetual Care and
in the Rules and Regulations of the Manila Memorial Park Cemetery, Inc. that the vault would be
waterproof. Private respondent's witness, Mr. Dexter Heuschkel, explained that the term "sealed"
meant "closed." 9 On the other hand, the word "seal" is defined as . . . any of various closures or
fastenings . . . that cannot be opened without rupture and that serve as a check against tampering or
unauthorized opening." 10 The meaning that has been given by private respondent to the word
conforms with the cited dictionary definition. Moreover, it is also quite clear that "sealed" cannot be
equated with "waterproof". Well settled is the rule that when the terms of the contract are clear and
leave no doubt as to the intention of the contracting parties, then the literal meaning of the stipulation
shall control. 11 Contracts should be interpreted according to their literal meaning and should not be
interpreted beyond their obvious intendment. 12 As ruled by the respondent Court:
When plaintiff-appellant Juan J. Syquia affixed his signature to the Deed of Sale (Exhibit
"A") and the attached Rules and Regulations (Exhibit "1"), it can be assumed that he has
accepted defendant-appellee's undertaking to merely provide a concrete vault. He can
not now claim that said concrete vault must in addition, also be waterproofed (sic). It is
basic that the parties are bound by the terms of their contract, which is the law between
them (Rizal Commercial Banking Corporation vs. Court of Appeals, et al. 178 SCRA 739).
Where there is nothing in the contract which is contrary to law, morals, good customs,
public order, or public policy, the validity of the contract must be sustained (Phil. American
Insurance Co. vs. Judge Pineda, 175 SCRA 416). Consonant with this ruling, a
contracting party cannot incur a liability more than what is expressly specified in his
undertaking. It cannot be extended by implication, beyond the terms of the contract (Rizal
Commercial Banking Corporation vs. Court of Appeals, supra). And as a rule of evidence,
where the terms of an agreement are reduced to writing, the document itself, being
constituted by the parties as the expositor of their intentions, is the only instrument of
evidence in respect of that agreement which the law will recognize, so long as its (sic)
exists for the purpose of evidence (Starkie, Ev., pp. 648, 655, Kasheenath vs. Chundy, 5
W.R. 68 cited in Francisco, Revised Rules of Court in the Phil. p. 153, 1973 Ed.). And if
the terms of the contract are clear and leave no doubt upon the intention of the
contracting parties, the literal meaning of its stipulations shall control (Santos vs. CA, et
al., G. R. No. 83664, Nov. 13, 1989; Prudential Bank & Trust Co. vs. Community Builders
Co., Inc., 165 SCRA 285; Balatero vs. IAC, 154 SCRA 530). 13

We hold, therefore, that private respondent did not breach the tenor of its obligation to the Syquias.
While this may be so, can private respondent be liable for culpa aquiliana for boring the hole on the
vault? It cannot be denied that the hole made possible the entry of more water and soil than was
natural had there been no hole.
The law defines 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." 14 In
the absence of stipulation or legal provision providing the contrary, the diligence to be observed in
the performance of the obligation is that which is expected of a good father of a family.

The circumstances surrounding the commission of the assailed act boring of the hole negate
the allegation of negligence. The reason for the act was explained by Henry Flores, Interment
Foreman, who said that:
Q It has been established in this particular case that a certain Vicente
Juan Syquia was interred on July 25, 1978 at the Paraaque
Cemetery of the Manila Memorial Park Cemetery, Inc., will you please
tell the Hon. Court what or whether you have participation in
connection with said internment (sic)?
A A day before Juan (sic) Syquia was buried our personnel dug a grave.
After digging the next morning a vault was taken and placed in the grave
and when the vault was placed on the grave a hole was placed on the
vault so that water could come into the vault because it was raining
heavily then because the vault has no hole the vault will float and the
grave would be filled with water and the digging would caved (sic) in and
the earth, the earth would (sic) caved in and fill up the
grave. 15 (Emphasis ours)

Except for the foreman's opinion that the concrete vault may float should there be a heavy rainfall,
from the above-mentioned explanation, private respondent has exercised the diligence of a good
father of a family in preventing the accumulation of water inside the vault which would have resulted
in the caving in of earth around the grave filling the same with earth.
Thus, finding no evidence of negligence on the part of private respondent, We find no reason to
award damages in favor of petitioners.
In the light of the foregoing facts, and construed in the language of the applicable laws and
jurisprudence, We are constrained to AFFIRM in toto the decision of the respondent Court of
Appeals dated December 7, 1990. No costs.
SO ORDERED.
Narvasa, C.J., Feliciano, Regalado and Nocon, JJ., concur.
#

Footnotes
1 Civil Case No. Q-27112, "Juan J. Syquia, et al. vs. Manila Memorial Park
Cemetery, Inc.".
2 Rollo, pp. 59-60.
3 Ibid., p. 65.
4 Penned by Associate Justice Arturo B. Buena, concurred in by Associate Justices
Minerva P. Gonzaga-Reyes and Jainal D. Rasul.
5 Rollo, p. 87-A.
6 Exhibit "D"; Records, p. 10.
7 Annex A of Answer; Records, p. 31.
8 Petition, p. 5; Rollo, p. 13.
9 TSN, November 4, 1981, p. 7.
10 Webster's Third International Dictionary 2046 (1970).

11 Mercantile Insurance Co., Inc. vs. Felipe Ysmael, Jr. and Co., Inc., 169 SCRA 66
(1989); Papa vs. Alonzo, 198 SCRA 564 (1991); Alim vs. CA, 200 SCRA 450 (1991);
Republic vs. Sandiganbayan, 203 SCRA 310 (1991).
12 Mercantile Insurance Co., Inc., vs. Felipe Ysmael, Jr. and Co., Inc., 169 SCRA 66
(1989).
13 Rollo, pp. 64-65.
14 CIVIL CODE, Article 1173.
15 TSN, June 28, 1982, p. 2.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 145804
February 6, 2003
LIGHT RAIL TRANSIT AUTHORITY & RODOLFO ROMAN, petitioners,
vs.
MARJORIE NAVIDAD, Heirs of the Late NICANOR NAVIDAD & PRUDENT SECURITY
AGENCY, respondents.
DECISION
VITUG, J.:
The case before the Court is an appeal from the decision and resolution of the Court of Appeals,
promulgated on 27 April 2000 and 10 October 2000, respectively, in CA-G.R. CV No. 60720, entitled
"Marjorie Navidad and Heirs of the Late Nicanor Navidad vs. Rodolfo Roman, et. al.," which has
modified the decision of 11 August 1998 of the Regional Trial Court, Branch 266, Pasig City,
exonerating Prudent Security Agency (Prudent) from liability and finding Light Rail Transit Authority
(LRTA) and Rodolfo Roman liable for damages on account of the death of Nicanor Navidad.
On 14 October 1993, about half an hour past seven oclock in the evening, Nicanor Navidad, then
drunk, entered the EDSA LRT station after purchasing a "token" (representing payment of the fare).
While Navidad was standing on the platform near the LRT tracks, Junelito Escartin, the security
guard assigned to the area approached Navidad. A misunderstanding or an altercation between the
two apparently ensued that led to a fist fight. No evidence, however, was adduced to indicate how
the fight started or who, between the two, delivered the first blow or how Navidad later fell on the
LRT tracks. At the exact moment that Navidad fell, an LRT train, operated by petitioner Rodolfo
Roman, was coming in. Navidad was struck by the moving train, and he was killed instantaneously.
On 08 December 1994, the widow of Nicanor, herein respondent Marjorie Navidad, along with her
children, filed a complaint for damages against Junelito Escartin, Rodolfo Roman, the LRTA, the
Metro Transit Organization, Inc. (Metro Transit), and Prudent for the death of her husband. LRTA and
Roman filed a counterclaim against Navidad and a cross-claim against Escartin and Prudent.
Prudent, in its answer, denied liability and averred that it had exercised due diligence in the selection
and supervision of its security guards.
The LRTA and Roman presented their evidence while Prudent and Escartin, instead of presenting
evidence, filed a demurrer contending that Navidad had failed to prove that Escartin was negligent in
his assigned task. On 11 August 1998, the trial court rendered its decision; it adjudged:
"WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendants
Prudent Security and Junelito Escartin ordering the latter to pay jointly and severally the plaintiffs the
following:
"a) 1) Actual damages of P44,830.00;
2) Compensatory damages of P443,520.00;
3) Indemnity for the death of Nicanor Navidad in the sum of P50,000.00;
"b) Moral damages of P50,000.00;
"c) Attorneys fees of P20,000;
"d) Costs of suit.
"The complaint against defendants LRTA and Rodolfo Roman are dismissed for lack of merit.
"The compulsory counterclaim of LRTA and Roman are likewise dismissed." 1
Prudent appealed to the Court of Appeals. On 27 August 2000, the appellate court promulgated its
now assailed decision exonerating Prudent from any liability for the death of Nicanor Navidad and,
instead, holding the LRTA and Roman jointly and severally liable thusly:

"WHEREFORE, the assailed judgment is hereby MODIFIED, by exonerating the appellants from any
liability for the death of Nicanor Navidad, Jr. Instead, appellees Rodolfo Roman and the Light Rail
Transit Authority (LRTA) are held liable for his death and are hereby directed to pay jointly and
severally to the plaintiffs-appellees, the following amounts:
a) P44,830.00 as actual damages;
b) P50,000.00 as nominal damages;
c) P50,000.00 as moral damages;
d) P50,000.00 as indemnity for the death of the deceased; and
e) P20,000.00 as and for attorneys fees."2
The appellate court ratiocinated that while the deceased might not have then as yet boarded the
train, a contract of carriage theretofore had already existed when the victim entered the place where
passengers were supposed to be after paying the fare and getting the corresponding token therefor.
In exempting Prudent from liability, the court stressed that there was nothing to link the security
agency to the death of Navidad. It said that Navidad failed to show that Escartin inflicted fist blows
upon the victim and the evidence merely established the fact of death of Navidad by reason of his
having been hit by the train owned and managed by the LRTA and operated at the time by Roman.
The appellate court faulted petitioners for their failure to present expert evidence to establish the fact
that the application of emergency brakes could not have stopped the train.
The appellate court denied petitioners motion for reconsideration in its resolution of 10 October
2000.
In their present recourse, petitioners recite alleged errors on the part of the appellate court; viz:
"I.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED BY DISREGARDING THE FINDINGS
OF FACTS BY THE TRIAL COURT
"II.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT PETITIONERS
ARE LIABLE FOR THE DEATH OF NICANOR NAVIDAD, JR.
"III.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT RODOLFO
ROMAN IS AN EMPLOYEE OF LRTA."3
Petitioners would contend that the appellate court ignored the evidence and the factual findings of
the trial court by holding them liable on the basis of a sweeping conclusion that the presumption of
negligence on the part of a common carrier was not overcome. Petitioners would insist that
Escartins assault upon Navidad, which caused the latter to fall on the tracks, was an act of a
stranger that could not have been foreseen or prevented. The LRTA would add that the appellate
courts conclusion on the existence of an employer-employee relationship between Roman and
LRTA lacked basis because Roman himself had testified being an employee of Metro Transit and not
of the LRTA.
Respondents, supporting the decision of the appellate court, contended that a contract of carriage
was deemed created from the moment Navidad paid the fare at the LRT station and entered the
premises of the latter, entitling Navidad to all the rights and protection under a contractual relation,
and that the appellate court had correctly held LRTA and Roman liable for the death of Navidad in
failing to exercise extraordinary diligence imposed upon a common carrier.
Law and jurisprudence dictate that a common carrier, both from the nature of its business and for
reasons of public policy, is burdened with the duty of exercising utmost diligence in ensuring the
safety of passengers.4 The Civil Code, governing the liability of a common carrier for death of or
injury to its passengers, provides:

"Article 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.
"Article 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."
"Article 1759. Common carriers are liable for the death of or injuries to passengers through the
negligence or willful acts of the formers employees, although such employees may have acted
beyond the scope of their authority or in violation of the orders 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."
"Article 1763. A common carrier is responsible for injuries suffered by a passenger on account of the
willful acts or negligence of other passengers or of strangers, if the common carriers employees
through the exercise of the diligence of a good father of a family could have prevented or stopped
the act or omission."
The law requires common carriers to carry passengers safely using the utmost diligence of very
cautious persons with due regard for all circumstances.5 Such duty of a common carrier to provide
safety to its passengers so obligates it not only during the course of the trip but for so long as the
passengers are within its premises and where they ought to be in pursuance to the contract of
carriage.6 The statutory provisions render a common carrier liable for death of or injury to
passengers (a) through the negligence or wilful acts of its employees or b) on account of wilful acts
or negligence of other passengers or of strangers if the common carriers employees through the
exercise of due diligence could have prevented or stopped the act or omission. 7 In case of such
death or injury, a carrier is presumed to have been at fault or been negligent, and 8 by simple proof of
injury, the passenger is relieved of the duty to still establish the fault or negligence of the carrier or of
its employees and the burden shifts upon the carrier to prove that the injury is due to an unforeseen
event or to force majeure.9 In the absence of satisfactory explanation by the carrier on how the
accident occurred, which petitioners, according to the appellate court, have failed to show, the
presumption would be that it has been at fault,10 an exception from the general rule that negligence
must be proved.11
The foundation of LRTAs liability is the contract of carriage and its obligation to indemnify the victim
arises from the breach of that contract by reason of its failure to exercise the high diligence required
of the common carrier. In the discharge of its commitment to ensure the safety of passengers, a
carrier may choose to hire its own employees or avail itself of the services of an outsider or an
independent firm to undertake the task. In either case, the common carrier is not relieved of its
responsibilities under the contract of carriage.
Should Prudent be made likewise liable? If at all, that liability could only be for tort under the
provisions of Article 217612 and related provisions, in conjunction with Article 2180,13 of the Civil
Code. The premise, however, for the employers liability is negligence or fault on the part of the
employee. Once such fault is established, the employer can then be made liable on the basis of the
presumption juris tantum that the employer failed to exercise diligentissimi patris families in the
selection and supervision of its employees. The liability is primary and can only be negated by
showing due diligence in the selection and supervision of the employee, a factual matter that has not
been shown. Absent such a showing, one might ask further, how then must the liability of the
common carrier, on the one hand, and an independent contractor, on the other hand, be described?
It would be solidary. A contractual obligation can be breached by tort and when the same act or
omission causes the injury, one resulting in culpa contractual and the other in culpa aquiliana, Article
219414 of the Civil Code can well apply.15 In fine, a liability for tort may arise even under a contract,
where tort is that which breaches the contract.16 Stated differently, when an act which constitutes a
breach of contract would have itself constituted the source of a quasi-delictual liability had no
contract existed between the parties, the contract can be said to have been breached by tort,
thereby allowing the rules on tort to apply.17

Regrettably for LRT, as well as perhaps the surviving spouse and heirs of the late Nicanor Navidad,
this Court is concluded by the factual finding of the Court of Appeals that "there is nothing to link
(Prudent) to the death of Nicanor (Navidad), for the reason that the negligence of its employee,
Escartin, has not been duly proven x x x." This finding of the appellate court is not without substantial
justification in our own review of the records of the case.
There being, similarly, no showing that petitioner Rodolfo Roman himself is guilty of any culpable act
or omission, he must also be absolved from liability. Needless to say, the contractual tie between the
LRT and Navidad is not itself a juridical relation between the latter and Roman; thus, Roman can be
made liable only for his own fault or negligence.
The award of nominal damages in addition to actual damages is untenable. Nominal damages are
adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant,
may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss
suffered by him.18 It is an established rule that nominal damages cannot co-exist with compensatory
damages.19
WHEREFORE, the assailed decision of the appellate court is AFFIRMED with MODIFICATION but
only in that (a) the award of nominal damages is DELETED and (b) petitioner Rodolfo Roman is
absolved from liability. No costs.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Ynares-Santiago, Carpio and Azcuna, JJ., concur.

Footnotes
1
Rollo, p. 16.
2
Rollo, pp. 46-47.
3
Rollo, pp. 18-19.
4
Arada vs. Court of Appeals, 210 SCRA 624.
5
Philippine Airlines, Inc. vs. Court of Appeals, 226 SCRA 423.
6
Dangwa Transportation Co., Inc. vs. Court of Appeals, 202 SCRA 575.
7
Article 1763, Civil Code.
8
Gatchalian vs. Delim, 203 SCRA 126; Yobido vs. Court of Appeals, 281 SCRA 1; Landingin
vs. Pangasinan Transportation Co., 33 SCRA 284.
9
Mercado vs. Lira, 3 SCRA 124.
10
Article 1756, Civil Code.
11
Vda. De Abeto vs. Phil. Air Lines, Inc., 30 July 1982.
12
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.
13
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.
The father and, in case of his death or incapacity, the mother, are responsible for the
damages caused by the minor children who live in their company.
Guardians are liable for damages caused by the minors or incapacitated persons
who are under their authority and live in their company.
The owners and managers of an establishment or enterprise are likewise responsible
for damages caused by their employees in the service of the branches in which the
latter are employed or on the occasion of their functions.

Employers shall be liable for the damages caused by their employees and household
helpers acting within the scope of their assigned tasks, even though the former are
not engaged in any business or industry.
The State is responsible in like manner when it acts through a special agent, but not
when the damage has been caused by the official to whom the task done properly
pertains, in which case what is provided in article 2176 shall be applicable.
Lastly, teachers or heads of establishments of arts and trades shall be liable for
damages caused by their pupils and students or apprentices, so long as they remain
in their custody.
The responsibility treated of in this article shall cease when the persons herein
mentioned prove that they observed all the diligence of a good father of a family to
prevent damage.
14
Art. 2194. The responsibility of two or more persons who are liable for a quasi-delict is
solidary.
15
Air France vs. Carrascoso, 124 Phil. 722.
16
PSBA vs. CA, 205 SCRA 729.
17
Cangco vs. Manila Railroad, 38 Phil. 768; Manila Railroad vs. Compania Transatlantica, 38
Phil. 875.
18
Article 2221, Civil Code.
19
Medina, et al. vs. Cresencia, 99 Phil. 506.

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 Decision of the Court of Appeals dated 27
October 1998 and its Resolution dated 11 May 1999. The assailed decision reversed
the Decision 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.
[1]

[2]

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. Calapre went back to L.C. Diaz and
reported the incident to Macaraya.
[3]

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
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. 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.
[4]

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. 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.
[5]

In an Information 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.
[6]

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 Complaint 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.
[7]

L.C. Diaz then appealed to the Court of Appeals. On 27 October 1998, the Court of
Appeals issued its Decision reversing the decision of the trial court.
[8]

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]

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 ofP300,000 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. 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.
[10]

[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
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]

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.
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]

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 2231 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.
[14]

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]

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 A 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 DULY 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]

The Ruling of the Court

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 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. 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.
[17]

The law imposes on banks high standards in view of the fiduciary nature of
banking. Section 2 of Republic Act No. 8791 (RA 8791), 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. 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,
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.
[18]

[19]

[20]

[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. Section 2 of RA 8791 prescribes the statutory diligence required
from banks that banks must observe 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,
[22]

jurisprudence at the time of the withdrawal already imposed on banks the same high
standard of diligence required under RA No. 8791.
[23]

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. 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.
[24]

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 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]

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. Proximate cause is determined by the facts of each
case upon mixed considerations of logic, common sense, policy and precedent.
[26]

[27]

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 racing. Ilagan was apprehended and meekly
admitted his guilt. (Emphasis supplied.)
[28]

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. 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.
[29]

[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. 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.
[31]

[32]

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, 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
[33]

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.
Davide, Jr., C.J., (Chairman), Vitug, and Ynares-Santiago, JJ., concur.
Azcuna, J., on official leave.

[1]

Penned by Associate Justice Eugenio S. Labitoria with Associate Justices Jesus M. Elbinias, Marina L.
Buzon, Godardo A. Jacinto and Candido V. Rivera, concurring, Fourth Division (Special Division
of Five Justices).

[2]

Penned by Judge Felixberto T. Olalia, Jr.

[3]

Rollo, p. 119.

[4]

Ibid., p. 229. The account must have been long dormant.

[5]

Records, p. 9.

[6]

Ibid., p. 34.

[7]

Docketed as Civil Case No. 92-62384.

[8]

Docketed as CA-G.R. CV No. 49243.

[9]

Rollo, p. 231.

[10]

Ibid., p. 233.

[11]

Ibid., p. 60.

[12]

Ibid., p. 66.

[13]

Rollo, pp. 49-50.

[14]

Art. 2231. In quasi-delicts, exemplary damages may be granted if the defendant acted with gross
negligence.

[15]

Rollo, p. 43.

[16]

Ibid., pp. 33-34.

[17]

Article 1953 of the Civil Code provides: A person who receives a loan of money or any other fungible
thing acquires the ownership thereof, and is bound to pay the creditor an equal amount of the
same kind and quality.

[18]

The General Banking Law of 2000.

[19]

In the United States, the prevailing rule, as enunciated by the U.S. Supreme Court in Bank of Marin v.
England, 385 U.S. 99 (1966), is that the bank-depositor relationship is governed by contract, and
the bankruptcy of the depositor does not alter the relationship unless the bank receives notice of
the bankruptcy. However, the Supreme Court of some states, like Arizona, have held that banks

have more than a contractual duty to depositors, and that a special relationship may create a
fiduciary obligation on banks outside of their contract with depositors. See Stewart v. Phoenix
National Bank, 49 Ariz. 34, 64 P. 2d 101 (1937); Klein v. First Edina National Bank, 293 Minn.
418, 196 N.W. 2d 619 (1972).
[20]

G.R. No. 88013, 19 March 1990, 183 SCRA 360.

[21]

The ruling in Simex International was followed in the following cases: Bank of the Philippine Islands
v. Intermediate Appellate Court, G.R. No. 69162, 21 February 1992, 206 SCRA 408; Citytrust
Banking Corporation v. Intermediate Appellate Court, G.R. No. 84281, 27 May 1994, 232 SCRA
559; Tan v. Court of Appeals, G.R. No. 108555, 20 December 1994, 239 SCRA 310; Metropolitan
Bank & Trust Co. v. Court of Appeals, G.R. No. 112576, 26 October 1994, 237 SCRA 761;
Philippine Bank of Commerce v. Court of Appeals, 336 Phil. 667 (1997); Firestone v. Court of
Appeals, G.R. No. 113236, 5 March 2001, 353 SCRA 601.

[22]

The second paragraph of Article 1172 of the Civil Code provides: 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.

[23]

See notes 20 and 21.

[24]

Serrano v. Central Bank, G.R. L-30511, 14 February 1980, 96 SCRA 96.

[25]

Cangco v. Manila Railroad Co., 38 Phil. 769 (1918); De Guia v. Meralco, 40 Phil. 706 (1920).

[26]

Philippine Bank of Commerce v. Court of Appeals, supra note 21, citing Vda. de Bataclan v. Medina,
102 Phil. 181 (1957).

[27]

Ibid.

[28]

Rollo, p. 35.

[29]

Philippine Bank of Commerce v. Court of Appeals, supra note 21.

[30]

Ibid.

[31]

See note 23.

[32]

Del Prado v. Manila Electric Co., 52 Phil. 900 (1928-1929).

[33]

See note 21.

THIRD DIVISION
PHILIPPINE NATIONAL RAILWAYS
and VIRGILIO J. BORJA,
Petitioners,
- versus COURT OF APPEALS (Second Division),
CORAZON C. AMORES, MA. EMILIE
A. MOJICA, CECILE C. SISON, DINO
C. AMORES, LARISA C. AMORES,
ARMAND JINO C. AMORES and JOHN
C. AMORES,
Respondents.

G.R. No. 157658

Present:
YNARES-SANTIAGO, J.,
Chairperson,
AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA, and
REYES, JJ.
Promulgated:
October 15, 2007

x------------------------------------------------------------------------------------x
DECISION
NACHURA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the
1997 Rules of Civil Procedure, as amended, seeking to annul and set aside the
Decision[1] of the Court of Appeals (CA) in CA-G.R. CV No. 54906 which
reversed the Decision[2] of the Regional Trial Court (RTC) of Manila, Branch 28, in
Civil Case No. 92-61987.
The factual antecedents are as follows:
In the early afternoon of April 27, 1992, Jose Amores (Amores) was
traversing the railroad tracks in Kahilum II Street, Pandacan, Manila. Before
crossing the railroad track, he stopped for a while then proceeded accordingly.
[3]
Unfortunately, just as Amores was at the intersection, a Philippine National

Railways (PNR) train with locomotive number T-517 turned up and collided with
the car.[4]
At the time of the mishap, there was neither a signal nor a crossing bar at the
intersection to warn motorists of an approaching train. Aside from the railroad
track, the only visible warning sign at that time was the defective standard
signboard STOP, LOOK and LISTEN wherein the sign Listen was lacking
while that of Look was bent.[5] No whistle blow from the train was likewise
heard before it finally bumped the car of Amores. [6] After impact, the car was
dragged about ten (10) meters beyond the center of the crossing. [7] Amores died as
a consequence thereof.
On July 22, 1992, the heirs of Amores, consisting of his surviving wife and
six children, herein respondents, filed a Complaint for Damages [8] against
petitioners PNR and Virgilio J. Borja (Borja), PNRs locomotive driver at the time
of the incident, before the RTC of Manila. The case was raffled to Branch 28 and
was docketed as Civil Case No. 92-61987. In their complaint, respondents averred
that the trains speedometer was defective, and that the petitioners negligence was
the proximate cause of the mishap for their failure to take precautions to prevent
injury to persons and property despite the dense population in the vicinity. They
then prayed for actual and moral damages, as well as attorneys fees.[9]
In their Answer,[10] the petitioners denied the allegations, stating that the train
was railroad-worthy and without any defect. According to them, the proximate
cause of the death of Amores was his own carelessness and negligence, and
Amores wantonly disregarded traffic rules and regulations in crossing the railroad
tracks and trying to beat the approaching train. They admitted that there was no
crossing bar at the site of the accident because it was merely a barangay road.
[11]
PNR stressed that it exercised the diligence of a good father of a family in the
selection and supervision of the locomotive driver and train engineer, Borja, and
that the latter likewise used extraordinary diligence and caution to avoid the
accident. Petitioners further asserted that respondents had the last clear chance to
avoid the accident but recklessly failed to do so.
After trial on the merits, on August 22, 1996, the RTC rendered judgment in
favor of the petitioners, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered dismissing the complaint of

the plaintiffs and the defendants counterclaim.
The costs shall be halved and paid equally by the parties.
The counsel for the defendants is hereby ordered to inform this court who
is the legal representative of the deceased defendant, Virgilio Borja, within ten
(10) days from receipt of a copy of this decision.
SO ORDERED.[12]

The RTC rationalized that the proximate cause of the collision was Amores
fatal misjudgment and the reckless course of action he took in crossing the railroad
track even after seeing or hearing the oncoming train.
On appeal, the CA reversed the RTC decision, as follows:
WHEREFORE, the assailed Decision of the Regional Trial Court of
Manila, Branch 28 is hereby REVERSED. The defendants PNR and the estate of
Virgilio J. Borja are jointly and severally liable to pay plaintiffs the following:
1)

The amount of P122,300.00 for the cost of damage to the car; and,

2)

The amount of P50,000 as moral damages.

For lack of official receipts for funeral expenses and specimen of the last
pay slip of the deceased, the claim for reimbursement of funeral expenses and
claim for payment of support is herebyDENIED for lack of basis. Costs against
Defendants.
SO ORDERED.[13]

In reversing the trial courts decision, the appellate court found the
petitioners negligent. The court based the petitioners negligence on the failure of
PNR to install a semaphore or at the very least, to post a flagman, considering that
the crossing is located in a thickly populated area. Moreover, the signboard Stop,
Look and Listen was found insufficient because of its defective condition as
described above. Lastly, no negligence could be attributed to Amores as he
exercised reasonable diligence in crossing the railroad track.

Aggrieved by this reversal, the petitioners filed the present petition for
review on certiorari, raising the following grounds:
I
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION
IN RENDERING ITS DECISION REVERSING THE DECISION OF THE
REGIONAL TRIAL COURT OF MANILA BRANCH 28, IN NOT TAKING
INTO CONSIDERATION THE PROVISION OF SECTION 42, R.A. 4136 OF
THE LAND TRANSPORTATION AND TRAFFIC CODE.
II
THE DECISION OF THE COURT OF APPEALS IS CONTRARY TO THE
EVIDENCE ON RECORD ADDUCED IN THE TRIAL ON THE MERIT IN
CIVIL CASE NO. 92-61987.[14]

The petitioners insist that Amores must have heard the trains whistle and
heeded the warning but, noting that the train was still a distance away and moving
slowly, he must have calculated that he could beat it to the other side of the track
before the train would arrive at the intersection. The petitioners likewise add that
the train was railroad-worthy and that its defective speedometer did not affect the
trains operation. Lastly, they insist that evidence showed sufficient warning signs
strategically installed at the crossing to alert both motorists and pedestrians.
Respondents, on the other hand, argue that the cause of the accident was
petitioners carelessness, imprudence and laxity in failing to provide a crossing bar
and keeper at the Kahilum II railway intersection. Considering that Kahilum II
Street is in the middle of a thickly populated squatters area, and many pedestrians
cross the railroad track, notwithstanding the fact that it is a public street and a main
thoroughfare utilized in going to Herran Street, the presence of adequate warning
signals would have prevented the untimely death of Amores. Another crucial point
raised by the respondents is the manner in which Borja applied the brakes of the
train only when the locomotive was already very near Amores car, as admitted by
witness Querimit. Finally, respondents claim that Borjas failure to blow the
locomotives horn, pursuant to the usual practice of doing the same 100 meters

before reaching the Kahilum II crossing point is an earmark of recklessness on the

part of the petitioners.
The petition must fail.
The only issue to be resolved in the present case is whether the appellate
court was correct in ascribing negligence on the part of the petitioners. It was
ascertained beyond quandary that the proximate cause of the collision is the
negligence and imprudence of the petitioner PNR and its locomotive driver, Borja,
in operating the passenger train.
As the action is predicated on negligence, the relevant provision is Article
2176 of the New Civil Code, which states 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 was no pre-existing contractual relation between the parties, is called quasidelict and is governed by the provisions of this chapter.

We have thoroughly reviewed the records of the case and we find no cogent
reason to reverse the appellate courts decision. Negligence has been defined as
the failure to observe for the protection of the interests of another person that
degree of care, precaution, and vigilance which the circumstances justly demand,
whereby such other person suffers injury.[15] Using the aforementioned
philosophy, it may be reliably concluded that there is no hard and fast rule whereby
such degree of care and vigilance is calibrated; it is dependent upon the
circumstances in which a person finds himself. All that the law requires is that it is
perpetually compelling upon a person to use that care and diligence expected of
sensible men under comparable circumstances.[16]
We hold that the petitioners were negligent when the collision took place.
The transcript of stenographic notes reveals that the train was running at a fast
speed because notwithstanding the application of the ordinary and emergency
brakes, the train still dragged the car some distance away from the point of impact.
Evidence likewise unveils the inadequate precautions taken by petitioner PNR to
forewarn the public of the impending danger. Aside from not having any crossing

bar, no flagman or guard to man the intersection at all times was posted on the day
of the incident. A reliable signaling device in good condition, not just a dilapidated
Stop, Look and Listen signage because of many years of neglect, is needed to
give notice to the public. It is the responsibility of the railroad company to use
reasonable care to keep the signal devices in working order. Failure to do so would
be an indication of negligence.
As held in the case of Philippine National Railway v. Brunty,[17] 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 to the operation of trains and to the
maintenance of the crossings. 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 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.[18] The failure of the PNR to put a cross bar, or signal light, flagman or
switchman, or semaphore 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.
The petitioners insist that a train has a right-of-way in a railroad crossing
under the existing laws. They derive their theory from Section 42 (d), Article III of
R.A. 4136, otherwise known as the Land Transportation and Traffic Code, which
states that:
The driver of a vehicle upon a highway shall bring to a full stop such
vehicle before traversing any through highway or railroad crossing: Provided,
That when it is apparent that no hazard exists, the vehicle may be slowed down to
five miles per hour instead of bringing it to a full stop.

They claim that motorists are enjoined by law to stop, look and listen before
crossing railroad tracks and that a heavier responsibility rests upon the motorists in
avoiding accidents at level crossings.

It is true that one driving an automobile must use his faculties of seeing and
hearing when nearing a railroad crossing. However, the obligation to bring to a full
stop vehicles moving in public highways before traversing any through street
only accrues from the time the said through street or crossing is so designated
and sign-posted. From the records of the case, it can be inferred that Amores
exercised all the necessary precautions required of him as to avoid injury to
himself and to others. The witnesses testimonies showed that Amores slackened
his speed, made a full stop, and then proceeded to cross the tracks when he saw
that there was no impending danger to his life. Under these circumstances, we are
convinced that Amores did everything, with absolute care and caution, to avoid the
collision.
It is settled that every person or motorist crossing a railroad track should use
ordinary prudence and alertness to determine the proximity of a train before
attempting to cross. We are persuaded that the circumstances were beyond the
control of Amores for no person would sacrifice his precious life if he had the
slightest opportunity to evade the catastrophe. Besides, the authority in this
jurisdiction is that the failure of a railroad company to install a semaphore or at the
very least, to post a flagman or watchman to warn the public of the passing train
amounts to negligence.[19]
In view of the foregoing, We will now discuss the liability of petitioner
PNR. Article 2180[20] of the New Civil Code discusses the liability of the employer
once negligence or fault on the part of the employee has been established. The
employer is actually liable on the assumption of juris tantum that the
employer failed to exercise diligentissimi patris families in

the selection and supervision of its employees. The liability is primary and can
only be negated by showing due diligence in the selection and supervision of the
employee, a factual matter that has not been demonstrated. [21] Even the existence of
hiring procedures and supervisory employees cannot be incidentally invoked to
overturn the presumption of negligence on the part of the employer.[22]
WHEREFORE, the petition is DENIED. The Decision of the Court of
Appeals dated March 31, 2003 in CA-G.R. CV No. 54906 is hereby AFFIRMED.
SO ORDERED.
ANTONIO EDUARDO B. NACHURA
Associate Justice
WE CONCUR:

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson

MA. ALICIA AUSTRIA-MARTINEZ

Associate Justice

MINITA V. CHICO-NAZARIO
Associate Justice

RUBEN T. REYES
Associate Justice

AT T E S TAT I O N

I attest that the conclusions in the above Decision were reached in

consultation before the case was assigned to the writer of the opinion of the Courts
Division.

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division

C E R T I F I C AT I O N
Pursuant to Section 13, Article VIII of the Constitution and the Division
Chairperson's Attestation, I certify that the conclusions in the above Decision had
been reached in consultation before the case was assigned to the writer of the
opinion of the Courts Division.

REYNATO S. PUNO
Chief Justice

[1]

Penned by Associate Justice Teodoro P. Regino, with Associate Justices Buenaventura J. Guerrero and
Mariano C. Del Castillo, concurring; rollo, pp. 37-43.
[2]
Penned by Judge Eudoxia T. Gualberto; rollo, pp. 44-58.
[3]
TSN, March 4, 1994, pp. 6, 10.
[4]
Rollo, p. 37.
[5]
Id. at 41.
[6]
TSN, March 4, 1994, pp. 17-18..
[7]
Rollo, p. 40.
[8]
Records, pp. 1-5.
[9]
Id. at 4.
[10]
Id. at 14-17.
[11]
TSN, July 3, 1995, p. 23.
[12]
Rollo, p. 58.
[13]
Id. at 42.
[14]
[15]
[16]
[17]
[18]

Id. at 15.
Corliss v. The Manila Railroad Company, 137 Phil. 101, 107.
Cusi v. Philippine National Railways, No. L-29889, 31 May 1979, 90 SCRA 357, 362.
G.R. No. 169891, November 2, 2006, 506 SCRA 685, 699 citing 37 Am.Jur. PO F.2d 439.
Id.

[19]

Phil. National Railways v. Intermediate Appellate Court, G.R. No. 70547, 22 January 1993, 271 SCRA
401, 416, citing Lilius v. Manila Railroad Company, 59 Phil. 758 (1934).
[20]
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.
The father and, in case of his death or incapacity, the mother, are responsible for the damages caused by
the minor children who live in their company.
Guardians are liable for damages caused by the minors or incapacitated persons who are under their
authority and live in their company.
The owners and managers of an establishment or enterprise are likewise responsible for damages caused
by their employees in the service of the branches in which the latter are employed or on the occasion of their
functions.
Employers shall be liable for the damages caused by their employees and household helpers acting within
the scope of their assigned tasks, even though the former are not engaged in any business or industry.
The State is responsible in like manner when it acts through a special agent, but not when the damage has
been caused by the official to whom the task done properly pertains, in which case what is provided in Article 2176
shall be applicable.
Lastly, teachers or heads of establishments of arts and trades shall be liable for damages caused by their
pupils and students or apprentices, so ling as they remain in their custody.
The responsibility treated of in this article shall cease when the persons herein mentioned prove that they
observed all the diligence of a good father of a family to prevent damage.
[21]
Light Rail Transit Authority v. Navidad, G.R. No. 145804, 6 February 2003, 397 SCRA 75, 82.
[22]
Fabre, Jr. v. Court of Appeals, G.R. No. 111127, 26 July 1996, 259 SCRA 426, 434-435, citing Metro
Manila Transit Corp. v. Court of Appeals, 233 SCRA 521 (1993), Campo v. Camarote, 100 Phil 459 (1956).

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-6870

May 24, 1954

ELENA AMEDO, plaintiff-appellant,

vs.
RIO Y OLABARRIETA, INC., defendant-appellee.
Cesareo Perez and Meliton C. Parducho for appellant.
M. Almario and Jose T. Lajom for appellee.
CONCEPCION, J.:
This case was instituted on October 18, 1950. In her original complaint, plaintiff Elena Amedo sought
to collect from defendant Rio y Olabarrieta, Inc., the sum of P2,038.40 as compensation for the
death of her son, Filomeno Managuit, who worked for the defendant as a seaman of the M/S Pilar II.
The main allegation of said original complaint was:
That on May 27, 1949 at about 11:30 o'clock in the morning, while the deceased Filomeno
Managuit was on board M/S "Pilar II" as such seaman, he jumped into the water to retrieve a
2-peso bill belonging to him, and as a consequence of which, he was drowned.
On November 1, 1950, defendant filed a motion to dismiss upon the ground that said allegation does
not show that the death of plaintiff's son was due to an "accident arising out of and in the course of
employment," and that, accordingly, the complaint does not state a cause of action. This motion was
granted and the complaint dismissed, accordingly, by an order dated December 11, 1950. A motion
for the reconsideration of this order having been denied, plaintiff appealed to this Court, which, on
October 30, 1952, rendered a decision affirming the order appealed from, but "without prejudice to
the right of the plaintiff, the mother of the deceased seaman, to file an amended complaint within
fifteen (15) days from notice by the clerk of the trial court that the record of this case had been
remanded to and received by the trial court, without costs." Hence, on December 22, 1952, plaintiff
filed an amended complaint, paragraph 4 of which alleges:
That on May 27, 1949, at or about 11:30 o'clock in the morning while the said Filomeno
Managuit was in the course of his employment, performing his duties as such ordinary
seaman on defendant's M/S "Pilar II",which was anchored then about 1 1/2 miles from the
seashore of Arceli Dumarang, Palawan, his two-peso bill was blown by the breeze into the
sea and in his effort to retrieve the same from the waters he was drowned.
A motion to dismiss this amended complaint upon the ground of failure to state a cause of action
was granted and the case, consequently, dismissed without costs. Are consideration of this action
having been denied, the case is once again before us on appeal.
Plaintiff's claim is admittedly predicated upon Act No. 3428, otherwise known as the Workmen's
Compensation Act. The same was amended, first, by Act No. 3812, then, by Commonwealth Act No.
210 and, lastly, by Republic Act 772. The latter, however, took effect on June 20,1952 or after the
accident upon which plaintiff bases her cause of action. Hence, in the consideration of this case, we
shall disregard the provisions of said Republic Act No. 772. Sections 2 and 4 of Act No. 2428, prior
to its latest amendment, read:
Sec. 2. Grounds for compensation. When any employee receives a personal injury from
any accident arising out of and in the course of the employment, or contracts any illness

directly caused by such employment, or the result of the nature of such employment, his
employer shall pay compensation in the sums and to the persons hereinafter specified.
Sec. 4. Injuries not covered. Compensation shall not be allowed for injuries caused (1) by
the voluntary intent of the employee to inflict such injury upon himself or another person; (2)
by drunkenness on the part of the laborer who had the accident; (3) by notorious negligence
of the same.
Pursuant to these provisions in so far as pertinent to the case at bar three conditions are
essential to hold an employer liable to compensate his employee for a personal injury sustained by
him from an accident, namely: (1) the accident must arise out of the employment; (2) it must happen
in the course of the employment; and (3) it must not be caused by the "notorious negligence" of the
employee.
Admittedly, the death of Filomeno Managuit was due to an accident. The point in issue is whether
such accident occurred under the three (3) conditions aforementioned. Referring to the first two
requirements, we said, in Afable et al. vs. Singer Sewing Machine Co. (58 Phil., 39, 42):
The phrase "due to and in the pursuance of" used in section 2 of Act No. 3428 was changed
in Act No. 3812 to "arising out of and in the course of". Discussing this phrase, the Supreme
Court of Illinois in the case of Muller Construction Co. vs. Industrial Board (283 Ill., 148; 118
N. E., 1028; 1 W. C. L., 943), said:
"The words "arising out of" refer to the origin or cause of the accident and are descriptive of
its character, while the words `in the course of' refer to the time, place, and circumstances
under which the accident takes place. (Fitzgerald vs. Clarke & Sons, 1 B.W.C.C., 197
Dietzen Co. vs. Industrial Board, 279 Ill. 11; 116 N.E. 684.) By the use of these words it was
not the intention of the legislature to make the employer an insurer against all accidental
injuries which might happen to an employee while in the course of the employment, but only
for such injuries arising from or growing out of the risks peculiar to the nature of work in the
scope of the workmen's employment or incidental to such employment, and accidents in
which it is possible to trace the injury to some risk or hazard to which the employee is
exposed ina special degree by reason of such employment. Risks to which all persons
similarly situated are equally exposed and not traceable in some special degree to the
particular employment are excluded."
Adopting a liberal view, it may be conceded that the death of Filomeno took place "in the course of"
his employment, in that it happened at the "time" when, and at the "place" where-according to the
amended complaint-he was working. However, the accident which produced this tragic result did not
"arise out of" his employment. Indeed, the latter was not "the origin or cause of said accident. The
blowing of his 2-peso bill may have grown out of, or arisen from, his employment. It was the result of
a risk peculiar to his work as a seaman or incidental to such work. But, his death was the
consequence of his decision to jump into the water to retrieve said bill. The hazardous nature of this
act was not due specially to the nature of his employment. It was a risk to which any person on
board the M/S Pilar II, such as a passenger thereof or an ordinary visitor, would have been exposed
had he, likewise, jumped into the sea, as Filomeno had.
Irrespective of whether or not the accident in question arose out of, or took place in the course of the
employment, was it caused by his "notorious negligence"? The phrase "notorious negligence" has
been held to be tantamount to "gross negligence", which, in turn, has been defined as follows:
Gross negligence is define to be the want of even slight care and diligence. (Mobile and M.
R. Co. vs. Aschcraft [1872] 48 Ala., 15.)

By gross negligence is meant "such entire want of care as to raise a presumption that the
person in fault is conscious of the probable consequences of carelessness, and is indifferent,
or worse, to the danger of injury to person or property of others." ... The negligence must
amount to a reckless disregard of the safety of person or property." (Wall vs. Cameron [1882]
6 Colo., 275; see, also, The Law Governing Labor Disputes in the Philippines by Francisco,
2nd ed., p. 877.)
It cannot be denied that in jumping into the sea, one mile and a half from the seashore of Arceli,
Dumarang, Palawan, Filomeno failed to exercise "even slight care and diligence," that he displayed
a "reckless disregard of the safety" of his person, that he could not have been but conscious of the
probable consequences" of his carelessness and that he was "indifferent, or worse, to the danger of
injury.
Thus, in the case of Government of the Philippines vs. The Manila Electric Co. (40 Off. Gaz., 9th
Suppl., 232),an employee of the Bureau of Posts who died by electrocution, as the lines which he
was repairing came into contact with those of the Manila Electric, was held to be guilty of gross
negligence, he having been previously warned that the service of electric light had been
reestablished and that he should, therefore be careful in handling the wires. The same conclusion
was reached in De la Cruz vs. Hijos de I. de la Rama and Co. (62 Phil., 653), involving a truck driver
who died, because his truck fell into a ditch in consequence of a false manuever he made to avoid
collision with another car which unexpectedly appeared on the road, while he was driving on the
wrong side of the highway, at a speed of 40 to 50 km. an hour.
To the same effect was the decision in Jahara vs. Mindanao Lumber Co. (57 Phil., 853), referring to
a laborer who was run over by a car, as he fell therefrom, when he tried to board it while moving
backward. Similarly, the death of a carpenter as he slipped from the roof of a building he was
repairing was blamed on his gross negligence in Caunan vs. Compania General de Tabacos (56
Phil., 542,545), he having worn rubber shoes despite the fact that the roof was wet.
The case of Reyes vs. The City of Manila (G. R. No. 29112, July 18, 1933) referred to a watchman
assigned to a road-roller, who sat on a piece of board one end of which was over a box placed on
the hind wheels of the road-roller and the other end over a box of tools on the same rollert two
meters above the ground. As he tried to drive away the mosquitoes and flying ants which bothered
him, the board slipped off the wheel of the roller. So, he fell to the ground and his knee and left pelvis
bumped against the cement sidewalk, sustaining physical injuries as a consequence thereof. It was
held that he had been grossly negligent in seating on the piece of board which was precariously
placed and in making motions for the purpose of driving away the mosquitoes and flying ants. Again
in Guilas vs. The Province of Pampanga (G. R. No. 37744, July 21, 1933), a laborer on board a truck
who stood up as it was approaching a curve and fell over when the vehicle turned the curved, was
held guilty of gross negligence.
In none of these cases was the danger as apparent or imminent as when Filomeno Managuit
jumped into the sea to recover his 2-peso bill. Hence, there is more reason to hold that his death
was caused by his notorious negligence.
His case is easily distinguishable from that of Cuevo vs. Barredo (G.R. No. 45669, decided February
24, 1938, the employee involved therein, who appeared to be a good swimmer, having acted in
obedience to an order of his foreman, to save or protect a property of the employer. It is, also,
distinguishable from accidents occurring while the laborer or employee is answering a call of nature,
or throwing away his cigarette (Columbia Casualty Co. vs. Parham, 69 Ga. App. 258), or picking up
his pipe, which had fallen, or retrieving his shoes from a car into which a fellow worker had thrown it

(Donovan vs. Bush Terminal Co., 6 N. Y. S. 2nd 860, 255 App. Div. 737), these acts not being
dangerous per se and the employee being legally justified or supposed to perform either of them in
the course of his employment. So, also, if, while Filomeno Managuit was working, his 2-peso bill
merely fell from his pocket, and as he picked up the bill from the floor something accidentally fell
upon him and injured him, he would surely be entitled to compensation, his act being obviously
innocent. In such case, it could be said, in the words of the Lord President in Lauchlan vs. Anderson
(S. C. 529), that "He had the right to be at the place ...; he was within the time during which he was
employed ...;and he was doing a thing which a man while working may reasonably do-a workman of
his sort may reasonably smoke, he may reasonably drop his pipe, and he may reasonably pick it up
again." (See Ramos vs. Poblete et al., 40 Off. Gaz., 3474). Jumping into the sea, however, is entirely
different, the danger which it entails being clear, potent and obvious.
In view of the foregoing the decision appealed from is hereby affirmed, without special
pronouncement as to costs.
It is so ordered.
Paras, C.J., Bengzon, Montemayor, Reyes, A., Jugo, Bautista Angelo, and Labrador, JJ., concur.

SECOND DIVISION
[G.R. No. L-8110. June 30, 1956.]
MARINDUQUE IRON MINES AGENTS, INC., Petitioner, vs. THE WORKMENS
COMPENSATION COMMISSION, THE HEIRS OF PEDRO MAMADOR and
GERONIMO MA. COLL, Respondents.
DECISION
BENGZON, J.:
The Marinduque Iron Mines Agents Inc. questions by certiorari the order of the
Workmens Compensation Commissioner confirming the referees award of
compensation to the heirs of Pedro Mamador for his accidental death.
Only the right to compensation is disputed;

chan roblesv irtualawlibrary

not the amount.

It appears, says the award, that on August 23, 1951, at 6: 00 a.m. in Bo.
Sumangga, Mogpog, Marinduque, the deceased Mamador together with other
laborers of theRespondent-corporation, (Marinduque Iron Mines Agents Inc.)
boarded a truck belonging to the latter, which was then driven by one Procopio
Macunat, also employed by the corporation, and on its way to their place of work at
the mine camp at Talantunan, while trying to overtake another truck on the
company road, it turned over and hit a coconut tree, resulting in the death of said
Mamador and injury to the others.
chanroblesvirt uallawlibrary

Procopio Macunat was prosecuted, convicted and sentenced to indemnify the heirs
of the deceased. (Criminal Case No. 1491). He has paid nothing however, to the
latter.
In his first proposition Petitioner challenges the validity of the proceedings before
the Commission, asserting it had not been given the opportunity to cross-examine
the opposing witnesses. According to Respondents.
The records show that pursuant to a request made by this Commission on March
28, 1953 to investigate the above-entitled case, the Public Defender of Boac,
Marinduque, notifiedRespondent Geronimo Ma. Coll and the general manager of
the Respondent company, Mr. Eric Lenze, to appear before him in an investigation,
first on May 12, 1953, when neither of them appeared, and the second on May 29,
1953, when only Mr. Geronimo Ma. Coll. appeared. The sworn testimony of Mr. Ma.
Coll was then taken down in a question and answer method. On August 18, 1953,
thru Referee Ramon Villaflor, this Commission wrote the Respondentcompany to
comment on the enclosed copy of the sworn declaration of Ma. Coll.
TheRespondent company, thru its Vice President, denied its liability under the
Workmens Compensation Act, as amended. In an investigation conducted on
February 8, 1954 by the undersigned referee, the Respondent company thru Mr.
Lenze who was assisted by counsel, was allowed to examine the records of the case
including the sworn declaration of Ma. Coll and was given all the opportunity to
rebut the same by additional evidence.
In our opinion, Petitioners grievance does not rest on any sound basis, because it
was given notice, and therefore had the chance, to examine (and cross-examine)
the witnesses against it. The statute even permits the Commissioner (or his referee)

to take testimony without notice (section 48 Act 3428 as amended) provided of

course such ex parte evidence is reduced to writing, and the adverse party is
afforded opportunity to examine and rebut the same which was done in this
instance.
Anyway we are not shown how its failure to cross-examine the witnesses prejudiced
thePetitioners position.
In its second proposition, Petitioner maintains that this claim is barred by section 6
of the Workmens Compensation Law, because (a) Macunat was prosecuted and
required to indemnify the heirs of the deceased and (b) an amicable settlement was
concluded between said heirs and Macunat.
Section 6 provides as follows:

chanroblesvirt uallawlibrary

Sec. 6. Liability of third parties. In case an employee suffers an injury for which
compensation is due under this Act by any other person besides his employer, it
shall be optional with such injured employee either to claim compensation from his
employer, under this Act, or sue such other person for damages, in accordance with
law;
and in case compensation is claimed and allowed in accordance with this
Act, the employer who paid such compensation or was found liable to pay the same,
shall succeed the injured employee to the right of recovering from such person what
he paid:
Provided, That in case the employer recovers from such third person
damages in excess of those paid or allowed under this Act, such excess shall be
delivered to the injured employee or any other person entitled thereto, after
deduction of the expenses of the employer and the costs of the proceedings. The
sum paid by the employer for compensation or the amount of compensation to
which the employee or his dependents are entitled, shall not be admissible as
evidence in any damage suit or action.
chan

roblesvirt ualawlibrary

chanroblesvirt uallawlibrary

It is the Petitioners contention that Criminal Case No. 1491 and its outcome
constituted an election by the employee (or his heirs) to sue the third person, such
election having the effect of releasing the employer. However, Criminal Case No.
1491 was not a suit for damages against the third person, it being alleged, without
contradiction that the heirs did not intervene therein and have not so far received
the indemnity ordered by the court. At any rate, we have already decided in Nava
vs. Inchausti Co. 1 that the indemnity granted the heirs in a criminal prosecution of
the other person does not affect the liability of the employer to pay compensation.
2
As to the alleged amicable settlement, it consists of an affidavit wherein, for the
sum of 150 pesos, Mamadors widow promised to forgive Macunat for the wrong
committed and not to bring him before the authorities for prosecution. Upon
making such promise Petitionerargues she elected one of the remedies,
(against the third person) and is barred from the other remedy (against the
employer). The contention may not be sustained, inasmuch as all the widow
promised was to forego the offenders criminal prosecution. Note further that a
question may be raised whether she could bind the other heirs of the deceased.
The most important aspect of this appeal, is the effect of the deceaseds having
violated the employers prohibition against laborers riding the haulage
trucks. Petitioner claims such violation was the laborers notorious negligence
which, under the law, precludes recovery. The Commission has not declared that the
prohibition was known to Mamador. Yet the employer does not point out in the

record evidence to that effect. Supposing Mamador knew the prohibition, said the
referee, can we truthfully say that he boarded the fatal truck with full apprehension
of the existence of the danger, if any at all, that an ordinary prudent man would try
to avoid? I do not believe so, and even in the presence of doubt, the same must be
resolved in his favor. Unless of course, we can attribute to him a desire to end his
life. Nowhere in the records of this case can we find the slightest insinuation of that
desire.
There is no doubt that mere riding on haulage truck or stealing a ride thereon is not
negligence, ordinarily. It couldnt be, because transportation by truck is not
dangerous per se. It is argued that there was notorious negligence in this particular
instance because there was the employers prohibition. Does violation of this order
constitute negligence? Many courts hold that violation of a statute or ordinance
constitutes negligence per se. Others consider the circumstances.
However there is practical unanimity in the proposition that violation of a rule
promulgated by a Commission or board is not negligence per se;
but it may be
evidence of negligence. (C.J.S., Vol. 65, p. 427.)
chan

roblesv irtualawlibrary

This order of the employer (prohibition rather) couldnt be of a greater obligation

than the rule of a Commission or board. And the referee correctly considered this
violation as possible evidence of negligence;
but it declared that under the
circumstance, the laborer could not be declared to have acted with negligence.
Correctly, it is believed, since the prohibition had nothing to do with personal safety
of the riders.
chan

roblesvirt ualawlibrary

Such finding is virtually a finding of fact which we may not overrule in this certiorari
proceeding.
Nevertheless, even granting there was negligence, it surely was not notorious
negligence, which we have interpreted to mean the same thing as gross
negligence 3 implying conscious indifference to consequences pursuing a
course of conduct which would naturally and probably result in injury utter
disregard of consequences. (38 Am. Jur., 691) Getting or accepting a free ride on
the companys haulage truck couldnt be gross negligence, because as the referee
found, no danger or risk was apparent.
There being no other material point raised in the petition for review, the award of
compensation is hereby affirmed, with costs against Petitioner.
Padilla, Bautista Angelo, Concepcion, Reyes, J.B.L., and Endencia, JJ.,
concur.
Reyes, A., J., concurs in the result.
Separate Opinions
MONTEMAYOR, J.:
I concur in the result. I believe that the injury suffered herein was not in the course
of the employments, neither did it arise out of it, but this question does not seem to
have been raised below or in the appeal.

Endnotes:

chanroblesvirtuallawlibrary

1. 57 Phi., 751.
2. See Balajadia vs. Province of Iloilo, G. R. No. 41979 October 1934.
3. To Justice Malcolm notorious negligence is stronger in significance than
gross negligence. (56 Phil, 547.)

SECOND DIVISION
CONCEPCION ILAOORETA,
Petitioner,

G.R. No. 172406

Present:
QUISUMBING, J., Chairperson,
CARPIO,
CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.

- versus -

Promulgated:
SPOUSES EVA MARIE and
BENEDICTO
NOEL
RONQUILLO,
Respondents.

October 11, 2007

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
CARPIO MORALES, J.:
Respondents, spouses Eva Marie Ronquillo (Eva Marie) and Noel Benedicto
(Noel) Ronquillo (the Ronquillo spouses or the spouses), had not been blessed with
a child despite several years of marriage. They thus consulted petitioner, Dr.
Concepcion Ilao-Oreta (Dr. Ilao-Oreta), an obstetrician-gynecologist-consultant at
the St. Lukes MedicalCenter where she was, at the time material to the case, the
chief of the Reproductive Endocrinology and Infertility Section.
Upon Dr. Ilao-Oretas advice, Eva Marie agreed to undergo a laparoscopic
procedure whereby a laparascope would be inserted through the patients
abdominal wall to get a direct view of her internal reproductive organ in order to
determine the real cause of her infertility.
The procedure was scheduled on April 5, 1999 at 2:00 p.m., to be performed
by Dr. Ilao-Oreta. At around 7:00 a.m. of said date, Eva Marie, accompanied by

her husband Noel, checked in at the St. Lukes Medical Center and underwent preoperative procedures including the administration of intravenous fluid and enema.
Dr. Ilao-Oreta did not arrive at the scheduled time for the procedure,
however, and no prior notice of its cancellation was received. It turned out that the
doctor was on a return flight from Hawaii to, and arrived at 10:00 p.m. of April 5,
1999 in, Manila.
On May 18, 1999, the Ronquillo spouses filed a complaint [1] against Dr.
Ilao-Oreta and the St. Lukes Medical Center for breach of professional and service
contract and for damages before the Regional Trial Court (RTC)
of Batangas City. They prayed for the award of actual damages including alleged
loss of income of Noel while accompanying his wife to the hospital, moral
damages, exemplary damages, the costs of litigation, attorneys fees, and other
available reliefs and remedies.[2]
In her Answer,[3] Dr. Ilao-Oreta gave her side of the case as follows: She
went on a honeymoon to Hawaii and was scheduled to leave Hawaii at 3:00
p.m. of April 4, 1999for Manila. Aware that her trip from Hawaii to Manila would
take about 12 hours, inclusive of a stop-over at the Narita Airport in Japan, she
estimated that she would arrive inManila in the early morning of April 5,
1999. She thus believed in utmost good faith that she would be back in Manila in
time for the scheduled conduct of the laparoscopic procedure. She failed to
consider the time difference between Hawaii and the Philippines, however.
In its Answer,[4] the St. Lukes Medical Center contended that the spouses
have no cause of action against it since it performed the pre-operative procedures
without delay, and any cause of action they have would be against Dr. Ilao-Oreta.
By Decision[5] of March 9, 2001, Branch 84 of the Batangas RTC, finding
that the failure of the doctor to arrive on time was not intentional, awarded Eva
Marie only actual damages in the total amount of P9,939 and costs of suit. It found
no adequate proof that Noel had been deprived of any job contract while attending
to his wife in the hospital.

On appeal by the spouses, the Court of Appeals, by Decision [6] of April 21,
2006, finding Dr. Ilao-Oreta grossly negligent,[7] modified the trial courts decision
as follows:
WHEREFORE, the trial Courts decision dated March 9, 2001 is affirmed,
subject to the modification that the amount of actual damages, for which both
defendants-appellees are jointly and severally liable to plaintiffs-appellants,
is increased to P16,069.40. Furthermore, defendant-appellee Dr. Ilao-Oreta is
also held liable to pay plaintiff-appellants the following:
(a) P50,000.00 as moral damages;
(b) P25,000.00 as exemplary damages; and
(c) P20,000.00 as attorneys fees.
SO ORDERED.[8] (Underscoring supplied)

Hence, the present Petition for Review[9] of Dr. Ilao-Oreta raising the
following arguments:
THE COURT A QUO ERRED IN FINDING PETITIONER TO HAVE
ACTED WITH GROSS NEGLIGENCE AND AWARDING MORAL
DAMAGES TO RESPONDENTS.[10]
THE COURT A QUO ERRED IN AWARDING EXEMPLARY
DAMAGES TO RESPONDENTS.[11]
THE COURT A QUO [ERRED] IN AWARDING ATTORNEYS FEES
TO RESPONDENTS.[12]
THE COURT A QUO ERRED IN INCREASING THE AWARD OF
ACTUAL DAMAGES IN FAVOR OF RESPONDENTS.[13]

Gross negligence implies a want or absence of or failure to exercise slight

care or diligence, or the entire absence of care. It evinces a thoughtless disregard
of consequences without exerting any effort to avoid them.[14] It is characterized by
want of even slight care, acting or omitting to act in a situation where there is a

duty to act, not inadvertently but willfully and intentionally with a conscious
indifference to consequences in so far as other persons may be affected.[15]
The records show that before leaving for Hawaii, Dr. Ilao-Oreta left an
admitting order with her secretary for one of the spouses to pick up, apprised Eva
Marie of the necessary preparations for the procedure, and instructed the hospital
staff to perform pre-operative treatments.[16] These acts of the doctor reflect an
earnest intention to perform the procedure on the day and time scheduled.
The records also show that on realizing that she missed the scheduled
procedure, Dr. Ilao-Oreta, upon arrival in Manila, immediately sought to rectify the
same, thus:
[ATTY SINJAN] Q: So, can you tell us the reason why you missed that
operation?
[DR. ILAO-ORETA] A: When I scheduled her for the surgery, I looked at my
ticket and so I was to leave Hawaii on April 4 at around 4:00 oclock in
the afternoon, so I was computing 12 hours of travel including stop-over,
then probably I would be in Manila early morning of April 5, then I have
so much time and I can easily do the case at 2:00 oclock, you know it
skipped my mind the change in time.
Q:

So when you arrived at 10:00 [PM] in Manila, what did you do?

A:

I called immediately the hospital and I talked with the nurses, I asked
about the patient, Mrs. Ronquillo, and they told me that she has already
left at around 7:00.

Q:

And after calling the hospital, what happened?

A:

I wanted to call the plaintiffs, but I didnt have their number at that time,
so in the morning I went to my office early at 8:00 and looked for her
chart, because her telephone number was written in the chart. So, I called
them right away.

Q:

Were you able to contact them?

A:

I was able to reach Mr. Ronquillo.

Q:

In the course of your conversation, what did you tell Mr. Ronquillo?

A:

I apologized to him, I said I was sorry about the time that I missed the
surgery, and I told him that I can do the case right that same day without
Mrs. Ronquillo having to undergo another [b]ariumenema.

Q:

What else did you tell him, if any?

A:

I asked him whether I can talk with Mrs. Ronquillo because I wanted to
apologize to her personally.

Q:

And what did he say?

A:

I could hear on the background that Mrs. Ronquillo was shouting angrily
that she didnt want to talk to me, and that she didnt want re-scheduling
of the surgery . . .

ATTY LONTOK: May we move, your Honor, for the striking out of the answer,
this is purely hearsay.
COURT: Remain on the record.
WITNESS [DR. ILAO-ORETA]: . . . and then Mr. Ronquillo told me Im sorry,
Dra., we cannot re-schedule the surgery.[17] (Underscoring supplied)

Noel admitted that indeed Dr. Ilao-Oreta called him up after she arrived
in Manila as related by her.[18]
The evidence then shows that Dr. Ilao-Oreta, who had traveled more than
twice to the United States where she obtained a fellowship in Reproductive
Endocrinology and Infertility was indeed negligent when she scheduled to perform
professional service at 2:00 p.m. on April 5, 1999 without considering the time
difference between the Philippinesand Hawaii.
The doctors act did not, however, reflect gross negligence as defined
above. Her argument that
Although petitioner failed to take into consideration the time difference
between the Philippines and Hawaii, the situation then did not present any clear
and apparent harm or injury that even a careless person may perceive. Unlike in
situations where the Supreme Court had found gross negligence to exist,
petitioner could not have been conscious of any foreseeable danger that may
occur since she actually believed that she would make it to the operation that was
elective in nature, the only purpose of which was to determine the real cause of
infertility and not to treat and cure a life threatening disease. Thus, in merely

fixing the date of her appointment with respondent Eva Marie Ronquillo,
petitioner was not in the pursuit or performance of conduct which any ordinary
person may deem to probably and naturally result in injury,[19] (Underscoring in
original)

thus persuades.
It bears noting that when she was scheduling the date of her performance of
the procedure, Dr. Ilao-Oreta had just gotten married and was preparing for her
honeymoon,[20]and it is of common human knowledge that excitement attends its
preparations. Her negligence could then be partly attributed to human frailty
which rules out its characterization as gross.
The doctors negligence not being gross, the spouses are not entitled to
recover moral damages.
Neither are the spouses entitled to recover exemplary damages in the
absence of a showing that Dr. Ilao-Oreta acted in a wanton, fraudulent, reckless,
oppressive or malevolent manner,[21] nor to award of attorneys fees as, contrary to
the finding of the Court of Appeals that the spouses were compelled to litigate and
incur expenses to protect their interest,[22] the records show that they did not exert
enough efforts to settle the matter before going to court. Eva Marie herself
testified:
ATTY. SINJIAN:
Q:
Isnt it true that before instituting this present case, you did not make any
demand on Dr. Ilao-Oreta regarding the claims which you have allegedly
incurred, because of the failed laparoscopic surgery operation?
A [EVA MARIE]: I will tell the truth. Dr. Augusto Reyes of St. Lukes . . .
Q:

But did you demand?

A:

No, I did not demand because

ATTY. SINJIAN: That will be all, your Honor.

ATTY. LONTOK: The witness is still explaining.

WITNESS: Im explaining first. Dr. Augusto Reyes told me that he will hold the
meeting for me and Dr. Oreta to settle things and reimburse all the money
that I spent from the hospital, and he even suggested Dr. Oreta to
personally talk to me.
ATTY. SINJIAN:
Q:
So it was to Dr. Augusto Reyes that you talked?
A:
Yes.
Q:

But you did not demand anything or write to Dr. Oreta?

A:

No.

Q:

Before instituting this case?

A:

No.[23] (Underscoring supplied)

Finally, Dr. Ilao-Oretas prayer for the reduction of actual damages is welltaken. Article 2201 of the Civil Code provides:
In contracts and quasi-contracts, the damages for which the obligor who
acted in good faith is liable shall be those which are the natural and probable
consequences of the breach of the obligation, and which the parties have foreseen
or could have reasonably foreseen at the time the obligation was constituted.

In fixing the amount of actual damages, the Court of Appeals and the trial court
included expenses which the spouses incurred prior to April 5, 1999 when the
breach of contract complained of occurred. [24] The Court of Appeals also included
the alleged P300 spent on fuel consumption from the spouses residence at San
Pascual, Batangas to the St. Lukes Medical Center in Quezon City and the
alleged P500 spent on food in the hospital canteen, both of which are
unsubstantiated by independent or competent proof.[25] The only piece of
documentary evidence supporting the food and fuel expenses is an unsigned listing.
[26]
As the fuel and food expenses are not adequately substantiated, they cannot be
included in the computation of the amount of actual damages. So Premiere
Development Bank v. Court of Appeals[27] instructs:
In the instant case, the actual damages were proven through the sole
testimony of Themistocles Ruguero, the vice president for administration

of Panacor. In his testimony, the witness affirmed thatPanacor incurred losses,

specifically, in terms of training and seminars, leasehold acquisition, procurement
of vehicles and office equipment without, however, adducing receipts to
substantiate the same. The documentary evidence marked as Exhibit W, which
was an ordinary private writing allegedly itemizing the capital expenditures and
losses from the failed operation of Panacor, was not testified to by any witness to
ascertain the veracity of its content. Although the lower court fixed the sum of
P4,520,000.00 as the total expenditures incurred by Panacor, it failed to show how
and in what manner the same were substantiated by the claimant with reasonable
certainty. Hence, the claim for actual damages should be received with extreme
caution since it is only based on bare assertion without support from independent
evidence. Premieres failure to prove actual expenditure consequently conduces
to a failure of its claim. In determining actual damages, the court cannot rely on
mere assertions, speculations, conjectures or guesswork but must depend
on competent proof and on the best evidence obtainable regarding the actual
amount of loss.[28] (Underscoring supplied)

The list of expenses cannot replace receipts when they should have been issued as a
matter of course in business transactions[29] as in the case of purchase of gasoline
and of food.
The documented claim for hospital and medical expenses of the spouses is
detailed in the Statement of Account issued by the hospital, the pertinent entries of
which read:
xxxx
4/5/1999

GROSS HOSPITAL CHARGES

1699460 DEPOSITOFFICIAL
RECEIPT

2,416.50
(5,000.00)
(5,000.00)

________
4/5/1999 SECOND 0284893 UNUSED MED 0439534 (65.55)
FLOOR
HINOX 500 MG CAP
SECOND 0284894 UNUSED MED 0439893 (62.25)
FLOOR
PHENERGAN 2 ML
50MG
______ (127.80)
BALANCE DUE
(2,711.30)[30]
=======

As extrapolated from the above-quoted entries in the Statement of

Account, P2,288.70 (the gross hospital charges of P2,416.50 less the unused
medicine in the amount of P127.80) was debited from the P5,000 deposit[31] to thus
leave a balance of the deposit in the amount of P2,711.30, which the trial court
erroneously denominated as confinement fee. The remaining balance
of P2,711.30 was the amount refundable to the spouses.
Following Eastern Shipping Lines, Inc. v. Court of Appeals,[32] this Court
awards interest on the actual damages to be paid by Dr. Ilao-Oreta at the rate of
6% per annumfrom the time of the filing of the complaint on May 18, 1999, and at
12% per annum from the finality of this judgment until its satisfaction.
WHEREFORE, the petition is GRANTED.
is MODIFIED in that

The decision appealed from

1) the award to respondents-spouses Noel and Eva Marie Ronquillo of actual

damages is REDUCED to P2,288.70, to bear interest at a rate of 6% per
annum from the time of the filing of the complaint on May 18, 1999 and, upon
finality of this judgment, at the rate of 12% per annum until satisfaction; and
2.
The award of moral and exemplary damages and attorneys fees
is DELETED.
SO ORDERED.
CONCHITA CARPIO MORALES
Associate Justice

WE CONCUR:

LEONARDO A. QUISUMBING
Associate Justice

Chairperson

ANTONIO T. CARPIO
Associate Justice

DANTE O. TINGA
Associate Justice

PRESBITERO J. VELASCO, JR.

Associate Justice

ATTESTATION
I attest that the conclusions in the above Decision were reached in
consultation before the case was assigned to the writer of the opinion of the Courts
Division.

LEONARDO A. QUISUMBING
Associate Justice
Chairperson

CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the Division
Chairpersons Attestation, it is hereby certified that the conclusions in the above
Decision were reached in consultation before the case was assigned to the writer of
the opinion of the Courts Division.

REYNATO S. PUNO
Chief Justice

[1]
[2]
[3]
[4]
[5]
[6]

[7]
[8]
[9]
[10]
[11]
[12]
[13]
[14]
[15]
[16]
[17]
[18]
[19]
[20]

[21]

[22]
[23]
[24]

[25]

[26]
[27]
[28]

Records, pp. 1-8.

Id. at 6.
Id. at 28-32.
Id. at 58-62.
Id. at 263-264.
Penned by Court of Appeals Associate Justice Fernanda Lampas Peralta, with the concurrence of Associate
Justices Josefina Guevarra-Salonga and Sesinando E. Villon. CA rollo, pp. 202-212.
Id. at 208-210.
Id. at 211.
Rollo, pp. 8-23.
Id. at 11.
Id. at 18.
Ibid.
Id. at 20.
Phil. Aeolus Automotive United Corporation v. NLRC, 387 Phil. 250, 263 (2000).
De la Victoria v. Mongaya, 404 Phil. 609, 619-620 (2001).
TSN, April 10, 2000, p. 25; TSN, June 26, 2000, p. 20; Records, pp. 229, 232-253, 262.
TSN, June 26, 2000, pp. 21-23.
TSN, February 7, 2000, pp. 11-12; TSN, April 10, 2000, pp. 40-41.
Rollo, pp. 13-14.
TSN, February 7, 2000, pp. 2-5; TSN, April 10, 2000, pp. 17-21; TSN, June 26, 2000, pp. 16-20; TSN, July 12,
2000, pp. 4-6, 21.
CIVIL CODE, Article 2232: In contracts and quasi-contracts, the court may award exemplary damages if the
defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner.
CA rollo, p. 211.
TSN, May 16, 2000, pp. 9-10.
Rollo, pp. 21-22; CA rollo, p. 210; Records, pp. 162-166, 171, 198, 205, 264; TSN, December 6, 1999, pp. 1821; TSN, June 26, 2000, pp. 7-16.
Records, p. 190. Vide Article 2199, Civil Code: Except as provided by law or stipulation, one is entitled to
an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. x x x"
Id. at 190.
G.R. No. 159352, April 14, 2004, 427 SCRA 686.
Id. at 698-699.

[29]
[30]
[31]
[32]

People v. Matore, 436 Phil. 421, 433 (2002).

Records, p. 175.
Id. at 176.
G.R. No. 97412, July 12, 1994, 234 SCRA 78, 95-97.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-12219
March 15, 1918
AMADO PICART, plaintiff-appellant,
vs.
FRANK SMITH, JR., defendant-appellee.
Alejo Mabanag for appellant.
G. E. Campbell for appellee.
STREET, J.:
In this action the plaintiff, Amado Picart, seeks to recover of the defendant, Frank Smith, jr., the sum
of P31,000, as damages alleged to have been caused by an automobile driven by the defendant.
From a judgment of the Court of First Instance of the Province of La Union absolving the defendant
from liability the plaintiff has appealed.
The occurrence which gave rise to the institution of this action took place on December 12, 1912, on
the Carlatan Bridge, at San Fernando, La Union. It appears that upon the occasion in question the
plaintiff was riding on his pony over said bridge. Before he had gotten half way across, the defendant
approached from the opposite direction in an automobile, going at the rate of about ten or twelve
miles per hour. As the defendant neared the bridge he saw a horseman on it and blew his horn to
give warning of his approach. He continued his course and after he had taken the bridge he gave
two more successive blasts, as it appeared to him that the man on horseback before him was not
observing the rule of the road.
The plaintiff, it appears, saw the automobile coming and heard the warning signals. However, being
perturbed by the novelty of the apparition or the rapidity of the approach, he pulled the pony closely
up against the railing on the right side of the bridge instead of going to the left. He says that the
reason he did this was that he thought he did not have sufficient time to get over to the other side.
The bridge is shown to have a length of about 75 meters and a width of 4.80 meters. As the
automobile approached, the defendant guided it toward his left, that being the proper side of the
road for the machine. In so doing the defendant assumed that the horseman would move to the
other side. The pony had not as yet exhibited fright, and the rider had made no sign for the
automobile to stop. Seeing that the pony was apparently quiet, the defendant, instead of veering to
the right while yet some distance away or slowing down, continued to approach directly toward the
horse without diminution of speed. When he had gotten quite near, there being then no possibility of
the horse getting across to the other side, the defendant quickly turned his car sufficiently to the right
to escape hitting the horse alongside of the railing where it as then standing; but in so doing the
automobile passed in such close proximity to the animal that it became frightened and turned its
body across the bridge with its head toward the railing. In so doing, it as struck on the hock of the left
hind leg by the flange of the car and the limb was broken. The horse fell and its rider was thrown off
with some violence. From the evidence adduced in the case we believe that when the accident
occurred the free space where the pony stood between the automobile and the railing of the bridge
was probably less than one and one half meters. As a result of its injuries the horse died. The
plaintiff received contusions which caused temporary unconsciousness and required medical
attention for several days.
The question presented for decision is whether or not the defendant in maneuvering his car in the
manner above described was guilty of negligence such as gives rise to a civil obligation to repair the
damage done; and we are of the opinion that he is so liable. As the defendant started across the
bridge, he had the right to assume that the horse and the rider would pass over to the proper side;
but as he moved toward the center of the bridge it was demonstrated to his eyes that this would not
be done; and he must in a moment have perceived that it was too late for the horse to cross with
safety in front of the moving vehicle. In the nature of things this change of situation occurred while

the automobile was yet some distance away; and from this moment it was not longer within the
power of the plaintiff to escape being run down by going to a place of greater safety. The control of
the situation had then passed entirely to the defendant; and it was his duty either to bring his car to
an immediate stop or, seeing that there were no other persons on the bridge, to take the other side
and pass sufficiently far away from the horse to avoid the danger of collision. Instead of doing this,
the defendant ran straight on until he was almost upon the horse. He was, we think, deceived into
doing this by the fact that the horse had not yet exhibited fright. But in view of the known nature of
horses, there was an appreciable risk that, if the animal in question was unacquainted with
automobiles, he might get exited and jump under the conditions which here confronted him. When
the defendant exposed the horse and rider to this danger he was, in our opinion, negligent in the eye
of the law.
The test by which to determine the existence of negligence in a particular case may be stated as
follows: Did the defendant in doing the alleged negligent act use that person would have used in the
same situation? If not, then he is guilty of negligence. The law here in effect adopts the standard
supposed to be supplied by the imaginary conduct of the discreet paterfamilias of the Roman law.
The existence of negligence in a given case is not determined by reference to the personal judgment
of the actor in the situation before him. The law considers what would be reckless, blameworthy, or
negligent in the man of ordinary intelligence and prudence and determines liability by that.
The question as to what would constitute the conduct of a prudent man in a given situation must of
course be always determined in the light of human experience and in view of the facts involved in
the particular case. Abstract speculations cannot here be of much value but this much can be
profitably said: Reasonable men govern their conduct by the circumstances which are before them
or known to them. They are not, and are not supposed to be, omniscient of the future. Hence they
can be expected to take care only when there is something before them to suggest or warn of
danger. Could a prudent man, in the case under consideration, foresee harm as a result of the
course actually pursued? If so, it was the duty of the actor to take precautions to guard against that
harm. Reasonable foresight of harm, followed by ignoring of the suggestion born of this prevision, is
always necessary before negligence can be held to exist. Stated in these terms, the proper criterion
for determining the existence of negligence in a given case is this: Conduct is said to be negligent
when a prudent man in the position of the tortfeasor would have foreseen that an effect harmful to
another was sufficiently probable to warrant his foregoing conduct or guarding against its
consequences.
Applying this test to the conduct of the defendant in the present case we think that negligence is
clearly established. A prudent man, placed in the position of the defendant, would in our opinion,
have recognized that the course which he was pursuing was fraught with risk, and would therefore
have foreseen harm to the horse and the rider as reasonable consequence of that course. Under
these circumstances the law imposed on the defendant the duty to guard against the threatened
harm.
It goes without saying that the plaintiff himself was not free from fault, for he was guilty of antecedent
negligence in planting himself on the wrong side of the road. But as we have already stated, the
defendant was also negligent; and in such case the problem always is to discover which agent is
immediately and directly responsible. It will be noted that the negligent acts of the two parties were
not contemporaneous, since the negligence of the defendant succeeded the negligence of the
plaintiff by an appreciable interval. Under these circumstances the law is that the person who has
the last fair chance to avoid the impending harm and fails to do so is chargeable with the
consequences, without reference to the prior negligence of the other party.
The decision in the case of Rkes vs. Atlantic, Gulf and Pacific Co. (7 Phil. Rep., 359) should perhaps
be mentioned in this connection. This Court there held that while contributory negligence on the part
of the person injured did not constitute a bar to recovery, it could be received in evidence to reduce
the damages which would otherwise have been assessed wholly against the other party. The
defendant company had there employed the plaintiff, as a laborer, to assist in transporting iron rails
from a barge in Manila harbor to the company's yards located not far away. The rails were conveyed

upon cars which were hauled along a narrow track. At certain spot near the water's edge the track
gave way by reason of the combined effect of the weight of the car and the insecurity of the road
bed. The car was in consequence upset; the rails slid off; and the plaintiff's leg was caught and
broken. It appeared in evidence that the accident was due to the effects of the typhoon which had
dislodged one of the supports of the track. The court found that the defendant company was
negligent in having failed to repair the bed of the track and also that the plaintiff was, at the moment
of the accident, guilty of contributory negligence in walking at the side of the car instead of being in
front or behind. It was held that while the defendant was liable to the plaintiff by reason of its
negligence in having failed to keep the track in proper repair nevertheless the amount of the
damages should be reduced on account of the contributory negligence in the plaintiff. As will be seen
the defendant's negligence in that case consisted in an omission only. The liability of the company
arose from its responsibility for the dangerous condition of its track. In a case like the one now
before us, where the defendant was actually present and operating the automobile which caused the
damage, we do not feel constrained to attempt to weigh the negligence of the respective parties in
order to apportion the damage according to the degree of their relative fault. It is enough to say that
the negligence of the defendant was in this case the immediate and determining cause of the
accident and that the antecedent negligence of the plaintiff was a more remote factor in the case.
A point of minor importance in the case is indicated in the special defense pleaded in the defendant's
answer, to the effect that the subject matter of the action had been previously adjudicated in the
court of a justice of the peace. In this connection it appears that soon after the accident in question
occurred, the plaintiff caused criminal proceedings to be instituted before a justice of the peace
charging the defendant with the infliction of serious injuries (lesiones graves). At the preliminary
investigation the defendant was discharged by the magistrate and the proceedings were dismissed.
Conceding that the acquittal of the defendant at the trial upon the merits in a criminal prosecution for
the offense mentioned would be res adjudicata upon the question of his civil liability arising from
negligence -- a point upon which it is unnecessary to express an opinion -- the action of the justice of
the peace in dismissing the criminal proceeding upon the preliminary hearing can have no effect.
(See U. S. vs. Banzuela and Banzuela, 31 Phil. Rep., 564.)
From what has been said it results that the judgment of the lower court must be reversed, and
judgment is her rendered that the plaintiff recover of the defendant the sum of two hundred pesos
(P200), with costs of other instances. The sum here awarded is estimated to include the value of the
horse, medical expenses of the plaintiff, the loss or damage occasioned to articles of his apparel,
and lawful interest on the whole to the date of this recovery. The other damages claimed by the
plaintiff are remote or otherwise of such character as not to be recoverable. So ordered.
Arellano, C.J., Torres, Carson, Araullo, Avancea, and Fisher, JJ., concur.
Johnson, J., reserves his vote.

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

Republic of the Philippines

SUPREME COURT
Manila
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 deR.C. Sicam, Inc. (petitioner corporation) seeking to annul the Decision 1 of the Court
of Appeals dated March 31, 2003, and its Resolution2 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.
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 Decision6 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.
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.
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 contradictory 13 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:
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-ininterest because since April 20, 1987, the pawnshop business initiated by him was incorporated and
known as Agencia deR.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 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 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
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 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 ofAustria v. Court of Appeals,35 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 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 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.

Ynares-Santiago, Chairperson, Chico-Nazario, Nachura, JJ., concur.

Footnotes
1
CA rollo, pp. 63-73; Penned by Justice Bernardo P. Abesamis (ret.) and concurred in by
Justices Sergio L. Pestao and Noel G. Tijam.
2
Id. at p. 114.
3
Id. at 121; Exhibit "1."
4
Id. at 107-108; Exhibit "I."
5
Id. at 63-65; Per Judge Salvador P. de Guzman, Jr.
6
Id. at 146-147; Penned by Judge Roberto C. Diokno of Branch 62 as the case was
unloaded to him.
7
148-A Phil. 462 (1971).
8
CA rollo, p. 72.
9
Rollo, pp. 5-6.
10
Rollo, p. 7.
11
Nuez v. National Labor Relations Commission, G.R. No. 107574, December 28, 1994, 239
SCRA 518, 526.
12
Litonjua v. Fernandez, G.R. No. 148116, April 14, 2004, 427 SCRA 478, 489 citing Roble v.
Arbasa, 414 Phil. 343 (2001).
13
Fuentes v. Court of Appeals, 335 Phil. 1163, 1168 (1997).
14
See Jacinto v. Court of Appeals, G.R. No. 80043, June 6, 1991, 198 SCRA 211, 216.
15
See Sibagat Timber Corporation v. Garcia, G.R. No. 98185, December 11, 1992, 216
SCRA 470, 474.
16
Id. at 124-125; Exhibit "4".
17
Atillo III v. Court of Appeals, 334 Phil. 546, 552 (1997).
18
Minutes of the meeting held on October 22, 1986, p. 9.
19
Records, p. 67.
20
Id. at 38.
21
Id. at 147.
22
Republic v. Luzon Stevedoring Corporation, 128 Phil. 313, 318 (1967).
23
Mindex Resources Development Corporation v. Morillo, 428 Phil. 934, 944 (2002).
24
Co v. Court of Appeals, 353 Phil. 305, 313 (1998).
25
Mindex Resources Development Corporation v. Morillo, supra citing Tolentino, Civil Code
of the Philippines, Vol. IV, 1991 ed., p. 126, citing Sian v. Inchausti & Co., 22 Phil. 152
(1912); Juan F. Nakpil & Sons v. Court of Appeals, 228 Phil. 564, 578 (1986). Cf. Metal
Forming Corporation v. Office of the President, 317 Phil. 853, 859 (1995).
26
Id. citing Nakpil and Sons v. Court of Appeals, supra note 25, at 578.
27
Supra note 24.
28
Id. at 312-313.
29
Civil Code, Art. 1170.
30
443 Phil. 856, 863 (2003) citing McKee v. Intermediate Appellate Court, 211 SCRA 517
(1992).
31
Cruz v. Gangan, supra note 30, at 863.
32
TSN, January 21, 1992, pp.17-18.

Exhibit "1," Excerpt from the Police Blotter dated October 17, 1987 of the Paraaque
Police Station, p. 121.
34
Cruz v. Gangan, supra note 30, at 863 citing Sangco, Torts and Damages, Vol. 1, 1993 rev.
ed. p. 5.
35
Supra note 7.
36
G.R. No. 71871, November 6, 1989, 179 SCRA 39.
37
Supra note 30.
38
Austria v. Court of Appeals, supra note 7, at 466-467.
33

THIRD DIVISION
[G.R. No. 160795, June 27, 2008]
CORINTHIAN GARDENS ASSOCIATION, INC.,PETITIONER, VS. SPOUSES REYNALDO AND
MARIA LUISA TANJANGCO, AND SPOUSES FRANK AND TERESITA CUASO, RESPONDENTS.
DECISION
NACHURA, J.:
Before this Court is a Petition for Review on Certiorari[1] under Rule 45 of the Rules of Civil Procedure seeking
the reversal of the Court of Appeals (CA) Decision[2] dated January 31, 2003 in CA-G.R. CV No. 43217, which
reversed and set aside the Decision[3] of the Regional Trial Court (RTC) of Quezon City, dated March 30,
1993.
The Antecedents:
Respondents-spouses Reynaldo and Maria Luisa Tanjangco (the Tanjangcos) own Lots 68 and 69 covered by
Transfer Certificates of Title (TCT) No. 242245[4] and 282961[5]respectively, located at Corinthian Gardens
Subdivision, Quezon City, which is managed by petitioner Corinthian Gardens Association, Inc. (Corinthian).
On the other hand, respondents-spouses Frank and Teresita Cuaso (the Cuasos) own Lot 65 which is
adjacent to the Tanjangcos' lots.
Before the Cuasos constructed their house on Lot 65, a relocation survey was necessary. As Geodetic
Engineer Democrito De Dios (Engr. De Dios), operating under the business name D.M. De Dios Realty and
Surveying, conducted all the previous surveys for the subdivision's developer, Corinthian referred Engr. De
Dios to the Cuasos. Before, during and after the construction of the said house, Corinthian conducted
periodic ocular inspections in order to determine compliance with the approved plans pursuant to the Manual
of Rules and Regulations of Corinthian.[6]Unfortunately, after the Cuasos constructed their house employing
the services of C.B. Paraz Construction Co., Inc. (C.B. Paraz) as builder, their perimeter fence encroached on
the Tanjangcos' Lot 69 by 87 square meters.
No amicable settlement was reached between the parties. Thus, the Tanjangcos demanded that the Cuasos
demolish the perimeter fence but the latter failed and refused, prompting the Tanjangcos to file with the RTC
a suit against the Cuasos for Recovery of Possession with Damages. [7]
Eventually, the Cuasos filed a Third-Party Complaint[8] against Corinthian, C.B. Paraz and Engr. De Dios. The
Cuasos ascribed negligence to C.B. Paraz for its failure to ascertain the proper specifications of their house,
and to Engr. De Dios for his failure to undertake an accurate relocation survey, thereby, exposing them to
litigation. The Cuasos also faulted Corinthian for approving their relocation survey and building plans without
verifying their accuracy and in making representations as to Engr. De Dios' integrity and competence. The
Cuasos alleged that had Corinthian exercised diligence in performing its duty, they would not have been
involved in a boundary dispute with the Tanjangcos. Thus, the Cuasos opined that Corinthian should also be
held answerable for any damages that they might incur as a result of such construction.
On March 30, 1993, the RTC rendered a Decision in favor of the Tanjangcos. It ruled that the Cuasos'
perimeter wall encroached on the land of the Tanjangos by 87 square meters. It, however, ruled that the
Cuasos were builders in good faith, and gave the Tanjangcos the option to sell and the Cuasos the option to
buy the encroaching portion of the land, at a price to be agreed upon by the parties within sixty (60) days
from receipt of the said Decision. In the event that the Cuasos were unable and unwilling to purchase the
said portion, the perimeter wall should be demolished at the latter's expense. The RTC also ordered the
Cuasos to pay monthly rentals of P2,000.00 commencing from the time of the filing of the complaint. The
RTC likewise held that C.B. Paraz was grossly negligent in not taking into account the correct boundaries of

Cuasos' lot when it constructed the house. It, thus, ordered C.B. Paraz to pay moral and exemplary damages
as well as attorney's fees to the Tanjangcos and the Cuasos. The third-party complaint against Corinthian
and Engr. De Dios, on the other hand, was dismissed for lack of cause of action.
The Tanjangcos filed a Motion for Reconsideration[9] of the said RTC Decision which the RTC, however, denied
in its Order[10] dated June 28, 1993.
Dissatisfied with the RTC ruling, the Tanjangcos, the Cuasos, and C.B. Paraz all appealed to the CA.
On appeal, the CA reversed and set aside the RTC Decision. It held that the Cuasos acted in bad faith in
land-grabbing the 87 square meter-portion of Lot 69 as of April 5, 1989. Correlatively, the CA allowed the
Tanjangcos to exercise the rights granted under Articles 449, 450, 451 and 549 of the New Civil Code, which
include the right to demand the demolition of the offending perimeter wall after reimbursing the Cuasos the
necessary expenses for the preservation of the encroached area. The Cuasos were ordered to pay monthly
rentals of P10,000.00 for the use, enjoyment and occupancy of the lot from 1989 up to the time they vacate
the property considering the location and category of the same. They were, likewise, ordered to pay the
Tanjangcos P100,000.00, as moral damages, P50,000.00 as exemplary damages, and P150,000.00 as
attorney's fees. The CA also imposed six percent (6%) interest per annum on all the awards. The Cuasos'
appeal against the Tanjangcos, on the other hand, was dismissed for lack of merit. On the third-party
complaints, Corinthian, C.B. Paraz and Engr. De Dios were all found negligent in performing their respective
duties and so they were ordered to contribute five percent (5%) each, or a total of fifteen percent (15%) to
all judgment sums and amounts that the Cuasos shall eventually pay under the decision, also with interest
of six percent (6%) per annum.
Only Corinthian filed a Motion for Reconsideration[11] of the CA Decision within the 15-day reglementary
period. No motion for reconsideration was filed by the Cuasos, C.B. Paraz and/or Engr. De Dios.
About six (6) months later, or on August 12, 2003, the Cuasos filed a Comment/Manifestation [12] praying that
they be allowed to adopt Corinthian's Motion for Reconsideration.
In its Resolution[13] dated November 14, 2003, the CA denied Corinthian's Motion for Reconsideration.
Hence, Corinthian filed the instant Petition for Review on Certiorari assailing the CA Decision and Resolution,
and impleading the Cuasos as one of the respondents being the third-party plaintiffs in the RTC.
This Court gave due course to Corinthian's petition and required the parties to submit their respective
memorandum.[14] In compliance, the Cuasos submitted their Memorandum [15] and Supplement to
Memorandum,[16] which were both noted by this Court in its Resolutions dated January 10, 2005 [17] and
February 2, 2005, [18]respectively.
In the meantime, the Tanjangcos moved for partial entry of judgment of the CA Decision which was granted
by the CA in its Resolution[19] dated May 26, 2006, directing the issuance of an Entry of Judgment and a
Certification that its Decision dated January 31 2003 has become final and executory with respect to the
Cuasos, C.B. Paraz and Engr. De Dios for their failure to file an appeal assailing the said Decision before this
Court.
The Tanjangcos then moved for the execution of the judgment against the Cuasos, specifically the
demolition of the perimeter fence,[20] which was also granted by the RTC in its Order[21] dated December 18,
2006.
Other than the filing of an Opposition[22] and a Motion for Reconsideration[23] before the RTC, the Cuasos
prayed for the issuance of a temporary restraining order (TRO) and/or preliminary injunction before this
Court to enjoin the demolition of the perimeter fence. They averred that the premature demolition of the
alleged encroaching perimeter wall and other improvements will cause grave and irreparable damage to

them, because what is sought to be demolished is part of their residence. They claimed that no amount of
money will compensate for the damage they stand to suffer should any demolition subsequently prove to be
wrongful. They argued that before any execution can be carried out, it is necessary to first determine
whether or not Corinthian was negligent in approving the building plan and whether or not it acted in good
faith in doing so. Such determination, according to the Cuasos, will in turn determine whether or not they
were in good faith in constructing the house.[24]
The Tanjangcos opposed the Cuasos' application for TRO. They countered that the only pending matter with
this Court is the appeal by Corinthian; hence, the implementation of the January 31, 2003 Decision of the
CA against the Cuasos will not preempt the outcome of the said pending incidents. Also, any action taken by
this Court on Corinthian's petition would not benefit the Cuasos for they did not appeal the adverse decision
against them. Accordingly, they cannot obtain affirmative relief from this Court by reason or on account of
the appeal taken by Corinthian. The appeal, they added, is personal to Corinthian. Finally, they argued that
the Cuasos are now estopped from questioning the enforcement of the CA Decision since they issued a
manager's check to pay the money judgment.[25]
In this Court's Resolution dated July 18, 2007, we denied the Cuasos' application for TRO and/or writ of
preliminary injunction for lack of merit.
The denial was based on sound legal principles. It is axiomatic that to be entitled to the injunctive writ, one
must show that there exists a right to be protected which is directly threatened by the act sought to be
enjoined. Furthermore, there must be a showing that the invasion of the right is material and substantial,
that the right of complainant is clear and unmistakable, and that there is an urgent and paramount necessity
for the writ to issue in order to prevent serious damage. [26]
In the Cuasos' case, their right to injunctive relief had not been clearly and unmistakably demonstrated.
They failed to show proof that there is material and substantial invasion of their right to warrant the
issuance of an injunctive writ. Indeed, the enforcement of the writ of execution, which would demolish the
Cuasos' perimeter fence, is manifestly prejudicial to their interest. However, they possess no clear and
unmistakable legal right that merits protection through the writ of preliminary injunction. [27] Their right to
maintain the said fence had been declared inferior to the Tanjangcos' right to the demolition of the fence,
after the CA judgment had become final and executory as to the Cuasos.
It bears stressing that the Cuasos failed to appeal the ruling of the CA. This failure to contest the CA
decision before this Court was fatal to their cause. It had the effect of an admission that they indeed acted
in bad faith, as they accepted the CA ruling. The decision of the CA, therefore, became binding and final as
to them.[28] As a matter of fact, the CA already issued a partial entry of judgment against the Cuasos.
An injunction to stay a final and executory decision is unavailing except only after a showing that facts and
circumstances exist which would render execution unjust or inequitable, or that a change in the situation of
the parties occurred. Here, no such exception exists as shown by the facts earlier narrated. [29]
While it is true that this Court noted the Memorandum and Supplemental Memorandum filed by the Cuasos,
such notation was made only insofar as Corinthian made them respondents in this petition. This Court
cannot grant to the Cuasos any affirmative relief as they did not file a petition questioning the CA ruling.
Consequently, the Decision of the CA holding that the Cuasos acted in bad faith and that the perimeter fence
may now be demolished cannot be put in issue by the Cuasos. It is a fundamental principle that a party who
does not appeal, or file a petition for certiorari, is not entitled to any affirmative relief.[30] An appellee who is
not an appellant may assign errors in his brief where his purpose is to maintain the judgment, but he cannot
seek modification or reversal of the judgment or claim affirmative relief unless he has also appealed. [31] This
applies to C.B. Paraz and Engr. De Dios who likewise failed to assail the aforementioned CA Decision.
With this matter put to rest, we now go to the main issues raised by Corinthian, the sole petitioner in this
case, to wit:

a) Whether or not there is legal basis for the Court of Appeals to hold petitioner Corinthian Gardens
Association, Inc. liable to pay 5% of the judgment money to Sps. Tanjangco on account of the encroachment
made by Sps. Cuaso[; and]
b) Whether or not the Court of Appeals has legal basis to increase unilaterally and without proof the amount
prayed for in the Complaint,i.e., P2,000.00, as reasonable compensation for the use and enjoyment of the
portion of the lot encroached upon, to P10,000.00.[32]
Corinthian claims that the approval of the building plan of the Cuasos was not tainted with negligence as it
did not approve the survey relocation plan but merely the architectural, structural and sanitary plans for
Cuasos' house; that the purpose of the said approval is not to ensure that the house to be erected on a
particular lot is constructed within its boundaries but only to ensure compliance with the Manual of Rules and
Regulations; that while Corinthian conducts actual site inspections, the inspection and approval of the
building plans are limited to "table inspection" only; that the survey relocation plan was never submitted for
Corinthian's approval; that the acceptance of the builder's bond did not make Corinthian automatically liable
for the encroachment and for damages; and that Corinthian approved the building plan with the good faith
and due diligence required under the circumstances. It, thus, concludes that it cannot be held liable to pay
five percent (5%) of the money judgment to the Tanjangcos on account of the encroachment made by the
Cuasos. Likewise, it finds no legal basis for the CA to unilaterally increase the amount of the adjudged rent
from P2,000.00 to P10,000.00 which was not prayed for by the Tanjangcos in their complaint and in the
absence of evidence adduced by the parties.[33]
On the other hand, the Tanjangcos stand by the ruling of the CA and opine that Corinthian was negligent in
approving the building plan of the Cuasos. They submit that Corinthian's claim that it merely conducts "table
inspections" of buildings further bolsters their argument that Corinthian was negligent in conveniently and
unilaterally restricting and limiting the coverage of its approval, contrary to its own Manual of Rules and
Regulations; that the acceptance of a builder's bond does not automatically make Corinthian liable but the
same affirms the fact that a homeowner can hold it liable for the consequences of the approval of a building
plan; and that Corinthian, by regularly demanding and accepting membership dues, must be wary of its
responsibility to protect the rights and interests of its members. Lastly, the Tanjangcos contend that a court
can take judicial notice of the general increase in the rentals of real estate, as in this case, where the CA
considered the value of their lot in the "posh-and-swank" Corinthian Gardens Subdivision and the fact that
they were deprived of it for almost two decades. The Tanjangcos pray that this Court sustain the ruling of
the CA.[34]
The instant case is obviously one for tort, as governed by Article 2176 of the Civil Code, which 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.
In every tort case filed under this provision, plaintiff has to prove by a preponderance of evidence: (1) the
damages suffered by the plaintiff; (2) the fault or negligence of the defendant or some other person for
whose act he must respond; and (3) the connection of cause and effect between the fault or negligence and
the damages incurred.[35]
Undeniably, the perimeter fence of the Cuasos encroached on Lot 69 owned by the Tanjangcos by 87 square
meters as duly found by both the RTC and the CA in accordance with the evidence on record. As a result,
the Tanjangcos suffered damage in having been deprived of the use of that portion of their lot encroached
upon. Thus, the primordial issue to be resolved in this case is whether Corinthian was negligent under the
circumstances and, if so, whether such negligence contributed to the injury suffered by the Tanjangcos.
A negligent act is an inadvertent act; it may be merely carelessly done from a lack of ordinary prudence and
may be one which creates a situation involving an unreasonable risk to another because of the expectable
action of the other, a third person, an animal, or a force of nature. A negligent act is one from which an
ordinary prudent person in the actor's position, in the same or similar circumstances, would foresee such an
appreciable risk of harm to others as to cause him not to do the act or to do it in a more careful manner.[36]

The test to determine the existence of negligence in a particular case may be stated as follows: Did the
defendant in committing 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, in effect,
adopts the standard supplied by the imaginary conduct of the discreet paterfamilias in 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 a man of
ordinary intelligence and prudence, and determines liability according to that standard. [37]
By this test, we find Corinthian negligent.
While the issue of Corinthian's alleged negligence is factual in character,[38] a review by this Court is proper
because the CA's factual findings differ from those of the RTC's. [39] Thus, after a meticulous review of the
evidence on record, we hold that the CA committed no reversible error when it deviated from the findings of
fact of the RTC. The CA's findings and conclusions are substantiated by the evidence on record and are more
in accord with law and reason. Indeed, it is clear that Corinthian failed to exercise the requisite diligence in
insuring that the Cuasos abide by its Manual of Rules and Regulations, thereby resulting in the
encroachment on the Tanjangcos' property.
We agree with the CA when it aptly held:
Corinthian cannot and should not be allowed to justify or excuse its negligence by claiming that its approval
of the Cuasos' building plans was only limited to a so-called "table inspection;" and not actual site
measurement. To accept some such postulate is to put a premium on negligence. Corinthian was not
organized solely for the defendants Cuasos. It is also the subdivision of the plaintiffs-spouses Tanjangcos and of all others who have their dwelling units or abodes therein. Pertinently, its Manual of Rules and
Regulations stipulates in Section 3 thereof (under the heading Construction), thus:
A. Rules and Regulations
No new construction can be started unless the building plans are approved by the Association and the
appropriate Builder's cash bond and pre-construction fees are paid. The Association will not allow the entry
of construction materials and process identification cards for workers if the above conditions are not
complied with. Likewise, all renovations, repairs, additions and improvements to a finished house except
electrical wiring, will have to be approved by the Association. Water service connection of a homeowner who
undertakes construction work without prior approval of the Association will be cut-off in addition to the
sanctions previously mentioned.
It goes without saying that this Manual of Rules and Regulations applies to all - or it does not apply at all. To
borrow a popular expression, what is sauce for the gander is sauce for the goose - or ought to be. To put it
matter-of-factly and bluntly, thus, its so-called "table inspection" approval of the Cuasos' building plans is no
less of an approval, as approvals come and go. And since it is an approval tainted with negligence, the
necessary and inevitable consequences which law and justice attach to such negligence must, as a matter of
law and justice, also necessarily attach to Corinthian.
And then again third party defendant-appellee Corinthian Garden required the posting of a builder's cash
bond (Exh. 5-Corinthian) from the defendants-appellants Cuasos and the third-party defendant C.B. Paraz
Construction to secure the performance of their undertaking. Surely, Corinthian does not imply that while it
may take the benefits from the Builder's cash bond, it may, Pilate-like, wash its hands of any responsibility
or liability that would or might arise from the construction or building of the structure for which the cash
bond was in the first place posted. That is not only unjust and immoral, but downright unchristian and
iniquitous.
Under the same parity of reasoning, the payment by the appellants-Cuasos to the appellee Corinthian of
pre-construction and membership fees in the Association must necessarily entail the creation of certain
obligations on the part of Corinthian. For duties and responsibilities always go hand in hand with rights and

privileges. That is the law of life - and that is the law of every civilized society. It is an axiom of equity that
he who receives the benefits must share the burdens. [40]
By its Manual of Rules and Regulations, it is reasonable to assume that Corinthian, through its
representative, in the approval of building plans, and in the conduct of periodic inspections of on-going
construction projects within the subdivision, is responsible in insuring compliance with the approved plans,
inclusive of the construction of perimeter walls, which in this case is the subject of dispute between the
Tanjangcos and the Cuasos.[41] It is not just or equitable to relieve Corinthian of any liability when, by its
very own rules, it imposes its authority over all its members to the end that "no new construction can be
started unless the plans are approved by the Association and the appropriate cash bond and preconstruction fees are paid." Moreover, Corinthian can impose sanctions for violating these rules. Thus, the
proposition that the inspection is merely a "table inspection" and, therefore, should exempt Corinthian from
liability, is unacceptable. After all, if the supposed inspection is merely a "table inspection" and the approval
granted to every member is a mere formality, then the purpose of the rules would be defeated. Compliance
therewith would not be mandatory, and sanctions imposed for violations could be disregarded.
Corinthian's imprimatur on the construction of the Cuasos' perimeter wall over the property of the
Tanjangcos assured the Cuasos that everything was in order.
In sum, Corinthian's failure to prevent the encroachment of the Cuasos' perimeter wall into Tanjangcos'
property - despite the inspection conducted - constitutes negligence and, at the very least, contributed to
the injury suffered by the Tanjangcos.
On the second issue, our ruling in Spouses Badillo v. Tayag[42] is instructive:
Citing Sia v. Court of Appeals [272 SCRA 141, May 5, 1997], petitioners argue that the MTC may take
judicial notice of the reasonable rental or the general price increase of land in order to determine the
amount of rent that may be awarded to them. In that case, however, this Court relied on the CA's factual
findings, which were based on the evidence presented before the trial court. In determining reasonable rent,
the RTC therein took account of the following factors: 1) the realty assessment of the land, 2) the increase
in realty taxes, and 3) the prevailing rate of rentals in the vicinity. Clearly, the trial court relied, not on mere
judicial notice, but on the evidence presented before it.
Indeed, courts may fix the reasonable amount of rent for the use and occupation of a disputed property.
However, petitioners herein erred in assuming that courts, in determining the amount of rent, could simply
rely on their own appreciation of land values without considering any evidence. As we have said earlier, a
court may fix the reasonable amount of rent, but it must still base its action on the evidence adduced by the
parties.
In Herrera v. Bollos [G.R. No. 138258, January 18, 2002], the trial court awarded rent to the defendants in
a forcible entry case. Reversing the RTC, this Court declared that the reasonable amount of rent could be
determined not by mere judicial notice, but by supporting evidence:
x x x A court cannot take judicial notice of a factual matter in controversy. The court may take judicial notice
of matters of public knowledge, or which are capable of unquestionable demonstration, or ought to be
known to judges because of their judicial functions. Before taking such judicial notice, the court must "allow
the parties to be heard thereon." Hence, there can be no judicial notice on the rental value of the premises
in question without supporting evidence.
Truly, mere judicial notice is inadequate, because evidence is required for a court to determine the proper
rental value. But contrary to Corinthian's arguments, both the RTC and the CA found that indeed rent was
due the Tanjangcos because they were deprived of possession and use of their property. This uniform factual
finding of the RTC and the CA was based on the evidence presented below. Moreover, in Spouses Catungal
v. Hao,[43] we considered the increase in the award of rentals as reasonable given the particular
circumstances of each case. We noted therein that the respondent denied the petitioners the benefits,
including rightful possession, of their property for almost a decade.
Similarly, in the instant case, the Tanjangcos were deprived of possession and use of their property for more

than two decades through no fault of their own. Thus, we find no cogent reason to disturb the monthly
rental fixed by the CA.
All told, the CA committed no reversible error.
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals isAFFIRMED. Costs against
petitioner.
SO ORDERED.
Ynares-Santiago, (Chairperson), Austria-Martinez, Chico-Nazario, and Reyes, JJ.,concur.

[1]

Rollo, pp. 8-53.

Penned by Associate Justice Renato C. Dacudao (now retired), with Associate Justices Eugenio S. Labitoria
(now retired) and Danilo B. Pine (now retired), concurring; id. at 56-108.
[2]

[3]

Particularly docketed as Civil Case No. Q-89-2706; id. at 172-199.

[4]

Rollo, pp. 148-149.

[5]

Id. at 150.

[6]

Id. at 119-139.

[7]

Id. at 143-147.

[8]

Id. at 153-164.

[9]

Id. at 200-207.

[10]

Id. at 208.

[11]

Id. at 209-216.

[12]

Id. at 225-227.

[13]

Id. at 110-115.

[14]

Resolution dated September 15, 2004; id. at 308.

[15]

Rollo, pp. 310-325.

[16]

Id. at 419-433.

[17]

Id. at 450.

[18]

Id. at 452.

Penned by Associate Justice Renato C. Dacudao (now retired), with Associate Justices Celia C. LibreaLeagogo and Mariflor Punzalan-Castillo, concurring; id. at 457-460.
[19]

[20]

Motion for Execution dated July 10, 2006; id. at 493-501.

[21]

Rollo, pp. 509-511.

[22]

Id. at 502-508.

[23]

Id. at 517-529.

Application for a Temporary Restraining Order and/or Writ of Preliminary Injunction dated May 4, 2007;
id. at 465-491.
[24]

[25]

Opposition dated May 17, 2007; id. at 556-574.

[26]

Almeida v. Court of Appeals, G.R. No. 159124, January 17, 2005, 448 SCRA 681, 694.

Philippine School of Business Administration-Quezon City v. Tolentino-Genilo, G.R. No. 159277,

December 21, 2004, 447 SCRA 442, 448.
[27]

In GSIS v. Court of Appeals, 368 Phil. 36, 50 (1999), citing Firestone Tire and Rubber Company of
the Philippines v. Tempongko, 27 SCRA 418, 424 (1969) andSingapore Airlines Limited v. Court of Appeals,
243 SCRA 143, 148 (1995), this Court held: The decision of the trial court as affirmed by the Court of
Appeals not having been appealed by the insurer (MIGC) of the Toyota Tamaraw, the same is now final as far
as that entity is concerned, and may not be modified by this Court. Failure of any parties to appeal the
judgment as against him makes such judgment final and executory. By the same token, an appeal by one
party from such judgment does not inure to the benefit of the other party who had not appealed nor can it
be deemed to be an appeal of such other party from the judgment against him.
[28]

[29]

Philippine Sinter Corporation v. Cagayan Electric Power and Light Co., Inc., 431 Phil. 324, 333 (2002).

[30]

Alauya, Jr. v. COMELEC, 443 Phil. 893, 907 (2003).

[31]

Acebedo Optical Company, Inc. v. Court of Appeals, 385 Phil. 956, 976 (2000).

[32]

Corinthian's Memorandum dated December 6, 2004, rollo, pp. 384-385.

[33]

Id. at 363-407.

[34]

Tanjangcos' Memorandum dated November 29, 2004; id. at 331-361.

[35]

Child Learning Center, Inc. v. Tagorio, G.R. No. 150920, November 25, 2005, 476 SCRA 236, 242.

Capili v. Cardaa, G.R. No. 157906, November 2, 2006, 506 SCRA 569, 575, citing 65 C.J.S. 1(14), p.
462.
[36]

Fernando v. Court of Appeals, G.R. No. 92087, May 8, 1992, 208 SCRA 714, 718, citing Picart v. Smith,
37 Phil. 809, 813 (1992).
[37]

[38]

Pestao v. Sumayang, 400 Phil. 740, 749 (2000).

[39]

Manila Electric Company v. Court of Appeals, 413 Phil. 338, 354 (2001).

[40]

Rollo, pp. 104-105 (Citations omitted).

[41]

Art. IV, Section 3(d) of Corinthian's Manual of Rules and Regulations provides:

All on-going construction shall be subject to inspection of the Association's representative for the purpose of
determining compliance to the approved plans. It shall be considered a violation if the contractor/lot owner
does not permit entry of the Association representative doing inspection works. Such violation will be subject
to the sanctions available to the Association such as (a) denial of entry of construction materials (b)
renovation of ID's of construction workers and (c) cutting-off of water service. The schedule of inspection
shall be as follows:
A. For original construction
xxx
2. When the perimeter walls are being constructed.
xxx
[42]

448 Phil. 606, 623 (2003).

[43]

407 Phil. 309, 323 (2001).

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 172200
July 6, 2010
THE HEIRS OF REDENTOR COMPLETO and ELPIDIO ABIAD, Petitioners,
vs.
SGT. AMANDO C. ALBAYDA, JR., Respondent.
DECISION
NACHURA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court, assailing
the Decision1dated January 2, 2006 and the Resolution2 dated March 30, 2006 of the Court of
Appeals (CA) in CA-G.R. CV No. 68405.
The Facts
The facts of the case are as follows:
Respondent Amando C. Albayda, Jr. (Albayda) is a Master Sergeant of the Philippine Air Force,
527th Base Security Squadron, 520th Airbase, Philippine Air Force, located at Villamor Air Base
(VAB), Pasay City. Petitioner Redentor Completo (Completo), now represented by his heirs, was the
taxi driver of a Toyota Corolla, bearing Plate No. PYD-128, owned and operated by co-petitioner
Elpidio Abiad (Abiad).3 Albayda and Completo figured in an accident along the intersection of 8th and
11th Streets, VAB. Albayda filed a complaint for damages before the Regional Trial Court (RTC) of
Pasay City. The case was docketed as Civil Case No. 98-1333. 4
The amended complaint alleged that, on August 27, 1997, while Albayda was on his way to the office
to report for duty, riding a bicycle along 11th Street, the taxi driven by Completo bumped and
sideswiped him, causing serious physical injuries. Albayda was brought to the Philippine Air Force
General Hospital (PAFGH) inside VAB. However, he was immediately transferred to the Armed
Forces of the Philippines Medical Center (AFPMC) on V. Luna Road, Quezon City, because there
was a fracture in his left knee and there was no orthopedic doctor available at PAFGH. From August
27, 1997 until February 11, 1998, he was confined therein. He was again hospitalized at PAFGH
from February 23, 1998 until March 22, 1998.5
Conciliation between the parties before the barangay failed. Thus, Albayda filed a complaint for
physical injuries through reckless imprudence against Completo before the Office of the City
Prosecutor of Pasay City. On the other hand, Completo filed a counter-charge of damage to property
through reckless imprudence against Albayda. On January 13, 1998, the Office of the City
Prosecutor issued a resolution,6 recommending the filing of an information for reckless imprudence
resulting in physical injuries against Completo. The counter-charge of damage to property was
recommended dismissed.7
The case was raffled to the Metropolitan Trial Court of Pasay City, Branch 45, where Albayda
manifested his reservation to file a separate civil action for damages against petitioners Completo
and Abiad.8
Albayda alleged that the proximate cause of the incident which necessitated his stay in the hospital
for approximately seven (7) months was the negligence of Completo who, at the time of the
accident, was in the employ of Abiad. The pain he suffered required him to undergo medical
physiotherapy for a number of years to regain normality of his left knee joint, and he claimed that he
incurred actual damages totaling Two Hundred Seventy-Six Thousand Five Hundred Fifty Pesos
(P276,550.00), inclusive of his anticipated operations.9
He further stated that aggravating the physical sufferings, mental anguish, frights, serious anxiety,
besmirched reputation, wounded feelings, moral shock, and social humiliation resulting from his
injuries, his wife abandoned him in May 1998, and left their children in his custody. He thus
demanded the amount of Six Hundred Thousand Pesos (P600,000.00) as moral damages. He

likewise asked for exemplary damages in the amount of Two Hundred Thousand Pesos
(P200,000.00) and attorneys fees of Twenty-Five Thousand Pesos (P25,000.00), plus One
Thousand Pesos (P1,000.00) per court appearance.10
In his answer to the amended complaint, Completo alleged that, on August 27, 1997, he was
carefully driving the taxicab along 8th Street, VAB, when suddenly he heard a strange sound from
the rear right side of the taxicab. When he stopped to investigate, he found Albayda lying on the road
and holding his left leg. He immediately rendered assistance and brought Albayda to PAFGH for
emergency treatment.11
Completo also asserted that he was an experienced driver who, in accordance with traffic rules and
regulations and common courtesy to his fellow motorists, had already reduced his speed to twenty
(20) kilometers per hour even before reaching the intersection of 8th and 11th Streets. In contrast,
Albayda rode his bicycle at a very high speed, causing him to suddenly lose control of the bicycle
and hit the rear door on the right side of the taxicab. 12
The deep indentation on the rear right door of the taxicab was caused by the impact of Albaydas
body that hit the taxicab after he had lost control of the bicycle; while the slight indentation on the
right front door of the taxicab was caused by the impact of the bike that hit the taxicab after Albayda
let go of its handles when he had lost control of it.13
Completo maintained that Albayda had no cause of action. The accident and the physical injuries
suffered by Albayda were caused by his own negligence, and his purpose in filing the complaint was
to harass petitioners and unjustly enrich himself at their expense.14
After submission of the parties respective pleadings, a pretrial conference was held. On December
8, 1998, the RTC issued a pretrial order. Thereafter, trial on the merits ensued. 15
Albayda presented himself, Michael Navarro (Navarro), Dr. Rito Barrosa, Jr. (Dr. Barrosa), Dr.
Armando Sta. Ana, Jr., Dr. Ranny Santiago, (Dr. Santiago), and Dr. Manuel Fidel Magtira (Dr.
Magtira) as witnesses in open court.16
On direct examination, Navarro testified that, on August 27, 1997, at around 1:45 p.m., he saw a
taxicab, with Plate No. PYD-128, coming from 11th Street, running at an unusual speed. The normal
speed should have been twenty-five (25) kilometers per hour. He was at the corner of 9th and 8th
Streets when the taxicab passed by him. The side of the bicycle was hit by the taxicab at the
intersection of 11th and 8th Streets. He saw Albayda fall to the ground, grimacing in pain. The
taxicab at that moment was about ten (10) meters away from Albayda. On cross-examination,
Navarro reiterated that the taxicab was running quite fast. The bicycle ridden by Albayda reached the
intersection of 8th and 11th Streets before the taxicab hit it.17
Dr. Santiago, the orthopedic surgeon who treated Albayda when the latter was admitted at AFPMC,
testified that the cause of the injury was "hard impact," and recommended an operation to alleviate
the suffering. On cross-examination, he said that there was a separation of the fragments of the
proximal leg, the injured extremity, called levia. They placed the victim on knee traction or calcaneal
traction,18 in order to avoid further swelling. They bore the calcanean bone with a stainless steel pin
so that they could put five percent (5%) of the body weight of the patient to cool down the leg. He
treated Albayda for three (3) months. He recommended surgery, but the victim had other medical
problems, like an increase in sugar level, and they were waiting for the availability of the implant.
The implant was supposed to be placed on the lateral aspect of the proximal leg or the levia, the part
with the separation. It was a long implant with screws. 19
Dr. Magtira testified that Albayda was readmitted at AFPMC on January 25, 1999 because of
complaints of pain and limitation of motion on the knee joint. Upon evaluation, the pain was caused
by traumatic arthritis brought about by malunion of the lateral trivial condial. An operation of the soft
tissue release was conducted for him to mobilize his knee joint and attain proper range of motion.
After the operation, Albayda attained functional range of motion, but because of subsisting pain, they
had to do osteoplasty20 of the malunion, which was another operation. On cross-examination, Dr.
Magtira testified that he rendered free medical service at AFPMC.21

Albayda testified that he was thirty-six (36) years old and a soldier of the Armed Forces of the
Philippines. On August 27, 1997, at around 1:40 p.m., he was riding his bike on his way to the office,
located on 916 Street, VAB. He had to stop at the corner of 11th and 8th Streets because an
oncoming taxicab was moving fast. However, the taxicab still bumped the front tire of his bike, hit his
left knee and threw him off until he fell down on the road. The taxicab stopped about ten meters
away, and then moved backwards. Its driver, Completo, just stared at him. When somebody shouted
to bring him to the hospital, two (2) persons, one of whom was Dr. Barrosa, helped him and carried
him into the taxicab driven by Completo, who brought him to PAFGH.22
Upon examination, it was found that Albayda suffered fracture in his left knee and that it required an
operation. No orthopedic doctor was available at PAFGH. Thus, he was transferred that same
afternoon to AFPMC, where he was confined until February 11, 1998. 23
At AFPMC, Albaydas left leg was drilled on and attached to traction. When his leg was drilled, it was
so painful that he had to shout. After his release from the hospital, he continued to suffer pain in his
leg. He underwent reflexology and therapy which offered temporary relief from pain. But after some
time, he had to undergo therapy and reflexology again.24
On January 25, 1999, Albayda was readmitted at AFPMC and operated on. On June 24, 1999, he
was operated on again. Wire and screw were installed so that he could bend his knee. Nonetheless,
he continued to suffer pain. As of the date of his testimony in court, he was scheduled for another
operation in January 2000, when the steel that would be installed in his leg arrives. 25
For his food, Albayda spent Thirty Pesos (P30.00) each day during his six (6) months of
confinement; for his bed pan, One Thousand Pesos (P1,000.00); for his twice weekly reflexology,
Three Hundred Pesos (P300.00) every session since April 1997; for his caretaker, P300.00 per day
for six months. He also asked for P600,000.00 in moral damages because Completo did not lend
him a helping hand, and he would be suffering deformity for the rest of his life. He
demanded P25,000.00 as attorneys fees and P1,000.00 for every court appearance of his lawyer.26
On cross-examination, Albayda testified that, on the date of the incident, he was the base guard at
VAB, and his duty was from 2 p.m. to 8 p.m. That afternoon, he was not in a hurry to go to his place
of work because it was only about 1:45 p.m., and his place of work was only six (6) meters away.
After the accident, he was brought to PAFGH, and at 3:00 p.m., he was brought to the AFPMC.
When he was discharged from the hospital, he could no longer walk.27
Dr. Barrosas testimony during cross-examination emphasized that he was with 2 other persons
when he carried Albayda into the taxicab driven by Completo. He was certain that it was not
Completo who carried the victim into the taxicab. It was only a matter of seconds when he rushed to
the scene of the accident. The taxicab backed up fifteen (15) seconds later. Albayda lay 2 meters
away from the corner of 8th and 11th Streets.28
Completo, Abiad, and Benjamin Panican (Panican) testified for the defense. 29
Completo alleged that he had been employed as taxi driver of FOJS Transport, owned by Abiad,
since February 1997. On August 27, 1997, he was driving the taxicab, with Plate No. PYD-128, from
10:00 a.m. At around 1:45 p.m., he was on his way home when a bicycle bumped his taxicab at the
intersection of 8th and 11th Streets, VAB. The bicycle was travelling from south to north, and he was
going east coming from the west. The bicycle was coming from 11th Street, while he was travelling
along 8th Street.30
On cross-examination, Completo testified that when Albayda hit the rear right door of the taxicab, the
latter fell to the ground. When he heard a noise, he immediately alighted from the taxicab. He denied
that he stopped about 10 meters away from the place where Albayda fell. He carried Albayda and
drove him to the hospital.31
Panican testified that he worked as an airconditioner technician in a shop located on 8th Street
corner 11th Street. On the date and time of the incident, he was working in front of the shop near the
roadside. He saw a bicycle bump the rear right side of the taxicab. Then, the driver of the taxicab
alighted, carried Albayda, and brought him to the hospital.32

When questioned by the trial court, Panican testified that the bicycle was running fast and that he
saw it bump the taxicab. The taxicab already passed the intersection of 11th and 8th Streets when
the bicycle arrived.33
Abiad testified that, aside from being a soldier, he was also a franchise holder of taxicabs and
passenger jeepneys. When Completo applied as a driver of the taxicab, Abiad required the former to
show his bio-data, NBI clearance, and drivers license. Completo never figured in a vehicular
accident since the time he was employed in February 1997. Abiad averred that Completo was a
good driver and a good man. Being the operator of taxicab, Abiad would wake up early and
personally check all the taxicabs.34
On July 31, 2000, the trial court rendered a decision, 35 the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff [Albayda] and against the
defendants [Completo and Abiad]. Accordingly, the defendants [Completo and Abiad] are hereby
ordered to pay the plaintiff [Albayda] the following sum:
1. P46,000.00 as actual damages;
2. P400,000.00 as moral damages; [and]
3. P25,000.00 as attorneys fees.
Costs against the defendants [Completo and Abiad].
SO ORDERED.36
Completo and Abiad filed an appeal. The CA affirmed the trial court with modification in a
Decision37 dated January 2, 2006, viz.:
WHEREFORE, premises considered, the appeal is DENIED for lack of merit. The assailed Decision
dated 31 July 2000 rendered by the Regional Trial Court of Pasay City, Branch 117, in Civil Case No.
98-1333 is hereby AFFIRMED with the following MODIFICATIONS:
1. the award of Php 46,000.00 as actual damages is DELETED;
2. temperate damages in the amount of Php 40,000.00 is awarded in favor of appellee;
3. moral damages in favor of appellee is REDUCED to Php 200,000.00;
4. appellants Redentor Completo and Elpidio Abiad are solidarily liable to pay appellee
Amando C. Albayda, Jr. said temperate and moral damages, as well as the attorneys fees in
the amount of Php 25,000.00 awarded by the trial court;
5. the temperate and moral damages shall earn legal interest at 6% per annum computed
from the date of promulgation of Our Decision;
6. upon finality of Our Decision, said moral and temperate damages shall earn legal interest
at the rate of 12% per annum, in lieu of 6% per annum, until full payment. Costs against
appellants.
SO ORDERED.38
Hence, this petition.
The Issues
Petitioners presented the following issues for resolution: (1) whether the CA erred in finding that
Completo was the one who caused the collision;
(2) whether Abiad failed to prove that he observed the diligence of a good father of the family; and
(3) whether the award of moral and temperate damages and attorneys fees to Albayda had no
basis.39
The Ruling of the Court
The petition is bereft of merit.
I. On Negligence
The issues raised by petitioners essentially delve into factual matters which were already passed
upon by the RTC and the CA. Conclusions and findings of fact of the trial court are entitled to great
weight on appeal and should not be disturbed unless for strong and cogent reasons, because the

trial court is in a better position to examine real evidence, as well as to observe the demeanor of the
witnesses while testifying in the case. The fact that the CA adopted the findings of fact of the trial
court makes the same binding upon this Court. Well-settled is the rule that the Supreme Court is not
a trier of facts.40 To be sure, findings of fact of lower courts are deemed conclusive and binding upon
the Supreme Court, save only for clear and exceptional reasons,41 none of which is present in the
case at bar.
The instant case involved a collision between a taxicab and a bicycle which resulted in serious
physical injuries to the bicycle rider, Albayda. It is a rule in negligence suits that the plaintiff has the
burden of proving by a preponderance of evidence the motorists breach in his duty of care owed to
the plaintiff, that the motorist was negligent in failing to exercise the diligence required to avoid injury
to the plaintiff, and that such negligence was the proximate cause of the injury suffered. 42
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 preexisting contractual relation between the parties, is called a quasi-delict. In this regard,
the question of the motorist's negligence is a question of fact.
It was proven by a preponderance of evidence that Completo failed to exercise reasonable diligence
in driving the taxicab because he was over-speeding at the time he hit the bicycle ridden by Albayda.
Such negligence was the sole and proximate cause of the serious physical injuries sustained by
Albayda. Completo did not slow down even when he approached the intersection of 8th and 11th
Streets of VAB. It was also proven that Albayda had the right of way, considering that he reached the
intersection ahead of Completo.
The bicycle occupies a legal position that is at least equal to that of other vehicles lawfully on the
highway, and it is fortified by the fact that usually more will be required of a motorist than a bicyclist
in discharging his duty of care to the other because of the physical advantages the automobile has
over the bicycle.43
At the slow speed of ten miles per hour, a bicyclist travels almost fifteen feet per second, while a car
traveling at only twenty-five miles per hour covers almost thirty-seven feet per second, and splitsecond action may be insufficient to avoid an accident. It is obvious that a motor vehicle poses a
greater danger of harm to a bicyclist than vice versa. Accordingly, while the duty of using reasonable
care falls alike on a motorist and a bicyclist, due to the inherent differences in the two vehicles, more
care is required from the motorist to fully discharge the duty than from the bicyclist. 44 Simply stated,
the physical advantages that the motor vehicle has over the bicycle make it more dangerous to the
bicyclist than vice versa.45
Under Article 2180 of the Civil Code, the obligation imposed by Article 2176 is demandable not only
for ones own acts or omissions, but also for those persons for whom one is responsible. Employers
shall be liable for the damages caused by their employees, but the employers responsibility shall
cease upon proof that they observed all the diligence of a good father of the family in the selection
and supervision of their employees.
When an injury is caused by the negligence of an employee, a legal presumption instantly arises that
the employer was negligent. This presumption may be rebutted only by a clear showing on the part
of the employer that he exercised the diligence of a good father of a family in the selection and
supervision of his employee. If the employer successfully overcomes the legal presumption of
negligence, he is relieved of liability. In other words, the burden of proof is on the employer.46
The trial courts finding that Completo failed to exercise reasonable care to avoid collision with
Albayda at the intersection of 11th and 8th Streets of VAB gives rise to liability on the part of
Completo, as driver, and his employer Abiad. The responsibility of two or more persons who are
liable for quasi-delict is solidary.47 The civil liability of the employer for the negligent acts of his
employee is also primary and direct, owing to his own negligence in selecting and supervising his
employee.48 The civil liability of the employer attaches even if the employer is not inside the vehicle
at the time of the collision.49

In the selection of prospective employees, employers are required to examine them as to their
qualifications, experience, and service records. On the other hand, with respect to the supervision of
employees, employers should formulate standard operating procedures, monitor their
implementation, and impose disciplinary measures for breaches thereof. To establish these factors in
a trial involving the issue of vicarious liability, employers must submit concrete proof, including
documentary evidence.50
Abiad testified that before he hired Completo, he required the latter to show his bio-data, NBI
clearance, and drivers license. Abiad likewise stressed that Completo was never involved in a
vehicular accident prior to the instant case, and that, as operator of the taxicab, he would wake up
early to personally check the condition of the vehicle before it is used.
The protestation of Abiad to escape liability is short of the diligence required under the law. Abiads
evidence consisted entirely of testimonial evidence, and the unsubstantiated and self-serving
testimony of Abiad was insufficient to overcome the legal presumption that he was negligent in the
selection and supervision of his driver.
II. On Damages
The CA rightfully deleted the award of actual damages by the RTC because Albayda failed to
present documentary evidence to establish with certainty the amount that he incurred during his
hospitalization and treatment for the injuries he suffered. In the absence of stipulation, actual
damages are awarded only for such pecuniary loss suffered that was duly proved. 51
While the amount of actual damages was not duly established with certainty, the Court recognizes
the fact that, indeed, Albayda incurred a considerable amount for the necessary and reasonable
medical expenses, loss of salary and wages, loss of capacity to earn increased wages, cost of
occupational therapy, and harm from conditions caused by prolonged immobilization. Temperate
damages, more than nominal but less than compensatory damages, may be recovered when the
court finds that some pecuniary loss has been suffered but its amount cannot, from the nature of the
case, be proved with certainty.52 Temperate damages must be reasonable under the
circumstances.53 Thus, the Court finds the award of One Hundred Thousand Pesos (P100,000.00) as
temperate damages reasonable under the circumstances.
Doubtless, Albayda suffered immeasurable pain because of the incident caused by petitioners
negligence. The CA explained:
The court vicariously feels the pain the plaintiff [Albayda] suffered a number of times. After he was
bumped by defendants cab, he cried in pain. When the doctors bore holes into his left knee, he cried
in pain. When he was tractioned, when he was subjected to an operation after operation he suffered
pain. When he took the witness stand to testify, he walked with crutches, his left knee in bandage,
stiff and unfuctional. Pain was written [on] his face. He does deserve moral damages. 54
Moral damages are awarded in quasi-delicts causing physical injuries. The permanent deformity and
the scar left by the wounds suffered by Albayba will forever be a reminder of the pain and suffering
that he had endured and continues to endure because of petitioners negligence. Thus, the award of
moral damages in the amount of Five Hundred Thousand Pesos (P500,000.00) is proper.
Finally, an interest rate of six percent (6%) per annum is due on the amount of P100,000.00, as
temperate damages, and P500,000.00, as moral damages, which we have awarded. The 6% per
annum interest rate on the temperate and moral damages shall commence to run from the date of
the promulgation of this Decision. Upon finality of the Decision, an interest rate of twelve percent
(12%) per annum shall be imposed on the amount of the temperate and moral damages until full
payment thereof.55
The award of attorneys fees is hereby deleted for failure to prove that petitioners acted in bad faith
in refusing to satisfy respondents just and valid claim.
WHEREFORE, in view of the foregoing, the Decision dated January 2, 2006 and the Resolution
dated March 30, 2006 of the Court of Appeals in CA-G.R. CV No. 68405 are hereby AFFIRMED with
MODIFICATION, viz.:

(1) The estate of the late Redentor Completo and Elpidio Abiad are solidarily liable to pay
One Hundred Thousand Pesos (P100,000.00), as temperate damages, and Five Hundred
Thousand Pesos (P500,000.00), as moral damages;
(2) The temperate and moral damages hereby awarded shall earn legal interest at the rate of
six percent (6%) per annum from the date of the promulgation of this Decision. Upon finality
of this Decision, an interest rate of twelve percent (12%) per annum shall be imposed on the
amount of the temperate and moral damages until full payment thereof.
Costs against petitioners.
SO ORDERED.
ANTONIO EDUARDO B. NACHURA
Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson
DIOSDADO M. PERALTA
ROBERTO A. ABAD
Associate Justice
Associate Justice
JOSE CATRAL MENDOZA
Associate Justice
ATT E S TATI O N
I attest that the conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Courts Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division
C E R TI F I C ATI O N
Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I
certify that the conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Courts Division.
RENATO C. CORONA
Chief Justice

Footnotes
1
Penned by Associate Justice Celia C. Librea-Leagogo, with Associate Justices Renato C.
Dacudao and Lucas P. Bersamin (now a member of this Court), concurring; rollo, pp. 50-91.
2
Id. at 93-94.
3
Completo died pending appeal of the instant case to this Court.
4
Rollo, p. 51.
5
Id. 51-52.
6
Id. at 117-118.
7
Id. at 52.
8
Id. at 52-53.
9
Id. at 53.
10
Id. at 53-54.
11
Id. at 54.
12
Id. at 54-55.

Id. at 55.
Id.
15
Id.
16
Id.
17
Id. at 55-56.
18
Traction is the use of a pulling force to treat muscle and skeleton disorders. Traction is
usually applied to the arms and legs, the neck, the backbone, or the pelvis. It is used to
treat fractures, dislocations, and long-duration muscle spasms, and to prevent or correct
deformities. Traction can either be short-term, as at an accident scene, or long-term, when it
is used in a hospital setting. <http://medical-dictionary.thefreedictionary.com/traction> (visited
June 8, 2010.)
19
Rollo, pp. 56-57.
20
Bone grafting or bone repair of the malunion.
21
Rollo, p. 57.
22
Id. at 57-58.
23
Id. at 58.
24
Id.
25
Id.
26
Id.
27
Id. at 58-59.
28
Id. at 59.
29
Id. at 61.
30
Id.
31
Id.
32
Id.
33
Id. at 62.
34
Id.
35
Penned by Judge Henrick F. Gingoyon, RTC, Branch 117, Pasay City; id. at 175-188.
36
Id. at 188.
37
Supra note 1.
38
Id. at 87-88.
39
Rollo, p. 325.
40
Spouses Patricio and Myrna Bernales vs. Heirs of Julian Sambaan, G.R. No. 163271,
January 15, 2010; Poliand Industrial Limited v. National Development Company, G.R. Nos.
143866 and 143877, August 22, 2005, 467 SCRA 500, 543.
41
Empire East Land Holdings, Inc. v. Capitol Industrial Construction Groups, Inc., G.R. No.
168074, September 26, 2008, 566 SCRA 473; Bulay-og v. Bacalso, G.R. No. 148795, July
17, 2006, 495 SCRA 308.
42
11 AMJUR POF 3d 395.
43
Id.
44
Id.
45
Id.
46
Skyi v. Begasa, 460 Phil. 381 (2003); Delsan Transport Lines, Inc. v. C & A Construction,
Inc., 459 Phil. 156 (2003).
47
CIVIL CODE, Art. 2194.
48
Cerezo v. Tuazon, 469 Phil. 1020 (2004).
13
14

Sps. Hernandez v. Sps. Dolor, 479 Phil. 593 (2004).

Skyi v. Begasa, supra note 46.
51
CIVIL CODE, Art. 2199.
52
CIVIL CODE, Art. 2224.
53
CIVIL CODE, Art. 2225.
54
Rollo, p. 65.
55
Eastern Shipping Lines, Inc. v. CA, G.R. No. 97412, July 12, 1994, 234 SCRA 78.
49
50

SECOND DIVISION
ALFREDO P. PACIS and
CLEOPATRA D. PACIS,

G.R. No. 169467

Petitio

Present:

ners,
CARPIO, J., Chairperson,
BRION,
DEL CASTILLO,
ABAD, and
PEREZ, JJ.

- versus -

JEROME JOVANNE MORALES,

Respondent.

Promulgated:
February 25, 2010

x------------------------------------------------- x

DECISION

CARPIO, J.:

The Case

This petition for review[1] assails the 11 May 2005

Decision[2] and the 19 August 2005 Resolution of the Court of
Appeals in CA-G.R. CV No. 60669.

The Facts
On 17 January 1995, petitioners Alfredo P. Pacis and Cleopatra D.
Pacis (petitioners) filed with the trial court a civil case for
damages
against
respondent
Jerome
Jovanne
Morales
(respondent). Petitioners are the parents of Alfred Dennis Pacis, Jr.
(Alfred), a 17-year old student who died in a shooting incident
inside the Top Gun Firearms and Ammunitions Store (gun store) in
Baguio City. Respondent is the owner of the gun store.
The facts as found by the trial court are as follows:
On January 19, 1991, Alfred Dennis Pacis, then 17
years old and a first year student at the Baguio
Colleges Foundation taking up BS Computer Science,
died due to a gunshot wound in the head which he
sustained while he was at the Top Gun Firearm[s] and
Ammunition[s] Store located at Upper Mabini Street,
Baguio City. The gun store was owned and operated by
defendant Jerome Jovanne Morales.
With Alfred Pacis at the time of the shooting were Aristedes Matibag and Jason
Herbolario. They were sales agents of the defendant, and at that particular time, the
caretakers of the gun store.
The bullet which killed Alfred Dennis Pacis was fired from a gun brought in by a
customer of the gun store for repair.
The gun, an AMT Automag II Cal. 22 Rimfire Magnum with Serial No. SN-H34194
(Exhibit Q), was left by defendant Morales in a drawer of a table located inside the
gun store.
Defendant Morales was in Manila at the time. His employee Armando Jarnague, who
was the regular caretaker of the gun store was also not around. He left earlier and
requested sales agents Matibag and Herbolario to look after the gun store while he
and defendant Morales were away. Jarnague entrusted to Matibag and Herbolario a

bunch of keys used in the gun store which included the key to the drawer where the
fatal gun was kept.

It appears that Matibag and Herbolario later

brought out the gun from the drawer and placed it on
top of the table. Attracted by the sight of the gun, the
young Alfred Dennis Pacis got hold of the same.
Matibag asked Alfred Dennis Pacis to return the gun.
The latter followed and handed the gun to Matibag. It
went off, the bullet hitting the young Alfred in the head.
A criminal case for homicide was filed against Matibag before branch VII of this
Court. Matibag, however, was acquitted of the charge against him because of the
exempting circumstance of accident under Art. 12, par. 4 of the Revised Penal
Code.

By agreement of the parties, the evidence

adduced in the criminal case for homicide against
Matibag was reproduced and adopted by them as part
of their evidence in the instant case.[3]
On 8 April 1998, the trial court rendered its decision in favor
of petitioners. The dispositive portion of the decision reads:
WHEREFORE, premises considered, judgment is hereby
rendered in favor of the plaintiffs [Spouses Alfredo P. Pacis and
Cleopatra D. Pacis] and against the defendant [Jerome Jovanne
Morales] ordering the defendant to pay plaintiffs

(1) P30,000.00 as indemnity for the death of

Alfred Pacis;
(2) P29,437.65
hospitalization and burial

as

actual

damages

expenses incurred by the plaintiffs;

(3) P100,000.00 as compensatory damages;

for

the

(4) P100,000.00 as moral damages;

(5) P50,000.00 as attorneys fees.
SO ORDERED.[4]

Respondent appealed to the Court of Appeals. In its

Decision[5] dated 11 May 2005, the Court of Appeals reversed the
trial courts Decision and absolved respondent from civil liability
under Article 2180 of the Civil Code.[6]
Petitioners filed a motion for reconsideration, which the Court of
Appeals denied in its Resolution dated 19 August 2005.
Hence,

this

petition.
The Trial Courts Ruling
The trial court held respondent civilly liable for the death of Alfred
under Article 2180 in relation to Article 2176 of the Civil Code.
[7]
The trial court held that the accidental shooting of Alfred which
caused his death was partly due to the negligence of
respondents employee Aristedes Matibag (Matibag). Matibag
and Jason Herbolario (Herbolario) were employees of respondent
even if they were only paid on a commission basis. Under the Civil
Code, respondent is liable for the damages caused by Matibag on
the occasion of the performance of his duties, unless respondent
proved that he observed the diligence of a good father of a family
to prevent the damage. The trial court held that respondent failed
to observe the required diligence when he left the key to the
drawer containing the loaded defective gun without instructing
his employees to be careful in handling the loaded gun.

The Court of
Appeals Ruling
The Court of Appeals held that respondent cannot be held civilly
liable since there was no employer-employee relationship
between respondent and Matibag. The Court of Appeals found
that Matibag was not under the control of respondent with respect
to the means and methods in the performance of his work. There
can be no employer-employee relationship where the element of
control is absent. Thus, Article 2180 of the Civil Code does not
apply in this case and respondent cannot be held liable.
Furthermore, the Court of Appeals ruled that even if respondent is
considered an employer of Matibag, still respondent cannot be
held liable since no negligence can be attributed to him. As
explained by the Court of Appeals:
Granting arguendo that an employer-employee relationship
existed between Aristedes Matibag and the defendant-appellant, we
find that no negligence can be attributed to him.
Negligence is best exemplified in the case of Picart vs. Smith (37 Phil. 809).
The test of negligence is this:
x x x. Could a prudent man, in the position of the
person to whom negligence is attributed, foresee harm to
the person injured as a reasonable consequence of the
course about to be pursued? If so, the law imposes a duty
on the actor to refrain from that course or take precaution
against its mischievous results, and the failure to do so
constitutes negligence. x x x.

Defendant-appellant maintains that he is not

guilty of negligence and lack of due care as he did not
fail to observe the diligence of a good father of a family.
He submits that he kept the firearm in one of his table

drawers, which he locked and such is already an

indication that he took the necessary diligence and care
that the said gun would not be accessible to anyone. He
puts [sic] that his store is engaged in selling firearms
and
ammunitions.
Such
items
which
are per
se dangerous are kept in a place which is properly
secured in order that the persons coming into the gun
store would not be able to take hold of it unless it is
done intentionally, such as when a customer is
interested to purchase any of the firearms,
ammunitions and other related items, in which case, he
may be allowed to handle the same.
We agree. Much as We sympathize with the family
of the deceased, defendant-appellant is not to be
blamed. He exercised due diligence in keeping his
loaded gun while he was on a business trip in Manila.
He placed it inside the drawer and locked it. It was
taken away without his knowledge and authority.
Whatever happened to the deceased was purely
accidental.[8]
The Issues
Petitioners raise the following issues:
I. THE APPELLATE COURT COMMITTED SERIOUS ERROR IN RENDERING
THE DECISION AND RESOLUTION IN QUESTION IN DISREGARD OF
LAW AND JURISPRUDENCE BY REVERSING THE ORDER OF THE
REGIONAL TRIAL COURT (BRANCH 59) OF BAGUIO CITY
NOTWITHSTANDING
CLEAR,
AUTHENTIC
RECORDS
AND
TESTIMONIES PRESENTED DURING THE TRIAL WHICH NEGATE AND
CONTRADICT ITS FINDINGS.
II. THE APPELLATE COURT COMMITTED GRAVE, REVERSIBLE ERROR IN
RENDERING THE DECISION AND RESOLUTION IN QUESTION BY
DEPARTING FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL

PROCEEDINGS THEREBY IGNORING THE FACTUAL FINDINGS OF THE

REGIONAL TRIAL COURT (BRANCH 59) OF BAGUIO CITY SHOWING
PETITIONERS CLEAR RIGHTS TO THE AWARD OF DAMAGES. [9]

The Ruling of the Court

We find the petition meritorious.
This case for damages arose out of the accidental shooting
of petitioners son. Under Article 1161[10] of the Civil Code,
petitioners may enforce their claim for damages based on the civil
liability arising from the crime under Article 100 [11] of the Revised
Penal Code or they may opt to file an independent civil action for
damages under the Civil Code. In this case, instead of enforcing
their claim for damages in the homicide case filed against
Matibag, petitioners opted to file an independent civil action for
damages against respondent whom they alleged was Matibags
employer. Petitioners based their claim for damages under
Articles 2176 and 2180 of the Civil Code.

Unlike the subsidiary liability of the employer under Article

103[12] of the Revised Penal Code, [13] the liability of the employer, or
any person for that matter, under Article 2176 of the Civil Code is
primary and direct, based on a persons own negligence. Article
2176 states:
Art. 2176. Whoever by act or omission causes damage to
another, there being fault or negligence, is obliged to pay for the
damage done. Such fault or negligence, if there is no pre-existing
contractual relation between the parties, is called quasi-delict and is
governed by the provisions of this Chapter.

This case involves the accidental discharge of a firearm

inside a gun store. Under PNP Circular No. 9, entitled the Policy
on Firearms and Ammunition Dealership/Repair, a person who is
in the business of purchasing and selling of firearms and
ammunition must maintain basic security and safety
requirements of a gun dealer, otherwise his License to Operate
Dealership will be suspended or canceled. [14]
Indeed, a higher degree of care is required of someone who
has in his possession or under his control an instrumentality
extremely dangerous in character, such as dangerous weapons or
substances. Such person in possession or control of dangerous
instrumentalities has the duty to take exceptional precautions to
prevent any injury being done thereby. [15] Unlike the ordinary
affairs of life or business which involve little or no risk, a business
dealing with dangerous weapons requires the exercise of a higher
degree of care.
As a gun store owner, respondent is presumed to be
knowledgeable about firearms safety and should have known
never to keep a loaded weapon in his store to avoid unreasonable
risk of harm or injury to others. Respondent has the duty to
ensure that all the guns in his store are not loaded. Firearms
should be stored unloaded and separate from ammunition when
the firearms are not needed for ready-access defensive use.
[16]
With more reason, guns accepted by the store for repair
should not be loaded precisely because they are defective and
may cause an accidental discharge such as what happened in this
case. Respondent was clearly negligent when he accepted the
gun for repair and placed it inside the drawer without ensuring
first that it was not loaded. In the first place, the defective gun
should have been stored in a vault. Before accepting the defective
gun for repair, respondent should have made sure that it was not
loaded to prevent any untoward accident. Indeed, respondent
should never accept a firearm from another person, until the
cylinder or action is open and he has personally checked that the

weapon is completely unloaded. [17] For failing to insure that the

gun was not loaded, respondent himself was negligent.
Furthermore, it was not shown in this case whether respondent
had a License to Repair which authorizes him to repair defective
firearms to restore its original composition or enhance or upgrade
firearms.[18]
Clearly, respondent did not exercise the degree of care and
diligence required of a good father of a family, much less the
degree of care required of someone dealing with dangerous
weapons, as would exempt him from liability in this case.
WHEREFORE, we GRANT the petition. We SET ASIDE the
11 May 2005 Decision and the 19 August 2005 Resolution of the
Court of Appeals in CA-G.R. CV No. 60669. We REINSTATE the
trial courts Decision dated 8 April 1998.

SO ORDERED.

ANTONIO T. CARPIO
Associate Justice

WE CONCUR:

D. BRION
ASSOCIATE JUSTICE

MARIANO C. DEL CASTILLO

ASSOCIATE
JUSTICE
JUSTICE

ROBERTO A. ABAD

JOSE P. PEREZ
ASSOCIATE
JUSTICE

ATTESTATION

ASSOCIATE

I ATTEST THAT THE CONCLUSIONS IN THE ABOVE DECISION HAD

BEEN REACHED IN CONSULTATION BEFORE THE CASE WAS ASSIGNED
TO THE WRITER OF THE OPINION OF THE COURTS DIVISION.

ANTONIO T. CARPIO
Associate Justice
Chairperson

CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the
Division Chairpersons Attestation, I certify that the conclusions in the
above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Courts Division.

REYNATO S. PUNO
Chief Justice

[1]

Under Rule 45 of the 1997 Rules of Civil Procedure.

[2]

Penned by Associate Justice Jose Catral Mendoza (now Supreme Court Justice) with Associate Justices Romeo A.
Brawner and Edgardo P. Cruz, concurring.

[3]

Rollo, pp. 43-44.

[4]

Id. at 50.

[5]

Id. at 29-39.

[6]

The dispositive portion of the Court of Appeals decision reads:

WHEREFORE, the April 8, 1998 Decision of the Regional Trial Court, Branch 59,
Baguio City, is REVERSED and SET ASIDE and a new one entered dismissing the defendantappellant from civil liability under Article 2180 of the Civil Code.
SO ORDERED.
[7]

Articles 2176 and 2180 of the Civil Code provide:

Art. 2176. Whoever by act or omission causes damage to another, there being fault or
negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no preexisting contractual relation between the parties, is called quasi-delict and is governed by the
provisions of this Chapter.
Art. 2180. The obligation imposed by article 2176 is demandable not only for ones own acts or omissions, but
also of those persons for whom one is responsible.
xxx
The owners and managers of an establishment or enterprise are likewise responsible for damages caused by their
employees in the service of the branches in which the latter are employed or on the occasion of their functions.
xxx
The responsibility treated of in this article shall cease when the persons herein mentioned prove that they
observed all the diligence of a good father of a family to prevent damage.

[8]

Rollo, pp. 38-39.

[9]

Id. at 15.

[10]

Article 1161 of the Civil Code provides: Civil obligations arising from criminal offenses shall be governed by
the penal laws, subject to the provisions of Article 2177, and of the pertinent provisions of Chapter 2,
Preliminary Title, on Human Relations, and Title XVIII of this Book regulating damages.

[11]

Article 100 of the Revised Penal Code provides that [e]very person criminally liable for a felony is also civilly
liable.

[12]

Article 103 of the Revised Penal Code states that [t]he subsidiary liability in the next preceding article shall also
apply to employers, teachers, persons, and corporations engaged in any kind of industry for felonies
committed by their servants, pupils, workmen, apprentices, or employees in the discharge of their duties.

[13]

Maniago v. Court of Appeals, 324 Phil. 34 (1996).

[14]

See PNP

Circular

No.

9,

Policy

on

Firearms

and

Ammunition

<http://www.fed.org.ph/fed/download/PNP Circulars/PNP Circular

February 2010). The pertinent provision of the PNP Circular No. 9 reads:

No.

Dealership/Repair,
9.pdf> (visited

18

Administrative Sanction
a. There shall be an Administrative Sanction of suspension or cancellation of license depending on the gravity and
nature of the offense on the following prohibited acts:
1) Selling of ammunition to unauthorized persons, entities, security agencies, etc.
2) Selling of display firearm without authority.

3) Failure to maintain the basic security and safety requirements of a gun dealer and
gun repair shop such as vault, fire fighting equipment and maintenance of security
guards from a licensed security agency.
4) Failure to submit monthly sales report on time to FED, CSG [Firearms and
Explosives Division of the PNP Civil Security Group].
5) Unauthorized disposition or selling of firearms intended for demonstration/test/evaluation and display during gun
show purposes.
6)

Submission of spurious documents in the application for licenses.

7)

Other similar offenses. (Emphasis supplied)

[15]

1 J.C. SANCO, TORTS AND DAMAGES 24-25 (5th ed., 1994).

[16]

See The Fundamentals of Firearms Safety by the Firearms and Explosives Division of the PNP Civil Security
Group, < http://www.fed.org.ph/gunsafety.html> (visited 18 February 2010).

[17]

Id.

[18]

See PNP

Circular

No.

9,

Policy

on

Firearms

and

<http://www.fed.org.ph/fed/download/PNP Circulars/PNP
February 2010).

Ammunition
Circular

No.

Dealership/Repair,
9.pdf> (visited

18

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. 130068 October 1, 1998
FAR EASTERN SHIPPING COMPANY, petitioner,
vs.
COURT OF APPEALS and PHILIPPINE PORTS AUTHORITY, respondents.
G.R. No. 130150 October, 1998
MANILA PILOTS ASSOCIATION, petitioner,
vs.
PHILIPPINE PORTS AUTHORITY and FAR EASTERN SHIPPING COMPANY, respondents.
REGALADO, J.:
These consolidated petitions for review on certiorari seek in unison to annul and set aside the
decision 1 of respondent Court of Appeals of November 15, 1996 and its resolution 2 dated July 31,
1997 in CA-G.R. CV No. 24072, entitled "Philippine Ports Authority, Plaintiff-Appellee vs. Far Eastern
Shipping Company, Senen C. Gavino and Manila Pilots' Association, Defendants-Appellants," which
affirmed with modification the judgment of the trial court holding the defendants-appellants therein
solidarily liable for damages in favor of herein private respondent.
There is no dispute about the facts as found by the appellate court,
thus
. . . On June 20, 1980, the M/V PAVLODAR, flying under the flagship of the USSR,
owned and operated by the Far Eastern Shipping Company (FESC for brevity's
sake), arrived at the Port of Manila from Vancouver, British Columbia at about 7:00
o'clock in the morning. The vessel was assigned Berth 4 of the Manila International
Port, as its berthing space. Captain Roberto Abellana was tasked by the Philippine
Port Authority to supervise the berthing of the vessel. Appellant Senen Gavino was
assigned by the Appellant Manila Pilots' Association (MPA for brevity's sake) to
conduct docking maneuvers for the safe berthing of the vessel to Berth No. 4.
Gavino boarded the vessel at the quarantine anchorage and stationed himself in the
bridge, with the master of the vessel, Victor Kavankov, beside him. After a briefing of
Gavino by Kavankov of the particulars of the vessel and its cargo, the vessel lifted
anchor from the quarantine anchorage and proceeded to the Manila International
Port. The sea was calm and the wind was ideal for docking maneuvers.
When the vessel reached the landmark (the big church by the Tondo North Harbor)
one-half mile from the pier, Gavino ordered the engine stopped. When the vessel
was already about 2,000 feet from the pier, Gavino ordered the anchor dropped.
Kavankov relayed the orders to the crew of the vessel on the bow. The left anchor,
with two (2) shackles, were dropped. However, the anchor did not take hold as
expected. The speed of the vessel did not slacken. A commotion ensued between
the crew members. A brief conference ensued between Kavankov and the crew
members. When Gavino inquired what was all the commotion about, Kavankov
assured Gavino that there was nothing to it.
After Gavino noticed that the anchor did not take hold, he ordered the engines halfastern. Abellana, who was then on the pier apron, noticed that the vessel was
approaching the pier fast. Kavankov likewise noticed that the anchor did not take
hold. Gavino thereafter gave the "full-astern" code. Before the right anchor and
additional shackles could be dropped, the bow of the vessel rammed into the apron

of the pier causing considerable damage to the pier. The vessel sustained damage
too, (Exhibit "7-Far Eastern Shipping). Kavankov filed his sea protest (Exhibit "1Vessel"). Gavino submitted his report to the Chief Pilot (Exhibit "1-Pilot") who
referred the report to the Philippine Ports Authority (Exhibit 2-Pilot"). Abellana
likewise submitted his report of the incident (Exhibit "B").
Per contract and supplemental contract of the Philippine Ports Authority and the
contractor for the rehabilitation of the damaged pier, the same cost the Philippine Ports
Authority the amount of P1,126,132.25 (Exhibits "D" and "E"). 3
On January 10, 1983, the Philippine Ports Authority (PPA, for brevity), through the Solicitor General,
filed before the Regional Trial Court of Manila, Branch 39, a complaint for a sum of money against
Far Eastern Shipping Co., Capt. Senen C. Gavino and the Manila Pilots' Association, docketed as
Civil Case No. 83-14958, 4 praying that the defendants therein be held jointly and severally liable to
pay the plaintiff actual and exemplary damages plus costs of suit. In a decision dated August 1,
1985, the trial court ordered the defendants therein jointly and severally to pay the PPA the amount
of P1,053,300.00 representing actual damages and the costs of suit. 5
The defendants appealed to the Court of Appeals and raised the following issues: (1) Is the pilot of a
commercial vessel, under compulsory pilotage, solely liable for the damage caused by the vessel to
the pier, at the port of destination, for his negligence? and (2) Would the owner of the vessel be
liable likewise if the damage is caused by the concurrent negligence of the master of the vessel and
the pilot under a compulsory pilotage?
As stated at the outset, respondent appellate court affirmed the findings of the court a quo except
that if found no employer-employee relationship existing between herein private respondents Manila
Pilots' Association (MPA, for short) and Capt. Gavino. 6 This being so, it ruled instead that the liability
of MPA is anchored, not on Article 2180 of the Civil Code, but on the provisions of Customs
Administrative Order No. 15-65, 7 and accordingly modified said decision of the trial court by holding
MPA, along with its co-defendants therein, still solidarily liable to PPA but entitled MPA to
reimbursement from Capt. Gavino for such amount of the adjudged pecuniary liability in excess of
the amount equivalent to seventy-five percent (75%) of its prescribed reserve
fund. 8
Neither Far Eastern Shipping Co. (briefly, FESC) nor MPA was happy with the decision of the Court
of Appeals and both of them elevated their respective plaints to us via separate petitions for review
on certiorari.
In G. R. No. 130068, which was assigned to the Second Division of this Court, FESC imputed that
the Court of Appeals seriously erred:
1. in not holding Senen C. Gavino and the Manila Pilots' Association as the parties
solely responsible for the resulting damages sustained by the pier deliberately
ignoring the established jurisprudence on the matter;
2. in holding that the master had not exercised the required diligence demanded from
him by the circumstances at the time the incident happened;
3. in affirming the amount of damages sustained by the respondent Philippine Ports
Authority despite a strong and convincing evidence that the amount is clearly
exorbitant and unreasonable;
4. in not awarding any amount of counterclaim prayed for by the petitioner in its
answer; and
5. in not granting herein petitioner's claim against pilot Senen C. Gavino and Manila
Pilots' Association in the event that it be held
liable. 9
Petitioner asserts that since the MV PAVLODAR was under compulsory pilotage at the time of the
incident, it was the compulsory pilot, Capt. Gavino, who was in command and had complete control
in the navigation and docking of the vessel. It is the pilot who supersedes the master for the time
being in the command and navigation of a ship and his orders must be obeyed in all respects

connected with her navigation. Consequently, he was solely responsible for the damage caused
upon the pier apron, and not the owners of the vessel. It claims that the master of the boat did not
commit any act of negligence when he failed to countermand or overrule the orders of the pilot
because he did not see any justifiable reason to do so. In other words, the master cannot be faulted
for relying absolutely on the competence of the compulsory pilot. If the master does not observe that
a compulsory pilot is incompetent or physically incapacitated, the master is justified in relying on the
pilot. 10
Respondent PPA, in its comment, predictably in full agreement with the ruling of respondent court on
the solidary liability of FESC, MPA and Capt. Gavino, stresses the concurrent negligence of Capt.
Gavino, the harbor pilot, and Capt. Viktor Kabankov, * shipmaster of MV Pavlodar, as the basis of
their solidary liability for damages sustained by PPA. It posits that the vessel was being piloted by
Capt. Gavino with Capt. Kabankov beside him all the while on the bridge of the vessel, as the former
took over the helm of MV Pavlodar when it rammed and damaged the apron of the pier of Berth No.
4 of the Manila International Port. Their concurrent negligence was the immediate and proximate
cause of the collision between the vessel and the pier Capt. Gavino, for his negligence in the
conduct of docking maneuvers for the safe berthing of the vessel; and Capt. Kabankov, for failing to
countermand the orders of the harbor pilot and to take over and steer the vessel himself in the face
of imminent danger, as well as for merely relying on Capt. Gavino during the berthing procedure. 11
On the other hand, in G.R. No. 130150, originally assigned to the Court's First Division and later
transferred to the Third Division. MPA, now as petitioner in this case, avers that respondent court's
errors consisted in disregarding and misinterpreting Customs Administrative Order No. 15-65 which
limits the liability of MPA. Said pilots' association asseverates that it should not be held solidarily
liable with Capt. Gavino who, as held by respondent court is only a member, not an employee,
thereof. There being no employer-employee relationship, neither can MPA be held liable for any
vicarious liability for the respective exercise of profession by its members nor be considered a joint
tortfeasor as to be held jointly and severally liable. 12 It further argues that there was erroneous
reliance on Customs Administrative Order No. 15-65 and the constitution and by-laws of MPA,
instead of the provisions of the Civil Code on damages which, being a substantive law, is higher in
category than the aforesaid constitution and by-laws of a professional organization or an
administrative order which bears no provision classifying the nature of the liability of MPA for the
negligence its member pilots. 13
As for Capt. Gavino, counsel for MPA states that the former had retired from active pilotage services
since July 28, 1994 and has ceased to be a member of petitioner pilots' association. He is not joined
as a petitioner in this case since his whereabouts are unknown. 14
FESC's comment thereto relied on the competence of the Court of Appeals in construing provisions
of law or administrative orders as bases for ascertaining the liability of MPA, and expressed full
accord with the appellate court's holding of solidary liability among itself, MPA and Capt. Gavino. It
further avers that the disputed provisions of Customs Administrative Order No. 15-65 clearly
established MPA's solidary liability. 15
On the other hand, public respondent PPA, likewise through representations by the Solicitor
General, assumes the same supportive stance it took in G.R. No. 130068 in declaring its total accord
with the ruling of the Court of Appeals that MPA is solidarily liable with Capt. Gavino and FESC for
damages, and in its application to the fullest extent of the provisions of Customs Administrative
Order No. 15-65 in relation to MPA's constitution and by-laws which spell out the conditions of and
govern their respective liabilities. These provisions are clear and unambiguous as regards MPA's
liability without need for interpretation or construction. Although Customs Administrative Order No.
15-65 is a mere regulation issued by an administrative agency pursuant to delegated legislative
authority to fix details to implement the law, it is legally binding and has the same statutory force as
any valid statute. 16
Upon motion 17 by FESC dated April 24, 1998 in G.R. No. 130150, said case was consolidated with
G.R. No. 130068. 18

Prefatorily, on matters of compliance with procedural requirements, it must be mentioned that the
conduct of the respective counsel for FESC and PPA leaves much to be desired, to the displeasure
and disappointment of this Court.
Sec. 2, Rule 42 of the 1997 Rules of Civil Procedure 19 incorporates the former Circular No. 28-91
which provided for what has come to be known as the certification against forum shopping as an
additional requisite for petitions filed with the Supreme Court and the Court of Appeals, aside from
the other requirements contained in pertinent provisions of the Rules of Court therefor, with the end
in view of preventing the filing of multiple complaints involving the same issues in the Supreme
Court, Court of Appeals or different divisions thereof or any other tribunal or agency.
More particularly, the second paragraph of Section 2, Rule 42 provides:
xxx xxx xxx
The petitioner shall also submit together with the petition a certification under oath
that he has not theretofore commenced any other action involving the same issues in
the Supreme Court, the Court of Appeals or different divisions thereof, or any other
tribunal or agency; if there is such other action or proceeding, he must state the
status of the same; and if he should thereafter learn that a similar action or
proceeding has been filed or is pending before the Supreme Court, the Court of
Appeals or different divisions thereof, or any other tribunal or agency, he undertakes
to promptly inform the aforesaid courts and other tribunal or agency thereof within
five (5) days therefrom. (Emphasis ours.)
For petitions for review filed before the Supreme Court, Section 4(e), Rule 45 specifically
requires that such petition shall contain a sworn certification against forum shopping as
provided in the last paragraph of Section 2, Rule 42.
The records show that the law firm of Del Rosario and Del Rosario through its associate, Atty.
Herbert A. Tria, is the counsel of record for FESC in both G.R. No. 130068 and G.R. No. 130150.
G.R. No. 130068, which is assigned to the Court's Second Division, commenced with the filing by
FESC through counsel on August 22, 1997 of a verified motion for extension of time to file its petition
for thirty (30) days from August 28, 1997 or until September 27, 1997. 20 Said motion contained the
following certification against forum shopping 21 signed by Atty. Herbert A. Tria as affiant:
CERTIFICATION
AGAINST FORUM SHOPPING
I/we hereby certify that I/we have not commenced any other action or proceeding
involving the same issues in the Supreme Court, the Court of Appeals, or any other
tribunal or agency; that to the best of my own knowledge, no such action or proceeding is
pending in the Supreme Court, the Court of Appeals, or any other tribunal or agency; that
if I/we should thereafter learn that a similar action or proceeding has been filed or is
pending before the Supreme Court, the Court of Appeals, or any other tribunal or agency,
I/we undertake to report that fact within five (5) days therefrom to this Honorable Court.
This motion having been granted, FESC subsequently filed its petition on September 26,
1997, this time bearing a "verification and certification against forum-shopping" executed by
one Teodoro P. Lopez on September 24, 1997, 22 to wit:
VERIFICATION AND CERTIFICATION
AGAINST FORUM SHOPPING
in compliance with Section 4(e), Rule 45 in relation
to Section 2, Rule 42 of the Revised Rules of Civil Procedure
I, Teodoro P. Lopez, of legal age, after being duly sworn, depose and state:
1. That I am the Manager, Claims Department of Filsov Shipping Company, the local
agent of petitioner in this case.
2. That I have caused the preparation of this Petition for Review on Certiorari.

3. That I have read the same and the allegations therein contained are true and
correct based on the records of this case.
4. That I certify that petitioner has not commenced any other action or proceeding
involving the same issues in the Supreme Court or Court of Appeals, or any other
tribunal or agency, that to the best of my own knowledge, no such action or
proceeding is pending in the Supreme Court, the Court of Appeals or any other
tribunal or agency, that if I should thereafter learn that a similar action or proceeding
has been filed or is pending before the Supreme Court, the Court of Appeals, or any
other tribunal or agency, I undertake to report the fact within five (5) days therefrom
to this Honorable Court. (Italics supplied for emphasis.)
Reviewing the records, we find that the petition filed by MPA in G.R. No. 130150 then pending with
the Third Division was duly filed on August 29, 1997 with a copy thereof furnished on the same date
by registered mail to counsel for FESC. 23 Counsel of record for MPA. Atty. Jesus P. Amparo, in his
verification accompanying said petition dutifully revealed to the Court that
xxx xxx xxx
3. Petitioner has not commenced any other action or proceeding involving the same
issues in this Honorable Court, the Court of Appeals or different Divisions thereof, or any
other tribunal or agency, but to the best of his knowledge, there is an action or
proceeding pending in this Honorable Court, entitled Far Eastern Shipping Co.,
Petitioner, vs. Philippine Ports Authority and Court of Appeals with a Motion for Extension
of time to file Petition For Review by Certiorari filed sometime on August 18, 1987. If
undersigned counsel will come to know of any other pending action or claim filed or
pending he undertakes to report such fact within five (5) days to this Honorable
Court. 24 (Emphasis supplied.)
Inasmuch as MPA's petition in G.R. No. 130150 was posted by registered mail on August 29, 1997
and taking judicial notice of the average period of time it takes local mail to reach its destination, by
reasonable estimation it would be fair to conclude that when FESC filed its petition in G.R. No.
130068 on September 26, 1997, it would already have received a copy of the former and would then
have knowledge of the pendency of the other petition initially filed with the First Division. It was
therefore incumbent upon FESC to inform the Court of that fact through its certification against forum
shopping. For failure to make such disclosure, it would appear that the aforequoted certification
accompanying the petition in G.R. No. 130068 is defective and could have been a ground for
dismissal thereof.
Even assuming that FESC had not yet received its copy of MPA's petition at the time it filed its own
petition and executed said certification, its signatory did state "that if I should thereafter learn that a
similar action or proceeding has been filed or is pending before the Supreme Court, the Court of
Appeals or any other tribunal or agency, I undertake to report the fact within five (5) days therefrom
to this Honorable Court." 25 Scouring the records page by page in this case, we find that no
manifestation concordant with such undertaking was then or at any other time thereafter ever filed by
FESC nor was there any attempt to bring such matter to the attention of the Court. Moreover, it
cannot feign non-knowledge of the existence of such other petition because FESC itself filed the
motion for consolidation in G.R. No. 130150 of these two cases on April 24, 1998.
It is disturbing to note that counsel for FESC, the law firm of Del Rosario and Del Rosario, displays
an unprofessional tendency of taking the Rules for granted, in this instance exemplified by its pro
forma compliance therewith but apparently without full comprehension of and with less than faithful
commitment to its undertakings to this Court in the interest of just, speedy and orderly administration
of court proceedings.
As between the lawyer and the courts, a lawyer owes candor, fairness and good faith to the
court. 26 He is an officer of the court exercising a privilege which is indispensable in the
administration of justice. 27 Candidness, especially towards the courts, is essential for the expeditious
administration of justice. Courts are entitled to expect only complete honesty from lawyers appearing
and pleading before them. 28 Candor in all dealings is the very essence of honorable membership in

the legal profession. 29 More specifically, a lawyer is obliged to observe the rules of procedure and
not to misuse them to defeat the ends of justice. 30 It behooves a lawyer, therefore, to exert every
effort and consider it his duty to assist in the speedy and efficient administration of justice. 31 Being
an officer of the court, a lawyer has a responsibility in the proper administration of justice. Like the
court itself, he is an instrument to advance its ends the speedy, efficient, impartial, correct and
inexpensive adjudication of cases and the prompt satisfaction of final judgments. A lawyer should not
only help attain these objectives but should likewise avoid any unethical or improper practices that
impede, obstruct or prevent their realization, charged as he is with the primary task of assisting in
the speedy and efficient administration of justice. 32
Sad to say, the members of said law firm sorely failed to observe their duties as responsible
members of the Bar. Their actuations are indicative of their predisposition to take lightly the avowed
duties of officers of the Court to promote respect for law and for legal processes. 33 We cannot allow
this state of things to pass judicial muster.
In view of the fact that at around the time these petitions were commenced, the 1997 Rules of Civil
Procedure had just taken effect, the Court treated infractions of the new Rules then with relative
liberality in evaluating full compliance therewith. Nevertheless, it would do well to remind all
concerned that the penal provisions of Circular No. 28-91 which remain operative provides, inter alia:
3. Penalties.
xxx xxx xxx
(c) The submission of a false certification under Par. 2 of the Circular shall likewise
constitute contempt of court, without prejudice to the filing of criminal action against
the guilty party. The lawyer may also be subjected to disciplinary proceedings.
It must be stressed that the certification against forum shopping ordained under the Rules is to be
executed by thepetitioner, and not by counsel. Obviously it is the petitioner, and not always the
counsel whose professional services have been retained for a particular case, who is in the best
position to know whether he or it actually filed or caused the filing of a petition in that case. Hence, a
certification against forum shopping by counsel is a defective certification. It is clearly equivalent to
non-compliance with the requirement under Section 2, Rule 42 in relation to Section 4, Rule 45, and
constitutes a valid cause for dismissal of the petition.
Hence, the initial certification appended to the motion for extension of time to file petition in G.R. No.
130068 executed in behalf of FESC by Atty. Tria is procedurally deficient. But considering that it was
a superfluity at that stage of the proceeding, it being unnecessary to file such a certification with a
mere motion for extension, we shall disregard such error. Besides, the certification subsequently
executed by Teodoro P. Lopez in behalf of FESC cures that defect to a certain extent, despite the
inaccuracies earlier pointed out. In the same vein, we shall consider the verification signed in behalf
of MPA by its counsel, Atty. Amparo, in G.R. No. 130150 as substantial compliance inasmuch as it
served the purpose of the Rules of informing the Court of the pendency of another action or
proceeding involving the same issues.
It bears stressing that procedural rules are instruments in the speedy and efficient administration of
justice. They should be used to achieve such end and not to derail it. 34
Counsel for PPA did not make matters any better. Despite the fact that, save for the Solicitor General
at the time, the same legal team of the Office of the Solicitor General (OSG, for short) composed of
Assistant Solicitor General Roman G. Del Rosario and Solicitor Luis F. Simon, with the addition of
Assistant Solicitor General Pio C. Guerrero very much later in the proceedings, represented PPA
throughout the appellate proceedings in both G.R. No. 130068 and G.R. No. 130150 and was
presumably fully acquainted with the facts and issues of the case, it took the OSG an inordinately
and almost unreasonably long period of time to file its comment, thus unduly delaying the resolution
of these cases. It took several changes of leadership in the OSG from Silvestre H. Bello III to
Romeo C. dela Cruz and, finally, Ricardo P. Galvez before the comment in behalf of PPA was
finally filed.

In G.R. No. 130068, it took eight (8) motions for extension of time totaling 210 days, a warning that
no further extensions shall be granted, and personal service on the Solicitor General himself of the
resolution requiring the filing of such comment before the OSG indulged the Court with the long
required comment on July 10, 1998. 35This, despite the fact that said office was required to file its
comment way back on November 12, 1997. 36 A closer scrutiny of the records likewise indicates that
petitoner FESC was not even furnished a copy of said comment as required by Section 5, Rule 42.
Instead, a copy thereof was inadvertently furnished to MPA which, from the point of view of G.R. No.
130068, was a non-party. 37 The OSG fared slightly better in G.R. No. 130150 in that it took only six
(6) extensions, or a total of 180 days, before the comment was finally filed. 38 And while it properly
furnished petitioner MPA with a copy of its comment, it would have been more desirable and
expedient in this case to have furnished its therein co-respondent FESC with a copy thereof, if only
as a matter of professional courtesy. 39
This undeniably dilatory disinclination of the OSG to seasonably file required pleadings constitutes
deplorable disservice to the tax-paying public and can only be categorized as censurable inefficiency
on the part of the government law office. This is most certainly professionally unbecoming of the
OSG.
Another thing that baffles the Court is why the OSG did not take the inititive of filing a motion for
consolidation in either G.R. No. 130068 or G.R. No. 130150, considering its familiarity with the
background of the case and if only to make its job easier by having to prepare and file only one
comment. It could not have been unaware of the pendency of one or the other petition because,
being counsel for respondent in both cases, petitioner is required to furnish it with a copy of the
petition under pain of dismissal of the petition for failure otherwise. 40
Besides, in G.R. 130068, it prefaces its discussions thus
Incidentally, the Manila Pilots' Association (MPA), one of the defendants-appellants in the
case before the respondent Court of Appeals, has taken a separate appeal from the said
decision to this Honorable Court, which was docketed as G.R. No. 130150 and entitled
"Manila Pilots' Association, Petitioner, versus Philippine Ports Authority and Far Eastern
Shipping Co., Respondents." 41
Similarly, in G.R. No. 130150, it states
Incidentally, respondent Far Eastern Shipping Co. (FESC) had also taken an appeal from
the said decision to this Honorable Court, docketed as G.R. No. 130068, entitled "Far
Eastern Shipping Co. vs. Court of Appeals and Philippine Ports Authority." 42
We find here a lackadaisical attitude and complacency on the part of the OSG in the handling of its
cases and an almost reflexive propensity to move for countless extensions, as if to test the patience
of the Court, before favoring it with the timely submission of required pleadings.
It must be emphasized that the Court can resolve cases only as fast as the respective parties in a
case file the necessary pleadings. The OSG, by needlessly extending the pendency of these cases
through its numerous motions for extension, came very close to exhausting this Court's forbearance
and has regrettably fallen short of its duties as the People's Tribune.
The OSG is reminded that just like other members of the Bar, the canons under the Code of
Professional Responsibility apply with equal force on lawyers in government service in the discharge
of their official tasks. 43These ethical duties are rendered even more exacting as to them because, as
government counsel, they have the added duty to abide by the policy of the State to promote a high
standard of ethics in public service. 44Furthermore, it is incumbent upon the OSG, as part of the
government bureaucracy, to perform and discharge its duties with the highest degree of
professionalism, intelligence and skill 45 and to extend prompt, courteous and adequate service to the
public. 46
Now, on the merits of the case. After a judicious examination of the records of this case, the
pleadings filed, and the evidence presented by the parties in the two petitions, we find no cogent
reason to reverse and set aside the questioned decision. While not entirely a case of first
impression, we shall discuss the issues seriatim and, correlatively by way of a judicial once-over,

inasmuch as the matters raised in both petitions beg for validation and updating of well-worn
maritime jurisprudence. Thereby, we shall write finis to the endless finger-pointing in this shipping
mishap which has been stretched beyond the limits of judicial tolerance.
The Port of Manila is within the Manila Pilotage District which is under compulsory pilotage pursuant
to Section 8, Article III of Philippine Ports Authority Administrative Order No. 03-85, 47 which provides
that:
Sec. 8. Compulsor Pilotage Service. For entering a harbor and anchoring thereat,
or passing through rivers or straits within a pilotage district, as well as docking and
undocking at any pier/wharf, or shifting from one berth or another, every vessel
engaged in coastwise and foreign trade shall be under compulsory pilotage. . . .
In case of compulsory pilotage, the respective duties and responsibilities of the compulsory pilot and
the master have been specified by the same regulation in this wise:
Sec. 11. Control of vessels and liability for damage. On compulsory pilotage
grounds, the Harbor Pilot providing the service to a vessel shall be responsible for
the damage caused to a vessel or to life and property at ports due to his negligence
or fault. He can only be absolved from liability if the accident is caused by
force majeure or natural calamities provided he has exercised prudence and extra
diligence to prevent or minimize damage.
The Master shall retain overall command of the vessel even on pilotage grounds
whereby he can countermand or overrule the order or command of the Harbor Pilot
on beard. In such event, any damage caused to a vessel or to life and property at
ports by reason of the fault or negligence of the Master shall be the responsibility and
liability of the registered owner of the vessel concerned without prejudice to recourse
against said Master.
Such liability of the owner or Master of the vessel or its pilots shall be determined by
competent authority in appropriate proceedings in the light of the facts and
circumstances of each particular case.
Sec. 32. Duties and responsibilities of the Pilot or Pilots' Association. The duties
and responsibilities of the Harbor Pilot shall be as follows:
xxx xxx xxx
f) a pilot shall be held responsible for the direction of a vessel from the time he
assumes his work as a pilot thereof until he leaves it anchored or berthed
safely; Provided, however, that his responsibility shall cease at the moment the
Master neglects or refuses to carry out hisorder.
Customs Administrative Order No. 15-65 issued twenty years earlier likewise provided in Chapter I
thereof for the responsibilities of pilots:
Par. XXXIX. A Pilot shall be held responsible for the direction of a vessel from the
time he assumes control thereof until he leaves it anchored free from
shoal: Provided, That his responsibility shall cease at the moment the master
neglects or refuses to carry out his instructions.
xxx xxx xxx
Par. XLIV. Pilots shall properly and safely secure or anchor vessels under their
control when requested to do so by the master of such vessels.
I. G.R. No. 130068
Petitioner FESC faults the respondent court with serious error in not holding MPA and Capt. Gavino
solely responsible for the damages cause to the pier. It avers that since the vessel was under
compulsory pilotage at the time with Capt. Gavino in command and having exclusive control of the
vessel during the docking maneuvers, then the latter should be responsible for damages caused to
the pier. 48 It likewise holds the appellate court in error for holding that the master of the ship, Capt.
Kabankov, did not exercise the required diligence demanded by the circumstances. 49

We start our discussion of the successive issues bearing in mind the evidentiary rule in American
jurisprudence that there is a presumption of fault against a moving vessel that strikes a stationary
object such as a dock or navigational aid. In admiralty, this presumption does more than merely
require the ship to go forward and produce some evidence on the presumptive matter. The moving
vessel must show that it was without fault or that the collision was occasioned by the fault of the
stationary object or was the result of inevitable accident. It has been held that such vessel must
exhaust every reasonable possibility which the circumstances admit and show that in each, they did
all that reasonable care required. 50 In the absence of sufficient proof in rebuttal, the presumption of
fault attaches to a moving vessel which collides with a fixed object and makes a prima facie case of
fault against the vessel. 51 Logic and experience support this presumption:
The common sense behind the rule makes the burden a heavy one. Such accidents
simply do not occur in the ordinary course of things unless the vessel has been
mismanaged in some way. It is nor sufficient for the respondent to produce witnesses
who testify that as soon as the danger became apparent everything possible was done to
avoid an accident. The question remains, How then did the collision occur? The answer
must be either that, in spite of the testimony of the witnesses, what was done was too
little or too late or, if not, then the vessel was at fault for being in a position in which an
unavoidable collision would occur. 52
The task, therefore, in these cases is to pinpoint who was negligent the master of the
ship, the harbor pilot or both.
A pilot, in maritime law, is a person duly qualified, and licensed, to conduct a vessel into or out of
ports, or in certain waters. In a broad sense, the term "pilot" includes both (1) those whose duty it is
to guide vessels into or out of ports, or in particular waters and (2) those entrusted with the
navigation of vessels on the high seas. 53However, the term "pilot" is more generally understood as a
person taken on board at a particular place for the purpose of conducting a ship through a river, road
or channel, or from a port. 54
Under English and American authorities, generally speaking, the pilot supersedes the master for the
time being in the command and navigation of the ship, and his orders must be obeyed in all matters
connected with her navigation. He becomes the master pro hac vice and should give all directions as
to speed, course, stopping and reversing anchoring, towing and the like. And when a licensed pilot is
employed in a place where pilotage is compulsory, it is his duty to insist on having effective control of
the vessel, or to decline to act as pilot. Under certain systems of foreign law, the pilot does not take
entire charge of the vessel, but is deemed merely the adviser of the master, who retains command
and control of the navigation even in localities where pilotage is compulsory. 55
It is quite common for states and localities to provide for compulsory pilotage, and safety laws have
been enacted requiring vessels approaching their ports, with certain exceptions, to take on board
pilots duly licensed under local law. The purpose of these laws is to create a body of seamen
thoroughly acquainted with the harbor, to pilot vessels seeking to enter or depart, and thus protect
life and property from the dangers of navigation. 56
In line with such established doctrines, Chapter II of Customs Administrative Order No. 15-65
prescribes the rules for compulsory pilotage in the covered pilotage districts, among which is the
Manila Pilotage District,
viz.
PARAGRAPH I. Pilotage for entering a harbor and anchoring thereat, as well as
docking and undocking in any pier or shifting from one berth to another shall be
compulsory, except Government vessels and vessels of foreign governments entitled
to courtesy, and other vessels engaged solely in river or harbor work, or in a daily
ferry service between ports which shall be exempt from compulsory pilotage
provisions of these regulations: provided, however, that compulsory pilotage shall not
apply in pilotage districts whose optional pilotage is allowed under these regulations.
Pursuant thereto, Capt. Gavino was assigned to pilot MV Pavlodar into Berth 4 of the Manila
International Port. Upon assuming such office as compulsory pilot, Capt. Gavino is held to the

universally accepted high standards of care and diligence required of a pilot, whereby he assumes to
have skill and knowledge in respect to navigation in the particular waters over which his license
extends superior to and more to be trusted than that of the master. 57A pilot 57 should have a
thorough knowledge of general and local regulations and physical conditions affecting the vessel in
his charge and the waters for which he is licensed, such as a particular harbor or river.
He is not held to the highest possible degree of skill and care, but must have and exercise the
ordinary skill and care demanded by the circumstances, and usually shown by an expert in his
profession. Under extraordinary circumstancesm, a pilot must exercise extraordinary care. 58
In Atlee vs. The Northwesrern Union Packet Company. 59 Mr. Justice Miller spelled out in great detail
the duties of a pilot:
. . . (T)he pilot of a river steamer, like the harbor pilot, is selected for his personal
knowledge of the topography through which he steers his vessel. In the long course
of a thousand miles in one of these rivers, he must be familiar with the appearance of
the shore on each side of the river as he goes along. Its banks, towns, its landings,
its houses and trees, are all landmarks by which he steers his vessel. The compass
is of little use to him. He must know where the navigable channel is, in its relation to
all these external objects, especially in the night. He must also be familiar with all
dangers that are permanently located in the course of the river, as sand-bars, snags,
sunken rocks or trees or abandoned vessels orbarges. All this he must know and
remember and avoid. To do this, he must be constantly informed of the changes in
the current of the river, of the sand-bars newly made,of logs or snags, or other
objects newly presented, against which his vessel might be injured.
xxx xxx xxx
It may be said that this is exacting a very high order of ability in a pilot. But when we
consider the value of the lives and property committed to their control, for in this they
are absolute masters, the high compensation they receive, the care which Congress
has taken to secure by rigid and frequent examinations and renewal of licenses, this
very class of skill, we do not think we fix the standard too high.
Tested thereby, we affirm respondent court's finding that Capt. Gavino failed to measure up to such
strict standard of care and diligence required of pilots in the performance of their duties. Witness this
testimony of Capt. Gavino:
Court: You have testified before that the reason why the vessel
bumped the pier was because the anchor was not released
immediately or as soon as you have given the order. Do you
remember having srated that?
A Yes, your Honor.
Q And you gave this order to the captain of the vessel?
A Yes, your Honor.
Q By that testimony, you are leading the Court to understand that if
that anchor was released immediately at the time you gave the order,
the incident would not have happened. Is that correct?
A Yes, sir, but actually it was only a presumption on my part because
there was a commotion between the officers who are in charge of the
dropping of the anchor and the captain. I could not understand their
language, it was in Russian, so I presumed the anchor was not
dropped on time.
Q So, you are not sure whether it was really dropped on time or not?
A I am not sure, your Honor.
xxx xxx xxx

Q You are not even sure what could have caused the incident. What
factor could have caused the incident?
A Well, in this case now, because either the anchor was not dropped on
time or the anchor did not hold, that was the cause of the incident, your
Honor. 60
It is disconcertingly riddled with too much incertitude and manifests a seeming indifference for the
possibly injurious consequences his commands as pilot may have. Prudence required that he, as
pilot, should have made sure that his directions were promptly and strictly followed. As correctly
noted by the trial court
Moreover, assuming that he did indeed give the command to drop the anchor on time, as
pilot he should have seen to it that the order was carried out, and he could have done this
in a number of ways, one of which was to inspect the bow of the vessel where the anchor
mechanism was installed. Of course, Captain Gavino makes reference to a commotion
among the crew members which supposedly caused the delay in the execution of the
command. This account was reflected in the pilot's report prepared four hours later, but
Capt. Kavankov, while not admitting whether or not such a commotion occurred,
maintained that the command to drop anchor was followed "immediately and precisely."
Hence, the Court cannot give much weight or consideration to this portion of Gavino's
testimony." 61
An act may be negligent if it is done without the competence that a reasonable person in the position
of the actor would recognize as necessary to prevent it from creating an unreasonable risk of harm
to another. 62 Those who undertake any work calling for special skills are required not only to
exercise reasonable care in what they do but also possess a standard minimum of special
knowledge and ability. 63
Every man who offers his services to another, and is employed, assumes to exercise in the
employment such skills he possesses, with a reasonable degree of diligence. In all these
employments where peculiar skill is requisite, if one offers his services he is understood as holding
himself out to the public as possessing the degree of skill commonly possessed by others in the
same employment, and if his pretensions are unfounded he commits a species of fraud on every
man who employs him in reliance on his public profession. 64
Furthermore, there is an obligation on all persons to take the care which, under ordinary
circumstances of the case, a reasonable and prudent man would take, and the omission of that care
constitutes negligence. 65Generally, the degree of care required is graduated according to the danger
a person or property attendant upon the activity which the actor pursues or the instrumentality which
he uses. The greater the danger the greater the degree of care required. What is ordinary under
extraordinary of conditions is dictated by those conditions; extraordinary risk demands extraordinary
care. Similarly, the more imminent the danger, the higher the degree of care. 66
We give our imprimatur to the bases for the conclusion of the Court of Appeals that Capt. Gavino
was indeed negligent in the performance of his duties:
xxx xxx xxx
. . . As can be gleaned from the logbook, Gavino ordered the left anchor and two (2)
shackles dropped at 8:30 o'clock in the morning. He ordered the engines of the
vessel stopped at 8:31 o'clock. By then,Gavino must have realized that the anchor
did not hit a hard object and was not clawed so as to reduce the momentum of the
vessel. In point of fact, the vessel continued travelling towards the pier at the same
speed. Gavino failed to react, At 8:32 o'clock, the two (2) tugboats began to push the
stern part of the vessel from the port side bur the momentum of the vessel was not
contained. Still, Gavino did not react. He did not even order the other anchor and two
(2) more shackles dropped to arrest the momentum of the vessel. Neither did he
order full-astern. It was only at 8:34 o'clock, or four (4) minutes, after the anchor was
dropped that Gavino reacted. But his reaction was even (haphazard) because
instead of arresting fully the momentum of the vessel with the help of the tugboats,

Gavino ordered merely "half-astern". It took Gavino another minute to order a "fullastern". By then, it was too late. The vessel's momentum could no longer be arrested
and, barely a minute thereafter, the bow of the vessel hit the apron of the pier.
Patently, Gavino miscalculated. He failed to react and undertake adequate measures
to arrest fully the momentum of the vessel after the anchor failed to claw to the
seabed. When he reacted, the same was even (haphazard). Gavino failed to reckon
the bulk of the vessel, its size and its cargo. He erroneously believed that only one
(1) anchor would suffice and even when the anchor failed to claw into the seabed or
against a hard object in the seabed, Gavino failed to order the other anchor dropped
immediately. His claim that the anchor was dropped when the vessel was only 1,000
feet from the pier is but a belated attempt to extricate himself from the quagmire of
his own insouciance and negligence. In sum, then, Appellants' claim that the incident
was caused by "force majeure" is barren of factual basis.
xxx xxx xxx
The harbor pilots are especially trained for this job. In the Philippines, one may not be a
harbor pilot unless he passed the required examination and training conducted then by
the Bureau of Custom, under Customs Administrative Order No. 15-65, now under the
Philippine Ports Authority under PPA Administrative Order 63-85, Paragraph XXXIX of the
Customs Administrative Order No. 15-65 provides that "the pilot shall be held responsible
for the direction of the vessel from the time he assumes control thereof, until he leaves it
anchored free from shoal: Provided, that his responsibility shall cease at the.moment the
master neglects or refuse(s) to carry out his instructions." The overall direction regarding
the procedure for docking and undocking the vessel emanates from the harbor pilot. In
the present recourse, Gavino failed to live up to his responsibilities and exercise
reasonable care or that degree of care required by the exigencies of the occasion. Failure
on his part to exercise the degree of care demanded by the circumstances is negligence
(Reese versus Philadelphia & RR Co. 239 US 363, 60 L ed. 384, 57 Am Jur, 2d page
418). 67
This affirms the findings of the trial court regarding Capt. Gavino's negligence:
This discussion should not however, divert the court from the fact that negligence in
manuevering the vessel must be attributed to Capt. Senen Gavino. He was an
experienced pilot and by this time should have long familiarized himself with the depth of
the port and the distance he could keep between the vessel and port in order to berth
safely. 68
The negligence on the part of Capt. Gavino is evident; but Capt. Kabancov is no less responsible for
the allision. His unconcerned lethargy as master of the ship in the face of troublous exigence
constitutes negligence.
While it is indubitable that in exercising his functions a pilot is in sole command of the ship 69 and
supersedes the master for the time being in the command and navigation of a ship and that he
becomes master pro hac vice of a vessel piloted by him, 70 there is overwhelming authority to the
effect that the master does not surrender his vessel to the pilot and the pilot is not the master. The
master is still in command of the vessel notwithstanding the presence of a pilot. There are occasions
when the master may and should interfere and even displace the pilot, as when the pilot is obviously
incompetent or intoxicated and the circumstances may require the master to displace a compulsory
pilot because of incompetency or physical incapacity. If, however, the master does nor observe that
a compulsory pilot is incompetent or physically incapacitated, the master is justified in relying on the
pilot, but not blindly. 71
The master is not wholly absolved from his duties while a pilot is on board his vessel, and may
advise with or offer suggestions to him. He is still in command of the vessel, except so far as her
navigation is concerned, and must cause the ordinary work of the vessel to be properly carried on
and the usual precaution taken. Thus, in particular, he is bound to see that there is sufficient watch
on deck, and that the men are attentive to their duties, also that engines are stopped, towlines cast
off, and the anchors clear and ready to go at the pilot's order. 72

A perusal of Capt. Kabankov's testimony makes it apparent that he was remiss in the discharge of
his duties as master of the ship, leaving the entire docking procedure up to the pilot, instead of
maintaining watchful vigilance over this risky maneuver:
Q Will you please tell us whether you have the right to intervene in
docking of your ship in the harbor?
A No sir, I have no right to intervene in time of docking, only in case
there is imminent danger to the vessel and to the pier.
Q Did you ever intervene during the time that your ship was being
docked by Capt. Gavino?
A No sir, I did not intervene at the time when the pilot was docking my
ship.
Q Up to the time it was actually docked at the pier, is that correct?
A No sir, I did not intervene up to the very moment when the vessel
was docked.
xxx xxx xxx
Atty. Del Rosario (to the witness)
Q Mr. Witness, what happened, if any, or was there anything unusual
that happened during the docking?
A Yes sir, our ship touched ihe pier and the pier was damaged.
Court (to the witness)
Q When you said touched the pier, are you leading the court to
understand that your ship bumped the pier?
A I believe that my vessel only touched the pier but the impact was
very weak.
Q Do you know whether the pier was damaged as a result of that
slight or weak impact?
A Yes sir, after the pier was damaged.
xxx xxx xxx
Q Being most concerned with the safety of your vessel, in the
maneuvering of your vessel to the port, did you observe anything
irregular in the maneuvering by Capt. Gavino at the time he was
trying to cause the vessel to be docked at the pier?
A You mean the action of Capt. Gavino or his condition?
Court:
Q Not the actuation that conform to the safety maneuver of the ship
to the harbor?
A No sir, it was a usual docking.
Q By that statement of yours, you are leading the court to understand
that there was nothing irregular in the docking of the ship?
A Yes sir, during the initial period of the docking, there was nothing
unusual that happened.
Q What about in the last portion of the docking of the ship, was there
anything unusual or abnormal that happened?
A None Your Honor, I believe that Capt. Gavino thought that the
anchor could keep or hold the vessel.
Q You want us to understand, Mr. Witness, that the dropping of the
anchor of the vessel was nor timely?

A I don't know the depth of this port but I think, if the anchor was
dropped earlier and with more shackles, there could not have been
an incident.
Q So you could not precisely tell the court that the dropping of the
anchor was timery because you are not well aware of the seabed, is
that correct?
A Yes sir, that is right.
xxx xxx xxx
Q Alright, Capt. Kavankov, did you come to know later whether the
anchor held its ground so much so that the vessel could not travel?
A It is difficult for me to say definitely. I believe that the anchor did not
hold the ship.
Q You mean you don't know whether the anchor blades stuck to the
ground to stop the ship from further moving?
A Yes sir, it is possible.
Q What is possible?
A I think, the 2 shackles were not enough to hold the vessel.
Q Did you know that the 2 shackles were dropped?
A Yes sir, I knew that.
Q If you knew that the shackles were not enough to hold the ship, did
you not make any protest to the pilot?
A No sir, after the incident, that was my assumption.
Q Did you come to know later whether that presumption is correct?
A I still don't know the ground in the harbor or the depths.
Q So from the beginning, you were not competent whether the 2
shackles were also dropped to hold the ship?
A No sir, at the beginning, I did not doubt it because I believe Capt.
Gavino to be an experienced pilot and he should be more aware as
to the depths of the harbor and the ground and I was confident in his
actions.
xxx xxx xxx
Solicitor Abad (to the witness)
Q Now, you were standing with the pilot on the bridge of the vessel
before the inicident happened, were you not?
A Yes sir, all the time, I was standing with the pilot.
Q And so whatever the pilot saw, you could also see from that point
of view?
A That is right.
Q Whatever the piler can read from the panel of the bridge, you also
could read, is that correct?
A What is the meaning of panel?
Q All indications necessary for men on the bridge to be informed of
the movements of the ship?
A That is right.
Q And whatever sound the captain . . . Capt. Gavino would hear from
the bridge, you could also hear?
A That is right.

Q Now, you said that when the command to lower the anchor was
given, it was obeyed, is that right?
A This command was executed by the third mate and boatswain.
Court (to the witness)
Q Mr. Witness, earlier in today's hearing, you said that you did not
intervene with the duties of the pilot and that, in your opinion, you can
only intervene if the ship is placed in imminent danger, is that
correct?
A That is right, I did say that.
Q In your observation before the incident actually happened, did you
observe whether or not the ship, before the actual incident, the ship
was placed in imminent danger?
A No sir, I did not observe.
Q By that answer, are you leading the court to understand that
because you did not intervene and because you believed that it was
your duty to intervene when the vessel is placed in imminent danger
to which you did not observe any imminent danger thereof, you have
not intervened in any manner to the command of the pilot?
A That is right, sir.
xxx xxx xxx
Q Assuminp that you disagreed with the pilot regarding the step being
taken by the pilot in maneuvering the vessel, whose command will
prevail, in case of imminent danger to the vessel?
A I did nor consider the situation as having an imminent danger. I
believed that the vessel will dock alongside the pier.
Q You want us to understand that you did not see an imminent
danger to your ship, is that what you mean?
A Yes sir, up to the very last moment, I believed that there was no
imminent danger.
Q Because of that, did you ever intervene in the command of the
pilot?
A Yes sir, I did not intervene because I believed that the command of
the pilot to be correct.
Solicitor Abad (to the witness)
Q As a captain of M/V Pavlodar, you consider docking maneuvers a
serious matter, is it not?
A Yes sir, that is right.
Q Since it affects not only the safety of the port or pier, but also the
safety of the vessel and the cargo, is it not?
A That is right.
Q So that, I assume that you were watching Capt. Gavino very
closely at the time he was making his commands?
A I was close to him, I was hearing his command and being executed.
Q And that you were also alert for any possible mistakes he might
commit in the maneuvering of the vessel?
A Yes sir, that is right.
Q But at no time during the maneuver did you issue order contrary to
the orders Capt. Gavino made?

A No sir.
Q So that you were in full accord with all of Capt. Gavino's orders?
A Yes sir.
Q Because, otherwise, you would have issued order that would
supersede his own order?
A In that case, I should t,ke him away from his command or remove
the command from him.
Court (to the witness)
Q You were in full accord with the steps being taken by Capt. Gavino
because you relied on his knowledge, on his familiarity of the seabed
and shoals and other surroundings or conditions under the sea, is
that correct?
A Yes sir, that is right.
xxx xxx xxx
Solicitor Abad (to the witness)
Q And so after the anchors were ordered dropped and they did not
take hold of the seabed, you were alerted that there was danger
already on hand?
A No sir, there was no imminent danger to the vessel.
Q Do you mean to tell us that even if the anchor was supposed to
take hold of the bottom and it did not, there was no danger to the
ship?
A Yes sir, because the anchor dragged on the ground later.
Q And after a few moments when the anchor should have taken hold
the seabed bur not done (sic), as you expected, you already were
alerted that there was danger to the ship, is that correct?
A Yes sir, I was alerted but there was no danger.
Q And you were alerted that somebody was wrong?
A Yes sir, I was alerted.
Q And this alert vou assumed was the ordinary alertness that you
have for normal docking?
A Yes sir, I mean that it was usual condition of any man in time of
docking to be alert.
Q And that is the same alertness when the anchor did not hold onto
the ground, is that correct?
A Yes sir, me and Capt. Gavino (thought) that the anchor will hold the
ground.
Q Since, as you said that you agreed all the while with the orders of
Capt. Gavino, you also therefore agreed with him in his failure to take
necessary precaution against the eventuality that the anchor will not
hold as expected?
Atty. Del Rosario:
May I ask that the question . . .
Solicitor Abad:
Never mind, I will reform the question.
xxx xxx xxx
Solicitor Abad (to the witness)

Q Is it not a fact that the vessel bumped the pier?

A That is right, it bumped the pier.
Q For the main reason that the anchor of the vessel did not hold the
ground as expected?
A Yes sir, that is my opinion. 73
Further, on redirect examination, Capt. Kabankov fortified his apathetic assessment of the situation:
Q Now, after the anchor was dropped, was there any point in time
that you felt that the vessel was in imminent danger.
A No, at that time, the vessel was not in imminent, danger, sir. 74
This cavalier appraisal of the event by Capt. Kabankov is disturbingly antipodal to Capt. Gavino's
anxious assessment of the situation:
Q When a pilot is on board a vessel, it is the piler's command which
should be followed at that moment until the vessel is, or goes to port
or reaches port?
A Yes, your Honor, but it does not take away from the Captain his
prerogative to countermand the pilot.
Q In what way?
A In any case, which he thinks the pilot is not maneuvering correctly,
the Captain always has the prerogative to countermand the pilot's
order.
Q But insofar as competence, efficiency and functional knowledee of
the seabed which are vital or decisive in the safety (sic) bringing of a
vessel to the port, he is not competent?
A Yes, your Honor. That is why they hire a pilot in an advisory
capacity, but still, the safety of the vessel rest(s) upon the Captain,
the Master of the vessel.
Q In this case, there was not a disagreement between you and the
Captain of the vessel in the bringing of the vessel to port?
A No, your Honor.
Court:
May proceed.
Atty. Catris:
In fact, the Master of the vessel testified here that he was all along in
conformity with the orders you, gave to him, and, as matter of fact, as
he said, he obeyed all your orders. Can you tell, if in the course of
giving such normal orders for the saf(e) docking of the MV Pavlodar,
do you remember of any instance that the Master of the vessel did
not obey your command for the safety docking of the MV Pavlodar?
Atty. del Rosario:
Already answered, he already said yes sir.
Court:
Yes, he has just answered yes sir to the Court that there was no
disagreement insofar as the bringing of the vessel safely to the port.
Atty. Catris:
But in this instance of docking of the MV Pavlodar, do you remember
of a time during the course of the docking that the MV Pavlodar was
in imminent danger of bumping the pier?

A When we were about more than one thousand meters from the pier, I
think, the anchor was not holding, so I immediately ordered to push the
bow at a fourth quarter, at the back of the vessel in order to swing the bow away from the
pier and at the same time, I ordered for a full astern of the engine.

75

These conflicting reactions can only imply, at the very least, unmindful disregard or, worse,
neglectful relinquishment of duty by the shipmaster, tantamount to negligence.
The findings of the trial court on this aspect is noteworthy:
For, while the pilot Gavino may indeed have been charged with the task of docking
the vessel in the berthing space, it is undisputed that the master of the vessel had
the corresponding duty to countermand any of the orders made by the pilot, and
even maneuver the vessel himself, in case of imminent danger to the vessel and the
port.
In fact, in his testimony, Capt. Kavankov admitted that all throughour the
man(eu)vering procedures he did not notice anything was going wrong, and even
observed that the order given to drop the anchor was done at the proper time. He
even ventured the opinion that the accident occurred because the anchor failed to
take hold but that this did not alarm him because.there was still time to drop a
second anchor.
Under normal circumstances, the abovementioned facts would have caused the
master of a vessel to take charge of the situation and see to the man(eu)vering of the
vessel himself. Instead, Capt. Kavankov chose to rely blindly upon his pilot, who by
this time was proven ill-equipped to cope with the situation.
xxx xxx xxx
It is apparent that Gavino was negligent but Far Eastern's employee Capt. Kavankov was
no lesss responsible for as master of the vessel he stood by the pilot during the
man(eu)vering procedures and was privy to every move the latter made, as well as the
vessel's response to each of the commands. His choice to rely blindly upon the pilot's
skills, to the point that despite being appraised of a notice of alert he continued to
relinquish control of the vessel to Gavino, shows indubitably that he was not performing
his duties with the diligence required of him and therefore may be charged with
negligence along with defend;int Gavino. 76
As correctly affirmed by the Court of Appeals
We are in full accord with the findings and disquisitions of the Court a quo.
In the present recourse, Captain Viktor Kavankov had been a mariner for thirty-two
years before the incident. When Gavino was (in) the command of the vessel,
Kavankov was beside Gavino, relaying the commands or orders of Gavino to the
crewmembers-officers of the vessel concerned. He was thus fully aware of the
docking maneuvers and procedure Gavino undertook to dock the vessel. Irrefragably,
Kavankov was fully aware of the bulk and size of the vessel and its cargo as well as
the weight of the vessel. Kavankov categorically admitted that, when the anchor and
two (2) shackles were dropped to the sea floor, the claws of the anchor did not hitch
on to any hard object in the seabed. The momentum of the vessel was not arrested.
The use of the two (2) tugboats was insufficient. The momentum of the vessel,
although a little bit arrested, continued (sic) the vessel going straightforward with its
bow towards the port (Exhibit "A-1 ). There was thus a need for the vessel to move
"full-astern" and to drop the other anchor with another shackle or two (2), for the
vessel to avoid hitting the pier. Kavankov refused to act even as Gavino failed to act.
Even as Gavino gave mere "half-astern" order, Kavankov supinely stood by. The
vessel was already about twenty (20) meters away from the pier when Gavino gave
the "full-astern" order. Even then, Kavankov did nothing to prevent the vessel from
hitting the pier simply because he relied on the competence and plan of Gavino.
While the "full-astern'' maneuver momentarily arrested the momentum of the vessel,

it was, by then, too late. All along, Kavankov stood supinely beside Gavino, doing
nothing but relay the commands of Gavino. Inscrutably, then, Kavankov was
negligent.
xxx xxx xxx
The stark incompetence of Kavankov is competent evidence to prove the
unseaworthiness of the vessel. It has been held that the incompetence of the navigator,
the master of the vessel or its crew makes the vessel unseaworthy (Tug Ocean Prince
versus United States of America, 584 F. 2nd, page 1151). Hence, the Appellant FESC is
likewise liable for the damage sustained by the Appellee. 77
We find strong and well-reasoned support in time-tested American maritime jurisprudence, on which
much of our laws and jurisprudence on the matter are based, for the conclusions of the Court of
Appeals adjudging both Capt. Gavino and Capt. Kabankov negligent.
As early as 1869, the U.S. Supreme Court declared, through Mr. Justice Swayne, in The Steamship
China vs. Walsh, 78 that it is the duty of the master to interfere in cases of the pilot's intoxication or
manifest incapacity, in cases of danger which he does not foresee, and in all cases of great
necessity. The master has the same power to displace the pilot that he has to remove any
subordinate officer of the vessel, at his discretion.
In 1895, the U.S. Supreme Court, this time through Mr. Justice Brown, emphatically ruled that:
Nor are rye satisfied with the conduct of the master in leaving the pilot in sole charge
of the vessel. While the pilot doubtless supersedes the master for the time being in
the command and navigation of the ship, and his orders must be obeyed in all
matters connected with her navigation, the master is not wholly absolved from his
duties while the pilot is on board, and may advise with him, and even displace him in
case he is intoxicated or manifestly incompetent. He is still in command of the vessel,
except so far as her navigation is concerned, and bound to see that there is a
sufficient watch on deck, and that the men are attentive to their duties.
. . . (N)orwithstanding the pilot has charge, it is the duty of the master to prevent
accident, and not to abandon the vessel entirely to the pilot; but that there are certain
duties he has to discharge (notwithstanding there is a pilot on board) for the benefit of the
owners. . . . that in well conducted ships the master does not regard the presence of a
duly licensed pilot in compulsory pilot waters as freeing him from every, obligation to
attend to the safety of the vessel; but that, while the master sees that his officers and
crew duly attend to the pilot's orders, he himself is bound to keep a vigilant eye on the
navigation of the vessel, and, when exceptional circumstances exist, not only to urge
upon the pilot to use every precaution, but to insist upon such being taken. 79 (Italics for
emphasis.)
In Jure vs. United Fruit Co., 80 which, like the present petitions, involved compulsory pilotage, with a
similar scenario where at and prior to the time of injury, the vessel was in the charge of a pilot with
the master on the bridge of the vessel beside said pilot, the court therein ruled:
The authority of the master of a vessel is not in complete abeyance while a pilot, who
is required by law to be accepted, is in discharge of his functions. . . . It is the duty of
the master to interfere in cases of the pilot's intoxication or manifest incapacity, in
cases of danger which he does not foresee, and in all cases of great necessity. The
master has the same power to displace the pilot that he has to remove any
subordinate officer of the vessel. He may exercise it, or not, according to his
discretion. There was evidence to support findings that piaintiff's injury was due to
the negligent operation of the Atenas, and that the master of that vessel was
negligent in failing to take action to avoid endangering a vessel situated as the City of
Canton was and persons or property thereon.
A phase of the evidence furnished support for the inferences . . . that he negligently
failed to suggest to the pilot the danger which was disclosed, and means of avoiding
such danger; and that the master's negligence in failing to give timelt admonition to

the pilot proximately contributed to the injury complained of. We are of opinion that
the evidence mentioned tended to prove conduct of the pilot, known to the master,
giving rise to a case of danger or great necessity, calling for the intervention of the
master. A master of a vessel is not without fault in acquiescing in canduct of a pilot
which involves apparent and avoidable danger, whether such danger is to the vessel
upon which the pilot is, or to another vessel, or persons or property thereon or on
shore. (Emphasis ours.)
Still in another case involving a nearly identical setting, the captain of a vessel alongside the
compulsory pilot was deemed to be negligent, since, in the words of the court, "he was in a position
to exercise his superior authority if he had deemed the speed excessive on the occasion in question.
I think it was clearly negligent of him not to have recognized the danger to any craft moored at
Gravell Dock and that he should have directed the pilot to reduce his speed as required by the local
governmental regulations. His failure amounted to negligence and renders the respondent
liable." 81 (Emphasis supplied.) Though a compulsory pilot might be regarded as an independent
contractor, he is at all times subject to the ultimate control of the ship's master. 82
In sum, where a compulsory pilot is in charge of a ship, the master being required to permit him to
navigate it, if the master observes that the pilot is incompetent or physically incapable, then it is the
dury of the master to refuse to permit the pilot to act. But if no such reasons are present, then the
master is justified in relying upon the pilot, but not blindly. Under the circumstances of this case, if a
situation arose where the master, exercising that reasonable vigilance which the master of a ship
should exercise, observed, or should have observed, that the pilot was so navigating the vessel that
she was going, or was likely to go, into danger, and there was in the exercise of reasonable care and
vigilance an opportunity for the master to intervene so as to save the ship from danger, the master
should have acted accordingly. 83 The master of a vessel must exercise a degree of vigilance
commensurate with the circumstances. 84
Inasmuch as the matter of negligence is a question of fact, 85 we defer to the findings of the trial
court, especially as this is affirmed by the Court of Appeals. 86 But even beyond that, our own
evaluation is that Capt. Kabankov's shared liability is due mainly to the fact that he failed to act when
the perilous situation should have spurred him into quick and decisive action as master of the ship.
In the face of imminent or actual danger, he did not have to wait for the happenstance to occur
before countermanding or overruling the pilot. By his own admission, Capt. Kabankov concurred with
Capt. Gavino's decisions, and this is precisely the reason why he decided not to countermand any of
the latter's orders. Inasmuch as both lower courts found Capt. Gavino negligent, by expressing full
agreement therewith Capt. Kabankov was just as negligent as Capt. Gavino.
In general, a pilot is personally liable for damages caused by his own negligence or default to the
owners of the vessel, and to third parties for damages sustained in a collision. Such negligence of
the pilot in the performance of duty constitutes a maritime tort. 87 At common law, a shipowner is not
liable for injuries inflicted exclusively by the negligence of a pilot accepted by a vessel
compulsorily. 88 The exemption from liability for such negligence shall apply if the pilot is actually in
charge and solely in fault. Since, a pilot is responsible only for his own personal negligence, he
cannot be held accountable for damages proximately caused by the default of others, 89 or, if there
be anything which concurred with the fault of the pilot in producing the accident, the vessel master
and owners are liable.
Since the colliding vessel is prima facie responsible, the burden of proof is upon the party claiming
benefit of the exemption from liability. It must be shown affirmatively that the pilot was at fault, and
that there was no fault on the part of the officers or crew, which might have been conducive to the
damage. The fact that the law compelled the master to take the pilot does not exonerate the vessel
from liability. The parties who suffer are entitled to have their remedy against the vessel that
occasioned the damage, and are not under necessity to look to the pilot from whom redress is not
always had for compensation. The owners of the vessel are responsible to the injured party for the
acts of the pilot, and they must be left to recover the amount as well as they can against him. It
cannot be maintained that the circumstance of having a pilot on board, and acting in conformity to

his directions operate as a discharge of responsibility of the owners. 90 Except insofar as their liability
is limited or exempted by statute, the vessel or her owner are liable for all damages caused by the
negligence or other wrongs of the owners or those in charge of the vessel. Where the pilot of a
vessel is not a compulsory one in the sense that the owner or master of the vessel are bound to
accept him, but is employed voluntarily, the owners of the vessel are, all the more, liable for his
negligent act. 91
In the United States, the owners of a vessel are not personally liable for the negligent acts of a
compulsory pilot, but by admiralty law, the fault or negligence of a compulsory pilot is imputable to
the vessel and it may be held liable therefor in rem. Where, however, by the provisions of the statute
the pilot is compulsory only in the sense that his fee must be paid, and is not in compulsory charge
of the vessel, there is no exemption from liability. Even though the pilot is compulsory, if his
negligence was not the sole cause of the injury, but the negligence of the master or crew contributed
thereto, the owners are liable. 92 But the liability of the ship in rem does not release the pilot from the
consequences of his own negligence. 93 The rationale for this rule is that the master is not entirely
absolved of responsibility with respect to navigation when a compulsory pilot is in charge. 94
By way of validation and in light of the aforecited guidepost rulings in American maritime cases, we
declare that our rulings during the early years of this century in City of Manila vs. Gambe, 95 China
Navigation Co., Ltd. vs. Vidal, 96 and Yap Tica & Co. vs. Anderson, et al. 97 have withstood the
proverbial test of time and remain good and relevant case law to this day.
City of Manila stands for the doctrine that the pilot who was in command and complete control of a
vessel, and not the owners, must be held responsible for an accident which was solely the result of
the mistake of the pilot in not giving proper orders, and which did not result from the failure of the
owners to equip the vessel with the most modern and improved machinery. In China Navigation Co.,
the pilot deviated from the ordinary and safe course, without heeding the warnings of the ship
captain. It was this careless deviation that caused the vessel to collide with a pinnacle rock which,
though uncharted, was known to pilots and local navigators. Obviously, the captain was blameless. It
was the negligence of the pilot alone which was the proximate cause of the collision. The Court
could not but then rule that
The pilot in the case at bar having deviated from the usual and ordinary course
followed by navigators in passing through the strait in question, without a substantial
reason, was guilty of negligence, and that negligence having been the proximate
cause of the damages, he is liable for such damages as usually and naturally flow
therefrom. . . .
. . . (T)he defendant should have known of the existence and location of the rock
upon which the vessel struck while under his control and management. . . . .
Consistent with the pronouncements in these two earlier cases, but on a slightly different tack, the
Court in Yap Tico & Co. exonerated the pilot from liability for the accident where the orders of the
pilot in the handling of the ship were disregarded by the officers and crew of the ship. According to
the Court, a pilot is ". . . responsible for a full knowledge of the channel and the navigation only so far
as he can accomplish it through the officers and crew of the ship, and I don't see chat he can be held
responsible for damage when the evidence shows, as it does in this case, that the officers and crew
of the ship failed to obey his orders." Nonetheless, it is possible for a compulsory pilot and the
master of the vessel to be concurrently negligent and thus share the blame for the resulting damage
as joint tortfeasors, 98 but only under the circumstances obtaining in and demonstrated by the instant
petitions.
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 piaintiff's, 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 rortfeasor. 99 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 actor's
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. 100
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 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 101 of the Civil Code. 102
As for the amount of damages awarded by the trial court, we find the same to be reasonable. The
testimony of Mr. Pascual Barral, witness for PPA, on cross and redirect examination, appears to be
grounded on practical considerations:
Q So that the cost of the two additional piles as well as the (two)
square meters is already included in this P1,300,999.77.
A Yes sir, everything. It is (the) final cost already.
Q For the eight piles.
A Including the reduced areas and other reductions.
Q (A)nd the two square meters.
A Yes sir.
Q In other words, this P1,300,999.77 does not represent only for the
six piles that was damaged as well as the corresponding two piles.
A The area was corresponding, was increased by almost two in the
actual payment. That was why the contract was decreased, the real
amount was P1,124,627.40 and the final one is P1,300,999.77.
Q Yes, but that P1,300,999.77 included the additional two new posts.
A It was increased.
Q Why was it increased?
A The original was 48 and the actual was 46.
Q Now, the damage was somewhere in 1980. It took place in 1980
and you started the repair and reconstruction in 1982, that took
almost two years?
A Yes sir.
Q May it not happen that by natural factors, the existing damage in
1980 was aggravated for the 2 year period that the damage portion
was not repaired?
A I don't think so because that area was at once marked and no
vehicles can park, it was closed.
Q Even if or even natural elements cannot affect the damage?
A Cannot, sir.
xxx xxx xxx
Q You said in the cross-examination that there were six piles
damaged by the accident, but that in the reconstruction of the pier,

PPA drove and constructed 8 piles. Will you explain to us why there
was change in the number of piles from the original number?
A In piers where the piles are withdrawn or pulled out, you cannot redrive or drive piles at the same point. You have to redesign the
driving of the piles. We cannot drive the piles at the same point where
the piles are broken or damaged or pulled out. We have to redesign,
and you will note that in the reconstruction, we redesigned such that
it necessitated 8 plies.
Q Why not, why could you not drive the same number of piles and on
the same spot?
A The original location was already disturbed. We cannot get required
bearing capacity. The area is already disturbed.
Q Nonetheless, if you drove the original number of piles, six, on
different places, would not that have sustained the same load?
A It will not suffice, sir. 103
We quote the findings of the lower court with approval.
With regards to the amount of damages that is to be awarded to plaintiff, the Court
finds that the amount of P1,053,300.00 is justified. Firstly, the doctrine of res ipsa
loquitur best expounded upon in the landmark case of Republic vs. Luzon
Stevedoring Corp. (21 SCRA 279) establishes the presumption that in the ordinary
course of events the ramming of the dock would not have occurred if proper care
was used.
Secondly, the various estimates and plans justify the cost of the port construction
price. The new structure constructed not only replaced the damaged one but was
built of stronger materials to forestall the possibility of any similar accidents in the
future.
The Court inevitably finds that the plaintiff is entitled to an award of P1,053,300.00 which
represents actual damages caused by the damage to Berth 4 of the Manila International
Port. Co-defendants Far Eastern Shipping, Capt. Senen Gavino and Manila Pilots
Association are solidariiy liable to pay this amount to plaintiff. 104
The Solicitor General rightly commented that the adjudicated amount of damages represents
the proportional cost of repair and rehabilitation of the damaged section of the pier. 105
Except insofar as their liability is limited or exempted by statute, the vessel or her owners are liable
for all damages caused by the negligence or other wrongs of the owners or those in charge of the
vessel. As a general rule, the owners or those in possession and control of a vessel and the vessel
are liable for all natural and proximate damages caused to persons or property by reason of her
negligent management or navigation. 106
FESC's imputation of PPA's failure to provide a safe and reliable berthing place is obtuse, not only
because it appears to be a mere afterthought, being tardily raised only in this petition, but also
because there is no allegation or evidence on record about Berth No. 4 being unsafe and unreliable,
although perhaps it is a modest pier by international standards. There was, therefore, no error on the
part of the Court of Appeals in dismissing FESC's counterclaim.
II. G.R. No. 130150
This consolidated case treats on whether the Court of Appeals erred in holding MPA jointly and
solidarily liable with its member pilot. Capt. Gavino, in the absence of employer-employee
relationship and in applying Customs Administrative Order No. 15-65, as basis for the adjudged
solidary liability of MPA and Capt. Gavino.
The pertinent provisions in Chapter I of Customs Administrative Order No. 15-65 are:
PAR. XXVII. In all pilotage districts where pilotage is compulsory, there shall be
created and maintained by the pilots or pilots' association, in the manner hereinafter

prescribed, a reserve fund equal to P1,000.00 for each pilot thereof for the purpose
of paying claims for damages to vessels or property caused through acts or
omissions of its members while rendered in compulsory pilotage service. In Manila,
the reserve fund shall be P2,000.00 for each pilot.
PAR. XXVIII. A pilots' association shall not be liable under these regulations for
damage to any vessel, or other property, resulting from acts of a member of an
association in the actual performance of his duty for a greater amount than seventyfive per centum (75%) of its prescribed reserve fund; it being understood that if the
association is held liable for an amount greater than the amount above-stated, the
excess shall be paid by the personal funds of the member concerned.
PAR. XXXI. If a payment is made from the reserve fund of an association on
account of damages caused by a member thereof, and he shall have been found at
fault, such member shall reimburse the association in the amount so paid as soon as
practicable; and for this purpose, not less than twenty-five per centum of his
dividends shall be retained each month until the full amount has been returned to the
reserve fund.
PAR. XXXIV. Nothing in these regulations shall relieve any pilots' association or
members thereof, individually or collectively, from civil responsibility for damages to
life or property resulting from the acts of members in the performance of their duties.
Correlatively, the relevant provisions of PPA Administrative Order No. 03-85, which timery amended
this applicable maritime regulation, state:
Art. IV
Sec. 17. Pilots' Association The Pilots in a Pilotage District shall organize
themselves into a Pilots' Association or firm, the members of which shall promulgate
their own By-Laws not in conflict with the rules and regulations promulgated by the
Authority. These By-Laws shall be submitted not later than one (1) month after the
organization of the Pilots' Association for approval by the General Manager of the
Authority. Subsequent amendments thereto shall likewise be submitted for approval.
Sec. 25. Indemnity Insurance and Reserve Fund
a) Each Pilots' Association shall collectively insure its
membership at the rate of P50,000.00 each member
to cover in whole or in part any liability arising from
any accident resulting in damage to vessel(s), port
facilities and other properties and/or injury to persons
or death which any member may have caused in the
course of his performance of pilotage duties. . . . .
b) The Pilotage Association shall likewise set up and
maintain a reserve fund which shall answer for any
part of the liability referred to in the immediately
preceding paragraph which is left unsatisfied by the
insurance proceeds, in the following manner:
1) Each pilot in the Association shall
contribute from his own account an
amount of P4,000.00 (P6,000.00 in
the Manila Pilotage District) to the
reserve fund. This fund shall not be
considered part of the capital of the
Association nor charged as an
expense thereof.
2) Seventy-five percent (75 %) of the
reserve fund shall be set aside for use

in the payment of damages referred to

above incurred in the actual
performance of pilots' duties and the
excess shall be paid from the personal
funds of the member concerned.
xxx xxx xxx
5) If payment is made from the
reserve fund of an Association on
account of damage caused by a
member thereof who is found at fault,
he shall reimburse the Association in
the amount so paid as soon as
practicable; and for this purpose, not
less than twenty-five percentum (25
%) of his dividend shall be retained
each month until the full amount has
been returned to the reserve fund.
Thereafter, the pilot involved shall be
entitled to his full dividend.
6) When the reimbursement has been
completed as prescribed in the
preceding paragraph, the ten
percentum (10%) and the interest
withheld from the shares of the other
pilots in accordance with paragraph
(4) hereof shall be returned to them.
c) Liability of Pilots' Association Nothing in these
regulations shall relieve any Pilots' Association or
members thereof, individually or collectively, from any
civil, administrative and/or criminal responsibility for
damages to life or property resulting from the
individual acts of its members as well as those of the
Association's employees and crew in the performance
of their duties.
The Court of Appeals, while affirming the trial court's finding of solidary liability on the part of FESC,
MPA and Capt. Gavino, correctly based MPA' s liability not on the concept of employer-employee
relationship between Capt. Gavino and itself, but on the provisions of Customs Administrative Order
No. 15-65:
The Appellant MPA avers that, contrary to the findings and disquisitions of the
Court a quo, the Appellant Gavino was not and has never been an employee of the
MPA but was only a member thereof. The Court a quo, it is noteworthy, did not state
the factual basis on which it anchored its finding that Gavino was the employee of
MPA. We are in accord with MPA's pose. Case law teaches Us that, for an employeremployee relationship to exist, the confluence of the following elements must be
established: (1) selection and engagement of employees; (2) the payment of wages;
(3) the power of dismissal; (4) the employer's power to control the employees with
respect to the means and method by which the work is to be performed (Ruga versus
NLRC, 181 SCRA 266).
xxx xxx xxx
The liability of MPA for damages is not anchored on Article 2180 of the New Civil Code as
erroneously found and declared by the Court a quo but under the provisions of Customs
Administrative Order No. 15-65, supra, in tandem with the by-laws of the MPA. 107

There being no employer-employee relationship, clearly Article 2180 108 of the Civil Code is
inapplicable since there is no vicarious liability of an employer to speak of. It is so stated in American
law, as follows:
The well established rule is that pilot associations are immune to vicarious liability for the
tort of their members. They are not the employer of their members and exercise no
control over them once they take the helm of the vessel. They are also not partnerships
because the members do not function as agents for the association or for each other.
Pilots' associations are also not liable for negligently assuring the competence of their
members because as professional associations they made no guarantee of the
professional conduct of their members to the general public. 109
Where under local statutes and regulations, pilot associations lack the necessary legal incidents of
responsibility, they have been held not liable for damages caused by the default of a member
pilot. 110 Whether or not the members of a pilots' association are in legal effect a copartnership
depends wholly on the powers and duties of the members in relation to one another under the
provisions of the governing statutes and regulations. The relation of a pilot to his association is not
that of a servant to the master, but of an associate assisting and participating in a common purpose.
Ultimately, the rights and liabilities between a pilots' association and an individual member depend
largely upon the constitution, articles or by-laws of the association, subject to appropriate
government regulations. 111
No reliance can be placed by MPA on the cited American rulings as to immunity from liability of a
pilots' association in ljght of existing positive regulation under Philippine law. The Court of Appeals
properly applied the clear and unequivocal provisions of Customs Administrative Order No. 15-65. In
doing so, it was just being consistent with its finding of the non-existence of employer-employee
relationship between MPA and Capt. Gavino which precludes the application of Article 2180 of the
Civil Code.
True. Customs Administrative Order No. 15-65 does not categorically characterize or label MPA's
liability as solidary in nature. Nevertheless, a careful reading and proper analysis of the correlated
provisions lead to the conclusion that MPA is solidarily liable for the negligence of its member pilots,
without prejudice to subsequent reimbursement from the pilot at fault.
Art. 1207 of the Civil Code provides that there is solidary liability only when the obligation expressly
so states, or when the law or the nature of the obligation requires solidarity. Plainly, Customs
Administrative Order No. 15-65, which as an implementing rule has the force and effect of law, can
validly provide for solidary liability.We note the Solicitor General's comment hereon, to wit:
. . . Customs Administrative Order No. 15-65 may be a mere rule and regulation issued
by an administrative agency pursuant to a delegated authority to fix "the details" in the
execution or enforcement of a policy set out in the law itself. Nonetheless, said
administrative order, which adds to the procedural or enforcing provisions of substantive
law, is legally binding and receives the same statutory force upon going into effect. In that
sense, it has equal, not lower, statutory force and effect as a regular statute passed by
the legislature. 112
MPA's prayer for modification of the appellate court's decision under review by exculpating petitioner
MPA "from liability beyond seventy-five percent (75 %) of Reserve Fund" is unnecessary because
the liability of MPA under Par. XXVIII of Customs Administrative Order No. 15-65 is in fact limited to
seventy-five percent (75 %) of its prescribed reserve fund, any amount of liability beyond that being
for the personal account of the erring pilot and subject to reimbursement in case of a finding of fault
by the member concerned. This is clarified by the Solicitor General:
Moreover, contrary to petitioner's pretensions, the provisions of Customs Administrative
Order No. 15-65 do not limit the liability of petitioner as a pilots' association to an absurdly
small amount of seventy-five per centum (75 %) of the member pilots' contribution of
P2,000.00 to the reserve fund. The law speaks of the entire reserve fund required to be
maintained by the pilots' association to answer (for) whatever liability arising from the
tortious act of its members. And even if the association is held liable for an amount

greater than the reserve fund, the association may not resist the liability by claiming to be
liable only up to seventy-five per centum (75 %) of the reserve fund because in such
instance it has the right to be reimbursed by the offending member pilot for the excess. 113

WHEREFORE, in view of all of the foregoing, the consolidated petitions for review are DENIED and
the assailed decision of the Court of Appeals is AFFIRMED in toto.
Counsel for FESC, the law firm of Del Rosario and Del Rosario, specifically its associate, Atty.
Herbert A. Tria, is REPRIMANDED and WARNED that a repetition of the same or similar acts of
heedless disregard of its undertakings under the Rules shall be dealt with more severely.
The original members of the legal team of the Office of the Solicitor General assigned to this case,
namely, Assistant Solicitor General Roman G. Del Rosario and Solicitor Luis F. Simon, are
ADMONISHED and WARNED that a repetition of the same or similar acts of unduly delaying
proceedings due to delayed filing of required pleadings shall also be dealt with more stringently.
The Solicitor Genral is DIRECTED to look into the circumstances of this case and to adopt provident
measures to avoid a repetition of this incident and which would ensure prompt compliance with
orders of this Court regarding the timely filing of requisite pleadings, in the interest of just, speedy
and orderly administration of justice.
Let copies of this decision be spread upon the personal records of the lawyers named herein in the
Office of the Bar Confidant.
SO ORDERED.
Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Panganiban, Martinez, Quisumbing
and Purisima, JJ., concur.
Narvasa, C.J. and Mendoza, J., are on official leave.
Footnotes
1 Rollo, G.R. No. 130068, 61-83; Rollo, G.R. No. 130150, 24-46; per Justice Romeo
J. Callejo, Sr.,ponente, with the concurrence of Justices Pedro A. Ramirez and Pacita
Caizares-Nye.
2 Ibid., id., 85; ibid., id., 47.
3 Ibid., id., 61-63; ibid., id., 24-26.
4 Original Record, 1-6.
5 Ibid., 292-301; per Judge Abelardo M. Dayrit.
6 Rollo, G.R. No. 130068, 65-66; Rollo, G.R. No. 130150, 28-29.
7 Revised Rules and Regulations Governing Pilotage Districts, Pilots and Pilots
Association and Rates of Pilotage Fees in the Philippines, dated September 1, 1965
and approved on October 13, 1965; 61 O.G. No., 51, 8217-8237, December 20,
1965.
8 Rollo, G.R. No. 130068, 83; Rollo, G.R. No. 130150, 46.
9 Ibid., id., 43.
10 Ibid., id., 44-53.
* Also spelled as "Kavankov" elsewhere in the records.
11 Rollo, G.R. No. 130068, 229-230.
12 Rollo, G.R. No. 130150, 10-11.
13 Ibid., id., 12-18.
14 Ibid., id., 4.
15 Ibid., id., 62-66.
16 Ibid., id., 95-98.
17 Ibid., id., 103-106.
18 Ibid., id., 108; Minute resolution of the First Division dated July 8, 1998.

19 Effective July 1, 1997, per resolution of the Supreme Court in Bar Matter No. 803,
adopted in Baguio City on April 8, 1997.
20 Rollo, G.R. No. 130068, 3-4.
21 Ibid., id., 4.
22 Ibid., id., 56-57.
23 Rollo, G.R. No. 130150, 48.
24 Ibid., id., 23.
25 Rollo, G.R. No. 130068, 57.
26 Canon 10, Code of Professional Responsibility.
27 Agpalo, Legal Ethics, 1992 ed., 109.
28 Canon 22, Canons of Professional Ethics; Chavez vs. Viola, Adm. Case No. 2152,
April 19, 1991, 196 SCRA 10.
29 Cuaresma vs. Daquis, et al., G.R. No. L-35113, March 25, 1975, 63 SCRA 257;
Libit vs. Oliva, et al. A.C. No. 2837, October 7, 1994, 237 SCRA 375.
30 Rule 10.03, Canon 10, Code of Professional Responsibility.
31 Canon 12, Code of Professional Responsibility.
32 Chua Huat, et al. vs. Court of Appeals, et al., G.R. No. 53851, July 9, 1991, 199
SCRA 1, jointly deciding G.R. No. 63863.
33 Canon 1, Code of Professional Responsibility.
34 Gabriel, et al. vs. Court of Appeals, et al., G.R. No. L-43757-58, July 30, 1976, 72
SCRA 273.
35 Rollo, G.R. No. 130068, 221-242.
36 Ibid., id., 196.
37 Ibid., id., 242-243; Affidavit of service by Heidi B. Garcia, Records Officer III,
Office of the Solicitor General.
38 Rollo, G.R. No. 130150, 86-101.
39 Ibid., id., 102; Affidavit of service by Ofelia P. Panopio, Records Officer IV, Office
of the Solicitor General.
40 Sec. 3, in relation to Section 5, Rule 45.
41 Rollio, G.R. No. 130068, 222.
42 Ibid., G.R. No. 130150, 89.
43 Canon 6, Code of Professional Responsibility.
44 Sec. 2, R.A. No. 6713, entitled "Code of Conduct and Ethical Standards for Public
Officials and Employees."
45 Sec. 4(b), ibid.
46 Sec. 4(e), ibid.
47 Rules and Regulations Governing Pilotage Services, The Conduct of Pilots and
Pilotage Fees in Philippine Ports, dated March 21, 1985, 81 O.G. No. 18, 1872-1887.
48 Rollo, G.R. No. 130068, 45-50.
49 Ibid., id., 50-53.
50 Bunge Corporation vs. M.V. Furness Bridge, 558 F.2d 790 (1977).
51 Canal Barge Company, Inc. vs. Mary Kathryn Griffith, 480 F.2d 11
(1973), citing The Oregon, 158 U.S. 186, 39 Law Ed. 943 (1895).
52 Patterson Oil Terminals vs. The Port Covington, 109 F. Supp. 953, 954 (E.D. Pa.
1952), cited in Bunge Corporation vs. M.V. Furness Bridge, supra, Fn 50.
53 48 C.J., Pilots, 1-2, 1183-1184; 70 C.J.S., Pilots, 1, 1061.

54 48 Am Jur, Shipping, 192, 133; Hernandez and Peasalas, Philippine Admiralty

and Maritime Law, 1987 edition, 368.
55 Ibid., id., 193, 133; Op. cit., 369.
56 48 C.J., Pilots, 30, 1192; 48 Am Jur, Shipping, 204; 139.
57 48 Am Jur, Shipping, 194, 134.
58 48 C.J., Pilots, 67, 1201; 70 C.J.S., Pilots, 14(b), 1080.
59 22 Law. Ed. 619.
60 TSN, May 24, 1984, 8-10.
61 Regional Trial Court Decision, 10; Original Record, 300.
62 57A Am Jur 2d, Negligence, 153, 214.
63 Prosser, Law of Torts, 32, 164.
64 Cooley, Torts, 647, cited in Wilson v. Charleston Pilots Association, et al., 57 Fed.
227 (1893).
65 Davidson Steamship Company vs. United States, 205 U.S. 186, 51 Law, Ed. 764
(1907).
66 57A Am Jur 2d, Negligence, 169, 224-225.
67 Court of Appeals Decision, 13-15; Rollo, G.R. No. 130068, 73-74, 75.
68 Regional Trial Court Decision, 10; Original Record, 300.
69 The Oregon, infra., Fn 79.
70 Guy vs. Donald, 157 F 527.
71 70 C.J.S., Pilots, 14, 1078-1079; 48 C.J., Pilots, 64, 1199; 80 C.J,S, Shipping,
64, 782.
72 48 Am Jur, Shipping, 125, 89.
73 TSN, May 23, 1984, 6-8, 13-17, 38-40, 46-52.
74 Ibid., May 24, 1984, 40.
75 TSN, May 24, 1984, 16-19.
76 Original Record, 300-301.
77 Rollo, G.R. No. 130068, 79-80, 81.
78 74 U.S. 67; Union Shipping & Trading Co., Ltd. vs. United States, 127 F.2d, 771
(1942).
79 The Oregon, 158 U.S. 186, 39 Law Ed, 943.
80 6 F.(2d), 7 (1925).
81 The Emma T. Grimes, Mulqueen v. Cunard S.S. Co., Limited, 2 F. Supp, 319
(1933).
82 Burgess vs. M/V Tamano, et al., 564 F.2d 964 (1977).
83 Hinman v. Moran Towing & Transportation Co., Inc., et al. 268 N.Y.S.; 409 (1934).
84 Canada S.S. Lines v. Great Lakes Dredge & Dock Co., C.C.A. 111., 81 F.2d 100.
85 Davidson Steamship Company vs. United States, supra, Fn 65.
86 Banson vs. Court of Appeals, et al., G.R. No. 110580, July 13, 1995, 246 SCRA
42; Atlantic Gulf and Pacific Company of Manila vs. Court of Appeals, et al., G.R.
Nos. 114841-42, August 23, 1995, 247 SCRA 606; Acebedo Optical Co., Inc. vs.
Court of Appeals, et al., G.R. No. 118833, November 29, 1995, 250 SCRA 409.
87 48 C.J., Pilots 66, 1200.
88 Homer Ramsdell Transportation vs. La Compagnie Generale Transatlantique, 182
U.S. 1155, 1161.
89 70 C.J.S., Pilots 14(d), 1080-1081.

90 The Steamship China vs. Louis Walsh, supra, Fn 78.

91 58 C.J., Shipping, 417, 297.
92 Ibid., id., 421, 301-302.
93 Burgess, et al. v. M/V Tamano, et al., supra, Fn 82.
94 80 C.J.S., Shipping, 65(b), 792; Dampskibsselskabet Atlanta A/S vs. United
States, 31 F.(2d) 961 (1929); Union Shipping & Trading Co., Limited vs. United
States, supra, Fn 78.
95 6 Phil. 49 (1906).
96 22 Phil. 121 (1912).
97 34 Phil. 626 (1916).
98 Jure vs. United Fruit Co., supra, Fn 80; The Emma T. Grimes, Mulqueen vs.
Cunard S.S. Co., Limited, supra, Fn 81.
99 65 C.J.S., Negligence 110, 1184-1189.
100 Ibid., id., id., 1194-1197.
101 Art. 2194. The responsibility of two or more persons who are liable for a quasidelict is solidary.
102 Sangco, Philippine Law on Torts and Damages, 1984 ed., 259-260; Dimayuga
vs. Philippine Commercial & Industrial Bank, et al., G.R. No. 42542, August 5, 1991,
200 SCRA 143; Ouano Arrastre Service, Inc. vs. Aleonar, etc., et al., G.R. No. 97664,
October 10, 1991, 202 SCRA 619; Singapore Airlines Limited vs. Court of
Appeals, et al., G.R. No. 107356, March 31, 1995, 243 SCRA 143; Inciong, Jr. vs.
Court of Appeals, et al., G.R. No. 96405, June 26, 1996, 257 SCRA 578.
103 TSN, January 23, 1984, 12-15.
104 Original Record, 301.
105 Comment, 18; Rollo, G.R. No. 130068, 238.
106 58 C.J., Shipping, 417-418, 297-298.
107 Rollo, G.R. No. 130068, 65-66; Rollo, G.R. No. 130150, 28-29.
108 Art. 2180. The obligation imposed by Article 2176 is demandable not only for
one's own acts or omissions, but also for those of persons for whom one is
responsible.
xxx xxx xxx
Employers shall be liable for the damagas caused by their employees and household
helpers acting within the scope of their assigned tasks, even though the former are
not engaged in any business or industry.
xxx xxx xxx
109 Thomas J. Schoenbaum, Admiralty and Maritime Law, 1987 edition, 437; Guy
vs. Donald, supra, Fn 70; The Manchioneal, 243 Fed. 801 (1917); 48 Am Jur,
Shipping, 196, 135.
110 48 C.J., Pilots, 75, 1203.
111 70 C.J.S., Pilots, 17, 1083.
112 Rollo, G.R. No. 130150, 93.
113 Rollo, G.R. No. 130150, 99.
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 Manila 4 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 letter 8 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:
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. 15As
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 Decision19 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
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 PLAINTIFFSAPPELLEES.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.
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 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 preexisting 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
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 2179 62 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.
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 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
1wphi1

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 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.
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 ofP25,000.00 is awarded to the heirs of Rhonda Brunty. The award of moral
damages is reduced to P500,000.00.
SO ORDERED.
ROMEO J. CALLEJO, SR.
Associate Justice
WE CONCUR:
1wphi1

ARTEMIO V. PANGANIBAN
Chief Justice
Chairperson
CONSUELO YNARES-SANTIAGO
MA. ALICIA AUSTRIA-MARTINEZ
Associate Justice
Associate Justice
MINITA V. CHICO-NAZARIO
Associate Justice
C E R TI F I C ATI O N
Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the
above Decision were reached in consultation before the case was assigned to the writer of the
opinion of the Courts Division.
ARTEMIO V. PANGANIBAN
Chief Justice

Footnotes
1
Penned by Associate Justice Estela M. Perlas-Bernabe, with Associate Justices Elvi John
S. Asuncion and Hakim S. Abdulwahid, concurring; rollo, pp. 148-157.
2
Rollo, p. 171.
3
Penned by Judge Doroteo N. Caeba; rollo, pp. 69-73.
4
Rollo, p. 149.
5
Id.
6
Id.
7
Id.
8
Records, pp. 140-141.
9
Id. at 1-6.
10
Id. at 2.
11
Id.
12
Id. at 5-6.
13
Id. at 9-12.
14
Id. at 9-10.
15
Id. at 10-11.
16
Id. at 12.
17
Id. at 90-95.
18
Id. at 94.
19
Supra note 3.
20
Rollo, pp. 72-73.
21
CA rollo, pp. 29-30.
22
Id. at 44-55.
23
Id. at 56-62.
24
Id. at 62-73.
25
Id. at 73-75.
26
Id. at 75-77.
27
Id. at 77-79.
28
Id. at 98-100.
29
Id. at 100-102.

Id. at 103-104.
Id. at 104-105.
32
Id. at 105-106.
33
Id. at 106.
34
Rollo, pp. 148-156.
35
Id. at 156.
36
Id. at 152.
37
Id. at 154.
38
Id. at 13-14.
39
Id. at 14-16.
40
Id. at 17-18.
41
Id. at 20.
42
Id. at 181-188.
43
Id. at 182.
44
Id. at 184.
45
Id. at 185.
46
Id. at 186.
47
McKee v. Intermediate Appellate Court, G.R. No. 68102, July 16, 1992, 211 SCRA 517,
539, citing Layugan v. Intermediate Appellate Court, 167 SCRA 363 (1988).
48
137 Phil. 101, 108 (1969).
49
Cited in McKee v. IAC, supra, at 539.
50
Picart v. Smith, 37 Phil. 809, 813 (1918), cited in McKee v. IAC, supra, at 543.
51
Estacion v. Bernardo, G.R. No. 144723, February 27, 2006, 483 SCRA 222, 231; Lambert
v. Heirs of Ray Castillon, G.R. No. 160709, February 23, 2005, 452 SCRA 285, 290; Pestao
v. Sumayang, G.R. No. 139875, December 4, 2000, 346 SCRA 870, 878.
52
Pestao v. Sumayang, supra.
53
CA Decision dated August 15, 2005, rollo, p. 152, citing FGU Insurance Corporation v.
Court of Appeals, 351 Phil. 219, 224 (1998).
54
Rollo, pp. 152-153.
55
Id. at 154.
56
37 Am.Jur. PO F.2d 439.
57
Id.
58
Philippine National Railway v. Intermediate Appellate Court, G.R. No. 70547, January 22,
1993, 217 SCRA 401, 410, citing Lilius v. Manila Railroad Company, 59 Phil. 758 (1934).
59
Valenzuela v. Court of Appeals, 323 Phil. 374, 388 (1996).
60
Estacion v. Bernardo, supra note 51, at 235; Aonuevo v. Court of Appeals, G.R. No.
130003, October 20, 2004, 441 SCRA 24, 44.
61
Aonuevo v. Court of Appeals, supra.
62
Article 2179. 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.
63
Consolidated Bank and Trust Corporation v. Court of Appeals, G.R. No. 138569,
September 11, 2003, 410 SCRA 562, 580.
64
Public Estates Authority v. Chu, G.R. No. 145291, September 21, 2005, 470 SCRA 495,
505; ABS-CBN Broadcasting Corporation, 361 Phil. 499, 529-530 (1999).
30
31

People v. Werba, G.R. No. 144599, June 9, 2004, 431 SCRA 482, 499; People v.
Villanueva, 456 Phil. 14, 29 (2003).
66
People v. Villanueva, supra, at 29.
67
Macalinao v. Ong, G.R. No. 146635, December 14, 2005, 477 SCRA 740, 759.
68
Macalinao v. Ong, supra.; Victory Liner, Inc. v. Heirs of Andres Malecdan, 442 Phil. 784
(2002); Equitable Leasing Corporation v. Suyom, 437 Phil. 244, 257-258 (2002); Metro
Manila Transit Corporation v. Court of Appeals, 359 Phil. 18, 36 (1998).
69
Records, pp. 78-82.
70
Id. at 80.
71
319 Phil. 128, 215 (1995).
72
Supra.
73
Supra.
74
Supra.
65