Page 1 of 24

Topic: Contributory negligence of plaintiff

ALLIED BANKING CORPORATION,
PHILIPPINE ISLANDS, Respondents.

Petitioner,

petitioner, until on May 6, 2003, respondent requested the PCHC to take

custody of the check.
vs.

BANK

OF

THE

G.R. No. 188363 February 27, 2013

DOCTRINE:
A collecting bank is guilty of contributory negligence when it accepted for
deposit a post-dated check notwithstanding that said check had been cleared by
the drawee bank which failed to return the check within the 24-hour
reglementary period.
FACTS:
1. October 10, 2002: a check in the amount of P1,000,000.00 payable to
"Mateo Mgt. Group International" (MMGI) was presented for deposit and
accepted at petitioner Allied Banks Kawit Branch. The check, post-dated "Oct.
9, 2003", was drawn against the account of Marciano Silva, Jr. with respondent
BPI Bel-Air Branch. Upon receipt, petitioner Allied Bank sent the check for
clearing to respondent BPI through the Philippine Clearing House Corporation
(PCHC).
2. The check was cleared by respondent BPI and petitioner Allied Bank credited
the account of MMGI with P1,000,000.00.
3. October 22, 2002: MMGIs account was closed and all the funds therein were
withdrawn. A month later, Silva discovered the debit of P1,000,000.00 from his
account. In response to Silvas complaint, respondent BPI credited his account
with the aforesaid sum.
4. March 21, 2003: respondent BPI returned a photocopy of the check to
petitioner Allied Bank for the reason: "Postdated." Petitioner Allied Bank,
however, refused to accept and sent back to respondent a photocopy of the
check. Thereafter, the check, or more accurately, the Charge Slip, was tossed
several times from petitioner Allied Bank to respondent BPI, and back to

5. Acting on the request, PCHC directed the respondent BPI to deliver the
original check and informed it of PCHCs authority under Clearing House
Operating Memo to split 50/50 the amount of the check subject of a "PingPong" controversy which shall be implemented thru the issuance of Debit
Adjustment Tickets against the outward demands of the banks involved. PCHC
likewise encouraged respondent to submit the controversy for resolution thru
the PCHC Arbitration Mechanism.
6. Allied Bank filed a complaint before the Arbitration Committee, asserting that
BPI should solely bear the entire face value of the check due to its negligence in
failing to return the check to petitioner Allied Bank within the 24-hour
reglementary period as provided in Section 20.1 of the Clearing House Rules
and Regulations 2000. Petitioner Allied Bank prayed that respondent BPI be
ordered to reimburse the sum of P500,000.00 with 12% interest per annum,
and to pay attorneys fees and other arbitration expenses.
7. Respondent BPI charged petitioner Allied Bank with gross negligence for
accepting the post-dated check in the first place. It contended that petitioners
admitted negligence was the sole and proximate cause of the loss.
8. December 8, 2004: the Arbitration Committee rendered its Decision in favor
of petitioner Allied Bank and against the respondent BPI. It noted that
respondent BPI not only failed to return the check within the 24-hour
reglementary period, it also failed to institute any formal complaint within the
contemplation of Section 20.3 and it appears that respondent was already
contented with the 50-50 split initially implemented by the PCHC. Finding both
parties negligent in the performance of their duties, the Committee applied the
doctrine of "Last Clear Chance" and ruled that the loss should be shouldered by
respondent BPI alone.
9. May 13, 2005: respondent BPI filed a petition for review in the RTC claiming
that PCHC erred in ruling against it. BPI argued that PCHC erred in holding it
solely responsible and should bear entirely the consequent loss considering that
while respondent may have the "last" opportunity in proximity, it was petitioner
Allied Bank which had the longest, fairest and clearest chance to discover the
mistake and avoid the happening of the loss.

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10. RTC affirmed with modification the Arbitration Committees decision by

deleting the award of attorneys fees. The RTC found no merit in respondent
BPIs stance that through inadvertence it failed to discover that the check was
post-dated and that confirmation within 24 hours is often "elusive if not outright
impossible" because a drawee bank receives hundreds if not thousands of
checks in an ordinary clearing day. Thus: Petitioner admitted par. 4 in its
Answer with Counterclaim and in its Memorandum, further adding that upon
receipt of the subject check "through inadvertence", it did not notice that the
check was postdated, hence, petitioner did not return the same to respondent."
11. These contradict petitioner Allied Banks belated contention that it
discovered the defect only after the lapse of the reglementary period. What the
evidence on record discloses is that petitioner Allied Bank received the check on
October 10, 2002, that it was promptly sent for clearing, that through
inadvertence, it did not notice that the check was postdated. Petitioner did not
even state when it discovered the defect in the subject check. The Court has
noted the fact that the PCHC Arbitration Committee conducted a clarificatory
hearing during which petitioner admitted that its standard operating procedure
as regards confirmation of checks was not followed. No less than petitioners
witness admitted that BPI tried to call up the drawer of the check, as their
procedure dictates when it comes to checks in large amounts. However, having
initially failed to contact the drawer, no follow up calls were made nor other
actions taken. Despite these, petitioner cleared the check. Having admitted
making said calls, it is simply impossible for petitioner to have missed
the fact that the check was postdated.
12. Respondent BPI elevated the case to the CA. The CA set aside the RTC
judgment and ruled for a 60-40 sharing of the loss as it found petitioner guilty
of contributory negligence in accepting what is clearly a post-dated check. The
CA found that petitioner Allied Banks failure to notice the irregularity on the
face of the check was a breach of its duty to the public and a telling sign of its
lack of due diligence in handling checks coursed through it. While the CA
conceded that the drawee bank has a bigger responsibility in the clearing of
checks, it declared that the presenting bank cannot take lightly its obligation to
make sure that only valid checks are introduced into the clearing system.
According to the CA, considerations of public policy and substantial justice will
be served by allocating the damage on a 60-40 ratio.
ISSUE:

W/N the 60-40 apportionment of loss ordered by the CA was justified.

HELD:
YES. As well established by the records, both petitioner and respondent were
admittedly negligent in the encashment of a check post-dated one year from its
presentment.
Petitioner Allied Bank argues that the CA should have sustained PCHCs finding
that despite the antecedent negligence of petitioner in accepting the postdated
check for deposit, respondent BPI, by exercising reasonable care and prudence,
might have avoided injurious consequences had it not negligently cleared the
check in question. Petitioner Allied Bank underscores respondent BPIs failure to
observe clearing house rules and its own standard operating procedure which,
the PCHC said constitute further negligence so much so that respondent should
be solely liable for the loss. Specifically, respondent BPI failed to return the
subject check within the 24-hour reglementary period. The PCHC likewise
faulted respondent BPI for not making follow-up calls or taking any other action
after it initially attempted, without success, to contact by telephone the drawer
of the check, and clearing the check despite such lack of confirmation from its
depositor in violation of its own standard procedure for checks involving large
amounts.
The doctrine of last clear chance, stated broadly, is that the negligence of
the plaintiff does not preclude a recovery for the negligence of the defendant
where it appears that the defendant, by exercising reasonable care and
prudence, might have avoided injurious consequences to the plaintiff
notwithstanding the plaintiffs negligence. The doctrine necessarily assumes
negligence on the part of the defendant and contributory negligence on the part
of the plaintiff, and does not apply except upon that assumption. 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. Moreover, in situations where the doctrine has been
applied, it was defendants failure to exercise such ordinary care, having the
last clear chance to avoid loss or injury, which was the proximate cause of the
occurrence of such loss or injury.
In this case, the evidence clearly shows that the proximate cause of the
unwarranted encashment of the subject check was the negligence of

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respondent BPI who cleared a post-dated check sent to it thru the PCHC
clearing facility without observing its own verification procedure. As correctly
found by the PCHC and upheld by the RTC, if only respondent BPI exercised
ordinary care in the clearing process, it could have easily noticed the glaring
defect upon seeing the date written on the face of the check "Oct. 9, 2003".
Respondent BPI could have then promptly returned the check and with the
check thus dishonored, petitioner Allied Bank would have not credited the
amount thereof to the payees account. Thus, notwithstanding the
antecedent negligence of the petitioner Allied Bank in accepting the postdated check for deposit, it can seek reimbursement from respondent the
amount credited to the payees account covering the check.
What petitioner omitted to mention is that in the cited case of Philippine Bank
of Commerce v. Court of Appeals, while the Court found petitioner bank as the
culpable party under the doctrine of last clear chance since it had, thru its teller,
the last opportunity to avert the injury incurred by its client simply by faithfully
observing its own validation procedure, it nevertheless ruled that the plaintiff
depositor (private respondent) must share in the loss on account of its
contributory negligence. Thus: "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 defendant's lack of due care, the plaintiff may recover
damages, but the courts shall mitigate the damages to be awarded."
Apportionment of damages between parties who are both negligent was
followed in subsequent cases involving banking transactions notwithstanding
the courts finding that one of them had the last clear opportunity to avoid the
occurrence of the loss. In Bank of America NT & SA v. Philippine Racing Club,
the Court ruled: In the case at bar, petitioner cannot evade responsibility for
the loss by attributing negligence on the part of respondent because, even if we
concur that the latter was indeed negligent in pre-signing blank checks, the
former had the last clear chance to avoid the loss. Petitioners negligence has
been undoubtedly established and, thus, pursuant to Art. 1170 of the NCC, it
must suffer the consequence of said negligence. In the interest of fairness,
it is proper to consider respondents own negligence to mitigate
petitioners liability. The underlying precept on contributory negligence is
that a plaintiff who is partly responsible for his own injury should not be entitled
to recover damages in full but must bear the consequences of his own
negligence. The defendant must thus be held liable only for the damages
actually caused by his negligence.

We believe the allocation of 60% of the actual damages involved in this case to
petitioner is proper under the premises. Respondent should, in light of its
contributory negligence, bear forty percent (40%) of its own loss. In
Philippine Bank of Commerce v. Court of Appeals and The Consolidated Bank &
Trust Corporation v. Court of Appeals, where the banks negligence is the
proximate cause of the loss and the depositor is guilty of contributory
negligence, we allocated the damages between the bank and the depositor on a
60-40 ratio. 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.
Admittedly, petitioner Allied Banks acceptance of the subject check for deposit
despite the one year postdate written on its face was a clear violation of
established banking regulations and practices. In such instances, payment
should be refused by the drawee bank and returned through the PCHC within
the 24-hour reglementary period. As aptly observed by the CA, petitioner Allied
Banks failure to comply with this basic policy regarding post-dated checks was
"a telling sign of its lack of due diligence in handling checks coursed through it."
It bears stressing that "the diligence required of banks is more than that of
Roman paterfamilias or a good father of a family. The highest degree of
diligence is expected," considering the nature of the banking business that is
imbued with public interest.
While it is true that respondent BPIs liability for its negligent clearing of the
check is greater, petitioner Allied Bank cannot take lightly its own violation of
the long-standing rule against encashment of post-dated checks and the
injurious consequences of allowing such checks into the clearing system.
Petitioner Allied Bank repeatedly harps on respondent BPI's transgression of
clearing house rules when the latter resorted to direct presentment way beyond
the reglementary period but glosses over its own negligent act that clearly fell
short of the conduct expected of it as a collecting bank. Petitioner Allied Bank
must bear the consequences of its omission to exercise extraordinary diligence
in scrutinizing checks presented by its depositors. Assessing the facts and in the
light of the cited precedents, the Court thus finds no error committed by the CA
in allocating the resulting loss from the wrongful encashment of the subject
check on a 60-40 ratio. The Decision of the CA is hereby AFFIRMED.

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G.R. No. 193659, June 15, 2015

Presidential Decree No. 1096, otherwise known as the "National Building Code
of the Philippines" (National Building Code). Likewise, citing Sections 3.2.1,
3.2.3, and 3.2.4 of Section 3.2, Rule XV of the original Implementing Rules and
Regulations of the National Building Code, she explained that it was Sps.
Vergara's duty to provide safety requirements for the landfill they made on their
property to prevent any danger to life or property. Moreover, Sps. Vergara failed
to provide a sewerage line to divert the flow of the water into the adjoining
property, in violation of Section 90114 of the National Building Code

Facts:

RTC: Vergara Civilly liable

Spouses Vergara and Spouses Sonkin are adjoining land owners in Bulacan.

CA: Reversed: found sps Sonkin were likewise guilty of contributory negligence
in building their house directly abutting the perimeter wall. The CA explained
that despite the fact that under Article 637 of the Civil Code, the Sonkin
Property is legally obliged to receive any water from higher estates such as the
Vergara Property, it being the lower estate, the Sps. Sonkin still built their
house with parts thereof directly abutting the perimeter wall and, in the
process, violated the two (2)-meter setback rule under Section 708 of the
National Building Code.

Sps. Vergara vs, Sonkin,

The geographical configuration of the adjoining properties, the property owned

by Sps. Sonkin (Sonkin Property) is slightly lower in elevation than that owned
by Sps. Vergara (Vergara Property).
Sps Sonkin, when they bought the property, raised the height of the partition
wall before constructing the house which is attached to said wall (wall formed
part of the masters bedroom)

Issue/Held:
Later, Sps, Vergara levelled the uneven portion of their property by filling it with
earth and gravel and their property became higher than the Sonkins. Sonkins
began to complain that the water for the Vergaras was leaking into their
bedroom causing damage to the wall and floor. Sps. Sonkin demanded that Sps
Vergara build a retaining wall. Veragaras refused thus prompting Sonkins to file
for damages.
Veragaras: Sps. Sonkin's act of raising the partition wall made the same
susceptible to breakage, which therefore cannot be attributed to them. when
they levelled their own property by filling it with gravel and soil, they left a
distance of one (1) meter from the partition wall such that the edge of the
landfill did not breach it, asserting further that there was no valid and legal
reason why they should be enjoined from exercising their proprietary rights.
Sonkins: presented the testimony of Engineer Ma. Victoria Mendoza, considered
an expert witness, who categorically declared that in view of the sloping terrain
and the Sonkin Property being lower in elevation than that of the Vergara
Property, the Sps. Vergara were then duty bound to provide a retaining wall
because they were the ones who caused the landfill, citing Section 1202 of

WON the Sonkin spouses are also guilty of contributory negligence - YES
Ratio:
Article 2179 of the Civil Code reads:
Art. 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 defendant's lack of due care, the plaintiff may recover damages, but the
courts shall mitigate the damages to be awarded. Verily, 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.34chanrobleslaw
In the case at bar, it is undisputed that the Sonkin property is lower in elevation
than the Vergara property, and thus, it is legally obliged to receive the waters

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that flow from the latter, pursuant to Article 637 of the Civil Code. This
provision refers to the legal easement pertaining to the natural drainage of
lands, which obliges lower estates to receive from the higher estates water
which naturally and without the intervention of man descends from the latter,
i.e., not those collected artificially in reservoirs, etc., and the stones and earth
carried by the waters.
Art. 637. Lower estates are obliged to receive the waters which naturally and
without the intervention of man descend from the higher estates, as well as the
stones or earth which they carry with them.
The owner of the lower estate cannot construct works which will impede this
easement; neither can the owner of the higher estate make works which will
increase the burden.
Sps. Sonkin should have been aware of such circumstance and, accordingly,
made the necessary adjustments to their property so as to minimize the burden
created by such legal easement. Instead of doing so, they disregarded the
easement and constructed their house directly against the perimeter wall which
adjoins the Vergara property, thereby violating the National Building Code in the
process, specifically Section 708 (a) [2 meter from property line rule on
easements]

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Topic: Fortuitous event

3. The Dimaanos filed a complaint for damages based on culpa aquillana,

alleging that the damage to their house rendered the same uninhabitable.

Southeastern College, Inc. vs Court of Appeals

G.R. No. 126389 / July 10, 1998 / Purisima, J.:
DOCTRINE:
An act of God cannot be invoked for the protection of a person who has been
guilty of gross negligence in not trying to forestall its possible adverse
consequences. When a persons negligence concurs with an act of God in
producing damage or injury to another, such person is not exempt from liability
by showing that the immediate or proximate cause of the damage or injury was
a fortuitous event. When the effect is found to be partly the result of the
participation of manwhether it be from active intervention, or neglect, or
failure to actthe whole occurrence is hereby humanized, and removed from
the rules applicable to acts of God.
FACTS:
1. Private respondents (Sps Dimaano) and petitioners own houses along the
same road. On October 11, 1989, a powerful typhoon Saling hit Metro
Manila. The roof of petitioners building was partly ripped off and blown away,
landing on and destroying portions of the roofing of private respondents house.
2. After the typhoon had passed, an ocular inspection of the destroyed buildings
was conducted
a.

b.

c.

One of the factors that may have led to this calamitous event is the
formation of the buildings in the area and the general direction of the
wind. Petitioners building was an almost U-shaped 4 story building.
Another factor and perhaps the most likely reason for the dislodging of
the roofings structural trusses is the improper anchorage of the said
trusses to the roof beams. The 1/2 diameter steel bars embedded on
the concrete roof beams which serve as truss anchorage are not bolted
nor nailed to the trusses.
It recommended that the fourth floor of the petitioners building be
declared as a structural hazard

4. Southeastern College: The school building had withstood several devastating

typhoons and other calamities in the past without its roofing or any portion
giving way; typhoon Saling was an act of God and therefore beyond
human control such that petitioner cannot be answerable for the damages
wrought thereby, absent any negligence on its part.
5. RTC: The school building had a defective roofing structure; damage to the
Dimaanos house could have been avoided if petitioners roof was not faulty.
6. CA: Affirmed; reduced moral damages
ISSUE:
Whether the damage on the roof of the building of private respondents
resulting from the impact of the falling portions of the school buildings roof
ripped off by the strong winds of typhoon Saling, was, within legal
contemplation, due to fortuitous event?
HELD:
YES. The antecedent of fortuitous event or caso fortuito is found in the Partidas
which defines it as an event which takes place by accident and could not have
been foreseen. Civilist Arturo M. Tolentino adds that [f]ortuitous events may
be produced by two general causes: (1) by nature, such as earthquakes,
storms, floods, epidemics, fires, etc. and (2) by the act of man, such as an
armed invasion, attack by bandits, governmental prohibitions, robbery, etc.
In order that a fortuitous event may exempt a person from liability, it is
necessary that he be free from any previous negligence or misconduct by
reason of which the loss may have been occasioned. When a persons
negligence concurs with an act of God in producing damage or injury to
another, such person is not exempt from liability by showing that the immediate
or proximate cause of the damage or injury was a fortuitous event. When the
effect is found to be partly the result of the participation of manwhether it be

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from active intervention, or neglect, or failure to actthe whole occurrence is

hereby humanized, and removed from the rules applicable to acts of God.
After a careful scrutiny of the records and the pleadings submitted by the
parties, we find exception to this rule and hold that the lower courts
misappreciated the evidence proffered. There is no question that a typhoon or
storm is a fortuitous event, a natural occurrence which may be foreseen but is
unavoidable despite any amount of foresight, diligence or care. The person
seeking exoneration from liability must not be guilty of negligence. Negligence,
as commonly understood, is conduct which naturally or reasonably creates
undue risk or harm to others.
In the present case, other than the said ocular inspection, no investigation was
conducted to determine the real cause of the partial unroofing of petitioners
school building. Private respondents did not even show that the plans,
specifications and design of said school building were deficient and defective.
Neither did they prove any substantial deviation from the approved plans and
specifications. Nor did they conclusively establish that the construction of such
building was basically flawed.
On the other hand, petitioner elicited from one of the witnesses of private
respondents, city building official Jesus Reyna, that the original plans and
design of petitioners school building were approved prior to its construction.
Engr. Reyna admitted that it was a legal requirement before the construction of
any building to obtain a permit from the city building official (city engineer,
prior to the passage of the Building Act of 1977). In like manner, after
construction of the building, a certification must be secured from the same
official attesting to the readiness for occupancy of the edifice. Having obtained
both building permit and certificate of occupancy, these are, at the very least,
prima facie evidence of the regular and proper construction of subject school
building.
Furthermore, when part of its roof needed repairs of the damage inflicted by
typhoon Saling, the same city official gave the go-signal for such repairs
without any deviation from the original designand subsequently, authorized
the use of the entire fourth floor of the same building. These only prove that
subject building suffers from no structural defect, contrary to the report that its
U-shaped form was structurally defective. Having given his unqualified
imprimatur, the city building official is presumed to have properly performed his
duties in connection therewith.

In addition, petitioner presented its vice president for finance and

administration who testified that an annual maintenance inspection and repair
of subject school building were regularly undertaken. Moreover, the city building
official, who has been in the city government service since 1974, admitted in
open court that no complaint regarding any defect on the same structure has
ever been lodged before his office prior to the institution of the case at bench.
In light of the foregoing, we find no clear and convincing evidence to sustain
the judgment of the appellate court. We thus hold that petitioner has not been
shown negligent or at fault regarding the construction and maintenance of its
school building in question and that typhoon Saling was the proximate cause
of the damage suffered by private respondents house.

Metro Concast Steel Corp., et al. v. Allied Bank Corporation

G.R. No. 177921
Doctrine:
While it may be argued that Peakstars breach of the MoA was unforseen by
petitioners, the same us clearly not "impossible" to foresee or even an event
which is independent of human will." Neither has it been shown that said
occurrence rendered it impossible for petitioners to pay their loan obligations to
Allied Bank and thus, negates the formers force majeure theory altogether.
G.R. No. 177921 December 4, 2013
Facts:
1. Petitioner is a corporation engaged in the business of manufacturing steel.
Through its officers, the individual petitioners, it obtained several loans from
Allied Bank, which were covered by a promissory note and separate letters of
credit/trust receipts.
2. Out of the thirteen loan transactions, only one was a promissory note, which
had an interest rate of 15.25% per annum, with a penalty charge of 3% per
month in case of default. The rest are trust receipts with an interest rate of
14% and a penalty of 1% penalty charge

Page 8 of 24

3. Petitioners failed to settle their obligations, hence, Allied Bank through

counsel, sent them demand letters, seeking payment of PhP 51,064,093.62 but
to no avail. They thus filed a complaint for a collection of sum of money against
petitioners.
4. Petitioners, in their answer, admitted their indebtedness to Allied Bank, but
denied liability for the interests and penalties charged.
5. They claimed to have the total sum of P65,073,055.73 by way of interest
charges for the period of 1992-1997, and that due to the economic reverses
suffered by the Philippine economy in 1998, as well the devaluation of the peso
against the dollar, it directly affected their business.
6. Hence, in order to settle their debts with Allied Bank, petitioners offered the
sale of Metro Concasts remaining assets, consisting of machineries and
equipment to Allied Bank, which the latter refused.
7. Instead, Allied Bank advised them to sell the equipment and apply the
proceeds of the sale to their outstanding obligations.
8. Accordingly, petitioners offered the equipment for sale, but since there were
no takers, the equipment was reduced to scrap metal over the years.
9. In 2002, Peakstar Oil Corporation expressed interest in buying the scrap
metal. During the negotiations, petitioners claimed that Atty. Peter Saw, a
member of Allied Banks legal department acted as the latters agent.
Eventually, with the alleged conformity of Allied Bank through Atty. Saw, a MoA
was drawn between Metro Concast and Peakstar, under which the latter
obligated itself to purchase scrap metal for a total of P34M.
10. Unfortunately, Peakstar reneged on all its obligation under the MoA.
Petitioners asservated that
(1) Their failure to pay the outstanding loan obligations to Allied Bank
must be considered as force majeure; and
(2) That since Allied Bank was the party that accepted the terms and
conditions of payment proposed by Peakstar, petitioners must
therefore be deemed to have settled their obligations to Allied Bank.

Issue:
W/N the petitioners failure to pay the outstanding loan obligations to Allied
Bank must be considered as force majeure - NO
Ratio:
In the present case, petitioners essentially argue that their loan obligations to
Allied Bank had already been extinguished due to Peakstars failure to perform
its own obligations to Metro Concast pursuant to the MoA. Petitioners classify
Peakstars default as a form of force majeure in the sense that they have,
beyond their control, lost the funds they expected to have received from the
Peakstar (due to the MoA) which they would, in turn, use to pay their own loan
obligations to Allied Bank. Now, anent petitioners reliance on force majeure,
suffice it to state that Peakstars breach of its obligations to Metro Concast
arising from the MoA cannot be classified as a fortuitous event under
jurisprudential formulation. As discussed in Sicam v. Jorge:39
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. 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.40 (Emphases
supplied)
While it may be argued that Peakstars breach of the MoA was unforseen by
petitioners, the same us clearly not "impossible" to foresee or even an event
which is independent of human will." Neither has it been shown that said
occurrence rendered it impossible for petitioners to pay their loan obligations to
Allied Bank and thus, negates the formers force majeure theory altogether.

Page 9 of 24

Topic: Plaintiffs assumption of risk/volenti non fit injuria

5. CA: Reversed. Sungas action was based on contract of carriage, not quasidelict.

Calalas v CA
G.R. No. 122039 May 31, 2000

6. Calalas: The ruling in the other civil case that the negligence of Verena was
the proximate cause of the accident negates his liability.

DOCTRINE:

ISSUE:

The contention that Sungas taking an "extension seat" amounted to an implied

assumption of risk. It is akin to arguing that the injuries to the many victims of
the tragedies in our seas should not be compensated merely because those
passengers assumed a greater risk of drowning by boarding an overloaded
ferry. The fact that Sunga was seated in an "extension seat" placed her in a
peril greater than that to which the other passengers were exposed. Therefore,
not only was petitioner unable to overcome the presumption of negligence
imposed on him for the injury sustained by Sunga, but also, the evidence
shows he was actually negligent in transporting passengers.

Whether Sungas taking of an extension seat amounted to implied assumption

of risk

FACTS:

xxx

1. Respondent Eliza Sunga, a college freshman, took a passenger owned and

operated by petitioner Vicente Calalas. The jeepney was filled to capacity at
about 24 passengers, so Sunga was given by the conductor an extension
seat, a wooden stool at the back of the door at the rear end of the vehicle.

In the case at bar, upon the happening of the accident, the presumption of
negligence at once arose, and it became the duty of petitioner to prove that he
had to observe extraordinary diligence in the care of his passengers.

2. The jeepney stopped to let

she gave way to the outgoing
driven by Iglecerio Verena and
portion of the jeepney. Sunga
period of three months.

a passenger off, as she was seated at the rear,

passenger. As she was doing so, an Isuzu truck
owned by Francisco Salva, bumped the rear end
was injured. She was to remain on a cast for a

3. Sunga filed a complaint for damages against Calalas, alleging a violation of

the contract of carriage. Calalas filed a third party complaint against Salva.
4. RTC: decided against Salva and absolved Calalas of liability, holding that the
driver of the truck was responsible for the accident. It took cognizance of
another case filed by Calalas against Salva for quasi-delict (which held Salva
and his driver liable to Calalas for damage to his jeepney).

HELD:
NO. Insofar as contracts of carriage are concerned, some aspects regulated by
the Civil Code are those respecting the diligence required of common carriers
with regard to the safety of passengers as well as the presumption of
negligence in cases of death or injury to passengers.

Now, did the driver of jeepney carry Sunga "safely as far as human care and
foresight could provide, using the utmost diligence of very cautious persons,
with due regard for all the circumstances" as required by Art. 1755? We do not
think so. Several factors militate against petitioners contention
First, as found by the Court of Appeals, the jeepney was not properly parked,
its rear portion being exposed about two meters from the broad shoulders of
the highway, and facing the middle of the highway in a diagonal angle. This is a
violation of the R.A. No. 4136, as amended, or the Land Transportation and
Traffic Code. x x x
Second, it is undisputed that petitioners driver took in more passengers than
the allowed seating capacity of the jeepney, a violation of 32(a) of the same
law

Page 10 of 24

xxx
The fact that Sunga was seated in an "extension seat" placed her in a peril
greater than that to which the other passengers were exposed. Therefore, not
only was petitioner unable to overcome the presumption of negligence imposed
on him for the injury sustained by Sunga, but also, the evidence shows he was
actually negligent in transporting passengers.
We find it hard to give serious thought to petitioners contention that Sungas
taking an "extension seat" amounted to an implied assumption of risk. It is akin
to arguing that the injuries to the many victims of the tragedies in our seas
should not be compensated merely because those passengers assumed a
greater risk of drowning by boarding an overloaded ferry. This is also true of
petitioners contention that the jeepney being bumped while it was improperly
parked constitutes caso fortuito. A caso fortuito is an event which could not be
foreseen, or which, though foreseen, was inevitable. This requires that the
following requirements be present: (a) the cause of the breach is independent
of the debtors will; (b) the event is unforeseeable or unavoidable; (c) the event
is such as to render it impossible for the debtor to fulfill his obligation in a
normal manner, and (d) the debtor did not take part in causing the injury to the
creditor. Petitioner should have foreseen the danger of parking his jeepney with
its body protruding two meters into the highway.

FAR EAST BANK vs. TENTMAKERS GROUP

G.R. No. 171050; July 4, 2012
DOCTRINE:
FEBTC should have been more circumspect in dealing with its clients. It cannot
be over emphasized that the banking business is impressed with public interest.
Of paramount importance is the trust and confidence of the public in general in
the banking industry. Consequently, the diligence required of banks is more
than that of a Roman pater familias or a good father of a family. The highest
degree of diligence is expected. In handling loan transactions, banks are under
obligation to ensure compliance by the clients with all the documentary
requirements pertaining to the approval and release of the loan applications.
For failure of its branch manager to exercise the requisite diligence in abiding
by the MORB and the banking rules and practices, FEBTC was negligent in the
selection and supervision of its employees.
FACTS:
The signatures of respondents, Gregoria Pilares Santos and Rhoel P. Santos,
President and Treasurer of respondent Tentmakers Group, Inc. respectively,
appeared on the 3 promissory notes for loans contracted with petitioner Far
East Bank and Trust Company. The first 2 promissory notes were signed by
both of them on July 5, 1996. Gregoria and Rhoel alleged that they did sign on
blank promissory notes intended for future use. The 60-day notes became
due and demandable on September 3, 1996. On August 7, 1996, a 30-day
Promissory Note for 140,000.00, was executed allegedly in the same manner
as the first two promissory notes. After a futile demand, FEBTC filed a
Complaint before the RTC for the payment of the principal of the PNs which
amounted to a total of 887,613.37 inclusive of interest, penalty charges and
attorneys fees. In the said complaint, Gregoria and Rhoel were impleaded to be
jointly and severally liable with TGI for the unpaid promissory notes.
In defense, the respondents alleged that FEBTC had no right at all to demand
from them the amount being claimed; that records would show the absence of
any resolution coming from the Board of Directors of TGI, authorizing the
signatories to receive the proceeds and the FEBTC to release any loan; that

Page 11 of 24

FEBTC violated the rules and regulations of the Central Bank as well as its own
policy when it failed to require the respondents to submit the said board
resolution, it allegedly being a condition sine qua non before granting a loan to
a corporate entity, for the protection of the depositors/borrowers.

The CA held that [b]anks should always have adequate audit mechanisms to
make sure that their employees follow accepted banking rules and practices to
safeguard the interest of the investing public and preserve the public
confidence on banks.

It also alleged that it was FEBTCs branch manager, a certain Liza Liwanag, who
represented to Gregoria and Rhoel that they could avail of additional working
capital for TGI by having them sign the promissory notes in advance, which
were blank at the time, so they would be ready for future use; that Liza
Liwanags act of not requiring the aforesaid board resolution was against bank
policy; that this irregularity caused damage to FEBTC with its own employee
defrauding the bank; that the respondents had no knowledge that a loan had
been taken out in its name; and that FEBTC could not present any proof that
the respondents duly received the various amounts reflected in the 3 PNs.

ISSUE/HELD:

The RTC rendered its judgment granting in favor of FEBTC. It ruled that It ruled
that the liability of the individual respondents, Gregoria and Rhoel, was based
on their having assumed personal and solidary liability for the amounts
represented under the promissory notes as shown by their respective
signatures appearing in the aforesaid documents. It upheld the validity and
binding effect of the said promissory notes as the respondents did not deny the
due execution thereof or their signatures appearing therein. The Court of
Appeals reversed the RTC judgment.
The CA, aking judicial notice of the usual banking practice involving loan
agreements, held that although there were promissory notes, there was no
board resolution/corporate secretarys certificate designating the signatories for
the corporation, and there was no disclosure that the signatories acted as
agents thereof. There were no collaterals either to ensure the payment of the
loan.
In the conferment of such unsecured loans, FEBTC, its bank manager in
particular, also failed to comply with the guidelines set forth under the Manual
of Regulations for Banks, when it allegedly approved and released the subject
loans to Gregoria and Rhoel. These deficiencies, according to the CA, cast doubt
on the loan transaction which appeared more like an inside job with the
branch manager or bank employee securing the signatures of Gregoria and
Rhoel, after which the said manager/employee simply filled in the blanks.

Whether FEBTC complied with banking rules and regulations through board
resolutions issued by TGI fully authorizing Gregoria and Rhoel to transact
business with it - NO. Petition is DENIED.
RATIO:
In any case, even granting that factual issues may be considered, the facts
would not make a good case for FEBTC because there was no evidence adduced
to prove that the respondents received the amount demanded in its complaint.
Contrary to the claim of FEBTC, nowhere in the records of this case can one find
a document evidencing that Gregoria and Rhoel, or TGI for that matter,
received the proceeds of the 3 promissory notes.
Moreover, FEBTC violated the rules and regulations of the Bangko Sentral ng
Pilipinas by its failure to strictly follow the guidelines in the conferment of
unsecured loans set forth under the Manual of Regulations for Banks (MORB),
to quote:
Sec. X319 Loans Against Personal Security.
The following regulations shall govern credit accommodations against
personal security granted by banks.[24]

X319.1
General
guidelines.
Before
granting
credit
accommodations against personal security, banks must exercise proper
caution by ascertaining that the borrowers, co-makers, endorsers,
sureties and/or guarantors possess good credit standing and are
financially capable of fulfilling their commitments to the bank. For this
purpose, banks shall keep records containing information on the credit
standing and financial capacity of credit applicants.

Page 12 of 24

X319.2 Proof of financial capacity of borrower. In addition to

the usual personal information sheet about the borrower, banks shall
require that an application for a credit accommodation against
personal security be accompanied by:
a.
b.

A copy of the latest income tax returns of the borrower and

his co-maker duly stamped as received by the BIR; and
If the credit accommodation exceeds 500,000.00, a copy of
the borrowers balance sheet duly certified by an Independent
Certified Public Accountant (CPA), and in case he is engaged
in business, also a copy of the profit and loss statement duly
certified by a CPA.

The above documents shall be required to be submitted annually for as

long as the credit accommodation is outstanding.
A perusal of the evidentiary records discloses that none of the aboveenumerated guidelines was complied with by FEBTC, particularly the bank
manager. As the CA stated, banking institutions usually require the following
documentations involving loan agreements to be presented before approving
any loan or release of the proceeds thereof:
1)
2)
3)

4)
5)

Promissory Notes duly signed by the parties;

Evidence of Receipt of Proceeds of the Promissory Notes;
If a corporation is involved, the appropriate copy of the Board
Resolution and a duly notarized Corporate Secretarys Certificate is
required to indicate who the authorized signatories are;
If agents sign, they must disclose their principal; and
Real Estate Mortgage/Chattel Mortgage/Pledges to secure the payment
of the loan.

In this case, although there were promissory notes, there was no proof of
receipt by the respondents of the same amounts reflected in the said
promissory notes. There was no Board Resolution/Corporate Secretarys
Certificate either, designating the authorized signatories for the corporation
specifically for the loan covered by the Promissory Notes. Even granting
arguendo that the two Board Resolutions (Exhibits A and B) dated March
3, 1995 and April 11, 1995, respectively, authorizing Gregoria and Rhoel to
transact business with FEBTC, were binding, still the petition would not prosper
as there was no evidence of crediting of the proceeds of the promissory notes.
Further, there were no collaterals, real estate mortgage, chattel mortgage or

pledges to ensure the payment of the loan. The Court is in accord with the CA
when the latter wrote:
The bank was remiss in the surveillance of its people because the bank
auditors could have easily spotted the anomaly that the loan
transaction: (1) did not have any Board Resolution/Corporate
Secretarys Certificate; (2) did not have collateral/Real Estate
Mortgage/Chattel Mortgage/Pledge and was given clean; and (3)
there was no disclosure that TGI was the principal involved as
borrower all in violation of accepted banking rules and practices.
Time and again, the Supreme Court has stressed that banking
business is so impressed with public interest where the trust and
confidence of the public in general is of paramount importance such
that the appropriate standard of diligence must be very high, if not the
highest degree of diligence. A banks liability as obligor is not merely
vicarious but primary, wherein the defense of exercise of due diligence
in the selection and supervision of its employees is of no moment.
The laxity of the bank cannot be allowed to prejudice the clients of the
bank who may unsuspectingly become victims of fraud most likely
perpetrated by insiders or employees of the bank, which is made
possible when the bank did not follow accepted banking rules and
practices and prescribed requirements by the Bangko Sentral in
dealing with loan transactions.
The CA was, thus, correct when it dismissed FEBTCs complaint against the
respondents.
As to the allegation that there is no evidence on record that warrants an
inference that the transaction was attended by irregularities purely orchestrated
by FEBTCs branch manager, the Court gives credence to the respondents
stance that:
xxx. Those are material facts which have not been refuted by the
petitioner especially the issue of irregularities orchestrated by the
petitioners Branch Manager Liza Liwanag. Not even an Affidavit of
Denial was adduced by the petitioner. The banks silence on this point
is tantamount to acquiescence to respondents position, more so on

Page 13 of 24

the sudden disappearance of the said Bank Manager which under the
law and jurisprudence that flight being an evidence/indication of guilt.
Evidently, this is a case where the respondents are being used as a
scapegoat to answer for the damage and prejudice brought about by the
negligence of FEBTCs own employees. The branch manager should have
appeared and explained the circumstances. Thus, the CA cannot be faulted for
making such a ruling.
The bottom line is that FEBTC miserably failed to present any document that
would serve as basis for its claim that the proceeds of the three promissory
notes were indeed credited to the account of the respondents. Indeed, the
Court finds no evidentiary basis to sustain the RTCs finding of actual receipt by
TGI of the amounts stated in the promissory notes. Accordingly, the Court
affirms the CA decision for being more in accord with the facts and evidence on
record.
FEBTC should have been more circumspect in dealing with its clients. It cannot
be over emphasized that the banking business is impressed with public interest.
Of paramount importance is the trust and confidence of the public in general in
the banking industry. Consequently, the diligence required of banks is more
than that of a Roman pater familias or a good father of a family. The highest
degree of diligence is expected. In handling loan transactions, banks are under
obligation to ensure compliance by the clients with all the documentary
requirements pertaining to the approval and release of the loan applications.
For failure of its branch manager to exercise the requisite diligence in abiding
by the MORB and the banking rules and practices, FEBTC was negligent in the
selection and supervision of its employees.
For the loss suffered by FEBTC due to its laxity and carelessness to police its
own personnel, the bank has no one to blame but itself. As correctly concluded
by the CA, this situation partakes of the nature of damnum absque injuria.

Page 14 of 24

Topic: Tests to determine proximate cause

LAPANDAY
AGRICULTURAL
and
DEVELOPMENT
CORPORATION
(LADECO), HENRY BERENGUEL, and APOLONIO R. DEOCAMPO,
petitioners, vs. MICHAEL RAYMOND ANGALA, respondent.
Doctrine:
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.
Facts:
1. On 4 May 1993, at about 2:45 p.m., a Datsun crewcab driven by Apolonio
Deocampo (Deocampo) bumped into a 1958 Chevy pick- owned by Michael
Raymond Angala (respondent) and driven by Bernulfo Borres (Borres).
a. Lapanday Agricultural and Development Corporation (LADECO) owned the
crewcab which was assigned to its manager Manuel Mendez (Mendez).
2. Deocampo was the driver and bodyguard of Mendez. Both vehicles were
running along Rafael Castillo St., Agdao, Davao City heading north towards
Lanang, Davao City.
3. The left door, front left fender, and part of the front bumper of the
pick-up were damaged.
4. Respondent filed an action for Quasi-Delict, Damages, and Attorneys Fees
against LADECO, its administrative officer Henry Berenguel4 (Berenguel) and
Deocampo.
5. Respondent alleged that his pick-up was slowing down to about five to ten
kilometers per hour (kph) and was making a left turn preparatory to turning
south when it was bumped from behind by the crewcab which was running at
around 60 to 70 kph.

6. The crewcab stopped 21 meters from the point of impact. Respondent

alleged that he heard a screeching sound before the impact. Respondent was
seated beside the driver and was looking at the speedometer when the accident
took place.
7. Respondent testified that Borres made a signal because he noticed a blinking
light while looking at the speedometer.
8. Respondent sent a demand letter to LADECO for the payment of the
damages he incurred because of the accident but he did not receive any reply.
9. Thus, respondent filed the case against LADECO, Berenguel, and Deocampo.
10. Deocampo alleged that the pick-up and the crewcab he was driving
were both running at about 40 kph.
a. The pick-up was running along the outer lane.
b. The pick-up was about 10 meters away when it made a U-turn
towards the left. Deocampo testified that he did not see any signal
from the pick-up.6
11. Deocampo alleged that he tried to avoid the pick-up but he was
unable to avoid the collision.
12. Deocampo stated that he did not apply the brakes because he knew
the collision was unavoidable.
13. Deocampo admitted that he stepped on the brakes only after the
collision.
14. RTC: The trial court found that the crewcab was running very fast while
following the pick-up and that the crewcabs speed was the proximate cause of
the accident. The trial court observed that the crewcab stopped 21 meters away
from the point of impact despite Deocampos claim that he stepped on the
brakes moments after the collision. The trial court ruled that Deocampo had the
last opportunity to avoid the accident The trial court found that Berenguel was
not liable because he was not the owner of the crewcab.

Page 15 of 24

15. CA: The Court of Appeals sustained the finding of the trial court that
Deocampo was negligent. The Court of Appeals applied the doctrine of last clear
chance and ruled that Deocampo had the responsibility of avoiding the pick-up.

could have avoided the vehicle if he was not driving very fast while following
the pick-up. Deocampo was not only driving fast, he also admitted that
he did not step on the brakes even upon seeing the pick-up. He only
stepped on the brakes after the collision.

Issue:
Note:
Whether the provisions of Section 45(b) of Republic Act No. 413612 (RA 4136)
and Article 2185 of the Civil Code apply to this case
Held:
YES! The Supreme Court ruled that both parties were negligent in this case.
Borres was at the outer lane when he executed a U-turn. Following Section
45(b) of RA 41361, Borres should have stayed at the inner lane which is the
lane nearest to the center of the highway. However, Deocampo was equally
negligent. Borres slowed down the pick-up preparatory to executing the U-turn.
Deocampo should have also slowed down when the pick-up slowed down.
Deocampo admitted that he noticed the pick-up when it was still about 20
meters away from him. Vehicular traffic was light at the time of the incident.
The pick-up and the crewcab were the only vehicles on the road. Deocampo
could have avoided the crewcab if he was not driving very fast before the
collision, as found by both the trial court and the Court of Appeals. We sustain
this finding since factual findings of the Court of Appeals affirming those of the
trial court are conclusive and binding on this Court. Further, the crewcab
stopped 21 meters from the point of impact. It would not have happened if
Deocampo was not driving very fast.
Since both parties are at fault in this case, the doctrine of last clear chance
applies.
The doctrine of last clear chance states that where both parties are negligent
but the negligent act of one is appreciably later than that of the other, or where
it is impossible to determine whose fault or negligence caused the loss, the one
who had the last clear opportunity to avoid the loss but failed to do so is
chargeable with the loss. In this case, Deocampo had the last clear chance
to avoid the collision. Since Deocampo was driving the rear vehicle, he
had full control of the situation since he was in a position to observe
the vehicle in front of him. Deocampo had the responsibility of avoiding
bumping the vehicle in front of him. A U-turn is done at a much slower speed to
avoid skidding and overturning, compared to running straight ahead. Deocampo

Section 45(b) of RA 4136 states:

Sec. 45. Turning at intersections. x x x (b) The driver of a vehicle intending to
turn to the left shall approach such intersection in the lane for traffic to the
right of and nearest to the center line of the highway, and, in turning, shall pass
to the left of the center of the intersection, except that, upon highways laned
for traffic and upon one-way highways, a left turn shall be made from the left
lane of traffic in the direction in which the vehicle is proceeding.

Page 16 of 24

Topic: Vicarious Liability - PARENTS

Libi vs. Intermediate Appellate Court,

Hence this case. Herein petitioners seek for the reversal of judgment of
requiring them to pay P30,000.00 for moral damages, P10,000.00 for
exemplary damages.

214 SCRA 16

Issue/Held:

Facts:

Whether the petitioners are liable for vicarious liability under Art 2180 of the
NCC - YES

Wendell Libi, son of petitioners, and Julie Ann Gotiong, the daughter of private
respondent spouses, were sweethearts until Julie broke up with Wendell upon
finding out of his sadistic and irresponsible character.

Ratio:

Wendell tried hard to reconcile with Julie Ann but when the latter refused,
Wendell started making threats.
On that fateful day of January 14,1978, Julie Ann and Wendell died from a
single gunshot wound each coming from the same Smith and Wesson revolver
licensed in the name of petitioner Cresencio Libi.
There being no eyewitnesses to the crime, petitioners and private respondents
herein advanced conflicting versions of the case.
Private respondents claimed that with the use of the same gun, Wendell took
his own life after killing Julie Ann. On the other hand, the petitioners argued
that an unknown third party, whom Wendell may have displeased by reason of
his work as a narcotic informant, must have caused the death of Wendell and
Julie Ann.
As a result of the death of Julie Ann, private respondents filed an action to
recover damages arising from the vicarious liability of the parents of Wendell
(petitioners herein) under Article 2180 of the New Civil Code.
After trial, the case was dismissed for insufficiency of evidence. Likewise, the
counterclaim filed by the petitioners was dismissed for lack of merit.
On appeal lodged by private respondents, the respondent court set aside the
dismissal of the case and held petitioners liable under Art. 2180 of the NCC.

Under said Article 2180, the enforcement of such liability shall be effected
against the father and, in case of his death or incapacity, the mother. This was
amplified by the Child and Youth Welfare Code which provides that the same
shall devolve upon the father and, in case of his death or incapacity, upon the
mother or, in case of her death or incapacity, upon the guardian, but the liability
may also be voluntarily assumed by a relative or family friend of the youthful
offender.
However, under the Family Code, this civil liability is now, without such
alternative qualification, the responsibility of the parents and those who
exercise parental authority over the minor offender.
For civil liability arising from quasi-delicts committed by minors, the same rules
shall apply in accordance with Articles2180 and 2182 of the Civil Code, as so
modified.
In the case at bar, whether the death of the hapless Julie Ann Gotiong was
caused by a felony or a quasi-delict committed by Wendell Libi, respondent
court did not err in holding petitioners liable for damages arising therefrom.
Subject to the preceding modifications of the premises relied upon by it
therefor and on the bases of the legal imperatives herein explained, we conjoin
in its findings that said petitioners failed to duly exercise the requisite
diligentissimi patris familias to prevent such damages.
ACCORDINGLY, the instant Petition is DENIED and the assailed judgment of
respondent Court of Appeals is hereby AFFIRMED, with costs against
petitioners.

Page 17 of 24

Topic: Vicarious Liability - TEACHER

Ratio:

Rosaldes vs. People of the Philippines

Petitioner contends that she did not deliberately inflict the physical injuries
suffered by Michael Ryan to maltreat or malign him in a manner that would
debase, demean or degrade his dignity. She characterizes her maltreatment as
an act of discipline that she as a school teacher could reasonably do towards
the development of the child. She insists that her act further came under the
doctrine of in loco parentis.

G.R. No. 173988 October 8, 2014

Facts:
-

In 1996, 7 year old Gonzales, a grade 1 student at Pughanan

Elementary school in Iloilo, rushing to the classroom, bumped the
knee of his teacher, Petitioner Rosaldes, who, from sleeping, was
awakened and asked the pupil to apologize. Gonzales did not apologize
and instead went to his seat. Petitioner then pinched Michael on his
thighs and held him on his armpits and pushed him to the floor. The
pupil hit his head on a desk and lost consciousness. Petitioner
proceeded to pick the said pupil by his ears and slammed him
repeatedly on the floor.

The pupil told his mother about the incident and the mother, together
with the aunt, reported the incident to the barangay captain.

The medical certificate reads:

1.
2.
3.
4.

Petechiae and tenderness of both external ears 1x2 cm. and

1x1 cm.;
Lumbar pains and tenderness at area of L3-L4;
Contusions at left inner thigh 1x1 and 1x1 cm.;
Tenderness and painful on walking especially at the area of
femoral head.

Petitioner was charged before the RTC for violation of the child abuse
law.

RTC: Petitioner guilty, CA affirmed.

Issue/Held:
WON the petitioner is guilty of Child Abuse - YES

Although the petitioner, as a school teacher, could duly discipline Michael Ryan
as her pupil, her infliction of the physical injuries on him was unnecessary,
violent and excessive. The boy even fainted from the violence suffered at her
hands. She could not justifiably claim that she acted only for the sake of
disciplining him. Her physical maltreatment of him was precisely prohibited by
no less than the Family Code, which has expressly banned the infliction of
corporal punishment by a school administrator, teacher or individual engaged in
child care exercising special parental authority (i.e., in loco parentis), viz:
Article 233. The person exercising substitute parental authority shall have the
same authority over the person of the child as the parents.
In no case shall the school administrator, teacher or individual engaged in child
care exercising special parental authority inflict corporal punishment upon the
child.
In the crime charged against the petitioner, therefore, the maltreatment may
consist of an act by deeds or by words that debases, degrades or demeans the
intrinsic worth and dignity of a child as a human being. The act need not be
habitual. The CA concluded that the petitioner "went overboard in disciplining
Michael Ryan, a helpless and weak 7-year old boy, when she pinched hard
Michael Ryan on the left thigh and when she held him in the armpits and threw
him on the floor[; and as] the boy fell down, his body hit the desk causing him
to lose consciousness [but instead] of feeling a sense of remorse, the accusedappellant further held the boy up by his ears and pushed him down on the
floor."15 On her part, the trial judge said that the physical pain experienced by
the victim had been aggravated by an emotional trauma that caused him to
stop going to school altogether out of fear of the petitioner, compelling his
parents to transfer him to another school where he had to adjust again.

Page 18 of 24

Moral damages should be awarded to assuage the moral and emotional

sufferings of the victim, and in that respect the Court believes and holds that
P20,000.00 is reasonable. The victim was likewise entitled to exemplary
damages, considering that Article 2230 of the Civil Code authorizes such
damages if at least one aggravating circumstance attended the commission of
the crime. The child abuse committed by the petitioner was aggravated her
being a public school teacher, a factor in raising the penalty to its maximum
period pursuant to Section 31(e) of Republic Act No. 7610. The amount of
P20,000.00 as exemplary damages is imposed on in order to set an example for
the public good and as a deterrent to other public school teachers who violate
the ban imposed by Article 233 of the Family Code, supra, against the infliction
of corporal punishment on children under their substitute parental authority.
The lack of proof of the actual expenses for the victims treatment should not
hinder the granting of a measure of compensation in the form of temperate
damages, which, according to Article 2224 of the Civil Code, may be recovered
when some pecuniary loss has been suffered but its amount cannot be proved
with certainty. There being no question about the injuries sustained requiring
medical treatment, temperate damages of at least P20,000.00 are warranted,
for it would be inequitable not to recognize the need for the treatment. Lastly,
interest of 6% per annum shall be charged on all the items of civil liability, to
be reckoned from the finality of this decision until full payment.
The CA revised the penalty fixed by the R TC by imposing the indeterminate
penalty of four years, two months and one day of prision correccional, as
minimum, to 10 years and one day of prision mayor, as the maximum, on the
ground that the offense was aggravated by the petitioner being a public
schoolteacher.23 It cited Section 3 l(e) of Republic Act No. 7610, which
commands that the penalty provided in the Act "shall be imposed in its
maximum period if the offender is a public officer or employee." Her being a
public schoolteacher was alleged in the information and established by evidence
as well as admitted by her. The revised penalty was erroneous, however,
because Section 10 (a) of Republic Act No. 7610 punishes the crime committed
by the petitioner with prision mayor in its minimum period, whose three periods
are six years and one day to six years and eight months, for the minimum
period; six years, eight months and one day to seven years and four months,
for the medium period; and seven years, four months and one day to eight
years, for the maximum period. The maximum of the indeterminate sentence
should come from the maximum period, therefore, and the Court fixes it at
seven years, four months and one day of prision mayor. The minimum of the
indeterminate sentence should come from prision correccional in the maximum
period, the penalty next lower than prision mayor in its minimum period, whose

range is from four years, two months and one day to six years.1wphi1
Accordingly, the minimum of the indeterminate sentence is four years, nine
months and 11 days, and the maximum is seven years, four months and one
day of prision mayor.

Page 19 of 24

Establishments/

As a result Junnel and his companion were thrown to the road and
Junnels right leg was severely fractured. The motorcycle owned by
Reynaldo was extensively damaged.

Metro Manila Transit Corp. vs. Reynaldo Cuevas & Junnel Cuevas,
represented by Reynaldo Cuevas

Junnel and his companion were then brought to the Philippine General
Hospital along Taft Avenue in Manila, where Junnel had to undergo
several operations on his right leg. Alas, Junnel is unable to walk on
his own without the aid of crutches and is still scheduled for more
operations.

As a result, Reynaldo and Junnel sued MMTC and Mina's Transit for
damages in the RTC in Cavite.

Topic: Vicarious
Employers

Liability

Owners/Managers

of

G.R. No. 167797 / 15 June 2015 / Bersamin, J.

Doctrine:
The registered owner of a motor vehicle whose operation causes injury to
another is legally liable to the latter. But it is error not to allow the registered
owner to recover reimbursement from the actual and present owner by way of
its cross-claim.
Facts:
1. Metro Manila Transit Corporation (MMTC) and Mina's Transit Corporation
(Mina's Transit) entered into an agreement to sell dated 31 Aug. 1990, whereby
the latter bought several bus units from the former at a stipulated price.

They agreed that MMTC would retain the ownership of the buses until
certain conditions were met, but in the meantime Mina's Transit could
operate the buses within Metro Manila.

2. On 14 Oct. 1994, one of the buses subject of the agreement to sell hit and
damaged a Honda Motorcycle owned by Reynaldo and driven by Junnel.

The accident happened at around 7:45pm, where Junnel was riding on

a Honda motorcycle with a companion at the back, along South
Superhighway, in front of Magallanes Supermarket in Makati, Metro
Manila.
Jessie Rillera, the driver of MMTC/Minas Transit Passenger bus
recklessly and carelessly attempted to overtake Junnels motorcycle on
the right side of the lane, in the course of which Jessie Rillera sideswiped Junnel and accelerated his speed.

3. In its Answer with Compulsory Counter-claim and Cross-claim, MMTC denied

liability, and averred that although it retained the ownership of the bus, the
actual operator and employer of the bus driver was Mina's Transit; and that, in
support of its cross-claim against Mina's Transit, a provision in the agreement
to sell mandated Mina's Transport to hold it free from liability arising from the
use and operation of the bus units.
4. On its part, Mina's Transit contended that it was not liable because: (a) it
exercised due diligence in the selection and supervision of its employees; (b) its
bus driver exercised due diligence; and (c) Junnel's negligence was the cause of
the accident.

Meanwhile, Mina's Transit filed a third-party complaint against its

insurer, Perla Compania de Seguros, Inc. (Perla), seeking
reimbursement should it be adjudged liable, pursuant to its insurance
policy issued by Perla with the following coverage: (a) third-party
liability of P50,000.00 as the maximum amount; and (b) third-party
damage to property of P20,000.00 as the maximum amount.

In its Answer to the third-party complaint, Perla denied liability as

insurer because Mina's Transit had waived its recourse by failing to
notify Perla of the incident within one year from its occurrence, as
required by Section 384 of the Insurance Code.

Page 20 of 24

5. After trial, the RTC rendered judgment in favour of Reynaldo and Junnel on
17 Sept. 1999, ordering MMTC and Minas Transit to pay damages in favour of
them.

MMTC and Minas Transit are held solidarily liable.

The RTC concluded that the proximate cause of the mishap was the
negligence of Jessie Rillera; that following Article 2180 of the Civil
Code, his employers should be solidarity liable; that MMTC and Mina's
Transit, being the joint owners of the bus, were liable.

The third-party complaint was dismissed because no evidence was

presented to prove it.

However, the RTC did not rule on the propriety of the cross-claim.

6. On appeal, the CA affirmed the RTCs decision.

Issue:
MMTC posits the sole issue of whether it was liable for the injuries
sustained by Junnel Cuevas despite the provision in the agreement to
sell that shielded it from liability.
Held:
The SC had ruled that the appeal is partly meritorious.
MMTC urges the revisit of the registered-owner rule in order to gain absolution
from liability. It contends that although it retained ownership of the bus at the
time of the vehicular accident, the actual operation was transferred to Mina's
Transit; that for it to be held liable for the acts of the bus driver, the existence
of an employer-employee relationship between them must be established; and
that because the bus driver was not its employee, it was not liable for his
negligent act.
The contentions of MMTC cannot persuade.

In view of MMTC's admission in its pleadings that it had remained the registered
owner of the bus at the time of the incident, it could not escape liability for the
personal injuries and property damage suffered by the Cuevases. This is
because of the registered-owner rule, whereby the registered owner of the
motor vehicle involved in a vehicular accident could be held liable for the
consequences. The registered-owner rule has remained good law in this
jurisdiction considering its impeccable and timeless rationale, as enunciated in
the 1957 ruling in Erezo, et al. v. Jepte, where the Court pronounced:
Registration is required not to make said registration the operative act by which
ownership in vehicles is transferred, as in land registration cases, because the
administrative proceeding of registration does not bear any essential relation to
the contract of sale between the parties (Chinchilla vs. Rafael and Verdaguer,
39 Phil. 888), but to permit the use and operation of the vehicle upon any
public highway (section 5 [a], Act No. 3992, as amended.) The main aim of
motor vehicle registration is to identify the owner so that if any accident
happens, or that any damage or injury is caused by the vehicle on the public
highways, responsibility therefor can be fixed on a definite individual, the
registered owner. Instances are numerous where vehicles running on public
highways caused accidents or injuries to pedestrians or other vehicles without
positive identification of the owner or drivers, or with very scant means of
identification. It is to forestall these circumstances, so inconvenient or
prejudicial to the public, that the motor vehicle registration is primarily
ordained, in the interest of the determination of persons responsible for
damages or injuries caused on public highways.
'One of the principal purposes of motor vehicles legislation is identification of
the vehicle and of the operator, in case of accident; and another is that the
knowledge that means of detection are always available may act as a deterrent
from lax observance of the law and of the rules of conservative and safe
operation. Whatever purpose there may be in these statutes, it is subordinate
at the last to the primary purpose of rendering it certain that the violator of the
law or of the rules of safety shall not escape because of lack of means to
discover him.' The purpose of the statute is thwarted, and the displayed
number becomes a 'snare and delusion,' if courts would entertain such defenses
as that put forward by appellee in this case. No responsible person or
corporation could be held liable for the most outrageous acts of negligence, if
they should be allowed to place a 'middleman' between them and the public,
and escape liability by the manner in which they recompense their servants.
(King vs. Brenham Automobile Co., 145 S.W. 278, 279.)

Page 21 of 24

The Court has reiterated the registered-owner rule in other rulings, like in Filcar
Transport Services v. Espinas, to wit:
x x x It is well settled that in case of motor vehicle mishaps, the registered
owner of the motor vehicle is considered as the employer of the
tortfeasor-driver, and is made primarily liable for the tort committed by the
latter under Article 2176, in relation with Article 2180, of the Civil Code.

Thus, it is clear that for the purpose of holding the registered owner of the
motor vehicle primarily and directly liable for damages under Article 2176, in
relation with Article 2180, of the Civil Code, the existence of an employeremployee relationship, as it is understood in labor relations law, is not required.
It is sufficient to establish that Filcar is the registered owner of the motor
vehicle causing damage in order that it may be held vicariously liable under
Article 2180 of the Civil Code. (Citations Omitted)

In Equitable Leasing Corporation v. Suyom, we ruled that in so far as third

persons are concerned, the registered owner of the motor vehicle is the
employer of the negligent driver, and the actual employer is considered
merely as an agent of such owner.

Indeed, MMTC could not evade liability by passing the buck to Mina's Transit.
The stipulation in the agreement to sell did not bind third parties like the
Cuevases, who were expected to simply rely on the data contained in the
registration certificate of the erring bus.

In that case, a tractor registered in the name of Equitable Leasing Corporation

(Equitable) figured in an accident, killing and seriously injuring several persons.
As part of its defense, Equitable claimed that the tractor was initially leased to
Mr. Edwin Lim under a Lease Agreement, which agreement has been overtaken
by a Deed of Sale entered into by Equitable and Ecatine Corporation (Ecatine).
Equitable argued that it cannot be held liable for damages because the tractor
had already been sold to Ecatine at the time of the accident and the negligent
driver was not its employee but of Ecatine.

Although the registered-owner rule might seem to be unjust towards MMTC, the
law did not leave it without any remedy or recourse. According to Filcar
Transport Services v. Espinas, MMTC could recover from Mina's Transit, the
actual employer of the negligent driver, under the principle of unjust
enrichment, by means of a cross-claim seeking reimbursement of all the
amounts that it could be required to pay as damages arising from the driver's
negligence. A cross-claim is a claim by one party against a co-party arising out
of the transaction or occurrence that is the subject matter either of the original
action or of a counterclaim therein, and may include a claim that the party
against whom it is asserted is or may be liable to the cross-claimant for all or
part of a claim asserted in the action against the cross-claimant.

In upholding the liability of Equitable, as registered owner of the tractor, this

Court said that "regardless of sales made of a motor vehicle, the registered
owner is the lawful operator insofar as the public and third persons are
concerned; consequently, it is directly and primarily responsible for the
consequences of its operation." The Court further stated that "[i]n
contemplation of law, the owner/operator of record is the employer of
the driver, the actual operator and employer being considered as
merely its agent." Thus, Equitable, as the registered owner of the tractor,
was considered under the law on quasi delict to be the employer of the driver,
Raul Tutor; Ecatine, Tutor's actual employer, was deemed merely as an agent
of Equitable.

MMTC set up its cross-claim against Mina's Transit precisely to ensure that
Mina's Transit would reimburse whatever liability would be adjudged against
MMTC. Yet, it is a cause of concern for the Court that the RTC ignored to rule
on the propriety of MMTC's cross-claim. Such omission was unwarranted,
inasmuch as Mina's Transit did not dispute the cross-claim, or did not
specifically deny the agreement to sell with MMTC, the actionable document on
which the cross-claim was based. Even more telling was the fact that Mina's
Transit did not present controverting evidence to disprove the cross-claim as a
matter of course if it was warranted for it to do so.
Under the circumstances, the RTC should have granted the cross-claim to
prevent the possibility of a multiplicity of suits, and to spare not only the MMTC
but also the other parties in the case from further expense and bother.
Compounding the RTC's uncharacteristic omission was the CA's oversight in
similarly ignoring the cross-claim. The trial and the appellate courts should not

Page 22 of 24

forget that a cross-claim is like the complaint and the counterclaim that the
court must rule upon.
The SC affirms the Decision, but subject to the modification that the crossclaim of MMTC against Minas Transit is granted. Hence, Minas Transit is
ordered to reimburse MMTC whatever amounts the latter shall pay to the
Cuevases.

Page 23 of 24

Topic: Interference with contractual relations

Czarina T. Malvar v. Kraft Food Phils., Inc., and/or Bienvenido Bautista,
Kraft Foods International

8. CA granted the petition, ordering the remand of the case to the LA for
purposes of recomputing the monetary awards for Malvar.
9. Malvar sought reconsideration with the CA, but the CA denied the same.
Thus, Malvar appealed to the SC.

GR No. 183952 / Sept 9, 2013 / Bersamin, J.:

FACTS:
1. In 1988, Malvar was hired by Kraft Foods Phils as its Corp. Planning Manager.
In 1996, she was elected as VP for Finance in the Southeast Asia Region of
Kraft Foods International.
2. Bautista, a corporate officer of Kraft, directed Malvar to explain why no
admin. sanctions should be imposed on her for possible breach of trust and
confidence and for wilful violation of company rules and regulations.
Meanwhile, she was placed under preventive suspension pending the
investigation of her case.
3. In 2000, Malvar was served a notice of termination. Hence, Malvar filed a
complaint for illegal dismissal and illegal suspension against Kraft and Bautista
before the LA. The Labor Arbiter ruled in favor of Malvar. The NLRC affirmed the
decision of the LA.
4. Malvar, in all the proceedings therefrom and thereafter, was
represented by the law firm of Dasal, Llasos and Associates through its
Of Counsel (Ret. SC Justice) Josue Bellosillo.
5. Kraft and Bautista filed a petition for certiorari before the CA, but the CA
dismissed the same. The computed amount as award Malvar is entitled to is at
P 27 million.
6. After securing a partial execution of the judgment, Krafts funds deposit at
Citibank at 37 million was garnished.
7. Kraft and Bautista filed a petition for certiorari, assailing the computation
made by the NLRC.

10. During the pendency of the SC case, Malvar entered into a compromise
agreement with Kraft. After executing the compromise agreement, Malvar
moved for the dismissal/withdrawal of her appeal.
11. Before SC could decide on Malvars motion to withdraw, the law firm of
Dasal, Llasos and Associates filed a Motion for Intervention to Protect
Attorneys Rights, praying that Malvar and Kraft be ordered to pay jointly and
severally the law firms contingent fees. The law firm claimed that Malvar
unjustifiably terminated its legal services to Malvar. The firm claimed that while
the client has the right to enter into a compromise without the intervention of
his/her lawyer, the lawyer has the right to recover fees due him. The firm
claims that Malvar defrauded the firm and that Malvar is evading her duty to
pay the firms fees through Kraft and Bautistas insinuations.
ISSUE/HELD:
Whether Kraft and Bautista, in executing the compromise agreement with
Malvar, unjustly and unfairly interfered with the the firms professional
relationship with Malvar - YES
RATIO:
Kraft and Bautista were complicit with Malverns move to deprive the firm of its
contingent fees. First, the timing of Malverns compromise and motion to
withdraw manifested her desire to evade her legal obligation to pay the firms
fees. When Kraft offered to pay 40 million, in addition to what it paid to Malvar
at 14 million, despite its hardline stance of lack of liability, it is fair to assume
that the termination of the firms services to Malvar was instigated by Krafts
prodding in order to save the any expense due to the firm. Also, the
compromise agreement was silent on the firms fees, indicating that the
objective of the compromise was to secure a huge discount from its liability
towards Malvar. Because of this, Malvar and Kraft became joint-tortfeasors who

Page 24 of 24

acted adversely against the interests of the firm. Joint-tortfeasors are those
who command, instigate, promote, encourage, advise, countenance, cooperate
in, aid or abet the commission of a tort, or who approve of it after it is done, if
done for their benefit. Joint-tortfeasors are solidarily liable under Art. 2194 of
the Civil Code.
DISPOSITIVE:

the motion for intervention of the fim is granted. Malvar and Kraft are ordered
to pay the firm (solidarily) its contingent fees of 10% of 41 million, and the
further sum equivalent to 10% of the value of the stock option.