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G.R. No.

108164 February 23, 1995 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
FAR EAST BANK AND TRUST COMPANY, petitioner, and Beverage Manager of the Intercontinental Hotel, wrote back to say that the credibility of
vs. private respondent had never been "in question." A copy of this reply was sent to Luis by
THE HONORABLE COURT OF APPEALS, LUIS A. LUNA and CLARITA S. Festejo.
LUNA, respondents.
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.

VITUG, J.: 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)
Some time in October 1986, private respondent Luis A. Luna applied for, and was accorded, P50,000.00 exemplary damages; and (c) P20,000.00 attorney's fees.
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 On appeal to the Court of Appeals, the appellate court affirmed the decision of the trial court.
respondent Clarita S. Luna.
Its motion for reconsideration having been denied by the appellate court, FEBTC has come to
In August 1988, Clarita lost her credit card. FEBTC was forthwith informed. In order to this Court with this petition for review.
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 There is merit in this appeal.
card, along with the principal card, as a "Hot Card" or "Cancelled Card" in its master file.
In culpa contractual, moral damages may be recovered where the defendant is shown to
On 06 October 1988, Luis tendered a despedida lunch for a close friend, a Filipino-American, have acted in bad faith or with malice in the breach of the contract. 2 The Civil Code provides:
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 Art. 2220. Willful injury to property may be a legal ground for awarding moral
had it verified through a telephone call to the bank's Credit Card Department. Since the card damages if the court should find that, under the circumstances, such damages are
was not honored, Luis was forced to pay in cash the bill amounting to P588.13. Naturally, justly due. The same rule applies to breaches of contract where the defendant acted
Luis felt embarrassed by this incident. fraudulently or in bad faith. (Emphasis supplied)

In a letter, dated 11 October 1988, private respondent Luis Luna, through counsel, demanded Bad faith, in this context, includes gross, but not simple, negligence.3 Exceptionally, in a
from FEBTC the payment of damages. Adrian V. Festejo, a vice-president of the bank, contract of carriage, moral damages are also allowed in case of death of a passenger
expressed the bank's apologies to Luis. In his letter, dated 03 November 1988, Festejo, in attributable to the fault (which is presumed4 ) of the common carrier.5
part, said:
Concededly, the bank was remiss in indeed neglecting to personally inform Luis of his own
In cases when a card is reported to our office as lost, FAREASTCARD undertakes card's cancellation. Nothing in the findings of the trial court and the appellate court, however,
the necessary action to avert its unauthorized use (such as tagging the card as can sufficiently indicate any deliberate intent on the part of FEBTC to cause harm to private
hotlisted), as it is always our intention to protect our cardholders. 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.
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 Malice or bad faith implies a conscious and intentional design to do a wrongful act for a
Credit Card Department did not consider the possibility that it may have been you dishonest purpose or moral obliquity; it is different from the negative idea of negligence in
who was presenting the card at that time (for which reason, the unfortunate incident that malice or bad faith contemplates a state of mind affirmatively operating with furtive
occurred). 1 design or ill will.6
1
We are not unaware of the previous rulings of this Court, such as in American Express to breaches of contract where the defendant acted fraudulently or in
International, Inc., vs. Intermediate Appellate Court (167 SCRA 209) and Bank of Philippine bad faith.
Islands vs. Intermediate Appellate Court (206 SCRA 408), sanctioning the application of
Article 21, in relation to Article 2217 and Article 22197 of the Civil Code to a contractual By contrasting the provisions of these two articles it immediately becomes apparent
breach similar to the case at bench. Article 21 states: that:

Art. 21. Any person who wilfully causes loss or injury to another in a manner that is (a) In case of breach of contract (including one of transportation) proof of bad faith or
contrary to morals, good customs or public policy shall compensate the latter for the fraud (dolus), i.e., wanton or deliberately injurious conduct, is essential to justify an
damage. award of moral damages; and

Article 21 of the Code, it should be observed, contemplates a conscious act to cause harm. (b) That a breach of contract can not be considered included in the descriptive term
Thus, even if we are to assume that the provision could properly relate to a breach of "analogous cases" used in Art. 2219; not only because Art. 2220 specifically provides
contract, its application can be warranted only when the defendant's disregard of his for the damages that are caused contractual breach, but because the definition of
contractual obligation is so deliberate as to approximate a degree of misconduct certainly no quasi-delict in Art. 2176 of the Code expressly excludes the cases where there is a
less worse than fraud or bad faith. Most importantly, Article 21 is a mere declaration of a "preexisitng contractual relations between the parties."
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
Art. 2176. Whoever by act or omission causes damage to another,
contractual solely when the breach is due to fraud or bad faith.
there being fault or negligence, is obliged to pay for the damage
done. Such fault or negligence, if there is no pre-existing contractual
Mr. Justice Jose B.L. Reyes, in his ponencia in Fores vs. Miranda8 explained with great clarity relation between the parties, is called a quasi-delict and is governed
the predominance that we should give to Article 2220 in contractual relations; we quote: by the provisions of this Chapter.

Anent the moral damages ordered to be paid to the respondent, the same must be The exception to the basic rule of damages now under consideration is a mishap
discarded. We have repeatedly ruled (Cachero vs. Manila Yellow Taxicab Co. Inc., resulting in the death of a passenger, in which case Article 1764 makes the common
101 Phil. 523; 54 Off. Gaz., [26], 6599; Necesito, et al. vs. Paras, 104 Phil., 75; 56 carrier expressly subject to the rule of Art. 2206, that entitles the spouse,
Off. Gaz., [23] 4023), that moral damages are not recoverable in damage actions descendants and ascendants of the deceased passenger to "demand moral
predicated on a breach of the contract of transportation, in view of Articles 2219 and damages for mental anguish by reason of the death of the deceased" (Necesito vs.
2220 of the new Civil Code, which provide as follows: 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
Art. 2219. Moral damages may be recovered in the following and passenger does not die, moral damages are not recoverable unless it is proved that
analogous cases: 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
(1) A criminal offense resulting in physical injuries; 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
(2) Quasi-delicts causing physical injuries;
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
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
The distinction between fraud, bad faith or malice in the sense of deliberate or
circumstances, such damages are justly due. The same rule applies
wanton wrong doing and negligence (as mere carelessness) is too fundamental in

2
our law to be ignored (Arts. 1170-1172); their consequences being clearly circumstances (Art. 2230, Civil Code). In quasi-delicts, such damages are granted if the
differentiated by the Code. 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;
Art. 2201. In contracts and quasi-contracts, the damages for which Globe Mackay Cable and Radio Corp. vs. CA, 176 SCRA 778). In contracts and quasi-
the obligor who acted in good faith is liable shall be those that are contracts, the court may award exemplary damages if the defendant is found to have acted in
the natural and probable consequences of the breach of the a wanton, fraudulent, reckless, oppressive, or malevolent manner (Art. 2232, Civil Code; PNB
obligation, and which the parties have foreseen or could have vs. Gen. Acceptance and Finance Corp., 161 SCRA 449).
reasonably foreseen at the time the obligation was constituted.
Given the above premises and the factual circumstances here obtaining, it would also be just
In case of fraud, bad faith, malice or wanton attitude, the obligor shall as arduous to sustain the exemplary damages granted by the courts below (see De Leon vs.
be responsible for all damages which may be reasonably attributed Court of Appeals, 165 SCRA 166).
to the non-performance of the obligation.
Nevertheless, the bank's failure, even perhaps inadvertent, to honor its credit card issued to
It is to be presumed, in the absence of statutory provision to the contrary, that this private respondent Luis should entitle him to recover a measure of damages sanctioned
difference was in the mind of the lawmakers when in Art. 2220 they limited recovery under Article 2221 of the Civil Code providing thusly:
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 Art. 2221. Nominal damages are adjudicated in order that a right of the plaintiff, which
evidence, and a carrier's bad faith is not to be lightly inferred from a mere finding that has been violated or invaded by the defendant, may be vindicated or recognized, and
the contract was breached through negligence of the carrier's employees. not for the purpose of indemnifying the plaintiff for any loss suffered by him.

The Court has not in the process overlooked another rule that a quasi-delict can be the cause Reasonable attorney's fees may be recovered where the court deems such recovery to be
for breaching a contract that might thereby permit the application of applicable principles on just and equitable (Art. 2208, Civil Code). We see no issue of sound discretion on the part of
tort9 even where there is a pre-existing contract between the plaintiff and the defendant (Phil. the appellate court in allowing the award thereof by the trial court.
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 WHEREFORE, the petition for review is given due course. The appealed decision is
improve private respondents' case for it can aptly govern only where the act or omission MODIFIED by deleting the award of moral and exemplary damages to private respondents; in
complained of would constitute an actionable tort independently of the contract. The test its stead, petitioner is ordered to pay private respondent Luis A. Luna an amount of
(whether a quasi-delict can be deemed to underlie the breach of a contract) can be stated P5,000.00 by way of nominal damages. In all other respects, the appealed decision is
thusly: Where, without a pre-existing contract between two parties, an act or omission can AFFIRMED. No costs.
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
SO ORDERED.
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; see Prudenciado 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
3
THIRD DIVISION Petitioner Khristine Rea M. Regino was a first year computer science student at Respondent
Pangasinan Colleges of Science and Technology (PCST). Reared in a poor family, Regino
G.R. No. 156109 November 18, 2004 went to college mainly through the financial support of her relatives. During the second
semester of school year 2001-2002, she enrolled in logic and statistics subjects under
KHRISTINE REA M. REGINO, Assisted and Represented by ARMANDO Respondents Rachelle A. Gamurot and Elissa Baladad, respectively, as teachers.
REGINO, petitioner,
vs. In February 2002, PCST held a fund raising campaign dubbed the "Rave Party and Dance
PANGASINAN COLLEGES OF SCIENCE AND TECHNOLOGY, RACHELLE A. GAMUROT Revolution," the proceeds of which were to go to the construction of the school's tennis and
and ELISSA BALADAD, respondents. volleyball courts. Each student was required to pay for two tickets at the price of P100 each.
The project was allegedly implemented by recompensing students who purchased tickets
with additional points in their test scores; those who refused to pay were denied the
opportunity to take the final examinations.

Financially strapped and prohibited by her religion from attending dance parties and
DECISION
celebrations, Regino refused to pay for the tickets. On March 14 and March 15, 2002, the
scheduled dates of the final examinations in logic and statistics, her teachers -- Respondents
Rachelle A. Gamurot and Elissa Baladad -- allegedly disallowed her from taking the tests.
According to petitioner, Gamurot made her sit out her logic class while her classmates were
taking their examinations. The next day, Baladad, after announcing to the entire class that
PANGANIBAN, J.: she was not permitting petitioner and another student to take their statistics examinations for
failing to pay for their tickets, allegedly ejected them from the classroom. Petitioner's pleas
Upon enrolment, students and their school enter upon a reciprocal contract. The students ostensibly went unheeded by Gamurot and Baladad, who unrelentingly defended their
agree to abide by the standards of academic performance and codes of conduct, issued positions as compliance with PCST's policy.
usually in the form of manuals that are distributed to the enrollees at the start of the school
term. Further, the school informs them of the itemized fees they are expected to pay. On April 25, 2002, petitioner filed, as a pauper litigant, a Complaint5 for damages against
Consequently, it cannot, after the enrolment of a student, vary the terms of the contract. It PCST, Gamurot and Baladad. In her Complaint, she prayed for P500,000 as nominal
cannot require fees other than those it specified upon enrolment. damages; P500,000 as moral damages; at least P1,000,000 as exemplary damages;
P250,000 as actual damages; plus the costs of litigation and attorney's fees.
The Case
On May 30, 2002, respondents filed a Motion to Dismiss 6 on the ground of petitioner's failure
Before the Court is a Petition for Review under Rule 45,1 seeking
to nullify the July 12, to exhaust administrative remedies. According to respondents, the question raised involved
20022 and the November 22, 20023 Orders of the Regional Trial Court (RTC) of Urdaneta the determination of the wisdom of an administrative policy of the PCST; hence, the case
City, Pangasinan (Branch 48) in Civil Case No. U-7541. The decretal portion of the first should have been initiated before the proper administrative body, the Commission of Higher
assailed Order reads: Education (CHED).

"WHEREFORE, the Court GRANTS the instant motion to dismiss for lack of cause of In her Comment to respondents' Motion, petitioner argued that prior exhaustion of
action."4 administrative remedies was unnecessary, because her action was not administrative in
nature, but one purely for damages arising from respondents' breach of the laws on human
The second challenged Order denied petitioner's Motion for Reconsideration. relations. As such, jurisdiction lay with the courts.

The Facts On July 12, 2002, the RTC dismissed the Complaint for lack of cause of action.

Ruling of the Regional Trial Court


4
In granting respondents' Motion to Dismiss, the trial court noted that the instant controversy Respondents anchored their Motion to Dismiss on petitioner's alleged failure to exhaust
involved a higher institution of learning, two of its faculty members and one of its students. It administrative remedies before resorting to the RTC. According to them, the determination of
added that Section 54 of the Education Act of 1982 vested in the Commission on Higher the controversy hinge on the validity, the wisdom and the propriety of PCST's academic
Education (CHED) the supervision and regulation of tertiary schools. Thus, it ruled that the policy. Thus, the Complaint should have been lodged in the CHED, the administrative body
CHED, not the courts, had jurisdiction over the controversy.7 tasked under Republic Act No. 7722 to implement the state policy to "protect, foster and
promote the right of all citizens to affordable quality education at all levels and to take
In its dispositive portion, the assailed Order dismissed the Complaint for "lack of cause of appropriate steps to ensure that education is accessible to all."10
action" without, however, explaining this ground.
Petitioner counters that the doctrine finds no relevance to the present case since she is
Aggrieved, petitioner filed the present Petition on pure questions of law.8 praying for damages, a remedy beyond the domain of the CHED and well within the
jurisdiction of the courts.11
Issues
Petitioner is correct. First, the doctrine of exhaustion of administrative remedies has no
bearing on the present case. In Factoran Jr. v. CA,12 the Court had occasion to elucidate on
In her Memorandum, petitioner raises the following issues for our consideration:
the rationale behind this doctrine:
"Whether or not the principle of exhaustion of administrative remedies applies in a
civil action exclusively for damages based on violation of the human relation "The doctrine of exhaustion of administrative remedies is basic. Courts, for reasons
provisions of the Civil Code, filed by a student against her former school. of law, comity, and convenience, should not entertain suits unless the available
administrative remedies have first been resorted to and the proper authorities have
been given the appropriate opportunity to act and correct their alleged errors, if any,
"Whether or not there is a need for prior declaration of invalidity of a certain school committed in the administrative forum. x x x.13 "
administrative policy by the Commission on Higher Education (CHED) before a
former student can successfully maintain an action exclusively for damages in regular
courts. Petitioner is not asking for the reversal of the policies of PCST. Neither is she demanding it to
allow her to take her final examinations; she was already enrolled in another educational
institution. A reversal of the acts complained of would not adequately redress her grievances;
"Whether or not the Commission on Higher Education (CHED) has exclusive original under the circumstances, the consequences of respondents' acts could no longer be undone
jurisdiction over actions for damages based upon violation of the Civil Code or rectified.
provisions on human relations filed by a student against the school."9
Second, exhaustion of administrative remedies is applicable when there is competence on
All of the foregoing point to one issue -- whether the doctrine of exhaustion of administrative the part of the administrative body to act upon the matter complained of.14 Administrative
remedies is applicable. The Court, however, sees a second issue which, though not agencies are not courts; they are neither part of the judicial system, nor are they deemed
expressly raised by petitioner, was impliedly contained in her Petition: whether the Complaint judicial tribunals.15 Specifically, the CHED does not have the power to award
stated sufficient cause(s) of action. damages.16 Hence, petitioner could not have commenced her case before the Commission.

The Court's Ruling Third, the exhaustion doctrine admits of exceptions, one of which arises when the issue is
purely legal and well within the jurisdiction of the trial court.17 Petitioner's action for damages
The Petition is meritorious. inevitably calls for the application and the interpretation of the Civil Code, a function that falls
within the jurisdiction of the courts.18
First Issue:
Second Issue:
Exhaustion of Administrative Remedies
Cause of Action

5
Sufficient Causes of Action Stated in the Allegations in the Complaint tickets would not be allowed to participate in the examination, for which threat and
intimidation many students were eventually forced to make payments:
As a rule, every complaint must sufficiently allege a cause of action; failure to do so warrants
its dismissal.19 A complaint is said to assert a sufficient cause of action if, admitting what "16. Because plaintiff could not afford to pay, defendant Rachelle A. Gamurot
appears solely on its face to be correct, the plaintiff would be entitled to the relief prayed for. inhumanly made plaintiff sit out the class but the defendant did not allow her to take
Assuming the facts that are alleged to be true, the court should be able to render a valid her final examination in 'Logic;'
judgment in accordance with the prayer in the complaint.20
"17. On March 15, 2002 just before the giving of the final examination in the subject
A motion to dismiss based on lack of cause of action hypothetically admits the truth of the 'Statistics,' defendant Elissa Baladad, in connivance with defendants Rachelle A.
alleged facts. In their Motion to Dismiss, respondents did not dispute any of petitioner's Gamurot and PCST, announced in the classroom that she was not allowing plaintiff
allegations, and they admitted that "x x x the crux of plaintiff's cause of action is the and another student to take the examination for their failure and refusal to pay the
determination of whether or not the assessment of P100 per ticket is excessive or price of the tickets, and thenceforth she ejected plaintiff and the other student from
oppressive."21 They thereby premised their prayer for dismissal on the Complaint's alleged the classroom;
failure to state a cause of action. Thus, a reexamination of the Complaint is in order.
"18. Plaintiff pleaded for a chance to take the examination but all defendants could
The Complaint contains the following factual allegations: say was that the prohibition to give the examinations to non-paying students was an
administrative decision;
"10. In the second week of February 2002, defendant Rachelle A. Gamurot, in
connivance with PCST, forced plaintiff and her classmates to buy or take two tickets "19. Plaintiff has already paid her tuition fees and other obligations in the school;
each, x x x;
"20. That the above-cited incident was not a first since PCST also did another forced
"11. Plaintiff and many of her classmates objected to the forced distribution and distribution of tickets to its students in the first semester of school year 2001-2002; x
selling of tickets to them but the said defendant warned them that if they refused [to] x x " 22
take or pay the price of the two tickets they would not be allowed at all to take the
final examinations; The foregoing allegations show two causes of action; first, breach of contract; and second,
liability for tort.
"12. As if to add insult to injury, defendant Rachelle A. Gamurot bribed students with
additional fifty points or so in their test score in her subject just to unjustly influence Reciprocity of the
and compel them into taking the tickets; School-Student Contract

"13. Despite the students' refusal, they were forced to take the tickets because [of] In Alcuaz v. PSBA,23 the Court characterized the relationship between the school and the
defendant Rachelle A. Gamurot's coercion and act of intimidation, but still many of student as a contract, in which "a student, once admitted by the school is considered enrolled
them including the plaintiff did not attend the dance party imposed upon them by for one semester."24 Two years later, in Non v. Dames II,25 the Court modified the "termination
defendants PCST and Rachelle A. Gamurot; of contract theory" in Alcuaz by holding that the contractual relationship between the school
and the student is not only semestral in duration, but for the entire period the latter are
"14. Plaintiff was not able to pay the price of her own two tickets because aside form expected to complete it."26 Except for the variance in the period during which the contractual
the fact that she could not afford to pay them it is also against her religious practice relationship is considered to subsist, both Alcuaz and Non were unanimous in characterizing
as a member of a certain religious congregation to be attending dance parties and the school-student relationship as contractual in nature.
celebrations;
The school-student relationship is also reciprocal. Thus, it has consequences appurtenant to
"15. On March 14, 2002, before defendant Rachelle A. Gamurot gave her class its and inherent in all contracts of such kind -- it gives rise to bilateral or reciprocal rights and
final examination in the subject 'Logic' she warned that students who had not paid the obligations. The school undertakes to provide students with education sufficient to enable

6
them to pursue higher education or a profession. On the other hand, the students agree to student to be used for the "purchase of a piece of land and for the construction of new
abide by the academic requirements of the school and to observe its rules and regulations. 27 buildings and other facilities x x x which the school would transfer [to] and occupy after the
expiration of its lease contract over its present site."
The terms of the school-student contract are defined at the moment of its inception -- upon
enrolment of the student. Standards of academic performance and the code of behavior and The amount was refundable after the student graduated or left the school. After noting that
discipline are usually set forth in manuals distributed to new students at the start of every the imposition of the fee was made only after prior consultation and approval by the parents
school year. Further, schools inform prospective enrollees the amount of fees and the terms of the students, the Court held that the school committed no actionable wrong in refusing to
of payment. admit the children of the petitioners therein for their failure to pay the "land purchase deposit"
and the 2.5 percent monthly surcharge thereon.
In practice, students are normally required to make a down payment upon enrollment, with
the balance to be paid before every preliminary, midterm and final examination. Their failure In the present case, PCST imposed the assailed revenue-raising measure belatedly, in the
to pay their financial obligation is regarded as a valid ground for the school to deny them the middle of the semester. It exacted the dance party fee as a condition for the students' taking
opportunity to take these examinations. the final examinations, and ultimately for its recognition of their ability to finish a course. The
fee, however, was not part of the school-student contract entered into at the start of the
The foregoing practice does not merely ensure compliance with financial obligations; it also school year. Hence, it could not be unilaterally imposed to the prejudice of the enrollees.
underlines the importance of major examinations. Failure to take a major examination is
usually fatal to the students' promotion to the next grade or to graduation. Examination results Such contract is by no means an ordinary one. In Non, we stressed that the school-student
form a significant basis for their final grades. These tests are usually a primary and an contract "is imbued with public interest, considering the high priority given by the Constitution
indispensable requisite to their elevation to the next educational level and, ultimately, to their to education and the grant to the State of supervisory and regulatory powers over all
completion of a course. educational institutions."32 Sections 5 (1) and (3) of Article XIV of the 1987 Constitution
provide:
Education is not a measurable commodity. It is not possible to determine who is "better
educated" than another. Nevertheless, a student's grades are an accepted approximation of "The State shall protect and promote the right of all citizens to quality education at all
what would otherwise be an intangible product of countless hours of study. The importance of levels and shall take appropriate steps to make such declaration accessible to all.
grades cannot be discounted in a setting where education is generally the gate pass to
employment opportunities and better life; such grades are often the means by which a "Every student has a right to select a profession or course of study, subject to fair,
prospective employer measures whether a job applicant has acquired the necessary tools or reasonable and equitable admission and academic requirements."
skills for a particular profession or trade.
The same state policy resonates in Section 9(2) of BP 232, otherwise known as the
Thus, students expect that upon their payment of tuition fees, satisfaction of the set academic Education Act of 1982:
standards, completion of academic requirements and observance of school rules and
regulations, the school would reward them by recognizing their "completion" of the course "Section 9. Rights of Students in School. – In addition to other rights, and subject to
enrolled in. the limitations prescribed by law and regulations, students and pupils in all schools
shall enjoy the following rights:
The obligation on the part of the school has been established in Magtibay v. Garcia,28 Licup v.
University of San Carlos29 and Ateneo de Manila University v. Garcia,30 in which the Court
xxx xxx xxx
held that, barring any violation of the rules on the part of the students, an institution of higher
learning has a contractual obligation to afford its students a fair opportunity to complete the
course they seek to pursue. (2) The right to freely choose their field of study subject to existing curricula
and to continue their course therein up to graduation, except in cases of
academic deficiency, or violation of disciplinary regulations."
We recognize the need of a school to fund its facilities and to meet astronomical operating
costs; this is a reality in running it. Crystal v. Cebu International School31 upheld the
imposition by respondent school of a "land purchase deposit" in the amount of P50,000 per Liability for Tort
7
In her Complaint, petitioner also charged that private respondents "inhumanly punish class seat aboard the petitioner airline. It is noted, however, that the Court referred to
students x x x by reason only of their poverty, religious practice or lowly station in life, which the petitioner-airline's liability as one arising from tort, not one arising form a contract
inculcated upon [petitioner] the feelings of guilt, disgrace and unworthiness;" 33 as a result of of carriage. In effect, Air France is authority for the view that liability from tort may
such punishment, she was allegedly unable to finish any of her subjects for the second exist even if there is a contract, for the act that breaks the contract may be also a tort.
semester of that school year and had to lag behind in her studies by a full year. The acts of x x x This view was not all that revolutionary, for even as early as 1918, this Court
respondents supposedly caused her extreme humiliation, mental agony and "demoralization was already of a similar mind. In Cangco v. Manila Railroad (38 Phil. 780), Mr.
of unimaginable proportions" in violation of Articles 19, 21 and 26 of the Civil Code. These Justice Fisher elucidated thus: 'x x x. When such a contractual relation exists the
provisions of the law state thus: 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-
"Article 19. Every person must, in the exercise of his rights and in the performance of contractual obligation had no contract existed between the parties.'
his duties, act with justice, give everyone his due, and observe honesty and good
faith." "Immediately what comes to mind is the chapter of the Civil Code on Human
Relations, particularly Article 21 x x x."35
"Article 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 Academic Freedom
the damage."
In their Memorandum, respondents harp on their right to "academic freedom." We are not
"Article 26. Every person shall respect the dignity, personality, privacy and peace of impressed. According to present jurisprudence, academic freedom encompasses the
mind of his neighbors and other persons. The following and similar acts, though they independence of an academic institution to determine for itself (1) who may teach, (2) what
may not constitute a criminal offense, shall produce a cause of action for damages, may be taught, (3) how it shall teach, and (4) who may be admitted to study. 36In Garcia v. the
prevention and other relief: Faculty Admission Committee, Loyola School of Theology, 37 the Court upheld the respondent
therein when it denied a female student's admission to theological studies in a seminary for
(1) Prying into the privacy of another's residence; prospective priests. The Court defined the freedom of an academic institution thus: "to decide
for itself aims and objectives and how best to attain them x x x free from outside coercion or
interference save possibly when overriding public welfare calls for some restraint." 38
(2) Meddling with or disturbing the private life or family relations of another;

In Tangonan v. Paño,39 the Court upheld, in the name of academic freedom, the right of the
(3) Intriguing to cause another to be alienated from his friends;
school to refuse readmission of a nursing student who had been enrolled on probation, and
who had failed her nursing subjects. These instances notwithstanding, the Court has
(4) Vexing or humiliating another on account of his beliefs, lowly station in emphasized that once a school has, in the name of academic freedom, set its standards,
life, place of birth, physical defect, or other personal condition." these should be meticulously observed and should not be used to discriminate against
certain students.40 After accepting them upon enrollment, the school cannot renege on its
Generally, liability for tort arises only between parties not otherwise bound by a contract. An contractual obligation on grounds other than those made known to, and accepted by,
academic institution, however, may be held liable for tort even if it has an existing contract students at the start of the school year.
with its students, since the act that violated the contract may also be a tort. We ruled thus in
PSBA vs. CA,34 from which we quote: In sum, the Court holds that the Complaint alleges sufficient causes of action against
respondents, and that it should not have been summarily dismissed. Needless to say, the
"x x x A perusal of Article 2176 [of the Civil Code] shows that obligations arising from Court is not holding respondents liable for the acts complained of. That will have to be ruled
quasi-delicts or tort, also known as extra-contractual obligations, arise only between upon in due course by the court a quo.
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 WHEREFORE, the Petition is hereby GRANTED, and the assailed Orders REVERSED. The
when there obtains a contract. In Air France v. Carrascoso (124 Phil. 722), the trial court is DIRECTED to reinstate the Complaint and, with all deliberate speed, to continue
private respondent was awarded damages for his unwarranted expulsion from a first- the proceedings in Civil Case No. U-7541. No costs.
8
SO ORDERED.

9
EN BANC the accident occurred were difficult to discern especially to a person emerging from a lighted
car.
G.R. No. L-12191 October 14, 1918
The explanation of the presence of a sack of melons on the platform where the plaintiff
JOSE CANGCO, plaintiff-appellant, alighted is found in the fact that it was the customary season for harvesting these melons and
vs. a large lot had been brought to the station for the shipment to the market. They were
MANILA RAILROAD CO., defendant-appellee. contained in numerous sacks which has been piled on the platform in a row one upon
another. The testimony shows that this row of sacks was so placed of melons and the edge
Ramon Sotelo for appellant. of platform; and it is clear that the fall of the plaintiff was due to the fact that his foot alighted
Kincaid & Hartigan for appellee. upon one of these melons at the moment he stepped upon the platform. His statement that
he failed to see these objects in the darkness is readily to be credited.

The plaintiff was drawn from under the car in an unconscious condition, and it appeared that
the injuries which he had received were very serious. He was therefore brought at once to a
certain hospital in the city of Manila where an examination was made and his arm was
FISHER, J.: amputated. The result of this operation was unsatisfactory, and the plaintiff was then carried
to another hospital where a second operation was performed and the member was again
At the time of the occurrence which gave rise to this litigation the plaintiff, Jose Cangco, was amputated higher up near the shoulder. It appears in evidence that the plaintiff expended the
in the employment of Manila Railroad Company in the capacity of clerk, with a monthly wage sum of P790.25 in the form of medical and surgical fees and for other expenses in connection
of P25. He lived in the pueblo of San Mateo, in the province of Rizal, which is located upon with the process of his curation.
the line of the defendant railroad company; and in coming daily by train to the company's
office in the city of Manila where he worked, he used a pass, supplied by the company, which Upon August 31, 1915, he instituted this proceeding in the Court of First Instance of the city
entitled him to ride upon the company's trains free of charge. Upon the occasion in question, of Manila to recover damages of the defendant company, founding his action upon the
January 20, 1915, the plaintiff arose from his seat in the second class-car where he was negligence of the servants and employees of the defendant in placing the sacks of melons
riding and, making, his exit through the door, took his position upon the steps of the coach, upon the platform and leaving them so placed as to be a menace to the security of passenger
seizing the upright guardrail with his right hand for support. alighting from the company's trains. At the hearing in the Court of First Instance, his Honor,
the trial judge, found the facts substantially as above stated, and drew therefrom his
On the side of the train where passengers alight at the San Mateo station there is a cement conclusion to the effect that, although negligence was attributable to the defendant by reason
platform which begins to rise with a moderate gradient some distance away from the of the fact that the sacks of melons were so placed as to obstruct passengers passing to and
company's office and extends along in front of said office for a distance sufficient to cover the from the cars, nevertheless, the plaintiff himself had failed to use due caution in alighting from
length of several coaches. As the train slowed down another passenger, named Emilio the coach and was therefore precluded form recovering. Judgment was accordingly entered
Zuñiga, also an employee of the railroad company, got off the same car, alighting safely at in favor of the defendant company, and the plaintiff appealed.
the point where the platform begins to rise from the level of the ground. When the train had
proceeded a little farther the plaintiff Jose Cangco stepped off also, but one or both of his feet It can not be doubted that the employees of the railroad company were guilty of negligence in
came in contact with a sack of watermelons with the result that his feet slipped from under piling these sacks on the platform in the manner above stated; that their presence caused the
him and he fell violently on the platform. His body at once rolled from the platform and was plaintiff to fall as he alighted from the train; and that they therefore constituted an effective
drawn under the moving car, where his right arm was badly crushed and lacerated. It appears legal cause of the injuries sustained by the plaintiff. It necessarily follows that the defendant
that after the plaintiff alighted from the train the car moved forward possibly six meters before company is liable for the damage thereby occasioned unless recovery is barred by the
it came to a full stop. plaintiff's own contributory negligence. In resolving this problem it is necessary that each of
these conceptions of liability, to-wit, the primary responsibility of the defendant company and
The accident occurred between 7 and 8 o'clock on a dark night, and as the railroad station the contributory negligence of the plaintiff should be separately examined.
was lighted dimly by a single light located some distance away, objects on the platform where

10
It is important to note that the foundation of the legal liability of the defendant is the contract scope of his employment causes the injury. The liability of the master is personal and direct.
of carriage, and that the obligation to respond for the damage which plaintiff has suffered But, if the master has not been guilty of any negligence whatever in the selection and
arises, if at all, from the breach of that contract by reason of the failure of defendant to direction of the servant, he is not liable for the acts of the latter, whatever done within the
exercise due care in its performance. That is to say, its liability is direct and immediate, scope of his employment or not, if the damage done by the servant does not amount to a
differing essentially, in legal viewpoint from that presumptive responsibility for the negligence breach of the contract between the master and the person injured.
of its servants, imposed by article 1903 of the Civil Code, which can be rebutted by proof of
the exercise of due care in their selection and supervision. Article 1903 of the Civil Code is It is not accurate to say that proof of diligence and care in the selection and control of the
not applicable to obligations arising ex contractu, but only to extra-contractual obligations — servant relieves the master from liability for the latter's acts — on the contrary, that proof
or to use the technical form of expression, that article relates only to culpa aquiliana and not shows that the responsibility has never existed. As Manresa says (vol. 8, p. 68) the liability
to culpa contractual. arising from extra-contractual culpa is always based upon a voluntary act or omission which,
without willful intent, but by mere negligence or inattention, has caused damage to another. A
Manresa (vol. 8, p. 67) in his commentaries upon articles 1103 and 1104 of the Civil Code, master who exercises all possible care in the selection of his servant, taking into
clearly points out this distinction, which was also recognized by this Court in its decision in consideration the qualifications they should possess for the discharge of the duties which it is
the case of Rakes vs. Atlantic, Gulf and Pacific Co. (7 Phil. rep., 359). In commenting upon his purpose to confide to them, and directs them with equal diligence, thereby performs his
article 1093 Manresa clearly points out the difference between "culpa, substantive and duty to third persons to whom he is bound by no contractual ties, and he incurs no liability
independent, which of itself constitutes the source of an obligation between persons not whatever if, by reason of the negligence of his servants, even within the scope of their
formerly connected by any legal tie" and culpa considered as an accident in the performance employment, such third person suffer damage. True it is that under article 1903 of the Civil
of an obligation already existing . . . ." Code the law creates a presumption that he has been negligent in the selection or direction of
his servant, but the presumption is rebuttable and yield to proof of due care and diligence in
In the Rakes case (supra) the decision of this court was made to rest squarely upon the this respect.
proposition that article 1903 of the Civil Code is not applicable to acts of negligence which
constitute the breach of a contract. The supreme court of Porto Rico, in interpreting identical provisions, as found in the Porto
Rico Code, has held that these articles are applicable to cases of extra-
Upon this point the Court said: contractual culpa exclusively. (Carmona vs. Cuesta, 20 Porto Rico Reports, 215.)

The acts to which these articles [1902 and 1903 of the Civil Code] are applicable are This distinction was again made patent by this Court in its decision in the case of
understood to be those not growing out of pre-existing duties of the parties to one Bahia vs. Litonjua and Leynes, (30 Phil. rep., 624), which was an action brought upon the
another. But where relations already formed give rise to duties, whether springing theory of the extra-contractual liability of the defendant to respond for the damage caused by
from contract or quasi-contract, then breaches of those duties are subject to article the carelessness of his employee while acting within the scope of his employment. The
1101, 1103, and 1104 of the same code. (Rakes vs. Atlantic, Gulf and Pacific Co., 7 Court, after citing the last paragraph of article 1903 of the Civil Code, said:
Phil. Rep., 359 at 365.)
From this article two things are apparent: (1) That when an injury is caused by the
This distinction is of the utmost importance. The liability, which, under the Spanish law, is, in negligence of a servant or employee there instantly arises a presumption of law that
certain cases imposed upon employers with respect to damages occasioned by the there was negligence on the part of the master or employer either in selection of the
negligence of their employees to persons to whom they are not bound by contract, is not servant or employee, or in supervision over him after the selection, or both; and (2)
based, as in the English Common Law, upon the principle of respondeat superior — if it were, that that presumption is juris tantum and not juris et de jure, and consequently, may
the master would be liable in every case and unconditionally — but upon the principle be rebutted. It follows necessarily that if the employer shows to the satisfaction of the
announced in article 1902 of the Civil Code, which imposes upon all persons who by their court that in selection and supervision he has exercised the care and diligence of a
fault or negligence, do injury to another, the obligation of making good the damage caused. good father of a family, the presumption is overcome and he is relieved from liability.
One who places a powerful automobile in the hands of a servant whom he knows to be
ignorant of the method of managing such a vehicle, is himself guilty of an act of negligence This theory bases the responsibility of the master ultimately on his own negligence
which makes him liable for all the consequences of his imprudence. The obligation to make and not on that of his servant. This is the notable peculiarity of the Spanish law of
good the damage arises at the very instant that the unskillful servant, while acting within the negligence. It is, of course, in striking contrast to the American doctrine that, in
11
relations with strangers, the negligence of the servant in conclusively the negligence control of persons who, by reason of their status, occupy a position of dependency with
of the master. respect to the person made liable for their conduct.

The opinion there expressed by this Court, to the effect that in case of extra- The position of a natural or juridical person who has undertaken by contract to render service
contractual culpa based upon negligence, it is necessary that there shall have been some to another, is wholly different from that to which article 1903 relates. When the sources of the
fault attributable to the defendant personally, and that the last paragraph of article 1903 obligation upon which plaintiff's cause of action depends is a negligent act or omission, the
merely establishes a rebuttable presumption, is in complete accord with the authoritative burden of proof rests upon plaintiff to prove the negligence — if he does not his action fails.
opinion of Manresa, who says (vol. 12, p. 611) that the liability created by article 1903 is But when the facts averred show a contractual undertaking by defendant for the benefit of
imposed by reason of the breach of the duties inherent in the special relations of authority or plaintiff, and it is alleged that plaintiff has failed or refused to perform the contract, it is not
superiority existing between the person called upon to repair the damage and the one who, necessary for plaintiff to specify in his pleadings whether the breach of the contract is due to
by his act or omission, was the cause of it. willful fault or to negligence on the part of the defendant, or of his servants or agents. Proof of
the contract and of its nonperformance is sufficient prima facie to warrant a recovery.
On the other hand, the liability of masters and employers for the negligent acts or omissions
of their servants or agents, when such acts or omissions cause damages which amount to As a general rule . . . it is logical that in case of extra-contractual culpa, a suing
the breach of a contact, is not based upon a mere presumption of the master's negligence in creditor should assume the burden of proof of its existence, as the only fact upon
their selection or control, and proof of exercise of the utmost diligence and care in this regard which his action is based; while on the contrary, in a case of negligence which
does not relieve the master of his liability for the breach of his contract. presupposes the existence of a contractual obligation, if the creditor shows that it
exists and that it has been broken, it is not necessary for him to prove negligence.
Every legal obligation must of necessity be extra-contractual or contractual. Extra-contractual (Manresa, vol. 8, p. 71 [1907 ed., p. 76]).
obligation has its source in the breach or omission of those mutual duties which civilized
society imposes upon it members, or which arise from these relations, other than contractual, As it is not necessary for the plaintiff in an action for the breach of a contract to show that the
of certain members of society to others, generally embraced in the concept of status. The breach was due to the negligent conduct of defendant or of his servants, even though such
legal rights of each member of society constitute the measure of the corresponding legal be in fact the actual cause of the breach, it is obvious that proof on the part of defendant that
duties, mainly negative in character, which the existence of those rights imposes upon all the negligence or omission of his servants or agents caused the breach of the contract would
other members of society. The breach of these general duties whether due to willful intent or not constitute a defense to the action. If the negligence of servants or agents could be
to mere inattention, if productive of injury, give rise to an obligation to indemnify the injured invoked as a means of discharging the liability arising from contract, the anomalous result
party. The fundamental distinction between obligations of this character and those which would be that person acting through the medium of agents or servants in the performance of
arise from contract, rests upon the fact that in cases of non-contractual obligation it is the their contracts, would be in a better position than those acting in person. If one delivers a
wrongful or negligent act or omission itself which creates the vinculum juris, whereas in valuable watch to watchmaker who contract to repair it, and the bailee, by a personal
contractual relations the vinculum exists independently of the breach of the voluntary duty negligent act causes its destruction, he is unquestionably liable. Would it be logical to free
assumed by the parties when entering into the contractual relation. him from his liability for the breach of his contract, which involves the duty to exercise due
care in the preservation of the watch, if he shows that it was his servant whose negligence
With respect to extra-contractual obligation arising from negligence, whether of act or caused the injury? If such a theory could be accepted, juridical persons would enjoy
omission, it is competent for the legislature to elect — and our Legislature has so elected — practically complete immunity from damages arising from the breach of their contracts if
whom such an obligation is imposed is morally culpable, or, on the contrary, for reasons of caused by negligent acts as such juridical persons can of necessity only act through agents
public policy, to extend that liability, without regard to the lack of moral culpability, so as to or servants, and it would no doubt be true in most instances that reasonable care had been
include responsibility for the negligence of those person who acts or mission are imputable, taken in selection and direction of such servants. If one delivers securities to a banking
by a legal fiction, to others who are in a position to exercise an absolute or limited control corporation as collateral, and they are lost by reason of the negligence of some clerk
over them. The legislature which adopted our Civil Code has elected to limit extra-contractual employed by the bank, would it be just and reasonable to permit the bank to relieve itself of
liability — with certain well-defined exceptions — to cases in which moral culpability can be liability for the breach of its contract to return the collateral upon the payment of the debt by
directly imputed to the persons to be charged. This moral responsibility may consist in having proving that due care had been exercised in the selection and direction of the clerk?
failed to exercise due care in the selection and control of one's agents or servants, or in the

12
This distinction between culpa aquiliana, as the source of an obligation, and culpa In the case of Yamada vs. Manila Railroad Co. and Bachrach Garage & Taxicab Co. (33 Phil.
contractual as a mere incident to the performance of a contract has frequently been Rep., 8), it is true that the court rested its conclusion as to the liability of the defendant upon
recognized by the supreme court of Spain. (Sentencias of June 27, 1894; November 20, article 1903, although the facts disclosed that the injury complaint of by plaintiff constituted a
1896; and December 13, 1896.) In the decisions of November 20, 1896, it appeared that breach of the duty to him arising out of the contract of transportation. The express ground of
plaintiff's action arose ex contractu, but that defendant sought to avail himself of the the decision in this case was that article 1903, in dealing with the liability of a master for the
provisions of article 1902 of the Civil Code as a defense. The Spanish Supreme Court negligent acts of his servants "makes the distinction between private individuals and public
rejected defendant's contention, saying: enterprise;" that as to the latter the law creates a rebuttable presumption of negligence in the
selection or direction of servants; and that in the particular case the presumption of
These are not cases of injury caused, without any pre-existing obligation, by fault or negligence had not been overcome.
negligence, such as those to which article 1902 of the Civil Code relates, but of
damages caused by the defendant's failure to carry out the undertakings imposed by It is evident, therefore that in its decision Yamada case, the court treated plaintiff's action as
the contracts . . . . though founded in tort rather than as based upon the breach of the contract of carriage, and
an examination of the pleadings and of the briefs shows that the questions of law were in fact
A brief review of the earlier decision of this court involving the liability of employers for discussed upon this theory. Viewed from the standpoint of the defendant the practical result
damage done by the negligent acts of their servants will show that in no case has the court must have been the same in any event. The proof disclosed beyond doubt that the
ever decided that the negligence of the defendant's servants has been held to constitute a defendant's servant was grossly negligent and that his negligence was the proximate cause
defense to an action for damages for breach of contract. of plaintiff's injury. It also affirmatively appeared that defendant had been guilty of negligence
in its failure to exercise proper discretion in the direction of the servant. Defendant was,
In the case of Johnson vs. David (5 Phil. Rep., 663), the court held that the owner of a therefore, liable for the injury suffered by plaintiff, whether the breach of the duty were to be
regarded as constituting culpa aquiliana or culpa contractual. As Manresa points out (vol. 8,
carriage was not liable for the damages caused by the negligence of his driver. In that case
pp. 29 and 69) whether negligence occurs an incident in the course of the performance of a
the court commented on the fact that no evidence had been adduced in the trial court that the
contractual undertaking or its itself the source of an extra-contractual undertaking obligation,
defendant had been negligent in the employment of the driver, or that he had any knowledge
its essential characteristics are identical. There is always an act or omission productive of
of his lack of skill or carefulness.
damage due to carelessness or inattention on the part of the defendant. Consequently, when
the court holds that a defendant is liable in damages for having failed to exercise due care,
In the case of Baer Senior & Co's Successors vs. Compania Maritima (6 Phil. Rep., 215), the either directly, or in failing to exercise proper care in the selection and direction of his
plaintiff sued the defendant for damages caused by the loss of a barge belonging to plaintiff servants, the practical result is identical in either case. Therefore, it follows that it is not to be
which was allowed to get adrift by the negligence of defendant's servants in the course of the inferred, because the court held in the Yamada case that defendant was liable for the
performance of a contract of towage. The court held, citing Manresa (vol. 8, pp. 29, 69) that if damages negligently caused by its servants to a person to whom it was bound by contract,
the "obligation of the defendant grew out of a contract made between it and the plaintiff . . . and made reference to the fact that the defendant was negligent in the selection and control
we do not think that the provisions of articles 1902 and 1903 are applicable to the case." of its servants, that in such a case the court would have held that it would have been a good
defense to the action, if presented squarely upon the theory of the breach of the contract, for
In the case of Chapman vs. Underwood (27 Phil. Rep., 374), plaintiff sued the defendant to defendant to have proved that it did in fact exercise care in the selection and control of the
recover damages for the personal injuries caused by the negligence of defendant's chauffeur servant.
while driving defendant's automobile in which defendant was riding at the time. The court
found that the damages were caused by the negligence of the driver of the automobile, but The true explanation of such cases is to be found by directing the attention to the relative
held that the master was not liable, although he was present at the time, saying: spheres of contractual and extra-contractual obligations. The field of non- contractual
obligation is much more broader than that of contractual obligations, comprising, as it does,
. . . unless the negligent acts of the driver are continued for a length of time as to give the whole extent of juridical human relations. These two fields, figuratively speaking,
the owner a reasonable opportunity to observe them and to direct the driver to desist concentric; that is to say, the mere fact that a person is bound to another by contract does not
therefrom. . . . The act complained of must be continued in the presence of the owner relieve him from extra-contractual liability to such person. When such a contractual relation
for such length of time that the owner by his acquiescence, makes the driver's acts exists the obligor may break the contract under such conditions that the same act which
his own. constitutes the source of an extra-contractual obligation had no contract existed between the
parties.
13
The contract of defendant to transport plaintiff carried with it, by implication, the duty to carry a person of average prudence that to get off the train under the conditions then existing was
him in safety and to provide safe means of entering and leaving its trains (civil code, article dangerous? If so, the plaintiff should have desisted from alighting; and his failure so to desist
1258). That duty, being contractual, was direct and immediate, and its non-performance was contributory negligence.1awph!l.net
could not be excused by proof that the fault was morally imputable to defendant's servants.
As the case now before us presents itself, the only fact from which a conclusion can be
The railroad company's defense involves the assumption that even granting that the negligent drawn to the effect that plaintiff was guilty of contributory negligence is that he stepped off the
conduct of its servants in placing an obstruction upon the platform was a breach of its car without being able to discern clearly the condition of the platform and while the train was
contractual obligation to maintain safe means of approaching and leaving its trains, the direct yet slowly moving. In considering the situation thus presented, it should not be overlooked
and proximate cause of the injury suffered by plaintiff was his own contributory negligence in that the plaintiff was, as we find, ignorant of the fact that the obstruction which was caused by
failing to wait until the train had come to a complete stop before alighting. Under the doctrine the sacks of melons piled on the platform existed; and as the defendant was bound by reason
of comparative negligence announced in the Rakes case (supra), if the accident was caused of its duty as a public carrier to afford to its passengers facilities for safe egress from its
by plaintiff's own negligence, no liability is imposed upon defendant's negligence and trains, the plaintiff had a right to assume, in the absence of some circumstance to warn him to
plaintiff's negligence merely contributed to his injury, the damages should be apportioned. It the contrary, that the platform was clear. The place, as we have already stated, was dark, or
is, therefore, important to ascertain if defendant was in fact guilty of negligence. dimly lighted, and this also is proof of a failure upon the part of the defendant in the
performance of a duty owing by it to the plaintiff; for if it were by any possibility concede that it
It may be admitted that had plaintiff waited until the train had come to a full stop before had right to pile these sacks in the path of alighting passengers, the placing of them
alighting, the particular injury suffered by him could not have occurred. Defendant contends, adequately so that their presence would be revealed.
and cites many authorities in support of the contention, that it is negligence per se for a
passenger to alight from a moving train. We are not disposed to subscribe to this doctrine in As pertinent to the question of contributory negligence on the part of the plaintiff in this case
its absolute form. We are of the opinion that this proposition is too badly stated and is at the following circumstances are to be noted: The company's platform was constructed upon a
variance with the experience of every-day life. In this particular instance, that the train was level higher than that of the roadbed and the surrounding ground. The distance from the
barely moving when plaintiff alighted is shown conclusively by the fact that it came to stop steps of the car to the spot where the alighting passenger would place his feet on the
within six meters from the place where he stepped from it. Thousands of person alight from platform was thus reduced, thereby decreasing the risk incident to stepping off. The nature of
trains under these conditions every day of the year, and sustain no injury where the company the platform, constructed as it was of cement material, also assured to the passenger a
has kept its platform free from dangerous obstructions. There is no reason to believe that stable and even surface on which to alight. Furthermore, the plaintiff was possessed of the
plaintiff would have suffered any injury whatever in alighting as he did had it not been for vigor and agility of young manhood, and it was by no means so risky for him to get off while
defendant's negligent failure to perform its duty to provide a safe alighting place. the train was yet moving as the same act would have been in an aged or feeble person. In
determining the question of contributory negligence in performing such act — that is to say,
We are of the opinion that the correct doctrine relating to this subject is that expressed in whether the passenger acted prudently or recklessly — the age, sex, and physical condition
Thompson's work on Negligence (vol. 3, sec. 3010) as follows: of the passenger are circumstances necessarily affecting the safety of the passenger, and
should be considered. Women, it has been observed, as a general rule are less capable than
men of alighting with safety under such conditions, as the nature of their wearing apparel
The test by which to determine whether the passenger has been guilty of negligence
obstructs the free movement of the limbs. Again, it may be noted that the place was perfectly
in attempting to alight from a moving railway train, is that of ordinary or reasonable
familiar to the plaintiff as it was his daily custom to get on and of the train at this station.
care. It is to be considered whether an ordinarily prudent person, of the age, sex and
condition of the passenger, would have acted as the passenger acted under the There could, therefore, be no uncertainty in his mind with regard either to the length of the
circumstances disclosed by the evidence. This care has been defined to be, not the step which he was required to take or the character of the platform where he was alighting.
Our conclusion is that the conduct of the plaintiff in undertaking to alight while the train was
care which may or should be used by the prudent man generally, but the care which
yet slightly under way was not characterized by imprudence and that therefore he was not
a man of ordinary prudence would use under similar circumstances, to avoid injury."
guilty of contributory negligence.
(Thompson, Commentaries on Negligence, vol. 3, sec. 3010.)

Or, it we prefer to adopt the mode of exposition used by this court in Picart vs. Smith (37 Phil. The evidence shows that the plaintiff, at the time of the accident, was earning P25 a month
as a copyist clerk, and that the injuries he has suffered have permanently disabled him from
rep., 809), we may say that the test is this; Was there anything in the circumstances
continuing that employment. Defendant has not shown that any other gainful occupation is
surrounding the plaintiff at the time he alighted from the train which would have admonished
14
open to plaintiff. His expectancy of life, according to the standard mortality tables, is
approximately thirty-three years. We are of the opinion that a fair compensation for the
damage suffered by him for his permanent disability is the sum of P2,500, and that he is also
entitled to recover of defendant the additional sum of P790.25 for medical attention, hospital
services, and other incidental expenditures connected with the treatment of his injuries.

The decision of lower court is reversed, and judgment is hereby rendered plaintiff for the sum
of P3,290.25, and for the costs of both instances. So ordered

15
EN BANC done at first. The boiler was gain lifted; but as it was being brought up, the bolt at the end of
the derrick book broke, and again the boiler fell.
G.R. No. L-11318 October 26, 1918
The crane was repaired and the boiler discharged, but it was found to be so badly damaged
THE MANILA RAILROAD CO., plaintiff-appellant, that it had to be reshipped to England where it was rebuilt, and afterwards was returned to
vs. Manila. The Railroad Company's damage by reason of the cost of repairs, expenses and loss
LA COMPAÑIA TRANSATLANTICA, defendant-appellee. and of the use of the boiler proved to be P23,343.29; and as to the amount of the damage so
THE ATLANTIC GULF & PACIFIC CO., defendant-appellant. resulting there is practically no dispute. To recover these damages the present action was
instituted by the Railroad Company against the Steamship Company. the latter caused the
William A. Kincaid & Thomas L. Hartigan for plaintiff-appellant. Atlantic Company to be brought in as a codefendant, and insisted that whatever liability
Lawrence, Ross & Block for defendant-appellant Atlantic, Gulf & Pacific Co. existed should be fixed upon the Atlantic Company as an independent contractor who had
Gilbert, Cohn & Fisher for defendant-appellee Compañia Transatlantica. undertaken to discharge the boilers and had become responsible for such damage as had
been done.

The judge of the Court of First Instance gave judgment in favor of the plaintiff against the
Atlantic Company, but the absolved the Steamship Company from the complaint. The plaintiff
has appealed from the action of the court in failing to give judgment against the Steamship
STREET, J.: company, while the Atlantic company has appealed from the judgment against it.

In March 1914, the steamship Alicante, belonging to the Compañia Transatlantica de The mishap was undoubtedly due, as the lower court found, to the negligence of one Leyden,
Barcelona, arrived at Manila with two locomotive boilers aboard, the property of The Manila the foreman in charge; and we may add that the evidence tends to show that his negligence
Railroad Company. The equipment of the ship for discharging heavy cargo was not was of a type which may without exaggeration be denominated gross. The sling was in the
sufficiently strong to handle these boilers, and it was therefore necessary for the Steamship first place improperly adjusted, and the attention of Leyden was at once called to this by the
Company to procure assistance in the port of Manila. man in charge of the stevedores. Nevertheless he proceeded and, instead of lowering the
boiler when it was seen that it could not readily pass through the hatch, he attempted to force
The Atlantic, Gulf and Pacific Company (hereafter called the Atlantic Company) was it through; and the ship's tackle was brought into use to assist in this maneuver. The second
accordingly employed by the Steamship Company, as having probably the best equipment fall was, it appears, caused by the weakening of the bolt at the head of the derrick boom, due
for this purpose of any contracting company in the city. The service to be performed by the to the shock incident to the first accident. This defect was possibly such as not to be patent to
Atlantic Company consisted in bringing it s floating crane alongside the Alicante, lifting the external observation but we are of the opinion that a person of sufficient skill to be trusted
boilers our of the ship's hold, and transferring them to a barge which would be placed ready with the operation of machinery of this character should be trusted with the operation of
to receive them. machinery of this character should have known that the crane had possibly been weakened
by the jar received in the first accident. The foreman was therefore guilty of negligence in
Upon the arrival of the Alicante, the Atlantic company sent out its crane in charge of one attempting to hoist the boiler the second time under the conditions that had thus developed. It
Leyden. In preparing to hoist the first boiler the sling was unfortunately adjusted near the should be noted that the operation was at all its states entirely under Leyden's control; and,
middle of the boiler, and it was thus raised nearly in an horizontal position. The boiler was too although in the first lift he utilized the ship's tackle to aid in hoisting the boiler, everything was
long to clear the hatch in this position, and after one end of the boiler had emerged on one done under his immediate supervision. There is no evidence tending to show that the first fall
side of the hatch, the other still remained below on the other side. When the boiler had been of the boiler might have been due to any hidden defect in the lifting apparatus; and if it had
gotten into this position and was being hoisted still further, a river near the head of the boiler not been for the additional strain caused by one end of the boiler catching under the hatch,
was caught under the edge of the hatch. The weight on the crane was thus increased by a the operation would doubtless have been accomplished without difficulty. The accident is
strain estimated at fifteen tons with the result that the cable of the sling parted and the boiler therefore to be attributed to the failure of Leyden to exercise the degree of care which an
fell to the bottom of the ship's hold. The sling was again adjusted to the boiler but instead of ordinarily competent and prudent person would have exhibited under the circumstances
being placed near the middle it was now slung nearer one of the ends, as should have been which then confronted him. This conclusion of fact cannot be refuted; and, indeed, no attempt
is here made by the appellant to reverse this finding of the trial court.

16
Three questions are involved in the case, namely: (1) Is the steamship company liable to the render the service, all risk incident to the discharge of the boilers was assumed by the
plaintiff by reason of having delivered the boiler in question in a damaged condition? (2) Is steamship company, and secondly, that the atlantic company should be absolved under the
the atlantic company liable to be made to respond to the steamship company for the amount last paragraph of article 1903 of the civil code, inasmuch as it had used due care in the
the latter may be required to pay to the plaintiff for the damage done? Is the Atlantic company selection of the employee whose negligent act caused the damage in question.
directly liable to the plaintiff, as the trial court held?
At the hearing in first instance the Atlantic Company introduced four witnesses to prove that
It will be observed that the contractual relation existed between the railroad company and the at the time said company agreed to lift the boilers out of the Alicante, as upon other later
steamship company; and the duties of the latter with respect to the carrying and delivery of occasions, the steamship company not be responsible for damage. The vice-president of the
the boilers are to be discovered by considering the terms and legal effect of that contract. A atlantic company testified that hew as present upon the occasion when the agent of the
contractual relation also existed between the Steamship company and the atlantic company; Steamship company made arrangements for the discharge of the boilers and he heard the
and the duties owing by the latter to the former with respect to the lifting and the transferring conversation between the president and said agent. According to this witness the substance
of the boiler are likewise to be discovered by considering the terms and legal effect of the of the agreement was that, while the Atlantic Company would use all due care in getting the
contract between these parties. On the other hand, no contractual relation existed directly boilers out, no responsibility was assumed for damage done either to ship or cargo. The
between the Railroad Company and the Atlantic Company. intermediary who acted as agent for the Steamship Company in arranging for the
performance of this service stoutly denied that any such terms were announced by the
We are all agreed, that, under the contract for transportation from England to Manila, the officials or anybody else connected with the Atlantic Company at any time while the
Steamship company is liable to the plaintiff for the injury done to the boiler while it was being arrangements were pending.
discharged from the ship. The obligation to transport the boiler necessarily involves the duty
to convey and deliver it in a proper condition according to its nature, and conformably with In the conflict of the evidence, we recognize that, by a preponderance of the evidence, some
good faith, custom, and the law (art. 1258, Civ. Code). The contract to convey import the duty reservation or other was made as to the responsibility of the Atlantic Company; was made to
to convey and deliver safely and securely with reference to the degree of care which, under the responsibility of the atlantic company and though the agent who acted on behalf of the
the circumstances, are required by law and custom applicable to the case. The duty to carry steamship company possibly never communicated this reservation to his principal, the latter
and to carry safely is all one. should nevertheless be held bound thereby. It thus becomes necessary to discover what the
exact terms of this supposed reservation were.
Such being the contract of the Steamship Company, said company is necessarily liable,
under articles 1103 and 1104 of the Civil Code, for the consequences of the omission of the We think that we must put aside at once the words of studies precision with which the
care necessary to the proper performance of this obligation. The contact to transport and president of the Atlantic company could exclude the possibility of any liability attaching to his
deliver at the port of Manila a locomotive boiler, which was received by it in proper condition, company, though we may accept his statement as showing that the excepted risk
is not complied with the delivery at the port of destination of a mass of iron the utility of which contemplated breakage of the lifting equipment. There is undoubtedly a larger element of
had been destroyed. truth in the more reasonable statement by the vice-president of the company. According to
this witness the contract combined two features, namely, an undertaking on the part of the
Nor does the Steamship Company escape liability by reason of the fact that it employed a Atlantic Company to use all due care, combined with a reservation concerning the company's
competent independent contractor to discharge the boilers. The law applicable to this feature liability for damage.
of the case will be more fully discussed further on in this opinion. At this point we merely
observe that in the performance of this service the Atlantic company, and it has never yet The Atlantic Company offered in evidence, a number of letters which had been written by it at
been held that the failure to comply with a contractual obligation can be excused by showing different times, extending over a period of years, in response to inquiries made by other firms
that such delinquency was due to the negligence of one to whom the contracting party had and person in Manila concerning the terms upon which the Atlantic Company was not
committed the performance of the contract. accustomed to assume the risk incident to such work and required the parties for whom the
service might be rendered either to carry the risk or insure against it. One such letter, dated
Coming to the question of the liability of the Atlantic Company to respond to the Steamship nearly four years prior to the occurrence such letter, dated nearly four years prior to the
Company for the damages which the latter will be compelled to pay to the plaintiff, we occurrences which gave rise to this lawsuit, was addressed to the Compañia Transatlantica
observe that the defense of the Atlantic company comprises two contentions, to-wit, first, that de Barcelona one of the defendants in this case. It was stated in this communication that the
by the terms of the engagement in accordance with which the Atlantic company agreed to company's derrick would be subject to inspection prior to making the lift but that the Atlantic

17
Company would not assume responsibility for damage that might occur either to ship or cargo expressly declared by law that liability arising from negligence is demandable in the fulfillment
from any whatsoever. The steamship company rejected the services of the Atlantic company of all kinds of obligations (art. 1103, Civil Code). Every contract for the presentation of service
in that instance as being too onerous. therefore has annexed to it, as an inseparable implicit obligation, the duty to exercise due
care in the accomplishment of the work; and no reservation whereby the person rendering
The letters directed to this parties, it may observed, would not, generally speaking, be the services seeks to escape from the consequences of a violation of this obligations can
admissible as against the plaintiff for the purpose of proving that a similar reservation was viewed with favor.
inserted in the contract with it on this occasion; but if knowledge of such custom is brought
home to the steamship company, the fact that such reservation was commonly made is of Contracts against liability for negligence are not favored by law. In some instances,
some probative force. Reference to a number of these letters will show that no particular such as common carriers, they are prohibited as against public policy. In all cases
formula was used by the Atlantic Company in defining its exemption, and the tenor of these such contracts should be construed strictly, with every intendment against the party
various communications differs materially. We think, however, that some of the letters are of seeking its protection. (Crew vs. Bradstreet Company, 134 Pa. St., 161; 7 L. R. A.,
value as an aid in interpreting the reservation which the Atlantic Company may have intended 661; 19 Am. St. Rep., 681.)
to make. We therefore quote from some of these letters as follows:
The strictness with which contracts conferring such an unusual exemption are construed is
We will use our best endeavors to carry out the work successfully and will ask you to illustrated in Bryan vs. Eastern & Australian S. S. Co. (28 Phil. Rep., 310). The decision in
inspect our plant but we wish it distinctly understood that we cannot assume that case is not precisely applicable to the case at bar, since the court was there applying the
responsibility for damage which may occur . . . while the lift is being made. (To Rear law of a foreign jurisdiction, and the question at issue involved a doctrine peculiar to contracts
Admiral, U.S.N., Oct. 4, 1909.) of common carriers. Nevertheless the case is instructive as illustrating the universal attitude
of courts upon the right of a contracting party to stipulate against the consequences of his
Our quotation is based on the understanding that we assume no responsibility from own negligence. It there appeared that the plaintiff had purchased from the defendant
any accident which may happen during our operations. We always insert this clause company a ticket for the transportation of himself and baggage from Hongkong to Manila By
as precautionary measure, but we have never had to avail ourselves of it as yet and the terms of the contract printed in legible type upon the back of the ticket it was provided that
do not expect to now. (To "El Varadero de Manila," Nov. 1, 1913.) the company could not hold itself responsible for any loss or damage to luggage, under any
circumstances whatsoever, unless it had been paid for as freight. It was held that this
limitation upon the liability of the defendant company did not relieve it from liability of the
As is customary in these cases, we will use all precaution as necessary to handle the
defendant company for negligence of its servants by which the baggage of the passenger
gun in a proper manner. Our equipment has been tested and will be again, before
was lost. Said the court: Ordinarily this language would seem to be broad enough to cover
making the lift, but we do not assume any responsibility for damage to the gun ship,
every possible contingency, including the negligent act of the defendant's servants. To so
or cargo. (To Warner, Barnes & Co., June 7, 1909.)
hold, however, would run counter to the established law of England and the United States on
that subject. The court then quoted the following proposition from the decision of the King's
The idea expressed in these letters is, we think entirely consonant with the interpretation Bench Division in Price & Co. vs. Union Lighterage Co. ([1903], 1 K. B. D., 750, 754):
which the vice-president of the company placed upon the contract which was made with the
steamship company upon this occasion, that is, the company recognized its duty to exercise
"An exemption in general words not expressly relating to negligence, even though the
due supervisory care; and the exemption from liability, whatever may have been its precise
words had reference to disasters which might result from some inherent hidden defect in the words are wide enough to include loss by negligence or default of carriers' servants'
lifting apparatus or other unforeseen occurrence not directly attributable to negligence of the must be construed as limiting the liability of the carrier as assurer, and not as
relieving from the duty of the exercising reasonable skill and care."
company in the lifting operations. Neither party could have supposed for a moment that it was
intended to absolve the Atlantic Company from its duty to use due care in the work.
Even admitting that, generally speaking, a person may stipulate against liability for the
It is not pretended that negligence on the part of the Atlantic Company or its employees was consequences of negligence, at least in those cases where the negligence is not gross or
expressly included in the excepted risk, and we are of the opinion that the contract should not willful, the contract conferring such exemption must be so clear as to leave no room for the
operation of the ordinary rules of liability consecrated by experience and sanctioned by the
be understood as covering such an exemption. It is a rudimentary principle that the contractor
express provisions of law.
is responsible for the work executed by persons whom he employees in its performance, and
this expressed in the Civil Code in the form of a positive rule of law (art. 1596). It is also
18
If the exemption should be understood in the scene that counsel for the Atlantic Company the Code relative to contractual obligations; and if he falls short of complete performance by
now insists it should bear, that is, as an absolute exemption from all responsibility for reason of his own negligence or that of any person to whom he may commit the work, he is
negligence, it is evident that the agreement was a most inequitable and unfair one, and liable for the damages resulting therefrom. What was there said is also applicable with
hence it is one that the steamship company can not be lightly assumed to have made. reference to the liability of the Atlantic Company upon its contract with the Steamship
Understood in that sense it is the equivalent of licensing the Atlantic Company to perform its Company, and the same need not be here repeated. It is desirable, however, in this
tasks in any manner and fashion that it might please, and to hold it harmless from the connection, to bring out somewhat more fully the distinction between negligence in the
consequences. performance of a contractual obligation (culpa contractual) and neligence considered as an
independent source of obligation between parties not previously bound (culpa aquiliana).
It is true that, in these days insurance can usually be obtained in the principal ports of
commerce by parties circumstanced as was the steamship company in the case now before This distinction is well established in legal jurisprudence and is fully recognized in the
us. But the best insurance against disasters of this kind is found in the exercise of due care; provisions of the Civil Code. As illustrative of this, we quote the following passage from the
and the chief incentive to the exercise of care is a feeling of responsibility on the part of him opinion of this Court in the well-known case of Rakes vs. Atlantic, Gulf & Pacific Co. (7 Phil.
who undertakes the work. Naturally the courts are little inclined to aid tin the efforts of Rep., 359, 365), and in this quotation we reproduce the first paragraph of here presenting a
contractors to evade this responsibility. more correct English version of said passage.

There may have been in the minds of the officials of the Atlantic Company an idea that the The acts to which these articles are applicable are understood to be those not
promise to use due care in the lifting operations was not accompanied by a legal obligation, growing out of preexisting duties of the parties to one another. But where relations
such promise being intended merely for its moral effect as an assurance to the steamship already formed give arise to duties, whether springing form contract or quasi-
company that the latter might rely upon competence and diligence of the employees of the contract, then breaches of those duties are subject to articles 1101, 1103, and 1104
Atlantic Company to accomplish the work in a proper way. The contract can not be permitted of the same code. A typical application of this distinction may be found in the
to operate in this one-sided manner. The two features of the engagement, namely, the consequences of a railway accident due to defective machinery supplied by the
promise to use due care and the exemption from liability for damage should be so construed employer. His liability to his employee would arise out of the contract for passage,
as to give some legal effect to both. The result is, as already indicated, that the Atlantic while that of the injured by-stander would originate in the negligent act itself. This
Company was bound by its undertaking to use due care and that he exemption was intended distinction is thus clearly set forth by Manresa in his commentary on article 1093:
to cover accidents use to hidden defects in the apparatus or other unforeseeable occurrences
not having their origin in the immediate personal negligence of the party in charge of the "We see with reference to such obligations, that culpa, or negligence, may be
operations. understood in two different senses, either
as culpa, substantive and independent, which of itself constitutes the source
We now proceed to consider the contention that the Atlantic Company under the last of an obligation between two person not formerly bound by any other
paragraph of article 1903 of the Civil Code, which declares that the liability there referred to obligation; or as an incident in the performance of an obligation which
shall cease when the persons mentioned therein prove that they employed all the diligence of already existed, and which increases the liability arising from the already
a good father of a family to avoid the damage. In this connection the conclusion of fact must existing obligation."
be conceded in favor of the Atlantic Company that it had used proper care in the selection of
Leyden and that , so far as the company was aware, he was a person to whom might Justice Tracey, the author of the opinion from which we have quoted, proceeds to observe
properly be committed the task of discharging the boilers. The answer to the contention, that Manresa, in commenting on articles 1101 and 1104, has described these two species of
however is the obligation of the Atlantic Company was created by contract, and article 1903 negligence as contractual and extra-contractual, the latter being the culpa aquiliana of the
is not applicable to negligence arising in the course of the performance of a contractual Roman law. "This terminology is unreservedly accepted by Sanchez Roman (Derecho Civil,
obligation. Article 1903 is exclusively concerned with cases where the negligence arises in fourth section, chapter XI, article II, No. 12), and the principle stated is supported by
the absence of agreement. decisions of the supreme court of Spain,. among them those of November 29, 11896
(80 Jurisprudencia Civil, No. 151), and June 27, 1894 (75 Jurisprudencia Civil, No. 182.)"
In discussing the liability of the Steamship Company to the plaintiff Railroad Company we
have already shown that a party is bound to the full performance of his contractual The principle that negligence in the performance of a contract is not governed by article of the
engagements under articles 1101 et seq. of the Civil Code, and other special provisions of Civil Code but rather by article 1104 of the same Code was directly applied by this court in
19
the case of Baer Senior & Co.'s successors vs. Compañía Maritima (6 Phil. Rep., 215); and paragraph reproduced above is of the opinion that negligence, considered a substantive and
the same idea has been impliedly if not expressly recognized in other cases (N. T. Hashim & independent source of liability, does not include cases where the parties are previously
Co. vs. Rocha & Co., 18 Phil. Rep., 315; Tan Chiong Sian vs. Inchausti & Co., 22 Phil. Rep., bound by any other obligation. Again, it is instructive in this connection to refer to the contents
152). of article 1103 of the Civil Code, where it is demandable in the fulfillment of all kinds of
obligations. These words evidently comprehend both forms of positive obligations, whether
What has been said suffices in our opinion to demonstrate that the Atlantic Company is liable arising from express contract or from implied contract (quasi contract).
to the Steamship Company for the damages brought upon the latter by the failure of the
Atlantic company to use due care in discharging the boiler, regardless of the fact that the In this connection it is instructive to recall celebrate case of Coggs vs. Bernard (2 Ld. Raym,
damage was caused by the negligence of an employee who was qualified for the work and 909), decided in the court of the King's Bench of England in the year of 1803. The action was
who had been chosen by the Atlantic Company with due care. brought by the owner of certain casks of brandy to recover damages from a person who had
undertaken to transport them from one place to another. It was alleged that in so doing the
This brings us to the last question here to be answered, which is, Can the Atlantic Company defendant so negligently and improvidently put then down that one of the casks was staved
be held directly liable to the Railroad Company? In other words, can the judgement entered in and the brandy lost. The complaint did not allege that the defendant was a common carrier or
the trial court directly in favor of the plaintiff against the Atlantic Company be sustained? To that he was to be paid for his services. It was therefore considered that the compliant did not
answer this it is necessary to examine carefully the legal relations existing between the state facts sufficient to support an action for breach of any express contract. This made it
Atlantic Company and the Railroad Company with reference to this affair; and we shall for a necessary for the court to go back to fundamental principles and to place liability on the
moment ignore the existence of the contract between the steamship company and the ground of a violation of the legal duty incident to the mere fact of carriage. Said Powell, J.:
atlantic company, to which the railroad company was not a party. "An action indeed will not lie for not doing the thing, for want of a sufficient consideration; but
yet if the bailee will take the goods into his custody, he shall be answerable for them; for the
Having regard then to the bare fact that the Atlantic Company undertook to remove the boiler taking of the goods into his custody is his own act." S9 Gould, J.: ". . . any man that
undertakes to carry goods in liable to an action, be he a common carrier or whatever he is, if
from the ship's hold and for this purpose took the property into its power and control, there
through his neglect they are lost or come to any damage: . . . . " Behind these expressions
arose a duty to the owner to use due care in the performance of that service and to avoid
was an unbroken line of ancient English precedents holding persons liable for damage
damaging was obviously in existence before the negligent act may, if we still ignore the
inflicted by reason of a misfeasance in carrying out an undertaking. The principle determined
existence of the express contract, be considered as an act done in violation of this duty.
by the court in the case cited is expressed in the syllabus in these words: 'If a man
undertakes to carry goods safely and securely, he is responsible for any damage they may
The duty thus to use due care is an implied obligation, of a quasi contractual nature, since it sustain in the carriage through his neglect, though he was not a common carrier and was to
is created by implication of liability with which we are here confronted is somewhat similar to have nothing for the carriage." Though not stated in so many words, this decision recognizes
that which is revealed in the case of the depositary, or commodatary, whose legal duty with that from the mere fact that a person takes the property of another into his possession and
respect to the property committed to their care is defined by law even in the absence of control there arises an obligation in the nature of an assumpsit that he will use due care with
express contract; and it can not be doubted that a person who takes possession of the respect thereto. This must be considered a principle of universal jurisprudence, for it is
property of another for the purpose of moving or conveying it from one place to another, or for consonant with justice and common sense and as we have already seen harmonizes with the
the purpose of performing any other service in connection therewith (locatio operis faciendi), doctrine above deduced from the provisions of the Civil Code.
owes to the owner a positive duty to refrain from damaging it, to the same extent as if an
agreement for the performance of such service had been expressly made with the owner.
The obligation as if an agreement made with the owner. The obligation here is really a The conclusion must therefore be that if there had been no contract of any sort between the
species of contract re, and it has its source and explanation in vital fact, that the active party Atlantic company and the Steamship Company, an action could have been maintained by the
Railroad Company, as owner, against the Atlantic Company to recover the damages
has taken upon himself to do something with or to the property and has taken it into his
sustained by the former. Such damages would have been demandable under article 1103 of
power and control for the purpose of performing such service. (Compare art. 1889, Civil
the Civil Code and the action would not have been subject to the qualification expressed in
Code.)
the last paragraph of article 1903.
In the passage which we have already from the decision in the Rakes case this Court
The circumstance that a contract was made between the Atlantic Company and the
recognized the fact that the violation of a quasi-contractual duty is subject to articles 1101,
Steamship company introduces, however, an important, and in our opinion controlling factor
1103, 1104 of the Civil Code, and not within the purview of article 1903. Manresa also, in the
20
into this branch of the case. It cannot be denied that the Steamship company has possession Arellano, C.J., Torres, Araullo and Avanceña, JJ., concur.
of this boiler in the capacity of carrier and that as such it was authorized to make a contract
with Atlantic Company to discharge the same from the ship. Indeed, it appears in evidence
that even before the contract of affreightment was made the Railroad Company was informed
that it would necessary for steamship company to procure the services of some contractor in
the port of Manila to handle the discharge, as the ship's tackle was inadequate to handle
heavy cargo. It is therefore to be assumed that the Railroad Company had in fact assented to
the employment of a contractor to perform this service.

Now, it cannot be admitted that a person who contract to do a service like that rendered by
the Atlantic company in this case incurs a double responsibility upon entering upon
performance, namely, a responsibility to the party with whom he contracted, and another
entirely different responsibility to the owner, based on an implied contract. The two liabilities
can not in our opinion coexist. It is a general rule that an implied conract never arises where
an express contract has been made.

If double responsibility existed in such case as this, it would result that a person who had
limited his liability by express stipulation might find himself liable to the owner without regard
to the limitation which he had seen fit to impose by contract. There appears to be no
possibility of reconciling the conflict that would be developed in attempting to give effect to
those inconsistent liabilities. The contract which was in fact made, in our opinion, determine
not only the character and extent of the liability of the Atlantic company but also the person or
entity by whom the obligation is eligible. It is of course quite clear that if the Atlantic company
had refused to carry out its agreement to discharge the cargo, the plaintiff could have
enforced specific performance and could not have recovered damages for non-performance.
(Art. 1257, Civil Code; Donaldson, Sim & Co. vs. Smith, Bell & Co., 2 Phil. Rep., 766; Uy Tam
and Uy Yet vs. Leonard, 30 Phil. Rep., 471.) In view of the preceding discussion it is equally
obvious that, for lack of privity with the contract, the Railroad Company can have no right of
action to recover damages from the Atlantic Company for the wrongful act which constituted
the violation of said contract. The rights of the plaintiff can only be made effective through
the Compañia Trasatlantica de Barcelona with whom the contract of affreightment was made.

The judgment entered in the Court of First Instance must, therefore be reversed not only with
respect to the judgment entered in favor of the plaintiff directly against the Atlantic company
but also with respect to the absolution of the steamship company and the further failure of the
court to enter judgment in favor of the latter against the Atlantic Company. The Compañía
Transatlantic de Barcelona should be and is hereby adjudged to pay to the Manila Railroad
Company the sum of twenty nine thousand three hundred forty three pesos and twenty nine
centavos (P23,343.29) with interest from May 11, 1914, until paid; and when this judgment is
satisfied, the Compañia Transatlantic de Barcelona is declared to be entitled to recover the
same amount from the Atlantic & Pacific Gulf Company, against whom judgment is to this
end hereby rendered in favor of the Compañia Transatlantica de Barcelona. No express
adjudication of costs of either instance will be made. So ordered.

21
Rep ubl i c of t h e P hi li ppin e s T his c as e or ig i n at ed f r om an ac t io n f or d am ages f i l ed wi th t h e RT C b y
Sup r em e Cou rt S po us es Lu z S a n Pe dro a n d Ke n ic h iro T om in ag a (r es po n de n t s ) a ga i ns t
M anila
S po us es E rl i n da B at a l an d Fr a nk B a ta l ( pe t it i on ers ) f or f a i l ur e t o ex erc is e d ue
c are a n d d i l i ge nc e b y th e l at ter i n th e pr ep a rat i on of a s u r ve y wh i c h f orm ed
FIR ST D I VI S IO N
th e b as is f or th e c o ns t ruc t i on of a p er im eter f enc e t h at wa s l at er d i s c o ver e d
to h a v e e nc ro ac he d o n a r ig ht of wa y.
S PO US E S ERL IN D A B AT AL AN D F R AN K G .R . No. 16 4 60 1
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P et it ion e rs ,
T he f ac ts of t h e c as e, as f ou n d b y t h e RT C a nd s um m ari ze d b y t he CA ,
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are as f o l l o ws :
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Y N AR E S - S AN T I AG O , T om ina ga ( K en ic h ir o) a re t h e o wn ers of a p arc e l of l a nd , o n
AU ST RI A- M ART I N EZ , wh ic h th e ir h o us e was er ec t e d, d es c r i be d as L ot 15 0 9- C- 3 wi t h
C AL LE JO , S R. a nd an ar e a of 70 0 s qu a re m ete rs s it ua t ed i n B ara n g a y M a l is ,
S PO US E S LUZ S AN P ED RO AN D CH ICO - N AZ AR IO , J J. G u ig u i nt o, Bu l ac an . S a id pr o per t y was ac q u ire d b y th em f rom
KE NI CH IR O T O M IN AG A, on e G u i l lerm o Narc is o as e v id e nc ed b y a Bi l i ha n n g Ba h ag i n g
Re spo nd ent s . Lu p a d at ed Marc h 1 8, 19 9 2.

P rom ulg at ed: T he s po us es Lu z a n d K en ic h iro t h en c o nt rac te d th e s er v ic es of


Fra nk B at a l ( Fra nk ) who r ep res e nt ed h im s elf as a s ur v e yo r t o
S ept emb e r 2 7, 2 0 06 c on d uc t a s ur v e y of t he ir l o t f or th e s um of P 6 ,5 0 0. 00 . As L u z
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x an d Ke n ic hir o wa nt e d t o e nc los e t h eir pr o per t y, th e y a g ai n
proc ur e d th e s er v ic es of Fr a nk f or a n a dd i ti o na l f e e
of P1 ,5 0 0. 0 0 i n or der to d e term i ne t h e ex ac t b o un d ar ies of t he
D E C I S I O N s am e b y wh ic h th e y wi l l bas e th e c o ns tr uc t i o n of t he ir p er im eter
f enc e.

AU ST RI A- M ART I N EZ , J .: Co ns eq u en t l y, Fr ank p lac e d c o nc re te m on u m ents m ark ed P. S.


on a l l c or ners of th e l ot wh ic h we re us e d as g ui d es b y Lu z a n d
K en ic h iro i n e rec t in g a c onc r e te f e nc e m eas u ri ng a bo ut e i gh t (8)
B ef or e t he Co ur t is a P et it i o n f or R e v i e w on C ert i or ar i un d er R u le 45 f eet in he i gh t a nd c os t t hem P2 5 0, 00 0 .0 0t o b u il d .
of t he R u les of C o ur t qu es ti o n in g th e D ec is i on [ 1 ] da t ed S e pt em ber 2 9, 2 00 3 S om etim e i n 19 9 6, a c om p la i nt wa s l o dg e d a g ai ns t L u z a n d
pr om u lg a te d b y t h e C our t of A p p ea ls ( C A) i n C A - G .R . C V N o. 71 75 8 , wh ic h K en ic h iro bef or e t he b ara n g a y on t he gro u n d th at t h e nor t her n
por t io n of t h e ir f e nc e a ll e ge d l y e nc ro ac he d up o n a des i g na te d
af f ir m ed t he Dec is i on da t ed Ma y 3 1 , 20 0 4 of th e R e gi o na l T ri a l C o u rt, Br anc h ri gh t- of - wa y k n o wn as Lo t 1 50 9 - D. U po n v er if ic at i on wi th
7, M a l ol os , B u lac a n ( R T C) ; an d t he C A R es ol ut i on [ 2 ] da t ed J ul y 1 9 , 20 0 4. an o th er s ur ve yo r , L u z an d K en ic h iro f o u n d t h at th e ir wa l l i n de e d
o ver l a pp e d t h e a dj o i n i ng l ot .T he y a l s o d is c o v ere d th at i t was no t

22
Fra nk b ut h is wif e Er l in d a Ba ta l ( Er l i nd a) , wh o is a l ic e ns e d
ge o de t ic e ng i n eer .

Dur i n g t he ir c o nf r o nt a t i ons b ef or e t h e b ar a ng a y, Fra nk adm i tt ed Re g ard i n g t he is s u e whe t her th e pe t it i o ners f a il e d t o ex erc is e du e c are
th at h e m a de a m is tak e an d of f er ed t o s h are i n t h e ex p e ns es f or
th e d em ol it i o n a nd r e c ons tr uc t i on of t he qu es t i on e d p ort i on of an d d i l ig e nc e in t h e c o nd uc t of t he r es u r ve y wh ic h e v en tu a l l y c a us ed dam ag e
Lu z a nd K e n ic h ir os f e nc e . H e h o we v er f a i le d t o de l i v er o n h is to t h e r es p o n de nts , t h e RT C he l d:
wor d, t h us th e f i l in g of t he ins t an t s u it .
As ag a i ns t th e ba re an d s e lf - s er v i ng d e n ia ls of t he
In t h ei r def ens e, th e d ef e nd a nts - s p ous es Fra nk a nd Er l in d a [p et i t io n ers ] , t h e t es t i m on y of [r es p o nd e nt ] Lu z S a n Pe dr o t h at
B at a l s u bm it te d t h at F r a nk ne v er r epr es en t ed h im s elf t o be a s he c o ns truc t ed t h e enc r o ac hi n g p erim et er f enc e i n q ues t io n
l ic e ns ed g eo d et ic e n g i ne er . I t was Er li n da wh o s u p er v is e d h er us in g as gu i d e t h e c yc l on e c o nc re te m onu m ents m ark ed P. S .
hus b an ds wor k [ an d t] ha t t he h o us e an d l o t o f p la i nt if f s , Lu z a n d th at wer e i ns t a ll e d b y [ p et i ti o ne r] Fr a nk B a ta l a n d h is s u r ve y
K en ic h iro , wer e a lr ea d y f e nc ed e v e n bef ore t he y we re te am , is m ore c r e d ib l e . As t es tif ie d to b y [re s po n de n t] L u z S a n
c on tr ac t ed to d o a r es ur ve y of th e s am e a n d t he l a yi n g o u t of P edr o , s h e pr oc e e de d wi th t he c o ns tr uc t i o n of th e per im et er
th e c o nc re t e m on um ents . T h e s po us es F ra nk an d Er l i n da a ls o f enc e i n q u es t i on up o n as s ur anc e g i v en b y [ pe t it i on er ]
ref ut e d t h e s p o us es Lu zs a nd K e nic h ir os a l l eg a ti o n of Fra nk B at a l th a t s he c ou l d a lr ea d y d o s o as th er e wer e a lr ea d y
ne g l ig e nc e a n d a ver r e d t h at t he s u bj ec t c om p la i nt wa s ins t it ut e d c onc r e te m on um ents p lac e d on t h e b ou n da ri es of h er pr o p ert y
to h ar as s th em . [ 3 ] x x x.

x x x x

O n M a y 31 , 2 00 1 , t h e RT C r en d er ed i ts D e c is io n , t h e d is p os it i v e p ort i o n of It do es no t m att er t h at th e loc a ti o n p l a n d at e d M a y 3 ,


19 9 2 ( Ex h ib i t B) was l at er a ppr o v ed b y t he DE NR , as it is qu i te
wh ic h r e ads :
ap p ar en t t ha t t he m is t ak e c om m itt e d by [ p et i ti o ne r]
W HEREFO R E, j u dgm e nt is h ere b y r e nd er e d i n f a v or of Fra nk B at a l p ert a ins t o t he wro n g l oc a t io n s of t he c onc re te
p la i nt if f s a n d ag a i ns t def e n d an ts , as f o l lo ws : m onum ents t h at h e p l ac e d o n th e s u bj ec t p rop er t y an d wh ic h
wer e us e d or r e li e d u p on b y t he [ res p on d en t s ] i n p ut t in g u p t h e
f enc e i n qu es ti o n. S uc h m is t ak e o r ne g l ig e nc e ha p pe n ed
1. O r der i n g th e d ef e nd a nts [ p et it i o ners ] t o p a y to p la i nt if f s
bec a us e q u it e o b v i o us l y t he i ns t a l la t io n of s a id c o nc re t e
[res p on d en ts ] th e s um of P6 , 50 0. 0 0 as r ef un d f or t h ei r
prof es s i o n al f e es b y r eas o n of t h e erro n eo u s re l oc a t io n s ur v e y m onum ents was w it h ou t th e n ee d ed s u per v is i o n of
of t h e pro p er t y i n qu es ti o n; [res p on d en t] Er l in d a B at a l, t he o n e t ru l y q u a lif ie d t o s up er v is e
th e s am e. x x x x
2. O r der i n g th e d ef e nd an ts t o pa y t o p l a in t if f s t he s um of T hre e
Hu n dre d T ho us a n d P e s os ( P 3 00 ,0 0 0. 0 0) as ac t u al dam ag es ; x x x x[5]

3. O r der i n g th e d ef e nd a nts t o p a y to p l ai n tif f s the s um


of P5 0, 0 00 . 00 as at tor ne ys f e es ; a n d T he RT C f o u nd t ha t i nd e ed t he p er im eter f enc e c o ns tr uc t e d b y t he

4. O r der i n g t he def en da n ts t o p a y t o p l a in t i f f s th e c o s ts of t his res p o n de nts e nc r o ac he d on th e r ig ht - o f - wa y in q ues t io n; t ha t th e


s u it . pre p o nd er anc e of e v i d enc e s up p orts t h e f i n d in g t h at t h e e nc r oac hm ent was
SO O R D ER E D. [ 4 ] c aus e d b y t h e n e g li g e nc e of t h e pe t it i on ers ; th at , i n p ar t ic u l ar, re s po n de n ts

23
II.
c ons tr uc t ed t he f e nc e bas e d o n t he c o nc re t e c yc l o ne m on um en ts t h at wer e
i ns t a ll e d b y p et i t io n er Fr a nk B at a l a nd af ter he ga v e h is as s ur anc e t ha t t he y T he Co ur t of A pp e a ls err ed in r u li n g i n f a vo r of R es p o nd e nts b y
prem is i ng its Dec is i on o n [ a] m is a p pre he ns i on of f ac ts
c an p roc e ed ac c or d i ng l y; th at t h e ne g l ig enc e i n t he i ns ta l l at i on of th e am oun t i ng to gr a ve a bus e of d is c r et i on . . . wh i c h is a ls o a
m onum ents was du e t o t he f ac t th a t p et i ti o ner Er l i nd a Ba ta l , t he o n e tr u l y gro u n d f or a P et it i o n f or Re v i e w. [ 7 ]

qu a l if i ed , d id n ot pr o v i de t he n e ed e d s up er v is io n o v er t h e work ; a nd , l as t l y,
th at t h e tes t im on ies of t he pe t it i on er s o n t he who l e we re no t c r e d ib l e. T he pe t it i o n m us t f ai l .

T he p et i ti o ne r s a pp e a l ed t o t h e C A . O n S e p tem ber 2 9, 2 0 0 3, t h e CA T he p et i ti o ne rs i ns is t t ha t t he re ha d b e e n n o err or i n t h eir r es ur ve y, bu t ra t her ,


r en d er ed its D ec is io n af f ir m in g th e RT C d ec i s i on in its e nt ir e t y. [ 6 ] th e err or oc c u rre d i n res p o n de nts f e nc i n g; th at t he p rox im at e c a us e of th e
In c o nc urr in g wi th t h e f in d in gs of th e RT C , t h e C A i n a dd i ti o n h e ld t ha t dam ag e h a d b e en r es p on d en ts o wn ne g l ig e nc e s uc h th a t th e f e nc in g was do n e
th e p et i ti o ners c an n ot c l aim t ha t t he er r or of t he c ons truc t io n of th e f enc e was un i l at er a ll y a n d s o l e l y b y t h em wi th o ut t h e p ri or a ppr o v a l a nd s u p e rv is io n of
du e t o t h e u n il a ter a l ac t of r es p o nd e nts i n b u i l di n g t he s am e wi th o ut t h e ir th e pe t it i on ers . A nd t o j us t if y t h e ir c as e , th e pe t it i on ers arg u e t h at th e
c ons e nt , s i nc e t h e f or m er g a v e th e ir wo r d th at t h e arr an g em en t of t h e c our ts a q uo m is a p pre he n de d t he f ac ts . Ac c ord i n g l y, th e y as k t hi s C our t to
m onum ents of t i t le ac c ur a t el y r ef l ec t e d t he b ou n da ri es of t he l ot ; a nd th at , as re v ie w f in d i ngs of f ac t .
a r e s u l t, th e nor t her n por t io n of t he f e nc e ha d t o be d em ol is he d an d re b u i lt i n
or d er t o c orr ec t t h e er r or . A re v i e w of t he f ac tu a l f i nd i ngs of t h e C A an d th e RT C ar e m at t ers n ot
ord i n ar il y r e v ie wa b l e i n a p et i t io n f or r e v i e w on c ert i ora ri . [ 8 ] W ell- e s ta b l is h e d
He nc e, t he ins t an t P et it i o n as s ig n in g t h e f o l l o wi ng erro rs : is t he r u le th a t f ac t ua l f i nd i ngs of th e tr i a l c our t a n d t he CA ar e en t it l ed to

I. gre a t we i g ht a n d r es pec t [ 9 ] a n d wi l l no t b e d is t ur be d o n a p pe a l s a v e i n
ex c e p ti o na l c irc um s ta nc es , [ 1 0 ] no n e of wh ic h ob t ai ns i n t h e pres e nt c as e . T h is
T he C our t of A pp e als er r ed i n r u l i ng f o r t he R es po n d en ts a n d
bas i n g its dec is i on [ o] n th e f o ll o wi n g j ur is p r ud e nc e : Co urt m us t s tr es s t h a t th e f i nd i n gs of f ac t of t h e C A ar e c o nc l us i v e o n t he
par t ies an d c a rr y e v e n m or e we i g ht wh en th es e c o inc i d e wi t h t he f ac tu a l
(a) [ A ] p ar t y, h a vi n g p er f or m ed af f irm at i v e ac ts up o n wh ic h
an o th er p er s on bas e d h is s u bs eq u en t ac ti o ns , c an n ot f in d in gs of th e tr i al c o urt , [ 1 1 ] as i n th is c as e .
th er eaf t er r ef ut e h is ac ts or re n eg e on t h e ef f ec ts of t he
s am e, to t he pr ej u dic e of t h e l at ter . ( P ur e z a vs . Co urt of
A pp e a ls , 2 9 0 SC R A 1 10) ; a nd T he C o urt wi l l n ot we i gh t he e v id e nc e a l l o v er a g a in u n les s th er e i s a

(b) F i nd i ngs of f ac t m ade b y t h e tr i a l c ou rt [ ar e] e nt i tl e d t o s ho wi n g th at t he f in d i ngs of t he l o wer c o urt are t ot a ll y d e v oi d of s up p ort or


gre a t we i g ht a nd r es p ec t . ( L o pe z v s . C our t of A pp e a ls , 32 2 are c le ar l y err on e ous s o as t o c o ns t i tu te s er i ous a b us e of dis c re t i on . [ 1 2 ] T h e
SC R A 6 86 ) .
pe t it i on ers f a i l ed to d e m ons tra t e t h is p o in t. O n t he c o ntr ar y, t he f i n d i ng of th e
24
c our ts a qu o t ha t t he d am ag e c a us ed to t h e r es p on d en ts was d u e to In th e pr es e n t c as e , i t is c le ar t ha t t h e p e ti t i o ners , i n c ar r yi n g ou t t h e ir
pe t it i on ers n e g l ig e nc e is s uf f ic i en t l y s u pp ort e d b y t he e v id e nc e on r ec or d . F or c on tr ac t ua l o b l ig at i o n s , f a i le d to ex erc is e th e r e qu is i te d i l ig e n c e in t he
th es e r eas o ns , t h e p et it i o ner 's c on t en t io ns b ear no im port . p lac em en t of t he m ark in gs f or th e c o nc re t e p er im eter f e nc e t ha t was l a ter
c ons tr uc t ed . T h e p l ac em ent of t h e m ark in gs h ad be e n d on e s o le l y b y
Cu l pa , or ne g l i ge nc e, m a y be u nd er s to o d i n t wo d if f er en t s ens es : e it h er pe t it i on er Fr ank B at a l wh o is no t a g e od e tic en g i ne er . It was l at er d is c o v er ed
as c u lp a a q ui l i a na , wh ic h is t h e wr o ngf ul or ne g l ig e nt ac t or om is s i on wh ic h th at i t was n o t h e b ut h is wif e, p et i ti o ne r E rl in d a B at a l, wh o is t h e l ic e ns ed
c r ea t es a v i nc u lu m jur i s a n d g i ves r is e to an ob l i ga t io n be t we en t w o p ers ons ge o de t ic en g in e er an d wh o is , th er ef or e, th e on e q ua l if i e d t o d o th e
no t f orm al l y b o u nd b y an y o t h e r o b l ig a ti o n, o r as c u lp a c on tr ac t ua l , wh ic h is work . P et i t io n er Fr ank B at a ls i ns ta l l at i on of t he c o nc re t e c yc l o n e m on um en ts
th e f a u lt or ne g l ig e nc e inc i d en t in t he p erf orm anc e of an o b li g at i on wh ic h ha d b e en d o ne wi th o u t t h e a de q ua t e s up er v is io n of h is wif e, Erl i nd a . As a
a lr e a d y ex is t e d, a nd wh ic h i nc r e as es th e li ab i l it y f rom s uc h a lre a d y ex is ti n g res u l t, t he p l ac em en t of th e m on um en ts d id n ot ac c ura t el y r ef l ec t th e
ob l i ga t io n . [ 1 3 ] C u l pa a qu i l i an a is g o v er n e d b y A r t ic l e 2 17 6 of t he Ci v i l Co d e d im ens io ns of th e lo t. T he res p on d en ts , u po n as s ur an c e g i ve n b y pe t it i on er
an d th e im m edi a te l y f o l lo wi n g Ar tic l es ; wh i l e c u lp a c on tr ac t ua l is g o v ern e d b y Fra nk B at a l th a t t he y c ou l d pr oc ee d wi t h t h e c o ns tr uc ti o n of t he p er im et er
Ar t ic l es 1 17 0 t o 1 17 4 of t h e s am e C o de . [ 1 4 ] f enc e b y r el yi n g o n t h e p ur por te d ac c u rac y of t he p l ac em ent of t h e
m onum ents , er ec t e d t he ir f enc e wh ic h t ur ne d ou t to e nc r o ac h o n a n adj ac en t
Art ic l es 1 17 0 a n d 1 17 3 pr o vi d e: eas em en t. Bec a us e of t h e e nc r o ac hm en t, t h e res p on d e nts ha d t o dem o lis h
an d rec o ns tr uc t t h e f e nc e an d, t h us , s uf f er e d d am ages .
ART . 1 17 0 . T hos e w ho i n t he p erf orm an c e of th e ir
ob l i ga t io ns a r e gu i lt y of f r a ud , n e g li g enc e , or d e la y, a n d th os e
wh o in a n y m a nn er c o ntr a v en e t h e t e nor th e reof , ar e li a b le f or T he Co ur t af f irm s an d ad o pts t h e f i n d i n gs of th e C A, t o wi t :
dam ag es .
Rec or ds s h o w t h at t h e s er v ic es of t h e [ pe t it i o ners ] Fra nk a n d
ART . 1 1 73 . T h e f a u lt o r n e gl i g enc e of t h e o bl i gor c ons is ts Er l in d a wer e i ni t ia l l y c on tr ac t ed t o s egr e ga t e L u z a n d Ke n ic h iros
pro p ert y f r om its adj o i n in g l ots . W hen th e [re s po n de n t] s p ous es
i n t h e om is s i o n of t ha t d i l ig e nc e wh ic h is r eq u ire d b y t he n at ur e
Lu z a nd K e n ic h ir o pl an n ed t o f enc e th e s egr e g at ed l ot , t h e y
of th e ob l i ga t io n an d c or r es p o nds wi t h t h e c i rc um s tanc es of th e
ag a i n c om m is s i on e d [ pe t it i on ers ] Fr a nk a nd Er l i n da t o c o nd uc t
pers o ns , of th e t im e a nd of th e p l ac e.W hen ne g l ig e nc e s h o ws
a r es ur v e y i n or de r to de t erm in e th e pr ec is e bo u nd ar i es of th e ir
ba d f a i th , t h e pr o v is i o ns of ar t ic l es 1 1 71 a n d 2 2 02 , par a gr ap h
2, s h a l l a pp l y. pro p ert y u p on wh ic h th e y wi l l b as e t h e c o ns tr uc t i o n of th e ir
f enc e. It was a ls o s h o wn t ha t in t h e c o urs e of th e r es ur v e y,
Fra nk c aus e d t he i ns t a ll a ti o n of m onum en ts of t it l e o n th e f o ur
If t he la w or c on tr ac t do es n ot s ta te t h e d i l i ge nc e wh ic h
(4) c or ners of Lu z a n d K en ic h iros pr o pe rt y a n d t h at h e i ns tr uc t e d
is t o b e o bs er ve d in th e p er f o r m anc e, th at w h ic h is ex p ec t ed of
th em to j us t f o l l o w t h e s am e i n bu i l d in g t he ir f enc e .
a g oo d f at he r of a f am i l y s h al l b e re q u ire d .
[P e ti t io n ers ] Fr ank a nd Er l in d a c an n ot th us v a l id l y c l a i m tha t th e
err or in th e c o ns tr uc t i o n of t h e nor t her n po rt i on of t h e f enc e was
du e t o th e s po us es L u z a n d K en ic h iros ac t o f b u il d i ng th e s am e
25
wi t ho ut t he ir c o ns en t. T his is c ons i d eri n g t h a t t he f orm er l e d t h e In c as e of f ra u d, ba d f a i t h, m al ic e or wa n to n at t it ud e , th e
l at ter t o be l i e ve t h e pur p or t e d ac c ur ac y of t h e r es ur ve y a n d ob l i go r s h a l l b e r es p ons i b le f or al l d am ages wh i c h m a y be
ex ac t nes s of t h e l ots bo u nd ar i es bas e d on th e m on um en ts of reas o n ab l y a ttr i bu t ed t o th e n o n - p erf orm anc e of th e o b l ig at i o n.
ti t le wh ic h th e y i ns t a l l ed .
It h as b e e n r ul e d t h at [ A] p ar t y, ha v i n g p er f orm ed af f irm at i v e
ac ts u p on wh ic h a no th er p er s o n b as ed his s ubs e qu e nt a c t i ons , T hus , th e Co ur t a gr ee s wi t h t h e C As af f irm a nc e of th e f i n d in gs of th e
c an n ot t h er e af t er r ef u t e h is ac t s or re n eg e o n th e ef f ec ts of t h e
s am e, t o t h e pr ej u dic e of t he l at te r. ( Pur e za v . C ou rt of A p pe a ls , RT C o n t he m att er of dam ag e s , to wi t:
29 0 S CR A 11 0)
G o in g n o w t o t he c l a im s f or dam a ges , E n gr. A rno l d M art i n
T he f or eg o i ng c l e ar l y s up p or ts t he f i nd i n gs of t he RT C t h at t he tes t if i ed o n h is c om pu ta t io n an d es t im at e ( E x h ib i ts G a n d G - 1)
s po us es B at a l c om m itt ed a m is t ak e i n t h e c o nd uc t of t h e ir th at t h e to ta l c os t f or th e d em ol it i on an d r e c ons tr uc t i on of t he
bus i n es s th a t l e d to t he enc r o ac hm ent of p la i nt if f s - a pp e l le es per im et er f e nc e i n q ues t io n wo u l d be i n th e to t a l am o un t
f enc e o n th e a dj o i n in g a ll e y - l ot . As a r es ul t, t he n ort h er n p or t io n of P4 2 8, 16 3 .9 0 , a nd t h is was n o t a t a l l d is p ut ed b y t h e
ha [ d] t o b e t or n d o wn an d r e b u i lt in ord er t o c orr ec t t h e err or i n def en d an ts , wh os e c ou ns e l wa i v ed c r os s - ex am i na t io n . T h is
its or i g in a l c ons tr uc t i on . T h e def en d an ts - a pp e l la n ts c a n n ot b e es t im at e is pr ac t ic a l l y d o u b l e th e am ou n t of t he c os t of
ex c us e d f r om t h e ef f ec ts of t he ir ac t i o ns i n t he s ur v e y of c ons tr uc t i ng s ai d f e nc e as t es t if i e d to b y p la i nt if f L u z S a n P e dro
p la i nt if f s - a pp e l le es l ot . as s he was t o ld t ha t it i s m uc h c os tl i er t o dem o l is h a n d
rec o ns truc t a f e nc e t ha n t o s im p l y er ec t o ne bec a us e of t h e
W e ther ef or e c onc ur w it h t he f i nd i ngs of t he RT C h o l di n g ad d ed ex p e ns e i n vo l v ed i n te ar i ng it do wn an d h a ul i n g i ts
def en d an ts - ap p el l a nts l i ab l e f or d am ag es i n th e c as e at de br is . O n th e o th er ha n d, s a i d p l ai n tif f s t at e d t h at t h e ir on
bar . F in d in gs of f ac t m ade b y t h e t ri a l c our t is e nt i tl e d t o gr e at dec or at i v e gr i l ls of t h e f e nc e, wh ic h is re- us ab l e, c os t
we i gh t a n d r es p ec t . ( Lo p e z v . C o urt of A pp e a ls , 32 2 SC R A her P 50 ,0 0 0. 0 0, a n d i t is o n l y pr op er t o d ed uc t s a id am o un t f rom
68 6) [ 1 5 ] th e t ot a l c os t of r ec o ns tr uc t i n g t he f e nc e i n q u es t i on . A t t he
s am e t im e, s om e f i g ur es i n t h e s a i d es tim at e a p p ear to be q ui t e
ex c es s i v e, s uc h as th e es t im at ed c os t f or d e m oli ti o n wh ic h wa s
qu o te d at P2 5 ,0 0 0. 00 i n a d d it i on t o t h e am ou n t of ex c a v a t io n
B ei n g g ui l t y of a b r e ac h of th e ir c o ntr ac t, p et i ti o ne rs are li a b le f or pr ic e d at P3 0, 0 00 . 00 an d th e c os t of h au l i n g of s c r ap m at er ia ls
at P1 0, 0 00 . 00 . T h e c o urt be l i e ves th at th e s um of P3 0 0, 0 00 .0 0
dam ag es s uf f er e d b y t he r es p o nd e nts in ac c ord a nc e wi t h Ar tic l es 11 7 0 a nd
f or t h e d em ol it i o n a nd rec o ns tr uc ti o n of th e f e nc e in qu es ti o n
22 0 1 of t h e C i vi l C o de , [ 1 6 ] wh ic h s t a te : wo u ld b e r e as o n ab l e c ons i d er in g t ha t t h e o ri gi n a l c os t f o r i ts
c ons tr uc t i on was o n l y a b o u t P 20 0 ,0 0 0. 00 , a nd c ons i de ri n g
Art . 1 17 0. T h os e wh o i n t he p erf orm a n c e of th e ir f urth er t h at i ts ir o n gr i l ls ar e r e - us ab l e.
ob l i ga t io ns ar e gu i lt y of f r au d, n e g li g enc e , or de l a y an d th os e
wh o in a n y m an ne r c o ntr a v en e th e t e n or t h ere of ar e l i ab l e f or T he p l ai n tif f s ar e l ik e wis e e n ti t le d t o r ec o v er a tt or ne ys
dam ag es f ees c o ns i d er in g t h a t t he y we r e c om pe l le d b y t h e d ef e nd a nts t o
res o rt t o c o urt ac t io n i n or der t o pr o tec t th e ir ri g hts a n d i nt er es t ,
Art . 2 2 01 . I n c o ntr ac t s a n d q u as i - c o ntr ac ts , t he dam a ges as def e n da n ts , p art ic u lar l y d ef e nd a nt F ra n k Ba ta l , f a i le d a nd
f or whic h th e ob l i g or wh o ac t e d i n g oo d f a i t h is li a b le s h a ll b e ref us ed r e pe at e d l y to e ve n a tt e nd th e c o nf ro n ta t io n of
th os e t ha t ar e th e na tur a l a n d pr o b ab l e c o ns e q ue nc es of t h e c onc i l i at i on m ee t in gs arr an g ed be t we en h im a n d t he p la i nt if f s
bre ac h of t he o b l ig a ti o n, a n d wh ic h t h e par t ie s h a ve f or es e e n or b y th e b ar an g ay a ut h or it i es c o nc er n ed , a nd t o h o nor his
c ou l d h a v e r eas o na b l y f or es ee n at t h e t im e th e o b l i ga t io n was prom is e t o h el p in s h ou l d er in g t he c os t of rec o ns truc t in g t h e
c ons t it ut e d. f enc e i n qu es ti o n.

26
O n t he ot her ha n d, t h er e is n o l e ga l or f ac t ua l b as es f or
th e c la im of t h e p l a in tif f s f or m or al or ex e m plar y d am ag es as
th er e was no s h o wi n g at a l l t h at d ef e nd a nts ac t e d wi th m a l ic e
or i n b ad f a it h .

In a l on g l in e of c as es , we h a v e c o ns is t en t l y
ru le d th a t in t he a bs enc e of a wr on gf u l a c t or
om is s i o n or of f r au d o r b a d f ai t h, m ora l d am ag es
c an n ot b e a wa r d e d. ( R & B Sur et y I ns u ra n c e C o.
v. In te r m ed ia te Co ur t of A pp e als , 1 2 9 SC R A
73 6 ; G u it a v . C o ur t of A pp e a ls , 13 9 S CR A 5 7 6). [ 1 7 ]

W HEREFO R E, th e i ns t a nt pe t it i on is D EN I ED an d the as s a i le d
Dec is i on a n d R es o l ut i on of t he C o ur t of A p p ea ls ar e AF FI RM ED .

Cos ts a ga i ns t p e ti t io n er s .
SO O R D ER E D .

27
started bathing at around 5:00 p.m. At around 7:00 p.m., the hotel’s swimming pool attendant
informed them that the swimming pool area was about to be closed. The two subsequently
Republic of the Philippines proceeded to the shower room adjacent to the swimming pool to take a shower and dress up.
SUPREME COURT However, when they came out of the bathroom, the entire swimming pool area was already
Manila pitch black and there was no longer any person around but the two of them. They carefully
walked towards the main door leading to the hotel but, to their surprise, the door was locked. 9
SECOND DIVISION
Petitioner and Delia waited for 10 more minutes near the door hoping someone would come
G.R. No. 180440 December 5, 2012 to their rescue but they waited in vain. Delia became anxious about their situation so
petitioner began to walk around to look for a house phone. Delia followed petitioner. After
some time, petitioner saw a phone behind the lifeguard’s counter. While slowly walking
DR. GENEVIEVE L. HUANG, Petitioner, towards the phone, a hard and heavy object, which later turned out to be the folding wooden
vs. counter top, fell on petitioner’s head that knocked her down almost unconscious.10
PHILIPPINE HOTELIERS, INC., DUSIT THANI PUBLIC CO., LTD. And FIRST LEPANTO
TAISHO INSURANCE CORPORATION, Respondents.
Delia immediately got hold of the house phone and notified the hotel telephone operator of
the incident. Not long after, the hotel staff arrived at the main entrance door of the swimming
DECISION pool area but it took them at least 20 to 30 minutes to get inside. When the door was finally
opened, three hotel chambermaids assisted petitioner by placing an ice pack and applying
PEREZ, J.: some ointment on her head. After petitioner had slightly recovered, she requested to be
assisted to the hotel’s coffee shop to have some rest. Petitioner demanded the services of
For this Court’s resolution is a Petition for Review on Certiorari under Rule 45 of the Rules of the hotel physician.11
Court, assailing the Decision1 of the Court of Appeals in CA-G.R. CV No. 87065 dated 9
August 2007, affirming the Decision2 of Branch 56 of the Regional Trial Court (RTC) of Makati Dr. Violeta Dalumpines (Dr. Dalumpines) arrived. She approached petitioner and introduced
City in Civil Case No. 96-1367 dated 21 February 2006, dismissing for lack of merit herein herself as the hotel physician. However, instead of immediately providing the needed medical
petitioner Dr. Genevieve L. Huang’s Complaint for Damages. Assailed as well is the Court of assistance, Dr. Dalumpines presented a "Waiver" and demanded that it be signed by
Appeals’ Resolution3 dated 5 November 2007 denying for lack of merit petitioner’s Motion for petitioner, otherwise, the hotel management will not render her any assistance. Petitioner
Reconsideration. refused to do so.12

This case stemmed from a Complaint for Damages filed on 28 August 1996 by petitioner Dr. After eating her dinner and having rested for a while, petitioner left the hotel’s coffee shop
Genevieve L. Huang4against herein respondents Philippine Hoteliers, Inc. (PHI)5 and Dusit and went home. Thereupon, petitioner started to feel extraordinary dizziness accompanied by
Thani Public Co., Ltd. (DTPCI),6 as owners of Dusit Thani Hotel Manila (Dusit Hotel);7 and co- an uncomfortable feeling in her stomach, which lasted until the following day. Petitioner was
respondent First Lepanto Taisho Insurance Corporation (First Lepanto),8 as insurer of the constrained to stay at home, thus, missing all her important appointments with her patients.
aforesaid hotel. The said Complaint was premised on the alleged negligence of respondents She also began experiencing "on" and "off" severe headaches that caused her three (3)
PHI and DTPCI’s staff, in the untimely putting off all the lights within the hotel’s swimming sleepless nights.13
pool area, as well as the locking of the main entrance door of the area, prompting petitioner
to grope for a way out. While doing so, a folding wooden counter top fell on her head causing Petitioner, thus, decided to consult a certain Dr. Perry Noble (Dr. Noble), a neurologist from
her serious brain injury. The negligence was allegedly compounded by respondents PHI and Makati Medical Center, who required her to have an X-ray and a Magnetic Resonance
DTPCI’s failure to render prompt and adequate medical assistance. Imaging (MRI) tests.14 The MRI Report15 dated 23 August 1995 revealed the following
findings:
Petitioner’s version of the antecedents of this case is as follows:
CONSULTATION REPORT:
On 11 June 1995, Delia Goldberg (Delia), a registered guest of Dusit Hotel, invited her friend,
petitioner Dr. Genevieve L. Huang, for a swim at the hotel’s swimming pool facility. They
28
MRI examination of the brain shows scattered areas of intraparenchymal contusions and In November 1995, petitioner went to the United States of America (USA) for further medical
involving mainly the left middle and posterior temporal and slightly the right anterior temporal treatment. She consulted a certain Dr. Gerald Steinberg and a certain Dr. Joel Dokson25 from
lobe. Mount Sinai Hospital who both found that she has "post traumatic-post concussion/contusion
cephalgias-vascular and neuralgia."26 She was then prescribed to take some medications for
Other small areas of contusions with suggestive pertechiae are seen in the left fronto-parietal, severe pain and to undergo physical therapy. Her condition did not improve so she returned
left parieto-occipital and with deep frontal periventricular subcortical and cortical regions. to the Philippines.27
There is no mass effect nor signs of localized hemorrhagic extravasation.
Petitioner, once again, consulted Dr. Sibayan, who simply told her to just relax and to
The ventricles are not enlarged, quite symmetrical without shifts or deformities; the peripheral continue taking her medicines. Petitioner also consulted other neurologists, who all advised
sulci are within normal limits. her to just continue her medications and to undergo physical therapy for her neck pain. 28

The C-P angles, petromastoids, sella, extrasellar and retro orbital areas appear normal. Sometime in 1996, petitioner consulted as well a certain Dr. Victor Lopez (Dr. Lopez), an
ophthalmologist from the Makati Medical Center, because of her poor vision, which she has
experienced for several months.29 Petitioner’s Eye Report dated 5 March 199630 issued by Dr.
The brainstem is unremarkable.
Lopez stated: "IMPRESSION: Posterior vitreous detachment, right eye of floaters." Dr. Lopez
told petitioner that her detached eye is permanent and very serious. Dr. Lopez then
IMPRESSION: Scattered small intraparenchymal contusions mainly involving the left middle- prescribed an eye drop to petitioner.31
posterior temporal lobe and also right medial anterior temporal, both deep frontal subcortical,
left parieto-occipital subcortical and cortical regions. Ischemic etiology not ruled out. No
For petitioner’s frustration to dissipate and to regain her former strength and physical well-
localized intra - or extracerebral hemorrhage.16
being, she consulted another neuro-surgeon from Makati Medical Center by the name of Dr.
Leopoldo P. Pardo, Jr. (Dr. Pardo, Jr.).32 She disclosed to Dr. Pardo, Jr. that at the age of 18
Petitioner claimed that the aforesaid MRI result clearly showed that her head was bruised. she suffered a stroke due to mitral valve disease and that she was given treatments, which
Based also on the same MRI result, Dr. Noble told her that she has a very serious brain also resulted in thrombocytopenia. In Dr. Pardo, Jr.’s medical evaluation of petitioner dated
injury. In view thereof, Dr. Noble prescribed the necessary medicine for her condition. 17 15 May 1996,33 he made the following diagnosis and opinion:

Petitioner likewise consulted a certain Dr. Ofelia Adapon, also a neurologist from Makati DIAGNOSIS AND OPINION:
Medical Center, who required her to undergo an Electroencephalogram examination (EEG) to
measure the electrostatic in her brain.18Based on its result,19 Dr. Ofelia Adapon informed her
This patient sustained a severe head injury in (sic) 11 June 1995 and as a result of which she
that she has a serious condition—a permanent one. Dr. Ofelia Adapon similarly prescribed
developed the following injuries:
medicines for her brain injury.20

Petitioner’s condition did not get better. Hence, sometime in September 1995, she consulted 1. Cerebral Concussion and Contusion
another neuro-surgeon by the name of Dr. Renato Sibayan (Dr. Sibayan), who required her
to have an X-ray test.21 According to petitioner, Dr. Sibayan’s finding was the same as those 2. Post-traumatic Epilepsy
of the previous doctors that she had consulted—she has a serious brain injury.22
3. Post-concussional Syndrome
By reason of the unfortunate 11 June 1995 incident inside the hotel’s swimming pool area,
petitioner also started to feel losing her memory, which greatly affected and disrupted the 4. Minimal Brain Dysfunction
practice of her chosen profession.23 Thus, on 25 October 1995, petitioner, through counsel,
sent a demand letter24 to respondents PHI and DTPCI seeking payment of an amount not 5. Cervical Sprain, chronic recurrent
less than P100,000,000.00 representing loss of earnings on her remaining life span. But,
petitioner’s demand was unheeded. It is my opinion that the symptoms she complained of in the foregoing history are all related to
and a result of the injury sustained on 11 June 1995.
29
It is further my opinion that the above diagnosis and complaints do materially affect her duties the hotel’s swimming pool area were turned off, it would not render the area completely dark
and functions as a practicing physician and dermatologist, and that she will require treatment as the Slimmer’s World Gym near it was well-illuminated.43
for an undetermined period of time.
Further, on 11 June 1995, at round 7:00 p.m., the hotel’s swimming pool attendant advised
The percentage of disability is not calculated at this time and will require further evaluation petitioner and Delia to take their showers as it was already closing time. Afterwards, at
and observation.34 around 7:40 p.m., Pearlie Benedicto-Lipana (Ms. Pearlie), the hotel staff nurse, who was at
the hotel clinic located at the mezzanine floor, received a call from the hotel telephone
Dr. Pardo, Jr. then advised petitioner to continue her medications. 35 operator informing her that there was a guest requiring medical assistance at the hotel’s
swimming pool area located one floor above the clinic.44
Petitioner likewise consulted a certain Dr. Tenchavez36 for her follow-up EEG.37 He similarly
prescribed medicine for petitioner’s deep brain injury. He also gave her pain killer for her Immediately, Ms. Pearlie got hold of her medical kit and hurriedly went to the hotel’s
headache and advised her to undergo physical therapy. Her symptoms, however, persisted swimming pool area. There she saw Delia and petitioner, who told her that she was hit on the
all the more.38 head by a folding wooden counter top. Although petitioner looked normal as there was no
indication of any blood or bruise on her head, Ms. Pearlie still asked her if she needed any
medical attention to which petitioner replied that she is a doctor, she was fine and she did not
In 1999, petitioner consulted another neurologist at the Makati Medical Center by the name of
need any medical attention. Petitioner, instead, requested for a hirudoid cream to which Ms.
Dr. Martesio Perez (Dr. Perez) because of severe fleeting pains in her head, arms and legs;
Pearlie acceded.45
difficulty in concentration; and warm sensation of the legs, which symptoms also occurred
after the 11 June 1995 incident. Upon examination, Dr. Perez observed that petitioner has
been experiencing severe pains and she has a slight difficulty in concentration. He likewise At about 8:00 p.m., after attending to petitioner, Ms. Pearlie went back to the hotel clinic to
noted that there was a slight spasm of petitioner’s neck muscle but, otherwise, there was no inform Dr. Dalumpines of the incident at the hotel’s swimming pool area. But before she could
objective neurologic finding. The rest of petitioner’s neurologic examination was essentially do that, Dr. Dalumpines had already chanced upon Delia and petitioner at the hotel’s coffee
normal.39 shop and the latter reported to Dr. Dalumpines that her head was hit by a folding wooden
counter top while she was inside the hotel’s swimming pool area. When asked by Dr.
Dr. Perez’s neurologic evaluation40 of petitioner reflected, among others: (1) petitioner’s past Dalumpines how she was, petitioner responded she is a doctor, she was fine and she was
already attended to by the hotel nurse, who went at the hotel’s swimming pool area right after
medical history, which includes, among others, mitral valve stenosis; (2) an interpretation of
the accident. Dr. Dalumpines then called Ms. Pearlie to verify the same, which the latter
petitioner’s EEG results in October 1995 and in January 1999, i.e., the first EEG showed
confirmed.46
sharp waves seen bilaterally more on the left while the second one was normal; and (3)
interpretation of petitioner’s second MRI result, i.e., petitioner has a permanent damage in the
brain, which can happen either after a head injury or after a stroke. Dr. Perez concluded that Afterwards, Dr. Dalumpines went back to petitioner and checked the latter’s condition.
petitioner has post-traumatic or post concussion syndrome.41 Petitioner insisted that she was fine and that the hirudoid cream was enough. Having been
assured that everything was fine, Dr. Dalumpines requested petitioner to execute a
handwritten certification47 regarding the incident that occurred that night. Dr. Dalumpines then
Respondents, on the other hand, denied all the material allegations of petitioner and, in turn,
countered the latter’s statement of facts, thus: suggested to petitioner to have an X-ray test. Petitioner replied that it was not necessary.
Petitioner also refused further medical attention.48
According to respondents PHI and DTPCI, a sufficient notice had been posted on the glass
On 13 June 1995, petitioner called up Dr. Dalumpines. The call, however, had nothing to do
door of the hotel leading to the swimming pool area to apprise the people, especially the hotel
with the 11 June 1995 incident. Instead, petitioner merely engaged in small talk with Dr.
guests, that the swimming pool area is open only from 7:00 a.m. to 7:00 p.m. 42 Though the
hotel’s swimming pool area is open only between the aforestated time, the lights thereon are Dalumpines while having her daily massage. The two talked about petitioner’s personal
kept on until 10:00 p.m. for, (1) security reasons; (2) housekeeping personnel to do the matters, i.e., past medical history, differences with siblings and family over inheritance and
difficulty in practice. Petitioner even disclosed to Dr. Dalumpines that she once fell from a
cleaning of the swimming pool surroundings; and (3) people doing their exercise routine at
horse; that she had a stroke; had hysterectomy and is incapable of having children for her
the Slimmer’s World Gym adjacent to the swimming pool area, which was then open until
uterus had already been removed; that she had blood disorder, particularly lack of platelets,
10:00 p.m., to have a good view of the hotel’s swimming pool. Even granting that the lights in
that can cause bleeding; and she had an "on" and "off" headaches. Petitioner oftentimes
30
called Dr. Dalumpines at the hotel clinic to discuss topics similar to those discussed during the nearby gym to have a good view of the swimming pool while doing their exercise routine.
their 13 June 1995 conversation.49 Besides, there was a remote possibility that the hotel’s swimming pool area was in complete
darkness as the aforesaid gym was then open until 10:00 p.m., and the lights radiate to the
Also, during one of their telephone conversations, petitioner requested for a certification hotel’s swimming pool area. As such, petitioner would not have met the accident had she
regarding the 11 June 1995 incident inside the hotel’s swimming pool area. Dr. Dalumpines only acted with care and caution.54
accordingly issued Certification dated 7 September 1995, which states that: 50
The trial court further struck down petitioner’s contention that the hotel management did not
CERTIFICATION extend medical assistance to her in the aftermath of the accident. Records showed that the
hotel management immediately responded after being notified of the accident. The hotel
nurse and the two chambermaids placed an ice pack on petitioner’s head. They were willing
This is to certify that as per Clinic records, duty nurse Pearlie was called to attend to an
to extend further emergency assistance but petitioner refused and merely asked for a
accident at the poolside at 7:45PM on 11 June 1995.
hirudoid cream. Petitioner even told them she is a doctor and she was fine. Even the medical
services offered by the hotel physician were turned down by petitioner. Emphatically,
Same records show that there, she saw petitioner who claimed the folding countertop fell on petitioner cannot fault the hotel for the injury she sustained as she herself did not heed the
her head when she lifted it to enter the lifeguard’s counter to use the phone. She asked for warning that the swimming pool area is open only from 7:00 a.m. to 7:00 p.m. As such, since
Hirudoid. petitioner’s own negligence was the immediate and proximate cause of her injury, she cannot
recover damages.55
The same evening petitioner met Dr. Dalumpines at the Coffee Shop. After narrating the
poolside incident and declining Dr. Dalumpines’ offer of assistance, she reiterated that the The trial court similarly observed that the records revealed no indication that the head injury
Hirudoid cream was enough and that petitioner being a doctor herself, knew her condition complained of by petitioner was the result of the alleged 11 June 1995 accident. Firstly,
and she was all right. petitioner had a past medical history which might have been the cause of her recurring brain
injury. Secondly, the findings of Dr. Perez did not prove a causal relation between the 11
This certification is given upon the request of petitioner for whatever purpose it may serve, 7 June 1995 accident and the brain damage suffered by petitioner. Even Dr. Perez himself
September 1995 at Makati City.51 (Emphasis supplied). testified that the symptoms being experienced by petitioner might have been due to factors
other than the head trauma she allegedly suffered. It bears stressing that petitioner had been
Petitioner personally picked up the afore-quoted Certification at the hotel clinic without any suffering from different kinds of brain problems since she was 18 years old, which may have
objection as to its contents.52 been the cause of the recurring symptoms of head injury she is experiencing at present.
Absent, therefore, of any proof establishing the causal relation between the injury she
From 11 June 1995 until 7 September 1995, the hotel clinic never received any complaint allegedly suffered on 11 June 1995 and the head pains she now suffers, her claim must fail.
from petitioner regarding the latter’s condition. The hotel itself neither received any written Thirdly, Dr. Teresita Sanchez’s (Dr. Sanchez) testimony cannot be relied upon since she
complaint from petitioner.53 testified on the findings and conclusions of persons who were never presented in court. Ergo,
her testimony thereon was hearsay. Fourthly, the medical reports/evaluations/certifications
issued by myriads of doctors whom petitioner sought for examination or treatment were
After trial, the court a quo in its Decision dated 21 February 2006 dismissed petitioner’s
neither identified nor testified to by those who issued them. Being deemed as hearsay, they
Complaint for lack of merit.
cannot be given probative value. Even assuming that petitioner suffered head injury as a
consequence of the 11 June 1995 accident, she cannot blame anyone but herself for staying
The trial court found petitioner’s testimony self-serving, thus, devoid of credibility. Petitioner at the hotel’s swimming pool area beyond its closing hours and for lifting the folding wooden
failed to present any evidence to substantiate her allegation that the lights in the hotel’s counter top that eventually hit her head.56
swimming pool area were shut off at the time of the incident. She did not even present her
friend, Delia, to corroborate her testimony. More so, petitioner’s testimony was contradicted
For petitioner’s failure to prove that her serious and permanent injury was the result of the 11
by one of the witnesses presented by the respondents who positively declared that it has
June 1995 accident, thus, her claim for actual or compensatory damages, loss of income,
been a normal practice of the hotel management not to put off the lights until 10:00 p.m. to
moral damages, exemplary damages and attorney’s fees, must all fail.57
allow the housekeepers to do the cleaning of the swimming pool surroundings, including the
toilets and counters. Also, the lights were kept on for security reasons and for the people in
31
With regard to respondent First Lepanto’s liability, the trial court ruled that under the contract Viewed from the foregoing, the question now is whether respondents PHI and DTPCI and its
of insurance, suffice it to state that absent any cause for any liability against respondents PHI employees were negligent? We do not think so. Several factors militate against petitioner’s
and DTPCI, respondent First Lepanto cannot be made liable thereon. contention.

Dissatisfied, petitioner elevated the matter to the Court of Appeals with the following One. Petitioner recognized the fact that the pool area’s closing time is 7:00 p.m.. She,
assignment of errors: (1) the trial court erred in finding that the testimony of petitioner is self- herself, admitted during her testimony that she was well aware of the sign when she
serving and thus void of credibility; (2) the trial court erred in applying the doctrine of and Delia entered the pool area. Hence, upon knowing, at the outset, of the pool’s
proximate cause in cases of breach of contract and even assuming arguendo that the closing time, she took the risk of overstaying when she decided to take shower and
doctrine is applicable, petitioner was able to prove by sufficient evidence the causal leave the area beyond the closing hour. In fact, it was only upon the advise of the
connection between her injuries and respondents PHI and DTPCI’s negligent act; and (3) the pool attendants that she thereafter took her shower.
trial court erred in holding that petitioner is not entitled to damages. 58
Two. She admitted, through her certification that she lifted the wooden bar
On 9 August 2007, the Court of Appeals rendered a Decision affirming the findings and countertop, which then fell onto her head. The admission in her certificate proves the
conclusions of the trial court. circumstances surrounding the occurrence that transpired on the night of 11 June
1995. This is contrary to her assertion in the complaint and testimony that, while she
The Court of Appeals ratiocinated in this wise: was passing through the counter door, she was suddenly knocked out by a hard and
heavy object. In view of the fact that she admitted having lifted the counter top, it was
At the outset, it is necessary for our purpose to determine whether to decide this case on the her own doing, therefore, that made the counter top fell on to her head.
theory that herein respondents PHI and DTPCI are liable for breach of contract or on the
theory of quasi-delict. Three. We cannot likewise subscribe to petitioner’s assertion that the pool area was
totally dark in that she herself admitted that she saw a telephone at the counter after
searching for one. It must be noted that petitioner and Delia had walked around the
xxxx
pool area with ease since they were able to proceed to the glass entrance door from
shower room, and back to the counter area where the telephone was located without
It cannot be gainsaid that herein petitioner’s use of the hotel’s pool was only upon the encountering any untoward incident. Otherwise, she could have easily stumbled over,
invitation of Delia, the hotel’s registered guest. As such, she cannot claim contractual or slid, or bumped into something while searching for the telephone. This negates her
relationship between her and the hotel. Since the circumstances of the present case do not assertion that the pool area was completely dark, thereby, totally impairing her vision.
evince a contractual relation between petitioner and respondents, the rules on quasi-delict ,
thus, govern.
xxxx
The pertinent provision of Art. 2176 of the Civil Code which states: "Whoever by act or
The aforementioned circumstances lead us to no other conclusion than that the proximate
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 and immediate cause of the injury of petitioner was due to her own negligence.
between the parties, is called quasi-delict."
Moreover, petitioner failed to sufficiently substantiate that the medical symptoms she is
currently experiencing are the direct result of the head injury she sustained on 11 June 1995
A perusal of Article 2176 shows that obligations arising from quasi-delict or tort, also known
as was aptly discussed in the lower court’s findings.
as extra-contractual obligations, arise only between parties not otherwise bound by contract,
whether express or implied. Thus, to sustain a claim liability under quasi-delict, the following
requisites must concur: (a) damages suffered by the plaintiff; (b) fault or negligence of the xxxx
defendant, or some other person for whose acts he must respond; and (c) the connection of
cause and effect between the fault or negligence of the defendant and the damages incurred It bears stressing that in civil cases, the law requires that the party who alleges a fact and
by the plaintiff. substantially asserts the affirmative of the issue has the burden of proving it. Hence, for

32
petitioner to be entitled to damages, she must show that she had suffered an actionable Petitioner further faults the Court of Appeals in ruling that no contractual relationship existed
injury. Regrettably, petitioner failed in this regard.59 (Emphasis supplied). between her and respondents PHI and DTPCI since her use of the hotel’s swimming pool
facility was only upon the invitation of the hotel’s registered guest. On the contrary, petitioner
Petitioner’s Motion for Reconsideration was denied for lack of merit in a Resolution dated 5 maintains that an implied contract existed between them in view of the fact that the hotel
November 2007. guest status extends to all those who avail of its services—its patrons and invitees. It follows
then that all those who patronize the hotel and its facilities, including those who are invited to
partake of those facilities, like petitioner, are generally regarded as guests of the hotel. As
Hence, this Petition raising the following issues:
such, respondents PHI and DTPCI are responsible by implied contract for the safety and
welfare of petitioner while the latter was inside their premises by exercising due care, which
(1) Whether or not the findings of fact of the trial court and of the Court of Appeals they failed to do.
are conclusive in this case.
Petitioner even asserts that the existence of a contract between the parties does not bar any
(2) Whether or not herein respondents PHI and DTPCI are responsible by implied liability for tort since the act that breaks a contract may also be a tort. Hence, the concept of
contract to exercise due care for the safety and welfare of the petitioner. change of theory of cause of action pointed to by respondents is irrelevant.

(3) Whether or not the cause of action of the petitioner can be based on both breach Petitioner similarly avows that the doctrines of res ipsa loquitur and respondeat superior are
of contract and tort. applicable in this case. She argues that a person who goes in a hotel without a "bukol" or
hematoma and comes out of it with a "bukol" or hematoma is a clear case of res ipsa loquitur.
(4) Whether or not it is respondents PHI and DTPCI and its employees who are liable It was an accident caused by the fact that the hotel staff was not present to lift the heavy
to the petitioner for negligence, applying the well-established doctrines of res ipsa counter top for petitioner as is normally expected of them because they negligently locked the
loquitur and respondeat superior. main entrance door of the hotel’s swimming pool area. Following the doctrine of res ipsa
loquitur, respondents PHI and DTPCI’s negligence is presumed and it is incumbent upon
(5) Whether the petitioner’s debilitating and permanent injuries were a result of the them to prove otherwise but they failed to do so. Further, respondents PHI and DTPCI failed
accident she suffered at the hotel on 11 June 1995. to observe all the diligence of a good father of a family in the selection and supervision of
their employees, hence, following the doctrine of respondeat superior, they were liable for the
(6) Whether or not the petitioner is entitled to the payment of damages, attorney’s negligent acts of their staff in not verifying if there were still people inside the swimming pool
fees, interest, and the costs of suit. area before turning off the lights and locking the door. Had respondents PHI and DTPCI’s
employees done so, petitioner would not have been injured. Since respondents PHI and
DTPCI’s negligence need not be proved, the lower courts erred in shifting the burden to
(7) Whether or not the respondent insurance company is liable, even directly, to the
petitioner and, thereafter, holding the hotel and its employees not negligent for petitioner’s
petitioner.
failure to prove their negligence. Moreover, petitioner alleges that there was no contributory
negligence on her part for she did not do anything that could have contributed to her injury.
(8) Whether or not petitioner’s motion for reconsideration of the decision of the Court And, even if there was, the same does not bar recovery.
of Appeals is pro forma.60
Petitioner equally declares that the evidence on record, including the objective medical
Petitioner argues that the rule that "findings of fact of the lower courts are conclusive and findings, had firmly established that her permanent debilitating injuries were the direct result
must be respected on appeal" finds no application herein because this case falls under the of the 11 June 1995 accident inside the hotel’s swimming pool area. This fact has not been
jurisprudentially established exceptions. Moreover, since the rationale behind the afore- totally disputed by the respondents. Further, the medical experts who had been consulted by
mentioned rule is that "the trial judge is in a vantage point to appreciate the conduct and petitioner were in unison in their diagnoses of her condition. Petitioner was also able to prove
behavior of the witnesses and has the unexcelled opportunity to evaluate their testimony," that the falling of the folding wooden counter top on her head while she was at the hotel’s
one logical exception to the rule that can be deduced therefrom is when the judge who swimming pool area was the cause of her head, eye and neck injuries.
decided the case is not the same judge who heard and tried the case.

33
Petitioner reiterates her claim for an award of damages, to wit: actual, including loss of (j) When the findings of fact are premised on the supposed absence of evidence and
income; moral, exemplary; as well as attorney’s fees, interest and costs of suit. She states contradicted by the evidence on record; or
that respondents PHI and DTPCI are liable for quasi-delict under Articles 19, 2176 and 2180
of the New Civil Code. At the same time, they are liable under an implied contract for they (k) When the Court of Appeals manifestly overlooked certain relevant facts not
have a public duty to give due courtesy, to exercise reasonable care and to provide safety to disputed by the parties, which, if properly considered, would justify a different
hotel guests, patrons and invitees. Respondent First Lepanto, on the other hand, is directly conclusion.64
liable under the express contract of insurance.
Upon meticulous perusal of the records, however, this Court finds that none of these
Lastly, petitioner contends that her Motion for Reconsideration before the Court of Appeals exceptions is obtaining in this case. No such justifiable or compelling reasons exist for this
was not pro forma for it specifically pointed out the alleged errors in the Court of Appeals Court to depart from the general rule. This Court will not disturb the factual findings of the trial
Decision. court as affirmed by the Court of Appeals and adequately supported by the evidence on
record.
The instant Petition is devoid of merit.
Also, this Court will not review the factual findings of the trial court simply because the judge
Primarily, only errors of law and not of facts are reviewable by this Court in a Petition for who heard and tried the case was not the same judge who penned the decision. This fact
Review on Certiorari under Rule 45 of the Rules of Court.61 This Court is not a trier of facts alone does not diminish the veracity and correctness of the factual findings of the trial
and it is beyond its function to re-examine and weigh anew the respective evidence of the court.65 Indeed, "the efficacy of a decision is not necessarily impaired by the fact that its writer
parties.62 Besides, this Court adheres to the long standing doctrine that the factual findings of only took over from a colleague who had earlier presided at the trial, unless there is showing
the trial court, especially when affirmed by the Court of Appeals, are conclusive on the parties of grave abuse of discretion in the factual findings reached by him."66 In this case, there was
and this Court.63 Nonetheless, this Court has, at times, allowed exceptions thereto, to wit: none.

(a) When the findings are grounded entirely on speculation, surmises, or conjectures; It bears stressing that in this jurisdiction there is a disputable presumption that the trial court’s
decision is rendered by the judge in the regular performance of his official duties. While the
(b) When the inference made is manifestly mistaken, absurd, or impossible; said presumption is only disputable, it is satisfactory unless contradicted or overcame by
other evidence. Encompassed in this presumption of regularity is the presumption that the
trial court judge, in resolving the case and drafting the decision, reviewed, evaluated, and
(c) When there is grave abuse of discretion;
weighed all the evidence on record. That the said trial court judge is not the same judge who
heard the case and received the evidence is of little consequence when the records and
(d) When the judgment is based on a misapprehension of facts; transcripts of stenographic notes (TSNs) are complete and available for consideration by the
former,67 just like in the present case.
(e) When the findings of facts are conflicting;
Irrefragably, the fact that the judge who penned the trial court’s decision was not the same
(f) When in making its findings the Court of Appeals went beyond the issues of the judge who heard the case and received the evidence therein does not render the findings in
case, or its findings are contrary to the admissions of both the appellant and the the said decision erroneous and unreliable. While the conduct and demeanor of witnesses
appellee; may sway a trial court judge in deciding a case, it is not, and should not be, his only
consideration. Even more vital for the trial court judge’s decision are the contents and
(g) When the Court of Appeals’ findings are contrary to those by the trial court; substance of the witnesses’ testimonies, as borne out by the TSNs, as well as the object and
documentary evidence submitted and made part of the records of the case.68
(h) When the findings are conclusions without citation of specific evidence on which
they are based; This Court examined the records, including the TSNs, and found no reason to disturb the
factual findings of both lower courts. This Court, thus, upholds their conclusiveness.
(i) When the facts set forth in the petition as well as in the petitioner’s main and reply
briefs are not disputed by the respondent;
34
In resolving the second and third issues, a determination of the cause of action on which assisted petitioner by holding the bag of ice on her head and applying the medicine
petitioner’s Complaint for Damages was anchored upon is called for. on the huge lump;

Initially, petitioner was suing respondents PHI and DTPCI mainly on account of their 10. THAT, petitioner after having recovered slightly from her nightmare, though still
negligence but not on any breach of contract. Surprisingly, when the case was elevated on feeling weak, asked to be assisted to the Hotel Coffee Shop to take a rest but
appeal to the Court of Appeals, petitioner had a change of heart and later claimed that an requested for the hotel’s Physician. Despite her insistent requests, the Dusit Hotel
implied contract existed between her and respondents PHI and DTPCI and that the latter refused to lift a finger to assists petitioner who was then in distress until a lady
were liable for breach of their obligation to keep her safe and out of harm. This allegation was approached and introduced herself as the Hotel’s house Doctor. Instead however of
never an issue before the trial court. It was not the cause of action relied upon by the assisting petitioner by asking her what kind of assistance the Hotel could render, in a
petitioner not until the case was before the Court of Appeals. Presently, petitioner claims that DISCOURTEOUS MANNER presented instead a paper and demanding petitioner to
her cause of action can be based both on quasi-delict and breach of contract. affix her signature telling her that the Hotel Management would only assists and
answer for all expenses incurred if petitioner signs the paper presented, but she
A perusal of petitioner’s Complaint evidently shows that her cause of action was based solely refused and petitioner instead wrote a marginal note on the said paper stating her
on quasi-delict. Telling are the following allegations in petitioner’s Complaint: reason therefore, said paper later on turned out to be a WAIVER OF RIGHT or QUIT
CLAIM;
6. THAT, in the evening of 11 June 1995, between the hours from 7:00 to 8:00
o’clock, after herein petitioner and her friend from New York, Delia, the latter being xxxx
then a Hotel guest, were taking their shower after having a dip in the hotel’s
swimming pool, without any notice or warning, the Hotel’s staff put off all the lights 14. THAT, due to the unfortunate incident caused by respondents PHI and DTPCI’s
within the pool area including the lights on the hallway and also locked the main gross negligence despite medical assistance, petitioner started to feel losing her
entrance door of the pool area, x x x; memory that greatly affected and disrupted the practice of her chosen profession x x
x.
7. THAT, Hotel guest Delia started to panic while petitioner pacified her by telling her
not to worry as they would both find their way out. Petitioner knowing that within the xxxx
area there is a house phone, started to look around while Delia was following her,
eventually petitioner saw a phone behind the counter x x x, that while slowly moving 19. THAT, due to respondents PHI and DTPCI’s gross negligence as being narrated
on towards the phone on a stooping manner due to the darkness CAUSED BY which caused petitioner to suffer sleepless nights, depression, mental anguish,
UNTIMELY AND NEGLIGENTLY PUTTING OFF WITH THE LIGHTS BY THE serious anxiety, wounded feelings, and embarrassment with her Diplomate friends in
HEREIN RESPONDENTS PHI AND DTPCI’S EMPLOYEE while passing through the the profession and industry, her social standing in the community was greatly
open counter door with its Folding Counter Top also opened, x x x, a hard and heavy affected and hence, respondents PHI and DTPCI must be imposed the hereunder
object fell onto the head of the petitioner that knocked her down almost unconscious damages, prayed for x x x and Artile (sic) 2176 and 2199 of the New Civil Code of the
which hard and heavy object turned out to be the Folding Counter Top; Philippines x x x.

8. THAT, Delia immediately got hold of the house phone and notified the Hotel xxxx
Telephone Operator about the incident, immediately the hotel staffs (sic) arrived but
they were stranded behind the main door of the pool entrance and it too (sic) them
22. THAT, as to Moral, Exemplary and Actual Damages, as well as petitioner’s Loss
more than twenty (20) minutes to locate the hotel maintenance employee who holds
of Income, the amounts are stated in its prayer hereunder.69
the key of the said main entrance door;
It is clear from petitioner’s allegations that her Complaint for Damages was predicated on the
9. THAT, when the door was opened, two Hotel Chamber Maids assisted the
alleged negligence of respondents PHI and DTPCI’s staff in the untimely putting off of all the
petitioner to get out of the counter door. Petitioner being a Physician tried to control
lights within the hotel’s swimming pool area, as well as the locking of its main door, prompting
her feelings although groggy and requested for a HURIDOID, a medicine for
her to look for a way out leading to the fall of the folding wooden counter top on her head
HEMATOMA, as a huge lump developed on her head while the two Chamber Maids
35
causing her serious brain injury. The said negligence was allegedly compounded by As petitioner’s cause of action is based on quasi-delict, it is incumbent upon her to prove the
respondents PHI and DTPCI’s failure to render prompt and adequate medical assistance. presence of the following requisites before respondents PHI and DTPCI can be held liable, to
These allegations in petitioner’s Complaint constitute a cause of action for quasi-delict, which wit: (a) damages suffered by the plaintiff; (b) fault or negligence of the defendant, or some
under the New Civil Code is defined as an act, or omission which causes damage to another, other person for whose acts he must respond; and (c) the connection of cause and effect
there being fault or negligence.70 between the fault or negligence of the defendant and the damages incurred by the
plaintiff.78 Further, since petitioner’s case is for quasi-delict , the negligence or fault should be
It is evident from petitioner’s Complaint and from her open court testimony that the reliance clearly established as it is the basis of her action.79 The burden of proof is upon petitioner.
was on the alleged tortious acts committed against her by respondents PHI and DTPCI, Section 1, Rule 131 of the Rules of Court provides that "burden of proof is the duty of a party
through their management and staff. It is now too late in the day to raise the said argument to present evidence on the facts in issue necessary to establish his claim or defense by the
for the first time before this Court.71 amount of evidence required by law." It is then up for the plaintiff to establish his cause of
action or the defendant to establish his defense. Therefore, if the plaintiff alleged in his
complaint that he was damaged because of the negligent acts of the defendant, he has the
Petitioner’s belated reliance on breach of contract as her cause of action cannot be
burden of proving such negligence. It is even presumed that a person takes ordinary care of
sanctioned by this Court. Well-settled is the rule that a party is not allowed to change the
theory of the case or the cause of action on appeal. Matters, theories or arguments not his concerns. The quantum of proof required is preponderance of evidence.80
submitted before the trial court cannot be considered for the first time on appeal or
certiorari.72 When a party adopts a certain theory in the court below, he will not be permitted In this case, as found by the trial court and affirmed by the Court of Appeals, petitioner utterly
to change his theory on appeal for to permit him to do so would not only be unfair to the other failed to prove the alleged negligence of respondents PHI and DTPCI. Other than petitioner’s
party but it would also be offensive to the basic rules of fair play, justice and due self-serving testimony that all the lights in the hotel’s swimming pool area were shut off and
process.73 Hence, a party is bound by the theory he adopts and by the cause of action he the door was locked, which allegedly prompted her to find a way out and in doing so a folding
stands on and cannot be permitted after having lost thereon to repudiate his theory and wooden counter top fell on her head causing her injury, no other evidence was presented to
cause of action and adopt another and seek to re-litigate the matter anew either in the same substantiate the same. Even her own companion during the night of the accident inside the
forum or on appeal.74 hotel’s swimming pool area was never presented to corroborate her allegations. Moreover,
petitioner’s aforesaid allegations were successfully rebutted by respondents PHI and DTPCI.
Here, we quote with conformity the observation of the trial court, thus:
In that regard, this Court finds it significant to take note of the following differences between
quasi-delict (culpa aquilina) and breach of contract (culpa contractual). In quasi-delict,
negligence is direct, substantive and independent, while in breach of contract, negligence is x x x Besides not being backed up by other supporting evidence, said statement is being
merely incidental to the performance of the contractual obligation; there is a pre-existing contradicted by the testimony of Engineer Dante L. Costas,81 who positively declared that it
contract or obligation.75 In quasi-delict, the defense of "good father of a family" is a complete has been a normal practice of the Hotel management not to put off the lights until 10:00P.M.
and proper defense insofar as parents, guardians and employers are concerned, while in in order to allow the housekeepers to do the cleaning of the pool’s surrounding, the toilets
breach of contract, such is not a complete and proper defense in the selection and and the counters. It was also confirmed that the lights were kept on for security reasons and
supervision of employees.76 In quasi- delict , there is no presumption of negligence and it is so that the people exercising in the nearby gym may be able to have a good view of the
incumbent upon the injured party to prove the negligence of the defendant, otherwise, the swimming pool. This Court also takes note that the nearby gymnasium was normally open
former’s complaint will be dismissed, while in breach of contract, negligence is presumed so until 10:00 P.M. so that there was a remote possibility the pool area was in complete
long as it can be proved that there was breach of the contract and the burden is on the darkness as was alleged by herein petitioner, considering that the illumination which reflected
defendant to prove that there was no negligence in the carrying out of the terms of the from the gym. Ergo, considering that the area were sufficient (sic) illuminated when the
contract; the rule of respondeat superior is followed.77 alleged incident occurred, there could have been no reason for the petitioner to have met
said accident, much less to have been injured as a consequence thereof, if she only acted
with care and caution, which every ordinary person is expected to do.82
Viewed from the foregoing, petitioner’s change of theory or cause of action from quasi-delict
to breach of contract only on appeal would necessarily cause injustice to respondents PHI
and DTPCI. First, the latter will have no more opportunity to present evidence to contradict More telling is the ratiocination of the Court of Appeals, to wit:
petitioner’s new argument. Second, the burden of proof will be shifted from petitioner to
respondents PHI and DTPCI. Petitioner’s change of theory from quasi-delict to breach
ofcontract must be repudiated.

36
Viewed from the foregoing, the question now is whether respondents PHI and DTPCI and its greatly affected and disrupted the practice of her chosen profession. x x x. 84 (Emphasis
employees were negligent? We do not think so. Several factors militate against petitioner’s supplied).
contention.
Also, as observed by the trial court, respondents PHI and DTPCI, indeed, extended medical
One. Petitioner recognized the fact that the pool area’s closing time is 7:00 p.m.. She, herself, assistance to petitioner but it was petitioner who refused the same. The trial court stated,
admitted during her testimony that she was well aware of the sign when she and Delia thus:
entered the pool area. Hence, upon knowing, at the outset, of the pool’s closing time, she
took the risk of overstaying when she decided to take shower and leave the area beyond the Further, herein petitioner’s asseverations that the Hotel Management did not extend medical
closing hour. In fact, it was only upon the advise of the pool attendants that she thereafter assistance to her in the aftermath of the alleged accident is not true. Again, this statement
took her shower. was not supported by any evidence other that the sole and self-serving testimony of
petitioner. Thus, this Court cannot take petitioner’s statement as a gospel truth. It bears
Two. She admitted, through her certification, that she lifted the wooden bar countertop, which stressing that the Hotel Management immediately responded after it received notice of the
then fell on to her head. The admission in her certificate proves the circumstances incident. As a matter of fact, Ms. Pearlie, the Hotel nurse, with two chambermaids holding an
surrounding the occurrence that transpired on the night of 11 June 1995. This is contrary to ice bag placed on petitioner’s head came to the petitioner to extend emergency assistance
her assertion in the complaint and testimony that, while she was passing through the counter when she was notified of the incident, but petitioner merely asked for Hirudoid, saying she
door, she was suddenly knocked out by a hard and heavy object. In view of the fact that she was fine, and that she was a doctor and know how to take care of herself. Also, the Hotel,
admitted having lifted the countertop, it was her own doing, therefore, that made the counter through its in-house physician, Dr. Dalumpines offered its medical services to petitioner when
top fell on to her head. they met at the Hotel’s coffee shop, but again petitioner declined the offer. Moreover, the
Hotel as a show of concern for the petitioner’s welfare, shouldered the expenses for the MRI
Three. We cannot likewise subscribe to petitioner’s assertion that the pool area was totally services performed on petitioner at the Makati Medical Center. Emphatically, petitioner
dark in that she herself admitted that she saw a telephone at the counter after searching for herself cannot fault the Hotel for the injury she allegedly suffered because she herself did not
one. It must be noted that petitioner and Delia had walked around the pool area with ease heed the warning at the pool to the effect that it was only open from 7:00 to 7:00 P.M. Thus,
since they were able to proceed to the glass entrance door from the shower room, and back when the petitioner’s own negligence was the immediate and proximate cause of his injury,
to the counter area where the telephone was located without encountering any untoward shecannot recover damages x x x.85
incident. Otherwise, she could have easily stumbled over, or slid, or bumped into something
while searching for the telephone. This negates her assertion that the pool area was With the foregoing, the following were clearly established, to wit: (1) petitioner stayed in the
completely dark, thereby, totally impairing her vision. hotel’s swimming pool facility beyond its closing hours; (2) she lifted the folding wooden
counter top that eventually hit her head; and (3) respondents PHI and DTPCI extended
xxxx medical assistance to her. As such, no negligence can be attributed either to respondents
PHI and DTPCI or to their staff and/or management. Since the question of negligence is one
of fact, this Court is bound by the said factual findings made by the lower courts. It has been
The aforementioned circumstances lead us to no other conclusion than that the proximate
repeatedly held that the trial court's factual findings, when affirmed by the Court of Appeals,
and immediate cause of the injury of petitioner was due to her own negligence. 83 (Emphasis
are conclusive and binding upon this Court, if they are not tainted with arbitrariness or
supplied).
oversight of some fact or circumstance of significance and influence. Petitioner has not
presented sufficient ground to warrant a deviation from this rule.86
Even petitioner’s assertion of negligence on the part of respondents PHI and DTPCI in not
rendering medical assistance to her is preposterous. Her own Complaint affirmed that
With regard to petitioner’s contention that the principles of res ipsa loquitur and respondeat
respondents PHI and DTPCI afforded medical assistance to her after she met the unfortunate
superior are applicable in this case, this Court holds otherwise.
accident inside the hotel’s swimming pool facility. Below is the portion of petitioner’s
Complaint that would contradict her very own statement, thus:
Res ipsa loquitur is a Latin phrase which literally means "the thing or the transaction speaks
for itself." It relates to the fact of an injury that sets out an inference to the cause thereof or
14. THAT, due to the unfortunate incident caused by respondents PHI and DTPCI’s gross
establishes the plaintiff’s prima facie case. The doctrine rests on inference and not on
negligence despite medical assistance, petitioner started to feel losing her memory that
presumption. The facts of the occurrence warrant the supposition of negligence and they
37
furnish circumstantial evidence of negligence when direct evidence is lacking.87 Simply x x x We searched and saw a phone on a chair behind a towel counter. However, in order to
stated, this doctrine finds no application if there is direct proof of absence or presence of get behind the counter I had to lift a hinged massive wooden section of the counter which
negligence. If there is sufficient proof showing the conditions and circumstances under which subsequently fell and knocked me on my head x x x.91
the injury occurred, then the creative reason for the said doctrine disappears. 88
Dr. Dalumpines’ Certification dated 7 September 1995:
Further, the doctrine of res ipsa loquitur applies where, (1) the accident was of such character
as to warrant an inference that it would not have happened except for the defendant’s CERTIFICATION
negligence; (2) the accident must have been caused by an agency or instrumentality within
the exclusive management or control of the person charged with the negligence complained
This is to certify that as per Clinic records, duty nurse Pearlie was called to attend to an
of; and (3) the accident must not have been due to any voluntary action or contribution on the
accident at the poolside at 7:45PM on 11 June 1995.
part of the person injured.89
Same records show that there, she saw petitioner who claimed the folding countertop fell on
In the case at bench, even granting that respondents PHI and DTPCI’s staff negligently her head when she lifted it to enter the lifeguard’s counter to use the phone. She asked for
turned off the lights and locked the door, the folding wooden counter top would still not fall on
Hirudoid.
petitioner’s head had she not lifted the same. Although the folding wooden counter top is
within the exclusive management or control of respondents PHI and DTPCI, the falling of the
same and hitting the head of petitioner was not due to the negligence of the former. As found The same evening petitioner met Dr. Dalumpnes at the Coffee Shop. After narrating the
by both lower courts, the folding wooden counter top did not fall on petitioner’s head without poolside incident and declining Dr. Dalumpines’ offer of assistance, she reiterated that the
any human intervention. Records showed that petitioner lifted the said folding wooden Hirudoid cream was enough and that petitioner]being a doctor herself, knew her condition
counter top that eventually fell and hit her head. The same was evidenced by the, (1) 11 June and she was all right.
1995 handwritten certification of petitioner herself; (2) her Letter dated 30 August 1995
addressed to Mr. Yoshikazu Masuda (Mr. Masuda), General Manager of Dusit Hotel; and, (3) This certification is given upon the request of petitioner for whatever purpose it may serve, 7
Certification dated 7 September 1995 issued to her by Dr. Dalumpines upon her request, September 1995 at Makati City.92 (Emphasis supplied).
which contents she never questioned.
This Court is not unaware that in petitioner’s Complaint and in her open court testimony, her
Here, we, respectively, quote the 11 June 1995 handwritten certification of petitioner; her assertion was, "while she was passing through the counter door, she was suddenly knocked
letter to Mr. Masuda dated 30 August 1995; and Dr. Dalumpines’ Certification dated 7 out by a hard and heavy object, which turned out to be the folding wooden counter top."
September 1995, to wit: However, in her open court testimony, particularly during cross-examination, petitioner
confirmed that she made such statement that "she lifted the hinge massive wooden section of
Petitioner’s 11 June 1995 Handwritten Certification: the counter near the swimming pool."93 In view thereof, this Court cannot acquiesce
petitioner’s theory that her case is one of res ipsa loquitur as it was sufficiently established
how petitioner obtained that "bukol" or "hematoma."
I was requested by Dr. Dalumpines to write that I was assured of assistance should it be
necessary with regard an accident at the pool. x x x The phone was in an enclosed area on a
chair – I lifted the wooden bar counter top which then fell on my head producing a large The doctrine of respondeat superior finds no application in the absence of any showing that
hematoma x x x.90 the employees of respondents PHI and DTPCI were negligent. Since in this case, the trial
court and the appellate court found no negligence on the part of the employees of
respondents PHI and DTPCI, thus, the latter cannot also be held liable for negligence and be
Petitioner’s Letter addressed to Mr. Masuda dated 30 August 1995: made to pay the millions of pesos damages prayed for by petitioner.

Dear Mr. Masuda,


The issue on whether petitioner’s debilitating and permanent injuries were the result of the
accident she suffered at the hotel’s swimming pool area on 11 June 1995 is another question
xxxx of fact, which is beyond the function of this Court to resolve. More so, this issue has already
been properly passed upon by the trial court and the Court of Appeals. To repeat, this Court

38
is bound by the factual findings of the lower courts and there is no cogent reason to depart question its contents. Being mere hearsay evidence, failure to present the author of the letter
from the said rule. renders its contents suspect and of no probative value. 97

The following observations of the trial court are controlling on this matter: All told, in the absence of negligence on the part of respondents PHI and DTPCI, as well as
their management and staff, they cannot be made Iiable to pay for the millions of damages
Firstly, petitioner had a past medical history which might have been the cause of her prayed for by the petitioner. Since respondents PHI and DTPCI arc not liable, it necessarily
recurring brain injury. follows that respondent First Lepanto cannot also be made liable under the contract or
Insurance.
Secondly, the findings of Dr. Perez did not prove a causal relation between the 11 June 1995
accident and the brain damage suffered by petitioner. Dr. Perez himself testified that the WHEREFORE, premises considered, the Decision and Resolution or the Court of Appeals in
symptoms being experienced by petitioner might have been due to factors other than the CA-G.R. CV No. 87065 dated 9 August 2007 and 5 November 2007, respectively, are hereby
head trauma she allegedly suffered. Emphasis must be given to the fact that petitioner had AFFIRMED. Costs against petitioner.
been suffering from different kinds of brain problems since she was 18 years old, which may
have been the cause of the recurring symptoms of head injury she is experiencing at present. SO ORDERED.

Thirdly, Dr. Sanchez’s testimony cannot be relied upon since she testified on the findings and
conclusions of persons who were never presented in court. Ergo, her testimony thereon was
hearsay. A witness can testify only with regard to facts of which they have personal
knowledge. Testimonial or documentary evidence is hearsay if it is based, not on the
personal knowledge of the witness, but on the knowledge of some other person not on the
witness stand. Consequently, hearsay evidence -- whether objected to or not -- has no
probative value.94

Fourthly, the medical reports/evaluations/certifications issued by myriads of doctors whom


petitioner sought for examination or treatment were neither identified nor testified to by those
who issued them. Being deemed as hearsay, they cannot be given probative value.1âwphi1

The aforesaid medical reports/evaluations/certifications of different doctors in favor of


petitioner cannot be given probative value and their contents cannot be deemed to constitute
proof of the facts stated therein. It must be stressed that a document or writing which is
admitted not as independent evidence but merely as part of the testimony of a witness does
not constitute proof of the facts related therein.95 In the same vein, the medical certificate
which was identified and interpreted in court by another doctor was not accorded probative
value because the doctor who prepared it was not presented for its identification. Similarly, in
this case, since the doctors who examined petitioner were not presented to testify on their
findings, the medical certificates issued on their behalf and identified by another doctor
cannot be admitted as evidence. Since a medical certificate involves an opinion of one who
must first be established as an expert witness, it cannot be given weight or credit unless the
doctor who issued it is presented in court to show his qualifications.96 Thus, an unverified and
unidentified private document cannot be accorded probative value. It is precluded because
the party against whom it is presented is deprived of the right and opportunity to cross-
examine the person to whom the statements or writings are attributed. Its executor or author
should be presented as a witness to provide the other party to the litigation the opportunity to
39
Republic of the Philippines In June 1996, the Zarates contracted the Pereñas to transport Aaron to and from Don Bosco.
SUPREME COURT On August 22, 1996, as on previous school days, the van picked Aaron up around 6:00 a.m.
Manila from the Zarates’ residence. Aaron took his place on the left side of the van near the rear
door. The van, with its air-conditioning unit turned on and the stereo playing loudly, ultimately
FIRST DIVISION carried all the 14 student riders on their way to Don Bosco. Considering that the students
were due at Don Bosco by 7:15 a.m., and that they were already running late because of the
G.R. No. 157917 August 29, 2012 heavy vehicular traffic on the South Superhighway, Alfaro took the van to an alternate route
at about 6:45 a.m. by traversing the narrow path underneath the Magallanes Interchange that
was then commonly used by Makati-bound vehicles as a short cut into Makati. At the time,
SPOUSES TEODORO1 and NANETTE PERENA, Petitioners, the narrow path was marked by piles of construction materials and parked passenger
vs. jeepneys, and the railroad crossing in the narrow path had no railroad warning signs, or
SPOUSES TERESITA PHILIPPINE NICOLAS and L. ZARATE, NATIONAL RAILWAYS, watchmen, or other responsible persons manning the crossing. In fact, the bamboo barandilla
and the COURT OF APPEALS Respondents. was up, leaving the railroad crossing open to traversing motorists.

DECISION At about the time the van was to traverse the railroad crossing, PNR Commuter No. 302
(train), operated by Jhonny Alano (Alano), was in the vicinity of the Magallanes Interchange
BERSAMIN, J.: travelling northbound. As the train neared the railroad crossing, Alfaro drove the van
eastward across the railroad tracks, closely tailing a large passenger bus. His view of the
The operator of a. school bus service is a common carrier in the eyes of the law. He is bound oncoming train was blocked because he overtook the passenger bus on its left side. The train
to observe extraordinary diligence in the conduct of his business. He is presumed to be blew its horn to warn motorists of its approach. When the train was about 50 meters away
negligent when death occurs to a passenger. His liability may include indemnity for loss of from the passenger bus and the van, Alano applied the ordinary brakes of the train. He
earning capacity even if the deceased passenger may only be an unemployed high school applied the emergency brakes only when he saw that a collision was imminent. The
student at the time of the accident. passenger bus successfully crossed the railroad tracks, but the van driven by Alfaro did not.
The train hit the rear end of the van, and the impact threw nine of the 12 students in the rear,
The Case including Aaron, out of the van. Aaron landed in the path of the train, which dragged his body
and severed his head, instantaneously killing him. Alano fled the scene on board the train,
and did not wait for the police investigator to arrive.
By petition for review on certiorari, Spouses Teodoro and Nanette Perefia (Perefias) appeal
the adverse decision promulgated on November 13, 2002, by which the Court of Appeals
(CA) affirmed with modification the decision rendered on December 3, 1999 by the Regional Devastated by the early and unexpected death of Aaron, the Zarates commenced this action
Trial Court (RTC), Branch 260, in Parañaque City that had decreed them jointly and severally for damages against Alfaro, the Pereñas, PNR and Alano. The Pereñas and PNR filed their
liable with Philippine National Railways (PNR), their co-defendant, to Spouses Nicolas and respective answers, with cross-claims against each other, but Alfaro could not be served with
Teresita Zarate (Zarates) for the death of their 15-year old son, Aaron John L. Zarate (Aaron), summons.
then a high school student of Don Bosco Technical Institute (Don Bosco).
At the pre-trial, the parties stipulated on the facts and issues, viz:
Antecedents
A. FACTS:
The Pereñas were engaged in the business of transporting students from their respective
residences in Parañaque City to Don Bosco in Pasong Tamo, Makati City, and back. In their (1) That spouses Zarate were the legitimate parents of Aaron John L. Zarate;
business, the Pereñas used a KIA Ceres Van (van) with Plate No. PYA 896, which had the
capacity to transport 14 students at a time, two of whom would be seated in the front beside (2) Spouses Zarate engaged the services of spouses Pereña for the adequate and
the driver, and the others in the rear, with six students on either side. They employed safe transportation carriage of the former spouses' son from their residence in
Clemente Alfaro (Alfaro) as driver of the van. Parañaque to his school at the Don Bosco Technical Institute in Makati City;

40
(3) During the effectivity of the contract of carriage and in the implementation (2) Whether or not the defendant spouses Pereña being the employer of defendant
thereof, Aaron, the minor son of spouses Zarate died in connection with a Alfaro are liable for any negligence which may be attributed to defendant Alfaro;
vehicular/train collision which occurred while Aaron was riding the contracted carrier
Kia Ceres van of spouses Pereña, then driven and operated by the latter's (3) Whether or not defendant Philippine National Railways being the operator of the
employee/authorized driver Clemente Alfaro, which van collided with the train of railroad system is liable for negligence in failing to provide adequate safety warning
PNR, at around 6:45 A.M. of August 22, 1996, within the vicinity of the Magallanes signs and railings in the area commonly used by motorists for railroad crossings,
Interchange in Makati City, Metro Manila, Philippines; constituting the proximate cause of the vehicular collision which resulted in the death
of the plaintiff spouses' son;
(4) At the time of the vehicular/train collision, the subject site of the vehicular/train
collision was a railroad crossing used by motorists for crossing the railroad tracks; (4) Whether or not defendant spouses Pereña are liable for breach of the contract of
carriage with plaintiff-spouses in failing to provide adequate and safe transportation
(5) During the said time of the vehicular/train collision, there were no appropriate and for the latter's son;
safety warning signs and railings at the site commonly used for railroad crossing;
(5) Whether or not defendants spouses are liable for actual, moral damages,
(6) At the material time, countless number of Makati bound public utility and private exemplary damages, and attorney's fees;
vehicles used on a daily basis the site of the collision as an alternative route and
short-cut to Makati; (6) Whether or not defendants spouses Teodorico and Nanette Pereña observed the
diligence of employers and school bus operators;
(7) The train driver or operator left the scene of the incident on board the commuter
train involved without waiting for the police investigator; (7) Whether or not defendant-spouses are civilly liable for the accidental death of
Aaron John Zarate;
(8) The site commonly used for railroad crossing by motorists was not in fact
intended by the railroad operator for railroad crossing at the time of the vehicular (8) Whether or not defendant PNR was grossly negligent in operating the commuter
collision; train involved in the accident, in allowing or tolerating the motoring public to cross,
and its failure to install safety devices or equipment at the site of the accident for the
protection of the public;
(9) PNR received the demand letter of the spouses Zarate;

(9) Whether or not defendant PNR should be made to reimburse defendant spouses
(10) PNR refused to acknowledge any liability for the vehicular/train collision;
for any and whatever amount the latter may be held answerable or which they may
be ordered to pay in favor of plaintiffs by reason of the action;
(11) The eventual closure of the railroad crossing alleged by PNR was an internal
arrangement between the former and its project contractor; and (10) Whether or not defendant PNR should pay plaintiffs directly and fully on the
amounts claimed by the latter in their Complaint by reason of its gross negligence;
(12) The site of the vehicular/train collision was within the vicinity or less than 100
meters from the Magallanes station of PNR. (11) Whether or not defendant PNR is liable to defendants spouses for actual, moral
and exemplary damages and attorney's fees.2
B. ISSUES
The Zarates’ claim against the Pereñas was upon breach of the contract of carriage for the
(1) Whether or not defendant-driver of the van is, in the performance of his functions, safe transport of Aaron; but that against PNR was based on quasi-delict under Article 2176,
liable for negligence constituting the proximate cause of the vehicular collision, which Civil Code.
resulted in the death of plaintiff spouses' son;

41
In their defense, the Pereñas adduced evidence to show that they had exercised the Both the Pereñas and PNR appealed (C.A.-G.R. CV No. 68916).
diligence of a good father of the family in the selection and supervision of Alfaro, by making
sure that Alfaro had been issued a driver’s license and had not been involved in any vehicular PNR assigned the following errors, to wit:5
accident prior to the collision; that their own son had taken the van daily; and that Teodoro
Pereña had sometimes accompanied Alfaro in the van’s trips transporting the students to The Court a quo erred in:
school.
1. In finding the defendant-appellant Philippine National Railways jointly and
For its part, PNR tended to show that the proximate cause of the collision had been the severally liable together with defendant-appellants spouses Teodorico and Nanette
reckless crossing of the van whose driver had not first stopped, looked and listened; and that
Pereña and defendant-appellant Clemente Alfaro to pay plaintiffs-appellees for the
the narrow path traversed by the van had not been intended to be a railroad crossing for
death of Aaron Zarate and damages.
motorists.
2. In giving full faith and merit to the oral testimonies of plaintiffs-appellees witnesses
Ruling of the RTC
despite overwhelming documentary evidence on record, supporting the case of
defendants-appellants Philippine National Railways.
On December 3, 1999, the RTC rendered its decision,3 disposing:
The Pereñas ascribed the following errors to the RTC, namely:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and
against the defendants ordering them to jointly and severally pay the plaintiffs as follows:
The trial court erred in finding defendants-appellants jointly and severally liable for actual,
moral and exemplary damages and attorney’s fees with the other defendants.
(1) (for) the death of Aaron- Php50,000.00;
The trial court erred in dismissing the cross-claim of the appellants Pereñas against the
(2) Actual damages in the amount of Php100,000.00; Philippine National Railways and in not holding the latter and its train driver primarily
responsible for the incident.
(3) For the loss of earning capacity- Php2,109,071.00;
The trial court erred in awarding excessive damages and attorney’s fees.
(4) Moral damages in the amount of Php4,000,000.00;
The trial court erred in awarding damages in the form of deceased’s loss of earning capacity
(5) Exemplary damages in the amount of Php1,000,000.00; in the absence of sufficient basis for such an award.

(6) Attorney’s fees in the amount of Php200,000.00; and On November 13, 2002, the CA promulgated its decision, affirming the findings of the RTC,
but limited the moral damages to ₱ 2,500,000.00; and deleted the attorney’s fees because
(7) Cost of suit. the RTC did not state the factual and legal bases, to wit:6

SO ORDERED. WHEREFORE, premises considered, the assailed Decision of the Regional Trial Court,
Branch 260 of Parañaque City is AFFIRMED with the modification that the award of Actual
Damages is reduced to ₱ 59,502.76; Moral Damages is reduced to ₱ 2,500,000.00; and the
On June 29, 2000, the RTC denied the Pereñas’ motion for reconsideration,4 reiterating that
award for Attorney’s Fees is Deleted.
the cooperative gross negligence of the Pereñas and PNR had caused the collision that led
to the death of Aaron; and that the damages awarded to the Zarates were not excessive, but
based on the established circumstances. SO ORDERED.

The CA’s Ruling


42
The CA upheld the award for the loss of Aaron’s earning capacity, taking cognizance of the 1.
ruling in Cariaga v. Laguna Tayabas Bus Company and Manila Railroad Company,7 wherein Were the Pereñas and PNR jointly
the Court gave the heirs of Cariaga a sum representing the loss of the deceased’s earning and severally liable for damages?
capacity despite Cariaga being only a medical student at the time of the fatal incident.
Applying the formula adopted in the American Expectancy Table of Mortality:– The Zarates brought this action for recovery of damages against both the Pereñas and the
PNR, basing their claim against the Pereñas on breach of contract of carriage and against
2/3 x (80 - age at the time of death) = life expectancy the PNR on quasi-delict.

the CA determined the life expectancy of Aaron to be 39.3 years upon reckoning his life The RTC found the Pereñas and the PNR negligent. The CA affirmed the findings.
expectancy from age of 21 (the age when he would have graduated from college and started
working for his own livelihood) instead of 15 years (his age when he died). Considering that We concur with the CA.
the nature of his work and his salary at the time of Aaron’s death were unknown, it used the
prevailing minimum wage of ₱ 280.00/day to compute Aaron’s gross annual salary to be ₱ To start with, the Pereñas’ defense was that they exercised the diligence of a good father of
110,716.65, inclusive of the thirteenth month pay. Multiplying this annual salary by Aaron’s
the family in the selection and supervision of Alfaro, the van driver, by seeing to it that Alfaro
life expectancy of 39.3 years, his gross income would aggregate to ₱ 4,351,164.30, from
had a driver’s license and that he had not been involved in any vehicular accident prior to the
which his estimated expenses in the sum of ₱ 2,189,664.30 was deducted to finally arrive at
fatal collision with the train; that they even had their own son travel to and from school on a
P 2,161,500.00 as net income. Due to Aaron’s computed net income turning out to be higher
daily basis; and that Teodoro Pereña himself sometimes accompanied Alfaro in transporting
than the amount claimed by the Zarates, only ₱ 2,109,071.00, the amount expressly prayed the passengers to and from school. The RTC gave scant consideration to such defense by
for by them, was granted. regarding such defense as inappropriate in an action for breach of contract of carriage.

On April 4, 2003, the CA denied the Pereñas’ motion for reconsideration. 8


We find no adequate cause to differ from the conclusions of the lower courts that the Pereñas
operated as a common carrier; and that their standard of care was extraordinary diligence,
Issues not the ordinary diligence of a good father of a family.

In this appeal, the Pereñas list the following as the errors committed by the CA, to wit: Although in this jurisdiction the operator of a school bus service has been usually regarded as
a private carrier,9primarily because he only caters to some specific or privileged individuals,
I. The lower court erred when it upheld the trial court’s decision holding the petitioners jointly and his operation is neither open to the indefinite public nor for public use, the exact nature of
and severally liable to pay damages with Philippine National Railways and dismissing their the operation of a school bus service has not been finally settled. This is the occasion to lay
cross-claim against the latter. the matter to rest.

II. The lower court erred in affirming the trial court’s decision awarding damages for loss of A carrier is a person or corporation who undertakes to transport or convey goods or persons
earning capacity of a minor who was only a high school student at the time of his death in the from one place to another, gratuitously or for hire. The carrier is classified either as a
absence of sufficient basis for such an award. private/special carrier or as a common/public carrier.10 A private carrier is one who, without
making the activity a vocation, or without holding himself or itself out to the public as ready to
III. The lower court erred in not reducing further the amount of damages awarded, assuming act for all who may desire his or its services, undertakes, by special agreement in a particular
petitioners are liable at all. instance only, to transport goods or persons from one place to another either gratuitously or
for hire.11 The provisions on ordinary contracts of the Civil Code govern the contract of private
Ruling carriage.The diligence required of a private carrier is only ordinary, that is, the diligence of a
good father of the family. In contrast, a common carrier is a person, corporation, firm or
association engaged in the business of carrying or transporting passengers or goods or both,
The petition has no merit. by land, water, or air, for compensation, offering such services to the public. 12 Contracts of
common carriage are governed by the provisions on common carriers of the Civil Code, the
Public Service Act,13 and other special laws relating to transportation. A common carrier is
43
required to observe extraordinary diligence, and is presumed to be at fault or to have acted As all the foregoing indicate, the true test for a common carrier is not the quantity or extent of
negligently in case of the loss of the effects of passengers, or the death or injuries to the business actually transacted, or the number and character of the conveyances used in
passengers.14 the activity, but whether the undertaking is a part of the activity engaged in by the carrier that
he has held out to the general public as his business or occupation. If the undertaking is a
In relation to common carriers, the Court defined public use in the following terms in United single transaction, not a part of the general business or occupation engaged in, as advertised
States v. Tan Piaco,15viz: and held out to the general public, the individual or the entity rendering such service is a
private, not a common, carrier. The question must be determined by the character of the
"Public use" is the same as "use by the public". The essential feature of the public use is not business actually carried on by the carrier, not by any secret intention or mental reservation it
confined to privileged individuals, but is open to the indefinite public. It is this indefinite or may entertain or assert when charged with the duties and obligations that the law imposes. 21
unrestricted quality that gives it its public character. In determining whether a use is public,
we must look not only to the character of the business to be done, but also to the proposed Applying these considerations to the case before us, there is no question that the Pereñas as
mode of doing it. If the use is merely optional with the owners, or the public benefit is merely the operators of a school bus service were: (a) engaged in transporting passengers generally
incidental, it is not a public use, authorizing the exercise of the jurisdiction of the public utility as a business, not just as a casual occupation; (b) undertaking to carry passengers over
commission. There must be, in general, a right which the law compels the owner to give to established roads by the method by which the business was conducted; and (c) transporting
the general public. It is not enough that the general prosperity of the public is promoted. students for a fee. Despite catering to a limited clientèle, the Pereñas operated as a common
Public use is not synonymous with public interest. The true criterion by which to judge the carrier because they held themselves out as a ready transportation indiscriminately to the
character of the use is whether the public may enjoy it by right or only by permission. students of a particular school living within or near where they operated the service and for a
fee.
In De Guzman v. Court of Appeals,16 the Court noted that Article 1732 of the Civil Code
avoided any distinction between a person or an enterprise offering transportation on a regular The common carrier’s standard of care and vigilance as to the safety of the passengers is
or an isolated basis; and has not distinguished a carrier offering his services to the general defined by law. Given the nature of the business and for reasons of public policy, the
public, that is, the general community or population, from one offering his services only to a common carrier is bound "to observe extraordinary diligence in the vigilance over the goods
narrow segment of the general population. and for the safety of the passengers transported by them, according to all the circumstances
of each case."22 Article 1755 of the Civil Code specifies that the common carrier should "carry
the passengers safely as far as human care and foresight can provide, using the utmost
Nonetheless, the concept of a common carrier embodied in Article 1732 of the Civil Code
diligence of very cautious persons, with a due regard for all the circumstances." To
coincides neatly with the notion of public service under the Public Service Act, which
successfully fend off liability in an action upon the death or injury to a passenger, the
supplements the law on common carriers found in the Civil Code. Public service, according to
common carrier must prove his or its observance of that extraordinary diligence; otherwise,
Section 13, paragraph (b) of the Public Service Act, includes:
the legal presumption that he or it was at fault or acted negligently would stand.23 No device,
whether by stipulation, posting of notices, statements on tickets, or otherwise, may dispense
x x x every person that now or hereafter may own, operate, manage, or control in the with or lessen the responsibility of the common carrier as defined under Article 1755 of the
Philippines, for hire or compensation, with general or limited clientèle, whether permanent or Civil Code. 24
occasional, and done for the general business purposes, any common carrier, railroad, street
railway, traction railway, subway motor vehicle, either for freight or passenger, or both, with or
without fixed route and whatever may be its classification, freight or carrier service of any And, secondly, the Pereñas have not presented any compelling defense or reason by which
class, express service, steamboat, or steamship line, pontines, ferries and water craft, the Court might now reverse the CA’s findings on their liability. On the contrary, an
examination of the records shows that the evidence fully supported the findings of the CA.
engaged in the transportation of passengers or freight or both, shipyard, marine repair shop,
ice-refrigeration plant, canal, irrigation system, gas, electric light, heat and power, water
supply and power petroleum, sewerage system, wire or wireless communications systems, As earlier stated, the Pereñas, acting as a common carrier, were already presumed to be
wire or wireless broadcasting stations and other similar public services. x x x. 17 negligent at the time of the accident because death had occurred to their passenger. 25 The
presumption of negligence, being a presumption of law, laid the burden of evidence on their
shoulders to establish that they had not been negligent.26 It was the law no less that required
Given the breadth of the aforequoted characterization of a common carrier, the Court has
them to prove their observance of extraordinary diligence in seeing to the safe and secure
considered as common carriers pipeline operators,18 custom brokers and
carriage of the passengers to their destination. Until they did so in a credible manner, they
warehousemen,19 and barge operators20 even if they had limited clientèle.
44
stood to be held legally responsible for the death of Aaron and thus to be held liable for all the The test by which to determine the existence of negligence in a particular case may be stated
natural consequences of such death. as follows: Did the 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,
There is no question that the Pereñas did not overturn the presumption of their negligence by then he is guilty of negligence. The law here in effect adopts the standard supposed to be
credible evidence. Their defense of having observed the diligence of a good father of a family supplied by the imaginary conduct of the discreet paterfamilias of the Roman law. The
in the selection and supervision of their driver was not legally sufficient. According to Article existence of negligence in a given case is not determined by reference to the personal
1759 of the Civil Code, their liability as a common carrier did not cease upon proof that they judgment of the actor in the situation before him. The law considers what would be reckless,
exercised all the diligence of a good father of a family in the selection and supervision of their blameworthy, or negligent in the man of ordinary intelligence and prudence and determines
employee. This was the reason why the RTC treated this defense of the Pereñas as liability by that.
inappropriate in this action for breach of contract of carriage.
The question as to what would constitute the conduct of a prudent man in a given situation
The Pereñas were liable for the death of Aaron despite the fact that their driver might have must of course be always determined in the light of human experience and in view of the
acted beyond the scope of his authority or even in violation of the orders of the common facts involved in the particular case. Abstract speculation cannot here be of much value but
carrier.27 In this connection, the records showed their driver’s actual negligence. There was a this much can be profitably said: Reasonable men govern their conduct by the circumstances
showing, to begin with, that their driver traversed the railroad tracks at a point at which the which are before them or known to them. They are not, and are not supposed to be,
PNR did not permit motorists going into the Makati area to cross the railroad tracks. Although omniscient of the future. Hence they can be expected to take care only when there is
that point had been used by motorists as a shortcut into the Makati area, that fact alone did something before them to suggest or warn of danger. Could a prudent man, in the case under
not excuse their driver into taking that route. On the other hand, with his familiarity with that consideration, foresee harm as a result of the course actually pursued? If so, it was the duty
shortcut, their driver was fully aware of the risks to his passengers but he still disregarded the of the actor to take precautions to guard against that harm. Reasonable foresight of harm,
risks. Compounding his lack of care was that loud music was playing inside the air- followed by the ignoring of the suggestion born of this prevision, is always necessary before
conditioned van at the time of the accident. The loudness most probably reduced his ability to negligence can be held to exist. Stated in these terms, the proper criterion for determining the
hear the warning horns of the oncoming train to allow him to correctly appreciate the lurking existence of negligence in a given case is this: Conduct is said to be negligent when a
dangers on the railroad tracks. Also, he sought to overtake a passenger bus on the left side prudent man in the position of the tortfeasor would have foreseen that an effect harmful to
as both vehicles traversed the railroad tracks. In so doing, he lost his view of the train that another was sufficiently probable to warrant his foregoing the conduct or guarding against its
was then coming from the opposite side of the passenger bus, leading him to miscalculate his consequences. (Emphasis supplied)
chances of beating the bus in their race, and of getting clear of the train. As a result, the bus
avoided a collision with the train but the van got slammed at its rear, causing the fatality. Pursuant to the Picart v. Smith test of negligence, the Pereñas’ driver was entirely negligent
Lastly, he did not slow down or go to a full stop before traversing the railroad tracks despite when he traversed the railroad tracks at a point not allowed for a motorist’s crossing despite
knowing that his slackening of speed and going to a full stop were in observance of the right being fully aware of the grave harm to be thereby caused to his passengers; and when he
of way at railroad tracks as defined by the traffic laws and regulations. 28He thereby violated a disregarded the foresight of harm to his passengers by overtaking the bus on the left side as
specific traffic regulation on right of way, by virtue of which he was immediately presumed to to leave himself blind to the approach of the oncoming train that he knew was on the opposite
be negligent.29 side of the bus.

The omissions of care on the part of the van driver constituted negligence, 30 which, according Unrelenting, the Pereñas cite Phil. National Railways v. Intermediate Appellate Court, 35 where
to Layugan v. Intermediate Appellate Court,31 is "the omission to do something which a the Court held the PNR solely liable for the damages caused to a passenger bus and its
reasonable man, guided by those considerations which ordinarily regulate the conduct of passengers when its train hit the rear end of the bus that was then traversing the railroad
human affairs, would do, or the doing of something which a prudent and reasonable man crossing. But the circumstances of that case and this one share no similarities. In Philippine
would not do,32 or as Judge Cooley defines it, ‘(t)he failure to observe for the protection of the National Railways v. Intermediate Appellate Court, no evidence of contributory negligence
interests of another person, that degree of care, precaution, and vigilance which the was adduced against the owner of the bus. Instead, it was the owner of the bus who proved
circumstances justly demand, whereby such other person suffers injury.’"33 the exercise of extraordinary diligence by preponderant evidence. Also, the records are
replete with the showing of negligence on the part of both the Pereñas and the PNR. Another
The test by which to determine the existence of negligence in a particular case has been distinction is that the passenger bus in Philippine National Railways v. Intermediate Appellate
aptly stated in the leading case of Picart v. Smith,34 thuswise:

45
Court was traversing the dedicated railroad crossing when it was hit by the train, but the the Manila Aero Club to pursue his ambition to become a professional pilot. That meant,
Pereñas’ school van traversed the railroad tracks at a point not intended for that purpose. according to the Court, that he was for all intents and purposes only a high school graduate.

At any rate, the lower courts correctly held both the Pereñas and the PNR "jointly and We reject the Pereñas’ submission.
severally" liable for damages arising from the death of Aaron. They had been impleaded in
the same complaint as defendants against whom the Zarates had the right to relief, whether First of all, a careful perusal of the Teehankee, Jr. case shows that the situation there of Jussi
jointly, severally, or in the alternative, in respect to or arising out of the accident, and Leino was not akin to that of Aaron here. The CA and the RTC were not speculating that
questions of fact and of law were common as to the Zarates.36 Although the basis of the right Aaron would be some highly-paid professional, like a pilot (or, for that matter, an engineer, a
to relief of the Zarates (i.e., breach of contract of carriage) against the Pereñas was distinct physician, or a lawyer). Instead, the computation of Aaron’s earning capacity was premised
from the basis of the Zarates’ right to relief against the PNR (i.e., quasi-delict under Article on him being a lowly minimum wage earner despite his being then enrolled at a prestigious
2176, Civil Code), they nonetheless could be held jointly and severally liable by virtue of their high school like Don Bosco in Makati, a fact that would have likely ensured his success in his
respective negligence combining to cause the death of Aaron. As to the PNR, the RTC rightly later years in life and at work.
found the PNR also guilty of negligence despite the school van of the Pereñas traversing the
railroad tracks at a point not dedicated by the PNR as a railroad crossing for pedestrians and And, secondly, the fact that Aaron was then without a history of earnings should not be taken
motorists, because the PNR did not ensure the safety of others through the placing of
against his parents and in favor of the defendants whose negligence not only cost Aaron his
crossbars, signal lights, warning signs, and other permanent safety barriers to prevent
life and his right to work and earn money, but also deprived his parents of their right to his
vehicles or pedestrians from crossing there. The RTC observed that the fact that a crossing
presence and his services as well. Our law itself states that the loss of the earning capacity of
guard had been assigned to man that point from 7 a.m. to 5 p.m. was a good indicium that
the deceased shall be the liability of the guilty party in favor of the heirs of the deceased, and
the PNR was aware of the risks to others as well as the need to control the vehicular and shall in every case be assessed and awarded by the court "unless the deceased on account
other traffic there. Verily, the Pereñas and the PNR were joint tortfeasors. of permanent physical disability not caused by the defendant, had no earning capacity at the
time of his death."38 Accordingly, we emphatically hold in favor of the indemnification for
2. Aaron’s loss of earning capacity despite him having been unemployed, because
Was the indemnity for loss of compensation of this nature is awarded not for loss of time or earnings but for loss of the
Aaron’s earning capacity proper? deceased’s power or ability to earn money.39

The RTC awarded indemnity for loss of Aaron’s earning capacity. Although agreeing with the This favorable treatment of the Zarates’ claim is not unprecedented. In Cariaga v. Laguna
RTC on the liability, the CA modified the amount. Both lower courts took into consideration Tayabas Bus Company and Manila Railroad Company, 40 fourth-year medical student
that Aaron, while only a high school student, had been enrolled in one of the reputable Edgardo Carriaga’s earning capacity, although he survived the accident but his injuries
schools in the Philippines and that he had been a normal and able-bodied child prior to his rendered him permanently incapacitated, was computed to be that of the physician that he
death. The basis for the computation of Aaron’s earning capacity was not what he would dreamed to become. The Court considered his scholastic record sufficient to justify the
have become or what he would have wanted to be if not for his untimely death, but the assumption that he could have finished the medical course and would have passed the
minimum wage in effect at the time of his death. Moreover, the RTC’s computation of Aaron’s medical board examinations in due time, and that he could have possibly earned a modest
life expectancy rate was not reckoned from his age of 15 years at the time of his death, but income as a medical practitioner. Also, in People v. Sanchez,41 the Court opined that murder
on 21 years, his age when he would have graduated from college. and rape victim Eileen Sarmienta and murder victim Allan Gomez could have easily landed
good-paying jobs had they graduated in due time, and that their jobs would probably pay
We find the considerations taken into account by the lower courts to be reasonable and fully them high monthly salaries from ₱ 10,000.00 to ₱ 15,000.00 upon their graduation. Their
warranted. earning capacities were computed at rates higher than the minimum wage at the time of their
deaths due to their being already senior agriculture students of the University of the
Yet, the Pereñas submit that the indemnity for loss of earning capacity was speculative and Philippines in Los Baños, the country’s leading educational institution in agriculture.
unfounded.1âwphi1 They cited People v. Teehankee, Jr.,37 where the Court deleted the
indemnity for victim Jussi Leino’s loss of earning capacity as a pilot for being speculative due 3.
to his having graduated from high school at the International School in Manila only two years Were the amounts of damages excessive?
before the shooting, and was at the time of the shooting only enrolled in the first semester at
46
The Pereñas plead for the reduction of the moral and exemplary damages awarded to the
Zarates in the respective amounts of ₱ 2,500,000.00 and ₱ 1,000,000.00 on the ground that
such amounts were excessive.

The plea is unwarranted.

The moral damages of ₱ 2,500,000.00 were really just and reasonable under the established
circumstances of this case because they were intended by the law to assuage the Zarates’
deep mental anguish over their son’s unexpected and violent death, and their moral shock
over the senseless accident. That amount would not be too much, considering that it would
help the Zarates obtain the means, diversions or amusements that would alleviate their
suffering for the loss of their child. At any rate, reducing the amount as excessive might prove
to be an injustice, given the passage of a long time from when their mental anguish was
inflicted on them on August 22, 1996.

Anent the ₱ 1,000,000.00 allowed as exemplary damages, we should not reduce the amount
if only to render effective the desired example for the public good. As a common carrier, the
Pereñas needed to be vigorously reminded to observe their duty to exercise extraordinary
diligence to prevent a similarly senseless accident from happening again. Only by an award
of exemplary damages in that amount would suffice to instill in them and others similarly
situated like them the ever-present need for greater and constant vigilance in the conduct of a
business imbued with public interest.

WHEREFORE, we DENY the petition for review on certiorari; AFFIRM the decision
promulgated on November 13, 2002; and ORDER the petitioners to pay the costs of suit.

SO ORDERED.

47
FIRST DIVISION antero-lateral compartment of lower leg.
Fracture, open comminuted, both tibial4
G.R. No. 147791 September 8, 2006
Thereafter, respondents filed a Complaint5 for damages against CDCP, BLTB, Espiridion
CONSTRUCTION DEVELOPMENT CORPORATION OF THE PHILIPPINES, petitioner, Payunan, Jr. and Wilfredo Datinguinoo before the Regional Trial Court of Manila, Branch 13.
vs. They alleged (1) that Payunan, Jr. and Datinguinoo, who were the drivers of CDCP and BLTB
REBECCA G. ESTRELLA, RACHEL E. FLETCHER, PHILIPPINE PHOENIX SURETY & buses, respectively, were negligent and did not obey traffic laws; (2) that BLTB and CDCP
INSURANCE INC., BATANGAS LAGUNA TAYABAS BUS CO., and WILFREDO did not exercise the diligence of a good father of a family in the selection and supervision of
DATINGUINOO, respondents. their employees; (3) that BLTB allowed its bus to operate knowing that it lacked proper
maintenance thus exposing its passengers to grave danger; (4) that they suffered actual
damages amounting to P250,000.00 for Estrella and P300,000.00 for Fletcher; (5) that they
DECISION
suffered physical discomfort, serious anxiety, fright and mental anguish, besmirched
reputation and wounded feelings, moral shock, and lifelong social humiliation; (6) that
YNARES-SANTIAGO, J.: defendants failed to act with justice, give respondents their due, observe honesty and good
faith which entitles them to claim for exemplary damage; and (7) that they are entitled to a
This petition for review assails the March 29, 2001 Decision1 of the Court of Appeals in CA- reasonable amount of attorney's fees and litigation expenses.
G.R. CV No. 46896, which affirmed with modification the February 9, 1993 Decision2 of the
Regional Trial Court of Manila, Branch 13, in Civil Case No. R-82-2137, finding Batangas CDCP filed its Answer6 which was later amended to include a third-party complaint against
Laguna Tayabas Bus Co. (BLTB) and Construction Development Corporation of the Philippine Phoenix Surety and Insurance, Inc. (Phoenix).7
Philippines (CDCP) liable for damages.
On February 9, 1993, the trial court rendered a decision finding CDCP and BLTB and their
The antecedent facts are as follows: employees liable for damages, the dispositive portion of which, states:

On December 29, 1978, respondents Rebecca G. Estrella and her granddaughter, Rachel E. WHEREFORE, judgment is rendered:
Fletcher, boarded in San Pablo City, a BLTB bus bound for Pasay City. However, they never
reached their destination because their bus was rammed from behind by a tractor-truck of
In the Complaint –
CDCP in the South Expressway. The strong impact pushed forward their seats and pinned
their knees to the seats in front of them. They regained consciousness only when rescuers
created a hole in the bus and extricated their legs from under the seats. They were brought to 1. In favor of the plaintiffs and against the defendants BLTB, Wilfredo Datinguinoo,
the Makati Medical Center where the doctors diagnosed their injuries to be as follows: Construction and Development Corporation of the Philippines (now PNCC) and
Espiridion Payunan, Jr., ordering said defendants, jointly and severally to pay the
Medical Certificate of Rebecca Estrella plaintiffs the sum of P79,254.43 as actual damages and to pay the sum of
P10,000.00 as attorney's fees or a total of P89,254.43;
Fracture, left tibia mid 3rd
2. In addition, defendant Construction and Development Corporation of the
Lacerated wound, chin
Philippines and defendant Espiridion Payunan, Jr., shall pay the plaintiffs the amount
Contusions with abrasions, left lower leg
Fracture, 6th and 7th ribs, right3 of Fifty Thousand (P50,000.00) Pesos to plaintiff Rachel Fletcher and Twenty Five
Thousand (P25,000.00) Pesos to plaintiff Rebecca Estrella;
Medical Certificate of Rachel Fletcher
3. On the counterclaim of BLTB Co. and Wilfredo Datinguinoo –
Extensive lacerated wounds, right leg posterior aspect popliteal area
and antero-lateral aspect mid lower leg with severance of muscles. Dismissing the counterclaim;
Partial amputation BK left leg with severance of gastro-soleus and
48
4. On the crossclaim against Construction and Development Corporation of the WHEREFORE, the assailed decision dated October 7, 1993 of the Regional Trial
Philippines (now PNCC) and Espiridion Payunan, Jr. – Court, Branch 13, Manila is hereby AFFIRMED with the following MODIFICATION:

Dismissing the crossclaim; 1. The interest of six (6) percent per annum on the actual damages of P79,354.43
should commence to run from the time the judicial demand was made or from the
5. On the counterclaim of Construction and Development Corporation of the filing of the complaint on February 4, 1980;
Philippines (now PNCC) –
2. Thirty (30) percent of the total amount recovered is hereby awarded as attorney's
Dismissing the counterclaim; fees;

6. On the crossclaim against BLTB – 3. Defendants-appellants Construction and Development Corporation of the
Philippines (now PNCC) and Espiridion Payunan, Jr. are ordered to pay plaintiff-
appellants Rebecca Estrella and Rachel Fletcher the amount of Twenty Thousand
Dismissing the crossclaim;
(P20,000.00) each as exemplary damages and P80,000.00 by way of moral
damages to Rachel Fletcher.
7. On the Third Party Complaint by Construction and Development Corporation of the
Philippines against Philippine Phoenix Surety and Insurance, Incorporated –
SO ORDERED.12
Dismissing the Third Party Complaint.
The Court of Appeals held that the actual or compensatory damage sought by respondents
for the injuries they sustained in the form of hospital bills were already liquidated and were
SO ORDERED.8 ascertained. Accordingly, the 6% interest per annum should commence to run from the time
the judicial demand was made or from the filing of the complaint and not from the date of
The trial court held that BLTB, as a common carrier, was bound to observe extraordinary judgment. The Court of Appeals also awarded attorney's fees equivalent to 30% of the total
diligence in the vigilance over the safety of its passengers. It must carry the passengers amount recovered based on the retainer agreement of the parties. The appellate court also
safely as far as human care and foresight provide, using the utmost diligence of very cautious held that respondents are entitled to exemplary and moral damages. Finally, it affirmed the
persons, with a due regard for all the circumstances. Thus, where a passenger dies or is ruling of the trial court that the claim of CDCP against Phoenix had already prescribed.
injured, the carrier is presumed to have been at fault or has acted negligently. BLTB's inability
to carry respondents to their destination gave rise to an action for breach of contract of Hence, this petition raising the following issues:
carriage while its failure to rebut the presumption of negligence made it liable to respondents
for the breach.9
I
Regarding CDCP, the trial court found that the tractor-truck it owned bumped the BLTB bus
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN NOT
from behind. Evidence showed that CDCP's driver was reckless and driving very fast at the
HOLDING RESPONDENTS BLTB AND/OR ITS DRIVER WILFREDO
time of the incident. The gross negligence of its driver raised the presumption that CDCP was
DATINGUINOO SOLELY LIABLE FOR THE DAMAGES SUSTAINED BY HEREIN
negligent either in the selection or in the supervision of its employees which it failed to rebut
thus making it and its driver liable to respondents.10 RESPONDENTS FLETCHER AND ESTRELLA.

II
Unsatisfied with the award of damages and attorney's fees by the trial court, respondents
moved that the decision be reconsidered but was denied. Respondents elevated the
case11 to the Court of Appeals which affirmed the decision of the trial court but modified the WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN AWARDING
amount of damages, the dispositive portion of which provides: EXCESSIVE OR UNFOUNDED DAMAGES, ATTORNEY'S FEES AND LEGAL
INTEREST TO RESPONDENTS FLETCHER AND ESTRELLA.

49
III It is well-settled in Fabre, Jr. v. Court of Appeals,15 that the owner of the other vehicle which
collided with a common carrier is solidarily liable to the injured passenger of the same. We
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN NOT held, thus:
HOLDING RESPONDENT PHOENIX LIABLE UNDER ITS INSURANCE POLICY ON
THE GROUND OF PRESCRIPTION. The same rule of liability was applied in situations where the negligence of the driver
of the bus on which plaintiff was riding concurred with the negligence of a third party
The issues for resolution are as follows: (1) whether BLTB and its driver Wilfredo Datinguinoo who was the driver of another vehicle, thus causing an accident. In Anuran v.
are solely liable for the damages sustained by respondents; (2) whether the damages, Buño, Batangas Laguna Tayabas Bus Co. v. Intermediate Appellate Court,
attorney's fees and legal interest awarded by the CA are excessive and unfounded; (3) and Metro Manila Transit Corporation v. Court of Appeals, the bus company, its
whether CDCP can recover under its insurance policy from Phoenix. driver, the operator of the other vehicle and the driver of the vehicle were
jointly and severally held liable to the injured passenger or the latter's
heirs. The basis of this allocation of liability was explained in Viluan v. Court of
Petitioner contends that since it was made solidarily liable with BLTB for actual damages and
Appeals, thus:
attorney's fees in paragraph 1 of the trial court's decision, then it should no longer be held
liable to pay the amounts stated in paragraph 2 of the same decision. Petitioner claims that
the liability for actual damages and attorney's fees is based on culpa contractual, thus, only Nor should it make any difference that the liability of petitioner [bus owner]
BLTB should be held liable. As regards paragraph 2 of the trial court's decision, petitioner springs from contract while that of respondents [owner and driver of other
claims that it is ambiguous and arbitrary because the dispositive portion did not state the vehicle] arises from quasi-delict. As early as 1913, we already ruled in
basis and nature of such award. Gutierrez vs. Gutierrez, 56 Phil. 177, that in case of injury to a passenger due to the
negligence of the driver of the bus on which he was riding and of the driver of another
vehicle, the drivers as well as the owners of the two vehicles are jointly and severally
Respondents, on the other hand, argue that petitioner is also at fault, hence, it was properly
liable for damages. x x x
joined as a party. There may be an action arising out of one incident where questions of fact
are common to all. Thus, the cause of action based on culpa aquiliana in the civil suit they
filed against it was valid. xxxx

The petition lacks merit. As in the case of BLTB, private respondents in this case and her co-plaintiffs did not
stake out their claim against the carrier and the driver exclusively on one theory,
much less on that of breach of contract alone. After all, it was permitted for them
The case filed by respondents against petitioner is an action for culpa aquiliana or quasi-
to allege alternative causes of action and join as many parties as may be liable
delict under Article 2176 of the Civil Code.13 In this regard, Article 2180 provides that the
on such causes of action so long as private respondent and her co-plaintiffs do
obligation imposed by Article 2176 is demandable for the acts or omissions of those persons
not recover twice for the same injury. What is clear from the cases is the intent of
for whom one is responsible. Consequently, an action based on quasi-delict may be instituted
the plaintiff there to recover from both the carrier and the driver, thus justifying the
against the employer for an employee's act or omission. The liability for the negligent conduct
of the subordinate is direct and primary, but is subject to the defense of due diligence in the holding that the carrier and the driver were jointly and severally liable because their
separate and distinct acts concurred to produce the same injury.16 (Emphasis
selection and supervision of the employee.14 In the instant case, the trial court found that
petitioner failed to prove that it exercised the diligence of a good father of a family in the supplied)
selection and supervision of Payunan, Jr.
In a "joint" obligation, each obligor answers only for a part of the whole liability; in a "solidary"
or "joint and several" obligation, the relationship between the active and the passive subjects
The trial court and the Court of Appeals found petitioner solidarily liable with BLTB for the
actual damages suffered by respondents because of the injuries they sustained. It was is so close that each of them must comply with or demand the fulfillment of the whole
obligation. In Lafarge Cement v. Continental Cement Corporation,17 we reiterated that joint
established that Payunan, Jr. was driving recklessly because of the skid marks as shown in
tort feasors are jointly and severally liable for the tort which they commit. Citing Worcester v.
the sketch of the police investigator.
Ocampo,18 we held that:

50
x x x The difficulty in the contention of the appellants is that they fail to recognize that Moral damages may be recovered in quasi-delicts causing physical injuries.21 The award of
the basis of the present action is tort. They fail to recognize the universal doctrine moral damages in favor of Fletcher and Estrella in the amount of P80,000.00 must be
that each joint tort feasor is not only individually liable for the tort in which he reduced since prevailing jurisprudence fixed the same at P50,000.00.22 While moral damages
participates, but is also jointly liable with his tort feasors. x x x are not intended to enrich the plaintiff at the expense of the defendant, the award should
nonetheless be commensurate to the suffering inflicted.23
It may be stated as a general rule that joint tort feasors are all the persons who
command, instigate, promote, encourage, advise, countenance, cooperate in, aid or The Court of Appeals correctly awarded respondents exemplary damages in the amount of
abet the commission of a tort, or who approve of it after it is done, if done for their P20,000.00 each. Exemplary damages may be awarded in addition to moral and
benefit. They are each liable as principals, to the same extent and in the same compensatory damages.24 Article 2231 of the Civil Code also states that in quasi-delicts,
manner as if they had performed the wrongful act themselves. x x x exemplary damages may be granted if the defendant acted with gross negligence. 25 In this
case, petitioner's driver was driving recklessly at the time its truck rammed the BLTB bus.
Joint tort feasors are jointly and severally liable for the tort which they commit. The Petitioner, who has direct and primary liability for the negligent conduct of its subordinates,
persons injured may sue all of them or any number less than all. Each is liable for the was also found negligent in the selection and supervision of its employees. In Del Rosario v.
whole damages caused by all, and all together are jointly liable for the whole Court of Appeals,26 we held, thus:
damage. It is no defense for one sued alone, that the others who participated in the
wrongful act are not joined with him as defendants; nor is it any excuse for him that ART. 2229 of the Civil Code also provides that such damages may be imposed, by
his participation in the tort was insignificant as compared to that of the others. x x x way of example or correction for the public good. While exemplary damages cannot
be recovered as a matter of right, they need not be proved, although plaintiff must
Joint tort feasors are not liable pro rata. The damages can not be apportioned among show that he is entitled to moral, temperate or compensatory damages before the
them, except among themselves. They cannot insist upon an apportionment, for the court may consider the question of whether or not exemplary damages should be
purpose of each paying an aliquot part. They are jointly and severally liable for the awarded. Exemplary Damages are imposed not to enrich one party or impoverish
whole amount. x x x another but to serve as a deterrent against or as a negative incentive to curb socially
deleterious actions.
A payment in full for the damage done, by one of the joint tort feasors, of course
satisfies any claim which might exist against the others. There can be but Regarding attorney's fees, we held in Traders Royal Bank Employees Union-Independent v.
satisfaction. The release of one of the joint tort feasors by agreement generally National Labor Relations Commission,27 that:
operates to discharge all. x x x
There are two commonly accepted concepts of attorney's fees, the so-called ordinary
Of course the court during trial may find that some of the alleged tort feasors are and extraordinary. In its ordinary concept, an attorney's fee is the reasonable
liable and that others are not liable. The courts may release some for lack of compensation paid to a lawyer by his client for the legal services he has rendered to
evidence while condemning others of the alleged tort feasors. And this is true even the latter. The basis of this compensation is the fact of his employment by and his
though they are charged jointly and severally.19 agreement with the client.

Petitioner's claim that paragraph 2 of the dispositive portion of the trial court's decision is In its extraordinary concept, an attorney's fee is an indemnity for damages
ambiguous and arbitrary and also entitles respondents to recover twice is without basis. In ordered by the court to be paid by the losing party in a litigation. The basis of
the body of the trial court's decision, it was clearly stated that petitioner and its driver this is any of the cases provided by law where such award can be made, such as
Payunan, Jr., are jointly and solidarily liable for moral damages in the amount of P50,000.00 those authorized in Article 2208, Civil Code, and is payable not to the lawyer but to
to respondent Fletcher and P25,000.00 to respondent Estrella. 20 Moreover, there could be no the client, unless they have agreed that the award shall pertain to the lawyer as
double recovery because the award in paragraph 2 is for moral damages while the award in additional compensation or as part thereof.28 (Emphasis supplied)
paragraph 1 is for actual damages and attorney's fees.
In the instant case, the Court of Appeals correctly awarded attorney's fees and other
Petitioner next claims that the damages, attorney's fees, and legal interest awarded by the expenses of litigation as they may be recovered as actual or compensatory damages when
Court of Appeals are excessive. exemplary damages are awarded; when the defendant acted in gross and evident bad faith in
51
refusing to satisfy the plaintiff's valid, just and demandable claim; and in any other case the time the judgment becomes final and executory, the interest rate shall be 12% until its
where the court deems it just and equitable that attorney's fees and expenses of litigation satisfaction.
should be recovered.29
Anent the last issue of whether petitioner can recover under its insurance policy from
Regarding the imposition of legal interest at the rate of 6% from the time of the filing of the Phoenix, we affirm the findings of both the trial court and the Court of Appeals, thus:
complaint, we held in Eastern Shipping Lines, Inc. v. Court of Appeals,30 that when an
obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or quasi- As regards the liability of Phoenix, the court a quo correctly ruled that defendant-
delicts is breached, the contravenor can be held liable for payment of interest in the concept appellant CDCP's claim against Phoenix already prescribed pursuant to Section 384
of actual and compensatory damages,31 subject to the following rules, to wit – of P.D. 612, as amended, which provides:

1. When the obligation is breached, and it consists in the payment of a sum of Any person having any claim upon the policy issued pursuant to this chapter
money, i.e., a loan or forbearance of money, the interest due should be that which shall, without any unnecessary delay, present to the insurance company
may have been stipulated in writing. Furthermore, the interest due shall itself earn concerned a written notice of claim setting forth the nature, extent and
legal interest from the time it is judicially demanded. In the absence of stipulation, the duration of the injuries sustained as certified by a duly licensed physician.
rate of interest shall be 12% per annum to be computed from default, i.e., from Notice of claim must be filed within six months from date of the accident,
judicial or extrajudicial demand under and subject to the provisions of Article 1169 of otherwise, the claim shall be deemed waived. Action or suit for recovery of
the Civil Code. damage due to loss or injury must be brought in proper cases, with the
Commissioner or Courts within one year from denial of the claim, otherwise,
2. When an obligation, not constituting a loan or forbearance of money, is breached, the claimant's right of action shall prescribe. (As amended by PD 1814, BP
an interest on the amount of damages awarded may be imposed at the discretion of 874.)34
the court at the rate of 6% per annum. No interest, however, shall be adjudged on
unliquidated claims or damages except when or until the demand can be established The law is clear and leaves no room for interpretation. A written notice of claim must be filed
with reasonable certainty. Accordingly, where the demand is established with within six months from the date of the accident. Since petitioner never made any claim within
reasonable certainty, the interest shall begin to run from the time the claim is made six months from the date of the accident, its claim has already prescribed.
judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be
so reasonably established at the time the demand is made, the interest shall begin
WHEREFORE, the instant petition is DENIED. The Decision of the Court of Appeals in CA-
to run only from the date the judgment of the court is made (at which time the
G.R. CV No. 46896 dated March 29, 2001, which modified the Decision of the Regional Trial
quantification of damages may be deemed to have been reasonably Court of Manila, Branch 13, in Civil Case No. R-82-2137, is AFFIRMED with the
ascertained). The actual base for the computation of legal interest shall, in any case, MODIFICATIONS that petitioner is held jointly and severally liable to pay (1) actual damages
be on the amount finally adjudged.
in the amount of P79,354.43; (2) moral damages in the amount of P50,000.00 each for
Rachel Fletcher and Rebecca Estrella; (3) exemplary damages in the amount of P20,000.00
3. When the judgment of the court awarding a sum of money becomes final and each for Rebecca Estrella and Rachel Fletcher; and (4) thirty percent (30%) of the total
executory, the rate of legal interest, whether the case falls under paragraph 1 amount recovered as attorney's fees. The total amount adjudged shall earn interest at the
or paragraph 2, above, shall be 12% per annum from such finality until its rate of 6% per annum from the date of judgment of the trial court until finality of this judgment.
satisfaction, this interim period being deemed to be by then an equivalent to a From the time this Decision becomes final and executory and the judgment amount remains
forbearance of credit.32 (Emphasis supplied) unsatisfied, the same shall earn interest at the rate of 12% per annum until its satisfaction.

Accordingly, the legal interest of 6% shall begin to run on February 9, 1993 when the trial SO ORDERED.
court rendered judgment and not on February 4, 1980 when the complaint was filed. This is
because at the time of the filing of the complaint, the amount of the damages to which
plaintiffs may be entitled remains unliquidated and unknown, until it is definitely ascertained,
assessed and determined by the court and only upon presentation of proof thereon. 33 From

52
THIRD DIVISION The dispositive portion of the trial courts[2] decision dated July 10, 1991, on the other hand,
is as follows:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiffs


[G.R. No. 115849. January 24, 1996] and against the defendants as follows:

1. Declaring the existence of a perfected contract to buy and sell over the six (6) parcels of
land situated at Don Jose, Sta. Rosa, Laguna with an area of 101 hectares, more or less,
FIRST PHILIPPINE INTERNATIONAL BANK (Formerly Producers Bank of the covered by and embraced in Transfer Certificates of Title Nos. T-106932 to T-106937,
Philippines) and MERCURIO RIVERA, petitioners, vs. COURT OF APPEALS, inclusive, of the Land Records of Laguna, between the plaintiffs as buyers and the defendant
CARLOS EJERCITO, in substitution of DEMETRIO DEMETRIA, and JOSE Producers Bank for an agreed price of Five and One Half Million (P5,500,000.00) Pesos;
JANOLO, respondents.
2. Ordering defendant Producers Bank of the Philippines, upon finality of this decision and
DECISION receipt from the plaintiffs the amount of P5.5 Million, to execute in favor of said plaintiffs a
deed of absolute sale over the aforementioned six (6) parcels of land, and to immediately
PANGANIBAN, J.:
deliver to the plaintiffs the owners copies of T.C.T. Nos. T-106932 to T-106937, inclusive, for
purposes of registration of the same deed and transfer of the six (6) titles in the names of the
In the absence of a formal deed of sale, may commitments given by bank officers in an plaintiffs;
exchange of letters and/or in a meeting with the buyers constitute a perfected and enforceable
contract of sale over 101 hectares of land in Sta. Rosa, Laguna? Does the doctrine of apparent
3. Ordering the defendants, jointly and severally, to pay plaintiffs Jose A. Janolo and
authority apply in this case? If so, may the Central Bank-appointed conservator of Producers
Demetrio Demetria the sums of P 200,000.00 each in moral damages;
Bank (now First Philippine International Bank) repudiate such apparent authority after said
contract has been deemed perfected? During the pendency of a suit for specific performance,
does the filing of a derivative suit by the majority shareholders and directors of the distressed 4. Ordering the defendants, jointly and severally, to pay plaintiffs the sum of P 100,000.00 as
bank to prevent the enforcement or implementation of the sale violate the ban against forum- exemplary damages;
shopping?
5. Ordering the defendants, jointly and severally, to pay the plaintiffs the amount of
Simply stated, these are the major questions brought before this Court in the instant P400,000.00 for and by way of attorneys fees;
Petition for review on certiorari under Rule 45 of the Rules of Court, to set aside the Decision
promulgated January 14, 1994 of the respondent Court of Appeals[1] in CA-G.R. CV No. 35756
6. Ordering the defendants to pay the plaintiffs, jointly and severally, actual and moderate
and the Resolution promulgated June 14, 1994 denying the motion for reconsideration. The
damages in the amount of P20,000.00;
dispositive portion of the said Decision reads:
With costs against the defendants.
WHEREFORE, the decision of the lower court is MODIFIED by the elimination of the
damages awarded under paragraphs 3, 4 and 6 of its dispositive portion and the reduction of
the award in paragraph 5 thereof to P75,000.00, to be assessed against defendant bank. In After the parties filed their comment, reply, rejoinder, sur-rejoinder and reply to sur-
all other aspects, said decision is hereby AFFIRMED. rejoinder, the petition was given due course in a Resolution dated January 18, 1995. Thence,
the parties filed their respective memoranda and reply memoranda. The First Division
transferred this case to the Third Division per resolution dated October 23, 1995. After carefully
All references to the original plaintiffs in the decision and its dispositive portion are deemed,
deliberating on the aforesaid submissions, the Court assigned the case to the undersigned
herein and hereafter, to legally refer to the plaintiff-appellee Carlos C. Ejercito.
ponente for the writing of this Decision.
Costs against appellant bank.

The Parties
53
Petitioner First Philippine International Bank (formerly Producers Bank of the Philippines; I have the honor to submit my formal offer to purchase your properties covered by titles listed
petitioner Bank, for brevity) is a banking institution organized and existing under the laws of the hereunder located at Sta. Rosa, Laguna, with a total area of 101 hectares, more or less.
Republic of the Philippines. Petitioner Mercurio Rivera (petitioner Rivera, for brevity) is of legal
age and was, at all times material to this case, Head Manager of the Property Management TCT NO. AREA
Department of the petitioner Bank.
Respondent Carlos Ejercito (respondent Ejercito, for brevity) is of legal age and is the T-106932 113,580 sq.m.
assignee of original plaintiffs-appellees Demetrio Demetria and Jose Janolo. T-106933 70,899 sq.m.
T-106934 52,246 sq.m.
Respondent Court of Appeals is the court which issued the Decision and Resolution T-106935 96,768 sq.m.
sought to be set aside through this petition. T-106936 187,114 sq.m.
T-106937 481,481 sq.m.

The Facts My offer is for PESOS: THREE MILLION FIVE HUNDRED THOUSAND (P3,500,000.00)
PESOS, in cash.

The facts of this case are summarized in the respondent Courts Decision, [3] as follows: Kindly contact me at Telephone Number 921-1344.

(1) In the course of its banking operations, the defendant Producer Bank of the Philippines (3) On September 1, 1987, defendant Rivera made on behalf of the bank a formal reply by
acquired six parcels of land with a total area of 101 hectares located at Don Jose, Sta. Rosa, letter which is hereunder quoted (Exh. C):
Laguna, and covered by Transfer Certificates of Title Nos. T-106932 to T-106937. The
property used to be owned by BYME Investment and Development Corporation which had
September 1, 1987
them mortgaged with the bank as collateral fora loan. The original plaintiffs, Demetrio
Demetria and Jose O. Janolo, wanted to purchase the property and thus initiated negotiations
for that purpose. J-P M-P GUTIERREZ ENTERPRISES
142 Charisma St., Doa Andres II
Rosario, Pasig, Metro Manila
(2) In the early part of August 1987 said plaintiffs, upon the suggestion of BYME Investments
legal counsel, Jose Fajardo, met with defendant Mercurio Rivera, Manager of the Property
Management Department of the defendant bank. The meeting was held pursuant to plaintiffs Attention: JOSE O. JANOLO Dear Sir:
plan to buy the property (TSN of Jan. 16, 1990, pp. 7-10). After the meeting, plaintiff Janolo,
following the advice of defendant Rivera, made a formal purchase offer to the bank through a Dear Sir:
letter dated August 30, 1987 (Exh. B), as follows:
Thank you for your letter-offer to buy our six (6) parcels of acquired lots at Sta. Rosa, Laguna
August 30, 1987 (formerly owned by Byme industrial Corp.). Please be informed however that the banks
counter-offer is at P5.5 million for more than 101 hectares on lot basis.
The Producers Bank of the Philippines
Makati, Metro Manila We shall be very glad to hear your position on the matter.

Attn. Mr. Mercurio Q. Rivera


Best regards.
Manager, Property Management Dept.
(4)On September 17, 1987, plaintiff Janolo, responding to Riveras aforequoted reply, wrote
Gentlemen:
(Exh.

54
September 17, 1987 the person of defendant Leonida T. Encarnacion. On November 4, 1987, defendant Rivera
wrote plaintiff Demetria the following letter (Exh. F):
Producers Bank
Paseo de Roxas Attention: Atty. Demetrio Demetria
Makati, Metro Manila
Dear Sir:
Attention: Mr. Mercurio Rivera
Your proposal to buy the properties the bank foreclosed from Byme Investment Corp. located
Gentlemen: at Sta. Rosa, Laguna is under study yet as of this time by the newly created committee for
submission to the newly designated Acting Conservator of the bank.
In reply to your letter regarding my proposal to purchase your 101-hectare lot located at Sta.
Rosa Laguna, I would like to amend my previous offer and I now propose to buy the said lot For your information.
at P4.250 million in CASH.
(7) What thereafter transpired was a series of demands by the plaintiffs for compliance by the
Hoping that this proposal meets your satisfaction. bank with what plaintiff considered as a perfected contract of sale, which demands were in
one form or another refused by the bank. As detailed by the trial court in its decision, on
(5) There was no reply to Janolos foregoing letter of September 17, 1987. What took place November 17, 1987, plaintiffs through a letter to defendant Rivera (Exhibit G) tendered
was a meeting on September 28, 1987 between the plaintiffs and Luis Co, the Senior Vice- payment of the amount of P5.5 million pursuant to (our) perfected sale agreement.
President of defendant bank. Rivera as well as Fajardo, the BYME lawyer, attended the Defendants refused to receive both the payment and the letter. Instead, the parcels of land
meeting. Two days later, or on September 30, 1987, plaintiff Janolo sent to the bank, through involved in the transaction were advertised by the bank for sale to any interested buyer
Rivera, the following letter (Exh. E): (Exhs. H and H-1). Plaintiffs demanded the execution by the bank of the documents on what
was considered as a perfected agreement. Thus:
The Producers Bank of the Philippines
Paseo de Roxas, Makati Mr. Mercurio Rivera
Metro Manila Manager, Producers Bank
Paseo de Roxas, Makati
Metro Manila
Attention: Mr. Mercurio Rivera

Dear Mr. Rivera:


Re: 101 Hectares of Land in Sta. Rosa, Laguna

This is in connection with the offer of our client, Mr. Jose O. Janolo, to purchase your 101-
Gentlemen:
hectare lot located in Sta. Rosa, Laguna, and which are covered by TCT No. T-106932 to
106937.
Pursuant to our discussion last 28 September 1987, we are pleased to inform you that we are
accepting your offer for us to purchase the property at Sta. Rosa, Laguna, formerly owned by
Byme In-vestment, for a total price of PESOS: FIVE MILLION FIVE HUNDRED THOUSAND From the documents at hand, it appears that your counter-offer dated September 1, 1987 of
this same lot in the amount of P5.5 million was accepted by our client thru a letter dated
(P5,500,000.00).
September 30, 1987 and was received by you on October 5, 1987.
Thank you.
In view of the above circumstances, we believe that an agreement has been perfected. We
were also informed that despite repeated follow-up to consummate the purchase, you now
(6) On October 12, 1987, the conservator of the bank (which has been placed under refuse to honor your commitment. Instead, you have advertised for sale the same lot to
conservatorship by the Central Bank since 1984) was replaced by an Acting Conservator in others.
55
In behalf of our client, therefore, we are making this formal demand upon you to consummate justified the refusal of the tenders of payment and the non-compliance with the obligations
and execute the necessary actions/documentation within three (3) days from your receipt under what the plaintiffs considered to be a perfected contract of sale.
hereof We are ready to remit the agreed amount of P5.5 million at your advice. Otherwise, we
shall be constrained to file the necessary court action to protect the interest of our client. (10) On May 16, 1988, plaintiffs filed a suit for specific performance with damages against the
bank, its Manager Rivera and Acting Conservator Encarnacion. The basis of the suit was that
We trust that you will be guided accordingly. the transaction had with the bank resulted in a perfected contract of sale. The defendants
took the position that there was no such perfected sale because the defendant Rivera is not
(8) Defendant bank, through defendant Rivera, acknowledged receipt of the foregoing letter authorized to sell the property, and that there was no meeting of the minds as to the price.
and stated, in its communication of December 2, 1987 (Exh. I), that said letter has been
referred x x x to the office of our Conservator for proper disposition. However, no response On March 14, 1991, Henry L. Co (the brother of Luis Co), through counsel Sycip Salazar
came from the Acting Conservator. On December 14, 1987, the plaintiffs made a second Hernandez and Gatmaitan, filed a motion to intervene in the trial court, alleging that as owner
tender of payment (Exhs. L and L-1), this time through the Acting Conservator, defendant of 80% of the Banks outstanding shares of stock, he had a substantial interest in resisting the
Encarnacion. Plaintiffs letter reads: complaint. On July 8, 1991, the trial court issued an order denying the motion to intervene on
the ground that it was filed after trial had already been concluded. It also denied a motion for
PRODUCERS BANK OF reconsideration filed thereafter. From the trial courts decision, the Bank, petitioner Rivera and
THE PHILIPPINES conservator Encarnacion appealed to the Court of Appeals which subsequently affirmed with
Paseo de Roxas, modification the said judgment. Henry Co did not appeal the denial of his motion for
Makati, Metro Manila intervention.

Attn.: Atty. NIDA ENCARNACION Central Bank Conservator In the course of the proceedings in the respondent Court, Carlos Ejercito was
substituted in place of Demetria and Janolo, in view of the assignment of the latters rights in
Gentlemen: the matter in litigation to said private respondent.
On July 11, 1992, during the pendency of the proceedings in the Court of Appeals, Henry
We are sending you herewith, in-behalf of our client, Mr. JOSE O. JANOLO, MBTC Check Co and several other stockholders of the Bank, through counsel Angara Abello Concepcion
No. 258387 in the amount of P5.5 million as our agreed purchase price of the 101-hectare lot Regala and Cruz, filed an action (hereafter, the Second Case) -purportedly a derivative suit -
covered by TCT Nos. 106932, 106933, 106934, 106935, 106936 and 106937 and registered with the Regional Trial Court of Makati, Branch 134, docketed as Civil Case No. 92-1606,
under Producers Bank. against Encarnacion, Demetria and Janolo to declare any perfected sale of the property as
unenforceable and to stop Ejercito from enforcing or implementing the sale. [4] In his answer,
This is in connection with the perfected agreement consequent from your offer of P5.5 Million Janolo argued that the Second Case was barred by litis pendentia by virtue of the case then
as the purchase price of the said lots. Please inform us of the date of documentation of the pending in the Court of Appeals. During the pre-trial conference in the Second Case, plaintiffs
sale immediately. filed a Motion for Leave of Court to Dismiss the Case Without Prejudice. Private respondent
opposed this motion on the ground, among others, that plaintiffs act of forum shopping justifies
the dismissal of both cases, with prejudice.[5] Private respondent, in his memorandum, averred
Kindly acknowledge receipt of our payment.
that this motion is still pending in the Makati RTC.
(9) The foregoing letter drew no response for more than four months. Then, on May 3, 1988, In their Petition[6] and Memorandum,[7] petitioners summarized their position as follows:
plaintiff, through counsel, made a final demand for compliance by the bank with its obligations
I.
under the considered perfected contract of sale (Exhibit N). As recounted by the trial court
(Original Record, p. 656), in a reply letter dated May 12, 1988 (Annex 4 of defendants answer
to amended complaint), the defendants through Acting Conservator Encarnacion repudiated The Court of Appeals erred in declaring that a contract of sale was perfected between
the authority of defendant Rivera and claimed that his dealings with the plaintiffs, particularly Ejercito (in substitution of Demetria and Janolo) and the bank.
his counter-offer of P5.5 Million are unauthorized or illegal. On that basis, the defendants
II.

56
The Court of Appeals erred in declaring the existence of an enforceable contract of sale 1) Was there forum-shopping on the part of petitioner Bank?
between the parties.
2) Was there a perfected contract of sale between the parties?
III. 3) Assuming there was, was the said contract enforceable under the statute of frauds?
4) Did the bank conservator have the unilateral power to repudiate the authority of the
The Court of Appeals erred in declaring that the conservator does not have the power to
bank officers and/or to revoke the said contract?
overrule or revoke acts of previous management.
5) Did the respondent Court commit any reversible error in its findings of facts?
IV.

The findings and conclusions of the Court of Appeals do not conform to the evidence on The First Issue: Was There Forum-Shopping?
record.

On the other hand, private respondents prayed for dismissal of the instant suit on the In order to prevent the vexations of multiple petitions and actions, the Supreme Court
ground[8] that: promulgated Revised Circular No. 28-91 requiring that a party must certify under oath x x x
[that] (a) he has not (t)heretofore commenced any other action or proceeding involving the
I. same issues in the Supreme Court, the Court of Appeals, or any other tribunal or agency; (b)
to the best of his knowledge, no such action or proceeding is pending in said courts or
Petitioners have engaged in forum shopping. agencies. A violation of the said circular entails sanctions that include the summary dismissal
of the multiple petitions or complaints. To be sure, petitioners have included a
II. VERIFICATION/CERTIFICATION in their Petition stating for the record(,) the pendency of Civil
Case No. 92-1606 before the Regional Trial Court of Makati, Branch 134, involving
a derivative suit filed by stockholders of petitioner Bank against the conservator and other
The factual findings and conclusions of the Court of Appeals are supported by the evidence
defendants but which is the subject of a pending Motion to Dismiss Without Prejudice.[9]
on record and may no longer be questioned in this case.
Private respondent Ejercito vigorously argues that in spite of this verification, petitioners
III. are guilty of actual forum shopping because the instant petition pending before this Court
involves identical parties or interests represented, rights asserted and reliefs sought (as that)
The Court of Appeals correctly held that there was a perfected contract between Demetria currently pending before the Regional Trial Court, Makati Branch 134 in the Second Case. In
and Janolo (substituted by respondent Ejercito) and the bank. fact, the issues in the two cases are so intertwined that a judgment or resolution in either case
will constitute res judicata in the other.[10]
IV. On the other hand, petitioners explain[11] that there is no forum-shopping because:

The Court of Appeals has correctly held that the conservator, apart from being estopped from 1) In the earlier or First Case from which this proceeding arose, the Bank was impleaded as a
repudiating the agency and the contract, has no authority to revoke the contract of sale. defendant, whereas in the Second Case (assuming the Bank is the real party in interest in a
derivative suit), it was the plaintiff;

The Issues 2) The derivative suit is not properly a suit for and in behalf of the corporation under the
circumstances;

From the foregoing positions of the parties, the issues in this case may be summed up as
follows:

57
3) Although the CERTIFICATION/VERIFICATION (supra) signed by the Bank president and orderly administration of justice. It had created extreme inconvenience to some of the parties
attached to the Petition identifies the action as a derivative suit, it does not mean that it is one to the action.
and (t)hat is a legal question for the courts to decide;
Thus, forum-shopping had acquired a different concept - which is unethical professional legal
4) Petitioners did not hide the Second Case as they mentioned it in the said practice. And this necessitated or had given rise to the formulation of rules and canons
VERIFICATION/CERTIFICATION. discouraging or altogether prohibiting the practice.[15]

We rule for private respondent. What therefore originally started both in conflicts of laws and in our domestic law as a
legitimate device for solving problems has been abused and misused to assure scheming
To begin with, forum-shopping originated as a concept in private international litigants of dubious reliefs.
law,[12] where non-resident litigants are given the option to choose the forum or place wherein
to bring their suit for various reasons or excuses, including to secure procedural advantages, To avoid or minimize this unethical practice of subverting justice, the Supreme Court, as
to annoy and harass the defendant, to avoid overcrowded dockets, or to select a more friendly already mentioned, promulgated Circular 28-91. And even before that, the Court had
venue. To combat these less than honorable excuses, the principle of forum non proscribed it in the Interim Rules and Guidelines issued on January 11, 1983 and had struck
conveniens was developed whereby a court, in conflicts of law cases, may refuse impositions down in several cases[16] the inveterate use of this insidious malpractice. Forum-shopping as
on its jurisdiction where it is not the most convenient or available forum and the parties are not the filing of repetitious suits in different courts has been condemned by Justice Andres R.
precluded from seeking remedies elsewhere. Narvasa (now Chief Justice) in Minister of Natural Resources, et al. vs. Heirs of Orval Hughes,
et al., as a reprehensible manipulation of court processes and proceedings x x x. [17] When does
In this light, Blacks Law Dictionary[13] says that forum-shopping occurs when a party forum-shopping take place?
attempts to have his action tried in a particular court or jurisdiction where he feels he will receive
the most favorable judgment or verdict. Hence, according to Words and Phrases, [14] a litigant
is open to the charge of forum shopping whenever he chooses a forum with slight connection There is forum-shopping whenever, as a result of an adverse opinion in one forum, a party
to factual circumstances surrounding his suit, and litigants should be encouraged to attempt to seeks a favorable opinion (other than by appeal or certiorari) in another. The principle applies
settle their differences without imposing undue expense and vexatious situations on the courts. not only with respect to suits filed in the courts but also in connection with litigations
commenced in the courts while an administrative proceeding is pending, as in this case, in
In the Philippines, forum-shopping has acquired a connotation encompassing not only a order to defeat administrative processes and in anticipation of an unfavorable administrative
choice of venues, as it was originally understood in conflicts of laws, but also to a choice of ruling and a favorable court ruling. This is specially so, as in this case, where the court in
remedies. As to the first (choice of venues), the Rules of Court, for example, allow a plaintiff to which the second suit was brought, has no jurisdiction [18]
commence personal actions where the defendant or any of the defendants resides or may be
found, or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff (Rule The test for determining whether a party violated the rule against forum-shopping has
4, Sec. 2 [b]). As to remedies, aggrieved parties, for example, are given a choice of pursuing been laid down in the 1986 case of Buan vs. Lopez,[19] also by Chief Justice Narvasa, and that
civil liabilities independently of the criminal, arising from the same set of facts. A passenger of is, forum-shopping exists where the elements of litis pendentia are present or where a final
a public utility vehicle involved in a vehicular accident may sue on culpa contractual, culpa judgment in one case will amount to res judicata in the other, as follows:
aquiliana or culpa criminal - each remedy being available independently of the others - although
he cannot recover more than once. There thus exists between the action before this Court and RTC Case No. 86-36563 identity
of parties, or at least such parties as represent the same interests in both actions, as well as
In either of these situations (choice of venue or choice of remedy), the litigant actually shops identity of rights asserted and relief prayed for, the relief being founded on the same facts,
for a forum of his action. This was the original concept of the term forum shopping. and the identity on the two preceding particulars is such that any judgment rendered in the
other action, will, regardless of which party is successful, amount to res adjudicata in the
Eventually, however, instead of actually making a choice of the forum of their actions, action under consideration: all the requisites, in fine, of auter action pendant.
litigants, through the encouragement of their lawyers, file their actions in all available courts,
or invoke all relevant remedies simultaneously. This practice had not only resulted to (sic) xxx xxx xxx
conflicting adjudications among different courts and consequent confusion enimical (sic) to an

58
As already observed, there is between the action at bar and RTC Case No. 86-36563, an agreement and damages. One can see that although the relief prayed for in the two (2)
identity as regards parties, or interests represented, rights asserted and relief sought, as well actions are ostensibly different, the ultimate objective in both actions is the same, that is, the
as basis thereof, to a degree sufficient to give rise to the ground for dismissal known as auter approval of the sale of vessel in favor of petitioner, and to overturn the letter-directive of the
action pendant or lis pendens. That same identity puts into operation the sanction of twin COA of October 10, 1988 disapproving the sale.(italics supplied)
dismissals just mentioned. The application of this sanction will prevent any further delay in
the settlement of the controversy which might ensue from attempts to seek reconsideration of In an earlier case,[23] but with the same logic and vigor, we held:
or to appeal from the Order of the Regional Trial Court in Civil Case No. 86-36563
promulgated on July 15, 1986, which dismissed the petition upon grounds which appear In other words, the filing by the petitioners of the instant special civil action for certiorari and
persuasive. prohibition in this Court despite the pendency of their action in the Makati Regional Trial
Court, is a species of forum-shopping. Both actions unquestionably involve the same
Consequently, where a litigant (or one representing the same interest or person) sues the transactions, the same essential facts and circumstances. The petitioners claim of absence of
same party against whom another action or actions for the alleged violation of the same right identity simply because the PCGG had not been impleaded in the RTC suit, and the suit did
and the enforcement of the same relief is/are still pending, the defense of litis pendencia in one not involve certain acts which transpired after its commencement, is specious. In the RTC
case is a bar to the others; and, a final judgment in one would constitute res judicata and thus action, as in the action before this Court, the validity of the contract to purchase and sell of
would cause the dismissal of the rest. In either case, forum shopping could be cited by the September 1, 1986, i.e., whether or not it had been efficaciously rescinded, and the propriety
other party as a ground to ask for summary dismissal of the two [20] (or more) complaints or of implementing the same (by paying the pledgee banks the amount of their loans, obtaining
petitions, and for the imposition of the other sanctions, which are direct contempt of court, the release of the pledged shares, etc.) were the basic issues. So, too, the relief was the
criminal prosecution, and disciplinary action against the erring lawyer. same: the prevention of such implementation and/or the restoration of the status quo ante.
Applying the foregoing principles in the case before us and comparing it with the Second When the acts sought to be restrained took place anyway despite the issuance by the Trial
Case, it is obvious that there exist identity of parties or interests represented, identity of rights Court of a temporary restraining order, the RTC suit did not become functus oflcio. It
or causes and identity of reliefs sought. remained an effective vehicle for obtention of relief; and petitioners remedy in the premises
was plain and patent: the filing of an amended and supplemental pleading in the RTC suit, so
Very simply stated, the original complaint in the court a quo which gave rise to the instant as to include the PCGG as defendant and seek nullification of the acts sought to be enjoined
petition was filed by the buyer (herein private respondent and his predecessors-in-interest) but nonetheless done. The remedy was certainly not the institution of another action in
against the seller (herein petitioners) to enforce the alleged perfected sale of real estate. On another forum based on essentially the same facts. The adoption of this latter recourse
the other hand, the complaint[21] in the Second Case seeks to declare such purported sale renders the petitioners amenable to disciplinary action and both their actions, in this Court as
involving the same real property as unenforceable as against the Bank, which is the petitioner well as in the Court a quo, dismissible.
herein. In other words, in the Second Case, the majority stockholders, in representation of the
Bank, are seeking to accomplish what the Bank itself failed to do in the original case in the trial In the instant case before us, there is also identity of parties, or at least, of interests
court. In brief, the objective or the relief being sought, though worded differently, is the same, represented. Although the plaintiffs in the Second Case (Henry L. Co. et al.) are not name
namely, to enable the petitioner Bank to escape from the obligation to sell the property to parties in the First Case, they represent the same interest and entity, namely, petitioner Bank,
respondent. In Danville Maritime, Inc. vs. Commission on Audit,[22] this Court ruled that the filing because:
by a party of two apparently different actions, but with the same objective, constituted forum
shopping: Firstly, they are not suing in their personal capacities, for they have no direct personal
interest in the matter in controversy. They are not principally or even subsidiarily liable; much
In the attempt to make the two actions appear to be different, petitioner impleaded different less are they direct parties in the assailed contract of sale; and
respondents therein - PNOC in the case before the lower court and the COA in the case
before this Court and sought what seems to be different reliefs. Petitioner asks this Court to Secondly, the allegations of the complaint in the Second Case show that the stockholders are
set aside the questioned letter-directive of the COA dated October 10, 1988 and to direct said bringing a derivative suit. In the caption itself, petitioners claim to have brought suit for and in
body to approve the Memorandum of Agreement entered into by and between the PNOC and behalf of the Producers Bank of the Philippines.[24] Indeed, this is the very essence of a
petitioner, while in the complaint before the lower court petitioner seeks to enjoin the PNOC derivative suit:
from conducting a rebidding and from selling to other parties the vessel T/T Andres Bonifacio,
and for an extension of time for it to comply with the paragraph 1 of the memorandum of

59
An individual stockholder is permitted to institute a derivative suit on behalf of the corporation Petitioner pointed out that since it was merely the defendant in the original case, it could
wherein he holds stock in order to protect or vindicate corporate rights, whenever the officials not have chosen the forum in said case.
of the corporation refuse to sue, or are the ones to be sued or hold the control of the
corporation. In such actions, the suing stockholder is regarded as a nominal party, with the Respondent, on the other hand, replied that there is a difference in factual setting
corporation as the real party in interest. (Gamboa v. Victoriano, 90 SCRA 40, 47 [1979]; between Victronics and the present suit. In the former, as underscored in the above-quoted
italics supplied). Court ruling, the defendants did not file any responsive pleading in the first case. In other
words, they did not make any denial or raise any defense or counter-claim therein. In the case
before us however, petitioners filed a responsive pleadingto the complaint - as a result of which,
In the face of the damaging admissions taken from the complaint in the Second Case, the issues were joined.
petitioners, quite strangely, sought to deny that the Second Case was a derivative suit,
reasoning that it was brought, not by the minority shareholders, but by Henry Co et al., who not Indeed, by praying for affirmative reliefs and interposing counter-claims in their responsive
only own, hold or control over 80% of the outstanding capital stock, but also constitute the pleadings, the petitioners became plaintiffs themselves in the original case, giving unto
majority in the Board of Directors of petitioner Bank.That being so, then they really represent themselves the very remedies they repeated in the Second Case.
the Bank. So, whether they sued derivatively or directly, there is undeniably an identity of
interests/entity represented. Ultimately, what is truly important to consider in determining whether forum-shopping
exists or not is the vexation caused the courts and parties-litigant by a party who asks different
Petitioner also tried to seek refuge in the corporate fiction that the personality of the Bank courts and/or administrative agencies to rule on the same or related causes and/or to grant the
is separate and distinct from its shareholders. But the rulings of this Court are consistent: When same or substantially the same reliefs, in the process creating the possibility of conflicting
the fiction is urged as a means of perpetrating a fraud or an illegal act or as a vehicle for the decisions being rendered by the different fora upon the same issue. In this case, this is exactly
evasion of an existing obligation, the circumvention of statutes, the achievement or perfection the problem: a decision recognizing the perfection and directing the enforcement of the contract
of a monopoly or generally the perpetration of knavery or crime, the veil with which the law of sale will directly conflict with a possible decision in the Second Case barring the parties from
covers and isolates the corporation from the members or stockholders who compose it will be enforcing or implementing the said sale. Indeed, a final decision in one would constitute res
lifted to allow for its consideration merely as an aggregation of individuals. [25] judicata in the other.[28]
In addition to the many cases[26] where the corporate fiction has been disregarded, we The foregoing conclusion finding the existence of forum-shopping notwithstanding, the
now add the instant case, and declare herewith that the corporate veil cannot be used to shield only sanction possible now is the dismissal of both cases with prejudice, as the other sanctions
an otherwise blatant violation of the prohibition against forum-shopping. Shareholders, whether cannot be imposed because petitioners present counsel entered their appearance only during
suing as the majority in direct actions or as the minority in a derivative suit, cannot be allowed the proceedings in this Court, and the Petitions VERIFICATION/CERTIFICATION contained
to trifle with court processes, particularly where, as in this case, the corporation itself has not sufficient allegations as to the pendency of the Second Case to show good faith in observing
been remiss in vigorously prosecuting or defending corporate causes and in using and applying Circular 28-91. The lawyers who filed the Second Case are not before us; thus the rudiments
remedies available to it. To rule otherwise would be to encourage corporate litigants to use of due process prevent us from motu propio imposing disciplinary measures against them in
their shareholders as fronts to circumvent the stringent rules against forum shopping. this Decision. However, petitioners themselves (and particularly Henry Co, et al.) as litigants
are admonished to strictly follow the rules against forum-shopping and not to trifle with court
Finally, petitioner Bank argued that there cannot be any forum shopping, even proceedings and processes. They are warned that a repetition of the same will be dealt with
assuming arguendo that there is identity of parties, causes of action and reliefs sought, more severely.
because it (the Bank) was the defendant in the (first) case while it was the plaintiff in the other
(Second Case), citing as authority Victronics Computers, Inc. vs. Regional Trial Court, Branch Having said that, let it be emphasized that this petition should be dismissed not merely
63, Makati, etc. et al.,[27] where the Court held: because of forum-shopping but also because of the substantive issues raised, as will be
discussed shortly.
The rule has not been extended to a defendant who, for reasons known only to him,
commences a new action against the plaintiff - instead of filing a responsive pleading in the
other case - setting forth therein, as causes of action, specific denials, special and affirmative The Second Issue: Was The Contract Perfected?
defenses or even counterclaims. Thus, Velhagens and Kings motion to dismiss Civil Case
No. 91-2069 by no means negates the charge of forum-shopping as such did not exist in the
first place. (italics supplied)

60
The respondent Court correctly treated the question of whether or not there was, on the committee to decide and he said the committee meets every week. If I am not
basis of the facts established, a perfected contract of sale as the ultimate issue. Holding that a mistaken Wednesday and in about two weeks (sic) time, in effect what he was
valid contract has been established, respondent Court stated: saying he was not the one who was to decide. But he would refer it to the
committee and he would relay the decision of the committee to me.
There is no dispute that the object of the transaction is that property owned by the defendant Q: Please answer the question.
bank as acquired assets consisting of six (6) parcels of land specifically identified under
Transfer Certificates of Title Nos. T-106932 to T-106937. It is likewise beyond cavil that the A: He did not say that he had the authority(.) But he said he would refer the matter to
bank intended to sell the property. As testified to by the Banks Deputy Conservator, Jose the committee and he would relay the decision to me and he did just like that.
Entereso, the bank was looking for buyers of the property. It is definite that the plaintiffs
wanted to purchase the property and it was precisely for this purpose that they met with Parenthetically, the Committee referred to was the Past Due Committee of which Luis Co
defendant Rivera, Manager of the Property Management Department of the defendant bank, was the Head, with Jose Entereso as one of the members.
in early August 1987. The procedure in the sale of acquired assets as well as the nature and
scope of the authority of Rivera on the matter is clearly delineated in the testimony of Rivera
What transpired after the meeting of early August 1987 are consistent with the authority and
himself, which testimony was relied upon by both the bank and by Rivera in their appeal
the duties of Rivera and the banks internal procedure in the matter of the sale of banks
briefs. Thus (TSN of July 30, 1990. pp. 19-20):
assets. As advised by Rivera, the plaintiffs made a formal offer by a letter dated August 20,
1987 stating that they would buy at the price of P3.5 Million in cash. The letter was for the
A: The procedure runs this way: Acquired assets was turned over to me and then I published attention of Mercurio Rivera who was tasked to convey and accept such offers. Considering
it in the form of an inter-office memorandum distributed to all branches that these are an aspect of the official duty of Rivera as some sort of intermediary between the plaintiffs-
acquired assets for sale. I was instructed to advertise acquired assets for sale so on that buyers with their proposed buying price on one hand, and the bank Committee, the
basis, I have to entertain offer; to accept offer, formal offer and upon having been offered, I Conservator and ultimately the bank itself with the set price on the other, and considering
present it to the Committee. I provide the Committee with necessary information about the further the discussion of price at the meeting of August resulting in a formal offer of P3.5
property such as original loan of the borrower, bid price during the foreclosure, total claim of Million in cash, there can be no other logical conclusion than that when, on September 1,
the bank, the appraised value at the time the property is being offered for sale and then the 1987, Rivera informed plaintiffs by letter that the banks counter-offer is at P5.5 Million for
information which are relative to the evaluation of the bank to buy which the Committee more than 101 hectares on lot basis, such counter-offer price had been determined by the
considers and it is the Committee that evaluate as against the exposure of the bank and it is Past Due Committee and approved by the Conservator after Rivera had duly presented
also the Committee that submit to the Conservator for final approval and once approved, we plaintiffs offer for discussion by the Committee of such matters as original loan of borrower,
have to execute the deed of sale and it is the Conservator that sign the deed of sale, sir. bid price during foreclosure, total claim of the bank, and market value. Tersely put, under the
established facts, the price of P5.5 Million was, as clearly worded in Riveras letter (Exh. E),
The plaintiffs, therefore, at that meeting of August 1987 regarding their purpose of buying the the official and definitive price at which the bank was selling the property.
property, dealt with and talked to the right person. Necessarily, the agenda was the price of
the property, and plaintiffs were dealing with the bank official authorized to entertain offers, to There were averments by defendants below, as well as before this Court, that the P5.5
accept offers and to present the offer to the Committee before which the said official is Million price was not discussed by the Committee and that it was merely quoted to start
authorized to discuss information relative to price determination. Necessarily, too, it being negotiations regarding the price. As correctly characterized by the trial court, this is not
inherent in his authority, Rivera is the officer from whom official information regarding the credible. The testimonies of Luis Co and Jose Entereso on this point are at best equivocal
price, as determined by the Committee and approved by the Conservator, can be had. And and considering the gratuitous and self-serving character of these declarations, the banks
Rivera confirmed his authority when he talked with the plaintiff in August 1987. The testimony submission on this point does not inspire belief. Both Co and Entereso, as members of the
of plaintiff Demetria is clear on this point (TSN of May 31, 1990, pp. 27-28): Past Due Committee of the bank, claim that the offer of the plaintiff was never discussed by
the Committee. In the same vein, both Co and Entereso openly admit that they seldom attend
Q: When you went to the Producers Bank and talked with Mr. Mercurio Rivera, did the meetings of the Committee. It is important to note that negotiations on the price had
you ask him point-blank his authority to sell any property? started in early August and the plaintiffs had already offered an amount as purchase price,
having been made to understand by Rivera, the official in charge of the negotiation, that the
A: No, sir. Not point blank although it came from him. (W)hen I asked him how long price will be submitted for approval by the bank and that the banks decision will be relayed to
it would take because he was saying that the matter of pricing will be passed plaintiffs. From the facts, the amount of P5.5 Million has a definite significance. It is the official
upon by the committee. And when I asked him how long it will take for the
61
bank price. At any rate, the bank placed its official, Rivera, in a position of authority to accept principals true representation and the contract is considered as entered into between the
offers to buy and negotiate the sale by having the offer officially acted upon by the bank. The principal and the third person (citing National Food Authority vs. Intermediate Appellate
bank cannot turn around and later say, as it now does, that what Rivera states as the banks Court, 184 SCRA 166).
action on the matter is not in fact so. It is a familiar doctrine, the doctrine of ostensible
authority, that if a corporation knowingly permits one of its officers, or any other agent, to do A bank is liable for wrongful acts of its officers done in the interests of the bank or in the
acts within the scope of an apparent authority, and thus holds him out to the public as course of dealings of the officers in their representative capacity but not for acts outside the
possessing power to do those acts, the corporation will, as against any one who has in good scope of their authority (9 C.J.S., p. 417). A bank holding out its officers and agents as worthy
faith dealt with the corporation through such agent, he estopped from denying his authority of confidence will not be permitted to profit by the frauds they may thus be enabled to
(Francisco v. GSIS, 7 SCRA 577, 583-584; PNB v. Court of Appeals, 94 SCRA 357, 369-370; perpetrate in the apparent scope of their employment; nor will it be permitted to shirk its
Prudential Bank v. Court of Appeals, G.R. No. 103957, June 14, 1993).[29] responsibility for such frauds, even though no benefit may accrue to the bank therefrom (10
Am Jur 2d, p. 114). Accordingly, a banking corporation is liable to innocent third persons
Article 1318 of the Civil Code enumerates the requisites of a valid and perfected contract where the representation is made in the course of its business by an agent acting within the
as follows: (1) Consent of the contracting parties; (2) Object certain which is the subject general scope of his authority even though, in the particular case, the agent is secretly
matter of the contract; (3) Cause of the obligation which is established. abusing his authority and attempting to perpetrate a fraud upon his principal or some other
person, for his own ultimate benefit (McIntosh v. Dakota Trust Co., 52 ND 752, 204 NW 818,
There is no dispute on requisite no. 2. The object of the questioned contract consists of 40 ALR 1021).
the six (6) parcels of land in Sta. Rosa, Laguna with an aggregate area of about 101 hectares,
more or less, and covered by Transfer Certificates of Title Nos. T-106932 to T-106937. There
is, however, a dispute on the first and third requisites. Application of these principles is especially necessary because banks have a fiduciary
relationship with the public and their stability depends on the confidence of the people in their
Petitioners allege that there is no counter-offer made by the Bank, and any supposed honesty and efficiency. Such faith will be eroded where banks do not exercise strict care in
counter-offer which Rivera (or Co) may have made is unauthorized. Since there was no the selection and supervision of its employees, resulting in prejudice to their depositors.
counter-offer by the Bank, there was nothing for Ejercito (in substitution of Demetria and
Janolo) to accept.[30] They disputed the factual basis of the respondent Courts findings that From the evidence found by respondent Court, it is obvious that petitioner Rivera has
there was an offer made by Janolo for P3.5 million, to which the Bank counter-offered P5.5 apparent or implied authority to act for the Bank in the matter of selling its acquired assets. This
million. We have perused the evidence but cannot find fault with the said Courts findings of evidence includes the following:
fact. Verily, in a petition under Rule 45 such as this, errors of fact -if there be any - are, as a
rule, not reviewable. The mere fact that respondent Court (and the trial court as well) chose to (a) The petition itself in par. II-1 (p. 3) states that Rivera was at all times material to this case,
believe the evidence presented by respondent more than that presented by petitioners is not Manager of the Property Management Department of the Bank. By his own admission, Rivera
by itself a reversible error. in fact, such findings merit serious consideration by this Court, was already the person in charge of the Banks acquired assets (TSN, August 6, 1990, pp. 8-
particularly where, as in this case, said courts carefully and meticulously discussed their 9);
findings. This is basic.
Be that as it may, and in addition to the foregoing disquisitions by the Court of Appeals, (b) As observed by respondent Court, the land was definitely being sold by the Bank. And
let us review the question of Riveras authority to act and petitioners allegations that the P5.5 during the initial meeting between the buyers and Rivera, the latter suggested that the buyers
million counter-offer was extinguished by the P4.25 million revised offer of Janolo. Here, there offer should be no less than P3.3 million (TSN, April 26, 1990, pp. 16-17);
are questions of law which could be drawn from the factual findings of the respondent Court.
They also delve into the contractual elements of consent and cause. (c) Rivera received the buyers letter dated August 30, 1987 offering P3.5 million (TSN, 30
The authority of a corporate officer in dealing with third persons may be actual or apparent. July 1990, p. 11);
The doctrine of apparent authority, with special reference to banks, was laid out in Prudential
Bank vs. Court of Appeals,[31] where it was held that: (d) Rivera signed the letter dated September 1, 1987 offering to sell the property for P5.5
million (TSN, July 30, p. 11);
Conformably, we have declared in countless decisions that the principal is liable for
obligations contracted by the agent. The agents apparent representation yields to the

62
(e) Rivera received the letter dated September 17, 1987 containing the buyers proposal to Justice Paras,[35] Art. 1319 of the Civil Code[36] and related Supreme Court rulings starting
buy the property for P4.25 million (TSN, July 30, 1990, p. 12); with Beaumont vs. Prieto.[37]
However, the above-cited authorities and precedents cannot apply in the instant case
(f) Rivera, in a telephone conversation, confirmed that the P5.5 million was the final price of because, as found by the respondent Court which reviewed the testimonies on this point, what
the Bank (TSN, January 16, 1990, p. 18); was accepted by Janolo in his letter dated September 30, 1987 was the Banks offer of P5.5
million as confirmed and reiterated to Demetria and Atty. Jose Fajardo by Rivera and Co during
(g) Rivera arranged the meeting between the buyers and Luis Co on September 28, 1987, their meeting on September 28, 1987. Note that the said letter of September 30, 1987 begins
during which the Banks offer of P5.5 million was confirmed by Rivera (TSN, April 26, 1990, with (p)ursuant to our discussion last 28 September 1987 x x x.
pp. 34-35). At said meeting, Co, a major shareholder and officer of the Bank, confirmed
Riveras statement as to the finality of the Banks counter-offer of P5.5 million (TSN, January Petitioners insist that the respondent Court should have believed the testimonies of Rivera
16, 1990, p. 21; TSN, April 26, 1990, p. 35); and Co that the September 28, 1987meeting was meant to have the offerors improve on their
position of P5.5 million.[38] However, both the trial court and the Court of Appeals found
(h) In its newspaper advertisements and announcements, the Bank referred to Rivera as the petitioners testimonial evidence not credible, and we find no basis for changing this finding of
officer acting for the Bank in relation to parties interested in buying assets owned/acquired by fact.
the Bank. In fact, Rivera was the officer mentioned in the Banks advertisements offering for Indeed, we see no reason to disturb the lower courts (both the RTC and the CA) common
sale the property in question (cf. Exhs. S and S-I). finding that private respondents evidence is more in keeping with truth and logic - that during
the meeting on September 28, 1987, Luis Co and Rivera confirmed that the P5.5 million price
In the very recent case of Limketkai Sons Milling, Inc. vs. Court of Appeals, et al., [32] the has been passed upon by the Committee and could no longer be lowered (TSN of April 27,
Court, through Justice Jose A. R. Melo, affirmed the doctrine of apparent authority as it held 1990, pp. 34-35).[39] Hence, assuming arguendo that the counter-offer of P4.25 million
that the apparent authority of the officer of the Bank of P.I. in charge of acquired assets is borne extinguished the offer of P5.5 million, Luis Cos reiteration of the said P5.5 million price during
out by similar circumstances surrounding his dealings with buyers. the September 28, 1987 meeting revived the said offer. And by virtue of the September 30,
1987 letter accepting this revived offer, there was a meeting of the minds, as the acceptance
To be sure, petitioners attempted to repudiate Riveras apparent authority through in said letter was absolute and unqualified.
documents and testimony which seek to establish Riveras actual authority. These pieces of
evidence, however, are inherently weak as they consist of Riveras self-serving testimony and We note that the Banks repudiation, through Conservator Encarnacion, of Riveras
various inter-office memoranda that purport to show his limited actual authority, of which authority and action, particularly the latters counter-offer of P5.5 million, as being unauthorized
private respondent cannot be charged with knowledge. In any event, since the issue is apparent and illegal came only on May 12, 1988 or more than seven (7) months after Janolos
authority, the existence of which is borne out by the respondent Courts findings, the evidence acceptance. Such delay, and the absence of any circumstance which might have justifiably
of actual authority is immaterial insofar as the liability of a corporation is concerned. [33] prevented the Bank from acting earlier, clearly characterizes the repudiation as nothing more
than a last-minute attempt on the Banks part to get out of a binding contractual obligation.
Petitioners also argued that since Demetria and Janolo were experienced lawyers and
their law firm had once acted for the Bank in three criminal cases, they should be charged with Taken together, the factual findings of the respondent Court point to an implied admission
actual knowledge of Riveras limited authority. But the Court of Appeals in its Decision (p. 12) on the part of the petitioners that the written offer made on September 1, 1987 was carried
had already made a factual finding that the buyers had no notice of Riveras actual authority through during the meeting of September 28, 1987. This is the conclusion consistent with
prior to the sale. In fact, the Bank has not shown that they acted as its counsel in respect to human experience, truth and good faith.
any acquired assets; on the other hand, respondent has proven that Demetria and Janolo
merely associated with a loose aggrupation of lawyers (not a professional partnership), one of It also bears noting that this issue of extinguishment of the Banks offer of P5.5 million was
whose members (Atty. Susana Parker) acted in said criminal cases. raised for the first time on appeal and should thus be disregarded.

Petitioners also alleged that Demetrias and Janolos P4.25 million counter-offer in the letter This Court in several decisions has repeatedly adhered to the principle that points of law,
dated September 17, 1987 extinguished the Banks offer of P5.5 million.[34] They disputed the theories, issues of fact and arguments not adequately brought to the attention of the trial
respondent Courts finding that there was a meeting of minds when on 30 September 1987 court need not be, and ordinarily will not be, considered by a reviewing court, as they cannot
Demetria and Janolo through Annex L (letter dated September 30, 1987) accepted Riveras be raised for the first time on appeal (Santos vs. IAC, No. 74243, November 14, 1986, 145
counter offer of P5.5 million under Annex J (letter dated September 17, 1987), citing the late SCRA 592).[40]

63
xxx It is settled jurisprudence that an issue which was neither averred in the complaint nor But let it be assumed arguendo that the counter-offer during the meeting on September
raised during the trial in the court below cannot be raised for the first time on appeal as it 28, 1987 did constitute a new offer which was accepted by Janolo on September 30, 1987.
would be offensive to the basic rules of fair play, justice and due process (Dihiansan vs. CA, Still, the statute of frauds will not apply by reason of the failure of petitioners to object to oral
153 SCRA 713 [1987]; Anchuelo vs. IAC, 147 SCRA 434 [1987]; Dulos Realty & testimony proving petitioner Banks counter-offer of P5.5 million. Hence, petitioners - by such
Development Corp. vs. CA, 157 SCRA 425 [1988]; Ramos vs. IAC, 175 SCRA 70 utter failure to object - are deemed to have waived any defects of the contract under the statute
[1989]; Gevero vs. IAC, G.R. 77029, August 30, 1990).[41] of frauds, pursuant to Article 1405 of the Civil Code:

Since the issue was not raised in the pleadings as an affirmative defense, private Art. 1405. Contracts infringing the Statute of Frauds, referred to in No. 2 of Article 1403, are
respondent was not given an opportunity in the trial court to controvert the same through ratified by the failure to object to the presentation of oral evidence to prove the same, or by
opposing evidence. Indeed, this is a matter of due process. But we passed upon the issue the acceptance of benefits under them.
anyway, if only to avoid deciding the case on purely procedural grounds, and we repeat that,
on the basis of the evidence already in the record and as appreciated by the lower courts, the As private respondent pointed out in his Memorandum, oral testimony on the reaffirmation
inevitable conclusion is simply that there was a perfected contract of sale. of the counter-offer of P5.5 million is aplenty -and the silence of petitioners all throughout the
presentation makes the evidence binding on them thus:
A - Yes, sir. I think it was September 28, 1987 and I was again present because Atty.
The Third Issue: Is the Contract Enforceable? Demetria told me to accompany him and we were able to meet Luis Co at the
Bank.
The petition alleged:[42] xxx xxx xxx
Q - Now, what transpired during this meeting with Luis Co of the Producers Bank?
Even assuming that Luis Co or Rivera did relay a verbal offer to sell at P5.5 million during the
meeting of 28 September 1987, and it was this verbal offer that Demetria and Janolo A - Atty. Demetria asked Mr. Luis Co whether the price could be reduced, sir.
accepted with their letter of 30 September 1987, the contract produced thereby would be
unenforceable by action - there being no note, memorandum or writing subscribed by the Q - What price?
Bank to evidence such contract. (Please see Article 1403[2], Civil Code.) A - The 5.5 million pesos and Mr. Luis Co said that the amount cited by Mr. Mercurio
Rivera is the final price and that is the price they intends (sic) to have, sir.
Upon the other hand, the respondent Court in its Decision (p. 14) stated:
Q - What do you mean?
x x x Of course, the banks letter of September 1, 1987 on the official price and the plaintiffs A - That is the amount they want, sir.
acceptance of the price on September 30, 1987, are not, in themselves, formal contracts of
sale. They are however clear embodiments of the fact that a contract of sale was perfected Q - What is the reaction of the plaintiff Demetria to Luis Cos statment (sic) that the
between the parties, such contract being binding in whatever form it may have been entered defendant Riveras counter-offer of 5.5 million was the defendants bank (sic) final
into (case citations omitted). Stated simply, the banks letter of September 1, 1987, taken offer?
together with plaintiffs letter dated September 30, 1987, constitute in law a sufficient
A - He said in a day or two, he will make final acceptance, sir.
memorandum of a perfected contract of sale.
Q - What is the response of Mr. Luis Co?
The respondent Court could have added that the written communications commenced not
A - He said he will wait for the position of Atty. Demetria, sir.
only from September 1, 1987 but from Janolos August 20, 1987 letter. We agree that, taken
together, these letters constitute sufficient memoranda - since they include the names of the
parties, the terms and conditions of the contract, the price and a description of the property as [Direct testimony of Atty. Jose Fajardo, TSN, January 16, 1990, at pp. 18-21.]
the object of the contract.
----0----

64
Q - What transpired during that meeting between you and Mr. Luis Co of the The Fourth Issue: May the Conservator Revoke
defendant Bank? the Perfected and Enforceable Contract?
A - We went straight to the point because he being a busy person, I told him if the It is not disputed that the petitioner Bank was under a conservator placed by the Central
amount of P5.5 million could still be reduced and he said that was already Bank of the Philippines during the time that the negotiation and perfection of the contract of
passed upon by the committee. What the bank expects which was contrary to sale took place. Petitioners energetically contended that the conservator has the power to
what Mr. Rivera stated. And he told me that is the final offer of the bank P5.5 revoke or overrule actions of the management or the board of directors of a bank, under Section
million and we should indicate our position as soon as possible. 28-A of Republic Act No. 265 (otherwise known as the Central Bank Act) as follows:
Q - What was your response to the answer of Mr. Luis Co?
Whenever, on the basis of a report submitted by the appropriate supervising or examining
A - I said that we are going to give him our answer in a few days and he said that department, the Monetary Board finds that a bank or a non-bank financial intermediary
was it. Atty. Fajardo and I and Mr. Mercurio [Rivera] was with us at the time at performing quasi - banking functions is in a state of continuing inability or unwillingness to
his office. maintain a state of liquidity deemed adequate to protect the interest of depositors and
creditors, the Monetary Board may appoint a conservator to take charge of the assets,
Q - For the record, your Honor please, will you tell this Court who was with Mr. Co in liabilities, and the management of that institution, collect all monies and debts due said
his Office in Producers Bank Building during this meeting? institution and exercise all powers necessary to preserve the assets of the institution,
A - Mr. Co himself, Mr. Rivera, Atty. Fajardo and I. reorganize the management thereof, and restore its viability. He shall have the power to
overrule or revoke the actions of the previous management and board of directors of the bank
Q - By Mr. Co you are referring to? or non-bank financial intermediary performing quasi-banking functions, any provision of law to
the contrary notwithstanding, and such other powers as the Monetary Board shall deem
A - Mr. Luis Co.
necessary.
Q - After this meeting with Mr. Luis Co, did you and your partner accede on (sic) the
counter offer by the bank? In the first place, this issue of the Conservators alleged authority to revoke or repudiate
the perfected contract of sale was raised for the first time in this Petition - as this was not
A - Yes, sir, we did. Two days thereafter we sent our acceptance to the bank which litigated in the trial court or Court of Appeals. As already stated earlier, issues not raised and/or
offer we accepted, the offer of the bank which is P5.5 million. ventilated in the trial court, let alone in the Court of Appeals, cannot be raised for the first time
on appeal as it would be offensive to the basic rules of fair play, justice and due process. [43]
[Direct testimony of Atty. Demetria, TSN, 26 April 1990, at pp. 34-36.]
In the second place, there is absolutely no evidence that the Conservator, at the time the
---- 0 ---- contract was perfected, actually repudiated or overruled said contract of sale. The Banks acting
conservator at the time, Rodolfo Romey, never objected to the sale of the property to Demetria
Q - According to Atty. Demetrio Demetria, the amount of P5.5 million was reached and Janolo. What petitioners are really referring to is the letter of Conservator Encarnacion,
by the Committee and it is not within his power to reduce this amount. What can who took over from Romey after the sale was perfected on September 30, 1987 (Annex V,
you say to that statement that the amount of P5.5 million was reached by the petition) which unilaterally repudiated - not the contract - but the authority of Rivera to make a
Committee? binding offer - and which unarguably came months after the perfection of the contract. Said
letter dated May 12, 1988 is reproduced hereunder:
A - It was not discussed by the Committee but it was discussed initially by Luis Co
and the group of Atty. Demetrio Demetria and Atty. Pajardo (sic), in that
September 28, 1987 meeting, sir. May 12, 1988

[Direct testimony of Mercurio Rivera, TSN, 30 July 1990, pp. 14-15.] Atty. Noe C. Zarate
Zarate Carandang Perlas & Ass.
Suite 323 Rufino Building
Ayala Avenue, Makati, Metro Manila

65
Dear Atty. Zarate: In the third place, while admittedly, the Central Bank law gives vast and far-reaching
powers to the conservator of a bank, it must be pointed out that such powers must be related
This pertains to your letter dated May 5, 1988 on behalf of Attys. Janolo and Demetria to the (preservation of) the assets of the bank, (the reorganization of) the management thereof
regarding the six (6) parcels of land located at Sta. Rosa, Laguna. and (the restoration of) its viability. Such powers, enormous and extensive as they are, cannot
extend to the post-facto repudiation of perfected transactions, otherwise they would infringe
We deny that Producers Bank has ever made a legal counter-offer to any of your clients nor against the non-impairment clause of the Constitution.[44] If the legislature itself cannot revoke
perfected a contract to sell and buy with any of them for the following reasons. an existing valid contract, how can it delegate such non-existent powers to the conservator
under Section 28-A of said law?
In the Inter-Office Memorandum dated April 25, 1986 addressed to and approved by former Obviously, therefore, Section 28-A merely gives the conservator power to revoke
Acting Conservator Mr. Andres I. Rustia, Producers Bank Senior Manager Perfecto M. contracts that are, under existing law, deemed to be defective - i.e., void, voidable,
Pascua detailed the functions of Property Management Department (PMD) staff and officers unenforceable or rescissible. Hence, the conservator merely takes the place of a banks board
(Annex A), you will immediately read that Manager Mr. Mercurio Rivera or any of his of directors. What the said board cannot do - such as repudiating a contract validly entered into
subordinates has no authority, power or right to make any alleged counter-offer. In short, your under the doctrine of implied authority - the conservator cannot do either. Ineluctably, his power
lawyer-clients did not deal with the authorized officers of the bank. is not unilateral and he cannot simply repudiate valid obligations of the Bank. His authority
would be only to bring court actions to assail such contracts - as he has already done so in the
Moreover, under Secs. 23 and 36 of the Corporation Code of the Philippines (Batas instant case. A contrary understanding of the law would simply not be permitted by the
Pambansa Blg. 68) and Sec. 28-A of the Central Bank Act (Rep. Act No. 265, as amended), Constitution. Neither by common sense. To rule otherwise would be to enable a failing bank to
only the Board of Directors/Conservator may authorize the sale of any property of the become solvent, at the expense of third parties, by simply getting the conservator to unilaterally
corporation/bank. revoke all previous dealings which had one way or another come to be considered unfavorable
to the Bank, yielding nothing to perfected contractual rights nor vested interests of the third
parties who had dealt with the Bank.
Our records do not show that Mr. Rivera was authorized by the old board or by any of the
bank conservators (starting January, 1984) to sell the aforesaid property to any of your
clients. Apparently, what took place were just preliminary discussions/ consultations between
him and your clients, which everyone knows cannot bind the Banks Board or Conservator. The Fifth Issue: Were There Reversible Errors of Fact?

We are, therefore, constrained to refuse any tender of payment by your clients, as the same
is patently violative of corporate and banking laws. We believe that this is more than sufficient Basic is the doctrine that in petitions for review under Rule 45 of the Rules of Court,
legal justification for refusing said alleged tender. findings of fact by the Court of Appeals are not reviewable by the Supreme Court. In Andres
vs. Manufacturers Hanover & Trust Corporation,[45] we held:
Rest assured that we have nothing personal against your clients. All our acts are official, legal
and in accordance with law. We also have no personal interest in any of the properties of the x x x. The rule regarding questions of fact being raised with this Court in a petition for
Bank. certiorari under Rule 45 of the Revised Rules of Court has been stated in Remalante vs.
Tibe, G.R. No. 59514, February 25, 1988, 158 SCRA 138, thus:
Please be advised accordingly.
The rule in this jurisdiction is that only questions of law may be raised in a petition for
certiorari under Rule 45 of the Revised Rules of Court. The jurisdiction of the Supreme Court
Very truly yours,
in cases brought to it from the Court of Appeals is limited to reviewing and revising the errors
of law imputed to it, its findings of the fact being conclusive [Chan vs. Court of Appeals, G.R.
(Sgd.) Leonida T. Encarnacion No. L-27488, June 30, 1970, 33 SCRA 737, reiterating a long line of decisions]. This Court
LEONIDA T. ENCARNACION has emphatically declared that it is not the function of the Supreme Court to analyze or weigh
Acting Conservator such evidence all over again, its jurisdiction being limited to reviewing errors of law that might
have been committed by the lower court (Tiongco v. De la Merced, G.R. No. L-24426, July
25, 1974, 58 SCRA 89; Corona vs. Court of Appeals, G.R. No. L-62482, April 28, 1983, 121
66
SCRA 865; Baniqued vs. Court of Appeals, G.R. No. L-47531, February 20, 1984, 127 SCRA and start negotiations anew, but a meeting on the already determined price of P5.5 million.
596). Barring, therefore, a showing that the findings complained of are totally devoid of Hence, citing Philippine National Bank vs. Court of Appeals,[49] petitioners are asking us to
support in the record, or that they are so glaringly erroneous as to constitute serious abuse of review and reverse such factual findings.
discretion, such findings must stand, for this Court is not expected or required to examine or
contrast the oral and documentary evidence submitted by the parties [Santa Ana, Jr. vs. The first point was clearly passed upon by the Court of Appeals,[50] thus:
Hernandez, G.R. No. L-16394, December 17, 1966, 18 SCRA 973] [at pp. 144-145.]
There can be no other logical conclusion than that when, on September 1, 1987, Rivera
Likewise, in Bernardo vs. Court of Appeals,[46] we held: informed plaintiffs by letter that the banks counter-offer is at P5.5 Million for more than 101
hectares on lot basis, such counter-offer price had been determined by the Past Due
Committee and approved by the Conservator after Rivera had duly presented plaintiffs offer
The resolution of this petition invites us to closely scrutinize the facts of the case, relating to for discussion by the Committee x x x. Tersely put, under the established fact, the price of
the sufficiency of evidence and the credibility of witnesses presented. This Court so held that P5.5 Million was, as clearly worded in Riveras letter (Exh. E), the official and definitive price
it is not the function of the Supreme Court to analyze or weigh such evidence all over again. at which the bank was selling the property. (p. 11, CA Decision)
The Supreme Courts jurisdiction is limited to reviewing errors of law that may have been
committed by the lower court. The Supreme Court is not a trier of facts. x x x
xxx xxx xxx
As held in the recent case of Chua Tiong Tay vs. Court of Appeals and Goldrock
Construction and Development Corp.:[47] xxx. The argument deserves scant consideration. As pointed out by plaintiff, during the
meeting of September 28, 1987 between the plaintiffs, Rivera and Luis Co, the senior vice-
president of the bank, where the topic was the possible lowering of the price, the bank official
The Court has consistently held that the factual findings of the trial court, as well as the Court refused it and confirmed that the P5.5 Million price had been passed upon by the Committee
of Appeals, are final and conclusive and may not be reviewed on appeal. Among the and could no longer be lowered (TSN of April 27, 1990, pp. 34-35) (p. 15, CA Decision).
exceptional circumstances where a reassessment of facts found by the lower courts is
allowed are when the conclusion is a finding grounded entirely on speculation, surmises or
conjectures; when the inference made is manifestly absurd, mistaken or impossible; when The respondent Court did not believe the evidence of the petitioners on this point,
there is grave abuse of discretion in the appreciation of facts; when the judgment is premised characterizing it as not credible and at best equivocal, and considering the gratuitous and self-
on a misapprehension of facts; when the findings went beyond the issues of the case and the serving character of these declarations, the banks submissions on this point do not inspire
same are contrary to the admissions of both appellant and appellee. After a careful study of belief.
the case at bench, we find none of the above grounds present to justify the re-evaluation of To become credible and unequivocal, petitioners should have presented then Conservator
the findings of fact made by the courts below. Rodolfo Romey to testify on their behalf, as he would have been in the best position to establish
their thesis. Under the rules on evidence,[51] such suppression gives rise to the presumption
In the same vein, the ruling of this Court in the recent case of South Sea Surety and that his testimony would have been adverse, if produced.
Insurance Company, Inc. vs. Hon. Court of Appeals, et al.[48] is equally applicable to the present
case: The second point was squarely raised in the Court of Appeals, but petitioners evidence
was deemed insufficient by both the trial court and the respondent Court, and instead, it was
respondents submissions that were believed and became bases of the conclusions arrived at.
We see no valid reason to discard the factual conclusions of the appellate court. x x x (I)t is
not the function of this Court to assess and evaluate all over again the evidence, testimonial In fine, it is quite evident that the legal conclusions arrived at from the findings of fact by
and documentary, adduced by the parties, particularly where, such as here, the findings of the lower courts are valid and correct. But the petitioners are now asking this Court to disturb
both the trial court and the appellate court on the matter coincide. (italics supplied) these findings to fit the conclusion they are espousing. This we cannot do.
To be sure, there are settled exceptions where the Supreme Court may disregard findings
Petitioners, however, assailed the respondent Courts Decision as fraught with findings
of fact by the Court of Appeals.[52] We have studied both the records and the CA Decision and
and conclusions which were not only contrary to the evidence on record but have no bases at
we find no such exceptions in this case. On the contrary, the findings of the said Court are
all, specifically the findings that (1) the Banks counter-offer price of P5.5 million had been
supported by a preponderance of competent and credible evidence. The inferences and
determined by the past due committee and approved by conservator Romey, after Rivera
conclusions are reasonably based on evidence duly identified in the Decision. Indeed, the
presented the same for discussion and (2) the meeting with Co was not to scale down the price
67
appellate court patiently traversed and dissected the issues presented before it, lending of the increase in land values. To rule in favor of the Bank simply because the property in
credibility and dependability to its findings. The best that can be said in favor of petitioners on question has algebraically accelerated in price during the long period of litigation is to reward
this point is that the factual findings of respondent Court did not correspond to petitioners lawlessness and delays in the fulfillment of binding contracts. Certainly, the Court cannot stamp
claims, but were closer to the evidence as presented in the trial court by private respondent. its imprimatur on such outrageous proposition.
But this alone is no reason to reverse or ignore such factual findings, particularly where, as in
this case, the trial court and the appellate court were in common agreement thereon. Indeed, WHEREFORE, finding no reversible error in the questioned Decision and Resolution, the
conclusions of fact of a trial judge - as affirmed by the Court of Appeals - are conclusive upon Court hereby DENIES the petition. The assailed Decision is AFFIRMED. Moreover, petitioner
this Court, absent any serious abuse or evident lack of basis or capriciousness of any kind, Bank is REPRIMANDED for engaging in forum-shopping and WARNED that a repetition of the
because the trial court is in a better position to observe the demeanor of the witnesses and same or similar acts will be dealt with more severely. Costs against petitioners.
their courtroom manner as well as to examine the real evidence presented. SO ORDERED

Epilogue

In summary, there are two procedural issues involved - forum-shopping and the raising of
issues for the first time on appeal [viz., the extinguishment of the Banks offer of P5.5 million
and the conservators powers to repudiate contracts entered into by the Banks officers] - which
per se could justify the dismissal of the present case. We did not limit ourselves thereto, but
delved as well into the substantive issues - the perfection of the contract of sale and its
enforceability, which required the determination of questions of fact. While the Supreme Court
is not a trier of facts and as a rule we are not required to look into the factual bases of
respondent Courts decisions and resolutions, we did so just the same, if only to find out whether
there is reason to disturb any of its factual findings, for we are only too aware of the depth,
magnitude and vigor by which the parties, through their respective eloquent counsel, argued
their positions before this Court.
We are not unmindful of the tenacious plea that the petitioner Bank is operating abnormally
under a government-appointed conservator and there is need to rehabilitate the Bank in order
to get it back on its feet x x x as many people depend on (it) for investments, deposits and well
as employment. As of June 1987, the Banks overdraft with the Central Bank had already
reached P1.023 billion x x x and there were (other) offers to buy the subject properties for a
substantial amount of money.[53]
While we do not deny our sympathy for this distressed bank, at the same time, the Court
cannot emotionally close its eyes to overriding considerations of substantive and procedural
law, like respect for perfected contracts, non-impairment of obligations and sanctions against
forum-shopping, which must be upheld under the rule of law and blind justice.
This Court cannot just gloss over private respondents submission that, while the subject
properties may currently command a much higher price, it is equally true that at the time of the
transaction in 1987, the price agreed upon of P5.5 million was reasonable, considering that the
Bank acquired these properties at a foreclosure sale for no more than P 3.5 million.[54] That the
Bank procrastinated and refused to honor its commitment to sell cannot now be used by it to
promote its own advantage, to enable it to escape its binding obligation and to reap the benefits
68
Republic of the Philippines That sometime on February 16, 1972 whi le the said Ricardo Severo was
SUPREME COURT in the actual discharge of his duties as an employee of defendants that
Manila is, he was driving the car of defendants, carnappers forcefully took
away and/or carnapped the said car of defendants and in his attempts
EN BANC to resist and prevent the subject car from being taken away, the said
carnappers shot and killed the said Ricardo Severo, thus his death
arose out of and in the course of his employment with defendants;
G.R. No. L-44330 January 29, 1988

V
JULITA T. VDA. DE SEVERO, ANTONIETE SEVERO, BERNADIT SEVERO, RICARDO
SEVERO, JR. and MARISOL SEVERO, petitioners,
vs. That plaintiffs herein depend solely and rely completely upon the late
LUNINGNING FELICIANO GO AND JOAQUIN GO, and THE HONORABLE COURT OF Ricardo Severo for their financial needs and means of living, and at the
FIRST INSTANCE OF SAMAR, BRANCH V, respondents. time of his death the said Ricardo Severo was receiving monthly
compensation by defendants herein at the rate of P250.00;

VI
BIDIN, J.:
That for the loss of the life of said Ricardo Severo, plaintiffs herein are
entitled to indemnification or death compensation from defendants in
This case treated as a special civil action for certiorari was originally filed as a petition
the least amount of P50,000.00 considering the fact that at the time of
for review by way of appeal on certiorari seeking to set aside the order of the then
his death the said Ricardo Severo was only 33 years and could have
Court of First Instance of Samar, Branch V, in Calbayog City dated April 6, 1976
dismissing Civil Case No. 522-CC entitled "Julita T. Vda, de Severo, et al., versus lived for many years as he was in a very good physical condition;
Luningning Feliciano Go, et al.' for lack of jurisdiction.
VII
The antecedents of the case are as follows:
That because of the sudden and violent death which Ricardo Severo
The late Ricardo Severo was an employee of herein private respondents Luningning met in the faithful service to his employers the defendants herein, the
plaintiffs herein suffered moral damages in the form of deep grief,
Feliciano Go and Joaquin Go, first as baker of 'Joni's Cakes and Pastries," an
lonesomeness, mental anguish and shock which sufferings although
enterprise owned by respondents located at 1634 P. Guevarra Street, Santa Cruz,
not capable of pecuniary estimation may be conservatively fixed at
Manila and finally, as driver-mechanic from 1961 up to February 16, 1972. On the latter
date, unidentified armed men forcibly took away and/or carnapped the car owned by P20,000.00;
respondents and driven by Ricardo Severo who, in his efforts to resist the carnappers,
was shot and killed by the latter. Up to now, the parties responsible for Severo's death VIII
have not been Identified nor apprehended.
That defendants manifested bad faith when they willfully failed to
On September 18, 1974, herein petitioners, the widow and minor children of Ricardo comply with their promise that they would properly compensate
Severo, filed an action against respondents-employers before the trial court for "Death plaintiffs herein for the death of Ricardo Severo and that they would
Compensation and Damages" in the total amount of P74,500.00 the complaint inter help plaintiffs prosecute the carnappers-killers of said Ricardo Severo,
alia alleging: thereby plaintiffs were compelled to institute this suit whereby they
incur litigation expenses of at least P500.00 and to contract the
IV services of their counsel on a contingent basis of P2,000.00.

69
On November 18, 1974, private respondents filed a motion to dismiss the complaint on Workmen's Compensation shall have jurisdiction to hear and decide
the ground that respondent Court has no jurisdiction over the nature of the action but claims for compensation under the Workmen's Compensation Act,
the same was denied by respondent Court in its order dated January 9, 1975. subject to appeal to the Supreme Court. ... In relation to this, Section 5
Respondents' motion for reconsideration was likewise denied by the trial court. On of the Act provides that the rights and remedies granted by this Act to
May 3, 1975, private respondents filed their answer traversing the material allegations an employee by reason of a personal injury entitling him to
of the complaint and raised as special affirmative defenses that the lower court has no compensation shall exclude all other rights and remedies accruing to
jurisdiction over the claim of the petitioner and that the complaint failed to state a an employee, his personal representatives, dependents or nearest of
sufficient cause of action. kin against the employer under the Civil Code or other laws, because of
said injury.
During the pre-trial on January 16, 1976, private respondents again filed a motion to
dismiss reiterating their allegation that the lower court has no jurisdiction over the The petition is impressed with merit. The ruling in the case of Robles vs. Yap
claim of petitioner and that the complaint failed to state a cause of action. Petitioners Wing, supra, that the action of the injured employee or that of his heirs in case of his
filed a reply (opposition) dated February 5, 1976 contending that their claim is not for death is restricted to seeking the limited compensation provided under the Workmen's
compensation under the Workmen's Compensation Act but for damages under Article Compensation Act relied upon by the trial court, no longer controls. We have
1711 and Article 21 of the Civil Code, hence, cognizable by the regular courts. abandoned the same in the recent case of Ysmael Maritime Corporation vs. Hon. Celso
Avelino, G.R. No. L-43674, promulgated on June 30, 1987, citing the case of Floresca
The respondent court, acting on the latest motion to dismiss, issued an order dated vs. Philex Mining Company, L-30642, April 30, 1985, 136 SCRA 141. We stated thus.
April 6, 1976 stating that petitioners' cause of action falls within the purview of the
Workmen's Compensation Act and the proper forum was the Workmen's In the recent case of Floresca vs. Philex Mining Company, L-30642,
Compensation Commission. It declared itself without jurisdiction following Our ruling April 30, 1985, 136 SCRA 141, involving a complaint for damages for the
in the case of Robles vs. Yap Wing, L-20442, October 4, 1971, 41 SCRA 267, to wit: death of five miners in a cave-in on June 28, 1967, this Court was
confronted with three divergent opinions on the exclusivity rule as
The Court after a careful consideration of the grounds in the presented by several amici curiae. One view is that the injured
defendants' motion, and considering the allegation of the complaint employee or his heirs, in case of death, may initiate an action to
describing their main cause of action, which is a claim for death recover damages (not compensation under the Workmen's
compensation and damages, is of the opinion and so holds that this Compensation Act) with the regular courts on the basis of negligence
Court has no jurisdiction to hear and decide the case. The plaintiffs' of the employer pursuant to the Civil Code. Another view, as
right to relief being derived on an accident resulting in death of Ricardo enunciated in the Robles case, is that the remedy of an employee for
Severo, an employee of the defendants, while engaged in the work connected injury or accident is exclusive in accordance with
performance of the task assigned to him, this Court is devoid of Section 5 of the WCA. A third view is that the action is selective and the
statutory competence to pass upon the subject matter of the plaintiffs' employee of his heirs have a choice of availing themselves of the
claim, as of the time the cause of action accrue, falls within the purview benefits under the WCA or of suing in the regular courts under the Civil
of the Workmen's Compensation Act as amended and, therefore, the Code for higher damages from the employer by reason of his
proper form (sic) was the Workmen's Compensation Commission, thru negligence. But once the election has been exercised, the employee or
its regional offices under the Department of Labor, a body empowered his heirs are no longer free to opt for the other remedy. In other words,
to act upon all claims for compensation for death, injury or sickness. the employee cannot pursue both actions simultaneously. This latter
Thus our Supreme Court in the case of Ciriaco Robles vs. Yap Wing, view was adopted by the majority in the Floresca case, reiterating as
No. L-20442, Oct. 4, 1971 ruled: main authority its earlier decision in Pacana vs. Cebu Autobus
Company, L-25382, April 30, 1982, 32 SCRA 442. In so doing, the Court
rejected the doctrine of exclusivity of the rights and remedies granted
Before the enactment of Republic Act No. 722(Amending Act. No. 3228),
which took effect on June 20, 1952, claims for compensation under the by the WCA as laid down in the Robles case. Three justices dissented.
Workmen's Compensation Act were cognizable by the regular courts,
but since then, as provided in Section 46 thereof as amended, 'the

70
As clarified by Mr. Chief Justice Claudio Teehankee in his concurring opinion
in Ysmael, "the employee or his heirs have the choice of cause of action and
corresponding relief, i.e., either an ordinary action for damages before the regular
courts or a special claim for limited compensation under the Workmen's
Compensation Act before the Workmen's Compensation Commission ... However, tills
right of choice is qualified in that the employee should be held to the particular remedy
in which he has staked his fortunes and must pursue even his alternative claim for
compensation exclusively in the same regular courts once he has opted to seek his
remedy there rather than in the Workmen's Compensation Commission." This is what
the petitioners did in filing their complaint for "Death Compensation and Damages"
before respondent Court. Petitioners have opted to seek their remedy before the
regular court. Their demand for compensation is predicated on the employer's liability
for the death of their employee (Ricardo Severo) imposed by Article 1711 of the Civil
Code which reads:

Art. 1711. Owners of enterprises and other employers are obliged to


pay compensation for the death of or injuries to their laborers,
workmen, mechanics or other employees even though the event may
have been purely accidental or entirely due to fortuitous cause if the
death or personal injury arose out of and in the course of employment
...

Petitioner's claim for compensation based on the Civil Code pertain to the jurisdiction
of the regular courts (Pacana vs. Cebu Autobus Co., 32 SCRA 442).

WHEREFORE, the petition is Granted and the order dated April 6, 1976 of respondent
Court dismissing petitioner's complaint is hereby Set Aside and the case Remanded to
the trial court for further proceedings. No pronouncement as to costs.

SO ORDERED

71
Republic of the Philippines Barangay Isabong, Tayabas, Quezon in the afternoon of August 11, 1978, which collision
SUPREME COURT resulted in the death of Aniceto Rosales, Francisco Pamfilo and Romeo Neri and in several
Manila injuries to Nena Rosales (wife of Anecito) and Baylon Sales, all passengers of the BLTB Bus
No. 1046. The evidence shows that as BLTB Bus No. 1046 was negotiating the bend of the
SECOND DIVISION highway, it tried to overtake a Ford Fiera car just as Bus No. 404 of Superlines was coming
from the opposite direction. Seeing thus, Armando Pon (driver of the BLTB Bus) made a
G.R. Nos. 74387-90 November 14, 1988 belated attempt to slacken the speed of his bus and tried to return to his proper lane. It was
an unsuccessful try as the two (2) buses collided with each other.
BATANGAS LAGUNA TAYABAS BUS COMPANY & ARMANDO PON, petitioners,
Nena Vda. de Rosales and Baylon Sales and the surviving heirs of the deceased Francisco
vs.
INTERMEDIATE APPELLATE COURT, THE HEIRS OF PAZ VDA. DE PAMFILO, THE Pamfilo, Aniceto Rosales and Romeo Neri instituted separate cases in the Court of First
HEIRS OF NORMA NERI, and BAYLON SALES and NENA VDA. DE Instance of Marinduque against BLTB and Superlines together with their respective drivers
ROSALES, respondents. praying for damages, attorney's fees and litigation expenses plus costs. Criminal cases
against the drivers of the two buses were filed in the Court of First Instance of Quezon.
Sibal, Custodia, Santos & Nofuente for petitioners.
Defendants BLTB and Superlines, together with their drivers Pon and Dasco, denied liability
by claiming that they exercised due care and diligence and shifted the fault, against each
Restituto L. Opis for respondents Pamfilos and Rosaleses. other. They all interposed counterclaims against the plaintiffs and crossclaims against each
other.
Citizens Legal Assistance Office for N. Neri and Baylon Sales.
After trial on the merits, the lower court exonerated defendants Superlines and its driver
Dasco from liability and attributed sole responsibility to defendants BLTB and its driver Pon,
and ordered them jointly and severally to pay damages to the plaintiffs. Defendants BLTB
PARAS, J.: and Armando Pon appealed from the decision of the lower court to respondent appellate
court which affirmed with modification the judgment of the lower court as earlier stated.
Before Us is a Petition to Review by Certiorari, the decision 1 of the respondent appellate
court which affirmed with modification the joint decision of the trial court in four (4) cases Hence, this petition to review by certiorari of defendant BLTB assigning a lone error, to wit:
involving similar facts and issues, finding favorably for the plaintiffs (private respondents
herein), the dispositive portion of said appellate judgment reading as follows: THE INTERMEDIATE APPELLATE COURT ERRED IN ADJUDGING THAT
THE ACTIONS OF PRIVATE RESPONDENTS ARE BASED ON CULPA
WHEREFORE, with the modification that the death indemnity is raised to CONTRACTUAL. (p. 12, Rollo)
P30,000.00 to each set of the victims' heirs, the rest of the judgment
appealed from is hereby affirmed in toto. Costs against the defendants- It is argued by petitioners that if the intention of private respondents were to file an action
appellants. based on culpa contractual or breach of contract of carriage, they could have done so by
merely impleading BLTB and its driver Pon. As it was in the trial court, private respondents
SO ORDERED. (p. 20, Rollo) filed an action against all the defendants basing their action on culpa aquiliana or tort.

From the records of the case We have gathered the following antecedent facts: Petitioners' contentions deserve no merit. A reading of the respondent court's decision shows
that it anchored petitioners' liability both on culpa contractual and culpa aquiliana, to wit:
The collision between Bus No. 1046 of the Batangas Laguna Tayabas Bus Company (BLTB,
for brevity) driven by Armando Pon and Bus No. 404 of Superlines Transportation Company The proximate cause of the collision resulting in the death of three and
(Superlines, for brevity) driven by Ruben Dasco took place at the highway traversing injuries to two of the passengers of BLTB was the negligence of the driver of

72
the BLTB bus, who recklessly operated and drove said bus by overtaking a For his own negligence in recklessly driving the truck owned by his employer,
Ford Fiera car as he was negotiating the ascending bend of the highway (tsn, appellant Armando Pon is primarily liable (Article 2176, Civil
October 4, 1979, pp. 9-10, 35, 36, 61; Exhibit 6 Superlines, p. 47) which was Code).<äre||anº•1àw>
divided into two lanes by a continuous yellow strip (tsn, October 4, 1979, p.
36). The driver of the BLTB bus admitted in his cross-examination that the On the other hand the liability of Pon's employer, appellant BLTB, is also
continuous yellow line on the ascending bend of the highway signifies a no- primary, direct and immediate in view of the fact that the death of or injuries
overtaking zone (tsn, October 4, 1979, p. 36). It is no surprise then that the to its passengers was through the negligence of its employee (Marahan v.
driver of the Superlines bus was exonerated by the lower court. He had a Mendoza, 24 SCRA 888, 894), and such liability does not cease even upon
valid reason to presuppose that no one would overtake in such a dangerous proof that BLTB had exercised all the diligence of a good father of a family in
situation. These facts show that patient imprudence of the BLTB driver. the selection and supervision of its employees (Article 1759, Civil Code).

It is well settled that a driver abandoning his proper lane for the purpose of The common carrier's liability for the death of or injuries to its passengers is
overtaking another vehicle in ordinary situation has the duty to see that the based on its contractual obligation to carry its passengers safely to their
road is clear and not to proceed if he can not do so in safety (People v. destination. That obligation is so serious that the Civil Code requires "utmost
Enriquez, 40 O.G. No. 5, 984). diligence of very cautious person (Article 1755, Civil Code). They are
presumed to have been at fault or to have acted negligently unless they
... Before attempting to pass the vehicle ahead, the rear driver must see that prove that they have observed extraordinary diligence" (Article 1756, Civil
the road is clear and if there is no sufficient room for a safe passage, or the Code). In the present case, the appellants have failed to prove extraordinary
driver ahead does not turn out so as to afford opportunity to pass, or if, after diligence. Indeed, this legal presumption was confirmed by the fact that the
attempting to pass, the driver of the overtaking vehicle finds that he cannot bus driver of BLTB was negligent. It must follow that both the driver and the
make the passage in safety, the latter must slacken his speed so as to avoid owner must answer for injuries or death to its passengers.
the danger of a collision, even bringing his car to a stop if necessary. (3-4
Huddy Encyclopedia of Automobile Law, Sec. 212, p. 195). The liability of BLTB is also solidarily with its driver (Viluan v. Court of
Appeals, 16 SCRA 742, 747) even though the liability of the driver springs
The above rule becomes more particularly applicable in this case when the from quasi delict while that of the bus company from contract. (pp. 17-19,
overtaking took place on an ascending curved highway divided into two lanes Rollo)
by a continuous yellow line. Appellant Pon should have remembered that:
Conclusively therefore in consideration of the foregoing findings of the respondent appellate
When a motor vehicle is approaching or rounding a curve there is special court it is settled that the proximate cause of the collision resulting in the death of three and
necessity for keeping to the right side of the road and the driver has not the injuries to two of the passengers of BLTB was the sole negligence of the driver of the BLTB
right to drive on the left hand side relying upon having time to turn to the right Bus, who recklessly operated and drove said bus in a lane where overtaking is not allowed by
if a car is approaching from the opposite direction comes into view. (42 C.J. Traffic Rules and Regulations. Such negligence and recklessness is binding against
42 906). petitioner BLTB, more so when We consider the fact that in an action based on a contract of
carriage, the court need not make an express finding of fault or negligence on the part of the
Unless there is proof to the contrary, it is presumed that a person driving a carrier in order to hold it responsible for the payment of the damages sought by the
motor vehicle has been negligent if at the time of the mishap, he was passenger. By the contract of carriage, the carrier BLTB assumed the express obligation to
violating any traffic regulation. (Art. 2165, Civil Code). transport the passengers to their destination safely and to observe extraordinary diligence
with a due regard for all the circumstances, and any injury that might be suffered by its
In failing to observe these simple precautions, BLTB's driver undoubtedly passengers is right away attributable to the fault or negligence of the carrier (Art. 1756, New
failed to act with the diligence demanded by the circumstances. Civil Code).

Petitioners also contend that "a common carrier is not an absolute insurer against all risks of
We now come to the subject of liability of the appellants.
travel and are not liable for acts or accidents which cannot be foreseen or inevitable and that
73
responsibility of a common carrier for the safety of its passenger prescribed in Articles 1733
and 1755 of the New Civil Code is not susceptible of a precise and definite formulation." (p.
13, Rollo) Petitioners' contention holds no water because they had totally failed to point out
any factual basis for their defense of force majeure in the light of the undisputed fact that the
cause of the collision was the sole negligence and recklessness of petitioner Armando Pon.
For the defense of force majeure or act of God to prosper the accident must be due to natural
causes and exclusively without human intervention.

WHEREFORE, premises considered, the appealed decision is hereby AFFIRMED.

SO ORDERED.

74
SECOND DIVISION Tropical Hut at the corner of Ortigas Avenue and EDSA until 8:00 oclock in the
evening. Petitioner Porfirio Cabil drove the minibus.
The usual route to Caba, La Union was through Carmen, Pangasinan. However, the
bridge at Carmen was under repair, so that petitioner Cabil, who was unfamiliar with the area
[G.R. No. 111127. July 26, 1996]
(it being his first trip to La Union), was forced to take a detour through the town of Ba-ay in
Lingayen, Pangasinan. At 11:30 that night, petitioner Cabil came upon a sharp curve on the
highway, running on a south to east direction, which he described as siete. The road was
slippery because it was raining, causing the bus, which was running at the speed of 50
MR. & MRS. ENGRACIO FABRE, JR.* and PORFIRIO CABIL, petitioners, vs. COURT OF kilometers per hour, to skid to the left road shoulder. The bus hit the left traffic steel brace and
APPEALS, THE WORD FOR THE WORLD CHRISTIAN FELLOWSHIP, INC., sign along the road and rammed the fence of one Jesus Escano, then turned over and landed
AMYLINE ANTONIO, JOHN RICHARDS, GONZALO GONZALES, VICENTE V. on its left side, coming to a full stop only after a series of impacts. The bus came to rest off the
QUE, JR., ICLI CORDOVA, ARLENE GOJOCCO, ALBERTO ROXAS CORDERO, road. A coconut tree which it had hit fell on it and smashed its front portion.
RICHARD BAUTISTA, JOCELYN GARCIA, YOLANDA CORDOVA, NOEL ROQUE,
EDWARD TAN, ERNESTO NARCISO, ENRIQUETA LOCSIN, FRANCIS NORMAN Several passengers were injured. Private respondent Amyline Antonio was thrown on the
O. LOPEZ, JULIUS CAESAR GARCIA, ROSARIO MA. V. ORTIZ, MARIETTA C. floor of the bus and pinned down by a wooden seat which came off after being unscrewed. It
CLAVO, ELVIE SENIEL, ROSARIO MARA-MARA, TERESITA REGALA, MELINDA took three persons to safely remove her from this position. She was in great pain and could not
TORRES, MARELLA MIJARES, JOSEFA CABATINGAN, MARA NADOC, DIANE move.
MAYO, TESS PLATA, MAYETTE JOCSON, ARLENE Y. MORTIZ, LIZA MAYO,
CARLOS RANARIO, ROSAMARIA T. RADOC and BERNADETTE The driver, petitioner Cabil, claimed he did not see the curve until it was too late. He said
FERRER, respondents. he was not familiar with the area and he could not have seen the curve despite the care he
took in driving the bus, because it was dark and there was no sign on the road. He said that he
saw the curve when he was already within 15 to 30 meters of it. He allegedly slowed down to
DECISION 30 kilometers per hour, but it was too late.
MENDOZA, J.: The Lingayen police investigated the incident the next day, November 3, 1984. On the
basis of their finding they filed a criminal complaint against the driver, Porfirio Cabil. The case
This is a petition for review on certiorari of the decision of the Court of Appeals[1] in CA- was later filed with the Lingayen Regional Trial Court. Petitioners Fabre paid Jesus Escano
GR No. 28245, dated September 30, 1992, which affirmed with modification the decision of the P1,500.00 for the damage to the latters fence. On the basis of Escanos affidavit of desistance
Regional Trial Court of Makati, Branch 58, ordering petitioners jointly and severally to pay the case against petitioners Fabre was dismissed.
damages to private respondent Amyline Antonio, and its resolution which denied petitioners
motion for reconsideration for lack of merit. Amyline Antonio, who was seriously injured, brought this case in the RTC of Makati, Metro
Manila. As a result of the accident, she is now suffering from paraplegia and is permanently
Petitioners Engracio Fabre, Jr. and his wife were owners of a 1982 model Mazda paralyzed from the waist down. During the trial she described the operations she underwent
minibus. They used the bus principally in connection with a bus service for school children and adduced evidence regarding the cost of her treatment and therapy. Immediately after the
which they operated in Manila. The couple had a driver, Porfirio J. Cabil, whom they hired in accident, she was taken to the Nazareth Hospital in Ba-ay, Lingayen. As this hospital was not
1981, after trying him out for two weeks. His job was to take school children to and from the St. adequately equipped, she was transferred to the Sto. Nio Hospital, also in the town of Ba-ay,
Scholasticas College in Malate, Manila. where she was given sedatives. An x-ray was taken and the damage to her spine was
determined to be too severe to be treated there. She was therefore brought to Manila, first to
On November 2, 1984 private respondent Word for the World Christian Fellowship Inc.
the Philippine General Hospital and later to the Makati Medical Center where she underwent
(WWCF) arranged with petitioners for the transportation of 33 members of its Young Adults
an operation to correct the dislocation of her spine.
Ministry from Manila to La Union and back in consideration of which private respondent paid
petitioners the amount of P3,000.00. In its decision dated April 17, 1989, the trial court found that:
The group was scheduled to leave on November 2, 1984, at 5:00 oclock in the
afternoon. However, as several members of the party were late, the bus did not leave the No convincing evidence was shown that the minibus was properly checked for travel to a long
distance trip and that the driver was properly screened and tested before being admitted for

75
employment. Indeed, all the evidence presented have shown the negligent act of the place of the accident. The Court of Appeals held that the Fabres were themselves
defendants which ultimately resulted to the accident subject of this case. presumptively negligent. Hence, this petition. Petitioners raise the following issues:
I. WHETHER OR NOT PETITIONERS WERE NEGLIGENT.
Accordingly, it gave judgment for private respondents holding:
II. WHETHER OR NOT PETITIONERS WERE LIABLE FOR THE INJURIES
Considering that plaintiffs Word for the World Christian Fellowship, Inc. and Ms. Amyline SUFFERED BY PRIVATE RESPONDENTS.
Antonio were the only ones who adduced evidence in support of their claim for damages, the
III. WHETHER OR NOT DAMAGES CAN BE AWARDED AND IN THE POSITIVE,
Court is therefore not in a position to award damages to the other plaintiffs.
UP TO WHAT EXTENT.

WHEREFORE, premises considered, the Court hereby renders judgment against defendants Petitioners challenge the propriety of the award of compensatory damages in the amount
Mr. & Mrs. Engracio Fabre, Jr. and Porfirio Cabil y Jamil pursuant to articles 2176 and 2180 of P600,000.00. It is insisted that, on the assumption that petitioners are liable, an award of
of the Civil Code of the Philippines and said defendants are ordered to pay jointly and P600,000.00 is unconscionable and highly speculative. Amyline Antonio testified that she was
severally to the plaintiffs the following amount: a casual employee of a company called Suaco, earning P1,650.00 a month, and a dealer of
Avon products, earning an average of P1,000.00 monthly. Petitioners contend that as casual
1) P93,657.11 as compensatory and actual damages; employees do not have security of tenure, the award of P600,000.00, considering Amyline
Antonios earnings, is without factual basis as there is no assurance that she would be regularly
2) P500,000.00 as the reasonable amount of loss of earning capacity of plaintiff earning these amounts.
Amyline Antonio;
With the exception of the award of damages, the petition is devoid of merit.
3) P20,000.00 as moral damages;
First, it is unnecessary for our purpose to determine whether to decide this case on the
4) P20,000.00 as exemplary damages; and theory that petitioners are liable for breach of contract of carriage or culpa contractual or on the
theory of quasi delict or culpa aquiliana as both the Regional Trial Court and the Court of
5) 25% of the recoverable amount as attorneys fees; Appeals held, for although the relation of passenger and carrier is contractual both in origin
6) Costs of suit. and nature, nevertheless the act that breaks the contract may be also a tort. [2] In either case,
the question is whether the bus driver, petitioner Porfirio Cabil, was negligent.
SO ORDERED. The finding that Cabil drove his bus negligently, while his employer, the Fabres, who
owned the bus, failed to exercise the diligence of a good father of the family in the selection
The Court of Appeals affirmed the decision of the trial court with respect to Amyline and supervision of their employee is fully supported by the evidence on record. These factual
Antonio but dismissed it with respect to the other plaintiffs on the ground that they failed to findings of the two courts we regard as final and conclusive, supported as they are by the
prove their respective claims. The Court of Appeals modified the award of damages as follows: evidence. Indeed, it was admitted by Cabil that on the night in question, it was raining, and, as
a consequence, the road was slippery, and it was dark. He averred these facts to justify his
1) P93,657.11 as actual damages; failure to see that there lay a sharp curve ahead. However, it is undisputed that Cabil drove his
2) P600,000.00 as compensatory damages; bus at the speed of 50 kilometers per hour and only slowed down when he noticed the curve
some 15 to 30 meters ahead.[3] By then it was too late for him to avoid falling off the road.Given
3) P50,000.00 as moral damages; the conditions of the road and considering that the trip was Cabils first one outside of Manila,
Cabil should have driven his vehicle at a moderate speed. There is testimony[4] that the vehicles
4) P20,000.00 as exemplary damages;
passing on that portion of the road should only be running 20 kilometers per hour, so that at 50
5) P10,000.00 as attorneys fees; and kilometers per hour, Cabil was running at a very high speed.

6) Costs of suit. Considering the foregoing the fact that it was raining and the road was slippery, that it was
dark, that he drove his bus at 50 kilometers an hour when even on a good day the normal
The Court of Appeals sustained the trial courts finding that petitioner Cabil failed to speed was only 20 kilometers an hour, and that he was unfamiliar with the terrain, Cabil was
exercise due care and precaution in the operation of his vehicle considering the time and the

76
grossly negligent and should be held liable for the injuries suffered by private respondent The above article makes no distinction between one whose principal business activity is
Amyline Antonio. the carrying of persons or goods or both, and one who does such carrying only as an ancillary
activity (in local idiom, as a sideline). Article 1732 also carefully avoids making any distinction
Pursuant to Arts. 2176 and 2180 of the Civil Code his negligence gave rise to the between a person or enterprise offering transportation service on a regular or scheduled basis
presumption that his employers, the Fabres, were themselves negligent in the selection and and one offering such service on an occasional, episodic or unscheduled basis. Neither does
supervision of their employee. Article 1732 distinguish between a carrier offering its services to the general public, i.e., the
Due diligence in selection of employees is not satisfied by finding that the applicant general community or population, and one who offers services or solicits business only from a
possessed a professional drivers license. The employer should also examine the applicant for narrow segment of the general population. We think that Article 1732 deliberately refrained
his qualifications, experience and record of service.[5] Due diligence in supervision, on the other from making such distinctions.
hand, requires the formulation of rules and regulations for the guidance of employees and the As common carriers, the Fabres were bound to exercise extraordinary diligence for the safe
issuance of proper instructions as well as actual implementation and monitoring of consistent transportation of the passengers to their destination. This duty of care is not excused by proof
compliance with the rules.[6] that they exercised the diligence of a good father of the family in the selection and supervision
In the case at bar, the Fabres, in allowing Cabil to drive the bus to La Union, apparently of their employee. As Art. 1759 of the Code provides:
did not consider the fact that Cabil had been driving for school children only, from their homes Common carriers are liable for the death of or injuries to passengers through the
to the St. Scholasticas College in Metro Manila.[7] They had hired him only after a two-week negligence or wilful acts of the formers employees, although such employees may have acted
apprenticeship. They had tested him for certain matters, such as whether he could remember beyond the scope of their authority or in violation of the orders of the common carriers.
the names of the children he would be taking to school, which were irrelevant to his qualification
to drive on a long distance travel, especially considering that the trip to La Union was his This liability of the common carriers does not cease upon proof that they exercised all the
first. The existence of hiring procedures and supervisory policies cannot be casually invoked diligence of a good father of a family in the selection and supervision of their employees.
to overturn the presumption of negligence on the part of an employer.[8]
The same circumstances detailed above, supporting the finding of the trial court and of
Petitioners argue that they are not liable because (1) an earlier departure (made the appellate court that petitioners are liable under Arts. 2176 and 2180 for quasi delict, fully
impossible by the congregations delayed meeting) could have averted the mishap and (2) justify finding them guilty of breach of contract of carriage under Arts. 1733, 1755 and 1759 of
under the contract, the WWCF was directly responsible for the conduct of the trip. Neither of the Civil Code.
these contentions hold water. The hour of departure had not been fixed. Even if it had been,
the delay did not bear directly on the cause of the accident. With respect to the second Secondly, we sustain the award of damages in favor of Amyline Antonio. However, we
contention, it was held in an early case that: think the Court of Appeals erred in increasing the amount of compensatory damages because
private respondents did not question this award as inadequate.[11] To the contrary, the award
of P500,000.00 for compensatory damages which the Regional Trial Court made is reasonable
[A] person who hires a public automobile and gives the driver directions as to the place to considering the contingent nature of her income as a casual employee of a company and as
which he wishes to be conveyed, but exercises no other control over the conduct of the distributor of beauty products and the fact that the possibility that she might be able to work
driver, is not responsible for acts of negligence of the latter or prevented from recovering for again has not been foreclosed. In fact she testified that one of her previous employers had
injuries suffered from a collision between the automobile and a train, caused by the expressed willingness to employ her again.
negligence either of the locomotive engineer or the automobile driver.[9]
With respect to the other awards, while the decisions of the trial court and the Court of
As already stated, this case actually involves a contract of carriage. Petitioners, the Appeals do not sufficiently indicate the factual and legal basis for them, we find that they are
Fabres, did not have to be engaged in the business of public transportation for the provisions nevertheless supported by evidence in the records of this case. Viewed as an action for quasi
of the Civil Code on common carriers to apply to them. As this Court has held:[10] delict, this case falls squarely within the purview of Art. 2219(2) providing for the payment of
moral damages in cases of quasi delict. On the theory that petitioners are liable for breach of
Art. 1732. Common carriers are persons, corporations, firms or associations engaged in the contract of carriage, the award of moral damages is authorized by Art. 1764, in relation to Art.
business of carrying or transporting passengers or goods or both, by land, water, or air for 2220, since Cabils gross negligence amounted to bad faith.[12] Amyline Antonios testimony, as
compensation, offering their services to the public. well as the testimonies of her father and co-passengers, fully establish the physical suffering
and mental anguish she endured as a result of the injuries caused by petitioners negligence.

77
The award of exemplary damages and attorneys fees was also properly made. However, between the carrier and the passenger, and in the event of contractual liability, the carrier is
for the same reason that it was error for the appellate court to increase the award of exclusively responsible therefore to the passenger, even if such breach be due to the
compensatory damages, we hold that it was also error for it to increase the award of moral negligence of his driver (see Viluan v. The Court of Appeals, et al., G.R. Nos. L-21477-81,
damages and reduce the award of attorneys fees, inasmuch as private respondents, in whose April 29, 1966, 16 SCRA 742) . . .[22]
favor the awards were made, have not appealed.[13]
As above stated, the decision of the Court of Appeals can be sustained either on the As in the case of BLTB, private respondents in this case and her co-plaintiffs did not stake
theory of quasi delict or on that of breach of contract. The question is whether, as the two courts out their claim against the carrier and the driver exclusively on one theory, much less on that
below held, petitioners, who are the owners and driver of the bus, may be made to respond of breach of contract alone. After all, it was permitted for them to allege alternative causes of
jointly and severally to private respondent. We hold that they may be. In Dangwa Trans. Co. action and join as many parties as may be liable on such causes of action [23] so long as private
Inc. v. Court of Appeals,[14] on facts similar to those in this case, this Court held the bus respondent and her co-plaintiffs do not recover twice for the same injury. What is clear from
company and the driver jointly and severally liable for damages for injuries suffered by a the cases is the intent of the plaintiff there to recover from both the carrier and the driver, thus
passenger. Again, in Bachelor Express, Inc. v. Court of Appeals[15] a driver found negligent in justifying the holding that the carrier and the driver were jointly and severally liable because
failing to stop the bus in order to let off passengers when a fellow passenger ran amuck, as a their separate and distinct acts concurred to produce the same injury.
result of which the passengers jumped out of the speeding bus and suffered injuries, was held WHEREFORE, the decision of the Court of Appeals is AFFIRMED with MODIFICATION
also jointly and severally liable with the bus company to the injured passengers. as to the award of damages. Petitioners are ORDERED to PAY jointly and severally the private
The same rule of liability was applied in situations where the negligence of the driver of respondent Amyline Antonio the following amounts:
the bus on which plaintiff was riding concurred with the negligence of a third party who was the 1) P93,657.11 as actual damages;
driver of another vehicle, thus causing an accident. In Anuran v. Buo,[16] Batangas Laguna
Tayabas Bus Co. v. Intermediate Appellate Court,[17] and Metro Manila Transit Corporation v. 2) P500,000.00 as the reasonable amount of loss of earning capacity of plaintiff
Court of Appeals,[18] the bus company, its driver, the operator of the other vehicle and the driver Amyline Antonio;
of the vehicle were jointly and severally held liable to the injured passenger or the latters
3) P20,000.00 as moral damages;
heirs. The basis of this allocation of liability was explained in Viluan v. Court of Appeals,[19] thus:
4) P20,000.00 as exemplary damages;
Nor should it make any difference that the liability of petitioner [bus owner] springs from
5) 25% of the recoverable amount as attorneys fees; and
contract while that of respondents [owner and driver of other vehicle] arises from quasi-
delict. As early as 1913, we already ruled in Gutierrez vs. Gutierrez, 56 Phil. 177, that in case 6) costs of suit.
of injury to a passenger due to the negligence of the driver of the bus on which he was riding
and of the driver of another vehicle, the drivers as well as the owners of the two vehicles are SO ORDERED
jointly and severally liable for damages. Some members of the Court, though, are of the view
that under the circumstances they are liable on quasi-delict.[20]

It is true that in Philippine Rabbit Bus Lines, Inc. v. Court of Appeals [21] this Court
exonerated the jeepney driver from liability to the injured passengers and their families while
holding the owners of the jeepney jointly and severally liable, but that is because that case was
expressly tried and decided exclusively on the theory of culpa contractual. As this Court there
explained:

The trial court was therefore right in finding that Manalo [the driver] and spouses Mangune
and Carreon [the jeepney owners] were negligent. However, its ruling that spouses Mangune
and Carreon are jointly and severally liable with Manalo is erroneous. The driver cannot be
held jointly and severally liable with the carrier in case of breach of the contract of
carriage. The rationale behind this is readily discernible. Firstly, the contract of carriage is

78
EN BANC while DefendantRosario Avorque was absolved from liability. From this
judgment, Defendant Cresencia appealed.
[G.R. No. L-8194. July 11, 1956.]
We have already held in the case of Montoya vs. Ignacio, 94 Phil., 182 (December 29, 1953),
EMERENCIANA M. VDA. DE MEDINA, ET AL., Plaintiffs-Appellees, vs. GUILLERMO
which the court below cited, that the law (section 20 [g], C. A. No. 146 as amended) requires
CRESENCIA, ET AL., Defendants. GUILLERMO CRESENCIA, Appellant.
the approval of the Public Service Commission in order that a franchise, or any privilege
pertaining thereto, may be sold or leased without infringing the certificate issued to the
grantee; chan roblesvirtualawlibraryand that if property covered by the franchise is transferred
DECISION
or leased without this requisite approval, the transfer is not binding against the public or the
REYES, J.B.L., J.: Service Commission; chan roblesvirtualawlibraryand in contemplation of law, the grantee of
record continues to be responsible under the franchise in relation to the Commission and to
Appeal by Defendant Guillermo Cresencia from the judgment of the Court of First Instance of the public. There we gave the reason for this rule to be as follows:chanroblesvirtuallawlibrary
Manila in its civil case No. 19890, sentencing Appellant, jointly and severally with his co-
DefendantBrigido Avorque, to pay Plaintiffs Emerencia M. Vda. de Medina and her minor “ cralaw Since a franchise is personal in nature any transfer or lease thereof should be notified
children damages in the total amount of P56,000, P5,000 attorneys’ fees, and costs. to the Public Service Commission so that the latter may take proper safeguards to protect the
interest of the public. In fact, the law requires that, before the approval is granted, there should
It appears that on May 31, 1953, passenger jeepney bearing plate No. TPU-2232 (Manila), be a public hearing, with notice to all interested parties, in order that the Commission may
driven by Brigido Avorque, smashed into a Meralco post on Azcarraga Street, resulting in the determine if there are good and reasonable grounds justifying the transfer or lease of the
death of Vicente Medina, one of its passengers. A criminal case for homicide through reckless property covered by the franchise, or if the sale or lease is detrimental to public
imprudence was filed against Avorque (criminal case No. 22775 of the Court of First Instance interest cralaw .”
of Manila), to which he pleaded guilty on September 9, 1953. The heirs of the deceased,
however, reserved their right to file a separate action for damages, and on June 16, 1953, The above ruling was later reiterated in the cases of Timbol vs. Osias, L-7547, April 30, 1955
brought suit against the driver Brigido Avorque and Appellant Guillermo Cresencia, the and Roque vs. Malibay Transit Inc., L- 8561, November 18, 1955.
registered owner and operator of the jeepney in question. Defendant Brigido Avorque did not
As the sale of the jeepney here in question was admittedly without the approval of the Public
file any answer; chan roblesvirtualawlibrarywhile DefendantCresencia answered, disclaiming Service Commission, Appellant herein, Guillermo Cresencia, who is the registered owner and
liability on the ground that he had sold the jeepney in question on October 14, 1950 to one operator thereof, continued to be liable to the Commission and the public for the consequences
Maria A. Cudiamat; chan roblesvirtualawlibrarythat the jeepney had been repeatedly sold by
incident to its operation. Wherefore, the lower court did not err in holding him, and not the buyer
one buyer after another, until the vehicle was purchased on January 29, 1953 by Rosario Rosario Avorque, responsible for the damages sustained by Plaintiff by reason of the death of
Avorque, the absolute owner thereof at the time of the accident. In view of Cresencia’s
Vicente Medina resulting from the reckless negligence of the jeepney’s driver, Brigido Avorque.
answer, Plaintiffsfiled leave, and was allowed, to amend their complaint making Rosario
Avorque a co-Defendant; chan roblesvirtualawlibraryand the latter, by way of answer, admitted Appellant also argues that the basis of Plaintiffs’ action being the employer’s subsidiary liability
having purchased the aforesaid jeepney on May 31, 1953, but alleged in defense that she was under the Revised Penal Code for damages arising from his employee’s criminal acts, it
never the public utility operator thereof. The case then proceeded to trial, during which, after is Defendant Rosario Avorque who should answer subsidiarily for the damages sustained
the Plaintiffs had presented their evidence, DefendantsGuillermo Cresencia and Rosario by Plaintiffs, since she admits that she, and not Appellant, is the employer of the negligent
Avorque made manifestations admitting that the former was still the registered operator of the driver Brigido Avorque. The argument is untenable, because Plaintiffs’ action for damages is
jeepney in question in the records of the Motor Vehicles Office and the Public Service independent of the criminal case filed against Brigido Avorque, and based, not on the
Commission, while the latter was the owner thereof at the time of the accident; chan employer’s subsidiary liability under the Revised Penal Code, but on a breach of the carrier’s
roblesvirtualawlibraryand submitted the case for the decision on the question of who, as contractual obligation to carry his passengers safely to their destination (culpa contractual).
between the two, should be held liable to Plaintiffs for damages. The lower court, by Judge And it is also for this reason that there is no need of first proving the insolvency of the driver
Jose Zulueta, held that as far as the public is concerned, Defendant Cresencia, in the eyes of Brigido Avorque before damages can be recovered from the carrier, for in culpa contractual,
the law, continued to be the legal owner of the jeepney in question; chan the liability of the carrier is not merely subsidiary or secondary, but direct and immediate
roblesvirtualawlibraryand rendered judgment against him, jointly and severally with the driver (Articles 1755, 1756, and 1759, New Civil Code).
Brigido Avorque, for P6,000 compensatory damages, P30,000 moral damages, P10,000
The propriety of the damages awarded has not been questioned, Nevertheless, it is patent
exemplary damages, P10,000 nominal damages, P5,000 attorneys fees, and costs,
upon the record that the award of P10,000 by way of nominal damages is untenable as a matter
of law, since nominal damages cannot co-exist with compensatory damages. The purpose of
79
nominal damages is to vindicate or recognize a right that has been violated, in order to preclude
further contest thereon; chan roblesvirtualawlibrary“and not for the purpose of indemnifying
the Plaintiff for any loss suffered by him” (Articles 2221, 2223, new Civil Code.) Since the court
below has already awarded compensatory and exemplary damages that are in themselves a
judicial recognition that Plaintiff’s right was violated, the award of nominal damages is
unnecessary and improper. Anyway, ten thousand pesos cannot, in common sense, be
deemed “nominal”.
With the modification that the award of P10,000 nominal damages” be eliminated, the decision
appealed from is affirmed. Costs against Appellant. SO ORDERED.
Paras, C.J., Bengzon, Padilla, Montemayor, Reyes, A., Bautista Angelo, Labrador,
Concepcion and Endencia, JJ., concur.

80