AMERICAN EXPRESS INTERNATIONAL, G.R. No.

138550
INC.,
Petitioner,
Present:

PANGANIBAN, J., Chairman,

SANDOVAL-GUTIERREZ,
- versus - CORONA,
CARPIO MORALES, and
GARCIA, JJ.

NOEL CORDERO, Promulgated:

Defendant.
October 14, 2005
x------------------------------------------------------------------------------------------------- x

D E C I S I O N

SANDOVAL-GUTIERREZ, J.:

This is a petition for review on certiorari of the Decision[1] of the Court of Appeals dated April 30, 1999

in CA-G.R. CV No. 51671, entitled, Noel Cordero, Plaintiff-Appellee versus American Express

International, Inc., Defendant-Appellant.

Petitioner is a foreign corporation that issues charge cards to its customers, which the latter then use

to purchase goods and services at accredited merchants worldwide. Sometime in 1988, Nilda

Cordero, wife of respondent Noel Cordero, applied for and was issued an American Express charge

card with No. 3769-895901-010020. The issuance of the charge card was covered by an Amex

Cardmember Agreement. As cardholder, Nilda, upon signing the back portion of the card, manifested

her acceptance of the terms of the Agreement.

An extension charge card, with No. 3769-895901-01010, was likewise issued to respondent

Noel Cordero which he also signed.[2]

On November 29, 1991, respondent, together with his wife, Nilda, daughter, sisters-in-law and uncle-

in-law, went on a three-day holiday trip to Hong Kong. In the early evening of November 30, 1991, at

about 7:00 oclock, the group went to the Watsons Chemist Shop located at 277C Ocean Gallery,

Kowloon, Hong Kong. Noel picked up some chocolate candies and handed to the sales clerk his

American Express extension charge card to pay for his purchases. The sales clerk verified the card

by making a telephone call to the American Express Office in Hong Kong. Moments later, Susan
Chong, the store manager, emerged from behind the counter and informed respondent that she had

to confiscate the card. Thereupon, she cut respondents American Express card in half with a pair of

scissors. This, according to respondent, caused him embarrassment and humiliation considering that

it was done in front of his family and the other customers lined up at the check-out counter. Hence,

Nilda had to pay for the purchases using her own American Express charge card.[3]

When they returned to the Excelsior Hotel, Nilda called up petitioners Office in Hong Kong. She was

able to talk to Senior Authorizer Johnny Chen, who informed her that on November 1, 1991, a person

in Hong Kong attempted to use a charge card with the same number as respondents card. The Hong

Kong American Express Office called up respondent and after determining that he was in Manila and

not in Hong Kong, placed his card in the Inspect Airwarn Support System. This is the system utilized

by petitioner as a protection both for the company and the cardholders against the fraudulent use of

their charge cards. Once a card suspected of unauthorized use is placed in the system, the person to

whom the card is tendered must verify the identity of the holder. If the true identity of the card owner is

established, the card is honored and the charges are approved. Otherwise, the card is revoked or

confiscated.[4]

When the Watsons sales clerk called up petitioners Hong Kong Office, its representative said

he wants to talk to respondent in order to verify the latters identity, pursuant to the procedure

observed under the Inspect Airwarn Support System. However, respondent refused. Consequently,

petitioners representative was unable to establish the identity of the cardholder. [5] This led to the

confiscation of respondents card.

On March 31, 1992, respondent filed with the Regional Trial Court, Branch V, Manila, a

complaint for damages against petitioner, docketed as Civil Case No. 92-60807. He prayed for the

award of moral damages and exemplary damages, as well as attorneys fees as a result of the

humiliation he suffered.

The trial court found that the inexcusable failure of defendant (petitioner herein) to inform

plaintiff (respondent herein) of the November 1, 1991 incident despite sufficient time was the

proximate cause of the confiscation and cutting of plaintiffs extension card which exposed the latter to
public humiliation for which defendant should be held liable.[6] On February 20, 1995, the trial court

promulgated its Decision, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff and

against the defendant, ordering the latter to pay the former the following amounts,
namely:

a) The sum of P300,000.00 as and by way of moral damages;

b) The sum of P200,000.00 as exemplary damages;

c) The sum of P100,000.00 as and for reasonable attorneys fees; and

d) The costs of the suit.

SO ORDERED.[7]

Upon appeal, the Court of Appeals rendered the assailed Decision affirming the trial courts

Decision with modification in the sense that the amounts of damages awarded were reduced, thus:

WHEREFORE, in view of the foregoing, the appealed decision dated

February 20, 1995 of the Regional Trial Court of Manila, Branch V, in Civil Case No.
92-60807 is hereby AFFIRMED, subject to modifications with respect to the amount
of damages awarded, which are reduced as follows:

(a) Moral damages from P300,000.00 to P150,000.00; and

(b) Exemplary damages from P200,000.00 to P100,000.00.

No pronouncement as to costs.

SO ORDERED.

Hence, the instant petition raising the following issues:

A. Whether the lower courts gravely erred in attributing the public humiliation
allegedly suffered by Cordero to Amex.

B. Whether the lower courts gravely erred in holding Amex liable to Cordero
for moral damages, exemplary damages and attorneys fees.[8]

Respondent filed his comment contending in the main that the petition raises questions of fact

beyond this Courts domain.

 While it is true that under Rule 45 of the 1997 Rules of Civil Procedure, as amended, this

Court may review only errors of law, however, this rule admits of well-known recognized exceptions,

thus:

. . . (1) the conclusion is a finding grounded entirely on speculation, surmise

and conjecture; (2) the inference made is manifestly mistaken; (3) there is grave
abuse of discretion; (4) the judgment is based on a misapprehension of facts; (5) the
findings of fact are conflicting; (6) the Court of Appeals went beyond the issues of the
case and its findings are contrary to the admissions of both parties; (7) the findings of
fact of the Court of Appeals are contrary to those of the trial court; (8) said findings of
fact are conclusions without citation of specific evidence on which they are based; (9)
the facts set forth in the petition are not disputed by the respondents; and (10) the
findings of fact of the Court of Appeals are premised on the supposed absence of
evidence and contradicted by the evidence on record.[9]

In this case, the inference made by the courts below is manifestly mistaken. Therefore, we

are justified in reviewing the records of this case and rendering judgment based on our own findings.

In his complaint, respondent claimed that he suffered embarrassment and humiliation

because his card was unceremoniously confiscated and cut in half by Susan Chong of Watsons

Chemist Shop.

Respondent anchors his cause of action on the following provision of the Civil Code:

Art. 2176. Whoever by act or omission causes damage to another, there

being fault or negligence, is obliged to pay for the damage done. Such fault or
negligence, if there is no pre-existing contractual relation between the parties, is
called a quasi-delict and is governed by the provisions of this Chapter.[10]

In order that an obligation based on quasi-delict may arise, there must be no pre-existing

contractual relation between the parties. But there are exceptions. There may be an action for quasi-

delict notwithstanding that there is a subsisting contract between the parties. A liability for tort may

arise even under a contract, where tort is that which breaches the contract. Stated differently, when

an act which constitutes a breach of contract would have itself constituted the source of a quasi-

delictual liability, the contract can be said to have been breached by tort, thereby allowing the rules on

tort to apply.[11]
 Furthermore, to constitute quasi-delict, the fault or negligence must be the proximate cause of

the damage or injury suffered by the plaintiff. Proximate cause is that cause which, in natural and

continuous sequence, unbroken by any efficient intervening cause, produces the injury and without

which the result would not have occurred. Proximate cause is determined by the facts of each case

upon mixed considerations of logic, common sense, policy and precedent.[12]

According to the trial court, petitioner should have informed respondent that on November 1,

1991, a person in Hong Kong attempted to use a charge card bearing similar number to that of

respondents card; and that petitioners inexcusable failure to do so is the proximate cause of the

confiscation and cutting of [respondents] extension card which exposed the latter to public humiliation

for which [petitioner] should be held liable. [13]

We cannot sustain the trial courts conclusion.

As explained by respondent himself, he could have used his card upon verification by the

sales clerk of Watson that indeed he is the authorized cardholder. This could have been

accomplished had respondent talked to petitioners representative, enabling the latter to determine

that respondent is indeed the true holder of the card. Clearly, no negligence which breaches the

contract can be attributed to petitioner. If at all, the cause of respondents humiliation and

embarrassment was his refusal to talk to petitioners representative.

That respondent refused to talk to petitioners representative can be gleaned from the

testimony of Mr. Chen Heng Kun a.k.a. Johnny Chen during the deposition in Hong Kong, [14] thus:

Question No 9 : Was AEII required under its existing policies and/or

membership agreement with its cardholders to advise said
cardholders of their card have been put under the support
INSPECT Strictly Question (for identification) cardmembers
before approving any charge?
Mr. Johnny Chen : Under the existing policies of AEII, we dont have to
inform the cardholders if they have to pass the INSPECT Strictly
Questions (for identification).

Question No 10 : If the answer to Q9 is in the negative, please explain

why not?
Mr. Johnny Chen : The reason why we dont have to are because, first,
we are not terminating the service to the cardholder. Second, it
doesnt mean that we are going to limit the service to the
cardholder. Third, as long as the cardholder can present an
identification card of his membership, we allow him to use the
 card. He can show this by telephoning the company or by
presenting us his passport or travel document. When Watson
Company called AEII for authorization, AEII representative
requested that he talk to Mr. Cordero but he refused to talk
to any representative of AEII. AEII could not prove then that
he is really the real card holder.

Mr. Chen Heng Kun was briefly cross-examined by respondents counsel, thus:

Question No 10 : Question 9 is objected to since the best evidence would

be the membership agreement between plaintiffs and AEII.

Significantly, paragraph 16 of the Cardmember Agreement signed by respondent provides:

16. THE CARD REMAINS OUR PROPERTY

The Card remains our property and we can revoke your right and the right of
ay Additional Cardmember to use it at any time, we can do this with or without giving
you notice. If we have revoked the Card without cause, we will refund a proportion of
your annual Card Account fee. We may list revoked Cards in our Cancellation
Bulletin, or otherwise inform Establishments that the Card issued to you and, if you
are the basic Cardmember, any Additional Cards have been revoked or cancelled.

If we revoke the card or it expires, you must return it to us if we request. Also,

if any Establishment asks you to surrender an expired or revoked Card, you must do
so. You may not use the Card after it has expired or after it has been revoked.

The revocation, repossession or request for the return of the Card is not, and
shall not constitute any reflection of your character or credit-worthiness and we shall
not be liable in any way for any statement made by any person requesting the return
or surrender of the Card.[15]

To be sure, pursuant to the above stipulation, petitioner can revoke respondents card without

notice, as was done here. It bears reiterating that the subject card would not have been confiscated

and cut had respondent talked to petitioners representative and identified himself as the genuine

cardholder. It is thus safe to conclude that there was no negligence on the part of petitioner and that,

therefore, it cannot be held liable to respondent for damages.

WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of Appeals in

CA-G.R. CV No. 51671 is REVERSED.

SO ORDERED.
G.R. No. L-12191 October 14, 1918

JOSE CANGCO, plaintiff-appellant,

vs.
MANILA RAILROAD CO., defendant-appellee.

Ramon Sotelo for appellant.

Kincaid & Hartigan for appellee.

FISHER, J.:

At the time of the occurrence which gave rise to this litigation the plaintiff, Jose Cangco, was in the
employment of Manila Railroad Company in the capacity of clerk, with a monthly wage of P25. He
lived in the pueblo of San Mateo, in the province of Rizal, which is located upon 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 entitled him to ride upon the
company's trains free of charge. Upon the occasion in question, January 20, 1915, the plaintiff arose
from his seat in the second class-car where he was riding and, making, his exit through the door, took
his position upon the steps of the coach, seizing the upright guardrail with his right hand for support.

On the side of the train where passengers alight at the San Mateo station there is a cement platform
which begins to rise with a moderate gradient some distance away from the company's office and
extends along in front of said office for a distance sufficient to cover the length of several coaches. As
the train slowed down another passenger, named Emilio Zuñiga, also an employee of the railroad
company, got off the same car, alighting safely at 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 came in contact with a sack of watermelons with the result that his
feet slipped from under him and he fell violently on the platform. His body at once rolled from the
platform and was drawn under the moving car, where his right arm was badly crushed and lacerated.
It appears that after the plaintiff alighted from the train the car moved forward possibly six meters
before it came to a full stop.

The accident occurred between 7 and 8 o'clock on a dark night, and as the railroad station was lighted
dimly by a single light located some distance away, objects on the platform where the accident
occurred were difficult to discern especially to a person emerging from a lighted car.

The explanation of the presence of a sack of melons on the platform where the plaintiff alighted is
found in the fact that it was the customary season for harvesting these melons and a large lot had
been brought to the station for the shipment to the market. They were 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 of platform; and it is clear that the fall of the plaintiff was
due to the fact that his foot alighted 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 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 amputated higher up near the shoulder.
It appears in evidence that the plaintiff expended the sum of P790.25 in the form of medical and
surgical fees and for other expenses in connection with the process of his curation.

Upon August 31, 1915, he instituted this proceeding in the Court of First Instance of the city of Manila
to recover damages of the defendant company, founding his action upon the negligence of the
servants and employees of the defendant in placing the sacks of melons upon the platform and
leaving them so placed as to be a menace to the security of passenger 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 conclusion to the effect that, although
negligence was attributable to the defendant by reason of the fact that the sacks of melons were so
placed as to obstruct passengers passing to and from the cars, nevertheless, the plaintiff himself had
failed to use due caution in alighting from the coach and was therefore precluded form recovering.
Judgment was accordingly entered in favor of the defendant company, and the plaintiff appealed.

It can not be doubted that the employees of the railroad company were guilty of negligence in piling
these sacks on the platform in the manner above stated; that their presence caused the plaintiff to fall
as he alighted from the train; and that they therefore constituted an effective legal cause of the injuries
sustained by the plaintiff. It necessarily follows that the defendant company is liable for the damage
thereby occasioned unless recovery is barred by the 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 contributory negligence of the plaintiff should be
separately examined.

It is important to note that the foundation of the legal liability of the defendant is the contract of
carriage, and that the obligation to respond for the damage which plaintiff has suffered arises, if at all,
from the breach of that contract by reason of the failure of defendant to exercise due care in its
performance. That is to say, its liability is direct and immediate, differing essentially, in legal viewpoint
from that presumptive responsibility for the negligence 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 not applicable to obligations arising ex contractu, but
only to extra-contractual obligations — or to use the technical form of expression, that article relates
only to culpa aquiliana and not to culpa contractual.

Manresa (vol. 8, p. 67) in his commentaries upon articles 1103 and 1104 of the Civil Code, clearly
points out this distinction, which was also recognized by this Court in its decision in the case of
Rakes vs. Atlantic, Gulf and Pacific Co. (7 Phil. rep., 359). In commenting upon article 1093 Manresa
clearly points out the difference between "culpa, substantive and independent, which of itself
constitutes the source of an obligation between persons not formerly connected by any legal tie"
and culpa considered as an accident in the performance of an obligation already existing . . . ."

In the Rakes case (supra) the decision of this court was made to rest squarely upon the proposition
that article 1903 of the Civil Code is not applicable to acts of negligence which constitute the breach
of a contract.

Upon this point the Court said:

The acts to which these articles [1902 and 1903 of the Civil Code] are applicable are
understood to be those not growing out of pre-existing duties of the parties to one another.
But where relations already formed give rise to duties, whether springing from contract or
quasi-contract, then breaches of those duties are subject to article 1101, 1103, and 1104 of
the same code. (Rakes vs. Atlantic, Gulf and Pacific Co., 7 Phil. Rep., 359 at 365.)

This distinction is of the utmost importance. The liability, which, under the Spanish law, is, in certain
cases imposed upon employers with respect to damages occasioned by the negligence of their
employees to persons to whom they are not bound by contract, is not based, as in the English
Common Law, upon the principle of respondeat superior — if it were, the master would be liable in
every case and unconditionally — but upon the principle announced in article 1902 of the Civil Code,
which imposes upon all persons who by their fault or negligence, do injury to another, the obligation of
making good the damage caused. 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 which makes him liable for all the consequences of his imprudence. The obligation to
make good the damage arises at the very instant that the unskillful servant, while acting within the
scope of his employment causes the injury. The liability of the master is personal and direct. But, if the
master has not been guilty of any negligence whatever in the selection and direction of the servant,
he is not liable for the acts of the latter, whatever done within the scope of his employment or not, if
the damage done by the servant does not amount to a breach of the contract between the master and
the person injured.

It is not accurate to say that proof of diligence and care in the selection and control of the servant
relieves the master from liability for the latter's acts — on the contrary, that proof shows that the
responsibility has never existed. As Manresa says (vol. 8, p. 68) the liability 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 master who exercises all possible
care in the selection of his servant, taking into consideration the qualifications they should possess for
the discharge of the duties which it is his purpose to confide to them, and directs them with equal
diligence, thereby performs his duty to third persons to whom he is bound by no contractual ties, and
he incurs no liability whatever if, by reason of the negligence of his servants, even within the scope of
their employment, such third person suffer damage. True it is that under article 1903 of the Civil 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 this respect.

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-contractual culpa exclusively.
(Carmona vs. Cuesta, 20 Porto Rico Reports, 215.)

This distinction was again made patent by this Court in its decision in the case of Bahia vs. Litonjua
and Leynes, (30 Phil. rep., 624), which was an action brought upon the theory of the extra-contractual
liability of the defendant to respond for the damage caused by the carelessness of his employee while
acting within the scope of his employment. The Court, after citing the last paragraph of article 1903 of
the Civil Code, said:

From this article two things are apparent: (1) That when an injury is caused by the negligence
of a servant or employee there instantly arises a presumption of law that there was
negligence on the part of the master or employer either in selection of the servant or
employee, or in supervision over him after the selection, or both; and (2) that that presumption
is juris tantum and not juris et de jure, and consequently, may be rebutted. It follows
necessarily that if the employer shows to the satisfaction of the court that in selection and
supervision he has exercised the care and diligence of a good father of a family, the
presumption is overcome and he is relieved from liability.

This theory bases the responsibility of the master ultimately on his own negligence and not on
that of his servant. This is the notable peculiarity of the Spanish law of negligence. It is, of
course, in striking contrast to the American doctrine that, in relations with strangers, the
negligence of the servant in conclusively the negligence of the master.

The opinion there expressed by this Court, to the effect that in case of extra-contractual culpa based
upon negligence, it is necessary that there shall have been some fault attributable to the defendant
personally, and that the last paragraph of article 1903 merely establishes a rebuttable presumption, is
in complete accord with the authoritative opinion of Manresa, who says (vol. 12, p. 611) that the
liability created by article 1903 is imposed by reason of the breach of the duties inherent in the special
relations of authority or superiority existing between the person called upon to repair the damage and
the one who, by his act or omission, was the cause of it.

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 the breach of a
contact, is not based upon a mere presumption of the master's negligence in their selection or control,
and proof of exercise of the utmost diligence and care in this regard does not relieve the master of his
liability for the breach of his contract.

Every legal obligation must of necessity be extra-contractual or contractual. Extra-contractual

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, of certain
members of society to others, generally embraced in the concept of status. The legal rights of each
member of society constitute the measure of the corresponding legal duties, mainly negative in
character, which the existence of those rights imposes upon all other members of society. The breach
of these general duties whether due to willful intent or to mere inattention, if productive of injury, give
rise to an obligation to indemnify the injured party. The fundamental distinction between obligations of
this character and those which arise from contract, rests upon the fact that in cases of non-contractual
obligation it is the wrongful or negligent act or omission itself which creates the vinculum juris,
whereas in contractual relations the vinculum exists independently of the breach of the voluntary duty
assumed by the parties when entering into the contractual relation.

With respect to extra-contractual obligation arising from negligence, whether of act or omission, it is
competent for the legislature to elect — and our Legislature has so elected — whom such an
obligation is imposed is morally culpable, or, on the contrary, for reasons of public policy, to extend
that liability, without regard to the lack of moral culpability, so as to include responsibility for the
negligence of those person who acts or mission are imputable, by a legal fiction, to others who are in
a position to exercise an absolute or limited control over them. The legislature which adopted our Civil
Code has elected to limit extra-contractual liability — with certain well-defined exceptions — to cases
in which moral culpability can be directly imputed to the persons to be charged. This moral
responsibility may consist in having failed to exercise due care in the selection and control of one's
agents or servants, or in the control of persons who, by reason of their status, occupy a position of
dependency with respect to the person made liable for their conduct.

The position of a natural or juridical person who has undertaken by contract to render service to
another, is wholly different from that to which article 1903 relates. When the sources of the obligation
upon which plaintiff's cause of action depends is a negligent act or omission, the burden of proof rests
upon plaintiff to prove the negligence — if he does not his action fails. But when the facts averred
show a contractual undertaking by defendant for the benefit of plaintiff, and it is alleged that plaintiff
has failed or refused to perform the contract, it is not necessary for plaintiff to specify in his pleadings
whether the breach of the contract is due to 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.

As a general rule . . . it is logical that in case of extra-contractual culpa, a suing creditor

should assume the burden of proof of its existence, as the only fact upon which his action is
based; while on the contrary, in a case of negligence which 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. (Manresa, vol. 8, p. 71 [1907 ed., p. 76]).

As it is not necessary for the plaintiff in an action for the breach of a contract to show that the breach
was due to the negligent conduct of defendant or of his servants, even though such be in fact the
actual cause of the breach, it is obvious that proof on the part of defendant that the negligence or
omission of his servants or agents caused the breach of the contract would not constitute a defense
to the action. If the negligence of servants or agents could be invoked as a means of discharging the
liability arising from contract, the anomalous result would be that person acting through the medium of
agents or servants in the performance of their contracts, would be in a better position than those
acting in person. If one delivers a valuable watch to watchmaker who contract to repair it, and the
bailee, by a personal negligent act causes its destruction, he is unquestionably liable. Would it be
logical to free 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
caused the injury? If such a theory could be accepted, juridical persons would enjoy practically
complete immunity from damages arising from the breach of their contracts if caused by negligent
acts as such juridical persons can of necessity only act through agents or servants, and it would no
doubt be true in most instances that reasonable care had been taken in selection and direction of
such servants. If one delivers securities to a banking corporation as collateral, and they are lost by
reason of the negligence of some clerk employed by the bank, would it be just and reasonable to
permit the bank to relieve itself of liability for the breach of its contract to return the collateral upon the
payment of the debt by proving that due care had been exercised in the selection and direction of the
clerk?
This distinction between culpa aquiliana, as the source of an obligation, and culpa contractual as a
mere incident to the performance of a contract has frequently been recognized by the supreme court
of Spain. (Sentencias of June 27, 1894; November 20, 1896; and December 13, 1896.) In the
decisions of November 20, 1896, it appeared that plaintiff's action arose ex contractu, but that
defendant sought to avail himself of the provisions of article 1902 of the Civil Code as a defense. The
Spanish Supreme Court rejected defendant's contention, saying:

These are not cases of injury caused, without any pre-existing obligation, by fault or
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 the contracts . . . .

A brief review of the earlier decision of this court involving the liability of employers for damage done
by the negligent acts of their servants will show that in no case has the court ever decided that the
negligence of the defendant's servants has been held to constitute a defense to an action for
damages for breach of contract.

In the case of Johnson vs. David (5 Phil. Rep., 663), the court held that the owner of a carriage was
not liable for the damages caused by the negligence of his driver. In that case the court commented
on the fact that no evidence had been adduced in the trial court that the defendant had been negligent
in the employment of the driver, or that he had any knowledge of his lack of skill or carefulness.

In the case of Baer Senior & Co's Successors vs. Compania Maritima (6 Phil. Rep., 215), the plaintiff
sued the defendant for damages caused by the loss of a barge belonging to plaintiff which was
allowed to get adrift by the negligence of defendant's servants in the course of the performance of a
contract of towage. The court held, citing Manresa (vol. 8, pp. 29, 69) that if the "obligation of the
defendant grew out of a contract made between it and the plaintiff . . . we do not think that the
provisions of articles 1902 and 1903 are applicable to the case."

In the case of Chapman vs. Underwood (27 Phil. Rep., 374), plaintiff sued the defendant to recover
damages for the personal injuries caused by the negligence of defendant's chauffeur 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 held that the master was not liable,
although he was present at the time, saying:

. . . unless the negligent acts of the driver are continued for a length of time as to give the
owner a reasonable opportunity to observe them and to direct the driver to desist therefrom. .
. . The act complained of must be continued in the presence of the owner for such length of
time that the owner by his acquiescence, makes the driver's acts his own.

In the case of Yamada vs. Manila Railroad Co. and Bachrach Garage & Taxicab Co. (33 Phil. Rep.,
8), it is true that the court rested its conclusion as to the liability of the defendant upon article 1903,
although the facts disclosed that the injury complaint of by plaintiff constituted a breach of the duty to
him arising out of the contract of transportation. The express ground of the decision in this case was
that article 1903, in dealing with the liability of a master for the negligent acts of his servants "makes
the distinction between private individuals and public 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 negligence had not been overcome.

It is evident, therefore that in its decision Yamada case, the court treated plaintiff's action as 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 discussed upon this
theory. Viewed from the standpoint of the defendant the practical result must have been the same in
any event. The proof disclosed beyond doubt that the defendant's servant was grossly negligent and
that his negligence was the proximate cause 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, 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, pp. 29 and 69) whether negligence occurs an incident in the course of the performance of
a contractual undertaking or its itself the source of an extra-contractual undertaking obligation, its
essential characteristics are identical. There is always an act or omission productive of 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, either directly, or in failing to
exercise proper care in the selection and direction of his servants, the practical result is identical in
either case. Therefore, it follows that it is not to be inferred, because the court held in the Yamada
case that defendant was liable for the damages negligently caused by its servants to a person to
whom it was bound by contract, and made reference to the fact that the defendant was negligent in
the selection and control 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 defendant to have proved that it did in fact exercise care in the selection and control of
the servant.

The true explanation of such cases is to be found by directing the attention to the relative 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, the whole extent of juridical
human relations. These two fields, figuratively speaking, concentric; that is to say, the mere fact that a
person is bound to another by contract does not relieve him from extra-contractual liability to such
person. When such a contractual relation exists the obligor may break the contract under such
conditions that the same act which constitutes the source of an extra-contractual obligation had no
contract existed between the parties.

The contract of defendant to transport plaintiff carried with it, by implication, the duty to carry him in
safety and to provide safe means of entering and leaving its trains (civil code, article 1258). That duty,
being contractual, was direct and immediate, and its non-performance could not be excused by proof
that the fault was morally imputable to defendant's servants.

The railroad company's defense involves the assumption that even granting that the negligent
conduct of its servants in placing an obstruction upon the platform was a breach of its contractual
obligation to maintain safe means of approaching and leaving its trains, the direct and proximate
cause of the injury suffered by plaintiff was his own contributory negligence in failing to wait until the
train had come to a complete stop before alighting. Under the doctrine of comparative negligence
announced in the Rakes case (supra), if the accident was caused by plaintiff's own negligence, no
liability is imposed upon defendant's negligence and plaintiff's negligence merely contributed to his
injury, the damages should be apportioned. It is, therefore, important to ascertain if defendant was in
fact guilty of negligence.

It may be admitted that had plaintiff waited until the train had come to a full stop before alighting, the
particular injury suffered by him could not have occurred. Defendant contends, 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 its absolute form. We are of the
opinion that this proposition is too badly stated and is at variance with the experience of every-day
life. In this particular instance, that the train was barely moving when plaintiff alighted is shown
conclusively by the fact that it came to stop within six meters from the place where he stepped from it.
Thousands of person alight from trains under these conditions every day of the year, and sustain no
injury where the company has kept its platform free from dangerous obstructions. There is no reason
to believe that plaintiff would have suffered any injury whatever in alighting as he did had it not been
for defendant's negligent failure to perform its duty to provide a safe alighting place.

We are of the opinion that the correct doctrine relating to this subject is that expressed in Thompson's
work on Negligence (vol. 3, sec. 3010) as follows:

The test by which to determine whether the passenger has been guilty of negligence in
attempting to alight from a moving railway train, is that of ordinary or reasonable 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 circumstances disclosed by
the evidence. This care has been defined to be, not the care which may or should be used by
the prudent man generally, but the care which a man of ordinary prudence would use under
 similar circumstances, to avoid injury." (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. rep.,
809), we may say that the test is this; Was there anything in the circumstances surrounding the
plaintiff at the time he alighted from the train which would have admonished a person of average
prudence that to get off the train under the conditions then existing was dangerous? If so, the plaintiff
should have desisted from alighting; and his failure so to desist was contributory
negligence.1awph!l.net

As the case now before us presents itself, the only fact from which a conclusion can be drawn to the
effect that plaintiff was guilty of contributory negligence is that he stepped off the car without being
able to discern clearly the condition of the platform and while the train was yet slowly moving. In
considering the situation thus presented, it should not be overlooked that the plaintiff was, as we find,
ignorant of the fact that the obstruction which was caused by the sacks of melons piled on the
platform existed; and as the defendant was bound by reason of its duty as a public carrier to afford to
its passengers facilities for safe egress from its trains, the plaintiff had a right to assume, in the
absence of some circumstance to warn him to the contrary, that the platform was clear. The place, as
we have already stated, was dark, or 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 had right to pile these sacks in the path of alighting passengers, the placing of them
adequately so that their presence would be revealed.

As pertinent to the question of contributory negligence on the part of the plaintiff in this case the
following circumstances are to be noted: The company's platform was constructed upon a level higher
than that of the roadbed and the surrounding ground. The distance from the steps of the car to the
spot where the alighting passenger would place his feet on the platform was thus reduced, thereby
decreasing the risk incident to stepping off. The nature of the platform, constructed as it was of
cement material, also assured to the passenger a stable and even surface on which to alight.
Furthermore, the plaintiff was possessed of the vigor and agility of young manhood, and it was by no
means so risky for him to get off while 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, whether the passenger acted prudently or recklessly — the age, sex, and
physical condition 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 obstructs the free movement of the limbs. Again, it may be noted that the place was perfectly
familiar to the plaintiff as it was his daily custom to get on and of the train at this station. There could,
therefore, be no uncertainty in his mind with regard either to the length of 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 yet slightly under way was not
characterized by imprudence and that therefore he was not guilty of contributory negligence.

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 continuing
that employment. Defendant has not shown that any other gainful occupation is 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.

Arellano, C.J., Torres, Street and Avanceña, JJ., concur.

G.R. No. 108164 February 23, 1995

FAR EAST BANK AND TRUST COMPANY, petitioner,

vs.
THE HONORABLE COURT OF APPEALS, LUIS A. LUNA and CLARITA S. LUNA, respondents.

VITUG, J.:

Some time in October 1986, private respondent Luis A. Luna applied for, and was accorded, a
FAREASTCARD issued by petitioner Far East Bank and Trust Company ("FEBTC") at its Pasig
Branch. Upon his request, the bank also issued a supplemental card to private respondent Clarita S.
Luna.

In August 1988, Clarita lost her credit card. FEBTC was forthwith informed. In order to replace the lost
card, Clarita submitted an affidavit of loss. In cases of this nature, the bank's internal security
procedures and policy would appear to be to meanwhile so record the lost card, along with the
principal card, as a "Hot Card" or "Cancelled Card" in its master file.

On 06 October 1988, Luis tendered a despedida lunch for a close friend, a Filipino-American, and
another guest at the Bahia Rooftop Restaurant of the Hotel Intercontinental Manila. To pay for the
lunch, Luis presented his FAREASTCARD to the attending waiter who promptly had it verified through
a telephone call to the bank's Credit Card Department. Since the card was not honored, Luis was
forced to pay in cash the bill amounting to P588.13. Naturally, Luis felt embarrassed by this incident.

In a letter, dated 11 October 1988, private respondent Luis Luna, through counsel, demanded from
FEBTC the payment of damages. Adrian V. Festejo, a vice-president of the bank, expressed the
bank's apologies to Luis. In his letter, dated 03 November 1988, Festejo, in part, said:

In cases when a card is reported to our office as lost, FAREASTCARD undertakes the
necessary action to avert its unauthorized use (such as tagging the card as hotlisted), as it is
always our intention to protect our cardholders.

An investigation of your case however, revealed that FAREASTCARD failed to inform you
about its security policy. Furthermore, an overzealous employee of the Bank's Credit Card
Department did not consider the possibility that it may have been you who was presenting the
card at that time (for which reason, the unfortunate incident occurred). 1

Festejo also sent a letter to the Manager of the Bahia Rooftop Restaurant to assure the latter that
private respondents were "very valued clients" of FEBTC. William Anthony King, Food and Beverage
Manager of the Intercontinental Hotel, wrote back to say that the credibility of private respondent had
never been "in question." A copy of this reply was sent to Luis by Festejo.

Still evidently feeling aggrieved, private respondents, on 05 December 1988, filed a complaint for
damages with the Regional Trial Court ("RTC") of Pasig against FEBTC.

On 30 March 1990, the RTC of Pasig, given the foregoing factual settings, rendered a decision
ordering FEBTC to pay private respondents (a) P300,000.00 moral damages; (b) P50,000.00
exemplary damages; and (c) P20,000.00 attorney's fees.

On appeal to the Court of Appeals, the appellate court affirmed the decision of the trial court.

Its motion for reconsideration having been denied by the appellate court, FEBTC has come to this
Court with this petition for review.

There is merit in this appeal.

In culpa contractual, moral damages may be recovered where the defendant is shown to have acted
in bad faith or with malice in the breach of the contract. 2 The Civil Code provides:

Art. 2220. Willful injury to property may be a legal ground for awarding moral damages if the
court should find that, under the circumstances, such damages are justly due. The same rule
applies to breaches of contract where the defendant acted fraudulently or in bad faith.
(Emphasis supplied)

Bad faith, in this context, includes gross, but not simple, negligence.3 Exceptionally, in a contract
of carriage, moral damages are also allowed in case of death of a passenger attributable to the fault
(which is presumed4 ) of the common carrier.5

Concededly, the bank was remiss in indeed neglecting to personally inform Luis of his own card's
cancellation. Nothing in the findings of the trial court and the appellate court, however, can sufficiently
indicate any deliberate intent on the part of FEBTC to cause harm to private respondents. Neither
could FEBTC's negligence in failing to give personal notice to Luis be considered so gross as to
amount to malice or bad faith.

Malice or bad faith implies a conscious and intentional design to do a wrongful act for a dishonest
purpose or moral obliquity; it is different from the negative idea of negligence in that malice or bad
faith contemplates a state of mind affirmatively operating with furtive design or ill will.6

We are not unaware of the previous rulings of this Court, such as in American Express International,
Inc., vs. Intermediate Appellate Court (167 SCRA 209) and Bank of Philippine Islands
vs. Intermediate Appellate Court (206 SCRA 408), sanctioning the application of Article 21, in relation
to Article 2217 and Article 22197 of the Civil Code to a contractual breach similar to the case at bench.
Article 21 states:

Art. 21. Any person who wilfully causes loss or injury to another in a manner that is contrary to
morals, good customs or public policy shall compensate the latter for the damage.

Article 21 of the Code, it should be observed, contemplates a conscious act to cause harm. Thus,
even if we are to assume that the provision could properly relate to a breach of contract, its
application can be warranted only when the defendant's disregard of his contractual obligation is so
deliberate as to approximate a degree of misconduct certainly no less worse than fraud or bad faith.
Most importantly, Article 21 is a mere declaration of a general principle in human relations that clearly
must, in any case, give way to the specific provision of Article 2220 of the Civil Code authorizing the
grant of moral damages in culpa contractual solely when the breach is due to fraud or bad faith.

Mr. Justice Jose B.L. Reyes, in his ponencia in Fores vs. Miranda8 explained with great clarity the
predominance that we should give to Article 2220 in contractual relations; we quote:

Anent the moral damages ordered to be paid to the respondent, the same must be discarded.
We have repeatedly ruled (Cachero vs. Manila Yellow Taxicab Co. Inc., 101 Phil. 523; 54 Off.
Gaz., [26], 6599; Necesito, et al. vs. Paras, 104 Phil., 75; 56 Off. Gaz., [23] 4023), that moral
damages are not recoverable in damage actions predicated on a breach of the contract of
transportation, in view of Articles 2219 and 2220 of the new Civil Code, which provide as
follows:

Art. 2219. Moral damages may be recovered in the following and analogous
cases:

(1) A criminal offense resulting in physical injuries;

(2) Quasi-delicts causing physical injuries;

xxx xxx xxx

 Art. 2220. Wilful injury to property may be a legal ground for awarding moral
damages if the court should find that, under the circumstances, such
damages are justly due. The same rule applies to breaches of contract where
the defendant acted fraudulently or in bad faith.

By contrasting the provisions of these two articles it immediately becomes apparent that:

(a) In case of breach of contract (including one of transportation) proof of bad faith or fraud
(dolus), i.e., wanton or deliberately injurious conduct, is essential to justify an award of moral
damages; and

(b) That a breach of contract can not be considered included in the descriptive term
"analogous cases" used in Art. 2219; not only because Art. 2220 specifically provides for the
damages that are caused contractual breach, but because the definition of quasi-delict in Art.
2176 of the Code expressly excludes the cases where there is a "preexisitng contractual
relations between the parties."

Art. 2176. Whoever by act or omission causes damage to another, there

being fault or negligence, is obliged to pay for the damage done. Such fault
or negligence, if there is no pre-existing contractual relation between the
parties, is called a quasi-delict and is governed by the provisions of this
Chapter.

The exception to the basic rule of damages now under consideration is a mishap resulting in
the death of a passenger, in which case Article 1764 makes the common carrier expressly
subject to the rule of Art. 2206, that entitles the spouse, descendants and ascendants of the
deceased passenger to "demand moral damages for mental anguish by reason of the death
of the deceased" (Necesito vs. Paras, 104 Phil. 84, Resolution on motion to reconsider,
September 11, 1958). But the exceptional rule of Art. 1764 makes it all the more evident that
where the injured passenger does not die, moral damages are not recoverable unless it is
proved that the carrier was guilty of malice or bad faith. We think it is clear that the mere
carelessness of the carrier's driver does not per se constitute or justify an inference of malice
or bad faith on the part of the carrier; and in the case at bar there is no other evidence of such
malice to support the award of moral damages by the Court of Appeals. To award moral
damages for breach of contract, therefore, without proof of bad faith or malice on the part of
the defendant, as required by Art. 2220, would be to violate the clear provisions of the law,
and constitute unwarranted judicial legislation.

xxx xxx xxx

The distinction between fraud, bad faith or malice in the sense of deliberate or wanton wrong
doing and negligence (as mere carelessness) is too fundamental in our law to be ignored
(Arts. 1170-1172); their consequences being clearly differentiated by the Code.

Art. 2201. In contracts and quasi-contracts, the damages for which the
obligor who acted in good faith is liable shall be those that are the natural and
probable consequences of the breach of the obligation, and which the parties
have foreseen or could have reasonably foreseen at the time the obligation
was constituted.

In case of fraud, bad faith, malice or wanton attitude, the obligor shall be
responsible for all damages which may be reasonably attributed to the non-
performance of the obligation.

It is to be presumed, in the absence of statutory provision to the contrary, that this difference
was in the mind of the lawmakers when in Art. 2220 they limited recovery of moral damages
to breaches of contract in bad faith. It is true that negligence may be occasionally so gross as
to amount to malice; but the fact must be shown in evidence, and a carrier's bad faith is not to
 be lightly inferred from a mere finding that the contract was breached through negligence of
the carrier's employees.

The Court has not in the process overlooked another rule that a quasi-delict can be the cause for
breaching a contract that might thereby permit the application of applicable principles on tort 9 even
where there is a pre-existing contract between the plaintiff and the defendant (Phil. Airlines vs. Court
of Appeals, 106 SCRA 143; Singson vs. Bank of Phil. Islands, 23 SCRA 1117; and Air France vs.
Carrascoso, 18 SCRA 155). This doctrine, unfortunately, cannot improve private respondents' case
for it can aptly govern only where the act or omission complained of would constitute an actionable
tort independently of the contract. The test (whether a quasi-delict can be deemed to underlie the
breach of a contract) can be stated thusly: Where, without a pre-existing contract between two
parties, an act or omission can nonetheless amount to an actionable tort by itself, the fact that the
parties are contractually bound is no bar to the application of quasi-delict provisions to the case. Here,
private respondents' damage claim is predicated solely on their contractual relationship; without such
agreement, the act or omission complained of cannot by itself be held to stand as a separate cause of
action or as an independent actionable tort.

The Court finds, therefore, the award of moral damages made by the court a quo, affirmed by the
appellate court, to be inordinate and substantially devoid of legal basis.

Exemplary or corrective damages, in turn, are intended to serve as an example or as correction for
the public good in addition to moral, temperate, liquidated or compensatory damages (Art. 2229, Civil
Code; 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 circumstances (Art. 2230, Civil Code). In quasi-delicts,
such damages are granted if the defendant is shown to have been so guilty of gross negligence as to
approximate malice (See Art. 2231, Civil Code; CLLC E.G. Gochangco Workers Union vs. NLRC, 161
SCRA 655; Globe Mackay Cable and Radio Corp. vs. CA, 176 SCRA 778). In contracts and quasi-
contracts, the court may award exemplary damages if the defendant is found to have acted in a
wanton, fraudulent, reckless, oppressive, or malevolent manner (Art. 2232, Civil Code; PNB vs. Gen.
Acceptance and Finance Corp., 161 SCRA 449).

Given the above premises and the factual circumstances here obtaining, it would also be just as
arduous to sustain the exemplary damages granted by the courts below (see De Leon vs. Court of
Appeals, 165 SCRA 166).

Nevertheless, the bank's failure, even perhaps inadvertent, to honor its credit card issued to private
respondent Luis should entitle him to recover a measure of damages sanctioned under Article 2221 of
the Civil Code providing thusly:

Art. 2221. Nominal damages are adjudicated in order that a right of the plaintiff, which has
been violated or invaded by the defendant, may be vindicated or recognized, and not for the
purpose of indemnifying the plaintiff for any loss suffered by him.

Reasonable attorney's fees may be recovered where the court deems such recovery to be just and
equitable (Art. 2208, Civil Code). We see no issue of sound discretion on the part of the appellate
court in allowing the award thereof by the trial court.

WHEREFORE, the petition for review is given due course. The appealed decision is MODIFIED by
deleting the award of moral and exemplary damages to private respondents; in its stead, petitioner is
ordered to pay private respondent Luis A. Luna an amount of P5,000.00 by way of nominal damages.
In all other respects, the appealed decision is AFFIRMED. No costs.

SO ORDERED.
 [G.R. No. 122796. December 10, 2001]

PETROPHIL CORPORATION, petitioner, vs. COURT OF APPEALS, DR. AMANDA TERNIDA-

CRUZ, JESSIE DE VERA, MARCIAL MULIG, ANTONIO CUENCA, and RUFINO
CUENCA, respondents.

DECISION
QUISUMBING, J.:

This petition seeks to annul and set aside the decision [1] dated September 26, 1995, of the Court
of Appeals, affirming with modification the decision of the Regional Trial Court of Manila, Branch 52,
in Civil Case No. 87-40930 for specific performance with preliminary injunction and Civil Case No. 88-
43946 for damages. It likewise seeks to annul the resolution[2] dated November 16, 1995 denying
petitioners motion for reconsideration.
On December 27, 1970, petitioner Petrophil Corporation (Petrophil) entered into contract with
private respondent Dr. Amanda Ternida-Cruz, allowing the latter to haul and transport any and all
packages and/or bulk products of Petrophil. The contract provided among others, that Petrophil could
terminate the contract for breach, negligence, discourtesy, improper and/or inadequate performance
or abandonment. Dr. Cruz was also required to reserve the use of at least two (2) units of tank trucks
solely for the hauling requirements of Petrophil. Paragraph 11 of the contract also stipulated that the
contact shall be for an indefinite period, provided that Petrophil may terminate said contract at any
time with 30 days prior written notice.[3]
Annexed to the contract was the Penalty Clause which contained calibrated penal sanctions for
infractions that may be committed by Dr. Cruz and/or her employees. [4] Petrophil also required the
formation of a Hearing Committee that will hear the offenses committed by hauling contractors or their
employees, to give an erring party opportunity to be heard prior to the imposition of any penalty. [5]
In a letter dated May 21, 1987, Petrophil, through its Operations Manager, advised Dr. Cruz that
it was terminating her hauling contract in accordance with paragraph 11 thereof. [6] Dr. Cruz appealed
to Petrophil for reconsideration but said appeal was denied on June 5, 1987.
On June 23, 1987, Dr. Cruz filed with the Regional Trial Court of Manila, a complaint docketed as
Civil Case No. 87-40930, against Petrophil seeking the nullity of the termination of the contract and
declaring its suspension as unjustified and contrary to its terms and conditions. [7]
On March 11, 1988, the other private respondents herein, Jessie de Vera, Marcial Mulig, Antonio
and Rufino Cuenca, all tank truck drivers of Dr. Cruz, also filed a complaint docketed as Civil Case
No. 88-43946 for damages against Petrophil Operations Manager Antonio Santos, Pandacan
Terminal Manager Crispino A. de Castro, and Pandacan Terminal Superintendent Jaime Tamayo.[8]
The two cases were consolidated and jointly tried.
During the hearing, Dr. Cruz testified that she had been in the gasoline business as dealer,
operator and hauling contractor for the last 26 years. She claimed that the termination of her hauling
contract was a retaliation against her for allegedly sympathizing with the then striking Petrophil
employees and for informing the PNOC president of anomalies perpetrated by some of its officers and
employees.
Driver Jessie de Vera corroborated these allegations and said that the termination of Dr. Cruzs
contract was intended to silence her. Further, he testified that before the termination of the contract,
Petrophil officials reduced their hauling trips to make life harder for them so that they would resign
from Dr. Cruzs employ, which in turn would result in the closure of her business.
Petitioner denied that Petrophil officials were out to starve Dr. Cruzs drivers for their support of
her. They professed that the hauling trips were reduced not because Dr. Cruz was being punished,
but because the company was assigning hauling trips on the basis of compartmentation and not on a
first-come first-serve. Additionally, witnesses for Petrophil testified that on April 25, 1987, there was a
strike at the Pandacan terminal and Dr. Cruz and her husband were at the picket line. They refused to
load petroleum products, resulting in the disruption of delivery to service stations in Metro Manila and
in the provinces, which in turn resulted in loss of sales and revenues. Because of Dr. Cruzs refusal to
load, the management terminated the hauling contract.
The trial court on May 29, 1991 rendered a decision that reads:

WHEREFORE, judgments are rendered as follows:

1. In Civil Case No. 87-40830 (sic), the defendant Petrophil Corporation is ordered to pay plaintiff Dra.
Amanda Ternida-Cruz the sum of P309,723.65 as unearned hauling charges and P20,000.00 as
attorneys fees and expenses of suit, without prejudice to indemnification from its officials and
employees responsible for the damage, and making the preliminary injunction permanent.

2. In Civil Case NO. 88-43949 (sic), ordering the defendants therein, jointly and severally, to pay each
of plaintiffs Jessie de Vera and Rufino Cuenca the sums of P64,390.00 and P5,000.00 as unearned
income and attorneys fees, respectively.

Costs in each case against the respective defendants.

SO ORDERED.[9]

In Civil Cases Nos. 87-40930 and 88-43946, Dr. Cruz alleged that the trial court erred in not
awarding actual damages from loss of income during the illegal and arbitrary suspension of the
hauling contract. She asked that Petrophil be ordered to pay her the sum of P309,723.65,
representing the unearned hauling charges that ended in 1990 and until said amount is paid and
settled; and to award compensatory, exemplary, and moral damages.[10]
On September 26, 1995, the Court of Appeals affirmed with modification the decision of the trial
court. It held:

WHEREFORE, the appealed decision is hereby AFFIRMED, with the modification that the amount of
P309,723.65, awarded as unearned hauling charges should earn legal interest from May 29, 1991
until fully paid.

SO ORDERED.[11]

The Court of Appeals sustained the trial court declaring that the termination of the contract was
for cause, and that the procedures set forth in petitioners policy guidelines should be followed.
In this petition for review, Petrophil alleges that the Court of Appeals erred in rendering a
decision that:
I

... UNLAWFULLY SET ASIDE A VALID AND EXISTING CONTRACTUAL STIPULATION BETWEEN
THE PARTIES.

II

... IMPOSED TORTIOUS LIABILITY WHERE THE REQUISITES PRESCRIBED BY LAW FOR SUCH
LIABILITY WERE NOT ESTABLISHED AT ALL BY THE EVIDENCE.[12]

On the first assigned error, petitioner contends that the courts a quo finding that the contract was
terminated for cause was a superfluity because petitioner was after all not contractually bound to use
the mode, for cause under par. 7, nor prohibited from using the other mode, without cause, under par.
11. It could use either. Petitioner avers these two modes were not mutually exclusive. The hauling
contract did not state that the existence of conditions for the exercise of one, precluded the exercise
of the other. Petitioner says it chose to terminate the contract under paragraph 11, whose language
was very clear and required no interpretation. Petitioner insists that Article 1377 of the Civil
Code,[13] applicable to contracts of adhesion, does not apply in this case.
Private respondents, on the other hand, claim that the contract did not envision a situation where
the contract can be rescinded or terminated after the occurrence of ambivalent acts which may qualify
as cause for termination. The contracts vagueness, according to private respondents, needed an
interpretation. Further, they contend that even granting arguendo that petitioner had all the right to
terminate the contract even without cause, petitioner would still be liable to answer for damages under
Article 19 of the Civil Code[14] on abuse of right for terminating the contract without reason but out of
sheer whim and caprice.
Two questions must initially be resolved: (1) whether or not the hauling contract needed
interpretation, and (2) whether petitioner was guilty of arbitrary termination of the contract, which
would entitle Dr. Cruz to damages.
On the first issue, we agree with petitioner that the contract clearly provided for two ways of
terminating the contract, and, one mode does not exclude the other. Although the contract provided
for causes for termination, it also stated in paragraph 11 that the contract was for an indefinite term
subject to the right of Petrophil to terminate it any time after a written notice of 30 days. When the
language of a contract is clear, it requires no interpretation. [15] Thus, the finding that the termination of
the contract was for cause, is immaterial. When petitioner terminated the contract without cause, it
was required only to give Dr. Cruz a 30-day prior written notice, which it did in this case.
However, we differ with petitioner on the second issue. Recall that before Petrophil terminated
the contract on May 25, 1987, there was a strike of its employees at the Pandacan terminal. Dr. Cruz
and her husband were seen at the picket line and were reported to have instructed their truck drivers
not to load petroleum products. At the resumption of the operation in Pandacan terminal, Dr. Cruzs
contract was suspended for one week and eventually terminated. Based on these circumstances, the
Court of Appeals like the trial court concluded that Petrophil terminated the contract because of Dr.
Cruzs refusal to load petroleum products during the strike. In respondent courts view, the termination
appeared as a retaliation or punishment for her sympathizing with the striking employees. Nowhere in
the record do we find that petitioner asked her to explain her actions. Petrophil simply terminated her
contract. These factual findings are binding and conclusive on us, especially in the absence of any
allegation that said findings are unsupported by the evidence, or that the appellate and trial courts
misapprehended these facts.[16] In terminating the hauling contract of Dr. Cruz without hearing her
side on the factual context above described, petitioner opened itself to a charge of bad faith. While
Petrophil had the right to terminate the contract, petitioner could not act purposely to injure private
respondents. In BPI Express Card Corporation vs. CA, 296 SCRA 260, 272 (1998), we held that there
is abuse of a right under Article 19 if the following elements are present: 1) there is a legal right or
duty; 2) which is exercised in bad faith; 3) for the sole purpose of prejudicing or injuring another. We
find all these three elements present in the instant case. Hence, we are convinced that the termination
by petitioner of the contract with Dr. Cruz calls for appropriate sanctions by way of damages.
Petitioner likewise contends that the lower court erred when they applied the procedures set forth
in the Policy Statement and Guidelines[17] and penalty clause.[18] Petitioner argues that the offenses in
the penalty clause refer to product theft or pilferage or gross violation of company policies on credit,
security and the like, as required in tank truck deliveries. Dr. Cruz claims, in turn, that there was no
showing that her alleged act was covered by the said offenses, hence petitioner erred when it
imposed the procedure in her case. However, this is the first time that petitioner raises this
issue. Well-established is the rule that matters not brought out in the proceedings below but raised for
the first time on appeal will ordinarily not be considered by a reviewing court. [19] Given no compelling
reason, we shall not now deviate from this familiar rule.
On the second assigned error, petitioner contends that the Court of Appeals erred when it
imposed a tortious liability where the requisites therefor were not established by the
evidence.According to petitioner, aside from the hearsay and inadmissible testimony of Jessie de
Vera, there is no other evidence that the termination of the contract was done with deliberate intent to
harm or for the sole purpose of prejudicing the respondent-drivers. Petitioner adds that the
termination was an exercise of a right and directed primarily at Dr. Cruz.
Article 20 of the Civil Code provides that every person who, contrary to law, willfully or negligently
causes damage to another, shall indemnify the latter for the damage done. Petitioner might not have
deliberately intended to injure the respondent-drivers. But as a consequence of its willful act directed
against Dr. Cruz, respondent-drivers lost their jobs and consequently suffered loss of income. Note
that under Article 20, there is no requirement that the act must be directed at a specific person, but it
suffices that a person suffers damage as a consequence of a wrongful act of another in order that
indemnity could be demanded from the wrongdoer. [20] The appellate court did not err, given the
circumstances of this case, in awarding damages to respondent-drivers.
WHEREFORE, the petition is DENIED. The decision and resolution of the Court of Appeals
dated September 26, 1995 and November 16, 1995, respectively, are hereby AFFIRMED.
Costs against petitioner.
SO ORDERED.
G.R. No. 1719 January 23, 1907

M. H., RAKES, plaintiff-appellee,

vs.
THE ATLANTIC, GULF AND PACIFIC COMPANY, defendant-appellant.

A. D. Gibbs for appellant.

F. G. Waite, & Thimas Kepner for appellee.

TRACEY, J.:

This is an action for damages. The plaintiff, one of a gang of eight negro laborers in the employment
of the defendant, was at work transporting iron rails from a barge in the harbor to the company's yard
near the malecon in Manila. Plaintiff claims that but one hand car was used in this work. The
defendant has proved that there were two immediately following one another, upon which were piled
lengthwise seven rails, each weighing 560 pounds, so that the ends of the rails lay upon two
crosspieces or sills secured to the cars, but without side pieces or guards to prevent them from
slipping off. According to the testimony of the plaintiff, the men were either in the rear of the car or at
its sides. According to that defendant, some of them were also in front, hauling by a rope. At a certain
spot at or near the water's edge the track sagged, the tie broke, the car either canted or upset, the
rails slid off and caught the plaintiff, breaking his leg, which was afterwards amputated at about the
knee.

This first point for the plaintiff to establish was that the accident happened through the negligence of
the defendant. The detailed description by the defendant's witnesses of the construction and quality of
the track proves that if was up to the general stranded of tramways of that character, the foundation
consisting on land of blocks or crosspieces of wood, by 8 inches thick and from 8 to 10 feet long laid,
on the surface of the ground, upon which at a right angle rested stringers of the same thickness, but
from 24 to 30 feet in length. On the across the stringers the parallel with the blocks were the ties to
which the tracks were fastened. After the road reached the water's edge, the blocks or crosspieces
were replaced with pilling, capped by timbers extending from one side to the other. The tracks were
each about 2 feet wide and the two inside rails of the parallel tracks about 18 inches apart. It was
admitted that there were no side pieces or guards on the car; that where no ends of the rails of the
track met each other and also where the stringers joined, there were no fish plates. the defendant has
not effectually overcome the plaintiff's proof that the joints between the rails were immediately above
the joints between the underlying stringers.

The cause of the sagging of the tracks and the breaking of the tie, which was the immediate occasion
of the accident, is not clear in the evidence, but is found by the trial court and is admitted in the briefs
and in the argument to have been the dislodging of the crosspiece or piling under the stringer by the
water of the bay raised by a recent typhoon. The superintendent of the company attributed it to the
giving way of the block laid in the sand. No effort was made to repair the injury at the time of the
occurrence. According to plaintiffs witnesses, a depression of the track, varying from one half inch to
one inch and a half, was therafter apparent to the eye, and a fellow workman of the plaintiff swears
that the day before the accident he called the attention of McKenna, the foreman, to it and asked by
simply straightening out the crosspiece, resetting the block under the stringer and renewing the tie,
but otherwise leaving the very same timbers as before. It has not proven that the company inspected
the track after the typhoon or had any proper system of inspection.

In order to charge the defendant with negligence, it was necessary to show a breach of duty on its
part in failing either to properly secure the load on iron to vehicles transporting it, or to skillfully build
the tramway or to maintain it in proper condition, or to vigilantly inspect and repair the roadway as
soon as the depression in it became visible. It is upon the failure of the defendant to repair the
weakened track, after notice of its condition, that the judge below based his judgment.

This case presents many important matters for our decision, and first among them is the standard of
duty which we shall establish in our jurisprudence on the part of employees toward employees.
The lack or the harshness of legal rules on this subject has led many countries to enact designed to
put these relations on a fair basis in the form of compensation or liability laws or the institution of
insurance. In the absence of special legislation we find no difficulty in so applying the general
principles of our law as to work out a just result.

Article 1092 of the Civil Code provides:

Civil obligations, arising from crimes or misdemeanors, shall be governed by the provisions of
the Penal Code.

And article 568 of the latter code provides:

He who shall execute through reckless negligence an act that if done with malice would
constitute a grave crime, shall be punished.

And article 590 provides that the following shall be punished:

4. Those who by simple imprudence or negligence, without committing any infraction of

regulations, shall cause an injury which, had malice intervened, would have constituted a
crime or misdemeanor.

And finally by articles 19 and 20, the liability of owners and employers for the faults of their servants
and representatives is declared to be civil and subsidiary in its character.

It is contented by the defendant, as its first defense to the action, that the necessary conclusion from
these collated laws is that the remedy for injuries through negligence lies only in a criminal action in
which the official criminally responsible must be made primarily liable and his employer held only
subsidiarily to him. According to this theory the plaintiff should have procured the arrest of the
representative of the company accountable for not repairing the tract, and on his prosecution a
suitable fine should have been imposed, payable primarily by him and secondarily by his employer.

This reasoning misconceived the plan of the Spanish codes upon this subject. Article 1093 of the Civil
Code makes obligations arising from faults or negligence not punished by the law, subject to the
provisions of Chapter 11 of Title XVI. Section 1902 of that chapter reads:

A person who by an act or omission causes damage to another when there is fault or
negligence shall be obliged to repair the damage so done.

SEC. 1903. The obligation imposed by the preceding article is demandable, not only for
personal acts and omissions, but also for those of the persons for whom they should be
responsible.

The father, and on his death or incapacity, the mother, is liable for the damages caused by
the minors who live with them.

xxx xxx xxx

Owners or directors of an establishment or enterprise are equally liable for the damages
caused by their employees in the service of the branches in which the latter may be employed
or in the performance of their duties.

xxx xxx xxx

The liability referred to in this article shall cease when the persons mentioned therein prove
that they employed all the diligence of a good father of a family to avoid the damages.
As an answer to the argument urged in this particular action it may be sufficient to point out that
nowhere in our general statutes is the employer penalized for failure to provide or maintain safe
appliances for his workmen. His obligation therefore is one "not punished by the law " and falls under
civil rather than criminal jurisprudence. But the answer may be a broader one. We should be
reluctant, under any conditions, to adopt a forced construction of these scientific codes, such as is
proposed by the defendant, that would rob some of these articles of effect, would shut out litigants
their will from the civil courts, would make the assertion of their rights dependent upon the selection
for prosecution of the proper criminal offender, and render recovery doubtful by reason of the strict
rules of proof prevailing in criminal actions. Even if these articles had always stood alone, such a
construction would be unnecessary, but clear light is thrown upon their meaning by the provisions of
the Law of Criminal Procedure of Spain (Ley de Enjuiciamiento Criminal), which, though n ever in
actual force in these Islands, was formerly given a suppletory or explanatory effect. Under article 111
of this law, both classes of action, civil and criminal, might be prosecuted jointly or separately, but
while the penal action was pending the civil was suspended. According to article 112, the penal action
once started, the civil remedy should be sought therewith, unless it had been waived by the party
injured or been expressly reserved by him for civil proceedings for the future. If the civil action alone
was prosecuted, arising out of a crime that could be enforced by only on private complaint, the penal
action thereunder should be extinguished. These provisions are in harmony with those of articles 23
and 133 of our Penal Code on the same subject.

An examination of this topic might be carried much further, but the citations of these articles suffices
to show that the civil liability was not intended to be merged in the criminal nor even to be suspended
thereby, except as expressly provided by law. Where an individual is civilly liable for a negligent act or
omission, it is not required that the inured party should seek out a third person criminally liable whose
prosecution must be a condition precedent to the enforcement of the civil right.

Under article 20 of the Penal Code the responsibility of an employer may be regarded as subsidiary in
respect of criminal actions against his employees only while they are process of prosecution, or in so
far as they determinate the existence of the criminal act from which liability arises, and his obligation
under the civil law and its enforcement in the civil courts is not barred thereby unless by election of
the injured person. Inasmuch as no criminal in question, the provisions of the Penal Code can not
affect this action. This construction renders it unnecessary to finally determine here whether this
subsidiary civil liability in penal actions survived the laws that fully regulated it or has been abrogated
by the American civil and criminal procedure now in force in the Philippines.

The difficulty in construing the articles of the code above cited in this case appears from the briefs
before us to have arisen from the interpretation of the words of article 1093, "fault or negligence not
punished by law," as applied to the comprehensive definition of offenses in articles 568 and 590 of the
Penal Code. It has been shown that the liability of an employer arising out of his relation to his
employee who is the offender is not to be regarded as derived from negligence punished by the law,
within the meaning of articles 1092 and 1093. More than this, however, it can not be said to fall within
the class of acts unpunished by the law, the consequences of which are regulated by articles 1902
and 1903 of the Civil Code. The acts to which these articles are applicable are understood to be those
and growing out of preexisting duties of the parties to one another. But were relations already formed
give rise to duties, whether springing from contract or quasi contract, then breaches of those duties
are subject to articles 1101, 1103, and 1104, of the same code. A typical application of the distinction
may be found in the consequences of a railway accident due to defective machinery supplied by the
employer. His liability to his employee would arise out of the contract of employment, that to the
passengers out of the contract for passage. while that to that injured bystander would originate in the
negligent act itself. This distinction is thus clearly set forth by Manresa in his commentary on article
1093.

We are with reference to such obligations, that culpa, or negligence, may be understood in
two difference senses; either as culpa, substantive and independent, which on account of its
origin arises in an obligation between two persons not formerly bound by any other obligation;
or as an incident in the performance of an obligation; or as already existed, which can not be
presumed to exist without the other, and which increases the liability arising from the already
exiting obligation.
 Of these two species of culpa the first one mentioned, existing by itself, may be also
considered as a real source of an independent obligation, and, as chapter 2, title 16 of this
book of the code is devoted to it, it is logical to presume that the reference contained in article
1093 is limited thereto and that it does not extend to those provisions relating to the other
species of culpa (negligence), the nature of which we will discuss later. (Vol. 8, p. 29.)

And in his commentary on articles 1102 and 1104 he says that these two species of negligence may
be somewhat inexactly described as contractual and extra-contractual, the letter being the culpa
aquiliana of the Roman law and not entailing so strict an obligation as the former. This terminology is
unreservedly accepted by Sanchez-Roman (Derecho Civil, fourth section, Chapter XI, Article II, No.
12), and the principle stated is supported be decisions of the supreme court of Spain, among them
those of November 20, 1896 (80 Jurisprudencia Civil, No. 151), and June 27, 1894 (75 Jurisprudencia
Civil, No. 182). The contract is one for hire and not one of mandate. (March 10, 1897, 81
Jurisprudencia Civil, No. 107.)

Spanish Jurisprudencia prior to the adoption of the Working Men's Accident Law of January 30, 1900,
throws uncertain light on the relation between master and workman. Moved by the quick industrial
development of their people, the courts of France early applied to the subject the principles common
to the law of both countries, which are lucidly discussed by the leading French commentators.

The original French theory, resting the responsibility of owners of industrial enterprises upon articles
1382, 1383, and 1384 of the Code Napoleon, corresponding in scope to articles 1902 and 1903 of the
Spanish Code, soon yielded to the principle that the true basis is the contractual obligation of the
employer and employee. (See 18 Dalloz, 196, Title Travail, 331.)

Later the hardships resulting from special exemptions inserted in contracts for employment led to the
discovery of a third basis for liability in an article of he French Code making the possessor of any
object answerable for damage done by it while in his charge. Our law having no counterpart of this
article, applicable to every kind of object, we need consider neither the theory growing out of it nor
that of "professional risk" more recently imposed by express legislation, but rather adopting the
interpretation of our Civil Code above given, find a rule for this case in the contractual obligation. This
contractual obligation, implied from the relation and perhaps so inherent in its nature to be invariable
by the parties, binds the employer to provide safe appliances for the use of the employee, thus closely
corresponding to English and American Law. On these principles it was the duty of the defendant to
build and to maintain its track in reasonably sound condition, so as to protect its workingmen from
unnecessary danger. It is plain that in one respect or the other it failed in its duty, otherwise the
accident could not have occurred; consequently the negligence of the defendant is established.

Another contention of the defense is that the injury resulted to the plaintiff as a risk incident to his
employment and, as such, one assumed by him. It is evident that this can not be the case if the
occurrence was due to the failure to repair the track or to duly inspect, it for the employee is not
presumed to have stipulated that the employer might neglect his legal duty. Nor may it be excused
upon the ground that the negligence leading to the accident was that of a fellow-servant of the injured
man. It is not apparent to us that the intervention of a third person can relieve the defendant from the
performance of its duty nor impose upon the plaintiff the consequences of an act or omission not his
own. Sua cuique culpa nocet. This doctrine, known as "the fellow-servant, rule," we are not disposed
to introduce into our jurisprudence. Adopted in England by Lord Abinger in the case of
Prescott vs. Fowler (3 Meeson & Welsby, 1) in 1837, it has since been effectually abrogated by "the
Employers' Liability Acts" and the "Compensation Law." The American States which applied it appear
to be gradually getting rid of it; for instance, the New York State legislature of 1906 did away with it in
respect to railroad companies, and had in hand a scheme for its total abolition. It has never found
place in the civil law of continental Europe. (Dalloz, vol. 39, 1858, Title Responsibilite, 630, and vol.
15, 1895, same title, 804. Also more recent instances in Fuzier-Herman, Title Responsibilite Civile,
710.)

The French Cour de Cassation clearly laid down the contrary principle in its judgment of June 28,
1841, in the case of Reygasse, and has since adhered to it.
The most controverted question in the case is that of the negligence of the plaintiff, contributing to the
accident, to what extent it existed in fact and what legal effect is to be given it. In two particulars is he
charged with carelessness:

First. That having noticed the depression in the track he continued his work; and

Second. That he walked on the ends of the ties at the side of the car instead of along the boards,
either before or behind it.

As to the first point, the depression in the track night indicate either a serious or a rival difficulty. There
is nothing in the evidence to show that the plaintiff did or could see the displaced timber underneath
the sleeper. The claim that he must have done so is a conclusion drawn from what is assumed to
have been a probable condition of things not before us, rather than a fair inference from the
testimony. While the method of construction may have been known to the men who had helped build
the road, it was otherwise with the plaintiff who had worked at this job less than two days. A man may
easily walk along a railway without perceiving a displacement of the underlying timbers. The foreman
testified that he knew the state of the track on the day of the accident and that it was then in good
condition, and one Danridge, a witness for the defendant, working on the same job, swore that he
never noticed the depression in the track and never saw any bad place in it. The sagging of the track
this plaintiff did perceive, but that was reported in his hearing to the foreman who neither promised
nor refused to repair it. His lack of caution in continuing at his work after noticing the slight depression
of the rail was not of so gross a nature as to constitute negligence, barring his recovery under the
severe American rule. On this point we accept the conclusion of the trial judge who found as facts that
"the plaintiff did not know the cause of the one rail being lower than then other" and "it does not
appear in this case that the plaintiff knew before the accident occurred that the stringers and rails
joined in the same place."

Were we not disposed to agree with these findings they would, nevertheless, be binding upon us,
because not "plainly and manifestly against the weight of evidence," as those words of section 497,
paragraph 3 of the Code of Civil Procedure were interpreted by the Supreme Court of the United
States in the De la Rama case (201 U. S., 303).

In respect of the second charge of negligence against the plaintiff, the judgment below is not so
specific. While the judge remarks that the evidence does not justify the finding that the car was pulled
by means of a rope attached to the front end or to the rails upon it, and further that the circumstances
in evidence make it clear that the persons necessary to operate the car could not walk upon the plank
between the rails and that, therefore, it was necessary for the employees moving it to get hold upon it
as best they could, there is no specific finding upon the instruction given by the defendant to its
employees to walk only upon the planks, nor upon the necessity of the plaintiff putting himself upon
the ties at the side in order to get hold upon the car. Therefore the findings of the judge below leave
the conduct of the plaintiff in walking along the side of the loaded car, upon the open ties, over the
depressed track, free to our inquiry.

While the plaintiff and his witnesses swear that not only were they not forbidden to proceed in this
way, but were expressly directed by the foreman to do so, both the officers of the company and three
of the workmen testify that there was a general prohibition frequently made known to all the gang
against walking by the side of the car, and the foreman swears that he repeated the prohibition before
the starting of this particular load. On this contradiction of proof we think that the preponderance is in
favor of the defendant's contention to the extent of the general order being made known to the
workmen. If so, the disobedience of the plaintiff in placing himself in danger contributed in some
degree to the injury as a proximate, although not as its primary cause. This conclusion presents
sharply the question, What effect is to be given such an act of contributory negligence? Does it defeat
a recovery, according to the American rule, or is it to be taken only in reduction of damages?

While a few of the American States have adopted to a greater or less extent the doctrine of
comparative negligence, allowing a recovery by a plaintiff whose own act contributed to his injury,
provided his negligence was slight as compared with that of the defendant, and some others have
accepted the theory of proportional damages, reducing the award to a plaintiff in proportion to his
responsibility for the accident, yet the overwhelming weight of adjudication establishes the principle in
American jurisprudence that any negligence, however slight, on the part of the person injured which is
one of the causes proximately contributing to his injury, bars his recovery. (English and American
Encyclopedia of law, Titles "Comparative Negligence" and Contributory Negligence.")

In Grant Trunk Railway Company vs. Ives (144 U. S., 408, at page 429) the Supreme Court of the
United States thus authoritatively states the present rule of law:

Although the defendant's' negligence may have been the primary cause of the injury
complained of, yet an action for such injury can not be maintained if the proximate and
immediate cause of the injury can be traced to the want of ordinary care and caution in the
person injured; subject to this qualification, which has grown up in recent years (having been
first enunciated in Davies vs. Mann, 10 M. & W., 546) that the contributory negligence of the
party injured will not defeat the action if it be shown that the defendant might, by the exercise
of reasonable care and prudence, have avoided the consequences of the injured party's
negligence.

There are may cases in the supreme court of Spain in which the defendant was exonerated, but when
analyzed they prove to have been decided either upon the point that he was not negligent or that the
negligence of the plaintiff was the immediate cause of the casualty or that the accident was due
to casus fortuitus. Of the first class in the decision of January 26, 1887 (38 Jurisprudencia Criminal,
No. 70), in which a railway employee, standing on a car, was thrown therefrom and killed by the shock
following the backing up of the engine. It was held that the management of the train and engine being
in conformity with proper rules of the company, showed no fault on its part.

Of the second class are the decision of the 15th of January, the 19th of February, and the 7th of
March, 1902, stated in Alcubilla's Index of that year; and of the third class the decision of the 4th of
June, 1888 (64 Jurisprudencia Civil, No. 1), in which the breaking down of plaintiff's dam by the logs
of the defendant impelled against it by the Tajo River, was held due to a freshet as a fortuitous cause.

The decision of the 7th of March, 1902, on which stress has been laid, rested on two bases, one, that
the defendant was not negligent, because expressly relieved by royal order from the common
obligation imposed by the police law of maintaining a guard at the road crossing; the other, because
the act of the deceased in driving over level ground with unobstructed view in front of a train running
at speed, with the engine whistle blowing was the determining cause of the accident. It is plain that
the train was doing nothing but what it had a right to do and that the only fault lay with the injured
man. His negligence was not contributory, it was sole, and was of such an efficient nature that without
it no catastrophe could have happened.

On the other hand, there are many cases reported in which it seems plain that the plaintiff sustaining
damages was not free from contributory negligence; for instance, the decision of the 14th of
December, 1894 (76 Jurisprudencia Civil, No. 134), in which the owner of a building was held liable
for not furnishing protection to workmen engaged in hanging out flags, when the latter must have
perceived beforehand the danger attending the work.

None of those cases define the effect to be given the negligence of a plaintiff which contributed to his
injury as one of its causes, though not the principal one, and we are left to seek the theory of the civil
law in the practice of other countries.

In France in the case of Marquant, August 20, 1879, the cour de cassation held that the carelessness
of the victim did not civilly relieve the person without whose fault the accident could not have
happened, but that the contributory negligence of the injured man had the effect only of reducing the
damages. The same principle was applied in the case of Recullet, November 10, 1888. and that of
Laugier of the 11th of November, 1896. (Fuzier-Herman, Title Responsibilite Cirile, 411, 412.) Of like
tenor are citations in Dalloz (vol. 18, 1806, Title Trail, 363, 364, and vol. 15, 1895, Title Responsibilite,
193, 198).

In the Canadian Province of Quebee, which has retained for the most part the French Civil Law, now
embodied in a code following the Code Napoleon, a practice in accord with that of France is laid down
in many cases collected in the annotations to article 1053 of the code edited by Beauchamps, 1904.
One of these is Luttrell vs. Trottier, reported in La Revue de Jurisprudence, volume 6, page 90, in
which the court of Kings bench, otherwise known as the court of appeals, the highest authority in the
Dominion of Canada on points of French law, held that contributory negligence did not exonerate the
defendants whose fault had been the immediate cause of the accident, but entitled him to a reduction
of damages. Other similar cases in the provincial courts have been overruled by appellate tribunals
made up of common law judges drawn from other provinces, who have preferred to impose
uniformally throughout the Dominion the English theory of contributory negligence. Such decisions
throw no light upon the doctrines of the civil law. Elsewhere we find this practice embodied in
legislation; for instance, section 2 of article 2398 of the Code of Portugal reads as follows:

If in the case of damage there was fault or negligence on the part of the person injured or in
the part of some one else, the indemnification shall be reduced in the first case, and in the
second case it shall be appropriated in proportion to such fault or negligence as provided in
paragraphs 1 and 2 of section 2372.

And in article 1304 of the Austrian Code provides that the victim who is partly changeable with the
accident shall stand his damages in proportion to his fault, but when that proportion is incapable of
ascertainment, he shall share the liability equally with the person principally responsible. The principle
of proportional damages appears to be also adopted in article 51 of the Swiss Code. Even in the
United States in admirality jurisdictions, whose principles are derived from the civil law, common fault
in cases of collision have been disposed of not on the ground of contradictor negligence, but on that
of equal loss, the fault of the one part being offset against that of the other. (Ralli vs. Troop, 157 U. S.
386; 97.)

The damage of both being added together and the sum equally divided, a decree is entered in favor
of the vessel sustaining the greater loss against the other for the excess of her damages over one-
half of the aggregate sum. (The Manitoba, 122 U. S., 97)

Exceptional practice appears to prevail in maritime law in other jurisdictions. The Spanish Code of
Commerce, article 827, makes each vessel for its own damage when both are the fault; this provision
restricted to a single class of the maritime accidents, falls for short of a recognition of the principle of
contributory negligence as understood in American Law, with which, indeed, it has little in common.
This is a plain from other articles of the same code; for instance, article 829, referring to articles 826,
827, and 828, which provides: "In the cases above mentioned the civil action of the owner against the
person liable for the damage is reserved, as well as the criminal liability which may appear."

The rule of the common law, a hard and fast one, not adjustable with respects of the faults of the
parties, appears to have grown out the original method of trial by jury, which rendered difficult a nice
balancing of responsibilities and which demanded an inflexible standard as a safeguard against too
ready symphaty for the injured. It was assumed that an exact measure of several concurring faults
was unattainable.

The reason why, in cases of mutual concurring negligence, neither party can maintain an
action against the other, is, not the wrong of the one is set off against the wrong of the other;
it that the law can not measure how much of the damage suffered is attributable to the
plaintiff's own fault. If he were allowed to recover, it might be that he would obtain from the
other party compensation for hiss own misconduct. (Heil vs. Glanding, 42 Penn. St. Rep.,
493, 499.)

The parties being mutually in fault, there can be no appointment of damages. The law has no
scales to determine in such cases whose wrongdoing weighed most in the compound that
occasioned the mischief. (Railroad vs. Norton, 24 Penn. St. 565, 469.)

Experience with jury trials in negligence cases has brought American courts to review to relax the
vigor of the rule by freely exercising the power of setting aside verdicts deemed excessive, through
the device of granting new trials, unless reduced damages are stipulated for, amounting to a partial
revision of damages by the courts. It appears to us that the control by the court of the subject matter
may be secured on a moral logical basis and its judgment adjusted with greater nicety to the merits of
the litigants through the practice of offsetting their respective responsibilities. In the civil law system
the desirable end is not deemed beyond the capacity of its tribunals.

Whatever may prove to be the doctrine finally adopted in Spain or in other countries under the stress
and counter stress of novel schemers of legislation, we find the theory of damages laid down in the
judgment the most consistent with the history and the principals of our law in these Islands and with
its logical development.

Difficulty seems to be apprehended in deciding which acts of the injured party shall be considered
immediate causes of the accident. The test is simple. Distinction must be between the accident and
the injury, between the event itself, without which there could have been no accident, and those acts
of the victim not entering into it, independent of it, but contributing under review was the displacement
of the crosspiece or the failure to replace it. this produced the event giving occasion for damages —
that is, the shinking of the track and the sliding of the iron rails. To this event, the act of the plaintiff in
walking by the side of the car did not contribute, although it was an element of the damage which
came to himself. Had the crosspiece been out of place wholly or partly thorough his act of omission of
duty, the last would have been one of the determining causes of the event or accident, for which he
would have been responsible. Where he contributes to the principal occurrence, as one of its
determining factors, he can not recover. Where, in conjunction with the occurrence, he contributes
only to his own injury, he may recover the amount that the defendant responsible for the event should
pay for such injury, less a sum deemed a suitable equivalent for his own imprudence.

Accepting, though with some hesitation, the judgment of the trial court, fixing the damage incurred by
the plaintiff at 5,000 pesos, the equivalent of 2,500 dollars, United States money, we deduct therefrom
2,500 pesos, the amount fairly attributable to his negligence, and direct judgment to be entered in
favor of the plaintiff for the resulting sum of 2,500 pesos, with cost of both instances, and ten days
hereafter let the case be remanded to the court below for proper action. So ordered.

Arellano, C.J. Torres and Mapa, JJ., concur.

Separate Opinions

WILLARD, J., dissenting:

The knowledge which the plaintiff had in regard to the condition of the track is indicated by his own
evidence. He testified, among other things, as follows:

Q. Now, describe the best you can the character of the track that ran from the place
where you loaded the irons from the barge up to the point where you unloaded them on the
ground.

A. — Well, it was pretty bad character.

xxx xxx xxx

Q. And you were familiar with the track before that its construction?

A. Familiar with what?

Q. Well, you have described it here to the court.

A. Oh, yes; I knew the condition of the track.

 Q. You knew its conditions as you have described it here at the time you were working
around there?

A. Yes, sir.

xxx xxx xxx

Q. And while operating it from the side it was necessary for you to step from board to
board on the cross-ties which extended out over the stringers?

A. Yes, sir.

Q. And these were very of irregular shape, were they not?

A. They were in pretty bad condition.

xxx xxx xxx

Q. And it was not safe to walk along on the outside of these crosspieces?

A. It was safe if the car stayed on the track. We didn't try to hold the load on. We tried to
hold the car back, keep it from going too fast, because we knew the track was in bad
condition just here, and going down too fast we could be liable to run off most any time.

Q. You knew the track was in bad condition when you got hold?

A. Sure, it was in bad condition.

xxx xxx xxx

Q. And the accident took place at that point where you believed it to be so dangerous?

A. Yes, sir.

Q. But you knew it was dangerous?

A. Why certainly, anybody could see it; but a workingman had to work in those days or get
arrested for a vag here in Manila.

The court below, while it found that the plaintiff knew in a general way of the bad condition of the
track, found that he was not informed of the exact cause of the accident, namely, the washing away of
the large crosspiece laid upon the ground or placed upon the posts as the foundation upon which the
stripers rested. This finding of fact to my mind is plainly and manifestly against the weight of the
evidence. Ellis, a witness for the plaintiff, testified that on the morning of the accident he called the
attention of McKenna, the foreman, to the defective condition of the track at his precise point where
the accident happened. His testimony in part is as follows:

A. I called Mr. McKenna. I showed him the track and told him I didn't think it was safe
working, and that if he didn't fix it he was liable to have an accident; I told him I thought if he
put fish plates on it would it. He said, you keep on fishing around here for fish plates and you
will be fishing for another job the first thing you know." He says, "You see to much."

xxx xxx xxx

Q. Who else was present at the time you had this conversation with Mr. McKenna?
 A. Well, at that conversation as far as I can remember, we were all walking down the track
and I know that McCoy and Mr. Blakes was along at the time. I remember them two, but we
were all walking down the track in a bunch, but I disremember them.

xxx xxx xxx

Q. Was that the exact language that you used, that you wanted some fish plates put on?

A. No, sir: I told him to look at that track. I says get some fish plates. I says if there was
any fish plates we would fix that.

Q. What did the fish plates have to do with that?

A. It would have strengthened that joint.

Q. Why didn't you put the 8 by 8 which was washed crossways in place?

A. That would have been taken the raising of the track and digging out along this upright
piece and then putting it up again.

The plaintiff himself testified that he was present with Ellis at the time this conversation was had with
McKenna. It thus appears that on the morning in question the plaintiff and McKenna were standing
directly over the place where the accident happened later in the day. The accident was caused, as the
court below found, by the washing away or displacement of the large 8 by 8 piece of timber. This track
was constructed as all other tracks are, all of it open work, with no floor over the ties, and of course
see the ground and the entire construction of the road, including these large 8 by 8 pieces, the long
stringers placed thereon, the ties placed on these stringers, and the rails placed on the ties. The
plaintiff himself must have seen that the 8 by 8 piece of timber was out of place.

If the testimony of the plaintiff's witnesses is to be believed, the displacement was more markedly
apparent even than it would appear from the testimony of the defendant's witnesses. According to the
plaintiff's witnesses, the water at high tide reached the place in question and these 8 by 8 pieces were
therefore not laid upon the ground but were placed upon posts driven into the ground, the height of
the posts at this particular place being, according to the testimony of the plaintiff's witnesses, from a
foot to two feet and a half. As has been said, Ellis testified that the reason why they did not put the 8
by 8 back in its place was because that would have required the raising up of the track and digging
out along this upright piece and then putting it up again.

It conclusively appears from the evidence that the plaintiff, before the accident happened, knew the
exact condition of the track and was informed and knew of the defect which caused the accident.
There was no promise on the part of McKenna to repair the track.

Under the circumstances the plaintiff was negligent in placing himself on the side of the car where he
knew that he would be injured by the falling of the rails from the car when they reached this point in
the track where the two stringers were without any support of their ends. He either should have
refused to work at all or he should have placed himself behind the car, on the other side of it, or in
front of it, drawing it with a rope. He was guilty of contributory negligence and is not entitled to
recover.

It is, said however, that contributory negligence on the part of the plaintiff in a case like this is no
defense under the law in force in these Islands. To this proposition I can not agree. The liability of the
defendant is based in the majority opinion upon articles 1101 and 1103 of the Civil Code.

In order to impose such liability upon the defendant, it must appear that its negligence caused the
accident. The reason why contradictory negligence on the part of the plaintiff is a defense in this class
of cases is that the negligence of the defendant did not alone cause the accident. If nothing but that
negligence had existed, the accident would not have happened and, as I understand it, in every case
in which contradictory negligence is a defense it is made so because the negligence of the plaintiff is
the cause of the accident, to this extent, that if the plaintiff had not been negligent the accident would
not have happened, although the defendant was also negligent. In other words, the negligence of the
defendant is not alone sufficient to cause the accident. It requires also the negligence of the plaintiff.

There is, so far as I know, nothing in the Civil Code relating to contributory negligence. The rule of the
Roman law was: "Quod quis ex culap sua damnum sentit, no intelligitur damnum sentire." (Digest,
book, 50, tit. 17, rule 203.)

The partidas contain the following provisions:

The just thing is that a man should suffer the damage which comes to him through his own
fault, and that he can not demand reparation therefor from another. (Law 25, tit. 5, partida 3.)

And they even said that when a man received an injury through his own acts, the grievance
should be against himself and not against another. (Law 2, tit. 7, partida 2.)

In several cases in the supreme court of Spain the fact has been negligence that the plaintiff was
himself guilty of negligence, as in the civil judgments of the 4th of June, 1888, and of the 20th of
February, 1887, and in the criminal judgments of the 20th of February 1888, the 90th of March, 1876,
and the 6th of October, 1882. These cases do not throw much light upon the subject. The judgment of
the 7th of March, 1902 (93 Jurisprudencia Civil, 391), is, however, directly in point. In that case the
supreme court of Spain said:

According to the doctrine expressed in article 1902 of the Civil Code, fault or negligence is a
source of obligation when between such negligence and the injury thereby caused there
exists the relation of cause and effect; but in the injury caused should not be the result of acts
or omissions of a third party, the latter has no obligation to repair the same, even though such
acts or omissions were imprudent or unlawful, and much less when it is shown that the
immediate cause of the injury was the negligence of the injured person party himself.

Found the reasons above stated, and the court below having found that the death of the
deceased was due to his own imprudence, and not therefore due to the absence of a guard at
the grade crossing where the accident occurred, it seems clear that court in acquitting the
railroad company of the complaint filed by the widow did not violate the provisions of the
aforesaid article of the Civil Code.

For the same reason, although the authority granted to the railroad company to open the
grade crossing without a special guard was nullified by the subsequent promulgation of the
railroad police law and the regulations for the execution of the same, the result would be
identical, leaving one of the grounds upon which the judgment of acquittal is based, to wit,
that the accident was caused by the imprudence of the injured party himself, unaffected.

It appears that the accident in this case took place at a grade crossing where, according to the claim
of the plaintiff, it was the duty of the railroad company to maintain husband was injured by a train at
this crossing, his negligence contributing to the injury according to the ruling of the court below. This
judgment, then, amounts to a holding that a contributory negligence is a defense according to the law
of Spain. (See also judgment of the 21st of October, 1903, vol. 96 p. 400, Jurisprudencia Civil.)

Although in the Civil Code there is no express provision upon the subject, in the Code of Commerce
there is found a distinct declaration upon it in reference to damages caused by collission at sea.
Article 827 of the Code of Commerce is as follows:

If both vessels may be blamed for the collission, each one shall for liable for his own
damages, and both shall jointly responsible for the loss and damages suffered to their
cargoes.
That article is an express recognition of the fact that in collision cases contributory negligence is a
defense,

I do not think that this court is justified in view of the Roman law, of the provisions of the Partidas, of
the judgment of March 7, 1902, of article 827 of the Code of Commerce, and in the absence of any
declaration upon the subject in the Civil Code, in saying that it was the intention rule announced in the
majority opinion, a rule dimetrically opposed to that put in force by the Code of Commerce.

The chief, is not the only, reason stated in the opinion for adopting the rule that contradictory
negligence is not a defense seems to be that such is the holding of the later French decisions.

As to whether, if any liability existed in this case, it would be necessary in accordance with the
provisions of the Penal Code, or primary, in accordance with the provision of the Civil Code, I express
no opinion.

The judgment should, I think, be reversed and the defendant acquitted of the complaint.

Carson, J., concurs.

SPO USES ERLIND A BAT AL AND FRAN K G .R . No. 16 4 60 1
B AT AL ,
P etit ion e rs ,
P re s ent:

- v e rs us - P AN G AN I B AN , C. J. ,
(Ch ai rp er so n )
Y N AR E S- S AN T I AG O ,
AU ST RI A- M ART I N EZ ,
C AL LE JO , S R. a nd
S PO US E S LUZ S AN P ED RO AN D CH ICO - N AZ AR IO , J J.
KE NI CH IR O T O M IN AG A,
Re spo nd ent s .

P rom ulg at ed:

S ept emb e r 2 7, 2 0 06
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

D E C I S I O N

AU ST RI A- M ART I N EZ , J .:

B ef or e th e C ou r t is a P et it i o n f o r Re v i e w on C ert i or ar i un d er R ul e 4 5 of t he
Ru l es of Co ur t q ues t i on i n g th e D ec is io n [ 1 ] da t ed Se p tem be r 29 , 20 0 3 pr om ul ga t ed
b y t h e Co ur t of A p p ea ls ( C A) i n C A - G . R . C V N o. 7 1 75 8, wh i c h af f irm ed t h e
Dec is i on d a te d M a y 31 , 2 00 4 of th e R e g i on a l T ri a l C our t, Br anc h 7 , M a lo l os ,
B ul ac a n ( RT C) ; a nd t h e C A Res o l ut i on [ 2 ] da t ed J ul y 1 9 , 2 00 4.

T his c as e or ig i na t ed f r om an ac t i o n f or d am ages f i l ed wi th t h e RT C b y
S po us es Lu z S a n P e dr o a n d K en ic h ir o T o m ina ga (re s p o nd e nts ) a ga i ns t Sp o us es
Er l in d a B at a l a n d Fr a nk B at a l ( p et i t io n ers ) f or f ai l ur e to ex erc is e d ue c are an d
d il i g enc e b y th e l a tt er i n t h e pr ep a r at i on of a s ur v e y wh ic h f orm e d th e b as is f or t he
c ons tr uc t i on of a p er i m eter f e nc e t ha t was l at er d is c o v er ed t o ha v e enc r o ac h e d on
a r i gh t of wa y.

T he f ac ts of th e c as e , as f ou n d b y t h e RT C an d s um m ari ze d b y t h e C A , ar e
as f o l l o ws :

T he s p o us es L u z S a n Pe dr o (L u z) a nd K en ic h ir o T om i na g a
(K en ic h ir o) ar e th e o wn er s of a p arc el of l an d , on wh ic h th e ir h ous e
was er ec t e d, d es c r ib e d as Lo t 1 50 9- C- 3 wit h a n ar ea of 7 0 0 s qu are
m eter s s it u at e d in B ar an g a y Ma l is , G u ig u in t o, Bu l ac a n . S a id pr o p ert y
was ac q u ir ed b y t he m f r om one G u i ll erm o N arc is o as e v i d enc e d b y
a B i l ih a n n g B ah a g i ng L u pa d a te d M arc h 18 , 1 9 92 .

T he s p ous es Lu z a n d K e n ic h ir o t h en c o ntr ac t e d t he s er v ic es of
Fra nk B at a l ( Fr a nk ) who r e pr es en te d h im s el f as a s ur v e yo r to c o n duc t
a s ur v e y of t h eir lo t f or th e s um of P 6, 5 00 . 00 . As L u z a n d K en ic h iro
 wanted to enc los e their pr operty, they again proc ured the s ervic es of
Fra nk f or an a d d it i on a l f e e of P 1, 50 0 .0 0 i n or d er to d e term i ne t he
ex ac t b ou n dar i es of th e s am e b y wh i c h t h e y wi l l b as e t h e c o ns tr uc t i on
of t h eir per im et er f enc e.

Co ns eq u en t l y, F r a nk p lac e d c o nc r et e m on u m ents m ark ed P. S. o n a ll

c orn er s of t h e l o t wh ic h wer e us e d as gu i de s b y Lu z a nd Ke n ic h ir o in
erec t in g a c onc r e te f e nc e m e as ur i n g a b ou t e ig ht (8) f ee t in h e ig ht an d
c os t t h em P2 5 0, 0 00 .0 0 to bu i l d.

S om etim e i n 1 99 6 , a c om pl a in t was lo d ge d a ga i ns t Lu z a n d K e nic h ir o

bef or e t h e bar a n ga y o n th e gr o un d th a t th e n ort h ern por t io n of t he ir
f enc e a l l eg e d l y enc r o ac h e d up o n a d es i gn a te d r i 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 a n ot her s u r ve yo r , Lu z an d
K en ic h ir o f o u nd th at t h ei r wa l l in d ee d o ver l a pp e d t he adj o i n in g
l ot .T he y a ls o d is c o v e r ed t h at i t wa s no t F rank bu t h is wif e Er l i nd a
B at a l ( Er l i nd a) , wh o is a lic e ns e d g e od et ic e ng i n eer .

Dur i n g t he ir c o nf r on t a ti o ns b ef or e t h e b ar a ng a y, Fr a nk adm i tt ed th at
he m ad e a m is tak e an d of f ere d t o s h ar e in th e ex p e ns es f or t h e
dem o l it i on a n d r ec o n s tr uc t io n of t h e qu es t i on e d por t io n of Lu z an d
K en ic h ir os f e nc e. H e ho we v er f a i l ed t o d e l i v er o n h is wor d, t hus t he
f il i ng of t he ins t an t s u i t.

In t he ir d ef e ns e, t he d ef e nd a nts - s p ous es Fra nk an d E rl i n da B at a l

s ubm it t ed th a t Fr a nk ne v er r epr es e nt ed h im s elf to b e a l ic e ns e d
ge o de t ic e ng i n eer . It was Er li n da wh o s u p e rv is ed her hus b an ds work
[a n d t] ha t t he ho us e an d l o t of pl a i nt if f s , Lu z a n d K e n ic h ir o, w ere
a lre a d y f e nc e d e ve n b ef or e t he y we re c o ntr ac t e d t o d o a res ur v e y of
th e s am e an d t h e l a yi ng ou t of th e c o nc r et e m onum en ts . T h e s po us es
Fra nk a n d Er l i nd a al s o r ef u t ed th e s p o us es L u zs a n d K e n ic h i ros
a ll e ga t io n of ne g l ig e n c e a nd a v erre d t h at t he s ubj ec t c om pl a in t was
i ns t it u te d t o ha r as s t h em . [ 3 ]

O n M a y 3 1, 2 00 1, th e RT C r en d ere d its D e c is io n , th e dis p os it i v e p or t io n of wh ic h

rea ds :

W HEREFO R E, j u d gm en t is h er e b y r e nd ere d in f a v or of
p la i nt if f s a n d ag a i ns t def en d an ts , as f o l lo ws :

1. O r der i n g t he d ef en d an ts [ p et i ti o ne rs ] to p a y t o p l a in t if f s
[res p on d en ts ] t h e s u m of P 6, 50 0 .0 0 as ref un d f or t he ir p rof es s i on a l
f ees b y r e as on of t h e er r on e ous r e l oc a t io n s ur ve y of t h e pr o per t y i n
qu es ti o n;

2. O r der i n g th e d ef e nd a nts t o p a y t o p l a i nt if f s t he s um of T hre e

Hu n dr e 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 ;

3. O r der i n g th e d e f en da nts to pay to p l a in t if f s th e s um

of P5 0, 0 00 . 00 as a tt or ne ys f e es ; a n d

4. 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 c os ts of th is s u i t .

SO O R D ER E D. [ 4 ]
 Regar ding the is s ue whether the petitioners f ailed to ex erc is e due c are and
d il i g enc e in t h e c o n d uc t of t h e r es ur v e y w h ic h e ve n tu a l l y c a us e d d am ag e t o th e
res p o n de nts , t he RT C he l d:

As ag a ins t t h e b a re a n d s e lf - s e r vi n g de n i als of t he
[p et i t io n er s ] , t he tes t i m on y of [res p on d en t] Lu z S a n P e dro th a t s he
c ons tr uc t ed th e enc r oac h i ng pe rim et er f e nc e i n q u es t i on us in g as
gu i d e t he c yc l o ne c onc r e te m on um en ts m ark ed P. S . t h at w ere
i ns t a ll e d b y [ pe t it i on er ] F ra nk B a ta l a n d h is s ur ve y te am , is m ore
c red i b l e. As t es t if i e d to b y [r es p o nd e nt ] L u z S a n Pe dr o, s he
proc e e de d wi th th e c ons tr uc t i on of th e pe rim et er f enc e in q ues ti o n
up o n as s ur a nc e g i v e n b y [ p et it i o ner ] Fr ank Ba t al t h at s h e c ou l d
a lre a d y do s o as th er e wer e a lre a d y c onc r et e m on um ents p l ac e d on
th e b ou n da r i es of h er pr o p ert y x x x .

x x x x

It do es no t m att er th at th e l oc a t io n p la n da t ed M a y 3 , 19 9 2
(Ex h ib i t B) wa s l at er ap pr o v ed b y t h e D E N R, as i t is q u it e a pp a ren t
th at th e m is tak e c om m itte d b y [ p et i t io n er] Fra nk B at a l p ert a ins t o t he
wro n g l oc at i ons of t h e c o nc r et e m o num en t s t h at h e pl ac ed o n th e
s ubj ec t pr o per t y an d wh ic h wer e us e d or r el i e d u p on b y th e
[res p on d en ts ] i n p u tt i ng u p t he f e nc e in q ues t io n . S uc h m is t ak e or
ne g l ig e nc e h a pp e ne d bec a us e q u it e o b v i ous l y t h e ins ta l l at i on of s a id
c onc r e te m on um en ts was wi t h ou t t h e ne e de d s u per v is i o n of
[res p on d en t] Er l in d a B at a l, th e on e t ru l y q ua l if i e d t o s up er v is e th e
s am e. x x x x

x x x x[5]

T he RT C found that in d ee d th e p erim e ter f enc e c o ns tr uc t e d by the

res p o n de nts e nc r o ac h ed o n t he r i g ht - of - wa y i n q ues t io n; t h at t he pre p o nd er anc e of
e v id e nc e s u pp or ts t h e f in d in g th a t t h e e nc r o ac hm en t was c a us ed b y t h e n e g l ig e nc e
of t h e p et it i o ner s ; t ha t, i n p ar tic u l ar, r es p o nd e nts c o ns truc t ed t h e f e nc e b as e d o n
th e c o nc re t e c yc l on e m onum ents t h at wer e i ns t a ll e d b y p et i ti o n er Fra nk Ba ta l a n d
af ter h e g a ve h is as s u r anc e t ha t th e y c a n pr oc e e d ac c o rd i ng l y; th a t t h e ne g l ig e nc e
i n th e ins t al l at i o n of th e m onum en ts was du e t o t h e f ac t t ha t pe t it i on er Er l in d a
B at a l, th e o ne tr u l y qu a l if i ed , d id n ot pr o v i de t he n ee d ed s u p er v is i o n o ver t he
work ; a n d, las t l y, t h a t th e t es t im on i es of t he pe t it i on ers on th e wh ol e wer e n ot
c red i b l e.

T he pe t it i on er s a pp e a le d to t h e C A . O n S ep tem b er 29 , 2 00 3 , t h e C A
ren 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 ]
In c o nc ur r in g wi th t h e f i nd i ngs of t h e RT C, th e C A i n a d di t io n h e l d th a t th e
pe t it i on ers c a nn o t c l a i m th at th e error of t h e c o ns truc t io n of th e f enc e was d ue to
th e un i l at er al ac t of r es p o nd e nts i n bu i l di n g t h e s am e wi th o ut th e ir c o ns en t, s i nc e
th e f orm er g a ve th e i r wor d t ha t t h e arr a ng em en t of t he m on um ents of ti t le
ac c urately r ef lec ted the bounda r ies of the lot; and that, as a res ult, the northern
por t io n of th e f e nc e h a d to be d em ol is h ed a n d r e bu i lt i n ord er t o c o rrec t t h e err or.

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 :

I.

T he Co ur t of A pp e als er r ed in r u li n g f o r th e R es p o n de nts an d b as i ng
its dec is i on [ o] n t he f o l lo wi n g j ur is pr ud e nc e :

(a) [ A ] p ar t y, ha v i n g per f orm ed af f irm at i v e ac ts up o n wh ic h a n ot her

per s o n b as e d h is s ubs eq u en t ac t io ns , c an n ot t he re af t er r ef u te h is
ac ts or r e ne g e on t he ef f ec ts of t he s am e, t o t h e p rej u dic e of t h e
l at ter . ( P ur e za vs . C o u rt of Ap p ea ls , 2 90 SC RA 11 0) ; an d

(b) F i nd i ngs of f ac t m ade b y t he tr i a l c o urt [ ar e] e nt i tl e d to g rea t

we i gh t a nd r es p ec t. ( L op e z v s . C ou rt of A pp ea ls , 3 22 SC R A 68 6) .

II.

T he C our t of Ap p e al s er r e d i n r u l i ng i n f av or of R es po n de n ts b y
prem is i ng i ts Dec is i on o n [ a ] m is a pp re h ens i on of f ac ts am oun t in g to
gra v e a bus e of d is c r et i on . . . wh ic h is a ls o a gr o u nd f o r a P et i t io n f or
Re v i e w. [ 7 ]

T he pe t it i o n m us t f ai l .

T he p e t it i on er s i ns is t t ha t th er e ha d be e n no err or i n t h ei r r es ur v e y, b u t r at her , th e
err or oc c u r r e d i n r es p on d en ts f enc i ng ; t ha t t he prox im at e c a us e of t he d am ag e h ad
be e n r es po n de n ts o wn n eg l i ge nc e s uc h th a t t h e f enc i ng was d o n e u ni l at er a l l y an d
s o le l y b y t h em wi th o ut t he pr i or a p pr o va l a n d s u per v is i on of t he p et i ti o ner s . A n d to
j us t if y t h eir c as e , t h e p et it i o ner s a rg u e t h a t t h e c our ts a q uo m is ap pr e he n de d th e
f ac ts . Ac c or di n g l y, t he y a s k t h is Co ur t to r e v i e w f i nd i ngs of f ac t .

A re v i e w of th e f ac t u a l f in d i ngs of t h e C A a n d t he RT C ar e m at ters n ot
ord i n ar il y r e v i e wa bl e i n a p et it i o n f or re v i e w on c e rt i orar i . [ 8 ] W ell- e s ta b l is h e d is th e
ru le t ha t f ac tu a l f i n di n gs of th e tr ia l c o urt a nd t he C A are e nt i t le d t o gr ea t we i gh t
an d res p ec t [ 9 ] a n d wi l l n ot be d is t ur b ed on a p pe a l s a ve in ex c ep t io n a l
c irc um s tanc es , [ 1 0 ] n o n e of wh ic h ob t a ins i n t he pr es e n t c as e. T his C o urt m us t
s tres s t h at th e f i nd i n g s of f ac t of t h e C A ar e c o nc lus i v e o n t h e p art i es a n d c arr y
e ve n m ore we i g ht whe n t h es e c o i nc i de wi t h th e f ac t u al f i n d i ngs of t h e tr ia l
c our t, [ 1 1 ] as in t h is c as e.

T he C ou r t wi l l no t we ig h t h e e v i d enc e al l o ver a ga i n un l es s t her e is a

s ho wi n g th a t t he f i nd i ngs of t h e lo wer c o ur t ar e to ta l l y d e vo i d of s up p ort or ar e
c learly erroneous s o as to c ons titute s erious abus e of dis c retion. [ 1 2 ] T he petitioners
f ai l ed t o d em ons tr at e t his po i nt . O n t he c on tr ar y, t he f i n di n g of t h e c o urts a
qu o t ha t t h e dam ag e c aus e d t o th e r es p o n d en ts was d ue t o p et i t i on ers n eg l i ge nc e
is s uf f ic i e nt l y s u pp or te d b y th e e v id e nc e o n r ec or d . F or th es e r eas o ns , t he
pe t it i on er's c on te n ti o n s b e ar no im por t.

Cu l pa , or n eg l i ge nc e, may be un d ers t oo d in t wo d if f ere n t s e ns es : e i th er

as c u lp a a q ui l i a na , wh ic h is t h e wr on gf u l or n e gl i g en t ac t or om is s i o n wh ic h
c rea t es a v inc u l um j u r is a nd g i ves r is e to a n o b l ig a ti o n b e t wee n t wo p ers ons n ot
f orm all y b o u n d b y a n y ot her o b li g at i on , o r a s c u l pa c o ntr ac t u a l, wh ic h is t h e f au l t
or n e g li g enc e i nc i d e nt in t he pe r f orm anc e o f a n o b l ig a ti o n wh ic h a lre a d y ex is te d,
an d wh ic h i nc r e as es the l ia b i li t y f rom s uc h a l rea d y ex is t i n g
ob l i ga t io n . [ 1 3 ] C u l pa a qu i l i an a is go v er ne d b y A rt ic le 21 7 6 of t h e C i v i l Co d e a nd t h e
im m ed ia te l y f ol l o wi n g Ar t ic l es ; wh il e c u l pa c on tr ac t ua l is g o v er ne d b y Art ic l es 11 7 0
to 1 1 74 of t he s am e C od e . [ 1 4 ]

Art ic l es 1 17 0 a n d 1 17 3 pr o vi d e:

ART . 1 1 7 0. T hos e wh o i n t he perf orm anc e of t h ei r o bl i g at i ons

are gu i l t y of f r a u d, ne g li g enc e , or d e l a y, a n d th os e who i n a n y m a nn er
c on tr a ve n e th e t en or t her e of , ar e l i ab l e f o r d am ages .

ART . 11 7 3. T h e f au l t o r n eg l i ge nc e of t he o b l i gor c ons is ts i n

th e om is s io n of t ha t d i l ig e nc e wh ic h is re q u ir ed b y th e n a tur e of th e
ob l i ga t io n a nd c or r es p on ds wi t h t h e c irc um sta nc es of th e p ers o ns , of
th e t im e a nd of th e p lac e. W hen n eg l i ge n c e s ho ws b ad f a it h, th e
pro v is i o ns of ar t ic les 11 7 1 a nd 2 2 02 , p ar agr ap h 2 , s h al l a p p l y.

If t h e l a w or c o n tr ac t do es no t s t at e t he d i l i ge nc e wh ic h is t o
be o bs er v e d in th e p er f or m anc e, th a t wh ic h is ex pec t ed of a g oo d
f ath er of a f am il y s h a l l b e r e qu ir e d.

In th e pr es e nt c a s e, it is c l ea r t ha t t h e p et i ti o ner s , i n c arr yi n g ou t t h e ir
c on tr ac t ua l o b l ig at i o n s , f a il e d t o ex erc is e t he re q uis i te d i l ig e nc e i n t h e p l ac em ent
of t h e m ar k ings f or th e c o nc r et e p er im et er f enc e t ha t was l a ter c ons tr uc t ed . T h e
p lac em en t of t h e m ar k ings h ad b ee n do n e s o le l y b y p e t it i on er Fr ank B at a l wh o is
no t a g eo d et ic e n gi n e er . I t was la te r d is c o v ere d t ha t i t was n o t he b u t h is wif e,
pe t it i on er E r l i n da Ba ta l , wh o is t he l ic e ns e d g eo d et ic e n gi n eer a n d wh o is ,
th er ef or e, t h e o ne q u a lif ie d t o d o t h e work . P et it i o ner Fr a nk Ba t a ls i ns t a l la t io n of
th e c onc r e te c yc l on e m onum ents h a d b e en do n e wi th o ut th e ad e q ua t e s u p er v is i o n
of h is wif e, Er l i nd a. As a r es u l t, t he p l ac em e nt of t he m onum e nts d i d n o t ac c ur at e l y
ref l ec t t he d im ens i o n s of t h e lo t. T he r e s po n de n ts , u po n as s ura nc e g i ve n b y
pe t it i on er Fr ank Ba ta l t ha t they c o ul d pr oc e e d wi t h th e c o ns truc t io n of the
perim eter f enc e by r elying on the purported ac c urac y of the plac em ent of the
m onum ents , er ec t e d th e ir f enc e wh ic h t ur ne d o ut to enc r o ac h o n a n a dj ac e nt
eas em en t . Bec a us e of t he enc r o ac hm en t, t he r es p o nd e nts h a d t o d em ol is h an d
rec o ns truc t t he f e nc e an d , th us , s uf f ere d d a m ages .

T he Co ur t af f ir m s an d ad o pts t h e f i n d in gs of th e C A, t o wi t :

Rec or ds s h o w t h at t h e s er v ic es of t he [ p et i ti on ers ] Fra nk a n d Er l i n da

wer e i n it i al l y c o ntr ac t ed t o s egr e ga t e L u z a nd K e n ic h ir os pro p ert y
f rom its adj o in i n g l o ts . W hen t h e [res p on de n t] s p ous es L u z an d
K en ic h ir o p la n ne d t o f enc e t h e s e gre ga t ed lo t, th e y a g a in
c om m is s i on e d [ pe t it i o ner s ] Fr a nk an d Er l i nd a to c o nd uc t a r es ur ve y i n
ord er to d et er m in e t he pr ec is e b ou n dar i e s of th e ir p ro p ert y u po n
wh ic h t he y wi l l b as e t he c ons tr uc t i on of t h ei r f e nc e . It was a ls o s h o wn
th at i n t h e c o ur s e of th e r es ur v e y, Fra nk c aus e d t h e i ns t a l l at i on of
m onum ents of t it l e o n th e f our ( 4) c or ner s of Lu z a n d K e nic h i ros
pro p er t y a n d th a t he i ns tr uc te d t hem to j us t f ol l o w t h e s am e i n
bu i l d in g t he ir f e nc e .

[P e ti t io n er s ] F r a nk a n d E r l i n da c an n ot th us v a li d l y c la im t h at t h e err or
i n th e c o ns tr uc t i o n of t he nor th er n p ort i o n of th e f enc e wa s du e t o t he
s po us es L u z a nd K en ic hir os ac t of b u il d i n g th e s am e wi t h ou t t he ir
c ons e nt . T h is is c o ns i der i n g t ha t t he f orm er le d t h e l at te r to b el i e ve
th e pur p or t e d ac c ur a c y of th e r es ur ve y a nd ex ac t n es s of t h e l ots
bo u nd ar i es b as e d o n t he m on um ents of t it l e wh ic h th e y i ns ta l l e d .
It h as be e n r u le d th a t [ A ] par t y, h a v i ng p erf orm ed af f irm at i ve ac ts
up o n wh ic h a n ot h er per s o n bas e d his s u bs e q ue n t ac t io ns , c a nn o t
th er eaf t er r ef ut e h is a c ts or re n eg e o n t h e e f f ec ts of t he s am e, to th e
prej u d ic e of t he la tt er . ( P ur e za v . Co ur t of A pp e a ls , 2 9 0 S CR A 1 1 0 )

T he f or e go i ng c le ar l y s u pp or ts t h e f i n d in gs of t he RT C th a t th e
s po us es B at a l c om m it te d a m is t ak e in t h e c on d uc t of t h e ir bus i n es s
th at l e d t o t h e e nc r oac hm en t of pl a i nt if f s - ap p e l le es f e nc e o n th e
adj o in i n g al l e y- l ot . As a r es u lt , t h e n or t her n por t io n h a[ d] t o b e tor n
do wn a nd r e bu i l t i n or d er t o c orr ec t t he err or in its or i g i na l
c ons tr uc t i on . T h e d ef e nd a nts - a pp e l la n ts c an no t b e ex c us e d f rom th e
ef f ec ts of t h e ir ac t i o ns i n t he s ur ve y of p l a in t if f s - ap p e ll e es l ot .

W e ther ef or e c onc ur wi t h th e f i n d in gs of t h e RT C h o l d in g
def en d an ts - ap p el l a nts l i ab l e f or d am ag es in th e c as e at b ar. F i nd i ngs
of f ac t m ade b y t h e tr i a l c o urt is e nt it l ed to gr ea t we i gh t an d
res p ec t. ( L o pe z v . C o u r t of Ap p ea ls , 3 22 SC RA 68 6) [ 1 5 ]

B ei n g g u i lt y of a br e a c h of t he ir c on tr ac t , p et i ti o ner s ar e l i a b le f o r dam ag es
s uf f ere d b y t h e r es p o n de n ts i n ac c or d anc e wit h Art ic l es 1 1 70 an d 22 0 1 of t he C i vi l
Co d e, [ 1 6 ] wh ic h s t at e:

Ar t . 1 17 0 . T h os e wh o i n th e p erf orm anc e of t he ir o b l i ga t io ns

are g u i lt y of f r a u d, n e g li g enc e , or de l a y an d th os e wh o i n an y m a n ner
c on tr a ve n e th e t en or t her e of a re li a b le f or d am ages

Ar t . 2 20 1 . In c o n tr ac t s a n d qu as i - c on tr ac ts , t h e d am ages f or
wh ic h th e o bl i g or wh o ac te d i n go o d f a i th is l i ab l e s h al l b e t hos e th at
are t he n at ur a l a n d pr o b a b l e c ons e qu e nc es of t h e b re ac h of th e
 obligation, and whic h the parties have f ores een or c ould have
reas o n ab l y f or es e e n a t t h e t im e t he ob l i ga t io n was c ons t it ut e d.

In c as e of f r au d, b a d f a it h, m al ic e or w an t on at t it ud e , t he
ob l i go r s h a l l b e r es p o ns ib l e f o r a l l d am ages wh ic h m a y be re as on ab l y
at tr ib ut e d to t h e n on - p er f or m anc e of t h e o b li ga t io n .

T hus , th e C our t ag r e e s wit h t h e CAs af f irm anc e of t h e f i n d in gs o f th e RT C

on t h e m at ter of d am ages , t o wi t:

G o in g n o w t o t h e c l a im s f or dam a ges , E ngr . Ar n ol d M art i n

tes t if i ed o n h is c om put at i o n a n d es t im at e (Ex h ib i ts G a nd G - 1 ) th at
th e t o ta l c os t f or t he dem o l it i on a nd r ec ons truc t io n of th e pe rim e ter
f enc e i n q ues t io n wo u ld be in th e t ot a l a m ount of P4 2 8, 16 3 .9 0 , an d
th is was n ot a t a l l d is pu t ed b y th e def en d an ts , wh os e c o u ns el wa i v ed
c ros s - ex am i na t io n. T h i s es t im ate is prac t ic a l l y d o ub l e t he am ou nt of
th e c os t of c o ns tr uc t in g s a id f e nc e as t es tif i ed t o b y p l a in t if f Lu z S an
P edr o as s h e was t o ld th at i t is m uc h c os t l i er t o d em ol is h an d
rec o ns tr uc 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 a d de d
ex p e ns e i n v o l ve d i n t ear i n g it d o wn an d h au l i ng i ts de br is . O n th e
ot h er ha n d, s a id p l a in tif f s t at e d t h at th e ir o n dec or at i v e gr il ls of th e
f enc e, wh ic h is r e - us a b le , c os t h er P 5 0, 0 00 . 00 , a n d i t is o nl y p r o per
to d e duc t s a id am ou n t f r om th e t o ta l c os t of rec ons tr uc t i ng t h e f e nc e
i n qu es t i o n. At t he s am e t im e, s om e f i gu res i n t h e s a id es t i m ate
ap p ea r t o be q u it e ex c es s i v e , s uc h as th e es t im at ed c os t f or
dem o l it i on wh ic h was qu o te d a t P 2 5, 0 00 .0 0 i n a dd i t io n t o t h e am o un t
of ex c a v at i on pr ic ed at P3 0, 0 00 . 00 a n d t h e c os t of h au l i ng of s c rap
m ater ia ls a t P 1 0, 00 0. 0 0.T h e c o urt b e l ie v es t h at t he s um
of P3 0 0, 00 0 .0 0 f or t h e d em ol i ti o n a n d rec o ns tr uc t i o n of t he f e nc e i n
qu es ti o n wo u ld b e r ea s on a b le c o ns id er i ng t h at t he or i gi n a l c o s t f or its
c ons tr uc t i on was o n l y ab o ut P2 0 0, 0 00 .0 0 , a n d c o ns id er i ng f ur th er t ha t
its ir o n gr i l ls ar e r e - us ab l e.

T he p l a in t if f s ar e l ik e wis e en t it l ed t o rec o ver a tt or ne ys f ees

c ons i d er in g t ha t th e y wer e c om pe l l ed b y t h e def en d an ts t o r es or t t o
c our t ac t io n in or d er t o pr ot ec t th e ir r ig hts a nd in t eres t , as
def en d an ts , p ar tic u l ar l y d ef en d an t Fra nk B at a l, f a il e d a nd ref u s ed
rep e at e d l y to e v e n a t te n d th e c o nf ro nt at i o n of c o nc i l i at i o n m ee t i ngs
arr an g ed b et we e n h i m an d t he p l ai n tif f s b y t h e b ara n gay au th or it i es
c onc er n ed , a nd to ho n or h is pr om is e t o h e l p i n s h ou l de ri n g t he c os t of
rec o ns tr uc t in g t he f e n c e i n q ues t io n.

O n t h e o t her h an d , t her e is n o le g a l or f a c tu a l b as es f o r t he
c l aim of t h e pl a i nt if f s f or m ora l or ex em p la r y d am ag es as t h ere was
no s ho wi n g a t a ll t h at def en d an ts ac t e d wi t h m alic e or i n b a d f a i th .

In a l on g l i ne of c as es , we ha v e c o ns is t en t l y ru le d
th at i n t he a bs e nc e o f a wr o ngf ul ac t or o m is s io n or of
f r au d or ba d f a i th , m or al d am ages c an n ot be
a war de d . ( R & B S ur et y I ns ur anc e C o . v. In term e d i a te
Co ur t of Ap p ea ls , 1 29 S CR A 7 36 ; G u it a v. C our t of
A pp e a ls , 1 3 9 SC R A 5 76) . [ 1 7 ]

W HEREFO R E, t h e i ns ta nt pe t it i on is D EN I E D an d t he as s a i l ed De c is io n a n d
Res o lu t io n of th e C o ur t of Ap 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 .
 [G.R. No. 145804. February 6, 2003]

LIGHT RAIL TRANSIT AUTHORITY & RODOLFO ROMAN, petitioners, vs. MARJORIE NAVIDAD,
Heirs of the Late NICANOR NAVIDAD & PRUDENT SECURITY AGENCY, respondents.

DECISION
VITUG, J.:

The case before the Court is an appeal from the decision and resolution of the Court of Appeals,
promulgated on 27 April 2000 and 10 October 2000, respectively, in CA-G.R. CV No. 60720, entitled
Marjorie Navidad and Heirs of the Late Nicanor Navidad vs. Rodolfo Roman, et. al., which has
modified the decision of 11 August 1998 of the Regional Trial Court, Branch 266, Pasig City,
exonerating Prudent Security Agency (Prudent) from liability and finding Light Rail Transit Authority
(LRTA) and Rodolfo Roman liable for damages on account of the death of Nicanor Navidad.
On 14 October 1993, about half an hour past seven oclock in the evening, Nicanor Navidad, then
drunk, entered the EDSA LRT station after purchasing a token (representing payment of the
fare). While Navidad was standing on the platform near the LRT tracks, Junelito Escartin, the security
guard assigned to the area approached Navidad. A misunderstanding or an altercation between the
two apparently ensued that led to a fist fight. No evidence, however, was adduced to indicate how the
fight started or who, between the two, delivered the first blow or how Navidad later fell on the LRT
tracks. At the exact moment that Navidad fell, an LRT train, operated by petitioner Rodolfo Roman,
was coming in. Navidad was struck by the moving train, and he was killed instantaneously.
On 08 December 1994, the widow of Nicanor, herein respondent Marjorie Navidad, along with
her children, filed a complaint for damages against Junelito Escartin, Rodolfo Roman, the LRTA, the
Metro Transit Organization, Inc. (Metro Transit), and Prudent for the death of her husband. LRTA and
Roman filed a counterclaim against Navidad and a cross-claim against Escartin and
Prudent. Prudent, in its answer, denied liability and averred that it had exercised due diligence in the
selection and supervision of its security guards.
The LRTA and Roman presented their evidence while Prudent and Escartin, instead of
presenting evidence, filed a demurrer contending that Navidad had failed to prove that Escartin was
negligent in his assigned task. On 11 August 1998, the trial court rendered its decision; it adjudged:

WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendants
Prudent Security and Junelito Escartin ordering the latter to pay jointly and severally the plaintiffs the
following:

a) 1) Actual damages of P44,830.00;

2) Compensatory damages of P443,520.00;

3) Indemnity for the death of Nicanor Navidad in the sum of P50,000.00;

b) Moral damages of P50,000.00;

c) Attorneys fees of P20,000;

d) Costs of suit.

The complaint against defendants LRTA and Rodolfo Roman are dismissed for lack of merit.

The compulsory counterclaim of LRTA and Roman are likewise dismissed.[1]

 Prudent appealed to the Court of Appeals. On 27 August 2000, the appellate court promulgated
its now assailed decision exonerating Prudent from any liability for the death of Nicanor Navidad and,
instead, holding the LRTA and Roman jointly and severally liable thusly:

WHEREFORE, the assailed judgment is hereby MODIFIED, by exonerating the appellants from any
liability for the death of Nicanor Navidad, Jr. Instead, appellees Rodolfo Roman and the Light Rail
Transit Authority (LRTA) are held liable for his death and are hereby directed to pay jointly and
severally to the plaintiffs-appellees, the following amounts:

a) P44,830.00 as actual damages;

b) P50,000.00 as nominal damages;

c) P50,000.00 as moral damages;

d) P50,000.00 as indemnity for the death of the deceased; and

e) P20,000.00 as and for attorneys fees.[2]

The appellate court ratiocinated that while the deceased might not have then as yet boarded the
train, a contract of carriage theretofore had already existed when the victim entered the place where
passengers were supposed to be after paying the fare and getting the corresponding token
therefor. In exempting Prudent from liability, the court stressed that there was nothing to link the
security agency to the death of Navidad. It said that Navidad failed to show that Escartin inflicted fist
blows upon the victim and the evidence merely established the fact of death of Navidad by reason of
his having been hit by the train owned and managed by the LRTA and operated at the time by
Roman. The appellate court faulted petitioners for their failure to present expert evidence to establish
the fact that the application of emergency brakes could not have stopped the train.
The appellate court denied petitioners motion for reconsideration in its resolution of 10 October
2000.
In their present recourse, petitioners recite alleged errors on the part of the appellate court; viz:
I.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED BY DISREGARDING THE FINDINGS

OF FACTS BY THE TRIAL COURT

II.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT PETITIONERS

ARE LIABLE FOR THE DEATH OF NICANOR NAVIDAD, JR.

III.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT RODOLFO

ROMAN IS AN EMPLOYEE OF LRTA.[3]

Petitioners would contend that the appellate court ignored the evidence and the factual findings
of the trial court by holding them liable on the basis of a sweeping conclusion that the presumption of
negligence on the part of a common carrier was not overcome.Petitioners would insist that Escartins
assault upon Navidad, which caused the latter to fall on the tracks, was an act of a stranger that could
not have been foreseen or prevented.The LRTA would add that the appellate courts conclusion on the
existence of an employer-employee relationship between Roman and LRTA lacked basis because
Roman himself had testified being an employee of Metro Transit and not of the LRTA.
Respondents, supporting the decision of the appellate court, contended that a contract of
carriage was deemed created from the moment Navidad paid the fare at the LRT station and entered
the premises of the latter, entitling Navidad to all the rights and protection under a contractual relation,
and that the appellate court had correctly held LRTA and Roman liable for the death of Navidad in
failing to exercise extraordinary diligence imposed upon a common carrier.
Law and jurisprudence dictate that a common carrier, both from the nature of its business and for
reasons of public policy, is burdened with the duty of exercising utmost diligence in ensuring the
safety of passengers.[4] The Civil Code, governing the liability of a common carrier for death of or
injury to its passengers, provides:

Article 1755. A common carrier is bound to carry the passengers safely as far as human care and
foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all
the circumstances.

Article 1756. In case of death of or injuries to passengers, common carriers are presumed to have
been at fault or to have acted negligently, unless they prove that they observed extraordinary
diligence as prescribed in articles 1733 and 1755.

Article 1759. Common carriers are liable for the death of or injuries to passengers through the
negligence or willful acts of the formers employees, although such employees may have acted
beyond the scope of their authority or in violation of the orders of the common carriers.

This liability of the common carriers does not cease upon proof that they exercised all the diligence of
a good father of a family in the selection and supervision of their employees.

Article 1763. A common carrier is responsible for injuries suffered by a passenger on account of the
willful acts or negligence of other passengers or of strangers, if the common carriers employees
through the exercise of the diligence of a good father of a family could have prevented or stopped the
act or omission.

The law requires common carriers to carry passengers safely using the utmost diligence of very
cautious persons with due regard for all circumstances.[5] Such duty of a common carrier to provide
safety to its passengers so obligates it not only during the course of the trip but for so long as the
passengers are within its premises and where they ought to be in pursuance to the contract of
carriage.[6] The statutory provisions render a common carrier liable for death of or injury to passengers
(a) through the negligence or wilful acts of its employees or b) on account of wilful acts or
negligence of other passengers or of strangers if the common carriers employees through the
exercise of due diligence could have prevented or stopped the act or omission.[7] In case of
such death or injury, a carrier is presumed to have been at fault or been negligent, and [8] by simple
proof of injury, the passenger is relieved of the duty to still establish the fault or negligence of the
carrier or of its employees and the burden shifts upon the carrier to prove that the injury is due to an
unforeseen event or to force majeure.[9] In the absence of satisfactory explanation by the carrier on
how the accident occurred, which petitioners, according to the appellate court, have failed to show,
the presumption would be that it has been at fault,[10] an exception from the general rule that
negligence must be proved.[11]
The foundation of LRTAs liability is the contract of carriage and its obligation to indemnify the
victim arises from the breach of that contract by reason of its failure to exercise the high diligence
required of the common carrier. In the discharge of its commitment to ensure the safety of
passengers, a carrier may choose to hire its own employees or avail itself of the services of an
outsider or an independent firm to undertake the task. In either case, the common carrier is not
relieved of its responsibilities under the contract of carriage.
Should Prudent be made likewise liable? If at all, that liability could only be for tort under the
provisions of Article 2176[12] and related provisions, in conjunction with Article 2180, [13] of the Civil
Code. The premise, however, for the employers liability is negligence or fault on the part of the
employee. Once such fault is established, the employer can then be made liable on the basis of the
presumption juris tantum that the employer failed to exercise diligentissimi patris families in the
selection and supervision of its employees. The liability is primary and can only be negated by
showing due diligence in the selection and supervision of the employee, a factual matter that has not
been shown. Absent such a showing, one might ask further, how then must the liability of the common
carrier, on the one hand, and an independent contractor, on the other hand, be described? It would be
solidary. A contractual obligation can be breached by tort and when the same act or omission causes
the injury, one resulting in culpa contractual and the other in culpa aquiliana, Article 2194[14] of the
Civil Code can well apply.[15] In fine, a liability for tort may arise even under a contract, where tort is
that which breaches the contract.[16] Stated differently, when an act which constitutes a breach of
contract would have itself constituted the source of a quasi-delictual liability had no contract existed
between the parties, the contract can be said to have been breached by tort, thereby allowing the
rules on tort to apply.[17]
Regrettably for LRT, as well as perhaps the surviving spouse and heirs of the late Nicanor
Navidad, this Court is concluded by the factual finding of the Court of Appeals that there is nothing to
link (Prudent) to the death of Nicanor (Navidad), for the reason that the negligence of its employee,
Escartin, has not been duly proven x x x. This finding of the appellate court is not without substantial
justification in our own review of the records of the case.
There being, similarly, no showing that petitioner Rodolfo Roman himself is guilty of any culpable
act or omission, he must also be absolved from liability. Needless to say, the contractual tie between
the LRT and Navidad is not itself a juridical relation between the latter and Roman; thus, Roman can
be made liable only for his own fault or negligence.
The award of nominal damages in addition to actual damages is untenable. Nominal damages
are adjudicated in order that a right of the plaintiff, which has been violated or invaded by the
defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for
any loss suffered by him.[18] It is an established rule that nominal damages cannot co-exist with
compensatory damages.[19]
WHEREFORE, the assailed decision of the appellate court is AFFIRMED with MODIFICATION
but only in that (a) the award of nominal damages is DELETED and (b) petitioner Rodolfo Roman is
absolved from liability. No costs.
SO ORDERED.
LOADMASTERS CUSTOMS SERVICES, G.R. No. 179446
INC.,
Petitioner, Present:

CARPIO, J., Chairperson,

NACHURA,
PERALTA,
- versus - ABAD, and
MENDOZA, JJ.

GLODEL BROKERAGE
CORPORATION and
R&B INSURANCE CORPORATION, Promulgated:
Respondents.
January 10, 2011

X -------------------------------------------------------------------------------------- X

DECISION

MENDOZA, J.:

This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court assailing the
August 24, 2007 Decision[1] of the Court of Appeals (CA) in CA-G.R. CV No. 82822, entitled R&B
Insurance Corporation v. Glodel Brokerage Corporation and Loadmasters Customs Services, Inc.,
which held petitioner Loadmasters Customs Services, Inc. (Loadmasters) liable to respondent Glodel
Brokerage Corporation (Glodel) in the amount of P1,896,789.62 representing the insurance indemnity
which R&B Insurance Corporation (R&B Insurance) paid to the insured-consignee, Columbia Wire
and Cable Corporation (Columbia).

THE FACTS:

On August 28, 2001, R&B Insurance issued Marine Policy No. MN-00105/2001 in favor
of Columbia to insure the shipment of 132 bundles of electric copper cathodes against All
Risks. On August 28, 2001, the cargoes were shipped on board the vessel Richard Rey from
Isabela, Leyte, to Pier 10, North Harbor, Manila. They arrived on the same date.

Columbia engaged the services of Glodel for the release and withdrawal of the cargoes from
the pier and the subsequent delivery to its warehouses/plants. Glodel, in turn, engaged the services of
Loadmasters for the use of its delivery trucks to transport the cargoes to Columbias
warehouses/plants in Bulacan and Valenzuela City.
 The goods were loaded on board twelve (12) trucks owned by Loadmasters, driven by its
employed drivers and accompanied by its employed truck helpers. Six (6) truckloads of copper
cathodes were to be delivered to Balagtas, Bulacan, while the other six (6) truckloads were destined
for Lawang Bato, Valenzuela City. The cargoes in six truckloads for Lawang Bato were duly delivered
in Columbias warehouses there. Of the six (6) trucks en route to Balagtas, Bulacan, however, only
five (5) reached the destination. One (1) truck, loaded with 11 bundles or 232 pieces of copper
cathodes, failed to deliver its cargo.

Later on, the said truck, an Isuzu with Plate No. NSD-117, was recovered but without the copper
cathodes. Because of this incident, Columbia filed with R&B Insurance a claim for insurance
indemnity in the amount of P1,903,335.39. After the requisite investigation and adjustment, R&B
Insurance paid Columbia the amount of P1,896,789.62 as insurance indemnity.

R&B Insurance, thereafter, filed a complaint for damages against both Loadmasters and
Glodel before the Regional Trial Court, Branch 14, Manila (RTC), docketed as Civil Case No. 02-
103040. It sought reimbursement of the amount it had paid to Columbia for the loss of the subject
cargo. It claimed that it had been subrogated to the right of the consignee to recover from the
party/parties who may be held legally liable for the loss. [2]

On November 19, 2003, the RTC rendered a decision[3] holding Glodel liable for damages for the loss
of the subject cargo and dismissing Loadmasters counterclaim for damages and attorneys fees
against R&B Insurance. The dispositive portion of the decision reads:

WHEREFORE, all premises considered, the plaintiff having established by

preponderance of evidence its claims against defendant Glodel Brokerage
Corporation, judgment is hereby rendered ordering the latter:

1. To pay plaintiff R&B Insurance Corporation the sum

of P1,896,789.62 as actual and compensatory damages, with
interest from the date of complaint until fully paid;

2. To pay plaintiff R&B Insurance Corporation the amount equivalent

to 10% of the principal amount recovered as and for attorneys fees
plus P1,500.00 per appearance in Court;

3. To pay plaintiff R&B Insurance Corporation the sum

of P22,427.18 as litigation expenses.

WHEREAS, the defendant Loadmasters Customs Services, Inc.s

counterclaim for damages and attorneys fees against plaintiff are hereby dismissed.
 With costs against defendant Glodel Brokerage Corporation.
SO ORDERED.[4]
Both R&B Insurance and Glodel appealed the RTC decision to the CA.

On August 24, 2007, the CA rendered the assailed decision which reads in part:

Considering that appellee is an agent of appellant Glodel, whatever liability

the latter owes to appellant R&B Insurance Corporation as insurance indemnity must
likewise be the amount it shall be paid by appellee Loadmasters.

WHEREFORE, the foregoing considered, the appeal is PARTLY GRANTED

in that the appellee Loadmasters is likewise held liable to appellant Glodel in the
amount of P1,896,789.62 representing the insurance indemnity appellant Glodel has
been held liable to appellant R&B Insurance Corporation.

Appellant Glodels appeal to absolve it from any liability is herein DISMISSED.

SO ORDERED.[5]

Hence, Loadmasters filed the present petition for review on certiorari before this Court
presenting the following

ISSUES

1. Can Petitioner Loadmasters be held liable to Respondent Glodel in spite of

the fact that the latter respondent Glodel did not file a cross-claim against it
(Loadmasters)?

2. Under the set of facts established and undisputed in the case, can petitioner
Loadmasters be legally considered as an Agent of respondent Glodel? [6]

To totally exculpate itself from responsibility for the lost goods, Loadmasters argues that it
cannot be considered an agent of Glodel because it never represented the latter in its dealings with
the consignee. At any rate, it further contends that Glodel has no recourse against it for its (Glodels)
failure to file a cross-claim pursuant to Section 2, Rule 9 of the 1997 Rules of Civil Procedure.

Glodel, in its Comment,[7] counters that Loadmasters is liable to it under its cross-claim because the
latter was grossly negligent in the transportation of the subject cargo. With respect to Loadmasters
claim that it is already estopped from filing a cross-claim, Glodel insists that it can still do so even for
the first time on appeal because there is no rule that provides otherwise. Finally, Glodel argues that its
relationship with Loadmasters is that of Charter wherein the transporter (Loadmasters) is only hired
for the specific job of delivering the merchandise. Thus, the diligence required in this case is merely
ordinary diligence or that of a good father of the family, not the extraordinary diligence required of
common carriers.

R&B Insurance, for its part, claims that Glodel is deemed to have interposed a cross-claim against
Loadmasters because it was not prevented from presenting evidence to prove its position even
without amending its Answer. As to the relationship between Loadmasters and Glodel, it contends
that a contract of agency existed between the two corporations.[8]

Subrogation is the substitution of one person in the place of another with reference to a lawful
claim or right, so that he who is substituted succeeds to the rights of the other in relation to a debt or
claim, including its remedies or securities.[9]Doubtless, R&B Insurance is subrogated to the rights of
the insured to the extent of the amount it paid the consignee under the marine insurance, as provided
under Article 2207 of the Civil Code, which reads:

ART. 2207. If the plaintiffs property has been insured, and he has received
indemnity from the insurance company for the injury or loss arising out of the wrong
or breach of contract complained of, the insurance company shall be subrogated to
the rights of the insured against the wrong-doer or the person who has violated the
contract. If the amount paid by the insurance company does not fully cover the injury
or loss, the aggrieved party shall be entitled to recover the deficiency from the person
causing the loss or injury.

As subrogee of the rights and interest of the consignee, R&B Insurance has the right to seek
reimbursement from either Loadmasters or Glodel or both for breach of contract and/or tort.

The issue now is who, between Glodel and Loadmasters, is liable to pay R&B Insurance for the
amount of the indemnity it paid Columbia.

At the outset, it is well to resolve the issue of whether Loadmasters and Glodel are common carriers
to determine their liability for the loss of the subject cargo. Under Article 1732 of the Civil
Code, common carriers are persons, corporations, firms, or associations engaged in the business of
carrying or transporting passenger or goods, or both by land, water or air for compensation, offering
their services to the public.
Based on the aforecited definition, Loadmasters is a common carrier because it is engaged in
the business of transporting goods by land, through its trucking service. It is a common carrier as
distinguished from a private carrier wherein the carriage is generally undertaken by special agreement
and it does not hold itself out to carry goods for the general public. [10] The distinction is significant in
the sense that the rights and obligations of the parties to a contract of private carriage are governed
principally by their stipulations, not by the law on common carriers. [11]
 In the present case, there is no indication that the undertaking in the contract between
Loadmasters and Glodel was private in character. There is no showing that Loadmasters solely and
exclusively rendered services to Glodel.

In fact, Loadmasters admitted that it is a common carrier.[12]

In the same vein, Glodel is also considered a common carrier within the context of Article
1732. In its Memorandum,[13] it states that it is a corporation duly organized and existing under the
laws of the Republic of the Philippines and is engaged in the business of customs brokering. It cannot
be considered otherwise because as held by this Court in Schmitz Transport & Brokerage Corporation
v. Transport Venture, Inc.,[14] a customs broker is also regarded as a common carrier, the
transportation of goods being an integral part of its business.

Loadmasters and Glodel, being both common carriers, are mandated from the nature of their
business and for reasons of public policy, to observe the extraordinary diligence in the vigilance over
the goods transported by them according to all the circumstances of such case, as required by Article
1733 of the Civil Code. When the Court speaks of extraordinary diligence, it is that extreme measure
of care and caution which persons of unusual prudence and circumspection observe for securing and
preserving their own property or rights.[15] This exacting standard imposed on common carriers in a
contract of carriage of goods is intended to tilt the scales in favor of the shipper who is at the mercy of
the common carrier once the goods have been lodged for shipment.[16] Thus, in case of loss of the
goods, the common carrier is presumed to have been at fault or to have acted negligently. [17] This
presumption of fault or negligence, however, may be rebutted by proof that the common carrier has
observed extraordinary diligence over the goods.

With respect to the time frame of this extraordinary responsibility, the Civil Code provides that
the exercise of extraordinary diligence lasts from the time the goods are unconditionally placed in the
possession of, and received by, the carrier for transportation until the same are delivered, actually or
constructively, by the carrier to the consignee, or to the person who has a right to receive them.[18]

Premises considered, the Court is of the view that both Loadmasters and Glodel are jointly
and severally liable to R & B Insurance for the loss of the subject cargo.Under Article 2194 of the New
Civil Code, the responsibility of two or more persons who are liable for a quasi-delict is solidary.

Loadmasters claim that it was never privy to the contract entered into by Glodel with the
consignee Columbia or R&B Insurance as subrogee, is not a valid defense. It may not have a direct
contractual relation with Columbia, but it is liable for tort under the provisions of Article 2176 of the
Civil Code on quasi-delicts which expressly provide:

ART. 2176. Whoever by act or omission causes damage to another, there

being fault or negligence, is obliged to pay for the damage done. Such fault or
negligence, if there is no pre-existing contractual relation between the parties, is
called a quasi-delict and is governed by the provisions of this Chapter.

Pertinent is the ruling enunciated in the case of Mindanao Terminal and Brokerage Service,
Inc. v. Phoenix Assurance Company of New York,/McGee & Co., Inc. [19] where this Court held that a
tort may arise despite the absence of a contractual relationship, to wit:

We agree with the Court of Appeals that the complaint filed by Phoenix and McGee
against Mindanao Terminal, from which the present case has arisen, states a cause
of action. The present action is based on quasi-delict, arising from the negligent and
careless loading and stowing of the cargoes belonging to Del Monte Produce. Even
assuming that both Phoenix and McGee have only been subrogated in the rights of
Del Monte Produce, who is not a party to the contract of service between Mindanao
Terminal and Del Monte, still the insurance carriers may have a cause of action in
light of the Courts consistent ruling that the act that breaks the contract may be also
a tort. In fine, a liability for tort may arise even under a contract, where tort is that
which breaches the contract. In the present case, Phoenix and McGee are not suing
for damages for injuries arising from the breach of the contract of service but
from the alleged negligent manner by which Mindanao Terminal handled the
cargoes belonging to Del Monte Produce. Despite the absence of contractual
relationship between Del Monte Produce and Mindanao Terminal, the allegation of
negligence on the part of the defendant should be sufficient to establish a cause of
action arising from quasi-delict. [Emphases supplied]

In connection therewith, Article 2180 provides:

ART. 2180. The obligation imposed by Article 2176 is demandable not only
for ones own acts or omissions, but also for those of persons for whom one is
responsible.

xxxx

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

It is not disputed that the subject cargo was lost while in the custody of Loadmasters whose
employees (truck driver and helper) were instrumental in the hijacking or robbery of the shipment. As
employer, Loadmasters should be made answerable for the damages caused by its employees who
acted within the scope of their assigned task of delivering the goods safely to the warehouse.

Whenever an employees negligence causes damage or injury to another, there instantly

arises a presumption juris tantum that the employer failed to exercise diligentissimi patris families in
the selection (culpa in eligiendo) or supervision (culpa in vigilando) of its employees.[20] To avoid
liability for a quasi-delict committed by its employee, an employer must overcome the presumption by
presenting convincing proof that he exercised the care and diligence of a good father of a family in the
selection and supervision of his employee.[21] In this regard, Loadmasters failed.

Glodel is also liable because of its failure to exercise extraordinary diligence. It failed to
ensure that Loadmasters would fully comply with the undertaking to safely transport the subject cargo
to the designated destination. It should have been more prudent in entrusting the goods to
Loadmasters by taking precautionary measures, such as providing escorts to accompany the trucks in
delivering the cargoes. Glodel should, therefore, be held liable with Loadmasters. Its defense of force
majeure is unavailing.

At this juncture, the Court clarifies that there exists no principal-agent relationship between
Glodel and Loadmasters, as erroneously found by the CA. Article 1868 of the Civil Code provides: By
the contract of agency a person binds himself to render some service or to do something in
representation or on behalf of another, with the consent or authority of the latter. The elements of a
contract of agency are: (1) consent, express or implied, of the parties to establish the relationship; (2)
the object is the execution of a juridical act in relation to a third person; (3) the agent acts as a
representative and not for himself; (4) the agent acts within the scope of his authority. [22]

Accordingly, there can be no contract of agency between the parties.Loadmasters never

represented Glodel. Neither was it ever authorized to make such representation. It is a settled rule
that the basis for agency is representation, that is, the agent acts for and on behalf of the principal on
matters within the scope of his authority and said acts have the same legal effect as if they were
personally executed by the principal. On the part of the principal, there must be an actual intention to
appoint or an intention naturally inferable from his words or actions, while on the part of the agent,
there must be an intention to accept the appointment and act on it. [23]Such mutual intent is not
obtaining in this case.

What then is the extent of the respective liabilities of Loadmasters and Glodel? Each
wrongdoer is liable for the total damage suffered by R&B Insurance. Where there are several causes
for the resulting damages, a party is not relieved from liability, even partially. It is sufficient that the
negligence of a party is an efficient cause without which the damage would not have resulted. It is no
defense to one of the concurrent tortfeasors that the damage would not have resulted from his
negligence alone, without the negligence or wrongful acts of the other concurrent tortfeasor. As stated
in the case of Far Eastern Shipping v. Court of Appeals,[24]

X x x. Where several causes producing an injury are concurrent and each is

an efficient cause without which the injury would not have happened, the injury may
 be attributed to all or any of the causes and recovery may be had against any or all of
the responsible persons although under the circumstances of the case, it may appear
that one of them was more culpable, and that the duty owed by them to the injured
person was not the same. No actor's negligence ceases to be a proximate cause
merely because it does not exceed the negligence of other actors. Each wrongdoer is
responsible for the entire result and is liable as though his acts were the sole cause of
the injury.
There is no contribution between joint tortfeasors whose liability is solidary
since both of them are liable for the total damage. Where the concurrent or
successive negligent acts or omissions of two or more persons, although acting
independently, are in combination the direct and proximate cause of a single injury to
a third person, it is impossible to determine in what proportion each contributed to the
injury and either of them is responsible for the whole injury. Where their
concurring negligence resulted in injury or damage to a third party, they become joint
tortfeasors and are solidarily liable for the resulting damage under Article 2194 of the
Civil Code. [Emphasis supplied]

The Court now resolves the issue of whether Glodel can collect from Loadmasters, it having
failed to file a cross-claim against the latter.

Undoubtedly, Glodel has a definite cause of action against Loadmasters for breach of
contract of service as the latter is primarily liable for the loss of the subject cargo. In this case,
however, it cannot succeed in seeking judicial sanction against Loadmasters because the records
disclose that it did not properly interpose a cross-claim against the latter. Glodel did not even pray that
Loadmasters be liable for any and all claims that it may be adjudged liable in favor of R&B
Insurance. Under the Rules, a compulsory counterclaim, or a cross-claim, not set up shall be
barred.[25]Thus, a cross-claim cannot be set up for the first time on appeal.

For the consequence, Glodel has no one to blame but itself. The Court cannot come to its aid
on equitable grounds. Equity, which has been aptly described as a justice outside legality, is applied
only in the absence of, and never against, statutory law or judicial rules of procedure. [26] The Court
cannot be a lawyer and take the cudgels for a party who has been at fault or negligent.

WHEREFORE, the petition is PARTIALLY GRANTED. The August 24, 2007 Decision of the
Court of Appeals is MODIFIED to read as follows:

WHEREFORE, judgment is rendered declaring petitioner Loadmasters

Customs Services, Inc. and respondent Glodel Brokerage Corporation jointly and
severally liable to respondent R&B Insurance Corporation for the insurance indemnity
it paid to consignee Columbia Wire & Cable Corporation and ordering both parties to
pay, jointly and severally, R&B Insurance Corporation a] the amount
of P1,896,789.62 representing the insurance indemnity; b] the amount equivalent to
ten (10%) percent thereof for attorneys fees; and c] the amount of P22,427.18 for
litigation expenses.
 The cross-claim belatedly prayed for by respondent Glodel Brokerage
Corporation against petitioner Loadmasters Customs Services, Inc. is DENIED.

SO ORDERED.
G.R. No. L-24803 May 26, 1977

PEDRO ELCANO and PATRICIA ELCANO, in their capacity as Ascendants of Agapito Elcano,
deceased, plaintiffs-appellants,
vs.
REGINALD HILL, minor, and MARVIN HILL, as father and Natural Guardian of said
minor, defendants-appellees.

Cruz & Avecilla for appellants.

Marvin R. Hill & Associates for appellees.

BARREDO, J.:

Appeal from the order of the Court of First Instance of Quezon City dated January 29, 1965 in Civil
Case No. Q-8102, Pedro Elcano et al. vs. Reginald Hill et al. dismissing, upon motion to dismiss of
defendants, the complaint of plaintiffs for recovery of damages from defendant Reginald Hill, a minor,
married at the time of the occurrence, and his father, the defendant Marvin Hill, with whom he was
living and getting subsistence, for the killing by Reginald of the son of the plaintiffs, named Agapito
Elcano, of which, when criminally prosecuted, the said accused was acquitted on the ground that his
act was not criminal, because of "lack of intent to kill, coupled with mistake."

Actually, the motion to dismiss based on the following grounds:

1. The present action is not only against but a violation of section 1, Rule 107, which
is now Rule III, of the Revised Rules of Court;

2. The action is barred by a prior judgment which is now final and or in res-adjudicata;

3. The complaint had no cause of action against defendant Marvin Hill, because he
was relieved as guardian of the other defendant through emancipation by marriage.

(P. 23, Record [p. 4, Record on Appeal.])

was first denied by the trial court. It was only upon motion for reconsideration of the defendants of
such denial, reiterating the above grounds that the following order was issued:

Considering the motion for reconsideration filed by the defendants on January 14,
1965 and after thoroughly examining the arguments therein contained, the Court finds
the same to be meritorious and well-founded.

WHEREFORE, the Order of this Court on December 8, 1964 is hereby reconsidered

by ordering the dismissal of the above entitled case.

SO ORDERED.

Quezon City, Philippines, January 29, 1965. (p. 40, Record [p. 21, Record on
Appeal.)

Hence, this appeal where plaintiffs-appellants, the spouses Elcano, are presenting for Our resolution
the following assignment of errors:

THE LOWER COURT ERRED IN DISMISSING THE CASE BY UPHOLDING THE

CLAIM OF DEFENDANTS THAT -
 I

THE PRESENT ACTION IS NOT ONLY AGAINST BUT ALSO A VIOLATION OF

SECTION 1, RULE 107, NOW RULE 111, OF THE REVISED RULES OF COURT,
AND THAT SECTION 3(c) OF RULE 111, RULES OF COURT IS APPLICABLE;

II

THE ACTION IS BARRED BY A PRIOR JUDGMENT WHICH IS NOW FINAL OR

RES-ADJUDICTA;

III

THE PRINCIPLES OF QUASI-DELICTS, ARTICLES 2176 TO 2194 OF THE CIVIL

CODE, ARE INAPPLICABLE IN THE INSTANT CASE; and

IV

THAT THE COMPLAINT STATES NO CAUSE OF ACTION AGAINST DEFENDANT

MARVIN HILL BECAUSE HE WAS RELIEVED AS GUARDIAN OF THE OTHER
DEFENDANT THROUGH EMANCIPATION BY MARRIAGE. (page 4, Record.)

It appears that for the killing of the son, Agapito, of plaintiffs-appellants, defendant- appellee Reginald
Hill was prosecuted criminally in Criminal Case No. 5102 of the Court of First Instance of Quezon City.
After due trial, he was acquitted on the ground that his act was not criminal because of "lack of intent
to kill, coupled with mistake." Parenthetically, none of the parties has favored Us with a copy of the
decision of acquittal, presumably because appellants do not dispute that such indeed was the basis
stated in the court's decision. And so, when appellants filed their complaint against appellees
Reginald and his father, Atty. Marvin Hill, on account of the death of their son, the appellees filed the
motion to dismiss above-referred to.

As We view the foregoing background of this case, the two decisive issues presented for Our
resolution are:

1. Is the present civil action for damages barred by the acquittal of Reginald in the criminal case
wherein the action for civil liability, was not reversed?

2. May Article 2180 (2nd and last paragraphs) of the Civil Code he applied against Atty. Hill,
notwithstanding the undisputed fact that at the time of the occurrence complained of. Reginald,
though a minor, living with and getting subsistenee from his father, was already legally married?

The first issue presents no more problem than the need for a reiteration and further clarification of the
dual character, criminal and civil, of fault or negligence as a source of obligation which was firmly
established in this jurisdiction in Barredo vs. Garcia, 73 Phil. 607. In that case, this Court postulated,
on the basis of a scholarly dissertation by Justice Bocobo on the nature of culpa aquiliana in relation
to culpa criminal or delito and mere culpa or fault, with pertinent citation of decisions of the Supreme
Court of Spain, the works of recognized civilians, and earlier jurisprudence of our own, that the same
given act can result in civil liability not only under the Penal Code but also under the Civil Code. Thus,
the opinion holds:

The, above case is pertinent because it shows that the same act machinist. come
under both the Penal Code and the Civil Code. In that case, the action of the agent
killeth unjustified and fraudulent and therefore could have been the subject of a
criminal action. And yet, it was held to be also a proper subject of a civil action under
article 1902 of the Civil Code. It is also to be noted that it was the employer and not
the employee who was being sued. (pp. 615-616, 73 Phil.). 1
It will be noticed that the defendant in the above case could have been prosecuted in
a criminal case because his negligence causing the death of the child was punishable
by the Penal Code. Here is therefore a clear instance of the same act of negligence
being a proper subject matter either of a criminal action with its consequent civil
liability arising from a crime or of an entirely separate and independent civil action for
fault or negligence under article 1902 of the Civil Code. Thus, in this jurisdiction, the
separate individuality of a cuasi-delito or culpa aquiliana, under the Civil Code has
been fully and clearly recognized, even with regard to a negligent act for which the
wrongdoer could have been prosecuted and convicted in a criminal case and for
which, after such a conviction, he could have been sued for this civil liability arising
from his crime. (p. 617, 73 Phil.) 2

It is most significant that in the case just cited, this Court specifically applied article
1902 of the Civil Code. It is thus that although J. V. House could have been criminally
prosecuted for reckless or simple negligence and not only punished but also made
civilly liable because of his criminal negligence, nevertheless this Court awarded
damages in an independent civil action for fault or negligence under article 1902 of
the Civil Code. (p. 618, 73 Phil.) 3

The legal provisions, authors, and cases already invoked should ordinarily be
sufficient to dispose of this case. But inasmuch as we are announcing doctrines that
have been little understood, in the past, it might not he inappropriate to indicate their
foundations.

Firstly, the Revised Penal Code in articles 365 punishes not only reckless but also
simple negligence. If we were to hold that articles 1902 to 1910 of the Civil Code refer
only to fault or negligence not punished by law, accordingly to the literal import of
article 1093 of the Civil Code, the legal institution of culpa aquiliana would have very
little scope and application in actual life. Death or injury to persons and damage to
property- through any degree of negligence - even the slightest - would have to be
Idemnified only through the principle of civil liability arising from a crime. In such a
state of affairs, what sphere would remain for cuasi-delito or culpa aquiliana? We are
loath to impute to the lawmaker any intention to bring about a situation so absurd and
anomalous. Nor are we, in the interpretation of the laws, disposed to uphold the letter
that killeth rather than the spirit that giveth life. We will not use the literal meaning of
the law to smother and render almost lifeless a principle of such ancient origin and
such full-grown development as culpa aquiliana or cuasi-delito, which is conserved
and made enduring in articles 1902 to 1910 of the Spanish Civil Code.

Secondary, to find the accused guilty in a criminal case, proof of guilt beyond
reasonable doubt is required, while in a civil case, preponderance of evidence is
sufficient to make the defendant pay in damages. There are numerous cases of
criminal negligence which can not be shown beyond reasonable doubt, but can be
proved by a preponderance of evidence. In such cases, the defendant can and
should be made responsible in a civil action under articles 1902 to 1910 of the Civil
Code. Otherwise. there would be many instances of unvindicated civil wrongs. "Ubi
jus Idemnified remedium." (p. 620,73 Phil.)

Fourthly, because of the broad sweep of the provisions of both the Penal Code and
the Civil Code on this subject, which has given rise to the overlapping or concurrence
of spheres already discussed, and for lack of understanding of the character and
efficacy of the action for culpa aquiliana, there has grown up a common practice to
seek damages only by virtue of the civil responsibility arising from a crime, forgetting
that there is another remedy, which is by invoking articles 1902-1910 of the Civil
Code. Although this habitual method is allowed by, our laws, it has nevertheless
rendered practically useless and nugatory the more expeditious and effective remedy
based on culpa aquiliana or culpa extra-contractual. In the present case, we are
asked to help perpetuate this usual course. But we believe it is high time we pointed
out to the harms done by such practice and to restore the principle of responsibility
 for fault or negligence under articles 1902 et seq. of the Civil Code to its full rigor. It is
high time we caused the stream of quasi-delict or culpa aquiliana to flow on its own
natural channel, so that its waters may no longer be diverted into that of a crime
under the Penal Code. This will, it is believed, make for the better safeguarding or
private rights because it realtor, an ancient and additional remedy, and for the further
reason that an independent civil action, not depending on the issues, limitations and
results of a criminal prosecution, and entirely directed by the party wronged or his
counsel, is more likely to secure adequate and efficacious redress. (p. 621, 73 Phil.)

Contrary to an immediate impression one might get upon a reading of the foregoing excerpts from the
opinion in Garcia that the concurrence of the Penal Code and the Civil Code therein referred to
contemplate only acts of negligence and not intentional voluntary acts - deeper reflection would reveal
that the thrust of the pronouncements therein is not so limited, but that in fact it actually extends to
fault or culpa. This can be seen in the reference made therein to the Sentence of the Supreme Court
of Spain of February 14, 1919, supra, which involved a case of fraud or estafa, not a negligent act.
Indeed, Article 1093 of the Civil Code of Spain, in force here at the time of Garcia, provided textually
that obligations "which are derived from acts or omissions in which fault or negligence, not punishable
by law, intervene shall be the subject of Chapter II, Title XV of this book (which refers to quasi-
delicts.)" And it is precisely the underline qualification, "not punishable by law", that Justice Bocobo
emphasized could lead to an ultimo construction or interpretation of the letter of the law that "killeth,
rather than the spirit that giveth lift- hence, the ruling that "(W)e will not use the literal meaning of the
law to smother and render almost lifeless a principle of such ancient origin and such full-grown
development as culpa aquiliana or quasi-delito, which is conserved and made enduring in articles
1902 to 1910 of the Spanish Civil Code." And so, because Justice Bacobo was Chairman of the Code
Commission that drafted the original text of the new Civil Code, it is to be noted that the said Code,
which was enacted after the Garcia doctrine, no longer uses the term, 11 not punishable by law,"
thereby making it clear that the concept of culpa aquiliana includes acts which are criminal in
character or in violation of the penal law, whether voluntary or matter. Thus, the corresponding
provisions to said Article 1093 in the new code, which is Article 1162, simply says, "Obligations
derived from quasi-delicto shall be governed by the provisions of Chapter 2, Title XVII of this Book,
(on quasi-delicts) and by special laws." More precisely, a new provision, Article 2177 of the new code
provides:

ART. 2177. Responsibility for fault or negligence under the preceding article is
entirely separate and distinct from the civil liability arising from negligence under the
Penal Code. But the plaintiff cannot recover damages twice for the same act or
omission of the defendant.

According to the Code Commission: "The foregoing provision (Article 2177) through at first sight
startling, is not so novel or extraordinary when we consider the exact nature of criminal and civil
negligence. The former is a violation of the criminal law, while the latter is a "culpa aquiliana" or quasi-
delict, of ancient origin, having always had its own foundation and individuality, separate from criminal
negligence. Such distinction between criminal negligence and "culpa extracontractual" or "cuasi-
delito" has been sustained by decision of the Supreme Court of Spain and maintained as clear, sound
and perfectly tenable by Maura, an outstanding Spanish jurist. Therefore, under the proposed Article
2177, acquittal from an accusation of criminal negligence, whether on reasonable doubt or not, shall
not be a bar to a subsequent civil action, not for civil liability arising from criminal negligence, but for
damages due to a quasi-delict or 'culpa aquiliana'. But said article forestalls a double recovery.",
(Report of the Code) Commission, p. 162.)

Although, again, this Article 2177 does seem to literally refer to only acts of negligence, the same
argument of Justice Bacobo about construction that upholds "the spirit that giveth lift- rather than that
which is literal that killeth the intent of the lawmaker should be observed in applying the same. And
considering that the preliminary chapter on human relations of the new Civil Code definitely
establishes the separability and independence of liability in a civil action for acts criminal in character
(under Articles 29 to 32) from the civil responsibility arising from crime fixed by Article 100 of the
Revised Penal Code, and, in a sense, the Rules of Court, under Sections 2 and 3 (c), Rule 111,
contemplate also the same separability, it is "more congruent with the spirit of law, equity and justice,
and more in harmony with modern progress"- to borrow the felicitous relevant language in Rakes vs.
Atlantic. Gulf and Pacific Co., 7 Phil. 359, to hold, as We do hold, that Article 2176, where it refers to
"fault or negligencia covers not only acts "not punishable by law" but also acts criminal in character,
whether intentional and voluntary or negligent. Consequently, a separate civil action lies against the
offender in a criminal act, whether or not he is criminally prosecuted and found guilty or acquitted,
provided that the offended party is not allowed, if he is actually charged also criminally, to recover
damages on both scores, and would be entitled in such eventuality only to the bigger award of the
two, assuming the awards made in the two cases vary. In other words, the extinction of civil liability
referred to in Par. (e) of Section 3, Rule 111, refers exclusively to civil liability founded on Article 100
of the Revised Penal Code, whereas the civil liability for the same act considered as a quasi-
delict only and not as a crime is not estinguished even by a declaration in the criminal case that the
criminal act charged has not happened or has not been committed by the accused. Briefly stated, We
here hold, in reiteration of Garcia, that culpa aquiliana includes voluntary and negligent acts which
may be punishable by law.4

It results, therefore, that the acquittal of Reginal Hill in the criminal case has not extinguished his
liability for quasi-delict, hence that acquittal is not a bar to the instant action against him.

Coming now to the second issue about the effect of Reginald's emancipation by marriage on the
possible civil liability of Atty. Hill, his father, it is also Our considered opinion that the conclusion of
appellees that Atty. Hill is already free from responsibility cannot be upheld.

While it is true that parental authority is terminated upon emancipation of the child (Article 327, Civil
Code), and under Article 397, emancipation takes place "by the marriage of the minor (child)", it is,
however, also clear that pursuant to Article 399, emancipation by marriage of the minor is not really
full or absolute. Thus "(E)mancipation by marriage or by voluntary concession shall terminate parental
authority over the child's person. It shall enable the minor to administer his property as though he
were of age, but he cannot borrow money or alienate or encumber real property without the consent
of his father or mother, or guardian. He can sue and be sued in court only with the assistance of his
father, mother or guardian."

Now under Article 2180, "(T)he obligation imposed by article 2176 is demandable not only for one's
own acts or omissions, but also for those of persons for whom one is responsible. The father and, in
case of his death or incapacity, the mother, are responsible. The father and, in case of his death or
incapacity, the mother, are responsible for the damages caused by the minor children who live in their
company." In the instant case, it is not controverted that Reginald, although married, was living with
his father and getting subsistence from him at the time of the occurrence in question. Factually,
therefore, Reginald was still subservient to and dependent on his father, a situation which is not
unusual.

It must be borne in mind that, according to Manresa, the reason behind the joint and solidary liability
of presuncion with their offending child under Article 2180 is that is the obligation of the parent to
supervise their minor children in order to prevent them from causing damage to third persons. 5 On
the other hand, the clear implication of Article 399, in providing that a minor emancipated by marriage
may not, nevertheless, sue or be sued without the assistance of the parents, is that such
emancipation does not carry with it freedom to enter into transactions or do any act that can give rise
to judicial litigation. (See Manresa, Id., Vol. II, pp. 766-767, 776.) And surely, killing someone else
invites judicial action. Otherwise stated, the marriage of a minor child does not relieve the parents of
the duty to see to it that the child, while still a minor, does not give answerable for the borrowings of
money and alienation or encumbering of real property which cannot be done by their minor married
child without their consent. (Art. 399; Manresa, supra.)

Accordingly, in Our considered view, Article 2180 applies to Atty. Hill notwithstanding the
emancipation by marriage of Reginald. However, inasmuch as it is evident that Reginald is now of
age, as a matter of equity, the liability of Atty. Hill has become milling, subsidiary to that of his son.

WHEREFORE, the order appealed from is reversed and the trial court is ordered to proceed in
accordance with the foregoing opinion. Costs against appellees.