Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-48006 July 8, 1942

FAUSTO BARREDO, petitioner,

vs.
SEVERINO GARCIA and TIMOTEA ALMARIO, respondents.

Celedonio P. Gloria and Antonio Barredo for petitioner.

Jose G. Advincula for respondents.

BOCOBO, J.:

This case comes up from the Court of Appeals which held the petitioner herein, Fausto Barredo,
liable in damages for the death of Faustino Garcia caused by the negligence of Pedro Fontanilla,
a taxi driver employed by said Fausto Barredo.

At about half past one in the morning of May 3, 1936, on the road between Malabon and
Navotas, Province of Rizal, there was a head-on collision between a taxi of the Malate Taxicab
driven by Pedro Fontanilla and a carretela guided by Pedro Dimapalis. The carretela was
overturned, and one of its passengers, 16-year-old boy Faustino Garcia, suffered injuries from
which he died two days later. A criminal action was filed against Fontanilla in the Court of First
Instance of Rizal, and he was convicted and sentenced to an indeterminate sentence of one year
and one day to two years of prision correccional. The court in the criminal case granted the
petition that the right to bring a separate civil action be reserved. The Court of Appeals affirmed
the sentence of the lower court in the criminal case. Severino Garcia and Timotea Almario,
parents of the deceased on March 7, 1939, brought an action in the Court of First Instance of
Manila against Fausto Barredo as the sole proprietor of the Malate Taxicab and employer of
Pedro Fontanilla. On July 8, 1939, the Court of First Instance of Manila awarded damages in
favor of the plaintiffs for P2,000 plus legal interest from the date of the complaint. This decision
was modified by the Court of Appeals by reducing the damages to P1,000 with legal interest
from the time the action was instituted. It is undisputed that Fontanilla 's negligence was the
cause of the mishap, as he was driving on the wrong side of the road, and at high speed. As to
Barredo's responsibility, the Court of Appeals found:

... It is admitted that defendant is Fontanilla's employer. There is proof that he exercised
the diligence of a good father of a family to prevent damage. (See p. 22, appellant's brief.)
In fact it is shown he was careless in employing Fontanilla who had been caught several
times for violation of the Automobile Law and speeding (Exhibit A) — violation which
appeared in the records of the Bureau of Public Works available to be public and to
himself. Therefore, he must indemnify plaintiffs under the provisions of article 1903 of
the Civil Code.
The main theory of the defense is that the liability of Fausto Barredo is governed by the Revised
Penal Code; hence, his liability is only subsidiary, and as there has been no civil action against
Pedro Fontanilla, the person criminally liable, Barredo cannot be held responsible in the case.
The petitioner's brief states on page 10:

... The Court of Appeals holds that the petitioner is being sued for his failure to exercise
all the diligence of a good father of a family in the selection and supervision of Pedro
Fontanilla to prevent damages suffered by the respondents. In other words, The Court of
Appeals insists on applying in the case article 1903 of the Civil Code. Article 1903 of the
Civil Code is found in Chapter II, Title 16, Book IV of the Civil Code. This fact makes
said article to a civil liability arising from a crime as in the case at bar simply because
Chapter II of Title 16 of Book IV of the Civil Code, in the precise words of article 1903
of the Civil Code itself, is applicable only to "those (obligations) arising from wrongful
or negligent acts or commission not punishable by law.

The gist of the decision of the Court of Appeals is expressed thus:

... We cannot agree to the defendant's contention. The liability sought to be imposed upon
him in this action is not a civil obligation arising from a felony or a misdemeanor (the
crime of Pedro Fontanilla,), but an obligation imposed in article 1903 of the Civil Code
by reason of his negligence in the selection or supervision of his servant or employee.

The pivotal question in this case is whether the plaintiffs may bring this separate civil action
against Fausto Barredo, thus making him primarily and directly, responsible under article 1903
of the Civil Code as an employer of Pedro Fontanilla. The defendant maintains that Fontanilla's
negligence being punishable by the Penal Code, his (defendant's) liability as an employer is only
subsidiary, according to said Penal code, but Fontanilla has not been sued in a civil action and
his property has not been exhausted. To decide the main issue, we must cut through the tangle
that has, in the minds of many confused and jumbled together delitos and cuasi delitos, or crimes
under the Penal Code and fault or negligence under articles 1902-1910 of the Civil Code. This
should be done, because justice may be lost in a labyrinth, unless principles and remedies are
distinctly envisaged. Fortunately, we are aided in our inquiry by the luminous presentation of the
perplexing subject by renown jurists and we are likewise guided by the decisions of this Court in
previous cases as well as by the solemn clarity of the consideration in several sentences of the
Supreme Tribunal of Spain.

Authorities support the proposition that a quasi-delict or "culpa aquiliana " is a separate legal
institution under the Civil Code with a substantivity all its own, and individuality that is entirely
apart and independent from delict or crime. Upon this principle and on the wording and spirit
article 1903 of the Civil Code, the primary and direct responsibility of employers may be safely
anchored.

The pertinent provisions of the Civil Code and Revised Penal Code are as follows:

CIVIL CODE
ART. 1089 Obligations arise from law, from contracts and quasi-contracts, and from acts
and omissions which are unlawful or in which any kind of fault or negligence intervenes.

xxx xxx xxx

ART. 1092. Civil obligations arising from felonies or misdemeanors shall be governed by
the provisions of the Penal Code.

ART. 1093. Those which are derived from acts or omissions in which fault or negligence,
not punishable by law, intervenes shall be subject to the provisions of Chapter II, Title
XVI of this book.

xxx xxx xxx

ART 1902. Any person who by an act or omission causes damage to another by his fault
or negligence shall be liable for the damage so done.

ART. 1903. The obligation imposed by the next preceding article is enforcible, not only
for personal acts and omissions, but also for those of persons for whom another is
responsible.

The father and in, case of his death or incapacity, the mother, are liable for any damages
caused by the minor children who live with them.

Guardians are liable for damages done by minors or incapacitated persons subject to their
authority and living with them.

Owners or directors of an establishment or business are equally liable for any damages
caused by their employees while engaged in the branch of the service in which employed,
or on occasion of the performance of their duties.

The State is subject to the same liability when it acts through a special agent, but not if
the damage shall have been caused by the official upon whom properly devolved the duty
of doing the act performed, in which case the provisions of the next preceding article
shall be applicable.

Finally, teachers or directors of arts trades are liable for any damages caused by their
pupils or apprentices while they are under their custody.

The liability imposed by this article shall cease in case the persons mentioned therein
prove that they are exercised all the diligence of a good father of a family to prevent the
damage.

ART. 1904. Any person who pays for damage caused by his employees may recover
from the latter what he may have paid.
 REVISED PENAL CODE

ART. 100. Civil liability of a person guilty of felony. — Every person criminally liable
for a felony is also civilly liable.

ART. 101. Rules regarding civil liability in certain cases. — The exemption from
criminal liability established in subdivisions 1, 2, 3, 5, and 6 of article 12 and in
subdivision 4 of article 11 of this Code does not include exemption from civil liability,
which shall be enforced to the following rules:

First. In cases of subdivision, 1, 2 and 3 of article 12 the civil liability for acts committed
by any imbecile or insane person, and by a person under nine years of age, or by one over
nine but under fifteen years of age, who has acted without discernment shall devolve
upon those having such person under their legal authority or control, unless it appears
that there was no fault or negligence on their part.

Should there be no person having such insane, imbecile or minor under his authority,
legal guardianship, or control, or if such person be insolvent, said insane, imbecile, or
minor shall respond with their own property, excepting property exempt from execution,
in accordance with the civil law.

Second. In cases falling within subdivision 4 of article 11, the person for whose benefit
the harm has been prevented shall be civilly liable in proportion to the benefit which they
may have received.

The courts shall determine, in their sound discretion, the proportionate amount for which each
one shall be liable.

When the respective shares can not be equitably determined, even approximately, or when the
liability also attaches to the Government, or to the majority of the inhabitants of the town, and, in
all events, whenever the damage has been caused with the consent of the authorities or their
agents, indemnification shall be made in the manner prescribed by special laws or regulations.

Third. In cases falling within subdivisions 5 and 6 of article 12, the persons using violence or
causing the fear shall be primarily liable and secondarily, or, if there be no such persons, those
doing the act shall be liable, saving always to the latter that part of their property exempt from
execution.

ART. 102. Subsidiary civil liability of innkeepers, tavern keepers and proprietors of
establishment. — In default of persons criminally liable, innkeepers, tavern keepers, and
any other persons or corporation shall be civilly liable for crimes committed in their
establishments, in all cases where a violation of municipal ordinances or some general or
special police regulation shall have been committed by them or their employees.

Innkeepers are also subsidiarily liable for the restitution of goods taken by robbery or
theft within their houses lodging therein, or the person, or for the payment of the value
 thereof, provided that such guests shall have notified in advance the innkeeper himself, or
the person representing him, of the deposit of such goods within the inn; and shall
furthermore have followed the directions which such innkeeper or his representative may
have given them with respect to the care of and vigilance over such goods. No liability
shall attach in case of robbery with violence against or intimidation against or
intimidation of persons unless committed by the innkeeper's employees.

ART. 103. Subsidiary civil liability of other persons. — The subsidiary liability
established in the next preceding article shall also apply to employers, teachers, persons,
and corporations engaged in any kind of industry for felonies committed by their
servants, pupils, workmen, apprentices, or employees in the discharge of their duties.

xxx xxx xxx

ART. 365. Imprudence and negligence. — Any person who, by reckless imprudence,
shall commit any act which, had it been intentional, would constitute a grave felony, shall
suffer the penalty of arresto mayor in its maximum period to prision correccional in its
minimum period; if it would have constituted a less grave felony, the penalty of arresto
mayor in its minimum and medium periods shall be imposed.

Any person who, by simple imprudence or negligence, shall commit an act which would
otherwise constitute a grave felony, shall suffer the penalty of arresto mayor in its
medium and maximum periods; if it would have constituted a less serious felony, the
penalty of arresto mayor in its minimum period shall be imposed."

It will thus be seen that while the terms of articles 1902 of the Civil Code seem to be broad
enough to cover the driver's negligence in the instant case, nevertheless article 1093 limits cuasi-
delitos to acts or omissions "not punishable by law." But inasmuch as article 365 of the Revised
Penal Code punishes not only reckless but even simple imprudence or negligence, the fault or
negligence under article 1902 of the Civil Code has apparently been crowded out. It is this
overlapping that makes the "confusion worse confounded." However, a closer study shows that
such a concurrence of scope in regard to negligent acts does not destroy the distinction between
the civil liability arising from a crime and the responsibility for cuasi-delitos or culpa extra-
contractual. The same negligent act causing damages may produce civil liability arising from a
crime under article 100 of the Revised Penal Code, or create an action for cuasi-delito or culpa
extra-contractual under articles 1902-1910 of the Civil Code.

The individuality of cuasi-delito or culpa extra-contractual looms clear and unmistakable. This
legal institution is of ancient lineage, one of its early ancestors being the Lex Aquilia in the
Roman Law. In fact, in Spanish legal terminology, this responsibility is often referred to as culpa
aquiliana. The Partidas also contributed to the genealogy of the present fault or negligence under
the Civil Code; for instance, Law 6, Title 15, of Partida 7, says: "Tenudo es de fazer emienda,
porque, como quier que el non fizo a sabiendas en daño al otro, pero acaescio por su culpa."

The distinctive nature of cuasi-delitos survives in the Civil Code. According to article 1089, one
of the five sources of obligations is this legal institution of cuasi-delito or culpa extra-
contractual: "los actos . . . en que intervenga cualquier genero de culpa o negligencia." Then
article 1093 provides that this kind of obligation shall be governed by Chapter II of Title XVI of
Book IV, meaning articles 1902-0910. This portion of the Civil Code is exclusively devoted to
the legal institution of culpa aquiliana.

Some of the differences between crimes under the Penal Code and the culpa aquiliana or cuasi-
delito under the Civil Code are:

1. That crimes affect the public interest, while cuasi-delitos are only of private concern.

2. That, consequently, the Penal Code punishes or corrects the criminal act, while the Civil Code,
by means of indemnification, merely repairs the damage.

3. That delicts are not as broad as quasi-delicts, because the former are punished only if there is a
penal law clearly covering them, while the latter, cuasi-delitos, include all acts in which "any
king of fault or negligence intervenes." However, it should be noted that not all violations of the
penal law produce civil responsibility, such as begging in contravention of ordinances, violation
of the game laws, infraction of the rules of traffic when nobody is hurt. (See Colin and Capitant,
"Curso Elemental de Derecho Civil," Vol. 3, p. 728.)

Let us now ascertain what some jurists say on the separate existence of quasi-delicts and the
employer's primary and direct liability under article 1903 of the Civil Code.

Dorado Montero in his essay on "Responsibilidad" in the "Enciclopedia Juridica Española" (Vol.
XXVII, p. 414) says:

El concepto juridico de la responsabilidad civil abarca diversos aspectos y comprende a

diferentes personas. Asi, existe una responsabilidad civil propiamente dicha, que en
ningun casl lleva aparejada responsabilidad criminal alguna, y otra que es consecuencia
indeclinable de la penal que nace de todo delito o falta."

The juridical concept of civil responsibility has various aspects and comprises different
persons. Thus, there is a civil responsibility, properly speaking, which in no case carries
with it any criminal responsibility, and another which is a necessary consequence of the
penal liability as a result of every felony or misdemeanor."

Maura, an outstanding authority, was consulted on the following case: There had been a collision
between two trains belonging respectively to the Ferrocarril Cantabrico and the Ferrocarril del
Norte. An employee of the latter had been prosecuted in a criminal case, in which the company
had been made a party as subsidiarily responsible in civil damages. The employee had been
acquitted in the criminal case, and the employer, the Ferrocarril del Norte, had also been
exonerated. The question asked was whether the Ferrocarril Cantabrico could still bring a civil
action for damages against the Ferrocarril del Norte. Maura's opinion was in the affirmative,
stating in part (Maura, Dictamenes, Vol. 6, pp. 511-513):
Quedando las cosas asi, a proposito de la realidad pura y neta de los hechos, todavia
menos parece sostenible que exista cosa juzgada acerca de la obligacion civil de
indemnizar los quebrantos y menoscabos inferidos por el choque de los trenes. El titulo
en que se funda la accion para demandar el resarcimiento, no puede confundirse con las
responsabilidades civiles nacidas de delito, siquiera exista en este, sea el cual sea,
una culpa rodeada de notas agravatorias que motivan sanciones penales, mas o menos
severas. La lesion causada por delito o falta en los derechos civiles, requiere
restituciones, reparaciones o indemnizaciones, que cual la pena misma atañen al orden
publico; por tal motivo vienen encomendadas, de ordinario, al Ministerio Fiscal; y claro
es que si por esta via se enmiendan los quebrantos y menoscabos, el agraviado excusa
procurar el ya conseguido desagravio; pero esta eventual coincidencia de los efectos, no
borra la diversidad originaria de las acciones civiles para pedir indemnizacion.

Estas, para el caso actual (prescindiendo de culpas contractuales, que no vendrian a

cuento y que tiene otro regimen), dimanan, segun el articulo 1902 del Codigo Civil, de
toda accion u omision, causante de daños o perjuicios, en que intervenga culpa o
negligencia. Es trivial que acciones semejantes son ejercitadas ante los Tribunales de lo
civil cotidianamente, sin que la Justicia punitiva tenga que mezclarse en los asuntos. Los
articulos 18 al 21 y 121 al 128 del Codigo Penal, atentos al espiritu y a los fines sociales
y politicos del mismo, desenvuelven y ordenan la materia de responsabilidades
civiles nacidas de delito, en terminos separados del regimen por ley comun de la culpa
que se denomina aquiliana, por alusion a precedentes legislativos del Corpus Juris. Seria
intempestivo un paralelo entre aquellas ordenaciones, y la de la obligacion de indemnizar
a titulo de culpa civil; pero viene al caso y es necesaria una de las diferenciaciones que en
el tal paralelo se notarian.

Los articulos 20 y 21 del Codigo Penal, despues de distribuir a su modo las

responsabilidades civiles, entre los que sean por diversos conceptos culpables del delito o
falta, las hacen extensivas a las empresas y los establecimientos al servicio de los cuales
estan los delincuentes; pero con caracter subsidiario, o sea, segun el texto literal, en
defecto de los que sean responsables criminalmente. No coincide en ello el Codigo Civil,
cuyo articulo 1903, dice; La obligacion que impone el articulo anterior es exigible, no
solo por los actos y omisiones propios, sino por los de aquellas personas de quienes se
debe responder; personas en la enumeracion de las cuales figuran los dependientes y
empleados de los establecimientos o empresas, sea por actos del servicio, sea con ocasion
de sus funciones. Por esto acontece, y se observa en la jurisprudencia, que las empresas,
despues de intervenir en las causas criminales con el caracter subsidiario de su
responsabilidad civil por razon del delito, son demandadas y condenadas directa y
aisladamente, cuando se trata de la obligacion, ante los tribunales civiles.

Siendo como se ve, diverso el titulo de esta obligacion, y formando verdadero postulado
de nuestro regimen judicial la separacion entre justicia punitiva y tribunales de lo civil, de
suerte que tienen unos y otros normas de fondo en distintos cuerpos legales, y diferentes
modos de proceder, habiendose, por añadidura, abstenido de asistir al juicio criminal la
Compañia del Ferrocarril Cantabrico, que se reservo ejercitar sus acciones, parece
innegable que la de indemnizacion por los daños y perjuicios que le irrogo el choque, no
estuvo sub judice ante el Tribunal del Jurado, ni fue sentenciada, sino que permanecio
intacta, al pronunciarse el fallo de 21 de marzo. Aun cuando el veredicto no hubiese sido
de inculpabilidad, mostrose mas arriba, que tal accion quedaba legitimamente reservada
para despues del proceso; pero al declararse que no existio delito, ni responsabilidad
dimanada de delito, materia unica sobre que tenian jurisdiccion aquellos juzgadores, se
redobla el motivo para la obligacion civil ex lege, y se patentiza mas y mas que la accion
para pedir su cumplimiento permanece incolume, extraña a la cosa juzgada.

As things are, apropos of the reality pure and simple of the facts, it seems less tenable
that there should be res judicata with regard to the civil obligation for damages on
account of the losses caused by the collision of the trains. The title upon which the action
for reparation is based cannot be confused with the civil responsibilities born of a crime,
because there exists in the latter, whatever each nature, a culpa surrounded with
aggravating aspects which give rise to penal measures that are more or less severe. The
injury caused by a felony or misdemeanor upon civil rights requires restitutions,
reparations, or indemnifications which, like the penalty itself, affect public order; for this
reason, they are ordinarily entrusted to the office of the prosecuting attorney; and it is
clear that if by this means the losses and damages are repaired, the injured party no
longer desires to seek another relief; but this coincidence of effects does not eliminate the
peculiar nature of civil actions to ask for indemnity.

Such civil actions in the present case (without referring to contractual faults which are not
pertinent and belong to another scope) are derived, according to article 1902 of the Civil
Code, from every act or omission causing losses and damages in which culpa or
negligence intervenes. It is unimportant that such actions are every day filed before the
civil courts without the criminal courts interfering therewith. Articles 18 to 21 and 121 to
128 of the Penal Code, bearing in mind the spirit and the social and political purposes of
that Code, develop and regulate the matter of civil responsibilities arising from a crime,
separately from the regime under common law, of culpa which is known as aquiliana, in
accordance with legislative precedent of the Corpus Juris. It would be unwarranted to
make a detailed comparison between the former provisions and that regarding the
obligation to indemnify on account of civil culpa; but it is pertinent and necessary to
point out to one of such differences.

Articles 20 and 21 of the Penal Code, after distriburing in their own way the civil
responsibilities among those who, for different reasons, are guilty of felony or
misdemeanor, make such civil responsibilities applicable to enterprises and
establishments for which the guilty parties render service, but with subsidiary character,
that is to say, according to the wording of the Penal Code, in default of those who are
criminally responsible. In this regard, the Civil Code does not coincide because article
1903 says: "The obligation imposed by the next preceding article is demandable, not only
for personal acts and omissions, but also for those of persons for whom another is
responsible." Among the persons enumerated are the subordinates and employees of
establishments or enterprises, either for acts during their service or on the occasion of
their functions. It is for this reason that it happens, and it is so observed in judicial
decisions, that the companies or enterprises, after taking part in the criminal cases
 because of their subsidiary civil responsibility by reason of the crime, are sued and
sentenced directly and separately with regard to the obligation, before the civil courts.

Seeing that the title of this obligation is different, and the separation between punitive
justice and the civil courts being a true postulate of our judicial system, so that they have
different fundamental norms in different codes, as well as different modes of procedure,
and inasmuch as the Compaña del Ferrocarril Cantabrico has abstained from taking part
in the criminal case and has reserved the right to exercise its actions, it seems undeniable
that the action for indemnification for the losses and damages caused to it by the collision
was not sub judice before the Tribunal del Jurado, nor was it the subject of a sentence,
but it remained intact when the decision of March 21 was rendered. Even if the verdict
had not been that of acquittal, it has already been shown that such action had been
legitimately reserved till after the criminal prosecution; but because of the declaration of
the non-existence of the felony and the non-existence of the responsibility arising from
the crime, which was the sole subject matter upon which the Tribunal del Jurado had
jurisdiction, there is greater reason for the civil obligation ex lege, and it becomes clearer
that the action for its enforcement remain intact and is not res judicata.

Laurent, a jurist who has written a monumental work on the French Civil Code, on which the
Spanish Civil Code is largely based and whose provisions on cuasi-delito or culpa extra-
contractual are similar to those of the Spanish Civil Code, says, referring to article 1384 of the
French Civil Code which corresponds to article 1903, Spanish Civil Code:

The action can be brought directly against the person responsible (for another), without
including the author of the act. The action against the principal is accessory in the sense
that it implies the existence of a prejudicial act committed by the employee, but it is not
subsidiary in the sense that it can not be instituted till after the judgment against the
author of the act or at least, that it is subsidiary to the principal action; the action for
responsibility (of the employer) is in itself a principal action. (Laurent, Principles of
French Civil Law, Spanish translation, Vol. 20, pp. 734-735.)

Amandi, in his "Cuestionario del Codigo Civil Reformado" (Vol. 4, pp. 429, 430), declares that
the responsibility of the employer is principal and not subsidiary. He writes:

Cuestion 1. La responsabilidad declarada en el articulo 1903 por las acciones u omisiones

de aquellas personas por las que se debe responder, es subsidiaria? es principal? Para
contestar a esta pregunta es necesario saber, en primer lugar, en que se funda el precepto
legal. Es que realmente se impone una responsabilidad por una falta ajena? Asi parece a
primera vista; pero semejante afirmacion seria contraria a la justicia y a la maxima
universal, segun la que las faltas son personales, y cada uno responde de aquellas que le
son imputables. La responsabilidad de que tratamos se impone con ocasion de un delito o
culpa, pero no por causa de ellos, sino por causa del causi delito, esto es, de la
imprudencia o de la negligencia del padre, del tutor, del dueño o director del
establecimiento, del maestro, etc. Cuando cualquiera de las personas que enumera el
articulo citado (menores de edad, incapacitados, dependientes, aprendices) causan un
daño, la ley presume que el padre, el tutor, el maestro, etc., han cometido una falta de
 negligencia para prevenir o evitar el daño. Esta falta es la que la ley castiga. No hay,
pues, responsabilidad por un hecho ajeno, sino en la apariencia; en realidad la
responsabilidad se exige por un hecho propio. La idea de que esa responsabilidad sea
subsidiaria es, por lo tanto, completamente inadmisible.

Question No. 1. Is the responsibility declared in article 1903 for the acts or omissions of
those persons for who one is responsible, subsidiary or principal? In order to answer this
question it is necessary to know, in the first place, on what the legal provision is based. Is
it true that there is a responsibility for the fault of another person? It seems so at first
sight; but such assertion would be contrary to justice and to the universal maxim that all
faults are personal, and that everyone is liable for those faults that can be imputed to him.
The responsibility in question is imposed on the occasion of a crime or fault, but not
because of the same, but because of the cuasi-delito, that is to say, the imprudence or
negligence of the father, guardian, proprietor or manager of the establishment, of the
teacher, etc. Whenever anyone of the persons enumerated in the article referred to
(minors, incapacitated persons, employees, apprentices) causes any damage, the law
presumes that the father, guardian, teacher, etc. have committed an act of negligence in
not preventing or avoiding the damage. It is this fault that is condemned by the law. It is,
therefore, only apparent that there is a responsibility for the act of another; in reality the
responsibility exacted is for one's own act. The idea that such responsibility is subsidiary
is, therefore, completely inadmissible.

Oyuelos, in his "Digesto: Principios, Doctrina y Jurisprudencia, Referentes al Codigo Civil

Español," says in Vol. VII, p. 743:

Es decir, no responde de hechos ajenos, porque se responde solo de su propia culpa,

doctrina del articulo 1902; mas por excepcion, se responde de la ajena respecto de
aquellas personas con las que media algun nexo o vinculo, que motiva o razona la
responsabilidad. Esta responsabilidad, es directa o es subsidiaria? En el orden penal, el
Codigo de esta clase distingue entre menores e incapacitados y los demas, declarando
directa la primera (articulo 19) y subsidiaria la segunda (articulos 20 y 21); pero en el
orden civil, en el caso del articulo 1903, ha de entenderse directa, por el tenor del articulo
que impone la responsabilidad precisamente "por los actos de aquellas personas de
quienes se deba responder."

That is to say, one is not responsible for the acts of others, because one is liable only for
his own faults, this being the doctrine of article 1902; but, by exception, one is liable for
the acts of those persons with whom there is a bond or tie which gives rise to the
responsibility. Is this responsibility direct or subsidiary? In the order of the penal law, the
Penal Code distinguishes between minors and incapacitated persons on the one hand, and
other persons on the other, declaring that the responsibility for the former is direct (article
19), and for the latter, subsidiary (articles 20 and 21); but in the scheme of the civil law,
in the case of article 1903, the responsibility should be understood as direct, according to
the tenor of that articles, for precisely it imposes responsibility "for the acts of those
persons for whom one should be responsible."
Coming now to the sentences of the Supreme Tribunal of Spain, that court has upheld the
principles above set forth: that a quasi-delict or culpa extra-contractual is a separate and distinct
legal institution, independent from the civil responsibility arising from criminal liability, and that
an employer is, under article 1903 of the Civil Code, primarily and directly responsible for the
negligent acts of his employee.

One of the most important of those Spanish decisions is that of October 21, 1910. In that case,
Ramon Lafuente died as the result of having been run over by a street car owned by the
"compañia Electric Madrileña de Traccion." The conductor was prosecuted in a criminal case but
he was acquitted. Thereupon, the widow filed a civil action against the street car company,
paying for damages in the amount of 15,000 pesetas. The lower court awarded damages; so the
company appealed to the Supreme Tribunal, alleging violation of articles 1902 and 1903 of the
Civil Code because by final judgment the non-existence of fault or negligence had been declared.
The Supreme Court of Spain dismissed the appeal, saying:

Considerando que el primer motivo del recurso se funda en el equivocado supuesto de

que el Tribunal a quo, al condonar a la compañia Electrica Madrileña al pago del daño
causado con la muerte de Ramon La fuente Izquierdo, desconoce el valor y efectos
juridicos de la sentencia absolutoria deictada en la causa criminal que se siguio por el
mismo hecho, cuando es lo cierto que de este han conocido las dos jurisdicciones bajo
diferentes as pectos, y como la de lo criminal declrao dentro de los limites de su
competencia que el hecho de que se trata no era constitutivo de delito por no haber
mediado descuido o negligencia graves, lo que no excluye, siendo este el unico
fundamento del fallo absolutorio, el concurso de la culpa o negligencia no califacadas,
fuente de obligaciones civiles segun el articulo 1902 del Codigo, y que alcanzan, segun el
1903, netre otras perosnas, a los Directores de establecimientos o empresas por los daños
causados por sus dependientes en determinadas condiciones, es manifesto que la de lo
civil, al conocer del mismo hehco baho este ultimo aspecto y al condenar a la compañia
recurrente a la indemnizacion del daño causado por uno de sus empleados, lejos de
infringer los mencionados textos, en relacion con el articulo 116 de la Ley de
Enjuciamiento Criminal, se ha atenido estrictamente a ellos, sin invadir atribuciones
ajenas a su jurisdiccion propia, ni contrariar en lo mas minimo el fallo recaido en la
causa.

Considering that the first ground of the appeal is based on the mistaken supposition that
the trial court, in sentencing the Compañia Madrileña to the payment of the damage
caused by the death of Ramon Lafuente Izquierdo, disregards the value and juridical
effects of the sentence of acquittal rendered in the criminal case instituted on account of
the same act, when it is a fact that the two jurisdictions had taken cognizance of the same
act in its different aspects, and as the criminal jurisdiction declared within the limits of its
authority that the act in question did not constitute a felony because there was no grave
carelessness or negligence, and this being the only basis of acquittal, it does no exclude
the co-existence of fault or negligence which is not qualified, and is a source of civil
obligations according to article 1902 of the Civil Code, affecting, in accordance with
article 1903, among other persons, the managers of establishments or enterprises by
reason of the damages caused by employees under certain conditions, it is manifest
 that the civil jurisdiccion in taking cognizance of the same act in this latter aspect and in
ordering the company, appellant herein, to pay an indemnity for the damage caused by
one of its employees, far from violating said legal provisions, in relation with article 116
of the Law of Criminal Procedure, strictly followed the same, without invading attributes
which are beyond its own jurisdiction, and without in any way contradicting the decision
in that cause. (Emphasis supplied.)

It will be noted, as to the case just cited:

First. That the conductor was not sued in a civil case, either separately or with the street car
company. This is precisely what happens in the present case: the driver, Fontanilla, has not been
sued in a civil action, either alone or with his employer.

Second. That the conductor had been acquitted of grave criminal negligence, but the Supreme
Tribunal of Spain said that this did not exclude the co-existence of fault or negligence, which is
not qualified, on the part of the conductor, under article 1902 of the Civil Code. In the present
case, the taxi driver was found guilty of criminal negligence, so that if he had even sued for his
civil responsibility arising from the crime, he would have been held primarily liable for civil
damages, and Barredo would have been held subsidiarily liable for the same. But the plaintiffs
are directly suing Barredo, on his primary responsibility because of his own presumed
negligence — which he did not overcome — under article 1903. Thus, there were two liabilities
of Barredo: first, the subsidiary one because of the civil liability of the taxi driver arising from
the latter's criminal negligence; and, second, Barredo's primary liability as an employer under
article 1903. The plaintiffs were free to choose which course to take, and they preferred the
second remedy. In so doing, they were acting within their rights. It might be observed in passing,
that the plaintiff choose the more expeditious and effective method of relief, because Fontanilla
was either in prison, or had just been released, and besides, he was probably without property
which might be seized in enforcing any judgment against him for damages.

Third. That inasmuch as in the above sentence of October 21, 1910, the employer was held liable
civilly, notwithstanding the acquittal of the employee (the conductor) in a previous criminal case,
with greater reason should Barredo, the employer in the case at bar, be held liable for damages in
a civil suit filed against him because his taxi driver had been convicted. The degree of negligence
of the conductor in the Spanish case cited was less than that of the taxi driver, Fontanilla,
because the former was acquitted in the previous criminal case while the latter was found guilty
of criminal negligence and was sentenced to an indeterminate sentence of one year and one day
to two years of prision correccional.

(See also Sentence of February 19, 1902, which is similar to the one above quoted.)

In the Sentence of the Supreme Court of Spain, dated February 14, 1919, an action was brought
against a railroad company for damages because the station agent, employed by the company,
had unjustly and fraudulently, refused to deliver certain articles consigned to the plaintiff. The
Supreme Court of Spain held that this action was properly under article 1902 of the Civil Code,
the court saying:
Considerando que la sentencia discutida reconoce, en virtud de los hechos que consigna
con relacion a las pruebas del pleito: 1.º, que las expediciones facturadas por la compañia
ferroviaria a la consignacion del actor de las vasijas vacias que en su demanda relacionan
tenian como fin el que este las devolviera a sus remitentes con vinos y alcoholes; 2.º, que
llegadas a su destino tales mercanias no se quisieron entregar a dicho consignatario por el
jefe de la estacion sin motivo justificado y con intencion dolosa, y 3.º, que la falta de
entrega de estas expediciones al tiempo de reclamarlas el demandante le originaron daños
y perjuicios en cantidad de bastante importancia como expendedor al por mayor que era
de vinos y alcoholes por las ganancias que dejo de obtener al verse privado de servir los
pedidos que se le habian hecho por los remitentes en los envases:

Considerando que sobre esta base hay necesidad de estimar los cuatro motivos que
integran este recurso, porque la demanda inicial del pleito a que se contrae no contiene
accion que nazca del incumplimiento del contrato de transporte, toda vez que no se funda
en el retraso de la llegada de las mercancias ni de ningun otro vinculo contractual entre
las partes contendientes, careciendo, por tanto, de aplicacion el articulo 371 del Codigo
de Comercio, en que principalmente descansa el fallo recurrido, sino que se limita a pedir
la reparaction de los daños y perjuicios producidos en el patrimonio del actor por la
injustificada y dolosa negativa del porteador a la entrega de las mercancias a su nombre
consignadas, segun lo reconoce la sentencia, y cuya responsabilidad esta claramente
sancionada en el articulo 1902 del Codigo Civil, que obliga por el siguiente a la
Compañia demandada como ligada con el causante de aquellos por relaciones de caracter
economico y de jurarquia administrativa.

Considering that the sentence, in question recognizes, in virtue of the facts which it
declares, in relation to the evidence in the case: (1) that the invoice issued by the railroad
company in favor of the plaintiff contemplated that the empty receptacles referred to in
the complaint should be returned to the consignors with wines and liquors; (2) that when
the said merchandise reached their destination, their delivery to the consignee was
refused by the station agent without justification and with fraudulent intent, and (3) that
the lack of delivery of these goods when they were demanded by the plaintiff caused him
losses and damages of considerable importance, as he was a wholesale vendor of wines
and liquors and he failed to realize the profits when he was unable to fill the orders sent
to him by the consignors of the receptacles:

Considering that upon this basis there is need of upholding the four assignments of error,
as the original complaint did not contain any cause of action arising from non-fulfillment
of a contract of transportation, because the action was not based on the delay of the goods
nor on any contractual relation between the parties litigant and, therefore, article 371 of
the Code of Commerce, on which the decision appealed from is based, is not applicable;
but it limits to asking for reparation for losses and damages produced on the patrimony of
the plaintiff on account of the unjustified and fraudulent refusal of the carrier to deliver
the goods consigned to the plaintiff as stated by the sentence, and the carrier's
responsibility is clearly laid down in article 1902 of the Civil Code which binds, in virtue
of the next article, the defendant company, because the latter is connected with the person
 who caused the damage by relations of economic character and by administrative
hierarchy. (Emphasis supplied.)

The above case is pertinent because it shows that the same act may come under both the Penal
Code and the Civil Code. In that case, the action of the agent was 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.

Let us now examine the cases previously decided by this Court.

In the leading case of Rakes vs. Atlantic Gulf and Pacific Co. (7 Phil., 359, 362-365 [year
1907]), the trial court awarded damages to the plaintiff, a laborer of the defendant, because the
latter had negligently failed to repair a tramway in consequence of which the rails slid off while
iron was being transported, and caught the plaintiff whose leg was broken. This Court held:

It is contended 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 track, 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 II 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 preceeding 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 damage."

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 laws' 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 against 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 never 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 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 citation 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 in the law.
Where an individual is civilly liable for a negligent act or omission, it is not required that
the injured 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 in
process of prosecution, or in so far as they determine 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 the election of the injured person.
Inasmuch as no criminal proceeding had been instituted, growing our of the accident 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 has 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
1902 and 1093. More than this, however, it cannot be said to fall within the class of acts
unpunished by the law, the consequence 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 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 articles 1101, 1103, and 1104 of the
same code. A typical application of this 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 the injured bystander would originate in the
negligent act itself.

In Manzanares vs. Moreta, 38 Phil., 821 (year 1918), the mother of the 8 of 9-year-old child
Salvador Bona brought a civil action against Moreta to recover damages resulting from the death
of the child, who had been run over by an automobile driven and managed by the defendant. The
trial court rendered judgment requiring the defendant to pay the plaintiff the sum of P1,000 as
indemnity: This Court in affirming the judgment, said in part:

If it were true that the defendant, in coming from the southern part of Solana Street, had
to stop his auto before crossing Real Street, because he had met vehicles which were
going along the latter street or were coming from the opposite direction along Solana
Street, it is to be believed that, when he again started to run his auto across said Real
Street and to continue its way along Solana Street northward, he should have adjusted the
speed of the auto which he was operating until he had fully crossed Real Street and had
completely reached a clear way on Solana Street. But, as the child was run over by the
auto precisely at the entrance of Solana Street, this accident could not have occurred if
the auto had been running at a slow speed, aside from the fact that the defendant, at the
moment of crossing Real Street and entering Solana Street, in a northward direction,
could have seen the child in the act of crossing the latter street from the sidewalk on the
right to that on the left, and if the accident had occurred in such a way that after the
automobile had run over the body of the child, and the child's body had already been
stretched out on the ground, the automobile still moved along a distance of about 2
meters, this circumstance shows the fact that the automobile entered Solana Street from
Real Street, at a high speed without the defendant having blown the horn. If these
precautions had been taken by the defendant, the deplorable accident which caused the
death of the child would not have occurred.

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 individually 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.

Years later (in 1930) this Court had another occasion to apply the same doctrine. In Bernal and
Enverso vs. House and Tacloban Electric & Ice Plant, Ltd., 54 Phil., 327, the parents of the five-
year-old child, Purificacion Bernal, brought a civil action to recover damages for the child's
death as a result of burns caused by the fault and negligence of the defendants. On the evening of
April 10, 1925, the Good Friday procession was held in Tacloban, Leyte. Fortunata Enverso with
her daughter Purificacion Bernal had come from another municipality to attend the same. After
the procession the mother and the daughter with two others were passing along Gran Capitan
Street in front of the offices of the Tacloban Electric & Ice Plant, Ltd., owned by defendants J.
V. House, when an automobile appeared from the opposite direction. The little girl, who was
slightly ahead of the rest, was so frightened by the automobile that she turned to run, but
unfortunately she fell into the street gutter where hot water from the electric plant was flowing.
The child died that same night from the burns. The trial courts dismissed the action because of
the contributory negligence of the plaintiffs. But this Court held, on appeal, that there was no
contributory negligence, and allowed the parents P1,000 in damages from J. V. House who at the
time of the tragic occurrence was the holder of the franchise for the electric plant. This Court
said in part:

Although the trial judge made the findings of fact hereinbefore outlined, he nevertheless
was led to order the dismissal of the action because of the contributory negligence of the
plaintiffs. It is from this point that a majority of the court depart from the stand taken by
the trial judge. The mother and her child had a perfect right to be on the principal street of
Tacloban, Leyte, on the evening when the religious procession was held. There was
nothing abnormal in allowing the child to run along a few paces in advance of the
mother. No one could foresee the coincidence of an automobile appearing and of a
frightened child running and falling into a ditch filled with hot water. The doctrine
announced in the much debated case of Rakes vs. Atlantic Gulf and Pacific Co. ([1907]),
7 Phil., 359), still rule. Article 1902 of the Civil Code must again be enforced. The
contributory negligence of the child and her mother, if any, does not operate as a bar to
recovery, but in its strictest sense could only result in reduction of the damages.

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.

In Bahia vs. Litonjua and Leynes (30 Phil., 624 [year 1915), the action was for damages for the
death of the plaintiff's daughter alleged to have been caused by the negligence of the servant in
driving an automobile over the child. It appeared that the cause of the mishap was a defect in the
steering gear. The defendant Leynes had rented the automobile from the International Garage of
Manila, to be used by him in carrying passengers during the fiesta of Tuy, Batangas. Leynes was
ordered by the lower court to pay P1,000 as damages to the plaintiff. On appeal this Court
reversed the judgment as to Leynes on the ground that he had shown that the exercised the care
of a good father of a family, thus overcoming the presumption of negligence under article 1903.
This Court said:

As to selection, the defendant has clearly shown that he exercised the care and diligence
of a good father of a family. He obtained the machine from a reputable garage and it was,
so far as appeared, in good condition. The workmen were likewise selected from a
standard garage, were duly licensed by the Government in their particular calling, and
apparently thoroughly competent. The machine had been used but a few hours when the
accident occurred and it is clear from the evidence that the defendant had no notice, either
actual or constructive, of the defective condition of the steering gear.

The legal aspect of the case was discussed by this Court thus:

Article 1903 of the Civil Code not only establishes liability in cases of negligence, but
also provides when the liability shall cease. It says:

"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 damage."

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 matter or employer either in the selection of the servant
or employee, or in supervision over him after the selection, or both; and (2) 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 relieve from liability.

This theory bases the responsibility of the master ultimately on his own negligence and
not on that of his servant.

The doctrine of the case just cited was followed by this Court in Cerf vs. Medel (33 Phil., 37
[year 1915]). In the latter case, the complaint alleged that the defendant's servant had so
negligently driven an automobile, which was operated by defendant as a public vehicle, that said
automobile struck and damaged the plaintiff's motorcycle. This Court, applying article 1903 and
following the rule in Bahia vs. Litonjua and Leynes, said in part (p. 41) that:

The master is liable for the negligent acts of his servant where he is the owner or director
of a business or enterprise and the negligent acts are committed while the servant is
engaged in his master's employment as such owner.
Another case which followed the decision in Bahia vs. Litonjua and Leynes was Cuison vs.
Norton & Harrison Co., 55 Phil., 18 (year 1930). The latter case was an action for damages
brought by Cuison for the death of his seven-year-old son Moises. The little boy was on his way
to school with his sister Marciana. Some large pieces of lumber fell from a truck and pinned the
boy underneath, instantly killing him. Two youths, Telesforo Binoya and Francisco Bautista,
who were working for Ora, an employee of defendant Norton & Harrison Co., pleaded guilty to
the crime of homicide through reckless negligence and were sentenced accordingly. This Court,
applying articles 1902 and 1903, held:

The basis of civil law liability is not respondent superior but the relationship of pater
familias. This theory bases the liability of the master ultimately on his own negligence
and not on that of his servant. (Bahia vs. Litonjua and Leynes [1915], 30 Phil., 624;
Cangco vs. Manila Railroad Co. [1918], 38 Phil., 768.)

In Walter A. Smith & Co. vs. Cadwallader Gibson Lumber Co., 55 Phil., 517 (year 1930) the
plaintiff brought an action for damages for the demolition of its wharf, which had been struck by
the steamer Helen C belonging to the defendant. This Court held (p. 526):

The evidence shows that Captain Lasa at the time the plaintiff's wharf collapsed was a
duly licensed captain, authorized to navigate and direct a vessel of any tonnage, and that
the appellee contracted his services because of his reputation as a captain, according to F.
C. Cadwallader. This being so, we are of the opinion that the presumption of liability
against the defendant has been overcome by the exercise of the care and diligence of a
good father of a family in selecting Captain Lasa, in accordance with the doctrines laid
down by this court in the cases cited above, and the defendant is therefore absolved from
all liability.

It is, therefore, seen that the defendant's theory about his secondary liability is negatived by the
six cases above set forth. He is, on the authority of these cases, primarily and directly responsible
in damages under article 1903, in relation to article 1902, of the Civil Code.

Let us now take up the Philippine decisions relied upon by the defendant. We study first, City of
Manila vs. Manila Electric Co., 52 Phil., 586 (year 1928). A collision between a truck of the City
of Manila and a street car of the Manila Electric Co. took place on June 8, 1925. The truck was
damaged in the amount of P1,788.27. Sixto Eustaquio, the motorman, was prosecuted for the
crime of damage to property and slight injuries through reckless imprudence. He was found
guilty and sentenced to pay a fine of P900, to indemnify the City of Manila for P1,788.27, with
subsidiary imprisonment in case of insolvency. Unable to collect the indemnity from Eustaquio,
the City of Manila filed an action against the Manila Electric Company to obtain payment,
claiming that the defendant was subsidiarily liable. The main defense was that the defendant had
exercised the diligence of a good father of a family to prevent the damage. The lower court
rendered judgment in favor of the plaintiff. This Court held, in part, that this case was governed
by the Penal Code, saying:

With this preliminary point out of the way, there is no escaping the conclusion that the
provisions of the Penal Code govern. The Penal Code in easily understandable language
 authorizes the determination of subsidiary liability. The Civil Code negatives its
application by providing that civil obligations arising from crimes or misdemeanors shall
be governed by the provisions of the Penal Code. The conviction of the motorman was a
misdemeanor falling under article 604 of the Penal Code. The act of the motorman was
not a wrongful or negligent act or omission not punishable by law. Accordingly, the civil
obligation connected up with the Penal Code and not with article 1903 of the Civil Code.
In other words, the Penal Code affirms its jurisdiction while the Civil Code negatives its
jurisdiction. This is a case of criminal negligence out of which civil liability arises and
not a case of civil negligence.

xxx xxx xxx

Our deduction, therefore, is that the case relates to the Penal Code and not to the Civil
Code. Indeed, as pointed out by the trial judge, any different ruling would permit the
master to escape scot-free by simply alleging and proving that the master had exercised
all diligence in the selection and training of its servants to prevent the damage. That
would be a good defense to a strictly civil action, but might or might not be to a civil
action either as a part of or predicated on conviction for a crime or misdemeanor. (By
way of parenthesis, it may be said further that the statements here made are offered to
meet the argument advanced during our deliberations to the effect that article 0902 of the
Civil Code should be disregarded and codal articles 1093 and 1903 applied.)

It is not clear how the above case could support the defendant's proposition, because the Court of
Appeals based its decision in the present case on the defendant's primary responsibility under
article 1903 of the Civil Code and not on his subsidiary liability arising from Fontanilla's
criminal negligence. In other words, the case of City of Manila vs. Manila Electric Co., supra, is
predicated on an entirely different theory, which is the subsidiary liability of an employer arising
from a criminal act of his employee, whereas the foundation of the decision of the Court of
Appeals in the present case is the employer's primary liability under article 1903 of the Civil
Code. We have already seen that this is a proper and independent remedy.

Arambulo vs. Manila Electric Co. (55 Phil., 75), is another case invoked by the defendant. A
motorman in the employ of the Manila Electric Company had been convicted o homicide by
simple negligence and sentenced, among other things, to pay the heirs of the deceased the sum of
P1,000. An action was then brought to enforce the subsidiary liability of the defendant as
employer under the Penal Code. The defendant attempted to show that it had exercised the
diligence of a good father of a family in selecting the motorman, and therefore claimed
exemption from civil liability. But this Court held:

In view of the foregoing considerations, we are of opinion and so hold, (1) that the
exemption from civil liability established in article 1903 of the Civil Code for all who
have acted with the diligence of a good father of a family, is not applicable to the
subsidiary civil liability provided in article 20 of the Penal Code.

The above case is also extraneous to the theory of the defendant in the instant case, because the
action there had for its purpose the enforcement of the defendant's subsidiary liability under the
Penal Code, while in the case at bar, the plaintiff's cause of action is based on the defendant's
primary and direct responsibility under article 1903 of the Civil Code. In fact, the above case
destroys the defendant's contention because that decision illustrates the principle that the
employer's primary responsibility under article 1903 of the Civil Code is different in character
from his subsidiary liability under the Penal Code.

In trying to apply the two cases just referred to, counsel for the defendant has failed to recognize
the distinction between civil liability arising from a crime, which is governed by the Penal Code,
and the responsibility for cuasi-delito or culpa aquiliana under the Civil Code, and has likewise
failed to give the importance to the latter type of civil action.

The defendant-petitioner also cites Francisco vs. Onrubia (46 Phil., 327). That case need not be
set forth. Suffice it to say that the question involved was also civil liability arising from a crime.
Hence, it is as inapplicable as the two cases above discussed.

The foregoing authorities clearly demonstrate the separate individuality of cuasi-delitos or culpa
aquiliana under the Civil Code. Specifically they show that there is a distinction between civil
liability arising from criminal negligence (governed by the Penal Code) and responsibility for
fault or negligence under articles 1902 to 1910 of the Civil Code, and that the same negligent act
may produce either a civil liability arising from a crime under the Penal Code, or a separate
responsibility for fault or negligence under articles 1902 to 1910 of the Civil Code. Still more
concretely, the authorities above cited render it inescapable to conclude that the employer — in
this case the defendant-petitioner — is primarily and directly liable under article 1903 of the
Civil Code.

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 be inappropriate to indicate their foundations.

Firstly, the Revised Penal Code in article 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, according 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 indemnified 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.

Secondly, 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 ibi
remedium.

Thirdly, to hold that there is only one way to make defendant's liability effective, and that is, to
sue the driver and exhaust his (the latter's) property first, would be tantamount to compelling the
plaintiff to follow a devious and cumbersome method of obtaining relief. True, there is such a
remedy under our laws, but there is also a more expeditious way, which is based on the primary
and direct responsibility of the defendant under article 1903 of the Civil Code. Our view of the
law is more likely to facilitate remedy for civil wrongs, because the procedure indicated by the
defendant is wasteful and productive of delay, it being a matter of common knowledge that
professional drivers of taxis and similar public conveyance usually do not have sufficient means
with which to pay damages. Why, then, should the plaintiff be required in all cases to go through
this roundabout, unnecessary, and probably useless procedure? In construing the laws, courts
have endeavored to shorten and facilitate the pathways of right and justice.

At this juncture, it should be said that the primary and direct responsibility of employers and
their presumed negligence are principles calculated to protect society. Workmen and employees
should be carefully chosen and supervised in order to avoid injury to the public. It is the masters
or employers who principally reap the profits resulting from the services of these servants and
employees. It is but right that they should guarantee the latter's careful conduct for the personnel
and patrimonial safety of others. As Theilhard has said, "they should reproach themselves, at
least, some for their weakness, others for their poor selection and all for their negligence." And
according to Manresa, "It is much more equitable and just that such responsibility should fall
upon the principal or director who could have chosen a careful and prudent employee, and not
upon the injured person who could not exercise such selection and who used such employee
because of his confidence in the principal or director." (Vol. 12, p. 622, 2nd Ed.) Many jurists
also base this primary responsibility of the employer on the principle of representation of the
principal by the agent. Thus, Oyuelos says in the work already cited (Vol. 7, p. 747) that before
third persons the employer and employee "vienen a ser como una sola personalidad, por
refundicion de la del dependiente en la de quien le emplea y utiliza." ("become as one personality
by the merging of the person of the employee in that of him who employs and utilizes him.") All
these observations acquire a peculiar force and significance when it comes to motor accidents,
and there is need of stressing and accentuating the responsibility of owners of motor vehicles.

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 harm 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 of private rights because it re-establishes 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.

In view of the foregoing, the judgment of the Court of Appeals should be and is hereby affirmed,
with costs against the defendant-petitioner.

Yulo, C.J., Moran, Ozaeta and Paras, JJ., concur.

FIRST DIVISION

G.R. No. L-32599 June 29, 1979

EDGARDO E. MENDOZA, petitioner

vs.
HON. ABUNDIO Z. ARRIETA, Presiding Judge of Branch VIII, Court of First Instance of
Manila, FELINO TIMBOL, and RODOLFO SALAZAR, Respondents.

David G. Nitafan for petitioner.chanrobles virtual law library

Arsenio R. Reyes for respondent Timbol.chanrobles virtual law library

Armando M. Pulgado for respondent Salazar.

MELENCIO-HERRERA, J:

Petitioner, Edgardo Mendoza, seeks a review on certiorari of the Orders of respondent Judge in
Civil Case No. 80803 dismissing his Complaint for Damages based on quasi-delict against
respondents Felino Timbol and Rodolfo Salazar.chanrobles virtual law library

The facts which spawned the present controversy may be summarized as follows:

On October 22, 1969, at about 4:00 o'clock in the afternoon, a three- way vehicular accident
occurred along Mac-Arthur Highway, Marilao, Bulacan, involving a Mercedes Benz owned and
driven by petitioner; a private jeep owned and driven by respondent Rodolfo Salazar; and a
gravel and sand truck owned by respondent Felipino Timbol and driven by Freddie Montoya. As
a consequence of said mishap, two separate Informations for Reckless Imprudence Causing
Damage to Property were filed against Rodolfo Salazar and Freddie Montoya with the Court of
First Instance of Bulacan. The race against truck-driver Montoya, docketed as Criminal Case No.
SM-227, was for causing damage to the jeep owned by Salazar, in the amount of Pl,604.00, by
hitting it at the right rear portion thereby causing said jeep to hit and bump an oncoming car,
which happened to be petitioner's Mercedes Benz. The case against jeep-owner-driver Salazar,
docketed as Criminal Case No. SM 228, was for causing damage to the Mercedes Benz of
petitioner in the amount of P8,890.00

At the joint trial of the above cases, petitioner testified that jeep-owner- driver Salazar overtook
the truck driven by Montoya, swerved to the left going towards the poblacion of Marilao, and hit
his car which was bound for Manila. Petitioner further testified that before the impact, Salazar
had jumped from the jeep and that he was not aware that Salazar's jeep was bumped from behind
by the truck driven by Montoya. Petitioner's version of the accident was adopted by truck driver
Montoya. Jeep-owner-driver Salazar, on the other hand, tried to show that, after overtaking the
truck driven by Montoya, he flashed a signal indicating his intention to turn left towards the
poblacion of Marilao but was stopped at the intersection by a policeman who was directing
traffic; that while he was at a stop position, his jeep was bumped at the rear by the truck driven
by Montova causing him to be thrown out of the jeep, which then swerved to the left and hit
petitioner's car, which was coming from the opposite direction.chanrobles virtual law library

On July 31, 1970, the Court of First Instance of Bulacan, Branch V, Sta. Maria, rendered
judgment, stating in its decretal portion:

IN VIEW OF THE FOREGOING, this Court finds the accused Freddie Montoya GUILTY
beyond reasonable doubt of the crime of damage to property thru reckless imprudence in Crime.
Case No. SM-227, and hereby sentences him to pay a fine of P972.50 and to indemnify Rodolfo
Salazar in the same amount of P972.50 as actual damages, with subsidiary imprisonment in case
of insolvency, both as to fine and indemnity, with costs.chanrobles virtual law library

Accused Rodolfo Salazar is hereby ACQUITTED from the offense charged in Crime. Case No.
SM-228, with costs de oficio, and his bond is ordered canceled

SO ORDERED. 1

Thus, the trial Court absolved jeep-owner-driver Salazar of any liability, civil and criminal, in
view of its findings that the collision between Salazar's jeep and petitioner's car was the result of
the former having been bumped from behind by the truck driven by Montoya. Neither was
petitioner awarded damages as he was not a complainant against truck-driver Montoya but only
against jeep-owner-driver Salazar.chanrobles virtual law library

On August 22, 1970, or after the termination of the criminal cases, petitioner filed Civil Case No.
80803 with the Court of First Instance of Manila against respondents jeep-owner-driver Salazar
and Felino Timbol, the latter being the owner of the gravel and sand truck driven by Montoya,
for indentification for the damages sustained by his car as a result of the collision involving their
vehicles. Jeep-owner-driver Salazar and truck-owner Timbol were joined as defendants, either in
the alternative or in solidum allegedly for the reason that petitioner was uncertain as to whether
he was entitled to relief against both on only one of them.chanrobles virtual law library

On September 9, 1970, truck-owner Timbol filed a Motion to Dismiss Civil Case No. 80803 on
the grounds that the Complaint is barred by a prior judgment in the criminal cases and that it fails
to state a cause of action. An Opposition thereto was filed by petitioner.chanrobles virtual law
library

In an Order dated September 12, 1970, respondent Judge dismissed the Complaint against truck-
owner Timbol for reasons stated in the afore- mentioned Motion to Dismiss On September 30,
1970, petitioner sought before this Court the review of that dismissal, to which petition we gave
due course.chanrobles virtual law library

On January 30, 1971, upon motion of jeep-owner-driver Salazar, respondent Judge also
dismissed the case as against the former. Respondent Judge reasoned out that "while it is true
that an independent civil action for liability under Article 2177 of the Civil Code could be
prosecuted independently of the criminal action for the offense from which it arose, the New
Rules of Court, which took effect on January 1, 1964, requires an express reservation of the civil
action to be made in the criminal action; otherwise, the same would be barred pursuant to
Section 2, Rule 111 ... 2 Petitioner's Motion for Reconsideration thereof was denied in the order
dated February 23, 1971, with respondent Judge suggesting that the issue be raised to a higher
Court "for a more decisive interpretation of the rule. 3

On March 25, 1971, petitioner then filed a Supplemental Petition before us, also to review the
last two mentioned Orders, to which we required jeep-owner-driver Salazar to file an Answer.

The Complaint against

truck-owner Timbol

We shall first discuss the validity of the Order, dated September 12, 1970, dismissing petitioner's
Complaint against truck-owner Timbol.chanrobles virtual law library

In dismissing the Complaint against the truck-owner, respondent Judge sustained Timbol's
allegations that the civil suit is barred by the prior joint judgment in Criminal Cases Nos. SM-
227 and SM-228, wherein no reservation to file a separate civil case was made by petitioner and
where the latter actively participated in the trial and tried to prove damages against jeep-driver-
Salazar only; and that the Complaint does not state a cause of action against truck-owner Timbol
inasmuch as petitioner prosecuted jeep-owner-driver Salazar as the one solely responsible for the
damage suffered by his car.chanrobles virtual law library

Well-settled is the rule that for a prior judgment to constitute a bar to a subsequent case, the
following requisites must concur: (1) it must be a final judgment; (2) it must have been rendered
by a Court having jurisdiction over the subject matter and over the parties; (3) it must be a
judgment on the merits; and (4) there must be, between the first and second actions, Identity of
parties, Identity of subject matter and Identity of cause of action.chanrobles virtual law library
It is conceded that the first three requisites of res judicata are present. However, we agree with
petitioner that there is no Identity of cause of action between Criminal Case No. SM-227 and
Civil Case No. 80803. Obvious is the fact that in said criminal case truck-driver Montoya was
not prosecuted for damage to petitioner's car but for damage to the jeep. Neither was truck-owner
Timbol a party in said case. In fact as the trial Court had put it "the owner of the Mercedes Benz
cannot recover any damages from the accused Freddie Montoya, he (Mendoza) being a
complainant only against Rodolfo Salazar in Criminal Case No. SM-228. 4 And more
importantly, in the criminal cases, the cause of action was the enforcement of the civil liability
arising from criminal negligence under Article l of the Revised Penal Code, whereas Civil Case
No. 80803 is based on quasi-delict under Article 2180, in relation to Article 2176 of the Civil
Code As held in Barredo vs. Garcia, et al. 5

The foregoing authorities clearly demonstrate the separate in. individuality of cuasi-
delitos or culpa aquiliana under the Civil Code. Specifically they show that there is a distinction
between civil liability arising from criminal negligence (governed by the Penal Code) and
responsibility for fault or negligence under articles 1902 to 1910 of the Civil Code, and that the
same negligent act may produce either a civil liability arising from a crime under the Penal Code,
or a separate responsibility for fault or negligence under articles 1902 to 1910 of the Civil Code.
Still more concretely, the authorities above cited render it inescapable to conclude that the
employer in this case the defendant- petitioner is primarily and directly liable under article 1903
of the Civil Code.

That petitioner's cause of action against Timbol in the civil case is based on quasi-delict is
evident from the recitals in the complaint to wit: that while petitioner was driving his car along
MacArthur Highway at Marilao, Bulacan, a jeep owned and driven by Salazar suddenly swerved
to his (petitioner's) lane and collided with his car That the sudden swerving of Salazar's jeep was
caused either by the negligence and lack of skill of Freddie Montoya, Timbol's employee, who
was then driving a gravel and sand truck iii the same direction as Salazar's jeep; and that as a
consequence of the collision, petitioner's car suffered extensive damage amounting to
P12,248.20 and that he likewise incurred actual and moral damages, litigation expenses and
attorney's fees. Clearly, therefore, the two factors that a cause of action must consist of, namely:
(1) plaintiff's primary right, i.e., that he is the owner of a Mercedes Benz, and (2) defendant's
delict or wrongful act or omission which violated plaintiff's primary right, i.e., the negligence or
lack of skill either of jeep-owner Salazar or of Timbol's employee, Montoya, in driving the truck,
causing Salazar's jeep to swerve and collide with petitioner's car, were alleged in the
Complaint. 6

Consequently, petitioner's cause of action being based on quasi-delict, respondent Judge

committed reversible error when he dismissed the civil suit against the truck-owner, as said case
may proceed independently of the criminal proceedings and regardless of the result of the latter.

Art. 31. When the civil action is based on an obligation not arising from the act or omission
complained of as a felony, such civil action may proceed independently of the criminal
proceedings and regardless of the result of the latter.
But it is truck-owner Timbol's submission (as well as that of jeep-owner-driver Salazar) that
petitioner's failure to make a reservation in the criminal action of his right to file an independent
civil action bars the institution of such separate civil action, invoking section 2, Rule 111, Rules
of Court, which says:

Section 2. - Independent civil action. - In the cases provided for in Articles 31, 32, 33, 34 and
2177 of the Civil Code of the Philippines, an independent civil action entirely separate and
distinct from the criminal action may be brought by the injured party during the pendency of the
criminal case, provided the right is reserved as required in the preceding section. Such civil
action shau proceed independently of the criminal prosecution, and shall require only a
preponderance of evidence.

Interpreting the above provision, this Court, in Garcia vs. Florida 7 said:

As we have stated at the outset, the same negligent act causing damages may produce a civil
liability arising from crime or create an action for quasi-delict or culpa extra-contractual. The
former is a violation of the criminal law, while the latter is a distinct and independent negligence,
having always had its own foundation and individuality. Some legal writers are of the view that
in accordance with Article 31, the civil action based upon quasi-delict may proceed
independently of the criminal proceeding for criminal negligence and regardless of the result of
the latter. Hence, 'the proviso in Section 2 of Rule 111 with reference to ... Articles 32, 33 and 34
of the Civil Code is contrary to the letter and spirit of the said articles, for these articles were
drafted ... and are intended to constitute as exceptions to the general rule stated in what is now
Section 1 of Rule 111. The proviso, which is procedural, may also be regarded as an
unauthorized amendment of substantive law, Articles 32, 33 and 34 of the Civil Code, which do
not provide for the reservation required in the proviso ... .

In his concurring opinion in the above case, Mr. Justice Antonio Barredo further observed that
inasmuch as Articles 2176 and 2177 of the Civil Code create a civil liability distinct and different
from the civil action arising from the offense of negligence under the Revised Penal Code, no
reservation, therefore, need be made in the criminal case; that Section 2 of Rule 111 is
inoperative, "it being substantive in character and is not within the power of the Supreme Court
to promulgate; and even if it were not substantive but adjective, it cannot stand because of its
inconsistency with Article 2177, an enactment of the legislature superseding the Rules of 1940."

We declare, therefore, that in so far as truck-owner Timbol is concerned, Civil Case No. 80803 is
not barred by the fact that petitioner failed to reserve, in the criminal action, his right to file an
independent civil action based on quasi-delict.

The suit against

jeep-owner-driver Salazar

The case as against jeep-owner-driver Salazar, who was acquitted in Criminal Case No. SM-228,
presents a different picture altogether.chanrobles virtual law library
At the outset it should be clarified that inasmuch as civil liability co-exists with criminal
responsibility in negligence cases, the offended party has the option between an action for
enforcement of civil liability based on culpa criminal under Article 100 of the Revised Penal
Code, and an action for recovery of damages based on culpa aquiliana under Article 2177 of the
Civil Code. The action for enforcement of civil liability based on culpa criminal under section 1
of Rule 111 of the Rules of Court is deemed simultaneously instituted with the criminal action,
unless expressly waived or reserved for separate application by the offended party. 8

The circumstances attendant to the criminal case yields the conclusion that petitioner had opted
to base his cause of action against jeep-owner-driver Salazar on culpa criminal and not on culpa
aquiliana as evidenced by his active participation and intervention in the prosecution of the
criminal suit against said Salazar. The latter's civil liability continued to be involved in the
criminal action until its termination. Such being the case, there was no need for petitioner to have
reserved his right to file a separate civil action as his action for civil liability was deemed
impliedly instituted in Criminal Case No. SM-228.chanrobles virtual law library

Neither would an independent civil action he. Noteworthy is the basis of the acquittal of jeep-
owner-driver Salazar in the criminal case, expounded by the trial Court in this wise:

In view of what has been proven and established during the trial, accused Freddie Montoya
would be held able for having bumped and hit the rear portion of the jeep driven by the accused
Rodolfo Salazar,

Considering that the collision between the jeep driven by Rodolfo Salazar and the car owned and
driven by Edgardo Mendoza was the result of the hitting on the rear of the jeep by the truck
driven by Freddie Montoya, this Court behaves that accused Rodolfo Salazar cannot be held able
for the damages sustained by Edgardo Mendoza's car. 9

Crystal clear is the trial Court's pronouncement that under the facts of the case, jeep-owner-
driver Salazar cannot be held liable for the damages sustained by petitioner's car. In other words,
"the fact from which the civil might arise did not exist. " Accordingly, inasmuch as petitioner's
cause of action as against jeep-owner-driver Salazar is ex- delictu, founded on Article 100 of the
Revised Penal Code, the civil action must be held to have been extinguished in consonance with
Section 3(c), Rule 111 of the Rules of Court 10which provides:

Sec. 3. Other civil actions arising from offenses. - In all cases not included in the preceding
section the following rules shall be observed:

xxx xxx xxx

c) Extinction of the penal action does not carry with it extinction of the civil, unless the
extinction proceeds from a declaration in a final judgment that the fact from which the civil night
arise did not exist. ...

And even if petitioner's cause of action as against jeep-owner-driver Salazar were not ex-delictu,
the end result would be the same, it being clear from the judgment in the criminal case that
Salazar's acquittal was not based upon reasonable doubt, consequently, a civil action for damages
can no longer be instituted. This is explicitly provided for in Article 29 of the Civil Code quoted
here under:

Art. 29. When the accused in a criminal prosecution is acquitted on the ground that his guilt has
not been proved beyond reasonable doubt, a civil action for damages for the same act or
omission may be instituted. Such action requires only a preponderance of evidence ...chanrobles
virtual law library

If in a criminal case the judgment of acquittal is based upon reasonable doubt, the court shall so
declare. In the absence of any declaration to that effect, it may be inferred from the text of the
decision whether or not the acquittal is due to that ground.

In so far as the suit against jeep-owner-driver Salazar is concerned, therefore, we sustain

respondent Judge's Order dated January 30, 1971 dismissing the complaint, albeit on different
grounds.chanrobles virtual law library

WHEREFORE, 1) the Order dated September 12, 1970 dismissing Civil Case No. 80803 against
private respondent Felino Timbol is set aside, and respondent Judge, or his successor, hereby
ordered to proceed with the hearing on the merits; 2) but the Orders dated January 30, 1971 and
February 23, 1971 dismissing the Complaint in Civil Case No. 80803 against respondent
Rodolfo Salazar are hereby upheld.chanrobles virtual law library

No costs.chanrobles virtual law library

SO ORDERED.

Teehankee, (Chairman), Makasiar, Fernandez, Guerrero and De Castro, JJ., concur.

Endnotes:

1 p. 26, Rollo

2 pp. 147-149, Ibid.

3 pp. 138-139, Ibid.

4 Decision P. 26, Ibid

5 73 PhiL 607, 620 (1942)

6 Racoma vs. Fortich, 39S CRA 521(1971)

7 52 SCRA 420 (1973)

8 Padua vs. Robles, 66 SCRA 485 (1975)

9 pp. 25-26, Rollo

10 Eleano Hill, 77 SCRA 98 (1977)

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 84698 February 4, 1992

PHILIPPINE SCHOOL OF BUSINESS ADMINISTRATION, JUAN D. LIM, BENJAMIN

P. PAULINO, ANTONIO M. MAGTALAS, COL. PEDRO SACRO and LT. M.
SORIANO, petitioners,
vs.
COURT OF APPEALS, HON. REGINA ORDOÑEZ-BENITEZ, in her capacity as
Presiding Judge of Branch 47, Regional Trial Court, Manila, SEGUNDA R. BAUTISTA
and ARSENIA D. BAUTISTA, respondents.

Balgos and Perez for petitioners.

Collantes, Ramirez & Associates for private respondents.

PADILLA, J.:

A stabbing incident on 30 August 1985 which caused the death of Carlitos Bautista while on the
second-floor premises of the Philippine School of Business Administration (PSBA) prompted the
parents of the deceased to file suit in the Regional Trial Court of Manila (Branch 47) presided
over by Judge (now Court of Appeals justice) Regina Ordoñez-Benitez, for damages against the
said PSBA and its corporate officers. At the time of his death, Carlitos was enrolled in the third
year commerce course at the PSBA. It was established that his assailants were not members of
the school's academic community but were elements from outside the school.

Specifically, the suit impleaded the PSBA and the following school authorities: Juan D. Lim
(President), Benjamin P. Paulino (Vice-President), Antonio M. Magtalas (Treasurer/Cashier),
Col. Pedro Sacro (Chief of Security) and a Lt. M. Soriano (Assistant Chief of Security).
Substantially, the plaintiffs (now private respondents) sought to adjudge them liable for the
victim's untimely demise due to their alleged negligence, recklessness and lack of security
precautions, means and methods before, during and after the attack on the victim. During the
proceedings a quo, Lt. M. Soriano terminated his relationship with the other petitioners by
resigning from his position in the school.

Defendants a quo (now petitioners) sought to have the suit dismissed, alleging that since they are
presumably sued under Article 2180 of the Civil Code, the complaint states no cause of action
against them, as jurisprudence on the subject is to the effect that academic institutions, such as
the PSBA, are beyond the ambit of the rule in the afore-stated article.

The respondent trial court, however, overruled petitioners' contention and thru an order dated 8
December 1987, denied their motion to dismiss. A subsequent motion for reconsideration was
similarly dealt with by an order dated 25 January 1988. Petitioners then assailed the trial court's
disposition before the respondent appellate court which, in a decision * promulgated on 10 June
1988, affirmed the trial court's orders. On 22 August 1988, the respondent appellate court
resolved to deny the petitioners' motion for reconsideration. Hence, this petition.

At the outset, it is to be observed that the respondent appellate court primarily anchored its
decision on the law of quasi-delicts, as enunciated in Articles 2176 and 2180 of the Civil
Code. 1 Pertinent portions of the appellate court's now assailed ruling state:

Article 2180 (formerly Article 1903) of the Civil Code is an adoption from the old
Spanish Civil Code. The comments of Manresa and learned authorities on its
meaning should give way to present day changes. The law is not fixed and
flexible (sic); it must be dynamic. In fact, the greatest value and significance of
law as a rule of conduct in (sic) its flexibility to adopt to changing social
conditions and its capacity to meet the new challenges of progress.

Construed in the light of modern day educational system, Article 2180 cannot be
construed in its narrow concept as held in the old case of Exconde
vs. Capuno 2 and Mercado vs. Court of Appeals; 3 hence, the ruling in
the Palisoc 4 case that it should apply to all kinds of educational institutions,
academic or vocational.

At any rate, the law holds the teachers and heads of the school staff liable unless
they relieve themselves of such liability pursuant to the last paragraph of Article
2180 by "proving that they observed all the diligence to prevent damage." This
can only be done at a trial on the merits of the case. 5

While we agree with the respondent appellate court that the motion to dismiss the complaint was
correctly denied and the complaint should be tried on the merits, we do not however agree with
the premises of the appellate court's ruling.

Article 2180, in conjunction with Article 2176 of the Civil Code, establishes the rule of in loco
parentis. This Court discussed this doctrine in the afore-cited cases of Exconde, Mendoza,
Palisoc and, more recently, in Amadora vs. Court of Appeals. 6 In all such cases, it had been
stressed that the law (Article 2180) plainly provides that the damage should have been caused or
inflicted by pupils or students of he educational institution sought to be held liable for the acts of
its pupils or students while in its custody. However, this material situation does not exist in the
present case for, as earlier indicated, the assailants of Carlitos were not students of the PSBA, for
whose acts the school could be made liable.

However, does the appellate court's failure to consider such material facts mean the exculpation
of the petitioners from liability? It does not necessarily follow.

When an academic institution accepts students for enrollment, there is established

a contract between them, resulting in bilateral obligations which both parties are bound to
comply with. 7 For its part, the school undertakes to provide the student with an education that
would presumably suffice to equip him with the necessary tools and skills to pursue higher
education or a profession. On the other hand, the student covenants to abide by the school's
academic requirements and observe its rules and regulations.

Institutions of learning must also meet the implicit or "built-in" obligation of providing their
students with an atmosphere that promotes or assists in attaining its primary undertaking of
imparting knowledge. Certainly, no student can absorb the intricacies of physics or higher
mathematics or explore the realm of the arts and other sciences when bullets are flying or
grenades exploding in the air or where there looms around the school premises a constant threat
to life and limb. Necessarily, the school must ensure that adequate steps are taken to maintain
peace and order within the campus premises and to prevent the breakdown thereof.

Because the circumstances of the present case evince a contractual relation between the PSBA
and Carlitos Bautista, the rules on quasi-delict do not really govern. 8 A perusal of Article 2176
shows that obligations arising from quasi-delicts or tort, also known as extra-contractual
obligations, arise only between parties not otherwise bound by contract, whether express or
implied. However, this impression has not prevented this Court from determining the existence
of a tort even when there obtains a contract. In Air France vs. Carrascoso (124 Phil. 722), the
private respondent was awarded damages for his unwarranted expulsion from a first-class seat
aboard the petitioner airline. It is noted, however, that the Court referred to the petitioner-airline's
liability as one arising from tort, not one arising from a contract of carriage. In effect, Air
France is authority for the view that liability from tort may exist even if there is a contract, for
the act that breaks the contract may be also a tort. (Austro-America S.S. Co. vs. Thomas, 248
Fed. 231).

This view was not all that revolutionary, for even as early as 1918, this Court was already of a
similar mind. In Cangco vs. Manila Railroad (38 Phil. 780), Mr. Justice Fisher elucidated thus:

The field of non-contractual obligation is much broader than that of contractual

obligation, comprising, as it does, the whole extent of juridical human relations.
These two fields, figuratively speaking, concentric; that is to say, the mere fact
that a person is bound to another by contract does not relieve him from extra-
contractual liability to such person. When such a contractual relation exists the
obligor may break the contract under such conditions that the same act which
 constitutes a breach of the contract would have constituted the source of an extra-
contractual obligation had no contract existed between the parties.

Immediately what comes to mind is the chapter of the Civil Code on Human Relations,
particularly Article 21, which provides:

Any person who wilfully causes loss or injury to another in a manner that is
contrary to morals, good custom or public policy shall compensate the latter for
the damage. (emphasis supplied).

Air France penalized the racist policy of the airline which emboldened the petitioner's employee
to forcibly oust the private respondent to cater to the comfort of a white man who allegedly "had
a better right to the seat." In Austro-American, supra, the public embarrassment caused to the
passenger was the justification for the Circuit Court of Appeals, (Second Circuit), to award
damages to the latter. From the foregoing, it can be concluded that should the act which breaches
a contract be done in bad faith and be violative of Article 21, then there is a cause to view the act
as constituting a quasi-delict.

In the circumstances obtaining in the case at bar, however, there is, as yet, no finding that the
contract between the school and Bautista had been breached thru the former's negligence in
providing proper security measures. This would be for the trial court to determine. And, even if
there be a finding of negligence, the same could give rise generally to a breach of contractual
obligation only. Using the test of Cangco, supra, the negligence of the school would not be
relevant absent a contract. In fact, that negligence becomes material only because of the
contractual relation between PSBA and Bautista. In other words, a contractual relation is a
condition sine qua non to the school's liability. The negligence of the school cannot exist
independently of the contract, unless the negligence occurs under the circumstances set out in
Article 21 of the Civil Code.

This Court is not unmindful of the attendant difficulties posed by the obligation of schools,
above-mentioned, for conceptually a school, like a common carrier, cannot be an insurer of its
students against all risks. This is specially true in the populous student communities of the so-
called "university belt" in Manila where there have been reported several incidents ranging from
gang wars to other forms of hooliganism. It would not be equitable to expect of schools to
anticipate all types of violent trespass upon their premises, for notwithstanding the security
measures installed, the same may still fail against an individual or group determined to carry out
a nefarious deed inside school premises and environs. Should this be the case, the school may
still avoid liability by proving that the breach of its contractual obligation to the students was not
due to its negligence, here statutorily defined to be the omission of that degree of diligence
which is required by the nature of the obligation and corresponding to the circumstances of
persons, time and place. 9

As the proceedings a quo have yet to commence on the substance of the private respondents'
complaint, the record is bereft of all the material facts. Obviously, at this stage, only the trial
court can make such a determination from the evidence still to unfold.
WHEREFORE, the foregoing premises considered, the petition is DENIED. The court of origin
(RTC, Manila, Br. 47) is hereby ordered to continue proceedings consistent with this ruling of
the Court. Costs against the petitioners.

SO ORDERED.

Melencio-Herrera, Paras, Regalado and Nocon, JJ., concur.

Footnotes

* Penned by Justice Jose C. Campos, Jr. and concurred in by Justices Ricardo J.

Francisco and Alfredo L. Benipayo.

1 Article 2176 provides:

Whoever by act or omission causes damage to another, there being fault or

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

Article 2180 provides:

The obligation imposed by article 2176 is demandable not only for one's own acts
or omissions, but also for those of persons for whom one is responsible.

xxx xxx xxx

Lastly, teachers or heads of establishments of arts and trades shall be liable for
damages caused by their pupils and students or apprentices, so long as they
remain in their custody.

The responsibility treated of in this article shall cease when the person herein
mentioned prove that they observed all the diligence of a good father of a family
to prevent damage."

2 101 Phil. 843

3 108 Phil. 414

4 G.R. No. L-29025, 4 October 1971, 41 SCRA 548.

5 Rollo, p. 75.

6 G.R. No. L-47745, 15 April 1988, 160 SCRA 315.

 7 In Non vs. Dames II, G.R. No. 89317, 20 May 1990, 185 SCRA 535, it was
held that the contract between school and student is one "imbued with public
interest" but a contract nonetheless.

8 Article 2176, Civil Code is re-quoted for stress:

Whoever by act or omission causes damage to another, there being fault or

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

9 Article 1173, Civil Code provides:

The fault or negligence of the obligor consists in the omission of that diligence
which is required by the nature of the obligation and corresponds with the
circumstances of the persons, of the time and of the place. When negligence
shows bad faith, the provisions of articles 1171 and 2201, paragraph 2, shall
apply.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-47745 April 15, 1988

JOSE S. AMADORA, LORETA A. AMADORA, JOSE A. AMADORA JR., NORMA A.

YLAYA PANTALEON A. AMADORA, JOSE A. AMADORA III, LUCY A. AMADORA,
ROSALINDA A. AMADORA, PERFECTO A. AMADORA, SERREC A. AMADORA,
VICENTE A. AMADORA and MARIA TISCALINA A. AMADORA, petitioners
vs.
HONORABLE COURT OF APPEALS, COLEGIO DE SAN JOSE-RECOLETOS,
VICTOR LLUCH SERGIO P. DLMASO JR., CELESTINO DICON, ANIANO
ABELLANA, PABLITO DAFFON thru his parents and natural guardians, MR. and MRS.
NICANOR GUMBAN, and ROLANDO VALENCIA, thru his guardian, A. FRANCISCO
ALONSO, respondents.

Jose S. Amadora & Associates for petitioners.

Padilla Law Office for respondents.

CRUZ, J.:
Like any prospective graduate, Alfredo Amadora was looking forward to the commencement
exercises where he would ascend the stage and in the presence of his relatives and friends receive
his high school diploma. These ceremonies were scheduled on April 16, 1972. As it turned out,
though, fate would intervene and deny him that awaited experience. On April 13, 1972, while
they were in the auditorium of their school, the Colegio de San Jose-Recoletos, a classmate,
Pablito Damon, fired a gun that mortally hit Alfredo, ending all his expectations and his life as
well. The victim was only seventeen years old. 1

Daffon was convicted of homicide thru reckless imprudence . 2 Additionally, the herein
petitioners, as the victim's parents, filed a civil action for damages under Article 2180 of the
Civil Code against the Colegio de San Jose-Recoletos, its rector the high school principal, the
dean of boys, and the physics teacher, together with Daffon and two other students, through their
respective parents. The complaint against the students was later dropped. After trial, the Court of
First Instance of Cebu held the remaining defendants liable to the plaintiffs in the sum of
P294,984.00, representing death compensation, loss of earning capacity, costs of litigation,
funeral expenses, moral damages, exemplary damages, and attorney's fees .3 On appeal to the
respondent court, however, the decision was reversed and all the defendants were completely
absolved .4

In its decision, which is now the subject of this petition for certiorari under Rule 45 of the Rules
of Court, the respondent court found that Article 2180 was not applicable as the Colegio de San
Jose-Recoletos was not a school of arts and trades but an academic institution of learning. It also
held that the students were not in the custody of the school at the time of the incident as the
semester had already ended, that there was no clear identification of the fatal gun and that in any
event the defendant, had exercised the necessary diligence in preventing the injury. 5

The basic undisputed facts are that Alfredo Amadora went to the San Jose-Recoletos on April 13,
1972, and while in its auditorium was shot to death by Pablito Daffon, a classmate. On the
implications and consequences of these facts, the parties sharply disagree.

The petitioners contend that their son was in the school to show his physics experiment as a
prerequisite to his graduation; hence, he was then under the custody of the private respondents.
The private respondents submit that Alfredo Amadora had gone to the school only for the
purpose of submitting his physics report and that he was no longer in their custody because the
semester had already ended.

There is also the question of the identity of the gun used which the petitioners consider important
because of an earlier incident which they claim underscores the negligence of the school and at
least one of the private respondents. It is not denied by the respondents that on April 7, 1972,
Sergio Damaso, Jr., the dean of boys, confiscated from Jose Gumban an unlicensed pistol but
later returned it to him without making a report to the principal or taking any further action .6 As
Gumban was one of the companions of Daffon when the latter fired the gun that killed Alfredo,
the petitioners contend that this was the same pistol that had been confiscated from Gumban and
that their son would not have been killed if it had not been returned by Damaso. The respondents
say, however, that there is no proof that the gun was the same firearm that killed Alfredo.
Resolution of all these disagreements will depend on the interpretation of Article 2180 which, as
it happens, is invoked by both parties in support of their conflicting positions. The pertinent part
of this article reads as follows:

Lastly, teachers or heads of establishments of arts and trades shall be liable for
damages caused by their pupils and students or apprentices so long as they remain
in their custody.

Three cases have so far been decided by the Court in connection with the above-quoted
provision, to wit: Exconde v. Capuno 7 Mercado v. Court of Appeals, 8 and Palisoc v.
Brillantes. 9 These will be briefly reviewed in this opinion for a better resolution of the case at
bar.

In the Exconde Case, Dante Capuno, a student of the Balintawak Elementary School and a Boy
Scout, attended a Rizal Day parade on instructions of the city school supervisor. After the
parade, the boy boarded a jeep, took over its wheel and drove it so recklessly that it turned turtle,
resulting in the death of two of its passengers. Dante was found guilty of double homicide with
reckless imprudence. In the separate civil action flied against them, his father was held solidarily
liable with him in damages under Article 1903 (now Article 2180) of the Civil Code for the tort
committed by the 15-year old boy.

This decision, which was penned by Justice Bautista Angelo on June 29,1957, exculpated the
school in an obiter dictum (as it was not a party to the case) on the ground that it was riot a
school of arts and trades. Justice J.B.L. Reyes, with whom Justices Sabino Padilla and Alex
Reyes concurred, dissented, arguing that it was the school authorities who should be held liable
Liability under this rule, he said, was imposed on (1) teachers in general; and (2) heads of
schools of arts and trades in particular. The modifying clause "of establishments of arts and
trades" should apply only to "heads" and not "teachers."

Exconde was reiterated in the Mercado Case, and with an elaboration. A student cut a classmate
with a razor blade during recess time at the Lourdes Catholic School in Quezon City, and the
parents of the victim sued the culprits parents for damages. Through Justice Labrador, the Court
declared in another obiter (as the school itself had also not been sued that the school was not
liable because it was not an establishment of arts and trades. Moreover, the custody requirement
had not been proved as this "contemplates a situation where the student lives and boards with the
teacher, such that the control, direction and influences on the pupil supersede those of the
parents." Justice J.B.L. Reyes did not take part but the other members of the court concurred in
this decision promulgated on May 30, 1960.

In Palisoc vs. Brillantes, decided on October 4, 1971, a 16-year old student was killed by a
classmate with fist blows in the laboratory of the Manila Technical Institute. Although the
wrongdoer — who was already of age — was not boarding in the school, the head thereof and
the teacher in charge were held solidarily liable with him. The Court declared through Justice
Teehankee:
 The phrase used in the cited article — "so long as (the students) remain in their
custody" — means the protective and supervisory custody that the school and its
heads and teachers exercise over the pupils and students for as long as they are at
attendance in the school, including recess time. There is nothing in the law that
requires that for such liability to attach, the pupil or student who commits the
tortious act must live and board in the school, as erroneously held by the lower
court, and the dicta in Mercado (as well as in Exconde) on which it relied, must
now be deemed to have been set aside by the present decision.

This decision was concurred in by five other members, 10 including Justice J.B.L. Reyes, who
stressed, in answer to the dissenting opinion, that even students already of age were covered by
the provision since they were equally in the custody of the school and subject to its discipline.
Dissenting with three others,11 Justice Makalintal was for retaining the custody interpretation in
Mercado and submitted that the rule should apply only to torts committed by students not yet of
age as the school would be acting only in loco parentis.

In a footnote, Justice Teehankee said he agreed with Justice Reyes' dissent in the Exconde Case
but added that "since the school involved at bar is a non-academic school, the question as to the
applicability of the cited codal provision to academic institutions will have to await another case
wherein it may properly be raised."

This is the case.

Unlike in Exconde and Mercado, the Colegio de San Jose-Recoletos has been directly impleaded
and is sought to be held liable under Article 2180; and unlike in Palisoc, it is not a school of arts
and trades but an academic institution of learning. The parties herein have also directly raised the
question of whether or not Article 2180 covers even establishments which are technically not
schools of arts and trades, and, if so, when the offending student is supposed to be "in its
custody."

After an exhaustive examination of the problem, the Court has come to the conclusion that the
provision in question should apply to all schools, academic as well as non-academic. Where the
school is academic rather than technical or vocational in nature, responsibility for the tort
committed by the student will attach to the teacher in charge of such student, following the first
part of the provision. This is the general rule. In the case of establishments of arts and trades, it is
the head thereof, and only he, who shall be held liable as an exception to the general rule. In
other words, teachers in general shall be liable for the acts of their students except where the
school is technical in nature, in which case it is the head thereof who shall be answerable.
Following the canon of reddendo singula singulis "teachers" should apply to the words "pupils
and students" and "heads of establishments of arts and trades" to the word "apprentices."

The Court thus conforms to the dissenting opinion expressed by Justice J.B.L. Reyes in Exconde
where he said in part:

I can see no sound reason for limiting Art. 1903 of the Old Civil Code to teachers
of arts and trades and not to academic ones. What substantial difference is there
 between them insofar as concerns the proper supervision and vice over their
pupils? It cannot be seriously contended that an academic teacher is exempt from
the duty of watching that his pupils do not commit a tort to the detriment of third
Persons, so long as they are in a position to exercise authority and Supervision
over the pupil. In my opinion, in the phrase "teachers or heads of establishments
of arts and trades" used in Art. 1903 of the old Civil Code, the words "arts and
trades" does not qualify "teachers" but only "heads of establishments." The phrase
is only an updated version of the equivalent terms "preceptores y artesanos" used
in the Italian and French Civil Codes.

If, as conceded by all commentators, the basis of the presumption of negligence of

Art. 1903 in some culpa in vigilando that the parents, teachers, etc. are supposed
to have incurred in the exercise of their authority, it would seem clear that where
the parent places the child under the effective authority of the teacher, the latter,
and not the parent, should be the one answerable for the torts committed while
under his custody, for the very reason/that the parent is not supposed to interfere
with the discipline of the school nor with the authority and supervision of the
teacher while the child is under instruction. And if there is no authority, there can
be no responsibility.

There is really no substantial distinction between the academic and the non-academic schools
insofar as torts committed by their students are concerned. The same vigilance is expected from
the teacher over the students under his control and supervision, whatever the nature of the school
where he is teaching. The suggestion in the Exconde and Mercado Cases is that the provision
would make the teacher or even the head of the school of arts and trades liable for an injury
caused by any student in its custody but if that same tort were committed in an academic school,
no liability would attach to the teacher or the school head. All other circumstances being the
same, the teacher or the head of the academic school would be absolved whereas the teacher and
the head of the non-academic school would be held liable, and simply because the latter is a
school of arts and trades.

The Court cannot see why different degrees of vigilance should be exercised by the school
authorities on the basis only of the nature of their respective schools. There does not seem to be
any plausible reason for relaxing that vigilance simply because the school is academic in nature
and for increasing such vigilance where the school is non-academic. Notably, the injury subject
of liability is caused by the student and not by the school itself nor is it a result of the operations
of the school or its equipment. The injury contemplated may be caused by any student regardless
of the school where he is registered. The teacher certainly should not be able to excuse himself
by simply showing that he is teaching in an academic school where, on the other hand, the head
would be held liable if the school were non-academic.

These questions, though, may be asked: If the teacher of the academic school is to be held
answerable for the torts committed by his students, why is it the head of the school only who is
held liable where the injury is caused in a school of arts and trades? And in the case of the
academic or non- technical school, why not apply the rule also to the head thereof instead of
imposing the liability only on the teacher?
The reason for the disparity can be traced to the fact that historically the head of the school of
arts and trades exercised a closer tutelage over his pupils than the head of the academic school.
The old schools of arts and trades were engaged in the training of artisans apprenticed to their
master who personally and directly instructed them on the technique and secrets of their craft.
The head of the school of arts and trades was such a master and so was personally involved in
the task of teaching his students, who usually even boarded with him and so came under his
constant control, supervision and influence. By contrast, the head of the academic school was not
as involved with his students and exercised only administrative duties over the teachers who
were the persons directly dealing with the students. The head of the academic school had then (as
now) only a vicarious relationship with the students. Consequently, while he could not be
directly faulted for the acts of the students, the head of the school of arts and trades, because of
his closer ties with them, could be so blamed.

It is conceded that the distinction no longer obtains at present in view of the expansion of the
schools of arts and trades, the consequent increase in their enrollment, and the corresponding
diminution of the direct and personal contract of their heads with the students. Article 2180,
however, remains unchanged. In its present state, the provision must be interpreted by the Court
according to its clear and original mandate until the legislature, taking into account the charges in
the situation subject to be regulated, sees fit to enact the necessary amendment.

The other matter to be resolved is the duration of the responsibility of the teacher or the head of
the school of arts and trades over the students. Is such responsibility co-extensive with the period
when the student is actually undergoing studies during the school term, as contended by the
respondents and impliedly admitted by the petitioners themselves?

From a reading of the provision under examination, it is clear that while the custody requirement,
to repeat Palisoc v. Brillantes, does not mean that the student must be boarding with the school
authorities, it does signify that the student should be within the control and under the influence of
the school authorities at the time of the occurrence of the injury. This does not necessarily mean
that such, custody be co-terminous with the semester, beginning with the start of classes and
ending upon the close thereof, and excluding the time before or after such period, such as the
period of registration, and in the case of graduating students, the period before the
commencement exercises. In the view of the Court, the student is in the custody of the school
authorities as long as he is under the control and influence of the school and within its premises,
whether the semester has not yet begun or has already ended.

It is too tenuous to argue that the student comes under the discipline of the school only upon the
start of classes notwithstanding that before that day he has already registered and thus placed
himself under its rules. Neither should such discipline be deemed ended upon the last day of
classes notwithstanding that there may still be certain requisites to be satisfied for completion of
the course, such as submission of reports, term papers, clearances and the like. During such
periods, the student is still subject to the disciplinary authority of the school and cannot consider
himself released altogether from observance of its rules.

As long as it can be shown that the student is in the school premises in pursuance of a legitimate
student objective, in the exercise of a legitimate student right, and even in the enjoyment of a
legitimate student right, and even in the enjoyment of a legitimate student privilege, the
responsibility of the school authorities over the student continues. Indeed, even if the student
should be doing nothing more than relaxing in the campus in the company of his classmates and
friends and enjoying the ambience and atmosphere of the school, he is still within the custody
and subject to the discipline of the school authorities under the provisions of Article 2180.

During all these occasions, it is obviously the teacher-in-charge who must answer for his
students' torts, in practically the same way that the parents are responsible for the child when he
is in their custody. The teacher-in-charge is the one designated by the dean, principal, or other
administrative superior to exercise supervision over the pupils in the specific classes or sections
to which they are assigned. It is not necessary that at the time of the injury, the teacher be
physically present and in a position to prevent it. Custody does not connote immediate and actual
physical control but refers more to the influence exerted on the child and the discipline instilled
in him as a result of such influence. Thus, for the injuries caused by the student, the teacher and
not the parent shag be held responsible if the tort was committed within the premises of the
school at any time when its authority could be validly exercised over him.

In any event, it should be noted that the liability imposed by this article is supposed to fall
directly on the teacher or the head of the school of arts and trades and not on the school itself. If
at all, the school, whatever its nature, may be held to answer for the acts of its teachers or even of
the head thereof under the general principle of respondeat superior, but then it may exculpate
itself from liability by proof that it had exercised the diligence of a bonus paterfamilias.

Such defense is, of course, also available to the teacher or the head of the school of arts and
trades directly held to answer for the tort committed by the student. As long as the defendant can
show that he had taken the necessary precautions to prevent the injury complained of, he can
exonerate himself from the liability imposed by Article 2180, which also states that:

The responsibility treated of in this article shall cease when the Persons herein
mentioned prove that they observed all the diligence of a good father of a family
to prevent damages.

In this connection, it should be observed that the teacher will be held liable not only when he is
acting in loco parentis for the law does not require that the offending student be of minority age.
Unlike the parent, who wig be liable only if his child is still a minor, the teacher is held
answerable by the law for the act of the student under him regardless of the student's age. Thus,
in the Palisoc Case, liability attached to the teacher and the head of the technical school although
the wrongdoer was already of age. In this sense, Article 2180 treats the parent more favorably
than the teacher.

The Court is not unmindful of the apprehensions expressed by Justice Makalintal in his
dissenting opinion in Palisoc that the school may be unduly exposed to liability under this article
in view of the increasing activism among the students that is likely to cause violence and
resulting injuries in the school premises. That is a valid fear, to be sure. Nevertheless, it should
be repeated that, under the present ruling, it is not the school that will be held directly liable.
Moreover, the defense of due diligence is available to it in case it is sought to be held answerable
as principal for the acts or omission of its head or the teacher in its employ.

The school can show that it exercised proper measures in selecting the head or its teachers and
the appropriate supervision over them in the custody and instruction of the pupils pursuant to its
rules and regulations for the maintenance of discipline among them. In almost all cases now, in
fact, these measures are effected through the assistance of an adequate security force to help the
teacher physically enforce those rules upon the students. Ms should bolster the claim of the
school that it has taken adequate steps to prevent any injury that may be committed by its
students.

A fortiori, the teacher himself may invoke this defense as it would otherwise be unfair to hold
him directly answerable for the damage caused by his students as long as they are in the school
premises and presumably under his influence. In this respect, the Court is disposed not to expect
from the teacher the same measure of responsibility imposed on the parent for their influence
over the child is not equal in degree. Obviously, the parent can expect more obedience from the
child because the latter's dependence on him is greater than on the teacher. It need not be stressed
that such dependence includes the child's support and sustenance whereas submission to the
teacher's influence, besides being coterminous with the period of custody is usually enforced
only because of the students' desire to pass the course. The parent can instill more las discipline
on the child than the teacher and so should be held to a greater accountability than the teacher for
the tort committed by the child.

And if it is also considered that under the article in question, the teacher or the head of the school
of arts and trades is responsible for the damage caused by the student or apprentice even if he is
already of age — and therefore less tractable than the minor — then there should all the more be
justification to require from the school authorities less accountability as long as they can prove
reasonable diligence in preventing the injury. After all, if the parent himself is no longer liable
for the student's acts because he has reached majority age and so is no longer under the former's
control, there is then all the more reason for leniency in assessing the teacher's responsibility for
the acts of the student.

Applying the foregoing considerations, the Court has arrived at the following conclusions:

1. At the time Alfredo Amadora was fatally shot, he was still in the custody of the authorities of
Colegio de San Jose-Recoletos notwithstanding that the fourth year classes had formally ended.
It was immaterial if he was in the school auditorium to finish his physics experiment or merely to
submit his physics report for what is important is that he was there for a legitimate purpose. As
previously observed, even the mere savoring of the company of his friends in the premises of the
school is a legitimate purpose that would have also brought him in the custody of the school
authorities.

2. The rector, the high school principal and the dean of boys cannot be held liable because none
of them was the teacher-in-charge as previously defined. Each of them was exercising only a
general authority over the student body and not the direct control and influence exerted by the
teacher placed in charge of particular classes or sections and thus immediately involved in its
discipline. The evidence of the parties does not disclose who the teacher-in-charge of the
offending student was. The mere fact that Alfredo Amadora had gone to school that day in
connection with his physics report did not necessarily make the physics teacher, respondent
Celestino Dicon, the teacher-in-charge of Alfredo's killer.

3. At any rate, assuming that he was the teacher-in-charge, there is no showing that Dicon was
negligent in enforcing discipline upon Daffon or that he had waived observance of the rules and
regulations of the school or condoned their non-observance. His absence when the tragedy
happened cannot be considered against him because he was not supposed or required to report to
school on that day. And while it is true that the offending student was still in the custody of the
teacher-in-charge even if the latter was physically absent when the tort was committed, it has not
been established that it was caused by his laxness in enforcing discipline upon the student. On
the contrary, the private respondents have proved that they had exercised due diligence, through
the enforcement of the school regulations, in maintaining that discipline.

4. In the absence of a teacher-in-charge, it is probably the dean of boys who should be held liable
especially in view of the unrefuted evidence that he had earlier confiscated an unlicensed gun
from one of the students and returned the same later to him without taking disciplinary action or
reporting the matter to higher authorities. While this was clearly negligence on his part, for
which he deserves sanctions from the school, it does not necessarily link him to the shooting of
Amador as it has not been shown that he confiscated and returned pistol was the gun that killed
the petitioners' son.

5. Finally, as previously observed, the Colegio de San Jose-Recoletos cannot be held directly
liable under the article because only the teacher or the head of the school of arts and trades is
made responsible for the damage caused by the student or apprentice. Neither can it be held to
answer for the tort committed by any of the other private respondents for none of them has been
found to have been charged with the custody of the offending student or has been remiss in the
discharge of his duties in connection with such custody.

In sum, the Court finds under the facts as disclosed by the record and in the light of the principles
herein announced that none of the respondents is liable for the injury inflicted by Pablito Damon
on Alfredo Amadora that resulted in the latter's death at the auditorium of the Colegio de San
Jose-Recoletos on April 13, 1972. While we deeply sympathize with the petitioners over the loss
of their son under the tragic circumstances here related, we nevertheless are unable to extend
them the material relief they seek, as a balm to their grief, under the law they have invoked.

WHEREFORE, the petition is DENIED, without any pronouncement as to costs. It is so ordered.

Yap, Narvasa, Paras, Feliciano, Gancayco, Bidin, Sarmiento, Cortes and Griño-Aquino, JJ.,
concur.

Fernan, Padilla and Teehankee, C.J., JJ, took no part.

Separate Opinions

MELENCIO-HERRERA, J., concurring and dissenting:

I concur, except with respect to the restricted meaning given the term "teacher" in Article 2180
of the Civil Code as "teacher-in-charge." This would limit liability to occasions where there are
classes under the immediate charge of a teacher, which does not seem to be the intendment of the
law.

As I understand it, the philosophy of the law is that whoever stands in loco parentis will have the
same duties and obligations as parents whenever in such a standing. Those persons are
mandatorily held liable for the tortious acts of pupils and students so long as the latter remain in
their custody, meaning their protective and supervisory custody.

Thus Article 349 of the Civil Code enumerates the persons who stand in loco parentis and
thereby exercise substitute parental authority:

Art. 349 The following persons shall exercise substitute parental authority:

xxx xxx xxx

2) Teachers and professors

xxx xxx xxx

4) Directors of trade establishments, with regard to apprentices;'

Article 352 of the Civil Code further provides:

Art. 362. The relations between teacher and pupil, professor and student, are fixed
by government regulations and those of each school or institution....

But even such rules and regulations as may be fixed can not contravene the concept of substitute
parental authority.

The rationale of liability of school heads and teachers for the tortious acts of their pupils was
explained in Palisoc vs. Brillantes (41 SCRA 548), thus:

The protective custody of the school heads and teachers is mandatorily

substituted for that of the parents, and hence, it becomes their obligation as well
 as that of the school itself to provide proper supervision of the students' activities
during the whole time that they are at attendance in the school, including recess
time, as well as to take the necessary precautions to protect the students in their
custody from dangers and hazards that would reasonably be anticipated, including
injuries that some students themselves may inflict wilfully or through negligence
on their fellow students. (Emphasis supplied)

Of course, as provided for in the same Article 2180, the responsibility treated of shall cease when
the persons mentioned prove that they observed all the diligence of a good father of a family to
prevent damage.

And while a school is, admittedly, not directly liable since Article 2180 speaks only of teachers
and schools heads, yet, by virtue of the same provision, the school, as their employer, may be
held liable for the failure of its teachers or school heads to perform their mandatory legal duties
as substitute parents (Sangco, Philippine Law on Torts & Damages, 1978 ed., p. 201). Again, the
school may exculpate itself from liability by proving that it had exercised the diligence of a good
father of the family.

Art. 2180. x x x

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

xxx xxx xxx

Parenthetically, from the enumeration in Article 349 of the Civil Code, supra, it is apparent that
the Code Commission had already segregated the classification of "teachers and professors" vis-
a-vis their pupils, from "directors of trade establishments, with regard to their apprentices."

GUTIERREZ, JR., J., concurring:

I concur in the Court's opinion so carefully analyzed and crafted by Justice Isagani A. Cruz.
However, I would like to stress the need for a major amendment to, if not a complete scrapping
of, Article 2180 of the Civil Code insofar as it refers to teachers or heads of establishments of
arts and trades in relation to pupils and students or apprentices. The seventh paragraph of Art.
2180 is a relic of the past and contemplates a situation long gone and out of date. In a Palisoc v.
Brillantes (41 SCRA 548) situation, it is bound to result in mischief and injustice.

First, we no longer have masters and apprentices toiling in schools of arts and trades. Students in
"technological" colleges and universities are no different from students in liberal arts or
professional schools. Apprentices now work in regular shops and factories and their relationship
to the employer is covered by laws governing the employment relationship and not by laws
governing the teacher—student relationship.
Second, except for kindergarten, elementary, and perhaps early high school students, teachers are
often no longer objects of veneration who are given the respect due to substitute parents. Many
students in their late teens or early adult years view some teachers as part of a bourgeois or
reactionary group whose advice on behaviour, deportment, and other non-academic matters is
not only resented but actively rejected. It ,seems most unfair to hold teachers liable on a
presumption juris tantum of negligence for acts of students even under circumstances where
strictly speaking there could be no in loco parentis relationship. Why do teachers have to prove
the contrary of negligence to be freed from solidary liability for the acts f bomb-throwing or
pistol packing students who would just as soon hurt them as they would other members of the so-
called-establishment.

The ordinary rules on quasi-delicta should apply to teachers and schools of whatever nature
insofar as grown up students are concerned. The provision of Art. 2180 of the Civil Code
involved in this case has outlived its purpose. The Court cannot make law. It can only apply the
law with its imperfections. However, the Court can suggest that such a law should be amended or
repealed.

Separate Opinions

MELENCIO-HERRERA, J., concurring and dissenting:

I concur, except with respect to the restricted meaning given the term "teacher" in Article 2180
of the Civil Code as "teacher-in-charge." This would limit liability to occasions where there are
classes under the immediate charge of a teacher, which does not seem to be the intendment of the
law.

As I understand it, the philosophy of the law is that whoever stands in loco parentis will have the
same duties and obligations as parents whenever in such a standing. Those persons are
mandatorily held liable for the tortious acts of pupils and students so long as the latter remain in
their custody, meaning their protective and supervisory custody.

Thus Article 349 of the Civil Code enumerates the persons who stand in loco parentis and
thereby exercise substitute parental authority:

Art. 349 The following persons shall exercise substitute parental authority:

xxx xxx xxx

2) Teachers and professors

xxx xxx xxx

 4) Directors of trade establishments, with regard to apprentices;'

Article 352 of the Civil Code further provides:

Art. 362. The relations between teacher and pupil, professor and student, are fixed
by government regulations and those of each school or institution....

But even such rules and regulations as may be fixed can not contravene the concept of substitute
parental authority.

The rationale of liability of school heads and teachers for the tortious acts of their pupils was
explained in Palisoc vs. Brillantes (41 SCRA 548), thus:

The protective custody of the school heads and teachers is mandatorily

substituted for that of the parents, and hence, it becomes their obligation as well
as that of the school itself to provide proper supervision of the students' activities
during the whole time that they are at attendance in the school, including recess
time, as well as to take the necessary precautions to protect the students in their
custody from dangers and hazards that would reasonably be anticipated, including
injuries that some students themselves may inflict wilfully or through negligence
on their fellow students. (Emphasis supplied)

Of course, as provided for in the same Article 2180, the responsibility treated of shall cease when
the persons mentioned prove that they observed all the diligence of a good father of a family to
prevent damage.

And while a school is, admittedly, not directly liable since Article 2180 speaks only of teachers
and schools heads, yet, by virtue of the same provision, the school, as their employer, may be
held liable for the failure of its teachers or school heads to perform their mandatory legal duties
as substitute parents (Sangco, Philippine Law on Torts & Damages, 1978 ed., p. 201). Again, the
school may exculpate itself from liability by proving that it had exercised the diligence of a good
father of the family.

Art. 2180. x x x

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

xxx xxx xxx

Parenthetically, from the enumeration in Article 349 of the Civil Code, supra, it is apparent that
the Code Commission had already segregated the classification of "teachers and professors" vis-
a-vis their pupils, from "directors of trade establishments, with regard to their apprentices."

GUTIERREZ, JR., J., concurring:

I concur in the Court's opinion so carefully analyzed and crafted by Justice Isagani A. Cruz.
However, I would like to stress the need for a major amendment to, if not a complete scrapping
of, Article 2180 of the Civil Code insofar as it refers to teachers or heads of establishments of
arts and trades in relation to pupils and students or apprentices. The seventh paragraph of Art.
2180 is a relic of the past and contemplates a situation long gone and out of date. In a Palisoc v.
Brillantes (41 SCRA 548) situation, it is bound to result in mischief and injustice.

First, we no longer have masters and apprentices toiling in schools of arts and trades. Students in
"technological" colleges and universities are no different from students in liberal arts or
professional schools. Apprentices now work in regular shops and factories and their relationship
to the employer is covered by laws governing the employment relationship and not by laws
governing the teacher—student relationship.

Second, except for kindergarten, elementary, and perhaps early high school students, teachers are
often no longer objects of veneration who are given the respect due to substitute parents. Many
students in their late teens or early adult years view some teachers as part of a bourgeois or
reactionary group whose advice on behaviour, deportment, and other non-academic matters is
not only resented but actively rejected. It ,seems most unfair to hold teachers liable on a
presumption juris tantum of negligence for acts of students even under circumstances where
strictly speaking there could be no in loco parentis relationship. Why do teachers have to prove
the contrary of negligence to be freed from solidary liability for the acts f bomb-throwing or
pistol packing students who would just as soon hurt them as they would other members of the so-
called-establishment.

The ordinary rules on quasi-delicta should apply to teachers and schools of whatever nature
insofar as grown up students are concerned. The provision of Art. 2180 of the Civil Code
involved in this case has outlived its purpose. The Court cannot make law. It can only apply the
law with its imperfections. However, the Court can suggest that such a law should be amended or
repealed.

Footnotes

1 Rollo, pp. 63,157.

2 lbid., p. 38.

3 Id., p. 23.

4 Id p. 31. Climaco, J., ponente, with Pascual and Agcaoili, JJ.

5 Id., pp. 30-31,

6 Id., pp. 23, 272.

 7 101 Phil, 843.

8 108 Phil, 414,

9 41 SCRA 548.

10 Concepcion, C.J., Reyes, Barredo, Villamor, and Makasiar, JJ.

11 Castro, Fernando, and Zaldivar, JJ.

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 116896 May 5, 1997

PHILIPPINE NATIONAL CONSTRUCTION CORPORATION, petitioner,

vs.
COURT OF APPEALS, MA. TERESA S. RAYMUNDO-ABARRA, JOSE S.
RAYMUNDO, ANTONIO S. RAYMUNDO, RENE S. RAYMUNDO, and AMADOR S.
RAYMUNDO, respondents.

DAVIDE, JR., J.:

This petition for review on certiorari has its roots in Civil Case No. 53444, which was sparked
by petitioner's refusal to pay the rentals as stipulated in the contract of lease 1 on an undivided
portion of 30,000 square meters of a parcel of land owned by private respondents.

The lease contract, executed on 18 November 1985, reads in part as follows:

1. TERM OF LEASE — This lease shall be for a period of five (5) years,
commencing on the date of issuance of the industrial clearance by the Ministry of
Human Settlements, renewable for a like or other period at the option of the
LESSEE under the same terms and conditions.

2. RATE OF RENT — LESSEE shall pay to the LESSOR rent at the monthly rate
of TWENTY THOUSAND PESOS (P20,000.00), Philippine Currency, in the
manner set forth in Paragraph 3 below. This rate shall be increased yearly by Five
Percent (5%) based on the agreed monthly rate of P20,000.00 as follows:
 Monthly Rate Period Applicable

P21,000.00 Starting on the 2nd year

P22,000.00 Starting on the 3rd year

P23,000.00 Starting on the 4th year

P24,000.00 Starting on the 5th year

3. TERMS OF PAYMENT — The rent stipulated in Paragraph 2 above shall be

paid yearly in advance by the LESSEE. The first annual rent in the amount of
TWO HUNDRED FORTY THOUSAND PESOS (P240,000.00), Philippine
currency, shall be due and payable upon the execution of this Agreement and the
succeeding annual rents shall be payable every twelve (12) months thereafter
during the effectivity of this Agreement.

4. USE OF LEASED PROPERTY — It is understood that the Property shall be

used by the LESSEE as the site, grounds and premises of a rock crushing plant
and field office, sleeping quarters and canteen/mess hall. The LESSORS hereby
grant to the LESSEE the right to erect on the Leased Property such structure(s)
and/or improvement(s) necessary for or incidental to the LESSEE's purposes.

xxx xxx xxx

11. TERMINATION OF LEASE — This Agreement may be terminated by mutual

agreement of the parties. Upon the termination or expiration of the period of lease
without the same being renewed, the LESSEE shall vacate the Leased Property at
its expense.

On 7 January 1986, petitioner obtained from the Ministry of Human Settlements a Temporary
Use Permit 2 for the proposed rock crushing project. The permit was to be valid for two years
unless sooner revoked by the Ministry.

On 16 January 1986, private respondents wrote petitioner requesting payment of the first annual
rental in the amount of P240,000 which was due and payable upon the execution of the contract.
They also assured the latter that they had already stopped considering the proposals of other
aggregates plants to lease the property because of the existing contract with petitioner. 3

In its reply-letter, petitioner argued that under paragraph 1 of the lease contract, payment of
rental would commence on the date of the issuance of an industrial clearance by the Ministry of
Human Settlements, and not from the date of signing of the contract. It then expressed its
intention to terminate the contract, as it had decided to cancel or discontinue with the rock
crushing project "due to financial, as well as technical, difficulties." 4
Private respondents refused to accede to petitioner's request for the pretermination of the lease
contract. They insisted on the performance of petitioner's obligation and reiterated their demand
for the payment of the first annual rental. 5

Petitioner objected to private respondents' claim and argued that it was "only obligated to pay . . .
the amount of P20,000.00 as rental payments for the one-month period of lease, counted from 07
January 1986 when the Industrial Permit was issued by the Ministry of Human Settlements up to
07 February 1986 when the Notice of Termination was served" 6 on private respondents.

On 19 May 1986, private respondents instituted with the Regional Trial Court of Pasig an action
against petitioner for Specific Performance with Damages. 7 The case was docketed as Civil
Case No. 53444 at Branch 160 of the said court. After the filing by petitioner of its Answer with
Counterclaim, the case was set for trial on the merits.

What transpired next was summarized by the trial court in this wise:

Plaintiffs rested their case on September 7, 1987 (p. 87 rec.). Defendant asked for
postponement of the reception of its evidence scheduled on August 10, 1988 and
as prayed for, was reset to August 25, 1988 (p. 91 rec.) Counsel for defendant
again asked for postponement, through representative, as he was presently
indisposed. The case was reset, intransferable to September 15 and 26, 1988 (p.
94 rec.) On September 2, 1988, the office of the Government Corporate Counsel
entered its appearance for defendant (p. 95, rec.) and the original counsel later
withdrew his appearance. On September 15, 1988 the Government Corporate
Counsel asked for postponement, represented by Atty. Elpidio de Vega, and with
his conformity in open court, the hearing was reset, intransferable to September
26 and October 17, 1988, (p. 98, rec.) On September 26, 1988 during the hearing,
defendant's counsel filed a motion for postponement (urgent) as he had "sore
eyes", a medical certificate attached.

Counsel for plaintiffs objected to the postponement and the court considered the
evidence of the government terminated or waived. The case was deemed
submitted for decision upon the filing of the memorandum. Plaintiffs filed their
memorandum on October 26, 1988. (p. 111, rec.).

On October 18, 1988 in the meantime, the defendant filed a motion for
reconsideration of the order of the court on September 26, 1988 (p. 107, rec.) The
motion was not asked to be set for hearing (p. 110 rec.) There was also no proof
of notice and service to counsel for plaintiff . The court in the interest of justice
set the hearing on the motion on November 29, 1988. (p. 120, rec.) but despite
notice, again defendant's counsel was absent (p. 120-A, dorsal side, rec.) without
reason. The court reset the motion to December 16, 1988, in the interest of
justice. The motion for reconsideration was denied by the court. A second motion
for reconsideration was filed and counsel set for hearing the motion on January
19, 1989. During the hearing, counsel for the government was absent. The motion
was deemed abandoned but the court at any rate, after a review of the incidents
 and the grounds relied upon in the earlier motion of defendant, found no reason to
disturb its previous order. 8

On 12 April 1989, the trial court rendered a decision ordering petitioner to pay private
respondents the amount of P492,000 which represented the rentals for two years, with legal
interest from 7 January 1986 until the amount was fully paid, plus attorney's fees in the amount
of P20,000 and costs. 9

Petitioner then appealed to the Court of Appeals alleging that the trial court erred in ordering it to
pay private respondent the amount of P492,000 and in denying it the right to be heard.

Upon the affirmance of the trial court's decision 10 and the denial of its motion for
reconsideration, petitioner came to this Court ascribing to respondent Court of Appeals the same
alleged errors and reiterating their arguments.

First. Petitioner invites the attention of this Court to paragraph 1 of the lease contract, which
reads: "This lease shall be for a period of five (5) years, commencing on the date of issuance of
the industrial clearance by the Ministry of Human Settlements. . . ." It then submits that the
issuance of an industrial clearance is a suspensive condition without which the rights under the
contract would not be acquired. The Temporary Use Permit is not the industrial clearance
referred to in the contract; for the said permit requires that a clearance from the National
Production Control Commission be first secured, and besides, there is a finding in the permit that
the proposed project does not conform to the Zoning Ordinance of Rodriguez, (formerly
Montalban), Rizal, where the leased property is located. Without the industrial clearance the
lease contract could not become effective and petitioner could not be compelled to perform its
obligation under the contract.

Petitioner is now estopped from claiming that the Temporary Use Permit was not the industrial
clearance contemplated in the contract. In its letter dated 24 April 1986, petitioner states:

We wish to reiterate PNCC Management's previous stand that it is only obligated

to pay your clients the amount of P20,000.00 as rental payments for the one-
month period of the lease, counted from 07 January 1986 when the Industrial
Permit was issued by the Ministry of Human Settlements up to 07 February 1986
when the Notice of Termination was served on your clients. 11 (Emphasis
Supplied).

The "Industrial Permit" mentioned in the said letter could only refer to the Temporary
Use Permit issued by the Ministry of Human Settlements on 7 January 1986. And it can
be gleaned from this letter that petitioner has considered the permit as industrial
clearance; otherwise, petitioner could have simply told private respondents that its
obligation to pay rentals has not yet arisen because the Temporary Use Permit is not the
industrial clearance contemplated by them. Instead, petitioner recognized its obligation to
pay rentals counted from the date the permit was issued.

Also worth noting is petitioner's earlier letter, thus:

 [P]lease be advised of PNCC Management's decision to cancel or discontinue
with the rock crushing project due to financial as well as technical difficulties. In
view thereof, we would like to terminate our Lease Contract dated 18 November,
1985. Should you agree to the mutual termination of our Lease Contract, kindly
indicate your conformity hereto by affixing your signature on the space provided
below. May we likewise request Messrs. Rene, Jose and Antonio, all surnamed
Raymundo and Mrs. Socorro A. Raymundo as Attorney-in-Fact of Amador S.
Raymundo to sign on the spaces indicated below. 12

It can be deduced from this letter that the suspensive condition — issuance of industrial
clearance — has already been fulfilled and that the lease contract has become operative.
Otherwise, petitioner did not have to solicit the conformity of private respondents to the
termination of the contract for the simple reason that no juridical relation was created because of
the non- fulfillment of the condition.

Moreover, the reason of petitioner in discontinuing with its project and in consequently
cancelling the lease contract was "financial as well as technical difficulties," not the alleged
insufficiency of the Temporary Use Permit.

Second. Invoking Article 1266 and the principle of rebus sic stantibus, petitioner asserts that it
should be released from the obligatory force of the contract of lease because the purpose of the
contract did not materialize due to unforeseen events and causes beyond its control, i.e., due to
the abrupt change in political climate after the EDSA Revolution and financial difficulties.

It is a fundamental rule that contracts, once perfected, bind both contracting parties, and
obligations arising therefrom have the force of law between the parties and should be complied
with in good faith. 13 But the law recognizes exceptions to the principle of the obligatory force of
contracts. One exception is laid down in Article 1266 of the Civil Code, which reads: "The
debtor in obligations to do shall also be released when the prestation becomes legally or
physically impossible without the fault of the obligor."

Petitioner cannot, however, successfully take refuge in the said article, since it is applicable only
to obligations "to do," and not to obligations "to give." 14 An obligation "to do" includes all kinds
of work or service; while an obligation "to give" is a prestation which consists in the delivery of
a movable or an immovable thing in order to create a real right, or for the use of the recipient, or
for its simple possession, or in order to return it to its owner. 15

The obligation to pay rentals 16 or deliver the thing in a contract of

lease 17 falls within the prestation "to give"; hence, it is not covered within the scope of Article
1266. At any rate, the unforeseen event and causes mentioned by petitioner are not the legal or
physical impossibilities contemplated in the said article. Besides, petitioner failed to state
specifically the circumstances brought about by "the abrupt change in the political climate in the
country" except the alleged prevailing uncertainties in government policies on infrastructure
projects.
The principle of rebus sic stantibus 18 neither fits in with the facts of the case. Under this theory,
the parties stipulate in the light of certain prevailing conditions, and once these conditions cease
to exist, the contract also ceases to exist. 19 This theory is said to be the basis of Article 1267 of
the Civil Code, which provides:

Art. 1267. When the service has become so difficult as to be manifestly beyond
the contemplation of the parties, the obligor may also be released therefrom, in
whole or in part.

This article, which enunciates the doctrine of unforeseen events, is not, however, an absolute
application of the principle of rebus sic stantibus, which would endanger the security of
contractual relations. The parties to the contract must be presumed to have assumed the risks of
unfavorable developments. It is therefore only in absolutely exceptional changes of
circumstances that equity demands assistance for the debtor. 20

In this case, petitioner wants this Court to believe that the abrupt change in the political climate
of the country after the EDSA Revolution and its poor financial condition "rendered the
performance of the lease contract impractical and inimical to the corporate survival of the
petitioner."

This Court cannot subscribe to this argument. As pointed out by private respondents: 21

It is a matter of record that petitioner PNCC entered into a contract with private
respondents on November 18, 1985. Prior thereto, it is of judicial notice that after
the assassination of Senator Aquino on August 21, 1983, the country has
experienced political upheavals, turmoils, almost daily mass demonstrations,
unprecedented, inflation, peace and order deterioration, the Aquino trial and many
other things that brought about the hatred of people even against crony
corporations. On November 3, 1985, Pres. Marcos, being interviewed live on U.S.
television announced that there would be a snap election scheduled for February
7, 1986.

On November 18, 1985, notwithstanding the above, petitioner PNCC entered into
the contract of lease with private respondents with open eyes of the deteriorating
conditions of the country.

Anent petitioner's alleged poor financial condition, the same will neither release petitioner from
the binding effect of the contract of lease. As held in Central Bank v. Court of Appeals, 22 cited
by private respondents, mere pecuniary inability to fulfill an engagement does not discharge a
contractual obligation, nor does it constitute a defense to an action for specific performance.

With regard to the non-materialization of petitioner's particular purpose in entering into the
contract of lease, i.e., to use the leased premises as a site of a rock crushing plant, the same will
not invalidate the contract. The cause or essential purpose in a contract of lease is the use or
enjoyment of a thing. 23 As a general principle, the motive or particular purpose of a party in
entering into a contract does not affect the validity nor existence of the contract; an exception is
when the realization of such motive or particular purpose has been made a condition upon which
the contract is made to depend. 24 The exception does not apply here.

Third. According to petitioner, the award of P492,000.00 representing the rent for two years is
excessive, considering that it did not benefit from the property. Besides, the temporary permit,
conformably with the express provision therein, was deemed automatically revoked for failure of
petitioner to use the same within one year from the issuance thereof. Hence, the rent payable
should only be for one year.

Petitioner cannot be heard to complain that the award is excessive. The temporary permit was
valid for two years but was automatically revoked because of its non-use within one year from its
issuance. The non-use of the permit and the non-entry into the property subject of the lease
contract were both imputable to petitioner and cannot, therefore, be taken advantage of in order
to evade or lessen petitioner's monetary obligation. The damage or prejudice to private
respondents is beyond dispute. They unquestionably suffered pecuniary losses because of their
inability to use the leased premises. Thus, in accordance with Article 1659 of the Civil
Code, 25 they are entitled to indemnification for damages; and the award of P492,000.00 is fair
and just under the circumstances of the case.

Finally, petitioner submits that the trial court gravely abused its discretion in denying petitioner
the right to be heard.

We disagree. The trial court was in fact liberal in granting several postponements 26 to petitioner
before it deemed terminated and waived the presentation of evidence in petitioner's behalf.

It must be recalled that private respondents rested their case on 7 September 1987 yet. 27 Almost
a year after, or on 10 August 1988 when it was petitioner's turn to present evidence, petitioner's
counsel asked for postponement of the hearing to 25 August 1988 due to conflict of
schedules, 28 and this was granted. 29 At the rescheduled hearing, petitioner's counsel, through a
representative, moved anew for postponement, as he was allegedly
indisposed. 30 The case was then reset "intransferable" to September 15 and 26, 1988. 31 On 2
September 1988, the Office of the Government Corporate Counsel, through Atty. Elpidio J.
Vega, entered its appearance for the
petitioner, 32 and later the original counsel withdrew his appearance. 33 On 15 September 1988,
Atty. Vega requested for postponement to enable him to go over the records of the case. 34 With
his conformity, the hearing was reset "intransferable" to September 26 and October 17,
1988. 35 In the morning of 26 September 1988, the court received Atty. Vega's Urgent Motion for
Postponement on the ground that he was afflicted with conjunctivitis or sore eyes. 36 This time,
private respondents objected; and upon their motion, the court deemed terminated and waived
the presentation of evidence for the petitioner. 37 Nevertheless, before the court considered the
case submitted for decision, it required the parties to submit their respective memoranda within
thirty days. 38 But petitioner failed to comply.

Likewise, the court was liberal with respect to petitioner's motion for reconsideration.
Notwithstanding the lack of request for hearing and proof of notice and service to private
respondents, the court set the hearing of the said motion on 29 November 1988. 39 Upon the
denial of the said motion for lack of merit, 40 petitioner filed a second motion for reconsideration.
But during the hearing of the motion on a date selected by him, Atty. Vega was absent for no
reason at all, despite due notice. 41

From the foregoing narration of procedural antecedents, it cannot be said that petitioner was
deprived of its day in court. The essence of due process is simply an opportunity to he
heard. 42 To be heard does not only mean oral arguments in court; one may be heard also through
pleadings. Where opportunity to be heard, either through oral arguments or pleadings, is
accorded, there is no denial of procedural due process. 43

WHEREFORE, the instant petition is DENIED and the challenge decision of the Court of
Appeals is AFFIRMED in toto.

No pronouncements as to costs.

SO ORDERED.

Narvasa, C.J., Melo, Francisco and Panganiban, JJ., concur.

Footnotes

1 Exhibit "A," Original Record (OR), 68.

2 Exhibit "C," OR, 77; Rollo, 57.

3 Exhibit "B," OR, 76.

4 Exhibit "D," OR, 78.

5 Exhibit "E," Id., 80.

6 Exhibit "F," Id., 81-82.

7 Id., 1-7.

8 Order of 19 January 1989, OR, 129-130; Decision, 2-3.

9 OR 134-137; Rollo, 53-56. Per Judge Mariano M. Umali.

10 Rollo, 24-31. Per then Associate Justice Justo P. Torres, Jr. (now Associate
Justice of the Supreme Court), with the concurrence of then Associate Justice
Bernardo P. Pardo and Associate Justice Corona Ibay-Somera.

11 Exhibit "F-1," OR, 82.

12 Exhibit "D," Id., 78-79.

13 Articles 1159, 1308, 1315, and 1356 of the Civil Code.

14 DESIDERIO P. JURADO, Comments and Jurisprudence on Obligations and

Contracts 292 ( 10th revised ed. 1993) (hereafter JURADO).

15 IV ARTURO M. TOLENTINO, Commentaries and Jurisprudence on the Civil

Code of the Philippines 57 (1991) (hereafter IV TOLENTINO).

16 JURADO, 283.

17 IV TOLENTINO 57.

18 At this point of affairs; in these circumstances. A name given to a tacit

condition, said to attach to all treaties, that they shall cease to be obligatory so
soon as the state of facts and conditions upon which they were founded has
substantially changed. (Black's Law Dictionary, 1139 [5th ed., 1979]).

19 Naga Telephone Co. v. Court of Appeals, 230 SCRA 351, 365 [1994] citing IV
TOLENTINO 347.

20 IV TOLENTINO 347.

21 Memorandum for the Private Respondents, 17; Rollo, 160.

22 139 SCRA 46 [1985], citing Repide v. Afzelius, 39 Phil. 190 [1918].

23 V TOLENTINO 206 [1992]; V EDGARDO E. PARAS, Civil Code of the

Philippines, 307 [1995].

24 V TOLENTINO 535.

25 It provides:

Art. 1659. If the lessor or the lessee should not comply with the obligations set
forth in Articles 1654 and 1657, the aggrieved party may ask for rescission of the
contract and indemnification for damages, or only the latter, allowing the contract
to remain in force.

26 Ocampo v. Arboleda, 153 SCRA 374, 381 [1987].

27 OR, 87.

28 OR, 89.

29 Id., 91.
 30 Id., 94.

31 Id.

32 Id., 95.

33 Id., 99.

34 Id., 98.

35 Id.

36 Id., 101.

37 Id., 106.

38 Id.

39 Id., 120.

40 Id., 128.

41 Id., 127.

42 Roces v. Aportadera, 243 SCRA 108, 114 [1995]; Vallende v. NLRC, 245
SCRA 662, 666-667 [1995]; Navarro III v. Damasco, 246 SCRA 260, 265 [1995].

43 Mutuc v. Court of Appeals, 190 SCRA 43, 49 [1990].

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 193577 September 7, 2011

ANTONIO FRANCISCO, substituted by his heirs: NELIA E.S. FRANCISCO, EMILIA F.

BERTIZ, REBECCA E.S. FRANCISCO, ANTONIO E.S. FRANCISCO, JR., SOCORRO
F. FONTANILLA, and JOVITO E.S. FRANCISCO, Petitioners,
vs.
CHEMICAL BULK CARRIERS, INCORPORATED, Respondent.

DECISION

CARPIO, J.:
 The Case

This is a petition for review1 of the 31 May 2010 Decision2 and 31 August 2010 Resolution3 of
the Court of Appeals in CA G.R. CV No. 63591. In its 31 May 2010 Decision, the Court of
Appeals set aside the 21 August 1998 Decision4 of the Regional Trial of Pasig City, Branch 71
(trial court), and ordered petitioner Antonio Francisco (Francisco) to pay respondent Chemical
Bulk Carriers, Incorporated (CBCI) ₱1,119,905 as actual damages. In its 31 August 2010
Resolution, the Court of Appeals denied Francisco’s motion for reconsideration.

The Facts

Since 1965, Francisco was the owner and manager of a Caltex station in Teresa, Rizal. Sometime
in March 1993, four persons, including Gregorio Bacsa (Bacsa), came to Francisco’s Caltex
station and introduced themselves as employees of CBCI. Bacsa offered to sell to Francisco a
certain quantity of CBCI’s diesel fuel.

After checking Bacsa’s identification card, Francisco agreed to purchase CBCI’s diesel fuel.
Francisco imposed the following conditions for the purchase: (1) that Petron Corporation
(Petron) should deliver the diesel fuel to Francisco at his business address which should be
properly indicated in Petron’s invoice; (2) that the delivery tank is sealed; and (3) that Bacsa
should issue a separate receipt to Francisco.

The deliveries started on 5 April 1993 and lasted for ten months, or up to 25 January
1994.5 There were 17 deliveries to Francisco and all his conditions were complied with.

In February 1996, CBCI sent a demand letter to Francisco regarding the diesel fuel delivered to
him but which had been paid for by CBCI.6 CBCI demanded that Francisco pay CBCI
₱1,053,527 for the diesel fuel or CBCI would file a complaint against him in court. Francisco
rejected CBCI’s demand.

On 16 April 1996, CBCI filed a complaint for sum of money and damages against Francisco and
other unnamed defendants.7 According to CBCI, Petron, on various dates, sold diesel fuel to
CBCI but these were delivered to and received by Francisco. Francisco then sold the diesel fuel
to third persons from whom he received payment. CBCI alleged that Francisco acquired
possession of the diesel fuel without authority from CBCI and deprived CBCI of the use of the
diesel fuel it had paid for. CBCI demanded payment from Francisco but he refused to pay. CBCI
argued that Francisco should have known that since only Petron, Shell and Caltex are authorized
to sell and distribute petroleum products in the Philippines, the diesel fuel came from
illegitimate, if not illegal or criminal, acts. CBCI asserted that Francisco violated Articles
19,8 20,9 21,10 and 2211 of the Civil Code and that he should be held liable. In the alternative,
CBCI claimed that Francisco, in receiving CBCI’s diesel fuel, entered into an innominate
contract of do ut des (I give and you give) with CBCI for which Francisco is obligated to pay
CBCI ₱1,119,905, the value of the diesel fuel. CBCI also prayed for exemplary damages,
attorney’s fees and other expenses of litigation.
On 20 May 1996, Francisco filed a Motion to Dismiss on the ground of forum shopping.12 CBCI
filed its Opposition.13 In an Order dated 15 November 1996, the trial court denied Francisco’s
motion.14

Thereafter, Francisco filed his Answer.15 Francisco explained that he operates the Caltex station
with the help of his family because, in February 1978, he completely lost his eyesight due to
sickness. Francisco claimed that he asked Jovito, his son, to look into and verify the identity of
Bacsa, who introduced himself as a radio operator and confidential secretary of a certain Mr.
Inawat (Inawat), CBCI’s manager for operations. Francisco said he was satisfied with the proof
presented by Bacsa. When asked to explain why CBCI was selling its fuel, Bacsa allegedly
replied that CBCI was in immediate need of cash for the salary of its daily paid workers and for
petty cash. Francisco maintained that Bacsa assured him that the diesel fuel was not stolen
property and that CBCI enjoyed a big credit line with Petron. Francisco agreed to purchase the
diesel fuel offered by Bacsa on the following conditions:

1) Defendant [Francisco] will not accept any delivery if it is not company (Petron)
delivered, with his name and address as shipping point properly printed and indicated in
the invoice of Petron, and that the product on the delivery tank is sealed; [and]

2) Although the original invoice is sufficient evidence of delivery and payment, under
ordinary course of business, defendant still required Mr. Bacsa to issue a separate receipt
duly signed by him acknowledging receipt of the amount stated in the invoice, for and in
behalf of CBCI.16

During the first delivery on 5 April 1993, Francisco asked one of his sons to verify whether the
delivery truck’s tank was properly sealed and whether Petron issued the invoice. Francisco said
all his conditions were complied with. There were 17 deliveries made from 5 April 1993 to 25
January 1994 and each delivery was for 10,000 liters of diesel fuel at ₱65,865.17 Francisco
maintained that he acquired the diesel fuel in good faith and for value. Francisco also filed a
counterclaim for exemplary damages, moral damages and attorney’s fees.

In its 21 August 1998 Decision, the trial court ruled in Francisco’s favor and dismissed CBCI’s
complaint. The dispositive portion of the trial court’s 21 August 1998 Decision reads:

WHEREFORE, Judgment is hereby rendered:

1. Dismissing the complaint dated March 13, 1996 with costs.

2. Ordering plaintiff (CBCI), on the counterclaim, to pay defendant the amount of

₱100,000.00 as moral damages and ₱50,000.00 as and by way of attorney’s fees.

SO ORDERED.18

CBCI appealed to the Court of Appeals.19 CBCI argued that Francisco acquired the diesel fuel
from Petron without legal ground because Bacsa was not authorized to deliver and sell CBCI’s
diesel fuel. CBCI added that Francisco acted in bad faith because he should have inquired further
whether Bacsa’s sale of CBCI’s diesel fuel was legitimate.

In its 31 May 2010 Decision, the Court of Appeals set aside the trial court’s 21 August 1998
Decision and ruled in CBCI’s favor. The dispositive portion of the Court of Appeals’ 31 May
2010 Decision reads:

IN VIEW OF THE FOREGOING, the assailed decision is hereby REVERSED and SET ASIDE.
Antonio Francisco is ordered to pay Chemical Bulk Carriers, Incorporated the amount of
₱1,119,905.00 as actual damages.

SO ORDERED.20

On 15 January 2001, Francisco died.21 Francisco’s heirs, namely: Nelia E.S. Francisco, Emilia F.
Bertiz, Rebecca E.S. Francisco, Antonio E.S. Francisco, Jr., Socorro F. Fontanilla, and Jovito
E.S. Francisco (heirs of Francisco) filed a motion for substitution.22 The heirs of Francisco also
filed a motion for reconsideration.23 In its 31 August 2010 Resolution, the Court of Appeals
granted the motion for substitution but denied the motion for reconsideration.

Hence, this petition.

The Ruling of the Trial Court

The trial court ruled that Francisco was not liable for damages in favor of CBCI because the 17
deliveries were covered by original and genuine invoices. The trial court declared that Bacsa, as
confidential secretary of Inawat, was CBCI’s authorized representative who received Francisco’s
full payment for the diesel fuel. The trial court stated that if Bacsa was not authorized, CBCI
should have sued Bacsa and not Francisco. The trial court also considered Francisco a buyer in
good faith who paid in full for the merchandise without notice that some other person had a right
to or interest in such diesel fuel. The trial court pointed out that good faith affords protection to a
purchaser for value. Finally, since CBCI was bound by the acts of Bacsa, the trial court ruled that
CBCI is liable to pay damages to Francisco.

The Ruling of the Court of Appeals

The Court of Appeals set aside the trial court’s 21 August 1998 Decision and ruled that Bacsa’s
act of selling the diesel fuel to Francisco was his personal act and, even if Bacsa connived with
Inawat, the sale does not bind CBCI.

The Court of Appeals declared that since Francisco had been in the business of selling petroleum
products for a considerable number of years, his blindness was not a hindrance for him to
transact business with other people. With his condition and experience, Francisco should have
verified whether CBCI was indeed selling diesel fuel and if it had given Bacsa authority to do so.
Moreover, the Court of Appeals stated that Francisco cannot feign good faith since he had doubts
as to the authority of Bacsa yet he did not seek confirmation from CBCI and contented himself
with an improvised receipt. Francisco’s failure to verify Bacsa’s authority showed that he had an
ulterior motive. The receipts issued by Bacsa also showed his lack of authority because it was on
a plain sheet of bond paper with no letterhead or any indication that it came from CBCI. The
Court of Appeals ruled that Francisco cannot invoke estoppel because he was at fault for
choosing to ignore the tell-tale signs of petroleum diversion and for not exercising prudence.

The Court of Appeals also ruled that CBCI was unlawfully deprived of the diesel fuel which, as
indicated in the invoices, CBCI had already paid for. Therefore, CBCI had the right to recover
the diesel fuel or its value from Francisco. Since the diesel fuel can no longer be returned, the
Court of Appeals ordered Francisco to give back the actual amount paid by CBCI for the diesel
fuel.

The Issues

The heirs of Francisco raise the following issues:

I. WHETHER THE COURT OF APPEALS ERRED IN NOT FINDING THAT

DEFENDANT ANTONIO FRANCISCO EXERCISED THE REQUIRED DILIGENCE
OF A BLIND PERSON IN THE CONDUCT OF HIS BUSINESS; and

II. WHETHER ON THE BASIS OF THE FACTUAL FINDINGS OF THE COURT OF

APPEALS AND THE TRIAL COURT AND ADMITTED FACTS, IT CAN BE
CONCLUDED THAT THE PLAINTIFF APPROVED EXPRESSLY OR TACITLY
THE TRANSACTIONS.24

The Ruling of the Court

The petition has no merit.

Required Diligence of a Blind Person

The heirs of Francisco argue that the Court of Appeals erred when it ruled that Francisco was
liable to CBCI because he failed to exercise the diligence of a good father of a family when he
bought the diesel fuel. They argue that since Francisco was blind, the standard of conduct that
was required of him was that of a reasonable person under like disability. Moreover, they insist
that Francisco exercised due care in purchasing the diesel fuel by doing the following: (1)
Francisco asked his son to check the identity of Bacsa; (2) Francisco required direct delivery
from Petron; (3) Francisco required that he be named as the consignee in the invoice; and (4)
Francisco required separate receipts from Bacsa to evidence actual payment.

Standard of conduct is the level of expected conduct that is required by the nature of the
obligation and corresponding to the circumstances of the person, time and place.25 The most
common standard of conduct is that of a good father of a family or that of a reasonably prudent
person.26 To determine the diligence which must be required of all persons, we use as basis the
abstract average standard corresponding to a normal orderly person.27
However, one who is physically disabled is required to use the same degree of care that a
reasonably careful person who has the same physical disability would use.28 Physical handicaps
and infirmities, such as blindness or deafness, are treated as part of the circumstances under
which a reasonable person must act. Thus, the standard of conduct for a blind person becomes
that of a reasonable person who is blind.

We note that Francisco, despite being blind, had been managing and operating the Caltex station
for 15 years and this was not a hindrance for him to transact business until this time. In this
instance, however, we rule that Francisco failed to exercise the standard of conduct expected of a
reasonable person who is blind. First, Francisco merely relied on the identification card of Bacsa
to determine if he was authorized by CBCI. Francisco did not do any other background check on
the identity and authority of Bacsa. Second, Francisco already expressed his misgivings about
the diesel fuel, fearing that they might be stolen property,29 yet he did not verify with CBCI the
authority of Bacsa to sell the diesel fuel. Third, Francisco relied on the receipts issued by Bacsa
which were typewritten on a half sheet of plain bond paper.30 If Francisco exercised reasonable
diligence, he should have asked for an official receipt issued by CBCI. Fourth, the delivery to
Francisco, as indicated in Petron’s invoice, does not show that CBCI authorized Bacsa to sell the
diesel fuel to Francisco. Clearly, Francisco failed to exercise the standard of conduct expected of
a reasonable person who is blind.

Express or Tacit Approval of the Transaction

The heirs of Francisco argue that CBCI approved expressly or tacitly the transactions. According
to them, there was apparent authority for Bacsa to enter into the transactions. They argue that
even if the agent has exceeded his authority, the principal is solidarily liable with the agent if the
former allowed the later to act as though he had full powers.31 They insist CBCI was not
unlawfully deprived of its property because Inawat gave Bacsa the authority to sell the diesel
fuel and that CBCI is bound by such action. Lastly, they argue that CBCI should be considered
in estoppel for failure to act during the ten month period that deliveries were being made to
Francisco.

The general principle is that a seller without title cannot transfer a better title than he has.32 Only
the owner of the goods or one authorized by the owner to sell can transfer title to the
buyer.33 Therefore, a person can sell only what he owns or is authorized to sell and the buyer
can, as a consequence, acquire no more than what the seller can legally transfer.34

Moreover, the owner of the goods who has been unlawfully deprived of it may recover it even
from a purchaser in good faith.35 Thus, the purchaser of property which has been stolen from the
owner has been held to acquire no title to it even though he purchased for value and in good
faith.

The exception from the general principle is the doctrine of estoppel where the owner of the
goods is precluded from denying the seller’s authority to sell.36 But in order that there may be
estoppel, the owner must, by word or conduct, have caused or allowed it to appear that title or
authority to sell is with the seller and the buyer must have been misled to his damage.37 1avvphi1
In this case, it is clear that Bacsa was not the owner of the diesel fuel.1âwphi1 Francisco was
aware of this but he claimed that Bacsa was authorized by CBCI to sell the diesel fuel. However,
Francisco’s claim that Bacsa was authorized is not supported by any evidence except his self-
serving testimony. First, Francisco did not even confirm with CBCI if it was indeed selling its
diesel fuel since it is not one of the oil companies known in the market to be selling petroleum
products. This fact alone should have put Francisco on guard. Second, it does not appear that
CBCI, by some direct and equivocal act, has clothed Bacsa with the indicia of ownership or
apparent authority to sell CBCI’s diesel fuel. Francisco did not state if the identification card
presented by Bacsa indicated that he was CBCI’s agent or a mere employee. Third, the receipt
issued by Bacsa was typewritten on a half sheet of plain bond paper. There was no letterhead or
any indication that it came from CBCI. We agree with the Court of Appeals that this was a
personal receipt issued by Bacsa and not an official receipt issued by CBCI. Consequently, CBCI
is not precluded by its conduct from denying Bacsa’s authority to sell. CBCI did not hold out
Bacsa or allow Bacsa to appear as the owner or one with apparent authority to dispose of the
diesel fuel.

Clearly, Bacsa cannot transfer title to Francisco as Bacsa was not the owner of the diesel fuel nor
was he authorized by CBCI to sell its diesel fuel. CBCI did not commit any act to clothe Bacsa
with apparent authority to sell the diesel fuel that would have misled Francisco. Francisco,
therefore, did not acquire any title over the diesel fuel. Since CBCI was unlawfully deprived of
its property, it may recover from Francisco, even if Francisco pleads good faith.

WHEREFORE, we DENY the petition. We AFFIRM the 31 May 2010 Decision and 31
August 2010 Resolution of the Court of Appeals.

SO ORDERED.

ANTONIO T. CARPIO
Associate Justice

WE CONCUR:

ARTURO D. BRION
Associate Justice

DIOSDADO M. PERALTA* JOSE PORTUGAL PEREZ

Associate Justice Associate Justice

JOSE C. MENDOZA**
Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the
case was assigned to the writer of the opinion of the Court’s Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson

CERTIFICATION

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

RENATO C. CORONA
Chief Justice

Footnotes

* Designated Acting Member per Special Order No. 1074 dated 6 September 2011.

** Designated Acting Member per Special Order No. 1066 dated 23 August 2011.
1
Under Rule 45 of the Rules of Court.
2
Rollo, pp. 7-27. Penned by Presiding Judge Andres B. Reyes, Jr., with Associate
Justices Isaias P. Dicidican and Stephen C. Cruz, concurring.
3
Id. at 28-30.
4
Id. at 150-157. Penned by Judge Celso D. Laviña.
5
Annexes "1" to "17," Records, pp. 11-27.
6
Id. at 196.
7
Rollo, pp. 77-85.
8
ART. 19. Every person must, in the exercise of his rights and in the performance of his
duties, act with justice, give everyone his due, and observe honesty and good faith.
9
ART. 20. Every person who, contrary to law, willfully or negligently causes damage to
another, shall indemnify the latter for the same.
10
ART. 21. Any person who willfully causes loss or injury to another in a manner that is
contrary to morals, good customs or public policy shall compensate the latter for the
damage.
11
ART. 22. Every person who through an act of performance by another, or any other
means, acquires or comes into possession of something at the expense of the latter
without just or legal ground, shall return the same to him.
12
Rollo, pp. 86-93.
13
Id. at 94-98.
14
Id. at 99.
15
Records, pp. 97-113.
16
Id. at 99-100.
17
The first delivery on 5 April 1993 was for 10,000 liters at ₱66,065; Annex "1," id. at
11.
18
Rollo, p. 157.
19
CA rollo, pp. 12-43.
20
Rollo, p. 27.
21
CA rollo, p. 150.
22
Id. at 120-124.
23
Id. at 126-136.
24
Rollo, p. 39.
25
Civil Code, Art. 1173.
26
Civil Code, Art. 1173.
27
Arturo M. Tolentino, Civil Code of the Philippines, Vol. 4 125 (1991).
28
Timoteo B. Aquino, Torts and Damages 92 (2001).
29
Records, pp. 98-99.
30
Exhibits "7" to "7-N," id. at 61-77.
31
Civil Code, Art. 1911.
32
Civil Code, Art. 1505.
 33
Id.
34
Nool v. Court of Appeals, 342 Phil. 106 (1997); Segura v. Segura, 247-A Phil. 449
(1988).
35
Civil Code, Art. 559.
36
Civil Code, Art. 1505.
37
Id.

SECOND DIVISION

[G.R. NO. 124242 - January 21, 2005]

SAN LORENZO DEVELOPMENT CORPORATION, Petitioner, v. COURT OF

APPEALS, PABLO S. BABASANTA, SPS. MIGUEL LU and PACITA ZAVALLA
LU, Respondents.

DECISION

TINGA, J.:

From a coaptation of the records of this case, it appears that respondents Miguel Lu and Pacita
Zavalla, (hereinafter, the Spouses Lu) owned two (2) parcels of land situated in Sta. Rosa,
Laguna covered by TCT No. T-39022 and TCT No. T-39023 both measuring 15,808 square
meters or a total of 3.1616 hectares.

On 20 August 1986, the Spouses Lu purportedly sold the two parcels of land to respondent Pablo
Babasanta, (hereinafter, Babasanta) for the price of fifteen pesos (P15.00) per square meter.
Babasanta made a downpayment of fifty thousand pesos (P50,000.00) as evidenced by a
memorandum receipt issued by Pacita Lu of the same date. Several other payments totaling two
hundred thousand pesos (P200,000.00) were made by Babasanta.

Sometime in May 1989, Babasanta wrote a letter to Pacita Lu to demand the execution of a final
deed of sale in his favor so that he could effect full payment of the purchase price. In the same
letter, Babasanta notified the spouses about having received information that the spouses sold the
same property to another without his knowledge and consent. He demanded that the second sale
be cancelled and that a final deed of sale be issued in his favor.
In response, Pacita Lu wrote a letter to Babasanta wherein she acknowledged having agreed to
sell the property to him at fifteen pesos (P15.00) per square meter. She, however, reminded
Babasanta that when the balance of the purchase price became due, he requested for a reduction
of the price and when she refused, Babasanta backed out of the sale. Pacita added that she
returned the sum of fifty thousand pesos (P50,000.00) to Babasanta through Eugenio Oya.

On 2 June 1989, respondent Babasanta, as plaintiff, filed before the Regional Trial Court (RTC),
Branch 31, of San Pedro, Laguna, a Complaint for Specific Performance and Damages1 against
his co-respondents herein, the Spouses Lu. Babasanta alleged that the lands covered by TCT No.
T - 39022 and T-39023 had been sold to him by the spouses at fifteen pesos (P15.00) per square
meter. Despite his repeated demands for the execution of a final deed of sale in his favor,
respondents allegedly refused.

In their Answer,2 the Spouses Lu alleged that Pacita Lu obtained loans from Babasanta and when
the total advances of Pacita reached fifty thousand pesos (P50,000.00), the latter and Babasanta,
without the knowledge and consent of Miguel Lu, had verbally agreed to transform the
transaction into a contract to sell the two parcels of land to Babasanta with the fifty thousand
pesos (P50,000.00) to be considered as the downpayment for the property and the balance to be
paid on or before 31 December 1987. Respondents Lu added that as of November 1987, total
payments made by Babasanta amounted to only two hundred thousand pesos (P200,000.00) and
the latter allegedly failed to pay the balance of two hundred sixty thousand pesos (P260,000.00)
despite repeated demands. Babasanta had purportedly asked Pacita for a reduction of the price
from fifteen pesos (P15.00) to twelve pesos (P12.00) per square meter and when the Spouses Lu
refused to grant Babasanta's request, the latter rescinded the contract to sell and declared that the
original loan transaction just be carried out in that the spouses would be indebted to him in the
amount of two hundred thousand pesos (P200,000.00). Accordingly, on 6 July 1989, they
purchased Interbank Manager's Check No. 05020269 in the amount of two hundred thousand
pesos (P200,000.00) in the name of Babasanta to show that she was able and willing to pay the
balance of her loan obligation.

Babasanta later filed an Amended Complaint dated 17 January 19903 wherein he prayed for the
issuance of a writ of preliminary injunction with temporary restraining order and the inclusion of
the Register of Deeds of Calamba, Laguna as party defendant. He contended that the issuance of
a preliminary injunction was necessary to restrain the transfer or conveyance by the Spouses Lu
of the subject property to other persons.

The Spouses Lu filed their Opposition4 to the amended complaint contending that it raised new
matters which seriously affect their substantive rights under the original complaint. However, the
trial court in its Order dated 17 January 19905 admitted the amended complaint.

On 19 January 1990, herein petitioner San Lorenzo Development Corporation (SLDC) filed
a Motion for Intervention6 before the trial court. SLDC alleged that it had legal interest in the
subject matter under litigation because on 3 May 1989, the two parcels of land involved, namely
Lot 1764-A and 1764-B, had been sold to it in a Deed of Absolute Sale with Mortgage.7 It
alleged that it was a buyer in good faith and for value and therefore it had a better right over the
property in litigation.
In his Opposition to SLDC's motion for intervention,8 respondent Babasanta demurred and
argued that the latter had no legal interest in the case because the two parcels of land involved
herein had already been conveyed to him by the Spouses Lu and hence, the vendors were without
legal capacity to transfer or dispose of the two parcels of land to the intervenor.

Meanwhile, the trial court in its Order dated 21 March 1990 allowed SLDC to intervene. SLDC
filed its Complaint-in-Intervention on 19 April 1990.9 Respondent Babasanta's motion for the
issuance of a preliminary injunction was likewise granted by the trial court in its Order dated 11
January 199110 conditioned upon his filing of a bond in the amount of fifty thousand pesos
(P50,000.00).

SLDC in its Complaint-in-Intervention alleged that on 11 February 1989, the Spouses Lu

executed in its favor an Option to Buy the lots subject of the complaint. Accordingly, it paid an
option money in the amount of three hundred sixteen thousand one hundred sixty pesos
(P316,160.00) out of the total consideration for the purchase of the two lots of one million two
hundred sixty-four thousand six hundred forty pesos (P1,264,640.00). After the Spouses Lu
received a total amount of six hundred thirty-two thousand three hundred twenty pesos
(P632,320.00) they executed on 3 May 1989 a Deed of Absolute Sale with Mortgage in its favor.
SLDC added that the certificates of title over the property were delivered to it by the spouses
clean and free from any adverse claims and/or notice of lis pendens. SLDC further alleged that it
only learned of the filing of the complaint sometime in the early part of January 1990 which
prompted it to file the motion to intervene without delay. Claiming that it was a buyer in good
faith, SLDC argued that it had no obligation to look beyond the titles submitted to it by the
Spouses Lu particularly because Babasanta's claims were not annotated on the certificates of title
at the time the lands were sold to it.

After a protracted trial, the RTC rendered its Decision on 30 July 1993 upholding the sale of the
property to SLDC. It ordered the Spouses Lu to pay Babasanta the sum of two hundred thousand
pesos (P200,000.00) with legal interest plus the further sum of fifty thousand pesos (P50,000.00)
as and for attorney's fees. On the complaint-in-intervention, the trial court ordered the Register of
Deeds of Laguna, Calamba Branch to cancel the notice of lis pendens annotated on the original
of the TCT No. T-39022 (T-7218) and No. T-39023 (T-7219).

Applying Article 1544 of the Civil Code, the trial court ruled that since both Babasanta and
SLDC did not register the respective sales in their favor, ownership of the property should
pertain to the buyer who first acquired possession of the property. The trial court equated the
execution of a public instrument in favor of SLDC as sufficient delivery of the property to the
latter. It concluded that symbolic possession could be considered to have been first transferred to
SLDC and consequently ownership of the property pertained to SLDC who purchased the
property in good faith.

Respondent Babasanta appealed the trial court's decision to the Court of Appeals alleging in the
main that the trial court erred in concluding that SLDC is a purchaser in good faith and in
upholding the validity of the sale made by the Spouses Lu in favor of SLDC.
Respondent spouses likewise filed an appeal to the Court of Appeals. They contended that the
trial court erred in failing to consider that the contract to sell between them and Babasanta had
been novated when the latter abandoned the verbal contract of sale and declared that the original
loan transaction just be carried out. The Spouses Lu argued that since the properties involved
were conjugal, the trial court should have declared the verbal contract to sell between Pacita Lu
and Pablo Babasanta null and void ab initio for lack of knowledge and consent of Miguel Lu.
They further averred that the trial court erred in not dismissing the complaint filed by Babasanta;
in awarding damages in his favor and in refusing to grant the reliefs prayed for in their answer.

On 4 October 1995, the Court of Appeals rendered its Decision11 which set aside the judgment of
the trial court. It declared that the sale between Babasanta and the Spouses Lu was valid and
subsisting and ordered the spouses to execute the necessary deed of conveyance in favor of
Babasanta, and the latter to pay the balance of the purchase price in the amount of two hundred
sixty thousand pesos (P260,000.00). The appellate court ruled that the Absolute Deed of Sale
with Mortgage in favor of SLDC was null and void on the ground that SLDC was a purchaser in
bad faith. The Spouses Lu were further ordered to return all payments made by SLDC with legal
interest and to pay attorney's fees to Babasanta.

SLDC and the Spouses Lu filed separate motions for reconsideration with the appellate
court.12 However, in a Manifestation dated 20 December 1995,13 the Spouses Lu informed the
appellate court that they are no longer contesting the decision dated 4 October 1995.

In its Resolution dated 11 March 1996,14 the appellate court considered as withdrawn the motion
for reconsideration filed by the Spouses Lu in view of their manifestation of 20 December 1995.
The appellate court denied SLDC's motion for reconsideration on the ground that no new or
substantial arguments were raised therein which would warrant modification or reversal of the
court's decision dated 4 October 1995.

Hence, this petition.

SLDC assigns the following errors allegedly committed by the appellate court:

THE COURT OF APPEALS ERRED IN HOLDING THAT SAN LORENZO WAS NOT A
BUYER IN GOOD FAITH BECAUSE WHEN THE SELLER PACITA ZAVALLA LU
OBTAINED FROM IT THE CASH ADVANCE OF P200,000.00, SAN LORENZO WAS PUT
ON INQUIRY OF A PRIOR TRANSACTION ON THE PROPERTY.

THE COURT OF APPEALS ERRED IN FAILING TO APPRECIATE THE ESTABLISHED

FACT THAT THE ALLEGED FIRST BUYER, RESPONDENT BABASANTA, WAS NOT IN
POSSESSION OF THE DISPUTED PROPERTY WHEN SAN LORENZO BOUGHT AND
TOOK POSSESSION OF THE PROPERTY AND NO ADVERSE CLAIM, LIEN,
ENCUMBRANCE OR LIS PENDENS WAS ANNOTATED ON THE TITLES.

THE COURT OF APPEALS ERRED IN FAILING TO APPRECIATE THE FACT THAT

RESPONDENT BABASANTA HAS SUBMITTED NO EVIDENCE SHOWING THAT SAN
LORENZO WAS AWARE OF HIS RIGHTS OR INTERESTS IN THE DISPUTED
PROPERTY.

THE COURT OF APPEALS ERRED IN HOLDING THAT NOTWITHSTANDING ITS FULL

CONCURRENCE ON THE FINDINGS OF FACT OF THE TRIAL COURT, IT REVERSED
AND SET ASIDE THE DECISION OF THE TRIAL COURT UPHOLDING THE TITLE OF
SAN LORENZO AS A BUYER AND FIRST POSSESSOR IN GOOD FAITH.15

SLDC contended that the appellate court erred in concluding that it had prior notice of
Babasanta's claim over the property merely on the basis of its having advanced the amount of
two hundred thousand pesos (P200,000.00) to Pacita Lu upon the latter's representation that she
needed the money to pay her obligation to Babasanta. It argued that it had no reason to suspect
that Pacita was not telling the truth that the money would be used to pay her indebtedness to
Babasanta. At any rate, SLDC averred that the amount of two hundred thousand pesos
(P200,000.00) which it advanced to Pacita Lu would be deducted from the balance of the
purchase price still due from it and should not be construed as notice of the prior sale of the land
to Babasanta. It added that at no instance did Pacita Lu inform it that the lands had been
previously sold to Babasanta.

Moreover, SLDC stressed that after the execution of the sale in its favor it immediately took
possession of the property and asserted its rights as new owner as opposed to Babasanta who has
never exercised acts of ownership. Since the titles bore no adverse claim, encumbrance, or lien at
the time it was sold to it, SLDC argued that it had every reason to rely on the correctness of the
certificate of title and it was not obliged to go beyond the certificate to determine the condition
of the property. Invoking the presumption of good faith, it added that the burden rests on
Babasanta to prove that it was aware of the prior sale to him but the latter failed to do so. SLDC
pointed out that the notice of lis pendens was annotated only on 2 June 1989 long after the sale
of the property to it was consummated on 3 May 1989.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

Meanwhile, in an Urgent Ex-Parte Manifestation dated 27 August 1999, the Spouses Lu

informed the Court that due to financial constraints they have no more interest to pursue their
rights in the instant case and submit themselves to the decision of the Court of Appeals.16

On the other hand, respondent Babasanta argued that SLDC could not have acquired ownership
of the property because it failed to comply with the requirement of registration of the sale in
good faith. He emphasized that at the time SLDC registered the sale in its favor on 30 June 1990,
there was already a notice of lis pendens annotated on the titles of the property made as early as
2 June 1989. Hence, petitioner's registration of the sale did not confer upon it any right.
Babasanta further asserted that petitioner's bad faith in the acquisition of the property is evident
from the fact that it failed to make necessary inquiry regarding the purpose of the issuance of the
two hundred thousand pesos (P200,000.00) manager's check in his favor.

The core issue presented for resolution in the instant petition is who between SLDC and
Babasanta has a better right over the two parcels of land subject of the instant case in view of the
successive transactions executed by the Spouses Lu.
To prove the perfection of the contract of sale in his favor, Babasanta presented a document
signed by Pacita Lu acknowledging receipt of the sum of fifty thousand pesos (P50,000.00) as
partial payment for 3.6 hectares of farm lot situated at Barangay Pulong, Sta. Cruz, Sta. Rosa,
Laguna.17 While the receipt signed by Pacita did not mention the price for which the property
was being sold, this deficiency was supplied by Pacita Lu's letter dated 29 May 198918 wherein
she admitted that she agreed to sell the 3.6 hectares of land to Babasanta for fifteen pesos
(P15.00) per square meter.

An analysis of the facts obtaining in this case, as well as the evidence presented by the parties,
irresistibly leads to the conclusion that the agreement between Babasanta and the Spouses Lu is a
contract to sell and not a contract of sale.

Contracts, in general, are perfected by mere consent,19 which is manifested by the meeting of the
offer and the acceptance upon the thing which are to constitute the contract. The offer must be
certain and the acceptance absolute.20 Moreover, contracts shall be obligatory in whatever form
they may have been entered into, provided all the essential requisites for their validity are
present.21

The receipt signed by Pacita Lu merely states that she accepted the sum of fifty thousand pesos
(P50,000.00) from Babasanta as partial payment of 3.6 hectares of farm lot situated in Sta. Rosa,
Laguna. While there is no stipulation that the seller reserves the ownership of the property until
full payment of the price which is a distinguishing feature of a contract to sell, the subsequent
acts of the parties convince us that the Spouses Lu never intended to transfer ownership to
Babasanta except upon full payment of the purchase price.

Babasanta's letter dated 22 May 1989 was quite telling. He stated therein that despite his
repeated requests for the execution of the final deed of sale in his favor so that he could effect
full payment of the price, Pacita Lu allegedly refused to do so. In effect, Babasanta himself
recognized that ownership of the property would not be transferred to him until such time as he
shall have effected full payment of the price. Moreover, had the sellers intended to transfer title,
they could have easily executed the document of sale in its required form simultaneously with
their acceptance of the partial payment, but they did not. Doubtlessly, the receipt signed by
Pacita Lu should legally be considered as a perfected contract to sell.

The distinction between a contract to sell and a contract of sale is quite germane. In a contract of
sale, title passes to the vendee upon the delivery of the thing sold; whereas in a contract to sell,
by agreement the ownership is reserved in the vendor and is not to pass until the full payment of
the price.22 In a contract of sale, the vendor has lost and cannot recover ownership until and
unless the contract is resolved or rescinded; whereas in a contract to sell, title is retained by the
vendor until the full payment of the price, such payment being a positive suspensive condition
and failure of which is not a breach but an event that prevents the obligation of the vendor to
convey title from becoming effective.23

The perfected contract to sell imposed upon Babasanta the obligation to pay the balance of the
purchase price. There being an obligation to pay the price, Babasanta should have made the
proper tender of payment and consignation of the price in court as required by law. Mere sending
of a letter by the vendee expressing the intention to pay without the accompanying payment is
not considered a valid tender of payment.24 Consignation of the amounts due in court is essential
in order to extinguish Babasanta's obligation to pay the balance of the purchase price. Glaringly
absent from the records is any indication that Babasanta even attempted to make the proper
consignation of the amounts due, thus, the obligation on the part of the sellers to convey title
never acquired obligatory force.

On the assumption that the transaction between the parties is a contract of sale and not a contract
to sell, Babasanta's claim of ownership should nevertheless fail.

Sale, being a consensual contract, is perfected by mere consent25 and from that moment, the
parties may reciprocally demand performance.26 The essential elements of a contract of sale, to
wit: (1) consent or meeting of the minds, that is, to transfer ownership in exchange for the price;
(2) object certain which is the subject matter of the contract; (3) cause of the obligation which is
established.27

The perfection of a contract of sale should not, however, be confused with its consummation. In
relation to the acquisition and transfer of ownership, it should be noted that sale is not a mode,
but merely a title. A mode is the legal means by which dominion or ownership is created,
transferred or destroyed, but title is only the legal basis by which to affect dominion or
ownership.28 Under Article 712 of the Civil Code, "ownership and other real rights over property
are acquired and transmitted by law, by donation, by testate and intestate succession, and in
consequence of certain contracts, by tradition." Contracts only constitute titles or rights to the
transfer or acquisition of ownership, while delivery or tradition is the mode of accomplishing the
same.29 Therefore, sale by itself does not transfer or affect ownership; the most that sale does is
to create the obligation to transfer ownership. It is tradition or delivery, as a consequence of sale,
that actually transfers ownership.

Explicitly, the law provides that the ownership of the thing sold is acquired by the vendee from
the moment it is delivered to him in any of the ways specified in Article 1497 to 1501.30 The
word "delivered" should not be taken restrictively to mean transfer of actual physical possession
of the property. The law recognizes two principal modes of delivery, to wit: (1) actual delivery;
and (2) legal or constructive delivery.

Actual delivery consists in placing the thing sold in the control and possession of the
vendee.31 Legal or constructive delivery, on the other hand, may be had through any of the
following ways: the execution of a public instrument evidencing the sale;32 symbolical tradition
such as the delivery of the keys of the place where the movable sold is being kept;33 traditio
longa manu or by mere consent or agreement if the movable sold cannot yet be transferred to the
possession of the buyer at the time of the sale;34 traditio brevi manu if the buyer already had
possession of the object even before the sale;35 and traditio constitutum possessorium, where the
seller remains in possession of the property in a different capacity.36

Following the above disquisition, respondent Babasanta did not acquire ownership by the mere
execution of the receipt by Pacita Lu acknowledging receipt of partial payment for the property.
For one, the agreement between Babasanta and the Spouses Lu, though valid, was not embodied
in a public instrument. Hence, no constructive delivery of the lands could have been effected. For
another, Babasanta had not taken possession of the property at any time after the perfection of
the sale in his favor or exercised acts of dominion over it despite his assertions that he was the
rightful owner of the lands. Simply stated, there was no delivery to Babasanta, whether actual or
constructive, which is essential to transfer ownership of the property. Thus, even on the
assumption that the perfected contract between the parties was a sale, ownership could not have
passed to Babasanta in the absence of delivery, since in a contract of sale ownership is
transferred to the vendee only upon the delivery of the thing sold.37

However, it must be stressed that the juridical relationship between the parties in a double sale is
primarily governed by Article 1544 which lays down the rules of preference between the two
purchasers of the same property. It provides:

Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be
transferred to the person who may have first taken possession thereof in good faith, if it should
be movable property.

Should it be immovable property, the ownership shall belong to the person acquiring it who in
good faith first recorded it in the Registry of Property.

Should there be no inscription, the ownership shall pertain to the person who in good faith was
first in the possession; and, in the absence thereof, to the person who presents the oldest title,
provided there is good faith.

The principle of primus tempore, potior jure (first in time, stronger in right) gains greater
significance in case of double sale of immovable property. When the thing sold twice is an
immovable, the one who acquires it and first records it in the Registry of Property, both made in
good faith, shall be deemed the owner.38 Verily, the act of registration must be coupled with
good faith' that is, the registrant must have no knowledge of the defect or lack of title of his
vendor or must not have been aware of facts which should have put him upon such inquiry and
investigation as might be necessary to acquaint him with the defects in the title of his vendor.39

Admittedly, SLDC registered the sale with the Registry of Deeds after it had acquired knowledge
of Babasanta's claim. Babasanta, however, strongly argues that the registration of the sale by
SLDC was not sufficient to confer upon the latter any title to the property since the registration
was attended by bad faith. Specifically, he points out that at the time SLDC registered the sale on
30 June 1990, there was already a notice of lis pendens on the file with the Register of Deeds, the
same having been filed one year before on 2 June 1989.

Did the registration of the sale after the annotation of the notice of lis pendens obliterate the
effects of delivery and possession in good faith which admittedly had occurred prior to SLDC's
knowledge of the transaction in favor of Babasanta?chanroblesvirtualawlibrary

We do not hold so.

It must be stressed that as early as 11 February 1989, the Spouses Lu executed the Option to
Buy in favor of SLDC upon receiving P316,160.00 as option money from SLDC. After SLDC
had paid more than one half of the agreed purchase price of P1,264,640.00, the Spouses Lu
subsequently executed on 3 May 1989 a Deed of Absolute Sale in favor or SLDC. At the time
both deeds were executed, SLDC had no knowledge of the prior transaction of the Spouses Lu
with Babasanta. Simply stated, from the time of execution of the first deed up to the moment of
transfer and delivery of possession of the lands to SLDC, it had acted in good faith and the
subsequent annotation of lis pendens has no effect at all on the consummated sale between
SLDC and the Spouses Lu.

A purchaser in good faith is one who buys property of another without notice that some other
person has a right to, or interest in, such property and pays a full and fair price for the same at the
time of such purchase, or before he has notice of the claim or interest of some other person in the
property.40 Following the foregoing definition, we rule that SLDC qualifies as a buyer in good
faith since there is no evidence extant in the records that it had knowledge of the prior
transaction in favor of Babasanta. At the time of the sale of the property to SLDC, the vendors
were still the registered owners of the property and were in fact in possession of the
lands.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

Time and again, this Court has ruled that a person dealing with the owner of registered land is
not bound to go beyond the certificate of title as he is charged with notice of burdens on the
property which are noted on the face of the register or on the certificate of title.41 In assailing
knowledge of the transaction between him and the Spouses Lu, Babasanta apparently relies on
the principle of constructive notice incorporated in Section 52 of the Property Registration
Decree (P.D. No. 1529) which reads, thus:

Sec. 52. Constructive notice upon registration. 'Every conveyance, mortgage, lease, lien,
attachment, order, judgment, instrument or entry affecting registered land shall, if registered,
filed, or entered in the office of the Register of Deeds for the province or city where the land to
which it relates lies, be constructive notice to all persons from the time of such registering, filing,
or entering.

However, the constructive notice operates as such by the express wording of Section 52 from the
time of the registration of the notice of lis pendens which in this case was effected only on 2 June
1989, at which time the sale in favor of SLDC had long been consummated insofar as the
obligation of the Spouses Lu to transfer ownership over the property to SLDC is concerned.

More fundamentally, given the superiority of the right of SLDC to the claim of Babasanta the
annotation of the notice of lis pendens cannot help Babasanta's position a bit and it is irrelevant
to the good or bad faith characterization of SLDC as a purchaser. A notice of lis pendens, as the
Court held in Nataño v. Esteban,42 serves as a warning to a prospective purchaser or
incumbrancer that the particular property is in litigation; and that he should keep his hands off
the same, unless he intends to gamble on the results of the litigation." Precisely, in this case
SLDC has intervened in the pending litigation to protect its rights. Obviously, SLDC's faith in
the merit of its cause has been vindicated with the Court's present decision which is the ultimate
denouement on the controversy.
The Court of Appeals has made capital43 of SLDC's averment in its Complaint-in-
Intervention44 that at the instance of Pacita Lu it issued a check for P200,000.00 payable to
Babasanta and the confirmatory testimony of Pacita Lu herself on cross-examination.45 However,
there is nothing in the said pleading and the testimony which explicitly relates the amount to the
transaction between the Spouses Lu and Babasanta for what they attest to is that the amount was
supposed to pay off the advances made by Babasanta to Pacita Lu. In any event, the incident
took place after the Spouses Lu had already executed the Deed of Absolute Sale with
Mortgage in favor of SLDC and therefore, as previously explained, it has no effect on the legal
position of SLDC.

Assuming ex gratia argumenti that SLDC's registration of the sale had been tainted by the prior
notice of lis pendens and assuming further for the same nonce that this is a case of double sale,
still Babasanta's claim could not prevail over that of SLDC's. In Abarquez v. Court of
Appeals,46 this Court had the occasion to rule that if a vendee in a double sale registers the sale
after he has acquired knowledge of a previous sale, the registration constitutes a registration in
bad faith and does not confer upon him any right. If the registration is done in bad faith, it is as if
there is no registration at all, and the buyer who has taken possession first of the property in good
faith shall be preferred.

In Abarquez, the first sale to the spouses Israel was notarized and registered only after the second
vendee, Abarquez, registered their deed of sale with the Registry of Deeds, but the Israels were
first in possession. This Court awarded the property to the Israels because registration of the
property by Abarquez lacked the element of good faith. While the facts in the instant case
substantially differ from that in Abarquez, we would not hesitate to rule in favor of SLDC on the
basis of its prior possession of the property in good faith. Be it noted that delivery of the property
to SLDC was immediately effected after the execution of the deed in its favor, at which time
SLDC had no knowledge at all of the prior transaction by the Spouses Lu in favor of
Babasanta.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

The law speaks not only of one criterion. The first criterion is priority of entry in the registry of
property; there being no priority of such entry, the second is priority of possession; and, in the
absence of the two priorities, the third priority is of the date of title, with good faith as the
common critical element. Since SLDC acquired possession of the property in good faith in
contrast to Babasanta, who neither registered nor possessed the property at any time, SLDC's
right is definitely superior to that of Babasanta's.

At any rate, the above discussion on the rules on double sale would be purely academic for as
earlier stated in this decision, the contract between Babasanta and the Spouses Lu is not a
contract of sale but merely a contract to sell. In Dichoso v. Roxas,47 we had the occasion to rule
that Article 1544 does not apply to a case where there was a sale to one party of the land itself
while the other contract was a mere promise to sell the land or at most an actual assignment of
the right to repurchase the same land. Accordingly, there was no double sale of the same land in
that case.
WHEREFORE, the instant petition is hereby GRANTED. The decision of the Court of Appeals
appealed from is REVERSED and SET ASIDE and the decision of the Regional Trial Court,
Branch 31, of San Pedro, Laguna is REINSTATED. No costs.

SO ORDERED.

Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Chico-Nazario, JJ., concur.

Endnotes:

1
RTC Records, pp. 1-11.
2
Id. at 30-37.
3
Id. at 73-90.
4
Id. at 104-106.
5
Id. at 96.
6
Id. at 98 - 100.
7
Id. at 116-119.
8
Id. at 120-121.
9
Id. at 162-168.
10
Id. at 287-288.
11
Penned by Justice Cesar D. Francisco, concurred in by Justices Eubulo G. Verzola and
Oswaldo D. Agcaoili.
12
CA Rollo, pp. 204-220 for SLDC and pp. 224-230 for Spouses Lu.
13
Id. at 251.
14
Id. at 261-262.
15
Rollo, pp. 19-20.
16
Id. at 347-348.
17
RTC Records, p. 9.
18
Rollo, p. 11.
19
Art. 1315, Civil Code.
20
Art. 1319, Civil Code.
21
Tan v. Lim, 357 Phil. 452 (1998); Cenido v. Apacionado, 376 Phil. 801 (1999).
22
Ong v. Court of Appeals, 361 Phil. 228 (1999).
23
Odyssey Park, Inc. v. Court of Appeals, 345 Phil. 475 (1997).
24
Vda. de Zulueta, et.al., v. Octaviano, 205 Phil. 247 (1983).
25
Co v. Court of Appeals, 349 Phil. 745 (1998); Fule v. Court of Appeals, 350 Phil. 349 (1998).
26
Xentrex Automotive, Inc. v. Court of Appeals, 353 Phil. 258 (1998).
27
San Juan Structural and Steel Fabricators, Inc. v. Court of Appeals, 357 Phil. 631 (1998);
Archipelago Management and Marketing Corporation v. Court of Appeals, 359 Phil. 363 (1998.
28
Villanueva, Philippine Law on Sales, 1995 Edition, at p. 5.
29
Gonzales v. Rojas, 16 Phil. 51 (1910); Ocejo, Perez and Co. v. International Bank, 37 Phil. 631
(1917-18); Fidelity and Deposit Co. v. Wilson, 8 Phil. 51 (1907).
30
Art. 1495, Civil Code
31
Art. 1497, Civil Code.
32
Art. 1498, Civil Code.
33
Art. 1498, par. 2, Civil Code.
34
Art. 1499, Civil Code.
35
Ibid.
36
Art. 1500, Civil Code.
37
Dawson v. Register of Deeds of Quezon City, 356 Phil. 1037 (1998).
38
Nuguid v. Court of Appeals, G.R. No. 77423, 13 March 1989, 171 SCRA 213;
Bautista v. Court of Appeals, G.R. No. 106042, 28 February 1994, 230 SCRA 446.
39
Balatbat v. Court of Appeals, 329 Phil. 858 (1996).
40
Bautista v. Court of Appeals, supra note 39.
41
Viray v. Court of Appeals, 350 Phil. 107 (1998); Heirs of Leopoldo Vencilao, Sr. v. Court of
Appeals, 351 Phil. 815 (1998); Heirs of Spouses Benito Gavino and Juana Euste v. Court of
Appeals, 353 Phil. 686 (1998).
42
124 Phil. 1067, 1072 (1966); citation omitted.
43
Rollo, pp. 25-29.
44
RTC Records, p. 165.
45
TSN, September 19, 1991, pp. 11-12, 14-15, 19.
46
G.R. No. 95843, 2 September 1992, 213 SCRA 415 citing Palanca v. Director of Lands, 43
Phil. 146 (1922); Cagaoan v. Cagaoan, 43 Phil. 554 (1922); Fernandez v. Mercader, 43 Phil. 581
(1922).
47
11 Phil. 768 (1908).