[G.R. No. 75112. August 17, 1992.
] defense, has promulgated by the Secretary of
FILAMER CHRISTIAN INSTITUTE, Petitioner, v.
HON. INTERMEDIATE APPELLATE COURT,
HON. ENRIQUE P. SUPLICO, in his capacity as
Judge of the Court of Appeals, Branch XIV,
Roxas City and POTENCIANO KAPUNAN
SR., Respondents.
Bedona & Bedona Law Office for Petitioner.
Rhodora G. Kapunan for Private Respondents.
SYLLABUS
1. CIVIL LAW; QUASI-DELICTS; ART. 2180 OF
THE CIVIL CODE; APPLICABLE IN CASE AT
BAR; INJURED PARTY SHALL HAVE
RECOURSE AGAINST THE SERVANT AS WELL
AS THE EMPLOYER FOR WHOM SERVANT
WAS ACTING IN FURTHERANCE OF THE
INTEREST OF THE LATTER. — The private
respondents assert that the circumstances
obtaining in the present case call for the application
of Article 2180 of the Civil Code since Funtecha is
no doubt an employee of the petitioner. The private
respondents maintain that under Article 2180 an
injured party shall have recourse against the
servant as well as the petitioner for whom, at the
time of the incident, the servant was performing an
act in furtherance of the interest and for the benefit
of the petitioner. Funtecha allegedly did not steal
the school jeep nor use it for a joy ride without the
knowledge of the school authorities. In learning
how to drive while taking the vehicle home in the
direction of Allan’s house, Funtecha definitely was
not, having a joy ride Funtecha was not driving for
the purpose of his enjoyment or for a "frolic of his
own" but ultimately, for the service for which the
jeep was intended by the petitioner school. (See L.
Battistoni v. Thomas, Can SC 144, 1 D.L.R. 577, 80
ALR 722 [1932]; See also Association of Baptists
for World Evangelism, Inc. v. Fieldmen’s Insurance
Co., Inc. 124 SCRA 618 [1983]). Therefore, the
Court is constrained to conclude that the act of
Funtecha in taking over the steering wheel was one
done for and in behalf of his employer for which act
the petitioner-school cannot deny any responsibility
by arguing that it was done beyond the scope of his
janitorial duties. The clause "within the scope of
their assigned tasks" for purposes of raising the
presumption of liability of an employer, includes any
act done by an employee, in furtherance of the
interests of the employer or for the account of the
employer at the time of the infliction of the injury or
damage. (Manuel Casada, 190 Va 906, 59 SE 2d
47 [1950]) Even if somehow, the employee driving
the vehicle derived some benefit from the act, the
existence of a presumptive liability of the employer
is determined by answering the question of whether
or not the servant was at the time of the accident
performing any act in furtherance of his master’s
business. (Kohlman v. Hyland, 210 NW 643, 50
ALR 1437 [1926]; Jameson v. Gavett, 71 P 2d 937
[1937])
2. LABOR LAW; SEC. 14, RULE X, BOOK III OF
RULES IMPLEMENTING THE LABOR CODE;
NOT THE DECISIVE LAW IN A CIVIL SUIT FOR
DAMAGES UNDER THE CIVIL CODE. — Section
14, Rule X, Book III of the Rules implementing the
Labor Code, on which the petitioner anchors its
Labor and Employment only for the purpose of
administering and enforcing the provisions of the
Labor Code on conditions of employment.
Particularly, Rule X of Book III provides guidelines
on the manner by which the powers of the Labor
Secretary shall be exercised; on what records
should be kept, maintained and preserved; on
payroll; and on the exclusion of working scholars
from, and inclusion of resident physicians in the
employment coverage as far as compliance with
the substantive labor provisions on working
conditions, rest periods, and wages, is concerned.
In other words, Rule X is merely a guide to the
enforcement of the substantive law on labor. The
Court, thus, makes the distinction and so holds that
Section 14, Rule X, Book III of the Rules is not the
decisive law in a civil suit for damages instituted by
an injured person during a vehicular accident
against a working student of a school and against
the school itself. The present case does not deal
with a labor dispute on conditions of employment
between an alleged employee and an alleged
employer. It invokes a claim brought by one for
damages for injury caused by the patently negligent
acts of a person, against both doer-employee and
his employer. Hence, the reliance on the
implementing rule on labor to disregard the primary
liability of an employer under Article 2180 of the
Civil Code is misplaced. An implementing rule on
labor cannot be used by an employer as a shield to
void liability under the substantive provisions of the
Civil Code.
3. CIVIL LAW; QUASI-DELICTS, EXTRA-
CONTRACTUAL OBLIGATION ARISING FROM
NEGLIGENCE OF AN EMPLOYEE; DILIGENCE
OF A GOOD FATHER OF A FAMILY;
PETITIONER FAILED TO SHOW PROOF OF
HAVING EXERCISED IT. — Funtecha is an
employee of petitioner Filamer. He need not have
an official appointment for a driver’s position in
order that the petitioner may be held responsible for
his grossly negligent act, it being sufficient that the
act of driving at the time of the incident was for the
benefit of the petitioner. Hence, the fact that
Funtecha was not the school driver or was not
acting with the scope of his janitorial duties does
not relieve the petitioner of the burden of rebutting
the presumption juris tantum that there was
negligence on its part either in the selection of a
servant or employee, or in the supervision over
him. The petitioner has failed to show proof of its
having exercised the required diligence of a good
father of a family over its employees Funtecha and
Allan.
4. ID.; ID.; SUPERVISION; WHAT IT INCLUDES;
FAILURE OF PETITIONER TO SET FORTH SUCH
RULES AND GUIDELINES; CASE AT BAR. — The
Court reiterates that supervision includes the
formulation of suitable rules and regulation for
the guidance of its employees and the issuance
of proper instructions intended for the
protection of the public and persons with whom
the employer has relations through his
employees. (Bahia v. Litonjua and Leynes, supra,
at p. 628; Phoenix Construction, Inc. v.
Intermediate Appellate Court, 148 SCRA 353
[1987]) An employer is expected to impose upon its
employees the necessary discipline called for in the
performance of any act indispensable to the
business and beneficial to their employer. In the
present case, the petitioner has not shown that it
has set forth such rules and guidelines as would
prohibit any one of its employees from taking
control over its vehicles if one is not the official
driver or prohibiting the driver and son of the
Filamer president from authorizing another
employee to drive the school vehicle. Furthermore,
the petitioner has failed to prove that it had
imposed sanctions or warned its employees against
the use of its vehicles by persons other than the
driver.
5. ID.; ID.; LIABILITY OF EMPLOYER UNDER
ART. 2180 IS PRIMARY AND SOLIDARY;
RECOURSE AGAINST NEGLIGENT EMPLOYEE.
— The liability of the employer is, under Article
2180, primary and solidary. However, the employer
shall have recourse against the negligent employee
for whatever damages are paid to the heirs of the
plaintiff.
DECISION
GUTIERREZ, JR., J.:
The private respondents, heirs of the late
Potenciano Kapunan, seek reconsideration of the
decision rendered by this Court on October 16,
1990 (Filamer Christian Institute v. Court Appeals,
190 SCRA 477) reviewing the appellate court’s
conclusion that there exists an employer-employee
relationship between the petitioner and its co-
defendant Funtecha. The Court ruled that the
petitioner is not liable for the injuries caused by
Funtecha on the grounds that the latter was not an
authorized driver for whose acts the petitioner shall
be directly and primarily answerable, and that
Funtecha was merely a working scholar who, under
Section 14, Rule X, Book III of the Rules and
Regulations Implementing the Labor Code is not
considered an employee of the petitioner.
The private respondents assert that the
circumstances obtaining in the present case call for
the application of Article 2180 of the Civil Code
since Funtecha is no doubt an employee of the
petitioner. The private respondents maintain that
under Article 2180 an injured party shall have
recourse against the servant as well as the
petitioner for whom, at the time of the incident, the
servant was performing an act in furtherance of the
interest and for the benefit of the petitioner.
Funtecha allegedly did not steal the school jeep nor
use it for a joy ride without the knowledge of the
school authorities.
After a re-examination of the laws relevant to the
facts found by the trial court and the appellate
court, the Court reconsiders its decision. We
reinstate the Court of Appeals’ decision penned by
the late Justice Desiderio Jurado and concurred in
by Justices Jose G. Campos, Jr. and Serafin E.
Camilon Applying Civil Code provisions, the
appellate court affirmed the trial court decision
which ordered the payment of the P20,000.00
liability in the Zenith Insurance Corporation policy,
P10,000.00 moral damages, P4,000.00 litigation
and actual expenses, and P3,000.00 attorney’s
fees.cralawnad
It is undisputed that Funtecha was a working
student, being a part-time Janitor and a scholar of
petitioner Filamer. He was, in relation to the school,
an employee even if he was assigned to clean the
school premises for only two (2) hours in the
morning of each school day.
Having a student driver’s license, Funtecha
requested the driver, Allan Masa, and was
allowed, to take over the vehicle while the latter
was on his way home one late afternoon. It is
significant to note that the place where Allan lives is
also the house of his father, the school president,
Agustin Masa. Moreover, it is also the house where
Funtecha was allowed free board while he was a
student of Filamer Christian Institute.
Allan Masa turned over the vehicle to Funtecha
only after driving down a road, negotiating a sharp
dangerous curb, and viewing that the road was
clear. (TSN, April 4, 1983, pp. 78-79) According to
Allan’s testimony, a fast moving truck with glaring
lights nearly hit them so that they had to swerve to
the right to avoid a collision. Upon swerving, they
heard a sound as if something had bumped
against the vehicle, but they did not stop to
check. Actually, the Pinoy jeep swerved
towards the pedestrian, Potenciano Kapunan
who was walking in his lane in the direction
against vehicular traffic, and hit him. Allan
affirmed that Funtecha followed his advise to
swerve to the right. (Ibid., p. 79) At the time of the
incident (6:30 P.M.) in Roxas City, the jeep had
only one functioning headlight.
Allan testified that he was the driver and at the
same time a security guard of the petitioner-school.
He further said that there was no specific time for
him to be off-duty and that after driving the students
home at 5:00 in the afternoon, he still had to go
back to school and then drive home using the same
vehicle.
Driving the vehicle to and from the house of the
school president where both Allan and Funtecha
reside is an act in furtherance of the interest of the
petitioner-school. Allan’s job demands that he drive
home the school jeep so he can use it to fetch
students in the morning of the next school day.
It is indubitable under the circumstances that the
school president had knowledge that the jeep was
routinely driven home for the said purpose.
Moreover, it is not improbable that the school
president also had knowledge of Funtecha’s
possession of a student driver’s license and his
desire to undergo driving lessons during the time
that he was not in his classrooms.
In learning how to drive while taking the vehicle
home in the direction of Allan’s house, Funtecha
definitely was not, having a joy ride Funtecha was
not driving for the purpose of his enjoyment or for a
"frolic of his own" but ultimately, for the service for
which the jeep was intended by the petitioner
school. (See L. Battistoni v. Thomas, Can SC 144,
1 D.L.R. 577, 80 ALR 722 [1932]; See also
Association of Baptists for World Evangelism, Inc.
v. Fieldmen’s Insurance Co., Inc. 124 SCRA 618
[1983]). Therefore, the Court is constrained to
conclude that the act of Funtecha in taking over
the steering wheel was one done for and in
behalf of his employer for which act the
petitioner-school cannot deny any
responsibility by arguing that it was done
beyond the scope of his janitorial duties. The
clause "within the scope of their assigned tasks" for
purposes of raising the presumption of liability of an
employer, includes any act done by an employee,
in furtherance of the interests of the employer or for
the account of the employer at the time of the
infliction of the injury or damage. (Manuel Casada,
190 Va 906, 59 SE 2d 47 [1950]) Even if somehow,
the employee driving the vehicle derived some
benefit from the act, the existence of a presumptive
liability of the employer is determined by answering
the question of whether or not the servant was at
the time of the accident performing any act in
furtherance of his master’s business. (Kohlman v.
Hyland, 210 NW 643, 50 ALR 1437 [1926];
Jameson v. Gavett, 71 P 2d 937 [1937])cralawnad
Section 14, Rule X, Book III of the Rules
implementing the Labor Code, on which the
petitioner anchors its defense, has promulgated by
the Secretary of Labor and Employment only for the
purpose of administering and enforcing the
provisions of the Labor Code on conditions of
employment. Particularly, Rule X of Book III
provides guidelines on the manner by which the
powers of the Labor Secretary shall be exercised;
on what records should be kept, maintained and
preserved; on payroll; and on the exclusion of
working scholars from, and inclusion of resident
physicians in the employment coverage as far as
compliance with the substantive labor provisions on
working conditions, rest periods, and wages, is
concerned.
In other words, Rule X is merely a guide to the
enforcement of the substantive law on labor. The
Court, thus, makes the distinction and so holds that
Section 14, Rule X, Book III of the Rules is not the
decisive law in a civil suit for damages instituted by
an injured person during a vehicular accident
against a working student of a school and against
the school itself.
The present case does not deal with a labor dispute
on conditions of employment between an alleged
employee and an alleged employer. It invokes a
claim brought by one for damages for injury
caused by the patently negligent acts of a
person, against both doer-employee and his
employer. Hence, the reliance on the
implementing rule on labor to disregard the
primary liability of an employer under Article
2180 of the Civil Code is misplaced. An
implementing rule on labor cannot be used by
an employer as a shield to void liability under
the substantive provisions of the Civil Code.
There is evidence to show that there exists in the
present case an extra-contractual obligation
arising from the negligence or reckless imprudence
of a person "whose acts or omissions are
imputable, by a legal fiction, to other(s) who are in a
position to exercise an absolute or limited control
over (him)." (Bahia v. Litonjua and Leynes, 30 Phil.
624 [1915])
Funtecha is an employee of petitioner Filamer.
He need not have an official appointment for a
driver’s position in order that the petitioner may
be held responsible for his grossly negligent
act, it being sufficient that the act of driving at
the time of the incident was for the benefit of
the petitioner. Hence, the fact that Funtecha was
not the school driver or was not acting with the
scope of his janitorial duties does not relieve the
petitioner of the burden of rebutting the
presumption juris tantum that there was negligence
on its part either in the selection of a servant or
employee, or in the supervision over him. The
petitioner has failed to show proof of its having
exercised the required diligence of a good father of
a family over its employees Funtecha and Allan.
The Court reiterates that supervision includes the
formulation of suitable rules and regulation for
the guidance of its employees and the issuance
of proper instructions intended for the
protection of the public and persons with whom
the employer has relations through his
employees. (Bahia v. Litonjua and Leynes, supra,
at p. 628; Phoenix Construction, Inc. v.
Intermediate Appellate Court, 148 SCRA 353
[1987])
An employer is expected to impose upon its
employees the necessary discipline called for in
the performance of any act indispensable to the
business and beneficial to their
employer.chanroblesvirtualawlibrary
In the present case, the petitioner has not shown
that it has set forth such rules and guidelines
as would prohibit any one of its employees
from taking control over its vehicles if one is
not the official driver or prohibiting the driver
and son of the Filamer president from
authorizing another employee to drive the
school vehicle. Furthermore, the petitioner has
failed to prove that it had imposed sanctions or
warned its employees against the use of its
vehicles by persons other than the driver.
The petitioner, thus, has an obligation to pay
damages for injury arising from the unskilled
manner by which Funtecha drove the vehicle.
(Cangco v. Manila Railroad Co. 38 Phil. 760, 772
[1918]) In the absence of evidence that the
petitioner had exercised the diligence of a good
father of a family in the supervision of its
employees, the law imposes upon it the
vicarious liability for acts or omissions of its
employees. (Umali v. Bacani, 69 SCRA 263
[1976l; Poblete v. Fabros, 93 SCRA 200 [1979];
Kapalaran Bus Liner v. Coronado, 176 SCRA 792
[1989]; Franco v. Intermediate Appellate Court, 178
SCRA 331 [1989]; Pantranco North Express, Inc. v.
Baesa, 179 SCRA 384 (1989]) The liability of the
employer is, under Article 2180, primary and
solidary. However, the employer shall have
recourse against the negligent employee for
whatever damages are paid to the heirs of the
plaintiff.
It is an admitted fact that the actual driver of the
school jeep, Allan Masa, was not made a party
defendant in the civil case for damages. This is
quite understandable considering that as far as the
injured pedestrian, plaintiff Potenciano Kapunan,
was concerned, it was Funtecha who was the one
driving the vehicle and presumably was one
authorized by the school to drive. The plaintiff and
his heirs should not now be left to suffer without
simultaneous recourse against the petitioner for the
consequent injury caused by a janitor doing a
driving chore for the petitioner even for a short
while. For the purpose of recovering damages
under the prevailing circumstances, it is enough
that the plaintiff and the private respondent heirs
were able to establish the existence of employer-
employee relationship between Funtecha and
petitioner Filamer and the fact that Funtecha was
engaged in an act not for an independent purpose
of his own but in furtherance of the business of his
employer. A position of responsibility on the part of
the petitioner has thus been satisfactorily
demonstrated.

WHEREFORE, the motion for reconsideration of

the decision dated October 16, 1990 is hereby
GRANTED. The decision of the respondent
appellate court affirming the trial court decision is
REINSTATED.

SO ORDERED.
[G.R. No. 138478. November 26, 2002.]
PACIFIC AIRWAYS CORPORATION, ARQUE
MAMING and JORBIN TOLENTINO, Petitioners,
v. JOAQUIN TONDA, Respondent.
DECISION
CORONA, J.:
Before this Court, on petition for review
on certiorari under Rule 45 of the Revised Rules of
Court, is the decision 1 dated December 10, 1998
of the Court of Appeals 2 in CA-G.R. CV No.
44967, which affirmed the decision 3 of RTC Pasay
City Branch 110, dated December 23, 1993, finding
petitioners Pacific Airways Corporation (PACO),
Arque Maming, and Jorbin Tolentino liable for
damages in favor of respondent Joaquin
Tonda.chanrob1es virtua1 1aw 1ibrary
The facts, as adopted by the Court of Appeals from
the trial court’s decision, are as
follows:jgc:chanrobles.com.ph
"On January 11, 1991, plaintiff [Respondent],
Joaquin Tonda, purchased from defendant Pacific
Airways Corporation through its travel agent
Valderama Travel and Tours, Inc. a package tour
for a party of nine consisting of round trip airfares
to, transfers to and from defendant corporation’s
airstrip at Caticlan, Malay, Aklan and
accommodation and breakfast at Boracay, Malay,
Aklan. Two receipts were issued (defendant
corporation’s O.R. No. 56273 [Exhibit ‘A’] & 567234
[Exhibit ‘B’]) which the travel agency advised would
entitle the members of the tour package to avail of
the above stated services/accommodation. On
January 18, 1991, with the receipts, plaintiff, his
wife, 3 kids, a nanny, two brothers-in-law, and a
sister-in-law flew to Boracay via defendant-
corporation’s aircraft. Plaintiff and party stayed in
Boracay up to January 21, 1991. In the morning of
January 21, 1991, plaintiff and party, along with
other guests, left Boracay on board bancas
provided by defendant corporation and on reaching
a certain point, they alighted and boarded tricycles
that look them to defendant corporation’s airstrip at
nearby Caticlan. They arrived at the airstrip at
around 9:30 a.m. during which the incident that
gave rise to the present complaint took place.
"Taking the witness stand, plaintiff declared as
follows: After plaintiff and his party arrived at the
airstrip and while their luggages were being
unloaded from the tricycles, passengers informed
them that they should weigh themselves. Heeding
the advice, plaintiff’s wife Mrs. Tina Marie Tonda
repaired to a nipa structure-office where the
weighing scale was located. While she was
weighing herself, defendant corporation’s
employee, Archimedes ‘Arque’ (N)aming, one of
the defendants herein, shouted at Mrs. Tonda,
telling her something which was not clearly
heard by plaintiff as he was unloading luggages
from the tricycles. Plaintiff later asked his wife
what transpired inside the hut and she related
that Maming shouted at her to hurry up as there
were may passengers who would also take their
weight, and that she replied by saying ‘please,
when you talk to me, talk to me in a nicer
manner.’ Plaintiff and the other members of his
party also went inside the hut to get their weight.
Later, as plaintiff and his party were about to board
the 19-seater aircraft that would carry 16
passengers, defendant Maming approached Mrs.
Tonda and asked for their tickers. Mrs. Tonda
obliged by giving him the receipts issued by the
travel agency, but defendant Maming shouted at
her, telling her that those were not tickets. Mrs.
Tonda answered back, saying that those were the
receipts that served as their tickets when they left
Manila. Plaintiff then butted in and told Maming
‘You don’t have to talk to my wife like that.’
Maming, who seemed to be very nervous, pushed
plaintiff, telling him ‘You don’t have bulls (sic), do
you?’, prompting plaintiff to push back Maming.
Suddenly, Jorvin Tolentino, defendant
corporation’s employee and also one of the
defendants herein, who was behind plaintiff,
appeared at plaintiff’s right side and punched
him at the right eye causing it to bleed. Maming
who was in front of plaintiff then slashed
plaintiff’s left shoulder with a sharp pointed
instrument which could have been a ballpen
causing it to bleed and leave a scar measuring 4
inches by 12 centimeters and plaintiff to fall down.
The other passengers who then intervened took
Maming and Tolentino away. Plaintiff
immediately aired a verbal complaint at
defendant corporation’s office, which, however,
gave him no medical treatment. On arrival in
Manila, plaintiff related the incident to, and
sought medical treatment at defendant
corporation’s office but he was not extended
any although he was advised to file a formal
complaint so it could be investigated. Plaintiff
thus sought medical attendance at the Ayala
Alabang Village Association Clinic, which gave him
the following treatment:chanrob1es virtual 1aw
library
‘Suturing done. Cloxacellin 500 OID x 7 days.
Defenamic Acid 500 TID pc prn.’
and later at the Makati Medical Center where he
was found to have sustained the following
injuries:chanrob1es virtual 1aw library
‘Abrasion, linear; 12.0 cm. long, running upward
and laterally, supraclavicular region, right side.
‘Wound, lacerated, 0.5 cm. long, zygomatic region,
face, right side; 2.0 cm. long running upward and
medially, lateral aspect, eyebrow, right." ‘
On 23 December 1993, the trial court rendered its
decision in favor of respondent Tonda and awarded
him actual, moral and exemplary damages, plus
attorney’s fees. The dispositive portion 4
reads:jgc:chanrobles.com.ph
"WHEREFORE, judgment is hereby rendered in
favor of plaintiff, Joaquin Tonda, and against the
defendants, ordering defendants to jointly and
severally pay plaintiff
1. P1,000.00 as and for actual damages;
2. P100,000.00 as and for moral damages;
3. P50,000.00 as and for exemplary damages;
4. P50,000.00 as and for attorney’s fees; and

5. The costs of suit.
"SO ORDERED."cralaw virtua1aw library
On appeal, the Court of Appeals affirmed the
decision of the trial court. 5 or concern for what happened, respondent’s
Hence, this petition based on this lone assignment
of error:jgc:chanrobles.com.ph
"THE HONORABLE COURT OF APPEALS
PATENTLY ERRED IN DISMISSING
PETITIONER’S APPEAL AND DENYING THEIR
MOTION FOR RECONSIDERATION." 6
The petition is unmeritorious.
In assailing the decision of the Court of Appeals,
petitioners impute errors which basically involve
questions of fact and the appreciation of evidence
by the courts a quo. They fault the Court of Appeals
for giving credence to respondent’s allegedly self-
serving testimony which was insufficient to prove
his cause of action. They question the finding of
negligence on petitioner-PACO’s part.
Time and again, this Court has stressed that our
jurisdiction in a petition for review
on certiorari under Rule 45 is limited to reviewing
only errors of law, not of fact, unless the findings of
fact complained of are devoid of support by the
evidence on record, or the assailed judgment is
based on the misapprehension of facts. 7 The trial
court, having heard the witnesses and observed
their demeanor and manner of testifying, is in a
better position to decide the question of their
credibility. 8 Hence, the findings of the trial court
must be accorded the highest respect, even finality,
by this Court. 9 Likewise, we have ruled that, when
supported by sufficient evidence, findings of fact by
the Court of Appeals affirming those of the trial
court, are not to be disturbed on appeal. The
rationale behind this doctrine is that review of the
findings of fact by the Court of Appeals is not a
function this Court normally undertakes. 10 We will
not weigh the evidence all over again unless there
is a showing that the findings of the lower court are
totally devoid of support or are clearly erroneous so
as to constitute serious abuse of discretion. 11
In the case at bar, there is no reason to deviate
from this rule inasmuch as the findings of fact by
the courts a quo are supported by the evidence and
records of the case. The errors imputed by the
petitioners require an inquiry into the appreciation
of evidence by the trial court which this Court
cannot do on a petition for review
on certiorari under Rule 45 of the Rules of Court.
Besides, this Court has already ruled that the
finding of negligence is a question of fact 12 which
it cannot look into anew, without any showing that
the case falls under the exceptions to the well-
established rule that this Court is not a trier of facts.
Hence, we affirm the decision of the courts a quo
that petitioner PACO is liable for the negligence of
its employees, co-petitioners Maming and
Tolentino, pursuant to Article 2180, 13 in
connection to Article 2176 14 of the Civil Code. In
fact, the finding of mere negligence on the part of
petitioner’s employees is too kind to accurately
describe what really happened on January 21,
1999 to respondent and his family. The treatment
accorded respondent and his wife by petitioner
PACO’s employees was characterized by a certain
viciousness and meanness which the businessman
did not deserve. This kind of bad conduct, not to
mention petitioner PACO’s utter lack of interest in
medical condition and extrajudicial demand for
reimbursement and damages, reflects the terrible
kind of service philosophy or orientation subscribed
to by petitioners. Any liability arising from such
substandard service orientation must therefore be
borne by them.
Regarding petitioners’ contention that respondent’s
testimony was self-serving, this Court, in Nazareno
v. Court of Appeals, 15 found no reason to overturn
the unrebutted testimony of a lone witness (who
was also a respondent in the case) regarding the
validity of the notarized document inasmuch as the
trial court found him credible and his testimony was
given credence by the courts a quo. Hence, so too
it must be in the case at bar.
Respondent proved that he incurred actual
damages of P1,000 for the treatment of the wounds
inflicted by petitioners Maming and Tolentino. The
fact that he suffered injuries which required him to
seek medical attention at the Ayala Alabang Village
Clinic and at the Makati Medical Center remains
uncontroverted 16 and is thus deemed admitted.
He is also entitled to moral damages pursuant
to Article 2219 (2) of the Civil Code inasmuch as
the petitioner’s tortious acts certainly caused
physical injuries and undue embarrassment.
Exemplary damages are also recoverable as it
is imposed by way of example or correcting for
the public good, in addition to moral, temperate,
liquidated or compensatory damages, and for
acting in a wanton, fraudulent, reckless,
oppressive and malevolent manner. 18 Petitioner
Maming’s acts of uttering vulgar words, and
pushing and scratching respondent with a ballpen,
and petitioner Tolentino’s act of punching
respondent (a paying customer) in the eye and
injuring it, were shameless and reprehensible
and therefore "wanton, reckless and oppressive
acts" which justify the award of such damages.
Respondent is also entitled to attorney’s fees as he
was forced to litigate to protect his rights 19 when
his extrajudicial demand for damages from
petitioner PACO was ignored.
In view of the foregoing, we affirm the award by the
courts a quo of P100,000 as moral damages, in the
light of the injuries, humiliation and harrowing
experience of Respondent. No customer,
especially a businessman like respondent,
deserves to be screamed at, pushed and
slashed with a ballpen by the company’s
employees, especially those of service-oriented
companies like petitioner PACO which offers its
services precisely to ensure a hassle-free
vacation for its customers. Because of the
particular obnoxiousness of petitioners’
behavior, exemplary damages are increased to
P100,000.
WHEREFORE, the petition for review is DENIED.
The decision dated December 10, 1998 of the
Court of Appeals is hereby AFFIRMED with the
MODIFICATION that the award of exemplary
damages is increased from P50,000 to
P100,000.chanrob1es virtua1 1aw 1ibrary

SO ORDERED.
 the selection and supervision of Joson, Jr.
[G.R. No. 154278. December 27, 2002.] Petitioner and its driver were held liable for
damages. The dispositive portion of the trial court’s
VICTORY LINER, INC., Petitioner, v. HEIRS OF decision reads:chanrob1es virtual 1aw library
ANDRES MALECDAN, Respondents.
WHEREFORE, judgment is hereby rendered
DECISION ordering the defendants to pay, jointly and severally
to the plaintiffs the amounts of:chanrob1es virtual
1aw library
MENDOZA, J.:
a. P50,000,00 as death indemnity;

This is a petition for review of the decision 1 of the b. P88,339.00 for actual damages;
Eighth Division of the Court of Appeals, which
affirmed the decision 2 of the Regional Trial Court c. P200,000.00 for moral damages;
of Baguio City, Branch 5, in Civil Case No. 3082-R,
ordering petitioner and its driver, Ricardo Joson, d. P50,000.00 as exemplary damages;
Jr., to pay damages to the heirs of Andres Malecn,
who had been killed after being hit by a bus e. Thirty percent (30%) as attorney’s fees of
while attempting to cross the National Highway whatever amount that can be collected by the
in Barangay Nungnungan 2 in Cauayan, Isabela. plaintiff, and

The facts of the case are as follows:chanrob1es f. The costs of the suit.
virtual 1aw library
The counterclaim of the defendant Victory Liner,
Petitioner is a common carrier. Private respondent Inc. against the plaintiffs and the third-party
Elena Malechanrobles.com.ph:redn is the widow of complaint of the same defendant against the Zenith
the deceased, while private respondents Veronica, Insurance Corporation are dismissed.
Virginia, Mary Pauline, Arthur, Viola, Manuel and
Valentin Malechanrobles.com.ph:redn are their SO ORDERED. 9
children.
On appeal, the decision was affirmed by the Court
Andres Malechanrobles.com.ph:redn was a 75 of Appeals, with the modification that the award of
year-old farmer residing in Barangay Nungnungan attorney’s fees was fixed at P50,000.00. 10
2, Municipality of Cauayan, Province of Isabela. 3
On July 15, 1994, at around 7:00 p.m., while Hence, this appeal raising the following
Andres was crossing the National Highway on his issues:chanrob1es virtual 1aw library
way home from the farm, a Dalin Liner bus on the
southbound lane stopped to allow him and his I. WHETHER OR NOT THE HONORABLE COURT
carabao to pass. However, as Andres was crossing OF APPEALS ERRED IN AFFIRMING THE
the highway, a bus of petitioner Victory Liner, APPEALED DECISION OF THE REGIONAL TRIAL
driven by Ricardo C. Joson, Jr., bypassed the COURT GRANTING P200,000.00 AS MORAL
Dalin bus. In so doing, respondent hit the old DAMAGES WHICH IS DOUBLE THE P100,000.00
man and the carabao on which he was riding. AS PRAYED FOR BY THE PRIVATE
As a result, Andres Malechanrobles.com.ph:redn RESPONDENTS IN THEIR COMPLAINT AND IN
was thrown off the carabao, while the beast toppled GRANTING ACTUAL DAMAGES NOT
over. 4 The Victory Liner bus sped past the old SUPPORTED BY OFFICIAL RECEIPTS AND
man, while the Dalin bus proceeded to its SPENT WAY BEYOND THE BURIAL OF THE
destination without helping him.chanrob1es virtua1 DECEASED VICTIM.
1aw 1ibrary
II. WHETHER OR NOT THE AFFIRMATION BY
The incident was witnessed by Andres THE HONORABLE COURT OF APPEALS OF THE
Malechanrobles.com.ph:redn’s neighbor, Virgilio APPEALED DECISION OF THE REGIONAL TRIAL
Lorena, who was resting in a nearby waiting shed COURT GRANTING THE AWARD OF MORAL
after working on his farm. AND EXEMPLARY DAMAGES AND ATTORNEY’S
Malechanrobles.com.ph:redn sustained a wound on FEES WHICH WERE NOT PROVED AND
his left shoulder, from which bone fragments CONSIDERING THAT THERE IS NO FINDING OF
protruded. He was taken by Lorena and another BAD FAITH AND GROSS NEGLIGENCE ON THE
person to the Cagayan District Hospital where he PART OF THE PETITIONER WAS NOT
died a few hours after arrival. 5 The carabao also ESTABLISHED, IS IN ACCORD WITH LAW AND
died soon afterwards. 6 Lorena executed a sworn JURISPRUDENCE.
statement before the police authorities.
Subsequently, a criminal complaint for reckless III. WHETHER OR NOT THE HONORABLE
imprudence resulting in homicide and damage to COURT OF APPEALS ERRED IN AFFIRMING
property was filed against the Victory Liner bus THE APPEALED DECISION OF THE REGIONAL
driver Ricardo Joson, Jr. 7 TRIAL COURT WHICH DISREGARDED THE
APPELLANT’S TESTIMONIAL AND
On October 5, 1994, private respondents brought DOCUMENTARY EVIDENCE THAT IT HAS
this suit for damages in the Regional Trial Court, EXERCISED EXTRAORDINARY DILIGENCE IN
Branch 5, Baguio City, 8 which, in a decision THE SELECTION AND SUPERVISION OF ITS
rendered on July 17, 2000, found the driver guilty of EMPLOYEES, OR STATED DIFFERENTLY,
gross negligence in the operation of his vehicle and WHETHER OR NOT THE AFFIRMATION BY THE
Victory Liner, Inc. also guilty of gross negligence in COURT OF APPEALS OF THE APPEALED
DECISION OF THE TRIAL COURT THAT IS
CONTRARY TO LAW AND JURISPRUDENCE
CONSTITUTES GRAVE ABUSE AND EXCESS OF
JURISDICTION. 11
We find the appealed decision to be in
order.chanrob1es virtua1 1aw 1ibrary
First. Victory Liner, Inc. no longer questions the
findings of the Regional Trial Court that Andres
Malen was injured as a result of the gross
negligence of its driver, Ricardo Joson, Jr. What
petitioner now questions is the finding that it
(petitioner) failed to exercise the diligence of a good
father of the family in the selection and supervision
of its employee. Petitioner argues,
With all due respect, the assignment of three
inspectors to check and remind the drivers of
petitioner Victory Liner of its policies in a two-and-a-
half hour driving distance, the installation of
tachometers to monitor the speed of the bus all
throughout the trip, the periodic monitoring and
checking of the trips from one station to another
through a trip ticket from station to station, the
regular periodic conducting of safety and defensive
driving [training sessions] for its drivers are
concrete and physical proofs of the formulated
operating standards, the implementation and
monitoring of the same, designed for the exercise
of due diligence of a good father of a family in the
supervision of its employees. 12
It explained that it did not present bus driver Joson,
Jr. on the witness stands because he had been
dismissed from the company after the incident,
which it found was a breach in the company
regulations. Petitioner blames private respondents
for the death of their father, Andres
Malechanrobles.com.ph:redn, who was already 75
years old, for allowing him to plough their field by
himself. 13
The contention has no merit.
Article 2176 provides:chanrob1es virtual 1aw library
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 for the solidary liability of
an employer for the quasi-delict committed by
an employee. The responsibility of employers
for the negligence of their employees in the
performance of their duties is primary and,
therefore, the injured party may recover from the
employers directly, regardless of the solvency
of their employees. 14 The rationale for the rule
on vicarious liability has been explained
thus:chanrob1es virtual 1aw library
What has emerged as the modern justification for
vicarious liability is a rule of policy, a deliberate
allocation of a risk. The losses caused by the torts
of employees, which as a practical matter are sure
to occur in the conduct of the employer’s
enterprise, are placed upon that enterprise itself, as
a required cost of doing business. They are placed
upon the employer because, having engaged in an
enterprise, which will on the basis of all past
experience involve harm to others through the tort
of employees, and sought to profit by it, it is just
that he, rather than the innocent injured plaintiff,
should bear them; and because he is better able to
absorb them and to distribute them, through prices,
rates or liability insurance, to the public, and so to
shift them to society, to the community at large.
Added to this is the makeweight argument that an
employer who is held strictly liable is under the
greatest incentive to be careful in the selection,
instruction and supervision of his servants, and to
take every precaution to see that the enterprise is
conducted safely. 15
Employers may be relieved of responsibility for
the negligent acts of their employees acting
within the scope of their assigned task only if
they can show that "they observed all the
diligence of a good father of a family to prevent
damage." 16 For this purpose, they have the
burden of proving that they have indeed exercised
such diligence, both in the selection of the
employee and in the supervision of the
performance of his duties. 17
In the selection of prospective employees,
employers are required to examine them as to
their qualifications, experience and service
records. 18 With respect to the supervision of
employees, employers must formulate standard
operating procedures, monitor their
implementation and impose disciplinary
measures for breaches thereof. 19 These facts
must be shown by concrete proof, including
documentary evidence. 20
In the instant case, petitioner presented the results
of Joson, Jr.’s written examination, 21 actual driving
tests, 22 x-ray examination, 23 psychological
examination, 24 NBI clearance, 25 physical
examination, 26 hematology examination, 27
urinalysis, 28 student driver training, 29 shop
training, 30 birth certificate, 31 high school diploma
32 and reports from the General Maintenance
Manager and the Personnel Manager showing that
he had passed all the tests and training sessions
and was ready to work as a professional driver. 33
However, as the trial court noted, petitioner did
not present proof that Joson, Jr. had nine years
of driving experience. 34
Petitioner also presented testimonial evidence that
drivers of the company were given seminars on
driving safety at least twice a year. 35 Again,
however, as the trial court noted there is no record
of Joson, Jr. ever attending such a seminar. 36
Petitioner likewise failed to establish the speed of
its buses during its daily trips or to submit in
evidence the trip tickets, speed meters and reports
of field inspectors. The finding of the trial court that
petitioner’s bus was running at a very fast speed
when it overtook the Dalin bus and hit the
deceased was not disputed by petitioner. For these
reasons, we hold that the trial court did not err in
finding petitioner to be negligent in the supervision
of its driver Joson, Jr.chanrob1es virtua1 1aw
1ibrary
Second. To justify an award of actual damages,
there should be proof of the actual amount of loss
incurred in connection with the death, wake or
burial of the victim. 37 We cannot take into account
receipts showing expenses incurred some time 4. Exemplary damages in the amount of Fifty
after the burial of the victim, such as expenses Thousand Pesos (P50,000.00);
relating to the 9th day, 40th day and 1st year death
anniversaries. 38 In this case, the trial court 5. Attorney’s fees in the amount of Fifty Thousand
awarded P88,339.00 as actual damages. While Pesos (P50,000.00); and
these were duly supported by receipts, these
included the amount of P5,900.00, the cost of one 6. Costs of suit.
pig which had been butchered for the 9th day death
anniversary of the deceased. This item cannot be SO ORDERED.
allowed. We, therefore, reduce the amount of
actual damages to P82,439.00.00. The award of
P200,000.00 for moral damages should likewise be
reduced. The trial court found that the wife and
children of the deceased underwent "intense moral
suffering" as a result of the latter’s death. 39 Under
Art. 2206 of the Civil Code, the spouse, legitimate
children and illegitimate descendants and
ascendants of the deceased may demand moral
damages for mental anguish by reason of the death
of the deceased. Under the circumstances of this
case an award of P100,000.00 would be in keeping
with the purpose of the law in allowing moral
damages. 40

On the other hand, the award of P50,000.00 for

indemnity is in accordance with current rulings of
the Court. 41

Art. 2231 provides that exemplary damages may

be recovered in cases involving quasi-delicts if
the defendant acted with gross negligence.
Exemplary damages are imposed not to enrich
one party or impoverish another but to serve as
a deterrent against or as a negative incentive to
curb socially deleterious actions. 42 In this case,
petitioner’s driver Joson, Jr. was grossly negligent
in driving at such a high speed along the national
highway and overtaking another vehicle which had
stopped to allow a pedestrian to cross. Worse, after
the accident, Joson, Jr. did not stop the bus to help
the victim. Under the circumstances, we believe
that the trial court’s award of P50,000.00 as
exemplary damages is proper.

Finally, private respondents are entitled to

attorney’s fees. Under Art. 2008 of the Civil Code,
attorney’s fees may be recovered when, as in the
instant case, exemplary damages are awarded. In
the recent case of Metro Manila Transit Corporation
v. Court of Appeals, 43 we held an award of
P50,000.00 as attorney’s fees to be reasonable.
Hence, private respondents are entitled to
attorney’s fees in that amount.chanrob1es virtua1
1aw 1ibrary

WHEREFORE, the decision of the Court of

Appeals, dated January 17, 2002, is hereby
AFFIRMED, with the MODIFICATION that
petitioner Victory Liner, Inc. is ordered to pay the
following amounts to the respondent heirs of
Andres Malechanrobles.com.ph:redn:chanrob1es
virtual 1aw library

1. Death indemnity in the amount of Fifty Thousand

Pesos (P50,000.00);

2. Actual damages in the amount of Eighty-Two

Thousand Four Hundred Thirty-Nine Pesos
(P82,439.00);

3. Moral damages in the amount of One Hundred

Thousand Pesos (P100,000.00);
[G.R. No. 115324. February 19, 2003.]
PRODUCERS BANK OF THE PHILIPPINES (now
FIRST INTERNATIONAL BANK), Petitioner, v.
HON. COURT OF APPEALS AND FRANKLIN
VIVES, Respondents.
DECISION
CALLEJO, SR., J.:
This is a petition for review on certiorari of the
Decision 1 of the Court of Appeals dated June 25,
1991 in CA-G.R. CV No. 11791 and of its
Resolution 2 dated May 5, 1994, denying the
motion for reconsideration of said decision filed by
petitioner Producers Bank of the
Philippines.chanrob1es virtua1 1aw 1ibrary
Sometime in 1979, private respondent Franklin
Vives was asked by his neighbor and friend
Angeles Sanchez to help her friend and townmate,
Col. Arturo Doronilla, in incorporating his business,
the Sterela Marketing and Services ("Sterela" for
brevity). Specifically, Sanchez asked private
respondent to deposit in a bank a certain
amount of money in the bank account of Sterela
for purposes of its incorporation. She assured
private respondent that he could withdraw his
money from said account within a month’s time.
Private respondent asked Sanchez to bring
Doronilla to their house so that they could
discuss Sanchez’s request. 3 Private respondent instituted an action for recovery
On May 9, 1979, private respondent, Sanchez,
Doronilla and a certain Estrella Dumagpi,
Doronilla’s private secretary, met and discussed the
matter. Thereafter, relying on the assurances and
representations of Sanchez and Doronilla, private
respondent issued a check in the amount of Two
Hundred Thousand Pesos (P200,000.00) in favor of
Sterela. Private respondent instructed his wife, Mrs.
Inocencia Vives, to accompany Doronilla and
Sanchez in opening a savings account in the name
of Sterela in the Buendia, Makati branch of
Producers Bank of the Philippines. However, only
Sanchez, Mrs. Vives and Dumagpi went to the
bank to deposit the check. They had with them an
authorization letter from Doronilla authorizing
Sanchez and her companions, "in coordination with
Mr. Rufo Atienza," to open an account for Sterela
Marketing Services in the amount of P200,000.00.
In opening the account, the authorized signatories
were Inocencia Vives and/or Angeles Sanchez. A
passbook for Savings Account No. 10-1567 was
thereafter issued to Mrs. Vives. 4
Subsequently, private respondent learned that
Sterela was no longer holding office in the address
previously given to him. Alarmed, he and his wife
went to the Bank to verify if their money was still
intact. The bank manager referred them to Mr. Rufo
Atienza, the assistant manager, who informed them
that part of the money in Savings Account No. 10-
1567 had been withdrawn by Doronilla, and that
only P90,000.00 remained therein. He likewise told
them that Mrs. Vives could not withdraw said
remaining amount because it had to answer for
some postdated checks issued by Doronilla.
According to Atienza, after Mrs. Vives and Sanchez
opened Savings Account No. 10-1567, Doronilla
opened Current Account No. 10-0320 for Sterela
and authorized the Bank to debit Savings; Account
No. 10-1567 for the amounts necessary to cover
overdrawings in Current Account No. 10-0320. In
opening said current account, Sterela, through
Doronilla, obtained a loan of P175,000.00 from the
Bank. To cover payment thereof, Doronilla issued
three postdated checks, all of which were
dishonored. Atienza also said that Doronilla could
assign or withdraw the money in Savings Account
No. 10-1567 because he was the sole proprietor of
Sterela. 5
Private respondent tried to get in touch with
Doronilla through Sanchez. On June 29, 1979, he
received a letter from Doronilla, assuring him that
his money was intact and would be returned to him.
On August 13, 1979, Doronilla issued a postdated
check for Two Hundred Twelve Thousand Pesos
(P212,000.00) in favor of private Respondent.
However, upon presentment thereof by private
respondent to the drawee bank, the check was
dishonored. Doronilla requested private respondent
to present the same check on September 15, 1979
but when the latter presented the check, it was
again dishonored. 6
Private respondent referred the matter to a lawyer,
who made a written demand upon Doronilla for the
return of his client’s money. Doronilla issued
another check for P212,000.00 in private
respondent’s favor but the check was again
dishonored for insufficiency of funds. 7
of sum of money in the Regional Trial Court (RTC)
in Pasig, Metro Manila against Doronilla, Sanchez,
Dumagpi and petitioner. The case was docketed as
Civil Case No. 44485. He also filed criminal actions
against Doronilla, Sanchez and Dumagpi in the
RTC. However, Sanchez passed away on March
16, 1985 while the case was pending before the
trial court. On October 3, 1995, the RTC of Pasig,
Branch 157, promulgated its Decision in Civil Case
No. 44485, the dispositive portion of which
reads:chanrob1es virtual 1aw library
IN VIEW OF THE FOREGOING, judgment is
hereby rendered sentencing defendants Arturo J.
Doronila, Estrella Dumagpi and Producers Bank of
the Philippines to pay plaintiff Franklin Vives jointly
and severally —
(a) the amount of P200,000.00, representing the
money deposited, with interest at the legal rate
from the filing of the complaint until the same is fully
paid;
(b) the sum of P50,000.00 for moral damages and
a similar amount for exemplary damages;
(c) the amount of P40,000.00 for attorney’s fees;
and
(d) the costs of the suit.
SO ORDERED. 8
Petitioner appealed the trial court’s decision to the
Court of Appeals. In its Decision dated June 25,
1991, the appellate court affirmed in toto the
decision of the RTC 9 It likewise denied with finality
petitioner’s motion for reconsideration in its
Resolution dated May 5, 1994. 10
On June 30, 1994, petitioner filed the present
petition, arguing that —
I.
THE HONORABLE COURT OF APPEALS ERRED
IN UPHOLDING THAT THE TRANSACTION
BETWEEN THE DEFENDANT DORONILLA AND
RESPONDENT VIVES WAS ONE OF SIMPLE
LOAN AND NOT ACCOMMODATION;
II.
THE HONORABLE COURT OF APPEALS ERRED
IN UPHOLDING THAT PETITIONER’S BANK
MANAGER, MR. RUFO ATIENZA, CONNIVED
WITH THE OTHER DEFENDANTS IN
DEFRAUDING PETITIONER (Sic. Should be
PRIVATE RESPONDENT) AND AS A
CONSEQUENCE, THE PETITIONER SHOULD BE
HELD LIABLE UNDER THE PRINCIPLE OF
NATURAL JUSTICE;
III.
THE HONORABLE COURT OF APPEALS ERRED
IN ADOPTING THE ENTIRE RECORDS OF THE
REGIONAL TRIAL COURT AND AFFIRMING THE
JUDGMENT APPEALED FROM, AS THE
FINDINGS OF THE REGIONAL TRIAL COURT
WERE BASED ON A MISAPPREHENSION OF
FACTS;
IV.
THE HONORABLE COURT OF APPEALS ERRED
IN DECLARING THAT THE CITED DECISION IN
SALUDARES VS. MARTINEZ, 29 SCRA 745,
UPHOLDING THE LIABILITY OF AN EMPLOYER
FOR ACTS COMMITTED BY AN EMPLOYEE IS
APPLICABLE;
V.
THE HONORABLE COURT OF APPEALS ERRED
IN UPHOLDING THE DECISION OF THE LOWER
COURT THAT HEREIN PETITIONER BANK IS
JOINTLY AND SEVERALLY LIABLE WITH THE
OTHER DEFENDANTS FOR THE AMOUNT OF
P200,000.00 REPRESENTING THE SAVINGS
ACCOUNT DEPOSIT, P50,000.00 FOR MORAL
DAMAGES, P50,000.00 FOR EXEMPLARY
DAMAGES, P40,000.00 FOR ATTORNEY’S FEES
AND THE COSTS OF SUIT. 11
Private respondent filed his Comment on
September 23, 1994. Petitioner filed its Reply
thereto on September 25, 1995. The Court then
required private respondent to submit a rejoinder to
the reply. However, said rejoinder was filed only on
April 21, 1997, due to petitioner’s delay in
furnishing private respondent with copy of the reply
12 and several substitutions of counsel on the part
of private Respondent. 13 On January 17, 2001,
the Court resolved to give due course to the petition
and required the parties to submit their respective
memoranda. 14 Petitioner filed its memorandum on
April 16, 2001 while private respondent submitted
his memorandum on March 22, 2001.chanrob1es
virtua1 1aw 1ibrary
Petitioner contends that the transaction between
private respondent and Doronilla is a simple loan
(mutuum) since all the elements of a mutuum are
present: first, what was delivered by private
respondent to Doronilla was money, a consumable
thing; and second, the transaction was onerous as
Doronilla was obliged to pay interest, as evidenced
by the check issued by Doronilla in the amount of
P212,000.00, or P12,000 more than what private
respondent deposited in Sterela’s bank account. 15
Moreover, the fact that private respondent sued his
good friend Sanchez for his failure to recover his
money from Doronilla shows that the transaction
was not merely gratuitous but "had a business
angle" to it. Hence, petitioner argues that it cannot
be held liable for the return of private respondent’s
P200,000.00 because it is not privy to the
transaction between the latter and Doronilla. 16
It argues further that petitioner’s Assistant
Manager, Mr. Rufo Atienza, could not be faulted for
allowing Doronilla to withdraw from the savings
account of Sterela since the latter was the sole
proprietor of said company. Petitioner asserts that
Doronilla’s May 8, 1979 letter addressed to the
bank, authorizing Mrs. Vives and Sanchez to open
a savings account for Sterela, did not contain any
authorization for these two to withdraw from said
account. Hence, the authority to withdraw therefrom
remained exclusively with Doronilla, who was the
sole proprietor of Sterela, and who alone had legal
title to the savings account. 17 Petitioner points out
that no evidence other than the testimonies of
private respondent and Mrs. Vives was presented
during trial to prove that private respondent
deposited his P200,000.00 in Sterela’s account for
purposes of its incorporation. 18 Hence, petitioner
should not be held liable for allowing Doronilla to
withdraw from Sterela’s savings account.
Petitioner also asserts that the Court of Appeals
erred in affirming the trial court’s decision since the
findings of fact therein were not accord with the
evidence presented by petitioner during trial to
prove that the transaction between private
respondent and Doronilla was a mutuum, and that it
committed no wrong in allowing Doronilla to
withdraw from Sterela’s savings account. 19
Finally, petitioner claims that since there is no
wrongful act or omission on its part, it is not liable
for the actual damages suffered by private
respondent, and neither may it be held liable for
moral and exemplary damages as well as
attorney’s fees. 20
Private respondent, on the other hand, argues that
the transaction between him and Doronilla is not a
mutuum but an accommodation, 21 since he did
not actually part with the ownership of his
P200,000.00 and in fact asked his wife to deposit
said amount in the account of Sterela so that a
certification can be issued to the effect that Sterela
had sufficient funds for purposes of its incorporation
but at the same time, he retained some degree of
control over his money through his wife who was
made a signatory to the savings account and in
whose possession the savings account passbook
was given. 22

He likewise asserts that the trial court did not err in
finding that petitioner, Atienza’s employer, is liable
for the return of his money. He insists that Atienza,
petitioner’s assistant manager, connived with
Doronilla in defrauding private respondent since it
was Atienza who facilitated the opening of Sterela’s
current account three days after Mrs. Vives and
Sanchez opened a savings account with petitioner
for said company, as well as the approval of the
authority to debit Sterela’s savings account to cover
any overdrawings in its current account. 23
There is no merit in the petition.
At the outset, it must be emphasized that only
questions of law may be raised in a petition for
review filed with this Court. The Court has
repeatedly held that it is not its function to analyze
and weigh all over again the evidence presented by
the parties during trial. 24 The Court’s jurisdiction is
in principle limited to reviewing errors of law that
might have been committed by the Court of
Appeals. 25 Moreover, factual findings of courts,
when adopted and confirmed by the Court of
Appeals, are final and conclusive on this Court
unless these findings are not supported by the
evidence on record. 26 There is no showing of any
misapprehension of facts on the part of the Court of
Appeals in the case at bar that would require this
Court to review and overturn the factual findings of
that court, especially since the conclusions of fact
of the Court of Appeals and the trial court are not
only consistent but are also amply supported by the
evidence on record.chanrob1es virtua1 1aw 1ibrary
No error was committed by the Court of Appeals
when it ruled that the transaction between private
respondent and Doronilla was a commodatum and
not a mutuum. A circumspect examination of the
records reveals that the transaction between
them was a commodatum. Article 1933 of the
Civil Code distinguishes between the two kinds of
loans in this wise:chanrob1es virtual 1aw library
By the contract of loan, one of the parties delivers
to another, either something not consumable so
that the latter may use the same for a certain time
and return it, in which case the contract is called a
commodatum; or money or other consumable thing,
upon the condition that the same amount of the
same kind and quality shall be paid, in which case
the contract is simply called a loan or mutuum.
Commodatum is essentially gratuitous.
Simple loan may be gratuitous or with a stipulation
to pay interest.
In commodatum, the bailor retains the ownership of
the thing loaned, while in simple loan, ownership
passes to the borrower.
The foregoing provision seems to imply that if the
subject of the contract is a consumable thing, such
as money, the contract would be a mutuum.
However, there are some instances where a
commodatum may have for its object a consumable
thing. Article 1936 of the Civil Code
provides:chanrob1es virtual 1aw library
Consumable goods may be the subject of
commodatum if the purpose of the contract is not
the consumption of the object, as when it is merely
for exhibition.
Thus, if consumable goods are loaned only for
purposes of exhibition, or when the intention of
the parties is to lend consumable goods and to
have the very same goods returned at the end
of the period agreed upon, the loan is a
commodatum and not a mutuum.
The rule is that the intention of the parties
thereto shall be accorded primordial
consideration in determining the actual
character of a contract. 27 In case of doubt, the
contemporaneous and subsequent acts of the
parties shall be considered in such determination.
28
As correctly pointed out by both the Court of
Appeals and the trial court, the evidence shows that
private respondent agreed to deposit his money in
the savings account of Sterela specifically for the
purpose of making it appear "that said firm had
sufficient capitalization for incorporation, with the
promise that the amount shall be returned within
thirty (30) days. 29 Private respondent merely
"accommodated" Doronilla by lending his money
without consideration, as a favor to his good friend
Sanchez. It was however clear to the parties to the
transaction that the money would not be removed
from Sterela’s savings account and would be
returned to private respondent after thirty (30) days.
Doronilla’s attempts to return to private respondent
the amount of P200,000.00 which the latter
deposited in Sterela’s account together with an
additional P12,000.00, allegedly representing
interest on the mutuum, did not convert the
transaction from a commodatum into a mutuum
because such was not the intent of the parties and
because the additional P12,000.00 corresponds to
the fruits of the lending of the P200,000.00. Article
1935 of the Civil Code expressly states that" [t]he
bailee in commodatum acquires the use of the thing
loaned but not its fruits." Hence, it was only proper
for Doronilla to remit to private respondent the
interest accruing to the latter’s money deposited
with petitioner.
Neither does the Court agree with petitioner’s
contention that it is not solidarily liable for the return
of private respondent’s money because it was not
privy to the transaction between Doronilla and
private Respondent. The nature of said transaction,
that is, whether it is a mutuum or a commodatum,
has no bearing on the question of petitioner’s
liability for the return of private respondent’s money
because the factual circumstances of the case
clearly show that petitioner, through its employee
Mr. Atienza, was partly responsible for the loss of
private respondent’s money and is liable for its
restitution.
Petitioner’s rules for savings deposits written on the
passbook it issued Mrs. Vives on behalf of Sterela
for Savings Account No. 10-1567 expressly states
that —
"2. Deposits and withdrawals must be made by the
depositor personally or upon his written authority
duly authenticated, and neither a deposit nor a
withdrawal will be permitted except upon the
production of the depositor savings bank book in
which will be entered by the Bank the amount
deposited or withdrawn." 30
Said rule notwithstanding, Doronilla was permitted
by petitioner, through Atienza, the Assistant Branch
Manager for the Buendia Branch of petitioner, to
withdraw therefrom even without presenting the
passbook (which Atienza very well knew was in the
possession of Mrs. Vives), not just once, but
several times. Both the Court of Appeals and the
trial court found that Atienza allowed said
withdrawals because he was party to Doronilla’s
"scheme" of defrauding private
respondent:chanrob1es virtual 1aw library
x       x       x
But the scheme could not have been executed
successfully without the knowledge, help and
cooperation of Rufo Atienza, assistant manager
and cashier of the Makati (Buendia) branch of the
defendant bank. Indeed, the evidence indicates that
Atienza had not only facilitated the commission of
the fraud but he likewise helped in devising the
means by which it can be done in such manner as
to make it appear that the transaction was in
accordance with banking procedure.
To begin with, the deposit was made in defendant’s
Buendia branch precisely because Atienza was a
key officer therein. The records show that plaintiff
had suggested that the P200,000.00 be deposited
in his bank, the Manila Banking Corporation, but
Doronilla and Dumagpi insisted that it must be in
defendant’s branch Makati for "it will be easier for
them to get a certification." In fact before he was
introduced to plaintiff, Doronilla had already
prepared a letter addressed to the Buendia branch
manager authorizing Angeles B. Sanchez and
company to open a savings account for Sterela in
the amount of P200,000.00, as "per coordination
with Mr. Rufo Atienza, Assistant Manager of the
Bank . . ." (Exh. 1). This is a clear manifestation
that the other defendants had been in consultation
with Atienza from the inception of the scheme.
Significantly, there were testimonies and admission
that Atienza is the brother-in-law of a certain
Romeo Mirasol, a friend and business associate of
Doronilla.
Then there is the matter of the ownership of the
fund. Because of the "coordination" between
Doronilla and Atienza, the latter knew before hand
that the money deposited did not belong to
Doronilla nor to Sterela. Aside from such
foreknowledge, he was explicitly told by Inocencia
Vives that the money belonged to her and her
husband and the deposit was merely to
accommodate Doronilla. Atienza even declared that
the money came from Mrs. Vives.
Although the savings account was in the name of
Sterela, the bank records disclose that the only
ones empowered to withdraw the same were
Inocencia Vives and Angeles B. Sanchez. In the
signature card pertaining to this account (Exh. J),
the authorized signatories were Inocencia Vives
&/or Angeles B. Sanchez. Atienza stated that it is
the usual banking procedure that withdrawals of
savings deposits could only be made by persons
whose authorized signatures are in the signature
cards on file with the bank. He, however, said that
this procedure was not followed here because
Sterela was owned by Doronilla. He explained that
Doronilla had the full authority to withdraw by virtue
of such ownership. The Court is not inclined to
agree with Atienza. In the first place, he was all the
time aware that the money came from Vives and
did not belong to Sterela.. He was also told by Mrs.
Vives that they were only accommodating Doronilla
so that a certification can be issued to the effect
that Sterela had a deposit of so much amount to be
sued in the incorporation of the firm. In the second
place, the signature of Doronilla was not authorized
in so far as that account is concerned inasmuch as
he had not signed the signature card provided by
the bank whenever a deposit is opened. In the third
place, neither Mrs. Vives nor Sanchez had given
Doronilla the authority to withdraw.
Moreover, the transfer of fund was done without
the passbook having been presented. It is an
accepted practice that whenever a withdrawal is
made in a savings deposit, the bank requires
the presentation of the passbook. In this case,
such recognized practice was dispensed with. The
transfer from the savings account to the current
account was without the submission of the
passbook which Atienza had given to Mrs. Vives.
Instead, it was made to appear in a certification
signed by Estrella Dumagpi that a duplicate
passbook was issued to Sterela because the
original passbook had been surrendered to the
Makati Branch in view of a loan accommodation
assigning the savings account (Exh. C). Atienza,
who undoubtedly had a hand in the execution of
this certification, was aware that the contents of the
same are not true. He knew that the passbook was
in the hands of Mrs. Vives for he was the one who
gave it to her. Besides, as assistant manager of the
branch and the bank official servicing the savings
and current accounts in question, he also was
aware that the original passbook was never
surrendered. He was also cognizant that Estrella
Dumagpi was not among those authorized to
withdraw so her certification had no effect
whatsoever.
The circumstance surrounding the opening of the
current account also demonstrate that Atienza’s
active participation in the perpetration of the
fraud and deception that caused the loss. The
records indicate that this account was opened
three days later after the P200,000.00 was
deposited. In spite of his disclaimer, the Court
believes that Atienza was mindful and posted
regarding the opening of the current account
considering that Doronilla was all the while in
"coordination" with him. That it was he who
facilitated the approval of the authority to debit
the savings account to cover any overdrawings
in the current account (Exh. 2) is not hard to
comprehend.
Clearly Atienza had committed wrongful acts that
had resulted to the loss subject of this case. . . . 31
Under Article 2180 of the Civil Code, employers
shall be held primarily and solidarily liable for
damages caused by their employees acting
within the scope of their assigned tasks. To
hold the employer liable under this provision, it
must be shown that an employer-employee
relationship exists, and that the employee was
acting within the scope of his assigned task
when the act complained of was committed 32
Case law in the United States of America has it that
a corporation that entrusts a general duty to its
employee is responsible to the injured party for
damages flowing from the employee’s wrongful
act done in the course of his general authority,
even though in doing such act, the employee
may have failed in its duty to the employer and
disobeyed the latter’s instructions. 33

There is no dispute that Atienza was an employee

of petitioner. Furthermore, petitioner did not deny
that Atienza was acting within the scope of his
authority as Assistant Branch Manager when he
assisted Doronilla in withdrawing funds from
Sterela’s Savings Account No. 10-1567, in which
account private respondent’s money was
deposited, and in transferring the money withdrawn
to Sterela’s Current Account with petitioner.
Atienza’s acts of helping Doronilla, a customer of
the petitioner, were obviously done in furtherance
of petitioner’s interests 34 even though in the
process, Atienza violated some of petitioner’s rules
such as those stipulated in its savings account
passbook. 35 It was established that the transfer
of funds from Sterela’s savings account to its
current account could not have been
accomplished by Doronilla without the
invaluable assistance of Atienza, and that it was
their connivance which was the cause of private
respondent’s loss.

The foregoing shows that the Court of Appeals

correctly held that under Article 2180 of the Civil
Code, petitioner is liable for private respondent’s
loss and is solidarily liable with Doronilla and
Dumagpi for the return of the P200,000.00 since it
is clear that petitioner failed to prove that it
exercised due diligence to prevent the unauthorized
withdrawals from Sterela’s savings account, and
that it was not negligent in the selection and
supervision of Atienza. Accordingly, no error was
committed by the appellate court in the award of
actual, moral and exemplary damages, attorney’s
fees and costs of suit to
private Respondent.chanrob1es virtua1 1aw 1ibrary

WHEREFORE, the petition is hereby DENIED. The

assailed Decision and Resolution of the Court of
Appeals are AFFIRMED.

SO ORDERED.
[G.R. NO. 155111 : February 14, 2008]
CORNELIO LAMPESA and DARIO
COPSIYAT, Petitioners, v. DR. JUAN DE VERA,
JR., FELIX RAMOS and MODESTO
TOLLAS, Respondents.
DECISION
QUISUMBING, J.:
This Petition for Review seeks the reversal of the
Decision1 dated August 21, 2002 of the Court of
Appeals in CA-G.R. CV No. 49778 which had
affirmed the Decision2 dated March 22, 1995 of the
Regional Trial Court of San Carlos City,
Pangasinan, Branch 57, finding petitioners Cornelio
Lampesa and Dario Copsiyat liable for damages on
account of the injury sustained by respondent, Dr.
Juan De Vera, Jr.
The antecedent facts, as found by the appellate
court, are as follows:
On December 28, 1988, De Vera, Jr. boarded a
passenger jeepney3 bound for Baguio City driven
by respondent Modesto Tollas. Upon reaching the
Km. 4 marker of the national highway, the jeepney
came to a complete stop to allow a truck, 4 then
being driven by Dario Copsiyat, to cross the
path of the jeepney in order to park at a private
parking lot on the right side of the road. As
Tollas began to maneuver the jeepney slowly along
its path, the truck, which had just left the pavement,
suddenly started to slide back towards the jeepney
until its rear left portion hit the right side of the
jeepney. De Vera, Jr., who was seated in the
front passenger seat, noticed his left middle
finger was cut off as he was holding on to the
handle of the right side of the jeepney. He
asked Tollas to bring him immediately to the
hospital. The Medical Certificate5 dated June 19,
1989, described De Vera, Jr.'s amputated left
middle finger as follows:
Neuroma, proximal phalange left middle finger
OPERATION PERFORMED: Ray amputation
middle finger left'6
P/Cpl. Arthur A. Bomogao of the Benguet
Integrated National Police investigated and
recorded the incident in his Police Investigation
Report7 dated January 17, 1989.
The defense, for its part, presented the following
version of the incident: After delivering a load of
vegetables, truck owner Lampesa instructed his
driver, Copsiyat, to park the truck in the parking lot
across the highway. While the rear of the truck was
still on the pavement of the highway, an
approaching passenger jeepney sideswiped the
rear portion of the truck. This resulted in the
dismemberment of De Vera, Jr.'s left middle finger,
according to the defense.
Lampesa offered P5,000 to De Vera, Jr. as a
gesture of humanitarian support, but the latter
demanded P1 million although this amount was
later lowered to P75,000. The parties failed to settle
amicably; thus, De Vera, Jr. filed an action for
damages8 against Lampesa, Copsiyat, Ramos and
Tollas, as the truck owner, truck driver, jeepney
owner/operator and jeepney driver, respectively.
The trial court found driver Copsiyat negligent in the
operation of his truck and ruled that his negligence
was the proximate cause of the injuries suffered by
De Vera, Jr. It also ruled that Lampesa did not
exercise due diligence in the selection and
supervision of his driver as required under Articles
21769 and 218010 of the Civil Code. The fallo of the
decision reads:
WHEREFORE, judgment is hereby rendered:
1. Ordering Dario Copsiyat and Cornelio F.
Lampesa, jointly and solidarily to pay the plaintiff
the sum of P75,000.00 as moral
damages; P22,000.00 as actual damages;
and P15,000.00 as attorney's fees plus the costs of
suit.
2. The counterclaim and cross-claim of defendant
Lampesa and Copsiyat and the counterclaim and
counter-cross-claim of defendants Ramos and
Tollas are hereby dismissed.
SO ORDERED.11
Upon review, the Court of Appeals upheld the trial
court's findings of negligence on the part of
Copsiyat and Lampesa. The dispositive portion of
the decision reads:
WHEREFORE, the questioned Decision, dated
March 22, 1995, of the Regional Trial Court of
Pangasinan, Branch 57, in Civil Case No. SCC-
1506, is hereby AFFIRMED.
SO ORDERED.12
Hence, the instant petition, raising the following as
issues:
I.
WHO BETWEEN THE TWO (2) DRIVERS
(COPSIYAT WHO WAS THE ELF TRUCK DRIVER
AND TOLLAS FOR THE PASSENGER JEEP)
WAS NEGLIGENT?
II.
GRANTING THAT COPSIYAT WAS ALSO
NEGLIGENT, WHETHER OR NOT THE AWARD
OF MORAL DAMAGES AND ATTORNEY'S FEES
ARE JUSTIFIED; AND
III.
WHETHER OR NOT THE TRIAL COURT AND
THE COURT OF APPEALS COMMITTED
REVERSIBLE ERROR IN THE APPRECIATION
OF THE EVIDENCE.13
Simply put, the issues for our resolution are: (1) Did
the Court of Appeals err in affirming the trial court's
ruling that petitioners are liable for the injury
sustained by De Vera, Jr.? and (2) Did it err in
awarding moral damages and attorney's fees?
cralawred
Petitioners insist that it was Tollas, the jeepney
driver, who was negligent. They maintain that
Tollas should have first allowed the truck to park as
he had a clear view of the scenario, compared to
Copsiyat, the truck driver, who had a very limited
view of the back of the truck. Lampesa also avers
he did his legal duty in the selection and
supervision of Copsiyat as his driver. He alleges
that before hiring Copsiyat, he asked the latter if he
had a professional driver's license.
For their part, respondents adopt the findings of the
trial and appellate courts. They contend that it was
Copsiyat who was negligent in driving the truck and
the testimony of De Vera, Jr. on this matter was
more than sufficient to prove the fact. De Vera, Jr.
also contends that petitioners are liable for moral
damages and attorney's fees under Articles
221714 and 220815 of the Civil Code.
Considering the contentions of the parties, in the
light of the circumstances in this case, we are in
agreement that the petition lacks merit.
Article 2176 of the Civil Code provides that
whoever by act or omission causes damage to
another, there being fault or negligence, is obliged
to pay for the damage done. Such fault or
negligence, if there is no pre-existing contractual
relation between the parties, is called quasi-delict.
Whether a person is negligent or not is a question
of fact, which we cannot pass upon in a Petition for
Review on Certiorari, as our jurisdiction is limited to
reviewing errors of law.16
In this case, both the trial and the appellate
courts found Copsiyat negligent in
maneuvering the truck and ruled that his
negligence was the proximate cause of the injury
sustained by De Vera, Jr. Lampesa was also held
accountable by both courts because he failed to
exercise due diligence in the supervision of his
driver. This Court is not bound to weigh all over
again the evidence adduced by the parties,
particularly where the findings of both the trial court
and the appellate court on the matter of petitioners'
negligence coincide. The resolution of factual
issues is a function of the trial court, whose findings
on these matters are, as a general rule, binding on
this Court more so where these have been affirmed
by the Court of Appeals.17
service, if any.19 Lampesa must also show that
he exercised due supervision over
Copsiyat after his selection. But all he had
shown on record were bare allegations
unsubstantiated by evidence. Having failed to
exercise the due diligence required of him as
employer, Lampesa cannot avoid solidary
liability for the tortuous act committed by his
driver, Copsiyat.
On a final note, petitioners' liability for moral
damages and attorney's fees cannot now be
questioned for failure of petitioners to raise it before
the Court of Appeals. It is a well-entrenched rule
that issues not raised below cannot be raised for
the first time on appeal as to do so would be
offensive to the basic rules of fair play and
justice.20 Moreover, the award of moral damages in
this case is justifiable under Article 2219 (2) 21 of the
Civil Code, which provides for said damages in
cases of quasi-delicts causing physical
injuries.22 The award for attorney's fees is also
proper under Article 2208 (2)23 of the Civil Code,
considering that De Vera, Jr. was compelled to
litigate when petitioners ignored his demand for an
amicable settlement of his claim.24
WHEREFORE, the petition is DENIED for lack of
merit. The Decision dated August 21, 2002 of the
Court of Appeals in CA-G.R. CV No. 49778
is AFFIRMED. Costs against the petitioners.
SO ORDERED.
Endnotes:

Once negligence on the part of the employee is

established, a presumption instantly arises that
the employer was negligent in the selection
and/or supervision of said employee.18 To rebut
this presumption, the employer must present
adequate and convincing proof that he
exercised care and diligence in the selection
and supervision of his employees.

Lampesa claims he did his legal duty as an

employer in the selection and supervision of
Copsiyat. But the record is bare on this point. It
lacks any showing that Lampesa did so.
Admitting arguendo that Copsiyat did show his
professional license when he applied for the job of
truck driver, Lampesa should not have been
satisfied by the mere possession of a professional
driver's license by Copsiyat. As an employer,
Lampesa was duty bound to do more. He
should have carefully examined Copsiyat's
qualifications, experiences and record of
[G.R. No. 73928. August 31, 1987.]
JOSE E. GENSON, Petitioner, v. SPS.
EDUARDO ADARLE and SHERLITA MARI-ON,
and INTERMEDIATE APPELLATE
COURT, Respondents.
DECISION
GUTIERREZ, JR., J.:
This is a petition for review which seeks to set
aside the decision in CA-G.R. No. 00783 on the
ground that the findings of the respondent Court of
Appeals are based on misapprehension of facts
and conflict with those of the trial court and that the
conclusions drawn therefrom are based on
speculations and conjectures.
Arturo Arbatin was the successful bidder in the sale
at public auction of junk and other unserviceable
government property located at the compound of
the Highway District Engineer’s Office of Roxas
City. Private respondent Eduardo Adarle was hired
as a laborer by Arbatin to gather and take away
scrap iron from the said compound with a daily
wage of P12.00 or about P312.00 a
month.chanrobles.com.ph : virtual law library
On September 8, 1979, at 4:00 o’clock in the
morning, on a Saturday and a non-working day,
while the private respondent was tying a cable
to a pile of scrap iron to be loaded on a truck
inside the premises of the compound, and while
the bucket of the payloader driven by Ramon
Buensalido was being raised, the bucket
suddenly fell and hit Adarle on the right back
portion of his head just below the nape of his
neck. Adarle was rushed to the St. Anthony
Hospital, Roxas City. According to the medical
certificate issued by the attending physician, the
private respondent suffered the following
injuries:jgc:chanrobles.com.ph
"1) Comminuted fructure of the vertebral body of 13
with extreme Kyphosis of the segment by x-ray.
"2) Cord compression 2nd to the injury with
paralysis of the lower extremity, inability to defecate
and urinate." (Exh. A, Exhibits for the plaintiff-
appellant, Original Records.)
The medical certificate also reported
that:jgc:chanrobles.com.ph
"The patient recovered the use of his urinary
bladder and was able to defecate 2 months after
surgery. He is paralyzed from the knee down to his
toes. He can only sit on a wheel chair. The above
residual damage is permanent 2nd to the injury
incurred by Mr. Adarle, he is still confined in the
Hospital." (idem.)
While still in the hospital, the private respondent
instituted the action below for damages against
Arbatin, his employer; Buensalido, the payloader
operator; Candelario Marcelino, the civil engineer;
and petitioner, the Highway District Engineer.
During the trial on the merits, the petitioner put up
the defense that he had no knowledge of or
participation in the accident and that, when it
happened, he was not present in the government
compound. Apart from the fact that it was a
Saturday and a non-working day, he was in Iloilo.
As part of his evidence, the petitioner presented a
memorandum directed to a certain Mr. Orlando
Panaguiton ordering the latter to take charge of the
district until his return (Exh. 1).
The trial court found that, with the exception of the
petitioner, all of the defendants were present at the
Highway’s compound when the accident occurred.
However, it still adjudged the petitioner liable for
damages because the petitioner was supposed to
know what his men do with their government
equipment within an area under his supervision.
Thus, on January 19, 1982, the trial court rendered
a decision finding all the defendants liable for
damages under Articles 1172 and 2176 of the New
Civil Code. The dispositive portion of the decision
reads:chanrobles virtual lawlibrary
"WHEREFORE, this court orders the defendants to
pay to plaintiff the amounts stated in the
complainant’s prayer as
follows:jgc:chanrobles.com.ph
"Ordering the defendants jointly and severally to
pay the plaintiff the sum of P312.00 monthly from
September 8, 1979 until his release from the
hospital.
"Ordering the defendants jointly and severally to
pay the plaintiff the sum of P7,410.63 for hospital
expenses up to January 14, 1980 and an additional
amount for further hospitalization until the release
of plaintiff from the hospital;
"Ordering the defendants jointly and severally to
pay the plaintiff the sum of at least P100,000.00 as
actual and compensatory damages, considering
that plaintiff Eduardo Adarle is totally incapacitated
for any employment for life;
"Ordering the defendants jointly and severally to
pay the plaintiff the sum of P20,000.00 as moral
damages and another sum for exemplary damages
which we leave to the sound discretion of the
Honorable Court;
"Ordering the defendants jointly and severally to
pay the plaintiff the sum of P5,000.00 as attorney’s
fees." (pp 129-130, Original Records)
The petitioner appealed to the Intermediate
Appellate Court which affirmed the decision of the
trial court and further ordered the defendants to pay
P5,000.00 exemplary damages. Defendant
Candelario Marcelino was, however, absolved from
liability.chanrobles virtual lawlibrary
In its decision, the appellate court
ruled:jgc:chanrobles.com.ph
"That payloader owned by the Government, as
found by the lower court, should not have been
operated that Saturday, September 8, 1979, a
Saturday, a non-working holiday. There is no
official order from the proper authorities authorizing
Arbatin and plaintiff to work and Buensalido to
operate the payloader on that day inside the
Highway compound. Thereabouts, we can logically
deduce that Arbatin and plaintiff went to the
compound to work with the previous knowledge
and consent of Highway District Engineer Jose E.
Genson. And allowed him, probably upon the
request of Arbatin. We have noted that Genson
testified that his office does not authorize work on
Saturdays.
"Genson testified that he was in Iloilo from
September 9 and 10, 1979. The accident occurred
on September 8, in the morning. In his answer,
Genson did not allege his presence in Iloilo on
September 9 and 10. . . . .
"We fully concur with the lower court’s conclusions
regarding the physical presence of appellants
inside the compound on that fateful day, pursuant
to a previous understanding with Arbatin for plaintiff
to work on the scrap iron and for Buensalido to
operate the payloader inside the compound.
Arbatin and plaintiff would not go to the compound
on that Saturday, if there was no previous
understanding with Genson and Buensalido.
"The liability of Genson is based on fault,
intentional and voluntary or negligent (Elcano v.
Hill, 77 SCRA 106; Jimena v. Lincallo, 63 O.G.
1115, 8 C. A.R. 2567). He gave permission to
Arbatin, plaintiff and Buensalido to work on
Saturday, a non-working day, in contravention of
his office’ rules and regulations outlawing work on
Saturdays. (pp. 29-30, Rollo)
In this present petition, the petitioner contends that
the appellate court committed a palpable error
when it ruled that the petitioner was present when
the accident happened and that he had given
permission to the other defendants to work on a
Saturday, a non-working day. The petitioner argues
that considering these were the facts relied upon by
the said court in holding that he was negligent and
thus liable for damages, such a conclusion, is
without basis.
The petitioner further contends that the appellate
court erred in not holding that the suit against the
petitioner was, in effect, a suit against the
government and, therefore, should be dismissed
under the principle of non-suability of the state.
As regards the petitioner’s second contention, we
hold that the petitioner’s identification as the
Highway District Engineer in the complaint filed by
the private respondent did not result in the said
complaint’s becoming a suit against the
government or state.
In Belizar v. Brazas, (2 SCRA 526), we ruled that
"the fact that the duties and positions of the
defendants are indicated does not mean that
they are being sued in their official capacities,
especially as the present action is not one
against the Government." Furthermore, the
accident in the case at bar happened on a non-
working day and there was no showing that the
work performed on that day was authorized by
the government. While the equipment used
belongs to the Government, the work was
private in nature, for the benefit of a purchaser
of junk. As we have held in the case of Republic
v. Palacio (23 SCRA 899, 906).chanrobles
lawlibrary : rednad
"x       x       x
"the ISU liability thus arose from tort and not from
contract, and it is a well-entrenched rule in this
jurisdiction, embodied in Article 2180 of the Civil
Code of the Philippines, that the State is liable only
for torts caused by its special agents, specially
commissioned to carry out the acts complained of
outside of such agent’s regular duties [Merritt v.
Insular Government, supra; Rosete v. Auditor
General, 81 Phil. 453). There being no proof that
the making of the tortious inducement was
authorized, neither the State nor its funds can be
made liable therefor."cralaw virtua1aw library
Therefore, the defense of the petitioner that he
cannot be made liable under the principle of non-
suability of the state cannot be sustained.
With regard to the main contention of the petitioner
that the appellate court based its conclusions on an
erroneous finding of fact, we agree with him that
the appellate court’s finding that he was present
within the premises when the accident happened is
not supported by evidence indisputably showing
that he was indeed there.
Since the evidence fails to establish petitioner
Genson’s presence when the payloader’s bucket
fell on the head of Mr. Adarle, any liability on his
part would be based only on his alleged failure to
exercise proper supervision over his subordinates
(See Umali v. Bacani, 69 SCRA 263, 267-268).
According to the trial court, Mr. Genson authorized
work on a Saturday when no work was supposed to
be done. It stated that the petitioner should know
what his men do with their government equipment
and he should neither be lax nor lenient in his
supervision over them.chanrobles virtual lawlibrary
The petitioner contends that:jgc:chanrobles.com.ph
"1. No evidence on record exists that Genson gave
authority to Adarle and Arbatin, either verbally or in
writing, to enter the work inside the Highways
Compound on September 8, 1979;
"2. Genson never knew or met Arbatin until the trial
of the case. This fact was never denied by Arbatin
nor rebutted by Adarle. How then could Genson
have ordered or allowed Arbatin to enter the
Highways Compound with Adarle?
"3. Adarle himself repeatedly admitted that Arbatin,
his employer, gave him the instructions to enter the
compound, thus:jgc:chanrobles.com.ph
"Q. Now particularly on September 8, 1979, did
Arbatin ask you to go to the compound in the
Highway?
"A. Yes sir.
"Q. Are you sure of that?
"A. Yes, sir.
"Q. Where did he say that to you?
"A. We went to the Highway compound for many
times already and that was the time when I met the
incident.
"Q. The particular day in question September 8,
1979 , did you see Arturo Arbatin and he asked you
to go the compound on that day?
"A. That date was included on the first day when
‘he instructed us to gather scrap iron until that work
could be finished.’ (pp. 25-26, tsn., October 10,
1980) (Emphasis supplied)
"Q. Who told you to work there?
"A.’Through the instruction of Arturo Arbatin.’ (pp.
32, tsn., Oct. 10, 1980) (Emphasis supplied) (pp.
12-13, Rollo).
Insofar as work on a Saturday is concerned, and
assuming Mr. Genson verbally allowed it, we see
nothing wrong in the petitioner’s authorizing work
on that day. As a matter of fact, it could even be
required that the hauling of junk and unserviceable
equipment sold at public auction must be done on
non-working days. The regular work of the District
Engineer’s office would not be disturbed or
prejudiced by a private bidder bringing in his trucks
and obstructing the smooth flow of traffic and the
daily routine within the compound. Obviously, it
would also be safer for all concerned to effect the
clearing of the junk pile when everything is peaceful
and quiet.
There is no showing from the records that it is
against regulations to use government cranes and
payloaders to load items sold at public auction on
the trucks of the winning bidder. The items were
formerly government property. Unless the contract
specifies otherwise, it may be presumed that all the
parties were in agreement regarding the use of
equipment already there for that purpose. Of
course, it would be different if the junk pile is in a
compound where there is no equipment for loading
or unloading and the cranes or payloaders have to
be brought there.chanrobles lawlibrary : rednad
There is likewise no sufficient basis for the "master-
servant" doctrine in tort law to apply. Buensalido
was not working overtime as a government
employee. It is doubtful if the district engineer
can be considered an "employer" for purposes
of tort liability who may be liable even if he was
not there. No evidence was presented to show
that an application for overtime work or a claim
for overtime pay from the district engineer’s
office was ever filed. It is more logical to
presume that Buensalido, the operator of the
payloader, was trying to earn a little money on
the side from the junk buyer and that his
presence in the compound on that Saturday
was a purely private arrangement. From the
records of this case, we are not disposed to rule
that a supervisor who tolerates his subordinates to
moonlight on a non-working day in their office
premises can be held liable for everything that
happens on that day. It would have been preferable
if Mr. Arbatin brought his own payloader operator
and perhaps, his own equipment but we are not
dealing with sound office practice in this case. The
issue before us is subsidiary liability for tort
committed by a government employee who is
moonlighting on a non-working day.
This Court ruled in Dumlao v. Court of Appeals
(114 SCRA 247, 251):jgc:chanrobles.com.ph
"Nevertheless, it is a well-settled principle of law
that a public official may be liable in his personal
private capacity for whatever damage he may have
caused by his act done with malice and in bad faith,
(Mindanao realty Corp. v. Kintanar, 6 SCRA 814) or
beyond the scope of his authority or jurisdiction.
(the Philippine Racing Club v. Bonifacio, G.R. No.
L-11844, August 31, 1960) The question, therefore,
is whether petitioner did act in any of the manner
aforesaid.
"Petitioner contends that, contrary to the holding of
the respondent Court of Appeals, he was not sued
in his personal capacity, but in his official capacity.
Neither was malice or bad faith alleged against him
in the complaint, much less proven by the
evidence, as the respondent court made no such
finding of malice or bad faith.
Examining the allegations of the complaint and
reviewing the evidence it would indeed be correct
to say that petitioner was sued in his official
capacity, and that the most that was imputed to him
is act of culpable neglect, inefficiency and gross
indifference in the performance of his official duties.
Verily, this is not imputation of bad faith or malice,
and what is more was not convincingly
proven."cralaw virtua1aw library
According to the respondent court, "Genson and
Buensalido divested themselves of their public
positions and privileges to accommodate an
acquaintance or probably for inordinate gain." (p.
31, Rollo).
There is no showing from the records that Genson
received anything which could be called "inordinate
gain." It is possible that he permitted work on a
Saturday to accommodate an acquaintance but it is
more plausible that he simply wanted to clear his
compound of junk and the best time for the winning
bidder to do it was on a non-working day.
At any rate, we see no malice, bad faith, or gross
negligence on the part of Genson to hold him liable
for the acts of Buensalido and Arbatin.
WHEREFORE, the decision of the Intermediate
Appellate Court is hereby REVERSED and SET
ASIDE. The complaint against Jesus Genson is
DISMISSED.
SO ORDERED.
G.R. No. L-11154            March 21, 1916
E. MERRITT, plaintiff-appellant,
vs.
GOVERNMENT OF THE PHILIPPINE
ISLANDS, defendant-appellant.
Crossfield and O'Brien for plaintiff.
Attorney-General Avanceña for defendant..
TRENT, J.:
This is an appeal by both parties from a judgment
of the Court of First Instance of the city of Manila in
favor of the plaintiff for the sum of P14,741,
together with the costs of the cause.
Counsel for the plaintiff insist that the trial court
erred (1) "in limiting the general damages which the
plaintiff suffered to P5,000, instead of P25,000 as
claimed in the complaint," and (2) "in limiting the
time when plaintiff was entirely disabled to two
months and twenty-one days and fixing the damage
accordingly in the sum of P2,666, instead of P6,000
as claimed by plaintiff in his complaint."
The Attorney-General on behalf of the defendant
urges that the trial court erred: (a) in finding that the
collision between the plaintiff's motorcycle and the
ambulance of the General Hospital was due to the
negligence of the chauffeur; (b) in holding that the
Government of the Philippine Islands is liable for
the damages sustained by the plaintiff as a result of
the collision, even if it be true that the collision was
due to the negligence of the chauffeur; and (c) in
rendering judgment against the defendant for the
sum of P14,741.
The trial court's findings of fact, which are fully
supported by the record, are as follows:
It is a fact not disputed by counsel for the
defendant that when the plaintiff, riding on a
motorcycle, was going toward the western
part of Calle Padre Faura, passing along the
west side thereof at a speed of ten to twelve
miles an hour, upon crossing Taft Avenue
and when he was ten feet from the
southwestern intersection of said streets,
the General Hospital ambulance, upon
reaching said avenue, instead of turning
toward the south, after passing the center
thereof, so that it would be on the left side of
said avenue, as is prescribed by the
ordinance and the Motor Vehicle Act, turned
suddenly and unexpectedly and long before
reaching the center of the street, into the
right side of Taft Avenue, without having
sounded any whistle or horn, by which
movement it struck the plaintiff, who was
already six feet from the southwestern point
or from the post place there.
By reason of the resulting collision, the
plaintiff was so severely injured that,
according to Dr. Saleeby, who examined
him on the very same day that he was taken
to the General Hospital, he was suffering
from a depression in the left parietal region,
a would in the same place and in the back
part of his head, while blood issued from his
nose and he was entirely unconscious.
The marks revealed that he had one or
more fractures of the skull and that the grey
matter and brain was had suffered material
injury. At ten o'clock of the night in question,
which was the time set for performing the
operation, his pulse was so weak and so
irregular that, in his opinion, there was little
hope that he would live. His right leg was
broken in such a way that the fracture
extended to the outer skin in such manner
that it might be regarded as double and the
would be exposed to infection, for which
reason it was of the most serious nature.
At another examination six days before the
day of the trial, Dr. Saleeby noticed that the
plaintiff's leg showed a contraction of an
inch and a half and a curvature that made
his leg very weak and painful at the point of
the fracture. Examination of his head
revealed a notable readjustment of the
functions of the brain and nerves. The
patient apparently was slightly deaf, had a
light weakness in his eyes and in his mental
condition. This latter weakness was always
noticed when the plaintiff had to do any
difficult mental labor, especially when he
attempted to use his money for
mathematical calculations.
According to the various merchants who
testified as witnesses, the plaintiff's mental
and physical condition prior to the accident
was excellent, and that after having
received the injuries that have been
discussed, his physical condition had
undergone a noticeable depreciation, for he
had lost the agility, energy, and ability that
he had constantly displayed before the
accident as one of the best constructors of
wooden buildings and he could not now
earn even a half of the income that he had
secured for his work because he had lost 50
per cent of his efficiency. As a contractor,
he could no longer, as he had before done,
climb up ladders and scaffoldings to reach
the highest parts of the building.
As a consequence of the loss the plaintiff
suffered in the efficiency of his work as a
contractor, he had to dissolved the
partnership he had formed with the
engineer. Wilson, because he was
incapacitated from making mathematical
calculations on account of the condition of
his leg and of his mental faculties, and he
had to give up a contract he had for the
construction of the Uy Chaco building."
We may say at the outset that we are in full accord
with the trial court to the effect that the collision
between the plaintiff's motorcycle and the
ambulance of the General Hospital was due
solely to the negligence of the chauffeur.
The two items which constitute a part of the
P14,741 and which are drawn in question by the
plaintiff are (a) P5,000, the award awarded for
permanent injuries, and (b) the P2,666, the amount
allowed for the loss of wages during the time the
plaintiff was incapacitated from pursuing his
occupation. We find nothing in the record which
would justify us in increasing the amount of the first.
As to the second, the record shows, and the trial
court so found, that the plaintiff's services as a
contractor were worth P1,000 per month. The court,
however, limited the time to two months and
twenty-one days, which the plaintiff was actually
confined in the hospital. In this we think there was
error, because it was clearly established that the
plaintiff was wholly incapacitated for a period of six
months. The mere fact that he remained in the
hospital only two months and twenty-one days
while the remainder of the six months was
spent in his home, would not prevent recovery
for the whole time. We, therefore, find that the
amount of damages sustained by the plaintiff,
without any fault on his part, is P18,075.
As the negligence which caused the collision is a
tort committed by an agent or employee of the
Government, the inquiry at once arises whether
the Government is legally-liable for the
damages resulting therefrom.
Act No. 2457, effective February 3, 1915, reads:
An Act authorizing E. Merritt to bring suit
against the Government of the Philippine
Islands and authorizing the Attorney-
General of said Islands to appear in said
suit.
Whereas a claim has been filed against
the Government of the Philippine Islands
by Mr. E. Merritt, of Manila, for damages
resulting from a collision between his
motorcycle and the ambulance of the
General Hospital on March twenty-fifth,
nineteen hundred and thirteen;
Whereas it is not known who is
responsible for the accident nor is it
possible to determine the amount of
damages, if any, to which the claimant is
entitled; and
Whereas the Director of Public Works and
the Attorney-General recommended that an
Act be passed by the Legislature
authorizing Mr. E. Merritt to bring suit in the
courts against the Government, in order that
said questions may be decided: Now,
therefore,
By authority of the United States, be it
enacted by the Philippine Legislature, that:
SECTION 1. E. Merritt is hereby authorized
to bring suit in the Court of First Instance of
the city of Manila against the Government of
the Philippine Islands in order to fix the
responsibility for the collision between his
motorcycle and the ambulance of the
General Hospital, and to determine the
amount of the damages, if any, to which Mr.
E. Merritt is entitled on account of said
collision, and the Attorney-General of the
Philippine Islands is hereby authorized and
directed to appear at the trial on the behalf
of the Government of said Islands, to
defendant said Government at the same.
SEC. 2. This Act shall take effect on its
passage.
Enacted, February 3, 1915.
Did the defendant, in enacting the above quoted
Act, simply waive its immunity from suit or did it
also concede its liability to the plaintiff? If only
the former, then it cannot be held that the Act
created any new cause of action in favor of the
plaintiff or extended the defendant's liability to
any case not previously recognized.
All admit that the Insular Government (the
defendant) cannot be sued by an individual without
its consent. It is also admitted that the instant case
is one against the Government. As the consent of
the Government to be sued by the plaintiff was
entirely voluntary on its part, it is our duty to look
carefully into the terms of the consent, and render
judgment accordingly.
The plaintiff was authorized to bring this action
against the Government "in order to fix the
responsibility for the collision between his
motorcycle and the ambulance of the General
Hospital and to determine the amount of the
damages, if any, to which Mr. E. Merritt is entitled
on account of said collision, . . . ." These were the
two questions submitted to the court for
determination. The Act was passed "in order that
said questions may be decided." We have
"decided" that the accident was due solely to the
negligence of the chauffeur, who was at the
time an employee of the defendant, and we
have also fixed the amount of damages
sustained by the plaintiff as a result of the
collision. Does the Act authorize us to hold that
the Government is legally liable for that amount? If
not, we must look elsewhere for such authority, if it
exists.
The Government of the Philippine Islands having
been "modeled after the Federal and State
Governments in the United States," we may look to
the decisions of the high courts of that country for
aid in determining the purpose and scope of Act
No. 2457.
In the United States the rule that the state is not
liable for the torts committed by its officers or
agents whom it employs, except when expressly
made so by legislative enactment, is well settled.
"The Government," says Justice Story, "does not
undertake to guarantee to any person the fidelity of
the officers or agents whom it employs, since that
would involve it in all its operations in endless
embarrassments, difficulties and losses, which
would be subversive of the public interest."
(Claussen vs. City of Luverne, 103 Minn., 491,
citing U. S. vs. Kirkpatrick, 9 Wheat, 720; 6 L. Ed.,
199; and Beers vs. States, 20 How., 527; 15 L. Ed.,
991.)
In the case of Melvin vs. State (121 Cal., 16), the
plaintiff sought to recover damages from the state
for personal injuries received on account of the
negligence of the state officers at the state fair, a
state institution created by the legislature for the
purpose of improving agricultural and kindred
industries; to disseminate information calculated to
educate and benefit the industrial classes; and to
advance by such means the material interests of
the state, being objects similar to those sought by
the public school system. In passing upon the
question of the state's liability for the negligent acts
of its officers or agents, the court said:
No claim arises against any government is
favor of an individual, by reason of the
misfeasance, laches, or unauthorized
exercise of powers by its officers or agents.
(Citing Gibbons vs. U. S., 8 Wall., 269;
Clodfelter vs. State, 86 N. C., 51, 53; 41
Am. Rep., 440; Chapman vs. State, 104
Cal., 690; 43 Am. St. Rep., 158; Green vs.
State, 73 Cal., 29; Bourn vs. Hart, 93 Cal.,
321; 27 Am. St. Rep., 203; Story on
Agency, sec. 319.)
As to the scope of legislative enactments permitting
individuals to sue the state where the cause of
action arises out of either fort or contract, the rule is
stated in 36 Cyc., 915, thus:
By consenting to be sued a state simply
waives its immunity from suit. It does not
thereby concede its liability to plaintiff, or
create any cause of action in his favor, or
extend its liability to any cause not
previously recognized. It merely gives a
remedy to enforce a preexisting liability and
submits itself to the jurisdiction of the court,
subject to its right to interpose any lawful
defense.
In Apfelbacher vs. State (152 N. W., 144, advanced
sheets), decided April 16, 1915, the Act of 1913,
which authorized the bringing of this suit, read:
SECTION 1. Authority is hereby given to
George Apfelbacher, of the town of Summit,
Waukesha County, Wisconsin, to bring suit
in such court or courts and in such form or
forms as he may be advised for the purpose
of settling and determining all controversies
which he may now have with the State of
Wisconsin, or its duly authorized officers
and agents, relative to the mill property of
said George Apfelbacher, the fish hatchery
of the State of Wisconsin on the Bark River,
and the mill property of Evan Humphrey at
the lower end of Nagawicka Lake, and
relative to the use of the waters of said Bark
River and Nagawicka Lake, all in the county
of Waukesha, Wisconsin.
In determining the scope of this act, the court said:
Plaintiff claims that by the enactment of this
law the legislature admitted liability on the
part of the state for the acts of its officers,
and that the suit now stands just as it would
stand between private parties. It is difficult
to see how the act does, or was intended to
do, more than remove the state's immunity
from suit. It simply gives authority to
commence suit for the purpose of settling
plaintiff's controversies with the estate.
Nowhere in the act is there a whisper or
suggestion that the court or courts in the
disposition of the suit shall depart from well
established principles of law, or that the
amount of damages is the only question to
be settled. The act opened the door of the
court to the plaintiff. It did not pass upon the
question of liability, but left the suit just
where it would be in the absence of the
state's immunity from suit. If the Legislature
had intended to change the rule that
obtained in this state so long and to declare
liability on the part of the state, it would not
have left so important a matter to mere
inference, but would have done so in
express terms. (Murdock Grate Co. vs.
Commonwealth, 152 Mass., 28; 24 N.E.,
854; 8 L. R. A., 399.)
In Denning vs. State (123 Cal., 316), the provisions
of the Act of 1893, relied upon and considered, are
as follows:
All persons who have, or shall hereafter
have, claims on contract or for negligence
against the state not allowed by the state
board of examiners, are hereby authorized,
on the terms and conditions herein
contained, to bring suit thereon against the
state in any of the courts of this state of
competent jurisdiction, and prosecute the
same to final judgment. The rules of
practice in civil cases shall apply to such
suits, except as herein otherwise provided.
And the court said:
This statute has been considered by this
court in at least two cases, arising under
different facts, and in both it was held that
said statute did not create any liability or
cause of action against the state where
none existed before, but merely gave an
additional remedy to enforce such liability as
would have existed if the statute had not
been enacted. (Chapman vs. State, 104
Cal., 690; 43 Am. St. Rep., 158; Melvin vs.
State, 121 Cal., 16.)
A statute of Massachusetts enacted in 1887 gave
to the superior court "jurisdiction of all claims
against the commonwealth, whether at law or in
equity," with an exception not necessary to be here
mentioned. In construing this statute the court,
in Murdock Grate Co. vs. Commonwealth (152
Mass., 28), said:
The statute we are discussing disclose no
intention to create against the state a new
and heretofore unrecognized class of
liabilities, but only an intention to provide a
judicial tribunal where well recognized
existing liabilities can be adjudicated.
In Sipple vs. State (99 N. Y., 284), where the board
of the canal claims had, by the terms of the statute
of New York, jurisdiction of claims for damages for
injuries in the management of the canals such as
the plaintiff had sustained, Chief Justice Ruger
remarks: "It must be conceded that the state can be
made liable for injuries arising from the negligence
of its agents or servants, only by force of some
positive statute assuming such liability."
It being quite clear that Act No. 2457 does not
operate to extend the Government's liability to any
cause not previously recognized, we will now
examine the substantive law touching the
defendant's liability for the negligent acts of its
officers, agents, and employees. Paragraph 5 of
article 1903 of the Civil Code reads:
The state is liable in this sense when it acts
through a special agent, but not when the
damage should have been caused by the
official to whom properly it pertained to do
the act performed, in which case the
provisions of the preceding article shall be
applicable.
The supreme court of Spain in defining the scope of
this paragraph said:
That the obligation to indemnify for
damages which a third person causes to
another by his fault or negligence is based,
as is evidenced by the same Law 3, Title
15, Partida 7, on that the person obligated,
by his own fault or negligence, takes part in
the act or omission of the third party who
caused the damage. It follows therefrom
that the state, by virtue of such provisions of
law, is not responsible for the damages
suffered by private individuals in
consequence of acts performed by its
employees in the discharge of the functions
pertaining to their office, because neither
fault nor even negligence can be presumed
on the part of the state in the organization of
branches of public service and in the
appointment of its agents; on the contrary,
we must presuppose all foresight humanly
possible on its part in order that each
branch of service serves the general weal
an that of private persons interested in its
operation. Between these latter and the
state, therefore, no relations of a private
nature governed by the civil law can arise
except in a case where the state acts as a
judicial person capable of acquiring rights
and contracting obligations. (Supreme Court
of Spain, January 7, 1898; 83 Jur. Civ., 24.)
That the Civil Code in chapter 2, title 16,
book 4, regulates the obligations which
arise out of fault or negligence; and
whereas in the first article thereof. No. 1902,
where the general principle is laid down that
where a person who by an act or omission
causes damage to another through fault or
negligence, shall be obliged to repair the
damage so done, reference is made to acts
or omissions of the persons who directly or
indirectly cause the damage, the following
articles refers to this persons and imposes
an identical obligation upon those who
maintain fixed relations of authority and
superiority over the authors of the damage,
because the law presumes that in
consequence of such relations the evil
caused by their own fault or negligence is
imputable to them. This legal presumption
gives way to proof, however, because, as
held in the last paragraph of article 1903,
responsibility for acts of third persons
ceases when the persons mentioned in said
article prove that they employed all the
diligence of a good father of a family to
avoid the damage, and among these
persons, called upon to answer in a direct
and not a subsidiary manner, are found, in
addition to the mother or the father in a
proper case, guardians and owners or
directors of an establishment or enterprise,
the state, but not always, except when it
acts through the agency of a special agent,
doubtless because and only in this case, the
fault or negligence, which is the original
basis of this kind of objections, must be
presumed to lie with the state.
That although in some cases the state might
by virtue of the general principle set forth in
article 1902 respond for all the damage that
is occasioned to private parties by orders or
resolutions which by fault or negligence are
made by branches of the central
administration acting in the name and
representation of the state itself and as an
external expression of its sovereignty in the
exercise of its executive powers, yet said
article is not applicable in the case of
damages said to have been occasioned to
the petitioners by an executive official,
acting in the exercise of his powers, in
proceedings to enforce the collections of
certain property taxes owing by the owner of
the property which they hold in sublease.
That the responsibility of the state is limited
by article 1903 to the case wherein it
acts through a special agent (and a special
agent, in the sense in which these words
are employed, is one who receives a
definite and fixed order or commission,
foreign to the exercise of the duties of his
office if he is a special official) so that in
representation of the state and being bound
to act as an agent thereof, he executes the
trust confided to him. This concept does not
apply to any executive agent who is an
employee of the acting administration and
who on his own responsibility performs the
functions which are inherent in and naturally
pertain to his office and which are regulated
by law and the regulations." (Supreme
Court of Spain, May 18, 1904; 98 Jur. Civ.,
389, 390.)
That according to paragraph 5 of article
1903 of the Civil Code and the principle laid
down in a decision, among others, of the
18th of May, 1904, in a damage case, the
responsibility of the state is limited to
that which it contracts through a special
agent, duly empowered by a definite
order or commission to perform some
act or charged with some definite
purpose which gives rise to the claim,
and not where the claim is based on acts
or omissions imputable to a public
official charged with some administrative
or technical office who can be held to the
proper responsibility in the manner laid
down by the law of civil responsibility.
Consequently, the trial court in not so
deciding and in sentencing the said
entity to the payment of damages,
caused by an official of the second class
referred to, has by erroneous
interpretation infringed the provisions of
articles 1902 and 1903 of the Civil Code.
(Supreme Court of Spain, July 30, 1911;
122 Jur. Civ., 146.)
It is, therefore, evidence that the State (the
Government of the Philippine Islands) is only liable,
according to the above quoted decisions of the
Supreme Court of Spain, for the acts of its
agents, officers and employees when they act
as special agents within the meaning of
paragraph 5 of article 1903, supra, and that the
chauffeur of the ambulance of the General
Hospital was not such an agent.

For the foregoing reasons, the judgment appealed

from must be reversed, without costs in this
instance. Whether the Government intends to make
itself legally liable for the amount of damages
above set forth, which the plaintiff has sustained by
reason of the negligent acts of one of its
employees, by legislative enactment and by
appropriating sufficient funds therefor, we are not
called upon to determine. This matter rests solely
with the Legislature and not with the courts.

Arellano, C. J., Torres, Johnson, and Moreland,

JJ., concur.
G.R. No. L-55963 December 1, 1989
SPOUSES JOSE FONTANILLA AND VIRGINIA
FONTANILLA, petitioners,
vs.
HONORABLE INOCENCIO D. MALIAMAN and
NATIONAL IRRIGATION
ADMINISTRATION, respondents.
G.R. No. L-61045 December 1, 1989
NATIONAL IRRIGATION
ADMINISTRATION, appellant,
vs.
SPOUSES JOSE FONTANILLA and VIRGINIA
FONTANILLA, appellees.
Cecilio V. Suarez, Jr. for Spouses Fontanilla.
Felicisimo C. Villaflor for NIA.
PARAS, J.:
In G.R. No. L-55963, the petition for review on
certiorari seeks the affirmance of the decision dated
March 20, 1980 of the then Court of First Instance
of Nueva Ecija, Branch VIII, at San Jose City and
its modification with respect to the denial of
petitioner's claim for moral and exemplary damages
and attorneys fees.
In G.R. No. 61045, respondent National Irrigation
Administration seeks the reversal of the aforesaid
decision of the lower court. The original appeal of
this case before the Court of Appeals was certified
to this Court and in the resolution of July 7, 1982, it
was docketed with the aforecited number. And in
the resolution of April 3, this case was consolidated
with G.R. No. 55963.
It appears that on August 21, 1976 at about 6:30
P.M., a pickup owned and operated by
respondent National Irrigation Administration, a
government agency bearing Plate No. IN-651, then
driven officially by Hugo Garcia, an employee of
said agency as its regular driver, bumped a
bicycle ridden by Francisco Fontanilla, son of
herein petitioners, and Restituto Deligo, at Maasin,
San Jose City along the Maharlika Highway. As a
result of the impact, Francisco Fontanilla and
Restituto Deligo were injured and brought to the
San Jose City Emergency Hospital for treatment.
Fontanilla was later transferred to the Cabanatuan
Provincial Hospital where he died.
Garcia was then a regular driver of respondent
National Irrigation Administration who, at the time of
the accident, was a licensed professional driver
and who qualified for employment as such
regular driver of respondent after having passed
the written and oral examinations on traffic rules
and maintenance of vehicles given by National
Irrigation Administration authorities.
The within petition is thus an off-shot of the action
(Civil Case No. SJC-56) instituted by petitioners-
spouses on April 17, 1978 against respondent NIA
before the then Court of First Instance of Nueva
Ecija, Branch VIII at San Jose City, for damages in
connection with the death of their son resulting from
the aforestated accident.
After trial, the trial court rendered judgment on
March 20, 1980 which directed respondent National
Irrigation Administration to pay damages (death
benefits) and actual expenses to petitioners. The
dispositive portion of the decision reads thus:
. . . . . Judgment is here rendered
ordering the defendant National
Irrigation Administration to pay to the
heirs of the deceased P12,000.00
for the death of Francisco Fontanilla;
P3,389.00 which the parents of the
deceased had spent for the
hospitalization and burial of the
deceased Francisco Fontanilla; and
to pay the costs. (Brief for the
petitioners spouses Fontanilla, p. 4;
Rollo, p. 132)
Respondent National Irrigation Administration filed
on April 21, 1980, its motion for reconsideration of
the aforesaid decision which respondent trial court
denied in its Order of June 13, 1980. Respondent
National Irrigation Administration thus appealed
said decision to the Court of Appeals (C.A.-G.R.
No. 67237- R) where it filed its brief for appellant in
support of its position.
Instead of filing the required brief in the aforecited
Court of Appeals case, petitioners filed the instant
petition with this Court.
The sole issue for the resolution of the Court is:
Whether or not the award of moral damages,
exemplary damages and attorney's fees is
legally proper in a complaint for damages
based on quasi-delict which resulted in the
death of the son of herein petitioners.
Petitioners allege:
1. The award of moral damages is
specifically allowable. under
paragraph 3 of Article 2206 of the
New Civil Code which provides that
the spouse, legitimate and
illegitimate descendants and
ascendants of the deceased may
demand moral damages for mental
anguish by reason of the death of
the deceased. Should moral
damages be granted, the award
should be made to each of
petitioners-spouses individually and
in varying amounts depending upon
proof of mental and depth of
intensity of the same, which should
not be less than P50,000.00 for each
of them.
2. The decision of the trial court had
made an impression that respondent
National Irrigation Administration
acted with gross negligence
because of the accident and the
subsequent failure of the National
Irrigation Administration personnel
including the driver to stop in order
to give assistance to the, victims.
 Thus, by reason of the gross
negligence of respondent,
petitioners become entitled to
exemplary damages under Arts.
2231 and 2229 of the New Civil
Code.
3. Petitioners are entitled to an
award of attorney's fees, the amount
of which (20%) had been sufficiently
established in the hearing of May 23,
1979.
4. This petition has been filed only
for the purpose of reviewing the
findings of the lower court upon
which the disallowance of moral
damages, exemplary damages and
attorney's fees was based and not
for the purpose of disturbing the
other findings of fact and
conclusions of law.
The Solicitor General, taking up the cudgels for
public respondent National Irrigation Administration,
contends thus:
1. The filing of the instant petition is
rot proper in view of the appeal
taken by respondent National
Irrigation Administration to the Court
of Appeals against the judgment
sought to be reviewed. The focal
issue raised in respondent's appeal
to the Court of Appeals involves the
question as to whether or not the
driver of the vehicle that bumped the
victims was negligent in his
operation of said vehicle. It thus
becomes necessary that before
petitioners' claim for moral and
exemplary damages could be
resolved, there should first be a
finding of negligence on the part of
respondent's employee-driver. In
this regard, the Solicitor General
alleges that the trial court decision
does not categorically contain such
finding.
2. The filing of the "Appearance and
Urgent Motion For Leave to File
Plaintiff-Appellee's Brief" dated
December 28, 1981 by petitioners in
the appeal (CA-G.R. No. 67237-R;
and G. R. No.61045) of the
respondent National Irrigation
Administration before the Court of
Appeals, is an explicit admission of
said petitioners that the herein
petition, is not proper. Inconsistent
procedures are manifest because
while petitioners question the
findings of fact in the Court of
Appeals, they present only the
questions of law before this Court
which posture confirms their
admission of the facts.
3. The fact that the parties failed to
agree on whether or not negligence
caused the vehicular accident
involves a question of fact which
petitioners should have brought to
the Court of Appeals within the
reglementary period. Hence, the
decision of the trial court has
become final as to the petitioners
and for this reason alone, the
petition should be dismissed.
4. Respondent Judge acted within
his jurisdiction, sound discretion and
in conformity with the law.
5. Respondents do not assail
petitioners' claim to moral and
exemplary damages by reason of
the shock and subsequent illness
they suffered because of the death
of their son. Respondent National
Irrigation Administration, however,
avers that it cannot be held liable for
the damages because it is an
agency of the State performing
governmental functions and driver
Hugo Garcia was a regular driver of
the vehicle, not a special agent who
was performing a job or act foreign
to his usual duties. Hence, the
liability for the tortious act should.
not be borne by respondent
government agency but by driver
Garcia who should answer for the
consequences of his act.
6. Even as the trial court touched on
the failure or laxity of respondent
National Irrigation Administration in
exercising due diligence in the
selection and supervision of its
employee, the matter of due
diligence is not an issue in this case
since driver Garcia was not its
special agent but a regular driver of
the vehicle.
The sole legal question on whether or not
petitioners may be entitled to an award of moral
and exemplary damages and attorney's fees can
very well be answered with the application of Arts.
2176 and 2180 of theNew Civil Code.
Art. 2176 thus provides:
Whoever by act omission causes
damage to another, there being fault
or negligence, is obliged to pay for
damage done. Such fault or
negligence, if there is no pre-existing
cotractual relation between the
parties, is called a quasi-delict and is
governed by the provisions of this
Chapter
Paragraphs 5 and 6 of Art. 21 80 read as follows:
Employers shall be liable for the
damages caused by their employees
and household helpers acting within
the scope of their assigned tasks,
even the though the former are not
engaged in any business or industry.
The State is responsible in like
manner when it acts through a
 special agent.; but not when the
damage has been caused by the
official to whom the task done
properly pertains, in which case
what is provided in Art. 2176 shall be
applicable.
The liability of the State has two aspects. namely:
1. Its public or governmental aspects
where it is liable for the tortious acts
of special agents only.
2. Its private or business aspects (as
when it engages in private
enterprises) where it becomes liable
as an ordinary employer. (p. 961,
Civil Code of the Philippines;
Annotated, Paras; 1986 Ed. ).
In this jurisdiction, the State assumes a limited
liability for the damage caused by the tortious acts
or conduct of its special agent.
Under the aforequoted paragrah 6 of Art. 2180, the
State has voluntarily assumed liability for acts done
through special agents. The State's agent, if a
public official, must not only be specially
commissioned to do a particular task but that
such task must be foreign to said official's
usual governmental functions. If the State's
agent is not a public official, and is
commissioned to perform non-governmental
functions, then the State assumes the role of an
ordinary employer and will be held liable as
such for its agent's tort. Where the government
commissions a private individual for a special
governmental task, it is acting through a special
agent within the meaning of the provision. (Torts
and Damages, Sangco, p. 347, 1984 Ed.)
Certain functions and activities, which can be
performed only by the government, are more or
less generally agreed to be "governmental" in
character, and so the State is immune from tort
liability. On the other hand, a service which might
as well be provided by a private corporation,
and particularly when it collects revenues from
it, the function is considered a "proprietary"
one, as to which there may be liability for the
torts of agents within the scope of their
employment.
The National Irrigation Administration is an agency
of the government exercising proprietary functions,
by express provision of Rep. Act No. 3601. Section
1 of said Act provides:
Section 1. Name and domicile.-
A body corporate is hereby created
which shall be known as the
National Irrigation Administration,
hereinafter called the NIA for short,
which shall be organized
immediately after the approval of this
Act. It shall have its principal seat of
business in the City of Manila and
shall have representatives in all
provinces for the proper conduct of
its business.
Section 2 of said law spells out some of the NIA's
proprietary functions. Thus-
Sec. 2. Powers and objectives.-The
NIA shall have the following powers
and objectives:
(a) x x x x x x x x x x x x x x x x x x
(b) x x x x x x x x x x x x x x x x x x
(c) To collect from the users of each
irrigation system constructed by it
such fees as may be necessary to
finance the continuous operation of
the system and reimburse within a
certain period not less than twenty-
five years cost of construction
thereof; and
(d) To do all such other tthings and
to transact all such business as are
directly or indirectly necessary,
incidental or conducive to the
attainment of the above objectives.
Indubitably, the NIA is a government corporation
with juridical personality and not a mere agency
of the government. Since it is a corporate body
performing non-governmental functions, it now
becomes liable for the damage caused by the
accident resulting from the tortious act of its driver-
employee. In this particular case, the NIA assumes
the responsibility of an ordinary employer and
as such, it becomes answerable for damages.
This assumption of liability, however, is
predicated upon the existence of negligence on
the part of respondent NIA. The negligence
referred to here is the negligence of
supervision.
At this juncture, the matter of due diligence on the
part of respondent NIA becomes a crucial issue in
determining its liability since it has been established
that respondent is a government agency performing
proprietary functions and as such, it assumes the
posture of an ordinary employer which, under Par.
5 of Art. 2180, is responsible for the damages
caused by its employees provided that it has
failed to observe or exercise due diligence in
the selection and supervision of the driver.
It will be noted from the assailed decision of the trial
court that "as a result of the impact, Francisco
Fontanilla was thrown to a distance 50 meters
away from the point of impact while Restituto
Deligo was thrown a little bit further away. The
impact took place almost at the edge of the
cemented portion of the road." (Emphasis
supplied,) [page 26, Rollo]
The lower court further declared that "a speeding
vehicle coming in contact with a person causes
force and impact upon the vehicle that anyone in
the vehicle cannot fail to notice. As a matter of fact,
the impact was so strong as shown by the fact that
the vehicle suffered dents on the right side of the
radiator guard, the hood, the fender and a crack on
the radiator as shown by the investigation
report (Exhibit "E"). (Emphasis supplied) [page 29,
Rollo]
It should be emphasized that the accident
happened along the Maharlika National Road within
the city limits of San Jose City, an urban area.
Considering the fact that the victim was thrown 50
meters away from the point of impact, there is a
strong indication that driver Garcia was driving at a
high speed. This is confirmed by the fact that the
pick-up suffered substantial and heavy damage as
above-described and the fact that the NIA group
was then "in a hurry to reach the campsite as
early as possible", as shown by their not
stopping to find out what they bumped as
would have been their normal and initial
reaction.

Evidently, there was negligence in the

supervision of the driver for the reason that
they were travelling at a high speed within the
city limits and yet the supervisor of the group,
Ely Salonga, failed to caution and make the
driver observe the proper and allowed speed
limit within the city. Under the situation, such
negligence is further aggravated by their desire
to reach their destination without even
checking whether or not the vehicle suffered
damage from the object it bumped, thus
showing imprudence and reckelessness on the
part of both the driver and the supervisor in the
group.

Significantly, this Court has ruled that even if the

employer can prove the diligence in the selection
and supervision (the latter aspect has not been
established herein) of the employee, still if he
ratifies the wrongful acts, or take no step to
avert further damage, the employer would still
be liable. (Maxion vs. Manila Railroad Co., 44 Phil.
597).

Thus, too, in the case of Vda. de Bonifacio vs.

B.L.T. Bus Co. (L-26810, August 31, 1970, 34
SCRA 618), this Court held that a driver should be
especially watchful in anticipation of others who
may be using the highway, and his failure to keep a
proper look out for reasons and objects in the line
to be traversed constitutes negligence.

Considering the foregoing, respondent NIA is

hereby directed to pay herein petitioners-spouses
the amounts of P12,000.00 for the death of
Francisco Fontanilla; P3,389.00 for hospitalization
and burial expenses of the aforenamed deceased;
P30,000.00 as moral damages; P8,000.00 as
exemplary damages and attorney's fees of 20% of
the total award.

SO ORDERED.
G.R. Nos. 140743 & 140745               September
17, 2009
CITY GOVERNMENT OF TAGAYTAY, Petitioner,
vs.
HON. ELEUTERIO F. GUERRERO, Presiding
Judge of the Regional Trial Court of Tagaytay,
Branch XVIII; TAGAYTAY-TAAL TOURIST
DEVELOPMENT CORPORATION; PROVINCE OF
BATANGAS; MUNICIPALITY OF LAUREL,
BATANGAS; and MUNICIPALITY OF TALISAY,
BATANGAS, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. Nos. 141451-52
AMEURFINA MELENCIO-HERRERA and
EMILINA MELENCIO-FERNANDO, Petitioners,
vs.
HON. ELEUTERIO F. GUERRERO, Presiding
Judge of the Regional Trial Court of Cavite City,
Branch XVIII; TAGAYTAY-TAAL TOURIST
DEVELOPMENT CORPORATION; PROVINCE OF
BATANGAS; MUNICIPALITY OF LAUREL,
BATANGAS; MUNICIPALITY OF TALISAY,
BATANGAS; and CITY OF
TAGAYTAY, Respondents.
DECISION
NACHURA, J.:
Before the Court are consolidated petitions for
review on certiorari under Rule 45 of the Rules of
Court, assailing the Decision1 dated June 19, 1998
and the Resolution2 dated November 11, 1999 of
the Court of Appeals (CA) in CA-G.R. SP Nos.
39008 and 38298.
The Facts
Tagaytay-Taal Tourist Development Corporation
(TTTDC) is the registered owner of two (2) parcels
of land covered by Transfer Certificate of Title
(TCT) Nos. T-98163 and T-98174 of the Registry of
Deeds of Tagaytay City. TTTDC incurred real
estate tax liabilities on the said properties for the
tax years 1976 to 1983.5
On November 28, 1983, for failure of TTTDC to
settle its delinquent real estate tax obligations, the
City Government of Tagaytay (City of Tagaytay)
offered the properties for sale at public auction.
Being the only bidder, a certificate of sale was
executed in favor of the City of Tagaytay and was
correspondingly inscribed on the titles of the
properties on November 20, 1984.6
On July 14, 1989, the City of Tagaytay filed an
unnumbered petition for entry of new certificates of
title in its favor before the Regional Trial Court
(RTC) of Cavite, Branch XVIII, Tagaytay City. The
case was entitled, "In re: Petition for Entry of New
Certificate of Title, City of Tagaytay, Petitioner." On
December 5, 1989, the RTC granted the petition.
The dispositive portion of the Decision7 reads:
WHEREFORE, finding the petition to be meritorious
and sufficiently sustained with preponderant, legal
and factual basis, this Court hereby gives its
imprimatur to it and grants the same, dismissing in
the process, the Opposition filed by Tagaytay-Taal
Tourist Development Corporation. Accordingly, the
Register of Deeds of Tagaytay City is hereby
ordered to allow the City to consolidate the titles
covering the properties in question (TCT Nos. T-
9816 and T-9817), by issuing in its favor, and under
its name, new Transfer Certificates of Titles and
canceling as basis thereof, the said TCT Nos. 9816
and 9817 in the name of Tagaytay-Taal Tourist
Development Corporation, all of which, being
hereby declared null and void, henceforth.
SO ORDERED.8
In granting the petition for entry of new certificates
of title in favor of the City of Tagaytay, the trial court
ratiocinated that whatever rights TTTDC had over
the properties had been lost by laches for its failure
to question the validity of the auction sale. It also
ruled that, as of April 30, 1989, the unpaid real
estate tax obligations of TTTDC to the City of
Tagaytay amounted to ₱3,307,799.00. Accordingly,
TTTDC’s failure to exercise its right of redemption
by way of paying its delinquent real estate taxes
and charges called for the application of Section
759 of Presidential Decree (P.D.) No. 1529,
otherwise known as the Property Registration
Decree.10 TTTDC appealed to the CA. The case
was docketed as CA-G.R. No. 24933, entitled "City
of Tagaytay v. Tagaytay-Taal Tourist Development
Corporation."
On June 29, 1990, Atty. Donato T. Faylona, acting
as agent of Ameurfina Melencio-Herrera and
Emilina Melencio-Fernando (Melencios), purchased
the subject properties pursuant to Section 8111 in
relation to Section 7812 of P.D. No. 464.13 The
Melencios bought the subject properties for Three
Million Five Hundred Fifty Thousand Pesos
(₱3,550,000.00) representing the total amount of
taxes and penalties due on the same.14
Meanwhile, on July 21, 1991, during the pendency
of CA-G.R. CV No. 24933, TTTDC filed a petition
for nullification of the public auction involving the
disputed properties on the ground that the
properties were not within the jurisdiction of the City
of Tagaytay and, thus, beyond its taxing
authority.15 The case, docketed as Civil Case No.
TG-1196 before the RTC of Cavite, Branch XVIII,
Tagaytay City, was entitled "Tagaytay-Taal Tourist
Development Corporation v. City of Tagaytay,
Municipality of Laurel (formerly Talisay), Province
of Batangas, Register of Deeds of Batangas, and
Register of Deeds of the City of Tagaytay." 16 On the
other hand, the City of Tagaytay averred that based
on its Charter,17 the subject properties were within
its territorial jurisdiction. 18 The sole issue in Civil
Case No. TG-1196 was whether the parcels of land
covered by TCT Nos. T-9816 and T-9817 were
within the territorial jurisdiction of the City of
Tagaytay.
Despite the fact that the Melencios had already
purchased the subject properties, they were not
impleaded in Civil Case No. TG-1196. Thus, on
June 23, 1994, they filed a Motion to
Intervene.19 On October 5, 1994, the RTC issued
an Order20 denying the motion. The pertinent
portions of the Order read:
This Court could clearly discern from the records
that on July 13, 1994, this Court, after the parties to
the case at bar have concluded the presentation of
their respective evidences (sic), issued an Order
giving the parties thirty (30) days within which to file
their respective memoranda simultaneously and
thereafter the instant case is considered submitted
for decision. It is equally observed by the Court that
although the motion to intervene was filed by the
movants on July 1, 1994, the latter had set the
same motion for the consideration of this Court on
July 15, 1994 at 8:30 o’clock in the morning or two
(2) days after the trial in this case was concluded.
Thus, while this Court is inclined to agree with
movants’ postulation that they have a legal interest
in the case at bar being the purchasers of the
parcels of land involved in the instant controversy, it
however believes and so holds that it is legally
precluded from granting the motion to intervene on
account of the provisions of Section 2, Rule 12 of
the Revised Rules of Court which is quoted
hereinunder as follows:
"SEC. 2. Intervention. – A person may, before or
during a trial, be permitted by the court, in its
discretion, to intervene in an action, if he has legal
interest in the matter in litigation, or in the success
of either of the parties, or an interest against both,
or when he is so situated as to be adversely
affected by the distribution or other disposition of
property in the custody of the court or of an official
thereof."
It is quite evident that the movants have filed their
motion to intervene beyond the period mentioned in
the above-quoted rule as it was repeatedly held by
jurisprudence that "the authority of the court to
permit a person to intervene is delimited by the
provisions of Section 2, Rule 12 of the Rules of
Court – ‘before or during trial.’" "And, trial is here
used in a restricted sense and refers to ‘the period
for the introduction of evidence by both parties.’"
(Pacusa v. Del Rosario, L-26353, July 29, 1968; 24
SCRA 125, 129-130; Bool v. Mendoza, 92 Phil.
892, 895; Trazo v. Manila Pencil Co., 1 SCRA 403,
405).
Surprisingly, even with the denial of the motion, the
Melencios did not further pursue their cause. This
was allegedly due to the assurances of the City of
Tagaytay that it would file a motion for
reconsideration and an appeal if the motion for
reconsideration was denied. However, the City of
Tagaytay filed a defective motion for
reconsideration which was denied by the RTC and
the City of Tagaytay did not file an appeal from the
decision of the trial court.21
On November 11, 1991, the CA, in CA-G.R. No.
24933, affirmed the decision of the trial court in the
unnumbered petition. The case was elevated to the
Supreme Court via a petition for review on certiorari
and was docketed as G.R. No. 106812.22 The case
was entitled "Tagaytay-Taal Tourist Development
Corporation v. Court of Appeals (Special Ninth
Division) and The City of Tagaytay."
During the pendency of the proceedings in G.R.
No. 106812, on October 21, 1994, the RTC
rendered a Decision23 in Civil Case No. TG-1196
wherein the trial court directed the annulment of the
public sale of the contested properties. The
dispositive portion of the decision reads:
WHEREFORE, judgment is hereby rendered
granting the instant petition and as a consequence,
the public auction sale of the properties of the
petitioner, both covered by TCT Nos. T-9816 and
T-9817 of the Registry of Deeds of Tagaytay City,
as well as the Certificate of Sale and the Final Bill
of Sale of said properties in favor of the respondent
City of Tagaytay City (sic), and all proceedings held
in connection therewith are hereby annulled and set
aside, and the respondent Register of Deeds of the
City of Tagaytay is hereby directed to cancel
Entries Nos. 21951/T-9816 and 36984/T9816
annotated and appearing on TCT No. T-9816 and
Entries Nos. 21950/T-9817 and 30087/T-9817
annotated and appearing on TCT No. T-9817
regarding the sale of the lots described therein in
favor of the City of Tagaytay.
Moreover, the writ of preliminary injunction issued
by this Court on September 24 is hereby made
permanent.
SO ORDERED.24
The City of Tagaytay filed a motion for
reconsideration of the RTC decision in Civil Case
No. TG-1196. But for failure to comply with the
procedural requirements of a litigious motion, the
trial court denied the same in an Order25 dated
February 28, 1995. The fallo of the order reads:
WHEREFORE, in the light of the foregoing, this
Court finds no cogent grounds (sic) for a grant of
the Motion for Reconsideration filed by respondent
City of Tagaytay and considering that the same
motion failed to comply with the requirements
imposed by Sections 4, 5 and 6 of Rule 15 of the
Revised Rules of Court, this Court hereby directs
that the said motion be stricken from the records
and the Acting Clerk of this Court is directed to
enter the Decision dated October 21, 1994 as
required under Section 2, Rule 36 of the Revised
Rules of Court.
SO ORDERED.26
On November 9, 1994, the RTC Decision dated
October 21, 1994 in Civil Case No. TG-1196
became final and executory. On March 24, 1995,
the Decision was entered in the Book of Entries of
Judgments.27
On August 31, 1995, the Melencios filed before the
CA a petition for annulment of judgment of the RTC
Decision in Civil Case No. TG-1196. The case was
docketed as CA-G.R. SP No. 38298, entitled
"Ameurfina Melencio-Herrera and Emilina
Melencio-Fernando v. Hon. Eleuterio F. Guerrero,
Tagaytay-Taal Tourist Development Corporation,
the Province of Batangas, the Municipality of
Laurel, the Municipality of Talisay and the City of
Tagaytay." In the Petition,28 the Melencios
questioned the final and executory decision of the
trial court on the ground that the City of Tagaytay
allegedly committed extrinsic fraud and that was
the ultimate reason why they were deprived of
property without due process of law. Furthermore,
they averred that the decision was rendered with
absolute lack of jurisdiction over the subject matter
and nature of the petition due to the following: (1)
violation of the prohibition to entertain cases
without the payment of the required deposit under
Section 83 of P.D. No. 464; (2) violation of the
doctrine of litis pendentia or the doctrine of non-
interference with a co-equal body; (3) forum-
shopping by TTTDC; and (4) failure to follow the
administrative procedure in the settlement of
boundary disputes between local government units
as provided under the Local Government Code.29
On November 15, 1995, City of Tagaytay also filed
before the CA a petition for annulment of judgment
of the RTC Decision in Civil Case No. TG-1196.
The case was docketed as CA-G.R. SP No. 39008,
entitled "City of Tagaytay v. Hon. Eleuterio F.
Guerrero, Tagaytay-Taal Tourist Development
Corporation, the Municipality of Laurel, Batangas,
and the Municipality of Talisay, Batangas." The City
of Tagaytay filed the Petition30on the following
grounds: (1) the RTC had no primary jurisdiction to
resolve boundary disputes; (2) the RTC committed
judicial legislation in its interpretation of
Commonwealth Act No. 338 and Republic Act
(R.A.) No. 1418; and (3) the RTC acted in excess
of jurisdiction in entertaining the case of TTTDC
without the deposit of the amount of the tax sale as
required by Section 83 of P.D. No. 464.31
CA-G.R. SP Nos. 38298 and 39008 were
eventually consolidated.
In the interregnum, on June 10, 1997, the Supreme
Court rendered a Decision32 in G.R. No. 106812,
the dispositive portion of which reads:
WHEREFORE, the decision of respondent Court of
Appeals promulgated on November 11, 1991 and
its resolution of August 24, 1992, and the decision
of the Regional Trial Court of Cavite dated
December 5, 1989 are hereby REVERSED and
SET ASIDE. The "Petition for Entry of New
Certificates of Title" of respondent City of Tagaytay
is DENIED.
SO ORDERED.33
In denying the petition, the Court ratiocinated, thus:
The Regional Trial Court of Cavite, sitting as a land
registration or cadastral court, could not have
ordered the issuance of new certificates of title over
the properties in the name of respondent City if the
delinquency sale was invalid because said
properties are actually located in the municipality of
Talisay, Batangas, not in Tagaytay City. Stated
differently, respondent City could not have validly
collected real taxes over properties that are outside
its territorial jurisdiction. x x x.
xxxx
The Regional Trial Court of Cavite in Civil Case No.
TG-1196 rendered a decision on October 21, 1994
ruling that the properties in question are actually
situated in Talisay, Batangas, hence, the
assessment of real estate taxes thereon by
respondent City and the auction sale of the
properties on November 28, 1983, as well as the
Certificate of Sale and Final Bill of Sale in favor of
respondent City are null and void. We quote with
favor portions of said decision:
As earlier stated herein, the portion of Barrio of
Birinayan, Municipality of Talisay, Province of
Batangas, by virtue of the provisions of
Commonwealth Act No. 338 corresponds to Exhibit
"1-B" of the Plan of Mendez-Nuñez marked as
Exhibit "1," and it is noted that Exhibit "1-B" or that
portion of the Municipality of Talisay, Province of
Batangas given to the respondent City under
Commonwealth Act No. 338 is located below the
Tagaytay Ridge which was the boundary between
the Provinces of Cavite and Batangas before the
enactment of Commonwealth Act No. 338. Thus,
taking into account the above-quoted portion of the
explanatory note of Republic Act No. 1418, there
can be no doubt that what had been ordered
returned by the law to the Municipality of Talisay,
Province of Batangas does not extend only to the
portion annexed to the respondent City by virtue of
Executive Order No. 336 but also the portion
mentioned under Commonwealth Act No. 338.
Besides, the same explanatory note mentions
specifically the return of the two (2) barrios of
Talisay, Batangas, and not merely portions thereof,
hence the conclusion is inescapable that Republic
Act No. 1418 intended the return of the entire
barrios of Caloocan and Birinayan to the same
municipality.
It is beyond [any] doubt, therefore, that Lots 10-
A and 10-B of TCT Nos. T-9816 and T-9817 of
petitioner, which are located in Barrio
Birinayan, Municipality of Talisay, Province of
Batangas, at the time Republic Act No. 1418
took effect, are no longer within the territorial
jurisdiction of the respondent City of Tagaytay
and since there is no dispute that under the law, the
City of Tagaytay may only subject to the
payment of real estate tax properties that are
situated within its territorial boundaries (See
Sections 27 & 30, Commonwealth Act No. 338;
Presidential Decree No. 464; and 1991 Local
Government Code), the assessment of real
estate taxes imposed by the respondent City on
the same properties in the years 1976 up to
1983 appears to be legally unwarranted. In the
same manner, the public auction sale, which was
conducted by the same respondent on November
28, 1989, for deficiencies on the part of the
petitioner to pay real estate taxes on the same
years, as well as the certificates of sale and the
final bills issued and executed in connection with
such auction sale, and all proceedings taken by the
respondent City in connection therewith are all
considered by this Court as illegal, and null and
void.
In fine, this Court finds from the evidence adduced
on record that petitioner has preponderantly
established its entitlement to the reliefs mentioned
in its petition.
WHEREFORE, judgment is hereby rendered
granting the instant petition and as a consequence,
the public auction sale of the properties of the
petitioner, both covered by TCT Nos. T-9816 and
T-9817 of the Registry of Deeds of Tagaytay City,
as well as the Certificates of Sale and the Final Bills
of Sale of said properties in favor of the respondent
Tagaytay City, and all proceedings held in
connection therewith are hereby annulled and set
aside, and the respondent Register of Deeds of the
City of Tagaytay is hereby directed to cancel
Entries Nos. 21951/T-9816, 21984/T-9816
annotated and appearing on TCT No. T-9816 and
Entries Nos. 21950/T-98917 and 30087/T-9817
annotated and appearing on TCT No. T-9817
regarding the sale of the lots described therein in
favor of the City of Tagaytay.
The above-cited decision has not been appealed
and is now final and executory.34
The Supreme Court decision in G.R. No. 108612 is
already final and executory.
On June 19, 1998, the CA rendered a
Decision35 dismissing the consolidated petitions for
annulment of judgment of the RTC Decision in Civil
Case No. TG-1196.
Both the City of Tagaytay and the Melencios filed
their respective motions for reconsideration.
However, both motions were denied in the
Resolution36 of the CA dated November 11, 1999.
Hence, the instant consolidated petitions.
The Issues
In G.R. Nos. 140743 and 140745, petitioner City of
Tagaytay assigns the following errors:
THE HONORABLE COURT OF APPEALS ERRED
IN FAILING TO RULE ON THE QUESTION OF
JURISDICTION AND TO CONSIDER THE FACT
THAT THE REGIONAL TRIAL COURT OF
TAGAYTAY CITY HAS NO JURISDICTION TO
RENDER ITS OCTOBER 21, 1994 DECISION
BECAUSE:
A] THE REGIONAL TRIAL COURT HAS
NO ORIGINAL JURISDICTION OVER A
BOUNDARY DISPUTE BETWEEN TWO
PROVINCES (CAVITE AND BATANGAS).
THE LOCAL GOVERNMENT CODE
CLEARLY VESTS PRIMARY AND
ORIGINAL JURISDICTION OVER
BOUNDARY DISPUTES TO THE
SANGGUNIAN OF THE LOCAL
GOVERNMENT UNITS CONCERNED;
B] THE REGIONAL TRIAL COURT DID
NOT ACQUIRE JURISDICTION OVER THE
CASE FOR FAILURE OF PRIVATE
RESPONDENT TO COMPLY WITH THE
JURISDICTIONAL REQUIREMENT OF
DEPOSITING/PAYING TO THE COURT
THE AMOUNT EQUIVALENT TO THE TAX
SALE AS MANDATED BY SECTION 83 OF
PRESIDENTIAL DECREE NO. 464
OTHERWISE KNOWN AS THE "REAL
PROPERTY TAX CODE" AND SECTION
35 (C) OF COMMONWEALTH ACT NO.
338 (TAGAYTAY CITY CHARTER); AND
C] THE REGIONAL TRIAL COURT HAS
NO JURISDICTION TO CHANGE/AMEND
THE EXISTING TERRITORIAL LIMITS OF
POLITICAL SUBDIVISIONS.37
In G.R. Nos. 141451-52, the Melencios assign the
following errors, viz.:
I.
THE COURT OF APPEALS ERRED IN RULING
THAT FOR EXTRINSIC FRAUD TO JUSTIFY
AND/OR WARRANT THE NULLIFICATION OF
THE DECISION OF THE REGIONAL TRIAL
COURT, THE SAME MUST BE COMMITTED BY
THE "PREVAILING PARTY."
II.
THE COURT OF APPEALS FAILED TO
CONSIDER THAT PETITIONERS HAVE VESTED
RIGHTS OVER THE SUBJECT PARCELS OF
LAND.
III.
THE COURT OF APPEALS ERRED IN FAILING
TO ANNUL THE JUDGMENT ON THE GROUND
THAT PETITIONERS WERE NOT IMPLEADED IN
THE CASE DESPITE BEING INDISPENSABLE
PARTIES.
IV.
THE COURT OF APPEALS ERRED IN
DISREGARDING THE FOLLOWING
JURISDICTIONAL ISSUES:
(1) SECTION 83 OF PD 464;
(2) THE DOCTRINE OF EXHAUSTION OF
ADMINISTRATIVE REMEDIES.
(3) THE DOCTRINE OF NON-FORUM
SHOPPING;
(4) DOCTRINE OF LITIS PENDENTIA;
AND
(5) THE DOCTRINE OF NON-
INTERFERENCE OF CO-EQUAL BODY
V.
THE COURT OF APPEALS ERRED IN FAILING
TO DECLARE THAT RESPONDENT COURT HAD
NO JURISDICTION TO REPEAL BY
IMPLICATION THE PROVISIONS OF
COMMONWEALTH ACT NO. 338 WHICH
REFERS TO THE SUBJECT PARCELS OF
LAND.38
The errors assigned by petitioners may be distilled
into two major issues: (1) whether the RTC had
jurisdiction to settle the alleged boundary dispute;
and (2) whether the City of Tagaytay committed
extrinsic fraud against the Melencios.
The Ruling of the Court
I. On Lack of Jurisdiction
The consolidated petitions are an offshoot of the
petitions for annulment of judgment of the RTC
Decision in Civil Case No. TG-1196 filed by the City
of Tagaytay and the Melencios.
Annulment of Judgment under Rule 47 of the Rules
of Court is a recourse equitable in character and
allowed only in exceptional cases where the
ordinary remedies of new trial, appeal, petition for
relief or other appropriate remedies are no longer
available through no fault of petitioner.39 Section 2
of the said Rule provides that the annulment may
be based only on the grounds of extrinsic fraud and
lack of jurisdiction, although jurisprudence
recognizes denial of due process as an additional
ground.40
Petitioners aver that the instant case involves a
boundary dispute and, thus, the RTC had no
jurisdiction to decide the matter. They maintain that
the basic issue resolved by the RTC was the
location of the properties, whether in the City of
Tagaytay or in the Province of Batangas. They cite
Sections 118 and 119 of the Local Government
Code in support of their argument. The said
sections read:
SECTION 118. Jurisdictional Responsibility for
Settlement of Boundary Dispute. — Boundary
disputes between and among local government
units shall, as much as possible, be settled
amicably. To this end:
(a) Boundary disputes involving two (2) or
more barangays in the same city or
municipality shall be referred for settlement
to the sangguniang panlungsod or
sangguniang bayan concerned.
(b) Boundary disputes involving two (2) or
more municipalities within the same
province shall be referred for settlement to
the sangguniang panlalawigan concerned.
(c) Boundary disputes involving
municipalities or component cities of
different provinces shall be jointly referred
for settlement to the sanggunians of the
province concerned.
(d) Boundary disputes involving a an area of NINE HUNDRED THIRTY SEVEN
component city or municipality on the one
hand and a highly urbanized city on the
other, or two (2) or more highly urbanized
cities, shall be jointly referred for settlement
to the respective sanggunians of the parties.
(e) In the event the sanggunian fails to
effect an amicable settlement within sixty
(60) days from the date the dispute was
referred thereto, it shall issue a certification
to that effect. Thereafter, the dispute shall
be formally tried by the sanggunian
concerned which shall decide the issue
within sixty (60) days from the date of the
certification referred to above.
SECTION 119. Appeal. — Within the time and
manner prescribed by the Rules of Court, any party
may elevate the decision of the sanggunian
concerned to the proper Regional Trial Court
having jurisdiction over the area in dispute. The
Regional Trial Court shall decide the appeal within
one (1) year from the filing thereof. Pending final
resolution of the disputed area prior to the dispute
shall be maintained and continued for all legal
purposes.
They further claimed that the RTC had no
jurisdiction to repeal by implication Commonwealth
Act No. 338,41 particularly on the territorial limits of
the City of Tagaytay.
The subject properties, covered by TCT Nos. 9816
and 9817, are more particularly described as
follows:
TECHNICAL DESCRIPTION
TCT No. T-9816
CITY OF TAGAYTAY
A parcel of land (Lot 10-A of the subdivision plan
(LRC) Psd-229279, being a portion of Lot 10, Psu-
82838, Amd. 4 LRC Record No. 49057), situated in
the Barrio of Birinayan, Municipality of Talisay,
Province of Batangas, Island of Luzon. Bounded on
the NW., and NE., points 7 to 1, and 1 to 2 by Lot
10-B; on the SE., points 3 to 4, by Lot 10-C both of
the subdivision plan; and on the SW., points 4 to 7,
by property of Agapito Rodriguez x x x containing
an area of SEVENTY FOUR THOUSAND THREE
HUNDRED FORTY (74,340) SQUARE METERS,
more or less x x x.42
TECHNICAL DESCRIPTION
TCT No. T-9817
CITY OF TAGAYTAY
A parcel of land (Lot 10-B, of the subdivision plan
(LRC) Psd-229279, being a portion of Lot 10, Psu-
82838, Amd. 4., LRC Record No. 49057), situated
in the Barrio of Birinayan, Municipality of Talisay,
Province of Batangas, Island of Luzon. Bounded on
the NE., points 14 to 1; and 1 to 4 by property of
Angel T. Limjoco; on the SE., points 4 to 5 by Lot
10-D; on the SW., and SE., points 5 to 7 by Lot 10-
A, both of the subdivision plan; on the SW., points 7
to 9 by property of Agapito Rodriguez; and on the
NW., points 9 to 12 by Lot 11, points 12 to 13 by
Lot 9, and points 13 to 14 by Lot 7, x x x containing
THOUSAND EIGHT HUNDRED FOURTEEN
(937,814) SQUARE METERS, more or less. x x x.43
Based on the decision of the Court in G.R. No.
106812 and the findings of fact of the RTC, as
affirmed by the CA, the subject properties that are
situated in Barrio Birinayan, Municipality of Talisay,
are within the territorial jurisdiction of the Province
of Batangas. This factual finding binds this Court
and is no longer subject to review. Recourse under
Rule 45 of the Rules of Court, as in this case,
generally precludes the determination of factual
issues.
Under Commonwealth Act No. 338, Barrio
Birinayan was annexed to the City of Tagaytay as
of its incorporation on June 31, 1938. However,
upon the passage of R.A. No. 1418 44 on June 7,
1956, Barrio Birinayan was taken away from the
City of Tagaytay and transferred to the Province of
Batangas. The pertinent portions of R.A. No. 1418
read:
SECTION 1. The former barrios of Caloocan and
Birinayan of the Municipality of Talisay, Province of
Batangas, which were annexed to the City of
Tagaytay, are hereby separated from the latter city
and transferred to the said Municipality of Talisay.
SECTION 2. The portion of Executive Order
numbered three hundred and thirty-six, dated April
first, nineteen hundred and forty-one, relating to the
transfer of the said barrios of Caloocan and
Birinayan to the City of Tagaytay, is hereby
repealed.
On June 21, 1969, by virtue of R.A. No.
5689,45 Barrio Birinayan became part of the
Municipality of Laurel, Province of Batangas.
Section 1 of R.A. No. 5689 reads:
SECTION 1. Barrios Bayuyungan, Ticub,
Balakilong, Bugaan, Borinayan, As-is, San Gabriel,
and Buso-buso in the Municipality of Talisay,
Province of Batangas, are separated from said
municipality and constituted into a distinct and
independent municipality to be known as the
Municipality of Laurel, same province. The seat of
government of the new municipality shall be in the
present site of Barrio Bayuyungan.
Central to the resolution of this dispute is the proper
interpretation of Section 1 of R.A. No. 1418.
Petitioner City of Tagaytay argues that only certain
portions of Birinayan were transferred to the
Province of Batangas, and not the entire Barrio.
However, upon perusal, it can be easily discerned
that the law is clear and categorical. The transfer of
the entire Barrio Birinayan to the Municipality of
Talisay, Province of Batangas, is definite and
unqualified. There is no indication that only certain
portions of the Barrio were transferred. Thus, no
further interpretation is required in order to
ascertain its meaning and consequent implication.
A statute is not subject to interpretation or
construction as a matter of course. It is only when
the language of the statute is ambiguous when
taken in relation to a set of facts, or reasonable
minds disagree as to its meaning, that
interpretation or construction becomes necessary.
Where the terms of the statute are clear and
unambiguous, no interpretation is called for, and
the law is applied as written, for application is the
first duty of the court, and interpretation is needed
only where literal application is impossible or
inadequate.46
Every statute is understood to contain, by
implication, if not by its express terms, all such
provisions as may be necessary to effectuate its
object and purpose, or to make effective the rights,
powers, privileges, or jurisdiction which it grants,
and also all such collateral and subsidiary
consequences as may be fairly and logically
inferred from its terms.47
There is no boundary dispute in the case at bar.
The RTC did not amend the existing territorial limits
of the City of Tagaytay and the Province of
Batangas. The entire Barrio Birinayan was
transferred to the Municipality of Talisay, Province
of Batangas, by virtue of R.A. No. 1418. At present,
Barrio Birinayan forms part of the Municipality of
Laurel, also in the Province of Batangas, pursuant
to R.A. No. 5689. The RTC acted well within its
powers when it passed judgment on the nullification
of the auction sale of the contested properties,
considering that the City of Tagaytay has no right to
collect real estate taxes on properties that are not
within its territorial jurisdiction.
The City of Tagaytay acted in bad faith when it
levied real estate taxes on the subject properties.
R.A. No. 1418 became law as early as 1956. The
City of Tagaytay is conclusively presumed to know
the law that delineates its jurisdiction, more
especially when the law, as in this case, is clear
and categorical. Men of common intelligence need
not guess at its meaning and differ on its
application. The entire Barrio Birinayan, not only
portions thereof, was transferred to the Province of
Batangas. If it was the true intention of the
legislature to transfer only certain portions of Barrio
Birinayan to the Province of Batangas, it would
have plainly stated so in the law.
Petitioners also claim that the doctrine of
exhaustion of administrative remedies was violated
when the RTC took cognizance of the case for the
annulment of the auction sale. They aver that the
jurisdiction of the RTC is only appellate in view of
Section 119 of R.A. No. 7160. However, as already
explained, the instant case does not involve a
boundary dispute. As such, there is no room for the
application of Section 119.
Petitioners likewise make reference to Section 83
of P.D. No. 464 to assail the jurisdiction of the RTC
in entertaining the petition for the annulment of the
auction sale of the contested properties. They aver
that compliance with Section 83 of P.D. No. 464 is
a jurisdictional requirement that must be complied
with before a court may take cognizance of a case
assailing the validity of a tax sale of real estate. The
said Section reads:
Section 83. Suits assailing validity of tax sale. No
court shall entertain any suit assailing the validity of
a tax sale of real estate under this Chapter until the
taxpayer shall have paid into court the amount for
which the real property was sold, together with
interests of twenty per centum per annum upon that
sum from the date of sale to the time of instituting
suit. The money so paid into court shall belong to
the purchaser at the tax sale if the deed is declared
invalid, but shall be returned to the depositor if the
action fails.
However, this provision may only be used in a
voidable tax sale. When the sale is void because
the property subjected to real estate tax is not
situated within the jurisdiction of the taxing
authority, the provision cannot be invoked. In this
case, there is already a final and executory
decision by the Supreme Court in G.R. No. 106812
that the properties are situated outside the territorial
jurisdiction of the City of Tagaytay. Thus, there was
no basis for the collection of the real estate tax.
The other arguments of petitioners, i.e., violation of
the doctrine of non-forum shopping, violation of the
doctrine of litis pendentia and the doctrine of non-
interference of a co-equal body, must likewise be
struck down. These issues were already addressed
by the Court, through the ponencia of Justice
Kapunan, in G.R. No. 106812, viz.:
The issues raised before the RTC sitting as a land
registration or cadastral court, without question,
involved substantial or controversial matters and,
consequently, beyond said court's jurisdiction. The
issues may be resolved only by a court of general
jurisdiction.
In Re: Balanga v. Court of Appeals, we
emphatically held:
x x x. While it is true that Section 78 of Act. 496 on
which the petition is based provides that upon the
failure of the judgment-debtor to redeem the
property sold at public auction the purchaser of the
land may be granted a new certificate of title, the
exercise of such function is qualified by the
provision that "at any time prior to the entry of a
new certificate the registered owner may pursue all
his lawful remedies to impeach or annul
proceedings under executions or to enforce liens of
any description." The right, therefore, to petition for
a new certificate under said section is not absolute
but subject to the determination of any objection
that may be interposed relative to the validity of the
proceedings leading to the transfer of the land
subject thereof which should be threshed out in a
separate appropriate action. This is the situation
that obtains herein. Teopista Balanga, the
judgment-debtor, is trying to impeach or annul the
execution and sale of the properties in question by
alleging that they are conjugal in nature and the
house erected on the land has been constituted as
a family home which under the law is exempt from
execution. These questions should first be
determined by the court in an ordinary action before
entry of a new certificate may be decreed.
This pronouncement is also in line with the
interpretation we have placed on Section 112 of the
same Act to the effect that although cadastral
courts are empowered to order the cancellation of a
certificate of title and the issuance of a new one in
favor of the purchaser of the land covered by it,
such relief can only be granted if there is unanimity
among the parties, or no serious objection is
interposed by a party in interest. As this Court has
aptly said: "While this section, (112) among other
things, authorizes a person in interest to ask the
court for any erasure, alteration, or amendment of a
certificate of title x x x and apparently the petition
comes under its scope, such relief can only be
granted if there is unanimity among the parties, or
there is no adverse claim or serious objection on
the part of any party in interest; otherwise the case
becomes controversial and should be threshed out
in an ordinary case or in the case where the
incident properly belongs" (Angeles v. Razon, G.R.
No. L-13679, October 26, 1959, and cases cited
therein). x x x.
From the foregoing ruling, it is clear that petitions
under Section 75 and Section 108 of P.D. 1529
(formerly Sec. 78 and Sec. 112 of Act 496) can be
taken cognizance of by the RTC sitting as a land
registration or cadastral court. Relief under said
sections can only be granted if there is unanimity
among the parties, or that there is no adverse claim
or serious objection on the part of any party in
interest; otherwise, the case becomes controversial
and should be threshed out in an ordinary case or
in the case where the incident properly belongs.48
The foregoing ponencia is now the controlling
precedent on the matters being raised anew by
petitioners. We can no longer digress from such
ruling. The determination of the questions of fact
and of law by this Court in G.R. No. 106812 already
attained finality, and may not now be disputed or
relitigated by a reopening of the same questions in
a subsequent litigation between the same parties
and their privies over the same subject matter.
Furthermore, Section 4, sub-paragraph (3), Article
VIII of the 1987 Constitution explicitly provides that
no doctrine or principle of law laid down by the
Supreme Court en banc or its Divisions may be
modified or reversed except by the Court sitting en
banc. Reasons of public policy, judicial orderliness,
economy, judicial time, and interests of litigants, as
well as the peace and order of society, all require
that stability be accorded the solemn and final
judgments of the courts or tribunals of competent
jurisdiction. There can be no question that such
reasons apply with greater force to final judgments
of the highest Court of the land.49
II. On Extrinsic Fraud
Fraud is of two categories. It may either be: (a)
actual or constructive and (b) extrinsic or intrinsic.
Actual or positive fraud proceeds from an
intentional deception practiced by means of the
misrepresentation or concealment of a material
fact. Constructive fraud is construed as such
because of its detrimental effect upon public
interest and public or private confidence, even
though the act is not done with an actual design to
commit positive fraud or injury upon other
persons.50
On the other hand, fraud may also be either
extrinsic or intrinsic. There is intrinsic fraud where
the fraudulent acts pertain to an issue involved in
the original action, or where the acts constituting
the fraud were or could have been litigated therein.
Fraud is regarded as extrinsic where the act
prevents a party from having a trial or from
presenting his entire case to the court, or where it
operates upon matters pertaining not to the
judgment itself but to the manner in which it is
procured, so that there is not a fair submission of
the controversy. Extrinsic fraud is also actual fraud,
but collateral to the transaction sued upon.51
In this case, the Melencios allege extrinsic fraud on
the part of petitioner City of Tagaytay for its failure
to implead them in Civil Case No. TG-1196. They
allege that they are indispensable parties to the
case, considering that have vested rights to protect,
being purchasers of the subject parcels of land.
Sadly, this contention does not persuade.
Extrinsic fraud refers to any fraudulent act of the
prevailing party in the litigation which is committed
outside of the trial of the case, whereby the
unsuccessful party has been prevented from
exhibiting fully his case, by fraud or deception
practiced on him by his opponent. The fraud or
deceit cannot be of the losing party's own doing,
nor must such party contribute to it. The extrinsic
fraud must be employed against it by the adverse
party, who, because of some trick, artifice, or
device, naturally prevails in the suit. 52 It affects not
the judgment itself but the manner in which the said
judgment is obtained.53
Extrinsic fraud is also present where the
unsuccessful party has been prevented by his
opponent from exhibiting fully his case by keeping
the former away from court or giving him a false
promise of a compromise; or where the defendant
never had knowledge of the suit, having been kept
in ignorance by the acts of the plaintiff; or where an
attorney fraudulently or without authority assumed
to represent a party and connived at his defeat; or
where the attorney regularly employed corruptly
sold out his client's interest to the other side. The
overriding consideration is that the fraudulent
scheme of the prevailing litigant prevented a party
from having his day in court.54
In the instant case, we find that the action or
inaction of the City of Tagaytay does not amount to
extrinsic fraud. The City of Tagaytay is not the
prevailing party in the assailed decision. Moreover,
the Melencios were not totally without fault in
protecting their interest. They were aware of the
pendency of Civil Case No. TG-1196, as shown by
their filing of a motion to intervene in the case.
When their motion was denied by the trial court,
they no longer pursued their cause.
The alleged assurances and representations of
certain officials of the City of Tagaytay that they
would file the necessary motion for reconsideration
or appeal in case of an unfavorable decision in Civil
Case No. TG-1196 was not an impediment to the
Melencios protecting their rights over the disputed
properties. There is no allegation that the City of
Tagaytay prevented them from, or induced them
against, acting on their own. Its failure to implead
the Melencios did not prevent the latter from having
their day in court, which is the essence of extrinsic
fraud.
The foregoing disquisition notwithstanding, we
reiterate our finding that the City of Tagaytay acted
in bad faith when it levied real estate taxes on the
subject properties, and should be held accountable
for all the consequences thereof, including the void
sale of the properties to the Melencios.1avvph!1
The City of Tagaytay is accountable for erroneously
assessing taxes on properties outside its territorial
jurisdiction. As of the passage of R.A. No. 1418 in
1956, the City of Tagaytay is presumed to know
that Barrio Birinayan, in which the subject
properties are situated, is no longer within its
territorial jurisdiction and beyond its taxing powers.
Under the doctrine of respondeat superior, the
principal is liable for the negligence of its agents
acting within the scope of their assigned
tasks.55 The City of Tagaytay is liable for all the
necessary and natural consequences of the
negligent acts of its city officials. It is liable for the
tortious acts committed by its agents who sold the
subject lots to the Melencios despite the clear
mandate of R.A. No. 1418, separating Barrio
Birinayan from its jurisdiction and transferring the
same to the Province of Batangas. The negligence
of the officers of the City of Tagaytay in the
performance of their official functions gives rise to
an action ex contractu and quasi ex-delictu.
However, the Melencios cannot recover twice for
the same act or omission of the City of Tagaytay.
Negligence is the failure to observe protection of
the interests of another person, that degree of care,
precaution, and vigilance which the circumstances
justly demand, whereby such other person suffers
injury.56 Thus, negligence is the want of care
required under circumstances.57
In this case, it is basic that before the City of
Tagaytay may levy a certain property for sale due
to tax delinquency, the subject property should be
under its territorial jurisdiction. The city officials are
expected to know such basic principle of law. The
failure of the city officials of Tagaytay to verify if the
property is within its jurisdiction before levying
taxes on the same constitutes gross negligence.
Accordingly, the City of Tagaytay is liable to return
the full amount paid by the Melencios during the
auction sale of the subject properties by way of
actual damages. The amount paid at the auction
sale shall earn interest at the rate of six percent
(6%) per annum from the time of the finality of the
RTC decision in Civil Case No. TG-1196, when the
claim was judicially demanded. Thereafter, interest
at the rate of twelve percent (12%), in lieu of the
6%, shall be imposed on such amount upon finality
of this decision until full payment thereof.581avvphi1
The gross negligence of the City of Tagaytay in
levying taxes and auctioning properties to
answer for real property tax deficiencies
outside its territorial jurisdiction amounts to
bad faith that calls for the award of moral
damages. Moral damages are meant to
compensate the claimant for any physical
suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded
feelings, moral shock, social humiliation and
similar injuries unjustly caused. Although
incapable of pecuniary estimation, the amount
must somehow be proportional to and in
approximation of the suffering inflicted.59
Moral damages are awarded to enable the injured
party to obtain means, diversions or amusements
that will serve to alleviate the moral suffering the
person has undergone, by reason of defendant's
culpable action. The award is aimed at
restoration, as much as possible, of the
spiritual status quo ante. Thus, it must be
proportionate to the suffering inflicted. Since
each case must be governed by its own
peculiar circumstances, there is no hard and
fast rule in determining the proper amount.60
The social standing of the aggrieved party is
essential to the determination of the proper
amount of the award. Otherwise, the goal of
enabling him to obtain means, diversions, or
amusements to restore him to the status quo
ante would not be achieved.61
The Melencios are likewise entitled to exemplary
damages. Exemplary or corrective damages are
imposed by way of example or correction for
the public good, in addition to the moral,
temperate, liquidated, or compensatory
62
damages.  Article 2229 of the Civil Code grants
the award of exemplary or corrective damages in
order to deter the commission of similar acts in the
future and to allow the courts to mould behavior
that can have grave and deleterious consequences
to society.63 In the instant case, the gross
negligence of the City of Tagaytay in
erroneously exacting taxes and selling
properties outside its jurisdiction, despite the
clear mandate of statutory law, must be
rectified.
WHEREFORE, in lieu of the foregoing, the
Decision dated June 19, 1998 and the Resolution
dated November 11, 1999 of the Court of Appeals
in CA-G.R. SP Nos. 39008 and 38298 are hereby
AFFIRMED WITH MODIFICATIONS:
 (1) The City of Tagaytay is hereby
ORDERED to return to petitioners
Ameurfina Melencio-Herrera and Emilina
Melencio-Fernando the total amount that
they have paid in connection with the
auction sale of the lands covered by
Transfer Certificate of Title Nos. 9816 and
9817, plus interest on the said amount at six
percent (6%) per annum from the date of
the finality of the decision of the Regional
Trial Court in Civil Case No. TG-1196. A
twelve percent (12%) interest per annum, in
lieu of the six percent (6%), shall be
imposed on such amount upon finality of
this decision until the full payment thereof;

(2) The City of Tagaytay is hereby

ORDERED to pay petitioners Ameurfina
Melencio-Herrera and Emilina Melencio-
Fernando moral damages in the amount of
Five Hundred Thousand Pesos
(₱500,000.00);

(3) The City of Tagaytay is hereby

ORDERED to pay petitioners Ameurfina
Melencio-Herrera and Emilina Melencio-
Fernando exemplary damages in the
amount of Two Hundred Thousand Pesos
(₱200,000.00); and

(4) To pay the costs of this suit.

SO ORDERED.
G.R. No. 46237           September 27, 1939
ROSALIO MARQUEZ, ET AL., plaintiffs-appellees,
vs.
BERNARDO CASTILLO, defendant-appellant.
A.L. Katigbak for appellant.
Teodorico Ona for appellee.
DIAZ, J.:
The plaintiffs and appellees surnamed Marquez
sought to collect from the defendant and appellant,
in the Court of First Instance of Tayabas, an
indemnity in the sum of P4,900 for the death of
Fernanda Marquez on whom they claim to be
dependent for support, which death was caused by
the reckless imprudence of Mariano Capulong, the
defendant's chauffeur who ran over her on April 30,
1937, in the barrio of Lusacan of the municipality of
Tiaong, Province of Tayabas. The plaintiff and
appellee Maria Chomacera, in turn, sought to
collect from the same defendant another indemnity
in the sum of P100 for certain injuries received by
her from the same cause and under the same
circumstances which resulted in the death of said
Fernanda Marquez.
The defendant defended himself by alleging that
the death of Fernanda Marquez was due to the
exclusive fault and negligence of the chauffeur
Mariano Capulong, and that in the selection and
employment of the latter, as such, in his service, he
exercised the due diligence of a good father of a
family, so that he should not be made to answer for
the damages caused by the imprudence of said
employee. To this defense of the defendant, who at
the same time alleged in his answer a counterclaim
seeking an indemnity in the sum of P300 for the
annoyance caused him by the plaintiffs, by
compelling him to defend himself in the case,
thereby incurring expenses in order to secure the
services of an attorney, the plaintiffs and appellees
filed a reply contending that it is of no avail to the
defendant to have exercised the due diligence of a
good father of a family in the selection and
employment of the chauffeur Mariano Capulong
claiming that the latter was duly licensed as such
chauffeur, because, under the provisions of article
103 of the Revised Penal Code, he is, at any rate,
bound subsidiarily to answer for the civil liability of
said servant, subordinate, employee or chauffeur,
for the reason that when the latter caused the death
of the deceased Marquez, he was in the employ of
the defendant.
During the trial, the parties filed a stipulation of
facts which appears inserted in the appealed
decision, as follows:
That Mariano Capulong is the same
accused convicted and sentenced in
criminal case No. 7103 of this court, as
evidenced by the judgment dated May 6,
1937.
xxx           xxx           xxx
That said Mariano Capulong is insolvent,
according to the investigations conducted
by us to this date.
1. That the defendant Bernardo Castillo has
exercised due diligence as a good father of
a family in selecting the chauffeur Mariano
Capulong, and the plaintiffs admit that said
chauffeur Mariano Capulong possesses an
automobile driver's license which, for
purposes of identification, we request to be
marked as Exhibit A, as a conclusive
evidence of his having exercised due
diligence.
2. That the defendant Bernardo Castillo is
not engaged in any kind of business or
industry on or about April 30, 1937, the date
of the accident.
3. That the defendant Bernardo Castillo was
not riding in the car at the time of the
accident, and he did not know that his car
was taken by the chauffeur Mariano
Capulong.
4. That, by reason of this complaint, the
defendant has suffered damages in the sum
of P300 in order to prepare his defense.
That Fernanda Marquez, that is, the
offended party in criminal case No. 7103,
was earning at the rate of P1 a day on the
date of her death; and that said Fernanda
Marquez was only 50 years old when she
died.
That the co-plaintiff Maria Chomacera was
earning at the rate of P1.20 a day at the
time she received the injuries mentioned in
the above-stated affidavit of Mariano
Capulong, and that she incurred for her
treatment expenses amounting to P100, as
alleged in the complaint, while Fernanda
Marquez spent for her burial and funeral the
sum of P300, as alleged in the complaint.
It should be noted that in said stipulation, there is a
provision appearing in paragraph 3 thereof, which
reads as follows:
That the defendant Bernardo Castillo
was not riding in the car at the time of
the accident, and he did not know that
his car was taken by the chauffeur
Mariano Capulong.
This fact decides the question because it
clearly shows that the accident did not occur in
the course of the performance of the duties or
service for which said chauffeur Mariano
Capulong had been hired. The defendant did
not hire him to do as he pleased, using the
defendant's car as if it were his own. His duties
and service were confined to driving his
master's car as the latter ordered him, and the
accident did not take place under said
circumstances. The subsidiary civil liability of
the master, according to the provisions of
article 103 of said Revised Penal Code, arises
and takes place only when the servant,
subordinate or employee commits a punishable
criminal act while in the actual performance of
his ordinary duties and service, and he is insolvent
thereby rendering him incapable of satisfying by
himself his own civil liability.
The general rule regarding the obligation to repair
the damage done, besides the one established in
article 103 of the Revised Penal Code, is that he,
who by an act or omission causes the damage
through his fault or negligence, is the one called
upon to repair the same (art. 1902, Civil Code).
This rule, which extends only to cases mentioned in
articles 1903 to 1910 of said Code, is in no way
applicable to the appellant, all the more so
because, as the lower court makes clear in its
decision, neither was he in his car at the time of the
accident for which Mariano Capulong was
sentenced to pay an indemnity of P500 to the heirs
of the deceased Marquez, nor was he negligent in
the selection of his chauffeur, since he hired in his
service precisely one who is duly licensed to drive a
car.

For the foregoing reasons, the appealed judgment

is reversed, with the costs de oficio.

So ordered.

Avanceña, C.J., Villa-Real, Imperial, Laurel,

Concepcion, and Moran, JJ., concur.