SECOND DIVISION G.R. No. 137775. March 31, 2005 FGU INSURANCE CORPORATION, Petitioner, vs.

THE COURT OF APPEALS, SAN MIGUEL CORPORATION, and ESTATE OF ANG GUI, represented by LUCIO, JULIAN, and JAIME, all surnamed ANG, and CO TO, Respondents. G.R. No. 140704. March 31, 2005 ESTATE OF ANG GUI, Represented by LUCIO, JULIAN and JAIME, all surnamed ANG, and CO TO, Petitioners, vs. THE HONORABLE COURT OF APPEALS, SAN MIGUEL CORP., and FGU INSURANCE CORP., Respondents. DECISION CHICO-NAZARIO, J.: Before Us are two separate Petitions for review assailing the Decision[1] of the Court of Appeals in CA-G.R. CV No. 49624 entitled, 'San Miguel Corporation, Plaintiff-Appellee versus Estate of Ang Gui, represented by Lucio, Julian and Jaime, all surnamed Ang, and Co To, Defendants-Appellants, ThirdParty Plaintiffs versus FGU Insurance Corporation, Third-Party Defendant-Appellant, which affirmed in toto the decision[2] of the Regional Trial Court of Cebu City, Branch 22. The dispositive portion of the Court of Appeals decision reads: WHEREFORE, for all the foregoing, judgment is hereby rendered as follows: 1) Ordering defendants to pay plaintiff the sum of P1,346,197.00 and an interest of 6% per annum to be reckoned from the filing of this case on October 2, 1990; 2) Ordering defendants to pay plaintiff the sum of P25,000.00 for attorney's fees and an additional sum of P10,000.00 as litigation expenses; 3) With cost against defendants.

For the Third-Party Complaint: 1) Ordering third-party defendant FGU Insurance Company to pay and reimburse defendants the amount of P632,700.00.[3] The Facts Evidence shows that Anco Enterprises Company (ANCO), a partnership between Ang Gui and Co To, was engaged in the shipping business. It owned the M/T ANCO tugboat and the D/B Lucio barge which were operated as common carriers. Since the D/B Lucio had no engine of its own, it could not maneuver by itself and had to be towed by a tugboat for it to move from one place to another. On 23 September 1979, San Miguel Corporation (SMC) shipped from Mandaue City, Cebu, on board the D/B Lucio, for towage by M/T ANCO, the following cargoes: Bill of Lading No. Shipment Destination 1 25,000 cases Pale Pilsen Estancia, Iloilo 350 cases Cerveza Negra Estancia, Iloilo 2 15,000 cases Pale Pilsen San Jose, Antique 200 cases Cerveza Negra San Jose, Antique The consignee for the cargoes covered by Bill of Lading No. 1 was SMC's Beer Marketing Division (BMD)Estancia Beer Sales Office, Estancia, Iloilo, while the consignee for the cargoes covered by Bill of Lading No. 2 was SMC's BMD-San Jose Beer Sales Office, San Jose, Antique. The D/B Lucio was towed by the M/T ANCO all the way from Mandaue City to San Jose, Antique. The vessels arrived at San Jose, Antique, at about one oclock in the afternoon of 30 September 1979. The tugboat M/T ANCO left the barge immediately after reaching San Jose, Antique. When the barge and tugboat arrived at San Jose, Antique, in the afternoon of 30 September 1979, the clouds over the area were dark and the waves were already big. The arrastre workers unloading the cargoes of SMC

on board the D/B Lucio began to complain about their difficulty in unloading the cargoes. SMC's District Sales Supervisor, Fernando Macabuag, requested ANCO's representative to transfer the barge to a safer place because the vessel might not be able to withstand the big waves. ANCO's representative did not heed the request because he was confident that the barge could withstand the waves. This, notwithstanding the fact that at that time, only the M/T ANCO was left at the wharf of San Jose, Antique, as all other vessels already left the wharf to seek shelter. With the waves growing bigger and bigger, only Ten Thousand Seven Hundred Ninety (10,790) cases of beer were discharged into the custody of the arrastre operator. At about ten to eleven oclock in the evening of 01 October 1979, the crew of D/B Lucio abandoned the vessel because the barge's rope attached to the wharf was cut off by the big waves. At around midnight, the barge run aground and was broken and the cargoes of beer in the barge were swept away. As a result, ANCO failed to deliver to SMC's consignee Twenty-Nine Thousand Two Hundred Ten (29,210) cases of Pale Pilsen and Five Hundred Fifty (550) cases of Cerveza Negra. The value per case of Pale Pilsen was FortyFive Pesos and Twenty Centavos (P45.20). The value of a case of Cerveza Negra was Forty-Seven Pesos and Ten Centavos (P47.10), hence, SMC's claim against ANCO amounted to One Million Three Hundred Forty-Six Thousand One Hundred Ninety-Seven Pesos (P1,346,197.00). As a consequence of the incident, SMC filed a complaint for Breach of Contract of Carriage and Damages against ANCO for the amount of One Million Three Hundred Forty-Six Thousand One Hundred Ninety-Seven Pesos (P1,346,197.00) plus interest, litigation expenses and Twenty-Five Percent (25%) of the total claim as attorney's fees. Upon Ang Gui's death, ANCO, as a partnership, was dissolved hence, on 26 January 1993, SMC filed a second amended complaint which was admitted by the Court impleading the surviving partner, Co To and the Estate of Ang Gui represented by Lucio, Julian and Jaime, all surnamed Ang. The substituted defendants adopted the original answer with counterclaim of ANCO since the substantial allegations of the original complaint and the amended complaint are practically the same. ANCO admitted that the cases of beer Pale Pilsen and Cerveza Negra mentioned in the complaint were indeed loaded on the vessel belonging to ANCO. It claimed however that it had an agreement with SMC that ANCO would not be liable for any losses or damages resulting to the cargoes by reason of fortuitous event. Since the cases of beer Pale Pilsen and Cerveza Negra were lost by reason of a storm, a fortuitous event which battered and sunk the vessel in which they were loaded, they should not be held liable. ANCO further asserted that there was an agreement between them and SMC to insure the cargoes in order to recover indemnity in case of loss. Pursuant to that agreement, the cargoes to the extent of Twenty Thousand (20,000) cases was insured with FGU Insurance Corporation (FGU) for the total amount of Eight Hundred Fifty-Eight Thousand Five Hundred Pesos (P858,500.00) per Marine Insurance Policy No. 29591. Subsequently, ANCO, with leave of court, filed a Third-Party Complaint against FGU, alleging that before the vessel of ANCO left for San Jose, Antique with the cargoes owned by SMC, the cargoes, to the extent of Twenty Thousand (20,000) cases, were insured with FGU for a total amount of Eight Hundred Fifty-Eight Thousand Five Hundred Pesos (P858,500.00) under Marine Insurance Policy No. 29591. ANCO further alleged that on or about 02 October 1979, by reason of very strong winds and heavy waves brought about by a passing typhoon, the vessel run aground near the vicinity of San Jose, Antique, as a result of which, the vessel was totally wrecked and its cargoes owned by SMC were lost and/or destroyed. According to ANCO, the loss of said cargoes occurred as a result of risks insured against in the insurance policy and during the existence and lifetime of said insurance policy. ANCO went on to assert that in the remote possibility that the court will order ANCO to pay SMC's claim, the third-party defendant corporation should be held liable to indemnify or reimburse ANCO whatever amounts, or damages, it may be required to pay to SMC. In its answer to the Third-Party complaint, third-party defendant FGU admitted the existence of the Insurance Policy under Marine Cover Note No. 29591 but maintained that the alleged loss of the cargoes covered by the said insurance policy cannot be attributed directly or indirectly to any of the risks insured against in the said insurance policy. According to FGU, it is only liable under the policy to Third-party Plaintiff ANCO and/or Plaintiff SMC in case of any of the following: a) total loss of the entire shipment; b) loss of any case as a result of the sinking of the vessel; or c) loss as a result of the vessel being on fire. Furthermore, FGU alleged that the Third-Party Plaintiff ANCO and Plaintiff SMC failed to exercise ordinary diligence or the diligence of a good father of the family in the care and supervision of the cargoes insured to

prevent its loss and/or destruction. Third-Party defendant FGU prayed for the dismissal of the Third-Party Complaint and asked for actual, moral, and exemplary damages and attorney's fees.[1] The trial court found that while the cargoes were indeed lost due to fortuitous event, there was failure on ANCO's part, through their representatives, to observe the degree of diligence required that would exonerate them from liability. The trial court thus held the Estate of Ang Gui and Co To liable to SMC for the amount of the lost shipment. With respect to the Third-Party complaint, the court a quo found FGU liable to bear Fifty-Three Percent (53%) of the amount of the lost cargoes. According to the trial court: . . . Evidence is to the effect that the D/B Lucio, on which the cargo insured, run-aground and was broken and the beer cargoes on the said barge were swept away. It is the sense of this Court that the risk insured against was the cause of the loss. ... Since the total cargo was 40,550 cases which had a total amount of P1,833,905.00 and the amount of the policy was only for P858,500.00, defendants as assured, therefore, were considered co-insurers of third-party defendant FGU Insurance Corporation to the extent of 975,405.00 value of the cargo. Consequently, inasmuch as there was partial loss of only P1,346,197.00, the assured shall bear 53% of the loss'

[4] [Emphasis ours]

The appellate court affirmed in toto the decision of the lower court and denied the motion for reconsideration and the supplemental motion for reconsideration. Hence, the petitions. The Issues In G.R. No. 137775, the grounds for review raised by petitioner FGU can be summarized into two: 1) Whether or not respondent Court of Appeals committed grave abuse of discretion in holding FGU liable under the insurance contract considering the circumstances surrounding the loss of the cargoes; and 2) Whether or not the Court of Appeals committed an error of law in holding that the doctrine of res judicata applies in the instant case. In G.R. No. 140704, petitioner Estate of Ang Gui and Co To assail the decision of the appellate court based on the following assignments of error: 1) The Court of Appeals committed grave abuse of discretion in affirming the findings of the lower court that the negligence of the crewmembers of the D/B Lucio was the proximate cause of the loss of the cargoes; and 2) The respondent court acted with grave abuse of discretion when it ruled that the appeal was without merit despite the fact that said court had accepted the decision in Civil Case No. R-19341, as affirmed by the Court of Appeals and the Supreme Court, as res judicata. Ruling of the Court First, we shall endeavor to dispose of the common issue raised by both petitioners in their respective petitions for review, that is, whether or not the doctrine of res judicata applies in the instant case. It is ANCO's contention that the decision in Civil Case No. R-19341, [5] which was decided in its favor, constitutes res judicata with respect to the issues raised in the case at bar. The contention is without merit. There can be no res judicata as between Civil Case No. R-19341 and the case at bar. In order for res judicata to be made applicable in a case, the following essential requisites must be present: 1) the former judgment must be final; 2) the former judgment must have been rendered by a court having jurisdiction over the subject matter and the parties; 3) the former judgment must be a judgment or order on the merits; and 4) there must be between the first and second action identity of parties, identity of subject matter, and identity of causes of action.

[6]

There is no question that the first three elements of res judicata as enumerated above are indeed satisfied by the decision in Civil Case No. R-19341. However, the doctrine is still inapplicable due to the absence of the last essential requisite of identity of parties, subject matter and causes of action. The parties in Civil Case No. R-19341 were ANCO as plaintiff and FGU as defendant while in the instant case, SMC is the plaintiff and the Estate of Ang Gui represented by Lucio, Julian and Jaime, all surnamed Ang and Co

To as defendants, with the latter merely impleading FGU as third-party defendant. The subject matter of Civil Case No. R-19341 was the insurance contract entered into by ANCO, the owner of the vessel, with FGU covering the vessel D/B Lucio, while in the instant case, the subject matter of litigation is the loss of the cargoes of SMC, as shipper, loaded in the D/B Lucio and the resulting failure of ANCO to deliver to SMC's consignees the lost cargo. Otherwise stated, the controversy in the first case involved the rights and liabilities of the shipowner vis--vis that of the insurer, while the present case involves the rights and liabilities of the shipper vis--vis that of the shipowner. Specifically, Civil Case No. R-19341 was an action for Specific Performance and Damages based on FGU Marine Hull Insurance Policy No. VMF-MH-13519 covering the vessel D/B Lucio, while the instant case is an action for Breach of Contract of Carriage and Damages filed by SMC against ANCO based on Bill of Lading No. 1 and No. 2, with defendant ANCO seeking reimbursement from FGU under Insurance Policy No. MA-58486, should the former be held liable to pay SMC. Moreover, the subject matter of the third-party complaint against FGU in this case is different from that in Civil Case No. R-19341. In the latter, ANCO was suing FGU for the insurance contract over the vessel while in the former, the third-party complaint arose from the insurance contract covering the cargoes on board the D/B Lucio. The doctrine of res judicata precludes the re-litigation of a particular fact or issue already passed upon by a court of competent jurisdiction in a former judgment, in another action between the same parties based on a different claim or cause of action. The judgment in the prior action operates as estoppel only as to those matters in issue or points controverted, upon the determination of which the finding or judgment was rendered.

[7]

If a particular point or question is in issue in the second action, and the judgment will depend on the determination of that particular point or question, a former judgment between the same parties or their privies will be final and conclusive in the second if that same point or question was in issue and adjudicated in the first suit.[8] Since the case at bar arose from the same incident as that involved in Civil Case No. R-19341, only findings with respect to matters passed upon by the court in the former judgment are conclusive in the disposition of the instant case. A careful perusal of the decision in Civil Case No. R-19341 will reveal that the pivotal issues resolved by the lower court, as affirmed by both the Court of Appeals and the Supreme Court, can be summarized into three legal conclusions: 1) that the D/B Lucio before and during the voyage was seaworthy; 2) that there was proper notice of loss made by ANCO within the reglementary period; and 3) that the vessel D/B Lucio was a constructive total loss. Said decision, however, did not pass upon the issues raised in the instant case. Absent therein was any discussion regarding the liability of ANCO for the loss of the cargoes. Neither did the lower court pass upon the issue of the alleged negligence of the crewmembers of the D/B Lucio being the cause of the loss of the cargoes owned by SMC. Therefore, based on the foregoing discussion, we are reversing the findings of the Court of Appeals that there is res judicata. Anent ANCO's first assignment of error, i.e., the appellate court committed error in concluding that the negligence of ANCO's representatives was the proximate cause of the loss, said issue is a question of fact assailing the lower court's appreciation of evidence on the negligence or lack thereof of the crewmembers of the D/B Lucio. As a rule, findings of fact of lower courts, particularly when affirmed by the appellate court, are deemed final and conclusive. The Supreme Court cannot review such findings on appeal, especially when they are borne out by the records or are based on substantial evidence.[9] As held in the case of Donato v. Court of Appeals,[10] in this jurisdiction, it is a fundamental and settled rule that findings of fact by the trial court are entitled to great weight on appeal and should not be disturbed unless for strong and cogent reasons because the trial court is in a better position to examine real evidence, as well as to observe the demeanor of the witnesses while testifying in the case.[11] It is not the function of this Court to analyze or weigh evidence all over again, unless there is a showing that the findings of the lower court are totally devoid of support or are glaringly erroneous as to constitute palpable error or grave abuse of discretion.[12] A careful study of the records shows no cogent reason to fault the findings of the lower court, as sustained by the appellate court, that ANCO's representatives failed to exercise the extraordinary degree of diligence required by the law to exculpate them from liability for the loss of the cargoes. First, ANCO admitted that they failed to deliver to the designated consignee the Twenty Nine Thousand Two Hundred Ten (29,210) cases of Pale Pilsen and Five Hundred Fifty (550) cases of Cerveza Negra.

Second, it is borne out in the testimony of the witnesses on record that the barge D/B Lucio had no engine of its own and could not maneuver by itself. Yet, the patron of ANCO's tugboat M/T ANCO left it to fend for itself notwithstanding the fact that as the two vessels arrived at the port of San Jose, Antique, signs of the impending storm were already manifest. As stated by the lower court, witness Mr. Anastacio Manilag testified that the captain or patron of the tugboat M/T ANCO left the barge D/B Lucio immediately after it reached San Jose, Antique, despite the fact that there were already big waves and the area was already dark. This is corroborated by defendants' own witness, Mr. Fernando Macabueg.[13] The trial court continued: At that precise moment, since it is the duty of the defendant to exercise and observe extraordinary diligence in the vigilance over the cargo of the plaintiff, the patron or captain of M/T ANCO, representing the defendant could have placed D/B Lucio in a very safe location before they left knowing or sensing at that time the coming of a typhoon. The presence of big waves and dark clouds could have warned the patron or captain of M/T ANCO to insure the safety of D/B Lucio including its cargo. D/B Lucio being a barge, without its engine, as the patron or captain of M/T ANCO knew, could not possibly maneuver by itself. Had the patron or captain of M/T ANCO, the representative of the defendants observed extraordinary diligence in placing the D/B Lucio in a safe place, the loss to the cargo of the plaintiff could not have occurred. In short, therefore, defendants through their representatives, failed to observe the degree of diligence required of them under the provision of Art. 1733 of the Civil Code of the Philippines.[14] Petitioners Estate of Ang Gui and Co To, in their Memorandum, asserted that the contention of respondents SMC and FGU that 'the crewmembers of D/B Lucio should have left port at the onset of the typhoon is like advising the fish to jump from the frying pan into the fire and an advice that borders on madness.[15] The argument does not persuade. The records show that the D/B Lucio was the only vessel left at San Jose, Antique, during the time in question. The other vessels were transferred and temporarily moved to Malandong, 5 kilometers from wharf where the barge remained.[16] Clearly, the transferred vessels were definitely safer in Malandong than at the port of San Jose, Antique, at that particular time, a fact which petitioners failed to dispute ANCO's arguments boil down to the claim that the loss of the cargoes was caused by the typhoon Sisang, a fortuitous event (caso fortuito), and there was no fault or negligence on their part. In fact, ANCO claims that their crewmembers exercised due diligence to prevent or minimize the loss of the cargoes but their efforts proved no match to the forces unleashed by the typhoon which, in petitioners' own words was, by any yardstick, a natural calamity, a fortuitous event, an act of God, the consequences of which petitioners could not be held liable for.[17] The Civil Code provides: Art. 1733. Common carriers, from the nature of their business and for reasons of public policy are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances of each case. Such extraordinary diligence in vigilance over the goods is further expressed in Articles 1734, 1735, and 1745 Nos. 5, 6, and 7 . . . Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless the same is due to any of the following causes only: (1) Flood, storm, earthquake, lightning, or other natural disaster or calamity; ... Art. 1739. In order that the common carrier may be exempted from responsibility, the natural disaster must have been the proximate and only cause of the loss . However, the common carrier must exercise due diligence to prevent or minimize loss before, during and after the occurrence of flood, storm, or other natural disaster in order that the common carrier may be exempted from liability for the loss, destruction, or deterioration of the goods . . . (Emphasis supplied) Caso fortuito or force majeure (which in law are identical insofar as they exempt an obligor from liability)[18] by definition, are extraordinary events not foreseeable or avoidable, events that could not be foreseen, or which though foreseen, were inevitable. It is therefore not enough that the event should not have been foreseen or anticipated, as is commonly believed but it must be one impossible to foresee or to avoid.[19]

In this case, the calamity which caused the loss of the cargoes was not unforeseen nor was it unavoidable. In fact, the other vessels in the port of San Jose, Antique, managed to transfer to another place, a circumstance which prompted SMC's District Sales Supervisor to request that the D/B Lucio be likewise transferred, but to no avail. The D/B Lucio had no engine and could not maneuver by itself. Even if ANCO's representatives wanted to transfer it, they no longer had any means to do so as the tugboat M/T ANCO had already departed, leaving the barge to its own devices. The captain of the tugboat should have had the foresight not to leave the barge alone considering the pending storm. While the loss of the cargoes was admittedly caused by the typhoon Sisang, a natural disaster, ANCO could not escape liability to respondent SMC. The records clearly show the failure of petitioners' representatives to exercise the extraordinary degree of diligence mandated by law. To be exempted from responsibility, the natural disaster should have been the proximate and only cause of the loss. [20] There must have been no contributory negligence on the part of the common carrier. As held in the case of Limpangco Sons v. Yangco Steamship Co.:[21] . . . To be exempt from liability because of an act of God, the tug must be free from any previous negligence or misconduct by which that loss or damage may have been occasioned. For, although the immediate or proximate cause of the loss in any given instance may have been what is termed an act of God, yet, if the tug unnecessarily exposed the two to such accident by any culpable act or omission of its own, it is not excused.

[22]

Therefore, as correctly pointed out by the appellate court, there was blatant negligence on the part of M/T ANCO's crewmembers, first in leaving the engine-less barge D/B Lucio at the mercy of the storm without the assistance of the tugboat, and again in failing to heed the request of SMC's representatives to have the barge transferred to a safer place, as was done by the other vessels in the port; thus, making said blatant negligence the proximate cause of the loss of the cargoes. We now come to the issue of whether or not FGU can be held liable under the insurance policy to reimburse ANCO for the loss of the cargoes despite the findings of the respondent court that such loss was occasioned by the blatant negligence of the latter's employees. One of the purposes for taking out insurance is to protect the insured against the consequences of his own negligence and that of his agents. Thus, it is a basic rule in insurance that the carelessness and negligence of

the insured or his agents constitute no defense on the part of the insurer.[23] This rule however presupposes that the loss has occurred due to causes which could not have been prevented by the insured, despite the exercise of due diligence. The question now is whether there is a certain degree of negligence on the part of the insured or his agents that will deprive him the right to recover under the insurance contract. We say there is. However, to what extent such negligence must go in order to exonerate the insurer from liability must be evaluated in light of the circumstances surrounding each case. When evidence show that the insured's negligence or recklessness is so gross as to be sufficient to constitute a willful act, the insurer must be exonerated. In the case of Standard Marine Ins. Co. v. Nome Beach L. & T. Co.,[24] the United States Supreme Court held that: The ordinary negligence of the insured and his agents has long been held as a part of the risk which the insurer takes upon himself, and the existence of which, where it is the proximate cause of the loss, does not absolve the insurer from liability. But willful exposure, gross negligence, negligence amounting to misconduct, etc., have often been held to release the insurer from such liability.[25] [Emphasis ours] ... In the case of Williams v. New England Insurance Co., 3 Cliff. 244, Fed. Cas. No. 17,731, the owners of an insured vessel attempted to put her across the bar at Hatteras Inlet. She struck on the bar and was wrecked. The master knew that the depth of water on the bar was such as to make the attempted passage dangerous. Judge Clifford held that, under the circumstances, the loss was not within the protection of the policy, saying: Authorities to prove that persons insured cannot recover for a loss occasioned by their own wrongful acts are hardly necessary, as the proposition involves an elementary principle of universal application. Losses may be recovered by the insured, though remotely occasioned by the negligence or misconduct of the master or crew, if proximately caused by the perils insured against, because such mistakes and negligence are incident to navigation and constitute a part of the perils which those who engage in such adventures are obliged to incur; but it was never supposed that the insured could recover indemnity for a loss occasioned by his own wrongful

act or by that of any agent for whose conduct he was responsible.[26] [Emphasis ours] From the above-mentioned decision, the United States Supreme Court has made a distinction between ordinary negligence and gross negligence or negligence amounting to misconduct and its effect on the insured's right to recover under the insurance contract. According to the Court, while mistake and negligence of the master or crew are incident to navigation and constitute a part of the perils that the insurer is obliged to incur, such negligence or recklessness must not be of such gross character as to amount to misconduct or wrongful acts; otherwise, such negligence shall release the insurer from liability under the insurance contract. In the case at bar, both the trial court and the appellate court had concluded from the evidence that the crewmembers of both the D/B Lucio and the M/T ANCO were blatantly negligent. To wit: There was blatant negligence on the part of the employees of defendants-appellants when the patron (operator) of the tug boat immediately left the barge at the San Jose, Antique wharf despite the looming bad weather. Negligence was likewise exhibited by the defendants-appellants' representative who did not heed Macabuag's request that the barge be moved to a more secure place. The prudent thing to do, as was done by the other sea vessels at San Jose, Antique during the time in question, was to transfer the vessel to a safer wharf. The negligence of the defendants-appellants is proved by the fact that on 01 October 1979, the only simple vessel left at the wharf in San Jose was the D/B Lucio.[27] [Emphasis ours] As stated earlier, this Court does not find any reason to deviate from the conclusion drawn by the lower court, as sustained by the Court of Appeals, that ANCO's representatives had failed to exercise extraordinary diligence required of common carriers in the shipment of SMC's cargoes. Such blatant negligence being the proximate cause of the loss of the cargoes amounting to One Million Three Hundred Forty-Six Thousand One Hundred Ninety-Seven Pesos (P1,346,197.00) This Court, taking into account the circumstances present in the instant case, concludes that the blatant negligence of ANCO's employees is of such gross character that it amounts to a wrongful act which must exonerate FGU from liability under the insurance contract. WHEREFORE, premises considered, the Decision of the Court of Appeals dated 24 February 1999 is hereby AFFIRMED with MODIFICATION dismissing the third-party complaint. SO ORDERED. Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Tinga, JJ., concur. FIRST DIVISION [G.R. No. 112550. February 5, 2001] DICK L. GO, petitioner, vs. COURT OF APPEALS and SECURITY BANK & TRUST COMPANY, respondents. DECISION YNARES-SANTIAGO, J.: This is a petition for review of the decision[1] of the Court of Appeals in CA-G.R. CV No. 15268, which reversed and set aside the decision[2] of the Regional Trial Court, Branch 88 of Quezon City in Civil Case No. Q-35744. The following facts were found by the trial court: National Steel Corporation (NSC) purchased two Philippine National Bank (PNB) Managers Checks to wit: Check No. J-81-006142, dated May 11, 1982 in the sum of P911,981.00 (hereinafter, the first check); and Check No. J-81-00698, dated May 14, 1982 in the sum of P1,511,293.00 (hereinafter, the second check), as payment for customs duties and taxes due on NSCs importation of steel plates. Both checks bore the notation: For Payees Account, and were made payable to the Collector of Customs. One Edmund Ulibarri, an NSC official, delivered the checks to LMC Brokerage Firm. Consequently, the steel plates were released from the Bureau of Customs and the official receipts, supposedly indicating payment, were delivered to NSC. On May 31, 1982, the first check was deposited with private respondent Security Bank and Trust Company (SBTC), Caloocan City Branch, and credited on June 1, 1982 in Current Account No. 2110-0282-47, maintained by a certain Robert Santos with SBTC, Congressional Branch, Quezon City, which was opened only the day before, on May 31, 1982. On June 21, 1982, another account in the name of Roberto Santos (C/A No. 3310-0031-03) was opened in

SBTCs Caloocan City Branch. On the same day, the second check was deposited in C/A No. 2110-0282-47 in the Congressional Branch, but credited to the newly opened C/A No. 3310-0031-03. The Congressional Branch accepted the check and sent it for clearing, and forwarded the deposit slip and the receipt for transfer of the account to the Caloocan City Branch. Thereafter, withdrawals of funds for the two Robert Santos accounts were made. The NSC learned that the official receipts issued to it for payment of customs duties and taxes were fake, and was required to pay the customs duties a second time. Meanwhile, SBTC, after discovering the anomaly, paid PNB the sum of P2,352,966.00 as reimbursement for the proceeds of the two checks which PNB had to refund to NSC. SBTC caused the conduct of an internal investigation, which revealed the participation of petitioner Dick Go, Assistant Manager-in-charge of SBTC Congressional Branch Accounting Department, together with his coaccused Eduardo L. Lauchengco and Generoso B. Fermin, in the opening of the Robert Santos accounts, the deposit in said accounts of the subject two checks although payable to the Collector of Customs, and the siphoning of the proceeds of the checks. Thereafter, two (2) criminal informations for estafa through falsification of commercial documents were filed against petitioner, Eduardo L. Lauchengco and Generoso B. Fermin. At the same time, a complaint for sum of money was filed against petitioner together with Spouses Herminio and Clara Lauchengco, Luisito Honorio, Danilo Fiesta, B.S. Santos and Eugene Gan, docketed as Civil Case No. Q-35744. The two criminal cases were tried jointly with the civil case. The lower court rendered judgment acquitting petitioner Dick Go and his co-accused of the crime of estafa for failure of the prosecution to prove their guilt beyond reasonable doubt. The court likewise dismissed SBTCs complaint for recovery of sum of money against petitioner and his co-defendants, as well as petitioners counterclaim. On appeal, the Court of Appeals reversed and set aside the decision of the trial court, disposing thus: WHEREFORE, premises considered, the decision appealed from dismissing plaintiff-appellants complaint in Civil Case No. Q-35744, and ordering plaintiff-appellant to return and/or release to defendant-appellant Dick Go all funds in its control under the account of said Dick Go, including accrued earnings, if any, and lifting and setting aside all attachments and/or garnishments issued by reason of the case is REVERSED and SET ASIDE and a new one entered ordering defendant-appellant Dick Go and defendant Eduardo Lauchengco to pay, jointly and severally, to plaintiff-appellant the amount of P1,307,811.62, with interest at the legal rate from September 7, 1982 until fully paid. In all other respects, the decision appealed from is affirmed. With costs against defendant-appellant. In reversing and setting aside the decision of the lower court, the Court of Appeals affirmed the lower courts factual findings but made corrections and deletions therein, thus: The two PNB checks were traced to have been deposited in the accounts of one Robert Santos at the SBTC Congressional Branch in Quezon City and in the SBTC Caloocan City Branch. The Congressional Branch Account (CA-2110-0282-47) was opened on May 31, 1982 (not on May 3, 1982), admittedly with the participation of Dick Go who, however, insisted that he met a real live person who was a walk-in-client, contrary to the prosecutions claim that the name Robert Santos and Dick Go are one and the same person. At the time the Congressional Branch account was opened, Dick Go was Assistant Manager-in-charge of Accounting Department, Nora Isidro was Branch Manager, and Dolores Satuito was Assistant Manager-in-charge of Cash Department which also superintended the New Accounts Department. On June 21, 1982 (not sometime before June 18, 1982), Current Account No. CA-3310-0031-03 (not No. CA33100031) in the name of Robert Santos was also opened at the SBTC Caloocan City Branch where accused Eduardo Lauchengco was then employed as bookkeeper. The account was opened with the intervention of Eduardo Lauchengco who reserved and opened the account without accomplishing the necessary papers, and received the corresponding checkbook which he then delivered to defendant-appellee Dick Go (TSN, November 16, 1984, pp. 10-17, (not that it is not clear under what circumstances the Caloocan City Branch account was opened) xxx. Earlier, on June 3, 1982, a bank account in the name of Fernando Cruz was opened with the Philippine Bank of Communication (PBC for short) by accused Generoso Fermin who at that time was a bank officer at the PBC. Fermin admitted opening the fictitious account and making withdrawals therein but claimed that this was to accommodate Dick Go who was a former officemate -- Dick Go having previously worked with PBC. Eventually, the total sum of P902,500.00 was withdrawn from the Congressional Branch Account and P536,722.00 from the Caloocan City Branch Account. Some of the funds were later traced to have been deposited in the Fernando Cruz Account, in the account of Eduardo Lauchengcos mother, and others in the name of the other defendants

in the civil action who were not charged in the criminal cases. (Decision, pp. 4-5, Rollo, pp. 76-77).[3] In addition to the above corrections and deletions in the lower courts factual findings, the Court of Appeals found the following additional facts to complete the story: The first check, Exhibit H, was deposited on May 31, 1982 with plaintiff-appellants Caloocan Branch, with the intervention of defendant-appellee Eduardo Lauchengco, and credited on June 1, 1982 to the Robert Santos account (No. 2110-0282-47) in the SBTCs Congressional Branch (TSN, November 16, 1984, p. 5-8) which was opened just a day before. On June 21, 1982 (the same day the Caloocan account of Robert Santos was opened), the second check, Managers Check No. J81-006142, Exhibit A, for P1,511,293.00, was deposited in Robert Santos account (CA #2110-0282-47) in SBTCs Congressional branch and credited to the newly opened Robert Santos account (CA #3310-0031-03) in the Caloocan City Branch. Thus, SBTCs Congressional Branch accepted the check and sent it for clearing, and transmitted merely the deposit slip for the check, as well as the receipt of transfer of the account, to the Caloocan City Branch (TSN, March 21, 1984, p. 9). From June 3, 1982 up to June 24, 1982, withdrawals from the two accounts of Robert Santos through clearing, as well as encashments over the counter, and deposits to various account, including those to Fernando Cruz account with the PBCom, were made as follows: (Listing of checks omitted)[4] In this petition for review, petitioner submits the following errors allegedly committed by the Court of Appeals: I The Court of Appeals gravely abused its discretion when it disregarded the findings of fact of the trial court and, thereafter, reversed and set aside the decision of the trial court, on the basis of mere conclusions without support in, nor citation of, specific evidence, or that its findings and decision are premised on the absence of evidence and are contradicted by the evidence on record, or that it overlooked certain relevant facts not disputed by the parties and which, if properly considered, would justify a different result; II The Court of Appeals committed an error of law in allowing the respondent bank to recover from petitioner the amounts it paid to the Philippine National Bank (PNB) representing the proceeds of the two (2) PNB managers checks placed in the Robert Santos account.[5] Petitioner contends that the Court of Appeals made additional findings not supported by the evidence on record and that it abused its discretion in disregarding the factual findings of the lower court. He argues that the Court of Appeals reversal of the decision of the lower court was based on unsupported conclusions and despite the absence of contrary evidence; and that it misappreciated the facts, thereby necessitating a review of factual matters by this Court. In Reyes v. Court of Appeals,[6] this Court held that factual findings of the trial court, when adopted and confirmed by the Court of Appeals, are final and conclusive and may not be reviewed on appeal; except: (1) when the inference made is manifestly mistaken, absurd or impossible; (2) when there is a grave abuse of discretion; (3) when the finding is grounded entirely on speculations, surmises or conjectures; (4) when the judgment of the Court of Appeals is based on misapprehension of facts; (5) when the findings of fact are conflicting; (6) when the Court of Appeals, in making its findings, went beyond the issues of the case and the same is contrary to the admissions of both appellant and appellee; (7) when the findings of the Court of Appeals are contrary to those of the trial court; (8) when the findings of fact are conclusions without citation of specific evidence on which they are based; (9) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties and which, if properly considered, would justify a different conclusion; and (10) when the findings of fact of the Court of Appeals are premised on the absence of evidence and are contradicted by the evidence on record. While the Court of Appeals characterized the lower courts factual findings as accurate and observed that the antecedent facts as found by the lower court were not disputed by the parties, it reached a different conclusion as regards petitioners civil liability. The issue, therefore, is whether, on the basis of the same factual findings, petitioner can be held civilly liable. Stated differently, the issue is whether from the evidence adduced before the lower court, there is sufficient proof as to the indispensable participation of petitioner in the opening of the accounts in the name of one allegedly inexistent and fictitious Robert Santos, the depositing of the PNB checks in said accounts, and the siphoning of the proceeds of said checks as charged in private respondents complaint. In civil cases, the party having the burden of proof must establish his case by a preponderance of evidence. Preponderance of evidence is the weight, credit, and value of the aggregate evidence on either side and is usually considered to be synonymous with the term greater weight of the evidence or greater weight of the

credible evidence. Preponderance of evidence is a phrase which, in the last analysis, means probability of the truth. It is evidence which is more convincing to the court as worthy of belief than that which is offered in opposition thereto.[7] Rule 133, Section 1 of the Rules of Court provides the guidelines in determining preponderance of evidence, thus: In civil cases, the party having the burden of proof must establish his case by a preponderance of evidence. In determining where the preponderance or superior weight of evidence on the issues involved lies the court may consider all the facts and circumstances of the case, the witnesses manner of testifying, their intelligence, their means and opportunity of knowing the facts to which they are testifying, the nature of the facts to which they testify, the probability or improbability of their testimony, their interest or want of interest, and also their personal credibility so far as the same legitimately appear upon the trial. The court may also consider the number of witnesses, though the preponderance is not necessarily with the greater number. In the case at bar, the judge who heard and saw the witnesses testify was not the same judge who penned the decision. As such, this Court is deprived of some important details necessary to determine the weight of evidence for either party. Be that as it may, this Court shall endeavour to weigh the evidence based on other factors available to this Court as can be gleaned principally from the recorded testimonies and the cold, hard transcripts of this case. SBTC alleged that: 1) petitioner took advantage of his position as Assistant Branch Manager in facilitating the opening of Current Account No. 2110-0282-47 with the SBTC Congressional Branch in the name of one Robert Santos with full knowledge that he was inexistent; 2) petitioner took advantage of his position in processing the deposit in the Robert Santos account of a crossed PNB Managers Check No. J-81-00698 in the amount of P911,981.00 with the notation For Payees Account Only, and made payable to the Collector of Customs; 3) petitioner took advantage of his position in causing the deposit in the Robert Santos account of a crossed PNB Managers Check No. J-81-006142, with the notation For Payees Account Only, in the amount of P1,511,293.00, payable to the Collector of Customs; and 4) petitioner appropriated the proceeds of said checks despite knowledge that said checks were payable to the Collector of Customs, hence, were government funds which cannot be accepted by SBTC for deposit pursuant to a Central Bank prohibition. In holding petitioner civilly liable, the Court of Appeals found the following facts: (a) petitioner initiated the opening of the Robert Santos account; and (b) Robert Santos is a fictitious or inexistent person, implying that petitioner and Robert Santos are one and the same person. The Court of Appeals based its finding on the testimony of petitioner himself on cross-examination, stating that he did not bother to find out if Robert Santos actually exists, and that he failed to get in touch with Robert Santos at his given address despite attempts to do so.[8] It also relied on the testimony of Teresita Hulinganga, the New Accounts clerk who assisted in the opening the subject account, to the effect that she never saw Robert Santos in person. Sergio Matutina corroborated Hulingangas testimony by saying that he tried to verify the existence of Robert Santos by going to the given address only to be informed that there was no Robert Santos residing therein.[9] Plainly, the above ratiocination is non sequitur. One cannot logically infer from petitioners failure to get in touch with Robert Santos that the latter is a fictitious or inexistent person. Teresita Hulingangas and Sergio Matutinas testimonies that they have never seen nor talked to Robert Santos or possess any knowledge about his existence do not prove that he does not exist. Their testimonies only tend to prove that they have neither seen nor talked to nor knew of the existence of Robert Santos and nothing else. From these, the most that can be inferred is that they have not met Robert Santos. On the other hand, it appears from SBTCs investigation report that Robert Santos exists. As testified to by Ester Mendoza, Manager of SBTCs Auditing Department: COURT: Q: A: Q: A: Q: A: Q: And according to the records, who approves the opening of the account? Usually the officer who interview the walk-in client. Per the documents who approve the opening of the account? Your Honor, again it is not indicated in the records who approves the opening of the account. Records dont show. Yes, your Honor. But . . . on the day of the opening of the account, who was the highest officer of the branch in the office?

WITNESS: At the time of the opening your Honor?

COURT: Yes. WITNESS: I dont exactly recall now if the Branch Manager Nora Isidro was present in the opening, but I can recall that Mr. Dick Go admitted to me that he talked to this Robert Santos. COURT: Does that appear in your report that he admitted to you? WITNESS: Can I look into my report, your Honor? COURT: Yes, please. WITNESS: (Witness examining her report) A: Yes, your Honor.

COURT: Q: A: xxx What did you say there? That Mr. Robert Santos was indorsed to the New Accounts clerk. xxx xxx

Although the lower court did not directly state that Robert Santos exists, neither did it state that he does not exist. Instead, it found that: Similarly, the testimony of Teresita Zosimo Hulinganga, whose bare verbal statements and claims that it was Dick Go who opened or caused to be opened the Robert Santos account with SBTC Congressional Branch, is belied by the documents she identified in the course of her testimony which, in addition to her admission that she was the one who had custody of and who issues to bank clients the signature cards, application forms and control cards necessary for the opening of new accounts of bank depositors, clearly show on their faces that: (1) she was the one who filled up the account number found on the signature card (Exh. M) before the same was forwarded to Dick Go for approval; (2) she was the one who affixed the control number on the application form; (3) she was the one who filled up the index or control card and her signature appears below the printed words in said card which reads: Sold by, Check Serial Number and Manner of Payment (Exh. N); (4) she was the one who issued the bank checkbook to Robert Santos (Exh. N); and (5) she was the one who prepared and filled up the deposit slip for the initial cash deposit of P500.00 on the Robert Santos account (Exh. O).[10] In finding that petitioner caused the opening of Current Account No. 2110-0282-47 in the name of Robert Santos, the Court of Appeals likewise relied on the testimony of Teresita Hulinganga and commented on the lower courts finding, thus: The involvement of Dick Go in the Robert Santos account could be traced from the time it was opened. Teresita Hulinganga, the new accounts clerk who assisted defendant-appellant in opening the account, and who we do not find to be actuated by any motive to testify against her superior, save to relate the incidents as she knew them, testified that it was her superior, Dick Go, who secured the application form and signature card a day or two before the account was opened (TSN, February 8, 1984, pp. 10, 29), returned them already filled up (Id., pp. 29-30), gave the initial deposit and obtained the checkbook from her. She disclaimed ever seeing Robert Santos (TSN, December 16, 1983, pp. 9-15). The trial court expressed misgivings about her testimony since she filled in most of the entries in the application documents (Rollo, p. 79; Decision, p. 7) But the entries she made like the account and control numbers, who sold the checkbook, the manner of payment, and the like, are normally the entries a new accounts clerk would fill in for new accounts, as in the account then being opened by Dick Go for a certain Robert Santos. In fact, filling up the deposit slip for initial deposits, according to defendant-appellant himself, is usually the new accounts clerks job (TSN, November 27, 1985, p. 15). If Teresita Hulinganga still performed her tasks without having seen the applicant, this could be attributed to the fact that Dick Go followed up on the application and as a superior officer, exercised professional ascendancy over this clerk who had the right to assume defendant-appellant Dick Go knew what he was doing.[11]

We do not agree with the above findings of the Court of Appeals. As correctly observed by the trial court, the alleged non-existence of Robert Santos and the participation of petitioner in the opening of the Robert Santos account were based on the bare verbal statements of Hulinganga and Matutina. On the other hand, petitioners oral testimony, that he met Robert Santos in person and that it was Hulinganga who opened the Robert Santos account, is corroborated by documentary evidence which were identified and admitted by Hulinganga herself. In the weighing of evidence, documentary evidence prevails over testimonial evidence.

[12]
As to SBTCs allegation that petitioner caused to be deposited the PNB Managers Check in the Robert Santos account, the Court of Appeals found that: Defendant-appellant Dick Gos involvement in the Robert Santos account was highly unusual and unexplainable. It was defendant-appellant Dick Go who supposedly interviewed the alleged Robert Santos when he opened the account and affixed his signature as approving officer in the signature card (Exh. M-1). Again, by his own admission, he had opportunities to refer to the account whenever there are deposits and encashments in relation to it (TSN, January 29, 1986, p. 11). When the second check, Managers Check No. J81-006142 (Exh. A) for P1,511,293 was deposited in the Robert Santos account in SBTCs Congressional Branch, defendant-appellant Dick Go was the one who approved the clearing statement (Exh. U-1-a). Defendant-appellant Dick Go was the one who conveniently received the telephone call from the supposed Robert Santos who allegedly expressed his desire to transfer his account (CA No. 2110-0282-47) from the Congressional Branch to the Caloocan City Branch (TSN, November 27, 1985, p. 22). He also facilitated the transfer by calling SBTCs Caloocan City Branch for the transfer (Id., pp. 22-23), caused the preparation of the receipt of transfer (RT) and signed the same (Exh. V). Underscoring all these, defendant-appellant is the sole person who claims that there is such a person as Robert Santos when all convincing and established evidence point to the contrary. Under the circumstances, defendant-appellant Dick Gos disclaimer of his participation in the irregularity involving the two diverted checks is stripped of all credence.[13] While admitting his participation in the opening of the Robert Santos account, petitioner nonetheless insists that his acts were limited to: 1) interviewing Robert Santos prior to his opening of a current account; and 2) approving the signature card and the application form. His role in the opening of the Robert Santos account were in line with his duties as assistant manager of the accounting department.[14] In fact, prosecution witness Hulinganga acknowledged that petitioner had to sign the signature card as approving officer of the

branch.[15] The participation of petitioner in the processing of Robert Santos account were never questioned by the prosecution as irregular. Hence, the Court of Appeals cannot insinuate that petitioners acts were highly unusual and unexplainable. In fact, even the finding of the Court of Appeals that petitioner conveniently received the telephone call from Robert Santos for the transfer of his account from the Congressional Branch is not extraordinarily unusual and unexplainable. On the other hand, as found by the trial court, while it may be true that there was irregularity in the acceptance and deposit of the PNB Managers checks into the account of Robert Santos because they were payable to the Collector of Customs, the fault therefor is traceable to the concerned tellers of the bank who admittedly, negligently, improperly, and in violation of their duties, accepted the said checks into the account of Robert Santos.15a It is, therefore, the concerned tellers who acted unusually and unexplainably. Oral testimonies based on documentary evidence validates the trial courts finding that the bank employees involved in the opening of the Robert Santos account were negligent. Prosecution witness Ester Mendoza testified thus: COURT: Q: Let me see. In Congressional Branch, who is in custody of these specimen cards? Who keeps them and to whom are these turned over? A: At the end of the day, your honor, these are turned over to the officers for authentication approval and then x x x they are included in the outstanding files and kept in the vault ovenight. COURT: Q: Who is in charge of these files? Who was the person in the bank in charge of these files?

WITNESS: A: It is the cashier, your Honor.

COURT:

Q: A:

Who is the cashier at that time? At that time, I think, it was Mrs. Satuito, you Honor.

COURT: All right, continue. ATTY. RACHO: (cont. of the cross-exam.) Q: Mrs. Mendoza, in your observation found in the last two pages of your audit report, in the observation under item 1.6 last page, it is stated there that the officer-in-charge of New Accounts, Congressional Branch has not closely monitored review of these accounts; this officer-in-charge of New Accounts is Mrs. Dolores Satuito. Is it not? WITNESS: A: xxx COURT: Q: In other words, why did you not say in your report that Mr. Dick Go facilitated the withdrawal? Yes, sir. xxx xxx

WITNESS: A: Because usually in our audit report, your Honor, we dont give conclusions but our actual findings.

COURT: Q: A: You mentioned that Mrs. Satuito did not closely monitor this account. She was negligent. In a way your Honor, Yes.[16]

As observed by the trial court: Significantly, the cashier, Dolores Satuito, who is in-charge of New Accounts was neither investigated, punished or called to the witness stand. The impression gathered by the Court is that a big cover-up was initiated to spare many people in the SBTC, the PNB, the Bureau of Customs, and, perhaps, even some people at the NSC, by the prosecution of minor employees of the bank. If an alert Bureau of Customs personnel had not discovered the non-payment of taxes, the whole scam would not have surfaced. But, having discovered the nefarious act, it is strange that none of the banks (PNB and SBTC) sought an investigation on how the two checks originally delivered by Edmund Ulibarri of NSC to a certain Claro Cases of the LMC Brokerage firm ended up with the Security Bank. No attempt was made to ask the National Bureau of Investigation to conduct an investigation of the Bureau of Customs Personnel on how the steel plates were released. In fact, as earlier mentioned, the original receipts used in the release of the imported goods were never produced in evidence.

[17]
As to SBTCs allegation that petitioner siphoned and appropriated the proceeds of said checks, the Court of Appeals found that it was Dick Go who received the checkbook of Robert Santos. In view of said finding, the Court of Appeals modified the lower courts finding that it is not clear under what circumstances the Caloocan City Branch account was opened and the proceeds of said account appropriated. Petitioner disputes the findings made by the Court of Appeals that the checkbook of the Robert Santos account opened at SBTC Caloocan City was delivered by Eduardo Lauchenco to defendant-appellee Dick Go. According to petitioner, the basis of said finding is a hearsay testimony because the witness merely testified on the basis of what was related to her by the person who allegedly gave the checkbook, but the person who allegedly gave the checkbook himself did not testify to said effect at all. He added that aside from the aforesaid corrected finding, petitioner is not adversely affected at all by the rest of the corrected findings. Petitioners contention is meritorious. The term hearsay as used in the rules of evidence signifies all evidence which is not founded upon the personal knowledge of the witness from whom it is elicited and which consequently does not depend for its credibility and weight upon the confidence which the court may have in him. Briefly, hearsay evidence is information relayed from another person to the witness before it reaches the court.[18] From the testimony of prosecution witnesses Lourdes Gabriel and Ester Mendoza, it appears that both of them

do not have first-hand knowledge that the checkbook was indeed delivered by Eduardo Lauchengco to Dick Go, and that it was received by Dick Go himself. Lourdes Gabriel testified only as to what Eduardo Lauchengco told her, that is, that Dick Go would be the one to sign the checkbook.[19] As to Ester Mendoza, she testified that Eduardo Lauchengco told her that he left the checkbook on top of Dick Gos table.[20] Hence, their testimonies on that point were clearly hearsay. WHEREFORE, the petition for review is GRANTED. The decision of the Court of Appeals in CA-G.R. CV No. 15268 is REVERSED and SET ASIDE, and the judgment of the Regional Trial Court of Quezon City, Branch 88, in Civil Case No. Q-35744, dismissing the civil action filed by respondent SBTC against petitioner Dick Go and his co-defendants as well as the counterclaim, and ordering SBTC to return and/or release to petitioner Dick Go all funds in its control under the account of said Dick Go including accrued earnings, and lifting and setting aside all attachments and/or garnishments issued by reason of the said action against petitioner Dick Go, is REINSTATED. SO ORDERED. Davide, Jr., C.J. (Chairman), Kapunan, and Pardo, JJ., concur. Puno J., on official leave. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 76093 March 21, 1989 AIR FRANCE, petitioner, vs. THE COURT OF APPEALS AND NARCISO O. MORALES, respondents. Siguion Reyna, Montecillo & Ongsiako for petitioner. Morales & Joyas Law Office for private respondent.

PADILLA, J.: This is a petition for review on certiorari of the decision ** of the Court of Appeals, dated 1986, in CA-G.R. CV No. 69875, entitled "Narciso Morales vs. Air France," dismissing herein petitioner's appeal from the adverse ruling of the trial court (Branch 33, CFI of Rizal, Kalookan City) *** and the latter's denial of its motion for reconsideration. The respondent Court of Appeals likewise denied petitioner's motion for reconsideration of its decision in a resolution dated 25 September 1986. In reviewing the records, we find: Sometime in October 1977, private respondent Narciso Morales thru his representative, Ms. Janet Tolentino, purchased an airline ticket from Aspac Management Corporation, petitioner's General Sales Agent in Makati, for P 9,426.00 plus P 1,413.90 travel tax, of which P 413.90 were later refunded to Ms. Tolentino. The itinerary covered by the ticket included several cities, with certain segments thereof restricted by markings of "non endorsable' and 'valid on AF (meaning Air France) only', as herein specified: CARRIER EXPRESS ITINERARY SPECIFIED RESTRICTIONS New York/Paris Air France NONENDORSABLE VALID ON AF ONLY Paris/Stockholm Air France NONENDORSABLE VALID ON AF ONLY Stockholm/Copenhagen None Copenhagen/London None London/Amsterdam None Amsterdam/Hamburg None Humburg/Frankfurt None

Frankfurt/Paris Air France NONENDORSABLE VALID ON AF ONLY Paris/Geneva Air France NONENDORSABLE VALID ON AF ONLY Geneva/Madrid None Madrid/Nice Air France NONENDORSABLE VALID ON AF ONLY Nice/Rome Air France NONENDORSABLE VALID ON AF ONLY Rome/Athens None Athens/Tel Aviv None Tel Avive/Bangkok Air France NONENDORSABLE VALID ON AF ONLY Bangkok/Manila Air France NONENDORSABLE VALID ON AF ONLY 1 While in New York, U.S.A. on 3 November 1977, private respondent Morales obtained three (3) medical certificates (Exhibits G, G-1, G-2) attesting to ear an infection which necessitated medical treatment. From New York, he flew to Paris, Stockholm and then Copenhagen where he made representations with petitioner's office to shorten his trip by deleting some of the cities in the itinerary. Respondent Morales was informed that, as a matter of procedure, confirmation of petitioner's office in Manila (as ticketing office) must be secured before shortening of the route (already paid for). Air France in Amsterdam telexed AF Manila requesting for rerouting of the passenger to Amsterdam, Hamburg, Geneva, Rome, Hongkong, Manila. 2 As there was no immediate response to the telex, respondent proceeded to Hamburg where he was informed of AF Manila's negative reply. After reiterating his need to flying home on a shorter route due to his ear infection, and presentation of supporting medical certificates, again, the airline office made the necessary request to Manila on 23 November 1977 for a Hamburg, Paris, Geneva, Rome, Paris, Hongkong and Manila route. Still, the request was denied. Despite respondent as protest and offer to pay any fare difference, petitioner did not relent in its position. Respondent, therefore, had to buy an entirely new set of tickets, paying 1,914 German marks for the homeward route, namely: Itinerary Carrier Date Reservation Hamburg/Frankfurt LH 26 Nov. OK (Lufthansa) Frankfurt/Geneva SR 26 Nov. OK (Swissair) Geneva/Rome AZ 29 Nov. OK (Alitalia) Rome/Hongkong BA 02 Dec. OK (British Airways) Hongkong/Manila PR Open Open (Philippine Airlines) 3 Upon arrival in Manila, respondent sent a letter-complaint to Air France dated 20 December 1977 thru Aspac Management Corporation. Respondent Morales was advised to surrender the unused flight coupons for a refund of its value, but he kept the same and, instead, filed a complaint for breach of contract of carriage and damages. CFI Judge Marcelino Sayo found Air France in evident bad faith for violation of the contract of carriage, aggravated by the threatening attitude of its employees in Hamburg. Considering the social and economic standing of respondent, who is chairman of the board of directors of a multi-million corporation and a member of several civic and business organizations, an award of moral and exemplary damages, in addition to the actual damages incurred, was deemed proper under the circumstances. The dispositive part of the CFI decision states: WHEREFORE, this Court hereby renders judgment for the plaintiff and orders the defendant to pay to the plaintiff the sum of 1,914 German Marks, in its equivalent in Philippine Peso, as actual damages, the sum of P 1,000,000.00 as moral damages, and the further sum of P 800,000.00 as exemplary damages, with legal interest thereon from date of the filing of the complaint until fully paid, plus the sum equal to 20% thereof as attorney's fees, with costs against the plaintiff. 4 On appeal to the Court of Appeals, the award of damages was modified as follows: ACCORDINGLY, the judgment appealed from is hereby modified so that it will read as follows: Judgment is hereby rendered in favor of the plaintiff against the defendant ordering ther defendant to pay to said plaintiff the following.

(1) 1,914 German Marks in its equivalent in Philippine peso at prevailing rate of exchange as actual damages, with legal interest thereon from the date of the filing of the complaint until fully paid; (2) P 500,000.00, as moral damages; (3) P 150,000.00, as exemplary damages; and (4) 5% of the amount of actual, moral and exemplary damages which are recoverable, as attorney's fees. 5 Questioning the factual findings of the respondent court, petitioner comes to this court for review citing three (3) errors: 1. The conclusion that there is a breach of contract is premised on a misapprehension of facts. 2. Failure to apply the doctrine of avoidable consequence in the present case. 3. Award of exorbitant damages and attorney's fees. After considering respondent's comment, the Court resolved to give due courses to the petition, and required the parties to file their respective memoranda. Complying with the resolution of 26 October 1987, private respondent filed his reply memorandum on 17 December 1987. This is the last pleading on record. While this Court is not a trier of facts, yet, when the findings of respondent court are without citation of specific evidence on which they are based, there is sufficient reason for the Court to review the appellate court's decision. 6 The respondent court's ruling that there was breach of contract of carriage is premised on petitioner's refusal to re-route respondent and, in effect, requiring him to purchase a new set of tickets. Petitioner refutes this conclusion, claiming that the original ticket was discounted and non-endorsable on certain segments. Eventually respondent flew on his chosen route with different airlines. Under the factual milieu, was there really a breach of contract of carriage on the part of the petitioner, as to justify the award to private respondent of actual, moral and exemplary damages? We find none. International Air Transportation Association (IATA) Resolution No. 275 e, 2., special note reads: "Where a fare is restricted and such restrictions are not clearly evident from the required entries on the ticket, such restrictions may be written, stamped or reprinted in plain language in the Endorsement/Restrictions" box of the applicable flight coupon(s); or attached thereto by use of an appropriate notice." 7 Voluntary changes to tickets, 8 while allowable, are also covered by (IATA) Resolution No. 1013, Art. II, which provides: "1. changes to the ticket requested by the passenger will be subject to carriers regulations. Private respondent wanted a rerouting to Hamburg, Geneva, Rome, Hongkong and Manilas 9 which shortened the original itinerary on the ticket issued by AF Manila through ASPAC, its general sales agent. Considering the original restrictions on the ticket, it was not unreasonable for Air France to deny the request. Besides, a recurring ear infection was pleaded as reason necessitating urgent return to Manila. Assuming arguendo a worsening pain or discomfort, private respondent appears to have still proceeded to four (4) other cities covering a period of at least six (6) days and leaving open his date of departure from Hongkong to Manila.10 And, even if he claimed to have undergone medical examination upon arrival in Manila, no medical certificate was presented. He failed to even remember his date of arrival in Manila. With a claim for a large amount of damages, the Court finds it unsual for respondent, a lawyer, to easily forget vital information to substantiate his plea. It is also essential before an award of damages that the claimant must satisfactorily prove during the trial the existence of the factual basis of the damages and its causal connection to defendant's acts.11 In KLM Royal Dutch Airlines v. CA, 12 the Court observed.... As noted by the Court of Appeals that condition was printed in letters so small that one would have to use a magnifying glass to read the words. Under the circumstances, it would be unfair and inequitable to charge the respondents with automatic knowledge or notice of the said condition so as to preclude any doubt that it was fairly and freely agreed upon by the respondents when they accepted the passage tickets issued to them by the KLM. As the airline which issued those tickets with the knowledge that the respondents would be flown on the various legs of their journey by different air carriers, the KLM was chargeable with the duty and responsibility of specifically informing the respondents of conditions prescribed in their tickets or in the very least, to ascertain that the respondent read them before they accepted their

passage tickets. A thorough search of the records, however, inexplicably fails to show that any effort was exerted by the KLM officials or employees to discharge in a proper manner this responsibility to the respondents. Consequently, We hold that the respondents cannot be bound by the provision in question by which KLM unilaterally assumed the role of a mere ticket-issuing agent for other airlines and limited its liability only to untoward occurrences on its own lines. (Emphasis supplied) Unlike in the KLM case where the breach of contract was aggravated by the discourteous and arbitrary conduct of an official of the Aer Lingus which the KLM had engaged to transport the respondents, here. Air France employees in Hamburg informed private respondent that his tickets were partly stamped "non-endorsable" and "valid on Air France only."13 Mere refusal to accede to the passenger's wishes does not necessarily translate into damages in the absence of bad faith.14 To our mind, respondent has failed to show wanton, malevolent or reckless misconduct imputable to petitioner in its refusal to re-route. Air France Manila acted upon the advise of ASPAC in denying private respondent's request. There was no evident bad faith when it followed the advise not to authorize rerouting.15 At worst, the situation can be considered a case of inadvertence on the part of ASPAC in not explaining the non-endorsable character of the ticket. Of importance, however, is the fact that private respondent is a lawyer, and the restriction box 16 clearly indicated the non-endorsable character of the ticket. Omissions by ordinary passengers may be condoned but more is expected of members of the bar who cannot feign ignorance of such limitations and restrictions. An award of moral and exemplary damages cannot be sustained under the circumstances, but petitioner has to refund the unused coupons in the Air France ticket to the private respondent. WHEREFORE, the judgement appealed from is REVERSED and SET ASIDE. Petitioner is ordered, however, to refund to private respondent the value of the unused coupons in the passenger's ticket issued to him by the petitioner. No costs. SO ORDERED. Melencio-Herrera, (Chairperson), Paras, Sarmiento and Regalado JJ., concur: Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-7664 August 29, 1958

MR. AND MRS. AMADOR C. ONG, plaintiffs-appellants, vs. METROPOLITAN WATER DISTRICT, defendant-appellee. Tomas Tria Tirona for appellants. Government Corporate Counsel Ambrosio Padilla and Juan C. Jimenez for appellee. BAUTISTA ANGELO, J.: Plaintiffs spouses seek to recover from defendant, a government-owned corporation, the sum of P50,000 as damages, P5,000 as funeral expenses, and P11,000 as attorneys' fees, for the death of their son Dominador Ong in one of the swimming pools operated by defendant. Defendant admits the fact that plaintiffs' son was drowned in one of its swimming pools but avers that his death was caused by his own negligence or by unavoidable accident. Defendant also avers that it had exercised due diligence in the selection of, and supervision over, its employees and that it had observed the diligence required by law under the circumstances. After trial, the lower court found that the action of plaintiffs is untenable and dismissed the complaint without pronouncement as to costs. Plaintiffs took the case on appeal directly to this Court because the amount involved exceeds the sum of P50,000. Defendant owns and operates three recreational swimming pools at its Balara filters, Diliman, Quezon City, to which people are invited and for which a nominal fee of P0.50 for adults and P0.20 for children is charged. The main pool it between two small pools of oval shape known as the "Wading pool" and the "Beginners Pool." There are diving boards in the big pools and the depths of the water at different parts are indicated by appropriate marks on the wall. The care and supervision of the pools and the users thereof is entrusted to a

recreational section composed of Simeon Chongco as chief, Armando Rule, a male nurse, and six lifeguards who had taken the life-saving course given by the Philippine Red Cross at the YMCA in Manila. For the safety of its patrons, defendant has provided the pools with a ring buoy, toy roof, towing line, saving kit and a resuscitator. There is also a sanitary inspector who is in charge of a clinic established for the benefit of the patrons. Defendant has also on display in a conspicuous place certain rules and regulations governing the use of the pools, one of which prohibits the swimming in the pool alone or without any attendant. Although defendant does not maintain a full-time physician in the swimming pool compound, it has however a nurse and a sanitary inspector ready to administer injections or operate the oxygen resuscitator if the need should arise. In the afternoon of July 5, 1952, at about 1:00 o'clock, Dominador Ong, a 14-year old high school student and boy scout, and his brothers Ruben and Eusebio, went to defendant's swimming pools. This was not the first time that the three brothers had gone to said natatorium for they had already been there four or five times before. They arrived at the natatorium at about 1:45 p.m. After paying the requisite admission fee, they immediately went to one of the small pools where the water was shallow. At about 4:35 p.m., Dominador Ong told his brothers that he was going to the locker room in an adjoining building to drink a bottle of coke. Upon hearing this, Ruben and Eusebio went to the bigger pool leaving Dominador in the small pool and so they did not see the latter when he left the pool to get a bottle of coke. In that afternoon, there were two lifeguards on duty in the pool compound, namely, Manuel Abao and Mario Villanueva. The tour of duty of Abao was from 8:00 to 12:00 in the morning and from 2:00 to 6:00 in the afternoon, and of Villanueva from 7:30 to 11:30 a.m. and from 12:30 to 4:30 p.m. Between 4:00 to 5:00 that afternoon, there were about twenty bathers inside the pool area and Manuel Abao was going around the pools to observe the bathers in compliance with the instructions of his chief. Between 4:40 to 4:45 p.m., some boys who were in the pool area informed a bather by the name of Andres Hagad, Jr., that somebody was swimming under water for quite a long time. Another boy informed lifeguard Manuel Abao of the same happening and Abao immediately jumped into the big swimming pool and retrieved the apparently lifeless body of Dominador Ong from the bottom. The body was placed at the edge of the pool and Abao immediately applied manual artificial respiration. Soon after, male nurse Armando Rule came to render assistance, followed by sanitary inspector Iluminado Vicente who, after being called by phone from the clinic by one of the security guards, boarded a jeep carrying with him the resuscitator and a medicine kit, and upon arriving he injected the boy with camphorated oil. After the injection, Vicente left on a jeep in order to fetch Dr. Ayuyao from the University of the Philippines. Meanwhile, Abao continued the artificial manual respiration, and when this failed to revive him, they applied the resuscitator until the two oxygen tanks were exhausted. Not long thereafter, Dr. Ayuyao arrived with another resuscitator, but the same became of no use because he found the boy already dead. The doctor ordered that the body be taken to the clinic. In the evening of the same day, July 5, 1952, the incident was investigated by the Police Department of Quezon City and in the investigation boys Ruben Ong and Andres Hagad, Jr. gave written statements. On the following day, July 6, 1952, an autopsy was performed by Dr. Enrique V. de los Santos, Chief, Medico Legal Division, National Bureau of Investigation, who found in the body of the deceased the following: an abrasion on the right elbow lateral aspect; contusion on the right forehead; hematoma on the scalp, frontal region, right side; a congestion in the brain with petechial subcortical hemorrhage, frontal lobe; cyanosis on the face and on the nails; the lung was soggy with fine froth in the bronchioles; dark fluid blood in the heart; congestion in the visceral organs, and brownish fluid in the stomach. The death was due to asphyxia by submersion in water. The issue posed in this appeal is whether the death of minor Dominador Ong can be attributed to the negligence of defendant and/or its employees so as to entitle plaintiffs to recover damages. The present action is governed by Article 2176 in relation to Article 2080 of the new Civil Code. The first article provides that "whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damages done." Such fault or negligence is called quasi-delict. Under the second article, this obligation is demandable not only for one's own acts or omissions but also for those of persons for whom one is responsible. In addition, we may quote the following authorities cited in the decision of the trial court: "The rule is well settled that the owners of resorts to which people generally are expressly or by implication invited are legally bound to exercise ordinary care and prudence in the management and maintenance of such resorts, to the end of making them reasonably safe for visitors" (Larkin vs. Saltair Beach Co., 30 Utah 86, 83 Pac. 686). "Although the proprietor of a natatorium is liable for injuries to a patron, resulting from lack of ordinary care in providing for his safety, without the fault of the patron, he is not, however, in any sense deemed to be the insurer of the safety of patrons. And the death of a patron within his premises does not cast upon him the burden of excusing himself from any presumption of negligence" (Bertalot vs. Kinnare. 72 Ill. App. 52, 22 A. L. R. 635; Flora vs. Bimini Water Co., 161 Cal. 495, 119 Pac. 661). Thus in Bertalot vs. Kinnare, supra, it was held that there could be no recovery for the death by drowning of a fifteen-

year boy in defendant's natatorium, where it appeared merely that he was lastly seen alive in water at the shallow end of the pool, and some ten or fifteen minutes later was discovered unconscious, and perhaps lifeless, at the bottom of the pool, all efforts to resuscitate him being without avail. Since the present action is one for damages founded on culpable negligence, the principle to be observed is that the person claiming damages has the burden of proving that the damage is caused by the fault or negligence of the person from whom the damage is claimed, or of one of his employees (Walter A. Smith & Co. vs. Cadwallader Gibson Lumber Co., 55 Phil., 517). The question then that arises is: Have appellants established by sufficient evidence the existence of fault or negligence on the part of appellee so as to render it liable for damages for the death of Dominador Ong? There is no question that appellants had striven to prove that appellee failed to take the necessary precaution to protect the lives of its patrons by not placing at the swimming pools efficient and competent employees who may render help at a moment's notice, and they ascribed such negligence to appellee because the lifeguard it had on the occasion minor Ong was drowning was not available or was attending to something else with the result that his help came late. Thus, appellants tried to prove through the testimony of Andres Hagad, Jr. and Ruben Ong that when Eusebio Ong and Hagad, Jr. detected that there was a drowning person in the bottom of the big swimming pool and shouted to the lifeguard for help, lifeguard Manuel Abao did not immediately respond to the alarm and it was only upon the third call that he threw away the magazine he was reading and allowed three or four minutes to elapse before retrieving the body from the water. This negligence of Abao, they contend, is attributable to appellee. But the claim of these two witnesses not only was vehemently denied by lifeguard Abao, but is belied by the written statements given by them in the investigation conducted by the Police Department of Quezon City approximately three hours after the happening of the accident. Thus, these two boys admitted in the investigation that they narrated in their statements everything they knew of the accident, but, as found by the trial, nowhere in said statements do they state that the lifeguard was chatting with the security guard at the gate of the swimming pool or was reading a comic magazine when the alarm was given for which reason he failed to immediately respond to the alarm. On the contrary, what Ruben Ong particularly emphasized therein was that after the lifeguard heard the shouts for help, the latter immediately dived into the pool to retrieve the person under water who turned out to be his brother. For this reason, the trial court made this conclusion: "The testimony of Ruben Ong and Andres Hagad, Jr. as to the alleged failure of the lifeguard Abao to immediately respond to their call may therefore be disregarded because they are belied by their written statements. (Emphasis supplied.) On the other hand, there is sufficient evidence to show that appellee has taken all necessary precautions to avoid danger to the lives of its patrons or prevent accident which may cause their death. Thus, it has been shown that the swimming pools of appellee are provided with a ring buoy, toy roof, towing line, oxygen resuscitator and a first aid medicine kit. The bottom of the pools is painted with black colors so as to insure clear visibility. There is on display in a conspicuous place within the area certain rules and regulations governing the use of the pools. Appellee employs six lifeguards who are all trained as they had taken a course for that purpose and were issued certificates of proficiency. These lifeguards work on schedule prepared by their chief and arranged in such a way as to have two guards at a time on duty to look after the safety of the bathers. There is a male nurse and a sanitary inspector with a clinic provided with oxygen resuscitator. And there are security guards who are available always in case of emergency. The record also shows that when the body of minor Ong was retrieved from the bottom of the pool, the employees of appellee did everything possible to bring him back to life. Thus, after he was placed at the edge of the pool, lifeguard Abao immediately gave him manual artificial respiration. Soon thereafter, nurse Armando Rule arrived, followed by sanitary inspector Iluminado Vicente who brought with him an oxygen resuscitator. When they found that the pulse of the boy was abnormal, the inspector immediately injected him with camphorated oil. When the manual artificial respiration proved ineffective they applied the oxygen resuscitator until its contents were exhausted. And while all these efforts were being made, they sent for Dr. Ayuyao from the University of the Philippines who however came late because upon examining the body he found him to be already dead. All of the foregoing shows that appellee has done what is humanly possible under the circumstances to restore life to minor Ong and for that reason it is unfair to hold it liable for his death. Sensing that their former theory as regards the liability of appellee may not be of much help, appellants now switch to the theory that even if it be assumed that the deceased is partly to be blamed for the unfortunate incident, still appellee may be held liable under the doctrine of "last clear chance" for the reason that, having the last opportunity to save the victim, it failed to do so. We do not see how this doctrine may apply considering that the record does not show how minor Ong came into the big swimming pool. The only thing the record discloses is that minor Ong informed his elder brothers

that he was going to the locker room to drink a bottle of coke but that from that time on nobody knew what happened to him until his lifeless body was retrieved. The doctrine of last clear chance simply means that the negligence of a claimant does not preclude a recovery for the negligence of defendant where it appears that the latter, by exercising reasonable care and prudence, might have avoided injurious consequences to claimant notwithstanding his negligence. Or, "As the doctrine usually is stated, a person who has the last clear chance or opportunity of avoiding an accident, notwithstanding the negligent acts of his opponent or the negligence of a third person which is imputed to his opponent, is considered in law solely responsible for the consequences of the accident." (38 Am. Jur. pp. 900-902) It goes without saying that the plaintiff himself was not free from fault, for he was guilty of antecedent negligence in planting himself in the wrong side of the road. But as we have already stated, the defendant was also negligent; and in such case the problem always is to discover which agent is immediately and directly responsible. It will be noted that the negligent acts of the two parties were not contemporaneous, since the negligence of the defendant succeeded the negligence of the plaintiff by an appreciable interval. Under these circumstances, the law is that a person who has the last clear chance to avoid the impending harm and fails to do so is chargeable with the consequences, without reference to the prior negligence of the other party. (Picart vs. Smith, 37 Phil., 809) Since it is not known how minor Ong came into the big swimming pool and it being apparent that he went there without any companion in violation of one of the regulations of appellee as regards the use of the pools, and it appearing that lifeguard Aba__o responded to the call for help as soon as his attention was called to it and immediately after retrieving the body all efforts at the disposal of appellee had been put into play in order to bring him back to life, it is clear that there is no room for the application of the doctrine now invoked by appellants to impute liability to appellee.. The last clear chance doctrine can never apply where the party charged is required to act instantaneously, and if the injury cannot be avoided by the application of all means at hand after the peril is or should have been discovered; at least in cases in which any previous negligence of the party charged cannot be said to have contributed to the injury. O'Mally vs. Eagan, 77 ALR 582, 43 Wyo. 233, 350, 2, P2d 1063. (A.L.R. Digest, Vol. 8, pp. 955-956) Before closing, we wish to quote the following observation of the trial court, which we find supported by the evidence: "There is (also) a strong suggestion coming from the expert evidence presented by both parties that Dominador Ong might have dived where the water was only 5.5 feet deep, and in so doing he might have hit or bumped his forehead against the bottom of the pool, as a consequence of which he was stunned, and which to his drowning. As a boy scout he must have received instructions in swimming. He knew, or have known that it was dangerous for him to dive in that part of the pool." Wherefore, the decision appealed from being in accordance with law and the evidence, we hereby affirm the same, without pronouncement as to costs. Paras, C. J., Bengzon, Padilla, Montemayor, Reyes, A., Concepcion, Reyes, J. B. L., Endencia and Felix, JJ., concur. Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. L-51806 November 8, 1988 CIVIL AERONAUTICS ADMINISTRATION, petitioner, vs. COURT OF APPEALS and ERNEST E. SIMKE, respondents. The Solicitor General for petitioner. Ledesma, Guytingco, Veleasco & Associates for respondent Ernest E. Simke.

CORTES, J.: Assailed in this petition for review on certiorari is the decision of the Court of Appeals affirming the trial court decision which reads as follows: WHEREFORE, judgment is hereby rendered ordering defendant to pay plaintiff the amount of P15,589.55 as full reimbursement of his actual medical and hospital expenses, with interest at

the legal rate from the commencement of the suit; the amount of P20,200.00 as consequential damages; the amount of P30,000.00 as moral damages; the amount of P40,000.00 as exemplary damages; the further amount of P20,000.00 as attorney's fees and the costs [Rollo, p. 24]. The facts of the case are as follows: Private respondent is a naturalized Filipino citizen and at the time of the incident was the Honorary Consul Geileral of Israel in the Philippines. In the afternoon of December 13, 1968, private respondent with several other persons went to the Manila International Airport to meet his future son-in-law. In order to get a better view of the incoming passengers, he and his group proceeded to the viewing deck or terrace of the airport. While walking on the terrace, then filled with other people, private respondent slipped over an elevation about four (4) inches high at the far end of the terrace. As a result, private respondent fell on his back and broke his thigh bone. The next day, December 14, 1968, private respondent was operated on for about three hours. Private respondent then filed an action for damages based on quasi-delict with the Court of First Instance of Rizal, Branch VII against petitioner Civil Aeronautics Administration or CAA as the entity empowered "to administer, operate, manage, control, maintain and develop the Manila International Airport ... ." [Sec. 32 (24), R.A. 776]. Said claim for damages included, aside from the medical and hospital bills, consequential damages for the expenses of two lawyers who had to go abroad in private respondent's stead to finalize certain business transactions and for the publication of notices announcing the postponement of private respondent's daughter's wedding which had to be cancelled because of his accident [Record on Appeal, p. 5]. Judgment was rendered in private respondent's favor prompting petitioner to appeal to the Court of Appeals. The latter affirmed the trial court's decision. Petitioner then filed with the same court a Motion for, Reconsideration but this was denied. Petitioner now comes before this Court raising the following assignment of errors: 1. The Court of Appeals gravely erred in not holding that the present the CAA is really a suit against the Republic of the Philippines which cannot be sued without its consent, which was not given in this case. 2. The Court of Appeals gravely erred in finding that the injuries of respondent Ernest E. Simke were due to petitioner's negligence although there was no substantial evidence to support such finding; and that the inference that the hump or elevation the surface of the floor area of the terrace of the fold) MIA building is dangerous just because said respondent tripped over it is manifestly mistaken circumstances that justify a review by this Honorable Court of the said finding of fact of respondent appellate court (Garcia v. Court of Appeals, 33 SCRA 622; Ramos v. CA, 63 SCRA 331.) 3. The Court of Appeals gravely erred in ordering petitioner to pay actual, consequential, moral and exemplary damages, as well as attorney's fees to respondent Simke although there was no substantial and competent proof to support said awards I Rollo, pp. 93-94 1. I Invoking the rule that the State cannot be sued without its consent, petitioner contends that being an agency of the government, it cannot be made a party-defendant in this case. This Court has already held otherwise in the case of National Airports Corporation v. Teodoro, Sr. [91 Phil. 203 (1952)]. Petitioner contends that the said ruling does not apply in this case because: First, in the Teodoro case, the CAA was sued only in a substituted capacity, the National Airports Corporation being the original party. Second, in the Teodoro case, the cause of action was contractual in nature while here, the cause of action is based on a quasi-delict. Third, there is no specific provision in Republic Act No. 776, the law governing the CAA, which would justify the conclusion that petitioner was organized for business and not for governmental purposes. [Rollo, pp. 94-97]. Such arguments are untenable. First, the Teodoro case, far from stressing the point that the CAA was only substituted for the National Airports Corporation, in fact treated the CAA as the real party in interest when it stated that:

xxx xxx xxx ... To all legal intents and practical purposes, the National Airports Corporation is dead and the Civil Aeronautics Administration is its heir or legal representative, acting by the law of its creation upon its own rights and in its own name. The better practice there should have been to make the Civil Aeronautics Administration the third party defendant instead of the National Airports Corporation. [National Airports Corp. v. Teodoro, supra, p. 208.] xxx xxx xxx Second, the Teodoro case did not make any qualification or limitation as to whether or not the CAA's power to sue and be sued applies only to contractual obligations. The Court in the Teodoro case ruled that Sections 3 and 4 of Executive Order 365 confer upon the CAA, without any qualification, the power to sue and be sued, albeit only by implication. Accordingly, this Court's pronouncement that where such power to sue and be sued has been granted without any qualification, it can include a claim based on tort or quasi-delict [Rayo v. Court of First Instance of Bulacan, G.R. Nos. 55273-83, December 19,1981, 1 1 0 SCRA 4561 finds relevance and applicability to the present case. Third, it has already been settled in the Teodoro case that the CAA as an agency is not immune from suit, it being engaged in functions pertaining to a private entity. xxx xxx xxx The Civil Aeronautics Administration comes under the category of a private entity. Although not a body corporate it was created, like the National Airports Corporation, not to maintain a necessary function of government, but to run what is essentially a business, even if revenues be not its prime objective but rather the promotion of travel and the convenience of the travelling public. It is engaged in an enterprise which, far from being the exclusive prerogative of state, may, more than the construction of public roads, be undertaken by private concerns. [National Airports Corp. v. Teodoro, supra, p. 207.] xxx xxx xxx True, the law prevailing in 1952 when the Teodoro case was promulgated was Exec. Order 365 (Reorganizing the Civil Aeronautics Administration and Abolishing the National Airports Corporation). Republic Act No. 776 (Civil Aeronautics Act of the Philippines), subsequently enacted on June 20, 1952, did not alter the character of the CAA's objectives under Exec, Order 365. The pertinent provisions cited in the Teodoro case, particularly Secs. 3 and 4 of Exec. Order 365, which led the Court to consider the CAA in the category of a private entity were retained substantially in Republic Act 776, Sec. 32 (24) and (25).<re||an1w> Said Act provides: Sec. 32. Powers and Duties of the Administrator. Subject to the general control and supervision of the Department Head, the Administrator shall have among others, the following powers and duties: xxx xxx xxx (24) To administer, operate, manage, control, maintain and develop the Manila International Airport and all government-owned aerodromes except those controlled or operated by the Armed Forces of the Philippines including such powers and duties as: (a) to plan, design, construct, equip, expand, improve, repair or alter aerodromes or such structures, improvement or air navigation facilities; (b) to enter into, make and execute contracts of any kind with any person, firm, or public or private corporation or entity; ... . (25) To determine, fix, impose, collect and receive landing fees, parking space fees, royalties on sales or deliveries, direct or indirect, to any aircraft for its use of aviation gasoline, oil and lubricants, spare parts, accessories and supplies, tools, other royalties, fees or rentals for the use of any of the property under its management and control. xxx xxx xxx From the foregoing, it can be seen that the CAA is tasked with private or non-governmental functions which operate to remove it from the purview of the rule on State immunity from suit. For the correct rule as set forth in the Tedoro case states: xxx xxx xxx Not all government entities, whether corporate or non-corporate, are immune from suits. Immunity functions suits is determined by the character of the objects for which the entity was organized. The rule is thus stated in Corpus Juris:

Suits against State agencies with relation to matters in which they have assumed to act in private or non-governmental capacity, and various suits against certain corporations created by the state for public purposes, but to engage in matters partaking more of the nature of ordinary business rather than functions of a governmental or political character, are not regarded as suits against the state. The latter is true, although the state may own stock or property of such a corporation for by engaging in business operations through a corporation, the state divests itself so far of its sovereign character, and by implication consents to suits against the corporation. (59 C.J., 313) [National Airport Corporation v. Teodoro, supra, pp. 206-207; Emphasis supplied.] This doctrine has been reaffirmed in the recent case of Malong v. Philippine National Railways [G.R. No. L49930, August 7, 1985, 138 SCRA 631, where it was held that the Philippine National Railways, although owned and operated by the government, was not immune from suit as it does not exercise sovereign but purely proprietary and business functions. Accordingly, as the CAA was created to undertake the management of airport operations which primarily involve proprietary functions, it cannot avail of the immunity from suit accorded to government agencies performing strictly governmental functions. II Petitioner tries to escape liability on the ground that there was no basis for a finding of negligence. There can be no negligence on its part, it alleged, because the elevation in question "had a legitimate purpose for being on the terrace and was never intended to trip down people and injure them. It was there for no other purpose but to drain water on the floor area of the terrace" [Rollo, P. 99]. To determine whether or not the construction of the elevation was done in a negligent manner, the trial court conducted an ocular inspection of the premises. xxx xxx xxx ... This Court after its ocular inspection found the elevation shown in Exhs. A or 6-A where plaintiff slipped to be a step, a dangerous sliding step, and the proximate cause of plaintiffs injury... xxx xxx xxx This Court during its ocular inspection also observed the dangerous and defective condition of the open terrace which has remained unrepaired through the years. It has observed the lack of maintenance and upkeep of the MIA terrace, typical of many government buildings and offices. Aside from the litter allowed to accumulate in the terrace, pot holes cause by missing tiles remained unrepaired and unattented. The several elevations shown in the exhibits presented were verified by this Court during the ocular inspection it undertook. Among these elevations is the one (Exh. A) where plaintiff slipped. This Court also observed the other hazard, the slanting or sliding step (Exh. B) as one passes the entrance door leading to the terrace [Record on Appeal, U.S., pp. 56 and 59; Emphasis supplied.] The Court of Appeals further noted that: The inclination itself is an architectural anomaly for as stated by the said witness, it is neither a ramp because a ramp is an inclined surface in such a way that it will prevent people or pedestrians from sliding. But if, it is a step then it will not serve its purpose, for pedestrian purposes. (tsn, p. 35, Id.) [rollo, p. 29.] These factual findings are binding and conclusive upon this Court. Hence, the CAA cannot disclaim its liability for the negligent construction of the elevation since under Republic Act No. 776, it was charged with the duty of planning, designing, constructing, equipping, expanding, improving, repairing or altering aerodromes or such structures, improvements or air navigation facilities [Section 32, supra, R.A. 776]. In the discharge of this obligation, the CAA is duty-bound to exercise due diligence in overseeing the construction and maintenance of the viewing deck or terrace of the airport. It must be borne in mind that pursuant to Article 1173 of the Civil Code, "(t)he fault or negligence of the obligor consists in the omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the person, of the time and of the place." Here, the obligation of the CAA in maintaining the viewing deck, a facility open to the public, requires that CAA insure the safety of the viewers using it. As these people come to the viewing deck to watch the planes and passengers, their tendency would be to look to where the planes and the incoming passengers are and not to look down on the floor or pavement of the viewing deck. The CAA should have thus made sure that no dangerous obstructions or

elevations exist on the floor of the deck to prevent any undue harm to the public. The legal foundation of CAA's liability for quasi-delict can be found in Article 2176 of the Civil Code which provides that "(w)hoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done... As the CAA knew of the existence of the dangerous elevation which it claims though, was made precisely in accordance with the plans and specifications of the building for proper drainage of the open terrace [See Record on Appeal, pp. 13 and 57; Rollo, p. 391, its failure to have it repaired or altered in order to eliminate the existing hazard constitutes such negligence as to warrant a finding of liability based on quasi-delict upon CAA. The Court finds the contention that private respondent was, at the very least, guilty of contributory negligence, thus reducing the damages that plaintiff may recover, unmeritorious. Contributory negligence under Article 2179 of the Civil Code contemplates a negligent act or omission on the part of the plaintiff, which although not the proximate cause of his injury, contributed to his own damage, the proximate cause of the plaintiffs own injury being the defendant's lack of due care. In the instant case, no contributory negligence can be imputed to the private respondent, considering the following test formulated in the early case of Picart v. Smith, 37 Phil. 809 (1918): The test by which to determine the existence of negligence in a particular case may be stated as follows: Did the defendant in doing the alleged negligent act use that reasonable care and caution which an ordinarily prudent man would have used in the same situation? If not, then he is guilty of negligence. The law here in effect adopts the standard supposed to be supplied by the imaginary conduct of the discreet paterfamilias of the Roman law. The existence of the negligence in a given case is not determined by reference to the personal judgment of the actor in the situation before him. The law considers what would be reckless, blameworthy, or negligent in the man of ordinary intelligence and prudence and determines liability by that. The question as to what would constitute the conduct of a prudent man in a given situation must of course be always determined in the light of human experience and in view of the facts involved in the particular case. Abstract speculations cannot be here of much value but this much can be profitably said: Reasonable men-overn their conduct by the circumstances which are before them or known to them. They are not, and are not supposed to be omniscient of the future. Hence they can be expected to take care only when there is something before them to suggest or warn of danger. Could a prudent man, in the case under consideration, foresee harm as a result of the course actually pursued' If so, it was the duty of the actor to take precautions to guard against that harm. Reasonable foresight of harm, followed by the ignoring of the suggestion born of this prevision, is always necessary before negligence can be held to exist.... [Picart v. Smith, supra, p. 813; Emphasis supplied.] The private respondent, who was the plaintiff in the case before the lower court, could not have reasonably foreseen the harm that would befall him, considering the attendant factual circumstances. Even if the private respondent had been looking where he was going, the step in question could not easily be noticed because of its construction. As the trial court found: In connection with the incident testified to, a sketch, Exhibit O, shows a section of the floorings oil which plaintiff had tripped, This sketch reveals two pavements adjoining each other, one being elevated by four and one-fourth inches than the other. From the architectural standpoint the higher, pavement is a step. However, unlike a step commonly seen around, the edge of the elevated pavement slanted outward as one walks to one interior of the terrace. The length of the inclination between the edges of the two pavements is three inches. Obviously, plaintiff had stepped on the inclination because had his foot landed on the lower pavement he would not have lost his balance. The same sketch shows that both pavements including the inclined portion are tiled in red cement, and as shown by the photograph Exhibit A, the lines of the tilings are continuous. It would therefore be difficult for a pedestrian to see the inclination especially where there are plenty of persons in the terrace as was the situation when plaintiff fell down. There was no warning sign to direct one's attention to the change in the elevation of the floorings. [Rollo, pp. 2829.] III Finally, petitioner appeals to this Court the award of damages to private respondent. The liability of CAA to answer for damages, whether actual, moral or exemplary, cannot be seriously doubted in view of one conferment of the power to sue and be sued upon it, which, as held in the case of Rayo v. Court of First Instance, supra, includes liability on a claim for quasi-dilict. In the aforestated case, the liability of the National Power Corporation to answer for damages resulting from its act of sudden, precipitate and simultaneous

opening of the Angat Dam, which caused the death of several residents of the area and the destruction of properties, was upheld since the o,rant of the power to sue and be sued upon it necessarily implies that it can be held answerable for its tortious acts or any wrongful act for that matter. With respect to actual or compensatory damages, the law mandates that the same be proven. Art. 2199. Except as provided by law or by stipulation, one are entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. Such compensation is referred to as actual on compensatory damages [New Civil Code]. Private respondent claims P15,589.55 representing medical and hospitalization bills. This Court finds the same to have been duly proven through the testimony of Dr. Ambrosio Tangco, the physician who attended to private respondent (Rollo, p. 26) and who Identified Exh. "H" which was his bill for professional services [Rollo, p. 31]. Concerning the P20,200.00 alleged to have been spent for other expenses such as the transportation of the two lawyers who had to represent private respondent abroad and the publication of the postponement notices of the wedding, the Court holds that the same had also been duly proven. Private respondent had adequately shown the existence of such losses and the amount thereof in the testimonies before the trial court [CA decision, p. 81. At any rate, the findings of the Court of Appeals with respect to this are findings of facts [One Heart Sporting Club, Inc. v. Court of Appeals, G.R. Nos. 5379053972, Oct. 23, 1981, 108 SCRA 4161 which, as had been held time and again, are, as a general rule, conclusive before this Court [Sese v. Intermediate Appellate Court, G.R. No. 66186, July 31, 1987,152 SCRA 585]. With respect to the P30,000.00 awarded as moral damages, the Court holds private respondent entitled thereto because of the physical suffering and physical injuries caused by the negligence of the CAA [Arts. 2217 and 2219 (2), New Civil Code]. With respect to the award of exemplary damages, the Civil Code explicitly, states: Art. 2229. Exemplary or corrective damages, are imposed, by way of example or correction for the public good, in addition to the moral, liquidated or compensatory Art. 2231. In quasi-delicts, exemplary damages may be granted if the defendant acted with gross negligence. Gross negligence which, according to the Court, is equivalent to the term "notorious negligence" and consists in the failure to exercise even slight care [Caunan v. Compania General de Tabacos, 56 Phil. 542 (1932)] can be attributed to the CAA for its failure to remedy the dangerous condition of the questioned elevation or to even post a warning sign directing the attention of the viewers to the change in the elevation of the floorings notwithstanding its knowledge of the hazard posed by such elevation [Rollo, pp. 28-29; Record oil Appeal, p. 57]. The wanton disregard by the CAA of the safety of the people using the viewing deck, who are charged an admission fee, including the petitioner who paid the entrance fees to get inside the vantage place [CA decision, p. 2; Rollo, p. 25] and are, therefore, entitled to expect a facility that is properly and safely maintained justifies the award of exemplary damages against the CAA, as a deterrent and by way of example or correction for the public good. The award of P40,000.00 by the trial court as exemplary damages appropriately underscores the point that as an entity changed with providing service to the public, the CAA. like all other entities serving the public. has the obligation to provide the public with reasonably safe service. Finally, the award of attorney's fees is also upheld considering that under Art. 2208 (1) of the Civil Code, the same may be awarded whenever exemplary damages are awarded, as in this case, and,at any rate, under Art. 2208 (11), the Court has the discretion to grant the same when it is just and equitable. However, since the Manila International Airport Authority (MIAA) has taken over the management and operations of the Manila International Airport [renamed Ninoy Aquino International Airport under Republic Act No. 6639] pursuant to Executive Order No. 778 as amended by executive Orders Nos. 903 (1983), 909 (1983) and 298 (1987) and under Section 24 of the said Exec. Order 778, the MIAA has assumed all the debts, liabilities and obligations of the now defunct Civil Aeronautics Administration (CAA), the liabilities of the CAA have now been transferred to the MIAA. WHEREFORE, finding no reversible error, the Petition for review on certiorari is DENIED and the decision of the Court of Appeals in CA-G.R. No. 51172-R is AFFIRMED. SO ORDERED. Fernan, C.J., Gutierrez, Jr., Feliciano and Bidin, JJ., concur. SECOND DIVISION [G.R. No. 119602. October 6, 2000]

WILDVALLEY SHIPPING CO., LTD. petitioner, vs. COURT OF APPEALS and PHILIPPINE PRESIDENT LINES INC., respondents. DECISION BUENA, J.: This is a petition for review on certiorari seeking to set aside the decision of the Court of Appeals which reversed the decision of the lower court in CA-G.R. CV No. 36821, entitled "Wildvalley Shipping Co., Ltd., plaintiff-appellant, versus Philippine President Lines, Inc., defendant-appellant." The antecedent facts of the case are as follows: Sometime in February 1988, the Philippine Roxas, a vessel owned by Philippine President Lines, Inc., private respondent herein, arrived in Puerto Ordaz, Venezuela, to load iron ore. Upon the completion of the loading and when the vessel was ready to leave port, Mr. Ezzar del Valle Solarzano Vasquez, an official pilot of Venezuela, was designated by the harbour authorities in Puerto Ordaz to navigate the Philippine Roxas through the Orinoco River.[1] He was asked to pilot the said vessel on February 11, 1988[2] boarding it that night at 11:00 p.m.

[3]
The master (captain) of the Philippine Roxas, Captain Nicandro Colon, was at the bridge together with the pilot (Vasquez), the vessel's third mate (then the officer on watch), and a helmsman when the vessel left the port[4] at 1:40 a.m. on February 12, 1988.[5] Captain Colon left the bridge when the vessel was under way.

[6]
The Philippine Roxas experienced some vibrations when it entered the San Roque Channel at mile 172.[7] The vessel proceeded on its way, with the pilot assuring the watch officer that the vibration was a result of the shallowness of the channel.[8] Between mile 158 and 157, the vessel again experienced some vibrations.[9] These occurred at 4:12 a.m.

[10] It was then that the watch officer called the master to the bridge.[11]
The master (captain) checked the position of the vessel[12] and verified that it was in the centre of the channel.[13] He then went to confirm, or set down, the position of the vessel on the chart.[14] He ordered Simplicio A. Monis, Chief Officer of the President Roxas, to check all the double bottom tanks.[15] At around 4:35 a.m., the Philippine Roxas ran aground in the Orinoco River,[16] thus obstructing the ingress and egress of vessels. As a result of the blockage, the Malandrinon, a vessel owned by herein petitioner Wildvalley Shipping Company, Ltd., was unable to sail out of Puerto Ordaz on that day. Subsequently, Wildvalley Shipping Company, Ltd. filed a suit with the Regional Trial Court of Manila, Branch III against Philippine President Lines, Inc. and Pioneer Insurance Company (the underwriter/insurer of Philippine Roxas) for damages in the form of unearned profits, and interest thereon amounting to US $400,000.00 plus attorney's fees, costs, and expenses of litigation. The complaint against Pioneer Insurance Company was dismissed in an Order dated November 7, 1988.[17] At the pre-trial conference, the parties agreed on the following facts: "1. The jurisdictional facts, as specified in their respective pleadings; "2. That defendant PPL was the owner of the vessel Philippine Roxas at the time of the incident; "3. That defendant Pioneer Insurance was the insurance underwriter for defendant PPL; "4. That plaintiff Wildvalley Shipping Co., Inc. is the owner of the vessel Malandrinon, whose passage was obstructed by the vessel Philippine Roxas at Puerto Ordaz, Venezuela, as specified in par. 4, page 2 of the complaint; "5. That on February 12, 1988, while the Philippine Roxas was navigating the channel at Puerto Ordaz, the said vessel grounded and as a result, obstructed navigation at the channel; "6. That the Orinoco River in Puerto Ordaz is a compulsory pilotage channel; "7. That at the time of the incident, the vessel, Philippine Roxas, was under the command of the pilot Ezzar

Solarzano, assigned by the government thereat, but plaintiff claims that it is under the command of the master; "8. The plaintiff filed a case in Middleburg, Holland which is related to the present case; "9. The plaintiff caused the arrest of the Philippine Collier, a vessel owned by the defendant PPL; "10. The Orinoco River is 150 miles long and it takes approximately 12 hours to navigate out of the said river; "11. That no security for the plaintiff's claim was given until after the Philippine Collier was arrested; and "12. That a letter of guarantee, dated 12-May-88 was issued by the Steamship Mutual Underwriters Ltd."[18] The trial court rendered its decision on October 16, 1991 in favor of the petitioner, Wildvalley Shipping Co., Ltd. The dispositive portion thereof reads as follows: "WHEREFORE, judgment is rendered for the plaintiff, ordering defendant Philippine President Lines, Inc. to pay to the plaintiff the sum of U.S. $259,243.43, as actual and compensatory damages, and U.S. $162,031.53, as expenses incurred abroad for its foreign lawyers, plus additional sum of U.S. $22,000.00, as and for attorney's fees of plaintiff's local lawyer, and to pay the cost of this suit. "Defendant's counterclaim is dismissed for lack of merit. "SO ORDERED."[19] Both parties appealed: the petitioner appealing the non-award of interest with the private respondent questioning the decision on the merits of the case. After the requisite pleadings had been filed, the Court of Appeals came out with its questioned decision dated June 14, 1994,[20] the dispositive portion of which reads as follows: "WHEREFORE, finding defendant-appellant's appeal to be meritorious, judgment is hereby rendered reversing the Decision of the lower court. Plaintiff-appellant's Complaint is dismissed and it is ordered to pay defendantappellant the amount of Three Hundred Twenty-three Thousand, Forty-two Pesos and Fifty-three Centavos (P323,042.53) as and for attorney's fees plus cost of suit. Plaintiff-appellant's appeal is DISMISSED. "SO ORDERED."[21] Petitioner filed a motion for reconsideration[22] but the same was denied for lack of merit in the resolution dated March 29, 1995.[23] Hence, this petition. The petitioner assigns the following errors to the court a quo: 1. RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN FINDING THAT UNDER PHILIPPINE LAW NO FAULT OR NEGLIGENCE CAN BE ATTRIBUTED TO THE MASTER NOR THE OWNER OF THE "PHILIPPINE ROXAS" FOR THE GROUNDING OF SAID VESSEL RESULTING IN THE BLOCKAGE OF THE RIO ORINOCO; 2. RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN REVERSING THE FINDINGS OF FACTS OF THE TRIAL COURT CONTRARY TO EVIDENCE; 3. RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN FINDING THAT THE "PHILIPPINE ROXAS" IS SEAWORTHY; 4. RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN DISREGARDING VENEZUELAN LAW DESPITE THE FACT THAT THE SAME HAS BEEN SUBSTANTIALLY PROVED IN THE TRIAL COURT WITHOUT ANY OBJECTION FROM PRIVATE RESPONDENT, AND WHOSE OBJECTION WAS INTERPOSED BELATEDLY ON APPEAL; 5. RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN AWARDING ATTORNEY'S FEES AND COSTS TO PRIVATE RESPONDENT WITHOUT ANY FAIR OR REASONABLE BASIS WHATSOEVER; 6. RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN NOT FINDING THAT PETITIONER'S CAUSE IS MERITORIOUS HENCE, PETITIONER SHOULD BE ENTITLED TO ATTORNEY'S FEES, COSTS AND INTEREST. The petition is without merit. The primary issue to be determined is whether or not Venezuelan law is applicable to the case at bar. It is well-settled that foreign laws do not prove themselves in our jurisdiction and our courts are not authorized

to take judicial notice of them. Like any other fact, they must be alleged and proved.[24] A distinction is to be made as to the manner of proving a written and an unwritten law. The former falls under Section 24, Rule 132 of the Rules of Court, as amended, the entire provision of which is quoted hereunder. Where the foreign law sought to be proved is "unwritten," the oral testimony of expert witnesses is admissible, as are printed and published books of reports of decisions of the courts of the country concerned if proved to be commonly admitted in such courts.[25] Section 24 of Rule 132 of the Rules of Court, as amended, provides: "Sec. 24. Proof of official record. -- The record of public documents referred to in paragraph (a) of Section 19, when admissible for any purpose, may be evidenced by an official publication thereof or by a copy attested by the officer having the legal custody of the record, or by his deputy, and accompanied, if the record is not kept in the Philippines, with a certificate that such officer has the custody. If the office in which the record is kept is in a foreign country, the certificate may be made by a secretary of the embassy or legation, consul general, consul, vice consul, or consular agent or by any officer in the foreign service of the Philippines stationed in the foreign country in which the record is kept, and authenticated by the seal of his office." (Underscoring supplied) The court has interpreted Section 25 (now Section 24) to include competent evidence like the testimony of a witness to prove the existence of a written foreign law.[26] In the noted case of Willamette Iron & Steel Works vs. Muzzal,[27] it was held that: " Mr. Arthur W. Bolton, an attorney-at-law of San Francisco, California, since the year 1918 under oath, quoted verbatim section 322 of the California Civil Code and stated that said section was in force at the time the obligations of defendant to the plaintiff were incurred, i.e. on November 5, 1928 and December 22, 1928. This evidence sufficiently established the fact that the section in question was the law of the State of California on the above dates. A reading of sections 300 and 301 of our Code of Civil Procedure will convince one that these sections do not exclude the presentation of other competent evidence to prove the existence of a foreign law. "`The foreign law is a matter of fact You ask the witness what the law is; he may, from his recollection, or on producing and referring to books, say what it is.' (Lord Campbell concurring in an opinion of Lord Chief Justice Denman in a well-known English case where a witness was called upon to prove the Roman laws of marriage and was permitted to testify, though he referred to a book containing the decrees of the Council of Trent as controlling, Jones on Evidence, Second Edition, Volume 4, pages 3148-3152.) x x x. We do not dispute the competency of Capt. Oscar Leon Monzon, the Assistant Harbor Master and Chief of Pilots at Puerto Ordaz, Venezuela,[28] to testify on the existence of the Reglamento General de la Ley de Pilotaje o (pilotage law of Venezuela)[29] and the Reglamento Para la Zona de Pilotaje N 1 del Orinoco (rules governing the navigation of the Orinoco River). Captain Monzon has held the aforementioned posts for eight He is also in charge of the documents that come into the office of the harbour masters.[31] Nevertheless, we take note that these written laws were not proven in the manner provided by Section 24 of Rule 132 of the Rules of Court. The Reglamento General de la Ley de Pilotaje was published in the Gaceta Oficial[32]of the Republic of Venezuela. A photocopy of the Gaceta Oficial was presented in evidence as an official publication of the Republic of Venezuela. o The Reglamento Para la Zona de Pilotaje N 1 del Orinoco is published in a book issued by the Ministerio de Comunicaciones of Venezuela.[33] Only a photocopy of the said rules was likewise presented as evidence. Both of these documents are considered in Philippine jurisprudence to be public documents for they are the written official acts, or records of the official acts of the sovereign authority, official bodies and tribunals, and public officers of Venezuela.[34] For a copy of a foreign public document to be admissible, the following requisites are mandatory: (1) It must be attested by the officer having legal custody of the records or by his deputy; and (2) It must be accompanied by a certificate by a secretary of the embassy or legation, consul general, consul, vice consular or consular agent or foreign service officer, and with the seal of his office.[35] The latter requirement is not a mere

years.[30] As such he is in charge of designating the pilots for maneuvering and navigating the Orinoco River.

technicality but is intended to justify the giving of full faith and credit to the genuineness of a document in a foreign country.[36] It is not enough that the Gaceta Oficial, or a book published by the Ministerio de Comunicaciones of Venezuela, was presented as evidence with Captain Monzon attesting it. It is also required by Section 24 of Rule 132 of the Rules of Court that a certificate that Captain Monzon, who attested the documents, is the officer who had legal custody of those records made by a secretary of the embassy or legation, consul general, consul, vice consul or consular agent or by any officer in the foreign service of the Philippines stationed in Venezuela, and authenticated by the seal of his office accompanying the copy of the public document. No such certificate could be found in the records of the case. With respect to proof of written laws, parol proof is objectionable, for the written law itself is the best evidence. According to the weight of authority, when a foreign statute is involved, the best evidence rule requires that it be proved by a duly authenticated copy of the statute.[37] At this juncture, we have to point out that the Venezuelan law was not pleaded before the lower court. A foreign law is considered to be pleaded if there is an allegation in the pleading about the existence of the foreign law, its import and legal consequence on the event or transaction in issue.[38] A review of the Complaint[39] revealed that it was never alleged or invoked despite the fact that the grounding of the M/V Philippine Roxas occurred within the territorial jurisdiction of Venezuela. We reiterate that under the rules of private international law, a foreign law must be properly pleaded and proved as a fact. In the absence of pleading and proof, the laws of a foreign country, or state, will be presumed to be the same as our own local or domestic law and this is known as processual presumption.[40] Having cleared this point, we now proceed to a thorough study of the errors assigned by the petitioner. Petitioner alleges that there was negligence on the part of the private respondent that would warrant the award of damages. There being no contractual obligation, the private respondent is obliged to give only the diligence required of a good father of a family in accordance with the provisions of Article 1173 of the New Civil Code, thus: Art. 1173. The fault or negligence of the obligor consists in the omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the persons, of the time and of the place. When negligence shows bad faith, the provisions of articles 1171 and 2201, paragraph 2, shall apply. If the law or contract does not state the diligence which is to be observed in the performance, that which is expected of a good father of a family shall be required. The diligence of a good father of a family requires only that diligence which an ordinary prudent man would exercise with regard to his own property. This we have found private respondent to have exercised when the vessel sailed only after the "main engine, machineries, and other auxiliaries" were checked and found to be in good running condition;[41] when the master left a competent officer, the officer on watch on the bridge with a pilot who is experienced in navigating the Orinoco River; when the master ordered the inspection of the vessel's double bottom tanks when the vibrations occurred anew.[42] The Philippine rules on pilotage, embodied in Philippine Ports Authority Administrative Order No. 03-85, otherwise known as the Rules and Regulations Governing Pilotage Services, the Conduct of Pilots and Pilotage Fees in Philippine Ports enunciate the duties and responsibilities of a master of a vessel and its pilot, among other things. The pertinent provisions of the said administrative order governing these persons are quoted hereunder: Sec. 11. Control of Vessels and Liability for Damage. -- On compulsory pilotage grounds, the Harbor Pilot providing the service to a vessel shall be responsible for the damage caused to a vessel or to life and property at ports due to his negligence or fault. He can be absolved from liability if the accident is caused by force majeure or natural calamities provided he has exercised prudence and extra diligence to prevent or minimize the damage. The Master shall retain overall command of the vessel even on pilotage grounds whereby he can countermand or overrule the order or command of the Harbor Pilot on board. In such event, any damage caused to a vessel or to life and property at ports by reason of the fault or negligence of the Master shall be the responsibility and liability of the registered owner of the vessel concerned without prejudice to recourse against said Master.

Such liability of the owner or Master of the vessel or its pilots shall be determined by competent authority in appropriate proceedings in the light of the facts and circumstances of each particular case. x x x Sec. 32. Duties and Responsibilities of the Pilots or Pilots Association. -- The duties and responsibilities of the Harbor Pilot shall be as follows: x x x f) A pilot shall be held responsible for the direction of a vessel from the time he assumes his work as a pilot thereof until he leaves it anchored or berthed safely; Provided, however, that his responsibility shall cease at the moment the Master neglects or refuses to carry out his order." The Code of Commerce likewise provides for the obligations expected of a captain of a vessel, to wit: Art. 612. The following obligations shall be inherent in the office of captain: x x x "7. To be on deck on reaching land and to take command on entering and leaving ports, canals, roadsteads, and rivers, unless there is a pilot on board discharging his duties. x x x. The law is very explicit. The master remains the overall commander of the vessel even when there is a pilot on board. He remains in control of the ship as he can still perform the duties conferred upon him by law[43] despite the presence of a pilot who is temporarily in charge of the vessel. It is not required of him to be on the bridge while the vessel is being navigated by a pilot. However, Section 8 of PPA Administrative Order No. 03-85, provides: Sec. 8. Compulsory Pilotage Service - For entering a harbor and anchoring thereat, or passing through rivers or straits within a pilotage district, as well as docking and undocking at any pier/wharf, or shifting from one berth or another, every vessel engaged in coastwise and foreign trade shall be under compulsory pilotage. xxx. The Orinoco River being a compulsory pilotage channel necessitated the engaging of a pilot who was presumed to be knowledgeable of every shoal, bank, deep and shallow ends of the river. In his deposition, pilot Ezzar Solarzano Vasquez testified that he is an official pilot in the Harbour at Port Ordaz, Venezuela,[44] and that he had been a pilot for twelve (12) years.[45] He also had experience in navigating the waters of the Orinoco River.[46] The law does provide that the master can countermand or overrule the order or command of the harbor pilot on board. The master of the Philippine Roxas deemed it best not to order him (the pilot) to stop the vessel,

[47] mayhap, because the latter had assured him that they were navigating normally before the grounding of the vessel.[48] Moreover, the pilot had admitted that on account of his experience he was very familiar with
the configuration of the river as well as the course headings, and that he does not even refer to river charts when navigating the Orinoco River.[49] Based on these declarations, it comes as no surprise to us that the master chose not to regain control of the ship. Admitting his limited knowledge of the Orinoco River, Captain Colon relied on the knowledge and experience of pilot Vasquez to guide the vessel safely. Licensed pilots, enjoying the emoluments of compulsory pilotage, are in a different class from ordinary employees, for they assume to have a skill and a knowledge of navigation in the particular waters over which their licenses extend superior to that of the master; pilots are bound to use due diligence and reasonable care and skill. A pilot's ordinary skill is in proportion to the pilot's responsibilities, and implies a knowledge and observance of the usual rules of navigation, acquaintance with the waters piloted in their ordinary condition, and nautical skill in avoiding all known obstructions. The character of the skill and knowledge required of a pilot in charge of a vessel on the rivers of a country is very different from that which enables a navigator to carry a vessel safely in the ocean. On the ocean, a knowledge of the rules of navigation, with charts that disclose the places of hidden rocks, dangerous shores, or other dangers of the way, are the main elements of a pilot's knowledge and skill. But the pilot of a river vessel, like the harbor pilot, is selected for the individual's personal knowledge of the topography through which the vessel is steered."[50] We find that the grounding of the vessel is attributable to the pilot. When the vibrations were first felt the

watch officer asked him what was going on, and pilot Vasquez replied that "(they) were in the middle of the channel and that the vibration was as (sic) a result of the shallowness of the channel."[51] Pilot Ezzar Solarzano Vasquez was assigned to pilot the vessel Philippine Roxas as well as other vessels on the Orinoco River due to his knowledge of the same. In his experience as a pilot, he should have been aware of the portions which are shallow and which are not. His failure to determine the depth of the said river and his decision to plod on his set course, in all probability, caused damage to the vessel. Thus, we hold him as negligent and liable for its grounding. In the case of Homer Ramsdell Transportation Company vs. La Compagnie Generale Transatlantique, 182 U.S. 406, it was held that: x x x The master of a ship, and the owner also, is liable for any injury done by the negligence of the crew employed in the ship. The same doctrine will apply to the case of a pilot employed by the master or owner, by whose negligence any injury happens to a third person or his property: as, for example, by a collision with another ship, occasioned by his negligence. And it will make no difference in the case that the pilot, if any is employed, is required to be a licensed pilot; provided the master is at liberty to take a pilot, or not, at his pleasure, for in such a case the master acts voluntarily, although he is necessarily required to select from a particular class. On the other hand, if it is compulsive upon the master to take a pilot, and, a fortiori, if he is bound to do so under penalty, then, and in such case, neither he nor the owner will be liable for injuries occasioned by the negligence of the pilot; for in such a case the pilot cannot be deemed properly the servant of the master or the owner, but is forced upon them, and the maxim Qui facit per alium facit per se does not apply." (Underscoring supplied) Anent the river passage plan, we find that, while there was none,[52] the voyage has been sufficiently planned and monitored as shown by the following actions undertaken by the pilot, Ezzar Solarzano Vasquez, to wit: contacting the radio marina via VHF for information regarding the channel, river traffic,[53] soundings of the river, depth of the river, bulletin on the buoys.[54] The officer on watch also monitored the voyage.[55] We, therefore, do not find the absence of a river passage plan to be the cause for the grounding of the vessel. The doctrine of res ipsa loquitur does not apply to the case at bar because the circumstances surrounding the injury do not clearly indicate negligence on the part of the private respondent. For the said doctrine to apply, the following conditions must be met: (1) the accident was of such character as to warrant an inference that it would not have happened except for defendant's negligence; (2) the accident must have been caused by an agency or instrumentality within the exclusive management or control of the person charged with the negligence complained of; and (3) the accident must not have been due to any voluntary action or contribution on the part of the person injured.[56] As has already been held above, there was a temporary shift of control over the ship from the master of the vessel to the pilot on a compulsory pilotage channel. Thus, two of the requisites necessary for the doctrine to apply, i.e., negligence and control, to render the respondent liable, are absent. As to the claim that the ship was unseaworthy, we hold that it is not. The Lloyds Register of Shipping confirmed the vessels seaworthiness in a Confirmation of Class issued on February 16, 1988 by finding that "the above named ship (Philippine Roxas) maintained the class "+100A1 Strengthened for Ore Cargoes, Nos. 2 and 8 Holds may be empty (CC) and +LMC" from 31/12/87 up until the time of casualty on or about 12/2/88."[57] The same would not have been issued had not the vessel been built according to the standards set by Lloyd's. Samuel Lim, a marine surveyor, at Lloyd's Register of Shipping testified thus: "Q Now, in your opinion, as a surveyor, did top side tank have any bearing at all to the seaworthiness of the vessel? "A Well, judging on this particular vessel, and also basing on the class record of the vessel, wherein recommendations were made on the top side tank, and it was given sufficient time to be repaired, it means that the vessel is fit to travel even with those defects on the ship. "COURT What do you mean by that? You explain. The vessel is fit to travel even with defects? Is that what you mean? Explain. "WITNESS

"A Yes, your Honor. Because the class society which register (sic) is the third party looking into the condition of the vessel and as far as their record states, the vessel was class or maintained, and she is fit to travel during that voyage." x x x "ATTY. MISA Before we proceed to other matter, will you kindly tell us what is (sic) the 'class +100A1 Strengthened for Ore Cargoes', mean? "WITNESS "A Plus 100A1 means that the vessel was built according to Lloyd's rules and she is capable of carrying ore bulk cargoes, but she is particularly capable of carrying Ore Cargoes with No. 2 and No. 8 holds empty. x x x "COURT The vessel is classed, meaning? "A Meaning she is fit to travel, your Honor, or seaworthy."[58] It is not required that the vessel must be perfect. To be seaworthy, a ship must be reasonably fit to perform the services, and to encounter the ordinary perils of the voyage, contemplated by the parties to the policy.[59] As further evidence that the vessel was seaworthy, we quote the deposition of pilot Vasquez: "Q Was there any instance when your orders or directions were not complied with because of the inability of the vessel to do so? "A No. "Q. Was the vessel able to respond to all your commands and orders? "A. The vessel was navigating normally.[60] Eduardo P. Mata, Second Engineer of the Philippine Roxas submitted an accident report wherein he stated that on February 11, 1988, he checked and prepared the main engine, machineries and all other auxiliaries and found them all to be in good running condition and ready for maneuvering. That same day the main engine, bridge and engine telegraph and steering gear motor were also tested.[61] Engineer Mata also prepared the fuel for consumption for maneuvering and checked the engine generators.[62] Finally, we find the award of attorneys fee justified. Article 2208 of the New Civil Code provides that: "Art. 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannot be recovered, except: x x x "(11) In any other case where the court deems it just and equitable that attorney's fees and expenses of litigation should be recovered. x x x Due to the unfounded filing of this case, the private respondent was unjustifiably forced to litigate, thus the award of attorneys fees was proper. WHEREFORE, IN VIEW OF THE FOREGOING, the petition is DENIED and the decision of the Court of Appeals in CA G.R. CV No. 36821 is AFFIRMED. SO ORDERED. Bellosillo, (Chairman), Mendoza, Quisumbing, and De leon, Jr., JJ., concur. Republic of the Philippines SUPREME COURT Manila

FIRST DIVISION G.R. No. 153591 February 23, 2004

PEOPLE OF THE PHILIPPINES, appellee vs. RENATO GARCIA y ROMANO, appellant. DECISION YNARES-SANTIAGO, J.: Appellant Renato Garcia y Romano was charged with Murder before the Regional Trial Court of Quezon City, Branch 87, in Criminal Case No. Q-98-79961 in an Information1 which reads: That on or about the 22nd day of May, 1998, in Quezon City, Philippines, the said accused, being then the driver and/or person in charge of an Isuzu Jitney bearing Plate No. NPJ-948 did then and there unlawfully and feloniously drive, manage and operate the same along Zabarte Road in said City, in a careless, reckless, negligent and impudent manner, by then and there making the said vehicle run at a speed greater than was reasonable and proper without taking the necessary precaution to avoid accident to person/s of the traffic at said place at the time, causing as consequence of his said carelessness, negligence, impudence and lack of precaution, the said vehicle so driven, managed and operated by him to hit and bump, as in fact it hit and bumped Sanily Billon y Trinidad, a pedestrian, thereafter, with intent to kill, qualified by evident premeditation and use of motor vehicle, did then and there willfully, unlawfully and feloniously ran said vehicle over the victim thereby causing her serious and mortal wounds which were the direct and immediate cause of her untimely death, to the damage and prejudice of the heirs of the said Sanily Billon y Trinidad. CONTRARY TO LAW. On arraignment, appellant pleaded "not guilty". Thereafter, trial on the merits followed. The prosecution alleged that at around 12:00 noon of May 22, 1998, Bentley Billon and his younger sister, Sanily, boarded a passenger jeepney on their way to Sacred Heart School in Barangay Kaligayahan, Novaliches, Quezon City to attend remedial classes. They alighted on Zabarte Road in front of the school. Bentley crossed the street and waited on the center island for Sanily to cross. While Sanily was crossing the street, a passenger jeepney driven by appellant, coming from Camarin and heading towards Quirino Highway, hit her on the left side of the body. Sanily fell and was thrown to the ground a meter away from the vehicle. The jeepney stopped. But as Bentley was running towards his sister, the vehicle suddenly accelerated with its front tire running over Sanilys stomach. Bentley and appellant pulled Sanily, who was writhing in excruciating pain, from underneath the vehicle and brought her to the Sta. Lucia Hospital but due to lack of medical facilities, she was transferred to the Quezon City General Hospital (QCGH) where she was operated. However, she died four days later. Dr. Emmanuel Reyes,2 Medico-legal of the Southern Police District, Fort Bonifacio, testified that the attending physician, Dr. Santiago C. Sagad, noted lacerations in Sanilys liver and spleen which was caused by a blunt/strong force on the victims body, resulting to her death due to internal bleeding. He opined that the blunt force may have also caused lacerations in the victims intestine and the abrasions on the arm, from the elbow to the shoulder could be the result of the skins contact with a rough surface. Appellant admitted having ran over the victim, but claimed that it was an accident. He narrated that at around noon on May 22, 1998, while driving his passenger jeepney along Zabarte Road, he saw a boy crossing the street followed by the victim. While the vehicle was running, he heard a thud. He immediately applied his breaks and alighted to check what it was. He saw to his horror a girl sprawled underneath his vehicle between the front and the rear tires. He and the victims brother rushed the girl to the Sta. Lucia Hospital, but they transferred her to the Quezon City General Hospital which has better facilities. A week later, he learned that the victim died. On May 2, 2002, the trial court rendered judgment,3 finding appellant guilty beyond reasonable doubt of Murder and sentenced him to suffer the penalty of reclusion perpetua, the dispositive portion of which reads:4 WHEREFORE, judgment is hereby rendered finding accused guilty beyond reasonable doubt of the crime of Murder, for which, said RENATO GARCIA y ROMANO is hereby sentenced to suffer the penalty of reclusion perpetua and to indemnify the heirs of Sanily Billon the sum of One Hundred and Twenty Three Thousand and Five Hundred Pesos (P123,500.00) as actual damages including attorneys fees; Fifty Thousand Pesos (P50,000.00) as civil indemnity for the death of Sanily and Five Hundred Thousand Pesos (P500,000.00) as moral damages.

Cost against the accused. SO ORDERED. The trial court held that appellant is guilty of murder qualified by evident premeditation because he deliberately ran over the slumped body of the victim. Hence this appeal, raising the following errors, to wit: I THE TRIAL COURT GRAVELY ERRED IN APPRECIATING AGAINST ACCUSED-APPELLANT THE QUALIFYING CIRCUMSTANCE OF EVIDENT PREMEDITAION II THE TRIAL COURT GRAVELY ERRED IN FINDING ACCUSED GUILTY BEYOND REASONABLE BEYOND REASONABLE DOUBT OF THE CRIME OF MURDER AS CHARGED. The issue to be resolved is whether or not appellant is guilty of murder or reckless imprudence resulting in homicide. Appellant argues that the trial court gravely erred in finding that the qualifying circumstance of evident premeditation attended the commission of the offense. He contends that the mere allegation by the prosecution that he bumped the victim and intentionally ran over her body is not sufficient to establish evident premeditation. He claims that he did not intentionally run over the victim when his vehicle bumped her because he was rattled and was no longer aware of what he was doing. We find from a careful review of the facts on record that the unfortunate incident was more the result of reckless imprudence than of malicious intent. Therefore, the trial court erred in convicting appellant of the crime of murder qualified by evident premeditation. The elements of evident premeditation are: (1) a previous decision by the appellant to commit the crime; (2) an overt act/acts manifestly indicating that the appellant clung to his determination; and (3) a lapse of time between the decision to commit the crime and its actual execution sufficient to allow appellant to reflect upon the consequences of his acts. The victims brother, Bentley, testified that the vehicle stopped after it bumped the victim, but it moved forward and ran over the prostrate body of her sister. From his narration, we find that no sufficient time elapsed for appellant to decide to commit the crime and reflect on its consequences. Moreover, there was no showing that appellant performed other overt acts to show that he was determined to commit murder. The essence of evident premeditation is that the execution of the criminal act must be preceded by cool thought and reflection upon the resolution to carry out the criminal intent, during the space of time sufficient to arrive at a calm judgment.5 These circumstances do not obtain in the case at bar. Appellant could have reacted on instinct and relied on sheer impulse to respond to the situation at hand. While it is possible that appellant deliberately ran over the victim, it is equally possible, if not more probable, that the vehicle moved forward because appellant failed to control its momentum. Indeed, this is more consistent with the unrebutted evidence that the jeepney, which had no handbrake, was moving fast and that appellant became confused when the accident occurred. Furthermore, appellants act of bringing the victim to the hospital despite numerous opportunities to flee from the scene is more compatible with a state of mind devoid of criminal intent. In view of the gravity of the offense involved, the trial court should have been more circumspect in weighing the evidence of both parties. Our own evaluation of the evidence reveals that appellant had no intention to kill the victim. As such, he cannot be held liable for an intentional felony. All reasonable doubt intended to demonstrate negligence, and not criminal intent, must be resolved in favor of appellant.6 Thus, appellant is guilty of reckless imprudence resulting in homicide defined in Article 365 of the Revised Penal Code, as amended. In U.S. v. Maleza,7 we explained the rationale behind this crime as follows: A man must use common sense, and exercise due reflection in all his acts; it is his duty to be cautious, careful, and prudent, if not from instinct, then through fear of incurring punishment. He is responsible for such results as anyone might foresee and for acts which no one would have performed except through culpable abandon. Otherwise his own person, rights and property, all those of his fellow-beings, would ever be exposed to all

manner of danger and injury. In intentional crimes, the act itself is punished; in negligence or imprudence, what is principally penalized is the mental attitude or condition behind the act, the dangerous recklessness, lack of care or foresight, the imprudencia punible.8 Article 365 of the Revised Penal Code, as amended, states that reckless imprudence consists in voluntarily, but without malice, doing or failing to do an act from which material damage results by reason of inexcusable lack of precaution on the part of the person performing such act. Compared to intentional felonies, such as homicide or murder, what takes the place of the element of malice or intention to commit a wrong or evil is the failure of the offender to take precautions due to lack of skill taking into account his employment, or occupation, degree of intelligence, physical condition, and other circumstances regarding persons, time, and place.9 Appellant showed an inexcusable lack of precaution when he disregarded a traffic sign cautioning motorists to slow down10 and drove his vehicle in full speed despite being aware that he was traversing a school zone and pedestrians were crossing the street. He should have observed due diligence of a reasonably prudent man by slackening his speed and proceeding cautiously while passing the area. The imposable penalty, under Art. 365 (2)11 of the Revised Penal Code, homicide resulting from reckless imprudence in the use of motor vehicle is prision correccional in its medium and maximum periods, which ranges from two (2) years, four (4) months and one (1) day to six (6) years. Under Article 65 of the Revised Penal Code, the penalty shall be divided into three equal portions of time, each of which shall form one period. There being no aggravating or mitigating circumstance, the proper penalty shall be within the medium period, which is three (3) years, six (6) months and twenty-one (21) days to four (4) years, nine (9) months and ten (10) days. Applying the provisions of the Indeterminate Sentence Law, appellant is entitled to a minimum term to be taken from the penalty next lower in degree, which is arresto mayor, maximum to prision correccional, minimum. Accordingly, appellant should be sentenced to an indeterminate penalty of four (4) months and one (1) day of arresto mayor, as minimum, to four (4) years and two (2) months of prision correccional, as maximum.12 The trial court correctly awarded P50,000.00 as civil indemnity. However, the award of moral damages in the amount of P500,000.00 should be reduced to P50,000.00. 13 The award of P30,000.00 as actual damages must likewise be modified. The mother of the victim presented receipts that they, in fact, spent P58,257.90 14 for hospital bills and funeral expenses. The fact that she received P40,000.00 from insurance will not affect the award of actual damages.15 The award of exemplary damages is deleted for lack of factual basis. WHEREFORE, in view of the foregoing, the Decision of the Regional Trial Court of Quezon City, Branch 87, in Civil Case No. Q-98-79961, convicting appellant of the crime of murder is REVERSED and SET ASIDE. Appellant Renato Garcia y Romano is found guilty beyond reasonable doubt of the crime reckless imprudence resulting in homicide, and he is sentenced to suffer an indeterminate prison term of four (4) months and one (1) day of arresto mayor, as minimum, to four (4) years and two (2) months of prision correccional, as maximum. Appellant is ordered to pay the heirs of the victim, P50,000.00 as civil indemnity, P58,257.90 as actual damages and P50,000.00 as moral damages. Costs de oficio. SO ORDERED. Davide, Jr., C.J. (Chairman), Panganiban, Carpio and Azcuna, JJ., concur. THIRD DIVISION [G.R. No. 160795, June 27, 2008] CORINTHIAN GARDENS ASSOCIATION, INC.,PETITIONER, VS. SPOUSES REYNALDO AND MARIA LUISA TANJANGCO, AND SPOUSES FRANK AND TERESITA CUASO, RESPONDENTS. DECISION NACHURA, J.: Before this Court is a Petition for Review on Certiorari[1] under Rule 45 of the Rules of Civil Procedure seeking the reversal of the Court of Appeals (CA) Decision[2] dated January 31, 2003 in CA-G.R. CV No. 43217, which reversed and set aside the Decision[3] of the Regional Trial Court (RTC) of Quezon City, dated March 30, 1993.

The

Antecedents:

Respondents-spouses Reynaldo and Maria Luisa Tanjangco (the Tanjangcos) own Lots 68 and 69 covered by Transfer Certificates of Title (TCT) No. 242245[4] and 282961[5] respectively, located at Corinthian Gardens Subdivision, Quezon City, which is managed by petitioner Corinthian Gardens Association, Inc. (Corinthian). On the other hand, respondents-spouses Frank and Teresita Cuaso (the Cuasos) own Lot 65 which is adjacent to the Tanjangcos' lots. Before the Cuasos constructed their house on Lot 65, a relocation survey was necessary. As Geodetic Engineer Democrito De Dios (Engr. De Dios), operating under the business name D.M. De Dios Realty and Surveying, conducted all the previous surveys for the subdivision's developer, Corinthian referred Engr. De Dios to the Cuasos. Before, during and after the construction of the said house, Corinthian conducted periodic ocular inspections in order to determine compliance with the approved plans pursuant to the Manual of Rules and Regulations of Corinthian.[6] Unfortunately, after the Cuasos constructed their house employing the services of C.B. Paraz Construction Co., Inc. (C.B. Paraz) as builder, their perimeter fence encroached on the Tanjangcos' Lot 69 by 87 square meters. No amicable settlement was reached between the parties. Thus, the Tanjangcos demanded that the Cuasos demolish the perimeter fence but the latter failed and refused, prompting the Tanjangcos to file with the RTC a suit against the Cuasos for Recovery of Possession with Damages.[7] Eventually, the Cuasos filed a Third-Party Complaint[8] against Corinthian, C.B. Paraz and Engr. De Dios. The Cuasos ascribed negligence to C.B. Paraz for its failure to ascertain the proper specifications of their house, and to Engr. De Dios for his failure to undertake an accurate relocation survey, thereby, exposing them to litigation. The Cuasos also faulted Corinthian for approving their relocation survey and building plans without verifying their accuracy and in making representations as to Engr. De Dios' integrity and competence. The Cuasos alleged that had Corinthian exercised diligence in performing its duty, they would not have been involved in a boundary dispute with the Tanjangcos. Thus, the Cuasos opined that Corinthian should also be held answerable for any damages that they might incur as a result of such construction. On March 30, 1993, the RTC rendered a Decision in favor of the Tanjangcos. It ruled that the Cuasos' perimeter wall encroached on the land of the Tanjangos by 87 square meters. It, however, ruled that the Cuasos were builders in good faith, and gave the Tanjangcos the option to sell and the Cuasos the option to buy the encroaching portion of the land, at a price to be agreed upon by the parties within sixty (60) days from receipt of the said Decision. In the event that the Cuasos were unable and unwilling to purchase the said portion, the perimeter wall should be demolished at the latter's expense. The RTC also ordered the Cuasos to pay monthly rentals of P2,000.00 commencing from the time of the filing of the complaint. The RTC likewise held that C.B. Paraz was grossly negligent in not taking into account the correct boundaries of Cuasos' lot when it constructed the house. It, thus, ordered C.B. Paraz to pay moral and exemplary damages as well as attorney's fees to the Tanjangcos and the Cuasos. The third-party complaint against Corinthian and Engr. De Dios, on the other hand, was dismissed for lack of cause of action. The Tanjangcos filed a Motion for Reconsideration[9] of the said RTC Decision which the RTC, however, denied in its Order[10] dated June 28, 1993. Dissatisfied with the RTC ruling, the Tanjangcos, the Cuasos, and C.B. Paraz all appealed to the CA. On appeal, the CA reversed and set aside the RTC Decision. It held that the Cuasos acted in bad faith in landgrabbing the 87 square meter-portion of Lot 69 as of April 5, 1989. Correlatively, the CA allowed the Tanjangcos to exercise the rights granted under Articles 449, 450, 451 and 549 of the New Civil Code, which include the right to demand the demolition of the offending perimeter wall after reimbursing the Cuasos the necessary expenses for the preservation of the encroached area. The Cuasos were ordered to pay monthly rentals of P10,000.00 for the use, enjoyment and occupancy of the lot from 1989 up to the time they vacate the property considering the location and category of the same. They were, likewise, ordered to pay the Tanjangcos P100,000.00, as moral damages, P50,000.00 as exemplary damages, and P150,000.00 as attorney's fees. The CA also imposed six percent (6%) interest per annum on all the awards. The Cuasos' appeal against the Tanjangcos, on the other hand, was dismissed for lack of merit. On the third-party complaints, Corinthian, C.B. Paraz and Engr. De Dios were all found negligent in performing their respective duties and so they were ordered to contribute five percent (5%) each, or a total of fifteen percent (15%) to all judgment sums and amounts that the Cuasos shall eventually pay under the decision, also with interest of six

percent

(6%)

per

annum.

Only Corinthian filed a Motion for Reconsideration[11] of the CA Decision within the 15-day reglementary period. No motion for reconsideration was filed by the Cuasos, C.B. Paraz and/or Engr. De Dios. About six (6) months later, or on August 12, 2003, the Cuasos filed a Comment/Manifestation[12] praying that they be allowed to adopt Corinthian's Motion for Reconsideration. In its Resolution[13] dated November 14, 2003, the CA denied Corinthian's Motion for Reconsideration. Hence, Corinthian filed the instant Petition for Review on Certiorari assailing the CA Decision and Resolution, and impleading the Cuasos as one of the respondents being the third-party plaintiffs in the RTC. This Court gave due course to Corinthian's petition and required the parties to submit their respective memorandum.[14] In compliance, the Cuasos submitted their Memorandum[15] and Supplement to Memorandum,[16] which were both noted by this Court in its Resolutions dated January 10, 2005[17] and February 2, 2005, [18] respectively. In the meantime, the Tanjangcos moved for partial entry of judgment of the CA Decision which was granted by the CA in its Resolution[19] dated May 26, 2006, directing the issuance of an Entry of Judgment and a Certification that its Decision dated January 31 2003 has become final and executory with respect to the Cuasos, C.B. Paraz and Engr. De Dios for their failure to file an appeal assailing the said Decision before this Court. The Tanjangcos then moved for the execution of the judgment against the Cuasos, specifically the demolition of the perimeter fence,[20] which was also granted by the RTC in its Order[21] dated December 18, 2006. Other than the filing of an Opposition[22] and a Motion for Reconsideration[23] before the RTC, the Cuasos prayed for the issuance of a temporary restraining order (TRO) and/or preliminary injunction before this Court to enjoin the demolition of the perimeter fence. They averred that the premature demolition of the alleged encroaching perimeter wall and other improvements will cause grave and irreparable damage to them, because what is sought to be demolished is part of their residence. They claimed that no amount of money will compensate for the damage they stand to suffer should any demolition subsequently prove to be wrongful. They argued that before any execution can be carried out, it is necessary to first determine whether or not Corinthian was negligent in approving the building plan and whether or not it acted in good faith in doing so. Such determination, according to the Cuasos, will in turn determine whether or not they were in good faith in constructing the house.[24] The Tanjangcos opposed the Cuasos' application for TRO. They countered that the only pending matter with this Court is the appeal by Corinthian; hence, the implementation of the January 31, 2003 Decision of the CA against the Cuasos will not preempt the outcome of the said pending incidents. Also, any action taken by this Court on Corinthian's petition would not benefit the Cuasos for they did not appeal the adverse decision against them. Accordingly, they cannot obtain affirmative relief from this Court by reason or on account of the appeal taken by Corinthian. The appeal, they added, is personal to Corinthian. Finally, they argued that the Cuasos are now estopped from questioning the enforcement of the CA Decision since they issued a manager's check to pay the money judgment.[25] In this Court's Resolution dated July 18, 2007, we denied the Cuasos' application for TRO and/or writ of preliminary injunction for lack of merit. The denial was based on sound legal principles. It is axiomatic that to be entitled to the injunctive writ, one must show that there exists a right to be protected which is directly threatened by the act sought to be enjoined. Furthermore, there must be a showing that the invasion of the right is material and substantial, that the right of complainant is clear and unmistakable, and that there is an urgent and paramount necessity for the writ to issue in order to prevent serious damage.[26] In the Cuasos' case, their right to injunctive relief had not been clearly and unmistakably demonstrated. They failed to show proof that there is material and substantial invasion of their right to warrant the issuance of an injunctive writ. Indeed, the enforcement of the writ of execution, which would demolish the Cuasos' perimeter fence, is manifestly prejudicial to their interest. However, they possess no clear and unmistakable legal right that merits protection through the writ of preliminary injunction.[27] Their right to maintain the said fence had

been declared inferior to the Tanjangcos' right to the demolition of the fence, after the CA judgment had become final and executory as to the Cuasos. It bears stressing that the Cuasos failed to appeal the ruling of the CA. This failure to contest the CA decision before this Court was fatal to their cause. It had the effect of an admission that they indeed acted in bad faith, as they accepted the CA ruling. The decision of the CA, therefore, became binding and final as to them.[28] As a matter of fact, the CA already issued a partial entry of judgment against the Cuasos. An injunction to stay a final and executory decision is unavailing except only after a showing that facts and circumstances exist which would render execution unjust or inequitable, or that a change in the situation of the parties occurred. Here, no such exception exists as shown by the facts earlier narrated.[29] While it is true that this Court noted the Memorandum and Supplemental Memorandum filed by the Cuasos, such notation was made only insofar as Corinthian made them respondents in this petition. This Court cannot grant to the Cuasos any affirmative relief as they did not file a petition questioning the CA ruling. Consequently, the Decision of the CA holding that the Cuasos acted in bad faith and that the perimeter fence may now be demolished cannot be put in issue by the Cuasos. It is a fundamental principle that a party who does not appeal, or file a petition for certiorari, is not entitled to any affirmative relief.[30] An appellee who is not an appellant may assign errors in his brief where his purpose is to maintain the judgment, but he cannot seek modification or reversal of the judgment or claim affirmative relief unless he has also appealed.[31] This applies to C.B. Paraz and Engr. De Dios who likewise failed to assail the aforementioned CA Decision. With this matter put to rest, we now go to the main issues raised by Corinthian, the sole petitioner in this case, to wit: a) Whether or not there is legal basis for the Court of Appeals to hold petitioner Corinthian Gardens Association, Inc. liable to pay 5% of the judgment money to Sps. Tanjangco on account of the encroachment made by Sps. Cuaso[; and] b) Whether or not the Court of Appeals has legal basis to increase unilaterally and without proof the amount prayed for in the Complaint, i.e., P2,000.00, as reasonable compensation for the use and enjoyment of the portion of the lot encroached upon, to P10,000.00.[32] Corinthian claims that the approval of the building plan of the Cuasos was not tainted with negligence as it did not approve the survey relocation plan but merely the architectural, structural and sanitary plans for Cuasos' house; that the purpose of the said approval is not to ensure that the house to be erected on a particular lot is constructed within its boundaries but only to ensure compliance with the Manual of Rules and Regulations; that while Corinthian conducts actual site inspections, the inspection and approval of the building plans are limited to "table inspection" only; that the survey relocation plan was never submitted for Corinthian's approval; that the acceptance of the builder's bond did not make Corinthian automatically liable for the encroachment and for damages; and that Corinthian approved the building plan with the good faith and due diligence required under the circumstances. It, thus, concludes that it cannot be held liable to pay five percent (5%) of the money judgment to the Tanjangcos on account of the encroachment made by the Cuasos. Likewise, it finds no legal basis for the CA to unilaterally increase the amount of the adjudged rent from P2,000.00 to P10,000.00 which was not prayed for by the Tanjangcos in their complaint and in the absence of evidence adduced by the parties. [33] On the other hand, the Tanjangcos stand by the ruling of the CA and opine that Corinthian was negligent in approving the building plan of the Cuasos. They submit that Corinthian's claim that it merely conducts "table inspections" of buildings further bolsters their argument that Corinthian was negligent in conveniently and unilaterally restricting and limiting the coverage of its approval, contrary to its own Manual of Rules and Regulations; that the acceptance of a builder's bond does not automatically make Corinthian liable but the same affirms the fact that a homeowner can hold it liable for the consequences of the approval of a building plan; and that Corinthian, by regularly demanding and accepting membership dues, must be wary of its responsibility to protect the rights and interests of its members. Lastly, the Tanjangcos contend that a court can take judicial notice of the general increase in the rentals of real estate, as in this case, where the CA considered the value of their lot in the "posh-and-swank" Corinthian Gardens Subdivision and the fact that they were deprived of it for almost two decades. The Tanjangcos pray that this Court sustain the ruling of the CA.[34] The instant case is obviously one for tort, as governed by Article 2176 of the Civil Code, which provides:

ART. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter. In every tort case filed under this provision, plaintiff has to prove by a preponderance of evidence: (1) the damages suffered by the plaintiff; (2) the fault or negligence of the defendant or some other person for whose act he must respond; and (3) the connection of cause and effect between the fault or negligence and the damages incurred.[35] Undeniably, the perimeter fence of the Cuasos encroached on Lot 69 owned by the Tanjangcos by 87 square meters as duly found by both the RTC and the CA in accordance with the evidence on record. As a result, the Tanjangcos suffered damage in having been deprived of the use of that portion of their lot encroached upon. Thus, the primordial issue to be resolved in this case is whether Corinthian was negligent under the circumstances and, if so, whether such negligence contributed to the injury suffered by the Tanjangcos. A negligent act is an inadvertent act; it may be merely carelessly done from a lack of ordinary prudence and may be one which creates a situation involving an unreasonable risk to another because of the expectable action of the other, a third person, an animal, or a force of nature. A negligent act is one from which an ordinary prudent person in the actor's position, in the same or similar circumstances, would foresee such an appreciable risk of harm to others as to cause him not to do the act or to do it in a more careful manner.[36] The test to determine the existence of negligence in a particular case may be stated as follows: Did the defendant in committing the alleged negligent act use that reasonable care and caution which an ordinary person would have used in the same situation? If not, then he is guilty of negligence. The law, in effect, adopts the standard supplied by the imaginary conduct of the discreet paterfamilias in Roman law. The existence of negligence in a given case is not determined by reference to the personal judgment of the actor in the situation before him. The law considers what would be reckless, blameworthy, or negligent in a man of ordinary intelligence and prudence, and determines liability according to that standard.[37] By this test, we find Corinthian negligent.

While the issue of Corinthian's alleged negligence is factual in character,[38] a review by this Court is proper because the CA's factual findings differ from those of the RTC's.[39] Thus, after a meticulous review of the evidence on record, we hold that the CA committed no reversible error when it deviated from the findings of fact of the RTC. The CA's findings and conclusions are substantiated by the evidence on record and are more in accord with law and reason. Indeed, it is clear that Corinthian failed to exercise the requisite diligence in insuring that the Cuasos abide by its Manual of Rules and Regulations, thereby resulting in the encroachment on the Tanjangcos' property. We agree with the CA when it aptly held: Corinthian cannot and should not be allowed to justify or excuse its negligence by claiming that its approval of the Cuasos' building plans was only limited to a so-called "table inspection;" and not actual site measurement. To accept some such postulate is to put a premium on negligence. Corinthian was not organized solely for the defendants Cuasos. It is also the subdivision of the plaintiffs-spouses Tanjangcos - and of all others who have their dwelling units or abodes therein. Pertinently, its Manual of Rules and Regulations stipulates in Section 3 thereof (under the heading Construction), thus: A. Rules and Regulations

No new construction can be started unless the building plans are approved by the Association and the appropriate Builder's cash bond and pre-construction fees are paid. The Association will not allow the entry of construction materials and process identification cards for workers if the above conditions are not complied with. Likewise, all renovations, repairs, additions and improvements to a finished house except electrical wiring, will have to be approved by the Association. Water service connection of a homeowner who undertakes construction work without prior approval of the Association will be cut-off in addition to the sanctions previously mentioned.

It goes without saying that this Manual of Rules and Regulations applies to all - or it does not apply at all. To borrow a popular expression, what is sauce for the gander is sauce for the goose or ought to be. To put it matter-of-factly and bluntly, thus, its so-called "table inspection" approval of the Cuasos' building plans is no less of an approval, as approvals come and go. And since it is an approval tainted with negligence, the necessary and inevitable consequences which law and justice attach to such negligence must, as a matter of law and justice, also necessarily attach to Corinthian. And then again third party defendant-appellee Corinthian Garden required the posting of a builder's cash bond (Exh. 5-Corinthian) from the defendants-appellants Cuasos and the third-party defendant C.B. Paraz Construction to secure the performance of their undertaking. Surely, Corinthian does not imply that while it may take the benefits from the Builder's cash bond, it may, Pilate-like, wash its hands of any responsibility or liability that would or might arise from the construction or building of the structure for which the cash bond was in the first place posted. That is not only unjust and immoral, but downright unchristian and iniquitous. Under the same parity of reasoning, the payment by the appellants-Cuasos to the appellee Corinthian of pre-construction and membership fees in the Association must necessarily entail the creation of certain obligations on the part of Corinthian. For duties and responsibilities always go hand in hand with rights and privileges. That is the law of life - and that is the law of every civilized society. It is an axiom of equity that he who receives the benefits must share the burdens. [40] By its Manual of Rules and Regulations, it is reasonable to assume that Corinthian, through its representative, in the approval of building plans, and in the conduct of periodic inspections of on-going construction projects within the subdivision, is responsible in insuring compliance with the approved plans, inclusive of the construction of perimeter walls, which in this case is the subject of dispute between the Tanjangcos and the Cuasos.[41] It is not just or equitable to relieve Corinthian of any liability when, by its very own rules, it imposes its authority over all its members to the end that "no new construction can be started unless the plans are approved by the Association and the appropriate cash bond and pre-construction fees are paid." Moreover, Corinthian can impose sanctions for violating these rules. Thus, the proposition that the inspection is merely a "table inspection" and, therefore, should exempt Corinthian from liability, is unacceptable. After all, if the supposed inspection is merely a "table inspection" and the approval granted to every member is a mere formality, then the purpose of the rules would be defeated. Compliance therewith would not be mandatory, and sanctions imposed for violations could be disregarded. Corinthian's imprimatur on the construction of the Cuasos' perimeter wall over the property of the Tanjangcos assured the Cuasos that everything was in order. In sum, Corinthian's failure to prevent the encroachment of the Cuasos' perimeter wall into Tanjangcos' property - despite the inspection conducted - constitutes negligence and, at the very least, contributed to the injury suffered by the Tanjangcos. On the second issue, our ruling in Spouses Badillo v. Tayag[42] is instructive: Citing Sia v. Court of Appeals [272 SCRA 141, May 5, 1997], petitioners argue that the MTC may take judicial notice of the reasonable rental or the general price increase of land in order to determine the amount of rent that may be awarded to them. In that case, however, this Court relied on the CA's factual findings, which were based on the evidence presented before the trial court. In determining reasonable rent, the RTC therein took account of the following factors: 1) the realty assessment of the land, 2) the increase in realty taxes, and 3) the prevailing rate of rentals in the vicinity. Clearly, the trial court relied, not on mere judicial notice, but on the evidence presented before it. Indeed, courts may fix the reasonable amount of rent for the use and occupation of a disputed property. However, petitioners herein erred in assuming that courts, in determining the amount of rent, could simply rely on their own appreciation of land values without considering any evidence. As we have said earlier, a court may fix the reasonable amount of rent, but it must still base its action on the evidence adduced by the parties. In Herrera v. Bollos [G.R. No. 138258, January 18, 2002], the trial court awarded rent to the defendants in a forcible entry case. Reversing the RTC, this Court declared that the reasonable amount of rent could be determined not by mere judicial notice, but by supporting evidence:

x x x A court cannot take judicial notice of a factual matter in controversy. The court may take judicial notice of matters of public knowledge, or which are capable of unquestionable demonstration, or ought to be known to judges because of their judicial functions. Before taking such judicial notice, the court must "allow the parties to be heard thereon." Hence, there can be no judicial notice on the rental value of the premises in question without supporting evidence. Truly, mere judicial notice is inadequate, because evidence is required for a court to determine the proper rental value. But contrary to Corinthian's arguments, both the RTC and the CA found that indeed rent was due the Tanjangcos because they were deprived of possession and use of their property. This uniform factual finding of the RTC and the CA was based on the evidence presented below. Moreover, in Spouses Catungal v. Hao,[43] we considered the increase in the award of rentals as reasonable given the particular circumstances of each case. We noted therein that the respondent denied the petitioners the benefits, including rightful possession, of their property for almost a decade. Similarly, in the instant case, the Tanjangcos were deprived of possession and use of their property for more than two decades through no fault of their own. Thus, we find no cogent reason to disturb the monthly rental fixed by the CA. All told, the CA committed no reversible error.

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals is AFFIRMED. Costs against petitioner. SO Ynares-Santiago, (Chairperson), Austria-Martinez, Chico-Nazario, and Reyes, JJ., concur. SECOND DIVISION [G.R. No. 122039. May 31, 2000] VICENTE CALALAS, petitioner, vs. COURT OF APPEALS, ELIZA JUJEURCHE SUNGA and FRANCISCO SALVA, respondents. D E C I S I ON MENDOZA, J.: This is a petition for review on certiorari of the decision[1] of the Court of Appeals, dated March 31, 1991, reversing the contrary decision of the Regional Trial Court, Branch 36, Dumaguete City, and awarding damages instead to private respondent Eliza Jujeurche Sunga as plaintiff in an action for breach of contract of carriage. The facts, as found by the Court of Appeals, are as follows: At 10 oclock in the morning of August 23, 1989, private respondent Eliza Jujeurche G. Sunga, then a college freshman majoring in Physical Education at the Siliman University, took a passenger jeepney owned and operated by petitioner Vicente Calalas. As the jeepney was filled to capacity of about 24 passengers, Sunga was given by the conductor an "extension seat," a wooden stool at the back of the door at the rear end of the vehicle. Sclaw On the way to Poblacion Sibulan, Negros Occidental, the jeepney stopped to let a passenger off. As she was seated at the rear of the vehicle, Sunga gave way to the outgoing passenger. Just as she was doing so, an Isuzu truck driven by Iglecerio Verena and owned by Francisco Salva bumped the left rear portion of the jeepney. As a result, Sunga was injured. She sustained a fracture of the "distal third of the left tibia-fibula with severe necrosis of the underlying skin." Closed reduction of the fracture, long leg circular casting, and case wedging were done under sedation. Her confinement in the hospital lasted from August 23 to September 7, 1989. Her attending physician, Dr. Danilo V. Oligario, an orthopedic surgeon, certified she would remain on a cast for a period of three months and would have to ambulate in crutches during said period. On October 9, 1989, Sunga filed a complaint for damages against Calalas, alleging violation of the contract of carriage by the former in failing to exercise the diligence required of him as a common carrier. Calalas, on the other hand, filed a third-party complaint against Francisco Salva, the owner of the Isuzu truck. Korte The lower court rendered judgment against Salva as third-party defendant and absolved Calalas of liability, ORDERED.

holding that it was the driver of the Isuzu truck who was responsible for the accident. It took cognizance of another case (Civil Case No. 3490), filed by Calalas against Salva and Verena, for quasi-delict, in which Branch 37 of the same court held Salva and his driver Verena jointly liable to Calalas for the damage to his jeepney. Rtcspped On appeal to the Court of Appeals, the ruling of the lower court was reversed on the ground that Sungas cause of action was based on a contract of carriage, not quasi-delict, and that the common carrier failed to exercise the diligence required under the Civil Code. The appellate court dismissed the third-party complaint against Salva and adjudged Calalas liable for damages to Sunga. The dispositive portion of its decision reads: WHEREFORE, the decision appealed from is hereby REVERSED and SET ASIDE, and another one is entered ordering defendant-appellee Vicente Calalas to pay plaintiff-appellant: (1) P50,000.00 as actual and compensatory damages; (2) P50,000.00 as moral damages; (3) P10,000.00 as attorneys fees; and (4) P1,000.00 as expenses of litigation; and (5) to pay the costs. SO ORDERED. Hence, this petition. Petitioner contends that the ruling in Civil Case No. 3490 that the negligence of Verena was the proximate cause of the accident negates his liability and that to rule otherwise would be to make the common carrier an insurer of the safety of its passengers. He contends that the bumping of the jeepney by the truck owned by Salva was a caso fortuito. Petitioner further assails the award of moral damages to Sunga on the ground that it is not supported by evidence. Sdaadsc The petition has no merit. The argument that Sunga is bound by the ruling in Civil Case No. 3490 finding the driver and the owner of the truck liable for quasi-delict ignores the fact that she was never a party to that case and, therefore, the principle of res judicata does not apply. Missdaa Nor are the issues in Civil Case No. 3490 and in the present case the same. The issue in Civil Case No. 3490 was whether Salva and his driver Verena were liable for quasi-delict for the damage caused to petitioners jeepney. On the other hand, the issue in this case is whether petitioner is liable on his contract of carriage. The first, quasi-delict, also known as culpa aquiliana or culpa extra contractual, has as its source the negligence of the tortfeasor. The second, breach of contract or culpa contractual, is premised upon the negligence in the performance of a contractual obligation. Consequently, in quasi-delict, the negligence or fault should be clearly established because it is the basis of the action, whereas in breach of contract, the action can be prosecuted merely by proving the existence of the contract and the fact that the obligor, in this case the common carrier, failed to transport his passenger safely to his destination.[2] In case of death or injuries to passengers, Art. 1756 of the Civil Code provides that common carriers are presumed to have been at fault or to have acted negligently unless they prove that they observed extraordinary diligence as defined in Arts. 1733 and 1755 of the Code. This provision necessarily shifts to the common carrier the burden of proof. Slxmis There is, thus, no basis for the contention that the ruling in Civil Case No. 3490, finding Salva and his driver Verena liable for the damage to petitioners jeepney, should be binding on Sunga. It is immaterial that the proximate cause of the collision between the jeepney and the truck was the negligence of the truck driver. The doctrine of proximate cause is applicable only in actions for quasi-delict, not in actions involving breach of contract. The doctrine is a device for imputing liability to a person where there is no relation between him and another party. In such a case, the obligation is created by law itself. But, where there is a pre-existing contractual relation between the parties, it is the parties themselves who create the obligation, and the function of the law is merely to regulate the relation thus created. Insofar as contracts of carriage are concerned, some aspects regulated by the Civil Code are those respecting the diligence required of common carriers with regard to the safety of passengers as well as the presumption of negligence in cases of death or injury to passengers. It provides: Slxsc Art. 1733. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances of each case.

Such extraordinary diligence in the vigilance over the goods is further expressed in articles 1734, 1735, and 1746, Nos. 5,6, and 7, while the extraordinary diligence for the safety of the passengers is further set forth in articles 1755 and 1756. Art. 1755. A common carrier is bound to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with due regard for all the circumstances. Art. 1756. In case of death of or injuries to passengers, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as prescribed by articles 1733 and 1755. In the case at bar, upon the happening of the accident, the presumption of negligence at once arose, and it became the duty of petitioner to prove that he had to observe extraordinary diligence in the care of his passengers. Scslx Now, did the driver of jeepney carry Sunga "safely as far as human care and foresight could provide, using the utmost diligence of very cautious persons, with due regard for all the circumstances" as required by Art. 1755? We do not think so. Several factors militate against petitioners contention. Slx First, as found by the Court of Appeals, the jeepney was not properly parked, its rear portion being exposed about two meters from the broad shoulders of the highway, and facing the middle of the highway in a diagonal angle. This is a violation of the R.A. No. 4136, as amended, or the Land Transportation and Traffic Code, which provides: Sec. 54. Obstruction of Traffic. - No person shall drive his motor vehicle in such a manner as to obstruct or impede the passage of any vehicle, nor, while discharging or taking on passengers or loading or unloading freight, obstruct the free passage of other vehicles on the highway. Second, it is undisputed that petitioners driver took in more passengers than the allowed seating capacity of the jeepney, a violation of 32(a) of the same law. It provides: Mesm Exceeding registered capacity. - No person operating any motor vehicle shall allow more passengers or more freight or cargo in his vehicle than its registered capacity. The fact that Sunga was seated in an "extension seat" placed her in a peril greater than that to which the other passengers were exposed. Therefore, not only was petitioner unable to overcome the presumption of negligence imposed on him for the injury sustained by Sunga, but also, the evidence shows he was actually negligent in transporting passengers. Calrky We find it hard to give serious thought to petitioners contention that Sungas taking an "extension seat" amounted to an implied assumption of risk. It is akin to arguing that the injuries to the many victims of the tragedies in our seas should not be compensated merely because those passengers assumed a greater risk of drowning by boarding an overloaded ferry. This is also true of petitioners contention that the jeepney being bumped while it was improperly parked constitutes caso fortuito. A caso fortuito is an event which could not be foreseen, or which, though foreseen, was inevitable.[3] This requires that the following requirements be present: (a) the cause of the breach is independent of the debtors will; (b) the event is unforeseeable or unavoidable; (c) the event is such as to render it impossible for the debtor to fulfill his obligation in a normal manner, and (d) the debtor did not take part in causing the injury to the creditor.[4] Petitioner should have foreseen the danger of parking his jeepney with its body protruding two meters into the highway. Kycalr

Finally, petitioner challenges the award of moral damages alleging that it is excessive and without basis in law. We find this contention well taken. In awarding moral damages, the Court of Appeals stated: Kyle Plaintiff-appellant at the time of the accident was a first-year college student in that school year 1989-1990 at the Silliman University, majoring in Physical Education. Because of the injury, she was not able to enroll in the second semester of that school year. She testified that she had no more intention of continuing with her schooling, because she could not walk and decided not to pursue her degree, major in Physical Education "because of my leg which has a defect already." Plaintiff-appellant likewise testified that even while she was under confinement, she cried in pain because of her injured left foot. As a result of her injury, the Orthopedic Surgeon also certified that she has "residual bowing of the fracture side." She likewise decided not to further pursue Physical Education as her major subject, because "my left leg x x x has a defect

already." Those are her physical pains and moral sufferings, the inevitable bedfellows of the injuries that she suffered. Under Article 2219 of the Civil Code, she is entitled to recover moral damages in the sum of P50,000.00, which is fair, just and reasonable. As a general rule, moral damages are not recoverable in actions for damages predicated on a breach of contract for it is not one of the items enumerated under Art. 2219 of the Civil Code.[5] As an exception, such damages are recoverable: (1) in cases in which the mishap results in the death of a passenger, as provided in Art. 1764, in relation to Art. 2206(3) of the Civil Code; and (2) in the cases in which the carrier is guilty of fraud or bad faith, as provided in Art. 2220.[6] In this case, there is no legal basis for awarding moral damages since there was no factual finding by the appellate court that petitioner acted in bad faith in the performance of the contract of carriage. Sungas contention that petitioners admission in open court that the driver of the jeepney failed to assist her in going to a nearby hospital cannot be construed as an admission of bad faith. The fact that it was the driver of the Isuzu truck who took her to the hospital does not imply that petitioner was utterly indifferent to the plight of his injured passenger. If at all, it is merely implied recognition by Verena that he was the one at fault for the accident. Exsm WHEREFORE, the decision of the Court of Appeals, dated March 31, 1995, and its resolution, dated September 11, 1995, are AFFIRMED, with the MODIFICATION that the award of moral damages is DELETED. SO ORDERED. Bellosillo, (Chairman), and Buena, JJ., concur. Quisumbing, and De Leon, Jr., JJ., on leave. Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-4977 March 22, 1910

DAVID TAYLOR, plaintiff-appellee, vs. THE MANILA ELECTRIC RAILROAD AND LIGHT COMPANY, defendant-appellant. W. H. Lawrence, for appellant. W. L. Wright, for appellee. CARSON, J.: An action to recover damages for the loss of an eye and other injuries, instituted by David Taylor, a minor, by his father, his nearest relative. The defendant is a foreign corporation engaged in the operation of a street railway and an electric light system in the city of Manila. Its power plant is situated at the eastern end of a small island in the Pasig River within the city of Manila, known as the Isla del Provisor. The power plant may be reached by boat or by crossing a footbridge, impassable for vehicles, at the westerly end of the island. The plaintiff, David Taylor, was at the time when he received the injuries complained of, 15 years of age, the son of a mechanical engineer, more mature than the average boy of his age, and having considerable aptitude and training in mechanics. On the 30th of September, 1905, plaintiff, with a boy named Manuel Claparols, about 12 years of age, crossed the footbridge to the Isla del Provisor, for the purpose of visiting one Murphy, an employee of the defendant, who and promised to make them a cylinder for a miniature engine. Finding on inquiry that Mr. Murphy was not in his quarters, the boys, impelled apparently by youthful curiosity and perhaps by the unusual interest which both seem to have taken in machinery, spent some time in wandering about the company's premises. The visit was made on a Sunday afternoon, and it does not appear that they saw or spoke to anyone after leaving the power house where they had asked for Mr. Murphy. After watching the operation of the travelling crane used in handling the defendant's coal, they walked across the open space in the neighborhood of the place where the company dumped in the cinders and ashes from its furnaces. Here they found some twenty or thirty brass fulminating caps scattered on the ground. These caps

are approximately of the size and appearance of small pistol cartridges and each has attached to it two long thin wires by means of which it may be discharged by the use of electricity. They are intended for use in the explosion of blasting charges of dynamite, and have in themselves a considerable explosive power. After some discussion as to the ownership of the caps, and their right to take them, the boys picked up all they could find, hung them on stick, of which each took end, and carried them home. After crossing the footbridge, they met a little girl named Jessie Adrian, less than 9 years old, and all three went to the home of the boy Manuel. The boys then made a series of experiments with the caps. They trust the ends of the wires into an electric light socket and obtained no result. They next tried to break the cap with a stone and failed. Manuel looked for a hammer, but could not find one. Then they opened one of the caps with a knife, and finding that it was filled with a yellowish substance they got matches, and David held the cap while Manuel applied a lighted match to the contents. An explosion followed, causing more or less serious injuries to all three. Jessie, who when the boys proposed putting a match to the contents of the cap, became frightened and started to run away, received a slight cut in the neck. Manuel had his hand burned and wounded, and David was struck in the face by several particles of the metal capsule, one of which injured his right eye to such an extent as to the necessitate its removal by the surgeons who were called in to care for his wounds. The evidence does definitely and conclusively disclose how the caps came to be on the defendant's premises, nor how long they had been there when the boys found them. It appears, however, that some months before the accident, during the construction of the defendant's plant, detonating caps of the same size and kind as those found by the boys were used in sinking a well at the power plant near the place where the caps were found; and it also appears that at or about the time when these caps were found, similarly caps were in use in the construction of an extension of defendant's street car line to Fort William McKinley. The caps when found appeared to the boys who picked them up to have been lying for a considerable time, and from the place where they were found would seem to have been discarded as detective or worthless and fit only to be thrown upon the rubbish heap. No measures seems to have been adopted by the defendant company to prohibit or prevent visitors from entering and walking about its premises unattended, when they felt disposed so to do. As admitted in defendant counsel's brief, "it is undoubtedly true that children in their play sometimes crossed the foot bridge to the islands;" and, we may add, roamed about at will on the uninclosed premises of the defendant, in the neighborhood of the place where the caps were found. There is evidence that any effort ever was made to forbid these children from visiting the defendant company's premises, although it must be assumed that the company or its employees were aware of the fact that they not infrequently did so. Two years before the accident, plaintiff spent four months at sea, as a cabin boy on one of the interisland transports. Later he took up work in his father's office, learning mechanical drawing and mechanical engineering. About a month after his accident he obtained employment as a mechanical draftsman and continued in that employment for six months at a salary of P2.50 a day; and it appears that he was a boy of more than average intelligence, taller and more mature both mentally and physically than most boys of fifteen. The facts set out in the foregoing statement are to our mind fully and conclusively established by the evidence of record, and are substantially admitted by counsel. The only questions of fact which are seriously disputed are plaintiff's allegations that the caps which were found by plaintiff on defendant company's premises were the property of the defendant, or that they had come from its possession and control, and that the company or some of its employees left them exposed on its premises at the point where they were found. The evidence in support of these allegations is meager, and the defendant company, apparently relying on the rule of law which places the burden of proof of such allegations upon the plaintiff, offered no evidence in rebuttal, and insists that plaintiff failed in his proof. We think, however, that plaintiff's evidence is sufficient to sustain a finding in accord with his allegations in this regard. It was proven that caps, similar to those found by plaintiff, were used, more or less extensively, on the McKinley extension of the defendant company's track; that some of these caps were used in blasting a well on the company's premises a few months before the accident; that not far from the place where the caps were found the company has a storehouse for the materials, supplies and so forth, used by it in its operations as a street railway and a purveyor of electric light; and that the place, in the neighborhood of which the caps were found, was being used by the company as a sort of dumping ground for ashes and cinders. Fulminating caps or detonators for the discharge by electricity of blasting charges by dynamite are not articles in common use by the average citizen, and under all the circumstances, and in the absence of all evidence to the contrary, we think that the discovery of twenty or thirty of these caps at the place where they were found by the plaintiff on defendant's premises fairly justifies the inference that the defendant company was either the owner of the caps in question or had the caps under its possession and control. We think also that the evidence tends to disclose that these caps or detonators were willfully and knowingly thrown by the company or its employees at the spot where they were found, with the expectation that they would be buried out of the sight by the ashes which it

was engaged in dumping in that neighborhood, they being old and perhaps defective; and, however this may be, we are satisfied that the evidence is sufficient to sustain a finding that the company or some of its employees either willfully or through an oversight left them exposed at a point on its premises which the general public, including children at play, where not prohibited from visiting, and over which the company knew or ought to have known that young boys were likely to roam about in pastime or in play. Counsel for appellant endeavors to weaken or destroy the probative value of the facts on which these conclusions are based by intimidating or rather assuming that the blasting work on the company's well and on its McKinley extension was done by contractors. It was conclusively proven, however, that while the workman employed in blasting the well was regularly employed by J. G. White and Co., a firm of contractors, he did the work on the well directly and immediately under the supervision and control of one of defendant company's foremen, and there is no proof whatever in the record that the blasting on the McKinley extension was done by independent contractors. Only one witness testified upon this point, and while he stated that he understood that a part of this work was done by contract, he could not say so of his own knowledge, and knew nothing of the terms and conditions of the alleged contract, or of the relations of the alleged contractor to the defendant company. The fact having been proven that detonating caps were more or less extensively employed on work done by the defendant company's directions and on its behalf, we think that the company should have introduced the necessary evidence to support its contention if it wished to avoid the not unreasonable inference that it was the owner of the material used in these operations and that it was responsible for tortious or negligent acts of the agents employed therein, on the ground that this work had been intrusted to independent contractors as to whose acts the maxim respondent superior should not be applied. If the company did not in fact own or make use of caps such as those found on its premises, as intimated by counsel, it was a very simple matter for it to prove that fact, and in the absence of such proof we think that the other evidence in the record sufficiently establishes the contrary, and justifies the court in drawing the reasonable inference that the caps found on its premises were its property, and were left where they were found by the company or some of its employees. Plaintiff appears to have rested his case, as did the trial judge his decision in plaintiff's favor, upon the provisions of article 1089 of the Civil Code read together with articles 1902, 1903, and 1908 of that code. ART. 1089 Obligations are created by law, by contracts, by quasi-contracts, and illicit acts and omissions or by those in which any kind of fault or negligence occurs. ART. 1902 A person who by an act or omission causes damage to another when there is fault or negligence shall be obliged to repair the damage so done. ART. 1903 The obligation imposed by the preceding article is demandable, not only for personal acts and omissions, but also for those of the persons for whom they should be responsible. The father, and on his death or incapacity the mother, is liable for the damages caused by the minors who live with them. xxx xxx xxx

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

The liability referred to in this article shall cease when the persons mentioned therein prove that they employed all the diligence of a good father of a family to avoid the damage. ART. 1908 The owners shall also be liable for the damage caused 1 By the explosion of machines which may not have been cared for with due diligence, and for kindling of explosive substances which may not have been placed in a safe and proper place. Counsel for the defendant and appellant rests his appeal strictly upon his contention that the facts proven at the trial do not established the liability of the defendant company under the provisions of these articles, and since we agree with this view of the case, it is not necessary for us to consider the various questions as to form and the right of action (analogous to those raised in the case of Rakes vs. Atlantic, Gulf and Pacific Co., 7 Phil. Rep., 359), which would, perhaps, be involved in a decision affirming the judgment of the court below. We agree with counsel for appellant that under the Civil Code, as under the generally accepted doctrine in the United States, the plaintiff in an action such as that under consideration, in order to establish his right to a recovery, must establish by competent evidence:

(1) Damages to the plaintiff. (2) Negligence by act or omission of which defendant personally, or some person for whose acts it must respond, was guilty. (3) The connection of cause and effect between the negligence and the damage. These proposition are, of course, elementary, and do not admit of discussion, the real difficulty arising in the application of these principles to the particular facts developed in the case under consideration. It is clear that the accident could not have happened and not the fulminating caps been left exposed at the point where they were found, or if their owner had exercised due care in keeping them in an appropriate place; but it is equally clear that plaintiff would not have been injured had he not, for his own pleasure and convenience, entered upon the defendant's premises, and strolled around thereon without the express permission of the defendant, and had he not picked up and carried away the property of the defendant which he found on its premises, and had he not thereafter deliberately cut open one of the caps and applied a match to its contents. But counsel for plaintiff contends that because of plaintiff's youth and inexperience, his entry upon defendant company's premises, and the intervention of his action between the negligent act of defendant in leaving the caps exposed on its premises and the accident which resulted in his injury should not be held to have contributed in any wise to the accident, which should be deemed to be the direct result of defendant's negligence in leaving the caps exposed at the place where they were found by the plaintiff, and this latter the proximate cause of the accident which occasioned the injuries sustained by him. In support of his contention, counsel for plaintiff relies on the doctrine laid down in many of the courts of last resort in the United States in the cases known as the "Torpedo" and "Turntable" cases, and the cases based thereon. In a typical cases, the question involved has been whether a railroad company is liable for an injury received by an infant of tender years, who from mere idle curiosity, or for the purposes of amusement, enters upon the railroad company's premises, at a place where the railroad company knew, or had good reason to suppose, children would be likely to come, and there found explosive signal torpedoes left unexposed by the railroad company's employees, one of which when carried away by the visitor, exploded and injured him; or where such infant found upon the premises a dangerous machine, such as a turntable, left in such condition as to make it probable that children in playing with it would be exposed to accident or injury therefrom and where the infant did in fact suffer injury in playing with such machine. In these, and in great variety of similar cases, the great weight of authority holds the owner of the premises liable. As laid down in Railroad Co. vs. Stout (17 Wall. (84 U. S.), 657), wherein the principal question was whether a railroad company was liable for in injury received by an infant while upon its premises, from idle curiosity, or for purposes of amusement, if such injury was, under circumstances, attributable to the negligence of the company), the principles on which these cases turn are that "while a railroad company is not bound to the same degree of care in regard to mere strangers who are unlawfully upon its premises that it owes to passengers conveyed by it, it is not exempt from responsibility to such strangers for injuries arising from its negligence or from its tortious acts;" and that "the conduct of an infant of tender years is not to be judged by the same rule which governs that of adult. While it is the general rule in regard to an adult that to entitle him to recover damages for an injury resulting from the fault or negligence of another he must himself have been free from fault, such is not the rule in regard to an infant of tender years. The care and caution required of a child is according to his maturity and capacity only, and this is to be determined in each case by the circumstances of the case." The doctrine of the case of Railroad Company vs. Stout was vigorously controverted and sharply criticized in several state courts, and the supreme court of Michigan in the case of Ryan vs. Towar (128 Mich., 463) formally repudiated and disapproved the doctrine of the Turntable cases, especially that laid down in Railroad Company vs. Stout, in a very able decision wherein it held, in the language of the syllabus: (1) That the owner of the land is not liable to trespassers thereon for injuries sustained by them, not due to his wanton or willful acts; (2) that no exception to this rule exists in favor of children who are injured by dangerous machinery naturally calculated to attract them to the premises; (3) that an invitation or license to cross the premises of another can not be predicated on the mere fact that no steps have been taken to interfere with such practice; (4) that there is no difference between children and adults as to the circumstances that will warrant the inference of an invitation or a license to enter upon another's premises. Similar criticisms of the opinion in the case of Railroad Company vs. Stout were indulged in by the courts in

Connecticut and Massachusetts. (Nolan vs. Railroad Co., 53 Conn., 461; 154 Mass., 349). And the doctrine has been questioned in Wisconsin, Pennsylvania, New Hampshire, and perhaps in other States. On the other hand, many if not most of the courts of last resort in the United States, citing and approving the doctrine laid down in England in the leading case of Lynch vs. Nurding (1 Q. B., 29, 35, 36), lay down the rule in these cases in accord with that announced in the Railroad Company vs. Stout (supra), and the Supreme Court of the United States, in a unanimous opinion delivered by Justice Harlan in the case of Union Pacific Railway Co. vs. McDonal and reconsidered the doctrine laid down in Railroad Co. vs. Stout, and after an exhaustive and critical analysis and review of many of the adjudged cases, both English and American, formally declared that it adhered "to the principles announced in the case of Railroad Co. vs. Stout." In the case of Union Pacific Railway Co. vs. MacDonald (supra) the facts were as follows: The plaintiff, a boy 12 years of age, out of curiosity and for his own pleasure, entered upon and visited the defendant's premises, without defendant's express permission or invitation, and while there, was by accident injured by falling into a burning slack pile of whose existence he had no knowledge, but which had been left by defendant on its premises without any fence around it or anything to give warning of its dangerous condition, although defendant knew or had reason the interest or curiosity of passers-by. On these facts the court held that the plaintiff could not be regarded as a mere trespasser, for whose safety and protection while on the premises in question, against the unseen danger referred to, the defendant was under no obligation to make provision. We quote at length from the discussion by the court of the application of the principles involved to the facts in that case, because what is said there is strikingly applicable in the case at bar, and would seem to dispose of defendant's contention that, the plaintiff in this case being a trespasser, the defendant company owed him no duty, and in no case could be held liable for injuries which would not have resulted but for the entry of plaintiff on defendant's premises. We adhere to the principles announced in Railroad Co. vs. Stout (supra). Applied to the case now before us, they require us to hold that the defendant was guilty of negligence in leaving unguarded the slack pile, made by it in the vicinity of its depot building. It could have forbidden all persons from coming to its coal mine for purposes merely of curiosity and pleasure. But it did not do so. On the contrary, it permitted all, without regard to age, to visit its mine, and witness its operation. It knew that the usual approach to the mine was by a narrow path skirting its slack pit, close to its depot building, at which the people of the village, old and young, would often assemble. It knew that children were in the habit of frequenting that locality and playing around the shaft house in the immediate vicinity of the slack pit. The slightest regard for the safety of these children would have suggested that they were in danger from being so near a pit, beneath the surface of which was concealed (except when snow, wind, or rain prevailed) a mass of burning coals into which a child might accidentally fall and be burned to death. Under all the circumstances, the railroad company ought not to be heard to say that the plaintiff, a mere lad, moved by curiosity to see the mine, in the vicinity of the slack pit, was a trespasser, to whom it owed no duty, or for whose protection it was under no obligation to make provisions. In Townsend vs. Wathen (9 East, 277, 281) it was held that if a man dangerous traps, baited with flesh, in his own ground, so near to a highway, or to the premises of another, that dogs passing along the highway, or kept in his neighbors premises, would probably be attracted by their instinct into the traps, and in consequence of such act his neighbor's dogs be so attracted and thereby injured, an action on the case would lie. "What difference," said Lord Ellenborough, C.J., "is there in reason between drawing the animal into the trap by means of his instinct which he can not resist, and putting him there by manual force?" What difference, in reason we may observe in this case, is there between an express license to the children of this village to visit the defendant's coal mine, in the vicinity of its slack pile, and an implied license, resulting from the habit of the defendant to permit them, without objection or warning, to do so at will, for purposes of curiosity or pleasure? Referring it the case of Townsend vs. Wathen, Judge Thompson, in his work on the Law of Negligence, volume 1, page 305, note, well says: "It would be a barbarous rule of law that would make the owner of land liable for setting a trap thereon, baited with stinking meat, so that his neighbor's dog attracted by his natural instinct, might run into it and be killed, and which would exempt him from liability for the consequence of leaving exposed and unguarded on his land a dangerous machine, so that his neighbor's child attracted to it and tempted to intermeddle with it by instincts equally strong, might thereby be killed or maimed for life." Chief Justice Cooley, voicing the opinion of the supreme court of Michigan, in the case of Powers vs. Harlow (53 Mich., 507), said that (p. 515): Children, wherever they go, must be expected to act upon childlike instincts and impulses; and others who are chargeable with a duty of care and caution toward them must calculate upon this, and take

precautions accordingly. If they leave exposed to the observation of children anything which would be tempting to them, and which they in their immature judgment might naturally suppose they were at liberty to handle or play with, they should expect that liberty to be taken. And the same eminent jurist in his treatise or torts, alluding to the doctrine of implied invitation to visit the premises of another, says: In the case of young children, and other persons not fully sui juris, an implied license might sometimes arise when it would not on behalf of others. Thus leaving a tempting thing for children to play with exposed, where they would be likely to gather for that purpose, may be equivalent to an invitation to them to make use of it; and, perhaps, if one were to throw away upon his premises, near the common way, things tempting to children, the same implication should arise. (Chap. 10, p. 303.) The reasoning which led the Supreme Court of the United States to its conclusion in the cases of Railroad Co. vs. Stout (supra) and Union Pacific Railroad Co. vs. McDonald (supra) is not less cogent and convincing in this jurisdiction than in that wherein those cases originated. Children here are actuated by similar childish instincts and impulses. Drawn by curiosity and impelled by the restless spirit of youth, boys here as well as there will usually be found whenever the public is permitted to congregate. The movement of machinery, and indeed anything which arouses the attention of the young and inquiring mind, will draw them to the neighborhood as inevitably as does the magnet draw the iron which comes within the range of its magnetic influence. The owners of premises, therefore, whereon things attractive to children are exposed, or upon which the public are expressly or impliedly permitted to enter or upon which the owner knows or ought to know children are likely to roam about for pastime and in play, " must calculate upon this, and take precautions accordingly." In such cases the owner of the premises can not be heard to say that because the child has entered upon his premises without his express permission he is a trespasser to whom the owner owes no duty or obligation whatever. The owner's failure to take reasonable precautions to prevent the child from entering his premises at a place where he knows or ought to know that children are accustomed to roam about of to which their childish instincts and impulses are likely to attract them is at least equivalent to an implied license to enter, and where the child does enter under such conditions the owner's failure to take reasonable precautions to guard the child against injury from unknown or unseen dangers, placed upon such premises by the owner, is clearly a breach of duty, responsible, if the child is actually injured, without other fault on its part than that it had entered on the premises of a stranger without his express invitation or permission. To hold otherwise would be expose all the children in the community to unknown perils and unnecessary danger at the whim of the owners or occupants of land upon which they might naturally and reasonably be expected to enter. This conclusion is founded on reason, justice, and necessity, and neither is contention that a man has a right to do what will with his own property or that children should be kept under the care of their parents or guardians, so as to prevent their entering on the premises of others is of sufficient weight to put in doubt. In this jurisdiction as well as in the United States all private property is acquired and held under the tacit condition that it shall not be so used as to injure the equal rights and interests of the community (see U. S. vs. Toribio,1 No. 5060, decided January 26, 1910), and except as to infants of very tender years it would be absurd and unreasonable in a community organized as is that in which we lived to hold that parents or guardian are guilty of negligence or imprudence in every case wherein they permit growing boys and girls to leave the parental roof unattended, even if in the event of accident to the child the negligence of the parent could in any event be imputed to the child so as to deprive it a right to recover in such cases a point which we neither discuss nor decide. But while we hold that the entry of the plaintiff upon defendant's property without defendant's express invitation or permission would not have relieved defendant from responsibility for injuries incurred there by plaintiff, without other fault on his part, if such injury were attributable to the negligence of the defendant, we are of opinion that under all the circumstances of this case the negligence of the defendant in leaving the caps exposed on its premises was not the proximate cause of the injury received by the plaintiff, which therefore was not, properly speaking, "attributable to the negligence of the defendant," and, on the other hand, we are satisfied that plaintiffs action in cutting open the detonating cap and putting match to its contents was the proximate cause of the explosion and of the resultant injuries inflicted upon the plaintiff, and that the defendant, therefore is not civilly responsible for the injuries thus incurred. Plaintiff contends, upon the authority of the Turntable and Torpedo cases, that because of plaintiff's youth the intervention of his action between the negligent act of the defendant in leaving the caps exposed on its premises and the explosion which resulted in his injury should not be held to have contributed in any wise to the accident; and it is because we can not agree with this proposition, although we accept the doctrine of the Turntable and Torpedo cases, that we have thought proper to discuss and to consider that doctrine at length in this decision. As was said in case of Railroad Co. vs. Stout (supra), "While it is the general rule in regard to an adult that to entitle him to recover damages for an injury resulting from the fault or negligence of another he

must himself have been free from fault, such is not the rule in regard to an infant of tender years. The care and caution required of a child is according to his maturity and capacity only, and this is to be determined in each case by the circumstances of the case." As we think we have shown, under the reasoning on which rests the doctrine of the Turntable and Torpedo cases, no fault which would relieve defendant of responsibility for injuries resulting from its negligence can be attributed to the plaintiff, a well-grown boy of 15 years of age, because of his entry upon defendant's uninclosed premises without express permission or invitation' but it is wholly different question whether such youth can be said to have been free from fault when he willfully and deliberately cut open the detonating cap, and placed a match to the contents, knowing, as he undoubtedly did, that his action would result in an explosion. On this point, which must be determined by "the particular circumstances of this case," the doctrine laid down in the Turntable and Torpedo cases lends us no direct aid, although it is worthy of observation that in all of the "Torpedo" and analogous cases which our attention has been directed, the record discloses that the plaintiffs, in whose favor judgments have been affirmed, were of such tender years that they were held not to have the capacity to understand the nature or character of the explosive instruments which fell into their hands. In the case at bar, plaintiff at the time of the accident was a well-grown youth of 15, more mature both mentally and physically than the average boy of his age; he had been to sea as a cabin boy; was able to earn P2.50 a day as a mechanical draftsman thirty days after the injury was incurred; and the record discloses throughout that he was exceptionally well qualified to take care of himself. The evidence of record leaves no room for doubt that, despite his denials on the witness stand, he well knew the explosive character of the cap with which he was amusing himself. The series of experiments made by him in his attempt to produce an explosion, as described by the little girl who was present, admit of no other explanation. His attempt to discharge the cap by the use of electricity, followed by his efforts to explode it with a stone or a hammer, and the final success of his endeavors brought about by the application of a match to the contents of the caps, show clearly that he knew what he was about. Nor can there be any reasonable doubt that he had reason to anticipate that the explosion might be dangerous, in view of the fact that the little girl, 9 years of age, who was within him at the time when he put the match to the contents of the cap, became frightened and ran away. True, he may not have known and probably did not know the precise nature of the explosion which might be expected from the ignition of the contents of the cap, and of course he did not anticipate the resultant injuries which he incurred; but he well knew that a more or less dangerous explosion might be expected from his act, and yet he willfully, recklessly, and knowingly produced the explosion. It would be going far to say that "according to his maturity and capacity" he exercised such and "care and caution" as might reasonably be required of him, or that defendant or anyone else should be held civilly responsible for injuries incurred by him under such circumstances. The law fixes no arbitrary age at which a minor can be said to have the necessary capacity to understand and appreciate the nature and consequences of his own acts, so as to make it negligence on his part to fail to exercise due care and precaution in the commission of such acts; and indeed it would be impracticable and perhaps impossible so to do, for in the very nature of things the question of negligence necessarily depends on the ability of the minor to understand the character of his own acts and their consequences; and the age at which a minor can be said to have such ability will necessarily depends of his own acts and their consequences; and at the age at which a minor can be said to have such ability will necessarily vary in accordance with the varying nature of the infinite variety of acts which may be done by him. But some idea of the presumed capacity of infants under the laws in force in these Islands may be gathered from an examination of the varying ages fixed by our laws at which minors are conclusively presumed to be capable of exercising certain rights and incurring certain responsibilities, though it can not be said that these provisions of law are of much practical assistance in cases such as that at bar, except so far as they illustrate the rule that the capacity of a minor to become responsible for his own acts varies with the varying circumstances of each case. Under the provisions of the Penal Code a minor over fifteen years of age is presumed to be capable of committing a crime and is to held criminally responsible therefore, although the fact that he is less than eighteen years of age will be taken into consideration as an extenuating circumstance (Penal Code, arts. 8 and 9). At 10 years of age a child may, under certain circumstances, choose which parent it prefers to live with (Code of Civil Procedure, sec. 771). At 14 may petition for the appointment of a guardian (Id., sec. 551), and may consent or refuse to be adopted (Id., sec. 765). And males of 14 and females of 12 are capable of contracting a legal marriage (Civil Code, art. 83; G. O., No. 68, sec. 1). We are satisfied that the plaintiff in this case had sufficient capacity and understanding to be sensible of the danger to which he exposed himself when he put the match to the contents of the cap; that he was sui juris in the sense that his age and his experience qualified him to understand and appreciate the necessity for the exercise of that degree of caution which would have avoided the injury which resulted from his own deliberate act; and that the injury incurred by him must be held to have been the direct and immediate result of his own willful and reckless act, so that while it may be true that these injuries would not have been incurred but for

the negligence act of the defendant in leaving the caps exposed on its premises, nevertheless plaintiff's own act was the proximate and principal cause of the accident which inflicted the injury. The rule of the Roman law was: Quod quis ex culpa sua damnum sentit, non intelligitur sentire. (Digest, book 50, tit. 17 rule 203.) The Patidas contain the following provisions: The just thing is that a man should suffer the damage which comes to him through his own fault, and that he can not demand reparation therefor from another. (Law 25, tit. 5, Partida 3.) And they even said that when a man received an injury through his own acts the grievance should be against himself and not against another. (Law 2, tit. 7, Partida 2.) According to ancient sages, when a man received an injury through his own acts the grievance should be against himself and not against another. (Law 2, tit. 7 Partida 2.) And while there does not appear to be anything in the Civil Code which expressly lays down the law touching contributory negligence in this jurisdiction, nevertheless, the interpretation placed upon its provisions by the supreme court of Spain, and by this court in the case of Rakes vs. Atlantic, Gulf and Pacific Co. (7 Phil. Rep., 359), clearly deny to the plaintiff in the case at bar the right to recover damages from the defendant, in whole or in part, for the injuries sustained by him. The judgment of the supreme court of Spain of the 7th of March, 1902 (93 Jurisprudencia Civil, 391), is directly in point. In that case the court said: According to the doctrine expressed in article 1902 of the Civil Code, fault or negligence is a source of obligation when between such negligence and the injury there exists the relation of cause and effect; but if the injury produced should not be the result of acts or omissions of a third party, the latter has no obligation to repair the same, although such acts or omission were imprudent or unlawful, and much less when it is shown that the immediate cause of the injury was the negligence of the injured party himself. The same court, in its decision of June 12, 1900, said that "the existence of the alleged fault or negligence is not sufficient without proof that it, and no other cause, gave rise to the damage." See also judgment of October 21, 1903. To similar effect Scaevola, the learned Spanish writer, writing under that title in his Jurisprudencia del Codigo Civil (1902 Anuario, p. 455), commenting on the decision of March 7, 1902 of the Civil Code, fault or negligence gives rise to an obligation when between it and the damage there exists the relation of cause and effect; but if the damage caused does not arise from the acts or omissions of a third person, there is no obligation to make good upon the latter, even though such acts or omissions be imprudent or illegal, and much less so when it is shown that the immediate cause of the damage has been the recklessness of the injured party himself. And again In accordance with the fundamental principle of proof, that the burden thereof is upon the plaintiff, it is apparent that it is duty of him who shall claim damages to establish their existence. The decisions of April 9, 1896, and March 18, July, and September 27, 1898, have especially supported the principle, the first setting forth in detail the necessary points of the proof, which are two: An act or omission on the part of the person who is to be charged with the liability, and the production of the damage by said act or omission. This includes, by inference, the establishment of a relation of cause or effect between the act or omission and the damage; the latter must be the direct result of one of the first two. As the decision of March 22, 1881, said, it is necessary that the damages result immediately and directly from an act performed culpably and wrongfully; "necessarily presupposing a legal ground for imputability." (Decision of October 29, 1887.) Negligence is not presumed, but must be proven by him who alleges it. (Scavoela, Jurisprudencia del Codigo Civil, vol. 6, pp. 551-552.) (Cf. decisions of supreme court of Spain of June 12, 1900, and June 23, 1900.) Finally we think the doctrine in this jurisdiction applicable to the case at bar was definitely settled in this court in the maturely considered case of Rakes vs. Atlantic, Gulf and Pacific Co. (supra), wherein we held that while "There are many cases (personal injury cases) was exonerated," on the ground that "the negligence of the

plaintiff was the immediate cause of the casualty" (decisions of the 15th of January, the 19th of February, and the 7th of March, 1902, stated in Alcubilla's Index of that year); none of the cases decided by the supreme court of Spain "define the effect to be given the negligence of its causes, though not the principal one, and we are left to seek the theory of the civil law in the practice of other countries;" and in such cases we declared that law in this jurisdiction to require the application of "the principle of proportional damages," but expressly and definitely denied the right of recovery when the acts of the injured party were the immediate causes of the accident. The doctrine as laid down in that case is as follows: Difficulty seems to be apprehended in deciding which acts of the injured party shall be considered immediate causes of the accident. The test is simple. Distinction must be made between the accident and the injury, between the event itself, without which there could have been no accident, and those acts of the victim not entering into it, independent of it, but contributing to his own proper hurt. For instance, the cause of the accident under review was the displacement of the crosspiece or the failure to replace it. This produces the event giving occasion for damagesthat is, the sinking of the track and the sliding of the iron rails. To this event, the act of the plaintiff in walking by the side of the car did not contribute, although it was an element of the damage which came to himself. Had the crosspiece been out of place wholly or partly through his act or omission of duty, that would have been one of the determining causes of the event or accident, for which he would have been responsible. Where he contributes to the principal occurrence, as one of its determining factors, he can not recover. Where, in conjunction with the occurrence, he contributes only to his own injury, he may recover the amount that the defendant responsible for the event should pay for such injury, less a sum deemed a suitable equivalent for his own imprudence. We think it is quite clear that under the doctrine thus stated, the immediate cause of the explosion, the accident which resulted in plaintiff's injury, was in his own act in putting a match to the contents of the cap, and that having "contributed to the principal occurrence, as one of its determining factors, he can not recover." We have not deemed it necessary to examine the effect of plaintiff's action in picking up upon defendant's premises the detonating caps, the property of defendant, and carrying the relation of cause and effect between the negligent act or omission of the defendant in leaving the caps exposed on its premises and the injuries inflicted upon the plaintiff by the explosion of one of these caps. Under the doctrine of the Torpedo cases, such action on the part of an infant of very tender years would have no effect in relieving defendant of responsibility, but whether in view of the well-known fact admitted in defendant's brief that "boys are snappers-up of unconsidered trifles," a youth of the age and maturity of plaintiff should be deemed without fault in picking up the caps in question under all the circumstances of this case, we neither discuss nor decide. Twenty days after the date of this decision let judgment be entered reversing the judgment of the court below, without costs to either party in this instance, and ten days thereafter let the record be returned to the court wherein it originated, where the judgment will be entered in favor of the defendant for the costs in first instance and the complaint dismissed without day. So ordered. Arellano, C.J., Torres and Moreland, JJ., concur. Johnson, J., concurs in the result. Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-10126 October 22, 1957

SALUD VILLANUEVA VDA. DE BATACLAN and the minors NORMA, LUZVIMINDA, ELENITA, OSCAR and ALFREDO BATACLAN, represented by their Natural guardian, SALUD VILLANUEVA VDA. DE BATACLAN, plaintiffsappellants, vs. MARIANO MEDINA, defendant-appellant. Lope E. Adriano, Emmanuel Andamo and Jose R. Francisco for plaintiffs-appellants. Fortunato Jose for defendant and appellant. MONTEMAYOR, J.: Shortly after midnight, on September 13, 1952 bus no. 30 of the Medina Transportation, operated by its owner defendant Mariano Medina under a certificate of public convenience, left the town of Amadeo, Cavite, on its way

to Pasay City, driven by its regular chauffeur, Conrado Saylon. There were about eighteen passengers, including the driver and conductor. Among the passengers were Juan Bataclan, seated beside and to the right of the driver, Felipe Lara, sated to the right of Bataclan, another passenger apparently from the Visayan Islands whom the witnesses just called Visaya, apparently not knowing his name, seated in the left side of the driver, and a woman named Natalia Villanueva, seated just behind the four last mentioned. At about 2:00 o'clock that same morning, while the bus was running within the jurisdiction of Imus, Cavite, one of the front tires burst and the vehicle began to zig-zag until it fell into a canal or ditch on the right side of the road and turned turtle. Some of the passengers managed to leave the bus the best way they could, others had to be helped or pulled out, while the three passengers seated beside the driver, named Bataclan, Lara and the Visayan and the woman behind them named Natalia Villanueva, could not get out of the overturned bus. Some of the passengers, after they had clambered up to the road, heard groans and moans from inside the bus, particularly, shouts for help from Bataclan and Lara, who said they could not get out of the bus. There is nothing in the evidence to show whether or not the passengers already free from the wreck, including the driver and the conductor, made any attempt to pull out or extricate and rescue the four passengers trapped inside the vehicle, but calls or shouts for help were made to the houses in the neighborhood. After half an hour, came about ten men, one of them carrying a lighted torch made of bamboo with a wick on one end, evidently fueled with petroleum. These men presumably approach the overturned bus, and almost immediately, a fierce fire started, burning and all but consuming the bus, including the four passengers trapped inside it. It would appear that as the bus overturned, gasoline began to leak and escape from the gasoline tank on the side of the chassis, spreading over and permeating the body of the bus and the ground under and around it, and that the lighted torch brought by one of the men who answered the call for help set it on fire. That same day, the charred bodies of the four deemed passengers inside the bus were removed and duly identified that of Juan Bataclan. By reason of his death, his widow, Salud Villanueva, in her name and in behalf of her five minor children, brought the present suit to recover from Mariano Medina compensatory, moral, and exemplary damages and attorney's fees in the total amount of P87,150. After trial, the Court of First Instance of Cavite awarded P1,000 to the plaintiffs plus P600 as attorney's fee, plus P100, the value of the merchandise being carried by Bataclan to Pasay City for sale and which was lost in the fire. The plaintiffs and the defendants appealed the decision to the Court of Appeals, but the latter endorsed the appeal to us because of the value involved in the claim in the complaint. Our new Civil Code amply provides for the responsibility of common carrier to its passengers and their goods. For purposes of reference, we are reproducing the pertinent codal provisions: ART. 1733. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances of each case. Such extraordinary diligence in the vigilance over the goods is further expressed in articles 1734, 1735, and 1745, Nos. 5, 6, and 7, while the extra ordinary diligence for the safety of the passengers is further set forth in articles 1755 and 1756. ART. 1755. A common carrier is bound to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all the circumstances. ART. 1756. In case of death of or injuries to passengers, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as prescribed in articles 1733 and 1755 ART. 1759. Common carriers are liable for the death of or injuries to passengers through the negligence or willful acts of the former's employees, although such employees may have acted beyond the scope of their authority or in violation of the order of the common carriers. This liability of the common carriers does not cease upon proof that they exercised all the diligence of a good father of a family in the selection and supervision of their employees. ART. 1763. A common carrier responsible for injuries suffered by a passenger on account of the willful acts or negligence of other passengers or of strangers, if the common carrier's employees through the exercise of the diligence of a good father of a family could have prevented or stopped the act or omission. We agree with the trial court that the case involves a breach of contract of transportation for hire, the Medina Transportation having undertaken to carry Bataclan safely to his destination, Pasay City. We also agree with the trial court that there was negligence on the part of the defendant, through his agent, the driver Saylon. There is evidence to show that at the time of the blow out, the bus was speeding, as testified to by one of the

passengers, and as shown by the fact that according to the testimony of the witnesses, including that of the defense, from the point where one of the front tires burst up to the canal where the bus overturned after zigzaging, there was a distance of about 150 meters. The chauffeur, after the blow-out, must have applied the brakes in order to stop the bus, but because of the velocity at which the bus must have been running, its momentum carried it over a distance of 150 meters before it fell into the canal and turned turtle. There is no question that under the circumstances, the defendant carrier is liable. The only question is to what degree. The trial court was of the opinion that the proximate cause of the death of Bataclan was not the overturning of the bus, but rather, the fire that burned the bus, including himself and his co-passengers who were unable to leave it; that at the time the fire started, Bataclan, though he must have suffered physical injuries, perhaps serious, was still alive, and so damages were awarded, not for his death, but for the physical injuries suffered by him. We disagree. A satisfactory definition of proximate cause is found in Volume 38, pages 695-696 of American jurisprudence, cited by plaintiffs-appellants in their brief. It is as follows: . . . 'that cause, which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces the injury, and without which the result would not have occurred.' And more comprehensively, 'the proximate legal cause is that acting first and producing the injury, either immediately or by setting other events in motion, all constituting a natural and continuous chain of events, each having a close causal connection with its immediate predecessor, the final event in the chain immediately effecting the injury as a natural and probable result of the cause which first acted, under such circumstances that the person responsible for the first event should, as an ordinary prudent and intelligent person, have reasonable ground to expect at the moment of his act or default that an injury to some person might probably result therefrom. It may be that ordinarily, when a passenger bus overturns, and pins down a passenger, merely causing him physical injuries, if through some event, unexpected and extraordinary, the overturned bus is set on fire, say, by lightning, or if some highwaymen after looting the vehicle sets it on fire, and the passenger is burned to death, one might still contend that the proximate cause of his death was the fire and not the overturning of the vehicle. But in the present case under the circumstances obtaining in the same, we do not hesitate to hold that the proximate cause was the overturning of the bus, this for the reason that when the vehicle turned not only on its side but completely on its back, the leaking of the gasoline from the tank was not unnatural or unexpected; that the coming of the men with a lighted torch was in response to the call for help, made not only by the passengers, but most probably, by the driver and the conductor themselves, and that because it was dark (about 2:30 in the morning), the rescuers had to carry a light with them, and coming as they did from a rural area where lanterns and flashlights were not available; and what was more natural than that said rescuers should innocently approach the vehicle to extend the aid and effect the rescue requested from them. In other words, the coming of the men with a torch was to be expected and was a natural sequence of the overturning of the bus, the trapping of some of its passengers and the call for outside help. What is more, the burning of the bus can also in part be attributed to the negligence of the carrier, through is driver and its conductor. According to the witness, the driver and the conductor were on the road walking back and forth. They, or at least, the driver should and must have known that in the position in which the overturned bus was, gasoline could and must have leaked from the gasoline tank and soaked the area in and around the bus, this aside from the fact that gasoline when spilled, specially over a large area, can be smelt and directed even from a distance, and yet neither the driver nor the conductor would appear to have cautioned or taken steps to warn the rescuers not to bring the lighted torch too near the bus. Said negligence on the part of the agents of the carrier come under the codal provisions above-reproduced, particularly, Articles 1733, 1759 and 1763. As regard the damages to which plaintiffs are entitled, considering the earning capacity of the deceased, as well as the other elements entering into a damage award, we are satisfied that the amount of SIX THOUSAND (P6,000) PESOS would constitute satisfactory compensation, this to include compensatory, moral, and other damages. We also believe that plaintiffs are entitled to attorney's fees, and assessing the legal services rendered by plaintiffs' attorneys not only in the trial court, but also in the course of the appeal, and not losing sight of the able briefs prepared by them, the attorney's fees may well be fixed at EIGHT HUNDRED (P800) PESOS for the loss of merchandise carried by the deceased in the bus, is adequate and will not be disturbed. There is one phase of this case which disturbs if it does not shock us. According to the evidence, one of the passengers who, because of the injuries suffered by her, was hospitalized, and while in the hospital, she was visited by the defendant Mariano Medina, and in the course of his visit, she overheard him speaking to one of his bus inspectors, telling said inspector to have the tires of the bus changed immediately because they were already old, and that as a matter of fact, he had been telling the driver to change the said tires, but that the driver did not follow his instructions. If this be true, it goes to prove that the driver had not been diligent and had not taken the necessary precautions to insure the safety of his passengers. Had he changed the tires, specially those in front, with new ones, as he had been instructed to do, probably, despite his speeding, as we have already stated, the blow out would not have occurred. All in all, there is reason to believe that the driver

operated and drove his vehicle negligently, resulting in the death of four of his passengers, physical injuries to others, and the complete loss and destruction of their goods, and yet the criminal case against him, on motion of the fiscal and with his consent, was provisionally dismissed, because according to the fiscal, the witnesses on whose testimony he was banking to support the complaint, either failed or appear or were reluctant to testify. But the record of the case before us shows the several witnesses, passengers, in that bus, willingly and unhesitatingly testified in court to the effect of the said driver was negligent. In the public interest the prosecution of said erring driver should be pursued, this, not only as a matter of justice, but for the promotion of the safety of passengers on public utility buses. Let a copy of this decision be furnished the Department of Justice and the Provincial Fiscal of Cavite. In view of the foregoing, with the modification that the damages awarded by the trial court are increased from ONE THOUSAND (P1,000) PESOS TO SIX THOUSAND (P6,000) PESOS, and from SIX HUNDRED PESOS TO EIGHT HUNDRED (P800) PESOS, for the death of Bataclan and for the attorney's fees, respectively, the decision appealed is from hereby affirmed, with costs. Paras, C. J., Bengzon, Padilla, Reyes, A., Bautista Angelo, Labrador, Concepcion, Reyes, J. B. L., Endencia, and Felix, JJ., concur. Republic of the Philippines SUPREME COURT Manila

EN BANC

DECISION January 28, 1961 G.R. No. L-13541 EDUARDO TUASON, plaintiff-appellant, vs. LUZON STEVEDORING CO., INC. and JULIAN RAMOS, defendants-appellees. M. H. de Joya for plaintiff-appellant. E. R. Tiongson and H. San Luis for defendant-appellee. GUTIERREZ DAVID, J.: Early in the morning of April 13, 1953, Eduardo Tuason left Baguio City in a 1952 model Packard car, with three passengers, namely, Olivia de Leon, Francisco de Leon and Manuel de Leon. He passed the Kennon Road Checkpoint at 3:00 o'clock and winged on his way passing the National Toll Road, Camp 6 Toll Gate, 24 minutes later. After paying the toll, he continued slashing through the early morning air so that by 5: 00 o'clock of that same morning he arrived at a town in Tarlac. There he stopped at a gasoline station to fill up his car's gasoline tank. This took about 15 to 20 minutes. Thereafter, he continued his drive for Manila. At about the same time Eduardo Tuason left Baguio City, Julian Ramos, an employee of the Luzon Stevedoring Co., Inc., together with a mechanic, Graciano Bautista, and a laborer, Zoilo Tolentino, left the company's compound at Guagua, Pampanga, driving one of its truck-trailers for Manaoag, Pangasinan. They passed through the towns of Bacolor, San Fernando, Angeles, Mabalacat, of the province of Pampanga. When they reached the municipality of Bamban, Tarlac, the truck developed some engine trouble. The mechanic, Graciano Bautista, had to clean the carburetor and the gasoline line, which took him about 25 to 30 minutes to finish. Afterwards, they proceeded on their way. At around 5:10 o'clock that same morning at about 75 meters south of the bridge at barrio Cut-Cut of the municipality of Capas, Tarlac, the Packard car driven by Eduardo Tuason and the truck-trailer driven by Julian Ramos collided. As a result of the collision, Eduardo Tuason's left leg was pinned down by the door of his car. After he was extricated from his seat, he was taken to the clinic of Dr. Pineda at Capas, and later, on that same day, brought to the National Orthopedic Hospital in Manila. His companions in the car, who were also injured

were, likewise, taken to the clinic at Capas. On February 22, 1956, or after almost three years from the date of the collision, Eduardo Tuason filed with the Court of First Instance of Manila a complaint against the Luzon Stevedoring Co., Inc., and Julian Ramos for the recovery of damages suffered by him as a result of the collision above referred to. The complaint alleges, among other things, that plaintiff was driving at a moderate speed 35 to 40 kilometers per hour with headlights on, when the truck-trailer driven by the defendant Julian Ramos struck his car; that the collision completely wrecked plaintiff's car and caused serious physical injuries to him and his companions; and that defendant Julian Ramos was then driving recklessly and negligently at a high rate of speed. Plaintiff, therefore, claims and prays for actual and compensatory damages in the sum of P200,000, moral damages in the amount of P25,000, and exemplary or corrective damages in the sum of P25,000, plus attorney's fees. The defendants, in their separate answers, denied any liability for damages, alleging by way of special defenses that the truck trailer driven by the defendant Julian Ramos was traveling at low-speed, with lights on, along the right side of the road when it was hit by the Packard car driven by plaintiff recklessly and negligently at a high speed; that after the accident, both plaintiff and defendant Julian Ramos were charged criminally before the Justice of the Peace Court of Capas, Tarlac, and upon the case being forwarded to the Court of First Instance of the same province, the information as against the defendant Julian Ramos was dismissed; and that the collision was due to the fault and negligence of plaintiff as defendant Julian Ramos exercised due care and diligence in the performance of his duties as driver of the truck-trailer. The defendant company, in addition, alleged that it exercised the care and diligence of a good father of a family in the selection and supervision of Julian Ramos as its driver fyT8Hf. At the trial, both parties presented testimonial and documentary evidence. Finding the evidence adduced by plaintiff and his witnesses to he contradictory and unworthy of belief, and holding that plaintiff was traveling at a very high speed and on the wrong side of the road, that it to say, on the left lane facing south, while the truck-trailer driven by the defendant Julian Ramos was traveling at a moderate speed and was almost at a stop before the collision, the trial court, on January 9, 1958, rendered decision, the dispositive part of which reads: "WHEREFORE, the court finds the plaintiff Eduardo Tuason, solely and wholly responsible for the collision which occurred on April 13, 1953, subject matter of the present case, and absolves the defendants Julian Ramos and Luzon Stevedoring Co., Inc., from any liability or responsibility in connection therewith. The court hereby orders plaintiffs claims against the defendants dismissed with costs against the plaintiff." From this decision, the plaintiff appealed directly to this Court AEEH. After going over the record, we find no reason for rejecting the findings of fact below, justifying the dismissal of plaintiff's claim for damages. The issue being one of credibility, the question of which testimony should be given more credence is best left to the trial judge, who had the advantage of hearing the parties testify and of observing their demeanor on the witness stand. Briefly stated, plaintiff's version is that while he was driving his new Packard car along the right lane of the road, with lights on and blowing his horn, at a curve, about 75 meters south of the bridge in Barrio Cut-Cut, of the municipality of Capas, Tarlac, his car collided with the truck-trailer of the Luzon Stevedoring Company driven without any lights by defendant Julian Ramos; that the collision took place at the middle of the road; that as a result thereof, the two vehicles became attached to and entangled with one another; that the people who were attracted to the scene of the collision had to separate the automobile from the truck-trailer before they could extricate plaintiff from the driver's seat of his car; and that to separate the two vehicles the trucktrailer had to move backwards, with the use of its own power, dragging the automobile, which after being separated from the truck-trailer, was also moved backwards. In support of his complaint, plaintiff himself testified. He contradicted himself, however, in some particulars, admitted that he was in extreme pain after the collision and, indeed, must have been unconscious so that he could not have observed the details of the accident. Considering the other circumstances of the case, which shall hereafter be discussed, we think the trial court was justified in resolving his testimony against him. Manuel de Leon, one of plaintiff's companions in the car, in an effort to corroborate plaintiff's version and theory of the case, also took the witness stand. The lower court, however, noted from his testimony and demeanor that he was not at all clear about the special circumstances and important details of the accident which an eyewitness would normally notice, recall and remember. He could not, for instance, tell "who moved the trailer nor whether it was moved on its own power or pushed by the people around; he could not even tell

or recall on what part of the road the Packard car was. Moreover, this witness could not even recall how wide Cut-Cut bridge is or whether two vehicles could meet and pass each other, safely, over the bridge; he could, likewise, not recall whether there were shoulders and ditches on both sides of the road at the scene of the collision." Explaining his unreliability as a witness, the trial court made the following observations: "In the mind of the court, this witness was in a state of shock and light-headed after he recovered consciousness and, as he admitted that he was unconscious for 30 minutes after the collision, he could not have seen anything that was done during his state of unconsciousness nor afterwards. The court is convinced that Manuel de Leon was merely accommodating the plaintiff, his friend, when he testified for the reason that he was neither clear nor positive as to his testimony." Alberto Yandan, a resident of Barrio Cut-Cut, Capas, Tarlac, at the time of the accident, testifying for the plaintiff, claims that he saw the collision. He declared, among other things, that he ordered the truck to be moved backward; and that it took thirty minutes to take plaintiff out of the car. He disclaimed knowledge, however, of the identity of the person who moved the truck. It also appears that he was investigated by the police of Capas at 10:00 a.m. of the day of the collision in the presence of the chief of police and the Justice of the Peace. In that investigation, which was later reduced to writing, sworn to and signed by him before the Justice of the Peace, he declared contrary to his testimony in court that he was in his house when he heard a crash; that he immediately went downstairs and found that the crash was caused by a collision between a truck and a car; that the driver of the car was badly injured; and its three occupants suffered minor injuries; that the car was wrecked while the truck was only slightly damaged; and that he brought one of the injured to the clinic of Dr. Pineda at Capas. He was asked three times in the course of the investigation whether or not he had anything more to say in connection with the collision and in like number of times the answered, "no more, sir." For this reason, the trial court found it difficult to believe his testimony and opines that his participation in the matter of the collision was merely to bring one of the injured to the clinic of Dr. Pineda at Capas and nothing else. We are inclined to agree with the lower court, for it has not been explained why he did not, at the time he was investigated, tell the matters he testified to in court, when he admittedly was aware that he was being investigated to bring out everything that he knew of the accident. Pedro Mallari, another resident of Barrio Cut-Cut, Capas, likewise, testified for plaintiff. This witness admitted on direct and cross-examination that he stayed at the scene of the accident only for five minutes, yet he sought to convince the court of facts which could not have happened, and which he could not have seen, during that period. Thus, he said that when he arrived at the scene of the collision, He saw Alberto Yandan, carrying plaintiff Eduardo Tuason while the three car passengers were still inside the automobile. This statement is contrary to the testimonies of plaintiff's other witnesses, namely, Alberto Yandan and Manuel de Leon, who declared that, the last person taken out of the car was plaintiff and that it took them some 30 minutes to extricate him from the driver's seat. Witness Mallari also declared that plaintiff's left leg was pinned down by the left bumper of the truck and that when the truck was moved back, the leg was still pinned by the bumper. If such were the case, plaintiff's leg would have been crushed or severed and he would not now have possession and use of both legs. Considering these contradictions and observing that the witness, while testifying, was restless, nervous and uncomfortable and that he was shifting around and could not keep his eyes fixed, the trial court entertained grave doubts concerning the veracity of his testimony. The lower court, we think, was justified in doing so. Evidence, to be worthy of credit, must not only proceed from a credible source, but must, in addition, be credible itself. And by this is meant that it shall be natural, reasonable and probable as to make it easy to believe. Examining further Pedro Mallari's testimony, we find that there is, indeed, good reason to believe this witness was never at the scene of the collision. He stated that he returned from work around 12 noon to take his lunch; that thereafter he went to the police station of Capas and when he peeped inside he saw the police investigating Alberto Yandan; that he did not listen to the investigation but he knew that it concerned the accident which occurred in Barrio Cut-Cut, Capas, that morning; that he did not volunteer to testify nor made known his presence at the scene of the collision. His declarations are directly contradicted by those of Alberto Yandan who testified that he was investigated at 10:00 a.m. and that he (Mallari) was inside the police station and present during the investigation. And had Mallari really been present then, whether inside or outside the police station, he would certainly have volunteered his testimony, having taken the trouble of going to the police station at the town proper and knowing as he did the subject matter of the police investigation. But he did not do this and instead admitted that he testified in this case after he was approached by Alberto Yandan to do so for plaintiff CfIL4Fk. Salvador Baun, chief of police of the municipality of Capas another witness for the plaintiff. The trial court, however, from his demeanor on the witness stand and from the long delayed and often evasive answers, he

gave, was convinced that he was suppressing and hiding the true facts of the case. He admitted that he conducted an investigation of the collision and he testified that in the course of that investigation, he saw evidence that the Packard car driven by plaintiff swerved from the middle of the road to the left lane facing south, thus hitting the truck-trailer. He made such statement in his official report of the accident (Exh. "I"), and the proof of the swerving of the car as reported by him were the skid marks of the tires of the car at the scene of the collision. The record also shows that it was on the basis of his report that the criminal case for physical injuries and damage to property thru reckless imprudence filed against both plaintiff and defendant Julian Ramos was dismissed as against the latter. The dismissal was made upon motion of the Provincial Fiscal on the ground that "during a reinvestigation of the case, and as can be seen from the sketch attached to the record prepared by the Chief of Police of Capas, Tarlac, the driver of the truck-trailer, Julian Ramos, the accused, tried his best to avoid the incident; that it is the other driver, Eduardo Tuason, who was at fault in causing the collision; and that the prosecution has no evidence to sustain any criminal action against Julian Ramos." . The evidence for the defendants, on the other hand, showed that the truck-trailer driven by Julian Ramos covered the distance of 50.89 kilometers between Guagua, Pampanga, and Cut-Cut bridge, Capas, Tarlac, in 2 hours and 10 minutes. Subtracting the 30 minutes consumed in fixing the engine trouble that developed on the way, the traveling time was, therefore, 1 hour and 40 minutes. This shows that the truck-trailer ran at an average speed of 30 kilometers per hour on the national highway from Guagua, Pampanga, to Cut-Cut bridge, Capas, Tarlac. Upon the other hand, plaintiff drove his car from Baguio City to Cut-Cut bridge in Capas, a distance of 144.22 kilometers, in 2 hours and 10 minutes. Deducting the maximum of 20 minutes it took him to load up gasoline, that leaves a traveling time of 1 hour and 50 minutes. As correctly found by the court below, it is evident from the above facts, which are not disputed, that plaintiff drove his car at great speed and in excess of the speed limits along the national highway. Plaintiff claims that the truck-trailer, which weighed 10 tons, was traveling at the rate of 60 kilometers per hour when the collision occurred, but if such were the case, the car he was driving would have been sent flying, or, at least, carried and pushed back by virtue of the truck's momentum and weight. There were, however, no indications on the surface of the road at the scene of the collision showing that the Packard car was carried and dragged by the truck-trailer. Indeed, none of the witnesses testified to this fact. On the contrary, Salvador Baun, chief of police, and Jesus Baluyot, patrolman, both of Capas, and other witnesses for the defendants testified that the skid marks present at the scene of the collision were those made by the tires of the Packard car. No skid marks made by the tires of the truck-trailer existed or were present at the scene of the collision. The evidence for the defendants also showed that at the time of the collision, the truck-trailer was on the right lane of the road facing north with the right front wheel of the truck on the shoulder of the road about six inches from the ditch on the right side and that the Packard car was on the left lane of the road going south towards Pampanga. These facts were testified to by the defendant Julian Ramos, his mechanic, Graciano Bautista, Jesus Baluyot and Pagano Atienza, both members of the police force of Capas, Mariano Nacpil, a farmer and civilian guard residing in Barrio Cut-Cut, and others. Policeman Jesus Baluyot, at the time of the collision, drew a sketch (Exh. 1.A) showing the relative positions of the vehicles, which piece of evidence became the basis of the chief of police's report but which he tried to suppress at the trial of the case. Regarding the testimony of defendants' witnesses, the trial court said: "The court has observed the conduct and demeanor of the witnesses, for the defendants, and noted that they testified in a straight-forward manner indicating that they know the subject matter of their testimonies and that they were testifying on facts and circumstances of their own personal knowledge. Defendant Julian was lengthily cross-examined and there was no divergence in his, testimony. Likewise, the mechanic, Graciano Bautista, was clear and explicit in his narration of facts. The witnesses for the defendants, Jesus Baluyot and Paciano Atienza are members of the police force of the Municipality of Capas and they testified on facts and circumstances surrounding the collision between the two vehicles, which they gathered in the course of their official investigation. There is no reason for the court to doubt the testimony of these police officers considering the official positions and the fact that they testified on matters gathered in the performance of their official duties. Moreover, they submitted a report of their investigation to their Chief of Police. Arturo Cabrera, another witness for the defendants is a government employee who testified in regard to his own personal knowledge of the collision in question. He stated that after viewing the scene of the collision and noting that the Packard car involved therein was a hazard to traffic, he telephoned a report to his superior, the District Engineer of Tarlac that he was able to talk to Mr. Epifanio Panopio, Maintenance Engineer who personally viewed the scene of the collision; that after the investigation being conducted by the Police was through he caused the Packard car to be removed upon the instruction of Engineer Panopio. Again, there is no reason for the court to doubt the testimony of this witness. Mariano Nacpil is an old man and a farmer. His demeanor in court was that of a witness testifying to the truth. As a matter of fact, Mariano Nacpil signed a sworn statement, Exh. '8' before the

Chief of Police and Justice of the Peace of Capas, Tarlac, on the same day, April 13, 1953, when the collision occurred. His testimony during the trial conforms with his sworn statement appearing on Exhibit '8'." Plaintiff claims that the truck-trailer and the Packard car were linked together and in order to give room to take plaintiff out of the car, the truck-trailer was moved back, on its own power, across the line at the center of the road and stopped on the right lane facing north carrying the car along with it. The trial court, however, after a close scrutiny of the evidence adduced, rejected the claim, defendant shaving shown to its satisfaction that the truck's battery and front axle were damaged, the U-bolt broken, and mudguard stuck to the left front wheel. The truck-trailer's weight of ten tons eliminated the possibility of its having been pushed by the people gathered at the scene of the collision, so that the trial court believed that it was the Packard car which was moved back about three feet in order to extricate plaintiff from his seat, some persons stepping on the bumper of the automobile while others pushed it away. The defendant Julian Ramos, whose testimony was found by the court to be credible and straight forward, testified in this regard. This testimony of defendant Julian Ramos, contrary to plaintiff's claim, does not necessarily contradict those of policemen Jesus Baluyot and Pagano Atienza, who declared that the vehicles were not moved during their investigation. Apparently, the vehicles were disengaged before the arrival of the aforenamed policeman, who had to come yet from the town proper. It would certainly have been unnatural and cruel for the people who were there to have waited for them or other authorities before doing anything, considering that plaintiff was painfully pinned by the door of his car and could not be extricated without disconnecting the vehicles. It might not be amiss to mention here that plaintiff's complaint was filed only after the lapse of almost three years from the date of the accident. This, in itself, is indicative of the weakness of plaintiff's cause of action. And considering the established fact that said plaintiff was really the proximate cause of the accident, we find no valid reason to disturb the decision complained of denying his claim for damages isDaSB5ipc. IN VIEW OF THE FOREGOING, the decision appealed from is hereby affirmed, with costs against plaintiffappellant ErSQUo. Bengzon, Bautista Angelo, Labrador, Concepcion, Reyes , J.B.L, Barrera, Paredes and Dizon, JJ., concur. Padilla, J., took no part. . Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-39309 November 24, 1933

TEH LE KIM, plaintiff-appellant, vs. PHILIPPINE AERIAL TAXI CO., INC., defendant-appellee. Marcelo Nubla, G.E. Campbell and W.A. Caldwell for appellant. L.D. Lockwood for appellee.

VILLA-REAL, J.: This is an appeal taken by the plaintiff Teh Le Kim from the judgment rendered by the Court of First Instance of Manila, absolving the defendant Philippine Aerial Taxi Co., Inc., from the complaint, which was dismissed, without special pronouncement as to costs. In support of his appeal, the appellant assigns five alleged errors as committed by the trail court, which we shall discuss in the course of this decision. The following facts have been proven by a preponderance of evidence presented during the trial, to wit: On the Morning of September 4, 1931, the plaintiff herein bought, in Manila, a passenger ticket for a flight to Iloilo in one of the defendant company's hydroplanes starting from Madrigal Field in Pasay. Inasmuch as the engine of the plane Mabuhay, in which he was to take the flight, was not working satisfactorily, the said plaintiff had to wait for some time. While the engine was being tested, the plaintiff saw how it was started by turning the propeller repeatedly and how the man who did it ran away from it each time in order not to be caught by the said propeller. Before the plane Mabuhay was put in condition for the flight, the plane Taal arrived and it was decided to have the plaintiff make the flight therein. The plaintiff and his companion were

carefully carried from the beach to the plane, entering the same by the rear or tail end, and were placed in their seats to which they were strapped. Later, they were shown how the straps could be tightened or loosened in case of accident and were instructed further not to touch anything in the plane. After an uneventful flight, the plane landed on the waters of Guimaras Strait, in front of Iloilo, and taxied toward the beach until its pontoons struck bottom, when the plane stopped. the pilot shut off the gasoline feed pipe, permitting the engine, however, to continue to function until all the gasoline was drained from the feed pipe and carburetor. This operation was necessary in accordance with the established practice of aviation in order to avoid danger of fire which would exist if the pipes and carburetor remained full of gasoline, and to prevent the sudden cooling of the engine which might cause serious damage, especially to the valves. When the pilot observed that a banca was approaching rapidly on the right hand side of the plane, he arose signalled and shouted to the boatman to keep his banca at a distance from the plane, inasmuch as there were waves and quite a strong current, and he feared that the banca, which had a high prow, might collide with the plane and damage either the wing or the pontoon thereof. While he was doing this, he heard the propeller strike something. He immediately turned off the switch and, looking on the other side, he saw Bohn picking up the plaintiff out of the water. What really happened was that at the moment the pontoons touched bottom and while the pilot was signalling to the banca, the plaintiff unfastened the straps around him and, not even waiting to put on his hat, climbed over the door to the lower wing, went down the ladder to the pontoon and walked along the pontoon toward the revolving propeller. The propeller first grazed his forehead and, as he threw up his arm, it was caught by the revolving blades thereof and so injured that it had be amputated.lawphil.net Bohn and Garrett of Warner, Barnes & Co., consignees of the defendant in Iloilo, were on the beach to meet the plane and to make arrangements for the disembarking of the passengers. Upon seeing the plaintiff walking toward the propeller, they shouted frantically and motioned to him to keep away from it, but the said plaintiff took no heed of them. The usual procedure in discharging passengers from a hydroplane is to wait until the propeller stops, then turn the plane around by hand so as to have the rear or tail and thereof towards the beach, and then take the passengers to shore in a banca. The pilot in charge of the plane has had fourteen years experience, having first learned to fly during the World War. He is duly licensed by the Department of Commerce of the United States and by the Department of Commerce and Communications of the Government of the Philippine Islands. The only question to decide in this appeal, which is raised in the first assignment of error, is whether or not the defendant entity has complied with its contractual obligation to carry the plaintiff-appellant Teh Le Kim safe and sound to his destination. The contract entered into by the plaintiff Teh Le Kim and the defendant entity Philippine Aerial Taxi Co., Inc., was that upon payment of the price of the passage, which the carrier had received, the latter would carry the former by air in one of its hydroplanes and put him, safe and sound, on the beach at Iloilo. After an uneventful flight, the hydroplane, which carried the plaintiff and his companion, arrived at the Iloilo beach, as usual, with nothing more left to do but to take the plaintiff and his companion, safe and sound, ashore. In order to do this, it was necessary to wait for the propeller to stop, turn the rear or tail end of the plane towards the shore, take the passengers out by the aforesaid rear or tail end thereof, place them in a banca and take them ashore. By sheer common sense, the plaintiff ought to know that a propeller, be it that of a ship or of an aeroplane, is dangerous while in motion and that to approach it is to run the risk of being caught and injured thereby. He ought to know furthermore that inasmuch as the plane was on the water, he had to wait for a banca to take him ashore. Notwithstanding the shouts and warning signals given him from the shore by the representatives of the consignee firm, the plaintiff herein, not being a man of ordinary prudence, hastily left the cabin of the plane, walked along one of the pontoons and directly into the revolving propeller, while the banca which was to take him ashore was still some distance away and the pilot was instructing the boatman to keep it at a safe distance from the plane. Under such circumstances, it is not difficult to understand that the plaintiff-appellant acted with reckless negligence in approaching the propeller while it was still in motion, and when the banca was not yet in a position to take him. That the plaintiff-appellant's negligence alone was the direct cause of the accident, is so clear that it is not necessary to cite authoritative opinions to support the conclusion that the injury to his right arm and the subsequent amputation thereof were due entirely and exclusively to his own imprudence and not to the slightest negligence attributable to the defendant entity or to its agents. Therefore, he alone should suffer the consequences of his act. Wherefore, not finding any error in the judgment appealed from, it is hereby affirmed in toto, with the costs against the appellant. So ordered. Avancea, C.J., Malcolm, Hull, and Imperial, JJ., concur.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 72827 July 18, 1989 LUCIA EUROPA (Mother of Deceased Lucrecia Europa), petitioner, vs. HUNTER GARMENTS MFG. (PHIL.) INC. and INTERMEDIATE APPELLATE COURT, respondents.

PARAS, J.: This is a petition for certiorari to annul the Court of Appeals decision which set aside the order of default and judgment by default rendered by the Court of First Instance of Rizal Branch XIII in Civil Case No. 37848 for Damages. The facts of the case are briefly as follows: In 1973, the petitioner's daughter, Lucrecia Europa, was employed as sample maker by the private respondent Hunter Garments Manufacturing (Philippines) Incorporated. Sometime during the course of her employment, or on March 9, 1978, Lucrecia got electrocuted by the high speed sewing machine which had been assigned to her by the private respondent. Thus, on July 18, 1980, the petitioner filed an action for damages against private respondent based on quasidelict. Summons, together with a copy of the complaint, was served on its production manager, Mr. Simplicio A. Garcia. No answer to the complaint was ever filed. Thus, private respondent was declared in default and the petitioner was allowed to present evidence ex parte. On April 8, 1981, the trial court rendered judgment, the dispositive portion of which reads; WHEREFORE, the plaintiff having established her cause of action, judgment is rendered against the defendant corporation ordering the latter to pay the plaintiff the following: a) for the death of Lucrecia, the sum of P12,000.00; b) for actual expenses for the wake, the funeral and burial expenses and other miscellaneous expenses, the sum of P5,580.00; c) for loss of income, the sum of P30,000.00; d) for moral damages, the sum of P10,000.00; e) for attorney's fees, the sum of P5,000.00; and pay the costs. (p. 39, Rollo) Private respondent filed a motion for reconsideration of the aforesaid decision and a motion to admit answer, alleging its failure to seasonably file an answer was due to the excusable negligence of Ms. Lilia Jimenez, the production manager's secretary, who failed to forward the summons and the copy of the complaint to the company president, despite instructions to do so by her superior. The trial court denied both motions. Thus, private respondent appealed to the Court of Appeals, assigning the following errors: The Honorable Court, a quo, erred in not ruling that defendant-appellant's failure to seasonably file its Answer was due to excusable negligence; The Honorable Court, a quo, erred in declaring defendant-appellant in default and in allowing plaintiff-appellee to present her evidence ex parte despite the fact that summons had not been properly served; and Assuming, arguendo, that the Honorable Court, a quo, had validly acquired jurisdiction over the person of defendant-appellant, it erred in rendering a decision which is not supported by law and the facts of the case. (p. 42, Rollo) Finding that the trial court never acquired jurisdiction over the person of private respondent as summons was improperly served (the production manager not being the same "manager" referred to in Section 13 Rule 14 of

the Revised Rules of Court for purposes of service of summons upon a domestic private corporation), the Court of Appeals set aside the default order and judgment by default and directed the trial court to conduct further proceedings for the adjudication of the case. (p. 22, Rollo) The petitioner filed a motion for reconsideration of the aforesaid decision but the same was denied. Hence, the instant petition for certiorari. There is merit in this petition. Assuming arguendo that the court below originally did not acquire jurisdiction over the private respondent, the latter certainly submitted to it when private respondent filed a motion for reconsideration of the judgment by default and a motion to admit answer on the ground of excusable negligence. Therefore, the lower court's denial of both motions is binding on private respondent. (Soriano vs. Palacio, 12 SCRA 449). Private respondent likewise appealed from the judgment by default, thus, We shall proceed to review the evidence presented and the propriety of damages awarded by the lower court. The evidence on record discloses that on March 9, 1978, Lucrecia Europa was electrocuted by the sewing machine owned by private respondent. The autopsy conducted by Dr. Nieto M. Salvador confirmed that Lucrecia died from "shock probably secondary to electrocution" (Annex "A" of the complaint). The facts and circumstances of the case point to the reasonableness of the damages awarded. There is an express finding of gross negligence on the part of private respondent in the judgment of the lower court, thus: ... There are at least two incidents, according to De la Cruz, where high speed sewing machines of the defendant corporation were grounded. These incidents were brought to the attention of the management of the defendant corporation. Apparently, nothing was done by way of checking these grounded machines. At one time, Fornoza claimed that when her machine was grounded and she complained about it, she was told by the management to get out of there.' The defendant corporation does not employ a duly-licensed electrical engineer but only has three (3) electricians whose services clearly proved inadequate for maintaining the safety of the machines in the factory. There is no indication that the management had ever shown any serious concern for the safety of those operating said machines. As it was, the defendant corporation even tended to be apathetic to the plight of its employees manning the factory sewing machines.... If the machines were frequently and regularly checked or properly maintained, the death of Lucrecia by electrocution would surely not have come to pass, ... (p. 2, Decision). In actions based on quasi-delict as in this case, all damages for the natural and probable consequences of the act or omission complained of are recoverable. (Article 2202 of the New Civil Code). WHEREFORE, the decision of the Court of Appeals is hereby set aside and the decision of the lower court is hereby reinstated except that the indemnity for the death itself is increased to Thirty Thousand (P30,000.00) Pesos. SO ORDERED. Melencio-Herrera, (Chairperson), Padilla, Sarmiento and Regalado, JJ., concur. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. L-57079 September 29, 1989 PHILIPPINE LONG DISTANCE TELEPHONE CO., INC., petitioner, vs. COURT OF APPEALS and SPOUSES ANTONIO ESTEBAN and GLORIA ESTEBAN, respondents.

REGALADO, J.: This case had its inception in an action for damages instituted in the former Court of First Instance of Negros Occidental 1 by private respondent spouses against petitioner Philippine Long Distance Telephone Company (PLDT, for brevity) for the injuries they sustained in the evening of July 30, 1968 when their jeep ran over a

mound of earth and fell into an open trench, an excavation allegedly undertaken by PLDT for the installation of its underground conduit system. The complaint alleged that respondent Antonio Esteban failed to notice the open trench which was left uncovered because of the creeping darkness and the lack of any warning light or signs. As a result of the accident, respondent Gloria Esteban allegedly sustained injuries on her arms, legs and face, leaving a permanent scar on her cheek, while the respondent husband suffered cut lips. In addition, the windshield of the jeep was shattered. 2 PLDT, in its answer, denies liability on the contention that the injuries sustained by respondent spouses were the result of their own negligence and that the entity which should be held responsible, if at all, is L.R. Barte and Company (Barte, for short), an independent contractor which undertook the construction of the manhole and the conduit system. 3 Accordingly, PLDT filed a third-party complaint against Barte alleging that, under the terms of their agreement, PLDT should in no manner be answerable for any accident or injuries arising from the negligence or carelessness of Barte or any of its employees. 4 In answer thereto, Barte claimed that it was not aware nor was it notified of the accident involving respondent spouses and that it had complied with the terms of its contract with PLDT by installing the necessary and appropriate standard signs in the vicinity of the work site, with barricades at both ends of the excavation and with red lights at night along the excavated area to warn the traveling public of the presence of excavations. 5 On October 1, 1974, the trial court rendered a decision in favor of private respondents, the decretal part of which reads: IN VIEW OF THE FOREGOING considerations the defendant Philippine Long Distance Telephone Company is hereby ordered (A) to pay the plaintiff Gloria Esteban the sum of P20,000.00 as moral damages and P5,000.00 exemplary damages; to plaintiff Antonio Esteban the sum of P2,000.00 as moral damages and P500.00 as exemplary damages, with legal rate of interest from the date of the filing of the complaint until fully paid. The defendant is hereby ordered to pay the plaintiff the sum of P3,000.00 as attorney's fees. (B) The third-party defendant is hereby ordered to reimburse whatever amount the defendantthird party plaintiff has paid to the plaintiff. With costs against the defendant. 6 From this decision both PLDT and private respondents appealed, the latter appealing only as to the amount of damages. Third-party defendant Barte did not appeal. On September 25, 1979, the Special Second Division of the Court of Appeals rendered a decision in said appealed case, with Justice Corazon Juliano Agrava as ponente, reversing the decision of the lower court and dismissing the complaint of respondent spouses. It held that respondent Esteban spouses were negligent and consequently absolved petitioner PLDT from the claim for damages. 7 A copy of this decision was received by private respondents on October 10, 1979. 8 On October 25, 1979, said respondents filed a motion for reconsideration dated October 24, 1979. 9 On January 24, 1980, the Special Ninth Division of the Court of Appeals denied said motion for reconsideration. 10 This resolution was received by respondent spouses on February 22, 1980. 11 On February 29, 1980, respondent Court of Appeals received private respondents' motion for leave of court to file a second motion for reconsideration, dated February 27, 1980. 12 On March 11, 1980, respondent court, in a resolution likewise penned by Justice Agrava, allowed respondents to file a second motion for reconsideration, within ten (10) days from notice thereof. 13 Said resolution was received by private respondents on April 1, 1980 but prior thereto, private respondents had already filed their second motion for reconsideration on March 7, 1980. 14 On April 30,1980 petitioner PLDT filed an opposition to and/or motion to dismiss said second motion for reconsideration. 15 The Court of Appeals, in view of the divergent opinions on the resolution of the second motion for reconsideration, designated two additional justices to form a division of five. 16 On September 3, 1980, said division of five promulgated its resolution, penned by Justice Mariano A. Zosa, setting aside the decision dated September 25, 1979, as well as the resolution dated, January 24,1980, and affirming in toto the decision of the lower court. 17

On September 19, 1980, petitioner PLDT filed a motion to set aside and/or for reconsideration of the resolution of September 3, 1980, contending that the second motion for reconsideration of private respondent spouses was filed out of time and that the decision of September 25, 1979 penned by Justice Agrava was already final.

It further submitted therein that the relationship of Barte and petitioner PLDT should be viewed in the light of the contract between them and, under the independent contractor rule, PLDT is not liable for the acts of an independent contractor. 18 On May 11, 1981, respondent Court of Appeals promulgated its resolution denying

said motion to set aside and/or for reconsideration and affirming in toto the decision of the lower court dated October 1, 1974. 19 Coming to this Court on a petition for review on certiorari, petitioner assigns the following errors: 1. Respondent Court of Appeals erred in not denying private respondents' second motion for reconsideration on the ground that the decision of the Special Second Division, dated September 25, 1979, and the resolution of the Special Ninth Division, dated January 24, 1980, are already final, and on the additional ground that said second motion for reconsideration is pro forma. 2. Respondent court erred in reversing the aforesaid decision and resolution and in misapplying the independent contractor rule in holding PLDT liable to respondent Esteban spouses. A convenient resume of the relevant proceedings in the respondent court, as shown by the records and admitted by both parties, may be graphically presented as follows: (a) September 25, 1979, a decision was rendered by the Court of Appeals with Justice Agrava as ponente; (b) October 10, 1979, a copy of said decision was received by private respondents; (c) October 25, 1979, a motion for reconsideration was filed by private respondents; (d) January 24, 1980, a resolution was issued denying said motion for reconsideration; (e) February 22, 1980, a copy of said denial resolution was received by private respondents; (f) February 29, 1980, a motion for leave to file a second motion for reconsideration was filed by private respondents (g) March 7, 1980, a second motion for reconsideration was filed by private respondents; (h) March 11, 1980, a resolution was issued allowing respondents to file a second motion for reconsideration within ten (10) days from receipt; and (i) September 3, 1980, a resolution was issued, penned by Justice Zosa, reversing the original decision dated September 25, 1979 and setting aside the resolution dated January 24, 1980. From the foregoing chronology, we are convinced that both the motion for leave to file a second motion for reconsideration and, consequently, said second motion for reconsideration itself were filed out of time. Section 1, Rule 52 of the Rules of Court, which had procedural governance at the time, provided that a second motion for reconsideration may be presented within fifteen (15) days from notice of the order or judgment deducting the time in which the first motion has been pending. 20 Private respondents having filed their first motion for reconsideration on the last day of the reglementary period of fifteen (15) days within which to do so, they had only one (1) day from receipt of the order denying said motion to file, with leave of court, a second motion for reconsideration. 21 In the present case, after their receipt on February 22, 1980 of the resolution

denying their first motion for reconsideration, private respondents had two remedial options. On February 23, 1980, the remaining one (1) day of the aforesaid reglementary period, they could have filed a motion for leave of court to file a second motion for reconsideration, conceivably with a prayer for the extension of the period within which to do so. On the other hand, they could have appealed through a petition for review on certiorari to this Court within fifteen (15) days from February 23, 1980. 22 Instead, they filed a motion for leave to file a second motion 'for reconsideration on February 29, 1980, and said second motion for reconsideration on March 7, 1980, both of which motions were by then time-barred. Consequently, after the expiration on February 24, 1980 of the original fifteen (15) day period, the running of which was suspended during the pendency of the first motion for reconsideration, the Court of Appeals could no longer validly take further proceedings on the merits of the case, much less to alter, modify or reconsider its aforesaid decision and/or resolution. The filing of the motion for leave to file a second motion for reconsideration by herein respondents on February 29, 1980 and the subsequent filing of the motion itself on March 7, 1980, after the expiration of the reglementary period to file the same, produced no legal effects. Only a motion for re-hearing or reconsideration filed in time shall stay the final order or judgment sought to be reexamined. 23

The consequential result is that the resolution of respondent court of March 11, 1980 granting private respondents' aforesaid motion for leave and, giving them an extension of ten (10) days to file a second motion for reconsideration, is null and void. The period for filing a second motion for reconsideration had already expired when private respondents sought leave to file the same, and respondent court no longer had the power to entertain or grant the said motion. The aforesaid extension of ten (10) days for private respondents to file their second motion for reconsideration was of no legal consequence since it was given when there was no more period to extend. It is an elementary rule that an application for extension of time must be filed prior to the expiration of the period sought to be extended. 24 Necessarily, the discretion of respondent court to grant said extension for filing a second motion for reconsideration is conditioned upon the timeliness of the motion seeking the same. No appeal having been taken seasonably, the respondent court's decision, dated September 25, 1979, became final and executory on March 9, 1980. The subsequent resolutions of respondent court, dated March 11, 1980 and September 3, 1980, allowing private respondents to file a second motion for reconsideration and reversing the original decision are null and void and cannot disturb the finality of the judgment nor restore jurisdiction to respondent court. This is but in line with the accepted rule that once a decision has become final and executory it is removed from the power and jurisdiction of the court which rendered it to further alter or amend, much less revoke it. 25 The decision rendered anew is null and void. 26 The court's inherent power to correct its own errors should be exercised before the finality of the decision or order sought to be corrected, otherwise litigation will be endless and no question could be considered finally settled. Although the granting or denial of a motion for reconsideration involves the exercise of discretion, 27 the same should not be exercised whimsically, capriciously or arbitrarily, but prudently in conformity with law, justice, reason and equity. 28 Prescinding from the aforesaid procedural lapses into the substantive merits of the case, we find no error in the findings of the respondent court in its original decision that the accident which befell private respondents was due to the lack of diligence of respondent Antonio Esteban and was not imputable to negligent omission on the part of petitioner PLDT. Such findings were reached after an exhaustive assessment and evaluation of the evidence on record, as evidenced by the respondent court's resolution of January 24, 1980 which we quote with approval: First. Plaintiff's jeep was running along the inside lane of Lacson Street. If it had remained on that inside lane, it would not have hit the ACCIDENT MOUND. Exhibit B shows, through the tiremarks, that the ACCIDENT MOUND was hit by the jeep swerving from the left that is, swerving from the inside lane. What caused the swerving is not disclosed; but, as the cause of the accident, defendant cannot be made liable for the damages suffered by plaintiffs. The accident was not due to the absence of warning signs, but to the unexplained abrupt swerving of the jeep from the inside lane. That may explain plaintiffhusband's insistence that he did not see the ACCIDENT MOUND for which reason he ran into it. Second. That plaintiff's jeep was on the inside lane before it swerved to hit the ACCIDENT MOUND could have been corroborated by a picture showing Lacson Street to the south of the ACCIDENT MOUND. It has been stated that the ditches along Lacson Street had already been covered except the 3 or 4 meters where the ACCIDENT MOUND was located. Exhibit B-1 shows that the ditches on Lacson Street north of the ACCIDENT MOUND had already been covered, but not in such a way as to allow the outer lane to be freely and conveniently passable to vehicles. The situation could have been worse to the south of the ACCIDENT MOUND for which reason no picture of the ACCIDENT MOUND facing south was taken. Third. Plaintiff's jeep was not running at 25 kilometers an hour as plaintiff-husband claimed. At that speed, he could have braked the vehicle the moment it struck the ACCIDENT MOUND. The jeep would not have climbed the ACCIDENT MOUND several feet as indicated by the tiremarks in Exhibit B. The jeep must have been running quite fast. If the jeep had been braked at 25 kilometers an hour, plaintiff's would not have been thrown against the windshield and they would not have suffered their injuries. Fourth. If the accident did not happen because the jeep was running quite fast on the inside lane and for some reason or other it had to swerve suddenly to the right and had to climb over the ACCIDENT MOUND, then plaintiff-husband had not exercised the diligence of a good father of a family to avoid the accident. With the drizzle, he should not have run on dim lights, but should have put on his regular lights which should have made him see the ACCIDENT MOUND in time. If he was running on the outside lane at 25 kilometers an hour, even on dim lights, his

failure to see the ACCIDENT MOUND in time to brake the car was negligence on his part. The ACCIDENT MOUND was relatively big and visible, being 2 to 3 feet high and 1-1/2 feet wide. If he did not see the ACCIDENT MOUND in time, he would not have seen any warning sign either. He knew of the existence and location of the ACCIDENT MOUND, having seen it many previous times. With ordinary precaution, he should have driven his jeep on the night of the accident so as to avoid hitting the ACCIDENT MOUND. 29 The above findings clearly show that the negligence of respondent Antonio Esteban was not only contributory to his injuries and those of his wife but goes to the very cause of the occurrence of the accident, as one of its determining factors, and thereby precludes their right to recover damages. 30 The perils of the road were known to, hence appreciated and assumed by, private respondents. By exercising reasonable care and prudence, respondent Antonio Esteban could have avoided the injurious consequences of his act, even assuming arguendo that there was some alleged negligence on the part of petitioner.

The presence of warning signs could not have completely prevented the accident; the only purpose of said signs was to inform and warn the public of the presence of excavations on the site. The private respondents already knew of the presence of said excavations. It was not the lack of knowledge of these excavations which caused the jeep of respondents to fall into the excavation but the unexplained sudden swerving of the jeep from the inside lane towards the accident mound. As opined in some quarters, the omission to perform a duty, such as the placing of warning signs on the site of the excavation, constitutes the proximate cause only when the doing of the said omitted act would have prevented the injury. 31 It is basic that private respondents cannot charge PLDT for their injuries where their own failure to exercise due and reasonable care was the cause thereof. It is both a societal norm and necessity that one should exercise a reasonable degree of caution for his own protection. Furthermore, respondent Antonio Esteban had the last clear chance or opportunity to avoid the accident, notwithstanding the negligence he imputes to petitioner PLDT. As a resident of Lacson Street, he passed on that street almost everyday and had knowledge of the presence and location of the excavations there. It was his negligence that exposed him and his wife to danger, hence he is solely responsible for the consequences of his imprudence.

Moreover, we also sustain the findings of respondent Court of Appeals in its original decision that there was insufficient evidence to prove any negligence on the part of PLDT. We have for consideration only the selfserving testimony of respondent Antonio Esteban and the unverified photograph of merely a portion of the scene of the accident. The absence of a police report of the incident and the non-submission of a medical report from the hospital where private respondents were allegedly treated have not even been satisfactorily explained. As aptly observed by respondent court in its aforecited extended resolution of January 24, 1980 (a) There was no third party eyewitness of the accident. As to how the accident occurred, the Court can only rely on the testimonial evidence of plaintiffs themselves, and such evidence should be very carefully evaluated, with defendant, as the party being charged, being given the benefit of any doubt. Definitely without ascribing the same motivation to plaintiffs, another person could have deliberately engineered a similar accident in the hope and expectation that the Court can grant him substantial moral and exemplary damages from the big corporation that defendant is. The statement is made only to stress the disadvantageous position of defendant which would have extreme difficulty in contesting such person's claim. If there were no witness or record available from the police department of Bacolod, defendant would not be able to determine for itself which of the conflicting testimonies of plaintiffs is correct as to the report or non-report of the accident to the police department. 32 A person claiming damages for the negligence of another has the burden of proving the existence of such fault or negligence causative thereof. The facts constitutive of negligence must be affirmatively established by competent evidence. 33 Whosoever relies on negligence for his cause of action has the burden in the first instance of proving the existence of the same if contested, otherwise his action must fail. WHEREFORE, the resolutions of respondent Court of Appeals, dated March 11, 1980 and September 3,1980, are hereby SET ASIDE. Its original decision, promulgated on September 25,1979, is hereby REINSTATED and AFFIRMED. SO ORDERED. Melencio-Herrera (Chairperson), Paras, Padilla and Sarmiento JJ., concur.

SECOND DIVISION [G.R. No. 125018. April 6, 2000] REMMAN ENTERPRISES, INC., petitioner, vs. COURT OF APPEALS and CRISPIN E. LAT, respondents. francis DECISION BELLOSILLO, J.: REMMAN ENTERPRISES, INC. (REMMAN), and CRISPIN E. LAT are adjoining landowners in Barangay Bugtong Na Pulo, Lipa City. The land of Lat containing an area of 1.8 hectares is agricultural and planted mostly with fruit trees while REMMAN occupies a land area of fifteen (15) hectares six (6) hectares of which are devoted to its piggery business. REMMAN's land is one and a half (1) meters higher in elevation than that of respondent Lat. Sometime in July 1984 Lat noticed that REMMAN's waste disposal lagoon was already overflowing and inundating one-fourth (1/4) of Lat's plantation. He made several representations with REMMAN but they fell on deaf ears. On 14 March 1985, after almost one (1) hectare of Lat's plantation was already inundated with water containing pig manure, as a result of which the trees growing on the flooded portion started to wither and die, Lat filed a complaint for damages with preliminary mandatory injunction against REMMAN. Lat alleged that the acidity of the soil in his plantation increased because of the overflow of the water heavy with pig manure from REMMAN's piggery farm. REMMAN denied all the allegations of Lat and raised as an affirmative defense that measures such as the construction of additional lagoons were already adopted to contain the waste water coming from its piggery to prevent any damage to the adjoining estates. After conducting an ocular inspection and evaluating the evidence of both parties the Regional Trial Court found that indeed REMMANs waste disposal lagoon overflowed with the contaminated water flooding one (1) hectare of Lat's plantation. The waste water was ankle-deep and caused death and destruction to one (1) jackfruit tree, fifteen (15) coconut trees, one hundred twenty-two (122) coffee trees, and an unspecified number of mango trees, bananas and vegetables. As a consequence, the trial court ordered REMMAN to indemnify Lat P186,975.00 for lost profits for three (3) crop years and P30,000.00 as attorney's fees.[1] marie The decision of the court a quo was affirmed in toto by the Court of Appeals.[2] In this Petition for Review on Certiorari REMMAN prays that we pass upon the findings of the trial court as well as of the appellate court. REMMAN insists that factual findings of lower courts may be passed upon, reviewed and reversed: (a) when the conclusion is a finding grounded entirely on speculation, surmises or conjectures; (b) when the inference made is manifestly mistaken, absurd or impossible; (c) when there is grave abuse of discretion; (d) when the judgment is based on a misapprehension of facts; (e) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties and which, if properly considered, would justify a different conclusion; (f) when the conclusions of the Court of Appeals are not supported by the evidence on record; (g) when facts of substance were overlooked which, if correctly considered, might have changed the outcome of the case; and, (h) when the findings of the Court of Appeals are not in accord with what reasonable men would readily accept are the correct inferences from the evidence extant in the records.

[3]
Indeed, in the abovementioned instances, the factual milieu of a particular case may be passed upon, reversed or modified by this Court. But examination of the record reveals that all the above instances are unavailing. From this point of view alone the instant petition is dismissible. Nevertheless, we shall discuss them hereunder to dispose finally of the contentions of REMMAN. First, REMMAN argues that its liability for the damages suffered by Lat was not clearly established. We disagree. During the ocular inspection conducted by the lower court where representatives of both parties were present, it was established that the waste water containing pig manure was continuously flowing from REMMAN's piggery farm to Lat's plantation. The water was ankle-deep and flooded one (1) hectare of Lat's plantation. The overflow of the "acidic, malodorous and polluted water" continued from June 1984 to March 1985 thus destroying one (1) jackfruit tree, fifteen (15) coconut trees, one hundred an twenty-two (122) coffee trees, and an unspecified number of mango trees, bananas and vegetables.[4] In addition, the appellate court found that there was indeed negligence on the part of REMMAN which directly caused the damage to the plantation of Lat. Thus -novero

x x x Negligence was clearly established. It is uncontroverted that the land of appellee was flooded on account of the overflow of acidic, malodorous and polluted water coming from the adjacent piggery farm of appellant sometime in May 1984. This resulted in the impairment of the productivity of appellee's land as well as the eventual destruction and death of several fruit trees, such as coconuts, coffee, jackfruits, bananas and other plants x x x x Appellant cannot avoid liability because their negligence was the proximate cause of the damage. Appellee's property was practically made a catch-basin of polluted water and other noxious substances emptying from appellant's piggery which could have been prevented had it not been for the negligence of appellant arising from its: (a) failure to monitor the increases in the level of water in the lagoons before, during and after the heavy downpours which occurred during the rainy months of 1984; (b) failure to augment the existing lagoons prior to the incident, notwithstanding the fact that at the time of the flooding, the piggery had grown to a capacity of 11,000 heads, and considering that it was reasonably forseeable that the existing waste disposal facilities were no longer adequate to accomodate the increasing volume of waste matters in such a big farm; and more importantly, (c) the repeated failure to comply with their promise to appellee.[5] Second, REMMAN argues that the trial court as well as the Court of Appeals should not have rejected its request for the production of Lat's income tax returns. According to REMMAN had Lat's income tax returns been produced, the issue of the alleged damages suffered by Lat would have been settled. This argument is moot, if not trite. For this matter has been laid to rest when we affirmed the Court of Appeals' decision in an earlier case involving the same parties.[6] In sustaining the trial court's quashal of the subpoena duces tecum previously issued compelling Lat to produce his income tax returns for the years 19821986, the appellate court explained that the production of the income tax returns would not necessarily serve to prove the special and affirmative defenses set up by REMMAN nor rebut Lat's testimony regarding the losses he sustained due to the piggery. The tax returns per se could not reflect the total amount of damages suffered by Lat, as income losses from a portion of the plantation could be offset by any profit derived from the rest of the plantation or from other sources of income. Conversely, losses incurred from other sources of income would be totally unrelated to the income from the particular portion of the plantation flooded with waste matter coming from REMMAN's piggery.[7] Third, REMMAN contends that the damages allegedly sustained by Lat have not been satisfactorily established. nigel We a not convinced. The factual findings of the court a quo rightly support its conclusions on this respect Coming now to the issue of damages, We find appellant's allegations not well-taken. Appellant contends that actual and compensatory damages require evidentiary proof, and there being no evidence presented as to the necessity of the award for damages, it was erroneous for the lower court to have made such award. It must be remembered that after the ocular inspection, the court a quo rendered an inventory of dead and rotten trees and plants found in appellee's property. Appellee also testified on the approximate annual harvest and fair market value thereof. Significantly, no opposition or controverting evidence was presented by appellant on the matter. Hence, appellant is bound thereby and cannot now be heard to complain. As correctly held by the court a quo: An ocular inspection has been conducted by the trial court. The inventory of the trees damaged and the itemized valuation placed therein by private respondent after the ocular inspection which is not rebutted by the petitioner, is the more accurate indicator of the said amount prayed for as damages. If the valuation is indeed unreasonable, petitioner should present controverting evidence of the fair market value of the crops involved. The trial court held that the private respondent himself had been subjected to extensive cross and re-cross examination by the counsel for the petitioner on the amount of damages.[8] Finally, REMMAN complains that the damages, if any, were due to a fortuitous event. Again cannot agree with petitioner. We defer instead to the findings opinions expressed by the lower courts Even assuming that the heavy rains constituted an act of God, by reason of their negligence, the fortuitous event became humanized, rendering appellants liable for the ensuing damages. In National Power Corporation v. Court of Appeals, 233 SCRA 649 (1993), the Supreme Court held: ella Accordingly, petitioners cannot be heard to invoke the act of God or force majeure to escape liability for

the loss or damage sustained by private respondents since they, the petitioners, were guilty of negligence. This event then was not occasioned exclusively by an act of God or force majeure; a human factor - negligence or imprudence - had intervened. The effect then of the force majeure in question may be deemed to have, even if only partly, resulted from the participation of man. Thus, the whole occurrence was thereby humanized, as it were, and removed from the rules applicable to acts of God. As regards the alleged natural easement imposed upon the property of appellee, resort to pertinent provisions of applicable law is imperative. Under the Civil Code, it is provided: Art. 637. Lower estates are obliged to receive the waters which naturally and without the intervention of man descend from the higher estates, as well as the stones or earth which they carry with them. The owner of the lower estate cannot construct works which will impede this easement; neither can the owner of the higher estate make works which will increase the burden. A similar provision is found in the Water Code of the Philippines (P.D. No.1067), which provides: Art. 50. Lower estates are obliged to receive the water which naturally and without the intervention of man flow from the higher estates, as well as the stone or earth which they carry with them. The owner of the lower estate cannot construct works which will impede this natural flow, unless he provides an alternative method of drainage; neither can the owner of the higher estate make works which will increase this natural flow. marinella As worded, the two (2) aforecited provisions impose a natural easement upon the lower estate to receive the waters which naturally and without the intervention of man descend from higher states. However, where the waters which flow from a higher state are those which are artificially collected in man-made lagoons, any damage occasioned thereby entitles the owner of the lower or servient estate to compensation.[9] On the basis of the foregoing discussion, it is crystal clear that REMMAN is directly accountable to Lat for the damages sustained by him. The negligence of REMMAN in maintaining the level of waste water in its lagoons has been satisfactorily established. The extent of damages suffered by Lat remains unrebutted; in fact, has been proved. WHEREFORE, the petition is DENIED. The 19 October 1995 Decision of the Court of Appeals affirming that of the Regional Trial Court-Br. 16, Lipa City, holding petitioner Remman Enterprises, Inc. (REMMAN) liable to private respondent Crispin E. Lat for damages and to indemnify the latter P186,975.00 for lost profits for three (3) crop years and P30,000.00 as attorneys fees, is AFFIRMED. Costs against petitioner. SO ORDERED. Mendoza, Quisumbing, Buena and De Leon, Jr., JJ., concur. SECOND DIVISION [G.R. No. 128607. January 31, 2000] ALFREDO MALLARI SR. and ALFREDO MALLARI JR., petitioners, vs. COURT OF APPEALS and BULLETIN PUBLISHING CORPORATION, respondents. DECISION BELLOSILLO, J.: ALFREDO MALLARI SR. and ALFREDO MALLARI JR. in this petition for review on certiorari seek to set aside the Decision of the Court of Appeals[1] which reversed the court a quo and adjudged petitioners to be liable for damages due to negligence as a common carrier resulting in the death of a passenger. On 14 October 1987, at about 5:00 o'clock in the morning, the passenger jeepney driven by petitioner Alfredo Mallari Jr. and owned by his co-petitioner Alfredo Mallari Sr. collided with the delivery van of respondent Bulletin Publishing Corp. (BULLETIN, for brevity) along the National Highway in Barangay San Pablo, Dinalupihan, Bataan. Petitioner Mallari Jr. testified that he went to the left lane of the highway and overtook a Fiera which had stopped on the right lane. Before he passed by the Fiera, he saw the van of respondent BULLETIN coming from the opposite direction. It was driven by one Felix Angeles. The sketch of the accident showed that the collision occurred after Mallari Jr. overtook the Fiera while negotiating a curve in the highway. The points of collision were the left rear portion of the passenger jeepney and the left front side of the delivery van of

BULLETIN. The two (2) right wheels of the delivery van were on the right shoulder of the road and pieces of debris from the accident were found scattered along the shoulder of the road up to a certain portion of the lane travelled by the passenger jeepney. The impact caused the jeepney to turn around and fall on its left side resulting in injuries to its passengers one of whom was Israel Reyes who eventually died due to the gravity of his injuries. Manikan On 16 December 1987 Claudia G. Reyes, the widow of Israel M. Reyes, filed a complaint for damages with the Regional Trial Court of Olongapo City against Alfredo Mallari Sr. and Alfredo Mallari Jr., and also against BULLETIN, its driver Felix Angeles, and the N.V. Netherlands Insurance Company. The complaint alleged that the collision which resulted in the death of Israel Reyes was caused by the fault and negligence of both drivers of the passenger jeepney and the Bulletin Isuzu delivery van. The complaint also prayed that the defendants be ordered jointly and severally to pay plaintiff P1,006,777.40 in compensatory damages, P40,000.00 for hospital and medical expenses, P18,270.00 for burial expenses plus such amounts as may be fixed by the trial court for exemplary damages and attorneys fees. The trial court found that the proximate cause of the collision was the negligence of Felix Angeles, driver of the Bulletin delivery van, considering the fact that the left front portion of the delivery truck driven by Felix Angeles hit and bumped the left rear portion of the passenger jeepney driven by Alfredo Mallari Jr. Hence, the trial court ordered BULLETIN and Felix Angeles to pay jointly and severally Claudia G. Reyes, widow of the deceased victim, the sums of P42,106.93 for medical expenses; P8,600.00 for funeral and burial expenses; P1,006,777.40 for loss of earning capacity; P5,000.00 for moral damages and P10,000.00 for attorneys fees. The trial court also ordered N.V. Netherlands Insurance Company to indemnify Claudia G. Reyes P12,000.00 as death indemnity and P2,500.00 for funeral expenses which when paid should be deducted from the liabilities of respondent BULLETIN and its driver Felix Angeles to the plaintiff. It also dismissed the complaint against the other defendants Alfredo Mallari Sr. and Alfredo Mallari Jr. On appeal the Court of Appeals modified the decision of the trial court and found no negligence on the part of Angeles and consequently of his employer, respondent BULLETIN. Instead, the appellate court ruled that the collision was caused by the sole negligence of petitioner Alfredo Mallari Jr. who admitted that immediately before the collision and after he rounded a curve on the highway, he overtook a Fiera which had stopped on his lane and that he had seen the van driven by Angeles before overtaking the Fiera. The Court of Appeals ordered petitioners Mallari Jr. and Mallari Sr. to compensate Claudia G. Reyes P1,006,777.50 for loss of earning capacity, P50,000.00 as indemnity for death and P10,000.00 for attorneys fees. It absolved from any liability respondent BULLETIN, Felix Angeles and N.V. Netherlands Insurance Company. Hence this petition. Oldmis o Petitioners contend that there is no evidence to show that petitioner Mallari Jr. overtook a vehicle at a curve on the road at the time of the accident and that the testimony of Angeles on the overtaking made by Mallari Jr. was not credible and unreliable. Petitioner also submits that the trial court was in a better position than the Court of Appeals to assess the evidence and observe the witnesses as well as determine their credibility; hence, its finding that the proximate cause of the collision was the negligence of respondent Angeles, driver of the delivery van owned by respondent BULLETIN, should be given more weight and consideration. We cannot sustain petitioners. Contrary to their allegation that there was no evidence whatsoever that petitioner Mallari Jr. overtook a vehicle at a curve on the road at the time of or before the accident, the same petitioner himself testified that such fact indeed did occur Q:.......And what was that accident all about? A:.......Well, what happened, sir, is that at about that time 5:00 oclock in that morning of October 14 while I was negotiating on the highway at San Pablo, Dinalupihan, Bataan, I was then following a blue Ford Fierra and my distance behind was about twenty (20) feet and then I passed that blue Ford Fierra. I overtook and when I was almost on the right lane of the highway towards Olongapo City there was an oncoming delivery van of the Bulletin Publishing Corporation which bumped the left rear portion of the jeepney which I was driving and as a result of which the jeepney x x x turned around and fell on its left side and as a result of which some of my passengers including me were injured, sir x x x x Q:.......Before you overtook the Ford Fierra jeepney did you look x x x whether there was any vehicle coming towards you? A:.......Yes, sir. Q:.......Did you see the Bulletin van or the Press van coming towards you? A:.......Yes, sir. Q:.......At the moment the Ford Fierra xxx stop(ped) and in overtaking the Fierra, did you not

have an option to stop and not to overtake the Ford Fierra? A:.......Well, at the time when the Ford Fierra stopped in front of me I slowed down with the intention of applying the brake, however, when I saw the oncoming vehicle which is the Press van is very far x x x which is 100 feet distance, x x x it is sufficient to overtake the Ford Fierra so I overt(ook) it x x x x Q:.......You said that you took into consideration the speed of the oncoming Press van but you also could not estimate the speed of the press van because it was dark at that time, which of these statements are true? Ncm A:.......What I wanted to say, I took into consideration the speed of the oncoming vehicle, the Press van, although at the moment I could not estimate the speed of the oncoming vehicle x x x x[2] The Court of Appeals correctly found, based on the sketch and spot report of the police authorities which were not disputed by petitioners, that the collision occurred immediately after petitioner Mallari Jr. overtook a vehicle in front of it while traversing a curve on the highway.[3] This act of overtaking was in clear violation of Sec. 41, pars. (a) and (b), of RA 4136 as amended, otherwise known as The Land Transportation and Traffic Code which provides: Sec. 41. Restrictions on overtaking and passing. - (a) The driver of a vehicle shall not drive to the left side of the center line of a highway in overtaking or passing another vehicle proceeding in the same direction, unless such left side is clearly visible and is free of oncoming traffic for a sufficient distance ahead to permit such overtaking or passing to be made in safety. (b) The driver of a vehicle shall not overtake or pass another vehicle proceeding in the same direction when approaching the crest of a grade, nor upon a curve in the highway, where the drivers view along the highway is obstructed within a distance of five hundred feet ahead except on a highway having two or more lanes for movement of traffic in one direction where the driver of a vehicle may overtake or pass another vehicle: Provided That on a highway, within a business or residential district, having two or more lanes for movement of traffic in one direction, the driver of a vehicle may overtake or pass another vehicle on the right. The rule is settled that a driver abandoning his proper lane for the purpose of overtaking another vehicle in an ordinary situation has the duty to see to it that the road is clear and not to proceed if he cannot do so in safety.

[4] When a motor vehicle is approaching or rounding a curve, there is special necessity for keeping to the
right side of the road and the driver does not have the right to drive on the left hand side relying upon having time to turn to the right if a car approaching from the opposite direction comes into view.[5] Ncmmis In the instant case, by his own admission, petitioner Mallari Jr. already saw that the BULLETIN delivery van was coming from the opposite direction and failing to consider the speed thereof since it was still dark at 5:00 o'clock in the morning mindlessly occupied the left lane and overtook two (2) vehicles in front of it at a curve in the highway. Clearly, the proximate cause of the collision resulting in the death of Israel Reyes, a passenger of the jeepney, was the sole negligence of the driver of the passenger jeepney, petitioner Alfredo Mallari Jr., who recklessly operated and drove his jeepney in a lane where overtaking was not allowed by traffic rules. Under Art. 2185 of the Civil Code, unless there is proof to the contrary, it is presumed that a person driving a motor vehicle has been negligent if at the time of the mishap he was violating a traffic regulation. As found by the appellate court, petitioners failed to present satisfactory evidence to overcome this legal presumption. The negligence and recklessness of the driver of the passenger jeepney is binding against petitioner Mallari Sr., who admittedly was the owner of the passenger jeepney engaged as a common carrier, considering the fact that in an action based on contract of carriage, the court need not make an express finding of fault or negligence on the part of the carrier in order to hold it responsible for the payment of damages sought by the passenger. Under Art. 1755 of the Civil Code, a common carrier is bound to carry the passengers safely as far as human care and foresight can provide using the utmost diligence of very cautious persons with due regard for all the circumstances. Moreover, under Art. 1756 of the Civil Code, in case of death or injuries to passengers, a common carrier is presumed to have been at fault or to have acted negligently, unless it proves that it observed extraordinary diligence. Further, pursuant to Art. 1759 of the same Code, it is liable for the death of or injuries to passengers through the negligence or willful acts of the formers employees. This liability of the common carrier does not cease upon proof that it exercised all the diligence of a good father of a family in the selection of its employees. Clearly, by the contract of carriage, the carrier jeepney owned by Mallari Sr. assumed the express obligation to transport the passengers to their destination safely and to observe

extraordinary diligence with due regard for all the circumstances, and any injury or death that might be suffered by its passengers is right away attributable to the fault or negligence of the carrier. Scnc m The monetary award ordered by the appellate court to be paid by petitioners to the widow of the deceased passenger Israel M. Reyes of P1,006,777.50 for loss of earning capacity, P50,000.00 as civil indemnity for death, and P10,000.00 for attorneys fees, all of which were not disputed by petitioners, is a factual matter binding and conclusive upon this Court. WHEREFORE, the Petition is DENIED and the Decision of the Court of Appeals dated 20 September 1995 reversing the decision of the trial court being in accord with law and evidence is AFFIRMED. Consequently, petitioners are ordered jointly and severally to pay Claudia G. Reyes P1,006,777.50 for loss of earning capacity, P50,000.00 as civil indemnity for death, and P10,000.00 for attorneys fees. Costs against petitioners. SO ORDERED. Mendoza, Quisumbing, Buena and De Leon, Jr., concur.

FIRST DIVISION [G.R. No. 112392. February 29, 2000] BANK OF THE PHILIPPINE ISLANDS, petitioner, vs. COURT OF APPEALS and BENJAMIN C. NAPIZA, respondents. DECISION YNARES-SANTIAGO, J.: This is a petition for review on certiorari of the Decision[1] of the Court of Appeals in CA-G.R. CV No. 37392 affirming in toto that of the Regional Trial Court of Makati, Branch 139,[2] which dismissed the complaint filed by petitioner Bank of the Philippine Islands against private respondent Benjamin C. Napiza for sum of money. Sdaad On September 3, 1987, private respondent deposited in Foreign Currency Deposit Unit (FCDU) Savings Account No. 028-187[3] which he maintained in petitioner banks Buendia Avenue Extension Branch, Continental Bank Managers Check No. 00014757[4] dated August 17, 1984, payable to "cash" in the amount of Two Thousand Five Hundred Dollars ($2,500.00) and duly endorsed by private respondent on its dorsal side.[5] It appears that the check belonged to a certain Henry Chan who went to the office of private respondent and requested him to deposit the check in his dollar account by way of accommodation and for the purpose of clearing the same. Private respondent acceded, and agreed to deliver to Chan a signed blank withdrawal slip, with the understanding that as soon as the check is cleared, both of them would go to the bank to withdraw the amount of the check upon private respondents presentation to the bank of his passbook. Using the blank withdrawal slip given by private respondent to Chan, on October 23, 1984, one Ruben Gayon, Jr. was able to withdraw the amount of $2,541.67 from FCDU Savings Account No. 028-187. Notably, the withdrawal slip shows that the amount was payable to Ramon A. de Guzman and Agnes C. de Guzman and was duly initialed by the branch assistant manager, Teresita Lindo.[6] On November 20, 1984, petitioner received communication from the Wells Fargo Bank International of New York that the said check deposited by private respondent was a counterfeit check[7] because it was "not of the type or style of checks issued by Continental Bank International."[8] Consequently, Mr. Ariel Reyes, the manager of petitioners Buendia Avenue Extension Branch, instructed one of its employees, Benjamin D. Napiza IV, who is private respondents son, to inform his father that the check bounced.[9] Reyes himself sent a telegram to private respondent regarding the dishonor of the check. In turn, private respondents son wrote to Reyes stating that the check had been assigned "for encashment" to Ramon A. de Guzman and/or Agnes C. de Guzman after it shall have been cleared upon instruction of Chan. He also said that upon learning of the dishonor of the check, his father immediately tried to contact Chan but the latter was out of town.[10] Private respondents son undertook to return the amount of $2,500.00 to petitioner bank. On December 18, 1984, Reyes reminded private respondent of his sons promise and warned that should he fail to return that amount within seven (7) days, the matter would be referred to the banks lawyers for appropriate action to protect the banks interest.[11] This was followed by a letter of the banks lawyer dated April 8, 1985

demanding the return of the $2,500.00.[12] In reply, private respondent wrote petitioners counsel on April 20, 1985[13] stating that he deposited the check "for clearing purposes" only to accommodate Chan. He added: "Further, please take notice that said check was deposited on September 3, 1984 and withdrawn on October 23, 1984, or a total period of fifty (50) days had elapsed at the time of withdrawal. Also, it may not be amiss to mention here that I merely signed an authority to withdraw said deposit subject to its clearing, the reason why the transaction is not reflected in the passbook of the account. Besides, I did not receive its proceeds as may be gleaned from the withdrawal slip under the captioned signature of recipient. If at all, my obligation on the transaction is moral in nature, which (sic) I have been and is (sic) still exerting utmost and maximum efforts to collect from Mr. Henry Chan who is directly liable under the circumstances. Scsdaad xxx......xxx......xxx." On August 12, 1986, petitioner filed a complaint against private respondent, praying for the return of the amount of $2,500.00 or the prevailing peso equivalent plus legal interest from date of demand to date of full payment, a sum equivalent to 20% of the total amount due as attorney's fees, and litigation and/or costs of suit. Private respondent filed his answer, admitting that he indeed signed a "blank" withdrawal slip with the understanding that the amount deposited would be withdrawn only after the check in question has been cleared. He likewise alleged that he instructed the party to whom he issued the signed blank withdrawal slip to return it to him after the bank drafts clearance so that he could lend that party his passbook for the purpose of withdrawing the amount of $2,500.00. However, without his knowledge, said party was able to withdraw the amount of $2,541.67 from his dollar savings account through collusion with one of petitioners employees. Private respondent added that he had "given the Plaintiff fifty one (51) days with which to clear the bank draft in question." Petitioner should have disallowed the withdrawal because his passbook was not presented. He claimed that petitioner had no one to blame except itself "for being grossly negligent;" in fact, it had allegedly admitted having paid the amount in the check "by mistake" x x x "if not altogether due to collusion and/or bad faith on the part of (its) employees." Charging petitioner with "apparent ignorance of routine bank procedures," by way of counterclaim, private respondent prayed for moral damages of P100,000.00, exemplary damages of P50,000.00 and attorneys fees of 30% of whatever amount that would be awarded to him plus an honorarium of P500.00 per appearance in court. Private respondent also filed a motion for admission of a third party complaint against Chan. He alleged that "thru strategem and/or manipulation," Chan was able to withdraw the amount of $2,500.00 even without private respondents passbook. Thus, private respondent prayed that third party defendant Chan be made to refund to him the amount withdrawn and to pay attorneys fees of P5,000.00 plus P300.00 honorarium per appearance. Petitioner filed a comment on the motion for leave of court to admit the third party complaint, wherein it asserted that per paragraph 2 of the Rules and Regulations governing BPI savings accounts, private respondent alone was liable "for the value of the credit given on account of the draft or check deposited." It contended that private respondent was estopped from disclaiming liability because he himself authorized the withdrawal of the amount by signing the withdrawal slip. Petitioner prayed for the denial of the said motion so as not to unduly delay the disposition of the main case asserting that private respondents claim could be ventilated in another case. Private respondent replied that for the parties to obtain complete relief and to avoid multiplicity of suits, the motion to admit third party complaint should be granted. Meanwhile, the trial court issued orders on August 25, 1987 and October 28, 1987 directing private respondent to actively participate in locating Chan. After private respondent failed to comply, the trial court, on May 18, 1988, dismissed the third party complaint without prejudice. On November 4, 1991, a decision was rendered dismissing the complaint. The lower court held that petitioner could not hold private respondent liable based on the checks face value alone. To so hold him liable "would render inutile the requirement of clearance from the drawee bank before the value of a particular foreign check or draft can be credited to the account of a depositor making such deposit." The lower court further held that "it was incumbent upon the petitioner to credit the value of the check in question to the account of the private respondent only upon receipt of the notice of final payment and should not have authorized the withdrawal from the latters account of the value or proceeds of the check." Having admitted that it committed

a "mistake" in not waiting for the clearance of the check before authorizing the withdrawal of its value or proceeds, petitioner should suffer the resultant loss. Supremax On appeal, the Court of Appeals affirmed the lower courts decision. The appellate court held that petitioner committed "clear gross negligence" in allowing Ruben Gayon, Jr. to withdraw the money without presenting private respondents passbook and, before the check was cleared and in crediting the amount indicated therein in private respondents account. It stressed that the mere deposit of a check in private respondents account did not mean that the check was already private respondents property. The check still had to be cleared and its proceeds can only be withdrawn upon presentation of a passbook in accordance with the banks rules and regulations. Furthermore, petitioners contention that private respondent warranted the checks genuineness by endorsing it is untenable for it would render useless the clearance requirement. Likewise, the requirement of presentation of a passbook to ascertain the propriety of the accounting reflected would be a meaningless exercise. After all, these requirements are designed to protect the bank from deception or fraud. The Court of Appeals cited the case of Roman Catholic Bishop of Malolos, Inc. v. IAC,[14] where this Court stated that a personal check is not legal tender or money, and held that the check deposited in this case must be cleared before its value could be properly transferred to private respondent's account. Without filing a motion for the reconsideration of the Court of Appeals Decision, petitioner filed this petition for review on certiorari, raising the following issues: 1.......WHETHER OR NOT RESPONDENT NAPIZA IS LIABLE UNDER HIS WARRANTIES AS A GENERAL INDORSER. 2.......WHETHER OR NOT A CONTRACT OF AGENCY WAS CREATED BETWEEN RESPONDENT NAPIZA AND RUBEN GAYON. 3.......WHETHER OR NOT PETITIONER WAS GROSSLY NEGLIGENT IN ALLOWING THE WITHDRAWAL. Petitioner claims that private respondent, having affixed his signature at the dorsal side of the check, should be liable for the amount stated therein in accordance with the following provision of the Negotiable Instruments Law (Act No. 2031): "SEC. 66. Liability of general indorser. Every indorser who indorses without qualification, warrants to all subsequent holders in due course (a)......The matters and things mentioned in subdivisions (a), (b), and (c) of the next preceding section; and (b)......That the instrument is at the time of his indorsement, valid and subsisting. And, in addition, he engages that on due presentment, it shall be accepted or paid, or both, as the case may be, according to its tenor, and that if it be dishonored, and the necessary proceedings on dishonor be duly taken, he will pay the amount thereof to the holder, or to any subsequent indorser who may be compelled to pay it." Section 65, on the other hand, provides for the following warranties of a person negotiating an instrument by delivery or by qualified indorsement: (a) that the instrument is genuine and in all respects what it purports to be; (b) that he has a good title to it, and (c) that all prior parties had capacity to contract.[15] In People v. Maniego,[16] this Court described the liabilities of an indorser as follows: Juris "Appellants contention that as mere indorser, she may not be liable on account of the dishonor of the checks indorsed by her, is likewise untenable. Under the law, the holder or last indorsee of a negotiable instrument has the right to enforce payment of the instrument for the full amount thereof against all parties liable thereon. Among the parties liable thereon is an indorser of the instrument, i.e., a person placing his signature upon an instrument otherwise than as a maker, drawer or acceptor * * unless he clearly indicated by appropriate words his intention to be bound in some other capacity. Such an indorser who indorses without qualification, inter alia engages that on due presentment, * * (the instrument) shall be accepted or paid, or both, as the case may be, according to its tenor, and that if it be dishonored, and the necessary proceedings on dishonor be duly taken, he will pay the amount thereof to the holder, or any subsequent indorser who may be compelled to pay it. Maniego may also be deemed an accommodation party in the light of the facts, i.e., a person who has signed the instrument as maker, drawer, acceptor, or indorser, without receiving value therefor, and for the purpose of lending his name to some other person. As such, she is under the law

liable on the instrument to a holder for value, notwithstanding such holder at the time of taking the instrument knew * * (her) to be only an accommodation party, although she has the right, after paying the holder, to obtain reimbursement from the party accommodated, since the relation between them is in effect that of principal and surety, the accommodation party being the surety." It is thus clear that ordinarily private respondent may be held liable as an indorser of the check or even as an accommodation party.[17] However, to hold private respondent liable for the amount of the check he deposited by the strict application of the law and without considering the attending circumstances in the case would result in an injustice and in the erosion of the public trust in the banking system. The interest of justice thus demands looking into the events that led to the encashment of the check. Petitioner asserts that by signing the withdrawal slip, private respondent "presented the opportunity for the withdrawal of the amount in question." Petitioner relied "on the genuine signature on the withdrawal slip, the personality of private respondents son and the lapse of more than fifty (50) days from date of deposit of the Continental Bank draft, without the same being returned yet."[18] We hold, however, that the propriety of the withdrawal should be gauged by compliance with the rules thereon that both petitioner bank and its depositors are duty-bound to observe. In the passbook that petitioner issued to private respondent, the following rules on withdrawal of deposits appear: "4.......Withdrawals must be made by the depositor personally but in some exceptional circumstances, the Bank may allow withdrawal by another upon the depositors written authority duly authenticated; and neither a deposit nor a withdrawal will be permitted except upon the presentation of the depositors savings passbook, in which the amount deposited withdrawn shall be entered only by the Bank. 5.......Withdrawals may be made by draft, mail or telegraphic transfer in currency of the account at the request of the depositor in writing on the withdrawal slip or by authenticated cable. Such request must indicate the name of the payee/s, amount and the place where the funds are to be paid. Any stamp, transmission and other charges related to such withdrawals shall be for the account of the depositor and shall be paid by him/her upon demand. Withdrawals may also be made in the form of travellers checks and in pesos. Withdrawals in the form of notes/bills are allowed subject however, to their (availability). 6.......Deposits shall not be subject to withdrawal by check, and may be withdrawn only in the manner above provided, upon presentation of the depositors savings passbook and with the withdrawal form supplied by the Bank at the counter."[19] Scjuris Under these rules, to be able to withdraw from the savings account deposit under the Philippine foreign currency deposit system, two requisites must be presented to petitioner bank by the person withdrawing an amount: (a) a duly filled-up withdrawal slip, and (b) the depositors passbook. Private respondent admits that he signed a blank withdrawal slip ostensibly in violation of Rule No. 6 requiring that the request for withdrawal must name the payee, the amount to be withdrawn and the place where such withdrawal should be made. That the withdrawal slip was in fact a blank one with only private respondents two signatures affixed on the proper spaces is buttressed by petitioners allegation in the instant petition that had private respondent indicated therein the person authorized to receive the money, then Ruben Gayon, Jr. could not have withdrawn any amount. Petitioner contends that "(i)n failing to do so (i.e., naming his authorized agent), he practically authorized any possessor thereof to write any amount and to collect the same."[20] Such contention would have been valid if not for the fact that the withdrawal slip itself indicates a special instruction that the amount is payable to "Ramon A. de Guzman &/or Agnes C. de Guzman." Such being the case, petitioners personnel should have been duly warned that Gayon, who was also employed in petitioners Buendia Ave. Extension branch,[21] was not the proper payee of the proceeds of the check. Otherwise, either Ramon or Agnes de Guzman should have issued another authority to Gayon for such withdrawal. Of course, at the dorsal side of the withdrawal slip is an "authority to withdraw" naming Gayon the person who can withdraw the amount indicated in the check. Private respondent does not deny having signed such authority. However, considering petitioners clear admission that the withdrawal slip was a blank one except for private respondents signature, the unavoidable conclusion is that the typewritten name of "Ruben C. Gayon, Jr." was intercalated and thereafter it was signed by Gayon or whoever was allowed by petitioner to withdraw the amount. Under these facts, there could not have been a principal-agent relationship between private respondent and Gayon so as to render the former liable for the amount withdrawn.

Moreover, the withdrawal slip contains a boxed warning that states: "This receipt must be signed and presented with the corresponding foreign currency savings passbook by the depositor in person. For withdrawals thru a representative, depositor should accomplish the authority at the back." The requirement of presentation of the passbook when withdrawing an amount cannot be given mere lip service even though the person making the withdrawal is authorized by the depositor to do so. This is clear from Rule No. 6 set out by petitioner so that, for the protection of the banks interest and as a reminder to the depositor, the withdrawal shall be entered in the depositors passbook. The fact that private respondents passbook was not presented during the withdrawal is evidenced by the entries therein showing that the last transaction that he made with the bank was on September 3, 1984, the date he deposited the controversial check in the amount of $2,500.00.[22] In allowing the withdrawal, petitioner likewise overlooked another rule that is printed in the passbook. Thus: "2.......All deposits will be received as current funds and will be repaid in the same manner; provided, however, that deposits of drafts, checks, money orders, etc. will be accepted as subject to collection only and credited to the account only upon receipt of the notice of final payment. Collection charges by the Banks foreign correspondent in effecting such collection shall be for the account of the depositor. If the account has sufficient balance, the collection shall be debited by the Bank against the account. If, for any reason, the proceeds of the deposited checks, drafts, money orders, etc., cannot be collected or if the Bank is required to return such proceeds, the provisional entry therefor made by the Bank in the savings passbook and its records shall be deemed automatically cancelled regardless of the time that has elapsed, and whether or not the defective items can be returned to the depositor; and the Bank is hereby authorized to execute immediately the necessary corrections, amendments or changes in its record, as well as on the savings passbook at the first opportunity to reflect such cancellation." (Italics and underlining supplied.) Jurissc As correctly held by the Court of Appeals, in depositing the check in his name, private respondent did not become the outright owner of the amount stated therein. Under the above rule, by depositing the check with petitioner, private respondent was, in a way, merely designating petitioner as the collecting bank. This is in consonance with the rule that a negotiable instrument, such as a check, whether a managers check or ordinary check, is not legal tender.[23] As such, after receiving the deposit, under its own rules, petitioner shall credit the amount in private respondents account or infuse value thereon only after the drawee bank shall have paid the amount of the check or the check has been cleared for deposit. Again, this is in accordance with ordinary banking practices and with this Courts pronouncement that "the collecting bank or last endorser generally suffers the loss because it has the duty to ascertain the genuineness of all prior endorsements considering that the act of presenting the check for payment to the drawee is an assertion that the party making the presentment has done its duty to ascertain the genuineness of the endorsements."[24] The rule finds more meaning in this case where the check involved is drawn on a foreign bank and therefore collection is more difficult than when the drawee bank is a local one even though the check in question is a managers check.

[25] Misjuris

In Banco Atlantico v. Auditor General,[26] Banco Atlantico, a commercial bank in Madrid, Spain, paid the amounts represented in three (3) checks to Virginia Boncan, the finance officer of the Philippine Embassy in Madrid. The bank did so without previously clearing the checks with the drawee bank, the Philippine National Bank in New York, on account of the "special treatment" that Boncan received from the personnel of Banco Atlanticos foreign department. The Court held that the encashment of the checks without prior clearance is "contrary to normal or ordinary banking practice specially so where the drawee bank is a foreign bank and the amounts involved were large." Accordingly, the Court approved the Auditor Generals denial of Banco Atlanticos claim for payment of the value of the checks that was withdrawn by Boncan. Said ruling brings to light the fact that the banking business is affected with public interest. By the nature of its functions, a bank is under obligation to treat the accounts of its depositors "with meticulous care, always having in mind the fiduciary nature of their relationship."[27] As such, in dealing with its depositors, a bank should exercise its functions not only with the diligence of a good father of a family but it should do so with the highest degree of care.[28] In the case at bar, petitioner, in allowing the withdrawal of private respondents deposit, failed to exercise the diligence of a good father of a family. In total disregard of its own rules, petitioners personnel negligently handled private respondents account to petitioners detriment. As this Court once said on this matter: "Negligence is the omission to do something which a reasonable man, guided by those considerations which ordinarily regulate the conduct of human affairs, would do, or the doing of

something which a prudent and reasonable man would do. The seventy-eight (78)-year-old, yet still relevant, case of Picart v. Smith, provides the test by which to determine the existence of negligence in a particular case which may be stated as follows: Did the defendant in doing the alleged negligent act use that reasonable care and caution which an ordinarily prudent person would have used in the same situation? If not, then he is guilty of negligence. The law here in effect adopts the standard supposed to be supplied by the imaginary conduct of the discreet pater-familias of the Roman law. The existence of negligence in a given case is not determined by reference to the personal judgment of the actor in the situation before him. The law considers what would be reckless, blameworthy, or negligent in the man of ordinary intelligence and prudence and determines liability by that."[29] Petitioner violated its own rules by allowing the withdrawal of an amount that is definitely over and above the aggregate amount of private respondents dollar deposits that had yet to be cleared. The banks ledger on private respondents account shows that before he deposited $2,500.00, private respondent had a balance of only $750.00.[30] Upon private respondents deposit of $2,500.00 on September 3, 1984, that amount was credited in his ledger as a deposit resulting in the corresponding total balance of $3,250.00.[31] On September 10, 1984, the amount of $600.00 and the additional charges of $10.00 were indicated therein as withdrawn thereby leaving a balance of $2,640.00. On September 30, 1984, an interest of $11.59 was reflected in the ledger and on October 23, 1984, the amount of $2,541.67 was entered as withdrawn with a

balance of $109.92.[32] On November 19, 1984 the word "hold" was written beside the balance of $109.92.

[33] That must have been the time when Reyes, petitioners branch manager, was informed unofficially of the
fact that the check deposited was a counterfeit, but petitioners Buendia Ave. Extension Branch received a copy of the communication thereon from Wells Fargo Bank International in New York the following day, November 20, 1984.[34] According to Reyes, Wells Fargo Bank International handled the clearing of checks drawn against U.S. banks that were deposited with petitioner.[35] Jjlex From these facts on record, it is at once apparent that petitioners personnel allowed the withdrawal of an amount bigger than the original deposit of $750.00 and the value of the check deposited in the amount of $2,500.00 although they had not yet received notice from the clearing bank in the United States on whether or not the check was funded. Reyes contention that after the lapse of the 35-day period the amount of a deposited check could be withdrawn even in the absence of a clearance thereon, otherwise it could take a long time before a depositor could make a withdrawal,[36] is untenable. Said practice amounts to a disregard of the clearance requirement of the banking system. While it is true that private respondents having signed a blank withdrawal slip set in motion the events that resulted in the withdrawal and encashment of the counterfeit check, the negligence of petitioners personnel was the proximate cause of the loss that petitioner sustained. Proximate cause, which is determined by a mixed consideration of logic, common sense, policy and precedent, is "that cause, which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces the injury, and without which the result would not have occurred."[37] The proximate cause of the withdrawal and eventual loss of the amount of $2,500.00 on petitioners part was its personnels negligence in allowing such withdrawal in disregard of its own rules and the clearing requirement in the banking system. In so doing, petitioner assumed the risk of incurring a loss on account of a forged or counterfeit foreign check and hence, it should suffer the resulting damage. WHEREFORE, the petition for review on certiorari is DENIED. The Decision of the Court of Appeals in CA-G.R. CV No. 37392 is AFFIRMED. SO ORDERED. Newmiso Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Pardo, JJ., concur. Republic of the Philippines SUPREME COURT Manila

EN BANC

G.R. No. 1719

January 23, 1907

M. H., RAKES, plaintiff-appellee, vs. THE ATLANTIC, GULF AND PACIFIC COMPANY, defendant-appellant. A. D. Gibbs for appellant. F. G. Waite, & Thimas Kepner for appellee. TRACEY, J.: This is an action for damages. The plaintiff, one of a gang of eight negro laborers in the employment of the defendant, was at work transporting iron rails from a barge in the harbor to the companys yard near the malecon in Manila. Plaintiff claims that but one hand car was used in this work. The defendant has proved that there were two immediately following one another, upon which were piled lengthwise seven rails, each weighing 560 pounds, so that the ends of the rails lay upon two crosspieces or sills secured to the cars, but without side pieces or guards to prevent them from slipping off. According to the testimony of the plaintiff, the men were either in the rear of the car or at its sides. According to that defendant, some of them were also in front, hauling by a rope. At a certain spot at or near the waters edge the track sagged, the tie broke, the car either canted or upset, the rails slid off and caught the plaintiff, breaking his leg, which was afterwards amputated at about the knee. This first point for the plaintiff to establish was that the accident happened through the negligence of the defendant. The detailed description by the defendants witnesses of the construction and quality of the track proves that if was up to the general standard of tramways of that character, the foundation consisting on land of blocks or crosspieces of wood, by 8 inches thick and from 8 to 10 feet long laid, on the surface of the ground, upon which at a right angle rested stringers of the same thickness, but from 24 to 30 feet in length. On the across the stringers the parallel with the blocks were the ties to which the tracks were fastened. After the road reached the waters edge, the blocks or crosspieces were replaced with pilling, capped by timbers extending from one side to the other. The tracks were each about 2 feet wide and the two inside rails of the parallel tracks about 18 inches apart. It was admitted that there were no side pieces or guards on the car; that where no ends of the rails of the track met each other and also where the stringers joined, there were no fish plates. The defendant has not effectually overcome the plaintiffs proof that the joints between the rails were immediately above the joints between the underlying stringers. The cause of the sagging of the tracks and the breaking of the tie, which was the immediate occasion of the accident, is not clear in the evidence, but is found by the trial court and is admitted in the briefs and in the argument to have been the dislodging of the crosspiece or piling under the stringer by the water of the bay raised by a recent typhoon. The superintendent of the company attributed it to the giving way of the block laid in the sand. No effort was made to repair the injury at the time of the occurrence. According to plaintiffs witnesses, a depression of the track, varying from one half inch to one inch and a half, was therafter apparent to the eye, and a fellow workman of the plaintiff swears that the day before the accident he called the attention of McKenna, the foreman, to it and asked by simply straightening out the crosspiece, resetting the block under the stringer and renewing the tie, but otherwise leaving the very same timbers as before. It has not proven that the company inspected the track after the typhoon or had any proper system of inspection. In order to charge the defendant with negligence, it was necessary to show a breach of duty on its part in failing either to properly secure the load on iron to vehicles transporting it, or to skillfully build the tramway or to maintain it in proper condition, or to vigilantly inspect and repair the roadway as soon as the depression in it became visible. It is upon the failure of the defendant to repair the weakened track, after notice of its condition, that the judge below based his judgment. This case presents many important matters for our decision, and first among them is the standard of duty which we shall establish in our jurisprudence on the part of employees toward employees. The lack or the harshness of legal rules on this subject has led many countries to enact designed to put these relations on a fair basis in the form of compensation or liability laws or the institution of insurance. In the absence of special legislation we find no difficulty in so applying the general principles of our law as to work out a just result. Article 1092 of the Civil Code provides: Civil obligations, arising from crimes or misdemeanors, shall be governed by the provisions of the Penal Code. And article 568 of the latter code provides:

He who shall execute through reckless negligence an act that if done with malice would constitute a grave crime, shall be punished. And article 590 provides that the following shall be punished: 4. Those who by simple imprudence or negligence, without committing any infraction of regulations, shall cause an injury which, had malice intervened, would have constituted a crime or misdemeanor. And finally by articles 19 and 20, the liability of owners and employers for the faults of their servants and representatives is declared to be civil and subsidiary in its character. It is contented by the defendant, as its first defense to the action, that the necessary conclusion from these collated laws is that the remedy for injuries through negligence lies only in a criminal action in which the official criminally responsible must be made primarily liable and his employer held only subsidiarily to him. According to this theory the plaintiff should have procured the arrest of the representative of the company accountable for not repairing the tract, and on his prosecution a suitable fine should have been imposed, payable primarily by him and secondarily by his employer. This reasoning misconceived the plan of the Spanish codes upon this subject. Article 1093 of the Civil Code makes obligations arising from faults or negligence not punished by the law, subject to the provisions of Chapter 11 of Title XVI. Section 1902 of that chapter reads: A person who by an act or omission causes damage to another when there is fault or negligence shall be obliged to repair the damage so done. SEC. 1903. The obligation imposed by the preceding article is demandable, not only for personal acts and omissions, but also for those of the persons for whom they should be responsible. The father, and on his death or incapacity, the mother, is liable for the damages caused by the minors who live with them. xxx xxx xxx

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

The liability referred to in this article shall cease when the persons mentioned therein prove that they employed all the diligence of a good father of a family to avoid the damages. As an answer to the argument urged in this particular action it may be sufficient to point out that nowhere in our general statutes is the employer penalized for failure to provide or maintain safe appliances for his workmen. His obligation therefore is one not punished by the law and falls under civil rather than criminal jurisprudence. But the answer may be a broader one. We should be reluctant, under any conditions, to adopt a forced construction of these scientific codes, such as is proposed by the defendant, that would rob some of these articles of effect, would shut out litigants their will from the civil courts, would make the assertion of their rights dependent upon the selection for prosecution of the proper criminal offender, and render recovery doubtful by reason of the strict rules of proof prevailing in criminal actions. Even if these articles had always stood alone, such a construction would be unnecessary, but clear light is thrown upon their meaning by the provisions of the Law of Criminal Procedure of Spain (Ley de Enjuiciamiento Criminal), which, though never in actual force in these Islands, was formerly given a suppletory or explanatory effect. Under article 111 of this law, both classes of action, civil and criminal, might be prosecuted jointly or separately, but while the penal action was pending the civil was suspended. According to article 112, the penal action once started, the civil remedy should be sought therewith, unless it had been waived by the party injured or been expressly reserved by him for civil proceedings for the future. If the civil action alone was prosecuted, arising out of a crime that could be enforced by only on private complaint, the penal action thereunder should be extinguished. These provisions are in harmony with those of articles 23 and 133 of our Penal Code on the same subject. An examination of this topic might be carried much further, but the citations of these articles suffices to show that the civil liability was not intended to be merged in the criminal nor even to be suspended thereby, except as expressly provided by law. Where an individual is civilly liable for a negligent act or omission, it is not required that the inured party should seek out a third person criminally liable whose prosecution must be a condition precedent to the enforcement of the civil right. Under article 20 of the Penal Code the responsibility of an employer may be regarded as subsidiary in respect of criminal actions against his employees only while they are process of prosecution, or in so far as they

determinate the existence of the criminal act from which liability arises, and his obligation under the civil law and its enforcement in the civil courts is not barred thereby unless by election of the injured person. Inasmuch as no criminal in question, the provisions of the Penal Code can not affect this action. This construction renders it unnecessary to finally determine here whether this subsidiary civil liability in penal actions survived the laws that fully regulated it or has been abrogated by the American civil and criminal procedure now in force in the Philippines. The difficulty in construing the articles of the code above cited in this case appears from the briefs before us to have arisen from the interpretation of the words of article 1093, fault or negligence not punished by law, as applied to the comprehensive definition of offenses in articles 568 and 590 of the Penal Code. It has been shown that the liability of an employer arising out of his relation to his employee who is the offender is not to be regarded as derived from negligence punished by the law, within the meaning of articles 1092 and 1093. More than this, however, it can not be said to fall within the class of acts unpunished by the law, the consequences of which are regulated by articles 1902 and 1903 of the Civil Code. The acts to which these articles are applicable are understood to be those and growing out of preexisting duties of the parties to one another. But were relations already formed give rise to duties, whether springing from contract or quasi contract, then breaches of those duties are subject to articles 1101, 1103, and 1104, of the same code. A typical application of the distinction may be found in the consequences of a railway accident due to defective machinery supplied by the employer. His liability to his employee would arise out of the contract of employment, that to the passengers out of the contract for passage. While that to that injured bystander would originate in the negligent act itself. This distinction is thus clearly set forth by Manresa in his commentary on article 1093. We are with reference to such obligations, that culpa, or negligence, may be understood in two different senses; either as culpa, substantive and independent, which on account of its origin arises in an obligation between two persons not formerly bound by any other obligation; or as an incident in the performance of an obligation; or as already existed, which cannot be presumed to exist without the other, and which increases the liability arising from the already existing obligation. Of these two species of culpa the first one mentioned, existing by itself, may be also considered as a real source of an independent obligation, and, as chapter 2, title 16 of this book of the code is devoted to it, it is logical to presume that the reference contained in article 1093 is limited thereto and that it does not extend to those provisions relating to the other species of culpa (negligence), the nature of which we will discuss later. (Vol. 8, p. 29.) And in his commentary on articles 1102 and 1104 he says that these two species of negligence may be somewhat inexactly described as contractual and extra-contractual, the letter being the culpa aquiliana of the Roman law and not entailing so strict an obligation as the former. This terminology is unreservedly accepted by Sanchez-Roman (Derecho Civil, fourth section, Chapter XI, Article II, No. 12), and the principle stated is supported by decisions of the supreme court of Spain, among them those of November 20, 1896 (80 Jurisprudencia Civil, No. 151), and June 27, 1894 (75 Jurisprudencia Civil, No. 182). The contract is one for hire and not one of mandate. (March 10, 1897, 81 Jurisprudencia Civil, No. 107.) Spanish Jurisprudencia prior to the adoption of the Working Mens Accident Law of January 30, 1900, throws uncertain light on the relation between master and workman. Moved by the quick industrial development of their people, the courts of France early applied to the subject the principles common to the law of both countries, which are lucidly discussed by the leading French commentators. The original French theory, resting the responsibility of owners of industrial enterprises upon articles 1382, 1383, and 1384 of the Code Napoleon, corresponding in scope to articles 1902 and 1903 of the Spanish Code, soon yielded to the principle that the true basis is the contractual obligation of the employer and employee. (See 18 Dalloz, 196, Title Travail, 331.) Later the hardships resulting from special exemptions inserted in contracts for employment led to the discovery of a third basis for liability in an article of the French Code making the possessor of any object answerable for damage done by it while in his charge. Our law having no counterpart of this article, applicable to every kind of object, we need consider neither the theory growing out of it nor that of professional risk more recently imposed by express legislation, but rather adopting the interpretation of our Civil Code above given, find a rule for this case in the contractual obligation. This contractual obligation, implied from the relation and perhaps so inherent in its nature to be invariable by the parties, binds the employer to provide safe appliances for the use of the employee, thus closely corresponding to English and American Law. On these principles it was the duty of the defendant to build and to maintain its track in reasonably sound condition, so as to protect its workingmen from unnecessary danger. It is plain that in one respect or the other it failed in its duty, otherwise the accident could not have occurred; consequently the negligence of the defendant is established.

Another contention of the defense is that the injury resulted to the plaintiff as a risk incident to his employment and, as such, one assumed by him. It is evident that this cannot be the case if the occurrence was due to the failure to repair the track or to duly inspect, it for the employee is not presumed to have stipulated that the employer might neglect his legal duty. Nor may it be excused upon the ground that the negligence leading to the accident was that of a fellow-servant of the injured man. It is not apparent to us that the intervention of a third person can relieve the defendant from the performance of its duty nor impose upon the plaintiff the consequences of an act or omission not his own. Sua cuique culpa nocet. This doctrine, known as the fellowservant, rule, we are not disposed to introduce into our jurisprudence. Adopted in England by Lord Abinger in the case of Prescott vs. Fowler (3 Meeson & Welsby, 1) in 1837, it has since been effectually abrogated by the Employers Liability Acts and the Compensation Law. The American States which applied it appear to be gradually getting rid of it; for instance, the New York State legislature of 1906 did away with it in respect to railroad companies, and had in hand a scheme for its total abolition. It has never found place in the civil law of continental Europe. (Dalloz, vol. 39, 1858, Title Responsibilite, 630, and vol. 15, 1895, same title, 804. Also more recent instances in Fuzier-Herman, Title Responsibilite Civile, 710.) The French Cour de Cassation clearly laid down the contrary principle in its judgment of June 28, 1841, in the case of Reygasse, and has since adhered to it. The most controverted question in the case is that of the negligence of the plaintiff, contributing to the accident, to what extent it existed in fact and what legal effect is to be given it. In two particulars is he charged with carelessness: First. That having noticed the depression in the track he continued his work; and Second. That he walked on the ends of the ties at the side of the car instead of along the boards, either before or behind it. As to the first point, the depression in the track might indicate either a serious or a rival difficulty. There is nothing in the evidence to show that the plaintiff did or could see the displaced timber underneath the sleeper. The claim that he must have done so is a conclusion drawn from what is assumed to have been a probable condition of things not before us, rather than a fair inference from the testimony. While the method of construction may have been known to the men who had helped build the road, it was otherwise with the plaintiff who had worked at this job less than two days. A man may easily walk along a railway without perceiving a displacement of the underlying timbers. The foreman testified that he knew the state of the track on the day of the accident and that it was then in good condition, and one Danridge, a witness for the defendant, working on the same job, swore that he never noticed the depression in the track and never saw any bad place in it. The sagging of the track this plaintiff did perceive, but that was reported in his hearing to the foreman who neither promised nor refused to repair it. His lack of caution in continuing at his work after noticing the slight depression of the rail was not of so gross a nature as to constitute negligence, barring his recovery under the severe American rule. On this point we accept the conclusion of the trial judge who found as facts that the plaintiff did not know the cause of the one rail being lower than then other and it does not appear in this case that the plaintiff knew before the accident occurred that the stringers and rails joined in the same place. Were we not disposed to agree with these findings they would, nevertheless, be binding upon us, because not plainly and manifestly against the weight of evidence, as those words of section 497, paragraph 3 of the Code of Civil Procedure were interpreted by the Supreme Court of the United States in the De la Rama case (201 U. S., 303). In respect of the second charge of negligence against the plaintiff, the judgment below is not so specific. While the judge remarks that the evidence does not justify the finding that the car was pulled by means of a rope attached to the front end or to the rails upon it, and further that the circumstances in evidence make it clear that the persons necessary to operate the car could not walk upon the plank between the rails and that, therefore, it was necessary for the employees moving it to get hold upon it as best they could, there is no specific finding upon the instruction given by the defendant to its employees to walk only upon the planks, nor upon the necessity of the plaintiff putting himself upon the ties at the side in order to get hold upon the car. Therefore the findings of the judge below leave the conduct of the plaintiff in walking along the side of the loaded car, upon the open ties, over the depressed track, free to our inquiry. While the plaintiff and his witnesses swear that not only were they not forbidden to proceed in this way, but were expressly directed by the foreman to do so, both the officers of the company and three of the workmen testify that there was a general prohibition frequently made known to all the gang against walking by the side of the car, and the foreman swears that he repeated the prohibition before the starting of this particular load. On this contradiction of proof we think that the preponderance is in favor of the defendants contention to the extent of the general order being made known to the workmen. If so, the disobedience of the plaintiff in placing

himself in danger contributed in some degree to the injury as a proximate, although not as its primary cause. This conclusion presents sharply the question, What effect is to be given such an act of contributory negligence? Does it defeat a recovery, according to the American rule, or is it to be taken only in reduction of damages? While a few of the American States have adopted to a greater or less extent the doctrine of comparative negligence, allowing a recovery by a plaintiff whose own act contributed to his injury, provided his negligence was slight as compared with that of the defendant, and some others have accepted the theory of proportional damages, reducing the award to a plaintiff in proportion to his responsibility for the accident, yet the overwhelming weight of adjudication establishes the principle in American jurisprudence that any negligence, however slight, on the part of the person injured which is one of the causes proximately contributing to his injury, bars his recovery. (English and American Encyclopedia of law, Titles Comparative Negligence and Contributory Negligence.) In Grant Trunk Railway Company vs. Ives (144 U. S., 408, at page 429) the Supreme Court of the United States thus authoritatively states the present rule of law: Although the defendants negligence may have been the primary cause of the injury complained of, yet an action for such injury cannot be maintained if the proximate and immediate cause of the injury can be traced to the want of ordinary care and caution in the person injured; subject to this qualification, which has grown up in recent years (having been first enunciated in Davies vs. Mann, 10 M. & W., 546) that the contributory negligence of the party injured will not defeat the action if it be shown that the defendant might, by the exercise of reasonable care and prudence, have avoided the consequences of the injured partys negligence. There are many cases in the supreme court of Spain in which the defendant was exonerated, but when analyzed they prove to have been decided either upon the point that he was not negligent or that the negligence of the plaintiff was the immediate cause of the casualty or that the accident was due to casus fortuitus. Of the first class in the decision of January 26, 1887 (38 Jurisprudencia Criminal, No. 70), in which a railway employee, standing on a car, was thrown therefrom and killed by the shock following the backing up of the engine. It was held that the management of the train and engine being in conformity with proper rules of the company, showed no fault on its part. Of the second class are the decision of the 15th of January, the 19th of February, and the 7th of March, 1902, stated in Alcubillas Index of that year; and of the third class the decision of the 4th of June, 1888 (64 Jurisprudencia Civil, No. 1), in which the breaking down of plaintiffs dam by the logs of the defendant impelled against it by the Tajo River, was held due to a freshet as a fortuitous cause. The decision of the 7th of March, 1902, on which stress has been laid, rested on two bases, one, that the defendant was not negligent, because expressly relieved by royal order from the common obligation imposed by the police law of maintaining a guard at the road crossing; the other, because the act of the deceased in driving over level ground with unobstructed view in front of a train running at speed, with the engine whistle blowing was the determining cause of the accident. It is plain that the train was doing nothing but what it had a right to do and that the only fault lay with the injured man. His negligence was not contributory, it was sole, and was of such an efficient nature that without it no catastrophe could have happened. On the other hand, there are many cases reported in which it seems plain that the plaintiff sustaining damages was not free from contributory negligence; for instance, the decision of the 14th of December, 1894 (76 Jurisprudencia Civil, No. 134), in which the owner of a building was held liable for not furnishing protection to workmen engaged in hanging out flags, when the latter must have perceived beforehand the danger attending the work. None of those cases define the effect to be given the negligence of a plaintiff which contributed to his injury as one of its causes, though not the principal one, and we are left to seek the theory of the civil law in the practice of other countries. In France in the case of Marquant, August 20, 1879, the cour de cassation held that the carelessness of the victim did not civilly relieve the person without whose fault the accident could not have happened, but that the contributory negligence of the injured man had the effect only of reducing the damages. The same principle was applied in the case of Recullet, November 10, 1888. and that of Laugier of the 11th of November, 1896. (Fuzier-Herman, Title Responsibilite Cirile, 411, 412.) Of like tenor are citations in Dalloz (vol. 18, 1806, Title Trail, 363, 364, and vol. 15, 1895, Title Responsibilite, 193, 198). In the Canadian Province of Quebee, which has retained for the most part the French Civil Law, now embodied in a code following the Code Napoleon, a practice in accord with that of France is laid down in many cases collected in the annotations to article 1053 of the code edited by Beauchamps, 1904. One of these is Luttrell vs. Trottier, reported in La Revue de Jurisprudence, volume 6, page 90, in which the court of Kings bench,

otherwise known as the court of appeals, the highest authority in the Dominion of Canada on points of French law, held that contributory negligence did not exonerate the defendants whose fault had been the immediate cause of the accident, but entitled him to a reduction of damages. Other similar cases in the provincial courts have been overruled by appellate tribunals made up of common law judges drawn from other provinces, who have preferred to impose uniformally throughout the Dominion the English theory of contributory negligence. Such decisions throw no light upon the doctrines of the civil law. Elsewhere we find this practice embodied in legislation; for instance, section 2 of article 2398 of the Code of Portugal reads as follows: If in the case of damage there was fault or negligence on the part of the person injured or in the part of some one else, the indemnification shall be reduced in the first case, and in the second case it shall be appropriated in proportion to such fault or negligence as provided in paragraphs 1 and 2 of section 2372. And in article 1304 of the Austrian Code provides that the victim who is partly changeable with the accident shall stand his damages in proportion to his fault, but when that proportion is incapable of ascertainment, he shall share the liability equally with the person principally responsible. The principle of proportional damages appears to be also adopted in article 51 of the Swiss Code. Even in the United States in admirality jurisdictions, whose principles are derived from the civil law, common fault in cases of collision have been disposed of not on the ground of contradictor negligence, but on that of equal loss, the fault of the one part being offset against that of the other. (Ralli vs. Troop, 157 U. S. 386; 97.) The damage of both being added together and the sum equally divided, a decree is entered in favor of the vessel sustaining the greater loss against the other for the excess of her damages over one-half of the aggregate sum. (The Manitoba, 122 U. S., 97) Exceptional practice appears to prevail in maritime law in other jurisdictions. The Spanish Code of Commerce, article 827, makes each vessel for its own damage when both are the fault; this provision restricted to a single class of the maritime accidents, falls for short of a recognition of the principle of contributory negligence as understood in American Law, with which, indeed, it has little in common. This is a plain from other articles of the same code; for instance, article 829, referring to articles 826, 827, and 828, which provides: In the cases above mentioned the civil action of the owner against the person liable for the damage is reserved, as well as the criminal liability which may appear. The rule of the common law, a hard and fast one, not adjustable with respects of the faults of the parties, appears to have grown out the original method of trial by jury, which rendered difficult a nice balancing of responsibilities and which demanded an inflexible standard as a safeguard against too ready symphaty for the injured. It was assumed that an exact measure of several concurring faults was unattainable. The reason why, in cases of mutual concurring negligence, neither party can maintain an action against the other, is, not the wrong of the one is set off against the wrong of the other; it that the law cannot measure how much of the damage suffered is attributable to the plaintiffs own fault. If he were allowed to recover, it might be that he would obtain from the other party compensation for his own misconduct. (Heil vs. Glanding, 42 Penn. St. Rep., 493, 499.) The parties being mutually in fault, there can be no appointment of damages. The law has no scales to determine in such cases whose wrongdoing weighed most in the compound that occasioned the mischief. (Railroad vs. Norton, 24 Penn. St. 565, 469.) Experience with jury trials in negligence cases has brought American courts to review to relax the vigor of the rule by freely exercising the power of setting aside verdicts deemed excessive, through the device of granting new trials, unless reduced damages are stipulated for, amounting to a partial revision of damages by the courts. It appears to us that the control by the court of the subject matter may be secured on a moral logical basis and its judgment adjusted with greater nicety to the merits of the litigants through the practice of offsetting their respective responsibilities. In the civil law system the desirable end is not deemed beyond the capacity of its tribunals. Whatever may prove to be the doctrine finally adopted in Spain or in other countries under the stress and counter stress of novel schemers of legislation, we find the theory of damages laid down in the judgment the most consistent with the history and the principals of our law in these Islands and with its logical development. Difficulty seems to be apprehended in deciding which acts of the injured party shall be considered immediate causes of the accident. The test is simple. Distinction must be between the accident and the injury, between the event itself, without which there could have been no accident, and those acts of the victim not entering into it, independent of it, but contributing under review was the displacement of the crosspiece or the failure to replace it. This produced the event giving occasion for damages that is, the shrinking of the track and the sliding of the iron rails. To this event, the act of the plaintiff in walking by the side of the car did not contribute, although it was an element of the damage which came to himself. Had the crosspiece been out of place wholly

or partly thorough his act of omission of duty, the last would have been one of the determining causes of the event or accident, for which he would have been responsible. Where he contributes to the principal occurrence, as one of its determining factors, he cannot recover. Where, in conjunction with the occurrence, he contributes only to his own injury, he may recover the amount that the defendant responsible for the event should pay for such injury, less a sum deemed a suitable equivalent for his own imprudence. Accepting, though with some hesitation, the judgment of the trial court, fixing the damage incurred by the plaintiff at 5,000 pesos, the equivalent of 2,500 dollars, United States money, we deduct therefrom 2,500 pesos, the amount fairly attributable to his negligence, and direct judgment to be entered in favor of the plaintiff for the resulting sum of 2,500 pesos, with cost of both instances, and ten days hereafter let the case be remanded to the court below for proper action. So ordered. Arellano, C.J. Torres and Mapa, JJ., concur.

Separate Opinions WILLARD, J., dissenting: The knowledge which the plaintiff had in regard to the condition of the track is indicated by his own evidence. He testified, among other things, as follows: Q. Now, describe the best you can the character of the track that ran from the place where you loaded the irons from the barge up to the point where you unloaded them on the ground. A. xxx Q. A. Q. A. Q. A. xxx Well, it was pretty bad character. xxx xxx

And you were familiar with the track before that its construction? Familiar with what? Well, you have described it here to the court. Oh, yes; I knew the condition of the track. You knew its conditions as you have described it here at the time you were working around there? Yes, sir. xxx xxx

Q. And while operating it from the side it was necessary for you to step from board to board on the crossties which extended out over the stringers? A. Q. A. xxx Q. Yes, sir. And these were very of irregular shape, were they not? They were in pretty bad condition. xxx xxx

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

A. It was safe if the car stayed on the track. We didnt try to hold the load on. We tried to hold the car back, keep it from going too fast, because we knew the track was in bad condition just here, and going down too fast we could be liable to run off most any time. Q. A. xxx Q. A. Q. You knew the track was in bad condition when you got hold? Sure, it was in bad condition. xxx xxx

And the accident took place at that point where you believed it to be so dangerous? Yes, sir. But you knew it was dangerous?

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

The court below, while it found that the plaintiff knew in a general way of the bad condition of the track, found that he was not informed of the exact cause of the accident, namely, the washing away of the large crosspiece laid upon the ground or placed upon the posts as the foundation upon which the stripers rested. This finding of fact to my mind is plainly and manifestly against the weight of the evidence. Ellis, a witness for the plaintiff, testified that on the morning of the accident he called the attention of McKenna, the foreman, to the defective condition of the track at his precise point where the accident happened. His testimony in part is as follows: A. I called Mr. McKenna. I showed him the track and told him I didnt think it was safe working, and that if he didnt fix it he was liable to have an accident; I told him I thought if he put fish plates on it would it. He said, you keep on fishing around here for fish plates and you will be fishing for another job the first thing you know. He says, You see to much. xxx Q. xxx xxx

Who else was present at the time you had this conversation with Mr. McKenna?

A. Well, at that conversation as far as I can remember, we were all walking down the track and I know that McCoy and Mr. Blakes was along at the time. I remember them two, but we were all walking down the track in a bunch, but I disremember them. xxx Q. xxx xxx

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

A. No, sir: I told him to look at that track. I says get some fish plates. I says if there was any fish plates we would fix that. Q. A. Q. What did the fish plates have to do with that? It would have strengthened that joint. Why didnt you put the 8 by 8 which was washed crossways in place?

A. That would have been taken the raising of the track and digging out along this upright piece and then putting it up again. The plaintiff himself testified that he was present with Ellis at the time this conversation was had with McKenna. It thus appears that on the morning in question the plaintiff and McKenna were standing directly over the place where the accident happened later in the day. The accident was caused, as the court below found, by the washing away or displacement of the large 8 by 8 piece of timber. This track was constructed as all other tracks are, all of it open work, with no floor over the ties, and of course see the ground and the entire construction of the road, including these large 8 by 8 pieces, the long stringers placed thereon, the ties placed on these stringers, and the rails placed on the ties. The plaintiff himself must have seen that the 8 by 8 piece of timber was out of place. If the testimony of the plaintiffs witnesses is to be believed, the displacement was more markedly apparent even than it would appear from the testimony of the defendants witnesses. According to the plaintiffs witnesses, the water at high tide reached the place in question and these 8 by 8 pieces were therefore not laid upon the ground but were placed upon posts driven into the ground, the height of the posts at this particular place being, according to the testimony of the plaintiffs witnesses, from a foot to two feet and a half. As has been said, Ellis testified that the reason why they did not put the 8 by 8 back in its place was because that would have required the raising up of the track and digging out along this upright piece and then putting it up again. It conclusively appears from the evidence that the plaintiff, before the accident happened, knew the exact condition of the track and was informed and knew of the defect which caused the accident. There was no promise on the part of McKenna to repair the track. Under the circumstances the plaintiff was negligent in placing himself on the side of the car where he knew that he would be injured by the falling of the rails from the car when they reached this point in the track where the two stringers were without any support of their ends. He either should have refused to work at all or he should have placed himself behind the car, on the other side of it, or in front of it, drawing it with a rope. He was guilty of contributory negligence and is not entitled to recover. It is, said however, that contributory negligence on the part of the plaintiff in a case like this is no defense under the law in force in these Islands. To this proposition I can not agree. The liability of the defendant is based in the majority opinion upon articles 1101 and 1103 of the Civil Code. In order to impose such liability upon the defendant, it must appear that its negligence caused the accident.

The reason why contradictory negligence on the part of the plaintiff is a defense in this class of cases is that the negligence of the defendant did not alone cause the accident. If nothing but that negligence had existed, the accident would not have happened and, as I understand it, in every case in which contradictory negligence is a defense it is made so because the negligence of the plaintiff is the cause of the accident, to this extent, that if the plaintiff had not been negligent the accident would not have happened, although the defendant was also negligent. In other words, the negligence of the defendant is not alone sufficient to cause the accident. It requires also the negligence of the plaintiff. There is, so far as I know, nothing in the Civil Code relating to contributory negligence. The rule of the Roman law was: Quod quis ex culap sua damnum sentit, no intelligitur damnum sentire. (Digest, book, 50, tit. 17, rule 203.) The partidas contain the following provisions: The just thing is that a man should suffer the damage which comes to him through his own fault, and that he can not demand reparation therefor from another. (Law 25, tit. 5, partida 3.) And they even said that when a man received an injury through his own acts, the grievance should be against himself and not against another. (Law 2, tit. 7, partida 2.) In several cases in the supreme court of Spain the fact has been negligence that the plaintiff was himself guilty of negligence, as in the civil judgments of the 4th of June, 1888, and of the 20th of February, 1887, and in the criminal judgments of the 20th of February 1888, the 90th of March, 1876, and the 6th of October, 1882. These cases do not throw much light upon the subject. The judgment of the 7th of March, 1902 (93 Jurisprudencia Civil, 391), is, however, directly in point. In that case the supreme court of Spain said: According to the doctrine expressed in article 1902 of the Civil Code, fault or negligence is a source of obligation when between such negligence and the injury thereby caused there exists the relation of cause and effect; but in the injury caused should not be the result of acts or omissions of a third party, the latter has no obligation to repair the same, even though such acts or omissions were imprudent or unlawful, and much less when it is shown that the immediate cause of the injury was the negligence of the injured person party himself. Found the reasons above stated, and the court below having found that the death of the deceased was due to his own imprudence, and not therefore due to the absence of a guard at the grade crossing where the accident occurred, it seems clear that court in acquitting the railroad company of the complaint filed by the widow did not violate the provisions of the aforesaid article of the Civil Code. For the same reason, although the authority granted to the railroad company to open the grade crossing without a special guard was nullified by the subsequent promulgation of the railroad police law and the regulations for the execution of the same, the result would be identical, leaving one of the grounds upon which the judgment of acquittal is based, to wit, that the accident was caused by the imprudence of the injured party himself, unaffected. It appears that the accident in this case took place at a grade crossing where, according to the claim of the plaintiff, it was the duty of the railroad company to maintain husband was injured by a train at this crossing, his negligence contributing to the injury according to the ruling of the court below. This judgment, then, amounts to a holding that a contributory negligence is a defense according to the law of Spain. (See also judgment of the 21st of October, 1903, vol. 96 p. 400, Jurisprudencia Civil.) Although in the Civil Code there is no express provision upon the subject, in the Code of Commerce there is found a distinct declaration upon it in reference to damages caused by collission at sea. Article 827 of the Code of Commerce is as follows: If both vessels may be blamed for the collission, each one shall for liable for his own damages, and both shall jointly responsible for the loss and damages suffered to their cargoes. That article is an express recognition of the fact that in collision cases contributory negligence is a defense, I do not think that this court is justified in view of the Roman law, of the provisions of the Partidas, of the judgment of March 7, 1902, of article 827 of the Code of Commerce, and in the absence of any declaration upon the subject in the Civil Code, in saying that it was the intention rule announced in the majority opinion, a rule dimetrically opposed to that put in force by the Code of Commerce. The chief, is not the only, reason stated in the opinion for adopting the rule that contradictory negligence is not a defense seems to be that such is the holding of the later French decisions. As to whether, if any liability existed in this case, it would be necessary in accordance with the provisions of the Penal Code, or primary, in accordance with the provision of the Civil Code, I express no opinion.

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

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. L-65295 March 10, 1987 PHOENIX CONSTRUCTION, INC. and ARMANDO U. CARBONEL, petitioners, vs. THE INTERMEDIATE APPELLATE COURT and LEONARDO DIONISIO, respondents.

FELICIANO, J: In the early morning of 15 November 1975 at about 1:30 a.m. private respondent Leonardo Dionisio was on his way home he lived in 1214-B Zamora Street, Bangkal, Makati from a cocktails-and-dinner meeting with his boss, the general manager of a marketing corporation. During the cocktails phase of the evening, Dionisio had taken "a shot or two" of liquor. Dionisio was driving his Volkswagen car and had just crossed the intersection of General Lacuna and General Santos Streets at Bangkal, Makati, not far from his home, and was proceeding down General Lacuna Street, when his car headlights (in his allegation) suddenly failed. He switched his headlights on "bright" and thereupon he saw a Ford dump truck looming some 2-1/2 meters away from his car. The dump truck, owned by and registered in the name of petitioner Phoenix Construction Inc. ("Phoenix"), was parked on the right hand side of General Lacuna Street (i.e., on the right hand side of a person facing in the same direction toward which Dionisio's car was proceeding), facing the oncoming traffic. The dump truck was parked askew (not parallel to the street curb) in such a manner as to stick out onto the street, partly blocking the way of oncoming traffic. There were no lights nor any so-called "early warning" reflector devices set anywhere near the dump truck, front or rear. The dump truck had earlier that evening been driven home by petitioner Armando U. Carbonel, its regular driver, with the permission of his employer Phoenix, in view of work scheduled to be carried out early the following morning, Dionisio claimed that he tried to avoid a collision by swerving his car to the left but it was too late and his car smashed into the dump truck. As a result of the collision, Dionisio suffered some physical injuries including some permanent facial scars, a "nervous breakdown" and loss of two gold bridge dentures. Dionisio commenced an action for damages in the Court of First Instance of Pampanga basically claiming that the legal and proximate cause of his injuries was the negligent manner in which Carbonel had parked the dump truck entrusted to him by his employer Phoenix. Phoenix and Carbonel, on the other hand, countered that the proximate cause of Dionisio's injuries was his own recklessness in driving fast at the time of the accident, while under the influence of liquor, without his headlights on and without a curfew pass. Phoenix also sought to establish that it had exercised due rare in the selection and supervision of the dump truck driver. The trial court rendered judgment in favor of Dionisio and against Phoenix and Carbonel and ordered the latter: (1) To pay plaintiff jointly and severally the sum of P 15,000.00 for hospital bills and the replacement of the lost dentures of plaintiff; (2) To pay plaintiff jointly and severally the sum of P 1,50,000.-00 as loss of

expected income for plaintiff brought about the accident in controversy and which is the result of the negligence of the defendants; (3) To pay the plaintiff jointly and severally the sum of P 10,000. as moral damages for the unexpected and sudden withdrawal of plaintiff from his lifetime career as a marketing man; mental anguish, wounded feeling, serious anxiety, social humiliation, besmirched reputation, feeling of economic insecurity, and the untold sorrows and frustration in life experienced by plaintiff and his family since the accident in controversy up to the present time; (4) To pay plaintiff jointly and severally the sum of P 10,000.00 as damages for the wanton disregard of defendants to settle amicably this case with the plaintiff before the filing of this case in court for a smaller amount. (5) To pay the plaintiff jointly and severally the sum of P 4,500.00 due as and for attorney's fees; and (6) The cost of suit. (Emphasis supplied) Phoenix and Carbonel appealed to the Intermediate Appellate Court. That court in CA-G.R. No. 65476 affirmed the decision of the trial court but modified the award of damages to the following extent: 1. The award of P15,000.00 as compensatory damages was reduced to P6,460.71, the latter being the only amount that the appellate court found the plaintiff to have proved as actually sustained by him; 2. The award of P150,000.00 as loss of expected income was reduced to P100,000.00, basically because Dionisio had voluntarily resigned his job such that, in the opinion of the appellate court, his loss of income "was not solely attributable to the accident in question;" and 3. The award of P100,000.00 as moral damages was held by the appellate court as excessive and unconscionable and hence reduced to P50,000.00. The award of P10,000.00 as exemplary damages and P4,500.00 as attorney's fees and costs remained untouched. This decision of the Intermediate Appellate Court is now before us on a petition for review. Both the trial court and the appellate court had made fairly explicit findings of fact relating to the manner in which the dump truck was parked along General Lacuna Street on the basis of which both courts drew the inference that there was negligence on the part of Carbonel, the dump truck driver, and that this negligence was the proximate cause of the accident and Dionisio's injuries. We note, however, that both courts failed to pass upon the defense raised by Carbonel and Phoenix that the true legal and proximate cause of the accident was not the way in which the dump truck had been parked but rather the reckless way in which Dionisio had driven his car that night when he smashed into the dump truck. The Intermediate Appellate Court in its questioned decision casually conceded that Dionisio was "in some way, negligent" but apparently failed to see the relevance of Dionisio's negligence and made no further mention of it. We have examined the record both before the trial court and the Intermediate Appellate Court and we find that both parties had placed into the record sufficient evidence on the basis of which the trial court and the appellate court could have and should have made findings of fact relating to the alleged reckless manner in which Dionisio drove his car that night. The petitioners Phoenix and Carbonel contend that if there was negligence in the manner in which the dump truck was parked, that negligence

was merely a "passive and static condition" and that private respondent Dionisio's recklessness constituted an intervening, efficient cause determinative of the accident and the injuries he sustained. The need to administer substantial justice as between the parties in this case, without having to remand it back to the trial court after eleven years, compels us to address directly the contention put forward by the petitioners and to examine for ourselves the record pertaining to Dionisio's alleged negligence which must bear upon the liability, or extent of liability, of Phoenix and Carbonel. There are four factual issues that need to be looked into: (a) whether or not private respondent Dionisio had a curfew pass valid and effective for that eventful night; (b) whether Dionisio was driving fast or speeding just before the collision with the dump truck; (c) whether Dionisio had purposely turned off his car's headlights before contact with the dump truck or whether those headlights accidentally malfunctioned moments before the collision; and (d) whether Dionisio was intoxicated at the time of the accident. As to the first issue relating to the curfew pass, it is clear that no curfew pass was found on the person of Dionisio immediately after the accident nor was any found in his car. Phoenix's evidence here consisted of the testimony of Patrolman Cuyno who had taken Dionisio, unconscious, to the Makati Medical Center for emergency treatment immediately after the accident. At the Makati Medical Center, a nurse took off Dionisio's clothes and examined them along with the contents of pockets together with Patrolman Cuyno. 1 Private respondent Dionisio was not able to produce any curfew pass during the trial. Instead, he offered the explanation that his family may have misplaced his curfew pass. He also offered a certification (dated two years after the accident) issued by one Major Benjamin N. Libarnes of the Zone Integrated Police Intelligence Unit of Camp Olivas, San Fernando, Pampanga, which was said to have authority to issue curfew passes for Pampanga and Metro Manila. This certification was to the effect that private respondent Dionisio had a valid curfew pass. This certification did not, however, specify any pass serial number or date or period of effectivity of the supposed curfew pass. We find that private respondent Dionisio was unable to prove possession of a valid curfew pass during the night of the accident and that the preponderance of evidence shows that he did not have such a pass during that night. The relevance of possession or non-possession of a curfew pass that night lies in the light it tends to shed on the other related issues: whether Dionisio was speeding home and whether he had indeed purposely put out his headlights before the accident, in order to avoid detection and possibly arrest by the police in the nearby police station for travelling after the onset of curfew without a valid curfew pass. On the second issue whether or not Dionisio was speeding home that night both the trial court and the appellate court were completely silent. The defendants in the trial court introduced the testimony of Patrolman Cuyno who was at the scene of the accident almost immediately after it occurred, the police station where he was based being barely 200 meters away. Patrolman Cuyno testified that people who had gathered at the scene of the accident told him that Dionisio's car was "moving fast" and did not have its headlights on. 2 Dionisio, on the other hand, claimed that he was travelling at a moderate speed at 30 kilometers per hour and had just crossed the intersection of General Santos and General Lacuna Streets and had started to accelerate when his headlights failed just before the collision took place. 3 Private respondent Dionisio asserts that Patrolman Cuyno's testimony was hearsay and did not fag within any of the recognized exceptions to the hearsay rule since the facts he testified to were not acquired by him through official information and had not been given by the informants pursuant to any duty to do so. Private respondent's objection fails to take account of the fact that the testimony of Patrolman Cuyno is admissible not under the official records exception to the hearsay rule 4 but rather as part of the res gestae. 5 Testimonial evidence under this exception to the hearsay rule consists of excited utterances made on the occasion of an occurrence or event sufficiently startling in nature so as to render inoperative the normal reflective thought processes of the observer and hence made as a spontaneous reaction to the occurrence or event, and not the result of reflective thought. 6

We think that an automobile speeding down a street and suddenly smashing into a stationary object in the dead of night is a sufficiently startling event as to evoke spontaneous, rather than reflective, reactions from observers who happened to be around at that time. The testimony of Patrolman Cuyno was therefore admissible as part of the res gestae and should have been considered by the trial court. Clearly, substantial weight should have been ascribed to such testimony, even though it did not, as it could not, have purported to describe quantitatively the precise velocity at winch Dionisio was travelling just before impact with the Phoenix dump truck. A third related issue is whether Dionisio purposely turned off his headlights, or whether his headlights accidentally malfunctioned, just moments before the accident. The Intermediate Appellate Court expressly found that the headlights of Dionisio's car went off as he crossed the intersection but was non-committal as to why they did so. It is the petitioners' contention that Dionisio purposely shut off his headlights even before he reached the intersection so as not to be detected by the police in the police precinct which he (being a resident in the area) knew was not far away from the intersection. We believe that the petitioners' theory is a more credible explanation than that offered by private respondent Dionisio i.e., that he had his headlights on but that, at the crucial moment, these had in some mysterious if convenient way malfunctioned and gone off, although he succeeded in switching his lights on again at "bright" split seconds before contact with the dump truck. A fourth and final issue relates to whether Dionisio was intoxicated at the time of the accident. The evidence here consisted of the testimony of Patrolman Cuyno to the effect that private respondent Dionisio smelled of liquor at the time he was taken from his smashed car and brought to the Makati Medical Center in an unconscious condition. 7 This testimony has to be taken in conjunction with the admission of Dionisio that he had taken "a shot or two" of liquor before dinner with his boss that night. We do not believe that this evidence is sufficient to show that Dionisio was so heavily under the influence of liquor as to constitute his driving a motor vehicle per se an act of reckless imprudence. 8 There simply is not enough evidence to show how much liquor he had in fact taken and the effects of that upon his physical faculties or upon his judgment or mental alertness. We are also aware that "one shot or two" of hard liquor may affect different people differently. The conclusion we draw from the factual circumstances outlined above is that private respondent Dionisio was negligent the night of the accident. He was hurrying home that night and driving faster than he should have been. Worse, he extinguished his headlights at or near the intersection of General Lacuna and General Santos Streets and thus did not see the dump truck that was parked askew and sticking out onto the road lane. Nonetheless, we agree with the Court of First Instance and the Intermediate Appellate Court that the legal and proximate cause of the accident and of Dionisio's injuries was the wrongful or negligent manner in which the dump truck was parked in other words, the negligence of petitioner Carbonel. That there was a reasonable relationship between petitioner Carbonel's negligence on the one hand and the accident and respondent's injuries on the other hand, is quite clear. Put in a slightly different manner, the collision of Dionisio's car with the dump truck was a natural and foreseeable consequence of the truck driver's negligence. The petitioners, however, urge that the truck driver's negligence was merely a "passive and static condition" and that private respondent Dionisio's negligence was an "efficient intervening cause and that consequently Dionisio's negligence must be regarded as the legal and proximate cause of the accident rather than the earlier negligence of Carbonel. We note that the petitioners' arguments are drawn from a reading of some of the older cases in various jurisdictions in the United States but we are unable to persuade ourselves that these arguments have any validity for our jurisdiction. We note, firstly, that even in the United States, the distinctions between "cause" and "condition" which the 'petitioners would have us adopt have already been "almost entirely discredited." Professors and Keeton make this quite clear: Cause and condition. Many courts have sought to distinguish between the active "cause" of the harm and the existing "conditions" upon which that cause operated. If the defendant has created only a passive static condition which made the

damage possible, the defendant is said not to be liable. But so far as the fact of causation is concerned, in the sense of necessary antecedents which have played an important part in producing the result it is quite impossible to distinguish between active forces and passive situations, particularly since, as is invariably the case, the latter are the result of other active forces which have gone before. The defendant who spills gasoline about the premises creates a "condition," but the act may be culpable because of the danger of fire. When a spark ignites the gasoline, the condition has done quite as much to bring about the fire as the spark; and since that is the very risk which the defendant has created, the defendant will not escape responsibility. Even the lapse of a considerable time during which the "condition" remains static will not necessarily affect liability; one who digs a trench in the highway may still be liable to another who fans into it a month afterward. "Cause" and "condition" still find occasional mention in the decisions; but the distinction is now almost entirely discredited. So far as it has any validity at all, it must refer to the type of case where the forces set in operation by the defendant have come to rest in a position of apparent safety, and some new force intervenes. But even in such cases, it is not the distinction between "cause" and "condition" which is important but the nature of the risk and the character of the intervening cause. 9 We believe, secondly, that the truck driver's negligence far from being a "passive and static condition" was rather an indispensable and efficient cause. The collision between the dump truck and the private respondent's car would in an probability not have occurred had the dump truck not been parked askew without any warning lights or reflector devices. The improper parking of the dump truck created an unreasonable risk of injury for anyone driving down General Lacuna Street and for having so created this risk, the truck driver must be held responsible. In our view, Dionisio's negligence, although later in point of time than the truck driver's negligence and therefore closer to the accident, was not an efficient intervening or independent cause. What the Petitioners describe as an "intervening cause" was no more than a foreseeable consequent manner which the truck driver had parked the dump truck. In other words, the petitioner truck driver owed a duty to private respondent Dionisio and others similarly situated not to impose upon them the very risk the truck driver had created. Dionisio's negligence was not of an independent and overpowering nature as to cut, as it were, the chain of causation in fact between the improper parking of the dump truck and the accident, nor to sever the juris vinculum of liability. It is helpful to quote once more from Professor and Keeton: Foreseeable Intervening Causes. If the intervening cause is one which in ordinary human experience is reasonably to be anticipated or one which the defendant has reason to anticipate under the particular circumstances, the defendant may be negligence among other reasons, because of failure to guard against it; or the defendant may be negligent only for that reason. Thus one who sets a fire may be required to foresee that an ordinary, usual and customary wind arising later wig spread it beyond the defendant's own property, and therefore to take precautions to prevent that event. The person who leaves the combustible or explosive material exposed in a public place may foresee the risk of fire from some independent source. ... In all of these cases there is an intervening cause combining with the defendant's conduct to produce the result and in each case the defendant's negligence consists in failure to protect the plaintiff against that very risk. Obviously the defendant cannot be relieved from liability by the fact that the risk or a substantial and important part of the risk, to which the defendant has subjected the plaintiff has indeed come to pass. Foreseeable intervening forces are within the scope original risk, and hence of the defendant's negligence. The courts are quite generally agreed that intervening causes which fall fairly in this category will not supersede the defendant's responsibility. Thus it has been held that a defendant will be required to anticipate the usual weather of the vicinity, including all ordinary forces of nature such as usual wind or rain, or snow or frost or fog or even lightning; that one who leaves an obstruction

on the road or a railroad track should foresee that a vehicle or a train will run into it; ... The risk created by the defendant may include the intervention of the foreseeable negligence of others. ... [The standard of reasonable conduct may require the defendant to protect the plaintiff against 'that occasional negligence which is one of the ordinary incidents of human life, and therefore to be anticipated.' Thus, a defendant who blocks the sidewalk and forces the plaintiff to walk in a street where the plaintiff will be exposed to the risks of heavy traffic becomes liable when the plaintiff is run down by a car, even though the car is negligently driven; and one who parks an automobile on the highway without lights at night is not relieved of responsibility when another negligently drives into it. --- 10 We hold that private respondent Dionisio's negligence was "only contributory," that the "immediate and proximate cause" of the injury remained the truck driver's "lack of due care" and that consequently respondent Dionisio may recover damages though such damages are subject to mitigation by the courts (Article 2179, Civil Code of the Philippines). Petitioners also ask us to apply what they refer to as the "last clear chance" doctrine. The theory here of petitioners is that while the petitioner truck driver was negligent, private respondent Dionisio had the "last clear chance" of avoiding the accident and hence his injuries, and that Dionisio having failed to take that "last clear chance" must bear his own injuries alone. The last clear chance doctrine of the common law was imported into our jurisdiction by Picart vs. Smith 11 but it is a matter for debate whether, or to what extent, it has found its way into the Civil Code of the Philippines. The historical function of that doctrine in the common law was to mitigate the harshness of another common law doctrine or rule that of contributory negligence. 12 The common law rule of contributory negligence prevented any recovery at all by a plaintiff who was also negligent, even if the plaintiff's negligence was relatively minor as compared with the wrongful act or omission of the defendant. 13 The common law notion of last clear chance permitted courts to grant recovery to a plaintiff who had also been negligent provided that the defendant had the last clear chance to avoid the casualty and failed to do so. 14 Accordingly, it is difficult to see what role, if any, the common law last clear chance doctrine has to play in a jurisdiction where the common law concept of contributory negligence as an absolute bar to recovery by the plaintiff, has itself been rejected, as it has been in Article 2179 of the Civil Code of the Philippines. 15 Is there perhaps a general concept of "last clear chance" that may be extracted from its common law matrix and utilized as a general rule in negligence cases in a civil law jurisdiction like ours? We do not believe so. Under Article 2179, the task of a court, in technical terms, is to determine whose negligence the plaintiff's or the defendant's was the legal or proximate cause of the injury. That task is not simply or even primarily an exercise in chronology or physics, as the petitioners seem to imply by the use of terms like "last" or "intervening" or "immediate." The relative location in the continuum of time of the plaintiff's and the defendant's negligent acts or omissions, is only one of the relevant factors that may be taken into account. Of more fundamental importance are the nature of the negligent act or omission of each party and the character and gravity of the risks created by such act or omission for the rest of the community. The petitioners urge that the truck driver (and therefore his employer) should be absolved from responsibility for his own prior negligence because the unfortunate plaintiff failed to act with that increased diligence which had become necessary to avoid the peril precisely created by the truck driver's own wrongful act or omission. To accept this proposition is to come too close to wiping out the fundamental principle of law that a man must respond for the forseeable consequences of his own negligent act or omission. Our law on quasi-delicts seeks to reduce the risks and burdens of living in society and to allocate them among the members of society. To accept the petitioners' pro-position must tend to weaken the very bonds of society. Petitioner Carbonel's proven negligence creates a presumption of negligence on the part of his employer Phoenix 16 in supervising its employees properly and adequately. The respondent appellate court in effect found, correctly in our opinion, that Phoenix was not able to overcome this presumption of negligence. The circumstance that Phoenix had allowed its truck driver to bring the dump truck to his home whenever there was work to be done early the following morning, when

coupled with the failure to show any effort on the part of Phoenix to supervise the manner in which the dump truck is parked when away from company premises, is an affirmative showing of culpa in vigilando on the part of Phoenix. Turning to the award of damages and taking into account the comparative negligence of private respondent Dionisio on one hand and petitioners Carbonel and Phoenix upon the other hand, 17 we believe that the demands of substantial justice are satisfied by allocating most of the damages on a 20-80 ratio. Thus, 20% of the damages awarded by the respondent appellate court, except the award of P10,000.00 as exemplary damages and P4,500.00 as attorney's fees and costs, shall be borne by private respondent Dionisio; only the balance of 80% needs to be paid by petitioners Carbonel and Phoenix who shall be solidarity liable therefor to the former. The award of exemplary damages and attorney's fees and costs shall be borne exclusively by the petitioners. Phoenix is of course entitled to reimbursement from Carbonel. 18 We see no sufficient reason for disturbing the reduced award of damages made by the respondent appellate court. WHEREFORE, the decision of the respondent appellate court is modified by reducing the aggregate amount of compensatory damages, loss of expected income and moral damages private respondent Dionisio is entitled to by 20% of such amount. Costs against the petitioners. SO ORDERED. Yap (Chairman), Narvasa, Cruz, Gancayco and Sarmiento, JJ., concur. Melencio-Herrera, J. Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-35283 November 5, 1932

JULIAN DEL ROSARIO, plaintiff-appellant, vs. MANILA ELECTRIC COMPANY, defendant-appellee. Vicente Sotto for appellant. Ross, Lawrence & Selph and Antonio T. Carrascoso, Jr. for appellee.

STREET, J.: This action was instituted by Julian del Rosario for the purpose of recovering damages from the Manila Electric Company for the death of his son, Alberto del Rosario, resulting from a shock from a wire used by the defendant for the transmission of electricity. The accident occurred on Dimas-Alang Street, in the municipality of Caloocan, Province of Rizal. Damages are claimed in the complaint in the amount of P30,000. Upon hearing the cause the trial court absolved the defendant, and the plaintiff appealed. Shortly after 2 o'clock on the afternoon of August 4, 1930, trouble developed in a wire used by the defendant on Dimas-Alang Street for the purpose of conducting electricity used in lighting the City of Manila and its suburbs. Jose Noguera, who had charge of a tienda nearby, first noticed that the wire was burning and its connections smoking. In a short while the wire parted and one of the ends of the wire fell to the ground among some shrubbery close to the way. As soon as Noguera took cognizance of the trouble, he stepped into a garage which was located nearby and asked Jose Soco, the timekeeper, to telephone the Malabon station of the Manila Electric Company that an electrical wire was burning at that place. Soco transmitted the message at 2.25 p.m. and received answer from the station to the effect that they would send an inspector. From the testimony of the two witnesses mentioned we are justified in the conclusion that information to the effect that the electric wire at the point mentioned had developed trouble was received by the company's servant at the time stated. At the time that message was sent the wire had not yet parted, but from the testimony of Demetrio Bingao, one of the witnesses for the defense, it is clear that the end of the wire was on the ground shortly after 3 p.m.

At 4 p. m. the neighborhood school was dismissed and the children went home. Among these was Alberto del Rosario, of the age of 9 years, who was a few paces ahead of two other boys, all members of the second grade in the public school. These other two boys were Jose Salvador, of the age of 8, and Saturnino Endrina, of the age of 10. As the three neared the place where the wire was down, Saturnino made a motion as if it touch it. His companion, Jose Salvador, happened to be the son of an electrician and his father had cautioned him never to touch a broken electrical wire, as it might have a current. Jose therefore stopped Saturnino, telling him that the wire might be charged. Saturnino yielded to this admonition and desisted from his design, but Alberto del Rosario, who was somewhat ahead, said, I have for some time been in the habit of touching wires ("Yo desde hace tiempo cojo alambres"). Jose Salvador rejoined that he should into touch wires as they carry a current, but Alberto, no doubt feeling that he was challenged in the matter, put out his index finger and touch the wire. He immediately fell face downwards, exclaiming "Ay! madre". The end of the wire remained in contact with his body which fell near the post. A crowd soon collected, and some one cut the wire and disengaged the body. Upon being taken to St. Luke's Hospital the child was pronounced dead. The wire was an ordinary number 6 triple braid weather proof wire, such as is commonly used by the defendant company for the purpose of conducting electricity for lighting. The wire was cased in the usual covering, but this had been burned off for some distance from the point where the wire parted. The engineer of the company says that it was customary for the company to make a special inspection of these wires at least once in six months, and that all of the company's inspectors were required in their daily rounds to keep a lookout for trouble of this kind. There is nothing in the record indicating any particular cause for the parting of the wire.lawphil.net We are of the opinion that the presumption of negligence on the part of the company from the breakage of this wire has not been overcome, and the defendant is in our opinion responsible for the accident. Furthermore, when notice was received at the Malabon station at 2.25 p. m., somebody should have been dispatched to the scene of the trouble at once, or other measures taken to guard the point of danger; but more than an hour and a half passed before anyone representing the company appeared on the scene, and in the meantime this child had been claimed as a victim. It is doubtful whether contributory negligence can properly be imputed to the deceased, owing to his immature years and the natural curiosity which a child would feel to do something out of the ordinary, and the mere fact that the deceased ignored the caution of a companion of the age of 8 years does not, in our opinion, alter the case. But even supposing that contributory negligence could in some measure be properly imputed to the deceased, a proposition upon which the members of the court do not all agree, yet such negligence would not be wholly fatal to the right of action in this case, not having been the determining cause of the accident. (Rakes vs. Atlantic, Gulf and Pacific Co., 7 Phil., 359.) With respect to the amount of damages recoverable the majority of the members of this court are of the opinion that the plaintiff is entitled to recover P250 for expenses incurred in connection with the death and burial of the boy. For the rest, in accordance with the precedents cited in Astudillo vs. Manila Electric Company (55 Phil., 427), the majority of the court are of the opinion that the plaintiff should recover the sum of P1,000 as general damages for loss of service. The judgment appealed from is therefore reversed and the plaintiff will recover of the defendant the sum of P1,250, with costs of both instances. So ordered. Avancea, C.J., Malcolm, Ostrand, Villa-Real, Vickers, Imperial and Butte, JJ., concur. Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 83491 August 27, 1990 MA-AO SUGAR CENTRAL CO., INC. and GUILLERMO ARANETA, petitioners, vs. HON. COURT OF APPEALS and HERMINIA FAMOSO, respondents. Jalandoni, Herrera, Del Castillo & Associates for petitioners. Napoleon Corral for private respondent.

CRUZ, J.:

To say the least, the Court views with regret the adamant refusal of petitioner Ma-ao Sugar Central to recompense the private respondent for the death of Julio Famoso, their main source of support, who was killed in line of duty while in its employ. It is not only a matter of law but also of compassion on which we are called upon to rule today. We shall state at the outset that on both counts the petition must fail. On March 22, 1980, Famoso was riding with a co-employee in the caboose or "carbonera" of Plymouth No. 12, a cargo train of the petitioner, when the locomotive was suddenly derailed. He and his companion jumped off to escape injury, but the train fell on its side, caught his legs by its wheels and pinned him down. He was declared dead on the spot. 1 The claims for death and other benefits having been denied by the petitioner, the herein private respondent filed suit in the Regional Trial Court of Bago City. Judge Marietta Hobilla-Alinio ruled in her favor but deducted from the total damages awarded 25% thereof for the decedent's contributory negligence and the total pension of P41,367.60 private respondent and her children would be receiving from the SSS for the next five years. The dispositive portion of the decision read: WHEREFORE, in view of the foregoing facts and circumstances present in this case, the Court order, as it does hereby order the defendant Ma-ao Sugar Central thru its Manager Mr. Guillermo Y. Araneta to pay plaintiff the following amount: P30,000.00 for the death of plaintiff's husband, the late Julio Famoso P30,000.00 for actual, exemplary and moral damages P10,000.00 loss of earnings for twenty (20) years P3,000.00 funeral expenses P73,000.00 Total Damages Less: P18,250.00 25% for the deceased's contributory negligence Less: P41,367.60 pension plaintiff and her minor children would be receiving for five (5) years from the SSS Pl3,382.40 Plus: P3,000.00 Attorney's fees and cost of this suit Pl6,382.40 Total amount payable to the plaintiff. SO ORDERED. The widow appealed, claiming that the deductions were illegal. So did the petitioner, but on the ground that it was not negligent and therefore not liable at all. In its own decision, the Court of Appeals 2 sustained the rulings of the trial court except as to the contributory negligence of the deceased and disallowed the deductions protested by the private respondent. Thus, the respondent court declared: WHEREFORE, the decision appealed from is MODIFIED by ordering the defendant-appellant to pay the plaintiff-appellee the following amounts: P30,000.00, for the death of Julio Famoso P30,000.00, for actual, exemplary and moral damages P10,000.00, for loss of earnings for twenty (20) years P3,000.00, for funeral expenses P3,000.00, for attorney's fees

 P76,000.00 Total Amount ======== In this petition, the respondent court is faulted for finding the petitioner guilty of negligence notwithstanding its defense of due diligence under Article 2176 of the Civil Code and for disallowing the deductions made by the trial court. Investigation of the accident revealed that the derailment of the locomotive was caused by protruding rails which had come loose because they were not connected and fixed in place by fish plates. Fish plates are described as strips of iron 8" to 12" long and 3 1/2" thick which are attached to the rails by 4 bolts, two on each side, to keep the rails aligned. Although they could be removed only with special equipment, the fish plates that should have kept the rails aligned could not be found at the scene of the accident. There is no question that the maintenance of the rails, for the purpose inter alia of preventing derailments, was the responsibility of the petitioner, and that this responsibility was not discharged. According to Jose Treyes, its own witness, who was in charge of the control and supervision of its train operations, cases of derailment in the milling district were frequent and there were even times when such derailments were reported every hour. 3

The petitioner should therefore have taken more prudent steps to prevent such accidents instead of waiting until a life was finally lost because of its negligence. The argument that no one had been hurt before because of such derailments is of course not acceptable. And neither are we impressed by the claim that the brakemen and the conductors were required to report any defect in the condition of the railways and to fill out prescribed forms for the purpose. For what is important is that the petitioner should act on these reports and not merely receive and file them. The fact that it is not easy to detect if the fish plates are missing is no excuse either. Indeed, it should stress all the more the need for the responsible employees of the petitioner to make periodic checks and actually go down to the railroad tracks and see if the fish plates were in place. It is argued that the locomotive that was derailed was on its way back and that it had passed the same rails earlier without accident. The suggestion is that the rails were properly aligned then, but that does not necessarily mean they were still aligned afterwards. It is possible that the fish plates were loosened and detached during its first trip and the rails were as a result already mis-aligned during the return trip. But the Court feels that even this was unlikely, for, as earlier noted, the fish plates were supposed to have been bolted to the rails and could be removed only with special tools. The fact that the fish plates were not found later at the scene of the mishap may show they were never there at all to begin with or had been removed long before. At any rate, the absence of the fish plates whatever the cause or reason is by itself alone proof of the negligence of the petitioner. Res ipsa loquitur. The doctrine was described recently in Layugan v. Intermediate Appellate Court, 4 thus: Where the thing which causes injury is shown to be under the management of the defendant, and the accident is such as in the ordinary course of things does not happen if those who have the management use proper care, it affords reasonable evidence, in the absence of an explanation by the defendant, that the accident arose from want of care. The petitioner also disclaims liability on the ground of Article 2176 of the Civil Code, contending it has exercised due diligence in the selection and supervision of its employees. The Court cannot agree. The record shows it was in fact lax in requiring them to exercise the necessary vigilance in maintaining the rails in good condition to prevent the derailments that sometimes happened "every hour." Obviously, merely ordering the brakemen and conductors to fill out prescribed forms reporting derailments-which reports have not been acted upon as shown by the hourly derailments is-not the kind of supervision envisioned by the Civil Code. We also do not see how the decedent can be held guilty of contributory negligence from the mere fact that he was not at his assigned station when the train was derailed. That might have been a violation of company rules but could not have directly contributed to his injury, as the petitioner suggests. It is pure speculation to suppose that he would not have been injured if he had stayed in the front car rather than at the back and that he had been killed because he chose to ride in the caboose. Contributory negligence has been defined as "the act or omission amounting to want of ordinary care on the part of the person injured which, concurring with the defendant's negligence, is the proximate cause of the injury." 5 It has been held that "to hold a person as having contributed to his injuries, it must be shown that he performed an act that brought about his injuries in disregard of warnings or signs of an impending danger to health and body." 6 There is no showing that the caboose where Famoso was riding was a dangerous place and

that he recklessly dared to stay there despite warnings or signs of impending danger. The last point raised by the petitioner is easily resolved. Citing the case of Floresca v. Philex Mining Corporation, 7 it argues that the respondent court erred in disauthorizing the deduction from the total damages awarded the private respondent of the amount of P41,367.60, representing the pension to be received by the private respondent from the Social Security System for a period of five years. The argument is that such deduction was quite proper because of Art. 173 of the Labor Code, as amended. This article provides that any amount received by the heirs of a deceased employee from the Employees Compensation Commission, whose funds are administered by the SSS, shall be exclusive of all other amounts that may otherwise be claimed under the Civil Code and other pertinent laws. The amount to be paid by the SSS represents the usual pension received by the heirs of a deceased employee who was a member of the SSS at the time of his death and had regularly contributed his premiums as required by the System. The pension is the benefit derivable from such contributions. It does not represent the death benefits payable under the Workmen's Compensation Act to an employee who dies as a result of a workconnected injury. Indeed, the certification from the SSS 8 submitted by the petitioner is simply to the effect that: TO WHOM IT MAY CONCERN: This is to certify that Mrs. Herminia Vda. de Famoso is a recipient of a monthly pension from the Social Security System arising from the death of her late husband, Julio Famoso, an SSS member with SSS No. 07-018173-1. This certification is issued to Ma-ao Sugar Central for whatever legal purpose it may serve best. Issued this 8th day of April 1983 in Bacolod City, Philippines. GODOFREDO S. SISON Regional Manager By: (SGD.) COSME Q. BERMEO, JR. Chief, Benefits Branch It does not indicate that the pension is to be taken from the funds of the ECC. The certification would have said so if the pension represented the death benefits accruing to the heirs under the Workmen's Compensation Act. This conclusion is supported by the express provision of Art. 173 as amended, which categorically states that: Art. 173. Exclusiveness of liability. Unless otherwise provided, the liability of the State Insurance Fund under this Title shall be exclusive and in place of all other liabilities of the employer to the employee, his dependents or anyone otherwise entitled to receive damages on behalf of the employee or his dependents. The payment of compensation under this Title shall not bar the recovery of benefits as provided for in Section 699 of the Revised Administrative Code, Republic Act Numbered Eleven hundred sixty-one, as amended, Commonwealth Act Numbered One hundred eighty-six, as amended, Republic Act Numbered Six hundred ten, as amended, Republic Act Numbered Forty-eight hundred sixty-four, as amended and other laws whose benefits are administered by the System or by other agencies of the government. (Emphasis supplied). Rep. Act No. 1161, as amended, is the Social Security Law. As observed by Justice J.B.L. Reyes in the case of Valencia v. Manila Yacht Club, 9 which is still controlling: . . . By their nature and purpose, the sickness or disability benefits to which a member of the System may be entitled under the Social Security law (Rep. Act No. 1161, as amended by Rep. Acts Nos. 1792 and 2658) are not the same as the compensation that may be claimed against the employer under the Workmen's Compensation Act or the Civil Code, so that payment to the member employee of social security benefits would not wipe out or extinguish the employer's liability for the injury or illness contracted by his employee in the course of or during the employment. It must be realized that, under the Workmen's Compensation Act (or the Civil Code, in a proper case), the employer is required to compensate the employee for the sickness or injury arising in the course of the employment because the industry is supposed to be responsible therefore; whereas, under the Social Security Act, payment is being made because the hazard specifically covered by the membership, and for which the employee had put up his

own money, had taken place. As this Court had said: . . . To deny payment of social security benefits because the death or injury or confinement is compensable under the Workmen's Compensation Act would be to deprive the employees members of the System of the statutory benefits bought and paid for by them, since they contributed their money to the general common fund out of which benefits are paid. In other words, the benefits provided for in the Workmen's Compensation Act accrues to the employees concerned due to the hazards involved in their employment and is made a burden on the employment itself However, social security benefits are paid to the System's members, by reason of their membership therein for which they contribute their money to a general common fund . . . . It may be added that whereas social security benefits are intended to provide insurance or protection against the hazards or risks for which they are established, e.g., disability, sickness, old age or death, irrespective of whether they arose from or in the course of the employment or not, the compensation receivable under the Workmen's Compensation law is in the nature of indemnity for the injury or damage suffered by the employee or his dependents on account of the employment. (Rural Transit Employees Asso. vs. Bachrach Trans. Co., 21 SCRA 1263 [19671]) And according to Justice Jesus G. Barrera in Benguet Consolidated, Inc. v. Social Security System:" 10 The philosophy underlying the Workmen's Compensation Act is to make the payment of the benefits provided for therein as a responsibility of the industry, on the ground that it is industry which should bear the resulting death or injury to employees engaged in the said industry. On the other hand, social security sickness benefits are not paid as a burden on the industry, but are paid to the members of the System as a matter of right, whenever the hazards provided for in the law occurs. To deny payment of social security benefits because the death or injury or confinement is compensable under the Workmen's Compensation Act would be to deprive the employees-members of the System of the statutory benefits bought and paid for by them, since they contribute their money to the general common fund out of which benefits are paid. In other words, the benefits provided for in the Workmen's Compensation Act accrues to the employees concerned, due to the hazards involved in their employment and is made a burden on the employment itself However, social security benefits are paid to the System's members, by reason of their membership therein for which they contributed their money to a general common fund. Famoso's widow and nine minor children have since his death sought to recover the just recompense they need for their support. Instead of lending a sympathetic hand, the petitioner has sought to frustrate their efforts and has even come to this Court to seek our assistance in defeating their claim. That relief-and we are happy to say this must be withheld. WHEREFORE, the appealed decision is AFFIRMED in toto. The petition is DENIED, with costs against the petitioner. SO ORDERED. Narvasa (Chairman), Gancayco, Grio-Aquino and Medialdea, JJ., concur. FIRST DIVISION [G.R. No. 124354. December 29, 1999] ROGELIO E. RAMOS and ERLINDA RAMOS, in their own behalf and as natural guardians of the minors, ROMMEL RAMOS, ROY RODERICK RAMOS and RON RAYMOND RAMOS, petitioners, vs. COURT OF APPEALS, DELOS SANTOS MEDICAL CENTER, DR. ORLINO HOSAKA and DRA. PERFECTA GUTIERREZ, respondents. DECISION KAPUNAN, J.: The Hippocratic Oath mandates physicians to give primordial consideration to the health and welfare of their patients. If a doctor fails to live up to this precept, he is made accountable for his acts. A mistake, through gross negligence or incompetence or plain human error, may spell the difference between life and death. In this sense, the doctor plays God on his patients fate.[1]

In the case at bar, the Court is called upon to rule whether a surgeon, an anesthesiologist and a hospital should be made liable for the unfortunate comatose condition of a patient scheduled for cholecystectomy.[2] Petitioners seek the reversal of the decision[3] of the Court of Appeals, dated 29 May 1995, which overturned the decision[4]of the Regional Trial Court, dated 30 January 1992, finding private respondents liable for damages arising from negligence in the performance of their professional duties towards petitioner Erlinda Ramos resulting in her comatose condition. The antecedent facts as summarized by the trial court are reproduced hereunder: Plaintiff Erlinda Ramos was, until the afternoon of June 17, 1985, a 47-year old (Exh. A) robust woman (TSN, October 19, 1989, p. 10). Except for occasional complaints of discomfort due to pains allegedly caused by the presence of a stone in her gall bladder (TSN, January 13, 1988, pp. 4-5), she was as normal as any other woman. Married to Rogelio E. Ramos, an executive of Philippine Long Distance Telephone Company, she has three children whose names are Rommel Ramos, Roy Roderick Ramos and Ron Raymond Ramos (TSN, October 19, 1989, pp. 5-6). Because the discomforts somehow interfered with her normal ways, she sought professional advice. She was advised to undergo an operation for the removal of a stone in her gall bladder (TSN, January 13, 1988, p. 5). She underwent a series of examinations which included blood and urine tests (Exhs. A and C) which indicated she was fit for surgery. Through the intercession of a mutual friend, Dr. Buenviaje (TSN, January 13, 1988, p. 7), she and her husband Rogelio met for the first time Dr. Orlino Hozaka (should be Hosaka; see TSN, February 20, 1990, p. 3), one of the defendants in this case, on June 10, 1985. They agreed that their date at the operating table at the DLSMC (another defendant), would be on June 17, 1985 at 9:00 A.M.. Dr. Hosaka decided that she should undergo a cholecystectomy operation after examining the documents (findings from the Capitol Medical Center, FEU Hospital and DLSMC) presented to him. Rogelio E. Ramos, however, asked Dr. Hosaka to look for a good anesthesiologist. Dr. Hosaka, in turn, assured Rogelio that he will get a good anesthesiologist. Dr. Hosaka charged a fee of P16,000.00, which was to include the anesthesiologists fee and which was to be paid after the operation (TSN, October 19, 1989, pp. 14-15, 22-23, 31-33; TSN, February 27, 1990, p. 13; and TSN, November 9, 1989, pp. 3-4, 10, 17). A day before the scheduled date of operation, she was admitted at one of the rooms of the DLSMC, located along E. Rodriguez Avenue, Quezon City (TSN, October 19, 1989, p. 11). At around 7:30 A.M. of June 17, 1985 and while still in her room, she was prepared for the operation by the hospital staff. Her sister-in-law, Herminda Cruz, who was the Dean of the College of Nursing at the Capitol Medical Center, was also there for moral support. She reiterated her previous request for Herminda to be with her even during the operation. After praying, she was given injections. Her hands were held by Herminda as they went down from her room to the operating room (TSN, January 13, 1988, pp. 9-11). Her husband, Rogelio, was also with her (TSN, October 19, 1989, p. 18). At the operating room, Herminda saw about two or three nurses and Dr. Perfecta Gutierrez, the other defendant, who was to administer anesthesia. Although not a member of the hospital staff, Herminda introduced herself as Dean of the College of Nursing at the Capitol Medical Center who was to provide moral support to the patient, to them. Herminda was allowed to stay inside the operating room. At around 9:30 A.M., Dr. Gutierrez reached a nearby phone to look for Dr. Hosaka who was not yet in (TSN, January 13, 1988, pp. 11-12). Dr. Gutierrez thereafter informed Herminda Cruz about the prospect of a delay in the arrival of Dr. Hosaka. Herminda then went back to the patient who asked, Mindy, wala pa ba ang Doctor? The former replied, Huwag kang mag-alaala, darating na iyon (ibid.). Thereafter, Herminda went out of the operating room and informed the patients husband, Rogelio, that the doctor was not yet around (id., p. 13). When she returned to the operating room, the patient told her, Mindy, inip na inip na ako, ikuha mo ako ng ibang Doctor. So, she went out again and told Rogelio about what the patient said (id., p. 15). Thereafter, she returned to the operating room. At around 10:00 A.M., Rogelio E. Ramos was already dying [and] waiting for the arrival of the doctor even as he did his best to find somebody who will allow him to pull out his wife from the operating room (TSN, October 19, 1989, pp. 19-20). He also thought of the feeling of his wife, who was inside the operating room waiting for the doctor to arrive (ibid.). At almost 12:00 noon, he met Dr. Garcia who remarked that he (Dr. Garcia) was also tired of waiting for Dr. Hosaka to arrive (id., p. 21). While talking to Dr. Garcia at around 12:10 P.M., he came to know that Dr. Hosaka arrived as a nurse remarked, Nandiyan na si Dr. Hosaka, dumating na raw. Upon hearing those words, he went down to the lobby and waited for the operation to be completed (id., pp. 16, 29-30).

At about 12:15 P.M., Herminda Cruz, who was inside the operating room with the patient, heard somebody say that Dr. Hosaka is already here. She then saw people inside the operating room moving, doing this and that, [and] preparing the patient for the operation (TSN, January 13, 1988, p. 16). As she held the hand of Erlinda Ramos, she then saw Dr. Gutierrez intubating the hapless patient. She thereafter heard Dr. Gutierrez say, ang hirap ma-intubate nito, mali yata ang pagkakapasok. O lumalaki ang tiyan (id., p. 17). Because of the remarks of Dra. Gutierrez, she focused her attention on what Dr. Gutierrez was doing. She thereafter noticed bluish discoloration of the nailbeds of the left hand of the hapless Erlinda even as Dr. Hosaka approached her. She then heard Dr. Hosaka issue an order for someone to call Dr. Calderon, another anesthesiologist (id., p. 19). After Dr. Calderon arrived at the operating room, she saw this anesthesiologist trying to intubate the patient. The patients nailbed became bluish and the patient was placed in a trendelenburg position - a position where the head of the patient is placed in a position lower than her feet which is an indication that there is a decrease of blood supply to the patients brain (Id., pp. 19-20). Immediately thereafter, she went out of the operating room, and she told Rogelio E. Ramos that something wrong was x x x happening (Ibid.). Dr. Calderon was then able to intubate the patient (TSN, July 25, 1991, p. 9). Meanwhile, Rogelio, who was outside the operating room, saw a respiratory machine being rushed towards the door of the operating room. He also saw several doctors rushing towards the operating room. When informed by Herminda Cruz that something wrong was happening, he told her (Herminda) to be back with the patient inside the operating room (TSN, October 19, 1989, pp. 25-28). Herminda Cruz immediately rushed back, and saw that the patient was still in trendelenburg position (TSN, January 13, 1988, p. 20). At almost 3:00 P.M. of that fateful day, she saw the patient taken to the Intensive Care Unit (ICU). About two days thereafter, Rogelio E. Ramos was able to talk to Dr. Hosaka. The latter informed the former that something went wrong during the intubation. Reacting to what was told to him, Rogelio reminded the doctor that the condition of his wife would not have happened, had he (Dr. Hosaka) looked for a good anesthesiologist (TSN, October 19, 1989, p. 31). Doctors Gutierrez and Hosaka were also asked by the hospital to explain what happened to the patient. The doctors explained that the patient had bronchospasm (TSN, November 15, 1990, pp. 26-27). Erlinda Ramos stayed at the ICU for a month. About four months thereafter or on November 15, 1985, the patient was released from the hospital. During the whole period of her confinement, she incurred hospital bills amounting to P93,542.25 which is the subject of a promissory note and affidavit of undertaking executed by Rogelio E. Ramos in favor of DLSMC. Since that fateful afternoon of June 17, 1985, she has been in a comatose condition. She cannot do anything. She cannot move any part of her body. She cannot see or hear. She is living on mechanical means. She suffered brain damage as a result of the absence of oxygen in her brain for four to five minutes (TSN, November 9, 1989, pp. 21-22). After being discharged from the hospital, she has been staying in their residence, still needing constant medical attention, with her husband Rogelio incurring a monthly expense ranging from P8,000.00 to P10,000.00 (TSN, October 19, 1989, pp. 32-34). She was also diagnosed to be Thus, on 8 January 1986, petitioners filed a civil case[6] for damages with the Regional Trial Court of Quezon City against herein private respondents alleging negligence in the management and care of Erlinda Ramos. During the trial, both parties presented evidence as to the possible cause of Erlindas injury. Plaintiff presented the testimonies of Dean Herminda Cruz and Dr. Mariano Gavino to prove that the damage sustained by Erlinda was due to lack of oxygen in her brain caused by the faulty management of her airway by private respondents during the anesthesia phase. On the other hand, private respondents primarily relied on the expert testimony of Dr. Eduardo Jamora, a pulmonologist, to the effect that the cause of brain damage was Erlindas allergic reaction to the anesthetic agent, Thiopental Sodium (Pentothal). After considering the evidence from both sides, the Regional Trial Court rendered judgment in favor of petitioners, to wit: After evaluating the evidence as shown in the finding of facts set forth earlier, and applying the aforecited provisions of law and jurisprudence to the case at bar, this Court finds and so holds that defendants are liable to plaintiffs for damages. The defendants were guilty of, at the very least, negligence in the performance of their duty to plaintiff-patient Erlinda Ramos. On the part of Dr. Perfecta Gutierrez, this Court finds that she omitted to exercise reasonable care in not only intubating the patient, but also in not repeating the administration of atropine (TSN, August 20, 1991, pp. 510), without due regard to the fact that the patient was inside the operating room for almost three (3) hours.

suffering from diffuse cerebral parenchymal damage (Exh. G; see also TSN, December 21, 1989, p. 6).[5]

For after she committed a mistake in intubating [the] patient, the patient's nailbed became bluish and the patient, thereafter, was placed in trendelenburg position, because of the decrease of blood supply to the patient's brain. The evidence further shows that the hapless patient suffered brain damage because of the absence of oxygen in her (patient's) brain for approximately four to five minutes which, in turn, caused the patient to become comatose. On the part of Dr. Orlino Hosaka, this Court finds that he is liable for the acts of Dr. Perfecta Gutierrez whom he had chosen to administer anesthesia on the patient as part of his obligation to provide the patient a `good anesthesiologist', and for arriving for the scheduled operation almost three (3) hours late. On the part of DLSMC (the hospital), this Court finds that it is liable for the acts of negligence of the doctors in their `practice of medicine' in the operating room. Moreover, the hospital is liable for failing through its responsible officials, to cancel the scheduled operation after Dr. Hosaka inexcusably failed to arrive on time. In having held thus, this Court rejects the defense raised by defendants that they have acted with due care and prudence in rendering medical services to plaintiff-patient. For if the patient was properly intubated as claimed by them, the patient would not have become comatose. And, the fact that another anesthesiologist was called to try to intubate the patient after her (the patient's) nailbed turned bluish, belie their claim. Furthermore, the defendants should have rescheduled the operation to a later date. This, they should have done, if defendants acted with due care and prudence as the patient's case was an elective, not an emergency case. xxx WHEREFORE, and in view of the foregoing, judgment is rendered in favor of the plaintiffs and against the defendants. Accordingly, the latter are ordered to pay, jointly and severally, the former the following sums of money, to wit: 1) the sum of P8,000.00 as actual monthly expenses for the plaintiff Erlinda Ramos reckoned from November 15, 1985 or in the total sum of P632,000.00 as of April 15, 1992, subject to its being updated; 2) the sum of P100,000.00 as reasonable attorney's fees; 3) the sum of P800,000.00 by way of moral damages and the further sum of P200,000.00 by way of exemplary damages; and, 4) the costs of the suit. SO ORDERED.[7] Private respondents seasonably interposed an appeal to the Court of Appeals. The appellate court rendered a Decision, dated 29 May 1995, reversing the findings of the trial court. The decretal portion of the decision of the appellate court reads: WHEREFORE, for the foregoing premises the appealed decision is hereby REVERSED, and the complaint below against the appellants is hereby ordered DISMISSED. The counterclaim of appellant De Los Santos Medical Center is GRANTED but only insofar as appellees are hereby ordered to pay the unpaid hospital bills amounting to P93,542.25, plus legal interest for justice must be tempered with mercy. SO ORDERED.[8] The decision of the Court of Appeals was received on 9 June 1995 by petitioner Rogelio Ramos who was mistakenly addressed as Atty. Rogelio Ramos. No copy of the decision, however, was sent nor received by the Coronel Law Office, then counsel on record of petitioners. Rogelio referred the decision of the appellate court to a new lawyer, Atty. Ligsay, only on 20 June 1995, or four (4) days before the expiration of the reglementary period for filing a motion for reconsideration. On the same day, Atty. Ligsay, filed with the appellate court a motion for extension of time to file a motion for reconsideration. The motion for reconsideration was submitted on 4 July 1995. However, the appellate court denied the motion for extension of time in its Resolution dated 25 July 1995.[9] Meanwhile petitioners engaged the services of another counsel, Atty. Sillano, to replace Atty. Ligsay. Atty. Sillano filed on 7 August 1995 a motion to admit the motion for reconsideration contending that the period to file the appropriate pleading on the assailed decision had not yet commenced to run as the Division Clerk of Court of the Court of Appeals had not yet served a copy thereof to the counsel on record. Despite this explanation, the appellate court still denied the motion to admit the motion for reconsideration of petitioners in its Resolution, dated 29 March 1996, primarily on the ground that the fifteen-day (15) period for filing a motion for reconsideration had already expired, to wit:

We said in our Resolution on July 25, 1995, that the filing of a Motion for Reconsideration cannot be extended; precisely, the Motion for Extension (Rollo, p. 12) was denied. It is, on the other hand, admitted in the latter

Motion that plaintiffs/appellees received a copy of the decision as early as June 9, 1995. Computation wise, the period to file a Motion for Reconsideration expired on June 24. The Motion for Reconsideration, in turn, was received by the Court of Appeals already on July 4, necessarily, the 15-day period already passed. For that alone, the latter should be denied. Even assuming admissibility of the Motion for Reconsideration, but after considering the Comment/Opposition, the former, for lack of merit, is hereby DENIED. SO ORDERED.[10] A copy of the above resolution was received by Atty. Sillano on 11 April 1996. The next day, or on 12 April 1996, Atty. Sillano filed before this Court a motion for extension of time to file the present petition for certiorari under Rule 45. The Court granted the motion for extension of time and gave petitioners additional thirty (30) days after the expiration of the fifteen-day (15) period counted from the receipt of the resolution of the Court of Appeals within which to submit the petition. The due date fell on 27 May 1996. The petition was filed on 9 May 1996, well within the extended period given by the Court. Petitioners assail the decision of the Court of Appeals on the following grounds: I IN PUTTING MUCH RELIANCE ON THE TESTIMONIES OF RESPONDENTS DRA. GUTIERREZ, DRA. CALDERON AND DR. JAMORA; II IN FINDING THAT THE NEGLIGENCE OF THE RESPONDENTS DID NOT CAUSE THE UNFORTUNATE COMATOSE CONDITION OF PETITIONER ERLINDA RAMOS; III IN NOT APPLYING THE DOCTRINE OF RES IPSA LOQUITUR.[11] Before we discuss the merits of the case, we shall first dispose of the procedural issue on the timeliness of the petition in relation to the motion for reconsideration filed by petitioners with the Court of Appeals. In their Comment,[12] private respondents contend that the petition should not be given due course since the motion for reconsideration of the petitioners on the decision of the Court of Appeals was validly dismissed by the appellate court for having been filed beyond the reglementary period. We do not agree. A careful review of the records reveals that the reason behind the delay in filing the motion for reconsideration is attributable to the fact that the decision of the Court of Appeals was not sent to then counsel on record of petitioners, the Coronel Law Office. In fact, a copy of the decision of the appellate court was instead sent to and received by petitioner Rogelio Ramos on 9 June 1995 wherein he was mistakenly addressed as Atty. Rogelio Ramos. Based on the other communications received by petitioner Rogelio Ramos, the appellate court apparently mistook him for the counsel on record. Thus, no copy of the decision of the appellate court was furnished to the counsel on record. Petitioner, not being a lawyer and unaware of the prescriptive period for filing a motion for reconsideration, referred the same to a legal counsel only on 20 June 1995. It is elementary that when a party is represented by counsel, all notices should be sent to the partys lawyer at his given address. With a few exceptions, notice to a litigant without notice to his counsel on record is no notice at all. In the present case, since a copy of the decision of the appellate court was not sent to the counsel on record of petitioner, there can be no sufficient notice to speak of. Hence, the delay in the filing of the motion for reconsideration cannot be taken against petitioner. Moreover, since the Court of Appeals already issued a second Resolution, dated 29 March 1996, which superseded the earlier resolution issued on 25 July 1995, and denied the motion for reconsideration of petitioner, we believe that the receipt of the former should be considered in determining the timeliness of the filing of the present petition. Based on this, the petition before us was submitted on time. After resolving the foregoing procedural issue, we shall now look into the merits of the case. For a more logical presentation of the discussion we shall first consider the issue on the applicability of the doctrine of res ipsa loquitur to the instant case. Thereafter, the first two assigned errors shall be tackled in relation to the res ipsa loquitur doctrine. Res ipsa loquitur is a Latin phrase which literally means the thing or the transaction speaks for itself. The phrase res ipsa loquitur is a maxim for the rule that the fact of the occurrence of an injury, taken with the surrounding circumstances, may permit an inference or raise a presumption of negligence, or make out a plaintiffs prima facie case, and present a question of fact for defendant to meet with an explanation.[13]

Where the thing which caused the injury complained of is shown to be under the management of the defendant or his servants and the accident is such as in ordinary course of things does not happen if those who have its management or control use proper care, it affords reasonable evidence, in the absence of explanation by the defendant, that the accident arose from or was caused by the defendants want of care.[14] The doctrine of res ipsa loquitur is simply a recognition of the postulate that, as a matter of common knowledge and experience, the very nature of certain types of occurrences may justify an inference of negligence on the part of the person who controls the instrumentality causing the injury in the absence of some explanation by the defendant who is charged with negligence.[15] It is grounded in the superior logic of ordinary human experience and on the basis of such experience or common knowledge, negligence may be

deduced from the mere occurrence of the accident itself.[16] Hence, res ipsa loquitur is applied in conjunction with the doctrine of common knowledge. However, much has been said that res ipsa loquitur is not a rule of substantive law and, as such, does not create or constitute an independent or separate ground of liability.[17] Instead, it is considered as merely evidentiary or in the nature of a procedural rule.[18] It is regarded as a mode of proof, or a mere procedural convenience since it furnishes a substitute for, and relieves a plaintiff of, the burden of producing specific proof of negligence.[19] In other words, mere invocation and application of the doctrine does not dispense with the requirement of proof of negligence. It is simply a step in the process of such proof, permitting the plaintiff to present along with the proof of the accident, enough of the attending circumstances to invoke the doctrine, creating an inference or presumption of negligence, and to thereby place on the defendant the burden of going forward with the proof.[20] Still, before resort to the doctrine may be allowed, the following requisites must be satisfactorily shown: 1. The accident is of a kind which ordinarily does not occur in the absence of someones negligence; 2. It is caused by an instrumentality within the exclusive control of the defendant or defendants; and 3. The possibility of contributing conduct which would make the plaintiff responsible is eliminated.[21] In the above requisites, the fundamental element is the control of the instrumentality which caused the damage.[22] Such element of control must be shown to be within the dominion of the defendant. In order to have the benefit of the rule, a plaintiff, in addition to proving injury or damage, must show a situation where it is applicable, and must establish that the essential elements of the doctrine were present in a particular incident.[23] Medical malpractice[24]cases do not escape the application of this doctrine. Thus, res ipsa loquitur has been applied when the circumstances attendant upon the harm are themselves of such a character as to justify an inference of negligence as the cause of that harm.[25] The application of res ipsa loquitur in medical negligence cases presents a question of law since it is a judicial function to determine whether a certain set of circumstances does, as a matter of law, permit a given inference.[26] Although generally, expert medical testimony is relied upon in malpractice suits to prove that a physician has done a negligent act or that he has deviated from the standard medical procedure, when the doctrine of res ipsa loquitur is availed by the plaintiff, the need for expert medical testimony is dispensed with because the injury itself provides the proof of negligence.[27] The reason is that the general rule on the necessity of expert testimony applies only to such matters clearly within the domain of medical science, and not to matters that are within the common knowledge of mankind which may be testified to by anyone familiar with the facts.

[28] Ordinarily, only physicians and surgeons of skill and experience are competent to testify as to whether a
patient has been treated or operated upon with a reasonable degree of skill and care. However, testimony as to the statements and acts of physicians and surgeons, external appearances, and manifest conditions which are observable by any one may be given by non-expert witnesses.[29] Hence, in cases where the res ipsa loquitur is applicable, the court is permitted to find a physician negligent upon proper proof of injury to the patient, without the aid of expert testimony, where the court from its fund of common knowledge can determine the proper standard of care.[30] Where common knowledge and experience teach that a resulting injury would not have occurred to the patient if due care had been exercised, an inference of negligence may be drawn giving rise to an application of the doctrine of res ipsa loquitur without medical evidence, which is ordinarily required to show not only what occurred but how and why it occurred.[31] When the doctrine is appropriate, all that the patient must do is prove a nexus between the particular act or omission complained of

and the injury sustained while under the custody and management of the defendant without need to produce expert medical testimony to establish the standard of care. Resort to res ipsa loquitur is allowed because there is no other way, under usual and ordinary conditions, by which the patient can obtain redress for injury suffered by him. Thus, courts of other jurisdictions have applied the doctrine in the following situations: leaving of a foreign object in the body of the patient after an operation,[32] injuries sustained on a healthy part of the body which was not under, or in the area, of treatment,[33] removal of the wrong part of the body when another part was intended,[34] knocking out a tooth while a patients jaw was under anesthetic for the removal of his tonsils,

[35] and loss of an eye while the patient plaintiff was under the influence of anesthetic, during or following an operation for appendicitis,[36] among others.
Nevertheless, despite the fact that the scope of res ipsa loquitur has been measurably enlarged, it does not automatically apply to all cases of medical negligence as to mechanically shift the burden of proof to the defendant to show that he is not guilty of the ascribed negligence. Res ipsa loquitur is not a rigid or ordinary doctrine to be perfunctorily used but a rule to be cautiously applied, depending upon the circumstances of each case. It is generally restricted to situations in malpractice cases where a layman is able to say, as a matter of common knowledge and observation, that the consequences of professional care were not as such as would ordinarily have followed if due care had been exercised.[37] A distinction must be made between the failure to secure results, and the occurrence of something more unusual and not ordinarily found if the service or treatment rendered followed the usual procedure of those skilled in that particular practice. It must be conceded that the doctrine of res ipsa loquitur can have no application in a suit against a physician or surgeon which involves the merits of a diagnosis or of a scientific treatment.[38] The physician or surgeon is not required at his peril to explain why any particular diagnosis was not correct, or why any particular scientific

treatment did not produce the desired result.[39] Thus, res ipsa loquitur is not available in a malpractice suit if the only showing is that the desired result of an operation or treatment was not accomplished.[40] The real question, therefore, is whether or not in the process of the operation any extraordinary incident or unusual event outside of the routine performance occurred which is beyond the regular scope of customary professional activity in such operations, which, if unexplained would themselves reasonably speak to the average man as the negligent cause or causes of the untoward consequence.[41] If there was such extraneous interventions, the doctrine of res ipsa loquitur may be utilized and the defendant is called upon to explain the matter, by evidence of exculpation, if he could.[42] We find the doctrine of res ipsa loquitur appropriate in the case at bar. As will hereinafter be explained, the damage sustained by Erlinda in her brain prior to a scheduled gall bladder operation presents a case for the application of res ipsa loquitur. A case strikingly similar to the one before us is Voss vs. Bridwell,[43] where the Kansas Supreme Court in applying the res ipsa loquitur stated: The plaintiff herein submitted himself for a mastoid operation and delivered his person over to the care, custody and control of his physician who had complete and exclusive control over him, but the operation was never performed. At the time of submission he was neurologically sound and physically fit in mind and body, but he suffered irreparable damage and injury rendering him decerebrate and totally incapacitated. The injury was one which does not ordinarily occur in the process of a mastoid operation or in the absence of negligence in the administration of an anesthetic, and in the use and employment of an endoctracheal tube. Ordinarily a person being put under anesthesia is not rendered decerebrate as a consequence of administering such anesthesia in the absence of negligence. Upon these facts and under these circumstances a layman would be able to say, as a matter of common knowledge and observation, that the consequences of professional treatment were not as such as would ordinarily have followed if due care had been exercised. Here the plaintiff could not have been guilty of contributory negligence because he was under the influence of anesthetics and unconscious, and the circumstances are such that the true explanation of event is more accessible to the defendants than to the plaintiff for they had the exclusive control of the instrumentalities of anesthesia. Upon all the facts, conditions and circumstances alleged in Count II it is held that a cause of action is stated under the doctrine of res ipsa loquitur.[44] Indeed, the principles enunciated in the aforequoted case apply with equal force here. In the present case, Erlinda submitted herself for cholecystectomy and expected a routine general surgery to be performed on her

gall bladder. On that fateful day she delivered her person over to the care, custody and control of private respondents who exercised complete and exclusive control over her. At the time of submission, Erlinda was neurologically sound and, except for a few minor discomforts, was likewise physically fit in mind and body. However, during the administration of anesthesia and prior to the performance of cholecystectomy she suffered irreparable damage to her brain. Thus, without undergoing surgery, she went out of the operating room already decerebrate and totally incapacitated. Obviously, brain damage, which Erlinda sustained, is an injury which does not normally occur in the process of a gall bladder operation. In fact, this kind of situation does not happen in the absence of negligence of someone in the administration of anesthesia and in the use of endotracheal tube. Normally, a person being put under anesthesia is not rendered decerebrate as a consequence of administering such anesthesia if the proper procedure was followed. Furthermore, the instruments used in the administration of anesthesia, including the endotracheal tube, were all under the exclusive control of private respondents, who are the physicians-in-charge. Likewise, petitioner Erlinda could not have been guilty of contributory negligence because she was under the influence of anesthetics which rendered her unconscious. Considering that a sound and unaffected member of the body (the brain) is injured or destroyed while the patient is unconscious and under the immediate and exclusive control of the physicians, we hold that a practical administration of justice dictates the application of res ipsa loquitur. Upon these facts and under these circumstances the Court would be able to say, as a matter of common knowledge and observation, if negligence attended the management and care of the patient. Moreover, the liability of the physicians and the hospital in this case is not predicated upon an alleged failure to secure the desired results of an operation nor on an alleged lack of skill in the diagnosis or treatment as in fact no operation or treatment was ever performed on Erlinda. Thus, upon all these initial determination a case is made out for the application of the doctrine of res ipsa loquitur. Nonetheless, in holding that res ipsa loquitur is available to the present case we are not saying that the doctrine is applicable in any and all cases where injury occurs to a patient while under anesthesia, or to any and all anesthesia cases. Each case must be viewed in its own light and scrutinized in order to be within the res ipsa loquitur coverage. Having in mind the applicability of the res ipsa loquitur doctrine and the presumption of negligence allowed therein, the Court now comes to the issue of whether the Court of Appeals erred in finding that private respondents were not negligent in the care of Erlinda during the anesthesia phase of the operation and, if in the affirmative, whether the alleged negligence was the proximate cause of Erlindas comatose condition. Corollary thereto, we shall also determine if the Court of Appeals erred in relying on the testimonies of the witnesses for the private respondents. In sustaining the position of private respondents, the Court of Appeals relied on the testimonies of Dra. Gutierrez, Dra. Calderon and Dr. Jamora. In giving weight to the testimony of Dra. Gutierrez, the Court of Appeals rationalized that she was candid enough to admit that she experienced some difficulty in the endotracheal intubation[45]of the patient and thus, cannot be said to be covering her negligence with falsehood. The appellate court likewise opined that private respondents were able to show that the brain damage sustained by Erlinda was not caused by the alleged faulty intubation but was due to the allergic reaction of the patient to the drug Thiopental Sodium (Pentothal), a short-acting barbiturate, as testified on by their expert witness, Dr. Jamora. On the other hand, the appellate court rejected the testimony of Dean Herminda Cruz offered in favor of petitioners that the cause of the brain injury was traceable to the wrongful insertion of the tube since the latter, being a nurse, was allegedly not knowledgeable in the process of intubation. In so holding, the appellate court returned a verdict in favor of respondents physicians and hospital and absolved them of any liability towards Erlinda and her family. We disagree with the findings of the Court of Appeals. We hold that private respondents were unable to disprove the presumption of negligence on their part in the care of Erlinda and their negligence was the proximate cause of her piteous condition. In the instant case, the records are helpful in furnishing not only the logical scientific evidence of the pathogenesis of the injury but also in providing the Court the legal nexus upon which liability is based. As will be shown hereinafter, private respondents own testimonies which are reflected in the transcript of stenographic notes are replete of signposts indicative of their negligence in the care and management of Erlinda. With regard to Dra. Gutierrez, we find her negligent in the care of Erlinda during the anesthesia phase. As borne by the records, respondent Dra. Gutierrez failed to properly intubate the patient. This fact was attested to by Prof. Herminda Cruz, Dean of the Capitol Medical Center School of Nursing and petitioner's sister-in-law, who was in the operating room right beside the patient when the tragic event occurred. Witness Cruz testified to this effect:

ATTY. PAJARES: Q: A: Q: In particular, what did Dra. Perfecta Gutierrez do, if any on the patient? In particular, I could see that she was intubating the patient. Do you know what happened to that intubation process administered by Dra. Gutierrez?

ATTY. ALCERA: She will be incompetent Your Honor. COURT: Witness may answer if she knows. A: As I have said, I was with the patient, I was beside the stretcher holding the left hand of the patient and all of a sudden I heard some remarks coming from Dra. Perfecta Gutierrez herself. She was saying Ang hirap ma-intubate nito, mali yata ang pagkakapasok. O lumalaki ang tiyan. xxx ATTY. PAJARES: Q: A: xxx After hearing the phrase lumalaki ang tiyan, what did you notice on the person of the patient? A: Q: A: Q: A: Q: A: Q: A: Q: I notice (sic) some bluish discoloration on the nailbeds of the left hand where I was at. Where was Dr. Orlino Ho[s]aka then at that particular time? I saw him approaching the patient during that time. When he approached the patient, what did he do, if any? He made an order to call on the anesthesiologist in the person of Dr. Calderon. Did Dr. Calderon, upon being called, arrive inside the operating room? Yes sir. What did [s]he do, if any? [S]he tried to intubate the patient. What happened to the patient? From whom did you hear those words lumalaki ang tiyan? From Dra. Perfecta Gutierrez.

A: When Dr. Calderon try (sic) to intubate the patient, after a while the patients nailbed became bluish and I saw the patient was placed in trendelenburg position. xxx Q: A: xxx The appellate court, however, disbelieved Dean Cruz's testimony in the trial court by declaring that: A perusal of the standard nursing curriculum in our country will show that intubation is not taught as part of nursing procedures and techniques. Indeed, we take judicial notice of the fact that nurses do not, and cannot, intubate. Even on the assumption that she is fully capable of determining whether or not a patient is properly intubated, witness Herminda Cruz, admittedly, did not peep into the throat of the patient. (TSN, July 25, 1991, p. 13). More importantly, there is no evidence that she ever auscultated the patient or that she conducted any type of examination to check if the endotracheal tube was in its proper place, and to determine the condition of the heart, lungs, and other organs. Thus, witness Cruz's categorical statements that appellant Dra. Gutierrez failed to intubate the appellee Erlinda Ramos and that it was Dra. Calderon who succeeded in doing so clearly suffer from lack of sufficient factual bases.[47] Do you know the reason why the patient was placed in that trendelenburg position? As far as I know, when a patient is in that position, there is a decrease of blood supply to the brain.[46]

In other words, what the Court of Appeals is trying to impress is that being a nurse, and considered a layman in the process of intubation, witness Cruz is not competent to testify on whether or not the intubation was a success. We do not agree with the above reasoning of the appellate court. Although witness Cruz is not an anesthesiologist, she can very well testify upon matters on which she is capable of observing such as, the statements and acts of the physician and surgeon, external appearances, and manifest conditions which are observable by any one.[48] This is precisely allowed under the doctrine of res ipsa loquitur where the testimony of expert witnesses is not required. It is the accepted rule that expert testimony is not necessary for the proof of negligence in non-technical matters or those of which an ordinary person may be expected to have knowledge, or where the lack of skill or want of care is so obvious as to render expert testimony unnecessary.

[49] We take judicial notice of the fact that anesthesia procedures have become so common, that even an

ordinary person can tell if it was administered properly. As such, it would not be too difficult to tell if the tube was properly inserted. This kind of observation, we believe, does not require a medical degree to be acceptable. At any rate, without doubt, petitioner's witness, an experienced clinical nurse whose long experience and scholarship led to her appointment as Dean of the Capitol Medical Center School of Nursing, was fully capable of determining whether or not the intubation was a success. She had extensive clinical experience starting as a staff nurse in Chicago, Illinois; staff nurse and clinical instructor in a teaching hospital, the FEU-NRMF; Dean of the Laguna College of Nursing in San Pablo City; and then Dean of the Capitol Medical Center School of Nursing.[50]Reviewing witness Cruz' statements, we find that the same were delivered in a straightforward manner, with the kind of detail, clarity, consistency and spontaneity which would have been difficult to fabricate. With her clinical background as a nurse, the Court is satisfied that she was able to demonstrate through her testimony what truly transpired on that fateful day. Most of all, her testimony was affirmed by no less than respondent Dra. Gutierrez who admitted that she experienced difficulty in inserting the tube into Erlindas trachea, to wit: ATTY. LIGSAY: Q: In this particular case, Doctora, while you were intubating at your first attempt (sic), you did not immediately see the trachea? DRA. GUTIERREZ: A: Q: A: Q: A: Q: A: Q: A: Yes sir. Did you pull away the tube immediately? You do not pull the ... Did you or did you not? I did not pull the tube. When you said mahirap yata ito, what were you referring to? Mahirap yata itong i-intubate, that was the patient. So, you found some difficulty in inserting the tube? Yes, because of (sic) my first attempt, I did not see right away.[51]

Curiously in the case at bar, respondent Dra. Gutierrez made the haphazard defense that she encountered hardship in the insertion of the tube in the trachea of Erlinda because it was positioned more anteriorly (slightly deviated from the normal anatomy of a person)[52] making it harder to locate and, since Erlinda is obese and has a short neck and protruding teeth, it made intubation even more difficult. The argument does not convince us. If this was indeed observed, private respondents adduced no evidence demonstrating that they proceeded to make a thorough assessment of Erlindas airway, prior to the induction of anesthesia, even if this would mean postponing the procedure. From their testimonies, it appears that the observation was made only as an afterthought, as a means of defense. The pre-operative evaluation of a patient prior to the administration of anesthesia is universally observed to lessen the possibility of anesthetic accidents. Pre-operative evaluation and preparation for anesthesia begins when the anesthesiologist reviews the patients medical records and visits with the patient, traditionally, the day before elective surgery.[53] It includes taking the patients medical history, review of current drug

therapy, physical examination and interpretation of laboratory data.[54] The physical examination performed by the anesthesiologist is directed primarily toward the central nervous system, cardiovascular system, lungs

and upper airway.[55] A thorough analysis of the patient's airway normally involves investigating the following: cervical spine mobility, temporomandibular mobility, prominent central incisors, diseased or artificial teeth, ability to visualize uvula and the thyromental distance.[56] Thus, physical characteristics of the patients upper airway that could make tracheal intubation difficult should be studied.[57] Where the need arises, as when initial assessment indicates possible problems (such as the alleged short neck and protruding teeth of Erlinda) a thorough examination of the patients airway would go a long way towards decreasing patient morbidity and mortality. In the case at bar, respondent Dra. Gutierrez admitted that she saw Erlinda for the first time on the day of the operation itself, on 17 June 1985. Before this date, no prior consultations with, or pre-operative evaluation of Erlinda was done by her. Until the day of the operation, respondent Dra. Gutierrez was unaware of the physiological make-up and needs of Erlinda. She was likewise not properly informed of the possible difficulties she would face during the administration of anesthesia to Erlinda. Respondent Dra. Gutierrez act of seeing her patient for the first time only an hour before the scheduled operative procedure was, therefore, an act of exceptional negligence and professional irresponsibility. The measures cautioning prudence and vigilance in dealing with human lives lie at the core of the physicians centuries-old Hippocratic Oath. Her failure to follow this medical procedure is, therefore, a clear indicia of her negligence. Respondent Dra. Gutierrez, however, attempts to gloss over this omission by playing around with the trial court's ignorance of clinical procedure, hoping that she could get away with it. Respondent Dra. Gutierrez tried to muddle the difference between an elective surgery and an emergency surgery just so her failure to perform the required pre-operative evaluation would escape unnoticed. In her testimony she asserted: ATTY. LIGSAY: Q: Would you agree, Doctor, that it is good medical practice to see the patient a day before so you can introduce yourself to establish good doctor-patient relationship and gain the trust and confidence of the patient? DRA. GUTIERREZ: A: As I said in my previous statement, it depends on the operative procedure of the anesthesiologist and in my case, with elective cases and normal cardio-pulmonary clearance like that, I usually don't do it except on emergency and on cases that have an abnormalities (sic).[58] However, the exact opposite is true. In an emergency procedure, there is hardly enough time available for the fastidious demands of pre-operative procedure so that an anesthesiologist is able to see the patient only a few minutes before surgery, if at all. Elective procedures, on the other hand, are operative procedures that can wait for days, weeks or even months. Hence, in these cases, the anesthesiologist possesses the luxury of time to make a proper assessment, including the time to be at the patient's bedside to do a proper interview and clinical evaluation. There is ample time to explain the method of anesthesia, the drugs to be used, and their possible hazards for purposes of informed consent. Usually, the pre-operative assessment is conducted at least one day before the intended surgery, when the patient is relaxed and cooperative. Erlindas case was elective and this was known to respondent Dra. Gutierrez. Thus, she had all the time to make a thorough evaluation of Erlindas case prior to the operation and prepare her for anesthesia. However, she never saw the patient at the bedside. She herself admitted that she had seen petitioner only in the operating room, and only on the actual date of the cholecystectomy. She negligently failed to take advantage of this important opportunity. As such, her attempt to exculpate herself must fail. Having established that respondent Dra. Gutierrez failed to perform pre-operative evaluation of the patient which, in turn, resulted to a wrongful intubation, we now determine if the faulty intubation is truly the proximate cause of Erlindas comatose condition. Private respondents repeatedly hammered the view that the cerebral anoxia which led to Erlindas coma was due to bronchospasm[59] mediated by her allergic response to the drug, Thiopental Sodium, introduced into her system. Towards this end, they presented Dr. Jamora, a Fellow of the Philippine College of Physicians and Diplomate of the Philippine Specialty Board of Internal Medicine, who advanced private respondents' theory that the oxygen deprivation which led to anoxic encephalopathy,[60] was due to an unpredictable drug reaction to the short-acting barbiturate. We find the theory of private respondents unacceptable. First of all, Dr. Jamora cannot be considered an authority in the field of anesthesiology simply because he is not

an anesthesiologist. Since Dr. Jamora is a pulmonologist, he could not have been capable of properly enlightening the court about anesthesia practice and procedure and their complications. Dr. Jamora is likewise not an allergologist and could not therefore properly advance expert opinion on allergic-mediated processes. Moreover, he is not a pharmacologist and, as such, could not have been capable, as an expert would, of explaining to the court the pharmacologic and toxic effects of the supposed culprit, Thiopental Sodium (Pentothal). The inappropriateness and absurdity of accepting Dr. Jamoras testimony as an expert witness in the anesthetic practice of Pentothal administration is further supported by his own admission that he formulated his opinions on the drug not from the practical experience gained by a specialist or expert in the administration and use of Sodium Pentothal on patients, but only from reading certain references, to wit: ATTY. LIGSAY: Q: In your line of expertise on pulmonology, did you have any occasion to use pentothal as a method of management? DR. JAMORA: A: Q: A: We do it in conjunction with the anesthesiologist when they have to intubate our patient. But not in particular when you practice pulmonology? No.

Q: In other words, your knowledge about pentothal is based only on what you have read from books and not by your own personal application of the medicine pentothal? A: Q: A: Based on my personal experience also on pentothal. How many times have you used pentothal? They used it on me. I went into bronchospasm during my appendectomy.

Q: And because they have used it on you and on account of your own personal experience you feel that you can testify on pentothal here with medical authority? A: No. That is why I used references to support my claims.[61]

An anesthetic accident caused by a rare drug-induced bronchospasm properly falls within the fields of anesthesia, internal medicine-allergy, and clinical pharmacology. The resulting anoxic encephalopathy belongs to the field of neurology. While admittedly, many bronchospastic-mediated pulmonary diseases are within the expertise of pulmonary medicine, Dr. Jamora's field, the anesthetic drug-induced, allergic mediated bronchospasm alleged in this case is within the disciplines of anesthesiology, allergology and pharmacology. On the basis of the foregoing transcript, in which the pulmonologist himself admitted that he could not testify about the drug with medical authority, it is clear that the appellate court erred in giving weight to Dr. Jamoras testimony as an expert in the administration of Thiopental Sodium. The provision in the rules of evidence[62]regarding expert witnesses states: Sec. 49. Opinion of expert witness. - The opinion of a witness on a matter requiring special knowledge, skill, experience or training which he is shown to possess, may be received in evidence. Generally, to qualify as an expert witness, one must have acquired special knowledge of the subject matter about which he or she is to testify, either by the study of recognized authorities on the subject or by practical experience.[63] Clearly, Dr. Jamora does not qualify as an expert witness based on the above standard since he lacks the necessary knowledge, skill, and training in the field of anesthesiology. Oddly, apart from submitting testimony from a specialist in the wrong field, private respondents intentionally avoided providing testimony by competent and independent experts in the proper areas. Moreover, private respondents theory, that Thiopental Sodium may have produced Erlinda's coma by triggering an allergic mediated response, has no support in evidence. No evidence of stridor, skin reactions, or wheezing - some of the more common accompanying signs of an allergic reaction - appears on record. No laboratory data were ever presented to the court. In any case, private respondents themselves admit that Thiopental induced, allergic-mediated bronchospasm happens only very rarely. If courts were to accept private respondents' hypothesis without supporting medical proof, and against the weight of available evidence, then every anesthetic accident would be an act of God.

Evidently, the Thiopental-allergy theory vigorously asserted by private respondents was a mere afterthought. Such an explanation was advanced in order to absolve them of any and all responsibility for the patients condition. In view of the evidence at hand, we are inclined to believe petitioners stand that it was the faulty intubation which was the proximate cause of Erlindas comatose condition. Proximate cause has been defined as that which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces injury, and without which the result would not have occurred.[64] An injury or damage is proximately caused by an act or a failure to act, whenever it appears from the evidence in the case, that the act or omission played a substantial part in bringing about or actually causing the injury or damage; and that the injury or damage was either a direct result or a reasonably probable consequence of the act or omission.[65] It is the dominant, moving or producing cause. Applying the above definition in relation to the evidence at hand, faulty intubation is undeniably the proximate cause which triggered the chain of events leading to Erlindas brain damage and, ultimately, her comatosed condition. Private respondents themselves admitted in their testimony that the first intubation was a failure. This fact was likewise observed by witness Cruz when she heard respondent Dra. Gutierrez remarked, Ang hirap maintubate nito, mali yata ang pagkakapasok. O lumalaki ang tiyan. Thereafter, witness Cruz noticed abdominal distention on the body of Erlinda. The development of abdominal distention, together with respiratory embarrassment indicates that the endotracheal tube entered the esophagus instead of the respiratory tree. In other words, instead of the intended endotracheal intubation what actually took place was an esophageal intubation. During intubation, such distention indicates that air has entered the gastrointestinal tract through the esophagus instead of the lungs through the trachea. Entry into the esophagus would certainly cause some delay in oxygen delivery into the lungs as the tube which carries oxygen is in the wrong place. That abdominal distention had been observed during the first intubation suggests that the length of time utilized in inserting the endotracheal tube (up to the time the tube was withdrawn for the second attempt) was fairly significant. Due to the delay in the delivery of oxygen in her lungs Erlinda showed signs of cyanosis.[66] As stated in the testimony of Dr. Hosaka, the lack of oxygen became apparent only after he noticed that the nailbeds of Erlinda

were already blue.[67] However, private respondents contend that a second intubation was executed on Erlinda and this one was successfully done. We do not think so. No evidence exists on record, beyond private respondents' bare claims, which supports the contention that the second intubation was successful. Assuming that the endotracheal tube finally found its way into the proper orifice of the trachea, the same gave no guarantee of oxygen delivery, the hallmark of a successful intubation. In fact, cyanosis was again observed immediately after the second intubation. Proceeding from this event (cyanosis), it could not be claimed, as private respondents insist, that the second intubation was accomplished. Even granting that the tube was successfully inserted during the second attempt, it was obviously too late. As aptly explained by the trial court, Erlinda already suffered brain damage as a result of the inadequate oxygenation of her brain for about four to five minutes.[68] The above conclusion is not without basis. Scientific studies point out that intubation problems are responsible for one-third (1/3) of deaths and serious injuries associated with anesthesia.[69] Nevertheless, ninety-eight percent (98%) or the vast majority of difficult intubations may be anticipated by performing a thorough

evaluation of the patients airway prior to the operation.[70] As stated beforehand, respondent Dra. Gutierrez failed to observe the proper pre-operative protocol which could have prevented this unfortunate incident. Had appropriate diligence and reasonable care been used in the pre-operative evaluation, respondent physician could have been much more prepared to meet the contingency brought about by the perceived anatomic variations in the patients neck and oral area, defects which would have been easily overcome by a prior knowledge of those variations together with a change in technique.[71] In other words, an experienced anesthesiologist, adequately alerted by a thorough pre-operative evaluation, would have had little difficulty

going around the short neck and protruding teeth.[72] Having failed to observe common medical standards in pre-operative management and intubation, respondent Dra. Gutierrez negligence resulted in cerebral anoxia and eventual coma of Erlinda. We now determine the responsibility of respondent Dr. Orlino Hosaka as the head of the surgical team. As the so-called captain of the ship,[73] it is the surgeons responsibility to see to it that those under him perform their task in the proper manner. Respondent Dr. Hosakas negligence can be found in his failure to exercise the proper authority (as the captain of the operative team) in not determining if his anesthesiologist observed proper anesthesia protocols. In fact, no evidence on record exists to show that respondent Dr. Hosaka verified

if respondent Dra. Gutierrez properly intubated the patient. Furthermore, it does not escape us that respondent Dr. Hosaka had scheduled another procedure in a different hospital at the same time as Erlindas cholecystectomy, and was in fact over three hours late for the latters operation. Because of this, he had little or no time to confer with his anesthesiologist regarding the anesthesia delivery. This indicates that he was remiss in his professional duties towards his patient. Thus, he shares equal responsibility for the events which resulted in Erlindas condition. We now discuss the responsibility of the hospital in this particular incident. The unique practice (among private hospitals) of filling up specialist staff with attending and visiting consultants,[74] who are allegedly not hospital employees, presents problems in apportioning responsibility for negligence in medical malpractice cases. However, the difficulty is only more apparent than real.

In the first place, hospitals exercise significant control in the hiring and firing of consultants and in the conduct of their work within the hospital premises. Doctors who apply for consultant slots, visiting or attending, are required to submit proof of completion of residency, their educational qualifications; generally, evidence of accreditation by the appropriate board (diplomate), evidence of fellowship in most cases, and references. These requirements are carefully scrutinized by members of the hospital administration or by a review committee set up by the hospital who either accept or reject the application.[75] This is particularly true with respondent hospital. After a physician is accepted, either as a visiting or attending consultant, he is normally required to attend clinico-pathological conferences, conduct bedside rounds for clerks, interns and residents, moderate grand rounds and patient audits and perform other tasks and responsibilities, for the privilege of being able to maintain a clinic in the hospital, and/or for the privilege of admitting patients into the hospital. In addition to these, the physicians performance as a specialist is generally evaluated by a peer review committee on the basis of mortality and morbidity statistics, and feedback from patients, nurses, interns and residents. A consultant remiss in his duties, or a consultant who regularly falls short of the minimum standards acceptable to the hospital or its peer review committee, is normally politely terminated. In other words, private hospitals, hire, fire and exercise real control over their attending and visiting consultant staff. While consultants are not, technically employees, a point which respondent hospital asserts in denying all responsibility for the patients condition, the control exercised, the hiring, and the right to terminate consultants all fulfill the important hallmarks of an employer-employee relationship, with the exception of the payment of wages. In assessing whether such a relationship in fact exists, the control test is determining. Accordingly, on the basis of the foregoing, we rule that for the purpose of allocating responsibility in medical negligence cases, an employer-employee relationship in effect exists between hospitals and their attending and visiting physicians. This being the case, the question now arises as to whether or not respondent hospital is solidarily liable with respondent doctors for petitioners condition.[76] The basis for holding an employer solidarily responsible for the negligence of its employee is found in Article 2180 of the Civil Code which considers a person accountable not only for his own acts but also for those of

others based on the formers responsibility under a relationship of patria potestas.[77] Such responsibility ceases when the persons or entity concerned prove that they have observed the diligence of a good father of the family to prevent damage.[78] In other words, while the burden of proving negligence rests on the plaintiffs, once negligence is shown, the burden shifts to the respondents (parent, guardian, teacher or employer) who should prove that they observed the diligence of a good father of a family to prevent damage. In the instant case, respondent hospital, apart from a general denial of its responsibility over respondent physicians, failed to adduce evidence showing that it exercised the diligence of a good father of a family in the hiring and supervision of the latter. It failed to adduce evidence with regard to the degree of supervision which it exercised over its physicians. In neglecting to offer such proof, or proof of a similar nature, respondent hospital thereby failed to discharge its burden under the last paragraph of Article 2180. Having failed to do this, respondent hospital is consequently solidarily responsible with its physicians for Erlindas condition. Based on the foregoing, we hold that the Court of Appeals erred in accepting and relying on the testimonies of the witnesses for the private respondents. Indeed, as shown by the above discussions, private respondents were unable to rebut the presumption of negligence. Upon these disquisitions we hold that private respondents are solidarily liable for damages under Article 2176[79] of the Civil Code. We now come to the amount of damages due petitioners. The trial court awarded a total of P632,000.00 pesos (should be P616,000.00) in compensatory damages to the plaintiff, subject to its being updated covering the period from 15 November 1985 up to 15 April 1992, based on monthly expenses for the care of the patient estimated at P8,000.00.

At current levels, the P8000/monthly amount established by the trial court at the time of its decision would be grossly inadequate to cover the actual costs of home-based care for a comatose individual. The calculated amount was not even arrived at by looking at the actual cost of proper hospice care for the patient. What it reflected were the actual expenses incurred and proved by the petitioners after they were forced to bring home the patient to avoid mounting hospital bills. And yet ideally, a comatose patient should remain in a hospital or be transferred to a hospice specializing in the care of the chronically ill for the purpose of providing a proper milieu adequate to meet minimum standards of care. In the instant case for instance, Erlinda has to be constantly turned from side to side to prevent bedsores and hypostatic pneumonia. Feeding is done by nasogastric tube. Food preparation should be normally made by a dietitian to provide her with the correct daily caloric requirements and vitamin supplements. Furthermore, she has to be seen on a regular basis by a physical therapist to avoid muscle atrophy, and by a pulmonary therapist to prevent the accumulation of secretions which can lead to respiratory complications. Given these considerations, the amount of actual damages recoverable in suits arising from negligence should at least reflect the correct minimum cost of proper care, not the cost of the care the family is usually compelled to undertake at home to avoid bankruptcy. However, the provisions of the Civil Code on actual or compensatory damages present us with some difficulties. Well-settled is the rule that actual damages which may be claimed by the plaintiff are those suffered by him as he has duly proved. The Civil Code provides: Art. 2199. - Except as provided by law or by stipulation, one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. Such compensation is referred to as actual or compensatory damages. Our rules on actual or compensatory damages generally assume that at the time of litigation, the injury suffered as a consequence of an act of negligence has been completed and that the cost can be liquidated. However, these provisions neglect to take into account those situations, as in this case, where the resulting injury might be continuing and possible future complications directly arising from the injury, while certain to occur, are difficult to predict. In these cases, the amount of damages which should be awarded, if they are to adequately and correctly respond to the injury caused, should be one which compensates for pecuniary loss incurred and proved, up to the time of trial; and one which would meet pecuniary loss certain to be suffered but which could not, from the nature of the case, be made with certainty.[80] In other words, temperate damages can and should be awarded on top of actual or compensatory damages in instances where the injury is chronic and continuing. And because of the unique nature of such cases, no incompatibility arises when both actual and temperate damages are provided for. The reason is that these damages cover two distinct phases.

As it would not be equitable - and certainly not in the best interests of the administration of justice - for the victim in such cases to constantly come before the courts and invoke their aid in seeking adjustments to the compensatory damages previously awarded - temperate damages are appropriate. The amount given as temperate damages, though to a certain extent speculative, should take into account the cost of proper care. In the instant case, petitioners were able to provide only home-based nursing care for a comatose patient who has remained in that condition for over a decade. Having premised our award for compensatory damages on the amount provided by petitioners at the onset of litigation, it would be now much more in step with the interests of justice if the value awarded for temperate damages would allow petitioners to provide optimal care for their loved one in a facility which generally specializes in such care. They should not be compelled by dire circumstances to provide substandard care at home without the aid of professionals, for anything less would be grossly inadequate. Under the circumstances, an award of P1,500,000.00 in temperate damages would therefore be reasonable.[81] In Valenzuela vs. Court of Appeals,[82] this Court was confronted with a situation where the injury suffered by the plaintiff would have led to expenses which were difficult to estimate because while they would have been a direct result of the injury (amputation), and were certain to be incurred by the plaintiff, they were likely to arise only in the future. We awarded P1,000,000.00 in moral damages in that case. Describing the nature of the injury, the Court therein stated: As a result of the accident, Ma. Lourdes Valenzuela underwent a traumatic amputation of her left lower extremity at the distal left thigh just above the knee. Because of this, Valenzuela will forever be deprived of the full ambulatory functions of her left extremity, even with the use of state of the art prosthetic technology. Well beyond the period of hospitalization (which was paid for by Li), she will be

required to undergo adjustments in her prosthetic devise due to the shrinkage of the stump from the process of healing. These adjustments entail costs, prosthetic replacements and months of physical and occupational rehabilitation and therapy. During her lifetime, the prosthetic devise will have to be replaced and readjusted to changes in the size of her lower limb effected by the biological changes of middle-age, menopause and aging. Assuming she reaches menopause, for example, the prosthetic will have to be adjusted to respond to the changes in bone resulting from a precipitate decrease in calcium levels observed in the bones of all post-menopausal women. In other words, the damage done to her would not only be permanent and lasting, it would also be permanently changing and adjusting to the physiologic changes which her body would normally undergo through the years. The replacements, changes, and adjustments will require corresponding adjustive physical and occupational therapy. All of these adjustments, it has been documented, are painful. x x x. A prosthetic devise, however technologically advanced, will only allow a reasonable amount of functional restoration of the motor functions of the lower limb. The sensory functions are forever lost. The resultant anxiety, sleeplessness, psychological injury, mental and physical pain are inestimable.

[83]
The injury suffered by Erlinda as a consequence of private respondents negligence is certainly much more serious than the amputation in the Valenzuela case. Petitioner Erlinda Ramos was in her mid-forties when the incident occurred. She has been in a comatose state for over fourteen years now. The burden of care has so far been heroically shouldered by her husband and children, who, in the intervening years have been deprived of the love of a wife and a mother. Meanwhile, the actual physical, emotional and financial cost of the care of petitioner would be virtually impossible to quantify. Even the temperate damages herein awarded would be inadequate if petitioners condition remains unchanged for the next ten years. We recognized, in Valenzuela that a discussion of the victims actual injury would not even scratch the surface of the resulting moral damage because it would be highly speculative to estimate the amount of emotional and moral pain, psychological damage and injury suffered by the victim or those actually affected by the victims

condition.[84] The husband and the children, all petitioners in this case, will have to live with the day to day uncertainty of the patients illness, knowing any hope of recovery is close to nil. They have fashioned their daily lives around the nursing care of petitioner, altering their long term goals to take into account their life with a comatose patient. They, not the respondents, are charged with the moral responsibility of the care of the victim. The familys moral injury and suffering in this case is clearly a real one. For the foregoing reasons, an award of P2,000,000.00 in moral damages would be appropriate. Finally, by way of example, exemplary damages in the amount of P100,000.00 are hereby awarded. Considering the length and nature of the instant suit we are of the opinion that attorneys fees valued at P100,000.00 are likewise proper. Our courts face unique difficulty in adjudicating medical negligence cases because physicians are not insurers of life and, they rarely set out to intentionally cause injury or death to their patients. However, intent is immaterial in negligence cases because where negligence exists and is proven, the same automatically gives the injured a right to reparation for the damage caused. Established medical procedures and practices, though in constant flux are devised for the purpose of preventing complications. A physicians experience with his patients would sometimes tempt him to deviate from established community practices, and he may end a distinguished career using unorthodox methods without incident. However, when failure to follow established procedure results in the evil precisely sought to be averted by observance of the procedure and a nexus is made between the deviation and the injury or damage, the physician would necessarily be called to account for it. In the case at bar, the failure to observe preoperative assessment protocol which would have influenced the intubation in a salutary way was fatal to private respondents case. WHEREFORE, the decision and resolution of the appellate court appealed from are hereby modified so as to award in favor of petitioners, and solidarily against private respondents the following: 1) P1,352,000.00 as actual damages computed as of the date of promulgation of this decision plus a monthly payment of P8,000.00

up to the time that petitioner Erlinda Ramos expires or miraculously survives; 2) P2,000,000.00 as moral damages, 3) P1,500,000.00 as temperate damages; 4) P100,000.00 each as exemplary damages and attorneys fees; and, 5) the costs of the suit. SO ORDERED. Davide, Jr., C.J., (Chairman), Puno, Pardo and Ynares-Santiago, JJ., concur. Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 156037 May 28, 2007

MERCURY DRUG CORPORATION, Petitioner, vs. SEBASTIAN M. BAKING, Respondent. DECISION SANDOVAL-GUTIERREZ, J.: For our resolution is the instant Petition for Review on Certiorari 1 assailing the Decision2 dated May 30, 2002 and Resolution dated November 5, 2002 of the Court of Appeals in CA-G.R. CV No. 57435, entitled "Sebastian M. Baking, plaintiff-appellee, versus Mercury Drug Co. Inc., defendant-appellant." The facts are: On November 25, 1993, Sebastian M. Baking, respondent, went to the clinic of Dr. Cesar Sy for a medical check-up. On the following day, after undergoing an ECG, blood, and hematology examinations and urinalysis, Dr. Sy found that respondents blood sugar and triglyceride were above normal levels. Dr. Sy then gave respondent two medical prescriptions Diamicron for his blood sugar and Benalize tablets for his triglyceride. Respondent then proceeded to petitioner Mercury Drug Corporation (Alabang Branch) to buy the prescribed medicines. However, the saleslady misread the prescription for Diamicron as a prescription for Dormicum. Thus, what was sold to respondent was Dormicum, a potent sleeping tablet. Unaware that what was given to him was the wrong medicine, respondent took one pill of Dormicum on three consecutive days November 6, 1993 at 9:00 p.m., November 7 at 6:00 a.m., and November 8 at 7:30 a.m. On November 8 or on the third day he took the medicine, respondent figured in a vehicular accident. The car he was driving collided with the car of one Josie Peralta. Respondent fell asleep while driving. He could not remember anything about the collision nor felt its impact. Suspecting that the tablet he took may have a bearing on his physical and mental state at the time of the collision, respondent returned to Dr. Sys clinic. Upon being shown the medicine, Dr. Sy was shocked to find that what was sold to respondent was Dormicum, instead of the prescribed Diamicron. Thus, on April 14, 1994, respondent filed with the Regional Trial Court (RTC), Branch 80 of Quezon City a complaint for damages against petitioner, docketed as Civil Case No. Q-94-20193. After hearing, the trial court rendered its Decision dated March 18, 1997 in favor of respondent, thus: WHEREFORE, premises considered, by preponderance of evidence, the Court hereby renders judgment in favor of the plaintiff and against the defendant ordering the latter to pay mitigated damages as follows: 1. P250,000.00 as moral damages; 2. P20,000.00 as attorneys fees and litigation expenses; 3. plus % of the cost of the suit. SO ORDERED. On appeal, the Court of Appeals, in its Decision, affirmed in toto the RTC judgment. Petitioner filed a motion for reconsideration but it was denied in a Resolution dated November 5, 2002. Hence, this petition. Petitioner contends that the Decision of the Court of Appeals is not in accord with law or prevailing

jurisprudence. Respondent, on the other hand, maintains that the petition lacks merit and, therefore, should be denied. The issues for our resolution are: 1. Whether petitioner was negligent, and if so, whether such negligence was the proximate cause of respondents accident; and 2. Whether the award of moral damages, attorneys fees, litigation expenses, and cost of the suit is justified. Article 2176 of the New Civil Code provides: Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter. To sustain a claim based on the above provision, the following requisites must concur: (a) damage suffered by the plaintiff; (b) fault or negligence of the defendant; and, (c) connection of cause and effect between the fault or negligence of the defendant and the damage incurred by the plaintiff.3 There is no dispute that respondent suffered damages. It is generally recognized that the drugstore business is imbued with public interest. The health and safety of the people will be put into jeopardy if drugstore employees will not exercise the highest degree of care and diligence in selling medicines. Inasmuch as the matter of negligence is a question of fact, we defer to the findings of the trial court affirmed by the Court of Appeals. Obviously, petitioners employee was grossly negligent in selling to respondent Dormicum, instead of the prescribed Diamicron. Considering that a fatal mistake could be a matter of life and death for a buying patient, the said employee should have been very cautious in dispensing medicines. She should have verified whether the medicine she gave respondent was indeed the one prescribed by his physician. The care required must be commensurate with the danger involved, and the skill employed must correspond with the superior knowledge of the business which the law demands.41awphi1.nt Petitioner contends that the proximate cause of the accident was respondents negligence in driving his car. We disagree. Proximate cause is defined as any cause that produces injury in a natural and continuous sequence, unbroken by any efficient intervening cause, such that the result would not have occurred otherwise. Proximate cause is determined from the facts of each case, upon a combined consideration of logic, common sense, policy, and precedent.5 Here, the vehicular accident could not have occurred had petitioners employee been careful in reading Dr. Sys prescription. Without the potent effects of Dormicum, a sleeping tablet, it was unlikely that respondent would fall asleep while driving his car, resulting in a collision. Complementing Article 2176 is Article 2180 of the same Code which states: ART. 2180. The obligation imposed by Article 2176 is demandable not only for ones own acts or omissions, but also for those of persons for whom one is responsible. xxx The owners and managers of an establishment or enterprise are likewise responsible for damages caused by their employees in the service of the branches in which the latter are employed or on the occasion of their functions. Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks, even though the former are not engaged in any business or industry. xxx The responsibility treated of in this article shall cease when the persons herein mentioned prove that they observed the diligence of a good father of a family to prevent damage. It is thus clear that the employer of a negligent employee is liable for the damages caused by the latter. When an injury is caused by the negligence of an employee, there instantly arises a presumption of the law that there

has been negligence on the part of the employer, either in the selection of his employee or in the supervision over him, after such selection. The presumption, however, may be rebutted by a clear showing on the part of the employer that he has exercised the care and diligence of a good father of a family in the selection and supervision of his employee.6 Here, petitioner's failure to prove that it exercised the due diligence of a good father of a family in the selection and supervision of its employee will make it solidarily liable for damages caused by the latter.

As regards the award of moral damages, we hold the same to be in order. Moral damages may be awarded whenever the defendants wrongful act or omission is the proximate cause of the plaintiffs physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury in the cases specified or analogous to those provided in Article 2219 of the Civil Code.7 Respondent has adequately established the factual basis for the award of moral damages when he testified that he suffered mental anguish and anxiety as a result of the accident caused by the negligence of petitioners employee. There is no hard-and-fast rule in determining what would be a fair and reasonable amount of moral damages, since each case must be governed by its own peculiar facts. However, it must be commensurate to the loss or injury suffered.8 Taking into consideration the attending circumstances here, we are convinced that the amount awarded by the trial court is exorbitant. Thus, we reduce the amount of moral damages from P250,000.00 to P50,000.00 only. In addition, we also deem it necessary to award exemplary damages. Article 2229 allows the grant of exemplary damages by way of example or correction for the public good. As mentioned earlier, the drugstore business is affected with public interest. Petitioner should have exerted utmost diligence in the selection and supervision of its employees. On the part of the employee concerned, she should have been extremely cautious in dispensing pharmaceutical products. Due to the sensitive nature of its business, petitioner must at all times maintain a high level of meticulousness. Therefore, an award of exemplary damages in the amount of P25,000.00 is in order.1awphi1.nt On the matter of attorneys fees and expenses of litigation, it is settled that the reasons or grounds for the award thereof must be set forth in the decision of the court.9 Since the trial courts decision did not give the basis of the award, the same must be deleted. In Vibram Manufacturing Corporation v. Manila Electric Company,10 we held: Likewise, the award for attorneys fees and litigation expenses should be deleted. Well-enshrined is that "an award for attorneys fees must be stated in the text of the courts decision and not in the dispositive portion only" (Consolidated Bank and Trust Corporation (Solidbank) v. Court of Appeals, 246 SCRA 193 [1995] and Keng Hua Paper Products, Inc. v. Court of Appeals, 286 SCRA 257 [1998]). This is also true with the litigation expenses where the body of the decision discussed nothing for its basis. WHEREFORE, we DENY the petition. The challenged Decision and Resolution of the Court of Appeals in CA-G.R. CV No. 57435 are AFFIRMED with modification in the sense that (a) the award of moral damages to respondent is reduced from P250,000.00 to P50,000.00; (b) petitioner is likewise ordered to pay said respondent exemplary damages in the amount of P25,000.00; and (c) the award of attorneys fees and litigation expenses is deleted. Costs against petitioner. SO ORDERED. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 149019 August 15, 2006 DELSAN TRANSPORT LINES, vs. AMERICAN HOME ASSURANCE CORPORATION, Respondent. DECISION GARCIA, J.: INC., Petitioner,

By this petition for review on certiorari under Rule 45 of the Rules of Court, petitioner Delsan Transport Lines,

Inc. (Delsan hereafter) assails and seeks to set aside the Decision, 1 dated July 16, 2001, of the Court of Appeals (CA) in CA-G.R. CV No. 40951 affirming an earlier decision of the Regional Trial Court (RTC) of Manila, Branch IX, in two separate complaints for damages docketed as Civil Case No. 85-29357 and Civil Case No. 8530559. The facts: Delsan is a domestic corporation which owns and operates the vessel MT Larusan. On the other hand, respondent American Home Assurance Corporation (AHAC for brevity) is a foreign insurance company duly licensed to do business in the Philippines through its agent, the American-International Underwriters, Inc. (Phils.). It is engaged, among others, in insuring cargoes for transportation within the Philippines. On August 5, 1984, Delsan received on board MT Larusan a shipment consisting of 1,986.627 k/l Automotive Diesel Oil (diesel oil) at the Bataan Refinery Corporation for transportation and delivery to the bulk depot in Bacolod City of Caltex Phils., Inc. (Caltex), pursuant to a Contract of Afreightment. The shipment was insured by respondent AHAC against all risks under Inland Floater Policy No. AH-IF64-1011549P and Marine Risk Note No. 34-5093-6. On August 7, 1984, the shipment arrived in Bacolod City. Immediately thereafter, unloading operations commenced. The discharging of the diesel oil started at about 1:30 PM of the same day. However, at about 10:30 PM, the discharging had to be stopped on account of the discovery that the port bow mooring of the vessel was intentionally cut or stolen by unknown persons. Because there was nothing holding it, the vessel drifted westward, dragged and stretched the flexible rubber hose attached to the riser, broke the elbow into pieces, severed completely the rubber hose connected to the tanker from the main delivery line at sea bed level and ultimately caused the diesel oil to spill into the sea. To avoid further spillage, the vessels crew tried water flushing to clear the line of the diesel oil but to no avail. In the meantime, the shore tender, who was waiting for the completion of the water flushing, was surprised when the tanker signaled a "red light" which meant stop pumping. Unaware of what happened, the shore tender, thinking that the vessel would, at any time, resume pumping, did not shut the storage tank gate valve. As all the gate valves remained open, the diesel oil that was earlier discharged from the vessel into the shore tank backflowed. Due to non-availability of a pump boat, the vessel could not send somebody ashore to inform the people at the depot about what happened. After almost an hour, a gauger and an assistant surveyor from the Caltexs Bulk Depot Office boarded the vessel. It was only then that they found out what had happened. Thereafter, the duo immediately went ashore to see to it that the shore tank gate valve was closed. The loss of diesel oil due to spillage was placed at 113.788 k/l while some 435,081 k/l thereof backflowed from the shore tank. As a result of spillage and backflow of diesel oil, Caltex sought recovery of the loss from Delsan, but the latter refused to pay. As insurer, AHAC paid Caltex the sum of P479,262.57 for spillage, pursuant to Marine Risk Note No. 34-5093-6, and P1,939,575.37 for backflow of the diesel oil pursuant to Inland Floater Policy No. AH-1F641011549P. On February 19, 1985, AHAC, as Caltexs subrogee, instituted Civil Case No. 85-29357 against Delsan before the Manila RTC, Branch 9, for loss caused by the spillage. It likewise prayed that it be indemnified for damages suffered in the amount of P652,432.57 plus legal interest thereon. Also, on May 5, 1985, in the Manila RTC, Branch 31, AHAC instituted Civil Case No. 85-30559 against Delsan for the loss caused by the backflow. It likewise prayed that it be awarded the amount of P1,939,575.37 for damages and reasonable attorneys fees. As counterclaim in both cases, AHAC prayed for attorneys fees in the amount of P200,000.00 and P500.00 for every court appearance. Since the cause of action in both cases arose out of the same incident and involved the same issues, the two were consolidated and assigned to Branch 9 of the court. On August 31, 1989, the trial court rendered its decision 2 in favor of AHAC holding Delsan liable for the loss of the cargo for its negligence in its duty as a common carrier. Dispositively, the decision reads: WHEREFORE, judgment is hereby rendered: A). In Civil Case No. 85-30559: (1) Ordering the defendant (petitioner Delsan) to pay plaintiff (respondent AHAC) the sum of P1,939,575.37 with interest thereon at the legal rate from November 21, 1984 until fully paid and satisfied; and (2) Ordering defendant to pay plaintiff the sum of P10,000.00 as and for attorneys fees. For lack of merit, the counterclaim is hereby dismissed.

B). In Civil Case No. 85-29357: (1) Ordering defendant to pay plaintiff the sum of P479,262.57 with interest thereon at the legal rate from February 6, 1985 until fully paid and satisfied; (2) Ordering defendant to pay plaintiff the sum of P5,000.00 as and for attorneys fees. For lack of merit, the counterclaim is hereby dismissed. Costs against the defendant. SO ORDERED. In time, Delsan appealed to the CA whereat its recourse was docketed as CA-G.R. CV No. 40951. In the herein challenged decision, 3 the CA affirmed the findings of the trial court. In so ruling, the CA declared that Delsan failed to exercise the extraordinary diligence of a good father of a family in the handling of its

cargo. Applying Article 1736 4 of the Civil Code, the CA ruled that since the discharging of the diesel oil into Caltex bulk depot had not been completed at the time the losses occurred, there was no reason to imply that there was actual delivery of the cargo to Caltex, the consignee. We quote the fallo of the CA decision: WHEREFORE, premises considered, the appealed Decision of the Regional Trial Court of Manila, Branch 09 in Civil Case Nos. 85-29357 and 85-30559 is hereby AFFIRMED with a modification that attorneys fees awarded in Civil Case Nos. 85-29357 and 85-30559 are hereby DELETED. SO ORDERED. Delsan is now before the Court raising substantially the same issues proffered before the CA. Principally, Delsan insists that the CA committed reversible error in ruling that Article 1734 of the Civil Code cannot exculpate it from liability for the loss of the subject cargo and in not applying the rule on contributory negligence against Caltex, the shipper-owner of the cargo, and in not taking into consideration the fact that the loss due to backflow occurred when the diesel oil was already completely delivered to Caltex. We are not persuaded. In resolving this appeal, the Court reiterates the oft-stated doctrine that factual findings of the CA, affirmatory of those of the trial court, are binding on the Court unless there is a clear showing that such findings are tainted with arbitrariness, capriciousness or palpable error.

Delsan would have the Court absolve it from liability for the loss of its cargo on two grounds. First, the loss through spillage was partly due to the contributory negligence of Caltex; and Second, the loss through backflow should not be borne by Delsan because it was already delivered to Caltexs shore tank. Common carriers are bound to observe extraordinary diligence in the vigilance over the goods transported by them. They are presumed to have been at fault or to have acted negligently if the goods are lost, destroyed or deteriorated. 6 To overcome the presumption of negligence in case of loss, destruction or deterioration of the goods, the common carrier must prove that it exercised extraordinary diligence. There are, however, exceptions to this rule. Article 1734 of the Civil Code enumerates the instances when the presumption of negligence does not attach: Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless the same is due to any of the following causes only: 1) Flood storm, earthquake, lightning, or other natural disaster or calamity; 2) Act of the public enemy in war, whether international or civil; 3) Act or omission of the shipper or owner of the goods; 4) The character of the goods or defects in the packing or in the containers; 5) Order or act of competent public authority. Both the trial court and the CA uniformly ruled that Delsan failed to prove its claim that there was a contributory negligence on the part of the owner of the goods Caltex. We see no reason to depart therefrom. As aptly pointed out by the CA, it had been established that the proximate cause of the spillage and backflow of the diesel oil was due to the severance of the port bow mooring line of the vessel and the failure of the shore tender to close the storage tank gate valve even as a check on the drain cock showed that there was still a product on the pipeline. To the two courts below, the actuation of the gauger and the escort surveyor, both

personnel from the Caltex Bulk Depot, negates the allegation that Caltex was remiss in its duties. As we see it, the crew of the vessel should have promptly informed the shore tender that the port mooring line was cut off. However, Delsan did not do so on the lame excuse that there was no available banca. As it is, Delsans personnel signaled a "red light" which was not a sufficient warning because such signal only meant that the pumping of diesel oil had been finished. Neither did the blowing of whistle suffice considering the distance of more than 2 kilometers between the vessel and the Caltex Bulk Depot, aside from the fact that it was not the agreed signal. Had the gauger and the escort surveyor from Caltex Bulk Depot not gone aboard the vessel to make inquiries, the shore tender would have not known what really happened. The crew of the vessel should have exerted utmost effort to immediately inform the shore tender that the port bow mooring line was severed. To be sure, Delsan, as the owner of the vessel, was obliged to prove that the loss was caused by one of the excepted causes if it were to seek exemption from responsibility. discharge this burden by the required quantum of proof.

Unfortunately, it miserably failed to

Delsans argument that it should not be held liable for the loss of diesel oil due to backflow because the same had already been actually and legally delivered to Caltex at the time it entered the shore tank holds no water. It had been settled that the subject cargo was still in the custody of Delsan because the discharging thereof has not yet been finished when the backflow occurred. Since the discharging of the cargo into the depot has not yet been completed at the time of the spillage when the backflow occurred, there is no reason to imply that there was actual delivery of the cargo to the consignee. Delsan is straining the issue by insisting that when the diesel oil entered into the tank of Caltex on shore, there was legally, at that moment, a complete delivery thereof to Caltex. To be sure, the extraordinary responsibility of common carrier lasts from the time the goods are unconditionally placed in the possession of, and received by, the carrier for transportation until the same are delivered, actually or constructively, by the carrier to the consignee, or to a person who has the right to receive them. 8 The discharging of oil products to Caltex Bulk Depot has not yet been finished, Delsan still has the duty to guard and to preserve the cargo. The carrier still has in it the responsibility to guard and preserve the goods, a duty incident to its having the goods transported.

To recapitulate, common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in vigilance over the goods and for the safety of the passengers transported

by them, according to all the circumstances of each case. 9 The mere proof of delivery of goods in good order to the carrier, and their arrival in the place of destination in bad order, make out a prima facie case against the carrier, so that if no explanation is given as to how the injury occurred, the carrier must be held responsible. It is incumbent upon the carrier to prove that the loss was due to accident or some other circumstances inconsistent with its liability.

10 11

All told, Delsan, being a common carrier, should have exercised extraordinary diligence in the performance of its duties. Consequently, it is obliged to prove that the damage to its cargo was caused by one of the excepted causes if it were to seek exemption from responsibility. consequences. Having failed to do so, Delsan must bear the

WHEREFORE, petition is DENIED and the assailed decision of the CA is AFFIRMED in toto. Cost against petitioner. SO ORDERED. Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 154469 December 6, 2006

METROPOLITAN BANK AND TRUST COMPANY, petitioners, vs. RENATO D. CABILZO, respondent.

DECISION

CHICO-NAZARIO, J.:

Before this Court is a Petition for Review on Certiorari, filed by petitioner Metropolitan Bank and Trust Company (Metrobank) seeking to reverse and set aside the Decision1 of the Court of Appeals dated 8 March 2002 and its Resolution dated 26 July 2002 affirming the Decision of the Regional Trial Court (RTC) of Manila, Branch 13 dated 4 September 1998. The dispositive portion of the Court of Appeals Decision reads:

WHEREFORE, the assailed decision dated September 4, 1998 is AFFIRMED with modifications (sic) that the awards for exemplary damages and attorneys fees are hereby deleted. Petitioner Metrobank is a banking institution duly organized and existing as such under Philippine laws.2 Respondent Renato D. Cabilzo (Cabilzo) was one of Metrobanks clients who maintained a current account with Metrobank Pasong Tamo Branch.3 On 12 November 1994, Cabilzo issued a Metrobank Check No. 985988, payable to "CASH" and postdated on 24 November 1994 in the amount of One Thousand Pesos (P1,000.00). The check was drawn against Cabilzos Account with Metrobank Pasong Tamo Branch under Current Account No. 618044873-3 and was paid by Cabilzo to a certain Mr. Marquez, as his sales commission.4 Subsequently, the check was presented to Westmont Bank for payment. Westmont Bank, in turn, indorsed the check to Metrobank for appropriate clearing. After the entries thereon were examined, including the availability of funds and the authenticity of the signature of the drawer, Metrobank cleared the check for encashment in accordance with the Philippine Clearing House Corporation (PCHC) Rules. On 16 November 1994, Cabilzos representative was at Metrobank Pasong Tamo Branch to make some transaction when he was asked by a bank personnel if Cabilzo had issued a check in the amount of P91,000.00 to which the former replied in the negative. On the afternoon of the same date, Cabilzo himself called Metrobank to reiterate that he did not issue a check in the amount of P91,000.00 and requested that the questioned check be returned to him for verification, to which Metrobank complied.5 Upon receipt of the check, Cabilzo discovered that Metrobank Check No. 985988 which he issued on 12 November 1994 in the amount of P1,000.00 was altered to P91,000.00 and the date 24 November 1994 was changed to 14 November 1994.6 Hence, Cabilzo demanded that Metrobank re-credit the amount of P91,000.00 to his account. Metrobank, however, refused reasoning that it has to refer the matter first to its Legal Division for appropriate action. Repeated verbal demands followed but Metrobank still failed to re-credit the amount of P91,000.00 to Cabilzos account.7 On 30 June 1995, Cabilzo, thru counsel, finally sent a letter-demand8 to Metrobank for the payment of P90,000.00, after deducting the original value of the check in the amount of P1,000.00. Such written demand notwithstanding, Metrobank still failed or refused to comply with its obligation. Consequently, Cabilzo instituted a civil action for damages against Metrobank before the RTC of Manila, Branch 13. In his Complaint docketed as Civil Case No. 95-75651, Renato D. Cabilzo v. Metropolitan Bank and Trust Company, Cabilzo prayed that in addition to his claim for reimbursement, actual and moral damages plus costs of the suit be awarded in his favor.9 For its part, Metrobank countered that upon the receipt of the said check through the PCHC on 14 November 1994, it examined the genuineness and the authenticity of the drawers signature appearing thereon and the technical entries on the check including the amount in figures and in words to determine if there were alterations, erasures, superimpositions or intercalations thereon, but none was noted. After verifying the authenticity and propriety of the aforesaid entries, including the indorsement of the collecting bank located at the dorsal side of the check which stated that, "all prior indorsements and lack of indorsement guaranteed," Metrobank cleared the check.10 Anent thereto, Metrobank claimed that as a collecting bank and the last indorser, Westmont Bank should be held liable for the value of the check. Westmont Bank indorsed the check as the an unqualified indorser, by virtue of which it assumed the liability of a general indorser, and thus, among others, warranted that the instrument is genuine and in all respect what it purports to be. In addition, Metrobank, in turn, claimed that Cabilzo was partly responsible in leaving spaces on the check, which, made the fraudulent insertion of the amount and figures thereon, possible. On account of his negligence in the preparation and issuance of the check, which according to Metrobank, was the proximate cause of the loss, Cabilzo cannot thereafter claim indemnity by virtue of the doctrine of equitable estoppel.

Thus, Metrobank demanded from Cabilzo, for payment in the amount of P100,000.00 which represents the cost of litigation and attorneys fees, for allegedly bringing a frivolous and baseless suit.

11

On 19 April 1996, Metrobank filed a Third-Party Complaint12 against Westmont Bank on account of its unqualified indorsement stamped at the dorsal side of the check which the former relied upon in clearing what turned out to be a materially altered check. Subsequently, a Motion to Dismiss13 the Third-Party Complaint was then filed by Westmont bank because another case involving the same cause of action was pending before a different court. The said case arose from an action for reimbursement filed by Metrobank before the Arbitration Committee of the PCHC against Westmont Bank, and now the subject of a Petition for Review before the RTC of Manila, Branch 19. In an Order14 dated 4 February 1997, the trial court granted the Motion to Dismiss the Third-Party Complaint on the ground of litis pendentia. On 4 September 1998, the RTC rendered a Decision15 in favor of Cabilzo and thereby ordered Metrobank to pay the sum of P90,000.00, the amount of the check. In stressing the fiduciary nature of the relationship between the bank and its clients and the negligence of the drawee bank in failing to detect an apparent alteration on the check, the trial court ordered for the payment of exemplary damages, attorneys fees and cost of litigation. The dispositive portion of the Decision reads: WHEREFORE, judgment is rendered ordering defendant Metropolitan Bank and Trust Company to pay plaintiff Renato Cabilzo the sum of P90,000 with legal interest of 6 percent per annum from November 16, 1994 until payment is made plus P20,000 attorneys fees, exemplary damages of P50,000, and costs of the suit.16 Aggrieved, Metrobank appealed the adverse decision to the Court of Appeals reiterating its previous argument that as the last indorser, Westmont Bank shall bear the loss occasioned by the fraudulent alteration of the check. Elaborating, Metrobank maintained that by reason of its unqualified indorsement, Westmont Bank warranted that the check in question is genuine, valid and subsisting and that upon presentment the check shall be accepted according to its tenor. Even more, Metrobank argued that in clearing the check, it was not remiss in the performance of its duty as the drawee bank, but rather, it exercised the highest degree of diligence in accordance with the generally accepted banking practice. It further insisted that the entries in the check were regular and authentic and alteration could not be determined even upon close examination. In a Decision17 dated 8 March 2002, the Court of Appeals affirmed with modification the Decision of the court a quo, similarly finding Metrobank liable for the amount of the check, without prejudice, however, to the outcome of the case between Metrobank and Westmont Bank which was pending before another tribunal. The decretal portion of the Decision reads: WHEREFORE, the assailed decision dated September 4, 1998 is AFFIRMED with the modifications (sic) that the awards for exemplary damages and attorneys fees are hereby deleted.18 its Resolution19 issued on 26 July 2002, for lack of merit. Metrobank now poses before this Court this sole issue: THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING METROBANK, AS DRAWEE BANK, LIABLE FOR THE ALTERATIONS ON THE SUBJECT CHECK BEARING THE AUTHENTIC SIGNATURE OF THE DRAWER THEREOF. We resolve to deny the petition. An alteration is said to be material if it changes the effect of the instrument. It means that an unauthorized change in an instrument that purports to modify in any respect the obligation of a party or an unauthorized addition of words or numbers or other change to an incomplete instrument relating to the obligation of a party.20 In other words, a material alteration is one which changes the items which are required to be stated under Section 1 of the Negotiable Instruments Law. Section 1 of the Negotiable Instruments Law provides: Section 1. Form of negotiable instruments. - An instrument to be negotiable must conform to the Similarly ill-fated was Metrobanks Motion for Reconsideration which was also denied by the appellate court in

following requirements: (a) It must be in writing and signed by the maker or drawer; (b) Must contain an unconditional promise or order to pay a sum certain in money; (c) Must be payable on demand or at a fixed determinable future time; (d) Must be payable to order or to bearer; and (e) Where the instrument is addressed to a drawee, he must be named or otherwise indicated therein with reasonable certainty. Also pertinent is the following provision in the Negotiable Instrument Law which states: Section 125. What constitutes material alteration. Any alteration which changes: (a) The date; (b) The sum payable, either for principal or interest; (c) The time or place of payment; (d) The number or the relation of the parties; (e) The medium or currency in which payment is to be made; Or which adds a place of payment where no place of payment is specified, or any other change or addition which alters the effect of the instrument in any respect is a material alteration. In the case at bar, the check was altered so that the amount was increased from P1,000.00 to P91,000.00 and the date was changed from 24 November 1994 to 14 November 1994. Apparently, since the entries altered were among those enumerated under Section 1 and 125, namely, the sum of money payable and the date of the check, the instant controversy therefore squarely falls within the purview of material alteration. Now, having laid the premise that the present petition is a case of material alteration, it is now necessary for us to determine the effect of a materially altered instrument, as well as the rights and obligations of the parties thereunder. The following provision of the Negotiable Instrument Law will shed us some light in threshing out this issue: Section 124. Alteration of instrument; effect of. Where a negotiable instrument is materially altered without the assent of all parties liable thereon, it is avoided, except as against a party who has himself made, authorized, and assented to the alteration and subsequent indorsers. But when the instrument has been materially altered and is in the hands of a holder in due course not a party to the alteration, he may enforce the payment thereof according to its original tenor. (Emphasis ours.) Indubitably, Cabilzo was not the one who made nor authorized the alteration. Neither did he assent to the alteration by his express or implied acts. There is no showing that he failed to exercise such reasonable degree of diligence required of a prudent man which could have otherwise prevented the loss. As correctly ruled by the appellate court, Cabilzo was never remiss in the preparation and issuance of the check, and there were no indicia of evidence that would prove otherwise. Indeed, Cabilzo placed asterisks before and after the amount in words and figures in order to forewarn the subsequent holders that nothing follows before and after the amount indicated other than the one specified between the asterisks. The degree of diligence required of a reasonable man in the exercise of his tasks and the performance of his duties has been faithfully complied with by Cabilzo. In fact, he was wary enough that he filled with asterisks the spaces between and after the amounts, not only those stated in words, but also those in numerical figures, in order to prevent any fraudulent insertion, but unfortunately, the check was still successfully altered, indorsed by the collecting bank, and cleared by the drawee bank, and encashed by the perpetrator of the fraud, to the damage and prejudice of Cabilzo. Verily, Metrobank cannot lightly impute that Cabilzo was negligent and is therefore prevented from asserting his rights under the doctrine of equitable estoppel when the facts on record are bare of evidence to support such conclusion. The doctrine of equitable estoppel states that when one of the two innocent persons, each guiltless of any intentional or moral wrong, must suffer a loss, it must be borne by the one whose erroneous conduct,

either by omission or commission, was the cause of injury.21 Metrobanks reliance on this dictum, is misplaced. For one, Metrobanks representation that it is an innocent party is flimsy and evidently, misleading. At the same time, Metrobank cannot asseverate that Cabilzo was negligent and this negligence was the

proximate cause22 of the loss in the absence of even a scintilla proof to buttress such claim. Negligence is not presumed but must be proven by the one who alleges it.23 Undoubtedly, Cabilzo was an innocent party in this instant controversy. He was just an ordinary businessman who, in order to facilitate his business transactions, entrusted his money with a bank, not knowing that the latter would yield a substantial amount of his deposit to fraud, for which Cabilzo can never be faulted. We never fail to stress the remarkable significance of a banking institution to commercial transactions, in particular, and to the countrys economy in general. The banking system is an indispensable institution in the modern world and plays a vital role in the economic life of every civilized nation. Whether as mere passive entities for the safekeeping and saving of money or as active instruments of business and commerce, banks have become an ubiquitous presence among the people, who have come to regard them with respect and even gratitude and, most of all, confidence.24 Thus, even the humble wage-earner does not hesitate to entrust his life's savings to the bank of his choice, knowing that they will be safe in its custody and will even earn some interest for him. The ordinary person, with equal faith, usually maintains a modest checking account for security and convenience in the settling of his monthly bills and the payment of ordinary expenses. As for a businessman like the respondent, the bank is a trusted and active associate that can help in the running of his affairs, not only in the form of loans when needed but more often in the conduct of their day-to-day transactions like the issuance or encashment of checks.25 In every case, the depositor expects the bank to treat his account with the utmost fidelity, whether such account consists only of a few hundred pesos or of millions. The bank must record every single transaction accurately, down to the last centavo, and as promptly as possible. This has to be done if the account is to reflect at any given time the amount of money the depositor can dispose of as he sees fit, confident that the bank will deliver it as and to whomever he directs.26 The point is that as a business affected with public interest and because of the nature of its functions, the bank is under obligation to treat the accounts of its depositors with meticulous care, always having in mind the fiduciary nature of their relationship. The appropriate degree of diligence required of a bank must be a high degree of diligence, if not the utmost diligence.27 In the present case, it is obvious that Metrobank was remiss in that duty and violated that relationship. As observed by the Court of Appeals, there are material alterations on the check that are visible to the naked eye. Thus: x x x The number "1" in the date is clearly imposed on a white figure in the shape of the number "2". The appellants employees who examined the said check should have likewise been put on guard as to why at the end of the amount in words, i.e., after the word "ONLY", there are 4 asterisks, while at the beginning of the line or before said phrase, there is none, even as 4 asterisks have been placed before and after the word "CASH" in the space for payee. In addition, the 4 asterisks before the words "ONE THOUSAND PESOS ONLY" have noticeably been erased with typing correction paper, leaving white marks, over which the word "NINETY" was superimposed. The same can be said of the numeral "9" in the amount "91,000", which is superimposed over a whitish mark, obviously an erasure, in lieu of the asterisk which was deleted to insert the said figure. The appellants employees should have again noticed why only 2 asterisks were placed before the amount in figures, while 3 asterisks were placed after such amount. The word "NINETY" is also typed differently and with a lighter ink, when compared with the words "ONE THOUSAND PESOS ONLY." The letters of the word "NINETY" are likewise a little bigger when compared with the letters of the words "ONE THOUSAND PESOS ONLY".28 Surprisingly, however, Metrobank failed to detect the above alterations which could not escape the attention of even an ordinary person. This negligence was exacerbated by the fact that, as found by the trial court, the check in question was examined by the cash custodian whose functions do not include the examinations of checks indorsed for payment against drawers accounts.29 Obviously, the employee allowed by Metrobank to examine the check was not verse and competent to handle such duty. These factual findings of the trial court is conclusive upon this court especially when such findings was affirmed the appellate court.30 Apropos thereto, we need to reiterate that by the very nature of their work the degree of responsibility, care and trustworthiness expected of their employees and officials is far better than those of ordinary clerks and employees. Banks are expected to exercise the highest degree of diligence in the selection and supervision of their employees.31

In addition, the bank on which the check is drawn, known as the drawee bank, is under strict liability to pay to the order of the payee in accordance with the drawers instructions as reflected on the face and by the terms of the check. Payment made under materially altered instrument is not payment done in accordance with the instruction of the drawer. When the drawee bank pays a materially altered check, it violates the terms of the check, as well as its duty to charge its clients account only for bona fide disbursements he had made. Since the drawee bank, in the instant case, did not pay according to the original tenor of the instrument, as directed by the drawer, then it has no right to claim reimbursement from the drawer, much less, the right to deduct the erroneous payment it made from the drawers account which it was expected to treat with utmost fidelity. Metrobank vigorously asserts that the entries in the check were carefully examined: The date of the instrument, the amount in words and figures, as well as the drawers signature, which after verification, were found to be proper and authentic and was thus cleared. We are not persuaded. Metrobanks negligence consisted in the omission of that degree of diligence required of a bank owing to the fiduciary nature of its relationship with its client. Article 1173 of the Civil Code provides: The fault or negligence of the obligor consists in the omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the persons, of the time and of the place. x x x. Beyond question, Metrobank failed to comply with the degree required by the nature of its business as provided by law and jurisprudence. If indeed it was not remiss in its obligation, then it would be inconceivable for it not to detect an evident alteration considering its vast knowledge and technical expertise in the intricacies of the banking business. This Court is not completely unaware of banks practices of employing devices and techniques in order to detect forgeries, insertions, intercalations, superimpositions and alterations in checks and other negotiable instruments so as to safeguard their authenticity and negotiability. Metrobank cannot now feign ignorance nor claim diligence; neither can it point its finger at the collecting bank, in order to evade liability. Metrobank argues that Westmont Bank, as the collecting bank and the last indorser, shall bear the loss. Without ruling on the matter between the drawee bank and the collecting bank, which is already under the jurisdiction of another tribunal, we find that Metrobank cannot rely on such indorsement, in clearing the questioned check. The corollary liability of such indorsement, if any, is separate and independent from the liability of Metrobank to Cabilzo. The reliance made by Metrobank on Westmont Banks indorsement is clearly inconsistent, if not totally offensive to the dictum that being impressed with public interest, banks should exercise the highest degree of diligence, if not utmost diligence in dealing with the accounts of its own clients. It owes the highest degree fidelity to its clients and should not therefore lightly rely on the judgment of other banks on occasions where its clients money were involve, no matter how small or substantial the amount at stake. Metrobanks contention that it relied on the strength of collecting banks indorsement may be merely a lame excuse to evade liability, or may be indeed an actual banking practice. In either case, such act constitutes a deplorable banking practice and could not be allowed by this Court bearing in mind that the confidence of public in general is of paramount importance in banking business. What is even more deplorable is that, having been informed of the alteration, Metrobank did not immediately re-credit the amount that was erroneously debited from Cabilzos account but permitted a full blown litigation to push through, to the prejudice of its client. Anyway, Metrobank is not left with no recourse for it can still run after the one who made the alteration or with the collecting bank, which it had already done. It bears repeating that the records are bare of evidence to prove that Cabilzo was negligent. We find no justifiable reason therefore why Metrobank did not immediately reimburse his account. Such ineptness comes within the concept of wanton manner contemplated under the Civil Code which warrants the imposition of exemplary damages, "by way of example or correction for the public good," in the words of the law. It is expected that this ruling will serve as a stern warning in order to deter the repetition of similar acts of negligence, lest the confidence of the public in the banking system be further eroded.

32

WHEREFORE, premises considered, the instant Petition is DENIED. The Decision dated 8 March 2002 and the Resolution dated 26 July 2002 of the Court of Appeals are AFFIRMED with modification that exemplary damages in the amount of P50,000.00 be awarded. Costs against the petitioner. SO ORDERED. Panganiban, C.J. (Chairperson), Ynares-Santiago, Austria-Martinez, and Callejo, Sr., JJ., concur. Republic of the Philippines

SUPREME COURT Manila EN BANC G.R. No. L-12219 March 15, 1918

AMADO PICART, plaintiff-appellant, vs. FRANK SMITH, JR., defendant-appellee. Alejo Mabanag for appellant. G. E. Campbell for appellee. STREET, J.: In this action the plaintiff, Amado Picart, seeks to recover of the defendant, Frank Smith, jr., the sum of P31,000, as damages alleged to have been caused by an automobile driven by the defendant. From a judgment of the Court of First Instance of the Province of La Union absolving the defendant from liability the plaintiff has appealed. The occurrence which gave rise to the institution of this action took place on December 12, 1912, on the Carlatan Bridge, at San Fernando, La Union. It appears that upon the occasion in question the plaintiff was riding on his pony over said bridge. Before he had gotten half way across, the defendant approached from the opposite direction in an automobile, going at the rate of about ten or twelve miles per hour. As the defendant neared the bridge he saw a horseman on it and blew his horn to give warning of his approach. He continued his course and after he had taken the bridge he gave two more successive blasts, as it appeared to him that the man on horseback before him was not observing the rule of the road. The plaintiff, it appears, saw the automobile coming and heard the warning signals. However, being perturbed by the novelty of the apparition or the rapidity of the approach, he pulled the pony closely up against the railing on the right side of the bridge instead of going to the left. He says that the reason he did this was that he thought he did not have sufficient time to get over to the other side. The bridge is shown to have a length of about 75 meters and a width of 4.80 meters. As the automobile approached, the defendant guided it toward his left, that being the proper side of the road for the machine. In so doing the defendant assumed that the horseman would move to the other side. The pony had not as yet exhibited fright, and the rider had made no sign for the automobile to stop. Seeing that the pony was apparently quiet, the defendant, instead of veering to the right while yet some distance away or slowing down, continued to approach directly toward the horse without diminution of speed. When he had gotten quite near, there being then no possibility of the horse getting across to the other side, the defendant quickly turned his car sufficiently to the right to escape hitting the horse alongside of the railing where it as then standing; but in so doing the automobile passed in such close proximity to the animal that it became frightened and turned its body across the bridge with its head toward the railing. In so doing, it as struck on the hock of the left hind leg by the flange of the car and the limb was broken. The horse fell and its rider was thrown off with some violence. From the evidence adduced in the case we believe that when the accident occurred the free space where the pony stood between the automobile and the railing of the bridge was probably less than one and one half meters. As a result of its injuries the horse died. The plaintiff received contusions which caused temporary unconsciousness and required medical attention for several days. The question presented for decision is whether or not the defendant in maneuvering his car in the manner above described was guilty of negligence such as gives rise to a civil obligation to repair the damage done; and we are of the opinion that he is so liable. As the defendant started across the bridge, he had the right to assume that the horse and the rider would pass over to the proper side; but as he moved toward the center of the bridge it was demonstrated to his eyes that this would not be done; and he must in a moment have perceived that it was too late for the horse to cross with safety in front of the moving vehicle. In the nature of things this change of situation occurred while the automobile was yet some distance away; and from this moment it was not longer within the power of the plaintiff to escape being run down by going to a place of greater safety. The control of the situation had then passed entirely to the defendant; and it was his duty either to bring his car to an immediate stop or, seeing that there were no other persons on the bridge, to take the other side and pass sufficiently far away from the horse to avoid the danger of collision. Instead of doing this, the defendant ran straight on until he was almost upon the horse. He was, we think, deceived into doing this by the fact that the horse had not yet exhibited fright. But in view of the known nature of horses, there was an appreciable risk that, if the animal in question was unacquainted with automobiles, he might get exited and jump under the conditions which here confronted him. When the defendant exposed the horse and rider to this danger he was, in our opinion, negligent in the eye of the law.

The test by which to determine the existence of negligence in a particular case may be stated as follows: Did the defendant in doing the alleged negligent act use that person would have used in the same situation? If not, then he is guilty of negligence. The law here in effect adopts the standard supposed to be supplied by the imaginary conduct of the discreet paterfamilias of the Roman law. The existence of negligence in a given case is not determined by reference to the personal judgment of the actor in the situation before him. The law considers what would be reckless, blameworthy, or negligent in the man of ordinary intelligence and prudence and determines liability by that. The question as to what would constitute the conduct of a prudent man in a given situation must of course be always determined in the light of human experience and in view of the facts involved in the particular case. Abstract speculations cannot here be of much value but this much can be profitably said: Reasonable men govern their conduct by the circumstances which are before them or known to them. They are not, and are not supposed to be, omniscient of the future. Hence they can be expected to take care only when there is something before them to suggest or warn of danger. Could a prudent man, in the case under consideration, foresee harm as a result of the course actually pursued? If so, it was the duty of the actor to take precautions to guard against that harm. Reasonable foresight of harm, followed by ignoring of the suggestion born of this prevision, is always necessary before negligence can be held to exist. Stated in these terms, the proper criterion for determining the existence of negligence in a given case is this: Conduct is said to be negligent when a prudent man in the position of the tortfeasor would have foreseen that an effect harmful to another was sufficiently probable to warrant his foregoing conduct or guarding against its consequences. Applying this test to the conduct of the defendant in the present case we think that negligence is clearly established. A prudent man, placed in the position of the defendant, would in our opinion, have recognized that the course which he was pursuing was fraught with risk, and would therefore have foreseen harm to the horse and the rider as reasonable consequence of that course. Under these circumstances the law imposed on the defendant the duty to guard against the threatened harm. It goes without saying that the plaintiff himself was not free from fault, for he was guilty of antecedent negligence in planting himself on the wrong side of the road. But as we have already stated, the defendant was also negligent; and in such case the problem always is to discover which agent is immediately and directly responsible. It will be noted that the negligent acts of the two parties were not contemporaneous, since the negligence of the defendant succeeded the negligence of the plaintiff by an appreciable interval. Under these circumstances the law is that the person who has the last fair chance to avoid the impending harm and fails to do so is chargeable with the consequences, without reference to the prior negligence of the other party. The decision in the case of Rkes vs. Atlantic, Gulf and Pacific Co. (7 Phil. Rep., 359) should perhaps be mentioned in this connection. This Court there held that while contributory negligence on the part of the person injured did not constitute a bar to recovery, it could be received in evidence to reduce the damages which would otherwise have been assessed wholly against the other party. The defendant company had there employed the plaintiff, as a laborer, to assist in transporting iron rails from a barge in Manila harbor to the company's yards located not far away. The rails were conveyed upon cars which were hauled along a narrow track. At certain spot near the water's edge the track gave way by reason of the combined effect of the weight of the car and the insecurity of the road bed. The car was in consequence upset; the rails slid off; and the plaintiff's leg was caught and broken. It appeared in evidence that the accident was due to the effects of the typhoon which had dislodged one of the supports of the track. The court found that the defendant company was negligent in having failed to repair the bed of the track and also that the plaintiff was, at the moment of the accident, guilty of contributory negligence in walking at the side of the car instead of being in front or behind. It was held that while the defendant was liable to the plaintiff by reason of its negligence in having failed to keep the track in proper repair nevertheless the amount of the damages should be reduced on account of the contributory negligence in the plaintiff. As will be seen the defendant's negligence in that case consisted in an omission only. The liability of the company arose from its responsibility for the dangerous condition of its track. In a case like the one now before us, where the defendant was actually present and operating the automobile which caused the damage, we do not feel constrained to attempt to weigh the negligence of the respective parties in order to apportion the damage according to the degree of their relative fault. It is enough to say that the negligence of the defendant was in this case the immediate and determining cause of the accident and that the antecedent negligence of the plaintiff was a more remote factor in the case. A point of minor importance in the case is indicated in the special defense pleaded in the defendant's answer, to the effect that the subject matter of the action had been previously adjudicated in the court of a justice of the peace. In this connection it appears that soon after the accident in question occurred, the plaintiff caused criminal proceedings to be instituted before a justice of the peace charging the defendant with the infliction of serious injuries (lesiones graves). At the preliminary investigation the defendant was discharged by the magistrate and the proceedings were dismissed. Conceding that the acquittal of the defendant at the trial upon the merits in a criminal prosecution for the offense mentioned would be res adjudicata upon the question of his

civil liability arising from negligence -- a point upon which it is unnecessary to express an opinion -- the action of the justice of the peace in dismissing the criminal proceeding upon the preliminary hearing can have no effect. (See U. S. vs. Banzuela and Banzuela, 31 Phil. Rep., 564.) From what has been said it results that the judgment of the lower court must be reversed, and judgment is her rendered that the plaintiff recover of the defendant the sum of two hundred pesos (P200), with costs of other instances. The sum here awarded is estimated to include the value of the horse, medical expenses of the plaintiff, the loss or damage occasioned to articles of his apparel, and lawful interest on the whole to the date of this recovery. The other damages claimed by the plaintiff are remote or otherwise of such character as not to be recoverable. So ordered. Arellano, C.J., Torres, Johnson, J., reserves his vote. Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 70493 May 18, 1989 GLAN PEOPLE'S LUMBER AND HARDWARE, GEORGE LIM, FABIO S. AGAD, FELIX LIM and PAUL ZACARIAS y INFANTE, petitioners, vs. INTERMEDIATE APPELLATE COURT, CECILIA ALFEREZ VDA. DE CALIBO, Minors ROYCE STEPHEN, JOYCE JOAN, JANISE MARIE, JACQUELINE BRIGITTE JOCELINE CORAZON, JULIET GERALDINE, JENNIFER JILL, all surnamed CALIBO, represented by their mother, CECILIA A. VDA. DE CALIBO, respondents. Rufino Mayor and Isidro M. Ampig for petitioners. Manuel L. Hontanosas for private respondents. Carson, Araullo, Avancea, and Fisher, JJ., concur.

NARVASA, J.: There is a two-fold message in this judgment that bears stating at the outset. The first, an obvious one, is that it is the objective facts established by proofs presented in a controversy that determine the verdict, not the plight of the persons involved, no matter how deserving of sympathy and commiseration because, for example, an accident of which they are the innocent victims has brought them to. reduced circumstances or otherwise tragically altered their lives. The second is that the doctrine laid done many, many years ago in Picart vs. Smith 1 continues to be good law to this day. The facts giving rise to the controversy at bar are tersely and quite accurately recounted by the Trial Court as follows: 2 Engineer Orlando T. Calibo, Agripino Roranes, and Maximo Patos were on the jeep owned by the Bacnotan Consolidated Industries, Inc., with Calibo at the wheel, as it approached from the South Lizada Bridge going towards the direction of Davao City at about 1:45 in the afternoon of July 4,1979. At about that time, the cargo track, loaded with cement bags, GI sheets, plywood, driven by defendant Paul Zacarias y Infants, coming from the opposite direction of Davao City and bound for Glan, South Cotabato, had just crossed said bridge. At about 59 yards after crossing the bridge, the cargo truck and the jeep collided as a consequence of which Engineer Calibo died while Roranes and Patos sustained physical injuries. Zacarias was unhurt. As a result of the impact, the left side of the truck was slightly damaged while the left side of the jeep, including its fender and hood, was extensively damaged. After the impact, the jeep fell and rested on its right side on the asphalted road a few meters to the rear of the truck, while the truck stopped on its wheels on the road. On November 27, 1979, the instant case for damages was filed by the surviving spouse and children of the late Engineer Calibo who are residents of Tagbilaran City against the driver and owners of the cargo truck. For failure to file its answer to the third party complaint, third party defendant, which insured the cargo truck involved, was declared in default.

The case filed by the heirs of Engineer Calibo his widow and minor children, private respondents herein was docketed as Civil Case No. 3283 of the Court of First Instance of Bohol. 3 Named defendants in the complaint were "Felix S. Agad, George Lim and Felix Lim . . . (who) appear to be the co-owners of the Glan People's Lumber and Hardware . . . (and) Paul Zacarias y Infante." 4 The defendants' answer however alleged that the lumber and

hardware business was exclusively owned by George Y. Lim, this being evidenced by the Certificate of Registration issued by the Bureau of Domestic Trade; Fabio S. Agad was not a co-owner thereof but "merely employed by . . . George Y. Lim as bookkeeper"; and Felix Lim had no connection whatever with said business, "he being a child only eight (8) years of age." 5 "After (trial, and) a careful evaluation of the evidence, both testimonial and documentary," the Court reached the conclusion "that the plaintiffs failed to establish by preponderance of evidence the negligence, and thus the liability, of the defendants." Accordingly, the Court dismissed the complaint (and defendants' counterclaim) "for insufficiency of evidence." Likewise dismissed was third-party complaint presented by the defendants against the insurer of the truck. The circumstances leading to the Court's conclusion just mentioned, are detailed in the Court's decision, as follows: 1. Moments before its collission with the truck being operated by Zacarias, the jeep of the deceased Calibo was "zigzagging." 6 2. Unlike Zacarias who readily submitted himself to investigation by the police, Calibo's companions, Roranes (an accountant), and Patos, who suffered injuries on account of the collision, refused to be so investigated or give statements to the police officers. This, plus Roranes' waiver of the right to institute criminal proceedings against Zacarias, and the fact that indeed no criminal case was ever instituted in Court against Zacarias, were "telling indications that they did not attribute the happening to defendant Zacarias' negligence or fault." 7 3. Roranes' testimony, given in plaintiffs' behalf, was "not as clear and detailed as that of . . . Zacarias," and was "uncertain and even contradicted by the physical facts and the police investigators Dimaano and Esparcia." 8 4. That there were skid marks left by the truck's tires at the scene, and none by the jeep, demonstrates that the driver of the truck had applied the brakes and the jeep's driver had not; and that the jeep had on impact fallen on its right side is indication that it was running at high speed. Under the circumstances, according to the Court, given "the curvature of the road and the descending grade of the jeep's lane, it was negligence on the part of the driver of the jeep, Engr. Calibo, for not reducing his speed upon sight of the truck and failing to apply the brakes as he got within collision range with the truck." 5. Even if it be considered that there was some antecedent negligence on the part of Zacarias shortly before the collision, in that he had caused his truck to run some 25 centimeters to the left of the center of the road, Engr. Calibo had the last clear chance of avoiding the accident because he still had ample room in his own lane to steer clear of the truck, or he could simply have braked to a full stop. The Court of Appeals saw things differently. It rendered judgment 9 on the plaintiffs' appeal, l0 reversing the decision of the Trial Court. It found Zacarias to be negligent on the basis of the following circumstances, to wit: 1) "the truck driven by defendant Zacarias occupied the lane of the jeep when the collision occurred,' and although Zacarias saw the jeep from a distance of about 150 meters, he "did not drive his truck back to his lane in order to avoid collision with the oncoming jeep . . .;" 11 what is worse, "the truck driver suddenly applied his brakes even as he knew that he was still within the lane of the jeep;" 12 had both vehicles stayed in their respective lanes, the collision would never have occurred, they would have passed "along side each other safely;" 13

2) Zacarias had no license at the time; what he handed to Pfc. Esparcia, on the latter's demand, was the 'driver's license of his co-driver Leonardo Baricuatro;" 14 3) the waiver of the right to file criminal charges against Zacarias should not be taken against "plaintiffs" Roranes and Patos who had the right, under the law, to opt merely to bring a civil suit. 15

The Appellate Court opined that Zacarias' negligence "gave rise to the presumption of negligence on the part of his employer, and their liability is both primary and solidary." It therefore ordered "the defendants jointly and solidarily to indemnify the plaintiffs the following amounts: (1) P30,000.00 for the death of Orlando Calibo; (2) P378,000.00 for the loss of earning capacity of the deceased (3) P15,000.00 for attorney's fees; (4) Cost of suit. 16 The defendants George Lim, Felix Lim, Fabio S. Agad and Paul Zacarias have appealed to this Court on certiorari and pray for a reversal of the judgment of the Intermediate Appellate Court which, it is claimed, ignored or ran counter to the established facts. A review of the record confirms the merit of this assertion and persuades this Court that said judgment indeed disregarded facts clearly and undisputably demonstrated by the proofs. The appealed judgment, consequently, will have to be reversed. The finding that "the truck driven by defendant Paul Zacarias occupied the lane of the jeep when the collision occurred" is a loose one, based on nothing more than the showing that at the time of the accident, the truck driven by Zacarias had edged over the painted center line of the road into the opposite lane by a width of twenty-five (25) centimeters. It ignores the fact that by the uncontradicted evidence, the actual center line of the road was not that indicated by the painted stripe but, according to measurements made and testified by Patrolman Juanita Dimaano, one of the two officers who investigated the accident, correctly lay thirty-six (36) centimeters farther to the left of the truck's side of said stripe. The unimpugned testimony of Patrolman Dimaano, a witness for the private respondents, is to the effect that the jeep's lane was three (3) meters and seventy-five (75) centimeters wide, and that of the truck three (3) meters and three (3) centimeters, measured from the center stripe to the corresponding side lines or outer edges of the road. 17 The total width of the road being, therefore, six (6) meters and seventy-eight (78) centimeters, the true center line equidistant from both side lines would divide the road into two lanes each three (meters) and thirty-nine (39) centimeters wide. Thus, although it was not disputed that the truck overrode the painted stripe by twenty-five (25) centimeters, it was still at least eleven (11) centimeters away from its side of the true center line of the road and well inside its own lane when the accident occurred. By this same reckoning, since it was unquestionably the jeep that rammed into the stopped truck, it may also be deduced that it (the jeep) was at the time travelling beyond its own lane and intruding into the lane of the truck by at least the same 11-centimeter width of space.

Not only was the truck's lane, measured from the incorrectly located center stripe uncomfortably narrow, given that vehicle's width of two (2) meters and forty-six (46) centimeters; the adjacent road shoulder was also virtually impassable, being about three (3) inches lower than the paved surface of the road and "soft--not firm enough to offer traction for safe passage besides which, it sloped gradually down to a three foot-deep ravine with a river below. 18 The truck's lane as erroneously demarcated by the center stripe gave said vehicle barely half a meter of clearance from the edge of the road and the dangerous shoulder and little room for maneuver, in case this was made necessary by traffic contingencies or road conditions, if it always kept to said lane. It being also shown that the accident happened at or near the point of the truck's approach to a curve, 19 which called for extra precautions against driving too near the shoulder, it could hardly be accounted negligent on the part of its driver to intrude temporarily, and by only as small as a twenty-five centimeter wide space (less than ten inches), into the opposite lane in order to insure his vehicle's safety. This, even supposing that said maneuver was in fact an intrusion into the opposite lane, which was not the case at all as just pointed out. Nor was the Appellate Court correct in finding that Paulino Zacarias had acted negligently in applying his brakes instead of getting back inside his lane upon qqqespying the approaching jeep. Being well within his own lane, as has already been explained, he had no duty to swerve out of the jeep's way as said Court would have had him do. And even supposing that he was in fact partly inside the opposite lane, coming to a full stop with the jeep still thirty (30) meters away cannot be considered an unsafe or imprudent action, there also being uncontradicted evidence that the jeep was "zigzagging" 20 and hence no way of telling in which direction it would go as it approached the truck. Also clearly erroneous is the finding of the Intermediate Appellate Court that Zacarias had no driver's license at the time. The traffic accident report attests to the proven fact that Zacarias voluntarily surrendered to the investigating officers his driver's license, valid for 1979, that had been renewed just the day before the accident, on July 3, 1979. 21 The Court was apparently misled by the circumstance that when said driver was first asked to show his license by the investigators at the scene of the collision, he had first inadvertently

produced the license of a fellow driver, Leonardo Baricuatro, who had left said license in Davao City and had asked Zacarias to bring it back to him in Glan, Cotabato. 22 The evidence not only acquits Zacarias of any negligence in the matter; there are also quite a few significant indicators that it was rather Engineer Calibo's negligence that was the proximate cause of the accident. Zacarias had told Patrolman Dimaano at the scene of the collision and later confirmed in his written statement at the police headquarters 23 that the jeep had been "zigzagging," which is to say that it was travelling or being driven erratically at the time. The other investigator, Patrolman Jose Esparcia, also testified that eyewitnesses to the accident had remarked on the jeep's "zigzagging." 24 There is moreover more than a suggestion that Calibo had been drinking shortly before the accident. The decision of the Trial Court adverts to further testimony of Esparcia to the effect that three of Calibo's companions at the beach party he was driving home from when the collision occurred, who, having left ahead of him went to the scene when they heard about the accident, had said that there had been a drinking spree at the party and, referring to Calibo, had remarked: "Sabi na huag nang mag drive . . . . pumipilit," (loosely translated, "He was advised not to drive, but he insisted.") It was Calibo whose driver's license could not be found on his person at the scene of the accident, and was reported by his companions in the jeep as having been lost with his wallet at said scene, according to the traffic accident report, Exhibit "J". Said license unexplainedly found its way into the record some two years later. Reference has already been made to the finding of the Trial Court that while Zacarias readily submitted to interrogation and gave a detailed statement to the police investigators immediately after the accident, Calibo's two companions in the jeep and supposed eyewitnesses, Agripino Roranes and Maximo Patos, refused to give any statements. Furthermore, Roranes who, together with Patos, had sustained injuries as a result of the collision, waived his right to file a criminal case against Zacarias. 25 Even, however, ignoring these telltale indicia of negligence on the part of Calibo, and assuming some antecedent negligence on the part of Zacarias in failing to keep within his designated lane, incorrectly demarcated as it was, the physical facts, either expressly found by the Intermediate Appellate Court or which may be deemed conceded for lack of any dispute, would still absolve the latter of any actionable responsibility for the accident under the rule of the last clear chance. Both drivers, as the Appellate Court found, had had a full view of each other's vehicle from a distance of one hundred fifty meters. Both vehicles were travelling at a speed of approximately thirty kilometers per hour. 26

The private respondents have admitted that the truck was already at a full stop when the jeep plowed into it. And they have not seen fit to deny or impugn petitioners' imputation that they also admitted the truck had been brought to a stop while the jeep was still thirty meters away. 27 From these facts the logical conclusion emerges that the driver of the jeep had what judicial doctrine has appropriately called the last clear chance to avoid the accident, while still at that distance of thirty meters from the truck, by stopping in his turn or swerving his jeep away from the truck, either of which he had sufficient time to do while running at a speed of only thirty kilometers per hour. In those circumstances, his duty was to seize that opportunity of avoidance, not merely rely on a supposed right to expect, as the Appellate Court would have it, the truck to swerve and leave him a clear path. The doctrine of the last clear chance provides as valid and complete a defense to accident liability today as it did when invoked and applied in the 1918 case of Picart vs. Smith, supra, which involved a similar state of facts. Of those facts, which should be familiar to every student of law, it is only necessary to recall the summary made in the syllabus of this Court's decision that: (t)he plaintiff was riding a pony on a bridge. Seeing an automobile ahead he improperly pulled his horse over to the railing on the right. The driver of the automobile, however guided his car toward the plaintiff without diminution of speed until he was only few feet away. He then turned to the right but passed so closely to the horse that the latter being frightened, jumped around and was killed by the passing car. . . . . Plaintiff Picart was thrown off his horse and suffered contusions which required several days of medical attention. He sued the defendant Smith for the value of his animal, medical expenses and damage to his apparel and obtained judgment from this Court which, while finding that there was negligence on the part of both parties, held that that of the defendant was the immediate and determining cause of the accident and that of the plaintiff ". . . the more remote factor in the case": It goes without saying that the plaintiff himself was not free from fault, for he was guilty of antecedent negligence in planting himself on the wrong side of the road. But as we have already stated, the defendant was also negligent; and in such case the problem always is to

discover which agent is immediately and directly responsible. It will be noted that the negligent acts of the two parties were not contemporaneous, since the negligence of the defendant succeeded the negligence of the plaintiff by an appreciable interval. Under these circumstances the law is that the person who has the last fair chance to avoid the impending harm and fails to do so is chargeable with the consequences, without reference to the prior negligence of the other party. Since said ruling clearly applies to exonerate petitioner Zacarias and his employer (and co-petitioner) George Lim, an inquiry into whether or not the evidence supports the latter's additional defense of due diligence in the selection and supervision of said driver is no longer necessary and wig not be undertaken. The fact is that there is such evidence in the record which has not been controverted. It must be pointed out, however, that the Intermediate Appellate Court also seriously erred in holding the petitioners Pablo S. Agad and Felix Lim solidarily liable for the damages awarded in its appealed decision, as alleged owners, with petitioner George Lim, of Glan People's Lumber and Hardware, employer of petitioner Zacarias. This manifestly disregarded, not only the certificate of registration issued by the Bureau of Domestic Trade identifying Glan People's Lumber and Hardware as a business name registered by George Lim, 28 but

also unimpugned allegations into the petitioners' answer to the complaint that Pablo S. Agad was only an employee of George Lim and that Felix Lim, then a child of only eight (8) years, was in no way connected with the business. In conclusion, it must also be stated that there is no doubt of this Court's power to review the assailed decision of the Intermediate Appellate Court under the authority of precedents recognizing exceptions to the familiar rule binding it to observe and respect the latter's findings of fact. Many of those exceptions may be cited to support the review here undertaken, but only the most obvious that said findings directly conflict with those of the Trial Court will suffice. 29 In the opinion of this Court and after a careful review of the record, the

evidence singularly fails to support the findings of the Intermediate Appellate Court which, for all that appears, seem to have been prompted rather by sympathy for the heirs of the deceased Engineer Calibo than by an objective appraisal of the proofs and a correct application of the law to the established facts. Compassion for the plight of those whom an accident has robbed of the love and support of a husband and father is an entirely natural and understandable sentiment. It should not, however, be allowed to stand in the way of, much less to influence, a just verdict in a suit at law. WHEREFORE, the appealed judgment of the Intermediate Appellate Court is hereby REVERSED, and the complaint against herein petitioners in Civil Case No. 3283 of the Court of First Instance of Bohol, Branch IV, is DISMISSED. No pronouncement as to costs. SO ORDERED. Cruz, Gancayco, Grio-Aquino and Medialdea, JJ., concur.

THIRD DIVISION [G.R. No. 112160. February 28, 2000] OSMUNDO S. CANLAS and ANGELINA CANLAS, petitioner, vs. COURT OF APPEALS, ASIAN SAVINGS BANK, MAXIMO C. CONTRERAS and VICENTE MAOSCA, respondents. DECISION PURISIMA, J.: Mi-so At bar is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking to review and set aside the Decision[1] of the Court of Appeals in CA-G.R. CV No. 25242, which reversed the Decision[2] of Branch 59 of the Regional Trial Court of Makati City in Civil Case No. M-028; the dispositive portion of which reads: "WHEREFORE, the decision appealed from is hereby REVERSED and SET ASIDE and a new one is hereby entered DISMISSING the complaint of the spouses Osmundo and Angelina Canlas. On the counterclaim of defendant Asian Savings Bank, the plaintiffs Canlas spouses are hereby ordered to pay the defendant Asian Savings Bank the amount of P50,000.00 as moral and exemplary damages plus P15,000.00 as and for attorney's fees. With costs against appellees. SO ORDERED."[3]

The facts that matter: Sometime in August, 1982, the petitioner, Osmundo S. Canlas, and private respondent, Vicente Maosca, decided to venture in business and to raise the capital needed therefor. The former then executed a Special Power of Attorney authorizing the latter to mortgage two parcels of land situated in San Dionisio, (BF Homes) Paranaque, Metro Manila, each lot with semi-concrete residential house existing thereon, and respectively covered by Transfer Certificate of Title No. 54366 in his (Osmundo's) name and Transfer Certificate of Title No. S-78498 in the name of his wife Angelina Canlas. Subsequently, Osmundo Canlas agreed to sell the said parcels of land to Vicente Manosca, for and in consideration of P850,000.00, P500,000.00 of which payable within one week, and the balance of P350,000.00 to serve as his (Osmundo's) investment in the business. Thus, Osmundo Canlas delivered to Vicente Maosca the transfer certificates of title of the parcels of land involved. Vicente Maosca, as his part of the transaction, issued two postdated checks in favor of Osmundo Canlas in the amounts of P40,000.00 and P460,000.00, respectively, but it turned out that the check covering the bigger amount was not sufficiently funded.[4]Nexold On September 3, 1982, Vicente Maosca was able to mortgage the same parcels of land for P100,000.00 to a certain Attorney Manuel Magno, with the help of impostors who misrepresented themselves as the spouses, Osmundo Canlas and Angelina Canlas.[5] On September 29, 1982, private respondent Vicente Maosca was granted a loan by the respondent Asian Savings Bank (ASB) in the amount of P500,000.00, with the use of subject parcels of land as security, and with the involvement of the same impostors who again introduced themselves as the Canlas spouses.[6] When the loan it extended was not paid, respondent bank extrajudicially foreclosed the mortgaged.

On January 15, 1983, Osmundo Canlas wrote a letter informing the respondent bank that the execution of subject mortgage over the two parcels of land in question was without their (Canlas spouses) authority, and request that steps be taken to annul and/or revoke the questioned mortgage. On January 18, 1983, petitioner Osmundo Canlas also wrote the office of Sheriff Maximo C. Contreras, asking that the auction sale scheduled on February 3, 1983 be cancelled or held in abeyance. But respondents Maximo C. Contreras and Asian Savings Bank refused to heed petitioner Canlas' stance and proceeded with the scheduled auction sale.[7] Consequently, on February 3, 1983 the herein petitioners instituted the present case for annulment of deed of real estate mortgage with prayer for the issuance of a writ of preliminary injunction; and on May 23, 1983, the trial court issued an Order restraining the respondent sheriff from issuing the corresponding Certificate of Sheriffs Sale.[8] For failure to file his answer, despite several motions for extension of time for the filing thereof, Vicente Maosca was declared in default.[9] On June 1, 1989, the lower court a quo came out with a decision annulling subject deed of mortgage and disposing, thus: "Premises considered, judgment is hereby rendered as follows: 1. Declaring the deed of real estate mortgage (Exhibit 'L) involving the properties of the plaintiffs as null and void; Man-ikx 2. Declaring the public auction sale conducted by the defendant Sheriff, involving the same properties as illegal and without binding effect; 3. Ordering the defendants, jointly and severally, to pay the plaintiffs the sum of P20,000.00 representing attorney's fees; 4. On defendant ASB's crossclaim: ordering the cross-defendant Vicente Maosca to pay the defendant ASB the sum of P350,000.00, representing the amount which he received as proceeds of the loan secured by the void mortgage, plus interest at the legal rate, starting February 3, 1983, the date when the original complaint was filed, until the amount is fully paid; 5. With costs against the defendants. SO ORDERED."[10] From such Decision below, Asian Savings Bank appealed to the Court of Appeals, which handed down the

assailed judgment of reversal, dated September 30, 1983, in CA-G.R. CV No. 25242. Dissatisfied therewith, the petitioners found their way to this Court via the present Petition; theorizing that: "I RESPONDENT COURT OF APPEALS ERRED IN HOLDING THAT THE MORTGAGE OF THE PROPERTIES SUBJECT OF THIS CASE WAS VALID. II RESPONDENT COURT OF APPEALS ERRED IN HIOLDING THAT PETITIONERS ARE NOT ENTITLED TO RELIEF BECAUSE THEY WERE NEGLIGENT AND THEREFORE MUST BEAR THE LOSS. III RESPONDENT COURT OF APPEALS ERRED IN HOLDING THAT RESPONDENT ASB EXERCISED DUE DILIGENCE IN GRANTING THE LOAN APPLICATION OF RESPONDENT. Manik-s IV RESPONDENT COURT OF APPEALS ERRED IN HOLDING THAT RESPONDENT ASB DID NOT ACT WITH BAD FAITH IN PROCEEDING WITH THE FORECLOSURE SALE OF THE PROPERTIES. V RESPONDENT COURT OF APPEALS ERRED IN AWARDING RESPONDENT ASB MORAL DAMAGES."[11] The Petition is impressed with merit. Article 1173 of the Civil Code, provides: "Article 1173. The fault or negligence of the obligor consist in the omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the persons, of the time and of the place. When negligence shows bad faith, the provisions of articles 1171 and 2201, paragraph 2, shall apply. If the law or contract does not state the diligence which is to be observed in the performance, that which is expected of a good father of a family shall be required. (1104)" The degree of diligence required of banks is more than that of a good father of a family;[12] in keeping with their responsibility to exercise the necessary care and prudence in dealing even on a register or titled property. The business of a bank is affected with public interest, holding in trust the money of the depositors, which bank deposits the bank should guard against loss due to negligence or bad faith, by reason of which the bank would be denied the protective mantle of the land registration law, accorded only to purchases or mortgagees for value and in good faith.[13]Man-ikan In the case under consideration, from the evidence on hand it can be gleaned unerringly that respondent bank did not observe the requisite diligence in ascertaining or verifying the real identity of the couple who introduced themselves as the spouses Osmundo Canlas and Angelina Canlas. It is worthy to note that not even a single identification card was exhibited by the said impostors to show their true identity; and yet, the bank acted on their representations simply on the basis of the residence certificates bearing signatures which tended to match the signatures affixed on a previous deed of mortgage to a certain Atty. Magno, covering the same parcels of land in question. Felizado Mangubat, Assistant Vice President of Asian Savings Bank, thus testified inter alia: "x x x Q:.....According to you, the basis for your having recommended for the approval of MANASCO's (sic) loan particularly that one involving the property of plaintiff in this case, the spouses OSMUNDO CANLAS and ANGELINA CANLAS, the basis for such approval was that according to you all the signatures and other things taken into account matches with that of the document previously executed by the spouses CANLAS? A:.....That is the only basis for accepting the signature on the mortgage, the basis for the recommendation of the approval of the loan are the financial statement of MAOSCA? A:.....Yes, among others the signature and TAX Account Number, Residence Certificate appearing on the previous loan executed by the spouses CANLAS, I am referring to EXHIBIT 5, mortgage to ATTY. MAGNO, those were made the basis. A:.....That is just the basis of accepting the signature, because at that time the loan have been

approved already on the basis of the financial statement of the client the Bank Statement. Wneh (sic) it was approved we have to base it on the Financial statement of the client, the signatures were accepted only for the purpose of signing the mortgage not for the approval, we don't (sic) approve loans on the signature. ATTY. CLAROS: .....Would you agree that as part of ascertaining the identify of the parties particularly the mortgage, you don't consider also the signature, the Residence Certificate, the particular address of the parties involved. A:.....I think the question defers (sic) from what you asked a while ago. Q:.....Among others? A:.....We have to accept the signature on the basis of the other signatures given to us it being a public instrument. Ol-dmiso ATTY. CARLOS: .....You mean to say the criteria of ascertaining the identity of the mortgagor does not depend so much on the signature on the residence certificate they have presented. A:.....We have to accept that xxx.....xxx.....xxx A:.....We accepted the signature on the basis of the mortgage in favor of ATTY. MAGNO duly notarized which I have been reiterrting (sic) entitled to full faith considering that it is a public instrument. ATTY. CARLOS: .....What other requirement did you take into account in ascertaining the identification of the parties particularly the mortgagor in this case. A:.....Residence Certificate. Q:.....Is that all, is that the only requirement? A:.....We requested for others but they could not produce, and because they presented to us the Residence Certificate which matches on the signature on the Residence Certificate in favor of Atty. Magno."[14]M-isjuris Evidently, the efforts exerted by the bank to verify the identity of the couple posing as Osmundo Canlas and Angelina Canlas fell short of the responsibility of the bank to observe more than the diligence of a good father of a family. The negligence of respondent bank was magnified by the fact that the previous deed of mortgage (which was used as the basis for checking the genuineness of the signatures of the suppose Canlas spouses) Canlas.[16] But such fact notwithstanding, the bank did not require the impostors to submit additional proof of their true identity. Under the doctrine of last clear chance, which is applicable here, the respondent bank must suffer the resulting loss. In essence, the doctrine of last clear chance is to the effect that where both parties are negligent but the negligent act of one is appreciably later in point of time than that of the other, or where it is impossible to determine whose fault or negligence brought about the occurrence of the incident, the one who had the last clear opportunity to avoid the impending harm but failed to do so, is chargeable with the consequences arising therefrom. Stated differently, the rule is that the antecedent negligence of a person does not preclude recovery of damages caused by the supervening negligence of the latter, who had the last fair chance to prevent the impending harm by the exercise of due diligence.[17] Assuming that Osmundo Canlas was negligent in giving Vicente Maosca the opportunity to perpetrate the fraud, by entrusting to latter the owner's copy of the transfer certificates of title of subject parcels of land, it cannot be denied that the bank had the last clear chance to prevent the fraud, by the simple expedient of faithfully complying with the requirements for banks to ascertain the identity of the persons transacting with them. For not observing the degree of diligence required of banking institutions, whose business is impressed with public interest, respondent Asian Savings Bank has to bear the loss sued upon.

did not bear the tax account number of the spouses,[15] as well as the Community Tax Certificate of Angelina

In ruling for respondent bank, the Court of Appeals concluded that the petitioner Osmundo Canlas was a party to the fraudulent scheme of Maosca and therefore, estopped from impugning the validity of subject deed of mortgage; ratiocinating thus: Sd-aamiso "x x x Thus, armed with the titles and the special power of attorney, Manosca went to the defendant bank and applied for a loan. And when Maosca came over to the bank to submit additional documents pertinent to his loan application, Osmundo Canlas was with him, together with a certain Rogelio Viray. At that time, Osmundo Canlas was introduced to the bank personnel as 'Leonardo Rey. When he was introduced as 'Leonardo Rey for the first time Osmundo should have corrected Maosca right away. But he did not. Instead, he even allowed Maosca to avail of his (Osmundo's) membership privileges at the Metropolitan Club when Maosca invited two officers of the defendant bank to a luncheon meeting which Osmundo also attended. And during that meeting, Osmundo did not say who he really is, but even let Maosca introduced him again as 'Leonardo Rey, which all the more indicates that he connived with Maosca in deceiving the defendant bank. Finally after the loan was finally approved, Osmundo accompanied Maosca to the bank when the loan was released. At that time a manger's check for P200,000.00 was issued in the name of Oscar Motorworks, which Osmundo admits he owns and operates. Collectively, the foregoing circumstances cannot but conjure to a single conclusion that Osmundo actively participated in the loan application of defendant Asian Savings Bank, which culminated in his receiving a portion of the process thereof."[18] A meticulous and painstaking scrutiny of the Records on hand, reveals, however, that the findings arrived at by the Court of Appeals are barren of any sustainable basis. For instance, the execution of the deeds of mortgages constituted by Maosca on subject pieces of property of petitioners were made possible not by the Special Power of Attorney executed by Osmundo Canlas in favor of Maosca but through the use of impostors who misrepresented themselves as the spouses Angelina Canlas and Osmundo Canlas. It cannot be said therefore, that the petitioners authorized Vicente Maosca to constitute the mortgage on their parcels of land. What is more, Osmundo Canlas was introduced as "Leonardo Rey" by Vicente Maosca, only on the occasion of the luncheon meeting at the Metropolitan Club.[19] Thereat, the failure of Osmundo Canlas to rectify Maosca's misrepresentations could not be taken as a fraudulent act. As well explained by the former, he just did not want to embarrass Maosca, so that he waited for the end of the meeting to correct Maosca.[20] Then, too, Osmundo Canlas recounted that during the said luncheon meeting, they did not talk about the security or collateral for the loan of Maosca with ASB.[21] So also, Mrs. Josefina Rojo, who was the Account Officer of Asian Savings Bank when Maosca applied for subject loan, corroborated the testimony of Osmundo Canlas, she testified: S-daad "xxx.....xxx.....xxx QUESTION:.....Now could you please describe out the lunch conference at the Metro Club in Makati? ANSWER:.....Mr. Mangubat, Mr. Maosca and I did not discuss with respect to the loan application and discuss primarily his business. xxx.....xxx.....xxx xxx.....xxx.....xxx QUESTION:..... So, what is the main topic of your discussion during the meeting? ANSWER:..... The main topic was then, about his business although, Mr, Leonardo Rey, who actually turned out as Mr. Canlas, supplier of Mr. Maosca. QUESTION:..... I see ... other than the business of Mr. Maosca, were there any other topic discussed? ANSWER:..... YES. QUESTION:..... And what was the topic?

ANSWER:..... General Economy then. x x x"[22] Verily, Osmundo Canlas was left unaware of the illicit plan of Maosca, explaining thus why he (Osmundo) did not bother to correct what Maosca misrepresented and to assert ownership over the two parcels of land in question. Scs-daad Not only that; while it is true that Osmundo Canlas was with Vicente Maosca when the latter submitted the documents needed for his loan application, and when the check of P200,000.000 was released, the former did not know that the collateral used by Maosca for the said loan were their (Canlas spouses) properties. Osmundo happened to be with Maosca at the time because he wanted to make sure that Maosca would make good his promise to pay the balance of the purchase price of the said lots out of the proceeds of the loan.[23] The receipt by Osmundo Canlas of the P200,000.00 check from ASB could not estop him from assailing the validity of the mortgage because the said amount was in payment of the parcels of land he sold to Maosca.

[24]
What is decisively clear on record is that Maosca managed to keep Osmundo Canlas uninformed of his (Maosca's) intention to use the parcels of land of the Canlas spouses as security for the loan obtained from Asian Savings Bank. Since Vicente Maosca showed Osmundo Canlas several certificates of title of lots which, according to Maosca were the collaterals, Osmundo Canlas was confident that their (Canlases) parcels of land were not involved in the loan transaction with the Asian Savings Bank.[25] Under the attendant facts and circumstances, Osmundo Canlas was undoubtedly negligent, which negligence made them (petitioners) undeserving of an award of Attorneys fees. Settled is the rule that a contract of mortgage must be constituted only by the absolute owner on the property mortgaged;[26] a mortgage, constituted by an impostor is void.[27] Considering that it was established indubitably that the contract of mortgage sued upon was entered into and signed by impostors who misrepresented themselves as the spouses Osmundo Canlas and Angelina Canlas, the Court is of the ineluctible conclusion and finding that subject contract of mortgage is a complete nullity. WHEREFORE, the Petition is GRANTED and the Decision of the Court of Appeals, dated September 30, 1993, in CA-G.R. CV No. 25242 SET ASIDE. The Decision of Branch 59 of the Regional Trial Court of Makati City in Civil Case No. M-028 is hereby REINSTATED. No pronouncement as to costs. SO ORDERED. Melo, (Chairman), Vitug, and Gonzaga-Reyes, JJ., concur.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 153076 June 21, 2007

LAPANDAY AGRICULTURAL and DEVELOPMENT CORPORATION (LADECO), HENRY BERENGUEL, and APOLONIO R. DEOCAMPO, petitioners, vs. MICHAEL RAYMOND ANGALA, respondent. DECISION CARPIO, J.: The Case Before the Court is a petition for review1 assailing the 25 July 2001 Decision2 and 11 March 2002 Resolution3 of the Court of Appeals in CA-G.R. CV No. 51134. The Antecedent Facts On 4 May 1993, at about 2:45 p.m., a Datsun crewcab with plate no. PEC-903 driven by Apolonio Deocampo (Deocampo) bumped into a 1958 Chevy pick-up with plate no. MAM-475 owned by Michael Raymond Angala (respondent) and driven by Bernulfo Borres (Borres). Lapanday Agricultural and Development Corporation (LADECO) owned the crewcab which was assigned to its manager Manuel Mendez (Mendez). Deocampo was the driver and bodyguard of Mendez. Both vehicles were running along Rafael Castillo St., Agdao, Davao City heading north towards Lanang, Davao City. The left door, front left fender, and part of the front bumper of the pick-up were damaged. Respondent filed an action for Quasi-Delict, Damages, and Attorneys Fees against LADECO, its administrative officer Henry Berenguel4 (Berenguel) and Deocampo. Respondent alleged that his pick-up was slowing down to about five to ten kilometers per hour (kph) and was making a left turn preparatory to turning south when it was bumped from behind by the crewcab which was running at around 60 to 70 kph. The crewcab stopped 21 meters from the point of impact. Respondent alleged that he heard a screeching sound before the impact. Respondent was seated beside the driver and was looking at the speedometer when the accident took place. Respondent testified that Borres made a signal because he noticed a blinking light while looking at the speedometer.5 Respondent sent a demand letter to LADECO for the payment of the damages he incurred because of the accident but he did not receive any reply. Thus, respondent filed the case against LADECO, Berenguel, and Deocampo. Deocampo alleged that the pick-up and the crewcab he was driving were both running at about 40 kph. The pick-up was running along the outer lane. The pick-up was about 10 meters away when it made a U-turn towards the left. Deocampo testified that he did not see any signal from the pick-up. 6 Deocampo alleged that he tried to avoid the pick-up but he was unable to avoid the collision. Deocampo stated that he did not apply

the brakes because he knew the collision was unavoidable. Deocampo admitted that he stepped on the brakes only after the collision. The Ruling of the Trial Court In its 3 March 1995 Decision,7 the Regional Trial Court of Davao City, Branch 15 (trial court) ruled: WHEREFORE, judgment is hereby rendered ordering the defendants LADECO and Apolonio Deocampo to solidarily pay the plaintiffs the following sums: 1. Twenty three thousand two hundred (P23,200.00) pesos as actual damages. 2. Ten thousand (P10,000.00) pesos as moral damages. 3. Ten thousand (P10,000.00) pesos as attorneys fees. 4. Costs of suit. SO ORDERED.8 The trial court found that the crewcab was running very fast while following the pick-up and that the crewcabs speed was the proximate cause of the accident. The trial court observed that the crewcab stopped 21 meters away from the point of impact despite Deocampos claim that he stepped on the brakes moments after the collision. The trial court ruled that Deocampo had the last opportunity to avoid the accident. The trial court found that Berenguel was not liable because he was not the owner of the crewcab. LADECO and Deocampo (petitioners)9 filed a motion for reconsideration. The trial court denied petitioners motion in its 13 June 1995 Order.10 Petitioners filed an appeal before the Court of Appeals. The Ruling of the Court of Appeals The Court of Appeals affirmed in toto the trial courts decision. The Court of Appeals sustained the finding of the trial court that Deocampo was negligent. The Court of Appeals applied the doctrine of last clear chance and ruled that Deocampo had the responsibility of avoiding the pick-up. The Court of Appeals also sustained the solidary liability of LADECO and Deocampo. The Court of Appeals ruled that under Article 2180 of the Civil Code, the negligence of the driver is presumed to be the negligence of the owner of the vehicle. The dispositive portion of the Court of Appeals Decision reads: WHEREFORE, premises considered, the appeal is DISMISSED for lack of merit, and the assailed Decision of the Court a quo in Civil Case No. 22067-93 is AFFIRMED in toto. Costs against defendantsappellants. SO ORDERED.11 Petitioners filed a motion for reconsideration. In its 11 March 2002 Resolution, the Court of Appeals denied the motion for lack of merit. Hence, the petition before this Court. The Issues The issues before the Court are the following: 1. Whether the provisions of Section 45(b) of Republic Act No. 413612 (RA 4136) and Article 2185 of the Civil Code apply to this case; and 2. Whether respondent is entitled to the damages awarded. The Ruling of this Court The petition is partly meritorious. Both Drivers are Negligent Both the trial court and the Court of Appeals found that Deocampo was at fault because he was driving very

fast prior to the collision. The Court of Appeals sustained the trial courts finding that Deocampo was running more than the normal cruising speed. Both the trial court and the Court of Appeals noted that the crewcab stopped 21 meters away from the point of impact. Deocampo admitted that he stepped on the brakes only after the collision. Petitioners allege that Borres did not take the proper lane before executing the U-turn. Petitioners allege that Borres violated Section 45(b) of RA 4136 and it was his recklessness that was the proximate cause of the accident. Section 45(b) of RA 4136 states: Sec. 45. Turning at intersections. x x x (b) The driver of a vehicle intending to turn to the left shall approach such intersection in the lane for traffic to the right of and nearest to the center line of the highway, and, in turning, shall pass to the left of the center of the intersection, except that, upon highways laned for traffic and upon one-way highways, a left turn shall be made from the left lane of traffic in the direction in which the vehicle is proceeding. Petitioners further allege that since Borres was violating a traffic rule at the time of the accident, respondent and Borres were the parties at fault. Petitioners cite Article 2185 of the Civil Code, thus: Art. 2185. Unless there is proof to the contrary, it is presumed that a person driving a motor vehicle has been negligent if at the time of the mishap, he was violating any traffic regulation. We rule that both parties were negligent in this case. Borres was at the outer lane when he executed a U-turn. Following Section 45(b) of RA 4136, Borres should have stayed at the inner lane which is the lane nearest to the center of the highway. However, Deocampo was equally negligent. Borres slowed down the pick-up preparatory to executing the U-turn. Deocampo should have also slowed down when the pick-up slowed down. Deocampo admitted that he noticed the pick-up when it was still about 20 meters away from him. 13 Vehicular traffic was light at the time of the incident. The pick-up and the crewcab were the only vehicles on the road. 14 Deocampo could have avoided the crewcab if he was not driving very fast before the collision, as found by both the trial court and the Court of Appeals. We sustain this finding since factual findings of the Court of Appeals affirming those of the trial court are conclusive and binding on this Court.15 Further, the crewcab stopped 21 meters from the point of impact. It would not have happened if Deocampo was not driving very fast. Doctrine of Last Clear Chance Applies Since both parties are at fault in this case, the doctrine of last clear chance applies. The doctrine of last clear chance states that where both parties are negligent but the negligent act of one is appreciably later than that of the other, or where it is impossible to determine whose fault or negligence caused the loss, the one who had the last clear opportunity to avoid the loss but failed to do so is chargeable with the loss.16 In this case, Deocampo had the last clear chance to avoid the collision. Since Deocampo was driving the rear vehicle, he had full control of the situation since he was in a position to observe the vehicle in front of him.17 Deocampo had the responsibility of avoiding bumping the vehicle in front of him. 18 A U-turn is done at a much slower speed to avoid skidding and overturning, compared to running straight ahead.19 Deocampo could have avoided the vehicle if he was not driving very fast while following the pick-up. Deocampo was not only driving fast, he also admitted that he did not step on the brakes even upon seeing the pick-up. He only stepped on the brakes after the collision. Petitioners are Solidarily Liable LADECO alleges that it should not be held jointly and severally liable with Deocampo because it exercised due diligence in the supervision and selection of its employees. Aside from this statement, LADECO did not proffer any proof to show how it exercised due diligence in the supervision and selection of its employees. LADECO did not show its policy in hiring its drivers, or the manner in which it supervised its drivers. LADECO failed to substantiate its allegation that it exercised due diligence in the supervision and selection of its employees. Hence, we hold LADECO solidarily liable with Deocampo. Respondent is Entitled to Moral Damages We sustain the award of moral damages. Moral damages are awarded to allow a plaintiff to obtain means, diversion, or amusement that will serve to alleviate the moral suffering he has undergone due to the defendants culpable action.20 The trial court found that respondent, who was on board the pick-up when the

collision took place, suffered shock, serious anxiety, and fright when the crewcab bumped his pick-up. We sustain the trial court and the Court of Appeals in ruling that respondent sufficiently showed that he suffered shock, serious anxiety, and fright which entitle him to moral damages. Both the trial court and the Court of Appeals failed to give any justification for the award of attorneys fees. Awards of attorneys fees must be based on findings of fact and of law and stated in the decision of the trial court.21 Further, no premium should be placed on the right to litigate.22 Hence, we delete the award of attorneys fees. WHEREFORE, we AFFIRM the 25 July 2001 Decision and 11 March 2002 Resolution of the Court of Appeals in CA-G.R. CV No. 51134 with MODIFICATION by deleting the award of attorneys fees. SO ORDERED. Carpio-Morales* , Tinga, Velasco, Jr., JJ., concur. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 160889 April 27, 2007

DR. MILAGROS L. CANTRE, Petitioner, vs. SPS. JOHN DAVID Z. GO and NORA S. GO, Respondents. DECISION QUISUMBING, J.: For review on certiorari are the Decision1 dated October 3, 2002 and Resolution2 dated November 19, 2003 of the Court of Appeals in CA-G.R. CV No. 58184, which affirmed with modification the Decision3 dated March 3, 1997 of the Regional Trial Court of Quezon City, Branch 98, in Civil Case No. Q-93-16562. The facts, culled from the records, are as follows: Petitioner Dr. Milagros L. Cantre is a specialist in Obstetrics and Gynecology at the Dr. Jesus Delgado Memorial Hospital. She was the attending physician of respondent Nora S. Go, who was admitted at the said hospital on April 19, 1992. At 1:30 a.m. of April 20, 1992, Nora gave birth to her fourth child, a baby boy. However, at around 3:30 a.m., Nora suffered profuse bleeding inside her womb due to some parts of the placenta which were not completely expelled from her womb after delivery. Consequently, Nora suffered hypovolemic shock, resulting in a drop in her blood pressure to "40" over "0." Petitioner and the assisting resident physician performed various medical procedures to stop the bleeding and to restore Noras blood pressure. Her blood pressure was frequently monitored with the use of a sphygmomanometer. While petitioner was massaging Noras uterus for it to contract and stop bleeding, she ordered a droplight to warm Nora and her baby. 4 Nora remained unconscious until she recovered. While in the recovery room, her husband, respondent John David Z. Go noticed a fresh gaping wound two and a half (2 ) by three and a half (3 ) inches in the inner portion of her left arm, close to the armpit. 5 He asked the nurses what caused the injury. He was informed it was a burn. Forthwith, on April 22, 1992, John David filed a request for investigation.6 In response, Dr. Rainerio S. Abad, the medical director of the hospital, called petitioner and the assisting resident physician to explain what happened. Petitioner said the blood pressure cuff caused the injury. On May 7, 1992, John David brought Nora to the National Bureau of Investigation for a physical examination, which was conducted by medico-legal officer Dr. Floresto Arizala, Jr.7 The medico-legal officer later testified that Noras injury appeared to be a burn and that a droplight when placed near the skin for about 10 minutes could cause such burn.8 He dismissed the likelihood that the wound was caused by a blood pressure cuff as the scar was not around the arm, but just on one side of the arm.9 On May 22, 1992, Noras injury was referred to a plastic surgeon at the Dr. Jesus Delgado Memorial Hospital for

skin grafting.10 Her wound was covered with skin sourced from her abdomen, which consequently bore a scar as well. About a year after, on April 30, 1993, scar revision had to be performed at the same hospital. 11 The surgical operation left a healed linear scar in Noras left arm about three inches in length, the thickest portion rising about one-fourth (1/4) of an inch from the surface of the skin. The costs of the skin grafting and the scar revision were shouldered by the hospital.12 Unfortunately, Noras arm would never be the same.1a\^/phi1.net Aside from the unsightly mark, the pain in her left arm remains. When sleeping, she has to cradle her wounded arm. Her movements now are also restricted. Her children cannot play with the left side of her body as they might accidentally bump the injured arm, which aches at the slightest touch. Thus, on June 21, 1993, respondent spouses filed a complaint 13 for damages against petitioner, Dr. Abad, and the hospital. Finding in favor of respondent spouses, the trial court decreed: In view of the foregoing consideration, judgment is hereby rendered in favor of the plaintiffs and against the defendants, directing the latters, (sic) jointly and severally (a) to pay the sum of Five Hundred Thousand Pesos (P500,000.00) in moral damages; (b) to pay the sum of One Hundred Fifty Thousand Pesos (P150,000.00) exemplary damages; (c) to pay the sum of Eighty Thousand Pesos (P80,000.00) nominal damages; (d) to pay Fifty Thousand Pesos (P50,000.00) for and as attorneys fees; and (e) to pay Six Thousand Pesos (P6,000.00) litigation expenses. SO ORDERED.14 Petitioner, Dr. Abad, and the hospital all appealed to the Court of Appeals, which affirmed with modification the trial court decision, thus: WHEREFORE, in view of all the foregoing, and finding no reversible error in the appealed Decision dated March 3, 1997 of Branch 98 of the Regional Trial Court of Quezon City in Civil Case No. Q-93-16562, the same is hereby AFFIRMED, with the following MODIFICATIONS: 1. Ordering defendant-appellant Dra. Milagros [L.] Cantre only to pay plaintiffs-appellees John David Go and Nora S. Go the sum of P200,000.00 as moral damages; 2. Deleting the award [of] exemplary damages, attorneys fees and expenses of litigation;1awphi1.nt 3. Dismissing the complaint with respect to defendants-appellants Dr. Rainerio S. Abad and Delgado Clinic, Inc.; 4. Dismissing the counterclaims of defendants-appellants for lack of merit; and 5. Ordering defendant-appellant Dra. Milagros [L.] Cantre only to pay the costs. SO ORDERED.15 Petitioners motion for reconsideration was denied by the Court of Appeals. Hence, the instant petition assigning the following as errors and issues: I. WHETHER OR NOT, THE LOWER COURT, AND THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF THEIR DISCRETION WHEN, NOTWITHSTANDING THAT BOTH PARTIES HAVE RESTED THEIR RESPECTIVE CASES, THE LOWER COURT ADMITTED THE ADDITIONAL EXHIBITS FURTHER OFFERED BY RESPONDENTS NOT TESTIFIED TO BY ANY WITNESS AND THIS DECISION OF THE LOWER COURT WAS UPHELD BY THE COURT OF APPEALS LIKEWISE COMMITTING GRAVE ABUSE OF DISCRETION; II. WHETHER OR NOT THE LOWER COURT COMMITTED GRAVE ABUSE OF ITS DISCRETION WHEN, CONTRARY TO PREPONDERANCE OF EVIDENCE PRESENTED BY THE PETITIONER, IT RULED THAT THE PETITIONER HAS NOT AMPLY SHOWED THAT THE DROPLIGHT DID NOT TOUCH THE BODY OF

MRS. NORA GO, AND THIS DECISION OF THE LOWER COURT WAS UPHELD BY THE COURT OF APPEALS LIKEWISE COMMITTING GRAVE ABUSE OF DISCRETION; III. WHETHER OR NOT THE LOWER COURT COMMITTED GRAVE ABUSE OF ITS DISCRETION WHEN, CONTRARY TO PREPONDERANCE OF EVIDENCE PRESENTED BY THE PETITIONER, IT RULED THAT PETITIONER DRA. CANTRE WAS NOT ABLE TO AMPLY EXPLAIN HOW THE INJURY (BLISTERS) IN THE LEFT INNER ARM OF RESPONDENT MRS. GO CAME ABOUT; IV. WHETHER OR NOT THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF ITS DISCRETION WHEN IT MADE A RULING ON THE RESPONDENTS INJURY QUOTING THE TESTIMONY OF SOMEONE WHO WAS NOT PRESENT AND HAS NOT SEEN THE ORIGINAL, FRESH INJURY OF RESPONDENT MRS. NORA GO; V. WHETHER OR NOT THE COURT OF APPEALS GRAVELY ABUSING ITS DISCRETION RULED THAT PETITIONER DRA. CANTRE SHOULD HAVE INTENDED TO INFLICT THE INJURY TO SAVE THE LIFE OF RESPONDENT MRS. GO; VI. WHETHER OR NOT THE LOWER COURT AND THE COURT [OF] APPEALS COMMITTED GRAVE ABUSE OF DISCRETION WHEN, CONTRARY TO THE DETAILED PROCEDURES DONE BY PETITIONER, BOTH RULED THAT THE RESPONDENT WAS LEFT TO THE CARE OF THE NURSING STAFF; VII. WHETHER OR NOT THE LOWER COURT COMMITTED GRAVE ABUSE OF DISCRETION WHEN, CONTRARY TO THE MEDICAL PURPOSES OF COSMETIC SURGERY, IT RULED THAT THE COSMETIC SURGERY MADE THE SCARS EVEN MORE UGLY AND DECLARED THE COSMETIC SURGERY A FAILURE; VIII. WHETHER OR NOT THE LOWER COURT GRAVELY ABUSE OF (SIC) DISCRETION WHEN, CONTRARY TO RESPONDENTS CONTRARY TESTIMONIES AND THE ABSENCE OF ANY TESTIMONY, IT RULED THAT THEY ARE ENTITLED TO DAMAGES AND WHICH WAS UPHELD, ALTHOUGH MODIFIED, BY THE COURT OF APPEALS LIKEWISE ABUSING ITS DISCRETION.16

Petitioner contends that additional documentary exhibits not testified to by any witness are inadmissible in evidence because they deprived her of her constitutional right to confront the witnesses against her. Petitioner insists the droplight could not have touched Noras body. She maintains the injury was due to the constant taking of Noras blood pressure. Petitioner also insinuates the Court of Appeals was misled by the testimony of the medico-legal officer who never saw the original injury before plastic surgery was performed. Finally, petitioner stresses that plastic surgery was not intended to restore respondents injury to its original state but rather to prevent further complication. Respondents, however, counter that the genuineness and due execution of the additional documentary exhibits were duly admitted by petitioners counsel. Respondents point out that petitioners blood pressure cuff theory is highly improbable, being unprecedented in medical history and that the injury was definitely caused by the droplight. At any rate, they argue, even if the injury was brought about by the blood pressure cuff, petitioner was still negligent in her duties as Noras attending physician. Simply put, the threshold issues for resolution are: (1) Are the questioned additional exhibits admissible in

evidence? (2) Is petitioner liable for the injury suffered by respondent Nora Go? Thereafter, the inquiry is whether the appellate court committed grave abuse of discretion in its assailed issuances. As to the first issue, we agree with the Court of Appeals that said exhibits are admissible in evidence. We note that the questioned exhibits consist mostly of Noras medical records, which were produced by the hospital during trial pursuant to a subpoena duces tecum. Petitioners counsel admitted the existence of the same when they were formally offered for admission by the trial court. In any case, given the particular circumstances of this case, a ruling on the negligence of petitioner may be made based on the res ipsa loquitur doctrine even in the absence of such additional exhibits. Petitioners contention that the medico-legal officer who conducted Noras physical examination never saw her original injury before plastic surgery was performed is without basis and contradicted by the records. Records show that the medico-legal officer conducted the physical examination on May 7, 1992, while the skin grafting and the scar revision were performed on Nora on May 22, 1992 and April 30, 1993, respectively. Coming now to the substantive matter, is petitioner liable for the injury suffered by respondent Nora Go? The Hippocratic Oath mandates physicians to give primordial consideration to the well-being of their patients. If a doctor fails to live up to this precept, he is accountable for his acts. This notwithstanding, courts face a unique restraint in adjudicating medical negligence cases because physicians are not guarantors of care and, they never set out to intentionally cause injury to their patients. However, intent is immaterial in negligence cases because where negligence exists and is proven, it automatically gives the injured a right to reparation for the damage caused.17 In cases involving medical negligence, the doctrine of res ipsa loquitur allows the mere existence of an injury to justify a presumption of negligence on the part of the person who controls the instrument causing the injury, provided that the following requisites concur: 1. The accident is of a kind which ordinarily does not occur in the absence of someones negligence; 2. It is caused by an instrumentality within the exclusive control of the defendant or defendants; and 3. The possibility of contributing conduct which would make the plaintiff responsible is eliminated.18 As to the first requirement, the gaping wound on Noras arm is certainly not an ordinary occurrence in the act of delivering a baby, far removed as the arm is from the organs involved in the process of giving birth. Such injury could not have happened unless negligence had set in somewhere. Second, whether the injury was caused by the droplight or by the blood pressure cuff is of no moment. Both instruments are deemed within the exclusive control of the physician in charge under the "captain of the ship" doctrine. This doctrine holds the surgeon in charge of an operation liable for the negligence of his assistants

during the time when those assistants are under the surgeons control.19 In this particular case, it can be logically inferred that petitioner, the senior consultant in charge during the delivery of Noras baby, exercised control over the assistants assigned to both the use of the droplight and the taking of Noras blood pressure. Hence, the use of the droplight and the blood pressure cuff is also within petitioners exclusive control. Third, the gaping wound on Noras left arm, by its very nature and considering her condition, could only be caused by something external to her and outside her control as she was unconscious while in hypovolemic shock. Hence, Nora could not, by any stretch of the imagination, have contributed to her own injury. Petitioners defense that Noras wound was caused not by the droplight but by the constant taking of her blood pressure, even if the latter was necessary given her condition, does not absolve her from liability. As testified to by the medico-legal officer, Dr. Arizala, Jr., the medical practice is to deflate the blood pressure cuff immediately after each use. Otherwise, the inflated band can cause injury to the patient similar to what could have happened in this case. Thus, if Noras wound was caused by the blood pressure cuff, then the taking of Noras blood pressure must have been done so negligently as to have inflicted a gaping wound on her arm, 20 for which petitioner cannot escape liability under the "captain of the ship" doctrine. Further, petitioners argument that the failed plastic surgery was not intended as a cosmetic procedure, but rather as a measure to prevent complication does not help her case. It does not negate negligence on her part. Based on the foregoing, the presumption that petitioner was negligent in the exercise of her profession stands unrebutted. In this connection, the Civil Code provides: ART. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done.

ART. 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of pecuniary computation, moral damages may be recovered if they are the proximate result of the defendants wrongful act or omission. Clearly, under the law, petitioner is obliged to pay Nora for moral damages suffered by the latter as a proximate result of petitioners negligence. We note, however, that petitioner has served well as Noras obstetrician for her past three successful deliveries. This is the first time petitioner is being held liable for damages due to negligence in the practice of her profession. The fact that petitioner promptly took care of Noras wound before infection and other complications set in is also indicative of petitioners good intentions. We also take note of the fact that Nora was suffering from a critical condition when the injury happened, such that saving her life became petitioners elemental concern. Nonetheless, it should be stressed that all these could not justify negligence on the part of petitioner. Hence, considering the specific circumstances in the instant case, we find no grave abuse of discretion in the assailed decision and resolution of the Court of Appeals. Further, we rule that the Court of Appeals award of Two Hundred Thousand Pesos (P200,000) as moral damages in favor of respondents and against petitioner is just and equitable.21 WHEREFORE, the petition is DENIED. The Decision dated October 3, 2002 and Resolution dated November 19, 2003 of the Court of Appeals in CA-G.R. CV No. 58184 are AFFIRMED. No pronouncement as to costs. SO ORDERED. THIRD DIVISION [G.R. No. 117929. November 26, 1999] CORA VERGARA, petitioner, vs. THE COURT OF APPEALS, HON. CAMILO O. MONTESA, JR., Presiding Judge, RTC-Malolos, Br. 19 and SPS. NAZARIO and ZENAIDA BARRETO, respondents. DECISION GONZAGA_REYES, J.: Challenged in this petition for review on certiorari is the Decision and Resolution of the Court of Appeals in CAG.R. SP No. 33889[1] which upheld the Orders of the Regional Trial Court, Malolos, Bulacan, Branch 19 in Civil Case No. 915-M-93[2], denying herein petitioner Cora Vergaras motion to dismiss filed on the ground that the complaint states no cause of action before the court a quo. The following antecedent facts are uncontroverted: A complaint for recovery of sum of money with damages was filed by herein private respondents Nazario and Zenaida Baretto against petitioner Cora Vergara before the said court. The complaint alleged that on May 28, 1993, petitioners husband borrowed the amount of Fifty Thousand (P50,000.00) Pesos from the private respondents and executed a promissory note to pay at any time within the month of June of that year; that on June 25, 1993, petitioners husband died without paying the amount loaned; and that on July 15, 1993, herein petitioner executed another promissory note undertaking to pay the loan. The promissory notes signed by the late husband and by herein petitioner were annexed to the complaint. Unable to collect from petitioner despite several demands, private respondents instituted the aforesaid complaint on November 12, 1993. On January 14, 1994, petitioner filed a motion to dismiss the complaint on the ground that the complaint states no cause of action pursuant to Section 1(g), Rule 16 of the Rules of Court. Petitioner reasoned out in said motion that the complaint being a money claim against her deceased husband should be filed in accordance with the procedure laid down in Section 1, Rule 87 of the Rules of Court which provides that all money claims against deceased persons should be recovered in the estate proceedings. The motion was denied by the court a quo in an Order dated February 7, 1994, and required the petitioner Cora Vergara to file her answer within ten (10) days from receipt thereof. The Order reads: The grounds relied upon by defendant in her motion to dismiss being not indubitable and apparently evidentiary in nature which requires trial thereof to substantiate her defense, the motion to dismiss is hereby denied due course. WHEREFORE, defendant is hereby directed to file her answer to the complaint within ten (10) days from receipt

hereof.[3] Subsequently, a motion for reconsideration was filed which was likewise denied in an Order dated March 7, 1994. Aggrieved, petitioner filed a special civil action for certiorari before the Court of Appeals which as mentioned at the outset affirmed the above rulings of the RTC. Hence, the instant petition on the following grounds: I RESPONDENT CA ERRED IN SUSTAINING THE ORDERS OF RESPONDENT JUDGE DEFERRING RESOLUTION OF PETITIONERS MOTION TO DISMISS GROUNDED ON FAILURE TO STATE A SUFFICIENT CAUSE OF ACTION UNTIL AFTER TRIAL ON THE MERITS. II RESPONDENT CA ERRED IN SUSTAINING RESPONDENT JUDGES ORDERS SHORTENING PETITIONERS PERIOD TO ANSWER FROM FIFTEEN (15) DAYS TO TEN (10) DAYS FROM RECEIPT OF THE ORDER DENYING (DEFERRING) THE MOTION TO DISMISS.[4] The petition is devoid of merit. As regards the first issue raised by petitioner, the Court of Appeals did not err in upholding the court a quos denial of petitioners motion to dismiss for the reason that a motion to dismiss based on the fact that the complaint states no cause of action can only be determined by considering the facts alleged in the complaint and no other.[5] In the case of Paraaque King Enterprises, Inc. vs. Court of Appeals[6], this Court stated thus: A cause of action exists if the following elements are present: (1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect or not to violate such right; and (3) an act or omission on the part of such defendant violative of the right of the plaintiff or constituting a breach of the obligation of defendant to the plaintiff for which the latter may maintain an action for recovery of damages. In determining whether allegations of a complaint are sufficient to support a cause of action, it must be borne in mind that the complaint does not have to establish or allege facts proving the existence of a cause of action at the outset; this will have to be done at the trial on the merits of the case. To sustain a motion to dismiss for lack of cause of action, the complaint must show that the claim for relief does not exist, rather than that a claim has been defectively stated, or is ambiguous, indefinite or uncertain.[7] Briefly stated, lack of cause of action, as a ground for a motion to dismiss, must appear on the face of the complaint itself, meaning that it must be determined from the allegations of the complaint and from none other.

[8] A perusal of the complaint reveals that it sufficiently

alleges an actionable breach of an obligation on the part of petitioner. The complaint against herein petitioner as defendant alleges that petitioners husband loaned a specified sum of money from the private respondents; that a promissory note was executed by the husband in evidence thereof; that upon the death of petitioners husband, petitioner herself executed a promissory note undertaking to pay the indebtedness. The reasons in support of the motion to dismiss that petitioner could not have assumed the obligation of her husband, and that novation could not have taken place, are defenses that could not be taken into consideration in ruling on the motion. It does not appear clearly from the face of the complaint that the private respondents are not entitled to any relief under any state of facts which could be proved within the facts alleged therein warranting the outright dismissal of the same. Hence, the denial of the motion to dismiss is not only justified but is necessary since the issue as to whether petitioner is liable to pay the loan is a question which can better be resolved after trial on the merits where each party can present evidence to prove their respective allegations and defenses. We now come to the second part of the controverted Decision sustaining the court a quos order giving petitioner only ten (10) days instead of fifteen (15) days to file her answer to the complaint reckoned from receipt of the order denying the motion to dismiss allegedly in violation of provisions of the Rules of Court,

particularly, Section 1 of Rule 11[9] and Section 4 of Rule 16. The records bear out the following findings of fact by the Court of Appeals: The summons was received by her on December 15, 1993, and she had been granted by the court another fifteen (15) days after the reglementary period of fifteen (15) days, or up to January 14, 1994. On said date of

January 14, 1994, defendant/petitioner filed her motion to dismiss. When the respondent court denied petitioners motion to dismiss and was ordered to file her answer within ten (10) days from receipt thereof on February 7, 1994, she was not deprived of her day in court. Petitioner received said order of denial of February 7, 1994 on February 14, 1994. She filed her motion for reconsideration to said denial on February 23, 1994 and the same was denied by the respondent court on March 7, 1994, which order was received by petitioner on March 17, 1994. She filed her answer (Ex Abundanti Cautelam) on March 28, 1994 or one (1) day late of the second ten-day period required by the court from date of her receipt of the questioned order on March 17, 1994. x x x.[10] Consequently, petitioner was declared in default and trial proceeded ex-parte and a judgment in default rendered against her. Petitioner filed a Notice of Appeal (Ex Abundanti Cautelam) with the court a quo. The provision in question, Section 4 of Rule 16 of the Rules of Court, cannot be any clearer: Sec. 4. Time to plead. If the motion to dismiss is denied or if determination thereof is deferred, the movant shall file his answer within the period prescribed by Rule 11, computed from the time he received notice of the denial or deferment, unless the court provides a different period.[11] This provision has received a categorical interpretation in Matute vs. Court of Appeals[12], wherein this pronouncement was made: "Rule 11, section 1 of the Revised Rules of Court gives the defendant a period of fifteen (15) days after service of summons within which to file his answer and serve a copy thereof upon the plaintiff, unless a different period is fixed by the court. However, within the period of time for pleading, the defendant is entitled to move for dismissal of the action on any of the grounds enumerated in Rule 16. If the motion to dismiss is denied or if determination thereof is deferred, the movant shall file his answer within the period prescribed by Rule 11, computed from the time he receives notice of the denial or deferment, unless the court provides a different period (Rule 16, section 4). x x x. Under this provision, where the motion to dismiss is denied, the defendant has the entire reglementary period all over again within which to file his answer reckoned from his receipt of the courts order, unless otherwise provided by said court.[13] In the instant case, the court a quo gave petitioner ten (10) days to file answer and this is reasonable as correctly pointed out by the Court of Appeals considering that from the date respondent received the summons up to the time she filed her answer on March 29, 1994, she had a total of one hundred three (103) days. We also note that petitioners counsel did not bother to seek relief from the order of default in accordance with Section 3, Rule 18 of the Rules of Court.[14] Counsel did not even attempt to have the order of default set aside as provided for in said rule. In fine, the Court of Appeals committed no reversible error in affirming the court a quos orders denying the dismissal of the complaint. WHEREFORE, the instant petition is hereby DENIED. The decision and resolution of the Court of Appeals dated July 27, 1994 and November 7, 1994, respectively, in CA G.R. SP No. 33889 are AFFIRMED. SO ORDERED. Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 126297 January 31, 2007

PROFESSIONAL SERVICES, INC., Petitioner, vs. NATIVIDAD and ENRIQUE AGANA, Respondents. x-----------------------x G.R. No. 126467 January 31, 2007

NATIVIDAD (Substituted by her children MARCELINO AGANA III, ENRIQUE AGANA, JR., EMMA AGANA ANDAYA, JESUS AGANA, and RAYMUND AGANA) and ENRIQUE AGANA, Petitioners, vs.

JUAN FUENTES, Respondent. x- - - - - - - - - - - - - - - - - - - -- - - - x G.R. No. 127590 January 31, 2007

MIGUEL AMPIL, Petitioner, vs. NATIVIDAD AGANA and ENRIQUE AGANA, Respondents. DECISION SANDOVAL-GUTIERREZ, J.: Hospitals, having undertaken one of mankinds most important and delicate endeavors, must assume the grave responsibility of pursuing it with appropriate care. The care and service dispensed through this high trust, however technical, complex and esoteric its character may be, must meet standards of responsibility commensurate with the undertaking to preserve and protect the health, and indeed, the very lives of those placed in the hospitals keeping.1 Assailed in these three consolidated petitions for review on certiorari is the Court of Appeals Decision 2 dated September 6, 1996 in CA-G.R. CV No. 42062 and CA-G.R. SP No. 32198 affirming with modification the Decision3 dated March 17, 1993 of the Regional Trial Court (RTC), Branch 96, Quezon City in Civil Case No. Q43322 and nullifying its Order dated September 21, 1993. The facts, as culled from the records, are: On April 4, 1984, Natividad Agana was rushed to the Medical City General Hospital (Medical City Hospital) because of difficulty of bowel movement and bloody anal discharge. After a series of medical examinations, Dr. Miguel Ampil, petitioner in G.R. No. 127590, diagnosed her to be suffering from "cancer of the sigmoid." On April 11, 1984, Dr. Ampil, assisted by the medical staff4 of the Medical City Hospital, performed an anterior resection surgery on Natividad. He found that the malignancy in her sigmoid area had spread on her left ovary, necessitating the removal of certain portions of it. Thus, Dr. Ampil obtained the consent of Natividads husband, Enrique Agana, to permit Dr. Juan Fuentes, respondent in G.R. No. 126467, to perform hysterectomy on her. After Dr. Fuentes had completed the hysterectomy, Dr. Ampil took over, completed the operation and closed the incision. However, the operation appeared to be flawed. In the corresponding Record of Operation dated April 11, 1984, the attending nurses entered these remarks: "sponge count lacking 2 "announced to surgeon searched (sic) done but to no avail continue for closure." On April 24, 1984, Natividad was released from the hospital. Her hospital and medical bills, including the doctors fees, amounted to P60,000.00. After a couple of days, Natividad complained of excruciating pain in her anal region. She consulted both Dr. Ampil and Dr. Fuentes about it. They told her that the pain was the natural consequence of the surgery. Dr. Ampil then recommended that she consult an oncologist to examine the cancerous nodes which were not removed during the operation. On May 9, 1984, Natividad, accompanied by her husband, went to the United States to seek further treatment. After four months of consultations and laboratory examinations, Natividad was told she was free of cancer. Hence, she was advised to return to the Philippines. On August 31, 1984, Natividad flew back to the Philippines, still suffering from pains. Two weeks thereafter, her daughter found a piece of gauze protruding from her vagina. Upon being informed about it, Dr. Ampil proceeded to her house where he managed to extract by hand a piece of gauze measuring 1.5 inches in width. He then assured her that the pains would soon vanish. Dr. Ampils assurance did not come true. Instead, the pains intensified, prompting Natividad to seek treatment at the Polymedic General Hospital. While confined there, Dr. Ramon Gutierrez detected the presence of another foreign object in her vagina -- a foul-smelling gauze measuring 1.5 inches in width which badly infected her vaginal vault. A recto-vaginal fistula had formed in her reproductive organs which forced stool to excrete through the vagina. Another surgical operation was needed to remedy the damage. Thus, in October 1984, Natividad underwent another surgery.

On November 12, 1984, Natividad and her husband filed with the RTC, Branch 96, Quezon City a complaint for damages against the Professional Services, Inc. (PSI), owner of the Medical City Hospital, Dr. Ampil, and Dr. Fuentes, docketed as Civil Case No. Q-43322. They alleged that the latter are liable for negligence for leaving two pieces of gauze inside Natividads body and malpractice for concealing their acts of negligence. Meanwhile, Enrique Agana also filed with the Professional Regulation Commission (PRC) an administrative complaint for gross negligence and malpractice against Dr. Ampil and Dr. Fuentes, docketed as Administrative Case No. 1690. The PRC Board of Medicine heard the case only with respect to Dr. Fuentes because it failed to acquire jurisdiction over Dr. Ampil who was then in the United States. On February 16, 1986, pending the outcome of the above cases, Natividad died and was duly substituted by her above-named children (the Aganas). On March 17, 1993, the RTC rendered its Decision in favor of the Aganas, finding PSI, Dr. Ampil and Dr. Fuentes liable for negligence and malpractice, the decretal part of which reads: WHEREFORE, judgment is hereby rendered for the plaintiffs ordering the defendants PROFESSIONAL SERVICES, INC., DR. MIGUEL AMPIL and DR. JUAN FUENTES to pay to the plaintiffs, jointly and severally, except in respect of the award for exemplary damages and the interest thereon which are the liabilities of defendants Dr. Ampil and Dr. Fuentes only, as follows: 1. As actual damages, the following amounts: a. The equivalent in Philippine Currency of the total of US$19,900.00 at the rate of P21.60US$1.00, as reimbursement of actual expenses incurred in the United States of America; b. The sum of P4,800.00 as travel taxes of plaintiffs and their physician daughter; c. The total sum of P45,802.50, representing the cost of hospitalization at Polymedic Hospital, medical fees, and cost of the saline solution; 2. As moral damages, the sum of P2,000,000.00; 3. As exemplary damages, the sum of P300,000.00; 4. As attorneys fees, the sum of P250,000.00; 5. Legal interest on items 1 (a), (b), and (c); 2; and 3 hereinabove, from date of filing of the complaint until full payment; and 6. Costs of suit. SO ORDERED. Aggrieved, PSI, Dr. Fuentes and Dr. Ampil interposed an appeal to the Court of Appeals, docketed as CA-G.R. CV No. 42062. Incidentally, on April 3, 1993, the Aganas filed with the RTC a motion for a partial execution of its Decision, which was granted in an Order dated May 11, 1993. Thereafter, the sheriff levied upon certain properties of Dr. Ampil and sold them for P451,275.00 and delivered the amount to the Aganas. Following their receipt of the money, the Aganas entered into an agreement with PSI and Dr. Fuentes to indefinitely suspend any further execution of the RTC Decision. However, not long thereafter, the Aganas again filed a motion for an alias writ of execution against the properties of PSI and Dr. Fuentes. On September 21, 1993, the RTC granted the motion and issued the corresponding writ, prompting Dr. Fuentes to file with the Court of Appeals a petition for certiorari and prohibition, with prayer for preliminary injunction, docketed as CA-

G.R. SP No. 32198. During its pendency, the Court of Appeals issued a Resolution 5 dated October 29, 1993 granting Dr. Fuentes prayer for injunctive relief. On January 24, 1994, CA-G.R. SP No. 32198 was consolidated with CA-G.R. CV No. 42062. Meanwhile, on January 23, 1995, the PRC Board of Medicine rendered its Decision6 in Administrative Case No. 1690 dismissing the case against Dr. Fuentes. The Board held that the prosecution failed to show that Dr. Fuentes was the one who left the two pieces of gauze inside Natividads body; and that he concealed such fact from Natividad. On September 6, 1996, the Court of Appeals rendered its Decision jointly disposing of CA-G.R. CV No. 42062 and CA-G.R. SP No. 32198, thus: WHEREFORE, except for the modification that the case against defendant-appellant Dr. Juan Fuentes is hereby

DISMISSED, and with the pronouncement that defendant-appellant Dr. Miguel Ampil is liable to reimburse defendant-appellant Professional Services, Inc., whatever amount the latter will pay or had paid to the plaintiffs-appellees, the decision appealed from is hereby AFFIRMED and the instant appeal DISMISSED. Concomitant with the above, the petition for certiorari and prohibition filed by herein defendant-appellant Dr. Juan Fuentes in CA-G.R. SP No. 32198 is hereby GRANTED and the challenged order of the respondent judge dated September 21, 1993, as well as the alias writ of execution issued pursuant thereto are hereby NULLIFIED and SET ASIDE. The bond posted by the petitioner in connection with the writ of preliminary injunction issued by this Court on November 29, 1993 is hereby cancelled. Costs against defendants-appellants Dr. Miguel Ampil and Professional Services, Inc. SO ORDERED. Only Dr. Ampil filed a motion for reconsideration, but it was denied in a Resolution7 dated December 19, 1996. Hence, the instant consolidated petitions. In G.R. No. 126297, PSI alleged in its petition that the Court of Appeals erred in holding that: (1) it is estopped from raising the defense that Dr. Ampil is not its employee; (2) it is solidarily liable with Dr. Ampil; and (3) it is not entitled to its counterclaim against the Aganas. PSI contends that Dr. Ampil is not its employee, but a mere consultant or independent contractor. As such, he alone should answer for his negligence. In G.R. No. 126467, the Aganas maintain that the Court of Appeals erred in finding that Dr. Fuentes is not guilty of negligence or medical malpractice, invoking the doctrine of res ipsa loquitur. They contend that the pieces of gauze are prima facie proofs that the operating surgeons have been negligent. Finally, in G.R. No. 127590, Dr. Ampil asserts that the Court of Appeals erred in finding him liable for negligence and malpractice sans evidence that he left the two pieces of gauze in Natividads vagina. He pointed to other probable causes, such as: (1) it was Dr. Fuentes who used gauzes in performing the hysterectomy; (2) the attending nurses failure to properly count the gauzes used during surgery; and (3) the medical intervention of the American doctors who examined Natividad in the United States of America. For our resolution are these three vital issues: first, whether the Court of Appeals erred in holding Dr. Ampil liable for negligence and malpractice; second, whether the Court of Appeals erred in absolving Dr. Fuentes of any liability; and third, whether PSI may be held solidarily liable for the negligence of Dr. Ampil. I - G.R. No. 127590 Whether the Court of Appeals Erred in Holding Dr. Ampil Liable for Negligence and Malpractice. Dr. Ampil, in an attempt to absolve himself, gears the Courts attention to other possible causes of Natividads detriment. He argues that the Court should not discount either of the following possibilities: first, Dr. Fuentes left the gauzes in Natividads body after performing hysterectomy; second, the attending nurses erred in counting the gauzes; and third, the American doctors were the ones who placed the gauzes in Natividads body. Dr. Ampils arguments are purely conjectural and without basis. Records show that he did not present any evidence to prove that the American doctors were the ones who put or left the gauzes in Natividads body. Neither did he submit evidence to rebut the correctness of the record of operation, particularly the number of gauzes used. As to the alleged negligence of Dr. Fuentes, we are mindful that Dr. Ampil examined his (Dr. Fuentes) work and found it in order. The glaring truth is that all the major circumstances, taken together, as specified by the Court of Appeals, directly point to Dr. Ampil as the negligent party, thus: First, it is not disputed that the surgeons used gauzes as sponges to control the bleeding of the patient during the surgical operation. Second, immediately after the operation, the nurses who assisted in the surgery noted in their report that the sponge count (was) lacking 2; that such anomaly was announced to surgeon and that a search was done but to no avail prompting Dr. Ampil to continue for closure x x x. Third, after the operation, two (2) gauzes were extracted from the same spot of the body of Mrs. Agana where the surgery was performed. An operation requiring the placing of sponges in the incision is not complete until the sponges are properly removed, and it is settled that the leaving of sponges or other foreign substances in the wound after the

incision has been closed is at least prima facie negligence by the operating surgeon.8 To put it simply, such act is considered so inconsistent with due care as to raise an inference of negligence. There are even legions of authorities to the effect that such act is negligence per se.9 Of course, the Court is not blind to the reality that there are times when danger to a patients life precludes a surgeon from further searching missing sponges or foreign objects left in the body. But this does not leave him free from any obligation. Even if it has been shown that a surgeon was required by the urgent necessities of the case to leave a sponge in his patients abdomen, because of the dangers attendant upon delay, still, it is his legal duty to so inform his patient within a reasonable time thereafter by advising her of what he had been compelled to do. This is in order that she might seek relief from the effects of the foreign object left in her body as her condition might permit. The ruling in Smith v. Zeagler10 is explicit, thus: The removal of all sponges used is part of a surgical operation, and when a physician or surgeon fails to remove a sponge he has placed in his patients body that should be removed as part of the operation, he thereby leaves his operation uncompleted and creates a new condition which imposes upon him the legal duty of calling the new condition to his patients attention, and endeavoring with the means he has at hand to minimize and avoid untoward results likely to ensue therefrom. Here, Dr. Ampil did not inform Natividad about the missing two pieces of gauze. Worse, he even misled her that the pain she was experiencing was the ordinary consequence of her operation. Had he been more candid, Natividad could have taken the immediate and appropriate medical remedy to remove the gauzes from her body. To our mind, what was initially an act of negligence by Dr. Ampil has ripened into a deliberate wrongful act of deceiving his patient. This is a clear case of medical malpractice or more appropriately, medical negligence. To successfully pursue this kind of case, a patient must only prove that a health care provider either failed to do something which a reasonably prudent health care provider would have done, or that he did something that a reasonably prudent provider would not have done; and that failure or action caused injury to the patient. 11 Simply put, the elements are duty, breach, injury and proximate causation. Dr, Ampil, as the lead surgeon, had the duty to remove all foreign objects, such as gauzes, from Natividads body before closure of the incision. When he failed to do so, it was his duty to inform Natividad about it. Dr. Ampil breached both duties. Such breach caused injury to Natividad, necessitating her further examination by American doctors and another surgery. That Dr. Ampils negligence is the proximate cause12 of Natividads injury could be traced from his act of closing the incision despite the information given by the attending nurses that two pieces of gauze were still missing. That they were later on extracted from Natividads vagina established the causal link between Dr. Ampils negligence and the injury. And what further aggravated such injury was his deliberate concealment of the missing gauzes from the knowledge of Natividad and her family. II - G.R. No. 126467 Whether the Court of Appeals Erred in Absolving Dr. Fuentes of any Liability The Aganas assailed the dismissal by the trial court of the case against Dr. Fuentes on the ground that it is contrary to the doctrine of res ipsa loquitur. According to them, the fact that the two pieces of gauze were left inside Natividads body is a prima facie evidence of Dr. Fuentes negligence. We are not convinced. Literally, res ipsa loquitur means "the thing speaks for itself." It is the rule that the fact of the occurrence of an injury, taken with the surrounding circumstances, may permit an inference or raise a presumption of negligence, or make out a plaintiffs prima facie case, and present a question of fact for defendant to meet with an explanation.13 Stated differently, where the thing which caused the injury, without the fault of the injured, is under the exclusive control of the defendant and the injury is such that it should not have occurred if he, having such control used proper care, it affords reasonable evidence, in the absence of explanation that the injury arose from the defendants want of care, and the burden of proof is shifted to him to establish that he has observed due care and diligence.14 From the foregoing statements of the rule, the requisites for the applicability of the doctrine of res ipsa loquitur are: (1) the occurrence of an injury; (2) the thing which caused the injury was under the control and management of the defendant; (3) the occurrence was such that in the ordinary course of things, would not have happened if those who had control or management used proper care; and (4) the absence of explanation by the defendant. Of the foregoing requisites, the most instrumental is the "control and management of the

thing which caused the injury."15 We find the element of "control and management of the thing which caused the injury" to be wanting. Hence, the doctrine of res ipsa loquitur will not lie. It was duly established that Dr. Ampil was the lead surgeon during the operation of Natividad. He requested the assistance of Dr. Fuentes only to perform hysterectomy when he (Dr. Ampil) found that the malignancy in her sigmoid area had spread to her left ovary. Dr. Fuentes performed the surgery and thereafter reported and showed his work to Dr. Ampil. The latter examined it and finding everything to be in order, allowed Dr. Fuentes to leave the operating room. Dr. Ampil then resumed operating on Natividad. He was about to finish the procedure when the attending nurses informed him that two pieces of gauze were missing. A "diligent search" was conducted, but the misplaced gauzes were not found. Dr. Ampil then directed that the incision be closed. During this entire period, Dr. Fuentes was no longer in the operating room and had, in fact, left the hospital. Under the "Captain of the Ship" rule, the operating surgeon is the person in complete charge of the surgery room and all personnel connected with the operation. Their duty is to obey his orders. 16 As stated before, Dr. Ampil was the lead surgeon. In other words, he was the "Captain of the Ship." That he discharged such role is evident from his following conduct: (1) calling Dr. Fuentes to perform a hysterectomy; (2) examining the work of Dr. Fuentes and finding it in order; (3) granting Dr. Fuentes permission to leave; and (4) ordering the closure of the incision. To our mind, it was this act of ordering the closure of the incision notwithstanding that two pieces of gauze remained unaccounted for, that caused injury to Natividads body. Clearly, the control and management of the thing which caused the injury was in the hands of Dr. Ampil, not Dr. Fuentes. In this jurisdiction, res ipsa loquitur is not a rule of substantive law, hence, does not per se create or constitute an independent or separate ground of liability, being a mere evidentiary rule.17 In other words, mere invocation and application of the doctrine does not dispense with the requirement of proof of negligence. Here, the negligence was proven to have been committed by Dr. Ampil and not by Dr. Fuentes. III - G.R. No. 126297 Whether PSI Is Liable for the Negligence of Dr. Ampil The third issue necessitates a glimpse at the historical development of hospitals and the resulting theories concerning their liability for the negligence of physicians. Until the mid-nineteenth century, hospitals were generally charitable institutions, providing medical services to the lowest classes of society, without regard for a patients ability to pay. 18 Those who could afford medical treatment were usually treated at home by their doctors.19 However, the days of house calls and philanthropic health care are over. The modern health care industry continues to distance itself from its charitable past and has experienced a significant conversion from a not-for-profit health care to for-profit hospital businesses. Consequently, significant changes in health law have accompanied the business-related changes in the hospital industry. One important legal change is an increase in hospital liability for medical malpractice. Many courts now allow claims for hospital vicarious liability under the theories of respondeat superior, apparent authority, ostensible authority, or agency by estoppel.

20

In this jurisdiction, the statute governing liability for negligent acts is Article 2176 of the Civil Code, which reads: Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter. A derivative of this provision is Article 2180, the rule governing vicarious liability under the doctrine of respondeat superior, thus: ART. 2180. The obligation imposed by Article 2176 is demandable not only for ones own acts or omissions, but also for those of persons for whom one is responsible. x x x x x x

The owners and managers of an establishment or enterprise are likewise responsible for damages caused by their employees in the service of the branches in which the latter are employed or on the occasion of their functions. Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks even though the former are not engaged in any business or industry.

The responsibility treated of in this article shall cease when the persons herein mentioned prove that they observed all the diligence of a good father of a family to prevent damage. A prominent civilist commented that professionals engaged by an employer, such as physicians, dentists, and pharmacists, are not "employees" under this article because the manner in which they perform their work is not within the control of the latter (employer). In other words, professionals are considered personally liable for the fault or negligence they commit in the discharge of their duties, and their employer cannot be held liable for such fault or negligence. In the context of the present case, "a hospital cannot be held liable for the fault or negligence of a physician or surgeon in the treatment or operation of patients."21 The foregoing view is grounded on the traditional notion that the professional status and the very nature of the physicians calling preclude him from being classed as an agent or employee of a hospital, whenever he acts in specialized knowledge,23 such that physicians are generally free to exercise their own skill and judgment in rendering medical services sans interference.24 Hence, when a doctor practices medicine in a hospital setting, the hospital and its employees are deemed to subserve him in his ministrations to the patient and his actions are of his own responsibility.25 The case of Schloendorff v. Society of New York Hospital26 was then considered an authority for this view. The "Schloendorff doctrine" regards a physician, even if employed by a hospital, as an independent contractor because of the skill he exercises and the lack of control exerted over his work. Under this doctrine, hospitals are exempt from the application of the respondeat superior principle for fault or negligence committed by physicians in the discharge of their profession. However, the efficacy of the foregoing doctrine has weakened with the significant developments in medical care. Courts came to realize that modern hospitals are increasingly taking active role in supplying and regulating medical care to patients. No longer were a hospitals functions limited to furnishing room, food, facilities for treatment and operation, and attendants for its patients. Thus, in Bing v. Thunig,27 the New York Court of Appeals deviated from the Schloendorff doctrine, noting that modern hospitals actually do far more than provide facilities for treatment. Rather, they regularly employ, on a salaried basis, a large staff of physicians, interns, nurses, administrative and manual workers. They charge patients for medical care and treatment, even collecting for such services through legal action, if necessary. The court then concluded that there is no reason to exempt hospitals from the universal rule of respondeat superior. inconsequential in view of our categorical pronouncement in Ramos v. Court of Appeals28 that for purposes of apportioning responsibility in medical negligence cases, an employer-employee relationship in effect exists between hospitals and their attending and visiting physicians. This Court held:

a professional capacity.22 It has been said that medical practice strictly involves highly developed and

In our shores, the nature of the relationship between the hospital and the physicians is rendered

"We now discuss the responsibility of the hospital in this particular incident. The unique practice (among private hospitals) of filling up specialist staff with attending and visiting "consultants," who are allegedly not hospital employees, presents problems in apportioning responsibility for negligence in medical malpractice cases. However, the difficulty is more apparent than real. In the first place, hospitals exercise significant control in the hiring and firing of consultants and in the conduct of their work within the hospital premises. Doctors who apply for consultant slots, visiting or attending, are required to submit proof of completion of residency, their educational qualifications, generally, evidence of accreditation by the appropriate board (diplomate), evidence of fellowship in most cases, and references. These requirements are carefully scrutinized by members of the hospital administration or by a review committee set up by the hospital who either accept or reject the application. x x x. After a physician is accepted, either as a visiting or attending consultant, he is normally required to attend clinico-pathological conferences, conduct bedside rounds for clerks, interns and residents, moderate grand rounds and patient audits and perform other tasks and responsibilities, for the privilege of being able to maintain a clinic in the hospital, and/or for the privilege of admitting patients into the hospital. In addition to these, the physicians performance as a specialist is generally evaluated by a peer review committee on the basis of mortality and morbidity statistics, and feedback from patients, nurses, interns and residents. A consultant remiss in his duties, or a consultant who regularly falls short of the minimum standards acceptable to the hospital or its peer review committee, is normally politely terminated. In other words, private hospitals, hire, fire and exercise real control over their attending and visiting

consultant staff. While consultants are not, technically employees, x x x, the control exercised, the hiring, and the right to terminate consultants all fulfill the important hallmarks of an employer-employee relationship, with the exception of the payment of wages. In assessing whether such a relationship in fact exists, the control test is determining. Accordingly, on the basis of the foregoing, we rule that for the purpose of allocating responsibility in medical negligence cases, an employer-employee relationship in effect exists between hospitals and their attending and visiting physicians. " But the Ramos pronouncement is not our only basis in sustaining PSIs liability. Its liability is also anchored upon the agency principle of apparent authority or agency by estoppel and the doctrine of corporate negligence which have gained acceptance in the determination of a hospitals liability for negligent acts of health professionals. The present case serves as a perfect platform to test the applicability of these doctrines, thus, enriching our jurisprudence. Apparent authority, or what is sometimes referred to as the "holding out" theory, or doctrine of ostensible agency or agency by estoppel,29 has its origin from the law of agency. It imposes liability, not as the result of the reality of a contractual relationship, but rather because of the actions of a principal or an employer in somehow misleading the public into believing that the relationship or the authority exists.30 The concept is essentially one of estoppel and has been explained in this manner: "The principal is bound by the acts of his agent with the apparent authority which he knowingly permits the agent to assume, or which he holds the agent out to the public as possessing. The question in every case is whether the principal has by his voluntary act placed the agent in such a situation that a person of ordinary prudence, conversant with business usages and the nature of the particular business, is justified in presuming that such agent has authority to perform the particular act in question.31 The applicability of apparent authority in the field of hospital liability was upheld long time ago in Irving v. Doctor Hospital of Lake Worth, Inc.32 There, it was explicitly stated that "there does not appear to be any rational basis for excluding the concept of apparent authority from the field of hospital liability." Thus, in cases where it can be shown that a hospital, by its actions, has held out a particular physician as its agent and/or employee and that a patient has accepted treatment from that physician in the reasonable belief that it is being rendered in behalf of the hospital, then the hospital will be liable for the physicians negligence. Our jurisdiction recognizes the concept of an agency by implication or estoppel. Article 1869 of the Civil Code reads: ART. 1869. Agency may be express, or implied from the acts of the principal, from his silence or lack of action, or his failure to repudiate the agency, knowing that another person is acting on his behalf without authority. In this case, PSI publicly displays in the lobby of the Medical City Hospital the names and specializations of the physicians associated or accredited by it, including those of Dr. Ampil and Dr. Fuentes. We concur with the Court of Appeals conclusion that it "is now estopped from passing all the blame to the physicians whose names it proudly paraded in the public directory leading the public to believe that it vouched for their skill and competence." Indeed, PSIs act is tantamount to holding out to the public that Medical City Hospital, through its accredited physicians, offers quality health care services. By accrediting Dr. Ampil and Dr. Fuentes and publicly advertising their qualifications, the hospital created the impression that they were its agents, authorized to perform medical or surgical services for its patients. As expected, these patients, Natividad being one of them, accepted the services on the reasonable belief that such were being rendered by the hospital or its employees, agents, or servants. The trial court correctly pointed out: x x x regardless of the education and status in life of the patient, he ought not be burdened with the defense of absence of employer-employee relationship between the hospital and the independent physician whose name and competence are certainly certified to the general public by the hospitals act of listing him and his specialty in its lobby directory, as in the case herein. The high costs of todays medical and health care should at least exact on the hospital greater, if not broader, legal responsibility for the conduct of treatment and surgery within its facility by its accredited physician or surgeon, regardless of whether he is independent or employed."33 The wisdom of the foregoing ratiocination is easy to discern. Corporate entities, like PSI, are capable of acting only through other individuals, such as physicians. If these accredited physicians do their job well, the hospital succeeds in its mission of offering quality medical services and thus profits financially. Logically, where negligence mars the quality of its services, the hospital should not be allowed to escape liability for the acts of its ostensible agents. We now proceed to the doctrine of corporate negligence or corporate responsibility.

One allegation in the complaint in Civil Case No. Q-43332 for negligence and malpractice is that PSI as owner, operator and manager of Medical City Hospital, "did not perform the necessary supervision nor exercise diligent efforts in the supervision of Drs. Ampil and Fuentes and its nursing staff, resident doctors, and medical interns who assisted Drs. Ampil and Fuentes in the performance of their duties as surgeons."34 Premised on the doctrine of corporate negligence, the trial court held that PSI is directly liable for such breach of duty. We agree with the trial court. Recent years have seen the doctrine of corporate negligence as the judicial answer to the problem of allocating hospitals liability for the negligent acts of health practitioners, absent facts to support the application of respondeat superior or apparent authority. Its formulation proceeds from the judiciarys acknowledgment that in these modern times, the duty of providing quality medical service is no longer the sole prerogative and responsibility of the physician. The modern hospitals have changed structure. Hospitals now tend to organize a highly professional medical staff whose competence and performance need to be monitored by the hospitals commensurate with their inherent responsibility to provide quality medical care.35 The doctrine has its genesis in Darling v. Charleston Community Hospital.36 There, the Supreme Court of Illinois held that "the jury could have found a hospital negligent, inter alia, in failing to have a sufficient number of trained nurses attending the patient; failing to require a consultation with or examination by members of the hospital staff; and failing to review the treatment rendered to the patient." On the basis of Darling, other jurisdictions held that a hospitals corporate negligence extends to permitting a physician known to be

incompetent to practice at the hospital.37 With the passage of time, more duties were expected from hospitals, among them: (1) the use of reasonable care in the maintenance of safe and adequate facilities and equipment; (2) the selection and retention of competent physicians; (3) the overseeing or supervision of all persons who practice medicine within its walls; and (4) the formulation, adoption and enforcement of adequate rules and policies that ensure quality care for its patients.38 Thus, in Tucson Medical Center, Inc. v. Misevich,39 it was held that a hospital, following the doctrine of corporate responsibility, has the duty to see that it meets the standards of responsibilities for the care of patients. Such duty includes the proper

supervision of the members of its medical staff. And in Bost v. Riley,40 the court concluded that a patient who enters a hospital does so with the reasonable expectation that it will attempt to cure him. The hospital accordingly has the duty to make a reasonable effort to monitor and oversee the treatment prescribed and administered by the physicians practicing in its premises. In the present case, it was duly established that PSI operates the Medical City Hospital for the purpose and under the concept of providing comprehensive medical services to the public. Accordingly, it has the duty to exercise reasonable care to protect from harm all patients admitted into its facility for medical treatment. Unfortunately, PSI failed to perform such duty. The findings of the trial court are convincing, thus: x x x PSIs liability is traceable to its failure to conduct an investigation of the matter reported in the nota bene of the count nurse. Such failure established PSIs part in the dark conspiracy of silence and concealment about the gauzes. Ethical considerations, if not also legal, dictated the holding of an immediate inquiry into the events, if not for the benefit of the patient to whom the duty is primarily owed, then in the interest of arriving at the truth. The Court cannot accept that the medical and the healing professions, through their members like defendant surgeons, and their institutions like PSIs hospital facility, can callously turn their backs on and disregard even a mere probability of mistake or negligence by refusing or failing to investigate a report of such seriousness as the one in Natividads case. It is worthy to note that Dr. Ampil and Dr. Fuentes operated on Natividad with the assistance of the Medical City Hospitals staff, composed of resident doctors, nurses, and interns. As such, it is reasonable to conclude that PSI, as the operator of the hospital, has actual or constructive knowledge of the procedures carried out, particularly the report of the attending nurses that the two pieces of gauze were missing. In Fridena v. Evans,41 it was held that a corporation is bound by the knowledge acquired by or notice given to its agents or officers within the scope of their authority and in reference to a matter to which their authority extends. This means that the knowledge of any of the staff of Medical City Hospital constitutes knowledge of PSI. Now, the failure of PSI, despite the attending nurses report, to investigate and inform Natividad regarding the missing gauzes amounts to callous negligence. Not only did PSI breach its duties to oversee or supervise all persons who practice medicine within its walls, it also failed to take an active step in fixing the negligence committed. This renders PSI, not only vicariously liable for the negligence of Dr. Ampil under Article 2180 of the Civil Code, but also directly liable for its own negligence under Article 2176. In Fridena, the Supreme Court of Arizona held: x x x In recent years, however, the duty of care owed to the patient by the hospital has expanded. The

emerging trend is to hold the hospital responsible where the hospital has failed to monitor and review medical services being provided within its walls. See Kahn Hospital Malpractice Prevention, 27 De Paul . Rev. 23 (1977). Among the cases indicative of the emerging trend is Purcell v. Zimbelman, 18 Ariz. App. 75,500 P. 2d 335 (1972). In Purcell, the hospital argued that it could not be held liable for the malpractice of a medical practitioner because he was an independent contractor within the hospital. The Court of Appeals pointed out that the hospital had created a professional staff whose competence and performance was to be monitored and reviewed by the governing body of the hospital, and the court held that a hospital would be negligent where it had knowledge or reason to believe that a doctor using the facilities was employing a method of treatment or care which fell below the recognized standard of care. Subsequent to the Purcell decision, the Arizona Court of Appeals held that a hospital has certain inherent responsibilities regarding the quality of medical care furnished to patients within its walls and it must meet the standards of responsibility commensurate with this undertaking. Beeck v. Tucson General Hospital, 18 Ariz. App. 165, 500 P. 2d 1153 (1972). This court has confirmed the rulings of the Court of Appeals that a hospital has the duty of supervising the competence of the doctors on its staff. x x x. x x x x x x

In the amended complaint, the plaintiffs did plead that the operation was performed at the hospital with its knowledge, aid, and assistance, and that the negligence of the defendants was the proximate cause of the patients injuries. We find that such general allegations of negligence, along with the evidence produced at the trial of this case, are sufficient to support the hospitals liability based on the theory of negligent supervision." Anent the corollary issue of whether PSI is solidarily liable with Dr. Ampil for damages, let it be emphasized that PSI, apart from a general denial of its responsibility, failed to adduce evidence showing that it exercised the diligence of a good father of a family in the accreditation and supervision of the latter. In neglecting to offer such proof, PSI failed to discharge its burden under the last paragraph of Article 2180 cited earlier, and, therefore, must be adjudged solidarily liable with Dr. Ampil. Moreover, as we have discussed, PSI is also directly liable to the Aganas. One final word. Once a physician undertakes the treatment and care of a patient, the law imposes on him certain obligations. In order to escape liability, he must possess that reasonable degree of learning, skill and experience required by his profession. At the same time, he must apply reasonable care and diligence in the exercise of his skill and the application of his knowledge, and exert his best judgment. WHEREFORE, we DENY all the petitions and AFFIRM the challenged Decision of the Court of Appeals in CA-G.R. CV No. 42062 and CA-G.R. SP No. 32198. Costs against petitioners PSI and Dr. Miguel Ampil. SO ORDERED. SECOND DIVISION [G.R. No. 124922. June 22, 1998] JIMMY CO, doing business under the name & style DRAGON METAL MANUFACTURING, Petitioner, vs. COURT OF APPEALS and BROADWAY MOTOR SALES CORPORATION, Respondents. DECISION MARTINEZ, J.: On July 18, 1990, petitioner entrusted his Nissan pick-up car 1988 model[1] to private respondent - which is engaged in the sale, distribution and repair of motor vehicles - for the following job repair services and supply of parts: - Bleed injection pump and all nozzles; - Adjust valve tappet; - Change oil and filter; - Open up and service four wheel brakes, clean and adjust; - Lubricate accelerator linkages; - Replace aircon belt; and

- Replace battery[2] Private respondent undertook to return the vehicle on July 21, 1990 fully serviced and supplied in accordance with the job contract. After petitioner paid in full the repair bill in the amount of P1,397.00,[3] private respondent issued to him a gate pass for the release of the vehicle on said date. But came July 21, 1990, the latter could not release the vehicle as its battery was weak and was not yet replaced. Left with no option, petitioner himself bought a new battery nearby and delivered it to private respondent for installation on the same day. However, the battery was not installed and the delivery of the car was rescheduled to July 24, 1990 or three (3) days later. When petitioner sought to reclaim his car in the afternoon of July 24, 1990, he was told that it was carnapped earlier that morning while being road-tested by private respondents employee along Pedro Gil and Perez Streets in Paco, Manila. Private respondent said that the incident was reported to the police. Having failed to recover his car and its accessories or the value thereof, petitioner filed a suit for damages against private respondent anchoring his claim on the latters alleged negligence. For its part, private respondent contended that it has no liability because the car was lost as a result of a fortuitous event - the carnapping. During pre-trial, the parties agreed that: (T)he cost of the Nissan Pick-up four (4) door when the plaintiff purchased it from the defendant is P332,500.00 excluding accessories which were installed in the vehicle by the plaintiff consisting of four (4) brand new tires, magwheels, stereo speaker, amplifier which amount all in all to P20,000.00. It is agreed that the vehicle was lost on July 24, 1990 `approximately two (2) years and five (5) months from the date of the purchase. It was agreed that the plaintiff paid the defendant the cost of service and repairs as early as July 21, 1990 in the amount of P1,397.00 which amount was received and duly receipted by the defendant company. It was also agreed that the present value of a brand new vehicle of the same type at this time is P425,000.00 without accessories.[4] They likewise agreed that the sole issue for trial was who between the parties shall bear the loss of the vehicle which necessitates the resolution of whether private respondent was indeed negligent.[5] After trial, the court a quo found private respondent guilty of delay in the performance of its obligation and held it liable to petitioner for the value of the lost vehicle and its accessories plus interest and attorneys fees.[6] On appeal, the Court of Appeals (CA) reversed the ruling of the lower court and ordered the dismissal of petitioners damage suit.[7] The CA ruled that: (1) the trial court was limited to resolving the issue of negligence as agreed during pre-trial; hence it cannot pass on the issue of delay; and (2) the vehicle was lost due to a fortuitous event.

In a petition for review to this Court, the principal query raised is whether a repair shop can be held liable for the loss of a customers vehicle while the same is in its custody for repair or other job services? The Court resolves the query in favor of the customer. First, on the technical aspect involved. Contrary to the CAs pronouncement, the rule that the determination of issues at a pre-trial conference bars the consideration

of other issues on appeal, except those that may involve privilege or impeaching matter,[8] is inapplicable to this case. The question of delay, though not specifically mentioned as an issue at the pre-trial may be tackled by the court considering that it is necessarily intertwined and intimately connected with the principal issue agreed upon by the parties, i.e. who will bear the loss and whether there was negligence. Petitioners imputation of negligence to private respondent is premised on delay which is the very basis of the formers complaint. Thus, it was unavoidable for the court to resolve the case, particularly the question of negligence without considering whether private respondent was guilty of delay in the performance of its obligation. On the merits. It is a not a defense for a repair shop of motor vehicles to escape liability simply because the damage or loss of a thing lawfully placed in its possession was due to carnapping. Carnapping per se cannot be considered as a fortuitous event. The fact that a thing was unlawfully and forcefully taken from anothers rightful possession, as in cases of carnapping, does not automatically give rise to a fortuitous event. To be considered as such, carnapping entails more than the mere forceful taking of anothers property. It must be proved and established that the event was an act of God or was done solely by third parties and that neither the claimant nor the person alleged to be negligent has any participation.[9] In accordance with the Rules of evidence, the burden of proving that the loss was due to a fortuitous event rests on him who invokes it[10]which in this case is the private respondent. However, other than the police report of the alleged carnapping incident, no other evidence was presented by private respondent to the effect that the incident was not due to its fault. A police report of an alleged crime, to which only private respondent is privy, does not suffice to established the carnapping. Neither does it prove that there was no fault on the part of private respondent notwithstanding the parties agreement at the pre-trial that the car was carnapped. Carnapping does not

foreclose the possibility of fault or negligence on the part of private respondent. Even assuming arguendo that carnapping was duly established as a fortuitous event, still private respondent cannot escape liability. Article 1165[11] of the New Civil Code makes an obligor who is guilty of delay responsible even for a fortuitous event until he has effected the delivery. In this case, private respondent was already in delay as it was supposed to deliver petitioners car three (3) days before it was lost. Petitioners agreement to the rescheduled delivery does not defeat his claim as private respondent had already breached its obligation. Moreover, such accession cannot be construed as waiver of petitioners right to hold private respondent liable because the car was unusable and thus, petitioner had no option but to leave it. Assuming further that there was no delay, still working against private respondent is the legal presumption under Article 1265 that its possession of the thing at the time it was lost was due to its fault.[12] This presumption is reasonable since he who has the custody and care of the thing can easily explain the circumstances of the loss. The vehicle owner has no duty to show that the repair shop was at fault. All that petitioner needs to prove, as claimant, is the simple fact that private respondent was in possession of the vehicle at the time it was lost. In this case, private respondents possession at the time of the loss is undisputed. Consequently, the burden shifts to the possessor who needs to present controverting evidence sufficient enough to overcome that presumption. Moreover, the exempting circumstances - earthquake, flood, storm or other natural calamity - when the presumption of fault is not applicable[13] do not concur in this case. Accordingly, having failed to rebut the presumption and since the case does not fall under the exceptions, private respondent is answerable for the loss. It must likewise be emphasized that pursuant to Articles 1174 and 1262 of the New Civil Code, liability attaches even if the loss was due to a fortuitous event if the nature of the obligation requires the assumption of risk.

[14] Carnapping is a normal business risk for those engaged in the repair of motor vehicles. For just as the
owner is exposed to that risk so is the repair shop since the car was entrusted to it. That is why, repair shops are required to first register with the Department of Trade and Industry (DTI)[15] and to secure an insurance policy for the shop covering the property entrusted by its customer for repair, service or maintenance as a pre-requisite for such registration/accreditation.[16] Violation of this statutory duty constitutes negligence per se.[17] Having taken custody of the vehicle, private respondent is obliged not only to repair the vehicle but must also provide the customer with some form of security for his property over which he loses immediate control. An owner who cannot exercise the seven (7) juses or attributes of ownership the right to possess, to use and enjoy, to abuse or consume, to accessories, to dispose or alienate, to recover or vindicate

and to the fruits -[18] is a crippled owner. Failure of the repair shop to provide security to a motor vehicle owner would leave the latter at the mercy of the former. Moreover, on the assumption that private respondents repair business is duly registered, it presupposes that its shop is covered by insurance from which it may recover the loss. If private respondent can recover from its insurer, then it would be unjustly enriched if it will not compensate petitioner to whom no fault can be attributed. Otherwise, if the shop is not registered, then the presumption of negligence applies. One last thing. With respect to the value of the lost vehicle and its accessories for which the repair shop is liable, it should be based on the fair market value that the property would command at the time it was entrusted to it or such other value as agreed upon by the parties subsequent to the loss. Such recoverable value is fair and reasonable considering that the value of the vehicle depreciates. This value may be recovered without prejudice to such other damages that a claimant is entitled under applicable laws. WHEREFORE, premises considered, the decision of the Court Appeals is REVERSED and SET ASIDE and the decision of the court a quo is REINSTATED. SO ORDERED. Regalado (Chairman), Melo, Puno and Mendoza, JJ. concur. Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 159617 August 8, 2007

ROBERTO C. SICAM and AGENCIA de R.C. SICAM, INC., petitioners, vs. LULU V. JORGE and CESAR JORGE, respondents.

DECISION AUSTRIA-MARTINEZ, J.: Before us is a Petition for Review on Certiorari filed by Roberto C. Sicam, Jr. (petitioner Sicam) and Agencia de 31, 2003, and its Resolution2 dated August 8, 2003, in CA G.R. CV No. 56633. It appears that on different dates from September to October 1987, Lulu V. Jorge (respondent Lulu) pawned several pieces of jewelry with Agencia de R. C. Sicam located at No. 17 Aguirre Ave., BF Homes Paraaque, Metro Manila, to secure a loan in the total amount of P59,500.00. On October 19, 1987, two armed men entered the pawnshop and took away whatever cash and jewelry were found inside the pawnshop vault. The incident was entered in the police blotter of the Southern Police District, Paraaque Police Station as follows: Investigation shows that at above TDPO, while victims were inside the office, two (2) male unidentified persons entered into the said office with guns drawn. Suspects(sic) (1) went straight inside and poked his gun toward Romeo Sicam and thereby tied him with an electric wire while suspects (sic) (2) poked his gun toward Divina Mata and Isabelita Rodriguez and ordered them to lay (sic) face flat on the floor. Suspects asked forcibly the case and assorted pawned jewelries items mentioned above. Suspects after taking the money and jewelries fled on board a Marson Toyota unidentified plate number.3 Petitioner Sicam sent respondent Lulu a letter dated October 19, 1987 informing her of the loss of her jewelry due to the robbery incident in the pawnshop. On November 2, 1987, respondent Lulu then wrote a letter 4 to petitioner Sicam expressing disbelief stating that when the robbery happened, all jewelry pawned were deposited with Far East Bank near the pawnshop since it had been the practice that before they could withdraw, advance notice must be given to the pawnshop so it could withdraw the jewelry from the bank. Respondent Lulu then requested petitioner Sicam to prepare the pawned jewelry for withdrawal on November 6, 1987 but petitioner Sicam failed to return the jewelry. On September 28, 1988, respondent Lulu joined by her husband, Cesar Jorge, filed a complaint against petitioner Sicam with the Regional Trial Court of Makati seeking indemnification for the loss of pawned jewelry and payment of actual, moral and exemplary damages as well as attorney's fees. The case was docketed as Civil Case No. 88-2035. Petitioner Sicam filed his Answer contending that he is not the real party-in-interest as the pawnshop was incorporated on April 20, 1987 and known as Agencia de R.C. Sicam, Inc; that petitioner corporation had exercised due care and diligence in the safekeeping of the articles pledged with it and could not be made liable for an event that is fortuitous. Respondents subsequently filed an Amended Complaint to include petitioner corporation. Thereafter, petitioner Sicam filed a Motion to Dismiss as far as he is concerned considering that he is not the real party-in-interest. Respondents opposed the same. The RTC denied the motion in an Order dated November 8, 1989.5 After trial on the merits, the RTC rendered its Decision6 dated January 12, 1993, dismissing respondents complaint as well as petitioners counterclaim. The RTC held that petitioner Sicam could not be made personally liable for a claim arising out of a corporate transaction; that in the Amended Complaint of respondents, they asserted that "plaintiff pawned assorted jewelries in defendants' pawnshop"; and that as a consequence of the separate juridical personality of a corporation, the corporate debt or credit is not the debt or credit of a stockholder. The RTC further ruled that petitioner corporation could not be held liable for the loss of the pawned jewelry since it had not been rebutted by respondents that the loss of the pledged pieces of jewelry in the possession of the corporation was occasioned by armed robbery; that robbery is a fortuitous event which exempts the victim from liability for the loss, citing the case of Austria v. Court of Appeals;7 and that the parties transaction was that of a pledgor and pledgee and under Art. 1174 of the Civil Code, the pawnshop as a pledgee is not responsible for those events which could not be foreseen. Respondents appealed the RTC Decision to the CA. In a Decision dated March 31, 2003, the CA reversed the RTC, the dispositive portion of which reads as follows: R.C. Sicam, Inc. (petitioner corporation) seeking to annul the Decision1 of the Court of Appeals dated March

WHEREFORE, premises considered, the instant Appeal is GRANTED, and the Decision dated January 12, 1993,of the Regional Trial Court of Makati, Branch 62, is hereby REVERSED and SET ASIDE, ordering the appellees to pay appellants the actual value of the lost jewelry amounting to P272,000.00, and attorney' fees of P27,200.00.8 In finding petitioner Sicam liable together with petitioner corporation, the CA applied the doctrine of piercing the veil of corporate entity reasoning that respondents were misled into thinking that they were dealing with the pawnshop owned by petitioner Sicam as all the pawnshop tickets issued to them bear the words "Agencia de R.C. Sicam"; and that there was no indication on the pawnshop tickets that it was the petitioner corporation that owned the pawnshop which explained why respondents had to amend their complaint impleading petitioner corporation. The CA further held that the corresponding diligence required of a pawnshop is that it should take steps to secure and protect the pledged items and should take steps to insure itself against the loss of articles which are entrusted to its custody as it derives earnings from the pawnshop trade which petitioners failed to do; that Austria is not applicable to this case since the robbery incident happened in 1961 when the criminality had not as yet reached the levels attained in the present day; that they are at least guilty of contributory negligence and should be held liable for the loss of jewelries; and that robberies and hold-ups are foreseeable risks in that those engaged in the pawnshop business are expected to foresee. The CA concluded that both petitioners should be jointly and severally held liable to respondents for the loss of the pawned jewelry. Petitioners motion for reconsideration was denied in a Resolution dated August 8, 2003. Hence, the instant petition for review with the following assignment of errors: THE COURT OF APPEALS ERRED AND WHEN IT DID, IT OPENED ITSELF TO REVERSAL, WHEN IT ADOPTED UNCRITICALLY (IN FACT IT REPRODUCED AS ITS OWN WITHOUT IN THE MEANTIME ACKNOWLEDGING IT) WHAT THE RESPONDENTS ARGUED IN THEIR BRIEF, WHICH ARGUMENT WAS PALPABLY UNSUSTAINABLE. THE COURT OF APPEALS ERRED, AND WHEN IT DID, IT OPENED ITSELF TO REVERSAL BY THIS HONORABLE COURT, WHEN IT AGAIN ADOPTED UNCRITICALLY (BUT WITHOUT ACKNOWLEDGING IT) THE SUBMISSIONS OF THE RESPONDENTS IN THEIR BRIEF WITHOUT ADDING ANYTHING MORE THERETO DESPITE THE FACT THAT THE SAID ARGUMENT OF THE RESPONDENTS COULD NOT HAVE BEEN SUSTAINED IN VIEW OF UNREBUTTED EVIDENCE ON RECORD.9 Anent the first assigned error, petitioners point out that the CAs finding that petitioner Sicam is personally liable for the loss of the pawned jewelries is "a virtual and uncritical reproduction of the arguments set out on pp. 5-6 of the Appellants brief."10 Petitioners argue that the reproduced arguments of respondents in their Appellants Brief suffer from infirmities, as follows: (1) Respondents conclusively asserted in paragraph 2 of their Amended Complaint that Agencia de R.C. Sicam, Inc. is the present owner of Agencia de R.C. Sicam Pawnshop, and therefore, the CA cannot rule against said conclusive assertion of respondents; (2) The issue resolved against petitioner Sicam was not among those raised and litigated in the trial court; and (3) By reason of the above infirmities, it was error for the CA to have pierced the corporate veil since a corporation has a personality distinct and separate from its individual stockholders or members. Anent the second error, petitioners point out that the CA finding on their negligence is likewise an unedited reproduction of respondents brief which had the following defects: (1) There were unrebutted evidence on record that petitioners had observed the diligence required of them, i.e, they wanted to open a vault with a nearby bank for purposes of safekeeping the pawned articles but was discouraged by the Central Bank (CB) since CB rules provide that they can only store the pawned articles in a vault inside the pawnshop premises and no other place; (2) Petitioners were adjudged negligent as they did not take insurance against the loss of the pledged jelweries, but it is judicial notice that due to high incidence of crimes, insurance companies refused to cover pawnshops and banks because of high probability of losses due to robberies; (3) In Hernandez v. Chairman, Commission on Audit (179 SCRA 39, 45-46), the victim of robbery was

exonerated from liability for the sum of money belonging to others and lost by him to robbers. Respondents filed their Comment and petitioners filed their Reply thereto. The parties subsequently submitted their respective Memoranda. We find no merit in the petition. To begin with, although it is true that indeed the CA findings were exact reproductions of the arguments raised in respondents (appellants) brief filed with the CA, we find the same to be not fatally infirmed. Upon examination of the Decision, we find that it expressed clearly and distinctly the facts and the law on which it is based as required by Section 8, Article VIII of the Constitution. The discretion to decide a case one way or another is broad enough to justify the adoption of the arguments put forth by one of the parties, as long as these are legally tenable and supported by law and the facts on records.11 Our jurisdiction under Rule 45 of the Rules of Court is limited to the review of errors of law committed by the appellate court. Generally, the findings of fact of the appellate court are deemed conclusive and we are not

duty-bound to analyze and calibrate all over again the evidence adduced by the parties in the court a quo.12 This rule, however, is not without exceptions, such as where the factual findings of the Court of Appeals and the trial court are conflicting or contradictory13 as is obtaining in the instant case. However, after a careful examination of the records, we find no justification to absolve petitioner Sicam from liability. The CA correctly pierced the veil of the corporate fiction and adjudged petitioner Sicam liable together with petitioner corporation. The rule is that the veil of corporate fiction may be pierced when made as a shield to

14 promote unfair objectives or otherwise to shield them.15

perpetrate fraud and/or confuse legitimate issues.

The theory of corporate entity was not meant to

Notably, the evidence on record shows that at the time respondent Lulu pawned her jewelry, the pawnshop was owned by petitioner Sicam himself. As correctly observed by the CA, in all the pawnshop receipts issued to respondent Lulu in September 1987, all bear the words "Agencia de R. C. Sicam," notwithstanding that the pawnshop was allegedly incorporated in April 1987. The receipts issued after such alleged incorporation were still in the name of "Agencia de R. C. Sicam," thus inevitably misleading, or at the very least, creating the wrong impression to respondents and the public as well, that the pawnshop was owned solely by petitioner Sicam and not by a corporation. Even petitioners counsel, Atty. Marcial T. Balgos, in his letter 16 dated October 15, 1987 addressed to the Central Bank, expressly referred to petitioner Sicam as the proprietor of the pawnshop notwithstanding the alleged incorporation in April 1987. We also find no merit in petitioners' argument that since respondents had alleged in their Amended Complaint that petitioner corporation is the present owner of the pawnshop, the CA is bound to decide the case on that basis. Section 4 Rule 129 of the Rules of Court provides that an admission, verbal or written, made by a party in the course of the proceedings in the same case, does not require proof. The admission may be contradicted only by showing that it was made through palpable mistake or that no such admission was made. Thus, the general rule that a judicial admission is conclusive upon the party making it and does not require proof, admits of two exceptions, to wit: (1) when it is shown that such admission was made through palpable mistake, and (2) when it is shown that no such admission was in fact made. The latter exception allows one to contradict an admission by denying that he made such an admission.17 The Committee on the Revision of the Rules of Court explained the second exception in this wise: x x x if a party invokes an "admission" by an adverse party, but cites the admission "out of context," then the one making the "admission" may show that he made no "such" admission, or that his admission was taken out of context. x x x that the party can also show that he made no "such admission", i.e., not in the sense in which the admission is made to appear. That is the reason for the modifier "such" because if the rule simply states that the admission may be contradicted by showing that "no admission was made," the rule would not really be providing for a contradiction of the admission but just a denial.18 (Emphasis supplied).

While it is true that respondents alleged in their Amended Complaint that petitioner corporation is the present owner of the pawnshop, they did so only because petitioner Sicam alleged in his Answer to the original complaint filed against him that he was not the real party-in-interest as the pawnshop was incorporated in April 1987. Moreover, a reading of the Amended Complaint in its entirety shows that respondents referred to both petitioner Sicam and petitioner corporation where they (respondents) pawned their assorted pieces of jewelry and ascribed to both the failure to observe due diligence commensurate with the business which resulted in the loss of their pawned jewelry. Markedly, respondents, in their Opposition to petitioners Motion to Dismiss Amended Complaint, insofar as petitioner Sicam is concerned, averred as follows: Roberto C. Sicam was named the defendant in the original complaint because the pawnshop tickets involved in this case did not show that the R.C. Sicam Pawnshop was a corporation. In paragraph 1 of his Answer, he admitted the allegations in paragraph 1 and 2 of the Complaint. He merely added "that defendant is not now the real party in interest in this case." It was defendant Sicam's omission to correct the pawnshop tickets used in the subject transactions in this case which was the cause of the instant action. He cannot now ask for the dismissal of the complaint against him simply on the mere allegation that his pawnshop business is now incorporated. It is a matter of defense, the merit of which can only be reached after consideration of the evidence to be presented in due course.19 Unmistakably, the alleged admission made in respondents' Amended Complaint was taken "out of context" by petitioner Sicam to suit his own purpose. Ineluctably, the fact that petitioner Sicam continued to issue pawnshop receipts under his name and not under the corporation's name militates for the piercing of the corporate veil. We likewise find no merit in petitioners' contention that the CA erred in piercing the veil of corporate fiction of petitioner corporation, as it was not an issue raised and litigated before the RTC. Petitioner Sicam had alleged in his Answer filed with the trial court that he was not the real party-in-interest because since April 20, 1987, the pawnshop business initiated by him was incorporated and known as Agencia de R.C. Sicam. In the pre-trial brief filed by petitioner Sicam, he submitted that as far as he was concerned, the basic issue was whether he is the real party in interest against whom the complaint should be directed.20 In fact, he subsequently moved for the dismissal of the complaint as to him but was not favorably acted upon by the trial court. Moreover, the issue was squarely passed upon, although erroneously, by the trial court in its Decision in this manner: x x x The defendant Roberto Sicam, Jr likewise denies liability as far as he is concerned for the reason that he cannot be made personally liable for a claim arising from a corporate transaction. This Court sustains the contention of the defendant Roberto C. Sicam, Jr. The amended complaint itself asserts that "plaintiff pawned assorted jewelries in defendant's pawnshop." It has been held that " as a consequence of the separate juridical personality of a corporation, the corporate debt or credit is not the debt or credit of the stockholder, nor is the stockholder's debt or credit that of a corporation.21 Clearly, in view of the alleged incorporation of the pawnshop, the issue of whether petitioner Sicam is personally liable is inextricably connected with the determination of the question whether the doctrine of piercing the corporate veil should or should not apply to the case. The next question is whether petitioners are liable for the loss of the pawned articles in their possession. Petitioners insist that they are not liable since robbery is a fortuitous event and they are not negligent at all. We are not persuaded. Article 1174 of the Civil Code provides: Art. 1174. Except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation requires the assumption of risk, no person shall be responsible for those events which could not be foreseen or which, though foreseen, were inevitable. Fortuitous events by definition are extraordinary events not foreseeable or avoidable. It is therefore, not enough that the event should not have been foreseen or anticipated, as is commonly believed but it must be one impossible to foresee or to avoid. The mere difficulty to foresee the happening is not impossibility to foresee the same.

22

To constitute a fortuitous event, the following elements must concur: (a) the cause of the unforeseen and unexpected occurrence or of the failure of the debtor to comply with obligations must be independent of human will; (b) it must be impossible to foresee the event that constitutes the caso fortuito or, if it can be foreseen, it must be impossible to avoid; (c) the occurrence must be such as to render it impossible for the debtor to fulfill obligations in a normal manner; and, (d) the obligor must be free from any participation in the aggravation of the injury or loss.

23

The burden of proving that the loss was due to a fortuitous event rests on him who invokes it.24 And, in order for a fortuitous event to exempt one from liability, it is necessary that one has committed no negligence or misconduct that may have occasioned the loss.

25

It has been held that an act of God cannot be invoked to protect a person who has failed to take steps to forestall the possible adverse consequences of such a loss. One's negligence may have concurred with an act of God in producing damage and injury to another; nonetheless, showing that the immediate or proximate cause of the damage or injury was a fortuitous event would not exempt one from liability. When the effect is found to be partly the result of a person's participation -- whether by active intervention, neglect or failure to act -- the whole occurrence is humanized and removed from the rules applicable to acts of God.

26

Petitioner Sicam had testified that there was a security guard in their pawnshop at the time of the robbery. He likewise testified that when he started the pawnshop business in 1983, he thought of opening a vault with the nearby bank for the purpose of safekeeping the valuables but was discouraged by the Central Bank since pawned articles should only be stored in a vault inside the pawnshop. The very measures which petitioners had allegedly adopted show that to them the possibility of robbery was not only foreseeable, but actually foreseen and anticipated. Petitioner Sicams testimony, in effect, contradicts petitioners defense of fortuitous event. Moreover, petitioners failed to show that they were free from any negligence by which the loss of the pawned jewelry may have been occasioned. Robbery per se, just like carnapping, is not a fortuitous event. It does not foreclose the possibility of negligence on the part of herein petitioners. In Co v. Court of Appeals,27 the Court held: It is not a defense for a repair shop of motor vehicles to escape liability simply because the damage or loss of a thing lawfully placed in its possession was due to carnapping. Carnapping per se cannot be considered as a fortuitous event. The fact that a thing was unlawfully and forcefully taken from another's rightful possession, as in cases of carnapping, does not automatically give rise to a fortuitous event. To be considered as such, carnapping entails more than the mere forceful taking of another's property. It must be proved and established that the event was an act of God or was done solely by third parties and that neither the claimant nor the person alleged to be negligent has any participation. In accordance with the Rules of Evidence, the burden of proving that the loss was due to a fortuitous event rests on him who invokes it which in this case is the private respondent. However, other than the police report of the alleged carnapping incident, no other evidence was presented by private respondent to the effect that the incident was not due to its fault. A police report of an alleged crime, to which only private respondent is privy, does not suffice to establish the carnapping. Neither does it prove that there was no fault on the part of private respondent notwithstanding the parties' agreement at the pretrial that the car was carnapped. Carnapping does not foreclose the possibility of fault or negligence on the part of private respondent.28 Just like in Co, petitioners merely presented the police report of the Paraaque Police Station on the robbery committed based on the report of petitioners' employees which is not sufficient to establish robbery. Such report also does not prove that petitioners were not at fault. On the contrary, by the very evidence of petitioners, the CA did not err in finding that petitioners are guilty of concurrent or contributory negligence as provided in Article 1170 of the Civil Code, to wit: Art. 1170. Those who in the performance of their obligations are guilty of fraud, negligence, or delay, and those who in any manner contravene the tenor thereof, are liable for damages.29 Article 2123 of the Civil Code provides that with regard to pawnshops and other establishments which are engaged in making loans secured by pledges, the special laws and regulations concerning them shall be observed, and subsidiarily, the provisions on pledge, mortgage and antichresis. The provision on pledge, particularly Article 2099 of the Civil Code, provides that the creditor shall take care of the thing pledged with the diligence of a good father of a family. This means that petitioners must take care of

the pawns the way a prudent person would as to his own property. In this connection, Article 1173 of the Civil Code further provides: Art. 1173. The fault or negligence of the obligor consists in the omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the persons, of time and of the place. When negligence shows bad faith, the provisions of Articles 1171 and 2201, paragraph 2 shall apply. If the law or contract does not state the diligence which is to be observed in the performance, that which is expected of a good father of a family shall be required. We expounded in Cruz v. Gangan30 that negligence is the omission to do something which a reasonable man, guided by those considerations which ordinarily regulate the conduct of human affairs, would do; or the doing

of something which a prudent and reasonable man would not do. 31 It is want of care required by the circumstances. A review of the records clearly shows that petitioners failed to exercise reasonable care and caution that an ordinarily prudent person would have used in the same situation. Petitioners were guilty of negligence in the operation of their pawnshop business. Petitioner Sicam testified, thus: Court: Q. Do you have security guards in your pawnshop? A. Yes, your honor. Q. Then how come that the robbers were able to enter the premises when according to you there was a security guard? A. Sir, if these robbers can rob a bank, how much more a pawnshop. Q. I am asking you how were the robbers able to enter despite the fact that there was a security guard? A. At the time of the incident which happened about 1:00 and 2:00 o'clock in the afternoon and it happened on a Saturday and everything was quiet in the area BF Homes Paraaque they pretended to pawn an article in the pawnshop, so one of my employees allowed him to come in and it was only when it was announced that it was a hold up. Q. Did you come to know how the vault was opened? A. When the pawnshop is official (sic) open your honor the pawnshop is partly open. The combination is off. Q. No one open (sic) the vault for the robbers? A. No one your honor it was open at the time of the robbery. Q. It is clear now that at the time of the robbery the vault was open the reason why the robbers were able to get all the items pawned to you inside the vault. A. Yes sir.32 revealing that there were no security measures adopted by petitioners in the operation of the pawnshop. Evidently, no sufficient precaution and vigilance were adopted by petitioners to protect the pawnshop from unlawful intrusion. There was no clear showing that there was any security guard at all. Or if there was one, that he had sufficient training in securing a pawnshop. Further, there is no showing that the alleged security guard exercised all that was necessary to prevent any untoward incident or to ensure that no suspicious individuals were allowed to enter the premises. In fact, it is even doubtful that there was a security guard, since it is quite impossible that he would not have noticed that the robbers were armed with caliber .45 pistols each, which were allegedly poked at the employees.33 Significantly, the alleged security guard was not presented at all to corroborate petitioner Sicam's claim; not one of petitioners' employees who were present during the robbery incident testified in court.

Furthermore, petitioner Sicam's admission that the vault was open at the time of robbery is clearly a proof of petitioners' failure to observe the care, precaution and vigilance that the circumstances justly demanded. Petitioner Sicam testified that once the pawnshop was open, the combination was already off. Considering petitioner Sicam's testimony that the robbery took place on a Saturday afternoon and the area in BF Homes

Paraaque at that time was quiet, there was more reason for petitioners to have exercised reasonable foresight and diligence in protecting the pawned jewelries. Instead of taking the precaution to protect them, they let open the vault, providing no difficulty for the robbers to cart away the pawned articles. We, however, do not agree with the CA when it found petitioners negligent for not taking steps to insure themselves against loss of the pawned jewelries. Under Section 17 of Central Bank Circular No. 374, Rules and Regulations for Pawnshops, which took effect on July 13, 1973, and which was issued pursuant to Presidential Decree No. 114, Pawnshop Regulation Act, it is provided that pawns pledged must be insured, to wit: Sec. 17. Insurance of Office Building and Pawns- The place of business of a pawnshop and the pawns pledged to it must be insured against fire and against burglary as well as for the latter(sic), by an insurance company accredited by the Insurance Commissioner. However, this Section was subsequently amended by CB Circular No. 764 which took effect on October 1, 1980, to wit: Sec. 17 Insurance of Office Building and Pawns The office building/premises and pawns of a pawnshop must be insured against fire. (emphasis supplied). where the requirement that insurance against burglary was deleted. Obviously, the Central Bank considered it not feasible to require insurance of pawned articles against burglary. The robbery in the pawnshop happened in 1987, and considering the above-quoted amendment, there is no statutory duty imposed on petitioners to insure the pawned jewelry in which case it was error for the CA to consider it as a factor in concluding that petitioners were negligent. Nevertheless, the preponderance of evidence shows that petitioners failed to exercise the diligence required of them under the Civil Code. The diligence with which the law requires the individual at all times to govern his conduct varies with the nature of the situation in which he is placed and the importance of the act which he is to perform.34 Thus, the cases of Austria v. Court of Appeals,35 Hernandez v. Chairman, Commission on Audit36 and Cruz v. Gangan37 cited by petitioners in their pleadings, where the victims of robbery were exonerated from liability, find no application to the present case. In Austria, Maria Abad received from Guillermo Austria a pendant with diamonds to be sold on commission basis, but which Abad failed to subsequently return because of a robbery committed upon her in 1961. The incident became the subject of a criminal case filed against several persons. Austria filed an action against Abad and her husband (Abads) for recovery of the pendant or its value, but the Abads set up the defense that the robbery extinguished their obligation. The RTC ruled in favor of Austria, as the Abads failed to prove robbery; or, if committed, that Maria Abad was guilty of negligence. The CA, however, reversed the RTC decision holding that the fact of robbery was duly established and declared the Abads not responsible for the loss of the jewelry on account of a fortuitous event. We held that for the Abads to be relieved from the civil liability of returning the pendant under Art. 1174 of the Civil Code, it would only be sufficient that the unforeseen event, the robbery, took place without any concurrent fault on the debtors part, and this can be done by preponderance of evidence; that to be free from liability for reason of fortuitous event, the debtor must, in addition to the casus itself, be free of any concurrent or contributory fault or negligence.38 We found in Austria that under the circumstances prevailing at the time the Decision was promulgated in 1971, the City of Manila and its suburbs had a high incidence of crimes against persons and property that rendered travel after nightfall a matter to be sedulously avoided without suitable precaution and protection; that the conduct of Maria Abad in returning alone to her house in the evening carrying jewelry of considerable value would have been negligence per se and would not exempt her from responsibility in the case of robbery. However we did not hold Abad liable for negligence since, the robbery happened ten years previously; i.e., 1961, when criminality had not reached the level of incidence obtaining in 1971. In contrast, the robbery in this case took place in 1987 when robbery was already prevalent and petitioners in fact had already foreseen it as they wanted to deposit the pawn with a nearby bank for safekeeping. Moreover, unlike in Austria, where no negligence was committed, we found petitioners negligent in securing their pawnshop as earlier discussed. In Hernandez, Teodoro Hernandez was the OIC and special disbursing officer of the Ternate Beach Project of the Philippine Tourism in Cavite. In the morning of July 1, 1983, a Friday, he went to Manila to encash two checks covering the wages of the employees and the operating expenses of the project. However for some

reason, the processing of the check was delayed and was completed at about 3 p.m. Nevertheless, he decided to encash the check because the project employees would be waiting for their pay the following day; otherwise, the workers would have to wait until July 5, the earliest time, when the main office would open. At that time, he had two choices: (1) return to Ternate, Cavite that same afternoon and arrive early evening; or (2) take the money with him to his house in Marilao, Bulacan, spend the night there, and leave for Ternate the following day. He chose the second option, thinking it was the safer one. Thus, a little past 3 p.m., he took a passenger jeep bound for Bulacan. While the jeep was on Epifanio de los Santos Avenue, the jeep was held up and the money kept by Hernandez was taken, and the robbers jumped out of the jeep and ran. Hernandez chased the robbers and caught up with one robber who was subsequently charged with robbery and pleaded guilty. The other robber who held the stolen money escaped. The Commission on Audit found Hernandez negligent because he had not brought the cash proceeds of the checks to his office in Ternate, Cavite for safekeeping, which is the normal procedure in the handling of funds. We held that Hernandez was not negligent in deciding to encash the check and bringing it home to Marilao, Bulacan instead of Ternate, Cavite due to the lateness of the hour for the following reasons: (1) he was moved by unselfish motive for his co-employees to collect their wages and salaries the following day, a Saturday, a non-working, because to encash the check on July 5, the next working day after July 1, would have caused discomfort to laborers who were dependent on their wages for sustenance; and (2) that choosing Marilao as a safer destination, being nearer, and in view of the comparative hazards in the trips to the two places, said decision seemed logical at that time. We further held that the fact that two robbers attacked him in broad daylight in the jeep while it was on a busy highway and in the presence of other passengers could not be said to be a result of his imprudence and negligence. Unlike in Hernandez where the robbery happened in a public utility, the robbery in this case took place in the pawnshop which is under the control of petitioners. Petitioners had the means to screen the persons who were allowed entrance to the premises and to protect itself from unlawful intrusion. Petitioners had failed to exercise precautionary measures in ensuring that the robbers were prevented from entering the pawnshop and for keeping the vault open for the day, which paved the way for the robbers to easily cart away the pawned articles. In Cruz, Dr. Filonila O. Cruz, Camanava District Director of Technological Education and Skills Development Authority (TESDA), boarded the Light Rail Transit (LRT) from Sen. Puyat Avenue to Monumento when her handbag was slashed and the contents were stolen by an unidentified person. Among those stolen were her wallet and the government-issued cellular phone. She then reported the incident to the police authorities; however, the thief was not located, and the cellphone was not recovered. She also reported the loss to the Regional Director of TESDA, and she requested that she be freed from accountability for the cellphone. The Resident Auditor denied her request on the ground that she lacked the diligence required in the custody of government property and was ordered to pay the purchase value in the total amount of P4,238.00. The COA found no sufficient justification to grant the request for relief from accountability. We reversed the ruling and found that riding the LRT cannot per se be denounced as a negligent act more so because Cruzs mode of transit was influenced by time and money considerations; that she boarded the LRT to be able to arrive in Caloocan in time for her 3 pm meeting; that any prudent and rational person under similar circumstance can reasonably be expected to do the same; that possession of a cellphone should not hinder one from boarding the LRT coach as Cruz did considering that whether she rode a jeep or bus, the risk of theft would have also been present; that because of her relatively low position and pay, she was not expected to have her own vehicle or to ride a taxicab; she did not have a government assigned vehicle; that placing the cellphone in a bag away from covetous eyes and holding on to that bag as she did is ordinarily sufficient care of a cellphone while traveling on board the LRT; that the records did not show any specific act of negligence on her part and negligence can never be presumed. Unlike in the Cruz case, the robbery in this case happened in petitioners' pawnshop and they were negligent in not exercising the precautions justly demanded of a pawnshop. WHEREFORE, except for the insurance aspect, the Decision of the Court of Appeals dated March 31, 2003 and its Resolution dated August 8, 2003, are AFFIRMED. Costs against petitioners. SO ORDERED. Ynares-Santiago, Chairperson, Chico-Nazario, Nachura, JJ., concur. THIRD DIVISION [G.R. No. 159132, December 18, 2008] FE CAYAO-LASAM, PETITIONER, VS. SPOUSES CLARO AND EDITHA RAMOLETE,

RESPONDENTS.* DECISION AUSTRIA-MARTINEZ, J.: Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court filed by Dr. Fe CayaoLasam (petitioner) seeking to annul the Decision[1] dated July 4, 2003 of the Court of Appeals (CA) in CA-G.R. SP No. 62206. The antecedent facts:

On July 28, 1994, respondent, three months pregnant Editha Ramolete (Editha) was brought to the Lorma Medical Center (LMC) in San Fernando, La Union due to vaginal bleeding. Upon advice of petitioner relayed via telephone, Editha was admitted to the LMC on the same day. A pelvic sonogram[2] was then conducted on Editha revealing the fetus' weak cardiac pulsation.[3] The following day, Editha's repeat pelvic sonogram[4] showed that aside from the fetus' weak cardiac pulsation, no fetal movement was also appreciated. Due to persistent and profuse vaginal bleeding, petitioner advised Editha to undergo a Dilatation and Curettage Procedure (D&C) or "raspa." On July 30, 1994, petitioner performed the D&C procedure. Editha was discharged from the hospital the following day. On September 16, 1994, Editha was once again brought at the LMC, as she was suffering from vomiting and severe abdominal pains. Editha was attended by Dr. Beatriz de la Cruz, Dr. Victor B. Mayo and Dr. Juan V. Komiya. Dr. Mayo allegedly informed Editha that there was a dead fetus in the latter's womb. After, Editha underwent laparotomy,[5] she was found to have a massive intra-abdominal hemorrhage and a ruptured uterus. Thus, Editha had to undergo a procedure for hysterectomy[6] and as a result, she has no more chance to bear a child. On November 7, 1994, Editha and her husband Claro Ramolete (respondents) filed a Complaint[7] for Gross Negligence and Malpractice against petitioner before the Professional Regulations Commission (PRC). Respondents alleged that Editha's hysterectomy was caused by petitioner's unmitigated negligence and professional incompetence in conducting the D&C procedure and the petitioner's failure to remove the fetus inside Editha's womb.[8] Among the alleged acts of negligence were: first, petitioner's failure to check up, visit or administer medication on Editha during her first day of confinement at the LMC;[9] second, petitioner recommended that a D&C procedure be performed on Editha without conducting any internal examination prior to the procedure;[10] third, petitioner immediately suggested a D&C procedure instead of closely monitoring the state of pregnancy of Editha.[11] In her Answer,[12] petitioner denied the allegations of negligence and incompetence with the following explanations: upon Editha's confirmation that she would seek admission at the LMC, petitioner immediately called the hospital to anticipate the arrival of Editha and ordered through the telephone the medicines Editha needed to take, which the nurses carried out; petitioner visited Editha on the morning of July 28, 1994 during her rounds; on July 29, 1994, she performed an internal examination on Editha and she discovered that the latter's cervix was already open, thus, petitioner discussed the possible D&C procedure, should the bleeding become more profuse; on July 30 1994, she conducted another internal examination on Editha, which revealed that the latter's cervix was still open; Editha persistently complained of her vaginal bleeding and her passing out of some meaty mass in the process of urination and bowel movement; thus, petitioner advised Editha to undergo D&C procedure which the respondents consented to; petitioner was very vocal in the operating room about not being able to see an abortus;[13] taking the words of Editha to mean that she was passing out some meaty mass and clotted blood, she assumed that the abortus must have been expelled in the process of bleeding; it was Editha who insisted that she wanted to be discharged; petitioner agreed, but she advised Editha to return for check-up on August 5, 1994, which the latter failed to do. Petitioner contended that it was Editha's gross negligence and/or omission in insisting to be discharged on July 31, 1994 against doctor's advice and her unjustified failure to return for check-up as directed by petitioner that contributed to her life-threatening condition on September 16, 1994; that Editha's hysterectomy was brought about by her very abnormal pregnancy known as placenta increta, which was an extremely rare and very unusual case of abdominal placental implantation. Petitioner argued that whether or not a D&C procedure was

done by her or any other doctor, there would be no difference at all because at any stage of gestation before term, the uterus would rupture just the same. On March 4, 1999, the Board of Medicine (the Board) of the PRC rendered a Decision,[14] exonerating petitioner from the charges filed against her. The Board held: Based on the findings of the doctors who conducted the laparotomy on Editha, hers is a case of Ectopic Pregnancy Interstitial. This type of ectopic pregnancy is one that is being protected by the uterine muscles and manifestations may take later than four (4) months and only attributes to two percent (2%) of ectopic pregnancy cases. When complainant Editha was admitted at Lorma Medical Center on July 28, 1994 due to vaginal bleeding, an ultra-sound was performed upon her and the result of the Sonogram Test reveals a morbid fetus but did not specify where the fetus was located. Obstetricians will assume that the pregnancy is within the uterus unless so specified by the Sonologist who conducted the ultrasound. Respondent (Dr. Lasam) cannot be faulted if she was not able to determine that complainant Editha is having an ectopic pregnancy interstitial. The D&C conducted on Editha is necessary considering that her cervix is already open and so as to stop the profuse bleeding. Simple curettage cannot remove a fetus if the patient is having an ectopic pregnancy, since ectopic pregnancy is pregnancy conceived outside the uterus and curettage is done only within the uterus. Therefore, a more extensive operation needed in this case of pregnancy in order to remove the fetus.[15] Feeling aggrieved, respondents went to the PRC on appeal. On November 22, 2000, the PRC rendered a Decision[16] reversing the findings of the Board and revoking petitioner's authority or license to practice her profession as a physician.[17] Petitioner brought the matter to the CA in a Petition for Review under Rule 43 of the Rules of Court. Petitioner also dubbed her petition as one for certiorari[18] under Rule 65 of the Rules of Court. In the Decision dated July 4, 2003, the CA held that the Petition for Review under Rule 43 of the Rules of Court was an improper remedy, as the enumeration of the quasi-judicial agencies in Rule 43 is exclusive.[19] PRC is not among the quasi-judicial bodies whose judgment or final orders are subject of a petition for review to the CA, thus, the petition for review of the PRC Decision, filed at the CA, was improper. The CA further held that should the petition be treated as a petition for certiorari under Rule 65, the same would still be dismissed for being improper and premature. Citing Section 26[20] of Republic Act (R.A.) No. 2382 or the Medical Act of 1959, the CA held that the plain, speedy and adequate remedy under the ordinary course of law which petitioner should have availed herself of was to appeal to the Office of the President.[21] Hence, herein petition, assailing the decision of the CA on the following grounds: 1. THE COURT OF APPEALS ERRED ON A QUESTION OF LAW IN HOLDING THAT THE PROFESSIONAL REGULATION[S] COMMISSION (PRC) WAS EXCLUDED AMONG THE QUASIJUDICIAL AGENCIES CONTEMPLATED UNDER RULE 43 OF THE RULES OF CIVIL PROCEDURE;

2.

EVEN ASSUMING, ARGUENDO, THAT PRC WAS EXCLUDED FROM THE PURVIEW OF RULE 43 OF THE RULES OF CIVIL PROCEDURE, THE PETITIONER WAS NOT PRECLUDED FROM FILING A PETITION FOR CERTIORARI WHERE THE DECISION WAS ALSO ISSUED IN EXCESS OF OR WITHOUT JURISDICTION, OR WHERE THE DECISION WAS A PATENT NULLITY; 3. HEREIN RESPONDENTS-SPOUSES ARE NOT ALLOWED BY LAW TO APPEAL FROM THE DECISION OF THE BOARD OF MEDICINE TO THE PROFESSIONAL REGULATION[S] COMMISSION; 4. THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN DENYING FOR IMPROPER FORUM THE PETITION FOR REVIEW/PETITION FOR CERTIORARI WITHOUT GOING OVER THE MERITS OF THE GROUNDS RELIED UPON BY THE PETITIONER;

5. PRC'S GRAVE OMISSION TO AFFORD HEREIN PETITONER A CHANCE TO BE HEARD ON APPEAL IS A CLEAR VIOLATION OF HER CONSTITUTIONAL RIGHT TO DUE PROCESS AND HAS THE EFFECT OF RENDERING THE JUDGMENT NULL AND VOID; 6. COROLLARY TO THE FOURTH ASSIGNED ERROR, PRC COMMITTED GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK OF JURISDICTION, IN ACCEPTING AND CONSIDERING THE MEMORANDUM ON APPEAL WITHOUT PROOF OF SERVICE TO HEREIN PETITIONER, AND IN VIOLATION OF ART. IV, SEC. 35 OF THE RULES AND REGULATIONS GOVERNING THE REGULATION AND PRACTICE OF PROFESSIONALS; 7. PRC COMMITTED GRAVE ABUSE OF DISCRETION IN REVOKING PETITIONER'S LICENSE TO PRACTICE MEDICINE WITHOUT AN EXPERT TESTIMONY TO SUPPORT ITS CONCLUSION AS TO THE CAUSE OF RESPONDENT EDITHAT [SIC] RAMOLETE'S INJURY; 8. PRC COMMITTED AN EVEN GRAVER ABUSE OF DISCRETION IN TOTALLY DISREGARDING THE FINDING OF THE BOARD OF MEDICINE, WHICH HAD THE NECESSARY COMPETENCE AND EXPERTISE TO ESTABLISH THE CAUSE OF RESPONDENT EDITHA'S INJURY, AS WELL AS THE TESTIMONY OF THE EXPERT WITNESS AUGUSTO MANALO, M.D.; [and] 9. PRC COMMITTED GRAVE ABUSE OF DISCRETION IN MAKING CONCLUSIONS OF FACTS THAT WERE NOT ONLY UNSUPPORTED BY EVIDENCE BUT WERE ACTUALLY CONTRARY TO EVIDENCE ON RECORD.[22] The Court will first deal with the procedural issues.

Petitioner claims that the law does not allow complainants to appeal to the PRC from the decision of the Board. She invokes Article IV, Section 35 of the Rules and Regulations Governing the Regulation and Practice of Professionals, which provides: Sec. 35. The respondent may appeal the decision of the Board within thirty days from receipt thereof to the Commission whose decision shall be final. Complainant, when allowed by law, may interpose an appeal from the Decision of the Board within the same period. (Emphasis supplied) Petitioner asserts that a careful reading of the above law indicates that while the respondent, as a matter of right, may appeal the Decision of the Board to the Commission, the complainant may interpose an appeal from the decision of the Board only when so allowed by law.[23] Petitioner cited Section 26 of Republic Act No. 2382 or "The Medical Act of 1959," to wit: Section 26. Appeal from judgment. The decision of the Board of Medical Examiners (now Medical Board) shall automatically become final thirty days after the date of its promulgation unless the respondent, during the same period, has appealed to the Commissioner of Civil Service (now Professional Regulations Commission) and later to the Office of the President of the Philippines. If the final decision is not satisfactory, the respondent may ask for a review of the case, or may file in court a petition for certiorari. Petitioner posits that the reason why the Medical Act of 1959 allows only the respondent in an administrative case to file an appeal with the Commission while the complainant is not allowed to do so is double jeopardy. Petitioner is of the belief that the revocation of license to practice a profession is penal in nature.[24] The Court does not agree.

For one, the principle of double jeopardy finds no application in administrative cases. Double jeopardy attaches only: (1) upon a valid indictment; (2) before a competent court; (3) after arraignment; (4) when a valid plea has been entered; and (5) when the defendant was acquitted or convicted, or the case was dismissed or otherwise terminated without the express consent of the accused.[25] These elements were not present in the proceedings before the Board of Medicine, as the proceedings involved in the instant case were administrative and not criminal in nature. The Court has already held that double jeopardy does not lie in administrative cases.[26]

Moreover, Section 35 of the Rules and Regulations Governing the Regulation and Practice of Professionals cited by petitioner was subsequently amended to read: Sec. 35. The complainant/respondent may appeal the order, the resolution or the decision of the Board within thirty (30) days from receipt thereof to the Commission whose decision shall be final and executory. Interlocutory order shall not be appealable to the Commission. (Amended by Res. 174, Series of 1990).[27] (Emphasis supplied) Whatever doubt was created by the previous provision was settled with said amendment. It is axiomatic that the right to appeal is not a natural right or a part of due process, but a mere statutory privilege that may be exercised only in the manner prescribed by law.[28] In this case, the clear intent of the amendment is to render the right to appeal from a decision of the Board available to both complainants and respondents. Such conclusion is bolstered by the fact that in 2006, the PRC issued Resolution No. 06-342(A), or the New Rules of Procedure in Administrative Investigations in the Professional Regulations Commission and the Professional Regulatory Boards, which provides for the method of appeal, to wit: Sec. 1. Appeal; Period Non-Extendible.- The decision, order or resolution of the Board shall be final and executory after the lapse of fifteen (15) days from receipt of the decision, order or resolution without an appeal being perfected or taken by either the respondent or the complainant. A party aggrieved by the decision, order or resolution may file a notice of appeal from the decision, order or resolution of the Board to the Commission within fifteen (15) days from receipt thereof, and serving upon the adverse party a notice of appeal together with the appellant's brief or memorandum on appeal, and paying the appeal and legal research fees. x x x[29] The above-stated provision does not qualify whether only the complainant or respondent may file an appeal; rather, the new rules provide that "a party aggrieved" may file a notice of appeal. Thus, either the complainant or the respondent who has been aggrieved by the decision, order or resolution of the Board may appeal to the Commission. It is an elementary rule that when the law speaks in clear and categorical language, there is no need, in the absence of legislative intent to the contrary, for any interpretation.[30] Words and phrases used in the statute should be given their plain, ordinary, and common usage or meaning.[31] Petitioner also submits that appeals from the decisions of the PRC should be with the CA, as Rule 43[32] of the Rules of Court was precisely formulated and adopted to provide for a uniform rule of appellate procedure for quasi-judicial agencies.[33] Petitioner further contends that a quasi-judicial body is not excluded from the purview of Rule 43 just because it is not mentioned therein.[34] On this point, the Court agrees with the petitioner.

Sec. 1, Rule 43 of the Rules of Court provides: Section 1. Scope. - This Rule shall apply to appeals from judgments or final orders of the Court of Tax Appeals, and from awards, judgments, final orders or resolutions of or authorized by any quasi-judicial agency in the exercise of its quasi-judicial functions. Among these agencies are the Civil Service Commission, Central Board of Assessment Appeals, Securities and Exchange Commission, Office of the President, Land Registration Authority, Social Security Commission, Civil Aeronautics Board, Bureau of Patents, Trademarks and Technology Transfer, National Electrification Administration, Energy Regulatory Board, National Telecommunications Commission, Department of Agrarian Reform under Republic Act No. 6657, Government Service Insurance System, Employees Compensation Commission, Agricultural Inventions Board, Insurance Commission, Philippine Atomic Energy Commission, Board of Investments, Construction Industry Arbitration Commission, and voluntary arbitrators authorized by law. (Emphasis supplied) Indeed, the PRC is not expressly mentioned as one of the agencies which are expressly enumerated under Section 1, Rule 43 of the Rules of Court. However, its absence from the enumeration does not, by this fact alone, imply its exclusion from the coverage of said Rule.[35] The Rule expressly provides that it should be applied to appeals from awards, judgments final orders or resolutions of any quasi-judicial agency in the exercise of its quasi-judicial functions. The phrase "among these agencies" confirms that the enumeration made in the Rule is not exclusive to the agencies therein listed.[36]

Specifically, the Court, in Yang v. Court of Appeals,[37] ruled that Batas Pambansa (B.P.) Blg. 129[38] conferred upon the CA exclusive appellate jurisdiction over appeals from decisions of the PRC. The Court held: The law has since been changed, however, at least in the matter of the particular court to which appeals from the Commission should be taken. On August 14, 1981, Batas Pambansa Bilang 129 became effective and in its Section 29, conferred on the Court of Appeals "exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or commissions except those falling under the appellate jurisdiction of the Supreme Court. x x x." In virtue of BP 129, appeals from the Professional Regulations Commission are now exclusively cognizable by the Court of Appeals.[39] (Emphasis supplied) Clearly, the enactment of B.P. Blg. 129, the precursor of the present Rules of Civil Procedure,[40] lodged with the CA such jurisdiction over the appeals of decisions made by the PRC. Anent the substantive merits of the case, petitioner questions the PRC decision for being without an expert testimony to support its conclusion and to establish the cause of Editha's injury. Petitioner avers that in cases of medical malpractice, expert testimony is necessary to support the conclusion as to the cause of the injury. [41] Medical malpractice is a particular form of negligence which consists in the failure of a physician or surgeon to apply to his practice of medicine that degree of care and skill which is ordinarily employed by the profession generally, under similar conditions, and in like surrounding circumstances.[42] In order to successfully pursue such a claim, a patient must prove that the physician or surgeon either failed to do something which a reasonably prudent physician or surgeon would not have done, and that the failure or action caused injury to the patient.[43] There are four elements involved in medical negligence cases: duty, breach, injury and proximate causation. [44] A physician-patient relationship was created when Editha employed the services of the petitioner. As Editha's physician, petitioner was duty-bound to use at least the same level of care that any reasonably competent doctor would use to treat a condition under the same circumstances.[45] The breach of these professional duties of skill and care, or their improper performance by a physician surgeon, whereby the patient is injured in body or in health, constitutes actionable malpractice.[46] As to this aspect of medical malpractice, the determination of the reasonable level of care and the breach thereof, expert testimony is essential.[47] Further, inasmuch as the causes of the injuries involved in malpractice actions are determinable only in the light of scientific knowledge, it has been recognized that expert testimony is usually necessary to support the conclusion as to causation.[48] In the present case, respondents did not present any expert testimony to support their claim that petitioner failed to do something which a reasonably prudent physician or surgeon would have done. Petitioner, on the other hand, presented the testimony of Dr. Augusto M. Manalo, who was clearly an expert on the subject. Generally, to qualify as an expert witness, one must have acquired special knowledge of the subject matter about which he or she is to testify, either by the study of recognized authorities on the subject or by practical experience.[49] Dr. Manalo specializes in gynecology and obstetrics, authored and co-authored various publications on the subject, and is a professor at the University of the Philippines.[50] According to him, his diagnosis of Editha's case was "Ectopic Pregnancy Interstitial (also referred to as Cornual), Ruptured."[51] In stating that the D&C procedure was not the proximate cause of the rupture of Editha's uterus resulting in her hysterectomy, Dr. Manalo testified as follows: Atty. Hidalgo: Q: Doctor, we want to be clarified on this matter. The complainant had testified here that the D&C was the proximate cause of the rupture of the uterus. The condition which she found herself in on the second admission. Will you please tell us whether that is true or not? A: Yah, I do not think so for two reasons. One, as I have said earlier, the instrument cannot reach

the site of the pregnancy, for it to further push the pregnancy outside the uterus. And, No. 2, I was thinking a while ago about another reason- well, why I don't think so, because it is the triggering factor for the rupture, it could havethe rupture could have occurred much earlier, right after the D&C or a few days after the D&C. Q: In this particular case, doctor, the rupture occurred to have happened minutes prior to the hysterectomy or right upon admission on September 15, 1994 which is about 1 months after the patient was discharged, after the D&C was conducted. Would you tell us whether there is any relation at all of the D&C and the rupture in this particular instance? A: I don't think so for the two reasons that I have just mentioned- that it would not be possible for the instrument to reach the site of pregnancy. And, No. 2, if it is because of the D&C that rupture could have occurred earlier.[52] (Emphases supplied) Clearly, from the testimony of the expert witness and the reasons given by him, it is evident that the D&C procedure was not the proximate cause of the rupture of Editha's uterus. During his cross-examination, Dr. Manalo testified on how he would have addressed Editha's condition should he be placed in a similar circumstance as the petitioner. He stated: Atty. Ragonton: Q: Doctor, as a practicing OB-Gyne, when do you consider that you have done a good, correct and ideal dilatation and curettage procedure? A: Well, if the patient recovers. If the patient gets well. Because even after the procedure, even after the procedure you may feel that you have scraped everything, the patient stops bleeding, she feels well, I think you should still have some reservations, and wait a little more time. Q: A: If you were the OB-Gyne who performed the procedure on patient Editha Ramolete, would it be your standard practice to check the fetal parts or fetal tissues that were allegedly removed? From what I have removed, yes. But in this particular case, I think it was assumed that it was part of the meaty mass which was expelled at the time she was urinating and flushed in the toilet. So there's no way. There was [sic] some portions of the fetal parts that were removed? No, it was described as scanty scraping if I remember it rightscanty. And you would not mind checking those scant or those little parts that were removed? Well, the fact that it was described means, I assume that it was checked, `no. It was described as scanty and the color also, I think was described. Because it would be very unusual, even improbable that it would not be examined, because when you scrape, the specimens are right there before your eyes. It's in front of you. You can touch it. In fact, some of them will stick to the instrument and therefore to peel it off from the instrument, you have to touch them. So, automatically they are examined closely. As a matter of fact, doctor, you also give telephone orders to your patients through telephone? Yes, yes, we do that, especially here in Manila because you know, sometimes a doctor can also be tied-up somewhere and if you have to wait until he arrive at a certain place before you give the order, then it would be a lot of time wasted. Because if you know your patient, if you have handled your patient, some of the symptoms you can interpret that comes with practice. And, I see no reason for not allowing telephone orders unless it is the first time that you will be encountering the patient. That you have no idea what the problem is.

Q: A: Q: A:

Q: A:

Q: A:

But, doctor, do you discharge patients without seeing them? Sometimes yes, depending on how familiar I am with the patient. We are on the question of telephone orders. I am not saying that that is the idle [sic] thing to do, but I think the reality of present day practice somehow justifies telephone orders. I have patients whom I have justified and then all of a sudden, late in the afternoon or late in the evening, would suddenly call they have decided that they will go home inasmuch as they anticipated that I will discharge them the following day. So, I just call and ask our resident on duty or the nurse to allow them to go because I have seen that patient and I think I have full grasp of her problems. So, that's when I make this telephone orders. And, of course before giving that order I ask about how she feels.[53] (Emphases supplied) From the foregoing testimony, it is clear that the D&C procedure was conducted in accordance with the standard practice, with the same level of care that any reasonably competent doctor would use to treat a

condition under the same circumstances, and that there was nothing irregular in the way the petitioner dealt with Editha. Medical malpractice, in our jurisdiction, is often brought as a civil action for damages under Article 2176[54] of the Civil Code. The defenses in an action for damages, provided for under Article 2179 of the Civil Code are: Art. 2179. When the plaintiff's own negligence was the immediate and proximate cause of his injury, he cannot recover damages. But if his negligence was only contributory, the immediate and proximate cause of the injury being the defendant's lack of due care, the plaintiff may recover damages, but the courts shall mitigate the damages to be awarded. Proximate cause has been defined as that which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces injury, and without which the result would not have occurred.[55] An injury or damage is proximately caused by an act or a failure to act, whenever it appears from the evidence in the case that the act or omission played a substantial part in bringing about or actually causing the injury or damage; and that the injury or damage was either a direct result or a reasonably probable consequence of the act or omission.[56] In the present case, the Court notes the findings of the Board of Medicine: When complainant was discharged on July 31, 1994, herein respondent advised her to return on August 4, 1994 or four (4) days after the D&C. This advise was clear in complainant's Discharge Sheet. However, complainant failed to do so. This being the case, the chain of continuity as required in order that the doctrine of proximate cause can be validly invoked was interrupted. Had she returned, the respondent could have examined her thoroughly.[57] x x x (Emphases supplied) Also, in the testimony of Dr. Manalo, he stated further that assuming that there was in fact a misdiagnosis, the same would have been rectified if Editha followed the petitioner's order to return for a check-up on August 4, 1994. Dr. Manalo stated: Granting that the obstetrician-gynecologist has been misled (justifiably) up to thus point that there would have been ample opportunity to rectify the misdiagnosis, had the patient returned, as instructed for her follow-up evaluation. It was one and a half months later that the patient sought consultation with another doctor. The continued growth of an ectopic pregnancy, until its eventual rupture, is a dynamic process. Much change in physical findings could be expected in 1 months, including the emergence of suggestive ones. [58] It is undisputed that Editha did not return for a follow-up evaluation, in defiance of the petitioner's advise. Editha omitted the diligence required by the circumstances which could have avoided the injury. The omission in not returning for a follow-up evaluation played a substantial part in bringing about Editha's own injury. Had Editha returned, petitioner could have conducted the proper medical tests and procedure necessary to determine Editha's health condition and applied the corresponding treatment which could have prevented the rupture of Editha's uterus. The D&C procedure having been conducted in accordance with the standard medical practice, it is clear that Editha's omission was the proximate cause of her own injury and not merely a contributory negligence on her part. Contributory negligence is the act or omission amounting to want of ordinary care on the part of the person injured, which, concurring with the defendant's negligence, is the proximate cause of the injury.[59] Difficulty seems to be apprehended in deciding which acts of the injured party shall be considered immediate causes of the accident.[60] Where the immediate cause of an accident resulting in an injury is the plaintiff's own act, which contributed to the principal occurrence as one of its determining factors, he cannot recover damages for the injury.[61] Again, based on the evidence presented in the present case under review, in which no negligence can be attributed to the petitioner, the immediate cause of the accident resulting in Editha's injury was her own omission when she did not return for a follow-up check up, in defiance of petitioner's orders. The immediate cause of Editha's injury was her own act; thus, she cannot recover damages from the injury. Lastly, petitioner asserts that her right to due process was violated because she was never informed by either respondents or by the PRC that an appeal was pending before the PRC.[62] Petitioner claims that a verification with the records section of the PRC revealed that on April 15, 1999, respondents filed a Memorandum on

Appeal before the PRC, which did not attach the actual registry receipt but was merely indicated therein.[63] Respondents, on the other hand avers that if the original registry receipt was not attached to the Memorandum on Appeal, PRC would not have entertained the appeal or accepted such pleading for lack of notice or proof of service on the other party.[64] Also, the registry receipt could not be appended to the copy furnished to petitioner's former counsel, because the registry receipt was already appended to the original copy of the Memorandum of Appeal filed with PRC.[65] It is a well-settled rule that when service of notice is an issue, the rule is that the person alleging that the notice was served must prove the fact of service. The burden of proving notice rests upon the party asserting its existence.[66] In the present case, respondents did not present any proof that petitioner was served a copy of the Memorandum on Appeal. Thus, respondents were not able to satisfy the burden of proving that they had in fact informed the petitioner of the appeal proceedings before the PRC. In EDI-Staffbuilders International, Inc. v. National Labor Relations Commission,[67] in which the National Labor Relations Commission failed to order the private respondent to furnish the petitioner a copy of the Appeal Memorandum, the Court held that said failure deprived the petitioner of procedural due process guaranteed by the Constitution, which could have served as basis for the nullification of the proceedings in the appeal. The same holds true in the case at bar. The Court finds that the failure of the respondents to furnish the petitioner a copy of the Memorandum of Appeal submitted to the PRC constitutes a violation of due process. Thus, the proceedings before the PRC were null and void. All told, doctors are protected by a special rule of law. They are not guarantors of care. They are not insurers against mishaps or unusual consequences[68] specially so if the patient herself did not exercise the proper diligence required to avoid the injury. WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of Appeals dated July 4, 2003 in CA-GR SP No. 62206 is hereby REVERSED and SET ASIDE. The Decision of the Board of Medicine dated March 4, 1999 exonerating petitioner is AFFIRMED. No pronouncement as to costs. SO Ynares-Santiago, (Chairperson), Chico-Nazario, Nachura, and Reyes, JJ., concur. ORDERED.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. L-24803 May 26, 1977 PEDRO ELCANO and PATRICIA ELCANO, in their capacity as Ascendants of Agapito Elcano, deceased, plaintiffs-appellants, vs. REGINALD HILL, minor, and MARVIN HILL, as father and Natural Guardian of said minor, defendants-appellees. Cruz & Avecilla for appellants. Marvin R. Hill & Associates for appellees.

BARREDO, J.: Appeal from the order of the Court of First Instance of Quezon City dated January 29, 1965 in Civil Case No. Q8102, Pedro Elcano et al. vs. Reginald Hill et al. dismissing, upon motion to dismiss of defendants, the complaint of plaintiffs for recovery of damages from defendant Reginald Hill, a minor, married at the time of the occurrence, and his father, the defendant Marvin Hill, with whom he was living and getting subsistence, for the killing by Reginald of the son of the plaintiffs, named Agapito Elcano, of which, when criminally prosecuted, the said accused was acquitted on the ground that his act was not criminal, because of "lack of intent to kill, coupled with mistake."

Actually, the motion to dismiss based on the following grounds: 1. The present action is not only against but a violation of section 1, Rule 107, which is now Rule III, of the Revised Rules of Court; 2. The action is barred by a prior judgment which is now final and or in res-adjudicata; 3. The complaint had no cause of action against defendant Marvin Hill, because he was relieved as guardian of the other defendant through emancipation by marriage. (P. 23, Record [p. 4, Record on Appeal.]) was first denied by the trial court. It was only upon motion for reconsideration of the defendants of such denial, reiterating the above grounds that the following order was issued: Considering the motion for reconsideration filed by the defendants on January 14, 1965 and after thoroughly examining the arguments therein contained, the Court finds the same to be meritorious and well-founded. WHEREFORE, the Order of this Court on December 8, 1964 is hereby reconsidered by ordering the dismissal of the above entitled case. SO ORDERED. Quezon City, Philippines, January 29, 1965. (p. 40, Record [p. 21, Record on Appeal.) Hence, this appeal where plaintiffs-appellants, the spouses Elcano, are presenting for Our resolution the following assignment of errors: THE LOWER COURT ERRED IN DISMISSING THE CASE BY UPHOLDING THE CLAIM OF DEFENDANTS THAT I THE PRESENT ACTION IS NOT ONLY AGAINST BUT ALSO A VIOLATION OF SECTION 1, RULE 107, NOW RULE 111, OF THE REVISED RULES OF COURT, AND THAT SECTION 3(c) OF RULE 111, RULES OF COURT IS APPLICABLE; II THE ACTION IS BARRED BY A PRIOR JUDGMENT WHICH IS NOW FINAL OR RES-ADJUDICTA; III THE PRINCIPLES OF QUASI-DELICTS, ARTICLES 2176 TO 2194 OF THE CIVIL CODE, ARE INAPPLICABLE IN THE INSTANT CASE; and IV THAT THE COMPLAINT STATES NO CAUSE OF ACTION AGAINST DEFENDANT MARVIN HILL BECAUSE HE WAS RELIEVED AS GUARDIAN OF THE OTHER DEFENDANT THROUGH EMANCIPATION BY MARRIAGE. (page 4, Record.) It appears that for the killing of the son, Agapito, of plaintiffs-appellants, defendant- appellee Reginald Hill was prosecuted criminally in Criminal Case No. 5102 of the Court of First Instance of Quezon City. After due trial, he was acquitted on the ground that his act was not criminal because of "lack of intent to kill, coupled with mistake." Parenthetically, none of the parties has favored Us with a copy of the decision of acquittal, presumably because appellants do not dispute that such indeed was the basis stated in the court's decision. And so, when appellants filed their complaint against appellees Reginald and his father, Atty. Marvin Hill, on account of the death of their son, the appellees filed the motion to dismiss above-referred to. As We view the foregoing background of this case, the two decisive issues presented for Our resolution are: 1. Is the present civil action for damages barred by the acquittal of Reginald in the criminal case wherein the action for civil liability, was not reversed? 2. May Article 2180 (2nd and last paragraphs) of the Civil Code he applied against Atty. Hill, notwithstanding the undisputed fact that at the time of the occurrence complained of. Reginald, though a minor, living with and getting subsistenee from his father, was already legally married? The first issue presents no more problem than the need for a reiteration and further clarification of the dual character, criminal and civil, of fault or negligence as a source of obligation which was firmly established in this

jurisdiction in Barredo vs. Garcia, 73 Phil. 607. In that case, this Court postulated, on the basis of a scholarly dissertation by Justice Bocobo on the nature of culpa aquiliana in relation to culpa criminal or delito and mere culpa or fault, with pertinent citation of decisions of the Supreme Court of Spain, the works of recognized civilians, and earlier jurisprudence of our own, that the same given act can result in civil liability not only under the Penal Code but also under the Civil Code. Thus, the opinion holds: The, above case is pertinent because it shows that the same act machinist. come under both the Penal Code and the Civil Code. In that case, the action of the agent killeth unjustified and fraudulent and therefore could have been the subject of a criminal action. And yet, it was held to be also a proper subject of a civil action under article 1902 of the Civil Code. It is also to be noted that it was the employer and not the employee who was being sued. (pp. 615-616, 73 Phil.). 1 It will be noticed that the defendant in the above case could have been prosecuted in a criminal case because his negligence causing the death of the child was punishable by the Penal Code. Here is therefore a clear instance of the same act of negligence being a proper subject matter either of a criminal action with its consequent civil liability arising from a crime or of an entirely separate and independent civil action for fault or negligence under article 1902 of the Civil Code. Thus, in this jurisdiction, the separate individuality of a cuasi-delito or culpa aquiliana, under the Civil Code has been fully and clearly recognized, even with regard to a negligent act for which the wrongdoer could have been prosecuted and convicted in a criminal case and for which, after such a conviction, he could have been sued for this civil liability arising from his crime. (p. 617, 73 Phil.) 2 It is most significant that in the case just cited, this Court specifically applied article 1902 of the Civil Code. It is thus that although J. V. House could have been criminally prosecuted for reckless or simple negligence and not only punished but also made civilly liable because of his criminal negligence, nevertheless this Court awarded damages in an independent civil action for fault or negligence under article 1902 of the Civil Code. (p. 618, 73 Phil.) 3 The legal provisions, authors, and cases already invoked should ordinarily be sufficient to dispose of this case. But inasmuch as we are announcing doctrines that have been little understood, in the past, it might not he inappropriate to indicate their foundations. Firstly, the Revised Penal Code in articles 365 punishes not only reckless but also simple negligence. If we were to hold that articles 1902 to 1910 of the Civil Code refer only to fault or negligence not punished by law, accordingly to the literal import of article 1093 of the Civil Code, the legal institution of culpa aquiliana would have very little scope and application in actual life. Death or injury to persons and damage to property- through any degree of negligence - even the slightest - would have to be Idemnified only through the principle of civil liability arising from a crime. In such a state of affairs, what sphere would remain for cuasidelito or culpa aquiliana? We are loath to impute to the lawmaker any intention to bring about a situation so absurd and anomalous. Nor are we, in the interpretation of the laws, disposed to uphold the letter that killeth rather than the spirit that giveth life. We will not use the literal meaning of the law to smother and render almost lifeless a principle of such ancient origin and such full-grown development as culpa aquiliana or cuasi-delito, which is conserved and made enduring in articles 1902 to 1910 of the Spanish Civil Code. Secondary, to find the accused guilty in a criminal case, proof of guilt beyond reasonable doubt is required, while in a civil case, preponderance of evidence is sufficient to make the defendant pay in damages. There are numerous cases of criminal negligence which can not be shown beyond reasonable doubt, but can be proved by a preponderance of evidence. In such cases, the defendant can and should be made responsible in a civil action under articles 1902 to 1910 of the Civil Code. Otherwise. there would be many instances of unvindicated civil wrongs. "Ubi jus Idemnified remedium." (p. 620,73 Phil.) Fourthly, because of the broad sweep of the provisions of both the Penal Code and the Civil Code on this subject, which has given rise to the overlapping or concurrence of spheres already discussed, and for lack of understanding of the character and efficacy of the action for culpa aquiliana, there has grown up a common practice to seek damages only by virtue of the civil responsibility arising from a crime, forgetting that there is another remedy, which is by invoking articles 1902-1910 of the Civil Code. Although this habitual method is allowed by, our laws, it has nevertheless rendered practically useless and nugatory the more expeditious and effective remedy based on culpa aquiliana or culpa extra-contractual. In the present case, we are asked

to help perpetuate this usual course. But we believe it is high time we pointed out to the harms done by such practice and to restore the principle of responsibility for fault or negligence under articles 1902 et seq. of the Civil Code to its full rigor. It is high time we caused the stream of quasi-delict or culpa aquiliana to flow on its own natural channel, so that its waters may no longer be diverted into that of a crime under the Penal Code. This will, it is believed, make for the better safeguarding or private rights because it realtor, an ancient and additional remedy, and for the further reason that an independent civil action, not depending on the issues, limitations and results of a criminal prosecution, and entirely directed by the party wronged or his counsel, is more likely to secure adequate and efficacious redress. (p. 621, 73 Phil.) Contrary to an immediate impression one might get upon a reading of the foregoing excerpts from the opinion in Garcia that the concurrence of the Penal Code and the Civil Code therein referred to contemplate only acts of negligence and not intentional voluntary acts - deeper reflection would reveal that the thrust of the pronouncements therein is not so limited, but that in fact it actually extends to fault or culpa. This can be seen in the reference made therein to the Sentence of the Supreme Court of Spain of February 14, 1919, supra, which involved a case of fraud or estafa, not a negligent act. Indeed, Article 1093 of the Civil Code of Spain, in force here at the time of Garcia, provided textually that obligations "which are derived from acts or omissions in which fault or negligence, not punishable by law, intervene shall be the subject of Chapter II, Title XV of this book (which refers to quasi-delicts.)" And it is precisely the underline qualification, "not punishable by law", that Justice Bocobo emphasized could lead to an ultimo construction or interpretation of the letter of the law that "killeth, rather than the spirit that giveth lift- hence, the ruling that "(W)e will not use the literal meaning of the law to smother and render almost lifeless a principle of such ancient origin and such full-grown development as culpa aquiliana or quasi-delito, which is conserved and made enduring in articles 1902 to 1910 of the Spanish Civil Code." And so, because Justice Bacobo was Chairman of the Code Commission that drafted the original text of the new Civil Code, it is to be noted that the said Code, which was enacted after the Garcia doctrine, no longer uses the term, 11 not punishable by law," thereby making it clear that the concept of culpa aquiliana includes acts which are criminal in character or in violation of the penal law, whether voluntary or matter. Thus, the corresponding provisions to said Article 1093 in the new code, which is Article 1162, simply says, "Obligations derived from quasi-delicto shall be governed by the provisions of Chapter 2, Title XVII of this Book, (on quasi-delicts) and by special laws." More precisely, a new provision, Article 2177 of the new code provides: ART. 2177. Responsibility for fault or negligence under the preceding article is entirely separate and distinct from the civil liability arising from negligence under the Penal Code. But the plaintiff cannot recover damages twice for the same act or omission of the defendant. According to the Code Commission: "The foregoing provision (Article 2177) through at first sight startling, is not so novel or extraordinary when we consider the exact nature of criminal and civil negligence. The former is a violation of the criminal law, while the latter is a "culpa aquiliana" or quasi-delict, of ancient origin, having always had its own foundation and individuality, separate from criminal negligence. Such distinction between criminal negligence and "culpa extracontractual" or "cuasi-delito" has been sustained by decision of the Supreme Court of Spain and maintained as clear, sound and perfectly tenable by Maura, an outstanding Spanish jurist. Therefore, under the proposed Article 2177, acquittal from an accusation of criminal negligence, whether on reasonable doubt or not, shall not be a bar to a subsequent civil action, not for civil liability arising from criminal negligence, but for damages due to a quasi-delict or 'culpa aquiliana'. But said article forestalls a double recovery.", (Report of the Code) Commission, p. 162.) Although, again, this Article 2177 does seem to literally refer to only acts of negligence, the same argument of Justice Bacobo about construction that upholds "the spirit that giveth lift- rather than that which is literal that killeth the intent of the lawmaker should be observed in applying the same. And considering that the preliminary chapter on human relations of the new Civil Code definitely establishes the separability and independence of liability in a civil action for acts criminal in character (under Articles 29 to 32) from the civil responsibility arising from crime fixed by Article 100 of the Revised Penal Code, and, in a sense, the Rules of Court, under Sections 2 and 3 (c), Rule 111, contemplate also the same separability, it is "more congruent with the spirit of law, equity and justice, and more in harmony with modern progress"- to borrow the felicitous relevant language in Rakes vs. Atlantic. Gulf and Pacific Co., 7 Phil. 359, to hold, as We do hold, that Article 2176, where it refers to "fault or negligencia covers not only acts "not punishable by law" but also acts criminal in character, whether intentional and voluntary or negligent. Consequently, a separate civil action lies against the offender in a criminal act, whether or not he is criminally prosecuted and found guilty or acquitted, provided that the offended party is not allowed, if he is actually charged also criminally, to recover damages on both scores, and would be entitled in such eventuality only to the bigger award of the two, assuming the awards made in the two cases vary. In other words, the extinction of civil liability referred to in Par. (e) of Section 3, Rule 111, refers exclusively to civil liability founded on Article 100 of the Revised Penal Code,

whereas the civil liability for the same act considered as a quasi-delict only and not as a crime is not estinguished even by a declaration in the criminal case that the criminal act charged has not happened or has not been committed by the accused. Briefly stated, We here hold, in reiteration of Garcia, that culpa aquiliana includes voluntary and negligent acts which may be punishable by law.4 It results, therefore, that the acquittal of Reginal Hill in the criminal case has not extinguished his liability for quasi-delict, hence that acquittal is not a bar to the instant action against him. Coming now to the second issue about the effect of Reginald's emancipation by marriage on the possible civil liability of Atty. Hill, his father, it is also Our considered opinion that the conclusion of appellees that Atty. Hill is already free from responsibility cannot be upheld. While it is true that parental authority is terminated upon emancipation of the child (Article 327, Civil Code), and under Article 397, emancipation takes place "by the marriage of the minor (child)", it is, however, also clear that pursuant to Article 399, emancipation by marriage of the minor is not really full or absolute. Thus "(E)mancipation by marriage or by voluntary concession shall terminate parental authority over the child's person. It shall enable the minor to administer his property as though he were of age, but he cannot borrow money or alienate or encumber real property without the consent of his father or mother, or guardian. He can sue and be sued in court only with the assistance of his father, mother or guardian." Now under Article 2180, "(T)he obligation imposed by article 2176 is demandable not only for one's own acts or omissions, but also for those of persons for whom one is responsible. The father and, in case of his death or incapacity, the mother, are responsible. The father and, in case of his death or incapacity, the mother, are responsible for the damages caused by the minor children who live in their company." In the instant case, it is not controverted that Reginald, although married, was living with his father and getting subsistence from him at the time of the occurrence in question. Factually, therefore, Reginald was still subservient to and dependent on his father, a situation which is not unusual. It must be borne in mind that, according to Manresa, the reason behind the joint and solidary liability of presuncion with their offending child under Article 2180 is that is the obligation of the parent to supervise their minor children in order to prevent them from causing damage to third persons. 5 On the other hand, the clear implication of Article 399, in providing that a minor emancipated by marriage may not, nevertheless, sue or be sued without the assistance of the parents, is that such emancipation does not carry with it freedom to enter into transactions or do any act that can give rise to judicial litigation. (See Manresa, Id., Vol. II, pp. 766-767, 776.) And surely, killing someone else invites judicial action. Otherwise stated, the marriage of a minor child does not relieve the parents of the duty to see to it that the child, while still a minor, does not give answerable for the borrowings of money and alienation or encumbering of real property which cannot be done by their minor married child without their consent. (Art. 399; Manresa, supra.) Accordingly, in Our considered view, Article 2180 applies to Atty. Hill notwithstanding the emancipation by marriage of Reginald. However, inasmuch as it is evident that Reginald is now of age, as a matter of equity, the liability of Atty. Hill has become milling, subsidiary to that of his son. WHEREFORE, the order appealed from is reversed and the trial court is ordered to proceed in accordance with the foregoing opinion. Costs against appellees. Fernando (Chairman), Antonio, and Martin, JJ., concur. SECOND DIVISION [G.R. No. 108395. March 7, 1997] HEIRS OF THE LATE TEODORO GUARING, JR., petitioners, vs. COURT OF APPEALS, PHILIPPINE RABBIT BUS LINES, INC., and ANGELES CUEVAS, respondents. DECISION MENDOZA, J.: This is a petition for review of the decision of the Court of Appeals, reversing the decision of the Regional Trial Court of Manila, Branch 20, which ordered respondent Philippine Rabbit Bus Lines, Inc. and its driver, Angeles Cuevas, to pay various amounts in damages to petitioners, the heirs of the late Teodoro Guaring, Jr. This case arose from an unfortunate vehicular accident which happened on November 7, 1987, along the North Expressway in San Rafael, Mexico, Pampanga. Involved in the accident were a Mitsubishi Lancer car driven by Teodoro Guaring, Jr., who died as a result of the mishap, Philippine Rabbit Bus No. 415, driven by Angeles Cuevas, and a Toyota Cressida car, driven by Eligio Enriquez. The Mitsubishi Lancer was heading north, at the speed of 80 to 90 kilometers per hour. Following it was the Philippine Rabbit Bus No. 415, with Plate No. CVD-

584. On the other hand, the Toyota Cressida was cruising on the opposite lane, bound for Manila. Petitioners, heirs of Teodoro Guaring, Jr., brought this action for damages, based on quasi delict, in the Regional Trial Court of Manila. Their evidence tended to show that the Rabbit bus tried to overtake Guarings car by passing on the right shoulder of the road and that in so doing it hit the right rear portion of Guarings Mitsubishi Lancer. The impact caused the Lancer to swerve to the south-bound lane, as a result of which it collided with the Toyota Cressida car coming from the opposite direction. With Teodoro Guaring, Jr. in the Lancer, seated beside him in front, was Bonifacio Clemente. Riding in the Toyota Cressida driven by Sgt. Eligio Enriquez was his mother, Dolores Enriquez, who was seated beside him. Seated at the back were his daughter Katherine (who was directly behind him), his wife Lilian, and his nephew Felix Candelaria. Killed in the collision were Teodoro Guaring, Jr., who was driving the Lancer, and Dolores Enriquez, who was riding in the Cressida, while injured were Bonifacio Clemente and the occupants of the Toyota Cressida. Private respondents, on the other hand, presented evidence tending to show that the accident was due to the negligence of the deceased Guaring. They claimed that it was Guaring who tried to overtake the vehicle ahead of him on the highway and that in doing so he encroached on the south-bound lane and collided with the oncoming Cressida of U.S. Air Force Sgt. Enriquez. Private respondents claim that as a result of the collision the Lancer was thrown back to its lane where it crashed into the Rabbit bus. On May 16, 1990, the Regional Trial Court rendered judgment finding Philippine Rabbit Bus Lines, Inc. and its driver, Angeles Cuevas, at fault, and holding them solidarily liable for damages to petitioners. The dispositive portion of its decision reads: WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendants, ordering the latter to pay the former, jointly and severally, the sum of: 1. P500,000.00 for loss of earning capacity of the deceased Teodoro Guaring, Jr.; 2. P1,000,000.00 as moral damages; 3. P50,000.00 as and for attorneys fees; and 4. Costs of suit. From this judgment, private respondent Philippine Rabbit Bus Lines, Inc. appealed, contending: 1. The lower court erred in not finding that the proximate cause of the collision was Guarings negligence in attempting to overtake the car in front of him. 2. The lower court erred in not holding that PRBL exercised due diligence in the supervision of its employees. 3. The lower court erred in awarding the amount of P500,000.00 in favor of plaintiffs-appellees representing Guarings loss of earning capacity. 4. The lower court erred in awarding moral damages in favor of plaintiffs-appellees.

5. The lower court erred in awarding attorneys fees in favor of plaintiffs-appellees. On December 16, 1992, the Court of Appeals rendered a decision, setting aside the decision of the Regional Trial Court of Manila in the civil action for damages and dismissing the complaint against private respondents Philippine Rabbit Bus Lines, Inc. and Cuevas, on the strength of a decision rendered by the Regional Trial Court at San Fernando, Pampanga, in the criminal case, acquitting the bus driver Angeles Cuevas of reckless imprudence resulting in damage to property and double homicide. The appellate court held that since the basis of petitioners action was the alleged negligence of the bus driver, the latters acquittal in the criminal case rendered the civil case based on quasi delict untenable. Hence, this petition. Petitioners contend that [1] EVIDENCE IN ONE CASE IS INADMISSIBLE IN ANOTHER CASE AGAINST A PERSON NOT A PARTY IN THE FIRST CASE AND TO HOLD OTHERWISE IS VIOLATIVE OF PROCEDURAL DUE PROCESS. [2] THE DECISION OF THE COURT OF APPEALS WAS WITHOUT FACTUAL FINDINGS AND DID NOT RESOLVE SQUARELY THE ASSIGNED ERRORS AND IS THEREFORE A VOID JUDGMENT.

[3] ACQUITTAL OF THE ACCUSED IN THE CRIMINAL CASE, WHETHER ON REASONABLE DOUBT OR NOT, IS NO BAR TO THE PROSECUTION FOR DAMAGES BASED ON QUASI-DELICT. The question is whether the judgment in the criminal case extinguished the liability of private respondent Philippine Rabbit Bus Lines, Inc. and its driver, Angeles Cuevas, for damages for the death of Teodoro Guaring, Jr. In absolving private respondents from liability, the Court of Appeals reasoned:[1] Since the appellees civil action is predicated upon the negligence of the accused which does not exist as found by the trial court in the said criminal case, it necessarily follows that the acquittal of the accused in the criminal case carries with it the extinction of the civil responsibility arising therefrom. Otherwise stated, the fact from which the civil action might arise, that is, the negligence of the accused, did not exist. The finding in the criminal case that accused Cuevas was not negligent and the proximate cause of the accident was the act of deceased Guaring in overtaking another vehicle ahead of him likewise exonerates PRB from any civil liability. Although it did not say so expressly, the appellate court appears to have based its ruling on Rule 111, 2(b) of the Rules of Criminal Procedure, which provides: (b) Extinction of the penal action does not carry with it extinction of the civil, unless the extinction proceeds from a declaration in a final judgment that the fact from which the civil might arise did not exist. This provision contemplates, however, a civil action arising from crime, whereas the present action was instituted pursuant to Art. 2176 of the Civil Code, which provides: Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter. It is now settled that acquittal of the accused, even if based on a finding that he is not guilty, does not carry with it the extinction of the civil liability based on quasi delict. Thus, in Tayag v. Alcantara,[2] it was held: . . . a separate civil action lies against the offender in a criminal act, whether or not he is criminally prosecuted and found guilty or acquitted, provided that the offended party is not allowed, if he is actually charged also criminally, to recover damages on both scores, and would be entitled in such eventuality only to the bigger award of the two, assuming the awards made in the two cases vary. In other words, the extinction of civil liability referred to in Par. (c), Section 3, Rule 111 [now Rule 111, 2(b)], refers exclusively to civil liability founded on Article 100 of the Revised Penal Code, whereas the civil liability for the same act considered as a quasi-delict only and not as a crime is not extinguished even by a declaration in the criminal case that the criminal act charged has not happened or has not been committed by the accused. . . . It is noteworthy that the accident in that case also involved a Philippine Rabbit bus and that, as in this case, the acquittal of the bus driver was based on reasonable doubt. We held that the civil case for damages was not barred since the cause of action of the heirs was based on quasi delict. Again, in Gula v. Dianala it was held:[3] Since the cause of action of plaintiffs-appellants is based on culpa aquiliana and not culpa criminal, thus precluding the application of the exception in Sec. 3(c) of Rule 111 [now Rule 111, 2(b)], and the fact that it can be inferred from the criminal case that defendant-accused, Pedro Dianala, was acquitted on reasonable doubt because of dearth of evidence and lack of veracity of the two principal witnesses, the doctrine in Mendoza vs. Arrieta, 91 SCRA 113, will not find application. In that case, the acquittal was not based on reasonable doubt and the cause of action was based on culpa criminal, for which reason we held the suit for damages barred. Even if damages are sought on the basis of crime and not quasi delict, the acquittal of the bus driver will not bar recovery of damages because the acquittal was based not on a finding that he was not guilty but only on reasonable doubt. Thus, it has been held:[4]

The judgment of acquittal extinguishes the liability of the accused for damages only when it includes a declaration that the facts from which the civil might arise did not exist. Thus, the civil liability is not extinguished by acquittal where the acquittal is based on reasonable doubt (PNB v. Catipon, 98 Phil. 286) as only preponderance of evidence is required in civil cases; where the court expressly declares that the liability of the accused is not criminal but only civil in nature (De Guzman v. Alvia, 96 Phil. 558; People v. Pantig, supra) as, for instance, in the felonies of estafa, theft, and malicious mischief committed by certain relatives who thereby incur only civil liability (See Art. 332, Revised Penal Code); and, where the civil liability does not arise from or is not based upon the criminal act of which the accused was acquitted (Castro v. Collector of Internal Revenue, 4 SCRA 1093; See Regalado, Remedial Law Compendium, 1983 ed., p. 623). In the present case, the dispositive portion of the decision of the RTC in the criminal case reads: WHEREFORE, the Court, entertaining reasonable doubt as to his guilt, the accused is hereby acquitted, of the offense of reckless imprudence resulting to double homicide and damage to property as charged in the Information, without pronouncement as to costs. SO ORDERED.[5] It was thus error for the appellate court to skip the review of the evidence in this case and instead base its decision on the findings of the trial court in the criminal case. In so doing, the appellate court disregarded the fact that this case had been instituted independently of the criminal case and that petitioners herein took no part in the criminal prosecution. In fact this action was filed below before the prosecution presented evidence in the criminal action. The attention of the Court of Appeals was called to the decision in the criminal case, which was decided on September 7, 1990, only when the decision of the trial court in this case was already pending review before it (the Court of Appeals). The appellate court did not even have before it the evidence in the criminal case. What it did was simply to cite findings contained in the decision of the criminal court. Worse, what the criminal court considered was reasonable doubt concerning the liability of the bus driver the appellate court regarded as a categorical finding that the driver was not negligent and, on that basis, declared in this case that the proximate cause of the accident was the act of deceased Guaring in overtaking another vehicle ahead of him. The notion that an action for quasi delict is separate and distinct from the criminal action was thus set aside. This case must be decided on the basis of the evidence in the civil case. This is important because the criminal court appears to have based its decision, acquitting the bus driver on the ground of reasonable doubt, solely on

what it perceived to be the relative capacity for observation of the prosecution and defense witnesses.[6] The prosecution did not call Bonifacio Clemente to testify despite the fact that shortly after the accident he gave a statement to the police, pinning the blame for the accident on the Philippine Rabbit bus driver. Indeed, the civil case involved a different set of witnesses. Petitioners presented Eligio Enriquez, who was driving the Cressida, and Bonifacio Clemente, who was a passenger in Guarings car. Thus, both had full view of the accident. It is unfair to bind petitioners to the result of the criminal action when the fact is that they did not take part therein. That the witnesses presented on behalf of the petitioners are different from those presented by the prosecution should have brought home to the appellate court the fundamental unfairness of considering the decision in the criminal case conclusive of the civil case. Because the Court of Appeals did not consider the evidence in the civil case, this case should be remanded to it so that it may render another decision in accordance with the law and the evidence. The issues raised by petitioners are essentially factual and require the evaluation of evidence, which is the function of the Court of Appeals in the exercise of its exclusive appellate jurisdiction. They cannot be decided in this Court. WHEREFORE, the decision of the Court of Appeals is REVERSED and this case is REMANDED to the Court of Appeals with instruction to render judgment with reasonable dispatch in accordance with law and the evidence presented in Civil Case No. 88-43860. SO ORDERED. SECOND DIVISION [G.R. No. 113433. March 17, 2000] LUISITO P. BASILIO, petitioner, vs. THE COURT OF APPEALS, HON. JESUS G. BERSAMIRA, and FE ADVINCULA, respondents. Sc DECISION

QUISUMBING, J.: This is a petition for review[1] under Rule 45 of the Revised Rules of Court which seeks to annul and set aside the Decision[2] and Resolution[3] of the Court of Appeals dated October 27, 1992 and January 5, 1994, respectively. The decision sustained the Order dated April 7, 1992 of the Regional Trial Court of Pasig City, Branch 166, denying due course to petitioners appeal from the Judgment in Criminal Case No. 70278 and allowing execution against the petitioner of the subsidiary indemnity arising from the offense committed by his truck driver. The relevant facts as gleaned from the records are as follows: On July 23, 1987, Simplicio Pronebo was charged by the Provincial Fiscal of Rizal with the crime of reckless imprudence resulting in damage to property with double homicide and double physical injuries.[4] The case was docketed as Criminal Case No. 70278. The information against him reads: Scmis "The undersigned Assistant Fiscal accused Simplicio Pronebo y Cruz of the crime of Reckless Imprudence Resulting in Damage to Property with Double Homicide and Double Physical Injuries, committed as follows: "That on or about the 15th day of July, 1987 in the municipality of Marikina, Metro Manila, Philippines and within the jurisdiction of this Honorable Court, the said accused, being then the driver and person in charge of a dump truck with plate no. NMW-609 owned and registered in the name of Luisito Basilio, without due regard to traffic laws, rules and regulations and without taking the necessary care and precaution to prevent damage to property and avoid injuries to persons, did then and there willfully, unlawfully and feloniously drive, manage and operate said dump truck in a careless, reckless, negligent and imprudent manner as a result of which said dump truck being then driven by him hit/bumped and sideswiped the following vehicles, to wit: a) a motorized tricycle with plate no. NF-2457 driven by Benedicto Abuel thereby causing damage in the amount of P1,100.00; b) an automobile Toyota Corona with plate no. NAL -138 driven by Virgilio Hipolito thereby causing damage in the amount of P2,190.50 c) a motorized tricycle with plate no. NW-9018 driven by Ricardo Sese y Julian thereby causing damage of an undetermined amount d) an automobile Mitsubishi Lancer with plate no. PHE-283 driven by Angelito Carranto thereby causing damage of an undetermined amount and 3) a Ford Econo Van with plate no. NFR-898 driven by Ernesto Aseron thereby causing damage of an undetermined amount; that due to the strong impact caused by the collision, the driver Ricardo Sese y Julian and his 3 passengers including Danilo Advincula y Poblete were hit/bumped which directly caused their death; while the other 2 passengers, namely; Cirilo Bangot sustained serious physical injuries which required medical attendance for a period of more than 30 days which incapacitated him from performing his customary labor for the same period of time and Dominador Legaspi Jr. sustained physical injuries which required medical attendance for a period of less than nine days and incapacitated him from performing his customary labor for the same period of time. Contrary to law." Mis sc After arraignment and trial, the court rendered its judgment dated February 4, 1991, which reads: "WHEREFORE, the court finds accused Simplicio Pronebo y Cruz guilty beyond reasonable doubt of Reckless Imrpudence resulting in the death of Danilo Advincula and is hereby sentenced to suffer the indeterminate penalty of two (2) years and four (4) months, as minimum to six (6) years of prision correccional, as maximum, and to indemnify the heirs of danilo Advincula P30,000.00 for the latters death, P31,614.00, as actual and compensatory damages. P2,000,000.00 for the loss of his earning capacity. P150,000.00, as moral damages, and P30,000.00 as attorneys fees, plus the costs of suit."[5] Thereafter, the accused filed an application for probation, so that the above judgment became final and executory. Pertinently, the trial court also found that at the time of the vehicular accident accused Simplicio Pronebo was employed as the driver of the dump truck owned by petitioner Luisito Basilio. On March 27, 1991, petitioner Luisito Basilio filed with the trial court a "Special Appearance and Motion for Reconsideration"[6] praying that the judgment dated February 4, 1991, be reconsidered and set aside insofar

as it affected him and subjected him to a subsidiary liability for the civil aspect of the criminal case. The motion was denied for lack of merit on September 16, 1991.[7] Petitioner filed a Notice of Appeal[8] on September 25, 1991. Mis spped On September 23, 1991, private respondent filed a Motion for Execution of the subsidiary civil liability[9] of petitioner Basilio. On April 7, 1992, the trial court issued two separate Orders. One denied due course and dismissed Basilios appeal for having been filed beyond the reglementary period.[10] The other directed the issuance of a writ of execution against him for the enforcement and satisfaction of the award of civil indemnity decreed in judgment on February 4, 1991.[11] Aggrieved, petitioner filed a petition for certiorari[12] under Rule 65 of the Revised Rules of Court with the Court of Appeals, alleging that respondent judge acted without jurisdiction or with grave abuse of discretion in issuing: (1) the Order dated September 16, 1991, denying the petitioners motion for reconsideration of the judgment dated February 4, 1991 insofar as the subsidiary liability of the petitioner was concerned, and (2) the Order dated April 7, 1992, directing the issuance of a writ of execution against the petitioner. Before the appellate court, petitioner claimed he was not afforded due process when he was found subsidiarily liable for the civil liability of the accused Pronebo in the criminal case. The Court of Appeals dismissed the petition in its Decision dated October 27, 1992, disposing as follows: Spped "ACCORDINGLY, in view of the foregoing disquisitions, the instant petition for certiorari and prohibition with preliminary injunction is DENIED DUE COURSE and should be, as it is hereby, DISMISSED for lack of persuasive force and effect."[13] Resolution[15] dated January 5, 1994. Hence this petition for review. Now, petitioner, in his assignment of errors, avers that respondent Court of Appeals erred: I. ... IN SUSTAINING THE RULING OF THE TRIAL COURT THAT THE JUDGMENT OF 4 FEBRUARY 1991 HAD BECOME FINAL AND EXECUTORY AS REGARDS BOTH THE CIVIL AND CRIMINAL ASPECTS WHEN THE ACCUSED APPLIED FOR PROBATION AT THE PROMULGATION. II. ... IN HOLDING THAT AS PETITIONER IS NEITHER AN ACCUSED OR A PARTY IN CRIMINAL CASE NO. 70278, HE IS NOT ENTITLED TO FILE A MOTION FOR RECONSIDERATION OF THE JUDGMENT OF SUBSIDIARY CIVIL LIABILITY AGAINST HIM. III. ... IN HOLDING THAT PETITIONER WAS NOT DEPRIVED OF HIS DAY IN COURT IN VIOLATION OF PROCEDURAL DUE PROCESS. Jo spped IV. ... IN HOLDING THAT PETITIONER WAS NOT ENTITLED TO THE AUXILIARY RELIEF OF PRELIMINARY INJUNCTION BECAUSE THE JUDGMENT OF CONVICTION "IS CONCLUSIVE UPON THE EMPLOYER". V. IN RULING THAT THE RESPONDENT JUDGE DID NOT ACT IN ABUSE OF AND/OR EXCESS OF JURISDICTION.[16] The issue before us is whether respondent Court of Appeals erred and committed grave abuse of discretion in denying the special civil action under Rule 65 filed by petitioner against the trial court. To resolve it, we must, however, also pass upon the following: (1) Had the judgment of February 4, 1991 of the trial court become final and executory when accused applied for probation at the promulgation? (2) May the petitioner as employer file a Motion for Reconsideration concerning civil liability decreed in the judgment if he is not a party to the criminal case? (3) May petitioner, as employer, be granted relief by way of a writ of preliminary injunction? Spped jo Petitioner asserts that he was not given the opportunity to be heard by the trial court to prove the absence of an employer-employee relationship between him and accused. Nor that, alternatively, the accused was not lawfully discharging duties as an employee at the time of the incident. While these assertions are not moved, A motion for reconsideration[14] was filed by the petitioner on November 24, 1992. This was denied in a

we shall give them due consideration. The statutory basis for an employers subsidiary liability is found in Article 103 of the Revised Penal Code.[17] This liability is enforceable in the same criminal proceeding where the award is made.[18] However, before execution against an employer ensues, there must be a determination, in a hearing set for the purpose of 1) the existence of an employer-employee relationship; 2) that the employer is engaged in some kind of industry; 3) that the employee is adjudged guilty of the wrongful act and found to have committed the offense in the discharge of his duties (not necessarily any offense he commits "while" in the discharge of such duties; and 4) that said employee is insolvent.[19] In Vda. De Paman vs. Seeris, 115 SCRA 709, 714 (1982), the Court observed that the drawback in the enforcement of the subsidiary liability in the same criminal proceeding is that the alleged employer is not afforded due process. Not being a party to the case, he is not heard as to whether he is indeed the employer. Hence, we held: Miso "To remedy the situation and thereby afford due process to the alleged employer, this Court directed the court a quo in Pajarito vs. Seeris (supra) to hear and decide in the same proceeding the subsidiary liability of the alleged owner and operator of the passenger bus. It was explained therein that the proceeding for the enforcement of the subsidiary liability may be considered as part of the proceeding for the execution of the judgment. A case in which an execution has been issued is regarded as still pending so that all proceedings on the execution are proceedings in the suit."[20] There are two instances when the existence of an employer-employee relationship of an accused driver and the alleged vehicle owner may be determined. One during the criminal proceeding, and the other, during the proceeding for the execution of the judgment. In both instances, petitioner should be given the opportunity to be heard, which is the essence of due process.[21] Petitioner knew of the criminal case that was filed against accused because it was his truck that was involved in the incident.[22] Further, it was the insurance company, with which his truck was insured, that provided the counsel for the accused, pursuant to the stipulations in their contract.[23] Petitioner did not intervene in the criminal proceedings, despite knowledge, through counsel, that the prosecution adduced evidence to show employer-employee relationship.[24] With the convicts application for probation, the trial courts judgment became final and executory. All told, it is our view that the lower court did not err when it found that petitioner was not denied due process. He had all his chances to intervene in the criminal proceedings, and prove that he was not the employer of the accused, but he chooses not to intervene at the appropriate time. Nex old Petitioner was also given the opportunity during the proceedings for the enforcement of judgment. Even assuming that he was not properly notified of the hearing on the motion for execution of subsidiary liability, he was asked by the trial court to make an opposition thereto, which he did on October 17, 1991, where he properly alleged that there was no employer-employee relationship between him and accused and that the latter was not discharging any function in relation to his work at the time of the incident.[25] In addition, counsel for private respondent filed and duly served on December 3, 1991, and December 9, 1991,

respectively, a manifestation praying for the grant of the motion for execution.[26] This was set for hearing on December 13, 1991. However, counsel for petitioner did not appear. Consequently, the court ordered in open court that the matter be submitted for resolution. It was only on January 6, 1992, that the petitioners counsel filed a counter-manifestation[27] that belatedly attempted to contest the move of the private prosecutor for the execution of the civil liability. Thus, on April 7, 1992, the trial court issued the Order granting the motion for execution of the subsidiary liability. Given the foregoing circumstances, we cannot agree with petitioner that the trial court denied him due process of law. Neither can we fault respondent appellant court for sustaining the judgment and orders of the trial court. Mani kx Accordingly, the instant petition is DENIED for lack of merit. The Decision of the Court of Appeals dated October 27, 1992, in CA-G.R. SP No. 27850 is AFFIRMED. Costs against petitioner. SO ORDERED. FIRST DIVISION [G.R. No. 127934. August 23, 2000] ACE HAULERS CORPORATION, petitioner, vs. THE HONORABLE COURT OF APPEALS AND EDERLINDA ABIVA, respondents.

DECISION PARDO, J.: The case is an appeal via certiorari seeking to set aside the decision of the Court of Appeals[1] affirming that of the Regional Trial Court, Quezon City, Branch 106, except for the award of thirty thousand pesos (P30,000.00) as exemplary damages, which was deleted. The dispositive portion of the trial court's decision reads as follows: WHEREFORE, judgment is hereby rendered ordering the defendant to pay plaintiff: 1. the amount of Two Hundred Thousand (P200,000.00) as actual damages; 2. the amount of Fifty Thousand (P50,000.00) as moral damages; 3. the amount of Thirty Thousand (P30,000.00) as exemplary damages; 4. the amount of Thirty Thousand (P30,000.00) as attorneys fees; 5. Costs of suit. SO ORDERED.[2] The facts, culled from the findings of the Court of Appeals, are as follows: The case was an action for damages arising from a vehicular mishap which took place on June 1, 1984, involving a truck owned by petitioner Ace Haulers Corporation and driven by its employee, Jesus dela Cruz, and a jeepney owned by Isabelito Rivera, driven by Rodolfo Parma. A third vehicle, a motorcycle, was bumped and dragged by the jeepney, and its rider, Fidel Abiva, was run over by the truck owned by petitioner Ace Haulers Corporation, causing his death. Upon his untimely demise, Fidel Abiva left behind a wife, respondent Erderlinda Abiva and their three (3) children. On July 27, 1984, a criminal information for reckless imprudence resulting in homicide was filed against the two drivers, Dela Cruz and Parma, docketed as Criminal Case No. Q-37248 before the RTC of Quezon City, Branch 103. While the criminal action was pending, on March 11, 1985, respondent Ederlinda Abiva filed with the Regional Trial Court, Quezon City, Branch 93, a separate civil action for damages against the two accused in the criminal case, as well as against Isabelito Rivera and petitioner Ace Haulers Corp., the owners of the vehicles involved in the accident and employers of the accused. In her complaint, respondent Abiva prayed that: 1. A Writ of Preliminary Attachment be immediately issued against the properties of the defendants as security for the satisfaction of any judgment that may be recovered; 2. Defendants in solidum, to pay plaintiff the amount of P200,000.00 as actual damage; 3. Defendants, in solidum, to pay plaintiff the sum of P50,000.00 as attorneys fees; 4. Defendants, in solidum, to pay plaintiff the amount of moral and exemplary damages which this Court may reasonably assess. On January 31, 1986, petitioner Ace Haulers Corp. and Jesus dela Cruz filed a motion to dismiss bringing to the trial courts attention the fact that a criminal action was pending before another branch of the same court, and that under the 1985 Rules on Criminal Procedure, the filing of an independent civil action arising from a quasi-delict is no longer allowed. Furthermore, said defendants alleged that respondents private counsel actively participated in the criminal proceedings, showing that the respondent was in fact pursuing the civil aspect automatically instituted with the criminal case. On February 21, 1986, respondent filed an opposition to the motion arguing that she was not pursuing the civil aspect in the criminal case as she, in fact, manifested in open court in the criminal proceedings that she was filing a separate and independent civil action for damages against the accused and their employers, as allowed under Articles 2177 and 2180 of the Civil Code. On February 28, 1986, the trial court dismissed the action for damages on the ground that no civil action shall proceed independently of the criminal prosecution in a case for reckless imprudence resulting in homicide. Respondent Abivas motion for reconsideration of the order of dismissal was also denied by the trial court. She then elevated the case before the Intermediate Appellate Court (IAC) by way of a petition for certiorari, docketed as Civil Case No. 09644. The appellate court reversed the dismissal order of the trial

court. It was then petitioner Ace Haulers Corporation and Jesus dela Cruzs turn to appeal the judgment of the IAC before the Supreme Court. On August 3, 1988, the Supreme Court issued a resolution denying the petition for review of Ace Haulers Corp. and Jesus dela Cruz for failure to sufficiently show that the Court of Appeals had committed any reversible error in the questioned error. The case was remanded to the trial court for further proceedings. In the meantime that the petition for review was pending before the Supreme Court, fire razed the portion of the Quezon City Hall building which housed the trial courts and the records of the case were among those that the fire reduced to ashes. It was not until March 26, 1992 that the records of the case was reconstituted by the trial court. While the pre-trial proceedings in the civil action for damages was still being set and reset upon motion of the opposing parties, on July 6, 1992, the RTC, Quezon City, Branch 83 rendered judgment in the criminal case, finding as follows: WHEREFORE, the prosecution having established beyond reasonable doubt the guilt of both accused Rodolfo Parma and Jesus dela Cruz for the offense of Reckless Imprudence Resulting in Homicide, this Court finds them guilty of said offense charged and hereby sentences each of them to suffer and undergo imprisonment of ONE (1) YEAR AND ONE (1) DAY of prision correccional as minimum to FOUR (4) YEARS, NINE (9) MONTHS and TEN (10) DAYS also of prision correccional as maximum, and to pay the costs. Accused Rodolfo Parma and Jesus dela Cruz are hereby ordered to pay the heirs of the deceased Fidel O. Abiva, jointly or pro rata, the amount of FIFTY THOUSAND PESOS (P50,000.00) as indemnification for his death and the amount of FOUR THOUSAND PESOS (P4,000.00) by way of actual damages. SO ORDERED. On March 9, 1993, the pre-trial conference of the civil case was finally set on April 6, 1993, and notices thereof were sent to the parties and their respective counsel. On the appointed date, however, no representative nor counsel for petitioner Ace Haulers Corporation appeared. Consequently, upon motion of respondent Abiva, the petitioner was declared as in default. Furthermore, defendants Jesus dela Cruz, Isabelito Rivera and Rodolfo Parma were discharged as defendants, and the case against them dismissed. On June 30, 1993, the trial court rendered a decision, ruling against petitioner Ace Haulers Corporation. The trial court summarized its findings thus: Hence, Mrs. Ederlinda Abiva as part of plaintiffs evidence, testified that she is 43 years old, a widow and housekeeper, residing at Cefels Subdivision, Deparo, Novaliches, Quezon City. She told the Court that she is the widow of Fidel Abiva, who died on June 1, 1984 after he was ran over by Isuzu Cargo Truck Plate No. NWYT Phil 93 owned and operated by the defendant Ace Haulers Corporation, then driven by Jesus dela Cruz and that because of the death of her husband, she suffered damages, among which, moral, exemplary and actual damages for her expenses and attorneys fees. She claimed that she is lawfully married to the late Fidel Abiva as evidenced by their Marriage Contract (Exhibits A and A-1). Out of their wedlock, (sic) they begot three (3) children, namely: Noel, Gina and Argentina with ages 25, 21 and 15, respectively. Her husband died on June 1, 1984 at around 11:45 p.m. (Exhibits B, B-1 and B-2), because of the vehicular accident which involved the wheeler truck of Ace Haulers Corporation driven by Jesus dela Cruz, a jeepney owned by Isabelito Rivera, then driven by Rodolfo Parma and a motorcycle driven by her husband. Her husband, after his death, was autopsied, as reflected in an Autopsy Report (Exhibit C) and by the Postmortem Finding (Exhibit C-1). This was also covered by a police report (Exhibit D) which shows that Jesus dela Cruz is the driver of the defendant (Exhibit D-1). This fact is reiterated in a sworn statement which she executed relative to this vehicular accident (Exhibit E) wherein the said driver mentioned and confirmed the name of his employer (Exhibit E-1). A criminal case was lodged against the drivers of the two vehicles and a Decision was rendered thereon in Criminal Case No. Q-37248 entitled People of the Philippines versus Jesus dela Cruz and Rodolfo Parma finding both of them guilty beyond reasonable doubt of the crime charged. (Exhibits F, F-1, F-2, F-3, F-4 and F-5). This decision has now acquired finality as no appeal was taken by the accused. It is established, however, that prior to the filing of the instant case, Mrs. Abiva pleaded to Ace Haulers to compensate her for the death of her husband. But her plea went (sic) to deaf ears. She was thus constrained to file this case for damages. Further testimony of Mrs. Abiva revealed that before the death of her husband, he was employed with Philippine Airlines (PAL) earning P4,600.00.00 a month, as evidenced by the Pay Statement covering the period of 4-15-84 in the amount of P2,065.00 (Exhibits G, G-1, G-2 and G-3); that when he died, he was only 40 years old and healthy, and that based on the life history and pedigree of his family where some of its members lived up to 100 years, she expects her husband to live for no less than 15 years more and could have earned no less than P828,000.00 for the family. But this, her family was deprived, because his life was snatched away by this accident while her husband was riding in a motorcycle which he bought for P11,850.00

(Exhibits H and H-1) which was also totally wrecked. Resulting from her husbands death, Mrs. Abiva told the Court that she incurred expenses for his burial and funeral in the total amount of no less than P30,000.00 and for his wake of six days, in the amount of about P40,600.00 (Exhibits J, J-1, J-2, J-3, J-4, J-5, and J-6). She also spent around P80,000.00 as litigation expenses, in her quest for justice since she has to engage the services of four (4) counsels from the time of the filing of this case before the Hon. Miriam Defensor-Santiago, then Presiding Judge of this Court who once dismissed this case, and which led eventually to an appeal by certiorari which was later elevated up to the Supreme Court. (Exhibits K, K-1, K-2, K-3, K-4, K-5 and K-6). Blaming the defendant, Mrs. Abiva claimed that had Ace Haulers exercised diligence, care and prudence in the selection and supervision of its employees, her husband would have been spared from this accident. Hence, her prayer for the award of P200,000.00 for the death of her husband, who by now, could have risen in the promotional ladder to a senior Executive of PAL and could be earning about P30,000.00 salary per month by now. She further prays for award of moral damages in the amount of P200,000.00 exemplary damages of P100,000.00, attorneys fees of P50,000.00 and litigation expenses of P50,000.00. After the testimony of Mrs. Abiva as the lone witness for the plaintiff, counsel formally offered his exhibits and rested his case. Gathered from the evidence presented, testimonial and documentary, the Court finds enough legal and factual basis to grant the claim for damages by the plaintiff. The insinuations of negligence on the part of defendants driver is amply shown as one, who drove his vehicle fast, impervious to the safety of life and property of others, his utter lack of care and caution and his unmitigated imprudence, rolled into one, all these predicated the occurrence of this accident which took away a precious human life. Whoever by act or omission causes damages to another, there being fault or negligence, is obliged to pay for the damages done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict x x x (Article 2176, New Civil Code). Corollary to this, is the civil law concept that: The obligations imposed by Article 2176 is demandable not only for ones own acts or omissions, but also for those persons for whom one is responsible (Art. 2180, 1st paragraph, New Civil Code) x x x xxx

Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks, x x x (Article 2180 paragraph 5, New Civil Code). Taken in their appropriate context, and predicated on the evidence adduced which has not been evidentiarily traversed by the defendant, this Court is left to (sic) no other recourse but to grant the remedies and reliefs which in her complaint plaintiff prays for, all of them having been by her adduced evidence, preponderantly shown and established and out of which, she has shown herself to be completely deserving.[3] On September 13, 1993, petitioner appealed to the Court of Appeals.[4] On January 17, 1997, the Court of Appeals promulgated its decision, the dispositive portion of which reads as follows: WHEREFORE, except for the award of thirty thousand (P30,000.00) as exemplary damages, which is hereby set aside, the Decision appealed from is hereby AFFIRMED in all other respect. SO ORDERED. Hence, this appeal.[5] The issues raised are whether or not in an action for damages arising from a vehicular accident plaintiff may recover damages against the employer of the accused driver both in the criminal case (delict) and the civil case for damages based on quasi delict, but not recover twice for the same act; (2) whether the Court of Appeals erred in not lifting the order declaring petitioner as in default for failure to appear at the pre-trial conference; and (3) whether the damages awarded in the civil case were excessive, much more than the previous award in the criminal case. In Padua v. Robles,5 we held that Civil liability coexists with criminal responsibility. In negligence cases, the offended party (or his heirs) has the option between an action for enforcement of civil liability based on culpa criminal under Article 100 of the Revised Penal Code and an action for recovery of damages based on culpa aquiliana under Article 2176 of the Civil Code. x x x Article 2177 of the Civil Code, however, precludes recovery

of damages twice for the same negligent act or omission.6 Consequently, a separate civil action for damages lies against the offender in a criminal act, whether or not he is criminally prosecuted and found guilty or acquitted, provided that the offended party is not allowed, if he is actually charged also criminally, to recover damages on both scores, and would be entitled in such eventuality only to the bigger award of the two, assuming the awards made in the two cases vary.7 Hence, in this case, respondent Abiva shall have the choice which of the awards to take, naturally expecting that she would opt to recover the greater amount. It has not been shown that she has recovered on the award in the criminal case, consequently, she can unquestionably recover from petitioner in the civil case. As to the second issue raised, we find that petitioner was rightly declared as in default for its failure to appear during the pre-trial conference despite due notice. This is a factual question resolved by the Court of Appeals which we cannot review.8 As to the third issue regarding the award of damages to respondent Abiva, we find the award of actual damages to be supported by preponderant evidence. Basic is the rule that to recover actual damages, the amount of loss must not only be capable of proof but must actually be proven with reasonable degree of

certainty, premised upon competent proof or best evidence obtainable of the actual amount thereof.9 However, there is no basis for the award of moral damages, which is hereby deleted. The person claiming moral damages must prove the existence of bad faith by clear and convincing evidence for the law always presumes good faith. It is not enough that one merely suffered sleepless nights, mental anguish, serious anxiety as the result of the actuations of the other party. Invariably such action must be shown to have been willfully done in bad faith or with ill motive.10 The attorney's fees awarded is reduced to P20,000.00 which is ten (10%) percent of the amount of actual damages. WHEREFORE, the Court DENIES the petition for review on certiorari and AFFIRMS the decision of the Court of Appeals,11 with modification. The Court deletes the award of fifty thousand pesos (P50,000.00) as moral damages, and reduces the attorney fees to twenty thousand pesos (P20,000.00). No costs. SO ORDERED. FIRST DIVISION [G.R. No. 131280. October 18, 2000] PEPE CATACUTAN and AURELIANA CATACUTAN, petitioners, vs. HEIRS OF NORMAN KADUSALE, HEIRS OF LITO AMANCIO and GIL B. IZON, respondents. DECISION YNARES-SANTIAGO, J.: The issue raised in this petition for review on certiorari is whether or not a subsidiary writ of execution may issue against the employers of an accused, against whom a judgment of conviction had been entered, even when said employers never took part in the criminal proceedings where the accused was charged, tried and convicted. Assailed in the instant petition is the August 12, 1997 Decision[1] of the Court of Appeals in CA-G.R. SP No. 43617, directing the issuance of a subsidiary writ of execution against petitioners, as well as its October 9, 1997 Resolution,[2] denying petitioners' Motion for Reconsideration. The antecedent facts relevant to the issue before us may be summarized, as follows Petitioner Aureliana Catacutan is the registered owner and operator of a jeepney, driven by the accused Porferio Vendiola, which bumped a tricycle on April 11, 1991, in Banilad, Bacong, Negros Oriental, thereby causing the death of its driver, Norman Kadusale, and its passenger, Lito Amancio, and serious physical injuries to another passenger, respondent Gil B. Izon. Respondents thus filed a criminal case against Porferio Vendiola, for Reckless Imprudence Resulting in Double Homicide with Physical Injuries and Damages to Property on July 26, 1991, before the Regional Trial Court of Negros Oriental.

On December 1, 1995, the trial court rendered judgment,[3] the dispositive portion of which reads as follows: Wherefore, foregoing considered, this court is convinced beyond doubt that accused is guilty of negligence and imprudence under Article 365 of the Revised Penal Code in the collision which occurred in Banilad, Bacong, Negros Oriental on April 11, 1991 which claimed the lives of Norman Kadusale, the driver of the motortricycle, and Lito Amancio, a passenger of the motortricycle, and caused injury to Gil B. Izon. He is therefore sentenced to suffer the penalty of prision correccional medium and maximum periods. Applying the Indeterminate Sentence Law, the accused is sentenced to one year eight months and one day of prision correccional as minimum to two years, four months and one day of prision correccional as maximum for each death to be served successively, and for the physical injuries suffered by Gil B. Izon, accused is ordered to suffer the penalty of thirty days of arresto mayor straight. He is likewise ordered to indemnify the heirs of Norman Kadusale and Lito Amancio in the amount of Fifty Thousand Pesos each victim; and to pay actual damages to: 1. Norman Kadusale or his heirs the amount of P170,543.24; 2. Lito Amancio or his heirs the amount of P38,394.35; and 3. Gil B. Izon, the amount of P23,454.00. SO ORDERED.[4] Accused Vendiola did not appeal the judgment of conviction. Instead, he applied for probation. Meanwhile, when the judgment became final and executory, respondents moved for the issuance of a writ of execution and the corresponding writ was issued by the trial court on April 24, 1996. However, per the Sheriff's Return of

Service,[5] dated July 3, 1996, the writ was unsatisfied as the accused had "nothing to pay off the damages in the decision." On August 28, 1996, respondents filed a Motion for Subsidiary Writ of Execution[6] before the trial court, praying that such writ be issued against petitioner Aureliana Catacutan as registered owner and operator of the jeepney driven by the accused when the collision occurred. Petitioner Aureliana Catacutan filed her Opposition[7] thereto, arguing that she was never a party to the case and that to proceed against her would be in violation of the due process clause of the Constitution. Petitioner also argued that the subsidiary liability of the employer is not determined in the criminal case against the employee. On October 3, 1996, the trial court issued an Order[8] denying the said Motion for lack of merit. According to the trial court, it never acquired jurisdiction over petitioner Aureliana Catacutan since she was never impleaded as party to the case, and respondents' remedy was to file a separate case for damages. Respondents' Motion for Reconsideration was also denied on December 3, 1996.[9] Undaunted, respondents went on certiorari to the Court of Appeals. On August 12, 1997, the Court of Appeals rendered the assailed Decision. The issue raised in the instant petition is not new. It has been passed upon in the case of Yusay v. Adil,[10] where this Court held Petitioners contend that they were not informed of Criminal Case No. 11828 nor heard therein, in the matter of their alleged subsidiary liability and that they were thus denied their day in court, and that the court did not acquire jurisdiction over them. We hold otherwise. Petitioners were given ample opportunity to present their side. The respondent judge admitted their "Urgent Ex Parte Motion for Time to File Necessary Pleadings." The respondent judge also issued an order suspending the execution of the writ dated 24 October 1980 and granting petitioners until 5 November 1980 within which to file their comment and/or opposition to the Motion for Issuance of the Writ of Subsidiary Execution. On 4 November 1980, petitioners filed their Motion for Reconsideration of the order of 24 October 1980 and To Set Aside Subsidiary Writ of Execution. This was opposed by private respondent. On 21 November 1980, an order of denial of the Motion dated 4 November 1980 was issued. A second motion for reconsideration was filed by petitioners which was again opposed by private respondent. Petitioners filed their reply thereto. Acting on the pleadings, respondent judge issued a resolution denying petitioners' second motion for reconsideration. As stated in Martinez v. Barredo: "The employer cannot be said to have been deprived of his day in court, because the situation before us is not one wherein the employer is sued for a primary liability under article 1903 of the Civil Code, but one in which

enforcement is sought of a subsidiary civil liability incident to and dependent upon his driver's criminal negligence which is a proper issue to be tried and decided only in a criminal action. In other words, the employer becomes ipso facto subsidiarily liable upon his driver's conviction and upon proof of the latter's insolvency, in the same way that acquittal wipes out not only the employee's primary liability but also his employer's subsidiary liability for such criminal negligence (81 Phil. 1, 3, G.R. No. L-49308, May 13, 1948, citing Almeida et al., vs. Abaroa, 8 Phil., 178, affirmed in 218 U.S. 476; 54 Law ed., 1116; Wise & Co. vs. Larion, 45 Phil. 314, 320; Francisco vs. Onrubia, 46 Phil. 327; Province of Ilocos Sur vs. Tolentino, G.R. No. 34186, 56 Phil., 829; Moran, Comments on the Rules of Court, Vol. II, p. 403)." The employer is, in substance and in effect, a party to the criminal case against his employee, considering the subsidiary liability imposed upon him by law. Thus: "It is true that an employer, strictly speaking, is not a party to the criminal case instituted against his employee but in substance and in effect he is considering the subsidiary liability imposed upon him by law. It is his concern, as well as his employee, to see to it that his interest be protected in the criminal case by taking virtual participation in the defense of his employee. He cannot leave him to his own fate because his failure is also his. And if because of his indifference or inaction the employee is convicted and damages are awarded against him, he cannot later be heard to complain, if brought to court for the enforcement of his subsidiary liability, that he was not given his day in court. It was not without purpose that this Court sounded the following stern warning: "It is high time that the employer exercised the greatest care in selecting his employees, taking real and deep interest in their welfare; intervening in any criminal action brought against them by reason or as a result of the performance of their duties, if only in the way of giving them benefit of counsel; and consequently doing away with the practice of leaving them to their fates. If these be done, the American rule requiring notice on the part of the employer shall have been satisfied (Miranda vs. Malate Garage and Taxicab, Inc., 99 Phil. 670, 675, citing Martinez vs. Barredo, supra)." More recently, in the case of Basilio v. Court of Appeals,[11] the issuance of a subsidiary writ of execution against the employer of the accused therein was once more upheld, notwithstanding the non-participation of such employer in the criminal case against the accused. Instructive as it is on the issue at hand, we are reproducing hereunder this Court's pronouncement in said case, to wit The statutory basis for an employer's subsidiary liability is found in Article 103 of the Revised Penal Code. This liability is enforceable in the same criminal proceeding where the award is made. (Rules of Court, Rule 111, Sec. 1) However, before execution against an employer ensues, there must be a determination, in a hearing set for the purpose of 1) the existence of an employer-employee relationship; 2) that the employer is engaged in some kind of industry; 3) that the employee is adjudged guilty of the wrongful act and found to have committed the offense in the discharge of his duties (not necessarily any offense he commits "while" in the discharge of such duties); and 4) that said employee is insolvent. (Yonaha vs. CA, 255 SCRA 397, 402 [1996].) In Vda. De Paman vs. Seeris, 115 SCRA 709, 714 (1982), the Court observed that the drawback in the enforcement of the subsidiary liability in the same criminal proceeding is that the alleged employer is not afforded due process. Not being a party to the case, he is not heard as to whether he is indeed the employer. Hence, we held: To remedy the situation and thereby afford due process to the alleged employer, this Court directed the court a quo in Pajarito vs. Seeris (supra) to hear and decide in the same proceeding the subsidiary liability of the alleged owner and operator of the passenger bus. It was explained therein that the proceeding for the enforcement of the subsidiary liability may be considered as part of the proceeding for the execution of the judgment. A case in which an execution has been issued is regarded as still pending so that all proceedings on the execution are proceedings in the suit. (Vda. De Paman vs. Seeris, 115 SCRA 709, 714 [1982].) There are two instances when the existence of an employer-employee relationship of an accused driver and the alleged vehicle owner may be determined. One during the criminal proceeding, and the other, during the proceeding for the execution of the judgment. In both instances, petitioner should be given the opportunity to be heard, which is the essence of due process. (National Federation of Labor vs. National Labor Relations Commissions, 283 SCRA 275, 284 [1997].) Petitioner knew of the criminal case that was filed against accused because it was his truck that was involved in the incident. Further, it was the insurance company, with which his truck was insured, that provided the counsel for the accused, pursuant to the stipulations in their contract. Petitioner did not intervene in the criminal proceedings, despite knowledge, through counsel, that the prosecution adduced evidence to show employeremployee relationship. With the convict's application for probation, the trial court's judgment became final and executory. All told, it is our view that the lower court did not err when it found that petitioner was not denied due process. He had all his chances to intervene in the criminal proceedings, and prove that he was not the

employer of the accused, but he chooses not to intervene at the appropriate time. Petitioner was also given the opportunity during the proceedings for the enforcement of judgment. Even assuming that he was not properly notified of the hearing on the motion for execution of subsidiary liability, he was asked by the trial court to make an opposition thereto, which he did on October 17, 1991, where he properly alleged that there was no employer-employee relationship between him and accused and that the latter was not discharging any function in relation to his work at the time of the incident. In addition, counsel for private respondent filed and duly served on December 3, 1991, and December 9, 1991, respectively, a manifestation praying for the grant of the motion for execution. This was set for hearing on December 13, 1991. However, counsel for petitioner did not appear. Consequently, the court ordered in open court that the matter be submitted for resolution. It was only on January 6, 1992, that the petitioner's counsel filed a counter-manifestation that belatedly attempted to contest the move of the private prosecutor for the execution of the civil liability. Thus, on April 7, 1992, the trial court issued the Order granting the motion for execution of the subsidiary liability. Given the foregoing circumstances, we cannot agree with petitioner that the trial court denied him due process of law. Neither can we fault respondent appellant court for sustaining the judgment and orders of the trial court. In the instant case, we find no reason why the subsidiary writ of execution issued against petitioner Aurelianana Catacutan should be set aside. To begin with, as in Yusay and Basilio, supra, petitioners cannot complain of having been deprived of their day in court. They were duly furnished a copy of respondents' Motion for Subsidiary Writ of Execution to which they filed their Opposition. So, too, we find no good ground to order a separate hearing to determine the subsidiary liability of petitioner Aureliana Catacutan, as was ordered in the case of Pajarito v. Seeris, supra. To do so would entail a waste of both time and resources of the trial court as the requisites for the attachment of the subsidiary liability of the employer have already been established, to wit: First, the existence of an employer-employee relationship.

[12] Second, the employer is engaged in some kind of industry, land transportation industry in this case as the jeep driven by accused was admittedly a passenger jeep.[13] Third, the employee has already been
adjudged guilty of the wrongful act and found to have committed the offense in the discharge of his duties.

[14] Finally, said employee is insolvent.[15]

WHEREFORE, based on the foregoing, the petition is DENIED. No pronouncement as to costs. SO ORDERED. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 158995 September 26, 2006

L.G. FOODS CORPORATION and VICTORINO GABOR, Vice-President and General Manager, petitioners, vs. HON. PHILADELFA B. PAGAPONG-AGRAVIADOR, in her capacity as Presiding Judge of Regional Trial Court, Branch 43, Bacolod City, and SPS. FLORENTINO and THERESA VALLEJERA, respondents. DECISION GARCIA, J.: Assailed and sought to be set aside in this petition for review on certiorari is the Decision1 dated April 25, 2003 of the Court of Appeals (CA), as reiterated in its Resolution of July 10, 2003, 2 in CA-G.R. SP No. 67600, affirming an earlier Order of the Regional Trial Court (RTC) of Bacolod City, Branch 43, which denied the petitioners' motion to dismiss in Civil Case No. 99-10845, an action for damages arising from a vehicular accident thereat instituted by the herein private respondents - the spouses Florentino Vallejera and Theresa Vallejera - against the petitioners. The antecedent facts may be briefly stated as follows: On February 26, 1996, Charles Vallereja, a 7-year old son of the spouses Florentino Vallejera and Theresa Vallejera, was hit by a Ford Fiera van owned by the petitioners and driven at the time by their employee, Vincent Norman Yeneza y Ferrer. Charles died as a result of the accident. In time, an Information for Reckless Imprudence Resulting to Homicide was filed against the driver before the

Municipal Trial Court in Cities (MTCC), Bacolod City, docketed as Criminal Case No. 67787, entitled People of the Philippines v. Vincent Norman Yeneza. Unfortunately, before the trial could be concluded, the accused driver committed suicide, evidently bothered by conscience and remorse. On account thereof, the MTCC, in its order of September 30, 1998, dismissed the criminal case. On June 23, 1999, in the RTC of Bacolod City, the spouses Vallejera filed a complaint3 for damages against the petitioners as employers of the deceased driver, basically alleging that as such employers, they failed to exercise due diligence in the selection and supervision of their employees. Thereat docketed as Civil Case No. 99-10845, the complaint was raffled to Branch 43 of the court. In their Answer with Compulsory Counterclaim,4 the petitioners as defendants denied liability for the death of the Vallejeras' 7-year old son, claiming that they had exercised the required due diligence in the selection and supervision of their employees, including the deceased driver. They thus prayed in their Answer for the dismissal of the complaint for lack of cause of action on the part of the Vallejera couple. During pre-trial, the defendant petitioners insisted that their dismissal prayer be resolved. Hence, the trial court required them to file within ten days a memorandum of authorities supportive of their position. Instead, however, of the required memorandum of authorities, the defendant petitioners filed a Motion to Dismiss, principally arguing that the complaint is basically a "claim for subsidiary liability against an employer"

under the provision of Article 1035 of the Revised Penal Code. Prescinding therefrom, they contend that there must first be a judgment of conviction against their driver as a condition sine qua non to hold them liable. Ergo, since the driver died during the pendency of the criminal action, the sine qua non condition for their subsidiary liability was not fulfilled, hence the of lack of cause of action on the part of the plaintiffs. They further argue that since the plaintiffs did not make a reservation to institute a separate action for damages when the criminal case was filed, the damage suit in question is thereby deemed instituted with the criminal action. which was already dismissed. In an Order dated September 4, 2001,6 the trial court denied the motion to dismiss for lack of merit and set the case for pre-trial. With their motion for reconsideration having been denied by the same court in its subsequent order7 of September 26, 2001, the petitioners then went on certiorari to the CA in CA-G.R. SP No. 67600, imputing grave abuse of discretion on the part of the trial judge in refusing to dismiss the basic complaint for damages in Civil Case No. 99-10845. In the herein assailed decision8 dated April 25, 2003, the CA denied the petition and upheld the trial court. Partly says the CA in its challenged issuance: xxx xxx xxx

It is clear that the complaint neither represents nor implies that the responsibility charged was the petitioner's subsidiary liability under Art. 103, Revised Penal Code. As pointed out [by the trial court] in the Order of September 4, 2001, the complaint does not even allege the basic elements for such a liability, like the conviction of the accused employee and his insolvency. Truly enough, a civil action to enforce subsidiary liability separate and distinct from the criminal action is even unnecessary. xxx xxx xxx

Specifically, Civil Case No. 99-10845 exacts responsibility for fault or negligence under Art. 2176, Civil Code, which is entirely separate and distinct from the civil liability arising from negligence under the Revised Penal Code. Verily, therefore, the liability under Art. 2180, Civil Code, is direct and immediate, and not conditioned upon prior recourse against the negligent employee or prior showing of the latter's insolvency. (Underscoring in the original.) In time, the petitioners moved for a reconsideration but their motion was denied by the CA in its resolution9 of July 10, 2003. Hence, the petitioners' present recourse on their submission that the appellate court committed reversible error in upholding the trial court's denial of their motion to dismiss. We DENY. As the Court sees it, the sole issue for resolution is whether the spouses Vallejeras' cause of action in Civil Case No. 99-10845 is founded on Article 103 of the Revised Penal Code, as maintained by the petitioners, or derived from Article 218010 of the Civil Code, as ruled by the two courts below. It thus behooves us to examine the allegations of the complaint for damages in Civil Case No. 99-10845. That

complaint alleged, inter alia, as follows: xxx xxx xxx

3. That defendant [LG Food Corporation] is the registered owner of a Ford Fiera Van with Plate No. NMS 881 and employer sometime February of 1996 of one Vincent Norman Yeneza y Ferrer, a salesman of said corporation; 4. That sometime February 26, 1996 at around 2:00 P.M. at Rosario St., Bacolod City, the minor son of said plaintiffs [now respondents], Charles Vallejera, 7 years old, was hit and bumped by abovedescribed vehicle then driven by said employee, Vincent Norman Yeneza y Ferrer; 5. That the mishap was due to the gross fault and negligence of defendant's employee, who drove said vehicle, recklessly, negligently and at a high speed without regard to traffic condition and safety of other road users and likewise to the fault and negligence of the owner employer, herein defendants LG Food Corporation who failed to exercise due diligence in the selection and supervision of his employee, Vincent Norman Yeneza y Ferrer; 6. That as a result of said incident, plaintiffs' son suffered multiple body injuries which led to his untimely demise on that very day; 7. That a criminal case was filed against the defendant's employee, docketed as Criminal Case No. 67787, (earlier filed as Crim. Case No. 96-17570 before RTC) before MTC-Branch III, entitled "People v. Yeneza" for "Reckless Imprudence resulting to Homicide," but the same was dismissed because pending litigation, then remorse-stricken [accused] committed suicide; xxx xxx xxx 8. That the injuries and complications as well as the resultant death suffered by the late minor Charles Vallejera were due to the negligence and imprudence of defendant's employee; 9. That defendant LG Foods Corporation is civilly liable for the negligence/imprudence of its employee since it failed to exercise the necessary diligence required of a good father of the family in the selection and supervision of his employee, Vincent Norman Yeneza y Ferrer which diligence if exercised, would have prevented said incident. (Bracketed words and emphasis ours.) Nothing in the foregoing allegations suggests, even remotely, that the herein petitioners are being made to account for their subsidiary liability under Article 103 of the Revised Penal Code. As correctly pointed out by the trial court in its order of September 4, 2001 denying the petitioners' Motion to Dismiss, the complaint did not even aver the basic elements for the subsidiary liability of an employer under Article 103 of the Revised Penal Code, such as the prior conviction of the driver in the criminal case filed against him nor his insolvency. Admittedly, the complaint did not explicitly state that plaintiff Vallejeras were suing the defendant petitioners for damages based on quasi-delict. Clear it is, however, from the allegations of the complaint that quasi-delict was their choice of remedy against the petitioners. To stress, the plaintiff spouses alleged in their complaint gross fault and negligence on the part of the driver and the failure of the petitioners, as employers, to exercise due diligence in the selection and supervision of their employees. The spouses further alleged that the petitioners are civilly liable for the negligence/imprudence of their driver since they failed to exercise the necessary diligence required of a good father of the family in the selection and supervision of their employees, which diligence, if exercised, could have prevented the vehicular accident that resulted to the death of their 7year old son. Section 2, Rule 2, of the 1997 Rules of Civil Procedure defines cause of action as the "act or omission by which a party violates the right of another." Such act or omission gives rise to an obligation which may come from law, contracts, quasi contracts, delicts or quasi-delicts.11 Corollarily, an act or omission causing damage to another may give rise to two separate civil liabilities on the part of the offender, i.e., 1) civil liability ex delicto;12 and 2) independent civil liabilities, such as those (a) not arising from an act or omission complained of as felony (e.g., culpa contractual or obligations arising from law;13 the intentional torts;14 and culpa aquiliana15); or (b) where the injured party is granted a right to be enforced against the offender.17 Stated otherwise, victims of negligence or their heirs have a choice between an action to enforce the civil liability arising from culpa criminal under Article 100 of the Revised Penal Code, and an action for quasi-delict file an action independent and distinct from the criminal action.16 Either of these two possible liabilities may

(culpa aquiliana) under Articles 2176 to 2194 of the Civil Code. If, as here, the action chosen is for quasi-delict, the plaintiff may hold the employer liable for the negligent act of its employee, subject to the employer's defense of exercise of the diligence of a good father of the family. On the other hand, if the action chosen is for culpa criminal, the plaintiff can hold the employer subsidiarily liable only upon proof of prior conviction of its employee.18 Article 116119 of the Civil Code provides that civil obligation arising from criminal offenses shall be governed by penal laws subject to the provision of Article 217720 and of the pertinent provision of Chapter 2, Preliminary Title on Human Relation, and of Title XVIII of this Book, regulating damages. Plainly, Article 2177 provides for the alternative remedies the plaintiff may choose from in case the obligation has the possibility of arising indirectly from the delict/crime or directly from quasi-delict/tort. The choice is with the plaintiff who makes known his cause of action in his initiatory pleading or complaint,21 and not with the defendant who can not ask for the dismissal of the plaintiff's cause of action or lack of it based on the defendant's perception that the plaintiff should have opted to file a claim under Article 103 of the Revised Penal Code. upon prior recourse against the negligent employee and a prior showing of insolvency of such employee.22 Here, the complaint sufficiently alleged that the death of the couple's minor son was caused by the negligent act of the petitioners' driver; and that the petitioners themselves were civilly liable for the negligence of their driver for failing "to exercise the necessary diligence required of a good father of the family in the selection and supervision of [their] employee, the driver, which diligence, if exercised, would have prevented said accident." Had the respondent spouses elected to sue the petitioners based on Article 103 of the Revised Penal Code, they would have alleged that the guilt of the driver had been proven beyond reasonable doubt; that such accused driver is insolvent; that it is the subsidiary liability of the defendant petitioners as employers to pay for the damage done by their employee (driver) based on the principle that every person criminally liable is also civilly liable.23 Since there was no conviction in the criminal case against the driver, precisely because death intervened prior to the termination of the criminal proceedings, the spouses' recourse was, therefore, to sue the petitioners for their direct and primary liability based on quasi-delict. Besides, it is worthy to note that the petitioners, in their Answer with Compulsory Counter-Claim,24 repeatedly made mention of Article 2180 of the Civil Code and anchored their defense on their allegation that "they had exercised due diligence in the selection and supervision of [their] employees." The Court views this defense as an admission that indeed the petitioners acknowledged the private respondents' cause of action as one for quasi-delict under Article 2180 of the Civil Code. All told, Civil Case No. 99-10845 is a negligence suit brought under Article 2176 - Civil Code to recover damages primarily from the petitioners as employers responsible for their negligent driver pursuant to Article 2180 of the Civil Code. The obligation imposed by Article 2176 is demandable not only for one's own acts or omissions, but also for those of persons for whom one is responsible. Thus, the employer is liable for damages caused by his employees and household helpers acting within the scope of their assigned tasks, even though the former is not engaged in any business or industry. Citing Maniago v. CA,25 petitioner would argue that Civil Case No. 99-10845 should have been dismissed for failure of the respondent spouses to make a reservation to institute a separate civil action for damages when the criminal case against the driver was filed. The argument is specious. To start with, the petitioners' reliance on Maniago is obviously misplaced. There, the civil case was filed while the criminal case against the employee was still pending. Here, the criminal case against the employee driver was prematurely terminated due to his death. Precisely, Civil Case No. 99-10845 was filed by the respondent spouses because no remedy can be obtained by them against the petitioners with the dismissal of the criminal case against their driver during the pendency thereof. The circumstance that no reservation to institute a separate civil action for damages was made when the criminal case was filed is of no moment for the simple reason that the criminal case was dismissed without any pronouncement having been made therein. In reality, therefor, it is as if there was no criminal case to speak of in the first place. And for the petitioners to insist for the conviction of their driver as a condition sine qua non to hold them liable for damages is to ask for the impossible. IN VIEW WHEREOF, the instant petition is DENIED for lack of merit.

Under Article 2180 of the Civil Code, the liability of the employer is direct or immediate. It is not conditioned

Costs against the petitioners. SO ORDERED.