G.R. No.

L-33380

December 17, 1930

TEODORA ASTUDILLO, plaintiff-appellee, vs. MANILA ELECTRIC COMPANY, defendant-appellant. Ross, Lawrence and Selph and Antonio Vicente Sotto and Adolfo Brillantes for appellee. T. Carrascoso, Jr. for appellant.

The matter principally discussed is the question of the defendant company's liability under the circumstances stated. It is well established that the liability of electric light companies for damages for personal injuries is governed by the rules of negligence. Such companies are, however, not insurers of the safety of the public. But considering that electricity is an agency, subtle and deadly, the measure of care required of electric companies must be commensurate with or proportionate to the danger. The duty of exercising this high degree of diligence and care extends to every place where persons have a right to be. The poles must be so erected and the wires and appliances must be so located the persons rightfully near the place will not be injured. Particularly must there be proper insulation of the wires and appliances in places where there is probable likelihood of human contact therewith. (20 C. J., pp. 320 et seq.; San Juan Light & Transit Co. vs. Requena [1912], 224 U. S., 89.) We cannot agree with the defense of the Manila Electric Company in the lower court to the effect that the death of Juan Diaz Astudillo was due exclusively to his negligence. He only did the natural thing to be expected of one not familiar with the danger arising from touching an electric wire, and was wholly unconscious of his peril. Had not the wire caused the death of this young man, it would undoubtedly have been only a question of time when someone else, like a playful boy, would have been induced to take hold of the wire, with fatal results. The cause of the injury was one which could have been foreseen and guarded against. The negligence came from the act of the Manila Electric Company in so placing its pole and wires as to be within proximity to a place frequented by many people, with the possibility ever present of one of them losing his life by coming in contact with a highly charged and defectively insulated wire. As we understand the position of the Manila Electric Company on appeal, its principal defense now is that it has fully complied with the provisions of its franchise and of the ordinances of the City of Manila. It is undeniable that the violation of franchise, an ordinance, or a statute might constitute negligence. But the converse is not necessarily true, and compliance with a franchise, an ordinance, or a statute is not conclusive proof that there was no negligence. The franchise, ordinance, or statute merely states the minimum conditions. The fulfillment of these conditions does not render unnecessary other precautions required by ordinary care. (Moore vs. Hart [1916], 171 Ky., 725; Oliver vs. Weaver [1923], 72 Colo., 540; Caldwell vs. New Jersey Steamboat Co. [1872], 47 N. Y., 282; Consolidated Electric Light & Power Co. vs. Healy [1902], 65 Kan., 798.) The company further defends in this court on the ground that it has not been proven that the deceased is an acknowledged natural child of the plaintiff mother. Technically this is correct. (Civil Code, art. 944). At the same time, it should first of all be mentioned that, so far as we know, this point was not raised in the lower court. Further, while the mother may thus be precluded from succeeding to the estate of the son, yet we know of no reason why she cannot be permitted to secure damages from the company when the negligence of this company resulted in the death of her child.lawphi1>net We, therefore, conclude that the plaintiff is entitled to damages. But the evidence indicative of the true measure of those damages is sadly deficient. All that we know certainly is that the deceased was less than 20 years of age, a student, and working in the Ateneo de Manila, but at what wages we are not told. We are also shown that approximately P200 was needed to defray the travel and funeral expenses. As would happen in the case of a jury who have before them one of the parents, her position to life, and the age and sex of the child, varying opinions, have been disclosed in the court regarding the estimate of the damages with reference to the next of kin. Various sums have been suggested, beginning as low as P1,000 and extending as high as P5,000. A majority of the court finally arrived at the sum of P1,500 as appropriate damages in this case. The basis of this award would be the P1,000 which have been allowed in other cases for the death of young

MALCOLM, J.: In August, 1928, a young man by the name of Juan Diaz Astudillo met his death through electrocution, when he placed his right hand on a wire connected with an electric light pole situated near Santa Lucia Gate, Intramuros, in the City of Manila. Shortly thereafter, the mother of the deceased instituted an action in the Court of First Instance of Manila to secure from the Manila Electric Company damages in the amount of P30,000. The answer of the company set up as special defenses that the death of Juan Diaz Astudillo was due solely to his negligence and lack of care, and that the company had employed the diligence of a good father of a family to prevent the injury. After trial, which included an ocular inspection of the place where the fatality occurred, judgment was rendered in favor of the plaintiff and against the defendant for the sum of P15,000, and costs. As is well known, a wall surrounds the District of Intramuros, in the City of Manila. At intervals, gates for the ingress and egress of pedestrians and vehicles penetrate the wall. One of these openings toward Manila Bay is known as the Santa Lucia Gate. Above this gate and between the wall and a street of Intramuros is a considerable space sodded with grass with the portion directly over the gate paved with stone. Adjoining this place in Intramuros are the buildings of the Ateneo de Manila, the Agustinian Convent, the Bureau of Public Works, and the Santa Lucia Barracks. The proximity to these structures and to the congested district in the Walled City has made this a public place where persons come to stroll, to rest, and to enjoy themselves. An employee of the City of Manila, a number of years ago, put up some wire to keep persons from dirtying the premises, but this wire has fallen down and is no obstacle to those desiring to make use of the place. No prohibitory signs have been posted. Near this place in the street of Intramuros is an electric light pole with the corresponding wires. The pole presumably was located by the municipal authorities and conforms in height to the requirements of the franchise of the Manila Electric Company. The feeder wires are of the insulated type, known as triple braid weather proof, required by the franchise. The pole, with its wires, was erected in 1920. It was last inspected by the City Electrician in 1923 or 1924. The pole was located close enough to the public place here described, so that a person, by reaching his arm out the full length, would be able to take hold of one of the wires. It would appear, according to the City Electrician, that even a wire of the triple braid weather proof type, if touched by a person, would endanger the life of that person by electrocution. About 6 o'clock in the evening of August 14, 1928, a group of boys or young men came to this public place. Two of them named Juan Diaz Astudillo and Alejo Ponsoy sauntered over to where the electric post was situated. They were there looking out towards Intramuros. For exactly what reason, no one will ever know, but Juan Diaz Astudillo, placing one foot on a projection, reached out and grasped a charged electric wire. Death resulted almost instantly.

children without there having been tendered any special proof of the amount of damages suffered, in connection with which should be taken into account the more mature age of the boy in the case at bar, together with the particular expenses caused by his death. (Manzanares vs Moreta [1918], 38 Phil., 821; Bernal and Enverso vs. House and Tacloban Electric & Ice Plant [1930], 54 Phil., 327; Cuison vs. Norton & Harrison Co. [1930], p. 18, ante.) In the light of the foregoing, the various errors assigned by the appellant will in the main be overruled, but as above indicated, the judgment will be modified by allowing the plaintiff to recover from the defendant the sum of P1,500, and the costs of both instances. Avancea, C.J., Street, Villamor, Ostrand, Johns and Villa-Real, JJ., concur.

against. The negligence came from the act of the defendant in so placing its pole and wires as to be w/n proximity to a place frequented by many people, with the possibility ever present of one of them losing his life by coming in contact with a highly charged and defectively insulated wire.

Separate Opinions

JOHNSON, J., dissenting: I dissent, I find nothing in the record which even remotely justifies a judgment for damages against the Manila Electric Company. There is not a word in the testimony which shows in the slightest degree any culpability or negligence on the part of the appellant. The judgment appealed from should therefore be revoked.

Astudillo vs. Manila Electric Co. Teodora Astudillo vs. Manila Electric Co. G.R. No. L-33380. 17 December 1930. Malcolm, J.: Facts: In August, 1928, a young man by the name of Juan Astudillo met his death through electrocution, when he placed his right hand on a wire connected with an electric light pole situated near Sta Lucia Gate, Intramuros, in the City of Manila. Shortly thereafter, the mother of the deceased instituted an action in the CFI Mla to secure from the defendant, Manila Electric Company, damages. After trial, judgment was rendered in favor of the plaintiff. Issue: WON defendant did not exercise due care and diligence so as to render it liable for damages. Ruling: The SC concludes that the plaintiff is entitled to damages. It is well established that the liability of electric light companies for damages for personal injuries is governed by the rules of negligence. Such companies are, however, not insurers of the safety of the public. But considering that electricity is an agency, subtle and deadly, the measure of care required of electric companies must be commensurate with or proportionate to the danger. The duty of exercising this high degree of diligence and care extends to every place where persons have a right to be. In the case at ber, the cause of the injury was one which could have been foreseen and guarded

PICART vs. SMITH, JR. G.R. No. L-12219 March 15, 1918 STREET, J.: FACTS: On the Carlatan Bridge in La Union. Picart was riding on his pony over said bridge. Before he had gotten half way across, Smith approached from the opposite direction in an automobile. 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. Picart 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. As the automobile approached, Smith 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. 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; 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, got hit by the car and the limb was broken. The horse fell and its rider was thrown off with some violenceAs a result of its injuries the horse died. The plaintiff received contusions which caused temporary unconsciousness and required medical attention for several days. From a judgment of the CFI of La Union absolving Smith from liability Picart has appealed. ISSUE: WON Smith was guilty of negligence such as gives rise to a civil obligation to repair the damage done HELD: the judgment of the lower court must be reversed, and judgment is here rendered that the Picart recover of Smith damages YES 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 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.

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 Smith 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, Smith 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.

Picart vs Smith 37 Phil 809 Torts and Damages Doctrine of Last Clear Chance In December 1912, Picart was riding his horse and while they were on a 75 meter long bridge, he saw Smiths car approaching. Smith blew his horn thrice while he was still at a distance away because Picart and his horse were on Smiths lane. But Picart did not move his horse to the other lane, instead he moved his horse closer to the railing. Smith continued driving towards Picart without slowing down and when he was already so near the horse he swerved to the other lane. But the horse got scared so it turned its body across the bridge; the horse struck the car and its limb got broken. Picart suffered injuries which required several days of medical attention while the horse eventually died. ISSUE: Whether or not Smith is negligent. HELD: Yes. And so was Picart for planting himself on the wrong side of the road. But Smiths negligence succeeded that of Picart. Smith saw at a distance when he blew his horn that Picart and his horse did not move to the other lane so he should have steered his car to the other lane at that point instead of swerving at the last minute. He therefore had the last clear chance to avoid the unfortunate incident. When Smiths car has approached the horse at such proximity it left no chance for Picart extricate himself and vigilance on his part will not avert injury. Picart can therefore recover damages from Smith but such should be proportioned by reason of his contributory negligence.

G.R. No. L-12219

March 15, 1918

AMADO PICART, plaintiff-appellant, vs. FRANK SMITH, JR., defendant-appellee. Alejo Mabanag 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; for appellant.

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, Carson, Johnson, J., reserves his vote. Araullo, Avancea, and Fisher, JJ., concur.

Separate Opinions MALCOLM, J., concurring: After mature deliberation, I have finally decided to concur with the judgment in this case. I do so because of my understanding of the "last clear chance" rule of the law of negligence as particularly applied to automobile accidents. This rule cannot be invoked where the negligence of the plaintiff is concurrent with that of the defendant. Again, if a traveler when he reaches the point of collision is in a situation to extricate himself and avoid injury, his negligence at that point will prevent a recovery. But Justice Street finds as a fact that the negligent act of the interval of time, and that at the moment the plaintiff had no opportunity to avoid the accident. Consequently, the "last clear chance" rule is applicable. In other words, when a traveler has reached a point where he cannot extricate himself and vigilance on his part will not avert the injury, his negligence in reaching that position becomes the condition and not the proximate cause of the injury and will not preclude a recovery. (Note especially Aiken vs. Metcalf [1917], 102 Atl., 330.)

G.R. No. L-44264 September 19, 1988 HEDY GAN y YU, petitioner, vs. THE HONORABLE COURT OF APPEALS and the PEOPLE OF THE PHILIPPINES, respondents. Pacis, Baluyot, Reyes & De Leon for petitioner. The Solicitor General for respondents.

of hearing on September 7, 1972. The grounds cited therefor were lack of interest on the part of the complaining witness to prosecute the case as evidenced by an affidavit of desistance submitted to the trial court and lack of eyewitness to sustain the charge. The motion to dismiss filed by the fiscal was never resolved. The Court instead ordered the prosecution to present its evidence. After the prosecution rested its case, the petitioner filed a motion to dismiss the case on the ground of insufficiency of evidence. On December 22, 1972, the trial court rendered judgment finding petitioner guilty beyond reasonable doubt of the of- offense charged. Petitioner appealed to the Court of Appeals in CA-G.R. No. 14472-CR. On May 3, 1976, the Court of Appeals rendered a decision, the dispositive portion of which reads as follows: Wherefore, as modified, the accused Hedy Gan is guilty beyond reasonable doubt of the crime of homicide thru simple imprudence and, pursuant to paragraph 2, Article 365 of the Revised Penal Code, she is hereby sentenced to the indeterminate penalty of three (3) months and eleven (11) days of arresto mayor and to indemnify the heirs of Isidoro Casino in the sum of Twelve Thousand Pesos (Pl2,000.00) without, however, any subsidiary imprisonment in 3 case of insolvency, and to pay the costs. Petitioner now appeals to this Court on the following assignments of errors: I The Court of Appeals erred in holding that when the petitioner saw a car travelling directly towards her, she should have stepped on the brakes immediately or in swerving her vehicle to the right should have also stepped on the brakes or lessened her speed, to avoid the death of a pedestrian. II The Court of Appeals erred in convicting the petitioner of the crime of Homicide thru Simple Imprudence. III The Court of Appeals erred in adjudging the petitioner liable to indemnify the 4 deceased in the sum of P12,000.00. We reverse. The test for determining whether or not a person is negligent in doing an act whereby injury or damage results to the person or property of another is this: Would a prudent man in the position of the person to whom negligence is attributed foresee harm to the person injured as a reasonable consequence of the course about to be pursued? If so, the law imposes the duty oil the doer to 5 take precaution against its mischievous results and the failure to do so constitutes negligence.

FERNAN, C.J.: Petitioner Hedy Gan was convicted of the crime of Homicide thru Reckless Imprudence in Criminal Case No. 10201 of the then Court of First Instance of Manila, Branch XXII presided by Judge Federico C. Alikpala. She was sentenced to an indeterminate penalty of four (4) months and one (1) day of arresto mayor as minimum and two (2) years, four (4) months and one (1) day of prision correccional as maximum and was made to indemnify the heirs of the victim the sum of P12,000.00 without any subsidiary imprisonment in case of insolvency and to pay the costs. On appeal, the trial court's decision was modified and petitioner was convicted only of Homicide thru Simple 1 Imprudence. Still unsatisfied with the decision of the Court of Appeals, petitioner has come to this Court for a complete reversal of the judgment below. The facts of the case as found by the appellate court are as follows: In the morning of July 4, 1972 at about 8:00 o'clock, the accused Hedy Gan was driving a Toyota car along North Bay Boulevard, Tondo, Manila. While in front of house no. 694 of North Bay Boulevard, there were two vehicles, a truck and a jeepney parked on one side of the road, one following the other about two to three meters from each other. As the car driven by the accused approached the place where the two vehicles were parked, there was a vehicle coming from the opposite direction, followed by another which tried to overtake and bypass the one in front of it and thereby encroached the lane of the car driven by the accused. To avoid a head-on collision with the oncoming vehicle, the defendant swerved to the right and as a consequence, the front bumper of the Toyota Crown Sedan hit an old man who was about to cross the boulevard from south to north, pinning him against the rear of the parked jeepney. The force of the impact caused the parked jeepney to move forward hitting the rear of the parts truck ahead of it. The pedestrian was injured, the Toyota Sedan was damaged on its front, the jeep suffered damages on its rear and front paints, and the truck sustained scratches at the wooden portion of its rear. The body of the old man who was later Identified as Isidoro Casino was immediately brought to the 2 Jose Reyes Memorial Hospital but was (pronounced) dead on arrival. An information for Homicide thru Reckless Imprudence was filed against petitioner in view of the above incident. She entered a plea of not guilty upon arraignment and the case was set for trial. Meanwhile, petitioner sought and was granted a re-investigation by the City Fiscal, as a result of which the trial fiscal moved for the dismissal of the case against petitioner during the resumption

A corollary rule is what is known in the law as the emergency rule. "Under that rule, one who suddenly finds himself in a place of danger, and is required to act without time to consider the best means that may be adopted to avoid the impending danger, is not guilty of negligence, if he fails to adopt what subsequently and upon reflection may appear to have been a better method, unless 6 the emergency in which he finds himself is brought about by his own negligence." Applying the above test to the case at bar, we find the petitioner not guilty of the crime of Simple Imprudence resulting in Homicide. The appellate court in finding the petitioner guilty said: The accused should have stepped on the brakes when she saw the car going in the opposite direction followed by another which overtook the first by passing towards its left. She should not only have swerved the car she was driving to the right but should have also tried to stop or lessen her speed so that she would not bump into the pedestrian who was crossing at the time but also the 7 jeepney which was then parked along the street. The course of action suggested by the appellate court would seem reasonable were it not for the fact that such suggestion did not take into account the amount of time afforded petitioner to react to the situation she was in. For it is undeniable that the suggested course of action presupposes sufficient time for appellant to analyze the situation confronting her and to ponder on which of the different courses of action would result in the least possible harm to herself and to others. Due to the lack of eyewitnesses, no evidence was presented by the prosecution with respect to the relative distances of petitioner to the parked jeepney and the oncoming overtaking vehicle that would tend to prove that petitioner did have sufficient time to reflect on the consequences of her instant decision to swerve her car to the light without stepping on her brakes. In fact, the evidence 8 presented by the prosecution on this point is the petitioner's statement to the police stating:: And masasabi ko lang ho umiwas ho ako sa isang sasakyan na biglang nagovertake sa sasakyan na aking kasalubong kung kaya ay aking kinabig sa kanan ang akin kotse subalit siya naman biglang pagtawid ng tao o victim at hindi ko na ho naiwasan at ako ay wala ng magawa . Iyan ho ang buong 9 pangyayari nang nasabing aksidente. (Emphasis supplied) The prosecution having presented this exhibit as its own evidence, we cannot but deem its veracity to have been admitted by it. Thus, under the circumstances narrated by petitioner, we find that the appellate court is asking too much from a mere mortal like the petitioner who in the blink of an eye had to exercise her best judgment to extricate herself from a difficult and dangerous situation caused by the driver of the overtaking vehicle. Petitioner certainly could not be expected to act 10 with all the coolness of a person under normal conditions. The danger confronting petitioner was real and imminent, threatening her very existence. She had no opportunity for rational thinking but only enough time to heed the very powerfull instinct of self-preservation. Also, the respondent court itself pronounced that the petitioner was driving her car within the legal limits. We therefore rule that the "emergency rule" enunciated above applies with full force to the case at bar and consequently absolve petitioner from any criminal negligence in connection with the incident under consideration.

We further set aside the award of damages to the heirs of the victim, who by executing a release of the claim due them, had effectively and clearly waived their right thereto. WHEREFORE, judgment is hereby rendered acquitting petitioner HEDY GAN y YU of the crime of Homicide thru Simple Imprudence. She is no longer liable for the P12,000.00 civil indemnity awarded by the appellate court to the heirs of the victim. SO ORDERED. Feliciano, Bidin and Cortes, JJ., concur.

G.R. No. 188288

January 16, 2012 and LOURDES VILORIA, Petitioners,

SPOUSES FERNANDO vs. CONTINENTAL AIRLINES, INC., DECISION REYES, J.:

As he was having second thoughts on traveling via Frontier Air, Fernando went to the Greyhound Station where he saw an Amtrak station nearby. Fernando made inquiries and was told that there are seats available and he can travel on Amtrak anytime and any day he pleased. Fernando then purchased two (2) tickets for Washington, D.C. From Amtrak, Fernando went to Holiday Travel and confronted Mager with the Amtrak tickets, telling her that she had misled them into buying the Continental Airlines tickets by misrepresenting that Amtrak was already fully booked. Fernando reiterated his demand for a refund but Mager was firm in her position that the subject tickets are non-refundable.

This is a petition for review under Rule 45 of the Rules of Court from the January 30, 2009 Decision of the Special Thirteenth Division of the Court of Appeals (CA) in CA-G.R. CV No. 88586 entitled "Spouses Fernando and Lourdes Viloria v. Continental Airlines, Inc.," the dispositive portion of which states:

Upon returning to the Philippines, Fernando sent a letter to CAI on February 11, 1998, demanding 3 a refund and alleging that Mager had deluded them into purchasing the subject tickets. In a letter dated February 24, 1998, Continental Micronesia informed Fernando that his complaint 4 had been referred to the Customer Refund Services of Continental Airlines at Houston, Texas. In a letter dated March 24, 1998, Continental Micronesia denied Fernandos request for a refund and advised him that he may take the subject tickets to any Continental ticketing location for the re-issuance of new tickets within two (2) years from the date they were issued. Continental Micronesia informed Fernando that the subject tickets may be used as a form of payment for the 5 purchase of another Continental ticket, albeit with a re-issuance fee. On June 17, 1999, Fernando went to Continentals ticketing office at Ayala Avenue, Makati City to have the subject tickets replaced by a single round trip ticket to Los Angeles, California under his name. Therein, Fernando was informed that Lourdes ticket was non-transferable, thus, cannot be used for the purchase of a ticket in his favor. He was also informed that a round trip ticket to Los Angeles was US$1,867.40 so he would have to pay what will not be covered by the value of his San Diego to Newark round trip ticket. In a letter dated June 21, 1999, Fernando demanded for the refund of the subject tickets as he no longer wished to have them replaced. In addition to the dubious circumstances under which the subject tickets were issued, Fernando claimed that CAIs act of charging him with US$1,867.40 for a round trip ticket to Los Angeles, which other airlines priced at US$856.00, and refusal to allow him 6 to use Lourdes ticket, breached its undertaking under its March 24, 1998 letter. On September 8, 2000, Spouses Viloria filed a complaint against CAI, praying that CAI be ordered to refund the money they used in the purchase of the subject tickets with legal interest from July 21, 1997 and to pay P1,000,000.00 as moral damages, P500,000.00 as exemplary damages and 7 P250,000.00 as attorneys fees. CAI interposed the following defenses: (a) Spouses Viloria have no right to ask for a refund as the subject tickets are non-refundable; (b) Fernando cannot insist on using the ticket in Lourdes name for the purchase of a round trip ticket to Los Angeles since the same is non-transferable; (c) as Mager is not a CAI employee, CAI is not liable for any of her acts; (d) CAI, its employees and agents did not act in bad faith as to entitle Spouses Viloria to moral and exemplary damages and attorneys fees. CAI also invoked the following clause printed on the subject tickets: 3. To the extent not in conflict with the foregoing carriage and other services performed by each carrier are subject to: (i) provisions contained in this ticket, (ii) applicable tariffs, (iii) carriers conditions of carriage and related regulations which are made part hereof (and are available on

WHEREFORE, the Decision of the Regional Trial Court, Branch 74, dated 03 April 2006, awarding US$800.00 or its peso equivalent at the time of payment, plus legal rate of interest from 21 July 1997 until fully paid, [P]100,000.00 as moral damages, [P]50,000.00 as exemplary damages, [P+40,000.00 as attorneys fees and costs of suit to plaintiffs-appellees is hereby REVERSED and SET ASIDE. Defendant-appellants counterclaim is DENIED. Costs against plaintiffs-appellees. SO ORDERED.
2

On April 3, 2006, the Regional Trial Court of Antipolo City, Branch 74 (RTC) rendered a Decision, giving due course to the complaint for sum of money and damages filed by petitioners Fernando Viloria (Fernando) and Lourdes Viloria (Lourdes), collectively called Spouses Viloria, against respondent Continental Airlines, Inc. (CAI). As culled from the records, below are the facts giving rise to such complaint. On or about July 21, 1997 and while in the United States, Fernando purchased for himself and his wife, Lourdes, two (2) round trip airline tickets from San Diego, California to Newark, New Jersey on board Continental Airlines. Fernando purchased the tickets at US$400.00 each from a travel agency called "Holiday Travel" and was attended to by a certain Margaret Mager (Mager). According to Spouses Viloria, Fernando agreed to buy the said tickets after Mager informed them that there were no available seats at Amtrak, an intercity passenger train service provider in the United States. Per the tickets, Spouses Viloria were scheduled to leave for Newark on August 13, 1997 and return to San Diego on August 21, 1997. Subsequently, Fernando requested Mager to reschedule their flight to Newark to an earlier date or August 6, 1997. Mager informed him that flights to Newark via Continental Airlines were already fully booked and offered the alternative of a round trip flight via Frontier Air. Since flying with Frontier Air called for a higher fare of US$526.00 per passenger and would mean traveling by night, Fernando opted to request for a refund. Mager, however, denied his request as the subject tickets are non-refundable and the only option that Continental Airlines can offer is the re-issuance of new tickets within one (1) year from the date the subject tickets were issued. Fernando decided to reserve two (2) seats with Frontier Air.

application at the offices of carrier), except in transportation between a place in the United States 8 or Canada and any place outside thereof to which tariffs in force in those countries apply. According to CAI, one of the conditions attached to their contract of carriage is the nontransferability and non-refundability of the subject tickets. The RTCs Ruling Following a full-blown trial, the RTC rendered its April 3, 2006 Decision, holding that Spouses Viloria are entitled to a refund in view of Magers misrepresentation in obtaining their consent in 9 the purchase of the subject tickets. The relevant portion of the April 3, 2006 Decision states: Continental Airlines agent Ms. Mager was in bad faith when she was less candid and diligent in presenting to plaintiffs spouses their booking options. Plaintiff Fernando clearly wanted to travel via AMTRAK, but defendants agent misled him into purchasing Continental Airlines tickets instead on the fraudulent misrepresentation that Amtrak was fully booked. In fact, defendant Airline did not specifically denied (sic) this allegation. Plainly, plaintiffs spouses, particularly plaintiff Fernando, were tricked into buying Continental Airline tickets on Ms. Magers misleading misrepresentations. Continental Airlines agent Ms. Mager further relied on and exploited plaintiff Fernandos need and told him that they must book a flight immediately or risk not being able to travel at all on the couples preferred date. Unfortunately, plaintiffs spouses fell prey to the airlines and its agents unethical tactics for baiting trusting 10 customers." Citing Articles 1868 and 1869 of the Civil Code, the RTC ruled that Mager is CAIs agent, hence, bound by her bad faith and misrepresentation. As far as the RTC is concerned, there is no issue as to whether Mager was CAIs agent in view of CAIs implied recognition of her status as such in its March 24, 1998 letter. The act of a travel agent or agency being involved here, the following are the pertinent New Civil Code provisions on agency: Art. 1868. By the contract of agency a person binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter. 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. Agency may be oral, unless the law requires a specific form. As its very name implies, a travel agency binds itself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter. This court takes judicial notice of the common services rendered by travel agencies that represent themselves as such, specifically the reservation and booking of local and foreign tours as well as the issuance of airline tickets for a commission or fee.

The services rendered by Ms. Mager of Holiday Travel agency to the plaintiff spouses on July 21, 1997 were no different from those offered in any other travel agency. Defendant airline impliedly if not expressly acknowledged its principal-agent relationship with Ms. Mager by its offer in the letter 11 dated March 24, 1998 an obvious attempt to assuage plaintiffs spouses hurt feelings. Furthermore, the RTC ruled that CAI acted in bad faith in reneging on its undertaking to replace the subject tickets within two (2) years from their date of issue when it charged Fernando with the amount of US$1,867.40 for a round trip ticket to Los Angeles and when it refused to allow Fernando to use Lourdes ticket. Specifically: Tickets may be reissued for up to two years from the original date of issue. When defendant airline still charged plaintiffs spouses US$1,867.40 or more than double the then going rate of US$856.00 for the unused tickets when the same were presented within two (2) years from date of issue, 12 defendant airline exhibited callous treatment of passengers. The Appellate Courts Ruling On appeal, the CA reversed the RTCs April 3, 2006 Decision, holding that CAI cannot be held liable for Magers act in the absence of any proof that a principal-agent relationship existed between CAI and Holiday Travel. According to the CA, Spouses Viloria, who have the burden of proof to establish the fact of agency, failed to present evidence demonstrating that Holiday Travel is CAIs agent. Furthermore, contrary to Spouses Vilorias claim, the contractual relationship between Holiday Travel and CAI is not an agency but that of a sale. Plaintiffs-appellees assert that Mager was a sub-agent of Holiday Travel who was in turn a ticketing agent of Holiday Travel who was in turn a ticketing agent of Continental Airlines. Proceeding from this premise, they contend that Continental Airlines should be held liable for the acts of Mager. The trial court held the same view. We do not agree. By the contract of agency, a person binds him/herself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter. The elements of agency are: (1) consent, express or implied, of the parties to establish the relationship; (2) the object is the execution of a juridical act in relation to a third person; (3) the agent acts as a representative and not for him/herself; and (4) the agent acts within the scope of his/her authority. As the basis of agency is representation, there must be, on the part of the principal, an actual intention to appoint, an intention naturally inferable from the principals words or actions. In the same manner, there must be an intention on the part of the agent to accept the appointment and act upon it. Absent such mutual intent, there is generally no agency. It is likewise a settled rule that persons dealing with an assumed agent are bound at their peril, if they would hold the principal liable, to ascertain not only the fact of agency but also the nature and extent of authority, and in case either is controverted, the burden of proof is upon them to establish it. Agency is never presumed, neither is it created by the mere use of the word in a trade or business name. We have perused the evidence and documents so far presented. We find nothing except bare allegations of plaintiffs-appellees that Mager/Holiday Travel was acting in behalf of Continental Airlines. From all sides of legal prism, the transaction in issue was simply a contract of sale, wherein Holiday Travel buys airline tickets from Continental Airlines and then, through its 13 employees, Mager included, sells it at a premium to clients. The CA also ruled that refund is not available to Spouses Viloria as the word "non-refundable" was clearly printed on the face of the subject tickets, which constitute their contract with CAI.

Therefore, the grant of their prayer for a refund would violate the proscription against impairment of contracts. Finally, the CA held that CAI did not act in bad faith when they charged Spouses Viloria with the higher amount of US$1,867.40 for a round trip ticket to Los Angeles. According to the CA, there is no compulsion for CAI to charge the lower amount of US$856.00, which Spouses Viloria claim to be the fee charged by other airlines. The matter of fixing the prices for its services is CAIs prerogative, which Spouses Viloria cannot intervene. In particular: It is within the respective rights of persons owning and/or operating business entities to peg the premium of the services and items which they provide at a price which they deem fit, no matter how expensive or exhorbitant said price may seem vis--vis those of the competing companies. The 14 Spouses Viloria may not intervene with the business judgment of Continental Airlines. The Petitioners Case In this Petition, this Court is being asked to review the findings and conclusions of the CA, as the latters reversal of the RTCs April 3, 2006 Decision allegedly lacks factual and legal bases. Spouses Viloria claim that CAI acted in bad faith when it required them to pay a higher amount for a round trip ticket to Los Angeles considering CAIs undertaking to re-issue new tickets to them within the period stated in their March 24, 1998 letter. CAI likewise acted in bad faith when it disallowed Fernando to use Lourdes ticket to purchase a round trip to Los Angeles given that there is nothing in Lourdes ticket indicating that it is non-transferable. As a common carrier, it is CAIs duty to inform its passengers of the terms and conditions of their contract and passengers cannot be bound by such terms and conditions which they are not made aware of. Also, the subject contract of carriage is a contract of adhesion; therefore, any ambiguities should be construed against CAI. Notably, the petitioners are no longer questioning the validity of the subject contracts and limited its claim for a refund on CAIs alleged breach of its undertaking in its March 24, 1998 letter. The Respondents Case In its Comment, CAI claimed that Spouses Vilorias allegation of bad faith is negate d by its willingness to issue new tickets to them and to credit the value of the subject tickets against the value of the new ticket Fernando requested. CAI argued that Spouses Vilorias sole basis to claim that the price at which CAI was willing to issue the new tickets is unconscionable is a piece of hearsay evidence an advertisement appearing on a newspaper stating that airfares from Manila 15 to Los Angeles or San Francisco cost US$818.00. Also, the advertisement pertains to airfares in September 2000 and not to airfares prevailing in June 1999, the time when Fernando asked CAI to 16 apply the value of the subject tickets for the purchase of a new one. CAI likewise argued that it did not undertake to protect Spouses Viloria from any changes or fluctuations in the prices of airline tickets and its only obligation was to apply the value of the subject tickets to the purchase of the newly issued tickets. With respect to Spouses Vilorias claim that they are not aware of CAIs restrictions on the subject tickets and that the terms and conditions that are printed on them are ambiguous, CAI denies any ambiguity and alleged that its representative informed Fernando that the subject tickets are nontransferable when he applied for the issuance of a new ticket. On the other hand, the word "nonrefundable" clearly appears on the face of the subject tickets.

CAI also denies that it is bound by the acts of Holiday Travel and Mager and that no principalagency relationship exists between them. As an independent contractor, Holiday Travel was without capacity to bind CAI. Issues To determine the propriety of disturbing the CAs January 30, 2009 Decision and whether Spouses Viloria have the right to the reliefs they prayed for, this Court deems it necessary to resolve the following issues: a. Does a principal-agent relationship exist between CAI and Holiday Travel? b. Assuming that an agency relationship exists between CAI and Holiday Travel, is CAI bound by the acts of Holiday Travels agents and employees such as Mager? c. Assuming that CAI is bound by the acts of Holiday Travels agents and employees, can the representation of Mager as to unavailability of seats at Amtrak be considered fraudulent as to vitiate the consent of Spouse Viloria in the purchase of the subject tickets? d. Is CAI justified in insisting that the subject tickets are non-transferable and nonrefundable? e. Is CAI justified in pegging a different price for the round trip ticket to Los Angeles requested by Fernando? f. Alternatively, did CAI act in bad faith or renege its obligation to Spouses Viloria to apply the value of the subject tickets in the purchase of new ones when it refused to allow Fernando to use Lourdes ticket and in charging a higher price for a round trip ticket to Los Angeles? This Courts Ruling I. A principal-agent relationship exists between CAI and Holiday Travel. With respect to the first issue, which is a question of fact that would require this Court to review and re-examine the evidence presented by the parties below, this Court takes exception to the general rule that the CAs findings of fact are conclusive upon Us and our jurisdiction is limited to the review of questions of law. It is well-settled to the point of being axiomatic that this Court is authorized to resolve questions of fact if confronted with contrasting factual findings of the trial court and appellate court and if the findings of the CA are contradicted by the evidence on 17 record. According to the CA, agency is never presumed and that he who alleges that it exists has the burden of proof. Spouses Viloria, on whose shoulders such burden rests, presented evidence that fell short of indubitably demonstrating the existence of such agency. We disagree. The CA failed to consider undisputed facts, discrediting CAIs denial that Holiday Travel is one of its agents. Furthermore, in erroneously characterizing the contractual relationship

between CAI and Holiday Travel as a contract of sale, the CA failed to apply the fundamental civil law principles governing agency and differentiating it from sale. In Rallos v. Felix Go Chan & Sons Realty Corporation, this Court explained the nature of an agency and spelled out the essential elements thereof: Out of the above given principles, sprung the creation and acceptance of the relationship of agency whereby one party, called the principal (mandante), authorizes another, called the agent (mandatario), to act for and in his behalf in transactions with third persons. The essential elements of agency are: (1) there is consent, express or implied of the parties to establish the relationship; (2) the object is the execution of a juridical act in relation to a third person; (3) the agent acts as a representative and not for himself, and (4) the agent acts within the scope of his authority.1avvphi1 Agency is basically personal, representative, and derivative in nature. The authority of the agent to act emanates from the powers granted to him by his principal; his act is the act of the principal if done within the scope of the authority. Qui facit per alium facit se. "He who acts through another 19 acts himself." Contrary to the findings of the CA, all the elements of an agency exist in this case. The first and second elements are present as CAI does not deny that it concluded an agreement with Holiday Travel, whereby Holiday Travel would enter into contracts of carriage with third persons on CAIs behalf. The third element is also present as it is undisputed that Holiday Travel merely acted in a representative capacity and it is CAI and not Holiday Travel who is bound by the contracts of carriage entered into by Holiday Travel on its behalf. The fourth element is also present considering that CAI has not made any allegation that Holiday Travel exceeded the authority that was granted to it. In fact, CAI consistently maintains the validity of the contracts of carriage that Holiday Travel executed with Spouses Viloria and that Mager was not guilty of any fraudulent misrepresentation. That CAI admits the authority of Holiday Travel to enter into contracts of carriage on its behalf is easily discernible from its February 24, 1998 and March 24, 1998 letters, where it impliedly recognized the validity of the contracts entered into by Holiday Travel with Spouses Viloria. When Fernando informed CAI that it was Holiday Travel who issued to them the subject tickets, CAI did not deny that Holiday Travel is its authorized agent. Prior to Spouses Vilorias filing of a complaint against it, CAI never refuted that it gave Holiday Travel the power and authority to conclude contracts of carriage on its behalf. As clearly extant from the records, CAI recognized the validity of the contracts of carriage that Holiday Travel entered into with Spouses Viloria and considered itself bound with Spouses Viloria by the terms and conditions thereof; and this constitutes an unequivocal testament to Holiday Travels authority to act as its agent. This Court cannot therefore allow CAI to take an altogether different position and deny that Holiday Travel is its agent without condoning or giving imprimatur to whatever damage or prejudice that may result from such denial or retraction to Spouses Viloria, who relied on good faith on CAIs acts in recognition of Holiday Travels authority. Estoppel is primarily based on the doctrine of good faith and the avoidance of harm that will befall an innocent party due to its 20 injurious reliance, the failure to apply it in this case would result in gross travesty of justice. Estoppel bars CAI from making such denial. As categorically provided under Article 1869 of the Civil Code, "[a]gency 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."
18

Considering that the fundamental hallmarks of an agency are present, this Court finds it rather peculiar that the CA had branded the contractual relationship between CAI and Holiday Travel as one of sale. The distinctions between a sale and an agency are not difficult to discern and this Court, as early as 1970, had already formulated the guidelines that would aid in differentiating the 21 two (2) contracts. In Commissioner of Internal Revenue v. Constantino, this Court extrapolated that the primordial differentiating consideration between the two (2) contracts is the transfer of ownership or title over the property subject of the contract. In an agency, the principal retains ownership and control over the property and the agent merely acts on the principals behalf and under his instructions in furtherance of the objectives for which the agency was established. On the other hand, the contract is clearly a sale if the parties intended that the delivery of the property will effect a relinquishment of title, control and ownership in such a way that the recipient may do with the property as he pleases. Since the company retained ownership of the goods, even as it delivered possession unto the dealer for resale to customers, the price and terms of which were subject to the company's control, the relationship between the company and the dealer is one of agency, tested under the following criterion: "The difficulty in distinguishing between contracts of sale and the creation of an agency to sell has led to the establishment of rules by the application of which this difficulty may be solved. The decisions say the transfer of title or agreement to transfer it for a price paid or promised is the essence of sale. If such transfer puts the transferee in the attitude or position of an owner and makes him liable to the transferor as a debtor for the agreed price, and not merely as an agent who must account for the proceeds of a resale, the transaction is a sale; while the essence of an agency to sell is the delivery to an agent, not as his property, but as the property of the principal, who remains the owner and has the right to control sales, fix the price, and terms, demand and receive the proceeds less the agent's commission upon sales made. 1 Mechem on Sales, Sec. 43; 1 Mechem on Agency, Sec. 48; Williston on Sales, 1; Tiedeman on Sales, 1." (Salisbury v. Brooks, 94 22 SE 117, 118-119) As to how the CA have arrived at the conclusion that the contract between CAI and Holiday Travel is a sale is certainly confounding, considering that CAI is the one bound by the contracts of carriage embodied by the tickets being sold by Holiday Travel on its behalf. It is undisputed that CAI and not Holiday Travel who is the party to the contracts of carriage executed by Holiday Travel with third persons who desire to travel via Continental Airlines, and this conclusively indicates the existence of a principal-agent relationship. That the principal is bound by all the obligations contracted by the agent within the scope of the authority granted to him is clearly provided under Article 1910 of the Civil Code and this constitutes the very notion of agency. II. In actions based on quasi-delict, a principal can only be held liable for the tort committed by its agents employees if it has been established by preponderance of evidence that the principal was also at fault or negligent or that the principal exercise control and supervision over them. Considering that Holiday Travel is CAIs agent, does it necessarily follow that CAI is liable for the fault or negligence of Holiday Travels employees? Citing China Air Lines, Ltd. v. Court of Appeals, et 23 al., CAI argues that it cannot be held liable for the actions of the employee of its ticketing agent in the absence of an employer-employee relationship. An examination of this Courts pronouncements in China Air Lines will reveal that an airline company is not completely exonerated from any liability for the tort committed by its agents employees. A prior determination of the nature of the passengers cause of action is necessary. If

the passengers cause of action against the airline company is premised on culpa aquiliana or quasi-delict for a tort committed by the employee of the airline companys agent, there must be an independent showing that the airline company was at fault or negligent or has contributed to the negligence or tortuous conduct committed by the employee of its agent. The mere fact that the employee of the airline companys agent has committed a tort is not sufficient to hold the airline company liable. There is no vinculum juris between the airline company and its agents employees and the contractual relationship between the airline company and its agent does not operate to create a juridical tie between the airline company and its agents employees. Article 2180 of the Civil Code does not make the principal vicariously liable for the tort committed by its agents employees and the principal-agency relationship per se does not make the principal a party to such tort; hence, the need to prove the principals own fault or negligence. On the other hand, if the passengers cause of action for damages against the airline company is based on contractual breach or culpa contractual, it is not necessary that there be evidence of the airline companys fault or negligence. As this Court previously stated in China Air Lines and 24 reiterated in Air France vs. Gillego, "in an action based on a breach of contract of carriage, the aggrieved party does not have to prove that the common carrier was at fault or was negligent. All that he has to prove is the existence of the contract and the fact of its non-performance by the carrier." Spouses Vilorias cause of action on the basis of Magers alleged fraudulent misrepresentation is clearly one of tort or quasi-delict, there being no pre-existing contractual relationship between them. Therefore, it was incumbent upon Spouses Viloria to prove that CAI was equally at fault. However, the records are devoid of any evidence by which CAIs alleged liability can be substantiated. Apart from their claim that CAI must be held liable for Magers supposed fraud because Holiday Travel is CAIs agent, Spouses Viloria did not present evidence that CAI was a party or had contributed to Magers complained act either by instructing or authorizing Holiday Travel and Mager to issue the said misrepresentation. It may seem unjust at first glance that CAI would consider Spouses Viloria bound by the terms and conditions of the subject contracts, which Mager entered into with them on CAIs behalf, in order to deny Spouses Vilorias request for a refund or Fernandos use of Lourdes ticket for the re issuance of a new one, and simultaneously claim that they are not bound by Magers supposed misrepresentation for purposes of avoiding Spouses Vilorias claim for damages and maintaining the validity of the subject contracts. It may likewise be argued that CAI cannot deny liability as it benefited from Magers acts, which were performed in compliance with Holiday Travels obligations as CAIs agent. However, a persons vicarious liability is anchored on his possession of control, whether absolute or limited, on the tortfeasor. Without such control, there is nothing which could justify extending the liability to a person other than the one who committed the tort. As this Court explained in 25 Cangco v. Manila Railroad Co.: With respect to extra-contractual obligation arising from negligence, whether of act or omission, it is competent for the legislature to elect and our Legislature has so elected to limit such liability to cases in which the person upon whom such an obligation is imposed is morally culpable or, on the contrary, for reasons of public policy, to extend that liability, without regard to the lack of moral culpability, so as to include responsibility for the negligence of those persons whose acts or omissions are imputable, by a legal fiction, to others who are in a position to exercise an absolute or limited control over them. The legislature which adopted our Civil Code has elected to

limit extra-contractual liability with certain well-defined exceptions to cases in which moral culpability can be directly imputed to the persons to be charged. This moral responsibility may consist in having failed to exercise due care in one's own acts, or in having failed to exercise due care in the selection and control of one's agent or servants, or in the control of persons who, by reasons of their status, occupy a position of dependency with respect to the person made liable for 26 their conduct. (emphasis supplied) It is incumbent upon Spouses Viloria to prove that CAI exercised control or supervision over Mager by preponderant evidence. The existence of control or supervision cannot be presumed and CAI is 27 under no obligation to prove its denial or nugatory assertion. Citing Belen v. Belen, this Court 28 ruled in Jayme v. Apostol, that: In Belen v. Belen, this Court ruled that it was enough for defendant to deny an alleged employment relationship. The defendant is under no obligation to prove the negative averment. This Court said: "It is an old and well-settled rule of the courts that the burden of proving the action is upon the plaintiff, and that if he fails satisfactorily to show the facts upon which he bases his claim, the defendant is under no obligation to prove his exceptions. This [rule] is in harmony with the provisions of Section 297 of the Code of Civil Procedure holding that each party must prove his 29 own affirmative allegations, etc." (citations omitted) Therefore, without a modicum of evidence that CAI exercised control over Holiday Travels employees or that CAI was equally at fault, no liability can be imposed on CAI for Magers supposed misrepresentation. III. Even on the assumption that CAI may be held liable for the acts of Mager, still, Spouses Viloria are not entitled to a refund. Magers statement cannot be considered a causal fraud that would justify the annulment of the subject contracts that would oblige CAI to indemnify Spouses Viloria and return the money they paid for the subject tickets. Article 1390, in relation to Article 1391 of the Civil Code, provides that if the consent of the contracting parties was obtained through fraud, the contract is considered voidable and may be annulled within four (4) years from the time of the discovery of the fraud. Once a contract is annulled, the parties are obliged under Article 1398 of the same Code to restore to each other the things subject matter of the contract, including their fruits and interest. On the basis of the foregoing and given the allegation of Spouses Viloria that Fernandos consent to the subject contracts was supposedly secured by Mager through fraudulent means, it is plainly apparent that their demand for a refund is tantamount to seeking for an annulment of the subject contracts on the ground of vitiated consent. Whether the subject contracts are annullable, this Court is required to determine whether Magers alleged misrepresentation constitutes causal fraud. Similar to the dispute on the existence of an agency, whether fraud attended the execution of a contract is factual in nature and this Court, as discussed above, may scrutinize the records if the findings of the CA are contrary to those of the RTC. Under Article 1338 of the Civil Code, there is fraud when, through insidious words or machinations of one of the contracting parties, the other is induced to enter into a contract which, without them, he would not have agreed to. In order that fraud may vitiate consent, it must be the causal ( dolo

causante), not merely the incidental (dolo incidente), inducement to the making of the contract. 31 In Samson v. Court of Appeals, causal fraud was defined as "a deception employed by one party 32 prior to or simultaneous to the contract in order to secure the consent of the other."

30

Ratification of a voidable contract is defined under Article 1393 of the Civil Code as follows: Art. 1393. Ratification may be effected expressly or tacitly. It is understood that there is a tacit ratification if, with knowledge of the reason which renders the contract voidable and such reason having ceased, the person who has a right to invoke it should execute an act which necessarily implies an intention to waive his right. Implied ratification may take diverse forms, such as by silence or acquiescence; by acts showing approval or adoption of the contract; or by acceptance and retention of benefits flowing 36 therefrom. Simultaneous with their demand for a refund on the ground of Fernandos vitiated consent, Spouses Viloria likewise asked for a refund based on CAIs supposed bad faith in reneging on its undertaking to replace the subject tickets with a round trip ticket from Manila to Los Angeles. In doing so, Spouses Viloria are actually asking for a rescission of the subject contracts based on contractual breach. Resolution, the action referred to in Article 1191, is based on the defendants 37 breach of faith, a violation of the reciprocity between the parties and in Solar Harvest, Inc. v. 38 Davao Corrugated Carton Corporation, this Court ruled that a claim for a reimbursement in view of the other partys failure to comply with his obligations under the contract is one for rescission or resolution. However, annulment under Article 1390 of the Civil Code and rescission under Article 1191 are two (2) inconsistent remedies. In resolution, all the elements to make the contract valid are present; in annulment, one of the essential elements to a formation of a contract, which is consent, is absent. In resolution, the defect is in the consummation stage of the contract when the parties are in the process of performing their respective obligations; in annulment, the defect is already present at the time of the negotiation and perfection stages of the contract. Accordingly, by pursuing the remedy of rescission under Article 1191, the Vilorias had impliedly admitted the validity of the subject contracts, forfeiting their right to demand their annulment. A party cannot rely on the contract and claim rights or obligations under it and at the same time impugn its existence or 39 validity. Indeed, litigants are enjoined from taking inconsistent positions. V. Contracts cannot be rescinded for a slight or casual breach. CAI cannot insist on the non-transferability of the subject tickets. Considering that the subject contracts are not annullable on the ground of vitiated consent, the next question is: "Do Spouses Viloria have the right to rescind the contract on the ground of CAIs supposed breach of its undertaking to issue new tickets upon surrender of the subject tickets?" Article 1191, as presently worded, states: The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him. The injured party may choose between the fulfilment and the rescission of the obligation, with the payment of damages in either case. He may also seek rescission, even after he has chosen fulfillment, if the latter should become impossible.

Also, fraud must be serious and its existence must be established by clear and convincing evidence. 33 As ruled by this Court in Sierra v. Hon. Court of Appeals, et al., mere preponderance of evidence is not adequate: Fraud must also be discounted, for according to the Civil Code: Art. 1338. There is fraud when, through insidious words or machinations of one of the contracting parties, the other is induced to enter into a contract which without them, he would not have agreed to. Art. 1344. In order that fraud may make a contract voidable, it should be serious and should not have been employed by both contracting parties. To quote Tolentino again, the "misrepresentation constituting the fraud must be established by full, clear, and convincing evidence, and not merely by a preponderance thereof. The deceit must be serious. The fraud is serious when it is sufficient to impress, or to lead an ordinarily prudent person into error; that which cannot deceive a prudent person cannot be a ground for nullity. The circumstances of each case should be considered, taking into account the personal conditions of 34 the victim." After meticulously poring over the records, this Court finds that the fraud alleged by Spouses Viloria has not been satisfactorily established as causal in nature to warrant the annulment of the subject contracts. In fact, Spouses Viloria failed to prove by clear and convincing evidence that Magers statement was fraudulent. Specifically, Spouses Viloria failed to prove that (a) there were indeed available seats at Amtrak for a trip to New Jersey on August 13, 1997 at the time they spoke with Mager on July 21, 1997; (b) Mager knew about this; and (c) that she purposely informed them otherwise. This Court finds the only proof of Magers alleged fraud, which is Fernandos testimony that an Amtrak had assured him of the perennial availability of seats at Amtrak, to be wanting. As CAI correctly pointed out and as Fernando admitted, it was possible that during the intervening period of three (3) weeks from the time Fernando purchased the subject tickets to the time he talked to said Amtrak employee, other passengers may have cancelled their bookings and reservations with Amtrak, making it possible for Amtrak to accommodate them. Indeed, the existence of fraud cannot be proved by mere speculations and conjectures. Fraud is never lightly inferred; it is good faith that is. Under the Rules of Court, it is presumed that "a person is innocent of crime or wrong" 35 and that "private transactions have been fair and regular." Spouses Viloria failed to overcome this presumption. IV. Assuming the contrary, Spouses Viloria are nevertheless deemed to have ratified the subject contracts. Even assuming that Magers representation is causal fraud, the subject contracts have been impliedly ratified when Spouses Viloria decided to exercise their right to use the subject tickets for the purchase of new ones. Under Article 1392 of the Civil Code, "ratification extinguishes the action to annul a voidable contract."

The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a period. This is understood to be without prejudice to the rights of third persons who have acquired the thing, in accordance with articles 1385 and 1388 and the Mortgage Law. According to Spouses Viloria, CAI acted in bad faith and breached the subject contracts when it refused to apply the value of Lourdes ticket for Fernandos purchase of a round trip ticket to Los Angeles and in requiring him to pay an amount higher than the price fixed by other airline companies. In its March 24, 1998 letter, CAI stated that "non-refundable tickets may be used as a form of payment toward the purchase of another Continental ticket for $75.00, per ticket, reissue fee ($50.00, per ticket, for tickets purchased prior to October 30, 1997)." Clearly, there is nothing in the above-quoted section of CAIs letter from which the restriction on the non-transferability of the subject tickets can be inferred. In fact, the words used by CAI in its letter supports the position of Spouses Viloria, that each of them can use the ticket under their name for the purchase of new tickets whether for themselves or for some other person. Moreover, as CAI admitted, it was only when Fernando had expressed his interest to use the subject tickets for the purchase of a round trip ticket between Manila and Los Angeles that he was informed that he cannot use the ticket in Lourdes name as payment. Contrary to CAIs claim, that the subject tickets are non-transferable cannot be implied from a plain reading of the provision printed on the subject tickets stating that "[t]o the extent not in conflict with the foregoing carriage and other services performed by each carrier are subject to: (a) provisions contained in this ticket, x x x (iii) carriers conditions of carriage and related regulations which are made part hereof (and are available on application at the offices of carrier) x x x." As a common carrier whose business is imbued with public interest, the exercise of extraordinary diligence requires CAI to inform Spouses Viloria, or all of its passengers for that matter, of all the terms and conditions governing their contract of carriage. CAI is proscribed from taking advantage of any ambiguity in the contract of carriage to impute knowledge on its passengers of and demand compliance with a certain condition or undertaking that is not clearly stipulated. Since the prohibition on transferability is not written on the face of the subject tickets and CAI failed to inform Spouses Viloria thereof, CAI cannot refuse to apply the value of Lourdes ticket as payment for Fernandos purchase of a new ticket. CAIs refusal to accept Lourdes ticket for the purchase of a new ticket for Fernando is only a casual breach. Nonetheless, the right to rescind a contract for non-performance of its stipulations is not absolute. The general rule is that rescission of a contract will not be permitted for a slight or casual breach, but only for such substantial and fundamental violations as would defeat the very object of the 40 parties in making the agreement. Whether a breach is substantial is largely determined by the 41 attendant circumstances. While CAIs refusal to allow Fernando to use the value of Lourdes ticket as payment for the purchase of a new ticket is unjustified as the non-transferability of the subject tickets was not clearly stipulated, it cannot, however be considered substantial. The endorsability of the subject

tickets is not an essential part of the underlying contracts and CAIs failure to comply is not essential to its fulfillment of its undertaking to issue new tickets upon Spouses Vilorias surrender of the subject tickets. This Court takes note of CAIs willingness to perform its principal obligation and this is to apply the price of the ticket in Fernandos name to the price of the round trip ticket between Manila and Los Angeles. CAI was likewise willing to accept the ticket in Lourdes name as full or partial payment as the case may be for the purchase of any ticket, albeit under her name and for her exclusive use. In other words, CAIs willingness to comply with it s undertaking under its March 24, 1998 cannot be doubted, albeit tainted with its erroneous insistence that Lourdes ticket is non-transferable. Moreover, Spouses Vilorias demand for rescission cannot prosper as CAI cannot be solely faulted for the fact that their agreement failed to consummate and no new ticket was issued to Fernando. Spouses Viloria have no right to insist that a single round trip ticket between Manila and Los Angeles should be priced at around $856.00 and refuse to pay the difference between the price of the subject tickets and the amount fixed by CAI. The petitioners failed to allege, much less prove, that CAI had obliged itself to issue to them tickets for any flight anywhere in the world upon their surrender of the subject tickets. In its March 24, 1998 letter, it was clearly stated that "[n]onrefundable tickets may be used as a form of payment toward the purchase of another Continental 42 ticket" and there is nothing in it suggesting that CAI had obliged itself to protect Spouses Viloria from any fluctuation in the prices of tickets or that the surrender of the subject tickets will be considered as full payment for any ticket that the petitioners intend to buy regardless of actual price and destination. The CA was correct in holding that it is CAIs right and exclusive prerogative to fix the prices for its services and it may not be compelled to observe and maintain the prices of 43 other airline companies. The conflict as to the endorsability of the subject tickets is an altogether different matter, which does not preclude CAI from fixing the price of a round trip ticket between Manila and Los Angeles in an amount it deems proper and which does not provide Spouses Viloria an excuse not to pay such price, albeit subject to a reduction coming from the value of the subject tickets. It cannot be denied that Spouses Viloria had the concomitant obligation to pay whatever is not covered by the value of the subject tickets whether or not the subject tickets are transferable or not.1avvphi1 There is also no showing that Spouses Viloria were discriminated against in bad faith by being charged with a higher rate. The only evidence the petitioners presented to prove that the price of a round trip ticket between Manila and Los Angeles at that time was only $856.00 is a newspaper advertisement for another airline company, which is inadmissible for being "hearsay evidence, twice removed." Newspaper clippings are hearsay if they were offered for the purpose of proving 44 the truth of the matter alleged. As ruled in Feria v. Court of Appeals,: [N]ewspaper articles amount to "hearsay evidence, twice removed" and are therefore not only inadmissible but without any probative value at all whether objected to or not, unless offered for a purpose other than proving the truth of the matter asserted. In this case, the news article is admissible only as evidence that such publication does exist with the tenor of the news therein 45 stated. (citations omitted) The records of this case demonstrate that both parties were equally in default; hence, none of them can seek judicial redress for the cancellation or resolution of the subject contracts and they are therefore bound to their respective obligations thereunder. As the 1st sentence of Article 1192 provides:

Art. 1192. In case both parties have committed a breach of the obligation, the liability of the first infractor shall be equitably tempered by the courts. If it cannot be determined which of the parties first violated the contract, the same shall be deemed extinguished, and each shall bear his own damages. (emphasis supplied) Therefore, CAIs liability for damages for its refusal to accept Lourdes ticket for the purchase of Fernandos round trip ticket is offset by Spouses Vilorias liability for their refusal to pay the amount, which is not covered by the subject tickets. Moreover, the contract between them remains, hence, CAI is duty bound to issue new tickets for a destination chosen by Spouses Viloria upon their surrender of the subject tickets and Spouses Viloria are obliged to pay whatever amount is not covered by the value of the subject tickets. This Court made a similar ruling in Central Bank of the Philippines v. Court of Appeals. Thus: Since both parties were in default in the performance of their respective reciprocal obligations, that is, Island Savings Bank failed to comply with its obligation to furnish the entire loan and Sulpicio M. Tolentino failed to comply with his obligation to pay his P17,000.00 debt within 3 years as stipulated, they are both liable for damages. Article 1192 of the Civil Code provides that in case both parties have committed a breach of their reciprocal obligations, the liability of the first infractor shall be equitably tempered by the courts. WE rule that the liability of Island Savings Bank for damages in not furnishing the entire loan is offset by the liability of Sulpicio M. Tolentino for damages, in the form of penalties and surcharges, 47 for not paying his overdue P17,000.00 debt. x x x. Another consideration that militates against the propriety of holding CAI liable for moral damages is the absence of a showing that the latter acted fraudulently and in bad faith. Article 2220 of the Civil Code requires evidence of bad faith and fraud and moral damages are generally not 48 recoverable in culpa contractual except when bad faith had been proven. The award of exemplary damages is likewise not warranted. Apart from the requirement that the defendant acted in a wanton, oppressive and malevolent manner, the claimant must prove his entitlement to 49 moral damages. WHEREFORE, premises considered, the instant Petition is DENIED. SO ORDERED.
46

Later however, the spouses found out that the train trip isnt fully booked and so they purchased train tickets and went to their destination by train instead. Then they called up Mager to request for a refund for the plane tickets. Mager referred the couple to Continental Airlines. As the couple are now in the Philippines, they filed their request with Continental Airlines office in Ayala. The spouses Viloria alleged that Mager misled them into believing that the only way to travel was by plane and so they were fooled into buying expensive tickets. Continental Airlines refused to refund the amount of the ticket and so the spouses sued the airline company. In its defense, Continental Airlines claimed that the ticket sold to them by Mager is nonrefundable; that, if any, they are not bound by the misrepresentations of Mager because theres no agency existing between Continental Airlines and Mager. The trial court ruled in favor of spouses Viloria but the Court of Appeals reversed the ruling of the RTC. ISSUE: Whether or not a contract of agency exists between Continental Airlines and Mager. HELD: Yes. All the elements of agency are present, to wit: 1. 2. 3. 4. there is consent, express or implied of the parties to establish the relationship; the object is the execution of a juridical act in relation to a third person; the agent acts as a representative and not for himself, and the agent acts within the scope of his authority.

The first and second elements are present as Continental Airlines does not deny that it concluded an agreement with Holiday Travel to which Mager is part of, whereby Holiday Travel would enter into contracts of carriage with third persons on the airlines behalf. The third element is also present as it is undisputed that Holiday Travel merely acted in a representative capacity and it is Continental Airlines and not Holiday Travel who is bound by the contracts of carriage entered into by Holiday Travel on its behalf. The fourth element is also present considering that Continental Airlines has not made any allegation that Holiday Travel exceeded the authority that was granted to it. Continental Airlines also never questioned the validity of the transaction between Mager and the spouses. Continental Airlines is therefore in estoppels. Continental Airlines cannot be allowed to take an altogether different position and deny that Holiday Travel is its agent without condoning or giving imprimatur to whatever damage or prejudice that may result from such denial or retraction to Spouses Viloria, who relied on good faith on Continental Airlines acts in recognition of Holiday Travels authority. Estoppel is primarily based on the doctrine of good faith and the avoidance of harm that will befall an innocent party due to its injurious reliance, the failure to apply it in this case would result in gross travesty of justice. G.R. No. 174089 January 25, 2012

Spouses Fernando Viloria and Lourdes Viloria vs Continental Airlines, Inc. On September 23, 2012 Business Organization Partnership, Agency, Trust Elements of Agency Estoppel In 1997, while the spouses Viloria were in the United States, they approached Holiday Travel, a travel agency working for Continental Airlines, to purchase tickets from Newark to San Diego. The travel agent, Margaret Mager, advised the couple that they cannot travel by train because it is fully booked; that they must purchase plane tickets for Continental Airlines; that if they wont purchase plane tickets; theyll never reach their destination in time. The couple believed Magers representations and so they purchased two plane tickets worth $800.00.

ORIX METRO LEASING AND FINANCE CORPORATION (Formerly CONSOLIDATED ORIX LEASING AND FINANCE CORPORATION), Petitioner, vs. MINORS: DENNIS, MYLENE, MELANIE and MARIKRIS, all surnamed MANGALINAO y DIZON, MANUEL M. ONG, LORETO LUCILO, SONNY LI, AND ANTONIO DE LOS SANTOS, Respondents.

x - - - - - - - - - - - - - - - - - - - - - - -x G.R. No. 174266 SONNY LI and ANTONIO DE LOS SANTOS, Petitioners, vs. MINORS: DENNIS, MYLENE, MELANIE and MARIKRIS, all surnamed MANGALINAO y DIZON, LORETO LUCILO, CONSOLIDATED ORIX LEASING AND FINANCE CORPORATION and MANUEL M. ONG, Respondents. DECISION DEL CASTILLO, J.: The ones at fault are to answer for the effects of vehicular accidents. A multiple-vehicle collision in North Luzon Expressway (NLEX) resulting in the death of all the passengers in one vehicle, including the parents and a sibling of the surviving orphaned minor heirs, compelled the latter to file an action for damages against the registered owners and drivers of the two 10-wheeler trucks that collided with their parents Nissan Pathfinder (Pathfinder). Assailed in these consolidated Petitions for Review on Certiorari filed by Orix Metro Leasing and 2 3 Finance Corporation (Orix) and by Sonny Li (Sonny) and Antonio delos Santos (Antonio) are the 4 5 October 27, 2005 Decision and August 17, 2006 Resolution of the Court of Appeals (CA) in CAG.R. CV No. 70530. Factual Antecedents On June 27, 1990, at about 11:15 p.m., three vehicles were traversing the two-lane northbound NLEX in the vicinity of Barangay Tibag, Pulilan, Bulacan. It was raining that night. Anacleto Edurese, Jr. (Edurese) was driving a Pathfinder with plate number BBG-334. His Isabelabound passengers were the owners of said vehicle, spouses Roberto and Josephine Mangalinao (Mangalinao spouses), their daughter Marriane, housemaid Rufina Andres and helper Armando Jebueza (Jebueza). Before them on the outer lane was a Pampanga-bound Fuso 10-wheeler truck (Fuso), with plate number PAE-160, driven by Loreto Lucilo (Loreto), who was with truck helper 6 Charlie Palomar (Charlie). The Fuso was then already moving in an erratic and swerving motion. Following behind the Pathfinder was another 10-wheeler truck, an Isuzu Cargo (Isuzu) with plate number PNS-768 driven by Antonio, who was then with helper Rodolfo Navia (Rodolfo). Just when the Pathfinder was already cruising along the NLEXs fast lane and about to overtake the Fuso, the latter suddenly swerved to the left and cut into the Pathfinders lane thereby blocking its 7 way. As a result, the Pathfinder hit the Fusos left door and left body. The impact caused both vehicles to stop in the middle of the expressway. Almost instantly, the inevitable pileup happened. 8 9 Although Antonio stepped on the brakes, the Isuzus front crashed into the rear of the Pathfinder 10 leaving it a total wreck. Soon after, the Philippine National Construction Corporation (PNCC) patrol arrived at the scene of the accident and informed the Pulilan police about the vehicular mishap. Police Investigator SPO2 Emmanuel Banag responded at about 2:15-2:30 a.m. of June 28, 11 1990 and investigated the incident as gathered from the information and sketch provided by the 12 PNCC patrol as well as from the statements provided by the truck helpers Charlie and Rodolfo.
1

In the meantime, the Mangalinao spouses, the driver Edurese, and the helper Jebueza were declared dead on the spot while 6-month old Marriane and the housemaid were declared dead on 13 arrival at a nearby hospital. The occupants of the trucks escaped serious injuries and death. As their letters to the registered owners of the trucks demanding compensation for the accident were ignored, the minor children of the Mangalinao spouses, Dennis, Mylene, Melanie and 15 16 Marikris, through their legal guardian, consequently filed on January 16, 1991 a Complaint for damages based on quasi-delict, before the Regional Trial Court (RTC) of Makati which was 17 docketed as Civil Case No. 91-123. They impleaded the drivers Loreto and Antonio, as well as the 18 registered owners of the Fuso and the Isuzu trucks, namely Orix and Sonny, respectively. The children imputed recklessness, negligence, and imprudence on the truck drivers for the deaths of their sister and parents; while they hold Sonny and Orix equally liable for failing to exercise the diligence of a good father of a family in the selection and supervision of their respective drivers. The children demanded payment of more than P10.5 million representing damages and attorneys fees. Orix in its Motion to Dismiss interposed that it is not the actual owner of the Fuso truck. As the 20 trial court denied the motion, it then filed its Answer with Compulsory Counterclaim and Cross21 claim. Orix reiterated that the children had no cause of action against it because on September 9, 22 1983, it already sold the Fuso truck to MMO Trucking owned by Manuel Ong (Manuel). The latter 23 being the alleged owner at the time of the collision, Orix filed a Third Party Complaint against Manuel, a.k.a. Manuel Tan. In their Answer with Compulsory Counterclaim and Cross-Claim, Sonny and Antonio attributed fault for the accident solely on Loretos reckless driving of his truck which suddenly stopped and slid across the highway. They claimed that Sonny had exercised the expected diligence required of an employer; that Antonio had been all along driving with care; and, that with the abrupt and unexpected collision of the vehicles before him and their precarious proximity, he had no way of preventing his truck from hitting the Pathfinder. For failing to file any responsive pleading, both Manuel and Loreto were declared in default. Ruling of the Regional Trial Court After trial, the court a quo issued a Decision on February 9, 2001 finding Sonny, Antonio, Loreto and Orix liable for damages. It likewise ruled in favor of Orix anent its third party complaint, the latter having sufficiently proven that Manuel of MMO Trucking is the real owner of the Fuso. The dispositive portion of the RTC Decision states: Wherefore, premises considered, judgment is hereby rendered in favor of plaintiffs and against the defendants, ordering the latter to pay plaintiffs, jointly and severally, the following: 1. 2. 3. 4. 5. 6. P3,077,000.00 as actual damages; P2,000,000.00 as moral damages; P1,000,000.00 as exemplary damages; and P400,000.00 as and for reasonable attorneys fees legal interest at six percent (6%) per annum on the above-stated amounts from the filing of the complaint on January 16, 1991 until fully paid; and costs of suit and expenses of litigation.
26 25 24 19 14

Third party defendant Manuel M. Ong is ordered to indemnify third party plaintiff [Orix] for the amounts adjudged against the latter in this case. SO ORDERED.
27

The CA also ruled that Orix, as the registered owner of the Fuso, is considered in the eyes of the law and of third persons responsible for the deaths of the passengers of the Pathfinder, regardless of the lack of an employer-employee relationship between it and the driver Loreto. The CA modified the award of damages as follows:

Ratiocinating its finding of recklessness on both truck drivers, the RTC said: 1. The evidence leaves no doubt that both truck drivers were at fault and should be held liable. Lucilo, who was driving the Fuso truck, was reckless when he caused the swerving of his vehicle directly on the lane of the Pathfinder to his left. The Pathfinder had no way to avoid a collision because it was about to pass the truck when suddenly blocked. On the other hand, the Isuzu truck was practically tailgating the Pathfinder on the dark slippery highway such that when the Pathfinder collided with the Fuso truck, it became inevitable for the Isuzu truck to crash into the Pathfinder. 28 So, de los Santos, the driver of the Isuzu truck was likewise reckless. In an attempt to exonerate itself, Orix appealed to the CA followed by Sonny and Antonio. All of them challenged the factual findings and conclusions of the court a quo with regard to their respective liabilities, each pinpointing to the negligence of the other and vice versa. All of them likewise assailed the amounts the RTC awarded to the minors for lack of basis. Ruling of the Court of Appeals SO ORDERED. On October 27, 2005, the CA rendered its Decision affirming the factual findings of the trial court of reckless driving. It said: It may be true that it was the Nissan Pathfinder which first hit and bumped and eventually crashed into the Fuso truck. However, this would not have happened if the truck did not swerve into the lane of the Nissan Pathfinder. As afore-mentioned [sic], the latter had no way then to avoid a collision because it was about to overtake the former. As a motorist, Lucilo [Loreto] should have operated his truck with reasonable caution considering the width, traffic, grades, crossing, curvatures, visibility and other conditions of the highway and the conditions of the atmosphere and weather. He should have carefully and cautiously driven his vehicle so as not to have endangered the property or the safety or rights of other persons. By failing to drive with reasonable caution, Lucilo is, hence, liable for the resultant vehicle collision. Neither do *we+ find credence in delos Santos claim that he is without liability for the vehicular collision. We cannot overemphasize the primacy in probative value of physical evidence, that mute but eloquent manifestation of the truth. An examination of the destroyed front part of the Isuzu truck, as shown by photographic evidence, clearly indicates strong bumping of the rear of the Pathfinder. The photographs belie delos Santos claim that he was driving at a safe speed and even slowed down when he noticed the [erratic] traveling of the Fuso truck. In fact, by his own admission, it was a matter of seconds before his Isuzu truck hit the Nissan Pathfinder - a clear indication that he did not actually [slow] down considering the weather and road condition at that time. Had he been actually prudent in driving, the impact on the Nissan Pathfinder would not have been that great or he might have even taken evasive action to avoid hitting it. Sadly, that was not 32 the case as shown by the evidence on record.
31 29 30

2. 3. 4. 5. 6.

P150,000.00 as indemnity for the death of Spouses Roberto and Josephine Mangalinao and their daughter Marianne Mangalinao; P2,000,000.00 for loss of earning capacity; P64,200.00 for funeral expenses; P1,000,000.00 as moral damages; P1,000,000.00 as exemplary damages; P400,000.00 as attorneys fees.

If the amounts adjudged remain unpaid upon the finality of this decision, the interest rate shall be twelve percent (12%) per annum computed from the time the judgment bec[a]me final and executory until fully satisfied. The six percent (6%) interest per annum from the filing of the complaint indicated in the assailed decision is DELETED.
33

Orix and Sonny joined by Antonio, filed their separate Motions for Reconsideration 35 were denied in a Resolution dated August 17, 2006. Hence, these consolidated petitions. Petitioners Respective Arguments Orixs contentions in its petition may be summarized as follows: 1. 2.

34

but same

3.

4.

It is not the owner and operator of the Fuso at the time of the collision and should not be held responsible for compensating the minor children of the Mangalinaos; The Fusos swerving towards the inner lane where the Pathfinder is cruising is attributable not to the alleged negligence of Loreto but to adverse driving conditions, i.e., the stormy weather and slippery road; The CA has no reliable evidentiary basis for computing loss of earning capacity as the Balance Sheet and Income Statement of Roberto Mangalinao, as certified by accountant Wilfredo de Jesus for the year 1989, is hearsay evidence; and The award of attorneys fees sustained by the CA is not justified and is exorbitant.

On the other hand, Sonny and Antonio argue in their petition that: 1. 2. the CA erred in affirming the trial courts erroneous finding that the Isuzu was tailgating, which is contradicted by the material evidence on record; the proximate cause of the death of the victims is Loretos gross negligence. Antonio should have been accorded the benefit of the emergency rule wherein he was

3.

immediately confronted with a sudden danger and had no time to think of how to avoid it; the CA should not have awarded damages and attorneys fees because of the total absence of evidence to substantiate them.

was three cars away from the Pathfinder. When the Pathfinder hit the left side of the Fuso, he 40 stepped on the brake but still struck the Pathfinder. He further narrated: CROSS-EXAMINATION BY ATTY. DOMINGO: Q And what was this if you noticed anything before the incident happened? A The Fu[s]o Cargo Truck was swerving from left to right, Sir. Q How long before this collision did you notice this kind of travelling on the part of the Fu[s]o Cargo Truck? A About 15 to 20 minutes, Sir. Q When you noticed this, what if anything, did you do? A I slow[ed] down, Sir. Q When you said you slow[ed] down, at what speed do you mean you were travelling?

In short, petitioners want us to review the finding of negligence by the CA of both truck drivers, the solidary liability of Orix as the registered owner of the Fuso, and the propriety of the damages the CA awarded in favor of the Mangalinao children. Our Ruling The finding of negligence of petitioners as found by the lower courts is binding Negligence and proximate cause are factual issues. Settled is the rule that this Court is not a trier of facts, and the concurrence of the findings of fact of the courts below are conclusive. "A petition for review on certiorari under Rule 45 of the Rules of Court should include only questions of law 37 38 questions of fact are not reviewable" save for several exceptions, two of which petitioners invoke, i.e., that the finding is grounded on speculations, surmises, and conjectures, and that the judgment is based on a misapprehension of facts. There is no compelling reason to disturb the lower courts factual conclusions.
36

A More or less 50 kph., Sir. With regard to the Fuso, we note the statement given by the helper Charlie before the Pulilan police immediately after the incident: T: Pakisalaysay mo nga ang mga pangyayari? S: Nuon nga pong oras at petsang nabanggit habang ako ay sakay ng isang truck patungo Pampanga at sa lugar ng pinangyarihan ay namireno ang aking driver dahil sa madulas at nagawi kami sa gawing kaliwa (inner lane) na isang mabilis na pajero (Nissan 4x4) ang bumangga sa gawing unahan hanggang sa tagiliran gawing kaliwa, na ang nasabing pajero ay papalusot (overtake) na 39 pagkatapos nuon ay may isa (1) pang truck na bumangga sa hulihan. Based on the helpers statement, the Fuso had lost control, skidded to the left and blocked the way of the Pathfinder, which was about to overtake. The Pathfinder had absolutely no chance to avoid the truck. Instead of slowing down and moving towards the shoulder in the highway if it really needed to stop, it was very negligent of Loreto to abruptly hit the brake in a major highway wherein vehicles are highly likely to be at his rear. He opened himself up to a major danger and naturally, a collision was imminent. On the other hand, the parties for the Isuzu contend that the CA erred in ruling that the truck was moving at a fast speed and was tailgating. They assert that they be absolved because the fault lay entirely on the Fuso, which had been zigzagging along the highway. They aver that when the Fuso and the Pathfinder collided in the middle of the highway with the Fuso blocking both lanes of the northbound stretch, there was no room left for driver Antonio to maneuver to avoid them, and that the Pathfinder was hit as a natural consequence. The Isuzus driver, Antonio, claims that he and the two vehicles before him were travelling at the right lane of the highway, and on his part, he was travelling at a speed of 50-60 kph and that he Q So prior to that, you were travelling faster than 50 to 60 kph. Is that correct? A Yes, Sir. Q And [in spite] of that, you testified that you hit the Nissan Pathfinder after it hit the Fu[s]o Cargo Truck? A Despite the fact that it slow[ed] down, I also hit the Nissan Pathfinder when I skidded because of the slippery condition of the road at that time. Q And it was precisely this slippery condition of the road that you are talking about that caused you to hit the Nissan Pathfinder? A Yes, Sir. xxxx Q I will just go back to the incident on the collision. At what particular point in the vehicle you were driving hit the Nissan Pathfinder? At what portion of the Nissan Pathfinder was it hit by the vehicle that you were driving? A At the rear portion of the Nissan Pathfinder, Sir. Q What portion, the right o[r] the left portion of the rear?
41

A I hit the right side of the rear portion of the Nissan Pathfinder, Sir. Q And what happened to the Nissan Pathfinder after you hit it on the right rear portion? A The back portion of the Nissan Pathfinder was damaged, Sir. Q And what was the extent of the [damage] on the back portion? A The rear portion was extensively damaged, Sir. Q After you hit the rear portion of the Nissan Pathfinder, did your vehicle hit any other portion of that Nissan Pathfinder? A None, Sir. Q After you hit the Nissan Pathfinder at the rear, in what manner did it move, if it moved? A After I hit the rear portion of the Nissan Pathfinder, it did not move anymore, but I also hit the right side of the Fu[s]o Cargo Truck, Sir. COURT: For a while, what part of the Fu[s]o Cargo Truck did you hit? WITNESS: A I hit the sidings of the Fu[s]o Cargo Truck, Your Honor. xxxx CROSS-EXAMINATION BY ATTY. GUERRERO: Q When the Pathfinder hit the Fu[s]o Truck, were you still behind the Pathfinder? A Yes, Sir. Q [Were you] still in the same lane that you were travelling 30 minutes before the impact? A Yes, Sir. Q You did not move from your lane [in spite] of the collision between the Pathfinder and the Fu[s]o Truck? A No, Sir. I did not move. I stayed on my lane.
43 42

xxxx REDIRECT EXAMINATION BY ATTY. NATIVIDAD: Q You stated a while ago, during the cross-examination by counsel that the moment you saw the Nissan Pathfinder [smash] against the side of the Fu[s]o, you did not move your Truck anymore. Why did you not swerve to the left or to the right? A Because there was an [oncoming] bus signalling [sic] to me, Sir. Q How about to the right, why did you not abruptly maneuver your truck to the right to avoid hitting the Nissan Pathfinder? A I cannot move my truck to the right side because my truck will not pass thorugh [sic] the lane because it is very narrow and if I will do that, I might fall on the other side of the highway where houses were standing. Q You said that you were unable to pass through the right side of the road. Why [were you] not able to pass [through] to the right side[?] You said it was too narrow. Why is it too narrow? A Because the Fu[s]o Truck cut across the highway and my truck cannot pass through that space. It is only in the fast lane where I can pass through, Sir. Q All the while this bumping or the impact between the Nissan Pathfinder and the Fu[s]o Truck and your bumping against the Nissan Pathfinder happened in a few seconds only. Is that correct? A Yes, Sir.
44

The exact positions of the vehicles upon a perusal of the sketch (drawn only after the Fuso was moved to the shoulder to decongest traffic) would show that both the Pathfinder and the Isuzu rested on the highway diagonally. The left part of the former occupied the right portion of the inner lane while the rest of its body was already on the outer lane, indicating that it was about to change lane, i.e., to the inner lane to overtake. Meanwhile, the point of collision between the Pathfinder and the Isuzu occurred on the right portion of the outer lane, with the Isuzus front part ramming the Pathfinders rear, while the rest of the 10-wheelers body lay on the shoulder of the road. We are not convinced that the Isuzu is without fault. As correctly found by the CA, the smashed front of the Isuzu strongly indicates the strong impact of the ramming of the rear of the Pathfinder that pinned its passengers. Furthermore, Antonio admitted that despite stepping on the brakes, the Isuzu still suddenly smashed into the rear of the Pathfinder causing extensive damage to it, as well as hitting the right side of the Fuso. These militate against Antonios claim that he was driving at a safe speed, that he had slowed down, and that he was three cars away. Clearly, the Isuzu was not within the safe stopping distance to avoid the Pathfinder in case of emergency. Thus, the Emergency Rule invoked by petitioners will not apply. Such principle states:

45

[O]ne who suddenly finds himself in a place of danger, and is required to act without time to consider the best means that may be adopted to avoid the impending danger, is not guilty of negligence, if he fails to adopt what subsequently and upon reflection may appear to have been a better method, unless the emergency in which he finds himself is brought about by his own 46 negligence. Considering the wet and slippery condition of the road that night, Antonio should have been prudent to reduce his speed and increase his distance from the Pathfinder. Had he done so, it would be improbable for him to have hit the vehicle in front of him or if he really could not avoid hitting it, prevent such extensive wreck to the vehicle in front. With the glaring evidence, he obviously failed to exercise proper care in his driving. Orix as the operator on Fuso truck is liable to the heirs of the victims of the mishap record of the

challenge this for lack of basis, arguing that the CA failed to consider the formula provided by this 55 Court, and that the income statement was not even testified to by the accountant who prepared such document. In its Decision, the CA, while recognizing that there is a formula provided for computing the loss of the earning capacity of the victims, itself acknowledged that such formula cannot be used to arrive at the net earning capacity using the 1989 income statement alone, more so when such was not authenticated by the proper party. If the net income stated therein was used in the formula, the CA would have awarded the Mangalinao heirs more than P18,000,000.00. It did not, however, use the income statement as its sole gauge. While the net income had not been sufficiently established, the Court recognizes the fact that the Mangalinao heirs had suffered loss deserving of compensation. What the CA awarded is in actuality 56 a form of temperate damages. Such form of damages under Article 2224 of the Civil Code is given 57 in the absence of competent proof on the actual damages suffered. "In the past, we awarded temperate damages in lieu of actual damages for loss of earning capacity where earning capacity is plainly established but no evidence was presented to suppo rt the allegation of the injured partys 58 actual income." In this case, Roberto Mangalinao, the breadwinner of the family, was a businessman engaged in buying and selling palay and agricultural supplies that required high capital in its operations and was only 37 at the time of his death. Moreover, the Pathfinder which the Mangalinaos own, became a total wreck. Under the circumstances, we find the award of 59 P500,000.00 as temperate damages as reasonable. lawphi1 Moral damages, it must be stressed, are not intended to enrich plaintiff at the expense of the defendant. They are awarded to enable the injured party to obtain means, diversions, or amusements that will serve to alleviate the moral suffering he/she had undergone due to the other 61 partys culpable action and must, perforce, be proportional to the suffering inflicted. While the children did not testify before the court, undoubtedly, they suffered the pain and ordeal of losing both their parents and sibling and hence, the award of moral damages is justified. However, the 62 amount must be reduced to P500,000.00. "In quasi-delicts, exemplary damages may be granted if the defendant acted with gross 63 64 negligence." It is given by way of example or correction for the public good. Before the court may consider such award, the plaintiff must show his entitlement first to moral, temperate, or 65 compensatory damages, which the respondents have. In the case at bench, the reckless driving of the two trucks involved caused the death of the victims. However, we shall reduce the amount of 66 exemplary damages to P200,000.00. Lastly, because exemplary damages are awarded and that we find it equitable that expenses of 67 litigation should be recovered, we find it sufficient and reasonable enough to grant attorneys 68 fees of P50,000.00. Parenthetically, the Manifestation and Motion with notice of change of address by counsel for respondents; and the transmittal of CAs rollo consisting of 256 pages with two attached Supreme Court petitions, one folder of original records and one folder of transcript of stenographic notes, by the Judicial Records Division, CA, are noted. WHEREFORE, the instant petitions are PARTIALLY GRANTED. The Decision of the Court of Appeals in CA-G.R. CV No. 70530 is AFFIRMED with MODIFICATIONS. The award of actual damages is hereby INCREASED to P107,000.00. The award of moral damages is REDUCED to P500,000.00, the award of temperate damages for loss of earning capacity is likewise REDUCED to P500,000.00, and
60

Orix cannot point fingers at the alleged real owner to exculpate itself from vicarious liability under 47 Article 2180 of the Civil Code. Regardless of whoever Orix claims to be the actual owner of the Fuso by reason of a contract of sale, it is nevertheless primarily liable for the damages or injury the truck registered under it have caused. It has already been explained: Were a registered owner allowed to evade responsibility by proving who the supposed transferee or owner is, it would be easy for him, by collusion with others or otherwise, to escape said responsibility and transfer the same to an indefinite person, or to one who possesses no property with which to respond financially for the damage or injury done. A victim of recklessness on the public highways is usually without means to discover or identify the person actually causing the injury or damage. He has no means other than by a recourse to the registration in the Motor Vehicles Office to determine who is the owner. The protection that the law aims to extend to him would become illusory were the registered owner given the opportunity to escape liability by 48 disproving his ownership. x x x Besides, the registered owners have a right to be indemnified by the real or actual owner of the 49 amount that they may be required to pay as damage for the injury caused to the plaintiff, which Orix rightfully acknowledged by filing a third-party complaint against the owner of the Fuso, Manuel. The heirs deserve to receive the damages awarded by the CA, with modifications as to their amounts With regard to actual damages, one is entitled to an adequate compensation only for such 50 pecuniary loss suffered by him as he has duly proved. Anent the funeral and burial expenses, the 51 receipts issued by San Roque Funeral Homes in the amount of P57,000.00 and by St. Peter 52 Memorial Homes in the amount of P50,000.00, as supported by the testimonies of the witnesses who secured these documents, prove payment by the respondent heirs of the funeral costs not only of their deceased relatives but of the latters helpers as well, and thus we find it proper to award the total amount of P107,000.00. In addition to P150,000.00 indemnity for the death of the spouses Mangalinao and their daughter Marianne as a result of quasi-delict, actual damages shall likewise include the loss of the earning 53 capacity of the deceased. In this case, the CA awarded P2,000,000.00, which it found reasonable 54 after considering the income statement of Roberto Mangalinao as of the year 1989. Petitioners

the award of exemplary damages and of attorneys fees are REDUCED to P200,000.00 and P50,000.00, respectively. All other awards of the Court of Appeals are AFFIRMED. SO ORDERED. Damages awarded in gross negligence Orix Metro Leasing and Finance Corp (Formerly Consolidated Orix Leasing and Finance Corp)

may consider such award, the plaintiff must show his entitlement first to moral, temperate, or compensatory damages, which the respondents have. In the case at bench, the reckless driving of the two trucks involved caused the death of the victims. However, we shall reduce the amount of exemplary damages to P200,000.00.
66 65

Lastly, because exemplary damages are awarded and that we find it equitable that "x x x. expenses of litigation should be recovered, we find it sufficient and reasonable enough to grant attorneys fees ofP50,000.00. While the net income had not been sufficiently established, the Court recognizes the fact that the Mangalinao heirs had suffered loss deserving of compensation. What the CA awarded is in actuality a form of temperate damages. Such form of damages under Article 2224
57 56 68 67

of the Civil

Parenthetically, the Manifestation and Motion with notice of change of address by counsel for respondents; and the transmittal of CAs rollo consisting of 256 pages with two attached Supreme Court petitions, one folder of original records and one folder of transcript of stenographic notes, by the Judicial Records Division, CA, are noted. WHEREFORE, the instant petitions are PARTIALLY GRANTED. The Decision of the Court of Appeals in CA-G.R. CV No. 70530 is AFFIRMED with MODIFICATIONS. The award of actual damages is hereby INCREASED to P107,000.00. The award of moral damages is REDUCED toP500,000.00, the award of temperate damages for loss of earning capacity is likewise REDUCED toP500,000.00, and the award of exemplary damages and of attorneys fees are REDUCED toP200,000.00 and P50,000.00, respectively. All other awards of the Court of Appeals areAFFIRMED.

Code is given in the absence of competent proof on the actual damages suffered. In the past, we awarded temperate damages in lieu of actual damages for loss of earning capacity where earning capacity is plainly established but no evidence was presented to support the allegation of the injured partys actual income. In this case, Roberto Mangalinao, the breadwinner of the family, was a businessman engaged in buying and selling palay and agricultural supplies that required high capital in its operations and was only 37 at the time of his death. Moreover, the Pathfinder which the Mangalinaos own, became a total wreck. Under the circumstances, we find the award of P500,000.00 as temperate damages as reasonable.
59 58

Moral damages, it must be stressed, are not intended to enrich plaintiff at the expense of the defendant. They are awarded to enable the injured party to obtain means, diversions, or amusements that will serve to alleviate the moral suffering he/she had undergone due to the other partys culpable action and must, perforce, be proportional to the suffering inflicted.
61

60

While the children did not testify before the court, undoubtedly, they suffered the pain and ordeal of losing both their parents and sibling and hence, the award of moral damages is justified. However, the amount must be reduced toP500,000.00.
62

In quasi-delicts, exemplary damages may be granted if the defendant acted with gross negligence. It is given by way of example or correction for the public good. Before the court
63 64